Raine falls, but PPL must wait for relief

Phonographic Performance Ltd v Simon Noel Raine, a Chancery Division (England and Wales) ruling of Stephen Smith QC, sitting as a Deputy Judge on 5 March, deals with a procedural issue that has cropped up frequently in recent patent and trade mark trials, but less so in those involving copyright: when to stay infringement proceedings.

In short, Raine was the sole shareholder and director of several companies that operated nightclubs in England. There was a history of licensing disputes between Raine and Phonographic Performance Ltd (PPL). In early 2013, Raine's companies operated at least five clubs in relation to whose activities licensing fees were payable to PPL. After Raine fell into arrears in the payment to PPL of instalments under a fee agreement, PPL said that, since the instalments were not paid, the relevant licences were thereby terminated.

A number of Raine's companies fell into financial difficulties and entered into administration and the licence fees remained unpaid. Nothing daunted, the enterprising Raine then set up a batch of new companies which then made three applications for licences for the public use of sound. PPL was plainly not thrilled at this potential new source of customers: in one of those applications the company name had been misstated and contained other factual errors, including in relation to the days of operation of one of the clubs and underdeclarations of usage. This strengthened PPL's resolve to refuse the applications. So far as that body was concerned, the false declarations made in Raine's applications meant that any licence previously held was terminated, and no licence would be granted until fees due from Raine's companies that had entered into administration were paid. To back this up, PPL sought the cessation of all music performances at the relevant venues until an agreement was reached and, just to make sure there was going to be an outcome, PPL sued Raine for copyright infringement, seeking injunctive and financial relief.

At this point Raine, and rather late in the proceedings, sought a stay of the copyright infringement proceedings to allow for applications to resolve Raine's licensing issues under the Copyright, Designs and Patents Act 1988 section 121 before the Copyright Tribunal. If a stay were refused, PPL planned to press for summary judgment and an enquiry as to damages. The application for a stay was opposed on the basis that, apart from the fact that the applications for licences had been made in a slipshod and misleading way and the stay was applied for late, although the infringement proceedings had been brought against Raine personally the applications to the tribunal had been in his companies' names and there would be a duplication in costs in bringing the tribunal applications.

Stephen Smith QC granted Raine's application for a stay.  In his view

* Although the application for a stay had been made late, it had been "foreshadowed" and, though Raine had not been obliged to make it earlier and the timing of the application might have costs consequences, PPL did not suffer any real prejudice in result of the lateness and the stay ought not be refused on that basis.

* The court had real concerns in relation to the extent of further possible delay of the determination of issues before the Tribunal which could have a number of consequences: it could be that licence fees or damages for infringement would not be paid until the resolution of the tribunal proceedings; there was also a chance that Raine's companies becoming insolvent.  However, these issues could be addressed through the imposition of appropriate terms and the provision of security.

* Raine had undertaken to be personally bound by the companies' applications, and any costs implications could be dealt with through ordering security. Accordingly, it was appropriate to order that the proceedings, pending the outcome of the tribunal proceedings, be stayed.

* PPL's interests still needed to be protected. Raine would be made to give an undertaking to prosecute the tribunal proceedings with all reasonable expedition, to take all steps in his power to ensure that the companies take all required steps and be bound by the Tribunal's decision, and to pay into court a sum as security for PPL's infringement claims.

This blogger knows how unwise it can be to prejudge a situation, particularly when he doesn't have direct access to the facts -- but from the track record of the defendant licence applicant as reported in the Lawtel note from which this blog post is taken it seems appropriate to speculate as to how well he will cope with his undertakings, given the mess he has apparently made of things so far.