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| Dorothea Thompson |
For
a select few, the recent damages assessment in Henderson v All Around The World Recordings may provide an excuse
to reminisce about the ‘glory’ of late-noughties Bassline music. For everyone
else, it provides the first guidance on the interpretation of the Enforcement Directive and implementing UK Regulations, with
particular regard to the notion of ‘unfair profits’ and ‘moral
prejudice’, as 1709 Blog friend and music loving trainee solicitor Dorothea Thompson (Bray & Krais)
explains in her guest contribution.
According to Dorothea, “this case confirmed that inquiry as to damages and account of
profits remain available as alternatives only, and ‘additional damages’ for
infringement of performance rights under the Copyright, Designs and Patents Act
1988 (CDPA) are now effectively redundant.”
Here’s what Dorothea writes in more detail:
“Background
The
song Heartbroken was recorded by Jodie Henderson (aka Jodie Aysha) and
Tafazwa Tawonezvi (aka T2) in 2005. In 2007 Mr Tawonezvi re-mixed the track to
produce a Bassline version and signed a record deal with 2NV Records Ltd (2NV).
2NV then signed a deal with All Around the World Recordings Ltd (AATW) to
release Heartbroken (for those readers with an
enquiring/nostalgic mind, the song in its released version can be found here). 2NV
offered Ms Henderson £1,500 for her performance, but she refused. She then
entered into a publishing contract with Sony ATV.
In November 2007 AATW released Heartbroken. It was a big hit, reaching No.2 in the singles charts, staying
there for 5 weeks, and remaining in the Top 40 for 46 weeks.
To date Ms Henderson had
received no performance royalties for AATW's release, nor been paid for her
participation in the video or the use of her name.
Breach
of performance rights
Back in February 2013, in the Patents County Court (as
it then was) HH Judge Birss QC found that Ms Henderson had consented to the
recording of her vocal, but not any future exploitation. Objectively, there
were no grounds for AATW to infer consent, as they knew Ms Henderson had not
signed with 2NV. 2NV had not obtained consent which could be passed on to AATW,
and Ms Henderson had no contractual right to royalties.
AATW had "gone
ahead at risk" in the knowledge that Ms Henderson had not signed a
contract. AATW had thereby infringed the singer's rights by making copies of
her performance and issuing those copies to the public without her consent,
contrary to sections 182A and 182B CDPA.
.jpg) |
Fair enough, but:
can you at least claim damages? |
Assessment
of damages
Ms Henderson elected for an inquiry as to damages. Aside
from loss of royalties, assessed under the standard ‘user-principle’ (royalties
that would have been paid had there been a licence negotiated between willing
licensor and willing licensee), Ms Henderson sought damages under the
Enforcement Directive and additional damages under the CDPA.
Enforcement Directive
It was not disputed that Ms Henderson
was entitled to rely on reg. 3 of the 2006 Regulations, implementing art. 13(1)
of the Directive, which applies where the infringer knowingly, or with reasonable grounds to
know, engages in infringing activity. However, Ms Henderson argued
that reg. 3 allowed a claim for both damages and
defendant's profits, and required the court to consider both and make an award
in relation to both as appropriate.
Judge Hacon reiterated that as a matter of English
law, inquiry as to damages and account of profits are only available as
alternatives. In intellectual property proceedings a claimant is free to choose
between them but may not have the benefit of both.
Under art. 13(2) in
respect of unknowing infringement, it is clear that there is a choice between
inquiry as to damages or account of profits. Where knowledge is proved,
art.13(1)(a) requires the court to take into account relevant aspects of the
actual prejudice suffered, including both lost profits and unfair profits.
However, the overall task is to order damages appropriate to the actual
prejudice suffered, and this is usually profit lost (possibly
plus expenses).
Recital 26 of the Directive confirms the aim is not to impose punitive damages
but to achieve objectively assessed compensation.
‘Unfair profits’
Judge Hacon considered that art. 13(1) did not
mean that the court must always take into account profit made by the defendant from his knowing
infringement. Instead, if the claimant would not receive adequate compensation
for actual prejudice suffered where damages were assessed as lost profits,
moral prejudice and expenses, or account of profits, there was flexibility to
award an additional sum
related to profit that the defendant has generated through the knowing
infringement.
He referred to the example of a
defendant making no direct financial profit from the infringement, but his
business expanded in volume and/or in reputation on the back of loss-leader
infringements.
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| What about 'moral prejudice'? |
‘Moral prejudice’
Damage for 'moral prejudice' is rooted in continental
civil law, but there is little guidance to a single meaning according to EU
law. Judge Hacon held that art.13(1)(a) entitles recovery for three of the
categories of non-economic loss on which Ms Henderson relied: mental distress,
injury to feelings and humiliation.
He considered that the moral prejudice
contemplated by this provision was confined to prejudice arising in limited
circumstances, particularly where a claimant had suffered little or no
financial loss and would otherwise either be left with no compensation, or the
compensation would not be proportionate to the overall damage suffered.
For example, if a defendant were to
infringe the copyright in photographs disclosing private grief by publishing
them on the internet (which, unfortunately, seems like an entirely plausible
situation these days), that might generate no profit for the defendant and no
financial loss for the copyright owner, but the emotional stress caused might
be acute. In such circumstances, the court could award compensation for moral
prejudice, previously unavailable in England to copyright owners.
Additional damages under the CDPA
Section 191J(2) CDPA provides that in
an claim for infringement of performer’s rights, the court may award additional
damages, having regard in
particular to the flagrancy of the infringement.
Judge Hacon held that art. 13
(with reg. 3(3)) now provides a lower hurdle - of knowing infringement. Consequently, s. 191J(2) has effectively
become redundant.
***
In conclusion, Ms Henderson was
awarded damages according to the 'user principle' of £30,000 and a further £5,000
pursuant to art.13(1)(a) of the Enforcement Directive, making a total of £35,000.
This might not seem like an enormous result for her, some 7 years after the
infringement, but the case has provided welcome clarification on the assessment
of damages post-Enforcement Directive.”
And more on Google: Günther Oettinger, the man who will become the European Union’s digital economy and society commissioner in place of Nolie Kroes, is said to be considering taking the so-called “Google tax” law from his native Germany and applying it across the EU. Germany’s Leistungsschutzrecht für Presseverleger (LSR), or “ancillary copyright for press publishers” law was passed in 2013 at the behest of publishers such as Axel Springer. The LSR gives publishers the right to demand royalties from aggregators such as Google News for the use of copyrighted text in their listings. the Spanish Parliament has passed a law to levy a charge on aggregators and search engines for using snippets or linking to infringing content - with TechDirt saying "As plenty of folks have described, the bill is clearly just a Google tax". The Irish Minister of State for European Affairs Dara Murphy said the idea veered towards protectionism.and that itwent against the principles of Europe’s single market saying "“It’s important that Europe doesn’t lurch further and closer towards protectionism just because – to date – large Silicon Valley companies have been market leaders”. In his future role, Oettinger won't be responsible for EU competition policy, but he has been a vocal critical of Google's search antitrust settlement with the EU and may have more influence over negotiations during the next phase of negotiations. Previously, he's suggested that Google could be forced to display search results objectively and neutrally, the FT noted. 
