Friday 3 June 2011

When appeal loses its appeal: CSC turn tables on VPL

CSC Media Group Ltd (formerly Chart Show Channels Ltd) v Video Performance Ltd [2011] EWCA Civ 650, 27 May 2011, is a decision of the Court of Appeal for England and Wales which is not yet available on BAILII (this note being taken from a helpful alert on LexisNexis) but which raises important implications for anyone thinking of appealing against a decision of the UK's Copyright Tribunal.

In August 2010 Mr Justice Floyd heard an appeal against the first decision of the Tribunal on the going rate for broadcasting music videos. The appellant, Video Performance Ltd (VPL), was not very happy when the Tribunal said that the correct royalty rate payable by TV channel operator CSC should be somewhere in the region of 10% to 15% since an earlier licence between VPL and BSkyB set a more comfortably remunerative rate of 20%.  Floyd J allowed VPL's appeal and held that, when the Tribunal assesses the amount the licensee must pay under the Copyright, Designs and Patents Act 1988 s.129, it must give proper weight to the terms of other comparable licences. In this case the Tribunal had taken account of the BSkyB licence only after it had reached its position that 10-15% was correct. Even if the Tribunal had reservations about the BSkyB licence, it couldn't just be shunted into the background since it was the single most significant piece of evidence as to what the proper royalty rate should be. The correct approach involved starting with the most relevant comparable licence, then adapting it to the circumstances of the present case. Since the Tribunal had not only taken the wrong view concerning the earlier licence but had also erred in not applying the pro-rating formula which the parties had themselves agreed while having no proper or rational basis for departing from that formula, the case would be remitted to a differently-constituted Tribunal for reconsideration.

This time it was CSC's turn to appeal, submitting that Floyd J had (i) failed to attribute to the Tribunal awareness, in fixing the reduced window, of its subsequent discussion of comparables and (ii) failed to appreciate that the Tribunal's treatment of the relevance and weight of those comparables was coloured by its earlier discussion of the law and of the music video market.

The Court of Appeal allowed CSC's appeal.  In its view the judge's criticisms of the Tribunal's arrival at the reduced window royalty rate took an unrealistic and unjustified view of its reasoning and adopted too prescriptive a view of the way such cases fell to be decided.  This was because, before arriving at those figures, the Tribunal had surveyed the music video market and effectively rejected VPL's case that it had secured a freely negotiated voluntary acceptance of an alleged standard licensing approach of a headline 20 per cent royalty. Additionally, the Tribunal had made findings of fact which were directly relevant to its assessment of any comparables.  This being so, it was unrealistic to subject the Tribunal's reasoning to a rigorous analysis which was based on the assumption that, when fixing the lower window, it had missed issues which it actually mentioned explicitly later on in its decision.

This would have been enough to bury Floyd J's decision by itself. However, having got up a reasonable momentum, the Court of Appeal was not going to be easy to stop.  It would be odd, it added, to hold that a specialist Tribunal --  in a lengthy, conscientious and detailed judgment -- had ignored its own clear and proper statement of the correct legal approach. What's more, the Tribunal's findings of fact were capable of supporting a perfectly proper conclusion about the reduced window since the law did not compel the Tribunal  to deploy any specific analytical structure and methodology. So long as it discharged its statutory duty under section 126, the precise way it carried out its analysis and the order in which it addressed the material issues in its decision could not undermine the validity of its conclusions.

It wasn't just the judge who came in for a bashing: VPL's criticisms of the Tribunal's approach to the reduced window royalty rate weren't worth a shout since they did not disclose any error of law which undermined the validity of its decision.

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