Notional licence fee not the correct measure of damages for infringing CD covermount

09-Aug-2010  |  Commercial Agreements, Copyright & Media Law, IT & Telecoms, Technology, Media & Telecoms


This case concerned a CD covermount which included recordings of songs performed at a Jimi Hendrix Experience concert (the Band’s last live performance in the UK).  The covermount was distributed with The Sunday Times in September 2006.

In 2008, Times Newspapers Limited was found to have infringed the claimants’ rights in the performances and in the recordings through their authorisation and distribution of the covermount.

In a ruling last week, Sir William Blackburne ruled on the damages inquiry. His findings make interesting reading:

  • Rejecting the notional licence fee approach, the appropriate measure of damages was an award to compensate the claimants for the losses they had suffered as a consequence of infringement. The claimants were entitled to damages to compensate them for the losses incurred as a consequence of a year’s delay in launching a film which is due to include recordings of the Hendrix concert.
  • This is the first UK judgment to consider Article 13(1) of the Enforcement Directive (2004/48/EC) in any detail. In this case, Article 13 did not significantly affect the court’s approach to damages awards. As there was no flagrancy element to the damages, there was no decision on how Article 13 interacts with additional statutory damages.

  • The claimants are to be compensated for damage suffered on a worldwide basis, as a result of the delay in the launch of their project. The judge found that a claim justiciable before UK courts can result in the recovery of damages suffered outside the UK if the claimant can show that the loss in question was caused by the defendant's wrongdoing (subject always to causation and remoteness).

The judge commented that the notional licence fee approach threw up "formidable difficulties". It would require the court to assess what would have been a reasonable licence fee to permit the defendant to make and distribute a vast number of CDs containing "very poor quality, illicitly obtained recordings which the claimants would never have permitted", not least because to do so would have upset their own plans for exploitation.

Comment

Many people would assume in these sorts of covermount situations, in case of infringement, the correct amount of damages would be the notional licence fee that would otherwise have been payable had the parties been willing licensor and willing licensee. This judgment reminds us that a defendant can be in for all foreseeable losses suffered by a claimant, stemming from the infringement, whether UK based losses or otherwise.

Article 13 may still prove significant on a different set of facts. Article 13 anticipates that a court can elect between a notional licence fee approach (Article (13(1)(b)) or an approach whereby the claimant is compensated for negative economic consequences of the infringement (including their own lost profits and any unfair profits made by the infringer), as well as other harm suffered such as moral prejudice (Article 13(1)(a)). Historically, claimants have chosen between an account of profits or an award of damages, which might include their own lost profits. Article 13 appears to contemplate that a claimant can recover an account of the defendant's profits arising from infringing behaviour, as well as damages to compensate the claimant for its own lost profits, along with any flagrancy damages. Practitioners are yet to test the true parameters of Article 13.

Click here to read a full case note.

Lawyers Niri Shanmuganathan, Lorna Caddy