A Rare Decision on Copyright from the Scots Courts

Cats take a rest in preparation for 'Winter'

This Kat was excited to find a judgment relating to copyright infringement from the Outer House of the Court of Session on the Scottish Courts 50 Most Recent Cases page yesterday. Although Naxos Rights International Ltd v Project Management (Borders) Ltd & Salmon [2012] CSOH 158 goes no way towards developing the substantive law relating to copyright ownership and infringement, Lord Glennie provided a helpful reminder of when a director will be found personally and jointly liable for the damage caused by an infringing company. 

The pursuer, Naxos Rights International Ltd, traded as a record label which commissioned or obtained rights to exploit works of classical music which were sold on CD and by digital download from its own website and third-party websites. The label sought damages for copyright infringement pursuant to the Copyright, Design and Patents Act 1988 on the grounds that the first defender, Project Management (Borders) Ltd, had infringed its copyright by copying and issuing copies of the recordings for sale on its website (www.royalty-free-classical-music.org) and by licensing the recordings for resale by other websites without the payment of royalties. For all those classical music loving IPKat readers, the works alleged to have been infringed were recordings of Vivaldi's 'The Four Seasons' made in 1987 in Bratislava, Czechoslovakia (now Slovakia), and the Christmas carol 'Joy to the World' recorded at Worcester Cathedral on 22 and 23 September 1992 by the Worcester Cathedral Choir with conductor Donald Hunt. The pursuer also alleged that the infringing acts done by the limited company were authorised or procured by its director, the second defender Mr Salmon, who was therefore joint and severally liable for any damage. The court considered three issues; i) whether Naxos owned the copyright in the copyright recordings; ii) whether the recordings of the works which the experts agreed were copied from the copyright recordings were downloaded from the defenders' website, and; iii) whether Salmon was personally liable as a joint tortfeasor.

i) Ownership

It was not in dispute that the recordings of the works qualified for copyright protection in terms of the 1988 Act. However, Salmon challenged the pursuer's title to the recordings on the rather tenuous ground that the terms of an Asset Transfer Agreement had not actually transferred copyright ownership as they were written in the future tense. 

Applying the ordinary rules of construction, the court found that a document transferring copyright does not have to be in any particular form or use any particular words. The test is whether, on a proper construction of the agreement viewed in its context, the parties intended that copyright and other rights be transferred. Applying that test to the facts, the Asset Transfer Agreement was found to have effectively achieved the transfer of copyright with immediate effect to the Naxos without the need for a further agreement or deed of assignment. The court was satisfied that Naxos is, and at all material times was, owner of the copyright in the copyright recordings.

ii) Infringement

Salmon was punished by being fed to a cat

Despite both experts for the parties agreeing that the recordings were copied from the copyright recordings (based on the identification of performance anomalies in audio and visual waveforms), the court's determination of infringement was complicated by Salmon's claim that Naxos's version of the infringing downloads were not derived from Project Management's website. However, the court gave little weight to Salmon's evidence of what he claimed to be the provenance of the downloads due to doubts as to his credibility and the doubts raised by Naxos's submissions. 'The fatal blow' to his account was found to have come from his own evidence that conflicted with the finding of his expert that the recordings were copied. Infringement was therefore found.  

iii) Liability

The most interesting part of the judgment related to Salmon's liability for infringement as joint tortfeasor. Despite an attempt to rely on the Saloman principle of separate corporate personality, the court noted that 'the fact that he was a director of the company does not place him in some protected category' (at [62]). In the field of intellectual property, whether an individual is liable with a company as a joint tortfeasor is determined, inter alia, under the principle that liability arises where the individual intends, procures and shares a common design with the company that the infringement takes place (per Chadwick LJ in MCA Records v Charly Records Ltd [2001] EWCA Civ 1441). As such, the test was whether (a) he procured the breaches of copyright by the company and (b) he and the company, both separate legal entities, were acting in concert with one another pursuant to a common design in the infringement (per Arnold J in L'Oreal SA v eBay International AG [2009] EWHC 1094 (Ch) and Kitchin J in Twentieth Century Fox Film Corp v Newzbin Ltd [2012] EWHC 608 (Ch)).

Applying those principles, the court was in no doubt that Salmon was personally liable for the infringements of copyright. The true position was that the website was in fact operated together by the company and Salmon. He 'was acting not only as a director of the company but also as an individual setting up the website and putting or causing to be put infringing material on it for sale. This makes him liable as a principal, not only for his own acts but also for those of the company on the basis both of procurement and of acting in concert with the company for a common purpose' (at [64]).

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