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Dealings with Copyright Works

General introduction

Copyright is a species of personal or moveable property and consequently it can be dealt in, just as other types of personal property can. It can be assigned, mortgaged and used as security; licences can be granted to use the works which it protects; it can be passed to another by will or by operation of law, as for example on an intestacy or bankruptcy. The provisions governing dealings in copyright (Chapter v of the Act) are broadly restatements of the 1956 law.

Assignment

Partial assignment

There is no need for an assignment of copyright to be entire or absolute1. Copyright is a bundle of rights, and they do not have to be assigned together. In particular, the Act contemplates two limitations which may be placed on an assignment.

First, the assignment may be limited by reference to the things2 which the owner has the exclusive right to do by virtue of section 16. It is common for the owner of rights to assign some of them while retaining others, or to assign rights to more than one person.

A copyright owner may assign certain rights (e.g., the public performance right in a musical work) to a collecting society whilst retaining other rights or assigning them to other parties. The line between such a partial assignment and a mere licence may be extremely difficult to draw.

Secondly, the assignment may be for a limited period of time. In this case, at the end of the period of assignment the copyright reverts to the owner who may, if desired, grant a further assignment.

Form and Effect

An assignment of copyright must, as under the 1956 Act, be in writing and be signed by or on behalf of the assignor3. Provided this requirement is met it confers legal ownership on the assignee, who is therefore able to sue in his or her own name.

The first assignment in writing of copyright therefore takes priority over any subsequent written assignment of the same rights and also over any purported oral assignments. An assignee does, however, take subject to any earlier licence, although this rule is displaced if the assignee purchases the copyright bona fide for value without notice of the licence. Anyone subsequently acquiring an interest in the copyright will take free of the licence even if they are aware of its existence4.

While an assignment must be in writing and signed by the assignor, no formalities are involved in an agreement to assign. In Lakeview Computers plc v Steadman and others5 the Court of Appeal held that a sole trader setting up a company to carry on his business impliedly agreed to transfer the copyright to it. The Act applied to assignments but not to agreements to assign, and it was possible to imply such an agreement from conduct. It was effective as an equitable assignment which could be executed by an order for specific performance or by a vesting order transferring legal title to the equitable owner The evidence in the present case showed that an agreement to assign had to be implied.

Restraint of trade

The courts will not enforce contracts which are in unreasonable restraint of trade: to do so would be contrary to public policy. Many restraints of trade are now governed by statute (such as resale price maintenance), but the common law doctrine remains important, especially for restrictive covenants.

Every restraint is presumed void unless it can be proved to be valid. The validity of a contract which restrains trade depends on three factors:

  • The restraint must be necessary to protect some legitimate interest of the covenantee.

  • Restrictions must be reasonable as between the parties.

  • Restrictions must be reasonable in the public interest.

Schroeder Music Publishers v Macaulay6 is one of the great cases in this area of law, and it concerned an agreement entered into by a young musician at the start of his career, relating to copyright in his music. It shows that the courts are sympathetic to arguments based on inequalities of bargaining power. See also John v James7 in which an assignment of copyright by a youthful Elton John and Bernie Taupin to their manager was challenged on the basis that there was a fiduciary duty on the manager to act in the best interests of the assignors.

Prospective Ownership of Copyright

Section 91 provides for agreements for the assignment and licensing of works which had not been created at the time the agreement was made.

Licences

A licence is permission to do something which would otherwise be an infringement. It may be written or oral, express or implied, exclusive or non-exclusive. Future copyright may be licensed and a licensee has rights against a later assignee of the copyright other than a bona fide purchaser for value without notice.

Exclusive Licences

An exclusive licence is a written licence signed by the copyright owner which authorises the licensee to exercise a right conferred by the copyright to the exclusion of all other persons, including the copyright owner himself. Section 92(2) provides that the exclusive licensee has the same rights against a successor in title of the licensor who is bound by the licence as he has against the licensor himself8.

An exclusive licensee may not sue the owner of the copyright for infringement. The correct course is to rely on the licence and to sue for breach of its terms. Otherwise, the exclusive licensee is in much the same position as an assignee9, enjoying the right concurrently with the owner to sue for infringement, request Customs and Excise to treat infringing copies as prohibited goods, and obtain an order for delivery up of or seize infringing copies.

Neither the copyright owner nor the exclusive licensee may proceed with an infringement action (other than by leave of the court) unless the other is joined to the action as co-claimant or defendant10. Joinder is not however necessary for the purpose only of seeking interlocutory relief.

Non-exclusive licensees

In certain circumstances, a non-exclusive licensee is given the right, under new section 101A, to bring an action for infringement against circumventers and manufacturers of and dealers in circumvention devices. This will apply where the infringing act was directly connected to a prior licensed act of the licensee. The right to arise, for licence must be in writing and signed by or on behalf of the copyright owner. The licence must expressly grant to the non-exclusive licensee a right of action under this section.

The rights and remedies of the non-exclusive licensee are the same as those which the copyright owner would enjoy. The two have concurrent rights.

Form of Licence

There is no requirement that a licence of copyright should be in writing, and indeed a licence can often be implied from the dealings between the parties. The writer of a letter to the correspondence editor of a newspaper gives an implied licence to the newspaper to publish the letter.

Any licence granted by a copyright owner will bind every successor in title to his interest in the copyright with the exception of a purchaser in good faith for valuable consideration without actual or constructive notice of the licence or a person deriving title from such a purchaser.

Future Copyright

As with licences granted for existing copyright, licences granted by the prospective owner of copyright are binding on his successors in title with the exception of a purchaser in good faith without actual constructive notice of the licence or a person deriving title from him.

Transmission of Copyright on Death or Insolvency

On the death of the copyright owner, section 90 provides that copyright will automatically vest in the executors or administrators of the estate. In this copyright is exactly like any other asset of the deceased which must be collected in for distribution to the beneficiaries.

On insolvency, copyright will vest in the trustee in bankruptcy or the liquidator along with other assets.

Moral Rights

Inter Vivos Transfers

Section 94 provides that moral rights are not assignable. Article 6bis of the Berne Convention says nothing about the transfer of moral rights during the author’s lifetime but in most continental legal systems moral rights are inalienable.

Transmission of Moral Rights on Death

Section 95(1) provides for the transmission of paternity right, integrity right, and the right to privacy of certain photographs and films on the death of the author, director or commissioner. These rights will pass to the person named in the will; if no direction is given and copyright in the work forms part of the estate, the rights will pass to the person to whom the copyright passes. Failing that, they will be exercisable by the personal representatives of the deceased.

False attribution of authorship is dealt with in subsection (5). This right is not one of those which the Berne Convention requires and it continues for only 20 years after the death of the person concerned. During this period it may be exercised only by the deceased’s personal representatives.

Licensing And Licensing Schemes

The CDPA’s provisions on licensing copyright works through licensing schemes are among the Act’s most complicated provisions. Putting in place the machinery for blanket licensing was one of the purposes of the Act. This section deals very briefly with a large and complicated area.

Licensing schemes

The Act regulates licensing schemes. These are arrangements whereby the operator of the scheme grants licences on standard terms11. ‘Licensing bodies’ are organisations which grant licences on behalf of more than one copyright owner. They include organisations such as the Performing Rights Society, Phonographic Performance Ltd, the Mechanical Copyright Protection Society, the Design and Artists Copyright Society, the Copyright Licensing Agency and the Newspaper Licensing Agency.

The existence of a licensing scheme creates a monopoly in the supply of permission to use the material in the repertoire: this must be carefully controlled, and the legislation is concerned to prevent abuses. But the basic principle that you pay a flat rate royalty for permission to use the material is itself potentially unfair. For example, the holder of a licence from the Performing Rights Society must pay royalties at the standard rate, based on its annual expenditure on any performed music, and may not purport to calculate the royalties on the amount of copyright music actually used.

In Performing Rights Society v Boizot12 the defendant’s restaurant, Pizza on the Park, and the Great Northern Hotel in Peterborough provided live musical entertainment: a number of the musical works performed did not require a licence, and the entertainment included a significant proportion of activities that did not involve the use of the PRS repertoire. At first instance, the defendant was ordered to pay £24,600 in royalties calculated on the standard basis: his appeal was dismissed,, the Court of Appeal holding that the licence was unequivocal, and royalties for use of a blanket licence were calculated on expenditure on performers not on the amount of PRS material used. The reasonableness of that was a matter within the exclusive jurisdiction of the Copyright Tribunal.

The Copyright Tribunal is given jurisdiction over disputes arising in the operation of certain licensing schemes. These are:

  • Schemes for licensing the use of literary, dramatic, musical or artistic works or films, which are operated by licensing bodies;

  • Any schemes for licensing copyright in sound recordings, broadcasts, cable programmes and typographical arrangements;

  • Any schemes for licensing the rental or lending of sound recordings, films or computer programs.

Reasonableness of licensing terms

The Tribunal is given jurisdiction to determine whether the terms applied to licences by licensing bodies are reasonable. In Romeike & Curtice Ltd v Newspaper Licensing Agency13 the Copyright Tribunal exercised its powers to control the terms of a collective licence. The applicant, a press cuttings agency, took exception to the terms on which it (and other agencies) were offered licences by the NLA. In particular, it was disturbed by the policing provisions, which required it to help identify customers who were making copies of cuttings without a licence, to press them to take a licence, and to supply a full list of its customers and to cease supplying customers who would not take a licence.

The Copyright Tribunal observed that a person involved in the tortious act of another came under a duty to assist the victim to identify the tortfeasor, even if it was not actually established that this person was a wrongdoer. However, to say that press cuttings agencies were involved in the tortious acts of their customers merely because they knew or suspected that their customers might take copies without permission was artificial.

If there was particular information about a particular infringer, that would be different, and it was reasonable for the applicant to give assistance to the victim because of the difficulty the NLA faced in trying to persuade users to take up its licences. The fact that some of the applicant’s customers were engaged in unlawful copying was also relevant. However, the licence terms went beyond what was reasonable.

The Tribunal held that the licence should include terms requiring:

  • That the cuttings bear a copyright notice:

  • That the applicant draw its customers’ attention to the need for a licence before making copies: and

  • That the applicant remind any customer whom it became aware might be making infringing copies of the need for a licence, and inform the NLA if the customer failed to do so within 28 days.

The Copyright Tribunal has wide discretion to make orders for costs of an application to settle the terms of a licence under the 1988 Act. In AEI Rediffusion Music Ltd v Phonographic Performance Ltd14 the Court of Appeal held that the High Court (Neuberger J) had been correct to allow an appeal against the Tribunal’s decision to award costs on the basis that they should follow the event, failing to distinguish between the contested and non-contested aspects of the case. This amounted to an error of principle that allowed the court to interfere with the order. The case also highlights the fact that Tribunal decisions are often less clear-cut than those of the civil courts, and a ‘costs follow the event’ order is not always appropriate.

1Section 90(2).

2The 1956 Act said ‘acts’; section 36(2).

3Section 90(3). Section 176(1) sets out how the requirement can be met by a body corporate, which must affix its seal.

4Section 90(4).

526 November 1999.

6[1974] (HL).

7[1991] FSR 397.

8I.e., the assignee takes subject to the licence unless he is a bona fide purchaser for value without notice.

9See sections 101 and 102.

10The party joined to the action is not liable for costs unless he or she takes part in the proceedings.

11Section 116(1).

12The Times, 10 February 1999.

13[1999] EMLR 142.

14The Times, 3 March 1999.

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