Reformation Publishing Co Ltd v Cruiseco Ltd (Spandau Ballet)
How does the court calculate a reasonable licence fee, and what conduct is sufficient for the court to award additional damages under Section 97(2) of the Copyright, Designs and Patents Act 1998?
Reformation owns the copyright in two well-known Spandau Ballet songs, “Gold” and “True” (the Songs). Cruiseco Discovery Travel, are part of the same group of companies and operate cruise holidays.
In June 2017, Cruiseco posted on their websites and a file sharing platform (a link to which was shared with 257 travel agents) a short publicity clip to promote their “Back to the 80’s” themed cruise which featured extracts of the Songs without a licence from Reformation (the Publicity Clip).
Cruiseco accepted that their Publicity Clip infringed Reformation’s copyright in the Songs and, as such, they promptly removed it from their websites and told the travel agents not to use it. However, they failed to remove the Publicity Clip from the file sharing platform.
The question was what damages should be paid for Cruiseco’s infringement, to be assessed on the basis of a “reasonable licence fee”. Reformation also sought additional damages under Section 97(2) of the Copyright, Designs and Patents Act 1998 owing to the “flagrancy” of Cruiseco’s infringement.
Duration of copyright infringement
Cruiseco’s infringement was assumed to be over a period of five days in June 2017, ie from when the Publicity Clip was posted on Cruiseco’s websites and the file sharing platform link sent to the travel agents, to when instructions were given by Cruiseco to take it down once they were aware of their infringement. However, Reformation discovered that the Publicity Clip was still available via the file sharing platform, which remained live until two days before trial.
The court found that (i) the travel agents were not an indeterminate number of potential recipients and this was not sufficient enough to constitute the public, and (ii) it was only speculative that the Publicity Clip would be send on to members of the public by the travel agents and this was not strong enough evidence.
The court therefore held that Cruiseco had not continued to make the Publicity Clip available to the public and, as such, the infringement lasted for five days only.
Damages for copyright infringement on the basis of a “reasonable licence fee”
The court took the view that a reasonable licence fee should be calculated by reference to the period of copyright infringement rather than the duration of a licence that would have been negotiated should Cruiseco have sought a licence from Reformation for the Songs.
As for the terms of a hypothetical licence under which a reasonable fee would be charged, it was decided that it would have been for both Songs, it would have covered internet usage, it would have covered point of use sale, and it would not have extended to television usage.
The court lacked comparator licences as evidence, but established that there was substantial value in the Songs even for a short five day period owing to their iconic status. It therefore awarded Reformation £38,750 in ordinary damages.
Additional damages under Section 97(2) of the Copyright, Designs and Patents Act 1998
By Section 97(2) of the Copyright, Designs and Patents Act 1998, the court had the ability to award Reformation additional damages owing to the apparent “flagrancy” of Cruiseco’s conduct, being its careless, recklessness and/or deliberate actions leading to infringement.
The Publicity Clip was produced for Cruiseco by Artists Network Australia (ANA). Given ANA’s experience in the music industry the court found that it should likely have known of the consequences of using the Songs without licence and had “decided to chance it”, amounting to (at the least) a reckless attitude. This reckless attitude was assigned to Cruiseco as principal and therefore an award of £25,000 in additional damages was given to Reformation.
Why is this important?
This decision is a useful guide of how copyright damages will be assessed and of the principles that will be applied to a reasonable licence fee and the hypothetical licence. It also provides guidance on the “flagrant” behaviors, and the identities and relative characteristics of the parties, which the court will consider when looking to award additional damages.
Always go through paper clearance procedures (copyright, trade marks, etc) before releasing content or advertising/marketing campaigns. If using third party agencies, ensure they have proper procedures in place and that you have proper recourse against them under your agreement. Act quickly and look to resolve issues (including withdrawing content) if third party rights have been used without permission.