Hoffmann LJ:
The plaintiff ('A.') claims the copyright in certain sound recordings made
by Sam Cooke. The second defendant ('Ch.') is a Danish company which
claims to be entitled to the same copyright. On 26 February 1991 it
granted a licence in writing to the first defendant ('M. C.') to manufacture
and sell copies of the sound recordings in the United Kingdom and Eire. M.
C. subsequently released compact discs of the recordings which purported
to have been made under the licence.
The Copyright, Designs and Patents Act 1988 says:
16-(1) The owner of the copyright in a work has, in accordance with the
following provisions of this Chapter, the exclusive right to do the following
acts in the United Kingdom -
(a) to copy the work (see section 17);
(b) to issue copies of the work to the public (see section 18);
...
and those acts are referred to in this Part as the 'acts restricted by the
copyright'.
(2) Copyright in a work is infringed by a person who without the licence
of the copyright owner does, or authorises another to do, any of the acts
restricted by the copyright.
On 4 November 1991 A. issued a writ indorsed with statement of claim
against M. C. and Ch.. It alleges that M. C. had infringed its copyright by
manufacturing and issuing to the public copies of the sound recordings
and that Ch. had done so by authorising or 'directing counselling or
procuring' the acts of M. C..
M. C. is an English company. After being served with the writ it gave
certain undertakings and the proceedings against it were stayed by
consent pending a determination as between A. and Ch. on the question
of who had title to the copyright.
Ch. is domiciled in Denmark. It carries on no business in the United
Kingdom. A. served it under RSC Ord.11,r.1(2)(a) without leave on the
ground that the English courts had jurisdiction under the Brussels
Convention. The relevant Articles are Article 5(3) ('in matters relating to
tort... the courts for the place where the harmful event occurred') and
Article 6(1) ('where [the defendant] is one of a number of defendants,
the courts for theplace where any one of them is domiciled'). Ch. does
not dispute that A.'s case as pleaded falls within those Articles. But a
defendant domiciled in another Contracting State cannot be impleaded
unless the plaintiff's case satisfies the threshold requirement of disclosing
a serious question to be tried: see Molnlycke AB v Procter & Gamble Ltd
[1992] 1 WLR 1112 and Seaconsar Far East Ltd v Bank Markazi [1994] AC
438. Ch. says that A.'s case fails this test. It therefore issued a summons
under Ord.12,r.8 to set aside service. Mr Colin Rimer QC (sitting as a
deputy High Court judge) dismissed the summons and Ch. appeals.
The judge recorded that the parties had not sought to argue the merits
of their respective claims to title in the copyright. It was accepted that
this dispute could be resolved only by a trial. In this court, Mr Miller for
Ch., asked for leave to amend the notice of appeal by alleging that A.'s
pleadings did not disclose an arguable claim to copyright. Mr Hamer, for
A., objected: he said that he was considering amending the pleadings and
that if he had known there was to be a dispute at this stage over the title,
he might have wished to file further evidence. The application to amend
was made at the last minute and we refused it. It will be open to A., if so
advised, to apply to strike out the statement of claim under Ord.18,r.19
on the ground that it discloses no arguable claim to title.
I come then to authorisation. In CBS Songs Ltd v Amstrad Plc [1988] AC
1013 the House of Lords explained the meaning of 'authorise' in section
1(2) of the Copyright Act 1956 which was in similar terms to section
16(2) of the 1988 Act. Lord Templeman said:
... an authorisation means a grant or purported grant, which may be
express or implied, of the right to do the act complained of.
Mr Miller accepts that if the licence of 26 February had been granted in
the United Kingdom and upon its true construction it had purported to
give M. C. the right to manufacture and sell the records of which
complaint is made, then Ch. would be liable under section 16(2). But he
says, first, that section 16(2) does not apply to a licence granted outside
the United Kingdom and secondly, that the licence did not purport to give
M. C. the right to do what they actually did. I shall take these two points
in turn. First, extra-territoriality.
There is a striking contrast between section 16(1) which limits the acts
restricted by the copyright to acts done in the United Kingdom, and
section 16(2) which contains no territorial limit on where the doing of
those acts
may be authorised. Mr Miller however relied upon the general principle
that, in the absence of express words or plain implication, United
Kingdom statutes do not apply to the acts of foreigners outside the United
Kingdom: see Clark v Oceanic Contractors Inc [1983] 2 AC 130, especially
per Lord Scarman at pages
144 to 145. Mr Miller says that there are other infringement sections
in the Act, such as section 23, which also contain no express territorial
implication, but which are very unlikely to have been intended to have
an extra-territorial application. Therefore, he says that no inference can
be drawn from the express limitation of section 16(1) to acts done in the
United Kingdom and the absence of such a limitation in section 16(2). The
presumption against extra-territoriality should govern the latter
subsection also. In principle the law of copyright is strictly territorial in its
application: see Deff Lepp Music v Stuart-Brown [1986] RPC 273.
In my view, the reason why section 16(2) places no limit upon the place
of authorisation is that the requirements of territoriality are satisfied
by the need for the act authorised to have been done within the United
Kingdom. It is true, as Mr Miller emphasised, that the doing of an act
restricted by the copyright and its authorisation are separate torts: see
Ash v Hutchinson and Co. (Publishers) Ltd [1936] Ch 489. But there
is an overlap in the ingredients of the two torts in that 'authorising' is
a tort only if the act authorised is an act restricted by the copyright.
It is well-established that in the case of torts or crimes which include
in their definition a described consequence, the English Courts can
assert jurisdiction on the grounds that consequence took place, or was
intended to take place, in England: see DPP v Stonehouse [1978] AC
55, Ord.11,r.1(1)(f) and Article 5(3) of the Brussels Convention. It does
not matter that the acts which preceded that consequence all took place
abroad. Mr Miller distinguishes these cases by saying that in all the
authorities the consequence was intended by the defendant. In the case
of authorisation, on the other hand, the licensee may be free to choose
whether or not to do the act. The authorisation does not cause him to do
so. I do not think it is necessary for the purposes of jurisdiction that the
link between the preliminary act and the consequence should have to be a
causal one. It is I think sufficient that the definition of the tort requires an
act and that that act is performed within the United Kingdom, however it
may be linked to the preliminary act performed abroad.
As those are the rules of jurisdiction, I can see no reason why, on grounds
of international comity or the principle of territoriality, it is necessary
to construe the substantive provision creating such a tort so as to
require the preliminary act to have taken place in the United Kingdom.
I think that a territorial limitation on the act of authorising would lead
to anomalies. Anyone contemplating the grant of a licence to do an act
restricted by copyright would be able to avoid liability simply by having
the document executed abroad. Mr Miller says that there are other
anomalies created by the principle of territoriality in copyright and even
more used to exist by virtue of the old requirement that a work had to be
first published or performed in the United Kingdom. But these were the
results of the express terms of the legislation. There seems to me no need
to introduce anomalies by implication when this is not required by express
language or general principles of international law. For those reasons, I
would reject Mr Miller's point on extra-territoriality.
I come then to construction. Mr Miller says that upon the true
construction of the licence and in the light of the evidence, M. C. was not
authorised to do the infringing acts which they are alleged to have done.
These are the relevant clauses of the licence:
1. DEFINITIONS
'Record' shall mean a magnetic tape record and/or a compact disc
reproducing the Recordings in sound only
'Compilations' shall mean those compilation Records specified in Schedule
Clause 1
'Master' shall mean a tape recording... or a compact disc suitable for use
in the manufacture of Records reproducing the Recordings
'Recordings' shall mean those recordings specified in Schedule Clause 1
'Term' shall mean [1 April 1991 to 31 March 1994]
'Territory' shall mean the United Kingdom and the Republic of Eire only
2. MANUFACTURING AND SELLING RIGHTS
(A) Ch. grants by way of licence to the Licencee the non-exclusive right
to manufacture and to have manufactured and to sell only in the territory
during the term Records of the Compilations reproducing the
Recordings.
6. LICENSEE's OBLIGATIONS
(A) The Licensee shall not:
(i) Release the recordings other than as part of the Compilations as
specified in Schedule Clause 1.
...
(iv) Manufacture Records from any source other than the materials
delivered by Ch. hereunder
10. RIGHT OF TERMINATION
... either party shall have the right to terminate this Agreement on 30
days written notice in the event of -
...
(c) A breach by the other party of any of the conditions of this Agreement
which breach shall not have been remedied within 30 days of written
notice being given by the complaining party to the other party to remedy
such breach
SCHEDULE
1. The Recordings
...
TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT
DISPLAYABLE
Mr Jan Ranners, a director of Ch., has sworn an affidavit alleging that M.
C. is in breach of various of its obligations under clause 6. It seems that,
despite receiving an advance of £27,000 against royalties, Ch. did not
deliver a Master in accordance with its obligations under clause 3(i) or
provide M. C. with any material from which actually to make the records.
M. C. appears to have made them from another copy. It is therefore
alleged to be in breach of its obligation under clause 6(A)(iv) to use only
the material supplied by Ch.. M. C. is also said to be in breach of clause
6(A)(i) by releasing two discs containing one track each from the Sam
Cooke compilation and by reason of the fact that the compilation record
itself has the tracks in a different order.
There is also the question of whether M. C. was entitled to release
any of the recordings in the form of vinyl records. 'Record' is defined
as a magnetic tape record and/or a compact disc. Ch. says that the
word’record' there does not have an independent meaning, but is part of
the phrase’magnetic tape record'.
It seems to me that the evidence from Ch. on these breaches gives rise
to serious questions both about their materiality and whether Ch. can be
said to have waived compliance. Those are questions which, in my view,
can only be satisfactorily investigated at a trial. I do not think, however,
it matters because Mr Miller accepts that, if the grant in clause 2 stood
alone, it would constitute an authorisation to M. C. to release the records,
which it did. He says that the clauses of clause 6 which I have read, cut
down the extent of that grant and resulted in M. C. being authorised only
so far as they are in compliance with those provisions. This is a matter of
construction on which it is possible that evidence at the trial may throw
more light, but in my view there is no part of clause 6 which operates
as a restriction on the scope of the grant. The structure of the licence
agreement was such that, in my view, the covenants in clause 6 are
obligations on the part of M. C. for breach of which Ch. would be entitled
to terminate the licence under clause 10, either after a 30 day notice to
remedy, or possibly summarily in the case of an irremedial breach. Until
termination, however, it seems to me that the licence remains on foot
and that licence is in the terms of clause 2(A). M. C. therefore remains
able to do anything within the scope of that grant. There is no suggestion
that Ch. has relied upon the alleged breaches to terminate the licence and
accordingly in my judgment it has authorised the acts of M. C..
As an alternative to authorisation, A. alleged that Ch. made itself party
to M. C.'s infringements of copyright by acting in concert to effect those
breaches pursuant to a common design. We heard argument on that
question, but since we have found that service was effective because
there is a serious issue to be tried on the question of authorisation, we
need express no view on the alternative claim. It can, if necessary, be
investigated at the trial.
In conclusion, therefore, I think that the judge was right and I would
dismiss the appeal.
Neill LJ:
I agree. I propose, however, to add a few words of my own on the
question of the proper construction of section 16(2) of the Copyright,
Designs and Patents Act 1988 ('the 1988 Act').
Chapter II of the 1988 Act is concerned with the rights of a copyright
owner. Section 16(1) confers on the owner of the copyright in a work the
exclusive right to do certain acts in relation to that work in the United
Kingdom. These acts, which are set out in paragraphs (a) to (e) in section
16(1) and are more particularly described in sections 17 to 21, are
referred to in Part I of the 1988 Act as 'acts restricted by the copyright'.
Sections 22 to 26 of the 1988 Act contain provisions relating to secondary
infringements of the copyright in a work.
It is clear that the rights conferred by section 16 (1) are rights which
protect the copyright only insofar as they are exercised in the United
Kingdom. 'Acts restricted by the copyright', if done without the licence of
the owner of the copyright, constitute infringements. These infringements
are confined within the same geographical limits as the owner's exclusive
rights.
I turn therefore to section 16(2) which is in these terms:
The copyright in a work is infringed by a person who without the licence
of the copyright owner does, or authorises another to do, any of the acts
restricted by the copyright.
It is plain that the 'doer' of a restricted act will infringe the copyright
if, but only if, he does that act within the United Kingdom. The act, if
committed outside the United Kingdom, would not be a restricted act.
I can, however, see no satisfactory basis for placing a similar territorial
limitation on the liability of a person who 'authorises another to do' a
restricted act. It is to be noted that authorising another to do a restricted
act is not itself a restricted act.
Furthermore, this construction seems to me to accord with the way in
which at the present day English courts approach both crimes and torts
which in this Court have been described as having 'a double locality',
that is, where the effect of an act abroad takes place in this country.
The phrase 'double locality' was used by the Court of Appeal in Metall &
Rohstoff v. Donaldson Inc. [1990] 1 QB 391.
In the course of the argument we were referred to the decision of the
House of Lords in DPP v. Stonehouse [1978] AC 55. In that case, in
relation to the criminal offence of attempting to obtain property by
deception, Lord Diplock said at page 67G:
... the acts of the accused in Florida caused something to happen in
England which was an inevitable and intended consequence of those acts.
Furthermore, in considering this case I have also had the benefit of
reading the judgment of the Privy Council in Liangsiriprasert v United
States [1991] 1 AC 225, a case on appeal from the court in Hong Kong.
We were also referred in relation to the tort of deceit to Diamond v the
Bank of London and Montreal Ltd [1979] QB 333. This case, and other
similar cases, were considered in detail by the Court of Appeal in Metall &
Rohstoff, a case to which I have already referred. At page 449, in relation
to the tort of inducing breach of contract, the Court said:
If the acts of inducement alleged are viewed in isolation, the torts alleged
here in our judgment, would be properly regarded as, in substance,
torts committed in New York.... But if, as we have concluded, the
question is where as a matter of substance the torts were committed, the
matter must be looked at more broadly, taking account of the breaches
(particularly the effective breaches induced and the resulting damage).
On this approach we conclude that as a matter of substance the torts
were committed in London.
In the light of this general approach of the courts to crimes and torts
which have a double locality, I have no doubt that, on its proper
construction, an authorisation given outside the United Kingdom to
another to do a restricted act in the United Kingdom is an authorisation
to which section 16(2) extends. The scope of the tort has a sufficient
territorial limitation because the restricted act which is authorised has to
be done within the United Kingdom.
Some further support for this approach is to be found in Article 5 of the
Brussels Convention itself, which provides:
A person domiciled in a Contracting State may, in another Contracting
State be sued:
...
(3) In matters relating to tort, delict or quasi-delict, in the courts of the
place where the harmful event occurred;...
See also RSC Ord.11,r.1(1)(f).
On the other matters referred to by Hoffmann LJ in his judgment, I agree
with him and have nothing to add. I would therefore dismiss the appeal.
Appeal dismissed with costs.