The High Court (Arnold J) has handed down a judgment with significant implications for the recorded music industry addressing the interrelationship between music publishing agreements governed by English law and so-called “reversionary rights” for authors under s. 203 of the US Copyright Act 1976.
Between 1980 to 1993, the Claimant entered into music publishing and associated agreements with the Defendants, who comprised the current and former members of Duran Duran and their service companies. The agreements granted on a worldwide basis the entire copyrights in Duran Duran compositions for the full term. The agreements were expressly subject to English law and the exclusive jurisdiction of the English Courts.
In 2014, the Defendants served notices pursuant to s. 203 of the US Copyright Act 1976 in respect of 37 compositions provided under the agreements, including many of Duran Duran’s best-known songs. The effect of doing so was that upon the date specified in the notices the grant to the Claimant under the agreements of rights under the US Copyright Act in respect the relevant compositions would terminate and revert to the authors. Pursuant to s. 203(A)(5) of the Act: “Termination of the grant may be effected notwithstanding any agreement to the contrary”.
The Claimant commenced proceedings before the English Court seeking declarations that the Defendants’ conduct in serving the Notices was in anticipatory or actual breach of their contractual obligations under the agreements depending on whether the notices had taken effect or would do so in future. The Claimant accepted that the notices were valid and effective for their purpose as a matter of US law. Its case was that the Defendants had as a matter of English law contractually promised not to bring about such effects, i.e. not to exercise their “reversionary rights” under the US Copyright Act. The Defendants resisted the claim on the grounds that the agreements were not properly to be construed to contain such promises; and even if they were, that it would be contrary to public policy to enforce them.
Arnold J upheld the claim. The judge preferred the Claimant’s case on construction emphasizing the broad terms in which the grant of rights under the agreements had been expressed, the Defendants’ warranties not to grant rights otherwise than to the Claimant, and the doctrine of non-derogation from grant. The judge rejected the Defendants’ reliance on English public policy as (among other things) inconsistent with the well-established principle that the English courts will enforce a contract which is valid and enforceable under English law even if the contract would be unenforceable as contrary to public policy in another country with which the contract has a connection: see In re Missouri Steamship Co (1889) 42 Ch D 321 at 335-337 (Lord Halsbury LC) and Vita Foods Products v Unus Shipping Co Ltd  AC 277 at 296-298 (Lord Wright).
Arnold J’s judgment is likely to have significant implications for the recorded music industry given that the contractual provisions that were in issue are frequently encountered in materially similar terms in other music publishing agreements from the time. The judgment means that authors seeking to exercise their “reversionary rights” under the US Copyright Act must keep in mind the contractual consequences of doing so, at least in a case where the relevant agreement is subject to English law and jurisdiction.
Ian Mill QC and Andrew Scott (instructed by Lee & Thompson) appeared for the Claimant
Michael Bloch QC and Paul Luckhurst (instructed by Russells) appeared for the First to Fourth and Sixth to Eleventh Defendants
The Fifth and Twelfth Defendants did not appear and were not represented, but agreed to be bound by the result