In the case of BSI Enterprises Limited v Blue Mountain Music Limited [2015] EWCA Civ 1151, a music publisher was unable to overturn a 2014 High Court decision regarding the copyright ownership of some Bob Marley songs, including “No Woman No Cry”. It was held by the Court of Appeal that wording used in a definition cannot be altered or interpreted differently by language subsequently used in a contract which is not intended to alter that definition. Although fact-specific, the decision illustrates the application of the basic principles of contractual interpretation.

What?

The case relates to the interpretation of wording used in a 1992 agreement between Island Logic Limited (“Island”) and Cayman Music Inc. (“Cayman”) that implied an assignment of copyright ownership from Cayman to Island in relation to songs written by Bob Marley.

As a means of preventing the copyright and royalties going to his record company, the authorship of 13 songs (“the Songs”) was misattributed by Marley to other artists (“the Misattribution Ploy”). Marley died intestate in 1981. The Misattribution Ploy was addressed in court proceedings in 1984 in New York between Cayman and Marley's estate (“the Estate”) but due to limitation grounds the claim was dismissed. The Estate did not pursue a counterclaim.

To protect Marley’s legacy after his death, and in conjunction with the Estate, Island pursued the acquisition of the rights in Marley’s works. This resulted in a 1988 agreement with the Estate and the 1992 agreement with Cayman.

In 2008, BSI Enterprises Limited (“BSI”) and Cayman entered into an agreement by which BSI supposedly acquired the rights in the Songs. The acquisition was built on the assumption that the Songs were not included in the 1992 agreement between Cayman and Island.

The Court of Appeal held that, in accordance with the principles of contractual interpretation, the Songs were included in the 1992 agreement and BSI’s claims that they were not included were unworkable.

Court of first instance

In 2014, a declaration was sought by BSI that, under the 2008 agreement with Cayman, it was the owner of the copyright in the Songs and Cayman was an exclusive licensee. The appellants claimed that the Songs were not included in the 1992 agreement and the court was invited to decide that this had been the agreement of the parties. In support of their argument they drew attention to the fact that the Songs were not expressly mentioned in the 1992 agreement.

Blue Mountain Music Limited (“Blue Mountain”) was a member of the Island group and, as the respondent in the action, maintained that the copyrights in the Songs passed to Island under the 1992 agreement and that it was therefore authorised to exploit those rights.

The declaration sought by BSI and Cayman was refused by the High Court and it was held that the rights in the Songs transferred to Island under the 1992 agreement. The reasoning behind this ruling was that "Compositions" and "Catalogue" as defined in the agreement included the Songs:

  • The definitions referred to “all presently-existing musical compositions” written by Marley;
  • To achieve their objective of preserving Marley’s legacy, Island’s intention would have been to acquire the rights in everything to build up a complete catalogue and, given the ownership issue surrounding the Misattribution Ploy, it would make commercial sense that Cayman would have wanted to sell them;
  • The Court held it was “little short of ridiculous” for the parties to agree to omit the misattributed songs without expressly saying so and to prolong the ownership issue.

Court of Appeal

On appeal, the appellants put forward the new arguments that, firstly, on its proper interpretation, the 1992 agreement did not oblige Cayman to transfer to Island any rights it owned in the Songs; and secondly, the deputy judge had mistakenly directed himself that the language of the agreement had to meet Island’s objective of acquiring as many rights as possible in Marley’s works, and that he should have ascertained the scope of the agreement and the intentions of the parties from the language of the agreement, not the surrounding circumstances.

The Court of Appeal rejected this approach. Instead, it confirmed that the correct approach to contractual interpretation is to determine what the parties meant by the language used in a contract by considering how a reasonable person would understand the meaning of the language and what it is trying to convey, having all the background knowledge that would reasonably have been available to the parties in the situation in which they were in at the time of the contract, referred to as the “factual matrix”. This background knowledge would not include any previous negotiations between the parties or any subjective intentions; it is an objective test. Please see the box below for a summary of the factual matrix which the court considered in this case.

Based on their contractual interpretation, the appellants argued that “Compositions” was not defined in the Definitions section but in other parts of the Agreement. However, Kitchen LJ rejected this approach, as follows:

  • Preliminary Statement – here reference was made to the use of the word “certain” in the context that Cayman wished to sell “certain” publishing interests. It was argued that this should be interpreted as meaning only some of the publishing interests were to be transferred, not all. But it was held that the appellants tried to give far too much significance to the word "certain".
  • Warranties – it was argued that a warranty which provided that a schedule to the Agreement (Schedule 2) contained a “complete and accurate list of all of the Compositions” meant that only the compositions in this Schedule were subject to transfer. But this argument was found to be “unsustainable”; the warranties were not intended to act as definitions and therefore could not be relied upon as such.
  • Schedules – the definition of “Compositions” referred to Schedule 2, which included a list of the Compositions, but the wording was broad in scope in that it provided a non-exhaustive list of the Compositions.

Accordingly, the decision of the High Court, that the Songs fell within the scope of the definition of “Compositions", was upheld by the Court of Appeal. Therefore, the rights in the Songs, despite not being expressly referred to, were transferred to Island under the 1992 agreement.

So What?

This is a reminder that, when drafting agreements, definitions play a key role and should be considered properly and carefully drafted. While the copyright assignment and the background facts of this case are fairly complex, the crux of the case is a simple application of the well-established principles of contractual interpretation. It illustrates the application of common sense together with a consideration of the commercial purpose of the agreement, in the context of the words used in the agreement. The attempts by the claimant to construe an alternative interpretation of the wording was described by the court as “imaginative” but the decision of the court shows that inventive methods of interpretation are not appropriate. The complexity of an agreement need not complicate the method of interpreting its terms.

The Factual matrix considered by the Court

  • Marley entered into a publishing agreement with Johnny Nash Music Ltd in 1968.
  • Marley entered into a publishing agreement with Cayman in 1973.
  • The misattribution of the 13 songs by Marley and the subsequent court proceedings in New York.
  • The possibility that the Misattribution Ploy would be raised again in future proceedings because it had not been dismissed on the merits. This left some uncertainty regarding the ownership of these songs.
  • There were likely to be works created by Marley during the 1973 agreement which had not been identified.
  • Island was working to acquire the Estate’s interest in Marley’s works. This was being done through the 1988 Agreement, which remained under challenge.
  • The general terms of the 1988 Agreement.
  • Island wanted to obtain as many as possible of the rights in Marley’s work.
  • The misattributed songs were registered at the US Copyright Office as written by the misattributed authors, and Island had been paying royalties accordingly.