First instance decision
In November 2010 the Court of Appeal dismissed an appeal against a High Court ruling allowing the writers of the song "Believe" automatic reversion of their copyright following a material breach of contract by their publishers. The court held that an automatic reversion clause for a future unknown date was an enforceable partial assignment under Section 90(2) of the Copyright Designs and Patents Act 1988. The court also ruled that although the contract covered UK and foreign copyrights, the exclusive English choice of law and jurisdiction clauses contained in the agreements meant that the court had the appropriate jurisdiction to decide on both categories of copyright.
Songwriters Mark Taylor and Paul Barry, who were the creative minds behind artists including Cher and Lionel Ritchie, signed exclusive agreements with music publisher Rive Droite, assigning both their UK and foreign copyrights in return for payment of advance royalties. Clause 18 of the agreements stated that in the event of a material breach by Rive Droite, the songwriters could serve a 'cure' notice to request that the breach be remedied within a certain period; if the breach was not remedied, the copyright would automatically revert back to the songwriters. Rive Droite subsequently assigned the copyrights to Crosstown.
In 2007 the songwriters served cure notices on Crosstown in relation to ongoing disputes with Rive Droite concerning late accounting and miscalculation of royalty payments, in particular for Cher's song "Believe". They requested that Crosstown make reasonable efforts to remedy the breaches within 45 days, and clearly stated that failure to remedy the breaches would result in the automatic reversion of copyright to the songwriters.
Crosstown subsequently issued proceedings against Rive Droite, claiming ownership of the copyrights and an order requiring Rive Droite to account fully to the songwriters. Shortly afterwards Rive Droite entered into administration, so Crosstown instead sought declarations from the songwriters that copyright had not legally reverted to them under the contract.
The first instance judge accepted the songwriters' arguments that under the clear express terms of the contract and the wide wording of Section 90(2), the automatic reversion of copyright applied. Consequently, the copyright in the songs had automatically reverted to the songwriters on the expiry of the notices.
Crosstown appealed, raising three main points:
- An assignment of copyright should be for a fixed, certain period to fall within Section 90(2) of the act; accordingly, a reversion of copyright cannot be contingent on an uncertain future event;
- The English court does not have jurisdiction to determine foreign copyrights;(1) and
- The songwriters had abandoned their rights to a reverter by way of a waiver of their rights.
The Court of Appeal agreed with the first instance judge that neither Clause 18 nor the wording of Section 90 contain anything to limit an owner from making a partial assignment of copyright for an unfixed period; nor do they expressly prohibit an automatic reversion at a future unknown date. In Lord Justice Mummery's view, the clause was clear in its terms, being "couched in the language of automatic vesting rather than of a future covenant to re-assign".(2) He rejected as irrelevant Crosstown's submission that copyright should be interpreted against Section 136 of the Law of Property Act 1925, which requires an absolute assignment of the whole of a legal interest to be effective to pass title at law. This was because copyright law is wholly contained in the Copyright Designs and Patents Act.
The agreements contained exclusive English choice of law and jurisdiction clauses. The court agreed with the view at first instance that these contractual provisions gave the court sufficient jurisdiction to rule on the case before it. With regard to Lucasfilm, the court held that nothing in that judgment diminished the force of the contractual provisions in the present case, which were binding on the parties and their successors in title. It distinguished Lucasfilm as being concerned with whether infringement of foreign copyright is justiciable in England (for further details please see "Star Wars: the Court of Appeal strikes back").
Election and waiver
Crosstown submitted that:
- the songwriters were required to elect whether there was a reversion of copyright, as is the case in repudiatory breaches of contract;
- the songwriters had waived their right to election by not sending the cure notices within a reasonable time; and
- the songwriters' behaviour after service of the notices was such that the copyright continued to be owned by Crosstown - they had encouraged Crosstown's exploitation of the songs and had continued to collect the royalties.
It was found that there were no implied terms requiring service of a notice within a reasonable time and no requirement for an election of reversion of rights, as "although the copyright is re-vested in the writers automatically, that shift in the title to the property rights does not instantly and automatically terminate all the contractual obligations".(3) Therefore, the songwriters' subsequent behaviour was not effective to transfer the reverted copyright back to Crosstown, and the obligations to pay royalties continued despite the reversion of copyright.
The Court of Appeal regarded the matter as a relatively straightforward contractual case. Crosstown managed to create convoluted legal arguments. It appears that Crosstown acquired the rights from Rive Droite without making appropriate enquiries with the songwriters about the sums due to them under previous agreements. This case is a warning to publishers to undertake thorough due diligence when looking to acquire back catalogues.
For further information on this topic please contact Clive Thorne or Rebecca Williams at Reynolds Porter Chamberlain LLP by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email ([email protected] or [email protected]).
(1) See Lucasfilm Ltd v Ainsworth  EWCA Civ 1328.