Crosstown Music Co 1 LLC v Rive Droite Music Ltd  EWCA Civ 1222
In November 2010 the Court of Appeal (Mummery LJ, Morgan J and Sir Paul Kennedy) dismissed an appeal against a High Court ruling allowing the Believe songwriters 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 (CDPA). 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 upon both categories of copyright.
Songwriters Mark Taylor and Paul Barry, who were the creative minds behind the likes of 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 writers could serve a ‘cure’ notice requesting the breach be remedied within a certain time period, and if not remedied the copyright would automatically revert back to the writers. Rive Droite subsequently assigned the copyrights on to Crosstown.
In 2007 the writers 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 them would result in the automatic reversion of copyright back to the writers.
Crosstown subsequently issued proceedings against Rive Droite, claiming ownership of the copyrights and an order requiring Rive Droite to account fully to the writers. Shortly afterwards Rive Droite entered into administration, so Crosstown instead sought declarations from the writers that copyright had not legally reverted to them under the contract.
First Instance Decision
Mr Justice Mann accepted the writers’ arguments that under the clear express terms of the contract and the wide wording of section 90(2) CDPA the automatic reversion of copyright applied. Consequently, the copyright in the songs had automatically reverted back to the songwriters upon the expiry of the notices.
- An assignment of copyright should be for a fixed, certain period to fall within section 90(2) of the CDPA, and accordingly a reversion of copyright cannot be contingent on an uncertain future event.
- The English court does not have jurisdiction to determine foreign copyrights, as per Lucasfilm Ltd v Ainsworth  EWCA Civ 1328.
- The writers had abandoned their rights to a reverter by way of a waiver of their rights.
The Court of Appeal agreed with Mann J that neither clause 18 nor the wording of section 90 CDPA contained anything which limited an owner from making a partial assignment of copyright for a period that is not fixed, nor do they expressly prohibit an automatic reversion at a future unknown date. In Mummery LJ’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’” (paragraph 29).
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 CDPA.
The agreements contained exclusive English choice of law and jurisdiction clauses, and the court agreed with Mann J that these contractual provisions gave the court sufficient jurisdiction to rule upon 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 as between the parties and their successors in title. It distinguished Lucasfilm as being concerned with the justiciability of the infringement of foreign copyright in England.
Election and waiver
Crosstown firstly submitted that the writers were required to elect whether there was a reversion of copyright, as is the case in repudiatory breaches of contract. Secondly, they had waived their right to election by not sending the cure notices within a reasonable time and thirdly, the way the writers behaved after service of the notices was such that the copyright continued to be owned by Crosstown. The writers had encouraged the exploitation of songs by Crosstown, and continued to collect the royalties.
Mummery LJ found that there were no implied terms requiring service of a notice within a reasonable time, and there was no requirement for an election of reversion of rights. He stated that “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” (paragraph 64). Therefore, the writers’ subsequent behaviour was not effective to transfer back to Crosstown the reverted copyright, 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 and, in Mummery J’s view, misconceived legal arguments. It seems that Crosstown acquired the rights from Rive Droite without making appropriate enquiries of the writers and the sums due to them under previous agreements. This case is a salutary warning to publishers to undertake thorough due diligence when looking to acquire back catalogues.