Gloucester Place Music Ltd v Le Bon & Ors  EWHC 3091 (Ch)
The English courts refuse the members of Duran Duran and their service companies the right to terminate the grant of copyright pursuant to section 203 of the US Copyright Act.
In 1980 the five members of Duran Duran entered music publishing agreements with the Claimant. In 1983 the service companies of each member of Duran Duran entered into music publishing agreements with the Claimant. Each member of Duran Duran also entered into an agreement with the Claimant in the form of a letter.
Broadly speaking, these agreements assigned to the Claimant the copyright (including any US copyright) in works created by the members of Duran Duran. During the term of the agreements, the members of Duran Duran (between them) wrote the music and/or lyrics of 37 songs ("the Compositions"), including songs such as “Girls on Film”, “Rio” and “Hungry Like The Wolf”.
In 2014, the Defendants’ representatives served notices specifying effective dates of termination for the purpose of section 203(a)(4) of the United States Copyright Act 1976 (“US Copyright Act”) in respect of the Compositions. The Claimant subsequently sought a declaration that the Defendants had acted in breach of the various agreements by issuing the notices, or would be in breach if the notices were not withdrawn.
The Defendants sought to rely upon US law in relation to agreements governed by English law and where English courts have exclusive jurisdiction. Arnold J. noted the US law aspect but pointed to the fact that Article 7(1) of the Rome Convention, which provides for effect to be given to the mandatory rules of the law of another country with which the situation has a close connection (i.e. such as US copyright in this instance), does not have the force of law in the United Kingdom by virtue of section 2(2) of the Contracts (Applicable Law) Act 1990.
In view of the above, the issues of US law were treated as questions of fact. However, no expert evidence was adduced as to the meaning of the US Copyright Act although the Defendants’ solicitor, Brian Howard (Russells), included a statement on the topic:
"As a consequence of Section 203, a US Court would not allow a claim for damages for breach of a contractual agreement because the statutory termination right supersedes any contractual right. This applies whether that contract was governed under English or US law."
Arnold J was not willing to treat this statement as admissible evidence. Arnold J held that Mr. Howard gave no basis for his statement and does not claim to be an expert on US law. Arnold J was also unwilling to accept the argument that Mr. Howard’s statement ought to stand because it had not been challenged.
As Arnold J was unable to consider the impact of US law, the case was ultimately decided on the basis of contractual interpretation.
The Claimant contended that members of Duran Duran assigned their US copyrights to the Claimant for the full term of those copyrights, and that, in the absence of any express reservation by them of the right of termination under section 203, the exercise of that right was precluded. The Claimant argued that the contractual language would have conveyed to a reasonable person having the relevant background knowledge that the parties' intention was that the "entire copyrights" in the Compositions should vest, and remain vested, in the Claimant for the "full period" of the copyrights. Furthermore, rights of termination under section 203 would derogate from that grant.
The Defendants, on the other hand, argued that the US copyrights assigned were inherently subject to the right of termination, and in the absence of any express prohibition upon the exercise of that right, they were free to terminate their grant pursuant to section 203.
Deciding for the Claimant, Arnold J held that:
“The language of clause 3(a) is wide and general. Particularly when read together with clause 4, I consider that what the language would have conveyed to a reasonable person having the relevant background knowledge was that the parties' intention was that the "entire copyrights" in the Compositions should vest, and remain vested, in the Claimant for the "full term" of the copyrights. That implicitly precludes the Group Members from exercising rights under US law which have the result that the Claimant's ownership of the copyrights is brought to an end prior to their expiry. Moreover, this interpretation is reinforced by clause 6(b), by which the Group Members promised not to transfer any interest in the copyrights to any other person, which I read in context as meaning any person other than the Claimant.”
Arnold J also commented on the impact of the doctrine of non-derogation:
“I do not consider that the doctrine of non-derogation of grant provides the Claimant with an independent route to this conclusion, I do consider that it supports the Claimant's interpretation of the Agreements”
Section 203 of the US Copyright Act precludes parties from contracting out of the right to terminate a grant of copyright (within the parameters of that section). Therefore, on the face of it, Arnold J’s decision to rule in favour of the Claimant in the Duran Duran case is controversial. However, it should be noted that Arnold J held himself unable to consider the impact of US law because the agreements were exclusively governed by English law (so US law could not be applied) and neither party adduced evidence on US law (so the impact of US law could not be considered). It would have been interesting if evidence on US law had been adduced. Potentially, the decision may have then been in favour of the Defendants.
It serves also as a warning that even if the wording of foreign law legislation appears clear (as was the case with the US Copyright Act), if it cannot be applied by the English courts then it would be prudent to consider obtaining expert evidence.
Arnold J’s interpretation of the agreements appears to confirm the Court’s current approach in relation to contractual interpretation, very much following cases such as Arnold v Britton & Ors.
Ultimately, the invocation of rights under section 203 of the US Copyright Act is a highly complex subject matter and expert legal advice should be sought if queries or disputes in relation to this arise.