Confetti Records (a firm) & Ors v Warner Music UK Ltd (t/a East West Records)

A communication marked subject to contract ordinarily prevents a binding contract from arising, including in music licensing for compilation albums. The phrase may be displaced only by strong and exceptional circumstances, or by clear wording and context showing an immediate bargain. Industry practice cannot alter that objective construction without a sufficiently certain and notorious trade usage.

A cleared recording sent with an invoice may nevertheless amount to an offer capable of acceptance by conduct, or to a present bare licence. Reliance on the recording and invoice may also create an estoppel. Under section 80 of the Copyright Designs and Patents Act 1988, distortion or mutilation is actionable only where it prejudices the author’s honour or reputation.

Confetti Records and associated claimants alleged that Warner Music UK Ltd infringed copyright in the track Burnin by incorporating it into a compilation album. Warner relied on signed deal terms headed subject to contract, and alternatively on the delivery of a cleared recording with an invoice, a licence, and estoppel. A separate claim alleged derogatory treatment because a rap was superimposed on the track.

The court determined whether a binding licence or enforceable contractual rights arose, whether any licence had been revoked, whether the alleged agreement was sufficiently certain, and whether the treatment was derogatory within section 80 of the Copyright Designs and Patents Act 1988.

1. The claim was dismissed. No contract arose from the signed deal memo because it was expressly headed subject to contract. That expression has a settled meaning in general commerce and was not shown to have a different meaning in music licensing or compilation-album practice.
2. The surrounding circumstances were not strong and exceptional enough to displace the ordinary meaning. The variety of deal memos and the evidence of industry practice did not establish a sufficiently certain and notorious trade usage. Objective construction, rather than subjective intention, governed.
3. The sending of the cleared recording with the invoice amounted to an offer to contract on the deal-memo terms, capable of acceptance by conduct. Warner accepted by using the track before any effective revocation. In any event, delivery of the cleared track and invoice constituted a bare licence to reproduce it.
4. The claimants were estopped from denying that a licence had been granted. The signed memo alone could not create an estoppel as to a binding contract, but the memo, cleared recording and invoice represented that the recording was licensed for the time being. Warner relied on those representations in producing the album.
5. The agreement was not void for uncertainty. The royalty division, timing of the advance, approximate number of tracks, release date and use of a mix were sufficiently ascertainable or non-essential.
6. The derogatory-treatment claim failed. Section 80(2)(b), read consistently with article 6 bis of the Berne Convention, required distortion, mutilation or other treatment to prejudice the author’s honour or reputation. The evidence did not establish such prejudice. The claim for additional damages under section 97(2) did not arise and, alternatively, any infringement would not have been flagrant.

First-instance decision. The judgment records that an earlier interlocutory injunction had been granted by Nelson J and discharged by Leveson J. This judgment differed from the view expressed by Leveson J on the interlocutory application.