Phonographic Performance Ltd v British Hospitality Association & Ors

An appeal from the Copyright Tribunal lies only on a point of law. The appellate court must not substitute its own assessment of facts or matters of fact and degree. A specialist tribunal’s decision should be respected unless it misdirected itself in law, failed to consider relevant matters, considered irrelevant matters, or gave legally inadequate reasons.

When comparable copyright licences are relevant, the tribunal should begin with the most appropriate comparator and adapt it to the circumstances. It should not first fix a royalty range by reference to a less relevant comparison and then use the strongest comparator merely for fine tuning. Where the parties agree a licensing term and argue the case on that basis, departure from it requires valid reasoning.

The supplied judgment concerns an appeal by Video Performance Limited from a decision of the Copyright Tribunal fixing the terms on which CSC Media Group Limited could use VPL’s music-video repertoire. The Tribunal set a royalty rate of 12.5 per cent, applied a pro-rating formula, and backdated the licence.

VPL challenged the royalty rate and the substitution of an earlier pro-rating formula for the formula on which the parties had agreed. The central issues were the proper appellate approach to a specialist tribunal, the use of comparable licences under sections 126 and 129 of the Copyright, Designs and Patents Act 1988, and whether the Tribunal had rational grounds for departing from an agreed term.

1. Appeal allowed and matter remitted. The application was remitted to the Copyright Tribunal for rehearing before a differently constituted tribunal.
2. Under section 152(1) of the Copyright, Designs and Patents Act 1988, an appeal lies only on a point of law. The court must not re-try the evidence or substitute its own judgment on matters of fact and degree. However, an error of law may arise where the tribunal misinterprets the statute, asks the wrong question, ignores relevant considerations, takes irrelevant considerations into account, gives legally faulty or inadequate reasons, or reaches a finding unsupported by evidence.
3. The Tribunal had adopted an erroneous two-stage approach to the royalty rate. It first fixed a concluded range of 10 to 15 per cent by reference principally to commercial radio, the promotional effect of music videos and market changes. It then treated comparable music-video licences and available profits as matters relevant only to fine tuning. The most significant comparator, the BSkyB licence at 20 per cent with limited pro-rating, should instead have been the starting point and adapted to the circumstances. The Tribunal’s approach gave insufficient weight to the strongest comparator and failed to comply properly with section 129.
4. The Tribunal was entitled to consider the promotional effect and changing market conditions as factors exerting downward pressure on the royalty. Its assessment of the product’s value in the hierarchy of entertainment was not supported by adequate evidence or reasoning.
5. The Tribunal also erred in replacing the parties’ agreed pro-rating formula. Where parties have agreed a term and argued the case on that footing, departure is unusual and requires valid reasoning. The Tribunal’s conclusion that the formula charged royalties on material outside VPL’s copyright was wrong. The rehearing was therefore to proceed on the basis of the agreed formula.

• High Court (Chancery Division): Appeal from the Copyright Tribunal allowed and the application remitted for rehearing.