CSC Media Group Ltd v Video Performance Ltd

An appeal from the Copyright Tribunal lies only on a point of law. The appellate court must respect the Tribunal’s specialist evaluative function and should not substitute its own assessment of fact or degree.

When fixing reasonable licensing terms, the Tribunal must give proper weight to the most relevant comparable licence. It should ordinarily begin with that comparator and adapt it to the circumstances, rather than fix a narrow royalty range by reference to a less relevant comparator and use the best comparator only for fine tuning.

Where the parties agree a term and argue the case on that footing, departure requires valid reasoning. An irrational departure is an error of law. The appropriate remedy is remission for rehearing where the Tribunal’s reasoning may have affected the outcome.

Video Performance Limited appealed from the Copyright Tribunal’s decision of 7 September 2009 on the terms of CSC Media Group Limited’s licence to use VPL’s music-video repertoire.

The Tribunal had fixed a royalty at 12.5 per cent of defined revenue, subject to pro-rating, and had substituted an earlier pro-rating formula for the formula on which the parties had agreed. VPL challenged both the royalty-setting methodology and the alteration of the pro-rating term.

The central issues were whether the Tribunal had properly considered comparable licences under the Copyright Designs and Patents Act 1988, and whether it had rationally departed 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. An appeal under section 152(1) of the Copyright Designs and Patents Act 1988 lies only on a point of law. The appellate court must approach the specialist Tribunal’s factual and evaluative conclusions with caution. It may intervene where the Tribunal asked the wrong question, considered irrelevant matters, failed to consider relevant matters, gave legally faulty or inadequate reasons, or reached a conclusion unsupported by evidence.

3. The Tribunal was required by section 129 to have regard to comparable licences. Its two-stage approach was legally flawed. It fixed a concluded royalty range of 10 to 15 per cent by reference principally to commercial-radio rates, the promotional effect of music videos and market changes. It then treated the materially more relevant BSkyB licence, which provided for a 20 per cent royalty with limited pro-rating, merely as a matter for fine tuning. The correct approach was to start with the most relevant comparator and adapt its terms to the circumstances.

4. The Tribunal was entitled to consider the promotional effect and changing market conditions as factors exerting downward pressure on the royalty. Those factors should, however, have been considered in adjusting an appropriate comparable rate. The Tribunal’s assessment of the product’s value in the entertainment hierarchy was not shown to rest on evidence or adequate reasoning.

5. Although the second ground was not strictly necessary, the Tribunal also erred in replacing the parties’ agreed pro-rating formula. Where parties agree a term and argue the case on that basis, departure is unusual and must be supported by valid reasoning. The Tribunal’s stated reason—that the formula charged for programmes in which VPL owned no copyright—was wrong. The rehearing should proceed on the basis of the agreed formula.

• High Court (Chancery Division): allowed VPL’s appeal from the Copyright Tribunal and remitted the application for rehearing before a differently constituted Tribunal.
• Copyright Tribunal: by decision dated 7 September 2009, fixed a 12.5 per cent royalty and altered the pro-rating formula.