CSC Media Group Ltd v Video Performance Ltd

On an appeal on a point of law from a specialist copyright tribunal, the court asks whether the tribunal was legally entitled to reach its conclusion, rather than whether it would have reached the same result. Respect is due to the tribunal’s factual and evaluative judgments.

Under the Copyright, Designs and Patents Act 1988, the tribunal must determine reasonable licence terms, have regard to comparable licences and schemes, and consider all relevant matters. The Act does not prescribe a particular analytical sequence. A tribunal may adjust a comparator for market changes, promotional benefit and other evidence, and may use a less direct comparator for limited broad-brush assistance.

CSC, a broadcaster of music television channels, appealed from Floyd J’s order dated 30 September 2010. The judge had set aside the Copyright Tribunal’s determination that the royalty payable to Video Performance Ltd for use of its music-video repertoire should be 12.5% of CSC’s gross revenue, subject to pro-rating, and had remitted the royalty issue to a differently constituted tribunal.

The Tribunal had acted on CSC’s application under section 126 of the Copyright, Designs and Patents Act 1988. CSC challenged the judge’s decision concerning the royalty rate but not the need to correct the pro-rating formula. The central issue was whether the Tribunal’s treatment of comparators, including the BSkyB licence, and its methodology disclosed an error of law.

Appeal allowed. Lord Justice Etherton gave the judgment, with which Lord Justice Wilson and Lord Justice Longmore agreed.

1. On an appeal under section 152(1) of the Copyright, Designs and Patents Act 1988, the issue is whether the specialist Tribunal was entitled in law to reach its conclusions. The appellate court must respect its expertise and factual evaluation. It must not substitute its own view merely because it would have reached a different conclusion. Intervention requires an error of law, irrationality, or reasoning which no properly directed tribunal could have adopted. The approach in [2009] EWHC 209(Ch), [2007] UKHL 49, [2009] EWCA Civ 407 and the other authorities cited was applied.
2. There was no basis for treating the Tribunal’s judgment as having ignored the BSkyB licence. Read as a whole, its findings showed that the licence had been considered, but its value had been reduced by market changes, declining advertising revenue and the continuing promotional effect of music videos. The Tribunal could therefore use it at the fine-tuning stage.
3. Sections 126(4), 129 and 135 required reasonable terms, proper regard to comparable licences and schemes, and consideration of all relevant matters. They did not impose a mandatory analytical structure or require the Tribunal to begin with the most relevant comparator and adjust it in a fixed sequence. The Tribunal’s method was not legally invalid merely because another method might have been preferable.
4. The Tribunal was entitled to use commercial-radio evidence for a limited, high-level comparison. It was also entitled, on the evidence, to take account of the pop-promo effect and changes in the market when assessing the royalty. The different factual context of Virgin Retail, concerned with in-store radio, did not require the same approach.
5. CSC accepted the pro-rating formula in the offered licence without seeking a consequential reduction in the 12.5% rate. The royalty-rate part of the judge’s order was therefore set aside, while the corrected pro-rating formula remained applicable.
6. The postscript was obiter. In an appropriate appeal, the appellate court may invite a tribunal to provide clarification or further reasons and adjourn the appeal, adapting the procedure discussed in [2002] EWCA Civ 605, [2005] EWCA Civ 578 and related authorities. Caution is required where supplementary reasons risk reconstructing rather than clarifying the tribunal’s actual reasoning.

• Court of Appeal (Civil Division): Allowed CSC’s appeal and rejected the challenge to the Tribunal’s royalty-rate reasoning.
• High Court: On 30 September 2010, Floyd J set aside the Tribunal’s royalty-rate determination and remitted the issue for rehearing before a differently constituted tribunal.
• Copyright Tribunal: On 7 September 2010, determined a royalty of 12.5% of CSC’s gross revenue, subject to pro-rating, under section 126 of the Copyright, Designs and Patents Act 1988.