BSI Enterprises Ltd & Anor v Blue Mountain Music Ltd

A contract is interpreted objectively by asking what it would convey to a reasonable person with the relevant background knowledge. The court must construe the agreement as a whole, while giving effect to its language. Commercial common sense may assist where competing constructions are available, but it cannot be used to rewrite clear wording or impose an agreement that the parties did not express.

A copyright owner who knowingly allows another to receive royalties for many years may, in appropriate circumstances, be treated as having granted a gratuitous licence, including an implied right to sublicense. The licence may be terminated by a formal assertion of rights.

The claim concerned ownership of copyright in 13 songs written by Bob Marley, including No Woman No Cry. BSI Enterprises Ltd claimed ownership and Cayman Music Ltd claimed an exclusive licence. The defendant argued that the copyrights had already passed to Island Logic Ltd under an asset purchase agreement made in March 1992 between Island Logic and Cayman Music Inc.

The court also considered contingent restitutionary relief and an alleged implied licence, on the assumption that the claimants owned the copyrights. The central issues were the proper construction of the March 1992 Agreement and the consequences of the claimants’ prolonged awareness that royalties were being paid to the defendant.

1. Copyright ownership. The claimants did not acquire the copyrights under the May 2008 Agreement because Cayman Music Inc had already transferred them to Island Logic Ltd under the March 1992 Agreement.
2. The agreement was governed by New York law, but no evidence of New York law was adduced, so the court applied English principles of contractual interpretation. The relevant approach was objective and required the agreement to be construed as a whole against the factual matrix. The language of clause 1.8 was deliberately broad. It included compositions written or recorded by Bob Marley and owned, controlled or administered by the seller, whether or not accurately attributed or specifically listed.
3. The omission of the works from the schedules dealing with warranties and encumbrances did not alter that conclusion. The parties’ commercial purpose, and Island’s desire to acquire as complete a Marley catalogue as possible, supported the broad construction. The court rejected the suggested unstated agreement to leave the misattributed works unresolved.
4. Clause 1.22 also conveyed the benefit of the 1973 publishing agreement, including the relevant music publishing rights. Accrued royalties, if any, passed under clauses 1.2 and/or 1.22.
5. The restitutionary claim was not decided. The court considered the legal argument incomplete and made factual findings only in case its ownership conclusion was overturned. It rejected the contention that the earlier New York proceedings justified restitution after years of non-assertion.
6. Alternatively, following Fisher v Brooker [2006] EWHC 3239 (Ch), [2007] E.S.R. 12, the defendant would have had a gratuitous licence to exploit the works, with an implied right to sublicense, until the claim form was issued or served. The court declined to depart from that decision.
7. The claim was dismissed.