Henderson v All Around the World Recordings Ltd

Damages for infringement of intellectual property rights remain compensatory. A claimant may recover the reasonable royalty that would have been agreed for a licence of the right infringed, assessed by reference to the parties’ actual bargaining positions and the circumstances at the date of infringement. A knowing infringer’s profits are not ordinarily recoverable in addition to damages or an account of profits. “Unfair profits” may justify an additional compensatory award where ordinary damages would not reflect actual prejudice, including loss of promotional benefit. Moral prejudice is confined to unusual cases where economic compensation is absent or materially disproportionate. Claims for additional damages under the Copyright, Designs and Patents Act 1988 must be pleaded in accordance with the applicable practice direction.

The claimant was a singer and songwriter whose vocal performance was used in a successful recording released by the defendant. The defendant had infringed her performer’s rights, and the judgment concerned the ensuing inquiry as to damages.

The claimant sought a reasonable royalty, compensation for further economic and non-economic loss, recovery of the defendant’s profits, and additional damages. She also sought amendments concerning PPL royalties and an unpleaded claim for additional damages. The central issues were the valuation of a hypothetical licence and the effect of regulation 3 of the Intellectual Property (Enforcement, etc.) Regulations and article 13 of the Enforcement Directive.

1. Amendment and procedural applications. The proposed amendment concerning PPL royalties was refused because any entitlement had to be pursued against PPL. The order striking out the claim for an account of profits and the unpleaded claim for additional damages was maintained. CPR 63PD paragraph 22.1 required the additional-damages claim to be pleaded in the substantive proceedings.
2. User-principle damages. The hypothetical negotiation was between the actual parties immediately before release. It concerned only the claimant’s performer’s rights in the recorded vocal, not copyright in the song. The court considered the defendant’s bargaining position, its ability to use a session singer, the claimant’s limited profile at the time, and the commercial value of using her vocal and name. The appropriate net royalty was 12 per cent for the performer’s contribution. As the claimant and the remixer were treated as joint and equal performers, the claimant’s share was 6 per cent. Applying that rate to the accepted royalty base produced £30,000.
3. Enforcement Directive. Regulation 3 implements article 13(1). It requires damages appropriate to the actual prejudice caused by knowing infringement, while avoiding punitive recovery. The claimant could not recover both damages and an account of profits. “Unfair profits” do not automatically mean all profits from infringement; they may support an additional compensatory sum where ordinary damages, a reasonable royalty or an account would not adequately reflect actual prejudice. The defendant’s failure to secure equivalent prominence and credit for the claimant caused such prejudice. £5,000 was awarded for that loss.
4. Moral prejudice and additional damages. Moral prejudice may include mental distress, injury to feelings and humiliation, but is generally confined to unusual cases in which economic damages are absent or disproportionate. This case did not qualify. The court considered that article 13 had substantially made section 191J(2) redundant, but, alternatively, the pleaded claim would have justified £5,000 without cumulative recovery.
5. Result. The total damages awarded were £35,000.

First-instance inquiry as to damages following the liability judgment of HH Judge Birss QC dated 13 February 2013 and the order of 18 March 2013. No appellate decision is stated.