Editions Musicales Alpha S.A.R.L. v Universal Music Publishing Ltd & Ors

Under Misrepresentation Act 1967, s.2(1), a claimant succeeds where it entered a contract after a misrepresentation, relied on it, suffered loss as a result, and the representor cannot establish reasonable grounds for belief in its truth. A representation may arise from conduct, including approving the inclusion of property in a contractual schedule. An implied warranty may also arise where the circumstances and the parties’ knowledge justify imposing it on an individual party. Recoverable loss includes sums paid to settle liability caused by the misrepresentation and the reasonable costs of defending that liability. Loss of royalties is not recoverable where the claimant would never have obtained the relevant rights or income.

EMA had claimed copyright in the song Alright, Alright, Alright. Those claims were settled, leaving AMI’s additional claim against Ray Dorset. AMI had acquired, or purported to acquire, a 25% copyright interest in the song under the Satellite Assignment and had licensed that interest onwards. Dorset knew that the copyright belonged to EMA, but approved or failed to correct the song’s inclusion in the assignment schedule. AMI alleged misrepresentation under s.2(1) of the Misrepresentation Act 1967, breach of warranty, and breach of implied term. The issues were whether Dorset had represented that Satellite owned the copyright, whether AMI relied on that representation, and what loss was recoverable.

1. Misrepresentation. AMI’s claim under s.2(1) of the Misrepresentation Act 1967 succeeded. Dorset’s conduct in approving, or failing to object to, the inclusion of Alright in Schedule C represented that Satellite owned the copyright. AMI entered the Satellite Assignment in reliance on that representation and believed that it had acquired 25% of the copyright.
2. Causation and loss. The representation caused AMI to permit the copyright interest to be licensed onwards and to become a defendant in EMA’s infringement claim. The £33,600 paid to EMA in settlement and AMI’s costs of defending that claim were losses caused by the misrepresentation.
3. Prior publishing agreement. Dorset could not be liable for a representation made before the agreement with Sony/ATV or SME. That agreement pre-dated his representation, and Dorset was not a party to the SME agreement.
4. Warranty. The Satellite Assignment expressly warranted that Satellite owned the copyright. Although Dorset was an assignee and gave no express warranty personally, the judge found an implied warranty from him because he was the individual who knew the true position. This provided an alternative basis of liability.
5. Lost royalties. AMI could not recover royalties which it would have received from exploiting the song. Without Dorset’s representation and warranty, there would have been no purported assignment and AMI would have received no royalties.
6. Order. Dorset was required to reimburse AMI’s settlement payment and the costs of defending EMA’s claim. AMI’s lost-royalty claim was dismissed.