Phonographic Performance Ltd v Ellis (t/a Bla Bla Bar)

Additional damages under section 97(2) of the Copyright Designs and Patents Act 1988 are a sui generis statutory remedy. They may include punitive or restitutionary elements and are paid to the claimant, so they are not a fine, although a fine is a useful analogy. A court may combine a contempt fine or additional damages with immediate or suspended imprisonment. Breach of an injunction usually supports, but does not automatically establish, flagrancy. Flagrancy implies scandalous conduct or deceit. The court retains discretion and refused additional damages where the breach arose from a credible misunderstanding rather than such conduct.

Phonographic Performance Ltd, a collection society, sought additional damages after the respondent admitted breaching an injunction restraining unlicensed public performance of recorded music. The High Court awarded compensatory damages and imposed a suspended custodial sentence for contempt, but refused additional damages on the basis that the court should not fine a contemnor while imposing a suspended custodial sentence. The decision, reported at [2018] EWHC 821 (Pat), was appealed on that self-contained point of principle. The central issues were whether additional damages could be awarded alongside punishment for contempt and whether such damages should be awarded on the facts.

1. Appeal dismissed. The Court of Appeal rejected the High Court’s general principle that a fine could not be imposed with a custodial sentence for contempt. The judge’s discretion had proceeded on a flawed basis, so the Court of Appeal was entitled to exercise it afresh.
2. Nature of additional damages. Section 97(2) of the Copyright Designs and Patents Act 1988 creates a statutory remedy with a sui generis character. It need not be classified as aggravated or exemplary damages under general law. It may include a punitive element and may also reflect restitutionary or disgorgement considerations. It remains damages payable to the claimant, not a fine payable to the state. The restriction recognised in Redrow Homes Ltd v Bett Brothers plc [1998] RPC 793 applies where an account of profits, rather than damages, is sought.
3. Relationship with contempt punishment. Civil contempt sentences protect the authority of the court and encourage compliance; they do not compensate the claimant. There is no objection in principle to combining a fine and imprisonment for contempt, including civil contempt. Authorities including Re M (Children) [2005] EWCA Civ 615, R v Martindale [2014] EWCA Crim 1232, Ex p Fernandez (1861) 10 CBNS 3, Re A Special Reference from the Bahama Islands [1893] AC 138 and Jennison v Baker [1972] QB 52 supported that conclusion. Imprisonment or possible confiscation does not itself prevent punitive civil damages, but financial punishment must not result in double recovery for the same damage.
4. Discretion and flagrancy. Section 97(2) requires consideration of all the circumstances, particularly the flagrancy of the infringement and any benefit accruing to the defendant. Breach of an injunction will usually support a finding of flagrancy, but does not automatically establish it. Even a flagrant infringement does not require an award. Flagrancy implies scandalous conduct or deceit. The respondent’s credible misunderstanding and failure to take earlier advice did not meet that standard. Since the claim was advanced only on flagrancy, additional damages were refused.
5. The court also accepted that additional damages could not be used to recover a shortfall in assessed costs in the same action, and indicated that the domestic remedy was not displaced by Directive 2004/48, subject to the possibility of abuse of rights in an exceptional case.

• Court of Appeal (Civil Division): dismissed the appeal and declined to award additional damages.
• High Court of Justice, Chancery Division: Birss J refused additional damages after awarding compensatory damages and imposing a suspended custodial sentence for contempt. Decision at [2018] EWHC 821 (Pat).