Publications
European IP Bulletin, Issue 6, November -
Copyright
Copyright
Confetti Records v Warner Music [2003] EWCH 1274 (Ch)
The author of a garage music track ‘Burnin’ had assigned ownership of copyright to the music publisher Confetti Records. Warner Music wished to produce a compilation garage album with further mixes of a number of tracks in a particular style. Warner approached Confetti and the evidence showed that a price was agreed and a deal memo was sent by Warner to Confetti.
A Deal Memo is a document typically used in the music industry to communicate between the parties planning to bring the licence into effect. These have little detail and at a later date long form licence agreements are usually entered into. Sometimes a licence is never recorded in one of these long form agreements. As was heard in court how the Deal Memo is drafted varies from case to case and company to company. In this case the document was headed ‘Subject to Contract’ and there was no indication in the drafting how the terms could become binding. For example evidence showed that other Deal Memos contained various wording indicating that the document would bind the parties in the event certain conditions were met such as the signature of both parties. The actual effect of these various wordings was not discussed.
Warner argued that the term Subject to Contract meant that a future contract was merely indicative as a desire to a manner of transacting rather than an agreement to agree and that the term had a special meaning in the music industry. The Court decided that the conventional meaning could not be displaced given well-established case law. Further since the meaning of the term was a matter of law evidence merely of use of the term within the music industry was insufficient to establish a different meaning in law.
However, Warner successfully argued on the facts that either a unilateral contract had been accepted before the offer was withdrawn by Confetti or that an estoppel arose from the grant of a gratuitous licence, as Confetti had later sent to Warner a ‘cleared’ copy of the track to be mixed and an invoice. The Court found that this on the one hand expunged the use of the term by necessary implication or on the other hand it was a representation that overcame the use of this term and represented to Warner the grant of a gratuitous licence by Confetti. Estoppel existed after Warner acted to its detriment upon the sending of the track. An attempt by Confetti to withdraw the offer or licence came after the contract accepted or estoppel was raised and was thus too late to prevent.
This case highlights the need for the music industry to adopt practices that create certainty for all the parties involved. Whilst music companies might like to be ‘relaxed’ or ‘commercially minded’ the result of failing to use proper documentation could be expensive. Deal Memos can be used still though proper wording dictating how and when a binding agreement would be achieved should be included. In further argument in this case the Court found that the limited information contained in this Deal Memo did provide sufficient certainty for a binding contract to come into existence. Thus the parties must be careful to identify terms that they see as crucial to the performance of the contract before an agreement is reached. The use of properly drafted Deal Memos should solve this problem.
6. Incidental Intent?
FA Premier League & Others v Panini UK Ltd [2003] EWCA Civ 995 (Unreported)
This case provides trade mark owners with hope when they are unable to prove that an alleged infringer has used their mark in a trade mark sense.
Collecting and swapping stickers depicting football players, particularly amongst school children, is big business. The market forces in the playground are such that unofficial suppliers are tempting litigation by distributing cards incorporating trade mark protected emblems or logos of premier league clubs. Topps Ltd under an exclusive license from the Premier League had the sole right to take one-off photographs of football players dressed in their respective club’s kit and distribute resulting images world wide in the form of stickers or in an album.
The Premier League, with Topps Ltd and 16 premier league clubs brought an action at the High Court on 13 August 2002 against Panini UK Ltd for infringement of copyright subsisting in the logos and emblems on the player shirts, which had been captured in the Appellants stickers. The strategy to use copyright rather than trade mark law to seek an injunction against the Appellant’s activities probably reflected the decision in Trebor Bassett case which held that cards bearing photographs of famous footballers reproduced the England three lion logo, a registered trade mark, did not constitute use of the mark in a trade mark sense.
At the High Court Panini relied on the defence of Section 31(1) of the Copyright, Designs and Patents Act 1988, which provides that copyright in a work, in this case the clubs logos, is not infringed by its incidental inclusion in an artistic work, the sticker. However, Smith, J. construed the meaning of incidental in the construction of the act according to it’s ordinary dictionary definition; concurring with McCombe QC in IPC Magazines Ltd v MGN Ltd (1998), as something of ‘causal, secondary importance or merely background’ to the work. He held that the inclusion of logos in the defendants stickers was not incidental; rather they were an integral feature of the sticker and without them the stickers would be of an inferior value to collector i.e. the discerning collector of stickers seeks exact provenance of the players in his present day kit provided by the sport strip and logo; in addition to the face of the football player.
Smith, J. finding that Panini had infringed the copyright in the premier league clubs’ logos granted an injunction against Panini distributing stickers including premier league lion logo or the club badges.
At the Court of Appeal Chadwick, LJ held that a subjective test should be applied to determine whether reproducing a copyright work (Work A) in another artistic work (Work B) was incidental reasoning that Section 31(3) of the Act requires the courts to establish whether the reproduction of a work in another work, based on the factual circumstances of the case, had been deliberate. Furthermore, when distilling a test to adduce whether the inclusion of Work A in to another Work B he remarked that it was not necessary to find a dichotomy between incidental and integral. Instead the courts had to determine the intent or objective of the alleged infringer and whether there were any commercial reasons for doing so. In effect the Court of Appeal proposed that ‘Work A’ could form an integral part of ‘Work B’; e.g. providing the most aesthetically exact setting for a photograph, whilst still being incidental. Turning to the factual circumstances of the present case he suggested that the objective when creating the image of the player as they appeared on stickers was to produce an image that was of economic value to the collector. A collector seeks objects that are authentic and in the case of football stickers an image of players in an authentic strip that includes club logos and league emblems. The logos were also essential to the object of creating the sticker and could not be said to be incidental. As such, Chadwick, LJ, found that Panini had failed the test of incidentiality and dismissed the appeal.
Mummery, LJ, when affirming Chadwick, LJ’s decision reminded the court that Panini stickers were compilations (i.e. literary works and not artistic works as required by the defence of incidental inclusion) and had they satisfied the test they would be unable to enjoy the defence to infringement provided under Section 31(1) of the Act.
7. High Court of Justice Decision in X v Nowacki
X v Nowacki and Another, [2003] EWHC (CH) (Unreported)
On 1 August 2003, Mr Christopher Floyd QC issued a judgment on X v Nowacki and Another.
The Claimant was a wholesaler of high value ornate tableware sometimes with the end user’s name and/or crest back-stamped on the underside of the china. The Defendants, Mr and Mrs Nowacki, ran a factory called the Lynton Porcelain Company, manufacturing elaborately decorated porcelain.
The Claimant and the Defendant entered into a series of formal trading agreements in 1987 and portrayed themselves to customers as a single entity.
Under the trading agreements, the Claimant retained exclusivity, copyright and unregistered design right in relation to the Defendant’s china and porcelain tableware and the Defendant was restricted from using the designs except for the purpose of the agreement. In return for this exclusivity, the Claimant accepted a minimum purchase obligation of £200,000 in purchase order value.
The arguments arose regarding termination and the Claimant contended that: (i) although the exclusivity agreement had ended, the vesting of the copyright in their works had already taken effect, (ii) restrictions on the Defendant relating to the use of information had survived the termination of the agreement, (iii) letters sent to the Defendant after the termination had given rise to a contract, (iv) following the termination of the agreement the Claimant had continued to place orders with the Defendant on the same purchase terms, (v) the back-stamps were original artistic works.
It was held that the issues of design right subsistence and legal ownership of copyright were to be decided at the main hearing if not admitted. Consequently, the hearing focused on the issue of duty of confidence.
It was held that the trading agreement had been terminated by consent and restrictions on the Defendant relating to the use of information had not survived the termination of the agreement. Although the letters had given rise to a general recognition of a duty of confidence in relation to certain matters, they had not given rise to a new contract
However, it was held that since the defendant had learned of the identity of the customers from the back-stamps and from purchase orders and other correspondence, the equitable duty of confidence did apply to customers’ information back-stamped on the products and to characteristics of those customers since such information would be of value to a competitor.
8. Registrability Of Designs Dictated By Their Technical Function
The UK Patent Office has, by Designs Practice Note DPN 5/03 dated 18 August 2003, explained its interpretation of Section 1C of the Registered Designs Act 1949, as amended to implement Directive 98/71/EC on the legal protection of designs:
‘Section 1C-(1): A right in a registered design shall not subsist in features of appearance of a product which are solely dictated by the product’s technical function’.
The Notice states that the Act no longer precludes designs which lack aesthetic quality, but that does not mean that designs dictated solely by technical function may gain protection. Relying on Recital 14 of the Directive, the Notice holds that the intention of Section 1(C) (1) of the Act is to avoid hampering technological innovation. The Notice refers to Paragraph 34 of the opinion of Advocate General in Philips Electronics NV v Remington Consumer Products Limited, Case C-299/99, where it was stated that a functional design may be eligible for protection if it can be shown that the same technical function could be achieved by another different form.
The Notice, therefore advises that a design is registrable even if all its features are dictated by function. The test will be: whether or not the technical function dictates the appearance of the product to the extent that there is no (or negligible) design freedom. Where all the features of the design would appear to be dictated by function, examiners will raise an objection under S.1(C) (1) of the Act. However, the applicant may successfully overcome this objection if they demonstrate that there is sufficient design freedom, in that the product need not appear to the exact design as shown in the application.
‘Section 1C-(2): A right in a registered design shall not subsist in features of appearance of a product which must necessarily be reproduced in their exact form and dimensions so as to permit the product in which the design is incorporated or to which it is applied to be mechanically connected to, or placed in, around or against, another product so that either product may perform its function’.
The Notice holds that this section is similar to that of ‘must-fit’ features, bearing in mind that ‘must-fit’ parts of a complete product have a limited scope of design freedom by their very nature. Here, the Notice quotes the test as: is there any part of the design which is not required to be of the appearance it is, in order to enable it to fit the end product? If the answer is yes, then the design application should be allowed to proceed if it satisfies other requirements for registration, particularly individual character. If the answer is no, and the design would appear to have no practical scope for alteration and still fit the end product, then it must be regarded as a mere fitting, and objection to its registration would be warranted.
‘Section 1C-(3): Subsection (2) above does not prevent a right in a registered design subsisting in a design serving the purpose of allowing multiple assembly or connection of mutually interchangeable products within a modular system’.
The Notice states that this section provides protection to modular systems, which would normally be shape features, like concert seating, with its interlocking features provide for multiple assembly or dual purpose products. Relying on Recital 15 of the aforesaid Directive, the Notice holds that modular products should be distinguished from stand-alone products and granted design protection.
Click here to return to the Summary page, or on any of the headings below to see the full case notes for that topic:
HOT TOPICS | PATENTS | TRADE MARKS
