What is a record? Pink Floyd v EMI

In its judgment of 14 December 2010 in Pink Floyd Music and Anor v EMI Records Limited [2010] EWCA Civ 1429 the Court of Appeal considered an appeal by EMI against summary judgment in favour of Pink Floyd Music (PFM). PFM had sought declarations to the following effect:

1. That EMI (with which it had signed a Master License Agreement) had underpaid royalties with respect to online sales through third parties (such as iTunes) and;

2. That EMI ought to have sought permission from PFM with respect to giving permission to stream the music and convert it into ringtones.

The relevant agreements between the parties referred both to the receipt of royalties from ‘online sales’ and the requirement for permission from Pink Floyd to distribute music in configurations other than how the music appeared on the albums.

Royalties from online sales
After reviewing the case law on the interpretation of terms Lord Neuberger MR observes that although the dispute relates to an agreement entered into in 1999 when the (lawful) sale of music online was in its infancy that, at para 37: 

…the parties intended that their contractual arrangements in relation to on-line distribution should follow, or mirror, their contractual arrangements in relation to the more traditional, physical, methods of distribution, at least so far as royalty rates were concerned.

His Honour rejected EMI’s contention that the wording of the clause in question was the result of ‘a clear mistake’ (by reference to Chartbrook v Persimmon Homes [2009] 1 AC 1101) nor that the words themselves would produce a ‘produce a result which is so commercially nonsensical that the parties could not have intended it’ (following City Alliance v Oxford Forecasting Service [2001] 1 All ER Comm 233). Carnwath and Laws LJJ agreed.

Further online distribution
Lord Neuberger MR was unconvinced by EMI’s contention that ‘the Records’ referred only to the physical albums. If that interpretation was accepted it would mean that EMI was allowed to distribute digital recordings of Pink Floyd’s music without seeking permission for such distribution.

On the basis of commercial common sense, the use of the word ‘recordings’ in the agreement indicated that it did not refer simply to the physical recording. The parties made a mistake in referring to ‘Records’ in the licensing agreement when in fact they had intended to refer to the music, lyrics and performances embodied on the records. At para 55:

While it is true that digital distribution was in its infancy at the time, it was plainly in existence and was seen by the parties as being commercially significant, and, on the issue of maintaining the integrity of recordings, no sensible reason for distinguishing between physical format and digital recordings has been advanced.

Carnwath LJ dissented on this point on the basis that ‘had the parties intended the rules for Records to apply also to On-line Distribution, they made specific provision for it’ (para 84). Rather than refer to commercial common sense Carnwath LJ adopted a natural reading which implied that the term referred only to physical recordings.

Commercially sensitive information and party anonymity
Finally, it is worth noting that the precise royalty figures were expunged from the judgment upon application by the parties. The Court agreed that the percentages were commercially sensitive. However Lord Neuberger MR was highly critical of the lower court’s listing of the case as ‘P v E’ and the Court did not, in fact, hold a private hearing. His Honour reasoned that although Pink Floyd is famous and that any case involving the group would attract media attention, the hearing itself did not touch upon subjects of ‘general interest’ (para 64). 

However, the inappropriate listing of the case ensured that the public were unaware that an appeal in the case was going to be heard. This caused both inconvenience for the Court because court documents were not redacted in advance of the hearing. ‘More importantly’, His Honour states at para 65: 

…unless steps are taken to ensure that this does not happen again, such inappropriate listing and preparation could lead to real injustice in another appeal.

His Honour concludes that such listing or the granting of anonymity to the parties should occur only if it is ‘necessary for the proper administration of justice’ (para 66).

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