Phonographic Performance Ltd v British Hospitality Association & Ors [2009] EWHC 209 (Ch) (12 February 2010)

Last Friday, the High Court (Arnold, J.) denied an appeal of a decision by the Copyright Tribunal brought by the performance rights society, Phonographic Performance Limited. The Copyright Tribunal had found that the tariffs PPL accessed for the public performance of sound recordings in (i) public houses, bars, restaurants ad cafes, (ii) shops and stores, and (iii) factories and offices were unreasonable.

To briefly review, the Copyright, Designs and Patents Act 1998 provided that the public performance of a broadcast to an audience who had not paid for admission did not infringe any sound recording. PPL had previously claimed that the exception violated violated Article 8(2) of Council Directive 92/100/EC of 19 November 1992. Phonographic Performance Ltd v Department of Trade and Industry [2004] EWHC 1795 (Ch), [2004] EMLR 30).

The Government exercised its powers under section 2 of the European Communities Act 1972 to implement Article 11(1)(b) of European Parliament and Council Directive 2001/29/EC of 22 May 2001, by means of regulation 21(1) of the Copyright and Related Rights Regulations 2003, SI 2003/2498. The practical effect of the amendment was that many establishments needed to obtain a license to publicly perform sound recordings that they had previously played for free.

In December 2004, PPL noted its new tariffs, which came into full effect in 2006, to the Department of State. The new tariffs, in addition to creating a “delivery system neutral fee” also changed the rates accessed to performers of sound recordings under the existing structures. The changes in tariffs were referred to the Copyright Tribunal by the Secretary of State in October 2005 for a determination as to whether they were reasonable.

The Copyright Tribunal issued a final decision on October 15, 2009 finding that the tariffs were not reasonable, and made an order under Section 128 B(3)(a) changing the tariffs. The Tribunal reinstated the previous tariffs, extended them to all means of delivery, but with (i) an increase in the tariffs payable by 10% in addition to an adjustment in line with the Retail Price Index and (ii) the imposition of a concessionary discount rate for some small users.

Ground A: the investigatory obligations of the Copyright Tribunal

The argument that Copyright Tribunal was under an obligation to investigate the reasonableness of the tariffs was central to a number of PPL’s arguments on appeal. The Court found that while the Tribunal’s role under 128B was inquisitorial and not adversarial, it did not have an obligation to investigate. The Tribunal, according to the Court, only had to take into account the relevant considerations, and it’s obligations were fulfilled by considering the record and parties’ briefings.

Grounds B & C: the Performance Rights Society tariffs and previous tariffs as best competitor

PPL’s second and third grounds for appeal were that the Tribunal should have used the tariffs used by the Performance Rights Society, the tariff collection society for righsholders of musical works,  and not the previous tariff rates as “best competitor.”  The Court found that the Tribunal did not make an error of law by taking into consideration the PRS tariffs, and only finding that they suggested a modest increase in PLL’s tariffs; and that the Tribunal did not make an error in considering the previous tariff rates as best competitor.

Ground D: market reaction

PPL argued that the Tribunal failed to take into account the increase in numbers of licensees (81,921 in 2005 to 105,981 in 2008), as an indicator of the reasonableness of the tariffs. In opposition, the Interested Parties claimed that the increase was due to the removal of the exceptions under Section 72, which required more users to acquire a license. The Court found that the Tribunal should have directly addressed the argument, but that the reasoning used by the Tribunal showed that it did not consider the increase in numbers to be indicative of reasonableness.

Ground E: measurement of audience

PPL argued that the Tribunal committed material error by not considering that the new tariffs accounted for the size of a venue, where the old tariffs did not.  The Court found that this may show that the new tariffs are more reasonable than the old tariffs, but not that the Tribunal made an error in concluding that the new tariffs were unreasonable.

Ground F: the statutory factors

The statutory factors for which the Tribunal must consider when evaluating a tariff, set forth in section 128A(7), include “(c) [the] commercial benefit a potential licensee is likely to obtain from playing the excepted sound recordings.” PPL contended that the Tribunal did not adequately consider the factor. The Court found that the Tribunal  made the conclusion, which was in its discretion, that the factor did not support an increase, except to the extent that the new tariffs covered PPL’s new rights in the broadcast of sound recordings.

Ground G: the concessionary discount

PPL argued that Tribunal made an error by imposing the concessionary discount. The Court found that the Tribunal was within its discretion in finding that the concessionary discount was reasonable to balance the increase of 10% it granted on top of the old tariffs.

Costs

PPL also appealed the decision of the Tribunal to order it to pay half the costs of the Reference.  PPL contended that the costs order “did not reflect the inquisitorial nature of the Tribunal’s jurisdiction under [S]ection 128B.” The Court affirmed the order, finding that the awarding of costs “was within the ambit of [the Tribunal's] jurisdiction.”