- The
claimants are the owners or the exclusive licensees of the UK copyright in various
sound recordings. The fifth defendant ("Mr Robinson") is a substantial
shareholder in the second defendant ("BVI"), the beneficial owner of
the shares in the third defendant ("UPI") and a director of the first
defendant ("HK") and of UPI. The first defendant ("HK") is
a wholly owned subsidiary of BVI. (Proceedings against the fourth defendant have
been discontinued.)
- Since
early 2000 the defendants or one of them have operated a website at www.cd-wow.com
in the trading name CD-WOW at which they advertise for sale a large number of
CDs containing sound recordings of well known popular artists. Orders placed on
that website are supplied by HK with CDs from Hong Kong. Such CDs are genuine
in that they were made and released on the market outside the European Economic
Area with the knowledge and approval of the owners of the UK copyright or their
exclusive licensees.
- On
23rd August 2002 the claim form in these proceedings was issued by the claimants
seeking an injunction, damages or an account of profits and delivery up of infringing
copies. The claim is made in relation to CDs embodying sound recordings in which
they own or are the exclusive licensees of the UK copyright which had been released
on the market outside EEA and subsequently supplied by HK to buyers in the UK.
The infringements relied on are the importation of such CDs into the United Kingdom
and their subsequent possession in the course of business and issue to the public
as provided in ss.18, 22 and 23 Copyright, Designs and Patents Act 1988 ("CDPA").
The claim form states that the claimants are
"suing
on behalf of themselves and for and as representing all other members of the British
Phonographic Industry Ltd ["BPI"] and Phonographic Performance Ltd ["PPL"]".
In
the particulars of claim served the same day it is alleged that the claimants
are members of BPI and/or PPL and sue on behalf of all other members whose names
are set out in Schedule 1 thereto. It is claimed that nearly all sound recordings
produced in the UK are produced, manufactured or distributed by such members each
of whom is a qualifying person for the purposes of s.154 CDPA.
- In
response to an objection made by solicitors for the defendants, by a letter dated
4th October 2002 the claimants’ solicitors indicated that the representative claim
would be limited to those members of BPI and PPL as are "owners and/or exclusive
licensees of UK sound recordings". The defendants were not satisfied with
this assurance and on 23rd December 2002 issued the first of the applications
now before me seeking an order in accordance with CPR Rule 19.6(2) preventing
the claimants from acting in the representative capacity claimed on the grounds
that (1) the claimants have not demonstrated that they are authorised by the persons
they claim to represent to bring the action as presently constituted and (2) they
do not have the same interest as those persons.
- Following
further correspondence between the parties’ respective solicitors the second application
now before me was issued by the claimants on 5th February 2003. By that application
the claimants seek, amongst other things, to add as the sixth and seventh claimants
Sony Music Entertainment (UK) Ltd and Sony Music Entertainment Inc, and to amend
the particulars of claim. If permission to amend as sought is granted then the
title to the claim will still aver that the first six claimants "sue on behalf
of themselves and for and as representing all other members of [BPI and PPL]".
Paragraphs 3 to 7 will be in the following terms:
3. The
First to Sixth Claimants are members of the British Phonographic Industry
Limited ("the BPI") and/or Phonographic Performance Limited ("PPL").
The BPI is a company limited by guarantee established (amongst other things) to
represent the interests and to protect the rights of its members and, in particular,
the sound recording copyrights owned by or exclusively licensed to its members
together with the rights in performances owned by such members. PPL is a company
limited by guarantee. Its objects include (among other things) the power to authorise
the BPI to take action in the interest of any member or members of PPL with a
view to protecting the interests or rights of any member or members of PPL with
particular regard to infringement of copyright in sound recordings. The members
of the BPI have given it a mandate to authorize third parties to act on their
behalf to prosecute proceedings in the High Court. The BPI has authorized the
First to Sixth Claimants on behalf of its members and on behalf of the members
of the PPL to commence and prosecute these proceedings.
3A. The
Seventh Claimant is incorporated under the laws of the State of Delaware and is
(along with the Sixth Claimant) a company within the Sony Group of companies.
4. The
First to Sixth Claimants each sue on their own behalf and for and on behalf of
and as representing all other members of the BPI and PPL that own or are the exclusive
licensees of United Kingdom sound recording copyrights. ("the Relevant Members").
5. The
Relevant Members are continually and frequently producing, manufacturing
and/or distributing records embodying new sound recordings, and nearly all reproductions
of sound recordings (namely compact discs, vinyl records and cassette tapes) that
are produced, made or distributed within the United Kingdom are produced, manufactured
and/or distributed by the Relevant Members.
6. The
Relevant Member responsible for the making of each sound recording owns
the United Kingdom sound recording copyright therein or is the exclusive licensee
thereof. Lists of the current members of the:
BPI
that are Relevant Members are set out in Schedule 1 annexed hereto; and
PPL
that are Relevant Members but not also members of the BPI are set out in Schedule
1A annexed hereto.
7. Each
of the Relevant Members is and has at all material times been a qualifying
person within the meaning of section 154 of the 1988 Act.
- CPR
Rule 19.6, so far as relevant, provides that
(1)
Where more than one person has the same interest in a claim –
(a)
the claim may be begun; or
(b)
the court may order that the claim be continued,
by
or against one or more of the persons who have the same interest as representatives
of any other persons who have that interest.
(2)
The court may direct that a person may not act as a representative.
(3)
Any party may apply to the court for an order under paragraph (2).
(4)
Unless the court otherwise directs any judgment or order given in a claim in which
a party is acting as a representative under this rule –
(a)
is binding on all persons represented in the claim; but
(b)
may only be enforced by or against a person who is not a party to the claim with
the permission of the court.
- The
issues for my determination are (1) whether the claim comes within the provisions
of CPR Rule 19.6(1), and if so (2) whether I should make a direction under Rule
19.6(2) that the claimants may not act as representatives. The extent to which
I should grant permission to amend the particulars of claim or make the further
directions sought depend on my answers to those questions.
The
Facts
- BPI
was incorporated in 1972. The objects for which it was established include:
[(a)...]
(b)
to promote and protect the welfare and interest of the British record industry
and in this respect to take such action on behalf of its members or individual
members of the Association as may be considered necessary;
[(c)
to (j)]
(k)
to make representations and to institute and to prosecute and defend proceedings
before the Copyright Tribunal and any other Court or Tribunal; and
(l)
to do all such other things as are incidental or conducive to the attainment of
the above objects or any of them."
- An
aspiring member is required to sign an application form. It summarises the objects
of BPI and contains an acknowledgement that if the application is accepted the
applicant agrees to abide by the rules and regulations of BPI as contained in
its memorandum and articles of association or otherwise decided on by the Council
of Management of BPI. The Articles of Association, adopted on 22nd September 1999,
contain the usual provisions for regulating the conduct of a company’s business
through a board of directors. It was submitted by counsel for the claimants that
the operation of the objects clause of the memorandum of association and the application
form signed by all members conferred on BPI, without more, the authority to institute
proceedings in the name or on behalf of a member. I do not agree. The memorandum
confers on BPI the corporate ability to sue on behalf of others. The member acknowledges
that that is so. Such acknowledgement does not, without more, authorise BPI to
institute any particular action in the name or on behalf of a member.
- PPL
adopted a new memorandum of association in June 1996. By clause 4 it is empowered
to enforce on behalf of its members or third parties, being producers of sound
recordings, the performing rights and dubbing rights arising under the Copyright
Acts 1911, 1956 and CDPA and for that purpose to take assignments and other assurances
of performers’ rights from its members and others. On 14th November 2001 PPL adopted
new articles of association. Art.1 defined "Dubbing Right", "Performing
Right" and "Sound Recordings" by reference to the relevant provisions
of CDPA and Copyright Acts 1911 and 1956. Art.7 provides that every member grants
to PPL
"acting
by itself or through duly authorised agents for and during the period of his membership...
[(i)
authority to collect fees and to sue for infringement of Performing or Dubbing
Rights.]
(ii)
the power and authority, to the extent the directors deem necessary, to protect
generally the Member’s interests in the Sound Recordings.
[(iii)
and (iv)]
(v)
the power and authority to authorise any person, body, organisation acting on
behalf of copyright owners or performers (or any of them) as and on such terms
as the Directors may deem necessary or expedient to institute or prosecute proceedings
before any court, tribunal or other body and to take any other action or steps
on behalf of the Company and/or any member or members and/or in the interests
(directly or indirectly) of any Member or Members or performers designed or intended
or undertaken to prevent or discourage the piracy or counterfeiting of, or the
infringement of the copyright in, Sound Recordings provided always that neither
the Company nor any other person, body or organisation so authorised by the Company
shall be under any obligation to take any such action on behalf of any individual
Member or Members or performer."
- The
nature of the business carried on by the various defendants is described in the
first witness statement of Mr Robinson and the defences of those defendants. CD-WOW
is an internet business involving the sourcing and sale of, primarily, current
UK Top 75 chart CDs together with new releases and old favourites. They are made
available for sale to the public on the website at www.cd-wow.com
and elsewhere. That domain name was originally registered in the name of UPI,
transferred to HK on 30th November 2000 and to BVI on 22nd June 2001. A person
placing an order on the website contracts with HK. CDs so ordered are posted in
HK addressed to the customer. Replacements are supplied in the same manner but
faulty or unwanted CDs are returned to an address in the UK until sufficient quantities
have accumulated to make their return to Hong Kong economic. The conditions of
sale prescribe that property in the goods passes on delivery.
- The
operation of the website came to the attention of BPI shortly after the business
commenced. Their then solicitors, Hamlins, wrote to UPI on 5th April 2000 expressing
concern at the allegedly illegal parallel importation of CDs from South East Asia
by UPI. They sought suitable undertakings. That round of correspondence came to
an end on 23rd May 2000. On 27th November 2000 Hamlins wrote again to the solicitors
for UPI asking for further information. That exchange came to an end with a letter
dated 24th January 2001 from the solicitors for UPI to Hamlins.
- On
11th March 2002 an agreement between PPL and BPI was executed. Clause 2 provided,
so far as relevant, that
"PPL
will mandate the BPI through its Anti-Piracy Unit ("the APU") to act
on behalf of all PPL members....
....
PPL
will use its reasonable endeavours to procure that individual members execute
such additional deeds or documents as may reasonably be required to confirm or
support BPI’s authority to act for the purposes of any court or other proceedings."
- On
29th May 2002 Wiggin & Co wrote a letter before action to HK, the solicitors
previously acting for UPI, and the directors of HK. They stated that they had
been instructed by BPI "and for this purpose we are also instructed on behalf
of the members of BPI". That and other allegations were challenged by the
solicitors for HK, UPI and the directors personally in subsequent correspondence.
On 21st August 2002 the chairman and chief executive of PPL wrote to the Director-General
of BPI referring to proposed proceedings against HK, BVI, UPI and Mr Robinson.
He wrote:
"In
accordance with our agreement with you dated 11th March 2002 I write to confirm
that the BPI is mandated to act on behalf of PPL in the Proceedings to the extent
permitted by the Memorandum and Articles of PPL."
- As
I have already indicated the claim form with particulars of claim was issued by
the five claimants on 23rd August 2002. They claimed the representative capacity,
qualified by the letter of 4th October 2002, to which I have referred. The defences
of the various defendants were served in October or November 2002 and claim, amongst
other things, that the claimants are not entitled to sue in the representative
capacity claimed. This led to a letter dated 3rd February 2003 from the Director-General
of BPI to each of the claimants stating that:
"I
am writing to you formally to confirm our previous discussions concerning the
above proceedings and to confirm your authority to bring these proceedings as
claimant for and on behalf of the relevant members of BPI and PPL, namely those
who own or are exclusive licensees of United Kingdom sound recording copyright.
The
claim is brought by you for your own benefit and for and on behalf of all relevant
members of BPI and PPL. I confirm that the claimants in the action remain ultimately
responsible for costs in the proceedings but that the BPI will instruct solicitors
to act on your behalf and will pay the costs incurred by those solicitors. The
claim includes a claim for damages and/or an account of profits. You have agreed
that any such monies recovered shall be accounted by you to BPI."
The
writer then explained the basis for the representative nature of the proceedings
by reference to the Memorandum and Articles of both BPI and PPL, the agreement
of 11th March 2002 and the letter of 21st August 2002 which I have already quoted.
The writer concluded:
"Please
therefore accept this letter as formal confirmation of your authority to bring
these representative proceedings for and on behalf of the members of BPI and PPL
who are owners of United Kingdom sound recording copyrights and/or exclusive licensees
thereof."
- Counsel
for the defendants now accept that a representative claimant may sue in a representative
capacity without the authority of those he claims to represent provided only that
the claim satisfies the conditions prescribed by CPR Rule 19.6.(1). Accordingly
the relevance of the issue of authority has been reduced if not extinguished altogether.
Nevertheless and notwithstanding the submissions of counsel for the claimants
to the contrary I do not accept that the individual claimants had actual authority
from the members of either PPL or BPI to commence these proceedings on their behalf.
In the case of the members of PPL both the agreement of 11th March 2002 and the
letter of 21st August 2002 purported to do no more than mandate BPI. PPL did not
purport to mandate the claimants and had no authority from its members to confer
the benefit of their pecuniary remedies on BPI. Nor, for the reasons I have given
in paragraph 9 above, did BPI have the authority of its members to sue on their
behalf or to authorise the individual claimants to do so either.
The
issues in the action
- The
applicability of CPR Rule 19.6 depends, in part, on the nature of the issues raised
by the particulars of claim. I will describe them by reference to the proposed
amended particulars of claim. I have already quoted paragraphs 3 to 7 dealing
with the representative nature of the claim. Paragraph 8 alleges that the individual
claimants are the owners of the copyright in eight specific sound recordings therein
specified. Paragraph 9 alleges that each of those eight sound recordings has been
issued to the public bearing labels or other marks sufficient to attract the presumptions
as to the subsistence and ownership of the copyright prescribed by s.105 CDPA.
Thus the subsistence and ownership of the copyright will not be in issue unless
the defendants seek to displace the presumption.
- Paragraphs
10 to 24 contain the relevant allegations concerning the defendants, the existence
and mode of operation of the CD-WOW site and the terms and manner on and in which
CDs are supplied to those who order them. It is only necessary specifically to
mention paragraph 15 in which it is alleged that
"The
CD-WOW site advertises for sale a large number of CDs containing sound recordings
by well-known popular artists, the United Kingdom sound recording copyright in
all or most of which is owned by or exclusively licensed to Relevant Members of
BPI."
In
that context there is no specific allegation of issue to the public with the labels
or other marks referred to in s.105 CDPA. If an implication to that effect is
not enough then the allegation could be simply introduced by amendment.
- Paragraphs
25 to 50 contain allegations relevant to the alleged infringements and the role
played therein by the respective defendants. In each case the allegations of infringement
are made expressly in relation to "sound recordings the United Kingdom sound
recording copyright in each of which is owned by or exclusively licensed to one
or more of the Relevant Members" (See paragraphs 25.1 and 37). It is true
that the particulars relied on, set out in schedules 3 and 4, deal only with one
or more of the eight specific sound recordings, but those are stated to be the
best particulars available until after disclosure and the provision of further
information. The point is clearly made in paragraph 50 in which it is stated that
"The
Claimants do not at present know of all the acts of primary and secondary infringements
of the Claimants and the other Relevant Members United Kingdom sound recording
copyrights committed by the Defendants and each of them, but will at the trial
of this Claim seek to rely upon and seek relief in respect of each and every such
act."
The
remaining paragraphs contain the usual allegations to justify the grant of injunctions
and the award of damages, including additional damages under s.97(2) CDPA.
- It
is clear, therefore, that the claimants sue and seek relief in respect of the
infringement of the United Kingdom copyright in sound recordings owned by or exclusively
licensed to any individual claimant or any Relevant Member, as defined in paragraph
4.
Right
to represent
- The
right of a claimant to represent another person in the sense of suing on his behalf
arises if, in the terms of CPR Rule 19.6, both have "the same interest in
[the] claim". The requirement that both should have "the same interest"
is the same as that previously contained in RSC Ord 15 r.12. It is common ground
that the general principles applicable under the old rule are also applicable
under the new. In that connection it is helpful to refer to two authorities.
- The
first is Duke of Bedford v Ellis [1901] AC 1. Ellis and five others sued
on behalf of themselves and all other growers of fruit, flowers, vegetables, roots
or herbs within the meaning of the Covent Garden Act 1828 to enforce rights conferred
on them by that Act against the Duke of Bedford as the owner of the market in
which they were exercisable. The Duke of Bedford applied to strike out the writ.
He was successful before Romer J. The Court of Appeal discharged that order on
the undertaking of the plaintiffs to join the Attorney-General as a defendant.
The Duke of Bedford appealed to the House of Lords. His appeal was dismissed.
Lord Macnaghten referred to the argument to the effect that the rule only applied
to claims to some beneficial right of property and said (p.8):
"But
it seems to me that there is no reason whatever for so restricting the rule, which
was only meant to apply the practice of the Court of Chancery to all divisions
of the High Court. The old rule in the Court of Chancery was very simple and perfectly
well understood. Under the old practice the Court required the presence of all
parties interested in the matter in suit, in order that a final end might be made
of the controversy. But when the parties were so numerous that you could never
"come at justice", to use an expression in one of the older cases, if
everybody interested was made a party, the rule was not allowed to stand in the
way. It was originally a rule of convenience: for the sake of convenience it was
relaxed. Given a common interest and a common grievance, a representative suit
was in order if the relief sought was in its nature beneficial to all whom the
plaintiff proposed to represent. To limit the rule to persons having a beneficial
proprietary interest would be opposed to precedent, and not, I think, in accordance
with common sense."
- In
John v Rees [1970] 1 Ch.345, 370 Megarry J, having quoted the same passage,
commented that the rule is to be treated as being not a rigid matter of principle
but a flexible tool of convenience in the administration of justice. The provisions
of the civil procedure rules, particularly CPR Rule 1.2, emphasise the need to
interpret the phrase "the same interest" and to apply the provisions
of CPR Rule 19.6 both flexibly and in conformity with the overriding objective.
Accordingly there are three questions: do the individual claimants on the one
hand and the Relevant Members as defined on the other have (1) a common interest,
(2) a common grievance and (3) is the relief sought by the claimants in its nature
beneficial to the Relevant Members? Counsel for the defendants submits that the
answer to each of those questions is in the negative.
- With
regard to the question of common interest counsel for the defendants points out
that neither PPL nor BPI has asked any of their members if they wish to complain
about the operation of the CD-WOW website nor is there any evidence to suggest
that they do. He suggests that the only interest or grievance is that of PPL and
BPI but points out that neither of them could have any cause of action in the
absence of an assignment of copyright in their favour. He submits that the amended
paragraphs 3 to 7 of the particulars of claim do not cure the problem of interest
because the Relevant Members are competitors in the global market place for sound
recordings and the class of Relevant Member fluctuates from day to day.
- With
regard to the second question counsel for the defendants contends that there is
no evidence that any of the Relevant Members are in fact aggrieved by the activities
of the defendants. The alleged infringements arise from the parallel importation
of genuine CDs not counterfeit goods. He accepts that it may be inferred that
all Relevant Members would wish to suppress counterfeit goods (EMI v Riley
[1981] 1 WLR 923) but submits that no such inference can be drawn in the case
of parallel importation.
- With
regard to the benefits to be derived by the Relevant Members from the relief sought
counsel for the defendants contends that the injunctions go beyond what the court
will grant, as demonstrated by Scott J in Columbia Picture Industries v Robinson
[1986] FSR 367. He relies on the letter dated 4th October 2002 from BPI to the
individual claimants pointing out that any sums recovered in the action are to
be accounted for to BPI as showing that they will derive no benefit from the claim
to damages either.
- I
do not accept these submissions. The common interest arises from the fact that
the claim as pleaded is made in respect of the UK copyright in a sound recording
to which any Relevant Member is entitled as owner or exclusive licensee. The common
grievance arises from the facts pleaded regarding the operation of the CD-WOW
site. There is at least a threat to supply a CD embodying a sound recording to
which a Relevant Member is so entitled in response to an order placed on the website.
The question whether that method of supply constitutes an infringement of the
UK copyright in the sound recording is common to all Relevant Members because
the same method is used for all supplies. Unless and to the extent that the defendants
seek to put in issue the subsistence or ownership of the UK copyright contrary
to the presumptions for which s.105 CDPA provides or the consent of a Relevant
Member to the acts complained of the issues of fact and law will be identical
however many sound recordings or Relevant Members are involved. It would be absurd
and contrary to the propositions expressed by Megarry J in John v Rees and
CPR Rule 1 if there had to be a separate claim in respect of each Relevant Member
at least until it is seen if the issues in relation to that Relevant Member are
substantially different from those relating to the generality of the Relevant
Members.
- The
relevant relief is injunctive or pecuniary. As far as pecuniary relief is concerned
it is in its nature equally beneficial to Relevant Members as to the individual
claimants. What they do with any money recovered in the action is a matter for
them, not the defendants. The letter of 4th October 2002 from BPI to the claimants
is not of itself binding on the claimants, let alone any Relevant Members. If
the Relevant Members are content that the money should go to BPI that is a matter
for them. Their wishes in that regard do not prevent the pecuniary relief being
in its nature equally beneficial to all.
- In
Columbia Picture Industries v Robinson [1986] FSR 367, 430 Scott J pointed
out that the injunction sought by the plaintiffs was of very great breadth because
it aimed to restrain the defendants from knowingly infringing copyright in any
film for the time being belonging to the plaintiffs or of which they were exclusive
licensees. He considered that it would be wrong in principle to grant an injunction
the scope of which the defendants could not know and could not discover. That
proposition, which is not challenged, was stated in relation to films of which
the copyright was regulated by the Copyright Act 1956. But, as counsel for the
claimants points out, there was no provision in the Copyright Act 1956 for presumptions
as to the subsistence of copyright and its ownership to arise from labels or marks
fixed to films. In a case to which s.105 CDPA applies the use of the requisite
labels or marks gives rise to a presumption of ownership readily apparent to the
defendants. In any event, as counsel for the claimants pointed out, Scott J did
grant injunctions in relation to copyrights to which it had been established in
the action that existing members were entitled. Given the presumptions prescribed
in s.105 CDPA I see no reason why it should be assumed now that Relevant Members
cannot benefit from the injunctive relief sought by the claimants.
- For
these reasons I conclude that the claimants and the Relevant Members, as defined
in the particulars of claim, all have the same interest in the claim. My conclusion
is supported by the views of Sir Denys Buckley expressed, obiter, in CBS v
Amstrad [1988] 1 Ch.61. In that case Amstrad sold recording machines with
which a sound recording on one tape might be duplicated onto another, blank, tape.
The plaintiff, CBS, was the owner or exclusive licensee of a substantial number
of sound recording copyrights. It sued for injunctions to restrain the sale of
such machines without taking such precautions as might be necessary to protect
the copyrights of which it or any member of the BPI was the owner or exclusive
licensee. The basis of the claim was the unlawful incitement of the public to
commit offences under s.21(3) Copyright Act 1956. The majority of the Court of
Appeal concluded that such unlawful activity could not give rise to a civil claim
and struck it out.
- Sir
Denys Buckley took the contrary view. Consequently he, unlike the other two members
of the court, had to consider whether CBS could sue in respect of copyrights owned
or licensed to members of BPI. He referred to the speech of Lord Macnaghten in
Duke of Bedford v Ellis and continued:
"Similarly,
in the instant case the plaintiffs, and all the persons whom they purport to represent,
have statutory rights under the Copyright Act 1956, which the action is designed
to protect from infringement resulting from the conduct of the defendants which
is complained of. They share, in my judgment, a common interest and a common grievance,
such as Lord Macnaghten had in mind. The relief which is primarily claimed is
injunctive in form which would benefit the plaintiffs and all whom they purport
to represent in the same way, that is to say, by protecting them from the risk
of infringements incited by the defendants."
In
relation to the claim for damages he added (p.86):
"In
the instant action, the claims of the plaintiffs and those of the persons whom
they purport to represent, all have a common basis: damages are not the sole relief
claimed and can, in my opinion, be regarded as a quite subsidiary form of relief,
capable of being pursued by any individual claimant..."
- It
follows that in my judgment the claim is capable of being brought in a representative
capacity because the claimants and the Relevant Members have the same interest
in the claim. In their written argument counsel for the defendants emphasised
that there was no evidence that either the claimants or PPL or BPI had the authority
of the Relevant Members to bring these proceedings on their behalf. This is true
as a matter of fact but it is irrelevant as a matter of law. Markt & Co
Ltd v Knight Steamship Co.Ltd [1910] 2 KB 1021, 1039 and John v Rees
[ibid] at p. 371. It appears to me that in cases falling within CPR Rule 19.6
the rule itself provides the authority of the person who is represented.
Should
a direction be made under CPR Rule 19.6(2)?
- Counsel
for the defendants submits that if CPR Rule 19.6(1) does apply I should, nevertheless,
make a direction under Rule 19.6(2) that the claimants may not act as representatives
of the Relevant Members or any of them. Whether or not such a direction should
be made is within the discretion of the court to be exercised in accordance with
the overriding objective.
- The
defendants rely on a letter from the solicitors for the claimants dated 20th November
2002 in which they indicate that they expect documents produced on disclosure
to reveal the extent of the defendants’ allegedly infringing activities. By a
request for further information served on 5th February 2003 the claimants seek
details of the CDs purchased by the defendants for resale through the CD-WOW site
including titles, quantities and whether or not such CDs had been put into circulation
in EEA by or with the consent of the owner or exclusive licensee of the UK copyright.
In these circumstances the defendants claim that the fair trial of the issues
between them and the individual claimants will be made longer and more expensive
if the court permits the claimants to sue in the representative capacity they
claim.
- The
defendants also maintain that even if the Relevant Members and the individual
claimants have a common grievance because each of their copyrights will have been
infringed by the same course of the defendant’s dealing it should not be assumed
that all Relevant Members wish to sue. It is not, the defendants submit, self-evident
that the owner of the UK copyright in a sound recording who has consented to that
sound recording being put on the market outside EEA wishes to protect his position
in the market in EEA by preventing parallel imports.
- The
defendants rely on the decision of Hirst J in Haarhaus v Law Debenture Trust
Corpn [1988] BCLC 640. In that case the plaintiffs brought an action on behalf
of themselves and all other holders of promissory notes issued by a Nigerian Bank
to restrain the defendant, the trustee of the noteholders trust deed, from publishing
details as to the votes cast at a meeting of noteholders. Hirst J referred to
the obvious conclusion that the figures themselves indicated such a difference
of opinion as would preclude a common grievance and relief beneficial to all noteholders.
In his discretion he ordered that the action might not be continued in a representative
capacity. The defendants also draw attention to the course Laddie J took in Russell-Cooke
Trust Co. v Elliott (26th March 2001 unreported). In that case the judge was
concerned with the administration of certain investment schemes set up by a solicitor
into whose practice the Law Society had intervened. Laddie J directed that a circular
be sent to all investors to determine their views. It is suggested that I should
do likewise in this case so that it may be determined whether or not Relevant
Members do wish proceedings to be taken on their behalf to restrain parallel imports.
- In
my view it would not be right to make the direction sought under CPR Rule 19.6(2)
or any lesser order requiring any questionnaire to be sent to Relevant Members.
For the reasons I have already given I accept the submission of the defendants
that these proceedings have not been specifically authorised by the Relevant Members.
But I am not prepared to infer from that that the Relevant Members do not know
of them. Nor in the absence of any evidence to that effect am I prepared to infer
that any Relevant Member is content that the parallel importation of sound recordings
in respect of which he is the owner or exclusive licensee of the UK copyright
should continue. If he did then such parallel importation would cease to give
rise to infringements of that copyright.
- It
is true that the representative element of the claim is likely to make the proceedings
longer and more expensive than would be the case if they were confined to the
claims of the individual claimants. But that is not the only comparison to be
made. The other is to compare the aggregate time and cost involved if there were
separate claims brought by these claimants and each and every Relevant Member.
Plainly the saving of time and expense by permitting the representative element
of the claim to be pursued in conjunction with the individual claims of the claimants
is considerable. If the claim succeeds then the defendants can hardly complain.
If it fails they will get their costs of the claim as a whole or of the representative
part of it as the case may be.
- As
I have already pointed out the terms on which the proceedings are brought, as
between PPL, BPI, the individual claimants or their solicitors on the one hand
and the Relevant Members on the other are issues between them, not between them
and the defendants. A Relevant Member will not be liable for any costs unless
he has specifically authorised the proceedings brought on his behalf. Nor, as
against him, will BPI be entitled to retain any damages or profits recovered from
the defendants on his behalf unless he agrees.
Conclusion
- For
all these reasons I consider that the claim is properly brought by the individual
claimants on behalf of the Relevant Members as defined in the particulars of claim
as proposed to be amended as well as on their own behalf. Similarly I see no reason
to make any order under CPR Rule 19.6(2). In those circumstances I dismiss the
application of the defendants issued on 23rd December 2002. I will hear argument
on any consequential issues as to costs and on the application of the claimants
issued on 5th February 2003 for directions if and to the extent that it has not
been resolved by agreement.