Carrickdale Hotel Ltd v Controller of Patents

• Jurisdiction: Ireland
• Judgment Date: 12 May 2004
• Date: 12 May 2004
• Docket Number: [2002 No. 350 Sp]
• Court: High Court

Carrickdale Hotel Ltd. v. Controller of Patents

Carrickdale Hotel Limited

Plaintiff

and

The Controller of Patents, Designs and Trade Marks and Phonographic Performance (Ireland) Limited

Defendants

[2004] IEHC 83; [2004] IEHC 185

[2002 No. 350 Sp]

High Court

High Court

Copyright - Sound recordings - Equitable remuneration - Copyright owners - Dispute regarding appropriate quantum of equitable remuneration referred to arbitrator - Appeal from award of arbitrator - Whether tariff should be determined by reference to turnover or profitability of copyright user - Whether foreign comparators relevant - Copyright Act 1963 (No. 10), ss. 17(4) and 41(3).

Courts - Jurisdiction - High Court - Statutory appeal - Standard of review - Copyright - Sound recordings - Equitable remuneration - Dispute regarding appropriate quantum of equitable remuneration referred to arbitrator - Appeal from award of arbitrator - Appropriate standard of review applicable to decisions of expert administrative tribunals - Copyright Act 1963 (No. 10), s. 41(3).

Section 17(4)(b) of the Copyright Act 1963 provides that a copyright owner is entitled to be paid an "equitable remuneration" by a copyright user who causes a sound recording or any reproduction thereof to be heard in public or to be broadcast or transmitted to subscribers to a diffusion service. Section 31(3) provides that where there is a dispute between the copyright owner and copyright user as to the amount of the remuneration payable, the dispute may be referred to the first defendant who may refer the case to an arbitrator under s. 41.

The plaintiff was the owner of a nightclub. The second defendant was a limited company whose function it was to collect the remuneration payable by copyright users who cause a sound recording or a reproduction thereof to be heard in public or broadcast on behalf of record companies.

The first defendant referred a dispute concerning the amount of equitable remuneration to be paid by the plaintiff to the second defendant to an arbitrator pursuant to s. 41(1)(b) of the Act of 1963. The award of the arbitrator comprised, inter alia, a fixed fee, a tariff structure which provided for a baseline rate on the basis of attendance and event length and admission price adjustment factors. The plaintiff appealed the award under s. 41(3) of the Act of 1963 to the High Court.

The plaintiff contended that the arbitrator failed to take into account that the music in a nightclub, while essential to the operation of the nightclub, does not in itself determine the profitability of the nightclub which depends on a wide variety of other factors and that the arbitrator erred in fixing a tariff on the basis that fairness and reasonableness is derived from a profitability-related concept. It was further submitted that the arbitrator erred in rejecting comparisons proffered by the plaintiff.

On a preliminary issue regarding the standard of review applicable to the appeal, the second defendant contended that the appropriate standard of review to be applied by the High Court on hearing the appeal was that of "reasonableness simpliciter". The plaintiff contended that the appeal should be treated in the same fashion as appeals from the High Court to the Supreme Court by way of rehearing pursuant to O. 58, r. 1 of the Rules of the Superior Courts 1986.

Held by the High Court (Laffoy J.), in determining the preliminary issue, that the test to be applied by the court on hearing an appeal from an award fixing an amount of equitable remuneration under the Copyright Act 1963, in determining whether the award should be confirmed, annulled or varied, was whether the plaintiff had established as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors. In applying the test, regard was to be had to the degree of expertise and specialist knowledge possessed by the adjudicator.

Orange Ltd. v. Director of Telecoms (No. 2) [2000] 4 I.R. 159applied. M. & J. Gleeson v. Competition Authority[1999] 1 I.L.R.M. 401 followed.

Quaere: Whether the same degree of deference should be shown to the award of an arbitrator under appeal as should be shown to the decision of the Controller of Patents, Designs and Trade Marks.

Held by the High Court (Laffoy J.), in allowing the appeal and in varying the arbitrator's award, 1, that, in determining whether it was reasonable to fix a royalty by reference to turnover or profitability, it was necessary to consider whether it could be shown that the use of the copyright was connected with the level of turnover and profitability generated bearing in mind that the copyright owner did not share the risks of the copyright user's enterprise.

British Sky Broadcasting Ltd. v. Performing Right Society Ltd. [1998] R.P.C. 467; Performing Right Society Ltd. v. British Entertainment and Dancing Association Ltd. (Unreported, English Copyright Tribunal, 1st August, 1989); Performing Right Society Ltd. v. British Entertainment and Dancing Association Ltd. [1993] E.M.L.R. 325 approved. Association of Independent Radio Companies Ltd. v. Phonographic Performance Ltd. [1994] R.P.C. 143 considered.

2. That the arbitrator erred in assigning baseline rates to the various attendance bands in his tariff structure which were revenue and profit related and in weighting the baseline rates and price adjustment factor so as to absorb a greater share of the real profit of the nightclub enterprise at higher attendance and higher price levels because an adequate nexus between the use, on a non-exclusive basis, of recorded music in a nightclub and revenue generated from all sources had not been shown. While recorded music was an important feature of a nightclub, it did not justify seeking payment which was related to the revenue or profitability of the nightclub enterprise, whether notional or actual.

3. That, in determining what constituted equitable remuneration for the purposes of s. 17(4) of the Copyright Act 1963, comparable bargains and determinations were relevant provided that the comparison exercise was done on a consistent basis, that is, a comparison of like with like.

• A.E.I. Rediffusion Music Ltd. v. Phonographic Performance Ltd. [1998] R.P.C. 335; American Society of Composers, Authors and Publishers v. Showtime/The Movie Channel Inc. (1990) 912F. 2d 563; British Airways Plc. v. Performing Right Society Ltd. [1998] R.P.C. 581; British Sky Broadcasting Ltd. v. Performing Right Society Ltd. [1998] R.P.C. 467; Performing Right Society Ltd. v. British Entertainment and Dancing Association Ltd. [1993] E.M.L.R. 325; Phonographic Performance v. Virgin Retail Ltd. [2001] E.M.L.R.; Reference by Australasian Performing Right Association Ltd under s.154 of the Copyright Act 1968 (1992) 25 I.P.R. 257; Association of Independent Radio Companies Ltd. v. Phonographic Performance Ltd. [1994] R.P.C. 143 approved.

4. That equitable remuneration in the context of s. 17(4) of the Act of 1963 meant a fair price for the service provided. In respect of the use of sound recordings by a nightclub owner, a fair price was a sum which fairly reflected the value to the nightclub owner of the use of the repertoire while fairly compensating the copyright owner for the availability of that repertoire.

Phonographic Performance v. Controller of Industrial Property [1996] 2 I.R. 560 applied.

5. That, in the context of deciding what constituted an appropriate comparator for the purposes of determining the equitable remuneration payable in accordance with s. 17(4), there was no basis for the proposition that the sound recording copyright was inferior to the author's copyright.

6. That, to the extent that the determination the arbitrator was required to make turned on legal issues, he was not owed any particular deference by the court. However, in reviewing the decision of the arbitrator, the court did have regard to the expertise and specialist knowledge which he had in the areas of accountancy, business and commerce.

Semble: That, within the European Union, even if the comparison methodology was not such as to eliminate the differences which might exist from one jurisdiction to another for use of sound recording copyright, the existence of a glaring disparity between the rates charged in one jurisdiction and another or others should put an independent adjudicator on inquiry as to whether the domestic rate could be equitable.

Cases mentioned in this report:-

A.E.I. Rediffusion Music Ltd. v. Phonographic Performance Ltd. [1998] R.P.C. 335; [1998] E.M.L.R. 240.

American Society of Composers, Authors and Publishers v. Showtime/The Movie Channel Inc. (1990) 912F. 2d 563; 16 U.S.P.Q.2D (BNA) 1026; 1990-2 Trade Cas. (CCH) P69, 167.

In re Application of Hamilton Cosco Inc. [1966] I.R. 266.

Association of Independent Radio Companies Ltd. v. Phonographic Performance Ltd. [1994] R.P.C. 143; [1993] E.M.L.R. 181.

Basset v. S.A.C.E.M. (Case 402/85) [1987] E.C.R. 1747.

British Airways Plc. v. Performing Right Society Ltd. [1998] R.P.C. 556.

British Sky Broadcasting Ltd. v. Performing Right Society Ltd. [1998] R.P.C. 467; [1998] E.M.L.R. 193.

Canada (Director of Investigation and Research) v. Southam Inc. [1997] 1 S.C.R. 748.

Hay v. O'Grady [1992] 1 I.R. 213.

Henry Denny & Sons (Ireland) Ltd. v. Minister for Social Welfare [1998] 1 I.R. 34.

Independent Television Companies Association Ltd. v. Performing Right Society Ltd. (Unreported, English Performing Rights Tribunal (No. 38/81), 19th October, 1983).

M. & J. Gleeson v. Competition Authority [1999] 1 I.L.R.M. 401.

Ministère Public v. Tournier (Case 395/87) [1989] E.C.R. 2521.

Montex Holdings Ltd. v. Controller of Patents [2001] 3 I.R. 85.

Murphy v. Minister for Defence [1991] 2 I.R. 161.

O'Keeffe v. An Bord Pleanála [1993] 1 I.R. 39.

Orange Ltd. v. Director of Telecoms (No. 1) [2000] 4 I.R. 136.

Orange Ltd v....