Recorded music, artists
This update By Leeza Panayiotou, LLB(Hons)
In Henderson v All Around the World Recordings Ltd  EWHC 3087 (IPEC), the Claimant Jodie Henderson’s damages were assessed to be a total of £35,000.00. But it’s the result of a fairly long process and it’s interesting to see how the court reached this decision and quantum.
The year was 2007 and Jodie Henderson (aka Jodie Aysha) and Tafazwa Tawonezvi (aka T2) charted at No.2 in the Singles Chart for 5 weeks and stayed in the Top 40 for over 40 weeks with the track ‘‘Heartbroken’’.
Despite such success however, Henderson was never remunerated for her performance on the track, her appearance in the music video or for the use of her name.
Though Henderson penned the lyrics herself several years before the tracks release (and she is now signed to Sony ATV music publishing), it was Tawonezvi who remixed the track into its ‘Bassline’ state (arguably the reason for the track’s mainstream success at the time). Tawonezvi had signed a deal with 2NV Records Ltd, presumably in recognition of his talents as a producer and DJ, and this paved the way for 2NV Records to sign a deal with All Around the World Recordings Ltd (AATWR) in order to release the track. The track went on to be a hit. A big hit. The scene was rife with naughties teenagers, separating their heart-shaped fingers Heartbroken-ly as a result.
Prior to this, 2NV records offered Henderson £1,500.00 in payment for her performance on the track, however she declined the sum.
The story did not end there though, because as the saying goes – “where there is a hit, there is a writ”. And a writ there was in the Patents County Court (now the Intellectual Property Enterprise Court) in February 2013. In this matter, the presiding Judge (the then HH Judge Birss QC) held that although Henderson had consented to the recording of her vocal for the track, she had not consented to any future exploitation thereafter. As Henderson had declined the sum offered for her performance and had not signed a deal with 2NV, AATWR were unable to claim they had inferred Henderson’s consent. On that basis, the Judge held that AATWR had infringed Henderson’s performance rights by making and issuing copies of her performance to the public without her consent, in conflict with ss 182A and 182B CDPA 1988.
The Judge further commented that the fact that Henderson reluctantly appeared in the music video of the track, entered into discussions regarding the release, approved artwork for the single and made personal appearances in nightclubs to sing the track, did not equate to consent. The court held AATWR had “gone ahead at risk” in releasing the track as they knew Henderson was not signed to 2NV, the party from whom they derived permission to release the track and without agreeing any terms of payment with Henderson before doing so.
In light of the above, Henderson elected for an inquiry as to damages in this matter. In The Intellectual Property Enterprise Court, HH Judge Hacon assessed Henderson’s damages to be £30,000.00 according to the user principle and a further £5,000.00 under Article 13(1)(a) Directive on the enforcement of intellectual property (IP) rights (2004/48/EC) (Enforcement Directive) for unfair profits.
Firstly, in relation to the user principle, HH Judge Hacon considered the royalties that would have been agreed between Henderson and AATWR before the track’s release. The starting point for the Judge’s deliberation came in consideration of comparable recording deals offered to Henderson. In 2009 when beginning discussions regarding another of Henderson’s tracks, AATWR pointed to a figure of 12% net artist’s royalties. The Judge concluded that had negotiations been conducted, Henderson’s likely net royalty rate would have been 6%, on the assumption that Henderson and Tawonezvi would be joint and equal performers, as was the case in the ‘Heartbroken’ track.
In relation to unfair profits, the Judge considered Henderson suffered loss whereby her name and reputation would have been enhanced by the ‘Heartbroken’ track’s release. The £5,000.00 was awarded to provide Henderson compensation for the loss of promoting her name. The Judge held that this meant wherever the court felt that the Claimant would receive inadequate damages for the actual prejudice suffered by assessing damages in relation to lost profits, moral prejudice or by assessment according to the ‘user principle’ or on an account of profits, Article 13(1)(a) allowed for an additional sum to be awarded to the Claimant on the basis of the sum related to the profit the Defendant made from the knowing infringement.
The Judge further clarified the fact that s 191J(2) CDPA, which allowed for additional damages for infringement of a performers rights by having regard to the flagrancy of the infringement, was now essentially redundant in favour of Article 13, as it provides a lower hurdle, of situations where a Defendant knowingly or with reasonable grounds to know engages in infringing activity
Judge Hacon further considered awarding compensation for ‘moral prejudice’ on the grounds of mental distress, injury to feelings and humiliation under Article 13(1)(a). However, the Judge did not allow for such an award in this instance and he considered that the “provision was confined to prejudice arising in limited circumstances, particularly where a claimant had suffered little or no financial loss and would otherwise either be left with no compensation, or the compensation would not be proportionate to the overall damage suffered”.
Although Henderson further attempted to argue that she should be entitled to recover both lost profits and unfair profits accrued to the Defendant under Regulation 3(2)(a)(i) UK Regulations (and on that basis Article 13(1)(a) Enforcement Directive, on this point, HH Judge Hacon stated that it was clear from Article 13(2) that a Claimant could choose between an inquiry as to damages or an account of profits but could not have the benefit of both . HH Judge Hacon stated that the task of the court was to pay the Claimant’s damages “appropriate to the actual prejudice” suffered by it as a result of the infringement, usually profit lost and expenses. In this instance, the Judge considered that “unfair profits” in Article 13(1) did not mean that the court had to always take into account the profit made by the defendant from his knowing infringement.
However, despite the above, the Claimant was awarded damages based on the ‘user principle’ – being ‘lost profits’ and unfair profits under Article 13. Nevertheless, HH Judge Hacon assured that this was not reached contrary to Article 13 as there was not an inquiry as to damages and an account of profits. HH Judge Hacon merely used Article 13 to provide a ‘top up’ to damages by deciding that damages alone would be inadequate for the actual prejudice suffered. This has allowed the courts to have ongoing discretion in such matters without going against the Enforcement Directive.
In what was seemingly a small case for a since relatively unknown artist, HH Judge Hacon has provided guidance on the interpretation of the Enforcement Directive, CPDA and given a clear interpretation of the meaning of ‘unfair profits’ and ‘moral prejudice’.
It would appear that only the Defendant wound up heartbroken in the end.