The Court of Appeal (the Court) recently ruled that a clause in a PRS agreement with two composers, which transferred future rights in works which a composer “may acquire or own” would work to give PRS rights over future works, even those which purported to vest in a third party on creation.
In 2004 songwriters Suleiman and Salim Merchant entered a contract with the Performing Rights Society (PRS) agreeing to transfer to the PRS “absolutely for all parts of the world, the rights which belong to you on the date of this Agreement, or which you may acquire or own whilst you remain our member”.
In 2008, the brothers were commissioned to write the music and lyrics for the film ‘Kurbaan’. The composers entered an agreement with B4U, the film production company. The agreement provided that copyright in their works (present and future) would vest with B4U as first owner. B4U then broadcast a song from the film in April 2010. PRS brought proceedings for copyright infringement and obtained summary judgment against B4U.
B4U appealed the summary judgment arguing that they, not the composers were the first owners of the work so that it fell outside of the scope of the PRS agreement. B4U cited section 91(1) of the Copyright, Designs and Patents Act 1988, which permits the assignment of future copyright by agreement between the parties concerned.
The question for the Court of Appeal to resolve was whether or not the song from the film fell within the scope of the brothers’ initial assignment to PRS. If so, the PRS assignment would rank ahead of that of B4U in time.
Moses LJ found that the clause in the 2004 agreement included future works the composer may own; but there was no requirement that the rights must be owned by the composer in order that the composer be considered a potential owner: “The question is not whether the composers became owners but whether, at the time the agreement was made, they could have done so. The assignment does not transfer rights of which the composers subsequently became owners, it transfers rights which the composers may own.”
Moses LJ said in his judgment: “At the time of [the PRS agreement] the composers could have become owners of the song. As prospective owners, their assignment took effect under section 91 once the song had been composed.”
The court’s analysis of how section 91(1) operates to transfer future copyright will be of considerable interest to practitioners. Further, the case raised interesting commercial implications from the court’s construction of the PRS Clause. Kitchin LJ noted that the clause has been echoed in virtually identical terms across PRS’s member agreements for many years. There is a concern that assigning rights in future works to other entities would be prohibited – even those works written pursuant to a later commissioning agreement with a third party. However, the Court of Appeal emphasised that there was insufficient evidence on the commercial effect of this construction in the current case.