07 May 2012

Enforcing Small IP Claims: Sullivan v Bristol Film Studios

In Sullivan v Bristol Film Studios Ltd    [2012] EWCA Civ 570 (3 May 2012) the Court of Appeal dismissed an appeal from a strike out of a claim for copyright, moral rights and performers' rights infringement and breach of contract under CPR 3.4 by the Chancery interim applications judge sitting in Bristol. The claim was struck out as an abuse of the process of the court not because it was bound to fail, but because even if it were to succeed the costs of fighting it would be out of all proportion to the amount that the claimant was likely to recover.

The claim was brought by a hip hop artist who had contracted with the defendant film company to make a video. The film was to have been a joint venture.  The claimant, Tony Sullivan (also known as Rudey Soloman ("Mr. Soloman"), made the sound track and appeared in the film.  The film company made the film in return for a share of the sales or other revenues.   After the film had been made, it was uploaded to YouTube.   Unfortunately, Mr. Soloman did not like what he saw.   He insisted on its removal from YouTube and after 5 days the film was taken down.

Mr. Soloman issued proceedings out of the Bristol District Registry claiming £800,000 for the causes of action mentioned above.  He applied to the interim applications judge for delivery up of infringing materials.   In the course of his application the studio made a cross-application to strike out his claim form and particulars of claim.   In considering the cross-application the judge worked out the maximum damages that could possibly be awarded under the claim.   In the words of Lord Justice Lewison at paragraph [13]:
"He considered the evidence about what had happened during the short period that the video had been viewable on You Tube. There was evidence before him that showed that during the period that the video had been posted on You Tube it had been viewed nearly 100 times. That is not to say that it had been viewed by 100 different people, because You Tube only records "hits" which may be multiple hits by the same person. But the judge concluded that apart from BFS' own personnel a maximum of some 50 people had seen the video. He assumed, in Mr Soloman's favour, that the video in its unfinished state was "derogatory" treatment within the meaning of the CPDA. He reasoned as follows. There were three possible consequences of 50 persons having seen the video. First, having seen its poor quality, they would decide not to buy the record when it eventually came out. On the basis of figures given to him by Mr Soloman the judge decided that Mr Soloman stood to make a maximum of £1.20 for each record sold. The judge was prepared to assume in Mr Soloman's favour that of the 50 people who saw the video, 40 would have bought the record once it had been released but for the poor quality of the video. This would produce for him a recovery of approximately £50. Second it was possible that those 40 people would themselves disparage or bad mouth the video. The judge was not prepared to make that assumption in Mr Soloman's favour since there was no evidence that anyone had done that. Nor is there now. Third, the 50 people might have liked the video so much that they bootlegged it. Again the judge was not prepared to make this assumption in Mr Soloman's favour in the absence of any evidence that this had in fact happened. Again there is no evidence now of any bootlegging. I might also add that there would in any event be a considerable overlap between this way of putting the claim and the first way, because the lost sales attributable to bootlegging would have been to some extent the mirror image of the lost sales due to people not buying the record at all."
The judge assessed the maximum possible recovery at £50. Noting that on addition to the categories of damage to which the judge referred, it was also possible that Mr Soloman would recover a modest amount of damages for derogatory treatment amounting to a breach of his moral rights, Lord Justice Lewison concluded at paragraph [27] that the judge had been right to approach the case on the basis that the recoverable damages were likely to be extremely modest, on the assumption that Mr Soloman established liability. As Mr. Solomon had already conceded in argument that if indeed his claim was worth only £50 or thereabouts, it should not go forward to trial, the Court of Appeal dismissed the appeal.

Both the Court of Appeal and the judge below had relied on the decisions of the Court of Appeal and Mr. Justice Eady in Dow Jones & Co Inc v Jameel [2005] 2 WLR 1614, [2005] EMLR 353, [2005] EWCA Civ 75, [2005] EMLR 16, [2005] QB 946. In that appeal Lord Phillips MR had said at paragraph [70]:
"It would be an abuse of process to continue to commit the resources of the English court, including substantial judge and possibly jury time, to an action where so little is now seen to be at stake. Normally where a small claim is brought, it will be dealt with by a proportionate small claims procedure. Such a course is not available in an action for defamation where, although the claim is small, the issues are complex and subject to special procedure under the CPR."
The important point of that passage is that Jameel had been struck out not because it was small but because there was no small claims procedure for defamation claims.   Lord Justice Lewison added at paragraph [29] of his judgment in Sullivan:
"The mere fact that a claim is small should not automatically result in the court refusing to hear it at all. If I am entitled to recover a debt of £50 I should, in principle, have access to justice to enable me to recover it if my debtor does not pay. It would be an affront to justice if my claim were simply struck out."
In his Lordship's judgment "it is only if there is no proportionate procedure by which a claim can be adjudicated that it would be right to strike it out as an abuse of process."

In Lord Justice Lewison's view there was a proportionate procedure for intellectual property claims and that was the Patents or indeed the Bristol County Court.   He said at paragraph [32]:
"In my judgment in principle a claim like Mr Soloman's could have been tried in the PCC if its true value had been recognised at the outset. When in future a judge is confronted by an application to strike out a claim on the ground that the game is not worth the candle he or she should consider carefully whether there is a means by which the claim can be adjudicated without disproportionate expenditure. As I have said, in addition to the PCC the claim could also have proceeded in the Bristol County Court."
Although intellectual property claims are allocated initially to the multitrack by CPR 63.1 (3) there was nothing in the rules to prevent its reallocation to the small claims track under CPR 26.10.   Since the small claims track is the normal track for claim which has a value of not more than £5,000, the learned Lord Justice was inclined to think that the best solution would have been for a small claim for copyright infringement to have been allocated to that track in the Bristol county court. Both Lord Justice Etherton and Lord Justice Ward agreed with Lord Justice Lewison.

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