Facts

Marshall Bruce Mathers III, better known as "Eminem", became very famous after the release of his second album in 1999. This case concerned his lesser known and less successful first album entitled "Infinite", recorded in 1996.

FBT Productions LLC brought the claim for copyright infringement against Let Them Eat Vinyl Distribution Ltd (LTEV) and a second company, Plastic Head Music Distribution Ltd, alleging infringement of the copyright in Eminem's first album. The claim covered both vinyl and CD formats of the album.

His Honour Judge Hacon found that LTEV had infringed the copyright in the album by making vinyl copies of the work. However, neither of the defendants was liable for any of the secondary acts of infringement pleaded, namely importing, offering for sale and selling copies of the album. HHJ Hacon accepted that the defendants neither knew nor had reason to believe that the vinyl and CD copies of the album sold by Plastic Head were infringing copies of another party's copyright work.

LTEV made 2,891 vinyl copies, all of which were supplied to and distributed by Plastic Head. Distribution of vinyl copies continued until 9 October 2016. Plastic Head also sold CDs obtained from a business known as Boogie Up Productions which was based in the US and run by a Mr David Temkin, who had advised the defendants that he had the right to license vinyl format copies of the album.

On 12 January 2017, Plastic Head withdrew from sale the CD copies of the album supplied by Boogie Up following receipt of a letter before action to LTEV from FBT. Advertising and marketing of the album by the defendants came to an end.

FBT elected an inquiry into damages and claimed on three bases:

  1. the loss of an opportunity to license a third party to exploit the album (and various tracks comprised in the album) to celebrate the album's 20th anniversary;
  2. the losses flowing from the licence that FBT would have offered the LTEV for the exploitation of the album; or
  • a reasonable royalty for the actual sales made by LTEV based on the notion of a willing licensee/willing licensor negotiation.

FBT's main claim was under the first head. It said that its loss was the loss of a chance to trade generally, rather than the loss of a particular chance. It did not rely on a particular third party to buy its goods but rather on the opportunity to market copies of singles and, subsequently, an album, generally, using a third party as the conduit for those sales.

Decision

Ian Karet (sitting as a Deputy High Court Judge) found that, on the facts, LTEV's infringing activities had not led to a loss of opportunity for FBT. FBT claimed that when it discovered the LTEV copy of the album in August 2016, it had abandoned its plans for the 20th anniversary release. However, Mr Karet said, plans for an issue of vinyl had in fact continued and, on the facts, FBT's actions were inconsistent with a party that was not proceeding.

Further, applying the test set out in SDL Hair Ltd  v Next Row Ltd [2014] EWHC 2084 (IPEC) Mr Karet said that FBT had not shown that the tort was a cause of any loss. Therefore the claim for damages under this head failed.

Mr Karet also rejected FBT's second head of loss, as the evidence before him was in fact that it would not have offered a licence to LTEV because it was not an attractive potential licensee.

As for the third head of loss, Mr Karet found that damages should be calculated for a licence to make 2,981 copies of the album. He said that the notional licensor would know that the licensee had experience in the UK market of re-issues of significant artists. Further, he found that the licence would probably have been for a unit price per record. (If it had been a percentage of the price to dealer that would have been assumed so as to give a similar royalty.) Given the nature and reputation of the licensor (with valid rights) and that this was a special anniversary disc, which might attract higher pricing, Mr Karet found that the notional licensee would have been prepared to pay more than the £1.50 that had been agreed with Boogie Up and would be able to set a higher price to dealer to maintain profits. The licensor would have in mind a likely retail price for the album of about US$24.

Taking all that into account, Mr Karet found that the hypothetical fee would be £2.50 per disc, which was equivalent to a rate of just over 32% on the price to dealer of £7.75 that LTEV in fact charged Plastic Head.

Therefore, Mr Karet assessed damages on the basis of a £2.50 notional licence fee to make 2,981 infringing copies, which came to £7,452.50 plus interest. (FBT Products LLC v Let Them Eat Vinyl Distribution Ltd [2021] EWHC 932 (IPEC) (20 April 2021) — to read the judgment in full, click  here).

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