Independiente Ltd. & Ors v Music Trading On-Line (Hk) Ltd. & Ors [2003] EWHC 470 (Ch)

Case No HC 02C02413[2003] EWHC 470 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13 th March 2003
Before
THE VICE-CHANCELLOR
Between
Independiente Ltd and OthersClaimantsMusic Trading On-Line (HK) LtdDefendantsAnd Others
Mr. Henry Carr QC and Mr. Mark Vanhegan (instructed by Wiggin & Co) for ClaimantsMr. Jeffery Onions QC and Mr. Philip Roberts (instructed by Messrs Nicholson Graham & Jones) for First to Third and Fifth DefendantsHearing Hearing date : 4 th March 2003
Approved JudgmentI direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic..............................The Vice-Chancellor

The Vice-Chancellor:

[1]The claimants are the owners or the exclusive licensees of the UK copyright in various sound recordings. The fifth defendant (“Mr Robinson”) is a substantial shareholder in the second defendant (“BVI”), the beneficial owner of the shares in the third defendant (“UPI”) and a director of the first defendant (“HK”) and of UPI. The first defendant (“HK”) is a wholly owned subsidiary of BVI. (Proceedings against the fourth defendant have been discontinued.)[2]Since early 2000 the defendants or one of them have operated a website at www.cd-wow.com in the trading name CD-WOW at which they advertise for sale a large number of CDs containing sound recordings of well known popular artists. Orders placed on that website are supplied by HK with CDs from Hong Kong. Such CDs are genuine in that they were made and released on the market outside the European Economic Area with the knowledge and approval of the owners of the UK copyright or their exclusive licensees.[3]On 23rd August 2002 the claim form in these proceedings was issued by the claimants seeking an injunction, damages or an account of profits and delivery up of infringing copies. The claim is made in relation to CDs embodying sound recordings in which they own or are the exclusive licensees of the UK copyright which had been released on the market outside EEA and subsequently supplied by HK to buyers in the UK. The infringements relied on are the importation of such CDs into the United Kingdom and their subsequent possession in the course of business and issue to the public as provided in ss.18, 22 and 23 Copyright, Designs and Patents Act 1988 (“CDPA”). The claim form states that the claimants are “suing on behalf of themselves and for and as representing all other members of the British Phonographic Industry Ltd [“BPI”] and Phonographic Performance Ltd [“PPL”]”. In the particulars of claim served the same day it is alleged that the claimants are members of BPI and/or PPL and sue on behalf of all other members whose names are set out in Schedule 1 thereto. It is claimed that nearly all sound recordings produced in the UK are produced, manufactured or distributed by such members each of whom is a qualifying person for the purposes of s.154 CDPA.[4]In response to an objection made by solicitors for the defendants, by a letter dated 4th October 2002 the claimants’ solicitors indicated that the representative claim would be limited to those members of BPI and PPL as are “owners and/or exclusive licensees of UK sound recordings”. The defendants were not satisfied with this assurance and on 23rd December 2002 issued the first of the applications now before me seeking an order in accordance with CPR Rule 19.6(2) preventing the claimants from acting in the representative capacity claimed on the grounds that(1) the claimants have not demonstrated that they are authorised by the persons they claim to represent to bring the action as presently constituted and(2) they do not have the same interest as those persons.[5]Following further correspondence between the parties’ respective solicitors the second application now before me was issued by the claimants on 5th February 2003. By that application the claimants seek, amongst other things, to add as the sixth and seventh claimants Sony Music Entertainment (UK) Ltd and Sony Music Entertainment Inc, and to amend the particulars of claim. If permission to amend as sought is granted then the title to the claim will still aver that the first six claimants “sue on behalf of themselves and for and as representing all other members of [BPI and PPL]”. Paragraphs 3 to 7 will be in the following terms:[3]The First to Sixth Claimants are and have at all material times been members of the British Phonographic Industry Limited (“the BPI”) and/or Phonographic Performance Limited (“PPL”). The BPI is a company limited by guarantee established (amongst other things) to represent the interests and to protect the rights of its members and, in particular, the sound recording copyrights owned by or exclusively licensed to its members together with the rights in performances owned by such members. PPL is a company limited by guarantee. Its objects include (among other things) the power to authorise the BPI to take action in the interest of any member or members of PPL with a view to protecting the interests or rights of any member or members of PPL with particular regard to infringement of copyright in sound recordings. The members of the BPI have given it a mandate to authorize third parties to act on their behalf to prosecute proceedings in the High Court. The BPI has authorized the First to Sixth Claimants on behalf of its members and on behalf of the members of the PPL to commence and prosecute these proceedings. 3A.The Seventh Claimant is incorporated under the laws of the State of Delaware and is (along with the Sixth Claimant) a company within the Sony Group of companies.[4]The First to Sixth Claimants each sue on their own behalf and for and on behalf of and as representing all other members of the BPI and PPL that own or are the exclusive licensees of United Kingdom sound recording copyrights. (“the Relevant Members”).[5]The Relevant Members members of the BPI and PPL are continually and frequently producing, manufacturing and/or distributing records embodying new sound recordings, and nearly all reproductions of sound recordings (namely compact discs, vinyl records and cassette tapes) that are produced, made or distributed within the United Kingdom are produced, manufactured and/or distributed by the Relevant Membersmembers of the BPI and/or PPL.[6]The Relevant Membermember of the BPI and/or PPL responsible for the making of each sound recording owns the United Kingdom sound recording copyright therein or is the exclusive licensee thereof. Lists of the current members of the: BPI that are Relevant Members are set out in Schedule 1 annexed hereto; and PPL that are Relevant Members but not also members of the BPI are set out in Schedule 1A annexed hereto.[7]Each of the Relevant Membersmembers of the BPI and PPL is and has at all material times been a qualifying person within the meaning of section 154 of the 1988 Act.

BPI that are Relevant Members are set out in Schedule 1 annexed hereto; and

[6]CPR Rule 19.6, so far as relevant, provides that(1) Where more than one person has the same interest in a claim – (a) the claim may be begun; or (b) the court may order that the claim be continued, by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.(2) The court may direct that a person may not act as a representative.(3) Any party may apply to the court for an order under paragraph (2).(4) Unless the court otherwise directs any judgment or order given in a claim in which a party is acting as a representative under this rule – (a) is binding on all persons represented in the claim; but (b) may only be enforced by or against a person who is not a party to the claim with the permission of the court. (a) the claim may be begun; or (b) the court may order that the claim be continued, (a) is binding on all persons represented in the claim; but (b) may only be enforced by or against a person who is not a party to the claim with the permission of the court.[7]The issues for my determination are(1) whether the claim comes within the provisions of CPR Rule 19.6(1), and if so(2) whether I should make a direction under Rule 19.6(2) that the claimants may not act as representatives. The extent to which I should grant permission to amend the particulars of claim or make the further directions sought depend on my answers to those questions.

The Facts

[8]BPI was incorporated in 1972.

[(c) to (j)]

(c) to (j)]

[9]An aspiring member is required to sign an application form. It summarises the objects of BPI and contains an acknowledgement that if the application is accepted the applicant agrees to abide by the rules and regulations of BPI as contained in its memorandum and articles of association or otherwise decided on by the Council of Management of BPI. The Articles of Association, adopted on 22nd September 1999, contain the usual provisions for regulating the conduct of a company’s business through a board of directors. It was submitted by counsel for the claimants that the operation of the objects clause of the memorandum of association and the application form signed by all members conferred on BPI, without more, the authority to institute proceedings in the name or on behalf of a member. I do not agree. The memorandum confers on BPI the corporate ability to sue on behalf of others. The member acknowledges that that is so. Such acknowledgement does not, without more, authorise BPI to institute any particular action in the name or on behalf of a member.[10]PPL adopted a new memorandum of association in June 1996. By clause 4 it is empowered to enforce on behalf of its members or third parties, being producers of sound recordings, the performing rights and dubbing rights arising under the Copyright Acts 1911, 1956 and CDPA and for that purpose to take assignments and other assurances of performers’ rights from its members and others. On 14th November 2001 PPL adopted new articles of association. Art.1 defined “Dubbing Right”, “Performing Right” and “Sound Recordings” by reference to the relevant provisions of CDPA and Copyright Acts 1911 and 1956. Art.7 provides that every member grants to PPL “acting by itself or through duly authorised agents for and during the period of his membership... [(i) authority to collect fees and to sue for infringement of Performing or Dubbing Rights.] (ii) the power and authority, to the extent the directors deem necessary, to protect generally the Member’s interests in the Sound Recordings. [(iii) and (iv)] (v) the power and authority to authorise any person, body, organisation acting on behalf of copyright owners or performers (or any of them) as and on such terms as the Directors may deem necessary or expedient to institute or prosecute proceedings before any court, tribunal or other body and to take any other action or steps on behalf of the Company and/or any member or members and/or in the interests (directly or indirectly) of any Member or Members or performers designed or intended or undertaken to prevent or discourage the piracy or counterfeiting of, or the infringement of the copyright in, Sound Recordings provided always that neither the Company nor any other person, body or organisation so authorised by the Company shall be under any obligation to take any such action on behalf of any individual Member or Members or performer.” [(i) authority to collect fees and to sue for infringement of Performing or Dubbing Rights.] (ii) the power and authority, to the extent the directors deem necessary, to protect generally the Member’s interests in the Sound Recordings. [(iii) and (iv)] (v) the power and authority to authorise any person, body, organisation acting on behalf of copyright owners or performers (or any of them) as and on such terms as the Directors may deem necessary or expedient to institute or prosecute proceedings before any court, tribunal or other body and to take any other action or steps on behalf of the Company and/or any member or members and/or in the interests (directly or indirectly) of any Member or Members or performers designed or intended or undertaken to prevent or discourage the piracy or counterfeiting of, or the infringement of the copyright in, Sound Recordings provided always that neither the Company nor any other person, body or organisation so authorised by the Company shall be under any obligation to take any such action on behalf of any individual Member or Members or performer.”[11]The nature of the business carried on by the various defendants is described in the first witness statement of Mr Robinson and the defences of those defendants. CD-WOW is an internet business involving the sourcing and sale of, primarily, current UK Top 75 chart CDs together with new releases and old favourites. They are made available for sale to the public on the website at www.cd-wow.com and elsewhere. That domain name was originally registered in the name of UPI, transferred to HK on 30th November 2000 and to BVI on 22nd June 2001. A person placing an order on the website contracts with HK. CDs so ordered are posted in HK addressed to the customer. Replacements are supplied in the same manner but faulty or unwanted CDs are returned to an address in the UK until sufficient quantities have accumulated to make their return to Hong Kong economic. The conditions of sale prescribe that property in the goods passes on delivery.[12]The operation of the website came to the attention of BPI shortly after the business commenced. Their then solicitors, Hamlins, wrote to UPI on 5th April 2000 expressing concern at the allegedly illegal parallel importation of CDs from South East Asia by UPI. They sought suitable undertakings. That round of correspondence came to an end on 23rd May 2000. On 27th November 2000 Hamlins wrote again to the solicitors for UPI asking for further information. That exchange came to an end with a letter dated 24th January 2001 from the solicitors for UPI to Hamlins.[13]On 11th March 2002 an agreement between PPL and BPI was executed. Clause 2 provided, so far as relevant, that “PPL will mandate the BPI through its Anti-Piracy Unit (“the APU”) to act on behalf of all PPL members.... .... PPL will use its reasonable endeavours to procure that individual members execute such additional deeds or documents as may reasonably be required to confirm or support BPI’s authority to act for the purposes of any court or other proceedings.”[14]On 29th May 2002 Wiggin & Co wrote a letter before action to HK, the solicitors previously acting for UPI, and the directors of HK. They stated that they had been instructed by BPI “and for this purpose we are also instructed on behalf of the members of BPI”. That and other allegations were challenged by the solicitors for HK, UPI and the directors personally in subsequent correspondence. On 21st August 2002 the chairman and chief executive of PPL wrote to the Director-General of BPI referring to proposed proceedings against HK, BVI, UPI and Mr Robinson. He wrote:
“In accordance with our agreement with you dated 11th March 2002 I write to confirm that the BPI is mandated to act on behalf of PPL in the Proceedings to the extent permitted by the Memorandum and Articles of PPL.”
[15]As I have already indicated the claim form with particulars of claim was issued by the five claimants on 23rd August 2002. They claimed the representative capacity, qualified by the letter of 4th October 2002, to which I have referred. The defences of the various defendants were served in October or November 2002 and claim, amongst other things, that the claimants are not entitled to sue in the representative capacity claimed. This led to a letter dated 3rd February 2003 from the Director-General of BPI to each of the claimants stating that:
“I am writing to you formally to confirm our previous discussions concerning the above proceedings and to confirm your authority to bring these proceedings as claimant for and on behalf of the relevant members of BPI and PPL, namely those who own or are exclusive licensees of United Kingdom sound recording copyright. The claim is brought by you for your own benefit and for and on behalf of all relevant members of BPI and PPL. I confirm that the claimants in the action remain ultimately responsible for costs in the proceedings but that the BPI will instruct solicitors to act on your behalf and will pay the costs incurred by those solicitors. The claim includes a claim for damages and/or an account of profits. You have agreed that any such monies recovered shall be accounted by you to BPI.”
The writer then explained the basis for the representative nature of the proceedings by reference to the Memorandum and Articles of both BPI and PPL, the agreement of 11th March 2002 and the letter of 21st August 2002 which I have already quoted. The writer concluded:
“Please therefore accept this letter as formal confirmation of your authority to bring these representative proceedings for and on behalf of the members of BPI and PPL who are owners of United Kingdom sound recording copyrights and/or exclusive licensees thereof.”
[16]Counsel for the defendants now accept that a representative claimant may sue in a representative capacity without the authority of those he claims to represent provided only that the claim satisfies the conditions prescribed by CPR Rule 19.6.(1). Accordingly the relevance of the issue of authority has been reduced if not extinguished altogether. Nevertheless and notwithstanding the submissions of counsel for the claimants to the contrary I do not accept that the individual claimants had actual authority from the members of either PPL or BPI to commence these proceedings on their behalf. In the case of the members of PPL both the agreement of 11th March 2002 and the letter of 21st August 2002 purported to do no more than mandate BPI. PPL did not purport to mandate the claimants and had no authority from its members to confer the benefit of their pecuniary remedies on BPI. Nor, for the reasons I have given in paragraph 9 above, did BPI have the authority of its members to sue on their behalf or to authorise the individual claimants to do so either.

The issues in the action

[17]The applicability of CPR Rule 19.6 depends, in part, on the nature of the issues raised by the particulars of claim. I will describe them by reference to the proposed amended particulars of claim. I have already quoted paragraphs 3 to 7 dealing with the representative nature of the claim. Paragraph 8 alleges that the individual claimants are the owners of the copyright in eight specific sound recordings therein specified. Paragraph 9 alleges that each of those eight sound recordings has been issued to the public bearing labels or other marks sufficient to attract the presumptions as to the subsistence and ownership of the copyright prescribed by s.105 CDPA. Thus the subsistence and ownership of the copyright will not be in issue unless the defendants seek to displace the presumption.[18]Paragraphs 10 to 24 contain the relevant allegations concerning the defendants, the existence and mode of operation of the CD-WOW site and the terms and manner on and in which CDs are supplied to those who order them. It is only necessary specifically to mention paragraph 15 in which it is alleged that “The CD-WOW site advertises for sale a large number of CDs containing sound recordings by well-known popular artists, the United Kingdom sound recording copyright in all or most of which is owned by or exclusively licensed to Relevant Members of BPI.” In that context there is no specific allegation of issue to the public with the labels or other marks referred to in s.105 CDPA. If an implication to that effect is not enough then the allegation could be simply introduced by amendment.[19]Paragraphs 25 to 50 contain allegations relevant to the alleged infringements and the role played therein by the respective defendants. In each case the allegations of infringement are made expressly in relation to “sound recordings the United Kingdom sound recording copyright in each of which is owned by or exclusively licensed to one or more of the Relevant Members” (See paragraphs 25.1 and 37). It is true that the particulars relied on, set out in schedules 3 and 4, deal only with one or more of the eight specific sound recordings, but those are stated to be the best particulars available until after disclosure and the provision of further information. The point is clearly made in paragraph 50 in which it is stated that “The Claimants do not at present know of all the acts of primary and secondary infringements of the Claimants and the other Relevant Members United Kingdom sound recording copyrights committed by the Defendants and each of them, but will at the trial of this Claim seek to rely upon and seek relief in respect of each and every such act.” The remaining paragraphs contain the usual allegations to justify the grant of injunctions and the award of damages, including additional damages under s.97(2) CDPA.[20]It is clear, therefore, that the claimants sue and seek relief in respect of the infringement of the United Kingdom copyright in sound recordings owned by or exclusively licensed to any individual claimant or any Relevant Member, as defined in paragraph 4.

Right to represent

[21]The right of a claimant to represent another person in the sense of suing on his behalf arises if, in the terms of CPR Rule 19.6, both have “the same interest in [the] claim”. The requirement that both should have “the same interest” is the same as that previously contained in RSC Ord 15 r.12. It is common ground that the general principles applicable under the old rule are also applicable under the new. In that connection it is helpful to refer to two authorities.[22]The first is Duke of Bedford v Ellis [1901] AC 1. Ellis and five others sued on behalf of themselves and all other growers of fruit, flowers, vegetables, roots or herbs within the meaning of the Covent Garden Act 1828 to enforce rights conferred on them by that Act against the Duke of Bedford as the owner of the market in which they were exercisable. The Duke of Bedford applied to strike out the writ. He was successful before Romer J. The Court of Appeal discharged that order on the undertaking of the plaintiffs to join the Attorney-General as a defendant. The Duke of Bedford appealed to the House of Lords. His appeal was dismissed. Lord Macnaghten referred to the argument to the effect that the rule only applied to claims to some beneficial right of property and said (p.8):
“But it seems to me that there is no reason whatever for so restricting the rule, which was only meant to apply the practice of the Court of Chancery to all divisions of the High Court. The old rule in the Court of Chancery was very simple and perfectly well understood. Under the old practice the Court required the presence of all parties interested in the matter in suit, in order that a final end might be made of the controversy. But when the parties were so numerous that you could never “come at justice”, to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way. It was originally a rule of convenience: for the sake of convenience it was relaxed. Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent. To limit the rule to persons having a beneficial proprietary interest would be opposed to precedent, and not, I think, in accordance with common sense.”
[23]In John v Rees [1970] 1 Ch.345, 370 Megarry J, having quoted the same passage, commented that the rule is to be treated as being not a rigid matter of principle but a flexible tool of convenience in the administration of justice. The provisions of the civil procedure rules, particularly CPR Rule 1.2, emphasise the need to interpret the phrase “the same interest” and to apply the provisions of CPR Rule 19.6 both flexibly and in conformity with the overriding objective. Accordingly there are three questions: do the individual claimants on the one hand and the Relevant Members as defined on the other have(1) a common interest,(2) a common grievance and(3) is the relief sought by the claimants in its nature beneficial to the Relevant Members? Counsel for the defendants submits that the answer to each of those questions is in the negative.[24]With regard to the question of common interest counsel for the defendants points out that neither PPL nor BPI has asked any of their members if they wish to complain about the operation of the CD-WOW website nor is there any evidence to suggest that they do. He suggests that the only interest or grievance is that of PPL and BPI but points out that neither of them could have any cause of action in the absence of an assignment of copyright in their favour. He submits that the amended paragraphs 3 to 7 of the particulars of claim do not cure the problem of interest because the Relevant Members are competitors in the global market place for sound recordings and the class of Relevant Member fluctuates from day to day.[25]With regard to the second question counsel for the defendants contends that there is no evidence that any of the Relevant Members are in fact aggrieved by the activities of the defendants. The alleged infringements arise from the parallel importation of genuine CDs not counterfeit goods. He accepts that it may be inferred that all Relevant Members would wish to suppress counterfeit goods (EMI v Riley [1981] 1 WLR 923) but submits that no such inference can be drawn in the case of parallel importation.[26]With regard to the benefits to be derived by the Relevant Members from the relief sought counsel for the defendants contends that the injunctions go beyond what the court will grant, as demonstrated by Scott J in Columbia Picture Industries v Robinson [1986] FSR 367. He relies on the letter dated 4th October 2002 from BPI to the individual claimants pointing out that any sums recovered in the action are to be accounted for to BPI as showing that they will derive no benefit from the claim to damages either.[27]I do not accept these submissions. The common interest arises from the fact that the claim as pleaded is made in respect of the UK copyright in a sound recording to which any Relevant Member is entitled as owner or exclusive licensee. The common grievance arises from the facts pleaded regarding the operation of the CD-WOW site. There is at least a threat to supply a CD embodying a sound recording to which a Relevant Member is so entitled in response to an order placed on the website. The question whether that method of supply constitutes an infringement of the UK copyright in the sound recording is common to all Relevant Members because the same method is used for all supplies. Unless and to the extent that the defendants seek to put in issue the subsistence or ownership of the UK copyright contrary to the presumptions for which s.105 CDPA provides or the consent of a Relevant Member to the acts complained of the issues of fact and law will be identical however many sound recordings or Relevant Members are involved. It would be absurd and contrary to the propositions expressed by Megarry J in John v Rees and CPR Rule 1 if there had to be a separate claim in respect of each Relevant Member at least until it is seen if the issues in relation to that Relevant Member are substantially different from those relating to the generality of the Relevant Members.[28]The relevant relief is injunctive or pecuniary. As far as pecuniary relief is concerned it is in its nature equally beneficial to Relevant Members as to the individual claimants. What they do with any money recovered in the action is a matter for them, not the defendants. The letter of 4th October 2002 from BPI to the claimants is not of itself binding on the claimants, let alone any Relevant Members. If the Relevant Members are content that the money should go to BPI that is a matter for them. Their wishes in that regard do not prevent the pecuniary relief being in its nature equally beneficial to all.[29]In Columbia Picture Industries v Robinson [1986] FSR 367, 430 Scott J pointed out that the injunction sought by the plaintiffs was of very great breadth because it aimed to restrain the defendants from knowingly infringing copyright in any film for the time being belonging to the plaintiffs or of which they were exclusive licensees. He considered that it would be wrong in principle to grant an injunction the scope of which the defendants could not know and could not discover. That proposition, which is not challenged, was stated in relation to films of which the copyright was regulated by the Copyright Act 1956. But, as counsel for the claimants points out, there was no provision in the Copyright Act 1956 for presumptions as to the subsistence of copyright and its ownership to arise from labels or marks fixed to films. In a case to which s.105 CDPA applies the use of the requisite labels or marks gives rise to a presumption of ownership readily apparent to the defendants. In any event, as counsel for the claimants pointed out, Scott J did grant injunctions in relation to copyrights to which it had been established in the action that existing members were entitled. Given the presumptions prescribed in s.105 CDPA I see no reason why it should be assumed now that Relevant Members cannot benefit from the injunctive relief sought by the claimants.[30]For these reasons I conclude that the claimants and the Relevant Members, as defined in the particulars of claim, all have the same interest in the claim. My conclusion is supported by the views of Sir Denys Buckley expressed, obiter, in CBS v Amstrad [1988] 1 Ch.61. In that case Amstrad sold recording machines with which a sound recording on one tape might be duplicated onto another, blank, tape. The plaintiff, CBS, was the owner or exclusive licensee of a substantial number of sound recording copyrights. It sued for injunctions to restrain the sale of such machines without taking such precautions as might be necessary to protect the copyrights of which it or any member of the BPI was the owner or exclusive licensee. The basis of the claim was the unlawful incitement of the public to commit offences under s.21(3) Copyright Act 1956. The majority of the Court of Appeal concluded that such unlawful activity could not give rise to a civil claim and struck it out.[31]Sir Denys Buckley took the contrary view. Consequently he, unlike the other two members of the court, had to consider whether CBS could sue in respect of copyrights owned or licensed to members of BPI. He referred to the speech of Lord Macnaghten in Duke of Bedford v Ellis and continued:
“Similarly, in the instant case the plaintiffs, and all the persons whom they purport to represent, have statutory rights under the Copyright Act 1956, which the action is designed to protect from infringement resulting from the conduct of the defendants which is complained of. They share, in my judgment, a common interest and a common grievance, such as Lord Macnaghten had in mind. The relief which is primarily claimed is injunctive in form which would benefit the plaintiffs and all whom they purport to represent in the same way, that is to say, by protecting them from the risk of infringements incited by the defendants.”
In relation to the claim for damages he added (p.86):
“In the instant action, the claims of the plaintiffs and those of the persons whom they purport to represent, all have a common basis: damages are not the sole relief claimed and can, in my opinion, be regarded as a quite subsidiary form of relief, capable of being pursued by any individual claimant...”
[32]It follows that in my judgment the claim is capable of being brought in a representative capacity because the claimants and the Relevant Members have the same interest in the claim. In their written argument counsel for the defendants emphasised that there was no evidence that either the claimants or PPL or BPI had the authority of the Relevant Members to bring these proceedings on their behalf. This is true as a matter of fact but it is irrelevant as a matter of law. Markt & Co Ltd v Knight Steamship Co.Ltd [1910] 2 KB 1021, 1039 and John v Rees [ibid] at p. 371. It appears to me that in cases falling within CPR Rule 19.6 the rule itself provides the authority of the person who is represented.

Should a direction be made under CPR Rule 19.6(2)?

[33]Counsel for the defendants submits that if CPR Rule 19.6(1) does apply I should, nevertheless, make a direction under Rule 19.6(2) that the claimants may not act as representatives of the Relevant Members or any of them. Whether or not such a direction should be made is within the discretion of the court to be exercised in accordance with the overriding objective.[34]The defendants rely on a letter from the solicitors for the claimants dated 20th November 2002 in which they indicate that they expect documents produced on disclosure to reveal the extent of the defendants’ allegedly infringing activities. By a request for further information served on 5th February 2003 the claimants seek details of the CDs purchased by the defendants for resale through the CD-WOW site including titles, quantities and whether or not such CDs had been put into circulation in EEA by or with the consent of the owner or exclusive licensee of the UK copyright. In these circumstances the defendants claim that the fair trial of the issues between them and the individual claimants will be made longer and more expensive if the court permits the claimants to sue in the representative capacity they claim.[35]The defendants also maintain that even if the Relevant Members and the individual claimants have a common grievance because each of their copyrights will have been infringed by the same course of the defendant’s dealing it should not be assumed that all Relevant Members wish to sue. It is not, the defendants submit, self-evident that the owner of the UK copyright in a sound recording who has consented to that sound recording being put on the market outside EEA wishes to protect his position in the market in EEA by preventing parallel imports.[36]The defendants rely on the decision of Hirst J in Haarhaus v Law Debenture Trust Corpn [1988] BCLC 640. In that case the plaintiffs brought an action on behalf of themselves and all other holders of promissory notes issued by a Nigerian Bank to restrain the defendant, the trustee of the noteholders trust deed, from publishing details as to the votes cast at a meeting of noteholders. Hirst J referred to the obvious conclusion that the figures themselves indicated such a difference of opinion as would preclude a common grievance and relief beneficial to all noteholders. In his discretion he ordered that the action might not be continued in a representative capacity. The defendants also draw attention to the course Laddie J took in Russell-Cooke Trust Co. v Elliott (26th March 2001 unreported). In that case the judge was concerned with the administration of certain investment schemes set up by a solicitor into whose practice the Law Society had intervened. Laddie J directed that a circular be sent to all investors to determine their views. It is suggested that I should do likewise in this case so that it may be determined whether or not Relevant Members do wish proceedings to be taken on their behalf to restrain parallel imports.[37]In my view it would not be right to make the direction sought under CPR Rule 19.6(2) or any lesser order requiring any questionnaire to be sent to Relevant Members. For the reasons I have already given I accept the submission of the defendants that these proceedings have not been specifically authorised by the Relevant Members. But I am not prepared to infer from that that the Relevant Members do not know of them. Nor in the absence of any evidence to that effect am I prepared to infer that any Relevant Member is content that the parallel importation of sound recordings in respect of which he is the owner or exclusive licensee of the UK copyright should continue. If he did then such parallel importation would cease to give rise to infringements of that copyright.[38]It is true that the representative element of the claim is likely to make the proceedings longer and more expensive than would be the case if they were confined to the claims of the individual claimants. But that is not the only comparison to be made. The other is to compare the aggregate time and cost involved if there were separate claims brought by these claimants and each and every Relevant Member. Plainly the saving of time and expense by permitting the representative element of the claim to be pursued in conjunction with the individual claims of the claimants is considerable. If the claim succeeds then the defendants can hardly complain. If it fails they will get their costs of the claim as a whole or of the representative part of it as the case may be.[39]As I have already pointed out the terms on which the proceedings are brought, as between PPL, BPI, the individual claimants or their solicitors on the one hand and the Relevant Members on the other are issues between them, not between them and the defendants. A Relevant Member will not be liable for any costs unless he has specifically authorised the proceedings brought on his behalf. Nor, as against him, will BPI be entitled to retain any damages or profits recovered from the defendants on his behalf unless he agrees.

Conclusion

[40]For all these reasons I consider that the claim is properly brought by the individual claimants on behalf of the Relevant Members as defined in the particulars of claim as proposed to be amended as well as on their own behalf. Similarly I see no reason to make any order under CPR Rule 19.6(2). In those circumstances I dismiss the application of the defendants issued on 23rd December 2002. I will hear argument on any consequential issues as to costs and on the application of the claimants issued on 5th February 2003 for directions if and to the extent that it has not been resolved by agreement.

Cited in 13 later judgments

and 4 more of the most senior