Copyright – subject to contract; derogatory treatment

Confetti Records and others v Warner Music UK Ltd (t/a East West Records) [2003] EWHC 1274 (Ch)

The claimants owned the copyright in a track of garage music. The defendant wished to use the track on a compilation album and terms were discussed between the parties. In December 2001, the defendant sent a fax to the claimants containing revised deal terms (the deal memo). The fax was marked subject to contract. The claimants faxed back a signed version of the terms, sent the defendant a CD of the track, label copy for the track as a ‘cleared’ track and an invoice. Before the defendant tendered payment and before any long-form contract had been entered into the claimants informed the defendant that they wanted the track not to be used or to renegotiate the terms. By that stage the album and been recorded and mixed and a number of copies had been manufactured. The claimants issued proceedings and sought to restrain use of the track. The defendant argued that the deal memo was a binding contract, alternatively that by sending the track and invoice the claimants were making a unilateral offer which the defendant accepted. As a further alternative, the defendant relied on estoppel arguing that it incurred substantial expenditure on mixing and manufacturing the album in reliance on the claimants’ conduct in signing the deal memo and sending the track and invoice and that it would be unconscionable for the claimants to deny that a licence had been granted on those terms. The third claimant, as originator of the track, advanced a separate claim based on alleged derogatory treatment of the track because of the rap over it, under s80(2)(b) of the Copyright Designs and Patents Act 1988.