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SEX PISTOLS LEGACY: ESTOPPEL DENIED

December 6, 2021

Music band breakups are not uncommon, over the years, several famous bands have parted their ways, such as “Daft Punk”, “The Beatles”, “Led Zeppelin” and the list goes on. While the same may be disheartening for the fans, it may be worrisome for those in the industry, to have to deal with the implications that follow. That is when the significance of band breakup agreements becomes evident, particularly when it comes to the licensing of intellectual property, which would include the rights for music, performance and other properties that the band might have had.

Considering that fallouts such as these are quite common in the industry, and there are recurring instances of disputes between ex-band members, one aspect which is often overlooked is a dispute resolution mechanism that can be resorted to in the future.

Looking at the recent case of Sex Pistols, which broke up , this aspect shall become implicit from the findings of the High Court of Justice, which dealt with the dispute in regards to a band member agreement (hereinafter BMA) which came into existence in 1998, to deal with future decisions regarding Sex Pistols’ intellectual property.

The High Court of Justice, Chancery Division, passed two judgements pertaining to the dispute, the first one dealing particularly with estoppel in relation to the BMA, whereas, the second judgement deals with the acceptability of communication between the parties marked as without prejudice.

PARTIES TO THE DISPUTE

To easily understand the factual matrix of the case, it is advisable to understand the roles played by the parties involved in the case.John Lydon, better known by his stage name, Johnny Rotten, was the lead singer and is the first defendant. Mark Cunningham QC is his legal representative. John “Rambo” Stevens has been the manager for him since the early 2000s.
Mr. Jones and Mr. Cook, 2 of the original band members, are the claimants. Edward Cullen QC, is their legal representative.
Mr. Matlock is the second defendant, who was the fourth founding member of the band but left before it split up. Simon Beverley or Simon Ritchie, hereinafter referred to by his stage name Sid Vicious, was the member who replaced Mr. Matlock. He died in the year 1979, and his artistic estate is represented by the trustee, Mr. Button, who is a solicitor. Mr. Matlock and Mr. Button, have not been represented during the course of the trial, but have provided witness evidence in favour of the claimants.
Ms. Anita Camarata, has primarily acted as a manager for Mr. Jones (since 1984) and Mr. Cook, as well as for Mr. Button in a limited manner.
Mr. Harish Shah, was the accountant for the band from 1986 to 2017, and has acted individually for Mr. Lydon as well, and since 2017 has only been an adviser to Mr. Lydon, and not the band. Mr. Grower, has been the UK solicitor of Mr. Lydon since 2010, and was introduced to him by Mr. Shah.

FACTS OF THE CASE

1. Relationship between the band members has always been strained, even dating back to the time when they performed together. Particularly, between Mr. Lydon and the other members of the band.
2. Mr. Jones published a memoir titled “Lonely Boy: Tales from a Sex Pistol” in UK and North America, in the year 2016 and 2017 respectively.
3. A production company expressed an interest in the memoir, for a limited TV Series, titled “Pistols” and took an option for the same in 2018. Mr. Danny Boyle was engaged to direct the series in 2020.
4. The series, according to Mr. Jones, revolves around his time spent in the band and the London Punk Music scene at the time of Sex Pistols.
5. The shooting of the series was expected to be finished by July 2021, with the post production anticipated to be finished by April 2022.
6. The producers of the show, wished to use Sex Pistols’ music, for obvious reasons, and required a “sync license” from the respective right holders.
7. The rights of the members of the band in their music and performances had fragmented over time, with different members assigning or licensing their rights to various organisations, and different geographical locations.
8. In the present dispute, Warner Chappel Music in respect of Mr. Lydon’s publishing rights excluding North America, and Universal Music Publishing (formerly BMG) in respect of his publishing rights in North America, had not yet consented to the use of the rights by the claimants, and stated that they would not do so without Mr.. Lydon’s consent.
9. Ms. Camarata, had been handling the project on behalf of Mr. Jones, and she had been assigned the task to deal with Mr. Lydon at an appropriate stage of the project. She hoped that Mr. Lydon would agree to the same based upon Mr… Boyle’s inputs, otherwise she would have to resort to the BMA.
10. Ms. Camarata had thus, not involved Mr. Lydon at an early stage of the project, specifically due to some difficulties arising out of another matter.
11. On 4th January, Mr. Stevens received an email from Ms. Camarata, to apprise him regarding the show and that Mr. Lydon shall be contacted by the respective right holders for his consent in regards to the music rights.
12. Mr. Lydon was provided with scene descriptions and had been given an opportunity to speak with Mr. Boyle along with the actor representing him in the show, but chose not to. Instead Mr. Boyle spoke to Mr. Stevens.
13. Mr. Lydon made several objections, especially about the fact that he had not been consulted for the show regarding the Sex Pistols band, wherein he had played a central role, and thus decided not to give consent for the use of Sex Pistols music in the series.
14. Before coming to the primary issues in the present dispute, the court discussed several facts pertaining to the formation of BMA and came to the conclusion that its validity is not disputed, the relevant provisions of the BMA were reiterated before proceeding to the issues.

Formation of BMA
The BMA came into existence due to a deal between Mr. Lydon and BMG, for his publishing rights in North America, wherein BMG requested a letter of comfort from the other members of the band, including Mr. Button for the transfer of the said rights. The band members while considering the same wanted to have some leverage for the future approvals for licenses, and thus, it was decided that an agreement should be entered into at the same time to provide for majority voting on licensing matters.
The Relevant Provisions of the BMA

The BMA dealt with majority decisions in relation to Sex Pistols’ IP Rights, the relevant provisions relied upon by the claimants, were:
1. Clause 1, which dealt with Compositions, i.e. the publishing rights and provided for a mechanism for dealing with licensing which involves notifying other right owners, about the requests for a license. Clause 1(e), particularly talked about approval by a majority, wherein the approval mechanism is mentioned to be in a form of consultation process.
2. Clause 2, which dealt with the existing approval rights of the band members, under the existing agreements, and stated that they were subject to the same majority voting provisions.
3. Clause 5, which dealt with “other rights” (“Properties”), such as recordings, videos, artwork and merchandising, which were to be licensed on the basis of majority.
ISSUES
The following issues were framed by the court for consideration:
1. Are the claimants (and Mr. Matlock and Mr. Button) estopped from relying on the majority voting provisions in the BMA?
2. If not, does the BMA on its true construction, or alternatively as a matter of Implication, require Mr. Lydon to grant a consent to the use of Sex Pistols music in the proposed Pistol TV series?
3. Are the claimants entitled to a declaration as to an obligation of Mr. Lydon to comply with the majority wishes as to the grant of IP rights? This point goes to one of the heads of relief sought.

COURT’S OBSERVATIONS:

Views on Estoppel
Firstly, dealing with the issue of estoppel, the court took into consideration several judicial precedents dealing with the ingredients of estoppel.

The court relied upon Tinkler v HMRC and Republic of India v India Steamship Co Ltd , for the ingredients of estoppel by convention and relying upon the evidence, stated that in the present case, none of the parties had assumed that BMA had become inoperative, and nor had they forgotten about it.

For estoppel by representation, the court placed reliance upon Spliethoff’s Bevraschingskantoor BV v. Bank of China Limited , and noted down the legal requirements that lay down what constitutes a representation of a fact, which states that a precise representation was in fact made, that the later position contradicts in substance to the original representation and that the original representation was of a nature to induce and was made with the intention and result of inducing the party raising the estoppel to alter his position on the faith of it and to his detriment.

While discussing promissory estoppel, the court took into consideration Harvey v Dunbar [2017] , which emphasises upon a clear and unequivocal promise or assurance that the party will not enforce his or her strict legal rights. In the same regards, The Court also noted Mr. Cullen’s reliance upon Argo Systems FZE v Liberty Insurance Pte Ltd [2011] , which stated that silence could not qualify as a clear and unequivocal promise or assurance.
The Court also noted Mr Cullen’s emphasis upon the fact that the need for representation should be clear and unequivocal, or precise and unambiguous, and stated that there is no reason as to why a lower standard of clarity should be required for other forms of estoppel.

Relying upon the abovementioned precedents and the string of events as laid out by the defendant to demonstrate the assumptions and representations made by the claimant in reference to the BMA, The Court held that Mr. Lydon had failed to establish any of the assumptions, representations and acquiescence that would be required for a case of estoppel.

Views on Application of BMA
The court observed a common theme, in the proceedings of the case, especially the events relied upon by the defendant, wherein the defendant has tried to present that there was a common understanding between the members of the agreement, that there needs to be unanimity in all decisions, or that individuals could exercise a veto. The defendant relied upon a string of events, primarily instances wherein a licensing deal pertaining to the IP rights of the band were in consideration and the BMA had not been enforced.

The court noted that the same could be adduced to the fact that Ms Camarata considered the long term interests of the band members, and wanted to maintain the relationships in a harmonious manner, avoiding such falling out, in case the band was ever to go on a tour again in the future.

It was also evident that the claimants (as well as Mr Button) acknowledged that deploying the BMA could be disruptive, and the members were reluctant to resort to the BMA, especially for trivial matters, since it could be fatal to the survival of the brand image of the band.

Views on Obligation to Comply with Majority
The Court held that the claimants were entitled to invoke the majority voting rules against Mr. Lydon for the use of Sex Pistols IP in the show “Pistols”.
The court also observed that it was necessary to ensure that the contract has a business efficacy, and it should be enforced, not doing so would be detrimental to the purpose of the contract itself. That Mr. Lydon should not be able to frustrate the will of the majority, especially when he himself has agreed into the agreement, binding him to the will of the majority.

Conclusion
As can be noted from this particular instance, the Band Member Agreement proved to be fruitful, especially for the claimants. While likeability by other band members played an important role considering that the agreement in the present case was pertaining to majority voting, specific provisions can be made keeping in mind the dynamics of the band.
Having a music band breakup agreement, at the time of splitting up can ensure smooth sailing as far as the Intellectual Property of a band is concerned, alternative methods of dispute resolution can also be resorted to through the agreement which would save either of the party’s time, resources as well as public image. The same might have been lacking in the present case, and it is possible that Mr. Lydon would have had better luck had he resorted to mediation, wherein they could have come to some mutually agreeable terms as to the use of the IP. Such agreements help ensure that a harmony is maintained between all the parties, regardless of the internal disputes of the band, and is ideal for a better business relationship.

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