Licence agreement being made between publishing company (Bright Star) and defendant permitting defendant to re-package Reader's Digest book edition of 'Wildlife of Britain'

Morse v Eaglemoss Publications Ltd: Chancery Division: 7 June 2013

The claimant was the chief executive officer of publishing companies, Bright Star and Midsummer, until they went into administration. Bright Star and the defendant publishing company had entered into a written licence on 27 November 2003 (the November licence), which permitted the defendant to re-package the Reader's Digest book edition of 'Wildlife of Britain'.

The November licence permitted the defendant to re-package (to publish and procure the publication of) the Reader's Digest book edition of Wildlife of Britain. It also provided for: 'The split of royalties between the components of the combined book/gift product.' The claimant, as assignee of Bright Star and Midsummer, brought a claim against the defendant for breach of contract in connection with the alleged entitlement to royalties under the November licence. The action related to a series continuity publication known as 'Wildlife Watch', which was published by Reader's Digest Association Limited (Reader's Digest), packaged by the defendant, and which, through Bright Star, reused some of Midsummer's copyrighted material in an earlier partworks publication 'Wildlife of Britain'.

The issues for consideration were: (i) whether any elements of the fixed packaging costs paid by Reader's Digest directly to the defendant, in addition to the royalty specifically referred to in the November licence, was or should be treated as a royalty or profit which the claimant was entitled to share; (ii) whether it was proper for the defendant to deduct picture costs of some £102,000 from the expressly agreed royalty before making payment to Bright Star; and (iii) whether there was any interest (and if so what) owing to the claimant by the defendant.

The court ruled: On the correct construction of the November licence, the claimant was only entitled to a proportion of royalties in the strict sense. Picture costs were to be deducted from the royalty payments although the claimant was entitled to an account of the sums said to have been expended on picture costs. There had been no intention sufficient to satisfy the prerequisites for a rectification of the November licence. Further, no fiduciary relationship existed between the parties and the defendant did not therefore owe any fiduciary duties to Bright Star.

There had been no misrepresentation on the part of the defendant which induced Bright Star to enter into the November licence and there was no collateral contract as alleged. The claimant was not entitled to interest to the extent that payments under the November licence had been made late (see [109] of the judgment). Chartbrook Ltd v Persimmon Homes Ltd [2009] 4 All ER 677 considered; Ross River Ltd v Cambridge City Football Club Ltd [2008] 1 All ER 1004 considered.

Clifford Darton (instructed by Bell Lax, solicitors) for the claimant; Malcolm Chapple (instructed by Briffa, solicitors) for the defendant.