February 20, 2023
In a dispute over payment of royalties under a Licence Agreement between UMG Recordings Inc and Declan Colgan Music Ltd (DCM) pertaining to the exploitation of the recording of the song “21st Century Schizoid Man” (the Song) by the group King Crimson, the court had to decide whether DCM, the claimant and worldwide licensee of the master recording of the Song, should have permission to adduce expert evidence concerning the market for the digital consumption of music.
UMG Recordings is part of Universal Music Group and owner of the record label Island Def Jam Music Group, to a division of which Kanye West is signed. In 2010, Kanye West recorded a song entitled “Power”, which contained a sample of the Song. “Power” was made available to the public, including on YouTube.
In July 2010, UMG Recordings and DCM entered into the Licence Agreement, together with Kanye West and his record company, to allow UMG Recordings to continue commercial exploitation of the Song as sampled in Kanye West’s song “Power”, in exchange for which UMG Recording was obliged to pay DCM royalties.
DCM claims that UMG Recordings has not properly accounted to DCM in relation to the royalties due for the playing of “Power” via streaming services and that UMG has not complied with (or is in breach of) the royalty accounting obligations under the Licence Agreement.
DCM sought to adduce expert evidence to address: (i) the extent to which there was a commercial market for the licensing or consumption of recorded music by streaming in 2005; and (ii) the nature of the services offered in 2005 by streaming services to consumers and the extent to which: (a) exploitation of a recording via a streaming service or platform is of a different nature to exploitation of a recording via compact disc; and/or (b) the price of usage of a recording via a streaming service or platform is lower than the price of usage of a compact disc (and the reasons for that difference).
Deputy Master Henderson identified three overlapping questions to answer:
- Is the evidence admissible as a matter of the law of evidence?
- Even if the evidence would or might be admissible, would it be expert evidence within the meaning of CPR 35; and, if so,
- Is it reasonably required to resolve the proceedings within the meaning of CPR 35.1?
The Deputy Master disagreed with UMG Recordings that evidence of fact is always inadmissible as expert evidence. He held that certain kinds of evidence of fact can be given by an expert witness, such as evidence that efficiently presents to the court the knowledge and experience of others in his or her field of expertise and evidence of opinion as to facts, drawing on the general body of the expert’s knowledge and understanding of the field in which he/she is an expert. However, the proposed expert evidence must be relevant, it must assist the court in its task, and the witness must be impartial and have the necessary knowledge and experience. Further, the court must consider whether there is a reliable body of knowledge or experience to underpin the expert’s evidence.
However, the Deputy Master said, the production and use of expert evidence as to fact should be controlled by the court under CPR 35. Accordingly, it must be reasonably required to resolve the proceedings and permission must be obtained. The court must consider whether the evidence is necessary (in the sense that a decision cannot be made without it) or whether it is of marginal relevance and the court could in fact decide the issue without it, in which case a balance must be struck and the proportionality of its admission assessed. In striking that balance, the Deputy Master said, the court should consider various factors, including the value of the claim, the effect of a judgment either way on the parties, who is to pay for the commissioning of the evidence on each side and the delay, if any, which the production of such evidence would entail.
The Deputy Master found that much of the evidence that DCM wished to adduce as expert evidence concerned issues of fact, but that in some cases a lay witness might not be able to provide it. He was also satisfied that the proposed expert evidence would be relevant and would assist the court in its task.
However, there was no evidence before the Deputy Master as to who the proposed expert would be, whether he/she would have the necessary knowledge and experience and whether he/she would be impartial in his/her presentation and assessment of the evidence. Therefore, he could not at this stage assess those matters.
There was also no evidence that there was a body of knowledge or experience to underpin the proposed expert evidence, nor was the existence of such a body of knowledge and experience so well-known that the Deputy Master could take judicial notice of its existence.
Accordingly, the Deputy Master said that he could not decide definitively at this stage that the proposed expert evidence would be admissible. There was a real prospect that, when produced, it would be admissible, but on the evidence provided at this stage, that was not clear.
As for whether, even if it were admissible, it should be permitted under CPR 35, the Deputy Master held that the issues in question could be resolved without it. Accordingly, although it would be of assistance to the court, it was not “necessary”.
As for proportionality, the Deputy Master found that the costs estimates submitted by DCM to produce the expert evidence were not proportionate to the degree of assistance that it would give the court. Further, the requirement to deal with the case justly and the overriding objective did not outweigh the proportionality consideration such as to make it appropriate to grant permission.
Accordingly, even if it turned out that the proposed expert evidence, when produced, was admissible, in Deputy Master Henderson’s view the proportionality issue militated against permitting it to be adduced under CPR 35. Therefore, he ruled that unless and until the likely cost of the expert evidence was re-visited and reduced, the application to adduce such evidence should be refused. (Declan Colgan Music Ltd v UMG Recordings Inc  EWHC 4 (Ch) (5 January 2023) — to read the judgment in full, click here).