Selling Music To Chocolate Buyers Before VISCOUNT SIMONDS, LORD REID, LORD TUCIER. LoRD KEITH OF AVON- HOLME, and LoYD SOMEXlVELL OF HARROW Their LoRDsHIPs (Viscount Simonds and Lord Keith dissenting) held that a sale of cheap gramophone records to purchasers of chocolate was not an ordinary retail sale entitling the vendor to require the owner of the copyright in the records to accepi a royalty on their selling price. The HOUSE (by the majority) allowed this appeal by Chappell & Co. Ltd., and Winne- ton Music Corporation, as sole licensees of and owners of copyright in a dance tune called " Rockin' Shoes," from tht decision of the Court of Appeal (Lord Justice Jenkins and Lord Justice Ornmerod, Lord Justice Romer dissenting) on March 19, 1958 (11958] I Ch. 529). allowing an appeal from Mr. Justice Upjohn in favout of the Hardy Record Manufacturing Co. Ltd. and The Nestle Co. Ltd. on a motiod to restrain those companies from manufacturing and " selling " gramophone records of the tune by a transaction alleged to be an infringe- ment of copyright. The Hardy company made the records and supplied them to NestlE, who sold them to the public at Is. 6d., subject to a condition that the purchaser must also send three wrappers from their sixpenny milk chocolate bars. These were of no value in themselves and were thrown away when received. Nestle made a profit on each sale, butt the purpose of the scheme was to advertise and promote the sale of their chocolate. Hardys save notice of their intention to manufacture, in accordance with section S(l) (b) of the Copyright Act, 1956, stating that Is. 6d. was the "ordinary retail sell- ing price," and offered to pay royalties, which Chappells refused. Mr. K. E. Shelley, Q.C., and Mr. Stuart Bevan appeared for the appellant companies; Mr. Guy Aldous, Q.C., and Mr. John Whitford for Nestles; and Mr. John Cope for Hardys. JUDGMENT VISCOUTrr SIMONDS, in a dissenting speecb, said that there was a " sale " of the record by Nestle, and the sale was a retail sale. It was a sale to a consuming member of the public and he knew of no other factor which distinguished a retail sale from other sales. On the third condition that there must be an " ordinary retail selling price," some confusion had arisen from treating the word ' ordinary " as if it qualified " retail " rather than "price." Given a retail sale, there was no difficulty in ascertaining the ordinary selling price on such a sale. The only problem, therefore, was whether there was a retail sale with a retail selling price within the meaning of the section. In his Lordship's view the wrappers were not part of the selling price. The ordinary retail selling price was the price at which the record was ordinarily sold, in this case Is. 6d. He would dismiss the appeal. LORD REID, for allowing the appeal, said that the crucial question was: Was the Is. 6d. an "ordinary retail selling price" within section 8 ? That involved two questions: what was the nature of the con- tract between the Nestle Company and a person who sent Is. 6d. plus three wrappers in acceptance of their offer, and what was meant by " ordinary retail selling price " in this context ? " UNREALISTIC" It was unrealistic to divorce the buying of the chocolate from the supplying of the records. Proceeding on the view that the transactic*n was a sale-on which his Lcrd- ship had some doubts-and, if so, a sale by retail and not by wholesale. the appatent object of the section was twofold, to bene- fit the public and to protect the financial interest of the owner of the copyright. The section made it possible for reccrds to be available to the public for the manu- facture of which the owner might not have granted a licence. And it protected the copyright owner by requiring royalties to be paid on the ordinary retail selling price. In a case such as the present the retailer would get the manufacturer to fix such a retail selling price as would best suit him. and that might be something quite different from tn ordinary economic price. In its context, his Lordship could not interpret the phrase "ordinary retail selling price " as applying to all sales. however extraordin- ary in character. and as meaning whatever money price might be charged, irrespective of the type of transaction or of conditionts attached to the sale or of collateral advantages accruing to the seller or cf whether the money price was really the whole consideration for the sale. The Hardy Company's notice that the ordinary retail selling Price was Is. 6d. was invalid' there was no ordinary retail selling price in this case. and the defendants' operations were not within the ambit of section S. They were therefore infringements of the plaintiffs' copyright and the appeal should be allowed. LORD TUcKER. concurring in the maiority opinion, said tbat the " ordinary retail sell- ins pnce " did not mean the price prevail- ing on an ordinary retail sale but the ordinary price obtainable on a retail sale, and that envisaged a money sum constitut- ing the entire consideration for the sale. Otherwise it would be impossible to calcu- late the royalty percettaie payable in cases whetre the money value of the additional consideration was incapable of valuation. LORD KFITH of AVONHOLM. dissenting, said that the suggestion that the wrappers represented some intangible consideration seemed entirely unreal. LORD SOMERVELL of HARROW, for allow- ing the appeal, said that Parliament would never have based the royalty on a per- centage of a money price if section 8 was to cover cases in which possibly the main part of the consideration was to be other than money. It was irrelevant that when received the wrappers were of no value to Nestles. A peppercorn did not cease to be good consideration if it was esta- blished that the promisee did not like pepper and wouild throw away the corn. Solicitors.-Messrs. Syrett & Sons; Messrs. Mckenna & Co.: Messrs. Howe & Rake. SELLING MUSIC TO CHOCOLATE BUYERS COPYRtIHT PROBLEM CHAPPELL & CO. LTD. AND OTHERS v. THE NESTLE CO. LTD. AND OTHERS