Possible refunds for those paying to play music in public spaces

Updated November 2009

The Copyright Tribunal has recently ruled that increases in licence fees for businesses playing background music in public spaces was unreasonable and unjustified. It is understood that the decision is to be appealed but, if upheld, it will mean a reduction in future licence fees and substantial refunds for licensees.

The case was brought by the British Hospitality Association (BHA), the British Beer and Pub Association (BBPA), the British Retail Consortium (BRC) and others against the Phonographic Performance Limited (PPL) in relation to increased tariffs which came into force on 1 January 2006. The increases applied to licences for the public performance of sound recordings in pubs, bars, restaurants, cafes, shops, stores, offices and factories.

The new pricing structure focused on the size of the premises for determining rates and meant that some larger shops saw a 200% increase in fees and some larger restaurants up to 400%. On average for pubs, bars, restaurants and cafes, the percentage total increase in annual fees was approximately 130%. Responding to widespread concern, the industry bodies challenged the increases as unfair.

In October 2003, the Copyright, Designs and Patents Act 1988 was amended to prevent businesses playing background music without a licence. In making its ruling the Tribunal accepted that the creation of this new right meant that PPL could reasonably require some additional payment but assessed the level of the increase to be disproportionate.

The Tribunal ordered that an increase of 10% plus RPI was reasonable and this new fee is to be brought into effect when licensees renew PPL licences. The Tribunal also ruled that PPL must pay refunds in respect of overpayments dating back to 1 January 2006. In relation to businesses playing music without first obtaining a licence, the Tribunal accepted that a 50% surcharge of the first year's fee was reasonable to provide an incentive for timely payment.

The decision could affect up to 41,000 hospitality licensees and 53,000 retail licensees. Recognising the practical challenge of implementing the repayments, the Tribunal did not award interest on the repayments and refunds will not be issued to those licensees owed less than £50. Licensees will be able to claim refunds based on their own calculations or will be able to apply to the PPL to make the calculation for them. The BHA claims that £15-20 million in refunds will be owing.

It is understood, however, that the PPL will be appealing the decision and so the issuing of repayments may be delayed pending the outcome of the appeal.

Whilst the PPL stated that it was "extremely disappointed", the result is a major victory for the hospitality and retail industry who will be hoping that the decision is upheld at appeal. Brigid Simmonds, BBPA chief executive commented "we will be doing everything we can to ensure that any appeal case is heard quickly, so that the matter of repayments can be settled as soon as possible."

We will keep you updated on developments relating to this decision. Should you have any queries on this or related issues please contact a member of TLT's Intellectual Property team.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2009. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.