PPL may have slimmed down its legal spend, but its vigour for catching the rulebreakers has not waned – it has a legal team and it’s not afraid to use it. By Steve Hoare
Phonographic Performance Limited (PPL) and Video Performance Limited (VPL) are responsible for collecting royalty fees on behalf of artists from businesses that play music to the public, including broadcasters, nightclubs, pubs and even hairdressers. They are not related to the British Phonographic Industry or the International Federation of Phonographic Industries, so they do not go around suing teenagers, but if you broadcast music in your lobby then beware, you should have a public broadcast licence. Indeed, director of legal and business affairs and rights negotiation Peter Leathem warns that every deal he strikes has the potential for litigation. That is why Leathem has a legal budget of £1.8m, which is a fair whack for a 150-person organisation.
Leathem and his team are responsible for negotiating all licensing deals for public performance and broadcasting. PPL and VPL are, in effect, a monopoly rights management organisation. This makes negotiations particularly tricky. “It’s an artificial market,” says Leathem.
The largest deal that Leathem has to negotiate is with the BBC. This includes the rights for broadcasting music on all of its radio stations, television stations and internet sites. The contract is worth more than £10m and takes an age to strike a deal.
On a contract of that size, Leathem will sit down at the negotiating table with a team that comprises external solicitors, barristers, an economist and accountants. “On every negotiation we’re facing a potential legal dispute,” says Leathem.
And that is why he has such a large legal budget. Large it may be, but when Leathem joined PPL three years ago from small City law firm GSC Solicitors, the legal budget was £4m just for PPL. Leathem joined as head of legal and business affairs for PPL with a remit to build a legal team and to manage the legal spend better.
When Leathem was named director of legal and business affairs for PPL and VPL that helped him rationalise the legal spend further. The two organisations are in the process of merging. So from henceforth we shall use ’PPL’ to cover both organisations.
About a year ago, Leathem was given full responsibility for rights negotiations. This has assisted with controlling the legal budget. “The way in which we conduct our licence negotiations has a direct impact on whether or not we agree terms or become involved in arbitration proceedings in the Copyright Tribunal… So being in charge of all the licence negotiations has ultimately helped control our legal spend,” he says.
Ultimately, Leathem says you want to create a winning situation for both the buyer and seller. But there are disputes. “We have reduced the number of disputes we had, albeit every now and again it is necessary to have a difference of opinion with a licensee about the value of the sound recordings or music videos they are using,” he says.
For instance, PPL was involved in a dispute with the British Brewers’ and Pubs Association with regards to how much its members should pay to play music on their premises.
The main beneficiaries of PPL’s legal spend are Olswang and Leathem’s former firm GSC Solicitors. GSC is a seven-partner City firm and Leathem was PPL’s key outside counsel before moving in-house. GSC and Olswang assist Leathem with most of the licence negotiations and also with IP issues, which Lovells also helps with.
While Leathem would deny that he is litigation-happy, he is not afraid to use the courts for the benefit of the business. GSC has instructed Blackstone Chambers’ David Pannick QC and Pushpinder Saini to sue the UK Government because of its failure to implement the Rental Directive. The action is on hold because the European Commission is also currently suing the Government in the European Court of Justice to get it to comply. Leathem is awaiting the result of that case, but he says: “By issuing proceedings we’ve already got a partial result.”
PPL’s argument is that it has suffered loss and damage. As a result of the Government’s failure to implement the directive, PPL has not been able to license certain premises such as shops or pubs where music is being broadcast. Leathem argues that the pressure exerted by his suit has already forced the Government to make more changes to its legislation than were originally mooted in the consultation paper.
Leathem also uses two Scottish firms. Dundas & Wilson is used for competition work following its hire of Tom Usher from SJ Berwin. Meanwhile, Leathem calls in McGrigors to handle enforcement issues in Scotland, such as copyright infringement actions against nightclubs and pubs.
In England, GSC and Hamlins are kept busy with this work. “We’re well-known because we have motions in court every week,” says Leathem.
Leathem does not have an official panel, but has a broad selection of firms working on a number of specialist areas. Media boutique Wiggin is advising PPL on its attempt to acquire the performers’ rights societies and make PPL a home for record companies and performers alike. Technology specialist Kemp Little advises the company on database rights, data protection and online issues.
Indeed, Leathem will need assistance from all of its lawyers as PPL studies how best to collect royalties from new music media such as websites or mobile phones. Whatever the business, if you broadcast music, pay attention – Leathem could well be on your case.
Director of legal and business affairs and rights negotiation
Phonographic Performance Limited and Video Performance Limited
|Organisation||Phonographic Performance Limited and Video Performance Limited|
|Annual legal spend||£1.8m|
|Director of legal and business affairs and rights negotiation||Peter Leathem|
|Reporting to||Chief executive officer Fran Nevrkla|
|Main law firms||Dundas & Wilson, GSC Solicitors, Kemp Little, Lovells, McGrigors, Olswang, Wiggin|