Reference:  EWHC 1277 (Ch)
Court: Chancery Division
Judge: Lindsay J
Date of judgment: 28 Apr 2004
Summary: Contract - Broadcasting - 'Right to produce' - Right to renew - 'Assignment' - 'Delegation' - 'Sub-licence' - Waiver
Instructing Solicitors: Harbottle & Lewis for the Claimant; Addleshaw Goddard for the Defendant.
Celador International Ltd (‘Celador’) granted Arief International Inc (‘Arief’) a licence to produce the hugely popular gameshow “Who Wants To Be A Millionaire?” for broadcast on Indonesian television. The agreement provided that, so long as its terms were complied with, Arief would be able to renew for a further period. Clause 15 of the agreement stated that Arief must not “assign in whole or in part its rights and/or delegate its obligations hereunder and shall not sub-licence the right to produce”. Shortly after entering into the agreement, Arief entered into an agreement with a third party, RCTI, by which RCTI would provide production services for the show. Celador subsequently refused to allow Arief to renew, claiming that the agreement with RCTI breached clause 15. Arief argued that it did not do so, and that, alternatively, if it did, Celador had waived the right to rely upon the breach by being aware of the arrangements with RCTI and taking no action.
(1) Whether Arief’s agreement with RCTI breached clause 15 of the agreement with Celador; (2) Whether, if it did, Celador had waived the right to rely upon the breach through it’s knowledge and inaction.
Granting judgment for Arief: (1) Clause 15 had to be construed by reference to Celador’s commercial purposes in including it in the agreement, and not by reference to any required minimum number of key staff involved in production or to the nature of the licensee. Such purposes were served by interpreting the clause to require the licensee to retain ultimate control over the production, which Arief had done. In the circumstances, “assign” meant a complete alienation of the subject matter assigned, which had not occurred. The qualified rights granted to RCTI did not amount to a sub-licensing or delegation of the right to produce. (2) If, on the contrary, Arief had breached the contract, Celador had not waived its right to rely on that breach and refuse a renewal of the contract.
This case will be of interest to those involved in the licensing of television programmes abroad. Where such a licensor wishes, in order to protect its brand, to have a direct relationship with those involved in the day-to-day production of the programme, as Celador did here, it will require a clause in more stringent terms than the one at issue in this case. The judge held that Arief’s investment in pre-production and its maintenance of some involvement in day-to-day production was sufficient for the purposes of clause 15.