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1948 (2) TMI 17

..... ppeal (Lord Greene, M.R., Somervell and Cohen, L.JJ.) allowing an appeal by the respondent from an order of the King's Bench Division (Macnaghten, J.) whereby an appeal by the respondent on a case stated by the commissioners for the special purposes of the Income Tax Acts was dismissed and the decision of the commissioners was affirmed. The material facts to be gathered from the case stated, and the documents annexed to it, may be summarised as follows: In 1897 the respondent obtained from the late Mr. Rudyard Kipling the exclusive right to dramatise his novel, "The Light that Failed", to produce the play to be so written, and to dispose of all her rights in respect of it. The play was duly written, and produced and it is common ground that the respondent has at all times been entitled to the copyright in the play. In 1914 the question of a film version arose and, inasmuch as a grant of film rights would concern both Mr. Kipling as owner of the copyright in the novel, and the respondent as owner of the copyright in the play, it was agreed between Mr. Kipling and the respondent that the entire control of the film rights in both the novel and the play should be in Mr. K .....

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..... is a finding of pure fact, such as cannot be reviewed by an appellate tribunal. The special case, after setting out the material facts which I have summarised above, recorded that the special commissioners reserved judgment and later issued their decision on the alternative claim as follows: "We hold... (2) that the sums received by her in respect of these rights under the terms of the agreement were of a revenue nature, being paid to her and received by her on account of royalties; (3) that on the authority of the judgment of Macnaghten, J., in the case of Beare v. Carter [1940] 8 I.T.R. Suppl. 127, such royalties being income are liable to assessment under Case VI of Schedule D." The appellant contended that the special commissioners' decision "that the sums received by the respondent were of a revenue nature," was itself a finding of fact which could not be disturbed on appeal, but I agree with the Master of the Rolls that this is not so. As we said in Bomford v. Osborne ([1942] A.C. at p. 22; 10 I.T.R. Suppl. at p. 34): "No doubt, there are many cases in which commissioners, having had proved or admitted before them a series of facts, may deduct th .....

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..... t decisions, between receipts of a revenue nature and receipts of a capital nature. Much emphasis was laid by the Crown on rule 19(2) of the general rules, which begins, "Where any royalty, or other sum is paid in respect of a user of a patent", but the Solicitor-General did not dispute the Master of the Rolls' proposition (which is plainly correct) that "other sum" in the phrase quoted means other sum which is of a revenue nature and does not include a capital sum. Rule 19(2), however, deals only with patents. In this case we are not concerned with patents but with copyright. Copyright is a species of incorporeal property. The Copyright Act, 1911, which is a consolidating Act repealing earlier Acts, makes it perfectly clear that the ownership of copyright can be transferred by assignment either wholly or partially and "either for the whole term of the copyright or for any part thereof." So far as the property is assigned, the assignee becomes the owner instead of the assignor. The Act also provides that, in contrast with an assignment of copyright, the owner may grant a licence which, though it permits the licensee to use the copyrighted matter wi .....

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..... sum of £ 3,000 paid in advance in consideration of a five-year licence for the use of a patent. The sum had no reference to any particular contemplated production under the licence; it might have been large or small, or there might have been none at all. The learned judge quoted with approval Rowlatt, J.'s observation in the Constantinesco case [1927] 11 Tax. Cas. 730 as follows: "I have not the least doubt that you may pay a lump capital sum in lieu of royalty, or to capitalise what is really a royalty for the use of a patent." The Master of the Rolls in the present case points out that Desoutter's case [1936] 1 All E.R. 535 was not the case of an estimated sum to represent royalties before the patent had been used―it was a sum in gross having no reference to user, but was paid merely for the purpose of acquiring the right to use as much or as little as the licensee might desire. In all the above cases what was granted was a licence to use the patent―not necessarily an exclusive licence at all, and, moreover, the owner of the patent itself remained owner throughout, whereas in the present case the appellant actually transferred the ownership of .....

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..... against this alternative contention, and that finding has been accepted by the revenue authorities, who relied in all subsequent proceedings upon the decision of the commissioners and special commissioners that the sums in question were of a revenue nature being paid to and received by her on account of royalties. The fact that the special commissioners have held these sums to have been so paid and received, however, is not determinative of the question at issue. The agreements under which the payments were made are attached to this case and their legal effect can he ascertained. In my view, the sums were not received on account of royalties: they are assignments and not licences; a parting by Miss Nethersole of part of her capital assets, not a stipulation for royalties. In dealing with this matter it has to be remembered that copyright occupies a position and character of its own, and the effect of any dealing with if must not be judged merely on principles which may be applicable in other cases, but in the light of the terms of the Copyright Act of 1911. Whatever may be the result of granting rights partial in quantity or length of time in other cases, as to which I should desir .....

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..... of some of the rights included in the copyright. The effect of a partial assignment of copyright for a period less than the whole term is not to create any new right but only to divide the existing right. In the result there are two separate owners each with a distinct property. Neither holds under the other. Nothing new except a position which may give rise to friction has been created. The only requisite for an effective assignment in such a case is that in a document, complying as to form with the requirements of the Act, the transfer intended should be expressed to be made, the rights to be transferred, and the period being stated with certainty. In this case, the agreement of June 27, 1939, states with certainty the rights which are the subject-matter of the transaction: the intention to transfer that subject-matter for a definite period is apparent : and an assignment is expressed to be made. The circumstance that the document contains provisions which state independently some of the rights necessarily involved in the assignment or which add to or subtract from those rights―however relevant that circumstance might be if the document were ambiguous as to its intended op .....

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