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Chappell & Co Ltd v Nestlé Co Ltd (1959) HL
Case Summary: This case concerns copyright infringement related to a sales promotion scheme. Nestlé offered records for sale at 1s 6d plus three chocolate bar wrappers. Chappell, the copyright holder of one of the records, sued, arguing Nestlé's offer didn't comply with the Copyright Act 1956, s.8, which allowed record production if a percentage of the ordinary retail price was paid to the copyright holder.
Key Issue: Did the chocolate wrappers constitute part of the consideration for the records, affecting the calculation of the "ordinary retail price" under s.8 of the Copyright Act 1956?
Majority Decision (Lord Reid & others):
Case Summary: This case concerns copyright infringement related to a sales promotion scheme. Nestlé offered records for sale at 1s 6d plus three chocolate bar wrappers. Chappell, the copyright holder of one of the records, sued, arguing Nestlé's offer didn't comply with the Copyright Act 1956, s.8, which allowed record production if a percentage of the ordinary retail price was paid to the copyright holder.
Key Issue: Did the chocolate wrappers constitute part of the consideration for the records, affecting the calculation of the "ordinary retail price" under s.8 of the Copyright Act 1956?
Majority Decision (Lord Reid & others):
- Yes, the wrappers were part of the consideration. Even though they had no intrinsic value to Nestlé (they were discarded), their collection was a condition for purchasing the record. This condition provided Nestlé with a valuable promotional benefit. The repeated acquisition of wrappers for multiple sales reinforced their status as part of the consideration.
- Therefore, the 1s 6d payment alone didn't represent the "ordinary retail price". Because Nestlé couldn't calculate and pay the required percentage based on the true value (including the promotional value of the wrappers), they infringed Chappell's copyright.
- No, the wrappers were merely a qualification for purchasing the record at the price of 1s 6d. They were a condition of the offer, but not part of the consideration.
- Copyright Infringement: The unauthorized reproduction and distribution of copyrighted material.
- Copyright Act 1956, s.8: This section provided a limited exception to copyright infringement for record production, contingent on payment of a percentage of the ordinary retail price to the copyright holder.
- Consideration: Something of value exchanged between parties in a contract. In this case, the debate centered on whether the wrappers formed part of Nestlé's consideration.
- "Ordinary Retail Price": The usual price at which the record would be sold without promotional schemes. The majority held that the wrappers affected this price because they were integral to the sales transaction
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