The decision in NoCopyrightSounds Limited v AEI Music Limited and Featherstone Music Limited provides an interesting example of the issues that can arise when a rights holder seeks to regain control of the commercial exploitation of its intellectual property following the breakdown of a long-standing distribution relationship.
The High Court granted an interim injunction in a dispute concerning the continued exploitation of the NoCopyrightSounds music catalogue by its former distributor and sub-publisher. Although the application was determined by reference to the familiar principles in American Cyanamid v Ethicon Ltd [1975] UKHL 1, the decision is noteworthy because the underlying dispute centred not on ownership of the rights themselves, but on whether the defendants retained any contractual authority to continue exploiting them. In reaching its decision, the court was required to consider competing interpretations of the parties’ contractual arrangements, the commercial impact of ongoing uncertainty surrounding exploitation rights, and the adequacy of damages as a remedy in circumstances where concerns existed regarding the defendants’ financial position.
Background to the Dispute
NoCopyrightSounds (“NCS”) is a well-known independent record label and publisher whose music catalogue is extensively exploited across streaming platforms, social media and gaming content.
Since 2014, AEI Music Limited (“AEI”) and Featherstone Music Limited (“FM”) had been authorised under a series of agreements to distribute and licence NCS’s music rights. In return, they accounted to NCS for revenues generated from those activities whilst retaining an agreed percentage by way of commission.
The parties’ relationship deteriorated after AEI accumulated substantial unpaid liabilities. By May 2025, AEI had acknowledged a debt of approximately £4.1 million owed to NCS and indicated that it could not repay more than £250,000 without entering insolvent liquidation.
NCS subsequently sought to terminate its agreements with both AEI and FM on the basis of material breaches. Although the parties disputed whether those termination notices were effective, it was common ground that the relevant contractual arrangements would, in any event, expire by July 2026.
Against that backdrop, NCS applied for an interim injunction preventing AEI and FM from continuing to exploit its intellectual property rights pending trial.
The Parties’ Arguments
NCS argued that the defendants no longer had any entitlement to exploit its catalogue and that continued exploitation was causing ongoing commercial harm.
Interestingly, NCS also sought to rely on a line of authority suggesting that interim relief may be granted where a defendant has no realistically arguable defence. In other words, NCS contended that its position was sufficiently strong that the court need not engage in the conventional balancing exercise ordinarily associated with interim injunction applications.
The defendants, however, argued that a later Heads of Agreement (“HOA”) had superseded the earlier contractual arrangements and that the HOA did not provide a right to terminate for material breach. AEI also relied on alleged representations concerning repayment of the debt, arguing that it had been afforded a reasonable period within which to satisfy its obligations.
An interesting feature of the injunction application was NCS’s submission that the court need not engage in the traditional American Cyanamid balancing exercise at all. Relying on authorities including Manchester Corporation v Connolly [1970] Ch 420, NCS argued that the defendants’ position was so weak that there was no real prospect of successfully defending the claim and that interim relief should therefore be granted without the need for a detailed assessment of the balance of convenience.
The court accepted that, in principle, there may be cases where interim relief can be granted on that basis. However, it concluded that the contractual issues arising from the parties’ various agreements, including the effect of the HOA, were sufficiently disputed that they could not properly be resolved on an interlocutory application. The court therefore proceeded to determine the application by reference to the familiar principles in American Cyanamid.
Whilst the argument was ultimately unsuccessful, this aspect of the judgment serves as a useful reminder that, in an appropriate case, a claimant may seek interim relief on the basis that a defendant has no real prospect of successfully defending the claim.
The Court’s Decision
Applying the principles in American Cyanamid, the key questions were:
- Is there a serious issue to be tried?
- Would damages be an adequate remedy if the injunction were refused?
- Where does the balance of convenience lie?
There was no dispute that serious issues existed which required determination at trial. The principal questions were therefore whether damages would provide an adequate remedy and where the balance of convenience lay:
- Why Damages Were Not an Adequate Remedy
The court concluded that damages were unlikely to provide an adequate remedy for NCS.
Importantly, the judge accepted evidence that the dispute was affecting the commercial exploitation of NCS’s rights. Potential licensees had expressed concerns about entering into licensing arrangements while ownership and control of the rights remained contested. There was evidence that at least one platform had already suspended payments during the dispute.
The court also considered the defendants’ financial position. Given the substantial sums (some £4.1m) already owed to NCS and AEI’s own acknowledgement of its financial difficulties, there were significant doubts about the defendants’ ability to satisfy any future damages award.
- Balance of Convenience
The balance of convenience also favoured NCS.
The judge considered that NCS appeared to have the stronger case on the contractual issues. The wording of the HOA, commercial common sense and the parties’ subsequent conduct all weighed against the interpretation advanced by the defendants.
Of particular significance was the fact that the parties had continued to behave as though the earlier contractual arrangements remained operative. Negotiations concerning a longer-form agreement continued, FM carried on exploiting the catalogue despite not being a party to the HOA, and AEI continued accounting in accordance with the previous arrangements rather than the accounting provisions contained within the HOA itself.
The court therefore granted the interim injunction. AEI and FM were restrained from continuing to exploit NCS’s rights and AEI was required to take positive steps to facilitate NCS’s exercise of those rights.
Key Takeaways
The decision offers several points of practical interest for rights holders, publishers, distributors and businesses involved in the commercial exploitation of intellectual property:
- The courts are prepared to recognise that uncertainty surrounding the exploitation of valuable rights may itself cause commercial harm, particularly where licensing opportunities and business relationships are affected.
- A defendant’s financial position may play an important role when the court considers whether damages would provide an adequate remedy.
- Parties relying on heads of terms or similar preliminary agreements should ensure that the intended contractual effect of those documents is clearly recorded.
- In appropriate cases, claimants may seek to argue that interim relief should be granted because there is no realistically arguable defence, although the courts are likely to reserve that approach for clear cases.
Comment
The significance of the decision lies less in the fact that an interim injunction was granted and more in the circumstances in which it was granted.
At its core, the case concerned control of a valuable music catalogue and whether the defendants retained the contractual authority to continue exploiting those rights. The judgment reflects the commercial reality that, in the digital economy, the value of intellectual property often depends as much upon certainty of control and exploitation as it does upon ownership itself. Where competing claims create uncertainty in the marketplace, the resulting disruption to licensing arrangements, platform relationships and commercial opportunities may be difficult, if not impossible, to quantify.
The decision also serves as a useful reminder of the interaction between intellectual property disputes and insolvency risk. The court was clearly influenced by concerns regarding the defendants’ ability to satisfy any future damages award, illustrating that the practical enforceability of a remedy may be just as important as its theoretical availability.
For businesses operating in the music, publishing and wider creative sectors, the judgment provides a timely illustration of the courts’ willingness to intervene where disputes over contractual rights threaten the continued control and exploitation of valuable intellectual property assets.