Tag Archives: contract disputes

The seventh Python

monty pythonAs most fules kno, Monty Python’s Flying Circus was a TV comedy series in the 1960s and 1970s that spawned several films and, in 2005, a stage musical called Spamalot.  So ingrained is Python in the public consciousness that (according to Wikipedia) questions about it feature in the examination for would-be British citizens.

When the TV show first appeared in 1969, IP Draughts’ mother didn’t allow him to watch it, but he heard about it at school.  Phrases such as “and now for something completely different” and “nobody expects the Spanish inquisition” became part of the playground banter in Newton Mearns, a pleasant suburb of Glasgow.  At around the same time, in the town of Lewes, near the South coast of England, the Draughtatrix received a Monty Python Christmas Annual, which she still possesses.

grailThere were originally six members of the Python team, some of whom went on to become household names for their later work.  John Cleese co-wrote and starred in one of the most successful TV comedies of all time, Fawlty Towers.  After many years of travel programmes, Michael Palin is now a national treasure.  Eric Idle, whom IP Draughts thought one of the strongest presences on the Python TV programmes, seemed to disappear from public view (other than in the Python films) until resurfacing in 2005 as the writer and driving force behind Spamalot.

It is strange, to say the least, to encounter the Python team as witnesses in a High Court trial.  The case, Forstater v Python (Monty) Pictures Limited [2013] EWHC 1873 (Ch), published yesterday, concerns the 1975 film, Monty Python and the Holy Grail (the Grail), and a dispute over entitlement to royalties from Spamalot, which was inspired by the film. The case is interesting because of the people involved and the facts; from a legal perspective it is rather unimportant.

spamalotThe claimant in the case, Mark Forstater, was hired by the Pythons to be the producer of the Grail.  He was entitled, under a written agreement with the first defendant dated 25 April 1974, to a percentage of certain profits from the film, including, in the words of the third schedule to this agreement, ‘any and all so-called “merchandising” and other “spin-off” rights arising therefrom.’  The dispute concerned (among other issues) whether  Mr Forstater was entitled to a percentage of the royalties accruing from Spamalot, and what that percentage should be.

Mr Forstater was rather unwise in the way he presented his claim.  The judge reported that Mr Forstater had dug a deep pit for himself by claiming to be the seventh Python, which infuriated the surviving Pythons.  He then tried to backtrack and clarify that he only meant for financial purposes and was not claiming a creative role.

The case report describes a long and complex factual history.  The judge, Norris J, was prepared to rectify (ie rewrite) a term of the agreement based on the evidence before him.  It is quite unusual, in IP Draughts’ experience, for judges to rectify the terms set out in a signed, written agreement, but then the way in which the parties in this case went about taking decisions was also highly unusual.

sea_of_galileeThe Pythons were not the only prominent people to feature in the case.  Mr Simon Olswang is a solicitor who founded the London firm that bears his name; Olswang is now a leading media law firm with offices in seven countries.  According to his blog, Mr Olswang is now “enjoying an active retirement from a mango fruit farm overlooking the Sea of Galilee”.  According to the judge, he gave evidence “in a rather casual way” by mobile phone and video link from Israel.  It seems he was responsible for drafting the agreement and failed to incorporate an agreed provision; hence the need for rectification.  But as the drafting work was done 40 years ago, there is unlikely to be any recourse against him or his firm at that time (Brecher & Co); the limitation period for claims has long since expired.

Several of the Pythons gave evidence to the court.  As is usual in court judgments nowadays, the judge stated whether he found each witness’s evidence trustworthy and reliable.  So, for the record:

Michael Palin: “a balanced and trustworthy witness.”

Terry Jones: “a trustworthy witness, though …his evidence was suffused with a sense that Mr Forstater had done very well out of his brief connection with the Pythons.”

Eric Idle: “he expressed the hope that in his evidence he was being honest and that his dislike [of Mr Forstater] did not affect his honesty. I think he largely achieved that aim so far as conscious effort could take him. He undoubtedly regarded Mr Forstater as ungrateful.”

Terry Gilliam and John Cleese: “gave written evidence but did not attend for cross-examination. I do not place much weight on their evidence on that account.”

The case report reveals the Pythons’ concern with retaining copyright in their creative work, which might suggest a good business approach.  However, other aspects of the way they worked seemed highly disfunctional.  Michael Palin’s evidence hints at frequent arguments among the Pythons.  They apparently had a “chaotic” approach to management and decision-making, relying on a succession of individuals of varying qualifications and experience to handle the business side of their activities, including important but mundane activities such as negotiating contracts and giving instructions to solicitors.  There seem to have been many fallings-out with these individuals over the years, including someone who might have been a key witness in the case, Anne Henshaw.

elvisAs he read the case report, IP Draughts reflected on the best way to manage the business and legal affairs of creative artists.  Even highly intelligent people such as the Pythons – most of them were from an Oxbridge background, and John Cleese obtained a 2:1 in law from Cambridge – seem to be unable, or unwilling, to engage with the business side.  It is not surprising that some artists are ripped off by their managers or have dark, strange relationships with them, as in the case of Elvis and Colonel Tom Parker.

IP Draughts’ experience of advising ‘creatives’ is more limited than it is of advising scientists and academics.  His experience tells him that advising artistic people can be very rewarding, but sometimes it requires the adviser to have a very thick skin.  Perhaps that is not so different from dealing with any driven, highly-talented individuals.  Last December a client of IP Draughts who is a novelist told him he knew “sod all” about the matter on which he was advising (she apologised later), while some years ago a client who is a leading academic surgeon and knight of the realm told him that he was “killing patients” with each day of delay in reaching agreement on the terms of a licence agreement (he didn’t apologise).  Maybe there isn’t any real difference between the artistic and scientific worlds!

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Academic inventors and investors: an eternal story

Click here to visit the home page of the KCL Institute of Telecommunications

Click here to visit the home page of the KCL Institute of Telecommunications

W is a professor at King’s College London, a Fellow of the Royal Society, and a prolific inventor.  He has developed a new telecommunications technology in collaboration with C, who is a businessman and former army officer.  W has demonstrated the effectiveness of his technology with a working installation that he has set up to transfer data between central London and a point approximately 20 miles to the West.  The installation proves conclusively both that it is possible to transfer data over this distance in a novel way and that there is a public appetite for the technology.

There is no reason why the technology could not be applied in a similar way over much longer distances.  The advantages over existing technologies are great, and there is a large, potential market.  W’s technology is well protected with patents in the UK and other major markets.  As W refines and improves the technology he is able to file further patents.  One of the benefits of W’s technology is that it can make use of existing technology infrastructure, which reduces installation costs.

W and C form a business together to exploit the technology, but they quarrel endlessly.  C claims to be a co-inventor of the inventions claimed in the patents, but W regards him more as a source of funding and marketing.  C also has interests in supplying hardware and installation services that are used in conjunction with the technology.

W and C refer their patent dispute to arbitration by a two-person panel.  W chooses a leading academic as one of the arbitrators.  C chooses a well-known engineer as the other arbitrator.  The panel concludes that each of W and C has contributed in his own way, so that they are co-inventors.  There are suspicions that this is a typical fudge by arbitrators, rather than a rigorous decision based on patent law.

Whatever their respective scientific contributions may be, it is clear that commercial exploitation of the technology will depend on C’s business skills. W is an academic who is so shy that sometimes he gets someone else – another well-known academic – to deliver his lectures for him.

Following the arbitrators’ decision, W and C resolve their dispute by entering into an agreement under which some of the patents are assigned to C in return for continuing royalty payments to W.

The technology increasingly captures the public imagination.  C and others form a public company to exploit it further.  The company raises sufficient money to buy outright most of the intellectual property that it needs.  W agrees to sell the company his remaining interests in patents and royalties for a lump sum of several million pounds.

The technology is successful for a few years, but is then overtaken by a more efficent and user-friendly technology that is developed in the USA.

wheatstone bridgeSounds familiar?  This could be a story about broadband or 4G, but is actually about the electric telegraph in the 1830s and 1840s.  W is Charles Wheatstone, who is most famous as the inventor of the Wheatstone Bridge.  C is William Cooke, who made a fortune from the telegraph but later lost it with less successful investments.  Both of them were knighted for their services to telegraphy, in the 1860s.  The arbitrators were Brunel senior (the father of Isambard Kingdom Brunel) and Professor Daniell, the inventor of the Daniell battery and the first professor of chemistry at King’s College London.  Wheatstone’s stand-in lecturer was Michael Faraday.

david brentThe working installation was built between Paddington railway station in London and Slough (now most famous as the location for the UK version of the TV show, The Office, and for the line from the Betjeman poem of 1937: “Come friendly bombs and fall on Slough…”).  One of the commercial attractions of the electric telegraph was that it was able to use land that had already been purchased for the railway lines that were being built all over the country.

btwifieThe public company that was formed was the Electric Telegraph Company, which later merged with other companies and was nationalised by the UK Government in 1870.  The present day British Telecommunications plc can trace its origins partly to the Electric Telegraph Company.  The company paid Wheatstone several tens of thousands of pounds to buy him out (accounts vary as to the amount, but one account says £33,000) which cPersons_throwing_stones_at_the_telegraphs_-_signan be roughly multiplied by, say, 100 to work out an amount in pounds sterling in 2013.

Oh, and the US technology that superseded Wheatstone’s electric telegraph…  Does anyone remember the name, Samuel Morse?

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Crowd-sourcing legal advice can work. Thank you.

got your numberRegular readers may recall the problem that Mrs Smith had, earlier this year, when she terminated a telephone line supply agreement with TryOnLine (not their real names) on its first anniversary.  She believed she was entitled to do so.  TryOnLine claimed that she had agreed to a 5 year contract, and sought to recover from her the revenue that they would have generated over the remaining 4 years.

To recap on the basic facts:

  • Mrs Smith is a lady in her seventies, who was cold-called at home by TryOnLine and persuaded to switch her telephone account.
  • She did not sign any written contract.  She paid £99 by direct debit as an upfront, annual charge and believed that she was effectively committed for a one-year period.
  • At the end of the year, she decided that she didn’t like the approach of TryOnLine (eg their actions in making deductions from her account without telling her, causing her to go into the red at her bank), and switched back to the market leader, British Telecom (BT).
  • TryOnLine then called her to try to persuade her to return to them, and at this stage mentioned a 5-year term for the contract, with penalties of several thousand pounds if she cancelled the contract.  The amount claimed changed over time, adding to the suspicion that they were making it up as they went along.  The phone call was followed up with a letter claiming £3,623.92, and later by an invoice for £2,469.85.  The basis for these various figures was never explained.
  • Terms and conditions were printed on the back of TryOnLine’s stationery, including a 5-year term and a provision stating that the remainder of the anticipated, 5-year revenue would be payable if the contract were terminated early.  Mrs Smith was not aware of presence of these terms on TryOnLine’s stationery until her lawyer pointed them out.  They are printed in grey ink in about 6-point type, Mrs Smith has poor eyesight, and she had no cause to look on the reverse of the only document that was sent to her when the contract was set up, namely a statement confirming that £99 was being deducted from her account under a direct debit arrangement.
  • No reference to the terms and conditions was made in the initial sales call (as far as Mrs Smith recalls) or subsequently until the contract was terminated.  No cooling-off period was mentioned, as required by EU consumer law.

detailsReaders of this blog were generous with their suggestions on how to deal with this problem.  Chris Shelley pointed out some case law that discussed when excessively long durations in consumer contracts might be considered unenforceable under consumer protection legislation.  Francis Davey pointed IP Draughts to the terms of Government licences for telecommunications service providers, which required the initial period of customer contracts to be limited to 12 months.  IP Draughts’ colleague Victor Warner gave some very practical advice that pressurising old ladies in this way could result in criminal or civil sanctions for harrassment under the Protection from Harrassment Act 1997.  With luck, IP Draughts might have eventually stumbled across the case that Chris mentioned.  It is doubtful whether he would have spent enough time to find the other areas of law that our readers mentioned.

Mrs Smith’s solicitor threw all of these items and more into a real stinker of a letter to TryOnLine, hoping to get them to back off and cancel their invoice.  Instead, Mrs Smith received another invoice from TryOnLine for £0.00 plus a £3.00 surcharge for sending a paper invoice.  We will give them the benefit of some very considerable doubts, and assume that this was an invoice “in the system”, reflecting their general incompetence and disorganisation, and not a coded response to the solicitor’s letter.

misrepTryOnLine’s formal reply to the solicitor’s letter raised an interesting line of argument.  They commented that most of the solicitor’s letter was based on the premise that the contract with Mrs Smith was a consumer transaction.  They pointed out that they marketed themselves as suppliers of telephone lines to small businesses, and not to consumers.  (When Mrs Smith’s solicitor looked at their stationery again, he noticed a strap line about this that he had glossed over before.)  They alleged that Mrs Smith had confirmed that she was in business at the time the contract was made.  They asked the solicitor to confirm whether Mrs Smith was in business.  They hinted, without quite saying it, that if it transpired that Mrs Smith was not in business, they would have a cause of action against her for misrepresentation.  They also appeared to be hinting that they were expecting an offer of settlement.

Responding to this letter required some thought.  On the one hand, TryOnLine had cold-called Mrs Smith at home, in relation to her domestic telephone line, which was the sole land line going into her home, which she shares with her daughter.  They persuaded her to cancel her (non-business) telephone contract with BT.  When she terminated her contract with TryOnLine, she reverted to a non-business contract with BT.


Mrs Smith is a semi-retired, or almost completely retired, dancing teacher.  Her teaching is now limited to 2 hours on a Saturday morning in a community centre in a nearby village.  The telephone line is used in connection with this “business”.  On a small point of detail, Mrs Smith does not claim any part of the cost of the telephone line as a business expense.  She does not recall having a conversation with TryOnLine about her business activities.

de minimisLooking at some of the European case law on the question of when someone is acting as a consumer, it seems that small-scale activities of this kind might be disregarded by the courts.  There is also some old English case law under the Unfair Contract Terms Act 1977 which points in a similar direction.

Mrs Smith’s solicitor carefully explains all this in a further letter to TryOnLine, and points out that Mrs Smith has no intention of paying them any money.  He suggests that the facts have now been exhaustively explored, and that no purpose would be served by further correspondence.  He indicates that there would seem to be two alternatives.  Either TryOnLine confirm that, now they understand the full picture, they withdraw their invoice, or litigation must now be commenced.

trifleTryOnLine reply with a face-saving formula, stating that, as Mrs Smith has retired from business, they are closing the account.  The clear inference of this letter is that they won’t be chasing for payment of the invoice.  At some point, when he has time, Mrs Smith’s solicitor will confirm this in writing.

So, thank you everybody who came up with suggestions.  A small book could be written about the law in this area and how it can be applied when dealing with suppliers who engage in sharp practice.  IP Draughts is not volunteering to write the book any time soon.

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