By Morag Peberdy and Jacqueline Clover

In a departure from the normal approach, the English High Court has found that in certain circumstances a copyright sub-licence may survive termination of the head licence. This was the Court’s holding in VLM Holdings Limited v Ravensworth Digital Services Limited [2013] EWHC 228 (Ch). Because of the specific facts of the case, termination of the head licence did not automatically terminate the sub-licence. Consequently, when the licensor subsequently exclusively licensed the same subject matter to another party, the licensor inadvertently put itself in instant breach of the exclusive licence. The case therefore illustrates some of the potential pitfalls for a licensor who does not fully understand what exactly it has permitted the licensee to do.

VLM Holdings does not hand down a rule of thumb that a sub-licence will survive termination of the head licence. The Court was very clear to confine its conclusion to the facts of the case. Notably, the head licensor was the parent of the sub-licensor and the sub-licensee was ignorant of the head licence. Nonetheless, it highlights the care which needs to be taken when drafting or interpreting licences of any kind.
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