Collecting society PPL has taken legal action against the British government for failing to implement a European directive that would extend the circumstances under which royalties should be paid for

LONDON -- Collecting society PPL has taken legal action against the British government for failing to implement a European directive that would extend the circumstances under which royalties should be paid for public airings of sound recordings.

During a July 7-8 preliminary hearing in London's High Court, PPL claimed that the government did not implement into national legislation European provisions that override licensing exemptions contained in the British 1988 Copyright Designs and Patents Act.

If implemented, the European directive would have caused certain parties to lose their exemption from paying public-performance royalties to record labels.

The dispute is centered on Council Directive 92/100/EEC 19 November 1992, commonly called "the Rental Directive."

During the preliminary hearing, the government tried to have the case dismissed, arguing, among other claims, that the PPL had waited too long to sue. The European directive in question had a deadline of July 1, 1994, for implementation.

The government's argument was rejected by the High Court, and the judge has allowed PPL to continue with the case.

If successful, the suit could result in a damages award to PPL, which has 3,000 record-company members, of millions of pounds.

However, the defense told the judge that the claim could have broad repercussions. "This has implications potentially across government," said counsel for the Department of Trade and Industry and the attorney general.

"It's all very much at early stages," comments Peter Leathem, director of legal and business affairs at PPL. "We will continue our dialog with the government outside the proceedings themselves to see if we can resolve matters," he says.

A PPL source adds, "This was just a first round. We'll wait for the next hearing, and we certainly don't want to embarrass the government."

No date for the full hearing has been set, but observers say it is unlikely to take place this year.