Moonbug Entertainment Ltd v (1) CCM Touring LLC; (2) S2BN Entertainment Corporation

Background

The Claimant, Moonbug Entertainment Ltd, is a company registered in the UK which creates and produces animated and live-action audio-visual content for children. It and its affiliates own all intellectual property rights connected with CoComelon, the most watched children's YouTube channel in the world. The First Defendant, CCM Touring LLC, is a Delaware company which is an affiliate of the Second Defendant, S2BN Entertainment Corporation, which is a Delaware corporation specialising in acquiring and putting on touring exhibitions, events and live performances.

Moonbug entered into a licence agreement with CCM which granted CCM exclusive licences of Moonbug's intellectual property rights in CoComelon for the purposes of putting on live shows as part of a CoComelon Tour. The agreement provided for early reversion to Moonbug of those licensed rights in a territory if there had not been a meaningful ticketed presentation of the CoComelon Tour in a territory by 5 November 2023. The agreement had an exclusive jurisdiction clause which provided that: (i) the agreement and any related dispute or claim shall be governed by, and construed in accordance with, the law and jurisdiction of the party bringing a claim; and (ii) each party irrevocably submits for all purposes in connection with the agreement to the exclusive jurisdiction of the party bringing the claim.

The Proceedings

Moonbug commenced proceedings in the UK on the Shorter Trial Scheme within the Commercial Court, seeking a declaration that by 5 November 2023, the rights to put on a CoComelon Tour had reverted to Moonbug in all but two territories. The Defendants, CCM and S2BN, acknowledged service, ticking the box that "The Defendant intends to defend all of this claim" and not the box that provides "The Defendant intends to contest jurisdiction". The Defendants then wrote to ask for a 28 day extension of time for service of the Defences, stating that the position on service and jurisdiction is reserved, Moonbug agreed to an extension of 14 days. The Defendants wrote to the Court to inform it of the extension and did not refer to any potential challenge to jurisdiction. When the initial extension for the Defences was due to elapse, the Defendants applied to the Court for a further extension of time to serve the Defences, and did not refer to any potential challenge to jurisdiction. The Defendants then corresponded with Moonbug about listing a CMC.

The Jurisdiction Challenge

On the day the Defences were due after two extensions, the Defendants brought an application seeking relief from sanctions for not having challenged jurisdiction in the appropriate time, challenging the jurisdiction of the English Court, or alternatively seeking a stay. The basis for the Defendants challenge was that there was a separate dispute between the parties taking place in New York over whether Moonbug had breached the agreement by licensing the rights to CoComelon to a third party who developed an interactive play-based character experience.

Andrew Baker J refused the Defendants' jurisdiction challenge on all grounds.

First, upon consideration of evidence of New York law, he found that the claim brought in England was not before the New York court or part of the claim brought by CCM there and so it follows that pursuant to the jurisdiction clause of the agreement Moonbug had a contractual right to have this claim determined in England as a claim governed by English law (§42).

Second, he found that by applying for extension of time to serve Defences and subsequent correspondence between the parties arranging dates for a CMC, the Defendants plainly submitted to the jurisdiction at common law (§56).

Third, he found that there was no arguable basis for a stay of these proceedings in favour of or pending the New York claim (§57).

Fourth, although it was not necessary to deal with the further issue of a retrospective extension of time or relief from sanctions, he found on the Denton test that: (i) a 40 day default against a deliberately short timescale for issuing a challenge to jurisdiction was a significant and substantial default; (ii) the default was substantially unexplained in the evidence; and (iii) on all the circumstances of the case, it was unfair to grant relief from sanctions on account of the delay caused by the Defendants' actions, having regard to the fact that the case was brought within the Shorter Trial Scheme (§59).

Ian Mill KC and Marlena Valles, instructed by Reed Smith, acted for the Claimant.

The judgment is available here.