The paper believed it had permission from the concert's rights holder to distribute the CD but the musician's estate said that it had not. The paper will not have to pay additional damages, though, because it had genuinely attempted to licence the music, the Court said.
Two filmmakers had filmed the concert and, in partnership with Hendrix's estate, were planning to release it to cinemas then on CD and DVD. When the newspaper distributed the CD they put their plans on hold, the court heard. It ruled that they were entitled to interest on the sums they could have earned had the film been released.
Hendrix shot to fame in the late 1960s, playing with English musicians Noel Redding and Mitch Mitchell in The Jimi Hendrix Experience. Though he played with other musicians after that group disbanded, the Experience played their last ever UK concert in 1969 at the Royal Albert Hall.
That concert was filmed by Gerald Goldstein and Steve Gold with Hendrix's permission, but when the singer and guitarist died in 1970 the project was put on hold.
In 2003 the two men agreed with Experience Hendrix, the company controlled by Hendrix's family that manages his estate, that they would edit and release the film and its soundtrack.
The film was nearing completion in 2006 and its 'final mix' was scheduled for October of that year. But in September The Sunday Times published the edition carrying 10 tracks from that concert on its 'covermount' CD.
The filmmakers and Experience Hendrix wrote to The Sunday Times just days before publication but the newspaper said that it had licensed the recordings from a company called Charly. An earlier ruling found that the Charly licence was not valid.
The process of putting the CDs in the polythene bags containing some of the Sunday Times supplements was too advanced to reverse by the time The Sunday Times had discovered that its licence may not be valid, the Court heard, and the CD was distributed with the newspaper.
The film project was put on hold and has still not resulted in a release.
Experience Hendrix, Gold and Goldstein sued The Sunday Times, claiming that the distribution of the CD made it commercially impossible for them to release the film. They asked the court to award it damages.
The High Court agreed, though it awarded far less in damages than had been claimed. To calculate the damages, Sir William Blackburne tried to work out how much the film would have made the filmmakers and Hendrix's estate.
"I have come to the clear conclusion that it is quite impossible to forecast, so as to provide a reliable basis for computing losses, what the box-office takings are likely to be for a film, whether in the US or beyond, which has yet to be released, which, at the time of the trial, had not even been completed and which none of the independent experts giving evidence before me had seen in any shape or form," he said. "Projections of unit sales of DVDs and CDs (and box sets of each) calculated for the first five years following release seem to me to be just as much a matter of guesswork."
The judge looked at offers of advances from media companies Sony and Universal in distribution offers they made, and used these as the basis of a calculation of likely earnings. He found that the film was likely to earn its makers $5.8 million in the first year of its release.
A similar sum to that was still available to be earned by the filmmakers and Experience Hendrix if they released the film, though, so all that happened was that the earning of that money was delayed by a year.
"With the possible exception of the market for recorded music (essentially CDs and CD box sets), there is no reason to think that the box-office and other takings from the Project would be any different merely because it had been delayed by 12 months," the judge said.
The Court awarded them the US rate of interest plus one per cent, when calculated on the sum of $5.8m.
The judge said that this money would be "very substantially less than the millions that they were claiming. But their claims, even the relatively more modest one of [Hendrix's estate], seemed to me, standing back, to be altogether out of proportion to the true scale and effect on the Project of the covermount's appearance".
Sir William Blackburne said that The Sunday Times should not have to pay punitive damages because it had made a genuine attempt to license the recordings for its use.
"It is not correct to say that the defendant was indifferent, let alone recklessly indifferent, to whether it would engage in infringing activities," he said. "The defendant used the services of TCP, a leading, well established and reputable agency with whom it had an established relationship, to supply and obtain all necessary licences for promotional material such a covermount CDs."
"[The Sunday Times] cannot, in my judgment, be criticised for failing to investigate the provenance of the covermount material," said the judge. "Damages, if otherwise appropriate, should not be increased by an award of additional damages, whether by reference to flagrancy or 'moral prejudice' or any other such considerations."