Downloads Not Public Performances; Fees Must Be Recalculated

US v. American Society of Composers, Authors and Publishers, 09-0539-cv (L), NYLJ [web_id_#], at *1 (Court, Decided September 28, 2010) [LINK]

"This case presents two distinct questions that arise from the transmittal of musical works over the Internet: First, whether a download of a digital file containing a musical work constitutes a public performance of that musical work; and, second, whether the district court, acting in its capacity as the rate court, was reasonable in its assessment of the blanket license fees of Yahoo! Inc. and RealNetworks, Inc. (collectively, "the Internet Companies") to publicly perform any of the millions of musical compositions in the American Society of Composers, Authors and Publishers ("ASCAP") repertory.

For the reasons set forth below, we affirm the district court's ruling that a download of a musical work does not constitute a public performance of that work, but we vacate the district court's assessment of fees for the blanket ASCAP licenses sought by the Internet Companies and remand for further proceedings."

Bob Marley Recordings Are Works Made For Hire

Fifty-Six Hope Road Music Ltd. v. UMG Recordings, 08 CIV. 6143 (DLC), NYLJ 1202472502152, at *1 (SDNY, Decided September 10, 2010)

"This dispute concerns the ownership of the renewal term copyrights in certain pre-1978 sound recordings embodying the performances of Jamaican reggae artist, Bob Marley (the "Sound Recordings"). The Sound Recordings were created pursuant to exclusive recording agreements between Bob Marley and the predecessor-in-interest to defendant UMG Recordings, Inc. ("UMG"). The plaintiffs—Bob Marley's widow, Rita Marley, as well as nine of Bob Marley's children (together with Rita Marley, the "Adult Beneficiaries"), and their wholly-owned company, Fifty-Six Hope Road (collectively, the "Plaintiffs")—allege that the renewal term copyrights in the Sound Recordings reverted to them under the Copyright Act of 1909 upon Bob Marley's death in 1981. Plaintiffs also assert claims for underpayment of royalties against UMG. Plaintiffs and UMG have cross-moved for partial summary judgment. For the following reasons, UMG's motion is granted in part and Plaintiffs' motion is denied."

The Court analyzed Marley's recording agreements, distinguished a Copyright Act "author" from a common-dictionary-usage "author," and after considering various factors determined that Bob Marley's recordings are "works made for hire" under the Copyright Act of 1909.

The royalties claim concerns digital downloads - the Court found that contract ambiguities precluded summary judgment

$6.5mil Statutory Damages In Copyright Case

Arista Records LLC v. Usenet.Com, Inc., 07 Civ. 8822 (HB), NYLJ 1202472409489 (SDNY, Decided September 16, 2010)

"In this copyright infringement action, this Court previously granted Plaintiffs'² motion for summary judgment in its entirety, granted Plaintiffs' motion for terminating sanctions in part, and dismissed Defendants'³ cross-motion for summary judgment as moot. See Arista Records, LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 129 (S.D.N.Y. 2009) (hereinafter the "Liability Decision"). The action was then referred to Magistrate Judge Theodore H. Katz for an inquest on damages. On February 2, 2010, Magistrate Judge Katz issued a detailed and articulate 23-page Report and Recommendation ("R&R"), in which he recommended that Defendants be held jointly and severally liable for statutory damages in the amount of $6,585,000. On February 15, 2010, Defendant Gerald Reynolds timely filed objections to Magistrate Judge Katz's R&R pursuant to 28 U.S.C. §636(b)(1) and Federal Rule of Civil Procedure 72.⁴ For the following reasons, after considering Reynolds's objections, and reviewing the remainder of the R&R for clear error, this Court approves, adopts, and ratifies Magistrate Judge Katz's R&R in its entirety."

Assignment of Label Trademark

Fitzpatrick v. Sony-BMG Music Entertainment, Inc., 07 Civ. 2933 (SAS), NYLJ 1202471263978, at *1 (SDNY, Decided August 23, 2010):

Plaintiff Basil Fitzpatrick brought suit under section 1125 of Title 15 of the United States Code (the "Lanham Act") against Sony-BMG Music Entertainment, Inc. and Red Distribution, Inc. (collectively the "Red defendants") and Sheridan Square Entertainment, LLC ("SSE"), Sheridan Square Entertainment, Inc., and Daniel Goldberg (collectively, the "SSE defendants"). Fitzpatrick alleges that the SSE defendants infringed his common law trademark in the name "ARTEMIS RECORDS" by improperly using that name and creating reverse confusion in the marketplace. Goldberg now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56(c) on the ground that he assigned the "ARTEMIS RECORDS" trademark to SSE and is therefore not liable for any alleged "indirect infringement." For the reasons that follow, Goldberg's motion is granted and plaintiff's Complaint is dismissed against him.

The Court held the assignment was not an invalid assignment "in gross."

Monies Gifts, Not Loans, from Label to DJ

ABKCO Music & Records v. Montague, NYLJ 8/3/10 "Decision of Interest" (Sup. Ct., N.Y. Co. July 26, 2010).

"What is in dispute is whether certain funds transferred from ABKCO on an on-going basis at the direction of its founder and principal, Allen Klein (Klein) (now deceased), to Montague(s), were interest-free, uncollateralized loans or were they gifts or perhaps investments. Arrangements between the parties, if any, were remarkably informal, but now ABKCO seeks the return of several hundred thousand dollars claimed to be loans."

Court dismisses plaintiff's claims - no evidence these were loans.

File Sharing Jury Award Reduced 90%

Sony BMG Music v. Tenenbaum, No. 07 Civ 11446 (D. Mass. memo and order filed July 9, 2010):

This copyright case raises the question of whether the Constitution’s Due Process Clause is violated by a jury’s award of $675,000 in statutory damages against an individual who reaped no pecuniary reward from his infringement and whose individual infringing acts caused the plaintiffs minimal harm. I hold that it is.

Joel Tenenbaum (“Tenenbaum”), the defendant in this action, was accused of using file- sharing software to download and distribute thirty copyrighted songs belonging to the plaintiffs. The plaintiffs are a group of the country’s biggest recording companies. Their lawsuit against Tenenbaum is one of thousands that they have brought against file sharers throughout the country. Tenenbaum, like many of the defendants in these suits, was an undergraduate when his file- sharing was detected.

Lady Gaga Insurer Seeks Declaratory Judgment

Navigators Specialty Insurance Company v. Mermaid Music LLC; Stefani Joanne Germanotta; Team Love Child; Rob Fusari Productions LLC individually and in the right of Team Love Child LLC, Index No. 108996/2010 (Sup.Ct., N.Y. Co. filed 7/8/2010)

Plaintiff seeks a declaration that it is not required to defend and indemnify the insured, Stefani Germanotta (aka "Lady Gaga") in an underlying breach of contract action, on the basis of the policy's definition of "professional services." While the underlying complaint alleges breaches of a production agreement held between Germanotta and defendant Rob Fusari, none of these causes of action assert that the insured was negligent in the performance of music production, rendering the policy inapplicable to the claim.

'Beat It' to Promotor's Claims Against Jackson Estate

Allgood Entertainment, Inc. v. Dileo Entertainment Entertainment & Touring, Inc., et al., No. 09 Civ. 5377 (S.D.N.Y. opinion & order June 29, 2010).

"This case is about whether or not Michael Jackson, through his alleged manager Frank Dileo, agreed to perform a concert with the plaintiffs, AllGood Entertainment, Inc. and AllGood Concerts, LLC, and then later reneged on this agreement in order to perform a different concert with the defendants Anshutz Entertainment Group, AEG Live, LLC, and AEG Live NY, LLC. Plaintiffs allege breach of contract, promissory estoppel, and fraud by Frank Dileo and his management company, Dileo Entertainment and Touring, Inc., and allege tortious interference of contract on the part of Anshutz Entertainment Group and the other AEG entities; Plaintiffs also seek a permanent injunction. Both sets of defendants have moved to dismiss for failure to state a claim. For the reasons below, the tortious interference, fraud, and permanent injunction claims are DISMISSED."

GaGa Over Tour Merchandise

Lady GaGa's merchandising company brings "Doe" trademark suit asking court to authorize the US Marshal to seize and impound counterfeit merchandise.

The Bravado International Group Merchandising Services Inc. v. John Does 1-100, 10-cv-04943 (S.D.N.Y. filed June 25, 2010)

Ringtone Royalty Rate Approved By DC Circuit

RIAA v. Librarian of Congress, No. 09-1075 (D.C. Cir. decided June 22, 2010).

Rebuking a challenge by the Recording Industry Association of America, the DC District Court upheld a decision by the Copyright Royalty Board setting the ringtone "penny-rate" royalty rate at $0.24. The court also upheld a new late fee, 1.5%, for overdue royalty payments.

The Board's decision was "reasonable and reasonably explained."

Attorneys' Fees Denied In Recording Software Case

Waves Audio Ltd v. Reckless Music LLC, 09 Civ 2282, 6/15/10 NYLJ "Decision of Interest" (S.D.N.Y. June 9, 2010).

This is a copyright infringement action concerning audio software designed for use in recording studios. Following a jury trial, the defendant, Reckless Music, LLC, doing business as Skyline Recording Studio ("Skyline"), was found liable for infringing two versions of copyrighted software created by the plaintiffs, Waves Audio, Ltd., and Waves, Inc. (collectively "Waves"). Waves moved for an award of attorneys' fees and costs pursuant to the Copyright Act of 1976, 17 U.S.C. §505.

The motion was denied because defenses asserted were not "unreasonable." The remaining factors also favored Skyline or are neutral. There was no suggestion that Skyline's conduct either prior to or in the course of litigation was frivolous or improperly motivated. The goals of compensation and deterrence were fully satisfied by the statutory damage award assessed by the jury. And, finally, the financial strength of the parties counseled against an award of fees. Skyline appeared to be a relatively modest one-man operation, while Waves seemed fully capable of bearing its own costs.

2d Cir Rules On Copyright Statutory Damages

Bryant v. Media Right Productions Inc., 09-2600-cv, 5/5/10 NYLJ "Decision of Interest" (2d Cir. decided April 27, 2010).

Affirming lower court's finding that musical albums were compilations, and therefore each infringer was liable for only one award of statutory damages per album, rather than one award per song.

"...[I]nfringement of an album should result in only one statutory damage award. The fact that each song may have received a separate copyright is irrelevant to this analysis." The Court expressly declined to adopt an"independent economic value test" (adopted by other circuits) that would have allowed a statutory damage award for each song on the album because the Copyright Act specifically states that all parts of a compilation must be treated as one work for the purpose of calculating statutory damages. "We cannot disregard the statutory language simply because digital music has made it easier for infringers to make parts of an album available separately." See also fn. 6, collecting local district court cases that have considered whether a compilation is subject to only one statutory damage award (and noting that those courts reached the same conclusion).

The Court then went on to review the District Court's decision on intent (it had found that the conduct was innocent, not willful infringement), its calculation of statutory damages ($2,400), and its decision not to award attorneys' fees.

Leave To Amend Pleading In Patent Case

Touchtunes Music Corp. v. Rowe Int'l Corp., 07 Civ 11450, 5/18/10 NYLJ "Decision of Interest" (S.D.N.Y. decided May 11, 2010).

Defendant moved pursuant to Rule 15 of the Fed. R. Civ. P. for leave to file an amended answer containing an additional counterclaim of patent infringement. Motion granted.

The patent at issue relates generally to source code concerning how advertisements are assembled and executed on a jukebox or other electronic device.

Sony Loses Employment Suit Against EMI and Top Executive

Sony Music Entertainment, Inc. v. Werre, No. 601441/09 (Sup. Ct., N.Y. Co. Mar. 19, 2010)

Sony sued a top EMI executive for alleged breach of contract, and EMI for tortious interference with that contract. The Court granted Defendants' motion to dismiss for failure to state a claim. (CPLR 3211(a)(7)). The Court found that the letter agreement at issue was not a binding, enforceable contract because a contingency, namely the executive's availability for employment on April 1, 2010, did not occur. Nor did the "prevention doctrine" apply because there was not binding contract in effect that contained the condition precedent in question; the contract was not binding on the parties until the condition precedent occurred such that the prevention doctrine did not apply. Similarly, since there was no valid contract, the tortious interference claim against EMI failed. Lastly, the fraud and breach of covenant of good faith and fair dealing claims against the executive were dismissed as duplicative of the (failed) breach of contract claim.

Sony v Werre (NYS)

My Boyfriend's Back

Sirico v. F.G.G. Prods., Inc., 2010 NY Slip Op 01733 (1st Dep't Mar. 4, 2010).

Singers of the 1960s hit "My Boyfriend's Back" sues producer of the recording concerning royalties. On appeal of denial of motion for renewal, the Appellate Division addresses plaintiff's New York breach of contract, breach of implied contract, unjust enrichment, accounting, rescission, and right of privacy statutory claims. Specifically at issue is whether summary judgment was appropriate based on limited discovery and problematic affidavits. The court also addresses laches, statute of limitations, limitation on equitable claims.

Sirico v F

Default Judgment Entered Against Distributing Agent Originally Appearing Thru Counsel

Jeepster Recordings Ltd. v. World's Fair Label Group Inc., 09 Civ. 2155, NYLJ 3/2/10 "Decision of Interest" (S.D.N.Y. decided Feb. 22, 2010).

Plaintiff and Defendant entered into an agreement under which Defendant would become Plaintiff's North American distribution agent. Plaintiff alleges that Defendant failed to meet is distribution, accounting, and sales obligations, and withheld contractually obligated royalties owed to Plaintiff.

After the action commenced, Defendant's counsel withdrew and Defendant did not obtain alternative counsel. Thereafter, Plaintiff moved for default judgment seeking to recover monies that were allegedly improperly retained in breach of the distribution agreement.

"In this case, the allegations in the Complaint, coupled with [Defendant]'s failure to retain counsel and prosecute the case, support the entering of a default judgment and a finding that Defendant is liable for breach of the distribution agreement. "

Continuing:

"Although [Defendant] initially appeared, it has failed to retain counsel and has indicated that it does not intend to. As a corporate entity, [Defendant] can only appear through counsel. [Cit. om.]. The failure to retain counsel thus constitutes a failure to appear for further proceedings. Even though default judgments are generally disfavored, [Defendant]'s conduct indicates that it had the capability to defend itself, and its withdrawal and cessation of prosccution was willful and voluntary. While [Defendant] filed an answer and conducted some discovery, it did not raise any meritorious defenses. Finally, a denial of default judgment would prejudice [Plaintiff] because it has actively pursued its claims to recover monies under its agreement with [Defendant], and has not contributed to the default."

Label Defeats 'Inadvertent] Privilege Disclosure Claim

Fifty-Six Hope Road Music, Ltd. v. UMG Recordings, Inc., No. 08-cv-6143, NYLJ 2/10/2010 "Decision of Interest" (S.D.N.Y. decided Feb. 1, 2010).

Plaintiffs claim privileged documents (attorney client and work product) were inadvertently produced to Defendant by a non-party witness pursuant to a subpoena.

At the heart of plaintiffs' application was their contention that they "retained" the non-party to act as their "representative" in the litigation. In this role, plaintiffs disclosed to the non-party "numerous confidential communications" between plaintiffs and their counsel, which plaintiffs contend are protected by the attorney client privilege and the work-product doctrine. Plaintiffs maintain that the nonparty was included on these communications based on plaintiffs' "understanding and expectation" that he would keep the communications confidential.

The Court found that Plaintiffs failed to meet their burden of establishing that the privilege should apply to the documents at issue because, inter alia, Plaintiff did not demonstrate that the non-party was their representative or agent.

2d Cir Finds Antitrust Suit Stated Against Record Labels For Online Sales

The United States Circuit Court, Second Circuit, holds that plaintiffs' antitrust complaint alleging a conspiracy by major record labels to fix the prices and terms under which their music would be sold over the Internet states a claim for violation of Section 1 of the Sherman Act under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The amended complaint contains "enough factual matter (taken as true) to suggest that an agreement was made," id. at 555, and therefore states a claim.

"The present complaint succeeds where Twombly's failed because the complaint alleges specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among defendants," Judge Katzmann said.

The defendants "agreed to launch MusicNet and pressplay, both of which charged unreasonably high prices and contained similar DRMs", and the entities did not "dramatically" drop "their prices for Internet Music (as compared to CDs), despite the fact that all defendants experienced dramatic cost reductions in producing Internet Music."

Starr v. Sony BMG, No. 08-5637-cv, NYLJ 1/14/2010 "Decision of the Day" (2d Cir. decided Jan. 13, 2010).