Covenant Not To Sue Upheld In Run-DMC Co-Author's Case Against Publisher Assignee For Royalties

Reach Music Publishing, Inc. v. Warner/Chappell Music, Inc., No. 09-cv-5580, 2014 BL 317978 (S.D.N.Y. Nov. 2014).

A Run-D.M.C. co-author's claim for breach of contract failed because that co-author "long ago sold all rights to the subject songs -- including his entire copyright interest -- in exchange for royalty payments," and in that agreement, he plainly acknowledged that the songs could be transferred to another publisher (Protoons) and that "he would only ever seek royalty payments from" the original publisher (Rush Grooves).  The Court found that the covenant not to sue Protoons was enforceable and was not unconscionable under New York law.  Therefore, the co-author breached the contract when he filed suit in 2008, and the defendant's damages were their resulting attorney's fees pursuant to the express attorney's fees provision in the contract.  Defendant also counterclaimed that the plaintiff (another publisher, Reach, to whom the co-author had purportedly transferred his interest), tortiously induced the co-author to breach the covenant not to sue.  The Court found that there was a question of material fact whether Reach had knowledge of the covenant not to sue, preventing either party from winning summary judgment on the tortious interference claim.  "Even though knowledge of the contract need not be perfect, Reach must have knowledge of the covenant not to sue in order to be liable for helping Reeves violate that particular contractual provision."