In re: Isbell Records, Inc. (Isbell v. DM Records), No. 13-40878 (5th Cir. Dec. 18, 2014).
The Fifth Circuit affirmed a finding that plaintiff owned the copyright in the composition of the song "Whomp! (There It Is)", that defendant was liable for infringement based on its exploitation of the song for year, and the jury's award of over $2 million in damages. The primary issue was whether a 50% interest in the song had originally been assigned to the plaintiff or the defendant's predecessor-in-interest (the other 50% remained with the writers/producers of the song). The 5th Circuit held that California contract interpretation law applied, and that the lower court correctly found that the contract granted the 50% interest in the song to the plaintiff.
On appeal of defendant's trial motion under Fed. R. Civ. P. 50 for judgment as a matter of law, the defendant raised two issues regarding the district court's interpretation of the recording agreement as assigning a single 50% interest to plaintiff. First, the Court rejected defendant's argument that the lower court erred in interpreting the agreement without asking the jury to make any findings on extrinsic evidence. Second, the Court rejected defendant's argument that the agreement also assigned a second 50% interest in the composition copyright because the argument had not previously pursued that theory and had disclaimed the theory at an earlier hearing. In short, the defendant could not raise its "two assignments theory" after not previously asserting it at trial or in its earlier Rule 50 motion.
On appeal of defendant's motion under Fed. R. Civ. P. 60(b) for relief from judgment based on fraud and lack of standing, the Court rejected defendant's argument that it was prevented from presenting the defense of plaintiff's lack of standing. Even if the plaintiff had improperly withheld a certain document, it would not have affected plaintiff's standing and thus would not have affected defendant's defense.
With respect to the jury's damage award of over $2 million, the Court rejected defendant's argument that plaintiff should have only been awarded 1/2 of that amount as 50% owner of the copyright. First, defendant did not object to the jury charge during trial. And under the plain-error standard of review, the district court did not err. Notably, the 5th Circuit found that Edward B. Marks Music Corp. v. Jerry Vogel Music Co., 140 F.2d 268 (2d Cir. 1944), was inapplicable to the issue of first impression whether a partial owner of a copyright can ever be awarded infringement damages for his co-owner's share. Specifically, the jury could have found that plaintiff was entitled to 100% of the royalties in the first instance as administrator/publisher of the song. In other words, because plaintiff was obligated to account to the other 50% owners (the producers/writers), plaintiff could recover 100% damages and any issue as to distributions would be a separate case between the co-owners not involving the defendant.
Lastly, in affirming denial of defendant's Fed. R. Civ. P. 59 motion for a new trial, the Court found that plaintiff's closing statement -- referring to defendant as a "thief -- was not abusive and improper. Defendant did not object to the closing statement at trial and thus the standard of review was plain error. Evidence was presented at trial form which the jury could find that defendant's conduct was willful and that defendant stole the copyrights from plaintiff. Further, any prejudice was minimized by the judge's instructions and the statements concerned damages rather than liability. Further, plaintiff ultimateley elected actual damages which were higher than statutory damages, and willfulness is not an element of actual damages calculation.