Cox Communications Not Protected By DMCA Safe Harbor In Bit-Torrent Case

BMG Rights Management v. Cox Communications, no. 14-1611 (E.D. Va. Dec. 1, 2015).

In an action by the putative owners of 1,400 musical compositions against an internet service provider (Cox) for contributory and vicarious liability based on its users Bit Torrent infringement, the Court held inter alia that the ISP was not protected by the DMCA safe-harbor because it did not terminate access of repeat infringers under appropriate circumstances.  The Court found that defendant did not implement a repeat infringer policy before 2012, and after 2012 it did not reasonably implement its policy.  Thus, if Plaintiff is successful at trial, it will not be limited in the remedies it seeks.

Other issues the Court addressed was whether Plaintiff had standing (the copyright registrations listed Plaintiff, its predecessor, someone else, or the works were purchased).  The Court further found questions of material fact, 1) whether there is evidence of direct infringement by third parties; (2) whether there is evidence of Cox’s contributory infringement; (3) whether there is evidence of Cox’s vicarious liability; and (4) whether BMG failed to mitigate its damages.  Lastly, the Court found that the "unclean hands" defense failed as a matter of law.

Stratotone Mark For Guitars Was Abandoned, Permitting Junior Use

Agler v. Westheimer Corp., No. 14-099 (N.D. Indiana 10/28/15).

In a trademark infringement action concerning the mark STRATOTONE for guitars, the Court held that an abandonment of the mark permitted a junior user's use of the mark.  A period of non-use by one of the parties triggered a presumption of abandonment, which was not rebutted.

Santa Clause Is Comin To Town Reverts To Author's Heirs In 2016

Baldwin v. EMI Feist Catalog, 14-182-cv (2d Cir. Oct. 8, 2015).

The Second Circuit held that EMI publishing owned rights to the song "Santa Clause Is Comin' To Town" under a 1981 grant, not a 1951 grant, and accordingly that a 2007 termination notice terminates EMI's interest in 2016, reversing the lower court's entry of summary judgment for EMI.  The case details the complex statutory scheme under the 1976 Copyright Act which gave authors and their statutory heirs the right to terminate previously made grants of copyright under certain circumstances, and thereby to recapture some of the value associated with the works.  17 USC 203 and 304(c)-(d).  Plaintiff sought a declaration that either a notice of termination served on the publisher in 2007 or another served in 2012, will, upon becoming effective, terminate EMI's rights to the song.  The Second Circuit concluded that EMI owned rights to the song not under a 1951 agreement but instead under a subsequent 1981 contract, and that that the 2007 termination notice will terminate the 1981 agreement in 2016.  Accordingly, plaintiff (the author's heirs) were entitled to a declaratory judgment.

The Court detailed the various rights of reversion under the Copyright Act, which permits the author of certain earlier works to terminate a grant of copyright (e.g., to a publisher, like EMI's predecessor).  It then found that a 1981 Agreement not only granted EMI the future interest scheduled to revert to the author upon termination, it also replaced an earlier 1951 agreement as to the source of EMI's existing rights to the song.  Applying New York common law, the Court held that the parties intended for the new contract to substitute for the old one.  "Section 1 of the contract shows that they chose not only to have EMI receive the future interest that vested in [the author] upon service of the termination notice, but also to replace the 1951 Agreement as the source of EMI's existing rights in the Song."  Thus, the failure to record a 1981 termination notice under the 1951 agreement was irrelevant to the question whether EMI presently owned the copyright in the Song under either agreement.  Its rights to the renewal term were traceable to the 1981 agreement.  Thus, that was all that matters for decided plaintiffs' termination notices pursuant to section 203.

The Court concluded that Plaintiff could terminate the 1981 agreement under section 203 (section 304 did not control), and that the 2007 termination notice terminated the 1981 agreement.  Publication is a one time event that occurred in the 1930s.  Because the 1981 grant was executed by the author and does not cover the right of publication, it was terminable under section 203 starting on December 15, 2016, which is the effective date of termination stated in the 2007 notice.

Party Rock Anthem Not A Parody Of Hustlin'; Material Questions Remain Regarding Fair Use Defense

Roberts v. Gordy et al, No. 13-cv-24700 (S.D. Fla. dated Sep. 17, 2015).

The Court found that defendants are precluded at trial from arguing that Party Rock Anthem parodies the song Hustlin', but that summary judgment was inappropriate because questions of fact remain regarding whether Defendants' use, outside the parody context, was a fair use.  Specifically, material questions existed regarding the purpose and transformativeness of Defendant's use and the market impact of their use.

"Everyday I'm Hustlin'" Phrase Not Copyrightable

Roberts v. Gordy, No. 13-cv-24700 (S.D. Fla. dated Sep. 15, 2015).

In a dispute between the alleged owners of the song "Hustlin'," whose chorus repeats the phrase "everday I'm hustlin'," and members of the group LFMAO who sell merchandise bearing the phrase "everday I'm shufflin'," a phrase from their hit song "Party Rock Anthem," the Court held that the isolated phrase "everyday I'm hustlin'" is not copyrightable.  The Court noted that "copyright protection does not automatically extend to every component of a copyrighted work," and that "the overwhelming authority is that short phrases or common or ordinary words are not copryightable."  It was indisputable that the plaintiff's "Hustlin'" composition and lyrics was an original creative work subject to copyright protection -- but, the question was whether the use of a three-word phrase appearing int he musical composition, divorced from the accompanying music, modified, and subsequently printed on merchandise, constituted an infringement of the composition.  "The answer, quite simply, is that it does not."  Moreover, the defendants set forth various evidence that the terms "hustling" or "hustlin'" have been used in numerous songs prior to Plaintiff's creation of "Hustlin'" and that at least one song pre-dating "Hustlin'" has the exact lyric "everday I'm hustlin'" in it.  Lastly, the Court was unable to find any basis or precedent supporting the conclusion that a short, modified, set of words printed on merchandise can infringe on the copyright for a musical composition.  Plaintiff's rights do not extend that far, the Court concluded.

Florida Court Rejects Pre-72 Sound Recording Rights in Turtles/Sirius Case; Contrary To NY and CA Decisions

Flo & Eddie, Inc. v. SiriusXM, No. 13-23182-CIV-GAYLES/TURNOFF (S.D. Fla. dated June 22, 2015).

A Florida federal court granted defendant Sirius summary judgment as to liability on plaintiff Flo & Eddie's (the Turtle's) common-law copyright infringement claims, although New York and California courts have found differently.  The Florida federal court observed that Florida is different from New York and California, inasmuch as as there is no Florida legislation covering sound recordings nor is there a bevy of case law interpreting common law copyright related to the arts.  "The Court finds that the issue of whether copyright protection for pre- 1972 rec ordings should include the exclusive right to public performance is for the Florida legislature."  Accordingly, the Court found that Florida common law did not provie plaintiff with the exclusive right of public performance in the Turtles' sound recordings.  Further, the Court found that back-up and buffer copies made by Sirius were not unlawful reproductions.  Because the Court found that Sirius had not infringed any of Plaintiff's copyrights, the Court also dismissed plaintiff's related claims for unfair competition, conversion and civil theft (all of which were based on alleged copyright infiringement).

Big Pimpin Suit Continues With Triable Issues Of Fact

Fahmy v. Jay-Z et al., No. 2:07-cv-05715 (C.D. Cal. May 27, 2015).

In the copyright infringement action concerning Jay-Z's song Big Pimpin', the Court denied plaintiff's motion for partial summary judgment seeking to dismiss defendant's "license" affirmative defense.  The Court concluded that there were triable issues of fact as to whether plaintiff conveyed any performance rights he owned in the infringed song.  The Court also concluded that there was a genuine dispute of material fact as to whether defendants received a license to publicly perform the song as part of Big Pimpin' through their asserted chain of title or as a result of BMI blanket licenses.

Ghostface Killa Case, Involving "Iron Man Theme" Sample, Dismissed

Urbont v. Sony Music Entertainment et al., No, 11-cv-94516 (S.D.N.Y. April 20, 2015) [Doc. 78].

The Court granted Sony Music summary judgment dismissing the claims of plaintiff, who alleged infringement of his rights to the musical composition and sound recording of the "Iron Man Theme" in a Ghostface Killa song.  Sony successfully challenged plaintiff's ownership of a copyright interest in the song by establishing that the composition was a "work for hire" and was therefore owned by Marvel Comics, for whom plaintiff created the composition.  Notably, the Court found that Sony -- a third-party to that transaction -- had standing to challenge plaintiff's ownership under the work for hire doctrine pursuant to the 1909 Act's "instance and expense" test.

The Court also dismissed Plaintiff's state law claims for common law copyright infringement, unfair competition, and misappropriation, finding that the claims were preempted by the Copyright Act.  Plaintiff argued that the recording fell within the exception to pre-emption as a sound recording fixed before February 15, 1972.  17 U.S.C. 301.  The Court disagreed, finding that the recording was an "audiovisual work" and not a "sound recording" because it was created purely to accompany the television show Iron Man and did not exist apart from the accompanying televisuals.  Under the 1976 Act, the claims were preempted because they involve an audiovisual work.

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."

11th Cir. Finds Summary Judgment Properly Granted In Favor of BMI And Against Tavern; Adopts 2nd Cir. Davis v. Blige

BMI v. Evie's Tavern Ellenton, Inc., No. 13-15871, 2014 BL 329074 (11th Cir. Nov. 21, 2014).

The 11th Circuit affirmed summary judgment in favor of the performing rights society BMI, rejecting the defendant-tavern's argument that there were questions of material fact as to the copyright ownership of the musical compositions at issue and as to whether defendants were innocent infringers.  With respect to the chain-of-title for the five songs at issue, the court examined each chain of title, and further found that the district court properly found that BMI could be awarded judgment on each song in addition to the copyright holder (generally, the music publisher who owned the copyright).  As BMI agreed to be responsible for all costs and expenses pursuing infringement actions based on the titles that BMI licenses from copyright owners, the number of them to whom summary judgment is granted made no difference in the award of damages, attorneys' fees and costs.  Thus, there was no error in granting summary judgment to the other plaintiffs (the copyright owners) under Fed. R. Civ. P. 61.

As to innocent infringement, the Court affirmed that is not a defense to summary judgment liability, and instead is only a consideration as to the amount of statutory damages to award.  The court also found that an award of attorney's fees was appropriate.  Notably, the 11th Circuit joined the rule adopted by the Second Circuit in Davis v. Blige, 505 F.3d 90, 99 (2d Cir. 2007) that a copyright co-owner may maintain and recover in a copyright infringement action without joining other co-owners.  See fn. 2.

California Law Protects Public Performance Right In Pre-1972 Sound Recordings; Turtles Granted Summary Judgment Against Sirius

Flo & Eddie Inc. v. Sirius XM Radio Inc., et al., No. 2:13-cv-05693-PSG-RZ (C.D. Cal. filed Sep. 22, 2014) (Doc. 117).

Plaintiff, owner of all rights to The Turtles’ master sound recordings (including the hit "Happy Together"), was granted summary judgment against Sirius XM on its causes of action for violation of California
copyright law (California Civil Code § 980(a)(2)), California’s Unfair Competition Law (Cal. Bus. & Prof. Code §§ 17200, et seq.), and common law misappropriation and conversion, but only so far as the claims were premised on Sirius XM’s public performance of Plaintiff's recordings, not its alleged reproductions for which there were outstanding questions of fact.

Plaintiff argued that Sirius XM was liable for two distinct unauthorized uses of its sound recordings: (1) publicly performing its recordings by broadcasting and streaming the content to end consumers and to secondary delivery and broadcast partners, and (2) reproducing the recordings in the process of operating its satellite and Internet radio services.  Plaintiff contended that, in California, copyright ownership of a pre-1972 sound recording includes the exclusive right to publicly perform the recording; therefore, if anyone wishes to publicly perform such a recording, they must first seek authorization from the recording’s owner.  The Court agreed.

First, the Court found that California statutory and common law governs the rights that attach to pre-1972 sound recordings because the Federal Copyright Act does not apply to those earlier recordings and explicitly allows states to continue to regulate them.  Second, the Court examined the provision of California’s copyright statute that contains a provision directly addressing pre-1972 sound recordings. Cal. Civ. Code § 980(a)(2) ("The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound
recording").

The crucial point of statutory interpretation for this case was whether “exclusive ownership” of a sound recording carries within it the exclusive right to publicly perform the recording.  The Court’s textual reading of § 980(a)(2) was that the legislature intended ownership of a sound recording in California to include all rights that can attach to intellectual property, save the singular, expressly-stated exception for making “covers” of a recording.

The Court further found that the rule of statutory construction requiring express statements to alter the common law did not apply because, when the legislature passed § 980(a)(2), there was no common law rule in California rejecting public performance rights in sound recording ownership.  Also, the legislative history of § 980(a)(2) and its comparison to the Federal Copyright Act bolstered the Court’s plain textual reading of the statute that sound recording ownership is inclusive of all ownership rights that can attach to intellectual property, including the right of public performance, excepting only the limited right expressly stated in the law (that the owner does not have the exclusive right to record and duplicate “covers").  Lastly, the Court found further support for its textual reading of the statute as inclusive of the right of public performance from the only two courts that have ruled on or discussed this right under § 980(a)(2).  Accordingly, the Court granted summary judgment on copyright infringement in violation of § 980(a)(2) in favor of Plaintiff.

Borrowing the violation of § 980, the Court found that Sirius also violated California's Unfair Competition Law because Sirius publicly performs Plaintiff's sound recordings without authorization to do so.  Also, the Court found that Sirius XM’s unauthorized performances established conversion damages in the form of license fees that Sirius XM should have paid Plaintiff in order to publicly perform its recordings.  The foregone licensing or royalty payments that Sirius XM should have paid before publicly performing the recordings also constituted misappropriation.

Lastly, the Court found that Sirius could not rely on the doctrine of laches because this was an action at law seeking money damages, and laches is an equitable defense.  Accordingly, the Court granted Plaintiff's motion for summary judgment on all causes of action, but only so far as the claims are premised on Sirius XM’s public performance of the recordings, not its alleged reproductions.

Tim McGraw Didn't Have Access To Plaintiff's Demo Tape; Summary Judgment Affirmed In Defendants' Favor

Martinez v. McGraw et al., No. 13-5796 (6th Cir. filed Sep. 15, 2014).

The 6th Circuit affirmed summary judgment in favor of defendants in a copyright-infringement action wherein Plaintiff alleged that Defendants infringed his musical composition Anytime, Anywhere
Amanda with the musical composition Everywhere by country-artist Tim McGraw.  On appeal, the 6th Circuit found that the District Court applied the correct standard -- that defendant had an opportunity to access Plaintiff's song -- and that Plaintiff could not meet that standard.  "There is no dispute that Anytime was never published or distributed, never received radio play, is not available on iTunes, has not been performed by third parties, and that Martinez performed the song only in South Texas. Defendants’ only possible access would have been through the demo tape Martinez gave to Tomac."  The record, though, was devoid of any evidence that the demo tape had been passed along.  "Martinez’s theories of access through third-party intermediaries fall short. The district court properly determined that Martinez presented only 'attenuated chains of hypothetical transmittals' in support of his claim that Defendants heard or had a reasonable opportunity to hear Anytime. See Patry on Copyright § 9:29. The chain of access vanishes after Tomac gave the lone demo tape to Bartley in the fall of 1996, and the hypothetical transmittals fail to support
a reasonable inference that any Defendant or associate of any Defendant received a copy of Anytime, much less that Wiseman or Reid, the alleged infringers, heard or had a reasonable opportunity to hear Anytime and copied it before they co-wrote Everywhere in November 1996."  Lastly, there was no error because no evidence was presented that protectible elements of the two works are substantially similar.

Infringement Action Against Lady Gaga Dismissed; No Substantial Similarity

Francescatti v. Germanotta; No. 11-cv-520 (N.D. Ill. June 17, 2014).

The Court granted defendant Lady Gaga's motion to dimiss the copyright infringement case over Gaga's song "Judas", even though the Court found that defendants had access to plaintiff's song "Juda," because no reasonable trier of fact could find that the songs are substantially similar.  With respect to access, the Court found that based on the nature and timing of a collaboration between Gaga and other defendants, a reasonable juror could find that there exists a nexus -- via a channel of communication -- between the parties and that therefore the defendants had an opportunity to hear the plaintiff's songs.  Accordingly, defendants were not entitled to summary judgment on that ground.  However, the Court found no substantial similarity.  First, the Court undertook an extensive analysis of whether expert testimony was necessary, or permissible, to determine similarity under the ordinary observer test.  The Court found that expert testimony was warranted because the songs are sufficiently complex, especially given the use of computer technology.  Second, the Court undertook the extrinsic-intrinsic test and held that the songs are substantially similar.  The songs do not share enough unique features to give rise to a breach of the duty not to copy another's work.

SESAC Can't Escape Antitrust Claims

Meredith Corp. v. SESAC LLC, No. 09 Civ. 9177 (PAE)., 2014 BL 57263 (S.D.N.Y. Mar. 03, 2014).

The issue in this putative class action is whether SESAC's licensing practices since 2008 have violated federal antitrust law. Plaintiffs are groups of local television stations.  They sue SESAC aand allege that, in practice, they must obtain licenses for some music in SESAC's repertory. That is because SESAC's repertory is large and includes works so ubiquitous that some are inevitably embedded in shows that the stations acquire and wish to air.  Plaintiffs contend that, since 2008, SESAC, with its affiliates' assent, has taken steps to make illusory any alternative to the blanket license it sells, which conveys the right to play the music of all SESAC affiliates.  Having insulated this product from competition and forced local television stations to acquire it, plaintiffs allege, SESAC has set an exorbitant price for that "all or nothing" license, even though stations have no interest in buying the rights to the entirety of SESAC's repertory. Plaintiffs assert that SESAC and its affiliates have thereby violated § 1 of the Sherman Act, 15 U.S.C. § 1, by combining to unlawfully restrain trade; and § 2 of the same Act, 15 U.S.C. § 2, by conspiring to monopolize the market for the performance rights to the musical works within SESAC's repertory.  Plaintiffs also assert a monopolization claim against SESAC under § 2.

SESAC moved for summary judgment. The Court denied the motion as to all three counts, except that on the § 1 claim, the Court granted summary judgment to defendants in two ways that narrowed that claim. Specifically, the Court rejected plaintiffs' (1) per se theory of liability; and (2) claim of an agreement to restrain trade among all 20,000-plus SESAC affiliates, as opposed to among only the far smaller subset (under 1%) of affiliates who were party to a supplemental affiliation agreement with SESAC.

The Court first reviewed the history of antitrust litigation involving the PROs' licensing practices. The Court then considered the § 1 claim, assessing whether (1) the conduct plaintiffs assail is amenable to per se condemnation; (2) there is adequate evidence of concerted action among SESAC's affiliates to restrain trade; and (3) the evidence would support a conclusion that the anti-competitive effects of SESAC's conduct outweighed its pro-competitive tendencies, i.e., whether a jury could find harm to competition. The Court then considered the § 2 claims, addressing first the monopolization claim and then the claim of a conspiracy to monopolize.

Blacked Eyed Peas Not Liable For Infringement In Absence Of Access And Lack Of Similarity

Pringle v. Adams, No. 12-55998 (9th Cir. Feb. 21, 2014).

The 9th Circuit affirmed summary judgment for the defendants -- the Black Eyed Peas and related parties -- in a copyright infringement case.  The Court found: "The evidence in support of Plaintiff, however, raises only the barest possibility that Defendants had access to [the song], and Plaintiff does not argue that there is a 'striking similarity' between [the song] and Defendants’ allegedly infringing work."  The 9th Circuit also affirmed sanctions against plaintiff for violating a court order regarding service of process on one of the defendants.

Summary Judgment Denied Where Question Of Fact Concerning Plaintiff's Interest In Song

Mayimba Music v. Sony Corp. of Am. et al., No. 12-cv-1094 (S.D.N.Y. Jan. 16, 2014) [Doc. 30].

The Court denied defendants' motion for summary judgment, finding that Plaintiff just "barely" had an issue for the jury, to wit: whether Plaintiff, alleged assignee of the song, still maintained an interest in the copyrighted song, which Plaintiff alleged was used without its permission in a song ultimately recorded by Shakira.  There was conflicting testimony and documentary evidence.

Vimeo Decision Modified; Leave To Appeal Granted

Capitol Records, LLC v. Vimeo, LLC, 2013 ILRC 3345, No. 09-cv-10101 (S.D.N.Y. Dec. 31, 2013).

Upon further review of the record, the Court agreed with defendants that Vimeo is entitled to summary judgment with respect to five videos for which the only evidence of employee interaction was that the user's account had been "whitelisted."  "It is simply unrealistic to infer that a Vimeo employee watched" those videos.  Also upon further review, the Court found that for two videos, the infringing nature of the videos was not objectively "obvious" and therefore Defendants did not have "red flag" knowledge of the videos' infringing content.  However, the Court found that 18 of the videos still should go to a jury.

The Court granted Plaintiff's motion to amend the complaint to add additional videos, including both pre- and post- 1972 sound recordings.

Lastly, the Court granted Vimeo's motion to certify two questions for interlocutory appeal: (1) Are the DMCA's safe-harbor provisions applicable to sound recordings fixed prior to Feb. 15, 1972, (2) and does a service provider's mere viewing of a user-generated video containing third party copyrighted music automatically give rise to a triable issue of fact as to the service provider's knowledge of infringement under the DMCA?

Madonna's "Vogue" Does Not Infringe Horn-Hit

VMG Salsoul, LLC v. Madonna Louise Ciccone, et al., No. 12-cv-05967 (C.D. Cal. filed 11/18/2013) [Doc. 116].

Plaintiff alleges copyright infringement for the appropriation of a single horn stab (“Horn Hit”) from Plaintiff’s work, Love Break. The Horn Hit is a single chord that is played eleven times in Defendants’ work, Vogue. The Court found that neither the chord nor the Horn Hit sound sufficiently original to merit copyright protection. Even if the alleged appropriation was subject to copyright protection, the Court found that any copying was de minimis.  Accordingly, defendants were granted summary judgment.

The Court recognized that while a valid certificate of registration with the copyright office entitles Plaintiff to
a presumption of originality, Defendants may overcome this presumption by demonstrating that the Horn Hit is not original.  The Court then concluded that, as a matter of law, the Horn Hit is not sufficiently original to merit copyright protection.  "The Horn Hit is not a component of the 'hook' in Plaintiff’s Love Break nor is it accompanied by a lyric. As a result, the Court finds that this single chord is not sufficiently original to merit copyright protection".

The Court further found that even if the alleged appropriation was subject to copyright protection, Defendants’ use was de minimis.  "Having listened to the sound recordings of Chicago Bus Stop, Love Break, and Vogue, the Court finds that no reasonable audience would find the sampled portions qualitatively or quantitatively significant in relation to the infringing work, nor would they recognize the appropriation. The Court finds that any sampling of the Horn Hit was de minimis or trivial."  Lastly, there was also evidence of independent creation.

Monster's 3rd Party Claims Against DJ Dismissed In Beastie Boys Case

Beastie Boys v. Monster, No. 12-cv-6065 (S.D.N.Y. filed Nov. 4, 2013) [Doc. 51].

The Beastie Boys sued Monster Energy drinks under Lanham Act for the allegedly unauthorized publication of a promotional video that used as its soundtrack a remix including songs originally composed and recorded by the Beastie Boys.  Monster brought third-party claims for breach of contract and fraud against a DJ, who originally made the remix (with the Beastie Boys' permission) and furnished it to Monster.  After discovery, the Court granted the DJ summary judgment dismissing the third-party claims.

First, the Court found that there was no binding agreement between the DJ and Monster.  "...[A] reasonable
juror could not find an offer, sufficiently clear acceptance, or consideration, e.g., a legal duty which Monster incurred to Z-Trip, let alone all three."  Second, the Court found that there was no fraud.

"In sum, if Monster is liable to the Beastie Boys, it may not shift legal responsibility for such lapses to Z-Trip.  Any such liability on Monster’s part would arise instead because Monster left these matters in the hands of an employee insensitive to the legal issues presented by making derivative use of, and commercially exploiting, the Beastie Boys’ original work. In musical terms, Z-Trip can now, therefore, rest at least “as cool as a cucumber in a bowl of hot sauce,” because Monster’s Third-Party Complaint against him has “got the rhyme and reason but no cause.” Beastie Boys, So Watcha Want (Capitol Records 1992). It is therefore dismissed, with prejudice."

The Court, in a separate order, further urged the parties to settle the case rather than to go to trial.  [Doc. 53].

ReDigi Loses - Court Examines "Reproduction" & Distribution; Finds No "First Sale" For Digital Music

Capitol Records v. ReDigi, No. 1:12-cv-00095-RJS (S.D.N.Y filed 03/30/13) [Doc. 109].

The Court was faced with the question of whether the unauthorized transfer of a digital music file over the Internet – where only one file exists before and after the transfer – constitutes reproduction within the meaning of the Copyright Act. The Court holds that it does.  "Because the reproduction right is necessarily implicated when a copyrighted work is embodied in a new material object, and because digital music files must be embodied in a new material object following their transfer over the Internet, the Court determines that the embodiment of a digital music file on a new hard disk is a reproduction within the meaning of the Copyright Act."  Continuing, "the fact that a file has moved from one material object – the user’s computer – to another – the ReDigi server – means that a reproduction has occurred.  Similarly, when a ReDigi user downloads a new purchase from the ReDigi website to her computer, yet another reproduction is
created. It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created."

The Court also concluded that absent the existence of an affirmative defense, the sale of digital music files on ReDigi’s website infringes Capitol’s exclusive right of distribution.

The Court then considered ReDigi's affirmative defenses: fair use, and first sale.  With respect to fair use, "On the record before it, the Court has little difficulty concluding that ReDigi’s reproduction and distribution of Capitol’s copyrighted works falls well outside the fair use defense".  In sum, "ReDigi facilitates and profits from the sale of copyrighted commercial recordings, transferred in their entirety, with a likely detrimental impact on the primary market for these goods. Accordingly, the Court concludes that the fair use defense does not permit ReDigi’s users to upload and download files to and from the Cloud Locker incident to sale."

Turning to the first sale defense, the Court also disagreed.  First, the court found that "first sale" does not apply to the reproduction right, but only to the distribution right.  Second, the Court found that the music files were not lawfully made (they were unlawful reproductions) under the Copyright Act, and therefore not entitled to the first sale defense.

Third, the Court found that the first sale doctrine is limited to physical items. "Here, a ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk. But to sell that song on ReDigi, she must produce a new phonorecord on the ReDigi server. Because it is therefore impossible for the user to sell her “particular” phonorecord on ReDigi, the first sale statute cannot provide a defense. Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce. Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era".  The Court did note, however, that digital music on an iPod, computer or CD would be protected by the first sale doctrine ("Section 109(a) still protects a lawful owner’s sale of her “particular” phonorecord, be it a computer hard disk, iPod, or other memory device onto which the file was originally downloaded. While this limitation clearly presents obstacles to resale that are different from, and perhaps even more onerous than, those involved in the resale of CDs and cassettes, the limitation is hardly absurd – the first sale doctrine was enacted in a world where the ease and speed of data transfer could not have been imagined.")

Having made those determinations, the Court then found ReDigi directly and secondarily liable for copyright infringement of Plaintiff's reproduction and distribution rights.  Summary judgment was granted in Plaintiff's favor, except on its claims relating to Plaintiff's performance and display rights and common law infringement.