Meredith Corp. et al. v. SESAC, 1:09-cv-09177-PAE (S.D.N.Y. filed 10/15/14) [Doc. 174].
Plaintiffs filed an unopposed motion for approval of the parties' settlement of the class action antitrust claims. In their motion, Plaintiffs summarize the first prong of the settlement as: "under the contemplated settlement, SESAC will be bound through 2035 by some of the same core conduct restrictions that constrain the anti-competitive potential, at least as it relates to their dealings with local stations, of the other two U.S. performance rights organizations ('PROs'), ASCAP and BMI, in their consent decrees with the Antitrust Division of the Department of Justice." Notably, rather than a "rate court", the settlement provides that disputes should be submitted for binding arbitration.
Plaintiffs further summarize the second prong of the settlement as follows: "the proposed settlement will provide significant monetary relief to local stations. SESAC has agreed to pay $58.5 million into a settlement fund. Those monies will be used to reimburse local stations for the claimed inflated license fees they have paid since 2008 as a result of the alleged anti-competitive conduct that was the subject of this lawsuit." In addition, the monies will be used to reimburse for legal fees and costs.
October 16, 2014
October 11, 2014
Punitive Damages Verdict Significantly Reduced; Defendant Granted Judgment Notwithstanding Verdict On Cover Art And DMCA "Red Flag" Theories
Capitol Records, Inc. v. MP3Tunes, No. 07-cv-9931 (S.D.N.Y. filed Sep. 29, 2014) [Doc. 629].
Defendant moved for judgment as a matter of law, or alternatively a new trial, and for remittur following a $48,061,073 jury verdict in favor of plaintiffs, who consisted of record labels and publishers who had filed copyright and unfair competition claims alleging that defendant and MP3Tunes made infringing copies of copyright songs and cover art. The motion was denied in part, and granted in part. Specifically, defendant's motion for judgment as a matter of law was granted as to plaintiffs' claims of (1) public display rights in cover art, and (2) copyright infringement under "red flag" knowledge and willful blindness theories (except for certain works sideloaded and which the source domain's URL was obviously infringing and viewed by a company executive). Further, defendant's motion for a new trial on punitive damages was granted unless plaintiffs elected to remit the jury's punitive damage award to $750,000.
Defendant moved for judgment as a matter of law, or alternatively a new trial, and for remittur following a $48,061,073 jury verdict in favor of plaintiffs, who consisted of record labels and publishers who had filed copyright and unfair competition claims alleging that defendant and MP3Tunes made infringing copies of copyright songs and cover art. The motion was denied in part, and granted in part. Specifically, defendant's motion for judgment as a matter of law was granted as to plaintiffs' claims of (1) public display rights in cover art, and (2) copyright infringement under "red flag" knowledge and willful blindness theories (except for certain works sideloaded and which the source domain's URL was obviously infringing and viewed by a company executive). Further, defendant's motion for a new trial on punitive damages was granted unless plaintiffs elected to remit the jury's punitive damage award to $750,000.
Grooveshark And Its Officers Liable For Copyright Infringment Based On Direct Uploads By Officers And Employees
UMG Recording, Inc. v. Escape Media Group, Inc. No. 1:11-cv-08407-TPG (S.D.N.Y. filed Sep. 29, 2014) [Doc. 100].
This case involved "Grooveshark" and the direct upload of plaintiffs' copyright music by defendant's officers and employees. The Court granted plaintifss' motion for spoliation sanctions, and granted plaintiffs' summary judgment on nearly all of their claims. As to spoliation sanctions, the Court found that defendants acted with a culpable state of mind when they deleted user upload information and relevant source code. Based on the spoliation, the Court found that an individual defendant directly infringed plaintiffs' copyright recordings; however, the Court did not agree with plaintiffs' request that it find 10,000 instances of infringement and instead found that plaintiffs were entitled to judgment as a matter of law that that defendant illegally uploaded a small percentage (144) of the recordings. Similarly, the Court found that the other employees uploaded a much smaller percentage of additional files than requested by plaintiffs.
Turning to the summary judgment motion, the court first found that a certain expert report was admissible. The Court then addressed defendants' affirmative defenses, and held that the claims were not barred by the statute of limitations, and that defendants' could not set forth a claim for equitable estoppel (or laches or waiver). On plaintiffs' copyright claims, the Court found that plaintiffs established that defendants illegally uploaded 5,977 sound recordings (plaintiffs had requested a much higher number). Accordingly, defendants were directly liable for infringement of plaintiffs' distribution, reproduction and public performance rights. Further, Escape was liable for vicarious and inducement infringement because it had the ability to control its employee's infringing activity and instructed its employees to upload as many files as possible to Grooveshark as a condition of their employment. Escape also materially contributed to the infringing employee uploads, and the Court granted plaintiffs summary judgment on their claim for contributory infringement. The corporate officers were also liable., jointly and severally with the company.
This case involved "Grooveshark" and the direct upload of plaintiffs' copyright music by defendant's officers and employees. The Court granted plaintifss' motion for spoliation sanctions, and granted plaintiffs' summary judgment on nearly all of their claims. As to spoliation sanctions, the Court found that defendants acted with a culpable state of mind when they deleted user upload information and relevant source code. Based on the spoliation, the Court found that an individual defendant directly infringed plaintiffs' copyright recordings; however, the Court did not agree with plaintiffs' request that it find 10,000 instances of infringement and instead found that plaintiffs were entitled to judgment as a matter of law that that defendant illegally uploaded a small percentage (144) of the recordings. Similarly, the Court found that the other employees uploaded a much smaller percentage of additional files than requested by plaintiffs.
Turning to the summary judgment motion, the court first found that a certain expert report was admissible. The Court then addressed defendants' affirmative defenses, and held that the claims were not barred by the statute of limitations, and that defendants' could not set forth a claim for equitable estoppel (or laches or waiver). On plaintiffs' copyright claims, the Court found that plaintiffs established that defendants illegally uploaded 5,977 sound recordings (plaintiffs had requested a much higher number). Accordingly, defendants were directly liable for infringement of plaintiffs' distribution, reproduction and public performance rights. Further, Escape was liable for vicarious and inducement infringement because it had the ability to control its employee's infringing activity and instructed its employees to upload as many files as possible to Grooveshark as a condition of their employment. Escape also materially contributed to the infringing employee uploads, and the Court granted plaintiffs summary judgment on their claim for contributory infringement. The corporate officers were also liable., jointly and severally with the company.
Apple Succeeds In Having Certain Audio Distribution Patents Deemed Unpatentable As Obvious
Apple Inc. v. Sightsound Technologies, LLC, Related Case Nos. CMB2013-00023 and CMB2013-00020 (PTAB Oct. 7, 2014) [Papers 101 and 105, respectively].
Apple succeeded in having the PTAB hold that certain claims in patents relating to a "system and associated method for the electronic sales and distribution of digital audio or video signals" are unpatentable. The PTAB concluded that certain claims would have been obvious based on existing publications by non-parties, pursuant to 35 USC 103(a). However, Apple did not succeed in establishing that the claims were anticipated under 35 USC 102(a).
Apple succeeded in having the PTAB hold that certain claims in patents relating to a "system and associated method for the electronic sales and distribution of digital audio or video signals" are unpatentable. The PTAB concluded that certain claims would have been obvious based on existing publications by non-parties, pursuant to 35 USC 103(a). However, Apple did not succeed in establishing that the claims were anticipated under 35 USC 102(a).
Beatles Rights Holders Did Not Interfere With Film's Release By Asserting Copyright Claims
Ace Arts, LLC v. Sony/ATV Music Publishing, No. 13-cv-7307-AJN (S.D.N.Y. filed Sep. 26, 2014).
This action arises from the use of eight Beatles songs in a documentary film, "The Lost Concert." Plaintiff alleges that defendants (publisher and record label) interfered with the US distribution of the film by asserting copyright claims regarding those songs. According to the allegations in the complaint and certain judicially noticeable documents (e.g., copyright registrations), the Beatles first performance in the US took place in 1964, twelve songs were played, and defendant had copyright registrations for 8 of the songs. The concert was preserved on a certain video tape. In 2009, a production company acquired the video tape and produced The Lost Concert film, which consists of the concert footage and other sequences and interviews. Plaintiff was granted distribution rights by the producers. In 2009, the producers approached Sony ATV for a synch license. Plaintiff's allege that at Apple's request, Sony refused to grant the producers a synch license, and instead Sony granted Apple an exclusive synch license for Apple's distribution of certain Beatles material on iTunes. Nonetheless, the producers and distributor believed that there was no legal obstacle to distributing the film and arranged for a premier and distribution in the USA and UK. Sony ATV sought an injunction against the producers in the UK alleging that the film would infringe Sony's copyrights. The US premier was then cancelled after Sony ATV made a claim to the distributor's partner. Eventually, the plaintiff commenced the action seeking a declaration, inter alia, that neither Sony ATV nor Apple has rights that would be infringed by exploitation of the film in the USA, and that Sony ATV "misused its copyrights."
First the Court denied the defendants' request to stay the US federal action pending resolution of the UK action. The Court found no exceptional circumstances to justify abstention.
Second, the Court found that the controversy was ripe for a declaratory judgment claim.
Third, the Court analyzed plaintiff's anti-trust claim under Section 1 of the Sherman Act. The Court found that, as alleged, the agreements between Sony ATV and Apple -- in particular their efforts to enforce Apple's exclusive synch license by preventing the US distribution of the film -- did not constitute horizontal restraints on trade that are a per se violation of the Sherman Act. Nor was there an anti-trust violation under the "rule of reason" because the allegations concerned a routine dispute between business competitors that is not cognizable under the Sherman Act.
Fourth, the Court considered the tortious interference with contract and economic relations claims, which was based on the allegation that Sony ATV and Applied conspired to interfere with the distribution contract by stating that the film infringed on Sony ATV's copyrights. The Court found that plaintiff failed to adequately plead breach of the contract because it was possible that the distribution contract was lawfully terminated. The complaint did not identify which section of the contract was breached, "a particularly damaging omission in light of the provisions in the contract suggesting that [the distribution partner] had the right to suspend working on, distributing or exhibiting all or any portion of the film for which the partner received a demand or claim. Further, plaintiff failed to allege the use of "wrongful means." Sony ATV steadfastly maintained that it owns the rights to the song, and it did not assert copyright claims in bad faith. The bare legal conclusions of malice were insufficient.
Fifth, the Court considered plaintiff's unfair competition claim under New York common law. The Court rejected an extension of the common law claim (which has two theories: for palming off and misappropriation) to include "commercial immorality."
Finally, the Court considered Plaintiff's claim under NY GBL sec. 349. The Court found that defendants' alleged conduct was not consumer-oriented. It was not a standard-issue consumer oriented transaction that section 349 was designed to protect.
This action arises from the use of eight Beatles songs in a documentary film, "The Lost Concert." Plaintiff alleges that defendants (publisher and record label) interfered with the US distribution of the film by asserting copyright claims regarding those songs. According to the allegations in the complaint and certain judicially noticeable documents (e.g., copyright registrations), the Beatles first performance in the US took place in 1964, twelve songs were played, and defendant had copyright registrations for 8 of the songs. The concert was preserved on a certain video tape. In 2009, a production company acquired the video tape and produced The Lost Concert film, which consists of the concert footage and other sequences and interviews. Plaintiff was granted distribution rights by the producers. In 2009, the producers approached Sony ATV for a synch license. Plaintiff's allege that at Apple's request, Sony refused to grant the producers a synch license, and instead Sony granted Apple an exclusive synch license for Apple's distribution of certain Beatles material on iTunes. Nonetheless, the producers and distributor believed that there was no legal obstacle to distributing the film and arranged for a premier and distribution in the USA and UK. Sony ATV sought an injunction against the producers in the UK alleging that the film would infringe Sony's copyrights. The US premier was then cancelled after Sony ATV made a claim to the distributor's partner. Eventually, the plaintiff commenced the action seeking a declaration, inter alia, that neither Sony ATV nor Apple has rights that would be infringed by exploitation of the film in the USA, and that Sony ATV "misused its copyrights."
First the Court denied the defendants' request to stay the US federal action pending resolution of the UK action. The Court found no exceptional circumstances to justify abstention.
Second, the Court found that the controversy was ripe for a declaratory judgment claim.
Third, the Court analyzed plaintiff's anti-trust claim under Section 1 of the Sherman Act. The Court found that, as alleged, the agreements between Sony ATV and Apple -- in particular their efforts to enforce Apple's exclusive synch license by preventing the US distribution of the film -- did not constitute horizontal restraints on trade that are a per se violation of the Sherman Act. Nor was there an anti-trust violation under the "rule of reason" because the allegations concerned a routine dispute between business competitors that is not cognizable under the Sherman Act.
Fourth, the Court considered the tortious interference with contract and economic relations claims, which was based on the allegation that Sony ATV and Applied conspired to interfere with the distribution contract by stating that the film infringed on Sony ATV's copyrights. The Court found that plaintiff failed to adequately plead breach of the contract because it was possible that the distribution contract was lawfully terminated. The complaint did not identify which section of the contract was breached, "a particularly damaging omission in light of the provisions in the contract suggesting that [the distribution partner] had the right to suspend working on, distributing or exhibiting all or any portion of the film for which the partner received a demand or claim. Further, plaintiff failed to allege the use of "wrongful means." Sony ATV steadfastly maintained that it owns the rights to the song, and it did not assert copyright claims in bad faith. The bare legal conclusions of malice were insufficient.
Fifth, the Court considered plaintiff's unfair competition claim under New York common law. The Court rejected an extension of the common law claim (which has two theories: for palming off and misappropriation) to include "commercial immorality."
Finally, the Court considered Plaintiff's claim under NY GBL sec. 349. The Court found that defendants' alleged conduct was not consumer-oriented. It was not a standard-issue consumer oriented transaction that section 349 was designed to protect.
Toto Loses Breach Of Contract Claim Against Label For Digital Download Royalties
Toto, Inc. v. Sony Music Entertainment, No. 1:12-cv-01434-RJS (S.D.N.Y. filed Oct. 8, 2014) [Doc. 117].
In this breach of contract action concerning royalties for digital downloads (and master and ringtones) payable by the record label to the 80's band "Toto", the Court granted the record label summary judgment finding that the proper royalty rate had been paid. The Court applied New York law to interpret the relevant recording agreements, and found that one provision (the "Audiophile Provision" in 1986 and 2002 amendments) supplied the applicable royalty rate for the sale of downloads through digital retailers, regardless of whether the downloads were sold by the record company or unaffiliated third-party licensees. The dispute turned on the meaning of the terms "Licensee" and "lease", which had different royalty rates. Toto argued the term "lease" referred to a license to any party, regardless of whether that party is affiliated with the record company; the record company argued that the term "lease" referred to a special license whereby a third party incorporates the recordings into its own product, such as a compilation record. The Court found that the inclusion of the record company's affiliates in the contractual definition of "licensee" did not limit the scope of that term; the definition included the term "without limitation". Accordingly, digital retailers were licensees, and industry custom defined the term "lease" as a limited license to a third party to incorporate recording into their own unique product. However, the Court found that the record company did not have a declaratory judgment claim because the dispute was "far more hypothetical than real." The declaratory judgment dispute arose from Toto's threat to sue the label for breach of the implied covenant of good faith and fair dealing if the label ceased distributing Toto's records through certain retailers.
In this breach of contract action concerning royalties for digital downloads (and master and ringtones) payable by the record label to the 80's band "Toto", the Court granted the record label summary judgment finding that the proper royalty rate had been paid. The Court applied New York law to interpret the relevant recording agreements, and found that one provision (the "Audiophile Provision" in 1986 and 2002 amendments) supplied the applicable royalty rate for the sale of downloads through digital retailers, regardless of whether the downloads were sold by the record company or unaffiliated third-party licensees. The dispute turned on the meaning of the terms "Licensee" and "lease", which had different royalty rates. Toto argued the term "lease" referred to a license to any party, regardless of whether that party is affiliated with the record company; the record company argued that the term "lease" referred to a special license whereby a third party incorporates the recordings into its own product, such as a compilation record. The Court found that the inclusion of the record company's affiliates in the contractual definition of "licensee" did not limit the scope of that term; the definition included the term "without limitation". Accordingly, digital retailers were licensees, and industry custom defined the term "lease" as a limited license to a third party to incorporate recording into their own unique product. However, the Court found that the record company did not have a declaratory judgment claim because the dispute was "far more hypothetical than real." The declaratory judgment dispute arose from Toto's threat to sue the label for breach of the implied covenant of good faith and fair dealing if the label ceased distributing Toto's records through certain retailers.
September 23, 2014
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.
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.
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