Napster Loses Indemnification Suit Against Label Over Mechanical Licenses

Napster LLC v Rounder Records Corp., No. 09-cv-00318 (S.D.N.Y. decided Jan. 25, 2011).

The dispute is over whether Rounder, a record label, is contractually obligated to indemnify Napster for costs incurred due to copyright infringement lawsuits brought by the owners of musical compositions embodied in the sound recordings provided by Rounder. Napster contends that under two contracts, Rounder was required to procure mechanical licenses for use of the infringed musical compositions.

The court dismissed Napster’s claim based on the first contract because the contract was rescinded by the second contract, thereby extinguishing any claim Napster might have had for its breach. The court dismissed Napster’s claim based on the second contract (i) for Napster's failure to comply with its advance consent provision concerning indemnification; and (ii) it was not Rounder’s responsibility to procure mechanical licenses for the infringing compositions under the contract.

Motion to dismiss granted.

Music Videos Authorized by Artist - Where does the Label Come In?

Recently, OTCS was forwarded a link for Black Cab Sessions. For fans of indie music, this site is a must. In sum, it's "unplugged" - but in the back of a taxi driving around London. (Favorites include Bon Iver, and Jens Lemkin.)

The site got OTCS thinking. Generally, an artist's recording agreement provides that the label owns all rights in recorded live performances and music videos. But, where an artist agrees to be recorded for online distribution, where does the label come in? Is it a "bootleg" if the artist agrees to be recorded without the label's consent? Do labels even care, and if yes, how can they capitalize on it? What sort of protection can a indie video producer/web-site receive from the artist? Where does the publisher come in?

OTCS doesn't have the answers, nor does it have any idea about the specifics of Black Cab. But, these issues might arise in the future.