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.

UMG's Venue And Transfer Motions Denied In Digital Class Action

Rick James v. UMG Recordings, No. 11-1613 (related case No. 11-2431) (N.D. Cal. filed Nov. 1, 2011) (Doc. 34).

Plaintiffs in two related cases filed putative nationwide class actions against UMG Recordings, Inc. Plaintiffs seek to represent a class of recording artists, music producers, and other royalty participants. The complaints allege that UMG has failed to properly account for and pay its recording artists and music producers for income it has received, and continues to receive, from the licensees of its recorded music catalog for the sale of digital downloads and ringtones.

Defendants moved to dismiss for improper venue. The Court concluded that under the circumstances, it would be unreasonable to transfer the action based on the forum selection clause contained in a 1977 contract. "Assuming arguendo that the forum selection clause is valid and enforceable, that clause only governs the claims brought under the 1977 agreement. In analogous circumstances, courts have found it unreasonable to enforce a forum selection clause that applied to some but not all of the plaintiff’s claims."

Alternatively, defendant moved to transfer venue pursuant to 28 U.S.C. § 1404(a), contending

that the Central District of California is a more convenient venue. The primary dispute was whether transfer will serve the convenience of the parties and witnesses. The Court concluded that defendant had not met its burden that the case should be transferred.

Defendant also moved to dismiss plaintiffs’ claims under California Business & Professions Code

§ 17200. In both cases, plaintiffs allege that UMG knowingly breached its contracts with recording artists and music producers, and that “UMG either knew, recklessly disregarded, or should have known that its collection of income from Music Download Services and Mastertone Providers was in connection with a license agreement and the royalties payable to Plaintiff and the Class should have been accounted for and paid on that basis.” The Court concluded that plaintiffs stated a claim under § 17200, and that the questions raised by defendants’ motions are better suited for determination on a full factual record (i.e., at summary judgment).

Lastly, a third-party ("The Tubes") sought to intervene. The Court denied the motion because the proposed intervenors assert claims “parallel” to those already pending before the Court, and thus their interest are already represented. "If plaintiffs in these cases, who the Court notes are represented by the same counsel as The Tubes, believe that The Tubes should be added

as a class representative, plaintiffs may seek to amend the complaints."

MP3Tunes Decision on Counterclaims

Defendant's counterclaims Dismissed:

DMCA claim
New York's GBL 349 (re: consumer protection)
Common law unfair competition
California Business and Professional Code 17200

Defendant's counterclaims NOT dismissed:

Declaratory judgment claim that it is a service provider protected by the safe-harbor provision of 17 USC 512 (of the DMCA)

[No. 1:07-cv-09931-WHP-FM (Doc. 73 filed Mar. 4, 2009).]

Antitrust Claims Against Majors Dismissed

In re Digital Music Antitrust Litigation, No. 06 MDL 1780, 10/17/08 N.Y.L.J. "Decision of Interest" (S.D.N.Y. decided Oct. 9, 2008) (Preska, J.)

Plaintiffs sought to represent a nation-wide class of buyers of "digital music" on claims that defendant recording companies conspired to artificially fix prices on digital music (both CDs and Internet music). Defendants, the major record labels (EMI, SonyBMG, UMG, anmd Warner) allegedly fixed a high price for, and restrained availability of Internet music - by imposing the same price and use restrictions (i.e., DRM) on their sale thereof - which "buoyed" the price of CDs.

Plaintiffs' second consolidated amended complaint dismissed under the pleading standards of Bell Atlantic v. Twombly. Plaintiffs' first claim was for violation of section 1 of the Sherman Antitrust Act. The court concluded it was unreasonable to infer that defendants' adoption of DRM and parallel price arose from their membership in joint ventures that were created to distribute Internet Music. Other circumstantial evidence also did not justify an inference that defendants' parallel conduct resulted from an illegal agreement under the Sherman Act. For example, the court found there was no "antitrust record" based on investigation by government agencies, including the NY Attorney General. Nor would"mere participation in an industry trade association" yield an inference of improper inter-firm communication.

Similarly dismissed as predicated on the same allegations were state antitrust claims, consumer protection claims, and the unjust enrichment count.