Covenant Not To Sue Defeats "This Land Is Your Land" Copyright Challenge

Saint-Amour v. Richmond Organization, Inc., No. 16-cv-4464-PKC, 2020 WL 978269 (S.D.N.Y Feb. 28, 2020).

The court dismissed a copyright suit challenging the validity of the Defendants’ interest in the copyright for the famous song “This Land is Your Land.” The Plaintiffs filed the lawsuit seeking a declaratory judgment that the Defendants did not own a valid copyright in the song, but rather it is in the public domain. Plaintiffs stated goal was to make their own recording and music video using the lyrics from the song with a different melody, but they were concerned that the Defendants would enforce their copyright against them if they did. However, on April 23, 2019, Defendants and Woody Guthrie Publications delivered a broadly worded covenant not to sue the Plaintiffs for any infringement in the song. As a result, the Defendants filed a motion to dismiss asserting that a live case or controversy no longer existed, so the court lacked subject matter jurisdiction. The court agreed with Defendants, cited Nike, Inc. v. Already, LLC, 568 U.S. 85 (2013) to support its finding that the covenant resolved the matter, and granted the motion to dismiss.

No Case Or Controversy In ISP's Declaratory Judgment Suit of NonInfringement

Windstream Services v. BMG Rights Management, 16-cv-5015 (S.D.N.Y. Apr. 17, 2017).

Plaintiff, an internet service provider (ISP), brought an action seeking a declaratory judgment of non-infringement based upon the DMCA's safe-harbor provisions.  Defendant is a music publisher.  The Court granted the defendant's motion to dismiss for lack of subject matter jurisdiction, finding that plaintiff sought an unauthorized advisory opinion (and even if the Court had subject matter jurisdiction, it would exercise its discretion and decline to hear the action).  "[Plaintiff] seeks a blanket approval of its business model, without reference to any specific copyright held by BMG or any specific act of direct infringement by any [plaintiff] subscriber."  The Court observed that the Southern District of California had rejected a nearly identical lawsuit in Veoh v. UMG, 522 F. Supp. 2d 1265 (S.D. Cal. 2007).  The complaint was hypothetical in nature.  Having dismissed the declaratory judgment clai, the Court declined to exercise supplemental jurisdiction over plaintiff's state law claim.

Copyright Ownership Claims Time-Barred For Songs Recently Sampled In Popular Songs

Wilson v. Dynatone Publishing, No. 16-cv-104 (S.D.N.Y. April 10, 2017).

For two songs from the 1970s that were recently sampled in popular songs, Plaintiffs sought a declaratory judgment judgment that they are the copyright owners of the sampled songs and that the defendants' copyrights are invalid, and Plaintiffs also sought an accounting.  The Court granted the defendants' motion to dismiss under Rule 12(b)(6).

The Court found that the copyright ownership claims were untimely and barred by the statute of limitations.  The claims accrued in the early 1970s.  The accounting claims, in addition to an absence of allegations of a fiduciary relationship, also were time-barred.

Court Has Jurisdiction Over King Of Pop's Executors In Photo Shoot Case, But Plaintiff's Counsel Disqualified As A Witness

Noval Williams Films v. Branc, 14-cv-4711 (S.D.N.Y. Sep. 3, 2015) [Doc. 43].

In a case where Plaintiff film matker sought a declaratory judgment against Michael Jackson's estate that it did not infringe the copyrights in certain audivisual and photographic materials by using them in a documentary film, the Court denied Michael Jackson's executor's motion to dismiss for lack of jurisdiction, or alternatively to transfer to California federal court.  However, the executor's motion disqualify plaintiff's counsel was granted because he is a material witness.

FCC Denies ASCAP's Challenge To Pandora's Acquisition Of FM Radio Station

In re Pandora Radio LLC, FCC 15-129 (FCC released Sep. 17, 2015).

The FCC denied ASCAP's motion for reconsideration of (1) the Media Bureau's decision granting the application to assign the license of KXMZ FM radio station in South Dakaota to Pandora; and (2) the Commission's declaratory ruling, which held that it would serve the public interest to permit a widely dispersed group of shareholders to hold aggreage foreign ownership in Pandora in excess of the 25% benchmark set out in Section 310(b)(5) of the Communications Act of 1934 (subject to certain conditions).  The FCC re-affirmed its finding that ASCAP lacked standing to challenge the license assignment.  ASCAP also claimed that the Bureau should have examined the rationale and motivation behind Pandora's transaction, specifically, Pandora's hope by acquiring the radio station to qualify for lower music license royalty rates.  The FCC found that "whatever the impact of its acquisition on such royalty rates may be, Pandora has undertaken to offer programming responsive to the interests of its local listeners, and ASCAP has failed to identify any substantial and matieral question about Pandora's ability to provide such service in the public interest."

Happy Birthday Lyrics Not Owned By Warner

Marya v Warner/Chappell, No. 13-cv-4460 (C.D. Cal. filed 9/22/14) [Doc. 244].

After collecting royalties for years, a Court found that Warner/Chappell lacked copyright ownership in the lyrics to the world's most famous song, "Happy Birthday."  The Court found that because the current publisher's alleged predecessor "never acquired the rights to the Happy Birthday lyrics, Defendants, as Summy Co.’s purported successors-in-interest, do not own a valid copyright in the Happy Birthday lyrics."

The melody of the song is the same as one called "Good Morning," which was published in a songbook and subject to copyright protection under the 1909 Act until 1949.  Both parties agree the melody entered the public domain years ago.  The origins of the "Happy Birthday" lyrics is less clear, as those lyrics did not appear in the same songbook as "Good Morning."  Subsequent publications of the lyrics noted that the tuen for "Happy Birthday" was the same as "Good Morning," but did not credit an author of the lyrics.  The decision then explains the alleged chain of title to the lyrics of "Happy Birthday."

Plaintiffs, bringing a declaratory judgment action, alleged that Defendants do not own the copyright in the lyrics to Happy Birthday, and thus should not have been collecting royalties for licensing the song (and should be compelled to return collected royalties).  The Court was facing cross-motions for summary judgment.

First, the Court found that a 1935 registration was not subject to a presumption of validity.  There was a facial and material defect in the registration, nameley that it did not state that the lyrics were being copyrighted.  Thus, there was no presumption that the lyrics were registered.

Next, the Court examined: who wrote the lyrics to Happy Birthday?  The Court found there was conflicting evidence, and therefore a material question of fact for trial.

Then, the Court examined whether, whoever wrote the lyrics, any copyright in the work was divested by publication before the 1935 registration?  Under the 1909 Act, general publication without notice of copyright divested the author of common law and federal copyright protection.  Again, the Court found a question of material fact whether the alleged authors granted their publisher the right to generally publish the song.

Next, the Court examined whether the alleged author abandoned her interest.  Although the plaintiffs had found an article where the alleged author said that she had resigned herserlf to the fact that the song was the publics, the Court found questions of fact on this issue again a ground to deny summary judgment.

Then, the Court examined the alleged transfers in interest of the song lyrics, and three old agreements between the alleged authors and their publisher.  The court found that Defendants had no evidence a transfer occurred, whether by oral statement, by writing, or by conduct. "Defendants ask us to find that the Hill sisters eventually gave Summy Co. the rights in the lyrics to exploit and protect, but this assertion has no support in the record. The Hill sisters gave Summy Co. the rights to the melody, and the rights to piano arrangements based on the melody, but never any rights to th e lyrics. Defendants’ speculation that the pleadings in the Hill-Summy lawsuit somehow show that the Second Agreement involved a transfer of rights in the lyrics is implau sible and unreasonable. Defendants’ suggestion that the Third Agreement effected such a transfer is circular and fares no better. As far as the record is concerned, even if the Hill sisters still held common law rights by the time of the Second or Third Agreement, they di d not give those rights to Summy Co."

No New Trial In "Blurred Lines" Case; Damages Reduced; 50% Royalty Awarded

Williams v. Bridgeport Music, No. CV13-06004 (C.D. Cal. dated July 14, 2015).

In the "Blurred Lines" copyright infringement case, Robin Thicke's motion for a new trial was denied but the amount of damages he is laible for was reduced.  Additionally, the heirs of Marvin Gaye were awarded a declaratory judgment that any past and ongoing exploitation of "Blurred Lines" constitutes copyright infringement of "Got To Give It Up."  Rather than enjoin future exploitation or impound infringing articles, the Court awarded the Gaye parties a 50% royalty of songwriting/publishing revenues from "Blurred Lines."

Claims In 'Sugarman' Case Survive Dismissal; Rights Transferred To Defunct Publisher's Shareholder By Operation Of Law

Gomba Music, Inc. v. Avant, No. 14-cv-11767, 2014 BL 330905 (E.D. Mich. Nov. 24, 2014).

The Court dismissed a corporate music publisher's case in the Sugarman / Sixto Rodriguez case because the company had been administratively dissolved by the State of Michigan in 1971 for failure to file certain papers, but the claims by the company's sole shareholder survived because when the company dissolved, any interests it held were transferred to him by operation of law.  The Court found that whether under the 1976 or 1909 Copyright Acts, by operation of law [Mich. Comp. Laws § 450.1855a], any rights that the company had in the compositions transferred to its sole shareholder when the corporation dissolved.  The Court also found that the decision to sue in the company's name was due to a mistaken belief that the entity would be reinstated and that it was necessary to sue in the company's name because it was the original assignee of rights; accordingly, the Court allowed substitution of the shareholder for the defunct company he formerly owned as sole proprietor, pursuant to Fed. R. Civ. P. 17.

Thereafter, the Court addressed the sufficiency of the causes of action.  First, the Court held that the plaintiff could assert fraud on the copyright office as a declaratory judgment action to attack the prima facie validity of defendants' copyrights in the compositions.  Second, the Court held that the plaintiff could assert a declaratory judgment claim that he is the exclusive owner of the copyright in the compositions because it was plausible that plaintiff was not placed on notice of his claims until sometime after the release of the film Waiting for Sugar Man in July 2012 and therefore plausible that he timely filed his claim for declaratory judgment in May 2014.  Third, the Court held that plaintiff could assert fraudulent concealment claims, and that the claims were not time-barred, because the name of the artist with whom plaintiff had an exclusive agreement (Sixto Rodriguez) was completely absent from the album credits, there were affirmative statement that others wrote the works, the plaintiff had limited motivation to investigate further given the "commercial failure" of the  album at the time it was released, the artist Sixto Rodriguez was under an exclusive contract with the publisher plaintiff, and, later, copyright registrations were issued based on representations that others wrote the works.  Lastly, the Court found that the copyright infringement claim also was not time-barred, and though the plaintiff may be precluded from certain statutory damages/attorneys' fees based on the timing of his attempted registration, that did not bar the claims.

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.

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.

11th Circuit Clarifies Author's Standing When Publisher Registers Copyright As Author's Assignee

Smith v. Casey, No. 13-12351 (11th Cir. Jan. 22, 2014) (decision here).

At issue in this appeal is whether the author of a musical composition who assigned his rights in exchange for royalties may rely for purposes of standing to sue for infringement under the Copyright Act on a registration his publisher filed.  The 11th Circuit found that the lower court erred in concluding that the estate lacked statutory standing to sue for copyright infringement.

The basic facts are this.  Around the same time a song called "Spank" was recorded, Harrick Music, Inc. (Harrick Music), a publishing company affiliated with the record label Sunshine Sound, registered a copyright for the musical composition “Spank,” identifying Smith as composer and itself as claimant.  Harrick Music checked a box on the registration indicating the song was not a composition made for hire.  In the ensuing years, Smith acquiesced in Harrick Music’s administration of the “Spank” composition copyright, but, he alleged, the company never remitted a cent to him. According to the complaint, neither did Sunshine Sound. Under Smith's Recording Agreement with Sunshine and the form songwriter’s agreement attached to it,
however, Smith was owed percentage royalties for the song’s exploitation in exchange for assigning his rights to it. So on November 28, 2011, shortly before his death, Smith through counsel sent a cease-and-desist letter revoking Harrick Music’s authority to administer “Spank.” And Smith also filed with the Copyright
Office four Notices of Termination, seeking to formally record his revocation. Despite this, the defendants continued to commercially exploit the composition, and thereafter Smith's estate sued for infringement of the composition (not the sound recording).

Two defendants (not Sunshine or Harrick) moved to dismiss, and the district court concluded Smith lacked statutory standing to pursue his copyright claim and sua sponte dismissed that count with prejudice as to all of the defendants.  Harrick Music, not Smith or his estate, had registered the copyright, the district court noted, and registration was a necessary precondition to filing suit for infringement.

On appeal, the 11th Circuit first examined sections 411 and 501 of the Copyright Act: "The 1976 Copyright Act’s legislative history explains that Congress intended 'beneficial owner,' as the term is used in § 501(b), to 'include . . . an author who had parted with legal title to the copyright in exchange for percentage
royalties based on sales or license fees.'"  Continuing,

Under this definition, the estate has a sufficient ownership interest for standing under § 501(b). According to Smith’s allegations, he never signed any agreement giving Harrick Music the right to exploit the “Spank” copyright. But even were we to treat Smith’s agreement to permit Sunshine Sound to execute the form songwriter’s contract appended to his Recording Agreement as acquiescence to its terms for the “Spank” composition, Smith still would only have assigned his rights to the musical composition in exchange for royalties. Thus, he has at least a beneficial interest that satisfies § 501(b) of the Copyright Act.

The twist was that Harrick, not Smith, had filed the registration.  Nonetheless, the 11th Circuit found that "The district court’s construction of § 411(a) was too narrow. Harrick Music registered a claim to copyright in the 'Spank' composition, specifically identifying Smith as the composer and informing the Copyright Office the work was not made for hire. Nothing in § 411(a) indicates that a composer who has agreed to assign his legal interest in a composition, along with the right to register it, in exchange for royalties, may not rely on the registration his assignee files. Where a publisher has registered a claim to copyright in a work not made for hire, we conclude the beneficial owner has statutory standing to sue for infringement."  (Emphasis added).

Although the 11th Circuit reversed on the standing issue, it found that the District Court properly dismissed plaintiff's declaratory judgment claim.

Some Claims Time-Barred In "Happy Birthday" Suit

Good Morning To You Productions et al. v. Warner-Chappell Music, No. 2:13-cv-04460 (C.D. Cal. filed 10/16/13) [Doc. 71].

Plaintiffs seek a declaration, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, that Defendants do not own the copyright to or possess the exclusive right to demand licensing fees for the use of Happy Birthday to You (the “Song”), and that the Song is in the public domain. In Claim Two, they seek relief based upon the entry of declaratory judgment,pursuant to 28 U.S.C. § 2202, including an injunction, restitution, and an accounting of Defendants’ monetary benefits obtained from Plaintiffs in connection with their claim of ownership of the Song.

Defendants moved to dismiss, and the Court granted the motion to the extent of dismissing those claims that fall outside the Copyright Act's 3-year statute of limitations (with leave to amend).  "Because Plaintiffs’ declaratory judgment and relief claims are 'civil action[s] maintained under the provisions' of the Copyright Act, they are subject to § 507(b)’s three-year statute of limitations."

Blurred Lines - Infringement?

Williams v. Bridgeport Music, Inc., No. 13-cv-06004 (C.D. Cal. complaint filed 8/15/2013).

Plaintiffs bring this declaratory judgment action seeking a declaration that their summer-single "Blurred Lines" does not infringe defendants songs: (i) Marvin Gaye's "Got to Give it Up", and (ii) Funkadelic's "Sexy Ways."  Plaintiffs claim there are no similarities between "Blurred Lines" and those defendants own, other than commonplace musical elements.  "Plaintiffs created a hit and did it without copying anyone else's composition."  What do you think?

New Suits Against Labels

Two suits were filed yesterday in SDNY against various record labels:

Grant v. Warner Music Group Corp. and Atlantic Recording Corp., No. 13-cv-4449 (alleging violation of the Fair Labor Standards Act concerning failure to pay employees minimum wages and overtime compensation).

Slip-N-Slide Records Inc. v. The Island Def Jam Music Group, No. 13-cv-4450 (seeking an accounting, declaratory judgment and claiming breach of fiduciary duty relating to defendant's agreement to manufacture and distribute sound recordings of plaintiff's artists).

Happy Birthday Class Action

Good Morning To You Productions Corp. v. Warner/Chappell Music, Inc., No. 1:13-cv-4040 (S.D.N.Y. filed June 13, 2013).

Plaintiff brings a class action on behalf of licensees of the song "Happy Birthday to You" (from June 13, 2009-present), seeking a declaratory judgment that defendant does not have the right to collect licensing fees for use of the song, "Happy Birthday To You."  Plaintiff claims that the song is in the public domain and dedicated to public use.

KC Royalties Claim Booted From Federal Court

Smith v Casey, No. 1:12-cv-23795 (S.D. Fla. Apr. 25, 2013) [Doc. 84].


The Court declined to exercise supplemental jurisdiction over Plaintiff’s remaining state-law claim for breach of contract relating to royalties, and "declines Plaintiff’s ill-formulated request for declaratory relief."

Plaintiff's copyright claim was previously dismissed, leaving only a state-law breach of contract claim and a request for declaratory relief.  The Court found that because "Plaintiff’s timely claims for breach-of-contract will not become time-barred as a result of this Court’s dismissal without prejudice", it would not exercise supplemental jurisdiction over the state law claim.  Moreover, there was no diversity, and very little discovery had taken place.  The Court also rejected the declaratory judgment claim, stating it was dangerously close to a request for issuance of an advisory opinion.

Capitol's Motion To Dismiss Class Action Denied

Davis v. Capitol Records, LLC, No. 4:12-cv-01602-YGR  (N.D. Cal. filed 04/18/13) [Doc. 73].


Plaintiff brought the action as a member of the music group, “The Motels,” and a shareholder, beneficiary, and/or successor-in-interest of the now-dissolved The Motels Music Corporation, Inc.  She brought the complaint alleging a nationwide class action for breach of standard recording contracts and for statutory violations of California law against Defendant Capitol Records, LLC (“Capitol”).  Plaintiff alleged that Capitol failed to account properly for royalties stemming from the licensing of musical performances or recordings produced by Plaintiff and putative class members under contract with Capitol, which were then were utilized by digital content providers, such as music download providers, music streaming providers, and ringtone providers, for digital download, streaming and distribution.  Capitol moved to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6).

First, Capitol argued that the claims were time-barred under the parties' agreement relating to objecting to royalty statements.  However, the Court found that Plaintiff's allegations "arguably support a basis for tolling of the contractual limitations period."  (Emphasis added).  Accordingly, the motion to dismiss on limitations grounds was denied.

Second, Capitol moved to dismiss Plaintiff's claim for declaratory relief as duplicative of her claim for
breach of contract.  The Court held that it could not determine, as a matter of law, that declaratory relief would be duplicative or otherwise inappropriate such that it should be dismissed at the pleading stage.

Third, Capitol moved to dismiss Plaintiff;s claim for breach of the implied covenant of good faith and fair dealing on the grounds that it is duplicative of her breach of contract claim. The Court disagreed.

Fourth, Plaintiff alleged a claim for violation of California Business & Professions Code section 17200, California’s Unfair Competition Law (“UCL”), based upon all three prongs of the statute – that is, unfair, unlawful, and fraudulent conduct. Capitol sought to dismiss the claim to the extent it is based upon either unlawful or fraudulent conduct.  As to the fraud prong, the Court found that Plaintiff's pleadings contained sufficient particularity to survive.  As to the unlawful prong, the Court found that, "Where, as here, the complaint alleges systemic conduct meant to breach the terms of, or deny the benefits of, agreements between the defendant and a group of similarly situated parties, it is sufficient state a claim for an unfair business practice in violation of the UCL."

Fifth, the Court struck Plaintiff's demand for punitive damages.

Covenant Not To Sue Dooms Velvet Underground Copyright Claim Against Warhol

The Velvet Underground v. The Andy Warhol Foundation, No. 1:12-cv-00201-AJN (S.D.N.Y. filed Sept. 7, 2012) [Doc. 30].

The Velvet Underground sought a declaration that the Andy Warhol Foundation has no copyright in the iconic banana image used by the Velvet Underground and designed by Warhol.  The Warhol Foundation had covenanted not to sue the Velvet Underground for copyright infringement for the Velvet Underground's use of the banana image.  The Court held that the covenant not to sue eliminated any justiciable controversy between the parties over copyright in the design, and thus dismissed the Velvet Underground's declaratory judgment claim.  (The Velvet Underground's trademark claims were not the subject of the motion and were not dismissed).

In the decision, Judge Nathan does a thorough analysis of the Declaratory Judgment Act (28 U.S.C. 2201 et seq.), and specifically with respect to intellectual property cases.  Notably, the covenant not to sue was entered after the litigation had commenced, so the issue had been mooted by a subsequent development (the covenant).  The Court found that: "[I]n intellectual property cases, when a declaratory judgment plaintiff seeks a declaration that an asserted right is invalid or otherwise unenforceable and the declaratory judgment defendant provides the plaintiff with a covenant not to sue for infringement of that right, that covenant can extinguish any current or future case or controversy between the parties, and divests the district court of subject matter jurisdiction."  (Doc. 30 at pp. 6-7).

The Court held that the covenant at issue was broad, and then determined that there no longer was a "live, actual controversy."   First, the Court found that there was no real and substantial prospect that the Warhol Foundation's alleged copyright would impact the Velvet Underground's legal interests, and the Foundation's mere assertion of the right did not support a declaratory judgment claim.  The Covenant no only held litigation in abeyance, but it also vitiated any coercive force that the Foundation's alleged copyright might have had against the Velvet Underground.  Second, the Court held that the Declaratory Judgment Act could not be sued to test the validity of an affirmative defense that a plaintiff anticipates the defendant will assert, to wit: the Foundation claiming that its copyright shields it from trademark liability.  Third, the alleged adverse economic impact of the alleged copyright was not sufficiently immediate and real to warrant the issuance of a declaratory judgment.  "Without the 'how,' [the Velvet Underground] cannot show the controversy is 'real'; without the 'when', it cannot show the controversy is 'immediate'."  (Doc. 30, p. 14).  Fourth the right to an accounting under the Declaratory Judgment Act is not an independent cause of action, but is merely relief that may be granted.
 

6th Circuit Rules On Copyright Issue

Severe Records, LLC v. Rich et al., No. 09-6175 (6th Cir. Sep. 23, 2011).

Plaintiff Mark Christopher “Chris” Sevier authored a song entitled “Better.” Defendant Shanna Crooks recorded the song and, because they were pleased with the results, they co-authored and recorded a second song, “Watching Me Leave.” Their relationship then collapsed, Crooks signed as a recording artist with unrelated recording and management companies, and various

accusations and altercations followed, precipitating this action. Sevier and his recording company, Severe Records, LLC (collectively, “Plaintiffs”) filed suit, alleging what Sevier characterized as a “novel” claim of copyright infringement against Crooks and

others for preventing Plaintiffs from commercially exploiting the two songs through threats contained in cease-and-desist letters and requests to music retailers that the songs not be offered for sale. Plaintiffs also sought a declaratory judgment regarding the authorship of the songs and ownership of the copyrights to the two songs. The district court dismissed the amended complaint for failing to state a claim of copyright infringement and declined to consider Plaintiffs’ pendent state law claims or issue a declaratory judgment. The 6th Circuit affirmed the district court’s dismissal of the copyright infringement claim and reversed its dismissal of the

declaratory judgment claim.

There is no allegation anywhere in the amended complaint that Crooks did anything with the musical composition “Better” other than utilize the sound recording that she and Sevier created and that she was admittedly permitted to use for commercial or non-commercial gain. Indeed, Plaintiffs conceded in paragraph 735 of their amended complaint that “[t]he Defendants did not engage in unauthorized copying, but rather, their actions prevented Plaintiffs from copying.” That ends the inquiry; no claim for copyright infringement was properly alleged. Plaintiffs’ allegation that “Crooks attempted to transfer and did transfer an interest in the composition ‘Better’, [sic] which she did not own, to the Rich Defendants” is not the same thing as creating an improper copy of “Better.” We read nothing in the plain language of the Copyright Act, 17 U.S.C. § 106, to suggest that such a transfer constitutes copyright infringement. We expressly decline Plaintiffs’ invitation to grossly expand copyright infringement causes of action to include any acts that create barriers to a copyright holder’s ability to fully exploit that copyright.

Lady Gaga Insurer Seeks Declaratory Judgment

Navigators Specialty Insurance Company v. Mermaid Music LLC; Stefani Joanne Germanotta; Team Love Child; Rob Fusari Productions LLC individually and in the right of Team Love Child LLC, Index No. 108996/2010 (Sup.Ct., N.Y. Co. filed 7/8/2010)

Plaintiff seeks a declaration that it is not required to defend and indemnify the insured, Stefani Germanotta (aka "Lady Gaga") in an underlying breach of contract action, on the basis of the policy's definition of "professional services." While the underlying complaint alleges breaches of a production agreement held between Germanotta and defendant Rob Fusari, none of these causes of action assert that the insured was negligent in the performance of music production, rendering the policy inapplicable to the claim.