No Rehearing By Second Circuit For "Santa Claus" Copyright Termination Case

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Baldwin v. EMI Feist, No. 14-182 (2d Cir. Jan. 29, 2016).

In the copyright termination case concerning "Santa Claus Is Comin' To Town," the Second Circuit denied defendant-EMI's application for a rehearing (by the panel or en banc).

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

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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.

Partial Attorney's Fees Awarded In MP3Tunes

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Capitol Records, Inc. v. MP3Tunes, No. 1:07-cv-09931-WHP-FM (SDNY filed 04/03/15) [Doc. 689]

Record company and music publisher plaintiffs, who succeeded at trial, moved for an award of partial attorneys' fees and costs under the Copyright Act, and pre-judgment and post-judgment interest under Fed. R. Civ. P. 59 against defendant MP3tunes.  The Court granted the motion for partial attorneys' fees, in part, denied the motion for pre-judgment interest, and granted the motion for post-judgment interest.

Breach Of Contract Claim Survives In "Daydream Believer" Royalty Suit Concerning Foreign Publishing

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Stewart v. Screen Gems-EMI Music, Inc., No. 3:14-cv-04805 (N.D. Cal. filed Mar. 2, 2015) [Doc. 45].

Plaintiff alleges that defendants -- various EMI defendants -- wrongfully withheld publishing royalties to the song "Daydream Believer" written by Plaintiff's late-husband.  The claims arise out of a 1967 songwriter's agreement, which has a "net receipts" (not "at source") arrangement, meaning that the publisher is only obligated to remit to the songwriter a certain percentage of revenue the publisher actually receives after deducting applicable fees and costs.  Plaintiff contended that Defendants were improperly deducting from the song's foreign receipts fees that defendant paid to affiliated foreign sub-publishers that are alter egos of defendant and operate as part of a single enterprise (i.e., defendant was effectively paying itself and then deducting those payments from the receipts to reduce the "net receipts").  Defendants moved to dismissed.  The Court granted the motion to dismiss of defendants EMI and EMI North America for lack of personal jurisdiction; but, found that Plaintiff had stated a claim against defendant Screen Gems-EMI for breach of contract, breach of the implied covenant of good faith and fair dealing, and for an accounting.

EMI and Sony Permitted To Intervene In ASCAP/Pandora Rate Court Matter

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In re Petition of Pandora Media, Inc. [related to US v. ASCAP]; No. 1941-cv-01395 (S.D.N.Y. filed Dec.13, 2013) [Doc. 733].

EMI and Sony moved to intervene in the Pandora rate-court proceeding (ASCAP) after the Court's summary judgment opinion issued on September 17, 2013 in which the Court held that the Second Amended Final Judgment ("AFJ2") prevented ASCAP from withholding from Pandora the rights to compositions in its repertory while licensing those compositions to other users. In re Pandora Media, Inc., 12 Civ. 8035 (DLC), 2013 WL 5211927 (S.D.N.Y. Sept. 17, 2013) (“September 17 Opinion”). The summary judgment practice was precipitated by putative publisher partial withdrawals of rights from ASCAP.

The Court analyzed Rule 24 of the Federal Rules of Civil Procedure.  It considered whether the publishers' motion to intervene was timely (mixed finding), and whether the publishers possess an interest related to the subject of the action (yes).  Ultimately, the Court granted the motion to intervene on the condition that the Publishers "may not raise new arguments on appeal that were not raised by ASCAP, with the exception of the Section 106 of the Copyright Act argument".

New Trial In EMI/Citi Case

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Terra Firma Investments v. Citigroup, Docket No. 11-1267 (2d Cir. May 31, 2013)

After a jury trial, judgment was entered against Plaintiff.  The Second Circuit vacated the judgment and remanded for a new trial, "[b]ecause the district court’s jury instructions were based on an inaccurate understanding of the relevant English law".

This case concerns the 2007 acquisition of EMI by the private equity firm Terra Firma.  Terra Firma sued Citigroup, alleging that during the auction, a Citi banker advising the auction fraudulently induced the Terra Firma to make an inflated bid for EMI.  A jury ruled in Citi's favor.

Dismissal of Duke Ellington Royalty Suit Affirmed

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Ellington v. EMI Music, No. 651558/10, NYLJ 1202598616249 (1st Dep't May 2, 2013)

 The First Department affirmed dismissal of Duke Ellington heirs' breach of contract action against a group of music publishers.  The dispute was based on a 1961 songwriter agreement, and called for an interpretation of paragraph 3(a) of the agreement which, where relevant, required payment to Ellington of "a sum equal to fifty (50 percent) percent of the net revenue actually received by the Second Party from…foreign publication" of Ellington's compositions.  This is known in the music publishing industry as a "net receipts" arrangement by which a composer, such as Ellington, would collect royalties based on income received by a publisher after the deduction of fees charged by foreign subpublishers.

 Fees that previously had been charged by independent foreign subpublishers under the instant net receipts agreement were now being charged by subpublishers owned by Defendant.  Plaintiff asserted that Defendant had enabled itself to skim his claimed share of royalties from the Duke Ellington compositions by paying commissions to its affiliated foreign subpublishers before remitting the bargained-for royalty payments to Duke Ellington's heirs.  In dismissing the complaint, the motion court declined to read into the royalty payment terms any distinction between affiliated and unaffiliated foreign subpublishers inasmuch as the contracting parties themselves chose not to make such a distinction.  The First Department affirmed.

 The Court found no ambiguity in the agreement which, by its terms, required EMI to pay Ellington's heirs 50 percent of the net revenue actually received from foreign publication of Ellington's compositions. "'Foreign publication' has one unmistakable meaning regardless of whether it is performed by independent or affiliated subpublishers. Given the plain meaning of the agreement's language, plaintiff's argument that foreign subpublishers were generally unaffiliated in 1961, when the agreement was executed, is immaterial."

Labels Denied Interlocutory Appeal In MP3Tunes Case

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Capitol Records, Inc. et al. v. MP3Tunes, LLC et al., No. 07-9931 (S.D.N.Y. filed Jan. 9, 2012) [Doc. 277].

Plaintiffs (record companies and music publishers) asked the Court to certify an interlocutory appeal of the Amended Memorandum & Order dated October 25, 2011 ("October 25,2011 Memorandum & Order") pursuant to 28 U.S.C. § 1292(b). Plaintiffs sought interlocutory appeal on whether, (i) the DMCA safe harbors apply to sound recordings fixed before February 15, 1972, (ii) a repeat infringer policy can be reasonably implemented by terminating only "blatant" infringers, and (iii) red flag knowledge of infringement can be established through sources other than takedown notices. The Court denied Plaintiffs' request.

Statutory Damages Awarded To EMI For Willful Infringement

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EMI Entertainment v. Karen Records, Inc. et al, No. 1:05-cv-00390 (S.D.N.Y. filed Aug. 26, 2011) (Holwell, J.) [Doc. 110 Memorandum Opinion and Order].

The court found that defendants willfully infringed EMI's copyrights in the four musical compositions at issue and awarded EMI $25,000 for infringement of each composition (total $100,000) for which all defendants -- corporate and individual -- shall be jointly and severally liable.

The Court had previously granted EMI summary judgment on liability as to sales on or after January 14, 2002 of albums containing the four musical compositions. 603 F. Supp.2d 759 (SDNY 2009). Now, the Court analyzed EMI's statutory damages request and found that defendants infringement was willful based on defendants industry experience and copyright ownership, prior lawsuit regarding similar practices and a specific warning. The next step was determining the amount of damages ($25,000 per work) and then analyzing whether the individual defendants should be jointly and severally liable. They were because they had the right and ability to supervise the infringing activity and a direct financial interest in such activities.

Summary Judgments In MP3Tunes Case

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Capitol Records, Inc. v. MP3Tunes, LLC, 1:07-cv-09931-WHP (S.D.N.Y. filed 8/22/2011) [Doc. 267].

"This case turns in large part on whether MP3tunes is eligible for protection under the safe harbors created by the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. 512."

The Court addressed Plaintiff's argument that MP3tunes failed to reasonably implement a repeat infringer policy. The court distinguished between "blatant infringers" and users who merely consume the content and found "this applies to MP3tunes executives." There was no evidence that executives or employees had firsthand knowledge that websites linked on the sideload.com website were unauthorized. Additionally, MP3tunes did nor purposefully blind itself to its users' identities and activities, and had a procedure for responding to DMCA takedown notices.

The Court next addressed MP3tune's compliance with Plaintiff's take-down notices. The court found that MP3tunes was obligated to remove specifice works traceable to users' "lockers" and that MP3tunes interpreted the reach of Plaintiff's notices too narrowly. However, MP3tunes was not obligated to take down all of Plaintiff's cotnent because the notices provided a representative list. Plaintiff had to provide sufficient information --additional web addresses -- for MP3tunes to locate other infringing material. "Absent adequate notice, MP3tunes would need to conduct a burdensome investigation in order to determine whether songs in its users' accounts were unauthorized copies. As discussed, the DMCA does not place this burden on service providers."

The Court next addressed actual or "red flag" knowledge of infringement. The Court found that MP3tunes "undoubtedly...is aware that some level of infringement occurs. But there is no genuine dispute that MP3tunes did not have specific 'red flag' knowledge with respect to any particular link...other than the URLs noticed [in the DMCA takedowns]."

The Court next addressed defendant's benefit and control of infringing activity, finding "at worst, MP3tunes set up a fully automated system where users can choose to download infringing content."

In sum, MP3tunes could claim safe harbor protection for plaintiff's works stored on and linked to on the websites. However, MP3tunes did not qualify for safe harbor protection for songs identified in takedown notices which it failed to remove.

The Court then turned to whether MP3tunes is secondarily liable for storing material at the direction if its users. The court found that MP3tunes knowledge of the unauthorized use of infringing material "is manifest." "Accordingly, [Plaintiff's] motion for summary judgment on its claim for contributory infringement with respect to the songs listed in [Plaintiff's] takedown notices and which MP3tunes failed to removed from users' lockers is granted."

The Court next turned to direct infringment. Plaintiff motion with respect to songs downloaded by employees was denied because there was a dispute as to whether the songs were downloaded by employees in the course of their employment. On the other hand, an individual named defendant was directly liable for the songs personally "sideloaded" from unauthorized sites.

Sony Loses Employment Suit Against EMI and Top Executive

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Sony Music Entertainment, Inc. v. Werre, No. 601441/09 (Sup. Ct., N.Y. Co. Mar. 19, 2010)

Sony sued a top EMI executive for alleged breach of contract, and EMI for tortious interference with that contract. The Court granted Defendants' motion to dismiss for failure to state a claim. (CPLR 3211(a)(7)). The Court found that the letter agreement at issue was not a binding, enforceable contract because a contingency, namely the executive's availability for employment on April 1, 2010, did not occur. Nor did the "prevention doctrine" apply because there was not binding contract in effect that contained the condition precedent in question; the contract was not binding on the parties until the condition precedent occurred such that the prevention doctrine did not apply. Similarly, since there was no valid contract, the tortious interference claim against EMI failed. Lastly, the fraud and breach of covenant of good faith and fair dealing claims against the executive were dismissed as duplicative of the (failed) breach of contract claim.



Sony v Werre (NYS)

EMI Sues Seeqpod & Favtape.com

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Capitol Records LLC et. al. v. Seeqpod, Inc., No. 09 cv 1584 (S.D.N.Y. filed 2/20/09).

"The Seeqpod site and service are designed to, and do, encourage and facilitate the search for, and the unlawful production, distribution and public performance of, copyrighted sound recordings and the copyrighted compositions embodied therein. In response to a user's query for a particular recording or recording artist, SeeqPod's proprietary algorithims - which SeeqPod's CEO and founder, Kazian Franks refers to as SeeqPod's "targeted crawling system" - crawl the Internet specifically to locate and index unlawful MP3 files of copyrighted sound recordings and compositions. SeeqPod then formats and presents the results as direct links to those unlawful files. A click on any one of these links will automatically cause the recording and composition to be reproduced and performed, via "streaming" technology, on and via SeeqPod's own MP3 software "player."

Paragraph 48.

NY State Action Against Labels

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In New York Supreme Court, New York County, Plaintiff filed summons with notice for breach of contract and unjust enrichment against two major labels, his former band ("Dr. Hook") and a band-mate. Alleged damages: $500,000.

Plaintiff's autobiography, including statements concerning his relationship with the band, appear on his website.

George Cummings Jr. v. EMI Music Inc.; Sony BMG Music Entertainment; Dr. Hook of Tennessee Inc.; Dennis Locorriere. No. 08-603856; filed 12/30/2008.

Antitrust Claims Against Majors Dismissed

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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.

Ono/EMI Withdraw All Claims Against Premise Media

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Article:

"Yoko Ono and EMI Records have withdrawn all claims filed against Premise Media. The dismissal follows failed attempts by Yoko Ono in federal court and EMI Records in state court to enjoin Premise Media’s documentary, “Expelled: No Intelligence Allowed,” because it uses a 15-second clip of a John Lennon song."

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