Copyright Termination By Majority Of Heirs Effective As To Lucrative Gospel Song; 6th Circuit

Brumley v. Albert Brumley & Sons, Inc., No. 15-5429 (6th Cir. May 16, 2016)

Four of six children of the author of the gospel song “I’ll Fly Away” successfully exercised their right to terminate the assignment of the song’s copyright to another one of their brothers, holds the Sixth Circuit.  The case centered on the 1976 Copyright Act’s termination right that allows an author to undo a prior transfer of his copyright and recapture all interests in the copyright for himself. 

In this case, Albert Brumley composed the song “I’ll Fly Away” (a gospel spiritual) in the late 1920s and owned the copyright through a publishing company.  In 1975, the publishing company was sold to two of Brumley’s sons, assigning and transferring all right title and interest in the song.  Brumley died in 1977, and in 1986 one of the sons bought out his brother’s interest.  In 2008, a sibling spat arose over the royalties for the song (approx. $300,000/year), and four of Brumley’s children served and filed a termination notice to share in the lucrative rights.  In December 2008, the four siblings filed a declaratory judgment action seeking a declaration that their termination notice was effective.  The owning brother (Robert) responded with two defenses, one of which – whether the song was a work made for hire – was tried before a jury, who found in favor of the four siblings.

On appeal, the Court found that the termination notice was effective.  Because the rights were transferred before 1978, the termination provisions in section 304 of the Copyright Act govern.  When Brumley’s wife passed away, each of his children held a one-sixth interest in the termination right.  Accordingly, the four siblings could exercise two-thirds of the termination interest with respect to the pre-1978 assingment.  Further, a post-transfer (1979) second “bill of sale and assignment” did not bargain away the wife’s termination replace and did not replace the 1975 contract.  The Court found that it should not lightly assume that a contract bargains away the centerpiece feature of the 1976 act.

Sirius To Be Liable To Turtles On Pre-1972 Sound Recording Claims

Flo & Eddie, Inc. v. Sirius XM Radio Inc., 1:13-cv-05784 (S.D.N.Y. filed Jan. 15, 2015) [Doc. 114].

The Court found that Sirius will be found liable to the Turtles' successor in interest for common law copyright infringement of pre-1972 sound recordings, but deferred entering judgment as to liability until the plaintiff decided whether to proceed individually or as a class action representative.

First, the Court rejected Sirius' argument that the plaintiff's had not yet established ownership of the recordings.  The Court found that documentary evidence of the transfer of rights from the Turtles to the plaintiff was not required because an assignment of common law copyrights need not be in writing to be valid under New York law; that a court may infer that a transfer has taken place from subsequent conduct.

Second, the Court rejected Sirius' argument that it had an implied license.  There was no evidence that the recordings were created at Sirius' request (indeed, Sirius did not even exist when the recordings were made), nor any evidence that plaintiff "handed over" the recordings to Sirius (let alone with intent for Sirius to copy and distribute the recordings).  Mere acquiescence was insufficient.

Third, the Court rejected Sirius' waiver and estoppel defenses.  The Court found that plaintiff's failure to pursue infringement actions for many years while the recordings were played on the air did not constitute a waiver.  Inaction was insufficient.  The estoppel defense failed because there was no proof that Plaintiff made any false representations to Sirius or concealed any material fact with intent to deceive.  Even if Sirius relied on general industry practice as to pre-1972 recordings, and the lack of any lawsuits over the years challenging that practice, the Court found that was distinguishable from relying on affirmative conduct by the plaintiff.

Fourth, the Court found that there is a three year statute of limitations under New York law, and that while plaintiff's claim was not time-barred, it could only recover damages for infringement going back three years.  The Court distinguished the case from those in which ownership of the copyright is in dispute between the parties; here, infringement is the primary issue (there is no claim by Sirius that it owns the copyrights).

Lastly, the Court found that it would defer on ruling on the merits until the issue of class certification was decided.  The Court directed plaintiff to notify it if it intends to proceed individually or as a class action representative.

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.

Covenant Not To Sue Upheld In Run-DMC Co-Author's Case Against Publisher Assignee For Royalties

Reach Music Publishing, Inc. v. Warner/Chappell Music, Inc., No. 09-cv-5580, 2014 BL 317978 (S.D.N.Y. Nov. 2014).

A Run-D.M.C. co-author's claim for breach of contract failed because that co-author "long ago sold all rights to the subject songs -- including his entire copyright interest -- in exchange for royalty payments," and in that agreement, he plainly acknowledged that the songs could be transferred to another publisher (Protoons) and that "he would only ever seek royalty payments from" the original publisher (Rush Grooves).  The Court found that the covenant not to sue Protoons was enforceable and was not unconscionable under New York law.  Therefore, the co-author breached the contract when he filed suit in 2008, and the defendant's damages were their resulting attorney's fees pursuant to the express attorney's fees provision in the contract.  Defendant also counterclaimed that the plaintiff (another publisher, Reach, to whom the co-author had purportedly transferred his interest), tortiously induced the co-author to breach the covenant not to sue.  The Court found that there was a question of material fact whether Reach had knowledge of the covenant not to sue, preventing either party from winning summary judgment on the tortious interference claim.  "Even though knowledge of the contract need not be perfect, Reach must have knowledge of the covenant not to sue in order to be liable for helping Reeves violate that particular contractual provision."

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.


Summary Judgment Denied Where Question Of Fact Concerning Plaintiff's Interest In Song

Mayimba Music v. Sony Corp. of Am. et al., No. 12-cv-1094 (S.D.N.Y. Jan. 16, 2014) [Doc. 30].

The Court denied defendants' motion for summary judgment, finding that Plaintiff just "barely" had an issue for the jury, to wit: whether Plaintiff, alleged assignee of the song, still maintained an interest in the copyrighted song, which Plaintiff alleged was used without its permission in a song ultimately recorded by Shakira.  There was conflicting testimony and documentary evidence.

Raising Capital By Selling Royalty Income


Web Helps Musicians Sell Shares of Royalties
Web sites like the Royalty Exchange allows musicians to sell parts of their royalty income to investors and define which rights to sell and which to retain.
Article here.   Ben Sisario, "Web Helps Musicians Sell Shares of Royalties", 4/22/2013 NYTimes (Business).

Article re: Copyright Termination in 2013

See Ryan Davis, "Copyright Termination For '70s Hits Won't Spark Lawsuit Fever" (Law360, New York; Nov. 26, 2012).  (Link to article; registration required).

Article summary (first paragraph): "Musicians who recorded hit songs in the late 1970s will gain the right to reclaim ownership of their work starting in January under a 1978 copyright law provision, and while record labels are expected to fight to retain control of lucrative music, 2013 is unlikely to bring a flood of litigation, attorneys said."

The article concerns the reclamation of rights by authors that were licensed or transferred after 1978, pursuant to section 203 of the Copyright Act.  Generally, termination rights may be effected after 35 years from the grant.  Id.  Thirty-five years from 1978 is...2013!

Lawyers interviewed for the article predicted that there will be few actually litigated cases, and instead termination notices will serve as a jumping-off point for contract re-negotiations between artists and record labels.

Spanish Language Adapter Loses Suit Against Coke

Vergara Hermosilla v. Coca-Cola Co., No. 10-21418 (S.D. Fla. Feb. 23, 2011). Decision here.

Plaintiff was hired by Coca Cola to adapt a song into Spanish. Plaintiff requested an "adapter's share." During a telephone call with defendant, Plaintiff agreed to relinquish any copyright interest in the work. In an email later that day, Plaintiff wrote "For the adaptation, you may consider it a work for hire with no economic compensation to that respect. I believe what's legal is a dollar."

The Court granted Defendant's motion for summary judgment. Relying on section 204 of the Copyright Act, the Court held that Plaintiff's copyright interest -- the adapted lyrics -- was conveyed by a signed writing (the email). An irrevocable agreement was reached, so that later communications between the parties concerning a written contract that differed from the parties' agreement did not alter the parties' actual agreement. "Therefore, because Coca Cola cannot be sued based on a copyright interest it owns, Coca Cola is entitled to summary judgment on all counts."


Assignment of Label Trademark

Fitzpatrick v. Sony-BMG Music Entertainment, Inc., 07 Civ. 2933 (SAS), NYLJ 1202471263978, at *1 (SDNY, Decided August 23, 2010):

Plaintiff Basil Fitzpatrick brought suit under section 1125 of Title 15 of the United States Code (the "Lanham Act") against Sony-BMG Music Entertainment, Inc. and Red Distribution, Inc. (collectively the "Red defendants") and Sheridan Square Entertainment, LLC ("SSE"), Sheridan Square Entertainment, Inc., and Daniel Goldberg (collectively, the "SSE defendants"). Fitzpatrick alleges that the SSE defendants infringed his common law trademark in the name "ARTEMIS RECORDS" by improperly using that name and creating reverse confusion in the marketplace. Goldberg now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56(c) on the ground that he assigned the "ARTEMIS RECORDS" trademark to SSE and is therefore not liable for any alleged "indirect infringement." For the reasons that follow, Goldberg's motion is granted and plaintiff's Complaint is dismissed against him.

The Court held the assignment was not an invalid assignment "in gross."

Reconsideration Denied On Claim of Lost Written Assignment

Tolliver v. McCants, No. 05 Civ. 10840, NYLJ 6/03/09 "Decision of Interest" (S.D.N.Y. May 26, 2009)

The Court had previously granted plaintiff judgment on defendant's copyright infringement. Granting defendant reconsideration in part, the Court reinstated eight affirmative defenses. However, the Court denied reconsdiertion on defendant's claim of a lost written assignment.

Defendant could not rely on plaintiff's prior deposition testimony to create a genuine factual issue as to the written assignment's existence. Also, the Court noted that its earlier ruling found that defendant had admitted that the only written agreement with plaintiff was a recording contract concerning artist's royalties. The court discounted allegedly "new" evidence, and determined that defendant pointed to nothing undermining the Court's prior conclusion that no genuine factual issue existed regarding defendant's claim of a lost written assignment.

"My Humps" Licensing Suit

Tolliver v. McCants, 05 Civ. 10840, 4/7/09 N.Y.L.J. "Decision of Interest" (S.D.N.Y. decided Mar. 25, 2009)

In 1982, plaintiff collaborated with defendant to produce a music album that included a recording of a musical composition entitled, "I Need a Freak." In 2005, defendant licensed the composition to the popular music group, The Black Eyed Peas, for use in their hit single, "My Humps." At issue in this case is whether the grant of the license by defendant infringed upon plaintiff's copyright to the composition. Both parties cross-moved for summary judgment. Plaintiff's motion was granted; defendant's denied.

Issues:

Statute of Frauds: No writing assigning to defendant right to license work for derivative works, therefore no valid assignment so that the license for "My Humps" violated plaintiff's copyright.

Statute of Limitations: "conundrum" between the limitations period for an ownership claim and an infringement claim

Adding affirmative defense (laches) on summary judgment motion, 2.5 years after litigation commenced.