Beats, Dre & Iovine May Owe Royalties For More Than First Model Headphone; Question for Jury

Jibe Audio v. Beats Elec., No, B267633 (Cal. App. - 2nd Dist. Sep. 19, 2016).

A California appellate court holds that the headphone company Beats, Dr. Dre and Jimmy Iovine may owe the plaintiff royalties for more than the first headphone model, the Studio model, because the contract at issue (a settlement agreement) was ambiguous and disputes of material fact existed.  Accordingly, summary judgment in favor of the defendants was reversed so that a jury could decide the case.

The case was a question of contract interpretation under California law, and the Court considered extrinsic evidence outside of the 4 corners of the contract.  "The Beats parties and Brunner contend that the Royalty Agreement was only intended to cover one product: the Studio headphone. They argue that the agreement was not intended to cover sales of the entire line of Beats headphones. Lamar, on the other hand, argues that the Royalty Agreement requires Beats to pay a royalty on the sale of every headphone whose design embodies or is a minor or cosmetic modification to the original headphones design."

We find that the contract is ambiguous as to whether it contemplated royalties only for the Studio headphone model or for other headphones that embody the headphones design depicted in Schedule I to the Royalty Agreement. The extrinsic evidence thus must be admitted to assist in the second step of contract interpretation. The factual conflict in the evidence regarding the meaning of the contract must be resolved by a jury. 

Jeremih Can't Avoid Photog's Secondary Copyright Infringement Claims & Model's Publicity Claim Over Album Cover

Rams v. Def Jam Recordings, No. 15-8671 (S.D.N.Y. Aug. 16, 2016).

Artist Jeremih's Rule 12 motion to dismiss the plaintiffs' secondary copyright infringement claim, and all of the Defendants' motion to dismiss the right of publicity claim under California law, were denied.  The case involves the use of a photo on an album cover on the hit single "Don't Tell 'Em"; the plaintiff photographer alleged copyright infringement against the artist and label, and the plaintiff model alleged violation of her right of publicity.

As to the contributory infringement claim against the defendant artist, the Court held that the photographer stated a claim.  "Drawing all reasonable inferences in favor of Plaintiffs, it is plausible that ... the recording artist, whose work is distributed by UMG under the Def Jam label, would have reason to know of the infringing use of the Subject Image on his own album cover."

As to the vicarious infringement claim against the defendant artist, again the Court held that the photographer stated a claim.  "Plaintiffs state a plausible claim that, as a recording artist...[he] had the right and ability to supervise the selection of cover artwork for his own 'Don't Tell 'Em' single."  Further, the Court found that the complaint sufficiently alleged that the artist benefited financially from the infringement.

As to the model's right of publicity claim, the Court first addressed whether the law of Denmark applied (where the model resides) or whether instead California law applies.  California's choice of law rules applied because the case had been transferred to New York from California district court.  Accordingly, the Court applied the "governmental interest" test under California law, and held that California law should apply.  "Under California law, Rams has sufficiently alleged that Defendants knowingly distributed and profited from the use of her image throughout California without her consent, violating her right of publicity."

Band Member May Sue As Third-Party Beneficiary Of Contract Between Record Label and Suspended Loan-Out Company

Bozzio v. EMI Group Ltd. et al., No. 13-15685 (9th Cir. Jan. 26, 2016).

The 9th Circuit held that the front-woman of the '80s new-wave band "Missing Persons" could sue the band's record label for breach of contract (whether proper royalty rates were paid) as a third-party beneficiary of the contract between the record label and the "loan-out" company created by the band, even though the State of California had suspended the corporation's status for failure to pay certain taxes.  "The parties have not cited, and we have not found, any California case holding that a third-party beneficiary cannot sue the promisor for breach of contract when the promisee is a suspended corporation."  Additionally, interpreting a related Artist Declaration, the 9th Circuit held that plaintiff did not necessary waive the benefits of the contract under the provision requiring band-members to look to the loan-out company (not the label) for the payment of royalties.  Language in the Loan-Out Agreement was in tension with language in the artist declaration.  Accordingly, the district court -- which had dismissed with prejudice believing that amendment would be futile -- was reversed.

State-Law Copyright And Unfair Competition Claims Relating To In-Flight Music Services Not Preempted

UMG Recordings v. Global Eagle Entertainment, No. 14-03466 MMM (C.D. Cal. dated Feb. 23, 2015).

The Court denied defendant airline's motion to dismiss claims for copyright infringement under California law, along with California unfair competition claims, finding that even if in-flight entertainment qualifies as a service as that term is used in the Airline Deregulation Act, any connection between the service and plaintiffs' claims was too tenuous and remote to justify preemption.

Plaintiffs were various record companies and music publishers.  They contended that defendants provided “various airlines” sound recordings and music videos that the airlines then publicly perform to their passengers.  Defendants contended that the court should dismiss the record company plaintiffs’ state law copyright infringement and unfair competition claims because the claims were preempted by the Deregulation Act.  Congress enacted the Deregulation Act in 1978 after determining that maximum reliance on competitive market forces would best further efficiency, innovation, and low prices as well as variety and quality of air transportation services."

Only Breach Of Contract Claim Survives in Ozzy Osbourne Guitarist Case

Rhoads v. Margolis, No. B249800 (Cal. App. Ct., 2d Dist. - Div. 7, Jan. 26, 2015).

Only a breach of contract claim survived in an action, brought by the family of a well-known rock guitarist who died in a 1982 plane crash, against Defendants based on the family's grant of the right to use personal information and memorabilia to make a documentary film about the deceased guitarist.  When the documentary project faltered, defendants instead published a book about the guitarist.  The family sued, alleging the book was based on materials they had provided for the exclusive purpose of making the documentary film.  Defendants moved to dismiss the complaint.

On appeal, the Court found that the Anti-SLAPP Statute (section 425.16) applied because the principal thrust of every claim was premised on the allegation that the defendants, in researching, writing and publishing the book, used the family's proprietary material provided solely for the purpose of the documentary.  Whether or not defendants violated the terms of the agreement, their conduct in writing and publishing the book qualified as a form of protected activity.  With the exception of the breach of contract claim, the family failed to establish a probability of prevailing on its claims. The fraud claim failed because there was no allegation that the defendants intended to create the book at the time of the agreement.  The misappropriation claim (based on the right of privacy) failed because the alleged acts did not implicate the personal privacy or publicity rights of the guitarist's family members.  Additionally, the life and death of the guitarist was a matter of public interest.  The unfair competition claim failed because plaintiffs had not articulated an actionable manner in which the public was likely to be deceived by the book or that consumers suffered substantial injury.

No Interlocutory Appeal Of Pre-72 Sound Recording Liability Holding In Turtles v Sirius Case

Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13-cv-5693 (C.D. Cal. Nov. 20, 2014).

The District Court denied Sirius XM's motion to certify for interlocutory appeal the Court's earlier order granting partial summary judgment.  The earlier order granted plaintiff summary judgment to the extent that its claims were premised on Sirius XM's public performance of plaintiff's pre-1972 sound recordings, ruling that owners of sound recordings have the exclusive right to publicly perform their recordings under California Civil Code 980(a)(2).  28 USC 1292(b) provides a means for litigants to bring an immediate appeal of a non-final order with the consent of both the federal district court and the federal court of appeals.  The district court denied the motion because, "[a]t this stage in the litigation and under the operative scheduling order governing the case, certification of the Order for immediate appeal would delay rather than materially advance the termination of the litigation".  Continuing, the district court observed that the case is moving swiftly toward trial and a final resolution that will be appealable to the Ninth Circuit in the customary manner.  While interpretation of Cal. Civ. Code 980(a)(2) is an issue of controlling law, an immediate appeal would not speed up the resolution of the case.

California Law Protects Public Performance Right In Pre-1972 Sound Recordings; Turtles Granted Summary Judgment Against Sirius

Flo & Eddie Inc. v. Sirius XM Radio Inc., et al., No. 2:13-cv-05693-PSG-RZ (C.D. Cal. filed Sep. 22, 2014) (Doc. 117).

Plaintiff, owner of all rights to The Turtles’ master sound recordings (including the hit "Happy Together"), was granted summary judgment against Sirius XM on its causes of action for violation of California
copyright law (California Civil Code § 980(a)(2)), California’s Unfair Competition Law (Cal. Bus. & Prof. Code §§ 17200, et seq.), and common law misappropriation and conversion, but only so far as the claims were premised on Sirius XM’s public performance of Plaintiff's recordings, not its alleged reproductions for which there were outstanding questions of fact.

Plaintiff argued that Sirius XM was liable for two distinct unauthorized uses of its sound recordings: (1) publicly performing its recordings by broadcasting and streaming the content to end consumers and to secondary delivery and broadcast partners, and (2) reproducing the recordings in the process of operating its satellite and Internet radio services.  Plaintiff contended that, in California, copyright ownership of a pre-1972 sound recording includes the exclusive right to publicly perform the recording; therefore, if anyone wishes to publicly perform such a recording, they must first seek authorization from the recording’s owner.  The Court agreed.

First, the Court found that California statutory and common law governs the rights that attach to pre-1972 sound recordings because the Federal Copyright Act does not apply to those earlier recordings and explicitly allows states to continue to regulate them.  Second, the Court examined the provision of California’s copyright statute that contains a provision directly addressing pre-1972 sound recordings. Cal. Civ. Code § 980(a)(2) ("The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound
recording").

The crucial point of statutory interpretation for this case was whether “exclusive ownership” of a sound recording carries within it the exclusive right to publicly perform the recording.  The Court’s textual reading of § 980(a)(2) was that the legislature intended ownership of a sound recording in California to include all rights that can attach to intellectual property, save the singular, expressly-stated exception for making “covers” of a recording.

The Court further found that the rule of statutory construction requiring express statements to alter the common law did not apply because, when the legislature passed § 980(a)(2), there was no common law rule in California rejecting public performance rights in sound recording ownership.  Also, the legislative history of § 980(a)(2) and its comparison to the Federal Copyright Act bolstered the Court’s plain textual reading of the statute that sound recording ownership is inclusive of all ownership rights that can attach to intellectual property, including the right of public performance, excepting only the limited right expressly stated in the law (that the owner does not have the exclusive right to record and duplicate “covers").  Lastly, the Court found further support for its textual reading of the statute as inclusive of the right of public performance from the only two courts that have ruled on or discussed this right under § 980(a)(2).  Accordingly, the Court granted summary judgment on copyright infringement in violation of § 980(a)(2) in favor of Plaintiff.

Borrowing the violation of § 980, the Court found that Sirius also violated California's Unfair Competition Law because Sirius publicly performs Plaintiff's sound recordings without authorization to do so.  Also, the Court found that Sirius XM’s unauthorized performances established conversion damages in the form of license fees that Sirius XM should have paid Plaintiff in order to publicly perform its recordings.  The foregone licensing or royalty payments that Sirius XM should have paid before publicly performing the recordings also constituted misappropriation.

Lastly, the Court found that Sirius could not rely on the doctrine of laches because this was an action at law seeking money damages, and laches is an equitable defense.  Accordingly, the Court granted Plaintiff's motion for summary judgment on all causes of action, but only so far as the claims are premised on Sirius XM’s public performance of the recordings, not its alleged reproductions.

NAPSTER Trademark Action Continues In California

Rhapsody Int'l, Inc. v. Lester & Napster.fm, Index No. C 13-05489 CRB (N.D. Cal., Feb. 24, 2014).

The Court denied defendants' motions to dismiss the trademark infringement case, concerning the mark NAPSTER, for failure to state a claim, lack of jurisdiction and improper venue.  The Court found that plaintiff stated a claim for trademark infringement, dilution, cybersquatting, unfair competition, and unfair business practices.  The Court also found that plaintiff made a prima facie showing of personal jurisdiction, and that transfer to Virginia for defendants' convenience was insufficient to warrant transfer.

Publisher Denied Attorney's Fees

De Walt v. Jobete Musc Co., No. B240650 (Cal. App. Ct., 2d Dist. filed May 7, 2013).

The California appellate court held that a publisher (related to MoTown) could not recover attorney's fees  in a royalties related suit in which the publisher prevailed because the company didn't move for the fees in the initial trial over copyright-misappropriation claims.

This case arises from an underlying action filed in 2003 by respondents,1 who are the heirs of the late musician and composer Autry De Walt, professionally known as Junior Walker (De Walt), against appellant Jobete Music Co., Inc. (Jobete). In the underlying action, respondents disputed the ownership of renewal copyrights of certain songs and sought a declaration as to which of several contracts between De Walt and Jobete were applicable. A jury found the most recent contract governed, and judgment was entered in favor of Jobete and affirmed on appeal. Although Jobete filed a memorandum of costs in the underlying action, it did not seek its attorney fees. Instead, over the next several years, Jobete unilaterally offset from the royalties payable to respondents amounts it claimed were incurred as attorney fees in the underlying action. In 2009, respondents sued Jobete for breach of contract and conversion. Following a bench trial based on stipulated evidence, the trial court entered judgment in favor of respondents, finding that Jobete was barred from seeking its attorney fees by not pursuing them in the underlying action. We agree that Jobete is no longer entitled to seek its attorney fees. We affirm the judgment in favor of respondents except as to their conversion claim.

Distribution, Not Only Copying, Sufficient For Copyright Claim

Marshall v. Huffman, No. 10-1665 (N.D. Cal. filed Aug. 20, 2010) [Doc. 133].

This action concerns a song recorded by Mariah Carey, and claims against Carey and a music executive for unauthorized exploitation of Plaintiff's song.  Defendant moved to dismiss, arguing that plaintiff failed adequately to allege his copyright claim, because plaintiff fails to allege that defendant “copied” plaintiff’s work, and because the allegation that Huffman “distributed” plaintiff’s copyrighted work without permission is insufficient to support the copyright infringement claim since it is devoid of supporting facts.  Defendant's was "not well taken."  The Court found that a claim for copyright infringement can be based on allegations of unauthorized distribution of a copyrighted work. See 17 U.S.C. § 106(3) (exclusive rights protected by Copyright Act include right to distribution of copyrighted work). The complaint adequately explained the facts supporting the improper distribution allegations: it alleged that defendant distributed without permission plaintiff’s song “Are You the One,” in violation of the Copyright Act.  Motion to dismiss DENIED.

Rick Ross Name Claim Time Barred

Ross v. William Leonard Roberts II, No. BC450511 (Superior Court for the State of California, County of Los Angeles).

It is reported that a lawsuit accusing rapper Rick Ross, his label and others of misappropriating the name and identity of former drug kingpin "Freeway" Ricky Ross, has been dismissed based on an expired statute of limitations. The Judge ruled that the former drug trafficker's claims were barred by the two-year statute of limitations under California's single publication rule and the doctrine of laches. Per the Court, the rapper's first hit single received significant radio play beginning in 2005 and alerted plaintiff, who was in prison at the time, that his name was being used commercially.

CA Statute Of Limitations Bars Singer's Malpractice Claim

Basilotta v. Warshavsky, 6508 115524/09, NYLJ 1202538059721, at *1 (1st Dept, Jan. 10, 2012).

Reversing the trial court's decision denying defendant's motion to dismiss, the Appellate Division applied California's one-year statute of limitations for legal malpractice to dismiss Plaintiff's complaint against her former lawyers. It appears that plaintiff had a recording contract with a record label, that label was involuntarily liquidated, and the lawyers allegedly neglected plaintiff's case against the label.

The End

permission to perform the The New York Times reports (8/23/08; B8 "Arts, Briefly") that the California Supreme Court decline to grant certiorari to a case involving the three surviving members of the Doors. The case concerns use of the band's name and trademark by the keyboardist Ray Manzarek and guitarist Robby Krieger while touring as a legacy act. Drummer Jon Densmore gave Manzarek and KriegerDoors' songs in 2002, but apparently limited their right to call themselves the Doors and from using the group's logo or other imagery.