A Rocky Finish at the 9th Cir. for UMG

Rock River Communications v UMG, No. 12-55180 (9th Cir. 2013)

Rock River’s lawsuit alleged that UMG inappropriately blocked Rock River from distributing its album of Marley remixes by wrongfully threatening to sue Rock River’s distributors. UMG persuaded the district court that unless Rock River had proof that its chain of licensing rights was valid – dating all the way back to the initial musicians and producers – then UMG could not be liable, because there is no liability for interference with an invalid business expectancy.

According to the 9th Circuit, UMG is only half right. Although there can be no liability for interfering with a business expectancy that is invalid or illegal, the defendant (UMG in this case) has the burden to prove the invalidity or illegality of the business expectancy. UMG cannot obtain summary judgment based on the holes in Rock River’s claim to a valid license when the validity of UMG’s own licensing rights is equally spotty.

The facts of the case are pretty straight forward.  In 2006, Rock River entered into a licensing agreement with San Juan Music Group, Ltd. (San Juan),  to “sample” or 16 recordings performed by Bob Marley and the Wailers. San Juan is a music licensing company that, since 1980, has been licensing recordings by Marley through an agreement with Lee Perry, the producer of many of Marley’s early recordings. Rock River eventually produced an album of 12 of these remxies entitled Roots, Rock, Remixed, which it intended to sell through normal sales channels.

In October 2007, however, UMG sent a cease-and-desist letter to Rock River claiming that UMG owned exclusive licensing rights to all the Recordings remixed on the album “Roots, Rock, Remixed” and that Rock River therefore could not release its album without a license from UMG.  UMG sent letters to Apple to block sales of the album on iTunes, to Fontana (a UMG subsidiary) to stop distributing physical units in the US, and to EMI (now a UMG label) to stop international distribution.

Rock River sued UMG in January, 2008, alleging violations of the Sherman Act, 15 U.S.C. § 2, and the Clayton Act, 15 U.S.C. § 18, intentional interference with contract, intentional interference with prospective economic advantage (IIPEA) and misrepresentation in violation of 17 U.S.C. § 512(f). On UMG’s first motion for summary judgment, the district court dismissed all of Rock River’s claims except for its IIPEA claim.

UMG, in moving for summary judgment, argued it cannot be held liable for interfering with an illegal business expectancy, such as album sales of an album that violates copyright law. As the 9th Circuit explained,

“The ingenuity of this theory, although we ultimately reject it, is that it seeks to allow UMG to prevail without requiring UMG to actually establish that Rock River’s album infringed on anyone’s licensing rights. Instead, it casts the licensing rights issue as an essential part of Rock River’s case-in-chief.”

The 9th Circuit reasoned that because San Juan had been openly licensing Marley Recordings for 30 years, including the famous “Trenchtown Rock,” to roughly 40 companies, including to divisions of UMG, without ever being sued, there was at least some evidence that San Juan did have the right to license Rock River.

The 9th Circuit’s opinion is here.