Category Archives: Cases

Mayweather Says Knock You Out!

The 4th Circuit delivered a knockout punch in a copyright infringement claim against Mayweather, affirming a district court’s granting of summary judgment dismissing a songwriter’s claim for infringement damages.

Anthony Dash claimed that he wrote the composition of a song Mayweather used as a “theme song” during several appearances at WWE events and sued for infringement.  Because Dash had not filed for copyright registration until after the alleged infringement, Dash was only able to seek actual damages under §504(b).  The district court bifurcated the proceedings between liability and damages and Mayweather filed a motion for summary judgment that Dash was not entitled to damages.  Dash responded by filing an expert report that listed four benchmark licensing fees paid to other artists for the use of their music at Wrestlemania XXIV. Based on those fees, Dash’s expert concluded that Dash “would have earned a maximal sum of $3,000 for the use of his musical composition.”  Mayweather argued that Dash’s expert opinion was too speculative on which to base an award.

The 4th Circuit began by noting that “the primary measure of recovery is the extent to which the market value of the copyrighted work at the time of the infringement has been injured or destroyed by the infringement.”  One measure of the fair market value is the licensing “fee the owner was entitled to charge for [the infringer’s] use” of his copyrighted work.”  In order to recover, the copyright owner “must prove the existence of a causal connection between the alleged infringement and some loss of anticipated revenue.”

Dash’s expert attempted to determine what the license fee would have been by considering 4 songs that the WWE did license: 1 by the Red Hot Chilli Peppers, 1 by Fuel and 2 by Snoop Dogg.  Dash’s expert concluded that, “[b]ased on these benchmarks, it is safe to conclude that [Dash] would have earned a maximal sum of $3,000 for the use of his musical composition.”

The 4th Circuit seized on Dash’s expert’s reference to the maximum amount Dash would have earned as evidence that Dash might not have earned anything. (“By referencing [Dash]’s maximal value—without any actual mention of a minimum value—[Dash’s expert] failed to satisfy this burden.  Rather it appears to have concluded only that, to the extent [Dash’s work] had a market value, such value was no more than $3,000.”)  The Court also concluded that the selection of benchmarks–representing licenses with well-known artists–were too removed from the unknown Dash to be reliable.

The Court then turned to Dash’e entitlement to WWE’s profits from using the work and noted that “in order to meet his initial burden under § 504(b), a plaintiff must not merely present proof of the amount of the claimed revenue streams, but must also provide “more than mere speculation as to the existence of a causal link between the infringement and the claimed revenues.”  The Court noted that the causal link need to be direct–it must only be hypothetically possible.  Here, Dash had stipulated that he had no evidence that the playing of his composition at Wrestlemania XXIV increased any of the WWE revenue streams. By making such stipulation, Dash admitted there was not even hypothetically possible to show the performance of his song created profits WWE would not have earned but for playing the song.

The decision is here.

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.

File Sharing Smack Down: First Circuit Rules Against Tenenbaum

In a victory for the record labels, the First Circuit has issued its decision in Sony v. Tenenbaum, finding meritless all of Tenebaum’s arguments against the constitutionality of statutory damage awards in file sharing cases.  The long-awaited decision, released Friday, restores the original jury award of $675,000 and remands back to District Judge Gertner to consider remittitur.

A key argument raised by Tenenbaum (and inherently adopted by the District Court in its opinion) is that the Copyright Act’s statutory damages provisions do not apply to “consumer-copiers” or non-commercial infringement.  The First Circuit quickly and authoritatively rejects that argument.

Tenenbaum is not a “consumer-copier,” a term he never clearly defines. He is not a consumer whose infringement was merely that he failed to pay for copies of music recordings which he downloaded for his own personal use. Rather, he widely and repeatedly copied works belonging to Sony and then illegally distributed those works to others, who also did not pay Sony. Further, he received, in turn, other copyrighted works for which he did not pay. Nor can Tenenbaum assert that his was merely a “non-commercial” use and distribution of copyrighted works as those terms are used elsewhere in the Act.  His use and distribution was for private gain and involved repeated and exploitative copying.

Had Congress intended to limit copyright actions against so-called “consumer infringers” as Tenenbaum hypothesizes, it easily could have done so. … Instead, subject to exceptions not relevant here, it extended liability to “anyone” who violates a copyright owner’s exclusive rights and allowed those owners to pursue actions against “any infringement.”

Where Congress intended to create other exceptions for solely personal or non-commercial use, it did so expressly. In two amendments which do not apply here, it drew such distinctions: (1) the Sound Recording Act of 1971, Pub. L. No. 92-140, 85 Stat. 391, which fully extended federal copyright protections to sound recordings but exempted certain reproductions of sound recordings made for personal use, and (2) the Audio Home Recording Act of 1992 (AHRA), Pub. L. No. 102-563, 106 Stat. 4237, codified at 17 U.S.C. § 1001 et seq., which provided some exemptions in other situations from copyright liability for infringements “based on the noncommercial use by a consumer.”  17 U.S.C. § 1008.  These statutes refute Tenenbaum’s argument [that statutory damages do not apply to “consumer copiers”].

The First Circuit, in remanding back to the district court to consider remittitur, briefly discusses the district court’s reliance on the Gore factors instead of Williams in determining that the jury award was unconstitutional.  Without directly holding that Gore does not apply, the First Circuit makes clear its belief that it is inapplicable here.

We note that in Gore, the Supreme Court did not overrule Williams. See Rivers v. Roadway Express, Inc., 511 U.S. 298, 312 (1994) (hierarchical relationship of Supreme Court to lower courts mandates that where “the Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law”). Nor has the Supreme Court to date suggested that the Gore guideposts should extend to constitutional review of statutory damage awards. The concerns regarding fair notice to the parties of the range of possible punitive damage awards present in Gore are simply not present in a statutory damages case where the statute itself provides notice of the scope of the potential award.

In the long-running District of Minnesota Elektra v. Thomas case, Judge Davis followed Judge Gertner’s district court decision in Tenenbaum, finding that the jury award of statutory damages was unconstitutional, but used the Williams factors instead of Gore in reaching his decision.  Judge Davis also tried remittitur once before reaching the constitutional question, so it will be interesting to see how the Eighth Circuit treats the inevitable appeal on the Thomas case.

The First Circuit’s Opinion is below:
[scribd id=65490758 key=key-1mzyriiczt13zzgb8mg6 mode=list]

First Sale Doctrine: Promotional CDs (UMG v. Augusto)

The 9th Circuit has ruled that when record labels send promotional copies of CDs to “Industry Insiders” they transfer ownership of those CDs such that the First Sale Doctrine (see § 109 of the Copyright Act) bars claims of infringement (i.e., unlicensed distribution).  The case arose when Troy Augusto sold promotional CDs on eBay.  The record labels claimed that such CDs were still owned by the labels because they had been merely licensed to the “Industry Insiders” to whom they had been sent.  In support of this claim, the labels pointed to language affixed to the CDs or to its packaging that read “This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws.” or sometimes just ““Promotional Use Only—Not for Sale.”  The labels argued that they intended to merely grant a limited use right (i.e., a license) to these “Industry Insiders” rather than transfer ownership of the promotional CDs such that the First Sale Doctrine would not apply.  The 9th Circuit disagreed and found that ownership of the promotional CDs had transferred to the “Industry Insiders” who were then free to dispose of them as they wished, including giving them to Troy Augusto, who could then sold them on eBay.

In their appeal brief, the record labels spend a lot of time arguing that they intended the provision of promotional CDs to be a license.  They didn’t spend much time discussing whether the “Industry Insiders” understood that by receiving a promotional CD they hadn’t specifically requested they were now bound to a license.  The labels spend a lot of time discussing software licenses, but it seems pretty obvious that in the context of a software license–even a so-called “click thru” license–that the prospective licensee is actively seeking the software allegedly being licensed.  Here, in contrast, the record labels are sending promotional CDs to “Industry Insiders” in hopes that such influencers will like the music and promote the music; i.e., play it on their radio station.  It’s hard for me to imagine that such “Industry Insiders” believed they were under any obligation to do anything.

The RIAA’s amicus does little more.  The RIAA trots out the public performance exception of § 110(7) to suggest that promotional uses of music are somehow intrinsically different than commercial uses.  Of course, to suggest that giving the “few thousand” promotional copies to “Industry Insiders” isn’t “commercial” is ridiculous on its face.  While the “Industry Insiders” aren’t paying for the promotional CDs, the record labels certainly believe that by giving away a “few thousand” promotional CDs they will increase the sale of that record.

The 9th Circuit opinion is here.
[scribd id=46478057 key=key-1n4eloslalgjsigywtvs mode=list]

Troy Augusto’s brief is here.
[scribd id=46478007 key=key-n6aq2yok0l512ex661n mode=list]

UMG’s brief is here.
[scribd id=46477989 key=key-g97kc2t4l6af8bu0dvr mode=list]

The RIAA’s brief is here.
[scribd id=46478024 key=key-b1nxq5yc97eui5yymub mode=list]

Tenenbaum – Def. Appeal Brief & EFF Amicus

While I’m a little late to the game, below is Joel Tenenbaum’s 1st Cir. appeal brief and the amicus filed by EFF.  Prof. Nesson continues to represent Joel, though this brief is far better written than anything submitted by Joel’s defense team during the district court trial.  Its greatest weakness–aside from being completely wrong on the law–is the repeated conflation of non-commercial and personal.  In other words, the brief goes to great lengths to talk about how copying for personal use was never intended to be covered by §504’s statutory damages scheme, which, Nesson argues, is reserved for commercial infringers.  The obvious problem here is that Joel didn’t just make a personal copy.  He made his personal copy available for millions of others to make their own personal copy.  One need look no further than Nesson’s own example from the hearings on the 1971 Sound Recording Act where Rep. Kazen asks, apparently rhetorically, “In other words, if your child were to record off of a program which comes through the air on the radio or television, and then used it for his or her own personal pleasure, this use would not be included under the penalties of this bill.”  Joel Tenenbaum did nothing remotely like what Rep. Kazen is describing.
[scribd id=46439782 key=key-12ka10ypdn5h2188u5jp mode=list]

The Electronic Frontier Foundation’s amicus brief didn’t make much sense to me.  I mean, I understand the point the brief is making–statutory damages are bad–but I fail to see any attempt to tie the facts of the Tenenbaum case with the outcome EFF presumably wants.
[scribd id=46439807 key=key-hzoi1drw9dmmk5c6dk4 mode=list]