Category Archives: Royalties

No, Seriously.

Alfred Matthew “Weird Al” Yankovic is suing Sony for $5mm.  In addition to several  audit-related claims regarding alledgedly unauthorized recoupments and/or deductions, Weird Al has joined the ranks of Eminem, the Allman Brothers, Rick James, and others in claiming that Sony should have paid 50% of revenue for digital download sales.  According to the complaint, which is provided below, Weird Al’s 2002 agreement with Sony specifies that “notwithstanding any other royalty provision …, Sony will credit [Weird Al’s] royalty account with an amount equal to fifty percent (50%) of the Net Receipts from any royalty, fee, or other payment received by [Sony] directly attributed to a Master licensed by us for use (A) in the manufacture and/or distribution of Phonograph Records.” (internal citations omitted).  According to the complaint, “Phonograph Records” is defined in his agreement with Sony as including permanent music downloads, mastertones and ringtones.

Like several other suits, this case is being brought by Richard Busch of Nashville’s King and Ballow, who has cut quite a lucrative niche for himself after winning the landmark Eminem case before the 9th Cir.

Stay tuned…

Complaint:
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Did You Ever Wonder How BMI Calculates Your Royalties?

An interesting battle is raging in the Central District of California, pitting Broadcast Music Inc. (“BMI”) against one of its own publishers, Deyon Davis (through his publishing company Cinematic Tunes, Inc. (“CTI”)).  The dispute is over royalties BMI paid to Davis for performances of his works on two seasons of the reality show So You Think You Can Dance and one season of the reality show Superstars of Dance.  BMI claims that the cue-sheets on which it relied in making payments to Davis were falsified, at the request of Davis, resulting in over-payments of $1.5 million—nearly $725,00 paid to him individually, nearly $530,000 paid to Deyon Davis Music, and more than $270,000 paid to CTI.  Davis claims that he had nothing to do with the allegedly falsified cue-sheets and that “BMI unlawfully assumed the role of ‘judge and executioner’ with respect to the parties’ dispute, purporting to adjudicate the dispute in its favor and then engaged in self-help by seizing Counterclaimants’ subsequently earned royalties to satisfy its ‘judgment.'”

The war of words is fierce.  In his counterclaim, Davis calls BMI “a bully. BMI deceptively lures unsuspecting songwriters and publishers into its playground (BMI ‘s performing rights licensing and royalty system) with the promise of fun (the fair calculation and payment of royalties) and then spends the day bossing them around, beating them up and taking their toys.”

In its Motion to Dismiss Davis’ Counterclaims, BMI notes Davis’ “fraud-based criminal
convictions” and describes Davis’ actions as “intentionally undertaking to deceive a not-for-profit-making music licensing company into paying you considerably more than your share of royalties to the direct detriment of your fellow songwriters, composers, and music publishers, and then refusing to return any of those royalties when you get caught…”, which BMI characterizes as “dishonest.”

Interestingly, the publisher agreement on which BMI bases it’s breach of contract claim contains a broad mandatory arbitration provision, including exclusive jurisdiction in New York. (see attached).  It’s not clear why BMI choose to file suit in the Central District of California, except that some of the parties in the case were not BMI-affiliated writers or publishers.  I think I would have filed a motion to compel arbitration.

Davis’ Counterclaims
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BMI’s Motion to Dismiss
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BMI’s Publisher Agreement with Davis
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ZFT Zapped: District Court Rules Against Frank Zappa’s Widow

The Zappa Family Trust (“ZFT”) was, indeed, zapped on August 17, 2011 when the District Court for the Southern District of New York squashed their attempts to collect, among other awards, $150,000 per alleged copyright infringement from Ryko, a subsidiary of Warner Music Group.  In a Memorandum and Order, dated August 17, 2011, Judge William H. Pauley, III granted Ryko’s motion for summary judgment, in part and denied in part.  Zappa’s motion for summary judgment was denied.

Frank Zappa released more than sixty albums before his death in 1993, including Burnt Weeny Sandwich, Weasels Ripped My Flesh, and Joe’s Garage Acts I, II and III.  After his death, all rights, title and interests in his sound recordings passed to ZFT.  In 1994, ZFT entered into an agreement with Ryko (the “1994 Agreement”), pursuant to which Ryko paid $20 million for “certain rights in and to the actual versions and mixes of the sound recordings commercially released or exploited with the authority of Zappa prior to October 6, 1994.”  The 1994 Agreement did contain certain restrictions on Ryko’s ability to exploit the masters; i.e., paragraph 12.11 of the 1994 Agreement provides that “[n]o remixes, edits, changes in technical standards or other changes will be made by Ryko to the Subject Masters which would impact the integrity of the work as embodied in 1610 or 16301 final version of each of the Subject Masters delivered.”[1] (italics mine)

Zappa’s widow, Adelaide Gail Zappa, brought suit against Ryko as the sole trustee of ZFT, which owns the rights to Zappa’s music.  Specifically, ZFT alleged that Ryko marketed specific Zappa recordings in ways not allowable under their 1994 agreement.  ZFT further alleged Ryko failed to properly account for mechanical royalties.  Ryko counterclaimed with copyright infringement and breach of contract claims of its own.

Significant to the Court was the lack of specificity defining the term, “technical standard.”  In fact, there was no definition.  The 1994 agreement specified, in part, that Ryko could not exercise its right to exploit the Zappa music in a way that changed the technical standard of Zappa’s work.

The Court specifically addressed digital downloads and vinyl records; and, found that digital downloads might be a violation of the agreement; but the extrinsic evidence used to interpret the violation of Zappa’s “technical standard,” was inconclusive.  In addition, the Court found that vinyl records, commonly used throughout Zappa’s career, were not a degradation of Zappa’s music

The Court dismissed other ZFT claims based on the ambiguity of terms in the 1994 agreement and as being barred by a 1999 settlement between ZFT and Ryko.   Other ZFT claims were barred because ZFT failed to show copyright violation, they were improperly raised, or ZFT provided insubstantial evidence.

The Court’s order is below:
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The 1994 Agreement is below:
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[1] 1610 and 1630 “refer to a format of music delivery equal to CD-quality audio.”

Clinton Sings Sad Tune in Court but Loses

Singer, composer, performer, George Clinton’s request for $33 million, in allegedly unpaid royalties, hit a wrong note with the Central District of California Court. In fact, Judge Philip S. Gutierrez, on remand from the 9th Circuit and having allowed Clinton to amend his earlier complaint to add “for the first time in this protracted litigation … a new claim for alleged underpayment of ‘internet royalties, i.e., exploitation by ‘download providers . . . and mastertone providers . . . for permanent downloads’” against Universal Music Group Inc. (UMG), has granted UMG’s motion for summary judgment.

In this case Clinton claimed that UMG failed to pay him appropriate royalties. UMG’s defense to these claims was simple: they argued that Clinton’s claims were barred by their 1980 performance contract, a copy of which is below. The contract provided that Clinton must specifically object to any royalty statement within 3 years of receiving the statement.  One problem was that UMG apparently had trouble finding Clinton:

“For a period of time, UMG was unable to locate Clinton and the royalty statements it sent were returned as undeliverable. In the spring or summer of 2001, UMG did locate Clinton and provided him with his first royalty statements and payments from Defendants for the exploitation of Parliament sound recordings under the 1980 Agreement. The royalty statement covered the period from 1996 through 2000, and the payment amounted to over $800,000.”

The contract further provided that Clinton was deemed to have received the statement, unless he informed UMG otherwise, within 90 days of the end of the statement period. There was controversy over a subsequent agreement which, as written, tolls any relevant statute of limitations regarding contract rights of the 1980 agreement. Clinton argued that the specified tolling also tolled contractual obligations such as the requirement that he provide specific objection to royalty statements. The issue at hand was whether Clinton ever timely and properly objected to payment of “internet royalties.” This Court found that he did not, stating, “[T]he 1980 Agreement bars Clinton’s internet royalty claims here.” Clinton was contractually barred from challenging royalty statements for the period of 1991-1999 because, in part, “in each of the two audit reports, Clinton not only categorizes the different types of royalties allegedly owed (omitting any reference to internet or internet-related royalties), but also itemizes each category and identifies the infringing records, artists, television shows, and movies, without ever referencing the type of claim he now raises as owed internet royalties.” As to later royalty statements and other related claims, Clinton’s argument became irrelevant because even if the contractual obligations were tolled, as applied to royalty statements provided after the tolling agreement, the Court found that either Clinton did not have any evidence to support his claims or there is no genuine dispute of the claim stated.

However, the Court did deny UMG’s request to deny Clinton an accounting based on their finding that there could be a material disagreement as to the relevant facts.

The court’s order is below:
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Clinton’s Production Agreement is below:
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