199 Misc. 786, Metropolitan Opera Ass'n v. Wagner-Nichols Recorder Corp.
|Citation:||199 Misc. 786, 101 N.Y.S.2d 483|
|Party Name:||METROPOLITAN OPERA ASSOCIATION, INC., et al., Plaintiffs, and COLUMBIA RECORDS, INC., Intervener, Plaintiff, v. WAGNER-NICHOLS RECORDER CORPORATION et al., Defendants.|
|Case Date:||October 18, 1950|
[Copyrighted Material Omitted]
Leon Lauterstein, Lincoln W. Lauterstein, Jacob L. Isaacs and Paul C. Guth for Metropolitan Opera Association, Inc., plaintiff.
Joseph A. McDonald for American Broadcasting Company, Inc., plaintiff.
Godfrey Goldmark, Ralph F. Colin and Ambrose Doskow for intervener, plaintiff.
Bernard A. Green for Wagner-Nichols Recorder Corporation and another, defendants.
The plaintiffs Metropolitan Opera Association, Inc. (hereinafter referred to as Metropolitan Opera), and American Broadcasting Company, Inc. (hereinafter referred
to as American Broadcasting), and the intervening plaintiff, Columbia Records, Inc.(hereinafter referred to as Columbia Records), move for a preliminary injunction to restrain the defendants from recording, advertising, selling or distributing musical performances of Metropolitan Opera broadcast over the air, and from using the name 'Metropolitan Opera' or any similar name which is calculated to mislead the public into believing that the records sold by the defendants are records of performances made or sold under the control or supervision or with the consent of the plaintiffs.
The defendants, by cross motion, seek: (1) A dismissal of the complaints on the ground that they fail to state facts sufficient to constitute a cause of action and are insufficient as matter of law; or (2) to compel the plaintiffs to serve an amended complaint which separately states and numbers the causes of action alleged; or (3) for a severance of the parties plaintiff and separate trials of their respective causes of action.
After the submission of these motions, upon its application, the plaintiff Columbia Records was granted leave to intervene and serve its complaint. The defendants' cross motion will therefore be treated as addressed to both the complaint of Metropolitan Opera and American Broadcasting and the complaint of the intervening plaintiff, Columbia Records.
The complaints of the plaintiffs allege in substance:
Metropolitan Opera is an educational membership corporation. Over a period of sixty years it has, by care, skill and great expenditure, maintained a position of pre-eminence in the field of music and grand opera. By reason of this skill and pre-eminence it has created a national and world-wide audience and thereby a large market for radio broadcasts and phonograph recordings of its performances. Metropolitan Opera has sold the exclusive right to broadcast its performances and the exclusive right to record its performances, as set forth below, and uses the proceeds to defray part of its operating expenses.
It has sold the exclusive right to make and sell phonograph records of its operatic performances and to use the names 'Metropolitan Opera Orchestra,' 'Metropolitan Opera Chorus' and any other names identified with Metropolitan in connection with these phonograph records to Columbia Records, which has acquired a reputation and good will of great value. This contract is for a five-year period ending December 31, 1951. The exclusive nature of these rights is of the essence of the contract. In payment for these exclusive rights Metropolitan Opera receives royalties on records sold, with a guaranteed
minimum of $125,000 during the five-year term of the contract. Columbia Records is required to pay the entire cost of each performance of an opera which it records. Metropolitan Opera has reserved to itself the right to approve all phonograph records of its performances before they may be offered for sale to the public.
Pursuant to this contract Metropolitan Opera's performances of three operas have been recorded and are now being offered for sale and sold. Columbia Records has incurred very substantial expenses in making these recordings and in preparing for the recording of additional operas, and it has extensively advertised the records and its exclusive right to record Metropolitan Opera performances.
Metropolitan Opera has sold the exclusive right to broadcast its opera performances during the 1949-50 season to American Broadcasting, for which Metropolitan Opera receives $100,000. Under this contract American Broadcasting is prohibited from making recordings of such performances except for certain limited purposes related to broadcasting. Negotiations for a similar contract for the 1950-51 and 1951-52 opera seasons are in progress. Under the contract for the 1949-50 season, American Broadcasting broadcast Metropolitan Opera performances of eighteen operas between November 26, 1949, and March 25, 1950.
Since November 26, 1949, the defendants have recorded these broadcast performances of Metropolitan Opera and have used their master recordings to make phonograph records of Metropolitan Opera performances. The defendants have advertised and sold these records as records of broadcast Metropolitan Opera performances. By reason of this publicity and the reputation of Metropolitan Opera, these records have aroused wide interest. Since the defendants, unlike Columbia Records, pay no part of the cost of the performance of the operas and are held to no standard of artistic or technical excellence, they incur only the very small cost of recording these performances 'off the air.' The quality of their recordings is inferior to that of Columbia Records and is so low that Metropolitan Opera would not have approved the sale and release of such records to the general public. By reason of their negligible costs, defendants are able in competition with Columbia Records to sell their records at considerably less than those of the latter, with a consequent loss of revenue to Columbia Records and Metropolitan Opera.
By their activities the defendants have:
Appropriated and exploited for their own benefit the result of the expenditures, labor and skill of Metropolitan Opera and American Broadcasting as embodied in the broadcast performances;
Diminished the possibility of renewal of Metropolitan Opera's valuable contractual relations with American Broadcasting;
Impaired Metropolitan Opera's revenues from the sale of authorized operatic recordings;
Impaired the value of future exclusive recording privileges guaranteed by Metropolitan Opera;
Wrongfully interfered with valuable contractual rights of the plaintiffs;
Traded on and appropriated the value of the name and reputation for artistic excellence of Metropolitan Opera and appropriated the market created by Metropolitan Opera for defendants' phonograph records, and
Endangered the reputation and good will of Metropolitan Opera and the sale of records of its performances by the sale of records of such low quality that Metropolitan Opera would not have approved their release to the public.
These activities of the defendants are continuing and will continue to have the same harmful effect on the plaintiffs.
The plaintiffs therefore ask for an injunction restraining the defendants:
From using, recording, advertising, selling or distributing musical performances of the plaintiff Metropolitan Opera, broadcast over the air, or phonograph recordings thereof;
From using the name 'Metropolitan Opera' or the name 'Metropolitan' or any similar name having the tendency to mislead the public into believing that the records sold by defendants are made in connection with or under the control and supervision of the plaintiffs or sold with their consent, and
From using, recording, advertising or selling records of any performance broadcast over the facilities of American Broadcasting.
The complaints also ask for damages and for an accounting.
The defendants urge that the complaints fail to state a cause of action in that they do not allege the defendants are 'palming off' their recordings as those of plaintiffs, or that plaintiffs are in competition with the defendants. They further urge that plaintiffs have no property right in the broadcast performances
and that the defendants are therefore free to record these performances and sell their recordings.
The defendants' cross motion attacking the complaints must necessarily be considered first.
In passing upon the question of the sufficiency of a complaint alleging unfair competition it is helpful to hear in mind the origin and evolution of this branch of law. It originated in the conscience, justice and equity of common-law judges. It developed within the framework of a society dedicated to freest competition, to deal with business malpractices offensive to the ethics of that society. The theoretic basis is obscure, but the birth and growth of this branch of law is clear. It is an outstanding example of the law's capacity for growth in response to the ethical as well as the economic needs of society. As a result of this background the legal concept of unfair competition has evolved as a broad and flexible doctrine with a capacity for further growth to meet changing conditions. There is no complete list of the activities which constitute unfair competition (1 Nims on Unfair Competition and Trade-marks [4th ed., 1947], Chs. I, II; Handler, Unfair Competition, 21 Iowa L. Rev. 175; Schechter, The Rational Basis of Trademark Protection, 40 Harv. L. Rev. 813).
The statement of a sufficient cause of action in unfair competition, in the last analysis, is therefore dependent more upon the facts set forth and less upon technical requirements than in most causes of action. This may best be illustrated by a consideration of the objections raised by the defendants.
The defendants contend that no cause of action is stated due to the absence of an allegation of 'palming off.' One of the inferences...
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