Bridgeport Music, Inc. v. Diamond Time, Ltd.

Citation371 F.3d 883
Decision Date18 June 2004
Docket NumberNo. 03-5003.,No. 03-5656.,03-5003.,03-5656.
PartiesBRIDGEPORT MUSIC, INC.; Westbound Records, Inc., Plaintiffs-Appellants, Southfield Music, Inc.; Nine Records, Inc., Plaintiffs, v. DIAMOND TIME, LTD., Defendant-Appellee, Irving Lorenzo, d/b/a DJ Irv Music; TVT Music, Inc.; TVT Records, Inc., a/k/a Tee Vee Toons, Defendants.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Richard S. Busch (argued and briefed), D'Lesli M. Davis (briefed), Jeannine Huber, King & Ballow, Nashville, TN, for Plaintiffs-Appellants in Nos. 03-5003, 03-5656.

R. Horton Frank III (argued and briefed), Stewart, Estes & Donnell, Nashville, TN, for Defendants-Appellees in Nos. 03-5003, 03-5656.

Before: GUY and GILMAN, Circuit Judges; BARZILAY, Judge.*

OPINION

RALPH B. GUY, JR., Circuit Judge.

Plaintiffs, Bridgeport Music, Inc., and Westbound Records, Inc., appeal from the decision granting summary judgment to defendant Diamond Time, Ltd., a copyright clearance company, on their claims of common law negligence and copyright infringement involving the use of samples in the rap release "4 My Click." Plaintiffs argue that the district court erred both in finding these claims were barred by the applicable statutes of limitations and in rejecting equitable estoppel as a basis to avoid the limitations bar. In a separate appeal, plaintiffs challenge the post-judgment award of attorney fees and nontaxable costs to Diamond Time as a prevailing defendant under 17 U.S.C. § 505. No other parties or claims are before us.1 After review of the record and the applicable law, we find no error and affirm.

I.

The claims against Diamond Time, a copyright clearance company, were initially asserted in a complaint filed May 4, 2001. That original complaint alleged nearly 500 counts against approximately 800 defendants for copyright infringement and other state law claims based on music sampling. "Sampling," common in rap, hip-hop, and urban music, typically involves making a digital copy from a master sound recording and using a piece in the making of a new work. Sound recordings and their underlying musical compositions are separate works with their own distinct copyrights. Bridgeport Music, Inc. v. Still N The Water Publ'g, 327 F.3d 472, 475 n. 3 (6th Cir.), cert. denied, 540 U.S. 948, 124 S.Ct. 399, 157 L.Ed.2d 279 (2003).

The amended complaint, filed after the district court severed the initial pleading into 476 separate actions, alleged that the rap CD single "4 My Click" sampled from the composition "The Most Beautifullest Thing In the World (Green Eyed Remix)" ("The Most"), and from both the composition and sound recording "Funky Worm." Bridgeport Music claims to own copyrights in both music compositions, while Westbound Records claims to hold a copyright in only the sound recording "Funky Worm."2

Diamond Time's business included sample clearance services, which refers to the process of obtaining permission to use a sample in a new musical work. According to Diamond Time's website, it offered sample clearance services in two phases. The first included locating the copyright owners, requesting permission to use the sample, and negotiating the fees for its use. The second phase, called "Licensing/Contract Administration," included negotiating agreeable terms with the copyright holders; issuing a Usage Report confirming the terms and requesting a formal written agreement; and overseeing the trafficking, execution, and payment of those agreements.

Catherine Carapella, Diamond Time's representative, testified that when engaged to perform clearance services, Diamond Time's practice was to contact the proprietor or owner of the copyrights in the material its client wanted to use, identify itself and the client on whose behalf it was acting, describe the proposed use and ask for terms on which it would permit the use. The owner would normally advise Diamond Time of its terms and Diamond Time would seek the consent of its client. This would end phase one, at which time Diamond Time's client would decide how it wanted to proceed. The client then dictated what phase two services, if any, it would have Diamond Time undertake.

On January 24, 1995, TVT Records released the CD single containing three versions of "4 My Click" by the rap artists known as Cash Money Click. TVT Records owned the sound recording "4 My Click," while TVT Music and DJ Irv Music each held a 50% interest in the composition "4 My Click." TVT Records had a policy of requiring clearance of all samples in its releases and depended on the "creative types" to identify any samples in a new recording. TVT Records hired Diamond Time to handle clearance of the sample from "The Most" in "4 My Click." Diamond Time maintains that it was not asked to obtain clearance for use of any other sample in "4 My Click."

In January 1995, on the same day that "4 My Click" was released, TVT Records obtained permission to use the sample "The Most" in "4 My Click" from Songs of PolyGram. On October 3, 1995, Diamond Time representative Drea Kaplon wrote to Jane Peterer, the administrator for Bridgeport Music, seeking permission from Bridgeport to use the sample from the composition "The Most."3 The letter states that she was

unaware, until this matter was well into the licensing process, that Zomba Music could only give clearance on the "green-eyed" version of "The Most Beautifullest Thing In The World" and that Bridgeport Music was a co-publisher on this song along with Zomba Music and PolyGram Music.

Accordingly, enclosed please find a cassette of both the new and sampled song for your review. We would like to obtain clearance for the use of "The Most Beautifullest Thing In The World (Green-eyed version)" in "4 My Click" from Bridgeport Music on a pro-rata basis with both Zomba and PolyGram Music as per the writer/publisher splits listed in the draft of the Zomba Publishing Agreement.

Jane, I look forward to your response so that we may finalize this in a timely manner. Please call me should you have any questions.

On November 20, 1995, Kaplon made a handwritten note on a copy of this letter and faxed it to Peterer. Kaplon's note stated: "Jane: Joan @ PolyGram has quoted 50% © pro-rata with Bridgeport. Is this o.k. with you? Please advise so we can wrap this matter up quickly. Zomba Music (who has some publishing on this as well) has agreed to go pro-rata. Thanks! Drea." Under this, also handwritten, is Peterer's response: "Ok, Jane Peterer, 11-20-95."4 On November 27, 1995, Kaplon sent Peterer a Usage Report confirming the terms offered; indicating that Diamond Time's client, TVT Records, was proceeding in reliance on the quote; and requesting that Peterer prepare and forward a formal agreement directly to TVT Records.

On December 10, 1995, Peterer sent a formal agreement, called a Release and Agreement, directly to TVT Records for signature by TVT Music and DJ Irv Music. Under that co-publishing agreement, Bridgeport would receive an 8.33% interest in the composition "4 My Click." Peterer sent Kaplon a copy of the cover letter relating to this agreement on the belief that Diamond Time would continue to participate until the formal agreement and mechanical licenses were signed. Peterer placed a copy of that letter in a file of "pending matters," where it remained until her deposition in June 2002.

On the same day that the Release and Agreement was sent to TVT Records, Peterer faxed a separate request to Kaplon asking for information that was needed to prepare the mechanical license for TVT Records. Kaplon did not respond to that request. Diamond Time maintains that its involvement in the clearance process for "4 My Click" ceased once the Usage Report had been sent. Plaintiffs dispute this, arguing that Diamond Time "dropped the ball" and failed to complete its assignment from TVT Records to oversee the trafficking and execution of the formal agreement. The district court did not attempt to resolve this dispute.5

Whatever the extent of the services Diamond Time had been engaged to provide in this case, Peterer admitted that she had no further written correspondence about "4 My Click" with either TVT Records or Diamond Time. The only contact Peterer claimed to have had occurred in several telephone conversations with Kaplon relating to "4 My Click" and other matters, during which Peterer urged Kaplon to see that the Agreement was signed. Peterer claims that she relied on Kaplon's assurances that she would "get the deal finalized." There is, however, no indication of when these conversations took place.

On September 5, 1996, TVT Records issued a Deletion Notice for a number of titles, including "4 My Click," which meant that no further copies would be manufactured or sold. The notice advised that requests for return of any of the listed products had to be made in writing no later than November 4, 1996, and that the products had to be received by TVT Records no later than January 10, 1997. The profit and loss statement for the artist Cash Money Click was prepared through December 31, 1998, in order to be sure that it included all sales and returns. TVT Records stated, however, that it did not receive any returns or unsold copies after April 1997. Plaintiffs argued that there must have been sales because the online service All Music Guide reported that "4 My Click" was still "in print" as of August 2000. Granting summary judgment to the TVT defendants, the district court found plaintiffs had failed to present evidence that any sales or returns had occurred after May 4, 1998. Plaintiffs' appeal from that decision was voluntarily dismissed as a result of a settlement reached between plaintiffs and the TVT defendants.

Diamond Time sought summary judgment on the grounds that it committed no acts of direct or contributory infringement, that it owed no duty on which the negligence claim could be based, that the negligence claim was...

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