ABKCO Music, Inc. v. Harrisongs Music, 71 Civ. 602.

• Decision Date: 19 February 1981
• Docket Number: No. 71 Civ. 602.,71 Civ. 602.
• Parties: ABKCO MUSIC, INC., Plaintiff, v. HARRISONGS MUSIC, LTD., Harrisongs Music, Inc., George Harrison, Apple Records, Ltd., Apple Records, Inc., Broadcast Music, Inc., and Hansen Publications, Inc., Defendants, v. ABKCO INDUSTRIES, INC. and Allen Klein, Additional Parties with Respect to the Counter-Claims.
• Court: U.S. District Court — Southern District of New York

508 F. Supp. 798

ABKCO MUSIC, INC., Plaintiff, v. HARRISONGS MUSIC, LTD., Harrisongs Music, Inc., George Harrison, Apple Records, Ltd., Apple Records, Inc., Broadcast Music, Inc., and Hansen Publications, Inc., Defendants, v. ABKCO INDUSTRIES, INC. and Allen Klein, Additional Parties with Respect to the Counter-Claims.

No. 71 Civ. 602.

United States District Court, S. D. New York.

February 19, 1981.

Pryor, Cashman, Sherman & Flynn, New York City, for ABKCO Music, Inc. and ABKCO Industries, Inc. and Allen Klein; Gideon Cashman, James A. Janowitz, Donald S. Zakarin, New York City, of counsel.

Santora, Shenkman & Kushel, New York City, for all defendants except Hansen Publications, Inc.; Joseph J. Santora, New York City, of counsel.

Barovick, Konecky, Braun, Schwartz & Kay, New York City, for Hansen Publications, Inc.; Richard Z. Lehv, David S. Rosenthal, New York City, of counsel.

Cleary, Gottlieb, Steen & Hamilton, New York City, for Apple Records Limited and Apple Records, Inc.; Albert S. Pergam, New York City, of counsel.

OPINION

OWEN, District Judge.

In this action by Bright Tunes Music Corporation for infringement of its copyright in the 1963 hit song "He's So Fine", I earlier concluded that defendant George Harrison had subconsciously plagiarized "He's So Fine" in arriving at the melody of his hit song, "My Sweet Lord", in 1971. Bright Tunes Music Corp. v. Harrisongs Music, Ltd., 420 F.Supp. 177 (S.D.N.Y.1976). I thereafter scheduled hearings to determine the damages flowing from that infringement and the parties responsible therefor, and extensive discovery commenced. Prior to the date for hearings, however, Bright Tunes sold, for $587,000.00, its copyright in "He's So Fine" and its rights in this litigation to ABKCO Music, Inc., of which Allen B. Klein, the "ABK" of ABKCO, is the moving spirit, owner, and principal officer. This immediately caused strong reaction from the Harrison interests¹ because ABKCO had been the exclusive business manager for George Harrison and his musical interests from November, 1970 to March 13, 1973,² the period in which the claim of infringement was first asserted.

Upon ABKCO being substituted as plaintiff herein, the Harrison interests amended their pleadings to assert, in one form or another, a breach of fiduciary duty by ABKCO, which, according to Harrison, disqualifies ABKCO from recovering in this action.

Testimony has now been taken on both the issue of damages and the question of ABKCO's disqualification. While I am of the view that ABKCO's conduct from 1975 to 1978 limits its recovery herein, see infra, it is nonetheless appropriate to determine first what the recovery would have been had ABKCO not become the plaintiff in the way it did, and to set forth the court's findings accordingly, albeit in somewhat summary fashion.

The earnings of the song "My Sweet Lord" have come from four principal sources: mechanical royalties,³ performance royalties,⁴ the sale of sheet music and folios, and the profits of Apple Records, Inc., the Harrison-owned manufacturer of the principal recordings of "My Sweet Lord".

Mechanical royalties attributable solely to "My Sweet Lord" total $260,103. Plaintiff contends that it is also entitled to some portion of the mechanical royalties Harrison received for the relatively unsuccessful songs on the same discs with "My Sweet Lord" which, it argues, would not have been earned but for the unusual popularity of "My Sweet Lord". In assessing plaintiff's argument, two things must be kept in mind. First, on the single record, the song "My Sweet Lord", a hit, was teamed with "Isn't It a Pity", a non-hit; on the twelve-inch album, "All Things Must Pass", "My Sweet Lord" was one of twenty-two Harrison songs, only one other of which achieved even modest popularity. Second, exactly the same mechanical royalty is payable to Harrison for each of his songs on any given record, whether memorable or not. Common sense dictates that a hit song contributes more to the sale of a record than does a less popular song. In such circumstance, mechanical royalties paid to a composer for a less-than-memorable song on the record are, in fact, earned by the memorable song which has caused the public to purchase the record. While not susceptible to quite the precision one might prefer, a reasonable determination of the total earnings allocable to "My Sweet Lord" can be made here and is an appropriate item of damage for the court to award.⁵ Lottie Joplin Thomas Trust v. Crown Publishers, Inc., 456 F.Supp. 531 (S.D.N.Y.1977), aff'd 592 F.2d 651 (2d Cir. 1978).

I turn first to the earnings of the single. By a ratio of sixteen to one disc jockeys played "My Sweet Lord" more frequently than the song on the single's flip side, "Isn't It a Pity". With respect to the album "All Things Must Pass", containing twenty-two songs, disc jockeys played "My Sweet Lord" seventy percent of the time that they aired any song from the album. I therefore find that, conservatively, seventy percent of the total mechanical royalties earned by the single were attributable to "My Sweet Lord".⁶ In addition, I find, again calculating conservatively, that fifty percent of the mechanical royalties earned by the album "All Things Must Pass" are attributable to "My Sweet Lord".

The album entitled "The Best of George Harrison" is another matter. The trial record provides me with no guidance as to the relative popularity of a number of the album's songs. Since this album was issued several years after the initial release of "My Sweet Lord", has a number of different songs, and is entitled "The Best", I conclude that these are all songs with substantial popularity. With respect to "The Best of George Harrison", therefore, I find that plaintiff has failed to establish that "My Sweet Lord" earned more than its own mechanical royalties.

The foregoing findings yield the following calculation of gross earnings by "My Sweet Lord" from mechanical royalties: from the single, $54,526.00; from the album "All Things Must Pass", $588,188.00; from "The Best of George Harrison", $6,887.00; for a total of $646,601.00.⁷

Performance royalties, which came solely from BMI figures, total $359,794.00, and sheet music earnings total $67,675.00.

Apple Records, Inc., the Harrison-owned manufacturer of his records, has a "spread"⁸ on the manufacturing of records, which constitutes earnings to Harrison. Applying the ratios comparing the air play given "My Sweet Lord" to the air play of the various other Harrison songs, i. e., the ratios used above to calculate mechanical royalties, see supra, I find that Apple's earnings from the "spread" that are attributable to "My Sweet Lord" are: from the single, $130,629.00; from "All Things Must Pass", $925,731.00; and from "The Best of George Harrison", $21,598.00;⁹ for a total of $1,077,958.00.

The total gross earnings of "My Sweet Lord" as calculated above are $2,152,028.00. From this total the Harrison interests contend there must be deducted a number of expense items, which I now treat seriatim. The Euro-Atlantic management fee, legal and professional fees, certain salaries, certain telephone expenses, United States public relations and promotions, and certain income taxes, are all disallowed. Basically, Harrison has not proven, even with minimum specificity, that those expenses are attributable to "My Sweet Lord". A certain twenty percent ABKCO commission already paid to ABKCO and the three and one-quarter percent commission paid to the Harry Fox Agency, totalling $18,712.00, are both allowed, thereby reducing the total earnings figure set forth above to $2,133,316.00.

Next, I must determine the portion of the above income which should be attributed to factors, other than the plagiarized music, affecting public interest in the song "My Sweet Lord".¹⁰ Several matters must be considered. Harrison, an artist with an international "name," supplied his own text. How much of the income is attributable to the text, to the selling power of his name? Although this is not an area susceptible to precise measurement, I conclude that three-fourths of "My Sweet Lord's" success is due to plagiarized tune and onefourth to other factors, such as the words and the popularity and stature of George Harrison in this particular field of music.¹¹ I weigh the music heavily in this case because the music had already demonstrated its outstanding "catchiness" in 1963 when it carried the rather unexceptional, romantic text of "He's So Fine" to first place on the Billboard charts in the United States for five weeks.

Given all the foregoing, I conclude that $1,599,987.00 of "My Sweet Lord's" earnings are reasonably attributable to the music of "He's So Fine".

Now, however, I must turn to the troublesome question of whether ABKCO may be awarded the amount calculated above or whether its conduct vis-a-vis Harrison, its former employer, regarding this very litigation in any manner limits or destroys its right of recovery.

As has been stated earlier, in the years 1971-73, Allen B. Klein, through ABKCO, the present plaintiff, was the overall business manager of George Harrison and his musical interests. ABKCO took care of all the financial matters, including negotiating contracts and keeping the financial books and records. For these services ABKCO was paid twenty percent of the gross income from the Harrison ventures. As Harrison's business manager, Klein obviously was aware of both the artistic and financial success of "My Sweet Lord". It was during ABKCO's tenure as business manager that this suit was commenced by Bright Tunes. It was ABKCO that obtained an opinion from musicologist Harold Barlow as to the suit's lack of merit.¹² ABKCO thereafter engaged experienced counsel in New York City to defend; all of these actions were taken before ABKCO's own services were terminated by Harrison in March 1973. I do not find that any of the steps taken by ABKCO, while acting as Harrison's business...