Isbell v. DM Records, Inc. (In re Isbell Records, Inc.)

Citation113 U.S.P.Q.2d 1222,774 F.3d 859
Decision Date18 December 2014
Docket Number14–40545.,Nos. 13–40878,s. 13–40878
PartiesIn the Matter of ISBELL RECORDS, INCORPORATED, Debtor, Alvertis Isbell, doing business as Alvert Music, Plaintiff–Appellee, v. DM Records, Incorporated, Defendant–Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

774 F.3d 859
113 U.S.P.Q.2d 1222

In the Matter of ISBELL RECORDS, INCORPORATED, Debtor
Alvertis Isbell, doing business as Alvert Music, Plaintiff–Appellee
v.
DM Records, Incorporated, Defendant–Appellant.

Nos. 13–40878
14–40545.

United States Court of Appeals, Fifth Circuit.

Dec. 18, 2014.


774 F.3d 862

Richard S. Busch, Esq., Attorney, King & Ballow, Nashville, TN, William S. Helfand, Chamberlain, Hrdlicka, White, Williams & Aughtry, Houston, TX, for Plaintiff–Appellee.

Connis Ostin Brown, III, Esq., Brown Robert, L.L.P., Fort Lauderdale, FL, for Defendant–Appellant.

Appeals from the United States District Court for the Eastern District of Texas.

Before HIGGINBOTHAM, CLEMENT, and HIGGINSON, Circuit Judges.

Opinion

STEPHEN A. HIGGINSON, Circuit Judge:

The popular song Whoomp! (There It Is)1 was released in 1993. For more than half of the song's existence—since 2002—the parties to this action have been litigating the question of who owns the composition copyright to the song. After an eleven-day trial, the district court ruled that, as a matter of law, Plaintiff–Appellee Alvertis Isbell owned the copyright and Defendant–Appellant DM Records, Inc. was liable for copyright infringement. The jury awarded over $2 million in damages. DM Records appeals these and several other district court decisions. We AFFIRM the district court in all respects.

FACTS AND PROCEEDINGS

In 1993, Cecil Glenn and Steven James (collectively, “Tag Team”) wrote and produced the song Whoomp! (There It Is) (“Whoomp!”). Tag Team entered into an Exclusive Producers Agreement (“Recording Agreement”) with Bellmark Records (“Bellmark”) that governed the relationship between Tag Team and Bellmark. The Recording Agreement discussed, inter alia, the ownership of the sound recordings and the payment of royalties. Exhibit B to the Recording Agreement, titled “Assignment of Compositions and Rights to Copyright” addressed Whoomp!'s composition copyright. The first paragraph stated:

[F]or good and valuable consideration, receipt of which is hereby acknowledged, the undersigned Assignors do hereby sell, assign, transfer and set over unto Bellmark's affiliated designee publisher, its successors and assigns, fifty
774 F.3d 863
percent (50%) of the entire rights, title and interests throughout the world and universe, including, without limitation, the copyrights and any registration and copyright applications relating thereto....

(emphasis added). The second paragraph stated:

and fifty percent (50%) of the right, title and interest of the undersigned Assignors, vested and contingent therein and thereto, subject to the terms and conditions of the Memorandum Agreement between Assignors and Assignee dated effective March 30, 1993 and for the term of the copyrights and all renewals and extensions thereof.

The third paragraph stated:

Assignors agrees that the Assignee(s) has the sole, exclusive worldwide and universal right to administer and exploit the copyrights and musical composition, to print, sell, dramatize, use and license any and all uses of the copyrights and compositions, to execute in Assignee(s) own name any and all licenses and agreements whatsoever affecting or respecting the compositions and copyrights.... This statement of exclusive rights is only in clarification and amplification of the rights of Assignee(s) and not in limitation thereof.

Alvertis Isbell (“Bell”) was the president of Bellmark, which was in the business of owning sound recordings. In 1977, Bell formed his own music publishing company, Alvert Music.

In 1997, Bellmark filed for bankruptcy in the Eastern District of Texas. Alvert Music did not file for bankruptcy. The bankruptcy court converted the Chapter 11 proceeding to a liquidation case under Chapter 7. In 1999, following bankruptcy court approval, DM Records, Inc. (“DM”) purchased Bellmark's assets for $166,000. The assets subject to the sale were not defined, but rather included “all property of the company.” The order approving the sale provided: “the sale of purchased assets is made as is, where is, without any representations or warranties concerning the estate's right, title or interest, if any, in such assets.” Bellmark's bankruptcy case was closed in 2001. After purchasing Bellmark's assets, DM exploited the composition copyright of Whoomp!.

In 2002, Bell (doing business as Alvert Music) filed this copyright infringement action against DM in the Northern District of Texas seeking a declaratory judgment that Alvert Music—not DM, as purchaser of Bellmark's assets—is the rightful owner of the composition copyright for Whoomp!.2 Bell also sought damages for the alleged infringement. The action bounced around several courts before landing in the Eastern District of Texas in 2007.3

In 2008, the district court granted DM's motion to dismiss the complaint for lack of

774 F.3d 864

standing, finding that, in 2004, Bell had assigned to Bridgeport Music half of his interest in the composition copyrights at issue and all of his interest in copyright infringement actions. Bell appealed the dismissal and this court reversed and remanded to the district court.

Finally, in 2012, the case went to trial. At trial, the parties each elicited testimony about the Recording Agreement and the parties' subsequent actions that they claimed proved that either Bellmark or Alvert Music was assigned the composition copyright. After the close of evidence at trial, both Bell and DM moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a). Bell asked the district court to rule, as a matter of law, that the Recording Agreement and events surrounding the Recording Agreement showed that Tag Team transferred fifty percent of the Whoomp! composition copyright to Alvert Music. DM asked the district court to rule that Bell could not show that he was intended to be a third party beneficiary to the Recording Agreement and that Bellmark was the only assignee. After hearing extensive oral argument on the motions, the district court granted Bell's motion and denied DM's motion. Specifically, the court found that: 1) the interpretation of the Recording Agreement was a question of law under California law; 2) Bellmark is a separate entity from its affiliated designee publisher; and 3) Bellmark's affiliated designee publisher was Alvert Music. Thus, Alvert Music was the owner of Whoomp! and DM was liable for copyright infringement.

After ruling on the ownership of the composition copyright as a matter of law, the district court submitted the question of damages to the jury. Bell's counsel made a closing statement focused largely on DM's willfulness in infringing the copyright (including calling DM a thief), to which DM did not object. DM's counsel also gave a closing statement, in which he rebutted Bell's characterization of willfulness and argued that the infringement was unintentional. The jury found actual damages of $2,131,482.28 and statutory damages of $132,500 for DM's willful infringement of the Whoomp! composition copyright. Bell elected to recover actual damages for DM's infringement of Whoomp!, and the district court entered a judgment to that effect.

After trial, DM filed a renewed motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) and/or a motion for a new trial under Rule 59. In its motion, DM argued for the first time that, even if the district court correctly found Alvert Music to be the assignee of fifty percent of the rights to the composition copyright, the court erred in not reading the Recording Agreement to have assigned the other fifty percent interest to Bellmark. DM also urged the district court to find that the damages proofs were rendered erroneous by the court's ruling on ownership, and that Bell's “abusive” closing argument deprived DM of a fair trial. The district court denied DM's Rule 50(b) motion. The court found that DM had waived its “two assignments” argument because it raised this new interpretation of the Recording Agreement for the first time in its Rule 50(b) motion. The court also considered DM's argument illogical because it would leave Tag Team with no ownership interest in the copyright. The court ruled that Bell's closing statement did not prejudice the jury. DM timely appealed the denial of its original and renewed motions for judgment as a matter of law and the final judgment.

After appealing the denials of its Rule 50 motions, DM moved in the district court for relief from the final judgment pursuant to Federal Rule of Civil Procedure 60(b).

774 F.3d 865

DM claimed that Bell withheld a 2006 Security Agreement (“Security Agreement”), which allegedly assigned copyright infringement claims for Whoomp! to another party. DM argued that Bell fraudulently withheld this document from DM and that the document showed that Bell lacked standing to pursue copyright infringement claims. A panel of this court remanded this case for the limited purpose of asking the district court to state, in writing,...

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  • Isbell v. DM Records, Inc. (In re Isbell Records, Inc.)
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • December 18, 2014
    ...774 F.3d 859In the Matter of ISBELL RECORDS, INCORPORATED, Debtor,Alvertis Isbell, doing business as Alvert Music, Plaintiff–Appellee,v.DM Records, Incorporated, Defendant–Appellant.Nos. 13–40878, 14–40545.United States Court of Appeals, Fifth Circuit.Dec. 18, Affirmed. [774 F.3d 862] Richa......

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