Corcovado Music Corp. v. Hollis Music, Inc.

• Decision Date: 05 January 1993
• Docket Number: No. 75,D,75
• Parties: 1993 Copr.L.Dec. P 27,050, 26 U.S.P.Q.2d 1632 CORCOVADO MUSIC CORP., Plaintiff-Appellant, v. HOLLIS MUSIC, INC., Bendig Music Corp., Songways Service, Inc., Defendants-Appellees. ocket 92-7399.
• Court: U.S. Court of Appeals — Second Circuit

Page 679

981 F.2d 679

1993 Copr.L.Dec. P 27,050, 26 U.S.P.Q.2d 1632

CORCOVADO MUSIC CORP., Plaintiff-Appellant, v. HOLLIS MUSIC, INC., Bendig Music Corp., Songways Service, Inc., Defendants-Appellees.

No. 75, Docket 92-7399.

United States Court of Appeals, Second Circuit.

Argued Sept. 3, 1992.

Decided Jan. 5, 1993.

Stuart Prager, New York City (Abeles Clark and Osterberg, of counsel), for defendants-appellees.

Howard Gotbetter, New York City, for plaintiff-appellant.

Before: FEINBERG, NEWMAN and CARDAMONE, Circuit Judges.

FEINBERG, Circuit Judge:

Plaintiff Corcovado Music Corp. (Corcovado) appeals from a judgment of the United States District Court for the Southern District of New York, Kevin T. Duffy, J., dismissing an action for copyright infringement on the condition that defendants submit to the jurisdiction of the Brazilian courts. For the reasons stated below, we reverse the judgment of the district court and remand.

I. Facts and Proceedings Below

In 1958 and 1960, the composer Antonio Carlos Jobim entered into a series of contracts with a Brazilian publisher, Editora Musical Arapua (Arapua), pursuant to which Arapua and its designee obtained United States copyrights for five songs (the Five Songs) ¹ composed by Jobim. Soon thereafter, Arapua assigned its copyrights in the Five Songs to Bendig Music Corp. (Bendig). Bendig in turn assigned the rights in one of the songs, the bossa nova classic "Desafinado," to Hollis Music, Inc. (Hollis). Songways Service, Inc. (Songways), an affiliate of Hollis, administers the rights in "Desafinado." Bendig, Hollis and Songways are all defendants in this action.

Jobim, apparently believing that he retained United States copyright renewal rights for the Five Songs, assigned those rights in 1987 and 1988 to plaintiff Corcovado. Corcovado's complaint alleges that after the expiration of the original term copyrights, defendants Bendig, Hollis, and Songways continued to receive payments in connection with the Five Songs notwithstanding Jobim's assignment of the renewal rights to Corcovado. Accordingly, the complaint alleges that defendants ² are infringing the renewal copyrights and seeks relief under the Copyright Act, 17 U.S.C. § 101 et seq.

Defendants moved to dismiss the complaint on the ground that the 1958 and 1960 contracts in which Jobim had conveyed copyrights to Arapua--negotiated and executed in Brazil and written in Portuguese--required interpretation by a Brazilian court. Defendants claimed that these contracts, which unquestionably conveyed original term copyrights, also conveyed renewal rights. They argued further that Corcovado, as Jobim's contractual successor, was bound by the forum selection clause in the Jobim-Arapua contracts. This clause, defendants contend, required the parties, i.e., Jobim and Arapua, to resolve any disputes in the courts of Brazil. Corcovado responded that it was suing to vindicate its rights under the Copyright Act, not as Jobim's successor under the Jobim-Arapua contracts. Therefore, the Jobim-Arapua contracts and the forum selection clause contained therein were relevant to the cause of action, if at all, only as a defense.

The district court agreed with defendants and granted the motion to dismiss with the following handwritten memorandum endorsement:

This case is by the initial agreement of the parties [i.e., Jobim and Arapua] to be resolved in the courts of Brazil. It involves citizens of Brazil and the interpretation of a Brazil contract and Brazil law. It is dismissed on condition that defendants submit to the jurisdiction of the Brazilian courts.

This appeal followed.

II. Discussion

A. Effect of forum selection clause

Corcovado argues to us that the district court erred, pointing out that Corcovado and defendants, the parties to this action, never had any agreement with each other, that none of the parties to this action is a citizen of Brazil (indeed, all--including Fox and BMI--are New York corporations doing business in New York) and that United States copyright law, not the law of Brazil, is involved. What is fundamentally at stake, Corcovado argues, is the vindication of rights under the Copyright Act, not the interpretation of a contract.

This is a copyright action. An action is a copyright action if it "arises under" the Copyright Act. ³ In a classic decision on the scope of federal jurisdiction under the 1909 Act, Judge Friendly set forth, in an explicitly tentative formulation that has nevertheless become authoritative, the circumstances under which an action "arises under" the Copyright Act:

Mindful of the hazards of formulation in this treacherous area, we think that an action "arises under" the Copyright Act if and only if the complaint is for a remedy expressly granted by the Act, e.g., a suit for infringement or for the statutory royalties for record reproduction, ... or asserts a claim requiring construction of the Act ... or, at the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim.

T.B. Harms Co. v. Eliscu, 339 F.2d 823, 828 (2d Cir.1964), cert. denied, 381 U.S. 915, 85 S.Ct. 1534, 14 L.Ed.2d 435 (1965). The present case falls squarely within Judge Friendly's first category: "[T]he complaint is for a remedy expressly granted by the Act, e.g., a suit for infringement." This fact makes it a "prototypical" copyright action. See 3 Nimmer on Copyright § 12.01[A] at 12-5. ⁴ The Jobim-Arapua contracts are relevant only as a defense. The complaint asserts no rights whatsoever arising out of those contracts, and they form no part of plaintiff Corcovado's case. Plaintiff's position is simply that the defendants infringed its renewal term copyrights.

Nevertheless, defendants argue that plaintiff is bound by the forum-selection clause in those contracts. Defendants cite Warner & Swasey Co. v. Salvagnini Transferica S.p.A., 633 F.Supp. 1209 (W.D.N.Y.), aff'd on basis of opinion below, 806 F.2d 1045 (Fed.Cir.1986), in which the court held that a forum-selection clause in a licensing agreement between an Ohio licensee and an Italian licensor applied to an action brought by the licensee against the licensor. Warner & Swasey is clearly distinguishable from the present case because the former concerns an action for breach of contract masquerading as patent infringement, whereas the latter is a bona fide copyright action, as noted above. In Warner & Swasey, unlike the present case, the suit was between the same two parties who drafted the forum-selection clause and it centered on the interpretation of the document containing that clause. Consequently, the court held that, "[a]lthough the cause of action pleaded is patent infringement, this action is ultimately based on alleged breach of the licensing agreement by the defendants." Id. at 1211.

More to the point is Cheever v. Academy Chicago Ltd., 685 F.Supp. 914 (S.D.N.Y.1988), in which the acclaimed author's heirs brought a copyright infringement action against a publishing company. While conceding that the defendant's "strongest argument" on a motion to dismiss was the forum-selection clause in a publishing agreement that designated Chicago as the forum, the court held that the clause did not apply because Mrs. Cheever was not "attempting to assert contractual rights arising from that agreement." Id. at 917; see also Cheever v. Academy Chicago Ltd., 690 F.Supp. 281, 285 (S.D.N.Y.1988) (related case). The Cheever case illustrates that where a plaintiff sues for copyright infringement and asserts no rights under a contract with the defendant containing a forum-selection clause, the forum-selection clause has no effect.

It is true, as defendants argue, that plaintiff Corcovado could receive a renewal term copyright from Jobim only if Jobim had something left to give. It can with equal justification be said of anyone who acquires anything by contract that he or she acquired it only if the seller had something left to give. That, and the fact that the defendants have a separate contract with the seller (Jobim) containing a forum-selection clause, do not, without more, entitle defendants to haul plaintiff halfway across the world to enforce its rights.

As an illustration, consider the following. Buyer 1 buys a house and proceeds to move in. Buyer 2 is already there and says: "You can't move in. Seller sold me this house a month ago." Buyer 1 replies, "Really? We'd better go to court," to which Buyer 2 answers: "Yes, but in Brazil, because when I bought the house from Seller, we put in a forum-selection clause. See you in Brazil." In this example, the essence of Buyer 1's claim is: "My deed is valid; you're interfering with my right of ownership." Buyer 2 wants to rewrite Buyer 1's claim as if it were based on a contract between Buyer 2 and Seller. In reality, the Buyer 2-Seller contract, like the contracts between Jobim and Arapua, is at most a defense to Buyer 1's claim of ownership.

Accordingly, we believe that the district court erred in dismissing Corcovado's copyright action with instructions, in effect, to pursue it in Brazil. We would ordinarily, at this point, simply remand the case to the district court for further proceedings, including a determination of the defense offered by defendants that they, rather than plaintiff Corcovado, are the owners of the renewal copyrights in the Five Songs. However, a careful examination of the record and principles of sound judicial administration persuade us that we should determine that issue at this time.

B. Owner of renewal rights

The ownership right at stake in this action is the author's right of renewal found in § 24 of the 1909 Copyright Act, reenacted in § 304 of the 1976 Act, 17 U.S.C. § 304(a). ⁵ The purpose of the right of renewal is to "provide[ ] authors a second opportunity to obtain remuneration for their works." Stewart v. Abend, 495 U.S. 207, 217, 110 S.Ct. 1750, 1758, 109...