Abkco Music, Inc. v. William Sagan, Norton LLC
| Decision Date | 30 March 2018 |
| Docket Number | 15 Civ. 4025 (ER) |
| Parties | ABKCO MUSIC, INC., COLGEMS-EMI MUSIC, INC., EMI ALGEE MUSIC CORP., EMI APRIL MUSIC INC., EMI BLACKWOOD MUSIC, INC., EMI CONSORTIUM MUSIC PUBLISHING, INC. d/b/a EMI FULL KEEL MUSIC, EMI CONSORTIUM SONGS, INC. d/b/a EMI LONGITUDE MUSIC, EMI FEIST CATALOG INC., EMI ROBBINS CATALOG INC., EMI UNART CATALOG, INC., JOBETE MUSIC CO., INC., SCREEN-GEMS-EMI MUSIC INC., STONE AGATE MUSIC, STONE DIAMOND MUSIC CORP., RODGERS & HAMMERSTEIN HOLDINGS LLC, PEER INTERNATIONAL CORPORATION, PSO LIMITED, PEERMUSIC LTD., PEERMUSIC III, LTD., SONGS OF PEER, LTD., SPIRIT CATALOG HOLDINGS S.A.R.L., TOWSER TUNES, INC., TOWSER NEWCO LTD., SPIRIT TWO MUSIC, INC., WARNER-TAMERLANE PUBLISHING CORP., and WB MUSIC CORP., Plaintiffs-Counterclaim-Defendants, v. WILLIAM SAGAN, NORTON LLC, BILL GRAHAM ARCHIVES, LLC d/b/a WOLFGANG'S VAULT, BILL GRAHAM ARCHIVES, LLC d/b/a CONCERT VAULT, BILL GRAHAM ARCHIVES, LLC d/b/a MUSIC VAULT, and BILL GRAHAM ARCHIVES, LLC d/b/a DAYTROTTER, Defendants-Counterclaim-Plaintiffs. |
| Court | U.S. District Court — Southern District of New York |
Ramos, D.J.:
This federal copyright infringement suit concerns a collection of live audio and audiovisual recordings of iconic songs that were recorded while being performed live in concert and thereafter acquired by Defendants William E. Sagan, Bill Graham Archives, LLC,2 and Norton, LLC ("Defendants"), from the late Bill Graham and operators of other concert venues. The collection primarily consists of recordings made from the 1960s to the 2000s, and reads like a veritable who's who of rock, soul, and alternative music, containing the performances of The Rolling Stones, The Who, the Grateful Dead, Willie Nelson, Ray Charles, Aretha Franklin, and Carlos Santana, to name a few. The list of songwriters who penned the works embodied in those performances is no less impressive and diverse, including legends such as Hoagy Carmichael, Carol King, Mick Jagger, Keith Richards, Pete Townshend, and Green Day, among others.
In the years following Defendants' acquisitions, they have reproduced those recordings principally in digital format and made them available for mass consumption through digital download and streaming services offered for a fee through Defendants' websites.3 Plaintiffs are a collection of six groups of music publishers4 who claim to own, or hold exclusive licenses in,the copyrights to approximately 200 musical compositions (the "Musical Works") reflected in Defendants' recordings. Plaintiffs claim that Defendants' exploitation of those recordings infringes their copyrights in the Musical Works. The principal question before the Court is whether Defendants obtained valid licenses such that their exploitation of these recordings is lawful under the Copyright Act, 17 U.S.C. § 101 et seq.
Before the Court are the parties' cross motions for summary judgment pursuant to Federal Rule of Civil Procedure 56 on Plaintiffs' claim of copyright infringement and their request to permanently enjoin Defendants from using the recordings at issue. Docs. 161, 191. For the reasons set forth below, the parties' motions for summary judgment are GRANTED in part and DENIED in part.
To better contextualize the dispute between the parties, it is helpful to outline the statutory scheme covering the licensing of musical works under the Copyright Act. As a general matter, the owner of a copyright in a nondramatic musical work (i.e., a song's words and musical composition) "has the exclusive rights" to reproduce that musical work in copies or phonorecords and to distribute those copies or phonorecords to the public.5 17 U.S.C. § 106(1), (3). That exclusive right, however, is not without limitation. To encourage creativity and prevent monopolization in the music industry, Congress created the compulsory mechanical license,6 a narrow exception to that exclusive right, which "must be construed narrowly, lest theexception destroy, rather than prove, the rule." Fame Publishing Co. v. Alabama Custom Tape, Inc., 507 F.2d 667, 670 (5th Cir. 1975) () (citing H.R. rep. NO. 2222, 60th Cong., 2d Sess. 6 (1909)); see also Fox Television Stations, Inc v. Aereokiller, LLC, 851 F.3d 1002, 1011 (9th Cir. 2017). As a result, although the copyright holder in the musical composition has the exclusive right to determine "the manner in which his composition will initially be offered to the public," once that musical work has been distributed to the public, the copyright holder "must then license others who wish to present their own competing renditions." Fame Publishing Co., 507 F.2d at 670. Under Section 115 of the Act, compulsory licensees are entitled to make and distribute "phonorecords" of a musical work, so long as they comply with requirements of that section. See 17 U.S.C. § 115; Cherry River Music Co. v. Simitar Entm't, Inc., 38 F. Supp. 2d 310, 312 (S.D.N.Y. 1999). Certain of those requirements are purely procedural, such as the timely filing of a Notice of Intention to Obtain Compulsory License ("NOI"). In this respect, Section 115(b)(1) requires that "[a]ny person who wishes to obtain a compulsory license under this section shall, before or within thirty days after making, and before distributing any phonorecords of the work, serve notice of intention to do so on the copyright owner." 17 U.S.C. § 115(b)(1). At that point, the copyright owner cannot deny the license—hence the term "compulsory"—however, "[f]ailure to serve or file the notice required by clause (1) forecloses the possibility of acompulsory license and, in the absence of a negotiated license, renders the making and distribution of phonorecords actionable as acts of infringement . . . ." Id. § 115(b)(2).7
Typically, a compulsory licensee must "exercise his rights under the compulsory license only by assembling his own musicians, singers, recording engineers and equipment . . . for the purpose of recording anew the musical work that is the subject of the compulsory license." 2 M. Nimmer & D. Nimmer, Nimmer on Copyright ("Nimmer") § 8.04 [A]; see also The Law of Copyright, Howard B. Abrams, ("Abrams") § 5:25; Recording Indus. Ass'n of Am., Inc. v. Librarian of Congress, 608 F.3d 861, 863 (D.C. Cir. 2010). In other words, the licensee cannot simply repackage and sell copies of another's sound recording. To do that, a licensee would have to comply with the additional substantive requirements of Section 115(a)(1). See 17 U.S.C. § 115(a)(1) (). Those requirements include that the recording be (1) "lawfully fixed,"8 and (2) that the licensee have the authorization of the copyright holder in the sound recording, or "if the sound recording was fixed before February 15, 1972," that the sound recording was fixed "pursuant to an express license from the owner of the copyright in the musical work or pursuant to a valid compulsory license for use of such a work in a sound recording." Id. As discussed in more detail below, theseprocedural and substantive requirements are strictly enforced and form the basis of the dispute between the parties in the instant suit.
Defendant William Sagan is the founder, president, CEO, and sole owner of Defendant Norton LLC. Defendants' Responses and Objections to Plaintiffs' Statement of Material Facts, ( ), Doc. 218 ¶ 10. Between 2002 and 2015, Defendants built their collection of audio and audiovisual recordings of live concert performances by acquiring entities possessing such recording archives, as well as acquiring collections of such recordings from various concert venues. Plaintiffs' Responses to Defendants' Statement of Material Facts ( ), Doc. 202, ¶ 1. These acquisitions began in July 2002, when Defendant Norton LLC acquired Bill Graham Archives LLC ("BGA"), which owned the archives of the late concert promoter Bill Graham. Defs.' Counter 56.1 ¶ 11. That acquisition netted Defendants 276 recordings covering approximately 90 of the Musical Works. See Dickstein Decl. Ex. 11 (Columns E & F). In documenting the sale, BGA was careful to advise Norton LLC that it was making no representations regarding BGA's rights to record or exploit the Musical Works. The purchase agreement that conveyed the BGA collection provided that the seller was acquiring [Redacted] Defs.' Counter 56.1 ¶ 17 (citing Dickstein Decl., Ex. 3 at ¶ 3.10(a)(C), ¶ 3.11(a)). A side letter to that purchase agreement further provided that [Redacted] Id. ¶ 18 (citing Dickstein Decl.,Ex. 7 at *2).9 In purchasing those recordings, Defendants never saw any performance contracts executed by the artists authorizing the recording of those performances, nor were they made aware that such agreements existed. Id. ¶ 19.
Contemporaneous external sources confirmed the exceedingly limited nature of the intellectual property rights Norton was acquiring along with the BGA collection. An appraisal report prepared by Richard Prelinger, a prominent archivist and intellectual property consultant, and included in Defendants' closing binder stated that: [Redacted] Id. ¶ 21; Dickstein Decl., Ex. 5, BGA Appraisal Report, at 26200. Indeed, in his deposition testimony, Sagan later confirmed that he was unaware if any of the copyright owners of the Musical Works captured in those recordings ever even consented to the recording of those concert performances. Defs.' Counter 56.1 ¶ 27; Dickstein Decl. Ex. 2 at 132:18-25, 133:10-15.
A marketing document for the BGA archive that was provided to Sagan at the time of the acquisition disclosed that [Redacted]Id.
Michael Krassner, an attorney who represented the seller in connection with the sale of BGA to Defendants,...
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