ABKCO Music, Inc. v. Sagan
| Decision Date | 05 November 2020 |
| Docket Number | 15 Civ. 4025 (ER) (SLC) |
| Citation | 500 F.Supp.3d 199 |
| 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 |
Barry Isaac Slotnick, Christian D. Carbone, Tal Efriam Dickstein, Priyamvada Sinha, Sarah Schacter, Loeb & Loeb LLP, New York, NY, for Plaintiffs/Counterclaim-Defendants.
Emily Catherine Ellis, Jeffrey J. Amato, Michael S. Elkin, Seth Eliot Spitzer, Thomas Patrick Lane, Winston & Strawn LLP, New York, NY, Erin R. Ranahan, Winston & Strawn LLP, Los Angeles, CA, Scott Richard Samay, Lerner, David, Littenberg, Krumholz & Mentlik, LLP, Cranford, NJ, for Defendants/Counterclaim-Plaintiffs.
On March 12, 2020, after a nine-day trial, a jury awarded Plaintiffs a total of $189,500 in statutory damages for infringing Plaintiffs’ copyrights for 197 musical works. Doc. 373 at 1. The jury also found that Defendants’ behavior constituted regular copyright infringement for the 30 works for which Defendants’ state of mind was at issue.1 Id. at 3. Plaintiffs now move for a new damages trial, arguing that the trial was fundamentally unfair because the jury was allegedly unable to deliberate as the COVID-19 pandemic was worsening in New York City. Doc. 377. Plaintiffs also move for attorneys’ fees and costs. Doc. 374.
For the reasons discussed below, Plaintiffs’ motion for a new trial is DENIED and Plaintiffs’ motion for attorneys’ fees is GRANTED. However, this Court will reduce Plaintiffs’ fee award by 60%.
Some familiarity with the factual background of this case is assumed, and the facts are recited in more detail in this Court's order granting in part and denying in part the parties’ cross motions for summary judgment. Doc. 262. However, a brief summary is necessary.
Defendant William Sagan is the founder, president, CEO and sole owner of Defendant Norton LLC. Doc. 262 at 6. In July 2002, Sagan, through Norton LLC, purchased Bill Graham Archives LLC ("BGA"), which owned the archives of the late concert promoter Bill Graham. Defendants’ Responses and Objections to Plaintiffs’ Statement of Material Facts ( ), Doc 218 at ¶ 11. This archive contained numerous audiovisual recordings of concerts by many of the twentieth century's most famous musical artists. The BGA purchase was the first of Defendants’ several major purchases of concert recordings in the subsequent years. Id. at ¶ 26.
At the time of the BGA purchase, however, Defendants were made aware that there were serious questions as to the intellectual property rights that attached to these purchases. For example, one appraisal report in connection with the BGA purchase noted that "no significant reuse can be contemplated without securing the customary clearances from performers, publishers and possibly other parties." Id. at ¶ 21.2 Another document provided to Sagan at the time of the purchase observed that "there are compelling issues regarding the right ... to exploit portions of the Archives without the approval of musical artists or other third parties." Id. at ¶ 22. In his deposition, Mr. Sagan confirmed that he did not know if any of the performers depicted consented to the recording of the concerts in question. Id. at ¶ 27.
Starting in 2006, Defendants made public these concert recordings and charged a fee for their digital download and streaming through their websites. Doc. 262 at 12. The following year, the Defendants began their attempts to gain intellectual property rights in the works by obtaining compulsory mechanical licenses. Id. at 25.
A compulsory mechanical license, or "mechanical license," is a narrow exception to a copyright holder's typical "exclusive" right to reproduce a musical work and distribute copies of that work in public. See 17 U.S.C. §§ 106(1), (3). The holder of a valid mechanical license may reproduce work copyrighted by another artist. However, they must first comply with various requirements under 17 U.S.C. § 115 (" Section 115"). Some of these requirements are procedural, such as serving a Notice of Intent to Obtain a Compulsory License ("NOI") on the copyright holder before distributing the work. Id. at § 115(b)(1). Others are substantive: For example, unless the licensee seeks to reproduce the work by recreating it (i.e., by assembling one's own musicians and recording a cover version), that licensee must also ensure that the recording both be (1) "fixed lawfully";3 and (2) have the authorization of the copyright holder in the sound recording. 17 U.S.C. § 115(a)(1)(B).4 In short, it is impossible to obtain a valid mechanical license to reproduce a concert recording without the consent of the artist featured in the concert.5
Defendants attempted to secure mechanical licenses through several channels. Starting in 2007, they worked through the Harry Fox Agency ("HFA"), a third-party licensing agent that grants mechanical licenses on behalf of music publishers. Doc. 262 at 12.6 They also entered into Joint Exploitation Agreements with three major record labels in 2009 that purported to show that the performers consented to lawfully fix certain of the live performances at issue here. Id. at 15. Finally, in 2013, they began directly serving NOIs on Plaintiffs. Id. at 14.
Plaintiffs are a collection of six groups of music publishers. Id. at 2. They claim to own or hold exclusive licenses in the copyrights to 197 of the musical works that defendants have made available to the public on their websites. Id. at 2–3. Plaintiff ABKCO first demanded that defendants cease and desist exploiting an audiovisual recording of a 1981 Rolling Stones concert in August 2013, claiming that ABKCO never issued the proper licenses for the recording. Id. at 17. Defendants received several similar demands from artists between 2013 and 2016. Id.
Plaintiffs filed this case on May 27, 2015, alleging that defendants infringed their copyrights in nearly 200 musical works by making them available for downloading and streaming on their websites without Plaintiffs’ consent. Doc. 1. They also alleged infringement based on Defendants’ manufacture of physical records containing certain of Plaintiffs’ works. Plaintiffs’ position is that not only were Defendants’ purported mechanical licenses legally invalid, but that Defendants must also secure "synchronization licenses" to lawfully exploit the works. See Memorandum of Law in Support of Plaintiffs’ Cross-Motion for Summary Judgment, Doc. 201 at 22–26. A synchronization license is typically used when pairing recorded music with images. See Trial Tr., Doc. 361 at 597: 9–12.
Defendants answered and asserted counterclaims seeking a declaration that their use did not infringe Plaintiffs’ rights and that they did not need synchronization licenses to exploit the works. Doc. 12. They further argued that their mechanical licenses were valid, arguing that they had complied with all substantive and procedural requirements under Section 115. Id. The parties cross-moved for summary judgment in May and September 2017 on Plaintiff's claims for copyright infringement and request for a permanent injunction. Docs. 161, 191.
In its summary judgment opinion, the Court held that Defendants failed to show that they held valid mechanical licenses in any of the works at issue. Doc. 262 at 39. In the decision, the Court found that Defendants’ mechanical licenses were invalid on several independent grounds, including that: (1) audiovisual recordings are not eligible for mechanical licenses under Section 115 of the Copyright Act; (2) Defendants did not show that the balance of their recordings were fixed or manufactured with the performers’ consent; and (3) any mechanical licenses that were not filed prior to the distribution of the recordings were independently invalid. Id. The Court also denied several other defenses proffered by Defendants. Id. at 40–46. However, the Court found a triable issue regarding whether the infringement of some of the works was willful. Id. at 39.
The jury trial commenced on March 2, 2020. Plaintiffs called twelve witnesses, including representatives from Sony, Peermusic and Warner, as well as defendant Sagan and his chief technology officer, Matthew Lundberg.
The trial coincided with the beginning of the COVID-19 pandemic in the United States. Over the course of the trial, confirmed cases of COVID-19 in the U.S. grew significantly. By March 11, 2020 there were 1,267 known cases reported in the United States. Declaration of Priy Sinha ("Sinha Decl.") Ex. A, Doc. 378-1. By March 9, Mayor Bill de Blasio had declared a state of emergency in New York City, and Governor Andrew Cuomo had begun to impose restrictions on large gatherings in New York. Sinha Dec. Ex. B, Doc. 378-2. There were 95 confirmed reported cases in New York City by the morning of March 12, the last day of the trial. Id.
On the morning of March 12, Juror Number 5 requested to speak with the Court about the pandemic. He stated the following:
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...the jury was allegedly unable to deliberate as the COVID-19 pandemic was worsening in New York City." ABKCO Music, Inc. v. Sagan, 500 F. Supp. 3d 199, 205 (S.D.N.Y. 2020) (Ramos, J. ), judgment entered, No. 15-cv-4025, 2021 WL 761852 (S.D.N.Y. Feb. 26, 2021). The Publishers claim an abuse o......
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