Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc.

• Decision Date: 18 July 1966
• Docket Number: No. 63 Civil 1459.,63 Civil 1459.
• Citation: 256 F. Supp. 399
• Parties: SCREEN GEMS-COLUMBIA MUSIC, INC., Travis Music Co., Sea-Lark Enterprises, Inc. and Figure Music, Inc., Plaintiffs, v. MARK-FI RECORDS, INC., Metlis & Lebow Corp., Advertising Distributors of America Incorporated, W.M.C.A., Inc., Westinghouse Broadcasting Company, Inc., Tony Alamo, Stanley Lebow and Monte Bruce, Defendants.
• Court: U.S. District Court — Southern District of New York

256 F. Supp. 399

SCREEN GEMS-COLUMBIA MUSIC, INC., Travis Music Co., Sea-Lark Enterprises, Inc. and Figure Music, Inc., Plaintiffs, v. MARK-FI RECORDS, INC., Metlis & Lebow Corp., Advertising Distributors of America Incorporated, W.M.C.A., Inc., Westinghouse Broadcasting Company, Inc., Tony Alamo, Stanley Lebow and Monte Bruce, Defendants.

No. 63 Civil 1459.

United States District Court S. D. New York.

July 18, 1966.

Julian T. Abeles, New York City, for plaintiffs, Robert C. Osterberg, New York City, of counsel.

Burton Ritter, New York City, for defendants Metlis & Lebow Corp., Stanley Lebow and Monte Bruce.

Phillips, Nizer, Benjamin, Krim & Ballon, New York City, for defendant, Advertising Distributors of America Inc., Jacob M. Usadi, Michael J. Silverberg, New York City, of counsel.

Robinson, Silverman, Pearce, Aronsohn & Sand, New York City, for defendant WMCA, Inc., Leonard B. Sand, New York City, of counsel.

Townley, Updike, Carter & Rodgers, New York City, for defendant, Westing-house Broadcasting Co., Inc., Andrew L. Hughes, John D. Canoni, New York City, of counsel.

WEINFELD, District Judge.

These are motions for summary judgment by various defendants in a copyright infringement action upon the ground that as to each moving defendant there is no triable issue of fact and that each is entitled to judgment as a matter of law. The role attributed to each defendant with respect to the claimed infringement is different and each must be considered separately.

The action was brought on behalf of four music publishers, each of whom owns a copyrighted musical composition which is a subject of the infringement. The issues upon all four of the plaintiffs' claims are the same. The infringement charged is the manufacture and sale of phonograph records that reproduced mechanically a copyrighted musical composition without compliance with the statutory compulsory license provision.¹

Mark-Fi Records, Inc. (Mark-Fi) manufactured and sold a long-playing phonograph record album entitled "Twenty Original Hits." Included in the album were the four copyrighted compositions owned by the plaintiffs. Their use was unauthorized and without plaintiffs' consent. The infringing acts of Mark-Fi allegedly were perpetrated under the direction of its executive, Tony Alamo. The plaintiffs charge that their acts were typical of a practice which has plagued the music publishing industry and has posed a serious threat to the interests of music publishers, songwriters and legitimate record companies—the unauthorized manufacture of phonograph records by fly-by-night companies organized by unscrupulous individuals who, because of nonpayment of royalties to the copyright owners, can sell the bootlegged product at prices substantially lower than those necessarily charged for legitimate records.² Plaintiffs allege that Mark-Fi was such a fly-by-night company organized by Alamo who, after manufacturing and commercializing the illicit records, abandoned the company and himself absconded so that neither he nor the company could be served with process, although both are named as defendants. The plaintiffs, however, in an effort to eradicate the evil practice, have directed their shafts against the defendants who have been served with process and who are the movants herein.

The plaintiffs do not claim that these defendants had anything to do with the manufacture of the infringing records or directly infringed their copyrights, but seek to hold them liable by reason of their activities in connection with the sale and distribution of the records. These defendants and the nature of their activities are:

(1) Metlis & Lebow Corp., an advertising agency, which was engaged by and received from Mark-Fi a previously prepared electrical transcription containing advertising material for the album. Metlis & Lebow's services rendered on behalf of Mark-Fi consisted of the purchase of radio time from thirty-three stations throughout the United States, which broadcast the electrical transcription advertising the record album. The agency's sole compensation was the usual commission of fifteen per cent of the fee charged by each radio station for the time purchased. The compensation had no relation to the number of records made or sold by Mark-Fi.

Also named as defendants are Stanley Lebow, an officer and principal stockholder of the advertising agency, and Monte Bruce, one of its employees, who the complaint alleges, participated in one or more of the agency's dealings in connection with the Mark-Fi account.

(2) Westinghouse Broadcasting Company, Inc., owner and operator of radio station WINS, and WMCA, Inc., owner and operator of radio station WMCA, each of which broadcast, on various dates in late 1962 and early 1963, the previously prepared advertising material for the record album as contracted for by the advertising agency on behalf of Mark-Fi. Each radio station was paid its fees in accordance with the amount and desirability of air time sold; the payment was unrelated to the sales of records. The rate was no different than that charged to other customers who had the same schedule of announcements. The advertisement of the album as broadcast by the radio stations did not include any portion of the infringing material.

(3) Advertising Distributors of America Incorporated (AD OF A), a servicing agency engaged to package and mail the Mark-Fi albums to those who responded to the radio advertising. A supply of records and cartons was made available to AD OF A by Mark-Fi. Upon receipt of orders and payments for records from purchasers, Mark-Fi retained the payments but submitted the orders to AD OF A, which then shipped the records to the purchasers in a carton which bore Mark-Fi's label. AD OF A's compensation for its services was a fixed fee of nine cents for each record mailed prepaid and fifteen and one-half cents for each record mailed C.O.D., plus postage. Its charges were payable in advance and were met through lump sum advances by Mark-Fi against which mailings as performed and expenses as incurred were credited.

The defendants, each in their own way, contend that their respective activities did not bring them within section 101(e) of the Copyright Act which makes unlawful "the unauthorized manufacture, use, or sale of"³ phonograph records.

In urging judgment in their favor as a matter of law, the defendants emphasize first that they cannot be classed as direct participants in the infringements, since they did not perform the infringing records or otherwise use or sell them. They readily acknowledge that a direct participant in an infringement is jointly and severally liable whether or not he intended to infringe,⁴ but urge that since they do not come within this category, the so-called dance hall cases⁵ cited by plaintiffs are inapplicable —the defendants equate their position as more akin to that of a noninfringing landlord who is without power or control over or direct financial interest in the infringing matter.⁶

Next defendants urge they do not come within the category of those who, even though not direct participants in an infringement, are held vicariously liable because of a financial interest in the infringing product coupled with the right and power to supervise the infringer's activities.⁷ They contend they were without any such financial interest and supervisory power; that their relationship to Mark-Fi was too remote to impose liability. In sum, they say plaintiffs here advance a doctrine of absolute liability which exceeds the present outer limits of vicarious liability now imposed in copyright infringement cases—one that if accepted would fasten liability no matter how remote the relationship to the actual infringer and even though the defendant was without financial stake in the infringing product and without power to control or supervise the acts of the infringer.

The plaintiffs acknowledge that such indeed is their purpose as the only feasible means to meet the challenge of the bootleg record. Their contention is, as alleged in their complaint, that one who "contributed to or participated or was concerned in the sale" of the infringing records, whether with or without knowledge, is liable as a contributory infringer. As elaborated in their original affidavits in opposition to the summary judgment motion, the essence of their claim is that these defendants, by their respective roles in providing advertising, packaging and distribution, contributed essential services in effecting and furthering the sale of the infringing albums and so were liable under the prohibition of section 101 (e) against "the unauthorized * * * sale" of such records.

The parties earnestly urged upon the court a determination of the issue as a matter of law, since it is one of concern and importance to copyright owners, music publishers, advertising agencies and communications media. However, following argument of the motion and a study of the briefs and affidavits, it appeared that plaintiffs, in addition to their basic contention of expanded absolute liability, suggested that each defendant was chargeable at the time it rendered its particular service with either actual or constructive knowledge that the Mark-Fi album contained the unauthorized renditions of plaintiffs' four musical compositions. The court thereupon conferred with counsel, following which each party submitted an additional affidavit. However much the parties desire a determination of the basic legal issue originally posed by them, this is precluded since a fact issue is raised. Plaintiffs in their supplemental affidavit allege facts upon which it is claimed that each defendant was aware or should have been aware of Mark-Fi's illicit activities, and that each defendant knew or should have known of the infringement. Although the defendants challenge plaintiffs' assertions upon which knowledge is predicated, the effect of the challenge is to create a fact issue. Since...