Decision of Note: Songs in Karaoke Not Fair Use

The U.S. Court of Appeals for the Sixth Circuit decided that the unlicensed use of songs for karaoke recordings was not a fair use. Zomba Enterprises Inc. v. Panorama Records Inc., 06-5013. Panorama produces monthly karaoke CDs of re-recorded recent hits, with graphic displays of the songs' lyrics. After Nashville attorney Linda Edell sent cease-and-desist letters for Zomba to Panorama over the unlicensed use of Zomba compositions for the karaoke CDs, Zomba sued for copyright infringement. Panorama then agreed to a consent order to stop releasing karaoke recordings with Zomba songs, but breached the order within a few days. The U.S. District Court for the Middle District of Tennessee subsequently granted summary judgment for Zomba.

Affirming, the Sixth Circuit began by noting: 'Countless people have lined up at various venues to perform their favorite songs with, and in front of, their friends. But few participants (with the possible exception of IP lawyers) ever stop to consider the intellectual property regime governing karaoke.' The court also noted that 'Panorama Records, Inc. ('Panorama'), a purveyor of karaoke discs, resembles the majority of these participants. It entered the business of recording and selling karaoke discs without considering whether doing so infringed the intellectual property rights of others. Before long, this lack of foresight caught up with Panorama.'

On purpose and character of use, the appeals court found that 'Panorama's use of the compositions is only minimally, if at all, transformative. Although Panorama created its own recordings of these songs, [Panorama executive Laurindo] Santos admitted that the hired musicians did not 'change the words or music' ' The crux of Panorama's fair-use argument is its assertion that its use was transformative because its karaoke packages are used for 'teaching' ' [But] the record is bereft of evidence indicating that Panorama's products are used for teaching at all.'

As for Panorama's effect on Zomba's potential market for licensing the songs, the appeals court explained: 'Zomba has previously licensed (and continues to license) its musical compositions to purveyors of karaoke products ' [T]here can be no doubt that Panorama's practices, if they became widespread throughout the karaoke industry, would have a deleterious effect on the potential market for licenses to Zomba's songs.'

(Panorama also argued that Zomba's songs were subject to use through compulsory licenses, but the appeals court found this argument forfeited because Panorama had not presented this and other affirmative defenses to the district court.)

The appeals court also upheld the finding of willful infringement, noting: '[W]e conclude that Panorama exhibited a reckless disregard for Zomba's rights, and accordingly, that Panorama's reliance on its fair-use defense was objectively unreasonable. The fact most crucial to this inquiry is that Panorama continued to sell karaoke packages containing copies of each of the relevant compositions after the district court entered its April 22, 2003, consent order forbidding Panorama to do so.'

The U.S. Court of Appeals for the Sixth Circuit decided that the unlicensed use of songs for karaoke recordings was not a fair use. Zomba Enterprises Inc. v. Panorama Records Inc., 06-5013. Panorama produces monthly karaoke CDs of re-recorded recent hits, with graphic displays of the songs' lyrics. After Nashville attorney Linda Edell sent cease-and-desist letters for Zomba to Panorama over the unlicensed use of Zomba compositions for the karaoke CDs, Zomba sued for copyright infringement. Panorama then agreed to a consent order to stop releasing karaoke recordings with Zomba songs, but breached the order within a few days. The U.S. District Court for the Middle District of Tennessee subsequently granted summary judgment for Zomba.

Affirming, the Sixth Circuit began by noting: 'Countless people have lined up at various venues to perform their favorite songs with, and in front of, their friends. But few participants (with the possible exception of IP lawyers) ever stop to consider the intellectual property regime governing karaoke.' The court also noted that 'Panorama Records, Inc. ('Panorama'), a purveyor of karaoke discs, resembles the majority of these participants. It entered the business of recording and selling karaoke discs without considering whether doing so infringed the intellectual property rights of others. Before long, this lack of foresight caught up with Panorama.'

On purpose and character of use, the appeals court found that 'Panorama's use of the compositions is only minimally, if at all, transformative. Although Panorama created its own recordings of these songs, [Panorama executive Laurindo] Santos admitted that the hired musicians did not 'change the words or music' ' The crux of Panorama's fair-use argument is its assertion that its use was transformative because its karaoke packages are used for 'teaching' ' [But] the record is bereft of evidence indicating that Panorama's products are used for teaching at all.'

As for Panorama's effect on Zomba's potential market for licensing the songs, the appeals court explained: 'Zomba has previously licensed (and continues to license) its musical compositions to purveyors of karaoke products ' [T]here can be no doubt that Panorama's practices, if they became widespread throughout the karaoke industry, would have a deleterious effect on the potential market for licenses to Zomba's songs.'

(Panorama also argued that Zomba's songs were subject to use through compulsory licenses, but the appeals court found this argument forfeited because Panorama had not presented this and other affirmative defenses to the district court.)

The appeals court also upheld the finding of willful infringement, noting: '[W]e conclude that Panorama exhibited a reckless disregard for Zomba's rights, and accordingly, that Panorama's reliance on its fair-use defense was objectively unreasonable. The fact most crucial to this inquiry is that Panorama continued to sell karaoke packages containing copies of each of the relevant compositions after the district court entered its April 22, 2003, consent order forbidding Panorama to do so.'