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Clause & Effect
Recording Agreements/Forum-Selection Clause. The U.S. Court of Appeals for the Second Circuit held that an artist's breach-of-contract claim against a record company was subject to a forum-selection clause, but his copyright-infringement claim against the company wasn't. Phillips v. Active Audio Ltd., 05-7017-CV. The recording agreement that hip-hop artist Pete Rock entered into with the label Barely Breaking Even (BBE) stated that 'validity[,] construction[,] and effect of this agreement and any or all modifications hereof shall be governed by English Law and any legal proceedings that may arise out of it are to be brought in England.' Rock later filed suit in Manhattan federal district court for breach of contract for BBE's alleged failure to pay the second half of a royalty advance and for copyright infringement for releasing an album of his songs without his permission.
The Second Circuit agreed with the district court that the forum-selection clause was mandatory, noting: 'The parties' use of the phrase 'are to be brought' establishes England as an obligatory venue for proceedings within the scope of the clause.' The appeals court then found: 'The contract claim for money owed and due falls squarely under the forum selection clause: the contract establishes [Rocks'] right to receive, and BBE's duty to pay, the installment and sets forth the relevant conditions.' But the appeals court added that Rock 'does not rely on the recording contract to establish his ownership of the relevant copyrights, but on his authorship of the work ' Plaintiff asserts, not implausibly ' there is no suggestion of bad faith on his part ' that he has been the rightful owner of the copyrights from the moment the songs became entitled to copyright protection ' Indeed, if [he] were to succeed in persuading the trial court of his interpretation of the recording contract, success on the merits of his copyright claims would leave the recording contract undisturbed.'
Royalty Claims/Letter of Induce- ment. The U.S. District Court for the Central District of California found that a letter of inducement signed by funk artist George Clinton didn't bar him from proceeding with a royalties breach-of-contract claim against Universal Music Group (UMG). Clinton v. Universal Music Group Inc., CV 07-672 PSG. In 1980, P-Funk, Clinton's loan-out corporation, entered into an agreement with Casablanca Records ' now owned by UMG ' 'for the recording and record production services of GEORGE CLINTON ('Artist') performing professionally as 'PARLIAMENT.' ' In addition, Clinton signed a letter of inducement that stated 'you [Casablanca] shall not have any obligation to make any payment whatsoever to me ' it being agreed and understood that I shall look solely to Producer [P-Funk] for any and all royalties ' I shall not assert any claims for such monies against you.' UMG thus argued that Clinton lacked standing to bring the present suit. But the district court noted: 'Plaintiff alleges that he suffered actual injury due to Defendants' underpayment and nonpayment of artist royalties, and that these royalties would have been paid to him, whether directly or through P-Funk, if Defendants had honored their obligations in the Agreement. ' [W]hen Defendants allegedly sent royalty payments, covering the period from 1996 to 2001, [they were] addressed to 'George Clinton' and not 'P-Funk.' '
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