Bit Parts

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Redigi Resales Case Factors Into Digital-Download Royalty Litigation

The suit that Capitol Records filed against Redigi to stop resales of digital music is playing a different role in a federal class action complaint by Martha Davis, former lead singer of the Motels. (In the Redigi case, a New York federal court ruled for Capitol that the first-sale doctrine of the Copyright Act doesn't apply to digital media. Capitol Records LLC v. Redigi Inc., 12 Civ. 95 (S.D.N.Y. 2013).) In her complaint in the Northern District of California, Davis seeks 50% of Capitol's income from digital downloads, which she says are based on third-party 'licenses' from Capitol to online services like iTunes. Capitol argues back that digital downloads are 'phonorecords' from which artists should receive a lower royalty rate. To establish inconsistency by Capitol, the Davis suit quotes from the label's complaint against Redigi in which Capitol argued that digital tracks aren't phonorecords. (Phonorecords can be resold under the first-sale doctrine.) But Capitol moved to strike Davis's inconsistency allegation on the ground that her complaint misquotes the Redigi complaint. For example, where Capitol alleged in Redigi that it 'distributes' sound recordings, the Davis complaint uses the word 'redistributes.' Denying Capitol's motion, Northern District Judge Yvonne Gonzalez Rogers noted 'the error does not change the meaning of the ReDigi allegations in any significant way. The Court does not condone Davis's misquotation, but neither does it find the allegation 'immaterial, impertinent, or scandalous' as set forth in Rule 12(f)' of the Federal Rules of Civil Procedure. Davis v. Capitol Records LLC, 12-cv-1602.

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Stan Soocher is Editor-in-Chief of Entertainment Law & Finance and a tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus. He can be reached at [email protected] or via www.stansoocher.com.

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Fifth Circuit Supports Perpetual License as Remedy for Video-Game Dispute

The U.S. Court of Appeals for the Fifth Circuit upheld a perpetual license an arbitrator awarded a video-game publisher in a game's intellectual property rights ' as a remedy for the publisher's contract dispute with the game developer. Timegate Studios Inc. v. Southpeak Interactive LLC, 12-20256. Video-game developer Timegate and publisher Gamecock Media Group (now owned by Southpeak Interactive) entered into a contract to develop the futuristic game Section 8. The parties subsequently entered arbitration on Timegate's claims that Southpeak wasn't properly paying over profits. But the arbitrator instead awarded Southpeak a perpetual license in Section 8's intellectual property rights, on the ground that Timegate had breached the video-game agreement by failing to meet its promises and that the developer fraudulently induced Gamecock to enter into the contract. The Fifth Circuit noted: 'Timegate committed an extraordinary breach of the Agreement [e.g., by failing to use any of its own promised $2.5 million on the game] and an equally extraordinary realignment of the parties' original rights is necessary to preserve the essence of the Agreement. Because the Agreement bestowed broad remedial powers upon the arbitrator and because it was fraudulently induced and irreversibly violated by Timegate, the perpetual license is a rational and permissible attempt to compensate Gamecock and maintain the Agreement's essence.'

Musical Composition Doesn't Infringe Screenplay

The U.S. District Court for the Southern District of New York dismissed a suit that alleged the musical composition 'Exogenesis: Symphony' from the band Muse infringed on plaintiff Charles Barton Bollfrass' screenplay Panspermia/ExoGensis. Bollfrass v. Warner Music Group Corp., 12 Civ. 6648. Bollfrass argued the two works were substantially similar through plots about the breakdown of Earth civilization, and the use of astronauts and space travel to emigrate humans to other planets. But District Judge Louis L. Stanton noted: 'The only place a plot can be found in 'Exogenesis: Symphony' is in its online liner notes.' The judge added: 'Music, apart from its lyrics, cannot infringe on the copyright of a written work. Because the lyrics of 'Exogenesis: Symphony' do not express a plot, they do not infringe on 'Panspermia: ExoGenesis.' The online liner notes describe a plot, but one that is far too abstract and general to infringe on Bollfrass' copyright.' Judge Stanton observed that Bollfrass' infringement allegation had 'practically no legal or factual basis,' but refused to award costs to Warner Music. '[M]ethods of expression of plots have received copyright protection, and it would be unduly critical to characterize the complaint as frivolous,' the court said. 'As a matter of discretion, on a close call, Warner's application for attorney's fees is denied.'

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Redigi Resales Case Factors Into Digital-Download Royalty Litigation

The suit that Capitol Records filed against Redigi to stop resales of digital music is playing a different role in a federal class action complaint by Martha Davis, former lead singer of the Motels. (In the Redigi case, a New York federal court ruled for Capitol that the first-sale doctrine of the Copyright Act doesn't apply to digital media. Capitol Records LLC v. Redigi Inc., 12 Civ. 95 (S.D.N.Y. 2013).) In her complaint in the Northern District of California, Davis seeks 50% of Capitol's income from digital downloads, which she says are based on third-party 'licenses' from Capitol to online services like iTunes. Capitol argues back that digital downloads are 'phonorecords' from which artists should receive a lower royalty rate. To establish inconsistency by Capitol, the Davis suit quotes from the label's complaint against Redigi in which Capitol argued that digital tracks aren't phonorecords. (Phonorecords can be resold under the first-sale doctrine.) But Capitol moved to strike Davis's inconsistency allegation on the ground that her complaint misquotes the Redigi complaint. For example, where Capitol alleged in Redigi that it 'distributes' sound recordings, the Davis complaint uses the word 'redistributes.' Denying Capitol's motion, Northern District Judge Yvonne Gonzalez Rogers noted 'the error does not change the meaning of the ReDigi allegations in any significant way. The Court does not condone Davis's misquotation, but neither does it find the allegation 'immaterial, impertinent, or scandalous' as set forth in Rule 12(f)' of the Federal Rules of Civil Procedure. Davis v. Capitol Records LLC, 12-cv-1602.

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Stan Soocher is Editor-in-Chief of Entertainment Law & Finance and a tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus. He can be reached at [email protected] or via www.stansoocher.com.

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