Bit Parts

The U.S. District Court for the Southern District of New York stayed a breach-of-contract suit, which alleges underpayment of music publishing income under two administration agreements, until a pending action in Canada over two related asset-purchase agreements is decided. Ole Media Management L.P. v. EMI April Music Inc., 12 Civ. 7249. In 2007, Canadian entity Ole Media entered into administration agreements with EMI April Music and EMI Blackwood Music, as well as purchase agreements to acquire songs from the administrators' affiliated EMI Entertainment World. But in 2011, Ole Media sued EMI Entertainment World in an Ontario, Canada, court for a clarification of which compositions the acquisition agreements actually covered. Southern District Judge Paul A. Engelmayer stayed the New York litigation, on April Music and Blackwood Music's motion, by noting: “Ole is correct that the parties are not identical. They need not be, however, ' ; the relevant test is whether the parties are substantially similar.” Judge Engelmayer added: “EMI Entertainment is a named defendant in the Canadian action; as such, staying this litigation pending resolution of the one in Canada in no way excludes a party here. The dissimilarity in parties to the two lawsuits, if anything, supports staying this motion, because the defendants in this action form a subset of those in the Canadian action.” As to similarity of issues, the district court decided: “It is also clear that the determination (in the Canadian lawsuit) as to which compositions Ole purchased under the Asset Purchase Agreements will have significant bearing, and res judicata effect, on the dispute regarding the Administration Agreements at issue here. The similarity of the issues here therefore warrants a stay, but not a dismissal, of the New York action.”

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.

Declaratory Bids Denied in Dispute over Literary Agent Agreement

The U.S. District Court for the Northern District of Illinois, Eastern Division, denied both literary agent Ken Levin's motion for summary judgment, and that of The Yard author Alex Grecian, in their opposing declaratory claims over whether a literary agent agreement that Grecian signed with Levin remained valid. Levin v. Grecian, 12 C 767. The initial seven-year term of the agreement expired in November 2011. Shortly after, Grecian informed Levin that he was terminating the agreement (though it automatically renewed unless Grecian sent Levin a 60-day notice of termination, which he hadn't). Levin didn't sell any of Grecian's novels until 2011, by pairing with literary agent Seth Fishman and securing a $500,000 deal from Putnam Publishing. Grecian claimed Levin materially breached his agreement with the author by not using “best efforts” to previously sell any Grecian novels. Though the Levin/Grecian agreement didn't specifically state the agent must use his “best efforts,” District Judge Gary Feinerman read that into the relationship because the agreement had made Levin the “sole and exclusive representative” of Grecian. Judge Feinerman went on to determine that “a reasonable factfinder could find the admitted quality of Grecian's work and the speed with which The Yard was sold once Fishman was brought onboard, combined with Levin's failure to sell any of Grecian's work before then, to be persuasive evidence that Levin did not exercise his best efforts.” Levin further argued that Grecian waived any breach. But Judge Feinerman noted: “In particular, the fact that [in 2008] Grecian asked to be released from the Agreement but did not sue for rescission when Levin refused suggests that Grecian was thinking in terms of an ideal and mutually beneficial business relationship between Levin and Grecian and not in terms of their respective legal obligations. If Grecian did not know [then] that Levin's inaction was potentially a material breach, then he could not have knowingly waived his right to assert that breach.”

Method for Monetizing Internet Content Not Too Abstract for Patentability

The U.S. Court of Appeals for the Federal Circuit decided that a method for collecting income from Internet sales of media products ' such as music, films and books ' wasn't too abstract to be patentable. Ultramercial Inc. v. Hulu Inc., 2010-1544. Ultramercial filed a patent infringement action, but the U.S. District Court for the Central District of California granted remaining defendant WildTangent's pre-answer motion dismiss for failure to state a viable claim. Ultramercial's Patent Claim No. 7,346,545 involves providing consumers with free copyrighted content, but requires them to first view advertisements; the advertisers then pay the copyright owners for the content. Thirty-five U.S.C. 100(b) broadly defines a patentable “process.” The Federal Circuit noted that “any attack on an issued patent based on a challenge to the eligibility of the subject matter must be proven by clear and convincing evidence.” Then reversing and remanding, the Federal Circuit noted that Ultramercial's patent claim “appears far from over generalized, with eleven separate and specific steps with many limitations and sub-steps in each category.” The appeals court concluded: “This court understands that the broadly claimed method in the '545 patent does not specify a particular mechanism for delivering media content to the consumer ( i.e. , FTP downloads, e-mail, or real-time streaming). This breadth and lack of specificity does not render the claimed subject matter impermissibly abstract.”

New York Music Administration Suit Stayed Until Outcome of Canadian Suit over Related Songs-Purchase Agreements

The U.S. District Court for the Southern District of New York stayed a breach-of-contract suit, which alleges underpayment of music publishing income under two administration agreements, until a pending action in Canada over two related asset-purchase agreements is decided. Ole Media Management L.P. v. EMI April Music Inc., 12 Civ. 7249. In 2007, Canadian entity Ole Media entered into administration agreements with EMI April Music and EMI Blackwood Music, as well as purchase agreements to acquire songs from the administrators' affiliated EMI Entertainment World. But in 2011, Ole Media sued EMI Entertainment World in an Ontario, Canada, court for a clarification of which compositions the acquisition agreements actually covered. Southern District Judge Paul A. Engelmayer stayed the New York litigation, on April Music and Blackwood Music's motion, by noting: “Ole is correct that the parties are not identical. They need not be, however, ' ; the relevant test is whether the parties are substantially similar.” Judge Engelmayer added: “EMI Entertainment is a named defendant in the Canadian action; as such, staying this litigation pending resolution of the one in Canada in no way excludes a party here. The dissimilarity in parties to the two lawsuits, if anything, supports staying this motion, because the defendants in this action form a subset of those in the Canadian action.” As to similarity of issues, the district court decided: “It is also clear that the determination (in the Canadian lawsuit) as to which compositions Ole purchased under the Asset Purchase Agreements will have significant bearing, and res judicata effect, on the dispute regarding the Administration Agreements at issue here. The similarity of the issues here therefore warrants a stay, but not a dismissal, of the New York action.”

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.