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California Federal Court Sorts Out Ownership Issues In Dispute Over Record Albums
Each co-owner of a copyright can independently grant third parties non-exclusive rights in the work, but approval of all the co-owners is needed to grant exclusive rights to third parties. Despite that, under U.S. copyright law, any co-owner of the work can sell that co-owner's exclusive ownership share to third parties without the permission of the other co-owners.
The U.S. District Court for the Eastern District of California recently released an opinion that considered the interplay of these copyright issues. In Yellowcake Inc. v. Morena Music Inc., 1:20-CV-0787, Jesus Chavez Sr., the founder of the Mexican music group Los Originales De San Juan, had entered into an agreement in 2013 for a three-album deal for his band with the record label Morena Music.
As Eastern District Senior Judge Anthony W. Ishii noted — based on a First Amended Counterclaim (FAC) that Morena Music filed in the litigation that grew out of the record deal — in 2019, Jose David Hernandez, principal of the music companies Yellowcake and Colonize Media, allegedly "intentionally and willfully misled Chavez into mistakenly believing that Morena had no rights in the Los Originales' albums and cover art and that Chavez was free to sell all rights in the works exclusively to Yellowcake and Colonize," which Chavez purportedly did.
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