CONTRACT / COPYRIGHT
Artists, record labels
This dispute concerned the ownership of the renewal term copyrights in certain pre-1978 sound recordings embodying the performances of Jamaican reggae artist, Bob Marley. The Sound Recordings were created pursuant to exclusive recording agreements between Bob Marley and the predecessor-in-interest (Island Records, now owned by UMG) to defendant UMG Recordings, Inc. The Plaintiffs argued that the renewal term copyrights in the Sound Recordings reverted to them under the Copyright Act of 1909 upon Bob. Marley’s death in 1981. The Plaintiffs also asserted claims for underpayment of royalties against UMG. But District Judge Denise Cote ruled that Universal Music holds the rights to Marley’s music, because Marley’s work was done on a “work for hire” basis: Judge Cote concluded that Marley’s recordings were “works made for hire” as defined under U.S. copyright law, entitling UMG to be designated the statutory owner and “author” of those recordings, for both the initial 28-year copyright terms and for renewals.
Marley signed a number of agreements with Island including agreements in 1972,1974,1975 and 1992. The 1972 Agreement states “ The Artist shall during the period attend at such places and times as the Company shall reasonably require and shall render to the best of his skill and ability and to the satisfaction of the Company such performances . . . as the Company shall elect for the purpose of reproduction in or by any record or sound recording”. The 1972 Agreement further provided that Island and Bob Marley would “[m]utually agree” as to the lyrics and music to be recorded, but that Island could “[d]ecide in its discretion whether or not such lyrics and music as recorded are acceptable and satisfactory for the manufacture and sale of records.”. The 1972 Agreement stated that “all recordings featuring the Artist and recorded by the Company . . . in pursuance hereof are the absolute property of the Company and the Company will continue to account to the Artist for the royalties thereon both”.
Noting that “Each of the agreements provided that the sound recordings were the ‘absolute property’ of Island,” Cote held. “Whether Marley would have recorded his music even if he had not entered the recording agreements with Island is beside the point.” She added that it was irrelevant that Marley might have maintained artistic control over the recording process. What mattered, she said, was that Island had a contractual “right” to accept or reject what Marley produced. saying
The 1972, 1974, and 1975 Agreements demonstrate that the Sound Recordings were produced at the instance and expense of Island, and were therefore works made for hire under the 1909 Act. Furthermore, Plaintiffs have failed to introduce any evidence of an agreement to rebut the presumption that Island
owned the copyrights in the Sound Recordings from the outset. Accordingly, UMG, as Island’s successor-in-interest, is the statutory author and owner of the initial and renewal term copyrights in the Sound Recordings.
However, Judge Cote left the royalty claim open. The Plaintiffs had argued that Paragraph 11 of the Royalty Schedule to the 1992 Royalties Agreement governs royalties paid on digital downloads.
Paragraph 11 states: “In the event that Island sells or licenses third parties to exploit Masters via telephone satellite cable or other direct transmission to the consumer over wire or through the air, Island will credit to
your royalty account sixty percent (60%) of its receipts therefrom attributable to the Masters or any
The Plaintiffs also contended that UMG improperly paid royalties based on its net, rather than gross, receipts from digital downloads.
UMG argued that Paragraph 11 does not apply to royalties on digital downloads, and contended these are instead governed by Paragraph 2(c) of the 1992 Royalties Agreement.
Paragraph 2(c) governs “the royalty rates and methods of royalty calculations for records released in formats newly developed as a result of advanced technology”.
Among other things, UMG contended that the use of the term “records” in Paragraph 2(c) includes copies of sound recordings embodied in all formats, including those developed subsequent to the 1992 Royalties Agreement, such as permanent digital downloads. By contrast, Paragraph 11 uses the term “Masters,” which is defined as “master recordings,” and is therefore distinct from the term “records.” In addition, UMG argues that Paragraph 11 deals with direct “transmission” of “Masters” to consumers, for instance through satellite or cable broadcasts, rather than digital sales of “records” to consumers. UMG thus interprets Paragraph 11 to apply to situations where UMG sells or licenses the right to third parties to transmit broadcasts of Bob Marley masters via satellite, cable or similar means.
Judge Cote held that UMG has shown that the pertinent language in the 1992 Royalties Agreement “is susceptible of at least two fairly reasonable meanings. Thus, it is ambiguous whether royalties for digital downloads are governed by Paragraph 2(c) of the 1992 Royalties Agreement or by Paragraph 11 of the Royalty Schedule. Even if the extrinsic evidence offered by the Plaintiffs of the parties’ intent is considered, it does not resolve this ambiguity.” The Plaintiff’s claim for summary judgment was dismissed – but the point left open. In light of the ‘Eminen’ judgment (see above) – this latter point could be a very very interesting time for record labels.
For an interesting comment on the RIAA’s actions in trying to get Congress to change the law in this area, see TechDirt at http://www.techdirt.com/articles/20100913/11504110989.shtml
Fifty-Six Hope Road Music ltd., Cedella Marley, David Marley, Julian Marley, Karen Marley, Rita Marley, Rohan Marley, Stephen Marley, Damian Marley, Stephanie Marley, and Robert Marley, -v- UMG Recordings, inc.,  08 CIV. 6143 (DLC)