IP Law Daily, COPYRIGHT—S.D.N.Y.: Reconsideration denied of dismissal of copyright song infringement occurring in the 1970s was time-barred, (Sep 12, 2023)

By Robert B. Barnett Jr., J.D.

The NY court refused to reconsider its decision that copyright infringement counterclaims about music rights in the 1960s-1970s should be dismissed as time-barred.

In a dispute about who owns the copyrights to six songs by funk music legend George Clinton, the federal district court in New York City has denied defendant TufAmerica’s motion to reconsider the court’s prior dismissal of TufAmerica’s copyright infringement counterclaims as time-barred because TufAmerica never established an intervening change in the law, the appearance of new evidence, a need to correct clear error, or any other factor that might justify reconsideration. In an interesting twist, the court also granted plaintiff Westbound’s motion to conditionally dismiss the case, pending the results of TufAmerica’s appeal of the court’s denial of reconsideration. If TufAmerica succeeds on its appeal, the case will continue; otherwise, it will be voluntarily dismissed (Bridgeport Music, Inc. v. TufAmerica, Inc., September 10, 2023, Gardephe, P.).

Background. In the late 1960s, George Clinton recorded music for Detroit-based Revilot Records, which was owned by LeBaron Taylor. Revilot obtained five copyright registrations of songs recorded in 1967 and 1968. Revilot went bankrupt in 1969. Taylor died in 2000.

After Revilot went bankrupt, Clinton began recording music for Westbound Records and Bridgeport Music, Inc., which are affiliated music companies (hereafter collectively referred to as “Westbound”). Five of the six songs in question were re-recorded and were released by Westbound during the 1970s. Westbound contends that it later purchased the rights to the sixth song from a non-party third label. Westbound registered copyrights for the six songs between the 1970s and early 1990s.

It is undisputed that Taylor knew about Westbound’s recordings because at that point he was a Detroit-area radio disc jockey who played the songs on his radio program.

Meanwhile, in 2011, Taylor’s wife contacted New York-based TufAmerica about selling the rights to Clinton’s music. The wife acknowledged that she had no paperwork establishing copyrights in Clinton’s music. Nevertheless, TufAmerica paid her $6,500 for a 50% ownership interest (it later paid her $6,000 for the other half). In the agreement, the wife ordered her lawyer to strike out the provision warranting that she was the valid copyright holder in the music.

More than six years later, TufAmerica accused Westbound of infringing TufAmerica’s rights to Clinton’s music. Westbound then sued TufAmerica and the widow, seeking a declaratory judgment that Westbound had not infringed any copyrights and that Westbound was the rightful owner. TufAmerica counterclaimed, asserting claims for copyright infringement, an accounting, and a declaration that TufAmerica owned the rights to the songs.

Westbound moved for summary judgment on its own claims and on TufAmerica’s counterclaims. The court denied summary judgment as it applied to Westbound’s own claims, but it granted summary judgment on the counterclaims on the ground that they were time-barred. The court ruled that any copyright infringement claims would have accrued in the 1970s, when Westbound repudiated TufAmerica’s ownership, or, at the latest, in 2011, when TufAmerica purchased rights from the widow.

TufAmerica then filed a motion for reconsideration. A jury trial is currently scheduled for October 2, 2023. After the first ruling was issued dismissing the counterclaims, Westbound filed a request for a conditional dismissal, should TufAmerica fail on its efforts to overturn dismissal of the counterclaims. TufAmerica, unsurprisingly, joined the request.

Reconsideration. Reconsideration is an “extraordinary remedy,” the court said, to be awarded within its discretion only when conditions warrant it. It is not intended to be a second bite at the apple.

The court then revisited its decision finding the claims time-barred. TufAmerica, in support of its reconsideration motion, argued that the court (1) overlooked facts about the widow’s actual knowledge of Westbound’s recordings, (2) improperly determined that TufAmerica and the widow were on inquiry notice of the Westbound recordings, and (3) overlooked the fact that the dismissal of the counterclaims would waste judicial resources.

The court reiterated its prior opinion that Westbound had received royalties for the six songs for more than 30 years before Taylor died. Taylor had reason to know about Clinton’s arrangement with Westbound because of Taylor’s deep experience in the music industry.

The court also rejected TufAmerica’s assertion that Taylor never played the Clinton recordings by Westbound on his radio show because TufAmerica was making that argument now for the first time. The argument, if it exists, existed at the time of the summary judgment hearing. Thus, it was waived and could not be made now. In any event, the court added, TufAmerica and the widow have previously admitted that Taylor played the recordings on the radio. In addition, other testimony has been offered to support the belief that Taylor was aware of the recordings. Furthermore, Taylor’s knowledge of the recordings is binding on TufAmerica and the widow.

Even in the unlikely event that TufAmerica could succeed on its argument that no knowledge of the recordings existed in the 1970s, the court concluded, the counterclaims accrued in 2011 when TufAmerica purchased rights from the widow because (1) the widow told TufAmerica that she had no paperwork and (2) the widow ordered the provision removed in which she warranted that she owned the copyright. TufAmerica could have examined her rights more comprehensively prior to signing the agreement, but it chose not to. For example, TufAmerica could have searched the copyright catalog for registrations, but TufAmerica’s owner admitted that he opted not to until a few years later. Two additional facts supporting accrual in 2011 were that TufAmerica paid only $6,500 for a 50% stake in a celebrated body of music and that TufAmerica’s owner had substantial music industry experience. All of those facts, the court ruled, added up to constitute inquiry notice for TufAmerica that another party may have claimed ownership rights. Thus, well more than three years had lapsed since TufAmerica and the widow were on notice of their claims.

TufAmerica also offered for the first time the argument that the statute of limitations should not be applied against a “senior copyright holder,” who cannot be said to be on inquiry notice without substantial evidence of repudiation. The court rejected the argument for two reasons. First, such arguments cannot be offered for the first time in a motion for reconsideration because reconsideration is not the proper vehicle for arguments that a party forgot to make the first time around. Second, substantial evidence of repudiation existed under these facts.

Waste. TufAmerica also argued that reconsideration was necessary because dismissal of the counterclaim will cause the parties to go through a trial that neither of them wants. The court noted, however, that its role was to apply the law and not to bail out parties who are having second thoughts about going through with a trial.

For all of those reasons, the court denied the motion for reconsideration.

Interlocutory appeal. The court then turned to TufAmerica’s request to certify the matter for an interlocutory appeal under 28 U.S.C. §1292(b), if the motion for reconsideration is denied, so that the Second Circuit could weigh in. The court denied the request because none of the conditions for certification existed, such as a controlling question of law, a substantial ground for differences of opinion, or a material advancement of the litigation. In the end, the “exceptional circumstances” that need to exist for certification simply did not exist.

Conditional dismissal. The court next addressed Westbound’s request to conditionally dismiss the case, which the court construed as a motion for voluntary dismissal under Fed. R. Civ. P. 41(a)(2). Given that the conditions required to exist to justify a voluntary dismissal appear to exist, the court granted the motion. Both parties apparently have a strong desire to avoid trial, and both parties believe that their dispute will be resolved by the Second Circuit’s decision on this court’s ruling that the counterclaims are time-barred.

The court, therefore, denied the motion for reconsideration and granted the request for conditional dismissal.

The Case is No. 19 Civ. 01764.

Attorneys: Richard Steven Busch (King & Ballow) for Bridgeport Music Inc. and Westbound Records, Inc. Hillel Ira Parness (Parness Law Firm, PLLC) for TufAmerica Inc. d/b/a Tuff City Records and Kay Lovelace Taylor.

Companies: Bridgeport Music Inc.; Westbound Records, Inc.; TufAmerica Inc. d/b/a Tuff City Records

Cases: Copyright NewYorkNews