IP Law Daily, COPYRIGHT—S.D.N.Y.: Recording artist failed to provide evidence of Capitol Records’ copyright infringement, (Sep 14, 2022)

By Patricia K. Ruiz, J.D.

The court was unpersuaded by the artist’s assertion that anyone contesting his copyright ownership is an infringer.

An action contesting the efficacy of a notice of termination under Section 203 of the Copyright Act does not deprive a copyright owner of any or all of his bundle of rights, the U.S. District Court for the Southern District of New York held, granting a motion to dismiss by Capitol Records, LLC. The court further found that Kasim Sulton, the copyright owner, failed to provide evidence of infringement sufficient to survive a motion to dismiss (Waite v. UMG Recordings, Inc., September 13, 2022, Kaplan, L.).

Background. The lawsuit arises out of Section 203 of the Copyright Act, a provision that allows authors, including recording artists, with an inalienable and un-waivable right to terminate grants of copyright ownership thirty-five years after the initial grant. Because the provision was enacted in 1976 and applies to agreements made in 1978 or later, recording artists and other authors have been able to invoke this 35-year termination provision beginning as early as 2013. But the artists involved in this lawsuit contend that their labels, namely UMG Recordings, Inc. and its subsidiary Capitol Records, LLC, have refused to recognize these termination notices.

The dispute between the artists and the labels revolves around an exception to Section 203 that involves so-called “works for hire.” Under the work for hire provision of Section 203, authors who are considered employees, as opposed to independent contractors, have no right to terminate their artist agreements and reclaim their masters. As the class certification motion makes clear, record labels have traditionally adopted a “belt and suspenders” approach to their recording contracts, insisting on contractual “work for hire” provisions but also, as a backup, requiring the artists to assign to the label any rights they may have in the masters. Those assignments are subject now to termination, but the record labels have refused to acknowledge the terminations on the ground that the albums covered by the agreements were made as works for hire and therefore are exempt from termination.

Sulton recording agreement. On September 29, 1980, Sulton and EMI America Records, Inc. (EMI) entered into a recording agreement for Sulton’s exclusive personal services as a performer on phonograph records. The agreement provided that EMI has “complete, unconditional, exclusive, perpetual, unencumbered and universe-wide” rights in “all results and proceeds of [Sulton]’s services and performances,” including the exclusive ownership of any and all masters and all records and reproductions of the work done under the contract. Capitol subsequently succeeded to EMI’s rights and obligations under the agreement, including ownership of the copyright to Kasim, an album published under the contract.

Putative notice of termination. On or about July 20, 2016, Sulton transmitted a putative notice of termination to Universal Music Group, purporting to terminate all grants or transfers of copyright and all rights of the copyright proprietor in the album Kasim, including the 1981 grant between Sulton and EMI America Records. The notice listed the effective date of termination for Kasim as July 21, 2018. Sulton joined the instant action as a plaintiff asserting claims against Capitol for copyright infringement and sought to be appointed as a class representative of a putative class of artists seeking compensatory damages for alleged copyright infringement against Capitol. Sulton alleged Capitol continued to exploit Kasim and generate revenue from that exploitation after the album’s putative termination date.

No evidence of exploitation, revenue. Capitol asserted it had no record of having exploited Kasim in the United States on or after July 21, 2018, and likewise had no record of any revenue activity asserted with the exploitation of Kasim in the United States after July 21, 2018. Capitol moved for summary judgment dismissing Sulton’s copyright infringement claim on the basis that—even assuming that Sulton’s putative notice of termination was effective on the date claimed and that Sulton has held the copyright in question since then—it has not violated Sulton’s exclusive rights under the Copyright Act and therefore has not infringed his copyright.

The court noted that the plaintiff has the burden of proof of infringement, finding Sulton has adduced no evidence whatsoever that Capitol exploited in the U.S. any of the exclusive rights conferred by copyright law after the purported termination date. By conventional standards, the court held, Capitol is entitled to dismissal of the infringement claim, unpersuaded by three theories of infringement offered by Sulton. Ultimately, the court disagreed that Capitol’s contention that the termination notice was ineffective constituted infringement, reasoning that contesting the efficacy of Sulton’s notice of termination does not deprive him of the benefit of copyright ownership.

The Case is No. 1:19-cv-01091-LAK.

Attorneys: David Michael Perry (Blank Rome, LLP) for John Waite. Ariel Atlas (Sidley Austin LLP) for UMG Recordings, Inc. d/b/a Universal Music Group and Capitol Records, LLC.

Companies: UMG Recordings, Inc. d/b/a Universal Music Group; Capitol Records, LLC

Cases: Copyright NewYorkNews