Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`ew ee ew ew ew Be
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`JOHN WAITE,an individual, et al.,
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`Plaintiffs,
`
`USDC SDNY
`DOCUMENT
`ELECTRONICALLY FILED
`
`DATE FILED: 4 } 13 [2022
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`DOC #:
`
`-against-
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`19-cv-1091 (LAK)
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`UMG RECORDINGS, INC.,,et al.,
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`Defendants.
`wwe eee eee eee Ee eee ee ee x
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`MEMORANDUM OPINION
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`Appearances:
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`Ryan E. Cronin
`Gregory M. Bordo
`David M. Petry
`BLANK ROME LLP
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`Evan 8. Cohen
`Maryann R. Marzano
`COHEN Music LAW
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`Attorneys for Plaintiffs
`
`Steven M. Bierman
`Melanie Berdecia
`Rollin A. Ransom
`Lisa M. Gilford
`Adriane Peralta
`SIDLEY AUSTIN LLP
`Attorneysfor Defendants
`
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`eee nr ee ew ee we
`ewe
`ew ee ew ew ew Be
`ew ee ee er ee ee eee ee x
`
`JOHN WAITE,an individual, et al.,
`
`Plaintiffs,
`
`USDC SDNY
`DOCUMENT
`ELECTRONICALLY FILED
`
`DATE FILED: 4 } 13 [2022
`
`DOC #:
`
`-against-
`
`19-cv-1091 (LAK)
`
`UMG RECORDINGS, INC.,,et al.,
`
`Defendants.
`wwe eee eee eee Ee eee ee ee x
`
`MEMORANDUM OPINION
`
`Appearances:
`
`Ryan E. Cronin
`Gregory M. Bordo
`David M. Petry
`BLANK ROME LLP
`
`Evan 8. Cohen
`Maryann R. Marzano
`COHEN Music LAW
`
`Attorneys for Plaintiffs
`
`Steven M. Bierman
`Melanie Berdecia
`Rollin A. Ransom
`Lisa M. Gilford
`Adriane Peralta
`SIDLEY AUSTIN LLP
`Attorneysfor Defendants
`
`
`
`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 2 of 10
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`LEWIS A. KAPLAN, District Judge.
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`Aspiring singers, musicians, authors and other artists — sometimes young and
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`inexperienced and often not well known -- tend to have little bargaining power in negotiating
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`financial arrangements with recording companies, publishers, and others who promote and
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`commercialize the artists’ work. They often grant copyright in that work as part ofthe bargain they
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`strike for promotion and commercialization. Accordingly, when an artistic work turns out to be a
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`“hit,” the lion’s share of the economic returns often goes to those who commercialized the works
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`rather than to the artist who created them. Section 203 of the Copyright Act of 1976 established a
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`limited opportunity for artists to terminate the copyright ownership that they had granted to
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`commercializers decades earlier in order to address this issue. The idea was that termination of
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`these rights would more fairly balance the allocation of the benefits derived from the artists’
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`creativity. Termination is effectuated by serving the grantee with written notice.!
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`This is a purported class action by recording artists whose albums were released by
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`predecessors in interest of defendant UMG Recordings, Inc. (“UMG”), and Capitol Records, LLC
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`(“Capitol”) pursuant to agreements the artists signed in the 1970s and 1980s that granted copyright
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`in their works to UMG’s and Capitol’s predecessor recording companies. These grants allowed those
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`companies (and now UMGandCapitol) ) to market, distribute, andsell the artists’ sound recordings.
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`Each member of the class allegedly has terminated that grant as to the sound
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`recordings comprising certain albums. Defendants dispute the validity of those terminations. The
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`matter, however, now is before the Court on a far more limited issue, The defendants seek summary
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`judgment dismissing the copyright infringement claim of plaintiff Kasim Sulton on the basis that
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`17 U.S.C. § 203(a)(4).
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 3 of 10
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`the defendants — even assuming that Mr. Sulton’s putative notice of termination waseffective on
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`the date claimed, and thus that Mr, Sulton has held the copyright in question since then — have not
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`violated Mr. Sulton’s exclusive rights under the Copyright Act and therefore have not infringed his
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`3
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`copyright.
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`Facts
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`The following facts are undisputed.
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`The Sulton Recording Agreement
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`On September 29, 1980, Sulton and EMI America Records, Inc. (“EMI”) entered into
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`a recording agreement for Sulton’s exclusive personal services as a performer on phonograph
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`records (the “Agreement”).”? Paragraph 6(a) of the Agreement provided that EMIhas:
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`“the complete, unconditional, exclusive, perpetual, unencumbered and universe-
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`wide”rights in “all results and proceeds of [Sulton]’s services and performances
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`hereunder, including the exclusive ownership of any and all masters and all records
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`and reproductions made therefrom together with all universal copyrights and
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`copyright rights[.]’”
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`Capitol subsequently succeeded to EMI’s rights and obligations under the Agreement, including
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`ownership of the copyright to Kasim, an album published thereunder.‘
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`Cronin Deel, (Dkt 172) 93 & Ex. 2; Pl. 56.1 St. (Dkt 204) Gf 1-2.
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`Cronin Decl. (Dkt 172) 93 & Ex. 2 6(a); Pl. 56.1 St. (Dkt 204) FY 3.
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`PI. 56.1 St. (Dkt 204) 492, 4.
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 4 of 10
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`The EMI-Demon License
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`On December 1, 2011, EMI Records Ltd. and Demon Music Group Limited
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`(“Demon”) entered into an agreement pursuant to which Demonlicensed the album Kasim for a
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`three-year term from February 25, 2013 to February 24, 2016 (the “License”), The License applied
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`to compact disc, or “CD,”releases only (i.¢., no streaming or other digital rights) and the territory
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`of the License was Itmited to the United Kingdom and Ireland. Pursuant to the License, Demon
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`released a compact disc re-issue of Kasim through its label Edsel Records in the United Kingdom
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`in 2013.°
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`Sulton’s Putative Notice of Termination
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`On or about July 20, 2016, Sulton, through his representative and counsel Evan
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`Cohen, transmitted a putative “Notice of Termination Under 17 U.S.C. § 203 and 37 C.F.R. §
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`201.10” to “Universal Music Group”(the “Notice”),° In the Notice, Sulton purported to terminate
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`“Talli grants or transfers of copyright andall rights ofthe copyright proprietor” in the album Kasim,
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`“including, without limitation the grant dated in or about 1981 between the recording artist Kasim
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`[Sulton] and EMI America Records, a division of Capitol Records, Inc.’
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`17
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`The Notice also listed an
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`“Effective Date of Termination” of July 21, 2018 for Kasim.®
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`Pl. 56.1 St. (Dkt 204) ff 5-7.
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`Id 48.
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`Id. 49.
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`Id. § 10.
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 5 of 10
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`Sulton’s Claims and Defendants’ Motion
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`On June 5, 2019, Sulton joined this action as a plaintiff asserting claims against
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`Defendants for copyright infringement.’ Sulton seeks to be appointed a class representative of a
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`putative class of artists seeking compensatory damages for alleged copyright infringement against
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`Capitol, defined as follows: “All recording artists (and statutory heirs and personal representatives
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`of those recordingartists, if applicable) who have served Defendants with Notices of Termination
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`pursuant to § 203 of the Copyright Act describing an effective date of termination fora particular
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`work(i) occurring on or after January 1, 2013 and (ii) occurring no later than the date the Court
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`grants class certification of Class A.”'"
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`Sulton contends that Defendants allegedly continued to exploit Kasim and generate
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`revenue from such exploitation after July 21, 2018, the album’s putative termination date.'!
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`Defendants, however, have submitted a declaration asserting that they have “no record of having
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`exploited Kasim in the United States on or after July 21, 2018, and likewise have no record of any
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`revenue activity associated with exploitation of Kasim in the United States after July 21, 2018”
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`and, on that basis, assert in their Rule 56.1 Statement that they have neither exploited Kasim in the
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`United States nor received any revenue associated with its exploration after the putative July 21,
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`al.
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`Td. 912.
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`Id. 414.
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`Harrington Decl. (Dkt 176) ff 3-4.
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 6 of 10
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`2018 termination date.'? Sulton has adduced no evidence to the contrary.
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`Indeed, Sulton’s Rule
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`56.1 Statement does not dispute defendants’ foregoing assertions."
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`6
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`Summary Judgment Standard
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`Discussion
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`The legal standard governing motions for summary judgmentis well established,
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`aptly summarized in defendants’ memorandum, and uncontroverted by Suiton:
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`“Summary judgment must be granted when ‘there is no genuine dispute as
`to any material fact and the movantis entitled to judgment as a matter of law.’ Fed.
`R, Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). While ‘facts
`must be viewedin the light most favorable to the nonmovingparty, that is true only
`if there is a “genuine” dispute as to those facts.’ /atel Corp. Inv. Pol’y Comm. y.
`Sulyma, 140 S. Ct. 768, 779 (2020) (internal quotation marks omitted). Mere
`‘conclusory allegations or unsubstantiated speculation’ are insufficient to raise a
`dispute of material fact and defeat summary judgment. F. D.C. v. Great Am. Ins.
`Co., 607 F.3d 288, 292 (2d Cir. 2010) (citation omitted).
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`“Rule 56(c) of the Federal Rules of Civil Procedure requires the entry of
`summary judgment ‘against a party who fails to make a showing sufficient to
`establish the existence of an element essential to that party’s case, and on whichthat
`party will bear the burden of proof attrial.’ H/-Nahal v. Yassky, 835 F.3d 248, 252
`(2d Cir, 2016) (internal quotations and citations omitted); see also Fed R. Civ.P.
`56(c). “In such a situation, there can be “no genuine issue as to any materialfact,”
`since a complete failure ofproof concerning an essential element of the nonmoving
`party’s case necessarily renders all other facts immatertal.’ Celotex, 477 U.S. at 322-
`23 (citation omitted).”?*
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`Pl. Rule 56.1 St. (Dkt 204) 415.
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`Id.
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`Def, Mem, (Dkt 170) at 3-4.
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`
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 7 of 10
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`Copyright Infringement - General Principles
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`The Intellectual Property Clause of the Constitution empowers Congress to “To
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`promote the Progress of Science and useful Arts, by securing for limited Times to Authors and
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`Inventors the exclusive Right to their Respective Writings and Discoveries.”’® The idea was to
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`empower Congress to enumerate authors by “the least exceptionable way of remunerating them [—
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`... } is by [giving thematime-limited] monopoly.”
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`The current manifestation of Congress’s exercise of this power for the benefit of
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`authors, including musical performers, is the Copyright Act of 1976 (the “Act”).'" Section 106 of
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`the Act, subject to the Act’s other provisions, confers on the owner ofcopyright“the exclusiverights
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`to do and to authorize,” insofar as is relevant here, (1) reproduction of the copyrighted work, (2)
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`prepare derivative works based on the copyrighted work, (3) distribution of copies or phonorecords
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`of the workto the public, (4) perform the workpublicly, (5) display the copyrighted work publicly,
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`and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a
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`digital audio transmission.’ Section 501(a) defines infringement of copyright, generally speaking,
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`as “violat[ion] of the exclusive rights of the copyright owner. Thus, assuming arguendo (as
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`defendants do, solely for the purposes of this motion) that Sulton’s termination notice was effective
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`U.S, Const., Art. I, § 8.
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`See 1 NIMMER ON COPYRIGHT § 1.05 n, 28 (quoting speech of Thomas MacCauleyto the
`House of Commons on February 5, 1841).
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`17 U.S.C, 8§ 1 ef seg.
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`Id. § 106,
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 8 of 10
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`8
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`as of July 21, 2018, the question whether defendants are entitled to judgment as a matter of law
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`dismissing Sulton’s copyright infringement claim resolves into whether there is a genuine issue of
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`material fact as to whether defendants have violated any of Sulton’s exclusiverights after that date.
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`The plaintiff has the burden of proof of infringement. He has adduced no evidence
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`whatsoever that the defendants have exploited in the United States any of the exclusive rights
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`conferred by Section 106 after the purported termination date. Accordingly, by conventional
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`standards, defendants are entitled to dismissal of the infringement claim. Plaintiff, however,
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`contends otherwise, offering three theories. None has any merit.
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`The First Theory — Contesting the Validity ofthe Termination Notice
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`Sulton characterizes the first ofhis theories of copyright infringement as defendants’
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`“wrongfully failing and refusing to relinquish the rights to Sulton in and to the sound recordings he
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`created and as set forth in the Notice of Termination served on Defendants.’”° In other words, he
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`characterizes defendants’ contention that the termination notice was ineffective as infringement.
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`Asan initial matter, it is important to recognize that Section 203 of the Act did not
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`categorically terminate, or categorically permit all transferors to terminate, transfers and licenses.
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`It established limits to termination. First, termination is not available in respectto “a work made
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`for hire.’ Moreover, the Act established conditions as to when, by whom and exactly how
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`termination might be effected.”' That there might be disputes as to whether particular works had
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`been madefor hire or as to the satisfaction ofall of the conditions was entirely foreseeable when the
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`20
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`21
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`Pl. Mem. (Dkt 201), at 1.
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`17 U.S.C, § 203(a).
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 9 of 10
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`9
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`Act was adopted, as this case makes quite evident. Yet there is nothing in the exclusive rights of
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`authors conferred by Section 106 nor in Section 501(a), which defines infringement,that transforms
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`an assertion by a transferee or licensee that a putative notice of termination failed to come within
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`or conditions of Section 203 an act of infringement. Indeed, reading the Act in such a way, likely
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`would give rise to serious constitutional questions.” Andplaintiff's attemptto stretch the limits of
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`the Act by contending that defendants’ action in contesting the efficacy of Sulton’s notice of
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`termination deprives him of the benefit of copyright ownership and therefore is inconsistent with
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`Section 106 and constitutes infringement is unpersuasive. Indeed, it assumes the very point at issue
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`in this action — whether Sulton or Capitol owns the exclusive rights.
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`The Remaining Theories — More ofthe Same
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`Sulton characterizes his two remaining theories as in this way: defendants are: “(2)
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`preventing [him] from exercising any orall of the bundle of rights enumerated in Section 106...
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`“ and “(3) threatening Sulton with litigation if he attempted to exercise those rights.” A moment’s
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`reflection, however, yields the conclusion that these amount to the same argumentalready rejected.
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`This is a lawsuit about whether Sulton or Capitol owns the exclusive rights of which Sulton writes.
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`Sulton’s argument assumesthat he ownsthose rights and, moreover, that anyone claiming otherwise
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`is a copyright infringer because those claims may interfere with Sulton’s ability to have the benefits
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`22
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`To be sure, there are circumstances in which the assertion of legal rights may be actionable.
`See.g., Chevron Corp.v. Donziger, 974 F. Supp.2d 362, 580-81 & nn. 1382-84 (S.D.NLY.
`2014) (corruption of legal proceedings not constitutionally protected), aff'd, 833 F.3d 74 (2d
`Cir. 2016), cert. denied, 137 S.Ct. 2268 (2017). But the facts alleged here do not approach
`suchalevel.
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`Case 1:19-cv-01091-LAK Document 246 Filed 09/13/22 Page 10 of 10
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`of the exclusive rights in question. Whileit theoretically might prove to be the case that Capitol’s
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`advocacy of its position is so baseless, so corrupt, and so otherwise devoid of legitimacy thatits
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`actions might give rise to some commercial tort or, perhaps, even infringementliability, there is
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`nothing in Sulton’s infringement claim that would permit such a conclusionat this point.
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`10
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`Conclusion
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`I have considered Sulton’s remaining arguments of found and them all wanting,
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`essentially for the reasons advanced by defendants. Accordingly, defendants’ motion for summary
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`judgment dismissing plaintiff Sulton’s copyright infringement claim (Dkt 168) is granted.
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`SO ORDERED,
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`Dated:
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`September 13, 2022
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`United States District Judge
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