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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`ee ee eeee ee ee ee ee eee x
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`JOHN WAITE,an individual, et al.,
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`Plaintiffs,
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` USDC SDNY
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`DOCUMENT
`ELECTRONICALLY FILED |
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`DOC #:
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`oy
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`ord |
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`-against-
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`19-cv-1091 (LAK)
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`UMG RECORDINGS, INC., et al.,
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`Defendants.
`ween ene eee ee ee eee ee ee ee ee ere eee eee x
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`MEMORANDUM OPINION
`(Corrected)
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`Appearances:
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`Ryan E. Cronin
`Gregory M. Bordo
`David M. Perry
`BLANK ROME LLP
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`Evan 8S. Cohen
`Maryann R. Marzano
`COHEN Music LAW
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`Attorneys for Plaintiffs
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`Steven M. Bierman
`Melanie Berdecia
`Rollin A. Ransom
`Lisa M. Gilford
`Adriane Peralta
`SIDLEY AUSTIN LLP
`Attorneys for Defendants
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`Case 1:19-cv-01091-LAK Document 247 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 workas part of the 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’
`creativity. Terminationis 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. (““SUMG”), and Capito! Records, LLC
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`(“Capitol”) pursuant to agreementstheartists 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
`companies (and nowUMGand Capitol) : to market, distribute, and sell the artists’ soundrecordings.
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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 onafar more limited issue. The defendants seek summary
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`17 U.S.C. § 203(a)(4).
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 3 of 10
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`judgment dismissing the copyright infringement claim of plaintiff Kasim Sulton on the basis that
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`the defendants — even assumingthat Mr. Sulton’s putative notice of termination was effective 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 andall 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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`Cronin Decl, (Dkt 172) 43 & Ex. 2; Pl, 56.1 St. (Dkt 204) Jf 1-2.
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`Cronin Decl. (Dkt 172) 3 & Ex. 2 { 6(a); Pl. 56.1 St. (Dkt 204) {ff 3.
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 4 of 10
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`ownership of the copyright to Kasim, an album published thereunder.*
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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 Demon licensed 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 limited to the United Kingdom and Ireland. Pursuant to the License, Demon
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`released a compactdisc 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 ofTermination
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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 purportedto terminate
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`“fajll grants or transfers of copyright and all rights ofthe copyright proprietor” in the album Kasim,
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`“including, without limitation the grant dated in or about 1981 between the recordingartist Kasim
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`PL, 56,1 St, (Dkt 204) 4ff 2,4.
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`PL. 56.1 St. (Dkt 204) $4] 5-7.
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`id. (8.
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 5 of 10
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`[Sulton] and EMI America Records, a division of Capitol Records, Inc.”’
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`ox]
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`The Notice alsolisted an
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`5
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`“Effective Date of Termination” of July 21, 2018 for Kasim.®
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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 recordingartists (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 for a 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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`1.49.
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`Id. 410.
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`id. Vb
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`Id. $12.
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`Id. 914,
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 6 of 10
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`6
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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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`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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`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 Sulton:
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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 judgmentas a matter of law.’ Fed.
`R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 US. 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.’ Intel Corp. Inv. Pol’y Comm. v.
`Sulyma, 140 8. 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. #. DIC. 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 which that
`party will bear the burden of proofattrial.’ ki-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 material fact,”
`since a completefailure of proof concerning an essential element of the nonmoving
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`Harrington Decl. (Dkt 176) 94 3-4,
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`Pl. Rule 56.1 St. (Dkt 204) ¥ 15.
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`id.
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 7 of 10
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`party’s case necessarily rendersail other facts immaterial.’ Celotex, 477 U.S, at 322-
`23 (citation omitted).”"°
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`7
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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 renumerate authors by “the least exceptionable way ofremunerating them {—
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`... ] is by [giving them a time-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 of copyright “the exclusive rights
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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 work to the public, (4) perform the workpublicly, (5) display the copyrighted workpublicly,
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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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`Def. Mem. (Dkt 170) at 3-4.
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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. §§ 1 ef seg.
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 8 of 10
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`8
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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 ofthis motion) that Sulton’s termination notice was effective
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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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`Theplaintiff 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 characterizesthefirst of his theories ofcopyright 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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`As an 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 respect to “a work made
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`id. § 106.
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`20
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`Pl. Mem. (Dkt 201), at 1.
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 9 of 10
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`9
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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 madeforhire or as to the satisfaction ofall ofthe conditions was entirely foreseeable when the
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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 norin 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.” And plaintiffs attempt to 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 infringementis unpersuasive. Indeed, it assumesthe very pointat issue
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`in this action — whether Sulton or Capitol owns the exclusiverights.
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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 anyorall 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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`21
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`22
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`17 U.S.C. § 203(a).
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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 £. Supp.2d 362, 580-81 & nn. 1382-84 (S.D.N.Y.
`2014) (corruption of legal proceedingsnotconstitutionally 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
`such a level.
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`Case 1:19-cv-01091-LAK Document 247 Filed 09/13/22 Page 10 of 10
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`10
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`reflection, however, yields the conclusion that these amountto the same argumentalready rejected.
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`This is a lawsuit about whether Sulton or Capitol ownsthe exclusive rights of which Sulton writes.
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`Sulton’s argument assumesthat he owns those 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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`of the exclusive rights in question. While it theoretically might prove to be the case that Capitol’s
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`advocacy ofits position is so baseless, so corrupt, and so otherwise devoid of legitimacy that its
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`actions might give rise to some commercial tort or, perhaps, even infringementliability, there is
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`nothing mn Sulton’s infringement claim that would permit such a conclusionat this point.
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`Conclusion
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`T 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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`judgmentdismissing plaintiff Sulton’s copyright infringement claim (Dkt 168) is granted.
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`SO ORDERED.
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`Dated:
`Corrected:
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`September 13, 2022
`September 13, 2022
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`Lewis A. Kaplan
`United States District Judge
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