UNITED STATES DISTRICT COURT
`MIDDLE DISTRICT OF TENNESSEE
`NASHVILLE DIVISION
`
`NO. 3:10-1160
`JUDGE CAMPBELL
`
`WARNER/CHAPPELL MUSIC, INC.,
`et al.
`
`v.
`
`)
`)
`BLUE MOON VENTURES and EDWARD )
`YIM, individually.
`)
`
`)
`
`))
`
`PRELIMINARY INJUNCTION ORDER
`
`Pending before the Court is Plaintiffs’ Motion for a Preliminary Injunction (Docket No.
`
`9). For the reasons described herein, the Motion is GRANTED.
`
`On December 17, 2010, Plaintiffs filed an application for a temporary retraining order
`
`and preliminary injunction, asking the Court to enjoin and restrain all of the Defendants from
`
`manufacturing, distributing, or otherwise exploiting certain musical compositions owned and/or
`
`administered by Plaintiffs without first obtaining an authorizing license. (Docket No. 9). In
`
`addition, Plaintiffs’ motion seeks to ensure that Defendants preserve all digital and physical
`
`information and products relating to the use and exploitations of the musical compositions.
`
`(Docket No. 9).
`
`A temporary restraining order (“TRO”) hearing was held on January 18, 2010, and
`
`Plaintiffs were granted a TRO. A preliminary injunction hearing was held on February 1, 2010,
`
`at which the Court, under Fed. R. Civ. P. 65(b)(2), extended the TRO an additional fourteen
`
`days. The TRO is set to expire at midnight on February 15, 2011.
`
`Plaintiffs allege, both in pleadings and in oral arguments, that they are the owners and/or
`
`administrators of a number of musical compositions which are being infringed by Defendants,
`
`although the exact number of compositions at issue is not currently clear. (Docket No. 10).
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 1 of 9 PageID #: 2785
`
`

`
`Defendants argue Plaintiffs lack standing to sue for copyright infringement, and thus
`
`have no standing to ask for a preliminary injunction, as they have not established the necessary
`
`ownership of the copyrights. (Docket No. 51). Defendants argue Plaintiffs have offered no
`
`evidence to meet their burden of demonstrating ownership other than relying on (i) Exhibits A
`
`through I to the complaint, which identify Plaintiffs’ percentage of control and the registration
`
`numbers of the compositions; (ii) screenshots from the U.S. Copyright Office’s website of some
`
`of the compositions, and (iii) Plaintiffs’ “split sheets,” which Plaintiffs argue show their
`
`“ownership/control” of the relevant compositions. Id. Defendants argue this evidence is not
`
`sufficient to demonstrate Plaintiffs are either the legal or beneficial owners of the copyrights. Id.
`
`At the preliminary injunction hearing held February 1, 2011, Plaintiffs argued they have
`
`standing to bring suit, and thus standing to ask the Court to grant a preliminary injunction against
`
`Defendants. Plaintiffs rely on four types of documents to demonstrate ownership: (1) actual
`
`copyright ownership certificates from the U.S. Copyright Office; (2) an Exclusive Songwriter
`
`and Co-Publishing Agreement, which conveys a percentage ownership to Plaintiffs of copyrights
`
`(Docket No. 44, ex. C); (3) an Exclusive Co-Publishing Agreement, which conveys a percentage
`
`ownership to Plaintiffs of copyrights (Id, Ex. D); and (4) an Exclusive Administration
`
`Agreement which grants Plaintiffs exclusive administration rights and appoints Plaintiffs as the
`
`attorneys-in-fact to execute necessary documents and interests in order to perfect Plaintiffs’
`
`administration rights in the subject compositions. The Exclusive Administration Agreement
`
`does not explicitly give Plaintiffs the right to bring suit as attorneys-in-fact. (Id, Ex. E).
`
`The Court finds that document types (1)-(3) are demonstrative of Plaintiffs’ copyright
`
`ownership rights in the corresponding compositions. However, the Exclusive Administration
`
`Agreement is not as clear and requires further analysis as set forth in this order.
`
`2
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 2 of 9 PageID #: 2786
`
`

`
`STANDARD OF REVIEW
`
`The underlying purpose of a preliminary injunction is to preserve the status quo and
`
`prevent irreparable harm pending trial. See, e.g. Granny Goose Foods, Inc. v. Brotherhood of
`
`Teamsters & Auto Truck Drivers Local No. 70 of Alameda County, 415 U.S. 423, 94 S.Ct. 1113,
`
`39 L.Ed. 2d 435 (1974); The Procter & Gamble Co. v. Bankers Trust Co., 78 F.3d 219, 226 (6th
`
`Cir. 1995)(purpose of a Rule 65 injunction is to preserve the status quo so that a reasoned
`
`resolution of a dispute may be had).
`
`In order to be entitled to injunctive relief, a plaintiff must demonstrate the following:
`
`1. Irreparable injury;
`2. The harm threatened to plaintiff outweighs whatever damage the proposed injunction
`may cause to defendant;
`3. The injunction would not be adverse to the public interest;
`4. The plaintiff has a substantial likelihood that it will eventually prevail on the merits.
`
`See Rock and Roll Hall of Fame and Museum, Inc. v. Gentile Prod., 134 F.3d 749, 753 (6th Cir.
`
`1989). The same criteria apply in the context of a plaintiff’s efforts to protect an intangible
`
`property right through injunctive relief. Tree Publishing Co., Inc. v. Warner Bros. Records, 785
`
`F.Supp. 1272, 1274 (M.D. Tenn. 1991). These four factors are elements to be balanced and not
`
`prerequisites that must be met. Id. at 1274 (citing In re: Delorean Motor Co. v. Delorean, 755
`
`F.2d 1223 (6th Cir. 1985)).
`
`ANALYSIS
`
`In determining whether Plaintiffs should be granted a preliminary injunction, the Court,
`
`after oral arguments, held that Plaintiffs have demonstrated irreparable injury, that the harm
`
`threatened to Plaintiffs outweighs any potential damages the injunction may cause to Defendant,
`
`that the injunction would not be adverse to public interest, and that if Plaintiffs have standing to
`
`3
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 3 of 9 PageID #: 2787
`
`

`
`bring this action, there is a substantial likelihood that they will prevail on the merits. The Court
`
`now need only determine whether Plaintiffs have standing to bring suit in this matter.
`
`As stated above, Plaintiffs have demonstrated ownership and control over a number of
`
`compositions through outright ownership, under the Exclusive Songwriter and Co-Publishing
`
`Agreement and under the Exclusive Co-Publishing Agreement. The Court now turns to the
`
`Exclusive Administration Agreement to determine whether there is ownership, and therefore
`
`standing to bring suit, for the compositions covered by this agreement.
`
`Under 17 U.S.C. §106, the owner of a copyright has the exclusive rights to do and to
`
`authorize any of six enumerated rights.1 Section 201(d)(1) states that ownership may be
`
`transferred in whole, or in part, by any means “of conveyance or by operation of law.” Transfer
`
`of copyright ownership is defined in the statute as
`
`an assignment, mortgage, exclusive license, or any other conveyance, alienation, or
`hypothecation of a copyright or of any of the exclusive rights comprised in a copyright,
`whether or not it is limited in time or place of effect, but not including a nonexclusive
`license.
`
`17 U.S.C. §101 (emphasis added). Any of the exclusive rights “including any subdivision of any
`
`of the right specified by 106, may be transferred as provided by clause (1) and owned separately.
`
`1 (1) to reproduce the copyrighted work in copies or phonorecords;
` (2) to prepare derivative works based upon the copyrighted work;
` (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or
` other transfer of ownership, or by rental, lease, or lending;
` (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes,
`and motion pictures and other audiovisual works, to perform the copyrighted work
`publicly;
` (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes,
`and pictorial, graphic, or sculptural works, including the individual images of a motion
`picture or other audiovisual work, to display the copyrighted work publicly; and
` (6) in the case of sound recordings, to perform the copyrighted work publicly by means
` of a digital audio transmission. 17 U.S.C. § 106
`
`
`
`4
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 4 of 9 PageID #: 2788
`
`

`
`The owner of any particular exclusive right is entitled, to the extent of that right, to all of the
`
`protection and remedies accorded to the copyright owner. . . “ 17 U.S.C. § 201(d)(2).
`
`Section 501(b) establishes that the “legal or beneficial” owner of an exclusive right is
`
`entitled to “institute an action for any infringement of that particular right committed while he or
`
`she is the owner of it.” 17 U.S.C. § 501(b).
`
`In addition, when a copyright interest is transferred, it must be recorded to protect the
`
`copyright holder’s right to bring an infringement suit. 17 U.S.C. § 205(d); see H.R. Rep. No 94-
`
`1476, at 129 (1976). This requirement ensures that prospective buyers or transferees have notice
`
`of the copyright interests owned by others. Silvers v. Sony Pictures Entertainment, 402 F.3d 881,
`
`885 (9th Cir. 2005). See also Sybersound Records v. UAV Corporation, 517 F.3d 1137, 1146
`
`(9th Cir. 2008); Imperial Residential Design, Inc. v. Palms Development Group, 70 F.3d 96
`
`(11th Cir. 1995).
`
`To have standing to bring suit, a party must have some ownership rights over at least part
`
`of the exclusive right for which he wishes to sue. However, the definition of “beneficial
`
`ownership” is not as cut and dry.
`
`In Silvers, the Ninth Circuit held that exclusive rights may be “chopped up and owned
`
`separately, and each owner of a subdivided exclusive right may sue to enforce that portion of an
`
`exclusive right, no matter how small.” Silvers, 402 F.3d at 887. The Court also noted that
`
`Congress’ intent in listing who may sue for copyright infringement, a legal or beneficial owner,
`
`should be understood (through statutory construction) as meaning an exclusion of all others
`
`besides the legal or beneficial owner from bringing suit.
`
`The House Report suggests, as an example, a “beneficial owner” could be “an author
`
`who had parted with legal title to the copyright in exchange for percentage royalties based on
`
`5
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 5 of 9 PageID #: 2789
`
`

`
`sales or license fees.” H.R. Rep. No. 94-1476 at 159. Additionally, the House Report states: “The
`
`exclusive rights accorded to a copyright owner under Section 106 are ‘to do and authorize’ any
`
`of the activities specified. Each . . . may be subdivided indefinitely and . . . in connection with
`
`section 201 [governing transfer of rights], each subdivision of an exclusive right may be owned
`
`and enforced separately.” Id. at 61. Although the Copyright Act permits exclusive rights to be
`
`chopped up and owned separately, the assignment or other type of alienation permitted by 17
`
`U.S.C. §§ 101 and 201(d)(2) must be exclusive.
`
`In a karaoke case similar to this case, the Court in Sybersound held, “If TVT were the
`
`sole copyright owner of the nine referenced songs and had transferred an exclusive karaoke-use
`
`interest to Sybersound. . . Sybersound would have had standing as the exclusive licensee to sue
`
`the Corporation Defendants for infringement.” Sybersound Records v. UAW Corp, 517 F.3d at
`
`1145.
`
`In Nafal v. Carter, the District Court for the Central District of California wrote, “A co-
`
`exclusive licensee is no different from a co-owner of a copyright, other than the fact that the
`
`former owns some lesser portion of the bundle of rights retained by the latter.” In addition, “[t]o
`
`find that a licensee of an exclusive license lacks copyright standing because the copyright owner
`
`also granted the exclusive license to one or more other licensees would, indeed, fly in the face of
`
`case law affirming the Copyright Act’s recognition of joint ownership of exclusive rights.” Nafal
`
`v. Carter, 540 F.Supp.2d 1128 (C.D. Cal. 2007).
`
`The Seventh Circuit explained that “[i]n an exclusive license, the copyright holder
`
`permits the licensee to use the protected material for a specific use and further promises that the
`
`6
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 6 of 9 PageID #: 2790
`
`

`
`same permission will not be given to others.” I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir.
`
`1996).
`
`Whether an agreement transfers rights that are exclusive or nonexclusive is governed by
`
`the substance of what was given to the licensee and not the label that the parties put on the
`
`agreement. Althin CD Medical, Inc. v. West Suburban Kidney Center, 874 F.Supp. at 837, 843
`
`(N.D. Ill. 1994). “When the owner conveys a nonexclusive license to one person, the owner still
`
`has the power to do precisely the same thing for everyone else in the world. A license is
`
`exclusive not simply when one individual or entity is given the right to use a copyright, but only
`
`because the owner promises not to convey that right to anyone outside of those persons or
`
`entities who have an interest in the license.” Shaver, at 775.
`
`In Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d Cir. 1982), the court
`
`held that one who owns no exclusive right in a copyright may not sue for infringement.
`
`We do not believe that the Copyright Act permits holders of rights under copyrights to
`choose third parties to bring suits on their behalf. When F[ed].R.Civ.P. 17(a) ordinarily
`permits the real party in interest to ratify a suit brought by another party, the Copyright
`Law is quite specific in stating that only the “owner of an exclusive right under a
`copyright” may bring suit.
`Id. at 32, n.3. See also I.A.E, Inc. V. Shaver, 74 F.3d at 775 (“. . . a person holding a
`
`nonexclusive license has no standing to sue for copyright infringement.”(internal quotations
`
`omitted)).
`
`Regarding musical compositions, although ownership rights originate with the creator,
`
`both ownership and the right to administer the copyright may be subject to an agreement, such as
`
`an administration agreement. Nimmer §30.02. In an administration agreement, the writer retains
`
`the entire copyright in the musical composition and the administrator is vested with the sole and
`
`7
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 7 of 9 PageID #: 2791
`
`

`
`exclusive right to license and exploit the musical composition under copyright for the term of the
`
`agreement. Nimmer § 30.02[B].
`
`Plaintiffs’ Exclusive Administration Agreement
`The agreement in dispute here is the “Exclusive Administration Agreement.” (Docket
`
`No. 44-25, Ex. E). Section 3.2 of the agreement states in part: “Although it is intended that we
`
`and our foreign subsidiaries, affiliates and licensees have the fullest possible rights to (1)
`
`administer and exploit the [Subject Compositions], utilize your name and approved likeness in
`
`connect therewith; (ii) grant non-exclusive life-of-copyright licenses for uses of the [Subject
`
`Compositions]. . .” (emphasis added).
`
`The language giving Plaintiff the right to administer and exploit the copyrights, as well as
`
`the ability to further grant non-exclusive licenses, gives them power of an exclusive licensee
`
`over at least two of the six rights in section 106, namely: the right to reproduce the copyrighted
`
`work (§106(1)) and the right to distribute copies of the work to the public by sale or other
`
`transfer of ownership (§106(2)). Further, the fact that Plaintiff is able to itself grant non-
`
`exclusive licenses weighs in favor of the fact that they are beneficial owners of the copyrights in
`
`question. The Plaintiffs that are party to the “Exclusive Administration Agreement” were
`
`transferred an exclusive interest from the copyright owners such that they have standing to bring
`
`suit on behalf of the copyright as the exclusive licensee.
`
`It is not the “attorney-in-fact” language in the “Exclusive Administration Agreement”
`
`that gives Plaintiffs standing to bring suit, but rather the language in the agreement that makes
`
`Plaintiffs exclusive licensees. The parties to the “Exclusive Administration Agreement”
`
`specifically elected to omit any indication that Plaintiffs, as attorneys-in-fact, had the specific
`
`right to bring suit against infringers. Even so, the agreement grants Plaintiffs the right to collect
`
`8
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 8 of 9 PageID #: 2792
`
`

`
`income, administer and exploit the compositions, and grant non-exclusive licenses to other
`
`parties, which is strong evidence of beneficial ownership and thus standing to bring suit.
`
`Accordingly, the Court finds that Plaintiffs have standing to bring this action. The
`
`Motion for Preliminary Injunction (Docket No. 9) is GRANTED.
`
`It is, therefore, ordered, pursuant to Federal Rule of Civil Procedure 65, that Defendants,
`
`their officers, agents, employees, servants, attorneys, and all persons in active concert or
`
`participation with them are hereby restrained and enjoined, pending trial, from selling, uploading
`
`soundclips to a website, or distributing the musical compositions listed on the attached Exhibits
`
`A through H (excluding the seventeen (17) musical compositions in the attached Exhibit I,
`
`Docket No. 37, page 4)2 without a license authorizing the exploitation. Defendants are further
`
`ordered to preserve all digital and physical information and products in their possession relating
`
`to the exploitation of the aforementioned musical compositions. Under the circumstances of this
`
`case, Plaintiff shall post a bond in the amount of $10,000.00 with the Clerk of Court.
`
`IT IS SO ORDERED.
`
`____________________________________
`TODD J. CAMPBELL
`UNITED STATES DISTRICT JUDGE
`
`2 Exhibit I, filed as Docket No. 33-9, is not included in the preliminary injunction
`because the parties have represented to the Court that the “Chartbuster” brand musical
`compositions are licensed or are otherwise no longer at issue.
`
`9
`
`Case 3:10-cv-01160 Document 61 Filed 02/14/11 Page 9 of 9 PageID #: 2793