Bruce D. Epperson
Capitol Records v. Mercury Records is justifiably famous, not for the decision itself, but for Judge Hand’s dissent. Judge Dimock read the majority opinion. Capitol was the American agent for Telefunken records. Mercury distributed the same records under license to a Czech alien properties administration. The records did not contain songs copyrighted in the USA.
The first question was: whose law applies? Judge Dimock ruled that under Erie v. Tompkins, New York state law applies. Under New York law, whose contract rights prevail? Through a relatively complex chain of legal reasoning that need not concern us here, Telefunken had the superior claim.
Now for the crucial issue: did Telefunken lose their common law copyright in the sound recordings through publication? Up to RCA v. Whiteman (1940), the answer would have been yes, but, according to Dimock, RCA v. Whiteman had been replaced by Metropolitan Opera v. Wagner-Nichols (1950). Therefore, Telefunken had not lost their monopoly to make or sell records.
Judge Hand’s dissent was longer than Dimock’s opinion. It was a refinement and extension of the things he had said a decade before in Fashion Originators’ Guild and RCA v. Whiteman. He opened with a flat-out statement of two principles: 1) The performance or rendition of a composition is a writing for the purposes of the Progress Clause; and 2) It is a thing separate and apart from the composition. By extension from these two principles, Congress could, if it wanted to, grant the power of statutory copyright to the performer of a sound recording if it were affixed to a tangible medium.
However, Congress had not extended such protection. Moreover, section 4 of the Copyright Act of 1909 said that “The works for which copyright may be secured under this act shall include all the writings of an author.” Therefore, all things eligible under the Constitution for inclusion in the Copyright Act already were included. That is, there was no such thing as “writings not covered by the Copyright Act.” Thus, there was no such thing as “common-law copyright.” There were simply writings covered under the Copyright Act, but for which the specified coverage mandated no regulation or restriction. (This is the inverse of the cupcake theory: 1) statutory copyright cuts off all common-law copyrights forever; 2) statutory copyright covers all writings; 3) however, for some writings, the protections extended in the statute are zero.)
However, Hand continued, here today, this is an academic discussion. The question is not whether Telefunken can stop the plagiarism of its records by Mercury. The question is whether by public sale its common-law property has been divested. The majority opinion assumed that under Erie v. Tompkins, state law determines whether “publication” has taken place. But because phonorecords, in both their composition and sound recording aspects, are writings under section 4 of the Copyright Act, the question of whether they are “published” is a federal question, to be decided solely under federal law.
If, for example in the case at bar [Mercury] is forbidden to make and sell these records in New York, that will not prevent it from making and selling them in any other state which may regard [Telefunken’s] sales as a “publication”; and it will be practically impossible to prevent their importation into New York. That is exactly the kind of evil at which the clause [section 4] is directed.
Now, move forward to 2005. Substitute “Capitol” and “Naxos” for “Mercury” and “Telefunken.” The case is exactly the same. The only difference is that in 1950, as Judge Dimock briefly noted, there were no applicable international treaties or federal law. In 2005, there was. Judge Graeffo’s opinion in Capitol v. Naxos was, in essence, a rebuttal to Judge Hand. Dimock argued that because there was no federal law, state law controlled. Judge Hand argued that there was applicable federal law, so it did apply. Judge Graeffo’s argument was that although there was federal law, New York law still prevailed.
To be continued…
There are additional levels of complexity here that were, apparently, not addressed.
The antecedent company for both Telefunken and Supraphon is Ultraphon. The on-line history of these tie-ups is at http://www.discogs.com/label/Ultraphon. There was some license between Telefunken and Supraphon regarding Telefunken’s German-made recordings which allowed them to be issued in Czechoslovokia. It is likely that Telefunken had not granted permission for this second party to license its recordings but wished to have that option itself. It would be useful to see this agreement, should it have survived.
Telefunken was also an official outlet for recordings made by the then-German government and had other close ties with it. Given issues thus related to WWII in the late 1940s and early 1950s, it’s likely the US courts may have been influenced at some remove from the facts of the case. At an earlier stage, it was probably more about Capitol’s agreement being with Telefunken and Mercury’s with Supraphon, as a licensee of Telefunken. David Hall, a past ARSC president, who implemented the Mercury agreement, is now dead. I wonder if his papers, probably at New York Public Library where he had later been head of the Sound Archives there, can shed further light on this issue.
In short, I’m wondering if the U.S. courts got things twisted around to try and address a tangentially related issue that needed attention.
Steve Smolian
Steve Smolian is correct. One of the main issues in the case was that certain German intellectual properties had been awarded as war reparations to the formerly occupied countries. The Warsaw pact nations were quite aggressive in claiming these reparation rights, while the Western nations were more interested in getting German industry back on its feet. The court’s logic in places was clearly influenced by the view that reparation rights should be more limited than the Czech government wanted. I did not discuss it because it was essentially “one shot” precedent, unique to that one case and never used again, at least that I know of, although I am sure the issue of reparation rights to property in the Communist bloc nations had to have come up somewhere else, probably for tangible property.
BE