Part 33

Just where did this alleged infringement take place? Like California’s statute 653h, New York has an anti-music piracy law, located in Article 275 (275.00-.45) of the penal code. At the time, Section 275.05 defined the crime of “manufacture of unauthorized recording in the second degree” as applying to one who:

1.   knowingly, and without the consent of the owner, transfers or causes to be transferred any sound recording, with the intent to rent or sell, or cause to be rented or sold for profit, such article to which such sound recording was transferred, or

2.   transports within this state, for commercial advantage or private financial gain, a recording, knowing that the sounds have been reproduced or transferred without the consent of the owner; provided however, that this section hall only apply to sound recordings initially fixed prior to February 15, 1972.

“Owner” was defined as “the person who owns, or has the exclusive license in the United States to distribute to the public copies of the sounds fixed in a master phonograph record [or other format].”

The statute only assessed criminal penalties; it did not create a private right of action to recover damages. But in its brief before the New York State Court of Appeals, Capitol Records asserted that it was entitled to civil relief under “common law copyright infringement.” To define what this was, it pointed to the above criminal statute and two civil cases, Metropolitan Opera v. Wagner-Nichols Music (1950) and Capitol Records v. Greatest Records (1964). Metropolitan Opera was the case where the opera company sued over recordings lifted from the Met’s Saturday afternoon radio broadcasts; Capitol v. Greatest involved the pirated Beatles singles and album excerpts.

The problem is that all three basically say the same thing: copyright infringement is the unauthorized manufacture or distribution of protected sound recordings within the state of New York. But this element was never established. Keep in mind that the CDs were manufactured in Nashville. Instead, Capitol’s lawyers implied, but never forthrightly stated, that the copying and distribution of the disputed recordings anywhere in the United States constituted common-law copyright infringement. That flatly contradicts what Chief Justice Berger said in the Goldstein Supreme Court case: “a copyright granted by a particular State has effect only within its boundaries . . .individuals who wish to purchase a copy of a work protected in their state will be able to buy unauthorized copies in other States where no protection exists.”

So not only am I left scratching my head about what the proper venue for this case should have been, I have reservations about whether the federal district court for the southern district of New York really had jurisdiction to hear it.

The parties submitted their pleadings, and as is typical in such litigation, Naxos tendered a motion to dismiss and Capital replied with a motion to winnow out some of Naxos’s less plausible affirmative defenses. Judge Sweet, on his own, converted Naxos’s motion to a full-blown motion for summary judgment. This was the equivalent of him saying that “I already have a sufficient factual record to fully decide the issues in the case.” This is polite legalese for “I’ve already seen enough to convince me that Capitol’s case is a hopeless dog.”

The core of Judge Sweet’s argument was simple. The original recordings were British. The last United Kingdom copyright had expired in 1986. In fact, EMI had told Richard Warren, Curator of Yale’s Historical Sound Recordings Collection in a letter that it no longer held an enforceable UK copyright to recordings made before 1957. Naxos never attempted to “palm off” the recordings as anything other than what they were. Thus, no tortuous activity occurred. Summary judgment in favor of Naxos. Case over.

To be continued…

Part 32

ITAR-TASS was a tortured-logic case twisted around to achieve a specific outcome: if the author of a foreign work claims protection in the United States under his home-nation’s copyright laws via the Berne Convention, and alleges infringement in the United States, his case will be considered under United States law. In other words, although the Berne language claims he is “entitled to the same copyright protection in other member states as in his home nation,” in the United States that means he will be “entitled to the same copyright protection as any other American author under similar circumstances.” The critical difference between Capitol v. Naxos and ITAR-TASS was that the doctrine was shifted from a conflict between foreign and American copyright law (ITAR-TASS) to a conflict between foreign and New York state law (Capitol v. Naxos).

Many of the facts in the case of Capitol Records, Inc. v. Naxos of America, Inc. have been touched on previously, but this is a good place to gather them together in one place. The dispute concerned a series of about ten classical music recordings made between 1931 and 1939 in England by the Gramophone Company. The artists included Yehudi Menuhin, Pablo Casals, and Edwin Fischer. Composers included Elgar, Max Bruch, J. S. Bach, and others. The Gramophone Company later became EMI, an affiliate of Capitol. Although the British copyrights for the last of these recordings expired in 1986, EMI asserted that its 1930’s contracts with the artists gave it “absolute, world-wide and perpetual” ownership of the recordings. Capitol licensed all the common-law copyrights in the recordings in America through a Matrix Exchange Agreement executed with EMI in 1996, ten years after the last British copyright expired.

Naxos began distributing the disputed recordings in 1999. It created them by dubbing the best available shellac copies. These turned out to be discs made in the U.S. in the 1930s by Victor under license to the Gramophone Company. Naxos then converted them into digital format using studio playback hardware and noise reduction software.

There are some aspects of the case that puzzle me to this day. The complaint was originally brought in the federal district court for the southern district of New York in diversity. It alleged unfair competition, misappropriation of property, unjust enrichment and common law copyright infringement. But normally, as we have discussed earlier, in a diversity action (a suit between parties from different states) the appropriate venue is the federal district court of the defendant’s home. That would be the middle district of Tennessee, because Naxos’s headquarters is the Nashville suburb of Franklin. However, there is an exception to the rule: a case may be brought in the venue most proximate to where the substance of the events giving rise to the cause of action occurred. As the Second Circuit Court later put it, everyone simply assumed that New York was the appropriate location because that was “the jurisdiction where the alleged infringement occurred.” Although I am not certain because I do not have all the information, it appears that Naxos’s lawyers did not vigorously contest the issue of inappropriate venue. If so, they blew the most important single issue in the case. Had this case been adjudicated in federal court in Tennessee, there would probably be nothing for me to write about today.

To be continued…

Part 31

With some six months of background behind us, its time to put on our oxygen masks, break Camp VII, and go for the summit: Capitol v. Naxos. But first, there is one ridge to traverse: ITAR-TASS News Agency v. Russian Kurier, a case from 1998. The details are not terribly relevant: the giant quasi-national Russian news bureau TASS accused Kurier, a Brooklyn-based Russian-language weekly newspaper with a circulation of about 20,000, of copying its material. The only really relevant facts were: 1) the TASS material originated in Russia; and, 2) the infringement, if any, took place in Brooklyn. Almost every aspect of the case turned on whether Russian or American copyright law should apply. The trial court had determined that Russian copyright law should apply—sort of.

Under the Berne Convention, an author of one member state is entitled to the same copyright protection in all other member states as in one’s home nation. Despite this, the conventional wisdom was that of David Nimmer (Melville’s son), who said that “the applicable law is the copyright law of the state in which the infringement occurred,” not the author’s home or the place where the work was first published. Judge Newman, who wrote the appellate opinion, was unhappy with both the trial court and Nimmer’s formulation because it didn’t break “applicable law” down into its (supposedly) two components: ownership and scope of rights.

Normally, one would think that Russian law should be applied, because, as the Berne Convention states, a work should be treated in the U.S. as in Russia. Not so, according to Newman. He ruled that “the treaty does not supply a choice of law rule for determining ownership [of an intellectual property].” Thus, the choice of law rule defaults to that of the jurisdiction where the court sits, i.e. the United States. The general rule under U.S. law is that the jurisdiction with “the most significant relationship to the persons and parties” determines the law to be used. Again, Russian law. Again, not so fast. The court declared an exception: if one has “an exclusive right under a copyright” pursuant to section 501(b) of the 1976 Copyright Act, “including one determined according to foreign law,” then American law shall be used.

But wait. Section 501(b) is the basic “standing” requirement under the Copyright Act. Unless one can meet that condition directly (holding an American copyright) or indirectly (holding a foreign copyright of a fellow Berne Convention member), the minimum threshold for bringing suit in federal court is not satisfied, and one’s case will be dismissed at the start. Judge Newman had created a clever Catch-22: if you can’t meet section 501(b), you can’t get in the door of the courthouse for lack of standing; and if you can, your ownership will be determined by American law because anything that meets 501(b) is an exception to the general choice of law rule. Newman went through an elaborate ritual of applying Russian law, but the criteria under section 501(b) is that one must be a legal or beneficial owner of an exclusive right under a copyright, and Newman determined that nothing under Russian law gave anything comparable to American exclusive copyrights to newspaper publishers. In other words, the issue wasn’t whether the newspaper articles were protected under Russian law, but whether the Russian newspapers had standing to be in an American court.

Frankly, the entire line of argument was nothing but an elaborate way of justifying the Nimmer Rule: “The applicable law is the copyright law of the state in which the infringement occurred, not that of the state of which the author is a national, or in which the work is first published.” One might also add: “the Berne Convention be damned.”

To be continued…