• Challenging the Sublicense to Your License

    by  • February 23, 2015 • copyright • 0 Comments

    Hang in with me, we have a bit of a licensing chain to follow here. The lawsuit is about whether a Russian performer, Sergey Lazarev, had a license to record and perform the song “Almost Sorry”:

    The song was written by Taryn Murphy and Chris Landon. They pitched Lazarev’s manager in 2006 and we have this series of agreements:

    • April 14, 2005: Lazarev entered into an exclusive producer’s agreement with Style Records with a four-year term. Style Records was to obtain the rights for music that Lazarev would perform.
    • January 1, 2007: Murphy and Landon enter into a “sub-publishing agreement” with a Russian law firm, per the instructions of Lazarev’s then-manager, granting rights to the song for the period January 1, 2007 to December 31, 2010. Murphy and Landon understood that the agreement was so Lazarev could perform the song.
    • Late 2006 or early 2007: Lazarev recorded the song for the first time.
    • Early 2008: Style Records contacted the songwriters and explained that Lazarev’s manager, acting out of spite because the she knew her engagement with Style Records was going to be terminated, induced authors to sign contracts with the law firm rather than with Style Records directly.
    • February, 2008: Murphy and Landon entered into a license agreement directly with Style Records. It was backdated to November 1, 2006. Murphy and Landon were told it was backdated so it would show Style Records had rights to the song pre-dating the agent’s rights. The agreement mentioned and gave permission for acts already performed. Murphy and Landon were given a flat fee of $3000 and there was no time limitation in the agreement.
    • April, 2008: the parties executed a second license agreement, backdated to November 20, 2006, that changed the territory of exploitation, allowed other artists to record it, and allowed Style Records to sublicense. It had a five-year term. Murphy and Landon were paid an additional $4000 and they were to also receive royalties.
    • September 7, 2009: the producer’s agreement between Style Records and Lazarev expired and they entered into a supplemental producer’s agreement that allowed Lazarev to continue to use recordings and perform songs for which Style had been granted rights during the term of the original agreement.

    Murphy and Landon received royalty payments, but not as much as they thought they were owed, so they sued Lazarev and Style Records. Murphy and Landon voluntarily dismissed Style Records after they failed to serve the company with the complaint.

    By the time the court had to make a decision, the copyright theory was that Lazarev did not have a license to “Almost Sorry” before 2008, when the license agreements with Style Records were signed, or after 2009, when Lazarev’s original agreement with his producers expired. Any use of the song before or after that was therefore a copyright infringement.

    As to when the license began, the original agreement with the law firm, and subsequent agreements with Style Records, referred to Lazarev’s use expressly and demonstrated that the plaintiffs intended that these licenses be applied retroactively. The licenses therefore included Lazarev’s 2006 and 2007 uses.

    As to when the license terminated, Lazarev and Style Records had an agreement that Lazarev could continue to exploit the works Style Records had licensed, so Lazarev could exploit the license to “Almost Sorry” through the term of the license Murphy and Landon had granted to Style Records, that is through May, 2013. There was no allegation that Lazarev used the song after May, 2013, so no infringement.

    As to any missing royalties—the right party wasn’t in court, royalties were to be paid by Style Records, not Lazarev, but the plaintiffs had dismissed Style Records from the suit.

    It’s an unpublished case that looks pretty easy from a copyright infringement perspective, a bit of grasping at straws trying to claim that Lazarev wasn’t licensed. But the reason I find it interesting is this whole Billy-Bob Teeth defense (recursive link) that aggravates me so much. At its narrowest, Billy-Bob Teeth stands for the proposition that a defendant cannot challenge the validity of an oral copyright assignment that was later ratified in writing when neither party to the assignment disputes it. More broadly, it has been applied to prohibit a challenge altogether to the scope of an earlier written agreement between the plaintiff and a third party through which the copyright might have been assigned away.

    So what happened here is, in my view, inconsistent with Billy-Bob Teeth, which isn’t to say that Billy-Bob Teeth is right but to show how wrong it is. Here, the plaintiffs Murphy and Landon licensed the use of “Almost Sorry” for Lazarev’s use through 2013. What business was it of theirs whether the agreement between Style Records and Lazarev was an effective sublicense if neither Style Records nor Lazarev disputed it? Murphy and Landon gave the rights away, and those rights were exploited in the exactly the way the contract anticipated. Billy-Bob Teeth in application gives a plaintiff an out on an element of proof, ownership of the copyright. Here, the plaintiffs were challenging the very use they had licensed, a challenge that it might make sense to estop in the interest of judicial efficiency. Yet this challenge is permitted but you can’t put a plaintiff to its proof on chain of title.

    Murphy v. Lazarev, No. 15-5028 (6th Cir. Oct. 17, 2104).
    Murphy v. Lazarev, No. 3:10-cv-0530 (M.D. Tenn. Oct. 12, 2013).

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