Property, intangible

a blog about ownership of intellectual property rights and its licensing

Co-ownership Is Not Privity

A co-owner of a copyrighted work sues for infringement of the work. The court holds that the defendant had been granted a license by another co-owner, not a party, and therefore there was no infringement. The non-party co-owner then sues for copyright infringement in a new suit. Collateral estoppel or not?

“Not,” according to the District Court for the Central District of California. To distill it down a bit, the “Crump plaintiffs” and Dwayne Michael Carter, Jr. (Lil Wayne) were the co-owners of the copyrights in the songs in dispute, which had been used in a documentary film about Carter. Carter was not a party to the first suit (the New York suit) but later brought his own suit for copyright infringement against various parties including Joshua Krause, who worked on the film but was also not a party in the first suit. Krause claimed that the decision in the Crump case precluded the infringement claim in the second suit.

First a review of collateral estoppel:

Collateral estoppel precludes the retrying of an issue previously determined by a “valid and final judgment.” The doctrine of collateral estoppel both “protect[s] litigants from the burden of relitigating an identical issue with the same party or his privy and promot[es] judicial economy.”When applying collateral estoppel to cases arising under California or federal law, courts must find that (1) the issue decided in the previous proceeding is identical to the current issue; (2) there was final judgment on the merits in the first proceeding; and (3) the party seeking to relitigate the issue was a party or privy to the first proceeding.

The question was whether Carter was privy to the New York suit. The court described six circumstances by which a non-party might be bound by a prior decision:

(1) a nonparty agrees to be bound by the determination of issues in another proceeding; (2) a substantive legal relationship exists, binding the parties (traditional privity); (3) adequate representation by a party to the suit holding the same interests as a nonparty; (4) a nonparty assumes control of the litigation in which that judgment was rendered; (5) a nonparty to previous litigation brings suit as “the designated representative” of a party to the prior action; or (6) a special statutory scheme “expressly foreclos[es] successive litigation by nonlitigants.”

Here, Krause argued that the co-ownership created traditional privity between Carter and the Crump plaintiffs, but the court disagreed. It was a question of first impression, so the court looked to Davis v. Blige for guidance. Davis v. Blige is a Second Circuit case which held that a settling co-owner could not retroactively grant a license and extinguish claims by non-settling co-owners. Similarly here, the court held that applying collateral estoppel would “effectively allow one co-owner to rob another co-owner’s own right to sue for an accrued cause of action by being the first to the courthouse steps.” Krause’s claim under circumstance (3) above also failed.

While some disagree* with Davis v. Blige, the concept seems right in application in this case. Who better to litigate whether a license was granted that the supposed grantor?

Young Money Enter., LLC v. Digerati Holdings, LLC, No. 2:12-cv-07663-ODW(JCx) (C.D. Cal. Nov. 15, 2012).

*See also Melvin B. Nimmer & David Nimmer, Nimmer on Copyright § 6.10[A][3][c]-[d] (2009).

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