Property, intangible

a blog about ownership of intellectual property rights and its licensing

Behind Every Movie is a Copyright Infringement Lawsuit

Successful movies always seem to be accompanied by copyright infringement lawsuits, generally an optimistic author who believes his or her story was stolen and made into a movie. But in Gomba Music, Inc. v. Avant we have a very different twist, two different claimants to ownership of the copyright in music written by the subject of a documentary.

In 1966, third-party defendant Sixto Rodriguez, a songwriter and singer, signed an “Exclusive Writer Agreement” with plaintiff Gomba Music, owned by Harry Balk. In the agreement, Sixto agreed to write exclusively for Gomba Music as a work for hire, with Gomba Music owning all copyrights, renewals and extensions.

In 1970, Sixto performed on an album called “Cold Fact” that was released by the defendant’s record label. The album listed Jesus Rodriguez, purportedly Sixto’s brother, and an entity called “Sixth Prince, Inc.” as the songwriters. As you might guess though, Sixto was really the author of the songs. When the album was released Balk reviewed the credits, but since Sixto wasn’t listed he took no action. Sometime in the 70’s, Sixto assigned the copyright to defendant publisher Interior Music Corp.

The album wasn’t a success in the U.S., but, unbeknownst to Sixto, it became enormously popular in South Africa. In 2012 the Oscar-winning film “Searching for Sugar Man” chronicled the story of finding Sixto. This is when Balk said he first became aware that Sixto was the songwriter for the Cold Fact album and sued Interior Music Corp.

The original complaint was filed by Gomba Music, but Gomba Music had been administratively dissolved in 1971. Balk amended the complaint to add himself as a plaintiff, owner of the copyrights by operation of law.

Which brings us to the first issue—whether indeed Balk had succeeded to the ownership of the copyrights. Note the date of the agreement, before 1978, and therefore to be decided under the Copyright Act of 1909. The 1909 Act provided that “copyright secured under this or previous Acts of the United States may be assigned, granted, or mortgaged by an instrument in writing signed by the proprietor of the copyright, or may be bequeathed by will”—no mention of transfer by operation of law.

But, like with the currently-existing assignment provision of the Patent Act, the absence of “by operation of law” in the statute doesn’t mean the ownership can’t be transferred that way:

section 28’s enumerated types of transfer, ‘assigned, granted, or mortgaged,’ denote voluntary action taken by the copyright proprietor, thus § 28 appears unconcerned with involuntary transfers imposed by law.

Michigan law provided that upon dissolution a corporation’s assets are distributed to the shareholders, so since Balk was the sole shareholder he owned the copyrights.

The next challenge was on timeliness. In the Sixth Circuit, a copyright infringement claim “accrues when a plaintiff knows of the potential violation or is chargeable with such knowledge.” There were two “potential violations” here, the original distribution of the album and the infringement occurring in the three years immediately preceding the complaint, that is, the use in the film.

But the court declined to decide to which infringement claim the ownership claim relates, deciding instead whether Balk was “chargeable with such knowledge” that Interior Music claimed to be the copyright owner in 1971. “Chargeable with knowledge,” or constructive knowledge, only requires “storm warnings, not when he hears thunder and sees lightening.” That’s a low bar, but here we also have the possibility of fraudulent concealment, which tolls a limitations period. Fraudulent concealment occurs when there is (1) wrongful concealment of their actions by the defendants; (2) failure of the plaintiff to discover the operative facts that are the basis of his cause of action within the limitations period; and (3) plaintiff’s due diligence until discovery of the facts. It was a close question—Balk didn’t even ask Sixto whether he wrote the songs on the album—but combined with the fact that the album was, as far as Balk knew, a commercial failure, Balk had done enough to survive a motion to dismiss.

Gomba Music, Inc. v. Avant, No. 14-CV-11767 (E.D. Mich. Nov. 24, 2014).

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