Property, intangible

Burbank High School has show choirs, which are choirs that combine choral singing with some choreographed steps. If you watched the TV show Glee you’ve seen it; in fact the court says that Burbank High School inspired the TV show. Brett Carroll is the vocal music director at the school and the Burbank show choirs are supported by a charitable non-profit, the Burbank High School Vocal Music Association Boosters Club, which raises money for the various show choirs at the school. Carroll, the Boosters Club and parents involved in the Boosters Club were named as defendants.

Carroll commissioned an arranger, Greene, to create sheet music for two shows, “Rainmaker” and “80’s Movie Montage.” “Rainmaker” was an 18 minute medley of many works, which ended with two minutes of Olivia Newton-John’s “Magic”:

The “80’s Movie Montage” included sixteen seconds of “(I’ve Had) The Time of My Life,” written by Bill Medley and Jennifer Warnes:

A show choir from a different school performed segments of the songs “Hotel California” and “Don’t Phunk with My Heart” at a show choir competition that was a fundraiser operated by the Boosters Club.¹

Plaintiff Tresóna Multimedia, LLC alleged it was “the only authorized issuer in the United States and Canada for the … infringed songs,” and that Carroll, the Boosters Club, and the parents’ use of the songs without obtaining a “custom arrangement license, grand right license, synchronization license, or mechanical license” for the songs infringed Tresóna’s copyright interests in the songs.

Tresóna obtained rights to three of the songs (except for “Don’t Phunk With My Heart”) from PEN Music Group. For “Magic,” the sole copyright owner was John Farrar Music (BMI). It licensed the work to PEN, but John Farrar Music (BMI) retained the performance rights. PEN only had some of the copyright owners’ rights for “Hotel California” and “(I’ve Had) The Time of My Life.” Tresóna obtained rights to “Don’t Phunk With My Heart” from The Royalty Network, but The Royalty Network only had rights to two of eight copyright owners.

So for three of the four works, Tresóna did not have grants from all the copyrights owners. This was fatal to its claim.

I confess that I am very confused by the 9th Circuit’s law on standing of licensees and authors. It all starts with a poorly-received decision in Sybersound Records Inc. v. UAV Corp., where the court held that a joint author cannot grant an exclusive license. The decision was subsequently refined in Corbello v. DeVito:

[O]ne co-owner, acting independently, “may not limit the other co-owners’ independent rights to exploit the copyright.” … Such a conclusion stems from the self-evident principle that a joint-owner cannot transfer more than he himself holds; thus, an assignment or exclusive license from one joint-owner to a third party cannot bind the other joint-owners or limit their rights in the copyright without their consent. In other words, the third party’s right is “exclusive” as to the assigning or licensing co-owner, but not as to the other co-owners and their assignees or licensees. As such, a third-party assignee or licensee lacks standing to challenge the attempted assignments or licenses of other copyright owners.

Corbello v. DeVito, 777 F.3d 1058, 1065 (9th Cir. 2015).

However, in Minden Pictures, Inc. v. John Wiley & Sons, Inc. a 9th Circuit panel held that an exclusive licensing agent had standing even though the owner of the copyright also retained the right to license the same rights granted to the agent. Here though, the court distinguished Minden Pictures:

[A]s we pointed out, Minden Pictures had received an exclusive right to act as the licensing agent for each of the individual photographers, which was a grant of rights vis-à-vis the world. Even if that exclusive right was shared with the photographers, Minden Pictures would still have standing to sue over infringement of its license. As we there reasoned:

The reason the [Copyright] Act prevents a holder of a “nonexclusive license” to use a copyrighted photograph from bringing an infringement action against others who use the same photograph is that such a licensee has no more than “a privilege that protects him from a claim of infringement by the owner” of the copyright. That is, because such a licensee has been granted rights only vis-à-vis the licensor, not vis-à-vis the world, he or she has no legal right to exclude others from using the copyrighted work, and thus no standing to bring an infringement suit. But when a licensee has been granted rights vis-à-vis the world—even if he or she shares those rights with another party, including the owner of the copyright—we see nothing in the Copyright Act that requires us to deem such an arrangement a mere “nonexclusive license” insufficient to give rise to standing to sue.

Id. (citations omitted).

We accordingly saw “no reason why, having appointed Minden [Pictures] to manage the commercial use of their photographs in the first instance as their licensing agent, the photographers should not also be able to rely on Minden [Pictures] to protect and defend the licenses that it has issued on their behalf.” Id. at 1005. In other words, even if an exclusive right is shared between two entities, a sole owner can promise exclusivity to just those two, while a co-owner cannot make that same promise unilaterally. Because the issue of whether a co-owner of a copyright interest can unilaterally grant an exclusive license to that interest was not present in Minden Pictures, Tresóna’s reliance on Minden Pictures is misplaced.

So, where there is a sole author, the author can grant an exclusive license while still retaining rights and the exclusive licensee will have standing. But where there are multiple authors, unless the licensee has grants from everyone, the licensee does not have standing to enforce the licenses.

It was therefore the end of the road for the infringement claims for “(I’ve Had) The Time of My Life,” “Hotel California” and “Don’t Plunk With My Heart.” But recall that there was sheet music for the “Rainmaker” work, so Tresóna did have standing for the infringement of the reproduction right. The district court had dismissed the claim on the basis of qualified immunity for music director Carroll and the absence of direct or indirect infringement by the Boosters Club and parents.

But the appeals court decided the infringement question for “Magic” on what I think is one of the most bizarre fair use cases I’ve ever seen. It’s bizarre for starters because the district court never reached fair use. Surely if fair use was a live issue, then the case should have been remanded for a determination in the district court in the first instance.

Instead, the appeals court, perhaps because of an absence of briefing by the parties on the issue, takes transformativeness to a new level. I guess the lesson is don’t bring a copyright infringement claim against a high school choir, because the court will go to great lengths to find that the use was fair.

The court recognized that educational use didn’t mean that it was a per se fair use, but found that “Rainmaker” was transformative, weighing “strongly” in favor of fair use:

“Magic” was an original song in the 1980 musical movie fantasy “Xanadu.” Olivia Newton-John played Kira, a muse descended from Mount Olympus, who encourages and inspires the male protagonist, Sonny, to pursue his dream of opening a fantastical nightclub, Xanadu. “Magic” plays during their first encounter, reprises first when Kira must return to Olympus, and then again when Kira seemingly reappears as a Xanadu waitress. It is thus used as a vehicle of inspiration for pursuit of one’s dreams and love.

“Rainmaker” is an entirely different theatrical work—a show piece for the high school choir that reworks pieces from multiple songs to tell a story with new expressive content and meaning. “Rainmaker” tells the story of a local Dust Bowl-era community ravaged by drought. After a stranger visits the town, he promises rain in return for faith in his magical powers and performs several miracles to encourage the townspeople to believe in him. When the town’s last holdout, the Sheriff, drops to his knees to proclaim his faith, lifesaving rain finally arrives. The townspeople celebrate the newfound rain, singing the rearranged chorus of “Magic,” including additional, new lyrics.²

This rearrangement of “Magic” along with other musical works was thus transformative.

My stars. “Magic” may have been written for Xanadu, but so what? It was a separate work with a separate registration for the musical composition. “Magic” was also a No. 1 hit on the Billboard Hot 100 for four weeks and charted all around the world. The claim wasn’t that the “Rainmaker” work infringed the movie Xanadu, so I haven’t got a clue why its origin matters. Instead, it was used exactly because the song fit into the story that the show choir was telling, “you have to believe we are magic” when the rainmaker brought the rain.

The second factor, the nature of the copyrighted work, “creative,” favored Tresóna. However, the third factor, the amount and substantiality of the portion used, despite copying a “qualitatively significant portion,” also fell to the transformativeness domino:

Here, the segment taken from the song “Magic” is approximately twenty seconds of a four-minute and twenty-two second song. The portion that was used, however, incorporates the song’s principle [sic] chorus, which is the central element of the musical work, and is repeated more than once. Thus, the copied portion is undoubtedly a qualitatively significant portion of “Magic.” However, as the Supreme Court has explained in discussing both parody and news reporting, “context is everything, and the question of fairness asks what else the [copier] did besides go to the heart of the original.” Even “entire verbatim reproductions are justifiable where the purpose of the work differs [enough] from the original.”

In this case, Greene’s rearrangement did not simply copy several lines from one chorus of the song and repeat it, but embedded that portion into a larger, transformative choir showpiece that incorporated many other works, and imbued that entire piece with new expression and meaning not contained within any of the individual works. Carroll thus “departed markedly from” the original lyrics, incorporating the chorus of “Magic” into a new and different story that also furthered high school students’ musical learning and development. The new work is not a verbatim copy, nor one in which the transformative use “is so insubstantial, as compared to the copying, that the third factor must be resolved as a matter of law against the [Defendants].”

In light of Carroll’s non-profit educational and transformative use of “Magic,” the amount and substantiality of the portion used does not weigh against of fair use.

As to the fourth factor, the effect upon the use for the potential market, transformativeness was a thumb on the scales here too:

Although the creation of sheet music incorporating the copyrighted work is a derivative use, the twenty seconds used in the “Rainmaker” choir piece is not a substitute for the song “Magic.”

Professor Nimmer explains, “if, regardless of medium, defendant’s work performs a different function from plaintiff’s, then notwithstanding its use of substantially similar material, the defense of fair use may prevail.” Fair use exists when “[t]hose interested in obtaining plaintiff’s music for musical purposes would not find their need fulfilled by purchasing” the defendant’s allegedly infringing work. A consumer interested in acquiring sheet music for “Magic” would not purchase the sheet music for”Rainmaker,” as it omits much of the song except the chorus, and even the portions that are included are substantially rearranged. Similarly, a person wishing to purchase the sheet music for “Magic” in order to play or perform that song would necessarily purchase the sheet music for the song itself from the owner of the performance rights—not the sheet music for “Rainmaker.” Thus, the use of “Magic” in “Rainmaker” does not affect the consumer market for the sheet music in the song at all. It is difficult to see how even widespread and unrestricted use of the chorus, in the context of nonprofit show choir performances, could displace the market for sheet music for the entire song.

Of course, “it is a given in every fair use case that plaintiff suffers a loss of a potential market if that potential is defined as the theoretical market for licensing the very use at bar.” However, “a copyright holder cannot prevent others from entering fair use markets merely ‘by developing or licensing a market for parody, news reporting, educational, or other transformative uses of its own creative work.’” Nor does the decision by secondary users to pay, or not pay, establish whether fair use exists. Because the use in this case “falls within a transformative market,” Tresóna was not harmed by the loss of any fees for the licensing of the song “Magic.”

Talk about a bootstrap. Apparently, where the use is transformative the fact that there is a well-developed market for licensing exactly these kinds of uses can’t affect the outcome.

So three of the four factors all turn on transformativeness, in a case where the court’s conclusion on transformativeness was based on a discussion of the movie the song was in, not the song itself. I assume it was only possible for the court to reach this outcome because there was no evidence whatsoever on any fair use factor. This case needs a do-over on fair use.

And then there is the cherry on top, reversing the district court’s denial of the award of attorneys’ fees to the defendants. The district court did not award them because part of the defense win was a technicality, the qualified immunity, however:

Tresóna should have known that Sybersound rendered its chances of prevailing on three of the four songs remaining at summary judgment “slim to none.” The argument was also legally unreasonable because our opinion in Minden Pictures did not purport to overrule Sybersound; nor did it address the precise standing issue decided in Sybersound and Corbello.

Tresóna’s fair use argument as to the one song it did have exclusive rights to, “Magic,” was likewise objectively unreasonable. … [T]he use falls plainly within the enumerated fair use purposes of “teaching” and “nonprofit education” and the portions of the song taken were used in a highly transformative work.

But here’s probably the real beef the court had:

Tresóna did more than simply pursue an aggressive litigation strategy. It sued a public school teacher, a not-for-profit Boosters Club, and parent volunteers. Both during litigation, and in pre-litigation communications with Carroll, Tresóna repeatedly mischaracterized its copyright interests in the songs at issue by claiming to be the sole entity empowered to issue licenses. In light of Tresóna’s minimal and belatedly produced evidence supporting its claimed chain-of-title, these communications appear specifically designed to frighten Carroll and the Boosters Club into purchasing licenses from Tresóna, rather than to legitimately enforce its limited licensing interests or those of the true copyright owners. Indeed, Tresóna’s initial complaint alleged exclusive rights in 79 songs used by the Burbank show choirs. And it was not until after briefing on Carroll’s summary judgment motion was complete that Tresóna belatedly produced any evidence of its chain of title, which demonstrated its claimed interests were almost entirely unsubstantiated. None of these actions furthers the purposes of the Copyright Act.

Courts have a legitimate interest in deterring the type of litigation conduct in which Tresóna engaged, and in compensating those who have been harmed by such conduct. Although the district court noted that it “[did] not believe that [Tresóna] will groundlessly reassert these claims,” the basis for that finding is unclear. Tresóna groundlessly asserted at least three claims of infringement in this very case, while simultaneously representing that it could have brought many more such claims. And while, after almost four years of litigation, Tresóna turned out to have standing as to the fourth remaining claim of infringement, it lost both in the district court and on appeal on two independent legal theories. As much of this litigation was avoidable from the beginning based on settled law when Tresóna filed its complaint, awarding attorneys’ fees to Defendants appropriately serves the interest in deterrence.

Awarding Defendants their attorneys’ fees insures that they are properly compensated for defending against overreaching claims of copyright infringement and pressing a defense that benefits those educating our youth. An award of attorneys’ fees here assures that “an overzealous monopolist [cannot] use his copyright to stamp out the very creativity that the [Copyright] Act seeks to ignite,” allowing for greater breathing room for classroom educators and those involved in similar educational extracurricular activities.

Tresóna Multimedia, LLC v. Burbank High School Vocal Music Ass’n, Nos. 17-56006, 17-56417, 17-56419 (9th Cir. Mar. 24, 2020).

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