Tuesday, November 13, 2012

Oral music deal leads to multiple claims and Dastar problems

Ward v. Mitchell, 2012 WL 5301475 (N.D. Cal.)

Matthew Ward alleged that he was a famous musical recording artist and songwriter. In 2001, he wrote fifteen compositions for an album, “End of Amnesia,” released by defendants.  He alleged that Mitchell repeatedly represented that defendants would enter into a written agreement to pay him for the right to use the sound recordings and musical works in “End of Amnesia,” but never did so.  Still, Ward created sound recordings of his compositions and allowed defendants to hold the masters pending a written agreement.  Ward registered the copyrights in 2005.

Ward initially filed a state court lawsuit alleging that defendants were selling his material without a license, then dismissed and refiled in federal court when it was pointed out that copyright claims are subject to exclusive federal jurisdiction.  (The specter haunting the claims here, it seems to me, is Rano v. Sipa Press, 987 F.2d 580 (9th Cir. 1993), which holds that even an oral, nonexclusive license is not revocable until the 35-year period has passed in the absence of a different express or implied period; while breach could entitle Ward to terminate the license, in the 9th Circuit he’s otherwise out of luck.)

The court rejected the argument that the entire claim was barred by the statute of limitations; the complaint only sought damages for the last four years, and damages from beyond that period would likely be barred, but no determination needed to be made without a record.  Ward also adequately pled a claim for breach of an oral contract, including a promise to enter into a written agreement, and a claim for fraud.  However, the court also denied a request for judicial notice of a C&D email from Ward’s attorney, which if properly authenticated would be “strong evidence” against the fraud claim.  “Also, it is worth noting that one can only wonder, if the allegations are true, why plaintiff sat on his rights for almost a dozen years, knowing full well that he had been defrauded; still, we are only at the pleading stage and the claim must go forward.”

Plaintiff’s claim for conversion of the master recordings also survived, though not his claim for conversion of profits from the sale of the album, since a claim for generalized money isn’t a conversion claim.

Ward’s California UCL claims were that “defendants attempted to take complete control over the copyrighted works and profitably promoted their record label by representing to the public that they had the authority and consent to exploit plaintiff's copyrighted material.”  (Though not raised by defendants, put this way the claim seems like an excellent candidate for preemption based on Dastar.  If the Lanham Act would conflict with the Copyright Act when interpreted in this way—where the alleged misrepresentation comes, as far as I can tell, from mere sales/distribution of works labeled truthfully as being written & performed by Ward—then conflict preemption would also get rid of a state law claim premised on the same allegations.  Admittedly, few courts have noticed this; and see below.)

The court found this claim unclear about the underlying violation of the law.  And to state a claim based on the fraudulent prong of the UCL, the complaint must satisfy Rule 9(b), which it didn’t—general claims of deception based on defendants’ “representing ... that they have the authority and consent to exploit [p]laintiff's copyrighted material” were insufficient.

Ward also brought right of publicity claims, as to which defendants did argue preemption.  Here, at the pleading stage, the court found that the allegations went beyond rights equivalent to any of copyright’s exclusive rights: misappropriation of Ward’s identity for the purpose of promoting defendants’ record label and website.  That went beyond being based entirely on alleged unauthorized distribution of copyrighted material.  (I’m assuming that if it turns out that the website just says “we are proud to have End of Amnesia in our catalog,” or some such, this claim fails.  At least I hope so.  Also, note that Dastar conflict preemption would go beyond §301, all that’s analyzed here, and I think Dastar would definitely cover the “we are proud” hypo.)

Ward’s Lanham Act claims were similar: that “by using his name, likeness, and musical works within the promotion of defendants' business and record label, defendants have deceived the public into believing that plaintiff is affiliated and/or participating in the promotion.”  In addition, Ward alleged that defendants “deceived and confused the public into believing that defendants have the authority and consent to sell and/or distribute plaintiff's musical compositions, constituting unfair competition.”  The court found that this failed to state a claim for false designation of origin (not mentioning Dastar) but did state a claim for “false representation in advertising/promotion.”  Obviously, there are a bunch of post-Dastar cases that are relevant here, and perhaps they’ll get a workout later.  (Even if this claim survives Dastar, would a consumer’s belief as to defendants’ “authority and consent” be material to a purchasing decision?  Seems unlikely if the works really were written and performed by Ward; why would a consumer care about the details of the contract?)

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