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August 1, 1990


The opinion of the court was delivered by: Sand, District Judge.


A company claiming to be the licensee of exclusive rights under the copyright to a popular song sues a company claiming to be the owner of the copyright for copyright infringement and violations of the Lanham Act. The alleged licensee moves to strike four of the alleged owner's affirmative defenses, for summary judgment as to liability on the copyright claims, and for a permanent injunction, or in the alternative, a preliminary injunction.


Defendant Klein, presently the President of defendant ABKCO Music and Records, Inc. ("ABKCO"), affirms that he represented the Rolling Stones and their manager in conducting a review of their various contractual arrangements in the spring of 1965, and that upon reaching twenty-one years of age, the members of the group and their manager "disaffirmed" various exclusive agreements related to their song-writing activities. Klein Affidavit in Opposition to Motion for Summary Judgment ("Klein II") ¶ 17. According to Klein, this disaffirmance "impacted directly on certain arrangements" between the group and a company called Essex Music, Limited ("Limited") and the "Essex Group territorial affiliates." Id. The parties dispute whether plaintiff and Limited are "affiliated" or at least jointly controlled.

Klein further affirms that negotiations were conducted from the summer of 1965 until the fall of 1966 and led eventually to other agreements. Id. By agreement dated November 1, 1966 ("the 1966 agreement"), Gideon Music, Inc. ("Gideon"), an affiliate of Forward, purported to grant to Limited exclusive sub-publication rights for the entire world, except the United States, Canada and the British Isles, to all the musical compositions which Gideon owned or for which it had exclusive sub-publication rights, including those owned or controlled by Forward. Plaintiff's Exhibit 8 ¶¶ 1, 4, 12(a) & (b).*fn1 Defendants contend that the song was within the scope of the agreement, that the agreement was intended to supersede the 1964 agreement, and that Gideon was to retain rights to the song in excluded territories. Plaintiff, for its part, offers a variety of explanations for why the 1966 agreement did not supersede the earlier agreement and why plaintiff retained the rights to the song for the United States and Canada.

In 1968, Limited assigned its rights under the 1966 agreement to its affiliate, Essex Music, International, which apparently later became Westminster Music, Ltd. Klein II ¶ 21; see infra p. 243. In or about 1970, through various corporate transactions involving a purchase of all of the stock of Forward and its subsequent liquidation, ABKCO became the owner of all of Forward's assets, including the copyright to the song. Klein I ¶ 3; Oldham Affidavit ¶ 2. In July 1975, ABKCO obtained a license under the compulsory license provisions of the Copyright Law through the Harry Fox Agency, which had been authorized to represent plaintiff in licensing rights to use the song and in collecting royalties, for use of the song in the United States. Plaintiff's Exhibit 3.

According to defendant Klein, towards the end of 1978 or early 1979 he learned that ABKCO had been paying mechanical royalties for the account of plaintiff to the Harry Fox Agency and that plaintiff was claiming sub-publication rights in the United States and Canada. Klein I ¶ 11. Klein reports that he then informed Howard Richmond, then the principal owner of plaintiff and its chief operating officer, that no such payments would be made in the future. Id. Howard Richmond offers a different version of the meeting, affirming that Klein actually sought an assignment of plaintiff's rights. Plaintiff's Exhibit 14 ¶ 5. It appears to be undisputed that since the period ending June 30, 1978, ABKCO has not accounted to or paid Essex for use of the song. See Klein I ¶ 12; Plaintiff's Exhibit 16. In September 1984, however, ABKCO once again secured a license under the compulsory license provisions of the Copyright Law to make and distribute a phonorecord in the United States. Plaintiff's Exhibit 3. At least since 1986, ABKCO has again been distributing phonorecords of the song, including some in the form of compact discs. Larry Richmond Affidavit ¶¶ 5-9; Klein II ¶ 12.

On February 9, 1990 plaintiff served on ABKCO written notice that the compulsory license to use the song would be terminated unless payment of all unpaid royalties and royalty statements for the phonorecords were submitted within thirty days. Plaintiff's Exhibit 5. Plaintiff commenced this action on March 15, 1990 asserting five claims against ABKCO and Klein, four for copyright infringement occurring after March 14, 1987 and one for violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1121 & 1125(a).*fn2 Defendants, for their part, assert eight affirmative defenses and four counterclaims. Each of plaintiff's three motions will be considered separately below.


I. Motion to Strike

Plaintiff moves to strike four of defendants' affirmative defenses. Since plaintiff also moves for summary judgment and since defendants assert all of their affirmative defenses in opposition to summary judgment, we need not consider defendants' argument that a motion to strike is not the appropriate procedural vehicle through which to resolve the issues raised by the affirmative defenses. We do note, however, that a "motion to strike for insufficiency was never intended to furnish an opportunity for the determination of disputed and substantial questions of law." William Z. Salcer, Panfeld, Edelman v. Envicon Equities Corp., 744 F.2d 935, 939 (2d Cir. 1984) (quoting Carter-Wallace, Inc. v. Riverton Laboratories, Inc., 47 F.R.D. 366, 367 (S.D.N.Y. 1969)), vacated on other grounds, 478 U.S. 1015, 106 S.Ct. 3324, 92 L.Ed.2d 731 (1986). Such motions will be granted, however, when "it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense." Id. (quoting Durham Indus., Inc. v. North River Ins. Co., 482 F. Supp. 910, 913 (S.D.N Y 1979)).

In their first two affirmative defenses, defendants assert that plaintiff has no standing to bring any action for infringement of the copyright at issue in this case and that even if plaintiff has standing, it cannot sue the owner of the copyright. As a threshold matter, the Court must determine whether to apply the Copyright Act of 1909 or the Copyright Act of 1978.

Issues relating to plaintiff's standing should not be resolved according to the law at the time of the 1964 agreement, as defendants contend, but rather according to the provisions of the 1978 Act. As Nimmer has observed, under a ...

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