Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

PEER INTL. CORP. v. LUNA RECORDS

March 21, 1995

PEER INTERNATIONAL CORPORATION, PEERMUSIC LTD., TEMI COMBINE, INC., LEO MUSICAL, S.A., EDITORIAL MUSICAL LATINO AMERICANA, S.A. and EMI BLACKWOOD MUSIC INC., Plaintiffs, against LUNA RECORDS, INC. and ABEL DE LUNA, Defendants.

SONIA SOTOMAYOR, U.S.D.J.


The opinion of the court was delivered by: SONIA SOTOMAYOR

This action arises from the alleged copyright infringement of seven musical compositions by defendants Luna Records, Inc., now known as Luna Music Corporation ("Luna") and Abel De Luna, the individual in charge of Luna. For the reasons discussed below, plaintiffs' motion for summary judgment is granted.

 BACKGROUND

 The compulsory license provision of the Copyright Act permits a user to produce and distribute phonorecords embodying a musical composition protected by a copyright upon compliance with statutory and regulatory requisites, including the service on the copyright owner of a notice of intention to make and distribute the phonorecords, and the regular, accurate payment of royalties. 17 U.S.C. § 115 (1988 & Supp. V 1993); 37 C.F.R. § 201.19 (1994). The Act allows the copyright owner to vary the terms set out in the Act upon written agreement with the user, and to terminate the compulsory license, upon thirty days notice, if the copyright owner does not receive payment or statements of account when due from the user. 17 U.S.C. § 115(c)(5). At times prior to the commencement of this action, Luna, a distributor of Spanish music, availed itself of the compulsory license provisions of the Copyright Act.

 In 1989, Prager & Fenton, an accounting firm specializing in examinations of entertainment companies on behalf of copyright owners, performed an audit of Luna. The audit, which examined several hundred musical compositions embodied in phonorecords distributed by tuna from the time of the corporation's inception in 1979 through 1988, revealed that tuna had substantially underpaid royalties for many compositions for which it had obtained compulsory licenses, and owed a total of $ 722,165.51 in royalties plus interest. In addition, the audit showed that Luna was distributing phonorecords of compositions for which it had never obtained licenses. Aff. Abraham Kahaner, Ex. 1.

 At issue in this action are only seven of the hundreds of compositions distributed by Luna: five of these were the subject of compulsory licenses (the "licensed compositions"), and two were never licensed (the "unlicensed compositions"). The two unlicensed compositions are owned by plaintiffs EMI Blackwood Music Inc. ("EMI") and Temi Combine, Inc. ("Temi"). *fn2" De Luna Dep., attached to Affirmation of Scott L. Baker in Supp. Pls.' Mot. Summ. J. at Exs. 5-22 [hereinafter De Luna Dep.], at 40-43, 156-158; Aff. Kenneth B. Higney PP 10-12. For the five remaining compositions, plaintiffs Peer International Corporation ("Peer"), Peermusic Ltd. ("Peermusic"), Leo Musical, S.A. ("Leo"), and Editorial Musical Latino Americana, S.A. ("EMLASA"), through their common agent, the Harry Fox Agency ("Fox"), had issued Luna written variations of the compulsory licenses. *fn3" The variations with tuna incorporated and preserved all statutory rights under 17 U.S.C. § 115, except the variations permitted Luna to dispense with the statute's requirement that a notice of intention be filed with the copyright owner before or within thirty days after making and before distributing any phonorecords of a copyrighted work, see 17 U.S.C. § 115(b), and authorized Luna to pay royalties and submit account statements quarterly instead of monthly, see 17 U.S.C. § 115(c)(4).

 On behalf of the plaintiffs representing the licensed compositions, their agent Fox sent Luna a notice on August 29, 1989 (the "August 1989 notice") stating that the licenses would be terminated if Luna did not render $ 722,165.51, the full payment for the deficiencies uncovered by the audit, within thirty days. Luna did not render a partial payment until December 1989, in the amount of $ 9,747.00. A year later, on September 6, 1990, Fox sent Luna a second notice (the "September 1990 notice"), again stating that termination of the licenses would occur unless the default in royalty payments was remedied within thirty days. Luna did not make another payment within thirty days of the September 1990 notice, and continued to distribute all seven compositions. All plaintiffs contend that Luna's continued distribution of the licensed and unlicensed compositions after receipt of the September 1990 termination notice constitutes willful infringement of their copyrights.

 Luna argues that any infringement of plaintiffs' copyrights was accidental in nature. Regarding the unlicensed compositions, Luna claims it was unaware that it was distributing music for which it had obtained no licenses, and points out that it made royalty payments on the two unlicensed compositions. Defs.' Mem. Law Opp'n Pls.' Mot. Summ. J. at 5-6. Regarding the licensed works, Luna contends that plaintiffs' revocation of their licenses was invalid, as Luna was not aware that plaintiffs intended to revoke the licenses, but rather, believed that the parties were engaged in negotiations in the years 1989 and 1990 over the amount of Luna's liability. Luna points out that Prager & Fenton's original finding of liability in the amount of $ 722,165.51 was revised to less than half that amount, $ 354,948.41, subsequent to Luna's making available to the auditors sales records and royalty data for the period 1979-83. In addition, Luna notes that because the texts of the August 1989 and September 1990 notices were identical, and because the August 1989 notice did not terminate the licenses, Luna had no reason to believe that the September 1990 notice did so either.

 Plaintiffs initiated this action for copyright infringement against defendants on December 28, 1992. Luna continued to make and distribute phonorecords containing both the licensed and unlicensed compositions at least until the time of Abel De Luna's deposition, six months after this action was commenced. De Luna Dep. at 66-68, 151-58.

 Following initiation of this action, Luna filed for bankruptcy and the litigation against it was stayed. The action and the motion for summary judgment now proceed directly and only against Abel De Luna as the individual in charge of Luna.

 DISCUSSION

 I. Rule 56: The Standard for Summary Judgment

 Rule 56(c) provides that summary judgment is appropriate when:

 
the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

 The burden is on the moving party to show that no genuine issue of material fact exists. Gallo v. Prudential Residential Servs., Ltd. Partnership, 22 F.3d 1219, 1223 (2d Cir. 1994) (citation omitted). A genuine issue of material fact exists where "the evidence is such that 'a reasonable jury could return a verdict for the nonmoving party.'" Iacobelli Constr., Inc. v. County of Monroe, 32 F.3d 19, 23 (2d Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986)). In determining whether a genuine issue of material facts exists, all ambiguities must be resolved and all inferences drawn in favor of the nonmoving party. Id.

 "The moving party may obtain summary judgment by showing that little or no evidence may be found in support of the nonmoving party's case." Gallo, 22 F.3d at 1223-24 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); DiCola v. SwissRe Holding (N.A.), Inc., 996 F.2d 30, 32 (2d Cir. 1993)). Establishing the "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir. 1994) (quoting Liberty Lobby, 477 U.S. at 247-48). Rather, to defeat a summary judgment motion, the responding party must show the existence of a disputed material fact in light of the substantive law. Iacobelli Constr., 32 F.3d at 23 (citing Liberty Lobby, 477 U.S. at 248).

 II. Personal Liability of Abel De Luna

 Under 17 U.S.C. § 501(a), "anyone who violates any of the exclusive rights of the copyright owner ... is an infringer of the copyright ...." While the Copyright Act does not expressly create any form of liability for infringement by a third party, the absence of express language in the statute does not preclude liability for infringement on parties who have not themselves engaged in the infringing activity. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 434-35, 78 L. Ed. 2d 574, 104 S. Ct. 774, reh'g denied, 465 U.S. 1112, 80 L. Ed. 2d 148, 104 S. Ct. 1619 (1984).

 Two types of third-party liability in copyright law have developed: vicarious liability, with roots in the tort doctrine of respondeat superior, and contributory infringement, which holds liable "'one who, with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another ....'" Demetriades v. Kaufmann, 690 F. Supp. 289, 292-93 (S.D.N.Y. 1988) (quoting Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)). The ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.