The opinion of the court was delivered by: CEDARBAUM
This diversity action involves a dispute over control of the copyright in twelve songs on a record album entitled "She." Papa's-June Music, Inc., a Delaware corporation of which the performer Harry Connick, Jr. is the chief executive officer and principal shareholder, alleges that it had an oral contract providing for a seventy/thirty percent division of royalties and copyright ownership with Ramsey McLean, author of the lyrics. The alleged oral agreement also gave Papa's-June the exclusive right to exploit the songs. The complaint asserts claims for breach of contract, unjust enrichment, restitution, tortious interference with contract relations, declaratory judgment and fraud. McLean has moved to dismiss the claims other than fraud on the ground that section 204 of the Copyright Act, 17 U.S.C. § 204 (1988), bars enforcement of an oral agreement transferring rights of copyright ownership. McLean has also moved to dismiss the fraud claim on the ground that under New York law an allegation that a party to an agreement never intended to comply with the terms of the agreement does not state a claim for fraud. For the reasons that follow, the motion to dismiss is granted, and Papa's-June is granted leave to amend the complaint with respect to the claims other than fraud.
Allegations of the First Amended Complaint
This dispute concerns twelve songs on an album called "She" that was publicly released in 1994. The complaint alleges that ownership of the copyright and division of royalties for these songs are governed by an agreement between the parties originally made in 1990.
In late 1989, Connick began to prepare an album entitled "We Are in Love." (First Am. Compl. P 9.) McLean sent him a folder of "poems." (Id.) Connick rewrote some of the words, composed the music, and recorded the songs between March and April 1990. (Id. P 10.) Five of the "jointly written" songs were ultimately selected for the "We Are in Love" album, which was released on June 4, 1990. (Id. PP 10, 13.) In April 1990, the parties entered into a Co-Publishing Agreement,
under the terms of which Papa's-June and McLean own seventy and thirty percent, respectively, of the copyrights in the five "jointly written songs" on the "We Are in Love" album. (Id. P 11.) Royalties are divided according to the same percentages. (Id.) Papa's-June has the exclusive right to license and publicly perform the songs. (Id.) The "jointly written songs" on the "We Are in Love Album" are also subject to the controlled composition clause in Connick's contract with his record company, Sony. (Id.) That clause sets the royalty rate paid by Sony at seventy-five percent of the statutory rate applicable to compulsory licenses under the Copyright Act. (Id. P 3.)
In early 1991, McLean sent Connick a folder of "poems" for the "Blue Light, Red Light" album. (Id. P 14.) Connick rewrote some of the words, composed the music, and recorded the songs in June and July 1991. (Id.) Some of the "jointly written" songs were included on the "Blue Light, Red Light" album, which was released on September 3, 1991. (Id.) On January 12, 1992, McLean signed an amendment to the Co-Publishing Agreement, which stated that the "jointly written compositions" on the "Blue Light, Red Light" album would be governed by the terms of the original Co-Publishing Agreement. (Id. P 15.)
When Connick began planning the "She" album, McLean sent him a folder of "poems." (Id. P 16.) Connick rewrote some of the words, composed the music, and recorded the songs. (Id.) On May 24, 1994, the master disk was delivered to Sony for manufacture and distribution. (Id. P 17.) The "She" album was publicly released on July 12, 1994. (Id. P 19.) According to the complaint, Papa's-June believed that McLean had delivered the "poems" for the "She" album with the understanding that the songs based on these "poems" would be governed by the terms of the Co-Publishing Agreement. (Id. P 21.) On June 8, 1994, McLean notified Papa's-June that he wanted a different arrangement for the "jointly written songs" on the "She" album. (Id. P 18.) On July 15, 1994, Papa's-June sent McLean an amendment to the Co-Publishing Agreement that would have extended its terms to the songs on the "She" album. (Id. P 20.) McLean refused to sign the amendment. (Id.)
In early 1995, Papa's-June sent McLean two checks for his share of the royalties from the songs on the "She" album. (Id. P 22.) Unbeknownst to Papa's-June, McLean also received two royalty checks from Sony. (Id.) McLean cashed all four checks. (Id.) McLean refused to refund to Papa's-June the royalty amount in excess of his thirty percent share under the Co-Publishing Agreement, approximately $ 60,000. (Id.) McLean has represented to various performance rights organizations around the world that he owns fifty percent of the copyright in the songs on the "She" album, is entitled to fifty percent of the royalties, and has an equal right to license the songs. (Id. P 24.)
On a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6), the factual allegations of the complaint are accepted as true, Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 113 S. Ct. 1160, 1161, 122 L. Ed. 2d 517, 522 (1993), and all reasonable inferences are drawn in favor of the plaintiff, Bolt Elec., Inc. v. City of New York, 53 F.3d 465, 469 (2d Cir. 1995). A motion to dismiss should be granted only if it appears beyond doubt that the plaintiff can prove no set of facts that would entitle it to relief. Id.
I. Claims Other Than Fraud
The complaint alleges that the songs on the "She" album were "jointly written" by Connick and McLean. (Id. PP 1, 18.) McLean argues that since he is a joint author of the songs on the "She" album, he is entitled to an undivided one-half interest in the joint works. Section 204 of the Copyright Act requires a signed writing to effect a transfer of copyright ownership. McLean argues that since there has been no such writing with regard to the songs on the "She" album, he retains all his rights as a joint author of those songs, including the right to license them. Papa's-June argues that even though the complaint alleges that the songs on the "She" album are "jointly written," they are derivative works based on McLean's "poems," and that no writing is required for what is effectively a non-exclusive license agreement between Papa's-June and McLean for the use of McLean's poems. Alternatively, Papa's-June argues that even if the songs on the "She" album are joint works, no writing is required because the writing requirement of the Copyright Act does not apply to transfers between joint authors. Papa's-June also contends that there are writings that satisfy the requirements of the Copyright Act.
The Copyright Act defines a "joint work" as a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole. 17 U.S.C. § 101 (1988 & Supp. 1993). The parts of a work are "interdependent" when they have some meaning standing alone but achieve their primary significance because of their combined effect, as in the case of the words and music of a song. See Childress v. Taylor, 945 F.2d 500, 505 (2d Cir. 1991); H.R. Rep. No. 1476, 94th Cong., 2d Sess. 120 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5736 (citing words and music of a song as example of interdependent parts of a joint work); S. Rep. No. 473, 94th Cong., 1st Sess. 103-04 (1975) (same). The requisite intent to create a joint work exists when ...