357 (S.D.N.Y. 1998). Prior proceedings and facts relevant to the
instant motion are set forth below.
Tuff filed a complaint against Sugarhill alleging copyright
infringement, violation of the Lanham Act, tortious interference
with prospective economic advantage, and unfair business
practices in violation of New York General Business Law on
October 17, 1997. Sugarhill filed its answer and six
counterclaims on March 9, 1998. Sugarhill alleges that Tuff
committed copyright infringement in violation of copyright law
and that Tuff is liable under New Jersey law for interference
with prospective economic advantage, tortious interference with
contract, slander of title, defamation, and malicious
On March 26, 1998, Tuff filed a motion, pursuant to
Fed.R.Civ.P. 12(b)(6), to dismiss the six counterclaims asserted
against it by Sugarhill. By opinion and order dated June 15,
1998, the Court granted the motion to dismiss Sugarhill's
counterclaim for malicious prosecution, but denied the motion to
dismiss the counterclaims of interference with prospective
economic advantage, tortious interference with contract, slander
of title, defamation, and copyright infringement.
On December 15, 1998, Tuff moved to amend the complaint to join
additional defendants. Tuff's motion was granted by order dated
January 27, 1999. Tuff filed and served its amended complaint
(the "Amended Complaint") on February 3, 1999.
On December 17, 1999, Tuff filed the instant motions to dismiss
the Sugarhill counterclaims. Oral argument was heard on February
14, 1999, at which time the motions were deemed fully submitted.
Sugarhill moved to strike the Amended Complaint on February 12,
1999. Opposition and reply papers were received through March 10,
1999, at which time the motion was deemed fully submitted.
For the purposes of these motions addressed to the pleadings
the factual allegations of the pleadings are taken as true,
though it is appropriate when considering jurisdictional issues
to consider matters outside the parameters of the pleadings. See
Cargill Intern. S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1019
(2d Cir. 1993); Kamen v. A.T. & T. Co., 791 F.2d 1006, 1011 (2d
Cir. 1986). When considering Tuff's motion to dismiss the
counterclaims for lack of subject matter jurisdiction, all
material factual allegations in Sugarhill's answer must be
accepted as true. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94
S.Ct. 1683, 40 L.Ed.2d 90 (1974); see also Atlantic Mutual Ins.
Co. v. Balfour Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir.
1992); Rubin v. Tourneau, Inc., 797 F. Supp. 247, 248 (S.D.N Y
1992). However, the Court must examine the substance of the
allegations and any other evidence before it in resolving the
jurisdictional dispute, see Cargill, 991 F.2d at 1019, but need
not draw argumentative inferences favorable to the party
asserting jurisdiction. See Norton v. Larney, 266 U.S. 511,
515, 45 S.Ct. 145, 69 L.Ed. 413 (1925); Atlantic Mutual, 968
F.2d at 198. Therefore, the factual allegations set forth below
do not constitute findings of fact by the Court. Unless otherwise
indicated, the facts are drawn from the allegations made by
Sugarhill in their counterclaims.
The dispute between Tuff and Sugarhill focuses on the copyright
ownership of the song "Spoonin' Rap," a musical composition (the
"Composition") by Gabriel Jackson, a/k/a Marion Jackson,
professionally known as Spoonie Gee ("Jackson"). On or about
November 1, 1979, Jackson sold to Heavenly Crown Music his rights
to the Composition and the master recording (the "Master"). On
June 9, 1980, Peter Brown, on behalf of Heavenly Crown Music,
assigned the copyright to both the Composition and the Master to
Sugarhill, which subsequently recorded the assignment in
the United States Copyright Office on August 18, 1995.
According to Tuff, Jackson assigned his copyright interest in
the Composition to Tuff in 1988, and it holds United States
Copyright Registration SR 174-458, dated August 23, 1994 (the
"Registration"). Sugarhill, however, maintains that Tuff's
copyright registration covers only the sounding recording.
Although Tuff has had knowledge of Sugarhill's interest in
"Spoonin' Rap," it has represented itself as the rightful owner
of both the Composition and the Master and claimed exclusive
entitlement to all royalties and licensing fees. As a result of
Tuff's assertions, Sugarhill has had to place money attributable
to royalties and/or licensing fees in escrow.
Sugarhill further alleges that Tuff has authorized third
parties to use the Composition and has collected royalties and
commissions from RCA for the "Fresh" movie soundtrack, the movie
"Love Without Pity," and the domestic/international release of
"True School" by K-Tel International. In addition, Tuff has filed
claims against Sugarhill's licensees.
Prior to the present action, Tuff brought similar claims
against Sugarhill in the Superior Court of New Jersey, Chancery
Division, Bergen County, Docket No. C-275-97. Sugarhill had the
case removed to the United States District Court for the District
of New Jersey, whereupon the court granted Tuff's motion for
voluntary dismissal without prejudice.
I. Tuff's Motion to Dismiss the Counterclaim for Copyright
Infringement is Granted
Tuff has moved to dismiss Sugarhill's counterclaim for
copyright infringement on the grounds of lack of subject matter
jurisdiction. The party invoking federal jurisdiction must
"allege in [its] pleadings the facts essential to show
jurisdiction," and "must support [those facts] by competent
proof." McNutt v. General Motors Acceptance Corp.,
298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); see also Board of Educ.
of the Mount Sinai Union Free Sch. Dist. v. New York State
Teachers Retirement Sys., 60 F.3d 106, 109 (2d Cir. 1995)
(citing FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110
S.Ct. 596, 107 L.Ed.2d 603 (1990)). Sugarhill bears the burden of
satisfying the jurisdictional requirements of the Copyright Act.
Under the Copyright Act, "no action for infringement of the
copyright of any work shall be instituted until registration of
the copyright claim has been made in accordance with this title."
17 U.S.C. § 411(a). "The registration requirement is a
jurisdictional prerequisite to an infringement suit." Noble v.
Town Sports International, Inc., 1998 WL 43127 at *1 (S.D.N Y
Feb. 2, 1998) (citing M.G.B. Homes, Inc. v. Ameron Homes, Inc.,
903 F.2d 1486, 1488 & n. 4 (11th Cir. 1990)). Thus, district
courts are without subject matter jurisdiction to hear claims for
federal copyright infringement unless a party asserts in his
pleadings that he has received an actual certificate of
registration or its denial from the Copyright Office. See
Whimsicality, Inc. v. Rubie's Costume Co., Inc., 891 F.2d 452,
453 (2d Cir. 1989); Geritrex Corp. v. Dermarite Indus., LLC,
910 F. Supp. 955, 966 (S.D.N.Y. 1996).
Defendants admit that they do not have nor have they applied
for a copyright registration for the Composition. Thus, despite
Sugarhill's assertion that this action is an "essential and
necessary totality of adjudication that precludes the barring of
any party's claims herein on the basis of the ritual
jurisprudence asserted by plaintiff," (Defendant's Brief at 20),
this Court does not have subject matter jurisdiction to hear the
counterclaim for copyright infringement, and, accordingly, this
counterclaim must be dismissed.*fn1
II. Tuff's Motion for Summary Judgment is Granted in Part
and Denied In Part
A. Legal Standard
The motion for summary judgment is "an integral part" of the
Federal Rules of Civil Procedure and facilitates the overall
purpose of the Rules, namely, "to secure the just, speedy and
inexpensive determination of every action." Celotex Corp. v.
Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265
(1986). A motion for summary judgment may be granted when there
is no issue of material fact remaining for trial and the moving
party is entitled to judgment as a matter of law. See Rule
56(c), Fed.R.Civ.P.; Silver v. City Univ., 947 F.2d 1021, 1022
(2d Cir. 1991). If, when "[v]iewing the evidence produced in the
light most favorable to the nonmovant . . . a rational trier
could not find for the nonmovant, then there is no genuine issue
of material fact and entry of summary judgment is appropriate."
Binder v. Long Island Lighting Co., 933 F.2d 187, 191 (2d Cir.
1991). If, on the other hand, a reasonable finder of fact could
return a verdict for the nonmoving party, there is a genuine
factual dispute and summary judgment should not be granted. See
Zeevi v. Union Bank of Switzerland, No. 89 Civ. 4637, 1992 WL
8347, *4 (S.D.N.Y. Jan.29, 1992). "[T]he trial court's task at
the summary judgment stage of litigation is carefully limited to
discerning whether there are any genuine issues of material fact
to be tried, not to deciding them." Gallo v. Prudential
Residential Servs., Ltd., 22 F.3d 1219 (2d Cir. 1994).
While all reasonable ambiguities and inferences should be
resolved against the moving party, those inferences must be
supported by affirmative facts and must be based on relevant,
admissible evidence. Fed.R.Civ.P. 56(e). In order to raise a
material issue of fact, affidavits must be based on personal
knowledge. Harriscom Svenska, AB v. Harris Corp., 3 F.3d 576
(2d Cir. 1993); Estate of Detwiler v. Offenbecher, 728 F. Supp. 103
Tuff has moved to dismiss Sugarhill's counterclaims for
tortious interference with contract and defamation, and to
dismiss Sugarhill's affirmative defense of prior transfer.
1. Tortious Interference with Contract
Under New Jersey law, the elements of a claim for tortious
interference with contract are: (1) the existence of the
contract; (2) interference which was intentional and with malice;
(3) the loss of the contract or prospective gain as a result of
the interference; and (4) damages. See Velop, Inc. v. Kaplan,
301 N.J. Super. 32, 693 A.2d 917 (App. Div. 1997). Where one or
more of the requisite elements is not established, summary
judgment is appropriate. See Silvestre v. Bell Atlantic Corp.,
973 F. Supp. 475, 485 (D.N.J. 1997).
Tuff contends that Sugarhill has failed to establish the
existence of either a contract or a contract that has been
breached. Sugarhill counters that it has a "valid and subsisting
cause of action for contractual interference," and points to a
letter from BMG Music ("BMG")*fn2 to Sugarhill dated September
27, 1995. The letter references
a lawsuit brought by Tuff against BMG and states in pertinent
In light of the requirements of the agreement between
Sugar Hill Records on the one hand and Miramax and
RCA Records on the other, dated July 8, 1994, with
respect to the Master Recording "Spoonin' Rap" by
Spoonie Gee (the "Agreement"), this letter will serve
as a formal notice of Tuff City's claim as set forth
in the attached complaint. Please be advised that the
complaint contains allegations which are inconsistent
with the warranties and representations made by Sugar
Hill in paragraph 3 of the Agreement. Accordingly,
RCA Records hereby invokes its right to be reimbursed
by Sugar Hill Records for any damages arising out of
such claim pursuant to paragraph 4 of the Agreement.
(Gandel Dec.Exh. M).
While this letter indicates that BMG and Sugarhill had a
contract, it does not show that the contract was breached nor the
loss of any prospective gain to Sugarhill.
Sugarhill asserts that a series of documents demonstrate that
it had contracts with which Tuff interfered. Upon examination,
however, while some of the documents suggest the existence of a
contract, none indicate any interference with those contracts by
Sugarhill suggests that in accordance with music industry
practice, it does not enter contracts. This assertion is belied
by the aforementioned evidence in the record tending to suggest
that Sugarhill did enter into written contracts. Moreover, to the
extent that Sugarhill alleges interference with negotiations,
these allegations are more properly dealt with in the context of
defendants' claim for tortious interference with prospective
Joseph Robinson Sr., president and CEO of Sugarhill
("Robinson"), testified that the only contract signed by the
defendants with which Tuff interfered was with Arista or Bad Boy
Records (collectively, "Arista"). Robinson explained that he
entered into an agreement with Arista for Arista's use of
"Spoonin' Rap," and that Arista was holding the money it owed to
Sugarhill in escrow pending the outcome of this litigation.
Robinson avers that Tuff contacted Deborah Mannis Gardner
("Gardner") at BMG and apprised her that it was the rightful
owner of both the Composition and the Master and claimed
exclusive entitlement to all royalties and licensing fees.
Gardner, in turn, contacted Arista and "told them what the
situation was." Consequently, Arista decided to hold the money it
owed to Sugarhill in escrow.
Arguably, Tuff's representations to BMG and Arista constitute
an interference with an existing contract between Sugarhill and
Arista. The question remains, however, as to whether Tuff's
interference was "intentional and with malice."
In the context of a claim for tortious interference with
contract, malice does not mean "ill will toward" the victim.
"Rather, malice is defined to mean that the harm was inflicted
intentionally and without justification or excuse." Printing
Mart-Morristown v. Sharp Electronics, 116 N.J. 739, 751,
563 A.2d 31 (1989). Implicit in this definition of malice "is
acceptance of the principle that requisite intent may be either a
specific intent to interfere with the contract or the taking of
improper action with knowledge that interference will probably
result." Velop, 301 N.J.Super. at 49, 693 A.2d at 926.
On this record, a question of fact exists as to whether Tuff's
interference was malicious and intentional. There is also a
question of fact as to what, if any, damages Sugarhill has
sustained as a result of the interference. Accordingly, summary
judgment is not appropriate as to Sugarhill's counterclaim for
tortious interference with contract.
In order to prove defamation, Sugarhill must establish that
Tuff made a defamatory statement of fact concerning Sugarhill,
which was false and which was communicated to a third party as
well as fault and damages. See Feggans v. Billington,
291 N.J. Super. 382, 390-91, 677 A.2d 771, 775 (App. Div. 1996). Unless
subject to a privilege, fault may be established by showing that
Tuff was negligent in its failure "to ascertain the truth or
falsity of the statement before communicating it" or that Tuff,
knowing the statement to be false, "acted with reckless disregard
of its truth or falsity." Id. Sugarhill "need not show that the
words impute to them illegality or immorality. It is sufficient
that the false declaration adversely affect [its] reputation,
business, trade, profession or office. New Jersey courts have
long held actionable false statements designed to produce an
adverse effect on one's business or trade." Printing
Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 766,
563 A.2d 31, 45 (1989).
Sugarhill contends that Tuff's statements concerning the
ownership of the Composition and the Master of "Spoonin' Rap"
suggest that it has violated copyright law and thus may be
subject to criminal penalties. Sugarhill maintains that Tuff's
statements tended to "denigrate and degrade" the reputation of
It is not clear from this record exactly when Tuff allegedly
made the defamatory statements or what precisely was said.
However, insofar as the alleged defamatory remarks were made in
connection with judicial or quasi-judicial proceedings, they are
arguably protected by the litigation privilege. New Jersey has
recognized the litigation privilege as "the backbone to an
effective and smoothly operating judicial system." Peterson v.
Ballard, 292 N.J. Super. 575, 582, 679 A.2d 657 (App. Div. 1996)
(quoting Hawkins v. Harris, 141 N.J. 207, 222, 661 A.2d 284
(1995)). The privilege protects, as absolutely immune from
liability, statements made by judges, attorneys, witnesses,
parties and jurors made in the course of judicial or
quasi-judicial proceedings. See Peterson, 292 N.J.Super. at
581, 679 A.2d 657; Rainier's Dairies v. Raritan Valley Farms,
19 N.J. 552, 558, 117 A.2d 889, 891 (1955).
Sugarhill correctly notes that whether the statements allegedly
made by Tuff are false is a factual issue that is "enmeshed" in
the ultimate resolution of this action. As noted, what, if any
damages, suffered by Sugarhill as a result of Tuff's
representations to BMG and Arista is also an issue of fact.*fn4
Thus, Tuff's motion for summary judgment on Sugarhill's
counterclaim for defamation is denied.
3. Prior Transfer
17 U.S.C. § 205(c) provides:
Recordation as Constructive Notice. Recordation of a
document in the Copyright Office gives all persons
constructive notice of the facts stated in the
recorded document, but only if —
(1) the document, or material attached to it,
specifically identifies the work to which it pertains
so that, after the document is indexed by the
Copyrights, it would be revealed by a reasonable
search under the title or registration number of the
work; and (2) registration has been made of the work.
17 U.S.C. § 205(d) provides:
Priority Between Conflicting Transfers. As between
two conflicting transfers the one that is executed
first prevails if it is recorded, in the manner
required to give constructive notice under subsection
(c), within one month after its execution in the
United States, or at any time before recordation of
the latter transfer. Otherwise the latter transfer
prevails if recorded first in such manner and if
taken in good faith, for valuable consideration or on
the basis of a binding promise to pay royalties, and
without notice of the earlier transfer.
Tuff registered its copyright on August 23, 1994 and
Sugarhill's recordation was docketed on August 8, 1995. Sugarhill
avers that it received its assignment of the copyright to the
Composition and the Master from Peter Brown on June 9, 1980. Tuff
received its assignment from Peter Brown on June 27, 1988. As
Tuff's registration predates Sugarhill's recordation, and the
parties do not dispute that the transfer between Tuff and Peter
Brown was for good and valuable consideration, in order for
Sugarhill to prevail on the affirmative defense of prior
transfer, it must establish that Tuff had constructive notice of
the assignment from Peter Brown to Sugarhill before the date of
plaintiff's registration. However, Sugarhill has produced no
evidence demonstrating knowledge on the part of Tuff. Sugarhill
has produced no documents indicating that it notified Tuff or any
other party of its claim to ownership prior to Tuff's