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CAPITOL RECORDS, INC. v. NAXOS OF AMERICA

July 30, 2003

CAPITOL RECORDS, INC., PLAINTIFF,
v.
NAXOS OF AMERICA, INC., DEFENDANT



The opinion of the court was delivered by: Robert Sweet, Senior District Judge [ Page 2]

OPINION

On June 16, 2003, plaintiff Capitol Records, Inc. ("Capitol") provided supplemental evidentiary submissions in opposition to the converted motion of defendant Naxos of America, Inc. ("Naxos") for summary judgment, as authorized by the Court's May 6, 2003 opinion (the "May 6 Opinion"). Capitol Records, Inc. v. Naxos of America, Inc., 262 F. Supp.2d 204 (S.D.N.Y. 2003). Capitol further moved, pursuant to Rule 56(f) of the Federal Rules of Civil Procedure, for additional discovery. Familiarity with the May 6 Opinion is assumed. This motion was marked fully submitted on June 19, 2003.

For the reasons set forth below Capitol's motion is denied.

The Parties

Capitol, a manufacturer and distributor of sound recordings in the United States, is a Delaware corporation with its principal place of business located at 150 Fifth Avenue, New York, New York.

Naxos is a foreign corporation with its principal place of business located at 416 Mary Lindsay Polk Drive, Franklin, Tennessee. Naxos is a wholly owned subsidiary of HNH International [ Page 3]

Ltd. and the United States distributor of sound recordings under HNH international's "Naxos" label.

Review of the Additional Facts

1. English Copyright

In support of its motion, Capitol submitted a Declaration by David Helfer ("Helfer"), one of Capitol's associate attorneys. Helfer attested that Capitol continuously has been the licensed distributor of EMI Records Ltd.'s ("EMI") recordings in the United States since 1956, before any of the recordings at issue in this action entered the public domain in Britain. (Helfer Decl. ¶ 2.) This may be true, but the fact remains that these recordings are currently in the public domain.

Capitol further argues that the duration and scope of transferred rights from the performers were complete, perpetual, and worldwide and thus not limited by British copyright law. The Casals agreement grants The Gramophone Company Ltd. ("Gramophone") "the sole right of production, reproduction, sale, use and performance (including broadcasting) throughout the world by any and every means whatsoever of the records of the works performed by the Artiste under this Agreement." (Casals Agreement ¶ 8.) The Menuhin and Fisher agreements state: "The Company shall also be the absolute owner of all rights in the Artiste's personal [ Page 4]

performance and all rights of any nature whatsoever in respect of the records made by the Artiste for the Company that the Artiste shall at any time possess in any country of the world where the Copyright Act 1911 is not in force." (Menuhin, Fisher Agreements ¶ 8.) However, the Copyright Act of 1911 is the applicable copyright statute protecting the agreement, as conceded by Capitol. (Gare Briefing Paper ¶ 15.)

2. Ambiguity Concerning Chain of Title

a. Matrix Exchange Agreement

There remains ambiguity in Capitol's chain of title. The Matrix Exchange Agreement was executed in 1996, years after any copyright in the sound recordings at issue expired in England. Furthermore, Exhibit 20 in support of Capitol's motion, a copy of the first of Capitol's licenses to distribute EMI's recordings in the United States, contains no reference to the transfer of ...


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