By Mark Engstrom, J.D.
Members of the Beastie Boys, music publisher Universal-Polygram International, and record company Capitol Records were awarded $825,945 in attorney fees and $19,652 in costs for their successful defense of a copyright infringement suit that was brought by the hip-hop record label TufAmerica, the federal district court in New York City has ruled (TufAmerica Inc. v. Diamond, March 9, 2016, Nathan, A.).
In an earlier decision, the court dismissed the case on summary judgment because TufAmerica lacked standing to sue the defendants for the Beastie Boys’ alleged sampling of the Trouble Funk songs “Let’s Get Small” and “Say What.” According to the court, TufAmerica lacked an exclusive license for the copyrights at issue because an original co-owner of the copyrights failed to sign an agreement that purportedly conveyed an exclusive license to TufAmerica. In addition, a second licensing agreement conveyed only a bare right to sue, which was insufficient to confer standing under the Copyright Act.
Justification of fees. TufAmerica argued that it had intended the relevant agreement to convey an exclusive license; therefore, the fact that the agreement “failed in its wording to accomplish its goal” did not mean that it had acted unreasonably. The court disagreed. Significantly, the court had stated in its summary judgment ruling that “the clear and unambiguous intent of the parties to assign the bare right to sue permeate[d] nearly every provision of the agreement.” Because an agreement to transfer only the bare right to sue was insufficient to confer standing under the Copyright Act, the court concluded that the agreement’s deficiencies were “readily apparent” and TufAmerica’s copyright claims were “objectively unreasonable” and “clearly without merit.”
TufAmerica also argued that an award of attorneys’ fees would not serve the purposes of the Copyright Act because, notwithstanding the standing issue, the defendants had unlawfully used the recordings at issue. Significantly, however, the court never ruled on the lawfulness of the defendants’ actions. Furthermore, the purposes of the Copyright Act were furthered by deterring lawsuits in which chain of title had not been adequately investigated by the plaintiff. For those reasons, the court decided that an award of attorneys’ fees was justified under 17 U.S.C. §505.
Hours billed. The court reduced by 10 percent—from 1,155.4 to 1,039.86—the number of hours that were billed by the Beastie Boys’ counsel (a five percent reduction for block billing and a five percent reduction for the duplication of effort and other inefficiencies that arose from the defendants’ co-counsel arrangement).
The time records provided by Universal-Polygram International (UPI) and Capitol Records (collectively, the “UMG” defendants) were less detailed than the records that were provided by the Beastie Boys, the court noted. For that reason, the court reduced by 15 percent—from 464.6 to 394.91—the number of hours that were billed by UMG’s counsel.
Hourly rates—Beastie Boys. The court approved rates of $675 per hour and $678.23 per hour for work that was provided by Sheppard Mullin partners. Those rates—and the rate of $560 an hour for an established associate—were reasonable.
The hourly rates for Sheppard Mullin associates with one or two years of experience, however, were too high. The court reduced those rates—from $404.92 and $455.67 per hour to $375 per hour for associates with a year of experience and from $460 per hour to $425 per hour for an associate with two years of experience.
In addition, the court reduced the hourly rates for Sheppard Mullin support staff—from $255.51 to $175 for a paralegal, from $202.80 to $150 for a managing clerk, and from $206.85 to $150 for a litigation support specialist.
Hourly rates—UMG defendants. Because the UMG Defendants provided insufficient information to justify the requested rates for work that was provided by Jenner & Block paralegals and other support staff, the court limited the recovery for unspecified “support staff” to the $150 per hour rate that the court had approved for the Sheppard Mullin paralegal. Hourly rates between $476.17 and $ 715.44 for Jenner & Block partners were reasonable, the court concluded.
Lodestar calculation. Multiplying the approved hours by the approved rates per hour, the court found that the Beastie Boys defendants were entitled to $591,274.79 in fees and the UMG defendants were entitled to 234,670.25 fees. The UMG amount included an additional $27,302.60 for 83.3 hours of work that Jenner & Block had spent on the preparation of their motion for fees.
Costs. The Beastie Boys defendants were awarded $11,553.29 in costs and the UMG defendants were awarded $8,098.90 in costs. The court was satisfied that the defendants had adequately documented the deposition-related expenses that were challenged by TufAmerica. In addition, the court found that the costs associated with a video deposition constituted “reasonable out-of-pocket expenses” that the defendants’ attorneys had incurred, even though the defendants did not use the deposition as evidence for summary judgment.
The case is No. 12-CV-3529 (AJN).
Attorneys: Kelly Douglas Talcott (The Talcott Law Firm PC) for TufAmerica, Inc. Theodore Conrad Max (Sheppard, Mullin, Richter & Hampton, LLP) for Michael Diamond.
Companies: TufAmerica Inc.
MainStory: TopStory Copyright NewYorkNews
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