By Thomas Long, J.D.
Owners of sound recordings embodying musical performances initially fixed in analog format prior to February 15, 1972, which the owners later remastered into digital formats, can go forward with California state-law copyright claims against CBS Corporation and CBS Radio, Inc. (collectively, "CBS") for publicly performing the songs without a license, the U.S. Court of Appeals in San Francisco has held. A district court erred in concluding that the owners’ state copyright interest in the pre-1972 sound recordings embodied in the remastered sound recordings was preempted by federal copyright law. The authorized digital remastering of pre-1972 analog sound recordings that qualified as copyrightable derivative works did not, by itself, bring the remastered sound recordings exclusively under the ambit of federal law, unless significant changes were made to the underlying works, the appellate court determined. The district court abused its discretion by excluding the testimony of an expert engaged by the recordings’ owners, as well as by excluding certain reports as evidence regarding CBS’s performance of the recordings in California, and by granting partial summary judgment of no infringement with respect to the sample recordings contained in those reports. Finally, the appellate court held that the district court, in denying class certification to the plaintiffs, abused its discretion in strictly applying local rules regarding the timeliness of the motion for class certification. The Ninth Circuit reversed the grant of summary judgment and the striking of class certification and remanded for further proceedings (ABS Entertainment, Inc. v. CBS Corp., August 20, 2018, Linn, R.).
Pre-1972 sound recordings. Passed by Congress in 1971, the Sound Recordings Act provided that sound recordings fixed after February 15, 1972, were subject to a compulsory license regime for performance via digital transmission and were excused from infringement for performance via terrestrial radio. The law reserved governance of sound recordings fixed before 1972 to state statutory law and common law and excluded such sound recordings from federal copyright protection until 2067.
Remastered works at issue. ABS Entertainment, Inc., Barnaby Records, Inc., Brunswick Record Corp. and Malaco, Inc. (collectively, "ABS") distributed, sold, and licensed the reproduction, distribution, and performance of sound recordings for use in albums, CDs, audiovisual works, and for streaming and downloading over the Internet. ABS took pre-1972 analog sound recordings and remastered them into digital formats. ABS had also entered into license agreements which allowed for the reproduction, remastering, and new distribution of the works, including as part of compilation albums with other sound recordings.
State-law infringement dispute. CBS owned and operated terrestrial broadcast radio stations, as well as online and mobile streaming services. ABS accused CBS of violating California copyright law—specifically, California Civil Code §980(a)(2), which protected the property rights of an author of a sound recording fixed prior to February 15, 1972—by publicly performing the pre-1972 sound recordings without authorization. CBS moved for summary judgment, contending that it had only publicly performed post-1972 remastered versions of ABS’s works, which CBS argued were authorized derivative works governed exclusively by federal copyright law.
District court’s decision. After excluding the testimony of ABS’s expert, the district court concluded that there was no genuine issue of material fact that the remastering created original derivative works protected by federal copyright law. According to the district court, the remastering made at least some perceptible changes to the recordings that were not merely "mechanical" or "trivial," but reflecting creativity, such as adjustments of equalization, sound editing, and channel assignment. The district court also concluded that ABS authorized the creation of the remastered sound recordings, because ABS failed to meet its burden to show that its authorization to create the remastered sound recordings did not extend to the creation of a derivative work. Because the remastered sound recordings, created after 1972, were original and authorized, the remastered sound recordings were exclusively governed by federal copyright law, and CBS had the right to perform the remastered sound recordings by complying with statutory compulsory license obligations and taking advantage of the terrestrial radio performance safe harbor under 17 U.S.C. §114. The district court assumed that because the right to perform the remastered sound recordings had been secured, CBS’s performance of the remastered sound recordings could not infringe the pre-1972 sound recordings.
The district court also held, in the alternative, that CBS was entitled to partial summary judgment of noninfringement with respect to 126 of the 174 representative remastered sound recordings because ABS failed to provide evidence of CBS’s performance of those sound recordings. In the district court’s view, a report regarding 40 of the recordings was inadmissible hearsay. ABS appealed each of the district court’s adverse rulings.
Copyright protection for remastered recordings. After reviewing precedent on the standard for finding derivative works protectable under federal copyright law, the Ninth Circuit stated that a remastered sound recording was not eligible for independent copyright protection as a derivative work unless its essential character and identity reflected a level of independent sound recording authorship that made it a variation that was distinguishable from the underlying work.
"If an allegedly derivative sound recording does not add or remove any sounds from the underlying sound recording, does not change the sequence of the sounds, and does not remix or otherwise alter the sounds in sequence or character, the recording is likely to be nothing more than a copy of the underlying sound recording and is presumptively devoid of the original sound recording authorship required for copyright protection," the court said. "Such a work lacks originality." The presumption against protectability could be rebutted by showing that the work contained independent creative content, recognizable contributions of sound recording authorship, or variations in defining aspects that gave a derivative sound recording a new and different essential character and identity. Merely translating a work from an analog to a digital format did not meet this standard. Even if the remastering engineer intended and attempted to improve the recording’s quality, brightness, or crispness of sound, the final product likely contained little more than a trivial contribution and did not result in an original work, in the Ninth Circuit’s view.
In this case, the district court determined that "at least some perceptible changes were made to Plaintiff’s Pre-1972 Sound Recordings" and that these changes were not merely "mechanical" or "trivial." Therefore, the district court held, there was no genuine dispute of material fact that the remastered works performed by CBS were sufficiently original to be protected by federal law. This conclusion was legal error, the appellate court said. The remastering engineers did not add or remove any sounds and did not edit or resequence the fixed pre-1972 performances; therefore, the remasters presumptively lacked the necessary originality for copyright protection as derivative works. The district court erred in basing its decision on the testimony of CBS’s expert, who explained that digitally perceptible changes to "timbre, spatial imagery, sound balance, and loudness range" in the remastered sound recordings were measures of sound quality. Technical improvements associated with the translation of the analog pre-1972 sound recordings into a digital medium, however, did not support a finding of originality, the Ninth Circuit said. CBS’s expert never analyzed whether the changes he identified reflected any original sound recording authorship that might have changed the essential character and identity of the resulting sound recordings.
In addition, the district court abused its discretion in excluding the rebuttal testimony of ABS’s expert. That expert opined that differences between the original and remastered recordings were barely audible and were likely to be noticed by the average listener. The district court erroneously excluded the testimony based on its belief that the expert’s methodology was flawed. The Ninth Circuit directed the district court to consider in full the testimony of ABS’s expert on remand.
"The district court also erred in failing to consider ABS’s objective in creating the digital remasters," said the Ninth Circuit. The objective was to create digital versions of the pre-1972 recordings in order to allow for digital distribution and compilation albums and to take advantage of the improvements enabled by digital technology, not to introduce any substantive changes to the works. Nothing in the record suggested that ABS set out to make any changes that would do anything other than make accurate copies in digital format of the original analog sound recordings. This was not enough to meet the minimal threshold for originality required for protection under the Copyright Act, the appellate court concluded. Accordingly, the court reversed the grant of summary judgment to CBS as to the question of whether the remastered recordings were independently eligible for copyright protection.
Effect of protection for derivative works. The Ninth Circuit also noted that a copyright-eligible derivative work must and must not in any way affect the scope of any copyright protection in that preexisting material reflect the degree to which it relies on preexisting material. Essentially, this test is meant to make sure that the owner of the preexisting work does not lose rights in that work as a result of the creation of the derivative work. It protects the author’s right to authorize later derivative works without concern for aggressive enforcement against those later derivative works by the earlier derivative work copyright holder, the Ninth Circuit explained. The district court committed legal error by failing to consider this test. Moreover, applying that test, there was at least a genuine issue of material fact as to whether granting copyright protection for the remastered sound recordings here would undermine ABS’s rights in the pre-1972 sound recordings to authorize additional derivative works, the appellate court said. On remand, if the factfinder were to conclude that the remastered sound recordings manifested a change sufficient to create a derivative, copyrightable work, the factfinder should also consider the effect of recognizing a copyright in the remastered sound recording on ABS’s ability to exercise whatever copyrights it may possess in the pre-1972 sound recording.
Class certification. Central District of California Local Rule 23-3 required ABS to file a motion for class certification within 90 days after service of the complaint. The parties had twice stipulated to extend the deadline, explaining in the second stipulation that ABS needed more time for class action-focused discovery. The district court denied the first stipulation for failure to show good cause, and denied the second without explanation. Despite the district court’s rulings, ABS timely filed its motion for class certification, the district court struck the motion because of technical deficiencies. The district court then dismissed the motion for class certification for failure to file a timely motion for class certification under Local Rule 23-3. This was an abuse of discretion, the Ninth Circuit said, because the local rule’s rigid timeframe was in direct contrast to the flexibility of Federal Rule of Civil Procedure 23, which calls for a determination on class certification at an "early practicable time after a person is sues or is sued as a class representative." The Ninth Circuit therefore reversed the district court’s striking of ABS’s certification motion, and remanded for consideration on the merits, including reconsideration of whether pre-certification discovery was warranted.
This case is No. 16-55917.
Attorneys: Robert Edward Allen (McKool Smith Hennigan, PC) for ABS Entertainment, Inc., Barnaby Records Inc., and Brunswick Record Corp. Amit Quint Gressel (Irell & Manella LLP) for CBS Corp. and CBS Radio, Inc.
Companies: ABS Entertainment, Inc.; Barnaby Records Inc.; Brunswick Record Corp.; CBS Corp.; CBS Radio, Inc.
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