By Thomas Long, J.D.
Infringement claims based on failure to obtain licenses for three other songs failed because the plaintiff licensing company did not hold exclusive rights in those works.
The vocal music director of Burbank High School and other defendants associated with the school’s student choir program engaged in fair use by adapting, altering, and performing segments of the sheet music for the popular song "Magic," originally recorded by Olivia Newton-John for the film "Xanadu," the U.S. Court of Appeals in San Francisco has decided. Accordingly, a licensing company holding exclusive rights to the work could not go forward with copyright infringement claims. In addition, the court held that the licensing company lacked standing to sue with respect to three other musical works because it had received its interests in those songs from individual co-owners of their copyrights, without the consent of other co-owners, and therefore held only non-exclusive licenses. Finally, the court held that the defendants were entitled to an award of attorney fees for their successful defense against the licensing company’s "objectively unreasonable" infringement claims (Tresona Multimedia, LLC v. Burbank High School Vocal Music Association, March 24, 2020, Wardlaw, K.).
Defendant Brett Carroll was the vocal music director at Burbank High School, the music program of which was nationally recognized for competitive show choirs that were top competitors in their divisions. The Burbank High School Vocal Music Association Boosters Club, a nonprofit organization consisting of parents of choir members, held several fundraisers to help cover the show choirs’ expenses.
Carroll commissioned music arranger Josh Greene (who was not a party to this lawsuit) to create custom sheet music for two shows, "Rainmaker" and "80’s Movie Montage," performed by the show choir group In Sync. "Rainmaker" was an approximately 18-minute performance of stanzas from many songs, including a rearranged segment of "Magic," a song originally performed by Olivia Newton-John. The "Magic" segment used by In Sync to close out the last two minutes of "Rainmaker" included a rearranged chorus and small segments from another verse of the song. "80’s Movie Montage" was about 20 minutes in length and incorporated part of the song "(I’ve Had) The Time of My Life" by Bill Medley and Jennifer Warnes. That segment was approximately 16 seconds of the song’s chorus, out of the song’s four-minute and 22-second length, and was used only once in "80’s Movie Montage" to transition between other songs. Each show also incorporated small segments of several other musical works not at issue in this case. In Sync performed these shows on several occasions, including at a fundraising event and during several student competitions.
Tresona Multimedia, LLC, a licensing company, filed suit against Carroll, the Boosters Clubs, and several individual Boosters Club parents, alleging that they failed to obtain licenses for their use of copyrighted sheet music for "Magic" and "(I’ve Had) The Time of My Life" in arranging the "Rainmaker" and "80’s Movie Montage" performances. Tresona also alleged that performances by the Jon Burroughs High School show choirs at the fundraiser, which incorporated segments of the songs "Hotel California" and "Don’t Phunk With My Heart" violated its copyright interests in those songs.
Tresona’s copyright interests. Although Tresona claimed to have exclusive interests in all of the asserted compositions, it had only obtained an exclusive right to issue licenses for "Magic." The interests in "Magic" were transferred to Tresona by John Farrar Music, the sole copyright claimant of that composition, according to the Copyright Office’s public catalog of registration. John Farrar Music retained the public performance rights to the song. Tresona failed to provide evidence of its chain of title to "Hotel California," but it was undisputed that the entity from which Tresona acquired its rights controlled only the interests of one of its songwriters, who owned the composition jointly with the other songwriters. Tresona held only a 25 percent interest in "(I’ve Had) The Time of My Life." Therefore, Tresona was not the sole copyright owner of those two songs. With respect to "Don’t Phunk With My Heart," Tresona obtained its interests from a publisher that only controlled the rights held by two out of eight joint owners of that song, and therefore was not the song’s sole copyright owner.
District court decision. Carroll moved for summary judgment, and the district court granted the motion in part, holding that Tresona lacked standing to sue for infringement of "(I’ve Had) The Time of My Life," "Hotel California," and "Don’t Phunk With My Heart," because Tresona held only non-exclusive rights to these works. For Tresona’s claims based on the song "Magic," the district court concluded that Carroll was entitled to qualified immunity from suit, and that the Boosters Club and Boosters Club parents could not be held liable for direct or secondary copyright infringement. Despite being the prevailing parties, the defendants were denied an award of attorney fees under Section 505 of the Copyright Act. Tresona appealed the summary judgment orders, and the defendants appealed the denial of their motion for fees.
Standing. The Ninth Circuit held that the district court correctly granted summary judgment for lack of standing as to "(I’ve Had) The Time of My Life," "Hotel California," and "Don’t Phunk With My Heart." The Copyright Act provides that only the "legal or beneficial owner of an exclusive right under a copyright" may sue for infringement of that particular right. Copyrights are divisible and can be freely transferred, but the question of standing to sue depended on the nature of the interest that was transferred, the court explained. When exclusive rights in copyright are jointly owned, the grant of one owner of a license—even if the license is purportedly "exclusive"—does not give the licensee standing to sue third-party infringers. The reason for this is that a nonexclusive license constitutes a grant of rights only with vis-à-vis the licensor, not vis-à-vis the world; the licensee obtains no right to exclude others from using the work, and thus no standing to sue for infringement. Because Tresona received its interests in these three songs from individual co-owners of copyright, without the consent of the other co-owners, it held only nonexclusive licenses in those works, the court said.
Fair use. The Ninth Circuit also affirmed the district court’s grant of summary judgment with respect to the fourth song at issue, "Magic," but on fair use grounds rather than grounds of qualified immunity. The court noted that Carroll had asserted a fair use defense from the outset and repeated that assertion in summary judgment filings. The appellate court deemed it important to rule on the fair use question because a similar situation could arise in a private school setting, in which the immunity defense would not be available. In addition, the Ninth Circuit noted that the fair use defense—which rendered a use noninfringing—had long served as an important defense in copyright law, unlike qualified immunity, which had never been used in the Ninth Circuit or in the Supreme Court to shield a public a public official from a copyright infringement claim.
The court first noted that Carroll’s use of the musical work was in his capacity as a teacher in the music education program at Burbank High School, and this educational use weighed in favor of a fair use finding. However, this did not end the inquiry, and the court next examined the four nonexclusive fair use factors listed in Section 107 of the Copyright Act: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.
Purpose and character of use. In the appellate court’s view, Greene’s arrangement of segments from several musical works, including the chorus from "Magic," was for nonprofit educational purposes, and the resulting work was transformative. Proceeds from the performance of the 18-minute competitive choir show containing segments of that work were used to support the school’s educational program and its show choir. Carroll distributed the sheet music to the music students at no charge to them. More importantly, however, "Rainmaker" was an entirely different theatrical work from "Magic" or the 1980 music fantasy movie that featured it, "Xanadu." The school’s show piece reworked portions of several songs to tell a story with new expressive content and meaning—the story of a local Dust Bowl–era community ravaged by drought, which is visited by a magical stranger wo brings lifesaving rain, prompting the townspeople to sing the rearranged chorus of "Magic," including additional, new lyrics. By adding new expression, meaning, and message, Greene created a transformative work, the court said. This weighed in favor of a fair use finding.
Nature of copyrighted work. The original arrangement of "Magic" was undoubtedly creative in nature, the court said, which weighed against a finding of fair use.
Amount used in relation to copyrighted work as a whole. The defendants used of about 20 seconds of "Magic"—which ran for four minutes and 22 seconds in its original version—although that 20 seconds contained the song’s principal chorus, a qualitatively significant portion of the work. However, the court noted that context was important. The court explained that "Greene’s rearrangement did not simply copy several lines from one chorus of the song and repeat it, but embedded that portion into a larger, transformative choir showpiece that incorporated many other works, and imbued that entire piece with new expression and meaning not contained within any of the individual works." Given Carroll’s nonprofit educational and transformative use of "Magic," the amount and substantiality of the portion used did not weigh against a finding of fair use, in the court’s view.
Market effects. Finally, the court determined that Tresona was not harmed by the loss of any fees for the licensing of the song "Magic." Although the sheet music created and distributed to students constituted a derivative use of the original sheet music, the 20 seconds used in the "Rainmaker" choir piece was not a market substitute for the song. "It is difficult to see how even widespread and unrestricted use of the chorus, in the context of nonprofit show choir performances, could displace the market for sheet music for the entire song," the court said.
Conclusion on fair use. Weighing the four factors, the court determined that the defendants’ use of "Magic" was fair use. The court said it was "especially swayed here by the limited and transformative nature of the use and the work’s nonprofit educational purposes in enhancing the educational experience of high school students."
Attorney fees. Lastly, the appellate court held that the district court abused its discretion in denying the defendants an award of attorney fees incurred in their successful defense. Tresona’s arguments were objectively unreasonable, said the court. As to standing, Tresona should have known from prior case law that its chances of prevailing on the three songs for which it held nonexclusive licenses were "slim to none." In addition, the defendant’s use of "Magic" fell plainly within the statutorily enumerated purposes of teaching and nonprofit education, and the portions of the song taken were used in a highly transformative work. The court also felt that Tresona was unreasonable in aggressively pursuing an action against a public school teacher, a nonprofit boosters club, and parent volunteers. The Ninth Circuit therefore awarded the defendants’ attorney fees and remanded to the district court for the calculation of the award.
This case is Nos. 17-56006, 17-56417, and 17-56419.
Attorneys: Brad A. Denton (Denton Peterson PC) for Tresona Multimedia, LLC. Scott D. Danforth and Marlon C. Wadlington (Atkinson Andelson Loya Ruud & Romo) for Brett Carroll and John Doe Carroll. A. Eric Bjorgum, Marc Karish, and Vincent Pollmeier (Karish & Bjorgum PC) for Burbank High School Vocal Music Association, Ellie Stockwell, John Doe Stockwell, Marianne Winters, John Doe Winters, Geneva Tarandek, John Doe Tarandek, Lorna Consoli, John Doe Consoli, Charles Rodriguez, and John Doe Rodriguez.
Companies: Tresona Multimedia, LLC; Burbank High School Vocal Music Association
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