IP Law Daily Liability of restaurant owners for performance of copyrighted music submitted to jury along with infringement issues
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Friday, September 21, 2018

Liability of restaurant owners for performance of copyrighted music submitted to jury along with infringement issues

By Pamela C. Maloney, J.D.

Whether the individual and corporate owners and operators of a restaurant were vicariously liable for the allegedly infringing acts of piano players who publicly performed copyrighted works of music without a license had to be resolved by a jury, a federal district court in Las Vegas, Nevada held. According to the court, there were questions of fact as to whether all 10 copyrighted works had been performed at the restaurant during the time period in question. In addition, the actual control and ownership rights of the corporate owners and the managing members remained in dispute (Broadcast Music, Inc. v. Five Star Enterprises LLC, September 19, 2018, Gordon, A.).

Broadcast Music, Inc. (BMI) is a nonprofit performing rights organization that acquired non-exclusive public performance rights by entering into license agreements with copyright owners, such as song writers and music publishers. BMI then granted licenses to others, such as bars and nightclubs, to publicly perform the copyrighted works. After deducting operating expenses and reserves from the license fees, BMI distributed its income to its affiliated songwriters and music publishers. BMI, along with several affiliated songwriters and music publishers, brought copyright infringement claims against both Five Star Restaurants, LLC (FSR) and Five Star Enterprises, LLC (FSE), the owners and operators of the restaurant, Zeffirino, alleging that 10 copyrighted works for which BMI owned the licensing rights had been performed publicly at the restaurant during in 2014 and 2015 without authorization. In addition to holding FSR and FSE responsible for the infringing acts, BMI also sought to hold the managing members of FSR and FSE vicariously liable for copyright infringement. BMI moved for summary judgement, asserting there was no genuine dispute over whether FSR and FSE, along with the individual managing members, had engaged in copyright violations.

Rights in the works.The evidence of BMI’s ownership interests in the 10 works included documents that showed registered copyrights for each of the 10 songs, along with licensing agreements with the affiliated songwriters and music publishers that covered the years in question. These licensing agreements granted BMI a performance license and the right to enforce infringement involving the works at issue. Although FSR and FSE had argued that the documents were illegible, the court found them to be readable. Finding that there was no evidence raising a genuine dispute as to BMI’s rights in the works at issue, the court granted summary judgment on this element of their claim.

Lack of authorization. A statement by one of the restaurant owners that there was no evidence that the piano players who had performed at the restaurantlacked authorization to perform the works was insufficient to overcome BMI’s evidence that no one at the restaurant was licensed to perform the works in question. Mere speculation that the piano players might have had a license without evidence to support that claim could not overcome BMI’s offer of proof and, therefore, the court granted summary judgment as to this element as well.

Public performance.However, there was a genuine dispute as to whether the piano players at the restaurant had performed the copyrighted works on dates set forth in the complaint. Investigators for BMI had heard and recorded the copyrighted songs being performed on the several of the nights in question, which was sufficient to meet BMI’s burden of showing a public performance of a copyrighted work. However, one of the restaurant’s managers declared that after receiving notification of a specific allegation of infringement, the use of those songs by the restaurant’s piano players stopped. The manager’s statement called into question a number of BMI’s infringement reports, thereby raising a question of fact that precluded summary judgment.

Vicarious liability. BMI sought to hold both FSR and FSE vicariously liable for the infringing acts committed by the restaurant’s piano players because they owned and operated the restaurant. They also argued that the individuals named in the lawsuit were vicariously liable for infringement because they were managing members of FSR and FSE with a financial interest in the restaurant and they could have stopped the infringing activity.FSR admitted that during the relevant time, it owned and operated the restaurant, had a direct financial interest in the restaurant, and had the right to direct and control the restaurant. Thus, FSR could be held vicariously liable for infringement.

However, the court could not determine, as a matter of law, whether FSR’s managing members also could be vicariously liable for the infringing acts. BMI presented no evidence setting forth the rights and authority of the individual members, nor did it prove which of the managing members actually engaged in managerial acts at the restaurant. Furthermore, the managing members themselves were not in agreement as to who had managerial authority and control over the restaurant. Accordingly, the court refused to grant summary judgment against FSR’s members.

In contrast, FSE, which had been dissolved in 2005 and ceased to exist in 2007, denied having any financial interest in the restaurant. BMI’s only evidence of FSE’s ownership interest and that of its managing members was FSE’s name on the liquor license. That evidence alone was not enough to establish that, as a matter of law, FSE and its managing members had a direct financial interest in the restaurant or had the right and practical ability to control what occurred at the restaurant. Thus, BMI’ motion for summary judgement with regard to the liability of FSE and its managing members was denied.

This case is No. 2:16-cv-02361-APG-CWH.

Attorneys: James A. Kohl (Howard & Howard Attorneys, PLLC) and Robert W. Hernquist (Howard & Howard Attorneys PLLC) for Broadcast Music, Inc. H. Stan Johnson (Cohen-Johnson, LLC) for Five Star Enterprises LLC.

Companies: Broadcast Music, Inc.; Five Star Enterprises LLC

MainStory: TopStory Copyright NevadaNews

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