(Hypebot) — Well known concert promoter Bill Graham amassed a number of coveted recordings of iconic artists during his time working in the industry, recordings which were then streamed and made available for download thanks to a third party buyer after Graham’s death. Now a court has ruled these recordings should have remained locked away.
Guest post by Stephen Carlisle of NOVA Southeastern University
Bill Graham was certainly one of the most well-known concert promoters of the 1960’s and 1970’s rock music scene, running the famous Fillmore concert venues in both San Francisco and New York City. He also made audio and video recordings of the bands that played his venues. Apparently, these recordings were made without getting any approvals or permissions from the performing artists.
This massive treasure trove of recordings which “reads like a veritable who’s who of rock, soul, and alternative music, containing the performances of The Rolling Stones, The Who, the Grateful Dead, Willie Nelson, Ray Charles, Aretha Franklin, and Carlos Santana, to name a few” became known as “Wolfgang’s Vault,” after Bill Graham’s childhood nickname.
For his part, Bill Graham did not commercially exploit any of these recordings during his lifetime, other than 10 instances of licensing material as a part of concert presentations, private parties and a few clips for such TV shows as VH-1’s “Behind the Music.” After Graham’s death, the entire collection was sold to Defendants William Sagan and Norton, LLC. These comprised of 276 separate recordings. At the time of sale, it was carefully noted by Bill Graham Archives that they made no representations or warranties that the purchaser would be able to commercially exploit the recordings. “In purchasing those recordings, Defendants never saw any performance contracts executed by the artists authorizing the recording of those performances, nor were they made aware that such agreements existed.”
But who cares? This is the internet age! Who needs to get permission before you do something?
Sure enough, in 2002, Defendants started a website called Wolfgang’s Vault. In 2006, the functionality of the site was expanded to provide audio and audio-video recordings made by Graham to be available for on-demand streaming and downloading.
Only after the on-demand streaming site had been up for a year, did the Defendants try to take the steps to have the material properly licensed. But, their licensing attempts were only directed towards mechanical licenses, defined as the right to reproduce audio-only copies of musical compositions. At no time did they seek synchronization licenses, the right to combine a song with a visual image.
Predictably, after the usual cease and desist letters were issued to the Defendants, and said cease and desist letters were predictably ignored by the Defendants, 26 music publishing companies filed suit. Incredibly, even after the suit was filed the Defendants added 36 more recordings of the Plaintiff publishers songs to their website. Thus, it is no surprise that in a ruling issued April 9, 2018, a U.S. District Court ruled uniformly in favor of the Plaintiff music publishing companies, and ruled that the principal of Norton LLC, William Sagan, be personally liable for the acts of infringement.
The most ridiculous argument advanced by Defendants was that somehow the compulsory licensing scheme of Section 115 of the Copyright Act protected their distribution of audio-visual works. This, by the plain meaning of the section only applies to “phonorecords.” The Copyright Act’s definition of “phonorecords” specifically excludes sounds which are “accompanying a motion picture or other audio-visual work.” Further, all of the audio-visual recordings were made available for streaming before any license was sought. This, under the clear terms of section 115, forecloses the possibility of compulsory licensing.
The Judge spends far more time on this issue than necessary, but still in the space of a page, rejects the Defendants contentions, holding them liable for all of the infringements contained in 206 audio-visual recordings.
The Defendants then try to bootstrap their lack of licensing of the audio-only recordings by entering into agreements with three major record labels (Sony, Warner Bros. and UMG), purporting to grant them permission to exploit the artist’s recordings. The problem with these agreements, according to the Court, are numerous:
The agreements were entered into years after, sometimes decades after the recordings were made.
Nowhere in the agreements does it contend the recordings were “lawfully made.”
No written consents by the artists recorded are attached.
No identification of the artists purportedly covered by the agreement are included.
Even if the performances were lawfully captured, there is no dispute that Defendants had no proper licenses to the musical compositions.
Next up, the Defendants contend that licenses obtained through the Harry Fox Agency give them the right to distribute the songs contained in the recordings. The problem is that these HFA licenses are essentially Section 115 compulsory licenses. Therefore, they fail for all of the reasons previously stated by the Court, including the facts that a compulsory license cannot be claimed after the date of first distribution, and do not apply to audiovisual recordings.
Next up, in the Defendant’s last-gasp effort to retroactively license the works at issue, it filed Notices of Intent to Obtain a Compulsory License, (NOI’s) with the Copyright office. Once again, one cannot obtain a compulsory license after the date of first distribution. To get around this, the Defendants apparently “front-dated” the NOI’s to show the date of first distribution to be the same as the date of filing of the NOI’s. In many cases, this is obviously incorrect. In response, the Defendant’s claim the inaccuracies are “harmless error,” or should be back-dated to the time they first hired the HFA to procure licenses.
The Court, once again, rejects the argument, finding the Defendants have undoubtedly infringed the songs. The issue of timelines or untimeliness of the NOI’s will, the Court will take into account this factor to determine whether Defendants actions were “[reckless] or willful.”
Next, by accepting payments rendered under the invalid compulsory licenses, Defendants claim that Plaintiff have granted them an “implied license.” Nope, says the Court. Once again, the failure to follow the statutory formalities of Section 115 is fatal to the argument.
“There is no evidence that Defendants intended audiovisual recordings of their Musical Works to be exploited under the guise of Section 115 compulsory mechanical licenses. Nor is there any indication that Plaintiffs intended recordings that were not fixed or exploited with the appropriate consents to be laundered into lawful reproductions by reason of the compulsory license regime. Accordingly, Defendants’ implied license defense fails.”
Next up, did the Defendants act “recklessly or willfully” which would entitle Plaintiffs to enhanced statutory damages under Section 504? The answer of the Court is a resounding “yes.”
“[T]he Court agrees with Plaintiffs that there is voluminous, undisputed record evidence demonstrating that Defendants were on notice that the recordings they acquired lacked the consents and authorizations necessary to exploit them, both from performing artists and the copyright holders in the songs. The collections, which were at least in part conveyed through quit-claim transfer, (citation omitted) informed Defendants that they were not acquiring intellectual property rights, (citation omitted) warned of the significant licensing issues that Defendants would need to overcome, (citation omitted) and either made “no representation … regarding original performance contracts,” (citation omitted), or simply never provided Defendants with any performer contracts, id. (citation omitted). Moreover, there is no factual assertion in the record that Defendants ever obtained the consent of the copyright holders in the Musical Works.
There is also ample evidence that during the course of Defendants’ exploitation, they were made aware of the statutory provision with which they were obligated to comply. Indeed, in invoking their licensing vendors as a show of good faith, Defendants fail to acknowledge that both the HFA and RightsFlow agreements stressed that Defendants were bound by the requirements of Section 115.”
Interestingly enough, the Court declines to reach the issue of whether a synchronization license was required for the audio-visual works that were streamed, which in my mind is a rather obvious conclusion. The Court contents itself merely to rule that the mechanical licenses obtained were insufficient to license audio-visual works for exploitation.
“Accordingly, summary judgment is granted to Plaintiffs on their claim of willful infringement as to all audiovisual recordings, pre-1972 audio recordings, and all recordings covered by the UMG agreement, and denied in all other respects.”
“Plaintiffs assert that Defendants have exploited in audio or audiovisual format more than 1,175 recordings of Plaintiffs’ approximately 200 Musical Works”.
This is going to get very expensive, very quickly. Especially if the Court rules that each new recording constituted a separate infringement of the work.
Perhaps it would have been better to leave these works in the “vault.” At least until they were properly licensed.