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The producer of Madonna’s iconic song “Vogue” isn’t responsible for paying the publisher’s legal fees in connection with a copyright fight they won, a federal appeals court on Wednesday ruled.
Following a lengthy copyright dispute over a sample Robert “Shep” Pettibone used in “Vogue,” which the producer and Warner Music defeated, another fight broke out over who had to foot the bill for attorneys’ fees.
Pettibone in April 2017 sued Warner/Chappell and WB Music claiming the publisher was unfairly withholding his royalty payments. U.S. District Judge Richard Sullivan in March 2018 dismissed the complaint, finding that their deal unambiguously said Pettibone must indemnify Warner and therefore it was fair for the publisher to use his royalties to offset attorneys’ fees.
For context, here’s what the relevant portion of their contract says: “Each party will indemnify the other against any loss or damage (including court costs and reasonable attorneys’ fees) due to a breach of this agreement by that party which results in a judgment against the other party or which is settled with the other party’s prior written consent (not to be unreasonably withheld). In addition, [Pettibone’s] indemnity shall extend to the ‘deductible’ under [Warner’s] errors-and-omissions policy without regard to judgment or settlement. Each party is entitled to be notified of any action against the other brought with respect to [the song ‘Vogue’], and to participate in the defense thereof by counsel of its choice, at its sole cost and expense.”
The 2nd Circuit on Wednesday vacated the decision and directed Sullivan to enter judgment for Pettibone. It found the agreement to be “pock-marked with ambiguity” and, if anything, suggests each party would pay its own fees and costs. The summary order notes the section “explicitly cabins” indemnification obligations to disputes arising from a breach of the agreement and “there is no explicit mention of whether an indemnification obligation exists absent such a breach.”
“[T]o the extent Warner urges that it intended to bury, in section 8.1, a highly unorthodox fee-shifting provision that is astonishing in its breadth, the contractual language undoubtedly ‘fails to disclose its purpose,'” states the order.
The order also notes that Warner drafted the agreement and could have included an indemnification for all allegations or clarified the section. At this point, Warner’s fees are almost $1 million and the 2nd Circuit doesn’t think Pettibone should foot the bill.
“Warner would have us read the Agreement to shift attorneys’ fees of this magnitude to individual songwriters for any and all infringement claims brought against them, regardless of merit or frivolousness,” states the order. “Because the Agreement’s language does not come close to unambiguously requiring such an extraordinary result, we hold that Warner cannot enforce section 8.1 against Pettibone.”
The appeals court directed Sullivan to calculate the royalties Warner now owes Pettibone and consider his requests for interest and an award of fees, costs and expenses he incurred in connection with this fight. Read the full summary order below.
Pettibone’s lawyer Richard Busch sent The Hollywood Reporter a statement saying he’s thrilled with the decision. “Warner literally wanted to apply the indemnification provision of their contract even though Shep breached no warranty and we defeated the underlying claim of infringement,” Busch said Wednesday in an email. “They have just kept his royalties that he relies on for years. This is a truly sweet victory, and will hopefully prevent others from trying to pull the same nonsense in the future.”
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