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Universal Music and Capitol Records have navigated the complexities of international air travel to score a summary judgment ruling that when it gets to a jury next month to decide damages could be worth hundreds of millions of dollars.
The defendant in the lawsuit is IFP and parent company Global Eagle, a worldwide provider of in-flight entertainment from movies to songs. IFP scored a lucrative contract loading American Airlines (and later US Airways) with music playlists obtained via physical CDs and digital downloads, and in 2008 upon concern that it had licensing issues, approached the major labels for a deal.
What followed was a few years of painstaking negotiations over advances and revenue apportionment, complicated by some catalogs not being available for in-flight licensing as well as IFP not wishing to let the cat out of the bag about the lack of licenses. During the talks, IFP continued to let American Airlines customers hear songs from The Beatles and other artists. What made this all the more confusing was that although IFP was based in Los Angeles, and had completed some of the early reproduction work there, there was also representations by IFP that duplication and encoding was taking place in the U.K. under a different licensing regime there.
If getting slow-moving record companies like Universal, Sony and Warner Bros. to sign off on licensing deals was tricky, that’s nothing compared to the knotty feat of winning a copyright lawsuit over a literally moving target. Although IFP’s argument that it wasn’t liable for works licensed elsewhere and imported into the U.S. found no favor with the judge, the defendant pursued other defenses and counterclaims against Universal.
For starters, IFP maintained that it had reached an oral or implied license and that the record companies committed fraud and tortiously interfered with its contracts with American and United.
In a tentative summary judgment ruling that was adopted on Wednesday, however, U.S. District Judge George Wu writes, “At best, there is evidence that the parties discussed various terms, but never reached any final agreements,” and further, “There is ample evidence that IFP knew it had no licenses from Plaintiffs and that it could be sued for copyright infringement, and no evidence that Plaintiffs ever indicated to IFP that any such licenses were forthcoming or misrepresented any existing fact.”
Wu also finds that IFP acted willfully by doing things like collecting money from airlines for copyright licenses in anticipation that it would one day have to make amends. The judge writes: “As Plaintiffs aptly state, ‘[i]f IFP’s infringements were not willful, no infringements could ever be.’”
Then, there was the issue of pre-1972 sound recordings not protected by copyright law, but now being interpreted under state law to protect against misappropriation. To this, IFP threw up an argument that such claims were preempted by the federal Airline Deregulation Act, but that argument fails because in-flight entertainment is deemed as a “service” under the statute and that the connection with state law claims is substantial.
Here’s the adopted tentative as well as the Wednesday ruling that also rejects a statute of limitations defense. The case is now set for a damages trial on May 10 with more than 4,500 copyrights involved. The plaintiffs are led by Jeffrey D. Goldman at Jeffer Mangels, while the defendants are being handled by Marty Katz at Shappard Mullin.
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