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Restaurants and Bars Beware: Failure to Obtain a License to Play a Copyrighted Music May Expose you to Substantial Damages

Posted in Copyright Law

By: David Muradyan

 

Restaurants, bars, night clubs and similar establishments who play copyrighted music or have live performers play the compositions from copyrighted music should pay particular attention to a recent Ninth Circuit case, where the court awarded plaintiffs statutory damages as well as substantial attorney’s fees.

In Range Road Music, Inc. et al. v. East Coast Foods, Inc. et al., 10-55691, 2012 WL 502510 (9th Cir. 2012), several music companies (“Music Companies”) who owned copyrights to certain songs and who were members of the American Society of Composers, Authors, and Publishers (“ASCAP”) sued East Coast Foods, Inc. and its principal shareholder and sole officer and director, Herbert Hudson, for copyright infringement arising out of musical performances of eight copyrighted works at one of East Coast’s locations. (ASCAP is a performing rights society that licenses the music of its members and collects royalties whenever that music is performed publicly). East Coast owned and operated the Roscoe’s House of Chicken and Waffles chain of restaurants in Southern California, including the Long Beach, California location. Shortly after the Long Beach location opened and for a period of seven years thereafter, ASCAP contacted East Coast to offer it a license to perform music by ASCAP members, but East Coast refused. As a result, ASCAP engaged Scott Greene, an independent investigator to visit the location and investigate whether copyright infringement was occurring at the venue. Greene visited Roscoe’s and conducted an investigation of the various musical compositions that were performed, and submitted his report to ASCAP, concluding that copyright infringement occurred with respect to eight songs owned by the Music Companies. 

 

After ASCAP confirmed that the Music Companies validly owned the registered copyrights to the eight songs that Greene had identified in his report, the Music Companies sued East Coast and Hudson for eight counts of copyright infringement, corresponding to the eight songs Greene heard publicly performed at Roscoe’s. Ultimately, the district court granted summary judgment in favor of the Music Companies and found defendants jointly and severally liable for $4,500 in statutory damages for each of the eight infringed works, for a total of $36,000. The court also awarded the Music Companies attorney’s fees and costs in the amount of $162,728.22.

 

The Copyright Act of 1976, 17 U.S.C. § 101 et. seq., provides copyright protection for “original works of authorship fixed in any tangible medium of expression.” Such protection is not extended to ideas or facts upon which the expression is based. Works of authorship include the following categories: (1) literary works; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works; (6) motion pictures and other audiovisual works; (7) sound recordings; and (8) architectural works.

 

Under the Copyright Act, copyright owners have the exclusive right to, and to authorize others to: (1) reproduce the copyrighted work in copies; (2) prepare derivative works based upon the copyrighted work; (3) distribute copies of the copyrighted work to the public by sale or other transfer of ownership; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, display the copyrighted work publicly; and (6) in the case of sound recordings, perform the copyrighted work publicly by means of a digital audio transmission. To ‘perform’ a work means to recite, render, play, dance, or act it, either directly or by means of any device or process.

 

Anyone who violates any of the exclusive rights of the copyright owner is an infringer of the copyright or rights of the author, as the case may be. To establish a prima facie case of copyright infringement, a plaintiff must show (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. The word “copying” is used as shorthand for infringing of any of the copyright owner’s six exclusive rights, one of which is the right to perform the copyrighted work publicly. An infringer of copyright is liable for the copyright owner’s actual damages and any additional profits of the infringer, or statutory damages of $750 to $30,000 (if the violation was committed willfully, the court may in its discretion increase the statutory damages award to $150,000). The court also has the discretion to allow the recovery of full costs by or against any party, including reasonable attorney’s fees to the prevailing party as part of the costs.

 

In Range Road Music, Inc., the defendants argued, among other things, that the Music Companies’ evidence of copyright infringement was inadequate because neither Greene nor any other witness provided “substantial similarity” between the publicly performed compositions at Roscoe’s and the copyrighted works. The Ninth Circuit rejected this claim, holding that “substantial similarity” is not an element of a claim of copyright infringement. Rather, the Court held, “substantial similarity” is a doctrine that helps courts adjudicate whether copying of the “constituent elements of the work that are original” actually occurred when an allegedly infringing work appropriates elements of an original without reproducing it in toto. The court held that because the Music Companies had produced evidence that the public performances entailed direct copying of the copyrighted work, a showing of “substantial similarity” was irrelevant, as such a showing is only necessary to prove infringement “absent evidence of direct copying.” In this case, Greene had identified some songs which were played from a compact disc player and others from the compositions played by the live band. He had provided a declaration stating that the live band he saw perform at Roscoe’s introduced the songs they were playing by title. He further declared that he saw a disc jockey play four tracks from a CD of one of the copyright owners, the titles of which he obtained from the jewel case lying next to the CD player. Defendants did not contradict any of this evidence. As such, because both the tracks played from the compact disc player and the compositions played by the live band were “performed” as the term is defined in the Copyright Act, there was no genuine issue of material fact as to whether copyright infringement occurred at Roscoe’s, and the court awarded the Music Companies $4,500 in statutory damages for each of the eight infringed works, which, though within the range authorized by the Copyright Act, was nonetheless substantial.

 

The Ninth Circuit also affirmed the district court’s award of attorney’s fees and costs. The Copyright Act grants courts the authority to “award a reasonably attorney’s fee to the prevailing party as part of the costs.” The Ninth Circuit explained that in awarding attorney fees, district courts are given wide latitude to exercise equitable discretion. In this case, the Ninth Circuit found that the district court had applied the factors set forth in Entm’t Research Grp., Inc. v. Genesis Creative Grp., Inc., 122 F.3d 1211, 1229 (9th Cir. 1997) (the degree of success obtained; frivolousness; motivation; the objective unreasonableness of the losing party’s factual and legal arguments; and the need, in particular circumstances, to advance considerations of compensation and deterrence), thoroughly considered both parties’ arguments, and articulated a reasoned explanation for its fee award. In upholding the district court’s award of attorneys’ fees, the Ninth Circuit concluded that the defendants “could have avoided liability by purchasing a valid license at any point during the seven years in which ASCAP importuned them to do so.” Defendants’ refusal and/or failure to purchase the license from ASCAP made them liable for a substantial attorney’s fees award ($162,728.22).

 

In light of this case, restaurants, bars, night clubs and similar establishments who play tracks from copyrighted music or allow compositions to be played by live bands should make sure to obtain a license from the copyright owner (or the group representing the owner), which in many cases is ASCAP. Otherwise, these businesses are at risk, not only of being sued for copyright infringement, but of being exposed to substantial statutory damages and significant attorney’s fees.