ABKCO Music's Lawsuit: Copyright Infringement by George Harrison & Unfair Competition, Study Guides, Projects, Research of Law

Download ABKCO Music's Lawsuit: Copyright Infringement by George Harrison & Unfair Competition and more Study Guides, Projects, Research Law in PDF only on Docsity! ABKCO MUSIC, INC., Plaintiff, v. HARRISONGS MUSIC, LTD., Harrisongs Music, Inc., George Harrison, Apple Records, Ltd., Apple Records, Inc., Broadcast Music, Inc., and Hansen Publications, Inc., Defendants, v. ABKCO INDUSTRIES, INC. and Allen Klein, Additional Parties with Respect to the Counter-Claims No. 71 Civ. 602 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 508 F. Supp. 798; 1981 U.S. Dist. LEXIS 11051 February 19, 1981 COUNSEL: [**1] Pryor, Cashman, Sherman & Flynn, New York City, for ABKCO Music, Inc. and ABKCO Industries, Inc. and Allen Klein; Gideon Cashman, James A. Janowitz, Donald S. Zakarin, New York City, of counsel. Santora, Shenkman & Kushel, New York City, for all defendants except Hansen Publications, Inc.; Joseph J. Santora, New York City, of counsel. Barovick, Konecky, Braun, Schwartz & Kay, New York City, for Hansen Publications, Inc.; Richard Z. Lehv, David S. Rosenthal, New York City, of counsel. Cleary, Gottlieb, Steen & Hamilton, New York City, for Apple Records Limited and Apple Records, Inc.; Albert S. Pergam, New York City, of counsel. OPINIONBY: OWEN OPINION: [*799] OPINION In this action by Bright Tunes Music Corporation for infringement of its copyright in the 1963 hit song "He's So Fine", I earlier concluded that defendant George Harrison had subconsciously plagiarized "He's So Fine" in arriving at the melody of his hit song, "My Sweet Lord", in 1971. Bright Tunes Music Corp. v. Harrisongs Music, Ltd., 420 F. Supp. 177 (S.D.N.Y.1976). I thereafter scheduled hearings to determine the damages flowing from that infringement and the parties responsible therefor, and extensive discovery [**2] commenced. Prior to the date for hearings, however, Bright Tunes sold, for $ 587,000.00, its copyright in "He's So Fine" and its rights in this litigation to ABKCO Music, Inc., of which Allen B. Klein, the "ABK" of ABKCO, is the moving spirit, owner, and principal officer. This immediately caused strong reaction from the Harrison interests n1 because ABKCO had been the exclusive business manager for George Harrison and his musical interests from November, 1970 to March 13, 1973, n2 the period in which the claim of infringement was first asserted. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1. The "Harrison interests" include Harrisongs Music Ltd., Harrisongs Music, Inc., George Harrison, Apple Records, Ltd., and Apple Records, Inc. n2. ABKCO was discharged in March of 1973, triggering bitter litigation which was eventually settled for $ 4.2 million. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Upon ABKCO being substituted as plaintiff herein, the Harrison interests amended their pleadings to assert, in one form or another, a breach of fiduciary duty by ABKCO, which, according to Harrison, [**3] disqualifies ABKCO from recovering in this action. Testimony has now been taken on both the issue of damages and the question of ABKCO's disqualification. While I am of the view that ABKCO's conduct from 1975 to 1978 limits its recovery herein, see infra, it is nonetheless appropriate to determine first what the recovery would have been had ABKCO not become the plaintiff in the way it did, and to set forth the court's findings accordingly, albeit in somewhat summary fashion. The earnings of the song "My Sweet Lord" have come from four principal [*800] sources: mechanical royalties, n3 performance royalties, n4 the sale of sheet music and folios, and the profits of Apple Records, Inc., the Harrison-owned manufacturer of the principal recordings of "My Sweet Lord". - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n3. A mechanical royalty is an amount per record payable by a manufacturer of a recording to the music publisher who licenses the use of the song on the record. When a record is made with a second song on the reverse side (a "single"), a separate mechanical royalty is payable for that second song as well. n4. Performance royalties are monies payable to the publisher and writer generated by the public performance of the composition and generally associated with radio broadcasts. In this case, Broadcast Music, Inc. (BMI), a performing rights society, was charged with the responsibility of collecting money from users of "My Sweet Lord" and paying said royalties. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**4] The album entitled "The Best of George Harrison" is another matter. The trial record provides me with no guidance as to the relative popularity of a number of the album's songs. Since this album was issued several years after the initial release of "My Sweet Lord", has a number of different songs, and is entitled "The Best", I conclude that these are all songs with substantial popularity. With respect to "The Best of George Harrison", therefore, I find that plaintiff has failed to establish that "My Sweet Lord" earned more than its own mechanical royalties. The foregoing findings yield the following calculation of gross earnings by "My Sweet Lord" from mechanical royalties: from the single, $ 54,526.00; from the album "All Things Must Pass", $ 588,188.00; from "The Best of George Harrison", $ 6,887.00; for a total of $ 646,601.00. n7 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n7. Canadian royalties are included. The lacquer masters, art work, packaging and licenses were all prepared in the United States. Sheldon v. Metro-Goldwyn Pictures Corp., 106 F.2d 45 (2d Cir. 1939), aff'd 309 U.S. 390, 60 S. Ct. 681, 84 L. Ed. 825 (1940); Famous Music Corp. v. Seeco Records, Inc., 201 F. Supp. 560 (S.D.N.Y.1961). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**8] Performance royalties, which came solely from BMI figures, total $ 359,794.00, and sheet music earnings total $ 67,675.00. Apple Records, Inc., the Harrison-owned manufacturer of his records, has a "spread" n8 on the manufacturing of records, which constitutes earnings to Harrison. Applying the ratios comparing the air play given "My Sweet Lord" to the air play of the various other Harrison songs, i. e., the ratios used above to calculate mechanical royalties, see supra, I find that Apple's earnings from the "spread" that are attributable to "My Sweet Lord" are: from the single, $ 130,629.00; from "All Things Must Pass", $ 925,731.00; and from "The Best of George Harrison", $ 21,598.00; n9 for a total of $ 1,077,958.00. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n8. A spread is the difference between the price Capitol Records Inc. charged Apple to press a record and the price at which Apple sold the finished record to Capitol Records Distributing Corp. n9. I decline to award statutory "in lieu" damages as to "The Best of George Harrison." - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The [**9] total gross earnings of "My Sweet Lord" as calculated above are $ 2,152,028.00. From this total the Harrison interests contend there must be deducted a number of expense items, which I now treat seriatim. The Euro-Atlantic management fee, legal and professional fees, certain salaries, certain telephone expenses, United States public relations and promotions, and certain income taxes, are all disallowed. Basically, Harrison has not proven, even with minimum specificity, that those expenses are attributable to "My Sweet Lord". A certain twenty percent ABKCO commission already paid to ABKCO and the three and one-quarter percent commission paid to the Harry Fox Agency, totalling $ 18,712.00, are both allowed, thereby reducing the total earnings figure set forth above to $ 2,133,316.00. Next, I must determine the portion of the above income which should be attributed to factors, other than the plagiarized music, affecting public interest in the song "My Sweet Lord". n10 Several matters must be considered. Harrison, an artist with an international "name," supplied his own text. How much of the income is attributable to the text, to the selling power of his name? Although this is [**10] not an area susceptible to precise measurement, I conclude that three-fourths of "My Sweet Lord's" success is due to plagiarized tune and one-fourth [*802] to other factors, such as the words and the popularity and stature of George Harrison in this particular field of music. n11 I weigh the music heavily in this case because the music had already demonstrated its outstanding "catchiness" in 1963 when it carried the rather unexceptional, romantic text of "He's So Fine" to first place on the Billboard charts in the United States for five weeks. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n10. Had I earlier found that Harrison deliberately plagiarized the music, I would award the entire earnings of "My Sweet Lord." See, Shapiro, Bernstein & Co., Inc. v. Jerry Vogel Music Co., Inc., 115 F. Supp. 754 (S.D.N.Y.1953), rev'd on other grounds, 223 F.2d 252 (2d Cir. 1955). n11. In this case I conclude that the much-touted "hook," an introductory musical motive used by Harrison was a minimal factor. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Given all the foregoing, I conclude that $ 1,599,987.00 [**11] of "My Sweet Lord's" earnings are reasonably attributable to the music of "He's So Fine". Now, however, I must turn to the troublesome question of whether ABKCO may be awarded the amount calculated above or whether its conduct vis-a-vis Harrison, its former employer, regarding this very litigation in any manner limits or destroys its right of recovery. As has been stated earlier, in the years 1971-73, Allen B. Klein, through ABKCO, the present plaintiff, was the overall business manager of George Harrison and his musical interests. ABKCO took care of all the financial matters, including negotiating contracts and keeping the financial books and records. For these services ABKCO was paid twenty percent of the gross income from the Harrison ventures. As Harrison's business manager, Klein obviously was aware of both the artistic and financial success of "My Sweet Lord". It was during ABKCO's tenure as business manager that this suit was commenced by Bright Tunes. It was ABKCO that obtained an opinion from musicologist Harold Barlow as to the suit's lack of merit. n12 ABKCO thereafter engaged experienced counsel in New York City to defend; all of these actions were taken before ABKCO's [**12] own services were terminated by Harrison in March 1973. I do not find that any of the steps taken by ABKCO, while acting as Harrison's business manager, to defend this action were in any way inappropriate or other than in good faith. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n12. Mr. Barlow later testified at the trial. Although the court found his testimony in this case unpersuasive, this in no way detracts from the appropriateness of ABKCO's utilizing his services, for Mr. Barlow is a highly knowledgeable musicologist. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - More troublesome, however, is Klein's covert intrusion into the settlement negotiation picture in late 1975 and early 1976, immediately preceding the trial on the merits. At this crucial time Harrison made a settlement proposal which, at the time, Bright Tunes' lawyer regarded as "a good one." Unknown to Harrison, Klein, at that point still involved in bitter post-firing litigation with Harrison, made a substantially higher offer to purchase Bright Tunes' claim on behalf of ABKCO, thereby causing Bright Tunes to conclude that the [**13] level at which it had been negotiating with Harrison was far too low. n13 Bright Tunes reached this conclusion, in part, on the not-unjustified assumption expressed by one of its principals, that Klein, known to Bright Tunes as Harrison's former business manager, "may be in a better position to judge whether the (infringement litigation) will be successful than we are. n14 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n13. Harrison's offer was $ 148,000 to settle only the question of damages arising from alleged copyright infringement in the United States. Klein's offer was $ 100,000 for a call on 100% of the Bright Tunes' stock thus a world-wide settlement exercisable for an additional $ 160,000, in the event of a finding in favor of Bright Tunes at the liability trial. I note that Klein, in fact, bought Bright Tunes' rights in "He's So Fine" in 1978, after the finding of infringement, for $ 587,000. See, infra. n14. Letter of Tenenbaum, Receiver of Bright Tunes, to Barash, a major stockholder of Bright Tunes, December 3, 1975. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Thereafter, Harrison's [**14] unwillingness to discuss a larger settlement and Klein's failure to better ABKCO's offer Bright Tunes viewed that offer merely as an "opener" necessarily forced the case to trial on the merits. Harrison, after the trial, made no further serious efforts to deal with Bright Tunes' higher demands and the claim was finally