The Parties:
1. Plaintiff-appellant Michael L. Agee, a California resident, is proprietor of L & H Records, a music recording studio located in California. Through L & H Records, Agee owns copyrights in two sound recordings, “Laurel and Hardy's Music Box” (“Music Box”) and “Laurel and Hardy's Music Box: Volume II” (“Music Box-Two”). Agee does not own the copyright in the musical compositions embodied in these sound recordings.
2. Defendant-appellee Paramount Communications, Inc. is a Delaware corporation whose principal place of business is California. Defendants-appellees Paramount Pictures and Paramount Television Group are divisions of Paramount. Paramount Pictures produces the daily, half-hour news magazine television program Hard Copy and transmits it to independently owned and operated television stations for broadcast nationwide.
Facts:
1. Paramount copied portions of three songs from Agee's “Music Box-Two,” entitled “Ku-Ku,” “Cops,” and “The Donkey's Ears,” to make the audio track of a four-minute segment of its Hard Copy feature called “Caught on Tape.” After duplicating parts of the recording, Paramount created an audiovisual work that timed or “synchronized” portions of the duplicated recording to visual images showing two young men engaged in an unsuccessful burglary attempt.
2. Paramount recorded the “Caught on Tape” feature on February 15, 1993, and integrated it into the Hard Copy program for satellite transmission to the TV stations for airing the next day. Portions of the feature, including Agee's recording, were also included in the opening and closing credits of the program. In addition, Paramount produced and transmitted to the TV stations a promotional commercial excerpted from the program, again including Agee's copyrighted work. The TV stations made their own copies of the program and the commercial and broadcast them to the public. Paramount neither sought nor obtained a license from Agee for the use of his recording, nor did it refer to him in the program's credits.
3. On September 10, 1993, Agee brought a copyright infringement action against Paramount and the TV stations for the unauthorized copying and synchronization of the songs from his sound recording, creation of a derivative work, and distribution or publication of that work to the public. Agee also alleged that defendants had engaged in unfair competition and that Paramount's use of his recording violated section 43(a) of the Lanham Act.
Issue:
Whether incorporating a copyrighted sound recording into the soundtrack of a taped commercial television production infringes the copyright owner's exclusive right of reproduction under the Copyright Act of 1976, 17 U.S.C. §§ 106 and 114(b) (1993) YES
Whether the copies of the program, including the duplicated portions of Agee's work, made by the TV stations violate the Lanham Act NO
Whether the copies of the program, including the duplicated portions of Agee's work, made by the TV stations constitute unfair competition NO
Ruling:
RE: Copyright Infringement
Section 106 of the Copyright Act of 1976 gives owners of copyrights in most works the exclusive right to reproduce the copyrighted work in copies or phonorecords, to prepare derivative works based upon the copyrighted work, to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending, to perform the work publicly, and to display the work publicly. 17 U.S.C. § 106. However, with respect to copyrights in sound recordings, which the Act defines as “works that result from the fixation of a series of musical, spoken, or other sounds,” id. § 101, the Act confers more limited rights. Only the rights of reproduction, preparation of derivative works, and distribution of copies are conferred, and a performance right is explicitly not conferred. Id. § 114(a). Moreover, the rights that are conferred are more limited than in the case of other works.
The reproduction right is limited to the right “to duplicate the sound recording in the form of phonorecords, or of copies of motion pictures and other audiovisual works, that directly or indirectly recapture the actual sounds fixed in the recording.” Id. § 114(b) (emphasis added). The derivative work right is limited to the right “to prepare a derivative work in which the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality.” Id.
Also pertinent to our inquiry in this case is the exemption that section 114 extends to broadcasters for “ephemeral recordings.” Specifically, it is not an infringement for a “transmitting organization entitled to transmit to the public a performance or display of a work, under a license or transfer of the copyright or under the limitations on exclusive rights in sound recordings specified by section 114(a), to make no more than one copy or phonorecord of a particular transmission program embodying the performance or display.” Id. § 112(a). To be eligible for this exemption, a “transmitting organization” must satisfy three conditions: (1) the copy must be used solely by the transmitting organization that made it, and no further copies can be reproduced from it; (2) the copy must be used “solely for the transmitting organization's own transmissions within its local service area, or for purposes of archival preservation or security”; and (3) unless preserved exclusively for archival purposes, the copy must be destroyed within six months from the date the program was first transmitted to the public.
Paramount infringed the reproduction rights of Agee’s. House Report at 106 infringement of copyright owner's reproduction right takes place “whenever all or any substantial portion of the actual sounds that go to make up a copyrighted sound recording are reproduced in phonorecords ․ by reproducing them in the soundtrack or audio portion of a motion picture or other audiovisual work”). A synchronization of previously recorded sounds onto the soundtrack of an audiovisual work is simply an example of the reproduction right explicitly granted by section 114(b) to the owner of rights in a sound recording. Paramount derived independent commercial value from copying Agee's sound recording because that reproduction not only shifted the timing of performance but actually enhanced the performance by ensuring that there would be no mistakes in the synchronized program broadcast to viewers. Reproducing Agee's recording in the soundtrack of Hard Copy also enabled Paramount to preserve the program intact for possible distribution or re-broadcast at a later date. It therefore infringed Agee's sound recording at the moment it put portions of his recording on tape to make a segment of Hard Copy. Its incorporation of the sound recording without permission violated Agee's reproduction right.
Paramount’s act of mere synchronization of Agee’s sound recording with visual images did not create an infringing derivative work. Under the Copyright Act, a “derivative work” is defined as a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted. See 17 U.S.C. § 101.
In the case of sound recordings, the Copyright Act imposes additional requirements before such a “transformation” of a preexisting work is sufficient to create a derivative work. See id. § 114(b); House Report at 106. Under section 114(b), the use of a sound recording qualifies as a derivative work only if “the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality.”
Paramount did not infringe Agee’s exclusive right to distribute his sound recording when it transmitted Hard Copy, including his work, by satellite to the TV stations because such a transmission did not constitute a distribution of one or more copies of his recording “to the public” under 17 U.S.C. § 106(3). The Court finds no basis for concluding that Paramount's transmission of Agee's recording to viewers via the TV stations, rather than directly, was a “distribution.” In a slightly different context, a number of courts have held that “[t]ransmissions by a cable network or service to local cable companies who in turn transmit to individual cable subscribers constitute ‘public performances' by the network under [the Copyright Act].”
RE: Violation of Lanham Act
To state a claim for damages under the Lanham Act, Agee must allege a false representation of the source of his sound recording and actual confusion by consumers as to the source. However, Agee has alleged no facts suggesting that appellees “deliberately engaged in a deceptive commercial practice” designed to deceive the public as to the source of the product. Agee based his Lanham Act claim entirely on the fact that appellees made unauthorized use of his sound recording without paying him a royalty or recognizing him in the credits to the program. See Merchant v. Lymon, 828 F.Supp. 1048, 1060 (S.D.N.Y.1993) (extending Lanham Act to cover “circumstances where an artist has not been properly credited for his ownership would simply transform every copyright action into a Lanham Act action as well”). Consequently, dismissal of the Lanham Act claim for failure to state a cause of action was appropriate.
RE: Unfair Competition
Agee's state law unfair competition claim is baseless. Although Agee alleges that appellees' use of his sound recording has caused a “diminution of good will” by connecting his sound recording to “criminal activities” or associating it with Hard Copy, Agee has failed to plead facts indicating that his record sales or licensing revenues have in any way been affected by Paramount's use of the recording. There is no reasonable ground for believing that Agee has suffered economic losses as a result of appellees' actions, or that consumers think less of the recording.
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