WOLF HALDENSTEIN ADLER
FREEMAN & HERZ LLP
Fred Taylor Isquith (FI 6782)
270 Madison Avenue
New York, New York 10016
(212) 545-4600LAWRENCE E. FELDMAN
& ASSOCIATES
Lawrence E. Feldman
Roseann E. Weisblatt
Jenkintown Plaza, Suite 230
101 Greenwood Avenue
Jenkintown, PA 19046
(215) 885-3302RIFKIN & ASSOCIATES LLC
Mark C. Rifkin
222 W. Lancaster Avenue, Suite 201
P.O. Box 1785
Paoli, PA 19301
(610) 993-9590UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
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LESTER CHAMBERS d/b/a The Chambers Brothers, :
CARL GARDNER d/b/a The Coasters, BILL
PINKNEY d/b/a The Original Drifters, TONY : Civil Action No.
SILVESTER d/b/a The Main Ingredient, on behalf of
themselves and all others similarly situated, :
Plaintiffs, : CLASS ACTION
- against - :
TIME WARNER, INC. in its own right and as JURY TRIAL DEMANDED
successor in interest to WARNER BROS. :
RECORDS, ATLANTIC RECORDS, ELEKTRA
RECORDS, and associated labels;SONY CORPORATION OF AMERICA, in its own :
right and as successor in interest to COLUMBIA :
RECORDS and associated labels;BMG ENTERTAINMENT, INC. in its own right :
and as successor in interest to RCA RECORDS,
ARISTA RECORDS, and associated labels; :UNIVERSAL MUSIC GROUP, INC. in its own :
right and as successor in interest to MCA RECORDS,
POLYDOR RECORDS, and associated labels, and :MP3.COM, INC., :
Defendants. :
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FIRST AMENDED CLASS ACTION COMPLAINTPlaintiffs, individually and on behalf of a CD’s of those similarly situated, by their undersigned counsel, allege as follows:
JURISDICTIONAL STATEMENT
1. This is a civil action seeking declaratory and injunctive relief and monetary damages under the copyright laws of the United States, 17 U.S.C. §101, et. seq., the Lanham Act, 15 U.S.C. §1125, the New York General Obligations Law, and Sections 50 and 51 of the New York State Civil Rights Law. The Court has jurisdiction over the subject matter of this action under 28 U.S.C. § 1331.
2. This Court has supplemental jurisdiction over the related state law claims under 28 U.S.C. § 1367(a) in that these claims are so related to the above federal claims that they form part of the same case or controversy.
3. This Court has personal jurisdiction over the defendants because the defendants all do business in this State and this District and purport to have the rights to transmit digital audio files of recorded performances to persons who reside in this district and elsewhere. Venue is properly laid in this judicial district pursuant to 28 U.S.C. §§ 1391(b) and (c), and 1400 (a).THE PARTIES
4. CARL GARDNER [a/k/a The Coasters] is a citizen of Florida, and has recorded for defendant Time Warner, Inc., as successor to Atlantic Records, and others. In addition, all defendants sell copies of Gardners’ recorded performances in various forms by way of license or cross license.
5. BILL PINKNEY [a/k/a The Original Drifters] is a citizen of South Carolina, and has Recorded for defendant Time Warner, Inc., as successor to Atlantic Records, and others. In addition, all defendants sell or utilize copies of Pinkney’s recorded performances in various forms by way of license or cross license.
6. TONY SILVESTER [a/k/a the Main Ingredient] is a citizen of New York, and has recorded for defendant BMG Entertainment, Inc., as successor to RCA Records, and for defendant Universal Music Group, Inc., as successor to Polydor Records, and others. In addition, all defendants sell or utilize copies of Silvester’s recorded performances in various forms by way of license or cross license.
7. LESTER CHAMBERS [a/k/a the Chambers Brothers] is a citizen of California, and has recorded for defendant Sony Corporation of America, as successor to Columbia Records, and others. In addition, all defendants sell or utilize copies of Chambers’ recorded performances in various forms by way of license or cross license.
8. Defendant TIME WARNER, INC., as successor in interest to WARNER BROS.
RECORDS, ATLANTIC RECORDS, ELEKTRA RECORDS, and associated labels, is a corporation duly organized and existing under the laws of the State of Delaware, with its principal place of business in Los Angeles, California, which is licensed to do business in New York.
9. Defendant UNIVERSAL MUSIC GROUP, INC., as successor in interest to MCA RECORDS, POLYDOR RECORDS and associated labels, is a corporation duly organized and existing under the laws of the State of California, with its principal place of business in Los Angeles County, California, and a place of business in New York, New York.
10. Defendant SONY CORPORATION OF AMERICA., as successor in interest to COLUMBIA RECORDS, is a corporation duly organized and existing under the laws of the State of Delaware, with its principal place of business in New York, New York.
11. Defendant BMG ENTERTAINMENT, INC., as successor in interest to RCA RECORDS, ARISTA RECORDS INC.,and associated labels, is a New York general partnership with its principal place of business in New York.
12. Defendant MP3.COM, Inc., upon information and belief, is a corporation organized under the laws of the State of Delaware with its principal place of business in San Diego, California. Defendant operates its business through a commercial Web site http://www.mp3.com that provides, among other things, information about the use of the MP3 digital audio format, digital downloading of music in the mp3 format, and the “My.MP3" interactive service. Defendant's My.MP3 service is targeted to and used by residents of this State and this District, and infringes copyrights owned by residents of this State and this District.INTRODUCTION
13. Plaintiffs are noted recording artists who recorded their performances for defendant “record companies” for the purposes of manufacture and sale of tangible copies of their performances in analog form on vinyl records (LPs) and cassette tapes in exchange for the promise of periodic royalty payments.
14. Plaintiffs bring this action to determine their rights under the federal copyright law and common law both in regard to Internet use of those sound recordings (and across computer networks in general) and the use of their names and likenesses in connection therewith, which unfairly competes with the sale of their performances in tangible media from which plaintiffs derive much of their royalty income. In fact, no royalty provision is made for sale of plaintiffs’ sound recordings in intangible formats in any written contract with the record company defendants executed by any CD’s member.
15. These performances at issue were recorded from the early 1950's until February 1, 1996, the effective date of the Digital Performance Rights in Sound Recordings Act of 1995. Prior to the effective date of this Act, there was no right under federal copyright law for the owner of a sound recording copyright to exclude others from digitally broadcasting it across a computer network.
16. Furthermore, as to any of these recordings first fixed in a tangible medium before February 15, 1972, the effective date of the Copyright Act of 1971, there is no applicable federal copyright protection for them at all.
17. Plaintiffs have no written agreement at all with defendant MP3.com, a Music Service Provider (“MSP”) which makes plaintiffs’ recordings available for digital downloads across computer networks.
18. All of the Record Company defendants in this litigation sell sound recordings by all plaintiffs and the CD’s, utilize their names and likenesses in connection therewith, and/or claim certain copyrights in those recordings, and are contractually liable for royalty payments from the sale of copies of those recordings, and for licensing fees collected from third parties.
19. All plaintiffs either have, or have had, written contracts with the defendant record companies and have royalty expectations in recordings that have been or are being exploited by the various record company defendants by way of license, cross license, compilation (combination of artists on one record release), assignment, merger, and so forth; or have rights at law or equity against infringers of their intellectual property, or name and likeness. Furthermore, plaintiffs have recorded songs created in analog form (the “master recordings” or “masters”) and have paid back to the defendant record companies all monetary advances provided to them by the defendant record companies in connection with the production of the masters such that the record companies have recouped their costs associated with the production of the masters.
20. All of the aforementioned contracts contain provisions for royalties to continue to be paid to the plaintiffs after the contract period expires. These provisions, known as “trailing royalty” provisions, are the sole means of continued compensation to the plaintiffs long after each defendant record company recoups its costs and reaps the benefits of its investment in the plaintiff artists.
21. Indeed, because the plaintiffs and the members of the Class in this case are technically no longer “under contract”, subject to the trailing royalty provision, their performances captured in the masters have become part of the defendant record companies’ “catalog” of masters, which they have exploited to the financial detriment of the plaintiff artists as alleged more fully herein. Effects of The Digital Revolution
22. The misuse of the masters began in the early 1980s when the record companies adopted new technology which allowed the record companies to transform the plaintiffs’ analog masters into a new format containing digitized data from which sound recordings in the form of compact discs (CDs) were pressed or manufactured. These CDs contained the exact same digital data that the “master” contained and were identical in all material respects to the “masters.” Due to its digital characteristic, the resulting CD sold to a consumer is capable of being “cloned” and with the advent of the Internet and the advance of computer technology, the digitized masters can be streamed (i.e., broadcast over the internet) or downloaded as audio files right into the consumer’s home computer.
23. Whereas cassette tapes and vinyl records (45 singles and 12 inch LPs) pressed from an analog master could not be identically reproduced by a consumer without degradation in sound quality, as each successive copy of a vinyl record ( a copy of a copy) was inferior in sound quality when compared to its predecessor, the CD and now the digital audio file are capable of being duplicated indentically, with all successive duplicates virtually indistinguishable in sound quality from the digitized master from which they were created.
24. This unique quality of digital masters transformed the recording industry and the way it conducts business because each compact disc created from such a master is now capable of being re-manufactured without degradation of the sound quality. Indeed, the new digitized master is not “copied” as the term implies. Rather, each CD is an identical duplicate or “clone” of the digitized master.
25. For the same reason, the digital audio file created from the same digital data contained in the master is also a clone and not a “copy.” At bottom, the advent of digital recording technology, including the re-mastering of plaintiffs’ analog masters to digital format, has resulted in the manufacture, sale, and distribution of clone digital masters, not copies, to the consumer public which are capable of unauthorized reproduction without sound quality degradation.
26. The Record company defendants manufacture, distribute, and sell CD’s containing digital audio files re-mastered from analog recordings made by plaintiffs and the other members of the Class, without adequate protection against unauthorized duplication of digital “clones” of data contained on the CD’s, which are themselves in effect “masters” of the
digital audio files.
27. The Record company defendants knew, or reasonably should have known, that the manufacture, distribution, and sale of CD’s containing digital audio files re-mastered from analog recordings made by plaintiffs and the other members of the Class would result in the downloading of the same digitized music which would directly compete with sales and distribution of music in tangible form.
28. The Record company defendants knew, or reasonably should have known, that this competition would and did reduce the revenue generated from the sale of music by each of the plaintiffs and the other members of the Class because, among other things, the identical and unauthorized “clones” of the digital audio files may be easily made by third parties without any loss in sound content or quality, and that CD’s were less prone to breakage and deterioration from multiple playback than either vinyl phonorecords or audiotapes.
29. The Record company defendants knew and/or intended that the manufacture, distribution, and sale of digital audio files to consumers on CD’s would reduce the revenues generated from the sale of the music by each of the plaintiffs and the other members of the Class, thus reducing the trailing royalties to which the plaintiffs and the other members of the Class would be entitled.
30. Defendant MP3.com provides digital audio files to consumers in downloadable or streamable format at no charge. Defendant MP3.com derives, or plans to derive, revenue from advertising on its Internet site or the sale of ancillary goods and services rather than the sale of music.
31. Defendant MP3.com knows, or reasonably should know, that plaintiffs and the other members of the Class receive trailing royalties based upon the revenues generated from the sale of their music.
32. Defendant MP3.com knows, or reasonably should know, that the provision of digital audio files to consumers in downloadable or streamable format at no charge would and does reduce the revenues generated from the sale of the music by plaintiffs and the other members of the Class, thus reducing the trailing royalties to which the plaintiffs and the other members of the Class would be entitled.
33. The Record company defendants, themselves and/or through subsidiaries or affiliates, provide, and/or intend in the future to provide, digital audio files to consumers in downloadable or streamable format at no charge. The Record company defendants derive, or plan to derive, revenue from advertising on their or their subsidiaries’ or affiliates’ Internet sites or the sale of ancillary goods and services in addition to the sale of music.
34. The Record company defendants know and/or intend that the provision of digital audio files to consumers in downloadable or streamable format at no charge would and does reduce the revenues generated from the sale of the music by plaintiffs and the other members of the Class, thus reducing the trailing royalties to which the plaintiffs and the other members of the
Class would be entitled.
35. The import of this dilemma is evidenced by the enactment of the Digital Performance Rights in Sound Recordings Act of 1995 wherein Congress granted holders of copyright in digital sound recordings for the first time, the authority to limit the performance of the sound recording. The act provides that the copyright holder and artist receive a royalty or license fee from others who wish to broadcast the sound recording in digital audio file format only. Effect of Defendant Record Companies’ Suit Against Defendant MP3.com
36. Prior to February 15, 1972, Federal law did not recognize a copyright in published sound recordings at all.
37. Prior to January 1, 1978, the effective date of the Copyright Act of 1976, Federal law did not recognize a copyright in unpublished sound recordings at all.
38. Prior to February 1, 1996, the right to broadcast digital sound recordings was not part of federal law. Only after this date did federal law provide a holder of a sound recording copyright an exclusive right to perform their copyrighted words publically be means of a digital audio transmission, subject to a statutory licensing scheme.
39. On January 14, 2000, defendant MP3.com announced that it was embarking on a course, along with three music retailers, to sell compact disks (CD’s) embodying plaintiffs’ and the CD’s members’ performances, and coupling them with a simultaneous Internet digital download to a consumer’s computer. To this end, defendant MP3.com began converting plaintiffs’ recorded analog performances to a new format called “MP3" (shorthand for MPEG-1 level 3, an audio compression technology) in order to digitally download intangible versions of such performances over the Internet. Once converted into this compressed format, the music could be accessed by the consumer at MP3.com’s website, http://www.mp3.com .
40. To promote and facilitate the sale of the plaintiffs’ performances now in the MP3 format, defendant MP3.com used the names and likenesses of these plaintiffs without their consent or authorization.
41. As a direct consequence of the unauthorized exploitation of digital audio recordings by third parties, the record company defendants, on December 24, 2000, sued defendant MP3.com in this Court, docketed as Case No. 00-CV-0472 (JSR), relying on Section 106 of the Copyright Act of 1976, 17 U.S.C. section 101, et. seq., alleging that the record companies have the exclusive right to digitally download plaintiffs’ recordings across computer networks, have obtained federal copyrights on plaintiffs’ recorded performances, and have exclusive rights to utilize plaintiffs’ names and likenesses in connection therewith. This action sought recovery for infringement of copyrights in which plaintiff and the CD’s are the beneficial owners. The complaint averred in part:
This litigation seeks relief against an ongoing infringement of the copyrights in the sound recordings on some 45,000 audio CDs, most of which copyrights are owned by the plaintiff recording companies....In particular, My.MP3 now allows a user to listen, via the Internet, to the tracks of almost any commercial audio CD of his or her choosing, and to download digital copies [emphasis supplied] of those CD tracks. In order to create and offer this ‘upgraded’ service, MP3.com copied the tracks from some 45,000 commercial CDs onto the computer servers that operate the MP3.com site and the My.MP3 service.... Plaintiffs are among the leading manufacturers of phonorecords [emphasis supplied] in the United States and own the copyrights [emphasis supplied] in most of the hundreds of thousands of copyrighted sound recordings contained on the CDs that MP3.com copied. At no time have plaintiffs ever authorized MP3.com to make any reproductions of their copyrighted works or to offer the My.MP3 service.See RIAA v. MP3.com. complaint Case No. 00-CV-0472 (JSR).
42. The defendant record companies, without distinguishing between plaintiffs’ pre-1996 analog recordings, their pre-1978 published recordings, or their pre February 15, 1972 unpublished recordings, claim in paragraph 5 of their complaint in RIAA v. MP3.com., Case No. 00-CV-0472 (JSR) that section 106 of the Copyright Act gives them "the exclusive right, among
other things, to make reproductions of their copyrighted sound recordings in all forms." 43. The defendant record companies do not possess the copyrights that they claim to possess, in paragraph 5 of their complaint against MP3.com. The express terms of their contracts and the rights conveyed therein, as well as the applicable copyright law, do not grant record
companies ownership of these copyrights, since those rights did not exist prior to 1978. Further, as to those copyrights in existence prior to December 31, 1995 (effective date of Digital Performance Rights in Sound Recordings Act of 1995), there were absolutely no performance rights for holders of federal sound recording copyrights (which are designated by a “p” within a circle, not a “c”), either in analog or digital form.
44. Plaintiffs seek a determination that such contracts did not grant to the record company defendants or anyone else the right to sell or authorize others to sell digitized versions of their pre-1996 artistic performances on the Internet, or to “digitally download" work authored by plaintiffs, or to utilize their names and likeness in connection with such activities, all of which
compete directly with the plaintiffs’ royalty expectancy in sales of tangible copies of their performances.
45. Plaintiffs seek declaratory and injunctive relief and damages on behalf of themselves and all others similarly situated for defendants’ unauthorized use of plaintiffs’ names and likenesses, and for utilizing all or part of plaintiffs’ recorded performances in an unauthorized manner.
46. Plaintiffs also seek a determination that the record company defendants’ phonorecord copyrights, upon which they rely in this litigation, do not contain any right to digitally download plaintiffs’ pre-1996 works of authorship over a computer network, or sell digitized versions of these works in any intangible form, within the meaning of the Copyright Act 17 U.S.C. §101, et. seq., the Sound Recording Amendment of 1971, or the Digital Performance Right in Sound Recordings Act of 1995, and that any rights must be determined under state law, which the Copy Right Act does not preempt, by its own terms, until 2047.
47. Plaintiffs also seek a determination that defendant MP3.com misappropriated plaintiffs’ names and likenesses in connection with digital downloading on the Internet, and that their use of such names and likenesses violates 11 U.S.C. §1125 (section 43a) and sections 50 and 51 of the New York State Civil Rights Statute, as well as the New York General Obligations law.
48. The record company defendants by their own admission in Case No. 00-CV-0472 (JSR) are engaged in the business of producing sound recordings, and manufacturing, distributing, selling, and licensing the distribution and sale of their sound recordings on phonorecords (as defined in 17 U.S.C. § 101), or arranging to do so in the United States. These same defendants are not in the business of transmitting data over networks, but are simply manufacturers of sound recordings.
49. Plaintiffs seek a declaration that under federal Copyright Law, the definition of phonorecord does not include “audio file,” contrary to the defendant record company’s assertion in paragraph 20 of their complaint against co-defendant MP3.com.
50. Contrary to the averments of their complaint against MP3.com, the record company defendants do not have the exclusive right under section 106 of the Copyright Act to “make reproductions of their copyrighted sound recordings in all forms.”
51. Following the plain language of section 101 of the Copyright Act, the digital downloading at issue in the recording industry’s complaint against MP3.com is expressly not subject to copyright under the Copyright Act simply because it is not “fixed.” It is not fixed because it is intangible. It is merely a transmission of what was once a “fixed” work. 52. Moreover, Section 101 defines copies as material objects. Thus, an owner of a copyright in a sound recording, as defendant record companies claim to be, cannot prevent "unauthorized downloading", at least under the federal copyright act, on the theory that it is an unauthorized “copy,” since a copy has to be a material object.
53. Settled copyright law defines copyright as a divisible bundle of rights. A person can own all, some, or none of these rights. Section 101 expressly points this out in its definition of ''copyright owner,'' with respect to “any one of the exclusive rights comprised in a copyright, referring to the owner of that particular right.” There is no statutory or constitutional basis to
allow a “record” company to gratuitously expand its grant of rights beyond those specifically granted in the contract between the artist and the record company.
CLASS ALLEGATIONS
54. The putative CD’s consists of all persons who created master recordings from their musical or vocal performances with the defendant record companies before 1996, under contracts calling for the exploitation of tangible copies of those recordings, and who have a beneficial interest in the exploitation thereof . The CD’s does not include the defendants, their agents, directors, officers and members of the immediate their families.
55. The CD’s consists of thousands of persons throughout the United States and is so numerous that joinder whether otherwise required or permitted, is impracticable. The exact number of CD’s members is unknown to plaintiff, but is believed to number in the several thousands.
56. Plaintiffs’ claims are typical of the claims of the CD’s they seek to represent, share those claims in common with the CD’s, and have retained counsel who are experienced in litigation such as this type.
57. Plaintiffs have no interests that are adverse or antagonistic to those of the other members of the Class.
58. There are questions of law or fact common to the members of the CD’s which predominate over any questions affecting only individual members which make CD’s certification appropriate in this instance, including but not limited to:
(a) whether defendant record companies have any basis in law or in fact to claim a federal copyright in sound recordings fixed in a tangible medium and published prior to February 15, 1972, so that they may authorize or prevent others from digitally delivering those recordings without consent of the plaintiffs, and on what terms;
(b) whether defendant record companies have any basis in law or in fact to claim a federal copyright in sound recordings fixed in a tangible medium, whether published or unpublished prior to January 1, 1978, the effective date of the Copyright Act of 1976; so that they may authorize or prevent others from digitally delivering those recordings without consent of the
plaintiff, and on what terms;
(c) whether computer audio files such as MP3 files, or other digital formats such as WAV, Real audio, MP4, Liquid Audio, can be the subject of copyright protection under the federal copyright act, 17 U.S.C. § 101 et. seq., and what the term of that protection is, since the U.S. Constitution, (Article 1, 8, cl. 8), only allows copyrights for “limited times”;
(d) whether under common law, plaintiffs and the other members of the Class herein have the sole and exclusive rights in their performances in unfixed, intangible form and for works fixed prior to 1972, the effective date of the Sound Recording Act of 1971 which grants copyright protection in tangible sound recordings;
(e) whether the Digital Performance Rights in Sound Recordings Act of 1995 creates or grants an unlimited term of copyright in sound recordings in violation of Article I, Section 8 of the U.S. Constitution.
(f) whether the record company defendants have the exclusive rights to the computer audio files under the federal copyright act, 17 U.S.C. § 101 et. seq., and whether they must seek new permission from the creative artists such as plaintiffs and the other members of the Class, whose performances were captured to exploit them;
(g) whether defendant MP.3 has infringed any federal copyright in plaintiffs’and the Class’ sound recordings;
(i) whether the plaintiffs and the Class members are beneficial owners pursuant to 17 U.S.C. § 501(b) and thus are entitled to damages for infringement by defendant MP3.com, and the proper measure of those damages;
(j) whether defendant MP3.com has violated §§ 50 and 51 of the New York Civil Rights Law by misappropriating plaintiffs’ and the Class members’ name and likeness without their permission;
(k) whether defendant MP3.com has violated §43(a) of the Lanham Act, 15 U.S.C. § 1125(a) by misappropriating plaintiffs’ and the Class members’ name and likeness in interstate commerce, and thereby confusing the public as to the source and origin of plaintiffs’ name and likeness on the Internet;
(l) whether the defendant record companies breached their contractual obligation to plaintiffs and the Class, including the covenant of good faith and fair dealing;
(m) whether the defendant record companies wrongfully released “master” digital audio files into the public’s hands, and whether all defendants wrongfully exploited the digital audio files to the detriment of plaintiffs and the Class;
(n) whether the defendant record companies breached their fiduciary duty as copyright holders by releasing “master” digital audio files into the public’s hands;
(o) whether plaintiffs and the other members of the Class are entitled to equitable relief for the misconduct of the defendants alleged herein;
(p) whether defendants conduct was wilful and intentional;
(q) whether defendant record companies’ copyright registrations in recordings produces prior to Feb 15, 1972 (or if unpublished, January 1, 1976), should be stricken.
(s) whether plaintiffs and the other members of the Class are entitled to damages and the proper measure of those damages.
59. Plaintiffs will fairly and adequately protect the interests of the other members of the Class. Plaintiffs are committed to prosecuting this Class action and have retained competent counsel experienced in litigation of this nature.
60. A Class Action is superior to other available methods for the fair and efficient adjudication of this action. Joinder of all Class members is impracticable. The likelihood of individual Class members prosecuting separate claims is remote because the damages suffered by individual Class members may be relatively small. Plaintiffs envision no unusual difficulty in the
management of this action as a Class action.COUNT IPlaintiffs vs. MP3.com
Violation of Sections 50 and 51 of the New York Civil Rights Law (Misappropriation of Name and Likeness)61. Plaintiffs re-allege paragraphs 1 through 60 as though the same were set forth below at length.
62. Defendant MP3.com used, primarily for purposes of trade, the name and likeness of the named plaintiffs and the other members of the CD’s without their written consent or authorization in connection with its MyMP3.com internet service.
63. Such use violates Section 50 of the New York Civil Rights Law, which prohibits the use of a person’s name or likeness for the purposes of advertising or trade, without their written consent.
64. As a direct and proximate result of defendant MP3.com’s conduct, plaintiffs and the other members of the CD’s have been, and will continue to be irreparably harmed if defendant is not required to cease using plaintiffs’ names and likenesses in connection with its online interactive service.
65. Plaintiffs seek injunctive relief and damages in an amount to be determined by the Court in connection with their injuries pursuant to section 51 of the New York State Civil Rights Law.
COUNT II
Plaintiffs vs. MP3.comViolation of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a)66. Plaintiffs repeat and re-allege paragraphs 1 through 60 as though the same were set forth below at length.
67. In connection with the promotion of its internet website, particularly its Beam It™ and Instant Listening™ features, defendant MP3.com uses plaintiffs’ names without their consent or knowledge.
68. For example, when the any of the plaintiffs’ names are typed into the search engine on MP3.com’s website, a box appears with the following language:
“Want to hear [artists’ name] on-line? Try My.MP3.com, where you can beam your CDs and listen to them anytime,
anywhere.”
69. Such use of plaintiffs’ names in association with the MP3.com service is intentional and willful strategy to imply that there is an affiliation between MP3.com and the plaintiffs which is inherently false and deceptive because such use has not been authorized by plaintiffs.
70. Such deceptive affiliation is likely to cause confusion or mistake, deceives as to the affiliation or association of the plaintiffs with MP3.com, gives the false view that plaintiffs approve of the use of their names in connection with MP3.com and its product, all in violation of section 43(a) of the Lanham Act, 15 U.S.C. §1125(a).
71. Such promotional conduct by MP3.com is material in that it is likely to influence the purchasing decisions of the consumers who visit the website. by linking the plaintiffs’ names or likenesses with the MP3 files being sold or delivered.
72. As a direct and proximate result of the conduct alleged herein, plaintiffs and the other members of the Class have been harmed in an amount to be determined by the Court.
COUNT III
Plaintiffs vs. All Defendants
Declaratory Relief Pursuant to
28 U.S.C. 220173. Plaintiffs repeat and re-allege paragraphs 1 through 60 as though the same were set forth below at length.
74. In their complaint filed in this court in Case No. 00-CV-0472 (JSR), the record company defendants have alleged that the Copyright Act gives them the exclusive right to make reproductions of their copyrighted sound recordings in all forms.
75. Plaintiffs seek a declaratory judgment for themselves and all other members of the CD’s that the record company defendants do not have a federal copyright in plaintiffs’ sound recordings created and published prior to 1972 as well as unpublished works created prior to 1978.
76. Plaintiffs seek further declaratory relief in the form of a final determination thatn plaintiffs have a beneficial interest in these pre-1972 published sound recordings and pre-1978 unpublished sound recordings and that plaintiffs’ therefore have a right and interest in any proceeds earned by way of exploitation of those sound recordings by defendant MP3.com as described above. 77. Plaintiffs seek further declaratory relief in the form of a final determination as to themselves and all other members of the CD’s that the permission to format a copyrighted sound recording from a tangible to intangible media such as an MP3 file, can be conveyed only by the artist performer and is not inherent in the sound recording copyright itself.
78. Plaintiffs seek further declaratory relief in the form of a final determination as to themselves and all other members of the CD’s that the Digital Performance Right in Sound Recordings Act of 1995 is not retroactive. Therefore, it does not ipso facto convey to the holder of a sound recording copyright first fixed in a tangible medium prior to the effective date of the act, any
rights to digitally transmit a sound recording over a computer network, unless authorized by the artists conveying such rights in his or her contract with the record company.
79. Plaintiffs seek further declaratory relief in the form of a final determination as to themselves and all other members of the Class that the owner of a sound recording copyright does not ipso facto have the right to use the performers’ names and likenesses in any manner it chooses, but rather must stay within the parameters of the written contract between the
performers and any party claiming such rights.
COUNT IV
Unfair Competition, Misappropriation and Palming Off by All Defendants
80. Plaintiffs repeat and re-allege paragraphs 1 through 60 as though the same were
set forth below at length.
81. The defendants’ deriving revenue from use of plaintiffs’ names and likenesses in promoting digital downloading of plaintiffs’ performances across computer networks unfairly competes with the sale of tangible copies of plaintiffs’ and the CD’s members’ works which they depend upon for royalties from sale of tangible copies, and as such constitutes unfair competition,
misappropriation, and palming off, for which plaintiffs are entitled to compensatory and punitive damages, as well as injunctive relief and attorneys’ fees.Imposition of Equitable Lien and Charging Order Against All Defendants
66. Plaintiffs repeat and re-allege paragraphs 1 through 44 as though the same were set forth below at length.
67. Plaintiffs have a beneficial interest in the ownership of the sound recordings claimed by the record company defendants, and request that an equitable lien and charging order be placed against such intellectual property or copyrights, and the proceeds thereof, to the extent that any defendant has: i) successfully claimed copyright infringement in any digital audio file created by plaintiffs and the CD’s’ performance, or; ii) has attempted to exploit such digital audio file on the
Internet.
68. Plaintiffs have a legal and/or beneficial interest in the ownership of digital sound files recordings claimed by the record company defendants, and request an equitable apportionment of damages realized in Case No. 00-CV-0472 (JSR), or other damages as the Court may grant for misuse of their property.Guys, isn’t this is really the same as proceeding as beneficial owners under the copyright act? That’s why i think it should be stricken.
COUNT V
Plaintiffs vs. Record company Defendants
NEGLIGENCE82. Plaintiffs repeat and re-allege paragraphs 1 through 60 as though the same were set forth below at length.
83. Beginning as early as 1982, when audio files on CD-ROM disks first became commercially available, there arose a risk of digital music “piracy,” which results when unauthorized duplicate digital “clones” are made of the audio files on the CD’s, which are themselves in effect “masters” of the digital audio files.
84. Since 1982, as CD-ROM recording devices have become more affordable and more user-friendly, the risk of digital music piracy has increased substantially.
85. Beginning as early as 1982, the Record company defendants were in fact aware, or reasonably should have been aware, of the risk of music piracy stemming from the digital mastering of music, and the resulting adverse impact upon the trailing royalty payments to plaintiffs and the other members of the Class.
86. Defendants were under a duty to take reasonable care to protect plaintiffs and the other members of the Class from digital music piracy.
87. Since 1998, digital audio files were available in a format that permitted downloading or broadcasting (known as “streaming”) over the Internet.
88. Beginning as early as 1998, all defendants were in fact aware, or reasonably should have been aware, of the risk that downloadable or streamable digital audio files would adversely impact the rights of plaintiffs and the other members of the Class to trailing royalty payments.
89. Defendants were under a duty to protect the copyrights which they claim to have to the digital audio files from digital music piracy, and to take all steps reasonably necessary to protect against digital music piracy, in the form of clones of the digital “masters” on CD-ROM as well as in the form of audio files in downloadable or streamable formats.
90. Despite actual or constructive knowledge of the risk of digital music piracy, defendants, in order to further their own economic interests and in deliberate, reckless, grossly negligent, or negligent disregard for the economic interests of plaintiffs and the other members of the Class, caused, permitted, or facilitated the manufacture, distribution, and/or sale of CD’s containing digital audio files without adequate protection against digital music piracy.
91. Despite actual or constructive knowledge of the risk of digital music piracy, defendants, in order to further their own economic interests and in deliberate, reckless, grossly negligent, or negligent disregard of the economic interests of plaintiffs and the other members of the Class, caused, permitted, or facilitated the availability and/or distribution of digital audio files capable of conversion into, or already in, downloadable or streamable form.
92. Defendants have thus breached their duty to take reasonable care to protect plaintiffs and the other members of the Class from digital music piracy.
93. Defendants have thus breached their duty to take reasonable care to protect the copyrights which they claim to have to the digital audio files from digital music piracy.
94. As a direct, proximate, and foreseeable result of the defendants’ breach of their duty to take reasonable care to protect plaintiffs and the other members of the Class and to protect the copyrights which they claim to have to the digital audio files from digital music piracy, plaintiffs and the other members of the Class have suffered substantial economic injury in the form of reduced trailing royalty payments, the amount of which will be proven at trial.
95. Defendants’ conduct in disregard of the economic interests of plaintiffs and the other members of the Class has been so intentional, reckless, or grossly negligent to warrant the imposition of punitive damages.COUNT VI
Plaintiffs vs. All Defendants
INFRINGEMENT PURSUANT TO 17 U.S.C. 501(b)96. Plaintiffs repeat and re-allege paragraphs 1 through 60 as though the same were set forth below at length.
97. To the extent that plaintiffs and the members of the Class have contractually parted with legal title to the copyrights in their sound recordings created after 1972, in exchange for royalties, they are the beneficial owners of the right to reproduce and distribute their sound recordings in digital audio format within the meaning of 17 U.S.C. 501(b).
98. To the extent that this Court has found that defendant MP3.com has infringed the
copyrights owned by the record company defendants in works fixed in tangible form after 1972, by copying them for future sale and distributing the “copies” on its Internet Website, plaintiffs and the other members of the Class are entitled to relief under the Copyright Act, 17 U.S.C. § 504, et. seq., as an equitable apportionment of any monies received by the Record company defendants as a result of the infringing conduct of defendant MP3.com.
99. In addition, to the extent that the Record company defendants have the exclusive right in the performance in their copyrighted sound recordings pursuant to the DPRSR Act of 1995, by this Count, plaintiffs also seek any and all statutory and/or voluntary licensing fees in
connection with the digital audio transmission of their copyrighted sound recordings pursuant to DPRSA Act, 17. U.S.C. § 114(2), et. seq. and § 501(b), and § 504 as a result of MP3.com’s infringement of the performance right granted therein, to the extent that defendant MP3.com has transmitted and will continue to transmit plaintiffs’ and the Class members’ copyrighted sound recordings in digital audio format without having paid any licensing fees required by the DPRSR Act of 1995.
COUNT VII
Plaintiffs vs. Record company Defendants
Breach of Implied Covenant of Good Faith and Fair Dealing
100. Plaintiffs repeat and re-allege paragraphs 1 though 60 as though the same were set forth below at length.
101. Plaintiffs and the Class entered into contracts with Defendant Record companies, by which ownership rights and/or copyrights in sound recordings were assigned to Defendant Record Companies, in exchange for the payment of royalties based on sales or license fees.
102. Implied in every contract is the covenant of good faith and fair dealing, which precluded Defendant Record Companies from inter alia, engaging in conduct that would deprive the Plaintiffs and the Class of their benefits under the agreements.
103. By distributing digital audio versions of the sound recordings which because of their digital characteristics, are vulnerable to unauthorized duplication by third parties which results in giving away sound recordings for free, or in piracy whereby the music is sold without any p including Defendant MP3.com, and by otherwise acting as described herein, Defendant Record Companies breached their implied obligation not to use the sound recordings in a way that would deprive, limit, or otherwise negatively impact Plaintiffs’ entitlement to royalties under their contracts with the defendant record companies.
104. As a direct and proximate cause of this breach, Plaintiffs and the Class have
suffered damages, including, but not limited to, loss or decrease in royalty payments stemming from the unauthorized proliferation of digital audio files.
Breach of Fiduciary Duty Against Defendant Record Companies
105. Plaintiffs repeat and re-allege paragraphs 1 though 60 as though the same were set forth below at length.
107. Plaintiffs and the Class entered into contracts with Defendant Record companies, by which ownership rights and/or copyrights in recorded performances were assigned to Defendant Record Companies in exchange for the payment of royalties based on sales or license fees, thereby creating fiduciary relationships.
108. Pursuant to these contracts, Defendant Record Companies owed a fiduciary duty to Plaintiffs and the Class to protect their beneficial interests and/or property rights in the recorded performances.
109. By distributing digital audio versions of recorded performances of Plaintiffs and the Class in the form of CDs, which constitute duplicate masters of their recorded performances and which are vulnerable to further and unauthorized duplication by third parties, including Defendant MP3.com, and by otherwise acting as described herein, Defendant Record Companies intentionally, recklessly, grossly negligently or negligently breached the fiduciary duty owed to Plaintiffs and the Class.
110. As a direct and proximate cause of this breach, Plaintiffs and the Class have
suffered damages, including, but not limited to, loss of royalty payments stemming from the record companies’ breach of this duty.PRAYER FOR RELIEF
WHEREFORE, plaintiffs demand the following relief all defendants:
(a) certifying this action as a CD’s action with plaintiffs as the representatives of the Class;
(b) enjoining defendants from using the name and likeness of plaintiffs’ and the other members of the CD’s to promote internet downloading of the plaintiffs’ music without their permission;
(c) awarding plaintiffs and the other members of the CD’s damages to compensate them fully for their loss from the defendants’ wrongful conduct, including punitive damages for the intentional and wilful acts alleged herein;
(d) awarding plaintiffs, an equitable apportionment of any proceeds obtained by the Record company defendants for infringement pursuant to 17 U.S.C.§501(b) and the remedies contained in 17 U.S.C. §504, including but not limited to licensing fees to which plaintiffs and the other members of the Class are entitled pursuant to section 114 (d)(2) of the DPRSR Act of 1995, and otherwise enjoining defendants pursuant to 17 U.S.C. §502 from digitally transmitting plaintiffs’ and the Class’ sound recordings absent such payment of licensing fees;
(e) declaration pursuant to 28 U.S.C. § 2201, that the record company
defendants do not have a copyright in pre-1972 master recordings and that the issues regarding these sound recordings are to be governed by state law until the year 2047, as provided by section 301 of the Copyright Act.
(f) Relief in the form of a declaration that the Digital Performance
Rights in Sound Recordings Act of 1995 (“DPRSA) is not retroactive and therefore does not grant exclusive performance rights in digital audio transmission in plaintiffs’ recordings fixed prior to the effective date of the Act, February 1, 1996, or in the alternative, to the extent that the DPRSA is retroactive, a declaration that its application results in an unconstitutional taking in violation of the Fifth Amendment of the U.S. Constitution.
(g) declaration pursuant to 28 U.S.C. § 2201, that the plaintiffs’ and the
members of the Class’ contracts are missing a term which is essential to the parties’ contractual rights, specifically their trailing royalty provisions, and implying a reasonable term for the calculation and payment of royalties and licensing fees in connection with the digital audio transmission of plaintiffs’ and the Class’ sound recordings;
(f) granting such other and further relief as is just and proper.
(g) awarding plaintiffs their costs of suit, including reasonable attorneys’ fees
pursuant to 17 U.S.C. § 505;
JURY TRIAL DEMANDED
Plaintiffs hereby demand a trial by jury.
WOLF HALDENSTEIN ADLER
FREEMAN & HERZ LLP
Date: By:
Fred Taylor Isquith (FI-6782)
270 Madison Avenue
New York, New York 10016
(212) 545-4600LAWRENCE E. FELDMAN & ASSOC.
Lawrence E. Feldman
Roseann E. Weisblatt
Jenkintown Plaza, Suite 230
101 Greenwood Avenue
Jenkintown, PA 19046
(215) 885-3302
Mark C. Rifkin
RIFKIN & ASSOCIATES LLC
222 W. Lancaster Avenue, Suite 201
P.O. Box 1785
Paoli, PA 19301
(610) 993-9590 (186539)