[794] ARGUED: Richard S. Busch, King & Ballow, Nashville, Tennessee, for Appellants. Robert L. Sullivan, Loeb & Loeb, Nashville, Tennessee, for Appellee. ON BRIEF: Richard S. Busch, D'Lesli M. Davis, King & Ballow, Nashville, Tennessee, for Appellants. Robert L. Sullivan, John C. Beiter, Loeb & Loeb, Nashville, Tennessee, for Appellee. Marjorie Heins, Brennan Center for Justice at Nyu School of Law, New York, New York, Paul M. Smith, Jenner & Block, Washington, D.C., Fred von Lohmann, Electronic Frontier Foundation, San Francisco, California, Todd M. Gascon, Law Office of Todd Gascon, San Francisco, California, for Amici Curiae.

Before: GUY and GILMAN, Circuit Judges; BARZILAY, Judge.^[1][795]

RALPH B. GUY, JR., Circuit Judge.

The court issued an initial opinion in these consolidated cases on September 7, 2004. Bridgeport Music, Inc. v. Dimension Films, 383 F.3d 390 (6th Cir.2004). Through an Order entered December 20, 2004, the full court denied the petition for rehearing en banc filed by No Limit Films and a panel rehearing was granted only with respect to the issues discussed in Section II of the opinion as amended. Bridgeport Music, Inc. v. Dimension Films, 401 F.3d 647 (6th Cir.2004). After additional briefing and argument on rehearing, we adhere to our conclusions and amend the opinion to further clarify our reasoning.

Plaintiffs, Bridgeport Music, Inc., Westbound Records, Inc., Southfield Music, Inc., and Nine Records, Inc., appeal from several of the district court's findings with respect to the copyright infringement claims asserted against No Limit Films.^[2] This action arises out of the use of a sample from the composition and sound recording "Get Off Your Ass and Jam" ("Get Off") in the rap song "100 Miles and Runnin" ("100 Miles"), which was included in the sound track of the movie I Got the Hook Up (Hook Up). Specifically, Westbound appeals from the district court's decision to grant summary judgment to defendant on the grounds that the alleged infringement was de minimis and therefore not actionable. Bridgeport, while not appealing from the summary judgment order, challenges instead the denial of its motion to amend the complaint to assert new claims of infringement based on a different song included in the sound track of Hook Up. Finally, Bridgeport, Southfield, and Nine Records appeal from the decision to award attorney fees and costs totaling $41,813.30 to No Limit Films under 17 U.S.C. § 505. For the reasons that follow, we reverse the district court's grant of summary judgment to No Limit on Westbound's claim of infringement of its sound recording copyright, but affirm the decision of the district court as to the award of attorney fees and the denial of Bridgeport's motion to amend.

The claims at issue in this appeal were originally asserted in an action filed on May 4, 2001, by the related entities Bridgeport Music, Southfield Music, Westbound Records, and Nine Records, alleging nearly 500 counts against approximately 800 defendants for copyright infringement and various state law claims relating to the use of samples without permission in new rap recordings. In August 2001, the district court severed that original complaint into 476 separate actions, this being one of them, based on the allegedly infringing work and ordered that amended complaints be filed.^[3]

The claims in this case were brought by all four plaintiffs: Bridgeport and Southfield, which are in the business of music publishing and exploiting musical composition copyrights, and Westbound Records and Nine Records, which are in the business of recording and distributing sound recordings. It was conceded at the time of summary judgment, however, that neither [796] Southfield Music nor Nine Records had any ownership interest in the copyrights at issue in this case. As a result, the district court ordered that they be jointly and severally liable for 10% of the attorney fees and costs awarded to No Limit Films.

Bridgeport and Westbound claim to own the musical composition and sound recording copyrights in "Get Off Your Ass and Jam" by George Clinton, Jr. and the Funkadelics. We assume, as did the district court, that plaintiffs would be able to establish ownership in the copyrights they claim. There seems to be no dispute either that "Get Off" was digitally sampled or that the recording "100 Miles" was included on the sound track of I Got the Hook Up. Defendant No Limit Films, in conjunction with Priority Records, released the movie to theaters on May 27, 1998. The movie was apparently also released on VHS, DVD, and cable television. Fatal to Bridgeport's claims of infringement was the Release and Agreement it entered into with two of the original owners of the composition "100 Miles," Ruthless Attack Muzick (RAM) and Dollarz N Sense Music (DNSM), in December 1998, granting a sample use license to RAM, DNSM, and their licensees. Finding that No Limit Films had previously been granted an oral synchronization license to use the composition "100 Miles" in the sound track of Hook Up, the district court concluded Bridgeport's claims against No Limit Films were barred by the unambiguous terms of the Release and Agreement. Bridgeport Music, Inc. v. Dimension Films, 230 F.Supp.2d 830, 833-38 (M.D.Tenn.2002). Although Bridgeport does not appeal from this determination, it is relevant to the district court's later decision to award attorney fees to No Limit Films.

Westbound's claims are for infringement of the sound recording "Get Off."^[4] Because defendant does not deny it, we assume that the sound track of Hook Up used portions of "100 Miles" that included the allegedly infringing sample from "Get Off." The recording "Get Off" opens with a three-note combination solo guitar "riff" that lasts four seconds. According to one of plaintiffs' experts, Randy Kling, the recording "100 Miles" contains a sample from that guitar solo. Specifically, a two-second sample from the guitar solo was copied, the pitch was lowered, and the copied piece was "looped" and extended to 16 beats. Kling states that this sample appears in the sound recording "100 Miles" in five places; specifically, at 0:49, 1:52, 2:29, 3:20 and 3:46. By the district court's estimation, each looped segment lasted approximately 7 seconds. As for the segment copied from "Get Off," the district court described it as follows:

The portion of the song at issue here is an arpeggiated chord—that is, three notes that, if struck together, comprise a chord but instead are played one at a time in very quick succession—that is repeated several times at the opening of "Get Off." The arpeggiated chord is played on an unaccompanied electric guitar. The rapidity of the notes and the way they are played produce a high-pitched, whirling sound that captures the listener's attention and creates anticipation of what is to follow.

Bridgeport, 230 F.Supp.2d at 839. No Limit Films moved for summary judgment, [797] arguing (1) that the sample was not protected by copyright law because it was not "original"; and (2) that the sample was legally insubstantial and therefore does not amount to actionable copying under copyright law.

Mindful of the limited number of notes and chords available to composers, the district court explained that the question turned not on the originality of the chord but, rather, on "the use of and the aural effect produced by the way the notes and the chord are played, especially here where copying of the sound recording is at issue." Id. (citations omitted). The district court found, after carefully listening to the recording of "Get Off," "that a jury could reasonably conclude that the way the arpeggiated chord is used and memorialized in the `Get Off' sound recording is original and creative and therefore entitled to copyright protection." Id. (citing Newton v. Diamond, 204 F.Supp.2d 1244, 1249-59 (C.D.Cal.2002)) (later affirmed on other grounds at 349 F.3d 591 (9th Cir.2003)). No Limit Films does not appeal from this determination.

Turning then to the question of de minimis copying in the context of digital sampling, the district court concluded that, whether the sampling is examined under a qualitative/quantitative de minimis analysis or under the so-called "fragmented literal similarity" test, the sampling in this case did not "rise to the level of a legally cognizable appropriation." 230 F.Supp.2d at 841. Westbound argues that the district court erred both in its articulation of the applicable standards and its determination that there was no genuine issue of fact precluding summary judgment on this issue.

On October 11, 2002, the district court granted summary judgment to No Limit Films on the claims of Bridgeport and Westbound; dismissed with prejudice the claims of Southfield and Nine Records; denied as moot the motion of Bridgeport and Westbound for partial summary judgment on the issue of copyright ownership; and entered final judgment accordingly. Bridgeport and Westbound appealed. The facts relevant to the earlier denial of Bridgeport's motion to amend the complaint will be discussed below. No Limit Films filed a post-judgment motion for attorney fees and costs, which the district court granted for the reasons set forth in its memorandum opinion and order of April 24, 2003. Bridgeport, Southfield Music, and Nine Records appealed from that award.

The district court's decision granting summary judgment is reviewed de novo. Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir.1997). In deciding a motion for summary judgment, the court must view the evidence and reasonable inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Summary judgment is appropriate when there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c).

In granting summary judgment to defendant, the district court looked to general de minimis principles and emphasized the paucity of case law on the issue of whether digital sampling amounts to copyright infringement. Drawing on both the quantitative/qualitative and "fragmented literal similarity" approaches, the district court found the de minimis analysis was a derivation of the substantial similarity element when a defendant claims that the literal copying of a small and insignificant portion of the copyrighted work should be [798] allowed. After listening to the copied segment, the sample, and both songs, the district court found that no reasonable juror, even one familiar with the works of George Clinton, would recognize the source of the sample without having been told of its source. This finding, coupled with findings concerning the quantitatively small amount of copying involved and the lack of qualitative similarity between the works, led the district court to conclude that Westbound could not prevail on its claims for copyright infringement of the sound recording.^[5]

Westbound does not challenge the district court's characterization of either the segment copied from "Get Off" or the sample that appears in "100 Miles." Nor does Westbound argue that there is some genuine dispute as to any material fact concerning the nature of the protected material in the two works. The heart of Westbound's arguments is the claim that no substantial similarity or de minimis inquiry should be undertaken at all when the defendant has not disputed that it digitally sampled a copyrighted sound recording. We agree and accordingly must reverse the grant of summary judgment.

A. Digital Sampling of Copyrighted Sound Recordings

At the outset it is important to make clear the precise nature of our decision. Our conclusions are as follows:

1. The analysis that is appropriate for determining infringement of a musical composition copyright, is not the analysis that is to be applied to determine infringement of a sound recording. We address this issue only as it pertains to sound recording copyrights.^[6]

2. Since the district court decision essentially tracked the analysis that is made if a musical composition copyright were at issue, we depart from that analysis.^[7]

3. We agree with the district court's analysis on the question of originality. On remand, we assume that Westbound will be able to establish it has a copyright in the sound recording and that a digital sample from the copyrighted sound recording was used in this case.

4. This case involves "digital sampling" which is a term of art well understood by the parties to this litigation and the music industry in general. Accordingly, we adopt the definition commonly accepted within the industry.

5. Because of the court's limited technological knowledge in this specialized field, our opinion is limited to an instance of digital sampling of a sound recording protected by a valid copyright. If by analogy it is possible to extend our analysis to other forms of sampling, we leave it to others to do so.

6. Advances in technology^[8] coupled with the advent of the popularity of hip [799] hop or rap music have made instances of digital sampling extremely common and have spawned a plethora of copyright disputes and litigation.

7. The music industry, as well as the courts, are best served if something approximating a bright-line test can be established. Not necessarily a "one size fits all" test, but one that, at least, adds clarity to what constitutes actionable infringement with regard to the digital sampling of copyrighted sound recordings.

B. Analysis

We do not set forth the arguments made by Westbound since our analysis differs somewhat from that offered by the plaintiff. Our analysis begins and largely ends with the applicable statute. Section 114(a) of Title 17 of the United States Code provides:

The exclusive rights of the owner of copyright in a sound recording are limited to the rights specified by clauses (1), (2), (3) and (6) of section 106, and do not include any right of performance under section 106(4).

Section 106 provides:

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) 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;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works to 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, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Section 114(b) states:

(b) The exclusive right of the owner of copyright in a sound recording under clause (1) of section 106 is limited to the right to duplicate the sound recording in the form of phonorecords or copies that directly or indirectly recapture the actual sounds fixed in the recording. The exclusive right of the owner of copyright in a sound recording under clause (2) of section 106 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. The exclusive rights of the owner of copyright in a sound recording under clauses [800] (1) and (2) of section 106 do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording. The exclusive rights of the owner of copyright in a sound recording under clauses (1), (2), and (3) of section 106 do not apply to sound recordings included in educational television and radio programs (as defined in section 397 of title 47) distributed or transmitted by or through public broadcasting entities (as defined by section 118(g)): Provided, That copies or phonorecords of said programs are not commercially distributed by or through public broadcasting entities to the general public.

Before discussing what we believe to be the import of the above quoted provisions of the statute, a little history is necessary. The copyright laws attempt to strike a balance between protecting original works and stifling further creativity. The provisions, for example, for compulsory licensing make it possible for "creators" to enjoy the fruits of their creations, but not to fence them off from the world at large. 17 U.S.C. § 115. Although musical compositions have always enjoyed copyright protection, it was not until 1971 that sound recordings were subject to a separate copyright. If one were to analogize to a book, it is not the book, i.e., the paper and binding, that is copyrightable, but its contents. There are probably any number of reasons why the decision was made by Congress to treat a sound recording differently from a book even though both are the medium in which an original work is fixed rather than the creation itself. None the least of them certainly were advances in technology which made the "pirating" of sound recordings an easy task. The balance that was struck was to give sound recording copyright holders the exclusive right "to duplicate the sound recording in the form of phonorecords or copies that directly or indirectly recapture the actual sounds fixed in the recording." 17 U.S.C. § 114(b). This means that the world at large is free to imitate or simulate the creative work fixed in the recording so long as an actual copy of the sound recording itself is not made.^[9] That leads us directly to the issue in this case. If you cannot pirate the whole sound recording, can you "lift" or "sample" something less than the whole. Our answer to that question is in the negative.^[10]

Section 114(b) provides that "[t]he exclusive right of the owner of copyright in a sound recording under clause (2) of section 106 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." Further, the rights of sound recording copyright holders under clauses (1) and (2) of section 106 "do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording." 17 U.S.C. § 114(b) (emphasis added). The significance of this provision is amplified by the fact that the Copyright [801] Act of 1976 added the word "entirely" to this language. Compare Sound Recording Act of 1971, Pub.L. 92-140, 85 Stat. 391 (Oct. 15, 1971) (adding subsection (f) to former 17 U.S.C. § 1) ("does not extend to the making or duplication of another sound recording that is an independent fixation of other sounds"). In other words, a sound recording owner has the exclusive right to "sample" his own recording. We find much to recommend this interpretation.^[11]

To begin with, there is ease of enforcement. Get a license or do not sample. We do not see this as stifling creativity in any significant way. It must be remembered that if an artist wants to incorporate a "riff" from another work in his or her recording, he is free to duplicate the sound of that "riff" in the studio. Second, the market will control the license price and keep it within bounds.^[12] The sound recording copyright holder cannot exact a license fee greater than what it would cost the person seeking the license to just duplicate the sample in the course of making the new recording. Third, sampling is never accidental. It is not like the case of a composer who has a melody in his head, perhaps not even realizing that the reason he hears this melody is that it is the work of another which he had heard before. When you sample a sound recording you know you are taking another's work product.^[13]

This analysis admittedly raises the question of why one should, without infringing, be able to take three notes from a musical composition, for example, but not three notes by way of sampling from a sound recording. Why is there no de minimis taking or why should substantial similarity not enter the equation.^[14] Our first answer to this question is what we have earlier indicated. We think this result is dictated by the applicable statute. Second, even [802] when a small part of a sound recording is sampled, the part taken is something of value.^[15] No further proof of that is necessary than the fact that the producer of the record or the artist on the record intentionally sampled because it would (1) save costs, or (2) add something to the new recording, or (3) both. For the sound recording copyright holder, it is not the "song" but the sounds that are fixed in the medium of his choice. When those sounds are sampled they are taken directly from that fixed medium. It is a physical taking rather than an intellectual one.

This case also illustrates the kind of mental, musicological, and technological gymnastics that would have to be employed if one were to adopt a de minimis or substantial similarity analysis. The district judge did an excellent job of navigating these troubled waters, but not without dint of great effort. When one considers that he has hundreds of other cases all involving different samples from different songs, the value of a principled bright-line rule becomes apparent. We would want to emphasize, however, that considerations of judicial economy are not what drives this opinion. If any consideration of economy is involved it is that of the music industry. As this case and other companion cases make clear, it would appear to be cheaper to license than to litigate.^[16]

Since our holding arguably sets forth a new rule, several other observations are in order. First, although there were no existing sound recording judicial precedents to follow,^[17] we did not pull this interpretation [803] out of thin air.^[18] Several law review and text writers, some of whom have been referenced in this opinion, have suggested that this is the proper interpretation of the copyright statute as it pertains to sound recordings.^[19] Since digital sampling has [804] become so commonplace and rap music has become such a significant part of the record industry, it is not surprising that there are probably a hundred articles dealing with sampling and its ramifications. It is also not surprising that the viewpoint expressed in a number of these articles appears driven by whose ox is being gored. As is so often the case, where one stands depends on where one sits. For example, the sound recording copyright holders favor this interpretation as do the studio musicians and their labor organization. On the other hand, many of the hip hop artists may view this rule as stifling creativity. The record companies and performing artists are not all of one mind, however, since in many instances, today's sampler is tomorrow's samplee. The incidence of "live and let live" has been relatively high, which explains why so many instances of sampling go unprotested and why so many sampling controversies have been settled.

Second, to pursue further the subject of stifling creativity, many artists and record companies have sought licenses as a matter of course.^[20] Since there is no record of those instances of sampling that either go unnoticed or are ignored, one cannot come up with precise figures, but it is clear that a significant number of persons and companies have elected to go the licensing route. Also there is a large body of pre-1972 sound recordings that is not subject to federal copyright protection.^[21]> Additionally, just as many artists and companies choose to sample and take their chances, it is likely that will continue to be the case.

Third, the record industry, including the recording artists, has the ability and know-how to work out guidelines, including a fixed schedule of license fees, if they so choose.

Fourth, we realize we are announcing a new rule and because it is new, it should not play any role in the assessment of concepts such as "willful" or "intentional" [805] in cases that are currently before the courts or had their genesis before this decision was announced.

Finally, and unfortunately, there is no Rosetta stone for the interpretation of the copyright statute. We have taken a "literal reading" approach. The legislative history is of little help because digital sampling wasn't being done in 1971. If this is not what Congress intended or is not what they would intend now, it is easy enough for the record industry, as they have done in the past, to go back to Congress for a clarification or change in the law. This is the best place for the change to be made, rather than in the courts, because as this case demonstrates, the court is never aware of much more than the tip of the iceberg. To properly sort out this type of problem with its complex technical and business overtones, one needs the type of investigative resources as well as the ability to hold hearings that is possessed by Congress.

These conclusions require us to reverse the entry of summary judgment entered in favor of No Limit Films on Westbound's claims of copyright infringement. Since the district judge found no infringement, there was no necessity to consider the affirmative defense of "fair use." On remand, the trial judge is free to consider this defense and we express no opinion on its applicability to these facts.

Bridgeport's substantive appeal is from the denial of leave to file a second amended complaint that would have asserted new claims of infringement based on the inclusion of a different song, called "How Ya Do Dat," in the sound track of Hook Up.^[22] We review the denial of a motion to amend for abuse of discretion, except to the extent that it is based on a legal determination that the amendment would not withstand a motion to dismiss. Wade v. Knoxville Utils. Bd., 259 F.3d 452, 459 (6th Cir.2001). Leave to amend a pleading shall be freely given "when justice so requires." FED. R. CIV. P. 15(a).

Undue delay in filing, lack of notice to the opposing party, bad faith by the moving party, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party, and futility of amendment are all factors which may affect the decision. Delay by itself is not sufficient reason to deny a motion to amend. Notice and substantial prejudice to the opposing party are critical factors in determining whether an amendment should be granted.

Head v. Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th Cir.1989) (quoting Hageman v. Signal L.P. Gas, Inc., 486 F.2d 479, 484 (6th Cir.1973)). "When amendment is sought at a late stage in the litigation, there is an increased burden to show justification for failing to move earlier." Wade, 259 F.3d at 459 (citing Duggins v. Steak `N Shake, Inc., 195 F.3d 828, 834 (6th Cir.1999)).

A. Facts

Plaintiffs commenced this action in May 2001, and filed an amended complaint in September 2001. In November 2001, the district court entered a scheduling order which required that any motion to amend pleadings be filed far enough in advance of April 1, 2002, to allow briefing to be completed by that date. Discovery was to be completed by May 21, 2002. On March 18, 2002, the district court extended the time [806] for amending pleadings with the proviso that it would have to be done in time to avoid extending discovery beyond May 21, 2002.

On April 15, 2002, plaintiffs' counsel received a "cue sheet" for Hook Up that apparently alerted Bridgeport to the presence of another song in which it held a copyright interest. Specifically, Bridgeport claims 37% interest in the composition "How Ya Do Dat" ("How Ya") under a Release and Agreement dated October 21, 1998, that granted permission to use a sample from the composition "One of Those Funky Things" in "How Ya." While there was disagreement about whether discovery made available as early as October 2001 should have alerted Bridgeport of this claim, there is no dispute that the presence of "How Ya" was readily observable from watching the movie. In fact, the magistrate judge noted that the "cue sheet" appears to be a list of credits from the end of the film.

Plaintiffs moved to amend on April 19, 2002, and No Limit Films opposed the motion in a response filed on April 26, 2002. On May 6, 2002, the magistrate judge recommended that the motion be denied. Plaintiffs filed objections on May 16, 2002, and defendant responded on May 30, 2002. The discovery cutoff date, May 21, had passed, but the deadline for completing depositions had been extended to June 14, 2002. But, the deadline for filing dispositive motions continued to be June 21, 2002. No Limit Films filed its motion for summary judgment on that date. On August 14, 2002, the district court entered its order overruling plaintiffs' objections, denying plaintiffs' motion to amend, and denying plaintiffs' further motion to certify the issue for appeal.

B. Analysis

Bridgeport maintains the district court abused its discretion by denying leave to amend on the grounds of unjustified delay and in the absence of a finding of prejudice to the defendant. It is true that, ordinarily, delay alone will not justify the denial of leave to amend the complaint. Morse v. McWhorter, 290 F.3d 795, 800 (6th Cir.2002). Delay, however, will become "undue" at some point, "placing an unwarranted burden on the court," or "'prejudicial,' placing an unfair burden on the opposing party." Morse, 290 F.3d at 800 (citing Adams v. Gould Inc., 739 F.2d 858, 863 (3d Cir.1984)).

Had the district court made an explicit finding of prejudice, very little would need to be said in affirming the denial of leave in this case. The district court's order, although brief, touched on undue delay and prejudice, explaining:

The plaintiffs object to the Magistrate Judge's conclusion that plaintiffs had not offered a sufficient reason for failing to amend their complaint to add claims and parties by the deadline set by the Court. Plaintiffs argue that this deadline was modified by subsequent order, and that the Magistrate Judge erred under Sixth Circuit law by not allowing the amendments in the interests of justice. The defendants respond that [the] Magistrate Judge correctly concluded that, under the circumstances of this case, amendment on the eve of the close of discovery would be prejudicial to defendants and unduly delay trial.

After careful consideration of the entire record, the Court adopts and approves the Magistrate Judge's Report and Recommendation. The plaintiffs' objections are overruled. The interest of justice in this case requires that plaintiffs show good cause why the Court should allow amendment of their complaint to add a claim and parties after the Court's deadline for such amendments, [807] which the plaintiffs have failed to do.

To the extent that this brief discussion leaves doubt that a finding of prejudice was made, we may sustain a denial of leave to amend on grounds that are apparent from the record. Morse, 290 F.3d at 801.

Defendant clearly argued that it would be unfairly prejudiced if required to respond to a distinct new claim of infringement with only a few weeks of discovery remaining. Plaintiffs focus on the magistrate judge's mistaken reliance on the April 1 deadline for seeking leave to amend. Nonetheless, as defendant argues, plaintiffs' motion was not timely because the district court required that any amendments be sought in sufficient time that discovery could be completed before May 21. Also, the record reflects that although there were extensions of discovery beyond that date, extensions were only granted to allow the completion of certain depositions and did not affect the deadline for filing dispositive motions. We find no abuse of discretion in the district court's denial of leave to raise new claims based on a different song, by a different artist, in the movie.

Bridgeport, Southfield Music, and Nine Records appeal from the decision to award $41,813.30 in attorney fees and costs to No Limit Films as a prevailing party under 17 U.S.C. § 505. Apportioning the award between these plaintiffs, the district court ordered that Southfield and Nine Records be held liable, jointly and severally, for 10% of the total. The district court also found that no award was warranted against Westbound Records because its claims were objectively reasonable and based on a developing area of copyright law. As a result, the amount of fees reasonably incurred in defense of this action were reduced by 50%. Plaintiffs do not challenge the calculation of the fees or the inclusion of any particular item.

A court may, in its discretion, award costs, including reasonable attorney fees, to the prevailing party in a civil suit under the Copyright Act. 17 U.S.C. § 505.^[23] Our review is for abuse of discretion. Coles v. Wonder, 283 F.3d 798, 804 (6th Cir.2002) (affirming award to prevailing defendant); Murray Hill Publ'ns, Inc. v. ABC Communications, Inc., 264 F.3d 622, 639 (6th Cir.2001) (reversing award to prevailing defendant). A district court abuses its discretion when it relies on clearly erroneous factual findings, improperly applies the law, or uses an erroneous legal standard. Adcock-Ladd v. Sec'y of Treasury, 227 F.3d 343, 349 (6th Cir.2000).

The discretion to award attorney fees under § 505 is to be exercised in an evenhanded manner with respect to prevailing plaintiffs and prevailing defendants, and in a manner consistent with the primary purposes of the Copyright Act. Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). "'There is no precise rule or formula for making these determinations,' but instead equitable discretion should be exercised 'in light of the considerations we have identified.'" Id. at 534, 114 S.Ct. 1023 (quoting Hensley v. Eckerhart, 461 U.S. 424, 436-37, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)).^[24]

[808] Several nonexclusive factors may be considered as long as they are "faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner." Id. at 534 n. 19, 114 S.Ct. 1023. Those nonexclusive factors include: "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id. (quoting Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir.1986)).

Southfield and Nine Records, neither of which had an interest in "Get Off" or "100 Miles," argue that defendant did not truly prevail against them because they were "inadvertently" left in the amended complaint and they did not oppose dismissal in this case. They did not voluntarily dismiss their claims, however, as it was only in response to defendant's dispositive motions that they acquiesced in dismissal. Moreover, the inclusion of Southfield and Nine Records in the amended complaint in this case was less "inadvertent" than a reflection of the plaintiffs' failure to discriminate between defendants and claims. No Limit Films is a prevailing defendant as judgment was entered in its favor on all claims.^[25]

Concluding that Bridgeport's claim was objectively unreasonable, the district court indicated that the factor weighed heavily in favor of awarding fees. The district court, relying on its decision granting summary judgment to defendant, specifically found Bridgeport's claims were objectively unreasonable because Bridgeport had no ownership interest in "100 Miles" when the oral synchronization license was granted and offered no evidence to undermine the existence of a valid license. Bridgeport argues that its claim, although unsuccessful, was not objectively unreasonable because it was not aware No Limit would claim it had an oral license that preceded the Release and Agreement. As defendant responds, nothing in this record suggests Bridgeport would not have sued No Limit Films if it had been aware of the oral license.

This brings us to what the district court called the deciding factor—the manner in which the plaintiffs litigated this action. This consideration, plaintiffs maintain, represents nothing more than an attempt to punish Bridgeport and deter the plaintiffs from pursuing reasonable, nonfrivolous claims in other cases under threat of an award of attorney fees. The district court reasoned as follows:

The initial complaint in this action is so voluminous that, with exhibits, it is almost 1,000 pages long and takes days to read in its entirety. It is replete with diatribes against the music industry, but lacks concrete facts directed at specific defendants. Almost all of the 800 or so [809] defendants in the initial complaint (representing what appeared to be almost the entirety of entities involved in making urban music) were lumped together in broad categories and descriptions of activities. The individual counts described the infringing conduct of the defendants by references to these broad generalizations, without any specific information as to what any individual defendant did to violate the Copyright Act.

From that inauspicious beginning, this action proceeded in a like manner, with heavy emphasis on discovery disputes and motion practice and little attention paid to narrowing the issues and refining the claims. The plaintiffs repeatedly taxed the patience of the Court, from narrowing the margins on their memoranda to circumvent page limits, to filing voluminous pleadings that were long on argument but short on concrete facts or applicable legal authority. The plaintiffs took every opportunity to inundate the Court with paperwork, yet many of these motions were hastily prepared and often lacked sufficient legal or factual support. Most notably, the plaintiffs filed a motion for summary judgment on ownership yet failed to submit certified copies of the registration certificates for the copyrights they claimed to own. When this oversight was pointed out by the Magistrate Judge as being fatal to their summary judgment motion, the plaintiffs, instead of providing the documentation (which could be easily obtained from the U.S. Copyright Office), expended enormous effort in subsequent motion papers trying to convince the Court that the certified copies were unnecessary [until ordered to produce them].

The plaintiffs' tactics have contributed to the multiplication of fees by all parties, including the defendant here. This, combined with the determination that Bridgeport's claim was objectively unreasonable, merits an award for fees and costs against Bridgeport.

To award fees simply because of the length of and lack of specificity in the original complaint or because of the number of claims brought by the plaintiffs would strike us as punitive and inconsistent with the purposes of the Copyright Act. See Murray Hill, 264 F.3d at 639-40 (reversing award of attorney fees, despite district court's criticism of the "voluminous burden" the case imposed, noting only that the law was unsettled and the plaintiff presented one or more colorable claims). The district court's criticisms go beyond just that, however, and are tied to conduct that complicated rather than streamlined the issues and contributed to the multiplication of fees for the defendant.

While the district court did not articulate this consideration in terms of the Fogerty factors, and was not required to since they are nonexclusive, we see it as related to the recognized factor of deterrence and compensation. The unique posture of this case as one of hundreds brought in the same manner and asserting parallel claims, makes deterrence a particularly relevant and appropriate consideration. It is not the deterrence of objectively reasonable good faith claims, but the interest in motivating plaintiffs to sort through the objectively unreasonable ones and prosecute this at best cumbersome litigation in a way that discriminates between parties and claims.

Plaintiffs charge that the defendant was equally responsible for multiplying fees, particularly by failing to designate a representative for deposition who had knowledge of the facts concerning the use of "Get Off" in Hook Up. While there is some suggestion that defendant contributed to increased discovery costs because multiple [810] depositions were required, our review is deferential and the record does not demonstrate clear error in the district court's assessment of plaintiffs' litigation conduct. Ultimately, we cannot say the district court abused its discretion in this case, particularly given the 50% reduction in attorney fees to account for Westbound's claims. Nor should Southfield and Nine Records be relieved of the nominal award of fees in this case, as defendant was required to investigate whether they had any claim and affirmatively move for dismissal of their claims before it was conceded that they had no interest in the copyrighted works.

AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings consistent with this opinion.

---------------

Notes:

[1] The Honorable Judith M. Barzilay, Judge, United States Court of International Trade, sitting by designation.

[2] All of plaintiffs' claims against Miramax Film Corp. and Dimension Films were dismissed with prejudice, pursuant to a settlement, on June 27, 2002.

[3] These are two of eleven appeals arising out of six related lawsuits that have been assigned to this panel for hearing and decision (Nos.02-6521, 03-5002, 03-5003, 03-5004, 03-5005, 03-5738, 03-5739, 03-5741, 03-5742, 03-5744, 03-5656).

[4] Sound recordings and their underlying musical compositions are separate works with their own distinct copyrights. See 17 U.S.C. § 102(a)(2), (7). Bridgeport Music, Inc. v. Still N The Water Publ'g, 327 F.3d 472, 475 n. 3 (6th Cir.), cert. denied, 540 U.S. 948, 124 S.Ct. 399, 157 L.Ed.2d 279 (2003) (consolidated appeals from the dismissal of 19 of the 476 actions for lack of personal jurisdiction).

[5] Were we to follow the analysis used by the district judge, we would agree with the result he reached.

[6] Defendants initially claimed that this argument was made for the first time on appeal. Since a panel rehearing was granted, defendants have had a full opportunity to brief and argue these issues.

[7] In most copyright actions, the issue is whether the infringing work is substantially similar to the original work. . . . The scope of inquiry is much narrower when the work in question is a sound recording. The only issue is whether the actual sound recording has been used without authorization. Substantial similarity is not an issue . . . . Bradley C. Rosen, Esq., 22 CAUSES OF ACTION § 12 (2d ed.2003).

[8] E.g., Terry Fryer, Sampling Jargon Illustrated, KEYBOARD, June 1988, at 66-73.

First, the cost barrier to enter into the audio production arena is low due to the influx of affordable digital recording equipment. The combination of a microphone, digital audio equipment, consumer audio equipment and an album or compact disc collection are the only tools needed to produce commercial rap music. Second, utilizing samples as the musical element of the song enables the producer to create commercial rap music without any original musical accompaniment prior to recording the vocals. Third, using music samples saves a considerable amount of time when compared to the traditional recording methods because another artist already recorded the underlying music. . . .

Stephen R. Wilson, Music Sampling Lawsuits: Does Looping Music Samples Defeat the De Minimis Defense?, 1 Journal of High Technology Law (JHTL) 179 n. 9 (2002) (citations omitted).

[9] Needless to say, in the case of a recording of a musical composition the imitator would have to clear with the holder of the composition copyright.

[10] A question arises as to whether the copying of a single note would be actionable. Since that is not the fact situation in this case, we need not provide a definitive answer. We note, however, that under the Copyright Act, the sound recording must "result from the fixation of a series of musical, spoken, or other sounds. . . ." 17 U.S.C. § 101 (definition of "sound recording").

[11] 

[B] by clarifying the rights of a sound recording copyright owner in regard to derivative works, Section 114(b) makes it clear that the digital sampling of a copyrighted sound recording must typically be licensed to avoid an infringement.... The import of this language is that it does not matter how much a digital sampler alters the actual sounds or whether the ordinary lay observer can or cannot recognize the song or the artist's performance of it. Since the exclusive right encompasses rearranging, remixing, or otherwise altering the actual sounds, the statute by its own terms precludes the use of a substantial similarity test.

Susan J. Latham, Newton v. Diamond: Measuring the Legitimacy of Unauthorized Compositional Sampling-A Clue Illuminated and Obscured, 26 Hastings Comm. & Ent. L.J. 119, 125 (2003) (footnotes omitted).

[21]

Samplers should apply for the appropriate licenses, respect the rights of copyright holders, and be respected in turn as equal creators, Responsibility for obtaining clearance should fall to either the artist, the label, or both. Samplers realize that in the litigious environment of the United States, there is nothing to be gained and much money potentially to be lost by being a renegade. Surely some obscure materials will be sampled and overlooked, but the process should proceed devoid of recrimination and with the opportunity for money to be made by both the sampler and those whom he samples.

David Sanjek, "Don't Have to DJ No More": Sampling and the "Autonomous" Creator, 10 Cardozo Arts & Ent. L.J. 607, 621 (1992).

[13] The opinion in Grand Upright Music Ltd. v. Warner Bros. Records, Inc., 780 F.Supp. 182 (S.D.N.Y.1991), one of the first cases to deal with digital sampling, begins with the phrase, "`Thou shalt not steal.'" Id. at 183 (quoting Exodus 20:15).

[14]

Thus, it seems like the only way to infringe on a sound recording is to re-record sounds from the original work, which is exactly the nature of digital sound sampling. Then the only issue becomes whether the defendant re-recorded sound from the original. This suggests that the substantial similarity test is inapplicable to sound recordings.

Jeffrey R. Houle, Digital Audio Sampling, Copyright Law and the American Music Industry: Piracy or Just a Bad "RAP"?, 37 Loy. L.Rev. 879, 896 (1992).

[15]

(A)ll samples from a record appropriate the work of the musicians who performed on that record. This enables the sampler to use a musical performance without hiring either the musician who originally played it or a different musician to play the music again. Thus sampling of records ... allows a producer of music to save money (by not hiring a musician) without sacrificing the sound and phrasing of a live musician in the song. This practice poses the greatest danger to the musical profession because the musician is being replaced with himself.

Christopher D. Abramson, Digital Sampling and the Recording Musician: A Proposal for Legislative Protection, 74 N.Y.U. L. REV. 1660, 1668 (1999) (footnote omitted).

[16]

The current lack of bright-line rules leads to unpredictability, which may be one reason that so few sampling cases are brought to trial .... A cost-benefit analysis generally indicates that is is less expensive for a sampler to purchase a license before sampling (or settle a post-sampling lawsuit) rather than take his chances in an expensive trial, the outcome of which ... is nearly impossible to predict with any degree of certainty.

Stephen R. Wilson, Music Sampling Lawsuits: Does Looping Music Samples Defeat the De Minimis Defense, 1 Journal of High Technology Law (JHTL) 179, 187 n. 97 (2002).

[17] Two prior cases are worthy of mention, however, as they are often cited in discussions of digital sampling. These cases are Grand Upright Music Ltd. v. Warner Bros. Records, Inc., 780 F.Supp. 182 (S.D.N.Y.1991), and United States v. Taxe, 540 F.2d 961 (9th Cir.1976).

Although Grand Upright applied a bright-line test in a sampling case, we have not cited it as precedent for several reasons. First, it is a district court opinion and as such has no binding precedential value. Second, although it appears to have involved claims for both sound recording and musical composition copyright infringement, the trial judge does not distinguish which he is talking about in his ruling, and appears to be addressing primarily the musical composition copyright. Third, and perhaps most important, there is no analysis set forth to indicate how the judge arrived at his ruling, which has resulted in the case being criticized by commentators. Although often cited in later cases, there appears to be no case involving only the digital sampling of sound recordings that has relied on that decision. Nonetheless, it did precipitate a significant increase in licensing requests and changes in the way some artists and recording companies approached the issue of digital sampling.

Taxe involved a criminal prosecution of sound recording "pirates." The defendants were convicted in the district court and on appeal the court held that a jury instruction that characterized "any and all re-recordings as infringements" went too far, but nonetheless found the instructions as a whole to be free of any error requiring reversal. Like Grand Upright, there was no analysis to support this conclusion. This is understandable because the court was upholding the instructions given and had no need to dwell on that portion of the instruction the court "believed" "went beyond the law." Taxe, 540 F.2d at 965. Although Taxe has been cited frequently, it has not been cited for the pronouncement relative to the nature of the copyright protection afforded to sound recordings. It has been cited, however, for the proposition that infringement occurs even though the unauthorized recording makes changes in the sounds duplicated. Id. at n. 2.

[18] We have not addressed several of the cases frequently cited in music copyright cases because in the main they involve infringement of the composition copyright and not the sound recording copyright or were decided on other grounds. Baxter v. MCA, Inc., 812 F.2d 421 (9th Cir.1987); Jarvis v. A & M Records, 827 F.Supp. 282 (D.N.J.1993); Tuff `N' Rumble Mgmt., Inc. v. Profile Records, Inc., 1997 WL 158364, 42 U.S.P.Q.2d 1398 (S.D.N.Y.1997) (plaintiff did not prove ownership of valid copyright or actual copying); Williams v. Broadus, 60 U.S.P.Q.2d 1051 (S.D.N.Y.2001); Newton v. Diamond, 349 F.3d 591 (9th Cir.2003), amended 388 F.3d 1189 (9th Cir.2004), cert. denied, ___ U.S. ___, 125 S.Ct. 2905, ___ L.Ed.2d ___, 2005 WL 585458, 73 U.S.L.W. 3557 (U.S. Jun. 13, 2005) (No. 04-1219). We note that in Newton, the matter at issue was infringement of the composition copyright. The alleged infringer had secured a license for use of the sound recording.

[19]

Certain provisions of the copyright law, however, do suggest that broader protection against unauthorized sampling may be available for owners of sound recordings than for the owners of musical compositions that may be embodied in those sound recordings.

For example, the copyright act states that, `The exclusive rights of the owner of copyright in a sound recording ... do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording' [17 U.S.C. § 114(b)] (emphasis added). By using the words `entirely of an independent fixation' in referring to sound recordings which may imitate or simulate the sounds of another, Congress may have intended that a recording containing any sounds of another recording would constitute infringement. Thus, it would appear that any unauthorized use of a digital sample taken from another's copyrighted recording would be an infringement of the copyrighted recording.

In fact, the copyright law specifically provides that the owner of copyright in a sound recording has the exclusive 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.' A recording that embodies samples taken from the sound recording of another is by definition a `rearranged, remixed, or otherwise altered in sequence or quality.'

It has been suggested that the strong protection implied by the foregoing provisions could be mitigated by a judicially applied standard which permits some degree of de minimis copying or copying where the sampled portion of the resulting work is not substantially similar to the copied work. For example, a court could determine that the taking of a millisecond of sound from another's copyrighted recording, or the taking of a more extensive portion that has been modified to the point of being completely unrecognizable or impossible to associate with the copied recording, does not constitute infringement. It is believed, however, that the courts should take what appears to be a rare opportunity to follow a `bright line' rule specifically mandated by Congress. This would result in a substantial reduction of litigation costs and uncertainty attending disputes over sampling infringement of sound recordings and would promote a faster resolution of these disputes.

While the question whether an unauthorized use of a digital sample infringes a musical composition may require a full substantial similarity analysis, the question whether the use of a sample constitutes infringement of a sound recording could end upon a determination that the sampler physically copied the copyrighted sound recording of another. If the sampler physically copied any portion of another's copyrighted sound recording, then infringement should be found. If the sampler did not physically copy, then there could be no infringement (even if the resulting recording substantially simulates or imitates the original recording).

AL KOHN & BOB KOHN, KOHN ON MUSICLICENSING 1486-87 (Aspen Law & Business 3d ed.2002) (footnotes omitted).

[20] "As a result of actual, as well as threatened, litigation in the area of digital sampling infringement, several developments have occurred. Sampling clearinghouses serve as one recent outgrowth. These companies are similar to publisher clearinghouses in that they are authorized by member copyright owners to clear samples for use on albums according to an agreed upon fee structure. In addition, record companies and most music publishers have instituted certain licensing policies as more and more artists routinely seek clearance for their samples with the hope of avoiding litigation." A. Dean Johnson, Music Copyrights: The Need for an Appropriate Fair Use Analysis in Digital Sampling Infringement Suits, 21 FLA. ST. U.L. REV. 135, 163 (1993) (footnote omitted).

[21] We speak as to federal copyright protection only, and recognize that the Copyright Act provides that: "With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067. The preemptive provisions of subsection (a) shall apply to any such rights and remedies pertaining to any cause of action arising from undertakings commenced on and after February 15, 2067. Notwithstanding the provisions of section 303, no sound recording fixed before February 15, 1972, shall be subject to copyright under this title before, on, or after February 15, 2067." 17 U.S.C. § 301(c) (1998).

[22] The district court also denied plaintiffs leave to amend to add claims against new parties arising from the inclusion of "100 Miles" in I Got the Hook Up. Plaintiffs have abandoned any appeal with respect to the denial of that request.

[23] Section 505 provides that:

In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.

[24] Those considerations include: the primary objective of the Copyright Act to "encourage the production of original literary, artistic, and musical expression for the good of the public"; the fact that defendants as well as plaintiffs may hold copyrights and run the "gamut" from large corporations to "starving artists"; the need to encourage "defendants who seek to advance a variety of meritorious copyright defenses ... to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement"; and the fact that "a successful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright." Id. at 524 and 527.

[25] Plaintiffs argue that Southfield had a significant interest in "How Ya Do Dat" and joined Bridgeport in seeking leave to file the second amended complaint to assert infringement claims. That assertion does not affect the prevailing party status of defendant or undermine the finding that the claims which were asserted were objectively unreasonable.

687 F.Supp.2d 1325 (2009)
SAREGAMA INDIA LTD., Plaintiff,
v.
Timothy MOSLEY, et al., Defendants.
Case No. 08-20373-Civ.

United States District Court, S.D. Florida.
December 23, 2009.

*1326 Michael Ingrassi Santucci, S. Tracy Long, Santucci Priore & Long LLP, Fort Lauderdale, FL, for Plaintiff.

Andrew Harrison Bart, Carletta F. Higginson, Jenner & Block LLP, Frank Christopher Salzano, Dewey & Leboeuf LLP, New York, NY, Karen Linda Stetson, Karen Linda Stetson, Grayrobinson P.A., Miami, FL, for Defendants.

ORDER: (1) GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT; (2) DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT; AND (3) GRANTING IN PART PLAINTIFF’S MOTION FOR VOLUNTARY DISMISSAL

PATRIA A. SEITZ, District Judge.

THIS dispute arises from Defendants’ sample of an Indian sound recording known as Bagor Mein Bahar Hai (“BMBH”) in the song “Put You on the Game” (“PYOG”) which appeared on Jayceon Taylor’s 2005 album “The Documentary.” At the November 10, 2009 hearing on the parties’ motions for summary judgment [DE 174, 176, 179, 181], Plaintiff (“Saregama”) argued that it held a valid copyright in the BMBH sound recording pursuant to a 1967 agreement between the author Shakti and its predecessor in interest, Gramophone. Saregama also argued that it was entitled to summary judgment because Defendants admit that they sampled the BMBH sound recording. Defendants maintained that Saregama’s 1967 agreement conveys no more than a license to exploit subject works and that there is no evidence that the BMBH sound recording was subject to the 1967 agreement. Defendants also argued that, irrespective of whether they sampled the BMBH sound recording, the BMBH sound recording and PYOG are not substantially similar.

After considering the arguments of counsel, the motions, the responses and replies thereto, the relevant legal authorities, and the record, the Court will grant Defendants’ motion and deny Saregama’s motion because the 1967 agreement confers, at most, an exclusive license for two years and a non-exclusive license thereafter, and Saregama proffers no proof that the BMBH sound recording was created during the term of the agreement or that *1327 it obtained the copyright through other means. Further, aside from the approximately one-second snippet sampled from the BMBH sound recording, the two works bear no similarities and no jury, properly instructed, could find that the songs are substantially similar.

I. Factual Background

A. Rights in the BMBH Sound Recording: The 1967 Agreement

1. The Assignment

On April 24, 1967, Shakti Films (“Shakti”) and Gramophone Company of India, Ltd. (“Gramophone”), a predecessor in interest of Saregama, came to an agreement regarding the production and distribution of music soundtracks to Shakti’s movies. (See DE 187, Ex. 3 “Agreement.”) The Agreement provides two methods by which Shakti agreed to provide music to Gramophone. (See id. ¶¶ 2, 4.) First, Shakti may provide Gramophone with musicians who record songs at Gramophone’s behest:

(See id. ¶ 2.)

As an alternative to providing musicians, Shakti agreed to provide Gramophone with pre-recorded songs, known conventionally as sound recordings, to be re-recorded:[1]

(See id. ¶ 4) (emphasis in original).

Whether by musician or pre-recorded song, the music Gramophone obtained from Shakti carried with it Shakti’s rights to record and re-record the works: ”[Shakti] hereby agree[s] that they assign their gramophone recording rights in all works to be recorded or re-recorded under the provisions of this Agreement to [Gramophone]....” (See id. ¶ 7.) Further, the Agreement provides that Gramophone shall own the “original plate” of all works “within the meaning of The [Indian] Copyright act of 1957.”[2] (See id. ¶ 10.) By its *1328 terms, the Agreement took effect on January 15, 1967 and terminated on January 15, 1969.[3] (See id. ¶ 2.) During this two-year term, Shakti was prohibited from providing any musicians or pre-existing recordings to other production companies. (See id. ¶ 5.) Finally, the Agreement provided that its terms were governed by Indian law. (See id. ¶ 15.)

2. Royalties

In exchange for the right of recording, re-recording, and selling these records, Gramophone agreed to pay Shakti royalties. The royalty payments are arranged according to the origin of the work (whether the work is created by Shakti musicians or reproduced from Shakti recordings) and whether the final soundtrack commingles Shakti-owned songs with songs owned by others.

For soundtracks produced from works recorded by Shakti’s musicians, the Agreement provides royalties at the following rates:

(See id. ¶ 6.)

However, if, after the Agreement’s two-year term, Shakti allowed another production company to record or re-record any songs obtained by Gramophone under the Agreement, Gramophone is no longer bound to pay Shakti a royalty for works recorded by Shakti’s musicians. (See id. ¶ 6.)

By contrast, soundtracks produced from Shakti’s pre-recorded songs are governed by similar royalty rates, albeit in a different section of the Agreement:

(See id. ¶ 8.)

When royalties “shall become payable to [Shakti]” for soundtracks produced both from Shakti’s artists and pre-recorded songs, Gramophone is entitled to confer manufacturing and sales rights to other parties. (See id. ¶ 10.)

*1329 B. Saregama’s Evidence Demonstrating Ownership of BMBH

The production dates for the BMBH sound recording and the Bollywood film Aradhana in which it played are unclear. On August 7, 1968, Shakti sent a letter to Gramophone regarding royalty payments for Aradhana, which reads:

(See DE 187, Ex. 1 “Letter 1”.)

Similarly, on May 2, 1968, Shakti directed Gramophone to pay royalties to a singer:

(See DE 187, Ex. 8 “Letter 2”.)

According to Saregama’s corporate representative’s declaration, BMBH was recorded in 1968. (See DE 183 “Ramji Decl.” ¶ 7.) However, at his deposition, Ramji conceded that he did not know when BMBH was recorded. (See DE 178, Ex. 1 “Ramji Depo.” at 84-85.) Indeed, he speculated that it could have been produced in 1969 or 1968. (See id.)

According to Ashim Samanta, a principal at Shakti, the film Aradhana was released in October or November of 1969. (See DE 195, Ex. 1 “Samanta Depo.” at 70-72.) However, Samanta admits that he has no personal knowledge as to when the film was produced. (See id.) Further, although Samanta speculates that Aradhana’s soundtrack was released three to six months prior to the movie, he concedes that he does not know when the soundtrack featuring BMBH was released. (See id. at 17-18.)

Samanta wrote a May 2009 letter on behalf of Shakti which states that Saregama owns the copyrights in BMBH pursuant to the 1967 Agreement. (See DE 187, Ex. 1 “Samanta Letter.”) However, in his deposition, Samanta admits that: (1) he knows nothing about copyright law and cannot distinguish an assignment from a license; (2) although he signed the letter, it was drafted by Adel Churamani, a Saregama representative; and (3) he hadn’t read the Agreement until he signed the May 2009 letter. (See Samanta Depo. at 74-78, 81.) Samanta states that, upon review of the letter and the Agreement, he believes that Saregama owns the copyright. (See id.)

As further evidence of ownership, Saregama proffers a xerox copy of a vinyl record label indicating that it contains the BMBH sound recording. (See DE 187, Ex. 9 “Record Label”.) The label names both Gramophone and Shakti, and along its rim it reads: “all rights of the manufacturer and of the owner of the recorded work reserved.” (See id.) Saregama also submits letters and charts reflecting sales of BMBH and royalties paid to Shakti. (See DE 187, Ex. 11, 12, 13, 17.) According to the letters and charts, the earliest royalties were paid in November 2005. (See DE 187, Ex. 13.)

Finally, Saregama provides a document which is labeled an “extract from the register of copyrights” from the “government of India.” (See DE 187, Ex. 4 “Extract”.) The extract indicates that “Gramco”[4] is *1330 the applicant, and that the work’s title is “Aradhana.” (See id.) Shakti is listed as the work’s author and that the work was published in 1969. (See id.) Next to the title an identification number is listed: “SPH0830115.” (See id.) According to Saregama’s corporate representative, the SPH0830115 number represents the identification number in its catalog. (See Ramji Depo. at 43, 101.) However, in another deposition, Saregama’s corporate representative reveals that the only catalog number for the complete Aradhana soundtrack is “130327.” (See DE 178, Ex. 9 “Ramji Depo. 2” at 3.)

C. Defendants’ Involvement in Producing the Song “Put You On the Game”

Defendant Timothy Mosley produced “Put You On the Game” (“PYOG”) for Jaceyon Taylor’s album “The Documentary,” released in 2005. (See DE 182 “PI. SoF” ¶¶ 20, 24.) Mosley included an approximately one-second snippet of BMBH in PYOG. (See id. ¶¶ 21.) According to Defendant G-Unit Records, it had no involvement in or control over the creation, distribution, or sale of PYOG. (See DE 180 “G-Unit Decl.” ¶¶ 3.) Rather, G-Unit asserts that its only connection to PYOG is that it “receives a passive income participation” pursuant to an agreement with Interscope and Aftermath records. (See id. ¶ 4.) However, according to Saregama, the Documentary album sleeve contains the G-Unit logo and indicates that G-Unit owns the copyrights in the album. (See DE 207 ¶ 1.) Further, Saregama remarks that G-Unit’s sole principal Curtis Jackson is credited as the album’s executive producer. (See id.)

According to Defendant Desperado Entertainment, it had no involvement in or control over the creation, distribution, or sale of PYOG. (See DE 175 “Harris Decl.” ¶¶ 3, 4.) However, Saregama claims that Desperado, doing business as “Each 1 Teach 1,” holds itself out as publisher of PYOG. (See DE 199 ¶ 1.) Saregama also asserts that, in its responses to interrogatories, Desperado indicates that it provided services to Jaceyon Taylor and it took part in the licensing or distribution of PYOG. (See id.)

D. Expert Testimony: Analyzing BMBH and PYOG

The snippet appearing in both BMBH and PYOG consists of three notes: D, B flat, and G. (See DE 178, Ex. 4 “Ricigliano Report” ¶ 11.) Together, the notes form a descending chord known as a G minor arpeggio. (See id.) In BMBH, this G minor chord is looped four times to create a “vocal unit,” which appears at 0:21, 0:38, and 1:49, 2:52. (See id. ¶ 12; DE 178, Ex. 6 “Oxendale Report” at 2.) The total vocal unit in BMBH is approximately 2 seconds in length. (See Ricigliano Report ¶ 12.) In PYOG, the G minor chord is first looped three times, and after an intervening D note, is looped twice more. (See id. ¶ 14; Oxendale Report at 4.) Thus, the looped G minor chord in PYOG produces a slightly modified version of the vocal unit in BMBH. (See Ricigliano Report 17.) The vocal unit in PYOG appears at 1:08, 2:03, and 3:47. (See id. ¶ 15.)

According to Saregama’s expert Mr. Oxendale, the vocal unit at issue in BMBH is a distinctive and memorable piece of the song as a whole. (See Oxendale Report at 2.) Oxendale also opined that the vocal unit in PYOG is a distinctive portion of the song as a whole. (See id.) Oxendale concluded that the vocal unit at issue in PYOG was copied from BMBH’s vocal unit and subject to a slight degree of manipulation. (See id.) By contrast, Defendants’ expert Mr. Ricigliano asserted that the vocal unit at issue in BMBH was not original and a basic musical element. (See DE 195, Ex. 2 “Ricigliano Depo.” at 5.) Further, Ricigliano *1331 opined that, although PYOG may have copied from BMBH, BMBH and PYOG are dissimilar compositions as a whole. (See id. at 6; Ricigliano Report ¶ 26.)

At his deposition, however, Mr. Oxendale admitted that he did not compare BMBH’s vocal unit to other portions of BMBH to determine its relative importance. (See DE 178, Ex. 5 “Oxendale Depo.” at 14.) Further, Oxendale conceded that the scope of his analysis did not consist of comparing BMBH to PYOG as a whole, but was limited to analyzing the vocal unit at issue in each work to determine whether PYOG sampled BMBH. (See id. at 8, 11, 16.)

II. Procedural History

On August 27, 2007, Saregama filed its initial complaint in the Southern District of New York, alleging federal and state copyright infringement claims, and seeking damages and injunctive relief. (See DE 30 at 5.) On Defendants’ motion to transfer venue, the case was transferred to this Court. (See id. at 1-2.) Once in this district, the Court granted Defendants’ motion to dismiss with leave for Saregama to re-plead. (See DE 60.) The Court also entered the Scheduling Order which bifurcated fact and damage discovery, and set trial in April 2010. (See DE 62.)

After Saregama filed its Amended Complaint, Defendants Mosley, G-Unit, and Desperado filed a second motion to dismiss, which the remaining Defendants joined despite the fact that they had previously answered the Amended Complaint. (See DE 86, DE 110, DE 114.) The Court granted Defendants’ motion in part, leaving Saregama with Federal copyright infringement claims for the BMBH musical composition and sound recording. (See DE 137.) Thereafter, Saregama voluntarily dismissed its musical composition claims against Mosley, G-Unit, and Desperado. (See DE 138.)

Because the remaining Defendants (“WB-Universal Defendants”) had answered, Saregama sought a stipulation to dismiss its musical composition claim with each party to bear its own fees in costs in connection with the musical composition claim. (See DE 148 ¶ 5.) The WB-Universal Defendants refused to stipulate, therefore Saregama moved to dismiss its musical composition claim on the condition that each party bear its own fees and costs. (See id. ¶¶ 6-7.) In response, the WB-Universal Defendants argued that they are entitled to seek fees as the prevailing party under the Copyright Act because Saregama’s musical composition claim is without merit. (See DE 161 at 6-9.) Saregama replied that it did not seek to dismiss its musical composition claim because it lacked merit, but because it would not provide any relief not available by way of the sound recording claim. (See DE 167 at 1-2.) Further, Saregama asserted that the Court has discretion to dismiss the musical composition claim on the condition that each party bear its own fees and costs, and, in any case, an entitlement to fees under the Copyright Act requires more than merely prevailing on the merits. (See id. at 3-5.)

On September 11, 2009, both Saregama and Defendants moved for summary judgment. Saregama moved for summary judgment on the grounds that: (1) it held a valid assignment of the BMBH sound recording copyright from Shakti; and (2) because Defendants admit that they copied a snippet of the BMBH sound recording, they are liable as a matter of law. By contrast, Defendants moved for summary judgment arguing that: (1) the 1967 Agreement only confers on Saregama a license to exploit the BMBH sound recording; (2) Saregama’s other evidence does not establish an assignment of copyright in the sound recording; and (3) the copying at issue is de minimis. Defendants G-Unit *1332 and Desperado also moved for summary judgment on the grounds that Saregama failed to plead vicarious infringement, and, because they did not participate in the production of PYOG, they cannot be held liable for direct infringement. In response, Saregama argued that G-Unit and Desperado can be held liable for vicarious infringement because they had an ability to control production of PYOG.[5]

III. Standards

A. Summary Judgment

Summary judgment is appropriate when “the pleadings … show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); HCA Health Servs. of Ga., Inc. v. Employers Health Ins. Co., 240 F.3d 982, 991 (11th Cir.2001). Once the moving party demonstrates the absence of a genuine issue of material fact, the non-moving party must “come forward with `specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)). The Court must view the record and all factual inferences therefrom in the light most favorable to the non-moving party and decide whether ”`the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’” Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.1997) (quoting Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505).

B. Copyright

Saregama bears the burden of proving ownership of the BMBH sound recording copyright. Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). To make out a prima facie case of copyright infringement, Saregama must show that: (1) it owns a valid copyright in the BMBH sound recording; and (2) Defendants copied protected elements of the BMBH sound recording. Peter Letterese and Associates, Inc. v. World Institute of Scientology Enterprises, Int’l., 533 F.3d 1287, 1300-01 (11th Cir.2008) (citations omitted). In the Eleventh Circuit, to prove that Defendants copied its copyrighted work, Saregama must prove both factual and legal copying. Peter Letterese, 533 F.3d at 1300-01. To prove factual copying, Saregama must show that “the defendant, as a factual matter, copied portions of the plaintiffs work.” Id. To prove legal copying, Saregama must show that “those elements of the copyrighted work that have been copied are protected expression and of such importance to the copied work that the appropriation is actionable.” Id. Thus, legal copying asks “whether there is substantial similarity between the allegedly offending works and the protectable, original elements” of the sound recording. Id.

IV. Discussion

A. Ownership

1. The Nature of Rights Assigned by the 1967 Agreement

Saregama argues that Clauses 7 and 10 of the Agreement demonstrate that Shakti conveyed copyrights in all subject works to Gramophone, its predecessor in *1333 interest. However, a careful reading of both clauses, in conjunction with the Agreement’s other clauses, reveals that Shakti at most transferred a two-year exclusive license to Gramophone, and a non-exclusive license thereafter, to exploit Shakti’s pre-recorded works. In Clause 7, Shakti purports to assign Saregama its “gramophone recording rights in all works to be recorded or re-recorded under the provisions of this Agreement ….” (See Agreement ¶ 7.) Saregama interprets this language to convey copyrights in the subject works, but it does not explain why conferral of “gramophone recording rights” is tantamount to an assignment of copyrights. Furthermore, the very next clause demonstrates that Shakti retained ownership interests in the works at issue: ”[i]n consideration of the assignment set out in Clause 7 hereof[,] [Gramophone] shall pay to [Shakti] a Copyright royalty [on] ... [a] work or works owned by [Shakti] ....” (See Agreement ¶ 8) (emphasis in original).

What is more, Clauses 5 and 6 confirm that, after January 15, 1969, Shakti was free to confer similar recording rights on parties other than Saregama. First, Clause 5 prohibits Shakti from conferring recording rights on Saregama’s competitors, but only during the two-year term of the Agreement. (See Agreement ¶ 5.) Saregama argues that Clause 5 only prohibits Shakti from providing musicians to other producers who would create new sound recordings based on Shakti’s existing musical compositions. However, Clause 5’s exclusivity expressly applies to works created from Shakti’s “artistes and musicians” as well as works created from its “sound tracks or recorded tapes.” (See id.) Thus, Clause 5 prohibits Shakti from providing other producers with its sound recordings, such as those supplied to Saregama, but only for the two-year term contemplated by the Agreement.

Second, Clause 6 provides that if, after January 15, 1969, Shakti provides to other parties the works previously supplied to Saregama, including those recorded by Shakti’s “artistes or musicians” or from its “sound track[s] or recorded tape[s],” then Saregama is no longer bound to pay royalties from sales for works recorded by Shakti’s artists and musicians. (See id. ¶ 6.) That, following the Agreement’s two-year term, Shakti is free to supply the same sound recordings to a third party that it previously gave to Saregama is wholly inconsistent with a transfer of copyright or exclusive license:

Davis v. Blige, 505 F.3d 90, 99-100 (2d Cir.2007).

Saregama argues that Clause 6 merely recognizes that Shakti will have breached the contract if it gives to third parties what it previously gave Saregama, thereby relieving Saregama of the burden to pay royalties. However, if Saregama indeed held the copyright or an exclusive license therein, the appropriate action against Shakti’s wrongful transfer of rights would not be a breach of contract action, but an action for copyright infringement. See id. at 101 (“An exclusive license … conveys an ownership interest…. Accordingly an exclusive licensee may sue others for infringement, including the licensor if the licensor infringes on the exclusive right he *1334 granted the licensee”) (citations omitted) (emphasis supplied). Furthermore, Clause 6 does not relieve Saregama of the burden to pay royalties in toto, but only those royalties provided under Clause 6. (See Agreement ¶ 6.) Thus, Saregama must continue to pay the royalties dictated by Clause 8, those for Shakti’s pre-recorded songs, even after Shakti gives the same pre-recorded song to a third-party producer. (See id. ¶¶ 6, 8.) To be sure, the proper reading of Clauses 5 and 6 is that Shakti enjoys the musician royalty from Saregama as long as it does not transfer the subject works to producers other than Saregama, but that Shakti may do so at any time after the Agreement’s two-year term. (See Agreement ¶¶ 5, 6.)

Clause 10 also supports the position that the Agreement did not transfer copyright in Shakti’s prerecorded works to Saregama. For works performed by Shakti’s “artistes and musicians,” Clause 10 confers a wide range of rights on Saregama, including exclusive rights of “production, reproduction, sale, use and performance (including broadcasting) throughout the world ….” (See id. ¶ 10.) Significantly, Clause 10 does not supply Saregama with such rights for Shakti’s pre-recorded works, such as the BMBH sound recording. Rather, Clause 10 entitles Saregama to authorize third parties to “manufacture, sell and/or catalogue” all subject works, including both musician-created and pre-recorded works, only “when royalties shall become payable to [Shakti] as mentioned in Clauses 6 and 8 hereof.” (See id.) (emphasis in original).

Saregama emphasizes that Clause 10 grants it ownership of “the original plate” of all subject works, including pre-recorded works, “within the meaning of The [Indian] Copyright Act of 1957.” (See id.) However, Saregama does not explain how ownership of “the original plate” equates to ownership of copyrights. To be sure, the Indian Copyright Act defines a “plate” as a “device used or intended to be used for printing or reproducing copies.” ICA Chapter 1, Section 2(t). This suggests that the Agreement merely codified that Saregama owned the original means of mass producing the subject works. It does not indicate, as Saregama insists, that Shakti assigned copyrights in the works slated for production, let alone that Shakti could not later provide other producers with a replica “plate” of any subject work for mass production, as Clause 6 contemplates.

Finally, Saregama submits that, if the Agreement’s intent is ambiguous, the Court should consider parole evidence of the parties’ intent to convey copyrights. Parole evidence is unnecessary, however, because the Agreement clearly does not convey copyrights in Shakti’s pre-recorded works. Nevertheless, even if the Court could examine parole evidence, the available evidence is inconclusive. While Ashim Samanta’s May 2009 letter alleges that Saregama owns the copyrights in the BMBH sound recording pursuant to Clause 10 of the Agreement, he conceded at his deposition that: (1) he knows nothing about copyright law and cannot distinguish between an assignment and license; (2) the letter was drafted by a representative of Saregama; and (3) he hadn’t read the Agreement until he signed the May 2009 letter. (See Samanta Depo. at 70-72, 74-78, 81; Samanta Letter.)

Saregama contends that, because Saregama and Shakti agree that the Agreement validly assigns copyrights, Defendants cannot challenge the terms of the assignment. This argument is without merit. Saregama misquotes Imperial Residential Design, Inc. v. Palms Development Group, Inc., 70 F.3d 96, 99 (11th Cir.1995). In that case, the Court held that a third party could not challenge an *1335 assignment where both the assignor and assignee were joined as plaintiffs and the assignor re-assigned the copyright to the assignee immediately prior to the infringement giving rise to the case in order to cure any defect in a prior assignment.[6] In this case, by contrast, Shakti is not joined as a plaintiff and there is no curative pre-infringement assignment. Furthermore, the Court cannot reasonably rely on Shakti’s current understanding of the terms of the Agreement where its representative had not read the Agreement prior to May 2009 and cannot distinguish an assignment from a license. (See Samanta Depo. at 74-78, 81.) Thus, the mere fact that Saregama’s corporate representative and Ashim Samanta believe that Saregama owns the BMBH sound recording copyright does not preclude inquiry into the terms of the Agreement.

Finally, Saregama’s evidence of royalties paid do not prove that Saregama owns copyrights. Indeed, Saregama’s royalty payments to Shakti are consistent with a licensing arrangement. Therefore, because the Agreement’s terms convey, at most, a two-year exclusive license to exploit Shakti’s pre-recorded songs which reverts to a non-exclusive license thereafter, Saregama fails to demonstrate that the Agreement confers copyrights.

2. Whether the Agreement Covers the BMBH Sound Recording

Citing to Clause 4, Defendants argue that the Agreement only covers songs that Shakti delivers to Saregama during the two-year term: ”[Shakti] shall … supply [Gramophone] with sound tracks or recorded tapes ….” (See Agreement ¶ 4.) In response, Saregama argues that the Agreement covers all songs that Shakti created from January 15, 1967 to January 15, 1969. In either case, however, Saregama does not proffer any evidence which demonstrates that the BMBH sound recording was created during the term of the Agreement.

First, Saregama’s corporate representative’s declaration and deposition testimony are in conflict. In his declaration he states that the BMBH sound recording was created in 1968, but in his deposition he speculated that it could have been produced in 1969 and admitted that he did not have personal knowledge as to when the sound recording was produced. (See Ramji Decl. ¶ 7; Ramji Depo. at 84-85.) Second, Shakti’s corporate representative Ashim Samanta admitted that he did not know when the film or the soundtrack was produced. (See Samanta Depo. at 17-18, 70-72.) Saregama submits Samanta’s May 2009 letter as evidence, but the May 2009 letter is not probative because Samanta conceded in his deposition that he did not draft the May 2009 letter and that he has no personal knowledge as to when the BMBH sound recording was created. (See id.)

Saregama also refers to two letters from May 2, 1968 and August 7, 1968 between Shakti and Gramophone which describe a royalty arrangement for records produced from the film, but neither letter demonstrates when the BMBH sound recording was created. (See Letter 1, Letter 2.) To be sure, there is no evidence to show that the letters were not produced in advance of the film and soundtrack. Saregama also proffers a xerox copy of a vinyl record label, but the label does not show when the BMBH sound recording was produced. (See Record Label.) The release date on the record is illegible, and it names both Shakti and Gramophone in an inconclusive fashion, reserving “all rights of the manufacturer *1336 and of the owner.” (See id.) (emphasis supplied).

Furthermore, Saregama’s extract from the Indian Copyright Office does not establish when the BMBH sound recording was created. The extract does not indicate that the BMBH sound recording was produced before the Agreement’s term expired on January 15, 1969. Rather, the extract merely indicates that “Aradhana” was published sometime in 1969. (See id.) Saregama finally argues that the 1967 Agreement provides for a one-year extension option to January 15, 1970, which would remove any doubt that it covered the BMBH sound recording. (See DE 204 at 3-4.) However, there is no evidence that this option was exercised. According to Saregama, it “has continually alleged that the document evidencing the option cannot be located, not that it does not exist.” (See id.) However, liability discovery has closed and Saregama is obligated to proffer evidence of ownership at this juncture in order to survive summary judgment. Saregama, however, has failed to provide evidence demonstrating that the BMBH sound recording was created during the term of the Agreement.

3. Whether the Extract Qualifies as Prima Facie Evidence of Ownership

Saregama asserts that its extract should be given deference because U.S. copyright law provides that certificates of registration constitute prima facie evidence of ownership. See In Design v. Lauren Knitwear Corp., 782 F.Supp. 824, 829 (S.D.N.Y.1991). However, even assuming that the extract warranted deference from this Court, it is unclear what work the extract protects because the catalog number on the extract conflicts with the catalog number for the Aradhana film soundtrack on which the BMBH sound recording appears. Saregama’s corporate representative testified that the catalog number on the extract (“SPH0830115”) matched Saregama’s internal catalog. (See Ramji Depo. at 43, 101.) However, Saregama’s corporate representative later testified that the only catalog number for the complete Aradhana film soundtrack on which BMBH appears is “130327.” (See Ramji Depo. 2 at 3.) Due to such inconsistency, the Court cannot give deference to the extract Saregama proffers.

In sum, there is no evidence to support that the BMBH sound recording was created during the term of the Agreement, nor is there evidence that the Agreement was extended for another year. Also, Saregama has not shown that the Agreement creates more than a licensing arrangement. Finally, neither Saregama’s extract nor any other record evidence shows that Saregama has a copyright interest in the BMBH sound recording. Without any evidence to demonstrate ownership of the BMBH sound recording, the Court must deny Saregama’s motion and grant Defendants’ motion on this issue.

B. Whether Defendants’ Copying is Legally Actionable

1. Originality

Defendants do not dispute that PYOG contains a sample of the BMBH sound recording. Rather, they maintain that the sampled snippet is an unoriginal and common vocal exercise, and that their expert’s testimony as to originality stands unrefuted. However, in arriving at his conclusion that PYOG sampled BMBH, Saregama’s expert Mr. Oxendale opined that the female vocal performance in BMBH was “distinctive and memorable.” (See Oxendale Report at 2.)

Furthermore, Defendants misapprehend Saregama’s burden to establish originality. To demonstrate originality, Saregama need only show that the female vocal expression in BMBH was original, *1337 not that the particular chord performed was unique. “For example, the idea of hunting a formidable whale at the lead of an eccentric captain is not protected by copyright law. The expression of this idea as it is encapsulated in the novel Moby-Dick, however, is protected by copyright.” Peter Letterese, 533 F.3d at 1302 (citing BUC Int’l Corp. v. Int’l Yacht Council Ltd., 489 F.3d 1129, 1148-49 (11th Cir. 2007)) (emphasis added). Thus, while the G minor chord performed in BMBH may be a common vocal exercise, a jury could reasonably conclude that the female vocal performance of the G minor chord is a distinct expression capable of copyright protection. Therefore, the Court will deny Defendants’ motion as to the originality of the BMBH sound recording.

2. Substantial Similarity

Saregama contends that a substantial similarity inquiry is unnecessary where, as here, Defendants concede that PYOG sampled elements of BMBH. Alternatively, Saregama argues that the substantial similarity inquiry is not an element of its prima facie infringement claim, but is merely an affirmative defense. Saregama, however, misreads the binding law of this Circuit. A prima facie infringement claim requires proof of both factual copying and substantial similarity:

Peter Letterese, 533 F.3d at 1300-01.

(a) Applying the Substantial Similarity Test

As a threshold matter, the Court is obligated to perform a substantial similarity inquiry at the summary judgment stage:

Id. at 1302.

Two works are substantially similar if “an average lay observer would recognize the alleged copy as having been appropriated from the copyrighted work.”[7] Leigh, 212 F.3d at 1214. Substantial similarity can arise from both literal and nonliteral similarities. Id. Sampling cases, like the one at bar, involve literal similarities because they deal with the “verbatim copying or paraphrasing of a copyrighted work.” Palmer v. Braun, 287 F.3d 1325, 1330 (11th Cir.2002). Where only a small *1338 amount of literal similarity exists, also known as “fragmented literal similarity,” a substantial similarity may be found if the “fragmented copy is important to the copyrighted work, and of sufficient quantity….” Id.

In a music composition copyright case, the Eleventh Circuit recently affirmed and adopted an order granting summary judgment for the defendant because its song “In Da Club” was not substantially similar to copyrightable aspects of the plaintiffs song “Its Your Birthday.” Lil’ Joe Wein Music, Inc. v. Jackson, 245 Fed.Appx. 873, 875 (11th Cir.2007). In addition to ruling that the “it’s your birthday” phrase in both songs was an unoriginal aspect of the plaintiffs song, the court ruled that the similarity between the songs was de minimis:

Id. at 880.

Similarly, in Jean v. Bug Music, Inc., 2002 WL 287786 *2 (S.D.N.Y. Feb. 27, 2002), the court ruled that two songs were not substantially similar where, “the songs, taken as a whole, [were] substantially different,” and “the only identical portions of the two songs are the first three words and notes,” which the court found were common musical and lyrical phrases.

In this case, the only portion of BMBH found in PYOG is an approximately one-second snippet of a female vocal performance appearing at 0:21, 0:38, 1:49, and 2:52. (See Ricigliano Report ¶ 11; Oxendale Report at 2.) In PYOG, the one-second snippet is looped in the refrain of the song at 1:08, 2:03, 3:08, and 3:47. (See Ricigliano Report ¶ 15.) Other than the one-second snippet, the songs bear no similarities. Taken as a whole, PYOG and BMBH are completely different songs, with different lyrical content, tempo, rhythms, and arrangements. Indeed, it is highly unlikely that the average lay observer could discern the source of the one-second snippet without prior warning. Saregama’s expert claims that the snippet is unique, however he did not compare the works to determine the snippet’s relative importance in each song or whether the songs are similar as a whole. By contrast, Defendants’ expert opined that PYOG and BMBH are dissimilar as a whole. (See Ricigliano Report ¶ 26.) To be sure, no reasonable jury, properly instructed, would mistake PYOG for BMBH or conclude that the two works were substantially similar.

(b) Substantial Similarity and Sound Recordings: The Bridgeport Case

As an alternative position, Saregama contends that sound recordings like BMBH must be treated differently from other forms of copyrightable work, relying on Bridgeport Music, Inc. v. Dimension Films, 410 F.3d 792 (6th Cir.2005). There the Sixth Circuit held that any sampling of a sound recording constitutes infringement, no matter how small the sampled snippet. Id. at 798-805. However, the Sixth Circuit’s decision to carve out an exception for sound recordings has not been followed in this Circuit. Indeed, the *1339 Eleventh Circuit imposes a “substantial similarity” requirement as a constituent element of all infringement claims:

Leigh v. Warner Bros., Inc., 212 F.3d 1210, 1214 (11th Cir.2000) (citations omitted) (emphasis supplied). Therefore, although factually similar, the Bridgeport court’s exception for sound recordings presents a departure from Eleventh Circuit precedent.

Saregama also fails to persuade the Court that, in the future, the Eleventh Circuit will depart from the black-letter consensus, which requires proof of substantial similarity, to follow the Sixth Circuit’s exception for sound recordings. In Bridgeport, the defendant sampled a two-second snippet of the plaintiffs copyrighted guitar solo, lowered and extended its pitch, and looped the snippet at five places throughout the background of the song. Id. at 796. The district court held that, although the sampled portion may have been important to the plaintiffs work, it would not be recognized by a lay observer, let alone an observer familiar with the plaintiffs work and was therefore not substantially similar. Bridgeport Music, Inc. v. Dimension Films, 230 F.Supp.2d 830, 842 (M.D.Tenn.2002).

The Sixth Circuit reversed. In essence, the Sixth Circuit held that the copyright statute dictated a broader scope of protection for sound recordings than that afforded to musical compositions or other types of copyrightable work. Bridgeport, 410 F.3d at 800-01. Rather than couching this distinction in the “copyright-granting” statutory provisions of 17 U.S.C. § 106,[8] the Sixth Circuit looked to 17 U.S.C. § 114(b),[9] which clarified and limited the *1340 scope of copyright protection for sound recordings, to proclaim that “a sound recording [copyright] owner has the exclusive right to `sample’ his own recording.” Id.

It is not clear to this Court, however, why the Bridgeport court’s reading of Section 114(b) follows inexorably from its text. First, Section 114(b)’s derivative-work provision addresses the scope of protection given to derivative works, not original works. There is no indication that Congress sought to expand the scope of protection for original works by redefining the term “derivative work” to include all works containing any sound from the original sound recording, whether those works bear substantial similarities to the original work or not. In other words, Section 114(b)’s derivative-work provision does not allow the Court to conclude that PYOG is a “derivative work” of, and thereby infringes on, BMBH merely because it contains a one-second snippet of BMBH.

Second, the Bridgeport court’s reading of Section 114(b)’s similar-sounding work provision is more expansive than its text and legislative history suggest. The similar-sounding work provision reads:

17 U.S.C. § 114(b).

The Bridgeport court appears to interpret this language to mean that protection in a copyrighted sound recording extends to every sound fixed in the work such that a sample of any sound automatically constitutes infringement. However, a more plausible reading of this provision is that protection in a copyrighted sound recording “do[es] not extend” to sound recordings which, although similar-sounding, do not capture any sounds from the copyrighted sound recording. On this reading, an appropriate implication is that PYOG infringes on BMBH if PYOG both: (1) samples any sound from BMBH; and (2) “imitate[s] or simulate[s]” BMBH.[10]

*1341 Thus, Section 114(b)’s similar-sounding work provision governs the relationship between similar-sounding sound recordings and whether they share captured sound. There is no indication, however, that this provision relates to works which are not similar-sounding or that Congress otherwise sought to abandon the substantial similarity inquiry.[11] Section 114(b)’s legislative history supports this view:

17 U.S.C. § 114, H. Rep. No. 94-1476, p. 106, U.S.Code Cong. & Admin.News 1976, pp. 5659, 5721 (emphasis added).

In sum, Section 114(b) does not seem to support the distinction between sound recordings and all other forms of copyrightable work that the Bridgeport court imposes. Apart from its reading of the statute, the Bridgeport court proffers a variety of policy-based arguments for treating sound recordings differently than other copyrightable work. See Bridgeport, 410 F.3d at 800-05. The Bridgeport court’s policy prescriptions, however accurate they may be, do not present grounds for this Court to follow its direction. Therefore, the Court will grant Defendants’ motion and deny Saregama’s motion on this issue.

C. Saregama’s Motion for Voluntary Dismissal

Saregama seeks dismissal of its music composition infringement claim against the WB-Universal Defendants on the condition that each party bear its own fees. However, Saregama has not demonstrated why the Court should preclude the WB-Universal Defendants from even attempting to prove an entitlement to fees on the musical composition claim. While the Court makes no decision on whether the WB-Defendants are entitled to fees on the musical composition claim, it will grant Saregama’s motion for voluntary dismissal with prejudice without addressing any issue that would bear on the WB-Universal Defendants’ opportunity or right to seek fees. If the WB-Universal Defendants believe *1342 it is a wise of their and the Court’s limited resources to seek fees in this case, they can do so.

V. Conclusion

As discussed above, the Court will grant Defendants’ motion and deny Saregama’s motion as to the ownership issue because the 1967 Agreement confers no more than a license to exploit Shakti’s pre-recorded songs and there is no evidence from which a reasonable jury could conclude that the BMBH sound recording was created during the term of the Agreement or that copyrights in the BMBH sound recording were subsequently conveyed to Saregama. Further, although the Court will deny Defendants’ motion as to the originality issue, it will grant Defendants’ motion as to the substantial similarity issue and deny Saregama’s motion because no reasonably jury, properly instructed, could find that the two songs are similar. Because the Court finds Defendants’ motion dispositive on both elements of Saregama’s prima facie infringement case, it need not consider the individual motions of Defendants G-Unit and Desperado Entertainment. Accordingly, it is hereby

ORDERED that:

(1) Defendants’ Motion for Summary Judgment [DE 176] is GRANTED.

(2) Saregama’s Motion for Summary Judgment [DE 181] is DENIED.

(3) Saregama’s Motion for Voluntary Dismissal [DE 148] is GRANTED IN PART. The musical composition claim against the WB-Universal Defendants is DISMISSED WITH PREJUDICE.

(4) All pending motions not otherwise ruled upon are DENIED AS MOOT.

(5) This case is CLOSED.

[1] Unlike musicians who performed at Gramophone’s pleasure, Gramophone lacked creative control over and authorship of prerecorded songs. Therefore, to protect Gramophone against any subsequent actions by a rogue producer or other third party claiming rights in the pre-recorded songs, Shakti agreed to indemnify Gramophone:

[Shakti] agree[s] to indemnify [Gramophone] and keep [Gramophone] indemnified from and against all actions, claims and damages in which [Gramophone] may be incurred by reason of such re-recording and subsequent manufacture, issue and sale of gramophone records derived from sound tracks or recorded tapes supplied by [Shakti] as aforesaid.

(See Agreement ¶ 4.)

[2] The Indian Copyright Act of 1957 defines a “plate” as:

[A]ny stereotype or other plate, stone, block, mould, matrix, transfer, negative, [duplicating equipment] or other device used or intended to be used for printing or reproducing copies of any work, and any matrix or other appliance by which sound recording for the acoustic presentation of the work are or are intended to be made.

Indian Copyright Act (“ICA”) Chapter 1, Section 2(t).

[3] The Agreement allows Gramophone to extend the term to January 15, 1970 upon written notice to Shakti, before the expiration of the original term. (See id. ¶ 12.)

[4] According to Ramji, Gramco held all of Gramophone’s copyrights until the two firms merged in 2000. (See Ramji Decl. ¶¶ 12-14.) That same year, Gramophone changed its name to Saregama. (See id. ¶ 15.)

[5] Because the Court will grant Defendants’ motion on ownership and substantial similarity grounds, it need not address the arguments made in Defendants G-Unit and Desperado’s individual motions.

[6] See also Triple Tee Golf, Inc. v. Nike, Inc., 2007 WL 4260489 *24 (N.D.Tex. August 10, 2007) (explaining that Imperial Residential does not apply to cases in which assignor and assignee are not joined as plaintiffs).

[7] In past cases, the Eleventh Circuit used a substantial similarity inquiry which involves “extrinsic” and “intrinsic” tests developed in the Ninth Circuit. See, e.g., Herzog v. Castle Rock Entm’t, 193 F.3d 1241 (11th Cir.1999). However, the “extrinsic” and “intrinsic” distinction has been eschewed in favor of a single, distilled inquiry. See Oravec v. Sunny Isles Luxury Ventures, L.C., 527 F.3d 1218, 1224 n. 5 (11th Cir.2008) (“we believe that the Herzog formulation is not useful in this case because the two tests ultimately merge into a single inquiry: whether a reasonable jury could find the competing designs substantially similar at the level of protected expression”).

[8] The Bridgeport court first quoted Section 106 and the general limiting provision of Section 114(a):

Our analysis begins and largely ends with the applicable statute. Section 114(a) of Title 17 of the United States Code provides:

The exclusive rights of the owner of copyright in a sound recording are limited to the rights specified by clauses (1), (2), (3) and (6) of section 106, and do not include any right of performance under section 106(4).

Section 106 provides:

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) 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;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works to 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, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Bridgeport, 410 F.3d at 799-800 (citing 17 U.S.C. §§ 106, 114(a)).

[9] Moving to Section 114(b), the Bridgeport court focused on two specific provisions, one dealing with derivative works and the other with similar-sounding works:

Section 114(b) provides that ”[t]he exclusive right of the owner of copyright in a sound recording under clause (2) of section 106 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.” Further, the rights of sound recording copyright holders under clauses (1) and (2) of section 106 “do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording.” 17 U.S.C. § 114(b) (emphasis added). The significance of this provision is amplified by the fact that the Copyright Act of 1976 added the word “entirely” to this language. Compare Sound Recording Act of 1971, Pub.L. 92-140, 85 Stat. 391 (Oct. 15, 1971) (adding subsection (f) to former 17 U.S.C. § 1) (“does not extend to the making or duplication of another sound recording that is an independent fixation of other sounds”). In other words, a sound recording owner has the exclusive right to “sample” his own recording. We find much to recommend this interpretation.

Id. at 800-01.

[10] For example, if Timothy Mosley performed a live rendition of BMBH using a background sample of the BMBH sound recording in which Saregama indeed held copyrights, then fixed his performance in a sound recording called PYOG, Mosley’s sound recording would infringe on Saregama’s sound recording copyright because his PYOG sound recording both: (1) does not “consist[] entirely of an independent fixation of other sounds”; and (2) it “imitate[s] or simulate[s] those [sounds] in the copyrighted sound recording.” 17 U.S.C. § 114(b). By contrast, if Mosley performed a live rendition of BMBH without a background sample of Saregama’s BMBH sound recording, then fixed his performance in a sound recording called PYOG, then, despite the fact that PYOG “imitate[s] or simulate[s]” BMBH, Mosley does not infringe on Saregama’s purported copyright because he has not sampled any sound from the BMBH sound recording. Id. In neither case, however, does the similar-sounding work provision govern where Mosley samples a snippet of the BMBH sound recording in a work that is not substantially similar. Therefore, if Mosley samples a one-second snippet of BMBH in PYOG, the Court must still inquire into whether PYOG and BMBH are substantially similar before it can hold that Mosley infringed on any BMBH copyright.

[11] Professor Nimmer concurs:

[The Bridgeport court’s] conclusion rests on a logical fallacy. By validating entire sound-alike recordings, the quoted sentence contains no implication that partial sound duplications are to be treated any differently from what is required by the traditional standards of copyright law-which, for decades prior to adoption of the 1976 Act and unceasingly in the decades since, has included the requirement of substantial similarity.

4-13 Nimmer on Copyright § 13.03.

§ 412. Registration as prerequisite to certain remedies for infringement

In any action under this title, other than an action brought for a violation of the rights of the author under section 106A (a), an action for infringement of the copyright of a work that has been preregistered under section 408 (f) before the commencement of the infringement and that has an effective date of registration not later than the earlier of 3 months after the first publication of the work or 1 month after the copyright owner has learned of the infringement, or an action instituted under section 411(c);, no award of statutory damages or of attorney’s fees, as provided by sections 504 and 505, shall be made for—

(1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or

(2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.

§ 504. Remedies for infringement: Damages and profits

(a) In General.— Except as otherwise provided by this title, an infringer of copyright is liable for either—

(1) the copyright owner’s actual damages and any additional profits of the infringer, as provided by subsection (b); or

(2) statutory damages, as provided by subsection (c).

(b) Actual Damages and Profits.— The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.

(c) Statutory Damages.—

(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. The court shall remit statutory damages in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use under section 107, if the infringer was:

(i) an employee or agent of a nonprofit educational institution, library, or archives acting within the scope of his or her employment who, or such institution, library, or archives itself, which infringed by reproducing the work in copies or phonorecords; or

(ii) a public broadcasting entity which or a person who, as a regular part of the nonprofit activities of a public broadcasting entity (as defined in subsection (g) of section 118) [1] infringed by performing a published nondramatic literary work or by reproducing a transmission program embodying a performance of such a work.

(3)

(A) In a case of infringement, it shall be a rebuttable presumption that the infringement was committed willfully for purposes of determining relief if the violator, or a person acting in concert with the violator, knowingly provided or knowingly caused to be provided materially false contact information to a domain name registrar, domain name registry, or other domain name registration authority in registering, maintaining, or renewing a domain name used in connection with the infringement.

(B) Nothing in this paragraph limits what may be considered willful infringement under this subsection.

(C) For purposes of this paragraph, the term “domain name” has the meaning given that term in section 45 of the Act entitled “An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes” approved July 5, 1946 (commonly referred to as the “Trademark Act of 1946”; 15 U.S.C. 1127).

(d) Additional Damages in Certain Cases.— In any case in which the court finds that a defendant proprietor of an establishment who claims as a defense that its activities were exempt under section 110(5) did not have reasonable grounds to believe that its use of a copyrighted work was exempt under such section, the plaintiff shall be entitled to, in addition to any award of damages under this section, an additional award of two times the amount of the license fee that the proprietor of the establishment concerned should have paid the plaintiff for such use during the preceding period of up to 3 years.

[1] See References in Text note below.

830 N.E.2d 250

4 N.Y.3d 540

CAPITOL RECORDS, INC., Appellant,
v.
NAXOS OF AMERICA, INC., Respondent.

Court of Appeals of New York.

April 5, 2005.

[252] Mayer, Brown, Rowe & Maw LLP, New York City (Philip Allen Lacovara and Todd Lundell of counsel), and Kaplan & Levenson LLP (Paul R. Levenson of counsel) for appellant.

Schiff Hardin, LLP, New York City (Maxim H. Waldbaum, Lori D. Greendorfer and John Becker of counsel), for respondent.

Loeb & Loeb LLP, New York City (Barry I. Slotnick and Eleanor M. Lackman of counsel), and Stanley Pierre-Louis, Washington, D.C., for Recording Industry Association of America, amicus curiae.

OPINION OF THE COURT

GRAFFEO, J.

Sound recordings produced after February 15, 1972 can be protected from infringement under federal copyright law but Congress did not extend statutory protection to recordings created before that date. In a certified question, the United States Court of Appeals for the Second Circuit asks us whether there is common-law copyright protection in New York for sound recordings made prior to 1972.

This case involves a dispute between two music recording companies. Capitol Records, Inc. owns the rights to several classical recordings made in the 1930s. Naxos of America, Inc. copied those recordings from the original shellac record format and, using technological advances, remastered the recordings for sale to the public as compact discs. Naxos did not request permission from Capitol to use the recordings. The issue here is whether Capitol may maintain a copyright infringement action against Naxos premised on the common law of New York. Because the answer to this question will have significant ramifications for the music recording industry, as well as these litigants, we were offered and accepted certification.

I. Factual and Procedural Background

During the 1930s, the Gramophone Company Limited, currently known as EMI Records Limited — the parent company of Capitol — recorded classical musical performances of three world-renowned artists: Yehudi Menuhin's July 1932 performance of Edward Elgar's "Violin Concerto in B minor, Opus 61"; Pablo Casals' performances of J.S. Bach's cello suites, recorded between November 1936 and June 1939; and Edwin Fischer's performances of Bach's "The Well Tempered Clavier, Book I," recorded between April 1933 and August 1934, and of Bach's "The Well Tempered Clavier, Book II," recorded between February 1935 and June 1936. The artists' contracts specified that Gramophone would have absolute, worldwide rights to the performances, including the right to reproduce and sell copies of the performances to the public.

[253] Gramophone recorded all of the performances in England. At that time, the United Kingdom provided statutory copyright protection to sound recordings for 50 years (see UK Copyright Act of 1911, 1 & 2 Geo. 5, ch. 46, § 19). Thus, all of the Gramophone recordings at issue had entered the public domain in the United Kingdom by 1990.

In 1996, subsidiaries of EMI entered into a series of agreements whereby Capitol was granted an exclusive license to exploit the Gramophone recordings in the United States. Using modern electronic methods, Capitol remastered the original recordings to improve their audio quality and transferred them to digital format for sale to the public.

Naxos also wished to preserve these important historical recordings. It located copies of the original 1930s shellac recordings and undertook its own multistep restoration process in the United Kingdom. The remastered compact disc versions produced by Naxos were distributed for sale in the United States beginning in 1999, competing with the compact disc products marketed by Capitol. Naxos never obtained a license from Capitol and rebuffed Capitol's demand to cease and desist the sale of the Naxos compact discs.

Capitol commenced an action against Naxos in the United States District Court for the Southern District of New York in 2002. The complaint set forth claims of common-law copyright infringement, unfair competition, misappropriation and unjust enrichment, all of which were premised on the law of the State of New York, the situs of the alleged infringement. Naxos moved to dismiss for failure to state a claim, arguing that the recordings had entered the public domain in the United Kingdom and, hence, the United States as well. Capitol moved for, among other relief, partial summary judgment on liability.

The District Court granted summary judgment to Naxos. The court characterized Capitol's cause of action as a "hybrid copyright, unfair competition" claim and concluded that Capitol did not have intellectual property rights in the original recordings because its copyrights had expired in the United Kingdom. (262 F.Supp.2d 204, 210 [2003].) With respect to the unfair competition cause of action, the District Court opined that the Naxos recordings were not a "duplicate" or "imitation" of the original recordings but "an entirely new and commercially viable product" because the original shellac records were obsolete and Naxos had removed "numerous sound imperfections" from the records. (Id. at 213, 214.) Finding that public policy favored the preservation and redissemination of classical performances, the court held that Capitol failed to show that Naxos had engaged in the type of bad faith required to sustain an unfair competition cause of action. In a second written decision, the court adhered to its ruling.^[1]

On appeal, the Second Circuit determined that this case raises several unsettled issues of New York law. After noting that, under federal law, "it is entirely up to New York to determine the scope of its common law copyright with respect to pre-1972 sound recordings," the Second Circuit certified the following question to this Court: "In view of the District Court's assessment of the undisputed facts, but without regard to the issue of abandonment, is Naxos entitled to defeat Capitol's claim for infringement of common law [254] copyrights in the original recordings?" (372 F.3d 471, 478, 484 [2004].) We are also asked to answer three questions:

"(1) ‘Does the expiration of the term of a copyright in the country of origin terminate a common law copyright in New York?' (2) `Does a cause of action for common law copyright infringement include some or all of the elements of unfair competition?' (3) `Is a claim of common law copyright infringement defeated by a defendant's showing that the plaintiff's work has slight if any current market and that the defendant's work, although using components of the plaintiff's work, is fairly to be regarded as a "new product"?'" (Id. at 484-485.)

II. English Copyright Law

Because of the close connection between the evolution of copyright protection in England and the American adaptation of copyrights, it is helpful to examine the historical roots of property rights in tangible intellectual products (see generally Eldred v. Ashcroft, 537 U.S. 186, 200, 123 S.Ct. 769, 154 L.Ed.2d 683 [2003] [when examining copyright law, "`a page of history is worth a volume of logic'"], quoting New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963 [1921] [Holmes, J.]).

With the introduction of the printing press in England in the 15th century, a commercial interest in written works was born. It was, however, not authors but printers and publishers who initially sought to control the right to publish literary works (see Patterson, Copyright in Historical Perspective, at 6, 21). The concept of an exclusive right to reproduce works sprang from the commercial objectives of stationers or printers who wished to create a monopoly over the printing trade (see id. at 28-64). At the same time, the Crown had an interest in maintaining censorship authority over the press. Thus, the granting of an exclusive right to reproduce printed materials served the government's desire to control the flow and content of information, and supported the economic viability of the printers' trade guild (see id. at 223). This symbiotic relationship gave rise to early English copyright laws, such as those issued by the Star Chamber in its Decrees of 1586 and 1637, which reflected trade and guild regulations that assisted in preserving government censorship (see id. at 6, 9-11, 121, 125).

After the abolition of the Star Chamber in 1641 and the civil war between the Crown and Parliament, English law began to recognize an author's natural property right to control the dissemination of a literary creation (see id. at 160-162; see also 2 Blackstone, Commentaries on the Laws of England, at 405-406 [1769]; Millar v. Taylor, 98 Eng. Rep. 201, 257, 4 Burr 2303, 2406-2407 [KB 1769] [Mansfield, L.C.J.] [discussing the "uniform()" decisions of the Chancery Court]; 98 Eng. Rep. at 212, 4 Burr at 2323 [Willes, J.] [same]). Parliament's passage of the Statute of Anne in 1709 (8 Anne ch. 19) signaled an attempt to end government censorship and trade guild monopoly. It broadened the concept of copyrights to include the ability of an author to decide whether a literary work would be published and disseminated to the public (referred to as the "right of first publication") and, if distributed, how the work would be reproduced in the future. The Statute of Anne vested an author or publisher of a literary work with statutory copyright protection for specified time periods — new works received 14 years of copyright protection (with the possibility of a 14-year renewal) and previously published works were entitled to 21 years of protection (see Patterson, Copyright in Historical Perspective, at 143-150).

[255] In the latter half of the 18th century, a recognition emerged that the creation of a literary work should vest rights in its author similar to the ownership rights in perpetuity associated with other forms of tangible property. The common law embraced this concept of ownership for literary works (see 2 Blackstone, Commentaries on the Law of England, at 405-406). This caused a "great question of literary property" to arise (Proceedings in the Lords on the Question of Literary Property, 17 Parliamentary History of England, at 953, 953-954 n. [HL 1774]): did the Statute of Anne supplant the common law or did it provide additional rights and remedies that coexisted with the common law?

The first definitive ruling on this question appears in Millar v. Taylor (98 Eng. Rep. 201, 4 Burr 2303 [KB 1769]). Millar, a bookseller, had purchased the rights to a certain book from its author. The dispute involved the unauthorized reproduction of the book by another publisher after copyright protection extended by the Statute of Anne had expired. The primary issues were whether common-law rights continued to exist in perpetuity after the first publication of a literary work and, if so, whether the Statute of Anne had abrogated the perpetual common-law copyright. In a 3-1 decision in favor of the bookseller, the court of King's Bench concluded that the common law furnished perpetual copyright protection that did not terminate upon the first publication of a literary work. More importantly, the Statute of Anne was viewed as not extinguishing common-law protections (see 98 Eng. Rep. at 252-253, 4 Burr at 2398-2399 [Mansfield, L.C.J.]; see also Patterson, Copyright in Historical Perspective, at 168-172).

Several years later, however, the House of Lords reached a different result in the seminal case of Donaldson v. Beckett (4 Burr 2408; 17 Parliamentary History of England, at 953 [HL 1774]). Relying on the Millar precedent, the Chancery Court had granted an injunction against the sale of an unauthorized reproduction of a literary work even though the work was not entitled to protection under the Statute of Anne. Given the importance of the issues presented, the House of Lords sought advisory opinions from 12 judges on five questions.^[2] The judges were asked to rule on whether the common law recognized the right of first publication; and if perpetual protection existed in common law for literary works, whether the Statute of Anne operated to curtail that protection.^[3]

[256] The judges determined that the common law recognized a right of first publication (see Donaldson v. Beckett, 4 Burr at 2417 [vote was 8-3]; cf. Patterson, Copyright in Historical Perspective, at 175 [vote was 10-1]) and that the common-law copyright protection extended beyond first publication into perpetuity (see Donaldson v. Beckett, 4 Burr at 2417 [vote was 7-4]). By a 6-5 margin, the judges disagreed with the Millar court and concluded that the Statute of Anne was intended to abrogate the common law with respect to the duration of copyright protection (see id.). Applying the restrictions of the Statute of Anne, the House of Lords reversed and rescinded the injunction (see id.; Proceedings in the Lords on the Question of Literary Property, 17 Parliamentary History of England, at 958 n.).^[4] The supremacy of statutory time limitations for copyright protection was now firmly established in English law.

III. Development of American Copyright Law

We enter the colonial era in America. In the midst of the Revolutionary War and transformation of the British colonies into independent states and commonwealths, it was generally presumed that colonial common law, derived from English law, should be applied as long as it was consistent with the acts of the colonial legislatures. Notably, preservation of existing common law was addressed in the first Constitution of the State of New York (see N.Y. Const. art. XXXV [1777] [renumbered as article I, § 14 and amended by Constitutional Convention of 1938]). Our Founders were aware that there was common-law copyright protection in England, as evidenced in James Madison's writings, which observed that "[t]he copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law" (Madison, Federalist No. 43).

Similar to the British experience, the new states responded to the needs of authors and publishers by adopting statutory copyrights. Using the Statute of Anne as a model, Connecticut, followed by Massachusetts and Maryland, enacted statutes assuring copyright protection for between 14 and 28 years following first publication (see Library of Congress, Copyright Enactments, 1783-1900, at 9-14). Soon [257] thereafter, the Colonial Congress (operating under the Articles of Confederation) recommended that each state pass legislation providing at least 14 years of copyright protection after first publication (id. at 9). Twelve of the 13 original states would eventually heed this call (see id. at 14-29; Nachbar, Constructing Copyright's Mythology, 6 Green Bag 2d 37, 38 [Autumn 2002]). When the New York Legislature acted, it contemplated the existence of common-law copyright protections separate from statutory rights: "nothing in this act, shall extend to effect prejudice, or confirm the rights, which any person may have, to the printing or publishing of any book or pamphlet, at common law, in cases not mentioned in this act" (L. 1786, ch. 54, § IV).

As the drafting of the national Constitution was underway, the Founders decided that federal copyright protection would be more effective and desirable than leaving the matter to the discretion of the states (see Madison, Federalist No. 43; Patterson, Copyright in Historical Perspective, at 192-193). In fact, the need for "national protection for intellectual property seems to have been accepted at first and full impression by both the [Constitutional] Convention and the states adopting the Constitution" (Sutak, The Great Motion Picture Soundtrack Robbery, at xiii-xiv [1976]). This fundamental belief in the need for uniform copyright protection led to the constitutional provision vesting Congress with the "Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries" (U.S. Const., art. I, § 8[8]). When the first Congress convened under the authority of the new Constitution, it enacted America's first federal copyright statute — the Copyright Act of 1790. The Act provided the author "of any map, chart, book or books," or the author's assignee, the exclusive "right and liberty of printing, reprinting, publishing and vending such map, chart, book or books" for up to 28 years (Act of May 31, 1790 § 1 [1st Congress, 2d Sess., ch. 15], 1 U.S. Stat. 124, reprinted in Library of Congress, Copyright Enactments, 1783-1900, at 30-32).

The American counterpart to Millar and Donaldson reached the United States Supreme Court in the case of Wheaton v. Peters, 8 Pet [33 U.S.] 591, 8 L.Ed. 1055 [1834]. The plaintiff, who had been the third official reporter for the United States Supreme Court, invoked statutory and common-law copyright claims to prevent his successor from copying and republishing material contained in the volumes published by the first three official reporters (see Patterson, Copyright in Historical Perspective, at 203). The Supreme Court, with two Justices dissenting, remanded for factual determinations on the statutory copyright claim but held that Wheaton could not maintain a common-law copyright cause of action. The majority and dissenting opinions extensively debated the impact of Millar and Donaldson on colonial copyright law. The majority acknowledged that the common law insured copyright protection prior to publication but believed that in the absence of federal common law under our constitutional system, a party seeking common-law protection must look to the state where the controversy arose (see Wheaton v. Peters, 8 Pet [33 U.S.] at 658).

The lasting effect of the Wheaton decision was that it "became accepted, and in most cases unquestioned, doctrine that ... it was the act of publication which divested common law rights" (1 Nimmer on [258] Copyright § 4.02[C], at 4-17).^[5] New York courts also adhered to this view with regard to literary works, declaring the "settled" principle that "a statutory copyright operates to divest a party of the common-law right" (Jewelers' Mercantile Agency v. Jewelers' Weekly Publ. Co., 155 N.Y. 241, 247, 49 N.E. 872 [1898]; see e.g. Palmer v. De Witt, 47 N.Y. 532, 536 [1872]).

With the dawn of the 20th century, courts throughout the country were confronted with issues regarding the application of copyright statutes, which were created with sole reference to the written word, to new forms of communication. One of the first such challenges involved music. In White-Smith Music Publ. Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct. 319, 52 L.Ed. 655 [1908], the United States Supreme Court was asked to determine whether the federal Copyright Act encompassed perforated rolls of music used in player pianos.^[6] Although acknowledging that the federal statute had been amended as far back as 1831 to include "musical composition[s]," the Court believed that only written works that could be "see[n] and read" met the requirement for filing with the Library of Congress — a prerequisite to securing federal copyright protection (id. at 17, 28 S.Ct. 319). Because the music rolls were incapable of being read by a person, the Court concluded that federal statutory protection for "copies or publications of the copyrighted music" did not extend to music rolls (id. at 18, 28 S.Ct. 319).

Following the White-Smith decision, Congress passed the Copyright Act of 1909. Since the Supreme Court had declared that player piano rolls and, by implication, sound recordings could not be "published" (i.e., read by a person) under federal law, Congress did not include audio musical works within the scope of the statute (see Keller and Cunard, Copyright Law: A Practitioner's Guide § 1:3:1, at 1-18 [Aug.2004]). Despite the fact that sound recordings could not be "published" under federal law, they were eligible for state common-law protection (see Wheaton v. Peters, 8 Pet [33 U.S.] at 687 [Thompson, J., dissenting]). To insure that the 1909 Act would not be interpreted to deny any existing common-law protection, Congress explicitly stated that the Act "shall [not] be construed to annul or limit the right of the author or proprietor of an unpublished work, at common law or in equity, to prevent the copying, publication, or use of such unpublished work without his consent, and to obtain damages therefor" (17 USC § 2, added by 35 U.S. Stat 1076 [1909]). Congress therefore confirmed that, although sound recordings were not protected under federal law, there was nothing to prevent the states from guaranteeing copyright protection under common law.

State courts then had to deal with the operation of this dual system of copyright protection. In Waring v. WDAS Broadcasting Sta., 327 Pa. 433, 194 A. 631 [1937], the plaintiff, a conductor and owner of an orchestra, had contracted with a phonograph company to produce recordings of the orchestra's performances to be sold to phonograph dealers and the public. To avoid interfering with a different contract the orchestra had for weekly radio broadcasts [259] of live performances, the record labels contained a printed warning that they were "[n]ot licensed for radio broadcast." (327 Pa. at 436, 194 A. at 633.) The plaintiff sued to prevent the owner of a radio station from broadcasting the recorded performances over the airwaves.

The Supreme Court of Pennsylvania found that the records were protected by state common law. Beginning with the premise that sound recordings were not copyrightable under federal law, the court explained:

"[a]t common law, rights in a literary or artistic work were recognized on substantially the same basis as title to other property. Such rights antedated the original copyright act of 8 Anne c. 19, and, while it has been uniformly held that the rights given by the act supersede those of the common law so far as the act applies ... the common-law rights in regard to any field of literary or artistic production which does not fall within the purview of the copyright statute are not affected thereby" (327 Pa. at 439, 194 A. at 634).

The court declared that a performer who transforms a musical composition into a sound product creates "something of novel intellectual or artistic value [and] has undoubtedly participated in the creation of a product in which he is entitled to a right of property" (327 Pa. at 441, 194 A. at 635). Even if the common law offered protection to sound recordings only to the point of first publication, the court held that the sale of records was not a publication of the work that operated to divest the orchestra of its common-law property right because the phonograph records had been marked "[n]ot ... for radio broadcast," which indicated that the manufacturer did not intend, by the sale alone, to make the records the "`common property'" of the public (327 Pa. at 443, 194 A. at 636, quoting American Tobacco Co. v. Werckmeister, 207 U.S. 284, 300, 28 S.Ct. 72, 52 L.Ed. 208 [1907]).

A similar dispute arose in New York in Metropolitan Opera Assn. v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y.S.2d 483 [Sup.Ct., N.Y. County 1950], affd. 279 App.Div. 632, 107 N.Y.S.2d 795 [1st Dept.1951]. The plaintiff's operatic performances had been broadcast on radio and records of the performances were sold to the public. The defendant copied those performances and created its own records for sale. In granting an injunction preventing the sale of the defendant's records, the trial court observed that "[a]t common law the public performance of a play, exhibition of a picture or sale of a copy of the film for public presentation did not constitute an abandonment of nor deprive the owner of his common-law rights" (199 Misc. at 798, 101 N.Y.S.2d 483). Far from expressing an intent to commit intellectual property to the public domain, the court determined that an owner who grants exclusive rights to record a performance to a particular company "shows clearly no intent to abandon but, on the contrary, an attempt to retain effective control over the ... recording of its performances" (id. at 799, 101 N.Y.S.2d 483). Thus, the court characterized the public sale of a sound recording as a "limited publication" that did not divest a composer or artist of common-law copyright protection (id.).

A contrary view was initially expressed by the Second Circuit in RCA Mfg. Co. v. Whiteman, 114 F.2d 86 [2d Cir.1940], cert. denied 311 U.S. 712, 61 S.Ct. 393, 394, 85 L.Ed. 463 [1940]. The court concluded that the sale of a record to the public is a general publication that ends common-law copyright protection. But the Second Circuit reconsidered this rule after Metropolitan Opera and subsequently stated that RCA Mfg. was "not the law of the State of [260] New York" (Capitol Records v. Mercury Records Corp., 221 F.2d 657, 663 [2d Cir.1955]). Instead, the court announced that the appropriate governing principle was that "where the originator, or the assignee of the originator, of records of performances by musical artists puts those records on public sale, his act does not constitute a dedication of the right to copy and sell the records" (id.).^[7] Capitol Records v. Mercury Records was consistent with the long-standing practice of the federal Copyright Office and became the accepted view within the music recording industry (see 1 Nimmer on Copyright § 4.05[B][4], at 4-35; Bailey, Phonorecords and Forfeiture of Common-Law Copyright in Music, 71 Wash. L. Rev. 151, 157 [Jan.1996]; Kaplan, Publication in Copyright Law: The Question of Phonograph Records, 103 U. Pa. L. Rev. 469, 472 [Jan.1955]).

The Waring, Metropolitan Opera and Capitol Records decisions may appear to conflict with the accepted principle that a public sale of a literary work is a "general publication" terminating a common-law copyright, and any copyright protection thereafter must be derived from statute. But the historical distinction in the treatment of literary and musical works by Congress accounts for the lack of federal statutory copyright protection for sound recordings. In the absence of protective legislation, Congress intended that the owner of rights to a sound recording should rely on the "broad and flexible" power of the common law to protect those property rights after public dissemination of the work. As Metropolitan Opera so aptly observed more than five decades ago, the common law "has allowed the courts to keep pace with constantly changing technological and economic aspects so as to reach just and realistic results" (199 Misc. at 799, 101 N.Y.S.2d 483).

In recent times, state legislatures have found common-law remedies inadequate to deter the widespread prevalence of "music piracy." By the 1970s, the technological ease of reproducing existing recordings for resale without securing authorization had motivated about one half of the state legislatures, including New York (see Penal Law former § 441-c [L. 1966, ch. 988]), to adopt criminal statutes prohibiting such piracy (see HR Rep. No. 94-1476, 94th Cong., 2d Sess., at 133, reprinted in 1976 U.S.Code Cong. & Admin. News, at 5659, 5749). Spurred by the action of the states, Congress finally responded in 1971 and amended the Copyright Act of 1909 to expressly include "[s]ound recordings" within the classes of artistic and intellectual works entitled to federal copyright protection (17 USC § 5[n], added by Pub L. 92-140, 85 U.S. Stat 391 [Act of Oct. 15, 1971]). But the 1971 amendments were prospective only, so recordings created before February 15, 1972 — the effective date of the amendment — were not protected by federal law (see Pub. L. 92-140 § 3 [1971]). During the drafting of the amendment, debate arose concerning the scope of protection to be afforded to pre-1972 sound recordings. Both the Senate and the House of Representatives recognized that decisional law had allowed sound recordings to be "protected by State statute or common law" (see HR Rep. No. 94-1476, 94th Cong., 2d Sess., at 133, reprinted in 1976 U.S.Code Cong. & Admin. News, at 5659, 5749). The Senate was content to permit the states to provide perpetual protection to pre-1972 sound recordings, but the House objected (see id.). The two houses eventually reached a compromise, [261] deciding that existing state common-law copyright protection for pre-1972 recordings would not be preempted by the new federal statute until February 15, 2047 — 75 years after the effective date of the 1971 amendment (see 17 USC § 301[c] [1976]).^[8]

The 1971 amendments raised new problems for the music recording industry. Because the status of pre-1972 sound recordings was a matter left to the states, there was uncertainty as to how claims of copyright infringement would be treated in different jurisdictions. The amendments also did not include a technical definition of the term "publication," which clouded the meaning of that term of art in the recording industry. Finally, there was concern that the amendments could be read as abrogating existing state statutes proscribing music piracy (see HR Rep. No. 94-1476, 94th Cong., 2d Sess., at 133, reprinted in 1976 U.S.Code Cong. & Admin. News, at 5659, 5749).

Initial guidance came from the United States Supreme Court in Goldstein v. California, 412 U.S. 546, 93 S.Ct. 2303, 37 L.Ed.2d 163 [1973]. The defendant, convicted of criminal music piracy, challenged the constitutionality of a California penal statute on the grounds that it conflicted with the Copyright Clause, the Supremacy Clause and the federal Copyright Act by "establish[ing] a state copyright of unlimited duration" (id. at 551, 93 S.Ct. 2303). Rejecting the defendant's claim, the Court noted that "[a]lthough the Copyright Clause... recognizes the potential benefits of a national system, it does not indicate that all writings are of national interest or that state legislation is, in all cases, unnecessary or precluded" (id. at 556-557, 93 S.Ct. 2303). The Court further observed that, because the Constitution does not require Congress to "take affirmative action either to authorize protection of all categories of writings or to free them of all restraint," it was sensible that the states did not relinquish all power to provide copyright protection (id. at 560, 93 S.Ct. 2303).

The Supreme Court also acknowledged that the states were free to act with regard to sound recordings precisely because Congress had not, and in the absence of conflict between federal and state law, the Supremacy Clause was not a barrier to a state's provision of copyright protection to a work not covered under federal copyright law (see id. at 569-570, 93 S.Ct. 2303). Nor did the Court find fault with the perpetual nature of California's copyright (see id. at 560-561, 93 S.Ct. 2303). Rejecting the defendant's "publication" argument, the Court clarified that

"[f]or purposes of federal law, `publication' serves only as a term of the art which defines the legal relationships which Congress has adopted under the federal copyright statutes. As to categories of writings which Congress has not brought within the scope of the federal statute, the term has no application" (id. at 570 n. 28, 93 S.Ct. 2303).

The effect of Goldstein was more than an affirmation of the states' right to enact criminal laws prohibiting music piracy. Its rationale clearly deviated from the Wheaton view — that publication divests common-law rights even in the absence of statutory protection. Instead, the Court relied on the rule that state common-law copyright protection can continue beyond the technical definition of publication in the absence of contrary statutory authority [262] (see 1 Nimmer on Copyright § 4.02[C], at 4-17 n. 23).

In the aftermath of Goldstein, Congress rectified some of the problems that erupted with the 1971 amendment of the Copyright Act. A major revision and restructuring of the Act occurred in 1976 and took effect in 1978. Included among the amendments was a statutory definition of "publication," now defined to include "the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership" (17 USC § 101). This definition applied prospectively only, thereby continuing to exclude pre-1972 recordings from the scope of the statute. Congress again left to the states the decision how to handle the meaning and effect of "publication" for pre-1972 sound recordings.

The music industry's belief that state common law could provide copyright protection for pre-1972 recordings (until the date of federal preemption), without regard to the "publication" or sale of recordings, was undermined by the Ninth Circuit in La Cienega Music Co. v. ZZ Top, 53 F.3d 950 [9th Cir.1995], cert. denied 516 U.S. 927, 116 S.Ct. 331, 133 L.Ed.2d 231 [1995]. This controversy pitted the owner of certain John Lee Hooker recordings against the band ZZ Top, which allegedly performed a top-selling song that was similar to earlier performances by Hooker. ZZ Top defended on the ground that any common-law protection was extinguished when the Hooker recordings were "published," i.e., released for sale to the public. This contention challenged the Second Circuit holdings in Capitol Records, 221 F.2d 657 [1955] and Rosette, 546 F.2d 461 [1976] — the only other United States Court of Appeals to have addressed the issue. The defendants in La Cienega were successful in convincing the Ninth Circuit not to adopt the rationale of the Second Circuit, and the court therefore held that public sale of a pre-1972 sound recording is a publication that divests the owner of common-law copyright protection.

La Cienega was criticized in Congress as exposing pre-1972 sound recordings to unauthorized uses and as "overturn[ing] nearly 90 years of [precedential] decisions" (143 Cong. Rec. H9882-01 [statement of Rep. Coble]). It was estimated that the ruling, if allowed to stand, would cause musicians, composers and publishers to lose over a billion dollars in annual revenue (see id. [statement of Rep. Delahunt]). Congress reacted to La Cienega by amending section 303 of the federal Copyright Act to clarify that "[t]he distribution before January 1, 1978, of a phonorecord shall not for any purpose constitute a publication of the musical work embodied therein" (17 USC § 303 [b]). After the passage of this amendment, the Ninth Circuit acknowledged that the intent of Congress was to "`restore national uniformity on this important issue by confirming the wisdom of the custom and usage of the affected industries and of the Copyright Office for nearly 100 years'" (ABKCO Music, Inc. v. La-Vere, 217 F.3d 684, 690 [2000] [quoting 143 Cong. Rec. S11301 (statement of Sen. Hatch)], cert. denied 531 U.S. 1051, 121 S.Ct. 655, 148 L.Ed.2d 559 [2000]). Congress had confirmed that sound recordings created before 1972 could be eligible for common-law copyright protection until federal preemption of state law in 2067.

IV. The Scope of Common-Law Copyright Protection in New York

The first New York State Constitution in 1777 permitted the continuation of colonial common law, derived from English common law. One such principle was that the creator of a literary work was entitled [263] to perpetual common-law copyright protection in the absence of abrogation by statute (see Madison, Federalist No. 43; see also Whicher, The Ghost of Donaldson v. Beckett: An Inquiry Into the Constitutional Distribution of Powers Over the Law of Literary Property in the United States, 9 Bull Copyright Socy. 102, 131-143 [1962]; Taubman, Copyright and Antitrust, at 9, 14 [1960]). The State Legislature acted to supplant common-law copyright protection when it passed a statute in 1786 "to promote literature" (L. 1786, ch. 54). The statute restricted the copyright protection an author of a literary work could receive after first publication for up to 28 years (see id.). This statute was superseded by Congress in 1790 when the first national copyright act was enacted (see Act of May 31, 1790, reprinted in Library of Congress, Copyright Enactments, 1783-1900, at 30-32). Consistent with the statutory abrogation rule, this Court established that New York common law would provide copyright protection to a literary work up to the point that federal law governed (see e.g. Jewelers' Mercantile Agency v. Jewelers' Weekly Publ. Co., 155 N.Y. at 247, 49 N.E. 872; see also Palmer v. De Witt, 47 N.Y. at 536; Estate of Hemingway v. Random House, 23 N.Y.2d 341, 346, 296 N.Y.S.2d 771, 244 N.E.2d 250 [1968]).

As earlier discussed, federal copyright statutes in the early 20th century encompassed only written musical compositions, not sound recordings (see White-Smith Music Publ. Co. v. Apollo Co., 209 U.S. at 18, 28 S.Ct. 319). Because the federal Copyright Act did not protect musical recordings, state common law could supply perpetual copyright protection to recordings without regard to the limitations of "publication" under the federal act (see Goldstein v. California, 412 U.S. at 560-561, 570, 93 S.Ct. 2303). It is clear that both the judiciary and the State Legislature intended to fill this void by protecting the owners of sound recordings in the absence of congressional action (see Rosette v. Rainbo Record Mfg. Corp., 546 F.2d 461 [1976]; Capitol Records v. Mercury Records Corp., 221 F.2d 657 [1955]; Metropolitan Opera Assn. v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y.S.2d 483 [1950]; Firma Melodiya v. ZYX Music GmbH, 882 F.Supp. 1306, 1316 n. 14 [S.D.N.Y.1995]; see also Penal Law art. 275; Arts and Cultural Affairs Law § 31.01; General Business Law former § 561 [L. 1967, ch. 680, § 59]; Penal Law former § 441-c [L. 1966, ch. 988]).

With the 1971, 1976 and subsequent congressional amendments to the federal Copyright Act, New York common-law protection of sound recordings has been abrogated, but only in two respects. First, the common law does not apply to any sound recording fixed, within the meaning of the federal act, after February 15, 1972, because recordings made after that date are eligible for federal statutory copyright protection. Second, state common-law copyright protection is no longer perpetual for sound recordings not covered by the federal act (those fixed before February 15, 1972), because the federal act mandates that any state common-law rights will cease on February 15, 2067. The musical recordings at issue in this case, created before February 15, 1972, are therefore entitled to copyright protection under New York common law until the effective date of federal preemption — February 15, 2067.

Even assuming, however, that common-law copyright protection ceases upon "first publication" without regard to the existence of an applicable statute covering the type of literary or artistic work at issue, our common law would continue to [264] protect sound recordings made before 1972.

The evolution of copyright law reveals that the term "publication" is a term of art that has distinct meanings in different contexts. With regard to literary works, it has long been the rule that common-law protection ends when a writing is distributed to the public (see e.g. Palmer v. De Witt, 47 N.Y. at 536; Chamberlain v. Feldman, 300 N.Y. 135, 139, 89 N.E.2d 863 [1949]; Estate of Hemingway v. Random House, 23 N.Y.2d at 345-346, 296 N.Y.S.2d 771, 244 N.E.2d 250) because it is at that point that federal statutory copyright protection controls (see Jewelers' Mercantile Agency v. Jewelers' Weekly Publ. Co., 155 N.Y. at 247, 49 N.E. 872). In contrast, in the realm of sound recordings, it has been the law in this state for over 50 years that, in the absence of federal statutory protection, the public sale of a sound recording otherwise unprotected by statutory copyright does not constitute a publication sufficient to divest the owner of common-law copyright protection (see Rosette v. Rainbo Record Mfg. Corp., 546 F.2d 461 [2d Cir.1976], affg. 354 F.Supp. 1183 [S.D.N.Y.1973]; Capitol Records v. Mercury Records Corp., 221 F.2d at 663; Radio Corp. of Am. v. Premier Albums, Inc., 19 A.D.2d 62, 63-64, 240 N.Y.S.2d 995 [1st Dept.1963]; Gieseking v. Urania Records, 17 Misc.2d 1034, 1035, 155 N.Y.S.2d 171 [Sup.Ct., N.Y. County 1956]; Metropolitan Opera Assn. v. Wagner-Nichols Recorder Corp., 199 Misc. at 799, 101 N.Y.S.2d 483; see also Note, Copyrights — Unfair Competition — Property Right of Performer in Recorded Performance, 7 Air L. Rev. 122, 125 [1936]).^[9]

V. The Certified Questions

Having concluded that the musical recordings here are presumptively entitled to common-law copyright protection in New York, we proceed to address the three subquestions posed by the Second Circuit.

First:"Does the expiration of the term of a copyright in the country of origin terminate a common law copyright in New York?"

When the recordings here were created in England, they received statutory copyright protection in the United Kingdom (UK) for 50 years after the date of creation (see Copyright Act of 1911, 1 & 2 Geo. 5, ch. 46, § 19). As a result, the UK copyrights for all of the recordings expired by the 1990s — years before Naxos's allegedly infringing actions. Naxos argues, and the District Court apparently agreed, that the expiration of the foreign copyrights prevents the enforcement of copyright protections in other jurisdictions, including the United States and New York. We disagree and concur with the [265] Second Circuit's observation that "nothing in federal law denies Capitol enforceable rights in the original recordings simply because the U.K. copyrights have expired" (372 F.3d 471, 480 [2d Cir.2004]).

Under the Federal Constitution, treaties that the United States enters with other countries have the force of federal law and must be respected by the states (see U.S. Const. art. VI[2]). Although the Berne Convention and the Universal Copyright Convention both recognize the "Rule of the Shorter Term," which generally provides that the term of copyright in the nation where a work is first published should be applied by other nations that would grant a longer period of protection, neither treaty applies this rule to sound recordings (see Universal Copyright Convention art. IV[4][a], 25 UST 1341, TIAS No. 7868 [1974]; Berne Convention for the Protection of Literary and Artistic Works art. 7[8], July 24, 1971 [Paris Text], S. Treaty Doc. No. 99-27 [amended 1979]; 4 Nimmer on Copyright § 17.06[A], at 17-48.2). Instead, sound recordings fall within the ambit of the Phonograms Convention but this treaty applies only to recordings fixed after the date it became law (March 10, 1974 in the United States). Furthermore, the Phonograms Convention does not contain a rule of the shorter term (see Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms, arts. 4, 7 [3], 25 UST 309, TIAS No. 7808 [1974]). Nor does the statutory implementation of the Uruguay Round Agreements Act (Pub. L. 103-465, 108 U.S. Stat 4809 [1994]), which appears in 17 USC § 104A, alter the common law with respect to the recordings at issue. That provision restores United States copyright protection to certain public domain works but does not apply to recordings, like those here, that were in the public domain in the country of origin prior to 1996 (see 17 USC § 104A [h][6][B]).

Thus, neither federal statutory nor constitutional law prohibits the states from providing common-law protection to artistic works that are in the public domain in the country of origin (see generally Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192-193 [2d Cir.1985]). Nothing in the statutes of this state or in our jurisprudence suggests such a prohibition is warranted. Indeed, there are indications that the opposite is true (see 1 Nimmer on Copyright § 5.11, at 5-90; see also Rostropovich v. Koch Intl. Corp., 34 USPQ2d 1609, 1614, 1995 WL 104123, *5 [S.D.N.Y.1995]), given that the copyright protection extended by state common law to sound recordings not covered by the federal Copyright Act is similar to the scope of common-law ownership rights in other forms of property, which can exist indefinitely (see generally People ex rel. International Nav. Co. v. Barker, 153 N.Y. 98, 101, 47 N.E. 46 [1897]). Until 2067, no federal or state statutory impediment constricts this common-law durational component for pre-1972 sound recordings. Applying the copyright law of the situs where the infringement occurs (see e.g. Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 89 [2d Cir.1998]), there is no justification under New York law for substituting the British copyright term in place of New York's common-law protection for these recordings, which continues until federal preemption occurs. We therefore answer the first subquestion in the negative because we conclude that New York provides common-law copyright protection to sound recordings not covered by the federal Copyright Act, regardless of the public domain status in the country of origin, if the alleged act of infringement occurred in New York.

[266] Second:"Does a cause of action for common law copyright infringement include some or all of the elements of unfair competition?"

We understand this question to ask whether the District Court was correct to assume that some type of malicious intent or bad faith is a necessary element of a state common-law copyright infringement claim. A copyright infringement cause of action in New York consists of two elements: (1) the existence of a valid copyright; and (2) unauthorized reproduction of the work protected by the copyright (see e.g. L. 1786, ch. 54, § I). To the extent that any inference of deceptive or fraudulent intent may have been referred to in early copyright case law, it appears to have been the view that bad faith was inherent in the act of copying and selling a work without permission from a competitor because this would deprive the true owner of the work's value (see Millar v. Taylor, 98 Eng. Rep. at 203, 4 Burr at 2305; see also Capitol Records, Inc. v. Wings Digital Corp., 218 F Supp 2d 280, 286 [E.D.N.Y.2002]). But fraud or bad faith is not an element of an infringement action in modern New York law (see Chamberlain v. Feldman, 300 N.Y. 135, 89 N.E.2d 863 [1949] [enjoining publication of Mark Twain manuscript on behalf of his estate's trustees in the absence of any indication of fraud or bad faith]).^[10] Copyright infringement is distinguishable from unfair competition, which in addition to unauthorized copying and distribution requires competition in the marketplace or similar actions designed for commercial benefit (see Roy Export Co. Establishment of Vaduz, Liechtenstein v. Columbia Broadcasting Sys., Inc., 672 F.2d 1095, 1105 [2d Cir.1982], cert. denied 459 U.S. 826, 103 S.Ct. 60, 74 L.Ed.2d 63 [1982]; G. Ricordi & Co. v. Haendler, 194 F.2d 914, 916 [2d Cir. 1952]; Capitol Records, Inc. v. Wings Digital Corp., 218 F.Supp.2d at 286; Metropolitan Opera Assn. v. Wagner-Nichols Recorder Corp., 199 Misc. at 793, 101 N.Y.S.2d 483), or deception of the public (see e.g. Shaw v. Time-Life Records, 38 N.Y.2d 201, 206, 379 N.Y.S.2d 390, 341 N.E.2d 817 [1975]). In response to the second subquestion, we hold that the causes of action for copyright infringement and unfair competition are not synonymous under New York law.

Third: "Is a claim of common law copyright infringement defeated by a defendant's showing that the plaintiff's work has slight if any current market and that the defendant's work, although using components of the plaintiff's work, is fairly to be regarded as a `new product'?"

We begin by noting that Naxos does not contend that "market size" or "new product" issues are relevant to the existence of a common-law copyright regarding sound recordings. Its discussion of those terms is limited to the context of an unfair competition cause of action. In any event, the ability to enforce copyright protections provided by New York common law is not diminished due to the size of the market and, therefore, the popularity of a product does not affect a state common-law copyright infringement claim (see generally Nimmer, Copyright in the Dead Sea Scrolls: Authorship and Originality, 38 Hous. L. Rev. 1, 177-179 [Spring 2001]).

[267] Nor do we believe that a state common-law copyright claim can be defeated under the so-called "new product" analysis. We note that the Second Circuit has declared that the "[i]ndependent creation" of a new product "[can]not consist of actual copying" of an entire work (Durham Indus., Inc. v. Tomy Corp., 630 F.2d 905, 910 [2d Cir.1980]). In the related area of the federal "fair use" doctrine, it is a general rule that the reproduction of an entire copyrighted work constitutes infringement (see Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104, 109 [2d Cir.1998], quoting 4 Nimmer on Copyright § 13.05[A][3], at 13-181). We see no justification for adopting a different rule of state law. Thus, even assuming that Naxos has created a "new product" due to its remastering efforts that enhance sound quality,^[11] that product can be deemed to infringe on Capitol's copyright to the extent that it utilizes the original elements of the protected performances. We conclude that the third subquestion should be answered in the negative.

VI. Conclusion

In light of our responses to these inquiries and our conclusion that state common law protects ownership interests in sound recordings made before 1972 that are not covered by the federal Copyright Act, the answer to the main certified question is that, without regard to the issue of abandonment, Naxos is not entitled to defeat Capitol's claim for infringement of common-law copyright in the original recordings. Accordingly, the certified question should be answered in the negative.

Chief Judge KAYE and Judges G.B. SMITH, CIPARICK, ROSENBLATT, READ and R.S. SMITH concur.

Following certification of a question by the United States Court of Appeals for the Second Circuit and acceptance of the question by this Court pursuant to section 500.17 of the Rules of Practice of the Court of Appeals (22 NYCRR 500.17), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question answered in the negative.

[1] The District Court also addressed issues of waiver and abandonment, which are not relevant to the certified question posed to us.

[2] One of the judges was Lord Chief Justice Mansfield, who, as a member of the House of Lords, declined to provide an opinion because of his participation in Millar v. Taylor (4 Burr at 2417).

[3] The texts of the inquiries by the House of Lords were as follows:

1. "Whether, at common law, an author of any book or literary composition, had the sole right of first printing and publishing the same for sale, and might bring an action against any person who printed, published, and sold the same without his consent?"

2. "If the author had such right originally, did the law take it away upon his printing and publishing such book or literary composition, and might any person afterward reprint and sell, for his own benefit, such book or literary composition, against the will of the author?"

3. "If such an action would have lain at common law, is it taken away by the statute of 8th Anne: and is an author, by the said statute, precluded from every remedy except on the foundation of the said statute, and on the terms and conditions prescribed thereby?"

4. "Whether the author of any literary composition, and his assigns, had the sole right of printing and publishing the same, in perpetuity, by the common law?"

5. "Whether this right is in any way impeached, restrained, or taken away, by the statute 8th Anne?" (Proceedings in the Lords on the Question of Literary Property, 17 Parliamentary History of England, at 970-971.)

[4] The precise ruling by the House of Lords is the subject of scholarly debate. Professor Nimmer, among other commentators, takes the position that the House of Lords voted to overrule Millar only with regard to the abrogation question (see 1 Nimmer on Copyright § 4.02[B], at 4-14, and n 12; see also Bowker, Copyright, Its History and Its Law, at 7 [1912]; Patterson, Copyright in Historical Perspective, at 174 ["The actual holding of the Donaldson case is that the author's common-law right to the sole printing, publishing, and vending of his works, a right which he could assign in perpetuity, is taken away and supplanted by the Statute of Anne"]; Burger, The Berne Convention: Its History and Its Key Role in the Future, 3 J. Law & Tech 1, 6 n. 25 [1988]; Cambridge Research Institute, Omnibus Copyright Revision, Comparative Analysis of the Issues, at 6 [1973]). It has been argued, however, that the House of Lords actually held that the common law never provided any copyright protection and that the rights of authors and publishers were solely statutory in nature (see Abrams, The Historic Foundation of American Copyright Law: Exploding the Myth of Common Law Copyright, 29 Wayne L. Rev. 1119, 1164 [Spring 1983]; Deazley, Re-Reading Donaldson [1774] in the Twenty-First Century and Why It Matters, 25[6] Eur. Intell. Prop. Rev. 270, 274 [2003]; Brown, Kaplan and Brown's Copyright, at 53, and n. 32 [2d ed. 1974]). The controversy stems from the lack of any contemporaneous report of the opinions of the Lords, because at that time it was "contempt punishable by imprisonment to publish any statements made by a member of Parliament in the course of parliamentary business" (Abrams, supra at 1159).

[5] The majority opinion in Wheaton has been criticized for its failure to rely on the rationale of Donaldson (that common-law rights cease upon publication because divestment is required by statute) and the majority's "unpersuasive analysis of Pennsylvania common law" (1 Nimmer on Copyright § 4.03, at 4-18).

[6] At this time, Congress was in the process of revising the copyright statutes but decided to wait for the Supreme Court's decision.

[7] This rule was reaffirmed in Rosette v. Rainbo Record Mfg. Corp., 546 F.2d 461 [2d Cir.1976], affg. 354 F.Supp. 1183 [S.D.N.Y.1973].

[8] The preemption date was later extended by 20 years, to February 15, 2067 (see Pub L. 105-298, 112 U.S. Stat. 2827 [105th Congress, 2d Sess., Oct. 27, 1998] [termed the "Sonny Bono Copyright Term Extension Act"], amending 17 USC § 301[c]).

[9] This appears to be the position of the United States Copyright Office and the sound recording industry with respect to recordings not covered by the national Copyright Act (see ABKCO Music, Inc. v. LaVere, 217 F.3d at 690; see also 1 Nimmer on Copyright § 4.05[B][4], at 4-35; Bailey, Phonorecords and Forfeiture of Common-Law Copyright in Music, 71 Wash. L. Rev. at 157; Kaplan, Publication in Copyright Law: The Question of Phonograph Records, 103 U. Pa. L. Rev. at 472). The international community also does not deem the sale of such a sound recording to be a "publication" (see Universal Copyright Convention art. IV, 25 UST 1341, TIAS No. 7868 [1974]), a definition crafted on the "understanding by the delegates [to the Convention] that the issuance of phonograph records does not amount to publication under United States law" and a belief "`that a contrary provision in the Convention would require an amendment of the United States Copyright Law unlikely to be accepted by Congress'" (Landau, "Publication," Musical Compositions, and the Copyright Act of 1909: Still Crazy After All These Years, 2 Vand. J. Ent. L. & Prac. 29, 40 [Winter 2000] [citing Universal Copyright Convention art. IV]).

[10] As the United States Supreme Court has explained, a federal statutory copyright infringement cause of action consists of two elements: "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original" (Feist Publs. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 [1991]). Commentators are in accord (see 3 Goldstein, Copyright § 15.5.2, at 15:45 [2d ed. 1996; 2005 Supp.]; 4 Nimmer on Copyright § 13.01, at 13-5).

[11] Although we express no view on whether Naxos has, in fact, created a "new product," we simply note that Capitol has a protected property interest in the performances embodied on the shellac records (cf. Capitol Records v. Greatest Records, 43 Misc.2d 878, 880, 252 N.Y.S.2d 553 [Sup.Ct., N.Y. County 1964]) and that Naxos is selling remastered copies of the identical performances.