Mixed Summary Judgment Ruling in Ringtones Litigation

Record labels have taken a lot of heat for being slow learners when it comes to profiting from Internet-era trends like downloads of mobile ringtones, but the labels haven't been shy in one area: copyright litigation against online purveyors of their artists' music. Musicians, meanwhile, have targeted the labels for allegedly stiffing them on royalties when customers pay for their music online.

UMG Recordings has been smack in the middle of both trends. In 2008, UMG joined more than a dozen other labels in a copyright infringement suit against the ringtone download site, Myxer, which allegedly allowed users to download clips of more than 700 copyrighted songs. Arista Records LLC v. Myxer Inc., 2:08cv3935 (C.D.Calif.). Then, in 2010, the U.S. Court of Appeals for the Ninth Circuit ruled against UMG in the landmark licensing fee suit over Eminem's early recordings, finding that royalty contracts predating the online music era extended to digital downloads. F.B.T. Productions, LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010).

Last month, UMG suffered a double whammy in the ringtone wars: It lost a motion for summary judgment in the Myxer case and got hit with a class action suit for allegedly continuing to underpay its artists for online music sales, in defiance of the Ninth Circuit's Eminem ruling. (In the latter case, a trust representing the musical estate of funk legend Rick James alleges in a class action complaint in San Francisco federal district court that the record company underpays its artists for music and ringtone downloads. James v. UMG Recordings Inc., 11-1613. The James trust is represented by David Given of San Francisco's Phillips Erlewine & Given.)

Myxer purportedly verifies the copyright status of its ringtones and polices for signs of infringement. Nevertheless, in October 2009, the record labels moved for summary judgment on their direct, contributory and vicarious infringement claims against the site. The labels also sought summary judgment barring Myxer from asserting that it can't be held liable for infringement because of the fair use provisions of the Copyright Act.

Last year, after the other record labels settled with Myxer (reportedly signing licensing deals), UMG became the only plaintiff. Last August, its lawyers, from Jeffer Mangels Butler & Mitchell, pressed ahead with a summary judgment motion at oral arguments before Los Angeles federal district court judge Gary Feess. In his recent 75-page decision, Judge Feess denied UMG summary judgment on its infringement claims, ruling that Myxer had “established a genuine issue of material fact” as to whether it took sufficient steps to qualify for the safe harbor provisions of the DMCA. But the ruling wasn't a total loss for UMG. Judge Feess also found that Myxer's use of copyrighted ringtones was not fair use under the Copyright Act. He granted the record label's motion for summary judgment on Myxer's affirmative fair use defense.

Myxer counsel Michael Elkin of Winston & Strawn believes that “this was the first time [DMCA safe harbor provisions] have been applied to a situation in which a service permits a third party to upload a sound recording and have it converted to a ring tone on a mobile device,” he says. “We fought to have that DMCA recognition, and we're pleased to be able to go to trial and hopefully prevail on that.”

UMG lawyer Jeffrey Goldman of Jeffer Mangels referred a request for comment to the company, which sent this e-mail statement: “We are pleased that the court has granted our motion for summary judgment determining that Myxer has indeed directly infringed on the works of our artists and is not entitled to claim fair use. We are evaluating the remainder of the decision and will proceed accordingly once scheduled by the court.” That would appear to be an extremely liberal interpretation of Judge Feess's ruling, in which the judge actually “declines to grant summary judgment as to plaintiff's claims of direct, contributory, and vicarious infringement.”

Record labels have taken a lot of heat for being slow learners when it comes to profiting from Internet-era trends like downloads of mobile ringtones, but the labels haven't been shy in one area: copyright litigation against online purveyors of their artists' music. Musicians, meanwhile, have targeted the labels for allegedly stiffing them on royalties when customers pay for their music online.

UMG Recordings has been smack in the middle of both trends. In 2008, UMG joined more than a dozen other labels in a copyright infringement suit against the ringtone download site, Myxer, which allegedly allowed users to download clips of more than 700 copyrighted songs. Arista Records LLC v. Myxer Inc., 2:08cv3935 (C.D.Calif.). Then, in 2010, the U.S. Court of Appeals for the Ninth Circuit ruled against UMG in the landmark licensing fee suit over Eminem's early recordings, finding that royalty contracts predating the online music era extended to digital downloads. F.B.T. Productions, LLC v. Aftermath Records , 621 F.3d 958 (9th Cir. 2010).

Last month, UMG suffered a double whammy in the ringtone wars: It lost a motion for summary judgment in the Myxer case and got hit with a class action suit for allegedly continuing to underpay its artists for online music sales, in defiance of the Ninth Circuit's Eminem ruling. (In the latter case, a trust representing the musical estate of funk legend Rick James alleges in a class action complaint in San Francisco federal district court that the record company underpays its artists for music and ringtone downloads. James v. UMG Recordings Inc., 11-1613. The James trust is represented by David Given of San Francisco's Phillips Erlewine & Given.)

Myxer purportedly verifies the copyright status of its ringtones and polices for signs of infringement. Nevertheless, in October 2009, the record labels moved for summary judgment on their direct, contributory and vicarious infringement claims against the site. The labels also sought summary judgment barring Myxer from asserting that it can't be held liable for infringement because of the fair use provisions of the Copyright Act.

Last year, after the other record labels settled with Myxer (reportedly signing licensing deals), UMG became the only plaintiff. Last August, its lawyers, from Jeffer Mangels Butler & Mitchell, pressed ahead with a summary judgment motion at oral arguments before Los Angeles federal district court judge Gary Feess. In his recent 75-page decision, Judge Feess denied UMG summary judgment on its infringement claims, ruling that Myxer had “established a genuine issue of material fact” as to whether it took sufficient steps to qualify for the safe harbor provisions of the DMCA. But the ruling wasn't a total loss for UMG. Judge Feess also found that Myxer's use of copyrighted ringtones was not fair use under the Copyright Act. He granted the record label's motion for summary judgment on Myxer's affirmative fair use defense.

Myxer counsel Michael Elkin of Winston & Strawn believes that “this was the first time [DMCA safe harbor provisions] have been applied to a situation in which a service permits a third party to upload a sound recording and have it converted to a ring tone on a mobile device,” he says. “We fought to have that DMCA recognition, and we're pleased to be able to go to trial and hopefully prevail on that.”

UMG lawyer Jeffrey Goldman of Jeffer Mangels referred a request for comment to the company, which sent this e-mail statement: “We are pleased that the court has granted our motion for summary judgment determining that Myxer has indeed directly infringed on the works of our artists and is not entitled to claim fair use. We are evaluating the remainder of the decision and will proceed accordingly once scheduled by the court.” That would appear to be an extremely liberal interpretation of Judge Feess's ruling, in which the judge actually “declines to grant summary judgment as to plaintiff's claims of direct, contributory, and vicarious infringement.”