BIT PARTS

The U.S. District Court for the Southern District of New York chose New York's statute of limitations for contract claims, in a dispute over property in the Dominican Republic, that arose from an artist/music company release agreement also involving a re-recording restriction. Distribuidora De Discos Karen (DDK) v. Universal Music Group Inc. (UMG), 13-CV-7706. Artist Juan Luis Guerra wrote and recorded songs for DDK. In 1992, he signed an agreement for Karen Publishing to administer his songs. In 2006, Guerra and DDK entered into a partial release agreement that ended his recording obligations and allowed DDK to continue to exploit the recordings of Guerra's songs. In addition, Guerra agreed to transfer to DDK a Guerra concert-recording master, office space, stocks and ownership of Dominican Republic real estate. He also agreed not to re-record the DDK songs for five years. In 2013, DDK sued Guerra and UMG for copyright infringement over release of a new album containing re-recordings of some of the songs. In 2014, Guerra signed an exclusive administration agreement with Universal Musica (UMU), which intervened in the ongoing litigation with a copyright claim against Karen. In the recent stage of the case, Karen moved to plead copyright infringement against UMU and a declaratory judgment that the agreement releasing Guerra had become unenforceable because he allegedly failed to turn over all the property promised under the contract. The Dominican Republic's statute of limitations for breach of contract claims is 20 years; New York's is six. Karen wanted federal choice of law rules to apply. But District Judge J. Paul Oetken noted: “Though the contract may also involve the transfer of rights sounding in copyright, the claim at issue is not one for copyright infringement but rather for breach of contract.” Applying New York choice of law, he found the contract claim was time-barred: “The breach of contract claim at issue here, alleging Guerra's failure to transfer property as required by the 2006 Release Agreement, accrued upon the signing of the agreement.” As to Karen's copyright infringement claim, District Judge Oetken granted Karen's motion to add it to the pleadings. The district judge concluded on this: “Guerra and UMU have not shown that the Release Agreement vested them with an exclusive license such that their use of the compositions could not amount to copyright infringement. Accordingly, Karen is permitted to supplement its pleading to include its claim of copyright infringement.”