This is an Appendix to Copyright Issues Relevant to Digital Preservation and Dissemination of Pre-1972 Commercial Sound Recordings by Libraries and Archives, © 2005 June M. Besek, Kernochan Center for Law, Media and the Arts, Columbia Law School.
1. Criminal Law. California’s criminal record piracy statute was enacted in 1968. The law provides, in relevant part, that a person is guilty of the offense if he:
Knowingly and willfully transfers or causes to be transferred any sounds that have been recorded on a phonograph record, disc, wire, tape, film or other article on which sounds are recorded, with intent to sell or cause to be sold, or to use or cause to be used for commercial advantage or private financial gain through public performance, the article on which the sounds are so transferred, without the consent of the owner.1
There is an exemption for not-for-profit educational institutions or federal or state governmental entities that meet certain conditions. The entity
• must have “as a primary purpose the advancement of the public’s knowledge and the dissemination of information regarding America’s musical cultural heritage,” and that purpose must be “clearly set forth in the institution’s or entity’s charter, bylaws,” or similar document;2 and
• may avail itself of the exemption if, prior to the transfer, it makes “a good faith effort to identify and locate the owner or owners of the sound recordings to be transferred,” and “the owner or owners could not be and have not been located.”3
The exemption goes on to state:
Nothing in this section shall be construed to relieve an institution or entity of its contractual or other obligation to compensate the owners of sound recordings to be transferred. In order to continue the exemption permitted by this subdivision, the institution or entity shall make continuing efforts to locate such owners and shall make an annual public notice of the fact of the transfers in newspapers of general circulation serving the jurisdictions where the owners were incorporated or doing business at the time of initial affixations. The institution or entity shall keep on file a record of the efforts made to locate such owners for inspection by appropriate governmental agencies.4
2. Civil Law. California’s civil protection of pre-1972 sound recordings, § 980(a)(2), provides:
The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior sound recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording.5
The civil statute does not include an exemption similar to the criminal statute for not-for-profit, educational, or governmental institutions, or for any other uses.
The few cases decided under § 980(a)(2) have viewed the section as conferring an intangible property interest in the sound recordings that can be protected in a misappropriation, conversion or unfair competition claim.6They have dealt predominantly with for-profit entities that have copied sound recordings without authorization and therefore do not provide guidance as to how not-for-profit entities or uses of such recordings will be treated. They have, however, distinguished the property interest protected by state law from copyright law by stating that these actions lie outside copyright (and, arguably, outside the realm of copyright defenses).7
The only case we found addressing the use of pre-1972 sound recordings for educational purposes was Bridge Publications, Inc. v. Vien.8 The defendant violated § 980(a)(2) by copying tape-recorded lectures by L. Ron Hubbard without authorization. Although the copying of the pre-1972 sound recordings was related to education (defendant’s course on “Dynamism”), the court found that the use was commercial in nature because the course was “offered for sale.”9
However, because case law related to § 980(a)(2) and earlier common law protection of sound recordings have focused primarily on the for-profit motives of defendants in finding liability under theories of unfair competition and misappropriation, a court could reach a different conclusion if the use were purely educational and not-for-profit.
1. Criminal Law. The Illinois criminal code provides that “[a] person commits unlawful use of recorded sounds or images when he”:
Intentionally, knowingly or recklessly transfers or causes to be transferred without the consent of the owner, any sounds or images recorded on any sound or audio visual recording with the purpose of selling or causing to be sold, or using or causing to be used for profit the article to which such sounds or recordings of sound are transferred.10
The law also prohibits
• intentionally selling or advertising the unauthorized copies for sale, or using them or causing them to be used for profit; and
• intentionally offering or making available for a “fee, rental, or any other form of compensation, directly or indirectly” any equipment for the purpose of reproducing any sound or audiovisual recording without the owner’s consent.11
No specific exception for not-for-profit use is included in the statute. No cases have been decided under this section of the code.12
2. Civil Law. In Capitol Records, Inc. v. Spies,13 the court held that pirating sound recordings and selling the pirated versions for profit is considered unfair competition and wrongful appropriation. The defendant purchased records in retail stores, then made and sold 1,500 unauthorized copies. The court found this to be unfair competition. It did not explicitly make commercial gain an element of an unfair competition claim, but the defendant in that case had profited from his piracy.
As explained by a subsequent Illinois court decision, “underlying the court’s reasoning [in Spies] is the premise that the plaintiff’s pecuniary reward for producing its intangible product would be severely reduced if other competitors could avoid production costs by merely waiting until a record became popular and then recording the work for resale.”14
There were no cases in which the defendant had used the contested sound recording for a nonprofit purpose.
Other Illinois unfair competition cases outside the sound recording context similarly do not explicitly state that commercial exploitation by the defendant is required to make a valid claim. Nevertheless, they all arise in a commercial context, and invariably the defendant had gained commercially from appropriating the plaintiff’s property right.15
1. Criminal Law. Michigan’s record piracy statute prohibits a person from transferring (or causing to be transferred), without the consent of the owner, a sound recording, “with the intent to sell or cause to be sold for profit or used to promote the sale of a product, the article on which the sound is so transferred.”16 It also prohibits knowingly advertising or selling the unauthorized copies.17
The law contains the following exclusion for persons who transfer sound:
a. intended for or in connection with radio or television broadcast transmission or related uses;
b. for archival, library, or educational purposes; or
c. solely for the personal use of the person transferring or causing the transfer and without any compensation being derived by the person from the transfer.18
No cases have been decided under or interpret this portion of Michigan’s code.
2. Civil Law. We found only one case that directly addressed unauthorized reproduction and distribution of pre-1972 sound recordings in Michigan. In A & M Records, Inc. v. M.V. C. Distributing Corp.,19 the U.S. Court of Appeals for the Sixth Circuit upheld the district court’s conclusion that unauthorized duplication and distribution of sound recordings constituted unfair competition under the common law of Michigan. The case does not discuss the cause of action in detail.
Michigan unfair competition cases outside the sound recording context have consistently involved commercial exploitation of plaintiff’s property right by the defendant, although never is this specifically made a requirement of the unfair competition claim.20 Our review did not reveal cases in which defendant was not seeking to profit commercially from the appropriation of the plaintiff’s property right.
D. New York
1. Criminal Law. New York Penal Law provides criminal liability for a person who
1. knowingly, and without the consent of the owner, transfers or causes to be transferred any sound recording, with the intent to rent or sell, or cause to be rented or sold for profit, or used to promote the sale of any product, such article to which such recording was transferred, or
2. transports within this state, for commercial advantage or private financial gain, a recording, knowing that the sounds have been reproduced or transferred without the consent of the owner.21
However, there are exceptions in the law for “any broadcaster who . . . for the purpose of archival preservation, transfers any such recorded sounds or images” and for “any person who transfers such sounds or images for personal use, and without profit for such transfer.”22 The statute does not define the terms “broadcaster” or “archival preservation.” There is no case law on this subsection that helps clarify those terms.
2. Civil Law. New York has a substantial body of case law applying common law principles of unfair competition to those who make and distribute unauthorized copies of sound recordings. One court described the elements of an unfair competition claim as follows: (1) plaintiff must establish a property right of commercial value; and (2) plaintiff must prove that defendant appropriated that property right for commercial gain.23
None of the other New York unfair competition cases involving pre-1972 sound recordings states explicitly that commercial gain by defendant is a required element. They simply state that production and distribution of unauthorized copies constitute unfair competition.24 Notably, one court has stated that the scope of protection under unfair competition was broad enough to encompass “any form of unfair invasion or infringement and . . . any form of commercial immorality.”25 This suggests that an invasion of another’s property right that causes commercial harm (even though not for commercial gain) could give rise to an unfair competition claim.26 Other courts have been similarly broad in crafting the unfair competition standard: “[Where] the apparent purpose is to reap where one has not sown, or to gather where one has not planted, or to build upon, or [to] profit from, the name, reputation, good will or work of another such actions will be enjoined as unfair competition.”27 However, all the unfair competition cases involving record piracy involved defendants who were seeking to use the pirated sound recording for commercial gain.28 While unfair competition claims commonly involve direct competition between plaintiff and defendant, direct competition is not essential to a claim.29
In Arista Records, Inc. v. MP3Board, Inc.,30 the court denied MP3Board’s motion for summary judgment on plaintiff record companies’ suit. MP3Board operated an Internet site that provided users with pirated copies of the record companies’ musical recordings. The record companies brought suit for copyright infringement with respect to the post-1972 sound recordings and for common law unfair competition with respect to the pre-1972 recordings. Concerning the state law claims, the court stated:
In New York, an unfair competition claim may be grounded in the appropriation of the exclusive property of the plaintiff by the defendant. Pursuant to New York common law, “an unfair competition claim involving misappropriation usually concerns the taking and use of the plaintiff’s property to compete against the plaintiff’s own use of the same property.” Due to the legal overlap between the New York tort of unfair competition based upon misappropriation and federal copyright infringement, summary judgment in favor of MP3Board is denied for the reasons stated above denying summary judgment on the copyright infringement claims.31
Despite the discussion of “unfair competition” in earlier claims under New York common law involving pre-1972 sound recordings, the New York Court of Appeals recently ruled that “common law copyright” applies to those sound recordings, and distinguished that tort from unfair competition. Capitol Records, Inc. v. Naxos of America, Inc.32 involved recordings of performances of classical music that were made in England in the 1930s by Yehudi Menuhin, Pablo Casals, and Edwin Fischer. Capitol succeeded to the rights in those recordings in the United States. When Naxos, without a license from Capitol, remastered and sold copies of the recordings in the United States, Capitol sued in federal district court. The district court found in favor of Naxos, on grounds, among other things, that the works were in the public domain in New York since they were in the public domain in England.33 On appeal, the Second Circuit determined that the case involved state law issues of first impression and certified several questions of law to the New York Court of Appeals, the highest court in New York.34The New York Court of Appeals’ recent decision held that there was no reason for New York to adopt another country’s term of protection, and that New York law protected the recordings, regardless of whether they were in the public domain in England.35
In its decision, the court also clarified the nature of common law copyright in New York, stating that a claim “consists of two elements: (1) the existence of a valid copyright; and (2) unauthorized reproduction of the work protected by copyright.” The court made it clear that bad faith is not an element of a common law infringement claim in New York,36 and that:
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.37
The final question certified by the Second Circuit related to the significance of a showing that Capitol’s recordings have “slight if any current market,” and that Naxos’s work, because of the remastering, “is fairly to be regarded as a new product.” The New York court held that the size of the market or the popularity of a product does not affect the ability to enforce a state law copyright claim. It observed, with reference to federal copyright law, that Naxos’s recordings were not independent creations and that under the fair use doctrine, reproduction of an entire work is generally infringing.38 It ruled that even if Naxos created a “new product” through remastering, that product could still infringe Capitol’s copyright “to the extent that it utilizes the original elements of the protected performances.”39
1. Criminal Law. Virginia law provides that it is unlawful to:
Knowingly transfer or cause to be transferred, directly or indirectly by any means . . . any sounds recorded on a phonograph record, disc, wire, tape, film, videocassette, or other article now known or later developed on which sounds are recorded, with the intent to sell, rent or cause to be sold or rented, or to be used for profit through public performance, such article on which sounds are so transferred, without consent of the owner.40
It is also an offense, for commercial advantage or private financial gain, to:
Manufacture, distribute, transport or wholesale, or cause to be manufactured, distributed, transported or sold as wholesale, or possess for such purposes any article with the knowledge that the sounds are so transferred, without consent of the owner.41
There is an exception for persons engaged in radio and television broadcasting to copy sound recordings for use in connection with their broadcast or for related uses, “or for archival purposes.”42 There is no specific exception for not-for-profit use. There is one citing reference to this section.43
2. Civil Law. We were unable to find any unfair competition cases in Virginia that deal with unauthorized reproduction and distribution of sound recordings.
Outside the context of sound recordings, no Virginia case explicitly makes commercial exploitation an element of an unfair competition claim. However, all Virginia’s unfair competition cases involve some form of commercial exploitation by the defendant.44
6 For example, Lone Ranger Television, Inc. v. Program Radio Corp., 740 F.2d 718, 725 (9th Cir. 1984) (addressing conversion claim of intangible property rights in sound recordings); A & M Records, Inc. v. Heilman, 75 Cal. App. 3d 554, 570 (Cal. Ct. App. 1977) (“These recorded performances are A & M Records’ intangible personal property. . . . [The] misappropriation and sale of the intangible property of another without authority from the owner is conversion.”).
7 See Lone Ranger, 740 F.2d at 726 (“Lone Ranger TV’s protection against conversion of an intangible property right in the performances embodied in its tapes is unaffected by notions of copyright”); A & M Records, 75 Cal. App. 3d at 564 (“A & M Records’ action against Heilman for duplicating without consent performances embodied in A & M Records’ recordings is independent of any action that the owners of the underlying compositions might bring against Heilman for copyright infringement.”).
12 Only a couple of reported cases cite this section, and they provide little guidance. See Gardner v. Senior Living Sys., 731 N.E. 2d 350 (Ill. App. Ct. 2000) (stating in dicta that former employee’s failure to remove company software from a computer that she had absconded with would be a violation of the law prohibiting unlawful use of recorded sounds or images); People v. Zakarian, 460 N.E. 2d 422 (Ill. App. Ct. 1984) (addressing whether a similarly worded predecessor statute encompassed unlawful use of unidentified sounds).
15 See, e.g., Delta Medical Systems v. Mid-America Medical Systems, Inc., 772 N.E. 2d 768 (Ill. App. Ct. 2002) (reversing lower court decision granting preliminary injunction on claim that defendant misappropriated plaintiff’s trade secrets in order to set up and operate a competing business); Everen Securities, Inc. v. A.G. Edwards and Sons, Inc., 719 N.E. 2d 312 (Ill. App. Ct. 1999) (affirming arbitration panel’s award to plaintiff where defendants, former employees of plaintiff, solicited plaintiff’s customers and photocopied plaintiff’s customer records for the purpose of creating a database for their new employer).
19 574 F.2d 312 (1978). But see Artie Field Prods. v. Channel 7, 1994 U.S. Dist. Lexis 16828 (D. Mich. June 10, 1994) (stating in dicta that A & M Records’ claim would have been preempted had it arisen after § 301 became effective).
20 See, e.g., Thrifty Acres, Inc. v. Al-Naimi, 326 N.W.2d 400 (Mich. Ct. App. 1982) (court affirmed lower court ruling in favor of plaintiff who brought unfair competition claim against defendant who had begun operating a grocery store under a trade name established by plaintiff grocery store operator).
24 See, e.g., Greater Recording Co., Inc. v. Stambler, 144 U.S.P.Q. 547 (N.Y. Sup. Ct. 1965) (denying motion to dismiss where defendant allegedly produced and distributed records made directly from plaintiffs’ recordings); Capitol Records, Inc. v. Greatest Records, Inc., 43 Misc. 2d 878 (N.Y. Sup. Ct. 1964) (enjoining defendant from manufacturing and distributing record album containing identical reproductions of certain records sold by plaintiff).
28 See, e.g., Roy Export Co. v. Columbia Broadcasting System, Inc., 672 F.2d 1095, 1105 (2d Cir. 1982) (“[Defendant] unquestionably appropriated the ‘skill, expenditures and labor’ of the plaintiffs to its own commercial advantage. We are confident that the New York courts would call this conduct unfair competition”); Capitol Records, 43 Misc. 2d 878, 881 (N.Y. Sup. Ct. 1964) (granting plaintiff’s motion for temporary injunction where defendant had made phonograph records by copying tape recordings made by plaintiff and sold the records to the public); Radio Corp. of America v. Premier Albums, Inc., 19 A.D.2d 62, 64 (N.Y. App. Div., 1963) (granting plaintiff’s motion for an injunction because defendant’s continued “[u]nrestrained commercial exploitation, competitively, would result in irreparable harm to [plaintiff] and render the right of little value.”).
“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 copyrights in the original recordings?” This overall question subsumes the following sub-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 484–85.
44 See, e.g., Cimmarron’s Old South Corp. v. Traveller’s Alley Café, Inc., 18 Va. Cir. 436 (Va. Cir. Ct. 1990) (preliminary injunction granted where plaintiff brought claim for unfair competition in the use of trade names against restaurant located on same street as his restaurant); Craigie, Inc. v. Legg Mason Wood Walker, Inc., 20 Va. Cir. 342 (Va. Cir. Ct. 1990) (arbitration panel’s award to plaintiff confirmed where plaintiff’s unfair competition claim was based on allegation that defendant illegally induced plaintiff’s employees to leave plaintiff’s firm and work for defendant’s firm).