YouTube Star Michelle Phan Settles Dispute With Dance Label Ultra Records

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Michelle Phan signs copies of her book "Make Up" at Bookends Bookstore on Oct. 23, 2014 in Ridgewood, New Jersey. 

The high-profile case examined whether background music in popular online videos was unlicensed.

On Wednesday, a tug-of-war between YouTube star Michelle Phan and dance label Ultra Records came to an end.

Ultra, home to such artists as Kaskade, Deadmau5 and Calvin Harris, sued in July 2014 with allegations that the supremely popular make-up artist with endorsement contracts with Endemol, L'Oreal Cosmetics, Dr. Pepper and others had "embarked on a wholesale infringement of Plaintiffs’ musical compositions and recordings."

The copyright lawsuit in California federal court from Ultra drove some attention to the way that background music was being used in viral videos on Google's video-sharing platform. Ultra alleged that Phan had received millions of dollars from her videos without paying anything for exploitation of its sound recording and publishing rights.

In counterclaims lodged last September, Phan claimed she was the one with market power and that record labels were so eager to reach her millions of subscribers, they came to her for the opportunity to be featured in her videos demonstrating make-up techniques.

However, that's not exactly what happened in this situation. Phan said she reached out to Ultra's senior new media manager Jason Kilgore for permission to use Kaskade's music in exchange for credit and an iTunes purchase link and was given an ok. Further, she said that she had reached an agreement whereby Kilgore promised Phan he would release claims placed on Phan's videos through YouTube's "Content ID System."

After this supposed agreement, Phan said she got a promotional package of CDs featuring Kaskade and other artists, and that she linked as promised. Asserting an absolute license to the music in question, her lawyers aimed to show that Ultra received substantial financial benefit from the arrangement until the dance label began serving takedowns pursuant to the Digital Millennium Copyright Act. Once that happened, Phan had her videos removed. She claimed that Ultra had abused the DMCA with misrepresentations and had interfered with her relationship with YouTube.

In response, Ultra's lawyers told the court that "no such license ever existed, and that even if any license of a more limited scope did once exist (and it did not), it was without consideration and was expressly revoked long before the filing of this lawsuit."

Settlement terms haven't been disclosed and the attorneys for both sides were unavailable for comment. Ultra was represented by Christine Lepera and Bradley Mullins while Phan was represented by Allen Grodsky and Marc Ehrlich.

This article was first published by The Hollywood Reporter.