The New York State Court of Appeals, the state's highest court, held on April 5 that the state's common-law copyright protects pre-1972 sound recordings -- even if recorded in another country where co


The New York State Court of Appeals, the state's highest court, held on April 5 that the state's common-law copyright protects pre-1972 sound recordings -- even if recorded in another country where copyright protection has expired. This law will be applied when infringements occur in New York.

Following is a summary of the court's written opinion.

Factual Background: The dispute involves several classical recordings made in the 1930s by the Gramophone Co. Ltd., which is now EMI Records Ltd.

Gramophone recorded concerts in England by 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 Bach's cello suites between November 1936 and 1939; and Edwin Fischer's performances of Bach's "The Well Tempered Clavier, Book I" between 1933 and 1934 and Bach's "The Well Tempered Clavier, Book II" between 1935 and 1936.

All artists entered into contracts with Gramophone that specified that the label would have absolute, worldwide rights to the performances -- including the right to reproduce and sell copies of the performances to the public.

At the time the recordings were made, U.K. statutory law provided copyright protection to sound recordings for 50 years. By 1990, all recordings had entered the public domain in the United Kingdom.

Six years later, in 1996, EMI subsidiaries entered into a series of agreements. Capitol Records, an EMI subsidiary, was granted an exclusive license to exploit the recordings in the United States. Capitol remastered the original recordings and transferred them to digital format for sale to the public.

Frankin, Tenn.-based Naxos of America wished to preserve these historical recordings. After locating copies of the original shellac recordings, Naxos used its own restoration process in the United Kingdom. Remastered CDs were then distributed in 1999 for sale to the public in the United States. Naxos did not obtain a license from Capitol and "rebuffed" Capitol's demand to cease and desist from sale of the CDs.

Procedural Background: Capitol sued Naxos in the U.S. District Court for the Southern District of New York in 2002 for common-law copyright infringement, unfair competition, misappropriation and unjust enrichment -- all based on New York law.

Naxos moved to dismiss the complaint, arguing that the recordings had entered the public domain in the United Kingdom and, therefore, in the United States. Capitol moved for various relief, including partial summary judgment on liability.

The District Court granted summary judgment to Naxos, characterizing Captol's claim as a "hybrid copyright, unfair competition" claim. It concluded that Capitol did not have any intellectual property rights in the original recordings since copyright proetection expired in the United Kingdom.

Also, it held 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. Since public policy favored preservation and redissemination of classical performances, Capitol could not show that Naxos could be liable for unfair competition.

Capitol appealed. Since the case raised "several unsettled issues of New York law," the Second Circuit Court of Appeals certified three questions for the New York State Court of Appeals to decide. The state court agreed to resolve the following questions:

  • Does the expiration of the term of a copyright in the country of origin terminate a common-law copyright in New York?

  • Does a cause of action for common-law copyright infringement include some or all of the elements of unfair competition?

  • 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?



Before answering these questions, the court examined the history of common-law and statutory copyright in England and the United States.

HISTORICAL COPYRIGHT PROTECTION: There is a close connection between the evolution of copyright protection in England and America.

English Law: When the printing press was introduced in the 15th century, printers and publishers -- not authors -- sought to control the right to publish literary works. They wanted to protect their commercial interests.

The Crown had an interest in maintaining censorship authority over the press. Granting an exclusive right to reproduce printed materials served the government's desire to control the flow and content of information, while supporting the economic viability of the printers' trade guild.

These interests gave rise to early English copyright law.

Later, English law recognized an author's natural property right to control the dissemination of a literary creation. The Statute of Anne signaled an attempt to end government censorship and trade guild monopoly, broadening the concept of copyrights to include an author's right to decide whether to publish and disseminate a literary work -- and how to reproduce it in the future. It granted protection for a limited number of years.

English common law subsequently embraced a concept of ownership for literary works in perpetuity, treating ownership of intellectual property the same as ownership of tangible property. This raised the question of whether statutory law supplanted common law or simply provided additional rights and remedies. Eventually it was "firmly established" in English law that statutory law limited the duration of common-law copyright protection.

Federal Law: Initially, many colonial states provided copyright protection. In the 1700s in New York, the legislature preserved common-law copyright, following English law. It also enacted state statutory copyright protection, while still recognizing separate common-law rights.

Then came federal copyright law -- the Copyright Act of 1790. This Act granted certain copyrights protection for up to 28 years.

A Supreme Court decision in 1834 -- Wheaton v. Peters -- resulted in the generally accepted principle that federal law governed copyrights after the act of publication occurred, which divested common-law rights. New York courts followed this view.

It was not until 1831 that music compositions were protected by federal copyright law; sound recordings were not protected. The next federal Copyright Act, in 1909, still did not include protection for sound recordings because they could not be "published" -- they were not capable of being read by a person, which was necessary to meet the requirements of filing a copy of the work with the Library of Congress.

However, sound recordings were eligible for state common-law protection. Although common law offered protection only until the first publication, early cases held that offering records of performances for sale to the public did not "constitute a dedication of the right to copy and sell the records." Therefore, releasing records did not mean that the sound recordings were "published," and common-law copyright would still protect recordings even after records were sold.

By 1971, Congress amended the Copyright Act to provide copyright protection to sound recordings created on or after the effective date of the amendment -- Feb. 15, 1972. State common-law copyright protection for pre-1972 recordings would not be preempted by the federal statute until Feb. 15, 2047, 75 years after the effective date of the amendment. The date was later changed to 2067.

In the 1976 Copyright Act (which became effective in 1978), "publication" was finally defined to include the distibution of copies -- or phonorecords -- of a work to the public by sale or other transfer of ownership. However, it only applied prospectively, so pre-1972 sound recordings were not included under this definition.

The music industry believed that state common law protected pre-1972 recordings without regard to publication, but the 1995 Ninth Circuit Court of Appeals decision in La Cienega Music Co. v. ZZ Top undermined this belief. The court held that a public sale of pre-1972 recordings was a publication, divesting the owner of common-law copyright protection.

Congress responded by amending federal law, confirming that the older sound recordings were eligible for common-law copyright protection until 2067.

New York Law: In New York, the state constitution permitted the continuation of common-law principles derived from English common law.

One principle was that the creator of a literary work was entitled to perpetual common-law copyright protection in the absence of abrogation by statute. The state later enacted a statute protecting copyrights for up to 28 years, which was later supplanted by federal law.

New York courts eventually established that state common law would provide protection up to the point that federal law governed.

NEW YORK LAW APPLIED: New York common law protects pre-1972 sound recordings until Feb. 15, 2067.

Federal law pre-empts New York common-law protection of sound recordings in two respects. First, New York law does not apply to sound recordings fixed after Feb. 15, 1972. Second, it is no longer perpetual because federal law mandates that state common-law rights will cease on Feb. 15, 2067.

The sale of records does not change this protection, since "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." This appears to be the position of the U.S. Copyright Office, the sound recording industry and the international community.

WAS PROTECTION TERMINATED WHEN THE U.K. COPYRIGHT EXPIRED? 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.

This decision concurs with the Second Circuit Court of Appeals that nothing in federal law denies enforceable rights in the original recordings simply because the U.K. copyrights have expired.

Under the U.S. Constitution, treaties have the force of federal law and must be respected by the states. Although the Berne Convention and the Universal Copyright Convention both recognize the "Rule of the Shorter Term" -- that the term of copyright in the nation where the 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.

Sound recordings fall within the gambit 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. It does not contain a rule of the shorter term.

Stautory implementation of the Uruguay Round Agreements Act also does not alter the common law with respect to these recordings. It restores U.S. copyright protection to certain public domain works, but does not apply to recordings that were in the public domain in the country of origin prior to 1996.

Since 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 -- and nothing in New York statutes or case law suggests this prohibition to be warranted -- there should be protection under common law.

Applying the law of the situs where the infringement occurs, there is no justification under New York law for substituting the British copyright term in place of New York's common-law protection, which continues until federal preemption occurs.

DOES COMMON-LAW COPYRIGHT INFRINGEMENT INCLUDE ELEMENTS OF FAIR COMPETITION? The two causes of action are not synonymous under New York law.

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.

Under modern New York law, fraud or bad faith is not an element. Unfair competition requires -- in addition to unauthorized copying and distribution -- competition in the marketplace or similar actions designed for commercial benefit.

IS THERE A DEFENSE IF THE NEW PRODUCT USES ONLY COMPONENTS OF A WORK WITHOUT A CURRENT MARKET? Although Naxos did not raise these questions in connection with the copyright infringement claim, the certified question from the federal court related it to common-law copyright infringement.

The ability to enforce copyright protections in New York is not diminished due to the size of the market or popularity of a product. Even assuming that Naxos created a new product due to its remastering efforts that enhanced sound quality, that product can be deemed to infringe on Capitol's copyright to the extent that it utilizes the original elements of the protected performances. The claim of infringement is not defeated.

With these questions answered, the case will continue in the federal court.

Case: Capitol Records Inc. v. Naxos of America Inc., USCOA 2, No. 30
Court: New York State Court of Appeals, April 5, 2005. Opinion by Judge Graffeo; Chief Judge Kaye and judges G.B. Smith, Ciparick, Rosenblatt, Read and R.S. Smith concurred.
Counsel for Capitol Records: Philip Allen Lacovara with Mayer, Brown, Rowe & Maw in New York City
Counsel for Naxos of America: Maxim H. Waldbaum with Schiff Hardin in New York City
Amicus Brief submitted by the Recording Industry Assn. of America