Legal and Management

No Encore for Music Publishers Who Say COVID-19 Wrecked Copyright Trial

The Rolling Stones
Michele Eve Sandberg / AFP

Ronnie Wood, Mick Jagger and Keith Richards of The Rolling Stones perform onstage at Hard Rock Stadium on August 30, 2019 in Miami Gardens, Florida.

Music publishers were expecting to win huge damages in a five-year copyright battle over concert recordings. Did a health pandemic ruin these plans?

Most people will remember March 11, 2020. That was the day that Tom Hanks was diagnosed with COVID-19, the day that the NBA suspended its season after one of its players tested positive too, and the day that the Dow Jones Industrial Average plunged 1,465 points. In short, it was the moment when the country began taking this pandemic very seriously. The very next morning, one juror in New York asked to speak with the judge. The conversation was the subject of a remarkable ruling on Friday.

When the juror spoke with the judge, this individual had just seen the finish of a trial that in normal times would be a hot ticket. It was the culmination of a five-year legal battle between music publishers and William Sagan, who ran Wolfgang's Vault, which the Wall Street Journal once described as "the most important collection of rock memorabilia and recordings ever assembled." The publishers alleged that the streaming of rock concerts was a copyright violation, and in April 2018, the judge agreed that the defendant lacked requisite license. During this case, all sorts of famous rock stars — Keith Richards, David Byrne and Michael Stipe — gave testimony. The trial was meant to decide what damages Sagan owed for the infringement of 197 works including classics like “Over the Rainbow,” “My Generation,” and “You Can’t Always Get What You Want."

But this juror had concerns.

"We have been coming here for two weeks, all of us in this room," said the juror on March 12. "We have been exposing ourselves. Whether we know it or not, it's happening. And, quite frankly, this matter doesn't seem all that important compared to lives at stake, such as my mom who has lupus. She has a very compromised immune system."

After the juror finished, the judge assured this person that the court was taking adequate safety precautions and consulting with the Centers for Disease Control.

"I'm not trying to get us shut down," the juror responded. "I don't want us delayed. I want you guys to hurry up so we can do our job."

Later that day, the judge delivered instructions. The jury deliberated for less than an hour and reached a verdict — $189,500, which was about $1,000 per work.

Probably expecting at least ten times to thirty times that much after five years of litigating the case (statutory damages run up to $150,000 per work), the music publishers moved for a new trial. Represented by attorney Barry Slotnick, they found it simply inconceivable that this jury hadn't reviewed a single one of the 326 exhibits that had been admitted into evidence. They blamed "a once-in-a-century global pandemic" for the jury rushing. And Slotnick told the judge there was precedent for a redo, pointing to how the 5th Circuit Court of Appeals once ordered a new trial because of a low damages verdict. In that case, a hurricane was bearing down, and the judge encouraged the jurors to hurry home “before you get blown away,”

Unfortunately for the music publishers, U.S. District Court Judge Edgardo Ramos isn't delivering an encore.

In his latest opinion (read here), the judge notes there's no argument that the plaintiffs lacked time to make their case, and unlike that hurricane situation, Ramos had advised the concerned juror, "Now that the case is in your hands, you can stay as long as you wish."

Ramos continues.

"Plaintiffs do not persuasively draw any connection between the potential impact of the COVID-19 pandemic and the specific damages awarded," he writes. "As Defendants point out, the jury could have just as easily settled on a higher award in the same amount of deliberation time."

So no new trial, and the music industry's pyrrhic victory doesn't end there.

The plaintiffs also sought more than $6 million in legal fees which Sagan resisted on multiple grounds. Among other arguments, defendant's attorneys said the music publishers couldn't really be considered the victors given the disappointing verdict. The judge rejects that contention. The music publishers won on the merits. Sagan also objected to a $6 million fee award because it would leave him in "financial ruin," especially given the COVID pandemic that had caused him to cut staff. That partially pushes Ramos to limit the fee award.

In the end, Ramos trims the fee award by 60 percent, meaning the plaintiffs will have to make good with $2 million for five years worth of work.

"The Court acknowledges that the reduction imposed here is substantial," writes Ramos. "However, the Court believes that the reduction is warranted given that the net amount of fees awarded—$ 2,420,226.00—is still large. Such a hefty fee award surely constitutes adequate deterrence for would-be infringers, but is intended to remain true to the principle that such awards should not result in financial ruination for Defendants."

This article was originally published by The Hollywood Reporter.

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