Zomba Enterprises, Inc. v. Panorama Records, Inc.

491 F.3d 574 (6th Cir. 2007)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

D manufactures and sells karaoke compact discs. It issues a new disc monthly in each of a variety of musical genres, including country, pop, rock, and R&B. The discs are in the CD+G format-shorthand for 'compact disc plus graphics.' Musicians that are hired by D record a musical composition of a work that at some time may have been made popular by another artist. The CD+G contains a graphic element and is designed to be viewed when played on a karaoke machine. The text of each song's lyrics scrolls across a screen as the music (sans vocals) plays, permitting karaoke participants to read the lyrics as they sing along. P 'is in the business of exploiting musical compositions for commercial gain.' P held and administered the copyrights to a variety of musical compositions. Without Anna is another music publishing company. Anna discovered that some of the songs to which it owned copyrights appeared on D's karaoke packages. Attorney Linda Edell Howard sent a cease-and-desist letter to D. D quit selling unlicensed copies of Anna's songs. D received this letter and then hired Vincent Castalucci, a licensing agent, and began negotiating licenses. D obtained license agreements from Without Anna. On February 28, 2002, Howard sent another cease-and-desist letter to D, this time on behalf of P. P's cease-and-desist letter specified the terms upon which P would be willing to grant a license: a $250 fixing fee for each Zomba-owned song on each package, plus royalties of $0.16 per song per CD+G sold for the first half of the five-year license term, and $0.19 per song per CD+G sold for the second-half of the term. D contacted Howard but did not stop selling CD+Gs with P's songs on them, nor did it obtain any licenses. On April 12, 2002, Howard sent a follow-up cease-and-desist letter on P's behalf. D responded to the letter. And again, D failed both to obtain licenses and to cease selling CD+Gs containing P's songs. P sued D for infringement. On April 22, 2003, the parties entered into a consent order to refrain from distributing compositions owned or administered by P. A week later D breached its agreement and resumed selling CD+Gs containing P's copyrighted work. P moved for sanctions on this basis. D's counsel withdrew on May 10, 2004. On June 18, 2004, the district court granted P's and denied D's, motion for summary judgment on the issue of copyright infringement, rejecting D's fair-use defense. A bench trial was scheduled for August 10, 2004. D was unable to obtain new counsel. The court entered a default against D on the issue of damages. D filed for bankruptcy on August 9, 2004. The district court stayed the case. After the bankruptcy court lifted its stay, D moved the district court to transfer the case. The district court denied this motion. On November 5, 2005, the district court held a hearing to determine the amount of damages. The district court concluded that the infringement was willful, and awarded $31,000 for each of the twenty-six infringements at issue (a total of $806,000). It found that the maximum award of $150,000 per infringement was excessive. D appealed.