PALLADIUM MUSIC, INC. v. EATSLEEPMUSIC, INC.

June 17, 2013

PALLADIUM MUSIC, INC. v. EATSLEEPMUSIC, INC.

http://caselaw.findlaw.com/us-10th-circuit/1423671.html

The parties involved in this case were Palladium Music Incorporated, also known as Palladium, as the Plaintiff vs. EatSleepMusic Incorporated (ESM) and Tennessee Production Center Incorporated (TPC) who is doing business as Chartbuster Karaoke as the defendants. Palladium has brought an action suit against ESM and TPC for copyright infringement.

Palladium is a company that rerecords popular music to make karaoke tracks. They create the entire musical recording from scratch and farm out the video lyrical work to other businesses, TPC is one of those contracted business’s. In 1999, Palladium began offering its recordings directly to consumers through downloads on the Internet and started filing copyrights for all of their recordings. After this was all established Palladium asked its manufactures to sign licensing contracts to allow Palladium to add their sound recordings into other karaoke products, but would restrict the sale and use of their recordings over the Internet. TPC, however, refused to sign the proposed licensing agreement.

In November of 2002, Palladium learned that ESM was selling their recordings through the ESM website. Palladium used a digital watermark and was able to figure out that TPC sold them the recordings in question. Palladium than brought this suit against ESM and TPC for copyright infringement in marketing their recordings online without an appropriate license. They also presented to the court with twenty different certificates of registration for their created recordings. Each of these registrations identified Palladium as its author.

ESM and TPC stated that, “Palladium’s copyrights were invalid and unenforceable because Palladium produced the sound recordings at issue without the authority of the copyright owners of the underlying musical compositions.” They basically showed the court that Palladium did not own any real copyrights of these recordings. They took away the use of Palladiums certificates by presenting evidence that the recordings were based on already created music. They showed that Palladium did not have the any rights to copy or reproduce these existing songs. ESM and TPC also filed an appeal against Palladium for attorney’s fees, which was denied. Palladium than appealed the defendants cross appeal.

The Judicial Opinion for this case states, “The district court found that Palladium had failed to obtain a license from the copyright owners of the underlying musical compositions as provided in 17 U.S.C. § 115, and thus was not lawfully using the preexisting material. As a result, the district court concluded Palladium’s copyrights were therefore invalid and unenforceable.” The court agreed with the evidence that ESM and TPC presented that the recordings were copied from already existing work.

Palladium continued that this was not the case because their recordings were all original and did not use any material from the original songs. They pushed the point that they were not required to have compulsory or consensual licenses for their recordings due to their originality. They think their originality comes from the fact that they recorded every single musical note in the song themselves, however the court and the Copyright Act do not see it that way. The Act states, “A work can generally be copyrighted as a derivative work only if the new work was produced with the permission of the copyright owner of the preexisting work or its duly authorized licensee.” Palladium did not have permission from the copyright owner.

At the court’s discretion they also denied ESM and TPC any reimbursement of attorney fees. In fact, neither party received any fees at all. 

I can actually see both sides of this case. I can agree with the plaintiffs, Palladium, because they showed that they had twenty different copyright certificates. In the notes section of this case it states, “The collections identified by the copyright registration certificates are comprised of more than two thousand individual sound recordings based upon previously copyrighted musical compositions. Palladium alleged that TPC and ESM infringed its copyrights by distributing over five hundred of these individual sound recordings.” I can see that they feel like they proved their point very well and why would this all of a sudden be a problem for them now. They have obviously been running their business this way for a long time and everything seems legal and legit.

On the other hand, ESM and TPC as the defendants, make some valid points that Palladium’s certificates were not actual permission from the original authors of the recordings. I can see how these two companies were not wanting to get into any trouble or receive any fines do to reproducing Palladiums reproductions. This could have bit them pretty good so they decided to point the attention to what Palladium was doing, or not doing correctly.

If I had to choose a side I would agree with the courts ruling. I feel that if your want to reproduce someone else’s music for a karaoke CD than you should have the correct copyrights that allow you to do so. Plus to prove that there was actual copyright infringement, Palladium had to prove they had ownership of a valid copyright and that there was unauthorized copying of the original work happening.

I believe that the goals of copyright are being served by the outcome of the case because Palladium was accused of not having the correct form of documentation for a copyright. As stated in this case, “The Copyright Act defines a derivative work as “a work based upon one or more preexisting works[.]” 17 U.S.C. § 101. Examples of a derivative work provided by the Act include, among others, a “translation,” “musical arrangement,” and most relevant for our purposes, a “sound recording.” Id.;  See also 2 M. Nimmer, Nimmer on Copyright § 2.10[A] n.8 (“A sound recording is a derivative work in relation to the musical work recorded therein, just as a motion picture is a derivative work in relation to the novel or screenplay upon which it is based.”);  Pamfiloff v. Giant Records, Inc., 794 F.Supp. 933, 938 (N.D.Cal.1992) (quoting Nimmer ). A work can generally be copyrighted as a derivative work only if the new work was produced with the permission of the copyright owner of the preexisting work or its duly authorized licensee.”

Palladium used this preexisting material as merely a basis for their material, which was still unlawful, so they argued that the idea of derivative work does not apply to any part of the work they created. I think that it does though; they copied someone else’s ideas without permission to do so. They basically created their own phonorecords .I understand what they were trying to do with their karaoke cd’s, but I think they could they have just asked for the correct permissions.

The case also states very clearly that,” Palladium has illegally used the preexisting material. As a result, Palladium’s copyrights in the sound recordings at issue are invalid and unenforceable.” They were wrong and the court upheld the Copyright Act, as they should.

Resources used were:

PALLADIUM MUSIC INC v. EATSLEEPMUSIC INC, Nos. 04-6061, 04-6097., February 14, 2005 – US 10th Circuit | FindLaw. (2005, February 14). Caselaw: Cases and Codes – FindLaw Caselaw. Retrieved June 16, 2013, from http://caselaw.findlaw.com/us-10th-circuit/1423671.html

U.S. Copyright Office – Law and Regulations. (n.d.). U.S. Copyright Office. Retrieved June 17, 2013, from http://www.copyright.gov/laws/

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