District court dismisses copyright and breach of contract claims by licensing agents of various music libraries against licensee broadcast networks and their affiliates, finding that change in ownership resulting from a sale of licensee’s stock does not constitute an “assignment” invalidating a copyright license, and that licensing agent did not have standing to bring copyright infringement claim.Plaintiffs Premier Tracks and Graffiti Music are music publishing and distribution companies that produce and publish musical compositions and sound recordings for use in broadcast, non-broadcast, and online media. In 2005 and 2008, plaintiffs entered into license agreements with defendants Fox Broadcasting Co. and Fox Cable Networks, Inc. (the Fox Defendants), granting certain broadcast networks (the Network Defendants) a three-year, nonexclusive, world-wide, irrevocable license to use tracks from plaintiffs’ 29 music libraries in television sports productions. The license agreements prohibited any assignment of the agreements without consent.
Thereafter, the parent company of the Network Defendants entered into a share exchange agreement that transferred the ownership in the Network Defendants to defendant Liberty Media Corp. (Liberty). Plaintiffs brought a breach of contract claim against the Fox Defendants alleging that this stock sale constituted an assignment in violation of the license agreements, and copyright infringement actions against the Network Defendants. Plaintiffs also brought suit against the Network Defendants, Liberty, and others for direct copyright infringement, and against the Fox Defendants and Liberty for secondary copyright infringement for marketing the allegedly infringing broadcasters and for reproducing and storing infringing content on their servers.
The court dismissed plaintiffs’ copyright infringement and breach of contract claims against the Fox Defendants, Liberty, and the Network Defendants, finding that the stock sale did not amount to an improper assignment or transfer of the license agreements. The court found that the stock sale was permissible because agreements did not expressly prohibit the sale of stock in the Network Defendants. Under California law, because the Network Defendants remained intact after the stock sale, the sale did not result in an assignment or transfer of the licenses, which were retained by the Network Defendants. The court distinguished this stock sale from a transfer of company assets or a merger in which a licensee company ceases to exist.
The court also dismissed the majority of plaintiffs’ copyright infringement claims for lack of standing because plaintiffs failed to plead ownership of an exclusive right in the works. Under the Copyright Act, only the owner of an exclusive right under the copyright is entitled to sue for infringement. Although plaintiffs alleged that they owned exclusive rights to grant non-exclusive licenses and direct licenses for the works at issue, plaintiffs’ rights as licensing agents did not give them legal or beneficial ownership of any exclusive right under the Copyright Act. Plaintiffs also did not acquire standing simply because the owners may have assigned plaintiffs the right to bring copyright claims on their behalves.
Finally, the court found that plaintiffs were not entitled to statutory damages or attorney’s fees under the Copyright Act because all alleged infringement began prior to plaintiffs’ registration of the copyrights to the music libraries. Under the Copyright Act, a plaintiff is not entitled to statutory damages or attorney’s fees for infringement if the first in a series of ongoing infringements of the same kind commenced prior to registration of the copyright, unless the registration occurred within three months after first publication of the work. Plaintiffs first filed their applications for copyright registration in 2012, around the time this action commenced.