Tempest Publishing, Inc. v. Hacienda Records and Recording Studio, Inc.

Texas district court holds that independent recording studio willfully infringed copyright in plaintiff’s musical composition, finding defendant’s four-year delay in seeking post-recording license did not conform with industry practice.

Plaintiff Tempest Publishing Inc., a music publisher, sued Hacienda Records & Recording Studio, Hacienda Records, L.P., and Latin American Entertainment, LLC, alleging infringement of the copyrights to four musical works, including the song Somos Dos Gatos.

In 1992, Tejano-music songwriters Joe Martinez and Lee Quirino signed a songwriters contract granting exclusive rights in a song they composed, Dos Gatos, to Tessitura Music Trust. Tessitura then registered Dos Gatos with the Copyright Office, as well as music licensing organizations BMI, ASCAP, and Harry Fox Agency. Dos Gatos was recorded and released under the title Somos Dos Gatos. In 1993, Musica Adelena acquired Tessitura’s interest in Dos Gatos, and, in 2000, Tempest acquired all of Musica Adelena’s contracts and copyrights, including the copyright to Somos Dos Gatos.

In 2008, Hacienda recorded and released an album titled Y Como le Hare, which included a song that was substantially similar to Somos Dos Gatos. During preparations for the album, Rick Garcia, the executive vice president in charge of licensing for Hacienda, researched Somos Dos Gatos on BMI’s website and learned that Musica Adelena owned the copyright to the song. Despite having this information, Garcia did not communicate with BMI or Harry Fox to obtain contact information for Musica Adelena, nor did he attempt to obtain a license to use Somos Dos Gatos before recording and distributing the album Y Como le Hare.

After concluding that plaintiff owned a valid copyright and that defendants had engaged in actionable copying, the court turned to the issue of damages. Tempest sought statutory damages, and Hacienda argued for lesser damages, asserting that its copying was innocent. The court rejected Hacienda’s innocent infringement argument, finding that it failed to show that it was unaware and had no reason to believe that its acts constituted copyright infringement. The court noted that Hacienda was on notice of Musica Adelena’s copyright based on Garcia’s review of the BMI website. It also found that Hacienda knew Somos Dos Gatos was copyrighted, as Hacienda listed the composers and publisher of Somos Dos Gatos on its Y Como le Hare album cover. Moreover, Hacienda could not credibly claim reliance on an industry practice of requesting a license shortly after an album was released. Even though Musica Adelena often granted licenses after an album’s release, the practice only applied to requests made before, or within a short period of time after, the album’s release. Hacienda’s four-year delay in requesting a post-release license did not conform with industry practice.

The district court also found that Hacienda’s infringement was willful. Hacienda and Garcia were experienced in the music industry and in the law prohibiting use of copyrighted songs without permission. They knew that Musica Adelena claimed rights to Somos Dos Gatos, and that Hacienda had no license to use it. Although Hacienda did not know that Tempest had purchased Musica Adelena, Hacienda did know that it needed to contact Musica Adelena or Harry Fox to obtain a license before releasing the song—and failed to do so.

To determine statutory damages, the court weighed Hacienda’s willful and non-innocent conduct against evidence that Tempest suffered no more than $4.37 in damages and that Hacienda had received net revenues of only $79.40, ultimately awarding only $5,000 in statutory damages. The court also declined to award attorneys’ fees to either party, noting that, although Hacienda had willfully infringed Somos Dos Gatos, the court had previously found that Hacienda had not infringed any of the three other songs that Tempest had sued on.