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IP/Entertainment Case Law Updates

Fahmy v. Jay-Z

Ninth Circuit determines that “moral rights” under Egyptian law cannot be enforced in United States, and affirms grant of judgment as matter of law to Jay-Z , Timbaland and other defendants on copyright infringement claims brought by heir of Egyptian musician whose work Jay-Z sampled in hit song “Big Pimpin’.”

In 1957, Baligh Hamdy composed the music to the song “Khosara,” which became popular after it appeared in an Egyptian movie. An Egyptian recording company, Sout el Phan, subsequently bought certain license and distribution rights to the song from Hamdy in 1968. Hamdy’s heirs inherited whatever rights he maintained in the song upon his death in 1993, and in August 1995, plaintiff Osama Ahmed Fahmy, as the heirs’ representative, executed another agreement with Sout El Phan, confirming the viability of the rights transferred in the 1968 agreement. In 1995, Sout El Phan sold to EMI Music Arabia the right to license and distribute “Khosara” in every country but Egypt.

Jay-Z and Timbaland used portions of the song “Khosara” in their 1999 hit song, “Big Pimpin’.” Understanding “Khosara” to be in the public domain, they did not acquire any permission to use it. EMI subsequently asserted its rights to “Khosara,” and Timbaland agreed to pay EMI $100,000 for the right to exploit “Khosara” in “Big Pimpin’.” Fahmy became aware of the use in 2000, and engaged an attorney to research a copyright claim against Jay-Z. The attorney subsequently contacted EMI, which informed him that EMI had a license to exploit “Khosara” but refused to provide a copy of the license. The attorney declined to represent the Hamdy heirs.

Alam el Phan, another Egyptian recording company, later assumed control of Sout el Phan’s musical catalog. In 2001 and in 2002, Mohsen Mohammed Jaber, the owner of Alam el Phan, entered into an independent agreement with Fahmy, as representative of Hamdy’s heirs, transferring broad rights in “Khosara” to Jaber, including the right to publish, use and sell “Khosara” in any part of the world, including through means of “musical re-segmentation and alteration methods.” The 2002 agreement also stated that Fahmy transferred to Jaber “all our rights clarified in the 1968 agreement.”

Despite the 2002 agreement, Fahmy filed suit against Jay-Z in 2007 alleging three separate infringements, all related to “Big Pimpin’.” On competing motions for judgment as a matter of law at the conclusion of the liability portion of trial in October 2015, the district court entered an order in favor of Jay-Z, holding that under Egyptian law, the right of adaptation is an economic right, as opposed to an inalienable moral right; that the 2002 agreement complied with Egyptian statutory requirements governing the transfer of economic rights; and that the reservation of the “rights to public performance and mechanical printing” to Fahmy in the agreement referred to the rights to receive royalties, and was insufficient to confer standing to Fahmy for his claims of infringement. (Read our summary of the court’s decision here.)

On appeal, Fahmy advanced three arguments: (1) that under Egyptian law, the right to create derivative works is an inalienable moral right, which Fahmy thus could not transfer under any agreement; (2) that even if a transfer were possible, the 2002 agreement did not transfer that right; and (3) that the right to receive royalties alone grants him standing to sue. The Ninth Circuit rejected all three.

Interpreting Egyptian law, the court observed that copyright holders in Egypt possess both moral and economic rights, and that moral rights protect a “presumed intimate bond” between authors and their works and are never transferable to another party. In contrast, economic rights exist to protect an author’s right to exploit his work for profit, and Article 149 of the 2002 Egyptian copyright law expressly permits authors to execute a complete or partial transfer of their economic rights. In addition, Article 147 of the same statute provides that authors have the exclusive right to authorize or prevent any exploitation of a work through “adaptation,” among other listed means. The Ninth Circuit therefore held that Fahmy’s argument that the right to authorize a derivative work was inalienable to be inconsistent with the express language of the Egyptian statute.

The Ninth Circuit also observed that the moral right to prevent “distortions” and “mutilations” that Fahmy advanced is not enforceable in the United States, for at least two reasons. First, the Copyright Act does not recognize any moral rights in music, but only in visual art. Furthermore, the Berne Convention — which grants protection in the United States to foreign copyright holders — does not elevate the rights of foreign copyright holders above domestic copyright holders, but guarantees only that foreign rights holders will receive the same degree of protection as their domestic peers. Fahmy therefore had no claim for violation of moral rights under United States law. In addition, even assuming that federal law recognized moral rights, Egyptian law for such rights entitles Fahmy only to injunctive relief in Egypt, and moreover, requires that an author who asserts these rights provide “fair compensation to the person authorized to exercise the economic rights of exploitation.” Fahmy’s claim for monetary damages was fully foreclosed even under Egyptian law and, given that there was no evidence that Fahmy had attempted to comply with the compensation requirement, he was not entitled even to seek injunctive relief under Egyptian law.

The court of appeals then turned to the 2002 agreement, holding that it unambiguously conveyed the right to create derivative works to Jaber, through its express grant of “all” of the economic rights in the work, notwithstanding Article 149’s requirement that the agreement contain an “explicit and detailed indication of each right to be transferred.” The court held that applying that language to require a full listing of every possible right that could be contained in a transfer of “all” rights would be counterproductive.

Finally, the court addressed Fahmy’s remaining argument, that because the 2002 agreement reserves his right to receive royalties, he is a beneficial owner under the Copyright Act, with standing to sue for infringement. The right to receive royalties does not, standing alone, confer standing to sue for infringement under the Copyright Act. The court also noted that the right to royalties is governed by state contract law, and is not an issue of federal law at all.

Summary prepared by Jonathan Zavin and Erin Smith Dennis