Structured Asset Sales LLC v. Sheeran

Structured Asset Sales LLC (SAS) sued singer-songwriter Ed Sheeran, Sony/ATV Music Publishing and others for copyright infringement, alleging that the musical composition for Sheeran’s hit song “Thinking Out Loud” infringes the copyright in the Marvin Gaye classic “Let’s Get It On,” of which SAS is a beneficial owner. SAS had previously filed the same claim, based on a 1973 copyright registration for “Let’s Get It On,” for which the deposit copy was the song’s sheet music. Following the Ninth Circuit’s recent decision in Skidmore v. Led Zeppelin holding that the scope of a copyright in an unpublished work under the 1909 Copyright Act is defined by the deposit copy, the judge in the prior action held that SAS’s claim was limited to what was expressed in the sheet music deposited with the Copyright Office. 

Following those decisions, SAS obtained a new registration for “Let’s Get It On,” depositing a sound recording this time, registering the copyright for those elements reflected on the sound recording that are not reflected in the sheet music deposited with the 1973 registration. SAS then filed this new action alleging copyright infringement, now based on both registrations. In addition, SAS claimed that Sony (which both owns the copyright to “Thinking Out Loud” and administers “Let’s Get It On”) breached two contracts by failing to maintain and enhance the protection of the “Let’s Get It On” composition under the Copyright Act by obtaining the 2020 registration, and intentionally permitting Sheeran’s copyright infringement. Defendants moved to dismiss each claim for failure to state a claim. The court denied the motion to dismiss the copyright infringement claim, granted the motion to dismiss the breach of contract claims and stayed the case pending resolution of the prior filed action.

With respect to the copyright infringement claim, defendants argued that the 2020 registration was invalid because SAS applied for the registration without authorization and misrepresented its authorship in the application, and that SAS, by virtue of its status as a beneficial rather than legal owner of the copyright, was not authorized to register the song. 

The court acknowledged defendants’ arguments, noting in particular that plaintiff did not allege that it acted as an authorized agent of the legal owner of the copyright, and that plaintiff did not allege that it qualified as an “author” of the new musical elements in the 2020 version. But the court also noted that defendants had not cited any authority that allowed the dismissal of a “facially valid” registration on a motion to dismiss, and held that it was similarly premature to do so here. 

Defendants also argued that the copyright infringement claim should be dismissed as duplicative of the prior action. The court, noting the similarities between the two actions, also emphasized that the actions have one material difference: the scope of the allegedly infringed copyright. The prior action was based solely on the 1973 registration, which encompassed only the deposited sheet music. This action was based on both that registration and the 2020 registration incorporating new musical elements not present in the sheet music. Thus, a jury could conclude that “Thinking Out Loud” is substantially similar to one but not the other version of “Let’s Get It On” such that this action is not duplicative of the prior action. Even so, the court stayed this case pending resolution of the prior action, recognizing the “considerable similarity” between the two lawsuits. 

With respect to the breach of contract claims against Sony, SAS alleged standing to assert these claims by alleging that it was a third-party beneficiary to the allegedly breached administration and songwriting agreements. The court granted Sony’s motion to dismiss on the basis that SAS had failed to plead the requisite elements of the breach of contract claims, however. The complaint did not actually identify any particular agreement that had been breached, and failed to plead sufficient facts to support the allegation that SAS was an intended third-party beneficiary of the agreements identified by Sony. Nevertheless, the court dismissed the claims without prejudice, allowing SAS to amend its complaint to bolster its allegations that it is third-party beneficiary to the relevant agreements.

Summary prepared by Linna Chen and Alex Loh