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IP/Entertainment Case Law Updates

ML Genius Holdings, LLC v. Google LLC

Second Circuit affirms dismissal of breach of contract and unfair competition claims brought by music lyric service Genius alleging that Google and LyricFind breached Genius' terms of use by copying and displaying lyrics posted to Genius' platform without permission, finding claims were preempted by Copyright Act. 

ML Genius Holdings, LLC, which operates an internet platform on which music fans post transcribed song lyrics, sued LyricFind for allegedly misappropriating those transcriptions from Genius’ platform and Google for displaying those transcriptions in response to internet searches for a particular song. Notably, Genius did not claim infringement of the underlying lyrics, because it does not hold the copyright to those lyrics. Genius claimed that it used a complex system of watermarking to determine that Google was in fact displaying the lyrics from Genius’ website. Genius asserted claims for breach of contract, indemnification, unfair competition and unjust enrichment. Google removed the suit to federal court on the grounds that all of Genius’ state law claims arose from the alleged copying of copyrighted material, which is governed exclusively by federal law, and then moved to dismiss the claims as preempted by the Copyright Act. The district court agreed, dismissing the suit after finding for Google on preemption. (Read our summary of the district court’s decision here.)

On appeal, the Second Circuit affirmed, finding that Genius’ allegations that LyricFind scraped, and Google used, Genius’ lyric transcriptions amounted to allegations that defendants made unauthorized reproductions of the transcriptions, which is proscribed by the U.S. Copyright Act. Since defendants were not alleged to have breached any fiduciary duty or confidential relationship with Genius, nor did they misappropriate any trade secrets, Genius’ claims fall under the umbrella of the Copyright Act. 

Statutory preemption involves two prongs: whether the work falls within the subject matter of copyright, and whether the claims seek to vindicate rights that are equivalent to the exclusive rights under copyright. The court first determined that Genius’ lyric transcriptions satisfied the subject matter prong. Despite Genius’ argument that the transcriptions (as opposed to the underlying lyrics themselves) are not copyrightable, the court found that the transcriptions fall within the subject matter of copyright, even if they are not protectable. The court next determined that Genius’ breach of contract claim satisfied the equivalency test, because the right Genius “seek[s] to protect is coextensive with an exclusive right already safeguarded by the Act—namely, control over reproduction and derivative use of copyrighted material.” Genius’ unfair competition claim similarly satisfied the second prong of preemption; it did not include an “extra element” that would “qualitatively differentiate its unfair competition claims from a federal copyright claim.” Lastly, the court held that the “hot news” exception to copyright preemption did not apply, because there was nothing time sensitive about Genius’ lyric transcriptions.

Summary prepared by Tal Dickstein and Shannon Gonyou 

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