· Record labels have taken a lot of heat for being slow learners when it comes to profiting from internet-era trends like downloads of mobile ringtones, but they haven't been shy in one area: copyright litigation against online purveyors of their artists' music. Musicians, meanwhile, have targeted the labels for allegedly stiffing them on royalties when customers pay for their music online.
· UMG Recordings has been smack in the middle of both trends. In 2008, UMG joined more than dozen other labels in a copyright infringement suit against the ringtone download site Myxer, which allegedly allowed users to download clips of more than 700 copyrighted songs. Meanwhile, as has been reported, in September 2010 the 9th U.S. Circuit Court of Appeals ruled against UMG in Eminem's landmark licensing fee suit, finding that royalty contracts predating the online music era extend to digital downloads.
· On April 1, UMG suffered a double-whammy in the ringtone wars: It lost a motion for summary judgment in the Myxer case and got hit with a class action suit for allegedly continuing to underpay its artists for online music sales, in defiance of the 9th Circuit's Eminem ruling.
· Myxer is one of the most successful websites for downloading ringtones culled from popular songs. It purportedly verifies the copyright status of its music uploads, employs a copyright compliance officer and Digital Millennium Copyright Act agent, and polices for signs of infringement. Nevertheless, in October 2009, the record labels moved for summary judgment on their direct, contributory, and vicarious infringement claims against the site. The labels also sought summary judgment barring Myxer from asserting that it can't be held liable for infringement because of the fair use provisions of the Copyright Act.
· Last year, after the other record labels settled with Myxer (reportedly signing licensing deals), UMG became the only plaintiff. Last August, its lawyers from Jeffer Mangels Butler & Mitchell pressed ahead with a summary judgment motion at oral arguments before Los Angeles federal district court judge Gary Feess.
· In a 75-page decision, Feess denied UMG summary judgment on its infringement claims, ruling that Myxer had "established a genuine issue of material fact" as to whether it took sufficient steps to qualify for the safe harbor provisions of the DCMA. But the ruling isn't a total loss for UMG. Feess also found that Myxer's use of copyrighted ringtones is not fair use under the Copyright Act. He granted the record label's motion for summary judgment on Myxer's affirmative fair use defense.
· Myxer counsel Michael Elkin of Winston & Strawn told us he was "very pleased" with Feess's ruling. "I think this was the first time [DMCA safe harbor provisions] have been applied to a situation in which a service permits a third party to upload a sound recording and have it converted to a ringtone on a mobile device," he said. "We fought to have that DMCA recognition, and we're pleased to be able to go to trial and hopefully prevail on that."
· of our artists and is not entitled to claim fair use. We are evaluating the remainder of the decision and will proceed accordingly once scheduled by the court." (That would appear to be an extremely liberal interpretation of Feess's ruling, in which the judge actually "declines to grant summary judgment as to plaintiff's claims of direct, contributory, and vicarious infringement.")
· Meanwhile, a trust representing the musical estate of funk legend Rick James filed a San Francisco federal district court class action complaint against UMG on April 1, alleging that the record company has continued to underpay its artists for music and ringtone downloads despite the 9th Circuit's ruling in the Eminem case. "Plaintiff here alleges, and the 9th Circuit found, that ringtone income received by UMG derives from a license," the complaint asserts. "Rather than fulfill its contractual obligations, UMG has systematically miscalculated the amounts due and owning to plaintiff and other class members." The James trust is represented by David Given of Phillips Erlewine & Given.