Court Finds Sampling of Sound Recording Can Infringe Underlying Musical Composition

In an August 7, 2015 ruling, Judge Ronnie Abrams found that the “sampling” of a sound recording can constitute copyright infringement of the underlying musical composition. As Judge Abrams wrote, “‘[s]ampling’ is a ‘technique whereby a portion of an already existing sound recording is incorporated into a new work.’” In seeking summary judgment on the issue of sampling, the defendants argued that, even if it had sampled, it could not be liable for copyright infringement “because Plaintiff owns only the musical composition copyright, not the sound recording copyright, of” the allegedly infringed work. The Court rejected this argument, finding that while “sampling involves the direct copying of a sound recording, this mode of copying does not somehow shield a defendant from also infringing the underlying musical composition.” Judge Abrams concluded that “if Plaintiff is able to present evidence showing that Defendants did in fact sample the . . . drum part [in the allegedly infringed work], such evidence would constitute proof that Defendants actually copied Plaintiff’s musical composition.”

Court Finds No Personal Jurisdiction Over Defendant in Trademark Infringment Action; Transfers It to Proper Court

In a February 5, 2014 ruling, Judge Ronnie Abrams granted defendant Positive Impact, Inc.’s motion to dismiss the trademark infringement claims against it for lack of personal jurisdiction, and transferred the action to the Northern District of Georgia. Having concluded that the Court lacks personal jurisdiction, Judge Abrams declined to reach Positive Impact’s motion to dismiss certain claims.

After the Atlanta-based Positive Impact sent New York-based plaintiff DH Services, LLC a cease and desist letter over DH Services use of the “Mister” mark for its online dating services and made a follow up telephone call to Positive Impact, Positive Impact started this action as a declaratory judgment of non-infringement. It later amended the complaint to add statutory and common law claims of unfair competition and deceptive practices.

Because Positive Impact is located outside New York, and the Lanham Act “‘does not specifically provide for national service of process,’” Judge Abrams applied the law of the forum state, New York’s Long Arm statute. It was undisputed that there was no general jurisdiction over Positive Impact in New York. So DH Services alleged jurisdiction based on Positive Impact’s transaction of business in New York, its alleged commission of a tort here, and its alleged commission of a tort outside New York that had a foreseeable impact in New York.

Court Certifies Interlocutory Questions About DCMA Safe Harbor to Second Circuit

In a December 31, 2013 decision, Judge Ronnie Abrams considered the application of the “Safe Harbor” defense in the Digital Millennium Copyright Act to plaintiffs’ claims against Vimeo, LLC. Vimeo operates a service that allows users to upload videos that they have created. The plaintiff music publishers sued Vimeo “asserting claims for direct, contributory, vicarious, and common law copyright infringement, as well as for inducement to infringe copyright and unfair compliance.” In a prior decision, the Court ruled that certain videos on the Vimeo service met the Safe Harbor requirements, others did not, and that “the Safe Harbor did not extend to videos containing music recorded before February 15, 1972.” Vimeo sought reconsideration of the denial of Safe Harbor status as to some of the videos, and sought leave to file an interlocutory appeal about the pre-February 15, 1972 recordings.

Regarding the reconsideration motion, the Court noted that the “Safe Harbor limits the liability of service providers for copyright infringement that occurs ‘by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider,’ as long as the provider satisfies certain criteria.” Vimeo argued on reconsideration that the only evidence that Vimeo had viewed certain of the challenged videos was that its employees could review videos in the accounts of the users who had uploaded these videos, not that they had done so. Judge Abrams ruled that this evidence was too tenuous to permit the Court to conclude that Vimeo’s employees had in fact viewed the videos. The Court largely rejected, however, Vimeo’s argument on reconsideration that even if Vimeo had viewed the videos, they did not have “red flag” knowledge – i.e., it was not “obvious” that they infringed the plaintiffs’ copyrights – finding fact questions for the jury about that issue.

The Court also agreed to certify two questions for interlocutory review: (1) the issue about the pre-February 15, 1972 recordings, and (2) “whether . . . a service provider’s viewing of a user-generated video containing all or virtually all of a recognizable, copyrighted song may establish ‘facts or circumstances’ giving rise to ‘red flag’ knowledge of infringement.” As to the first issue, Judge Abrams ruled that it is a pure question of law, and “that there exists a substantial ground for difference of opinion on this issue.” As to the second issue, the Court noted that although the inquiry depends in part on the contents of each video, the defendants do not contest for purposes of the appeal that the videos “contain visual images set to copyrighted songs played essentially in their entirety.” The Court further found that determining whether a defendant has sufficient “knowledge of infringement [to void the Safe Harbor] is a difficult question that has important ramifications for service providers such as Vimeo,” and that there is a “substantial ground for difference of opinion” on the issue. Thus, the Court certified both issues for interlocutory review.

Court Dismisses in Part Lanham Act Claims for Lack of Standing, Permissible "Gray Goods"

In an August 15, 2013 ruling, Judge Ronnie Abrams granted the cross motions for partial judgment of plaintiff L'Oreal USA, Inc. and defendant Trend Beauty Corp. in L'Oreal's action alleging Lanham Act and state law claims against Trend Beauty.  Trend Beauty was an unauthorized wholesaler of L'Oreal's luxury fragrances.  L'Oreal claimed that "Trend Beauty's unauthorized sale of counterfeit and 'decoded' L'Oreal fragrances in the 'gray market' interfered with L'Oreal's ability to control the quality of its products," and that "the counterfeit and decoded products materially differed from L'Oreal's 'coded' products so as to constitute . . . trademark and trade dress infringement."  The "coding" refers to quality assurance, security and Universal Product Code codes that L'Oreal places on its products.  A "decoded" product is one for which one of the codes have been removed, such as the fragrance bottle has been removed from its outer box.  Trend Beauty admits that it sold decoded L'Oreal products, and further admitted that it sold about 200 units of counterfeit product, but disputes that it knew or should have know that the product was counterfeit.

As a threshold matter, Judge Abrams considered whether L'Oreal, as a licensee of the marks at issue, had standing to assert trademark infringement, and concluded that L'Oreal did not have standing.  The Court noted that "L'Oreal only has standing to bring its trademark infringement claims if it qualifies as a legal representative or assignee of the registrants."  The Court rejected the argument that L'Oreal was the assignee of the marks based on the factual record, and then considered whether L'Oreal is the "legal representative" of the owners of the marks.  Judge Abrams relied on recent a Second Circuit case addressing the issue as a matter of first impression, and ruled that the term requires "a party to show that it 'has the authority to appear on behalf of the registrant/owner with respect to the registrant/owner's legal interests and the registrant/owner is unable or incapable of representing itself and enforcing its own rights.'"  The Court applied this standard, and concluded that L'Oreal was not the registrant's legal representative.  Judge Abrams rejected L'Oreal's dilution claims under 15 U.S.C. § 1125(c) on the same ground.

Attorneys' Fees Denied After Dismissal for Lack of Personal Jurisdiction in Copyright Infringement Case

In a June 27, 2013 ruling, Judge Ronnie Abrams denied defendant American Buddha's motion for attorneys' fees after it secured dismissal of Penguin Group (USA), Inc.'s copyright infringement claim against it for lack of personal jurisdiction. Judge Abrams first noted that the "Second Circuit has not directly addressed whether the dismissal of claims against a defendant for lack of personal jurisdiction renders it a 'prevailing party' for purposes of § 505," the provision of the Copyright Act addressing an award of attorneys' fees. The Court did not have to reach that issue, though, because Judge Abrams held that "even if Defendant is deemed a prevailing party, an award of attorney's fees is not warranted in this case." In declining to find Penguin's allegation of personal jurisdiction objectively unreasonable (so as to support an award of fees), Judge Abrams found: