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Newsletters and Bulletins / May 2005 / United States - New York High Court Expands Copyright Protection for Recordings

United States - New York High Court Expands Copyright Protection for Recordings

The New York Court of Appeals significantly expanded common law copyright protections in Capitol Records v. Naxos of America. The Court stated that recording artists are perpetually shielded under New York standards even when their foreign copyrights have expired.

The case arose from a federal dispute over the right of Naxos of America to market restorations of recordings of classical music originally recorded during the 1930s in the United Kingdom. All U.K. copyrights in the recordings had expired by 1990. In 1996 EMI Records, whose predecessor, The Gramophone Co. Limited, produced the original recordings, gave Capitol Records exclusive rights to exploit these recordings in the U.S. market. Naxos of America also wished to preserve these important historical recordings. It located copies of the original 1930s recordings and undertook its own restoration process in the United Kingdom. The remastered compact disc versions produced by Naxos were distributed for sale in the United States beginning in 1999, competing with the compact disc products marketed by Capitol. Naxos never obtained a license from Capitol and rebuffed Capitol's demand to cease and desist from the sale of the Naxos compact discs.

Capitol commenced an action against Naxos in the United States District Court for the Southern District of New York in 2002. The complaint set forth claims of common-law copyright infringement, unfair competition, misappropriation and unjust enrichment, all of which were premised on the law of the State of New York, the situs of the alleged infringement. Naxos moved to dismiss for failure to state a claim, arguing that the recordings had entered the public domain in the United Kingdom and, hence, the United States as well. Capitol moved for, among other relief, partial summary judgment on liability.

The District Court granted summary judgment to Naxos, finding that the common law copyrights had expired with UK copyrights, and noted that public policy favored the preservation and redissemination of classical performances. The court held that Capitol failed to show that Naxos had engaged in the type of bad faith required to sustain an unfair competition cause of action. Capitol appealed.

The Second Circuit, after reviewing the history of copyright law and noting that only post-1972 recordings were protected under federal copyright statutes, and that federal case law had specifically left to the states (at least until the year 2067) issues relating to common law coverage of property not protected under federal statutes or treaties (as the recordings in question were not), found there was nothing to prevent New York common law from applying. Under that law, according to the Nrw York Court of Appeals in responding to a question certified to it by the Second Circuit, the original author had a perpetual right of ownership, and even the public sale of recordings did not dissipate that right. Such an action was entirely distinct from an action seeking to recover for unfair competition. Naxos’ argument that it was in essence creating a new product was unsuccessful as it would have been under the fair use doctrine. Thus, the court held that Naxos was not entitled to defeat Capitol’s claim for infringement of common-law copyright in the original recordings.

Traditonally, common law copyrights apply only to unpublished works and publication acts to terminate the commn law right. An eventual certiorari petition to the U.S. Supreme Court is expected.

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© Copyright 2006 Ladas & Parry - Posted 5/23/2006
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