By Erach F. Screwvala
Capital Records, Inc. v. Naxos of America, Inc.
At issue are certain sound recordings made between 1933 and 1936 in the United Kingdom. At the time of the recordings, the artists signed agreements granting the recording company "all rights in the 'Artiste's personal performance and all rights of any nature whatsoever in respect of the records made by the Artiste for the Company that the Artiste shall at any time possess in any country of the world where the [British] Copyright Act 1911 is not in force.'"[4]
In 1996, Capital purported to acquire the rights to the original recordings from the original copyright owner.[5] Naxos, without permission from either the original copyright owner or from Capital, used the original shellacs to create restorations of the recordings, which it began to sell in 1999 in direct competition with Capital's restorations.[6] Capital sued, alleging unfair competition, misappropriation of property, unjust enrichment, and common law copyright infringement.
The Honorable Robert W. Sweet, in two rulings, concluded that Capital had no protectible rights to the original recordings and dismissed the case.[7] In pertinent part, the district court appears to have held that since the copyrights expired under British law, Columbia could not claim any intellectual property rights under New York common law.[8]
Under British law, copyrights in sound recordings expire "50 years from 'the making of the original plate.'"[9] Therefore, there is no dispute that under British Law, the recordings restored by Naxos are in the public domain.[10] Additionally, no copyright protection exists under federal copyright law, since federal protection of sound recordings did not exist prior to 1972.[11]
Notwithstanding the lack of protection under either British or United States law, both the District Court and the Second Circuit recognized that copyright protection may nonetheless exist under state common law.[12] The obvious question, of course, is why New York law applies to a recording made solely within the United Kingdom and which is no longer protected by British law. The answer lies in the fact that the acts of infringement allegedly committed by Naxos occurred in New York. Under well settled principles of law, courts will apply the law of the site of the alleged infringement - in this case, New York law.[13] Thus, New York law will determine whether protection exists for works that have fallen into the public domain in their country of creation.[14]
While it is impossible to predict how the New York Court of Appeals will rule on the issue, the Second Circuit has identified at least two possible outcomes. First, the state court could adopt a concept in the area of international copyrights known as the Rule of the Shorter Term.[15] Judge Sweet's ruling is essentially an application of this rule. Second, the state court may adopt a Second Circuit rule that holds that federal copyright may protect works that enjoy no protection in the country of origin.[16] As the Second Circuit recognized, however, the Second Circuit rule has only been applied to works that never enjoyed copyright protection in their country of origin.[17] The works here, however, were originally protected under British law and have since entered the public domain in the United Kingdom.
Whatever the outcome, however, preservations must exercise caution in assuming that the fact that a pre-1972 sound recording made outside of the United States that enjoys no protection in its country of origin may be freely exploited in the United States. Until federal preemption in 2067, uses of such works will be governed by applicable state law. If the Court of Appeals adopts Judge Sweet's view, the answer - in New York - will be clear and the creation and sale of restorations will not result in infringement.[18] However, for those who are not in New York, it will be necessary to consult with counsel to determine - if possible - how such a situation would treated in that jurisdiction.
This article was originally published in the Association For Sound Recorded Collections Journal, Vol. 35, No. 2 (2004)
[1] 372 F.3d 471, 481 (2d Cir. 2004).
[2] The Court of Appeals is the highest appellate court in the State of New York.
[3]Specifically, the Second Circuit asked (1) whether the expiration of the copyright in the country of origin terminates common law protection in New York, (2) whether a cause of action for copyright infringement includes elements of unfair competition, and (3) whether the limited market of the original work is a defense to infringement and whether the restorations could be considered a new product. 372 F.3d 471. The New York Court of Appeals has recently accepted the certified questions and will schedule briefs and oral argument in due course. Capital v. Naxos, 2004 WL 1933540 (New York, August 31, 2004). While all three questions raise important issues of New York's common law copyright protection, this article will focus only on the first question which is addressed to the effect that a work's public domain status in its country of origin will have on its protectibility under New York law.
[4] 372 F.3d at 474. One of the agreements contained slightly different language which provided that the recording company was "entitled to the sole right of production, reproduction, sale, use and performance (including broadcasting) throughout the world by any and every means whatsoever of the records of the works performed by Artiste under this Agreement." Id.
[5] In the District Court's view, there is a question concerning the chain of title through which Capital claimed its rights. Capital Records, Inc. v. Naxos of America, Inc., 262 F.Supp2d 204, 211 (S.D.N.Y. 2003) ("Naxos I").
[6] 372 F.3d at 475.
[7] Naxos I, 262 F.Supp.2d 204 (S.D.N.Y. 2003); Capital Records, Inc. v. Naxos of America, Inc., 274 F.Supp.2d 472 (S.D.N.Y. 2003) ("Naxos II").
[8] Naxos I, 262 F.Supp.2d at211.
[9] 372 F.3d at 479 (citing Copyright Act, 1911, 1 & 2 Geo. 5, c. 46, § 19).
[10] Id.
[11] Naxos I, 262 F.Supp.2d at 209 (citing 17 U.S.C. §104A(h)(6)(C)(ii)); see also, 372 F.3d at 477.
[12] 372 F.3d at 477; Naxos I, 262 F.Supp.2d at 210.
[13] 372 F.3d at 477 (citing Itar-Tass Russian News Agency Russian Kurier, Inc., 153 F.3d 82, 91 (2d Cir. 1998).
[14] This issue will become moot as of February 15, 2067 when state law protection over sound recordings is preempted by federal law. 17 U.S.C. §301(c).
[15] 372 F.3d at 480. The Rule of the Shorter Term is derived from the Berne Convention and essentially means that copyright protection need not be extended beyond the period of protection in the work's country of origin.
[16] 372 F.3d at 480-81 (citing Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192-93 (2d Cir. 1985).
[17] Id.
[18] If the Court of Appeals adopts a different view, there will be no clear answer and further litigation will be necessary.
