Copyright issues can often arise in unexpected places – even in a karaoke bar. In Zomba Enterprises, Inc. v. Panorama Records, Inc., 2001 WL 1814319 (6th Cir. 2007), the Sixth Circuit addressed the interaction of copyright law and karaoke music. The defendant in Zomba does not seem to have thought about the possible effects of intellectual property law on its conduct, and it paid a heavy price for this omission. Businesses concerned about avoiding potential claims should instead consider ahead of time the potential intellectual property repercussions of conduct that might involve the protected rights of others.
The court in Zomba began its opinion by noting that while “countless people have lined up at various venues to perform their favorite songs with, and in front of, their friends,” few of the participants “with the possible exception of IP lawyers,” would ever even think about “the intellectual property regime governing karaoke.” Defendant Panorama Records certainly didn’t think about it. Beginning in 1998, Panorama manufactured and sold karaoke compact discs. Panorama hired musicians to record songs that at some time had been made popular by another artist. The discs contained a graphic element designed, to be viewed on a karaoke machine, which consisted of the text of each song’s lyrics. As the lyrics scrolled across a screen and the music, without vocals, played, karaoke participants could read the lyrics as they sang along. Panorama issued a new disc each month in a variety of musical genres. Each monthly “karaoke package” contained the top hits in that genre for the relevant month. Panorama apparently gave no thought to whether its karaoke packages might be infringing on the intellectual property rights of others.
The Copyright Act, however, affords protection to “musical works, including any accompanying words.” 17 U.S.C. § 102(a)(2). Plaintiff Zomba Enterprises publishes and holds copyrights to various songs, including music performed by pop music performers such as 98 Degrees, the Backstreet Boys, NSYNC, and Britney Spears. Zomba learned that Panorama’s karaoke packages contained unauthorized copies of some of Zomba’s songs. Zomba filed suit asserting thirty counts of copyright infringement – one count for each Zomba-owned musical composition that Panorama recorded and sold in its karaoke packages.
The Sixth Circuit rejected Panorama’s argument that its copying of Zomba’s songs should be considered “fair use” under the Copyright Act. Section 107 of the Copyright Act provides that “the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” 17 U.S.C. § 107. In analyzing a fair use claim, a court is also to consider the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the use in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for or value of the copyrighted work.
The Sixth Circuit held that, in particular, a court assessing fair use should consider whether the use is transformative. A work is transformative and more likely to be protected by the fair use defense if it adds something new or alters the work with new expression or different character. In this case, Panorama’s hired musicians did not change the music or the words of the songs.
The court also rejected Panorama’s contentions that its use was transformative because, unlike the original songs, the karaoke packages could be used as a teaching tool and encouraged creativity. Panorama admitted, however, that karaoke is primarily a form of entertainment, and it was unable to produce any evidence that its discs had ever been used as a “teaching” tool. The court also noted that the end-user’s utilization of the discs was largely irrelevant to the fair-use analysis. According to the court, “Zomba does not challenge karaoke crooners’ renditions (atrocious or otherwise) of the relevant compositions, but rather Panorama’s decision to copy these songs onto CD+Gs and then distribute them without paying royalties.” Panorama’s use of the songs was commercial in nature, and the “creativity” of the karaoke performers did not change that fact.
Panorama also failed to prove its copying did not adversely affect the market value of Zomba’s copyrights. The court went on to conclude that Panorama’s copying was willful and sustained the district court’s award of $31,000 in damages per infringement plus attorney’s fees. For business concerned about copyright infringement, the decision in Zomba highlights the evolving law of copyrights and the limits of the fair use doctrine.
Full opinion: http://www.ca6.uscourts.gov/opinions.pdf/07a0242p-06.pdf