Bar Fight! Sony Sues Karaoke Distributor For Infringement; Gets Sued Right Back For 'Copyright Misuse'

from the winner-determined-via-sing-off-at-the-holiday-inn-express-lounge-starting-at-10 dept

A great many drinkers have watched helplessly as their BAC became inversely proportionate to their common sense, throwing around cash as thought it were Monopoly money before grabbing the mic to belt out Adele's latest track. Karaoke has been the go-to bar sport for thousands of people who feel the only thing keeping them back from superstardom is sobriety. It's a proven money-maker, but does it make ridiculously large damages-type money? Sony/ATV sure thinks so:

[O]ne manufacturer and distributor of karaoke discs [KTS] has just taken Sony/ATV Music Publishing to California federal court to get a declaration that it doesn't owe $1.28 billion for 6,715 acts of alleged infringement. The plaintiff not only wants to limit its liability, but also is seeking to punish the music publisher for unfair trade practices.

Sure, karaoke is lucrative, but $1.28 billion? From one manufacturer? And how about those damages -- $190,618 per violation? How does Sony get to this number? By going back to the well over and over and over and over. And they're not the only ones in line.

The use of the original music as the background score requires a license over the master recording. The use of the song composition requires a mechanical license too. When songs are performed in public, that requires payment to a PRO like ASCAP or BMI. When the music is matched to video images, it requires a synchronisation license. And if the lyrics are being republished, that might require an additional fee too.

Standard operating procedure for karaoke manufacturers is to hire their own lineup to play the hits, thus dodging higher royalty fees by paying a mechanical license for the cover versions. Obviously, this makes financial sense considering the sheer number of tunes required to run a karaoke business, not to mention the fact that it's frequently multiple mechanical licenses. You'd think Sony would be wary of shutting down a steady income stream. But a good thing can always become a better thing with the addition of lawyers and improbable maths, amiright? Not so fast, say KTS (also via lawyers):

In KTS' lawsuit two weeks ago, the company alleges that Sony is committing copyright misuse by attempting to collect multiple damage awards on a single work from the upstream producers, the downstream users (bars and restaurants), and KTS, the packager/distributor. KTS believes this alleged bullying "scheme" is unlawful.

In its lawsuit, KTS says that Sony/ATV has long since known about its operation, and rather than take reasonable steps to stop such products at the source, the defendant has: "instead committed copyright misuse by seeking to secure multiple license fees for the same allegedly infringed work by suing each link on the distribution chain, by demanding license fees for licensed goods and by attempting to obtain more than one statutory damage award for the continuing infringement (i.e., down stream distributions of the infringing work) of a SINGLE WORK."

This declaration only succeeded in irritating the music giant, which like many major labels finds itself easily angered in this "post-Napster" environment. Sony wants both damages and an injunction against KTS. KTS wants Sony to be realistic and to honor licenses paid by distributors instead of shoving all of its hands into KTS' wallet over and over again.

KTS wants a declaration that Sony is only eligible for one statutory award per work, which would trim the nearly $1.3 billion that Sony allegedly says it is due, but perhaps just as importantly, the karaoke manufacturer is bringing a bold copyright misuse claim that seeks to punish the publisher for trying to "recover multiple times for the same allegedly infringing conduct at rates greater than if the claims had been asserted against the manufacturers."

We'll see how this shakes out, but I have a feeling that Sony may be willing to slaughter one of its few remaining cash cows (you know, where people are still paying for music -- music not even performed by the original artists) on the altar of infringement, rather than settle for lower mechanical license fees. When all you have is sales declines, everything looks like a lawsuit.

Filed Under: copyright, karaoke
Companies: kts, sony, sony/atv