In re Isbell Records, Inc.

Addressing for the first time the issue of whether a partial owner of a copyright can be awarded infringement damages for his co-owner’s share, the U.S. Court of Appeals for the Fifth Circuit determined that a partial copyright owner may recover 100 percent of the damages from infringement of the copyright.  In re Isbell Records, Inc., Case Nos. 13-40878; 14-40545 (5th Cir., Dec. 18, 2014) (Higginson, J.).

Alvertis Isbell (Bell) is the former president of Bellmark Records, which was in the business of owning sound recordings.  Bell was also the owner of the music publishing company, Alvert Music.  The writers and producers of the song “Whoomp! (There It Is),” a group called Tag Team, entered into an exclusive producer’s agreement (Recording Agreement) with Bellmark for the ownership of the sound recordings and the payment of royalties for “Whoomp!”.  The Recording Agreement assigned to Bellmark’s affiliated designee publisher 50 percent of the rights, title and interests to the copyrights and any registration and copyright applications relating thereto and 50 percent of those rights to Tag Team.

Following Bellmark’s 1997 filing for bankruptcy, DM Records purchased Bellmark’s assets.  The assets subject to the sale were not defined, but rather included “all property of the company.”  Upon purchasing Bellmark’s assets, DM began exploiting the composition copyright to the song “Whoomp!”.  Bell, doing business as Alvert Music, sued DM for copyright infringement in 2002, seeking a declaratory judgment that Alvert Music—not DM, as purchaser of Bellmark’s assets—is the rightful owner of the composition copyright for “Whoomp!”.  Bell also sought damages for infringement.  After several procedural events, the case went to trial in 2012.

The court found that Bellmark’s affiliated designee publisher was Alvert Music and, thus, that Alvert Music was the owner of “Whoomp!”, holding DM was liable for copyright infringement.  Following the court’s finding of liability, the jury found actual damages of over $2 million and statutory damages of almost $135,000.  After several post-trial motions were denied, DM appealed this case to the 5th Circuit.  Along with several procedural issues, DM appealed the jury’s damages award as erroneous for awarding Bell 100 percent of the copyright damages, even though he was found to own only 50 percent of the copyright.

The 5th Circuit affirmed the district court.  The 5th Circuit distinguished Edward B. Marks, in which the U.S. Court of Appeals for the Second Circuit held that “the recovery shall be confined to the plaintiff’s own part,” i.e., its “proper share” of any damages.  Marks dealt with the nonjoinder of a copyright co-owner and did not involve a situation where there was evidence from which the jury could find that the plaintiff was administrator for all of the royalties.  The 5th Circuit pointed out that, in this case, there was testimony that Bell is the administrator of one hundred percent of the royalties and is responsible for accounting to the owner of the other half of the copyright, Tag Team.  As such, the court found that the jury could have determined that Bell was properly awarded 100 percent of the royalties, from which it could pay Tag Team its share.

Practice Note:  The proper redress in a case where in infringement damages are awarded to one of two co-owners of a copyright is through a suit between the co-owners and not in further litigation against the defendant.