The Estate of Joe Brown v. ARC Music Group, et al.

Filing 134

MEMORANDUM OPINION AND ORDER: Signed by the Honorable Harry D. Leinenweber on 8/17/2012:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ESTATE OF JOE BROWN,
Plaintiff,

Case No. 10 C 7141

v.

Hon. Harry D. Leinenweber

ARC MUSIC GROUP, et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
Before the Court are the Arc and Frederick Defendants’ Motions
for Attorney’s Fees under the Copyright Act. The Motions are granted
as to liability.
in regards

to

Arc Defendants’ Motion is denied without prejudice
apportionment.

Both

sanctions under 28 U.S.C. § 1927.
I.

Defendants’ also

moved for

Those Motions are denied.

BACKGROUND

Plaintiff, the Estate of Joe Brown, brought an action against
the following Defendants:

Arc Music Group and Opus 19 Music, LLC

(the “Arc Defendants”), Music Sales Corporation (“Music Sales”),
Frederick

Music

Company

and

Vincent

Brandom

(the

“Frederick

Defendants”), and Katrina Music Company and Willie C. Cobbs (the
“Katrina Defendants”).
Plaintiff
copyright
conspiracy.

brought

infringement,

claims

against

fraud,

unjust

the

Arc

Defendants

enrichment

and

for

civil

Plaintiff also sought an accounting and a constructive

trust. Plaintiff alleged that, without authority, the Arc Defendants

filed copyright registrations and collected funds for compositions
owned by the Plaintiff. The Court granted the Arc Defendants’ Motion
to Dismiss, dismissing for failure to state a claim the copyright
infringement, fraud, constructive trust, and civil conspiracy claims
with prejudice in an order dated November 22, 2011.
dismissed

the

unjust

enrichment

and

accounting

The Court

claims

without

prejudice to allow the Plaintiff to replead those claims.
From the Frederick Defendants, Plaintiff sought to recover for
copyright infringement, trademark infringement, common law fraud, and
conspiracy.

Plaintiff alleged that the Frederick Defendants failed

to pay royalties owed to the Plaintiff under a publishing agreement.
Plaintiff’s

Second

Amended

Complaint

voluntarily

dismissed

its

copyright and trademark infringement claims against the Frederick
Defendants, and added claims of breach of fiduciary duty, unjust
enrichment, accounting, and constructive trust.

The Court granted

the Frederick Defendants’ Motion to Dismiss, dismissing all claims
with prejudice.
The Arc and Frederick Defendants now move for attorneys’ fees
pursuant to the Copyright Act (17 U.S.C. § 505) and for sanctions
under 28 U.S.C. § 1927.

Familiarity with the Court’s order of

November 22, 2011 is presumed, and further facts are discussed below
where relevant.

- 2 -

II.
A.

ANALYSIS

Attorneys’ Fees Under the Copyright
Act, 17 U.S.C. § 505

The Copyright Act provides that a court has discretion to award
the prevailing party reasonable attorneys’ fees.

17 U.S.C. § 505

(2006). For this provision, prevailing plaintiffs and defendants are
treated alike.

Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994).

The defendant is considered the prevailing party when the action is
dismissed with prejudice. Riviera Distribs., Inc. v. Jones, 517 F.3d
926, 928 (7th Cir. 2007).
The Supreme Court in Fogerty listed four non-exclusive factors
that courts use to guide their discretion regarding attorneys’ fees.
These factors are frivolousness, motivation, objective factual and
legal unreasonableness, and the need in particular circumstances to
advance considerations of compensation and deterrence.

Fogerty, 510

U.S. at 534 n. 19 (citing Lieb v. Topstone Indus., Inc., 788 F.2d
151, 156 (3d Cir. 1986)).
The Seventh Circuit has further streamlined the Fogerty factors
into

just

two

important

considerations:

the

strength

of

the

prevailing party’s case and the amount of the relief obtained by the
prevailing party.

Assessment Techs. of WI, LLC v. WIREData, Inc.,

361 F.3d 434, 436-437 (7th Cir. 2004).

When the claim is frivolous

and the prevailing party is a defendant who has not otherwise
obtained

damages

(through

a

counterclaim,

for

example),

presumption to award attorneys’ fees is “compelling.”
- 3 -

Id.

the

The prevailing party entitled to attorneys’ fees on a particular
claim can only recover attorneys’ fees in defending against that one
claim or any related claims, but not for unrelated claims.

Entm’t

Research Grp. v. Genesis Research Grp., 122 F.3d 1211, 1230 (9th Cir.
1997).
1.
Plaintiff’s
Defendants

copyright

centered

on

the

Arc Defendants
infringement
following

action

against

compositions:

the

Arc

“This

New

Generation,” “Dark Road Blues,” and seventy-seven others attached in
a list to the Complaint.
filed copyright

Plaintiff alleged that the Arc Defendants

registrations,

filed

renewal

registrations,

and

collected funds for these compositions without authorization.
Plaintiff’s pleadings regarding “This New Generation” conceded
that James Oden (“Oden”) was a co-author of the composition.

Oden’s

joint author status can be seen from Joe Brown’s own copyright
registration, which lists Oden as a co-author. Plaintiff’s Complaint
attempted to establish sole authorship by alleging that Oden was an
employee at Lawn Music Co. (“Lawn”), a company Brown owned. (Brown’s
estate is the successor to Lawn.) Even though Plaintiff pleaded that
Oden was “work for hire under Lawn,” he did not allege sufficient
facts in support such a relationship.
Plaintiff additionally argued that Oden’s original registration
was invalid because of Brown’s previous original registration.
However, as the Court previously found, Oden was identified as a
claimant in the original registration and could, therefore, file
- 4 -

another

registration

in

his

own

name.

See

37

C.F.R.

§ 202.3(b)(11)(ii) (2006).
The Arc Defendants, as successors of Oden, could not be liable
to Plaintiff for copyright infringement because each author of a
joint work holds an undivided interest in it.
(2006).

See 17 U.S.C. § 201(a)

The joint authors of a copyright are akin to tenants in

common, and each may use or license the joint work.

Erickson v.

Trinity Theatre, Inc., 13 F.3d 1061, 1068 (7th Cir. 1994).
joint

authors

cannot

be

liable

to

each

other

for

While

copyright

infringement, each must account to the other for a share of profits
stemming from individual use or licensing.
F.3d 644, 652 (7th Cir. 2004).

Gaiman v. McFarlane, 360

However, when joint authorship is

conceded, as the Court found that it was here, the “appropriate
remedy is a state law suit for accounting of profits.”

Estate of Joe

Brown v. Arc Music Grp., 830 F.Supp.2d 501, 517 (N.D. Ill. 2011)
(citing

Gaiman,

360

F.3d

at

652).

Plaintiff

did

not

allege

sufficient facts to provide the Arc Defendants with notice of a state
law accounting claim based on co-ownership.

The Court granted leave

to the Plaintiff to replead an accounting action under a copyright
co-ownership theory within thirty days of the Order.

However,

Plaintiff did not do so.
With respect to “Dark Road Blues,” Plaintiff’s pleadings again
conceded

that

songwriter

Brown

Floyd

co-authored

Jones

the

(“Jones”).

work,

in

this

Brown

filed

a

case

with

copyright

registration for this composition in 1961 that listed Brown and Jones
- 5 -

as claimants.

Plaintiff again tried to establish sole ownership of

the composition by alleging that Jones, in 1953, and Metric Music
Company, in 1970, assigned Brown their interest in a composition
called “On the Road Again.”

“On the Road Again” was a separate work

from “Dark Road Blues,” so neither of these assignments would have
given Brown sole authorship rights in “Dark Road Blues.”
The Arc Defendants, as successors of Jones, could not be sued
for copyright infringement by Plaintiff as the co-author of “Dark
Road Blues.” Again, however, leave was granted to replead accounting
actions, which was not done.
With respect the additional seventy-seven works attached to its
Complaint, Plaintiff failed to attach any copyright registration
certificates

or

even

plead

registered by Plaintiff.

that

these

copyright

of

claim

this

information,

because

had

been

Plaintiff also failed to even allege that

it owned the copyrights to those songs.
alleging any

compositions

Copyright

The Court held that without

Plaintiff failed
registration

is

to
a

state

well-known

statutory prerequisite to filing a suit under the Copyright Act.
U.S.C. § 411(a) (2006).

a

17

Plaintiff also could not have credibly

brought the infringement action without being the copyright owner of
the listed songs.

See 17 U.S.C. § 501(b)(2006).

As noted above, the presumption for awarding attorneys fees to
the prevailing party in a frivolous action who otherwise receives no
damages is very strong in the Seventh Circuit. Here, the presumption
was not rebutted as the Arc Defendant’s defense was exceedingly
- 6 -

strong.

For “This New Generation” and “Dark Road Blues,” Plaintiff

alleged

copyright

infringement

against

compositions, a recognized impossibility.

a

co-author

of

the

For the listed works,

Plaintiff alleged copyright infringement without first establishing
copyright ownership or satisfying the registration prerequisite for
infringement actions.
It should have been apparent to Plaintiff that the infringement
action was without merit.

See Budget Cinema, Inc. v. Watertower

Assocs., et al., 81 F.3d 729, 732-733 (7th Cir. 1996) (reversing
district

court’s

denial

of

attorney

fees

when

plaintiff

filed

infringement action before finalizing ownership interest and before
effective date of copyright registration but still sought statutory
damages and attorneys’ fees).

If Watertower decrees that merely

jumping the gun on ownership and registration merits attorney’s fees,
then filing infringement counts against an admitted co-author for
some works and failing to even allege ownership in other works must
merit them as well.
Attorneys’

Fees

is

Accordingly, the Arc Defendants’ Motion for
granted

as

to

liability

in

defending

the

infringement action.
In

addition

to

copyright

infringement,

Plaintiff’s

claims

against the Arc Defendants also included breach of a fiduciary duty,
fraud, and civil conspiracy.

The Arc Defendants contend they are

entitled to attorneys fees for these dismissed counts as well.

For

Plaintiff’s fraud, constructive trust, and civil conspiracy claims to
be sufficiently related to the copyright infringement claim, (and
- 7 -

thus merit attorneys’ fees under § 505) the claims must have arisen
out of a “common core of facts” or “related legal theories.”

Ustrak

v. Fairman, 851 F.2d 983, 988 (7th Cir. 1988).
The fiduciary duty, fraud and civil conspiracy counts were based
on

the

allegations

that

the

Arc

Defendants

filed

copyright

registrations for the Plaintiff’s compositions without authorization.
Because this was the same course of alleged conduct that gave rise to
Plaintiff’s copyright infringement action, the Arc Defendants are
entitled to fees for defending these counts as well.
The Arc Defendants concede they are not entitled to fees for the
accounting and unjust enrichment counts that were dismissed without
prejudice.

Accordingly, The Arc Defendants requested $100,000,

representing

72%

of

its

actual

fees

and

expenses

totaling

$138,936.33.

The Arc Defendants give little information regarding

how they arrived at this figure and must show where it comes from by
submitting detailed original time records and billing statements.
This Court has the discretion to ask the Arc Defendants to submit
such materials, instead of relying exclusively on their declaration.
See Entm’t Research Grp., 122 F.3d at 1230-31 (holding that district
court abused its discretion in relying exclusively on the declaration
of the party requesting attorneys’ fee to segregate time spent on
each claim) (citing Hensley v. Eckerhart, 461 U.S. 424, 436-37
(1983)).
The Court recognizes that billing records for briefs might not
indicate how

much

time was

spent
- 8 -

writing

the

accounting

issue

sections versus

the

infringement

issues

sections.

If

the

Arc

Defendants are unable or unwilling to engage such hair-splitting, the
Court is prepared to award Arc Defendants 50 percent of their fees,
in recognition of the fact that the case was bifurcated along a line
between

the

meritless

infringement

meritorious accounting issues.
note,

they

must

still

issues

and

the

potentially

In any event, as the Arc Defendants

submit

documentation

demonstrating

the

reasonableness of their fees.
2.

Frederick Defendants

Plaintiff’s copyright infringement action against the Frederick
Defendants arose from a publishing agreement, where Plaintiff granted
sole and exclusive publication rights, and the rights to grant
mechanical licenses in exchange for half of royalties received.
Plaintiff

alleged

that

the

Frederick

Defendants

failed

to

pay

royalties subject to this publishing agreement since 1976.
In the Second Amended Complaint, Plaintiff voluntarily dismissed
its copyright claims against the Frederick Defendants. The Frederick
Defendants, therefore, prevailed for the purposes of 17 U.S.C. § 505
when

Plaintiff

prejudice.

voluntarily

dismissed

its

copyright

See Riviera Distribs., 517 F.3d at 928.

claim

with

Thus, the

Frederick Defendants are also presumptively entitled to attorneys’
fees, especially after looking at the strength of the Frederick
Defendants’

defense,

which

revolved

limitations.

- 9 -

around

the

statute

of

The statute of limitations under the Copyright Act in this
instance

began

to

run

when

the

royalty

payments

stopped,

and

prescribed a three-year window in which Plaintiff needed to bring its
action.

See 17 U.S.C. § 507(b) (2006).

Furthermore, the Frederick

Defendants assigned all of their rights and interests to Music Sales
Corporation

on

July

1,

1996.

This

assignment

included

the

responsibility to make royalty payments to writers and composers,
relieving the Frederick Defendants of their royalty obligation to the
Plaintiff.

Because

Plaintiff

had

far exceeded

the

statute

of

limitations for a copyright claim, the Frederick Defendants’ defense
strengthens the presumption entitling them to attorneys’ fees.

See

Bridgeport Music, Inc. v. Lorenzo, 255 F.Supp.2d 795, 799 (M.D. Tenn.
2003) (awarding attorneys’ fees when plaintiff brought claim outside
of

the

statute

of

limitations).

Accordingly,

the

Frederick

Defendants’ Motion for Attorneys’ Fees pursuant to the Copyright Act
is granted.
In addition to its copyright infringement claim against the
Frederick Defendants, Plaintiff also brought claims for trademark
infringement, fraud, conspiracy, breach of fiduciary duty, unjust
enrichment,

accounting,

and

constructive

trust.

The

trademark

infringement claim was voluntary dismissed with prejudice in the
Second Amended Complaint, and the remaining claims were dismissed
with prejudice in the November 22 order.

These claims were also

based on the publishing agreement between Plaintiff and the Frederick
Defendants.

The publishing agreement and the Frederick Defendants’
- 10 -

failure to pay royalties were part of the common core of facts that
also gave rise to the copyright infringement claim.

Accordingly,

because these claims were sufficiently related to the copyright
infringement claim, and were equally outside of the statute of
limitations and without merit, the Frederick Defendants do not need
to apportion the time spent on defense of these claims.

However,

they must still submit a motion demonstrating the reasonableness of
the attorney’s fees with attachments documenting billing and time
records.
B.
The

Arc

and

Sanctions Under 28 U.S.C. § 1927
Frederick

Defendants

both

filed

Motions

for

attorney’s fees and costs pursuant to 28 U.S.C. § 1927, alleging that
Plaintiff’s motion to reconsider the Court’s November 22, 2011
Memorandum Opinion and Order dismissing Plaintiff’s Second Amended
Complaint unnecessarily, unreasonably, and vexatiously multiplied the
proceedings in this action.
An award under Section 1927 must be supported by a finding of
bad faith:

vexatiousness has been defined as either subjective or

objective bad faith.
(7th Cir. 1992).

Kotsilieris v. Chambers, 966 F.2d 1181, 1184

But Kotsilieris made clear that even objectively

unreasonable conduct does not, alone, equate to vexatiousness.
Kotsilieris, 966 F.2d at 1184.
The Court agrees that Plaintiff’s motion to reconsider was
objectively unreasonable because it largely rehashed the issues of
the motion to dismiss without reference to new facts or manifest
- 11 -

errors of law, which is required in a motion for reconsideration.
Caisse Nationale de Credit Agricole v. CBA Indus., Inc., 90 F.3d
1264,

1269

(7th

objectively

Cir.

1996).

unreasonable

As

actions,

vexatiousness requirement.

Kotsilieris
alone,

do

notes,
not

however,

satisfy

the

Accordingly, Defendants’ Motions for

Attorneys’ Fees and Costs pursuant to 28 U.S.C. § 1927 is denied.
IV.

CONCLUSION

For the reasons stated herein, the Defendants’ Motions for
Sanctions

under

28

U.S.C.

§

1927

are

denied.

The

Frederick

Defendants’ Motion for Attorney’s Fees under the Copyright Act is
granted as to liability.

The Arc Defendants Motion for Attorney’s

Fees is granted as to liability, but denied without prejudice as to
apportionment.
apportionment

The

Arc

Defendants

between

the

infringement-related

accounting-related claims.

must

demonstrate
claims

proper
and

the

Alternatively, the Arc Defendants may

submit a motion for 50 percent of their fees, which will be granted.
Both the Frederick and Arc Defendants are to submit filings with the
necessary documentation demonstrating the reasonableness of the fees
to which they are entitled.

The filings are due within thirty (30)

days of entry of this order.

Plaintiff has fourteen (14) days from

that point to lodge any objections to reasonableness of the fees.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
DATE:8/17/2012
- 12 -