Eight Mile Style, LLC et al v. Apple Computer, Incorporated

Filing 159

RESPONSE to 138 MOTION in Limine No. 2 to Exclude Testimony of Peter Paterno filed by Aftermath Records, Apple Computer, Incorporated. (Attachments: # 1 Index of Exhibits, # 2 Exhibit 1 - Paterno 4-30-08 Transcript Excerpts, # 3 Exhibit 2 - Paterno 11-20-08 Transcript Excerpts, # 4 Exhibit 3 - Paterno Designations, # 5 Exhibit 4 - Defendants' Expert Disclosure) (Lemoine, Melinda)

Eight Mile Style, LLC et al v. Apple Computer, Incorporated

Doc. 159 Att. 3

Eight Mile Style, LLC et al. v. Apple Computer Inc., et al. Case No. 2:07-CV-13164

EXHIBIT 2 Excerpt of transcript pages from the Deposition of Peter Paterno taken on November 20, 2008

5005843.1

Dockets.Justia.com

DEPOSITION OF PETER PATERNO
Page 2
UNITED STATES DISTRICT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

EIGHT MILE STYLE, LLC, ET AL.,

) ) ) PLAINTIFFS, ) ) VS. ) CASE NO. 2:07-CV-13164 ) APPLE COMPUTER, INC., ) ) DEFENDANT. ) ______________________________)

DEPOSITION OF PETER PATERNO, TAKEN ON BEHALF OF THE PLAINTIFFS, AT 10250 CONSTELLATION BOULEVARD, 19TH FLOOR, LOS ANGELES, CALIFORNIA, COMMENCING AT 2:16 P.M., THURSDAY, NOVEMBER 20, 2008, BEFORE SAMANTHA AVENAIM, CSR NUMBER 10627.

KELLI NORDEN AND ASSOCIATES

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DEPOSITION OF PETER PATERNO
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14:18:56 14:18:57 14:18:59 14:19:01 14:19:03 14:19:05 14:19:07 14:19:10 14:19:12 14:19:13 14:19:13 14:19:15 14:19:18 14:19:20 14:19:20 14:19:23 14:19:25 14:19:28 14:19:30 14:19:48 14:19:49 14:19:49 14:19:50 14:19:52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

MR. BUSCH:

YOU'RE NOT SUGGESTING

THAT MY EXAMINATION, HOWEVER, IS LIMITED TO WHAT YOU ARE GOING TO IDENTIFY. MR. POMERANTZ: IT IS ENTIRELY

LIMITED TO THAT, BECAUSE YOU'RE ONLY ENTITLED TO QUESTION HIM ON THINGS IN WHICH HE IS GOING TO OFFER TESTIMONY AS AN EXPERT. MR. BUSCH: I CAN QUESTION HIM ON

THINGS RELATED TO BIAS AND DIFFERENT THINGS THAT WOULD COLOR HIS TESTIMONY. AGREE WITH THAT. MR. POMERANTZ: QUESTION-BY-QUESTION BASIS. WE WILL DO IT ON A BUT LET ME PUT ON THE AND SO I DON'T NECESSARILY

RECORD WHAT HE IS GOING TO BE REBUTTING.

AGAIN, THIS WOULD SUBSUME ALSO THE TESTIMONY WE ARE CURRENTLY OFFERING AS WELL. WITH RESPECT TO THE EXPERT REPORT OF MR. ABRAMS, HOWARD ABRAMS. MR. BUSCH: OF ME, PLEASE. OKAY. LET ME GET IT IN FRONT

HOWARD ABRAMS. ON PAGE 3 OF THE

MR. POMERANTZ: REPORT -MR. BUSCH: YES.

MR. POMERANTZ:

-- AT THE TOP OF

THE PAGE THERE IS A SENTENCE THAT BEGINS
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"INITIALLY." MR. BUSCH: YES. AND THEN IT'S

MR. POMERANTZ:

FOLLOWED BY A CLAUSE A AND A CLAUSE B. MR. BUSCH: YES. HE IS BEING

MR. POMERANTZ:

DESIGNATED TO OFFER TESTIMONY TO REBUT THAT PARTICULAR OPINION BY MR. ABRAMS. MR. BUSCH: YES. THAT'S IT IN THE

MR. POMERANTZ: ABRAMS REPORT. MR. BUSCH: ABRAMS REPORT? MR. POMERANTZ: MR. BUSCH:

THAT IS IT IN THE

THAT IS IT.

OKAY. AND THEN WITH

MR. POMERANTZ: RESPECT TO -MR. BUSCH:

SULLIVAN? -- MR. SULLIVAN,

MR. POMERANTZ: PAGE 12. MR. BUSCH:

OKAY. AT THE END OF THE

MR. POMERANTZ:

FIRST PARAGRAPH UNDER THE HEADING "CONTROL COMPOSITION CLAUSES" -MR. BUSCH:
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YES.
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MR. POMERANTZ:

-- THERE IS A

SENTENCE THAT BEGINS WITH "MOREOVER." MR. BUSCH: YES. HE WILL BE

MR. POMERANTZ:

REBUTTING THE OPINION IN THAT SENTENCE. MR. BUSCH: OKAY. YES.

MR. POMERANTZ:

AND THEN ON THE

NEXT PAGE, PAGE 13, UNDER THE HEADING, "THIRD PARTY LICENSES AND THE CONTROLLED COMPOSITION CLAUSE" -MR. BUSCH: RIGHT. -- HE IS GOING TO

MR. POMERANTZ:

BE REBUTTING THE SECOND -- THE OPINION IN THE SECOND SENTENCE. MR. BUSCH: "HOWEVER"? BEGINNING WITH THE

MR. POMERANTZ: WORD "HOWEVER."

AND THAT IS THE EXTENT OF HIS -- OF THE OPINIONS HE'LL BE OFFERING AND REBUTTING OR CAPTURED BY THOSE THREE SENTENCES. WE DO NOT INTEND TO OFFER HIM AS AN EXPERT ON COPYRIGHT LAW OR ANY OF THE OTHER MATTERS THAT ARE SET FORTH IN THESE EXPERT REPORTS. HIS EXPERT TESTIMONY, TO THE EXTENT
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Q. AT THEM? A. Q.

WAS THAT THE FIRST TIME YOU LOOKED

YES. OKAY. SO TODAY IS NOVEMBER 20TH,

SO IT WOULD BE FAIR TO SAY THAT THE FIRST TIME YOU LOOKED AT THE EXPERT REPORTS OR ANY MATERIAL REGARDING THIS CASE, THIS TIME OF YOUR DEPOSITION, WOULD HAVE BEEN IN THE LAST WEEK? A. Q. YES. OKAY. I THINK THAT'S RIGHT. AND WHILE YOU HAD A SHORT

CONVERSATION WITH MR. POMERANTZ WHEN HE ASKED YOU TO BE AN EXPERT, BETWEEN THAT TIME AND TODAY, THE FIRST CONVERSATION THAT YOU CAN RECALL WHERE YOU AND SOMEONE FROM HIS FIRM OR MR. POMERANTZ DISCUSSED WHAT THEY WANTED YOU TO TESTIFY ABOUT WAS THIS MORNING? A. Q. A. Q. YES. I MEAN, YES. THAT'S RIGHT.

AND TODAY IS NOVEMBER 20TH. OKAY. OKAY. NOW, TELL ME ABOUT THE

CONVERSATION TODAY ON NOVEMBER 20TH WHERE MR. POMERANTZ TOLD YOU WHAT THEY WANTED YOU TO TESTIFY ABOUT. MR. POMERANTZ: I WOULD ASK YOU TO

LIMIT IT ONLY TO THE THREE SUBJECT MATTERS THAT I
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IDENTIFIED EARLIER SINCE THAT'S WHAT WE'RE DESIGNATING YOU ON. TO THE EXTENT WE HAD CONVERSATIONS ABOUT ANYTHING OTHER THAN THOSE THREE SUBJECT MATTERS, I WOULD INSTRUCT YOU NOT TO ANSWER. MR. BUSCH: ON WHAT GROUNDS? IT'S PRIVILEGED.

MR. POMERANTZ: MR. BUSCH:

IN WHAT WAY? BECAUSE WE

MR. POMERANTZ:

REPRESENT HIM AS A WITNESS IN THIS CASE, AND WE'RE ONLY DESIGNATING HIM AS AN EXPERT ON THOSE THREE SUBJECT MATTERS. MR. BUSCH: I DISAGREE. I THINK

THAT AS AN EXPERT I'M ENTITLED TO KNOW -REGARDLESS OF WHAT YOUR DESIGNATION WAS, I'M ENTITLED TO KNOW EVERYTHING THAT WAS DISCUSSED. SO I'D ASK YOU TO WITHDRAW THAT OBJECTION AND ALLOW ME TO QUESTION HIM ABOUT ANYTHING THAT YOU AND HE DISCUSSED TODAY. MR. POMERANTZ: TO DO SO. THE RULES. AND I WOULD AGAIN INSTRUCT YOU TO LIMIT YOUR ANSWER TO THE DISCUSSIONS YOU RECALL RELATING TO THE THREE SUBJECT MATTERS I
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NO, I'M NOT GOING

I THINK MY INSTRUCTION IS PROPER UNDER

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IDENTIFIED. MR. BUSCH: I OBJECT, AND I'LL MOVE

TO STRIKE MR. PATERNO'S EXPERT TESTIMONY AS A RESULT. BY MR. BUSCH: Q. A. Q. YOU CAN. A. WE GENERALLY TALKED ABOUT MY GO AHEAD. CAN I LEAVE? IF YOU DON'T WANT TO BE AN EXPERT,

OPINING ON THINGS THAT I KNOW ABOUT, WHICH IS CUSTOM AND PRACTICE IN THE MUSIC INDUSTRY AS IT RELATES TO CONTROLLED COMPOSITION CLAUSES AND WHATEVER THOSE OTHER TWO THINGS THAT HE SAID THAT I'M GOING TO TALK ABOUT ARE. Q. OKAY. WHAT ARE THOSE OTHER TWO --

OH, WHAT ARE THOSE OTHER TWO THINGS? A. I COULD LOOK AND I COULD REMEMBER.

I DON'T REALLY REMEMBER. Q. CAN YOU TELL ME WHAT YOUR -- OTHER

THAN YOUR KNOWLEDGE AS AN ATTORNEY ABOUT CUSTOM AND PRACTICE IN THE INDUSTRY AS IT RELATES TO CONTROLLED COMPOSITION CLAUSES, IS THERE ANYTHING THAT YOU CAN RECALL RIGHT NOW THAT YOU'RE AN EXPERT ON THAT WAS COVERED IN MR. ABRAMS' OR
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MR. SULLIVAN'S EXPERT REPORTS? A. ARE THERE OTHER THINGS IN THOSE

REPORTS THAT I KNOW ABOUT? Q. THAT YOU ARE AN EXPERT ON, THAT YOU

CONSIDER YOURSELF AN EXPERT. A. I'M REALLY NOT FAMILIAR WITH WHAT I'VE PRACTICED MUSIC

IT TAKES TO BE AN EXPERT.

AND COPYRIGHT LAW FOR A LONG TIME, AND I KNOW A LOT ABOUT THOSE SUBJECTS. SO I CONSIDER MYSELF TO BE AN EXPERT IN THOSE AREAS, AND A LOT OF THAT IS COVERED IN THOSE TWO REPORTS. Q. DO YOU KNOW WHY YOU'RE ONLY BEING

DESIGNATED ON THREE SENTENCES IN THE TWO REPORTS RATHER THAN THE REMAINDER OF THE REPORTS? A. WELL, I DON'T REALLY KNOW. BUT,

YOU KNOW, I DON'T PRETEND TO BE AN EXPERT -- I DON'T PRETEND TO BE A LEGAL SCHOLAR IN THE COPYRIGHT ACT. I CERTAINLY KNOW A LOT ABOUT IT, BUT I WOULDN'T -- YOU KNOW, I WOULDN'T PUT MYSELF UP WITH PROFESSOR NIMMER AS AN EXPERT IN THE COPYRIGHT ACT. SO PROBABLY IF I WERE DESIGNATING

AN EXPERT IN THE COPYRIGHT ACT, I WOULD DESIGNATE PROFESSOR NIMMER AND NOT ME.
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Q.

WHAT ABOUT IN LICENSING FOR

PERMANENT DOWNLOADS, ARE YOU AN EXPERT IN LICENSING, CUSTOM AND PRACTICE IN THE INDUSTRY AS IT RELATES TO LICENSING FOR PERMANENT DOWNLOADS? MR. POMERANTZ: LICENSING? WHAT DO YOU MEAN BY

LICENSING BETWEEN A RECORD COMPANY AND

A THIRD PARTY DIGITAL DISTRIBUTOR? MR. BUSCH: AREA OF LICENSING. FOR EXAMPLE -BY MR. BUSCH: Q. LET ME BACK UP FOR ONE SECOND. NO. WELL, THAT'S ONE

WHAT I'M TALKING ABOUT IS --

EVEN THOUGH I WENT OVER THIS IN YOUR FACT DEPOSITION, I JUST WANT TO GET FOR THE RECORD SOME BACKGROUND ON YOU. I KNOW YOU'RE AN ATTORNEY AND YOU'RE A PARTNER IN A LAW FIRM. BEEN A PARTNER IN YOUR LAW FIRM? A. Q. A. Q. IN MY CURRENT LAW FIRM? YES. 12 OR 13 YEARS. OKAY. AND WHAT YEAR DID YOU HOW LONG HAVE YOU

GRADUATE LAW SCHOOL? A. Q. 1976. OKAY. AND JUST TAKE ME THROUGH,
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14:32:57 14:32:59 14:33:02 14:33:04 14:33:07 14:33:10 14:33:15 14:33:19 14:33:20 14:33:22 14:33:25 14:33:30 14:33:35 14:33:38 14:33:40 14:33:43 14:33:43 14:33:44 14:33:47 14:33:49 14:33:51 14:33:51 14:33:56 14:33:59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

JUST GENERALLY SPEAKING, YOU KNOW, NOT IN ANY GREAT DEPTH, BUT JUST THE JOBS THAT YOU'VE HELD IN THE MUSIC INDUSTRY OR PRACTICING ENTERTAINMENT LAW FROM '76 TO THE PRESENT. A. I TOOK THE BAR. I GRADUATED FROM LAW SCHOOL IN '76. I OPENED MY OWN LAW FIRM. I DID

THAT FOR A YEAR AND A HALF.

I THEN WENT TO WORK

WITH MANATT, PHELPS AT THE TIME OF MANATT, PHELPS, ROTHENBERG & TUNNEY WHERE I STARTED CONCENTRATING IN MUSIC LAW. I WAS THERE FOR 12 YEARS. I LEFT

TO GO START HOLLYWOOD RECORDS FOR THE WALT DISNEY COMPANY. I DID THAT FOR FOUR YEARS. I LEFT

BECAUSE THEY DIDN'T WANT ME THERE ANYMORE, AND I SPENT THE YEAR TRYING TO GET A REAL JOB. DIDN'T WORK. AGAIN. Q. A. Q. AND WHAT YEAR WAS THAT? '95, '96. SOMETHING LIKE THAT. IT

SO I WENT BACK TO BEING A LAWYER

AND YOU'VE BEEN IN THE PRIVATE

PRACTICE OF LAW FROM 1995 ONWARD? A. Q. YES. OKAY. SO IN YOUR CAPACITY AS A

PARTNER IN A LAW FIRM IN THE PRIVATE -- REPHRASE THAT.
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DEPOSITION OF PETER PATERNO
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TWO SENTENCES IDENTIFIED FOR YOU, THAT MAY BE FAIR GAME. I'M NOT AWARE OF SUCH SENTENCES. MR. BUSCH: "NO." MR. POMERANTZ: I'M CLARIFYING IT. I GUESS THAT'S WHY IT'S EITHER "YES" OR

I DON'T THINK THERE IS ANY IN BUT IF YOU HAVE

HERE THAT WOULD RELATE.

PARTICULAR ONES, I WOULD TAKE IT AT A LINE BY LINE. MR. BUSCH: I MEAN, I COULD GO

THROUGH EACH AND EVERY SENTENCE. YOU'VE READ THIS REPORT, HAVEN'T YOU, MR. POMERANTZ? MR. POMERANTZ: ANSWER QUESTIONS. I'M NOT HERE TO

BUT YES, I'VE READ THIS REPORT. OKAY. AND SO HAVING

MR. BUSCH:

READ THE REPORT, ARE THERE ANY SENTENCES IN HERE THAT YOU WOULD NOT INSTRUCT HIM NOT TO ANSWER? MR. POMERANTZ: BY MR. BUSCH: Q. MR. PATERNO, TURN YOUR ATTENTION TO I'M NOT SURE.

THE SENTENCE THAT SAYS: "MOREOVER, EVEN IF THE MECHANICAL ROYALTIES PARAGRAPH CONTAIN A DIRECT MECHANICAL
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LICENSE FOR PHYSICAL PRODUCTS, WHICH IT DOES NOT, IT IN NO WAY -IT IN NO WAY CAN IT BE INTERPRETED TO APPLY TO D.P.D.'S." DO YOU SEE THAT? A. Q. YES. WHAT IS YOUR EXPERT OPINION WITH

RESPECT TO THAT SENTENCE? MR. POMERANTZ: FAVOR? COULD I ASK A

BECAUSE THAT IS SPECIFICALLY REFERRING TO

A PARAGRAPH, WHICH I THINK WE ALL KNOW TO BE A PARAGRAPH FROM THE AGREEMENTS AT ISSUE IN THIS CASE, WOULD YOU MIND PUTTING THE PARAGRAPH IN FRONT OF HIM? MR. BUSCH: NO PROBLEM. THANK YOU.

MR. POMERANTZ: BY MR. BUSCH: Q.

LET ME SHOW YOU WHAT HAS BEEN

PREVIOUSLY MARKED AS EXHIBIT 5, AND WE MIGHT AS WELL SHOW YOU THIS AGREEMENT AS WELL. (DOCUMENT REVIEWED BY DEPONENT.) BY MR. BUSCH: Q. NUMBER 10? A. YES.
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DO YOU RECOGNIZE EXHIBIT 5 AND

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Q. A.

WHAT ARE EXHIBITS 5 AND 10? I THINK FIVE IS THE ORIGINAL DEAL

MEMO UNDER WHICH EMINEM SERVICES WERE PROVIDED BY F.B.T. TO AFTERMATH ENTERTAINMENT AS A RECORDING ARTIST. AND EXHIBIT 10 IS -- YEAH, IT'S SOME KIND OF MODIFICATION OF THAT. REMEMBER EXACTLY. Q. OKAY. LET'S LOOK -- LET'S PAY I CAN'T

ATTENTION TO EXHIBIT 5, IF WE COULD, PLEASE. A. Q. YES. AND TURN TO THE SECTION ENTITLED AND I BELIEVE IT IS

"MECHANICAL ROYALTIES." PARAGRAPH 6 ON PAGE 8.

MR. POMERANTZ: PAGE 7. MR. BUSCH: ME. BY MR. BUSCH: Q. ALL RIGHT.

I THINK IT'S

I HAVE -- 2003, EXCUSE

NOW THAT YOU HAVE IT IN

FRONT OF YOU, AND YOU HAVE THE SENTENCE THAT YOU HAVE BEEN DESIGNATED AS AN EXPERT ON, DO YOU HAVE AN OPINION WITH RESPECT TO THE SENTENCE THAT SAYS -- THAT BEGINS WITH "MOREOVER" THAT I JUST READ INTO THE RECORD?
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A.

IT SAYS: "MOREOVER, EVEN IF THE

MECHANICAL ROYALTIES PARAGRAPH CONTAINED A DIRECT MECHANICAL LICENSE FOR PHYSICAL PRODUCTS, WHICH IT DOES NOT, IN NO WAY CAN IT BE INTERPRETED TO APPLY TO D.P.D.'S." I DON'T KNOW WHY IT DOESN'T. IT'S

NOT A DIRECT MECHANICAL LICENSE, SO I DON'T AGREE WITH THAT. AND I DON'T UNDERSTAND WHY THIS PERSON DOESN'T THINK IT APPLIES TO D.P.D.'S, SO I DON'T AGREE WITH THAT EITHER. Q. OKAY. AND WHY DO YOU DISAGREE THAT

IT DOES NOT APPLY TO D.P.D.'S? A. D.P.D.'S. IT DOESN'T SAY IT DOESN'T APPLY TO

IT SAYS: "ALL CONTROLLED COMPOSITIONS

WILL BE LICENSED TO AFTERMATH." Q. WELL, WHAT IT SAYS IS: "ALL CONTROLLED COMPOSITIONS WILL BE LICENSED TO AFTERMATH AND ITS DISTRIBUTOR'S LICENSEES, AND AFTERMATH AND ITS DISTRIBUTOR'S LICENSEES,
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CANADIAN LICENSEES FOR THE U.S. AND CANADA RESPECTIVELY AT A RATE EQUAL TO 75 PERCENT OF THE CONTROLLED RATE." DO YOU SEE THAT? A. Q. YES. DO YOU KNOW WHETHER REDUCED RATES

LIKE THAT PROVIDED FOR IN THE MECHANICAL ROYALTY SECTION ARE ALLOWED BY LAW TO APPLY TO D.P.D.'S? MR. POMERANTZ: OBJECTION TO THE

EXTENT IT REQUIRES A LEGAL CONCLUSION. HE'S NOT HERE AS A LEGAL EXPERT. BY MR. BUSCH: Q. GO AHEAD. DO YOU KNOW WHETHER --

DO YOU KNOW WHETHER BY LAW YOU CAN HAVE A REDUCED RATE ON A D.P.D.? MR. POMERANTZ: OBJECTION. THE DEPONENT: BY MR. BUSCH: Q. AND WHERE -- AND WHAT IS YOUR BASIS I THINK YOU CAN. SAME -- SAME

FOR SAYING THAT? A. BECAUSE I THINK YOU CAN. I

DON'T -- I'M NOT -- I HAVEN'T READ THE COPYRIGHT ACT ON THIS PARTICULAR ISSUE, BUT I DON'T SEE WHY YOU CAN'T.
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Q.

OKAY.

WELL, IF YOU COULDN'T, WOULD

THAT AFFECT YOUR OPINION ABOUT WHETHER THIS APPLIED TO D.P.D.'S OR NOT? A. Q. A. NO. WHY NOT? IT STILL APPLIES TO D.P.D.'S. IT

MAY -- IT MAY PROVIDE A RATE THAT'S NOT -- THAT'S NOT ENFORCEABLE, BUT IT STILL APPLIES TO D.P.D.'S. I DON'T SEE WHY THAT WOULD CHANGE ANYTHING. Q. HAVE YOU EVER -- HAVE YOU EVER READ

THE HISTORY OF THE COPYRIGHT ACT WITH RESPECT TO D.P.D.'S TO DETERMINE WHAT THE LEGISLATIVE INTENT WAS AS IT RELATED TO MECHANICAL ROYALTIES SECTIONS LIKE THIS AND ITS APPLICATION OR NONAPPLICATION TO DIGITAL DOWNLOADS? MR. POMERANTZ: AND JUST SO WE'RE

CLEAR, WE ARE DESIGNATING HIM AS AN EXPERT ON HOW PARTICIPANTS IN THE MUSIC INDUSTRY UNDERSTAND WORDS IN A CONTROLLED COMPOSITION CLAUSE, AT LEAST THE WORDS THAT ARE AT ISSUE HERE. WE ARE NOT DESIGNATING HIM AS AN EXPERT ON THE COPYRIGHT LAWS. BY MR. BUSCH: Q. DO YOU KNOW WHETHER RECORD LABELS,

DESPITE HAVING LANGUAGE LIKE THIS IN A MECHANICAL
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14:51:53 14:51:57 14:51:58 14:52:01 14:52:03 14:52:08 14:52:08 14:52:09 14:52:10 14:52:10 14:52:13 14:52:15 14:52:19 14:52:23 14:52:28 14:52:32 14:52:34 14:52:34 14:52:35 14:52:37 14:52:39 14:52:41 14:52:42 14:52:43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

ROYALTIES CLAUSE, STILL SEEK SEPARATE DIGITAL DOWNLOAD LICENSES FROM PUBLISHERS? MR. POMERANTZ: OBJECTION TO THE

EXTENT OF LACK OF FOUNDATION, ALSO AN INCOMPLETE HYPOTHETICAL AND COMPOUND. BY MR. BUSCH: Q. A. Q. A. Q. GO AHEAD. DO I KNOW PERSONALLY? YES. NO. LET'S ASSUME FOR A SECOND THAT EVEN

IN LIGHT OF A CONTROLLED COMPOSITION CLAUSE OR A MECHANICAL ROYALTIES CLAUSE LIKE THIS, A RECORD LABEL STILL, AS A MATTER OF CUSTOM AND PRACTICE, SEEK SPECIFIC PERMANENT DOWNLOAD OR DIGITAL DOWNLOAD LICENSES FROM PUBLISHERS, DO YOU HAVE AN EXPLANATION WHERE THEY WOULD DO THAT IN LIGHT OF THIS LANGUAGE? MR. POMERANTZ: INCOMPLETE HYPOTHETICAL. EVIDENCE. OBJECTION. IT'S AN

IT ASSUMES FACTS NOT IN

LACK OF FOUNDATION AND BEYOND THE SCOPE

OF HIS EXPERT DESIGNATION. MR. BUSCH: ALLOW HIM TO TESTIFY? MR. POMERANTZ:
310.820.7733

SO YOU'RE NOT GOING TO

NO.

HE CAN ANSWER
FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 43
14:52:44 14:52:48 14:52:51 14:52:54 14:52:55 14:52:57 14:53:00 14:53:03 14:53:05 14:53:06 14:53:07 14:53:08 14:53:11 14:53:14 14:53:17 14:53:18 14:53:20 14:53:22 14:53:23 14:53:24 14:53:25 14:53:26 14:53:27 14:53:28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

THE QUESTION. THE DEPONENT: WELL, I MEAN, I KNOW

THAT RECORD LABELS GET SEPARATE MECHANICAL LICENSES EVEN THOUGH THEY DON'T HAVE TO UNDER THE CONTROLLED COMPOSITION CLAUSE. AND SO I SURMISE THE REASONS WOULD BE PRETTY SIMILAR, THAT THEY WOULD WANT TO HAVE A SEPARATE FILE FOR EACH SONG. ADMINISTER FOR THE LABELS. IT'S A LOT EASIER TO BUT I DON'T WORK THE

LABELS, SO I DON'T REALLY KNOW WHY THEY DO IT. BY MR. BUSCH: Q. IS IT POSSIBLE THAT THEY DO IT

BECAUSE -- SEEK OUT SPECIFIC PERMANENT DOWNLOAD LICENSES BECAUSE IT'S UNCLEAR WHETHER A CLAUSE LIKE THIS WOULD APPLY TO PERMANENT DOWNLOADS? IT POSSIBLE THAT'S ONE REASON? MR. POMERANTZ: FOR SPECULATION. OBJECTION; CALLS IS

IT'S AN INCOMPLETE HYPOTHETICAL.

LACK OF FOUNDATION. THE DEPONENT: COMPLETELY SPECULATE? BY MR. BUSCH: Q. YEAH. MR. POMERANTZ: DON'T SPECULATE. DO YOU WANT ME TO

IF IT WOULD CALL FOR SPECULATION -310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 44
14:53:31 14:53:33 14:53:34 14:53:36 14:53:37 14:53:38 14:53:44 14:53:46 14:53:48 14:53:54 14:54:01 14:54:05 14:54:10 14:54:14 14:54:17 14:54:20 14:54:21 14:54:25 14:54:28 14:54:30 14:54:33 14:54:34 14:54:34 14:54:35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

MR. BUSCH:

HE'S AN EXPERT. HE'S SAYING HE'S

MR. POMERANTZ:

SPECULATING AND HE CAN'T ANSWER. THE DEPONENT: IT'S POSSIBLE. BY MR. BUSCH: Q. OKAY. WHAT ARE CAPS IN A IT'S POSSIBLE. YOU'RE ASKING ME IF

MECHANICAL ROYALTY CLAUSE? A. THEY'RE A LIMITATION ON THE AMOUNT

OF ROYALTIES THAT THE LABEL WILL PAY FOR THE RIGHT TO MECHANICALLY REPRODUCE A COMPOSITION, THE STATUTE PROVIDES FOR A RATE AT A CERTAIN LEVEL, BUT THE RECORD COMPANY WILL TRY TO LIMIT THE TOTAL AMOUNT OF MECHANICAL ROYALTIES THEY HAVE TO PAVE. SO IF THERE IS 20 SONGS AND IT'S 9 CENTS A SONG, A LABEL ECONOMICALLY COULDN'T PAY THAT KIND OF MONEY AND STAY IN BUSINESS, WHICH WOULD BE A DOLLAR 80, SO THEY LIMIT THE AMOUNT OF SONGS ON WHICH THEY WILL PAY MECHANICAL ROYALTIES. Q. DO YOU KNOW WHETHER CAPS ARE

APPLICABLE TO PERMANENT DOWNLOAD? MR. POMERANTZ: OBJECTION TO THE

EXTENT IT CALLS FOR LEGAL CONCLUSION. THE DEPONENT: I KNOW THAT THE

LANGUAGE OF THE AGREEMENTS, MOST OF THE AGREEMENTS
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 45
14:54:37 14:54:40 14:54:41 14:54:44 14:54:47 14:54:48 14:54:52 14:54:52 14:54:54 14:54:58 14:55:01 14:55:03 14:55:04 14:55:04 14:55:06 14:55:06 14:55:07 14:55:09 14:55:12 14:55:16 14:55:18 14:55:21 14:55:24 14:55:25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

THAT I READ APPLIES CAPS TO DIGITAL DOWNLOADS. BY MR. BUSCH: Q. DO YOU KNOW WHETHER THERE IS ANY

RESTRICTION IN THE COPYRIGHT ACT FOR APPLICATION OF CAPS FOR PERMANENT DOWNLOADS? MR. POMERANTZ: OBJECTION. AGAIN,

HE'S NOT AN EXPERT ON COPYRIGHT LAW AND WE'RE NOT DESIGNATING HIM AS THAT, AND IT'S BEYOND THE SCOPE OF HIS TESTIMONY. ALSO A LACK OF FOUNDATION AND

IT CALLS FOR A LEGAL CONCLUSION. THE DEPONENT: THINGS THAT SAY THAT. COPYRIGHT ACT. BY MR. BUSCH: Q. WHAT? A. I READ YOUR EXPERT OPINION, YOUR YOU'VE READ THINGS THAT HAVE SAID OKAY. I HAVE READ

I HAVEN'T READ THE

EXPERT'S OPINION, AND HE SAYS THAT THE COPYRIGHT ACT PROVIDES THAT. THAT. I'M NOT SURE I AGREE WITH

BUT I HAVEN'T READ THE COPYRIGHT ACT. Q. LET'S JUST SAY, FOR EXAMPLE, THAT

THIS MECHANICAL ROYALTY SECTION DOES HAVE A RESTRICTION ON CAPS; RIGHT? RESTRICTION"? A. IT HAS A CAP.
310.820.7733 FAX: [phone]

IT SAYS "CAP

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 46
14:55:28 14:55:28 14:55:31 14:55:35 14:55:38 14:55:41 14:55:42 14:55:42 14:55:43 14:55:47 14:55:52 14:55:53 14:55:57 14:56:00 14:56:02 14:56:05 14:56:09 14:56:24 14:56:28 14:56:31 14:56:31 14:56:32 14:56:32 14:56:34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. Q.

IT HAS A CAP. YES. ASSUMING THAT CAPS ARE NOT

ALLOWABLE UNDER THE COPYRIGHT ACT FOR DIGITAL DOWNLOADS, WOULD THAT IMPACT YOUR OPINION ABOUT WHETHER THIS PROVISION IS APPLICABLE TO PERMANENT DOWNLOADS OR NOT? A. Q. A. WOULD. NO. WHY NOT? I THINK JUST -- I DON'T KNOW WHY IT

I MEAN, I THINK ANY PRACTITIONER. I'M TELLING YOU IF THERE IS SOME --

YOU'RE SAYING IF THERE IS A PROVISION IN THE COPYRIGHT ACT THAT WOULD LIMIT IT, I DON'T KNOW -IT WOULD SEEM TO ME THE PROPER RESPONSE WOULD BE THEN, OKAY, THE LICENSE IS AT THE FULL RATE RATHER THAN AT A REDUCED RIGHT. Q. OKAY. THAT'S NOT SURPRISING.

WERE PERMANENT DOWNLOADS IN

GENERAL DISTRIBUTION AT THE TIME OF THIS AGREEMENT, MARCH 9TH, 1998? A. NO. MR. POMERANTZ: GO AHEAD. THE DEPONENT: ///
310.820.7733 FAX: [phone]

OBJECTION; VAGUE.

NO, THEY WEREN'T.

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 47
14:56:35 14:56:39 14:56:42 14:56:43 14:56:46 14:56:47 14:56:49 14:56:51 14:56:54 14:56:59 14:57:02 14:57:05 14:57:08 14:57:11 14:57:13 14:57:15 14:57:23 14:57:26 14:57:29 14:57:30 14:57:33 14:57:36 14:57:37 14:57:37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

BY MR. BUSCH: Q. WERE PERMANENT DOWNLOADS

CONTEMPLATED TO BE IN THE MECHANICAL ROYALTIES SECTION IN 1998? A. IN THE MECHANICAL ROYALTIES SECTION YES.

OF THE CONTRACT? Q. A.

ON WHAT BASIS DO YOU SAY THAT? BECAUSE I KNOW THAT PEOPLE COULD

SEE THINGS LIKE THAT COMING, AND EVERY CONTRACT STARTING IN THE LATE 80'S, EARLY 90'S WOULD TRY TO ENCOMPASS THINGS LIKE DIGITAL DOWNLOADS, SATELLITE TRANSMISSIONS, TRANSMISSIONS OVER CABLE. THE IDEA WAS TO PROVIDE THE CAP ON ANY KIND OF DISTRIBUTION OF A RECORDING. Q. CAN YOU SHOW ME WHERE IN THE

MECHANICAL ROYALTY SECTION IT SAYS THAT? A. WELL, IT SAYS THAT ALL CONTROLLED

COMPOSITIONS WILL BE LICENSED AT A RATE EQUAL TO 75 PERCENT. SO I DON'T -- IS THERE SOMETHING

UNCLEAR ABOUT THAT? Q. SO WAS THE ANSWER THAT IT NOWHERE

SAYS THAT, BUT YOU'RE READING THAT INTO IT BY THE LANGUAGE YOU JUST READ? MR. POMERANTZ: OBJECTION;

MISSTATES HIS TESTIMONY AND IS ARGUMENTATIVE.
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 48
14:57:40 14:57:41 14:57:46 14:57:49 14:57:52 14:57:54 14:57:54 14:57:56 14:57:59 14:58:01 14:58:04 14:58:05 14:58:05 14:58:06 14:58:08 14:58:09 14:58:10 14:58:12 14:58:15 14:58:18 14:58:19 14:58:19 14:58:26 14:58:29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

BY MR. BUSCH: Q. IS THERE ANY DEFINITION UNDER

MECHANICAL ROYALTIES, ANY MENTION OR REFERENCE TO A DEFINED TERM UNDER MECHANICAL ROYALTIES THAT WOULD SHOW THAT IT WAS MEANT TO BE APPLICABLE TO PERMANENT DOWNLOADS? MR. POMERANTZ: OBJECTION TO THE

EXTENT IT'S ALREADY BEEN ASKED AND ANSWERED. THE DEPONENT: TWO ANSWERS. FIRST

OF ALL, IT DOESN'T SAY IT'S NOT.

AND SECOND OF

ALL, EVERY PRACTITIONER IN THE MUSIC INDUSTRY KNOWS THAT IT IS. BY MR. BUSCH: Q. YOU SAY "EVERY." HAVE YOU SPOKEN

TO EVERY PRACTITIONER IN THE MUSIC INDUSTRY ABOUT IT? A. Q. NO, I HAVEN'T. HAVE YOU SPOKEN TO ANY PRACTITIONER

IN THE MUSIC BUSINESS ABOUT WHETHER THIS SPECIFIC PROVISION, AS IT'S WORDED HERE, APPLIES TO PERMANENT DOWNLOADS? A. Q. NO. DO YOU KNOW WHETHER UNIVERSAL

INTERSCOPE SOUGHT SPECIFIC PERMANENT DOWNLOAD LICENSES FROM THE PUBLISHER OF THE COMPOSITIONS
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 49
14:58:36 14:58:36 14:58:37 14:58:39 14:58:42 14:58:46 14:58:51 14:58:53 14:58:54 14:58:56 14:58:59 14:59:03 14:59:08 14:59:10 14:59:11 14:59:14 14:59:14 14:59:15 14:59:17 14:59:20 14:59:24 14:59:25 14:59:27 14:59:29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

INVOLVED IN THIS -- IN THE SONGS INVOLVED IN THIS AGREEMENT? MR. POMERANTZ: FOUNDATION. THE DEPONENT: I DON'T KNOW. AS A OBJECTION; LACK OF

PERCIPIENT WITNESS, I READ IN SOME OF THE STUFF I READ, IT REFERS TO THE FACT THAT UNIVERSAL DID. I

HAVE NO WAY OF KNOWING WHETHER THAT'S TRUE OR NOT. BY MR. BUSCH: Q. DO YOU KNOW WHETHER UNIVERSAL

ENTERED INTO A DIGITAL DOWNLOAD LICENSE WHERE IT AGREED TO A SPECIFIC TERM OF TWO YEARS AND OTHER LIMITATIONS ON ITS -- IN CONNECTION WITH LICENSING ONE OF THE COMPOSITIONS FOR PERMANENT DOWNLOAD? MR. POMERANTZ: EXTENT IT MISSTATES EVIDENCE. BY MR. BUSCH: Q. A. Q. GO AHEAD. THE ANSWER IS NO. OKAY. IF UNIVERSAL AGREED TO A OBJECTION TO THE

PERMANENT DOWNLOAD LICENSE WITH THE PUBLISHER OF A SONG THAT WOULD BE COVERED BY THIS AGREEMENT AND AGREED TO A TWO-YEAR TERM, FOR EXAMPLE, DO YOU HAVE ANY EXPLANATION OF WHY THEY WOULD DO SO IF THIS WAS IN FACT A SELF-EFFECTUATING CONTROLLED
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 50
14:59:37 14:59:38 14:59:41 14:59:41 14:59:42 14:59:45 14:59:47 14:59:49 14:59:51 14:59:53 14:59:54 15:00:01 15:00:03 15:00:06 15:00:09 15:00:16 15:00:17 15:00:18 15:00:19 15:00:19 15:00:21 15:00:23 15:00:24 15:00:26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

COMPOSITION CLAUSE APPLICABLE TO D.P.D.'S? MR. POMERANTZ: OBJECTION; LACK OF

FOUNDATION, ARGUMENTATIVE, INCOMPLETE. BY MR. BUSCH: Q. A. GO AHEAD. IT COULD BE ANY NUMBER OF REASONS. THEY

I DON'T -- PEOPLE MAKE DEALS ALL THE TIME.

MIGHT HAVE WANTED -- MIGHT HAVE WANTED EMINEM TO DELIVER A RECORD HE WOULDN'T OTHERWISE DELIVER. I HAVE NO IDEA. WOULD KNOW. Q. OKAY. YOU SAY YOU DISAGREE THAT THERE IS NO WAY I

THIS IS NOT -- I THINK ONE OF THE STATEMENTS YOU MADE WHEN I READ THE SENTENCE AND ASKED YOU ABOUT YOUR OPINIONS IN RESPONSE TO IT WAS THAT YOU DISAGREED THAT THIS WAS NOT A SELF-EFFECTUATING CONTROLLED COMPOSITION CLAUSE; CORRECT? MR. POMERANTZ: THAT QUESTION? BY MR. BUSCH: Q. OKAY. DO YOU BELIEVE THIS TO BE A CAN YOU RESTATE

I DIDN'T FOLLOW IT.

SELF-EFFECTUATING LICENSE? MR. POMERANTZ: TERM "SELF-EFFECTUATING." AMBIGUOUS.
310.820.7733 FAX: [phone]

OBJECTION TO THE

IT'S VAGUE AND

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 51
15:00:27 15:00:29 15:00:31 15:00:33 15:00:37 15:00:38 15:00:38 15:00:39 15:00:39 15:00:41 15:00:41 15:00:45 15:00:48 15:00:53 15:00:57 15:01:03 15:01:06 15:01:09 15:01:14 15:01:16 15:01:17 15:01:18 15:01:19 15:01:26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

THE DEPONENT: THAT.

YEAH, I AGREE WITH

I AGREE THAT IT'S VAGUE AND AMBIGUOUS. BUT I KNOW WHAT YOU'RE GETTING AT,

AND WHAT YOU'RE GETTING AT IS YOU'RE ASKING WHETHER OR NOT THIS OPERATES AS A MECHANICAL LICENSE. BY MR. BUSCH: Q. A. Q. DOES? A. I BELIEVE IT DOES BECAUSE I'VE BEEN FAIR ENOUGH. I BELIEVE IT DOES. CAN YOU TELL ME WHY YOU BELIEVE IT

PRACTICING IN THIS AREA FOR A LONG TIME WITH A LOT OF DIFFERENT ATTORNEYS, AND CONTROLLED COMPOSITION CLAUSES ARE ALL THAT WAY. THEY'RE ALL -- THE INTENT OF THIS THING IS TO PROVIDE A LICENSE AT WHATEVER RATE THAT'S SET FORTH IN THE CONTROLLED COMPOSITION, AND THE CUSTOM AND PRACTICE OF PEOPLE THAT WORK IN THIS INDUSTRY KNOW THAT THAT'S WHAT THIS IS SUPPOSED TO BE. Q. A. Q. WHO HAVE YOU SPOKEN TO ABOUT THAT? NOBODY. HAVE YOU EVER SPOKEN TO ANYBODY

ABOUT THE USE OF THE PHRASE "ALL CONTROLLED
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 52
15:01:34 15:01:37 15:01:41 15:01:42 15:01:46 15:01:47 15:01:49 15:01:51 15:01:54 15:01:59 15:02:02 15:02:04 15:02:06 15:02:11 15:02:14 15:02:15 15:02:17 15:02:20 15:02:21 15:02:24 15:02:24 15:02:45 15:02:47 15:02:49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

COMPOSITIONS WILL BE LICENSED" AS OPPOSED TO "IS HEREBY LICENSED" AND THE IMPACT THAT HAS ON WHETHER IT'S A -- WHETHER IT, IN AND OF ITSELF, IS A MECHANICAL LICENSE? A. HAVE I SPOKEN TO ANY -- WHEN YOU

SAY "ANYBODY," WHAT DO YOU MEAN? Q. WHAT I'M ASKING IS: HAVE YOU EVER

HAD ANY DISCUSSION WITH PEOPLE IN THE MUSIC BUSINESS OR MUSIC INDUSTRY ABOUT WHAT EFFECT, IF ANY, THERE IS WHEN A MECHANICAL ROYALTY SAYS THAT ALL CONTROLLED COMPOSITIONS WILL BE LICENSED AS OPPOSED TO IS HEREBY LICENSED? A. I WAS GOING TO SAY NO, BUT NOW I

RECALL THAT AFTER MY LAST -- AND I KNOW YOU'RE GOING TO ASK ME WHO THEY ARE, AND I HAVE NO IDEA. SO I'LL SAVE YOU THE TROUBLE ASKING. BUT I WAS HAVING CONVERSATIONS WITH SEVERAL MUSIC ATTORNEYS ABOUT HOW ABSURD THE POSITION WAS THAT THERE WAS ANY DIFFERENCE BETWEEN THE TWO -- THE TWO LANGUAGE POINTS. IT WAS. Q. OKAY. WHERE IT SAYS THAT ALL NO IDEA WHO

CONTROLLED COMPOSITIONS WILL BE LICENSED TO AFTERMATH AND ITS DISTRIBUTOR'S LICENSEES. DO YOU SEE THAT?
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 53
15:02:50 15:02:53 15:02:53 15:02:57 15:02:57 15:02:59 15:02:59 15:03:00 15:03:04 15:03:07 15:03:08 15:03:10 15:03:13 15:03:15 15:03:17 15:03:20 15:03:20 15:03:27 15:03:28 15:10:28 15:10:30 15:10:30 15:10:31 15:10:32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q.

YES. ARE DISTRIBUTOR'S LICENSEES

AFFILIATED OR UNAFFILIATED DISTRIBUTORS OR LICENSEES? MR. POMERANTZ: INSTRUCT HIM NOT TO ANSWER. YOU HAVE A SEPARATE PROVISION, A SEPARATE PORTION OF YOUR REPORT THAT ADDRESSES THAT ISSUE, AND WE HAVE CHOSEN NOT TO DESIGNATE MR. PATERNO AS AN EXPERT TO REBUT THAT POINT, SO I WILL INSTRUCT HIM NOT TO ANSWER. AND BY THE WAY, YOU DID ASK HIM THAT QUESTION AS A FACT WITNESS, SO YOU ALREADY HAVE THAT IN THE DEPOSITION. MR. BUSCH: I REMEMBER ASKING A I'M GOING TO

COUPLE PEOPLE, BUT I WASN'T SURE IF I ASKED MR. PATERNO. MR. POMERANTZ: YOU DID. OFF THE RECORD

THE VIDEOGRAPHER: AT 3:03 P.M.

(WHEREUPON, A RECESS WAS HELD FROM 3:03 P.M. TO 3:10 P.M.) THE VIDEOGRAPHER: RECORD AT 3:10 P.M. ///
310.820.7733 FAX: [phone]

BACK ON THE

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 54
15:10:33 15:10:36 15:10:38 15:10:39 15:10:39 15:10:40 15:10:42 15:10:44 15:10:46 15:10:48 15:10:49 15:10:51 15:10:51 15:10:54 15:10:56 15:10:59 15:11:00 15:11:02 15:11:06 15:11:08 15:11:13 15:11:16 15:11:17 15:11:20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

BY MR. BUSCH: Q. MR. PATERNO, I DIDN'T ASK YOU THIS,

BUT ARE YOU BEING COMPENSATED BY YOUR TIME AS AN EXPERT WITNESS? A. Q. A. Q. YES. AT WHAT RATE? 600 DOLLARS AN HOUR. WHAT HAVE YOU CHARGED THE

DEFENDANTS SO FAR? A. Q. WHAT HAVE I CHARGED? YEAH. HAVE YOU CHARGED ANYTHING

FOR YOUR STUDY OR FOR ANYTHING THAT YOU'VE DONE UP UNTIL TODAY? A. I WROTE IT ON MY TIME SHEET. I WOULD SEND A BILL. I

DON'T REALLY KNOW. Q.

DO YOU RECALL HOW MANY HOURS YOU'VE

SPENT UP UNTIL NOW? A. LIKE THAT. PROBABLY FIVE OR SIX. I DON'T KNOW. MR. BUSCH: WE FORGOT TO -- DON'T SOMETHING

WALK OUT OF HERE BEFORE I MARK THOSE LETTERS AS AN EXHIBIT. I FORGOT TO DO IT AT THE BREAK. MR. POMERANTZ: MR. BUSCH: THEM READY TO GO, THOUGH.
310.820.7733 FAX: [phone]

SHE WASN'T THERE. I COULD HAVE HAD

TRUE.

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 55
15:11:23 15:11:25 15:11:27 15:11:30 15:11:33 15:11:34 15:11:35 15:11:37 15:11:38 15:11:42 15:11:47 15:11:50 15:11:54 15:11:55 15:11:55 15:11:59 15:12:01 15:12:02 15:12:05 15:12:06 15:12:06 15:12:08 15:12:09 15:12:13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

BY MR. BUSCH: Q. WOULD IT BE FAIR TO SAY THAT THE

PURPOSE OF A -- OF A MECHANICAL ROYALTY CLAUSE LIKE THE ONE WE'RE TALKING ABOUT IS REALLY TO GET THE REDUCED RATE FOR THE RECORD LABEL? MR. POMERANTZ: OR A PURPOSE? MR. BUSCH: PRIMARY PURPOSE. NO, I DON'T THINK AS THE ONLY PURPOSE

THE DEPONENT: SO.

THERE WERE MECHANICAL ROYALTY CLAUSES BEFORE REDUCED RATES ARE

PEOPLE SOUGHT REDUCED RATES.

NOT -- THEY'VE ONLY -- WHEN I STARTED PRACTICING LAW, THERE WEREN'T REDUCED RATES. THERE WERE

CAPS, BUT THERE WEREN'T REDUCED RATES. BY MR. BUSCH: Q. IS A CAP THE PRIMARY REASON FOR

HAVING A MECHANICAL ROYALTIES CLAUSE? A. I DON'T THINK SO. I THINK THE

LABELS WANT TO KNOW THAT THEY CAN LICENSE THE COMPOSITIONS, AND THAT'S THE PRIMARY REASON FOR HAVING IT. Q. HOW MANY CONTROLLED COMPOSITION

CLAUSES HAVE YOU YOURSELF DRAFTED? A. "DRAFTED." WELL, I DON'T KNOW WHAT YOU MEAN BY THEY'RE GENERALLY IN A FORM, AND I -310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 56
15:12:19 15:12:21 15:12:23 15:12:25 15:12:27 15:12:30 15:12:33 15:12:34 15:12:34 15:12:36 15:12:36 15:12:37 15:12:38 15:12:42 15:12:46 15:12:49 15:12:53 15:12:57 15:12:58 15:13:00 15:13:03 15:13:05 15:13:07 15:13:08 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

YOU KNOW, THE FORM COMES OFF THE SHELF. HAVE I ACTUALLY WRITTEN? ALL PRETTY SIMILAR. THEY'RE

I'VE PROBABLY PERSONALLY

WRITTEN, YOU KNOW, FOUR OR FIVE OR SOMETHING LIKE THAT OVER THE YEARS. Q. OKAY. YOU HAVE AN UNDERSTANDING OF

WHAT A PUBLISHER IS IN THE MUSIC INDUSTRY; CORRECT? A. Q. PUBLISHER? A. Q. A. YES. IN WHAT CONTEXT? WELL, A LOT OF MY CLIENTS YES. AND HAVE YOU EVER REPRESENTED A

SELF-PUBLISH, SO WE REPRESENT THEIR PUBLISHING INTERESTS AND THEIR CATALOGUES. I REPRESENTED

PUBLISHERS IN SALES, ACQUISITIONS, ACQUIRING TALENT, WRITERS, AND PRETTY MUCH EVERYTHING THE PUBLISHERS DO. Q. IN YOUR EXPERIENCE, DO ARTISTS

FREQUENTLY ASSIGN THEIR PUBLISHING RIGHTS TO A SEPARATE ENTITY, A PUBLISHER? A. Q. A. A SEPARATE THIRD-PARTY ENTITY? YES. IN MY EXPERIENCE, NO, BECAUSE MY
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
Page 57
15:13:14 15:13:16 15:13:17 15:13:17 15:13:21 15:13:26 15:13:28 15:13:32 15:13:32 15:13:32 15:13:32 15:13:32 15:13:32 15:13:38 15:13:38 15:13:39 15:13:42 15:13:45 15:13:48 15:13:51 15:13:53 15:13:55 15:13:56 15:13:57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

CLIENTS GENERALLY DON'T DO IT.

IN GENERAL, I I'M GUESSING

DON'T KNOW WHAT THE PERCENTAGE IS.

IT'S PROBABLY ABOUT MORE THAN HALF THE TIME THEY DO. Q. OKAY. DO ARTISTS HAVE -- GENERALLY

WHEN THEY ENTER INTO CO-PUBLISHING AGREEMENTS WITH RECORD LABELS OR WITH THIRD PARTIES, DO THEY MAKE SUCH ASSIGNMENTS ON AN AD HOC BASIS OR DO THEY HAVE A STANDING AGREEMENT WITH THE PUBLISHERS THAT ALL THEIR PUBLISHING RIGHTS ARE AUTOMATICALLY ASSIGNED TO THE PUBLISHER? MR. POMERANTZ: DIDN'T FOLLOW THE QUESTION. RESTATE IT OR READ IT BACK? MR. BUSCH: BY MR. BUSCH: Q. WHERE AN ARTIST/SONGWRITER ASSIGNS I'LL RESTATE IT. I'M SORRY. CAN YOU EITHER I

RIGHTS TO A PUBLISHER, LIKE A UNIVERSAL MUSIC PUBLISHING, FOR EXAMPLE, IS IT GENERALLY DONE ON AN AD HOC BASIS PER SONG OR IS THERE GENERALLY AN AGREEMENT WHERE ALL SONGS WRITTEN DURING A TERM ARE ASSIGNED TO A PUBLISHER? MR. POMERANTZ: OBJECTION; LACK OF

FOUNDATION, INCOMPLETE HYPOTHETICAL. THE DEPONENT:
310.820.7733

GENERALLY, IT'S THE
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DEPOSITION OF PETER PATERNO
Page 58
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LATTER.

GENERALLY.

BY MR. BUSCH: Q. IF AN ARTIST HAS ASSIGNED HIS

RIGHTS IN A COMPOSITION TO A PUBLISHER, CAN THE ARTIST, WITHOUT THE EXPRESSED PERMISSION OF THE PUBLISHER, GRANT A MECHANICAL LICENSE FOR THE COMPOSITION TO A THIRD PARTY? MR. POMERANTZ: I'M GOING TO OBJECT THIS IS

AND INSTRUCT THE WITNESS NOT TO ANSWER.

IN A PORTION OF THE REPORT THAT WE HAVE CHOSEN NOT TO DESIGNATE HIM TO REBUT AS AN EXPERT WITNESS, SO I'M GOING TO INSTRUCT HIM NOT TO ANSWER. MR. BUSCH: AND I'LL OBJECT AND

MOVE TO STRIKE HIS EXPERT TESTIMONY. BY MR. BUSCH: Q. IF AN ARTIST HAS AN AGREEMENT THAT

HIS INTEREST IN COMPOSITIONS HE AUTHORS IS AUTOMATICALLY GRANTED TO A PUBLISHER, CAN THE ARTIST, AFTER ENTERING INTO THAT AGREEMENT, ENTER INTO A SUBSEQUENT AGREEMENT CONTAINING A CONTROLLED COMPOSITION CLAUSE THAT GRANTS MECHANICAL LICENSES TO THOSE COMPOSITIONS? MR. POMERANTZ: MR. BUSCH: ///
310.820.7733 FAX: [phone]

SAME INSTRUCTION.

AND SAME OBJECTION.

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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BY MR. BUSCH: Q. YOU SAID, MR. PATERNO, YOU HAVE NOT

READ THE DIGITAL PERFORMANCE RIGHT AND SOUND RECORDING ACT OF 1995? A. I DON'T KNOW THAT THAT'S TRUE. I

PROBABLY HAVE READ IT. Q. HISTORY? A. Q. I HAVEN'T READ THAT. HAVE YOU READ IT -- HAVE YOU READ YOU HAVEN'T READ THE LEGISLATIVE

IT IN THE CONTEXT OF THE ISSUES INVOLVED IN THIS CASE? A. NO. MR. BUSCH: OKAY. I'M GOING TO WILL YOU ALLOW YOU KNOW WHICH

SHOW HIM THAT LEGISLATURE HISTORY. ME TO ASK HIM QUESTION ABOUT THAT?

ONE I'M GOING TO ASK HIM ABOUT, I WOULD ASSUME, SINCE IT'S THE ONE THAT HAS COME UP IN THE DEPOSITION. MR. POMERANTZ: I'M NOT -- I MEAN, BUT IF YOU WANT

I'M NOT -- I THINK PROBABLY NOT.

TO TRY IT, I'LL LOOK AT IT AND SEE IF IT RELATES TO HIS THREE OPINIONS. BY MR. BUSCH: Q. TAKE A LOOK AT WHAT I MARKED AS
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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EXHIBIT 249, WHICH IS THE LEGISLATIVE HISTORY OF THE ACT. (DOCUMENT REVIEWED BY DEPONENT.) THE DEPONENT: MR. BUSCH: WOW.

I DON'T WANT HIM TO SIT

HERE AND READ THE WHOLE THING. BY MR. BUSCH: Q. TURN, IF YOU WOULD, TO PAGE 41.

TOP MIDDLE 41, NOT 41 OF. A. Q. UH-HUH. AND I WANT TO DIRECT YOUR ATTENTION

TO THE LANGUAGE AT THE VERY BOTTOM WHERE IT SAYS, BEGINS WITH, "SUBJECT TO THE EXCEPTIONS." "SUBJECT TO THE EXCEPTIONS SET FORTH IN SUBPARAGRAPH (E)(II) -A. Q. A. Q. WHERE ARE YOU AT? LAST SENTENCE OF PAGE 41. OKAY. "SUBJECT TO THE EXCEPTION

SET FORTH IN PARAGRAPH (E)(II,) THE SECOND SENTENCE OF SUBPARAGRAPH (E)(I) IS INTENDED TO MAKE THESE CONTROLLED COMPOSITION CLAUSES INAPPLICABLE TO DIGITAL FORMER RECORD DELIVERIES."
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KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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DO YOU SEE THAT? A. Q. YES. DID YOU EVER STUDY THAT OR LOOKED

AT THAT IN CONNECTION WITH THIS LAWSUIT TO SEE WHETHER THIS LANGUAGE WOULD MAKE CONTROLLED COMPOSITION CLAUSES INAPPLICABLE TO D.P.D.'S BY VIRTUE OF THE -- OF THE ACT? A. Q. NO. AND HAVE YOU EVER READ THE

PARAGRAPH THAT FOLLOWS ON PAGE 42? A. Q. NO. OKAY. DO YOU KNOW WHAT IMPACT THIS

HAS ON WHETHER DIGITAL DOWNLOADS ARE -- ARE APPLICABLE TO CONTROLLED COMPOSITION CLAUSES? MR. POMERANTZ: ANSWER. ABOUT. MR. BUSCH: I HAVE A SECTION HERE INSTRUCTION NOT TO

GOES BEYOND WHAT WE'RE DESIGNATING HIM

IN MY EXAMINATION THAT DEALS WITH THE QUESTIONS REGARDING THE REQUIREMENT TO GET LICENSES WHEN A MASTER RECORDING IS LICENSED TO A THIRD PARTY COMPILATION AND HOW THAT IMPACTS -- WOULDN'T THE SAME ANALYSIS APPLY WITH RESPECT TO DIGITAL DOWNLOAD PROVIDERS. AND I ASSUME THAT YOU'RE NOT GOING
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KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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TO LET ME ASK THOSE QUESTIONS? MR. POMERANTZ: CORRECT. WE'RE NOT

DESIGNATING HIM AS AN EXPERT WITNESS ON THAT SUBJECT MATTER. MR. BUSCH: SO ANY QUESTIONS THAT I

WOULD HAVE THAT RELATED TO AFFILIATED OR UNAFFILIATED LICENSEES AND ANY COMPARISON BETWEEN AN ITUNES TO A, FOR EXAMPLE, THIRD-PARTY LICENSEE OF A MASTER RECORDING FOR PURPOSES OF RELEASING COMPILATION ALBUMS, HE'S NOT BEING DESIGNATED AND YOU WOULD INSTRUCT HIM NOT TO ANSWER? MR. POMERANTZ: MR. BUSCH: BY MR. BUSCH: Q. HAVE YOU EVER REPRESENTED A MUSIC CORRECT.

OKAY.

PUBLISHER IN THE NEGOTIATION OF A LICENSE WITH A COMPANY RELEASING A COMPILATION ALBUM? A. WELL, I REPRESENT THE PUBLISHING

COMPANY AFFILIATES OF A NUMBER OF ARTISTS, "OFFSPRING," "METALLICA," THEY OWN THEIR OWN PUBLISHING. SO OUR FIRM DEFINITELY HAS DONE THAT.

AND I PROBABLY HAVE, TOO, BUT NOT RECENTLY. Q. OKAY. AND DO YOU KNOW WHETHER

THOSE ARTISTS WERE SUBJECT TO A CONTROLLED COMPOSITION CLAUSE WITH ANOTHER RECORD LABEL BUT
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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NONETHELESS WERE CONTACTED BY THE THIRD PARTY RELEASING A COMPILATION ALBUM TO GET A MECHANICAL LICENSE FROM YOU OR FROM YOUR ARTIST? A. Q. THAT HAPPENS SOMETIMES. DO YOU HAVE AN OPINION ON WHETHER

THE -- ON WHETHER THE CONTROLLED COMPOSITION CLAUSE APPLIES TO SUCH RELEASES BY UNAFFILIATED THIRD PARTIES LIKE A LICENSEE WHO IS RELEASING A COMPILATION ALBUM WHERE THEY'VE LICENSED THE MASTER FROM THE RECORD LABEL? A. OR IN GENERAL? Q. A. IN GENERAL. IN GENERAL, MOST CONTROLLED THIS CONTROLLED COMPOSITION CLAUSE

COMPOSITION CLAUSES PURPORT TO ACQUIRE THOSE RIGHTS. THEY -- MOST OF THEM ATTEMPT TO ACQUIRE

THE RIGHTS TO BE ABLE TO SUBLICENSE TO THIRD PARTIES. Q. A. Q. DOES THIS ONE? I THINK SO, YES. SO YOUR TESTIMONY IS THAT -- SO HE

IS GOING TO TESTIFY ABOUT THE AFFILIATED LICENSEE? MR. POMERANTZ: NO, I DON'T. I WAS

WONDERING WHERE YOU WERE GOING, BUT THAT IS NOT A SUBJECT WE WOULD INTEND TO HAVE HIM OFFER EXPERT
310.820.7733 FAX: [phone]

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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TESTIMONY IN.

AND SO, NO. I REALIZE YOU DON'T LIKE HIS

OPINION, BUT THAT'S NOT A SUBJECT THAT WE ARE INTENDING TO OFFER EXPERT TESTIMONY FROM MR. PATERNO. MR. BUSCH: INSTRUCTED HIM NOT TO -MR. POMERANTZ: I WAS TRYING TO BECAUSE YOU HAD

LISTEN TO YOUR QUESTIONS AND SEE IF IT WAS GOING TO ONE OF THE THREE SUBJECT MATTERS THAT WE HAD DESIGNATED HIM ON, AND I DON'T SEE THAT. SO NO, I DON'T THINK WE WOULD INTEND TO OFFER HIM AS AN EXPERT ON THOSE SUBJECTS. BY MR. BUSCH: Q. OKAY. WELL, NOW THAT YOU'VE

ANSWERED THE QUESTION, DO YOU KNOW WHY THE THIRD PARTY RECORD LABELS, THIRD-PARTY LICENSEES WHO WERE RELEASING COMPILATION ALBUMS WOULD HAVE CONTACTED YOU OR YOUR ARTIST FOR A MECHANICAL LICENSE IF THE COMPOSITION WAS COVERED BY THE CONTROLLED COMPOSITION CLAUSE FOR WHICH THEY RECEIVED THE LICENSE? MR. POMERANTZ: INSTRUCT HIM NOT TO ANSWER.
310.820.7733 FAX: [phone]

I'M GOING TO

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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BY MR. BUSCH: Q. ALL RIGHT. LET'S GO TO THE OTHER

SENTENCE IN -- OR TWO SENTENCES IN THE SULLIVAN REPORT THAT YOU HAVE BEEN DESIGNATED AS AN EXPERT ON. AND I'LL READ IT FOR THE RECORD. IT'S PAGE 13 OF THE SULLIVAN REPORT. A. HERE. OKAY. Q. OKAY. GOT IT. THE SENTENCE BEGINS: "HOWEVER, AS NOTED ABOVE, THE POSITION TAKEN BY DEFENDANTS FOR PURPOSES OF THIS LITIGATION IS AT ODDS WITH WILDLY ACCEPTED INDUSTRY PRACTICE BETWEEN PUBLISHERS INCLUDING H.F.A. AND INDEPENDENT PUBLISHERS AND RECORD LABELS INCLUDING DEFENDANTS AFTERMATH AND U.M.G. TO SEPARATELY LICENSE FROM PUBLISHERS REPRESENTING SOLELY THEIR RESPECTED PERCENTAGE SHARES OF THE COPYRIGHT AND THE COMPOSITION, AND IN EACH INSTANCE PURSUANT TO SEPARATE LICENSES FOR MECHANICAL, PHYSICAL AND D.P.D. DIGITAL REPRODUCTION AND
310.820.7733 FAX: [phone]

I SPLIT IT UP SOMEWHERE.

KELLI NORDEN AND ASSOCIATES

DEPOSITION OF PETER PATERNO
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DISTRIBUTION." DO YOU SEE THAT? A. Q. THAT SENTENCE? A. LET ME READ IT AGAIN, BECAUSE I GOT YES. WHAT IS YOUR OPINION IN RESPONSE TO

LOST BECAUSE I WAS LOOKING AT THE WRONG ONE. Q. THAT'S FINE. READ IT TO YOURSELF.

AND WHEN YOU'RE READY, ANSWER. (DOCUMENT REVIEWED BY DEPONENT.) THE DEPONENT: WHAT'S THE QUESTION? BY MR. BUSCH: Q. THE QUESTION IS: TELL ME WHAT YOUR OKAY. SO, YEAH,

OPINION IS IN RESPONSE TO THAT SENTENCE WHICH YOU HAVE BEEN DESIGNATED AS AN EXPERT. A. WELL, MY RESPONSE IS THAT RECORD

LABELS -- LET ME READ THIS AGAIN, SIR. SO WHAT THE THING IS SAYING, WHAT THE SENTENCE IS SAYING IS THAT -- THAT IT'S CUSTOMARY THAT -- THAT LICENSORS SEEK OUT SEPARATE LICENSES FOR EACH INDIVIDUAL SHARE OF THE COPYRIGHT FROM THE COPYRIGHT HOLDER OF THAT SHARE OF THE COMPOSITION. THAT'S CUSTOMARY, YES. IT'S

HOWEVER, THEY DON'T HAVE TO.
310.820.7733

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FAX: [phone]

DEPOSITION OF PETER PATERNO
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JUST WHAT THEY DO. BY MR. BUSCH: Q. OR NOT? A. IT'S -- WELL, IT DEPENDS ON THE MOST CONTROLLED DO YOU KNOW WHETHER IT'S REQUIRED

CONTROLLED COMPOSITION CLAUSE.

COMPOSITION CLAUSES SAY TO THE PERSON, YOU KNOW, AGREEING TO THE CLAUSE, IT SAYS THAT ANY COMPOSITION WRITTEN IN WHOLE OR IN PART BY YOU OR ANYBODY OWNED OR CONTROLLED, OR WHATEVER, BY YOU IS HEREBY LICENSED OR WILL BE LICENSED OR LICENSED TO US FOR THE FOLLOWING RATES. SO THE ARTIST, WHO IS GENERALLY THE SIGNATORY OF THAT AGREEMENT, IS REQUIRED TO DELIVER NOT ONLY HIS SHARE BUT THE SHARES OF OTHER WRITERS TOO. Q. WITH? A. PART. NO, NO. IT SAYS IN WHOLE OR IN THAT THEY CONTROL OR ARE AFFILIATED

MOST CONTROLLED COMPOSITIONS SAY IN WHOLE SO ANY COMPOSITION, WRITTEN IN WHOLE

OR IN PART.

OR IN PART, IS A CONTROLLED COMPOSITION, AND THE ARTIST IS REQUIRED TO DELIVER THE RIGHTS TO THAT COMPOSITION. Q. LET'S BACK UP SO I UNDERSTAND WHAT
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DEPOSITION OF PETER PATERNO
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YOU SAID, AND I WANT TO UNDERSTAND THIS. WELL, FIRST YOU SAID IT IS TRUE THAT A CUSTOM AND PRACTICE IS THAT A PUBLISHER ONLY LICENSES THEIR SHARE; CORRECT? MR. POMERANTZ: HE SAID. MR. BUSCH: QUESTION. MR. POMERANTZ: HIS TESTIMONY. MR. BUSCH: I DON'T BELIEVE I DID. IT'S FAIRLY BUT YOU MISSTATED LET HIM ANSWER THE NO, THAT'S NOT WHAT

THE DEPONENT:

CUSTOMARY THAT -- THAT THE LABEL WILL SEEK OUT LICENSES FROM EACH INDIVIDUAL PUBLISHER FOR A NUMBER OF REASONS, ONE OF WHICH MAKES IT EASIER FOR THEM TO KNOW WHO TO ACCOUNT TO. BY MR. BUSCH: Q. SO IT IS FAIR TO SAY THAT, FOR

EXAMPLE, HARRY FOX WILL JUST LICENSE THE SHARE OF THOSE WRITERS OR PUBLISHERS THAT ARE CONTROLLED BY HARRY FOX? MR. POMERANTZ: OBJECTION TO THE

EXTENT IT MISSTATES HIS TESTIMONY. BY MR. BUSCH: Q. IS THAT RIGHT?
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DEPOSITION OF PETER PATERNO
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A.

NO, IT'S NOT RIGHT.

HARRY FOX WILL

LICENSE WHAT THEY'RE ASKED TO LICENSE, AND GENERALLY THEY'RE JUST ASKED TO LICENSE THEIR SHARE. Q. A. OKAY. NOW, YOU SAID THAT --

THEY MAY OR MAY NOT LICENSE THE

OTHER PERSON'S SHARE, BUT NEVER -- NOT NEVER, BUT CUSTOMARILY THEY'RE NOT ASKED TO LICENSE THE OTHER PERSON'S SHARE. Q. NOW -- AND THEN THERE WAS A SECOND AND

PART WHERE YOU SAID REQUIRED, NOT REQUIRED.

YOU SAID THAT THE LICENSING OF THE TOTAL SHARE IS NOT REQUIRED. DO YOU KNOW WHETHER IF, FOR EXAMPLE, YOU HAD THREE PUBLISHERS, TWO OF WHICH WERE -- TWO OF WHICH WERE -- LICENSED THEIR SHARE, BUT THE THIRD PUBLISHER WAS CONTACTED REFUSED TO LICENSE THE SHARE AND OBJECTED TO THE USE, DOES THE LABEL, UNDER THOSE CIRCUMSTANCES, HAVE THE RIGHT TO EXPLOIT THE COMPOSITION? MR. POMERANTZ: OBJECTION TO THE

EXTENT IT'S ASKING FOR A LEGAL CONCLUSION. YOU CAN ANSWER TO THE EXTENT THAT YOU KNOW. THE DEPONENT:
310.820.7733

YEAH.

I CAN'T
FAX: [phone]

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DEPOSITION OF PETER PATERNO
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REMEMBER WHAT THE ANSWER IS. IS GOING TO BE ABSOLUTELY. WHAT THE ANSWER IS ANYMORE. BY MR. BUSCH: Q. MY QUESTION IS:

I THINK THE ANSWER BUT I CAN'T REMEMBER

IF YOU HAVE THREE

PUBLISHERS, AND THE RECORD LABEL GETS A MECHANICAL LICENSE FROM TWO OF THE PUBLISHERS, THE THIRD PUBLISHER OBJECTS TO GIVING A LICENSE AND IN FACT OBJECTS TO THE USE AND SAYS, "I DO NOT WANT YOU USING MY COMPOSITION FOR THIS PURPOSE." A. Q. RIGHT. DO YOU KNOW WHETHER THE RECORD

LABEL HAS THE RIGHT TO EXPLOIT THAT COMPOSITION FOR THAT PURPOSE THAT THE PUBLISHER OBJECTS TO? MR. POMERANTZ: OBJECTION TO THE IT'S ALSO

EXTENT IT CALLS FOR A LEGAL CONCLUSION. AN INCOMPLETE HYPOTHETICAL. THE DEPONENT:

UNDER A TYPICAL

CONTROLLED COMPOSITION CLAUSE, THE ANSWER IS THAT THE RECORD LABEL CAN RELY ON THE GRANT FROM THE WRITER. IF IT'S AN OUTSIDE SONG, A LABEL CAN RELY

ON A NONEXCLUSIVE LICENSE PROVIDED BY ANY OF THE COPYRIGHT HOLDERS. BY MR. BUSCH: Q. EVEN IF THERE IS AN OBJECTION BY
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DEPOSITION OF PETER PATERNO
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ONE OF THE PUBLISHERS? A. Q. THAT? A. THE AREA THAT I'M NOT DESIGNATED TO YES. AND WHAT IS YOUR BASIS FOR SAYING

BE AN EXPERT ON. Q. DO YOU KNOW WHETHER NIMMER TAKES

THAT SAME POSITION? A. AGAIN -Q. A. THE TERRITORY. WOULD IT SURPRISE YOU IF HE DIDN'T? WELL, IT DEPENDS. IT DEPENDS ON I'M PRETTY CONFIDENT THAT HE DOES.

FOR THE UNITED STATES, I WOULD BE

SHOCKED IF HE DIDN'T. Q. OKAY. DO YOU KNOW WHETHER THAT --

DO YOU KNOW WHETHER THAT POINT OF LAW -- THAT POINT HAS EVER BEEN LITIGATED? MR. POMERANTZ: HERE AS A LEGAL EXPERT. YOU KNOW, HE'S NOT

HE'S HERE TO OFFER

OPINIONS ON VARIOUS CUSTOMARY USAGES IN THE MUSIC INDUSTRY WITH RESPECT TO CONTROLLED COMPOSITION CLAUSES. BY MR. BUSCH: Q. SO IS IT FAIR TO SAY THAT WITH

RESPECT TO THE SENTENCE THAT YOU'VE BEEN
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DEPOSITION OF PETER PATERNO
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DESIGNATED AS AN EXPERT ON, MR. PATERNO, THAT YOU DON'T DISAGREE WITH THE STATEMENT THAT IS MADE WITHIN THAT SENTENCE? MR. POMERANTZ: MISSTATES HIS TESTIMONY. THE DEPONENT: WITH SOME OF THE STATEMENTS. I DO DISAGREE WITH. BY MR. BUSCH: Q. OKAY. I WOULD LIKE TO KNOW IN THIS I DON'T DISAGREE I MEAN, PARTS OF IT OBJECTION;

SENTENCE WHAT PART OF IT -- WHAT PART OF IT DO YOU AGREE WITH? A. WELL, THE POSITION TAKEN ABOVE

TAKEN BY -- WELL, I GUESS THE POSITION TAKEN BY DEFENDANTS FOR PURPOSES OF THIS LITIGATION IS AT ODDS WITH WIDELY ACCEPTED INDUSTRY PRACTICE BETWEEN PUBLISHERS AND RECORD LABELS. IT'S NOT AT ODDS WITH IT. JUST NOT -- IT'S JUST NOT CUSTOMARY. IT'S

I MEAN, IT'S

NOT CUSTOMARY -- AS I TESTIFIED BEFORE, IT'S NOT CUSTOMARILY DONE THAT WAY. Q. A. IN WHAT WAY? THAT -- THAT ONE PUBLISHER WILL

GRANT A LICENSE ON BEHALF OF OTHER COPUBLISHERS. BUT THAT'S JUST BECAUSE MOST PEOPLE COOPERATE, AND
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DEPOSITION OF PETER PATERNO
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SO IT NEVER COMES TO THIS. Q. A. OKAY. AND AGAIN, I DON'T WANT TO GET TOO

FAR AFIELD, BUT I CERTAINLY HAVE TAKEN THE POSITION THAT THIS PERSON CLAIMS IS AT ODDS WITH INDUSTRY PRACTICE ON, YOU KNOW, NOT EVERY DAY, BUT IT COMES UP. AND WE HAVE, ON BEHALF OF OTHER HOLDERS OF COPYRIGHTS, LICENSED THEIR INTERESTS IN THE COPYRIGHT WHEN THEY WEREN'T BEING COOPERATIVE. Q. A. REMEMBER. WHO? I DON'T -- YOU KNOW, AGAIN, I DON'T

IT CAME UP LAST WEEK, AND I CAN'T FOR

THE LIFE OF ME TELL YOU WHO IT WAS. Q. IS IT FAIR TO SAY THAT LICENSES ARE

NARROWLY CONSTRUED TO CONFORM TO THE LANGUAGE IN THE LICENSE? MR. POMERANTZ: TALKING ABOUT? CONTEXT? WHAT ARE YOU WHAT

WHAT KIND OF LICENSE?

HOW DOES IT RELATE TO HIS OPINIONS?

BY MR. BUSCH: Q. WOULD IT BE FAIR TO SAY THAT A

LICENSE TO USE A COMPOSITION FOR A CERTAIN PURPOSE IS NARROWLY CONSTRUED TO ONLY GRANT A LICENSE FOR THAT PURPOSE IDENTIFIED WITHIN THE LICENSE?
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DEPOSITION OF PETER PATERNO
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MR. POMERANTZ:

I'M GOING TO

INSTRUCT HIM NOT TO ANSWER UNLESS YOU CAN EXPLAIN TO ME HOW THAT RELATES TO ONE OF THE THREE OPINIONS THAT WE ARE INTENDING TO OFFER HIM ON. BY MR. BUSCH: Q. FRONT OF YOU. LET'S GET MR. ABRAMS' REPORT IN AND AM I RIGHT, THERE IS ONLY ONE? MR. POMERANTZ: YEAH. IT'S THE

SENTENCE THAT BEGINS ON THE TOP OF PAGE 3 THAT STARTS WITH THE WORD "INITIALLY." I THINK IT'S

ACTUALLY TWO SENTENCES, BUT IT'S CLAUSES A AND B. I DON'T KNOW IF YOU'VE GIVEN US THIS REPORT YET. MR. BUSCH: ABRAMS? THE DEPONENT: IT. MR. BUSCH: THEN. MR. POMERANTZ: COPY. MR. BUSCH: AND SAME POINT HERE, I'LL GIVE HIM MY LET ME GIVE IT TO YOU, I DON'T THINK I HAVE I DID. DID I GIVE YOU

WHICH IS THAT YOU'RE ONLY GOING TO LET HIM ANSWER QUESTIONS THAT RELATE TO THIS -- WITH RESPECT TO THIS PARTICULAR?
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MR. POMERANTZ:

CORRECT.

THAT'S

THE SUBJECT MATTER THAT HE'S GOING TO BE TESTIFYING ABOUT AS AN EXPERT AND REBUTTING. MR. BUSCH: SAME RESERVATION OF RIGHTS. BY MR. BUSCH: Q. MR. PATERNO, MR. POMERANTZ HAS SAID OKAY. AND I HAVE THE

THAT YOU'RE ONLY GOING TO BE TESTIFYING ABOUT THIS -- THESE TWO CLAUSES WITHIN OR THESE TWO SENTENCES WITHIN MR. ABRAMS' REPORT. MR. POMERANTZ: SORRY TO INTERRUPT. LET ME JUST -- I'M

WE'RE ON PAGE 3. I WAS WAITING FOR

THE DEPONENT: HIM TO TELL ME. MR. POMERANTZ:

WE'RE ON PAGE 3 AT

THE TOP BEGINNING WITH THE SENTENCE, WITH THE WORD "INITIALLY" IN THE FIRST LINE. CAN YOU JUST GIVE HIM ONE MOMENT TO READ THE SENTENCE. BY MR. BUSCH: Q. "INITIALLY, THEREFORE, THERE THIS IS NOT

ARE TWO THINGS TO NOTE.

A SELF-EFFECTUATING CONTROLLED COMPOSITION CLAUSE AS THAT TERM IS KNOWN AND UNDERSTOOD WITHIN THE MUSIC
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Page 76
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INDUSTRY AND UNDER COPYRIGHT. SELF-EFFECTUATING CONTROLLED COMPOSITION CLAUSES WILL SAY THE CONTROLLED COMPOSITIONS ARE HEREBY LICENSED. "AND B, AS A RESULT, THIS LANGUAGE CLEARLY CONTEMPLATES THE SIGNING OF A SEPARATE LICENSE THAT WOULD PRESUMABLY CONTAIN THE TERMS GENERALLY FOUND WITHIN THE MECHANICAL LICENSES." OKAY. AS TO POINT A, WOULD YOU

HAVE ANYTHING TO ADD BEYOND WHAT YOU TESTIFIED TO ON THE SAME SUBJECT MATTER AS IT RELATED TO MR. SULLIVAN'S REPORT AS TO WHY MR. ABRAMS IS WRONG IN YOUR VIEW? A. I CAN'T REMEMBER WHAT I TESTIFIED,

BUT I COULD JUST RESPOND BY SAYING THAT -- THERE IS NO MAGIC WORDS THAT -- TO EFFECTUATE THE COPYRIGHT. THERE -- IT'S SO UNLIKELY THAT THE -- IF THIS CONTRACT THAT WE'RE SPEAKING ABOUT HAD SAID THE MECHANICAL -- THE CONTROLLED COMPOSITIONS ARE HEREBY LICENSED, NO ATTORNEY ON THE OTHER SIDE WOULD SAY, "NO.
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Page 77
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'WILL.'

I NEED TO RESERVE THE RIGHT TO BE ABLE TO

ISSUE A SEPARATE LICENSE." IT'S PATENTLY RIDICULOUS. THERE IS

NOBODY PRACTICING LAW IN THE MUSIC THAT THINKS THAT THE CONTROLLED COMPOSITION, WHETHER WELL DRAFTED, POORLY DRAFTED, MEANS ANYTHING OTHER THAN WHAT IT MEANS EVERY TIME THAT WE DO THIS, WHICH IS THAT -- THAT THE COMPOSITION WILL BE LICENSED AT THE RATES AND ON THE TERMS SET FORTH IN THE RECORDING AGREEMENT. Q. AREN'T THERE OTHER TERMS THAT

AREN'T GENERALLY FOUND WITHIN LICENSES THAT ARE NOT INCLUDED WITHIN THE MECHANICAL ROYALTY SECTION OF -- IN THE 1998 OR 2003 AGREEMENT? A. THESE AGREEMENTS ARE SHORT FORM.

SO YES, GENERALLY, YES, THERE ARE THINGS MISSING. NONE OF WHICH ANYBODY THINKS IS IMPORTANT. Q. A. Q. A. Q. AUDIT RIGHTS? YES, THOSE. THOSE ARE NOT IMPORTANT? THEY'RE NOT. WHAT OTHER THINGS THAT ARE FOUND ACCOUNTING RIGHTS?

WITHIN LICENSES ARE NOT FOUND WITHIN THE SHORT FORM AGREEMENTS THAT YOU HAVE IN FRONT OF YOU? A. I DON'T KNOW.
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Q.

I MEAN, YOU SAID THERE ARE TERMS,

CONDITIONS THAT ARE NOT FOUND WITHIN THIS -WITHIN THE SHORT-FORM AGREEMENT THAT ARE GENERALLY FOUND IN LICENSES. I IDENTIFIED TWO, AUDIT RIGHTS AND ACCOUNTING RIGHTS. ARE THERE ANY OTHER RIGHTS

THAT YOU CAN THINK OF? A. TIME OF PAYMENT, FREQUENCY OF I MEAN, I COULD

PAYMENT, OFF THE TOP OF MY HEAD.

LOOK AT A LICENSE AND TELL YOU WHAT'S NOT IN HERE THAT'S IN A LICENSE. IMMATERIAL. Q. ANYTHING -- DO YOU KNOW WHETHER THEY'RE ALL PRETTY MUCH

IT'S IMMATERIAL TO EVERYONE HAVING AUDIT RIGHTS OR ACCOUNTING RIGHTS OR WHEN THEY'RE BEING PAID AND HOW THEY'RE BEING PAID? A. IT'S IMMATERIAL TO RATIONAL PEOPLE. THERE IS TYPICAL

THEY'RE ALL PAID WITHIN 90 DAYS. ACCOUNTING RIGHTS. ISSUES. Q.

IT'S NOT -- THESE ARE NOT BIG

DO YOU KNOW WHETHER THERE ARE

SPECIFIC TERMS FOUND IN DIGITAL DOWNLOAD LICENSES THAT ARE NOT FOUND WITHIN THE MECHANICAL ROYALTY SECTION? A. SEPARATE DIGITAL DOWNLOAD LICENSES?
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