Brief Amicus Curiae of the Motown Alumni Association in F.B.T. Productions v. Aftermath, No. 09-56069 (9th. Cir.)

Abstract

This case involved an important issue of contract interpretation majorly affecting the market for digital music downloads with serious implications for the welfare of many recording artists. At issue was the "Masters Licensed" clause and the usage of standard terms in a deal involving the artist Eminem that paralleled the terms in a great many recording agreements. And while the recording label Appellees tried characterize these contracts as unique to these parties, the interpretation of the basic terms at issue — especially "license" and "sale" — affected nearly every American recording artist signed to a major record label, including many members of amicus Motown Alumni Association. For example, one agreement between Motown Records and The Temptations drew exactly the same distinction in its royalty structure between records sold and recordings that were licensed to third parties.During the proceedings below, the District Court failed to give adequate consideration to the broader context of the contractual terms at issue and the role they play in the music industry. In this appeal, amicus urged the Court not to make the same mistakes and, in particular, to consider three key factual and legal aspects of the music industry that are relevant to resolving the dispute: (1) the major labels’ frequent and repeated use of strained contractual interpretations, abstruse royalty structures, and strategic accounting practices to deny artists proper notice and fair compensation, including the historical failure to pay out accurate royalties earned under artist contracts; (2) the incentives record labels have to contort contractual terms in order to avoid paying higher “license” royalties to artists, given their changing role in a music market rapidly shifting to digital distribution; and (3) the specific context and meaning of common copyright terms such as “license” and “sale” in the federal Copyright Act.In light of these considerations, amicus urged the Court to adopt a strong presumption that when music contracts conveying copyright interests use terms derived from within the Copyright Act, such as "license" or "sale," the Act's default terminology should apply, and only in rare cases where there is substantial evidence that the parties unambiguously agreed to deviate from these common statutory meanings should these terms be susceptible to different interpretations. This practice comports with well-settled principles of contract law, the proper allocation of risks in recording contracts, and the reasonable expectations of artists, enabling them to rely on common industry understandings and the plain meaning of the terms, regardless of changes over time in technology, distribution methods, or the labels' business models.* This brief was written with the assistance of Berkeley Law students Adam Blankenheimer, Amber Burroff, Jade Jurdi, and Joel Wallace.