One year ago, a federal court jury in New York awarded popular rap group, the Beastie Boys, $1.7 million resulting from the unauthorized use of several of its songs by marketers of Monster brand energy drink. Recently, the judge in the same case ordered Monster to pay an additional $668,000 toward the group’s legal fees.
In view of the loss in court, Monster probably wishes it had put as much energy into its intellectual property (IP) licensing procedures as it does in its drinks. In the spring of 2012, Monster hosted a snowboarding competition, an annual event designed to promote the Monster brand and “lifestyle.” Within days after the event, Monster posted a promotional video on its YouTube channel highlighting moments from the competition and after-party. The video soundtrack included excerpts from a remix of Beastie Boys songs, created by the highly regarded remix DJ, Z-Trip, who had performed at the after-party. Z-Trip had previously created the “Megamix” and posted it on his own website with permission from the Beastie Boys.
Approximately one month later, lawyers for the Beastie Boys wrote to inform Monster that it did not have permission to use Z-Trip’s remix containing the underlying Beastie Boys music in the promotional video. Monster immediately removed the video from its YouTube channel, edited it, and re-posted it after replacing the Megamix excerpts with different music.
So how did a few weeks of unauthorized use of several already remixed songs result in liability of over $2 million? To begin with, it helps to understand that statutory damages under the Copyright Act can range from $750 to $30,000 per infringement. If the defendant acts “willfully,” damages can run as high as $150,000 for a single infringement of one work. In this case, the jury found that each of Monster’s l0 acts of infringement had been willful and awarded a total of $1.2 million in statutory damages. This was on top of a $500,000 award under the Lanham Act, with the jury having found that Monster engaged in intentional deception and acted in bad faith in causing the false endorsement.
As for liability, it was undisputed that Monster never contacted the Beastie Boys or any of their representatives to obtain permission to use the band’s music compositions, sound recordings, or marks in the video. Instead, one of Monster’s unsuccessful defense theories was to claim that any injury to the Beastie Boys was in fact caused by DJ Z-Trip, stemming from four discrete communications between Z-Trip and a director of marketing for Monster. The marketing director briefly discussed the proposed video with Z-Trip, who when asked if he had any music that Monster might use for it, mentioned the Megamix that could be downloaded for free on his own website.
Unfortunately for Monster, Z-Trip lacked the ability to convey any rights in the underlying Beastie Boys songs or sound recordings used in the Megamix. When a copyright owner grants a non-exclusive license, the owner retains the ownership over the copyright, and may still sue unauthorized users for infringement.
Nevertheless, Monster sued Z-Trip as a third-party defendant, asserting various liability theories including negligence, fraud or breach of contract. In dismissing the complaint against Z-Trip prior to trial, the court concluded that the sparse communications could not form the basis for a contract, because they did not specify any legal duty that Monster undertook in consideration for Z-Trip permitting the download of the mix. Further, no reasonable person could understand the DJ to have granted the extensive rights claimed by Monster (e.g., to reproduce for its own commercial purposes, original recordings and songs of the Beastie Boys contained in the Megamix) from the simple offer to download the mix.
The court highlighted the credentials (or lack thereof) of Monster’s marketing employee, a college dropout with work experience in the forestry and ski industries but “no evident legal expertise.” It did so to emphasize that the casual conversations with Z-Trip could not form the basis of a license necessary to acquire synchronization and other copyright interests in order for Monster to use the creative works at issue.
The court perhaps had the most fun in its opinion analyzing the legal significance of the interjection, “Dope!”, which Monster relied on in arguing that it had received approval for the use of the songs at issue. DJ Z-Trip had emailed, “Dope!” in response to an email from Monster’s director stating, “Please have a look at the video from this past weekend and let me know if you approve.” The court wrote that in proper context, “Dope!” could be an expression of acceptance and approval of another’s offer, but that here, it did not serve as an assent to a mutual exchange of promises necessary to form a contract, nor did it convey that Z-Trip had the authority to approve a copyright license on behalf of the Beastie Boys.
Businesses thus must have a much sounder basis (no pun intended) before they endeavor to use another’s copyrighted works or trademarks in connection with their own goods and services. Entrusting the communications and negotiations for such licenses to someone knowledgeable in intellectual property rights, as opposed to a marketing employee with a forestry and skiing background, is just one step in the right direction.
For more information please contact Jason Brino at 410-583-2400 or email@example.com.