Beastie Boys Verdict Underscores the Importance of Clearing IP Rights
By Linda J. Zirkelbach, Esq., Venable LLP, Washington D.C., USA
Launching an advertisement, production, or publication without obtaining the necessary third-party intellectual property (IP) rights can have costly consequences. A jury in the United States District Court for the Southern District of New York recently awarded the Beastie Boys and related plaintiffs USD1.7 million in a lawsuit against Monster Energy for using Beastie Boys music and references to the Beastie Boys without proper permission.
Monster Energy ran a promotional video on its website that used portions of five Beastie Boys songs as the soundtrack and included other references to the group. The remix of Beastie Boys songs used in the video came from a DJ using the name "Z-Trip" who had a 2011 agreement with the Beastie Boys to create the remix and use it as a free promotional item. Z-Trip did not have the right to sell or license the remix, or to authorize third parties to use it.
In 2012, Monster Energy used Z-Trip's remix in its promotional video, and a Monster Energy employee sent the video to Z-Trip for review. He responded "Dope," and Monster Energy later claimed it believed Z-Trip granted Monster Energy the necessary rights to use the remix in its video. However, Monster Energy never obtained authorization from the actual rights-holders to the musical compositions or the sound recordings.
The jury found Monster Energy's actions to be willful copyright infringement as well as a false endorsement under the Lanham Act (the US Trademark Act) and awarded USD1.7 million in damages. The federal court in New York recently denied Monster Energy's post-trial motions for judgment as a matter of law, a new trial, and a reduction in damages.
In a lengthy opinion and order denying Monster Energy's post-trial motions, the court made a number of findings regarding Monster Energy's copyright infringement. The court found that the jury had sufficient circumstantial evidence of Monster Energy's "reckless disregard" of the possibility that the video infringed on the Beastie Boys' copyrights to find the infringement to be "willful" and therefore award more significant damages under the Copyright Act. In so holding, the court found that the Monster Energy employee responsible for the matter had experience securing approval of other artists' music for similar videos, so a reasonable jury could find that he was aware of the legal duty to secure the Beastie Boys' approval and recklessly disregarded that duty. The court noted that the employee asked DJ Z-Trip's permission to use the remix in the video arguably meant that he understood the need to obtain some sort of authorization.
The court found that the actions of a second Monster Energy employee, the Director of Interactive Marketing, who failed to investigate proper licensing before posting the video, also constituted reckless disregard by Monster Energy. The court underscored that, the Director of Interactive Marketing was familiar with music licensing procedures, and his job responsibilities required sensitivity to others' IP rights in the sponsorship-type deals he handled. The court noted that the director had also produced and updated Monster Energy's social media guide and he had been vigilant in protecting Monster Energy's own IP rights.
Monster Energy sought to depict its infringement as sloppy, but non-willful, acts of two employees, but the court noted that Monster Energy had not performed any training of its employees related to the use of copyrighted or trademarked content. The court found that Monster Energy had no comprehensive music licensing policy, tasked unqualified and untrained employees, and protected its own IP rights with far more vigor than it did others' rights.
The court made several holdings regarding the false endorsement claim under the Lanham Act. First, the court found that the jury could have reasonably concluded that the video contained a false or misleading impression that the Beastie Boys endorsed Monster Energy, which they did not. Second, the court found that consumers were likely to be confused by the false or misleading representation. The court also held that a jury could reasonably conclude that Monster Energy's actions were "intentionally deceptive," that the Monster Energy employee intended that viewers of the video regard the Beastie Boys as equal subjects of the video along with Monster Energy, and that Monster Energy used the Beastie Boys music and marks with the intention of capitalizing on the Beastie Boys’ reputation and goodwill.
The bottom line
Monster Energy's legal battles are not over. As of this writing, Monster Energy has filed a notice of appeal of the court’s decision. The Beastie Boys have filed a motion for an additional USD2.4 million in attorneys' fees and costs, which the court is considering. Capitol Records, LLC, the co-owner of the copyrights in the sound recordings, and Universal-Polygram International Publishing, Inc., the co-owner of the copyrights in the various musical compositions written by the members of the Beastie Boys, have now sued Monster Energy in a related case, which has been stayed pending final disposition of the appeal.
These lawsuits highlight the importance of having IP rights cleared before launching any new production, advertisement, or publication. Many potential pieces of third-party content may need to be cleared for your production, including music, still photos, video footage, individual likenesses and testimonials, and the use of others' trademarks. Some of the rights clearance issues can be more difficult than you might expect.
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