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Music publishers ask US Supreme Court to intervene over founder liability questions in Wolfgang’s Vault case

By | Published on Friday 5 May 2023

Wolfgang's Vault

A group of music publishers have asked the US Supreme Court to intervene on one aspect of their past legal battle with the concert streaming service Wolfgang’s Vault. They argue that a specific ruling in that case in the Second Circuit appeals court incorrectly interpreted American copyright law and sets a dangerous precedent.

Launched in 2003, Wolfgang’s Vault began life as an archive of concert recordings previously owned by promoter Bill Graham, although it later expanded its content sources. As that happened, and the channels through which the firm disseminated and monetised the live recordings expanded too, the company became somewhat controversial in music industry circles.

It was claimed that neither Graham nor Wolfgang’s Vault had ever secured the necessary rights to stream the concert recordings that the promoter had captured over the years. A consortium of publishers sued in 2015 arguing that songs they controlled were contained in the concert films and Wolfgang’s Vault hadn’t secured the necessary licences to stream them.

The publishers were basically successful in that litigation, with a judge ruling in 2018 that Wolfgang’s Vault had indeed infringed their copyrights by not properly licensing the songs contained in the concerts it was making available online.

That said, the publishers weren’t entirely pleased with the outcome of the case, not least because when a jury was asked to decide what damages the streaming service should pay for the infringements they opted for a mere $189,500.

Which – given US law allows courts to set statutory damages of $150,000 per infringed work and 197 specific infringed songs had been identified by the publishers – was a very low payment indeed.

On appeal, the Second Circuit Appeals Court upheld both the judgement against Wolfgang’s Vault and the jury’s decision regarding damages. Which meant neither side in the case was particularly happy.

And the publishers had an additional gripe following the appeal proceedings. They wanted Wolfgang’s Vault founder William Sagan to be personally liable for direct copyright infringement for his involvement in putting the unlicensed concert recordings online.

The original judgement did just that, but the Second Circuit overturned that particular decision, saying that because an employee – actually Sagan’s brother-in-law Michael Lundberg – digitised and uploaded the unlicensed recordings, Sagan himself couldn’t be personally liable for the direct infringement.

Summarising this part of the legal battle in their new filing with the US Supreme Court, the publishers write: “The district court held that Sagan was directly liable for copyright infringement for acquiring the bootleg recordings, developing the plan to digitise them and distribute them online, and instructing his brother-in-law which recordings to post online”.

“The Second Circuit reversed, concluding that Sagan was not liable for direct infringement because ‘direct liability attaches only to the person who actually presses the button’ and Sagan instructed his employee to post the recordings instead of doing so himself”.

“That absurdly narrow understanding of direct infringement is plainly wrong under the text of the Copyright Act and accepted principles of primary and secondary liability”, the publishers’ filing goes on. “The decision cannot be reconciled with decisions from several other courts of appeals, including an opinion from the First Circuit reaching the exact opposite conclusion on materially indistinguishable facts”.

The Second Circuit decision regarding Sagan’s liabilities, they add, “creates terrible incentives, as it makes avoiding direct-infringement liability for corporate executives as easy as ordering their employees to make the infringing copies rather than running the copier themselves. This court should grant review and reverse”.

Someone not directly involved in the infringement of copyright can still be held liable for things like secondary or contributory infringement. But, the publishers say, that’s not an acceptable solution here because “direct liability is a different animal” to those other kinds of infringement “with different elements and different rules”.

And the fact this decision was made in the Second Circuit appeals court, which hears appeals in cases from – among other places – New York, makes it all the more problematic. “The consequences of [this] erroneous decision … are amplified by the Second Circuit’s centrality as a forum for copyright litigation”, the publishers state.

“If permitted to stand, the Second Circuit’s approach would allow corporate officers to evade direct liability for deliberate copyright infringement, as long as they are clever enough to leave the button-pushing to staff”.

It remains to be seen if the US Supreme Court is up for considering this particular grievance from the music industry.