Universal Music has argued that "no reasonable person" would have assumed that a junior employee at the major was empowered to enter into a licensing agreement on its behalf.
A UK media company which negotiated a licensing agreement with said junior employee wants compensation after a release project it was working on fell apart when - post-deal - Universal said it had not, in fact, given permission for its rights to be exploited by that project.
Elm Street Media Productions controlled the copyright in a number of music performances that were originally broadcast in the 1980s and 1990s. It planned to release those performances on CD and DVD in 2015, but first needed to clear some rights owned by the Universal division then known as Virgin EMI.
The media firm seemingly entered into licensing talks with a junior employee at the major who, it argues, said he could negotiate the licence they required. A deal was then signed in July 2015. However, that employee was not, in fact, empowered to negotiate any such deal, and he was subsequently sacked for gross misconduct in relation to the Elm Street negotiations.
The media firm was alerted to the issue with its licence when its partner on the CD/DVD release, Demon Music, was approached by Virgin EMI, which claimed that some Squeeze tracks that featured on the planned record infringed its copyrights.
Elm Street sued for £4.2 million in damages in relation to the licensing debacle earlier this year. According to Law360, Universal filed its defence late last month, arguing that the media firm should have known that the junior employee they were dealing with - referred to as Mr Lydon in legal papers - could not agree any licensing deal.
"No reasonable person would have understood, merely by reason of the fact that Lydon had been introduced as a point of contact within , that he had such authority", its legal papers state.
The major also claims that another Universal employee had informed Elm Street that any licensing agreement would actually need to come from its Universal International Music BV division, which would require sign-off from executives in the Netherlands.
It remains to be seen how Elm Street - and the court - responds to the major's defence.