The recent sizeable attorney's fee award in the lengthy
Beastie Boys v. Monster Energy Company legal battle is an
important reminder of how critical it is to properly clear third
party IP rights in your digital media materials and the serious
financial risks of not doing so. On June 15, 2015, a New York
federal court ordered Monster Energy to pay the Beastie Boys parties
$667,849.14 in attorney's fees, in addition to the $1.7
million in damages that a jury previously awarded---all because
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, without proper permission. The
Beastie Boys parties are also seeking roughly $100,000 in costs
from Monster Energy from this litigation. And, 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 also sued Monster Energy in a
related case, which has been stayed pending final disposition of
the first case.
Unless reversed on appeal, Monster Energy's one online video
promotion will ultimately cost the company many millions of dollars
when you add court awards to Monster Energy's own legal fees
expended in the litigation. No matter how minor you may think your
project is, whether it be a video on your website, a twitter video
or another social media use, this case demonstrates that proceeding
without properly obtaining the necessary rights is very risky.
The Case and $1.7 MM Damages Award
For those unfamiliar with this case, 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
and awarded $1.7 million in damages. The federal court in New York
denied Monster Energy's post-trial motions for judgment as a
matter of law, a new trial, and a reduction in damages.
Copyright Infringement
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.
False Endorsement
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 $667, 849.14 Attorney's Fees Award
On June 15, 2015, the court ordered Monster Energy to pay the
Beastie Boys parties $667,849.14 in attorney's fees spent in
this litigation. The Beastie Boys had originally sought
$2,385,175.50. To boil down a 45 page court opinion, the court
essentially determined that fees were appropriate under the
Copyright Act, but not under the Lanham Act. The court then reduced
the fees taking into account a number of factors, including, (a)
some of the work on the case was on the Lanham Act claims, for
which attorney's fees were not recoverable in this case because
this case was not "exceptional," (b) some of Monster
Energy's positions were reasonable whereas others were not, (c)
certain legal work on certain specific issues should not be borne
by Monster, and (d) the Beastie Boys' bills were higher than
typical because the case was staffed heavily with senior lawyers.
While awarding much lower attorney's fees than the Beastie Boys
sought, the court opined that the still very substantial fee award
furthers the goals of the Copyright Act. Specifically, the court
determined that the fee award, coupled with the damages award,
serves to compensate the Beastie Boys for their reasonable
attorney's fees in litigating their claims. The court also
noted that such an award serves the purpose to deter future
would-be infringers and should lead future parties contemplating
infringement or "designing corporate protocols with respect to
the handling of intellectual property to think twice before
disrespecting others' copyright interests."
Conclusion
Many potential pieces of third-party content may need to be cleared
for your digital media 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. And as this ongoing battle
demonstrates, it is extremely risky to proceed without solid
corporate protocols and experienced counsel on these issues. For
more information on the IP rights to consider, when creating and
distributing digital content, please see our February issue which
included the following article:
It's a Digital Media World: Legal Issues and Considerations in
Creating and Distributing Digital Content.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.