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F.B.T. Prods., LLC v. Aftermath Records

F.B.T. Prods., LLC v. Aftermath Records

United States Court of Appeals for the Ninth Circuit

July 12, 2010, Argued and Submitted, Pasadena, California; September 3, 2010, Filed

No. 09-55817, No. 09-56069

Opinion

 [*961]  SILVERMAN, Circuit Judge:

This dispute concerns the percentage of royalties due to Plaintiffs F.B.T. Productions, LLC, and Em2M, LLC, under their contracts with Defendant Aftermath in connection with the recordings of Marshal B. Mathers, III, professionally known as the rap artist Eminem. 1 Specifically, F.B.T. and Aftermath disagree on whether the contracts' "Records Sold" provision or "Masters Licensed" provision sets the royalty rate for sales of Eminem's records in the form of permanent downloads and  [**2] mastertones. Before trial, F.B.T. moved for summary judgment that the Masters Licensed provision unambiguously applied to permanent downloads and mastertones. The district court denied the motion. At the close of evidence, F.B.T. did not move for judgment as a matter of law, and the jury returned a verdict in favor of Aftermath. On appeal, F.B.T. reasserts that the Masters Licensed provision unambiguously applies to permanent downloads and mastertones. We agree that the contracts are unambiguous and that the district court should have granted summary judgment to F.B.T. We therefore reverse the judgment and vacate the district court's order awarding Aftermath its attorneys' fees.

BACKGROUND

F.B.T. signed Eminem in 1995, gaining exclusive rights to his recordings. In 1998, F.B.T. signed an agreement transferring Eminem's exclusive recording services to Aftermath. The "Records Sold" provision of that agreement provides that F.B.T. is to receive between 12% and 20% of the adjusted retail price of all "full price records sold  [**3] in the United States . . . through normal retail channels." The agreement further provides that "[n]otwithstanding the foregoing," F.B.T. is to receive 50% of Aftermath's net receipts "[o]n masters licensed by us . . . to others for their manufacture and sale of records or for any other uses." The parties refer to this provision as the "Masters Licensed" provision. The contract defines "master"  [*962]  as a "recording of sound, without or with visual images, which is used or useful in the recording, production or manufacture of records." The agreement does not contain a definition of the terms "licensed" or "normal retail channels."

In 2002, Aftermath's parent company, Defendant UMG Recordings, Inc., concluded an agreement with Apple Computer, Inc., that enabled UMG's sound recordings, including the Eminem masters, to be sold through Apple's iTunes store as permanent downloads. Permanent downloads are digital copies of recordings that, once downloaded over the Internet, remain on an end-user's computer or other device until deleted. The contract between UMG and Apple is but one example of the many agreements that Aftermath has concluded to sell sound recordings in digital formats since approximately  [**4] 2001. Since 2003, Aftermath has also concluded contracts with major cellular telephone network carriers to sell sound recordings as mastertones, which are short clips of songs that can be purchased by users to signal incoming calls, popularly known as ringtones.

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621 F.3d 958 *; 2010 U.S. App. LEXIS 18450 **

F.B.T. PRODUCTIONS, LLC; EM2M, LLC, Plaintiffs-Appellants, v. AFTERMATH RECORDS, DBA Aftermath Entertainment; INTERSCOPE RECORDS; UMG RECORDING, INC.; ARY, INC., Defendants-Appellees. F.B.T. PRODUCTIONS, LLC; EM2M, LLC, Plaintiffs-Appellants, v. AFTERMATH RECORDS, DBA Aftermath Entertainment; INTERSCOPE RECORDS; UMG RECORDING, INC.; ARY, INC., Defendants-Appellees.

Subsequent History: US Supreme Court certiorari denied by Aftermath Records v. F.B.T. Prods., LLC, 562 U.S. 1286, 131 S. Ct. 1677, 179 L. Ed. 2d 615, 2011 U.S. LEXIS 2255 (Mar. 21, 2011)

Summary judgment granted, in part, summary judgment denied, in part by F.B.T. Prods., LLC v. Aftermath Records, 827 F. Supp. 2d 1092, 2011 U.S. Dist. LEXIS 126159 (C.D. Cal., Oct. 31, 2011)

Request granted F.B.T. Prods., LLC v. Aftermath Records, 2012 U.S. Dist. LEXIS 191203 (C.D. Cal., June 27, 2012)

Prior History:  [**1] Appeal from the United States District Court for the Central District of California. D.C. No. 2:07-cv-03314-PSG-MAN, D.C. No. 2:07-cv-03314-PSG-MAN. Philip S. Gutierrez, District Judge, Presiding.

F.B.T. Prods., LLC v. Aftermath Records, 2009 U.S. Dist. LEXIS 5981 (C.D. Cal., Jan. 20, 2009)

CORE TERMS

Records, Licensed, downloads, permanent, Masters, mastertones, third party, district court, summary judgment, royalty, unambiguous, ambiguous, sound recording, contracts, rights, retail, sales, extrinsic evidence, channels, motion for judgment as a matter of law, reasonably susceptible, royalty rate, provisionally, manufacture, parties

Civil Procedure, Trials, Judgment as Matter of Law, General Overview, Evidence, Weight & Sufficiency, Appeals, Reviewability of Lower Court Decisions, Preservation for Review, Standards of Review, De Novo Review, Contracts Law, Contract Interpretation, Ambiguities & Contra Proferentem, Questions of Fact & Law, Summary Judgment, Appellate Review, Appealability, Parol Evidence, Contract Conditions & Provisions, Copyright Law, Assignments & Transfers, Licenses, Civil Infringement Actions, Defenses, First Sale Doctrine, Compulsory Licenses, Ownership Rights, Digital Performances