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Columbia Broadcasting System Inc. v. Melody Recordings Inc.

Decided: May 13, 1975.

COLUMBIA BROADCASTING SYSTEM, INC., A NEW YORK CORPORATION, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT,
v.
MELODY RECORDINGS, INC., A NEW JERSEY CORPORATION, DEFENDANT, AND NATIONAL CINEMATAPE, INC., A NEW YORK CORPORATION, ET AL., DEFENDANTS-RESPONDENTS AND CROSS-APPELLANTS



Collester, Lora and Handler. The opinion of the court was delivered by Handler, J.A.D.

Handler

[134 NJSuper Page 371] On January 10, 1973 Columbia Broadcasting System (hereinafter plaintiff or CBS) filed a complaint in the Superior Court, Chancery Division, on behalf of itself and other tape and record manufacturers seeking, among other things, an injunction against the corporate

and individual defendants for duplicating any recorded performance contained on a tape or record manufactured by plaintiff, an accounting for all proceeds received from the sale of "pirated" tapes and records, surrender of all unauthorized duplicated records and tapes, and compensatory and punitive damages. Summary judgment was granted in favor of defendants on May 28, 1973 and plaintiff's complaint was dismissed. This decision of Judge Kimmelman was reported at CBS v. Melody Recordings, Inc., 124 N.J. Super. 322 (Ch. Div. 1973).

Thereafter, on June 18, 1973, the United States Supreme Court decided Goldstein v. California, 412 U.S. 546, 93 S. Ct. 2303, 37 L. Ed. 2d 163 (1973). On the basis of this case CBS moved for a reconsideration of the decision and for summary judgment. On December 7, 1973 the lower court granted plaintiff's motion for summary judgment (in favor of CBS only and not as a class action) against the corporate defendants and denied the issuance of a permanent injunction.

These appear to be the essential facts: CBS is a manufacturer of records and contracts with well-known musical performers to obtain the exclusive right to manufacture and sell their records. Plaintiff obtains either the complete ownership or an exclusive license to manufacture and sell the record made by the performing artist and to use the name and likeness of the artist in the promotion, advertsiing and sale of the recordings. CBS pays for the copyright, hires union scale musicians and records an original production of the musical composition on record or tape.

Defendants are engaged in the business of duplicating magnetic tapes and sound records or records of musical compositions, described as "high quality reproductions," which are sold to distributors for resale to retailers. These reproductions are made from the original sound recordings manufactured by plaintiff. Defendants' activities are undertaken without the permission or authorization of plaintiff. Defendants' tapes and records, however, utilize their own

distinctive label and do not otherwise indicate that the product is that of CBS. It is agreed, therefore, that "palming off" in its traditional or conventional sense has not occurred as a result of defendants' actions.

Plaintiff's complaint against defendants pertains only to their duplications of CBS tapes and records made prior to February 15, 1972. It was stipulated that defendants have complied with the compulsory license provisions of the Federal Copyright Act, 17 U.S.C.A. § 1 et seq., which prior to February 15, 1972 provided that a person may reproduce mechanically musical copyrighted work upon the payment to the copyright proprietor of a royalty of two cents. Id. § 1(e). Defendants have filed requisite notices of intention and have paid CBS the compulsory license fee of two cents for each musical composition which has been recorded.

Recordings after February 15, 1972 are not involved by virtue of an amendment of the Federal Copyright Act in 1971 by Pub. Law 92-140, 85 Stat. 391, 17 U.S.C.A. § 1 et seq. as amended, effective February 15, 1972. This amendment gave to copyright owners the exclusive right to reproduce and distribute to the public reproductions of copyrighted sound recordings. 17 U.S.C.A. § 1(f). The effect of this amendment, which was to remain operative until January 1, 1975, is to prevent defendants from rerecording tapes and records "fixed, published, and copyrighted" between February 15, 1972 and January 1, 1975.*fn1 Defendants have not, and are not alleged to have, rerecorded tapes and records "fixed, published and copyrighted" after February 15, 1972.

The court below initially granted defendants' motion for summary judgment based on Sears, Roebuck & Co. v. Stiffel Company, 376 U.S. 225, 84 S. Ct. 784, 11 L. Ed. 2d 661 (1964), and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S. Ct. 779, 11 L. Ed. 2d 669 (1964). These

cases were thought to embrace the proposition that state law may not prevent the copying of unpatentable or uncopyrighted articles since such a prohibition would conflict with federal patent and copyright laws. As a result of the Supreme Court's later decision of Goldstein v. California, supra, the court below reversed itself and granted summary judgment for plaintiff. It did so on the ground that Goldstein indicated that state action in the copyright field is not precluded by the Sears and Compco cases and it ruled that such state action is not limited to legislative enactment but encompasses the application of state common law doctrines of unfair competition.

Defendants, though taking individual approaches, argue basically that Goldstein, read in the context of its particular facts, contemplates that only state action in the form of statutory enactments would be permissible to regulate the duplication or copying of pre-February 15, 1972 sound recordings and that other forms of state control in this area remain barred by virtue of a paramount federal concern.

We disagree. While Goldstein did involve the criminal enforcement of a provision of the California Penal Code, and the Supreme Court ruled specifically that the California statute was not federally preempted, the court did not hold, or otherwise suggest, that state action in this area, in a form other than legislative enactment, would be barred. Goldstein may be viewed as permitting local protection of musical performances under the judicial aegis of the common law, as well as by statute. Mercury Record Pro., Inc. v. Economic Consult., Inc., 64 Wis. 2d 163, 218 N.W. 2d 705, 712 (Sup. Ct. 1974); Jondora Music Pub. Co. v. Melody Recordings, Inc., 362 F. Supp. 488, 497 (D.N.J. 1973), rev'd on other grounds, 506 F. 2 d 392 (3 Cir. 1974); Note, ...


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