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How Much for Eminem's Ringtones?
Highest Court Ninth Circuit
Year Ended 2010
Plaintiffs Bass Brothers
F.B.T. Productions
Defendants Aftermath Records
Interscope Records
UMG Records
Other Eminem
Short Description This is not only an interesting lawsuit (for people who are interested in contractual interpretation issues), but an important decision for the music business, as its holding will likely be applied to the many outstanding record contracts. Plaintiffs are the production company and producers with whom Eminem originally signed exclusive production contracts. Since Em became a major record star, Plaintiffs have taken a "back seat" in his career, though they still collect royalties due to them by Em's record label, Aftermath Records, which is a subsidiary of the other Defendant record labels. According to the contracts signed between Plaintiffs and Aftermath, Plaintiffs were owed 50% of all income from licensing master recordings to third parties, and between 12-20% of income from sale of "records." Plaintiffs audited Defendants' book-keeping, and learned that they were being paid only 12-20% of the income earned through the sale of ringtones, which Defendants licensed for sale on iTunes and other related online stores. The California district court originally found the agreement between the parties was ambiguous as to whether ringtones would fall under the "Records Sold" or "Masters Licensed" provisions, and held that extrinsic evidence was allowed to aid contract interpretation. A federal jury then found for Defendants, granting them over $2 million in attorneys' fees. However, the Ninth Circuit, which is a very influential federal circuit, reversed the jury verdict and held that the district court should have granted summary judgment to Plaintiffs. The main reason for this holding was the use of the word "notwithstanding" in the "Masters Licensed" provision. Under a plain reading of the contract, the "Masters Licensed" provision guaranteed to Plaintiffs 50% of income from third-party licenses like ringtones, "notwithstanding" whether such uses would also fall within the "Records Sold" provision. In other words, the two provisions were not exclusive; it was not an either/or proposition. Since the court found the licenses granted to companies, like Apple, for ringtone sales fit within the "Masters Licensed" provision, Plaintiffs were owed appropriate royalties. The case was remanded. - LSW

Legal Issues
Contracts Breach Payment & Performance
  Terms Construction & Interpretation
    Declaratory Judgment
Copyrights Ownership Assignments, Licenses & Renewal Rights

Opinions F.B.T. Productions, LLC v. Aftermath Records
621 F.3d 958
Ninth Circuit , September 03, 2010 ( Nos. 09-55817, 09-56069 )

F.B.T. Productions, LLC v. Aftermath Records
2009 WL 137021
C.D. California , January 20, 2009 ( No. CV 07-3314 PSG (MANx) )

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Related Searches Parties
Aftermath Records ( Defendant )
Bass Brothers ( Plaintiff )
Eminem ( Other )
F.B.T. Productions ( Plaintiff )
Interscope Records ( Defendant )
UMG Records ( Defendant )

Legal Issues
Contracts / Breach / Payment & Performance
Contracts / Terms / Construction & Interpretation
Contracts / Terms / Declaratory Judgment
Copyrights / Ownership / Assignments, Licenses & Renewal Rights

Ninth Circuit (highest court)
C.D. California

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