Tuesday, October 11, 2016

Sony Music Conflict Causes Delay in Quincy Jones' Royalty Trial

Written by Ashley Cullins — The trial was originally set to begin Tuesday.

Legendary producer Quincy Jones was set to go to trial next week over royalties he says he's owed from albums released after Michael Jackson's death — but that's not happening now because a recent development means defendants Sony Music and MJJ Productions can no longer share a legal team.

Judge Michael Stern in September gave Jones the green light to pursue damages claims related to payment from permanent digital downloads. The producer is essentially arguing that he was shorted because Sony was underpaying MJJ, a song company controlled by the late artist's estate.

The issue boils down to whether Sony should have been treating those downloads as licenses instead of as sales — which would have given both Jackson's company and Jones more money. Artists get half of net revenue from licenses, but only a 15 percent royalty on sales. The payment of digital downloads is an area of continual conflict between artists and labels and has taken center stage in several major lawsuits over the past decade.

Warner Music, Sony and Universal Music Group each have paid millions to settle class action lawsuits involving digital download payments following a major 9th Circuit ruling concerning Eminem's music. There, the appellate court held that, because labels spending big bucks on CD packaging is a thing of the past, treating the downloads as licenses is more appropriate.

Jones raising the issue here complicates matters for defense attorneys.

Until now, Sony and MJJ have shared counsel from Kinsella Weitzman and Katten Muchin. But because this will pit the two against each other on at least one argument, Sony will have to retain separate legal counsel. (Sony Music declined to comment.)

The legal fight began in 2013, when Jones sued both Sony and MJJ, claiming master recordings he produced were remixed after Jackson's death to avoid paying him backend profit participation. Many of the King of Pop's biggest hits, including "Thriller," "Beat It" and "Billie Jean," were re-edited for the projects, and Jones says MJJ breached his contract by allowing third parties to exploit the works without first offering Jones the opportunity to perform the remixes himself.

In February, Judge Stern denied a motion for summary judgment from Sony and MJJ, finding the issues were best decided by a jury. The case was first set for trial in June, but was pushed back to Oct. 11. Now the trial has been put off once again, with no date currently set.

At the center of the delay is an expert report by Gary Cohen. Attorneys for MJJ and Sony fought the inclusion of evidence relating to permanent digital download damages set out in Cohen's Aug. 30 supplemental filing.

Stern agreed to limit Cohen's opinions at trial to those that were offered in his deposition based on his designation, but declined to strike the supplemental report. In response, defense attorneys asked to push the trial back to give Sony a chance to hire separate lawyers. Stern agreed.

It remains to be seen exactly how long it will take for new attorneys to get up to speed and get a trial back on the books, but a status conference is currently scheduled for November.

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