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Supreme court refuses to hear Universal’s FBT appeal

By | Published on Tuesday 22 March 2011

Universal Music

The US Supreme Court has declined to hear an appeal by the Universal Music Group in relation to that previously reported lawsuit pursued by early Eminem collaborators FBT Productions.

As previously reported, FBT Productions worked on the early Eminem recordings, and has a stake in the copyrights in those tracks, getting royalties via Slim Shady’s label, the Universal-owned Interscope. The company’s contract with the major, as is often the case, pays out a bigger share of royalties on licensing deals as opposed to record sales.

FBT argues that Universal’s relationship with services like iTunes should be considered a licensing deal, whereas labels always treat a la carte download stores as if they were record shops, and therefore any download revenue as record sales money rather that licensing income. That means, of course, that the labels pay the smaller royalty share to artists (and in this case producers), while FBT argue they are due the bigger cut on download money.

They weren’t the first artists with pre-internet record company contracts to make this argument, but whereas most other similar claims failed in court, with this case FBT won, the US Ninth Circuit Court ruling in their favour last year and then refusing to hear the case for a second time.

Which is why Universal took the case to the Supreme Court, but it has now refused to hear the appeal as it currently stands. Legal experts say that Universal could have one last go, by presenting an appeal case on different grounds, though the major is running out of options.

Of course, this case potentially has bigger implications than Universal just having to pay bigger royalties to FBT – if royalties from iTunes et al are to be treated as licensing income rather than record sales then many artists on pre-internet contracts may be due a bigger pay out from their labels. Though, we should note, Universal legal types continue to insist that this case relates to the specific wording of the FBT contract and that any ruling against the label does not set a precedent that might apply in other cases. Which may well be the case. Though they would say that, wouldn’t they?