Universal sues insurers over Chet Baker settlement

By | Published on Monday 14 November 2011

Universal Music

The Universal Music Group filed a lawsuit last week against the National Union Fire Insurance Company, which the music major claims has failed to pay out on a successful copyright claim made against all the big record companies in Canada.

This relates to the previously reported class action lawsuit pursued by Chet Baker’s estate, which claimed that the Canadian divisions of the four majors regularly released compilation albums without securing the publishing rights of many tracks featured. Technically the majors were just being slow at going through the motions of filling out mechanical copy licensing paperwork, but the Baker lawsuit claimed that was a deliberate policy, so that majors would only ever pay out if publishers or songwriters spotted their songs had been used. As a result, the majors were sitting on millions in unpaid royalties.

Under Canadian copyright law, had the lawsuit gone to court the majors could have been forced to pay statutory damages in addition to handing over unpaid royalties, which technically could have added up to $6 billion. Possibly with that in mind, the majors didn’t let the case go that far, and settled at the start of the year, with the four major music companies between them pledging to pay $47.5 million to the Canadian publishing and songwriting community.

As the biggest major, Universal has to pay the biggest portion of that damages settlement, over $17.5 million, so it put in a claim for that amount to its insurance company, National Union, who indemnify the major for copyright litigation. But the insurer is refusing to pay up.

Possibly because the damages paid to the Canadian songwriting community were more or less equal to the monies the Chet Baker estate’s lawyers claimed the majors had failed to hand over, so Universal in theory was sitting on that money already. Or possibly because as a music publisher as well as a record company, one bit of Universal will actually benefit from the pay out. Or possibly because they didn’t sign up to indemnify the major against allegedly dodgy practices.

Either way, according to the Hollywood Reporter, the major isn’t impressed, and has now begun legal proceedings against the insurers. Neither plaintiff nor defendant has commented on the litigation.