Digital Royalties Timeline Legal

Universal takes FBT dispute to Supreme Court

By | Published on Thursday 16 December 2010

Universal Music doesn’t want to let this one lie, does it? Perhaps the wider implications of the ruling are more significant than the company is prone to admit.

Universal’s Interscope division has appealed to the US Supreme Court over its dispute with FBT Productions, the US production house that has a stake in some of the early Eminem recordings. As much previously reported, FBT argues that digital sales of Slim Shady’s music should be considered a licensing arrangement rather than an equivalent to traditional record sales, which is an important distinction because the company earns a considerably bigger cut of revenues on licensing deals than record sales. 

FBT is not the first beneficiaries of a pre-internet record deal to argue that iTunes-style downloads should be considered a form of licensing rather than record sales, a distinction that would result in the artist’s cut being bigger. However, most other claims to this effect have not been successful in court. But earlier this year the US’s Ninth Circuit court sided with FBT, and then refused Universal’s call for judges to rehear the case. The major has now filed a motion with the Supreme Court asking for FBT’s lawsuit to be reconsidered anew.

Universal insists that FBT’s claim is based specifically around the wording of its contract with the major, and therefore the production company’s victory in this case does not set a precedent that other artists could use to reinterpret download sales as licensing arrangements and demand a higher royalty cut as a result. That said, the major clearly wants to win this case and is willing to pursue every avenue of appeal before writing the FBT team a cheque for past digital sales of Eminem’s tracks.