The recent sizeable attorney's fee award in the lengthy Beastie Boys v. Monster Energy Company legal battle is an important reminder of how critical it is to properly clear third party IP rights in your digital media materials and the serious financial risks of not doing so. On June 15, 2015, a New York federal court ordered Monster Energy to pay the Beastie Boys parties $667,849.14 in attorney's fees, in addition to the $1.7 million in damages that a jury previously awarded---all because Monster Energy ran a promotional video on its website that used portions of five Beastie Boys songs as the soundtrack and included other references to the group, without proper permission. The Beastie Boys parties are also seeking roughly $100,000 in costs from Monster Energy from this litigation. And, Capitol Records, LLC, the co-owner of the copyrights in the sound recordings, and Universal-Polygram International Publishing, Inc., the co-owner of the copyrights in the various musical compositions written by the members of the Beastie Boys, have also sued Monster Energy in a related case, which has been stayed pending final disposition of the first case.
Unless reversed on appeal, Monster Energy's one online video promotion will ultimately cost the company many millions of dollars when you add court awards to Monster Energy's own legal fees expended in the litigation. No matter how minor you may think your project is, whether it be a video on your website, a twitter video or another social media use, this case demonstrates that proceeding without properly obtaining the necessary rights is very risky.
The Case and $1.7 MM Damages Award
For those unfamiliar with this case, Monster Energy ran a promotional video on its website that used portions of five Beastie Boys songs as the soundtrack and included other references to the group. The remix of Beastie Boys songs used in the video came from a DJ using the name "Z-Trip" who had a 2011 agreement with the Beastie Boys to create the remix and use it as a free promotional item. Z-Trip did not have the right to sell or license the remix, or to authorize third parties to use it.
In 2012, Monster Energy used Z-Trip's remix in its promotional video, and a Monster Energy employee sent the video to Z-Trip for review. He responded "Dope," and Monster Energy later claimed it believed Z-Trip granted Monster Energy the necessary rights to use the remix in its video. However, Monster Energy never obtained authorization from the actual rights-holders to the musical compositions or the sound recordings.
The jury found Monster Energy's actions to be willful copyright infringement as well as a false endorsement under the Lanham Act and awarded $1.7 million in damages. The federal court in New York denied Monster Energy's post-trial motions for judgment as a matter of law, a new trial, and a reduction in damages.
In a lengthy opinion and order denying Monster Energy's post-trial motions, the court made a number of findings regarding Monster Energy's copyright infringement. The court found that the jury had sufficient circumstantial evidence of Monster Energy's "reckless disregard" of the possibility that the video infringed on the Beastie Boys' copyrights to find the infringement to be "willful" and therefore award more significant damages under the Copyright Act. In so holding, the court found that the Monster Energy employee responsible for the matter had experience securing approval of other artists' music for similar videos, so a reasonable jury could find that he was aware of the legal duty to secure the Beastie Boys' approval and recklessly disregarded that duty. The court noted that the employee asked DJ Z-Trip's permission to use the remix in the video arguably meant that he understood the need to obtain some sort of authorization.
The court found that the actions of a second Monster Energy employee, the Director of Interactive Marketing, who failed to investigate proper licensing before posting the video, also constituted reckless disregard by Monster Energy. The court underscored that, the Director of Interactive Marketing was familiar with music licensing procedures, and his job responsibilities required sensitivity to others' IP rights in the sponsorship-type deals he handled. The court noted that the director had also produced and updated Monster Energy's social media guide and he had been vigilant in protecting Monster Energy's own IP rights.
Monster Energy sought to depict its infringement as sloppy, but non-willful, acts of two employees, but the court noted that Monster Energy had not performed any training of its employees related to the use of copyrighted or trademarked content. The court found that Monster Energy had no comprehensive music licensing policy, tasked unqualified and untrained employees, and protected its own IP rights with far more vigor than it did others' rights.
The court made several holdings regarding the false endorsement claim under the Lanham Act. First, the court found that the jury could have reasonably concluded that the video contained a false or misleading impression that the Beastie Boys endorsed Monster Energy, which they did not. Second, the court found that consumers were likely to be confused by the false or misleading representation. The court also held that a jury could reasonably conclude that Monster Energy's actions were "intentionally deceptive," that the Monster Energy employee intended that viewers of the video regard the Beastie Boys as equal subjects of the video along with Monster Energy, and that Monster Energy used the Beastie Boys music and marks with the intention of capitalizing on the Beastie Boys’ reputation and goodwill.
The $667, 849.14 Attorney’s Fees Award
On June 15, 2015, the court ordered Monster Energy to pay the Beastie Boys parties $667,849.14 in attorney's fees spent in this litigation. The Beastie Boys had originally sought $2,385,175.50. To boil down a 45 page court opinion, the court essentially determined that fees were appropriate under the Copyright Act, but not under the Lanham Act. The court then reduced the fees taking into account a number of factors, including, (a) some of the work on the case was on the Lanham Act claims, for which attorney's fees were not recoverable in this case because this case was not "exceptional," (b) some of Monster Energy's positions were reasonable whereas others were not, (c) certain legal work on certain specific issues should not be borne by Monster, and (d) the Beastie Boys' bills were higher than typical because the case was staffed heavily with senior lawyers. While awarding much lower attorney’s fees than the Beastie Boys sought, the court opined that the still very substantial fee award furthers the goals of the Copyright Act. Specifically, the court determined that the fee award, coupled with the damages award, serves to compensate the Beastie Boys for their reasonable attorney's fees in litigating their claims. The court also noted that such an award serves the purpose to deter future would-be infringers and should lead future parties contemplating infringement or "designing corporate protocols with respect to the handling of intellectual property to think twice before disrespecting others' copyright interests."
Many potential pieces of third-party content may need to be cleared for your digital media production, including music, still photos, video footage, individual likenesses and testimonials, and the use of others' trademarks. Some of the rights clearance issues can be more difficult than you might expect. And as this ongoing battle demonstrates, it is extremely risky to proceed without solid corporate protocols and experienced counsel on these issues. For more information on the IP rights to consider, when creating and distributing digital content, please see our February issue which included the following article: It's a Digital Media World: Legal Issues and Considerations in Creating and Distributing Digital Content.