Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca1-08-01498/USCOURTS-ca1-08-01498-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 

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Of the Tenth Circuit, sitting by designation. *

United States Court of Appeals

For the First Circuit

No. 08-1498

LATIN AMERICAN MUSIC COMPANY, d/b/a Asociación de Compositores y

Editores de Música Latinoamericana (ACEMLA); ASOCIACIÓN DE

COMPOSITORES Y EDITORES DE MÚSICA LATINOAMERICANA (ACEMLA),

Plaintiffs, Appellants,

v.

AMERICAN SOCIETY OF COMPOSERS AUTHORS AND PUBLISHERS,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. José Antonio Fusté, U.S. District Judge]

Before

Torruella, Baldock and Howard, *

Circuit Judges.

Mauricio Hernandez Arroyo, with whom the Law Offices of

Mauricio Hernandez Arroyo, was on brief, for appellants.

Richard H. Reimer, with whom Diego A. Ramos, Fiddler Gonzáles

& Rodriguez, PSC, Stephen S. Young, and Holland & Knight LLP, were

on brief, for appellee.

January 29, 2010

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 Caballo Viejo translates into "Old Horse." The song was 1

composed by Simón Díaz and is a popular folk song in Venezuela. 

 The two appellants in this case, LAMCO, a music publisher 2

based in New York, and ACEMLA, a performance rights society based

in Puerto Rico, are affiliated with one another and their interests

are aligned in this case. Thus, we will sometimes refer to the

appellants singularly as "LAMCO."

An additional claim on appeal, based on a correction to the 3

judgment, is without any record support and warrants no discussion.

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HOWARD, Circuit Judge. This dispute involves rights to

a single song, "Caballo Viejo." The appellants are the Latin 1

American Music Company ("LAMCO") and the Asociación de Compositores

y Editores de Música Latino Americana ("ACEMLA"). The appellee is 2

the American Society of Composers, Authors, and Publishers

("ASCAP"). After a trial, a jury found that the rights belonged to

ASCAP. This determination turned on an implicit finding that

ASCAP's predecessor in interest West Side Music Publishing, Inc.

("West Side"), lawfully terminated a 1982 contract that had

previously transferred West Side's rights in Caballo Viejo to the

appellants.

The appellants' primary argument is that the jury was

improperly instructed about the manner in which the 1982 contract

could be terminated. The appellants also take issue with an

additional jury instruction, with the verdict form, and with

comments made by ASCAP's attorney during closing argument. We 3

affirm.

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Those interested in the background of this case may consult 4

our previous decision in Latin Am. Music Co. v. Archdiocese, 499

F.3d 32 (1st Cir. 2007). In that decision, we vacated a grant of

summary judgment in favor of ASCAP on the ownership of Caballo

Viejo, holding that a material question of fact existed. Id. at

38-40.

 West Side effectively became a part of ASCAP in 1993. 5

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I. Facts

We provide only the essential facts here. In September 4

1981, Simón Díaz, the composer of Caballo Viejo, granted rights to

the song to a predecessor of West Side. West Side, in turn,

through a 1982 contract "transferred and ceded" an exclusive

license to ACEMLA, LAMCO's predecessor in interest. The 1982

contract between West Side and ACEMLA, which was formed in New

York, was silent with respect to termination. It did not specify

a termination date, the conditions under which the exclusive

license could be terminated, or the manner in which the license

could be terminated.

In 1996, this lack of clarity became a sticking point, as

a dispute arose over the copyright. LAMCO filed an action in

federal court claiming, among other things, that it owned a

copyright in Caballo Viejo under the 1982 contract. ASCAP, which

was eventually brought into the case as a defendant, demurred and

claimed that it held the copyright, because its predecessor in

interest West Side had lawfully terminated the 1982 contract. 5

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 Bernard is the chief executive officer, director, and 6

majority stockholder of both ACEMLA and LAMCO.

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After a remand from this court, see Latin Am. Music Co., 499 F.3d

at 38-40, the case proceeded to trial. 

At trial, the only evidence that was presented about

termination was the videotaped deposition of West Side's president,

Hector Varona. In his deposition, Varona testified that he had

verbally terminated the 1982 agreement with ACEMLA. He testified

that the verbal termination occurred during a conversation that he

had with the president of ACEMLA, Raul Bernard.6

At the close of the evidence, the parties disagreed over

whether the court should instruct the jury that Varona's purported

termination of the 1982 contract had to be in writing. LAMCO

argued that the federal Copyright Act governed termination of the

agreement and that any notice of termination therefore had to be in

writing. It further argued that, even if New York state law rather

than the Copyright Act governed the termination, the notice of

termination still had to be in writing. For its part, ASCAP argued

that New York law governed termination and that, under New York

law, a contract of an unspecified duration could be terminated upon

reasonable notice. In ASCAP's view, whether Varona's verbal

communication constituted "reasonable notice" was a question for

the jury.

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The district court ultimately agreed with ASCAP,

instructing the jury as follows:

In order for ASCAP to prevail on its

declaration of legal rights claim, ASCAP must

prove by a preponderance of the evidence that

the agreements between West Side Music and

LAMCO parties had either expired by their own

terms or were terminated by Hector Varona

before January 1st, 1992, so that ASCAP and

not LAMCO had the rights to license public

performances of Caballo Viejo after January

the 1st, 1993. And that's where the dispute

is. That's what you have to look into. 

And how is it that you look into those

things? You know, a licensing agreement

without a specific term may be ended by one

party after a reasonable duration and after

reasonable notice is given to the other party.

And there are many things you can

consider. Obviously one thing that you can

consider is whether the development of the

transaction, as such, was made in writing or

not. You can also consider what kind of

letters the parties exchanged as these things

developed to figure out what was the intention

of them.

You can also consider the written words

of the contracts that they signed. You may

also consider the conduct of the parties to

ascertain if the actions of one party or the

other was consistent with the positions they

assumed in reference to the termination of the

contract at issue here.

Had it been totally black and white, we

probably would not be here obviously. It may

be better to make it in black and white, but I

don't think that the law requires in the case

of a termination of an agreement that it be

only in black and white. Better, yes, but not

only.

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And that's why I say that you have to

look at the whole scenario. You have to look

at what was it that the parties did, how was

it that they reacted to it, what was it that

they -- how was it that they conducted

themselves in reference to this? And then,

out of that, out of that circumstantial

evidence, perhaps you can figure out whether

indeed it is ASCAP, or it's the other party,

the one entitled to the rights of this song

Caballo Viejo.

(emphasis added).

When the court finished instructing the jury, LAMCO again

objected to the court's termination instruction. Again, LAMCO

argued that any notice of termination had to be in writing. The

court did not budge and the case went to the jury. The jury found

in favor of ASCAP. This appeal ensued.

II. Discussion

A. Jury Instructions

LAMCO objects to two instructions given by the district

court. We examine each instruction in turn. 

1. Termination instruction

a. Which law governs termination?

LAMCO first argues that the district court erred when it

applied New York law, rather than the Copyright Act, when

instructing the jury on whether there had been an effective

termination of the 1982 contract. We review this claim of

instructional error de novo. SEC v. Happ, 392 F.3d 12, 28 (1st

Cir. 2004). A jury instruction is erroneous if it is misleading,

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confusing, or incorrect as a matter of law. Davignon v. Clemmey,

322 F.3d 1, 9 (1st Cir. 2003).

Ordinarily, unless a contract provides otherwise, it is

governed by the law of the state in which it was formed. See U.S.

Trust Co. v. New Jersey, 431 U.S. 1, 19 n. 17 (1977); see also

Norfolk & W. Ry. Co. v. Am. Train Dispatchers Ass'n, 499 U.S. 117,

130 (1991). Where a contract formed in a particular state is

silent with respect to certain terms, state rules of enforcement

and interpretation may serve to fill those gaps. See U.S. Trust

Co., 431 U.S. at 19 n.17 ("The obligations of a contract long have

been regarded as including not only the express terms but also the

contemporaneous state law pertaining to interpretation and

enforcement."); see also Norfolk & W. Ry. Co., 499 U.S. at 130

("Laws which subsist at the time and place of the making of a

contract, and where it is to be performed, enter into and form a

part of it, as fully as if they had been expressly referred to or

incorporated in its terms.") (quoting Farmers and Merchs. Bank of

Monroe v. Fed. Reserve Bank of Richmond, 262 U.S. 649, 660 (1923));

Walthal v. Rusk, 172 F.3d 481, 485 (7th Cir. 1999) (explaining that

a contract reached in Illinois that was silent as to duration was

"terminable at will" under Illinois law).

Here, the contract was formed in New York and is silent

with respect to termination. Under New York law, such a contract

remains in force for a reasonable time and is subject to

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termination upon reasonable notice. Italian & French Wine Co. of

Buffalo, Inc. v. Negociants U.S.A., Inc., 842 F. Supp. 693, 699

(W.D.N.Y. 1993) ("[W]ell-settled New York law [] provides that a

contract with no stated duration is terminable only after a

reasonable duration and after reasonable notice is given."); see

also Laugh Factory, Inc. v. Basciano, 608 F. Supp. 2d 549, 556

(S.D.N.Y. 2009); Rogers v. HSN Direct Joint Venture, 1999 U.S.

Dist. LEXIS 12111, at * 3 (S.D.N.Y. Aug. 6, 1999).

LAMCO, however, argues that the Copyright Act preempts

this default rule of termination because the Act and the default

rule are in conflict. Walthal, 172 F.3d at 485 (explaining, when

deciding whether the Copyright Act preempted state law, that "state

contract law cannot provide the basis of a decision if that law

conflicts with federal law"). LAMCO argues further that, under the

Copyright Act, Varona's notice of termination had to be in writing.

We discern no conflict between the federal law and New

York law, because we conclude that the sections of the Copyright

Act cited by LAMCO are inapplicable in this case. Accordingly, we

reject LAMCO's preemption argument.

LAMCO first directs our attention to § 204 of the

Copyright Act, applicable to the transfers of copyright ownership.

17 U.S.C. § 204. It provides in relevant part:

Execution of transfers of copyright ownership.

(a) A transfer of copyright ownership, other

than by operation of law, is not valid unless

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an instrument of conveyance, or a note or

memorandum of the transfer, is in writing and

signed by the owner of the rights conveyed or

such owner's duly authorized agent.

Id. § 204 (a).

LAMCO suggests that this section is applicable to the

alleged termination of rights at issue in this case. The logic is

as follows. West Side transferred an exclusive license to ACEMLA

through the 1982 contract. Upon West Side's termination of that

contract, ownership of the copyright would be transferred from

ACEMLA back to West Side. Because the effect of the contract

termination was to transfer copyright ownership, § 204 applied and

required a writing to effectuate the transfer. And, because there

was no writing, no transfer of ownership interest could have

occurred.

Section 204, which requires a writing signed by the

transferor, however, applies to the transfer or grant of copyright

ownership, not to the termination of such a transfer or grant.

LAMCO cites no case suggesting otherwise, nor are we are aware of

any such case. Moreover, extending § 204 to the termination of

copyright interests would lead to untenable results. A transferee

of a copyright interest could effectively veto a lawful termination

of that interest by refusing to reconvey that interest to the

terminating party under § 204. For example, in this case, LAMCO,

the transferee, could have prevented West Side from terminating the

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exclusive license by simply choosing not to reconvey the license to

West Side through either an instrument of conveyance, or a note or

memorandum of transfer.

Next, LAMCO cites § 203, which explicitly deals with

termination of transfers and licenses granted by an author. 17

U.S.C. § 203. Under that section, an author, or an author's

statutory heirs, may, under certain conditions, terminate an

exclusive grant of a license "by serving an advance notice in

writing . . . upon the grantee or the grantee's successor in

title." Id. § 203 (a)(4) (emphasis added).

That section, however, is also inapplicable. According

to its plain language, § 203 only applies where an author or an

author's statutory heirs are terminating the grant. Id. § 203

(a)(1)-(2); 3 Melville B. Nimmer & David Nimmer, Nimmer on

Copyright § 11.03[B], at 11-40.5 (2007) ("Grants executed on or

after January 1, 1978 are subject to termination only if executed

by the author.") (emphasis added). West Side is neither the author

nor a statutory heir of the author. Furthermore, LAMCO does not

contend that West Side should be treated as either an author or

statutory heir for purposes of § 203. In light of the plain

language of § 203, there is no basis to conclude that § 203 applies

to this contract.

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b. Reasonable notice under New York law

LAMCO also argued below that it was entitled to relief

even under New York law. The contention is that, under the

circumstances of this case, only written notice of termination

could constitute "reasonable notice" under New York law, and the

court should have instructed the jury accordingly. In support of

this argument, LAMCO contended that New York law would require a

party who is terminating an exclusive license to comply with §

203's termination provision, whether or not the terminating party

is an author or statutory heir.

We need not linger over this argument. On appeal, LAMCO

makes only a passing reference to the argument, fails to cite any

authority in support of it, and does not develop the argument in

any meaningful way. As a result, the argument is waived. See

United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (noting

the "settled appellate rule that issues adverted to in a

perfunctory manner, unaccompanied by some effort at developed

argumentation, are deemed waived"). 

2. Missing witness instruction

Varona, West Side's president, did not testify in person

at trial. Instead, a videotape of his deposition was shown to the

jury. Because Varona did not testify in person, LAMCO asked the

district court to give the jury a "missing witness" instruction.

The district court declined the request. LAMCO claims that this

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 In criminal cases, the instructions are typically given 7

against the government. See, e.g., United States v. Pagan-Santini,

451 F.3d 258, 267 (1st Cir. 2006); United States v. Jimenez, 419

F.3d 34, 44 (1st Cir. 2005). 

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was in error. "We review the grant and denial of missing witness

instructions for abuse of discretion." Grajales-Romero v. Am.

Airlines, Inc., 194 F.3d 288, 298 (1st Cir. 1999).

Although far more common in criminal cases , a missing 7

witness instruction may be given in a civil case as well. See

Grajales-Romero, 194 F.3d at 298. The instruction informs the jury

that a party's failure to produce a particular witness may justify

the inference that the witness' testimony would have been

unfavorable to that party. United States v. Lewis, 40 F.3d 1325,

1336 (1st Cir. 1994). The instruction, however, should only be

given where "the witness is either actually unavailable to the

party seeking the instruction or so obviously partial to the other

side that the witness [though technically available] is deemed to

be legally unavailable." United States v. Perez, 299 F.3d 1, 3

(1st Cir. 2002). When deciding whether to issue a missing witness

instruction the "court must consider the explanation (if any) for

the witness's absence and whether the witness, if called, would be

likely to provide relevant, non-cumulative testimony." Id. 

Here, the court acted within its discretion in refusing

to give the jury a missing witness instruction. Varona was not

missing in the classic sense. Although he did not testify in

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Under this standard of review, LAMCO must show an error that 8

was plain, (i.e., obvious and clear under current law), prejudicial

(i.e., affected the outcome of the district court proceedings), and

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person, he testified in a deposition in which he was questioned by

LAMCO's counsel. This deposition was videotaped and shown to the

jury. See Poulin v. Greer, 18 F.3d 979, 983 n.3 (1st Cir. 1994)

(noting that, where the witness's deposition testimony was entered

into evidence, "we do not believe that the district court abused

its discretion in refusing to give a missing witness instruction");

see also Cameo Convalescent Ctr., Inc. v. Senn, 738 F.2d 836, 844

(7th Cir. 1984) (explaining that "the justification for the missing

witness instruction diminishes with the availability of the tools

of discovery"). Furthermore, Varona's inability to testify in

person was explained at trial. Both parties stipulated that Varona

would appear by videotape because he resided outside of the

district. See Perez, 299 F.3d at 3.

B. Verdict form

The district court provided the jury with a general

verdict form that required it only to find in favor of either ASCAP

or LAMCO. LAMCO claims that this was error and that the court

instead should have given the jury a verdict form requiring the

jury to determine whether there had been a writing memorializing

the termination. Because LAMCO failed to object to the verdict

form below, our review is for plain error. See Fed. R. Civ. P.

51(d)(2).8

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that seriously impaired the fairness, integrity, or public

reputation of the judicial proceedings. See Colon-Millin v. Sears

Roebuck de P.R., Inc., 455 F.3d 30, 41 (1st Cir. 2006).

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This claim amounts to a rehash of LAMCO's argument

regarding the district court's termination instruction.

Accordingly, for reasons already discussed, the claim fails.

C. Closing Argument

LAMCO claims that counsel for ASCAP made improper

statements to the jury during closing argument. According to

LAMCO, ASCAP's counsel intimated to the jury that there never was

an agreement between West Side and ACEMLA (LAMCO's predecessor in

interest).

To fully understand LAMCO's claim, some additional

background information is necessary. At trial, evidence was

presented that indicated that ACEMLA did not exist in 1982. This

evidence was a 1985 decision from the Copyright Royalty Tribunal

that effectively concluded that ACEMLA did not exist in 1982. In

relevant part, the Tribunal wrote:

The Tribunal concludes from the evidence

established on the record that Mr. Bernard

began a music publishing company sometime

before April 1981, that he incorporated in

April, 1981, and that he filed an assumed name

for a subdivision of his music publishing

company to be called ACEMLA in April, 1984.

Since LAM has rescinded its claim that either

Latin American Music or Latin American Music

Co., Inc. were performing rights societies in

1982, and 1983, and since ACEMLA did not even

legally exist until 1984, none of the LAM

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claimants were a performing rights society in

1982 and 1983.

However, Mr. Bernard claims that ACEMLA began

in 1980 or earlier. The record is devoid of

any activity by ACEMLA before 1984. ACEMLA

did not license a single user, receive a

single royalty or make a single distribution

in 1982 and 1983. Not a single agreement with

a domestic or foreign entity refers to ACEMLA.

Based on the Copyright Royalty Tribunal decision, which

was entered into evidence as Exhibit 18, ASCAP's attorney said the

following to the jury during closing argument:

Now, remember, this agreement is purportedly

with ACEMLA. Remember that? Not with LAMCO.

With ACEMLA. But in 1982, as the date of the

agreement, what do we know? Was there ACEMLA

active? No . . . . That's what the Copyright

Tribunal held. And you can read that from

Exhibit 18, which we read at the very last

part of the case.

These comments form the basis of LAMCO's claim. Because

LAMCO did not object to these comments in a timely fashion, our

review is for plain error. Smith v. Kmart Corp., 177 F.3d 19, 25

(1st Cir. 1999); see also Wilson v. Town of Mendon, 294 F.3d 1, 16

n.30 (1st Cir. 2002) (explaining that a party should typically

voice such an objection at the conclusion of an opponent's closing

argument). 

There was no plain error here for at least two reasons.

First, we doubt there was any error in the first place. Counsel's

statements appear to fall within the bounds of permissible

argument. The statements are supported by the Copyright Royalty

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Tribunal decision, an exhibit that was admitted into evidence

without any objection from LAMCO. 

Second, even if there was error, any possible prejudice

that the statements could have caused LAMCO was countered by the

district court's instructions to the jury. The district court

effectively instructed the jury that the 1982 contract did exist.

Again, some background information is necessary. West Side entered

into two separate contracts with ACEMLA concerning Caballo Viejo,

the 1982 contract, which is relevant to this particular dispute,

and a 1981 contract, which expired by its own terms in 1986. The

district referred to both contracts when instructing the jury,

thereby dispelling any notion that the 1982 contract did not exist.

The district court instructed the jury:

In order for ASCAP to prevail on its

declaration of legal rights claim, ASCAP must

prove by a preponderance of the evidence that

the agreements between West Side Music and

LAMCO parties had either expired by their own

terms or were terminated by Hector Varona

before January 1st, 1992, so that ASCAP and

not LAMCO had the rights to license public

performances of Caballo Viejo after January

the 1st, 1993. 

(emphasis added).

Although we doubt that any more is necessary, we also

note that the district court emphasized to the jury that closing

arguments were not evidence and "of course cannot be considered."

This further limited any ill effects that counsel's statements

could have caused LAMCO.

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III. Conclusion

For the reasons provided above, the judgment is affirmed.

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