1 RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Six

th Circuit Rul e 206

ELECTRO NIC CIT

ATION: 2004 FED App . 0233P (6th C ir.) File Name: 04a02 33p.06



### UNITED STATES COURT OF APPEALS

FOR THE SIXT H CIR CUIT

_________________
B RI DGEPO RT M USIC , I NC ., Plaintiff- Appellant

,
S OUTHFI ELD M USIC , I NC .; W ESTBOUND R ECORDS , I NC .; N INE R ECORDS , I

NC ., Plaintiffs,

v.

R HYME S YNDICATE M USIC ; U NIVER SAL -P OLYGRAM I NTER NAT IONAL P UBLI SHING , I NC ., individually and as successor to Polyg

ram International Publishing, I nc.; C ARRUMBA M USIC ; A MMO D UMP M USIC , Defenda nts-Appe llees,

WB M USIC C ORP .; W ARNER

C HAPP ELL M USIC , I NC .; R HYME S YNDICATE R ECORDS ,

Defenda nts. X

- - - -
> , - - - - - - - - - - - - - - - - - - - - - - N Nos. 03-5005/5744 2 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

* The Honorab le Judith M. Barzilay, Judge for t he United St ates Court of Internati onal Trade, sitti ng by designation. Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 01-00706—Thomas A. Higgins, District Judge.

Argued: April 28, 2004 Decided and Filed: July 22, 2004

Befor e: GU Y and G ILM AN , Circuit Judges; BAR ZILAY, Judge. *

_________________ COUNSEL

ARGUED: Richard S. Busch, KING & B AL LO W, Nashville, Tennessee, for Appellant. R uss ell J. Frackman, MITC H ELL, SIL

BERBERG

& KNUPP, L

os Ange les, Califor n ia, for Appellees. ON BRI EF: Richard S. Busch, D’Le sli M. Davis, KING & B ALL OW, Nashville, Tennessee, for Appellant. Russell J. Frackman, Jeffrey D. Goldman, Marc E. Mayer, MITCHEL L, SIL BERBERG & KNUPP, Los Angele s, Californ

ia, Philip M. Kirkpatr

ic k, STEWART, ESTES & DONNELL , Nashville, Tennessee, for Appe llees.
GUY, J., delivered the opinion of the court, in which BARZIL AY, J., joined. GILM

AN, J. (pp. 23-24), delivered a separ ate opini on concu

rring i n part an d dissentin

g in par t.Nos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 3

1 Bridgeport appeal ed fr om the ent ry of summar y ju dgment

in f avor of defenda nts W B M usic and W arner /Cha ppe ll Mu sic, but vo luntarily dismis sed the a ppe al against them as a result

of a sett lement. Also, no dist inct cl aim s of error have been argue d with re spec t to Rh yme S yndica te Music. _________________

OPINION

_________________ RALPH B. GUY, JR., Circuit

Judge. Plaintiff, Bridgeport Music, Inc., appeal s from the district court’s orders (1) gran tin g summar

y ju dgment t o defend ant Unive

rsalPolyGram

International Publishing, I nc. (UPIP), on Bridgeport’s copyrig

ht infringement claims; (2) dismissing defendan ts Carrumba Music and Ammo Dump Music without prejudice for lack of proper service of pr ocess; and (3) awa rd ing attorney

fees and costs to UPIP as a pre vailing defendant under 17 U.S.C. § 505. No other claims or parties are bef ore us. 1 After review of the record a nd the argume

nts presented on appeal, we affirm

both th e entry of

summary judgment and the dismissals for lack of service. With respect to Bridg eport’s sep arate appeal from the awar d of attorney fees and costs to UPIP, however, we va cate the award a nd remand for further consideration consistent with this opinion.

I.
The claims at issue in thi s ap peal were first asserted on May 4, 2001. In that original complaint, Br idgeport and three sister companies al le ged ne arly 500 count s again st approxima

tely 800 defendan

t s for copyr

ight infringement and other state law claims arising from music sam plin g. The amended complaint, filed after the dis trict court severed the initial pleading into 476 separate actions, was based on the claim that the rap song “99 Problems” sampled the openi ng thre e-note chord from the musical composition “Get Off Your 4 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

2 The term “sa mpli ng” t ypi cally re fer s t o the copyi ng of a port ion of

a master sound reco rdin g and using it in the making of a new work. Bridge port Music, Inc. v . Still N The W ater Publ’g , 327 F.3d 472 , 475 n.2 (6th Cir.), cert. denied , 124 S. Ct. 3 99 ( 200 3). Use of a sa mple fr om a master recording implicates t wo distinct copyri ghts: one i n t h e musical composi ti on and one in the sound recording itself. Id . at n.3. W hen the samp le is an in terpo lat ion, meani ng the mas ter sound recor ding is not used, only

the composi ti on copyr igh ts are i mpli cate d. Ass and Jam” (“Get Off”). 2 Bridgeport Music i s in the businessof owning and exploiting copy rights in musical compositions. We assume for purposes of this appe al that Bridgeport

would be able to est ablish that it owns the composi tion “Get Off,” which was written and re corded by Georg e Clinton, Jr ., and the Funkade lics in the

mid-1970s

. A. Background Facts

The song “99 Problems” was co-written and performed by Tracy Marrow, p/k/a Ice -T, for release o n the albu m “Home Inva si o n.” At that time , Marrow , d/b/a Rhy me Sy ndicate Music, owned 66. 7% of the composition copy

right i n “9 9 Problems.” Alphonso Hen derson, p /k/a DJ Alad

din, co-w rote “99 Problems.” The albu m was rel eased by

Priority Records
onMarch 23, 1993. While a mechanical license was prob ably granted for use of the composition “99 Problems,” there was no evidence presented in that rega rd.

More than a y

ear late r, UPI P obtained an interest in the composition through its predecessor, Poly Gram International Publi shin g, Inc ., by

assignment from M arrow, d/b/a Rhy me Synd icateMusic. Specifically, in Novembe r 1994, M arrow entered into seve ral ag reemen ts with PolyGram, including a

n Exclusiv e Songwriter’s Agreement a nd a Co-Publishing Agreement

coverin g past a nd future works. As part of

these agree ments, PolyGram ac quired ha lf of Mar row’s int erest in the composition “99 Problems” (or 3 3.34% ), as well as the exclusive right to administer their combined interests andNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 5

c ollect and distr ibute roy alties. T he copy right r egist ratio n reflecting this transfer listed the copy right claimants as PolyGram, Rhyme Sy

ndicate Music, WB Music, Carrumba Music, and Ammo Dump Music. The record does not reflect when UPI

P succee ded Poly

Gram.

OnJanu ar y 7 , 1998, Bridgeport’s administrator, Jane Peterer, notified UPIP and others of its sampling claim and demanded

that Bridgeport begranted a 33. 33% owne rship interest in the musical composition “99 Problems.” UPIP d id notrespond, but Warne

r/Chappe ll Music denied any sa mples
were us ed on the “

Home I nvasion” album.

B. Procedural Facts
This action was commenced May 4, 2001, more than three years after Bridgeport had actual notice of the alleged infring ement. Plaintiffs attempted to effect service of proce ss onCarrumba

Music and A mmo D ump M usic t hrough Warner/Chappell

Music. Bridgeport

also attempted to serve Carrumba Musi c at an address that was the office of Carrumba ’s acco

unting f irm.

Ca rrumba Music moved to dismiss both for failur e o f service and for lack of personal jurisdiction, while Bridgeport fil eda motion for

default judgmen t again st Ammo Dump Music. The district court granted Carrumba’s motion, denied Bridge por t’s motion for default judgment, and dismissed Carrumba Music and Ammo Dump Music withoutprejudice pursuant to Fed. R. Civ. P. 4(m). Bridgeport’s subseq uent motion for reconsideration was denied.

Defend ants Warn er/ Chappell M usic and WB Music (Warner defenda

nts ) moved for summary

judgment on severa l ground s. In August 2002, after considerabl e b riefing and supplementation, the magistrate judge issued a repor t and recommendation

inwhich he concluded that the infringement claims agains t the Warne r defen dants sh ould be dismissed 6 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

3 UPIP also argued that Bridgeport coul d not prev ail on its infri ngement claims eit her because the sampled three-note chord was not enti tledto copyright protecti on, or because the use of the sample f rom the composi ti on was de m inim is

. We do not reach the qu estions o f origina lity

or de m inimis use. because they wer

e b arred both by

a release as part of a settlement

of prior litigation and

by t he applic able three-year statute of limitations. As part of that decision, the mag istrate judge indicated that although the Warner def en dants had issued a licens e for

the release of “99 Problems” in 1993, the only acts b y the Warner defendants within the limitations period were the receipt of roy alties onthe sale of

the album

. Recognizingthat there was no cas e law on the question, the magistr ate judge concluded that the receipt of income from the sale of infringing prod uct s within the limitations period, by a p arty who does not manufacture, distribute, or sell the infringing product (but

who did provide a license), would not constitute direct or contrib

utory infring ement.
The district court adopted the report

and recommendation,
over plaintiff s’ objections, and g

ranted s ummary judgmen t to the Warner defendants on September 16, 2 002 . Beca use Bridgeport

has settle d with the Wa

rner de fendant s, that

order is no lon ger be fore us on appea l. It r emains pe

rtinent, however, to th e di st ric t co urt ’s d eci si on t o aw ard UP IP attorney fe es and costs incurred after September 16, 2002.

UP IP had al so mo ved fo r summ ary judgm en t, argu ing, inter alia , that Bridg e port’s claims were barred, or al te rn at iv el y, limitedby t

he statute of limitati ons. 3 While the motion was pen ding, UPIP w rote to Bridgeport and proposed that they stipulate to judgment

in favor of UPIP based on the magistr ate judge’s recommen dat ion concerning the Warner defenda nts’ motion for summary judgme nt. Bridgepor

t did notrespond. Once the district court granted summary judgment to the Warne

r defen dants, UPI

P obtained

leave toNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 7

supplement

its m otio n for summary judg ment. Bridgeport responded

ino pposition on October 4, 2002. The district
c ourt g ranted summary judg ment to UPIP on November 7, 2002, finding that Bridgeport failed to demons tr ate dire ct, contri bu to ry, or vicarious infringement by UPIP within the limitations period. Judgment was entered a c cordingly , and Bridgeport appealed.

Ina post-jud gment motion, UPIP moved for an award of $297,292.60 in attorne

y f ees and $ 16,119.22in nontaxab le costs as a prevailing party under 17 U.S.C. § 505. On May 6, 2003, the district court awarded UPIP $79,340.94 in attorney fee s and $3,409.35 in costs, which represented the fees and costs incurred

by UPI P after September 16, 2002. Bridgeport appealed.

II.
In its first claim of error, Bridgepor t argues that

there was
a question of fact whether UPI P committed acts within the limitations period for which i t coul d be liable for copy right infring ement. We review the district court’s decision to grant summary judgmen t de novo

. Smith v. Ameritech , 129 F.3d 857, 863 (6t h C ir. 199 7). Indecid ing a motion for summary judgmen t, the court mus t vi ew the e vidence and rea sonable inferences in the light most fa vo ra bl e t o t he no nm ov in g p ar ty. Matsushita

Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986). The nonmoving party may not r est on his pleading s, but must co me forward with evidence from which
a rational trier of f

act could find in his favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249 (1986).

A. Copyright

Infringem ent

A civil action under the Copyrig ht Act must be “commenced

within three yea

rs after the claim accrued.” 17 U.S.C. § 507(b). A cause of action accr ues when a plaintiff knows of the infringement or is cha rgeab le with such 8 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

knowledge. Roley v. New Wo rld Pictur es, Ltd.
, 19 F.3d 479, 481 (9th Cir. 199 4). Becau se each act of in fringe

ment is a disti nct harm, the statute of limitations bars infringement claims that accrued more than three y e ars before suit was filed, butdoes not preclude infringement claims that acc rued within the statutory period. Id .; Stone v. Williams , 970 F.2d 1043, 1049-50 (2d Cir. 1 992); Hoste v. Radio Corp. of Am.
, 654 F.2d 11, 11 (6th Cir. 1981) (per curiam); Mount v. Bookof-the-M onth Club, Inc. , 555 F.2d 1108, 1110-11 (2d Cir. 1977).

It is undisputed thatBridgep ort ha d actu al kno wledge of its infringement

claims with respect to “99 Problems” more than three years be fore this action was filed and, theref

ore, cla ims arising prior to May 4, 1998, are barred by

the statute of limi tations. For this reason, our focus must be on whether Bridgeport

established any a

cts within the per iod for which UP IP could be held liable as a direct infringer, a contributory infringer, or as one vicariously liable for the acts of another.

Liab ility for direct infringement

arises from the violation of any o ne of the exclusive rights of a copy right owner. 17 U.S.C. § 501(a). The owner of copy right in a musical composition has the exc lusiv e rig ht to, and to aut

horiz e others to, reproduce, distribute, perform, display, and prepare derivative works from the copy righted co mpo sition. 17 U.S.C. § 106. Liability f or contribut ory

in fringe ment is basedon the defendant’s relationship to the dire c t infring ement. Ez-Tixz, Inc. v. Hit-Tix, Inc. , 919 F. Supp. 728, 732-33 (S.D.N.Y. 199 6). Contributory infringe ment occurs when one, “wi th k no wl ed ge of th e i nf ri ng in g a ct iv it y, induce s, cau ses, or materially c ontributes to the infringing conduct of another.” Gershwin Publ’g Corp . v. Columb ia ArtistsMgmt., Inc. , 443 F.2d 1159, 1162 ( 2d Cir. 19 71). A defendant can be h eld vica

riously liableif he enj oys

a direct financial benefit from the infringing activity and “has the right and ability to supervise” the inf ringing ac ti vi ty. EllisonNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 9

v. Robertson , 357 F.3d

1072, 1076

(9th Ci r. 2004) (internal quotation marks and citation omitted).

B. Analysis

The district court

seems to have assumed that UPIP gr anted
a mechani cal lice

nse for u se of th e co mposition “99 Problems”

on the “Home Invasion” a lbum and received

r oyaltiesfrom the sale of the album within the limitation s peri od. Wit h that assumption, the district court then found that no direct infringement could be established beca

use there
was no eviden

ce eithe r that Br id gepo rt ever demanded that UP IP revoke its license because of the claimed infring ement,
or tha t UPI P had the r

ight to r evoke the

license for this
reason. It al so found, consi stent wi th its earlier decision relatingto the Warner defe ndants, that UPIP’s passive receipt of income alone could not constitute cont ributory infring ement. Finally, vicarious l iability was reje cted bec ause there was no showing tha t UPIP had contr

ol over a dir ec t infringer. After close examination of the record, we find a complete absence of proof

connec ting UPI

P either to

th e dis tribution and sale of the album or

to the pe rforman

ce of the allege dly infring ing wor

k within the limitations period. We affirm on this basis and do not reach the question of whether a publisher may be found liable for infringing sales occurring

within the limitations period when its only actions were the granting of
a licen se outside th e period and the r

eceipt o f roy

alty pay me nts under that license within the limitations period

. Bridgeport

has also f ailed todem ons tra te a bas is to fin d UP IP vicariously liable for

the acts of a direct infringer.

1. Mechanic al License Bridgep ort repeat edly

emphasizes t hat the re was evidence that t

he “Home Invasion” al bum continue d to 10 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

4 Spe cifically, there was evidence that over 300,000 copies of the “Home Invasion” album were sol d since its releas e in 1993. With r espect to t he re levant pe riod, Bridgeport al so indi cates in a f ootnote t hat a l atediscovere d Cha rt Histo ry show ed tha t 2,37 7 co pies o f “99 P rob lems” sold betwe en May 4, 1998, an d May 4, 2001. be sold and offer ed for sal e after May 4, 1998. 4 There is
no claim, howe ver, th at UPIP was directly involved in the manufacture, dis tribution, or sale o f the alb um. Nor is there evidence from which a rational trier of fact could conc lude th at UP IP ever granted a mecha nical license for use of the composition “99 Proble

ms” on the

“Home I nvasion” album. UP IP became a co-owner of the c omposition more than a yea r after the album’s release and has flatly den ie d ever granting
a license for the use o f the compos it io n. S pec ifi cal ly, U PIP offered the affidavit of Edward Arrow, a vi ce- president of copy rights, at testing that there is no record that UPIP eve r issued any mecha

nical, performance, synchronization,
s heet/musi c or other licenses, or distributed or otherwi s e exploitedsheet mus ic fo r the musical composition “99 Problems.” Arrow also stated that UPIP never controlled the sal e, di stribution , or public perfor mance of the “Home Invasion” album; the issuance of blanket performance license s; or the apportionment of fees g enerated by

such license s.
Inaddition, UPIP’ s recor ds showed

that it did not receive any mechanical roy

alties for the sa le o f “9 9 P rob lem s.” In fact, Anthony Sarag eueta, vice-pres id ent of roya lties, testified that while

UPIP would seem

to have a

right to mechanical royalties, he c ould not explain without conduc ting further research wh

y UPIP had not received any such roy alties. The bur den was on Bridg eport to f ollow up wi

th further discovery in its attempt to connect UPI P to the distribution and sal e of the album. Neither UPIP’s status as
a co-owner of the compo sition, nor its contra

ctual rig ht to administer

the compo sition and

receiv e and dist

ributeNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 11

roy alties, is suffic ient to create a genuine issue of fact whether UPIP r eceive d mechan

ical roy alties.

Si nce Bridg eport fa

iled to mak

e a showi

ng that UPI P granted a licens e, rece ived any

roy alties fr om the sale of the album, or had any c onnection t o the distribution and sale of the al bu m w it hi n t he li mi ta ti on s p er io d, su mm ar y j udgmen t
was properl

y entered in favor of UPI

P on the claims of direct and contributory infring ement. Similarly , Bridg eport’s

claim of vicario us liability

is based s olely

on t he allegation that UP IP grante d a mecha

nical lic ense tothe record label and had the right (through the contracts with Marrow) to administer the composition. The record fails to demonstrate UPI P’s connection

to, much less the a

bility to superv

ise or control, th e i nf ri ng in g a ct iv it y.
2. Performance Royalties Bridgeport

contends that the undisputed evidence in the record establishes that “ 99 Problem s” was publ icly perfor med after May 4, 1998, as a direc t result of licenses granted by UP IP even if

they were granted outside the limitations period. Onthe contrary , the only thing established by th e evidence
was that UPI

P received $0.81 in pe rformance roy alties after May 4, 1998. Specifically, UPI P received a total of $14.91 in p erfo rmance royalties rela ted to the public performance of “99 Problems,” of which only $0.81 wa s received after May 4, 1998.

A composition copy

right ow ner has t he exclusi

ve righ t to perfor m, or author

ize the pe

rforma nce of , a copyrig

hted composition. 17 U.S.C. § 106(4). A claim for infringement of this right requires proof that thecomposition was publicly performed withou t having obtained permission. See Job ete Music Co. v. Johnson Communications, Inc.
, 285 F. Supp.2d 1077, 1082 (S.D . Ohi o 2003). B ecause Bridg eport fa

iled to show that any public perf ormance occurred after

May 4, 1998, there wa s no evide nce of an infringing act within the 12 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

5 Bridgeport also ar gues tha t even if U PIP did not actually license use of t he compo siti on, UPIP may be liable as a direct infri nger for off

eri ng to li cens e th e work

wit hin the li mit ati ons per iod. None of the ca ses re lied upon by Bridgeport involved the offeri ng to licens e a wo rk. See Hotaling
v. C hurch of

Jesu s Ch rist of La tter-D ay S aints , 118 F.3d 199 , 203 (4th Cir. 1997) (pub lic li

brary distri

butes infr inging work whe n it adds the work to i ts col lect ion, l ist s it in t he catal og, and makes it avail able f o r borrowing by the p ublic); Repp v. Webber , 9 14 F . S upp . 8 0, 84 ( S. D.N. Y. 1996) (alleged inf

rin ger dis tri buted th e inf ringi ng work and gr anted lice nses to th ird part ies t o rep roduce t he infring ing wo rk); Johnson v. Ra dio City Prods., In c. , No. 97 CIV. 4099 (J SR), 1998 WL 171463 (S .D. N.Y. 1998) (question of fact whethe r ther e was a perf ormance license and whether performances were authori zed under the license). limitations period e ither by UPIP, or to which UPIP could be liableunder theories of contributory infring ement or vicarious li ab il it y. 5

For the above reasons, we affirm the entry of s ummar y judgment in favor of UPIP on B ri dgeport’s claims of copy right in fringe

ment.

III. Bridgeport

allege d that Ammo

Dump Music

and Carrumba Music, the d/b/a of Jorge Hinoj osa, are publishers with an interest in the composition “99 Problems.” The district court dismissedthe action against both A mmo Dump Music and Carrumba Music for lack of proper se rvi ce o f pr oce ss . If service of the summons and complaint is not made upon a defendant within 120 d

ay s after t he filin g of the

complain

t, the cour t, upon motion or on its own initiative, shall dismi ss the action without

prejudice as to that defendant or direct that service be effected within a specified time. F ED

. R. C IV

. P. 4(m). We exercise plenary review over

legal issues involving the adequacy

of service but review the relevant finding s of fact for clear error. LSJ Inv. Co. v. O.L.D., Inc. ,167 F.3d 320, 322 (6th Cir. 1999). Actual knowledge of a lawsuit does not substitute for proper service under Fed. R. Civ. P. 4.Nos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 13

6 Fed . R. Civ . P. 4( h) pro vides that:
(h) Servi ce Upon Corporati ons and A ssociation s. Unless otherwise p rovided by f ederal law, ser vice upon a dome sti c or foreign corporati on or upon a part nership or other unincorpora ted ass oc iation t hat is s ubject to suit under a

common name, and fr om whic h a wai ver of ser vice has n ot been obtai ned and f

il ed, s hall

be ef fect ed:
(1) in a j udicia l dis tri ct of t he United St ates i n the mann er prescri bed for

indi vidu als by s ubdiv isi on (e) (1), or by delivering

a cop y of the sum mon s and of the co mpla int t o a n officer , a managing or ge neral a gent, o r to a ny ot her a gent

aut hori zed by appointment or by la w to re ceive servic e of process and, if t he agent is one aut

hori zed by statu te to receive ser vice and the sta tut e so r equir es, by al so mai li ng a copy to t he def endant , or (2) in a place not

with in any

judici al dis tri ct of t

he United States in any manner prescribed for i nd ivid uals by s ubdiv isi on (f) except

pers onal deli very

as pr ovided i n pa ragra ph (2 )(C)( i) thereo f. A. Amm o Dump Mu sic Despite havin g been advised by Wa rner/Cha ppell tha t it
was notauthorize d to acce pt servic e for Ammo Dump Music
or Carrumba M us ic, Bridgeport attempted to serve the amended complaint on Ammo Du mp Mu sic th rough Warner/Chappell

by maili ng it to CT Corpora tion Sy stems, whichis author

ized to ac cept service on behalf of Warn er/Chapp ell. Bridgeport contends that it properly serv e d Ammo Dump Music by serving a “managing ag ent” as permitted by Fe d. R. Civ. P. 4(h)(1). 6

A managi ng ag ent is one

authorize d to trans act all bu siness of a particula r kind at a particular place and must be vested with powers of discretion rather than bei ng under direct superior control. See Grammenos v. Lemos , 457 F.2d 1067, 1073 (2d Cir. 19 72 ). Another factor to consider is the exclusivity

of the relationship between Warner/Chappell and 14 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

Ammo Dump Music. See Dodco, Inc. v. Am. Bonding Co. , 7 F.3d 1387 , 1388-89 (8th Cir. 1993) (salesman did not
ex clu si vel y rep res ent th e de fen dan t). Insupport of its claim that Warne

r/Chappe ll is a mana

ging a gent fo r Ammo Dump Music, Bridg eport re lies on the a ffidavit of Ed Pierson, an executive vice-president for Warner/Chappell, that was filed in opposition to Bridgeport’s motion for entry of defau l t judgment against Ammo Dump Music.

Piersonstated that Warner /Cha ppell works as a limited agent for thousands of writer s and thei r publishin

g entitie s, buthas never been authorized to accept service of process on behalf of a w ri te r o r p ub li sh in g c om pa ny. Ge ne ra ll y, Warner/Cha

ppell issues lic enses to c ompanies that want

to
use musical compositions in televis ion, movie s, video g ames, and the like. It collects the income g en erated from such licenses and distr

ibutes the roy alty shares to the writers and/or their publishing

entities. There was no evidence in the record concerni ng th e amount of discretion Warner/Chappell can exercise with resp ect to the

licensing of works own ed by Ammo Dump Music

. Se e Jennings v. McCall Corp. , 320 F.2d 64 (8th Cir. 1963) (s alesm an was not managing ag ent where he was hired

to secure new accounts but did not have discretionto establi sh price s, terms, or conditions of contracts and whose o r ders were subject to company approval). Beca use Bridgeport failed to come forward with evidence supporting a finding

that W arner/Chappell was a managing agent of Ammo Du

mp Music for purpose s of Fed . R. Civ. P. 4(h)(1), the district

court did not err by dismissing the ac tion againstAmmo Dump Music for lack of proper service of process

. B. Carrumba Music

Service onCarrumba Music, the d/b/a for Jorge Hinojosa, is governed by

Fed. R. Civ. P. 4(e), the provision for serviceNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 15

7 Fed. R . Civ. P. 4(e) states:
(e) Serv ice U pon Indiv idua ls W ithin a Judicial Distri ct of the U nited Sta tes. Unless ot herwis e provided by f

ederal l aw, servi ce upo n an ind ividua l from w hom a waive r has no t b ee n obtained and filed , oth er than an inf ant or an incompetent person, may be effected in any jud ic ial district

of th e United States:
(1) pursuant to th e law of the st ate in which t he district court is loca ted, or i n whi ch se rvi ce i s ef fect ed, forthe servi ce of a s ummons upon the def endant i n an acti on brough t i n th e cou rt s of gener al j uri sdic ti on of the Stat e; or (2) by delivering a copy of t he summons and of the complaint to the ind ividua l perso nall y o r by leaving copies there of atthe i ndiv idual 's dwell ing house or usual place of abode with some person of suitable age and discre t ion then residing therein or by deli vering a copy of the summons and of the complaint to an agent authori zed by appointment or by law to receive servi ce of proce ss. of process on i ndividual s. 7 Rule 4(e) permits service pursuant to the law of the state in w hich ser vice is e ffecte d, which i

n th is case is Ca

lifornia because Hinojosa i s a resid

ent o f Cal ifornia. See LSJ Inv. , 167 F.3d at 322-23. Unde r Californ ia law, service on an

individ ual may be e ffected as follows:

If a copy of the

summons and compl aint can not with
reasona ble diligence be person all y delivered to the person to be served, as specified in Section 416.60, 416.70, 416.80, or 416.90, a summons may be ser ved by leavinga copy

of the sum

m ons and complaint at the person’s dwelling house, us ual place of abode, usual place of business, or usual mailing addr e ss other than a United States Post

al Servic e post office box, in the presence of a comp etent m ember of the household or a 16 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

person appare ntly incharge of his or

her office, place of business, or usual ma i ling address other than a United States Postal Service post office box, at least 18 years of age, who shall be inform ed of the contents thereof, and by t hereafter mailing a copy of the summons and of the complaint by first-class mail, postag e prepaid to the person to be served at the p lace w here a copy of the
summons and

complaint were left. Service of a summons inthis manner

is deemed

complete on the 10th day a fter the ma ilin g.
C AL

. C IV

. P ROC

. C ODE § 415.20(b) (West 2004). Bridgeport

attempte d to serve Carrumba Music by leaving the summons an

d amende d complai

nt wit h a re ceptionist at the office o f Provident Financial Management in Los Angele s, Californ

ia. Provid ent is an accounting firm

retained by Carrumba Music to perform routine boo kkeep ing and
ac c ounting function s limited to t asks such as pay ing bills, receivi ng and depositing checks, preparing taxes, and keeping Carrumba Music’s b ooks and r

ecords. Provident wa s not authorized

to accept service of

process on

behalf of Carrumba Music. Bridgep ort failed to s how compl iance with Califor nia’s ru le for service of proce ss on indivi duals bec ause it of fered no basis to conclude that

the L os Ange les addr

ess for Provident
was the usual

p lace of b usiness or usual mailing address of Carrumba Musi c. See LSJ Inv. Co. , 167 F.3d at 323 (office
was location repeatedly

given by defendant as the address for his business a

nd h imself). Accord

ingly, we find

no error in the dismissal o f Carrumba Music for lack of service of process

. IV. Turning next to Br idgep ort’s separate appeal, we re view the districtcourt’s decision to award $79,340.94 in attorney fe esNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 17

8 “In any civil ac tion und er this title, the co urt in its discre tio n may all ow the r ecovery of fullcosts by or against any party other t

han t h e United State s or an off

icer the reof . Exce pt as othe rwi se pr ovided by this tit le, the cour

t may al so award a re asonable attorn ey’s f ee to the prevai li ng party as par

t of the cost s.” 17 U.S.C. § 505. and $3,409.35 in nontaxab le costs to UPI P for abuse of discretion. Coles v. Wonder , 283 F.3d 798, 804 (6th Cir. 2002 ); Murray Hill Publ’ns, Inc. v. ABC Communication s , 264 F.3d 622, 639 (6th Cir. 2001). The Copyr ight A ct provides that in civil suits the district court, in its discretion, may award co sts , including reasonable attorney fees, to the prevailing party . 17 U.S.C. § 505. 8 This discretion must be exercised in an evenhanded

manner w

ith respect to prevailing plaintiffs and prevailing defendants, and in a manne r consistent with the pr

imary purposes of the Copyr

ight Ac t. Fogerty v. Fantasy, Inc. , 510 U.S. 517 (1994).

While rejecting both a “dual standard ” unde r which prevailingdefendants are required to show fr ivolousness or bad f aith and the “British Rule” of automatic recovery of attorney fees b y the preva

iling party, the Court in Fogerty explained that “‘[t]here is no precise ru le or formula for maki ng these determinat ions,’ but instead equitable discretion should be exerci sed‘in light of the considerations we have iden tifie d.’” Id. at 534 (citation omitted). Several nonexclusive factors were approved by the Court in Fogerty for consider ation in ma

kin g award s to prevailing parties, as long as the f

actors were “faithful to the purposes of the Copyright Act and a

re appli ed to pre

vailing plaintif fs and defenda nts in an evenha

nded man ner.” Id. at 534 n.19. Thosefact o rs include “‘frivolousness, motivation, objective
unreasonabl eness (both in th e factu al and le gal com

ponents of the case) and the n eed in pa rticular circumst ances to advan ce consider

atio ns of compensation and deterrence.’” Id

. (quoting Lieb v. Top

stone Ind us. Inc. , 788 F.2d 151, 156 (3d Cir. 1986)). A s th e district court observed, the factors need 18 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

notall weigh in favor of an awar d in order to g rant fees to a prevailing party

and other factors may

be considered. Separat e sum mar y jud gme nt mo ti ons wer e fi led by UP IP and the Warne

r defen dants. Af ter the ma gistra te judge issued his decision recommending that s ummary judgme

nt be granted to the Warner d efendan ts on A ugu st 5, 2 002 , UP IP wroteto Bridgeport and urge d that Bridgeport stipulate to the entry of su mm ar y j udgme nt in favor of UPIP. That letter, dated Au gust 23, 2002, stat

ed in par t that: Despite lengthy, intrusive, and expensive discovery, y ou have not established and there is no ev idence that any infringing actsby UPI

P took pl ace after May

4, 1998. This letter will further confirm t hat none of the very limitedmonies UPI

P has r eceived after May 4, 1998 attributa ble to the com

posi tion 99 Problems are attributa ble to post-Ma

y 4, 1998 acti

v ities[ .] UPIP has not gran ted any license s for 99 Problems after May 4, 1998.

. . . Indeed, the total reve nue received by

UPIP for 99 Problems since May 4, 1998 are 81 cents – of which UPIP retained 40 cents

. Thus, in both Case Nos. 703 a nd 706, the Universal [d]efenda nts stand i n the same shoes as the Warner defenda nts in Case No. 706. We can provide you wi th
sworndeclar

ations t o this effect if y ou so desire (although, from the extensive discovery c onducted and your failure to put for

ward an y su ch evid ence in opposition to our summa ry j udgment motion, you are already aware of the complet e absen ce of evidence of such activities during the statutory period).

. . . . We have reviewed y

our Rule 72 Obj e ction s to J udge Brown ’s R &R to Jud ge Higgins. Jud ge Brown’s R&R
was thoughtfully ana

lyzed and well-re asoned, and weNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 19

fully anticipate that Judg e H iggins will adopt it as the order of the Court. We understand you ha ve also indicate d you

intend to a

ppeal thi s issue to the Sixth Circuit. With that in mind, we propose a nd reque st

that Bridgeport

stipulate to judgment in favor of Uni versa l Polygram International Publ ishi ng, Inc . (“UPI P”) in Case 706 bas ed upon Judge

Brown’ s R&R. This

would preserve the parties’ and

the Court’s resourc es and avoid
unnece ss ary

e xpenditure s of time, e ffort, a nd expense because the cases against both Warner-Chappell and UP IP w ou ld pr oc ee d s im ul ta ne ou sl y. Bridgeport

did not respond, and

UPIP began pre

paring for the trial scheduled to commence on November 12, 2002.

Once the distri ct court adopted th e magistrate judge’s repor t and recommendation with respect to the War ner def endants
onSepte mber 16 , 2002, UPIP obtained leave to supplement its pendi ng m ot ion for summary judg ment. In the supplemental brief filed

on September

27, 2002, UPIP argued that it “stood in the same shoe s ” as the Wa rner de fendant s. Bridgeport

filed an opposing memorandum on O ct ober 7, 2002. The district court granted summary judgment to UP IP
onNovember 7, 2002 , and Bridgeport appealed. On December

9, 2002, U

PIP filed its mo tion seeking $297,292.60 inattorney fe es and $16,119.22 in n ontaxable costs as a pr ev ai li ng pa rt y.
Init s or der of M ay 6, 200 3, t he d is tri ct c our t fo und UP IP
was a prevail ing par

ty a nd conclu ded that B ridgep ort should bear the reasonable fees and costs incurre d by UPI P after Septemb er

1 6, 2002, the date that summary judg ment was entered in favor of the War

ner def endants. Incalculating the lodestar amount, the dis trict court reduced the hourly rates charged b y UPI P’s Los Angeles counse l, “capped” the rates charged for paralegal work, deduc ted fees for redacted or nonspec ific entries, allocated fees between two cases a

gainst UPIP, and

reduced the lodestar amount by 25% to a ccount for 20 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

“t op -h ea vy” billing by partners for work that could have been performed

by a sso cia tes. Bridgeport does not challeng e the districtcourt’s ca lculat ion of the amount of

fees re asonably incurred or its inclusion of any particular item in the award.

After correctly stating the applic able standards, the district court indicated at the outset that Br

idgepo rt’s rel iance on

its novel, albeit un success ful, theory was not ob

jectivel y unreasonable. In particular, the district cour t recognized that it ha d “ruled

on a previous motion against Bridgeport for attorney’s fees tha t the plain

tiff’s theory that publishing defenda nts c o uld be liable for infringement within the limitations period for the receipt of royal ties income was novel enough to weigh ag ainst an award of attorney ’s fees.”

Nonethe less, the distri ct court found th at s everal factors weighed in favor of an aw a rd, including factors enumerated inits decisions awarding attorney fe es to prevailing defenda nts in other Bridgepo rt cases. Specifically , the distri c t court noted the plaintiff

s’ overly ag gressive, take-no-prisoners litigationtactics, an d the over all impre ssion that p laintiff s’ strat egy w as to exact the

highest possible to ll in order

to maximi ze the settle

ment value of the c ases. Th e decid in g factor, however, was specifica lly identified as

the plaintiff

’s decis ion not to se

ttle or otherwise compr omise it s claim af

ter the Co

urt ruled in this cas e againstits theory

of infrin gement by r eceipt o f roy

alties, whichby September

2002 was its only remaining viable theory against this defendant. Faced with cer tain defeat
onsummary

judgmen

t, the pla

intiff unnecessa

rily extended t

his litigation and caused both sides to expend
enormous resources preparing for a trial on

a theory that had been cle arly

rejecte d by

the Court, where the plaintiff had no new facts to offer that might persua de t he Court otherwise. The Court

views this

be ha vi or as fo ol ha rd y, and believes it entitles the defendant to a partial award of fees and costs. Therefore, the Court finds that [UPI P] isNos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 21

entitled to all rea sonable

f ees and costs incurred after September

16, 2002, the date that

the Court adopted the Report and Recommendation

by the Mag istra te Judge [], approved the dismissal of all cla

ims in this a

ction ag ainst the Warner defend ant s as barred by the statute of limitat ions a nd rejected receipt of income theory of infringement. The Court finds that Bridgeport’s further pursu anc e of similar claims against Universal after that date were objectively

unreasonable. With our affirmance of summary judgment, it is clear that UP IP is a prev ail ing p arty. As discussed e arlier, however, attorney fees are not to be awarded a utomat ically

to every prevailingparty. I

n Murray H

ill , this court reversed

an award of at to rn ey f

ee s to the prevailing defendant and concluded that the plaintiff had presented unsettled questions of law and
one or more colorable claims of infringeme nt. 264 F.3d at 640. This is con sistent wit h the view from other circuits that it generally doe s not promote the purposes of the Copy right Act to award attorney

fees to a prevailing defendant when the plaintiff has adva nced a r easonab le, y

et unsu cc essful c laim. See Matthew Be

nder & Co. v. West Publ’g Co. , 240 F.3d 116, 122 (2d Ci r. 2001); Lotus Dev. Corp. v. Borland Int’l, Inc.
, 140 F.3d 70, 7 5 (1st Cir. 1998) (I n close infringe

ment cas es, “the need to encourage meritorious def enses is a factor that

a districtcourt ma y balance against the potentially

chilling effect of imposing a large fee a ward on a plaintiff[] who . .

. may have ad

vanced a reasonable, a

lbeit unsu

ccess f ul, claim.”). The district court explicitly found that Bridgeport’s receipt of royalties theory

was objectively r

easonable. This objectiv ely

reasonable theory

did not sudd enl y be come objec tively

unreasonable (f

actually and leg ally

) once it became appare nt that the

district c ourt would

most likely reject it and enter

summary judgme

nt in UPIP’s favor. As a result, w e find it w ould be an abuseof discretion to base the award on the obje ctive unr

easonab leness of

Bridgep ort’s 22 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

claim. The district court

also faulted

Bridg eport for failing

to settle, but no se ttl ement offer was made by UPIP. Instea

d, UP IP demande d that Br

idgeport stipula

te to dismis sal of its objectiv ely

reasonable claim and fore go a decision on the merits spe cific to U

PIP.
While it would be improper to sanction a party simply

for electingto await decision on a pending motion, we h av e recognized

that a party’ s litigation tactics may weigh in favor of an award of fees when the c onduct supports an inference
concer nin g moti vation or a particular need for deter rence. Compare Matthew Bender , 240 F.3d at 125- 26 (filing 12(b)(6) motion), with Coles , 283 F.3 d at 803 (in light of objective unrea sonableness of the claims, the plaintiff’s tactics and strategies could “be interprete d as seekingto force settlement

with a wealthy

songwriter with little or no basis for doing so.”) We remand for the district court to c onsider i

n its d iscretionwhether, despite the objective reasona bleness of th e cla im, an aw ard or partial award is warrante d based on a weighing of one or more Fogerty factors or because an awa rd would othe

rwise fu rther the purposes of the Copyr

ight Ac t.

For the rea sons s et forth above, we AFFIRM the entry of summary judgmen t in favor of UPIP; AFFIRM the dismissal of Ammo Dump Music and Carrumba Music; and VACATE the award of

attorney fe es and costs to UPIP and REMAND for further consideration consistent with this opinion.Nos. 03-5005/5744 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. 23

_____________________________________________ CONCURRING IN PART, DISSENTING IN P ART

_____________________________________________ RON ALD LEE G

IL MAN, Ci rcuit Judge , concurring in part and dissenting in part . I con cur in Parts I, I I, and I II of the majority opinion. B ut I di sa gree wi th the majority’s conclusionin Pa

rt IV that the dist

rict cou rt abuse d its discretionin awarding at

torney fees to UPIP, the prevailing defendant.

Even assuming that Bridgeport’s rec eipt-o f- royalties argument was notunreasonable at the outset, the fact remains that the failure of the argument was a b solutel y foreor

dained
once the district court resolved that very issue i n a parallel
casein which Bridgeport was also the plaintiff. From that pointforward, the district c ourt had a sound bas is to conclude that Bridgeport was unreasona ble in continuing to pursue its claim agains t UPIP, especia

lly i n light of UPIP’ s proposa

l to stipulate to a dismissal of the complaint while still preserving Bridgeport’s right to appe al. Thi s case is theref ore eas ily distingu ishable fromthose where the district court was found to have abused its discretion by shifting attorney

fees to a party who advanced a reasonable c laim that had not p reviousl y been ruled upon, such as in Matthew Be nder & Co., Inc. v. West Publishing Co.
, 240 F.3d 116, 123 (2d Cir. 2001), which is cited in Part IV of the majority ’s opinion.

Iagree with the g eneral

p ri nciple that awarding attorney fees in cases

that pre sent clos e questions in unsettled areas of lawis imprope

r; otherw ise, par ties mi ght b e deterred from bringing colorab le claims

or defe nses that m e rit judicial consideration. But I

cannot perceive how the purposesof the Copyright Act would be thwarted by de terringa plaintiff such
as Bridgeport from pressing a theory tha t had already

been considered

and rejected in a parallel case bef ore the very

same judge. At a minimum, I am not “firmly convince d that a 24 Bridgeport Music, et al. v. Rhyme Syndicat e Music, et al. Nos. 03-5005/5744

mistake has been made” in this case. Adcock-Ladd v. Sec’y of Treasury , 227 F.3d 343, 349 (6th Cir. 2000) (quotationmarks omitted) (defining the term “abuse of discretion”). Nor do I believe that “the lower court relie[d] on clea rly errone ous findi ngs of fact
, . . . improperly applie[d] the law[,] or use[d]
anerroneous legal standard.” Id. (quotat ion marks omitted). Ac co rd in gl y, I would AFFIRM the decision of the district court because I find no a

buse of discretion in its award of attorne y f ees to UPI

P.