Opinion ID: 3164
Heading Depth: 2
Heading Rank: 3

Heading: Waiver and Abandonment.

Text: 36 The District Court's view of the Naxos claim that Capitol has waived or abandoned its rights in the original recordings is unclear. In the initial opinion, the Court stated that Capitol appears to have waived or abandoned its interests Capitol I, 262 F.Supp.2d at 211 (emphasis added), and also stated that Capitol waived and abandoned its rights, id. In the second opinion, the Court stated that EMI had expressly disclaimed its interests, Capitol II, 274 F.Supp.2d at 475, and then concluded that Capitol appears to have waived or abandoned its interests, id. at 481. 37 Waiver. The waiver rulings, whether tentative or definitive, are based entirely on the two letters from EMI officials Dewdney and Locantro to a curator at the Yale Library. These letters, however, do not establish waiver. Dewdney specifically stated that he was not ... conversant with American copyright law. Under New York law, a claim of waiver requires proof of an intentional relinquishment of a known right with both knowledge of its existence and an intention to relinquish it. Airco Alloys Division, Airco Inc. v. Niagara Mohawk Power Corp., 76 A.D.2d 68, 81, 430 N.Y.S.2d 179, 187 (4th Dep't 1980) (internal quotation marks omitted). Since Dewdney was unaware of the nature of EMI's rights under law (federal or state) in the United States, he could not have intended to relinquish a known right. Locantro's letter also gives no indication that it purports to waive any rights existing under common law in the United States. It simply agrees with Dewdney's views with respect to public domain works. Neither letter says anything about rights that might exist under state law copyrights. 38 Naxos contends that even if the Dewdney and Locantro letters do not establish waiver of common law rights in the United States, the Yale curator's inquiry should have prompted EMI to investigate protections for sound recordings under U.S. law and that EMI's failure to investigate satisfied the `known right' requirement for a finding of waiver. Br. for Defendant-Appellee at 47. Naxos attempts to support this argument by citing Lauder v. First Unum Life Insurance Co., 284 F.3d 375 (2d Cir.2002). 39 Lauder provides no support for Naxos. Lauder, an ERISA case, held that an insurer had waived a defense of which it had adequate information when it failed to investigate the facts concerning the defense and declined an insured's claim on the basis of a different defense. Id. at 380-82. Lauder noted that we had previously stated that  under the law applicable to insurance policies, an insurer may be barred from raising defenses not asserted in communications to the insured denying coverage. Id. at 380 (emphasis added) (quoting Juliano v. Health Maintenance Organization of New Jersey, Inc., 221 F.3d 279, 288 (2d Cir.2000)) (internal quotation marks omitted). Lauder relied on our opinion in New York v. AMRO Realty Corp., 936 F.2d 1420 (2d Cir.1991), for the proposition that  [a]n insurer is deemed, as a matter of law, to have intended to waive a defense to coverage where other defenses are asserted, and where the insurer possesses sufficient knowledge (actual or constructive) of the circumstances regarding the unasserted defense. Lauder, 284 F.3d at 382 (emphasis added) (quoting AMRO Realty, 936 F.2d at 1431) (internal quotation marks omitted). There is no comparable doctrine in copyright law, even if the Yale curator's inquiry created what might have been considered in the insurance context a duty to investigate. 40 Abandonment. The District Court's abandonment rulings, whether definitive or tentative, are based on three circumstances. First, EMI's own restorations of the original recordings claim copyright solely in the restored versions of the performances and not in the underlying sound recordings. Capitol I, 262 F.Supp.2d at 212. Second, Capitol has failed to pursue the many other companies presently selling restorations of the original recordings without any authority from Capitol. Id. Third, it is unclear from the documentation of royalty payments, the length of time in which royalties were paid, or if they were consistently paid. Id. at 213 (emphasis added). 41 The parties agree that the District Court invoked the correct legal standard in stating that abandonment of copyright requires (1) an intent by the copyright holder to surrender rights in the work; and (2) an overt act evidencing that intent. Id. at 211 (internal quotation marks omitted). Assuming that New York would apply this standard to abandonment of a common law copyright, we note that federal procedural law would normally render the issue of intent to abandon inappropriate for summary judgment. See Cline v. 1-888-Plumbing Group, Inc., 146 F.Supp.2d 351, 364 (S.D.N.Y.2001). In the pending case, the circumstances relied on by the District Court do not establish an intent to abandon to the degree of persuasiveness sufficient to warrant summary judgment. Indeed, it is far from clear that Naxos has produced enough evidence to create a genuine issue of disputed fact concerning such intent. 42 First, the notices on EMI's restorations reserved all rights, creating at least a factual issue as to whether those words applied only to the restorations, as Naxos claims, or to all of Capitol's rights, including rights in the underlying original recordings, as Capitol claims. More significantly, we find no indication that common law copyright in New York requires notice for protection, much less that the absence of notice indicates intent to abandon. 14 43 Second, failure to pursue third-party infringers has regularly been rejected as a defense to copyright infringement or as an indication of abandonment. See, e.g., Paramount Pictures Corp. v. Carol Publishing Group, 11 F.Supp.2d 329, 337 (S.D.N.Y.1998). 44 Third, the non-payment of royalties was acknowledged by the Court to be unclear, and payment has been unequivocally asserted by a senior EMI official. Moreover, it is by no means clear that some non-payment of royalties would indicate abandonment of common law copyright, as distinguished, for example, from some other plausible defense available to royalty obligors. 45 In sum, waiver has not been established, and abandonment is at least a factual issue that requires further exploration.