December 3, 2013
LES Insights
By John C. Paul; D. Brian Kacedon; Andrew E. Renison
Authored by D. Brian Kacedon, John C. Paul, and Andrew E. Renison
When the Beastie Boys sued Monster for using a remix of their songs without their approval, Monster claimed that the disc jockey who was the remix creator authorized Monster to use the remix. The resulting decision of the court in Beastie Boys v. Monster Energy Co.1 concluded that several brief communications between Monster's marketing director and the remix creator did not result in an enforceable license agreement to use the copyrighted material of the Beastie Boys, and that the remix creator did not falsely misrepresent to Monster that he had authority to permit Monster to use the remix for its own purposes.
In 2009, the Beastie Boys, the well-known hip-hop group, asked disc jockey Z-Trip to create a remix of their songs that fans could download for free to promote an upcoming album. Z-Trip released the 23-minute long "Megamix," which included numerous Beastie Boys songs, on his website in April 2011 with the Beastie Boys' permission. Almost one year later, Monster, the popular energy-drink company, booked Z-Trip to perform at an after-party at "Ruckus in the Rockies," an annual Canadian snowboarding competition.
During and after Ruckus in the Rockies, Nelson Phillips, a marketing director of Monster, and Z-Trip had two conversations about Monster's use of the Megamix in a promotional video recapping the event. On the night Z-Trip performed, Phillips and Z-Trip had a brief conversation backstage before Z-Trip's performance. Phillips testified that the two spoke for several minutes and discussed the Megamix for 30 seconds. Specifically, Phillips claimed that, after asking Z-Trip if he had any music available for the video, Z-Trip told him that "he had made a Megamix that was available on his website and it could be downloaded for free." Although Z-Trip testified that their entire conversation lasted only 30 seconds and he only complained about the lack of available refreshments backstage, the court considered Philips' testimony because it was addressing a motion for summary judgment.
Within the following two days, Phillips and Z-Trip met over breakfast. Phillips testified that they briefly discussed the video and that Phillips told Z-Trip that Monster "would not publish the [v]ideo until [Z-Trip] was completely satisfied with it and approved it, [and Z-Trip] indicated his agreement." Based on their conversations and Z-Trip's representations, Phillips believed that Z-Trip gave him permission to use the Megamix for the video, and that he did not believe he needed anyone else's approval to license the Megamix's music. Phillips and a videographer then used portions of the Megamix for Monster's video.
Following their meeting, Phillips and Z-Trip discussed through email Monster's video shortly before Monster posted the video on its YouTube channel. Phillips asked Z-Trip to view the video and notify Phillips of his approval, stating that Monster would post the video online once Z-Trip approved. Z-Trip responded, "Dope! Maybe at the end when you put up the info about my Beasties mix, you could post below it ‘Download the mix for free at http://ztrip.bandcamp.com.'" Monster included Z-Trip's suggestion in the video's credits and attributed the Megamix to Z-Trip. Phillips and Z-Trip interpreted their email exchange differently. Phillips emailed Z-Trip, believing that Monster needed Z-Trip's approval to use his Megamix and image for the video. Phillips interpreted the word "Dope" as Z-Trip's approval of the "entire [v]ideo and all elements, including the use of his Megamix and his image." Further, Phillips viewed Z-Trip's suggestion as an exchange for the use of his Megamix.
Z-Trip interpreted the emails differently. He was surprised that the video used portions of the Megamix, both because the Megamix had not played at the event and because "no one from Monster Energy had ever asked whether portions of the Megamix could be downloaded for use in a video." Z-Trip felt that Phillips emailed him the video because Phillips did not obtain his approval to tape his performance before he performed. Further, Z-Trip testified that "Dope!" merely conveyed that he liked how he appeared in the video. After the video appeared on Monster's YouTube channel, Phillips informed Z-Trip, and Z-Trip again replied, "Dope!!!" Almost one month later, Z-Trip emailed his manager, expressing his regret about the video and stating that he did not know that Monster never contacted the Beastie Boys about the Megamix.
The Beastie Boys brought several claims for copyright infringement and other violations against Monster. Monster attempted to deflect responsibility for any copyright infringement to Z-Trip by filing a complaint against him for breach of contract and fraud.
The court concluded on summary judgment that no reasonable juror could conclude that Phillips and Z-Trip formed a contract authorizing Monster to use the Beastie Boys' recordings and further found Monster's claim of fraud farcical.
First, the court addressed Monster's breach-of-contract claim against Z-Trip. Monster claimed that the communications between Phillips and Z-Trip formed a contract. The terms, according to Monster, were that Z-Trip allowed Monster free use of his Megamix in exchange for promotion on the video and a link to Z-Trip's website containing the Megamix. Further, because the Megamix implicated the Beastie Boys' copyright rights as it contained original Beastie Boys' recordings, Monster argued that Z-Trip represented that he had the authority to license the use of the recordings in the Megamix. According to Monster, because Z-Trip did not, in fact, convey a valid license, he breached their agreement.
The court concluded that no reasonable juror could find any of the elements necessary to form a valid contract—"offer, acceptance, consideration, mutual assent and intent to be bound"—present in the communications between Phillips and Z-Trip. The oral communications and emails between Phillips and Z-Trip did not, according to the court, involve an offer. Phillips and Z-Trip's backstage conversation at most amounted to a question—whether Z-Trip had music available for the video—followed by Z-Trip's factual representation that Monster could download the Megamix. Moreover, the court noted, even if Z-Trip granted Monster the right to download the Megamix, this right did not include Monster's claimed right "to reproduce, for its own commercial purposes, including on various websites, the original recordings and songs of the Beastie Boys contained on the Megamix." Similarly, Phillips and Z-Trip's breakfast conversation did not propose a bilateral exchange necessary for an offer. Neither did the email exchange between the two; Phillips' and Z-Trip's emails did not specify the legal duties each was offering to undertake.
The court then explained that no reasonable juror could find acceptance of any contractual offer. Here, the court found that the word "Dope!" did not constitute a "clear, unambiguous and unequivocal" acceptance. Rather, Z-Trip's response of "Dope!" merely communicated that he approved of the video, which, according to the court, did not convey his assent to an exchange of promises or other consideration. Neither did this approval convey to Monster that "Z-Trip had authority to approve, on behalf of the Beastie Boys, a free license to Monster to use the Beastie Boys' recordings and songs."
The court also found that the purported contract lacked consideration. Any benefit Z-Trip stood to gain from Monster linking its video to his website was merely incidental. Monster did not undertake a legal duty in exchange for Z-Trip's approval; Z-Trip would not have been able to claim breach of contract had Monster not included the link in the video or decided not to post the video.
Addressing the terms of the contract alleged by Monster, the court found no indication that, in their sparse communications, Z-Trip granted Monster "a license on behalf of the Beastie Boys to use the underlying copyrighted material owned by the Beastie Boys," or, alternatively, indemnification against future suits for copyright violations. The court also noted that Phillips lacked the qualifications that would have been necessary to negotiate a license for Monster. Further, only the Beastie Boys, as owners of the copyrights to the underlying songs, could authorize Monster to use and distribute its music. Even if Phillips had the requisite expertise, he could not, according to the court, reasonably conclude that Z-Trip had the right to license to Monster use of the underlying copyrighted material.
Second, the court rejected Monster's claim of fraud. Monster argued that Z-Trip told Phillips that Monster could use the Megamix and failed to disclose that he, Z-Trip, knew he did not have permission to license the mix because it contained Beastie Boys' music. But Z-Trip did not, according to the court, act with fraudulent intent. At most, Phillips and Z-Trip's communications were consistent with a miscommunication. The court found Monster's decision to entrust Phillips with the sole responsibility for licensing intellectual-property rights reckless. Further, the court found no motive for Z-Trip to defraud Monster, as the two were developing a business relationship, and Z-Trip's later email to his manager expressed his regret about Monster's use of the Megamix.
Finally, no reasonable juror could find that Monster reasonably relied on Z-Trip's allegedly fraudulent statements. The court explained that the two brief conversations and an email exchange between Phillips and Z-Trip did not create "a reasonable basis on which Monster, a major corporation, could conclude that it had obtained the necessary license to [use the Beastie Boys' original recordings for its own purposes]." And Monster could not, the court explained, shift liability to Z-Trip after it left such licensing matters solely in the hands of an employee insensitive to the legal issues surrounding such an agreement.
This case demonstrates the value in having a process for reviewing, and documenting the legal rights needed before using content prepared by others. This is particularly so where the content also includes the copyrighted works or other rights of third parties.
1 The Beastie Boys v. Monster Energy Co. opinion can be found at http://scholar.google.com/scholar_case?case=34819803461276005.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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