THREE BOYS MUSIC v BOLTON, 9755150
U.S. 9th Circuit Court of Appeals
THREE BOYS MUSIC v BOLTON
9755150
THREE BOYS MUSIC CORPORATION,
Plaintiff-Appellee,
v.
Nos. 97-55150
MICHAEL BOLTON, individually and
97-55154
d/b/a MR. BOLTON'S MUSIC, INC.;
ANDREW GOLDMARK; NON-PAREIL
D.C. No.
MUSIC, INC.; WARNER-CHAPPELL
CV-92-01177 LGB
MUSIC LIMITED; WARNER-
OPINION
TAMERLANE PUBLISHING CORP.; WB
MUSIC CORP.; and SONY MUSIC
ENTERTAINMENT, INC.,
Defendants-Appellants.
Appeals from the United States District Court
for the Central District of California
Lourdes G. Baird, District Judge, Presiding
Argued and Submitted
October 5, 1999--Pasadena, California
Filed May 9, 2000
Before: Betty B. Fletcher, Dorothy W. Nelson, and
Melvin Brunetti, Circuit Judges.
Opinion by D.W. Nelson
_________________________________________________________________
COUNSEL
Robert G. Sugarman, Weil, Gotshal & Manges, New York,
New York, for the defendants-appellants.
Russell J. Frackman, Mitchell, Silberberg & Knupp, Los
Angeles, California, for the defendant-appellant.
Pierce O'Donnell, O'Donnell & Shaeffer, Los Angeles, Cali-
fornia, for the plaintiff-appellee.
John P. McNicholas, McNicholas & McNicholas, Los Ange-
les, California, for the plaintiff-appellee.
Louis Petrich, Leopold, Petrich, & Smith, Los Angeles, Cali-
fornia, for amici, Recording Industry Association of America,
Inc. and Motion Picture Association of America, Inc.
_________________________________________________________________
OPINION
D.W. NELSON, Circuit Judge:
In 1994, a jury found that Michael Bolton's 1991 pop hit,
"Love Is a Wonderful Thing," infringed on the copyright of
a 1964 Isley Brothers' song of the same name. The district
court denied Bolton's motion for a new trial and affirmed the
jury's award of $5.4 million.
Bolton, his co-author, Andrew Goldmark, and their record
companies ("Sony Music") appeal, arguing that the district
court erred in finding that: (1) sufficient evidence supported
the jury's finding that the appellants had access to the Isley
Brothers' song; (2) sufficient evidence supported the jury's
finding that the songs were substantially similar; (3) subject
matter jurisdiction existed based on the Isley Brothers regis-
tering a complete copy of the song; (4) sufficient evidence
supported the jury's attribution of profits to the infringing ele-
ments of the song; (5) Sony Music could not deduct its tax lia-
bility; and (6) the appellants' motion for a new trial based on
newly discovered evidence was unwarranted.
We affirm.
I. BACKGROUND
The Isley Brothers, one of this country's most well-known
rhythm and blues groups, have been inducted into the Rock
and Roll Hall of Fame. They helped define the soul sound of
the 1960s with songs such as "Shout," "Twist and Shout," and
"This Old Heart of Mine," and they mastered the funky beats
of the 1970s with songs such as "Who's That Lady, " "Fight
the Power," and "It's Your Thing." In 1964, the Isley Broth-
ers wrote and recorded "Love is a Wonderful Thing " for
United Artists. The Isley Brothers received a copyright for
"Love is a Wonderful Thing" from the Register of Copyrights
on February 6, 1964. The following year, they switched to the
famous Motown label and had three top-100 hits including
"This Old Heart of Mine."
Hoping to benefit from the Isley Brothers' Motown suc-
cess, United Artists released "Love is a Wonderful Thing" in
1966. The song was not released on an album, only on a 45-
record as a single. Several industry publications predicted that
"Love is a Wonderful Thing" would be a hit -- "Cash Box"
on August 27, 1966, "Gavin Report" on August 26, 1966, and
"Billboard" on September 10, 1966. On September 17, 1966,
Billboard listed "Love is a Wonderful Thing" at number 110
in a chart titled "Bubbling Under the Hot 100. " The song was
never listed on any other Top 100 charts. In 1991, the Isley
Brothers' "Love is a Wonderful Thing" was released on com-
pact disc. See Isley Brothers, The Isley Brothers -- The Com-
plete UA Sessions, (EMI 1991).
Michael Bolton is a singer/songwriter who gained popular-
ity in the late 1980s and early 1990s by reviving the soul
sound of the 1960s. Bolton has orchestrated this soul-music
revival in part by covering old songs such as Percy Sledge's
"When a Man Love a Woman" and Otis Redding's"(Sittin'
on the) Dock of the Bay." Bolton also has written his own hit
songs. In early 1990, Bolton and Goldmark wrote a song cal-
led "Love Is a Wonderful Thing." Bolton released it as a sin-
gle in April 1991, and as part of Bolton's album,"Time, Love
and Tenderness." Bolton's "Love Is a Wonderful Thing" fin-
ished 1991 at number 49 on Billboard's year-end pop chart.
On February 24, 1992, Three Boys Music Corporation filed
a copyright infringement action for damages against the
appellants under 17 U.S.C. SS 101 et seq. (1988). The parties
agreed to a trifurcated trial. On April 25, 1994, in the first
phase, the jury determined that the appellants had infringed
the Isley Brothers' copyright. At the end of second phase five
days later, the jury decided that Bolton's "Love Is a Wonder-
ful Thing" accounted for 28 percent of the profits from
"Time, Love and Tenderness." The jury also found that 66
percent of the profits from commercial uses of the song could
be attributed to the inclusion of infringing elements. On May
9, 1994, the district court entered judgment in favor of the
Isley Brothers based on the first two phases.
The deadline for post-trial motions was May 25, 1994. On
that day, the appellants filed a motion for judgment as a mat-
ter of law and a motion for new trial. The district court denied
the motions on August 11, 1994. On June 8, 1994, the appel-
lants filed a second motion for new trial based on newly dis-
covered evidence on the issue of copyright ownership. The
district court dismissed this motion as untimely.
On December 5, 1996, the district court adopted the find-
ings of the Special Master's Amended Report about the allo-
cation of damages (third phase). In the final judgment entered
against the appellants, the district court ordered Sony Music
to pay $4,218,838; Bolton to pay $932,924; Goldmark to pay
$220,785; and their music publishing companies to pay
$75,900. They timely appealed.
II. DISCUSSION
Proof of copyright infringement is often highly circumstan-
tial, particularly in cases involving music. A copyright plain-
tiff must prove (1) ownership of the copyright; and (2)
infringement -- that the defendant copied protected elements
of the plaintiff's work. See Smith v. Jackson , 84 F.3d 1213,
1218 (9th Cir. 1996) (citation omitted). Absent direct evi-
dence of copying, proof of infringement involves fact-based
showings that the defendant had "access" to the plaintiff's
work and that the two works are "substantially similar." Id.
Given the difficulty of proving access and substantial simi-
larity, appellate courts have been reluctant to reverse jury ver-
dicts in music cases. See, e.g., id. at 1221 (affirming a jury's
verdict for the defendants in a copyright infringement case
involving Michael Jackson and other musicians); Gaste v.
Kaiserman, 863 F.2d 1061, 1071 (2d Cir. 1988) (affirming a
jury's damages award against a defendant in a music copy-
right infringement case). Judge Newman's opinion in Gaste
nicely articulated the proper role for an appeals court in
reviewing a jury verdict:
The guiding principle in deciding whether to over-
turn a jury verdict for insufficiency of the evidence
is whether the evidence is such that, without weigh-
ing the credibility of the witnesses or otherwise con-
sidering the weight of the evidence, there can be but
one conclusion as to the verdict that reasonable men
could have reached.
Id. at 1066 (internal quotations omitted). In Arnstein v. Por-
ter, the seminal case about musical copyright infringement,
Judge Jerome Frank wrote:
Each of these two issues -- copying and improper
appropriation -- is an issue of fact. If there is a trial,
the conclusions on those issues of the trier of the
facts -- of the judge if he sat without a jury, or of
the jury if there was a jury trial -- bind this court on
appeal, provided the evidence supports those find-
ings, regardless of whether we would ourselves have
reached the same conclusions.
Arnstein v. Porter, 154 F.2d 464, 469 (2d Cir. 1946).
As a general matter, the standard for reviewing jury ver-
dicts is whether they are supported by "substantial evidence"
-- that is, such relevant evidence as reasonable minds might
accept as adequate to support a conclusion. See Poppell v.
City of San Diego, 149 F.3d 951, 962 (9th Cir. 1998). The
credibility of witnesses is an issue for the jury and is generally
not subject to appellate review. See Gilbrook v. City of West-
minster, 177 F.3d 839, 856 (9th Cir.), cert. denied, 120 S. Ct.
614 (1999).
We affirm the jury's verdict in this case in light of the stan-
dard of review and copyright law's "guiding principles."
Although we will address each of the appellant's arguments
in turn, we focus on access because it is the most difficult
issue in this case. Our decision is predicated on judicial defer-
ence -- finding that the law has been properly applied in this
case, viewing the facts most favorably to the appellees, and
not substituting our judgment for that of the jury.
A. Access
[1] Proof of access requires "an opportunity to view or to
copy plaintiff's work." Sid and Marty Krofft Television
Prods., Inc. v. McDonald's Corp., 562 F.2d 1157, 1172 (9th
Cir. 1977). This is often described as providing a "reasonable
opportunity" or "reasonable possibility" of viewing the plain-
tiff's work. 4 Melville B. Nimmer & David Nimmer, Nimmer
on Copyright, S 13.02[A], at 13-19 (1999); Jason v. Fonda,
526 F. Supp. 774, 775 (C.D. Cal. 1981), aff'd , 698 F.2d 966
(9th Cir. 1983). We have defined reasonable access as "more
than a `bare possibility.' " Jason, 698 F.2d at 967. Nimmer
has elaborated on our definition: "Of course, reasonable
opportunity as here used, does not encompass any bare possi-
bility in the sense that anything is possible. Access may not
be inferred through mere speculation or conjecture. There
must be a reasonable possibility of viewing the plaintiff's
work -- not a bare possibility." 4 Nimmer,S 13.02[A], at 13-
19. "At times, distinguishing a `bare' possibility from a `rea-
sonable' possibility will present a close question. " Id. at 13-
20.
[2] Circumstantial evidence of reasonable access is proven
in one of two ways: (1) a particular chain of events is estab-
lished between the plaintiff's work and the defendant's access
to that work (such as through dealings with a publisher or
record company), or (2) the plaintiff's work has been widely
disseminated. See 4 Nimmer, S 13.02[A], at 13-20-13-21; 2
Paul Goldstein, Copyright: Principles, Law, and Practice
S 8.3.1.1., at 90-91 (1989). Goldstein remarks that in music
cases the "typically more successful route to proving access
requires the plaintiff to show that its work was widely dissem-
inated through sales of sheet music, records, and radio perfor-
mances." 2 Goldstein, S 8.3.1.1, at 91. Nimmer, however,
cautioned that "[c]oncrete cases will pose difficult judgments
as to where along the access spectrum a given exploitation
falls." 4 Nimmer, S 13.02[A], at 13-22.
[3] Proof of widespread dissemination is sometimes accom-
panied by a theory that copyright infringement of a popular
song was subconscious. Subconscious copying has been
accepted since Learned Hand embraced it in a 1924 music
infringement case: "Everything registers somewhere in our
memories, and no one can tell what may evoke it . . . . Once
it appears that another has in fact used the copyright as the
source of this production, he has invaded the author's rights.
It is no excuse that in so doing his memory has played him
a trick." Fred Fisher, Inc. v. Dillingham, 298 F. 145, 147-48
(S.D.N.Y. 1924). In Fred Fisher, Judge Hand found that the
similarities between the songs "amount[ed] to identity" and
that the infringement had occurred "probably unconsciously,
what he had certainly often heard only a short time before."
Id. at 147.
[4] In modern cases, however, the theory of subconscious
copying has been applied to songs that are more remote in
time. ABKCO Music, Inc v. Harrisongs Music, Ltd. , 722 F.2d
988 (2d Cir. 1983) is the most prominent example. In
ABKCO, the Second Circuit affirmed a jury's verdict that for-
mer Beatle George Harrison, in writing the song "My Sweet
Lord," subconsciously copied The Chiffons' "He's So Fine,"
which was released six years earlier. See id. at 997, 999. Har-
rison admitted hearing "He's So Fine" in 1963, when it was
number one on the Billboard charts in the United States for
five weeks and one of the top 30 hits in England for seven
weeks. See id. at 998. The court found:"the evidence, stand-
ing alone, `by no means compels the conclusion that there
was access . . . it does not compel the conclusion that there
was not.' " Id. (quoting Heim v. Universal Pictures Co., 154
F.2d 480, 487 (2d Cir. 1946)). In ABKCO, however, the court
found that "the similarity was so striking and where access
was found, the remoteness of that access provides no basis for
reversal." Id. Furthermore, "the mere lapse of a considerable
period of time between the moment of access and the creation
of defendant's work does not preclude a finding of copying."
4 Nimmer, S 13.02[A], at 13-20 (citing ABKCO, 722 F.2d at
997-98).
The Isley Brothers' access argument was based on a theory
of widespread dissemination and subconscious copying. They
presented evidence supporting four principal ways that Bolton
and Goldmark could have had access to the Isley Brothers'
"Love is a Wonderful Thing":
(1) Bolton grew up listening to groups such as the Isley
Brothers and singing their songs. In 1966, Bolton and Gold-
mark were 13 and 15, respectively, growing up in Connecti-
cut. Bolton testified that he had been listening to rhythm and
blues music by black singers since he was 10 or 11,"appreci-
ated a lot of Black singers," and as a youth was the lead singer
in a band that performed "covers" of popular songs by black
singers. Bolton also testified that his brother had a "pretty
good record collection."
(2) Three disk jockeys testified that the Isley Brothers'
song was widely disseminated on radio and television stations
where Bolton and Goldmark grew up. First, Jerry Blavitt testi-
fied that the Isley Brothers' "Love is a Wonderful Thing" was
played five or six times during a 13-week period on the televi-
sion show, "The Discophonic Scene," which he said aired in
Philadelphia, New York, and Hartford-New Haven. Blavitt
also testified that he played the song two to three times a
week as a disk jockey in Philadelphia and that the station is
still playing the song today. Second, Earl Rodney Jones testi-
fied that he played the song a minimum of four times a day
during an eight to 14 to 24 week period on WVON radio in
Chicago, and that the station is still playing the song today.
Finally, Jerry Bledsoe testified that he played the song on
WUFO radio in Buffalo, and WWRL radio in New York was
playing the song in New York in 1967 when he went there.
Bledsoe also testified that he played the song twice on a tele-
vision show, "Soul," which aired in New York and probably
in New Haven, Connecticut, where Bolton lived.
(3) Bolton confessed to being a huge fan of the Isley
Brothers and a collector of their music. Ronald Isley testified
that when Bolton saw Isley at the Lou Rawls United Negro
College Fund Benefit concert in 1988, Bolton said,"I know
this guy. I go back with him. I have all his stuff. " Angela
Winbush, Isley's wife, testified about that meeting that Bolton
said, "This man needs no introduction. I know everything he's
done."
(4) Bolton wondered if he and Goldmark were copying a
song by another famous soul singer. Bolton produced a work
tape attempting to show that he and Goldmark independently
created their version of "Love Is a Wonderful Thing." On that
tape of their recording session, Bolton asked Goldmark if the
song they were composing was Marvin Gaye's "Some Kind
of Wonderful."1 The district court, in affirming the jury's ver-
dict, wrote about Bolton's Marvin Gaye remark:
This statement suggests that Bolton was contemplat-
ing the possibility that the work he and Goldmark
were creating, or at least a portion of it, belonged to
someone else, but that Bolton wasn't sure who it
belonged to. A reasonable jury can infer that Bolton
mistakenly attributed the work to Marvin Gaye,
when in reality Bolton was subconsciously drawing
on Plaintiff's song.
The appellants contend that the Isley Brothers' theory of
access amounts to a "twenty-five-years-after-the-fact-
subconscious copying claim." Indeed, this is a more attenu-
ated case of reasonable access and subconscious copying than
ABKCO. In this case, the appellants never admitted hearing
the Isley Brothers' "Love is a Wonderful Thing. " That song
never topped the Billboard charts or even made the top 100
for a single week. The song was not released on an album or
compact disc until 1991, a year after Bolton and Goldmark
wrote their song. Nor did the Isley Brothers ever claim that
Bolton's and Goldmark's song is so "strikingly similar" to the
Isley Brothers' that proof of access is presumed and need not
be proven.
[5] Despite the weaknesses of the Isley Brothers' theory of
reasonable access, the appellants had a full opportunity to
present their case to the jury. Three rhythm and blues experts
(including legendary Motown songwriter Lamont Dozier of
Holland-Dozier-Holland fame) testified that they never heard
of the Isley Brothers' "Love is a Wonderful Thing." Further-
more, Bolton produced copies of "TV Guide" from 1966 sug-
gesting that the television shows playing the song never aired
in Connecticut. Bolton also pointed out that 129 songs called
"Love is a Wonderful Thing" are registered with the Copy-
right Office, 85 of them before 1964.
[6] The Isley Brothers' reasonable access arguments are not
without merit. Teenagers are generally avid music listeners. It
is entirely plausible that two Connecticut teenagers obsessed
with rhythm and blues music could remember an Isley Broth-
ers' song that was played on the radio and television for a few
weeks, and subconsciously copy it twenty years later. Further-
more, Ronald Isley testified that when they met, Bolton said,
"I have all his stuff." Finally, as the district court pointed out,
Bolton's remark about Marvin Gaye and "Some Kind of
Wonderful" indicates that Bolton believed he may have been
copying someone else's song.
[7] Finally, with regard to access, we are mindful of Judge
Frank's words of caution in Arnstein v. Porter : "The judge
characterized plaintiff's story as `fantastic'; and in the light of
the references in his opinion to defendant's deposition, the
judge obviously accepted the defendant's denial of access and
copying . . . . [Y]et plaintiff's credibility, even as to those
improbabilities, should be left to the jury." Arnstein, 154 F.2d
at 469. In this case, Judge Baird heeded Judge Frank's admo-
nition:
[T]his Court is not in a position to find that the only
conclusion that a reasonable jury could have reached
is that Defendants did not have access to Plaintiff's
song. One must remember that the issue this Court
must address is not whether Plaintiff has proven
access by a preponderance of evidence, but whether
reasonable minds could find that Defendants had a
reasonable opportunity to have heard Plaintiff's
song before they created their own song.
Although we might not reach the same conclusion as the jury
regarding access, we find that the jury's conclusion about
access is supported by substantial evidence. We are not estab-
lishing a new standard for access in copyright cases; we are
merely saying that we will not disturb the jury's factual and
credibility determinations on this issue.
B. Substantial Similarity
[8] Under our case law, substantial similarity is inextricably
linked to the issue of access. In what is known as the "inverse
ratio rule," we "require a lower standard of proof of substan-
tial similarity when a high degree of access is shown." Smith,
84 F.3d at 1218 (citing Shaw v. Lindheim, 919 F.2d 1353,
1361-62 (9th Cir. 1990); Krofft, 562 F.2d at 1172). Further-
more, in the absence of any proof of access, a copyright plain-
tiff can still make out a case of infringement by showing that
the songs were "strikingly similar." See Smith, 84 F.3d at
1220; Baxter v. MCA, Inc., 812 F.2d 421, 423, 424 n.2 (9th
Cir. 1987).
[9] Proof of the substantial similarity is satisfied by a two-
part test of extrinsic similarity and intrinsic similarity. See
Krofft, 562 F.2d at 1164. Initially, the extrinsic test requires
that the plaintiff identify concrete elements based on objective
criteria. See Smith, 84 F.3d at 1218; Shaw, 919 F.2d at 1356.
The extrinsic test often requires analytical dissection of a
work and expert testimony. See Apple Computer, Inc v.
Microsoft Corp., 35 F.3d 1435, 1442 (9th Cir. 1994). Once
the extrinsic test is satisfied, the factfinder applies the intrinsic
test. The intrinsic test is subjective and asks "whether the
ordinary, reasonable person would find the total concept and
feel of the works to be substantially similar." Pasillas v.
McDonald's Corp., 927 F.2d 440, 442 (9th Cir. 1991) (inter-
nal quotations omitted).
[10] We will not second-guess the jury's application of the
intrinsic test. See Krofft 562 F.3d at 1166 ("Since the intrinsic
test for expression is uniquely suited for determination by the
trier of fact, this court must be reluctant to reverse it.") (cita-
tions omitted). Furthermore, we will not reverse factual deter-
minations regarding the extrinsic test absent a clearly
erroneous application of the law. See id. It is well settled that
a jury may find a combination of unprotectible elements to be
protectible under the extrinsic test because " `the over-all
impact and effect indicate substantial appropriation.' " Id. at
1169 (quoting Malkin v. Dubinsky, 146 F. Supp. 111, 114
(S.D.N.Y. 1956)).
1. Evidence of Substantial Similarity
[11] Bolton and Goldmark argue that there was insufficient
evidence of substantial similarity because the Isley Brothers'
expert musicologist, Dr. Gerald Eskelin, failed to show that
there was copying of a combination of unprotectible elements.
On the contrary, Eskelin testified that the two songs shared a
combination of five unprotectible elements: (1) the title hook
phrase (including the lyric, rhythm, and pitch); (2) the shifted
cadence; (3) the instrumental figures; (4) the verse/chorus
relationship; and (5) the fade ending. Although the appellants
presented testimony from their own expert musicologist,
Anthony Ricigliano, he conceded that there were similarities
between the two songs and that he had not found the combi-
nation of unprotectible elements in the Isley Brothers' song
"anywhere in the prior art." The jury heard testimony from
both of these experts and "found infringement based on a
unique compilation of those elements." We refuse to interfere
with the jury's credibility determination, nor do we find that
the jury's finding of substantial similarity was clearly errone-
ous.
2. Independent Creation
[12] Bolton and Goldmark also contend that their witnesses
rebutted the Isley Brothers' prima facie case of copyright
infringement with evidence of independent creation. By estab-
lishing reasonable access and substantial similarity, a copy-
right plaintiff creates a presumption of copying. The burden
shifts to the defendant to rebut that presumption through proof
of independent creation. See Granite Music Corp. v. United
Artists Corp., 532 F.2d 718, 721 (9th Cir. 1976).
[13] The appellants' case of independent creation hinges on
three factors: the work tape demonstrating how Bolton and
Goldmark created their song, Bolton and Goldmark's history
of songwriting, and testimony that their arranger, Walter
Afanasieff, contributed two of five unprotectible elements that
they allegedly copied. The jury, however, heard the testimony
of Bolton, Goldmark, Afanasieff, and Ricigliano about inde-
pendent creation. The work tape revealed evidence that Bol-
ton may have subconsciously copied a song that he believed
to be written by Marvin Gaye. Bolton and Goldmark's history
of songwriting presents no direct evidence about this case.
And Afanasieff's contributions to Bolton and Goldmark's
song were described by the appellants' own expert as "very
common." Once again, we refuse to disturb the jury's deter-
mination about independent creation. The substantial evi-
dence of copying based on access and substantial similarity
was such that a reasonable juror could reject this defense.
3. Inverse-Ratio Rule
Although this may be a weak case of access and a circum-
stantial case of substantial similarity, neither issue warrants
reversal of the jury's verdict. An amicus brief on behalf of the
recording and motion picture industries warns against water-
ing down the requirements for musical copyright infringe-
ment. This case presents no such danger. The Ninth Circuit's
inverse-ratio rule requires a lesser showing of substantial sim-
ilarity if there is a strong showing of access. See Smith, 84
F.3d at 1218. In this case, there was a weak showing of
access. We have never held, however, that the inverse ratio
rule says a weak showing of access requires a stronger show-
ing of substantial similarity. Nor are we redefining the test of
substantial similarity here; we merely find that there was sub-
stantial evidence from which the jury could find access and
substantial similarity in this case.
C. Sufficiency of the Deposit Copy
The appellants argue that the district court did not have
jurisdiction over this case because the Isley Brothers failed to
register a complete copy of the song upon which the lawsuit
was based. Although the 1909 Copyright Act requires the
owner to deposit a "complete copy" of the work with the
copyright office, our definition of a "complete copy" is broad
and deferential: "Absent intent to defraud and prejudice, inac-
curacies in copyright registrations do not bar actions for
infringement." Harris v. Emus Records Corp. , 734 F.2d 1329,
1335 (9th Cir. 1984) (citations omitted).
Bolton and Goldmark argue that in 1964 the Isley Brothers
deposited sheet music ("deposit copy") of "Love is a Wonder-
ful Thing" that differed from the recorded version of the song.
Furthermore, they claimed that the deposit copy does not
include the majority of the musical elements that were part of
the infringement claim. At trial, the Isley Brothers' expert, Dr.
Eskelin, testified that the deposit copy included all of the
song's essential elements such as the title hook, chorus, and
pitches. Dr. Eskelin even played the deposit copy for the jury
on the keyboard. We refuse to disturb the jury's finding that
the Isley Brothers deposited a "complete copy " because (1)
there was no intent to defraud and prejudice and (2) any inac-
curacies in the deposit copy were minor and do not bar the
infringement action.
D. Attribution of Profits
[14] Sony Music claims that the district court improperly
applied an assumption that all profits from Bolton and Gold-
mark's song go to the Isley Brothers, and that no evidence
supported the jury's apportionment of profits. A successful
copyright plaintiff is allowed to recover only those profits that
are "attributable to infringement." 17 U.S.C.S 504(b) (1994).
"In establishing the infringer's profits, the copyright owner is
required to present proof only of the infringer's gross revenue,
and the infringer is required to prove his or her deductible
expenses and the elements of profit attributable to factors
other than the copyrighted work." Id. See also Cream
Records, Inc. v. Jos. Schlitz Brewing Co., 754 F.2d 826, 828
(9th Cir. 1985) (holding that when all profits do not clearly
derive from the infringing material, the copyright owner is not
entitled to recover all of the profits); Gaste , 863 F.2d at 1070
(finding that where there is "imprecision in the computation
of expenses, a court should err on the side of guaranteeing the
plaintiff a full recovery"). Thus, the statutory burden of proof
lies with Sony Music to prove what percentage of their profits
were not attributable to copying the Isley Brothers'"Love is
a Wonderful Thing."
Sony Music presented evidence that Bolton's "Love Is a
Wonderful Thing" produced only 5-10% of the profits from
his album, "Time, Love and Tenderness," and that the song's
infringing elements resulted in only 10-15% of the profits
from the song. The Isley Brothers, however, attacked the
credibility of one of Sony Music's experts. Furthermore, they
presented evidence that Bolton's infringing song was the
album's lead single, that it was released 19 days before the
album, and that Bolton engaged in telephone promotion of the
song. The jury found that 28% of the album's profits derived
from the song, and that 66% of the song's profits resulted
from infringing elements.
[15] We affirm the jury's apportionment of the profits for
several reasons. First, the jury instructions adequately con-
veyed the burden of proof. Second, the burden of proof was
on Sony Music, and the jury chose not to believe Sony
Music's experts. Finally, a jury verdict apportioning less than
100% of the profits but more than the percentage estimates of
Sony Music's experts does not represent clear error.
E. Deduction of Tax Liability
Sony Music also argues that the district court erred in
allowing Bolton and Goldmark, but not Sony Music, to
deduct income taxes due to profits from the album. Whether
income taxes are considered "deductible expenses " under
S 504(b) is an issue of first impression in this circuit. The
Supreme Court held that willful infringers could not deduct
income taxes, but it left open the possibility that non-willful
infringers could deduct their income taxes from the infringing
profits. See L.P. Larson, Jr., Co. v. Wm. Wrigley, Jr., Co., 277
U.S. 97, 99-100 (1928). The circuits are split over whether
non-willful infringers such as Bolton, Goldmark, and Sony
Music can deduct income taxes from their infringing profits.
Compare In Design v. K-Mart Apparel Corp., 13 F.3d 559,
567 (2d Cir. 1994) (allowing the deduction of income taxes)
with Schnadig Corp. v. Gaines Mfg. Co., Inc., 620 F.2d 1166,
1169-70 (6th Cir. 1980) (not allowing the deduction of
income taxes).
The Second Circuit allowed the deduction of income taxes
because if infringers are liable for pre-tax profits, they may
end up paying more money than they ever received. See In
Design, 13 F.3d at 567. Under the Second Circuit's rule, the
infringer receives a windfall by (1) paying a smaller damages
award and (2) deducting the entire, pre-tax award from gross
income on a subsequent tax return. The Sixth Circuit rejected
the deduction of income taxes because the increased pre-tax
profits paid to the copyright holder will be balanced out by an
eventual tax refund based on the pre-tax award. See Schnadig,
620 F.2d at 1169-70. Under the Sixth Circuit's rule, the copy-
right holder receives a windfall by receiving a larger, pre-tax
award.
During the third phase of this trial, the district court
adopted the findings of the special master's report regarding
the deduction of income taxes. The district court followed the
Second Circuit rule and allowed Bolton and Goldmark, as
non-willful infringers, to deduct the income taxes and man-
agement fees that they paid relating to the infringing song.
The district court, however, refused to allow Sony Music to
deduct its Net Operating Loss Carry-forward (NOL) because
the NOL did not have a "concrete financial impact."
We uphold the district court's decision to allow non-willful
infringers to deduct income taxes, but not NOL. In this case,
Bolton and Goldmark actually paid income taxes and manage-
ment fees on the infringing profits. Sony Music, however,
never actually paid income taxes on its infringing profits.
Rather, Sony Music claimed it offset nearly $1.7 million in
taxes on the infringing profits against its parent company's
NOL. No court has ever found that NOL is a deductible
expense under S 504(b). Furthermore, we find that the district
court's distinctions between taxes actually paid and taxes not
actually paid was a fair one. Thus, we affirm the district
court's calculation of a $4,218,838 damages award against
Sony Music.
F. Second New Trial Motion
Finally, Bolton and Goldmark claim that the district court
erred in rejecting their second motion for new trial. The dis-
trict court's denial of a motion for a new trial pursuant to Fed-
eral Rule of Civil Procedure 60(b) is reviewed for an abuse
of discretion. See Browning-Ferris Indus. v. Kelco Disposal,
Inc., 492 U.S. 257, 278 (1989); Scott v. Ross, 140 F.3d 1275,
1281 (9th Cir. 1998). The abuse of discretion standard applies
particularly when the district court's denial is based on the
motion's untimeliness. See E. & J. Gallo Winery v. Gallo Cat-
tle Co., 967 F.2d 1280, 1294-96 (9th Cir. 1992).
Bolton and Goldmark's second motion for a new trial was
based on the discovery of new evidence that disputed the Isley
Brothers' claim of authorship. A day before the deadline for
post-trial motions, the appellees discovered evidence alleging
that the Turkcords, a group that played with the Isley Brothers
in the mid-1960s, claimed to have written the 1964 song,
"Love is a Wonderful Thing." Bolton and Goldmark did not
immediately notify the district court of this new evidence.
Instead, fourteen days after the deadline for post-trial motions
had passed, they filed an additional motion for new trial. The
district court rejected the second motion for new trial as
untimely filed.
We affirm the district court's denial of the second motion
for new trial because the evidence, if true, goes at most to the
weight and credibility of the evidence before the jury. At trial,
Ronald Isley claimed to have written the song with the
deceased guitar legend, Jimi Hendrix. (As a young man, Hen-
drix played in the Isley Brothers' band.) The Turkcords'
claims of authorship are dubious for several reasons. The
Turkcords knew about the re-release of "Love is a Wonderful
Thing" by United Artists in 1991, yet they claimed that the
Isley Brothers had agreed to share the song's royalties with
them only after hearing about the damages award in this case
on "Inside Edition." Furthermore, Bolton and Goldmark knew
about this new evidence before the deadline for the post-trial
motions, yet they did not immediately notify the district court.
Even if the Turkcords' claims of authorship are true, a new
trial is not warranted in the interests of justice because the
Isley Brothers' copyright ownership is not jeopardized. Regis-
tration is prima facie evidence of the validity of a copyright.
See 17 U.S.C. S 410(c) (1994). This presumption can be
rebutted by the defendant's showing that the plaintiff's work
is not original. See North Coast Indus. v. Jason Maxwell, Inc.,
972 F.2d 1031, 1033 (9th Cir. 1992). North Coast 's definition
of originality is broad: " `All that is needed to satisfy both the
Constitution and the statute is that the "author " contributed
something more than a "merely trivial" variation, something
recognizably "his own." Originality in this context means "lit-
tle more than a prohibition of actual copying." ' " Id. (quoting
Krofft, 562 F.2d at 1163 n.5 (quoting Alfred Bell & Co. v.
Catalda Fine Arts, 191 F.2d 99, 102-03 (2d Cir. 1951))). See
also Kamar Int'l Inc. v. Russ Berrie and Co., 657 F.2d 1059,
1061 (9th Cir. 1981) (employing a broad definition of origi-
nality relating to toy stuffed animals).
In this case, the Isley Brothers undoubtedly contributed
something original to "Love is a Wonderful Thing. " Their
proteges, the Turkcords, purportedly wrote the song, then
gave the Isley Brothers' permission to record it after the voice
of the Turkcords' lead singer allegedly "cracked. " Members
of the Turkcords allegedly sang back-up on the record. Yet
the Turkcords never copyrighted their song. They relied on
the Isley Brothers' alleged promise to share the royalties with
them.
The district court did not abuse its discretion in rejecting
Bolton and Goldmark's second motion for a new trial based
on this evidence. The Turkcords' claims of authorship would
not have affected the outcome of the case and at most go to
the weight and credibility of the evidence. Bolton and Gold-
mark's second motion was a last-ditch attempt to discredit the
jury's verdict. The district court heard all of the evidence in
this case, instructed the jury on the applicable law, yet refused
to reverse the jury's verdict pursuant to motion for a judgment
as a matter of law. Having found that the law was properly
applied in this case, we leave the district court's decisions and
the jury's credibility determinations undisturbed.
AFFIRMED./dcs/programs/www/cgi-prod/getfile.sh[51]: rmove: not found
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FOOTNOTES
1 Gaye recorded "Some Kind of Wonderful" after it had been made
famous by The Drifters. See Marvin Gaye, Some Kind of Wonderful, on
In the Groove (Motown 1968). Marvin Gaye also referred to the song's
chorus, "She's some kind of wonderful," in his song, "Too Busy Thinking
About My Baby." See Marvin Gaye, Too Busy Thinking About My Baby,
on MPG, (Motown 1969).