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IP Law Daily, COPYRIGHT—S.D. Fla.: Sony wins partial victory over Bang Energy for its social media campaign, (Sep 19, 2022)

Law Firms Mentioned:Quarles, Brady LLP | Stroock Stroock & Lavan LLP
Organizations Mentioned:Arista Music | Arista Records LLC | Arista Records, LLC | LaFace Records LLC | Records Label, LLC | Sony Music Entertainment | Sony Music Entertainment US Latin LLC | Sony Music Entertainment, Inc. | Stroock & Stroock & Lavan, LLP | Vital Pharmaceuticals, Inc. | Vital Pharmaceuticals, Inc., d/b/a Bang Energy | Volcano Entertainment III LLC | Zomba Recording LLC

By Matthew Hersh, J.D.

The record label prevails on direct and vicarious infringement, but not on contributory infringement.

Sony Music was entitled to summary judgment on its contention that a popular sports drink company directly and vicariously infringed its sound record ...

By Matthew Hersh, J.D.

The record label prevails on direct and vicarious infringement, but not on contributory infringement.

Sony Music was entitled to summary judgment on its contention that a popular sports drink company directly and vicariously infringed its sound recordings as part of a social media advertising campaign, the federal district court in Fort Lauderdale, Florida, has held. But the court, addressing one of three cases filed recently by major record labels against the sports drink maker, rejected the record label’s contention that the company was contributory liable for the social media posts of its associated influencers (Sony Music Entertainment v. Vital Pharmaceuticals, Inc., September 14, 2022, Dimitrouleas, W.).

The lawsuit involves online advertising for Bang Energy, a company that sells sports drinks, nutrition supplements, apparel, and accessories. Since 2017, Bang has sold over 100 million units of Bang Energy drinks and generated over $1 billion gross revenue, the court found, making Bang Energy the third-largest selling energy drink in the United States. Bang Energy drinks, the court noted, are currently sold in all 50 states nationwide through retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience stores, and food-service customers.

The specific target of Sony’s lawsuit was Bang’s use of social media to promote its product. Bang utilizes the internet to market through various social media platforms, web campaigns, and influencers. In addition to its own social media postings, the court observed, Bang also engages popular social media influencers to promote and market Bang Energy and its related products. Bang agrees to pay the influencers a 15% commission from its own profits, the court found, for any Bang Energy products that are purchased using that Influencer’s promotional code. Critically, many of these social media postings—those directly posted by Bang as well as those posted by its influencers—use sound recordings owned by Sony. Although Sony’s license agreement with many social media companies allows the upload of its music for personal use, it prohibits the commercial use of that music.

Sony moved for summary judgment on several of its claims, leading to this opinion.

Direct infringement. The court easily granted summary judgment for Sony as to Bang’s direct infringement. Bang did not dispute that it had directly uploaded approximately 264 videos utilizing portions of Sony-controlled works. Bang attempted to create a factual dispute over 22 of those videos, contending that some of the works were “remixes, contain[ed] a different tempo, [were] sung by an artist different than the artist in the original work that [Sony] produced, [were] not part of the uploaded video, [were] of a very short duration, and/or [were] unrecognizable in the video.” But this was only a boilerplate list, the court held, and it did not specify which argument applied to which video. That would not do to defeat summary judgment.

Secondary infringement. The court issued a split decision on secondary liability, finding that the evidence supported summary judgment as to vicarious liability but not as to contributory liability.

As to contributory infringement, the court held, Sony had not met its burden to show that Bang contributed to its influencers’ infringement. The critical issue here was knowledge. To be sure, the court observed, Bang was aware that its influencers uploaded videos containing Sony-controlled content. “But knowledge of the videos is not the same as knowledge of the infringement,” the court noted, “and there is evidence from which a reasonable juror could infer Bang reasonably believed that the [i]nfluencers’ use of [Sony’s] copyrighted works was not prohibited.” To be sure, the court noted, Sony had submitted evidence from which a reasonable juror could conclude that Bang did have such knowledge, but that was not enough to grant summary judgment. And to the extent that Sony did submit better evidence, the court observed, it did so for the first time only its reply brief—too late to be considered here. Notably, this was the second time that the court in Fort Lauderdale directed such criticism at a record label. In a ruling this past July, the court rejected summary judgment as to part of Universal Music’s secondary infringement claim against Bang for the same reasons.

As to vicarious liability, however, the court found that summary judgment in Sony’s favor was appropriate. Bang plainly had “the right and ability to supervise, approve, reject, and remove” influencer-posted videos, the court found. Indeed, the court noted, Bang’s terms with the influencers required those influencers to turn over ownership of their videos to Bang as a condition of compensation. Moreover, the evidence also showed that Bang achieved a direct financial benefit from these videos, the court noted, as Bang spends tens of millions of dollars annually on its promotion through social media, and Bang’s own internal records showed that popular music such as Sony recordings give their influencer posts “the WOW factor.” Summary judgment was therefore appropriate on this issue.

Affirmative defenses. The court rendered a similarly split decision on Bang’s affirmative defenses. As to fair use, the court found, Sony was entitled to summary judgment. Nothing about Bang’s social media campaign was transformational, the court held. Bang argued that the social media campaign “provides distinct entertainment value from the songs.” But that was not enough, the court found, as “characterizing the copyrighted works as providing different entertainment value does not render the use transformative.” Nor did any of the other fair use factor support fair use, the court observed.

But Sony was not entitled to summary judgment, the court held, as to Bang’s recklessness or willfulness as to its social media conduct—a critical factor in establishing the level of statutory damages. Bang had submitted credible evidence, the court found, that Bang had a reasonable belief that its use of Sony’s works was not barred by law, making the issue appropriate for determination by a jury.

Profits. Finally, the court rejected Bang’s effort to exclude Sony’s lost profits from the calculation of any damages. Bang argued that Sony had not tendered enough evidence to show a causal connection between its use of Sony music and Sony’s lost profits. But Sony had put forward evidence of licensing agreements establishing what licensees have paid for similar uses, the court observed, and that was enough for Sony to bring the issue to a jury.

The Case is No. 1:21-cv-22825-WPD.

Attorneys: Brendan Stuart Everman (Stroock Stroock & Lavan LLP) for Sony Music Entertainment. Joseph Thomas Kohn (Quarles, Brady LLP) for Vital Pharmaceuticals, Inc. d/b/a Bang Energy and Jack Owoc.

Companies: Sony Music Entertainment; Sony Music Entertainment US Latin LLC; Zomba Recording LLC; Arista Music; Arista Records LLC; LaFace Records LLC; Records Label, LLC; Volcano Entertainment III LLC; Vital Pharmaceuticals, Inc., d/b/a Bang Energy

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