Drake (Kevin Winter/AMA2011/Getty Images for AMA)

The rapper has fired back at a woman he admits to having a “personal relationship” with that was neither “romantic” nor business,” who claims she helped cut the tune “Marvins Room” and received squat for her efforts.

In court documents filed in response to her lawsuit and obtained by E! News, Drake insists that he did give her what she deserved…

MORE: DMX Slams Drake, Haircut and All

He mentioned her name in the liner notes for Take Care!

Ericka Lee sued Drake on Feb. 2 for a cut of the royalties from the popular song, insisting she helped write and compose “Marvins Room,” and recorded both the hook and a spoken-word monologue that can be heard on the track.

Drake “denies that [Lee] ever had any rights to co-writer royalties, and denies the characterization that [Lee] was ‘excluded’ from something she had no right to,” states the rapper’s nine-page response. Lee is “not a co-writer of the song and…she is not entailed to writer credit and money.”

View Drake’s response

Lee’s attorney, Douglas Johnson, tells E! News that Drake’s response is “total nonsense.”

“It’s just not true and I am very surprised by his statements,” he said, adding, “This will all be taken care of in court.”

Johnson said that the case is still in the discovery, evidence-gathering  phase and that depositions will be taken eventually.

—Reporting by Baker Machado

Read more: http://www.eonline.com/news/drake_fires_back_marvins_room_suit_says/302733#ixzz1q9sKsVqN

1:29 PM PDT 3/15/2012 by Eriq Gardner, The Hollywood Reporter

Another major class-action lawsuit has just been filed on the digital royalties front.

The Temptations, the pioneering male vocal group from the 1960s, is suing Universal Music in federal court in California, seeking millions of dollars after allegedly being cheated out of revenue from digital downloads and ringtones.

Otis Williams, one of the original members of The Temptations, and Ron Tyson, one of the later members, are the latest to join a growing chorus of musicians who are going to court with allegations that record labels have stiffed musicians by accounting for downloads off of iTunes as “sales” rather than “licenses.”

There are more than a dozen of these types of lawsuits pending in courts, including eight that were filed in the past 12 months. The latest challenge, similar to what has come already, seeks to punish UMG for attempting to get away with paying pennies on the dollar when artists believe they should be making dimes on the dollar. The cases are potentially worth hundreds of millions of dollars to the music industry. UMG is about to go to trial with F.B.T. Productions, producers for Eminem.

The new lawsuit from The Temptations, which covers other artists similarly situated, cites the F.B.T. case. According to the complaint:

“UMG’s Standard Recording Agreements are, in every material way, the same as those at issue in F.B.T. Prods. Accordingly, Plaintiffs here allege that the digital download income received by UMG from Digital Content Providers are based on ‘licenses’ and not ‘sales,’ as those terms are defined in UMG’s Standard Recording Agreements with these Providers. Just as in F.B.T. Prods., UMG has not properly accounted for the appropriate amount of royalties owed to Plaintiffs and Class members.”

The complaint, filed Thursday and obtained by The Hollywood Reporter, goes so far as to list out all of UMG’s recording artists, including such superstars as James Brown, Eric Clapton, Guns N’ Roses, Kiss, Nirvana, The Police and The Who.

The lawsuit also provides stats like Apple’s iTunes store generating $1.4 billion in revenue in second-quarter 2011, up from $1.1 billion the previous year. The class action also goes after revenue from other digital download providers as well, including Amazon.com, Napster, Rhapsody, Zune and eMusic as well as ringtone providers by such wireless companies as AT&T, Verizon, Sprint and T-Mobile.

Like some of the other lawsuits, this one also quotes the late Steve Jobs, who once published a piece titled “Thoughts on Music,” which included the line, “[S]ince Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the ‘big four’ music companies: Universal, Sony BMG, Warner, and EMI.”

UMG, though, the largest of the record labels, is said to be responsible for 80 percent of downloads in the U.S.

As for The Temptations, the complaint asserts that their relationship with UMG is guided by a 1993 agreement that provides 14 to 16 percent of revenue from “sales” after packaging deductions, compared with 50 percent from licensing income. That’s a big difference.

The group, represented by a whopping 13 attorneys at five law firms, is bringing causes of action that include breach of contract and unfair competition and seeking a declaratory judgment, an injunction and damages to be proved at trial.

Universal has been contacted for comment, and if we hear any response, we’ll update.

E-mail: eriqgardner@yahoo.com

Twitter: @eriqgardner

http://www.hollywoodreporter.com/thr-esq/temptations-itunes-lawsuits-300733

1:46 AM PST 2/3/2012 by Matthew Belloni

(l-r) Kim Sledge Allen, Kathy Sledge Lightfoot, Debbie (Debra) Sledge & Joni (Joan) Sledge

The members of the musical group Sister Sledge have banded together with an Oscar-nominated actress and songwriter to file a major class action lawsuit against Warner Music Group alleging they have been cheated out of millions of dollars based on improper calculations of revenue from digital music sales.

Debra Sledge, Joan Sledge, Kathy Sledge Lightfoot, Kim Sledge Allen and Ronee Blakely filed suit in federal court in San Francisco on Thursday claiming that the music giant’s method for calcluating digital music purchases as “sales” rather than “licenses” on songs such as the band’s chart-topping “We Are Family” cheats artists out of money due to them under recording contracts, many of them signed decades before music was sold digitally via iTunes, Amazon, ringtones and other outlets.

“Rather than paying its recording artists and producers the percentage of net receipts it received–and continues to receive–from digital content providers for ‘licenses,’ Warner wrongfully treats each digital download as a ‘sale’ of a physical phonorecord…which are governed by much lower royalty provisions than ‘licenses’ in Warner’s standard recording agreements.”

If that claim sounds familiar, it’s one of the most hotly-disputed issues in the music business. Songwriters typically make much less money when an album is “sold” than they do when their music is “licensed” (the rationale derives from the costs that used to be associated with the physical production of records). But record labels have taken the position that music sold via such digital stores as iTunes should be counted as “sales” rather than licenses.

The difference in revenue can be significant. The Sister Sledge members claim their record deal promises 25 percent of revenue from licenses but much less from sales. Blakely, who is an Oscar nominated actress (Nashville) as well as songwriter and performer, alleges that her deal with WMG grants her 50 percent of licenses, much more than the rate WMG is paying based on its calculation of sales.

Eminem‘s publisher brought a nearly identical claim against Universal Music Group and won a fairly important decision at the 9th Circuit Court of Appeals in 2010 (the Supreme Court declined to hear an appeal). The 9th Circuit ruled that iTunes’ contract unambiguously provided that the music was licensed. At the time, UMG downplayed the ruling as specific to Eminem’s contract, but music lawyers believe more of these cases are going to be filed by legacy artists (newer contracts have specific language precluding such suits).

And now we have a full-fledged, 35-page class action lawsuit seeking to bring together many artists in one proceeding, calling Warner Music’s actions “wide-spread and calculated.” Hundreds of millions of dollars in revenue is at stake, the complaint alleges. It should be interesting to see which artists come forward.

Sister Sledge also claims WMG has improperly kept revenue from “reserves,” which is money withheld to offset losses related to unsold records. The plaintiffs point out there’s no such thing as unsold inventory in a digital universe.

The suit was filed by four firms: Pearson Simon Warshaw & Penny in San Francisco, Hausfeld in Washington DC, and Kiesel Boucher Larson and Johnson & Johnson in Beverly Hills.

Email: Matthew.Belloni@thr.com

Twitter:@THRMattBelloni

http://www.hollywoodreporter.com/thr-esq/sister-sledge-files-class-action-286903

10:03 PM PST 2/22/2012 by Eriq Gardner

Over the last few months, the music industry has been rocked by multiple lawsuits alleging that artists such as Kenny Rogers, Sister Sledge, Rob Zombie and others have been cheated out of substantial money from the improper calculation of revenues from digital music. The plaintiffs in these cases assert that the music giants have been wrongfully treating digital music purchases as “sales” rather than “licenses,” and thus only sharing 10-20 percent of revenue instead of a near 50-50 split they believe is owed.

Let’s assume the plaintiffs are right. What comes next? Do record labels have any way to limit the damage and what kind of money is at stake?

The answer is coming soon. In 2010, in a breakthrough case involving Eminem‘s producers, F.B.T. Productions, the 9th Circuit Court of Appeals largely blessed the “license” interpretation, remanding the case down to the district court level to figure out what was owed by Aftermath Records, a subsidiary of Universal Music Group.

At an upcoming jury trial, the two sides will fuss over exactly how much money is due to Eminem’s production team. In advance, THR has obtained the audit report prepared by the plaintiff’s accounting expert that F.B.T. hopes to showcase before a jury. The report, which is being vigorously disputed by the defendants, represents millions of dollars in claimed revenue from digital downloads. It also shows the other ways that record labels supposedly withhold too much income from artists, from overstating the costs of advertising on TV to not sharing the proceeds of litigation winnings.

The trial is scheduled for April 4.

In preparation, both sides investigated the spoils of Eminem’s lucrative career. Many of these audit reports remain under seal. But we’ve gotten ahold of one audit report, prepared by plaintiff’s auditing expert Gary Cohen, which covers the period between July 1, 2005 and December 31, 2009. It represents the years when iTunes first burgeoned as an income source for the record industry. Here’s a look at what F.B.T. claims is owed by Aftermath for this time period:

As you can see above, the plaintiffs believe that the difference in treating digital music as a “sale” instead of a “license” during this time period is worth $3,810,256. This potentially understates the damages. That’s because the figure only represents only one slice. Foreign licensing is listed in a separate column ($131,749) and has become controversial. More on that issue in a moment.

You’ll also see above that the auditor turned up all sorts of underreported income apart from the digital music issue. It’s claimed, for example, that Aftermath held back too much on vinyl sales of albums including “Slim Shady,” “Marshall Mathers,” “Eminem Show,” “8 Mile Soundtrack,” and “Curtain Call.” The record label also allegedly made accounting errors on units sold at U.S. military bases; allegedly withheld proceeds from litigation wins against Kazaa, Napster, and YouTube; allegedly messed up royalty calculations on tracks said to contain third party contributor like Dido or sampled work from Aerosmith; allegedly deducted too much for Dr. Dre‘s production work and the cost of his chartered air travel; and allegedly overstated the cost of doing TV ad campaigns on the “Curtain Call” album.

That’s just a start. You’ll also see that Aftermath held onto more than $2 million to pay its own legal costs in this very dispute. Keep in mind that this audit report only includes the time period between 2005-2009. We also understand that audit reports have also been prepared for the periods of 2002-2005 and 2010-2011. Against the defendants’ objections, F.B.T. also is getting a large share on Eminem’s latest releases, Recovery and Relapse, even though in 2009, after the litigation was filed, Eminem and Aftermath signed a new recording contract that explicitly pegged new royalty rates on sales and licenses of his new work. (Eminem was given a raise in his percentage.)

So how is Aftermath responding?

As U.S. District Judge Philip Gutierrez noted in an October order responding to the parties’ dueling summary judgment motions, “The 9th Circuit only determined that the Masters Licensed provision dictates the royalty rate for proceeds from permanent downloads and mastertones. Under the Masters Licensed provision, FBT and Eminem are generally due royalties of 50 percent. It remains to be determined what figure that 50 percent is applied to.” (ital ours)

In other words, 50 percent merely set a threshold on the general issue of how to treat digital income; it didn’t tie up all the loose ends on the calculation of damages.

Aftermath’s big argument after the 9th Circuit remanded the case was an attempt to apply “new medium and container deductions.” The plaintiffs argued in response that the costs of licensing digitally were negligible. The judge said that the language of the agreement governing these types of deductions was ambiguous, but pointed to evidence that the record labels understood that it could only be applied to stuff like audio-tapes and CDs. The record labels had never tried to apply it to digital downloads before, and the judge deemed their failure to so to be implicit consent they couldn’t.

The record label experienced more success on the issue of whether Eminem’s “side projects” should be included in the 50 percent royalty calculation rate. The judge ruled they shouldn’t.

Slightly less clear was the judge’s ruling on which of Aftermath’s “net receipts” should be apportioned to F.B.T. Anything going into Aftermath’s pocket from Eminem’s primary projects obviously gets included, but what about receipts to UMG’s other affiliates, especially those overseas that distribute Eminem albums. That issue is still being furiously debated.

Aftermath now wants the judge to reject Cohen’s report. This past week, it gave the judge several reasons. Among those given is that he included in his calculations “side projects” such as the chart-topping song, “Lose Yourself,” and the “8 Mile Soundtrack.” Additionally, the record label says that when foreign income comes into Aftermath’s sister companies, different calculations apply. Cohen couldn’t simply calculate the whole sale price of albums sold overseas, argued Aftermath. The plaintiffs believe that it would essentially mean that UMG could avoid exposure by merely shifting where the receipts come in.

The record label is also taking issue with some of Carter’s other conclusions, including deductions it believes are warranted, and the understatement of mechanical fees paid. In sum, Aftermath is challenging Cohen as unreliable.

To Cohen’s credit, he testified during a deposition that he wasn’t supplied with “appropriate information” concerning foreign royalties and believed that “substantial additional amounts would be due F.B.T.” And in his audit report, he pressed Aftermath for more information on things like public performance and blanket licensing revenue as well as more documentation on Aftermath’s share of litigation settlements with Napster, Kazaa, YouTube and others. This last bit probably won’t be a primary issue at trial, but could be of interest to artists out there wondering if they’ll ever see a cut from the RIAA’s legal efforts.

The case primarily shows just how many millions of dollars are at stake, even just for one artist. Now that several class actions have been launched on behalf of other artists, there’s likely hundreds of millions of dollars more that will be fussed over. But the ongoing controversy also demonstrates that record labels aren’t going to just roll over. They still intend to put up a good fight. Starting at a California jury trial on April 4.

E-mail: eriqgardner@yahoo.com

Twitter: @eriqgardner

http://www.hollywoodreporter.com/thr-esq/eminem-royalty-lawsuit-aftermath-records-fbt-productions-293881

The Warner suit has far reaching implications because it encompasses not just Warner, but its especially lucrative catalog business via Atlantic Records (Aretha Franklin, Sam & Dave, Otis Redding, Wilson Pickett) and Rhino Records (which has repackaged all that material for decades). It’s also a class action suit, which means dozens of artists from the heyday of Warner-Elektra-Atlantic-Rhino can join the suit as it progresses. Damning for WMG are former CEO Edgar Bronfman’s quarterly proclamations to shareholders over the last six years that “digital sales are booming” (I’m paraphrasing) while everything else was in the toilet. Recordings of those analysts calls are sure to be played before some jury in the future.

The suit can be distilled thusly: “However, in breach of its contractual obligations under its Standard Recording Agreements, WARNER has treated its transactions with Digital Content Providers as “sales” rather than “licenses.” In so doing, WARNER has applied the incorrect formula for calculating royalties owed to Plaintiffs and Class members, taken unjustifiable deductions (including, but not limited to, the Net Sales Deduction, the Container Charge deduction, and the Audiophile Deduction), and applied a royalty percentage that is, in general, less than half of what it should beapplying in its computation.”

The suit was filed by four law firms. The principal is Pearson, Simon, Warshaw, and Penny in San Francisco.

http://www.showbiz411.com/2012/02/03/sister-sledge-files-class-action-v-warner-music-we-are-not-family

2/3/2012 by Eriq Gardner, The Hollywood Reporter

Last year, hip-hop superstar Drake released a song, “Marvin’s Room,” that quickly went viral and prompted various remixes by fellow artists intrigued by the depiction of a young woman on a phone call as the rapper drunkenly croons, “You could do better.”

Now, Ericka Lee, revealing herself to be Drake’s ex-girlfriend, has stepped up, saying she was the voice on the other end of the phone call. The woman is now suing Drake for excluding her from sharing co-writer royalties on one of his biggest recent hits.

Lee filed the lawsuit on Thursday in California federal court claiming the two had a romantic and business partnership between early 2010 and mid-2011. During the relationship, the two are said to have traded poems and song lyrics and discussed joint creative projects.

Last year, Drake allegedly agreed to work with Lee on “Marvin’s Room” and split the proceeds. Lee says she was asked to record the song’s “hook” as well as the opening monologue that would serve as the thematic framework for a song about Drake’s yearning for an ex-girlfriend and how his fame interfered with his love life. “Plaintiff’s contribution is highly significant to the overall work,” says the complaint.

Drake supposedly acknowledged Lee’s contributions in text messages sent to her. One read, “U basically made that song.” Another read, “It’s s–t without you.”

Drake purportedly gave Lee credit as a “vocalist” on the song as “Syren Lyric Muse.” Additionally, the parties are said to have registered the sound recording at the U.S. Copyright Office. On July 11, Lee made a claim there, saying, “My works and voice are used on this work.” About six weeks later, Drake’s label, Cash Money Records made its own claim, saying that the song author was an “employer for hire.”

Lee reports that after the song was released, their relationship ended and got ugly fast. The two discussed meeting in Los Angeles, but it never happened. According to the complaint, Drake later sent a text message to Lee that offered her 2 percent of “publishing royalties.”

By November, Lee hired a lawyer, which allegedly caused Drake to make threatening phone calls. “What the f— is your problem?” he said to her, according to the complaint, then offering her “4-5%” of publishing monies plus a $50,000 payout to go away.

Instead, Lee has filed a lawsuit over “Marvin’s Room,” which has been viewed more than 39 million times on YouTube. She demands a judge declare her as co-writer of the song. She’s also seeking damages and disgorgement of profits on allegations of breach of fiduciary duties and unjust enrichment. Lee is represented by Neville Johnson, who previously filed a lawsuit against Drake on behalf of Playboy Enterprises for sampling an unauthorized sound recording it owned on “Best I Ever Had.”

Drake’s reps gave us this comment:

“This claim is entirely without merit and our client has not engaged in any wrongful conduct. Ericka Lee consented to the use of her voice in the song ‘Marvin’s Room’ prior to its release. Lee asked only for the credit she received as ‘Syren Lyric Muse,’ and she did not ask for any compensation. It was only after she retained a lawyer that there was a demand for payment. Drake tried for months to resolve the matter amicably, and he now looks forward to being vindicated in court.”

Here’s the video to “Marvin’s Room”:

http://www.youtube.com/watch?v=nwyjxsOYnys

http://www.hollywoodreporter.com/thr-esq/drake-girlfriend-marvins-room-lawsuit-286916

Guild cites confidentiality in request to state judge
By Dave McNary

Ken Osmond

The Screen Actors Guild has asked a state court judge to seal information about how it handles millions of dollars of foreign levies as part of the settlement in the tangled class-action suit over the funds.

Lawyers for Ken Osmond, who filed the suit over the funds in 2007, oppose the motion and assert that SAG is required by federal labor law to disclose any disbursements of more than $5,000.

At issue is an exhibit dubbed a Foreign Royalty Status Table, which details the status of SAG’s foreign levy program, including specific dollar amounts collected from the inception of the program through March 21, 2011.

SAG is insisting that it has “an overriding interest” in protecting its confidential financial information which outweighs “right of public access” to the information. “If this motion is denied, then sensitive confidential financial information will be exposed, to SAG deteriment,” the guild said in a filing to Superior Court Judge Carl West.

The judge met with attorneys for more than an hour Wednesday and said he’d decided not to hold a public hearing that had been scheduled to address unresolved issues that he didn’t identify, adding that he’s scheduled a Jan. 10 hearing.

“We have identified several open issues and reporting requirements,” he told William Richert, the lead plaintiff in a similar suit filed against the Writers Guild of America.

Neville Johnson, attorney for Richert and Osmond, said Wednesday that the confidentiality issue remains unresolved. He’s contended that SAG’s required to disclose the information to the U.S. Dept. of Labor under the Labor-Management Reporting Act in a Form LM-2 and that the majority of the dollar amounts detailed on Exhibit 1 are in excess of $5,000.

“Further, the foreign levy funds detailed in Exhibit 1 are being paid out to members of the class, and thus are distributions of SAG,” Johnson contended. “Therefore, the contents of Exhibit 1 are to be included in SAG’s report to the DOL and must be included on the Form LM-2. As stated above, such report is to be made public.As a result, SAG has an obligation to make the contents of Exhibit 1 public.”

The Osmond suit was settled earlier this year and the Richert suit was setted in June 2010. In 2008, the Directors Guild of America settled a suit filed by William Webb.

The lawsuits stem from “foreign levies” for American actors, writers and directors — which began to flow in 1989 after the U.S. agreed to the terms of the Berne Convention, which established the right of authorship for individuals who create works of art. SAG, the WGA and the DGA began collecting the foreign funds in the early 1990s on behalf of members and nonmembers who had a stake in films and TV programs.

The funds are collected from countries through mechanisms such as taxes on video sales and rentals to compensate copyright holders for reuse. All three guilds have denied any wrongdoing. SAG announced earlier this year that it had created an online Foreign Royalties tracker for actors and asserted that the guild has collected $18.1 million in foreign royalties for performers and had distributed $8.78 million in more than 273,000 checks to more than 76,000 individuals.

Johnson said that both sides have resolved long-standing disagreements on the issue of engaging consultants Donald Jasko and Daniel Gervais to review the foreign levies programs at SAG and the WGA West.

http://www.variety.com/article/VR1118045120

By LIZ POTOCSNAK, Courthouse News Service, October 05, 2011

LOS ANGELES (CN) – The Estate of Rick Nelson claims Capitol Records grossly underreported royalties owed and is Bogarting $100 million to $250 million in so-called “unmatched income” that Capitol claims it cannot link to any particular artist.
“Capitol is in possession of $100 million – $250 million in so-called ‘unmatched income’ – large caches of income that Capitol claims it cannot link to any particular artist,” according to the Superior Court complaint. “On information and belief Capitol is perfectly capably of ascertaining the amounts due to Nelson LLC from the unmatched income cache, yet has refused to do so and doesn’t want to do so.
“Indeed, on information and belief, Capitol has intentionally tried to make it harder for royalty auditors to discover the information so that royalty artists could be paid monies legitimately due them. Capitol has refused to allow independent auditors the access to the unmatched report from inception to date, or access to any other documentation needed to ascertain the amount on behalf of Nelson LLC.”
The Estate claims Capitol made things even harder for artists by moving income formerly held in separate accounts into a general account with other assets.
The Estate claims Capitol refused to provide “crucial information” for an audit this year, and was “purposefully disregarding” a royalty increase that was supposed to have begun in 1992.
According to the complaint: “On or about May 21, 1992 Nelson LLC received a letter from Capitol (‘the Letter’) informing them that Capitol was implementing a new royalty calculation on sales of music for ‘Legacy’ artists from the 1950′s, 60′s and 70′s – a classification into which Rick fell. The new royalty rate was increased for Nelson LLC from five percent (5%) of ninety percent (90%) of records sold (an outmoded and extraordinarily low rate that was commonplace in the 1950′s and 60′s when artists’ rights were often blatantly disregarded), to ten percent (10%) ‘[o]f the retail list price for all full price albums’ for ‘all domestic and foreign sales.’ The Letter also promised Nelson LLC fifty percent (50%) of ‘net receipts’ on ‘sales or uses by our licenses.’” (Parentheses and brackets in complaint.)
But the 2011 audit showed “that (1) Capitol was accounting improperly, (2) Capitol was refusing to provide crucial information regarding royalties from the songs, (3) Capitol was purposefully disregarding the royalty increase outlined in the 1992 letter, (4) Capitol would not provide information as to so-called ‘unmatched income’ to which Nelson LLC was entitled,” according to the complaint.
Nelson’s estate says Capitol did not pay the increased royalties, and also is cheating on digital royalties, whose rates are “grossly inequitable.” The Estate claims Capitol takes discounts on digital recordings for bogus “anticipated costs (such as breakage of physical records, or physical distribution) that simply do not apply to digital sales of the same music.”
The Estate says Capitol cannot assert the statute of limitations as a defense, because Nelson LLC was led to believe that Capitol was maintaining fair accounting, so the Estate did not know it had a reason to file a complaint.
“Defendants were aware that they manipulated the accounting in such a manner that made it impossible for Nelson LLC to ever receive proper compensation from Rick’s compositions or songs in the ordinary course of events,” the complaint states.
The Estate adds: “In yesteryear, Capitol was one of the major records in America. Today, Capitol is crippled and operated by a skeleton crew as it prepares itself to be sold off.”
Nelson’s estate seeks disgorgement, restitution, accounting, damages and punitive damages on 10 counts, including breach of contract, unjust enrichment, money due, conversion, fraud, negligent misrepresentation, unfair business practices and breach of faith and fair dealing.
It is represented by Neville Johnson and Douglas Johnson with Johnson & Johnson.
Best remembered today for his hits, “Travelin’ Man,” and “Hello, Mary Lou (Goodbye, Heart),” Nelson co-starred in the 1950s hit TV show, “Ozzie and Harriet,” and from 1957 to 1973 recorded 53 songs that made the Billboard top 100, including 20 songs on the Top 10, according to the complaint. He died in a 1985 plane crash.
According to Joel Selvin’s 1990 book, “Ricky Nelson: Idol for a Generation,” in 1958 Nelson made the immortal statement: “Anyone who knocks rock ‘n’ roll either doesn’t understand it, or is prejudiced against it, or is just plain square.”

“Douglas L. Johnson of Beverly Hills-based Johnson & Johnson LLP said his firm has for years brought profit participation cases on behalf of artists, most of which have settled. Since last summer, he’s fielded more inquiries about the issue. In the past year, Johnson and his partner, Neville L. Johnson, have filed several complaints over classic hit television shows “Mannix,” “Head of the Class,” “Knight Rider” and several others in which the artists’ contracts didn’t contain now-prevalent arbitration clauses.”

‘”It’s catch me if you can, good luck finding a lawyer and paying the big fees,” Doug Johnson said.”

By Erica E. Phillips, Daily Journal

LOS ANGELES – In Hollywood, disputes over profit sharing from hit films and television shows have long pitted artists and studios against each other. But many in the industry say a shock to the system last year in the form of three hefty verdicts favoring the artists may have shifted the scales between Hollywood’s Davids and Goliaths.

The closely followed trials shed new light on accounting methods studios have used when calculating, reporting and paying out profits to producers, directors and lead actors. For decades, artists and executives in the close-knit production industry have quietly settled profit participation disputes away from the glare of the courtroom as a way to ease the negative impacts of legal acrimony on future projects.
But three verdicts last year – which favored “Chariots of Fire” producer Alan Ladd, Jr., “Nash Bridges” actor Don Johnson and “Who Wants to be a Millionaire?” producer Paul Smith – revealed a weakness in that practice, observers said. Artists of a certain age, with time and money to spend on litigation and perhaps less concern for their reputations than actors and producers at earlier career stages, could be more willing to go to court. Observers also noted that two of the three trial lawyers for the plaintiffs weren’t focused in the entertainment industry, giving them an outsider’s perspective that may have bolstered their cases.

These so-called “perfect plaintiffs” have apparently emboldened other artists to examine their own profit statements and encouraged studios to evaluate their accounting procedures. But many in the industry say a flurry of profit participation inquiries this year is only temporary and likely won’t lead back to the courtroom.

The first verdict, handed down by a unanimous jury in 2007 and affirmed by a California Court of Appeal last May, was a win for producer Ladd, who argued that Warner Bros. Entertainment Inc. cut him out of profits for the “Police Academy” movies, “Chariots of Fire” and “Blade Runner,” among other projects. The court ruled that the studio’s practice of licensing collections of films to television stations and equally allocating the fees among the properties didn’t fairly account profits for the more popular films in the group, in this case, Ladd’s – to the tune of $97 million.

In the second case, last July, a state court jury awarded actor Don Johnson and his production company $23.2 million in damages for the television show “Nash Bridges,” in which Johnson shares 50 percent of the copyrights with studio Rysher Entertainment Inc.

On the same day, British producer Paul Smith and his production company, Celador International Ltd., won $269 million from The Walt Disney Co. when a federal jury determined the studio-owned network ABC Inc. had been unfairly licensing Celador’s show “Who Wants to be a Millionaire?” to its own affiliate, Buena Vista Television, for a below-market rate.

Entertainment industry trial lawyer John M. Gatti of Stroock & Stroock & Lavan LLP represented Ladd at trial and on appeal.

Business trial lawyer Mark C. Holscher of Kirkland & Ellis LLP led Johnson’s legal team at trial, and plaintiffs’ trial lawyer Roman M. Silberfeld of Robins, Kaplan, Miller & Ciresi LLP represented Celador.

Profit participation cases, including Ladd’s, Johnson’s and Smith’s, have long followed a standard course. Artists who believe they have a claim commence the process by requesting an audit of the studio’s books. They wait in a queue, often for a year or so, hire a professional studio auditing firm to conduct the audit and sit down with studio representatives to go through their concerns.

“That’s the point at which most of these matters get resolved,” said Harrison J. Dossick, a studio-side litigator with Katten Muchin Rosenman LLP in Century City. “Oftentimes, there just isn’t enough at issue to justify the expense and uncertainty of litigation. If the two sides can get to within a couple hundred thousand dollars, then these cases tend to settle.”

What set Ladd, Johnson and Smith apart, said Jeffrey S. Weiss, a litigation consultant and former in-house business affairs lawyer at several studios, was that all three had the time and money to endure the litigation. And while younger artists might be deterred by the public exposure and the possibility of earning a bad reputation, these three “perfect plaintiffs,” Weiss said, had very little to lose. And there could be more where they came from.

Silberfeld pointed out that contracts “of a certain vintage” don’t contain the now-popular arbitration clauses that send most contract disputes over newer films and television shows straight to a private arbitrator. But in last year’s three big cases, as in the vast majority of profit participation cases, there were attempts to settle before trial. In the Celador case, Silberfeld said Smith and ABC held their ground, and the matter went before a jury.

“Because there’s not a huge track record of these cases having been tried, it was easier for the defendant to say, ‘You know what? Let’s just go roll the dice,’” Silberfeld said. Now, he added, “I think studios will think twice about taking what I regard as an extreme position on what a contract term means in the profit area.”

Studios, perhaps feeling more vulnerable, naturally want to prevent losses like those suffered last year. Gatti, who also advises some studios in profit participation cases, said that after he won Ladd’s case, several studio clients asked him to help them evaluate their accounting and licensing procedures.

Warner Bros.’ manner of allocating profits equally among films, despite their disparate popularity – a common practice in years past, according to lawyers – is no longer accepted.

“There are guidelines now,” Gatti said. “Before having these opinions, you were bound by what the industry was doing … These methods were used and accepted but not tested by the courts.”

In the year since the verdicts in the Ladd, Johnson and Celador cases, entertainment lawyers say profit participation cases have gained visibility and that has emboldened plaintiffs. The back-to-back, highly public studio losses got people talking, and Silberfeld, Gatti and Holscher said that in the immediate aftermath of the verdicts, they received a flurry of calls from potential plaintiffs wondering if they, too, might have claims worth pursuing.

Elaine P. Douglas of entertainment audit firm Hacker Douglas & Co. LLP said she has also been busy in the past year.

Of the three verdicts, Douglas said, “We were delighted with all of them, needless to say,” adding, “It raises everybody’s awareness … For a lot of major [artists], their attorneys and business managers are very savvy about that to start with, but a lot of other people will suddenly go, ‘Hmm, I wonder if there’s money there I should be going after.’”

Douglas L. Johnson of Beverly Hills-based Johnson & Johnson LLP said his firm has for years brought profit participation cases on behalf of artists, most of which have settled. Since last summer, he’s fielded more inquiries about the issue. In the past year, Johnson and his partner, Neville L. Johnson, have filed several complaints over classic hit television shows “Mannix,” “Head of the Class,” “Knight Rider” and several others in which the artists’ contracts didn’t contain now-prevalent arbitration clauses.

For parties whose contracts contain arbitration clauses, JAMS launched a practice this year focused specifically on the entertainment industry. Gina Miller, regional vice president of JAMS, said she expects to see more profit cases over time, though it’s not a new issue for the company’s neutrals.

Meanwhile, many lawyers said it’s too early to tell who will come out on the winning end of this year’s profit claims. They said the audit process takes time and could now be more likely to result in private settlement after last year’s verdicts.

The prohibitive costs of litigation may also limit trials.

“It’s catch me if you can, good luck finding a lawyer and paying the big fees,” Doug Johnson said.

Dossick of Katten Muchin said that a 2003 decision in a profit participation case involving Disney and the film “Who Framed Roger Rabbit” had already been driving disputes to private resolution. In that case, the California Court of Appeals ruled that artists couldn’t be awarded punitive damages in profit claims.

“That took a lot of incentive out of these cases,” Dossick said. “Now you’re just dealing with the difference between what was paid and what [the artists] think they should have gotten. There’s just not enough to fight about.”

In other words, said participants’ lawyer Chad R. Fitzgerald of Kinsella Weitzman Iser Kump & Aldisert LLP, “Even though [studios] got bloody noses, they don’t seem to
have dropped their defenses or lowered the intensity with which they fight these claims.”

The Celador case is currently on appeal in the 9th U.S. Circuit Court of Appeals, and Johnson’s case has been appealed to the California Court of Appeal. No dates for oral argument have been set in either. After last May’s appellate ruling in the Ladd case, the parties privately resolved the remaining issues.

August 15, 2011 by Jonathan Handel, hollywoodreporter.com

In a move that could shut down a high-profile musical on the eve of its national tour, the Writers Guild of America has filed a claim over Bring It On: The Musical on behalf of Jessica Bendinger, the screenwriter of the 2000 Universal film on which it is based, The Hollywood Reporter has learned.

The confidential arbitration demand, filed a week ago, asserts that Beacon Communications Corp. and Beacon Communications, LLC are exploiting Bendinger’s dramatic rights in the cheerleader-themed Bring It On without her consent, in violation of the guild agreement’s “separated rights” provisions. It seeks damages and an injunction against Bring It On: The Musical, which is being coproduced by Universal Pictures Stage Productions, Beacon Communications and others.

Beacon’s outside counsel for the matter, Alan Brunswick of Manatt, Phelps & Phillips, tells THR, “The claim is without merit. We will vigorously defend it.”

In an interview, Bendinger counters that “Imitation is not the sincerest form of flattery. Compensation is.”

The screenwriter says she first heard about the show “in the worst way.” She had been working on a stage version of her own for six years and was developing the project with former Universal production chief Marc Platt, producer of the Broadway hit Wicked. But then she learned that a New York theater attorney not affiliated with her had been heard to say at a cocktail party that he was shopping the theatrical rights to the movie – the same rights she had been seeking to exploit.

The play subsequently opened for previews in Atlanta earlier this year. It’s scheduled to begin a four-city national tour in Los Angeles on October 30.

“I was shocked,” Bendinger says. “A writer works all her life trying to have a first hit. I was not treated well, given the revenue stream I created for them.”

The film, which grossed $90 million worldwide, stars Kirsten Dunst and inspired four direct to video followups. The three most recent video outings logged $18 million to $24 million in sales each, according to the-numbers.com, but Bendinger did not share in the revenue.

Her case “underscores the horrors of being a successful writer in Hollywood,” says her attorney, Neville Johnson of Johnson & Johnson. After cutting her out of the film franchise she created, the company, in Bendinger’s view, is taking the same approach to the stage production.

“It feels like they thought they could just keep going,” she says.

Both Bendinger and Johnson praise the WGA for bringing the case. The arbitration could begin in several weeks, or might not start for several months, depending on the availability of the arbitrator. With the play scheduled to open in two and a half months, it’s unclear whether the guild’s request for an injunction will have any practical effect until the case is heard and decided.

A key issue in the case is expected to be the relationship between Bendinger’s screenplay and the stage play: even though the titles are similar, is the play indeed a stage version of the movie or not?

The guild agreement’s separated rights provisions delineate various rights that are reserved to screen and television writers under specified circumstances. The section is notoriously intricate – it sprawls across dozens of pages – but for all their detail, the clauses don’t clearly explain how to determine whether a stage production is or is not an exploitation of the dramatic rights in the original film.

Complicating matters, separated rights relate to the original movie’s “story,” not its screenplay. “Story” is defined in the guild agreement as “literary or dramatic material indicating the characterization of the principal characters and containing sequences and action suitable for use in, or representing a substantial contribution to, a final script.”

That’s more skeletal than a screenplay itself, which may give the WGA room to maneuver even if the movie and stage play have different plots,as a comparison of the film’s website and a newspaper review of the play suggest may be the case.

A 2000 arbitration decision involving a scripted Universal theme park show based on Waterworld touched on the issue, saying that where “the story of the Picture and the (theme park show) is substantially the same,” the live show represents an exploitation of dramatic rights in the original rather than an exploitation of sequel rights. However, the arbitrator didn’t explain how he arrived at that formulation, nor whether it was intended as a definitive explanation.

The writer prevailed in the Waterworld case, leading to a confidential settlement.

Arbitration decisions are not public, and it’s not known whether relevant cases have arisen since then. The decisions are also not technically binding as precedent, although they are routinely used as such.

http://www.hollywoodreporter.com/thr-esq/writers-guild-trying-shut-down-222926