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Cruz’s Political Campaign Is Over, But Is “Cruising” Toward Potential Copyright and Breach of Contract Liability

Posted by David Powell on Mon, Jul 18, 2016 @ 06:26 PM

Written by Alexis Payne Esq. (Partridge Partners PC)

Ted Cruz’s presidential campaign and the advertising company the campaign hired face potential liability for using songs in political ads and for breaching the terms of a music licensing agreement.

An employee of the campaign’s advertising agency allegedly downloaded two songs from Leopona, Inc. (doing business as “Audiosocket”), and used them in television and YouTube ads. Audiosocket’s licensing agreement prohibited the use of licensed songs for political purposes. Audiosocket used proprietary LicenseID technology to identify the campaign’s use of the licensed songs on the Internet.

Audiosocket and the songs’ musicians filed a complaint against Cruz’s campaign and its advertising agency for unlawfully using the licensed songs under the Copyright Act and for breaching Audiosocket’s licensing agreement.

The defendants filed a motion to dismiss the claims on the grounds that the musician plaintiffs had not adequately pled the existence of their copyright registrations. The defendants also argued that Audiosocket’s $25,000 liquidated damages claim under the licensing agreement could not be multiplied by the number of times the ads appeared (which would result in $2 billion in damages). The defendants also argued that the Copyright Act preempted the breach of licensing agreement claim.

On July 11, 2016, a district court in Washington rejected the defendants’ arguments. The court found that the copyright registrations had been adequately pled. Further, the court rejected the defendants’ liquidated damages argument. The court noted that the defendants’ claim that the plaintiffs were seeking $2 billion in damages was “disingenuous” because the musician plaintiffs had acknowledged that they must ultimately prove damages. Also, because the licensing agreement expressly prohibited the use of licensed songs for political purposes, the court found that the breach of contract claim was not “equivalent” to a copyright infringement claim. Therefore, the Copyright Act did not preempt the breach of licensing claim.

Key Takeaways:

This case is yet another stark reminder that using music without securing the necessary rights thereto is a recipe for disaster. Doing so potentially exposes businesses and organizations to significant statutory damages under the Copyright Act. And if a business or organization is using a third party to procure content, this case is also a reminder that any attendant agreement must ensure that the third party has obtained all necessary rights to such content, including licenses for music.

Leopona, Inc. v. Cruz For President, 2016 WL 3670596 (W.D. Washington, July 11, 2016)

Topics: Music Clearance, Music Rights, Music Licensing, Music rights for advertising

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