Eminem Sues Apple
August 2007
Controversial multi-platinum selling US rapper Marshall Mathers, otherwise known as Eminem, has launched a landmark multi-million dollar lawsuit against Apple Computer Inc in the U.S District Court in Detroit, alleging copyright infringement. The action relates to the sale of Eminem recordings on Apple's hugely popular internet music store iTunes. Eight Mile Style LLC and Martin Affiliated LLC, Eminem's music publisher and copyright manager, claims that iTunes were never authorised to offer the downloads and that Apple had been instructed to cease and desist the reproduction and distribution of all Eminem recordings. It is alleged that Apple had refused to comply with this demand.
The case pinpoints an issue of increasing importance for both the music industry and for internet retailers concerned with protecting against litigation. Eminem is alleging that the rights held by Universal Music Group (UMG) to sell his recordings do not include the right to authorise downloads of that recording without further permission from the music publisher.
Owen Sloane, a leading entertainment lawyer at U.S. firm Berger Kahn, identifies the case as an attempt to secure a larger share of the revenue stream generated by the exploding digital music download market, and expects to see many copycat suits in the near future. If a download is treated as a sale, as is the usual position with online retailers, then the artist receives only a small share of the royalties, with the majority received by the recording label. However if downloads are treated as a licence agreement then the artist and recording label would share the royalties equally.
Sloan also stated that publishers would prefer to claim these royalties from the point of sale, saying many publishers do not believe that these fees are properly accounted for.
Eight Mile Style LLC and Martin Affiliated LLC have a reputation for aggressively protecting Eminem's rights to his music, with a history of litigation for copyright infringement. They have previously taken action against both Apple, for the use of the song "Lose Yourself" in a 2004 advertisement for iTunes, and several other companies for the sale of Eminem ringtones.
The case is being watched closely by those involved in the IP field. Ian Lewis, Chief Executive of SAMIAN Underwriting Agencies, the provider of market leading intangible asset protection solutions, believes that the case highlights how, due to rapidly changing technology, unforeseen problems can arise. He said that "It will be interesting to see if any of the initial agreements between Eminem, his publisher and UMG dealt with the issue of digital distribution mediums. If it did not, and it turns out that this type of agreement is widespread, then this court decision could have ramifications across the whole music industry. Both distributors and publishers will need to reconsider their approach to safeguarding against litigation in this area." He also raised the further issue of ultimate liability, stating "It is likely there are indemnity clauses in the licence agreements so the costs of the case could ultimately fall on one party. Even big companies used to dealing with such licensing issues get caught out. The unforeseen nature of this matter makes the exposure a perfect candidate for insurance risk transfer. Clearly this case will have a major impact on the decisions made by companies in this field in relation to IP risk, and we would expect this to lead to add to the increase in demand for insurance products to guard specifically against this kind of risk."
