A New York appeals court has held that Shep Pettibone, the producer of Madonna\u2019s 1990 hit \u201cVogue\u201d is entitled to back royalties from Warner Music Group, following a dispute over an indemnity provision in an agreement.<\/p>\n
In 2012, a music company, VMG Salsoul LLC sued Pettibone and Warner for copyright infringement, arguing that Pettibone had copied a portion of the song \u201cLove Break\u201d and used it without permission in \u201cVogue\u201d. Warner and Pettibone were successful in defeating this claim. However, Warner withheld over $500,000 in royalties due to Pettibone to offset the legal fees in defending the claim.<\/p>\n
In April 2017, Pettibone brought a claim against WB Music Corp and Warner Music Group publishing division \u2018Warner \/ Chappell\u2019, claiming that the label and publisher had unfairly withheld his royalty payments.<\/p>\n
Pettibone\u2019s complaint was dismissed, with the court finding that the agreement with Warner provided that Pettibone\u2019s royalty payments should be used to pay Warner\u2019s attorney fees. A New York appeals court held on 17th<\/sup>\u00a0April 2019 that Pettibone was not responsible for paying Warner\u2019s legal fees in the copyright infringement case.<\/p>\n The section of the agreement dealing with the indemnity stated as follows;<\/p>\n \u201cEach party will indemnify the other against any loss or damage (including court costs and reasonable attorneys\u2019 fees) due to a breach of this agreement by that party which results in a judgment against the other party or which is settled with the other party\u2019s prior written consent (not to be unreasonably withheld). In addition, [Pettibone\u2019s] indemnity shall extend to the \u201cdeductible\u201d under [Warner\u2019s] errors-and-omissions policy without regard to judgment or settlement. Each party is entitled to be notified of any action against the other brought with respect to [the song \u201cVogue\u201d], and to participate in the defense thereof by counsel of its choice, at its sole cost and expense\u201d<\/p>\n The appeals court found that under New York law, which governs the agreement, an indemnification provision cannot be enforced unless the intention to impose such an obligation is \u201cunambiguous\u201d.<\/p>\n The court held that the agreement was \u201cpock-marked with ambiguity\u201d and that on reading It appeared that the agreement provided that each party will pay their own costs and fees. The withheld royalties are estimated to be almost $1 million.<\/p>\n This case clearly illustrates that any legal agreement with a third party whether that be a supplier, customer or consultant should be as clear as possible to give effect to the aims of the business and legally enforceable. Without clarity in legal agreements (or poorly drafted indemnity provisions such as this), businesses can find themselves in similar positions\u2013 having to pay out large sums of money for issues that could have been avoided with careful legal drafting.<\/p>\n If you would like further advice on your legal agreements or copyright law issues please get in touch.<\/p>\nContract with Warner<\/h5>\n
Decision on Appeal<\/h5>\n
Advice for businesses<\/h5>\n