A somewhat obscure case in the second circuit should serve as an important reminder for those who handle copyright infringement cases. In early June, the United States District Court for the Southern District of New York vacated a prior judgment of copyright infringement against a company called Karen Records, Inc. leaving plaintiff EMI Entertainment World Inc. empty handed.
The reason? The defendant learned after the fact that EMI had no direct ownership interest in the copyrights over which it had filed suit. In this case, the copyrights were owned by an EMI subsidiary and at least in the second circuit “a parent company lacks standing to bring claims on behalf of its subsidiary”.
The scary part of the decision lies in the fact that the problem could have been remedied by joining the subsidiary companies in the lawsuit but EMI chose not to do so, perhaps assuming it was enough to suggest that it had authority to act on behalf of its subsidiaries.
This is an important case for anyone who represents publishers or publishing administrators. When filing copyright infringement suits like this, it is important to review the underlying registrations and agreements to make sure that there is no question as to the plaintiff’s standing to sue. This can sometimes be an issue in the publishing world where back catalogs are bought and sold and publishers occasionally change administrators. Sometimes, incorrect assumptions can be made. It seems obvious, but it is a good reminder to make sure your documents are in order before filing suit.