ABKCO Music, Inc. v. Harrisongs Music, Ltd.

722 F.2d 988 (1983)

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ABKCO Music, Inc. v. Harrisongs Music, Ltd.

United States Court of Appeals for the Second Circuit
722 F.2d 988 (1983)

Facts

In 1971 Bright Tunes Music Corp. (Bright Tunes) sued George Harrison of Harrisongs Music, Ltd. (defendant) for copyright infringement. A district court had found that Harrison had subconsciously plagiarized Bright Tunes’ hit song “He’s So Fine” in creating the song “My Sweet Lord.” When the suit was initiated, Harrison was still a member of the Beatles, and ABKCO Music, Inc. (plaintiff) was the group’s business manager. In 1971 ABKCO President Allen Klein contacted Bright Tunes, which was in receivership, on Harrison’s behalf and suggested that perhaps the lawsuit could be settled if Harrison purchased Bright Tunes. Immediately before the trial, in 1976, Harrison made Bright Tunes a settlement offer of $148,000, which reflected 40 percent of the estimated royalties for “My Sweet Lord” in the American market. Bright Tunes was seeking 50 percent when Klein inserted himself into the negotiations. By this time, ABKCO and the Beatles had ended their contractual relationship. Klein offered to purchase Bright Tunes for more money than Harrison offered. Klein gave Bright Tunes confidential data about the past royalties of “My Sweet Lord” and provided Bright Tunes with Klein’s own estimate of what the song’s future value would be. As a result, Bright Tunes demanded that Harrison pay 85 percent of the royalties and give Bright Tunes the copyright to “My Sweet Lord.” With the parties unable to reach a settlement, the trial proceeded, and a district judge found in favor of Bright Tunes. Before the damages phase of the trial, ABKCO purchased for $587,000 both the copyright to “He’s So Fine” from Bright Tunes and Bright Tunes’ claim against Harrison. ABKCO then offered Harrison the opportunity to purchase those rights from ABKCO for $700,000. Harrison did not accept, and ABKCO then became the plaintiff in the case against Harrison. It took another 15 years for the court to award almost $1.6 million in damages to ABKCO. However, Harrison had filed a counterclaim on which the judge ruled for Harrison, finding that ABKCO had breached a fiduciary duty to its former client. The judge did not like how ABKCO had become the plaintiff and ruled that ABKCO’s recovery would be reduced. The judge also ruled that the rights ABKCO purchased from Bright Tunes would be held in trust for Harrison until Harrison could pay ABKCO $587,000 plus interest. ABKCO appealed.

Rule of Law

Issue

Holding and Reasoning (Pierce, J.)

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