Frank Music Corp. v. Metro-Goldwyn-Meyer, Inc.

Frank Music Corporation (Frank Music) (plaintiff) was the copyright owner of a musical play entitled Kismet. Metro-Goldwyn-Mayer, Incorporated (MGM) (defendant) licensed Kismet to make a motion picture. In 1974, MGM produced a live musical show entitled Hallelujah Hollywood (the show) for its Las Vegas hotel, the MGM Grand. Most showings of the show included 10 acts. Act IV of the show used the music, characters, and set design of Kismet in tribute to the original play. The show played seven days per week. Sunday through Friday, the show included all 10 acts and occurred twice per day, for a total of 100 minutes per show. On Saturday, the show included only eight acts, including Act IV, and was performed three times during the day, with a run time of 75 minutes per show. Act IV was 11.5 minutes long. From the time the show opened in 1974 until Act IV was replaced in response to litigation in 1976, Act IV was performed 1,700 times. Frank Music sued MGM for copyright infringement based on the inclusion of Act IV in the show. The original holding by the district court found MGM liable for copyright infringement. On appeal, the court upheld the liability determination, but remanded the case to the district court to reconsider the profits attributable to infringement. On remand, the district court awarded Frank Music $22,000 in damages, based on a calculation of $6,131,606 in revenues and a determination that Act IV constituted one-tenth of the show, because it was one of 10 acts. Additionally, it determined that the value of Act IV attributable to infringement was 25 percent, considering creative talent and performances by the show’s staff. The district court determined that indirect profits made from incidental revenue increase in, for instance, the casino and hotel bookings, was 2 percent attributable to the show. Finally, the district court determined that prejudgment interest was not available. Frank Music appealed the damages award.