In re Isbell Records, Inc.

In 1993, Cecil Glenn and Steven James (collectively, Tag Team) wrote and produced the hit song “Whoomp! (There It Is)” (“Whoomp!”). Tag Team entered into an exclusive producer’s agreement with Bellmark Records (Bellmark). Under the terms of the agreement, Tag Team assigned to “Bellmark’s affiliated designee publisher” 50 percent of its interest in the copyright to the “Whoomp!” composition. Bellmark’s affiliated designee publisher was Alvert Music, a music-publishing company founded by Alvertis Isbell (Bell) (plaintiff). The agreement also gave Bell and Alvert Music, as the assignee, the right to administer 100 percent of the royalties from the composition. In 1997, Bellmark filed for bankruptcy, and DM Records, Inc. (DM) (defendant) purchased Bellmark’s assets. The specific assets were not defined; rather, the purchase included all Bellmark’s property. The bankruptcy proceeding closed in 2001, and DM, taking the position that it had acquired the copyright in “Whoomp!” from Bellmark, began to exploit the copyright. Bell, doing business as Alvert Music, then sued DM for copyright infringement, seeking (1) a declaratory judgment that Alvert Music was the rightful owner of the copyright and (2) damages for the alleged infringement. After an 11-day trial, the district court ruled that, as a matter of law, Bellmark was a separate entity from its affiliated designee publisher and Alvert Music was Bellmark’s affiliated designee publisher, and therefore that the copyright was not among the Bellmark assets that DM purchased, meaning that DM had infringed Alvert Music’s copyright. The district court then submitted the question of damages to the jury, which awarded $2,131,482 in actual damages and $132,500 in statutory damages. DM appealed, arguing that under the terms of the agreement between Bellmark and Tag Team, Alvert Music owned just half of the copyright and was not entitled to recover Tag Team’s share of the infringement damages.