Shapiro, Bernstein & Co. v. H.L. Green Co.

H.L. Green Co. (defendant) licensed Jalen Amusement Co., Inc. (defendant) as concessionaire of the record department in its stores. The licensing agreement required Jalen’s employees to follow all of Green’s rules and regulations and provided Green unfettered discretion to discharge any employee found to be conducting himself improperly. The proceeds from all record sales were collected by Green, and Jalen received only the amount remaining after deduction of Green’s licensing fees, salaries, and taxes. Even though Jalen ordered and paid for the records and its employees made all the sales, customers who purchased a record received a receipt with H.L. Green Co.’s name; Jalen’s name was nowhere on the premises. Shapiro, Bernstein & Co. (plaintiff) was the copyright proprietor of several musical compositions and alleged that Jalen was liable for infringement because it had manufactured bootleg records of these compositions in violation of the Copyright Act. Shapiro alleged that Green was also liable for infringement because it contributed to and participated in the sale of these bootleg records. The district court found Jalen liable but dismissed the complaint as to Green after finding that Green had not participated in the sale of the bootleg records and had no knowledge of the unauthorized manufacture of the records. Shapiro appealed.