Paul vs. John, George and Ringo: analysis of the Beatle vs. Beatles lawsuit.


Paul vs. John, George and Ringo
A legal analysis of Paul McCartney’s 1970 lawsuit
against John, George and Ringo

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Much has been written over the years regarding the circumstances that caused Paul McCartney to sue his former bandmates on the last day of December, 1970. His action began a series of court battles between the Beatles and the various companies associated with them that continued for the biggest part of the next two decades. This article will focus solely on the initial action filed by McCartney and examine precisely what he sought from the English court that heard his case. In focusing on the factors cited to the court that drove McCartney to seek the aid of the legal system, this article will not review the arguments made by the opposing parties or the order of the court beyond stating that the relief requested (appointment of a receiver and an accounting) was granted. Except for the background information at the beginning and the author's observations at the conclusion, this piece is based solely on arguments made by McCartney's counsel in open court on March 1 and 2, 1971.


Background

To understand why McCartney took such drastic action as suing his friends and airing the Beatles' business affairs for the world to see, a brief summary of those various dealings would likely be helpful.

Prior to April,1967, George Harrison, John Lennon, Paul McCartney, and Richard Starkey aka Ringo Starr were partners at will. As Pete Best could tell you, this meant the agreement to work together could be terminated by any of them at any time. However, on April 19, 1967, a partnership deed was entered into in which the Beatles agreed that their partnership would continue for a period of ten years, with the name of the firm being "The Beatles & Co." Apple Corps Limited was also brought into the partnership with an eighty percent interest in the capital and profits of the partnership, with Apple agreeing to pay the sum of £800,000 to be a partner. As corporations are treated as separate legal entities, the Beatles were in partnership with their own company. The partnership agreement gave the company the right to manage the business of the partnership and exploit the assets of the partnership as profitably as possible. The agreement further provided that "proper books of accounts shall be kept by the partnership" and that on the 31st of each year a balance sheet and profit and loss statement for the year ending was due to each partner.

It was contemplated by the Beatles that their long-time manager, Brian Epstein, would still be in charge of their affairs for the implementation and execution of this new agreement. However, in August, 1967, Epstein died and the Beatles' financial affairs became even more complex. Apple became a fully operational company, and proceeded to lose money at an alarming rate. In early 1969, John Lennon remarked to Ray Coleman of Disc magazine that if things continued with their financial affairs as they had been going, the Beatles would be broke within six months.

This statement caught the eye of Allen Klein, an American who was involved in music publishing and artist management in New York who had also served as an agent for some British musical acts, most notably the Rolling Stones. Klein, who controlled an American company called ABKCO, ingratiated himself to Lennon, Harrison, and Starr in the late winter and early spring of 1969. McCartney, however, was not enamored by Klein, in part because he wanted his brother-in-law, John Eastman, to be the manager of the Beatles. Despite the lack of unanimity within the band, on May 8, 1969, a contract was entered into between ABKCO and Apple, executed by Lennon and Harrison as directors of Apple, as well as the three Beatles who wanted Klein in charge of their affairs. McCartney never signed the contract with Klein.

Over the course of the next year and a half, Klein met with mixed success as the Beatles' manager. He renegotiated the existing recording agreement with Capitol records for the United States, Canada, and Mexico in which the Beatles' royalty increased from seventeen and a half percent to twenty five percent. He was involved in the negotiations to free the Beatles of Nems, the company formed by the late Brian Epstein. He also was able to get the film "Let It Be" into the hands of the distributors and the album of the same name into stores. On the other hand, the Beatles failed to acquire control of their publishing rights from Northern Songs, as that company was sold to ATV (a failure that, in fairness, cannot be completely blamed on Klein). He alienated McCartney even further by attempting to delay the release of his self-titled solo album and by releasing LET IT BE after it had been reworked by Phil Spector.

As 1970 unfolded, it became apparent that the Beatles were not going to be recording again, at least for the foreseeable future. Starr had turned his attention to solo projects such as SENTIMENTAL JOURNEY and BEAUCOUPS OF BLUES and had continued his film career. Both Lennon and Harrison were recording solo albums which were being produced by Phil Spector. McCartney seemed reluctant to do anything following the release of MCCARTNEY, at least in part because it was not clear whether revenues from solo recordings were to be divided as per the temrs of the partnership agreement.

While McCartney upbraided Ray Coleman for reporting John's remarks to the world, he too had been concerned about the Beatles' financial affairs for some time. McCartney had appointed some accountants to work for him in May, 1969, and as of December 10, 1970, the accountants for the Beatles Company had been unable to produce any account for a period subsequent to March 31, 1968. One of the duties that Apple had to the individual Beatles was to take care of their accounting, and the state of their financial records led McCartney to question whether enough money was available in the Apple accounts to pay the taxes due. It wasn't until an appeal by the Beatles against a provisional income tax assessment on profits for the firm was scheduled for a hearing in December, 1970 that McCartney and his advisors found it necessary to file an action.


McCartney files suit against Lennon, Harrison, Starr and Apple

In his action filed before the High Court of Justice, Chancery Division in London, McCartney had to name as defendants the other partners in his business. Even though the named defendants were John, George and Ringo, it was clear that the real target of his suit was Allen Klein. McCartney sought two basic remedies. First, he asked that a receiver be appointed to act as a caretaker of properties and interests in which the Beatles were involved. Second, he asked that an accounting of the Beatles financial condition be made by someone hired by the receiver. According to Black's Law Dictionary, a receiver is "an indifferent person between the parties to a cause, appointed by the court to receive and preserve the property or fund in litigation, and receive its rents, issues and profits, and apply or dispose them at the direction of the court when it does not seem reasonable that either party should hold them."

The aim was to have someone other than the current staff at Apple (which was working under ABKCO supervision) run the affairs of Apple and get the financial records in order. It was clearly McCartney's position that the Beatles were no longer a functioning band, and a receiver would have the primary duty of collecting payments from various sources based on the work the Beatles had produced up to that time.

Because Paul was the moving party, he bore the "burden of proof" that such an extreme step was necessary. After all, he was asking a judge to intervene in business contracts that had been entered into voluntarily by all involved, and wrest the control of the company away from the majority of the parties to the contract, namely John, George and Ringo. Paul reportedly had to be pushed into this action by his advisers, but when he and his legal staff went to court, they seemingly brought every complaint they had without any hesitation.

McCartney's attorney, Mr. David Hirst, did all the talking for Paul during the summation, and outlined the case against the three Beatles, Apple and by extention, Allen Klein, in an orderly and detailed fashion. He claimed that without a trustworthy receiver in charge, the assets of the Beatles were in jeopardy. There were seven areas McCartney felt demonstrated the partnership assets were being misused or improperly accounted for. These were: (1) that Allen Klein billed more money for his commissions than he was entitled to take pursuant to the agreement that the majority of Beatles executed with him; (2) the Defendants had entered into contracts which affected the property of the partnership without McCartney's knowledge or consent; (3) the abysmal state of the bookkeeping and accounting; (4) grouped with the next two items, the financial situation of the partnership; (5) the tax situation of the partners; and (6) the partner's excess drawing upon partnership assets. Finally, the seventh factor was a very general allegation that Allen Klein had engaged in misconduct as the manager for the Beatles, and based on his character, the court could assume it likely that the wrongdoing believed to have occured to that point would continue if he were allowed to continue in his capacity as Beatles manager.

It was also incumbent on McCartney to show it was likely that a court hearing the full case would agree that a dissolution of the partnership was appropriate. In addition to the factors set out above, Paul claimed his artistic freedom was being curtailed by his partners to such an extent it amounted to "unfair dealing" between the partners.


Allegations of Excess Payment from Apple to Klein

Hirst began his presentation on what was probably his strongest argument: that Allen Klein had received excess payment of commissions on royalties from various sources. His first example involved the McCARTNEY album. Klein claimed a commission on the royalties earned by MCCARTNEY even though it was clear that he had no management contract with McCartney. A point in contention during the litigation was whether solo albums were partnership assets, i.e. were to be divided among the partners according to the partnership agreement. Not surprising, Klein (and the other Beatles) took the position that the solo records were to be so divided (and in the case of Starr, Harrison, and Lennon, it did not matter to Klein since he had a contract with those three Beatles). McCartney was adamant in his position that solo projects were not covered by the partnership agreement.

At one point, John Eastman wrote to EMI Records on Paul's behalf and asked that the royalties from MCCARTNEY be held by EMI rather than paid to Apple, a request that EMI granted. However, EMI continued to supply to Apple (and thus Klein) the sales figures for MCCARTNEY. Upon seeing what MCCARTNEY had earned, Klein deducted his commission for those sales from existing Apple assets. Klein therefore was paid £72,000 pounds on royalties that had not yet been turned over to Apple, but were still being held by EMI. Because EMI was holding the money, McCartney had received nothing from the sales of his record.

Mr. Hirst then moved to his second example of overpayment to Klein in looking at the commissions charged on what were unquestionably Beatles records covered by the partnership agreement, that is releases under the name "Beatles". Klein had negotiated an increase in royalty payments with Capitol Records (which controlled the United States, Canada and Mexico, the single largest market for Beatles records) in which the royalty increased from 17 1/2% to 25% of the wholesale price. Even McCartney himself approved of this renegotiation and signed the documents that put the new rate into effect. However, the agreement that Klein had entered into with Starr, Harrison, and Lennon called for a commission of 20 percent of any increase in royalties Klein was able to secure. When the financial records were disclosed, it was learned that Klein was taking 20 percent of the entire royalty. On the sums of money the Beatles earned during 1969 and 1970, the total Klein claimed for his management fee was £851,000.00, and over £600,000 had already been paid to Klein; McCartney claimed that the commission on those Capitol Records royalties should have been no more than £250,000.00.

(To demonstrate the effect of what Klein had done, assume the Beatles had sales of $100,000.00 in records on a wholesale basis. On that sum, the band would have received $17,500.00 under the old contract, but under Klein's renegotiated contract, that sum went up to $25,000.00. Thus, Klein would have been entitled to a fee of $1,500.00--20 percent of $7,500.00, representing the amount of royalty due solely to Klein's negotiating skills. Instead, Klein collected 20 percent of the entire sum, or a commission of $5,000.00.)

Klein had also claimed a commission of EMI royalties, meaning Beatles records apart from the United States, Canada, and Mexico, of £123,000.00, £114,000 of which had already been paid to ABKCO. McCartney's position was that there had been no increase in those royalty payments from the EMI sales, and therefore no commission was due to Klein on the sale of those records.


Various Breaches in the Partnership Agreement

Hirst then turned to the numerous claims of breaches in the partnership agreement. As noted earlier, the original contract with Klein was presented to Paul McCartney for his consideration and signature and under basic partnership law, could be considered valid as ratified by the majority of the partners. In short, Paul got to vote along with the others, he was outvoted, and as happens in life, was likely stuck with the decision of the majority. However, subsequent to the execution of the contract that McCartney refused to sign, there were a series of additional agreements between Apple and Klein.

To begin with, there was no dispute that in September, 1969, Apple Records, Inc. sent a letter to Capitol directed that Klein's commission be paid to Klein directly, stating that ABKCO was to receive 20 percent of all sums accruing from Capitol Records, Inc. This letter was signed on behalf of Apple Records, Inc., by Lennon, on behalf of the partnership by Starkey and Lennon, and on behalf of the company Apple Corp. Limited by Harrison and Lennon. McCartney maintained that he had never been shown those documents prior to litigation. The Partnership Act in England provided at that time that a majority of partners can govern in certain cases, but only after a full consultation with all partners. McCartney's position was that assuming, without conceding, the original contract with Klein had been legal at the time, the variation on that contract as it was related to Capitol Records had to be discussed with him in order to be valid, and it had not been so discussed.

A similar event took place in 1970, when a letter was sent to EMI in which Apple authorized that 10 percent of sums due to Apple were to be paid to ABKCO, thus granting Klein a commission on sales outside of the US market that he would not have received under the May 1969 agreement. Once again, these documents were executed by Harrison, Lennon and Starkey, and as before, McCartney professed no knowledge of such.


The Financial Records of Apple

Hirst then went into great detail regarding the abysmal state of the accounts of Apple. He pointed out that after Klein assumed the manager's position of the Beatles, there had been no one in charge of accounting between August 1969 and January 1970. There was a gentleman who was in and out of England between January and June of 1970 and then no other accountant in charge from June through December 1970. Not only were the state of the accounts a problem for McCartney in determining what monies had been erroneously paid from Apple to Klein, but there was a looming tax problem. In a letter to Klein in April of 1970, one of the accountants wrote that his three previous letters regarding the accounts had not been answered and mentioned the inland revenues interest in the Beatles accounts. In correspondence before the court, the accountants were screaming that they needed full cooperation of Klein and Apple, but were receiving no help.


The Financial State of Apple

McCartney's lawyer then turned to the financial state of the partnership itself. Without going into mind-numbing details in this article, the sketchy information the accountants were able to provide showed that Apple's net worth, excluding good will, was £208,000.00. Not a bad sum, to be sure, but there was an estimated income tax bill of £341,000.00 coming due. There were additional questions about sur-tax liability. To make matters worse, individual Beatles had withdrawn money from the partnership account, leaving in its place an IOU. Lennon had withdrawn £76,000, Starr £68,000, Harrison £20,000 and McCartney £18,000. >From the state of their records, it did not appear that the Beatles would be able to meet their tax obligations.


Objections to Klein's Suitability as Manager

Mr. Hirst then moved to his final point regarding the jeopardy to the assets and launched an attack on Allen Klein's character in order to demonstrate that Klein could not be trusted. In addition to the matters that he had already mentioned at length (excess commission, secret variations to the original management agreement and accounting shortcomings), Mr. Hirst set forth how Klein had been involved in the affairs of Maclen, a publishing company owned by Lennon and McCartney. Maclen was under contract with Northern Songs to deliver a certain number of McCartney and/or Lennon compositions each year, and in 1969, Maclen brought an action against Northern Songs for an accounting. However, in the autumn of 1970, the action changed from one of an accounting to one in which Maclen sought to repudiate the contract with Northern. McCartney claimed that this change in the relief sought from Northern was done without his knowledge and consent and that Klein was a part of it. Further, McCartney alleged that Klein had attempted to claim a commission for some of Maclen's earnings back to 1967 but was prevented from the accountant from doing so.

Hirst then pointed out that the practice of trying to charge a commission for earnings prior to the management contract was not unique in the Maclen matter. Before the management contract with Klein was signed with three of the Beatles in May of 1969, there had been a rather unpleasant dissolution of the previous management contract with Nems Enterprises. Because of the squabble between the Beatles and their management company, EMI held £1,300,000 pounds until the dispute could be resolved. It was finally settled by July, 1969, and EMI released the money it was holding pursuant to the agreement. Klein charged a commission on money that EMI paid in July, 1969, but was clearly marked as money that was owed on March 1, 1969, some two months before any agreement with Klein was signed.

McCartney had several complaints with the way the film "Let It Be" was handled. He maintained that the contract he had signed in 1965 with The Beatles Film Production Limited (which later became Apple Films Limited) had expired and therefore Klein had no authority to make a deal with United Artists for the release of a film in which he appear. Further, there was a letter from Ringo Starr on behalf of Apple Films, Inc. (the American distributing Company) and George Harrison on behalf of Apple Films Limited on April 10, 1970 in which Apple agreed to give ABKCO. 20 percent of the monies paid to Apple Films, Inc. The significance of that assignment from Apple Films, Inc. was that Klein could be paid the money in dollars rather than pounds and would not have to pay taxes on it in England. The Beatles share of the income earned in America, however, would be paid through their English company. McCartney's position was that Klein was first negotiating deals for the release of the film "Let It Be" that he had no right to do, and then was structuring the deal so as to avoid paying British taxes on his commission earned by the film.

To conclude the section on the mistrust of Allen Klein, Hirst brought up that Klein had some legal problems in New York, including a criminal conviction and trouble with the Securities and Exchange Commission over some of his business dealings. Hirst's position was clear: Klein was a person that could not be trusted with overseeing such enterprise as that of the Beatles. In order to drive that point home, there were several portions of the Affidavit Klein submitted to the Court in England that were called into question regarding his integrity.


The Certainty of Dissolution

McCartney then moved to the shorter section of his argument, that the partnership was certain to be dissolved at a future date. Many of the factors that had been listed previously regarding the business relationship of the parties and the jeopardy to their assets also applied to the question as to whether this partnership was going to be dissolved. However, there were a couple of factors unique to this issue.

McCartney's clearly did not like the fact that Klein had been forced upon him as a manager by the other three. Even so, it was primarily the way things transpired after Klein was appointed as manager that McCartney cited as evidence that the partnership was not going to be able to continue. Whatever Klein's misdeeds had been, it was the individual Defendants, namely, Starr, Lennon and Harrison, that appointed ABKCO as the manager. It was the three individual partners that engaged in dealings with Klein that affected partnership assets without McCartney's knowledge. This was cited as evidence that not only did McCartney not want to do business with Klein any longer, he didn't want to be engaged in transaction with those that mistreated him in such a fashion.

Hirst then moved to his final area: that the artistic relationship between the parties had broken down and was not likely to be patched up. Citing the effort to delay the issue of the MCCARTNEY album and the changes on Paul's song "The Long and Winding Road" on LET IT BE, Hirst pointed out that McCartney's artistic freedom was being curtailed by his partners. This, coupled with the previous point, amounted to "unfair dealings" between the partners, and such a finding by the court would be sufficient to justify dissolving this partnership.


Author's Observations

As mentioned in the introduction, McCartney's motion for a receiver was granted. The judge did not have to rule on all the points raised by McCartney to do so, and centered his decision, which was temporary in nature, on the alleged misconduct of Klein. He found there was a likelihood that the assets of the partnership would be jeopardized if the business continued to operate in the manner in which it had for the prior months, and found that the partnership would probably be dissolved due to the conduct of the Defendants.

With the benefit of 30 years of hindsight, McCartney's decision, from a purely business standpoint, was a "no-brainer". While some of Klein's actions as manager had been approved by McCartney, those had occurred during the initial stages of the relationship (the Nems settlement and the Capitol renegotations). For over a year, things had gone from marginally tolerable to completely insufferable from Paul's viewpoint. But looking at the prospects of being the one to sue the others in order to rid himself of an unbearable situation had to have been gut-wrenching. Paul took enormous heat from his former bandmates, from the rock press that saw him as joining "the establishment", and from a public that viewed him as taking the initiative in breaking up the Beatles. Those outside the band that criticized him did not know or fully comprehend what he felt was wrong; those inside that disparaged him were the one that had caused much of the problems to begin with. The wonder of it all is not that McCartney filed suit, but rather that it took him so long to do so.



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George Harrison "My Sweet Lord" suit



THE "MY SWEET LORD"/"HE'S SO FINE" PLAGIARISM SUIT

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In an interview published in the November 27, 1992 issue of Goldmine magazine, George Harrison stated that the events that occurred during the litigation of a claim that he had plagiarized the melody for his worldwide smash hit, "My Sweet Lord" from a hit single from 1963 called "He's So Fine" would fill a book. Maybe so, but this article is designed to boil down what happened in the court proceedings to a concise and understandable account of several years of litigation.

As with my prior article on the Lennon-Levy suit, I have gone to what I consider the primary source for my information: the written opinions published by the courts that passed judgment on the facts presented to it. (footnote 1) The court had to decide if Harrison had infringed the copyright of "He's So Fine" (or HSF) in composing "My Sweet Lord" (or MSL) and if so, then a determination as to the damages due to the holder of the copyright would have to be made.


HISTORICAL BACKGROUND OF THE CASE

The story starts in 1962, when "He's So Fine" was recorded. It was composed by Ronald Mack, recorded by the Chiffons, and was owned by Bright Tunes Music Corp. in 1971 (the opinion does not say if the song was originally published by Bright; however, as Paul McCartney can tell you, ownership of song copyrights can be transferred from one publishing company to another). It was a big hit in the United States, hitting the top of the Billboard charts for five weeks. (footnote 2) It was moderately successful in England, reaching Number 12 on one chart on June 1, 1963, a week that saw "From Me To You" topping the charts. Harrison acknowledged that he was familiar with "He's So Fine".

During the next seven years, "He's So Fine" was little more than a song that was played on the "golden oldies" request lines. Harrison had gone on with the Beatles to become wildly successful, and in 1970 was embarking on a solo career.

In December, 1969, George was playing in Copenhagen, Denmark, with Delaney and Bonnie and Friends. Billy Preston was part of that group. Harrison told the court that the song that became "My Sweet Lord" was conceived when he slipped away from a press conference and began "vamping" some guitar chords, fitting the chords to the words "Hallelujah" and "Hare Krishna." Later, members of the band joined in and lyrics were developed.

Harrison took the idea further during the following week. Upon returning to London, Preston went into the studio to make an album, and while George was not playing on the record, he was supervising the work. The unfinished "My Sweet Lord" was brought up, and was worked into a finished version. Part of this completed song included a second section that differed significantly from the first section (more on this below). Although the song apparently had many mid-wives, Harrison is solely credited with the birth of "My Sweet Lord". (footnote 3) The Preston recording was issued by Apple Records, and a "lead sheet" containing the melody, words and harmony was submitted for the United States copyright application.

However, it was not the version recorded and released by Billy Preston that led to two decades of litigation. George Harrison recorded a version of "My Sweet Lord" for his album, "All Things Must Pass," and released MSL as the first single from that album. It was released on November 28, 1970 in the United States and was a number one hit shortly thereafter.

On February 10, 1971, before it even completed its fourteen-week run on the chart, Bright Tunes filed suit against George, his English and American companies, (Harrisongs Music, Ltd. and Harrisongs Music, Inc., respectively), Apple Records, BMI, and Hansen Publications. For sake of ease of reading, a reference to Harrison is meant to refer to all defendants in the suit unless otherwise stated.

Very soon after the suit against Harrison was filed, Allen Klein, who was then acting as manager for Harrison, met with Seymour Barash, the president and major stockholder of Bright Tunes to try to resolve the dispute. (footnote 4)

Klein suggested that Harrison would be willing to purchase the entire Bright catalog; Barash had countered with a proposal that the copyright to MSL be surrendered to Bright, and Harrison would receive half of the proceeds derived from MSL.

No further progress was made toward a settlement, and preparations were made to defend the case. Klein assisted Harrison in finding musicologist Harold Barlow to give an opinion as to the lack of merit of the lawsuit and it was Klein that engaged the attorneys that defended Harrison.

The case was delayed on the court's docket when Bright Tunes was placed in receivership. During the interim, Harrison's contract with Klein was terminated in what proved to be a bitter parting of the ways (and another lawsuit involving the Beatles). After Bright's affairs were put in order so as to enable it to continue the case, settlement negotiations between Bright and Harrison resumed.

After much discussion, Harrison's best offer of $148,000 was made in January 1976, a few week's prior to the trial on the issue of whether or not MSL was too similar to HSF. That sum represented 40% of the writer and publisher's royalties earned in the United States by MSL, and further provided that Harrison would retain the copyright for MSL. The attorney for Bright viewed the offer as "a good one", but did not accept the offer, but rather raised its demand from 50% of the U.S. royalties to 75% of the worldwide receipts, and surrender of the MSL copyright.

Why did Bright turn down what was viewed as a good offer and make a counter that was so harsh to Harrison? What Harrison didn't know was that Klein had again entered into discussions with Bright Tunes to purchase all of Bright's stock, except at this time, he was not attempting to buy the stock for Harrison, but rather for ABKCO.

Seymour Barash, then the ex-president of Bright, wrote a letter to Howard Sheldon, the man overseeing the receivership of Bright, in which Barash noted that Klein's interest in purchasing Bright indicated that Klein, as a former insider, had little doubt as the outcome of the pending litigation. Klein's offer was a bit different than Harrison's, as he was to purchase the entire company that held the copyright, thus putting himself in Bright's position in the lawsuit.

Klein's offer prior to the determination of liability was a bit complicated. He offered to pay $100,000 for the right to purchase the company after the judge's ruling for an additional $160,000. (This procedure is termed "buying a call" on the stock. If Harrison won the suit, there would no incentive for Klein to finish the deal, or in trading parlance, "exercise his option".)

As part of his offer, Klein furnished Bright with information regarding the domestic royalties generated by MSL, and his own estimate on the overseas earnings as well as his estimate on the present and future value of the copyright.

Needless to say, Barash and the other stockholders weighed this offer carefully in deciding how to respond to the two offers they received. Barash remarked in a letter to Sheldon that since Klein was "in a position to know the true earnings of MSL, R offer should give all of us an indication of the true value of this copyright and litigation". Barash viewed the Klein offer as a starting point in negotiations, and armed with the additional financial information Klein provided, demanded that Harrison update his total sales figures before continuing settlement negotiations with Harrison. (footnote 5) As it turned out, neither Harrison nor Klein could reach a settlement with Bright before trial.


THE QUESTION OF LIABILITY FOR INFRINGEMENT

The suit was conducted in two phases, which makes perfectly good sense in litigation of this type. (footnote 6) It would be a waste of time for Harrison to prepare and deliver the financial information necessary to determine the amount due to Bright unless the judge found that Harrison had plagiarized, at least in part, HSF. The trial on the issue of liability was conducted on February 23-25, 1976. At that trial, the judge was called upon to make an analysis of the music of both HSF and MSL. (footnote 7) Both sides called expert witnesses to support their contentions, and Harrison himself testified about the process that occurred in writing MSL. After hearing the testimony and considering the evidence, the judge found MSL did indeed infringe upon HSF's copyright.

The Court noted that HSF incorporated two basic musical phrases, which were called "motif A" and "motif B". Motif A consisted of four repetitions of the notes "G-E-D" or "sol-mi- re"; B was "G-A-C-A-C" or "sol-la-do-la-do", and in the second use of motif B, a grace note was inserted after the second A, making the phrase "sol-la-do-la-re-do". The experts for each party agreed that this was a highly unusual pattern.

Harrison's own expert testified that although the individual motifs were common enough to be in the public domain, the combination here was so unique that he had never come across another piece of music that used this particular sequence, and certainly not one that inserted a grace note as described above.

Harrison's composition used the same motif A four times, which was then followed by motif B, but only three times, not four. Instead of a fourth repetition of motif B, there was a transitional phrase of the same approximate length. The original composition as performed by Billy Preston also contained the grace note after the second repetition of the line in motif B, but Harrison's version did not have this grace note.

Harrison's experts could not contest the basic findings of the Court, but did attempt to point out differences in the two songs. However, the judge found that while there may have been modest alterations to accommodate different words with a different number of syllables, the essential musical piece was not changed significantly. The experts also pointed out that Harrison's version of MSL omitted the grace note, but the judge ruled that this minor change did not change the genesis of the song as that which previously occurred in HSF.

With all the evidence pointing out the similarities between the two songs, the judge said it was "perfectly obvious . . . the two songs are virtually identical". The judge was convinced that neither Harrison nor Preston consciously set out to appropriate the melody of HSF for their own use, but such was not a defense.

Harrison conceded that he had heard HSF prior to writing MSL, and therefore, his subconscious knew the combination of sounds he put to the words of MSL would work, because they had already done so. Terming what occurred as subconscious plagiarism, the judge found that the case should be re-set for a trial on the issue of damages.

This ruling as to the copyright infringement was upheld on appeal with little comment. The appellate court noted that an infringement can be established when the holder of the copyright demonstrates that the second work is substantially similar to the protected work and the second composer had "access" to the first work. Harrison conceded that he had indeed heard HSF when it was popular, thus establishing the second point.

Harrison's main argument on appeal was that it was unsound policy to allow a finding of plagiarism based on subconscious copying, as there was no evidence that he purposely appropriated the melody of HSF for use in a composition he claimed as his own. This position was rejected by the appellate court, which pointed out that the Copyright Act did not require a showing of "intent to infringe" to support a finding of infringement.


THE DAMAGES PORTION OF THE CASE

After deciding that Harrison had indeed improperly used the property of the holder of HSF's copyright, the judge then had to decide how much money to award Bright Tunes in damages for this infringement. In order to do that, he had to find what sum was generated by MSL, and then decide the portion of that sum that was attributable to the melody from HSF.

To determine the earnings for MSL, the court looked at four principal sources of revenue for compositions: Mechanical royalties (footnote 8 ), performance royalties (footnote 9), sale of sheet music and folios, and the profits of Apple Records, Inc. Two of these were easy to calculate, as the judge needed only look at the accounting numbers for the performance royalty provided by BMI to learn that MSL earned $359,794 in such royalties, and another $67,675 in sheet music sales. The remaining two factors, however, proved to be a bit more of a problem to determine.

In deciding what figure to use for the mechanical royalties generated by MSL, the judge first noted that the amount attributable solely to that song was $260,103. This figure used the royalty earned solely by MSL as a single, and as an album track on both "All Things Must Pass" and "The Best Of George Harrison," totalled $260,103.

However, Bright also contended that the enormous success of MSL generated revenue for Harrison's other compositions on "All Things Must Pass" beyond that which they would have otherwise earned. The judge noted that on the single 45 RPM record, MSL was backed by "Isn't It A Pity" (footnote 10) which was not a hit single in its own right (footnote 11), and on the album, MSL was one of twenty-two Harrison songs, and only one of the other songs ("What Is Life") achieved any significant degree of popularity.

Even though the earnings for MSL due to sales of All Things Must Pass was only 1/22 of the total mechanical royalties paid for the songs on that album, the judge agreed that the inclusion of MSL on the album did in fact boost the revenues of the "less-than-memorable" songs, and set out to devise a formula by which he could determine just how much revenue Harrison earned from his plagiarized song.

To make this determination, the court relied heavily, but not solely, on the amount of American airplay received by each song from "All Things Must Pass." Of the 22 songs on that album, only nine received enough airplay to be assigned a percentage of the total. "Wah-Wah", "Beware of Darkness", "Apple Scruffs", "Awaiting On You All", "All Things Must Pass", and "I Dig Love" were each found to have received one (1%) percent of the total airplay; "Isn't It A Pity" had four (4%) percent and "What Is Life" received twenty (20%) percent. Therefore, whenever a song from "All Things Must Pass" was played by a radio station, seventy (70%) percent of the time, the song was "My Sweet Lord". The judge thus ruled that seventy (70%) of the total mechanical royalties from the single, and fifty (50%) of the mechanical royalties earned by the album "All Things Must Pass" were attributable to MSL.

However, as far as "The Best of George Harrison" was concerned, the trial judge was unpersuaded that the earnings of that album were greatly enhanced by the inclusion of MSL, and since that album contained other songs which were relatively popular, the judge did not attribute any more than the actual mechanical royalties of MSL to the earnings of "The Best of George Harrison." Thus, using the formula as set forth for each release, the judge found that the gross earnings for the single attributable to MSL was $54,526; from "All Things Must Pass", $588,188; and from "The Best of George Harrison", $6,887, for a total of $646,601. (footnote 12)

The final piece of this financial puzzle was provided by examining the profits of Apple Records from MSL. Apple Records had a "spread" on the manufacturing of records. Boiled down to its simplest terms, the "spread" worked like this: Capitol Records had the facilities for making records. Apple Records paid Capitol Records a certain price to press its records, and then turned around and sold the finished product, which Capitol had just "delivered" to Apple, to Capitol Records Distributing Corp., for a higher price. The difference between what Apple paid Capitol for the production of its records and what Capitol paid Apple for the right to distribute the Apple product was the "spread". The judge applied his same formula to Apple's earnings from the "spread" and found those earnings attributable to MSL were: from the single, $130,629; from "All Things Must Pass", $925,731; from "The Best of George Harrison", $21,598, for a total of $1,077,958.

For those that don't have a calculator handy, the judge's figures for the total gross earnings of MSL were $2,152,028. This sum was reduced to $2,133,316 by the court allowing an offset for some agent's fees which Harrison had paid. However, before ordering that the entire earnings from MSL was due to Bright Tunes, the judge pointed out that there were some other factors present in this case. Harrison was an internationally known artist and he did provide a new lyric for the song. Had he been guilty of intentional plagiarism, even of the melody alone, the entire $2,133,316 would have been awarded to Bright.

After considering all the factors in the case, and conceding that this was not an area where precise measurement could be made, the judge found that three-fourth's of the success of MSL was due to the plagiarized tune, and one-fourth of that success was due to Harrison's name and the new words to the tune. The judge found that the introductory musical passage (the "hook") was a minimal factor in the popularity of this song, and pointed out that this unique melody had already demonstrated its appeal when it carried an otherwise unexceptional love song to the top of the charts in 1963. Therefore, the trial judge concluded that $1,599,987 of the earnings of MSL were reasonably attributable to the music of "He's So Fine".


THE EFFECT OF KLEIN'S ENTRY INTO THE CASE

The damages portion of the case was originally scheduled for trial in November, 1976. However, it was not until February, 1981 that this case was decided by the district judge. The reason for the delay was that Bright Tunes sold its copyright and its rights in this litigation to ABKCO. Upon ABKCO entering the lawsuit, Harrison amended his pleading to assert that Klein had acted improperly in purchasing this company, so much so that he should be disqualified from recovering anything from Harrison. (Again, for sake of ease of reading, a reference to Klein also includes his company ABKCO.)

The ruling by the district judge, and upheld in large part by the appeals court, was that Klein was not entitled to profit from his purchase of Bright Tunes' rights in HSF. The judge ruled that Harrison need only prove that his former manager's intrusion into the settlement of the lawsuit prior to the trial on the issue of liability were to his "probable detriment"; Harrison was not required to show that a settlement would have been reached. The court cited that Klein's proposals to Bright were viewed as highly credible, due to Klein's unique position to know the value of the MSL copyright. The court also found that Klein acted improperly in giving financial information about MSL to Bright prior to the decision on the question of liability. The court held that it would not reward Klein for his breach of the fiduciary duty owed to Harrison, a duty that continued even after the principal-agent relationship ended.

However, rather than just have Klein hand over his ill-gotten gains, the judge ordered that Klein hold the rights to HSF in trust for Harrison, and those interests would be transferred to Harrison upon payment of $587,000, plus interest, thus allowing Klein to "break even" on his purchase. This decision was upheld on appeal.


THE CURRENT STATUS OF THIS CASE

Even though the case had been in litigation for twelve years at the time the appellate court rendered its decision, the matter was far from over. The case lingered on for an additional eight years, as the parties contested just what rights Klein has purchased in 1978, how the settlement of a similar suit brought in England should be figured into Klein's purchase price, whether Klein should be allowed to deduct administrative fees from the song revenues (those revenues for HSF that were collected for Harrison under the terms of the trust), and other such accounting matters. The case was again in the appellate court in 1991, which ruled which credits against the original $587,000 award would be allowed, and sent the case back to Judge Owen's court for further proceedings.
A check with the judge's clerk in July, 1993, revealed that in April, 1993, an agreed order (meaning that all parties consented to the entry of the order) was entered at the trial court level, allowing certain funds to be dispersed to Harrison without having to be first placed in the registry of the court.

At the risk of sounding overly optimistic, all indications are that this case will finally be resolved before the end of the 20th century!


AUTHOR'S OBSERVATIONS

While I was in law school, I didn't take any courses specifically in copyright law, and had very little exposure to this field in my other courses. However, almost a dozen years later, I do recall one example that was used to illustrate a point in a course that surveyed the various remedies that are allowed in lawsuits. The professor brought a cassette tape with snippets of "My Sweet Lord" and "He's So Fine" into class and played them for us. I had owned the Harrison single for ten years at that point, had heard "He's So Fine" a few times, and was aware that there was a claim made that MSL had violated some copyright, but had never made the connection between the two songs. Hearing them in that context impressed upon me that the two songs were very similar, and I have never had any quarrel with the finding of Judge Owen that Harrison, however unwittingly, violated the copyright of HSF. As stated earlier, one that holds a copyright is not required to prove that an infringement was intentional.

I do take issue with a few things that Judge Owen did find in the area of damages. Before making these remarks, though, I should emphasize that Judge Owen and the judges who heard the appeals had the benefit of the briefs from the lawyers, and legal research into these areas that I have not done. If what follows sounds like second guessing, it is not so intended.

First, regarding the finding that 75% of the earnings of MSL could be attributed to the melody of HSF, Judge Owen admitted that making such an apportionment was an inexact science. Even so, giving only 25% credit to the success of MSL to the new lyrics and the fact that it was performed by one of the most popular musicians on the face of the earth in the early '70's seems to be unjustifiably low. The internal evidence of this is the lack of success of Billy Preston's version of the song. If the melody was such an integral part of the success of the song, then anyone that heard Preston's version should have been just as overwhelmed as they were by Harrison's. The fact that Harrison, not the relatively unknown (at that time) Preston, had the "hit" with MSL indicates that it was a lot more than a catchy melody that drove this song to the top of the charts.

Second, the decision that one-half of the mechanical royalties of the album "All Things Must Pass" were due to the plagiarized song is hard to understand. In my opinion, the fact that this was GEORGE HARRISON's first solo effort after the break-up of the Beatles was not given enough weight, nor was the fact that the critics who wrote for the rock press almost uniformly gave this record high marks. Whether or not MSL was included on this album, "All Things Must Pass" was going to sell very well. And there exists an argument that the "hit single" didn't propel this particular album to the heights that hit singles sometime do, because this was a triple record set, priced at twice the normal rate for a single album.

Third, while there was a lot of speculation on the percentages to be applied to Harrison's sales attributed to the plagiarized melody, there was an area of the damages that could have been resolved more fairly, and with less speculation. Klein was allowed to "break even" on the deal he made to buy the rights to HSF, and I'm not sure why. Judge Owen set out in great detail the series of events that transpired after Klein entered the picture acting on his own behalf, and based on these improper activities, Klein was not going to be allowed to profit from his wrongdoing.

But, in refusing to order that Klein forfeit the cost of the acquisition, the judge said "Had it been shown that Bright Tunes and Harrison were realistically close to a specific figure in their settlement negotiations, I could have utilized that figure for the resolution of the issue here". It was overlooked at this point in the opinion that the primary reason that Harrison and Bright Tunes weren't closer together was the fact that Klein was outbidding Harrison, and Harrison didn't know he was in a bidding war. It was only when Klein offered almost twice that which Harrison had put on the table that Bright Tunes concluded that the level of negotiation with Harrison was too low. As long as the judge was willing to speculate that the earnings of the song MSL were 75% due to the melody of HSF, and was further willing to guess that one-half of the earnings of "All Things Must Pass" were due to the inclusion of MSL on that album, I am at a loss as to why he was unable to apportion how much of the increase in the ultimate purchase price was due to Klein, guaranteeing that the case would not be settled prior to a ruling in Bright's favor on the issue of liability and thus driving up the purchase price. I would have thought that given the statement from Bright's attorney that Harrison's $148,000 offer to settle, prior to trial and prior to Klein's involvement, was "a good one" would have been ample evidence to reach a figure that would have been substantially lower than the $587,000 price Klein paid for Bright Tunes. Finding a lower figure to be appropriate would have left Klein in a situation where he lost money on his dealings, a conclusion that would have certainly been justified (and quite humorous as well).

Still, I find it funny that in after purchasing the rights to HSF, Klein offered to sell some of the rights to the song to his former client for $700,000. It is not clear that all rights Klein obtained would have been part of this deal, but Klein did Harrison a big favor, otherwise Harrison would have found himself facing payment of a judgment in the amount of $1.6 million dollars, and would not own the rights to HSF. While the legal expenses in this case are undoubtedly astronomical, Harrison should be able to take some comfort in the fact that Klein has had to pay his own fees, and has nothing to show for it, except a part in, without question, one of the longest running legal battles ever to be litigated in this country.

And there was one other benefit for Harrison; a second hit single entitled "This Song" which chronicled some of the travails of this litigation with lines like "This song has nothing Bright about it", and "as far as I know, don't infringe on anyone's copyright, so . . ." "This Song" wasn't as big a hit as MSL, but the revenue from it should have helped offset the costs of the litigation of the HSF suit.

My thanks to Allan Kozinn, for his help with some of the research and his input after reading the rough draft, and Professor Howard Brill of the University of Arkansas Law School, for exposing me to this case "all those years ago".


ENDNOTES

1. The various cases are: Bright Tunes Music Corp. v. Harrisongs Music, Ltd. et al, 420 F. Supp 177 (1976); ABKCO Music, Inc. v. Harrisongs Music, et al, 508 F. Supp. 798 (1981); same case on appeal, 722 F.2d. 988 (1983); again after remand, 841 F.2d. 494, and yet again 944 F.2d 971 (1991). I'll explain more about the changes in the party bringing this case later in the body of this article.

2. All chart references herein will be to Billboard, except as otherwise noted.

3. The reader will note that Harrison "gave" this extremely successful song to Preston, which might tell us that Harrison didn't recognize it as a hit single. If that's true, that would have been the second time he tossed a monster hit to a lesser artist. In his book I, Me, Mine, Harrison revealed that he "gave" the song "Something" to Joe Cocker before it was recorded for Abbey Road. It is also possible that Harrison, while taking sole credit for the song, recognized Preston's contributions by letting Preston record it first. The Court noted as much: "I treat Harrison as the composer, although it appears that Billy Preston may have been the composer as to part".

4. It is beyond the scope of this article to try to explain the intricacies of Klein's relationship to Harrison and the other Beatles. There are numerous books that account, at least in part, how the relationship began, functioned, and ended. My choice as the best book as to the genesis of this relationship is the 1972 paperback, Apple To The Core by Peter McCabe and Robert D. Schonfeld, which is regrettably out of print (and in dire need of an update). Philip Norman's Shout! is more readily available and does a pretty good job in setting forth the connection Klein had with the Beatles during their last months together.

5. As will be pointed out below, it is unlikely that Harrison had turned over detailed financial information to Bright, since there had not been a finding that Harrison was liable to Bright for infringement at this point.

6. This procedure is not uncommon in conducting a trial of this nature. It is usually discretionary with the judge as to whether or not to divide the case in this manner. This method differs from other types of litigation. For example, in automobile accident cases or product liability cases, the plaintiff may put on several days of testimony that go to the damages that the plaintiff maintains he or she suffered, but receive nothing when the jury or judge finds that there is no negligence on which to base liability.

7. While I take issue with part of the judge's ruling on the damages aspect of this case, the litigants could not have found themselves before a more able jurist in determining the question involving the music of the two compositions. Judge Richard Owen, the district court trial judge, has also composed music, and among his compositions is a three-act opera entitled Mary Dyer. He has also conducted orchestras, and his wife, Mary Owen, has appeared with the Metropolitan Opera Company in New York.

8. A mechanical royalty is the amount paid by the record company to the music publisher who licenses the use of the song on the record. The old vinyl singles had two songs which each earned a royalty, and each song on an album earned the same royalty, whether or not it was a memorable song or a throwaway track.

9. The performance royalty is most closely associated with radio play. These are monies payable to the publisher and the writer as a result of the composition being publicly performed or broadcast. BMI was responsible for collecting the royalty from those that owed it, and paying it to Harrison's publishing company.

10. Actually, "My Sweet Lord" and "Isn't It A Pity" may have been intended as equals on the record. The original Apple single used the green label on each side of the record; normally, the B-side had the dissected apple with the white core showing.

11. The judge found that "My Sweet Lord" received sixteen times as much airplay as did its flip side. Unlike many of the Beatles' singles released in the sixties, "Isn't It A Pity" did not have a chart history separate from "My Sweet Lord", at least not on Billboard. Billboard stopped giving separate chart listings for each side of a single on November 29, 1969, during the chart run of another Harrison composition, "Something".

12. These figures were for the U.S. and Canada. Since the lacquer masters, art work, packaging and licenses were all prepared in the United States, the judge included Canadian royalties in his computations.



http://abbeyrd.best.vwh.net/mysweet.htm

John Lennon "Roots" album lawsuit.


LENNON V. LEVY--THE "ROOTS" LAWSUIT

"Here comes old flat top, he comes groovin' up slowly"


In paying homage to Chuck Berry, one of his musical influences, in the song "Come Together", John Lennon could not have imagined that he was opening himself up to not one, but two lawsuits.

Most fans of John Lennon are at least somewhat aware that John was sued by Morris Levy in the mid-1970's over a dispute regarding the album "Roots," a mail-order record distributed by one of Levy's companies. The fact that there was such a lawsuit is often mentioned in Lennon biographies and in other books about the careers of the Beatles, especially when Lennon's 1975 album "Rock and Roll" is discussed, and the original Roots album has become a collectable among Lennon fans. This article will examine the second case brought by Morris Levy against Lennon, and Lennon's counterclaim, both at the federal district court level and on appeal to the U.S. Court of Appeals, Second Circuit. (footnote1) The information contained in this article will come primarily from those written opinions, and any information not found therein will be contained in a footnote.


THE PARTIES INVOLVED

Before discussing the background of the case, a review of the parties involved might be of some assistance to the reader unfamiliar with all the players. Although the introduction to this article states that the case was brought by Morris Levy, that is not technically correct, as the case was commenced by companies owned by Levy. Big Seven Music Corp. is the owner of music copyrights and Adam VIII was in the business of marketing records and tapes. For sake of ease of reading, when a reference is made to "Levy", I am referring to the corporations as well unless otherwise stated.

Several defendants were named. Lennon was identified by the trial judge as

"a singer, musician and composer and also a member of the former English rock music group known as `the Beatles.'"

He was also referred to as the president of Apple Records, Inc., another defendant in the suit. Capitol Records and EMI Records, Lennon's record companies in the U.S. and abroad, were also sued. One other person, Harold Seider was also named as a defendant, and was identified as "an attorney and Lennon's business advisor." The Defendants (except Seider) all countersued Levy.


HISTORICAL BACKGROUND TO THIS CASE

In the early Seventies, Big Seven, Inc., as the copyright holder of Chuck Berry's "You Can't Catch Me" sued MacLen Music, Inc., Northern Songs, Ltd. and Apple Records, Inc. Big Seven claimed that "Come Together" was so similar that it infringed on the copyright held by Big Seven.
The case was settled out of court on October 12, 1973 (and will be referred to herein as "the `Come Together' settlement"). As part of the settlement, the lawsuit was dropped in return for Lennon's promise to record three songs belonging to Big Seven for his next album. (footnote 2) At the time of the settlement, Lennon was in Los Angeles working on an album of rock and roll hits of the 1950's. The judge stated that "Lennon was working with one Phil Spector, a successful producer of rock and roll records. At some point these recording sessions terminated because of difficulties created by Spector." (footnote 3) Spector appropriated the tapes and Lennon did not retrieve them until July 1974, when Capitol Records paid $90,000.00 for them.

By that time, Lennon had commenced work on the "Walls and Bridges" album, and did not resume work on the oldies albums. " Walls and Bridges" was released in September, 1974, and was the next album released by Lennon following the settlement in October, 1973, but did not contain the three songs belonging to Big Seven as specified in the terms of that settlement. (footnote 4) Levy considered this to be a breach of the October 12, 1973 agreement and requested a meeting with Lennon to discuss the situation.


THE MEETING AT THE CLUB CAVALLERO
AND SUBSEQUENT EVENTS

Levy got his audience with Lennon in a meeting which occurred on October 8, 1974, at the Club Cavallero in New York. Present at this meeting was Levy, Lennon, Seider, Lennon's secretary, May Pang, an employee of Big Seven named Phil Kahl, and Bernard Brown, a business associate of Lennon from England. It is at this meeting that Levy claimed an oral contract was made, and it was the enforcement of this alleged contract which was the basis of the suit brought by Levy. (An examination of the precise legal claims of Levy follows this section.)

As for what transpired at the October 8, 1974 meeting, the parties were in agreement that the discussions started about the problems that Spector had caused in completing the oldies album. All agreed that the discussion turned to the possibility of Lennon completing the album and having it marketed by Levy through television promotion. Lennon was unquestionably interested in such a marketing move, partly because he was concerned that the delay in completion of the oldies album had somehow diminished its chance of success if marketed through normal channels, and partly because he was interested in using a different means of promotion and distribution.

It was also conceded by the parties that the question arose about Lennon's ability to grant Levy the rights to market this album. The complete conversation was a matter of contention between the parties. Levy testified that he had told Lennon and Seider that permission of Capitol was not needed for mail order distribution in the United States, and that Levy based this opinion on a published interview with Allen Klein (Playboy, Nov. 1971) and a private discussion with Klein in 1973. (footnote 5) Lennon and the other defense witnesses recalled that Levy was told that permission from EMI was needed before any rights, mail order or otherwise, could be granted to him. In any event, it was clear that despite Levy's assurances to the contrary, the parties recognized on October 8, 1974 that there was a potential impediment to the contract.

Following the meeting, there were several meetings and discussions that were brought up at trial in support of Levy's contention that a contract had been made on October 8, 1974. For example, Lennon invited Levy to hear the Spector tapes the next day and Lennon accepted Levy's invitation to rehearse at Levy's farm in Ghent, New York prior to the recording of the additional songs necessary to complete the album. Following the meeting, Lennon made statements to friends that he was making an album for Levy and in mid-November, gave Levy some rough tapes of the songs he intended to include on the oldies album.

Meanwhile, there was activity as far as the business end of the matter was concerned. Levy met with Seider and Michael Graham, an attorney for Lennon in mid-November, 1974. At this meeting, there were some discussions about what Levy's costs in producing and promoting the record would be, so as to get some idea as to what Levy's profit and Lennon's royalty would be. Seider also made some attempts to contact EMI about a possible arrangement with Levy, but Seider did not talk to anyone with Capitol or engage in substantial discussions with EMI until early January, 1975. In late December, John and Julian Lennon, with May Pang, were Levy's guests in Florida. Seider came to Florida to secure Lennon's signature on some documents to dissolve the Beatles' partnership and while there, Levy urged Seider to pursue the matter with EMI, and Seider agreed to do so.

On December 31, 1973, an attorney for Lennon sent a letter to Levy stating that Lennon was prepared to go forward with the second phase of the "Come Together" settlement, (footnote 6) and made no mention of the oldies album. Levy wrote back on January 9, 1975, stating the "Come Together" settlement had been superseded by a new agreement, and Levy would be marketing Lennon's record "throughout the world by use of television advertising." About this time, Capitol Records became active. It requested a meeting with Seider, who explained to Capitol for the first time what had transpired during the previous three months. Understandably, Capitol met this news with little enthusiasm. Capitol then met with Lennon and Seider in Los Angeles and it was decided that Lennon's oldies album would be marketed through Capitol.

After learning from Seider that Lennon's record would be issued by Capitol Records, Levy decided that he would nevertheless proceed, using the tapes Lennon had given him in November, 1974. Levy released his version, called "Roots," in early February, 1975; Capitol rush-released its version, called "Rock `n' Roll" about February 15, 1975. Capitol threatened legal action against those involved in the manufacturing and distribution of Roots, and production of Roots halted shortly thereafter.


LEVY'S CLAIMS AGAINST LENNON

As mentioned above, Levy based his whole case against Lennon on his assertion that an oral contract had been reached at the meeting. (footnote 7) It was his position that this contract was intended to supersede the "Come Together" settlement, that Lennon breached this agreement by not allowing him to complete the contract, that the other defendants conspired to interfere with Levy's contract which allowed him to market "Roots," and that he suffered a financial loss due to the breach of this contract.
In order to prevail, Levy had the burden of showing that a contract had been formed at the meeting on October 8, 1974. The judge stated that at the very least, Levy would have to show that an agreement had been reached by which Lennon would grant Levy the rights to distribute an album of Lennon's songs and that Levy was to pay Lennon or Apple a royalty, with the amount of the royalty being specified with reasonable certainty.

Levy had difficulties in stating what the terms of the contract. Early in the legal proceedings, Levy had made some sworn allegations to the effect that the October 8, 1974 agreement granted Levy worldwide rights for distribution through both mail order and retail outlets. After the trial commenced, Levy realized that such a contract was not possible, and conceded that EMI had exclusive rights to Lennon's records outside of North America, and had exclusive rights to distribute his records through retail channels in North America. So, during the trial, Levy amended his complaint to state that the contract only covered mail order sales in North America. (footnote 8 )

For his proof on this issue, Levy related his version of the meeting in which he gave Lennon advice about his contract with EMI. In addition to reading excerpts from the Playboy interview and hearing what Levy claimed he was told by Klein in 1973, the judge examined the actual contract between Apple and Capitol, approved by EMI. The pertinent part of the agreement said the following:

Apple hereby grants to Capitol . . . all of the rights which Apple derives under the Licensing Contract except . . .(ii) the distribution by mail direct to consumers.

Levy, of course, said that this supported his position that Lennon was free to enter into the contract with Levy. Lennon and the other defendants contended that the mail order distribution rights discussed in the contract referred to "record club" distribution, not the type of mail order business Levy intended to carry out. The defense also cited an underlying restriction in the EMI-Apple contract, which prohibited any party assigning that agreement or any part of it without the consent of the other party, and stated that the Capitol contract was subject to those restrictions as it had to be approved by EMI.

The judge never had to decide who was right on their interpretation of the Apple-Capitol contract, because he ruled that there was no contract. He found that Levy failed to prove that those in attendance at the October 8, 1974 meeting singled out the United States mail order rights from all other rights, and then agreed that Lennon had the ability to convey those limited rights to Levy. He further stated that there also was no evidence that Lennon had shown a willingness to go along with such a distribution scheme, even if he had the ability to do so. Levy's own testimony was that both retail and mail order distribution was discussed at the Club Cavellaro meeting, and had Lennon agreed to forgo Levy's retailing plan, something along those lines would have been discussed. The judge found that the October 8, 1974 meeting resulted in a tentative agreement for Lennon to provide 15 or 16 songs in the event that Lennon in fact made a record for Levy, but at this meeting no agreement was reached as to the amount or method of calculation of Lennon's royalty.

That then left one final matter, and that is the issue of damages to Levy for Lennon's breach of the "Come Together" settlement. There was no question that "Walls and Bridges" was chronologically the "next album" after the settlement of October, 1973, but the court found that the words "next album", in the context of the agreement, referred to the planned oldies album. Lennon had recorded three songs owned by Levy's company, Big Seven, but only "You Can't Catch Me" and "Ya Ya" actually appeared on "Rock `n' Roll"; the third, "Angel Baby", was not included on the Capitol release. Levy claimed that the omission of "Angel Baby" caused damages not only in the lost royalties from "Rock `n' Roll" sales, but also from the additional lost revenue that Levy would have had when other artists heard the song and covered it as well. Levy tried to persuade the court that "Angel Baby" would have been performed by numerous other artists after Lennon released it. Levy relied on the fact that the song "Close to You" had generated about two-thirds of its post-1970 royalties from cover records. The court gave little weight to this argument, stating that one track on an album by Lennon would not have the same exposure as a "hit single" like the Carpenters' version of "Close to You" and thus, there would not likely be a rash of new versions of "Angel Baby". Levy was awarded $6,795 in damages for Lennon's breach of the "Come Together" settlement.


LENNON'S COUNTERCLAIM

Lennon, Capitol, EMI and Apple all countersued Levy. The defendants all prevailed against Levy and damages were assessed for Levy's infringement of copyright and trademark rights, misappropriation of property, and in Lennon's case, a civil rights violation count under New York law. (footnote 9) The claims of the companies against Levy were settled after the trial and before the appeal was finalized. (footnote 10) Lennon and Levy were unable to settle Lennon's award, and it was reviewed by the appellate court.

Lennon's claim can be summarized as having three main parts. First, he maintained that the release of Roots and the resulting rush-release of "Rock `n' Roll" caused the latter album to sell less copies than it normally would have done, and therefore Lennon made less money on the royalty payments than he otherwise would have. Second, he asserted that the list price of "Rock `n' Roll" was reduced because of "Roots," and thus his share of the proceeds was also lessened. Third, he claimed his reputation was damaged by the shoddy quality of the album jacket and music of "Roots."

The trial court found that Lennon had suffered damages in the amount of $145,300.00 by Levy's unauthorized release of "Roots." The verdict in Lennon's favor was affirmed but modified on appeal. Before looking at the method used to determined this figure by the district court, and why it was reduced on appeal, an examination of what transpired after the release and recall of "Roots" is necessary.

Although Levy had been warned that Capitol was claiming rights to this material, Levy released his record on the Adam VIII label, with a list price of $4.98 per album and $5.98 per tape, which was two dollars per unit less than the standard market price for albums and tapes in February, 1975. Shortly after the release of the "Roots" album, television commercials were aired in a few markets. Capitol and Lennon contacted the stations and Adam VIII's suppliers, who then refused to handle "Roots." A total of 1,270 copies of "Roots" was sold, with gross revenues of less than $7,000, which did not cover the cost of production and marketing of the album.

As previously mentioned, Capitol rush-released its album several weeks earlier than it would have been released. However, there was no proof that this affected the album's jacket, or the quality of the recording and production. Capitol's version was called simply "Rock `n' Roll," and was listed for $5.98 per album and $6.98 per tape, so it could compete effectively with the Levy release after it was discounted by the retailers. At the time damages were determined, the album had been out for over a year, and had sold 342,000 copies in the United States, despite generally unfavorable reviews, despite the album not being new compositions and despite a recession that caused record sales to be down generally some 15-25%". United States figures were used because "Roots" had not been released elsewhere.


LENNON'S CLAIMS FOR LOST ROYALTIES

The trial court was faced with the difficult task of trying to determine what the sales of "Rock 'n' Roll" would have been if not for Levy's wrongful conduct. Lennon's position was that the total revenues of "Rock `n' Roll" were adversely affected by "Roots" in several ways, but primarily due to the reduced list price for this album (the normal list price for new releases was $6.98 in February, 1975), and the efforts to market "Rock `n' Roll" was hampered by the rush schedule the imminent release of "Roots" caused. To arrive at some sort of reasonable figure, the court examined the United States sales figures of previous and subsequent Lennon albums, and reviewed the sales figures of Lennon's releases in Canada, a market uneffected by Levy's marketing of "Roots." (footnote 11)

To this point in Lennon's career, he had released several solo albums. The district court decided to try to average the sales totals of some of Lennon's records to try to come up with a fair figure as to what "Rock `n' Roll" should have done, and used "Walls and Bridges" and "Shaved Fish" (the two records issued immediately before and after "Rock `n' Roll," with total American sales of 425,000 units and 408,000 units, respectively), as his basis for a projection for the low side of potential sales, which was set at 425,000, the same as "Walls and Bridges." The judge then looked at the actual Canadian sales figures for "Rock `n' Roll" and then arrived at the high side figure of projected U.S. sales at over 525,000 units for "Rock `n' Roll," given the past sales figures of Lennon's releases in Canada as compared to the U.S.

All in all, the trial court found that Lennon lost an estimated 100,000 units as a result of Levy's album. Given Lennon's royalty rate of 66 cents per unit, Lennon was awarded $66,000 for lost sales. Levy also had to pay Lennon $.10 per album actually sold worldwide, because "Rock `n' Roll" was sold for a dollar less per unit, due to the perceived competition from "Roots," for an additional payment of $43,700. Of this total award of $109,700, $9,400 was withheld for payment to the American Federation of Musicians, leaving Lennon with a total award on lost royalties of $100,300.

The appellate court agreed that Lennon was entitled to some compensation for the loss of royalties, but did not approve of the manner in which the loss was computed. The appellate court noted that several of Lennon's albums were not used in making the determination of what the sales of "Rock and Roll" would have been. The album "Imagine," Lennon's best seller to date (sales in 1975 of over 1.5 million) and his three worst-selling albums, "Two Virgins," "Unfinished Music No. Two: Life with the Lions," and "Wedding Album" (each of which sold between 20,000 and 50,000 copies) were all disregarded, presumably as aberrations.

The court also noted that the sales of "Sometime in New York City" were only 164,000 copies and "Mind Games," the album preceding "Walls and Bridges," had sold 376,000 units. The appeals court held it was wrong to exclude "Mind Games" from the calculations since Lennon had cited the Canadian sales of "Mind Games" to the district court, which was used to place the "upper limit" projection of what "Rock `n' Roll would have sold. It was never explained why "Sometime in New York City" was not used to make the projections; Levy claimed that if that album was included in the calculations, "Rock `n' Roll" actually sold more copies than the figure of 321,000 one would get by averaging all post-1972 releases. (footnote 12)

Once the appellate court decided that the sales of "Mind Games" must be included with those of "Walls and Bridges" and "Shaved Fish" in making calculations, the average sales for those records was 403,000, some 61,000 more than "Rock `n' Roll." Lennon's award was thus reduced to $40,260 ($.66 X 61,000), less any fees owed to the American Federation of Musicians.


LENNON'S DAMAGES DUE TO REDUCED LIST PRICE

Lennon claimed that he suffered a financial loss due to the reduced list price of "Rock `n' Roll." The trial judge agreed, set Lennon's damages at $.10 per unit, and found that 437,000 copies of "Rock `n' Roll" had been sold worldwide at a reduced price. (footnote 13)

However, the president of Capitol Records gave testimony that actually helped Levy in this regard. Mr. Menon (no first name given) testified that the competition of "Roots" was only one of three factors that determined the list price of "Rock `n' Roll" would be $5.98. He also cited the condition of the marketplace in the first quarter of 1975, and the fact that the album was not one of original compositions by Lennon as considerations. He also testified that the demand for the product would have been the same at $5.98 or $6.98, and thus there would have been no decrease in sales. Based on this testimony, the appellate court reduced Lennon's award for damages due to the reduced list price of "Rock `n' Roll" from $43,700 to $14,567 (less the AFM fees), stating that the best Lennon could prove was that one-third of the extra dollar of lost revenue was due to Levy's unauthorized release of "Roots."


LENNON'S CLAIM OF DAMAGE TO REPUTATION

Lennon was awarded $35,000 in compensatory damages for injury to his reputation, and an additional sum of $10,000 in punitive damages (the punitive damage award was for both the royalty claims and the damage to reputation). (footnote 14) Levy's defense was that Lennon could not possibly be damaged by any image on an album cover, as he had previously appeared nude on one cover and being arrested for drugs on another. Levy claimed that Lennon's reputation was "virtually impervious". The court found that when compared to other Lennon albums, this one looked cheap, if not ugly. The music was found to be shoddy and fuzzy, with one track out of tune and with indistinct voices in some places. Lennon's award for damages to his reputation stood at $35,000.

However, the appeals court tossed out the punitive damage award. Lennon had not shown that Levy was guilty of any evil motives, and in fact, the court found there was ample evidence to indicate there was no serious blameworthiness on Levy's part. In addition to the tentative agreement that was found to have existed between Lennon and Levy, the court also found that the whole matter could have been avoided if Lennon's agent, Seider, had promptly revealed the substance of the October 8, 1974 meeting to Capitol. The court further found that Levy's position on the Apple-Capitol contract was at least partially correct, although simplistically misplaced. There was no gross fraud, as the album was a set of performances by Lennon, even though the album erroneously claims that Lennon authorized the release. Thus, the $10,000 award for punitive damages was reversed. Therefore, the final award to Lennon totalled $84,912.96, and Levy received a judgment for $6,795.


AUTHOR'S OBSERVATIONS

I started this matter under the assumption Lennon had been hustled by Levy, but in the time I finished this article, my thinking has changed dramatically. I find it very hard to believe that "Rock `n' Roll" sold 100,000 or even 61,000 less copies because Levy issued his half-baked product and sold a whopping 1,270 copies. The true reason is well known to every fan of the Beatles--this album simply wasn't that good. It continued what had become a pattern of lackluster sales (by Beatle standards, anyway). After "Imagine," the fiasco that was "Sometime in New York City" and the mediocre "Mind Games" kept fans from buying the newest Lennon album without hearing some of it. The same thing happened to Harrison and even the more commercial "McCartney." For example, "Band on the Run," generally regarded as Paul's best album in the 70's, took four months to reach the top of the charts and then only after it had some hit singles. (footnote 15)

I found it curious that the two hit singles from "Walls and Bridges" didn't propel it to more sales than slightly over 400,000. Given subsequent claims and lawsuits, it makes me wonder if Lennon had been provided accurate figures for his sales. In any event, the sales of "Mind Games," with only one hit single should have tipped off the court that Lennon was not damaged by Levy's action. "Rock `n' Roll" had only a cover of "Stand By Me", which barely cracked the top twenty in America.

And damages for the loss of revenue due to the reduced list price is also a bit far-fetched. Since most records are discounted anyway (as I recall, $6.98 records sold for $5.47 in my local Wal-Mart), the notion that the sales price of "Roots" had anything to do with the decision to knock a dollar off the list price of "Rock `n' Roll" approaches the realm of fantasy. Even the president of Capitol, whose company would stand to receive 90% of the award for lost revenue didn't support this position very well.

As for damages to Lennon's reputation, the statute under which Lennon sued would have guaranteed him something if Levy was found to have used Lennon's likeness in an unauthorized manner. My vote would have been for $1.00. By 1975, Lennon had been busted for drugs, had a widely covered separation from his wife which featured drunken binges in L.A., had been filmed nude for Yoko's movie, "Self-Portrait," and the "Two Virgins" cover, had been associated with political leftists, and had fought publicly with his former bandmate, Paul McCartney. How Levy damaged Lennon's reputation in any way is still a mystery to me. Those that loved him, still did; those that didn't, still didn't.

But don't cry for Levy. He knew better. He had been in the business long enough to know what a record contract contains and what it takes to formulate a valid contract, especially with an artist already working for another label.

One final observation that needs to be made is that the judges in this case, both trial and appellate, were hopelessly out of their league in dealing with these issues. A couple of quotes will illustrate that point. Regarding the recession that affected sales in early 1975, the exact quote was: "despite the fact that teenage purchasing power was at the time affected by a recession . . ." These judges didn't realize that Lennon's audience did not primarily consist of teenagers at this time.

In discussing the condition of the "Roots" cover and record, the judges said that the out-of-tune track and indistinct voices were "reasonably clear even to appellate ears unused to Lennon's style of music". This conjures notions of the judges, sitting in chambers, trying to figure out the words to "Bony Maronie"! Still, all things considered, I think the judges all did the best they could. It just wasn't within their field to tell Lennon that his album didn't sell as well as he would have liked because it wasn't a great record. The buying public and rock press did that.


ENDNOTES:

1. Big Seven Music Corp. and Adam VIII, Ltd. v. John Lennon, et al, 409 F. Supp. 122 (1976); same case name on appeal--554 F.2d. 504 (1977). These abbreviations mean that to find this case in a law library, ask the librarian for volume 409 of the Federal Supplement, and look at page 122 to see the opinion from the trial judge, and for volume 554 of the Federal Reporter, Second Series, on page 504 to see the decision on appeal.

2. Even though the companies that controlled Lennon's and McCartney's publishing interests were involved, there does not seem to be any indication that McCartney was affected in any way by the lawsuit or the settlement, despite the fact that the offending song was credited to "Lennon-McCartney". It is widely recognized by that time as "John's song", and John took responsibility for the settlement.

3. While Spector, not a party to this litigation, made a handy scapegoat, and while his conduct was certainly erratic, one must recall that this was during John's "lost weekend" in Los Angeles, a period of his life that was hardly marked by stable behavior.

4. One such song did appear on "Walls and Bridges." "Ya Ya", which was published by one of Levy's companies, closed out the second side, and was a duet between John and his eleven year old son, Julian. However, this fact is not mentioned anywhere in the court's opinion.

5. Fans of the Beatles need no introduction to Allen Klein, the man that tried to get managerial control of the Beatles after the death of Brian Epstein, and eventually did exercise some control over Lennon, Starr, and Harrison. It is interesting that Levy would quote Klein as a source of valuable information in a meeting in which Lennon was attending, as Lennon had severed ties with Klein by that time, and wrote a song on "Walls and Bridges" that expressed his opinion of Klein.

6. Just what this "second phase" of the settlement was supposed to be is not clear from reading the court's opinion. The agreement was that three songs in Levy's catalog would be on Lennon's "next album", and the next one released after the settlement was "Walls and Bridges." Also, the name of the attorney that wrote the letter is omitted from the text of the opinion. Presumably, it was not the aforementioned Michael Graham. Graham would have had knowledge of the discussions with Levy; some of Lennon's other attorneys may not have been informed as to these negotiations.

7. Contrary to popular belief, it is possible for a oral contract to be enforced. (There are some agreements that must be in writing to be enforced, such as contracts regarding the sale of real estate.) However, in order to have a legally binding agreement, several factors must be present, including what the law calls "a meeting of the minds" A contract must also be definite in its terms, or at least clear enough that the meaning and intent of parties can be determined. Of course, the best and most common practice is to reduce the terms of an agreement to writing so that each party can see what the other believes the agreement to be. If a party then believes the other to have broken the agreement, the interpretation of the contract setting forth the rights and obligations of the parties is much easier when the terms are written.

8. It is not uncommon for parties to amend their pleadings after the initial complaint is filed, because depositions are taken and documents exchanged that causes the parties to better understand their position. It is less common, but not completely unheard of, for a party to amend their complaint several days into trial. However, the amendment Levy made was such a radical change in his position that the Court noted that his difficulty in formulating the terms of the contract would have itself been sufficient to cast doubt on the existence of the necessary meeting of the minds.

9. New York Civil Rights Law 51 gave Lennon a claim for the unauthorized use of his name and picture. This law provides for both compensatory and punitive damages.

10. Neither the amount awarded to the companies, nor the terms of the settlement were revealed in the written opinion. It is not terribly unusual for parties to compromise after a trial and before the appeal is decided, especially if both sides are running up big legal bills, and if the prevailing party is afraid that delay might cause the judgment to be harder to collect.

11. Through February, 1976, "Rock `n' Roll" had sold about 65,000 copies in Canada, about 19% of what had been sold in the U.S. However, there was some difficulty in using Canadian figures. In comparison of the sales figures for the U.S. and Canada for "Mind Games" and "Walls and Bridges," Lennon's sales in Canada were 12.5% of the total sales in the United States. Lennon's best seller, Imagine, sold only about 8% of the U.S. total. This factor, along with some of the other intangibles, such as the Canadian economy and the tastes of the purchasers in that market, made the use of these figures less than totally persuasive evidence as to the damage caused by "Roots."

12. It's not clear exactly what the Lennon position was. Simple math would show that the average would be highest if all records from "Imagine" through "Shaved Fish" were used. "Live Peace in Toronto" and "John Lennon/Plastic Ono Band" were not mentioned. It appears that the Lennon camp was determined to leave out the three poorest sellers, and "Sometime in New York City," and to do so, had to maintain that records issued that long ago could not reasonably be used to estimate the sales of "Rock `n' Roll."

13. Note the use of worldwide figures in this section. Although Lennon and his companies would have been free to charge whatever list price they chose in the rest of the world without fear of competition from Roots, the dollar reduction was uniform throughout the world.

14. In New York, the standard for an award of punitive damages is one of "moral culpability" on the wrongdoer's part, involving "evil and reprehensible motives or gross fraud". In general, punitive damages are assessed to punish the defendant and to discourage others from acting in a similar manner. They are often called "exemplary damages", because one purpose to make an example of the defendant. One sees punitive damages often in cases against large companies that hide or ignore data about the safety of their products, thus causing peril to consumers. They are also common in slander and libel cases.

15. Nicholas Schaffner, "The Beatles Forever," page 166. Schaffner made a similar observation about Harrison on page 192: "Perhaps 'Dark Horse' and 'Extra Texture' had broken the fans' habit of snapping up his albums on the strength of Harrison's name alone." I see the same thing happening with Lennon's sales. Double Fantasy was heavily promoted, and didn't do poorly before Lennon's death, but I don't think anyone believes it would have sold as many copies had John lived.


http://abbeyrd.best.vwh.net/lenlevy.htm.

The Star Club tapes


THE BEATLES VS. LINGASONG:
THE STAR CLUB LITIGATION

In 1977, a couple of "new" Beatle albums arrived in record stores throughout the world. One, "The Beatles At The Hollywood Bowl," was released by the Beatles' longtime label and with the help of producer George Martin; the other, "The Beatles--Live At The Star Club," was opposed by the band, and a lawsuit was filed in England to block the release of the album. This article examines the events leading up to the release, the claims made by the parties during litigation, and the rulings that allowed the release of the latter album. The primary source of the information contained herein is the actual published decision from England, published at [1977] FSR 345. (footnote1) I also have reviewed several magazine and newspaper articles that were published contemporaneously with the events, because the factual background of the case is not fully developed in the judge's opinion.


HISTORICAL BACKGROUND

The Court's written opinion starts with this factual background:

"In 1961 or 1962, the group of four musicians known as the Beatles performed a number of songs at the Star Club in Hamburg. A tape recording of that performance was made by Mr. E. W. Taylor. One of the Beatles, in the presence of the others, gave Mr. Taylor oral permission to make the recording; but no consent in writing was ever given."

It probably wasn't important to the judge to nail down the exact date, and it was apparently not widely known in the mid-70's, as contemporary accounts of the events show. (footnote 2) E. W. Taylor is better known to the public as Ted "Kingsize" Taylor, a fellow British musician playing in Hamburg with his band, The Dominoes, at the same time the Beatles were playing at the Star Club. It was not clear which of the Beatles gave permission to tape the show; Taylor may not have remembered at the time he gave his affidavit. He stated in that document: "It's O.K. with us--you get the beer in". (footnote 3) While permission was seemingly contested at one point by an affidavit sworn by Neil Aspinall, (footnote 4) the Court said that consent to making the tapes was "common ground", or a matter not in dispute.

It is also not disputed that the tapes were offered to Brian Epstein in 1963, who offered only L20 to cover the expenses of making them (I assume there are more than one spool of tape throughout this article; the judge wasn't sure, but said it didn't matter in making his decision). Taylor declined the offer.

The tapes were not seen again until 1972 or 1973, when they appeared in the hands of former Beatle manager Allan Williams. The story of how they wound up with Williams has varied throughout the years, and the true facts are not important to this article (one should perhaps read his book for his version of how they came to light). What is important is that Williams offered to sell the tapes to Apple about that time for the sum of L10,000 and a retained royalty interest, but the offer was again rejected. Williams also had no success in interesting various record companies to release the record.

In September, 1975, after failing to attract the interest of a major label, Williams struck a deal with Paul Murphy of BUK Records, a subsidiary of Polydor Records, for the production of records from the tapes. A new company, Lingasong, was formed for the project.

Still, it was going to be quite some time before the records would be ready to be placed on the shelves for the public. The technical work on the tapes is well-documented elsewhere; suffice for this article to say that it was quite an expensive undertaking to get the tapes in such condition that were considered acceptable (and some today still find the quality of the tapes distracting). In fact, in the fall of 1976, an interview with Allan Williams ran in Beatles Unlimited, in which he mentioned that Murphy was a co-owner of the tape, but he did not know when it would be released.(footnote 5)

However, the restoration work must have been completed by December, 1976, because an article appeared in Music Week reporting on the impending release of a "pre-EMI Beatles set". (The story was also picked up by Melody Maker in its Dec. 25, 1976 issue.) On January 21, 1977, Murphy was contacted by a solicitor (English term for a type of attorney) for Apple, a meeting that was "merely to find out what was going on". Murphy informed him that the record would be released very shortly. More conversations occurred on January 31, 1977, and correspondence was exchanged between the lawyers for each party. On March 23rd, Murphy told Apple's representatives that the record would be finished in the next two or three months, but may not be released in England due to the pending release of a Beatle record in May, 1977, a release that was scheduled to receive a massive advertising campaign. (The album that was pending on EMI's schedule was "The Beatles At The Hollywood Bowl.") At the end of March, in an effort to generate interest in the album's pending release, Murphy sent an apple to various members of the press along with an invitation that asked the recipient to come to the Apple Building at 3 Savile Row. The press event was not going to be held at that address, but someone was there that directed everyone to where the party was being held. This use of the name "Apple" upset those connected with Apple. (footnote 6) After a half-hearted attempt to explain his actions, Murphy apologized and pledged not to repeat it or attempt to imply any connection with Apple Corps Ltd.

It was about this time that Apple decided it was going to try to block the release of the album. A letter informing Murphy and his partners that the Beatles' attorneys had been instructed to take proceedings to prevent the distribution of the Hamburg tapes "unless they received unequivocal undertakings acceptable to (Apple)". The letter was delivered on April 1, 1977, and gave the Murphy group until 3:30 that afternoon to come to terms with Apple, or a request for an injunction would be filed. No such agreement was reached, and the action was filed that afternoon.


LEGAL ARGUMENTS

The lawsuit was filed by Apple and the Beatles. (For the sake of ease of reading, a reference to Apple, the Beatles or "Plaintiffs" all mean the same thing, unless the context clearly dictates otherwise. The defendants were Lingasong Limited and Paul Murphy, and likewise, a reference to Murphy also includes his company, unless the contrary is evident.) Apple sought an injunction to prevent "the manufacture, sale and distribution of records embodying a recording of a live performance given by the Beatles before they were well known." Several theories were advanced by Apple, and these are set out individually below.
However, before discussing the parties' contentions, it should be noted that the nature of this action differs from most types of civil litigation. When an injunction is requested, the party seeking that remedy must be able to show that it is about to suffer some grievous harm, that a lawsuit after the fact would not place the aggrieved party in as good a position as he would be without the injunction, and that issuing the injunction would not work an undue hardship on the one being enjoined. There must also be at least the slightest bit of evidence that the complaining party has a chance to prevail on the merits of his lawsuit. (footnote 7) The Beatles had to be able to show that the release of the Murphy product would somehow cause them harm, that a suit after the release would not be sufficient to compensate them for their harm, and that Murphy would not be unreasonably harmed due to the delay.


1. Claim under the Dramatic and Musical Performers' Protection Act of 1958.

The primary thrust of the Beatles' claim fell under the interpretation of an English statute. It is important to note that this statute is not a copyright statute; in fact, the claim made by the Beatles expressly disclaimed any contention based on ownership or copyright of the tape itself. Apple conceded, at least for the purpose of this action, that permission had been given for the making of the tape itself.

Without going into great detail, the Dramatic and Musical Performers' Protection Act (D&MPPA) is a criminal statute. It was originally passed in 1925, amended in 1958, 1963 and 1972. One violates this statute by making, selling, distributing or broadcasting a record without the written consent of the performers. It provides that violation of said Act is punishable by a fine of up to L 20 per record (up to a maximum of 400) and imprisonment for not more than two years. In essence, this would be the statute under which a bootlegger would expect to be prosecuted by the Crown in England.

It was the Beatles' position that the statute also gave them a right to bring civil litigation for what they claimed was the unlawful use of their performance. Without this right, The Beatles argued that there was no protection afforded a performer. On the other hand, Murphy cited the Court to a case from 1930 that held that performers had no property rights in their performances, and hence no civil remedies under that statute, and that the subsequent amendments to the law did not overrule the earlier case.

The judge found that the previous case from 1930 controlled this matter, as the law itself had not been changed by the subsequent amendments. The judge said that the criminal statute must be read in connection with the copyright laws of England. At the time the D&MPPA was enacted, the concept of copyright had been around for many years. A copyright gives a property interest in a work, but the copyright laws in England were not drafted so as to give a copyright in a performance. The judge found that Parliament had intentionally omitted granting this property right to a performance, since it would have been easy to revise the law following the 1930 decision had Parliament thought it prudent to do so. The judge ruled that creating criminal liability for acts done to the detriment of a class of persons is a common and effective way of providing protection for those persons. Noting that copyright law and its enforcement by civil litigation was closely related to the matter at hand, and given that Parliament had deliberately selected criminal prosecution as the sole remedy afforded to a performer, the Beatles could not receive injunctive relief on this theory.


2. Claim of interference with trade or business.

This claim was dealt with in two sentences in the opinion. The Beatles claimed that the unlawful act of Murphy would amount to the tort of unfair competition, and cited several cases to support that claim. The judge disposed of that argument thusly: "In the end, this really came down to a claim that there was a tort of misappropriation of the reputations of others by an unlawful act; and I found it difficult to see any real basis on the facts of this case for such a claim".


3. Claim of "balance of convenience".

Finally, Apple claimed that since Lingasong had formed with only the minimum amount of capital required under law to start a corporation (L100), an injunction should be issued because Lingasong would not be able to pay damages should Apple prevail on the merits of the litigation. The phrase "balance of convenience" means that the court may examine the relative hardships to the litigants of issuing or refusing to issue an injunction. The comparable worth of the parties is only one factor to consider in determining whether irreparable harm was about to occur. If this were the sole determining factor, the affluent would always receive injunctions against those of modest means simply by pointing out the financial disparity of the parties. The judge ruled that this factor did not outweigh the other factors, which he found mitigated against the injunction.
Although it was not clear that this defense was advanced by Murphy, the judge went to some lengths to discuss the inactivity of Apple prior to April 1, 1977, to prevent the release of these albums. In light of the evidence of Murphy's plans, both in the trade papers and in direct contact with Apple's lawyers, Apple had long known of the existence of the tapes and the effort to get them marketed. As Murphy had already been out considerable expense in processing the tape to improve the sound quality, and in manufacturing the records themselves, the judge thought it would be unfair to issue an injunction at that late date. Apple had argued that it was not aware that a release in England was planned by Murphy, but only in the U.S.A. The judge said he could not take very seriously this contention.

He also stated that he thought it would be unfair to demand that the agreement to make the tapes be in writing, even though it was statutorily required. What The Beatles were seeking was discretionary relief, and it is not uncommon to disregard a requirement of a written instrument in making an equitable ruling of this nature. Since all parties agreed that permission was given by at least one of the Beatles, the failure of Murphy to present a written agreement was not fatal to his cause. (footnote 8 )

After considering what he believed to be the weakness of the primary claim by the Beatles as to a right to bring this action under the D&MPPA, and after finding it unfair that last-minute proceedings would come after months of silence by the Beatles in the face of the obvious possibility of the release of these tapes, the judge declined to grant the requested relief.


AUTHOR'S OBSERVATIONS

I readily admit that I don't know enough about English law to know if this decision was correct. I know it was upheld on appeal to the higher courts in England, and done so without much discussion. However, and perhaps because I know so little about English law, I am a bit puzzled by the ruling by the judge that no right of civil action was available to protect the Beatles in this case. If, and that's a big "if", a criminal activity were about to occur, I'd think that a court would always retain injunctive jurisdiction to prevent the crime. In the States, it is routine to have injunctions or restraining orders that prevent certain conduct that would be criminal in nature; in every divorce action filed where I practice, the courts automatically issue a standard restraining order against trespassing, criminal mischief and harassment. Certain labor strikes are criminal, and are enjoined. I fail to see how the fact that the Beatles may not have been able to sue for damages meant that the door to the courthouse was closed to them for injunctive relief to prevent a crime from being committed against them. That, though, may be a difference in the American and English systems of justice.
However, whether or not they were about to become a victim of a crime, I am totally in agreement with the judge that the Beatles sat on their hands too long to expect him to grant their last-minute appeal for relief. Allan Williams made no secret his possession of and intentions regarding the tapes, several years before 1977. Paul Murphy had talked openly to the press about the pending release, and had been in discussions with Apple privately as well. To sit by and not utter a word of protest until shortly before Murphy was about to release his prepared product was very unfair to Murphy, and for that reason alone, the judge could have denied Apple's petition. I can't prove it, but I suspect this was the driving reason behind the denial, and the other stated reasons were ancillary.

I found no evidence that the Beatles pursued a civil action of any sort against Murphy. Naturally, in light of the judge's ruling, they may have decided not to throw any more money away on legal expenses. I also saw nothing to indicate that criminal sanctions were brought against Murphy, Taylor, or Williams. Even though the statute specifically states that "the consent in writing of the performers" is necessary, any prosecution witnesses would likely be bound by the admission in the civil court that consent, albeit oral, was given. As a former prosecutor, I know I would not charge anyone with a criminal offense simply because the parties had not reduced an admitted agreement to writing.

It is amazing how little foresight Brian Epstein had in offering only L20 for the tapes in 1963. Knowing the tapes existed in 1963, and knowing that the Beatles were already extremely popular, it wouldn't take a great leap of logic to figure out that there was a possibility of releasing those tapes to the public