Page:Harris v. Emus Records.pdf/6

1334 (7th Cir.1972), ''cert. denied'', 410 U.S. 929, 93 S.Ct. 1365, 35 L.Ed.2d 590 (1973), and citations therein.

Such an interpretation of a license accords with the policies underlying enactment of the Copyright Act. The legislative history reveals an acute awareness of the need to delicately balance competing interests. On the one hand, there was a strong reluctance to allow a monopolization of works or compositions; at the same time, there was an awareness of the necessity of preserving the rights of authors and composers in order to stimulate creativity. H.R.Rep. No. 2222, 60th Cong., 2d Sess. 7 (1909).

Illustrative of the compromises adopted is the compulsory licensing provision which permitted the copyright holder to control first use while providing a mechanism for others to obtain licenses once first use had been authorized. The notice provision for compulsory licenses insures that the copyright owner can monitor use in order to determine that accountings are accurate. The same consideration is relevant here. By licensing rather than assigning his interest in the copyright, the owner reserves certain rights, including that of collecting royalties. His ability to monitor use would be jeopardized by allowing sublicensing without notice. In fact precisely such a scenario underlies this litigation.

Amicus Recording Industry of America argues that the purchase of master recordings at bankruptcy sales is a common practice of the recording industry. It urges that whether or not a copyright license is otherwise transferable, it does pass to the bankruptcy trustee under the provisions of the Bankruptcy Act. We disagree.

Section 70(a)(2) of the Bankruptcy Act of 1898, codified as 11 USC. § 110(a)(2) (1976), provides that “interests in patents, patent rights, copyrights and trademarks, and in applications therefor” are vested in the bankruptcy trustee. We are called upon to decide whether “interests” in this context include licenses.

Under patent law, a license has been characterized as an agreement not to sue the licensee for infringement. United States v. Studiengesellschaft Kohle, m.b.H., 670 F.2d 1122, 1127 (D.C.Cir.1981); Western Electric Co. v. Pacent Reproducer Corp., 42 F.2d 116, 118 (2d Cir.1930). As such, a license conveys no proprietary rights in the patent. Bell Intercontinental Corp. v. United States, 381 F.2d 1004, 1010, 180 Ct.Cl. 1071 (1967), and cases cited therein. We hold therefore that for the purposes of § 70(a)(2) a license is not an interest in a copyright.

Section 70(a)(5) of the Bankruptcy Act provides for the transfer of all assets which the bankrupt “could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded or sequestered” prior to the petition for bankruptcy. Because a copyright license can not be transferred by the licensee without authorization, it falls outside the reach of this provision. Although defendants obtained the master tapes, they did not thereby obtain a license to mechanically reproduce them.

B. The Harris Compositions

Included on the Gliding Bird Album were five songs written and composed by Harris: “Fugue for the Ox”, “Bobbie’s Gone”, “Clocks”, “Black Gypsy” and “Waltz of the Magic Man”. Mechanical licenses to duplieate these songs had been issued to Jay-Gee by the joint copyright owners: Hannah Brown, Nanshel Music and Jubilee Music. No new mechanical licenses were obtained for the songs at issue by defendants at the time they released the album, nor were any royalties paid to Harris.

While there were ambiguities in the original mechanical licenses and the parties disagree as to whether they were compulsory or negotiated licenses, no one