With the National Party still licking its wounds after an unfavorable election outcome, the political party has again found itself on the wrong side of the line, and this time, potentially more than $600,000 out of pocket.

In the long-awaited decision of Eight Mile Style v New Zealand National Party, Justice Cull of the New Zealand High Court found the National Party liable for copyright infringement for its use of a sound-alike track, Eminem Esque. The track, which was used by the National Party in a 2014 election advertisement, was found to be an infringing copy of Eminem’s chart-topping hit Lose Yourself. The National Party has been ordered to pay $600,000 (plus interest) in damages to the copyright owner, Eight Mile Style.

What happened?

As discussed in our previous article about the case, as part of its 2014 general election campaign, the National Party engaged advertising and media consultants to create a rowing-themed advertisement. Eminem's award-winning soundtrack Lose Yourself was identified as a piece of music that would, through its steady, syncopated beat, help to create a sense of momentum to accompany the rowing strokes in the advertisement. Looking to mimic this sense of musical momentum, the National Party opted to purchase the rights to use a sound-alike track called Eminem Esque. As the name suggests, Eminem Esque bore significant similarities to Eminem's Lose Yourself.

Eight Mile Style, exclusive licensee and co-owner of Lose Yourself, caught wind of the National Party's advertisement and objected to it on the basis that it infringed those exclusive rights. Some 11 days after first airing the advertisement, the National Party decided to replace the Eminem Esque track with alternative music, but the damage had already been done. Eight Mile Style sued the National Party for copyright infringement.

A number of other parties in the chain of rights, including the National Party's advertising and media consultants and the author of Eminem Esque, were joined to the case with assertions that, if infringement was established, the party further up the chain would be responsible. To date, the Court has only considered the liability of the National Party and the quantum of damages. A second hearing will be necessary to determine the extent of any third party liability.

What does the High Court’s decision mean for you?

Justice Cull's decision highlights the importance of seeking consent for use of a third party musical work. Particular caution should be taken where consent negotiations are carried out with someone who is not the copyright owner.

At the time of selecting Eminem Esque for its campaign, the National Party sought assurances from its advertising and media consultants, Stan 3, that it could safely use the sound-alike track. Stan 3 in turn sought reassurance from Sale Street Studios (another advertising and media agency), Beatbox Music (an Australian based production music library) and the Australasian Mechanical Copyright Owners Society that the track was not infringing. While the liability of these third parties is yet to be determined by the Court, their involvement illustrates the market reality that consent negotiations are often not conducted directly with the copyright owner.

When negotiating with someone who is not the copyright owner, it is important to seek appropriate evidence in order to be satisfied the supplier has a right to grant the licence, together with sound contractual assurances from the supplier. This is particularly important where the musical work is a “sound-alike” track, as the nature of sound-alikes increases the risk of copyright infringement.

If use of a sound-alike track is contemplated, it is also important to assess your motivations for this use. In particular, caution should be taken where a sound-alike track is being used simply to side step the licence fee for, or other barriers possibly preventing use of, the original work. In Eight Mile Style v New Zealand National Party, Justice Cull, in assessing damages, took into account the fact that the National Party sought the Lose Yourself sound specifically. The willingness of the National Party to acquire the sound of the original work (rather than the sound-alike) was justification for a higher starting point for a notional licence fee.

A key case for New Zealand

Given the previous lack of local judicial commentary on copyright infringement in relation to musical works, Eight Mile Style v New Zealand National Party is an important decision for New Zealand. The High Court, in reaching its decision, considered and adopted reasoning from a number of overseas authorities, primarily from the United Kingdom, Canada and Australia.

Unsurprisingly, Eight Mile Style, as exclusive licensee and co-owner of Lose Yourself, was able to easily establish its eligibility to enforce copyright in New Zealand, as well as the originality of Lose Yourself. While the High Court acknowledged that the borrowing of musical building blocks when writing music is historically common, it confirmed that musical components that are borrowed from a musical genre or from other musicians can still engage copyright protection where the compilation of those components produces a distinctive and recognisably different musical work. Eminem’s Lose Yourself was found to be distinctive and therefore highly original.

A copy is a copy if it sounds like a copy

To establish copyright infringement, Eight Mile Style was required to prove that:

1. Eminem Esque reproduced either the entire Lose Yourself work or a substantial part of it;
2. There was sufficient objective similarity between Eminem Esque and Lose Yourself, or a substantial part of Lose Yourself; and
3. As the copyright work must be the source from which the infringing work is derived, there was some causal connection between Lose Yourself and creation of Eminem Esque.

Applying principles from overseas authorities, the High Court confirmed that a musical work will be infringing if it sounds the same as the original. The infringement assessment does not require a note for note comparison. Instead, works should be assessed as a whole. Essentially, the test is one of hearing and ear recognition. A copy is a copy if it sounds like a copy.

The High Court found that Eminem Esque was a substantial copy of Eminem’s Lose Yourself. While the Court identified slight differences between the musical works, these differences were barely discernable when considering the works as a whole. The High Court noted that a change in melody will be insufficient to differentiate one work from another if the overall sound in both works is the same.

The High Court went on to assess the second and third limbs of the infringement test - objective similarity and causal connection. As the second limb of the test is also one of hearing and ear recognition, a finding of objective similarity almost naturally followed from the Court’s finding that Eminem Esque was a substantial copy of Eminem’s Lose Yourself. Justice Cull was satisfied that, on an objective assessment, Eminem Esque sounded like a copy of Lose Yourself.

The extensive similarities between the works and the fact that Eminem Esque was created as a sound-alike track clearly supported a finding of a causal connection. Justice Cull was, unsurprisingly, satisfied that it was no coincidence that Lose Yourself and Eminem Esque sounded the same.

A finding of copyright infringement followed on the basis that the National Party had communicated a copy of Lose Yourself to the public without licence, authorised the copying of Lose Yourself by authorising the synchronisation of Eminem Esque with the advertisement and by authorising the broadcast of the advertisement.

The $600,000 hypothetical licence fee

Damages were calculated on the basis of the "user principle", that is the license fee that would have been negotiated between a willing Eight Mile Style, as licensor, and the National Party, as licensee.

Justice Cull settled on $600,000 as a reasonable licence fee for Lose Yourself. A high price was considered reasonable because:

• Eight Mile Style had rarely licensed Lose Yourself, preserving its rarity and increasing its value;
• Eight Mile Style had previously retained exclusive control of the limited licensing that had taken place;
• The purpose for the use was political and was not something that Eminem or Eight Mile Style would have endorsed;
• Despite the availability of other music, and the potential association with Eminem, the National Party wanted the sound of Lose Yourself or an equivalent; and
• The musical significance of copying Lose Yourself was significant.

Justice Cull was, however, willing to discount the fee for the 11-day use, which she considered was a relatively short duration.

Eight Mile Style's request for additional damages was refused. The National Party had taken appropriate steps in seeking professional and industry advice before using Eminem Esque, such that its actions were not reckless nor were they in total disregard of Eight Mile Style's rights.

The extent to which the National Party was entitled to rely on the advice it received, however, is a matter for a second hearing. Only time will tell where liability ultimately lies, and who will have to cough up the $600,000 (plus interest).

Contributors ali.merry@simpsongrierson.com