ABKCO MUSIC INC Plaintiff Appellant Cross Appellee v HARRISONGS MUSIC LTD HARRISONGS MUSIC INC GEORGE HARRISON APPLE RECORDS INC BROADCAST MUSIC INC HANSEN PUBLICATIONS INC Defendants HARRISONGS MUSIC LTD HARRISONGS MUSIC INC GEORGE HARRISON Defendants Appellees Cross Appellants Nos 90 9065 90 9115 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT 944 F 2d 971 1991 U S App LEXIS 20867 Copy L Rep CCH P26 818 April 8 1991 Argued September 5 1991 Decided September 5 1991 Filed SUBSEQUENT HISTORY 1 As Amended PRIOR HISTORY Plaintiff ABKCO Music Inc appeals from an Order and Judgment of the United States District Court for the Southern District of New York Owen J entered November 8 1990 which incorporates certain parts of an order and judgment dated June 26 1987 Defendants Harrisongs Music Ltd Harrisongs Music Inc and George Harrison cross appeal from the district court s Endorsed Memorandum decision and order entered March 30 1990 and from an order and judgment dated November 2 1990 COUNSEL Gideon Cashman New York New York Donald S Zakarin Charles B McKenna Pryor Cashman Sherman Flynn New York New York of Counsel for Plaintiff Appellant Cross Appellee Abkco Music Inc Joseph J Santora New York New York Michael S Allen Santora Allen New York New York of Counsel for Defendants Appellees Cross Appellants Harrisongs Music Inc JUDGES Cardamone and Mahoney Circuit Judges and Fred I Parker District Judge Mahoney Circuit 2 Judge concurring in part and dissenting in part Hon Fred I Parker United States District Judge for the District of Vermont sitting by designation OPINIONBY CARDAMONE OPINION 974 CARDAMONE Circuit Judge Bright Tunes Music Corporation Bright Tunes held the copyright to a song entitled He s So Fine HSF composed by Ronald Mack George Harrison a former member of the musical group The Beatles had authored a song called My Sweet Lord MSL In 1971 Bright Tunes sued Harrison claiming that his song infringed the copyright of Mack s song A trial court in 1976 agreed Today over 15 years later the damages issue flowing from this infringement is still being litigated giving truemeaning for those involved to the title of the Beatles It s Been a Hard Day s Night Subsequent to the determinations to be made on the remand hereby directed we fully expect the curtain to fall on this long playing litigation BACKGROUND The events leading up to this appeal are more fully set forth in the four prior opinions in this case Bright Tunes Music Corp v Harrisongs Music Ltd 420 F Supp 177 S D N Y 1976 3 ABKCO Music Inc v Harrisongs Music Ltd 508 F Supp 798 S D N Y 1981 aff d with modification and remanded 722 F 2d 988 2d Cir 1983 and ABKCO Music Inc v Harrisongs Music Ltd 841 F 2d 494 2d Cir 1988 per curiam familiarity with which is assumed We recount only those facts needed to resolve this appeal In 1971 when Bright Tunes brought its copyright infringement suit against Harrisongs Music Ltd Harrisongs Music Inc and George Harrison Harrison Interests or Harrison ABKCO Music Inc and its president and moving spirit Allen B Klein served as business manager for the Beatles and handled Harrison s business affairs In an attempt to end the Bright Tunes litigation Klein acting for Harrison offered to buy out Bright Tunes the property of which consisted mainly of the He s So Fine copyright and the lawsuit against the Harrison Interests Negotiations continued slowly over several years 975 In the meantime Klein and the Beatles had a falling out ending their relationship and resulting in bitter litigation In late 1975 and early 1976 the Harrison Interests and Bright Tunes renewed settlement 4 negotiations and the Harrison Interests made an offer that counsel for Bright Tunes considered to be a good one But Klein without Harrison s knowledge made an offer to buy Bright Tunes for an amount almost double that offered by the Harrison Interests Bright Tunes reasoning that Klein s offer likely indicated an accurate view of the value of the lawsuit because of his inside knowledge of the Harrison Interests business affairs thereupon declined Harrison s lower offer Klein s offer was also rejected and the case then went to trial Following a three day bench trial in 1976 Judge Owen ruled in favor of Bright Tunes finding that Harrison subconsciously plagiarized HSF but reserved judgment on the issue of damages 420 F Supp at 177 Klein s successful efforts to booby trap the settlement negotiations is critical to an understanding of this lengthy litigation and was a significant factor in the direction subsequent court opinions have taken The damages issue was not decided until 1981 in the meanwhile certain events in 1977 1978 and 1980 should be recited In June 1977 an infringement action in England 5 by Peter Maurice Music Co Ltd Maurice the subpublisher of He s So Fine in all places other than the United States and Canada against the Harrison Interests was settled with the Harrison Interests agreeing to pay Maurice 40 percent of the past and future monies received through exploitation of the My Sweet Lord copyright in the United Kingdom and retaining 60 percent of those revenues the UK settlement The parties also agreed to use their best endeavours to secure similar settlements throughout the remainder of Maurice s territory Maurice had obtained its interest in He s So Fine under a licensing agreement entered into in 1963 between it and Bright Tunes Under the agreement Maurice was obligated to pay Bright Tunes 50 percent of all amounts received from HSF less sheet music royalties in exchange for the right to exploit that song worldwide save for the United States and Canada On April 13 1978 ABKCO purchased all of Bright Tunes interest in He s So Fine including the right to certain royalties and all rights assertable against infringing compositions for 587 000 the 1978 acquisition ABKCO adopted Bright Tunes complaint and was substituted 6 as the sole party plaintiff in the action against the Harrison Interests Harrison asserted affirmative defenses and counterclaims against ABKCO and Klein for breaches of fiduciary duty relating to the purchase of the Bright Tunes properties The district court held an eight day bench trial on damages and counterclaims between August and October 1979 Finally on April 2 1980 Harrison and Essex Music International Ltd Essex Harrison s agent and a sub publisher of My Sweet Lord entered into an agreement authorizing Essex to negotiate and enter into settlement agreements on the same terms as the UK
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