#Nyc pandoras box license

To be clear, exposure to this type of abuse would not be limited to royalty-bearing license agreements. Of course, virtually every agreement is still bound by the implied covenants of good faith and fair dealing, but within those boundaries the potential and temptation for mischief will be ever-present. Consequently, if applied broadly, the ruling in this case could invite parties to create new affiliates to circumvent contractual obligations and prohibitions, and evade the parties’ original understandings, intentions and bargained-for exchange. This decision is very troubling because many existing contracts governed by New York law do not explicitly state that the definition of “affiliate” binds future affiliates of the contracting parties. Absent such language, the named entities and other affiliated companies of EMI's predecessor which existed at the time are bound by the provision, not entities that affiliated with EMI after execution of the Agreement.” If the parties intended to bind future affiliates they would have included language expressing that intent. Furthermore, the parties did not include any forward looking language. On appeal, New York’s Court of Appeals affirmed the two previous decisions holding: “Absent explicit language demonstrating the parties' intent to bind future affiliates of the contracting parties, the term 'affiliate' includes only those affiliates in existence at the time that the contract was executed. When Ellington’s family discovered that EMI is paying 50% of the royalties generated from foreign sales to EMI's affiliates, and only splitting the remaining 50% with Ellington’s family ( i.e., EMI and its affiliates receive 75% and Ellington’s family only receives 25% of the royalties generated from foreign sales), Ellington’s family commenced a lawsuit against EMI essentially accusing it of “double-dipping.” However, due to industry consolidation, the foreign subpublishers are now all affiliates of EMI. At the time the agreement was executed, all of the foreign subpublishers were unaffiliated with EMI’s predecessor. The agreement requires EMI to pay Ellington and his family 50% of all net revenues actually received by EMI from sales outside the U.S., after the deduction of fees paid to foreign subpublishers.

In 1961, a predecessor of EMI and, according to the wording of the contract’s preamble, “any affiliate of ,” entered into a standard songwriter royalty contract with Ellington.

In so doing, the court set the stage for contracting parties to take advantage of a remarkable definition interpretation. New York's highest appeals court has recently ruled against the family of jazz legend Duke Ellington in its lawsuit against music publisher EMI.

Nyc pandoras box