Grandson to ‘Sir Duke’ Loses Royalties Contest

(CN) - Duke Ellington's grandson failed to show EMI broke a 50-year-old contract by diluting his share of the legendary composer's royalties, New York's highest court ruleed.

Paul Ellington sued EMI Music and subsidiary Mill Music four years ago in New York County Supreme Court, alleging the record company had used "affiliated foreign sub-publishers" to nab more royalties than it was due under a 1961 agreement.

Ellington's limited-audit rights under the contract allegedly revealed that such subpublishers kept 50 percent of the royalties from the foreign sales of Duke Ellington's music. EMI and the jazz giant's heirs then split the other 50 percent, according to the complaint.

A judge disagreed, however, that the arrangement violated the terms of the royalties contract, which was conceived more than 50 years ago as a "net receipts" agreement.

Among other things, the court found that the parties' agreement did not include foreign subpublishers because they "had no existence or affiliation with [EMI] at the time of contract." (brackets in original)

An appellate panel affirmed dismissal in May 2013, declining to "read into the royalty payment terms any distinction between affiliated and unaffiliated foreign sub-publishers inasmuch as the contracting parties themselves chose not to make such a distinction."

Declaring the contract "clear and unambiguous," the New York Court of Appeals, the state's highest court, was divided 5-2 in affirming on Thursday.

"We note that the globalization of the music industry has rendered this 'net receipts' arrangement much more favorable to music publishers than to artists," Judge Sheila Abdus-Salaam wrote for the court.

In this case, however, "the parties merely did not account for the possibility that the publisher would eventually affiliate with foreign sub-publishers," Abdus-Salaam added. "The terms of the contract are clear and unambiguous and the Appellate Division correctly held that plaintiff has not stated a cause of action for breach of the agreement."

Judge Jenny Rivera argued in dissent that the term "affiliate" in the contract could be read to "include EMI's foreign affiliated entities."

"This reasonable interpretation of the agreement supports a conclusion that appellant has sufficiently pled a cause of action for breach of contract," Rivera wrote. "To hold otherwise, as the majority does here, forecloses appellant from pursuing his claim that EMI has avoided its obligations under the agreement by employing music industry business models that increase revenue for publishers, to the detriment of creative artists."

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