Caseflicks

Court of Appeals for the Seventh Circuit • 1995

Cass County Music Company v. Vasfi Muedini D/B/A Port Town Family Restaurant

55 F.3d 263 | 1995 U.S. App. LEXIS 10897

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Takeaway

In short, this case holds that § 110(5)'s homestyle-equipment exemption turns on the entire sound system, and a commercially configured, transformer-assisted nine-speaker system falls outside it even if its receiver is ordinarily used at home.

Background

Cass County Music Company and seven other ASCAP-affiliated music publishers owned copyrights in six songs played at the Port Town Family Restaurant in Racine, Wisconsin. The restaurant, owned at the time by Vasfi Muedini, played a Milwaukee radio station through a background-music system in its roughly 1,500-square-foot public dining area. ASCAP had repeatedly informed the restaurant between 1985 and 1991 that it needed a public-performance license, but the restaurant never obtained one.

The system used a Radio Shack receiver, a separate control panel with five selector switches, concealed wiring, and nine recessed ceiling speakers. Each speaker used a 70-volt line-matching transformer, allowing the receiver to operate many more speakers and much longer cable runs than it could in an ordinary configuration. ASCAP investigators heard the six copyrighted songs during a 1992 visit.

The publishers sued for copyright infringement, seeking an injunction, statutory damages, costs, and attorney fees. Muedini never appeared or responded. Rather than automatically enter a default judgment, the district court examined whether the restaurant fell within the Copyright Act's § 110(5) exemption for certain homestyle radio and television systems. It held that the exemption applied and dismissed the action. The publishers appealed.

Issues

Issue #1

Whether the publishers were entitled to judgment as a matter of law despite Muedini's default.

Holding

Yes. Although default did not automatically require judgment for the publishers, the court was required to accept the complaint's well-pleaded factual allegations as true and determine whether those facts established liability as a matter of law.

Reasoning

A defaulting defendant admits the factual allegations of the complaint, but a court must still determine whether those admitted facts state a legally valid claim. The district court therefore properly examined the asserted § 110(5) defense before deciding whether to enter default judgment.

On appeal, the Seventh Circuit likewise treated the plaintiffs' record-supported factual assertions as true. It could not rely on extra-record factual material submitted by amicus curiae, because review in this default posture was limited to the factual record before the district court.

Issue #2

Whether the restaurant's radio-over-speaker system qualified for the § 110(5) exemption for a single receiving apparatus commonly used in private homes.

Holding

No. Viewed as a whole, the restaurant's system was not a receiving apparatus of a kind commonly used in private homes, so § 110(5) did not exempt the unlicensed public performances.

Reasoning

The Copyright Act gives copyright owners the exclusive right to control public performances, and playing a radio broadcast for restaurant patrons is a public performance under the Act. Section 110(5) creates a narrow exception when a business publicly receives a broadcast through a single homestyle receiving apparatus, without charging listeners and without further transmitting the broadcast.

Under the Seventh Circuit's earlier decision in Broadcast Music, Inc. v. Claire's Boutiques, the exemption requires a single receiving apparatus, equipment commonly used in private homes, a free transmission, and no further transmission to the public. The relevant inquiry focuses on the entire audio-reproduction system, not merely on whether the radio receiver itself is a consumer model.

The restaurant satisfied the single-apparatus and no-direct-charge requirements. But the district court erred by focusing principally on the Radio Shack receiver and discounting the number, placement, and configuration of the speakers. A system may lose the exemption either because it contains non-home-type components or because otherwise home-type components are configured in a way not commonly found in homes.

Port Town's system included a separate selector control panel, nine recessed ceiling speakers, concealed wiring, and 70-volt transformers. The transformers increased the receiver's effective capacity from four speakers to as many as forty and permitted cable runs of up to 1,000 feet without meaningful signal loss. This was an engineered distributed system designed to provide uniform background music throughout the restaurant's entire public dining area.

The court did not establish a categorical maximum number of speakers permitted under § 110(5). The question remains case-specific. But this system, in its full configuration and operation, exceeded the receiver's ordinary capabilities and could not fairly be characterized as the kind of system commonly used in private homes. Because that conclusion resolved the case, the court did not need to decide whether the restaurant had also "further transmitted" the radio broadcast.