UMG sues insurance company to reimburse them for back royalties

UMG sues insurance company to reimburse them for back royalties
Universal Music Group is suing National Union Fire Insurance Company of Pittsburgh for refusing to pay $45 million to cover a settlement for back royalties owed in Canada.

The facts of the original case are far from surprising if you know anything about how major labels treat artists. UMG was accused of failing to pay artists when their songs were included on compilation albums.

Instead, the royalties owed were put on a list to be paid later. The problem is those payments weren't actually made.

UMG, whose Canadian subsidiary was named in the suit along with Warner Music Canada, Sony BMG Music Canada, and EMI Music Canada, agreed to settle the class action for copyright infringement because National Union rejected their claim from the beginning.

The settlement is actually quite generous, apparently amounting to only the amount originally owed in royalties, rather than close to $6 billion they could have been liable for under Canadian coypright law.

UMG claims their insurance policy covers both the settlement and the cost of their unsuccessful defense. In their suit against National Union, UMG lawyers claim:

The Insurer [National Union] shall pay on behalf of an Insured Loss...that the Insured becomes legally obligated to pay as Damages resulting from any Claim first made against an Insured during the Policy Period and reported to the Insurer in writing for an Insured's Wrongful Act committed solely in the Conduct of the Businesss of the Insured." "Wrongful Act" is defined at paragraph 3(s) and includes, at subparagraph (4), "infringement of statutory or common law copyright."

Just to summarize:

  1. UMG intentionally defrauded artists by failing to pay royalties they were aware were owed.
  2. They were caught and essentially admitted to the practice by settling the suit and agreeing to pay those royalties, saving themselves billions of dollars in copyright infringement penalties.
  3. Now they're complaining that their insurance company won't reimburse them for what they admitted was really an unpaid debt claiming the technicality of their debusiness expenses because they managed to avoid paying up until they were sued.

It's convenient they consider it fair for an individual like Jammie Thomas-Rasset or Joel Tenenbaum to pay hundreds of thousands to millions of dollars for sharing a few songs, but not to pay a dime of their own money for intentionally ripping off artists over a period of decades.

Apparently copyright infringement is fine as long as you make a fortune from it.

Written by: Rich Fiscus @ 16 Nov 2011 12:16
copyright infringement Universal Music Canada Settlement UMG
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  • LordRuss

    ... and now the insurance company says we don't cover that... Isn't this all just convenient? What's good for the goose isn't good for the gander? Life long, anecdotal, euphemism, BS story & yet we're all going through it time and again. At what point does Karma turn back onto itself & Rome start to burn?

    Enough of this 'beer drinking Baptist' "revenge be mine, syeth the lord" crap & let's get to see'n the due get their's. I'm not talking class warfare or anarchy, none of that crap or any of that rape & pillage, blood of enemies chug-a-lug stuff either. Just some good old fashioned equilibrium. Enough to scare the hell out of hell out of the elitists for the next 30 years anyway.

    16.11.2011 12:39 #1

  • Mysttic

    You know, I mixed on this issue; cause I hate labels as much as I hate Insurance Companies. They are all thieves in my opinion, that get away with stealing for way too much going on for way too long. I can see why Insurance wouldn't want to cover that considering Universal was liable to pay those royalties before it even went to court. At the same time I'd like to see an insurance company lose in court.

    16.11.2011 12:52 #2

  • KillerBug

    What a load of crap...they refuse to pay their bills, and the insurance company has to pay them?

    That sure is convenient...I wish I could just have the insurance company pay all my bills.

    17.11.2011 05:00 #3

  • phobet

    It's not surprising their insurance company doesn't want to pay. (Let's be honest, what insurance company actually *wants* to pay...) UMG got caught using unethical business practices, and now expects to leverage the insurance company against the cost of getting caught. I would suspect that the insurance company told UMG that they did not conduct themselves in good faith, so please go away and go pound sand.

    3.3.2012 04:15 #4

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