Plantiff: F.B.T = Eminem’s production company
Defendant: Aftermath = subset of Universal records that was given the right to Eminem’s music
The case has to do with ringtones and iTunes, which were previously not covered in many contracts created in the early 2000's simply because they did not exist. The main issue involved in the lawsuit was the definition of what was considered “records sold” and what was “music licensed”. Aftermath argued that since there was at least the act of buying/downloading the music and paying a set rate, that it would be considered part of the “records sold” definition. F.B.T countered and stated that since the digital version of the songs were sent to a third party distributor (iTunes) and included the licensing of a master. They also argued that Aftermath did not have to through the typical paths of distribution due to not having to pay for manufacturing and distributing of hard copy records. Becuase of these differences, F.B.T. stated that digital downloads should be paid as “music licensed”.
“records sold” = 15-20% of records sold
“Music Licensed” = 50% per licensed
District Court Ruling: no industry custom beforehand, said Aftermath did not need to pay license fee: awarded them $2.4 million in legal fees
Appeal: US Courts of Appeals the Ninth Circut relooked at the case and decided that since purchases of music on iTunes and ringtones are not actually records and the transaction between Aftermath and iTunes was a license and not a sale. F.B.T., and other contracts based on the same legality as Eminem's, would earn the 50% of licensed music.