Perspective: The battle over The Beatles

The Beatles burst onto the international music scene more than four decades ago. But while these boys from Liverpool sang that all you need is love, the battle over the money they generated continued well into the 21st century.

A reported recent settlement indicates that the parties have come together. While confidential, the terms must be financially mutually acceptable. (Perhaps the lyric should be rewritten that "all you need is love--and money?") So what generated the dispute in the first place?

In a complaint filed in state court in New York at the end of 2005, Apple Corps, Apple Records, the surviving members of The Fab Four--Sir James Paul McCartney (Paul) and Richard Starkey (Ringo), and the representatives of the deceased members of the band, John Lennon and George Harrison, alleged that EMI Records and Capitol Records had been guilty of fraud. They also alleged that EMI had breached contractual terms in a scheme designed to wrongfully siphon away many millions of dollars in royalties.

Far from showing the love, the complaint held back no punches in setting forth allegations of gross dishonesty and wrongdoing. At bottom, the complaint alleged that the defendants had rendered intentionally deficient accounting statements in an effort to pocket millions of dollars in royalties.

This was not the first dispute between the parties. Indeed, the complaint documents how 25 years earlier the plaintiffs had sued the defendants for nearly identical fraudulent conduct and breaches of fiduciary duty. When "the ink was hardly dry on the settlement of that past litigation," the plaintiffs discovered in the early 1990s that the defendants had "secretly continued their practice of egregious underreporting of royalties" that resulted in another round of settlements, according to the complaint.

Notwithstanding these rounds of settlements, the complaint alleged that the defendants "picked up where they left off and revived their fraudulent schemes hatched years ago attempting again to enrich themselves at plaintiffs' expense." The alleged schemes included defendants' concealment of the disposition of vast quantities of Beatles recordings by suggesting through supposed bogus certificates of destruction that the units were scrapped.

Another alleged scheme involved the defendants' declassification of the distribution of certain recordings as promotional, and as such non-royalty bearing--but supposedly covertly distributing the recordings on a non-promotional basis and thus obtaining all of the profit.

Furthermore, the defendants are alleged to have entered into licenses with third parties without the plaintiffs' consent, and supposedly failed to disclose the receipt of tremendous sums of money secretly obtained from "third party exploitation."

And the complaint goes on and on with 47 pages worth of other allegations.

In spite of these bitter historical fights, the parties recently resolved the most recent dispute, and it would seem they have come together on financial terms that work for both sides. The precise terms have not been revealed. Will this settlement stick? The parties have a history of fighting, settling and then fighting again. Alas, where big money is at stake, disputes do tend to follow.

Biography
Eric J. Sinrod is a partner in the San Francisco office of Duane Morris. His focus includes information technology and intellectual-property disputes. To receive his weekly columns, send an e-mail to [e-mail] with "Subscribe" in the subject line. This column is prepared and published for informational purposes only, and it should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

More Perspectives

[skeptik]

When will we learn?

Another point illustrating how crooked the record labels are. Hissy fits over kids stealing a few songs, while they're busy stealing millions from the artists they're supposedly "protecting".

Who needs these labels? It's too late for the Beatles, but any band signing now would do good to think long and hard. Leave the majors for the Brittney Spears of the world. Those two groups deserve each other. Any artist with talent should give serios consideration to going it solo or signing with an independent label.