Thought this might be of interest.

   June 2, 2003 (naxos.com)

   New York, USA - On November 22, 2002 Capitol Records, Inc.
   brought an action against Naxos of America in the United States
   District Court, Southern District of New York.  Capitol brought
   the action for unfair competition, misappropriation of property,
   unjust enrichment and common law copyright infringement.  Capitol
   challenged Naxos' distribution of historic recordings dating
   from the 1930's featuring performances by Yehudi Menuhin, Edwin
   Fisher and Pablo Casals.  Capitol claimed to be the owner of all
   rights in the United States to the original recordings.  Capitol
   complained that Naxos sold and distributed its restorations of
   the original recordings throughout the United States in bad
   faith, at substantially discounted prices in direct competition
   with Capitol's recordings of the same performances, often in the
   same retail outlets.

   The Court, in finding for Naxos, noted that Naxos used the
   original discs, the so-called shellacs (78rpm shellac discs) to
   restore the performances.  The restorations involved artistic
   choices and the use of the latest digital software.  Naxos has
   distributed and sold its restorations at discount prices since
   about October, 1999 throughout the United States.  The Court
   took notice of the fact the Naxos restorations have been widely
   praised by classical music critics.

   Naxos had claimed that EMI expressly disclaimed any exclusive
   commercial interest in the original recordings made more than
   50 years ago and that Capitol had, furthermore, failed to pursue
   many other companies engaging in restorations of the original
   recordings.  The Court completely agreed with Naxos.

   The Court found that Capitol has no rights in the original
   recordings and that the English copyrights in the recordings had
   long since expired.  The Court also found ambiguity concerning
   Capitol's chain of title in all agreements.  The Court further
   found that Capitol waived or abandoned any interests it had in
   the original recordings.  Capitol's lax practices were found
   consistent with EMI's disclaimer of any intellectual property
   rights in any sound recordings made prior to 1957 and which are
   more than 50 years old.  Naxos therefore operated under the good
   faith belief that the recordings at issue are in the public
   domain, said the Court.

   The Court further found that Naxos has not competed unfairly.
   Since Capitol has no rights in the original recordings it cannot
   charge Naxos with unfair competition.  Naxos never falsely
   advertised its restored products as duplicates of the originals
   and did not simply copy Capitol/EMI's restorations.  Naxos
   employed significant effort to create entirely new and commercially
   viable products.  Naxos did not profit from the labour, skill,
   expenditures, name and reputation of others but rather created
   and marketed new products relying on its own labour, skill, and
   reputation.

   The Court found that the quality and nature of the restorations
   stand as evidence to the fact that Naxos did not aim to simply
   duplicate the original recordings and capitalize on Capitol's
   efforts.  Instead, Naxos worked to create new products with
   superior sound.

   The Court agreed that the Naxos restorations do not discourage
   but rather encourage the preservation and dissemination of fine
   performances. The Court even felt that it was possible that the
   Naxos restorations have revived the relevant market in historical
   classical performances to Capitol's benefit.  The Naxos restorations
   help ensure that quality historic performances are commercially
   available for the present generation and well preserved for the
   next, the Court said.

   The Court clearly concluded that Naxos lacks the bad faith
   necessary in a common law unfair competition claim because Naxos
   neither attempted to sell its records as Capitol's, nor sell
   Capitol's records as its own.  Naxos did not misappropriate
   Capitol's labour and expenditures, but rather sought to profit
   from its own efforts and ingenuity.

   The Naxos motion to dismiss the Capitol action was granted by
   the court and converted to a summary judgment.  The Capitol
   motion for partial summary judgment was denied.  All substantive
   issues were decided in the favour of Naxos.

   Cary Ginell
   Sound Thinking Music Research
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Karl