The US Court of Appeals for the Ninth Circuit affirmed grant of judgment as a matter of law in favor of rapper Jay-Z and other defendants on copyright infringement claims brought by the heir to Egyptian composer Baligh Hamdy's copyright in a 1957 arrangement of the song "Khosara." Osama Ahmed Fahmy v. Jay-Z et al., Case No. 16-55213 (9th Cir., May 31, 2018) (Bea, J).

In 1957, Baligh Hamdy composed music to the song "Khosara," which quickly became popular in Egypt. Over a decade later, Hamdy transferred certain rights to the song to an Egyptian recording company, Sout el Phan. In 1993, Hamdy died, and his heirs inherited whatever rights he retained in "Khosara." The heirs, including Osama Ahmed Fahmy, confirmed the transfer of rights to Sout el Phan. Sout el Phan subsequently transferred the sole and exclusive rights to protect, publish and sub-publish songs, including "Khosara," to EMI. 

In 1999, Jay-Z released his album containing the song "Big Pimpin'." The background music of that song used a sample from "Khosara." EMI asserted its rights to the song, and Jay-Z's producer paid EMI $100,000 for the right to exploit "Khosara" in "Big Pimpin'." In 2002, Sout el Phan's catalog passed to Alam el Phan, and the Hamdy heirs entered into an agreement with its owner, Mohsen Mohammed Jaber, to transfer certain rights to "Khosara." Despite the agreement, in 2007 Fahmy sued Jay-Z for copyright infringement.

Jay-Z filed for a judgment as a matter of law on the ground that Fahmy lacked standing to bring the copyright claims. The district court agreed, finding that in the 2002 agreement, Fahmy transferred all of his economic rights in the song, including the right to make derivative works, and thus had no standing to bring a copyright claim. Fahmy appealed.

On appeal, Fahmy advanced three arguments:

  • First, under Egyptian law, the right to create derivative works is an inalienable moral right, which he could not transfer under any agreement.
  • Second, even if a transfer of moral rights was possible, the 2002 agreement did not transfer those rights.
  • Third, the right to receive royalties alone granted him standing to sue.

The Ninth Circuit began by noting that in order to have standing, Fahmy must have retained the exclusive right to prepare derivative works of "Khosara." Looking to Egyptian law, the Court noted that copyright holders possess both moral and economic rights. Egyptian statutes provide authors the exclusive right to authorize or prevent any exploitation of a work through "adaptation," among other listed means. But the Ninth Circuit determined that Fahmy's argument—that the right to authorize a derivative work is inalienable—was inconsistent with the language of the Egyptian statute. 

A moral right, under Egyptian law, allows the author of the copyrighted material to object to derivative works the author deems to be "mutilations" of the work, whether or not the relevant economic rights have been transferred. Fahmy contended that this moral right was not transferrable. The Ninth Circuit, however, pointed out that moral rights are not enforceable in the United States for two reasons. First, moral rights arising by operation of Egyptian law are not enforceable in a federal district court, and second, the Copyright Act does not recognize the asserted moral rights at issue to prevent creation of derivative works, even if the moral rights holder regards the derivative work as a distortion or mutilation of the transferred work. 

The Ninth Circuit also disagreed with Fahmy's argument that his 2002 agreement did not convey economic rights to create derivative works. The Court found that the agreement unambiguously conveyed the rights to "Khosara" to Jaber, leaving Fahmy without sufficient rights to establish standing.

Finally, the Court rejected Fahmy's argument that since he was entitled to receive royalties under the transfer agreement, he had standing to sue. The Ninth Circuit concluded that the right to receive royalties does not confer standing to sue for copyright infringement. 

No Standing, No Cheese

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