UMG sues insurance company to reimburse them for back royalties

Rich Fiscus
16 Nov 2011 12:16

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."

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.