Eminem Scores Court Victory In Royalty Lawsuit

An overturned verdict regarding a 2007 royalty lawsuit against Universal Music Group has paid off for Detroit rapper Eminem and the production company that helped launched his music career.

On Friday (Sept. 3), the Ninth Circuit U.S. Court of Appeals ruled that F.B.T. Production’s contract with Eminem entitled the rapper/actors and his producers to a 50-50 split of royalties for recordings licensed to digital music distributors such as Apple Inc.’s iTunes as well as cell phone ringtones.

The verdict is the latest development to come out of F.B.T. and Em2M’s lawsuit against UMG, Interscope Records and producer/rapper Dr. Dre’s firm Ary Inc. over breach of contract.

Em2M is owned by Joel Martin, the head of Eminem's publishing company, 8 Mile Style. F.B.T is run by brothers Mark and Jeff Bass.

In the suit, F.B.T. alleges that Universal cheated them out of digital royalties from the sale of Eminem’s music.

Prior to his contract being transferred to Aftermath in 1998, Eminem was signed to F.B.T. in 1995 before digital downloading made an impact on the music scene.

At the time of the transfer, the contract stated that F.B.T. was entitled to royalties of 12 to 20 percent on physical albums sold.

The agreement was maintained in 2003 when F.B.T. and Aftermath signed a new contract.

With the explosion of downloading, F.B.T. argued that Eminem should receive half the net receipts Universal gets from digital downloads rather than the 12 to 20 percent initially agreed on with the first contract.

Last year, a federal jury ruled against F.B.T, as it sought a greater share of royalties from Universal for downloads and ringtones.

In Friday’s decision, a three-judge panel concluded the contracts were ``unambiguous'' regarding digital sales.

According to U.S. Circuit Court Judge Barry G. Silverman, the district court ``should have granted summary judgment to FBT.''

``We therefore reverse the judgment and vacate the district court's order awarding Aftermath its attorneys' fees,'' Silverman said.

Despite suffering a loss in the case, Variety reports that Universal would file a petition for a rehearing.

The company, which distributes Eminem’s music through Interscope, countered opposing counsel at the trial as it argued that third parties such as iTunes are no different from retail sales of compact discs, which are covered by royalty provisions from the first contract.

“... Ideat should be noted that this ruling sets no legal precedent as it only concerns the language of one specific recording agreement,” Universal said in a statement. “Any assertion to the contrary is simply not true."

Although he stands to reap the benefits of F.B.T’s victory, Eminem was not a party to the company’s lawsuit.