Elvis estate taps finance firm to sue Arista
By Terry Baynes
NEW YORK (Reuters) - Elvis Presley's estate is turning to a litigation-finance firm to sue Arista Music in Germany for unpaid royalties from ringtones, downloads and apps that feature the icon's hit songs.
UK-based Calunius Capital, the exclusive adviser to a $60 million litigation fund, is backing a lawsuit against Arista Music, formerly RCA Records. The lawsuit alleges that Arista exploited Presley in a 1973 buyout agreement that left the King with only a small share of the revenue from his sound recordings, according to a press release from Elvis Presley Enterprises.
If the estate prevails or the case settles, Calunius Capital will share in the proceeds. Typically, a firm's returns range from 20 percent to 35 percent of any recovered proceeds or two to 2-1/2 times the amount invested, according to Christian Stuerwald of Calunius Capital. If the estate loses, the fund covers the costs, which in Germany include the winning side's attorney's fees.
Plaintiffs are increasingly turning to litigation finance firms, mostly because of high litigation costs. The model is especially attractive for lawsuits in foreign countries where the risks are hard to assess, Stuerwald said.
Elvis Presley Enterprises turned to Calunius Capital because the cost of bringing suit in Germany is high and Calunius has experience with complex suits in that country, said estate spokeswoman Alicia Dean.
Under the 1973 agreement, initiated by RCA and Presley's manager, "Colonel" Tom Parker, RCA purchased the rights to Presley's back catalog of more than 1,000 recordings for $5.4 million, to be split evenly between Presley and Parker, the suit alleges.
As a result of the contract, Presley received an annual payment of around $10 for the worldwide rights to each song - "conspicuously disproportionate" to the revenue RCA made from the master recordings, according to the suit.
Sony Music Entertainment, the parent company of Arista Music, declined to comment on the litigation. Continued...