For Damon Stout, Coke has turned out to be far from refreshing.

The Los Angeles musician has sued the soft drink company, claiming that Coca-Cola Co. owes him more than $1 million in royalty fees for 44 jingles he wrote for its "Always Coca-Cola" and "Enjoy Coca-Cola" advertising campaigns.

Coca-Cola says the company owes him nothing.

"He believes he is entitled to royalties," said Richard Williams, a partner at Holland & Knight LLP which represents the Atlanta-based soft drink giant, whose "Always" ad campaign featured animated polar bears drinking out of Coke bottles. Coca-Cola "believes no royalties are owed to him and he's been paid whatever compensation he's entitled to as a musician."

The case points to the copyright complexities associated not only with jingles but all ad campaigns. "It's a huge issue because you have to be careful about the visual, the sound," said Harvey Farr, president of Farr Marketing Group in Los Angeles.

Lawyers usually draft an agreement that transfers the artist's copyright to the advertiser, or sets up a usage fee paid by the advertiser to the artist. The contracts differ but often include specific parameters for use of the artist's work, such as the type of medium and the period under which the agreement is effective. In most cases, the advertiser ends up owning the copyright.

These days, copyright issues are especially complicated with so many contractors and subcontractors involved in an ad campaign. Among them: up-and-coming artists who fail to sign written agreements and find themselves unprotected. "Usually lawyers hammer it all out," said Farr. "But what happens is people who want to get into the business badly cannot get representation. They want to show their work and they'll take anything to get into the business."

Miriam Beezy, a partner at Foley & Lardner LLP, said music rights disputes in advertising campaigns are quite common. "Copyright laws are very strict with respect to any assignments," she said. "The assignments need to be in writing. The copyright is owned by the author or the creator and can only be transferred in writing."

Earlier this month, a federal judge split the Coca-Cola case into two phases. The first phase would decide who owns the copyright, while the second phase, if needed, would determine damages.

The case dates back to 1994, when Stout met Terry Coffey, one of the founders of a firm called Mercenary that had been working with Coca-Cola for two years.

"I became friends with him," said Stout, who was enrolled at UCLA's film scoring program at the time. "His business partner, Mike Hudson, approached me as a friend and asked if I wanted to do some demo work for various clients. Coke was included as one of them."

Mercenary asked Stout and four other writers to compose original jingles that were based on a six-note motif written by Coffey the familiar melody at the end of the commercials that goes with the words, "Always Coca-Cola." The "Always Coca-Cola" campaign ran from 1993 to 1999. The "Enjoy Coca-Cola" campaign, also part of the suit, ran for a year, beginning in 2001.

Stout said he was paid $100 to $1,000 in demo fees for each jingle under several verbal agreements. "There was no written contract," Stout told the Business Journal. "Obviously, that was not the way to go."

In court papers, Stout said it was always understood he would retain ownership of the copyrights for each jingle.

In fact, he said Coca-Cola and Mercenary, which was later re-formed as Magnum Entertainment Group Inc., conspired to create fake certificates and copyright transfers for Stout's songs. Magnum has since gone out of business. "He would essentially present the jingles and he never heard back as to whether the jingle house took them and sold them to Coke," said Dwight Stirling, Stout's lawyer. "Damon would deal just with Magnum itself and never directly with Coke."

After obtaining copyrights on the jingles in 2003, Stout sued Coca-Cola a year later. He claims Coca-Cola used 44 of his jingles, even though it never received licenses from him. About half of the songs in question are Stout's originals and the other half are derivative works, based on his originals.

Coca-Cola has maintained that Stout knew his works were being used for the soft drink commercials and that it obtained an "implied nonexclusive license" to use the jingles from Magnum, which was the licensee.

In July, a federal judge denied Coca-Cola's request to throw out the case.

Meanwhile, Stout, now a film director and writer, says he no longer composes jingles for commercials.

"I got soured after that," he said.

For reprint and licensing requests for this article, CLICK HERE.