The court in San Francisco overturned a 2016 judgment by a jury which found no proof the classic 1971 Zeppelin song breached the copyright of "Taurus," written by Randy Wolfe of a Los Angeles band called Spirit.
Wolfe's trustee, Michael Skidmore, filed the case in 2015 on behalf of his late friend who long maintained he deserved credit for "Stairway" but drowned in 1997 having never taken legal action over the song.
The case is "remanded for a new trial," the higher court panel ruled Friday in a 37-page decision supporting Skidmore's appeal.
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It said that certain instructions to the district court jury had been "erroneous and prejudicial" by arguing that common musical elements are not protected by copyright, and by failing to clarify that the arrangement of elements in the public domain could be considered original.
Experts called by the plaintiffs at the lower court trial said there were substantial similarities between key parts of the two songs, but defence witnesses testified the chord pattern used in the melancholic guitar intro to "Stairway" was so commonplace that copyright didn't apply.
Led Zeppelin guitarist Jimmy Page, sued along with the group's singer Robert Plant and another surviving band mate, John Paul Jones, testified in 2016 that the chord sequence in question had "been around forever."
Led Zeppelin's Plant, Page to face 'Stairway to Heaven' trial
Page and Plant denied plagiarism.
The appeals court panel further ruled that the lower chamber "abused its discretion" by not allowing the jury to observe Page listening to recordings of "Taurus."
Skidmore had argued that those observations were important in assessing Page's credibility.
"Stairway" is estimated to have grossed $3.4 million during a five-year period at issue in the earlier civil trial.
Zeppelin opened for Spirit when the British rockers made their US debut on December 26, 1968, in Denver.
Wolfe, nicknamed Randy California, wrote "Taurus" in late 1966.
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