Intellectual Property

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The CLASSICS (Compensating Legacy Artists for their Songs, Service and Important Contributions to Society) Act was introduced in Congress last week to try to clear up some of the ongoing disputes over the public performance rights of pre-1972 sound recordings. Through litigation, certain copyright holders (including, most notably, Flo and Eddie of the 1960’s band The Turtles) have been seeking compensation from digital and analog music services for the public performance of pre-1972 sound recordings. These sound recordings are not covered by Federal law. As the obligation to pay SoundExchange only applies to recordings covered by Federal law, some digital services were not paying for the performance of these songs. The artists that have brought suit have contended that state laws did create an obligation to pay for the public performance of these recordings, even though there were no specific statutory provisions establishing those rights. Thus far, New York, Florida, Georgia and Illinois have found there to be no right of compensation under state laws (though some of these cases are on appeal). By contrast, California found that there was a right for compensation, though that case, too, is on appeal.

The CLASSICS Act looks to resolve these issues by pre-empting state lawsuits and establishing that services cannot play these recordings without either getting a direct license from the copyright holder to do so, or by paying SoundExchange royalties under the statutory license at the fees set by the Copyright Royalty Board. If a digital music service pays SoundExchange royalties and obeys the rules that apply to such royalties, it is not infringing on the rights of the copyright holder. It can also directly license these rights, but must pay half the license fee to SoundExchange to be distributed to the artists who performed on the recording (in the same manner that half the fees paid under the statutory license are distributed to the artists).
Continue Reading CLASSICS Act Introduced to Provide Pre-1972 Sound Recording Public Performance Clarity – What Issues Does It Leave Unresolved?

The U.S. Supreme Court has invalidated the statutory bar against the federal registration of disparaging trademarks, on the ground that it violates the First Amendment and is unconstitutional. What does this mean for businesses in general, including, in particular, broadcasters and the Washington DC National Football League franchise?

History of the Case

The case involved an application by Simon Tam to register the mark THE SLANTS for an Asian-American band. Mr. Tam selected the name in order to make a statement about racial and cultural issues. The federal Lanham (Trademark) Act states that a trademark shall not be denied registration unless, among other reasons, it:

Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.

Accordingly, the Patent and Trademark Office (PTO) denied the application on the basis that, regardless of Mr. Tam’s intent, the phrase “THE SLANTS” may be disparaging to a substantial percentage of persons of Asian descent. The PTO also stated that it was bound by a 1981 precedent issued by the United States Court of Appeals for the Federal Circuit, holding that the statute was constitutional.
Continue Reading “Where seldom is heard a discouraging word?” Supreme Court Allows the Federal Registration of Disparaging Trademarks

I was recently interviewed by Steve Goldstein of Amplifi Media, a firm that consults for podcast companies, on the difficulties with the use of music in podcasts. That interview has been turned into an article on Steve’s blog, here, discussing these legal issues. That article discusses the same issues that we’ve written about…

This week SoundExchange, the non-profit rights organization that collects the royalties paid by digital music companies for the public performance in the United States of sound recordings, announced that it had acquired CMRRA (the Canadian Musical Reproduction Rights Agency, Ltd). CMRRA licenses the reproduction rights to musical works in Canada. As we have written before, musical works or musical compositions are the lyrics and music for a song, while the sound recording is the actual recording of that song by a singer, band or other performer. We have also written before about the difference between the public performance right and the right to make reproductions of songs (including “mechanical rights”), rights that arise in different contexts and usually require a different type of license before a music service can use a song in its business. Why would a company that licenses the public performances of sound recordings in the US acquire a company that licenses reproduction rights in Canada?

SoundExchange’s public notice talks about its ability to “integrate and streamline the administration and distribution of sound recording and music publishing royalties.” And it also highlights that the deal will allow it to “offer a broad and comprehensive range of services to rights holders in both sound recordings and music publishing and music users alike across North America.” While SoundExchange suggests that it is the first company to offer a comprehensive range of services in licensing both sound recordings and musical works in North America, this deal instead seems to be part of a trend where rights collectives are merging to offer such comprehensive services in licensing both public performance rights and the rights to make reproductions, for both sound recordings and musical works.
Continue Reading SoundExchange Acquires CMRRA – What Does it Mean for Music Licensing?

The Copyright Office last year announced changes to its system for registering designated agents for receiving take-down notices that are sent by copyright owners when they believe that user-generated content posted on a website is infringing on the copyright owner’s content (see our article here). The new system makes these registrations electronic, and requires all services seeking protection under Section 512 of the Copyright Act (the “safe harbor” for user-generated content) to register in the new system by December 31, 2017. Last week, the Copyright Office announced certain minor changes to the information required of the companies registering their designated agents in this new system (see Federal Register notice here).

The new changes make it easier for smaller companies to register in the new system. Initially, the system had required a user to establish an account with the Copyright Office before registering the designated agent. That account registration, while not public, did require the submission of information including the physical address of a contact person, and a secondary contact person for the company. Recognizing that many small website owners who might register for the sale harbor (e.g. a blogger running his or her own blog) might not have a secondary contact person for their website operations, the Copyright Office made the secondary contact optional. The office also eliminated the need to register a title for the contact person and the physical address for that person. Presumably, that address is no longer necessary as most contacts would be done through email or by phone – data fields that are still required. Why register in this system?
Continue Reading Copyright Office Makes Changes to Registration of Designated Agents for Take-Down Notices for User Generated Content – Reminder of December 1 Deadline to Register in New Electronic System

In the Federal Register last week was a notice that SoundExchange intends to audit the royalty payments of Pandora for its Internet radio service. As we wrote at the beginning of the year, SoundExchange routinely decides to audit representative companies in various segments of the digital music industry. In January, for instance, they issued notices of audits for a number of broadcasters, pure webcasters, and other digital music services (see our post here about the audit notices released in January). These audit notices are usually released at the beginning of the year though, from time to time, we’ve seen SoundExchange decide later in the year to audit a particular service (see our article here).

What is involved in an audit? We wrote about the royalty audit process here. SoundExchange issues notice of an audit, and that notice must be published in the Federal Register. SoundExchange selects an auditor who, under the rules of the Copyright Royalty Board, must be a CPA. The auditor reviews the books and records of the service and issues a report, to which the service can respond. Neither the audit report nor the response are filed with the government or otherwise made public. The results of the audit are provided to SoundExchange for any appropriate action they may take. Under the audit rules, if a service has underpaid SoundExchange by more than 10%, in addition to any late fees it owes, it also has to pick up the cost of the audit. This audit notice reminds all digital music services to accurately measure their audiences and properly report to SoundExchange, as it is always possible that their royalty payments can be reviewed. As this notice makes clear, just because they were not targeted in January does not mean that they will not be reviewed at some other point during the year.
Continue Reading Copyright Royalty Board Announces Additional Webcaster Audit by SoundExchange – Reminder to Carefully Maintain Your Royalty Records as They Can be Reviewed at Any Time

We wrote here about the Congressional proposal to make the Register of Copyrights a Presidential appointee subject to Congressional approval, rather than a selection of the Librarian of Congress. That bill, HR-1695 (an updated version of which is available here), despite some expressed concerns from certain advocacy groups about the potentially making that position…

In the last month, there have been two bills introduced in the US House of Representatives seeking to impose a performance royalty for sound recordings on broadcast radio stations in the US. The bill introduced yesterday, The PROMOTE Act (standing for the Performance Royalty Owners of Music Opportunity to Earn Act – whatever that may mean, can be found here), seems to have garnered more attention, perhaps as it was promoted by its principal sponsor, California Congressman Darrell Issa, as giving performing artists the right to decide whether or not their music is played by radio stations. In fact, it does not do that, instead merely setting up a royalty system similar to that in place for Internet radio operators, allowing broadcasters to play music only if they pay royalties on “identical” rates and terms as do webcasters.

The PROMOTE Act proposes to add to the Copyright Act’s Section 106 enumeration of the “exclusive rights” given to copyright holders a provision stating that sound recording copyright holders (for most popular releases, that is usually the record company) have the exclusive right to authorize the performance of recorded songs by broadcast radio stations. That is in addition to the existing right to authorize the playing of these songs by digital audio transmissions (e.g. webcasters, satellite radio and digital cable services). But, like with the right to play music by digital services, that right to prohibit the playing of recorded songs is not absolute. Instead, like for the digital services, through a proposed amendment to Section 114 of the Copyright Act, broadcasters will have the right to play the songs if they pay a royalty set by the proposed legislation at “rates and terms” “identical” to those paid by webcasters. Let’s look at these issues more closely.
Continue Reading New Congressional Attempts to Impose a Performance Royalty for Sound Recordings on Broadcast Radio, Including the PROMOTE Act – What Do They Provide?

The Copyright Office is now a part of the Library of Congress, with the Register of Copyrights (the head of the Copyright Office) appointed by the Librarian of Congress. As part of its plans to review the Copyright Act, the House Judiciary Committee asked for comments earlier this year about structural reform of the Copyright…

The Georgia Supreme Court this week issued a decision holding that the streaming of pre-1972 sound recordings by iHeart Media does not violate the state’s criminal statutes against the “transfer” of recorded sounds without the permission of the owner of the master recording. While many trade press articles have lumped this decision in with the ongoing litigation about the public performance right in pre-1972 sound recordings, this case is actually dealing with a different issue – and does not even mention the words “public performance” that were the center of debate in the Flo & Eddie cases against Sirius XM and Pandora, leading to the decisions that we wrote about in New York (here and here), California (here), and Florida (here).

What is at issue in the Georgia case is a criminal statute similar to those found in many states that prohibits the unauthorized transfer of various recordings, including pre-1972 sound recordings, without permission of the owner of the master recording. The plaintiff in this case, argued that the illegal transfers violated criminal law, and thus gave rise to a claim of civil liability under state racketeering statutes which provide for civil recovery against a defendant engaged in multiple criminal activities. By finding that there was no criminal violation here, the Georgia Supreme Court effectively ended the racketeering claim.
Continue Reading New Wrinkle in Pre-1972 Sound Recording Cases – Georgia Supreme Court Holds that iHeart Streaming Does Not Violate State Criminal Statute