Intellectual Property

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The Supreme Court decision in the Aereo case seemed to be the end of the line for the service that was retransmitting television stations signals without consent, as it found that the broadcasters were entitled to an injunction to force Aereo to cease the public performance of their signals without consent.  In fact, Aereo itself seemed to think so too, shutting off its service soon after the decision.  But in a move that was surprising to some, Aereo has apparently not thrown in the towel, and it is now back in Court with a two-pronged argument as to why its service is still viable (see its letter to the Court here).  First, it argues that, as the Supreme Court seemed to think that Aereo acted like a cable system and should be treated in the same manner as a cable system for purposes of determining whether its retransmission of a television stations signal was a public performance, it might as well be treated like a cable system for all purposes, and thus it should be entitled to carry the signals of TV stations pursuant to the statutory license granted to cable systems by Section 111 of the Copyright Act.  Second, it argues that, even if it does not qualify for treatment as a cable system, it should nevertheless be able to retransmit television signals – just not in real time, as the Aereo contends that the Court decision only prevented simultaneous and near simultaneous retransmissions of the television stations’ signals.  Offering once again a fearless prediction – I doubt these arguments will help Aereo any more than did their arguments before the Supreme Court.

Admittedly, their argument that they qualify as a cable system under the Copyright Act has some appeal.  In fact, as we noted in our summary of the oral argument before the Supreme Court, the Justices even asked why the company did not qualify as a cable company.  Section 111 of the Copyright Act defines a cable system as follows:

A “cable system” is a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.

That language is seemingly broad, covering not just what most of us think as a cable system (one that uses wires to transmit TV programming to the customer), as it talks expansively of “other communications channels” to deliver programming.  Of course, when satellite TV started, they were unsure of their status under this definition, and ended up getting a whole new section of the act to determine their ability to retransmit local TV signals to their subscribers.  But even if this section can be read expansively to cover Aereo, what does that get them?
Continue Reading Not Dead Yet – Aereo Tries To Reinvent Itself By Arguing that it is a Cable System Entitled to Carry Television Stations Pursuant to the Statutory License

The House of Representatives Judiciary Committee last week finished its second hearing on music licensing (written witness statements and a link to the webcast can be found here).  Congressional hearings usually are not in-depth proceedings looking to establish detailed facts as done in a hearing in a court proceeding.  Instead, they are formalized proceedings where parties get to make their canned statements setting out positions on issues.  Congressional representatives themselves make statements setting out their positions on the issues, and ask pointed questions to selected witnesses to reinforce those positions.  Minds are rarely changed, and the truly undecided are rarely illuminated on the issues.  But the hearings do serve to set out the issues that are going to be considered by the Committee in ultimately crafting legislation.  And last week’s hearing did just that – highlighting the issues likely to be considered in legislation promised by the Committee Chair, Representative Goodlatte, who promised an omnibus bill on music licensing, dubbed the “Music Bus,” to address the many issues on the table.

Note that any bill that is ultimately introduced will address many seemingly minor issues – details of process and procedure that don’t make the headlines.  But the big issues are the ones that will cause the most industry argument before the lawyers work out the details.  It’s also important to note that it is very late in the legislative calendar right now, with the Senate not putting the same emphasis on copyright issues as it the House.  With elections coming up in the Fall, and scheduled upcoming summer recess, Congress has much must-pass legislation that will fill up their legislative days before the next Congress is sworn in in January.  The start of a new Congress means that all legislation will have a fresh start.  Thus, any Omnibus bill that is introduced this year will most likely not become law, but instead will set the agenda for discussions for next year in the new Congress.  Certainly, there may be more limited bills that sponsors may try to get stuck on other legislation that must move before the end of the Congressional session, so interested parties will remain vigilant during the final days of this session of Congress.  But what are the issues that are on the table for inclusion in any Music Bus?
Continue Reading The Summer of Copyright, Part 2 – The House Judiciary Committee Plans Omnibus Music Licensing Bill – The “Music Bus”

The Supreme Court decided the Aereo case (decision here) and, if I can brag a little, the decision was pretty much what we predicted here after the oral argument – a relatively narrow decision finding that there is a public performance of the broadcast television signals retransmitted by Aereo as part of their service.  The Court looked at the service, and concluded that it effectively does what a cable system does with broadcast television stations – it takes their signals off the air and transmits them to the public, and charges a fee for doing so.  The only meaningful difference with Aereo for purposes of the decision was that it did not get the broadcasters permission to retransmit their signals.  Because its performance of the television stations’ signals was not authorized, the Court concluded that the service had violated the rights of the copyright holders, and remanded the case to the lower courts to finalize decisions which will presumably stop the retransmission of station signals unless Aereo gets permission from the TV broadcasters.

The decision was a 6-3 vote of the Court, with the dissenters adopting Aereo’s position that it was not the service that was making the performance, but each individual user, and thus the performance was a private one for which no permission of the copyright holder is necessary (akin to turning on the TV and performing its programming to yourself in your living room, or singing to your family in the car).  The dissenters, led by Justice Scalia, looked at three principal reasons for their conclusions that the majority missed the boat – (1) The statutory provisions and legislative history cited by the majority did not support the decision; (2) Aereo’s technology is different from cable as it sends one signal to one individual when the individual asks for it, as opposed to a cable system which is always sending all the TV signals to its subscribers, and (3) There was no volitional conduct by Aereo to infringe on copyrights – all the conduct actually seeking any infringing content was that of the users (going so far as to suggest that, while Aereo may not have violated the public performance rights of the copyright holders, it might still be contributorily infringing on their copyrights by encouraging the infringement by users).  The majority dismissed these complaints, for many of the same reasons that we have written about before (as summarized below).
Continue Reading Supreme Court Finds Aereo Infringes on Broadcasters’ Public Performance Rights – Why the Court Got it Right

This is the summer of copyright – as seemingly every government agency with any connection to media issues is looking at music licensing and other copyright issues.  Much press was given to the House Judiciary Committee hearing held last week.  But the Congressional committee’s consideration of copyright issues is but one of the many places where issues of importance to broadcasters and digital media companies are being reviewed.  The Copyright Office is doing its own review of the music royalty landscape (see our articles here and here), and I had the privilege of participating in their first roundtable discussion of these issues in Nashville the week before last.  Also holding hearings on copyright issues is the Commerce Department in connection with their Green Paper, which we summarized here and here.  The Copyright Royalty Board is starting its consideration of the recordkeeping requirements for webcasters and other digital music users (here and here), and also has begun the proceeding to determine the rates to be paid by webcasters for the public performance of sound recordings for the period of 2016-2020 (here and here).  And there is proposed legislation on pre-1972 sound recordings (the RESPECT Act), songwriters’ royalties (the Songwriters Equity Act) and another bill proposing to limit the collection of retransmission consent fees by TV companies that also own radio stations and don’t pay performance royalties to musicians.  On top of all that, law suits are pending in various courts on these and related issues, and the Department of Justice just announced a proceeding to review the consent decrees governing ASCAP and BMI that have been in place for over 50 years. I could easily cover nothing but music issues on this blog, and still not have enough time to write about all the pending proceedings, much less any new ones that may arise as I’m trying to catch up on all that has gone before.  But let’s start with one of the fundamental issues driving a significant part of this review.

Perhaps surprisingly, one of the principal drivers of much of this review of the Copyright laws is not whether there should be a performance royalty for sound recordings paid by broadcasters to record companies and performers for music played over the air, or even issues about the amount of royalties paid to recording artists and labels in the digital world – though much of the trade press (particularly the broadcast trade press) seems to focus on these issues, and to present them as the drivers of all of these reform proposals.  Certainly these issues are alive and important – but the area where there seems to be the most passion, and the strongest lobbying effort for copyright reform of music licensing deals not with performers and labels, but instead with the amounts that songwriters get paid for their use of music – with the debate focusing on how much they get paid by digital services for music streaming, and by the record labels for making “reproductions” of their compositions.
Continue Reading The Summer of Copyright and Music Licensing Part 1 – Songwriters Demand A Bigger Share

The Copyright Royalty Board has extended the deadline for comments on proposals to change the recordkeeping obligations of webcasters and others who use music under the statutory license granted by Section 114 of the Copyright Act.  Some of the proposed changes include requiring that services provide ISRC codes for all songs when filing their Reports…

On Friday, the Copyright Office extended by one week the deadline for comments on its wide-ranging proceeding on the current music licensing regime and whether reforms are necessary or appropriate.  We wrote about the proceeding and the many questions that it raises here.  Comments are now due on May 23.  Comments can be filed on the Copyright Office website, here. 

In addition, the Copyright Office announced a series of three roundtable discussions to be held at different sites across the country – in Nashville, Los Angeles and New York.  At these roundtables, stakeholders in the music industry and interested members of the public can address the issues raised in the Inquiry.  Interested parties who want to be considered for guaranteed participation in the round table discussions need to sign up by May 20, using the form available here.  At that same link, the discussion topics for these roundtables are set out – covering the broad range of music royalty and licensing issues raised in the Inquiry.  Clearly, this is an important proceeding in which many in the music and media industries will want to participate – but it is just one of many proceedings that may affect the way that broadcasters and digital media services use music in the future.
Continue Reading Copyright Office Announces One Week Extension for Comments on Music Licensing Inquiry and 3 Roundtable Discussions of the Issues – Just One of Many Proceedings Affecting Music Rights and Royalties

This week brings news that a Virginia broadcaster has brought suit to have a court declare that broadcasters who stream their signal on the Internet, but limit the reception of the signal to within 150 miles of their transmitter site, should not have to pay royalties to SoundExchange.  As we have written before, when Congress adopted the digital performance royalty for sound recordings in the late 1990s, there was an absolute exemption from the sound recording performance royalty for broadcast transmissions, embodied in Section 114(d)(1)(A).  That exemption is not limited by the 150 mile rule.  However, there is another section of the law, Section 114(d)(1)(B), that also exempted from royalty payments retransmissions of broadcast transmissions.  The law exempted from the 150 mile limit those retransmissions done by other broadcast stations.  Thus, FM translators, for instance, can rebroadcast their primary station beyond the 150 mile rule without triggering a sound recording performance royalty.  So what was the section on the 150 mile zone for retransmissions intended to cover?

This issue was raised back in the early days of webcasting, when questions were raised as to whether simulcasting of broadcast transmissions were covered by the 150 mile rule.  There was some thought that it was in the early days of Internet radio.  In the first webcasting decision (the one conducted by a Copyright Arbitration Panel – or CARP, before the Copyright Royalty Board came into existence), evidence was cited that Yahoo! Music, growing out of Mark Cuban’s Braodcast.com which built its business on the retransmission of broadcast station’s over-the-air signals, had set up its royalty structure negotiated with the record labels to take into account that broadcast simulcasts would be exempt.  But the Librarian of Congress issued a ruling rejecting that premise for a number of reasons.  See the decision here.  These included that, because Internet retransmissions of broadcast signals could not be geographically limited, they could not be encompassed within the 150 mile exception of 114(d)(1)(B).  The Librarian read the exception as encompassing only retransmissions that could be limited to being wholly within the 150 mile zone.  The Librarian also looked at Section 112, and did not find a similar exception in that section which grants a statutory license for the ephemeral copies made in certain transmissions, and thought that such an exemption would be necessary for the retransmission of broadcast signals on the Internet. (We have discussed ephemeral rights before, see e.g. here and here). There the issue sat until the case filed last week.
Continue Reading Broadcaster Asks Court to Declare that Internet Simulcasts of Radio Station Exempt From SoundExchange Royalties If Geo-Limited to a 150 Mile Zone

On Friday, the Copyright Royalty Board published in the Federal Register a proposal for changes in its recordkeeping rules – suggesting more detailed requirements for larger webcasters who are required to report the songs that they play on a “census” basis – that would be most webcasters who are required to report the songs that they play, how often they were played, and how many people listened when they were played each time.  Conversely, for the smallest of webcasters, those who pay a “proxy fee” so that they do not have to report the details of how many listeners were listening to each song that was played, the questions asked by the CRB are geared to potentially expanding the universe of those who do not need to report.  Comments are due on June 2, with replies due on June 16.  Given the potential economic impact that these proposals could have on businesses of all sizes, anyone steaming their music on the Internet and reporting to SoundExchange should carefully consider the details of the Notice of Proposed Rulemaking and whether to submit comments in this proceeding.

The proposals to require more detailed recordkeeping originated from SoundExchange, which filed a Petition for Rulemaking asking that the CRB adopt new rules on a number of issues.  The Board last comprehensively visited this topic in 2009 (see our summary here).  The Board’s Notice of Proposed Recordkeeping poses a number of questions that were raised by SoundExchange, and asks for public comment.  What are these proposals?
Continue Reading Copyright Royalty Board Starts Rulemaking to Change Recordkeeping Requirements for Commercial and Noncommercial Webcasters

Last week, the Copyright Royalty Board published in the Federal Register its decision on Internet radio royalties for 2011-2015.  The question that I received many times since the publication last week is “huh, didn’t we already see that decision a long time ago?”  Indeed we did – the original decision setting the rates was reached in December 2010 (which we wrote about here and here).  But, as many will remember, there was also an intervening decision finding that the CRB had been unconstitutionally established.  The Court remedied the unconstitutionality by changing the law’s provisions dealing with the ability of the Librarian of Congress to remove the Judges, and sent the decision back to the CRB to redo the 2010 decision.  The redo is the result that was released last week.  While the new decision did not change the rates for webcasters, it did contain some new analysis that presents some interesting insights into the Judge’s thought processes that may be relevant to webcasters who will be affected by the recently started proceeding to determine rates for 2016-2020.  As the three Judges on the CRB have all arrived on the CRB since the 2010 decision, this rewritten decision provides some insight as to how they are approaching the new proceeding. 

By the time the decision declaring the unconstitutionality of the “old” CRB was reached, the only party left fighting the decision was Intercollegiate Broadcasting Systems, a group of college broadcasters.  All of the commercial broadcasters had either settled their royalty disputes, or dropped out of the proceeding (see our summary of the rates entered into by parties as part of the Webcasters Settlement Acts).  Thus, no commercial webcasters participated in the remanded proceeding before the CRB.  The CRB noted the lack of any challenge to the commercial rates, and given that they were not challenged, and that they fell in a zone of reasonableness, they were adopted.  But, in determining that the rates were in the zone of reasonableness, the CRB did not just pay lip service to reviewing the prior decision, but it instead did a full review of that decision.  And, some of the discussion that they offered may arise again in the new proceeding.
Continue Reading Copyright Royalty Board Reissues Decision on Internet Radio Royalties for 2011-2015 – Same Rates But New Analysis

In discussing music royalties, the controversy that usually makes the news is the dispute between music services and copyright holders – with services arguing that the royalties are too high and rightsholders contending that they are underpaid. The introduction of the Songwriters Equity Act in Congress earlier this year seems to point toward a new area of dispute – one between the various rightsholders themselves.  This issue was one that was much discussed on a panel that I moderated last week at the RAIN Summit West (audio of that panel is available here).  What is this conflict?

The Songwriters Equity Act, while not explicit in identifying the controversy, does point to the dispute. As we have written many times before, in any piece of recorded music, there are two copyrights – the sound recording copyright (also known as the “master recording,” the recording of a particular song by a particular artist, rights usually held by the record label), and the right to the musical work (or “musical composition,” the words and music to a song, usually held by a publishing company).  The proposed legislation suggests that the amount of the royalties for the public performance of sound recordings can be taken into account in setting the royalties that are payable to songwriters for the public performance of the songs that they have written.  This would amend Section 114(i) of the Copyright Act, which currently prohibits the consideration of the sound recording royalty in determining the rates to be paid for the public performance of musical works.  The proposed legislation would also substitute the “willing buyer, willing seller” standard for the 801(b) standard in setting rates under Section 115 of the Copyright Act, the mechanical royalty (see our discussion of the difference between these standards, here).  While this does not sound like a big deal, it may have a significant impact.
Continue Reading Raising the Royalties for Musical Works? A Discussion of the Potential Dispute between Music Rights Holders over the Value of Their Rights