Intellectual Property

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The Copyright Office recently issued a Notice and Request for Public Comment on a study that they have commenced on music licensing in all of its forms.  We’ve written about the complexity of the music licensing process many times, and about proposals for reform.  Many of these proposals have been issued in connection with the speeches of Copyright Register Maria Pallante’s discussion of copyright reform (see our article here), and the subsequent Green Paper on Copyright issued by the Patent and Trademark Office (see our article here).  This Notice appears to be one more step in this overall review of copyright underway throughout the administration and in Congress.  The Notice released by the Copyright Office is wide-ranging, and touches on almost every area of controversy in music licensing.  Comments are due on May 16, and the Copyright Office promises to hold roundtable discussions to further explore the issues in music licensing.

The issues on which the Copyright Office asks for comments deal both with the licensing of the musical composition or musical work (the words and music of a song) and the sound recording (the song as actually recorded by a particular artist).  The request deals with both the public performance right for musical compositions, usually licensed through ASCAP, BMI and SESAC, and the rights to make reproductions of the works, which are usually licensed by the music publishers, sometimes through organizations like the Harry Fox Agency.  On the sound recording side of the music world, the rights are usually licensed by the record company except for the public performance royalties paid by non-interactive music services, which are collected in the United States by SoundExchange. 
Continue Reading Copyright Office Begins Wide-Ranging Inquiry Into Music Licensing

Aereo finally lost a court decision.  The US District Court in Utah released a well-reasoned decision finding that the service, by transmitting via the Internet over-the-air TV programming to subscribers without any consent from the TV stations or their program suppliers, violated the copyrights that the stations have in their programming.  Specifically, the Court found that the transmissions were public performances, the very issue to be determined later this year by the US Supreme Court when it considers the decision of the Second Circuit Court of Appeals in New York finding that no public performance was involved in the Aereo transmissions.  (See our summary of the NY decision here).  The Utah Court issued an injunction preventing Aereo from operating in Utah until the issue is decided by the Supreme Court. 

This is the first case that Aereo itself has lost, also winning a favorable decision from a District Court in Boston which essentially followed the Second Circuits reasoning (see our summary of the Boston decision here).  But the Aereo copycat service, FilmOn X, which presented essentially the same legal issues to Courts, has lost two decisions, one in California and one in Washington DC (see our summary of the DC decision here), both courts finding that the public performance right was implicated by Aereo’s transmissions.  Oral arguments in the Supreme Court are to be held in April, with a decision in the case expected before the Court adjourns for its summer recess in July.  Does this Utah decision serve as a preview of the upcoming Supreme Court decision?
Continue Reading Utah Court Enjoins Aereo Service – A Preview of the Supreme Court Decision? Could It Find Aereo to Violate Copyright Law Without Overturning the Cablevision Decision?

Social media and other digital platforms are playing a more and more important part of the business of traditional media companies.  In the last few weeks, I’ve participated in two seminars, looking at the legal issues that arise in these areas.  At the Winter Convention of the Wisconsin Broadcasters Association, I conducted a seminar outlining the legal issues that broadcasters need to consider in their digital media endeavors.  The slides from that presentation are available here.  We talked about many issues, some of which I write about regularly (e.g. music rights), and others that I will write about more in coming weeks, including privacy, online sponsorship attribution, user-generated content, and other issues that arise in the online world.  One issue that we spent a significant amount of time discussing was copyright – including specifically concerns that can arise when stations take content found on the Internet – pictures, videos, music or other creative works – and appropriate it for their websites or other digital properties, without bothering to get permission. 

Many broadcast employees, as well as many others throughout society, think that if something is on the Internet, it is there to be used by others, and no rights need to be obtained to use that material.  That is incorrect, and can get users into trouble.  In recent months, we have seen many lawsuits filed against broadcasters, including against some of the biggest broadcasters in the country, over improper use of photographs found on the Internet.  What often happens is that someone at a station is putting together some content for a station website – say the arrival in town of some band whose music the station plays.  Rather than calling the band’s management company or the concert promoter to get pictures to use in the article about the artist or the upcoming show, the station employee finds some picture on the Internet, copies it through a simple mouse click or two, and pastes it onto the station’s website.  A few months later, a cease and desist letter arrives, or worse, an immediate demand is made for a significant sum of money, claiming that the use of the photo infringed on the copyright of the photographer who took the pictures.  How can this be, asks the station employee?  When someone posts something in the Internet, isn’t it free for anyone to use?
Continue Reading Digital and Social Media Legal Issues for Broadcasters – Exercise Care in Using Internet Content on Your Digital Properties, And Why Fair Use is Not Always a Defense

50 years ago the Beatles invaded America, stacking up Number 1 hit records by the dozens, and creating music that, even today, remains incredibly popular with many Americans.  But go to many of the interactive or on-demand music services, like Spotify, and search for Beatles music, and what will you find?   Mostly cover tunes by sound-alike bands rather than the original hits.  But yet, on services where you can’t designate your next song, like Pandora, you can hear the original songs.  Why the difference?

As we wrote two years ago, when the Beatles first announced that their catalog would be licensed to iTunes as the first interactive service to get access to their music, such services need to get licenses from the copyright holder of the sound recordings (or “master recording” – a song as recorded by a particular artist) in order to play those songs. By contrast, the non-interactive services operate under a statutory license, where a digital music service pays a royalty set by the Copyright Royalty Board (or a negotiated rate agreed to in lieu of litigation before the CRB see our article here about the various rates that are currently available to webcasters, and our article here about the start of a new proceeding to determine what those rates will be from 2016-2020). If the service pays that royalty, and observes the requirements of the license (like the “performance complement” that limits the number of songs from the same artist that can be played in a given time period, the prior promotion of the playing of a song, and certain other matters – see our article on the performance complement here) – they can play any legally available sound recording available in the US, and the sound recording copyright holder can’t object.Continue Reading It’s the 50th Anniversary of the Beatles Arrival in the US – Why Are Their Songs Still Missing on Some On-Demand Music Services?

We recently wrote about FCC issues that will be facing broadcasters in this new year.  While broadcasters will no doubt be busy keeping track of what the FCC is up to, they also need to have their eyes on other government agencies, as there are numerous issues that may come from Congress and the other regulatory agencies in DC that could affect their bottom lines.  So, with a watchful eye on the FCC for the issues we wrote about earlier in the month, what other issues should broadcasters be watching for from all of the other regulatory power centers in DC? 

While this is an election year, and that makes many big pieces of legislation unlikely, the discussions that occur in 2014 on these issues may pave the way for action late in the year, or in 2015 after the new Congress is in place and before the Presidential election in 2016 commands everyone’s attention.  Here are some of the issues of interest to broadcasters likely to be on the DC agenda in 2014:
Continue Reading What’s Up in Washington For Broadcasters in 2014? — Part 2, Issues beyond the FCC Including Ad Taxes, Music Royalties, Privacy Reforms, and More

It’s that time again when broadcasters and advertisers need to watch their commercials and promotions to avoid improper uses of trademarked phrases – with the Super Bowl only weeks away, the Winter Olympics to follow soon thereafter and March Madness to follow closely after that.  Already, Stephen Colbert is making jokes about not using the Olympic rings in promotional announcements (see the first segment of last night’s show), so you know that the issue is arising at media outlets across the country.  As we do every year when the Super Bowl and March Madness roll around (and every other year at Olympics time), we remind broadcasters to scrutinize their advertising and promotions to avoid anything that appears to imply a tie in with any of these events – especially where the protected name of the event is used in the ad or promotion itself. (See past articles here and here). 

The Super Bowl and March Madness are both trademarked terms, and violations of the trademarks have been vigorously prosecuted by the NFL and the NCAA, respectively.  The US Olympic committee has gone one better, getting specific statutory protections in the US for the use of the term the Olympics and the interlocking rings that symbolize the games.  Sponsors of these events pay big bucks for the privilege of being associated with the events, and the organizations putting on the events rely on the money from these sponsors to fund their operations.  So they go out of their way to protect their trademarks.  I wrote the summer before last about my own experiences at the London Summer Olympics, where even the trademarks on the plumbing fixtures at the Olympic sites were obscured where the manufacturers had not obtained Olympics sponsorships.  So there are obviously limits on what can and cannot be said about these marks.  What are those limits?
Continue Reading Super Bowl, the Olympics and March Madness – Watch Your Advertising and Promotions for Unauthorized Uses of Trademarked Phrases

The Supreme Court on Friday announced that is has decided to review the decision of a US Appeals Court in New York finding that the Aereo service of retransmitting over the Internet the signals of local television stations, without permission from or payment to those stations, was legal.  We wrote about the Second Circuit Court of Appeals decision in the Aereo case here.  The Supreme Court’s decision to hear the case, which may signal that the case will be decided before the Court adjourns its term in June, was supported not only by the television stations who had sought to block the Aereo service and the program suppliers to those television stations (including many of the sports leagues), but also by Aereo itself.  As Aereo and its copycat service FilmOn X were being sued in every jurisdiction where they started to do business, the desire to get a quick and final resolution of the legality of their services is a natural one.  This is especially true as the Courts have been reaching different decisions, as demonstrated by the two cases decided only a month apart, one in Boston finding Aereo to be legal, and one in DC finding FilmOn X to be infringing on the copyrights of the TV stations who brought the lawsuit.  So what issues will the Supreme Court be deciding?

One newspaper editorial, from the Los Angeles Times, has suggested that this is a Betamax case for the 21st century.  The Betamax case, officially known as Sony Corp. v Universal City Studios, was the case that declared the VCR to be legal, and found that its original manufacturer, Sony, was not contributorily infringing on the copyrights held by Universal and other studios that brought the case.  But that comparison really does not hold up, as the Betamax decision was premised on several findings that simply cannot be made here.  First, the Court in the Betamax case found that the VCR was not in and of itself an infringing service, as it had substantial legal uses.  In fact, there was testimony in the record that many copyright holders actually were not opposed to the use of a Betamax to copy their programs for time shifting and other purposes.  In the Aereo cases, copyright holders are for the most part universally opposed to the service and, other than retransmitting copyrighted programs without consent, there does not appear to be another use for the service.
Continue Reading Supreme Court Decides to Review Aereo – Why This is Not the New Betamax Case

The Good Wife is not usually where one turns for serious discussions of music copyright issues (nor is Stephen Colbert’s Christmas special where we found copyright issues discussed several years ago).  But I was surprised to find this Sunday that the principal plot line of The Good Wife was focused on a music rights dispute.  After watching, I wondered how many people in the show’s audience had any idea of what the legal issues being discussed were really all about.  In fact, copyright law, as confusing as it can sometimes be, is an unusual topic for a plot line on a TV show.  It is not as universally understandable as is a criminal trial, a custody case or some civil suit for damages.  In fact, as we’ve written before, the complexity of copyright law makes compliance difficult even for those involved in the industry.  The Good Wife episode itself made that complexity a comedic point throughout the program, as even the musicians involved in the plot line several times remarked that they, too, were clueless as to the rights issues involved in this fictional case.  But, with a couple of days to reflect on the program, I thought that it might be worth expounding on some of the copyright issues involved, as they illustrate some of the rights that are included in the copyrights to every piece of music.

As we have written before, what makes copyrights in music so confusing is that there are several copyright holders in each recorded song, and each copyright holder has different rights, often administered by different organizations.  We write much about the public performance rights in sound recordings (usually payable to SoundExchange by noninteractive digital music services, and to the record companies by interactive services) and in musical compositions (usually payable to ASCAP, BMI and SESAC, though some large publishing companies have started to pull their catalogs from these organizations to license directly).  But The Good Wife did not deal with the public performance right, but instead with other rights in music.  The two rights principally dealt with were the right to authorize the making of a reproduction (often referred to as a “mechanical right“) and the right to make a derivative work.  The first is the right of the copyright holder to authorize others to use their compositions or recordings to make copies.  In the TV case, the issue involved the rights held by the writer of the song to authorize others to make cover versions of that song and to reproduce those versions (e.g. through CDs, downloads or other digital reproductions).  The right to make a derivative work is the right that the copyright holder has to authorize others to take parts of the original work but to make more than cursory changes to that work, e.g., keeping the melody and changing the words, or as in the TV case, keeping the words but changing the melody (in the TV case, taking a rap song and giving it a real pop song melody). 
Continue Reading Learning Copyright Law from TV’s The Good Wife – Compulsory Licenses, Derivitive Works and Parody and Fair Use

The Copyright Royalty Board today published in the Federal Register its notice announcing the commencement of the next proceeding to set webcasting royalty rates for 2016-2020.  The Notices (here for webcasting and here for “new subscription services” – subscription webcasting and other similar pay digital music services, other than satellite and cable radio whose royalties were set in another proceeding about which we wrote here) were notable as they were not simply an announcement that the proceedings were beginning and a recitation of the procedure for filing a petition to participate (essentially a written filing setting out a party’s interest in the outcome of the proceeding and the payment of a $150 filing fee). Instead, the order sets out a series of questions for consideration by potential participants, asking that they consider some fundamental issues about the nature of the royalty to be adopted in this proceeding.  Petitions to participate must be filed by interested parties with the CRB by February 3. 

The questions asked by the Judges really revolve around two issues that have been raised many times in prior proceedings.  These questions are noteworthy only because the Judges are asking the parties to consider whether the CRB should address issues that have been litigated in prior proceedings – issues that some might have considered to be settled by these prior cases.  First, the Judges ask if the CRB would be justified in adopting a percentage of revenue royalty, rather than the per song, per listener royalty metric that has been used in the three prior proceedings. Asking that question raises several other sub-issues that are set out in the orders including:

  • Whether it is too difficult to determine what the revenues of a webcaster are, an issue that can be troublesome if the webcaster has multiple lines of business where determining which revenues are attributable to webcasting and which are attributable to other services might be complicated (though collection agencies like ASCAP and BMI are able to administer their royalty schemes, usually using a percentage of revenue rate).
  • Whether a percentage of revenue royalty is unfair to the artists because it does not pay each artists an equivalent amount for each song that is played, thought the Judges ask parties to address whether all music is worth the same amount (see our article here about the difficulty in assessing the value of music and the controversies that it raises).
  • Whether a percentage of revenue royalty encourages the webcaster to use too much music, as services not paying on a per song per listener basis might not need to be efficient in monetizing their music use unless, as suggested by the Board, there are substantial minimum fees adopted to encourage the webcaster to make money off of its use of the music.

In addition, the Board asks if there should be different rates for different types of webcasters – are some more efficient than others?  Can royalties be maximized by “price discrimination” – charging less to certain webcasters to get whatever can be received from them, while charging a higher royalty rate to other services that can afford to pay more?  In effect, there has been price discrimination in the webcasting market, but such discrimination has come about after there have been decisions perceived as adverse to webcasters, when webcasters and SoundExchange have come together, often as the result of political pressure, to negotiate alternative rates pursuant to a Webcaster Settlement Act (or the Small Webcaster Settlement Act in the initial proceeding).  See our summary of the differing royalty rates currently paid by webcasters pursuant to these negotiated deals, here. 
Continue Reading Copyright Royalty Board Calls for Petitions to Participate in Proceeding to Set Webcasting Royalties for 2016-2020 – Posing Many Questions for Potential Participants

“Business Establishment Services” are copyright-speak for those music services that provide background music to commercial establishments.  These services have come a long way from the elevator music that once was so derided – and now set the mood in everything from retail clothing stores to restaurants to department stores with formats as varied as the commercial businesses themselves.  While the rates paid by these services pay for music rights is a little off-topic for this blog, these rates are a bit unusual, so they are worth mentioning.  The Copyright Royalty Board just announced the adoption of a settlement between services and SoundExchange which will raise the rates from the current 10% of revenue to 12.5%, with a minimum annual fee of $10,000, effective January 1.

We have written about the rates paid by these services before (see for instance our articles here and here).  What makes them unusual is that the royalties are not paid to SoundExchange for the public performance of sound recordings, as are the royalties paid by other digital music services including webcasters or Sirius XM.  That is because, in adopting Section 114 of the Copyright Act, Congress did not want to impose on businesses a new performance right, as there is no general public performance right in sound recordings in the United States.  Businesses and other services that do not digitally transmit performances of audio recordings have no obligation to pay copyright holders in the sound recordings (usually the record companies) or artists for the public performance of music.  Users do, however, pay fees for the public performance of the underlying composition through ASCAP, BMI and SESAC.  As we wrote here, the Register of Copyrights has suggested that a general public performance right in sound recordings be paid in the United States, but as that would impose new fees on all businesses that use recorded music in the US, from stadiums playing “We Will Rock You” at the appropriate point in a big game, to DJs spinning their discs in nightclubs, to the trendy tunes playing in the hip clothing retail stores, to over-the-air radio – this proposal is very controversial.  So, if they are not paying public performance fees, why do background music services have to pay SoundExchange?
Continue Reading New Music Royalty Rates for Ephemeral Recordings Used By Business Establishment Services