Intellectual Property

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The royalties that Sirius XM will pay to SoundExchange for the next 5 years will be decided by the Copyright Royalty Board ("CRB") in December. To summarize the hearings that have been held over the last year, the CRB held an oral argument last week, where Sirius XM and SoundExchange presented their arguments as to what those royalties should be. Sirius argued that the rates should be decreased, while SoundExchange contended that the rates should go up significantly from the 8% of revenue that the service now pays (see our summary of the current Sirius XM rates here). How can these parties have such different perspectives on the value of music, and what did this argument say about the application of the 801(b) standard that applies to Sirius?  This standard is the standard that webcasters are seeking to apply to Internet Radio services through the Internet Radio Fairness Act which we wrote about here.  If the IRFA is adopted, it would apply when the CRB next reviews webcasting rates in a case that will be decided by the end of 2015.

Sirius XM and cable music provider Music Choice, which was also part of the proceeding, are both governed by the 801(b) standard rather than the “willing buyer, willing seller” standard that applies to Internet Radio. The oral argument made clear that the adoption of the 801(b) standard is not in and of itself a panacea for the concerns about the royalties that have been set by the Copyright Royalty Board. Last week’s argument focused on the value of music in a marketplace – essentially the “willing buyer, willing seller” question. While other 801(b) factors were discussed, they were seemingly passed over quickly, with most of the focus being on the questions of the marketplace value of the music.Continue Reading Copyright Royalty Board Oral Argument on Sirius XM SoundExchange Royalties – A View of the Application of the 801(b) Standard Proposed for Internet Radio

Last week, the Radio Music License Committee (“RMLC” – see our article about the RMLC), filed a complaint in US District Court in Pennsylvania against SESAC, arguing that SESAC is a monopoly and should be treated like ASCAP and BMI.  RMLC is asking that SESAC be subject to an antitrust consent decree as are these two bigger collection societies. As we have written before, SESAC is not a non-profit organization like ASCAP and BMI, and is not subject to consent decrees like these other performing rights organizations (“PROs”). Instead, it is a private company, owned by venture funds which, up to now, has set its own prices for licenses subject only to negotiations with the rights holders. So what is this suit all about, and will broadcasters see any changes in SESAC licensing in the short-term? 

RMLC claims that SESAC, by effectively being the only way to license the public performance of compositions by thousands of different composers, effectively can get monopoly prices. Practically speaking, radio stations cannot individually license all the songs written by SESAC performers and, even if the stations were able to directly license some of the music from SESAC writers, SESAC still would not reduce their fees.  All SESAC licenses are blanket licenses that give stations the right to use all the music in the SESAC catalog, but are not reduced by any pro rata amount should any music be directly licensed. Thus, argues RMLC, stations cannot try to reduce their licensing liability through direct licenses with songwriters even if such deals could be negotiated.Continue Reading RMLC Files Antitrust Suit Against SESAC – What Does It Mean For Broadcasters?

The recent introduction of a bill by Congressman Jason Chaffetz offers proposals for reform of the operations of the Copyright Royalty Board – reforms that many in the Internet Radio industry have hailed as promising real change in the way that royalty decisions for webcasters have been made. While some webcasters seem to think that relief is at hand, in fact, the bill has simply been introduced into Congress co-sponsored by four congressmen, so it has a long way to go before it can be adopted by Congress and become the law of the land. But it is worth looking at the many issues that the Bill addresses so that webcasters know what it says so that they can rationally argue for its passage.

Most webcasters have focused on the provisions of the bill that would substitute the standards set out in Section 801(b) of the Copyright Act for the standard that currently applies – "the willing buyer, willing seller" standard. 801(b) sets out five factors to be considered in determining the rates to be set for a statutory royalty. These factors are:

(A) To maximize the availability of creative works to the public.

(B) To afford the copyright owner a fair return for his or her creative work and the copyright user a fair income under existing economic conditions.

(C) To reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression and media for their communication.

(D) To minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices. 

In contrast, the current “willing buyer, willing seller” standard looks only at one question – what a willing buyer and willing seller would agree to in a marketplace transaction.   What is the difference between these two standards?Continue Reading Chaffetz Bill Introduced in House of Representatives to Adopt 801(b) Standard for Internet Radio Royalty Decisions of Copyright Royalty Board – What’s It All About?

I was fortunate enough to spend some time earlier this month in London, at the Olympics. While there, I noticed just how closely the Olympic venues were guarding against any advertising from any non-official Olympic sponsors. This article from the AP notes how even the restroom fixtures had tape covering all brand names to prevent the manufacturers from getting any Olympic tie-in. I witnessed the tape and had puzzled over it many times when in London. At Wimbledon, too, where the tennis finals were held, the drink Pimms Cup, a fixture at events there, was not available as Pimms had not shelled out to be an Olympic sponsor. Again, I can attest that we spectators had to instead drink “No 1 Fruit Cup” which, I am told, was the same beverage. The AP article talks about many other similar enforcement actions taken by Olympic committees, zealously guarding Olympic trademarks. These actions all contain a warning for broadcasters – be very careful using any Olympic trademarks, symbols or other branded content in advertising and marketing campaigns, or those of other big events where trademarks (or service marks, as trademarks are known where they apply to services as opposed to goods) limit the use of the name of the big event.

We’ve written before (here and here) how Olympic sponsors pay big bucks for the rights to sponsor the Olympics, and to get exclusivity to associate their brands with the games. Thus, the sponsors guard their territory carefully, as do the Olympic organizations whose ability to stage the games is dependent on such sponsorship. Thus, when a broadcaster is approached by a local car dealer, who wants to promote an “Olympics of Savings”, or a local gym that wants to show in its commercial its exercise facilities with the Olympic rings hanging over a bank of treadmills, don’t do it, as there could be consequences far beyond the advertising revenues that you receive. And don’t plan your own WXXX Hometown Olympic festival, as that also could bring issues from the Olympic “police.”  (see this video on one local festival that confronted this issue from Comedy Central’s the Daily Show, not the first time that Comedy Central has explained trademark law -see our reference to a Colbert Report story dealing with the same question at the Winter Olympics).  And the Olympics is not the only event over which you should have this concern.Continue Reading The Olympic Trademark Reminder – Be Careful Using The Names of Big Events Without Permission

Radio stations are once again hearing about the Mission Abstract Data patents, as a firm representing them has been seeking a royalty for the use of the patent for certain digital music storage and retrieval systems. We’ve written about that patent before. When we last wrote on the subject, the patent was subject to review by the Patent Office, which had raised issues appearing to question the underlying validity of that patent. Since then, the Patent Office reversed itself, finding that the patent (as clarified and narrowed by the holder) was in fact valid. But that determination was itself challenged by certain companies that have interests in digital music storage systems for radio stations and, in an order released last week, the Patent Office has once again suggested that there may be issues with the patent that could undermine its validity.

While this development appears promising for broadcasters concerned about the patent, broadcasters need to take this news with a grain of salt.  The Patent Office letter is at best preliminary, and the patent owner can file comments addressing the concerns raised by the Patent Office in the next 60 days, and then the challengers to the patent can reply 60 days after that. As we have seen in the past, a preliminary indication from the Patent Office that the patent may not be valid does not always withstand scrutiny when the final evaluation is completed, after presentations from both sides are received.  So what is a broadcaster to do? 

 Continue Reading The Latest on Radio’s Digital Music Storage Patent Issue

Radio broadcasters have been receiving invoices from the Radio Music License Committee (“RMLC”), and many are asking whether the invoice is “real.”  Some stations seem concerned that they are being asked to pay some fee that they really don’t owe. The truth is that this is one bill that most commercial stations in fact do owe, and it is a bill that they should actually be happy to pay. RMLC is the committee that represented radio broadcasters in the recent negotiations with ASCAP and BMI, leading to new agreements covering the royalties to be paid to these organizations through 2016. We wrote about the ASCAP agreement, here. The BMI agreement was announced recently, and we’ll try to get a summary of that agreement up on the blog sometime soon. These settlement agreements significantly reduced the amount of royalties that the radio industry as a whole pays to ASCAP and BMI for the public performance of musical compositions on over-the-air radio (and in connection with their digital uses of music as well).   As part of these settlement agreements, the Court overseeing the antitrust consent decrees with ASCAP and BMI, which had to approve the settlements, approved the fees to RMLC as well. 

Under the terms of the Court approval, all stations that either elected to be represented by RMLC in the negotiations (see our article on that election here), or those who elect to be covered by the settlement by signing an agreement with ASCAP and BMI under the terms that RMLC negotiated, are required to pay the fee to RMLC.  The fee funds RMLC operations in the future, and pays for the cost of the litigation and negotiations that led to the settlements.Continue Reading What is the RMLC, And Why Should a Radio Station Pay Their Bill?

As we wrote about last year around this time, MARCH MADNESS is a term that is protected by trademark law.  It is owned by the March Madness Athletic Association (MMAA), a joint venture between the NCAA and the Illinois High School Athletic Association (IHSA).   The IHSA was actually first to begin using this mark to describe its high school basketball tournament in the 1940s. 

Brent Musburger brought MARCH MADNESS to public attention in using that term to describe the NCAA college basketball tournament, during which many hearts are broken each year….if you are lucky enough to have a team that made it this far. (Northwestern came this close to its first NCAA appearance.)

Normally, this would be a case of so-called "reverse confusion," in which the junior user of a mark (here, the NCAA) is so much bigger than the senior user of the mark (the IHSA) that the public thinks the mark belongs to the junior user.  In the typical reverse confusion case, the senior user can stop the junior user from using the mark.  But that did not happen here.  Why? Continue Reading MARCH MADNESS: An Unusual Case of Reverse Confusion

The Copyright Royalty Board makes many important decisions, yet for the last several years, there has been a cloud over its operations, as there have been questions as to whether its members were constitutionally appointed (see our articles here, here and here). Well, the question is before the Courts again – this time squarely in front of the US Court of Appeals for the District of Columbia – a Court one step below the Supreme Court. The Copyright Royalty Board sets the royalty rates to be paid by Internet radio stations for the public performance of sound recordings, and in doing so, they have made some controversial decisions over the last few years. They also set royalties for other digital non-interactive music services, including Sirius XM, music services that come with cable and satellite television services, and background music services. The Board also oversees the distribution of funds that are collected for the retransmission of distant television signals by cable systems. It also sets the rates under Section 115 of the Copyright Act for the reproductions of musical compositions made by record companies when producing musical recordings or downloads, by digital music companies in connection with on-demand music services, and by wireless carriers in selling ringtones. 

The case before the Court involves a seemingly small matter – the appeal of Intercollegiate Broadcasting Services from the CRB decision setting default rates for Internet radio services that are not covered by one of the many Webcaster Settlement Act agreements (about which we wrote here and here). IBS essentially is objecting to the fact that the Board would not lower the annual minimum royalty fee paid by some of IBS’ smaller members below $500. But, in connection with its appeal, IBS raised the issue of the constitutionality of the appointment of the Judges, and the Court this week heard an oral argument on the issue – mentioning the rate questions only in passing while concentrating on the constitutionality of the appointment of the Judges.Continue Reading Constitutionality of Copyright Royalty Board Argued Before the US Court of Appeals – How Will It Affect Future Music Royalty Rate-Setting?

ASCAP and the Radio Music Licensing Committee have reached a settlement on the amount that radio stations will pay to ASCAP for the use of music for the period through the end of 2016. The agreement was approved last week by the US District Court in the Southern District of New York acting as a “rate court” to consider those fees. We reported that a settlement had been reached in early December, and now we’ve seen the actual documents and can provide some details of this agreement between the commercial radio broadcast industry and ASCAP. It should result in significant savings for broadcasters from rates that they had been paying prior to January 1, 2010.

As we wrote in 2010 when RMLC and ASCAP were first trying to reach a deal on new rates, the biggest problem with the old rates was the payment structure. Rather than making ASCAP a partner of the broadcaster by cutting them in for a percentage of the broadcaster’s revenue, under the deal that ended in 2009, ASCAP was to receive a set fee each year from the broadcast industry.  That set fee was divided among all commercial radio stations not based on station revenues, but instead based on the market size and technical coverage of each station. So all similarly powered stations in a market paid the same ASCAP fee, whether they were big revenue producers or not.  And the agreement was entered into during a period where radio broadcasters thought that revenues would be ever-increasing, so that set fee to be paid to ASCAP increased each year. As the economy and broadcast revenues fell during the later years of the deal, while the set fee kept increasing,broadcasters were paying an ever-increasing percentage of their revenues to ASCAP – far more than would have been paid had the industry stuck to a percentage of revenue formula.

Well, the experiment is over, as the new deal returns to a traditional percentage of revenue deal. Music radio pays ASCAP 1.7% of “revenues subject to fee from radio broadcasting." Essentially, that is all the revenue that a station receives from advertising and promotions, less a 12% deduction (presumably to cover commissions and costs of collection). Barter revenues, and payments made to networks (as opposed to the stations themselves), are excluded from the gross revenue calculation. All revenues from HD programming (including any amounts received for brokered programming) is also included (at least for the time being – subject to reevaluation should HD revenues account for 25% of radio revenues by 2015). New Media revenues, if the arise exclusively from streaming your station on the Internet, are also included in this gross revenue calculation.Continue Reading Details of the ASCAP Settlement with the Radio Industry – What Will Your Station Pay?

One of the questions we commonly get from broadcasters and others around this time of year is whether and/or how they can use the term SUPER BOWL.  Some refer to it as a trademark while others call it a copyright.  Who is right…and how can it be used?  The term SUPER BOWL is a registered trademark owned by the National Football League. We previously discussed this issue in 2009, 2010 and 2011. 

Actually, the NFL owns at least eight trademark registrations containing the words SUPER BOWL, as well trademark registrations for the terms PRO BOWL and even SUPER SUNDAY.  Aside from these trademark registrations, the NFL also owns the copyright to the telecast of the game itself.  You may have heard that in past years, the NFL tried to stop Super Bowl parties shown on large TV screens.  This was an enforcement of the NFL’s copyright in the game.  Now, the NFL apparently no longer tries to stop Super Bowl parties unless the proprietor charges admission to see the game.  Again, this is a copyright issue.  But what do these rights mean for a broadcaster who wants to run a Super Bowl promotion or an advertiser who wants to run a campaign involving the Big Game?

Continue Reading Is Super Bowl Protected by Trademark or Copyright Law? Try Both.