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In recent years, patent issues have arisen in many areas affecting online media.  In a recent decision, the Supreme Court decided that lower Courts have more discretion to review whether a patent should be rejected for "obviousness."  To be valid, a patent must cover some degree of innovation, and should not be simply an…

In a ruling released last week, a US District Court Judge issued a ruling finding that a download of a recorded musical work does not give rise to a "public performance" requiring a payment to ASCAP, BMI or SESAC.  If this decision is upheld on appeal, it could mean that one less fee would have to be paid in connection with on-demand downloads – which would also affect podcasts and video downloads made available by broadcasters on their websites.  However, there are many issues that must be understood about this ruling, so broadcasters should not impetuously rush to provide downloads and podcasts without first securing the bundle of rights necessary for such performances.

First, it is important to understand the issue that was presented in this case.  The case did not involve streaming of programming – so it has no effect on Internet radio royalties.  It involves only downloads – where a copy of a specific work is downloaded to a single consumer’s computer at the request of that consumer.  This is what happens when a consumer buys a song from iTunes, or downloads a podcast made available by a broadcaster.  There is no question that, to provide such a download or podcast containing music, a service needs to get permission from the copyright holder in the "sound recording," the song as recorded by a particular artist.  This is typically received from the record company which holds the copyright.  In addition, there is a requirement that the rights to the composition must be obtained for purposes of the making of the making of a "reproduction" and a "distribution" of the underlying composition.  This is typically obtained from the publishing company or a clearinghouse such as the Harry Fox agency.  A service that provides downlaods of music can alternatively pay a statutory royalty for the composition, though that requires following a somewhat cumbersome process of filings set out by the Copyright Office and requiring specific notice to the copyright holder in the publication.Continue Reading District Court Finds No Public Performance In Download – Could Affect Fees on Podcasts and Video Downloads

The Copyright Office last week released a wide-ranging Notice of Inquiry, asking many questions about the statutory licenses that allow cable and satellite companies to retransmit broadcast television signals without getting the specific approval of all the copyright holders who provide programming to the television stations. The notice was released so that the Copyright Office can prepare a report to Congress, due June of 2008, in which it will present its views as to whether the various statutory licenses still perform a necessary function, and whether any reforms of the current licenses are necessary. To complete its report, the Notice asks many questions about how these licenses currently work, whether the licenses function efficiently, and whether they should be retained, modified or abolished in favor of marketplace negotiations. The Notice even asks whether the existing statutory licenses should be expanded to take into account the different ways video programming is now delivered to the consumer, including various Internet and mobile delivery systems. Thus, virtually anyone involved in the video programming world may want to be part of this proceeding. Comments are due July 2 and reply comments are due September 13.

The cable and satellite statutory licenses were adopted by Congress to allow these multi-channel video systems to retransmit broadcast  signals. Without these licenses, the individual owners of copyrighted material – including syndicated,  network, sports, and music programming — would have to be consulted to secure necessary copyright approval before the television signal could be retransmitted. As the multi-channel video providers would, in many cases, not even know who held all these rights, they instead pay a statutory license which is collected, pooled, and then distributed to the various rights holders in proportions agreed to by those copyright holders or, in the absence of agreement, set by the Copyright Royalty Board.Continue Reading Copyright Office Begins Inquiry to Reexamine Cable and Satellite Statutory Licenses – and Asks if Statutory Licenses are Appropriate for Internet Video

We have been covering the controversy over the rise in the royalties for all those who are providing an Internet radio service, whether they be over-the-air broadcasters streaming their signals on the Internet or pure webcasters whose stations are only available on the web.  Our previous postings on the topic can be found here.  Today…

As we wrote on Friday, the Copyright Royalty Board released to the parties their decision setting the sound recording music royalties for Internet radio for the years 2006-2010 – and the rates will be increasing significantly (absent success on appeal or in settlement discussions). The rates and appeal process are set out in our post on Friday.  The parties have until Monday, March 5 at noon, to request that the Board keep portions of the decision that contain confidential proprietary information out of the public record. Thus, the text of the decision is not yet public. Nevertheless, many parties are asking for more specific information about the decision and its impact. Certainly, when the decision is public, everyone will want to make their own judgments. But, until that time (which should be soon as the Board was careful to avoid using any significant amount of confidential information), I offer some observations about the decision (from my vantage point as a party who represented some of the webcasters involved in the proceeding), as well as thoughts on some of the questions that I have seen posted on various discussion boards this weekend.

First, it is essential to understand exactly what this decision covers. The Board’s decision covers only non-interactive webcasters operating pursuant to the statutory license. Our memo, here, discusses the statutory licensing scheme, and what a webcasting service must do to qualify to pay the royalties due under this statutory license. Essentially, a webcaster covered by this decision is one which operates like a radio station – where no listener can dictate which artists or songs he or she will hear (some limited degree of consumer influence is permitted, but a webcaster must comply with the restrictions set out in our memo).  Also, the webcaster cannot notify their listeners when any specific song will play. The decision does cover the Internet transmissions of the over-the-air content of most broadcast stations. 

The royalties are paid to SoundExchange – a nonprofit corporation with a Board made up of representatives of artists and the record companies. The royalties go to the copyright holders in Sound Recordings and the performers on those recordings ( the copyright holder is usually the record label. Royalties are split 50/50 – and the artist royalties are further divided 45% to the featured artist and 5% to any background musicians featured on the recording). 

The decision by the Board was the result of a long proceeding – which began in 2005. A summary of the proceeding can be found in our posting, here. Satellite radio also has to pay similar royalties, as do services that provide background music to businesses ("business establishment services"). Separate proceedings are underway to determine rates for these services.

With that background – here are some more thoughts on the decision – obviously in very summary form. The Board is charged with determining the royalty rates that would be determined by a willing buyer and a willing seller in a marketplace transaction. The Board was clear in the decision that it would look simply for evidence of what such a deal would be – it would not look at policy reasons why certain groups of webcasters (including small commercial webcasters or noncommercial webcasters) should get some special rate.Continue Reading More on the Copyright Royalty Board Decision on Internet Radio Music Royalties

Yesterday’s New York Times featured an article on radio’s increasing use of Internet video to promote their on-air programs, to extend their brand, and to increase the connection with their listeners.  This is another manifestation of the theme we wrote about earlier this week in connection with this year’s RAB Convention, where the emphasis…

I’ve just returned from this year’s Radio Advertising Bureau convention in Dallas.  In reflecting on the convention, and in discussing it with many who were in attendance, the consensus was that this was not your Father’s RAB convention.  I was surprised by how little discussion there was of traditional radio at the conference.  The sessions weren’t the typical…