The battle over services that record and stream over-the-air TV without compensation to TV broadcasters has become even more confusing, with a US District Court judge in Boston denying an injunction to stop the Aereo service in Massachusetts in a suit brought by Hearst Corporation, which owns a local TV station. This decision comes on the heels of a decision the decision by the US District Court in Washington DC finding that Aereo-like service FilmOn X was violating the copyrights of TV stations by operating a similar service in the DC area (see our discussion of that decision here). Joining decisions in NY favoring the streaming services (a decision we initially wrote about here), and one is California favoring broadcasters, the decision appears to be headed to an ultimate resolution before the Supreme Court to reflect these conflicting points of view. In fact, TV broadcasters have already announced the likelihood of their filing a Supreme Court petition asking the Court to resolve the matter. 

Of course, the decisions outside of NY have been by District Courts, not US Appeals Courts. All except the NY decision are subject to review by the US Court of Appeals in the Circuits in which these District Courts lie. It is possible that the appeals could come out differently than the decisions by the District Courts, and either increase or decrease the likelihood of Supreme Court review, depending on whether the other appellate courts rule for Aereo or FilmOn X (decreasing the likelihood of Supreme Court review if the Circuits agree on the outcome) or against it (increasing the likelihood of review as the Court would be faced with conflicts among the circuits which is a usual ground for Supreme Court review). The Boston decision, while not as comprehensive as some of the other decisions on the topic, does raise some interesting issues that will no doubt be considered on appeal.


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We wrote about the Department of Commerce’s Green Paper on Copyright Policy, Creativity, and Innovation in the Digital Economy that was released back in July. While our article principally addressed the music issues raised by the Green Paper, many other issues were discussed in its 120 pages. The questions raised by the Aereo case (about which we wrote here, and we wrote about the similar service, FilmOnX, here) were also discussed in the paper. Many other issues were also addressed, and the Commerce Department, through NTIA (the office within Commerce that advises the Executive Branch of the government on Telecommunications issues) and the Patent and Trademark Office, is now beginning the process of asking for public comment on some of the many issues raised in the Green Paper. The NTIA released a Public Notice, dated September 30 and still available on the NTIA website despite the Federal government shutdown, asking for comment on a number of these issues. 

The specific issues on which comments are sought (with our explanation of some of the issues involved) are the following:

  • "the legal framework for the creation of remixes" – the only music issue specifically teed up for comment.  The Green Paper had asked if consideration should be given to some sort of compulsory license for remixes, mash-ups and similar uses of music, or if other steps could or should be taken to allow for the creation of such works;
  • "the relevance and scope of the first sale doctrine in the digital environment." This is asking for comments on questions including whether consumers should be able to re-sell downloads that they purchase, as they have the right to do in a physical world;
  • "the appropriate calibration of statutory damages in the contexts of individual file sharers and of secondary liability for large-scale infringement."   This question seemingly stems from the issue raised by the huge statutory damage requests in mass-infringement cases, damages that in one case alone could exceed the entire revenue of many industries whose works are infringed. Questions have been raised as to whether the full amount of statutory damages should be available for each and every infringement, particularly where such infringement is done on a limited basis.  Obviously, though, copyright holders are concerned about large scale infringement, and want to preserve and even expand penalties in such cases;
  • "whether and how the government can facilitate the further development of a robust online licensing environment." It is unclear exactly what this question is looking at. Perhaps it is seeking comments on ideas such as the one the that government create some sort of copyright hub that would facilitate the identification of copyright holders and the licensing of their works; and
  • "establishing a multistakeholder dialogue on improving the operation of the notice and takedown system for removing infringing content from the Internet under the Digital Millennium Copyright Act (DMCA)." Next to the question on damages, this issue is likely to be among the most controversial of the proposals, and we’ll address that below in a little more detail below.

The reform of the DMCA notice and takedown system is looking to reform the current system where operators of websites generally have immunity from liability for copyright infringement for user generated content – unless the sites knew specifically about the infringing content and did not take steps to take it down, or unless they actively solicited or encouraged such uses. This is often referred to as the "safe harbor" for sites that feature user-generated content.  The safe harbor has allowed many of today’s most popular services, including YouTube and even Facebook to thrive, allowing millions of consumers to have an outlet for their interests through social sharing, without the sites having to review each and every post to determine if there is infringing content in the material that users have shared. We have written about this safe harbor before (see, for instance, our posts here and here).


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Congressman Mel Watt from North Carolina this week introduced his long-awaited bill proposing that over-the-air radio broadcasters pay a royalty to sound recording copyright holders (usually the record label) and to artists. As we have written many times, currently, royalties on sound recordings are paid only by companies that make digital performances, including webcasters (see our summary of the current webcasting rates here) and satellite radio (see our summary of the recent decision on satellite radio rates here). While the bill’s proposals for a broadcast royalty has been covered in many other news reports, few note that the Watt bill, called the Free Market Royalty Act, goes far beyond past proposals for a royalty on over-the-air broadcasters. In addition to the over-the-air royalty, the bill proposes that the Copyright Royalty Board be taken out of the equation in setting royalties.  And the removal of the CRB from the process applies not just to the proposed new performance royalty on broadcasters, but also to the setting of royalties for all other noninteractive commercial digital music services. Instead of a CRB proceeding to set rates, commercial music users, including webcasters and satellite radio, would need to negotiate a royalty with copyright holders – principally with SoundExchange – a royalty not subject to review as to the reasonableness of the rates by the CRB or by the Courts.

And the proposal goes further than simply designating SoundExchange as the party with whom all noninteractive digital audio services would go to negotiate royalties. In addition, the bill provides that any copyright holder could opt out of the rates negotiated by SoundExchange, after they are set, and negotiate direct licenses for its music with music services, including radio broadcasters. Seemingly, a popular band, or a label with a number of hit acts, that thought that it could get more from its music than any rate to which SoundExchange agreed, could withdraw from any "deal" with SoundExchange, and negotiate on their own for what would presumably be higher royalties.  If the copyright holder withdraws its music from the SoundExchange royalty, broadcasters and other music services could not play that music unless and until a license deal was reached.


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The US District Court in Washington DC issued a decision earlier this month, enjoining the operation of the television streaming service FilmOn X throughout the United States – except within the Second Circuit (covering NY) where the US Court of Appeals reached a contrary decision in connection with Aereo – a very similar service. Both of these services utilize multiple small antennas to receive over-the-air television programs, which are recorded on a central server and sent over the Internet on demand to individual viewers. In effect, these viewers, by paying the subscription fee charged by the services, get their television programming on the Internet – through their computers and soon to their mobile devices.  The contrary decisions in these two cases illustrate a fundamental disagreement between two courts as to the meaning of the "public performance" right enjoyed by copyright holders in their copyrighted works.

As we wrote here, the Second Circuit, in the Aereo case, determined that, as the transmission of the over-the-air programming was done on an individual basis, at the demand of the individual viewer, it was not a “public performance.” In the Second Circuit’s opinion, the fact that the transmission is made to a single user, either when the program is aired or on a delayed basis, made each individual performance of the television program a "private performance," which did not infringe on the rights of the copyright holders, and more than a transmission of a signal from an antenna on someone’s roof to the television set in the living room was a public performance.  The DC Court disagreed with that interpretation, joining a District Court in California in deciding that this type of service, without the permission of the broadcaster, is a violation of the copyright laws.

The DC Court was very thorough in its review of the issue and its basis for disagreeing with the Second Circuit (or agreeing with the dissenting opinion in the Second Circuit). The issue raised in the FilmOn X case, whether the retransmission over the Internet of the over-the-air television signal of a broadcaster is essentially the same issue raised 40 years ago when cable television operators first started to operate, charging customers for bring them television signals from over-the-air TV stations. After the Supreme Court at that time, in the Fortnightly and Telepromter cases, agreed with cable operators that their retransmissions of television stations did not constitute a "public performance" of those signals, Congress intervened in 1976, revising the Copyright Act to make clear that such retransmissions of broadcast signals were in fact covered by the Act. The changes adopted then, which are still in place in the Copyright Act, were cited by the DC Court in finding that the operations of FilmOn X indeed violated the copyright holders public performance rights under the Copyright Act.


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No one ever claimed that music royalties are easy to understand, especially in the digital age when nice, neat definitions that had grown up over many years in the physical world no longer necessarily make sense. The complexity of the world of digital music licensing is clear from many sources, but the Commerce Department’s “Green Paper” on Copyright Policy, Creativity, and Innovation in the Digital Economy does a good job discussing many of the music royalty issues that have arisen in the last 20 years that make copyright so confusing for professionals, and pretty much incomprehensible for those not immersed in the intricacies of copyright law on a regular basis. The Green Paper discusses some of the issues in music policy that make this area so confusing, and highlights where interested parties and lawmakers should focus their efforts to reform current rules to make them workable in the digital age. The Paper also discusses other areas of copyright policy that we will try to address in other articles.  You can find the Green Paper here (though note that it is about 120 pages and will take some time to download).

One of the most controversial issues that it addresses is the concept of a general performance right for sound recordings. As did Register of Copyrights Maria Pallante in the speech we summarized here, the Commerce Department puts the current administration on record as supporting the creation of such a right – a right that has not existed in the United States, except for a limited sound recording performance royalty for performances by digital audio companies like webcasters (see our summary of the royalty rates paid by different types of Internet Radio services here) and satellite radio (see our summary of the royalties to be paid by Sirius XM under the most recent Copyright Royalty Board decision). While the most controversial aspect of the creation of a broad sound recording performance royalty has been in connection with the extension of that royalty to broadcasters, the adoption of a general royalty, as advocated by the Green Paper would extend payment obligations to others who publicly perform sound recordings – including bars, restaurants, stadiums and other retail establishments.


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In a lawsuit filed last week (see the complaint here), Flo and Eddie, the artists who were behind the 1960’s band The Turtles, claim that Sirius XM has infringed on the copyrights in their songs by allowing copies of these recordings to be made by the satellite radio service and in certain Internet offerings that Sirius XM makes available. The article in THR.esq (the Hollywood Reporter’s legal blog) that first announced the lawsuit talks much about the ambiguous status of pre-1972 sound recordings under Section 114 of the copyright act (the section providing for royalties for the public performance of sound recordings by digital services), and seems to view the suit as a reaction to the decision in the satellite radio proceeding before the Copyright Royalty Board finding that Sirius XM owed no performance royalty to SoundExchange for its playing of pre-1972 sound recordings (see our article about that decision). As pre-1972 sound recordings are not entitled to Federal copyright protection, the Board decided that there could be no payment due to SoundExchange (which collects royalties for payments made under Section 114) as there was no Federal right. While that point seems to be well-established, a close reading of the complaint makes it appear that it is not the public performance that is the principal basis of the lawsuit, but instead the copies that are made in the digital transmission process and by certain features of Sirius’s Internet streaming services that allow the download or on-demand playing of their digital streams.

As we have written before, pre-1972 sound recordings were left out of Federal statutes as, until 1972, sound recordings (a specific recording of a song by a particular artist) had no protection at all under Federal copyright law. As these sound recordings had no Federal protections, state laws were adopted – principally to prevent bootlegging or other unauthorized copies of such sound recordings from being made and distributed. As there was not, and still is not, a general public performance right in sound recordings, there has been little in the way of court cases suggesting that pre-1972 sound recordings have rights that other sound recordings do not have, e.g. a general public performance right. If the Flo and Eddie suit were really alleging that there is a public performance right in pre-1972 sound recordings, then seemingly every restaurant, bar, or stadium that plays the original hit versions of Good Vibrations, Rock Around the Clock, Johnny Be Goode, the Twist or the Turtles’ Happy Together could find themselves looking at potential liability for public performance of these sound recordings. Certainly, these state statutes, many of which have been around for decades, did not contemplate the exclusively digital public performance right that exists for post-1972 sound recordings, which was not adopted until the late 1990s. So, if the plaintiffs are asserting that there is a public performance right inherent in these statutes, it would seem that it would have to be a general public performance right. But it sure seems difficult to believe that courts would find ambiguous state statutes adopted to prevent illegal copying created a public performance right where none has ever before existed in the common law of the United States.


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Using music in commercials and other broadcast station productions can be treacherous. As we’ve written before, contrary to what some stations might think (based on the questions we often get from broadcasters around the country), a station’s ASCAP, BMI and SESAC royalties do not give them the right to use popular music in their station productions – or in their commercials. Nor do they give you rights to use music in video productions used repeatedly on a station, or on a station’s website. Hearing an award winner at the recent broadcast awards banquet at the Montana Broadcasters Association annual convention thank the music publishers that gave her permission to change the lyrics of a well-known oldie for her PSA for a local animal shelter warms a lawyer’s heart, recognizing that there are broadcasters who understand the rights issues. But from questions that I get all the time, I fear that many other broadcasters don’t.

ASCAP, BMI and SESAC are commonly known as the Performing Rights Organizations (or PROs), as they grant music users only a single right – the right to make public performances of musical compositions (or "musical works"). A musical composition is the words and music in a song – not the actual recording done by a particular singer or band. The composer and lyricist of the song have a copyright in the musical composition, though the right is usually assigned to a publishing company to administer. Each copyright in a composition gives its holder the right to exploit it in several different ways – and then user needs to get the rights to use the composition in any of these ways. The different rights include the right to publicly perform the composition (e.g. to play it before an audience or to transmit it to an audience by means of radio, the Internet or other transmission media). But the copyright holder also has the right to limit users from making reproductions of the composition (e.g. a recording of the song or any other “fixation” of the composition), distributing the composition (e.g. selling it or otherwise making it available to the public), or making a “derivative work” (taking the copyrighted work, using it, but changing it in some manner which, in the case of a musical composition, is probably most commonly done by changing the words of a song). So, for the Montana broadcaster to take a well-known song and to change the lyrics for her PSA required that the broadcaster get permission to make a derivative work (and probably to make reproductions, too, if copies of the re-recorded song were made).


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In one week this month, Apple announced that it will get into Internet Radio, and Pandora, the biggest player in that space, announced that it will be buying a traditional, over-the-air radio station. What do these two big announcements say about the state of music royalties for digital music services? Apple’s struggles to get its service launched were well chronicled, as it was working to get an agreement for its new service from the record labels. What was less reported was its simultaneous negotiations with the music publishing community. Pandora’s radio station purchase, on the other hand, was admittedly a simple deal to take advantage of a blanket license available to all similarly situated companies owning radio stations. We’ll explain why these two deals were so different, and what impact the deals may have on other digital music services below.

The Apple deal is one negotiated with the copyright holders for the simple reason that the service that it is offering appears to be an interactive one, unlikely to be completely covered by any statutory (compulsory) or other blanket license. As we’ve written before, a statutory or compulsory license is one where the copyright holder, by law, cannot refuse to make available his or her copyrighted work. But, in return, the copyright holder receives a royalty set by the government – in the US, usually the Copyright Royalty Board. In the music world, the two most common compulsory licenses are the ones that allow webcasters and other digital music services to publicly perform sound recordings (the royalties paid by webcasters, satellite radio and digital cable radio companies to the record companies and artists), and the royalty that allows users (including record companies) to make reproductions of musical compositions in connection with the making of a sound recording, downloads, ringtones, and probably on-demand streaming services. This royalty is commonly referred to as the mechanical royalty, and is paid to songwriters and composers or their publishing companies. To qualify for these compulsory licenses, a company must follow certain rules. If they don’t, then they have to negotiate directly for the licenses from the copyright holder – which appears to be what Apple did.


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The Register of Copyrights, Maria Pallante, has made a series of speeches about the need to modernize Copyright, including offering testimony before Congress on the matter.  Her comments are but one sign that modernizing the Copyright Act has become the new catch-phrase in Washington. As the Courts have over the last few months wrestled with a host of copyright issues principally arising from digital media, boundaries that had carefully been set up by established copyright principles have been blurred – like the distinctions between a performance and a reproduction, or a public performance and one that is not.  These are distinctions that can have great importance as to who must be paid or whether any payment at all is due under current copyright laws – as in the Aereo case about which we wrote here. The call to modernize the Act is one looking for a copyright act that fits the realities of the 21st century. 

In recent months, Aereo is but one of many cases where the Courts have struggled with how to apply laws that were developed for the analog media, where boundaries are relatively clear, to the new digital world, where many copyright concepts don’t clearly fit reality. We’ve seen a number of cases interpreting the DMCA safe harbor provisions for user-generated content – including the NY State case about which we wrote here deciding Internet service providers were not excused from liability where pre-1972 sound recordings were included in user-generated content, as well as much more sweeping decisions upholding the protections of the safe harbor in broader applications, including protections extended to YouTube in its long-running dispute with Viacom. We’ve seen a decision determining that there is no right to resell digital copies – finding that the first sale doctrine (that says that consumers can resell physical goods that they buy without compensating the original creator) does not apply to digital goods. And outside the litigation sphere, we’ve seen innumerable stories about rights and royalties – from questions about Internet radio royalties like those that may apply to the new Apple streaming service, to disputes over the rights to video programs taken from one medium (like TV) and used in another (online or otherwise on-demand). 

In a speech last week to the World Creator’s Summit in Washington, DC, Register Pallante revisited the topic of Copyright reform, and laid out many of the issues that she felt needed to be addressed in any comprehensive reform that may occur. The list was long, and is bound to be controversial. She noted that the last comprehensive reform of the Act, in the 1990s leading to the Digital Millennium Copyright Act, was 20 years in the making – a delay that can’t occur now given the number of pressing issues. As she noted, the importance of copyright has never been greater to the average person. That, to me is very clear, as digital media has put so many more people in a position to be involved in copyright issues, as doing everything from creating a Facebook or Pinterest page to a YouTube video, or accessing a file on BitTorrent or any other sharing site, can immediately immerse an individual in a copyright dispute with consequences far greater than the improper use of a copy machine or cassette recorder would have had 20 or 30 years ago. So what does she propose to examine?


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The Librarian of Congress has announced the appointment of two new judges to the Copyright Royalty Board – marking a total change in the three judge board since the decision in the last webcasting royalty case (about which we wrote here). The two new judges are David Strickler and Jesse Feder. Mr. Strickler will serve through 2016, taking the position of Judge Wisnewski (who resigned about a year ago) as the economics expert required by the statute creating the Board. Mr. Stricker is currently Senior Counsel at a law firm in New Jersey, specializing in business litigation, according to his biography on the firm’s website, here. He also has a Masters Degree in economics, and is an adjunct economics professor as Brookdale College in New Jersey.

Mr. Feder takes the place of Judge Roberts, who was one of the original CRB judges and had worked in the Copyright Office in connection with the CARP process that set the first rates for webcasting back in 2002. Judge Roberts recently resigned from the Board. The position that Mr. Feder takes is required by statute to be filled by someone with Copyright experience. According to Mr. Feder’s online profile, he was the Director of International Trade and Intellectual Property at the Business Software Alliance, and previously held several supervisory positions at the Copyright Office and in the Library of Congress. His appointment, filling Judge Roberts’ seat, lasts only until 2014 (but he could be reappointed). 


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