Intellectual Property

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This week, the Chairman of the US House of Representatives Judiciary Committee issued a press release stating that he intends that the Committee do a thorough reexamination of the Copyright Act, noting that new technologies stemming from digital media have upset many settled expectations in Copyright Law, and confused many issues. That this release was issued in the same week as a decision of New York’s Supreme Court, Appellate Division, First Department, on the obscure issue of pre-1972 sound recordings is perhaps appropriate, as this decision demonstrates how an obscure provision of the copyright act can have a fundamental effect on the functioning of many online media outlets – including essentially any outlet that allows user-generated content with audio. The Court’s ruling, which conflicts with a Federal Court’s decision on the same question, would essentially remove the safe harbor protection for sites that allow for the posting of user generated content – where that content contains any pre-1972 sound recordings which don’t fall within the protections of the Copyright Act. Let’s explore this decision and its ramifications in a little more depth.

As we have written before, an Internet service that allows users to post content to that service is exempt from any liability for that content under two statutes. The Digital Millennium Copyright Act insulates the service from any claims of copyright infringement contained in any of the user generated content, if the service has met several standards. These standards include the obligations for the service to take down the infringing material if given proper notice from the copyright holder. The Service cannot encourage the infringement or profit directly from the infringement itself, and it must register a contact person with the Copyright Office so that the copyright owner knows who to contact to provide the notice of the takedown. While the exact meaning of some of these provisions is subject to some debate (including debate in recent cases, including one that Viacom has been prosecuting against YouTube that we may address in a subsequent post), the general concept is well-established.Continue Reading How a NY State Court Decision on Pre-1972 Sound Recordings Clouds the Safe Harbor Protections of Websites Featuring User Generated Content

We’ve written extensively about copyright issues for audio services, but the big copyright decision that recently made headlines is a TV issue, though one that could have an impact on audio as well. That was the Second Circuit decision in the Aereo case – upholding a lower court decision allowing a company to retransmit over-the-air TV signals to consumers over the Internet – without any royalties to the TV broadcasters or television program producers. The decision looked at the issue of what defines a “public performance” that would require the consent of the copyright owner. The Court found that there is no public performance of television programming where the service is set up so that the programming is streamed to the viewer individually, at their demand, rather than transmitted all at once to multiple consumers – as by a cable system or a  satellite television service. The decision is a controversial one – decided by a 2 to 1 vote with the dissenting judge issuing a strong dissent arguing that the Aereo service was nothing more than a “sham” designed to evade the royalty obligations or copyright permissions that would be necessary if the service were deemed a cable system or other type of multichannel video provider. What does this decision really mean for television stations, and could it have broader implications for the reuse of all sorts of broadcast content on the Internet?

The decision focused on the question of whether the Aereo service “publicly performs” the programming that it sends to its subscribers. Under the Copyright Act, a copyright owner has a bundle of rights which it has the exclusive ability to exploit. This includes the right to copy the copyrighted work, to distribute it, to make a “derivative work” (a work that uses the copyrighted material and changes it in some way – like putting new words to the melody of a copyrighted song), and the right to publicly perform it. The definition of a public performance includes any transmission or retransmission of a performance to multiple individuals at the same time or at different times. This language was added to the Copyright Act at the time of the advent of cable television, to make clear that services like cable, that take an existing performance (like that of a broadcast television station) and then further transmit it to other people (even people who could theoretically pick up the original performance) were themselves making a public performance that needed the consent of the copyright holder or a government-imposed statutory license (which allows the performance as long as the party making the performance pays the copyright holder an amount set by the government). From a cursory look, it would appear that Aereo is retransmitting the signal of the TV station to all of its customers. Why, then, did the Court rule that no public performance was involved?Continue Reading Aereo Court Decision Permits Internet Streaming of TV Programs Without Royalties – Undermining the Public Performance Right?

With the National Association of Broadcasters big convention coming up next week in Las Vegas, this week we’ll look at a couple of the issues that will likely be discussed when the industry gathers for its annual reunion. On Sunday, before most of the NAB Show begins, the Radio and Internet Newsletter (RAIN) will be holding its RAIN Summit West, where I will be moderating a panel called The Song Plays On – which will focus on the music royalties paid by Internet Radio and other digital music services. We’ll not focus on what the current royalties are, but instead to try to explore what they could be in the future. This is really one of the most difficult issues in the industry, as the two sides (and really there are many more than two sides to this issue) come at the issue from far different perspectives. We will try to bridge those differences and explore where there might be common ground for music users and copyright holders to come together to arrive at mutually beneficial solutions to this thorny issue.

The Internet Radio Fairness Act introduced in Congress last year brought this issue into sharp focus. That Act sought to bring about a number of reforms in the way that the Copyright Royalty Board sets various music royalties – particularly the rates that apply to Internet radio stations. We wrote about the provisions of the bill dealing with Internet radio royalties soon after the bill was introduced. After that article, there was a Congressional hearing on the issue, and lots of debate before the bill died at the end of the year as the session of Congress expired. This year, the Chair of the House Judiciary Committee has promised a number of hearings on all aspects of music and audio copyright issues, though none have yet been scheduled. But the debate about IRFA last year illustrated the divide between the various sides in the music royalty debate. Continue Reading Why the Differing Perceptions of the Value of Music by Digital Music Services and Copyright Holders Make Royalty Decisions So Hard

We’ve written many times before about those big name events, like March Madness, the Olympics and the Super Bowl. Events that you and your advertisers are just dying to tie into your own local event – a sale, a party or maybe the introduction of some special new product or service. Well, like the Super Bowl, March Madness is a trademarked term, and you need to exercise care in its use. While the company that owns the trademark (a company partially owned by the NCAA) may not be as aggressive as the NFL or the Olympic Committees in protecting its rights, it can still be an issue should you start promoting your March Madness sale without permission and get caught.

When we wrote our usual warning about the use of the term "Super Bowl" in advertising earlier this year, I received one message asking if I worked for the NFL. A reader who obviously had trademark law experience complained that I was too cautious in urging broadcasters to avoid the use of the term Super Bowl in a commercial. The argument from the reader was that, if used in the right way, not to name an event but just to say something like – "buy a big screen TV so that can watch the Super Bowl, the Academy Awards and all the best television that is coming your way this year," your use of the term in a commercial could probably be justified should it be challenged. While that may be the case, making the distinction between this arguably permissible kind of use, and a more problematic use (like "come on down to Joe’s electronics for our Super Bowl Sale on big screen TVs") is a nuanced issue. By avoiding the trademarked term in advertising, and instead sticking with something more generic – like "it is tournament time again, and you can watch all the action with a new big screen TV from Joe’s Electronics" – avoids any of the issues that might arise if you use the trademarked term in your commercial.Continue Reading March Madness is A Trademarked Term Like the “Super Bowl” – Watch Your Advertising and Promotional Uses

In the digital world, it seems that everything is reinvented, and someone claims that they have a patent on that reinvention. In the last few weeks, we have seen news about patent claims asserted against radio broadcasters for their digital music storage systems, against public broadcasters for podcasts, and even against companies trying to comply with the FCC’s new guidelines for E-911 (emergency communications over wireless and VoIP networks) providers. These claims highlight that media companies and others in the communications industry have to be prepared for patent litigation almost as a cost of doing business – and need to consult with patent lawyers about strategies if they are faced with such claims, and consider the potential of concerted defenses with others similarly situated if the defense does not violate other laws (such as the antitrust laws). What claims have been raised recently?

Over the last two years, thousands of radio stations across the country have received letters claiming that their digital music storage systems violated a patent from a company called Mission Abstract Data. While the patents in question have a checkered history at the Patent Office – after being issued, they were reexamined and their basis questioned, with the Patent Office ultimately agreeing that the patents, as limited through the reexamination, were in fact valid. But that decision was itself challenged by equipment manufacturers whose music systems could infringe on the patent. That further reexamination is still underway.  Nevertheless, as that reexamination continues, the company that currently has rights to the patent, Digimedia, has sued four radio station owners in Texas claiming that they are violating these patents controlled by the company. These suits are in addition to a long-pending case against a number of large broadcasters, which has been stayed pending the outcome of the Patent Office reexamination (though the patent holder has asked that the stay be lifted – an argument to be considered later this month). Some observers have suggested that these new suits may be a precursor to other actions to try to convince reluctant broadcasters to take out a license rather than fight a lawsuit.Continue Reading More Patent Issues for Media Companies – Mission Abstract Data Patent Asserted in Law Suits Against 4 Radio Broadcasters, and a New Patent Claim Raised Against Podcasters, Including Public Broadcasters

Deciding how to pay music royalties has always been difficult – trying to figure out what permissions are necessary, who has the rights to grant such permission, and how much the rights will cost. The one place where the rights were fairly simple – paying for the right to publicly perform musical compositions – may be getting more difficult. According to an article in the New York Post, Pandora may be getting a taste of that new reality, having to pay significantly more money to Sony ATV music publishers than it had previously paid for that same music when it was licensed by ASCAP and BMI. 

The rights to publicly perform musical compositions had until very recently been relatively straightforward. All a broadcaster, digital media company or other music user needed to do was to pay ASCAP, BMI and SESAC royalties (ASCAP, BMI and SESAC are often referred to as the PROs, or Performing Rights Organizations) – and the music service essentially had the rights to publicly perform virtually all the musical compositions in the world. And ASCAP and BMI were covered by antitrust decrees – so their rates were more or less known for most categories of music use – only subject to a rate court hearing once every now and then when these collection societies could not come to an agreement with the members of a particular class of music users. While SESAC is not subject to the antitrust consent decrees, and not necessarily as easy to deal with, most music services figured out a way to cut a deal with the society too.Continue Reading Pandora Enters Settlement to Pay For Public Performance of Sony/ATV Musical Works – What’s Its Impact on Licensing for Music Services and Rights Holders?

With the league championship match-ups set, and the Super Bowl only 3 weeks away, broadcasters are once again getting ready for the onslaught of advertising opportunities that come with the big game. But, as we write every year at this time, broadcasters need to be extremely careful in using the term "Super Bowl" in any advertising by a sponsor who has not been authorized to use that term. Super Bowl is a trademarked term, meaning that its use, particularly for commercial purposes, is limited. Trademarked terms should not be used in commercial messages except by authorized advertisers. These advertisers have paid big bucks to be able to say that they are a Super Bowl sponsor. See this article from the New York Times about the pricing of Super Bowl advertising. As the NFL enforces its trademarks rigorously (so that they can get the big bucks from the official advertisers), don’t risk their use without official permission.

This does not prevent all discussions of the Super Bowl on the air. News reports about the game can still air, using the name of the game. DJs can still chat about who is going to win the Super Bowl. But don’t try to commercially exploit these terms (e.g. saying that you are "Springfield’s Super Bowl station") unless you really have really the rights to use the trademarked term. Be careful, as a cute promotional idea can end up costing your station far more than you intended.Continue Reading Advertisers Beware – Remember That “Super Bowl” is a Protected Trademark That Can’t Be Used in a Commercial Without Permission

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?