Digital/Internet

Copyright Update Part 4: Digital Music Streaming

Image Ryan McGuire

Image Ryan McGuire

This paper was written and presented by Tamera H. Bennett at the 28th Annual Technology Law seminar hosted by UTLaw CLE. It has been edited into multiple blog posts. Enjoy Part 4 below, Part 3, Part 2, and Part 1.

While music publishers and record labels are fighting their own issues on getting paid (and sometimes against each other), this series of posts focuses on new media recent legal issues facing sound recording copyright owners.

ARE PRE-72 SOUND RECORDINGS PROTECTED?

Sound recordings are the fixation of a series of musical, spoken, or other sounds capturing a particular performance of an underlying musical composition. Congress acted in 1971 to grant federal copyright protection to sound recordings by extending federal protection prospectively to recordings created on or after February 15, 1972 (“Post-72” sound recordings). Sound Recording Act of 1971, 85 Stat. at 392. Sound recordings fixed before February 15, 1972 are protected by a patchwork of differing state laws (“Pre-72” sound recordings). (Bringing Pre-72 recordings under Federal Copyright Protection is outside the scope of this paper. Learn more by reading the December 2011 Copyright office report: Federal Copyright Protection for Pre-1972 Recordings).

One of the current hot litigation topics is whether or not Pre-72 recordings include a digital “public performance” right. Sound recording copyright owners for Post-72 works enjoy the exclusive right to control the public performance of their works by means of a digital audio transmission and be paid for such performances. 17 U.S.C. §106 (6). This means when you listen to a Post-72 sound recording on a non-interactive streaming services such as Sirius XM or Pandora, a payment should be made by the streaming service to Sound Exchange  - the entity that collects the payments and distributes the royalties to the sound recording copyright owners and recording artists. See Webcaster Settlement Act of 2008 and 2009.  As discussed in Part 3, interactive streaming services such as Spotify and Grooveshark must secure direct licenses with the sound recording copyright owner.

Sirius XM plays music of all genres and all decades. Sirius XM has never paid public performance royalties for digital streams of Pre-72 recordings. In 2014, three courts—two in California and one in New York—held that Sirius XM’s unauthorized public performance of Pre‐72 sound recordings violates applicable state law. Because there’s no federal copyright protection for Pre-72 sound recordings, the Pre-72 copyright owners must rely on statutory or common law rights that vary from state-to-state.

The Central District of California Court ruled that sound recordings published prior to February 15, 1972 include a public performance right under common law and codified under Cal. Civ. Code § 980

A California federal district court ruled that Sirius XM infringed rights guaranteed to plaintiffs by California state statute. See Flo & Eddie Inc. v. Sirius XM, No. 13‐cv‐5693, 2014 U.S. Dist. LEXIS 139053, at *22‐23 (C.D. Cal. Sept. 22, 2014). Flo & Eddie of the musical group The Turtles sued Sirius XM in August 2013 for infringement of sound recording copyrights because Sirius XM was not paying public performance royalties, yet performed the sound recordings owned by Flo & Eddie, Inc.  The Central District of California Court ruled that sound recordings published prior to February 15, 1972 include a public performance right under common law and codified under Cal. Civ. Code § 980  and such right may be infringed if permission is not secured before the sound recording is played on satellite radio. The Flo & Eddie No. 13cv5693 Fed. Cal. case continues on other grounds with the assumption the summary judgment ruling will be appealed by Sirius XM. 

In Flo & Eddie litigation in federal court in New York, the district court indicated that the public performance of Pre-72 sound recordings constitutes common law copyright infringement and unfair competition under New York law. See Flo & Eddie Inc. v. Sirius XM, No. 13‐cv‐5784, 2014 U.S. Dist. LEXIS 166492, at *40‐44, *50‐52 (S.D.N.Y. Nov. 14, 2014) (denying Sirius XM’s motion for summary judgment, and asking Sirius XM to show cause why judgment should not be entered on behalf of plaintiffs), reconsideration denied, 2014 U.S. Dist. LEXIS 174907 (Dec. 12, 2014).  The court held:

the New York Court of Appeals would recognize the exclusive right to public performance of a sound recording as one of the rights appurtenant to common law copyright in such a recording.

Id.  An interlocutory appeal in the case was granted on April 15, 2015.

A settlement was reached in June 2015 in similar pending litigation in a California state court case brought by major record labels against Sirius XM.   Capitol Records, LLC v. Sirius XM, No. BC520981 (Cal. Super. Ct. Oct. 14, 2014) (order regarding jury instructions).  Arguably many of the plaintiffs that settled out with Sirius XM would have joined the Turtles class action which was certified in May 2015. How does that impact the Turtles and their ability to reach a settlement?

Taking cases coast-to-coast, Flo & Eddie, Inc. also sued Sirius XM in Florida.  Flo & Eddie, Inc, v. Sirius XM Radio, Inc., No. 1:13-CV-23182 (S.D. Fla. filed Sept. 3, 2013).  

Conclusion:

New media always brings about new questions on how far copyright protection extends.  When looking at interactive and non-interactive digital services, the courts may be applying federal or state law depending on what year the sound recording was “fixed.”  In addition the courts have to look at the DMCA to determine how far the Safe Harbor provisions reach to protect the services providing the digital content.

Again, this article does not address the concerns of the music composition copyright owner.  That side of the equation has its own issues, some similar and some different, that are also being addressed via the court system and the Copyright Royalty Board.  In addition to the cases discussed, there’s plenty of pending litigation to keep an eye on for the future. 

To find links to most of the cases and articles cited herein (and bonus materials) visit https://delicious.com/tamerabennett/utlaw15.

Other cases to watch:

Flo & Eddie, Inc. v. Pandora Media, Inc., No. 2:14-cv-07648-PSG-RZ (C.A.C.D. filed Oct. 2, 2014).

Capitol Records, LLC v Pandora Media, Inc., No. 651195/2014 (N.Y. Sup. Ct. filed Apr. 17, 2014).

Zenbu Magazines LLC v. Escape Media Group, Inc., No. 1:15-cv-00349-MKB-RER (N.Y.E.D. filed Jan. 22, 2015).

Zenbu Magazines LLC v. Sony Computer Entertainment America LLC, No. 3:15-cv-00310-VC (C.A.N.D. filed Jan. 22, 2015).

UMG Recs., Inc. v. Escape Media Group, Inc., No. 1:2011cv08407 (N.Y.S.D. filed Nov. 18, 2011).

Copyright Update Part 3: Digital Music Streaming Issues.

Image Ryan McQuire

Image Ryan McQuire

This paper was written and presented by Tamera H. Bennett at the 28th Annual Technology Law seminar hosted by UTLaw CLE. It has been edited into multiple blog posts. Enjoy Part 3 below, Part 2 here and Part 1.

While music publishers and record labels are fighting their own issues on getting paid (and sometimes against each other), this series of posts focuses on new media recent legal issues facing sound recording copyright owners.

What Are Interactive Locker Services?

If we are not consuming music via non-interactive services like Pandora and Sirius XM or interactive services like Spotify, we are probably listening to the tunes we’ve stored in a music “Cloud.” iTunes Match, Amazon Cloud and Google Play are the leading providers of Cloud storage of music – locker services.

Locker services are either 1) free cloud storage for purchased music such as Apple, Google, and Amazon; or 2) paid locker services which are subscription-based music lockers providing on-demand streaming and downloads and include Spotify, Amazon Cloud Drive, Apple’s iTunes Match, Grooveshark, or the music component of Google Play.

Issues begin to arise with locker services when the services allow someone who did not upload a track the ability to stream and/or download that track. Because a specific track can be selected, the service is “interactive” and direct licenses are required. The paid locker services can attract greater numbers of consumers if they offer varied and larger quantity of tracks for streaming and downloads.

Locker services, when sued for online copyright infringement can always assert the defense known as the DMCA “Safe Harbor.” The Safe Harbor protects online service providers, which include locker and streaming services, from liability for songs posted or transmitted by subscribers to the service if, after receiving what is called a “take down notice,” the locker service promptly removes or disables access to material identified in a copyright holder's complaint.  See 17 U.S.C. § 512.


MP3Tunes

digital-music-part-3-tamerabennett

The courts continue to make it clear that intentional actions by employees or owners of locker services in uploading unlicensed content will not be tolerated.  A U.S. District Court judge in New York ruled in August 2011 that online music locker service MP3Tunes and its founder Michael Robertson were liable for copyright infringement for content they uploaded.  Capitol Records, Inc. v. MP3Tunes, LLC, 2011 WL 5104616 *14 (S.D.N.Y. Oct. 25, 2011). The court also held MP3Tunes was not entitled to DMCA safe harbor protection for infringing content that was readily identifiable in DMCA take-down notices from the plaintiff but not removed from MP3tunes after notice was received. 

The damage phase continues in the MP3Tunes case into 2015.  An original jury award of 48 million was modified by the Judge on September 29, 2014 and on April 14, 2015 the court reduced the judgment to a little more than 23 million. Capitol Records, Inc. v. MP3Tunes, LLC, No. 1:07-cv-09931-WHP-FM, Doc 692 (S.D.N.Y., filed Apr. 14, 2015).


Grooveshark

Locker service Grooveshark was embroiled in litigation battles over the unlicensed songs and sound recordings stored, streamed and downloaded via its locker service. See Capitol Records, LLC v. Escape Media Group, Inc., No. 1:12-cv-06646-AJN-SN, (S.D.N.Y, filed Aug. 30, 2012).   Grooveshark let users upload songs that can then be streamed or downloaded by anyone.  This is in contrast to locker services such as Google Play, iTunesMatch and Amazon Cloud Player which restrict a third-party from streaming or downloading songs from somebody else’s locker unless a license has been secured with the label and publisher for that specific use.  Because Grooveshark is an interactive service, similar to a music-only YouTube, compulsory licenses are not an option and negotiated licenses must be secured. 

digital-music-streaming-part3-tamerabennett

The only major label that entered into a license with Grooveshark was EMI.  Three lawsuits later, EMI terminated their deal with Grooveshark.  Id. The labels and publishers have multiple arguments why Grooveshark’s actions constitute copyright infringement and Grooveshark is not protected by the DMCA Safe Harbor provisions. The labels accuse Grooveshark of uploading roughly 100,000 recordings to the online music service, without payment or licenses.  Id. In light of the MP3tunes decision, the labels/publishers asserted the employees of Grooveshark were baiting Grooveshark by uploading unlicensed content.  Arguably, intentional actions of the employees and/or executives should not be protected by the DMCA. 

On March 24, 2015 the judge granted EMI's motion for summary judgement on claims that Grooveshark's parent company Escape Media Group, Inc. infringed its copyrights.  See id. at Doc. No 104.   Relying on the MP3tunes decision, the court found Escape's repeat infringer policy did not meet the conditions of the DMCA Safe Harbor, Escape had an insufficient record keeping system, failed to terminate repeat infringers, and "actively" prevented copyright holders from collecting information needed for the takedown requests required by the DMCA.  See id.  Total damages could amount to $420 million based on the court's finding that 2,807 EMI-copyrighted sound recordings existed on Grooveshark's servers. 

Until May 1, 2015, music locker service Grooveshark was embroiled in litigation battles over the unlicensed songs and sound recordings stored, streamed and downloaded via its locker service. See Capitol Records, LLC v. Escape Media Group, Inc., No. 1:12-cv-06646-AJN-SN, (S.D.N.Y, filed Aug. 30, 2012).

Grooveshark reached a settlement with labels and the Grooveshark website is down after eight years

Copyright Update: Part 2 Digital Music Streaming Issues

copyright-part2-digital-streaming-tamera-bennett

This paper was written and presented by Tamera H. Bennett at the 28th Annual Technology Law seminar hosted by UTLaw CLE. It has been edited into multiple blog posts. Enjoy Part 2 below and Part 1 here, Part 3 at this link and Part 4.

While music publishers and record labels are fighting their own issues on getting paid (and sometimes against each other), this series of posts focuses on new media recent legal issues facing sound recording copyright owners.

II.         Types of Digital Music Consumption

The music industry is no longer focused on consumers owning physical product, but rather focused on how consumers consume music. 

A.        Streaming:

The fastest growing area of music consumption is streaming. Billboard 200 Makeover: Album Chart to Incorporate Streams & Track Sales, BILLBOARD, Nov. 19, 2014. This area is growing so fast that for the first time in 23 years, BILLBOARD revamped its algorithms to calculate the weekly Top 200 albums chart to include digital streams and individual digital tracks.

Internet radio is non-interactive streaming - meaning the user cannot choose the track or artist they wish to hear.

Streaming means listening to music (or watching a video) in real time, instead of downloading a file to your computer or mobile device and listening to it later. There are two types of streaming: interactive and non-interactive. Both are defined below and are treated differently when it comes to licensing and royalty amounts.  Prior to the Digital Performance in Sound Recordings Act of 1995 (“DPRA”), recording artists and sound recording copyright owners in the U.S. did not have a performance right in digital transmissions such as internet radio, webcasting or satellite radio.   

i.          Non-interactive – Internet Radio/Webcasting/Satellite Radio: 

pandora.jpg

Internet radio is non-interactive streaming - meaning the user cannot choose the track or artist they wish to hear. The DPRA created a statutory license for subscription-based, non-interactive digital audio transmissions.  17 U.S.C. § 114. In 1998, Congress passed the Digital Millennium Copyright Act (“DMCA”), which expanded the statutory license to include non-subscription, non-interactive digital audio transmissions. License fees, predetermined by the Copyright Royalty Board, are non-negotiable and paid by the internet radio stations, webcasters and satellite radio stations to Sound Exchange (the entity designated to collect the royalties) as a digital performance royalty. 37 C.F.R. Part 380.

Sound Exchange reported digital performance royalty payments to artists and labels of $773 million in 2014 (up 31 percent from $590 million the prior year). These numbers include satellite radio as well as webcaster and internet radio. SoundExchange Wraps Record-Setting Year with $773 Million in Payments to Recording Artists and Record Labels, Sound Exchange, (Jan. 28, 2015).

Pandora and iHeartRadio are the two leading internet radio services in the US.  New players in the Internet radio space include Spotify, Rdio, and iTunes Radio.  Remember some of these providers offer multiple services which may include non-interactive streaming and interactive streaming. Satellite radio, such as Sirius XM, is also treated as a non-interactive service with fees predetermined by the Copyright Royalty Board.  17 U.S.C. § 114.

ii.         Interactive - On-Demand Streaming:

Streaming of content is considered interactive, or on-demand, when the listener can request the specific recording they wish to hear and the digital file is transmitted electronically to a computer or other device contemporaneously with the user's request.  17 U.S.C. § 114(j)(7).  The major on-demand streaming services include Spotify, Beats Music, Google Play Music All Access and Xbox Music.  The latest entry into the market is Tidal launched in March 2015 by artist and entrepreneur Jay Z.  Other offerings include Rdio and Slacker.

Streaming of content is considered interactive, or on-demand, when the listener can request the specific recording they wish to hear.

Because of the interactive nature of on-demand services, there is no statutory scheme or Copyright Royalty Board determining licensing rates.  The on-demand services must secure direct sound recording licenses from the owners of the sound recording copyrights in order to stream.  Royalty rates for on-demand services are negotiated between the sound recording copyright owner and the service provider.

How Do You Define Interactive?

There’s not been much litigation exploring the precise definition of “interactive.” We do know allowing users to create music playlists and access to listen to particular audio visual works and their accompanying sounds fit directly into the definition of an interactive service found at 17 U.S.C. § 114(j)(7).  See Capitol Records, LLC v. BlueBeat, Inc., 765 F. Supp. 2d 1198 (C.D. Cal 2010).

Compare the facts to a situation where a webcasting service provides users with individualized internet radio stations and the user rates the songs, artists, and albums.  The Second Circuit affirmed the lower court’s decision finding that voting up or down a song, artist or album on a service is not interactive so long as the user 1) cannot control precisely what song plays, and 2) cannot determine the next song with some amount of predictability. Arista Records, LLC v. Launch Media, Inc., 578 F.3d 148 (2d Cir. 2009).

In Part 3 we will discuss cloud/locker services and the demise of Grooveshark and Mp3Tunes.  You can read Part 1 here.

Copyright Update: Digital Music Streaming Issues

digital-music-streaming-issues-tamera-bennett

This paper was written and presented by Tamera H. Bennett at the 28th Annual Technology Law seminar hosted by UTLaw CLE. It has been edited into multiple blog posts. Enjoy part 1 below, Part 2 here, Part 3 at this link and Part 4.

I.          Streaming Pennies Are Hard to Divide

While most songwriters and artists thrive on the creative process of crafting their next song or production, the creative process by itself often does not put money in the bank.  The songs and sound recordings need to be commercially exploited with the hope and goal of securing licensing fees.

Whether you’re a label, artist, music publisher or songwriter, you either know or are quickly realizing the music business is a business of pennies. Those pennies are often so sliced and diced the music business has become a business of percentages of pennies.  Copyright owners often spend as much time tracking down payment for licensed uses as they do tracking down unlicensed content on the web. 

In 2014, for the first time revenues from digital channels equaled revenues of physical format sales with both accounting for forty-six percent of global revenues.

The new media – or digital space is huge and growing. In 2014, the music industry’s global digital revenues increased by 6.9 per cent to US$6.85 billion. IFPI DIGITAL MUSIC REPORT 2015 at 6. For the first time, revenues from digital channels equaled revenues of physical format sales with both accounting for forty-six percent of global revenues.

Thirty-two percent of digital revenues are from subscription and ad-supported streaming services, up from 27 per cent in 2013. Digital downloads still account for the majority of digital income coming in at 52 percent of global digital revenue. An estimated 41 million people paid for music subscription services in 2014, five times the level of eight million people in 2010. Once the royalties for digital downloads and streams are collected, they have to be distributed to the copyright owners.

When discussing the music business and who owns what rights, it's important to note that there are two copyrights involved in each musical recording. 17 U.S.C. § 102. The copyright that attaches to the song covers the words, music, and the arrangement. Sound recordings are defined as “works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work.” 17 U.S.C. § 101. The song copyright is owned by the song writer or a music publisher who was assigned the copyright. The copyright in a particular version of a recording is owned by the artist or record label. 

As an example of the difference between owning the song copyright and the master/sound recording copyright, recall that Dolly Parton is the songwriter of the hit “I Will Always Love You.” Neither Dolly Parton nor the music publishing company that owns the song copyright for “I Will Always Love You,” have any ownership in the sound recording copyright for the version of the song recorded by Whitney Houston for the movie “The Bodyguard.” Nor does the record label or Whitney Houston’s estate have any ownership in the song copyright. 

While music publishers and record labels are fighting their own issues on getting paid (and sometimes against each other), this article focuses on new media recent legal issues facing sound recording copyright owners.

Stay tuned for additional posts in this series.

Making Money In A Digital Age: Bootcamp On Digital Royalty Strategies

Making Money in a Digital Age:   Maximizing your client's film and music revenues with various digital options available at our fingertips.  Join the Sports & Entertainment Law Section of the Dallas Bar Association for a Boot Camp all about digital distribution for film, music, & television. Learn how to maximize you or your client's film, music, or tv revenues with various digital options available at our fingertips.When: Friday, 18 OCT 2013 at 1:00pm Where: Texas Theatre, 231 W. Jefferson Blvd, Dallas, TX 75208,  214-948-1546$25 for lawyers (MCLE Pending) $20 for non-lawyers

To purchase tickets, please go to: http://www.prekindle.com/promo/id/22815447475413408

Music PanelistsSteven Corn - Los Angeles, California Co-owner with BFM Digital

Andy R. Jordan - Dallas, Texas Music producer for interactive media and documentary films

Lee Mezistrano - Seattle, Washington Lawyer with Starbucks - Digital Ventures

Evan Stone - Dallas, Texas Lawyer with FUNimation Entertainment and Partner at Stone and Vaughn PLLC

Film Panelists

Steven Masur - New York, New York Lawyer, Venture Law Group Cowan Debaets Abrahams & Sheppard LLP

Ken Topolsky - Dallas, Texas Producer, Dallas TV Show

Lise Romanoff - Los Angeles, California Managing Director/CEO , Vision Films

Digital Distribution Income Flow Chart for Music

This Digital Distribution Aggregation flow chart provides answers to basic questions on how a record label, or artist that owns their master recordings/sound recordings, can use a digital content aggregator to make their sound recordings available on iTunes, Amazon, Spotify and other digital services. The flow chart is not all-inclusive and is not intended to endorse any particular aggregator. There are lots of choices out there these days. The chart will give you a starting point/frame of reference.

2010 Social Networking Legal Issues: Be Careful What You Tweet

I had a fantastic time chatting with the Women's Section of the Tarrant County bar on some of the 2010 top legal cases that were based on social networking snafus. The article I wrote highlighting social networking and issues such as defamation, right of publicity, criminal law, jury selection, smart phones in the courtroom and lawyer advertising is found here.

If you click here, you will go to my Delicious page with tags to news articles that we discussed.

iTunes Has The Beatles: But No Garth, AC/DC, Kid Rock.....

It's old news know that The Beatles tracks are  available on iTunes. Read more from The Wall Street Journal on how the deal was done. There are still a handful of artists that have i) the creative control with their record labels, or ii) control their own masters and can determine when and how their albums will be available for download on iTunes.  There are varied reasons for not getting on board with iTunes, but one of the major concerns of acts like Kid Rock and Garth Brooks is the inability of the artist/label to control album only downloads versus singles downloads.

Your search for AC/DC, Kid Rock, Def Leppard, Garth Brooks and Bob Seger will only lead to "sound a-likes" on iTunes.  On Episode 9 of the Entertainment Law Update Podcast, Texas music attorney Tamera Bennett and LA film attorney Gordon Firemark discussed with Jason Pascal, VP & Senior Counsel with The Orchard,  the success to be had by cover bands issuing digital only releases when the original artists' tracks are not available.

Entertainment Law Update Podcast Episode 14

headphones
headphones

Dallas Music Lawyer Tamera H. Bennett and Los Angeles  Theater Lawyer Gordon P. Firemark discussed Mockumentaries, Downloads, Licenses, and First Sale issues in Episode 14 of the Entertainment Law Update Podcast. If you are a licensed California attorney, CLE credit hours are available.  In most other states, listening to the podcast will qualify for "self-study" cle hours.

Texassports.org: University of Texas Lost Bad Faith UDRP Action

The University of Texas was unsuccessful in a bad faith domain name action to acquire www.texassports.org. The University is the owner of www.texassports.com and registered trademarks for:  TEXAS, UNIVERSITY OF TEXAS, TEXAS LONGHORNS, and LONGHORNS.  In particular, TEXAS is registered for "Entertainment services, namely, providing college athletic and sporting events."

In the UDRP action, the University asserted www.texassports.org was registered in bad faith, that the registrant had no legitimate rights to the name, and the use of the domain may cause confusion with the University's www.texassports.com domain.  The domain www.texassports.org was used as  "parking" website for information related to University of Texas sports and sporting events.

To be successful the University needed to prove:

the domain name registered by the Respondent is identical or confusingly similar to a trademark or service mark in which the Complainant has rights;

the Respondent has no rights or legitimate interests in respect of the domain name; and

the domain name has been registered and is being used in bad faith.

The UDRP panel found www.texassports.org defense persuasive:

"Texas sports" is geographically descriptive and not protected by trademark.  The University does not have the exclusive rights to "Texas" and "Sports."  The University does not have a registered trademark for "Texas Sports."  There is no likelihood of consumer confusion.

The University did not prove "bad faith."  Again, common, geographic terms are not typically going to rise to the level of a bad faith acquisition.

More about the UDRP decision may be found here.

Entertainment Law Update Podcast Episode 12 Now Available

headphones
headphones

In the latest episode of the Entertainment Law Update podcast, Tamera H. Bennett and Gordon Firemark explore:

  • Follow ups on Hot News
  • Viacom loses suit against YouTube.
  • Hurt Locker Suit(s)
  • Idea Theft
  • Tribute Band Names
  • Celebrity Rights of publicity

To listen to the podcast, click here.

Dallas Surgeon Raises Social Networking Defamation Claim

posted by Tamera H. Bennett Dallas eye surgeon Dr. Boothe (Boothe Eye Care and Laser Center), is asserting a patient's statements online may be defamatory in nature and should be removed.

The patient was unhappy with the results from her eye surgery and posted her complaints online.  Dr. Boothe now plans to take a pre-litigation/investigative deposition to determine what, if any evidence, there might be to bring a defamation lawsuit against her.