August 27, 2015

The 11 Contracts Every Artist, Songwriter & Producer Should Know: Music Publishing Agreements



By Steve Gordon

The fifth installment of this 11-part series on basic music industry agreements focuses on music publishing. Before discussing the basic forms of agreement, I will answer these basic questions:

• WHAT is music publishing?
• WHAT is publishing income and what are the major sources of that income?
• WHAT is a publisher, and why would you need one?

1. WHAT IS MUSIC PUBLISHING?

Publishing is the commercial exploitation of a musical composition -- not the recording. At seminars, I usually hold up a CD to demonstrate the difference between songs or "musical works," as the Copyright Act refers to them, and the recording that contains them, i.e. "sound recordings." At my last presentation at the New Music Seminar, I brought an album by the great jazz musician Thelonious Monk. The label on the CD shows that Columbia Records is the record company. It also shows the titles of each song contained in the CD. The recording is owned by Columbia Records. Monk transferred the rights in his performance to Columbia when he signed his record deal, and Columbia Records owns the copyright in the recording. Yet Columbia did not gain the rights in the songs. For instance, "Ruby, My Dear," written by Monk, is one of the songs included in the album. Columbia owns Monk's recording of the song, but not the song itself. Publisher Music Sales currently administers the rights in this song on behalf of Monk's estate. The money that flows from the administration of the rights in that song, or any songs, is called publishing income.

2. WHAT ARE THE MAJOR SOURCES OF MUSIC PUBLISHING INCOME?

The major sources of publishing income are public performance royalties, mechanical royalties, and sync fees. Each is explained below. The next biggest source of publishing income, although tiny in comparison with the first three, is sheet music.

Public Performance Royalties

Any user of music who or that publicly performs a song must secure a license and pay a royalty to do so. Songwriters and their music publishers use Performing Rights Organizations (PROs) to collect these royalties. In the U.S. there are three: ASCAP, BMI and SESAC. A fourth PRO, recently launched by music industry mogul Irving Azoff, is Global Music Rights (or GMR). The PROs collect public performance royalties from radio, television, the Internet and other users of music, such as nightclubs and concert halls. Last year, ASCAP and BMI collected approximately one billion dollars each. As of 2014, SESAC's revenue had grown to $182 million (from $167 million the year prior).

Mechanical Royalties

Mechanical royalties are the monies that songwriters earn from the inclusion of their songs on records. The mechanical royalty rate is set by a tribunal called the Copyright Royalty Board, pursuant to the Copyright Act. The current rate is 9.1 cents per song per copy of each record sold (unless the song is longer than five minutes, in which case the rate is 1.75 cents per minute or fraction thereof). This means that if a record containing one song sells a million copies, the "stat" rate would add up to $91,000. With respect to interactive streaming services, such as Spotify, the rate is 10.5% of gross income minus what the service pays to ASCAP, BMI and SESAC (approximately 6%).

Sync Fees

A sync refers to the synchronization of a musical composition in an audiovisual work, such as a movie, TV show, commercial or video game. The amount of money for a sync placement varies widely depending on the nature of the project and the identity of the song. For instance, use of a classic pop hit in a major motion picture or TV ad campaign can fetch well over six figures. On the other hand, I recently represented a young producer/songwriter who was paid $12,000 for composing new music for a 30 second beer commercial. The use of an indie writer's song in a basic cable show could garner just a few hundred dollars, or nothing at all except public performance royalties paid to the writer by hos or her PRO.

Sheet music

Sheet music was once the primary source of publishing income. However, although sheet music now includes digital as well as physical media, it represents only a small fraction of total publishing income.

Summary

Altogether, these sources added up to approximately six billion dollars in 2014 worldwide. That amount is only slightly higher than the amount earned 10 years ago. Accounting for inflation, publishing income has eroded. The major reason is that record sales have declined dramatically, and consequently mechanical income has sharply declined.

3. WHAT IS A PUBLISHER?

A publisher is a company that collects the income discussed above on behalf of the writer. Generally, the publisher will take 25% to 50% of the writer's income. Why would a writer give up all that money? There are various reasons. The most important ones are explained below.

Advances and Royalties

Advances are upfront payments that are usually made to the songwriter as an inducement to enter into an exclusive deal in which the writer gives up the right to exploit his or her songs or license others to do so. For instance, I recently negotiated a publishing deal between a major publisher and a producer who created a beat (which is a musical work as well as a sound recording) for a major record label artist. The publisher offered $150,000 as an upfront advance. Advances are recoupable against royalties. The amount of the royalty varies depending upon the type of agreement. The publisher's share is 50% in a traditional publishing deal and generally 25% in a co-publishing deal (see below). The songwriter does not receive a royalty payment until the publisher "recoups," that is, when the amount of monies earned from the writer's songs exceeds the amount advanced to the songwriter.

Administration

Publishers provide administrative services, such as registering songs with the U.S. Copyright Office and collection societies in the U.S. and throughout the world. They also negotiate deals and get the best fees, because they are aware of the current rates for various songs in diverse projects. For instance, if a major ad agency wants to use a song in a national campaign, the publisher is in a better position than the writer to negotiate the most favorable terms, because the publisher is aware of what similar songs have received in similar circumstances. The publisher will do its best to collect all of the monies generated by a song from all sources (with the exception of the writer's share of performance monies, which is paid directly to the writer by his or her PRO).

Exploitation

The publisher is also supposed to exploit a writer's songs and find opportunities to generate additional income. For instance, publishers may encourage producers or artists to re-record the writer's songs. These re-recordings are known as "covers," and can generate a great deal of additional money. As an example, Whitney Houston's cover of "I Will Always Love You," which was written and originally recorded by Dolly Parton, was a much bigger hit than the original record. The publisher will also try to get songs placed in motion pictures, television shows, video games and ad campaigns, as well as ancillary uses, such as greeting cards and toys.

Foreign Income

Publishers have foreign affiliates that collect the money earned by a song in other countries. Major publishers, such as Sony ATV and Warner Chappell, have offices all over the world. Small publishers can also administer the rights in their songs throughout the world by using "sub publishers." Therefore, when a European singer re-records a song, and the song is successful in Benelux (Belgium, Holland and Luxembourg), the songwriter needs someone on the ground to collect monies from record sales, radio play and streaming in those countries.

BASIC PUBLISHING AGREEMENTS

The basic types of agreements that songwriters sign with music publishers are:

• Individual or Single Song Agreements;
• Exclusive Term Agreements;
• Co-Publishing Agreements; and
• Administration Agreements.

Single Song Agreement

Under this agreement, a writer transfers the copyright to one song or a limited group of identified compositions to a publisher. In return, the writer receives a portion of the income earned from uses of that composition or compositions, usually 50%.As the individual song contract applies only to the song or songs specifically included in the agreement, the writer can go to a number of different publishers with other songs and give each one only those songs that the writer is interested in promoting.

Exclusive Term Agreement

Under this deal, which was the most common kind of agreement for many years, the songwriter agrees to assign the exclusive right to administer all compositions that he or she writes during a specified term, for example, one or two years with several options that the publisher can use to extend the term of the agreement for additional one year periods. Sometimes the term is the longer of a period of time or delivery of a certain number of songs. The writer agrees to assign the copyrights in every song that he or she writes during the term. The publisher keeps the copyright in each song even after the termination of the agreement. (Under the Copyright Act, however, the writer or his or her estate has the right to terminate the assignment after 35 years). All publishing income is split on a 50-50 basis, although the agreement may allow the publisher to deduct defined expenses, such as the costs of producing demos. Generally, as discussed above, the publisher pays a songwriter an advance at the beginning of the contract which is recoupable against the writer's royalties. Additional advance payments are usually due if the publisher exercises options to extend the contract.

Co-Publishing

This form of agreement is basically the same as the traditional exclusive publishing agreement except that the writer only assigns 50% of the copyright in each song he or she writes during the term to the publisher, and the writer generally gets to keep 75% of the publishing income (that is, 100% of the "writer's share" and 50% of the publisher's share). This model became the standard form of deal as singer songwriters such as Bob Dylan, James Taylor and Simon and Garfunkel became more successful and thereby gained more leverage. An example of a typical co-publishing deal is the second agreement included below. It is a form used by a major music publishing company. The annotations, which contain suggested changes, demonstrate that an experienced legal adviser is essential when negotiating a publishing deal.

Administration Agreements

Under an administration agreement, the writer retains the copyrights in his or her songs. The publisher only receives the right to administer a composition or group of compositions for a specified period of time (e.g., three years, five years, etc.). In return for its services, the publisher usually receives an "administration fee" of from 10% to 25% of all income earned during the term of the agreement. This form of agreement is seldom offered to new writers and is generally reserved for those who have already had great commercial success.

SYNC REP DEALS

A variation of a normal publishing agreement is a sync rep deal. It's much more likely that a new or emerging songwriter will encounter this form of agreement rather than a full-blown publishing deal. Sync rep deals usually do not offer up-front advances and involve companies who specialize in "shopping" songs, including instrumental and lyric versions, for use in movies, TV shows, ad campaigns, and video games. In a sense, these deals are publishing agreements because they involve the exploitation of musical compositions. However, unlike true publishing deals, these agreements are intended only for the exploitation of the songs in audiovisual works. They usually do not authorize any other exploitation of the song, such as collecting audio mechanicals or licensing sheet music, or collecting public performance royalties from radio play. Of course, there are variations and exceptions. For instance, a sync rep license could include the right to license a song for an audio soundtrack accompanying a movie which includes the song.

It should be noted that there are certain sync reps who will attempt to secure all rights in a song - just like a publisher would. That deal should be avoided, unless the rep is able to exploit songs in all media, as a normal publisher would. In other words, some sync reps "pose" as publishers.

In a standard sync rep deal, the writer grants the rep sync rights in songs that are mutually approved by the writer and the rep. The term is generally limited to one or two years, with automatic renewal terms, subject to cancellation by either party. Again, there are exceptions to this standard structure. For instance, some sync reps will want a longer term or even perpetuity in their rights to exploit a song. Generally, however, all sync reps will want the right to enter into perpetual licenses during the term of the agreement. Therefore, for instance, a sync rep will be able to license a song during the term to a movie producer to use that song in the movie in perpetuity.

The most important issue in negotiating or signing a sync rep deal is exclusivity versus non-exclusivity. Sync reps who offer exclusive deals usually give these three reasons to justify exclusivity:

(1) Confusion as to whom to pay: The argument is that the writer's PRO may not be able to identify the correct party to pay. In a sync rep deal, the sync rep will usually be listed as the publisher of the song and is paid directly by the PRO. If there is more than one publisher, the PRO may not know who to pay.

This argument is rebutted by advocates of non-exclusive licenses who argue that, when the song is registered with a PRO, a suffix can be added to the title such as "Blue Skies -- #1," "Blue Skies -- #2, etc. The cue sheet reporting the use of a song in an audiovisual work, which all the PROs require, can identify the correct title and the right publisher will be paid.

(2) Motivation: The argument is that exclusive publishers will be more motivated if they have exclusive rights in a song.

The non-exclusive reps will argue that first, this is not necessarily true. Moreover, if the rep loses interest in a writer's songs, the writer has no chance to make money from his or her songs.

(3) Value Reduction: The argument is that a licensee may cause two sync reps to compete against each other and offer a discount, thereby decreasing the value of a song represented by two different companies.

The non-exclusive reps will argue this is not the case, as licensees such as ad agencies and music supervisors value their relationships with the reps with whom they work on a regular basis and would not jeopardize those relationships by going around a trusted rep to get a cheaper price for the same song.

In terms of compensation, sync rep deals vary from company to company. Fifty percent is not unusual. Some companies provide better terms to the songwriter; for instance, only taking 20% to 25% and paying the balance to the writer. That percentage is usually based on gross income, including sync fees and public performance monies generated by the transmission of audiovisual works on television or the Internet. An example of a non-exclusive sync rep deal with annotations below.

forms-publishing8.16K1 (1).pdf
forms-publishing8.16K2 (1).pdf

August 26, 2015

Week In Review



By Chris Helsel

NOTE: This is my final installment of Week in Review. It has been a pleasure writing these recaps over the past several months, and I would like to thank you, loyal readers, for taking a few minutes out of your day to parse through them. I hope that you have found the stories interesting, informative and insightful. I have certainly learned a great deal, and can only hope that you have enjoyed reading the Week in Review half as much as I have writing it.

Major League Baseball and Players' Union Agree to New Domestic Violence, Sexual Assault and Child Abuse Policy

For the first time, Major League Baseball (MLB, league) and its players' union, the Major League Baseball Players Association (MLBPA, union) have come to terms on a comprehensive joint policy regarding domestic violence, sexual assault and child abuse. This agreement comes in the wake of numerous high-profile domestic incidents involving National Football League (NFL) players and the intense public debate and legal wrangling regarding that league's handling of those cases.

The MLB and MLBPA announced the new policy in a joint press release last Friday. The two sides say the agreement was created to protect the legal rights of players, hold players accountable through appropriate disciplinary measures and provide resources for the intervention and care of victims, families and the players themselves. The agreement covers not only MLB players, but also Minor League players and everyone employed by MLB clubs at all levels, including front office executives. The league office and union also pledged to implement similar domestic abuse policies covering their internal staffs.

Under the new policy, MLB commissioner Rob Manfred has the power to place a player accused of domestic violence, sexual assault or child abuse on paid administrative leave for up to seven days while the allegations are investigated. At the end of that period, the commissioner may discipline the player immediately, reinstate the player and defer any disciplinary action until after any criminal charges are resolved, or, under certain circumstances, may suspend the player with pay until legal proceedings are completed. That paid suspension may later be retroactively converted to an unpaid suspension. Importantly, the commissioner's authority to discipline a player (or other league, club or union employee) is not dependent on a finding of guilt in a court of law, but rather is governed by a "just cause" standard.

Additionally - and this is somewhat surprising, given the NFL's recent troubles with suspensions being reduced or vacated by federal courts - there are no minimum or maximum penalties outlined in the new policy. As a result, the severity of punishment will be decided on a case-by-case basis by Mr. Manfred. Individual teams are prohibited from issuing discipline on their own unless the commissioner defers his authority to the club. Players disciplined under the policy retain the right to appeal the decision before a three-person arbitration panel.

In an effort to prevent these issues from arising in the first place, the policy calls for players to be educated about domestic violence, sexual assault and child abuse in English and Spanish at regular intervals. In fact, these procedures have already begun, as all MLB players participated in education sessions during this past spring training (pre-season) and all Minor League players have received training organized by their clubs throughout the season.

Commissioner Manfred, who took office in January of this year, said in statement, "Major League Baseball and its Clubs are proud to adopt a comprehensive policy that reflects the gravity and the sensitivities of these significant societal issues. We believe that these efforts will foster not only an approach of education and prevention but also a united stance against these matters throughout our sport and our communities."

The union echoed Mr. Manfred's sentiments. MLBPA executive director and former MLB player Tony Clark said, "Players are husbands, fathers, sons and boyfriends. And as such want to set an example that makes clear that there is no place for domestic abuse in our society. We are hopeful that this new comprehensive, collectively-bargained policy will deter future violence, promote victim safety, and serve as a step toward a better understanding of the causes and consequences of domestic violence, sexual assault and child abuse."

http://m.nydailynews.com/sports/baseball/mlb-mlbpa-reach-deal-joint-domestic-violence-policy-article-1.2333764

Michael Jordan Awarded $8.9 Million in Name/Likeness Lawsuit against Defunct Supermarket Chain

A federal jury awarded retired basketball star Michael Jordan $8.9 million this week in a suit brought against the defunct supermarket chain Dominick's. Mr. Jordan, who earned over $100 million in endorsements in 2014, accused the company of using his identity in an advertisement in Sports Illustrated without his permission.

The advertisement in question appeared in a 2009 special issue of the magazine commemorating Mr. Jordan's election into the Basketball Hall of Fame. It read, "Congratulations Michael Jordan, 23 (his uniform number). You are a cut above." Below that message was an offer for $2.00 off Rancher's Reserve steaks.

Mr. Jordan, who has shrewdly capitalized upon his worldwide fame in the years following his retirement by carefully marketing his personal brand, testified at trial that he would "never" have agreed to the Dominick's advertisement, which essentially compared him to a piece of meat. Rather, he said, he only signs long-term deals expected to be worth $10 million or more.

Before the case went to trial, the court ruled that the chain (which is now owned by Safeway) was legally liable for running the advertisement without Mr. Jordan's permission. The trial itself was therefore exclusively to determine damages. Mr. Jordan sought $10 million, but Safeway argued that it should pay just $126,000. That figure was reached by an expert hired by the chain, who determined that a "hypothetical deal" between the two sides could have been reached for that amount.

After deliberating for six hours, the jury concluded that the improper use of Mr. Jordan's brand would cost far more than that. Speaking outside the courthouse after the award was announced, Mr. Jordan said, "It is my name, and I've worked hard for it for 30-something years, and I'm not just going to let someone take it." He added, "It's not the type of court I like to win at. But unfortunately we ended up in this court, and I'm very happy with the result."

http://www.chicagotribune.com/business/ct-michael-jordan-dominicks-case-0822-biz-20150821-story.html

Jay Z/Timbaland "Big Pimpin'" Flute Sample Lawsuit Scheduled for Trial

A lawsuit brought against rappers Shawn Carter (aka Jay Z) and Timothy Mosley (aka Timbaland) in 2007 in California federal court over the duo's use of a flute sample in a hit song has finally been scheduled for trial. The suit, brought by Osama Fahmy, the heir of Egyptian composer Baligh Hamdi, alleges that the pair improperly sampled a flute tune composed in 1957 for the film "Khosara, Khosara" in their chart topping 1999 hit, "Big Pimpin'."

The flute sample was introduced to the track by Mr. Mosley, who initially believed that it was in the public domain. Upon learning of his mistake, Mr. Mosley entered into an agreement with EMI Music Arabic, which holds the rights to the film, in 2001. Under the terms of that agreement, Mr. Mosley paid the company a lump sum of $100,000, which "granted the right to exploit the 'Big Pimpin'' composition, to the extent it used 'Khosara.'"

At the time, Mr. Hamdi's descendants received distributions from that payout. Now, however, the family believes it is entitled to substantially more money. According to Mr. Fahmy's attorney, the family did not realize the importance of the flute track to the song at the time of the agreement. Further, Mr. Fahmy contends that he "wasn't aware of the settlement at the time" and now seeks "fair compensation."

At trial, Mr. Fahmy's attorneys intend to call as a witness musicologist Judith Finell, who testified in support of Marvin Gaye's family in the "Blurred Lines" case earlier this year.

In support of his claim, Mr. Fahmy's attorneys allege that 80% of the 400 people who bought Jay Z concert tickets they surveyed said they hoped to see him perform "Big Pimpin'." Lawyers for the artists have disputed the relevance of this unscientific survey, calling it "beyond speculative - it's farcical."

http://pagesix.com/2015/08/15/jay-z-and-timbaland-to-testify-in-big-pimpin-lawsuit/

ISIS Beheads Archaeologist, Destroys 2000-Year-Old Temple

In what has become an all-too-familiar story, Syrian authorities announced this week that the Islamic State (ISIS) has destroyed yet another ancient and irreplaceable piece of history. The latest victim was the Temple of Baalshamin in the ancient city of Palmyra, which archaeologists believe dates back to the year 17 AD. In addition to the temple, the extremist group allegedly beheaded 81-year-old Khaled al-Asaad, an archaeologist who had overseen Palmyra's ruins for four decades. Mr. al-Asaad is said to have heroically refused to reveal to the militants where certain treasures were hidden, in an effort to save them. He paid for his bravery and conviction with his life.

The Temple of Baalshamin is the latest of a growing number of historically significant antiquities in the desert city of Palmyra to be destroyed by ISIS. The extremist militant group considers any shrines, statues or other artifacts implying the existence of any deity other than Allah to be sacrilege and unacceptable idolatry, which must be destroyed.

Palmyra, located central Syria, is considered an especially special cultural site because the ancient city had a culture unlike any other of its time, with a unique set gods as well as a style of art and architecture entirely its own. The city is a Unesco World Heritage site and has been under ISIS control since May of this year.

The recently destroyed temple itself had been a shrine to the ancient Phoenician god of storms and fertilizing rain. It was considered especially remarkable for how well it had stood the test of time, remaining almost completely intact for nearly two thousand years. Exeter (UK) University professor Emma Loosey, who lived near Palmyra for three years, told the BBC, "I can't think of another temple as beautifully preserved as the Temple of Baalshamin." It was especially renowned for its cella, or inner area. According to Ms. Loosley, the ancient building's cella was "pretty much perfect" until ISIS laid it to waste.

http://www.bbc.com/news/world-middle-east-34036644

New Mayor of Venice Ignites Controversy With Ban on Children's Books Aimed at Fighting Prejudices and Stereotypes

Upon taking office recently, Venice's new conservative mayor Luigi Brugnaro created quite a stir when he announced his intention to ban 49 children's books from the city's preschool libraries due to their supposedly subversive content. The books had been added to a reading list by a panel of university professors and preschool experts under the previous administration in order to aid educators in their quest to teach children about the dangers of prejudices and stereotypes.

The new mayor apparently disagreed with that agenda and declared that the books were not fit for children. He defended this action by insisting that preschool children would struggle with some of the mature concepts that the illustrated books conveyed. Among those salacious stories banned were one involving a princess who dreamed of being a soccer player and another depicting a little boy's struggle to cope with a physical disability. An especially egregious tale, according to Mr. Brugnaro, was the (true) story of the penguin egg hatched and adopted by two male penguins. Said the enlightened politician, "Of course I protested. What would happen if my 3-year-old daughter came home and asked me, where is the other daddy?"

Mr. Brugnaro was quick to insist that while he has "no problem with homosexuals," a line must be drawn between rational adults who can choose for themselves and impressionable children, whose decisions require parental approval. After all, he said, there are still plenty of other books for children to read. "We're not about to eliminate Pinocchio. That's not it. It's about a situation with two fathers and explaining that to the 3-year-olds."

Mr. Brugnaro's announced ban prompted an outcry from residents, authors, publishers, and librarian associations. Even Amnesty International appealed to the new mayor to reconsider. Thankfully, Mr. Brugnaro ultimately relented, narrowing his list of banned children's books down to two. The pair of books still prohibited from the preschool reading list both depict same-sex families living happily, and have been derided by some national news outlets as "gay fairy tales." The mayor explained, "Even today, you technically still need a man and a woman to have a baby. These books risk confusing children."

Italy as a whole has been frighteningly slow to adapt to the idea of equal rights for all persons regardless of sexual orientation, especially as compared to its European neighbors. The country has struggled to pass laws condemning homophobia, and is one of only a handful of major European countries that does not legally recognize same-sex unions. Just last month, the European Court of Human Rights declared that its failure to legally recognize same-sex couple constituted a human rights violation.

According to bookseller Nicola Fuochi, who was involved in the initiative to add the books to the preschool curriculum, the issue transcends political parties and cuts to the very core of modern Italian culture. "It's not a problem of left or right, it's an issue drummed up to ingratiate the electorate." Mr. Fuochi is especially disheartened by his belief that "children's literature has become an arena for political collision."

Others, including Francesca Pardi, who wrote the story of the adoptive penguin dads, believe that the backlash against adding progressive literature to the preschool curriculum is spurred by a fear that doing so would erode the Roman Catholic church's hold over social issues. "In Italy, it's as if morality is the prerogative of the church," she said, "and so some principles are never put into discussion." She believes that to the entrenched establishment, a book teaching children that there is "room for all becomes very threatening."

Despite the reluctance of national lawmakers to address the issue and the actions of local politicians like Mr. Brugnaro, progressive Italians like Ms. Pardi have vowed to fight on. "Education isn't about teaching how or what to think, but to pass values. Kids won't become gay if they read a book about two moms, but they will be happier if that is their family situation."

http://www.nytimes.com/2015/08/19/world/europe/venice-childrens-books-ban.html?_r=0


August 24, 2015

How Do I Get My Rights Back: Termination Rights Under U.S. Copyright Law


By Wallace Collins

Wallace Collins is an entertainment and intellectual property lawyer based in New York with more than 30 years of experience. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com

The 1976 Copyright Act provides for the termination of copyright transfers. It entitles content creators to reclaim their copyrights - regardless of any contract stating otherwise - after certain time periods. Therefore, even if an author, artist, musician, photographer or songwriter signed a contract which purports to transfer all rights in a work for perpetuity, the Copyright Act provides that the author of the work (or the author's heirs) can terminate that grant and demand that the rights revert in a shorter period of time. Authors and creators are now entitled to terminate their contractual transfers and demand back control of their copyrights; authors can terminate their book publishing contracts, songwriters can demand return of their musical compositions from music publishers and recording artists and record producers can demand return of their sound recordings from the record companies.

Generally speaking, for copyright grants made on or after January 1, 1978 (the effective date of the 1976 Copyright Act) the termination period is 35 years under Section 203 of the Copyright Act. For pre-1978 works the termination period is 56 years after copyright was originally secured under Section 304(c)-(d). For grants on or after 1978, termination may be exercised any time during a five year period beginning at the end of 35 years from the execution of the grant or, if the grant concerns the right of publication of the work, then the period begins on the sooner of 35 years after publication or 40 years after execution of the grant. Although there are certain formalities which must be complied with to effectuate transfer, this essentially means that recording artists and songwriters were entitled to start exercising their right of termination on post-1978 works as of the start of 2013.

The big exception to the termination right is if a work was done as a "work for hire." Section 101 of the Copyright Act of 1976 delineates what types of works by their nature are incontestably works for hire. It is essentially a two part test: (1) was the work created by an employee within the scope of his or her employment, and; (2) if not, is it (a) one of the nine enumerated work-for-hire classes of works and (b) is there a written agreement signed by the author acknowledging the work for hire relationship. Included on the list of nine enumerated categories of works that are works for hire are collective works, compilations and motion pictures. Not included on this list are books, photographs, songs and sound recordings.

There are ongoing legal battles over how termination rights affect the book, comic book and motion picture fields. Not unexpectedly, the entertainment business companies are not pleased with the copyright termination provision and the inevitable ramifications thereof.

With respect to songs and music publishers, some litigation has already been decided. In Scorpio Music S.A. v. Willis (Case No. 11 CV 1557 (C.D. CA 2012), California Federal District Judge Moskowitz determined that original Village People member, Victor Willis, could terminate his transfers and recapture a direct copyright interest in many of his group's songs, including "YMCA." In this case, after Willis notified Scorpio that he was terminating the prior transfers, Scorpio sued, arguing that Willis could not terminate because a majority of each song's authors had not also agreed to terminate their transfers. The court sided with Willis, ruling that an author can unilaterally terminate the transfer of his or her share in a copyrighted work without his or her co-writers. Although the Scorpio decision addressed a fairly narrow point concerning multi-author transfers, the decision opens the way for most songwriters to get their composition copyrights returned and sets the stage for the bigger battles looming on the recorded music side of the business. The copyright termination procedures apply to the separate and equally lucrative sound recording copyrights transferred to record labels as part of typical recording artist contracts over the years. Since the term "sound recordings" is not explicitly contained in the enumerated work for hire category list, practitioners representing record companies will need to try to find other ways to justify any claim that sound recordings are indeed works for hire in order to preclude termination by artists.

The termination rights of the author of a copyrighted work are generally subject to a five year window. Termination must be made effective within the termination window or the right to terminate the grant is forfeited. To be effective, the author must serve a written notice of termination on the original record company or publisher (and/or any successors) no more than 10 and no less than two years prior to the effective date stated in the notice. The notice of termination must state the effective date of termination. Perfection of the termination requires that a copy of the written notice also be filed with the U.S. Copyright Office prior to the effective date of termination.

Although the termination rights of an artist under the 1976 Copyright Act would only be effective for the U.S. territory, the size of the U.S. consumer market still makes this a valuable right to reclaim.

August 21, 2015

Sixth Circuit Reversal in Varsity Brands v. Star Athletica

By Barry Werbin

In a significant decision, on August 19th, the Sixth Circuit in Varsity Brands v. Star Athletica reversed the WD Tenn.'s widely criticized decision that had held that stripes, chevrons, zigzags and color blocking imprinted on cheerleader uniforms were not copyrightable because these design elements could not be disaggregated from the cheerleader dress design, which were otherwise utilitarian. That is, the District Court found that the aesthetic features of a cheerleading uniform merge with the functional purpose of the uniform.

The Circuit Court addressed what it characterized as "the question that has confounded courts and scholars: When can the 'pictorial, graphic, or sculptural features' that are incorporated into 'the design of a useful article' 'be identified separately from, and [be] capable of existing independently of the utilitarian aspects of the article[?]'"

In reversing, the Court granted partial summary judgment for Varsity on the issue of whether Varsity's designs were copyrightable pictorial, graphic, or sculptural works, holding they were, because the design elements could exist independently of the utilitarian aspects of the cheerleading uniforms, thus qualifying as copyrightable subject matter.

First, the Court gave deference to the registrations that had been issued by the Copyright Office, finding that a "comparison between the designs at issue in this case and the other Varsity registered designs confirms that the Copyright Office consistently found the arrangements of stripes, chevrons, and color-blocking to be original and separable from the utilitarian aspects of the articles on which they appear, and therefore copyrightable."

Second, in expressly upholding the "conceptual separability" doctrine, the Court held that "the Copyright Act protects the 'pictorial, graphic, or sculptural features' of a design of a useful article even if those features cannot be removed physically from the useful article, as long as they are conceptually separable from the utilitarian aspects of the article." After summarizing various approaches to assessing conceptual separability, particularly from the Second and Fourth Circuits, the Court adopted a "hybrid approach" that asks a series of questions to initially segregate utilitarian elements of a work, followed by an assessment as to whether viewers can identify "'pictorial, graphic, or sculptural features ... separately from . . . the utilitarian aspects of the [useful] article....'" Finally, there must be an assessment of whether the "features" of the design of the useful article "'exist[] independently of[] the utilitarian aspects of the [useful] article.'"

Ultimately, the Court deemed the designs as "more like fabric design than dress design," emphasizing that Varsity's graphic designs do not "enhance the [cheerleading uniform's] functionality qua clothing" and that "[t]he top and skirt are still easily identified as cheerleading uniforms without any stripes, chevrons, zigzags, or color-blocking." Evidence further supported the conclusion that the "designs are transferable to articles other than the traditional cheerleading uniform" and were "interchangeable." The Court concluded that "the arrangement of stripes, chevrons, color blocks, and zigzags are 'wholly unnecessary to the performance of' the garment's ability to cover the body, permit free movement, and wick moisture" and are therefore copyrightable subject matter.

A copy of the decision is available here:Varsity Brands app decision.pdf

August 20, 2015

"Sample" Clearance Issues

By Wallace E.J. Collins III

Wallace E.J. Collins III is an entertainment and intellectual property lawyer with more than 30 years of experience based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com.

Many clients ask about whether or not they can "sample" from an existing sound recording and how much is permissible to use, and whether or not they need permission to embody a sample in their new sound recording.

Sampling occurs when a portion of a prior sound recording or fixation of sound is incorporated into a new sound recording. When such a use occurs, two copyrights are involved: the copyright in the sound recording and in the underlying musical composition embodied in such recording. If sampling occurs without permission, copyright infringement of both the sound recording (usually owned by the record company and/or artist) and the song (usually owned by the publishing company and/or songwriter) have occurred.

In order to legally use a sample, one needs to contact both the owner of the sound recording and the copyright owner of the underlying musical work for permission. License fees for sampling vary greatly and depend on how much of the sample will likely be used, the perceived value of the recording from which the intended sample originates, and the intended use of the sample in the song. Although licenses can be granted "gratis", usually there is a fee, which is either a percentage of the record royalties and/or the mechanical royalties or for a flat fee paid upon execution of the sample license agreement (or a combination of both). There are no statutorily mandated rates for samples, so the copyright owner can charge whatever the copyright owner wants to charge, and does not have to grant permission to use the work at all.

Using samples without permission can lead to litigation where an infringer may be forced to pay damages to the copyright owner, which could amount to hundreds of thousands of dollars per infringement. A court can also order the user of the sample to recall and destroy all of the infringing copies and, in certain cases, can award the costs and legal fees incurred by the prevailing party in such a lawsuit.

Although the "2 Live Crew"/"Pretty Woman" infringement case turned on the issue of "fair use", I do not recommend to clients that they try to rely on that copyright law doctrine when they want to use samples in their works. Further, the idea that one can use a certain number of notes or seconds of someone's song without penalty is a myth.

The only proper way to use a sample of a prior recording in a recording is to get permission.

New York City Limits Credit History Use Beginning September 3rd

By Kristine Sova
www.sovalaw.com

Beginning September 3, 2015, it will be illegal for covered employers in New York City to request or use an employee's or applicant's consumer credit history to make employment decisions.

The Stop Credit Discrimination in Employment Act amends the New York City Human Rights Law, which applies to employers with four or more employees, and prohibits covered employers from requesting or using the consumer credit history of an applicant or employee for employment purposes. The law also prohibits covered employers from discriminating against applicants and employees with regard to hiring, compensation or other terms, conditions or privileges of employment based on the applicant's or employee's consumer credit history.

The new law defines "consumer credit history" as including:

-consumer credit reports (which includes any communication from a credit reporting agency that bears on a consumer's creditworthiness, credit standing, credit capacity or credit history);
credit scores; or
-other information an employer directly obtains from an applicant or employee about credit accounts, including:
*details about credit accounts, including the individual's number of credit accounts, late or missed payments, charged-off
debts, items in collections, credit limit and prior credit report inquiries; or
*bankruptcies, judgments or liens.

The new law allows employers to request consumer credit information from applicants and employee in limited circumstances, including when hiring for:

Positions where an employer is required by state or federal law or regulations or by a self-regulatory organization to use an individual's consumer credit history for employment purposes;
-Police officer or peace officer positions;
-Positions in which employees are required to be bonded under federal, state or city law;
-Positions in which employees are required to possess security clearance under federal or state law;
-Non-clerical positions having regular access to trade secrets, intelligence information or national security information;
-Positions having signatory authority over third party funds or assets valued at $10,000 or more;
-Positions that involve a fiduciary responsibility to the employer with the authority to enter into financial agreements valued at -$10,000 or more on behalf of the employer; and
-Positions with regular duties that allow the employee to modify digital security systems established to prevent the unauthorized use of the employer's or client's network or databases.

Nothing in the new law prohibits employers from requesting or receiving consumer credit history information pursuant to lawful subpoenas, court orders or law enforcement investigations.

August 18, 2015

Three Contracts Every Music Producer Should Know...

By Steve Gordon

Steve Gordon is an entertainment attorney with over 20 years of experience in the entertainment industry, including 10 years as Director of Business Affairs for Sony Music, attorney at a law firm representing Atlantic and Elektra Records, and in-house music counsel for a Hollywood studio. He is the author of The Future of the Music Business (Hal Leonard 4th Ed 2015).

Gordon gratefully acknowledges the assistance of Ryanne Perio in the preparation of this article. Ryanne is a graduate of Columbia Law School. She is currently an associate at Wilmer, Cutler, Pickering, Hale & Dorr, where she focuses on intellectual property litigation. He would also like to thank Alexandra Howard (Columbia University, BA 2017) and Evan Becker, Esq. for their assistance.

In this blog, we'll discuss music producer agreements in the context of the indie music business rather than standard producer agreements used by major labels. Producer who work on major label projects will generally have experienced music attorneys who will negotiate these deals on their behalves. Often, the upfront money that a small label or an indie artist can offer, if any at all, will not allow a producer to hire a lawyer. This is intended for producers in that situation, as well as for indie artists and small labels.

Major Label Producer Deals vs. Indie Producer Deals

To begin this installment of the series, it's useful to outline the differences in the agreements that major labels use for producers and the contracts that a producer may encounter in the indie world. A major label deal with a producer will generally include a producer fee ranging from several thousand dollars to much more, for a producer with a track record of making hits.

The producer would also usually receive a royalty of 3% to 5%, calculated in the same manner as the artist's royalty. For instance, if the artist's royalty is a percentage of the suggested retail price of a record, the producer's royalty will be as well. Like the artist's royalty (which typically ranges from 12% to 18%), the producer's royalty will be subject to multiple deductions, such as packaging costs and a reduced royalty for foreign sales. The producer's royalty will be deducted from the artist's royalty, in effect making the artist pay for the producer's royalty.

Unlike the artist, the producer usually receives his or her royalty from the first record sold after recoupment of recording costs. This means that once gross income exceeds production costs, the producer is paid for all prior records sales - the artist is not.

When an artist or small label hires a producer, the upfront fees are usually significantly less. In addition, since the label and the artist may be the same entity, it does not make sense in many cases to base the producer's royalty on the artist's royalty. In that case, the producer's royalty, if any, may be based on net receipts or "profits." (See the second and third contracts attached below.)

Beats

Many artists, particularly in hip hop and R&B but also in pop music, work with drum, digital or other percussive "beats" as core elements of their recordings. Often, an artist or indie label will search for the right beat on which to base a song. Although some beats are sampled, others are purchased or licensed from a producer who creates beats with digital drum machines or other studio equipment.

Some producers of beats, such as the Neptunes (Pharrell Williams and Chad Hugo), make more elaborate beats than just drum sounds. A Neptunes production has drum machine sounds and usually employs synthesizer riffs, sampling keyboard and other percussive sounds.

The Neptunes created some of the biggest hip hop, R&B and pop hits of the late 1990s and 2000s. Therefore, acquiring a beat from it or Pharrell himself could be very expensive. However, many new or emerging producers will offer their beats at low fees or maybe even waive upfront fees in exchange for royalties payable if the artist makes money from the song.

In the studio, a producer is ultimately responsible for the final sound of a recording. However, often, an artist will buy a beat or license it and finish the production themselves or with another producer.

Two Copyrights: 'Sound Recordings' and 'Musical Works'

As discussed in a previous blog about 'sync' licenses, copyright law protects 'musical works', including songs and any accompanying words as well as orchestral works, librettos, and other musical compositions. (http://nysbar.com/blogs/EASL/2015/05/a_simple_guide_to_signing_the.html) Copyright law also protects 'sound recordings,' that is, recordings of musical compositions. A beat is usually both a sound recording and a musical composition because the recording of a beat contains a separately copyrightable musical work.

For many years, producers generally did not create new music. They just recorded and tried to enhance songs created by a songwriter who may have been the artist. However, that has changed. Often in pop, R&B, and especially hip hop, producers are creating new music by providing beats or even complete music floors over which an artist sings or a rapper 'spits.' In that case, the producer is creating two copyrights: the sound recording and a part of the musical composition.

This is why producers sometimes enter into deals with music publishers (a future blog about music publishing agreements will be forthcoming).

Beats Agreements

Often, a producer will sell a beat outright. In that case, the buyer will have the exclusive right to use the beat. Other times however, a producer will give a non-exclusive license to use a beat, and reserve the right to use the beat for him or herself or license it to others.

Work for Hire vs. Non-Exclusive License

If the agreement is a sale, it will usually be structured as a 'work for hire.' In a work for hire agreement, the producer loses all rights in his or her beat, including the copyright and the right to use the beat again for any purpose. If, on the other hand, the grant of rights is a non-exclusive license, the producer keeps the copyright, and retains the right to use it or make other deals.

Here is a typical work for hire clause:

WORKS FOR HIRE: Producer agrees that all of the results and proceeds of his or her services shall be deemed a "work made for hire" for the Company [or Artist] under the U.S. Copyright. Accordingly, the Producer further acknowledges and agrees that Company is and shall be deemed to be the author and/or exclusive owner of the Beat inclusive of the underlying musical composition and sound recording contained in the Beat. Recordings and Musical Compositions contained therein for all purposes and the exclusive owner throughout the world of all the rights of any kind comprised in the copyright(s) thereof and any renewal or extension rights in connection therewith, and of any and all other rights thereto, and that Company shall have the right to exploit any or all of the Beat in any and all media, now known or hereafter devised, throughout the universe, in perpetuity, in all configurations as Company determines. In connection therewith Producer hereby grants to Company the right as attorney-in-fact to execute, acknowledge, deliver and record in the U.S. Copyright Office or elsewhere any and all such documents pertaining to the Beat if he or she shall fail to execute same within five (5) days after so requested by Company.

It's always in the producer's best interest to retain his or her copyrights. However, sometimes the work for hire clause will be non-negotiable, and then the producer has to determine whether the upfront money compensates for the loss of the right to use the beat. Generally, when an artist or indie label hires a producer to create a beat and fully produce one or more tracks, the agreement will be a work for hire, but the producer usually receives an upfront and can negotiate a "back-end" royalty.

Fees

The amount of the fee, if any, will depend on a variety of factors, including whether the deal is a sale or a license. A sale would generally be more expensive than a non-exclusive license under which the producer keeps the right to reuse the beat. The most important factor in determining the fee is the business reputation of the producer. A producer with a track record of some successful tracks can demand fees of several thousand dollars or more, and a producer with a track record of hits can command much higher amounts. Yet licensing, or even buying a beat, from a talented but unproven producer can be a few hundred dollars or less. If the producer receives a royalty in addition to the fee, the fee will be usually structured as an "advance", which will be recoupable prior to payment of the royalty.

Royalty

As noted above, a royalty for a producer hired by an artist or small label may be structured based on net receipts or net 'profits.' A traditional royalty for a producer who works with a big label is 3% to 5% based on the artist's royalty. Net profits should be defined fairly, for instance, as the gross monies received from the sale or license of the tracks minus the producer's fee and other production costs (see annotations for the last agreement attached below.)

Mechanicals

Even when an agreement is work for hire, it may be possible for the producer to retain the copyright in his or her contribution to the underlying musical work, as opposed to the sound recording. In that case, the label or artist will require the producer's permission to use that contribution so that it can exploit the recording.

In exchange for that permission, the producer usually receives a 'mechanical' royalty, i.e., a royalty tied to the use of the underlying musical composition contained in the record. Mechanical royalties are set by statute. The current mechanical rate is 9.1 cents per song per copy sold (or for songs over five minutes, 1.75 cents per minute or fraction thereof). Since the producer probably did not create 100% of the song, for instance, where someone else (perhaps the artist) wrote the lyrics, the producer's percentage ownership or "split" has to be negotiated.

If the producer's negotiated share is 50%, then he or she would receive 50% of 'stat' (i.e., 9.1 cents) for each sale of the record containing the song. This would be in addition to his or her producer royalty, which is tied to income derived from the record rather than the song.

Finally, the label usually asks the producer to accept a 3⁄4 of the stat rate (that is, 75% of 9.1 cents). This is called the 'Controlled Composition' clause. There is really no justification for it. All of the major labels have used it for many years to reduce their payout to artists who write their own material and to producers who contribute to the creation of songs. The only argument to justify this reduction is that it is an inducement for the label to use the song in the record.

Three Producer Agreements: Two Simple Agreements for a Beat and a Net Receipts Deal With an Indie Record Label

Re-printed below are three different producer deals that a producer working directly with an artist or an indie label may receive. The first license is a simple work for hire deal for the sale of a beat; the second is beat agreement in which the producer receives a royalty in connection with the sale or license of the recording as well as an up-front payment; and the third agreement not only provides a royalty for the recording, but also a royalty in connection with the producer's contribution to the underlying musical composition (the second and third agreements appear together).

The simple work for hire agreement for the acquisition of a beat is favorable to the person or company commissioning the beat. Since the agreement is work for hire, the producer transfers all his or her rights in the beat to the commissioning party, and that person or company in the beat - both the music and the sound recording.

Forms-producer.contract1.pdf
Forms-producer.contract2 (2) (2).pdf

August 17, 2015

Week in Review

By Chris Helsel

Association of NYC Hospitals and City Council Members Seek Greater Privacy for Patients

The Greater New York Hospital Association, which represents nearly all major New York City hospitals, announced this week that it has asked its members to prohibit the filming of patients without their consent. The request was prompted by the anger over the story of Upper East Side widow Anita Chanko, who was shocked to realize the patient moaning in agony on the television during a 2012 episode of "NY Med" was her late husband, who had died 16 months earlier after being struck by a sanitation truck.

"NY Med" is a reality television show set at New York Presbyterian Hospital. The show gives viewers a first-hand look inside the stressful environment of a prestigious hospital's busy emergency room. What many viewers likely do not realize, however, is that the patients featured do not give their consent to be filmed, nor are their families informed that their loved ones will be appearing.

After Ms. Chanko's story went public in January, 33 members of the New York City Council sent a letter to leaders of city hospitals seeking their pledge not to film patients or families without their knowledge and consent. This week, the hospital association followed suit, asking its members institutions to do the same. In addition, numerous bills are pending before the New York State Legislature that would prohibit the broadcast of medical treatment without consent.

Critics of medical reality television are concerned that despite the obvious privacy concerns the filming (and broadcasting) of trauma patients raises, the is gaining popularity. For instance, a new network television series called "Save My Life: Boston Trauma," featuring scenes from Massachusetts General Hospital, made its debut recently. The show's website boasts that "viewers will get unparalleled access to top tier trauma teams inside the emergency rooms and operating rooms of the nation's most prestigious hospitals."

ABC Network, which broadcasts both "NY Med" and "Save My Life: Boston Trauma," defended the shows in a statement, saying, "We have heard many stories of people who were inspired to go to medical school, to become nurses or paramedics, or to head into particular specialties like trauma or transplant surgery, after watching our show."

http://www.nytimes.com/2015/08/13/nyregion/new-york-hospitals-group-requests-ban-on-tv-filming.html?_r=1

Honolulu Museum Sues Benefactor for Selling Undocumented Art

A Hawaiian art museum has filed a lawsuit against one of its benefactors, the San Francisco-based collector Joel Alexander Greene, for allegedly failing to provide proper documentation for a collection of Southeast Asian art he sold the museum in 2004. The suit seeks to recoup $890,000 in payments made by the museum.

The original transaction between the 80-year-old collector and the Honolulu Museum of Art was a charitable annuity agreement under which the museum would pay a $80,000 quarterly annuity for the remainder of Mr. Greene's lifetime in exchange for five pieces. In addition, Mr. Greene loaned another 37 pieces that would become gifts upon his death.

According to the complaint, the museum has faithfully made all of its payments to date. However, it says, Mr. Greene has never provided proper documentation for the objects, which officials believe may have been stolen from their countries of origin. The museum contends that the 2004 agreement was "grounded" on the belief that Mr. Greene would provide the necessary documentation - though it did not offer an explanation of why it took this long to realize that he had not.

The issue came to light in 2011 following the arrest of New York art dealer Subhash Kapoor. Mr. Kapoor's arrest spurred a further investigation by the U.S. Department of Homeland Security, which ultimately resulted in the removal of seven pieces related to Mr. Kapoor from the Honolulu museum. The loss of those pieces prompted the museum to take a closer look at the rest of its inventory, including those provided by Mr. Greene.

Mr. Greene insists he has done nothing wrong, and that he provided all required documentation at the time of the transaction, a decade ago. He claims that he no longer has any of the documents. He characterized the lawsuit as an attempt by the museum to "get out of paying" the lifetime annuity.

http://www.bizjournals.com/pacific/news/2015/08/10/honolulu-museum-of-art-sues-donor-for-nearly-1m.html

Disappointing Iowa Music Festival Spawns Lawsuits

The Grassroots Music Festival, which took place in Council Bluffs, Iowa earlier this month, was a disappointment on many fronts. Fans complained on social media about long lines, expensive-but-underwhelming "VIP" sections, and no-show artists; food vendors allege that their contracts were not honored; and the festival's main investor is suing the group that staged the event for breach of contract, nonpayment of a loan and fraud.

After last year's successful one-day event, business partners Jason Dick and Darik Opperman sought to expand their Grassroots Festival into a three-day affair. To do so, they paired their company, The Dom Group, with investor Eric Marsh, who contributed over $400,000.

With the date and location for this year's festival secured, Mr. Dick and Mr. Opperman began entering into contracts with food vendors. Then, in April, The Dom Group sold exclusive rights to sell food, alcohol and other beverages to Mr. Marsh, the investor. Curiously, the pair did not inform the other vendors of this deal, and even continued entering into contracts with additional outside vendors into June.

It wasn't until just days before the festival that vendors learned they would not be appearing at Grassroots. Predictably, in anticipation of the weekend many of these vendors had ordered extra products, paid for permits, rented equipment, hired extra workers, and turned down other offers for catering business.

The Dom Group alleges that Mr. Marsh improperly leveraged his powerful position as sole investor to force the organizers into selling him the food and beverage rights, under threat of withdrawing his investment. They have begun the process of repaying vendors their deposits, but many vendors have indicated they intend to seek further damages.

"If they think they're gong to walk away with my cash, they're sorely mistaken," said Kelly Keegan, owner of Chicago Dawg House.

After signing the exclusive food and beverage rights contract, Mr. Marsh learned that the group was continuing to enter agreements with outside vendors. He brought a lawsuit against The Dom Group last month in order to ensure that would be the festival's exclusive vendor. The Dom Group then broke its contracts with previously signed vendors, ensuring that Mr. Marsh would enjoy the exclusive rights.

Now that the festival has concluded, Mr. Marsh is continuing his lawsuit against his business partners. He seeks repayment of $422,000 that he invested, and alleges breach of contract, nonpayment of a loan and fraud. While he originally intended to acquire an ownership stake in the festival, now the investor says he "just wants [his] money back."

The Dom Group contends that it never intended to cede ownership of the festival itself, but Mr. Marsh improperly pressured the partners into signing over a controlling interest in the company by cutting off all funding during the festival's planning stages, forcing them to sell or go bankrupt. The company, which is the defendant in Mr. Marsh's suit, plans to file a counterclaim.

Mr. Marsh denies any wrongdoing and contends that his intention to acquire an ownership stake was never a secret. "I always felt the need to have something in exchange for (money) I put out there," he said.

http://www.omaha.com/news/metro/investor-sues-grassroots-music-festival-organizers-vendors-call-for-money/article_30d67bff-67e3-5ec7-80e7-875a192834ee.html

Designer of Katy Perry Met Gala Dress Sued by Brooklyn Graffiti Artist

Brooklyn graffiti artist Joseph Tierney has filed a lawsuit in California federal court accusing fashion designer Jeremy Scott and his fashion house, Moschino, of misappropriating the artist's design in creating a loud, colorful dress for pop star Katy Perry. Mr. Tierney, known professionally as Rime, called the dress a "literal misappropriation" of one of the artist's murals in Detroit.

According to the suit, the offending dress not only contains the same visual style as Mr. Tierney's work, but also the artist's name and signature. Further, "if this literal misappropriation were not bad enough, Moschino and Jeremy Scott did their own painting over that of the Artist - superimposing the Moschino and Jeremy Scott brand names in spray-paint style as if part of the original work," states the complaint. "Not only was his art exploited by Defendants, but his credibility as a graffiti artist was compromised by inclusion in such a crass and commercial publicity stunt ... Nothing is more antithetical to the outsider 'street cred' that is essential to graffiti artists than association with European chic, luxury and glamour -- of which Moschino is the epitome."

The suit further alleges that "not only did Ms. Perry and Defendant Scott advertise, wear, and display the clothing at the event, they arrived at the event in a spray painted Rolls Royce, and even carried around Moschino-branded cans of fake spray paint during the event, as if Defendants were responsible for the artwork."

Despite landing Ms. Perry on several "worst dressed" lists, the elaborate Met Gala appearance (she also arrived in a spray-painted Rolls Royce) was a massive PR and financial success for the Milan-based fashion company. Following the gala, the New York Times profiled the company's creative director and its revenue increased 16% for the first half of the year.

In response to the suit, Moschino said, "Many of the allegations, especially the inflammatory and gratuitous allegations of wrongdoing are false. We intend to vigorously defend the lawsuit."

The suit demands an injunction as well as disgorgment of profits and further monetary damages.

http://www.cnn.com/2015/08/09/us/moschino-lawsuit/
http://www.hollywoodreporter.com/thr-esq/katy-perrys-met-gala-dress-813328

August 9, 2015

Week in Review

By Chris Helsel

New Evidence Emerges, and Decision Expected Soon in "Happy Birthday to You" Copyright Suit

A group of independent artists have filed a lawsuit in Los Angeles federal court challenging the copyright status of the ubiquitous birthday jingle, "Happy Birthday to You." As it currently stands, the song's copyright belongs to the Warner Music Group, which acquired it in 1988.

The song's publishing history is long and complicated. The simple version goes like this: First written in 1893 by a Kentucky kindergarten teacher and her sister as "Good Morning to All," the song evolved into a birthday tune in the early 1900s and became widespread in the decades that followed. After its use in an Irving Berlin show led to a lawsuit in 1933, the sisters' publisher, the Clayton F. Summy Company, filed the first copyright for "Happy Birthday to You" in 1935.

Today, the song is believed to earn around $2 million in licensing income annually, mostly from its use in film and television.

The plaintiffs in the current suit seek a judicial order declaring the song to be part of the public domain, and for Warner to return licensing fees dating to at least 2009. Their claim appears to have been strengthened last week, as lawyers submitted evidence they called "a proverbial smoking gun."

The new evidence consists of a 1922 songbook containing "Good Morning and Birthday Song," which included the familiar "Happy Birthday to You" lyrics in the third verse. Crucially, they say, is the fact that while other songs in the book are given copyright notices, "Good Morning and Birthday Song" lacks any copyright information and notes only that it appears through "special permission" of the Summy Company. Under the laws of the time, an authorized publication without copyright notice constituted a forfeiture of an existing copyright.

The obvious question now concerns when the song's copyright status attached. Warner contends that the 1922 publication was not actually authorized by the sisters (contrary to songbook's notation) and that the 1935 Summy filing constituted the first copyright of the song. Further complicating matters is the Sonny Bono Copyright Term Extension Act, which holds that anything published prior to 1923 is considered part of the public domain.

Both sides have moved for summary judgment, and Judge George H. King of the U.S. District Court for the Central District of California is expected to rule on those motions in the next few weeks. Should he deny summary judgment, the case will proceed to an unorthodox trial in which all principal witnesses are long dead.

http://www.nytimes.com/2015/08/05/business/media/an-old-songbook-could-put-happy-birthday-in-the-public-domain.html?module=ArrowsNav&contentCollection=Media&action=keypress®ion=FixedLeft&pgtype=article

American 800-meter Runner Embroiled in Sponsorship Dispute, Faces Ban From Competition

Runner Nick Symmonds, winner of six United States 800-meter outdoor national championships, may not be competing for his country at this month's world track and field championships in Beijing - for reasons completely unrelated to his ability on the track.

Under U.S.A. Track & Field (USATF) rules, athletes competing for the U.S. in international competition must wear apparel made by the team's official sponsor, Nike. Mr. Symmonds, who is sponsored by the apparel company Brooks, believes that the document containing this requirement is vague and overreaching, and has refused to sign it. He not sign today, when the American final roster was to be submitted, and it likely that he will not be on the team. "Responding by email after the deadline had passed, USATF spokeswoman Jill Geer wrote: 'We will announce the team tomorrow. We will make any statement necessary at that time.'"

At issue is exactly when and where American track athletes are required to wear Nike apparel. Under USATF rules, athletes must agree to wear only Nike or non-branded apparel at "official functions." The document specifically lists competitions, awards ceremonies, news conferences, as well as "other official team functions", which are not described.

USATF officials counter that conflicts between individual athletes' personal sponsorships and those of their teams or leagues are common. As an example, said a federation spokesperson, "Steph Curry is with Under Armour, and LeBron James is with Nike. Both men played in Adidas uniforms in the N.B.A. finals last season."

The USATF also noted that it spends $2.5 million yearly on televised meets in which athletes are allowed to wear whatever they want during competitions and news conferences so that they can get the most from their endorsement potential. "The only time we limit what athletes can wear is when they are representing the United States," said the spokesperson. Nike recently signed an extension to sponsor USATF through 2040 for approximately $20 million per year.

Yet Mr. Symmonds believes that the federation's rules are overly restrictive, and appears ready to take his battle to court. USATF "has confiscated advertising space that I own," he said. According to the runner, the federation "frequently uses bullying tactics to force athletes to do what they want, even when they have no legal right to do that...I deserve the right to know what an official team function is. They haven't defined that yet." When asked what he will do if he is stripped of his place in the world championships, he said, "I'll probably have to talk to a lawyer." As of tonight, he said: "I'm going to go sit by a lake for a little bit."

http://www.nytimes.com/2015/08/08/sports/olympics/dispute-over-uniforms-may-keep-nick-symmonds-from-the-worlds.html
http://www.oregonlive.com/trackandfield/index.ssf/2015/08/deadline_passes_and_neither_ni.html

Spanish Court Rules that Picasso Painting is a "National Treasure," Cannot be Sold Abroad

A Spanish appeals court ruled earlier this year that Pablo Picasso's 1906 painting, "Head of a Young Woman," is a "national treasure" and therefore cannot be removed from the country by its owner. The painting, which is valued at approximately 26 million euros, is owned by Jaime Botín, a member of a wealthy Spanish family that controls Banco Santander. Mr. Botín purchased the work in 1977 and keeps it on board a yacht docked on the country's Mediterranean coast.

In late July, the yacht appeared docked in Corsica. Last Friday, French customs officials boarded and seized the painting. The officials had apparently been tipped off by Spanish authorities, who accused Mr. Botín, 79, of attempting to improperly relocate the work to Switzerland for sale, in violation of a court ruling invoking a Spanish law protecting "national treasures" from export.

Mr. Botín's attorney, Rafael Mateu de Ros, contends that it would be impossible for his client to unlawfully export the painting from Spain, as it was purchased abroad and never actually entered the country. The yacht on which it was housed, he says, is registered in the United Kingdom. "For years now, the picture has been inside a British vessel, which is foreign territory for all who that may concern, even when it is moored in Spanish ports," said Mr. de Ros. Furthermore, Mr. Botín argues that the work is officially owned by a Panamanian company in which he is registered as a major shareholder.

In addition to blocking the painting's export, the Spanish government could ultimately take ownership of the Picasso masterpiece if it finds that Mr. Botín violated its cultural protection laws against illicit art trafficking.

Spain's historic heritage department, which is overseen by the nation's Culture Ministry, originally declared the painting a "national treasure" in 2013, declaring that no similar work remained in Spanish territory. At that time, the ministry denied Mr. Botín permission to sell the painting at auction in London.

For now, the painting remains in the hands of the French authorities, and Mr. Botín has formally appealed his case to Spain's Supreme Court. The timetable for that court's decision is unknown, but Spanish authorities seem confident that the work will be returned. At a budget presentation this week, the country's culture minister, Íñigo Méndez de Vigo, said his office is working with the Guardia Civil (Spanish national police) to recover the painting. Said Mr. de Vigo, "I am pleased that a work of this quality -- declared ineligible for export -- is returning to Spain."

http://www.nytimes.com/2015/08/06/arts/spain-says-bankers-seized-picasso-will-head-back-home.html

Under Brazilian Law, TV Executive Indicted in FIFA Corruption Case is Safe From Extradition

Argentinian-Polish-Brazilian broadcasting executive Jose Margulies was one of the 14 individuals indicted by United States authorities in May for their roles in the ongoing FIFA corruption scandal. Unlike his counterparts, however, Mr. Margulies has not yet been arrested, and is in fact living happily in São Paolo.

Mr. Margulies, 75, stands accused of leveraging his position as a television executive to help arrange illegal payments (read: bribes) between marketing executives and soccer officials. He was indicted on four counts of racketeering conspiracy, money laundering conspiracy and wire fraud conspiracy.

However, Brazilian law forbids the extradition of its citizens, except in certain circumstances not applicable here. As such, Mr. Margulies is living free in his adopted home country.

According to Interpol, Mr. Margulies faces arrest in any other country should he ever leave Brazil. Federal Bureau of Investigation spokeswoman Kelly Langmesser confirmed this week that Mr. Margulies is still a "wanted fugitive."

While refusing to extradite Mr. Margulies, Brazilian authorities have begun their own investigation into the U.S.'s allegations against the executive. According to his attorney, that investigation is expected to take at least a year, during which time Mr. Margulies will remain free.

Perhaps the only method by which the United States might secure extradition would be under the Palermo convention, an international agreement relating to organized crime and corruption. Under the convention, Brazilian authorities could agree to send Mr. Margulies to the U.S. temporarily to testify, with the requirement that he be returned to Brazil immediately afterward.

http://www.nytimes.com/2015/08/08/sports/soccer/brazilian-implicated-in-fifa-case-remains-free-unlike-many-others.html?_r=0

August 7, 2015

The Most Turbulent Professional Sports League Of Which You've Never Heard

By Daniel S. Greene

It has been a very busy off-season for North America's biggest and most popular professional sports leagues. The National Basketball Association had the DeAndre Jordan fiasco (http://grantland.com/the-triangle/sorting-out-the-deandre-jordan-carnival/), the National Hockey League (NHL) has been handling its latest expansion efforts in Las Vegas and Quebec (http://sports.yahoo.com/blogs/nhl-puck-daddy/las-vegas--quebec-city-hit--phase-ii--of-nhl-expansion-process-191056907.html), and, of course, the National Football League has been engulfed with "Deflategate" (http://www.usatoday.com/story/sports/nfl/patriots/2015/08/04/tom-brady-new-england-deflategate-testimony-phone-records/31126443/). Yet these leagues have not had as tumultuous and interesting off-season as the Federal Hockey League (FHL, league), the little known professional hockey league mainly based in small cities of the northeastern United States.

The league, which played its first season beginning in 2010, is essentially a Single-A minor league (below the East Coast Hockey League (AA) and American Hockey League (AAA)), but has no affiliation with any of the NHL franchises. While this season will mark the five year anniversary of the FHL, it is honestly amazing that it has lasted this long, considering that it has followed the script of the classic hockey film "Slap Shot" (https://www.youtube.com/watch?v=TJ2L2SgPldU).

The league has seen numerous teams start up and fold within a year, move, not complete a full season, and be taken over by league management due to financial issues. Teams have struggled to draw fans over the years, but have drawn some spectators due to the rough and tumble brand of hockey played. Furthermore, in the 2013-14 season, two players even staged a "hug and beer fight" to try to gain some publicity (http://www.si.com/nhl/home-ice/2014/04/01/hockey-fight-with-hug-and-beer-stunt-falls-flat-with-players-suspended). Other notable moments in FHL history include: Questionable player transactions (http://espnwilliamsport.com/opinion-the-fhl-finals-are-now-officially-a-joke/); the commissioner's daughter owning and coaching one of the teams (http://sports.yahoo.com/blogs/nhl-puck-daddy/nicole-kirnan-first-woman-coach-men-pro-hockey-130716495--nhl.html); and the creation of a website criticizing the league, along with details of certain incidents (http://thefhltruth.blogspot.com/).

Per FHL tradition, there has been no shortage of fireworks this summer. First off, the Berkshire (MA) Battalion moved to become the Dayton (OH) Demolition, and the Danbury (CT) Whalers moved to become the Stateline (NY) Whalers. The off-season also saw the folding of the Dayton (OH) Demonz and Steel City (PA) Warriors, along with the Watertown (NY) Wolves suspending its operation (but saying that the team will come back next season after construction on its rink is finished). However, the Berlin (NH) River Drivers, Danbury (CT) Titans, and Port Huron (MI) Prowlers joined the league as new franchises. So, for those of you keeping score at home, the Danville (IL) Dashers will be the only "non-new" team for the 2015-16 season.

In addition, before the Stateline Whalers even played a game, it changed its name to the Brewster (NY) Bulldogs. While there has been no officially stated reason for the quick name change, it is likely that it was due to trademark issues. The New England Whalers of the World Hockey Association (WHA) first used the "Whalers" nickname in 1972. The team's owner, Howard Baldwin, moved the franchise to Hartford, where it played in the NHL as the Hartford Whalers from 1979 to 1997, before moving to North Carolina to become the Carolina Hurricanes (http://www.courant.com/sports/hockey/hartford-whalers/hc-whalers-historical-timeline-story.html#page=1). The Whalers name remained dormant until 2009, when Baldwin founded Hartford Hockey LLC (also known as Whalers Sports & Entertainment), which was hired a year later by the NHL's New York Rangers to manage the day-to-day operation of its AHL franchise, the Hartford Wolf Pack. As a part of this agreement, the team was renamed the Connecticut Whale, until the Rangers terminated the company's contract in 2013 (http://articles.courant.com/2010-09-20/sports/hc-baldwin-wolf-pack-0920-20100920-5_1_whalers-sports-entertainment-new-logo-hockey-fest). The Connecticut Whale recently returned in the form of the one of the founding members of the National Women's Hockey League in 2015 (http://www.courant.com/sports/hockey/hc-connecticut-whale-women-hockey-0327-20150326-story.html). It is therefore likely that the team in Brewster would have needed permission to use the Whalers moniker, and even if it asked for such, it would have been odd for Baldwin to allow two teams to use the same name. There could have also been issues with the former Danbury Whalers management. Yet, like most things with the FHL, we will probably never find out the true answer.

While the league has survived many changes and financial hardships thus far, it might have finally met its match: a default judgment against the league to the plaintiff for $800,000. The suit, filed on January 23, 2014, stems out of an on-ice incident on February 10, 2012 that caused former Danville Dashers player Kyler Moje to become legally blind in one eye. According to the plaintiff: "Michael Stacey, a player for the Akwesane Warriors, made an illegal maneuver by lifting his hockey stick and thrusting the blade end forcefully under Kyler Moje's helmet" (http://www.courthousenews.com/2014/01/28/64882.htm). In addition to suing Oakley, Inc., the manufacturer of the visor he was wearing, Moje claims that the FHL was negligent in allowing the Warriors to play the game, since the league allegedly had "knowledge of the Akwesane Warriors' history of violent and illegal game play, although it knew or should have known that permitting game play on the day in question could cause injury to persons lawfully participating in league play therein." Stacey claims that he did not intend to injure Moje, stating: "I went to lift his stick in the corner and missed. I high-sticked him. No question. The puck left the zone and the ref left. No one saw it happen. I stayed with the kid and called for their trainer and after the game I went over and talked to their coach" (http://www.tsn.ca/hockey-league-loses-court-appeal-in-player-blindness-case-1.329444).

Now, this is where the suit gets interesting, since the court did not reach the issue of liability. According to court records, the FHL hired a Syracuse-based attorney named John LoFaro, who had provided legal services to Commissioner Don Kirnan in the past. Then in March 2014, the league was told that no defense had been filed despite LoFaro showing Kirnan documents that were allegedly the answer to the complaint. However, on October 9, 2014, National Casualty Co., the league's insurance company, notified Kirnan that the United States District Court (Northern District of Illinois - Eastern Division) issued a default judgment against the FHL for $800,000. Approximately two months later, the league asked an appeals court to vacate the judgment, claiming that LoFaro misled it by showing Kirnan fake legal papers (http://www.tsn.ca/hockey-league-loses-court-appeal-in-player-blindness-case-1.329444).

The United States Court of Appeals, Seventh Circuit filed its decision on July 7, 2015, and did not vacate the judgment. Within the opinion, the Court stated that LoFaro has never been asked to explain his conduct and the FHL has not filed a complaint with the legal-ethics panel in New York. The latter issue likely wouldn't matter, as LoFaro is not in good standing because of nonpayment of dues. The Court further held that the FHL did not deserve a ruling in its favor for two reasons: "first, the League failed to tender the defense of Moje's suit to its insurer when it received the complaint; second, the League failed to act prudently after being alerted by Oakley that there was a problem." It was also noted that the league should have approached its insurer first instead of hiring LoFaro, who seems to only provide legal services in Personal Injury law relating to DWI, speeding, and traffic matters, and is not admitted to the bar in the Northern District of Illinois. Overall, Judge Easterbrook noted that the league "did nothing to protect its interests" (http://caselaw.findlaw.com/us-7th-circuit/1706898.html).

Meanwhile, while the league has been preparing to play the 2015-16 season, there seems to be a discrepancy as to whether it can afford to go ahead with the schedule. Kirnan has said that the FHL could fold and reform under a different name to avoid paying the judgment, stating that, "we are a limited liability corporation... It's not like we have any real estate" (http://www.watertowndailytimes.com/sports/pro-hockey-federal-hockey-league-says-it-may-be-forced-to-fold-20150417). However, it has also been reported that Kirnan claims that the league "has $1 million worth of insurance and the legal wrangling would only be a temporary hiccup" (http://www.thetimesherald.com/story/sports/2015/04/20/fhl-rocky-week-holds-onto-hope/26058215/). At this moment, it seems like the latter is true, considering the 2015-16 FHL schedule has been released (http://www.federalhockey.com/view/thefederalhockeyleague/news-739/news_313776).

So, while you should be able to see one of these games this winter, you might be more inclined to follow the FHL from afar and keep tabs on its off-ice situations.