February 23, 2015

The 11 Contracts Every Artist, Songwriter & Producer Should Know

The following is the first installment in a series of articles from entertainment industry attorney Steve Gordon. In each installment, Steve discusses a particular music industry form of agreement from the point of view of both parties (that is, artists, songwriters and/or producers on the one hand), and those they do business with (that is, record labels, music publishers, managers, etc. on the other). Steve is writing these blogs primarily for the benefit of indie musicians. His hope is that they will read this series in other outlets. EASL is publishing these because they may be of interest to attorneys, particularly attorneys with limited experience in music business transactions.

INTRODUCTION

Although there is no truly "standard" agreement, many music business contracts begin as "form" agreements before the terms are negotiated. Often, there are two versions of a form agreement: one that represents the best interests of creators, including artists, songwriters, and producers, and one that represents the best interests of the companies that do business with them, such as record labels, publishers, and managers.

These parties typically have adverse interests. For instance, while a record label will often attempt to secure rights in an artist's sources of income beyond mere record sales, such as touring, merchandising and publishing, it is usually in the artist's best interest to retain as much income from these secondary sources as possible. Other agreements, such as contracts between co-songwriters or band members, seek to delineate the rights and duties of similarly situated parties in order to avoid disputes that might otherwise arise.

In this upcoming series, I will review the form contracts that artists are most likely to encounter in their music careers and provide commentary on each provision.

My focus will be on the types of agreements typically offered to indie artists, songwriters and producers who are taking the step to the next level.

In the first installment, below, I take on management agreements. I have re-printed a standard "pro-manager" form of agreement and provide paragraph by paragraph commentary from the artist's point of view. I also include a complete pro-artist management form of agreement.

Future installments will tackle these agreements:

2. Indie record deals
3. Synch licenses for original music
4. Co-writer agreements
5. Producer agreements for the licensing and sale of beats
6. Band agreements
7. Investment agreements
8. Agreement for production of music for TV ad campaign
9. Synch rep deals for artists, producers, and songwriters
10. Merchandising agreements; and
11. Performance agreements with clubs and promoters.

It is my hope that this series will be used as one tool to educate and prepare artist and artists' attorneys for the negotiations that will help define music careers.

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1ST INSTALLMENT: MANAGEMENT AGREEMENTS

Managers have never played a more important role in the music business than they do today.

A good manager advances the career of his or her client in a variety of ways. Traditionally, a manager provided advice on all aspects on the artist's professional life, used his or her relationships to generate opportunities, negotiated deals when the opportunity to do so arose, and helped the artist select other members of the "team," such as accountants, lawyers, booking agents, and publicists. A manager's principal job was, however, searching for the "holy grail" --- shopping the artist to record labels, particularly the majors, with the hope of signing a lucrative recording agreement. Signing a record deal meant a payday for both the artist and the manager. Managers work on commission, so the goal was to sign with a major label and negotiate the largest advance possible. In the 90's, when I was a lawyer for Sony Music, we paid advances to new artists ranging from $250,000 to upwards of $500,000. If the artist caught fire, both the artist and the manager could become very wealthy from record sales alone. Those days are largely gone.

Starting in 1999, income from recorded music has declined more than 75%, accounting for inflation. As a result, the major labels (Sony, Universal, and Warner, along with their affiliates) sign fewer artists and pay those new artists far more modest advances. An artist may never get a deal, or may be dropped from the label's roster much faster than in the past, when labels had spare cash to support a developing artist. For instance, Bruce Springsteen did not catch fire until after Columbia (now a Sony affiliate) released two albums. However, Columbia had faith and supported him through the early disappointments. Today, with the major labels fighting just to survive, a story like that is far less likely to occur. Labels would rather put their resources behind already established acts, where a return on investment is more certain.

In these days of financial insecurity in the record business, the manager's role is more important than ever. In the past, once the artist was signed to the major label, the manager's primary function became to serve as liaison between the record company and the artist. The manager lobbied the label to do more, spend more, and focus more on his or her artist(s). However, due to budget cuts and massive layoffs at the labels, today's manager does much of the work that the label used to do. For example, the manager may take over social networking, search for opportunities to get the artist's music in movies or commercials, or find branding opportunities with sponsors. Furthermore, if the artist cannot find an acceptable record deal, the manager may become the artist's de facto label, and take on the responsibility of securing funding from investors or crowdfunding to produce records, arranging physical and digital distribution, and everything else the record companies traditionally do.

PRO-MANAGER AGREEMENT WITH PRO-ARTIST COMMENTARY: Forms-management.comp2.16.pdf

In this PDF, I critique a standard pro-management agreement and explain in the comments the changes an artist should negotiate. There are a number of important terms where the interests of the manager are directly adverse to the interests of the artist. For example, it is generally in the manager's interest to have a long initial term and several options to extend the duration of the agreement. The artist, conversely, will want to be able to get out of an agreement quickly if the manager is not meeting the artist's goals. This issue is addressed in the comments for the first paragraph of the pro-management agreement.

Most management agreements base the manager's commission on gross income that an artist earns from any activities in the entertainment business. It's crucial for the artist to insist that monies paid to the artist, or on the artist's behalf, for recording costs, touring expenses and other business expenses are not included in gross income. For instance, if a record company gives an artist an advance of $100,000, and the artist spends $80,000 on recording costs, the manager should not calculate his or her commission on $100,000. If the contract allowed her do so, she would be entitled to $20,000 and the artist would be left with nothing. This issue is addressed in the comments for subparagraphs 11(b) and (d).

Another very important provision is whether the manager has the right to receive a commission from any contract negotiated during the term -- even after the management contract terminates. Pro-manager agreements will usually include such a provision. The artist will want to terminate the manager's right to commission his or her income when the contract ends. However, the manager's position is that if the manger lands a multi-album deal or long-term publishing agreement, the manager should continue to receive money because he or she helped create that source of income. The compromise is called a "sunset clause." Under this clause, the manager still receives income from contracts negotiated during the term of the agreement, but that amount of income declines over time and eventually ends within a reasonable time. An example of a sunset provision is included in the comments for paragraph 13 in the pro-management agreement, and is also contained in the pro-artist agreement provided in this installment.

Other terms are mere boilerplate that are important to the agreement but equally protect the interests of both parties. I will point out these terms and explain their significance as well. One example is paragraph 29, which states that any amendment to the contract must be made in writing and signed by both parties.

PRO-ARTIST MANAGEMENT AGREEMENT: Forms-management.pro-artist.2.16.pdf

This PDF provides an example of a pro-artist management agreement. The contract a new manager presents to an artist will often start out resembling the pro-manager agreement, and the closer one can negotiate it to the pro-artist agreement, the better.

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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. His clients include Time Life Films, Soul Train Holdings, Smithsonian Folkways, Music Choice, Maryland and Louisiana Public Broadcasting, and established and up and coming artists, producers, indie labels, and managers. He is the author of The Future of the Music Business (4th ed. 2015 Hal Leonard).

Steve Gordon gratefully acknowledges the assistance of Ryanne Perio and Anjana Puri in the preparation of this material. Ryanne Perio is a graduate of Columbia Law School and a former legal intern at Atlantic Records and SAG-AFTRA. She is currently an associate at Wilmer, Cutler, Pickering, Hale & Dorr, where she focuses on intellectual property litigation. Anjana Puri is a lawyer pending admission to the New York bar. She currently works as an associate of Mr. Gordon. She received her JD from Benjamin N. Cardozo School of Law (2014) and received her B.A. in International Development Studies from UCLA.
Disclaimer: The information in this series has been prepared for informational purposes only and does not constitute legal advice. This series should be used as a guide to understanding the law, not as a substitute for the advice of qualified counsel. You should consult an attorney before making any significant legal decisions.

February 21, 2015

Week in Review

By Chris Helsel

Off Broadway Company Fights to Retain Right to Buy Helen Hayes Theatre

Second Stage Theater (Second Stage), an off Broadway company, has brought an action in New York state court seeking an extension in order to secure financing to complete its purchase of the Helen Hayes Theatre (the Hayes). The deal, originally negotiated in 2007, calls for Second Stage to purchase the theater for $25 million. The closing was set for last Tuesday, but when Second Stage could not come up with the money, the Hayes sought to void the deal. Second Stage contends that the Hayes intended to offer to the theater, which has likely grown in value since 2007, to a higher bidder. The Hayes' owners, meanwhile, claim that they were ready to sell on Tuesday but would now prefer to retain ownership of the theater and have no plans to sell it to anyone else.

On Thursday, Judge Joan M. Kenney of the New York State Supreme Court urged the two parties to settle the case, rather than prolong litigation. Attorneys from both sides have made contradicting claims about settlement negotiations conducted last week. Both parties indicated they had been willing to accept a deal whereby Second Stage would pay $175,000 in exchange for a 90-day extension - both sides then said the other party rejected the deal.

Meanwhile, the Hayes' owners now claim that the delay in finalizing the purchase has cost them significant rental income for the theater. "We had several producers who were interested in putting shows in the theater this spring, but that won't be possible," said one of the Hayes' co-owners.

http://artsbeat.blogs.nytimes.com/2015/02/19/judge-urges-settlement-in-dispute-over-helen-hayes-theater/
http://artsbeat.blogs.nytimes.com/2015/02/19/judge-urges-settlement-in-dispute-over-helen-hayes-theater/

Letters of Intent Called Into Question

The official process by which high school athletes make their college choices, which has long been derided as unfair and exploitative, may have reached its tipping point. This year, on National Signing Day (February 4th), a star high school football player in Georgia announced on national television that he would be attending the University of California at Los Angeles (UCLA). What he did next may alter the history of college recruiting forever.

Traditionally, a player signs his letter of intent and sends it in to the school. The player is then bound by that agreement, and no other school can recruit him. The chosen school, though, has no obligations to the player. It can drop the player (that is, revoke his acceptance and scholarship) at any time between the receipt of his letter of intent and the commencement of preseason practice.

For obvious reasons, this practice has been railed by critics as monumentally one-sided in favor of the schools. High school athletes, however, typically do not complain - they are thrilled to be offered scholarships and announce their decision on national television. In many cases, however, schools pull the rug out from their recruits and revoke their offers after receiving letters of intent. These players are often stuck, as virtually every other school has filled its scholarship limits and have no room for the now-available player.

Another way this system can harm the players is if a school's coach decides to leave. In many cases players are recruited by a college coach, sign a letter of intent binding them to attend that coach's school, only to later learn that the coach had subsequently accepted a job elsewhere. In that case, because he signed the letter of intent, the player has no choice but to attend the school despite the coach's departure, or sit out a full year before enrolling elsewhere.

The aforementioned high school football player from Georgia, however, appears to have changed the game. On ESPN, Roquan Smith announced that he would be attending UCLA. However, acting on the advice of his high school coach, he declined to sign a letter of intent. This leaves him free to switch schools at any time before the start of the preseason.

The wisdom of his decision revealed itself almost immediately. In the hours following Mr. Smith's televised "commitment" to UCLA, the school's defensive coordinator, Jeff Ulbrich (who had been Mr. Smith's primary contact during the recruitment process), accepted an NFL coaching position with the Atlanta Falcons.

According to Mr. Smith, during the recruitment process, Mr. Ulbrich outright told him that he had turned down the offer to join the Falcons. Thankfully, Mr. Smith never submitted his letter of intent, so he was free to rescind his acceptance and enroll elsewhere once the truth was revealed. He announced on February 13th that he would be attending the University of Georgia.

Going forward, it seems likely that many high school players (at least the top-ranked players - those with many college options) may opt out of the practice of signing a letter of intent. As Mr. Smith's case demonstrates, the letters of intent serve only to bind the player to the school, but do nothing to stop the school from acting in its own best interest - often at the expense of impressionable 17- or 18-year-old young men and women.

http://www.washingtonpost.com/news/sports/wp/2015/02/11/how-roquan-smith-might-end-up-empowering-future-high-school-football-stars/
http://sports.yahoo.com/blogs/ncaaf-dr-saturday/roquan-smith-announces-he-s-heading-to-georgia-144857568.html

Lance Armstrong Ordered to Pay $10 Million to Sports Insurance Company

Earlier this month, an arbitration panel ordered American bicyclist Lance Armstrong to pay $10 million to SCA Promotions (SCA) for bonuses fraudulently won as a result of his seven Tour de France victories.

In 2005, Mr. Armstrong sued SCA, a sports insurance company, seeking to recoup a $5 million bonus that the company had withheld after allegations of Mr. Armstrong's doping surfaced. During that proceeding, Mr. Armstrong stated under oath that he did not use performance-enhancing drugs. Without probative evidence, SCA could not prove that Mr. Armstrong was not entitled to the bonus. The case was ultimately settled, with Mr. Armstrong was collecting the $5 million bonus, plus $2.5 million in fees.

Mr. Armstrong retired from competitive racing in 2011, as he faced a U.S. federal investigation into allegations of doping. The following year, federal prosecutors dropped their criminal investigation. However, the United States Anti-Doping Agency (USADA) conducted its own investigation, and found that Mr. Armstrong had indeed violated the World Anti-Doping Agency (WADA) code throughout his career. In August 2012, USADA issued Mr. Armstrong a lifetime ban from all sports that follow the WADA code, and stripped him of all seven Tour de France titles. The international cycling federation, Union Cycliste Interationale (UCI), upheld USADA's decision in October 2012.

Soon thereafter, SCA announced its intention to recoup the amount it paid to Mr. Armstrong. In January 2013, Mr. Armstrong finally admitted to using performance-enhancing drugs throughout his career in a television interview conducted by Oprah Winfrey.

On February 4th of this year, the arbitration panel awarded SCA $10 million. The panel's decision highlighted Mr. Armstrong's prior declaration under oath that he had never doped, and declared, "Perjury must never be profitable." The decision referred to Mr. Armstrong's doping regimen, bullying tactics against whistle-blowers and steadfast denials as "almost certainly the most devious sustained deception ever perpetrated in world sporting history."

SCA has now filed a claim in Texas state court, asking the judge to enforce the arbitration ruling. In addition, SCA has sued Mr. Armstrong in Texas civil court for an additional $5 to $10 million. SCA's attorney, Jeff Tillotson, said, "This is just a very good start to getting SCA full compensation. Oh, no, we're not finished with Mr. Armstrong yet."

In addition to the SCA actions, Mr. Armstrong faces a $100 million federal whistle-blower case, in which the U.S. Postal Service (USPS) claims that he defrauded it during its sponsorship of his riding team. The USPS sponsorship contract demanded that Mr. Armstrong not use performance-enhancing drugs, which he (until recently) vehemently denied he ever did.

As if 2015 wasn't going poorly enough for Mr. Armstrong, he received two traffic tickets this month for his involvement in a hit-and-run in Aspen, Colorado. His girlfriend originally took the blame for the accident, but later told police that she had lied about driving the car in order to protect the car's actual driver - Mr. Armstrong - who had been drinking.

http://www.nytimes.com/2015/02/17/sports/cycling/lance-armstrongs-ugly-detour-from-redemption.html?_r=1

NHL Concussion Suit Gains Steam

While the class action suit brought by former players against the National Football League (NFL) has garnered the majority of concussion litigation headlines in the past few years, the National Hockey League (NHL, League) also faces a similar legal challenge.

In 2013, following the announcement that the NFL had reached a preliminary settlement in the suit involving thousands of former players, 10 former NHL players brought a suit of their own. That suit, which now includes over 70 named plaintiffs, raises many of the same arguments as the NFL case. Specifically, the players argue that the League failed to address the dangers of head injuries, despite mounting evidence of the long-term ramifications of concussions.

The case has returned to the headlines in recent weeks as an additional 29 former players signed on and another, Steve Montador, was found dead at age 35 last Sunday. Mr. Montador had a history of concussions, which forced his premature retirement, and had hired an attorney with plans to join the suit before his untimely death. His brain will be studied by scientists to determine whether he suffered from chronic traumatic encephalopathy (CTE), a degenerative brain disease, which has been linked to the early deaths of numerous other former NHL and NFL players.

In the current case, the NHL has raised two main defenses. First, like the NFL, the League contended that the suit was preempted by the collective bargaining agreement with the players. Second, the NHL has also argued that most of the plaintiffs' complaints are barred by the statute of limitations. Those arguments were heard in January, and a ruling is expected shortly.

In the meantime, the class continues to grow. According to plaintiffs' attorneys, another 200 former players have retained counsel with plans to join, and roughly 500 have expressed their support.

http://www.nytimes.com/2015/02/19/sports/hockey/concussion-litigation-against-nhl-gains-heft.html

February 18, 2015

Old Rules, New Enforcement

By Angele Chapman

On March 24, 2014, the Bose Corporation extended its contract as a sponsor with the National Football League (NFL, league). The implications of this contract have changed the face of the NFL and how its players use products that are shown on television. On October 5, 2014, Business Insider reported that players were barred from wearing any non-Bose headphones during televised broadcasts.

Beats Electronics, a rival of the Bose Corporation, is a division of Apple Inc., which produces audio products. It gained its popularity and was co-founded by rap producer Dr. Dre and Interscope-Geffren-A&M Records chairman Jimmy Lovine. Many NFL players have contracts with Beats Electronics, commonly known as "Beats by Dre." Most recently, the public has been seeing star players like 49ers quarterback Colin Kapernick and Seahawks cornerback Richard Sherman, wearing "Beats by Dre" headphones during warm-ups and games.

The NFL released a statement confirming Bose's relationship as a sponsor. It was reported that: "Under the terms of its agreement with the league, the NFL confirmed, Bose received a broad set of rights that entitle it to prevent players (or coaches) from wearing any other manufacturer's headphones during televised interviews." The ban includes pre-season interviews and remains in effect until 90 minutes after a play has ended. An NFL spokesperson stated that:"The NFL has longstanding policies that prohibit branded exposure on-field or during interviews unless authorized by the league. These policies date back to the early 1990s and continue today." In 2006, running back Reggie Bush was fined $10,000 for wearing Adidas cleats because of the NFL's contractual partnership with Nike and Reebok that prohibited any other brand to be worn during games. This type of enforcement is similar to what occurred during the 2014 FIFA World Cup, when Beats headphones were banned because of FIFA's contractual agreement with Sony.

The question is: If the NFL had these brand exposure policies since the 1990s, why is it only recently enforcing them? Perhaps the league's new legal issues and criticism make it an easy target for heavy sponsors to void their contracts. After the recent incidents with Ray Rice's alleged domestic violence caught on video and Adrian Peterson's child abuse allegations, many sponsors like Procter & Gamble have taken the sidelines when it comes to supporting the NFL's decisions. While Procter & Gamble remains an NFL sponsor, it issued a statement that: "Domestic violence is completely unacceptable and we have strongly urged the NFL to take swift and decisive action to address this issue, and we will determine future actions as needed." This statement comes after Procter & Gamble decided to remove itself from the NFL's Breast Cancer Awareness campaign with its Crest Toothpaste brand. Other companies, such as Anheuser-Busch InBev, PepsiCo and Radisson Hotels, have questioned the NFL's handling of its recent legal issues with the players. The possibility of losing millions of dollars in sponsorships could be a reason why the NFL wants to hold on dearly and enforce the contracts with the sponsors that remain.

Another reason as to why the NFL may be enforcing this policy is because Bose sued Apple's Beats Electronics in July 2014 for patent infringement for allegedly infringing on its noise-cancelling technology. In the complaint filed in the United States District Court in Delaware, Bose Corporation alleges that Beats Electronics infringes on five patents, and seeks an injunction and damages for all infringing sales. Although the NFL denies that Bose's contract has influenced its enforcement policies, upcoming litigation may play an underlying role in NFL's decision. This theory is in comparison with Microsoft, which had a $400 million agreement for the NFL to exclusively use the Surface tablet on the field, but announcers and players are still referring to the tablets as "iPads", according to Business Insider.

Whatever reason the NFL gives for enforcing its branding policies, one can expect to see a difference in advertising among players (and coaches) and the technology they use during Monday night football and the upcoming season. While this level of brand enforcement is emerging, players such as Colin Kapernick decided to test how stringent the NFL is willing to go with its rules. After being fined $10,000 for wearing his Beats by Dre headphones during a conference, Kapernick decided to keep his headphones on, but put tape over the logo. So far, it seems as though the NFL is willing to accept the tape as conforming with the regulations and contractual obligations to its sponsors.

Sources:
https://globalpressroom.bose.com/uk-en/pressrelease/view/1318/FALSE/1

http://recode.net/2014/10/04/nfl-bans-beats-headphones-on-camera/

http://www.washingtonpost.com/blogs/early-lead/wp/2014/10/05/nfl-bans-players-beats-by-dre-headphones-on-camera-because-of-its-bose-deal/

http://bostinno.streetwise.co/2014/07/25/bose-suing-beats-by-dr-dre-bose-suing-apples-beats/

http://www.washingtonpost.com/blogs/early-lead/wp/2014/10/14/colin-kaepernick-sticks-with-beats-by-dre-with-a-little-tape-over-the-logo/

Bose Corporations v. Beats Electronics Complaint: https://docs.rpxcorp.com/lits/641/94801/dedce-55457.pdf?Signature=PoTMsCH7QY29PagvVajsar%2BnEmo%3D&Expires=1412564095&AWSAccessKeyId=AKIAI2UWKALIEYBVOKDA

Identity Crisis! Legal and PR Aspects of Managing Brand Image in Celebrity Endorsements and Licensing Agreements [Gone Wrong]

The Fashion Law Committee of the Entertainment, Arts and Sports Law Section presents: Identity Crisis! Legal and PR Aspects of Managing Brand Image in Celebrity Endorsements and Licensing Agreements [Gone Wrong]

March 6, 2015
10:30am - 1:00pm (with breakfast served at 10:00am)

Fashion Institute of Technology
227 W 27th St
New York, NY 10001

Register Online Now at http://www.nysba.org/store/events/registration.aspx?event=EA3200MR15 or call our State Bar Service Center at 1-866-640-4404

This program qualifies for 2.0 MCLE Credits in professional practice

As you wait in the checkout line at your local supermarket, you are so bored that you grab a gossip mag from the display above the mints. (OK, so it's really because you secretly love the sleaze... but we won't tell.) Flipping through the pages, you are consumed by the latest celebrity news: love, heartbreak and... uh oh... scandal. The top news story recounts a young celebutant's night of partying that ended in her arrest. In the wake of this incident, said starlet has been dropped by the trendy clothing line she served as brand ambassador for. "How can they do that!?" you think to yourself. "Isn't there a contract they have to honor?" "And what about free speech?"

Recently, such situations have become quite common, resulting in an increased importance placed on contract terms designed to protect a fashion brand's reputation. This need for image control does not stop at celebrity endorsements. A brand's reputation can be at risk if the brand is associated with manufacturers or factories alleged to be in violation of health, safety and labor laws.

NYSBA's Fashion Law Committee, in partnership with the Fashion Institute of Technology's Jay and Patty School of Business and Technology, invites you to attend its annual CLE event for a lively discussion of these issues. Industry attorneys and PR professionals will discuss the ins-and-outs of image protection from a legal and public relations perspective. Hear as they relay best practices in negotiating celebrity endorsement deals, discuss the importance and effectiveness of morality clauses and advise on avoiding reputational damage in the event of a "rogue" brand representative. Panelists will also discuss these issues as they apply to labor and safety standards.

For questions Contact Beth Gould at bgould@nysba.org

28th Annual Horace S. Manges Lecture - Columbia Law School

The Dean of the Faculty of Law and the Kernochan Center for Law, Media and the Arts at Columbia Law School kindly ask that you save the date for the 28th Annual Horace S. Manges Lecture, "Optional Copyright Renewal? Lessons for Designing Copyright Systems"

To be given by:

R. Anthony Reese
Chancellor's Professor of Law
School of Law, University of California•Irvine

Monday, February 23, 2015 at 6:30 p.m.
Columbia Law School • Jerome Greene Hall

Please direct inquiries to Cindy Tangorra at ctango@law.columbia.edu or 212-854-9073.

Kernochan Center for Law, Media and the Arts • 435 West 116th Street, Box A-17 • NY, NY 10027
t: 212-854-7424 • f: 212-854-9111
kernochancenter@law.columbia.edu • www.law.columbia.edu/kernochan

Jane C. Ginsburg
Morton L. Janklow Professor of Literary and Artistic Property Law; Faculty Director, Kernochan Center

June M. Besek
Lecturer-in-Law; Executive Director, Kernochan Center

Philippa Loengard
Lecturer-in-Law; Assistant Director, Kernochan Center

February 14, 2015

Week in Review

By Chris Helsel

Chicago's Little League National Champions Stripped of Title

Chicago's Jackie Robinson West Little League Baseball team, which last year became the first all-African American team to win the United States national championship, has been stripped of its title following an investigation revealed that it had fielded ineligible players from outside its district.

The team, which lost to a South Korean squad by a score of 8-4 in the international championship game, had galvanized urban Chicago during its tournament run and is credited with inspiring renewed interest in the sport among African-Americans. Jackie Robinson West is a product of Little League's Urban Initiative program, which along with Major League Baseball's Reviving Baseball in Inner Cities aims to promote the sport in inner-city areas by providing resources and training coaches.

During the tournament, the team was praised for its exciting brand of play and exemplary sportsmanship. Specifically, one player personally apologized to the coach of a team from Rhode Island following an excessive home run celebration, and another gave an elaborate handshake and hug to a South Korean player following the international championship game.

However, a month after the tournament concluded, an official from a neighboring suburban Little League district contacted officials with concerns that Jackie Robinson West had fielded players from outside its prescribed regional boundaries. In January, Little League International launched an investigation, which revealed that team officials had knowingly fielded players from outside Jackie Robinson West's district. It found that the officials illicitly expanded the district's boundaries to include territories belonging to other districts and improperly altered the boundary map. The suburban whistleblower claims that he has received death threats.

Going forward, Jackie Robinson West will remain ineligible to compete until its president and league treasurer, Anne Haley and her son William, respectively, are replaced. Mr. Haley, whose father, Joseph, founded the league in 1971, was named Little League's Urban Initiative volunteer of the year in 2010.

Perhaps the most tragic aspect of this sad story is that the players themselves were apparently completely unaware that they were doing anything wrong. Stephen D. Keener, president of Little League International, said in a statement, "This is a heartbreaking decision. What these players accomplished on the field and the memories and lessons they have learned during the Little League World Series tournament is something the kids can be proud of, but it is unfortunate that the actions of adults have led to this outcome." In an interview with ESPN, he described the players as victims. "No one should cast any blame, any aspersions, on the children who participated on this team," he said.

Following its run to the national championship, the team was honored with a parade in Chicago and visited the White House. Upon learning that Little League International had stripped Jackie Robinson West of its title, a White House spokesman stressed that the president was proud of how the players had represented Chicago and the United States. "The fact is, some dirty dealing by some adults doesn't take anything away from the accomplishments of those young men," said the spokesman.

Little League International also announced that the United States championship would be awarded to Mountain Ridge Little League, a team from Las Vegas that lost to Jackie Robinson West in the national title game. Prior to that decision, Mountain Ridge's coach, Ashton Cave, suggested that Little League should send a more powerful message by leaving the title vacant.

This is not the first time a Little League team has had its tournament victories vacated for fielding ineligible players. In 1992, Little League International stripped a team from the Philippines of its championship after learning that some players had not met age or residency requirements. Additionally, a New York team, the Rolando Paulino Little League, was famously stripped of its third-place finish in 2001 after star pitcher Danny Almonte turned out to be two years older than permitted under Little League rules.

Following the announcement that Jackie Robinson West's tournament exploits would be vacated, district officials retained an attorney and pledged to review the fairness of the investigation. Specifically, they intend to investigate whether the rules were applied equally to every other team in the 2014 tournament, and confirm that Jackie Robinson West had not been unfairly singled out. At a news conference, the attorney indicated that the league is not - for now, at least - contemplating filing a lawsuit.

As for the players themselves, they believe that nothing can take away what they accomplished on the field. Speaking at a news conference, pitcher Brandon Green said that the players were not involved "in anything that could have caused us to be stripped of our championship." He added, "We do know that we're champions."

http://www.nytimes.com/2015/02/12/sports/jackie-robinson-west-stripped-of-its-national-little-league-title.html
http://www.nbcnews.com/news/us-news/disgraced-jackie-robinson-west-little-league-team-hires-lawyer-n305356

Pandora/BMI Trial Begins This Week in Manhattan Federal Court

This week, Internet streaming music service Pandora and licensing agency BMI square off in federal court over music royalties.

Currently, Pandora pays BMI, which handles the songwriting and publishing rights of artists, 1.75% of its revenue. Pandora seeks to reduce that fee to 1.70% to match the rate paid by most traditional radio broadcasters. The company contends that its online streaming service is essentially just an alternate form of radio.

BMI, on the other hand, contends that Pandora's rate should raise to 2.5%. It believes that because Pandora listeners have more control over the songs they hear, and lacks non-music programming such as news and talk, the service extends beyond a traditional radio station by making more extensive use of music.

This case mirrors a similar case between Pandora and BMI's biggest rival, ASCAP, last year. In the ASCAP case, the judge declined to alter Pandora's royalty rate, but expressed concern that ASCAP and two prominent music publishers, Sony/ATV and Universal, demonstrated "troubling coordination" in their negotiations with Pandora. Following the judge's ruling, the Justice Department issued inquiries to ASCAP, Sony/ATV and Universal.

ASCAP and the publishers appealed the decision, and appellate oral arguments are set to begin in March.

In addition to its legal battles with the agencies regarding songwriting and publishing rights, Pandora is embroiled in another legal dispute with the music industry over the price of recording rights. The cost of these rights are set by a panel of federal judges in Washington.

While the difference in the royalty rates proposed by Pandora and BMI seems slight, music industry insiders note that given the increasing shift in music consumption away from albums and radio and toward online platforms, each percentage point is crucial to the economic interests of artists. Expect this fight to drag on for months, if not years, as the percentage of music consumed online continues to grow exponentially.

http://www.nytimes.com/2015/02/07/business/media/pandora-readies-fight-against-bmis-royalty-claims.html

Millennial News Site News Director Fired For Plagarism

The news website Mic, which caters to the millennial generation, has fired its news director after finding that he committed plagiarism. On Wednesday, the news and gossip website Gawker published a story accusing the news director, Jared Keller, of copying or liberally borrowing passages from other news outlets in at least 20 of his pieces. The following day, after an internal investigation, Mic announced that Mr. Keller had been fired.

Mr. Keller, who previously worked at Bloomberg, Al Jazeera America and The Atlantic, copied passages verbatim or with minor changes from numerous outlets, including Vox, Reuters and The Atlantic, without giving his sources proper credit. He issued an apology on Twitter on Thursday afternoon and declined to comment further.

http://www.nytimes.com/2015/02/13/business/media/news-director-at-mic-is-fired-after-plagiarism-accusations.html?_r=0

New Jersey Approves Gambling Based on "Physical Skills"

For the first time, an American casino will offer a competition based purely on gamblers' physical dexterity.

Atlantic City casinos, which have faced enormous financial difficulties in recent years following the opening of casinos in Philadelphia and New York, now have the ability to offer something their competitors cannot - yet. Executives at The Borgata Hotel Casino and Spa, an Atlantic City staple, announced yesterday that they have received permission from New Jersey gambling regulators to host a basketball-shooting contest next month. The contest, which will cost $20 to enter, gives entrants 90 seconds to make as many free throws as possible. The top 16 performers will enter a tournament, with the top four finishers splitting $10,000, $5,000 of which goes to the winner.

The program, which according to the American Gaming Association is the first of its kind offered by a licensed U.S. casino, was approved by the New Jersey Division of Gaming Enforcement under its "New Jersey First" initiative. The initiative seeks to adopt and enact unprecedented gambling products before other states do.

The program is expected to be followed by many similar programs in the coming months. According to Borgata senior vice president Joe Lupo, "This is a first step, something we've never been able to do until now. A year from now, you'll probably see a lot more of these skill-based tournaments or even games on the casino floor."

Other Atlantic City casinos are free to propose similar games, but each must be specifically evaluated and approved by the state prior to enactment.

The casino stressed that the contests are open to any and all persons age 21 and above - including professional athletes.

The approval of this new mode of gambling comes on the heels of the state's failed attempts to legalize sports betting, as covered in previous editions of "Week in Review."

http://espn.go.com/chalk/story/_/id/12320537/casino-new-jersey-allow-physical-skill-based-gambling

Center for Art Law Case Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

Plumb v. Casey, 469 Mass. 593 (Sept. 8, 2014) -- J. Duffly of the Supreme Judicial Court of Massachusetts answered a lingering question regarding consignments of artworks under M.G.L. Chapter 104A § 2b, stating that the delivery of an artwork by consignor and acceptance of the work by consignee is enough to create a consignment, and any lack of a separate written statement of delivery does not destroy the consignment relationship. The court reasoned that the law was established for the purpose of protecting artists rather than galleries.

King v. Park West Galleries, Inc. (MI, 2014) (unpublished) -- Reversal from trial court's order granting summary judgment to defendants. While on a cruise in 1999, plaintiff Mattie King bought supposed Salvador Dali originals for $165,000 at defendant Park West Galleries' auction. King received certificates of authenticity signed by Defendant CEO. She held on to the paintings for ten years before deciding to sell in 2009. King soon learned that defendant had been accused of forging artwork. An independent appraiser confirmed that her paintings were forgeries. On appeal, the court reversed lower court's findings and ruled that King was entitled to a tolling of the limitations period for the fraudulent concealment and breach of warranty claims. A party in Michigan that has a viable claim of fraud owes no duty of diligence to discover the claim. Defendants fraudulently concealed the existence of a claim by certifying the authenticity of the paintings and inducing King to rely on their artistic expertise. In an action alleging breach of warranty, the claim accrues once the breach of warranty is or reasonably should be discovered. As an art merchant, defendant created an express warranty of authenticity when providing King, a non-merchant buyer, with a certificate of authenticity. In providing inauthentic art, defendants breached that warranty.

Gordon v. Invisible Children, Inc. et al, 1:14-cv-04122, (SDNY, 6 June 2014) - The artist Janine Gordon sued a non-profit group for copyright infringement. Defendant allegedly copied Gordon's photograph and used it in a video campaign on the fugitive Ugandan war criminal Joseph Kony. Gordon asserted that the image used copies the "composition, total concept, feel, tone, mood, props, settings, decors, wardrobe, and lighting" from her 2001 photograph "Plant Your Feet on the Ground."

Phillips v. Macy's, Inc., 1:2015-cv-10059 (1st Cir. MA, Jan. 9, 2015) -- Award winning sculptor, David Phillips, originally from Flint, MI, brought a copyright infringement claim against Macy's for reproducing one of his iconic Frog's that decorate the Frog Pond in Boston on the Commons.

Aquino et al v. Zephyr Real Estate LLC, 5:15-cv-00060-NC (N.D. Cal., 6 Jan. 2015) - Amidst mounting tensions over soaring prices and gentrification in San Francisco, eight mural artists filed a complaint against the city's largest independent real estate firm alleging copyright infringement by reproducing their work in a 2013 promotional calendar which advertised "luxury homes."

Cindy Garcia v. Google, Inc., et al., (9th Cir., Nov. 13, 2014) - J. Thomas presiding, a panel of non-recused judges voted in favor of rehearing the 9th Circuit case that previously held that actress and plaintiff Cindy Lee Garcia had a "copyright interest" in her performance in the film "Innocence of Muslims" which gives her the right to have the video taken offline.

Polvent v. Global Fine Arts, Inc., 14-21569-CIV-MORENO (S.D. Fla., 18 Sept. 2014) - J. Federico A. Moreno granted a motion to compel arbitration filed by Defendant, American art dealer Global Fine Arts, Inc. in its copyright dispute with Plaintiff, French artist Jacqueline Polvent. The court ruled in favor of arbitration even though the licensing agreement between the parties, which stipulated for a compulsory arbitration in case of a legal dispute, had expired in 2013, an auto-renew provision provided for a successive and consecutive five-year period unless terminated in writing one-year prior to expiration.

The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

February 12, 2015

Penn Law Sports Law Symposium

On Friday, February 13th, the University of Pennsylvania Law School Entertainment and Sports Law Society (ESLS) and the Heisman Trust are presenting the Penn Law Sports Law Symposium.

This year, the symposium will address the intersection of the sports and entertainment industries in relation to business and law. As currently planned, the symposium will be composed of three panels:

1) Broadcasting & Media Rights: Negotiations Between Professional Sports Leagues/Teams and Television Networks
2) The Emergence of Conglomerate Sports Agencies Including those with an Entertainment Representation Component
3) Challenges of Managing Facilities and Entities with a Cross-Appeal Between Sports and Entertainment

Adam Schefter, ESPN NFL Insider, will be delivering the keynote address. The event will also feature more of the top names in the sports and entertainment industries, including: Executive VP of Business for Major League Baseball Tim Brosnan, Founder/President of Octagon Phil de Picciotto, Executive VP of Corporate Strategy and General Counsel for Fenway Sports Group Ed Weiss, and CEO of Relativity Sports Happy Walters, among many other extremely well respected practitioners and academics.

Attorneys will be able to obtain 5.0 CLE credits for New York State.

Tickets can be purchased at:
https://www.eventbrite.com/e/the-penn-law-sports-law-symposium-presented-by-the-heisman-trust-tickets-15388311855

February 11, 2015

Supreme Court to Decide Whether Issue Preclusion Applies to TTAB Findings on Likelihood of Confusion in Infringement Litigation

By Tim Buckley

On December 2, 2014, the Supreme Court heard oral arguments in B & B Hardware v. Hargis Industries, which presents the following issues for resolution:

1. Whether the Trademark Trial and Appeal Board's (TTAB or Board) finding of a likelihood of confusion precludes a party from relitigating that issue in infringement litigation, in which likelihood of confusion is an element; and
2. Whether, if issue preclusion does not apply, district courts are obliged to defer to the Board's findings concerning likelihood of confusion absent strong evidence to rebut them.

Background

Since 1997, B & B and Hargis have been contesting each other's rights in the marks "SEALTIGHT" for aerospace fasteners and "SEALTITE" for construction fasteners, respectively. B & B was the first to the market and also won the race to the Patent and Trademark Office (PTO), receiving a certificate of registration in 1993 for "SEALTIGHT" based on an application filed in 1990. Hargis filed an application to register "SEALTITE" in 1996, but registration was refused based on a likelihood of confusion with B & B's senior mark. Multiple administrative and judicial proceedings ensued, and in 2007 the TTAB again denied Hargis's application to register SEALTITE based on a likelihood of confusion.

In a subsequent action for infringement by B & B against Hargis, the Eastern District of Arkansas refused to apply issue preclusion on the question of likelihood of confusion and submitted the case to a jury, which returned verdicts against B & B on all of its claims and for Hargis on all of its counterclaims. The United States Court of Appeals for the Eighth Circuit affirmed, reasoning that the TTAB is not an Article III court, and the likelihood of confusion issues decided by the TTAB were not the same as those brought in the action before the district court.

The doctrine of issue preclusion, or collateral estoppel, is appropriate where (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and actually decided, (3) there was full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits.

B & B maintains that Congress's use of the language "likely to cause confusion" throughout the Lanham Act at 15 U.S.C. §§ 1052(d) (registration), 1114(1)(a) (infringement of registered marks), and 1125(a)(1)(A) (infringement of unregistered marks) indicates that the concept has the same meaning in each context, and therefore the issue of likely confusion is the same in TTAB proceedings and in infringement suits. As the registration provision mandates consideration of a mark as it is "used on or in connection with the goods of the applicant," the TTAB's inquiry is not divorced from marketplace context. Moreover, because the TTAB follows the Federal Rules of Civil Procedure and Federal Rules of Evidence, B & B argues that TTAB proceedings are similar to civil actions, so preclusion should apply.

In opposition, Hargis argues that registration proceedings and infringement actions resolve distinct issues, in that the TTAB looks to whether an applicant's mark "so resembles" another mark that it is likely to cause confusion, whereas district courts are tasked with deciding whether a party's actual use of the mark in the marketplace is likely to cause confusion. At oral argument, Hargis's attorney, Neal Katyal, detailed technical aspects of trademark prosecution and paraphrased the Federal Circuit's decision in Mayer/Berkshire as follows:

[A] claim of infringement before the court and a . . . likelihood of confusion before this Board are different claims. . . . [I]n Board proceedings, likelihood of confusion is determined independent of the context of actual usage. In an infringement action, on the other hand, the context of the use of the mark is relevant. Mayer/Berkshire Corp. v. Berkshire Fashions, Inc., 424 F.3d 1229, 1233 (Fed. Cir. 2005) (internal quotations omitted).

Hargis's lawyer also distinguished the Lanham Act from sections 315 and 325 of the patent statute, which under certain circumstances explicitly provide for preclusion in civil actions after the Patent Trial and Appeal Board (PTAB) issues a final written decision. The Lanham Act contemplates some effects of TTAB decisions in the infringement context (e.g., presumptions of validity and ownership), but it is silent on the issue of preclusion.

The Circuit Courts of Appeal have taken scattered approaches to this issue. The Third and Seventh Circuits have each applied issue preclusion, albeit with different justifications. Jean Alexander Cosmetics, Inc. v. L'Oreal USA, Inc., 458 F.3d 244 (3d Cir. 2006); EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375 (7th Cir. 1984). The Fifth and Eleventh Circuits deny preclusive effect to TTAB decisions, but apply a form of deference. Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 10 (5th Cir. 1974); Freedom Sav. and Loan Ass'n v. Way, 757 F.2d 1176 (11th Cir. 1985). The Second Circuit, which is regarded by some practitioners as the preeminent court with respect to intellectual property law, conducts an "identity of issues" analysis and applies preclusion only when the TTAB has determined likelihood of confusion by reference to the entire marketplace context of the conflicting marks, as required in infringement actions. Levy v. Kosher Overseers Ass'n of Am., Inc., 104 F.3d 38 (2d Cir. 1997). J. Thomas McCarthy, author of the leading treatise on trademarks and unfair competition, endorses the Second Circuit's approach. 6 McCarthy on Trademarks and Unfair Competition § 32:101 (4th ed.).

Analysis

The Supreme Court will likely hold that issue preclusion does not attach to TTAB findings on likelihood of confusion. In its amicus curiae brief, the International Trademark Association (INTA) took the position that TTAB determinations should not have preclusive effect in subsequent civil court proceedings because of the significant differences in the standards and procedures applied by the TTAB and federal courts.

The Trademark Manual of Examining Procedure (TMEP) at section 1207.01(a)(iii) provides that the "nature and scope of a party's goods or services must be determined on the basis of the goods or services recited in the application or registration." (emphasis added). Section 1207.01(c)(iii) provides that if "a mark (in either an application or a registration) is presented in standard characters, the owner of the mark is not limited to any particular depiction of the mark. . . . The rights associated with a mark in standard characters reside in the wording (or other literal element, e.g., letters, numerals, punctuation) and not in any particular display."

The TTAB is required to consider trademarks in hypothetical scenarios that do not comport with reality. For instance, it must presume that a registered standard character mark could be used in the same manner of display as an applied-for mark presented in special form, even if the registered mark is in fact only used in one particular manner. In infringement litigation, by contrast, Article III courts consider how the marks are actually used in the marketplace and how consumers encounter conflicting marks. These different standards reflect the fact that the TTAB's primary focus is on the registrability of marks, whereas Article III courts are concerned with the actual use and effect of marks on consumers in the marketplace.

At oral argument Justices Scalia and Breyer apparently struggled to grasp the differences between the relevant inquiries in Board proceedings and infringement litigation. Justice Ginsburg was more receptive to the Respondent's arguments and noted at the outset that perhaps preclusion should not apply because the stakes are much higher in infringement litigation. Chief Justice Roberts proposed a general rule of preclusion unless the issue of use in litigation involves something "other than what the TTAB would have been looking at . . . ."

The high court may take a middle ground and align itself with the Second Circuit by requiring preclusion only if the likelihood of confusion issues before the TTAB and district court are in fact identical. Regarding the second issue presented, if preclusion does not apply, district courts may nevertheless be required to give deference to decisions of the TTAB because of that administrative body's expertise in the field.

The court's opinion is expected to be released by April or May. Further analysis will be provided at that time.

Timothy J. Buckley is an associate at the law firm of Powley & Gibson, P.C. in New York. The views expressed herein are those of the author and do not necessarily reflect those of the Powley & Gibson firm or its clients.

Three Things to Consider Before Making Employee Loans

By Kristine Sova
www.sovalaw.com

If your company is considering developing (or revising) an employee loan policy, or even just making a one-off loan to a stellar employee, read on. Unbeknownst to many employers, there are a number of laws and regulations that impact almost every facet of the loan - from who can receive one to how your company will be repaid.

1. Governance Laws Restrict Who You Can Issue Loans To

For example, the Sarbanes-Oxley Act of 2002, which applies to publicly-traded companies or companies preparing for their initial public offering, places restrictions on which employees may receive personal loans. So, too, do some laws affecting non-profit organizations. For this reason, you'll want to speak to a corporate lawyer with experience in corporate governance and/or a regulatory lawyer with experience in non-profit organizations to review the parameters of any loan policy you may adopt or loan you may make.

2. Employee Loans Have Tax Consequences

Depending on how a loan is structured, it can have adverse tax consequences for an employee. For example, interest-free and below-market loans may result in the spread between the reduced or non-existent rate and the market rate of interest being treated as taxable compensation to the employee. You'll want to speak with an accountant or tax lawyer to navigate this and other tax issues relating to employee loans.

3. Labor Laws Restrict Repayment Methods

The easiest way to collect loan payments is through payroll deductions, but applicable wage-and-hour laws may either restrict your ability to do so, or specify parameters within which those deductions can be made. For example, the New York Labor Law permits employers to make deductions from an employee's wages for repayment of a wage/salary advance, but only if the employer follows certain rules requiring written authorization and adoption of a dispute resolution procedure as well as rules relating to the timing and duration of the deduction. Furthermore, under the New York Labor Law, if payment of interest or loan fees is contemplated, those monies may not be repaid through a wage deduction, or even by a separate transaction.

These are only three, of many, legal issues to consider before making an employee loan. Once you have the legal implications sorted out, and still want to move forward with an employee loan, your company should consider developing a written employee loan policy to ensure consistent treatment of employees. In addition to the issues above, you'll want to consider and address the following in any policy: circumstances for making a loan, employee eligibility, total and individual loan maximums, and length of loans.