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September 7, 2013

Week in Review

By Martha Nimmer

Concussion Case Closed?

The National Football League (NFL) has agreed to a $765 million settlement with roughly 4,500 former NFL players who alleged brain injuries caused by repeated concussions on the playing field. This announcement came last Thursday after two months of negotiations. Notably, the settlement does not include any admission of liability from the NFL. The $765 million settlement, if approved by presiding U.S. District Court Judge Anita Brody, will go towards compensating "the 4,500 or so living plaintiffs who claim dementia and other injuries, as well as fund medical exams and medical research." Specifically, $675 million "will go to compensate former players who have suffered cognitive injuries." As much as $75 million, it is rumored, will be earmarked for medical exams. The remainder of the settlement funds will be devoted to research and providing notices to class members. Additionally, according to the American Bar Association, "an unspecified amount of legal fees will be paid separately in addition to the settlement amount." Under the agreement's framework, the NFL is required to pay 50% of the settlement amount over three years, and the balance over the following 17 years.

The settlement, hailed by Judge Brody as "historic," came just a week before the NFL regular season began. The NFL will benefit from the agreement by avoiding a finding of liability. It can also avoid long, drawn out discovery regarding "what the league knew and when concerning a claimed connection between head injuries and degenerative brain disease, as well as the possibility of a mega-verdict if the case had gone to trial that could have made it difficult or impossible for the NFL to obtain insurance coverage." As for both current and retired players and survivors of players who have died, those parties "will be taken care of without having to fight a lengthy court battle," stated plaintiffs' attorneys. Parties who want to pursue separate claims are still able to opt out of the proposed settlement.



Happy Birthday to No One

Warner/Chappell Music wants you to have a happy birthday, but whatever you do, do not sing the "Happy Birthday" song, at least not without a license. Why? Well, according to Warner/Chappell Music, the "English language's most recognized song" is not in the public domain.

Last Friday, the mega music publisher went to court to respond to a lawsuit that claims that "Happy Birthday" is in the public domain. According to The Hollywood Reporter, the plaintiff in the "Happy Birthday" case has "traced the origins of the popular composition to a schoolteacher named Patty Smith Hill and her sister Mildred Hill in the late 19th century." The plaintiff also provided evidence that "much of what we know about the song was already published by the time a copyright registration was attempted. As such, the lawsuit seeks to confirm that 'Happy Birthday,' if there ever was a valid copyright to any part of the song, expired no later than 1921 and that if defendant Warner/Chappell owns any rights to 'Happy Birthday,' those rights are limited to the extremely narrow right to reproduce and distribute specific piano arrangements for the song published in 1935."

Unsurprisingly, Warner/Chappell is moving to dismiss this action. First, the publisher says that allegations by the plaintiff that Warner/Chappell violated California unfair competition and false advertising laws are "preempted by federal copyright law." Additionally, the defendant is also "looking to have the lawsuit narrowed by having a judge reject state-based claims." These arguments aim to limit Warner/Chappell's liability "and to test the resolve of the plaintiffs' attorneys."

In the meantime, find another way to wish your loved one a happy birthday, preferably a way not set to music!


Read the motion to dismiss here: http://www.scribd.com/doc/165236111/wchb

Sirius Problems

SiriusXM has some major legal problems: the satellite radio giant was just hit with its fourth $100 million lawsuit in the last month--and you thought you had problems!

The satellite radio company's latest legal woes arose from its longstanding assumption that SiriusXM had "the right to distribute and perform pre-1972 recordings." Turns out, however, that this may not be the case. Last month in California court, Flo & Eddie of the music group the Turtles filed a "proposed $100 million class-action lawsuit against the satellite radio giant, premised on the theory that because sound recordings didn't fall under federal copyright protection until 1972, then SiriusXM couldn't rely on statutory royalty rates for these older tunes." The duo did not stop there, however. The plaintiffs recently filed another, similar lawsuit in New York, and then filed a third proposed class action suit in Florida. SoundExchange then initiated its own $100 million lawsuit last week against SiriusXM, alleging that the satellite radio company should not have subtracted recordings made before 1972 from gross revenue calculations. Specifically, SoundExchange avers that "SiriusXM has taken the position that the federal statutory license does not cover pre-1972 sound recordings, and on information and belief, SiriusXM is not separately licensing the pre-1972 sound recordings from their owners, even though they are subject to common law copyright or equivalent protection under state law."

The defendant, likely still reeling from this string of $100 million legal actions, has not responded to any of the suits, "except to remove one filed in California state court to California federal court." Given the financial magnitude of the lawsuits facing SiriusXM, a response should be coming soon.


Taxing the King of Pop

Yes, even music royalty has to pay taxes, although this reality may have eluded the executors of Michael Jackson's estate.

The Internal Revenue Service (IRS) is currently seeking more than $700 million in tax penalties from the pop star's estate. The IRS has valued Jackson's estate at more than $1.1 billion, claiming that executors "significantly undervalued his property, resulting in a tax deficiency of more than $505 million and additions to tax of more than $196 million." In July, the singer's estate filed a petition that challenged the numerous deficiencies and penalties alleged by the IRS; in that petition, specific dollar valuations were redacted. The IRS, in turn, responded last week and "included a non-redacted copy of the government's deficiency notice." One of the assets of note is a 2001 Bentley Arnage driven by the deceased recording artist and valued by the estate at $91,600; the IRS, in contrast, valued the car at a cool $250,000. Other assets noted in the deficiency notice include: Jackson's "share of artist mechanical rights related to Jackson 5 master recordings," valued by the estate at $11.19 million, compared with $45.49 million by the IRS; tangible personal property valued by the estate at zero, compared with $47.46 million by the IRS; and a contingency non-appearance and cancellation policy issued by Lloyd's of London, valued by the estate at zero, compared with $17.5 million by the IRS. Most notably is the divergent valuation of Jackson's "image and likeness." While the Jackson estate claimed the ridiculously low value of a mere $2,105 for Jackson's image and likeness, the IRS determined a value of more than $434 million. The generally applied method for valuing an individual's image and likeness when he or she dies, according to Bloomberg News, is to "use an income-stream model where the executor "forecasts the income streams to be earned in the future and applies a capitalization rate to reach a present value." Perhaps the Jackson estate should check its math...


September 16, 2013

Fox Television Stations, Inc. v FilmOn X, LLC, et al.

By Barry Werbin

On September 5th, the District of D.C. issued a preliminary injunction against FilmOn X, LLC (FilmOn X), in favor of Fox Television Stations, Inc. (Fox) and other over-air broadcasters in the D.C. area, including Disney and Telemundo. FilmOn X isn't a stranger to these claims, as it was previously known as AereoKiller, under which name it was enjoined by a California district court earlier this year in a case currently on appeal to the Ninth Circuit. (After trademark complaints by Brooklyn-based Aereo, AereoKiller changed its name.)

Like Aereo, FilmOn X uses tiny individual antennas to capture broadcast signals over the airways and retransmit them to subscribers. A specific antenna is assigned to one specific individual subscriber only when that subscriber is watching broadcast TV through the system; once a user is done watching TV, the same antenna is then assigned to a different user. No single antenna is used by more than one user at a time. Broadcast data are routed from the antenna to a FilmOn X server, where it is stored in a "unique" directory for each user. After a user stops viewing a program, the data in the user's unique directory is deleted. FilmOn X also employs a DVR that allows its subscribers to pause live programming or record shows for later viewing. User access for standard definition broadcasts is free; hi-definition and selecting shows for later viewing incur fees.

The plaintiffs relied on the AereoKiller decision in California, Fox Television Systems, Inc. v. Barry Driller Content Systems, PLC, 915 F. Supp.2d 1138 (C.D. Cal. 2013), while FilmOn X relied on WNET, Thirteen v. Aereo, Inc., 712F.3d 676 (2d Cir. 2013), reh'g denied 2013 WL 3657978 (2d Cir. July 16, 2013), and the "Cablevision" case - Cartoon Network, LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008). The D.C. court here made it clear that it was not making a simple "blind choice" between the two.

[Note - Oral argument in the AereoKiller case took place before the Ninth Circuit during the last week of August, so a decision there is imminent. Interestingly, a visiting judge on the Ninth Circuit panel was Hon. Brian Cogan (formerly of Stroock) from the SDNY, where the Second Circuit had upheld Aereo's defenses, finding no infringement.]

The court held that "the Copyright Act forbids FilmOn X from retransmitting Plaintiffs' copyrighted programs over the Internet. Plaintiffs are thus likely to succeed on their claim that FilmOn X violates Plaintiffs' exclusive public performance rights in their copyrighted works." The court first undertook a detailed analysis of the respective decisions in the Barry Driller, Cablevision and Aereo decisions, also emphasizing Judge Denny Chin's strong dissent in Aereo. The court then took a close look at the core issue in all the cases - the proper interpretation and application of the Copyright Act's "Transmit Clause" in 17 U.S.C. § 101.

After analyzing the legislative history, the D.C. court found that such history and the plain language of the Transmit Clause respecting the meaning of the phrase to "perform or display a work 'publicly'" by any "device or process," compelled the conclusion that by "making available Plaintiffs' copyrighted performances to any member of the public who accesses the FilmOn X service, FilmOn X performs the copyrighted work publicly...." The court found the definitions within the Transmit clause are broadly encompassing of new technology, especially in light of the terms "device," "'machine," or "process" being defined as "now known [i.e., in 1976] or later developed." The court thus found that FilmOn X "transmits (i.e., communicates from mini-antenna through servers over the Internet to a user) the performance (i.e., an original over-the-air broadcast of a work copyrighted by one of the Plaintiffs) to members of the public (i.e., any person who accesses the FilmOn X service through its website or application) who receive the performance in separate places and at different times (i.e. at home at their computers or on their mobile devices)."

FilmOn X's one-to-one customer relationship was characterized as a "charitable description" of its technological arrangement. The court emphasized that the "the mini-antennas are networked together so that a single tuner server and router, video encoder, and distribution end point can communicate with them all....This system, through which any member of the public who clicks on the link for the video feed, is hardly akin to an individual user stringing up a television antenna on the roof." The aggregation of new technologies cannot avoid liability, said the court, because Congress defined "device or process" broadly to encompass "any other techniques and systems not yet in use or even invented." The court expressly agreed with Judge Chin's dissent in Aereo, stating in a footnote that the Second Circuit in "Cablevision and Aereo mistakenly substituted 'transmission' for 'performance' in its analysis."

Last, the court had no difficulty in finding, as has every court that has visited the issue (including the District Court in Aereo), that "unauthorized Internet streaming of television and other video programming causes irreparable harm to the copyright owners...." In particular, the court highlighted several findings of non-economic injury that plaintiffs likely would suffer in the absence of injunctive relief: "harm to their ability to negotiate with advertisers; damage to their contractual relationships and ability to negotiate with authorized retransmitters; interference with their proprietary and licensed online distribution avenues...and the loss of control over the distribution and quality of their copyrighted programs." The court concluded that a nationwide injunction was proper but excluded the Second Circuit, "where Aereo is the binding precedent."

The decision is attached and can also be accessed here: http://www.scribd.com/doc/165845374/filmonx

Are Strip Club Entertainers Employees?

By Kim Swidler

Last week the news was filled with eye catching headlines declaring that "New York strippers now have labor rights".

The articles concerned a Southern District decision on cross-motions for summary judgment regarding a class action that had been commenced by several exotic dancers, also known as entertainers, who had performed at Rick's Cabaret International Inc. (Rick's), a strip club located in Manhattan (Matter of Sabrina Hart et al v. Rick's Cabaret International Inc., No. 09cv3043, U.S. District Court for the Southern District of New York 2013).

The dancers asserted that they were employees of Rick's, and alleged violations of the Fair Labor Standards Act (FLSA) as well as the New York Labor Law (NYLL) and regulations promulgated thereunder by the New York State Department of Labor. The requested damages included minimum wage payments.

Rick's countered, in part, that the plaintiffs had at all times worked as independent contractors and, therefore, fell outside the coverage of FLSA and NYLL. However, based upon the evidence presented, Judge Paul A. Engelmayer disagreed and found that the dancers had, in fact, been employees of that entity.

As in other New York labor related matters, a major factor in making this determination concerning the issue of employer-employee relationship was the degree of direction and control that Rick's exercised over the plaintiffs.
As an example, in those controversies where there is a request for worker's compensation benefits, the court has held that the relevant factors in finding an employer-employee relationship include the right to control the work, set the schedule, the method of payment, the furnishing of equipment, the right to discharge and the relative nature of the work (Matter of Bugaj v Great Am. Transp. Inc., 20 AD3d 612 [ 2005]). No single factor is deemed dispositive, and the decision may be based on any one or a combination of the relevant factors (Matter of Gregg v Randazzo, 216 AD2d 747 [1995]).

In this case, Judge Engelmayer found that Rick's club-imposed written guidelines carried numerous restrictions that helped demonstrate that an employer-employee relationship had existed. The entertainers were forbidden to chew gum, have a bad attitude, use cell phones while on the [dance floor] or use public restrooms. The Judge also noted that the guidelines addressed the hours at which dancers could be scheduled to work, restrictions concerning tattoos, procedures for checking in and checking out, the range of fees that dancers were required to pay, appearance and dress, and the method and manner in which dancers could dance.

A spokesperson for Rick's has stated that it will appeal this finding and that the subject guidelines are no longer in effect.

The court's decision may also create other consequences for the owners of establishments such as Rick's. The workers' compensation laws require employers to obtain proper workers' compensation coverage for those who are designated as their employees. Failure to do so might result in various negative ramifications, including a fine of $2,000 for every 10 days of noncompliance. The business may also be shut down pursuant to a Stop Work Order until proof of proper coverage has been obtained. Furthermore, an injured employee might expose the uninsured entity to liability for medical and compensation awards.

So should all exotic dancers now be considered employees within the definition of the NYLL? That decision will still be made on a case by case basis. The burden of proof is on the claimant to prove an employer-employee relationship, and not all exotic dancers have been as successful. In Matter of Gallagher's 2000, 2013 NY Wrk 0511882, the claimant, also an exotic dancer, sustained an injury when she was kicked in the face by another dancer during a performance. Using the above noted factors, the New York State Workers' Compensation Board (the Board) held that the dancer was not an employee and disallowed the claim. The Board considered, among other factors, the fact the claimant received no remuneration and that she retained the discretion to decide which days she would work.

The opinion, views, and statements set forth in this post do not represent the views of the NYS Workers' Compensation Board.

Week in Review

By Martha Nimmer

Don't Film On Me

Unless, of course, you have a permit!

The Department of the Interior (DOI) has issued new rules for commercial filming and photography on the nation's public lands. The requirements, which go into effect on September 23rd, are "meant to align fee structures and requirements among the three DOI land management agencies. Previously, the types of commercial filming and still photography activities needing a permit varied from agency to agency." Yet what, exactly, is considered commercial filming, at least according to the DOI? Surprisingly, news gathering and documentary filmmaking are treated as commercial filming under the new rules, but, as the DOI stated, "news gathering should not be treated in the same manner as other commercial filming activities, and the agencies intend to allow news media access to federal lands to gather news." What that means is that news outlets may still need a permit, "when time allows and the agency determines that a permit is required to protect agency resources, to avoid visitor use conflicts, to ensure public safety, or to authorize entrance into a closed area." The DOI continued: "if the news story is such that the requirement for a permit would interfere with the ability of the entity to gather the required footage or photographs, then the permit requirement will be waived, but the activity is still subject to the oral instructions of the agency representative in order to protect cultural and natural resources and to maintain order and ensure the safety of the public, agency personnel, and the media."

As to be expected, these new permitting rules have raised First Amendment and censorship concerns. In response to critics' concerns over potential government censorship of protected photographic activities, the DOI stated, "the decision to approve or deny a request for a commercial filming or still photography permit is not based on the content of the material ... [but] on the potential impact the activity may have on cultural and natural resources, on other visitors, on agency operations, and on the health and safety of visitors, permittee staff and agency employees." [brackets added]

The DOI's reply to comments that some wording in the new rules was "too vague" and "overbroad" was to define further terms such as "model," "sets and props" and "resource damage." Hopefully, this additional clarification will satisfy Constitutional scrutiny, but it seems likely that implementation of these new rules will quickly lead to claims of First Amendment abridgment and government censorship.


Breaking Bad Apple

Fans of the hit television show Breaking Bad will understand when I say that Apple should "tread lightly" when it comes to interfering with customers' ability to watch the show. It turns out that fans of Breaking Bad are incensed that Apple has allegedly sold "season passes" for the final season of the show, then divided the season in two and charged customers twice to watch it, according to a federal class action suit. Breaking Bad is a popular, highly-acclaimed show about a high school chemistry teacher turned (spoiler alert) meth dealer and murderer. Season 5 of the hit series, produced by AMC Networks, was announced as the final season and was to include 16 episodes.

Lead plaintiff in the class action, Noam Lazebnik, accuses Apple of deceptive and unfair trade practices arising from the way the company sold Breaking Bad on iTunes. "When a consumer buys a ticket to a football game, he does not have to leave at halftime. When a consumer buys an opera ticket, he does not get kicked out at intermission. When a consumer buys a 'Season Pass' to a full season of a television show on iTunes, that consumer should get access to the whole season," Lazebnik states in the complaint. AMC announced in a 2012 press release that the final season of the show "consists of 16 episodes, with the first eight episodes beginning July 15th and culminating with the series' final eight episodes next Summer 2013." Since making that announcement last summer, AMC has collectively referred to the eight episodes broadcast in 2012, and the eight episodes currently airing, as "Season 5." To wit, this season's episodes are listed as "Season 5, Episode 9 (509), Season 5, Episode 10 (510), etc."

When the fifth season of Breaking Bad became available for download on iTunes, customers were offered a "Season Pass" for $21.99 for high definition and $13.99 for standard definition. In exchange, the complaint avers, customers were promised: "[t]his Season Pass includes all current and future episodes of Breaking Bad, Season 5." Additionally, the information page on the season pass "claims that the pass will give consumers access to every episode in the season, at a better price than it would cost to buy the episodes one at a time." "Therefore, customers who purchased a 'Breaking Bad: Season 5' Season Pass from iTunes reasonably believed that they would receive access to all 16 episodes of Season 5, as announced and promoted by AMC," Lazebnik argues. Unfortunately for Breaking Bad season pass holders, when the second half of the final season became available on iTunes in early August this year, customers with a season pass had to pay another $22.99 (or $14.99 for standard definition) to access the episodes. "Apple's behavior was deceptive, fraudulent and undertaken only to maximize its revenue with regard to Season 5 of 'Breaking Bad,' the most popular TV program on iTunes, all at the expense of its customers," the lead plaintiff claims. Lazebnik demands that Apple "refund the second-half charge it took from each class member," and seeks damages for breach of contract, deceptive trade and unfair competition.

Apple has not commented on the lawsuit. Better call Saul!


From Kids' Craze to Courtroom Battle

There is a looming legal battle in U.S. courtrooms. In August, the founder of Rainbow Loom -- a rubber-band jewelry-making kit -- sued Zenacon LLC, claiming that the rival company copied the "distinctive trade dress" of Rainbow Loom's "'unique' C-shaped clips with [Zenacon's] competing FunLoom product." Just 6 millimeters wide, the plastic C-shaped fastener at issue allows the crafting-inclined to connect loops of colored rubber bands to form bracelets. According to The Wall Street Journal, "the fasteners are key to rubber-band bracelet crafting because they're used to connect bands that have been woven together with a loom. The looming technique, which dates back to the 1800s, creates looped knots called Brunnian links." Steven Verona, whose company Zenacon produces the FunLoom product, denies the allegations. "Is a loom something new and novel?" he asks. "It isn't. It has been around for hundreds of years. Same as rubber bands." Furthermore, added Verona, the C-clip in FunLoom's kit is better, "given that it is larger and therefore easier for children to handle, plus it can hold more elastic bands."

Even though this now highly popular weaving method is far from new, Rainbow Loom founder Cheong Choon Ng took little comfort in that fact. He claims he "made this famous," adding that he has sold more than 1.2 million Rainbow Loom kits. "I worked on it for three years and now everyone wants to come in." Ng says he came up with the idea for the Rainbow Loom in 2010 after struggling to make bracelets with his young daughters. He applied for a for a patent on the Rainbow Loom kit, including its C-clip, that same year. The U.S. Patent and Trademark Office granted him a patent in July of this year.

The plaintiff also filed a lawsuit last month against toy retail powerhouse Toys "R" Us, which sells another competing kit. As part of this action, Ng is also suing LaRose Industries LLC of Randolph, N.J., the creator of Cra-Z-Loom, another kit for making rubber-band bracelets. According to the complaint in the suit against LaRose Industries, filed on August 9th, Ng seeks to stop Toys "R" Us from selling Cra-Z-Loom, plus unspecified damages. In response, LaRose Industries filed a countersuit on August 28th against Ng's firm, Choon's Design LLC, alleging that "Choon's actions were not motivated by a legitimate business purpose, but were instead maliciously calculated to procure a breach of contract, and were otherwise fraudulent, dishonest and illegal."

In happier news for Rainbow Loom, the company finalized an exclusive contract in August "to sell its products through national crafts chain Michaels Stores Inc. for one year," writes The Wall Street Journal.


September 23, 2013

IN RE PETITION OF PANDORA MEDIA, INC.: SDNY Allows Pandora to Maintain License to ASCAP's Repertory

By Barry Werbin

On September 17th,Judge Cote in the SDNY issued an interesting decision in favor of Pandora, holding that ASCAP cannot remove individual songs from Pandora's blanket license for streaming purposes without also removing them from its entire catalog, notwithstanding that some of ASCAP's licensors restricted certain songs from being licensed for "new media rights." ASCAP was held to be bound by its longstanding antitrust consent decree from doing that, and thus preferring one customer over another. The court distinguished the Copyright Act's divisibility of the bundle of exclusive copyright rights from the superseding restrictions imposed by the consent decree, which defines "works" as compositions not individual rights.


September 25, 2013

The Lawyers' Committee for Cultural Heritage Preservation Annual Meeting

The Lawyers'Committee for Cultural Heritage Preservation (LCCHP) (http://www.culturalheritagelaw.org/) is holding its annual conference, The Monuments Men, Social Media, the Law, and Cultural Heritage (http://www.culturalheritagelaw.org/monumentsmen). The full-day program will take place on November 1, 2013 in New York City at Fordham University School of Law. The conference is being hosted in anticipation of the December release of the film, The Monuments Men. As cultural heritage preservation quite literally takes center stage, LCCHP's Fifth Annual Conference will explore a variety of topics related to preservation during times of armed conflict.

For registration and conference information, please visit: http://www.culturalheritagelaw.org/monumentsmen

LCCHP is a not-for-profit organization that fosters the stewardship of the objects, places, and traditions that define us as societies, nations, civilizations, and even human beings. We are lawyers, legal scholars, and law enforcement agents -- but also anthropologists, archaeologists, architects, art historians, students, and others -- who champion preservation through the justice system. Through our educational programs and resources, we are also working to prepare a new generation of advocates, as well as inform the general public.

Week in Review

By Martha Nimmer

V for Victor

It turns out that you can stop the music, at least if you're Victor Willis.

Willis, singer and former member of the Village People, has proven victorious in a six year-long legal battle to reclaim his rights to more than 30 of the musical group's hit songs. The singer and songwriter, who dressed as a police officer in the band, left the Village People in 1979, and transferred his rights to 33 tracks, including "Y.M.C.A." and "In the Navy," to his publisher. After "experiencing a change of heart" and seeking to recover his rights in the musical works, Willis invoked Section 203 of the Copyright Act, the termination of transfers and licenses granted by the author provision. Section 203 grants musicians and songwriters "termination rights," which allow the musicians or songwriters to regain control of their works after 35 years have lapsed since their transfer; this provision applies even if the musician/songwriter is the party who originally transferred his/her rights in the musical composition! The purpose behind this part of the Copyright Act, added in 1976, was to protect composers and other musicians who had relinquished their rights in their creative works before becoming aware of the works' commercial success.

It is on this provision of the Copyright Act that the former Village People member relied when he filed suit to regain control of his ownership rights in the 33 musical works. Willis then "became locked in a bitter fight with the bosses behind the Village People's catalogue," but last year prevailed when a judge granted his "motion to dismiss the publishers' claims against his proceedings, allowing the termination to go forward." Now, more than three decades after he wrote the lyrics to the hit song "Y.M.C.A.," Victor Willis "will gain control of his share of the copyright to that song and others he wrote when he was the lead singer of the . . . Village People."

Little, however, is simple in the legal world: the litigation over the Village People catalog is not over. Although Willis' songwriting partner, Jacques Morali, died in 1991, the name of a third author, record producer Henri Belolo, is listed as a co-writer on "Y.M.C.A." and other songs, and the distribution of songwriting credits and revenues is now being decided in court. "The termination is going to occur," stated Jonathan Ross, one of Willis lawyers. "What is in dispute is how much he is getting back, one-half or one-third."



Read 17 USC § 203 here: http://www.law.cornell.edu/uscode/text/17/203

Rewriting the Rules

Earlier this month, radio giant Clear Channel reached an agreement with Warner Music Group (WMG) that will give the recording company and its artists a share of the revenue earned from radio station airplay. This agreement will be the first time that a record label and its artists will be able to collect royalties when their musical works are performed on Clear Channel's 850 stations. "In exchange," according to The New York Times, "Clear Channel will receive a favorable rate in the growing but expensive world of online streaming."

Under the current system of royalty payments, "terrestrial broadcasters are not required to pay royalties to labels and performing artists for the records they play on the air." As for Internet radio, however, "services such as Pandora, as well as broadcasters like Clear Channel through its station Web sites and iHeartRadio app, pay these royalties, but they have complained that the statutory rates for licensing music are too high. The New York Times points out that Internet and satellite radio services have default royalty rates determined according to formulas set by federal statute, while "most other kinds of digital music companies, including on-demand services like Spotify and Rhapsody, rely on all-encompassing licenses negotiated directly with labels and publishers."

Recently, Clear Channel has reached a number of similar licensing agreements with smaller companies, including Taylor Swift's label, Big Machine. WMG, however, is the first major company to make such a deal with Clear Channel, underscoring the significance of streaming in the music world, and the "continuing debate in the music industry over how music should be licensed and paid for," particularly in light of laws that have struggled to keep up with the rapid changes in technology.


Patented Leather

French designer Céline, whose iconic handbags have been spotted on the arms of Rihanna, Oprah and the Olsen twins, now has another accolade to add to its collection: patent protection. Earlier this month, the fashion house received U.S. patent protection for two of its designs: according to The Fashion Law Group, "the patents extend to the design of the house's Diamond clutch (from its Fall 2013 collection) and its Case bag (which debuted for Spring 2013)."

Even though the process of successfully obtaining a design patent is long and arduous (read: expensive) this has become the industry trend as of late for protecting fashion designs. For well-known designers, however, who have the financial resources to spare and who plan "to reintroduce a design or offer a design for longer than the one or two seasons, design patents provide protection that are not available to the vast majority of designs in the U.S. (where design piracy is rampant and the shift away from logo-covered purses makes trademark infringement a difficult avenue to fight fakes)." This move towards patent law as a way to protect design comes as fashion houses and IP attorneys have struggled to use trademark and copyright law, in their current forms, to safe guard fashion design adequately. A design patent, however, is no fail-safe against copycats and counterfeits, but only part of a company's intellectual property protection arsenal.


See the drawings submitted to the USPTO here: http://www.fashion-law.org/2013/09/celine-was-granted-tw">www.fashion-law.org/2013/09/celine-was-granted-tw

Pandora's Music Box

Pandora users can breath a sigh of relief: last week, U.S. District Judge Denise Cote granted Pandora's summary judgment motion that will prevent it from losing the right to stream thousands of popular songs contained in the repertory of the American Society of Composers, Authors and Publishers (ASCAP), a leading performing rights organization that represents over 470,000 songwriters, composers and music publishers.

The legal controversy dates back to 2011, when Pandora obtained a five-year "blanket license" from ASCAP. Heavy hitters in the music business -- including EMI Music and Sony/ATV Music -- then "withdrew from ASCAP the right to license their compositions to 'new media' services, such as Pandora. Pandora later reached an agreement with Sony/EMI in June 2012, only to see Warner, Universal and BMG announce their intentions "to withdraw new media rights as well." This turn of events caused Pandora to go to court, "seeking a determination that ASCAP publisher withdrawals did not impact the scope of [Pandora's] overall ASCAP license." Unfortunately for ASCAP, however, Judge Cote agreed with Pandora; the U.S. district court judge ultimately ruled that the consent decree under which ASCAP operates requires the organization to provide Pandora with a license to perform all of the works in the ASCAP repertory, "even if it purports to lack new media rights."

The consent decree at the heart of the dispute dates back to 1941. The decree came about, according to The Hollywood Reporter, "when the Justice Department filed an antitrust lawsuit alleging monopolization of performance rights licenses. A consent decree was reached and it has been adjusted over the years, most recently in 2001, in what is known as the "Second Amended Final Judgment" (AFJ2). The effect of the AFJ2 is to restrict how ASCAP may grant licenses; the AJF2 also establishes a framework for establishing fees for licenses when a license applicant cannot come to an agreement with ASCAP. Pandora currently finds itself in such a situation, which will go to trial in December.


Players Push for Reform

Last Saturday, college football viewers may have noticed that some players wore the letters "A.P.U." (all Players United) emblazoned on their equipment or on their wrists. The group behind the protest, the National College Players Association(NCPA), reported that 28 players from Northwestern University, the University of Georgia and Georgia Tech participated. The NCPA, founded by a former UCLA football player, has been advocating for a variety of changes to to how sports are played at the collegiate level, including "better health care of college athletes, more scholarship money, and to lift NCAA restrictions on legitimate employment and the players' ability to directly benefit from commercial opportunities." Another goal of the A.P.U. campaign is to "[s]how support for the players who joined the O'Bannon v. NCAA, EA Sports lawsuit regarding the use of players' images/likeliness."

The next step for the movement focuses on momentum, specifically, "on whether more players at more universities join the protest and if the N.C.P.A. and other organizations with similar aims can turn three words into a catalyst for reform." The NCAA has come under increased fire lately as a result of the O'Bannon lawsuit. In response to that criticism, NCAA President Mark Emmert remarked that "the board anticipates a lot of change" in the next six to eight months. The NCAA failed, however, to respond to the All Players United protest launched last Saturday.



Of Beanie Babies and Bank Accounts

H. Ty Warner, the man who brought the world the Beanie Baby in the 1990's, is a tax cheat. It turns out that federal prosecutors claim that the person who created the plush, bean-filled animals hid $3 million in a Swiss bank account. Warner will plead guilty to a charge of tax evasion, a charge that potentially "carries a maximum penalty of five years in prison, a $250,000 fine, plus liability for the back taxes plus interest." He also owes approximately $885,000 in additional taxes on this unreported income, according to the government. Warner faces a civil penalty of $53 million. I guess it's time to start auctioning off those Beanie Babies on eBay...


Sony, Warner, UMG, ABKCO v. SiriusXM

By Mark L. Belkin

On September 11, 2013, a consortium of music industry giants brought action against satellite radio leader SiriusXM in California, over the defendant's use of their back catalogs that pre-date 1972. In February 1972, the Copyright Act was amended to allow for protection of all fixed sound recordings of copyright holders, but only on those works created after February 15, 1972. SiriusXM has been using those recordings created before 1972 on its numerous channels, and the recording industry claims that it must pay royalties for such uses.

The companies involved represent the majority of the music industry, including Sony Music Entertainment, Capitol Records, Warner Music, UMG, and ABKCO, and they are not alone in bringing action against SiriusXM. Of late, there are at least four other lawsuits filed. These include $100 million dollar lawsuits from Flo and Eddie of the Turtles and SoundExchange over similar royalties issues on pre-1972 recordings - implying that more are sure to come.

At the heart of the plaintiffs' argument is that SiriusXm profits immensely from the pre-1972 recordings of many artists by using their intellectual property to attract and maintain over 25 million subscribers to its service. The plaintiffs are asking the courts to force SiriusXM to obtain licenses and pay royalties on those artists that contribute to channels which play music from 1940's, 1950's, 1960's, and up to February of 1972. SiriusXM applies the federal copyright standard to itself and does not provide royalties for pre-1972 recordings, but what about state law? A vital factor for the action being filed in Los Angeles County, is the plaintiffs' argument that for at least the last 30 years, sound recordings have been protected statutorily by Section 980 of the California Civil Code. "The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior sound recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording." Civil Code § 980(a)(2). Even though the 1972 amendments to the Copyright Act did not protect recordings already fixed, Congress understood that the recording industry already relied on statutes and common law to protect its intellectual property, and amended the legislation to preserve "any rights or remedies under the common law or statutes of any State" with respect to sound recordings that were fixed before February 15, 1972. 17 U.S.C. § 301(c).

In Goldstein v. California, the Supreme Court ruled on this very subject in 1973, holding that federal law did not preempt state laws for pre-1972 recordings. Finding that "[u]ntil and unless Congress takes further action with respect to recordings fixed prior to February 15, 1972, the California statute may be enforced against acts of piracy such as those which occurred in the present case." Congress did not enact a federal law on the subject and therefore state law applies.

Does the recording industry want federalization of those protections on pre-1972 recordings? The Copyright Office in 2009 released a report recommending that pre-1972 recordings be brought under federal copyright protections. (http://www.copyright.gov/docs/sound/pre-72-exec-summary.pdf). Through the RIAA, the recording industry argued that federalization would pose a problem for record companies. RIAA's Senior Vice President of Business and Legal Affairs, Susan Chertkof, stated that the cost of registering each album with the Copyright Office and other legal complications, led to the recording industry generally opposing a move by Congress to federalize pre-1972 rights. (http://www.copyright.gov/docs/sound/meeting/transcript-06-02-2011.pdf). It would seem that the recording industry has a preference for establishing precedence through the courts and maintaining state level protections for pre-1972 works. However, as anything in major industries, this is subject to change.

The complaint claims that SiriusXM earned $3.4 billion in revenue and it already pays royalties on those recordings fixed after the 1972 Amendments to the Copyright Act. The labels are asking for actual and punitive damages, as well as a preliminary and permanent injunction enjoining the defendants from infringing on all the pre-1972 fixed recordings. The precedent established would affect other music services, including digital providers like Pandora, and businesses such as bars and sports venues which currently are not obligated to pay royalties on fixed recordings outside federal protections.

The complaint is available here:

September 26, 2013

North Jersey Media Group, Inc. v. Roger Nunn and John Does Nos. 1-5

By Frank J. Colucci

Below is a copy of Judge Sweet's recent decision from September 18th in North Jersey Media Group, Inc. v. Roger Nunn and John Does Nos. 1-5, Case 1:13-CV-01695-RWS, granting the defendant's motion to dismiss the complaint for lack of personal jurisdiction.

The decision is of particular interest in that the defendant, a California resident, made only one sale of the allegedly infringing photo for $5.00 in response to an order placed by the plaintiff's New York counsel for the purpose of obtaining jurisdiction pursuant to New York's long arm statute.

A copy of the decision is available here: North Jersey Media.pdf

Scorpio Music S.A., et al v. Victor Willis

By Michael Cataliotti

The 35-year copyright termination clause within the 1976 Act is a topic that has been discussed industry-wide for some time now; yet with the precedent-setting dismissal of the plaintiffs' complaint for failure to state a cause of action that was recently handed down by Chief District Judge Barry Moskowitz of the Southern District of California, many questions have arisen as to the fate of those prominent compositions by Bob Dylan, Tom Petty, the Eagles, and their contemporaries. A quick search for the case will bring up an array of articles about the potential impact of Victor Willis's seeming ability to recapture copyright in and to 33 of those compositions he co-authored, "Y.M.C.A." being one of the most notable. What those articles do not reference so often, however, is that despite this, no appeal has yet to be filed, and should Scorpio Music and its co-plaintiffs seek review of the District Court's determination, it is entirely unclear what will come from the Ninth Circuit.

Should the decision be upheld, the impact on the recording industry may be tremendous, but the impact on other avenues could be even more grandiose, as Mr. Willis has openly stated that one of the things he has learned over the years is that "[y]ou can stop somebody from performing your music if you want to, and I might object to some usages." From this, the impact on all sorts of publishing (from songs to books), tours, cover bands, venues, and the like, could be disastrous. Only time will tell at this point.



A Copyright Claim Cannot Bar Use of Briefs and Pleadings in a Pending Litigation

By Joel L. Hecker

All attorneys who litigate at one time or another create new material as part of pleadings and briefs. To some extent this original work may be considered to be copyrighted material, with the copyright owned by the author/attorney. In a case of first impression, the United States Court of Appeals for the Second Circuit was called upon to rule on an appeal from the Eastern District's dismissal of such a copyright infringement claim. The case is Unclaimed Property Recovery Service, Inc. and Bernard Gelb v. Norman Alan Kaplan (Docket No. 12-4030, decided August 20, 2013).

The Circuit Court phrased the facts as follows: "this case concerns a novel attempt to use Copyright Law in furtherance of sharp litigation practices". The plaintiffs were two of the named plaintiffs in a class action and Kaplan was the class action plaintiffs' attorney. The plaintiffs alleged that Gelb wrote the Amended Class Action Complaint and compiled 305 pages of accompanying exhibits (the "First Exhibits"). The plaintiffs claimed that they owned the copyrights in these documents.

Kaplan signed and filed the First Amended Complaint and the First Exhibits on behalf of the class action plaintiffs, including UPRS and Gelb. The District Court dismissed the class action as time-barred, and Kaplan appealed on behalf of all the class plaintiffs. While the appeal was pending, Kaplan and Gelb (who is not an attorney) had a falling out and Kaplan informed Gelb that he would no longer represent Gelb and UPRS. Gelb and UPRS thereupon retained new attorneys to represent them in the class action, but Kaplan remained the attorney of record. New counsel for UPRS and Gelb then moved to withdraw the pending appeal in its entirety. However, the court only granted the motion with respect to them and the appeal proceeded without them. The Second Circuit vacated the District Court dismissal of the class action and on remand Kaplan filed a Second Amended Class Action Complaint and accompanying exhibits (the "Second Exhibits") on behalf of the class plaintiffs. The key component of this case was that significant portions of the Second Amended Complaint and Second Exhibits were identical to portions of the First Amended Complaint and First Exhibits in which Gelb and UPRS claimed copyright ownership.

Thereafter, Gelb and UPRS brought suit against Kaplan, alleging that Kaplan had infringed their copyrights when he incorporated portions of the First Amended Complaint and First Exhibits into the Second Amended Complaint and Second Exhibits. The District Court dismissed the action for failure to state a claim upon which relief can be granted, holding that they had granted Kaplan an irrevocable implied license to file the amended documents. The District Court did not reach the issue of whether they had valid copyright interests because this decision was dispositive.

The issue on appeal, as framed by the Circuit Court, was "whether the holder of a copyright in a litigation document who has authorized the party to a litigation to use the document in the litigation may withdraw the authorization after the document has already been introduced into the litigation and then claim infringement when subsequent use is made of the document in the litigation."

The Circuit Court affirmed the District Court in dismissing the case but on different grounds. It held that "such an authorization necessarily conveys, not only to the authorized party but to all present and future attorneys and to the court, an irrevocable authorization to use the document in the litigation thereafter". (The court in a footnote stated that it does not suggest that permission of the copyright holder is needed for use of a copyrighted document in litigation since the ruling only concerns the grant of authorization for use in litigation which the holder then purports to withdraw.)

The Second Circuit, in what seems to be an obvious conclusion, held that litigation could not be conducted successfully unless the parties to litigation and their attorneys are free to use documents that are a part of the litigation since the parties rely on such documents as a means of establishing the nature of dispute and the facts and legal arguments that have been put forward by each party.

In addition, the Court found that a court's ability to perform its function depends on the ability of the parties and their attorneys to submit copies of documents in contention and to serve one another with copies of such documents. Finally the Court said that courts could not thoroughly and fairly adjudicate a matter if suddenly in the midst of litigation the parties lost the right to give the court copies of documents already used in the litigation that support their argument.

Accordingly, held the Circuit Court, the copyright holder's authorization will be construed to encompass the authorization, irrevocable throughout the duration of the litigation, not only to the expressly authorized party, but to all parties to the litigation and to the court, to use the document for appropriate purposes in the conduct of the litigation.

The Circuit Court severely criticized the conduct of the plaintiffs and their questionable litigation practices, stating that they attempted to influence the class action litigation by means of this novel use of copyright law after the Circuit Court, in its earlier decision, had refused to allow them to withdraw the class action appeal on behalf of all of the named plaintiffs.

In what the Circuit Court described as particularly troubling, the plaintiffs' theory, if successful, would permit the replaced attorney to use copyright law to hamper the former client's ability to select his own new counsel - a right that is one of the foundations of our systems of justice.

Finally, the theory put forth by the plaintiffs would allow the author of a legal pleading to also bar the district court from exercising its discretion with respect to the management of the case, as courts often permit a party to amend a pleading in part but not in full. That would obviously require that an amended pleading retain a portion of the original pleading.

All in all, the Circuit Court rejected all of the plaintiffs' claims in what was a very sound and well-reasoned decision, leaving litigation attorneys wondering why this issue ever reached the Circuit Court of Appeals in the first place!

About September 2013

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in September 2013. They are listed from oldest to newest.

August 2013 is the previous archive.

October 2013 is the next archive.

Many more can be found on the main index page or by looking through the archives.