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April 14, 2009

Video Game Music Composers--Reserve Your Performance Rights

Written by Christine A. Pepe

Rock Band®, Guitar Hero®, Dance Dance Revolution® (DDR), Stubbs the Zombie®--these are just a few examples of video games in which music has increasingly become a focal point, or at the least, an important element. As a side note, for those indie-rock fans, the Stubbs the Zombie soundtrack is quite good, featuring classic covers performed by bands such as Rogue Wave, Death Cab for Cutie, The Raveonettes, The Flaming Lips, and last but not least, The Dandy Warhols. I highly recommend it.

Now, there was a time when video game music was simplistic, rudimentary if you will. Think Pac-Man®, Ms. Pac-Man®, Donkey Kong®, Donkey Kong Junior® and Galaga®. It is probably difficult to imagine a use of these trademark video game songs in a context other than the games themselves. So it isn't surprising that, beginning decades ago, a practice developed whereby the music composers for these games typically relinquished all of their rights (including their performance rights) to the game developer and producer in exchange for an upfront payment. Once the physical copy of the game was sold, no more fees went to the music composers.

That was then. Now, because video games are being delivered by entities other than developers and on transmission-based platforms such as the Internet, there is no reason that composers of music for video games should sign away their rights. Take for instance, X-Box--it is now fully integrated with the Internet and allows users to stream games (instead of just purchase the physical product in the store). Internet-based services that now offer streaming of video games are causing the music contained in such games to be publicly performed. The providers of these video game services typically have or should have a license from ASCAP (and possibly other public performance right organizations). ASCAP is actively licensing such online video game services. If a game songwriter or composer member of ASCAP has reserved his or her right to collect the writer's share of the performance royalty, that writer or composer is now in a position to receive recurring royalties. In fact, game developers who register as publisher members of ASCAP would also be eligible to collect public performance royalties when their games are delivered via online services licensed by ASCAP.

ASCAP encourages its members who work in the video game industry to adopt the model that has developed in the film and television industries. In the film and T.V. worlds, the reality is that a producer needs to hold all rights in order to distribute the ultimate work. Therefore, film/T.V. songwriters and composers are required to give up their ownership rights in the musical work typically through a "Work for Hire" agreement, which is the industry standard. Nonetheless, in this industry, the composers and songwriters routinely negotiate a contractual provision allowing them to receive performance royalties, which can be a significant revenue source.

Similarly, songwriters and composers in the video game industry may reserve the right to receive performance royalties and should not simply consider the upfront payment, but also the potential use of the music (i.e., in television, film and commercial contexts) and the potential for recurring performance royalties in the future. Sample contractual language that would reserve the performance right would be as follows: "Composer shall be entitled to collect the 'writers share' of public performance royalties (as that term is commonly used in the music industry) directly from a public performance society that makes a separate distribution of said royalties to composers and publishers."

For more information about how ASCAP is leading the call for performance royalties in new media video games, please contact Shawn LeMone in ASCAP's Los Angeles Membership office at slemone@ascap.com, and check out the Game Audio Network Guild (GANG) at http://www.audiogang.org.

Written by Christine A. Pepe, Director Legal Affairs at The American Society of Composers, Authors and Publishers. ASCAP is a performing rights organization that protects the rights of its members by, among other functions, licensing and distributing royalties for the public performances of their copyrighted musical works. If you have any questions, feel free to contact Christine at cpepe@ascap.com.

January 27, 2012

Golan v. Holder: A Victory for Copyright

By Christine A. Pepe

On the heels of Congress' shelving of the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), the Supreme Court's January 18, 2012 Golan v. Holder decision represents a glimmer of hope that protection of copyright is not dead and can co-exist with the First Amendment.

In Golan v. Holder, the petitioners (conductors, musicians, publishers and others who exploited certain works that entered the public domain), challenged the constitutionality of Section 514 of the Uruguay Round Agreements Act (URAA) , which is now codified in the Copyright Act as 17 U.S.C. §§104A, 109. Section 514 offered restored copyright protection to certain categories of works that are protected in their countries of origin but lack protection in the U.S. Many of such works fell into the U.S. public domain due largely to a failure to comply with certain arcane formalities unique to American copyright law as it existed at the time. Section 514 contains some built-in protections to cushion the impact of the restoration on certain reliance parties, e.g., the parties that exploited the works thought to be in the public domain. In broad terms, these protections include a notice requirement, removing liability for use of foreign works prior to the notice of restoration, and allowing reliance parties to continue to use the restored works for one year following notice.

Importantly, Section 514 was enacted in response to a mandate by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) that the U.S. fully comply with its obligations as a member of the Berne Convention. Initially, when the U.S. first became a member of Berne in 1989, Congress adopted a minimalist approach to compliance. For example, despite Berne's instruction that member countries protect foreign works under copyright in the country of origin, U.S. law provided no protection for foreign works that fell into the public domain in the U.S. but remained protected in their countries of origin. Beginning in 1994, however, TRIPS required compliance with Berne under penalty of World Trade Organization (WTO) enforcement. At this time, it became clear that many Berne member countries were outraged at the United States' refusal to grant protection to foreign works that remained protected in their countries of origin. On top of this, several countries balked at protecting U.S. works that remained under copyright in the U.S. but not abroad--until the U.S. reciprocated. It was against this backdrop that Congress passed Section 514.

The Supreme Court rejected petitioners' argument that in removing certain works from the public domain, Congress violated the Copyright Clause's confinement of copyright to a "limited time." Notably, the Court stated: "In aligning the United States with other nations bound by the Berne Convention and thereby according equitable treatment to once disfavored foreign authors, Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights." The Court relied heavily on its decision in Eldred v. Ashcroft, 537 U.S. 186 (2003), where it rejected a similar argument that the Copyright Term Extension Act (CTEA) was unconstitutional. The Court also dismissed petitioners' argument that the public domain was "inviolate," citing several historical examples where Congress protected works once freely available.

The Court also cast aside petitioners' claim that Section 514 fails to "promote the Progress of Science" as required by the Copyright Clause. Petitioners, and Justice Breyer in his dissent, urged that production of new works must always be a precondition to any grant of copyright; because Section 514, they argued, simply restricts the dissemination of old works, it does not promote the progress of science. As it did in Eldred, the Court refused to adopt such a singularly utilitarian view of copyright. The Court emphasized that Section 514 would expand the foreign markets available to U.S. authors, invigorate protection against piracy of U.S. works abroad, and as a result, ensure profitable international dissemination of existing and future U.S. works.

Finally, the Court declined to find that the restoration provisions of Section 514 trampled on the First Amendment. A content neutral statute, Section 514 must be upheld if "narrowly tailored to serve a significant government interest." Drawing again in large part from Eldred, the Court concluded that because copyright's built-in First Amendment protections, specifically the idea/expression dichotomy and the fair use doctrine, remained unscathed, there was no need for heightened review. Section 514's stated purposes of ensuring compliance with international treaty obligations, securing greater protection for U.S. authors abroad and remedying unequal treatment of foreign authors, clearly satisfied First Amendment scrutiny. Moreover, given the various protections to reliance parties discussed above, Section 514 implemented a calibrated transition from a national scheme to an international copyright regime. The Court also responded to Justice Breyer's concern over the potential difficulty in identifying or locating copyright owners, especially with regard to orphan works. The Court concluded that the orphan works issue is not peculiar to works restored under Section 514 and should be addressed through legislative not judicial methods.

In the end, the Court reiterated its powerful words from Harper & Row, 471 U.S. 539 (1985), that copyright protection is not simply a "limit on the manner in which expressive works may be used"--it is also "an engine of free expression: By establishing a marketable right to the use of one's expression, copyright supplies the economic incentive to create and disseminate ideas." Overall, this decision represents a significant victory for creators and one that hopefully will resonate with Americans as they continue to be bombarded with uninformed messages that any copyright law impinges on their First Amendment rights.

April 10, 2012

Unraveled: A Film Review

By Christine A. Pepe

The documentary film Unraveled tells the compelling story of Marc Dreier, a once well-regarded attorney, who was convicted in 2009 for defrauding hedge funds and other investors of more than $400 million dollars. Dreier's scheme involved creating and selling fictitious promissory notes purportedly issued by his "clients." Of course, there were no real clients borrowing the money--Dreier used the borrowed funds to fuel his lavish lifestyle (e.g., an art collection including works by Warhol, Picasso, Matisse, and Damien Hirst, two yachts, an Aston Martin, a vacation home in the Caribbean, multiple homes in the Hamptons) and grow his law firm, Dreier LLP. The successful perpetration of Dreier's Ponzi scheme ultimately involved arranging meetings for the hedge fund investors during which Dreier (or one of his lackeys) impersonated representatives from the purported issuers of the promissory notes. If you haven't heard of Marc Dreier, that's largely because his story was overshadowed by an even bigger Ponzi schemer, Bernie Madoff, who was arrested and sentenced around the same time. Madoff was sentenced to 150 years in prison--Dreier to 20 years.

Consisting of first person accounts, archival footage and graphic animation, Unraveled presents an engaging and thought-provoking portrait of one of America's more brazen white collar criminals. Part of the film's impact is that it captures Dreier during his period of house arrest as he awaits sentencing after pleading guilty, an undoubtedly intimate and vulnerable time. Unraveled is directed by Marc Simon--an entertainment attorney at Cowan, DeBaets, Abrahams & Sheppard LLP--who previously worked for Dreier LLP and knows Dreier personally, even viewing him as a mentor at one time. Despite this potential closeness to the subject matter, Simon's film remains objective in its case study. The score, written by Chris Hajian, adds to the film, creating an ominous and powerful backdrop to this dark tale of one man's self-inflicted demise.

Dreier graduated from Yale and went on to Harvard Law School; in high school, he was president of his class and was voted "Most Likely To Succeed." These types of achievements apparently weigh heavy on a person throughout life--they convinced Dreier that not only was he was destined for tremendous success, but that he must achieve it--at all costs. Success can mean a lot of things to different people, but for Dreier, success meant money, status, and more importantly, the appearance of success. While many attorneys can relate to the pressure to succeed, for Dreier, the illusory appearance of success became a compulsion. The film gives Dreier a platform to explain why he "lost his way", as he admits, and lets the viewer decide whether any degree of sympathy is warranted.

Most people will never cross the line that Dreier crossed, but is that, as Dreier muses in the film, because the line is presented to so few people--dare we say an elite few? As Dreier continues his on-camera introspection, he ponders what really stops most people from committing crimes: Is it moral opposition or just a fear of getting caught? In this way, Dreier is reminiscent of Dostoevsky's Raskolnikov. It seems that what was driving both Dreier and Raskolnikov in part was a desire to prove themselves "extraordinary men" above morality and law. Raskolnikov killed because he could; Dreier swindled because he could. Of course, the analogy to Raskolnikov ends when Dreier gets caught in the criminal act, whereas, if you recall, Raskolinkov's guilt over his murder overwhelmed him to the brink of confession. For me, Unraveled provided a fascinating exploration of the psychological motivations of a white collar criminal. See this film and decide for yourself what drove a member of the legal profession off the rails into a life of criminality and whether the punishment fits the crime.

UNRAVELED premieres April 13th, 2012 at the City Village Cinema East (2nd Avenue and 11th/12th Streets)

Tickets can be purchased here: http://www.fandango.com/citycinemasvillageeast_aaecf/theaterpage?date=4%2F13%2F2012

or you can visit the UNRAVELED Facebook page with links to the theatre website: http://www.facebook.com/Unraveledthefilm?ref=tn_tnmn

May 24, 2012

Village People's Original Lead Singer Victorious in Termination Lawsuit

By Christine A. Pepe, AVP ASCAP

In Scorpio Music S.A., et al. v. Victor Willis, Judge Moskowitz of the Southern District of California ruled that Victor Willis, song writer and original lead singer of the Village People, could unilaterally exercise his right of termination under the Copyright Act and reclaim his interests in 33 musical compositions, including iconic works such as "Y.M.C.A." and "In the Navy." The decision represents a victory for songwriters and performing artists who typically license or assign their copyrights to music publishers or record labels. To summarize, if an author of a joint work individually executes a grant of copyright to a third party, he or she may unilaterally terminate that grant without majority consent of the other joint authors.

In July 2011, defendant Willis served on the plaintiffs, music publishers to whom Willis had previously transferred his copyright interests in certain compositions, a notice of termination of grants of copyright for 33 musical works. The plaintiffs brought suit against Willis seeking declaratory judgment that: (1) Willis' notice was invalid and (2) should the court find the notice to be valid, Willis' reversion of rights is limited to the royalty percentage that he received under the agreements between the parties.

As Willis' transfer of copyright occurred after January 1, 1978, Section 203 of the Copyright Act applies, which reads in relevant part as follows:

(a) Conditions for Termination.--In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise, than by will, is subject to termination under the following conditions:

(1) In the case of a grant executed by one author, termination of the grant may be effected by that author . . . . In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it . . .

See 17 U.S.C. § 203 (emphasis added).

With regard to the validity of Willis' termination, the plaintiffs argued that under Section 203 (a)(1), because the subject compositions were joint works, a majority of all authors who transferred their copyright interests in a particular work must join in a termination. In other words, Willis could not unilaterally terminate his grant of copyright. The plaintiffs argued that the statute's language, "In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it" applies. They urged that the term "grant" as used in this phrase refers collectively to all grants by authors of a joint work, even if they were separate transactions.

Starting with the plain meaning of the statute, the court noted that when referring to a grant executed by two or more authors of a joint work, section 203(a)(1) refers to a "grant" in the singular--not "grants." Based on this observation, the court concluded that if two or more joint authors execute a single grant, only then is a majority necessary to effectuate a termination. If a single author of a joint work executes an individual grant, as Willis did, then that co-author can unilaterally terminate the copyright grant without obtaining consent of the other authors. Such a reading, the court held, harmonizes with the law governing copyright co-ownership--that each co-owner of a joint work holds an undivided interest in the whole and in the absence of an agreement to the contrary, may always transfer or license his or her interest in the joint work to a third party, subject only to a duty of accounting to the other co-owners. As the termination time is calculated from the date of grant execution, the court also found plaintiffs' proposed construction unwieldy. If the term "grant" consists of multiple separately executed grants by joint authors, how would the "date of execution" be calculated? Such a reading, the court determined, would create uncertainty "regarding the date of execution, which could become a moving target."

In the event that Willis' termination notice was valid, the plaintiffs alternatively argued that his reversion of rights should be limited to the royalty percentage that he received under the agreements between the parties. Again relying on traditional principles of copyright co-ownership, the court rejected this argument. Absent an agreement to the contrary, joint authors share equally in the ownership of the joint work, even if their contributions to the work were not equal. In other words, if Willis was one of three joint authors, he would have 1/3 undivided copyright interest in the musical work and upon an effective termination, he would get back exactly that--1/3 undivided copyright interest. The royalty percentage that was negotiated has no bearing on the copyright interest.

Obviously, this decision represents a victory for songwriters and recording artists who wish to terminate their copyright grants. Going forward, it is likely that music publishers and record labels will, as a matter of practice, attempt to have all joint authors execute one single grant so that majority consent is required for there to be an effective termination.

About Christine Pepe

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