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May 14, 2009

U.S. Supreme Court Revisits Indecent Broadcast Programming

By Barry Skidelsky, Esq.

On April 28, 2009, by a vote of 5-4 (with 5 additional and separate opinions also being released), the U.S. Supreme Court reversed and remanded to the U.S. Court of Appeals for the Second Circuit its decision in Federal Communications Commission v. Fox Television Stations, Inc. In writing the Supreme Court's majority opinion, Justice Scalia held that, contrary to the Second Circuit's view, the FCC did not act arbitrarily and capriciously in violation of the Administrative Procedure Act (“APA”), but rather did adequately explain the Agency's departure from its generally hands-off policy regarding so-called fleeting expletives . The Supreme Court specifically declined to rule on the constitutionality of the indecency finding, as the Second Circuit had not made its decision on that ground, and despite extended "dicta" by the Second Circuit that it was very skeptical of the constitutionality of the FCC's new approach.

Most observers recognize that the Supreme Court's ruling changes very little on the indecency front in the near term, at least until the issue likely returns to our country's top court following this remand to the Second Circuit and a companion remand to the Third Circuit in connection with the so-called "wardrobe malfunction" of Janet Jackson during a Super-bowl half-time show broadcast on CBS. However, many fail to recognize the real import of Fox is the major APA shift it creates. The Supreme Court has now made it easier for administrative agencies to depart from precedent without necessarily explaining why the reasons which underlay its to-be-abandoned policy are no longer persuasive, as a mere statement of preference for the new policy (as the FCC articulated in Fox) may suffice, rather than having to explain reasons why the new policy is better. This profound shift to a lower standard of accountability has far-reaching consequences and should be of great interest to anyone involved with administrative law at any level of government, going well beyond federal regulation of broadcast media.

In his dissent, Justice Stevens disagreed with the majority's assessment that the FCC need not fully explain its departure from prior policy, concluding that the Supreme Court's 1978 majority opinion in Pacifica (which Stevens wrote, and which involved the late George Carlin's monologue about seven dirty words) was meant to be limited to sexual or excretory "activities or organs", and should not now be expanded to treat as indecent any expletive that has a sexual or excretory "origin". In the questionably indecent words of Bono, that's "fucking brilliant!"

Also of interest is the concurring opinion of Justice Thomas in Fox, in which he expressed the view that the "scarcity" rationale -- the traditional justification for governmental regulation of broadcast media (which is treated dramatically differently than other non-electronic and electronic media) -- may no longer have any validity, if it ever had any. Escaping scrutiny for now, the Supreme Court may likely be compelled to address the issue of treating broadcasting differently than other media for First Amendment purposes, depending on how the Fox and CBS remands play out.

Barry Skidelsky is Co-Chair of both the NYSBA/EASL/TV & Radio Committee and FCBA/New York Chapter; contact: bskidelsky@mindspring.com or (212) 832-4800.

November 18, 2009

Second Circuit Finds Webcaster Entitled to Statutory Copyright License under DMCA

By Barry Skidelsky, Esq. (co-chair of both the NYSBA/EASL/TV-Radio Committee and the FCBA's New York Chapter; contact: bskidelsky@mindspring.com or 212-832-4800).

On August 21, 2009, in Arista Records v. Launch Media (No. 07-2576-cv), a case of first impression for the federal appellate courts, the U.S. Court of Appeals for the Second Circuit upheld an SDNY decision below based on a jury verdict that found the online music service (now owned by Yahoo), which customizes its music offerings to the tastes of individual listeners, was not sufficiently "interactive" within the meaning of the Digital Millennium Copyright Act (DMCA) so as to deny Launchcast the opportunity to avail itself of a DMCA statutory copyright license. The distinction is crucial, because if Arista and the other record label plaintiffs (several of whom did not join in the appeal) had prevailed on their argument that Launchcast was an "interactive service" under 17 U.S.C. § 114(j)(7) (e.g.: involving an on-request transmission of a particular sound recording or a program specifically created for the recipient), Launchcast would have been required to negotiate with and pay each copyright holder of every song it wanted to use -- obviously a much more burdensome and expensive approach. The court examined in detail the legislative history of the sound recording performance right, and applied its analysis to the particular facts of this case, focusing on the methodology employed by Launchcast and the degree of control its end users are able to exert in selecting the music streamed. Without elaborating those details here, the court concluded that this Internet radio service is not a substitute for the purchase of recorded music, and that Launchcast listeners "do not even enjoy the limited predictability that once graced the AM airwaves on weekends in America when special requests represented love-struck adolescents' attempts to communicate their feelings to that special friend." One must keep in mind that this decision, which narrowly construes this particular performance right, is not binding on other circuits, and with different facts this court might have reached a different conclusion.

February 8, 2010

TV Writers Settle Decade-Long Age Discrimination Litigation

By Barry Skidelsky, Esq. (co-chair NYSBA/EASL/TV-Radio Committee; contact: bskidelsky@mindspring.com or 212-832-4800).

On January 22, 2010, 17 television networks and production studios and 7 talent agencies settled 19 of 23 separate class actions filed in Los Angeles Superior Court, based on alleged intentional and unintentional age discrimination in the selection, employment and representation of television writers. As three companion cases had previously settled, Creative Artists Agency (CAA) is left as the lone holdout.

The procedural history of the TV writers’ cases (which is set forth in Alch et al v. Time Warner Entertainment et al, 122 Cal. App. 4th 339 (2004), subsequent history omitted), began in 2000 as a federal court action under applicable federal law, including the Age Discrimination in Employment Act (which generally protects workers aged 40 or more). That action was dismissed with leave to amend in 2002. Rather than pursue their federal case, Plaintiffs then instead filed 23 separate complaints in California state court, based on state law statutes involving fair employment, civil rights and unfair competition. The parties litigated aggressively over 10 years in the trial courts before five different judges, during which period 20 of the named plaintiffs died and five different appeals ensued, two of which reached the California Supreme Court (primarily involving class certification and discovery matters). Although the past decade saw thousands of pages of documents produced and thousands of interrogatories answered, discovery was still at an incipient stage and the class not yet certified. Thus, with final resolution still years away, the parties agreed (without any admission of liability by defendants) that it made sense to now bring these protracted cases to a close and obtain preliminary approval of the settlement.

The amount of the settlement is $70 million, the largest-ever settlement in the history of age discrimination litigation. Of that sum (two-thirds of which is to be funded by insurance carriers), about $25 million is expected to be paid to plaintiffs’ counsel; and, about $2.5 million is to be set aside into a so-called Fund for the Future to be created (which intends, inter alia, to make loans and grants to TV writers). The remainder of the record-breaking settlement sum is to be paid pursuant to a single formula to class members, which includes both professional and aspiring writers, subject to withholding taxes and union pension or health and welfare deductions as may be appropriate (interestingly, the Writers Guild was not a party to this litigation).

Writers who believe they were unlawfully denied a TV writing opportunity during the class period (from October 22, 1996 to January 22, 2010) and want a piece of this pie must file a claim form (available at www.tvwriterssettlementadmin.com) no later than April 13, 2010. A final approval hearing of the TV writers’ settlement is scheduled for May 5, 2010, in L.A. Superior Court.

It should also be noted that the United States Equal Employment Opportunity Commission (EEOC) has reported a significant uptick in age discrimination complaints. The latest figures show that for the 2008 fiscal year, 24,582 charges of age discrimination were filed with the agency, almost a 29% increase over the prior year, and by far the largest number of such charges filed in the past 10 years. No employer, not even a law firm, is immune. In fact, on January 28, 2010, the EEOC filed an age discrimination complaint in federal court in Manhattan (SDNY) against the nationally known law firm of Kelly Drye and Warren, the details of this action being beyond the scope of this article. Suffice it to say that, without doubt, the difficult economic circumstances we all face today is having a disparate impact (no pun intended) on baby boomers and other older workers; and, all employers (including law firms) would be well advised to review and improve their hiring and other employment practices.

May 31, 2010

ABC Family seeks seasoned VP, Legal Affairs (Burbank, CA)

ABC Family

15+ years of legal affairs experience, entertainment industry, substantial TV series development and production; strong leadership, advisor to senior management.

For full description and to apply, click on link:
https://disney.recruitmax.com/main/careerportal/Job_Profile.cfm?szOrderID=230572&szReturnToSearch=1&szWordsToHighlight=

June 28, 2010

YouTube Wins Landmark Copyright Case

By Barry Skidelsky, Esq.

In a 30 page decision dated June 23, 2010 (Viacom et al v. You Tube et al, CV Civ. 2013), Judge Louis Stanton of the United States District Court in the Southern District of New York granted summary judgment sought by defendant Google-owed YouTube, dismissing before trial copyright infringement claims brought by plaintiff Viacom seeking more than $1 billion in damages in connection with video clips culled from the media giant’s cable channels such as Comedy Central and MTV.

The opinion and order focused on whether the defendants were entitled to so-called “safe harbor” protections found at 17 U.S.C. § 512(c) in the Digital Millennium Copyright Act (DMCA), which 12 year-old statute provides protection against copyright infringement claims brought against various types of on-line providers who qualify.

To qualify for this protection, the DMCA in part requires that service providers designate an agent to receive statutorily defined notices of alleged copyright infringement, as well as establish and follow certain notice and take-down policies. After a lengthy review of the DMCA’s legislative history, the court found that the safe-harbor did apply here.

A key issue involved whether the defendants had either actual knowledge or a form of constructive knowledge of copyright infringing activity or material, as specified in the statute. The court interpreted this to require “... knowledge of specific and identifiable infringements of particular individual items. Mere knowledge of prevalence of such activity or material is not enough.” The court went on to find that YouTube lacked the requisite specific knowledge that would disallow the safe harbor.

Reportedly, about 24 hours of new video is uploaded by users to YouTube every minute, which the court found YouTube had no obligation to affirmatively monitor or police for possible copyright infringement. That burden more properly lies with copyright holders. The court also noted that Viacom had spent several months compiling a list of 100,000 videos that it attached to the single takedown notice it sent YouTube in February of 2007; and, that by the next business day, YouTube had removed virtually all of them.

To some, the plaintiff’s case is seen as one of sour grapes, given that Viacom tried to buy YouTube but was out-bid by Google -- which successfully purchased the enormously popular video web-site in 2006 for $1.76 billion, likely motivated in part by the DMCA’s safe harbor provisions. To others, this case is seen as a victory for creative expression and maintenance of the internet as both an outlet for expression and a participatory medium.

Barry Skidelsky co-chairs EASL’s TV & Radio Committee. A former broadcaster and musician, Barry previously served as General Counsel to an Internet Service Provider where his work in part involved the DMCA safe-harbor issues raised in this case. Now in private practice, Barry offers a broad range of legal and business services to those involved directly and indirectly with traditional and new media, telecommunications, technology and entertainment. Contact: bskidelskly@mindspring.com or 212-832-4800.

June 30, 2010

More on Viacom v. YouTube: Another View

After reading Barry Skidelsky's description of the decision in Viacom v. YouTube, a case that will certainly be brought up on appeal, I thought it appropriate to make a few observations. In my view, the court, by requiring "item specific" knowledge in all circumstances before a service provider could be disqualified for protection of the DMCA safe harbor, ignored significant aspects of the statute's language, legislative history and important policy considerations. (Full disclosure - I currently represent a client adverse to YouTube and my firm represented one of the amici who submitted a brief in support of Viacom.)

For example, the statute, in listing certain conditions which a service provider must meet to enjoy the safe harbor does state that the provider must not have "actual knowledge" of infringing material. With respect to the other conditions, however, there is no such requirement of lack of "actual knowledge." Indeed, Sec 512(c)(1)(A)(ii) - the so called "red-flag" knowledge section - explicitly provides that "in the absence of such actual knowledge" the service provider must also "not [be] aware of facts or circumstances from which infringing activity is apparent." By reading the need for item specific knowledge into the red flag exception, the court essentially eviscerated the statute's distinction between red flag constructive knowledge and the actual knowledge applicable to the earlier provision. Given the court's reading, there is essentially no instance of red flag knowledge which would not also constitute actual knowledge.

Congress's intention in adopting the DMCA was not simply to shield service providers from the threat of unpredictable litigation, but also to control piracy on the Internet and to forge cooperation between content owners and service providers in preventing widespread infringement. DMCA did not simply set up a notice-and-takedown system, and I believe Judge Stanton's ruling virtually reduces the legislation to just that.

Most importantly, the decision puts an enormous burden on content owners, especially harmful to independent or individual copyright holders, to monitor vast Internet sites which, if they simply adopt a notice-and-takedown system, may operate even if - in Judge Stanton's words - such sites "not only were generally aware of, but welcomed, copyright-infringing material being placed on their website[s]." Moreover, as a practical matter, the decision will likely discourage the use of the kind of filtering technology several service providers - including YouTube - have begun to employ to respond to the needs of copyright owners. If "actual knowledge" of specific infringing items is the only disqualifier from the safe harbor, why would any service provider go to the expense and trouble of adopting a filtering system which is designed to acquire such knowledge? This is a serious danger which hopefully will be considered by the Second Circuit.

Paul LiCalsi co-chairs EASL's Litigation Committee. He is a partner at Mitchell Silberberg & Knupp LLP

August 15, 2010

Report on the ABA Forum on the Entertainment and Sports Industries –Part II: “Clash of the Titans: Viacom v. YouTube – Will Copyright Law Undo Goggle’s Internet Juggernaut?”

By Monica Pa

This panel was held on Friday, August 6, 2010 at the InterContinental Hotel in San Francisco.
The panel included Jennifer Golinveaux, Marc Greenberg, and Jennifer Seibly and was moderated by David Given.

This panel raised some unique points about this heavily discussed litigation, including several interesting background facts surrounding this case. Even before the litigation was filed, there was a fair amount of trash talk by Viacom. When YouTube debuted, Viacom issued negative press about YouTube’s business model. Viacom has a lock on the “youth-market” as far as cable TV content (it owns MTV, VH1, Comedy Central, and Nickelodeon). Billions of dollars every year are earned in licensing fees and advertising revenue from programs on these channels. Viacom was appropriately concerned about YouTube, given that a significant percent of the youth market was trending towards turning to the Internet for media consumption. Google purchased YouTube in 2006, one year after YouTube’s public launch, for 1.65 billion dollars (a tremendous price for a company that has never made a profit), and Viacom filed suit shortly thereafter in March 2007.

Viacom’s lawsuit claimed that YouTube and Google were guilty of massive copyright infringement. The initial reaction was that, given the results in Napster and Grokster, this should be a slam dunk case for copyright infringement. Viacom’s complaint anticipated many of the defenses that YouTube would raise under the DMCA, accused YouTube of willful copyright infringement (which allows for enhanced statutory damages), and sought preliminary and permanent injunctive relief.

At the close of discovery and summary judgment briefing, there were supposedly “smoking gun” documents leaked to the media. Notably, the first source of that leak was a former subsidiary of Viacom (CBS.com), which suggested that there was evidence adduced at discovery extremely detrimental to YouTube’s defenses, including documents showing the state of YouTube’s knowledge and encouragement of infringing activities.

Turning to the merits of the decision, Professor Marc Greenberg from Golden Gate University Law School pointed out that this case turned on the straight forward issue of how to interpret the safe harbor provision of the DMCA, which provides that the content owner must give notice to the ISP identifying where on the website the infringing materials is located, and then the ISP must investigate this claim and perhaps take it down. The district court’s decision carefully parsed the DMCA provisions and legislative history, focusing on the question of whether it was sufficient for the content creator to provide only general notice to the ISP of a problem.

The court held that general notice is not sufficient; instead, the DMCA requires the content owner to provide specific information about infringements of particular individual items. This is a burden shifting issue - who should, in the first instance, be required to identify infringing works and police infringement. The court makes clear that the DMCA places the burden on the copyright holder to identify the infringing activity.

The panel discussed the fact that the more significant issue, and what the appeal may hang on, is the availability of the statutory exception for a “representative list,” which provides that, if copyright owner can identify a representative class of infringing items, then the burden shifts to the ISP to take down similar instances of infringement. Specifically, the statute provides that “works” may be described representatively, so long as the content owner provides
“information reasonably sufficient to permit the service provider to locate the material.” The very purpose of this exception is to relieve copyright owners of the need to specifically identify each and every infringement. The court found that merely giving a representative sampling of infringing content undermines the DMCA’s general requirement for content owners to identify the location of the infringing material. But, this undermines the fact that the apparent purpose of the statutory exception is to shift the burden to the ISP. As such, the district court’s construction and application of the “representative list” exception may be Viacom’s strongest argument on appeal.

The panel also discussed the decision in UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F. Supp.2d 1099 (C.D.Cal. 2009), with counsel for Veoh speaking on the panel. Veoh’s counsel pointed out that it is not easy for an ISP to identify what constitutes infringing content. For example, when a content owner says to take down unlawful copies of a music video, a broad sweep for videos containing a particular song may capture home videos with someone playing that song on the piano or kids dancing to that song. She argued that content owners are the ones in the best position to identify infringing content. You do not want ISPs guessing at what is infringing; this is not the case of “know it when you see it.”

She pointed out that in both UMG and Viacom, neither ISPs were ignoring infringement notices. As soon as they received a DMCA notice, they immediately took the infringing materials down. For example, when Viacom sent more than a hundred thousand DMCA infringement notices to YouTube on the eve of litigation, by the next business day, the majority of those allegedly infringing files had been taken down. She argued that this shows that the “take down” method actually works.

The panel also discussed the potential for a technological fix for these legal problems. Viacom argued that YouTube could have used filtering technology early on. Notably, Viacom’s infringement claim is predicated only on infringement occurring before YouTube enacted filtering technology. It’s unclear why Viacom would choose to limit liability for pre-filtering activity because the use of such technology is not relevant under the DMCA, which does not predicate the availability of safe harbor immunity on the use of filtering technology.

Early on, there was hash filtering software, which is a more precise but limited filtering system. It identifies any identical files on the system and disables them. But, all a user has to do to avoid this filter is to crop off one or two seconds at the end of the film clip. Veoh and YouTube employed more advanced and less precise “Audible Magic” fingerprinting filtering technology, which matches the “fingerprints” within a file with other files on the system. Thus, the file need not be identical to be captured by the filter. This is one of the most effective filtering software available right now.

These filtering fixes, however, are not without their issues. The EFF is vocal about over-filtering, especially since much non-infringing original content is being taken down without the ISP serving a DMCA counter-notice to the poster. Robust and broad filter technology takes away the opportunity to challenge a take down of allegedly infringing files, and also undermines the chance to consider fair use and other defenses.

As a final point, it bears observing that, when the DMCA was enacted in the late 90’s, there were no social networking sites (which is essentially how YouTube operates). It is extremely burdensome for content owners like Viacom, which generates thousands of hours of programming that results in thousands of infringing uploads on YouTube on a daily basis. The problem may be that legislation has not caught up with technological advances. The DMCA is just a poor fit to address user generated content on social networking sites. The 2d Circuit Court of Appeals may uphold this decision, or perhaps overturn the “representative sampling” holding, but the panel expects some language in the decision asking Congress to revisit the “take down” structure in the DMCA.

September 1, 2010

New York's Film Tax Credit in the 2010 Legislature

By Bennett Liebman

In the course of final passage of the State budget, the State legislature, followed by gubernatorial approval, passed a significant extension and expansion of New York's existing film tax credit. The 30% film production tax credit was extended for five additional years, and it was funded at the rate of $420 million per year for this five year period.(1)

Additionally, the legislature added a standalone credit for productions that do their post production in New York State. Eligible productions that complete 75 percent of their post production in New York can now apply for a 10% credit for the post production work done in NY.(2)

The legislation allocates additional $420 million in each of 2010, 2011, 2012, 2013, and 2014 and defines this as an "additional pool" for those years. Previously, the legislature had allocated $85 million in 2010, $90 million in 2011 and 2012, and $110 million in 2013 for the film credit.(3) In 2009, the legislature allocated an additional $350 million for the film credit for that year (4) on top of $75 million that had been previously allocated.(5)

New York State is among numerous states that have provided tax incentives to the film and TV industries. According to the nonpartisan Tax Foundation, 44 states plus the District of Columbia and Puerto Rico offered significant movie production incentives in 2009, up from five states in 2002.(6) 28 of these states offered tax credits. In the Unites States, the film tax credit concept started in Louisiana which in 1992 passed legislation for tax credits for investment losses for films which contained substantial Louisiana content.(7) The initial Louisiana experiment did not spur much added economic activity. Minnesota similarly enacted a film credit in 1997, (8) but by 2002, there were only four states in the nation that had film incentives. New Mexico (9) and Louisiana,(10) however, changed the entire ballgame in 2002 by expanding the monetary value of the film tax credits significantly. The 2002 Louisiana legislation included "a series of incentives designed to revitalize the state's movie business, which had declined in part because of a nationwide migration to Canada, where producers enjoy generous incentives and a favorable currency exchange rate."(11)

New York State has one of the larger film production industries in the United States. "Sources generally conclude that the states of California, New York, and New Mexico receive the most economic impact (in that order.)"(12) The Motion Picture Association in 2006 estimated a $1.5 billion economic effect for the film industry in New York.(13) The New York Governor's Office for Motion Picture and Television Development states that in 2009 the film production credit led to $1.88 billion in direct production spending.(14)

New York started its film production credit in 2004 with the aggregate amount of annual tax credits capped at $25 million (15) It was expanded in 2006 to increase the cap to $60 million.(16) It was further expanded in 2008 and 2009 to increase the cap, and with the 2010 legislation, it has reached its highest levels of State support.

The New York 30% credit applies only to below the line film expenses. According to the Governor's Office for Motion Picture and Television Development, below the line film expenses "mean hard costs of production including the salaries of crew and extras as well as equipment and facility rental, lab costs, construction materials, props, wardrobe, locations, editing and catering, etc. Typically, BTL represents 65 percent of the average budget."(17) Thus, the 30% credit would typically provide a benefit that approximates "18 percent of a project's total budget."(18)

Besides the additional $2.1 billion in funding, the 2010 legislation placed some qualifications on claiming the credit. The legislation specifies a time frame which will determine the tax year for which the credit can be claimed. It requires that at least 10% of the principal shooting days be spent at a qualified New York film production facility. This 10% requirement is waived for "qualified independent film production companies" which are smaller entities defined as entities "principally engaged in the production of a qualified film with a maximum budget of fifteen million dollars, and (ii) controls the qualified film during production, and (iii) either is not a publicly traded entity, or no more than five percent of the beneficial ownership of which is owned, directly or indirectly, by a publicly traded entity".(19)

The legislation requires that the completed DVD release of the production either contain an end credit acknowledging New York State support of the production or contain a New York promotional video approved by the governor's office of motion picture and television development. The production must also "certify that it will purchase taxable tangible property and services, defined as qualified production costs" only from companies registered to collect sales tax in New York.(20)

Postproduction costs of a qualified production will only be eligible for the general film credit where "the post production costs paid or incurred that is attributable to the use of tangible property or the performance of services in New York in the production of such qualified film equals or exceeds seventy-five percent of the total post production costs spent within and without New York in the production of such qualified film."(21)

The 2010 legislation also provided a separate credit that would cover 10% of work at a post production facility. This would cover works not eligible for the general 30% film production tax credit. It would cover works only where the costs at the New York post production facility met or exceeded "seventy-five percent of the total post production costs paid or incurred in the post production of the qualified film at any post production facility."(22)

$7 million is allocated annually for the post production tax credit. A separate chapter amendment makes clear that this $7 million allotment is part of and not in addition to the overall $420 million annual allocation.(23) The chapter amendment provides "that the post production tax credit will be allocated $7 million annually from the $420 million pool of available tax credits. Unallocated post-production tax credits may be made available for the Empire film production credit upon the exhaustion of the aggregate amount of film credits."(24)

In an especially tight budget year, there was significant legislative support for the film credit in New York. Governor Paterson's initial budget proposed the $2.1 billion in additional funds for the credit, and the only action taken by the legislature to in any way alter this funding was to use $35 million of the $2.1 billion allocation to establish the post production credit.

There was little substantive discussion given to curtailing or suspending the film credit. There were few questions raised about the overall merit of the program. While the Governor's Office for Motion Picture and Television Development maintains that the funding is necessary to make New York competitive with states such as Connecticut Michigan and Massachusetts that have more generous film credits, (25) some studies have questioned the overall value of the film credit.

The Tax Foundation has stated, "While broad-based tax competition often benefits consumers and spurs economic growth and development, industry-specific tax competition transfers wealth from the many to the few. Movie production incentives are costly and fail to live up to their promises."(26)

"A 2005 study from the Louisiana Legislative Fiscal Office found that the state could expect to recoup 16 percent to 18 percent of the tax revenue it spends on the film incentive program. This means Louisiana--often held up as the standard-bearer for successful film incentive programs--loses about 83 cents for every dollar it spends on movie production incentives."(27) A Pennsylvania legislative study found some limited justification for its film credit. The report stated, "While there is a net fiscal loss when comparing the net present cost of the Film Tax Credit program ($58.2 million) to the taxes generated by productions directly receiving tax credits ($17.9 million), there is a net fiscal gain to the Commonwealth of $4.5 million when considering all of the revenues generated by the entire industry. While some of this activity would occur without the benefit of the FTC, a significant proportion of this activity would be at risk without such a tax credit program."(28)

This year, Iowa, Kansas, and New Jersey terminated or temporarily suspended their film tax credit program, the first states in the nation to do so.(29) The Iowa suspension was largely due to corruption found in the film office,(30) and the New Jersey suspension, which was based on budgetary concerns, has been harshly criticized by officials in Bergen County which has often been the site of Law& Order SVU episodes.(31)

Nonetheless, a serious review of the New York film credit will not likely occur in 2010.

1Ch. 57, Part Q, L. 2010.
2Id. See Tax Law §§31, 210.41,and 606.(qq).
3 Ch. 57, L. 2008.
4 Ch. 57, L. 2009.
5See note 3 supra.
6 Tax Foundation, "Study: Film Tax Credits, Production Incentives Fail to Spur Economic Growth," January 14, 2010, http://taxfoundation.org/research/show/25707.html.
7 Louisiana Act 894 (H.B. 252) (1992).
8 Tax Foundation, "Movie Production Incentives: Blockbuster Support for Lackluster Policy," January 2010; The Hollywood Reporter ,June 25, 1997.
9 2002 N.M. ALS 36.
10 2002 La. ACT 6.
112002 La. ACT 6; La. R.S. 47:6007; Stewart Yerton, "Counting on Film Credits," New Orleans Times Picayune, May 11, 2003.
12 Michal H. Salima, "State Film Tax Incentives and the Related Potpourri of Federal Income Tax and Tax Accounting Considerations," 62 The Tax Lawyer 1085 Summer, 2009.
13Motion Picture Association of America, "The Economic Impact of the Motion Picture and Television Production Industry in the United States," 13-14 (2006), http://www.mpaa.org/press_releases/mpa%20us%20economic%20impact%20report_final.pdf.
14 Report on the Empire State Film Production Tax Credit, August 2010, http://www.tax.state.ny.us/pdf/stats/policy_special/film_production_credit/report_on_the_empire_state_film_production_credit_august_2010.pdf .
15Ch. 60, L. 2004.
16Ch. 62, L. 2006.
17 See note 14 supra at p. 24.
18 Id. Besides the state film tax credit, new York City provides a 5% credit applied to the applicant's New York City tax liability. See Tax Law, §1201-a.(b).
19 Tax Law, §24.(b)(7).
20Tax Law §24.(a)(4).
21 Tax Law §24.(b)(1).
22 Tax Law §31.
23 Ch. 312, L. 2010.
24 New York State Assembly Memorandum in Support of Legislation, A. 11678.
25 See note 14 supra at 24.
26See note 8 at 16. See also Mark Sanchez, "Tax Foundation Report Hits Film Incentives by States," West Michigan Business Review, January 14, 2010 http://www.mlive.com/business/west-michigan/index.ssf/2010/01/tax_foundation_report_hits_fil.html.
27Tax Foundation Commentary, "Michigan Should Stop Red-Carpet Tax Treatment of Film Industry," May 4, 2010 http://www.taxfoundation.org/research/show/26275.html.
28 Pennsylvania's Film Production Tax Credit and Industry Analysis, Legislative Budget and Finance Committee May 2009, Pg. 5 http://lbfc.legis.state.pa.us/reports/2009/35.PDF.
29 Tax Foundation, "A Review of 2010's Changes in State Tax Policy, "August 23, 2010. http://www.taxfoundation.org/research/show/26645.html.
30Associated Press, "Iowa AG Files Charges over Film Tax Credits," February 8, 2010 http://wcco.com/local/film.tax.credits.2.1480422.html. Corruption issues have also arisen in Louisiana. See "Film Tax-Credit Scam That Ensnared Dozens With Ties To New Orleans Saints Leads to Guilty Plea," New Orleans Times Picayune, May 13, 2010, http://www.nola.com/crime/index.ssf/2010/05/film_tax-credit_scam_that_ensn.html; "Editorial: Lights, Camera, Corruption," New Orleans Times Picayune, August 20, 2007, http://www.nola.com/news/t-p/editorials/index.ssf?/base/news-4/1187589162244190.xml&coll=1.
31"Freeholders Call for Restoration of Tax Credit for NJ Filmmakers," South Bergenite, August 26, 2010, http://www.northjersey.com/arts_entertainment/101535368_Locals_could_lose_big_on_area_filming_loss.html; "Law & Order: SVU Moves Production," Philadelphia Business Journal, July 30, 2010, HTTP://WWW.BIZJOURNALS.COM/PHILADELPHIA/BLOGS/STIMULUS_TRACKER/2010/07/LAW_ORDER_SVU_MOVES_PRODUCTION.HTML.


September 8, 2010

Whose Life is it Anyway? Clearance of Life Story Rights in Film

By Diane Krausz

The right to privacy is one of the most treasured fundamental rights in American society. Another treasured fundamental right is freedom of expression. A great deal of filmed media involves the re-imagination of historic events, the examination of public figures and their private lives, or the dramatization of the lives of private citizens with compelling, interesting or unusual stories. Often, the right of a film maker’s freedom of expression can overshadow or destroy an individual’s right of privacy, particularly for a private citizen. Attorneys who advise screenwriters, producers and film financiers often need to weigh the existing state laws, precedents and particular facts of a matter to determine how to advise their clients in this confusing area.

Even a first year film student understands that writing a screenplay based upon someone's life can raise significant legal issues. Law students are taught to analyze the facts; specifically, to classify the characters of a script into the "living" or "dead", "private" or "public” citizen, and the specific issues in a scene (“newsworthy”, “private matter” or “public matter”), as this can make all the difference when determining whether the depiction of a particular individual in a specific scene constitutes infringement on someone’s ”right to publicity” or is permissible because of “fair use.” Note that a right to privacy is a protected right of an individual to non-interference by others, while the right of publicity is an individual’s right to exploit and profit from the exploitation of the exact things he or she is entitled to protect under the right of privacy.

A right of publicity is typically defined as an individual’s right to control and profit from the commercial exploitation of his or her name, likeness, image, or persona. In order to grant a right of publicity in New York State, the individual must give permission for such use in writing. In order to use a person’s name and likeness in New York, one must look to N.Y.Civil Rights Law 50 and 51. Absent the obtaining of a signed release, a private individual may have a cause of action if private information about him or her is disclosed in a film, and if such information is offensive, embarrassing or defamatory.

However, the private individual could lose the right to object to the public dissemination of the above information if a court determines that the story and/or facts disclosed is/are something that the public needs to or should know, e.g., is "newsworthy", and that there is a "public need" to share the story. For information to fall within the newsworthy exception the information must: 1) Be a current news item, or a past event currently disseminated for informative purposes, 2) be a media presentation on public issues, or 3) be based on historic information. This means that fair use extends to underlying events discussed in the film containing information obtained during a private information session, but already available to the public (for example, court records, newspaper, etc.). Of course, the actual record cannot be reproduced or read verbatim, since that would infringe on the "actual means of expression" concerning the event. Again, one must always consider whether one can get the private individual in question to sign a permission or release, waiving his or her right to sue, or whether the facts disclosed are already in the public domain.

Screenwriters who cannot obtain releases from unwilling or unavailable individuals are often advised to craft characters and situations that are inspired by actual people and events, but where no individual is identifiable in the resulting film. Another approach is to create a "composite" character, which represents a number of various participants in a particular life story, but does not resemble or be identified as a specific individual.

Even in this age of sophisticated film students and eager life story litigants, rarely does a screenwriter or creative producer analyze a screenplay in the same way as a production attorney at a studio, or an attorney who clears errors and omissions insurance for a film prior to distribution. Post production decisions regarding the need for additional releases can often hold up the financing or distribution of a film until such a clearance is obtained. Absent the ability to obtain the mandated written waivers/permission, significant edits and other changes dictated by legal and business rather than creative concerns are often made to a final film prior to distribution.

It is important to note that the right of publicity is not a federal right. Therefore every state has a different view on what constitutes “infringement” and what is “fair use.” For example, in New York a photographer may not need permission to take someone’s picture and make the photograph a special feature at his next exhibit (see Nussenzweig v DiCorcia, 832 N.Y. S. 2d 510). However, in May, Judge Trauger of the Middle District Court of Nashville Tennessee refused to dismiss the plaintiff’s claim in summary judgment in Samuel David Moore et al. v. The Weinstein Co. LLC, opining that the use of Samuel David Moore’s identity as the basis for a character in the film “Soul Men” could sustain a cause of action for breach of right of publicity against a defense of First Amendment privilege.

It is important to point out that a claim for violation of a right to someone’s publicity is not limited to the main subject of a film or story. If there are ancillary individuals involved in the film, it is necessary for to obtain permission for the depiction of their names, likenesses, etc., especially if the dramatized depiction of the events was not previously recorded in a public manner. The upcoming release of the film, The Social Network, based on the actual facts surrounding the creation and creators of “Facebook”, has recently received quite a bit of media attention to the issue of whose and what rights producers should clear when dealing with recent, highly public and litigated issues concerning disagreement as to facts. A New York Times article by Michael Cieply and Miquel Helft correctly stated that "filmmakers often elect not to buy rights for people who figure only marginally in a picture....But studios like to lock down the rights to their principal living subjects if only so that they will not be bound to literal truth in their portrayals." An quote from one of the film’s producers, Scott Rudin, in The Wall Street Journal on September 3, 2010, excellently summarizes a film producer’s (and attorney’s) best legal justification for not obtaining releases from principals in connection with their portrayals in a film:

These guys (the major players in the Facebook lawsuits) all walked into a
courtroom to give their depositions-their version of the truth. And they told
three different stories. The movie exists in that grey area.

Personal experience has found that when negotiating life story rights with major studios, it is extremely difficult, if not impossible, to carve out, limit or modify any provision that gives the studio absolute control to make any and all changes to a story line, character, plot of any kind or nature, including a specific waiver of droit moral rights in European jurisdictions. The result of one very long but ultimately successful negotiation resulted from one client, a former head of a foreign government agency, to legally forbid the producers of a film from having him depicted in the act of personally carrying out the murder of anyone during the course of the film’s action. In other instances, film producers have been known to change the gender of an individual for a film, much to the consternation of the underlying life story owner/grantor.

Attorneys prefer well written and signed releases from anyone and everyone depicted in a film. If such releases are unavailable, the analysis and procedure for "clearing" the rights or "chain of title" to a film, including the need to obtain rights in and to life stories of characters in a film production, the decision of what creative edits are required often becomes a complicated and multi-tiered process. An ultimate resolution is often an imperfect combination of financial, practical, creative, legal and business considerations unique to the particular project in question.

October 19, 2010

Dora Explores a Minor Platform

By Diane Krausz and Jennifer Bellusci

Chapter Nine "Contracting with Minors", in the recently published Counseling Content Providers in the Digital Age, describes and compares the approval procedures required by New York and California courts for agreements signed by minor performers. Glenn Litwak and I, as the co-writers of the Chapter, conclude as follows: "...California offers a more streamlined and less expensive process than that required under the laws of the State of New York." For this reason, apparently, many New York based production companies have decided not to petition for court approval when dealing with agreements for minor performers with, until now, very little publicly reported consequences.

On October 7, 2010, it was reported that a complaint had been filed by Caitlin Sanchez, performing as the voice of "Dora the Explorer", against MTV Networks, et al. Ms. Sanchez, who is now 14 years old, lives in New Jersey. Her services for Dora were performed in New York City pursuant to an agreement with Uptown Productions, Inc., a production entity of Nickelodeon. The complaint claims that Ms. Sanchez was "swindled", "deceived" and signed a contract with "convoluted, vague, incomplete and misrepresented terms." It also claims that both MTVN (Nickelodeon's parent company) and CESD, Ms. Sanchez's agent, failed to pay Ms. Sanchez appropriate compensation for her services in connection with the program, including residuals, merchandise products, and recordings. The complaint does not contain even one citation for a law, statute or case in support of its position. More interestingly, it fails to allege or even mention, what if true, is the most important fact: Neither of the contracts signed by Ms. Sanchez was submitted to a court and was not court approved pursuant to New York State Arts and Cultural Affairs Law 35.03, and therefore, Ms. Sanchez, a minor, has the right to disaffirm and void the contracts as a matter of law.

A minor disaffirming a production, agent, or manager contract is nothing new. This is precisely why Section 35.03 was enacted, to provide a mechanism similar to the California procedure where a production company/employer could have a minor's employment contract approved and rendered not able to be disaffirmed. In New York, this procedure is neither required nor used as often as in California, where its frequent application and use is limited mostly to certain counties in the Los Angeles area. Further, the extent of effort and time required to file a petition either in New York Supreme or Surrogates' Court is often a significant deterrent to a company's desire to protect the enforceability of its minors' contracts. In many instances, a minor’s reputation and employability are factors in that decision, i.e., who wants to hire someone, even a minor, who would void an agreement after the fact? So it is interesting that the Sanchez case was brought at all, and that when it was in fact commenced, the claims contained no grounds that involved her status as a minor, but rather, included claims that could apply to any actress of majority that had been allegedly treated improperly in contractual dealings.

There is virtually no case law in New York that deals with what should occur where a minor disaffirms on a completed services agreement that has not been approved by the court. The law has been upheld to allow a manager or agent to collect the value of his or her respective commission for the work done to date, on a quantum meruit theory (see Scott Eden Mgmt vs. Kavovit (149 Misc 2d.262, 563 N.Y. S. 2d. 1001 (Sup Ct. Westchester Co. 1990) and Rice v Butler (160 N.Y. 578)), which held that a talent manager or an agent must be paid for commissions actually earned, even if a contract was disaffirmed.

In the case of Sanchez, it appears that with a non-court approved contract, provided that the producer does not remove the minor's services from the continued exploitation of the program, it is likely that the minor will be able to claim a greater amount of compensation, as well as a full accounting of "back-end" merchandising and other royalties given the subsequent huge success of the "Dora" franchise. This is, of course, provided that the complaint is re-pleaded in the future in accordance with the comments in this article.

October 27, 2010

“Media Masala"

“Media Masala – Current Trends and Issues in
US – India Film, Television and Music Programming, Production and Distribution”

The New York City Bar Association Entertainment Law Committee presents an evening of industry professionals sharing experiences, developments and challenges in the rapidly expanding media markets between India and the U.S.

Date: Monday, November 8, 2010
Time: 6:00-8:00

Location: New York City Bar Association
42 West 44th Street
New York, New York 10036
(212) 382-6600

Admission: Free
RSVP to: Michelle Adams at madams@cdas.com


Panelists:

Megha Bhouraskar
Founding Partner, Poppe and Bhouraskar LLP

Steve Stander
Vice President & Deputy General Counsel
A&E Television Networks, LLC.

Salil Gandhi
Co-founder, Cry Baby Media

Anadil Hossain
Co Founder, Dillywood Inc.

Mark Merriman
Frankfurt Kurnit Klein & Selz
Production counsel, “Darjeeling Limited,” Wes Anderson, Director

Co-sponsored by Entertainment Law Committee members Joanne Cassidy and
Madhu Goel Southworth


November 10, 2010

CMJ Entertainment Business Law Seminar – Afternoon Session

By Eva Dickerman

Rights, Restrictions & Compatibility: The Challenges of Mobile TV
Seth Metsch, Digital Counsel, Business & Legal Affairs, A&E Television Networks (Moderator); Jeffrey D. Neuburger, Partner, Proskauer Rose LLP; Shirin Malkani, Vice President, Legal & Business Affairs, National Basketball Association; Sharon E. Kopp, Assistant General Counsel, Business & Legal Affairs Verizon FiOS TV & V CAST Video; Salil Gandhi, Co-Founder, Crybaby Media

Due to the increasing capabilities of mobile devices, the cell phone has become the primary gadget for Americans. Television content providers are eager to take advantage of the unique opportunity to get their programming quite literally into the pockets of consumers. As they negotiate the deals that make mobile distribution of television programming possible, the panel members are shaping the law in this area. The panel discussed the obstacles and issues they face in making top shows and events available to our fingertips.

How Should Clients Be Advised As They Draw Up New Deals?

One of the primary issues is that it is difficult to define a mobile device. Is it just a device that fits into your pocket? How should the iPad be categorized? If mobile but not Internet rights are granted, can the content be hosted on an iPad? One of the greatest difficulties with mobile video distribution is its very newness – in previously written deals there may not have been mention of mobile distribution.

Neuberger noted that there are no clear definitions of the different kinds of mobile devices. As technology evolves, we have to ask whether those distinctions are even meaningful. Neuberger suggests that licensing should be articulated in terms of functionality. Agreements written in the past defined scope of rights in terms of the device, but now the scope of rights should be defined in terms of functionality. Gandhi, referring to his experience at Joost, noted that the focus should be on branding and functionality rather than screen size.

Going forward, when negotiating deals, distributors will want to secure all rights in all media.

There is also the possibility of longer term contracts to define the license based on external factors that will exist even in spite of technological change (i.e. target demographics.)

The Evolution of the Mobile Platform

Kopp noted that Vcast serves as an aggregator. She described the unique position of Verizon – it seeks to provide content to customers in any format that customers might want – so the company is simultaneously negotiating television, mobile and Internet rights. The goal is to give customers a uniform experience across screens.

Vcast is offered using carrier bandwidth. The service has some streaming and downloadable programs. From the perspective of delivery method, Vcast uses mobile bandwidth, and, vis-à-vis the discussion above, is clearly a mobile service. An app that uses WiFi, however, will be harder to describe as a purely mobile app.

The Sports Context

Malkani discussed some of the idiosyncrasies of delivering sports content on mobile devices. All leagues do not deal with rights in the same way – there are some national rights and some team rights, the latter of which serve internal markets. It is hard to know if the consumer can ever have a single, unified package in light of these different markets.

Malkani also noted that although mobile is a desirable new format, traditional television is still incredibly important for sports because fans want to see the action on the big screen. Furthermore, since sporting events are live, fans want to watch a game when it’s happening. Malkani explained a little bit about NBA’s developing mobile strategy. The app Gametime allows users to get scores, stats, and video highlights. There is also a ‘league pass’ that is offered through the Gametime app. Although previously the NBA had separate apps for the League and the team, now users will get league updates or team versions within Gametime – in other words the strategy shifted to allow for a single streamlined app, rather than a set of disaggregated apps. Verizon also has an NFL app that has been quite successful – Kopp credited the ‘front and center’ branding of the app – when a Verizon user looks through the icons on a phone’s display screen, the NFL symbol is clearly visible.

How Important Is the Screen Size?

Several of the panelists noted that older deals articulated the distinctions between devices in terms of screen size. Neuberger suggested that screen size might not continue to be as relevant.

Indeed, the importance of the labels given to different devices is a shifting one. For example, in the past the terms “TV” or “television” were equivalent to broadcast television, but as time went on, the definitions came to include cable networks.

TV Remains a Driving Force…

However, the screen size issue does still matter to a certain extent. As the big cable networks pay content providers large license fees, the networks want to make sure that these agreements are still valuable to them by ensuring the uniqueness of the content that they are receiving.

Some of the Difficulties of Mobile Deals

As previously mentioned, there is an overarching issue of how to define mobile devices and how to determine the rights required to distribute programming via those devices. Some contracts limit the definition of mobile to ‘cellular technology’ – but what about the increasing reliance upon WiFi networks? What about the phone versus tablet distinction? In general, contracts are also more likely to grant broadband rights rather than mobile rights.

Another important question concerns how to deal with territory restrictions on content. The whole point of a mobile device is that its owner takes it with him or her wherever he or she may go. How can companies ensure that restricted content stays within authorized territories? Do there need to be authentication license-keys?

Malkani explained that when the NBA launched a mobile app, the vendor incorporated a geofiltering device to make sure that the streaming complied with the geographical blackouts mandated by the different cable companies. When Malkani herself used the mobile app, if she were to be in LA in the morning, then the corresponding blackouts in the California market would mean that certain content would be unavailable on her phone. If she were to return to NY later that day, then the corresponding blackouts in the NY market would also be reflected in the content available on her phone.

Several panelists noted that content providers will also want to insure that the video is captive within the device, and cannot easily be acquired within the mobile context but watched on different screens. In other words, providers do not necessarily want to grant users mobile access to content if these users will simply be hooking up their phones to their televisions, and watching the content through the latter rather than their mobile devices.

Talent and Mobile Content

Gandhi noted that talent is now going directly to consumers through apps. He noted that the advantage of straight-to-consumer delivery is the allowance of preserving the rights needed to build a brand. There is also the desire, in the attempts to build a brand, to try to maintain as many revenue streams as possible; one is doing oneself a disservice in the age of television everywhere. Distributors want to make content available to customers in any way, but talent may want to divvy up the rights.

Furthermore, there are important distinctions based on the device, since the expectation will be that consumers will pay for mobile uses but not on the Internet.

There is also the sense that it may be better for talent to use short-form content in the mobile context – consumers want to see new and specially produced content. The NBA too looks strategically for potential other content beyond the games. Vcast however is moving towards long-form programming.

Where Is the Business Model of Mobile Video Going?

Neuberger suggested that as there is increasing pressure on companies to collect revenue from all of their interactive applications, there may be an approaching end to free, meaningful content, and hence, more rigorous pay models will emerge.

The panelists agreed that social networking would make its way into the mobile app context. Since consumer engagement is the ultimate goal, having ‘check-ins’ as a way to make television more social may increase consumers engagement with the content that they are purchasing.

The Changing Landscape of Film Distribution: A Digital Vision
Marc Jacobson, Entertainment Attorney, Marc Jacobson, P.C. (Moderator); Betsy Rodgers, Vice President, Legal and Business Affairs, IFC Entertainment; Jessica Nickelsberg, Director of Legal and Business Affairs, Tribeca Enterprises; John Logigian, Attorney and Independent Film Consultant, Isil Bagdadi, Co-founder and President of Distribution, CAVU Pictures.

The panelists began the discussion by explaining their work within the film distribution industry, with a focus on new and emerging modes of distribution.

Betsy Rodgers explained IFC Entertainment’s "festival stunt” partnership with film festivals. IFC acquires films at festivals (such as Sundance and SXSW), or immediately prior to the festival’s start date. Then IFC releases the film on VoD concurrent with the festival. Since IFC already had an established relationship with the cable companies, this creative turn seemed to be a natural step. These partnerships require IFC to establish a legal relationship with the festivals, and IFC must gain licensing rights to the trademarks, branding and intellectual property of the festival. Rodgers said these partnerships are valuable to IFC as a distributor, because the buzz from the festival can help to get viewers excited about the films. This arrangement allows the distributor to capitalize on the value created at the festival. Furthermore, many of these films would not be able to reach audiences otherwise. It is also a cost-effective process, because prints are incredibly expensive to create.

However there are also some complications with festival stunts.

Time Constraints: In the case of the Sundance Film Festival, IFC might already have acquired some films before the festival has begun. In that case, the delivery materials might have been received from the filmmaker prior. The difficult situation is when IFC wants to license films that have not been acquired before the festival. By the time the IFC team discovers what films are in the festival, the delivery materials might already be due in order to ensure a concurrent release on the VoD platform. In this case, there needs to be an incredibly quick turnaround – in papering the agreement, making sure the films are fully cleared (which can be a challenge since often filmmakers will only have festival rights to music in their films), and in ensuring that the film is fully finished and can be encoded in time to make it onto the VoD platform.

Psychological Hurdles: Filmmakers often dream of having their films get wide releases in theatres. Since most big theatre chains will not take a film that has been previously released on VoD, accepting such a distribution ‘stunt’ for the filmmaker may mean giving up certain expectations. Furthermore, if the primary release of a film occurred on the VoD platform, the film might be disqualified from the big awards races.

Financial Hurdles: Producers need to read their agreements. Low budget films will often contain a provision that allows the use of SAG actors at a low rate. If the film is not given a theatrical release, however, there might be significant penalties.

Jessica Nickelsberg next explained the evolution of the Tribeca brand. From the flagship Tribeca Film Festival, Tribeca Enterprises has recently launched a new initiative, Tribeca Films, a distribution arm which underlying mission is to get independent films out to a wider audience. Tribeca Films distributes on a variety of platforms; in theaters, online, on DVD, and on demand.

Tribeca also has its own version of the festival stunt. During the 2010 festival, Tribeca Enterprises launched “Tribeca Film Festival Virtual,” a digital festival experience. For one week during the festival, viewers could (at the price of $45) go and watch eight feature films online (otherwise only available at the festival), at an encrypted site.

John Logigian focused on broader distribution trends within the industry. Traditionally it has been the ancillary markets (i.e., home distribution) that have been the big money earners. The profit margin is much greater in the home entertainment sphere than it is in the theaters. However, home entertainment is becoming less profitable for the studios. Now that delivery is digital, (whether digital streaming or downloading), there is no longer the ‘packaged goods’ element (i.e. selling of DVD’s at a retailer). Profit margin was much greater in the packaged goods market.

An upside of the digital revolution has been digital projection. Digital projection allows a reduction in the enormous cost of manufacturing and shipping of prints. Certainly there is a cost to convert to digital projection, but it is possible that companies will help theaters underwrite the costs of digital projection. Another notable development has been the spectacular growth of 3D.

Isil Bagdadi focused upon the growth of the DIY (do it yourself) movement in film. Her major concern was that filmmakers are losing ownership rights to their works by entering into certain agreements with distributors. Her concern with the festival relationships described above is that if festivals get into the distribution game, will there be favoritism in programming at the festivals themselves?

Bagdadi championed a ‘services deal’ agreement, in which a distributor gets a fee for providing the services of distribution, but does not get ownership rights. Bagdadi also suggested the possibility of self-distribution.

In response to Bagdadi, Logigian brought up some counterarguments to the benefits of the DIY approach. Although it looks great on paper to retain ownership rights, it is the distributors who have leverage in the ancillary marketplace – and most revenue comes from the ancillary marketplace rather than from the theatrical release.

The panel as a whole engaged in a discussion of the different types of financing arrangements for independent films. Investors will have different expectations and different risks depending on where their money is going. If investors are putting in money for marketing, then they will be the first individuals to be repaid. Investments in production, however, hold a different kind of risk profile.

The panel also discussed the option of bifurcating the investment (i.e., various parties investing money for production and marketing), which might allow the filmmaker to get a better deal. Logigian noted that the foreign pre-sales market (selling a film to distributors overseas before the film is made) has largely dried up except for the biggest-name films. The panel also briefly touched upon the value of getting a high net worth individual to put equity into a film if studio financing is not a possibility. Jacobson also mentioned the option of state tax credits as a means of filling gaps in the financing of a film, and providing early capital for a marketing or festival campaign.

How to (Legally) Make an App for That - Dealmaking in the Mobile Media and Gaming Arena
Kenneth N. Swezey, Esq., Managing Partner, Cowan DeBaets Abrahams & Sheppard, LLP (Moderator); Hayley Geftman, Esq., Vice President, Business and Legal Affairs, MTV Networks; Sam Howard-Spink, Clinical Assistant Professor of Music Business, NYU; Amy Lauren, Esq., Vice President, Digital Legal & Business Affairs, EMI; Stephen Sternschein, Esq., Founder, Heard Games; Artist Manager, Heard Games

Sam Howard-Spink began by discussing some sweeping trends. He noted that in the first half of 2010, between 2.6 and 2.9 billion dollars were spent on content (excluding consoles, controllers and other devices). Spink also noted the importance of the growing phenomenon of “in-app” purchasing; once a consumer is inside the app, the consumer makes a further purchase. Spink suggested that when a consumer has taken the effort to spend a few dollars to buy the app, the consumer is more likely to go spend more money on content within the app itself. Spink also noted the different ways that music can be used within app games: original compositions, the use of existing music licensed into the game, rhythm action games (i.e. Guitar Hero), and generative games (the user creates music in real time by using a set of protocols – although such games might pose greater licensing issues).

What Is the Best Business Model For An App?

Geftman noted that apps have had an increasing presence at MTV for the last few years. MTV has been involved in the apps world in different contexts: distribution of content to third party apps, creation of paid apps, free apps surrounding certain temporal awards, and ad-supported apps.

Sternschein noted that at Heard Games, apps are being built and designed to engage and monetize a particular brand. In other words, each app has a unique and specific approach on a band-by-band basis. Sternschein hopes for the growth of artist-based apps as a means to re-contextualize and repackage music in the digital environment. Apps may play a role in integrated marketing campaigns promoting artists.

Lauren noted that at BMI, apps are still a hybrid form. Certainly many apps are getting traction, and sometimes these apps are tied into the overall strategy of an album release.

Then the audience had some fun as Spink showed a few apps, including the Gorillaz app (BMI), Shinobi Ninja Attacks (Heard Games), and Bloom – a generative game. These apps are just a few examples of a new approach in the music industry. These games create a narrative framework, which is in turn tied to music and lyrics, and reward users for interacting with the content that is being promoted.

Licensing Issues:

a) Costs There are different costs associated with the development of apps depending on the level of involvement – if creating a highly customized app, the process might be quite expensive. There has to be a developer deal in place, in addition to due diligence review on all of the content going into the app. Geftman noted that there must be clear language about merchandising and marketing within app agreements, since apps generally will be tied to MTV’s content.

b) Artist Concerns v. Developer Concerns When working with a developer on an app, the primary concern of the artist will always be: what is the scope of the intellectual property rights being given away? Will use of the song be limited to one app? Developers, on the other hand, are trying to get as many rights as possible.

c) Licensing to Different Devices As previously discussed by the Mobile TV panelists, there is segmentation in the current licensing schemes – different rights are granted for mobile, television and Internet (and apps may be used in any of these contexts). Therefore rights owners must be very specific about the rights they are granting to developers.

It is possible that a ‘new creature’ might come about – that of the music game, in which music and coding is treated as a single creative gesture. Such an evolution of the app might be an alternative to the segmentation of rights.

App Developer Agreements

Geftman stressed that the developer agreement should stipulate that apps are being created as works for hire. The developer will own his or her own source code, but anything being built for the content provider, will remain the provider’s property. In general, the panelists concurred that there should be a flat fee, such that at the point of delivery the process is completed. BMI’s Amy Lauren noted that the app developer agreement has many similarities to a standard software development agreement.

There is also an understanding that terms of use and privacy terms need to be placed on the launch page, otherwise this information may be hard to fit into the app.

The Apple Deal

Although typically when dealing with Apple, content providers will serve as the retailers, in the context of apps, EMI or MTV may serve as the retailer. This arrangement shifts the risk from Apple, and is in some sense new terrain for record labels based on previous relationships with Apple. As a retailer, the content provider will face consumer issues, tax implications, and territorial issues. Although Apple has an end-user license agreement for retailers, this agreement may not address all of the issues relevant to the app. It can be difficult to renegotiate the terms of a developer agreement with Apple. Yet in the case of an independent entity (such as Heard Games), since there is less of a potential financial gain at stake, Apple may be more flexible with the types of marketing it allows.


February 23, 2011

A Friday Night: Reflections on the Critiques of "Would the Bard have Survived the Web?"

By Mary Rasenberger

The excellent op-ed entitled "Would the Bard have Survived the Web?," written by Scott Turow, Paul Aiken, and James Shapiro (the Authors Guild's President, Executive Director and a member, respectively) and published in the New York Times on February 15th (available at: http://www.nytimes.com/2011/02/15/opinion/15turow.htm?_r=2), generated numerous responses and a great deal of controversy in the blogosphere. The op-ed took a look at the golden age of English theater in the late 16th and early 17th centuries when there was "a wave of brilliant dramatists", and described how the erection of walls around theaters (literal pay-walls) allowed theaters to charge theater-goers, which enabled playwrights and actors to get paid by the public for the first time, rather than only by patrons. When authorities knocked the walls down in the mid-17th century to silence the seditious political ideas they feared were being expressed within, the ability to make a living from playwriting came to an end for a time and so did the "explosion of playwriting talent." The article warned that if we allow the copyright system we currently have in place to crumble under prevailing attitudes and internet piracy, the explosion of creative talent we have today may likewise dwindle. A number of letters to the editor and blogs have criticized the op-ed and used it against copyright law generally. The primary arguments can be summarized as follows: (1) there was no copyright at the time of Shakespeare, so clearly money can be made without copyright, and (2) Shakespeare copied from others, showing that copyright law restricts rather than induces creativity.

The first point does not even merit a response, since the op-ed authors themselves describe how copyright developed a half century later, providing a new, more stable way for authors to make a living. The second point belies a complete over-simplification and misunderstanding of U.S. copyright law. Incorporating elements of a prior work into one's own is not necessarily infringement and has always been part of the creative process. Copyright law, as construed by the courts, has long-since accommodated this process through, among other doctrines, the substantial similarity test, lack of protection for ideas, facts, common expression, and scènes a faire, the fair use doctrine, and for older U.S. works, formalities that put a large number of works into the public domain, as well as the almost 80 pages of exceptions and limitations in the Copyright Act. As a copyright practitioner, rarely a day goes by when I don't tell a client, usually a copyright holder, that it is free to use elements of another's work in some manner or another. While the courts don't always get copyright right, they often do, and through the last two centuries they have demonstrated enormous flexibility in their applications of the copyright law as technologies have shifted, including expanding fair use considerably in a manner that reflects evolving practices and technological advancements.

While the analogy to Shakespearean theater in the op-ed was imperfect, as most analogies are, the point of the article was clear and an excellent one - that "a rich culture", such as we now have requires a large number of creative individuals - "authors and artists", who devote their careers to their art. Indeed, our Founders were wise enough to understand that a true democracy requires a proliferation of free expression, that individuals not be beholden to any patron including the government, and that this can only be achieved by allowing professional creators to earn money from their works on the open market. Copyright is a brilliant way to achieve that end. The Shakespearean era theater grew out of the literal pay-wall described in the op-ed; our vast, prolific culture today has largely grown out of copyright law, a legal pay-wall.

The Guild's op-ed acknowledges that there is a place for free creative work online; and certainly there are those who will create for free, as many of the responses also point out. Indeed, many professionals who make a living from their works often will produce, perform and/or distribute works for free for any number of reasons (marketing, friendship, philanthropy, or the desire to see a particular work "out there"). Copyright gives creators the flexibility to do that - to decide when they want to assert their rights. Yet that is not what the op-ed is talking about; rather, it reminds us that copyright law enables artists and authors to make a living and is why we have the tremendous creative output we have today -- just as the theater's literal pay-wall was key to the creative burst in the theater in Shakespeare's time.

Let me give you a concrete example. Friday, after finally having acknowledged that my son was too sick to join my husband skiing, I cancelled our plans and we found ourselves with a delightfully free weekend ahead of us. I worked late and, among other things, read posts critiquing the op-ed forwarded to me by my co-teacher at Fordham Law (of a seminar "Copyright Reconsidered - Authorship in Historical Perspective"). Pondering the posts, I signed off and decided to indulge myself for the rest of the evening: I went to the gym and watched a movie on TV. As I later realized, it had been a truly indulgent evening -- over the next four hours my two kids (ages 13 and 14) and I had consumed millions and millions of dollars' worth of copyrighted works.

First, my daughter and I listened to the radio on the way to the gym, switching stations to find songs one or both of us liked; we heard some hard rock that was too hard for me, the Rolling Stones, Pink Floyd, and Rihanna (my choice --over her eye rolling). At the gym, she listened to her iPod, with a collection of about 2000 songs -- post-1990 alt-rock, punk rock and hard rock (all legally downloaded). I watched and listened to music videos licensed by the health club chain. I surfed between 6 or 7 stations, including dance, top hits, rock, alternative, rap, and whatever was playing songs that would keep me moving, some of which were creative and fun - lots of great choreography, dancing and/or special effects. On the way home, we listened to Evanescence (I'd been watching one of their videos when my daughter came to find me and we started to talk about it), and an Angels and Airwaves song that my daughter had heard in the locker room and wanted me to hear, on her iPod. She also played me a Blink 182 song and another sister band of Angels and Airwaves to compare the music.

At home, my son suggested I watch the "The Other Guys" on video-on-demand (a superb, hilarious movie). He listened to his iTunes songs (a collection of pre-1980 rock, also legally downloaded) on the computer while playing Wii Ski (which has wonderful artwork - it makes you feel like you are there on the powder covered mountain). He also watched the George Lopez sitcom simultaneously while checking out interactive ski trail maps. My daughter took pictures on her digital camera of our new kitten, then edited them and added special effects using iPhoto and Picnik software, chatted with friends on Facebook, texted others, all while listening to her iTunes collection on her computer. Then, we all got into bed and read - different books. (I read Just Kids by Patti Smith - a testament to the artistic soul and the difficulties creators experience for their art. Thanks to copyright, Smith's and Mapplethorpe's days of privation when "just kids" paid off and they both were eventually able to make a living off of their art.)

As spoiled as we are with an abundance of creative content, our activities on Friday evening were not completely atypical for Americans. I am sure that even those who object to copyright laws and believe that somehow art gets produced without it, also have iPods full of songs, watch TV and movies, read books, and rely on a large assortment of software programs, and would feel deprived without this "content."

The reason why I describe all this is because it's important to bear in mind that it took hundreds of professional creators who work full-time honing their art so that we can enjoy it to produce what the three of us consumed in just one evening. At a minimum, the following full-time creative professionals were involved in creating our evening at home, most of whom you can assume need to earn a living:

• Recorded music: performers (lead and side musicians) and song writers for about 50 songs, amount to at least several hundred people.

• Music videos: recording artists, professional dancers (hundreds among all the videos), choreographers, sound engineers, directors, cinematographers amount to several hundreds of people for all of the videos combined.

• Movie and TV: screen writers (probably several for just the movie), actors (who clearly added some of their own creativity/improvisation), directors, editors, cinematographers, special effects artists, sound artists. Don't forget the scores and accompanying background music, which are in addition to the music listed above.

• Wii Ski: visual artists, computer programmers -a couple dozen at least, I'd guess.

• Computer programs (iPhoto, Picnik, digital camera, cell phone, interactive maps, Facebook ... among others) - involving dozens, if not hundreds of people

• Books: Each one probably took the author the equivalent of at least one year (and probably much longer) of full-time work, plus there may have been ghost writers, and editors likely played a creative role.

All of those people make a living doing their work and had to get paid (in most cases, not a heck of a lot but enough to make a living) - before the big bad media companies who are, according to some, ruining the world with copyright, made a cent of profit. Although I paid for every item of content where payment was required, my amortized costs for our evening were maybe $20.

How fortunate we are. We have access to so much wonderful and creative art that brings us together in the ways we share and experience it. Yet we take all this content and the shared experiences it provides us for granted. Try to imagine our lives without music everywhere we go, TV, movies, books, newspapers and software. (What if we didn't have music, movies, TV, and books to share and talk about with our teenage kids? The arts afford so many opportunities for sharing thoughts, feelings and learning - and the kids don't even realize it!) The reason that we are able to have access to an abundance of really great content is that we live in a country with so many creative people who have devoted their lives to their art -- and they can do so because we have copyright laws that work.

What if we couldn't support professional creators anymore because no one could afford to pay them - which, as the Authors Guild op-ed warns, could happen if it becomes impossible to make money on content because everyone is stealing it online? The op-ed authors' point is that we, as a culture, have been lulled into taking that kind of creative output for granted, but there is no guarantee it will continue. While it's certainly true that there will always be people who will create regardless, do we really want to rely on the creativity of kids, academics, moonlighters and retirees, or, blogs for our culture? Without copyright, we certainly wouldn't have anyone to underwrite the significant costs of creating film, videos, computer games or software - so just say good bye altogether to those arts. There are few creators who could afford the time to write a book, write or record original music, or choreograph if they had to find other ways to make a living.

Copyright propelled a huge explosion of creative output in America. The production of our creative works is so vastly more complex than any patronage system could muster, even if we were willing to give up expressive and artistic freedom - which we are not. Furthermore, creativity is one of the things we are really good at in this country. We excel at teaching our kids to think creatively in and out of school, and as a society at large. As a result, copyrighted works are one of our largest exports. Let's celebrate that creativity. Let's not let rhetoric and the imperfections of current copyright law diminish it. Rather, let's learn from the past and help steer copyright law so that it continues to morph to accommodate the evolving technologies and practices of our arts today.

October 6, 2011

No Tax Love for "Jersey Shore"

By Jo-Na Williams, Esq.

At the end of last month, New Jersey Governor Chris Christie vetoed the $420,000 film tax credit awarded by the New Jersey Economic Development Authority to the company that produced the inaugural first season of the reality show "Jersey Shore".

The Governor is a critic of the film tax credit, which seeks to attract companies to film TV shows and movies in the state. Those companies would in turn receive tax incentives on the materials and goods they use while filming in the state. Additionally, this incentive creates jobs and tourist revenues. The Governor claims, "I am duty-bound to ensure that taxpayers are not footing a $420,000 bill for a project which does nothing more than perpetuate misconceptions about the state and its citizens." (http://www.nj.com/news/index.ssf/2011/09/gov_christie_vetoes_jersey_sho.html). This and other comments have led some critics to call the Governor "Censor-in-Chief," as he has let the tax incentives stand for other movies and television shows filmed in the state. (http://online.wsj.com/article/SB10001424053111903703604576586742565938886.html)

However, proponents of the tax credit are concerned that Governor Christie's action will have a 'chilling effect' on the industry's desire to film in New Jersey. (http://www.nj.com/news/index.ssf/2011/09/gov_christie_vetoes_jersey_sho.html) and (http://businessfacilities.com/blog/snooki-tax-gets-whacked) The Governor suspended the program in 2010 to aid in closing the state's deficit, but the credit to "Jersey Shore" survived the suspension of the program because it was awarded to the show in 2009.

Giving tax credits to companies in the film industry as an incentive to attract more revenue and jobs is not a foreign concept. States like Massachusetts, Michigan, and Texas already engage in this practice, however some of their elected officials have also been harshly criticized for the content of the movies and shows filmed in their states. Many critics of these incentives question whether the content actually garners the attention, tourism, and jobs the incentives hope to create. While this is only the beginning of the battle for the film industry to receive assistance from local governments in the creations of their projects, the questions remain: should taxpayers foot the bill in exchange for increased tourism and potential jobs, or should filmmakers start cutting their budgets and clipping coupons?

November 10, 2011

The Next Chapter in CBS Corp. v FCC

By Nili Wexler

CBS won another battle with the Federal Communications Commission (FCC) regarding a 2004 indecency claim. A panel of three judges in the Third Circuit Court of Appeals ruled last week that the fine imposed on CBS by the FCC for the infamous Janet Jackson "wardrobe malfunction" at the 2004 Super Bowl was inappropriate. (CBS Corp. v. F.C.C., No. 06-375 (3rd Cir. Nov. 2, 2011))

During the 2004 Super Bowl halftime performance by Justin Timberlake and Janet Jackson, Mr. Timberlake pulled down a part of Ms. Jackson's costume, which revealed a portion of her breast for nine-sixteenths of a second. In response to the incident, the FCC fined each of 20 CBS-owned television stations with the maximum penalty of $27,500, resulting in a cumulative fine of $550,000. (http://www.cbsnews.com/stories/2004/07/01/entertainment/main626925.shtml)
CBS appealed the FCC decision, and in 2008 the Third Circuit ruled in favor of CBS in F.C.C v. CBS Corp. (535 F.3d 167 (3rd Cir. 2008)) Subsequently, the Supreme Court ordered a review of the case after it found in an unrelated matter that the FCC was permitted to exercise its enforcement powers to regulate unscripted indecency. (http://idolator.com/6065022/janet-jackson-cbs-super-bowl-wardrobe-malfunction-appeals-case)

The Third Circuit Court's Decision

The court based its decision on prior FCC rulings that were incompatible with the FCC's decision regarding the Super Bowl incident, and ruled that the action against CBS was an inappropriate deviation from the FCC's own policies. "We again set forth our reasoning and conclusion that the FCC failed to acknowledge that its order in this case reflected a policy change and improperly imposed a penalty on CBS for violating a previously unannounced policy." The court claimed that the FCC had acted "arbitrarily and capriciously" in doing so. (CBS Corp. v. F.C.C., No. 06-375 (3rd Cir. Nov. 2, 2011))

Reactions to the Decision

In reaction to the Third Circuit's decision, a CBS spokesman commented, "We are gratified that once again the court has ruled in our favor. We are hopeful that this will help lead the FCC to return to the policy of restrained indecency enforcement it followed for decades." (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/11/cbs-wins-again-over-fcc-in-janet-jackson-case.html)

An FCC spokesman who was disappointed with the ruling commented that the FCC would continue to "use all of the authority at its disposal to ensure that the nation's broadcasters fulfill the public interest responsibilities that accompany their use of the public airwaves." (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/11/cbs-wins-again-over-fcc-in-janet-jackson-case.html). The FCC is reviewing whether it will appeal the ruling, and if so whether it will appeal to the Third Circuit or the Supreme Court.

Family advocacy groups were outraged over the decision, calling it a "sucker punch to families everywhere" and asking, "[h]ow can nudity and a striptease in front of ninety million unsuspecting TV viewers not qualify as indecency?" (http://www.cnn.com/2011/11/02/justice/cbs-wardrobe-malfunction/)

Constitutionality Issues in FCC Enforcement

The decision in F.C.C. v. CBS hinged specifically on the FCC's ruling from an administrative law perspective, and did not address whether the FCC's enforcement policy was unconstitutional.

However, in another FCC case involving Fox Television (Fox), the Second Circuit questioned the constitutionality of the FCC's enforcement policies. The instances at issue involved two live broadcasts of Fox's Billboard Music awards. In 2002, musician Cher used profanity while accepting an award, and in 2003 Nicole Richie uttered profanities while presenting an award. The FCC issued notices of liability for indecency to the network, though it levied no fines. (http://lawprofessors.typepad.com/firstamendment/2008/03/cert-granted-fc.html) The appeals court ruled that the FCC's new policy against "fleeting expletives" was "arbitrary and capricious" for "failing to articulate a reasoned basis for its change in policy" and vacated the FCC's order. (Fox Television Stations, Inc. v. F.C.C., 489 F.3d 444 (2nd Cir. 2007))

The FCC appealed the Second Circuit's decision, and in June of this year the Supreme Court agreed to hear the case. It is expected to rule on the issue in 2012. Justice Sotomayor, who formerly served on the Second Circuit, has recused herself from the hearing. (http://www.nytimes.com/2011/06/28/business/media/28fcc.html?_r=1) The Supreme Court will limit its consideration to "whether the Federal Communications Commission's current indecency enforcement regime violates the First or Fifth Amendment to the United States Constitution." (F.C.C. v. Fox Television Stations, Inc., 613 F.3d 317 (2nd Cir. 2007), cert. granted, 79 U.S.L.W. 3629 (U.S. June 27, 2011) (No.10-1293))


May 11, 2012

CBS Broadcasting Inc. v. ABC, Inc.

By Kim Endelson

CBS filed a complaint today against ABC and several producers and staff in the U.S. District Court, Central District of California, alleging, among other claims, misappropriation of trade secrets, breach of contract, and copyright infringement. CBS contends that ABC's new show "Glass House" is a "carbon copy" of its show "Big Brother", and that 19 former "Big Brother" producers and staff now work on "Glass House."

"Glass House" is a reality show featuring 14 contestants who live in a large house and are filmed continuously. Viewer votes determine which contestants will remain in the house, with the final contestant receiving a six-figure cash award.

CBS is seeking an injunction to stop the airing of the show, scheduled for June 18th, as well as $500,000 for each violation of non-disclosure agreements signed by the former "Big Brother" employees.

CBS claims that the "imitation" is an "obvious attempt" to capitalize on the success of "Big Brother." ABC said the lawsuit has no merit. An ABC spokesperson commented, "The differences between 'Glass House' and 'Big Brother' are both fundamental and obvious, ranging from 'Glass House's' interactive elements and audience participation to its deployment of cutting edge technologies."

http://newsandinsight.thomsonreuters.com/Legal/News/2012/05_-_May/Report_--_CBS_sues_ABC,_says_new_show_copies__Big_Brother_/

http://www-deadline-com.vimg.net/wp-content/uploads/2012/05/CBS_v_ABC_et_al_Complaint_-_CV12-04073_MMM_JEMx__120510213528.pdf

May 24, 2012

Aereo

By Gergana Miteva

Aereo is one of several startups that pioneered the concept of streaming TV over the Internet and making it viewable on every available gadget, including smart phones, tablets, and even good old computers. However, Aereo and other similar services never bothered to request licenses or offered to pay anything to the content owners of the broadcasted programming, and they were all promptly sued. Unlike other companies, though, an injunction has not yet been placed on Aereo, and the company has been seamlessly offering online television since March of this year. The plaintiffs in the case, which include Fox, CBS, NBC, and PBC, are claiming that Aereo infringed upon their copyrights by publicly performing and reproducing copyrighted works. They are also claiming unfair competition under state law. (Complaint available at https://www.eff.org/document/wnet-v-aereo-complaint)

Aereo has brought a number of novel concepts to the technological and legal discussion in this highly litigated area. First, according to its pleadings, unlike other similar services, Aereo does not provide access to cable-subscription-only networks such as CNN, USA, and TNT, which has allowed it to argue that it is not offering its subscribers any content they were not already entitled to. Second, it has devised a very cheap to manufacture tiny antenna, which every subscriber would install on his or her rooftop. Unlike other over-the-air signal intercepting antennae, these are not shared among subscribers; each one is dedicated to a single consumer. Third, the programming is not streamed directly to a subscriber's device, rather, the signals are intercepted by the miniscule antenna and retransmitted to and stored on Aereo's remote infrastructure. Then the signal is encoded for streaming over a digital device and transmitted back to the subscriber. (Aereo's Pre-hearing Memorandum of Law available at: http://archive.recapthelaw.org/nysd/392874/)

According to the defendant, no "streaming" takes place, even when the subscriber requests the "watch now" option of its service. Indeed, Aereo claims that the "record" and "watch now" functions trigger exactly the same mechanism of recording the signal on Aereo's infrastructure. The only difference between the two functions is that the "watch now" option plays back the content while it is still being recorded, causing a short delay for the subscriber. Another legally significant detail of Aereo's setup is that only one subscriber would have access to and ability to play the stored content. Even if another subscriber requests the same content at that same time, a unique copy of the program would be stored for that subscriber.

This technological setup may be capable of skillfully bending around many of the obstacles Aereo's brethren have tripped over. Aereo is hoping to defeat the public performance claim by arguing that no public performance takes place when each subscriber is playing his or her unique copy of recorded programming which is exclusive and unique for this subscriber. If this argument sways the court, Aereo would have its cake and eat it too, because from a subscriber's perspective, he or she is watching live, streaming television; while from a legal perspective, subscribers are watching pre-recorded programs, and enjoying the same functionality as provided by DVR or TiVo.

This week, the Southern District of New York dismissed the plaintiffs' state law claim for unfair competition. The court noted that the question of whether private performances of copyrighted works are actionable under New York's unfair competition statute is one of first impression. Concluding that the claim is preempted by the Copyright Act, the court agreed with Aereo that imposing liability on private performances of copyrighted works would extend copyright protection beyond the scope of the Copyright Act. The court reasoned that Congress specifically excluded from copyright protection performances to "a normal circle of a family and its close social acquaintances," to indicate its intent to not impose liability for this type of activity. (Opinion available at: http://www.mediabistro.com/tvspy/aereo-scores-legal-victory-over-broadcasters_b49496)

Stay tuned, because the "season finale" on the copyright infringement claims under the theories of public performance and reproduction of copyrighted works, is coming up next...

September 4, 2012

Friends Actress Lisa Kudrow's Former Manager Seeks To Reap The Fruits of His Labor

By Aleeshea Sanders

Howard Entertainment, Inc. et al., v. Lisa Kudrow et al.

On August 22nd the California Court of Appeal opened the door for the former manager of the well-known sitcom "Friends" actress, Lisa Kudrow a/k/a "Phoebe", to finally reap the fruits of his labor. In this ongoing legal battle for breach of contract between Kudrow and Scott Howard, the Second District California Court of Appeal sided with Howard, reversing the trial court's summary judgment for Kudrow, and ruling admissible Howard's proffered expert testimony relating to the customary practice in the entertainment industry with regard to post-termination commissions. (Howard Entertainment, Inc. et al. v. Lisa Kudrow et al., No. B234962, (Cal. Ct. App. 2nd Dist. August 22, 2012); see also http://www.courts.ca.gov/opinions/documents/B234962A.PDF.).

The dispute arose when, after a 16-year management relationship, Kudrow terminated Howard in early March 2007. She then refused to pay him commissions for work that he handled during the term of their agreement. In 1991, Howard and Kudrow had orally agreed that Howard would provide management services for Kudrow in return for ten percent commission on her income. In 2000 and 2004 respectively, the parties again made modifications to their verbal agreement, which included a reduction in Howard's commissions on certain earnings for "Friends", and then a reduction in Howard's commissions to five percent.

In 2008, Howard brought suit against Kudrow for breach of contract alleging that she failed to make more than $50,000 in continuing post-termination commission payments. Howard sought declaratory relief that he was entitled to receive commissions on all of Kudrow's continuing earnings for work done between 1991 and 1997.

Howard attempted to offer the expert testimony and declaration of Martin Bauer that it was customary for a personal manager to be paid post-termination commissions on work handled during the management term. Bauer stated, "[F]rom at least the early 1980s, it had been the custom and practice in the entertainment industry for a personal manager to be paid post-termination commissions on the services that their clients rendered, and on engagements that their clients entered into, when the personal manager was representing them." (Howard Entertainment, Inc. v. Lisa Kudrow, 2010 WL 3758592, (Cal. Ct. App. Sept. 28, 2010)).

However, Kudrow objected to the inclusion of Bauer's testimony, and the court granted summary judgment on the grounds that Bauer's opinion lacked foundation as it did not adequately reflect specified knowledge of the customary entertainment industry practices with regard to a manager's post-termination commissions at the time the parties entered into their agreement. Howard requested a continuance to address the deficiencies in Bauer's declaration. The trial court concluded that it did not have the discretion to grant Howard a continuance, so it granted Kudrow's motion and dismissed the case.

In the Court of Appeal's unpublished decision, it ruled that the trial court erred in concluding that it had no discretion to allow an opportunity to supplement the declaration, and that it abused its discretion in failing to grant a continuance to allow Howard to file a supplemental expert declaration with sufficient foundation. (See http://scholar.google.com/scholar_case?case=4321723798193235120&hl=en&as_sdt=2&as_vis=1&oi=scholarr.). The court stated, "If Bauer supplied the necessary foundation, arguably there would be a triable issue of fact as to whether the custom and usage was of such 'general and universal application that [Kudrow] may be conclusively presumed to know of the custom.'" (Howard Entertainment, Inc. v. Lisa Kudrow, 2010 WL 3758592, (Cal. Ct. App. Sept. 28, 2010) [quoting Miller v. Germain Seed & Plant Co. (1924) 193 Cal. 62, 69 (Miller)]).

The court stated that "custom and usage" in the entertainment industry may become part of the oral agreement between the parties to explain whether Howard was entitled to receive post-termination earnings, and it relied on long-standing precedent which states:

"'[A] reasonable usage may supply an omitted term or otherwise supplement an agreement." (Varni Bros., Corp. v. Wine World, Inc. (1995) 35 Cal. App. 4th 880, 889 [quoting 1 Witkin, Summary of California Law (8th ed. 1987) Contracts, § 696, p. 630]; see also Civ. Code § 1655.); and

"Custom and usage is considered 'in determining the intent of the parties, and are in effect a part of the contract unless the contract manifests a contrary intention.'" (Miller v. Germain Seed & Plant Co., supra, 193 Cal. at p. 77; accord Civ. Code § 1655.).

The court continued, "Evidence of custom and usage in the entertainment industry, even if Kudrow was unaware of that custom and usage, may therefore be relevant to explain or disclose an ambiguity in the agreement or provide by implication a missing term." (Miller v. Germain Seed & Plant Co., supra, 193 Cal. at p. 69 italics added.) "[A] party to a contract may be bound by a custom not inconsistent with the terms of the contract, even though he is ignorant of the custom, if that custom is of such general and universal application that he may be conclusively presumed to know of the custom." (Miller v. Germain Seed & Plant Co., supra, 193 Cal. at p. 69, italics added.).

The Court of Appeal concluded that Howard should have been granted a continuance, and it reversed the summary judgment.

On remand, the trial court accepted Bauer's supplemental declaration that detailed the basis for the expert's understanding about the relevant custom and practice, but again, it granted summary judgment for Kudrow, explaining that Bauer's knowledge provided an insufficient basis to admit his declaration because he did not include details of his personal experience in handling the exact type of transactions involving the exact custom and practice that he described.

Now, on Howard's second appeal, the Second District Court of Appeal once more reversed the trial court in a published opinion holding that, again, it improperly granted summary judgment in favor of Kudrow. The court explained, "An expert may rely upon experiences and conversations he or she has had and information he or she has obtained without the necessity of providing the specifics of such experiences and conversation." The court concluded that "there is no requirement that an expert set forth specific persons, conversations, or dates of such conversation for the formation of the opinion, as apparently required by the trial court." (Howard Entertainment, Inc. et al. v. Lisa Kudrow et al., No. B234962, (Cal. Ct. App. 2nd Dist. August 22, 2012)).

Thus, the trial court erred in requiring Bauer to provide names and dates to back up his opinion based on his experience that it is custom and practice to continue paying commissions to talent managers after a contract is terminated. The Court of Appeal reversed the summary judgment for Kudrow and ruled as admissible Bauer's expert testimony that it is customary practice to pay managers post-termination commission. (Howard Entertainment, Inc. et al. v. Lisa Kudrow et al., No. B234962, (Cal. Ct. App. 2nd Dist. August 22, 2012)).

However, despite a 16-year entertainment-industry marriage, and the laborious four-year-old legal separation and divorce that have come along with it, Kudrow's attorney stated that she is considering taking the legal dispute to the California Supreme Court. "The bottom line at this point in time is we are taking a look at possibly petitioning the California Supreme Court to look at the matter and at the same Ms. Kudrow is looking forward to having the matter decided in front of a jury if the matter proceeds to a trial court for a determination." (See http://abcnewsradioonline.com/entertainment-news/lisa-kudrow-may-take-legal-dispute-with-ex-manager-to-state.html).

September 18, 2012

Proposed New Laws in New York State for Child Performers- Catching up with Reality

By Diane Krausz

On September 5th, the New York State Register contained a proposed rule from the Department of Labor concerning 12NYCRR Part 186 (Part 186), entitled "Child Performers." The Members of the EASL Executive Board have been asked to provide comments to the current draft of the regulations and intends to do so by the second week in October. Any comments or questions concerning this article or the regulations may be sent to DKrausz@DianeKrausz.com.

The proposed rule establishes, consolidates, clarifies, and (in some instances) updates all regulations and requirements regarding child performers within New York State. It also, for the first time, includes and defines what is a "reality show", filling in necessary protections for minors in this popular programming genre, especially outside of Hollywood. When Part 186 becomes law, it will be the "go-to" section for producers, agents, parents, and anyone seeking comprehensive and detailed information concerning the New York State requirements for a child performer's employment. As with any new law, many issues and questions remain to be resolved, but its eventual passage will be a solid and important step forward in assisting industry professionals (including the parents of professional minors) in protecting the dual goals of income retention and safe, healthy, and appropriate working conditions for underage entertainers.

1. What the Law Does: The promulgation of this law will supplement, update, and clarify existing laws that currently deal with the area of minority, New York State, and the entertainment industry:

(a) Section 35.01 of the Arts and Cultural Affairs Law discusses the ability and circumstances of a minor in the entertainment industry to legally be bound to an agreement with an employer;

(b) Labor Law Article 4-A, including Section 151, discusses the requirement that 15 percent of all of a child performer's earnings (regardless of a New York State or Surrogate's court approval of any particular contract) be put into a so-called "Coogan" account;

(c) Estates Powers and Trust Law Article 7, Part 7, discusses the details of "Coogan" accounts as trust instruments;

(d) Education Law Article 65, Part 1, sets forth for a child the specific requirements for schooling and tutoring; e.g., such as when an appropriate teacher is to be provided; and,

(e) Section 154-a, Article 4-A of the Labor Law, which is proposed to be inserted and deals with specific regulations stating the work conditions and hours required to "safeguard the health, education, morals, and general welfare of child performers."

2. The law initially outlines its main core requirements, which are:

A. Requirements for a Parent/Guardian of a Child Performer:
(i) A Child Performer Permit, which must be obtained by a parent or legal guardian before the child may engage in services; and

(ii) A Child Performer Trust Account, which must be established by the parent or legal guardian for the child's benefit.

B. Requirements for an Employer of a Child Performer:

(i) An Employer Certificate of Eligibility, which must be obtained by an employer before the use of the child's services;

(ii) A Notice of Use of Child Performer to the Department of Labor, before each production event by employer; and

(iii) Minimum Standards for education, hours of work, as well as health and safety requirements for the child during employment.

3. The proposed Section 186 is divided into 10 subparts, which predictably begins as Purposes, scope, and exemptions (186-1); thereafter, Definitions (186-2), Responsibilities of Parents and Guardians (186-3), Responsibilities of employers (186-4); Educational Requirements (186-5); Hours and Conditions of Work (186-6); Records; Contracts (186-7); Variances (186-8); Suspension or revocation of permits and certificates (186-9); and Penalties and Appeals (186-10).

4. Some facts of which to be aware in the current draft of the regulations are:

• The law applies to all child performers (under the age of 18) who either reside or work in New York State AND the entities employing them.

• Any child performer below 16 years of age is to be accompanied throughout the work day by a "responsible person" (186-2(t)), parent, or guardian. In film, television, and other non-live type work, the responsible person is either the parent, guardian or someone named by the parent or guardian. In live theater or performances, the employer may name the person responsible if parental accompaniment is not possible.

• The law applies to live performances and film, television, and Internet/social media; however, the actual requirements for an employer producing a live performance (as opposed to any other types of performances) differ, particularly in the amount, and type of supervision ("parental vs. responsible person"), and the specific hours and days of work.

• The cost for an employer for an initial three-year Certificate of Eligibility is $350, except for theaters with fewer than 500 seats, renewals of the Certificate and "Employment Certificates of Group Eligibility" (the hiring of a number of children as a group for a certain project for not more than two days of work) which each cost $200.

• In addition to this cost, an employer will incur significant reporting, recordkeeping (required to keep all records for six years), and other compliance requirements (trust account documentation, on-site tutoring). The employer will be responsible in each instance for collecting a copy of the Child Performer Permit from the parent or guardian.

• There is no cost for obtaining a child performer's permit, with the exception of the obtaining a statement of fitness for the minor. This is a new requirement for a certification by a physician, nurse practitioner, or physician's assistant that the child performer has been examined within 12 months of the date of application or renewal and is physically fit to work.

• There is a regulation for obtaining a temporary child's permit (valid for a first time applicant for 15 days), as well as for an annual renewal (12 month) of a regular Child Performer Permit.

• The proposed regulations require employers, at their costs, to provide for the education of child performers from certified or credentialed teachers when children's schedules conflicts with school commitments or schedules. A sex offender check of each proposed teacher must be made prior to hiring.

• For infants between the ages of 15 days (NYS does not allow an infant younger than 15 days to perform; see 186-6.2) and six weeks, the proposed regulations require employers to provide a nurse with pediatric practice experience to be present at the location.

• There are specific activities and performances that are exempt from the requirement of obtaining an employer certificate or a child's permit, or both. For example, when a child performer's performance is part of the activities of a school (whether academic or artistic), or broadcast from a school, or under the supervision of a department of education, or as part of a recognized course of academic study to receive credit, it is most likely exempt from the requirements of Rule 186 - unless the program in which the child is participating is a "reality show."

• In 186-1(s), "reality show" is defined as the "visual and/or audio recording or live transmission, by any means or process now known or hereafter devised, of a child appearing as himself or herself, in motion pictures, television, visual, data, and/or sound recordings, on the Internet , or otherwise," and, shall not include the recording or live transmittal of non-fictional athletic events academic events, "such as, but not limited to, spelling bees and science fairs" and interviews in newscasts or talk shows.

• An Employer who feels that he or she would "incur significant hardship" in complying with some or all of the regulations is able to apply for a variance (in conformity with 186-8).

• The Commission may suspend or revoke an Employer's Certificate of Eligibility for good cause or if an Employer has failed to provide inaccurate or false information on an Eligibility application, or has committed a violation that may be "hazardous or detrimental to the physical or mental health, morals, education," or general welfare of a child performer, or has not obtained a parent's permission for a child on a Group Eligibility form, or has not made the required deposit into a child's trust account, or has caused a minor to engage in or be scheduled to engage in an activity that "may be hazardous or detrimental the physical or mental health, education, morals, or general welfare of a child performer."

• In addition to revocation or suspension of an Employer's Certificate of Eligibility, civil penalties may be assessed against the Employer for violation of any provision of the part of the regulations. The penalty is currently limited to $1,000 for the first violation, $2,000 for the second violation, and $3,000 for the third violation. Each violation shall constitute a separate offense. Any final order issued by the Commissioner of Labor is subject to review by the Industrial Board of Appeals (pursuant to Labor Law Section 101), prior to any appeal to a regular State court.

April 1, 2013

WNET v. Aereo

By Barry Werbin

The Second Circuit's decision in WNET v. Aereo, affirming the denial of a PI, found that the District Court "correctly concluded that Aereo's system is not materially distinguishable from the system upheld in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008)." Judge Chin dissented.

The Court focused on whether Aereo's service infringes the plaintiffs' public performance right under the Copyright Act. The plaintiffs argued that the "Aereo's transmissions of broadcast television programs while the programs are airing on broadcast television fall within the plain language of the Transmit Clause and are analogous to the retransmissions of network programming made by cable systems, which the drafters of the 1976 Copyright Act viewed as public performances."

Looking at its Cablevision decision and a reading of the Transmit Clause, the Court noted that "the Cablevision court concluded that Cablevision's transmission of a recorded program to an individual subscriber was not a public performance....Each transmission of a program could be received by only one Cablevision customer, namely the customer who requested that the copy be created. No other Cablevision customer could receive a transmission generated from that particular copy."

The Court found that the two key features of the Cablevision system are also present in the Aereo system: (1) the creation of "unique copies of every program a Cablevision customer wished to record," and (2) the "transmission of the recorded program to a particular customer was generated from that unique copy; no other customer could view a transmission created by that copy." As described by the Court, in Aereo's system: "when a ... customer elects to watch or record a program using either the "Watch" or "Record" features, Aereo's system creates a unique copy of that program on a portion of a hard drive assigned only to that Aereo user. And when an Aereo user chooses to watch the recorded program, whether (nearly) live or days after the program has aired, the transmission sent by Aereo and received by that user is generated from that unique copy. No other Aereo user can ever receive a transmission from that copy. Thus, just as in Cablevision, the potential audience of each Aereo transmission is the single user who requested that a program be recorded."

The plaintiffs' argument that Cablevision had a license as opposed to Aereo was rejected, because the Court found there was no public performance and, therefore, no license was needed. The Court also rejected plaintiffs' argument that discrete transmissions should be aggregated to determine whether they are "public performances," noting that this interpretation of the Transmit Clause had been rejected by Cablevision. The Court emphasized that the interpretation adopted by Cablevision "focuses on the potential audience of the performance or work being transmitted, not the potential audience of the particular transmission."

The Court also rejected the plaintiffs' argument that the two cases also should be distinguished because "Cablevision was decided based on an analogy to a typical VCR, with the RS-DVR simply an upstream version, but Aereo's system is more analogous to a cable television provider." The Court explained that its interpretation of the public performance right in Cablevision was not "influenced by any analogy to the stand-alone VCR."

Further, the Court rejected the plaintiffs' analogy of the Aereo system to Internet streaming as a public performance. The Court found that an Aereo' user's "volitional control over how the copy is played makes Aereo's copies unlike the temporary buffer copies generated incident to internet streaming."

The Court found nothing wrong with Aereo designing its system to avoid copyright liability. In this respect, the Court further analogized Aereo to "many cloud computing services, such as internet music lockers..." Despite the plaintiffs' concern, shared by Judge Chin, that complex technological workarounds should not excuse functionality that would otherwise constitute a public performance, the Court observed: "Perhaps the application of the Transmit Clause should focus less on the technical details of a particular system and more on its functionality, but this Court's decisions in Cablevision and NFL, 211 F.3d 10, held that technical architecture matters." In interpreting the public performance provisions of the Copyright Act, the Court noted that "[i]n the technological environment of 1976, distinguishing between public and private transmissions was simpler than today" and new devices such as RS-DVRs and Slingboxes complicate the analysis. Nevertheless, while "Aereo's service may resemble a cable system, it also generates transmissions that closely resemble the private transmissions from these devices."

Lastly, the Court made the interesting observation that "[o]ne panel of this Court...'cannot overrule a prior decision of another panel'....We are 'bound by the decisions of prior panels until such time as they are overruled either by an en banc panel of our Court or by the Supreme Court.'" [Emphasis added] This assuredly is not the end of this issue.

Notable is Judge Chin's strong 27-page dissent, which starts out by characterizing Aereo's system as "a sham. The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law." Judge Chin concludes that Aereo's transmission of live public broadcasts over the
Internet to paying subscribers are unlicensed transmissions 'to the public.'"

The decision is available at: WNET v Aereo Opinion-2d Cir 12-2786.pdf


June 5, 2013

Job Opportunity - Television Industry Experience Necessary

Resources Global Professionals is seeking entertainment attorneys with television industry experience to join our Tri-State practice. New York Bar Admission required. As a consultant with Resources Global Professionals, you will have the ability to play an instrumental role in assisting clients in a variety of challenging projects.
http://www.resumeware.net/rgp_rw/rgp_web/job_detail.cfm?reqnum=13547

Professional Qualifications:

-Cable or network television experience, with (1) extensive experience negotiating and drafting programming and production agreements (Writer's Guild experience preferred), and/or (2) experience handling rights and clearances for television productions (experience developing processes and procedures for rights and clearances desirable).
8+ years legal experience; in-house experience required.

-Admitted to practice law in New York and in good standing.

-Excellent communication skills.

-Detail oriented.

-Ability to multi-task and demonstrate a sense of urgency.

Our Consultants enjoy the flexibility and autonomy to choose the client projects that interest them, while continuing to build professional relationships within our global community of Consultant and business professionals. We offer a comprehensive compensation and benefits package including health and life insurance, a 401(k) savings plan which includes a discretionary company match, employee stock purchase plan, paid personal time off program, professional development and certification courses.

Submit Resume: https://rcant.rcconnect.com/initialapp/resumeform.asp?jobid=13547&emid=2222&Svcln=LEG

June 17, 2013

Job Opportunity - Sirius XM Radio

Position: Entertainment Attorney
Employer: Sirius XM Radio
Location: New York, New York
Position Summary: Primary duties will consist of drafting on-air talent and licensing deals for talk, music and sports programming for distribution on channels on all Sirius XM platforms, etc...

Click Here to view full job description: http://www.jobtarget.com/link.cfm?c=ssrRkuYYdFdS

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

October 10, 2013

Aereo Decision

By Barry Werbin

In the ongoing battle between over-the-air-broadcasters and Aereo, as well as Aereo's copycat competitor FilmOn (formerly known AereoKiller), the U.S. District court of Massachusetts issued its anxiously awaited decision on October 8th. The court denied Hearst Stations Inc. (as the owner of a local TV station) a preliminary injunction against Aereo, which rolled out its retransmission streaming over-the-Internet antenna service in the Boston area in May and continues to aggressively expand into other parts of the country. The court sided with the Second Circuit's opinion in WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013), which held that Aereo's technology system incorporating single-user dedicated dime-size antennas resulted in the transmission of a unique copy of a copyrighted broadcast work to a single unique user, and was therefore not a "public performance" that infringed the broadcasters' exclusive right to publicly perform their works.

The Second Circuit previously affirmed the issuance of a preliminary injunction against Aereo in New York and denied the broadcasters' petition for a rehearing en banc, with a strong dissent from Judge Denny Chin. The broadcasters will file a petition for certiorari to the Supreme Court.

Meanwhile, district courts in the District of Columbia [Fox Television Stations, Inc. v. FilmOnX LLC, 2013 WL 4763414 (D.D.C. Sept, 5, 2013)] and California [Fox Television Stations, Inc,. v. BarryDriller Content Systems PLC, 915 F. Supp. 2d 1138 (C.D. Cal. 2012)] have both ruled in favor of a group of broadcasters in their separate suits against FilmOn, with the D.C. court recently issuing a nationwide injunction (excluding the Second Circuit) against FilmOn. Oral argument before the Ninth Circuit recently took place and a decision from that Circuit is imminent. On October 7th, a group of broadcasters sued Aereo in the District Court of Utah.

In its decision, the District Court of Massachusetts essentially adopted the reasoning of the Second Circuit but without an extensive discussion, citing to the legislative history behind the so-called "Transmit Clause" in Section 101 of the 1976 Copyright Act, which in the court's view favored Aereo's "unique copy/unique user" theory that was essentially adopted by the Second Circuit.

The Boston-based court also found that Aereo likely did not violate the broadcasters' exclusive right to make copies of their broadcast content when Aereo made more than "transitory" copies of those works on hard drives every time one of its subscribers chose to watch or record a program. The court found that Aereo itself did not engage in any "volitional conduct"; rather, it was "likely that the user supplies the necessary volitional conduct to make the copy." However, the court found that this was "a closer question than the issue of public performance", and that discovery "could disclose that Aereo's service infringes WCBV's right to reproduce its work."

Finally, the court found that Aereo's transmissions did not infringe the broadcasters' exclusive distribution right because courts have interpreted the distribution clause to require the "actual dissemination" of copies. As Aereo was not permitting the downloading of programming but only its streaming, Aereo was deemed to be "performing," rather than "distributing," copyrighted works. The court also summarily dismissed a claim that Aereo's transmissions created derivative works by converting the audio/video content into a different digital format compatible with Internet streaming.

With respect to the request for injunctive relief, the court further found that the balance of hardships did not favor one side over the other because each side made cogent arguments concerning irreparable harm, and that these respective contentions "balance out."

A copy of the decision is available here:Aereo-Boston-Ruling.pdf

October 28, 2013

New York Festivals International Television & Film Awards Adds New Categories To The 2014 Competition

By Kim Swidler

Rose Anderson, Executive Director of the New York Festivals International Television & Film Awards, has added new categories to the coming year's competition. This organization is coming into its forth year of showcasing the winners to more than 93,000 media and entertainment professionals from 156 countries, including more than 1,700 industry press representatives, at the annual NAB show in Las Vegas.

New categories in 2014 include: Best Host, Best Screenplay, Best Nonfiction Series, Corporate Social Responsibility, Business & Finance documentary, Human Concerns documentary, Legal Issues documentary, Financial & Legal Reporting, and Production Design/Graphic Design for Promos.

Last year, medal recipients in this organization's new categories included Julia Stiles (WIGS), Troian Bellisario(WIGS), and Robert Taylor (Longmire), for their performances; "The Fabric Of The Cosmos: What is Space?" (Nova/PBS/Pixeldust) and "You, Planet - An Exploration in 3D" (Terra Mater) for Special Visual Effects; "Exposure: The Other Side of Jimmy Savile"(ITV) for Current Affairs; "The Resurrection Tomb Mystery" (Discovery Channel) for Innovation; "Titanoboa Online" (Smithsonian) and "The Dalai Lama at St Paul's" (CTN) for Online Special Event; and "X Games" (ESPN), for their Technical Production Team.

To read Kim Swidler's blog piece published by Times Union.com concerning the New York Festivals International Television & Film Awards and Ms. Anderson's insights into this organization, please go to blog.timesunion.com/travelgal.

January 11, 2014

Bad Lawyering On "The Good Wife": Setting The Record Straight On Music Publishing Law

By Eric S. Goldman
http://ericgoldmanesq.com/blog/

Even though I'm not usually a fan of shows featuring lawyers, I am a big fan of "The Good Wife". So when "The Good Wife" ran an episode entitled David And Goliath that delved deeply into my legal wheelhouse, I was excited. The show was all about copyright law and music publishing, and I've been an entertainment lawyer for 20ish years. Yet as the episode unfolded, I kept finding myself saying: "Wait a minute, that's not right. That's not how the law works."

Things started out well, because the fact pattern was pretty interesting. Two little known singer/ songwriters recorded a pop version of a rap song entitled THICKY TRICK. Basically, the pop version took the entire song lyric from the rap song, slowed down the tempo and added a bubble gum melody. The singer/ songwriters thought that the pop treatment highlighted how ridiculous the lyrics were. The pop treatment of the song was then performed on a "Glee"-style television show. After the show, the pop version of the song became a top seller on iTunes, generating millions of dollars in sales.

The issue was: could the singer/ songwriters sue the television show for copyright infringement over the misappropriation of a song they did not write?

Sadly, things rapidly went downhill. The episode touched on a number of copyright and music publishing issues, and pretty much got them all wrong.

1. Compulsory License. First, a little background. The U.S. Constitution laid the groundwork for modern copyright law in Article 1, Section 8, Clause 8, which reads "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries". In other words, a copyright is a man-made bargain - authors give the public access to their work, and the authors get a state-mandated monopoly on the exploitation of that work.

In the music publishing world, a license of the right to record a song is called a mechanical license. The basic copyright bargain found in the Constitution has led to a compulsory mechanical licensing scheme. Artists can record and distribute their music, provided that anyone else can record and distribute new versions of that music by obtaining a government-mandated mechanical license. In other words, the government tells artists that the liberal licensing of their works is "compulsory."

In "The Good Wife", the manager for the singer/ songwriters obtained a compulsory mechanical license because he wanted to do the simplest thing. The problem is, no one in the music industry uses compulsory licenses because they are unduly burdensome. Insert joke about government-run programs here.

Compulsory licenses have vigorous accounting and record keeping requirements - the costs of complying with the terms of a compulsory license usually exceed the income generated by the use of the licensed song. So pretty much everyone in the industry obtains mechanical licenses for previously recorded songs from record labels and music publishers, who are in the business of granting those licenses and grant them pretty freely.

Mistake Number One: It would have been far easier and cheaper to get a mechanical license for the rap song from the music publisher or record label than it would have been to obtain and comply with a compulsory mechanical license.

2. Derivative Copyright. The lawyers on "The Good Wife" spent a fair amount of time running around trying to obtain a derivative copyright in the covered rap song. However, there is no such thing as a derivative copyright.

There is such a thing as a derivative work. A derivative work is a new work based on a pre-existing work. When someone produces a Broadway musical version of a film, the Broadway musical is a derivative work. There is also copyright in a derivative work. That Broadway musical qualifies for all of the protections available under copyright law as an original work of authorship. Yet there is no such thing as a derivative copyright.

The basic issue on the show was that the singer/ songwriters incorporated a new melody into the rap song. All of the lawyers on the show accepted without question the proposition that incorporating a new melody into the rap song made the cover version a derivative work. In order to create a legal derivative work, the singer/ songwriters would have had to obtain an underlying rights agreement giving them permission to create a new pop song based on the original rap song.

However, was the cover version a derivative work based on the rap version? Maybe not.

The singer/ songwriters obtained a compulsory mechanical license in the rap song. A mechanical license to record a previously recorded song, compulsory or otherwise, includes the right to make a new arrangement of that song to the extent necessary to conform it to the style or manner of interpretation of the performance involved. An arrangement can be defined as chord progression, harmonies, accompaniment rhythm and musical fill phrases which define the style and feel of a song.

It's not clear whether, by incorporating a new melody line, the singer/ songwriters created a derivative work, which was beyond the scope of their compulsory mechanical license, or merely created a new arrangement which would be within the scope of their license.

Mistake Number Two: There is no such thing as a derivative copyright. There is such a thing as copyright in a derivative work, and there is such a thing as an underlying rights agreement which grants permission to create a derivate work.

Mistake Number Three: It is not a foregone conclusion that incorporating new music into a song creates a derivative work. It is a question of fact whether the changes are merely a permitted new arrangement.

3. Satire. The lawyers for the singer/ songwriters, including The Good Wife herself, argued that the cover version was a satire of the rap version. Such assertion confused satire with parody, and then misapplied the parody defense to a copyright infringement claim.

A satire misappropriates material protected by copyright in order to comment on society as a whole. A parody misappropriates material protected by copyright in order to comment on the copied material. In Campbell v. Acuff-Rose Music, Inc., 510 US 569 (1994), the Supreme Court reasoned that, because of this distinction, it was much easier for a parody to qualify as a fair use than it is for a satire.

In this instance, the singer/ songwriters were intentionally making fun of the song they copied, as well as rap music in general. So, rather than arguing satire, the singer/ songwriters' lawyers should have been arguing parody, as parody was the stronger (and more accurate) defense.

That being said, this cover song took the entire lyric from the underlying rap song. While a parody may take enough from the original work in order to conjure up that original work in the minds of the audience, a parody may not take the entire original work.

Mistake Number Four: The best available defense was that the cover song was a parody, not that it was a satire.

Mistake Number Five: The parody cover song probably used too much of the original rap song to qualify as a fair use, since it took the entire lyric.

4. Master Recording Copyright. The dispute between the singer/ songwriters and the television show ultimately hinged on one thing. The TV show's version of the song included very specific background noise - bowling balls hitting pins. And the singer/ songwriters' version of the song was recorded in a bowling alley. Which proved that the television show actually broadcast the singer/ songwriters recording.

Lawyer Alicia Florrick noted: "That's just theft." Yes, but theft of what?

The lawyers had been arguing that the TV show stole the singer/ songwriters' song, violating the copyright in that song. Yet the case was resolved when it was demonstrated that the TV show stole the master recording of the singer/ songwriters' song, violating the copyright in the master recording.

This is a tricky concept. An MP3 recording of a song incorporates two copyrights. The first is the copyright in the song. The second is the copyright in the master recording of the song. If you want to make a new recording of the song itself, you get a mechanical license, compulsory or otherwise. If you want to use the specific master recording of the song incorporated into the .mp3 file, you have to get a master use license.

This distinction between the copyright in a work of art and the copyright in the physical copy of that work of art plays out in odd ways. For example, I own several original oil paintings. While I have the right to display the physical copies of those paintings in my possession, I do not have the right to make and sell copies of those paintings. The right to make and sell copies remains with the artists.

Why is this important in our episode? It is because while there was a lot of talk about whether or not the singer/ songwriters were entitled to a copyright in their cover version of the original rap song, there was absolutely no discussion about who owned the copyright in the master recording of the cover song. All parties concerned simply assumed that the singer/ songwriters owned the copyright in the masters.

The thing is, the artist almost never owns the copyright in master recordings. The label usually owns the copyright in the master recordings, because the label supplies the recording equipment and personnel necessary to create them. Here, the master recording was created in a bowling alley owned by an unidentified party, using recording equipment and people provided by an unidentified party. It's entirely possible that the singer/ songwriters don't own the copyright in the master recording of their cover song. Which means that the happy ending in the episode may be very, very short-lived.

Mistake Number Six. The lawyers did not distinguish between the copyright in the song and the copyright in the master recording of the song.

Mistake Number Seven. The lawyers assumed that the singer/ songwriters owned the copyright in the master recording of the songs.

Fortunately for all parties concerned, I don't think most people watch "The Good Wife" for its realistic portrayal of the legal profession. On the show, first year lawyers spend a lot of time in court; associates have reasonable expectations of making partner in their fourth year; litigators routinely handle both civil and criminal matters; and the current economy is the perfect time for a Chicago law firm to go national.

That being said, I can't help but feel a little disappointed. For a brief second, I felt validated by "The Good Wife", because what I do for a living was deemed interesting enough to supply the plot for an episode of a top-rated TV show. It's kind of like getting to sit at the cool kids' table at lunch, only to find out that it's because they want you to do their homework.

Maybe I just need to watch less television.

June 25, 2014

U.S. Supreme Court Decision Favors Broadcasters over Aereo

By Barry Skidelsky

Today the Supreme Court decided 6 to 3 against Aereo, the innovative Internet broadcaster. Although this case (American Broadcasting Cos., Inc., et al v. Aereo, Inc. aka Bamboom Labs, Inc) primarily involved television and cable retransmissions, it will likely have a strong impact on anyone involved at the intersection of entertainment and communications law and business with wide ranging repercussions yet to be felt.

For example, terrestrial radio and television may find that the Aereo case could be used as ammunition in the current effort to pass federal legislation imposing a performance royalty for sound recordings, which are currently applicable only to digital transmissions and paid through Sound Exchange (the licensing collective organized by the record labels), although broadcasters currently also pay performance royalties for compositions through the Performing Rights Organizations of ASCAP, BMI and SESAC. Other well known copyright related reforms are also underway.

For the moment, at least, Aereo does not appear to put television broadcasters at risk of loss for the retransmission fees (an estimated $2.4 billion in 2013) that they receive from cable and satellite distributors -- despite Justice Breyer's comment for the majority that "Aereo's system is, for all practical purposes, identical to a cable system." Justice Breyer also said that: "We believe that resolution of questions about cloud computing, remote storage DVRs and other novel items not now before us, should await a case in which they are clearly presented."

Aereo, backed by Barry Diller (inter alia a co-creator of Fox Broadcasting), operates in 11 major cities and had plans to expand. However, the ruling today by our nation's top court -- finding in key part that Aereo publicly performs the petitioners' works within the meaning of the Transmit Clause of the Copyright Act -- threatens to put Aereo out of business. A link to the Supreme Court's decision is found here: http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf.

Barry Skidelsky is a New York City based attorney, whose practice is primarily focused on communications, entertainment and technology related matters. An Executive Committee member of the EASL Section of the NYSBA, Barry also co-chairs EASL's Television and Radio committee, and he is a former chair of the NY chapter of the Federal Communications Bar Association -- whose members practice before the FCC in Washington, DC. In addition to serving as an attorney, Barry also offers services as consultant, broker, arbitrator and bankruptcy trustee or receiver for lenders and others directly or indirectly involved in these fields. Barry can be reached at 212-832-4800 or bskidelsky@mindspring.com.

July 3, 2014

Post-Aereo: Has The Supreme Court Clouded the Future?

By Barry Werbin
Herrick, Feinstein LLP

By now, everyone is probably tired of reading the myriad blogs and articles on the Supreme Court's June 25th decision in American Broadcasting Company, Inc. v. Aereo, Inc. Yet the real question raised by the decision -- which did not set any bright-line tests -- is what its impact will be on other existing and future technologies that permit consumer end-users to access subscribed content anywhere in the world and at any time over the Internet.

In the 6-3 decision, the majority took a fairly straightforward approach in going through the two primary issues presented: whether Aereo was engaging in a "performance" by using its system of dime sized antennas to deliver one-to-one content to its subscribers, and whether such performance was "public" so as to impose direct copyright liability on Aereo. The court answered both questions in the affirmative, pointing out that even a home user watching television "performs" a broadcast merely by turning on a television and flipping channels, and that Aereo essentially acted no differently than a cable system, even when it only enhanced its subscribers' ability to receive and view over-the-air broadcast programming.

The Court emphasized that Aereo was not merely an equipment provider and, while its system remained "inert" until a subscriber indicated what he or she wanted to watch, Aereo nevertheless was communicating the same content to multiple persons and was thus engaging in a public performance. Noting that in enacting the Transmit Clause in the 1976 Act, Congress had clearly overruled prior Supreme Court precedents that had permitted CATV systems to operate (no issue here), the majority interpreted the Transmit Clause as applying to any entity that acts like a CATV or more modern cable system (conjuring up the adage that "if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck"). Despite Aereo's system remaining inert until a subscriber designates which programming he or she wants to watch, the Court nevertheless equated Aereo's system with the CATV systems outlawed under the 1976 Act.

Consistent with the "looks like a duck" analogy, the Court said that Aereo's "technological differences" only concern "behind-the-scenes" ways in which Aereo delivers television programming to its viewers' screens, and these differences did not render Aereo's commercial objective any different from that of cable companies. Nor did Aereo's system significantly alter the viewing experience of its subscribers.

Justice Scalia's dissent said that the majority analyzed "performance" wrong, because it focused on the overall purpose of the technological system rigged by Aereo as opposed to where the "volitional" conduct was taking place. To the dissenters, the focus should have been on the individual subscribers, who controlled what programming to watch and when the allocated mini antennae would be activated in response to subscribers' commands.

This is where it gets murky. If we were to ignore all technological interfacing between, say, a cloud service provider and its subscribers, and focus only on the "commercial objective" of the provider, then all one has to do is find a for-profit motive in the context of any form of online content delivery, thereby essentially rendering meaningless the volitional conduct requirement for finding direct infringement. The Court doesn't go quite that far. In fairness to the majority, Aereo really was not such a difficult case, because the Transmit Clause covers the transmission of content to individuals at the same place or in different places, and at the same time or in different times, and has always arguably been broad enough to encompass Aereo's system.

Another key distinguishing factor, of course, is that Aereo paid no licensing fees, unlike cable and satellite operators; in the latter case, once a home subscriber lawfully receives fully licensed broadcasts, the subscriber has a fair use right under Sony to record broadcast programming and "time-shift" at will when he or she views that programming. Merely transplanting that mechanism into the cloud (à la Dish Network's "Hopper"), using a technological system developed by a provider, arguably does nothing more than what the individual subscriber is lawfully entitled to do in his or her home.

The majority itself recognized this scenario and threw a comfort blanket to the tech sector by saying: "In other cases involving different kinds of service or technology providers, a user's involvement in the operation of the provider's equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act." Therefore, volitional conduct on the subscriber end really is not dead. We just have no test for the "may well bear on" assessment. Maybe the duck knows.

Providing some small assistance, the majority made a clear distinction between the specific facts in Aereo and other situations where "subscribers receive performances in their capacities as owners or possessors of the underlying works." Justice Breyers' majority bloc noted that whether a transmission to "a set of people" constitutes a public performance "often depends on their relationship to the underlying work." Courts will continue to grapple with this general guidance in assessing what constitutes being an "owner" or "possessor" and what types of relationships between end users and underlying works remove a content delivery system from the realm of infringing conduct.

Surprisingly absent from the majority's decision was any discussion that the content at issue was free over-the-air broadcasts, which any citizen within reception range could lawfully receive with a digital antenna and a digital-ready TV. It seems that what really irked the Court was Aereo taking commercial advantage of what it viewed as a loophole in the language of the Transmit Clause. The venture capitalists who funded tens of millions of dollars into Aereo (primarily Barry Diller's IAC/InterActiveCorp) likely did not do so for some high altruistic purpose (despite some of the press releases to the contrary); they did it to make money and realize significant returns on their investments. Even the dissent said that it did not really like what Aereo was doing, but was bound to apply the provisions of the Act as written; and it was the job of Congress, not the Court, to correct any ill-phrased language in the Transmit Clause.

Absent also, albeit not surprisingly, from the majority's opinion, was any mention of the now infamous Cablevision case (The Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121(2d Cir. 2008), cert. denied), to which the dissent cited several times with approval. Cablevision involved a remote storage DVR system that was offered to paying subscribers, where the Second Circuit found no direct infringement of the public performance right by Cablevision because its DVR customers were the ones who made the copies carried out by the DVR system. Yet in keeping with its focus specifically on the facts of Aereo, the Court's majority tried to avoid making any overreaching statements or addressing matters that were not directly before the Court. Avoiding any discussion of Cablevision was therefore prudent.

Similarly, in the Dish Network litigation in California, involving Dish's "Hopper" technology called "Sling," the Ninth Circuit ruled last year against the broadcaster plaintiffs. (Fox Broadcasting Company, Inc. v. Dish Network L.L.C., 723 F.3d 1067 (9th Cir. 2013).) The Ninth Circuit specifically found that "operating a system used to make copies at the user's command does not mean that the system operator, rather than the user, caused copies to be made. Here, Dish's program creates the copy only in response to the user's command." Fox News immediately ran back to the Ninth Circuit last week for reconsideration after the Supreme Court decided Aereo.

Certainly, the Aereo Court's majority's opinion was circumspect and cautiously avoided any overreaching language that could impact new technologies, whether cloud based or otherwise. Indeed, with a nod to the warnings identified in various amicus briefs submitted by representatives of the technology industry and the United States government itself, the Court expressly stated that "we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content." (Emphasis added)

Yet a clear bright-line test was not provided, and we are perhaps left with "if it looks like a duck" gut assessment, which does not make for good law. The decision will undoubtedly keep judges and copyright litigators busy for some years to come. That is, unless the media broadcast industry sits down with providers like Dish Network and others (as NBC is currently doing) to work out reasonable business models that compensate content owners fairly and yet permit the public to receive lawfully licensed content anywhere they want, and at any time, as this is the age we live in and there is no going back. Even the duck would agree.

September 2, 2014

Studios and Guilds Attempt to Adapt to Changing Media Landscape With New Residual Agreements

By Jacob Reiser

Expect to see more reruns of your favorite TV shows in the near future on cable and digital networks. Thanks to a new agreement that changes the way residuals are calculated when studios sell reruns of television shows to cable channels and digital networks, acquiring the rights to air reruns of old classics has become more affordable than ever.

Residuals are the compensation paid to writers, directors and performers for use of television programs beyond the use covered by the initial contract. Residuals begin once a show starts re-airing or is released to video/DVD, pay television, broadcast TV, basic cable, new media and/or digital networks.

The New York Times(NYT) reported on August 25th that a new residual agreement for the licensing of TV shows has been reached between Hollywood studios, i.e., The Alliance of Motion Pictures and Television Producers, and the three major show business guilds: SAG-AFTRA, Writers Guild of America and the Directors Guild of America. The new three year agreement goes into effect immediately. (http://www.nytimes.com/2014/08/26)

Under the old residual agreement, a network interested in acquiring a show from a studio was required to pay a fixed residual payment, regardless of the amount the network also paid for licensing the show. As a result, networks frequently held off from acquiring otherwise attractive shows because the sum of the fixed residual payment together with licensing charges was too high. Under the new deal, residual payouts are based on a fixed percentage of the licensing charges the acquiring network paid or will pay to acquire reruns of the show. The hope is that the new residual agreement will allow the acquiring networks to negotiate licensing deals more in line with expected profits and thereby encourage them to acquire more reruns.

The NYT article quoted John Weiser, President of United States distribution for Sony Pictures Television, who explained that "the guilds were open to it because they fully understand how the TV landscape is evolving." The "evolution" Mr. Weiser mentioned is likely referring to the proliferation of digital networks, or "diginets," as they are more commonly known in the industry. The new residual agreement should have a huge impact in the diginet market, as reported by the NYT.

Diginets are digital networks residing in major network broadcasters' subchannels. Diginets came about when television stations were mandated by the FCC to transition from analog (the traditional method of transmitting television signals) to exclusively digital broadcasting of free over-the-air television programming. As a result of the transition, every television station now has digital channels in addition to its prime channel. For example, NBC Channel 4 in Los Angeles carries its programming on its prime channel 4.1, while broadcasting specialty programming on subchannels 4.2, 4.3, 4.4 all the way up to 4.10. While NBC's and some other stations' prime channels are carried by cable and satellite providers, most subchannels are not. However, all digital subchannels are accessible over the air by a digital ready television and a digital antenna for free. Therefore, these diginets are primarily focused on the roughly 10% of American homes that do not pay for cable or satellite service. If you have cable TV, you have probably never heard of a diginet.

Although relatively young, the most popular diginets, which include Me-TV, Antenna TV, Cozi TV and Bounce TV, deliver to defined audiences, beating out many cable channels in certain markets. For instance, in April 2014, Me-TV ranked 19th among all national cable networks in adults ages 25-54, outperforming brands like CNN, TLC, Bravo and 79 other outlets, per Nielsen data. (A three-part detailed report on diginets, including a ranking of the top 25 most viewed channels, is available at: http://www.tvnewscheck.com/tag/diginets-2014)

Many diginets offer some original programming such as local news and sports; but like cable TV in its early days, they primarily air reruns of classic shows. As a result, the popularity and ultimate success of diginets largely depend on their ability to acquire reruns of shows aimed at their target audience. Until now, diginets could not afford to acquire the licensing rights to many popular shows because the combined licensing and residual payments were too high. The new residual percentage structure should open the door to a flurry of new purchases by diginets.

Furthermore, as reported by the NYT, the change from fixed fee residual agreements may also create an opportunity for diginets to capture "broken shows" or shows that were canceled after only a few dozen episodes. Many of these shows, such as "Freaks and Geeks" or "Firefly," failed to capture the attention of the mainstream market, but nevertheless have a dedicated cult fan following. The niche nature of the audiences diginets target and cultivate makes many diginets natural candidates to purchase shows like these. Diginets will be more likely to acquire "broken shows" now that residual charges reflect a percentage of their lower licensing costs.

Although it is perhaps too early to definitively tell if the new residual agreement will have a significant and lasting impact on rerun licensing, it may already be having an effect. On August 27th, AntennaTV, one of the most popular diginets, announced that it would be adding 11 new shows to its schedule. (http://www.tribunemedia.com/?p=19403)


September 20, 2014

Sony and Viacom Ink Landmark Deal: Part I

By Jacob Reiser

Last week, Viacom announced it had reached an agreement with Sony to stream at least 22 of Viacom's networks on Sony's forthcoming web-based TV service, which Sony expects to roll out sometime this year. The agreement amounts to the first shot fired against the traditional cable model and could mark the beginning of a new era in television.

Viacom is a programming giant whose network offerings include such popular networks as Comedy Central, MTV and Nickelodeon. The agreement immediately lends credibility to Sony's new service and demonstrates that major content providers view web-based TV as a legitimate new distribution platform and a viable alternative to cable TV.
Web-based TV is aimed at so called "cord cutters", or those unwilling to pay for Cable TV. According to a source quoted by the New York Times (NYT), this year marked the fourth consecutive year in which the number of viewers cancelling their cable subscription rose. According to the NYT article, this trend is pronounced in 25 to 34 year olds, the demographic most coveted by television advertisers. Increasingly, Millennials are simply unwilling to pay upwards of $80 a month for cable subscription when so many low cost alternatives are available, such as Netflix and Hulu. (http://www.nytimes.com/2014/09/11)

Although much about Sony's anticipated new service is still unknown, it will likely cost significantly less than cable. According to the same NYT article, one television executive estimated that the service will be priced somewhere between $15 and $30 dollars a month. Like Netflix and Hulu, Sony's web-based service will provide video-on-demand programming; but in contrast to those companies, Sony's service will also provide live original programming, which until now was only available on network or cable TV.

Cable companies are not oblivious to the new trend among viewers and are also scrambling to position themselves for the future. Dish Network, DirecTV and Verizon have all announced plans to create new web-based TV services. Yet Sony is the first to strike a deal with a major content provider of Viacom's stature. By securing a deal with Viacom, Sony is positioning itself to hit the market with the most attractive content.

Sony may have another advantage over those cable companies -- it also sells consumer electronics. In its press release announcing the Viacom deal, Sony announced its plan to offer its service to owners of PlayStation game consoles and Sony internet-enabled devices, such as smart TV's and Blu-ray players. According to Sony, over 75,000 people already own a Sony internet-enabled device, thereby presenting a captive audience to whom Sony can market its new service. Additionally, Sony's distribution platform is a huge incentive for content providers to join with Sony, because the young demographic that providers covet is precisely the one that owns PlayStation consoles. Viacom currently enjoys a 25.9% viewership share among young people aged two to 34 years.

Sony and Viacom Ink Landmark Deal: Part II

By Jacob Reiser

Viacom recently announced an agreement with Sony to provide at least 22 of Viacom's networks for Sony's planned new web-based TV service. A major selling point of Sony's new service is expected to be its cheaper price as compared with cable TV for similar live programming offerings. The announcement of the agreement with Viacom is somewhat ironic, as Viacom is currently facing an antitrust lawsuit in Federal Court, accusing it of contributing to high cable TV prices.

In a sealed Complaint, Cablevision alleged that Viacom's policy of "bundling" popular networks with unpopular ones violates antitrust law and amounts to coercing distributers to pay for networks that their customers don't want. Cablevision's complaint asserts that Viacom engaged in a "per se" illegal tying arrangement in violation of both Federal Antitrust Law and the New York State Donnelly Act, the latter of which parallels Federal Antitrust Law. As the Complaint was sealed and not yet made available to the public, all information about the allegations contained in the Complaint are taken from Cablevision's press release concerning the lawsuit, available at: http://www.cablevision.com/pdf/news/022613.pdf.

Bundling is the practice of selling networks to cable and satellite providers in a package, where, for example, if a cable company wants to buy highly rated networks, such as MTV and Comedy Central, it must also buy lower rated networks. Comcast alleged that in Viacom's case, some of its networks are so popular that they are "commercially critical" and cable distributers are forced to buy them at any price. By wielding control of the "tying" product, i.e., the must-have networks, Viacom is able to insulate the "tied" product, i.e., the low rated networks, from competition. According to Cablevision, bundling forces consumers to pay for networks they've never wanted and is a major factor in high cable bills.

For the lawsuit to succeed, Cablevision must prove that Viacom's licensing practice not only harms consumers but also impairs competition by forcing Cablevision to carry networks they don't want, instead of competing networks that could be potentially more profitable.

Viacom argues that it does not demand that distributors buy anything. It only encourages cable companies to purchase smaller networks by providing incentives in the form of lower prices for bigger networks when purchased together with smaller ones. "Viacom's programming licensing arrangements are flexible, competitive and the result of good-faith negotiations with distributors," the company said in a statement.

However, the U.S. District Court for the Southern District of New York does not concur with this characterization. The court recently denied Viacom's motion to dismiss, stating that "Cablevision has pleaded facts sufficient to support plausibly an inference of anticompetitive effects." (http://www.scribd.com/doc/Motion-to-Dismiss)

The terms of Viacom's agreement with Sony were not disclosed and it is unclear if Viacom maintained its ordinary licensing practices in the deal. However, a quick look at the 22 networks Viacom agreed to provide Sony reveals that many of the lower rated networks Cablevision alleges would not be purchased but-for Viacom's oppressive bundling policy, such as Centric, Logo and Palladia, are included in the deal. Sony, for its part may be willing to stomach the cost of the bundle if the web-TV service is only part of a more comprehensive strategy to sell more game consoles and other consumer electronics, in which case Sony would recoup the bundling costs on the increased sales of hardware.

October 24, 2014

Aereo Decision

Aereo has lost the argument in the Southern District that it should be considered as a cable company and allowed to operate under the compulsory license scheme following the Supreme Court's opinion that its transmissions were similar to that of a cable company. Judge Nathan found that: "The Supreme Court in Aereo III did not imply, much less hold, that simply because an entity performs publicly in much the same way as a CATV system, it is necessarily a cable system entitled to a ... compulsory license ... Stated simply, while all cable systems may perform publicly, not all entities that perform publicly are necessarily cable systems, and nothing in the Supreme Court's opinion indicates otherwise." The Judge also stated that: "The void left by Aereo III's silence on 111 is filled by on-point, binding Second Circuit precedent, which has already resolved the issue presented here." AereoSDNYDecisionreCompulsoryLicense.pdf

October 28, 2014

Internet Streaming of Live Broadcast Television

By Rachele Morelli

In a recent decision, American Broadcasting Companies, Inc. v. Aereo, Inc., the Supreme Court of the United States granted to television broadcasters a sigh of relief under the Copyright Act of 1976. 573 U.S. __ (2014). The Supreme Court held Aereo, the internet-based broadcast television streaming service, infringed copyright holders' exclusive right to "perform" their works "publicly" within the meaning of the Transmit Clause of the 1976 Copyright Act. Id.

Prior to the 1976 amendment, the 1909 Copyright Act (the 1909 Act) granted copyright owners the right to publicly perform their works. Am. Broad. Cos. v. Aereo, Inc., 874 F. Supp. 2d 373 (S.D.N.Y. 2012). However, under the 1909 Act, to perform a copyrighted work publicly required a literal performance of the work. Id. The United States Supreme Court decided two cases under the 1909 Act that discussed cable television systems which received broadcast signals through antennas and then retransmitted those signals to its subscribers via coaxial cable. Id. Ultimately, the Court found that the defendants, the cable television systems, were not infringing the copyright holders' exclusive right to publicly perform, because the systems were not actually "performing" the copyrighted works through their transmittals. Id. Congress was extremely dissatisfied with the outcome of these cases and began efforts to amend the 1909 Act to account for the rapid advances in technology. Id.

In 1976, the Copyright Act (the 1976 Act) was amended with the intention of encompassing cable system providers within its scope. The 1976 Act provided that a copyright owner has the exclusive right to perform his/her copyrighted work publicly. See 17 U.S.C. §101; 17 U.S.C. §106(4). Further, the 1976 Act clarified that to "perform" an audiovisual work means "to show its images in any sequence or to make the sounds accompanying it audible." Id. Further, the addition of the Transmit Clause clarified that an entity performs a work "publicly" when it transmits or otherwise communicates a performance of the copyrighted work to the public. Id.

A significant case decided under the 1976 Act was "Cablevision". Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008). There, the court found that Cablevision's transmission of a recorded program to an individual customer through its remote server Digital Video Recorder (RS-DVR) system was not a public performance, but rather more similar to a private performance. Id. at 137-40. The court premised its holding on two major facts: 1) that the RS-DVR system created unique copies of every program, and 2) that the transmission of the recorded program to each specific customer was produced solely from that unique copy. Id. at 137. The court reasoned that each private performance created a one-to-one relationship, because each user made an individual copy that was viewable only by that user. Id. The court found that the RS-DVR's private performances did not violate any rights because the 1976 Act only protects the right to make a public performance of a copyrighted work. Id.

In light of the Cablevision holding and the explosion of innovative portable Internet enabled devices, numerous services have emerged that offer online streaming of live broadcast television. Most services have formulated their streaming in accordance with the Cablevision case rationale and have devised systems that attempt to create a one-to-one relationship with each user to ensure that the performances would remain "private" rather than "public." These novel progressive services have produced widespread implications for the future of all broadcast television.

Aereo, Inc. is a part of this group of services that allows users to stream live broadcast television from any Internet-enabled device without giving proper compensation to the owners of the copyrighted material it transmits. The television producers, marketers, distributors and broadcasters that own the copyrights in many of the programs Aereo streams sued Aereo for infringing on their right to "perform" their copyrighted works "publicly." Aereo, Inc., 134 S.Ct. 2498, 2503 (2014). The case was first decided in July 2012 by the District Court for the Southern District of New York (Aereo, Inc., 874 F. Supp. 2d at 373), and affirmed in April 2013 by the Second Circuit (WNET, THIRTEEN, Fox Television Stations, Inc. v. Aereo, Inc., 712 F.3d 676). Both lower courts declined to find infringement because they analogized Aereo's service to the RS-DVR in Cablevision. Aereo, Inc., 874 F. Supp. 2d at 382-96; Aereo, 712 F.3d at 684-95.

The Supreme Court granted certiorari and heard Aereo unsuccessfully argue that its streamed Internet transmissions were not made "publicly" under the 1976 Act. Aereo, Inc., 573 U.S. at __. Aereo attempted to persuade the Court that its streams were not "public," and similar to the RS-DVR in Cablevision, because Aereo's system generated separate copies of each program and the transmission to each individual subscriber was created solely from those unique copies. The Court relied heavily on Congress' regulatory objectives and refused to allow the "behind the scenes" technological differences to distinguish Aereo from an ordinary cable provider that does publicly perform. Overall, the Court ruled in a 6-3 decision that Aereo transmits a performance of the copyrighted works to the public within the meaning of the Transmit Clause of the 1976 Act. Id. As a result of the Supreme Court's decision, the case was remanded to the lower court and Aereo suspended its services on June 28, 2014.

In coming to its decision, the Supreme Court predominantly focused on the actual purpose of Aereo's service: To provide live broadcast television in the same manner as a cable provider while circumventing the statutory obligations that are inherent in being a cable provider. Today, there is still great debate as to whether the streaming of websites marks an infringement under the 1976 Act. Regardless of the Supreme Court's ruling, it is highly unlikely that any of the website streaming services, like Aereo, will completely cease to exist. This case and many others in history have proven that there are often consequences when one attempts to combat technology rather than embrace it. The next step to resolve this issue, which stems from our society's inevitable advances in technology, would be statutory reform.

The primary issue presented in this matter is whether these online streaming services should be considered "cable system providers" under the 1976 Act. If these services are indeed viewed as cable system providers, as the Supreme Court found, then the statute should be amended to indicate their inclusion. The 1976 Act allows cable system providers to retransmit copyrighted works from broadcast television stations in exchange for paying a compulsory license fee, which is then distributed accordingly to the copyright holders. Aereo, 712 F.3d at 685. The statutory decision to include these online streaming services under the umbrella of "cable system providers," thereby allowing them to pay the ordinary license fees associated with retransmitting, may be the solution to the technological challenges we are confronted with today.

January 28, 2015

In Wake of Aereo, California District Court Finds DISH Networks' New Technologies Do Not, For the Most Part, Violate the Copyright Act

By Barry Werbin and Bryan Meltzer, Herrick, Feinstein LLP

As technological advancements change the way we watch television programming, media networks and broadcasters continue to struggle with new legal issues relating to those technologies. Following the Supreme Court's recent rejection of Aereo's business model in American Broadcasting Company, Inc. v. Aereo, Inc., 134 S.Ct. 2498 (2014) (finding its online streaming of unlicensed over-the-airways television programming to subscribers constituted a public performance in violation of the Copyright Act), Central District of California Judge Dolly M. Gee recently held in Fox Broadcasting Co. v. Dish Network LLC, No. 12-4529 (C.D. Cal. Jan. 20, 2015 [unsealed]) that DISH Network LLC's ("DISH") new technologies did not, for the most part, violate the Copyright Act, but did, for the most part, breach DISH's 2002 Retransmission Consent Agreement with Fox Broadcasting Co. ("Fox") ("RTC Agreement").

Fox claimed that five of DISH's technological innovations and/or practices violated the Copyright Act and the parties' agreements. In particular, Fox took issue with the following DISH products: (1) DISH Anywhere using Sling technology ("DISH Anywhere"), which enables DISH subscribers to access live and recorded programming remotely on their computers and mobile devices; (2) PrimeTime Anytime ("PTAT"), which enables subscribers to record all prime time programming shown on the four major networks; (3) AutoHop, which is a feature of PTAT that enables subscribers to automatically skip commercials while watching recorded shows; (4) Quality Assurance ("QA") copies, which are DISH's internal recordings of shows used to test AutoHop prior to its delivery to subscribers; and (5) Hopper Transfers, which allows subscribers to transfer copies of DVR recordings to their mobile devices for later viewing.

In a heavily redacted decision dated January 12, 2015, Judge Gee rejected the vast majority of Fox's copyright claims because she found that, unlike in Aereo, where Aereo itself publicly performed the copyrighted broadcast content by initiating the transmission of copyrighted works, DISH's products simply facilitated its consumer subscribers' ability to transfer and/or copy programming that they already lawfully possessed and for which DISH held a license for similar initial retransmission of the programming to its users via satellite. For instance, Judge Gee held that DISH Anywhere, PTAT and Hopper Transfers did not directly infringe on Fox's copyrights since it was the subscriber, and not DISH, who engaged in the volitional conduct required for a copyright claim (i.e., the copying or transferring of the copyrighted material).

Although Judge Gee found that DISH's subscribers engaged in volitional conduct, she also held that their conduct did not actually infringe on Fox's copyrights, and therefore, DISH was not liable for secondary infringement. In particular, the court found that the subscribers' use of DISH Anywhere to transmit rightfully possessed programming to their own computers and devices did not constitute a "public" performance (i.e., a transmission to a large number of members of the pubic who are unknown to each other) as required for an infringement under the Copyright Act (in contrast to Aereo, where the Supreme Court found that Aereo was engaged in a public performance).

Judge Gee also found that the subscribers' use of PTAT and Hopper Transfers constituted fair use under Section 107 of the Copyright Act because, although a secondary market for Fox's programming exists (through outlets such as Hulu, Netflix, etc.), the potential harm to Fox was too speculative to cause an infringement. Moreover, Judge Gee stated that Hopper Transfers by its very nature constitutes fair use because it simply permits "non-commercial time-and place-shifting of recordings already validly possessed by subscribers, which is paradigmatic fair use under existing law." Harking back to the Supreme Court's seminal decision in Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984), because she found that the subscribers were not liable for infringement, Judge Gee held that DISH was not liable for inducing or encouraging any infringement.

In addition, Judge Gee also held that Auto Hop (i) did not infringe on Fox's copyrights because it did not copy or distribute the material but instead simply skipped commercials, and (ii) did not violate the Copyright Act's compulsory licensing framework for secondary transmission of network stations by satellite providers because by simply skipping commercials, it did not "change, delete, or add anything to the commercials at issue."

While coming close, DISH did not, however, pitch a perfect game with respect to Fox's copyright claims. Indeed, Judge Gee held that DISH's QA copies infringed on Fox's copyrights because DISH simply copied the copyrighted material for a commercial use, which here was found not to be a fair use. In fact, the court noted that a secondary market for the copies existed and Fox could have negotiated with DISH over the right to make such copies available.

Moreover, as successful as DISH was with Fox's primary copyright claims, it was arguably just as unsuccessful with Fox's contract claims. Indeed, Judge Gee found that a number of DISH's products breached the RTC Agreement.

First, Judge Gee agreed with Fox that DISH Anywhere breached the "no copying" provision of the RTC Agreement, which prohibited the copying of content other than for in-home use. Judge Gee rejected DISH's argument that the in-home exception was intended to include "private, non-commercial use" (like with mobile devices) because she found that if DISH wanted to incorporate future technologies, it should have bargained for such language.

Second, Judge Gee similarly found that the QA copies clearly breached the "no copying" provision of the RTC Agreement. While DISH argued that its vendor did the copying, Judge Gee found that DISH's authorization of such copying constituted a breach.

Finally, the court held that Hopper Transfers violated the same "no copying" provision because DISH authorized its subscribers to copy Fox's copyrighted programs to their devices by providing them with both the means and permission to make such copies.

On the other hand, Judge Gee found that PTAT did not breach the "no distribution" provision of the RTC Agreement because it did not deliver the programming to more than one person, and instead just recorded specific programming to which the subscribers already had access. In addition, DISH Anywhere did not violate the "other technologies" provision of the parties' 2010 Letter Agreement, which amended the RTC Agreement, because, under the plain terms of the Agreement, the subscriber and not DISH retransmitted the copyrighted programming. DISH's facilitation of such transmissions did not breach the agreement.

In sum, Judge Gee found that companies like DISH can innovate in ways that do not violate the Copyright Act. Those companies, however, must make sure that their own contracts do not prohibit them from making such advancements. To that end, as Judge Gee recommended, companies should bargain for contractual language that accounts for "future technologies not then contemplated." Either way, though, the decision will likely be more popular with the innovators than the copyright owners.

The long-running DISH court battle and Judge Gee's latest decision provide a window into the future of TV. While networks can legally innovate new ways to deliver programming to their customers, they and their distribution partners will need to draft future agreements affording themselves the flexibility to keep up with technological advancements.

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

March 16, 2015

Frank Sivero Sues Fox Television Studios for $250 Million

By Joseph Perry

On October 21st, Goodfellas actor Frank Sivero filed a $250 million lawsuit against Fox Television Studios, claiming that The Simpsons character, "Louie," is based on him. http://www.hollywoodreporter.com/thr-esq/goodfellas-actor-suing-fox-250-742709

According to The Hollywood Reporter, Sivero alleges that in 1989 he lived next door to The Simpsons writers in Sherman Oaks, California. Id. The complaint alleges that The Simpsons writers knew that Sivero created and developed his "Frankie Carbone" character for Goodfellas, which was based on Sivero's own personality, and soon after, "Louie" debuted on The Simpsons. Id. According to the complaint, "Louie" has appeared more than 15 times on The Simpsons. Id.

Sivero alleges that his "Frankie Carbone" character was misappropriated and his likeness infringed, which violates his publicity rights under California law. Id. Moreover, he argues that he had a meeting with James Brooks' Gracie Films about making a potential Simpsons-based movie with Sivero. Id. However, nothing materialized from this meeting. Finally, Sivero further alleges that Brooks conducted the meeting to study him further for the "Louie" character. Id.

Sivero demands $50 million in actual damages of his likeness, $100 million for improper interference, $50 million in actual damages over the appropriation of his "confidential" idea, $50 million in exemplary damages over the same "confidential" idea, injunctive relief, and attorney fees. Id.

December 15, 2015

Understanding the Option Agreement for a Screenplay

By Wallace Collins

Many writers dream that some day their stories or scripts will garner interest and develop into feature films or TV projects. Usually, the first step is taken when a producer or a production company, or even a movie studio, offers the writer a contract known as an option agreement. As with all such matters where art meets commerce, I always advise that if one is asked to sign anything - other than an autograph - one's lawyer should review it first. Every writer should have a literary agent and a lawyer advising him or her about his or her business dealings once this stage of the process arrives, where artistic creation spills over into the business world.

An option agreement at its most basic is a contract whereby the writer grants someone, for a period of time and for a payment, the right to make a film of the writer's screenplay. The three material issues that usually arise in negotiating such a deal are: 1) the length of the option period, 2) the amount of the option payment and 3) the purchase price if the project comes to fruition. How each of these issues will be resolved will vary depending on the negotiating leverage of the respective parties (i.e., whether the writer is a beginner or has had prior success in the industry, and whether the producer is an experienced player or just a fledgling production company trying to get traction).

An option agreement will designate an "option period", or length of time granted to a producer or studio to commence production of the project. It can range from six months to two years, or longer, depending on the negotiations. Such agreements frequently include additional periods of time for the producer to extend the length of the agreement in consideration of additional payments to the writer.

The option agreement will also set forth an "option payment", which is the amount to be paid to the writer as consideration for allowing the producer the privilege of utilizing the writer's screenplay for development purposes. Again, depending on the negotiating strength of each side, this could range from a very small amount (e.g., a few hundred dollars or even one dollar) to a larger payment (tens of thousands of dollars). Then, if the other party wants to extend the option period for an additional length of time, there should be additional payments to the writer. In most cases, these additional payments will be negotiated to be substantial even if the first payment is small. The amount of the option payments will vary, depending on the negotiation process and other factors, such as the writer's track record in the industry and the potential budget of the film or TV project. Some industry experts have said that as a rule of thumb, option payments are frequently equivalent to 10% of the purchase price, but these amounts are always negotiable, and writers need to be careful not to allow themselves to be taken advantage of in the rush of excitement that surrounds interest in their screenplays.

Another material term in an option agreement is the "purchase price", which is the amount of money that the writer will receive in the event the screenplay is made into a feature film or TV project. The purchase price is often calculated on a sliding scale as a percentage of the budget, so as the budget of the film project grows, so will the purchase price, although as with all negotiated terms this too can vary greatly.

When properly negotiated, an option agreement can be a win-win situation for both the writer and the producer. The writer is paid to lease his or her screenplays for a limited period of time, while the producer attempts to get the project green-lighted by a studio or production company. If this happens, the writer will receive a nice purchase price for the screenplay. If it does not happen during the option period, then the writer keeps the option payment or payments paid to date, and all rights to the screenplay revert back to the writer. The writer could then decide to option the script again to another producer. From the producer's perspective, an option agreement gives the producer an opportunity to hold on to a screenplay exclusively for a period of time, without having to lay out a lot of money up front while trying to get the project off the ground.

December 27, 2015

Congress Gave Certain Entertainment Industry Investors A Christmas Present for 2015 and 2016! Section 181 is Back for Film & TV Projects and Now Theatrical Projects, Too

By Marc Jacobson

Now, certain investors in film and theatrical projects that begin production in 2015 or 2016 may deduct their investments in the year in which the entity that receives the money actually spends the money. While tax on the profits will always have to be paid and the tax benefit of the deduction, once recouped, also creates taxable income, certain investors will get a current deduction, which is always welcome, because it reduces the investor's current tax liability.

Not every investor is eligible for the benefit of this deduction. Some prominent bloggers gloss over this requirement. (See, "The Producers Perspective," By Ken Davenport, http://bit.ly/KD181blog) Only investors who (a) have qualifying passive income, generally from real estate rents and income are eligible for this benefit, and then only up to the amount of their passive incomes in that year, or (b) are producers who pursue producing as an active trade or business, can reap this benefit. A doctor or dentist, successful stockbroker, and the like, who does not have passive rental income and who may be the traditional source of film, TV and theater investment, is not able reap the benefit of this deduction.

Revised §181 of the Internal Revenue Code (the Code) provides that investors in Film and TV Productions, and now, thankfully, Theatrical Productions, may deduct their investments in the year incurred, provided that certain steps are taken and rules are followed. When we read the Consolidated Appropriations Act of 2016 and the Protecting Americans from Tax Hikes Act of 2015 (http://bit.ly/Sec169HR2029) that President Obama signed into law on December 18, 2015, we don't see any mention of the passive activity rules. We also don't see it in the text of the old or new §181 of the Code, but we do see it in the accompanying regulations. (http://bit.ly/IRSregsForSec181)

However, any tax preparer worth his or her salt will tell you that while §181 is clear on its face and makes no mention of the passive activity rules, the taxpayer and his or her preparer must consider the entire Code when preparing a tax return. That includes things like the Alternative Minimum Tax, (http://bit.ly/AltMinTax) as well as §469 of the Code, (http://bit.ly/Sec469PassiveActivityLimited) entitled "Passive Activity Losses and Credits Limited" and its accompanying regulations.

The Code limits the benefit of deductions for Passive Activity. (Id.) Most investors in Film, TV and Theatrical Productions invest their money, watch carefully what happens with the "show," then sit back and wait for a return of capital and hopefully a profit, paid out ideally over the life of copyright. That is passive activity, completely legitimate and welcomed by the producers of and the investors in the show. Yet the Code says that if an investor does that, and does it in Film, TV and now, thankfully, Theatrical Productions, the investor can only deduct that investment against passive income received that year from real estate investments, and only up to the amount of that real estate passive income.

Therefore, if the investor had passive rental income of $50,000, but invested $75,000 in the qualifying Film, TV or Theatrical Production, only $50,000 would be deductible. If the investment were $35,000, then the full amount of the investment would be deductible, because the passive income exceeded that amount. All of this, of course, assumes that the entity that receives the investment owns the property, spends the money, makes the proper election in a timely fashion, and otherwise complies with the law. (This blog is only to alert people to the overall limitations on the benefit of the investment, and not to discuss all the steps necessary to qualify for the deduction.)

The only other method by which the investment can be deducted is if a person who is already active in the trade or business of the production makes the investment. The Tax Court in Storey v. Commissioner (http://bit.ly/Storey-v-Commissioner) outlined how a documentary filmmaker was found to be a producer and thus eligible to reap the benefit of the Code §181. It is instructive for the rest of us about what constitutes being active in a trade or business sufficient to qualify as a producer eligible for the current deduction.

The following assumptions show how this works on a film production with a cost of $2 million, received and spent entirely in one calendar year, where the traditional model applies where the investors recoup their money in full, first, before any "profit participation" is distributed to talent or other contributors to a film:

• The production follows the steps necessary to qualify under §181 when filing its tax return for the year in question.

• The investors all have passive rental income in excess of their individual investments.

• All of the investors are in a tax bracket of 50%

• The production then receives license income of $1.5 million, significantly less than the cost of production.

In this example, the investors in the aggregate had a net after-tax risk of $1 million, since the deduction "saves" them 50% of the actual cost of the investment. When the production receives $1.5 million as license income, the investors will receive cash of $1.5 million, an amount in excess of their tax-advantaged investments, thus creating taxable income. Although the production's license income is less than the cost of production, the investors are "in profit" before the picture itself reaps a cash on cash profit. This surely will continue to be an incentive for such investors to invest again with that producer, and with other producers as well.

The reinstatement of §181 for 2015 and 2016 is a welcome incentive for producers and will likely help create more films, TV shows, and live theatrical events. It is only for a certain few, however. Further, its effect is to only accelerate the deductibility of the investment, which is only meaningful for as long as the show does not return the investment or a profit. Tax will always need to be paid on income in excess of the tax-advantaged investment. It is important to consult with a tax advisor for more information.

January 20, 2016

The 11 Contracts Every Artist, Songwriter & Producer Should Know: Video Production

By Steven R. Gordon

Steven R. Gordon (steve@stevegordonlaw.com, www.stevegordonlaw.com) is an entertainment attorney specializing in music, television, film and video. His clients include artists, songwriters, producers, managers, indie labels and music publishers as well as TV and film producers and digital music entrepreneurs. He also provides music and sample clearance services for producers of any kind of project involving music. Mr. Gordon is the author of The Future of the Music Business [www.futureofthemusicbusiness.com/] (Hal Leonard 4th ed. 2015).

The author gratefully acknowledges the assistance of Ryanne Perio, Esq. in the preparation of this article. Ryanne is a litigation associate at the WilmerHale law firm. He would also like to thank his intern Jena Terlip, 2L at Benjamin N. Cardozo School of Law, for her research and editing assistance.

DISCLAIMER
This series of articles and the forms included in them have been created for informational purposes only and do not constitute legal advice. This article and other articles in 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.

The eighth installment of this 11-part series on basic music industry agreements focuses on the business of producing music videos. This article contains a form agreement that can be used to hire a video producer, as well as releases for people and locations appearing in videos. Although MTV does not play many anymore, music videos have become more important in breaking new artists than ever before. Before making your own video, though, it's important to know the legal ins and outs of producing them.

INTRODUCTION

In the first part of this Introduction, I give a brief history of music video followed by a survey of how successful artists have used and continue to use them to launch their careers. The second part of the Introduction offers a summary of business considerations in producing videos.

PART I: HISTORY & CONTINUING IMPORTANCE OF MUSIC VIDEOS

1. Before Music Videos
Audiovisual presentations of music have existed since the first motion pictures containing sound. In fact, the first Hollywood "talkie," released in 1927, was a musical featuring Al Jolson called "The Jazz Singer." Before the invention of the video cameras, there were many musical short films featuring the performance of single songs, such as Frank Sinatra's patriotic "The House I Live In (That's America To Me.)" (https://www.youtube.com/watch?v=EWxW2Z5znWQ) These films were sometimes shown before main features at movie theatres. In the 1960s, artists like the Rolling Stones and the Beatles started to make short form films of individual songs to promote their albums. The dawn of what we think of as music videos began in the 1970s. For example, in 1975, Queen commissioned the production of a video for its new single, "Bohemian Rhapsody," to show on Top of the Pops, a popular British TV show showcasing the week's top hit songs. In the U.S., Video Concert Hall was launched on November 1, 1979 as the first nationwide video music program on American television, predating MTV by almost three years.

2. MTV and the Birth of the Era of Music Videos on Television
In 1981, MTV launched by airing "Video Killed the Radio Star," and began an era of 24-hour-a-day music videos on television.

The founders of MTV, including Robert Pitman (current chairman and CEO of iHeartMedia, Inc. (formerly Clear Channel)), convinced record labels to produce more videos and give them to MTV for free, just as they gave free records to radio stations. The pitch was that the videos would promote the labels' records and increase sales. The only money MTV paid to the labels was a relatively small fee to secure exclusive rights to play select videos for a limited period of time. For instance, MTV paid Sony Music $4 million a year for such rights.

By the mid-1980s, MTV grew to play a central role in marketing pop and rock music. Many important acts of this period-- most notably Madonna, Aerosmith, The Who, Phil Collins, John Mellencamp, Phil Collins and Billy Idol-- owe a great deal of their successes to the seductive appeal of their videos. After years of controversy regarding the lack of diversity among artists on the network, MTV aired Michael Jackson's "Billie Jean," "Thriller" and other videos, which helped Jackson become the best-selling pop artist of all time.

However, by the late 1990s, MTV sharply decreased the number of videos it showed on its airways. Former MTV president Van Toeffler explained: "Clearly, the novelty of just showing music videos has worn off. It's required us to reinvent ourselves to a contemporary audience." A decade later, MTV was playing an average of just three hours of music videos per day, preferring cartoons such Beavis and Butt-Head and, later, unscripted reality shows, such as Jersey Shore. MTV continued to play some music videos instead of relegating them exclusively to its sister channels (such as MTV Hits), but around this time, the channel began to air music videos only in the early morning hours and in Total Request Live , which aired the 10 most requested music videos of the day. As a result of these programming changes, Justin Timberlake implored MTV to "play more damn videos!" while giving an acceptance speech at the 2007 Video Music Awards. Despite the challenge from Timberlake, MTV continued to decrease its total rotation time for music videos in 2007 and shut down TRL in 2008.

3. YouTube and the Rise of Cover Videos
YouTube was created by three former PayPal employees in February 2005. In November 2006, it was bought by Google for $1.65 billion. The online video sharing site is this generation's MTV. Artists like Beyoncé and Taylor Swift regularly have hundreds of millions of views for new videos, and their record companies and music publishers monetize them by allowing ads. YouTube keeps approximately 40% of the ad income, although the details of its formulas for arriving at the exact amount is not public record, and the balance is paid to the copyright owners.

YouTube allows you to share your videos with a worldwide audience. However, the thing that makes YouTube great for new artists--that it's so easy to upload and reach a huge audience--also makes it incredibly competitive. YouTube reports that hundreds of hours of video content are uploaded to its servers each minute. Unfortunately, therefore, although you have a potential audience of millions who you can directly reach with your video, standing out in the sea of other content is a huge challenge.

One way new artists have used YouTube to attract attention is to "cover," that is, re-record hit songs. A good example of an artist who was discovered from making covers is Justin Bieber. Before he was the erratic "bad boy" that many love to hate, Justin Bieber was just a kid from Stratford, Ontario. At age 12 Bieber began to regularly post covers of hit R&B songs on his YouTube channel under the username "kidrauhl."

As his videos got more and more views, he was eventually discovered by talent manager Scooter Braun. After tracking Bieber down, Braun flew the then-13 year old to Atlanta to record some demo tapes. Braun introduced Bieber to Usher, who reportedly beat out Justin Timberlake in a bidding war to sign the young YouTube star. After being signed by Usher, Bieber recorded his first album, released the single "One Time," and proceeded to have his face put up on tween bedroom walls everywhere. He's had three multi-platinum albums that have all reached number one on the charts, and continues to play to sold-out arenas all across the world.

Another example of how cover videos have launched careers is Vazquez Sound, a musical trio known for its covers of hits, including Adele's "Rolling in the Deep," which has garnered over 172 million views. In September 2014, Vazquez Sounds released its first original album, which was an instant hit that earned a nomination at the 2015 Latin GRAMMYs for "Best New Artist." Another example is the pop duo, Karmin. Karmin broke a couple of years ago with a string of clever, sassy covers of hits by acts such as Lil Wayne, Nicki Minaj, and Katy Perry. Alessia Cara, a 19 year old Canadian singer and songwriter, is another example. She is currently signed to Def Jam and is best known for hit single "Here," which reached the Top 20 in the United States. Before her original album was released, though, Cara was known for her acoustic song covers on YouTube.

4. YouTube Musical Celebrities
Other artists have made careers by producing original content for their YouTube channels. A prime example is Lindsey Stirling. She plays the violin, dances and then does them both at the same time. Stirling began posting videos of herself performing in 2007 after failing to be signed by a major record label. Now, she claims they are begging to sign her, but it's too late--she doesn't need them anymore. Explains Stirling: "It's a very loyal fan base that wants you to succeed because they found you. It wasn't some big radio station or record label that shoved art down someone's throat." Coming in fourth in Forbes' round-up of the most financially successful YouTube personalities, Stirling raked in $6 million in earnings last year. She has also released two albums, "Shatter Me" and "Lindsey Stirling", scored a book deal, and developed a lucrative touring career.

5. YouTube's New Subscription Service
YouTube recently unveiled its long-discussed paid subscription service, "YouTube Red." The new service offers ad-free versions of all current YouTube videos and additional exclusive content from some of the site's top creators, including PewDiePie and Lilly Singh, both of whom perform music as well as comedy. It launched on October 28, 2015 and costs $9.99 per month. YouTube Red will have a big emphasis on music, providing access to music streaming service Google Play Music and a new app called YouTube Music, which offers a Pandora-like personalized playlist based on a selected song or artist. Both music apps also have ad-supported versions that non-Red users can access.

6. Self-Made Indie Videos Launching Careers On Social Media Such As Vine & Instagram
Over the past several years, with the advent of smart phones with video capability, as well as greater connectivity across social platforms, an entirely new phenomenon has occurred with singer songwriters as well as rappers catapulting themselves to recognition and commercial success. They use self-contained performances on social media in addition to, or other than, YouTube. One example is Shawn Mendes. In 2013, when he was 15, Shawn Mendes began posting cover videos on Vine and picked up millions of views. The next year he was signed to Island Records and became the youngest artist to debut in the Top 25 with a song on the Billboard Hot 100.

PART II: LEGAL AND BUSINESS ISSUES

1. Cover Videos
It is legally necessary to get a license from the owner of the song before making a cover video. However, YouTube has developed a system Content ID that deals with this issue. The system recognizes the identity of the cover song and then notifies the publisher. The publisher can then choose to order YouTube to take down the video, or let the video continue to play and "monetize" it. If the latter is chosen, YouTube splits the advertising revenue with the publisher. It is important to note that if the publisher chooses the second option, the artist performing the cover will not receive any of the fees generated by advertising. This, however, is to be weighed against the possibility of worldwide recognition discussed above.

Although Vine and Instagram do not employ Content ID, the music publishers have not, so far, cracked down on covers on these social networks. An argument could be made that the snippets played in these services are "de minimis," i.e., too trivial to amount to copyright infringement. It can also be argued in a litigation defense that these brief videos are "fair use." The argument would be that, under the doctrine of fair use, a person can use a brief excerpt of a copyrighted work if the new work is "transformative" of the original.

2. Work For Hire Production Contract
I was the Director of Business Affairs for TV & Video at Sony Music from 1991 to 2001. We produced over 250 videos each year that I worked there, and every video that Sony commissioned was a "work for hire." Under the copyright law, a work for hire is defined as follows:

(1) a work prepared by an employee within the scope of his or her employment; or
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

In the case of works made for hire, "the employer or other person for whom the work was prepared is considered the author ...[and] owns all of the rights comprised in the copyright."

Recently I worked with a small book publishing company that wished to produce a series of music videos to promote the new edition on one of its religious text books. The videos will feature songs by 12 different Christian rock acts. The agreement that we used to commission the videos was basically the same as Sony's work for hire agreement. I recommend to my artist clients the same business format for the production of their music videos. Re-published below is sample work for hire contract for producing a music video.

3. Releases
If you are either a new artist or a small label, and you wish to create a music video, in addition to using a work for hire agreement, you should also make sure that you will not have legal problems associated later on with any person or location depicted in your video. Although you should always have every side artist, model, dancer or actor in your video sign a release, some judgment is required when determining whether to secure a location release.

Personal Releases: If a label is commissioning a video, the artist's appearance in the video will generally be covered by the recording agreement between the artist and the label, which usually includes a provision specifically addressing music videos and giving the label the right to use the video for any promotional or commercial purpose. If an indie artist is appearing in a video, obviously he or she will not need a release for his or her own performance. Regardless of whether the commissioning party is a label or an artist, it will want to have any other person appearing or performing in the video sign a personal release giving the label or the artist, as the case may be, the right to use the video, including that person's appearance and/or performance in any and all media. Usually, the production company will handle this responsibility.

An example of a personal release is included below. Personal releases do not vary very much, although some contain more legalese than others. The basic point of any personal release, however, is that the person signing the release grants the artist or label all rights to use his or her appearance and/or performance in the video.

Note that the person signing such a release may have recorded the audio performance as a background vocalist or musician. A separate contract usually covers that audio recording, but the release contained below would cover that audio performance as well. Please also note that the release usually does not include financial remuneration; but if a musician, dancer or actor contributed a performance in the underlying audio track, there may be a separate agreement in which that person is compensated.

A cautionary tale about failing to secure proper releases: The producer of a video for an artist at a major record label used a picture of an old girlfriend from her Facebook profile in a spilt second of a still titled "Missing Persons" in a video featuring the artist singing about a romantic break-up. The ex-girlfriend noticed and was not pleased. She retained a lawyer who was able to negotiate a significant settlement.

Crowds and Audiences: If you are shooting in a public place, releases should be given to anyone wandering into the scene if anyone is are recognizable. If a person doesn't want to sign the release, you should avoid using that footage. If you are shooting in front of a live audience, you can use one or more signs at the entrance to the performance area informing the audience members that, by entering, they consent to appearing in the video. The sign (or signs) should be large enough and displayed in a place prominent enough that anyone entering will notice. However, if a person from the audience is featured, or especially if he or she appears on stage, a personal release should be signed.

Location Release: The location release at the end of this article is for a venue that agrees to let you shoot your video at the location without a fee. It is particularly useful if there is a sign or logo that people would recognize. The release will make it clear that no consideration was expected for the use of the location. Of course, sometimes a location, such as a restaurant or bar, will require a fee. In that case, the amount to be paid can be inserted in the release.

Public Places: Generally, if public venues and landmarks, such as the Empire State Building appear in the video, you do not need a release if the location is incidental to the action in the video. If, however, you are shooting in front of a well-known place, such as Nathan's hotdog restaurant in Coney Island, and its name appears prominently in the video, it would be wise to have the manager sign a location release.

4. Trademarks
The use of a trademark in a music video is generally protected by the First Amendment, but not always.

Likelihood of Confusion Test: The limited purpose of trademark protection set forth in the Lanham Trademark Act (15 U.S.C. § 1051 et. seq.) is to avoid confusion in the marketplace by allowing a trademark owner to prevent others from duping consumers into buying a product or using a service they mistakenly believe is sponsored by the trademark owner. Trademark law aims to protect trademark owners from a false perception that they are associated with or endorse a product or service. Generally, to assess whether a defendant has infringed upon a plaintiff's trademark, the courts apply a "likelihood of confusion" test that asks whether use of the plaintiff's trademark by the defendant is likely to cause confusion or mistake, or to deceive as to the affiliation, connection, or association of plaintiff's brand with defendant's product or service.

Applying these principles to music videos, the bottom line is that if a trademark is used in such a way that it is not likely to confuse a viewer into thinking that the brand sponsored the video, the producer may have a First Amendment right to use the mark (notwithstanding any licensing issues). The classic example is a rapper wearing a baseball cap or t-shirt. Just because the singer may be wearing a Yankees cap or Baltimore Orioles t-shirt doesn't mean that a reasonable person would think that the Yankees or Orioles sponsored or produced the video.

On the other hand, where a trademark is prominently featured, it may be reasonable to think that a brand is sponsoring the video. For instance, a number of brands are featured in the video for "Telephone" featuring Beyoncé and Lady Gaga. Yet in that case, the brands were actually sponsoring the video by paying for product placement. In fact, these days, many indie artists use brands to help pay for or at least defray the costs of their videos. However, if you have not received approval or received a sponsorship from a brand, it is important not to lead your viewers to believe that you have by drawing too much attention to the brand in your video.

Product Disparagement: This is also called product defamation, trade libel, or slander of goods; product disparagement is any statement about a brand that is false and likely to adversely affect its profits. Product disparagement includes negative statements about a product or service, false comparisons of competing consumer products or services, and statements harming the reputation of an artist.

When applying these principals to a music video, it is important to note that showing a brand's name or logo in a negative context could prompt a demand that the video be changed or not shown at all. Consider this real world example: A record label made a video in the early 1990s, when MTV was still playing videos, of a toy train running off the track and smashing into small models of people made of clay. During the video, close-ups of the artist as the conductor of the wayward train would appear. The video was lighthearted, and no one would think that the artist/conductor was actually running over real people. However, the name of the well-known U.S. railroad appeared on the toy train, and its representatives were less than amused. In fact, they sent a letter to MTV demanding that it stop playing the video. The label agreed to take the name off the toy train by blurring it, but the railroad still insisted that the video be banned because the color of the toy train--a particular shade of yellow--was the same color as its actual trains. The label reacted by changing the entire color of the video to sepia, which made the toy trains a different shade of yellow. Yet the railroad still had a problem because the cars were still yellow. The label defiantly re-released the video. However, the railroad company initiated a lawsuit against the label and was able to persuade a federal judge to permanently enjoin the further exhibition of the video on MTV and any other outlet. Later, the label settled the suit by paying damages to the railroad, in addition to agreeing to never use the video for any purpose again.

5. Artwork and Other Copyrighted Works
A best practice is to avoid using material protected by copyright. This will save you a lot of headaches, and possibly money. The case of Ringgold v. Black Entertainment Television is an important case in this regard. In the late 1990s, Faith Ringgold, a successful contemporary artist, sued BET for airing an episode of a television series called ROC in which a poster containing her artwork appeared. In the scene, at least a portion of the poster was shown a total of nine times. In some of those instances, the poster was at the center of the screen, although nothing in the dialogue, action, or camera work particularly called the viewer's attention to it. The nine sequences in which a portion of the poster was visible ranged in duration from a little more than one to four seconds. The aggregate duration of all nine sequences was approximately 27 seconds.

The case was decided by a federal appeals court in New York. The court found BET liable, rejecting the de minimis defense. As already noted in the section on "Cover Videos" above, if the amount of a work copied is so trivial as to fall below the quantitative threshold of substantial similarity, the copying is de minimis, and does not constitute copyright infringement. However, the court found that in addition to its appearance in the scene, there was also a qualitative connection between the poster and the show. The poster included a painting depicting a Sunday school picnic held by the Freedom Baptist Church in Atlanta, Georgia in 1909, and was intended to convey "aspects of the African-American experience in the early 1900s." ROC was a television sitcom series about a middle-class African-American family living in Baltimore, and the scene in question was of a gathering in a church hall with a minister.

In contrast to Ringgold, the case of Sandoval vs. New Line Cinema Corp stands for the proposition that use of copyrighted artwork in the background of a scene may be de minimis.

In Sandoval, the same court that decided the Ringgold case, found that the use of the plaintiff's copyrighted photographs in the motion picture "Seven" was de minimis and therefore not actionable. The photographs appeared in the film for a total of 35.6 seconds, but they were always in the background and never in focus. The court found that the "photographs as used in the movie [were] not displayed with sufficient detail for the average lay observer to identify even the subject matter of the photographs, much less the style used in creating them." The court distinguished the facts from Ringgold because there was no substantive connection between the appearance of the photos and the subject matter of the scene.  

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The agreement below contemplates that an artist is hiring a production company to produce a promotional video. The same form of agreement may be used by a record company. An artist may consider forming a corporate entity (i.e., C corporation, Subchapter S or LLC) in order to avoid any personal liability in regard to any agreement including a video production agreement. In addition, an artist would be wise to consult with an accountant or attorney about forming an LLC or S corporation for tax purposes including eligibility to deduct video expenses from his or her personal income.

DISCLAIMER
This form has been created for informational purposes only and does not constitute legal advice. You should consult an attorney before making any such legal agreements.


VIDEO PRODUCTION AGREEMENT


This agreement ("Agreement"), effective as of _____, 2016, is between __________ ("Artist") with an address of __________________, and _____________ ("Producer"), with an address at _____________________________.

WITNESSETH:

WHEREAS, Producer has recognized expertise in video production; and

WHEREAS, Artist wishes to engage Producer to record a music video featuring Artist performing a song titled "_____________" (the "Video").

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1. PRODUCTION SERVICES

1.1. Producer shall provide Artist with the video recording and production services (hereinafter "Production Services") described within this Agreement.

1.2. Principal photography shall begin on ____________, 2016. Producer shall make Delivery, as defined herein, of the Video to Artist no later than _________, 2016. "Delivery" shall consist of delivery of (i) a fully edited sound synchronized video master, and (ii) all other recorded elements created during production, including but not limited to all audio tracks, video footage and outtakes. Delivery will not be deemed to have occurred until Artist accepts the Video as suitable for commercial exploitation.

1.3. Producer shall provide the Production Services to Artist promptly with the degree of skill, attention and due care that is standard practice within the professional Production Services industry.

1.4. Producer and Artist agree that the budget attached in Schedule A shall represent 100% of the funds required to produce the Video (hereinafter "Budget"). This amount represents the Producer's total anticipated costs and profit.

The Budget should include all costs for producing the video including producer and director fees as well as post production editing costs. For examples of music video budgets ranging from "shoestring" to "commercial/studio" budgets, see http://garrettgibbons.com/music-video-budgets.


1.5. If the Producer hires a director (hereinafter "Director"), the Director shall be an employee of the Producer for purposes of the production and Delivery of the Video.

1.6. All employees and representatives of Producer providing the Production Services hereunder to Artist during the Term of this Agreement shall be deemed for all purposes (including all compensation, taxes and employee benefits) to be employees or representatives solely of Producer, and not to be employees or representatives of Artist or to be independent contractors of Artist.

1.7. The Video shall depict content to be included in a treatment or script to be approved by Artist prior to principal photography.

2. GRANT OF RIGHT: WORK MADE FOR HIRE

This clause transfers all rights to the person (or company as the case may be) commissioning the Video.


2.1. Production Services provided by the Producer and any other person providing such Services shall be deemed to be provided on a "work made for hire" basis as that term is defined under the U.S. copyright law. The Video and all other materials created or contributed by the Producer including all footage, outtakes and audio tracks (the "Materials"), shall be the sole property of Artist throughout the universe, free from any claims whatsoever by Producer; and Artist shall have the exclusive right to register the copyright(s) in such Materials in her name as the owner and author thereof and to secure any and all renewals and extensions of such copyright(s).

2.2. Without limiting the generality of the foregoing, Artist and any person authorized by Artist shall have the unlimited exclusive right, throughout the universe, to manufacture or create copies of the Video or any other Materials by any method now or hereafter known, or any work derived from the Video or the Materials and to sell, market, transfer or otherwise deal in same under any trademarks, trade names and labels, or to refrain from such manufacture, sale and dealing.

2.3 Artist or any Person authorized by Artist shall have the right throughout the universe, and may grant to others the right, to reproduce, print, publish, or disseminate in any medium the name, portraits, pictures, likenesses and biographical material concerning Producer and Director any other person providing Production Services, as news or information, or for the purposes of trade, or for advertising purposes, in connection with promotion marketing and sale of the Video. As used in this Agreement, "name" shall include, without limitation, any professional names.

3. COMPENSATION

3.1. The Parties agree that the Effective Date of this Agreement shall be as set forth at the beginning of this Agreement (hereinafter "Effective Date"). The parties acknowledge that the total amount of the attached Budget is___________ Dollars ($_____). Within five (5) days of the Effective Date, Artist shall pay Producer 50% of the Budget, that is, _________ Dollars ($_____). The second payment of 25%, that is, _________ Dollars ($_____), shall be due upon completion of principal photography. The third and last 25% payment of ________ Dollars ($_____) shall be due upon Delivery of the Video and other Materials to Artist.

3.2. Overages. In regard to overages to the Budget, Producer shall not charge Artist any monies in addition to the approved Budget without Artist's prior written approval.

4. NOTICES

Notices, reports, accountings or other communication which Producer or Artist may require or desire to send to the other must be delivered either by:

Certified mail, return receipt requested to the parties at the addresses first written above or other address to be designated by Producer or Artist as the case may be; or

Electronic mail at the following addresses:

(i) for Artist: _________@___.com
(ii) for Producer: ___________@___.com

5. ASSIGNMENT

Producer may not assign this Agreement or any right or obligations under this Agreement. Artist may assign this Agreement or any of her rights or obligations hereunder to any person, firm, or corporation including a corporation in which Artist is a principal, provided that (i) Artist shall remain responsible for any payments required to be made under this Agreement, and (ii) the assignee has the necessary cash on hand to make any payments required under this Agreement.

6. WARRANTIES AND INDEMNIFICATION

6.1. Producer warrants and represents that he has the legal right to enter into this Agreement including the legal right to sign on behalf of the Director. Producer further warrants and represents that (a) all content contributed by the Producer shall be original and not interfere with or violate any rights of any third party; and (b) no content appearing in the Video, including artwork or photography, will interfere with or violate any rights of any third party.

6.2 Producer warrants and represents that he shall provide valid signed releases from any third party performing or appearing in the video, and that he shall, if legally required, secure valid signed location releases from any location appearing in the video. Acceptable forms of release are attached hereto as Schedule "A" and "B" respectively.

The attached releases may be used as Schedules A and B. Note that the releases allow the Producer to assign the rights secured in the releases to the Artist.

6.3. Producer and each of his representatives, employees, contractors, agents and representatives hereby release, indemnify and agree to hold harmless Artist and her agents and representatives from and against any and all losses and/or damages which arise out of the Production Services.

7. TERMINATION

Artist may terminate this Agreement upon written notice in the event of a material breach by Producer, including late delivery of the Video, if such breach is not cured within __ days of notice thereof. If such breach is not cured within that time, Producer shall not be entitled to any additional payments and, upon notice by Artist, Producer shall refund to Artist any monies previously paid.

8. MISCELLANEOUS

8.1. Governing Law. This Agreement shall be interpreted under the laws of the state of ________ without regard to its choice-of-law rules, and the parties shall submit to the exclusive jurisdiction of the courts of that state.

Since the Artist is the party paying money in this Agreement, the Artist should have the right to decide in which state any dispute arising from the Agreement should be litigated.

8.2. Relationship of Parties. Producer and Artist shall have the relationship of independent contractors. Nothing herein shall be construed to place Producer and Artist in the relationship of principal and agent, employer and employee, master and servant, partners, or joint venturers, and neither party shall, either expressly or by implication, have represented themselves as having any authority to make contracts in the name of, or binding on, each other, or to obligate the other in any manner.

8.3. Complete Agreement. Producer and Artist acknowledge that this Agreement represents the complete and exclusive statement of the agreement between the Producer and Artist with regard to the subject matter herein, and that it supersedes any proposal or prior agreement, whether oral or written, and any other communications between the Parties relating to the subject matter of this agreement.

8.4. Enforcement. If any provision of this Agreement shall be found invalid or unenforceable, then such provision shall not invalidate or in any way affect the enforceability of the remainder of this Agreement.

UNDERSTOOD AND AGREED:

[ARTIST's NAME]

_______________________________


[NAME OF PRODUCER]

_______________________________

SS #____________________________


If the Producer is a production company or LLC ("Production Company"), the president or managing partner should sign the personal guarantee below:


In order to induce Artist to enter into this Agreement, I hereby agree and acknowledge that (a) I have read all of the terms and conditions set forth in this Agreement; and (b) I shall be personally bound by all the terms and conditions in this Agreement applying to the Production Company, and that I shall be personally liable for any breach of this Agreement by Production Company.

PRESIDENT OR MANAGING PARTNER

_______________________________
Print Name: _____________________
Position: ________________________

PERSONAL RELEASE

To ______________ ("Producer")
Address

I understand that Producer is producing a video containing the performance of a song titled "_____________" (the "Video").

For good and valuable consideration, including my desire to appear in the Video, I irrevocably grant to Producer, his licensees and assigns the right to film, videotape, portray and photograph me, my likeness and my performance, and to record my voice and other sound effects, and the right to use them or any portion thereof, and my name and any biographical facts which may have been provided to Producer, in connection with the production of the Video and the advertising, promotion and publicity therefor, and all rights of every nature whatsoever in and to all films, video, portrayals, photographs, performances and recordings produced hereunder ("Material"), including without limitation all copyrights therein and renewals and extensions thereof, and the exclusive right to reproduce, exhibit, distribute and otherwise exploit the Material in whole or in part in perpetuity throughout the universe in all languages, in any and all versions (including digitized versions) and forms, and in any and all media now known or hereafter devised. Independently and apart from any consideration accruing to me hereunder, I hereby release Producer and Producer's authorized designees from, and covenant not to sue Producer and Producer's authorized designees for any claim or cause of action, whether known or unknown, for libel, slander, invasion of right of privacy, publicity or personality, or any other claim or cause of action, based upon or relating to the exercise of any of the rights referred to herein. I understand that nothing herein will require Producer or Producer's designees actually to produce or utilize any Material hereunder.

This grant is irrevocable so that Producer may proceed in reliance thereon. This instrument contains the entire understanding of the parties, may not be changed or terminated except by an instrument by Producer and me and will be construed in accordance with the laws of the State of ______, provided that the courts of the state of __________ shall have exclusive jurisdiction to resolve any disputes arising from this Release.


Dated:______________________

Authorized Signature

______________________________
[Print name]


LOCATION RELEASE

Property Owner: [Name]
Address: ___________________________ _
Phone: ____________________________ Fax: _______________________________
Email: _____________________________ Contact: ____________________________

Producer: [Name]
Address: _____________________________
Phone: _____________________________ Fax: ______________________________
Email: ______________________________ Contact: _____________________________

Your signature in the space provided below as owner or agent, will confirm the following agreement ("Agreement") between you as the Property Owner ("Owner") and Producer regarding filming of your property (the "Premises") described below in connection with a video containing the performance of a song titled "_____________" (the "Video").

1. For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner hereby grants to Producer the right during the Term (as defined below) hereof to photograph and record at, the Premises (including, without limitation, the right to photograph and record both the real and personal property, all of the signs, displays, exteriors, and the like appearing therein, if any) for the period specified below.

2. As used herein, the term "Premises" refers to the premises located at: __________________________________________________________________

3. The term hereof (the "Term") shall commence from __________am/pm to ____________ am/pm on or about ____________________________ and shall continue until _________________________, unless modified by the parties. The Term shall be subject to modification due to changes in production schedules. Owner agrees to consult closely with Producer's representatives to ensure scheduling is arranged which will allow for completion of the scenes planned to be included in the Video using the Premises. Owner acknowledges that Producer is incurring significant expenses in reliance on Owner's cooperation and participation in connection with this Agreement and that Owner may be held responsible for the actual and/or consequential damages incurred by any breach of this agreement.

4. Owner represents and warrants that: (a) Owner has the right and authority to make and enter into this Agreement and to grant Producer the rights set forth herein, without obtaining any consents or permissions from any third party; and (b) Owner shall take no action, nor allow or authorize any third party to take any action which might interfere with Producer's authorized use of the Premises. Owner hereby waives all rights of privacy or other rights of a similar nature with respect to Producer's use of the Premises. Owner shall indemnify Producer, his licensees and assigns, and their parent, affiliate, and related entities, shareholders, directors, officers and employees from and against any breach or claim of breach by Owner of any representation, warranty, agreement or obligation herein.

5. Producer shall leave the Property in as good condition as when received, reasonable wear and tear to be expected. Producer shall remove all of his material, equipment and personnel from the Property.

6. Producer agrees to indemnify and hold Owner harmless from damage to the Premises and property located thereon and for personal injury occurring on the Premises during the Term and from any liability and loss which Owner may incur by reason of any accidents, injuries, death or other damage to the Premises directly caused by Producer's negligence in connection with his use of the Premises. In connection therewith Owner must submit to Producer, within three (3) days after Producer vacates the Premises, a detailed list of any property damage or personal injuries which Owner feels Producer is responsible, failing which Owner will be deemed to have acknowledged that there is no property damage or personal injuries for which Producer is responsible. Owner shall permit Producer's representatives to inspect any damaged property and to verify any claims for damages by Owner.

7. Nothing shall obligate Producer to photograph, to use such photography, or to otherwise use the Premises. Producer shall have the right to photograph, record and depict the Premises and/or any part or parts thereof, accurately or otherwise, as Producer may choose, using and/or reproducing the actual name, signs, logos, trademarks and other identifying features thereof and/or without regard to the actual appearance or name of the Premises or any part or parts thereof, in connection with the Video.

8. a. Owner acknowledges that, as between Owner and Producer, Producer is the copyright owner of the photography and/or recordings of the Premises, and that Producer, his successors and assigns have the irrevocable and perpetual right, throughout the universe, in any matter and in any media to use and exploit the films, photographs, and recordings made of or on the Premises in such manner and to such extent as Producer desires in his sole discretion without payment of additional compensation to Owner. Producer and his licensees, assigns and successors shall be the sole and exclusive owner of all rights of whatever nature, including all copyrights, in and to all films, programs, products (including interactive and multimedia products), photographs, and recordings made on or of the Premises, and in the advertising and publicity thereof, in perpetuity throughout the universe.

b. The Owner hereby gives to Producer, his assigns, agents, licensees, affiliates, clients, principals, and representatives the absolute right to use any names associated with the Property in the Video, or to promote the Video, all without inspection or further consent or approval by the Owner.

9. Producer may assign or transfer this Agreement or all or any part of his rights hereunder to any person, film or corporation; Owner agrees that Owner shall not have the right to assign or transfer this Agreement.

10. From the date of execution of this Agreement, through and including the date this Agreement may be terminated, Producer shall keep or cause to be kept in force the following insurance:
Commercial General Liability Insurance, including public liability, contractual liability, bodily injury, and property damage insurance, each policy with a combined single limit of bodily injury and property damage liability of $1,000,000.00 per accident or occurrence. Owner shall be an additional insured. The policies shall provide that they cannot be canceled or reduced without thirty (30) days prior written notice to Owner.

All insurance policies required hereunder shall be with companies having at least a Best A+10 rating as of the date of issuance of the policy, and shall contain language to the extent obtainable, to the effect that (i) any loss shall be payable notwithstanding any act or negligence of Owner that might otherwise result in a forfeiture of the insurance, (ii) that the insurer waives the right to subrogation against Owner and against Owner's agents and representatives, including Owner's insurers, (iii) that the policies are primary and non-contributing with any insurance that may be carried by Owner. Producer shall furnish Owner with certificates evidencing the insurance on or before ______________________. All certificates of insurance required herein, and exclusions from coverage in all policies, and the actual liability policies are subject to the approval of Owner's counsel.

Insurance should be obtained if shooting is to occur inside a location such as a store or someone's house. The cost of the insurance should be included in the Budget for the Video.

11. This Agreement constitutes a binding agreement and is the entire agreement among Producer and Owner and supersedes all prior negotiations and communications, whether written or oral; representations and warranties, whether written or oral; and documents and writings, whether signed or unsigned, with respect to the subject matter hereof.

APPROVED AND ACCEPTED:

Owner or Owner Representative
Signature: _________________________
Print Name: _________________________

Producer or Producer Representative
Signature: _________________________
Print Name: _________________________

February 12, 2016

The Copyright Royalty Board Releases Decision on Webcasting Royalties for 2016-2020 (Webcasting IV)

By Barry Skidelsky, Esq.

The Copyright Royalty Board (CRB) recently released its full decision (http://www.loc.gov/crb/web-iv/web-iv-determination.pdf) concerning royalites that webcasters must pay to Sound Exchange for the public performance of sound recordings that are digitally distributed over the Internet and to mobile devices.

For most commercial webcasters who stream (including FCC licensed broadcasters), the royalty rate actually dropped, which may be the first time in any CRB proceeding where rates went down as the result of a CRB decision. The CRB essentially left in place the rates for non-commercial webcasters. The subscription rates for "pure-play" webcasters (such as Pandora) also decreased, although their non-subscription rates saw a modest rise. All rates are subject to periodic cost-of-living increases.

Most royalty terms remain unchanged from prior years, including requirements for payment of minimum fees at the end of each January in addition to payment of monthly fees. Sound Exchange audits must still be performed by a CPA, a requirement that the music licensing collective had sought to eliminate.

Although prior settlements allowed small commercial webcasters to avoid certain regulatory burdens and pay based on a percentage of their revenue (rather then be subject to the more complicated per-performance formulas generally used as part of the United State's balkanized approach to music copyright licensing), there were no small commercial webcasters who litigated this proceeding (known as Webcasting IV), which obviously precludes their direct participation in any possible appeal. It remains to be seen what actions, if any, Sound Exchange and/or the other players may take next in the wake of this CRB decision.

A Berklee-trained musician and former radio broadcaster, Barry is a member of EASL's Executive Committee, and he Co-Chairs the Section's Television & Radio Committee. A former co-chair of the NY chapter of the Federal Communications Bar Association (whose members practice before the FCC in Washington DC), Barry's practice focuses on communications, entertainment and technology. (bskidelsky@mindspring.com or 212-832-4800)

March 7, 2016

Urgent Warning: Beware Of NBC/Universal's "SONGLAND" Submission Form

By Wallace Collins
www.wallacecollins.com

The NBC/Universal submission agreement for the "Songland" TV show states that NBC will own all rights to use and exploit all of your songs involved in the show including the songs you submit in the initial application. You would also purportedly be giving up your song even if you do not get selected to be on the Songland TV show (so whatever songs you use to audition would arguably become theirs to use and exploit even if they do not choose you). It also states that you waive your rights to claim any royalties from the songs whatsoever. On top of that, it states that you waive your right to sue NBC Songland (e.g., in case you didn't read the contract upon signing).

There is no way to know if NBC/Universal would actually pursue such a course of action and claim to be able to use and exploit all of the submitted songs without paying songwriters - the only thing I am addressing here is the language in the submission agreement. This is by far one of the most onerous such television contest submission agreements I have encountered. There is no warning of what the contract entails until the final part of the submission application, and what they are offering is crippling for songwriters. Most songwriters make their life's savings off of just a few big hits, and to be required to give away your best work like this for free is quite extreme.

Below are some relevant portions of the Songland submission contract:

- "I further agree that the Released Parties exclusively own all right, title, and interest (including, without limitation, all copyrights) in and to any and all recordings made by them and in and to any and all video that I have provided in connection with my application and any other materials that I have provided or may provide in connection with my application or the Program"

- "Without in any way limiting the waivers and releases set forth herein, I waive any claims to royalties of any kind, whether accruing now or in the future, from Producer and NBCUniversal for the use of any such Music or any other music, including, without limitation, any applicable copyright, public performance, mechanical and synchronization royalties."

- "I grant the rights hereunder whether or not I am selected to participate in the Program in any manner whatsoever. "

- "The term "Released Parties" shall mean and refer to Producer, NBCUniversal Media, LLC ("Network"), all entities and platforms of Network, Comcast Corporation, any other licensees or assignees of the Program or the Materials, the other participants in the Program, all other persons and entities connected with the Program, all parent, subsidiary, related and affiliated entities, licensees, successors, assigns, sponsors and advertisers of each of the foregoing, all of the respective directors, officers, principals, executives, on-air talent, employees, agents, contractors, partners, shareholders, representatives and members of each of the foregoing, and the respective heirs, next of kin, spouses, guardians, representatives, executors, administrators, successors, licensees and assigns of each of the foregoing."

Now, to be impartial, maybe the NBC/Universal lawyers did not mean for it to be so onerous and were merely drafting broad language to cover all contingencies and protect their client. Normally, one side's lawyers might draft a contract like this and the other side's lawyer would review it and clean up the most egregious language in order to protect the client. Here, however, there is no negotiation - this is technically known as a "contract of adhesion" in legal terminology.

So be warned that you should always read all of the language in such agreements and decide if the risk is worth the reward. Although it might be deemed overreaching vis-a-vis an adhesion contract if NBC were to try to enforce this against all songwriters who submit, it is better not to go down that road.

March 8, 2016

NBC Universal Changes Language in Songland Submission Form

By Wallace Collins

After my statements went viral and there was a big outcry from songwriters, NBC announced that it would change the language:

http://www.thewrap.com/nbc-changes-contract-to-adam-levines-songland-after-claim-of-rights-overreach/

It started with just one voice, but then tens of thousands of songwriters and musicians joined in, and it made a difference!

September 29, 2016

Summary of Today's Meeting of the Commissioners of the Federal Communications Commission

By Barry Skidelsky, Esq.

Barry is a NYC based attorney and consultant in private practice, handling diverse regulatory, litigation and transactional matters, principally for clients (such as lenders, owners, management and talent) and other lawyers who are involved directly or indirectly with communications, media, entertainment and technology. A member of the NYSBA EASL Section Executive Committee, Barry co-chairs its Television-Radio Committee, and he is former chair of the NY chapter of the Federal Communications Bar Association (whose members in part practice before the FCC in Washington DC). Barry was also a former General Counsel for several private and public companies in the above mentioned fields, and can be reached at (212) 832-4800 or bskidelsky@mindspring.com.

At this morning's meeting of the Commissioners of the Federal Communications Commission (FCC), the FCC: (i) voted unanimously to adopt a Report and Order intended to foster increased foreign ownership of and foreign investment in U.S. broadcast stations; and, (ii) with two dissents along party lines, as frequently occurs, voted to adopt a Notice of Proposed Rule Making (NPRM) intended to promote the growth of independent video programming.

Foreign Ownership of U.S. Broadcast Stations (FCC GN Docket No. 15-236)

Citing the outdated original policy underpinnings of avoiding interference with ship to shore radio communications during war time, the FCC downplayed those national security concerns and noted the current inconsistency between FCC regulations that on the one hand allow foreign citizens to own a nation-wide mobile wireless network in the United States, but on the other hand restrict foreign ownership of merely one small rural American radio station (an implied reference to Pandora's efforts to buy a small FM radio station in South Dakota, in an attempt to leverage a music copyright licensing advantage).

Accordingly, the FCC today unanimously voted to extend to broadcasters a liberalized and streamlined foreign ownership approval process, akin to that adopted about three years ago for common carriers. Stated goals were to reduce regulatory burdens and to foster or improve access to capital, which now affords foreign lenders and investors an unprecedented opportunity to be (or become more) involved with inter alia U.S. radio and television stations licensed by the FCC.

Diverse and Independent Sources of Video Programming (FCC MB Docket No. 16-41)

In addition, a majority of the FCC Commissioners voted to adopt an NPRM intended to benefit video programmers -- who are independent of major studios and multichannel video program distributors (MVPDs), such as cable and satellite system operators -- in connection with carriage contract negotiations between the video programmers and MVPDs.

Essentially, the FCC proposes to ban certain TV carriage contract clauses that the Commission believes unfairly favor MVPDs, such as most favored nations (MFN) and alternative distribution media (ADM) clauses that MVPDs have insisted on being included in deals they negotiate with independent programmers. MVPD bargaining power generally disfavors the content owners.

Although both MVPDs and independent video programmers or content owners (as well as other interested persons or entities) will have an opportunity to file formal comments with the FCC about this matter after the agency releases the text of its NPRM (as usual, editorial privileges were reserved at today's meeting), the lack of authority by the FCC to meddle in private TV contract negotiations will surely be raised.

Video Navigation Choices and Devices (FCC MB Docket 16-42; CS Docket No. 97-80)

Lastly, the also controversial and so-called TV set top box (STB) item was dropped from today's FCC agenda at the eleventh hour in the wake of opposition from content and copyright owners, as well as due to the apparent failure of a majority of the FCC Commissioners to reach consensus on this item.

The STB item remains in circulation for further consideration at the FCC behind closed doors, with any opportunity for further public comment uncertain as of this writing.

Ostensibly, the FCC wants to give consumers competitive alternatives to paying monthly STB rental fees to their cable or satellite providers. However, the politics, issues and other realities behind this item are much more complex, and they are far beyond the scope of this brief summary of today's FCC actions.

Conclusion

As always, all of us who are involved directly or indirectly with the ever converging fields of communications, media, entertainment and technology, are best advised to stay informed -- and, whenever possible, to actively participate in rule-makings and otherwise engage in advocacy -- to help shape the federal government's involvement in the related creative and business realms, and for the benefit of the public and private interests we may respectively represent.


October 7, 2016

EASL Television & Radio Committee Report re Inaugural TV General Counsel Roundtable

Pamela Jones and Barry Skidelsky, co-chairs of EASL's Television & Radio Committee, report that Eriq Gardner, senior editor for the Hollywood Reporter, will moderate a panel discussion among several prominent cable TV network general counsel on January 24, 2017. Save the date!

This prestigious TV GC Roundtable will take place at the New York Hilton/Midtown Manhattan (1335 Avenue of the Americas, between 53rd and 54th Streets) as part of NYSBA's week-long Annual Meeting. CLE credit will be provided. A networking reception will follow off-site.

As this is the first edition of what is expected to become an annual luncheon/networking event organized by EASL's Television & Radio Committee, Pam and Barry are also planning now for next year with leading general counsel from traditional and online broadcasting.

Please contact Pam (pamela@pamelajonesesq.com) or Barry (bskidelsky@mindspring.com) for more information and/or future speaker opportunities, and help spread the growing buzz!

April 16, 2017

The Federal Communications Commission Announces Results of Broadcast Television Auction

By Barry Skidelsky

On April 13th, the Federal Communications Commission (FCC) made public the results of its so-called "incentive auction", which began about one year ago, whereby the broadcast television station spectrum was relinquished to be repurposed in support of U.S. consumers' growing demands for mobile broadband.

According to an FCC News Release, a total of $19.8 billion of gross revenue was realized by the federal government for an aggregate 70 MHz of nation-wide spectrum. Of those proceeds, approximately $10 billion will be disbursed to 175 television broadcasters who participated in the so-called "reverse" stage of the auction.

30 of those 175 broadcasters will relocate to a lower channel, and the remaining 145 will relinquish their licenses. However, the latter group is planning to stay on-the-air via channel-sharing agreements with other television broadcasters who did not participate in the auction. The broadcasters will be required to complete their transitions within 39 months.

Among the largest of the 50 successful bidders in the so-called "forward" stage of the auction were: T-Mobile, US Cellular, Dish, and Comcast. More specific details are provided in and linked to the FCC's News Release (https://apps.fcc.gov/edocs_public/attachmatch/DOC-344397A1.pdf), as well as in a companion summary sheet labeled "By the Numbers." (http://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db0413/DOC-344398A1.pdf)

Barry Skidelsky is a New York City based attorney and consultant with a nationally prominent diverse practice. He often works with other lawyers or law firms, as well as with individuals and entities directly or indirectly involved with entertainment, communications and technology. His background also includes service as General Counsel for several companies in those fields. A member of the EASL Executive Committee and co-chair of the EASL TV & Radio Committee, Barry is a former chair of the New York Chapter of the Federal Communications Bar Association (whose members' practices in part involve the FCC in Washington DC). Contact Barry at bskidelsky@mindspring.com or 212-832-4800.

October 12, 2017

FCC Grants Experimental License for Project Loon to Operate in Puerto Rico

By Barry Skidelsky

On October 7th, the Federal Communications Commission (FCC) granted an experimental license for Project Loon, led by Google's parent company Alphabet, to help provide emergency cellular service in Puerto Rico. As FCC Chairman Pai explained: "More than two weeks after Hurricane Maria struck, millions of Puerto Ricans are still without access to much-needed communications services. That's why we need to take innovative approaches to help restore connectivity on the island. Project Loon is one such approach."

Project Loon is a network of high altitude balloons that provides connectivity to users on the ground. This novel approach, which requires the cooperation of local incumbent wireless carriers en la isla del encanto, could help provide the people of Puerto Rico with access to cellular service enabling them to connect with loved ones and to access life-saving information.

Project Loon potentially could bring voice and internet access services not only to additional areas impacted by natural disaster caused emergencies, but also to rural or remote regions that generally lack the same communications connectivity large urban areas in the United States regularly enjoy. A brief video explanation from Project Loon is at https://x.company/loon/#video:MiEZfRh-h-s.

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Barry Skidelsky is a NYC based attorney whose private practice involves entertainment, media, telecommunications and technology. A frequent author and speaker, member of EASL's Executive Committee and co-chair of EASL's TV & Radio Committee, se habla espańol tambien. Barry can be reached at 212-832-4800 or bskidelsky@mindspring.com.

November 20, 2017

Conducting Salary Discussions in New York City after November 1, 2017

By Marc Jacobson, Esq.

Don't ask for an applicant's salary history, whether for you or your client, when interviewing that applicant for employment in New York City.


You were asked to represent a film production to take place in NYC. As part of that engagement, you were asked to negotiate agreements for the director, cast members, and for the department heads, including makeup, sound, transportation, costumes, and others.

Calls start coming in and you're ready to get to work. An actor's agent confirms that her client wants to play the female lead. In turn, you say the role requires eight consecutive weeks of shooting preceded by one week of rehearsal. You want to minimize costs for the production, and ask: "What's her quote?", meaning, what was her fee per week on her last film?

Or, you're working on any other NYC production--a TV show, play, or music video-- and you need to negotiate the agreement for the Costume or Set Designer. You ask each agent for a quote.

Under a new law, now in effect in NYC, each such question can subject the production to a fine of $125,000.

Section 8-107 of the NYC Administrative Code was recently amended to add a new subdivision 25. That subdivision prohibits employers from inquiring about or relying on a prospective employee's salary history prior to setting a new salary. When enacting the law, the council said: "When employers rely on salary histories to determine compensation, they perpetuate the gender wage gap. Adopting measures like this bill can reduce the likelihood that women will be prejudiced by prior salary levels and help break the cycle of gender pay inequity."

It is now unlawful for an "employer, employment agency, or employee or agent thereof:
1. To inquire about the salary history of an applicant for employment; or
2. To rely on the salary history of an applicant in determining the salary, benefits or other compensation for such applicant during the hiring process, including the negotiation of a contract."

There is a definition of "inquire" in the code as well:
" 'to inquire' means to communicate any question or statement to an applicant, an applicant's current or prior employer, or a current or former employee or agent of the applicant's current or prior employer, in writing or otherwise, for the purpose of obtaining an applicant's salary history, or to conduct a search of publicly available records or reports for the purpose of obtaining an applicant's salary history, but does not include informing the applicant in writing or otherwise about the position's proposed or anticipated salary or salary range."

The term "salary history" is also defined: "For purposes of this subdivision, 'salary history' includes the applicant's current or prior wage, benefits or other compensation. 'Salary history' does not include any objective measure of the applicant's productivity such as revenue, sales, or other production reports."

The employer, or its representatives, "may, without inquiring about salary history, engage in discussion with the applicant about their expectations with respect to salary benefits and other compensation..."

Going further, and making these interviews/negotiations even more awkward, "where an applicant voluntarily and without prompting discloses salary history to the [employer or its representatives] the employer [or its representatives] may consider salary history in determining salary benefits and other compensation for such applicant, and may verify such applicant's salary history."

If you're in the midst of such a discussion, you cannot "prompt" the applicant to tell you his or her salary history. Further, if you learn it from another source, you also cannot "rely" on it in determining the salary of the applicant.

However, if the applicant voluntarily reveals that information to you without prompting, you can rely on the information, and make whatever decision you want.

Without a tape recording of every conversation between the employer or the employer's representatives, and the applicant or the applicant's representatives, it seems like whatever happens in these calls will be difficult to prove.

Under §8-126 of the NYC Administrative Code, if the Human Rights Commission, which has the authority to enforce the new subdivision, finds that a person "has engaged in an unlawful discriminatory practice, it may, to vindicate the public interest, impose a civil penalty" of not more than $125,000. This penalty is in addition to the complainant's right to bring a private action under the code. Criminal misdemeanor penalties are available for "any person who shall willfully resist, prevent, impede or interfere with the commission or any of its members or representatives in the performance of any duty" under the code.

Whether acting for yourself or your clients, it is now a violation of the NYC Administrative Code to inquire about salary history, or to rely on salary history, to determine the salary of any employee.

Link to the NYC Charter: https://www1.nyc.gov/site/cchr/law/chapter-1.page#8-107.1

The code, as enacted, with summary of the law: http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=2813507&GUID=938399E5-6608-42F5-9C83-9D2665D9496F

Marc Jacobson, Esq. is the Founding Chairman of the NYS Bar Association Section on Entertainment Arts & Sports Law. He speaks regularly at bar association and other events about issues related to his practice. He is licensed to practice law in New York, California, and Florida. He can be reached at marc@marcjacobson.com or +1-212-245-8955. www.marcjacobson.com

December 6, 2017

New York State Attorney General Slams FCC Regarding Net Neutrality Investigation

By Barry Skidelsky

The Office of the New York State Attorney General (NYS AG) is investigating whether any public comments filed at the FCC regarding net neutrality rules wrongfully used New Yorkers' identities without their consent.

As Tech Crunch put it: "If the FCC's refusal to acknowledge the vast public outcry against its plan to gut net neutrality isn't enough of an outrage, its total disinterest in investigating how that same comment system may have been gamed by fake users posing as real Americans adds a bit more insult to injury."

Reportedly, the NYS AG asked the FCC to cooperate with its investigation, but the federal agency has been uncooperative. Thus, the NYS AG not only released an open letter to FCC Chairman Pai, but also set up a dedicated web-page soliciting help from the general public.

You can read more about this recent development at https://techcrunch.com/2017/11/21/new-york-attorney-general-fcc-fake-net-neutrality-comments/, and you can access the NYS AG's dedicated web-page at https://ag.ny.gov/fakecomments.

December 15, 2017

FCC December Meeting on Net Neutrality and Television Ownership Rules

By Barry Skidelsky

This blog entry further supplements my article on "Television and Radio Law in the 21st Century", which was published in the Fall/Winter 2017 issue (vol. 28, no. 4) of the EASL Journal.

On December 14, 2017, the FCC formally considered and adopted several noteworthy items, including inter alia, to restore the classification of broadband internet access service (BIAS) as an "information service" rather than a more heavily regulated "telecommunications service" (https://www.fcc.gov/document/fcc-takes-action-restore-internet-freedom).

This expected roll-back of the prior administration's Open Internet Order is merely the latest turn of events in a long and ongoing fight over "net neutrality." This action -- which affects all Internet users, including those who create, own, license, distribute and consume entertainment content -- will surely be challenged at the FCC and/or in court by multiple parties and amici (including tech titans such as Google, Amazon, Facebook and Netflix, as well as New York's and several other state attorney generals).

Of less public notoriety, a Notice of Proposed Rulemaking (NPRM) was adopted by the FCC initiating a comprehensive review of the national television audience reach cap (which rule limits ownership and control of television stations to 39% of U.S. households), including the rule's relationship to the so-called UHF discount, which discounts "attributable interests" held in UHF television stations (https://www.fcc.gov/document/fcc-opens-review-national-ownership-cap).

The effect of these proposed rule changes (which solicit and are subject to public comments) will be to further liberalize legal limits on ownership and control of television stations, to open the door to yet more mergers and acquisitions, joint ventures and related transactional activities, and will likely lead to further media industry consolidation.

Entertainment lawyers should consider reminding their clients and friends that ad hoc coalitions are often organized to share the cost of preparing and submitting administrative and judicial filings addressing common concerns in these and other matters. For more information, please contact me at 212-832-4800 or bskidelsky@mindspring.com.


January 8, 2018

Net Neutrality Update

By Barry Skidelsky

On January 4, 2018, the Federal Communications Commission (FCC) released the formal text of its "Restoring Internet Freedom" Order, previously approved by a 3 to 2 vote along political party lines on December 14, 2017 (http://transition.fcc.gov/Daily_Releases/Daily_Business/2018/db0105/FCC-17-166A1.pdf). The 524 page tome (supplemented by statements from each of the FCC Commissioners) spells out details relating to the expected roll-back of the prior administration's net neutrality rules and policies, and it includes language obviously intended to defend against likely challenges.

In short, the FCC re-classified all broadband internet access services (BIAS) as "information" services, rather than as more heavily regulated "telecommunications" services -- regardless of whether service providers own or lease their facilities, and regardless of what technology platforms are employed, including without limit, wired (such as DSL, cable and fiber), fixed and mobile wireless (using licensed or unlicensed spectrum), and satellite services.

This de- or re- regulatory change affects, inter alia, consumers and those in entertainment who do not own or control digital distribution channels. Many fear that it enhances both the incentive and ability of vertically integrated companies to raise prices or unfairly compete.

As my recent EASL Journal article and blog post elaborate, given the absence of relevant federal legislative action, administrative and judicial challenges are likely to be made by various parties and amici -- including technology titans, such as Facebook, Amazon, Netflix, and Google (collectively, FANG), New York and other state attorney generals, and ad hoc coalitions that may be organized to address common concerns.

For more information, please contact me directly.

Barry Skidelsky is an attorney, consultant, arbitrator and mediator, who provides diverse legal and business services nationwide, focused on individuals and entities directly or indirectly involved with entertainment, media, technology and telecommunications (including inter alia lenders, investors, other lawyers and law firms). Currently co-chair of EASL's Television & Radio Committee and previous chair of the NY Chapter of the Federal Communications Bar Association (whose members' practices in part involve work before the FCC in Washington DC), Barry's background also includes being a broadcaster, bankruptcy trustee and in-house General Counsel. Contact Barry at bskidelsky@mindspring.com or 212-832-4800.

February 7, 2018

Defamation, Right of Publicity and Sovereign Immunity

By Barry Skidelsky
Edited by Elissa D. Hecker

The above issues and more were implicated in a recent case involving a photograph of a woman. The photo was licensed by Getty Images ("Getty") to the New York State Division of Human Rights ("DHR"), in connection with DHR's public service announcement ("PSA") campaign intended to enhance public awareness that HIV-positive New Yorkers should not be the targets of discrimination.

The photographer, who originally took the woman's picture in connection with an online magazine article about New Yorkers' music interests, later sold the photograph to Getty without the woman's knowledge or consent. The photographer had also neglected to obtain a release from the woman, and in turn Getty mistakenly led DHR to believe that she had signed one.

Failures by each of those involved to conduct proper due diligence, if not to consult with counsel before the you-know-what hit the fan, obviously contributed to the creation of a messy situation. A friend of the woman saw the advertisement in print, and alerted her to its existence (including the implication that the woman had AIDS). The woman then commenced litigation against New York State in the NY Court of Claims. That court granted her motion for summary judgment on the issue of liability on her defamation "per se" and Civil Rights Law §50 and §51 claims.

New York State then appealed. On appeal, the First Department modified to deny the Claimant summary judgment on her Civil Rights Law claims, to grant New York State summary judgment dismissing those claims, and to grant New York State summary judgment dismissing the standard defamation claim. In part, the appellate court held that the State of New York is entitled to sovereign immunity against the Civil Rights Law claims asserted.

The case is interesting for this and other reasons, including additional matters of interpretation regarding New York State's Right of Publicity as embodied in the Civil Rights Law (a proposed modification of which is currently pending before the New York State legislature), differences between per se and standard defamation, and whether people with HIV or AIDS have a "loathsome disease."

See Nolan v. State of New York, 2018 NY Slip Op 00269 (decided January 16, 2018): http://nycourts.gov/reporter/3dseries/2018/2018_00269.htm

February 27, 2018

Fox New Network, LLC. v. TVEyes, Inc. Decision Regarding Redistribution of Content

Defendant TVEyes, Inc. ("TVEyes") is a media company that continuously records the audiovisual content of more than 1,400 television and radio channels, imports that content into a database, and enables its clients, for $500 per month, to view, archive, download, and email to others ten‐minute clips. TVEyes also copies the closed‐captioned text of the content it imports, allowing its clients to search for the clips that they want by keyword, as well as by date and time.

Plaintiff Fox News Network, LLC ("Fox") sued TVEyes for copyright infringement in the United States District Court for the Southern District of New York. The principal question on appeal is whether TVEyes's enabling of its clients to watch Fox's programming is protected by the fair use doctrine.

TVEyes's re‐distribution of Fox's content serves a transformative purpose insofar as it enables TVEyes's clients to isolate from the vast corpus of Fox's content the material that is responsive to their interests, and to access that material in a convenient manner. But because that re‐distribution makes available to TVEyes's clients virtually all of Fox's copyrighted content that the clients wish to see and hear, and because it deprives Fox of revenue that properly belongs to the copyright holder, TVEyes has failed to show that the product it offers to its clients can be justified as a fair use.

Accordingly, we reverse the order of the district court to the extent that it found fair use. Our holding does not encompass the copying of Fox's closed‐captioned text into a text‐searchable database, which Fox does not challenge on appeal. tv eyes.pdf

June 25, 2018

Dan Ingram, RIP

By Barry Skidelsy
EASL Chair, former Co-Chair EASL TV & Radio Committee

Legendary New York radio disc jockey and Long Island native Dan Ingram died at the age of 83. When inducted into the National Radio Hall of Fame in 2007, Dan was named "the best Top 40 DJ of all time." I -- and many other members of EASL, I suspect -- who remember listening to Dan during the W-A-Beatles-C heydays or during his later time on-air in NYC at WCBS-FM, do not dispute that honor and are saddened by his passing.

If you don't know about any of this (or even of you do), take a few minutes to check out this Newsday obit (https://www.newsday.com/entertainment/celebrities/dan-ingram-death-1.19424059), this post from the National Radio Hall of Fame (http://nationalradiohalloffame.com/dan_ingram.htm); and, this "scoped" behind-the-scenes air-check from 1992 while Dan was then on-air at WCBS-FM in New York City (https://www.youtube.com/watch?v=cBr308F3lIA&feature=youtu.be).

Tight, baby, tight. Man, I miss those days. RIP Dan.

About TV and Radio

This page contains an archive of all entries posted to The Entertainment, Arts and Sports Law Blog in the TV and Radio category. They are listed from oldest to newest.

Theater and Performing Arts is the previous category.

Young Entertainment Lawyers is the next category.

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