Everything Old is New Again

In the latest lawsuit involving the public performance of so-called Pre 72 sound recordings 1, defendant CBS Radio is making a claim almost as controversial as the plaintiff’s allegations. Much digital ink has been spilled criticizing the decisions of federal district courts in California and New York finding that record companies enjoy a state law right of public performance in their Pre 72 recordings, despite not having ever asserted such rights before 2012. 2 CBS, in its recent motion for summary judgment, makes a similarly bold assertion: that it cannot be liable to plaintiff for infringing a performance right in plaintiff’s Pre 72 recordings because CBS only performs “remastered” versions of plaintiff’s sound recordings — and not the original Pre 72 sound recordings owned by the plaintiff.

The question of when a remastering or remixing of an existing recording is entitled to a new copyright has been debated before.3 The problem here is that record labels have been remastering previously released recordings for many years and *not* attempting to secure a new copyright in those remastered versions. The reason is fairly obvious — as plaintiff’s point out in their response to CBS’ motion — if a record company could secure a new copyright simply by remastering a perviously copyrighted sound recording, a shrewd record executive could extend the life of copyright in a sound recording forever. While CBS is correct that remastering engineers contribute significant creativity in the process of applying new technologies to remaster a sound recording to (hopefully) improve the listener’s experience of listening to a previously released recording, it strikes me as dubious to conclude therefore that the resulting remastered sound recording is entitled to an entirely new federal copyright. If CBS is correct, then we could find ourselves in a world in which the originally issued sound recording enters the public domain, but the digitally remastered version continues to enjoy copyright protection, even though to the layperson those are the same recording.

CBS’ motion for summary judgment

ABS v CBS (CBS MSJ)

ABS’ response

Abs v Cbs (Abs Resp Cbs Msj)

CBS’ Reply

ABS v CBS (CSB Reply)

  1. Sound recordings created (“fixed”) prior to February 15, 1972 are not protectable by federal copyright. Instead, such recordings are protected, if at all, under state law until 2067.
  2.  Steve Gordon, The Current State of Pre-1972 Sound Recordings, 4 NYU J. Intell. Prop. & Ent. L. 336, at 347 (2015) (questioning “whether Judge Gutierrez’s decision will be upheld” because it ignored clear legislative intent); Noah Drake, Flo & Eddie, Inc.: Public Performance Rights for Pre-1972 Sound Recordings, 6 Calif. L. Rev. Cir., at 61, 66-67 (2015) (criticizing failure to consider legislative history); Tyler Ochoa, A Seismic Ruling on Pre-1972 Sound Recordings and State Copyright Law, Tech. & Mktg. L. Blog (Oct. 1, 2014), avail. at http://blog.ericgoldman.org/ (“Interpreting a state statute first enacted in 1872 to provide such rights now, some 75 years later, will wreak havoc with existing commercial practices” and “undo a 75-year-old consensus that state law does no  provide a public performance right”). Numerous amici in the Ninth Circuit Pandora appeal document the criticism. See Flo & Eddie v. Pandora, No. 15-55287, 2015 WL 5313052 (9th Cir. Sep. 9, 2015) (Computer & Communications Industry Association); id., 2015 WL 5331515 (National Association of Broadcasters); id., 2015 WL 5313054 (Yale Law School Information Society Project and Affiliated Scholars of Intellectual Property and Free Expression Law); id., 2015 WL 5313053 (9th Cir. Sep. 9, 2015) (Copyright and Intellectual Property Law Professors).
  3.  See James J. Schneider, Defeating the Terminator: How Remastered Albums May Help Record Companies Avoid Copyright Termination, 53 B.C. L. Rev. 1889, 1902 (2012).

Getting Tufer

TufAmerica has discovered that it can be very expensive to bring a copyright infringement claim when you don’t own the copyright allegedly being infringed. In this case, TufAmerica sued the Beastie Boys (including their record label [UMG] and music publisher [UMPG]) over the alleged sampling of TufAmerica’s recording artist Trouble Funk’s 1982 release “Say What” on the Beastie Boy’s track “Shadrach” from their 1989 release Paul’s Boutique. Judge Nathan of the SDNY recently granted Defendant’s motions for attorneys’ fees and costs totaling nearly $850,000! Judge Nathan had earlier granted Defendant’s motion for summary judgment, finding that TufAmerica lacked standing to sue for infringement because it did not own an exclusive license to the Trouble Funk recording / musical composition at issue. Instead, Judge Nathan found that, at most, TufAmerica had acquired a “bare right to sue,” which is not an exclusive license and does not provide standing under the Copyright Act’s Sec. 501’s standing requirements.

Judge Nathan’s decision is below.

TufAmerica v Beastie Boys (Atty Fee Award)

Getting Tuf

Also from TufAmerica’s lawsuit against the Beastie Boys over the alleged sampling of TufAmerica’s recording artist Trouble Funk’s 1982 release “Say What” on the Beastie Boy’s “Shadrach” from their 1989 release Paul’s Boutique, I give you Trouble Funk’s recording contract and co-publishing agreement.

Recording Agreement

Trouble Funk Recording Contract (1984)

Co-Publishing Agreement
 

Co Publishing Agreement

If “Ambient” Music Is “as ignorable as it is interesting,” Can It Be Worth $15mm?

ESPN recently initiated a rate proceeding with performing rights organization BMI. ESPN claimed that the rate BMI was seeking was above market and asked the federal district court for the Southern District of New York, which has continuing jurisdiction over the consent decree between BMI and the Department of Justice to determine “reasonable” rates. BMI has responded (attached below) and claims it is simply asking ESPN to continue paying the same percentage of revenue rate to which it agreed 10 years ago.

BMI claims that ESPN utilizes a BMI blanket license to cover so-called “incidental and ambient” music performances, such as in broadcasts of live sporting events; e.g., at Heinz Field the Pittsburgh Steelers sometimes play Styx’ “Renegade” during commercial breaks when the Steelers are on defense to “hype” the crowd. If the Steelers are on Monday Night Football and ESPN breaks back to the game before “Renegade” has stopped playing, for the purpose of music copyright licensing ESPN has “performed” that song, for which it must have a license. This is true even though Heinz Field already has its own license to perform that song to the fans sitting in the stadium to watch the game. In a bit of litigation hyperbole BMI argues that “ambient stadium music is a critical component of the broadcast that allows ESPN to attract viewers by making them feel like they are sitting in the stadium cheering on their favorite team.” How can something that is “ambient” (e.g., “as ignorable as it is interesting”) also be a “critical component” of a broadcast?

So how much does BMI want ESPN to pay for this ambient but “critical component”? $15 million per year. That figure is the product of ESPN’s annual revenue ($11b in 2014) multiplied by 0.1375%, the lowest rate among the rates charged for cable television broadcasts (“music intensive” programming networks pay 0.9% of gross revenue, “general entertainment” programming networks pay 0.375% of gross revenue, and “news and sports” programming networks pay 0.1375% of gross revenue.).

However, in 2005, the last year of ESPN’s prior license with BMI, ESPN’s annual revenue was “just” $5b. 1 This is one of the problems with a percentage of revenue royalty rate: while it may be that ESPN viewed its “incidental and ambient” music performances on live broadcasts of sports to be “worth” $6.875mm annually, it does not mean that those same performances are “worth” more than twice that amount. This is especially true at a time when ESPN’s revenues are declining rapidly and content acquisitions costs are increasing. 2

BMI’s answer is below:

Espn v Bmi (Bmi Answer)

  1. http://www.bloomberg.com/news/articles/2005-10-16/in-the-zone
  2. “ESPN’s subscriber losses, which have seen it lose nearly 8.5 million homes in the last 4 1/2 years, according to Nielsen estimates, or down about 8 percent, are at a rate that is declining faster than the rest of the industry.” http://awfulannouncing.com/2015/espn-make-3-billion-lost-revenue-increased-fees.html

Mobb Deep’s Copublishing Agreement

Readers of this blog know how much I enjoy finding actual recording / publishing agreements appended to lawsuits involving artists and their labels / publishers. Here is Mobb Deep’s 1995 copublishing agreement with BMG, the rights to which were acquired by UMPG and the subject of a short-lived lawsuit by Prodigy (a.k.a. Albert Johnson) (Johnson v. Universal Music Publishing Group et al, 15-cv-8811-ER (S.D.N.Y)). Here you go:

Mobb Deep Copublishing -W- BMG

100% Wrong

The Copyright Office (“CRO”) recently released what it called a response to a letter of inquiry by Rep. Doug Collins entitled “Views of the United States Copyright Office Concerning PRO Licensing of Jointly Owned Works (the “Views”),” which is provided below. For myriad reasons, this “response” appears to be totally contrived. For example, Rep. Collins sent his letter of inquiry on Tuesday, January 12, 2016. The CRO responded on Friday, January 29th – a mere 13 working days later. During these 13 days, the CRO was apparently able to (i) reach out to a sizeable number of PROs and music publishers, review potentially dozens of (confidential?) agreements between publishers and songwriters 1, and (iii) write 29 single-spaced pages of text supported by 153 footnotes! Within 4 business days of receiving this response for the CRO, Rep. Collins apparently had the idea that the Department of Justice might benefit from the CRO’s thoughts–given that the DOJ has been reviewing the consent decrees under which ASCAP and BMI operate, including the issue of whether these decrees require ASCAP and BMI to grant “100%” licenses to songs, even when the ASCAP or BMI-member songwriters are co-writers that control less than 100% of the underlying copyright in the musical work (so-called “fractional” licensing; songs for which the underlying copyright is “split” among two or more co-writers are sometimes referred to as “split works.”). The DOJ provides details of its investigation of the ASCAP and BMI consent decrees here: https://www.justice.gov/atr/antitrust-consent-decree-review-ascap-and-bmi-2015.

As is obvious from the sarcasm-laden prose above, I am highly skeptical that the above “facts” occurred as they appear. If you think my suspicions are misplaced, consider that just two weeks before the Views were released, the CRO released a report on the so-called “making available” right. That report was written in response to a letter of inquiry that was sent to the CRO by then Representative Mel Watt on December 13, 2013; i.e., while the CRO was able to draft a response to Rep. Collins in 13 working days, it labored for 801 calendar days to respond to Rep. Watt!

Even assuming the CRO miraculously crafted the attached in 13 days, it still suffers from fundamental flaws that make it completely unhelpful to the discussion of whether the blanket licenses that ASCAP and BMI offer — under requirements of their respective consent decrees — do and should provide 100% licenses to split works.

For example, the CRO begins by stating that “the fractional licensing of jointly owned musical works—a longstanding practice of the music industry—went unquestioned as a background fact by the many stakeholders who participated, including both licensors and licensees.” (Views p. 2). There are at least two significant problems with this statement. First, several of the citations in support of this “fact” appear to be taken wildly out of context.

  • Susan Chertoff of the RIAA does say “we’ve already discussed, is that most songs have fractional ownership,” but then goes on to discuss the practical implications of allowing fractional licensing: “let’s say you have a song that has ten owners and then there is an artist. So the [recording] artist wants it on Spotify and nine of the ten owners want it on Spotify. You’re talking about creating a situation where one owner would be able to withhold that song. … I don’t see how that’s workable when on the songwriter side you’re talking about fractional ownership.” (Transcript of U.S. Copyright Office Roundtable on Music Licensing,  New York University School of Law, June 24, 2014, pp. 145-46, available at http://copyright.gov/policy/musiclicensingstudy/transcripts/mls-nyc-transcript06242014.pdf).
  • Likewise, Spotify does state that “Although the Copyright Laws provide that a nonexclusive licensee of a co-author of a joint work may not be sued for copyright infringement, custom and practice in the music industry has developed such that each co-author of a musical work only licenses its proportionate share in the underlying work.” (Comments Submitted in Response to U.S. Copyright Office’s March 17, 2014 Notice of Inquiry at 4 (May 23, 2014), available at  http://copyright.gov/policy/musiclicensingstudy/comments/Docket2014_3/Spotify_USA_Inc_MLS_2014.pdf). Spotify’s quote, however, is in the context of its explanation of why fractional licensing is bad and why Sec. 115 of the Copyright Act should be amended to create a blanket license under which 100% licenses would be granted! (“This means that in order to avoid liability for copyright infringement – and the crushing statutory damages available under the Copyright Laws – Spotify must obtain licenses from each co-author owning a share in an individual work, no matter how small that co-author’s interest might be. … Spotify believes that the effectiveness of the Section 115 license can be ensured if uses of musical works were covered pursuant to a blanket license, in a manner similar to the Section 114 license.”) (pp. 4-6).

This leads to the second significant problem: the evidence regarding fractional licensing is in connection with individual music publishers licensing the reproduction (or synchronization) rights in their individual repertory to interactive services, not the blanket performance licenses issued by ASCAP and BMI, under which these same music publishers, who in a competitive market would be competing against each other on price to license services, jointly set a single price, which–absent the consent decrees–would be a violation of antitrust laws! Based on a series of statements regarding the licensing practices of individual publishers, each licensing only its particular catalog, the CRO, in a cagey (and totally disingenuous) slight-of-hand, then states “Despite the wide-ranging nature of the study and invitation to raise additional issues, none of the participants identified fractional licensing of musical works by the PROs as a practice that needed to be changed.” Do you see what the CRO does there? It notes that industry participants acknowledge that publishers, when licensing their individual catalogs — typically in connection with licensing reproduction or synchronization rights — license on a fractional basis, and from that concludes that the licenses granted by ASCAP and BMI, which are blanket licenses that aggregate the catalogs of thousands of individual publishers who would otherwise be competing against one another on price, must likewise be only granting fractional licenses.

Perhaps the most egregious example of the lengths to which the CRO goes to reach its desired conclusion — rather than the one dictated by the actual Copyright Act — is the following statement and supporting citations: “Because the industry practice of fractional licensing of performance rights … has been amply documented in the submissions of commenting parties in the DOJ’s pending review process, the below analysis assumes that fact and focuses primarily on the legal consequences that follow.” (Views p. 3). Do you care to guess which submissions the CRO cites in support of this “ample documentation”? If you guessed ASCAP, BMI and SESAC, you are correct.  2

Apparently the CRO failed to read the following submissions:

  • American Beverage Licensees, “Beverage licensees commonly understand that when they obtain a “blanket license” from a PRO, they have the right to use all the works in that PRO’s repertoire, irrespective of what may be considered a partial or “split work.” The very use of the term “blanket license” implies as much, and the ability to use all of the works in a PRO’s repertoire is one of the benefits that PROs tout when urging beverage licensees to pay for a license.” (Comments of American Beverage Licensees, at p. 2) (available at https://www.justice.gov/atr/public/ascapbmi2015/ascapbmi12.pdf).
  • Computer and Communications Industry Association, “… ASCAP and BMI’s existing licenses make no distinction between works that are wholly and partially administered …” (Comments of CCIA, at p. 4) (emphasis in original) (available at https://www.justice.gov/atr/public/ascapbmi2015/ascapbmi16.pdf).
  • National Association of Broadcasters, iHeartMedia, Inc., the National Cable & Telecommunications Association, the National Religious Broadcasters Music License Committee, Netflix Inc., Pandora Media, Inc., the Radio Music License Committee, Inc. (“RMLC”), Rhapsody International Inc., Sirius XM Radio, Inc., the Television Music License Committee, LLC, and Viacom Inc. (collectively the “Media Licensees”), “the express language of ASCAP’s and BMI’s own agreements with their respective members and affiliates, as well as their respective agreements with Media Licensees, provide for ASCAP and BMI to grant the right to publicly perform all of the works in the repertories of those PROs – irrespective of whether such works are owned solely by affiliates of the licensing PRO or constitute “split works,” one or more of whose joint owners may be affiliated with a separate PRO or with no PRO at all. Never in any of Media Licensees’ experience with ASCAP and BMI has any question arisen as to the nature and encompassing scope of this grant.” (Comments of Media Licensees, at p. 2) (available at https://www.justice.gov/atr/public/ascapbmi2015/ascapbmi19.pdf).
  • Music Choice, “There can be no serious question that the PRO licenses have always provided the right to play all songs in each PRO’s respective repertory, irrespective of whether the PRO represents all of the joint owners of a given song in the repertory.” (Music Choice’s Comments in Connection with the Department of Justice’s Review of the ASCAP and BMI Consent Decrees Regarding PRO Licensing of Jointly Owned Works, at p. 2 ) (available at  https://www.justice.gov/atr/public/ascapbmi2015/ascapbmi28.pdf). (“[T]he exact question at issue, whether a single PRO’s license provides the right to perform jointly-owned songs when that PRO represents less than 100 percent of the song’s owners, has already been answered by the courts. In Buffalo Broadcasting, the district court was confronted with this question and held that if both PROs had the same song in their repertories due to split ownership, a licensee had the option of licensing the song through either one of the PROs, without obtaining a license from the other. (In Re Application of Buffalo Broad. Co.), No. 13-95 (WCC), 1993 WL 60687, at *79 (S.D.N.Y. Mar. 1, 1993).” Id. at 5.).
  • Public Knowledge, “permitting music publishers the ability to both partially withdraw their catalogs from PROs, and amplify their market power by requiring licensees to obtain permission from all owners of a work (a practice at odds with the normal operation of copyright law), would be akin to blessing the very same concentration in market power that led the DOJ to bring antitrust actions against the PROs.” (Comments of Public Knowledge, at p. 4) (emphasis added) (available at https://www.justice.gov/atr/public/ascapbmi2015/ascapbmi15.pdf).

The CRO at least accurately states the basic principle of copyright co-ownership: “Co-owners of a joint work “[are] treated generally as tenants in common, with each coowner having an independent right to use [or] license the use of a work, subject to a duty of accounting to the other coowners for any profits.” Each co-owner may thus grant a nonexclusive license to use the entire work without the consent of other co-owners, provided that the licensor accounts for and pays over to his or her co-owners their pro-rata shares of the proceeds.” (Views p. 6) (internal citations omitted). Citing the copyright treatise Goldstein on Copyright, the CRO notes “the default rules within the Act are only a “starting point,” with “collaborators . . . free to alter this statutory allocation of rights and liabilities by contract.” Id. (emphasis added) It is striking that the following 23 pages deal with these contractual arrangements among copyright owners to alter the basic principle of copyright law; i.e., the ways in which a (supposedly) independent economic actor (a co-writer) uses private contractual provisions to restrict the exercise of the full panoply of rights enjoyed by another independent economic actor (her other co-writers).

This focus on what co-writers are permitted to do under the Copyright Act allows the CRO to completely ignore whether such actions might run afoul of antitrust laws. For example, the CRO states “As permitted under the 1976 Act, these contracts represent an agreement by the cowriters to divide and apportion as between themselves what would otherwise be the default equal and undivided interests in the copyright.” (Views p. 9) (emphasis added) Likewise, the CRO describes a contractual provision limiting co-owners’ ability to license 100% of a co-authored work as “as clearly permitted under the Act ….” (Views p. 10)

The biased nature of the CRO’s inquiry is further evidenced in its discussion of the intersection of the Copyright Act and the ASCAP and BMI consent decrees. The CRO states that, “Although [the definition of “repertoire” in the ASCAP and BMI consent decrees] neither specifically embraces nor rejects the concept of partial interests, because the consent decrees were amended after 1978, the definition of repertoire in each should be construed consistently with the 1976 Copyright Act, which allows for divided ownership of exclusive rights, including the right of public performance.” (Views p. 13). It is also true, however, that 1976 Act is also the source of the bedrock copyright principle that co-owners are tenants-in-common, each controlling an undivided partial interest in the entire copyrighted work. Presumably, the consent decrees need to be “construed consistently” with that principle as well.

Further, the CRO claims that, “given the definition of “repertoire” in the decrees (“those works the right of public performance [the PRO] has . . . the right to license”), to reject such an understanding [that the repertoire only includes the fractional interest of a member-songwriter] would mean that the ASCAP and BMI repertoires must exclude any work for which the PRO could offer only a partial license, since there would be no “right” to license the entire work.” (Views p. 14). Such a conclusion, however, is completely at odds with the standard membership / affiliation agreements into a songwriter enters with ASCAP / BMI, respectively. For example, ASCAP’s form writer agreement grants to ASCAP “the right to license non-dramatic public performances” of “each musical work” that the owner “wrote, composed, published, acquired or owned” “alone, or jointly, or in collaboration with others” and in which “the owner now has any right, title, interest or control whatsoever, in whole or in part.” BMI’s form writer agreement – while less detailed – likewise grants to BMI the right to license non-dramatic public performances of “all musical compositions … composed by you alone or with one or more co-writers.” (see Comments of Media Licensees’ at p. 7). In other words, in order to conclude that the definition of “repertoire” in the ASCAP and BMI consent decrees must mean only that fraction of a work controlled by a member-songwriter, the CRO had to completely ignore the actual agreements into which the PROs enter with songwriters that specifically grant to each PRO the right to license all of a co-written work.

One might wonder whether the CRO didn’t know about the existence of these ASCAP and BMI songwriter agreements. That might be a possibility except for the fact that on the very next page the CRO cites to the very ASCAP and BMI writer agreements I cite in the previous paragraph!

In fact, the prevarication gets even more blatant. The CRO states, “The practice of divided ownership and fractional licensing is also consistent with the ASCAP and BMI membership agreements and related documents. For example, the grant of rights by a writer or publisher to BMI extends only to rights “own[ed]” or “acquire[d]” by the member to perform “any part or all of the [member’s] Works.” The BMI writer agreement further provides that, upon termination of the agreement, if BMI “continue[s] to license your interest in any Work,” it will continue to make payments. While the ASCAP membership agreements are less clear on these points, ASCAP’s title registration system is indicative of fractional administration of works.” (p. 16)

The entire paragraph 4(a) of the BMI agreement reads, “Except as otherwise provided herein, you hereby grant to us for the Period: (a) All the rights that you own or acquire publicly to perform, and to license others to perform, anywhere in the world, in any and all places and in any and all media, now known or which hereafter may be developed, any part or all of the Works.” Thus, the grant specifically provides BMI with the right to license all of the “Work” that was written or co-written by the songwriter. You will also note that “Works” is a defined term, the definition of which is, “[(1)(b)](i) All musical compositions (including the musical segments and individual compositions written for a dramatic or dramatico-musical work) composed by you alone or with one or more co-writers during the Period.” Read together, it is clear that a BMI songwriter is granting to BMI the right to license all of a Work, even if that Work was written by more than that BMI songwriter.

The ASCAP songwriter agreement, far from being “less clear” on these points is, in fact, a model of clarity, making the CRO’s claims to the contrary that much more egregious. Section 1 of ASCAP’s Membership Agreement reads as follows:

“The [songwriter] grants to the [ASCAP] for the term hereof, the right to license non-dramatic public performances (as hereinafter defined), of each musical work:

Of which the[songwriter] is a copyright proprietor; or

Which the[songwriter], alone, or jointly, or in collaboration with others, wrote, composed, published, acquired or owned; or

In which the[songwriter] now has any right, title, interest or control whatsoever, in whole or in part; or

Which hereafter, during the term hereof, may be written, composed, acquired, owned, published or copyrighted by the[songwriter], alone, jointly or in collaboration with others; or

In which the[songwriter] may hereafter, during the term hereof, have any right, title, interest or control, whatsoever, in whole or in part.

The right to license the public performance of every such musical work shall be deemed granted to the [ASCAP] by this instrument for the term hereof, immediately upon the work being written, composed, acquired, owned, published or copyrighted.

The CRO’s decision to simply ignore all of this language, including the eight seperate instances in which joint authorship and/or partial ownership are specifically included in the works the member is dedicating to the ASCAP repertoire is, frankly, shocking.

The rest of the CRO letter is a recitation of the parade of horribles that will befall songwriters, publishers and PROs if the consent decrees are interpreted in a way that requires 100% licensing. Markedly absent from this parade are the reasons why licensees should bear the burden of costs associated with fixing these (potential) problems. For example, the CRO notes that,

[I]t appears that neither ASCAP nor BMI has in place a mechanism that would allow the PRO to track and account for payments to non-members on a broad basis, and that there would be significant obstacles to achieving this. In many cases, the PRO may not have current or reliable information concerning the current co-owners of a particular song, including how to contact them—let alone heirs or assignees. As the Office explained in its recent report, the music licensing marketplace is characterized by a lack of uniform data concerning song ownership and licensing. The ASCAP and BMI royalty payment systems presumably would need to be significantly enlarged (and largely crossduplicated) to generate payments for a multitude of non-members. Equally if not more overwhelming would be a scenario whereby individual authors and publishers receiving 100- percent payments from ASCAP and BMI would need to track down and pay royalties to coowners themselves. (Views p. 21)

To which a licensee might reasonably respond, “so?” The publishers and PROs chose to allow this system of individual fractional ownership coupled with 100% collective blanket licensing to evolve over the last 50 years. The same parties cannot now be heard to complain that they don’t like the system they’ve created and want someone else to pay to clean it up. The licensee community is certainly is a far less advantageous position to know how to contact all of the current owners of a particular song or make payments thereto.

More fundamentally, this entire exercise is being driven by the publishers’ desire to partially withdraw their performance rights from ASCAP and BMI to “hold up” digital music services for higher fees. This PRO system was able to evolve over the past 50 years precisely because the publishers viewed collective licensing as better than individual licensing. But collective licensing — which is otherwise a violation of antitrust law — comes at a cost. Now that the bill has come due, it appears that the songwriters, publishers and PROs want someone else to pay it.

Copyright Office – 100 Percent Licensing

 

  1.  The CRO states that in arriving at its conclusions it “reviewed representative contractual provisions between and among songwriters and music publishers.” p. 4. In the accompanying footnote, the CRO states “Of course, the Office’s review of industry contractual provisions could not be comprehensive. It is worth noting, however, that our examination of representative clauses in songwriter and publisher agreements from various sources revealed numerous references to fractional ownership and licensing and no provisions that appeared inconsistent with these practices.” fn. 14.

    “a provision reviewed by the Office addressed the interests of three songwriters, one affiliated with ASCAP, who received a 50 percent share of the copyright, and two affiliated with BMI, who each received a 25 percent share.” pp. 9-10.

    “one contractual provision reviewed by the Office awarded one of three co-writers a one-third share of the copyright, but prohibited that co-writer from granting even a partial (i.e., fractional) license in the work.” (p. 10).

    “one representative provision in a copublishing agreement reviewed by the Office stated specifically that where the songwriter “writes, owns, and/or controls less than one hundred percent (100%)” of a musical composition, the songwriter was granting the publisher rights only to the writer’s “fractional share” of the work. In another agreement, the songwriter granted rights to existing and future compositions only “to the extent written, composed, created, owned, controlled and/or acquired” by the songwriter.” (p. 11)

    one coadministration clause applicable to two songwriters reviewed by the Office provided that the parties would enter into agreements “solely with respect” to their respective interests and that all proceeds were to be paid “directly to (Party A) and (Party B) in the shares set forth (in the agreement).” (p. 12)

  2.  The CRO also cites the submission of the National Academy of Recording Arts & Sciences, whose submission was jointly prepared with 11 songwriters. Even including the NARAS, the citations listed by the CRO are anything but representative of the statements submitted to the DOJ.

Tidal Wave?

Jay Z’s Tidal is the latest interactive service to be sued for copyright infringement for failure to secure reproduction rights to musical compositions embodied in sound recordings made available to listeners / subscribers of the service. The suit specifically alleges that Tidal failed to submit the required notices of intent that are prerequisites to taking advantage of the statutory license under Sec. 115 of the Copyright Act.

The complaint is here:

Yesh Music v. S Carter Enterprises – class action complaint royalties TIDAL.pdf by Mark H. Jaffe

Stairway to Heaven or Road to Nowhere?

Randy California (born Randall Wolfe) was a singer songwriter and original member of the 60s psychedelic rock band Spirit, best known for “I Got a Line on You,” from the band’s second album.

A portion of the intro to the song “Taurus,” an obscure track on Spirit’s eponymous 1968 recording, bears a resemblance to introduction of “Stairway to Heaven,” the 1971 release by Led Zeppelin that is counted among Rolling Stone magazine’s 500 greatest songs of all time.

You can listen to “Taurus” and decide for yourself.

What is more interesting to me than whether Jimmy Page lifted the intro of one of the most famous songs in rock history from one of its most obscure is an argument in Led Zeppelin’s motion to dismiss, which alleges that Randy California isn’t the “author” of the song and, therefore, lacks standing to sue. The argument–which appears quite strong–is based on Randy’s first songwriting agreement, executed in 1968 when he was only 16. That agreement, which is provided below, defines the relationship between Hollenbeck Music (the publishing company affiliated with Ole Records, to which Spirit was signed for an exclusive recording contract) thusly: “Publisher … employs Writer to render his services as a songwriter and composer …” This language appears to be classic “work made for hire” under which the Copyright Act treats the employer as the author of the copyrighted work. (See Sec. 101, defining a “work made for hire” as “a work prepared by an employee within the scope of his or her employment.”). Said differently, in this context the “work made for hire” doctrine treats the copyright in the song “Taurus” as if Hollenbeck had actually written the notes in question. Under the Copyright Act’s Sec. 501(b), only the legal or beneficial owner of an exclusive right under copyright has standing to sue for its infringement. Importantly, however, “[a] creator of a work made for hire does not qualify as a beneficial owner even if he or she is entitled to royalties.” Ray Charles Found. v. Robinson, 795 F.3d 1109, 1116 n. 7 (9th Cir. 2015). This appears to be fatal to Randy’s heirs attempt to sue Led Zeppelin for infringement!

ASIDE: If Jimmy Page did copy the intro to Stairway to Heaven, then Hollenbeck may have a claim for infringement, so succeeding on this motion to dismiss is not necessarily a lasting victory for Led Zeppelin.

The exclusive songwriter agreement is here.

Stairway to Heaven (Songwriter Contract)

The motion to dismiss is here.

Stairway to Heaven MTD (2!25!16)

No (un)Original Thoughts

As I’ve often said, reviewing litigation dockets is a great place to learn new things. Instead of focusing on a judge’s final decision, one can often learn more by reading the party’s pleadings, which provide the strongest advocacy for a particular legal position. [caveat–it is critical to read BOTH side’s pleadings]. It is also often the case that a recording artist or songwriter’s contract will be appended to the complaint, providing useful insight not only into the issues in a particular litigation, but towards how the music industry evolves over time. I was reading Rita Ora’s recording contract with Roc Nation–a copy of which can be found here–and I remembered some research I’d done a while ago but never bothered to post here. Specifically, a review of 3 recording contracts executed between 1983 and 1992 demonstrate how public performance for sound recording royalties made their way into major label recording contracts. [caveat–this is not intended to be scientific; it is merely an interesting fact based on the 3 contracts in question]

So, check this out.  In 1983, CBS did *not* have any language about public performance rights in sound recordings—check out the Toto contract below.  By 1989, the language does exist—see 10.04 of the Allman Bros. agreement with CBS reproduced below.  Identical language appears in the Interscope license with Dr. Dre is 1992—see 10.05 of the Dre agreement reproduced below—even though I’m not aware of any relationship between CBS (which was bought by Sony) and Interscope (which was bought by UMG)!

Pre 72 Comparison

The Toto recording contract is below.

Toto 1983 Recording Contract w CBS (Sony)


The Allman Bros. recording contract is below.

Allman Bros Record Contract w CBS 1989

Dr. Dre’s recording agreement is below:

Dre Death Row Records Agreement (1992)

Shiver me timbers! Cox Has No Safe Harbor by Failing to Terminate Pirates

Judge Liam O’Grady of the Eastern District of Virginia has issued his full opinion and order granting partial summary judgment to plaintiff music publisher BMG against cable / ISP-provider Cox Communications. Judge O’Grady found that Cox’s “repeat offender” policy against customers accused of committing copyright infringement by downloading content without authorization using Cox network was insufficient as a matter of law. Cox could not, therefore, take advantage of the “safe harbor” provisions of Sec. 512 to escape secondary liability to BMG.

When Congress passed the Digital Millennium Copyright Act in 1998, it created four safe harbors that protect ISPs such as Cox from direct and indirect liability for copyright infringement when their involvement is limited to certain activities—transitory digital networking communications, system caching, information residing on systems or networks at the direction of users, and information location tools. See 17 U.S.C. §§ 512(a)–(d). As an Internet Service Provider, Cox sought protection as a “mere conduit for transmission” to protect against claims of secondary copyright infringement liability for the unauthorized exploitation of BMG’s copyrights by Cox’ subscribers.

In order for Cox to qualify for this “safe harbor,” however, it must demonstrate that it has “adopted and reasonably implemented, and informed subscribers and account holders of the service provider’s system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.” 17 U.S.C. § 512(i)(1)(A). Court’s have interpreted this requirement to obligate an ISP such as Cox has to “adopt” a policy that is “reasonable.” As the Copyright Act makes clear, for a policy to be “reasonable,” it must provide “for the termination in appropriate circumstances of subscribers … who are repeat infringers.” See Capital Records, LLC v. Escape Media Grp., Inc., No. 12-cv-6646, 2015 WL 1402049, at *9 (S.D.N.Y. March 25, 2015).

Although Cox sought the Court to find that an “infringer” could only be someone adjudicated as such by a court of competent jurisdiction, Judge O’Grady held that an ISP only requires “knowledge” of infringement by a particular user. While this might seem problematic–since the ISP only gains “knowledge” by receiving take-down notices from copyright owners and, as demonstrated by the “Dancing Baby” case (Lenz v. UMG), the copyright owner might be wrong–in practice, as described below, an ISP only takes actions against a subscriber after receiving multiple take-down notices over short periods of time.

Judge O’Grady details Cox’ Abuse Tracking System (“CATS”), which includes graduated responses to complaints about its customers unauthorized access to copyrighted content. In summary, here is CATS

1st Complaint – Cox does nothing
2nd Complaint – Cox sends an email to the customer
3rd Complaint – Cox sends the same email again
4th Complaint – Cox sends the same email again
5th Complaint – Cox sends the same email again
6th Complaint – Cox sends the same email again
7th Complaint – Cox sends the same email again
8th Complaint – Cox suspends the customers account, placing the customer in a “soft-walled garden,” which means the customer’s landing page is a warning message and link to reactive the account
9th Complaint – Cox sends customer back into “soft-walled garden”
10th Complaint – Cox sends customer to a “hard-walled garden,” a landing page that directs the customer to call Cox, during which call the customer can request reactivation
11th Complaint – Cox sends customer back to “hard-walled garden”
12th Complaint – Cox sends customer back to “hard-walled garden,” but now a higher-level Cox customer service rep must be involved for reactivation
13th Complaint – same as #12
14th Complaint – the customer’s account is considered for termination

Mind you, these 14 complaints against a single account-holder had to occur with a 6 month time period! That’s more than one complaint against a single account-holder every 2 weeks!! But it was not the volume of complaints that Cox had to receive before considering termination that caused it to lose the Sec. 512(a) safe harbor. It was the fact even after receiving 14 complaints, Cox never actually ever terminated anyone.

Initially, Cox “pretended” to terminate subscribers, only to reactive them immediately. As described in an email from Cox’ Manager of Customer Abuse Operations,

if a customer is terminated for DMCA, you are able to reactivate them after you give them a stern warning about violating our AUP and the DMCA. We must still terminate in order for us to be in compliance  with safe harbor but once termination is complete, we have fulfilled our obligation. After you reactivate them the DMCA ‘counter’ restarts; The procedure restarts with the sending of warning letters, just like a first offense. This is to be an unwritten semi-policy..

There were numerous other emails imparting similar instructions.

Cox was more lenient with subscribers illegally downloading copyrighted material because it had little impact on the network; “It does not cause a big problem on the network. Not like spam, Dos attacks, hacking, etc. do.”

In late 2012, Cox abandoned even this illusory termination and simply stopped terminating anyone. BMG introduced evidence that from January 2010 until August 2012, Cox terminated an average of 15.5 account holders a month. Between September 2012 and November 2014, Cox terminated an average of 0.8 accounts per month, notwithstanding the fact that Cox issued 711,000 email warnings and suspensions in response to alleged infringements during this same period. “Cox also admits that of the 22 terminated accounts, 17 of those had also either failed to pay their bills on time or were excessive bandwidth users.”

Again, Judge O’Grady cites to numerous emails in which Cox’ customer service team dismiss knowledge that a subscriber is using the network to access copyrighted content, often because the subscriber is paying Cox a lot of money: “So, the BitTorrent client is running on one of their computers (their child’s, etc.) and they need to uninstall it. This customer pays us over $400/month and if we terminate their service, they will likely cancel the rest of their services. Every terminated Customer becomes lost revenue and a potential Detractor to our Net Promoter Score;” and “This customer will likely fail again, but let’s give him one more change [sic]. [H]e pays 317.63 a month.”

The decision is below:

BMG v Cox Comm. (12!2!15)