The COPYKAT follows the money

As the world comes together today to panic about celebrate the GDPR coming into force, this COPYKAT follows the money.

Stock photo companies: uncertain standing? When a photographer licences their work to a stock photo company, is that company entitled to bring a copyright infringement claim if those images are subsequently used unlawfully? The answer, at Federal District level in the United States at least, is "maybe".

In May 2012, stock images company DRK Photo sued textbook publishing giant McGraw-Hill for alleged copyright infringement. DRK claimed that McGraw-Hill printed and distributed textbooks containing licensed images (636 unique photographs in total) which exceeded its licence agreement. However, the Court issued a summary judgement in favour of the defendants, because DRK failed to demonstrate any adequate ownership in the copyrights to confer standing.  The case, DRK Photo v. McGraw Hill et al, was then heard on Appeal from the United States District Court for the District of Arizona.  The Ninth Circuit affirmed the district court's verdict in favour of McGraw Hill. 

 

This case turned on a seemingly nuanced point of blackletter law, which reinforces the importance of careful drafting in intellectual property assignments and licensing agreements. Section 501(b) of the Copyright Act allows the “legal or beneficial owner of an exclusive right under a copyright” to sue for infringement. Unhelpfully, the Copyright Act does not define “beneficial owner.” The question before the Court was therefore whether the right to sue extends to an assignee, who has pre-existing interests in the copyright, and is subsequently injured by infringement.

A key precedent was established in the 1969 case of Prather v. Neva Paperbacks, Inc., which held that an assignee is a proper party to bring suit for copyright infringement. As recently as 2015, Minden Pictures, Inc. v. John Wiley & Sons, Inc held that a stock photography agency, serving as the exclusive licensing agent for allegedly infringed photographs, did have standing to sue for infringement under the Copyright Act.

In its claim against McGraw Hill, DRK contended that Minden created “a bright line rule” that all stock photography agencies have standing to bring copyright infringement claims, by virtue of their agreements with their photographers. In his judgement, Judge Hawkins slapped down DRK for “reading Minden too broadly.”

The decision went on to cite the 2005 case of Silvers v. Sony Pictures Entertainment, Inc, which reaffirmed the principle that a party with no ownership interest has no standing to sue, as “the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf.” In evaluating the licence agreements between the photographers and DRK, the Court found that those photographs were under non-exclusive licenses. Accordingly, DRK could not be deemed the legal owner of any exclusive right pertaining to the images.

Freelancers finally make (some) bank. 

In 2001, nearly 3,000 freelance journalists filed a class-action lawsuit for copyright infringement against some of the country’s biggest publishers, including The New York Times. It’s taken 17 years, but the cheques are finally in the mail.

The Authors Guild (whose press release about the case can be read here) filed the suit, together with the American Society of Journalists and Authors, the National Writers Union, and 21 individual freelancers who were named as class representatives.  Of the original 3,000 freelancers, almost 2,500 writers made it through what has been described as “a tortuous legal process” and have already begun to receive their pieces of the $9 million (approx. £6.8m) settlement.

The case, Re Literary Works in Electronic Databases Copyright Litigation (or simply “Freelance”) concerned the copyright relationship between freelance authors, print publications, and electronic databases. In particular, the lawsuit alleged that publishers – including the New York Times, TIME, and Economist – shared licensed articles written by freelancers to the Lexis/Nexis electronic database and other digital indexers, without first obtaining the writers’ approval.

James Gleick was previously a reporter and editor for The New York Times for 10 years. He is now the president of the Authors Guild and one of the named claimants in the case. He explained, “the argument that we made was the writers got paid for one-time use. We sued The Times because they sold copyrighted work by not just their staff, but also freelance writers. And the correct thing to do would have been to ask the freelance writers for permission and then pay the writers.”

While freelance writers account for nearly 70% of all professional writers in the United States, according to a survey done by Contently, over 20% of full-time freelancers make below the American poverty threshold for individuals.

Settlement was nearly reached in 2005, but negotiations stalled over disagreement regarding writers who had not registered copyrights for their work. In the United States, registration with the US Copyright Office is required before a suit for copyright infringement may be brought in federal court. However, the 2010 Supreme Court ruling Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 held that the settlement proceedings could continue.

The parties again reached what seemed to be a final agreement in 2014, only to endure four more years of delays caused by 41,000 objections challenging specific claims under the revised settlement agreement (Publishers Weekly). This tactic appears to have paid off for the defendants, however, as the final pay-out for the freelancers equalled only 50% of the $18 million liability cap negotiated in the initial settlement agreement.

Writing about her experience as a class member for LA Observed, Ellen Alperstein explained: “Did I receive what I was due? Nah. But more important than my check for $2,555.77 was confirmation that my work has value that our justice system respects. That organizations such as the ASJA served a vital role in my nascent career, educating me about writers' rights and my responsibility in advocating for them.”

Nightmare in Nigeria for Copyright Society. 

Controversy surrounding the Copyright Society of Nigeria (COSON) reached epic proportions earlier this month, as power struggles between the organisation and the Nigerian Copyright Commission (NCC) rumble on (Daily Trust).

Following a General Meeting of COSON in December 2017, several members sent a petition to the Governing Board to request an investigation regarding certain decisions made at the meeting. The Commission then issued directives to COSON Management, requesting that the irregularly-made decisions not be implemented. COSON Management failed to comply, and subsequently had its license revoked in line Regulation 19 (2) of the Copyright (Collective Management Organizations) Regulation 2007.

The continuing defiance of COSON Management is, according to Ezekude, “a clear indication of COSON’s unwillingness to operate within the framework of the Copyright Act” (4Traders). In return, COSON has called directly upon Nigeria’s President, Muhammadu Buhari, to immediately relieve Afam Ezekude of his position as the Director General of the NCC (today.ng).

By way of background, COSON was established in 2010 as the sole collective management organisation approved by the Nigerian Copyright Commission (NCC) to act on behalf of musicians and owners of sound recordings in Nigeria. In particular, COSON undertakes negotiating, granting copyright licences and collecting royalties, and curbing the “biting case of piracy that has plagued the Nigerian music industry.”  (Music in Africa).

Before COSON was founded, multiple entities had promised to represent the interest of musicians and other creatives, including the Nigeria Copyright Council, Music Collective Society of Nigeria and the Performing Musicians Association of Nigeria. Their failure to deliver on these promises led to the call for a singular collective management organisation as a result. Ultimately, it was COSON which obtained support of other national associations and the permission to collect royalties on behalf of Nigerian artists.

When first established, COSON was heralded as “one of the most important developments in the Nigerian entertainment industry in the last fifty years“ (Lessons for Africa). Unfortunately, this ongoing drama will provide little comfort to Nigeria’s creatives.

Speaking to The Nation on the subject, Nigerian artist Paul Play Dairo stated: “When you have a monopoly, this will not be flexible. They will take things for granted. I don’t know why Nigerians feel that only one collecting society will solve their problems. And also, as a concerned Nigerian musician, I believe that I have the right to protect my intellectual property, I have the right to choose the collecting society that I want to join.”

Smokey Robinson supports CLASSICS for fairer compensation.

As the CopyKat previously covered, copyright legislation is soon to be updated in the United States. Earlier this month, Motown legend Smokey Robinson joined a number of other entertainers before the United States Congress to throw weight behind stronger copyright protections for artists and rights owners. The proposed Music Modernisation Act (MMA) has received wide bipartisan support from Democrats and Republicans alike. Musicians from all backgrounds likewise welcome the new payment provisions in particular, as many assert that making a living off sales of albums and CDs is "a thing of the past" as users increasingly turn to streaming.

The MMA will be comprised of several separate titles (sections). Title II, entitled “Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS) Act” will focus on public performance rights for pre-1972 recordings. If passed, musicians with pre-1972 recordings will receive royalty payments when their tracks are played on the radio, with royalties then allocated for recordings played on the Internet, cable, and satellite radio.

This will amend current copyright law, which only protects music produced after Feb. 15, 1972. Robinson explaining that musicians deserve to be compensated in the same way, regardless of the recording dates of their particular music. The CLASSICS Act is intended (inter alia) “to fix the quirk in the law that created this loophole” (Variety).

“The records of the 50’s and 60’s aren’t called “classics” because of their age,” he noted. “They’re called classics because of their greatness. They still resonate today. They add value to our lives and bring people together. They define America.”

Robinson then detailed that during an audit of a digital services company several years ago, he discovered the company owed him $250,000 in royalties. After confronting them, he was offered $12,000 and told, “If you don’t like it, sue us.” In his written testimony, Robinson explained that few artists have the financial resources to commence legal proceedings, and would therefore benefit from statutory damages protection. You can watch a clip of Robinson answering Senator Cornyn’s question about statutory damages here.

Is music sampling back in Vogue?

A US Appeals court has decided that Madonna did not violate copyright law when her producer allegedly used a short section of music taken from another recording for her hit song “Vogue”. The split 2-1 decision must  call into doubt the strict approach taken by the 6th Circuit Court of Appeals in the leading case of Bridgeport Music, Inc., et al. v. Dimension Films, et al 410 F.3d 792 (September 2004). There the court in Cincinnati posed the question “If you cannot pirate the whole sound recording, can you ‘lift’ or ‘sample’ something less than the whole?” The Court’s answer to this was in the negative” and the court added “Get a license or do not sample – we do not see this as stifling creativity in any significant way.”

But in this new case, the U.S. 9th Circuit Court of Appeals said the horn segment at the heart of the copyright lawsuit  lasted less than a second and would not have been recognisable to a general audience.

Judge Susan P. Graber said for the majority: "The horn hit occurs only a few times in ‘Vogue' .... without careful attention, the horn hits are easy to miss.” The decision fits in neatly with the December 2014 decision by New York federal judge Lewis Kaplan who dismissed TufAmerica's lawsuit against Jay Z and his record companies which alleged he had violated copyright by sampling an "oh" on the song, "Run This Town," released on the album The Blueprint 3 from an older sound recording entitled "Hook & Sling Part 1" saying ""Plaintiff's tautological argument that 'oh' must be qualitatively significant to Hook & Sling Part I and to the "Hook & Sling" Master because defendants' sampled it more than 40 times in "Run This Town" misunderstands copyright law generally and the substantial similarity test in particular," writes the judge, later adding, "If the original recording has been sampled at all ... the fact of the matter is that the samples appear only faintly in the background of Run This Town and are, at best, only barely perceptible to the average listener."

VMG Salsoul, LLC, which holds a copyright to “Love Break,” sued Madonna and others, alleging that  Shep Pettibone, the producer of “Vogue,” copied a 0.23-second segment of horns from “Love Break,” which he had worked on years earlier. "Vogue" was a release from the album "I'm Breathless", and topped the charts in all major music markets reaching number one in the USA, the UK, Australia, Canada, Italy and Spain, selling six million units worldwide.

Having listened to the recordings Judge Graber held: “we conclude that a reasonable jury could not conclude that an average audience would recognize the appropriation of the composition.”

However, Judge Barry G. Silverman dissented, arguing that the use of the horn segments, if proven,  would amount to infringement: “It is no defense to theft that the thief made off with only a ‘de minimis’ part of the victim’s property”.  He said a copyright of a recording amounted to a “valuable property right, the stock-in-trade of artists who make their living recording music and selling records.”

The German Constitutional Court in Karlsruhe recently made a ruling in a case brought by the German avant garde rock band Kraftwerk against German music producer Moses Pelham over a two second sample - balancing the position of rights owners against a right of artistic freedom - coming down on the side of the latter. According to the Constitutional Court, requiring the phonogram producer's permission for taking even the "tiniest sliver" of a recording when it was possible to recreate the sound without copying violated freedom of art as it would essentially prohibit modern forms of pop music, namely hip hop, which relied on sampling. Norms of hip hop demanded actual sampling, not recreation of that snippet. Licensing was not a viable alternative namely for songs that were sampled from many other recordings, as it  as it was very time consuming and prohibitively complicated.

http://www.latimes.com/entertainment/music/la-et-ms-madonna-vogue-copyright-law-20160602-snap-story.html

http://musiclawupdates.blogspot.co.uk/2016/05/german-constitutional-court-sends.html

TufAmerica, Inc v   WB Music Corp, et al. Case 1:13-cv-07874-LAK 

Bridgeport Music, Inc., et al. v. Dimension Films, et al 410 F.3d 792

http://www.musiclawupdates.com/?p=199

The CopyKat - how will broadcasters fight back against the app?

Focussing on the latest trends and the latest technologies means that it is easy to be totally ignorant of what's going on in other parts of the world. So the CopyKat was brought out of orbit by an article in the Financial Express of Bangladesh that says "The mushroom growth of compact disc (CD) shops in cities and rural markets reflects, on the positive side, how dearly the Bangladeshis love music. But it does also indicate, on the other side, the extent of acts of 'piracy'. That provides some good reasons for growing worries over the pirated CDs. In a situation where most songs in CDs are pirated ones, both the government and original composers (of such songs) are deprived of a significant amount of revenue and rightful honoraria, respectively [and] could be raised significantly by implementing the copyright law."

Home to an estimated 144 million people, Russia is the world’s ninth biggest country in terms of population. With a recently booming economy, it should be of major importance to the global music business.Yet according to IFPI data, Russia contributed – in total – just US $72.8m to the recorded music industry last year, across digital, physical and public performance (the UK with less than half that population generated $1.33 billion). Whats worse - the market has declined - it was worth $191 million in 2007. Why - well blame it on piracy, corruption, past government inaction and consumers used to 'free' music. In the era of CDs in the 1990s and 2000s physical piracy was "up to 95% of the market.” And now with digital its worse.  Now a recent flurry of government activity has given some hope to the beleaguered music industry and there have been some recent successes in the courts.  In 2011 it seemed that enforcement of already existing infringement laws (including criminal sanctions) would be stepped up, not least to enhance Russia's position at World Trade Organization negotiations. In 2012 Russia's appellate court held that the massive social networking Vkontakte was liable for copyright infringement, upholding the earlier ruling by the commercial (“Arbitrazh”) Court of Saint Petersburg: in November 2014 Russia’s State Duma, the parliament’s lower house, approved a package of amendments to anti-piracy law, covering video, books, music and software, but not photos and among the amendments there was an initiative under which a Web site owner must delete within 24 hours any illegal content, rather than limit access to it, upon an electronic request from a rights’ owner. Now the Russian High Court has been given the power to order ISPs and website hosting companies to permanently block websites that repeatedly infringe copyright. Alongside the launch of services such as iTunes & Google Play and local music services such as Yandex, Torrent sites have  been sent a final notification from the Russian Government telling them that “the systematic violation of intellectual property rights will result in sites providing access to stolen content being blocked forever” and giving a 1st May deadline.

Pink Floyd's Roger Waters has taken a swipe at Silicon Valley in an interview in the Times (02.05.15) saying that he 'grateful' to have gown up in an age when an artist's hard work and talent were rewarded financially and before the music business suffered a 'takeover by Silicon Valley' saying "when this gallery of rogues and thieves had not yet interjected themselves between the people who aspire to be creative and their potential audience and then steal every f**king cent anybody every mad and put it in their pockets to buy f**king huge mega-yachts and Gulfstream Fives. These ..... thieves! It's just stealing. And that they are allowed to get away with it is just incredible". In 2010 Pink Floyd famously sued their record label, EMI, to withdraw their catalogue from iTunes after Apple's platform refused to sell 'Dark Side of the Moon' and other Floyd albums in their entirety - the band did not want individual tracks sold. Waters also takes a pop at consumers, saying he also blames "a whole generation that's grown up who believe that music should be free". Interestingly record labels don't seem to be in Water's line of fire -despite licensing and often being shareholders in many of the digital services Waters berates and paying royalty rates more appropriate for physical product than digital products.  That said, the tech companies have been clever in spotting just how important music is - and monetising that. One of the most interesting set of financial figures I have ever seen is the growth of Apple after it entered the music market. For a over a decade niche 'geeky' computer manufacturer with near static turnover, almost immediately after the launch of iTunes Apple grew to be the biggest corporation in the world dominating in computers ales, notebooks and mobile phones - with music sales just an ancillary - but an ancillary that undoubtedly made Apple ever such a cool brand. From 1992 to 2004 Apple's turnover grew from $7 billion to $8 billion: The iPlayer launched in 2001 and iTunes in 2003 and 2004. By 2005 Apple's turnover was $14 billion, 2006 19 billion, 2007 $24 billion, 2008 $35 billion, 2009 $42 billion and 2010 $65 billion. Now that is growth!

Next week at The Great Escape in Brighton an illustrious panel featuring our friend and IP specialist Amanda Harcourt and Andy Edwards (Board Director at Music Managers Forum), Horace Trubridge (Assistant General Secretary at Musicians’ Union), Jane Dyball (CEO at MCPS/IMPEL), Rob Collins (Label Director at Cooking Vinyl) and Vicky Bain (CEO of the British Academy Of Songwriters, Composers & Authors) who are going to debate THE DIGITAL PIE putting the spotlight on one of the biggest music industry debates of the moment: the division of streaming revenues between each of the stakeholders in music. How are the monies divided between labels, publishers, artists and songwriters, and asking - is the current system fair and sustainable? More on The Great Escape,  Europe's leading festival for new music here - this panel is on Thursday May 14th part of three days of conference panels, debates, workshops and new bands on show which will also ask 'what's the point of record labels anyway', explain music licensing and  'How to sell out gracefully' and investigate whether 'Music marketing is broken'. 

Daniel Voelker, the lawyer representing the 'Prenda Law' trio of attorneys, Paul Hansmeier, John Steele and Paul Duffy and their associated companies before the 9th Circuit Court of Appeals in the hearing into the earlier ruling of US District Court Judge Otis Wright which led to bruising sanctions and a referral to criminal investigators, is having something of a torrid time: ArtsTechnica has an excellent review but here's a little bit  flavour: "The entire proceeding was tainted," Voelker said. "Mark Lutz, the CEO of Ingenuity 13, was not allowed to testify. As soon as they asserted their 5th amendment rights, the judge stopped the proceeding. He can't use that against them." The appellate court disagreed: "Sure he can," responded US Circuit Judge Richard Tallman. "He can draw adverse inferences. The district court was trying to gather facts. Your clients didn't appear for the first hearing." And "Explain to me in simple English how this operation worked—from the beginning," said US Circuit Judge Harry Pregerson. "How did they make their money? Who ran this operation?" "I don't know," Voelker said. "You don't know anything, do you?" Pregerson said before Voelker persisted in arguing that the proceeding was tainted and that the sanctions should be thrown out entirely and Judge Pregerson said "Let's say you're right," said . "Do you want us to send this back and have this turn into a criminal contempt proceeding?" ..... "With a potential penalty of life in prison for criminal contempt?" asked Judge Tallman. "They're prepared to run that gauntlet?" Well, despite the judges' warnings, it seems the Prenda trio want their day in court. 

With a reported 100,000 people accessing illegal streams of the 'fight of the century' between Floyd Mayweather and Manny Pacquiqao using the new Periscope app, despite an injunction (Temporary Restraining Order) banning two other online services from offering free live streams, the CopyKat is wondering if the tweet from Dick Costolo, the CEO of Twitter, owner of Periscope saying "and the winner is ... Periscope" might come back to haunt him. With 'paid for' access to the fight costing anything from £24.95 here in the UK to upwards of $100 elsewhere, the cost of illegal streams via the likes of Periscope and Meerkat is potentially in the tens of millions of dollars, something that likes of HBO, Showtime and Sky TV, who licensed the exclusive rights to the boxing match, will no doubt be most concerned about. Periscope, which is an app (yes, another complexity!) allows a user to broadcast from where he or she is - for example by pointing his iPhone at a TV screen - has been downloaded over 1 million times and was blamed by HBO for facilitating mass copyright infringement after four episodes of the new series of Game of Thrones were leaked and widely shared using the service. The pay-TV offering reportedly generated over $400 million for official broadcasters. Apart from copyright infringement conundrums, the app and the 'social share' concept raises a host of other issues, privacy being at the forefront as the whole world becomes a broadcaster. Hmmmmmmmmm. Much to muse upon! 

The Shark is back: Techtimes tells us that Grooveshark.com may be no more, but a limited version of the website has reappeared  at Grooveshark.io, providing access to most of the same streaming music as the original Grooveshark, but lacking the playlists and other features. It seems a team of users began backing up all the music on the Grooveshark servers before the streaming service was shuttered last week. The group's leader, who calls himself "Shark," claims he has moved 90 percent of Grooveshark's music to the new site and is working on getting the remaining 10 percent.

And finally - a new book: A Newcomer's Guide to the Music Business is "A quick and simple guide to the music business for those on the verge of taking their first steps into the industry". Written by law graduate and music producer Tito Adesanya, who grew up on a notorious NW London council estate, "the book assists newbies in avoiding the basic mistakes the majority make when entering the music business, while also familiarizing prospective newcomers with industry customs, practices, and the type of working environment they can expect to encounter." And its just £4.99!