THE COPYKAT

Unauthorised sampling - the CJEU adds some clarity

The core issue in this all important case between the German electronic music pioneers Kraftwerk and and hip-hop producers Moses Pelham and Martin Haas in 1999 over the Sabrina Setlur song “Nur Mir”, which revolves around thse sample a two-second snippet of Kratfwerk's “Metall auf Metall” used as a loop was whether a license is required for sampling and could non-pursual of the same violate the phonogram producers rights? The AG's opinion which was released in December and 2018 gave an affirmative view to the same arguing that the “reproduction in part” does not require copied portions to be original. The CJEU in its decision (according to IPKAT and the Press Release) has stated that the reproduction of a sound sample by a user even if a very short clip must be regarded as a reproduction in principle “in part” and falls in the realm of the exclusive ownership of the phonogram producer. However the court went on to add that a rational respect towards freedom of artiatic expression in music must be recognised when the sampled portion is creatively played with to the extent that it is unrecognisable to the ear in another phonogram. In that case it won’t be a reproduction.  So the CJEU has now said that sampling a sound recording, however short a snippet the sampler takes, needs approval from the copyright owner of the original track and in accordance with the same it held the German Legislation allowing for an exception in the case of sampling as incompatible with the EU law, and it imperative to harmonize this substantive phonogram producers exclusive right irrespective of the fundamental right grounds claimed by the national jurisdiction. 

5 Seconds of Summer accused of copying by Hungarian songwriters

Moving from sampling to allegations of plagiarism, A Texas court recently saw a case where the Aussie pop group Five Seconds of Summer had been accused of ripping off a 2018 hit called “Younghood” from a song composed by Hungary based musicians David Henderson, David Toth and Peter Ferencz called “White Shadows”. It has been alleged by the applicants that the success of this rip-off has substantially taken to band to new heights virtually single-handedly, as reported by Complete Music Update. It has been alleged that the first melodic phrase of “Youngblood” shares virtual identicality with the similarly placed phrase from “White Shadow” and are both repeated equal number of times in the songs i.e. 4 times. The lay-listener has been used to allege an infringement by the Hungarian composers. It has further been alleged that the worldwide acclaim and substantial revenue which has been garnered by virtue of Youngblood, is a result of exploitation and appropriation and the applicant’s deserve accreditation and compensation in lieu of the same.

Take a listen - with the Applicant’s song is here https://youtu.be/7zMzXQU5dkA and the allegedly infringing song here https://youtu.be/-RJSbO8UZVY . In a second major case, a jury has now ruled that the Katy Perry song Dark Horse does plagiarise a Christian rap song. After two days of deliberations, the jurors concluded that Perry's team had likely heard 2008 release 'Joyful Noise' before writing 'Dark Horse', and that the latter was sufficiently similar to the former to constitute copyright infringement.

Now NIKE sues Kawhi Leonard - claiming exclusive rights on its Logo!

Nike has filed a countersuit against NBA star Kawhi Leonard, arguing that it holds exclusive rights to the claw logo that its “talented team of designers” created and claims its distinct from the design that Leonard had sketched and provided to the company, his “Klaw” logo, which he had conceived and created in college drawing on his hands. Although it has been admitted by the NIKE legal representatives that  Kawhi Leonard had submitted a design, they have gone on to state that it is a false claim that the design was the “Claw” design, as reported in the Bulletin. In the form of a counter claim, NIKE has gone on to now allege copyright infringement and breach of contract. This has been done in lieu of the use of the claw design on non-Nike apparel in the NBA finals. Nike had already served notice to Leonard’s lawyers in lieu of the same which was responded with non-agreement and compliance. Nike has further argued as reported in NiceKicks.com that Leonard had on an earlier occasion claimed that “I drew up the rough draft and sent it over and they made it perfect. They refined it and made it look better than I thought it would ever be, and I’m extremely happy with the final version.” Further, Nike has produced the initial sketch in the court which was given by Leonard which looks like an amateur drawing as has been reported by the Bulletin. Also, Nike does not claim any ownership over this initial rough design, rather merely on the final refined version.

CASE Act passed by the Senate Judiciary Committee

As had been reported by PetaPixel, the long awaited CASE Act has been passed by the Senate Judiciary Committee - if passed, the bill will  go on to establish a small claims court for Copyright Infringement cases in the USA. There is yet to be a full vote on the Senate Floor. Currently, to defend one’s copyright, a direct action needs to be made before the Federal Court which is an expensive and an extremely formalistic procedure. However, this act if legislated successfully would establish a small claims tribunal within the US Copyright Office, simplifying defense of copyrights. The highest amount of damages which can be awarded by this court per infringed work would be $15,000 with the total being a maximum of $30,000. This definitely increases the efficiency and reduces a certain amount of burden on the Federal Court. It will involve the appointment of three full-time Copyright Claims Officers who will look after the same.

This bill has been extensively supported by the US photographers, illustrators, graphic artists, songwriters and authors as well as bloggers! Even the National Press Photographers Association went ahead to commend the pressing of this act in the Senate by saying ““This is a very positive step in addressing infringement issues, where previously individual creators felt they had a right with no remedy because of the high cost of copyright litigation”, as reported by PetaPixel. The only criticism which has been drawn however has been upon the unappealable nature of this tribunal and the high amount of $30,000 being involved as a punitive power. 

It will be interesting to see the voting view taken by the Senate floor.

DailyMotion denied safe harbour protection

Dailymotion has been ordered to pay €5.5m in damages to Italian broadcaster Mediaset with the Rome court saying that Dailymotion was “entirely aware” of copyright infringement. As reported by Complete Music Update, in a case brought in by the Italian TV company RTI against  Dailymotion, it was argued by the applicant that Dailymotion should be held liable for hosting copyright infringing content without a license, involving programmes of the applicant. The take-down commitments were fulfilled by Dailymotion, and upon serving a notice, it had taken down such alleged infringing material. However, the Rome Court, absolved the safe harbour protection available to such intermediaries like Dailymotion as it did not fulfil the criteria set out in the EU E-Commerce directive, which is the origin point of the EU Safe Harbour norms. It has been ruled to be an “Active Host”. For failing to have a filtering mechanism and a system to automatically remove all such infringing content, Dailymotion has been asked to pay 5.5 million euros in damages. This has greatly increased the responsibility of a user-upload based intermediary platform and has reduced the standard from actual knowledge to mere presence. The courts of Rome have further refused to involve the European Court to confirm and clarify the interpretation and applicability of the EC Directive. It has been held that the right holder did not have an obligation to provide URL’s for the content that the platform should remove in its take down request and a simple indication in the title of the video would be sufficient. This seems all the more as an absurd and a non-sustainable interpretation and it will be interesting to see how this case turns out in lieu of the pending cases on the interpretation of Article 14 of the EC Directive in the CJEU. Although, this decision has been hailed by Italian media Conglomerate wherein it has reportedly been stated by its Chief Executive that: “Today’s decision is therefore an authentic turning point in consolidated national and EU jurisprudence (repeatedly referred to by the Court in the judgment in question) aimed at protecting the work of publishers, which is under attack by diverse forms of online piracy: A phenomenon that destroys both economic value and jobs in journalism and publishing companies.” (Reported by IBC 365). More on this in the IPKAT.

The functionality doctrine revisited in the Lego’s Copyright dispute against its British Competitor

The world famous toy maker from Denmark, Lego, has successfully won a copyright infringement suit against a British competitor in the US District court for the District of Connecticut. This dispute was launched in 2011 when Lego had sued Best-Lock for producing and selling infringing minifigurines. It was alleged, as reported by World IP review, that Best Lock’s advertisements had highlighted the well-known interchangeability of its figures and body parts with Lego’s. The main argument of the defendant in this case was the elements of Lego’s copyrighted work being functional. The court after confirming access, went on to conclude that the fact that some elements of the work are functional doesn’t render the whole work as non-copyrightable. The court said: “A comparison of the works makes clear that Best-Lock has copied protectable, expressive elements that are original to Lego”  Remember the case of Broderbund Software v. Unison World?

Copyright Protection of Military Reports, of national importance

In a very important opinion issued by the CJEU on a reference made in context of litigation between the German Government and a newspaper over unauthorized publication of “Afghanistan papers” and certain confidential reports, wherein the question of interplay of Copyright and Freedom of Press was brought in before the CJEU. Basically, the question was can freedom of expression and information be a valid defense for copyright infringement? The AG opinion reflected reluctance in admitting copyrightability of military reports. However, the CJEU has gone on to rule that Freedom of Information and press are not justifiable grounds to derogate from rights of copyright holders beyond exceptions set out itself within the InfoSoc directive. The concept of external limitations is not viable in law. As on the question of whether military reports are copyrightable in the first place, the court went on to hold that it is upon the national courts to decide whether the conditions of copyrightability and intellectual creation showing free and creative choices are there in these reports or not. If fulfilling the criteria of being a “work”, no justification in the form of freedom of information is sustainable.

The court went on to finally hold that: “As is clear from the case-law of the European Court of Human Rights, for the purpose of striking a balance between copyright and the right to freedom of expression, that court has, in particular, referred to the need to take into account the fact that the nature of the ‘speech’ or information at issue is of particular importance, inter alia in political discourse and discourse concerning matters of the public interest. In those circumstances, having also underlined the way in which Funke Medien published the military status reports on the internet, the Court of Justice states that it is not inconceivable that such use may be covered by the exception concerning current events reporting provided for in the Copyright Directive.” More on this once the judgment is available  on IPKAT.

And finally - trolls get a bashing

A High Court Judge has torn apart a trolling application made against Virgin subscribers in the United Kingdom - Douglas Campbell QC's can be found on TorrentFreak and is well worth a read - here's a snippet: "“I do not accept that I should simply assume that a 9 year old expert report remains up to date, particularly one given in the field of computer software,” the Judge commented, noting that the report also lacked the required “statement of truth” to comply with civil procedure rules  ..... . 

This Copykat by Akshat Agrawal

The COPYKAT: licensing, lawsuits, and legislative updates

Community Health Systems fails Microsoft check-up on licensing

Technology giant Microsoft has filed a suit against Community Health Systems for “willfully infringing Microsoft’s copyrights through unlicensed use of Microsoft’s software,” according to a lawsuit filed last month. Microsoft also alleges Community Health Systems is guilty of willful breach of its contractual obligations, and implied covenant of good faith and fair dealing.

Community Health Systems is a Fortune 500 private company based in Tennessee, USA. CHS is the largest provider of general hospital services in the United States in terms of number of acute care facilities. According to its website, CHS’s affiliates own, operate or lease 126 hospitals in 20 states with approximately 21,000 beds. 

Microsoft and CHS have a number of licensing agreements for its software, which prohibit CHS from distributing, sublicensing, renting, leasing, lending or hosting any Microsoft software. The products in question include Microsoft’s Windows, Office, SQL Server and Datacenter.

According to the 2013 Business & Services Agreement (MBSA) signed between the parties, Microsoft has “the right to verify compliance with the license terms” through an independent auditor, Deloitte. In late 2016, Microsoft notified CHS that it was exercising its contractual rights to verify licensing and contract compliance.

Around this time, CHS was in the process of selling off (divesting) various hospitals to new management. As reported by the Nashville Business Journal, CHS has sold more than 30 hospitals in the past 15 months, and plans to sell more this year. CHS is alleged to have sweetened the divestment deals by providing its buyers access to Microsoft Corp. software. The lawsuit states that “despite having no right to do so, CHS intentionally facilitated the continued use of Microsoft software by these divested entities.”

CHS has apparently missed numerous mutually agreed upon deadlines, and has failed to provide complete data to Microsoft. Microsoft insists that this demonstrates CHS’s “unwillingness to comply with its contractual obligation and/or with the independent verification process.” Microsoft’s lawyers charge CHS with being “largely not responsive to, if not obstructionist of” the Deloitte audits.

For reference the complaint, Case 3:18-cv-00291, was filed March 15th in the U.S. District Court for the Middle District of Tennessee, and made public several days ago in early April. According to the Docket, Microsoft’s legal team has been granted a case management conference in early June. CHS has until May 7 to respond to the complaint.


"Grande" victory on vicarious liability in RIAA piracy case

The Recording Industry Association of America’s legal battle against Texan internet service provider Grande Communications has been given the green light proceed to trial, although with the vicarious copyright infringement claim removed.

Pursuant to the Judge’s recent order, the matter continues on the contributory copyright infringement claim alone. This move is considered by Torrent Freak to be a partial defeat for the RIAA’s piracy lawsuit, as the vicarious copyright claim against Grande Communications has been dismissed. 

By way of background, several major record labels including Universal Music, Capitol Records, Warner Bros and Sony Music - represented together by the RIAA - brought action against Grande Communications for the copyright infringements of its customers. The original complaint, Case 1:17-cv-00365, was filed in April 2017 in the Austin Division of Western Texas District Court.

Grande denied these accusations, and filed a motion to dismiss the case. In respect of the vicarious liability aspect, vicarious liability is established when the third party (the ISP) has the right and ability to control the actions of the direct infringer, and the third party derives a direct financial benefit from the infringement. 

The RIAA claims Grande can be held liable for vicarious infringement, because the ISP has a “direct financial interest in keeping pirating subscribers on board.” 

As detailed in the lawsuit, piracy tracking company Rightscorp has provided Grande with notice of specific infringers who are using Grande’s high-speed internet service to infringe various copyrighted works. Through this process, Grande has been put on notice and informed of more than one million infringements. 

Grande admitted that while it received millions of takedown notices from Rightscorp, these notices based on flawed evidence and, as “mere allegations,” are not worthy of acting upon. In particular, the ISP explained that the notices of copyright infringement generated by piracy watchdog company Rightscorp are “so numerous and so lacking in specificity, that it is infeasible for Grande to devote the time and resources required to meaningfully investigate them.” 

Contrary to the RIAA’s allegations, Grande asserted that it was not failing to remove infringers for profit reasons.  Will the case turn on Rightscorp’s expertise, and the quality of its notices?

This case has considerable similarities to the legal battle between BMG Rights Management and internet service provider Cox Communications, in which a Virginia federal jury ruled that Cox was responsible for the copyright infringements of its subscribers. The Court of Appeals for the Fourth Circuit later threw out the $25 million piracy liability verdict.


EU-ser Created Content: draft Copyright Directive fails to hit the right note with artists

About 18 months ago, the European Commission announced its proposal for a Directive on Copyright in the Digital Single Market, currently in draft stages  Industry groups are keen to ensure their opinions are taken into consideration, especially in instances where consumers share content which belongs to artists, authors, record labels, and television channels. On 12 April, various trade groups representing Europe’s creators and creative content producers published an open Letter to the European Council about the proposed Directive. 

While the Letter’s authors support the primary objectives of the proposed legislation, they suggest that, far from ensuring legal certainty, the directive as currently drafted “could be detrimental to our sectors,” which include journalism, film and TV, music, and sport. 

In particular, the problems seem to arise with sections addressing the “use of protected content” by ISPs and other platforms which “store and give access to large amounts of works and other subject-matter uploaded by their users”. 

The E-commerce Directive states that EU Member States shall ensure that internet service providers are not liable for copyright infringements carried out by its customers, on condition that: (a) the ISP does not have actual knowledge of illegal activity or information; and (b) the provider “acts expeditiously to remove or to disable access” to the illegal content, once they become aware of it (see Article 14 of the E-commerce Directive). This article provides certain entities with a “safe harbour” from copyright liability.

Accordingly, many User Uploaded Content (UUC) platforms, like YouTube, argue that they are not responsible for any copyright infringing material uploaded by their users. This principle originates from the e-commerce directive and holds that platforms are not liable for their users’ infringement, provided that they enforce takedown procedures initiated by copyright owners. The copyright industries – such as those mentioned above – want the safe harbour reformed so that it no longer applies to user-upload sites (Complete Music Update).

This draws into question how online platforms hosting UUC should monitor user behaviour and filter their contributions, rather than by reviewing content after it has been published and reported or “flagged” as copyright infringement. This may, as has been discussed with Facebook’s proposed use of artificial intelligence in copyright and hate speech monitoring, “inevitably require an automated system of monitoring that could not distinguish copyright infringement from legal uses such as parody” (The Guardian).

The relevant sections of the draft Directive are Article 2, Article 13(1) and Article 13(4). 

Article 2 defines which services fall under liability, mentioned further at Article 13. The latest draft could leave most UUC platforms outside the scope, despite the fact they continue to provide access to copyright protected works and other subject-matter (for example, music playing in the background of a makeup tutorial on YouTube). 

The problem with Article 13(1) as currently written is that it risks narrowing the scope of the right and contravening CJEU jurisprudence. The letter’s authors argue that “any new EU law should secure that this right is broad,” and “contain no additional criteria which could change via future CJEU rulings.” 

As for Article 13(4) and its relevant recitals, the authors suggest the language is tantamount to a new safe harbour, which would both “seriously undermine fundamental principles of European copyright,” and pose “unwarranted liability privilege risks breaching the EU’s obligations under international copyright treaties.”

The Letter closes with the authors’ promise to “remain at the Council’s disposal to find solutions to these points.” For more information on the proposed Directive, be sure to check out the IPKat’s numerous posts on the subject.


House Judiciary Committee goes for a modern remix of US Copyright Law

Copyright legislation is getting an update on the other side of the Pond, too. The United States House Judiciary Committee voted unanimously today (32-0) to approve House Bill 4706, “to provide clarity and modernize the licensing system for musical works under section 115 and to ensure fairness in the establishment of certain rates and fees.” More commonly known as the Music Modernization Act, the bill now heads for consideration by the full House of Representatives. The act has received wide bipartisan support from Democrats and Republicans alike, and appears to be “on the fast track” for approval. 

Speaking to ABC news, John Simson noted that Americans “...have a 1909 statue trying to govern 2018 technology, and it doesn't work.” Mr Simson is a professor at the American University and founding member of Sound Exchange, a non-profit organisation set up to collect and distribute performance royalties.

Title I (the first section) of the bill seeks to address how modern digital music services operate, by creating a blanket licensing system to quickly license and pay for musical work copyrights. Another key aim includes discouraging litigation in favor of simply ensuring that artists and copyright owners are paid in the first place without such litigation. 

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. In particular, 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. 

Title III, the “Allocation for Music Producers (AMP) Act,” will ensure that record producers, sound engineers, and other creative professionals receive compensation for their work.

The Music Modernization Act will also create an American agency or “mechanical licensing collective,” that would house all music publishers under one roof. The digital streaming services will therefore pay the agency, which tracks and collects royalties on behalf of the artists.

IP Subcommittee Vice Chairman Collins noted that “the current music licensing landscape undervalues music creators and under-serves music consumers. Outdated copyright laws have produced unnecessary liabilities and inefficiencies within the music licensing system, and stakeholders across the music industry have called for reform. [...] This bill moves the music industry towards a freer and a fairer market, enabling it to leverage the present and future benefits of the digital age.” 

More statements from Judiciary Committee leaders on the their passage of the Music Modernization Act can be found on the committee website.


Spotify turns up the volume on licensing technology

On the topic of licensing, the day after the Music Modernization Act was approved by the Judiciary Committee (see above) Spotify announced plans to buy Loudr.fm, a San Francisco-based company which provides licensing technology. The deal has been described by Reuters as the acquisition of a “cover song licensing firm to tackle copyright risks.”

As a company which offers “Big Data for Music Rights,” Loudr’s platform obtains mechanical licenses to distribute recordings as digital downloads, ringtones, CDs or vinyl records. Publishers are able to “digitalize their collection process and gain more insight into the rights they control,” and businesses are able to “discover and automate publisher payments for music content at scale.”

Spotify’s purchase of Loudr comes only months after being hit with a lawsuit seeking damages of up to $1.6 billion (£1.1 billion) by Wixen Publishing, the California-based company that represents Tom Petty, Neil Young, Rage Against the Machine, Missy Elliott and others. The Wixen lawsuit, like others, demonstrates the difficulty Spotify faces in tracking down the right publishers connected to songs, and ensuring the correct royalties finds its way to the appropriate rightsholders.

In its New York Stock Exchange listing document, Spotify disclosed that licensing and royalty payment problems are a key threat to its business model. To make its 35 million tracks available for listeners, Spotify requires licenses from the musicians and record labels who own the songs. Additionally, Spotify has a complex royalty payment scheme, and it is difficult to estimate the amount payable to musicians under their license agreements. Even if Spotify secures the necessary rights to sound recordings from record labels and other copyright owners, artists may wish to discontinue licensing rights, hold back content, or increase their royalty fees.

In a press release dated 12 April, Spotify explained the Loudr team of publishing specialists and technologists will join Spotify’s New York offices. “Loudr will contribute to Spotify’s continued efforts towards a more transparent and efficient music publishing industry for songwriters and rights holders.”


This update by Kelsey Farish

THE COPYKAT

This CopyKat from Tibbie McIntyre

The UK Copyright Officers survey – deadline 3^rd April

If you work at a UK library and educational/cultural institution, your organisation is warmly invited to take part in a survey about copyright officers and copyright education here. The survey is available until 3^rd April.

The UK Copyright Literacy page states that the research is regarding “copyright officers or similar specialists in UK libraries and educational / cultural institutions. We want to find out more about the value and status of these positions, the responsibilities that they entail and the ways in which copyright education is delivered. … The findings should be of interest to organisations wishing to benchmark the copyright training and advice services they currently offer.”

Even if your UK library and educational/cultural institution does not have a dedicated copyright officer, your organisation is still invited to participate, as there are questions designed to determine how copyright is managed in the absence of a designated copyright post.

If you have any questions about the survey, please contact ukcopyrightlit@gmail.com.

You can find the survey here until 3^rd April.

Australia NOT to grant safe harbour to Google, Facebook, at al.

The Australian government had recently been seeking to extend its safe harbour provisions to online intermediaries (including Google and Facebook) that rely on user-generated content. The move would have given immunity to online intermediaries for infringing content uploaded onto platforms by users.

Across Europe and the U.S., online intermediaries already enjoy such a safe harbour (European legislation can be viewed here, American here). However, safe harbour provisions have generated much heated debate, with copyright holders arguing that it has led to the copyright ‘value gap’. For example, rights holders have argued that platforms that benefit from the safe harbour rule facilitate nearly half of all music consumption on the internet but represent only around 4% of the revenue generated by the industry.

Also, platforms are only under an obligation to remove infringing content when notification is given by the rights-holder. This leaves copyright holders in the position of eternally having to search YouTube, Facebook et al. for instances of infringement – an eternal game of ‘whack-a-mole’. This topic is coveredhere and here, and reports on controversial measures proposed by the EU to overcome the ‘value gap’ can be found here.

TorrentFreak reports that “Due to what some believe amounts to a drafting error in Australia’s implementation of the Australia – US Free Trade Agreement (AUSFTA), so-called safe harbor provisions only apply to commercial Internet service providers.” This means that platforms allowing the upload of user-generated content may be found liable for infringing content uploaded by 3^rd parties.

Communications Minister Mitch Fifield confirmed in a statement that the amendment had been dropped: “Provisions relating to safe harbour were removed from the bill before its introduction to enable the government to further consider feedback received on this proposal whilst not delaying the passage of other important reforms”.  

Lobbying from a consortium on copyright holders to drop the safe harbour amendment has been intense. The Australian has published a series of articles against implementation of the safe harbour rule, arguing that Google et al. are “ruthlessly exploiting” safe harbour rules in the US and Europe (no links are available as the content is behind a paywall).

What are the implications for platforms that allow 3^rd parties to upload content?

There is legal uncertainty – platforms may be found liable for any acts of infringement by their users. There are a number of options from which the platforms can choose;

1.      Run the risk of being found liable of copyright infringement because of the actions of 3^rd party users, having to pay penalties to copyright holders.

2.      Enter into agreements with copyright holders on a pre-emptive basis, licensing content that 3^rd party users might upload onto the platform.

3.      Implement filtering technology, identifying and blocking infringing content when it is uploaded. (This is also a live issue in Europe.)

4.      Exit the Australian market altogether.

The exemption from liability enjoyed by platforms is an important issue worldwide, and it should be interesting to observe how events unfold in Australia in the coming months.

There are more stairs? – Stairway to Heaven saga continues

This saga has previously been reported on the 1709 blog here and on the  IPKat here. This case deals with the potential infringement of a song by Spirit, ‘Taurus’, by Led Zeppelin in their ‘Stairway to Heaven’.

A 90 page brief was recently filed to the 9^th Circuit Appeals court by the agent of Michael Skidmor, trustee of Spirit guitarist, Randy Woolfe (California). The brief asks the court to reverse the previous finding, where the jury found unanimously in favour of Led Zeppelin in June 2016. This brief also asks for remand for a new trial, including striking the bill of costs.

Copykat will issue updates as and when they come.

By Alf van Beem (Own work), via Wikimedia Commons

Compulsory Licences for “cable systems” do not apply to TV streamers

The 9^th Circuit delivered its ruling in the Fox Television Stations v Aereokiller case on 21 March. The case relates to the TV streaming services provided by FilmOn.

FilmOn provides a service that uses antennas to capture over-the-air broadcast programming – much of it copyrighted – and then uses the internet to retransmit this programming, utilising both subscription and ad-based methods of revenue generation. Essentially, it enables you to watch TV on your computer.

The dispute centred on section 111 of the U.S. Copyright Act (17 U.S.C. § 111), which provides that a “cable system” is eligible for a compulsory license. Such a compulsory licence allows “cable systems” to retransmit “a performance or display of a work” originally broadcast by someone else without having to secure the consent of the copyright holder.

In order to maintain its compulsory licence, the “cable system” must pay a statutory fee to the Copyright Office – as well as complying with other regulations.

FilmOn contended that its services fall under the “cable system” definition and it should therefore be granted a compulsory licence.  

A group of broadcasters (including, inter alia, Fox, NBC Universal, ABC, CBS and Disney Enterprises Inc.) argued that the services provided by FilmOn do not fall under the definition of “cable system” as provided under § 111 and it should therefore not be granted a compulsory licence.

A statement on page 7 the ruling sheds further light on why this issue was so hotly contested by the parties:

“Compulsory licences are highly coveted, in no small part because, according to the Copyright Office, the royalty payments the Act requires cable companies to pay are “de minimis” when compared to the gross receipts and revenues the cable industry collects, a gap suggesting that the government-set rates fall well below market levels.”

Unfortunately, court found itself at an impasse: “The text of § 111 is written in broad terms, and both sides can make plausible arguments about the statute’s purposes and legislative history.”

The court goes on to state “that the meaning of § 111 is ambiguous on the precise question before us”.

To overcome this impasse, the decision hinged on arguments brought by the Copyright Office and the weight the court was willing to give those arguments. The court utilised the Skidmore framework (precedent that allows the court to rely on the arguments of a government agency in cases where there is no clear law).

The Copyright Office argued that FilmOn’s services do not fall under the definition of “cable systems”. Historic Copyright Office arguments have posited “that a provider of broadcast signals [must] be an inherently localized transmission media of limited availability to qualify as a cable system.” Significantly, Congress has for years been aware that the Copyright Office views internet-based retransmission services as not falling under the definition of “cable systems” and has never moved to amend or comment upon this view.

The arguments presented by the Copyright Office were therefore afforded significant deference in this case, since the statute was found to be ambiguous on the issues at stake and the Copyright Office proffered cogent arguments to address matters. The court noted that “To the extent the legislative history provides relevant evidence of § 111’s meaning, we would defer to the Copyright Office’s interpretation of it, seeing as the Copyright Office has a much more intimate relationship with Congress and is

institutionally better equipped than we are to sift through and to make sense of the vast and heterogeneous expanse that is the Act’s legislative history.

In summary, it was on the strength of the arguments brought by the Copyright Office, that court found that “a service that captures copyrighted works broadcast over the air, and then retransmits them to paying subscribers over the Internet without the consent of the copyright holders, is not a “cable system” eligible for a compulsory license under the Copyright Act.”

This story will continue, as FilmOn is arguing two similar cases at the D.C. Court of Appeals and the 7^th Circuit Court of Appeal.

Judgment against Cox opens up ISP liability in the USA

Cox Communications has been ordered to pay a $25 million dollar penalty for copyright infringements to the music rights management company BMG by a federal judge. The ruling follows a jury decision which found Cox liable for illegal movie and music downloads by its customers. The company's behaviour amounted to wilful infringement of copyright in the eyes of the jury.

The Eastern Virginia District Court dismissed Cox’s appeal of the earlier verdict, and ordered Cox to pay BMG $25m in damages for copyright infringement - a ruling which may have widespread repercussions for online copyright infringement in the US. The court decided that Cox did not do enough to stop users pirating music from BMG, and therefore did not qualify for Digital Millennium Copyright Act (DMCA) ‘safe harbor’ protections.

Crucially, BMG provided evidence that its agent, Rightscorp,  had identified individual infringers and then alerted Cox to their wrongdoing - which Cox then failed to act on.  In a statement, Rightscorp said: “For nearly five years, Rightscorp has warned US internet service providers (ISPs) that they risk of incurring huge liabilities if they fail to implement and enforce policies under which they terminate the accounts of their subscribers who repeatedly infringe copyrights." adding “Over that time, many ISPs have taken the position that it was simply impossible for an ISP to be held liable for its subscribers’ actions – even when the ISP had been put on notice of massive infringements and supplied with detailed evidence.  “Although Rightscorp was not a party in this case, we are delighted with the outcome. The Federal District Court declared the liability of ISPs to be precisely what Rightscorp has been saying it is for years,” said Rightscorp CEO Christopher Sabec.

http://www.komando.com/happening-now/369676/this-copyright-case-should-worry-all-internet-users

http://arstechnica.co.uk/tech-policy/2015/12/rightscorp-wins-landmark-ruling-cox-hit-with-25m-verdict-in-copyright-case/

http://www.law360.com/articles/761632/cox-rails-against-25m-piracy-verdict-awarded-to-bmg

http://www.musicbusinessworldwide.com/isps-may-face-huge-liabilities-for-music-use-after-bmgs-25m-payout-from-cox/

IFPI GLOBAL MUSIC REPORT 2016

The record labels' international trade body, the IFPI, has published its Global Music Report for 2016 with headline news that global recorded music revenues are up 3.2% as digital revenues overtake physical for the frst time. The report highlights: 

-       Digital revenues contribute 45 per cent of industry revenues, overtaking physical’s 39 per cent share

-       Streaming revenues up 45.2 per cent, helping to drive 3.2 per cent global growth

-       Music consumption is exploding globally, but the “value gap” is the biggest brake on sustainable revenue growth for artists and record labels

Downloads remain a significant offering, accounting for just 20 per cent of industry revenues.  Income was down 10.5 per cent to US$ 3.0 billion – a higher rate of decline than in 2014 (- 8.2 per cent).  Full album downloads are still a major part of the music fans’ experience and were worth US$1.4 billion.  This is higher than the level of sales in 2010 (US$983 million) and 2011 (US$1.3 billion).

Performance rights revenue grew. Revenue generated through the use of recorded music by broadcasters and public venues increased 4.4 per cent to US$2.1 billion and remains one of the most consistent growing revenue sources. This revenue stream now accounts for 14 per cent of the industry’s overall global revenue, up from 10 per cent in 2011.


Revenues from physical formats declined, albeit at a slower rate than in previous years, falling by 4.5 per cent compared to 8.5 per cent in 2014 and 10.6 per cent in 2013.  The sector still accounts for 39 per cent of overall global income and remains the format of choice for consumers in a number of major markets worldwide including Japan (75 per cent), Germany (60 per cent), and France (42 per cent).

IFPI’s Global Music Report 2016 also reported a 10.2 per cent rise in digital revenues to US$ 6.7 billion, with a 45.2 per cent increase in streaming revenue more than offsetting the decline in downloads and physical formats.

Total industry revenues grew 3.2 per cent to US$ 15.0 billion, leading to the industry’s first significant year-on-year growth in nearly two decades.  Digital revenues now account for more than half the recorded music market in 19 markets.  

However, the IFPI say that there is a fundamental weakness underlying this recovery. "Music is being consumed at record levels, but this explosion in consumption is not returning a fair remuneration to artists and record labels.   This is because of a market distortion resulting in a “value gap” which is depriving artists and labels of a fair return for their work."

IFPI Chief Executive Frances Moore said: “After two decades of almost uninterrupted decline, 2015 witnessed key milestones for recorded music:  measurable revenue growth globally; consumption of music exploding everywhere; and digital revenues overtaking income from physical formats for the first time. They reflect an industry that has adapted to the digital age and emerged stronger and smarter.

“This should be great news for music creators, investors and consumers. But there is good reason why the celebrations are muted: it is simply that the revenues, vital in funding future investment, are not being fairly returned to rights holders.  The message is clear and it comes from a united music community: the value gap is the biggest constraint to revenue growth for artists, record labels and all music rights holders. Change is needed - and it is to policy makers that the music sector looks to effect change.” 

The IFPI say that the “value gap” arises because some major digital services are able to circumvent the normal rules that apply to music licensing.  User upload services claim they do not need to negotiate licences for the music available on their platforms, or conclude licences at artificially low rates, claiming protection from so-called “safe harbour” rules that were introduced in the early days of the internet and established in both US and European legislation. Its clearly a dig at YouTube who many feel hide behind the DMCA 'safe harbor' provisions - and have an unfair advantage over competitors.

Recently some 400 recording artists, songwriters and groups including the Recording Industry Association of America (RIAA) are calling on Congress to reform existing US copyright law saying that the Digital Millenium Copyright Act (DMCA) is obsolete, dysfunctional and harmful,  and calling for stronger measures against the ongoing piracy troubles they face. The DCMA was signed into law by President Bill Clinton in 1998 and aimed to ready copyright law for the digital age. Christina Aguilera, Katy Perry, Steve Tyler, Lionel Richie and Garth Brooks are just some of music’s biggest names who want to make it harder to pirate music online. The musicians are asking lawmakers to make “drastic reforms” to the Act.

In September 2015 Cary Sherman, the chairman and CEO of the Recording Industry Association of America, has some choice words about the current state of US copyright law. He said that the provisions of the Act were 'largely useless' to combat music piracy and  that under the Digital Millennium Copyright Act, rightsholders had to play a game of whack-a-mole with Internet companies to get them to remove infringing content. But that "never-ending game" has allowed piracy to run amok and has cheapened the legal demand for music. Sure, many Internet companies remove links under the DMCA's "notice-and-takedown" regime. But the DMCA grants these companies, such as Google, a so-called "safe harbor"—meaning companies only have to remove infringing content upon notice from rightsholders.

The IFPI say that the safe harbour rules are being misapplied: "They were intended to protect truly passive online intermediaries from copyright liability.  They were not designed to exempt companies that actively engage in the distribution of music online from playing by the same rules as other online music services. The effect is a distorted market, unfair competition and artists and labels deprived of a fair return for their work."

"Rights holders from across the music community and wider creative sector are committed to changing this legislative anomaly.  They say there is no case for digital platforms that have built major businesses on the back of music and other creative content, to be allowed to seek “safe harbour” refuge while they profit from making music available on the internet."

YouTube’s deals with Universal Music Group, Sony Music and Warner Music have either expired or will this year, the Financial Times reported on Sunday.

http://www.ifpi.org/downloads/GMR2016.pdf

http://musiclawupdates.blogspot.co.uk/2016/04/artistes-call-for-major-reforms-of-take.html