Music Modernization Act launched in the US

COPYRIGHT: Two US Congressmen have launched a proposed new statute that has the support of both music owners and music users in an effort to overhaul of the mechanical royalties system in the US. Doug Collins and Hakeem Jeffries say that the Music Modernization Act would "bring music licensing its first meaningful update in almost 20 years".

With no collecting society offering a blanket licence covering the so called 'mechanical rights' in songs, music users must identify the owners of every song they copy, and make sure those owners receive the licensing paperwork and fixed royalty rate set out in American copyright law. Its not easy - the streaming platforms, which concurrently exploit both the performing right and mechanical right elements of the song copyright. Last May, Spotify came to a proposed $43 million settlement to resolve a class action from songwriters led by David Lowery and Melissa Ferrick. The plaintiffs in that case had alleged that Spotify hasn't adequately paid mechanical licenses for song compositions. In July, Spotify was hit with two lawsuits, including one from Bob Gaudio, a songwriter and founding member of the group Frankie Valli and the Four Seasons. Now Spotify has been hit with a $1.6 Billion copyright lawsuit from Wixen Music, publisher of songs by Tom Petty and Neil Young amongst others, which amongst other claims argues that the Lowery/Ferrick settlement was far too low. Apple Music has faced similar claims. 

The proposed legislation will be an overhaul of the compulsory licence system that governs mechanicals in the US, with Collins and Jeffries saying: "Under the Music Modernization Act, the digital services would fund a Mechanical Licensing Collective, and, in turn, be granted blanket mechanical licenses for interactive streaming or digital downloads of musical works". Although paid for by the digital services, the new collecting society would be run by music publishers and (self-published) songwriters. The law would also: change the way the statutory boards and courts that regulate US collective licensing are organised; the way judges are selected to consider the royalty rates would be changed; and the criteria employed when setting rates would be altered to reflect market realities.

With Wixen's claim against Spotify alleging that Spotify outsourced its work to a third party, licensing and royalty services provider the Harry Fox Agency, which was "ill-equipped to obtain all the necessary mechanical licenses", surely this proposed legislation is much needed? Some say yes, some say maybe!

The Digital Media Association (which includes Apple, Spotify, YouTube, Pandora, Amazon, Napster and Microsoft as members) is backing the proposals, as are the US music publishing and songwriter community. David Israelite for the National Music Publishers Association said "The Music Modernization Act brings the laws that govern songwriters into the modern age. This legislation will lead to improved rates for songwriters and will streamline digital music companies' ability to license music. While there is still more to do to free songwriters from oppressive government regulation, this is a major step forward". The NMPA also put its name to a joint statement alongside collecting societies BMI and ASCAP, plus Songwriters Of North America and Nashville Songwriters Association International. Together they declared that the Music Modernization Act represents "months of collaboration and compromise between the songwriting and tech industries". However the National Association of Broadcasters (NAB) said it has serious concerns about unrelated provisions in the bill that may unjustifiably increase costs for many music licensees, including local radio and TV broadcasters, who otherwise receive no benefit from the legislation” the organisation said in its statement adding “NAB looks forward to working with the bill sponsors and impacted parties to resolve our outstanding concerns” and  the Songwriters Guild of America said that while the proposed legislation has many good points, it also has a “number of serious problems” that will need to be addressed before SGA and thousands of its members can support the bill. 

Other proposed music sector focussed legislation in the US includes moves to ensure AM/FM radio stations to pay royalties to artists and labels as well as songwriters and publishers (the Fair Play Fair Pay Act), and moves to sort out the pre-1972 'quirk' in US copyright law (the CLASSICS Act), and the Transparency In Music Licensing & Ownership Act proposed by Congressman Jim Sensenbrenner earlier this year. That proposal also seeks to overcome some of the issues around digital licensing and the problems caused by the lack of a workable publicly accessible database detailing accessible music rights ownership information.

An interesting take on how this may have influenced Wixen Music's recent filing of it's $1.6 billion lawsuit against Spotify (and how this might impact on Spotify's planned IPO) here
https://www.npr.org/sections/therecord/2018/01/03/575368674/sweeping-new-music-law-expedites-a-1-6-billion-lawsuit-against-spotify and here  https://musicindustryblog.wordpress.com/tag/spotify-law-suit/

https://www.billboard.com/articles/business/8078543/music-modernization-act-house-of-representatives-licensing-reform

https://www.billboard.com/biz/articles/news/legal-and-management/8085840/spotify-hit-with-16-billion-copyright-lawsuit-over

http://musiclawupdates.blogspot.co.uk/2017/12/apple-music-in-hot-water-over-unpaid.html

http://www.theweek.co.uk/90715/spotify-hit-with-billion-dollar-copyright-lawsuit

The CopyKat. Friday the 13th without Jason Voorhees, sounds like a nightmare!

The Flamingos

June was certainly an interesting month in the world of copyright, and below you will find a selection of stories that have caught the eye of our new intern Matthew Lingard in the past month, supplemented by a couple of notes from Ben Challis!

Readers of this Blog will be aware that  there have been actions in New York, Florida and California about the existance of a 'common law' or state law right in the performance of pre-1972 sound recordings in the United States. These have been met with mixed results: Whilst some class actions exist, the main players have been the former members of the 60s combo The Turtles (Flo & Eddie) against internet broadcaster SiriusXM. Flo & Eddie had some initial success, although lately the prevailing mood has been with Sirius XM rather than the rights holders: In a new case  a court has again agreed with a broadcaster, here iHeartMedia, who had argued that the plaintiffs, husband and wife team Arthur and Barbara Sheridan, who own a number of master recordings from the pre-1972 era of popular musicincluding those The Flamingos and J.B. Lenoir,  had failed to make out a viable claim under state laws - with the court finding “By selling such recordings, the Sheridans did not, and could not, divest the compositions of their copyright protection. But they could, and did, divest the recordings of performances of those compositions of common law copyright protection by selling those recordings to the public.” For Judge Tharp, the primary issue on copyright was whether Illinois provides copyright protection to pre-1972 recordings sold to the public without licenses for public performance. And to this question the court had a simple answer - in Illinois, publication “extinguishes the common law copyright”. Judge Tharp explained “Both the Illinois Supreme Court and the Seventh Circuit, however, have construed the concept of dedication to the public to include acts by which members of the public could access copies of the work — particularly through sales,” Tharp said. Judge Tharp dismissed all claims saying “the dismissal is based on the incurable lack of any state law cause of action, rather than curable pleading deficiencies, the dismissal is with prejudice.”More on the Cook County Record here.

30 leading content creators and on-demand entertainment companies from around the world have launched the Alliance for Creativity and Entertainment (ACE), a new global coalition dedicated to protecting the dynamic legal market for creative content and reducing online piracy. The worldwide members of ACE are Amazon, AMC Networks, BBC Worldwide, Bell Canada and Bell Media, Canal+ Group, CBS Corporation, Constantin Film, Foxtel, Grupo Globo, HBO, Hulu, Lionsgate, Metro-Goldwyn-Mayer (MGM), Millennium Media, NBCUniversal, Netflix, Paramount Pictures, SF Studios, Sky, Sony Pictures Entertainment, Star India, Studio Babelsberg, STX Entertainment, Telemundo, Televisa, Twentieth Century Fox, Univision Communications Inc., Village Roadshow, The Walt Disney Company, and Warner Bros. Entertainment Inc.

ASCAP, the American Society of Composers, Authors and Publishers, and YouTube have signed a voluntary multi-year agreement, effective immediately, for U.S. public performance rights and data collaboration. The mutual goal of this agreement is to work together to ensure that ASCAP members get paid more fairly and accurately for the use of their music on YouTube. The deal combines ASCAP’s database of 10.5 million musical works with YouTube’s data exchange to aid in identifying songwriter, composer and publisher works on YouTube. The agreement is retroactive, allowing ASCAP to be compensated for content streamed on YouTube since the company’s 2013 deal to operate on a compulsory interim license with ASCAP. ASCAP CEO Elizabeth Matthews said, “This agreement achieves two important ASCAP goals – it will yield substantially higher overall compensation for our members from YouTube and will continue to propel ASCAP’s ongoing transformation strategy to lead the industry toward more accurate and reliable data. The ultimate goal is to ensure that more money goes to the songwriters, composers and publishers whose creative works fuel the digital music economy.

Dead sure: Will Jason Voorhees file an amicus brief?

The ongoing legal battle between Victor Miller, the original screenplay writer of Friday the 13th, and Horror Inc/Sean Cunningham continues to rumble on. Miller is seeking to terminate the grant of his rights in the script to recover ownership of the franchise but faces opposition from Cunningham, who directed and produced the first film and produced a number of further films. Miller is trying to use the provision in US copyright law that allows authors to terminate a grant of rights and reclaim ownership, giving him back Friday the 13th. Meanwhile, Cunningham and Co. are saying that Miller's screenplay was a work-made-for-hire, which invalidates any right he has to claim ownership in this case. Is there a settlement is sight? Its a complex case, not least as after the original film, a series of eleven more films followed and these in turn developed Jason Voorhees- now the main (much loved?) character in the franchise. Therei s also a television show, novels, comic books, video games, and tie‑in merchandise. Miller's attorney Marc Toberoff told The Hollywood Reporter: “Whereas Miller will thereby recover the U.S. copyright to his original film treatment and screenplay this does not prevent the continued exploitation by Plaintiffs or their licensees of prior derivative works, including the 1980 film and its many sequels; it solely relates to new derivative works after the effective 2018 termination date. Furthermore, as the U.S. Copyright Act has no extra-territorial application, the foreign rights to Miller’s screenplay remain with Plaintiffs or their licensees”.  Matthew adds: In simple terms this suggests that Miller will retain ownership of the concepts that were present in the original screenplay. As Jason Voorhees as he is currently portrayed is a relatively new addition to the franchise, Cunningham et all would retain the rights to utilise his character. Therefore we could see the scary possibility of Friday the 13th Films in the US that don’t feature Jason in addition to films in the same franchise made for outside the US that do. It is highly doubtful that a major studio is going to roll the dice on a film that has to be effectively rewritten dependant on the jurisdiction of release. Though the Friday the 13th films are a franchise that still draws fans, they are not significant in number enough to justify it. Until then horror fans will have to suffer without another Friday the 13th film.

When a group of museums and researchers in the Netherlands unveiled a portrait entitled The Next Rembrandt, it was something of a tease to the art world. It wasn’t a long lost painting - but a new artwork generated by a computer that had analysed thousands of works by the 17th-century Dutch artist Rembrandt Harmenszoon van Rijn. We've had monkeys taking photos - now theconversation.com asks "Should robot artists be given copyright protection?". 

Do robots dream of electric sheep?

Cross party support to make US radio 'pay to play'

A bipartisan group of legislators led by Representatives Jerry Nadler and Marsha Blackburn have reintroduced the Fair Play Fair Pay Act, a bill that would establish a public performance right for sound recordings on terrestrial radio, forcing stations to pay labels and artists for using their material, and correct the unusual position in the USA where there is no performance right for sound recordings on AM/FM stations (although there is for satellite and internet radio, and those royalties are collected by the collection society SoundExchange). 

If the bill passes, and is signed into law by President Trump, it would put webcasters like Pandora and iHeartRadio, which pay statutory royalties for their online radio platforms, on an equal footing with AM/FM radio, who would have to reimburse the owners of sound recordings for using their copyrights. 

Members of Congress say the bill will not be used to lower royalties that radio stations now pay to publishers and songwriters, which stations have always paid for the use of their songs. 

The legislators also say the bill will "make a clear statement that pre-1972 recordings have value and those who are profiting from them must pay appropriate royalties for their use," a reference to the ongoing web of litigation involving recordings made when copyright was still a matter of state law. As previously reported, sound recordings made after 1972 are covered under federal copyright law.

Representatives Nadler, Blackburn, Conyers, Issa, Deutch and Rooney issued  a joint statement saying: "Our current music licensing laws are antiquated and unfair, which is why we need a system that ensures all radio services play by the same rules and all artists are fairly compensated. Our laws should reward innovation, spur economic diversity and uphold the constitutional rights of creators. That is what the Fair Play Fair Pay Act sets out to accomplish: fixing a system that for too long has disadvantaged music creators and pitted technologies against each other by allowing certain services to get away with paying little or nothing to artists."

The National Association of Broadcasters (NAB), the radio industry's leading trade group, opposes the bill and president and CEO Gordon Smith said the bill "would impose a job-killing performance royalty on America's hometown radio stations,"  "NAB remains committed to working with Congress on balanced music licensing proposals that help grow the entire music ecosystem, promote innovation, and recognize the benefit of our free locally-focused platform to both artists and listeners."

http://www.billboard.com/articles/business/7744254/fair-play-fair-pay-bill-congress-radio-pay-artists

A second bill has now been introduced: The new PROMOTE Act is based on the premise that as the radio stations argue that basically airplay is free promotion for the acts and the labels, artists should have the right to decline the promotion and ask that their records not be played. More on CMU Daily.

http://www.completemusicupdate.com/article/second-bill-in-us-congress-seeks-to-address-radio-royalties-issue/

Image: Kmccoy

THE COPYKAT

This CopyKat by Tibbie McIntyre

The WS Society – Intellectual Property Conference – 20 April

You are warmly invited to attend the upcoming Intellectual Property Conference hosted by the WS Society. The event will take place on Thursday 20 April 2017, 9:00am – 1:00pm, at The Signet Library in Edinburgh.

The event promises to provide a wealth of information and discussion for IP practitioners, with panels covering;

-          The UK IP system post Brexit

-          Recent developments in IP contracts and licensing agreements

-          Brexit, PGIs and trade marks

-          IP in the Scottish FinTech sector – a case study

-          Panel session: the experiences of in-house counsel – what’s on their agenda?

-          Case law update – impact and implications

Speakers at the conference offer a wide range of expertise, including Stephen Rowan of the IPO, Ross Nicol of Maclay Murray & Spens, Mark Cruickshank of RBS and Anoop Joshi of Brodies. Gill Grassie will chair the conference.

The day should provide a valuable forum for IP practitioners to meet and discuss the impending impacts of Brexit on IP. For further information, please see the information page.

Seizure of over 10,000 pirated textbooks in Kenya

Pirated textbooks worth approximately Sh5.5 million were seized two weeks ago during a raid conducted by the Kenya Revenue Authority (“KRA”) and the Kenyan Ministry of Education.

The Kenya Publishers Association responded positively to the seizure, emphasising that pirates generate large incomes yet pay no taxes to the state. David Waweru, chairmen of the Kenya Publishers Association, stated that the pirated books “have poor binding and print quality. The text is illegible and unfriendly to the learners.” Examples of the poor quality pirated books can be viewed here. Waweru called for the facilitation of a new copyright bill which would enact stricter laws with heavier penalties for pirates.

“Digital Economy Bill criminal provisions are too broad” says experts

The Digital Economy Bill (“the Bill”) is currently making its way through the UK Parliament. The Bill deals with a variety of issues, including ticket touting, broadband provision and digital copyright. The digital copyright provisions are particularly controversial because a copyright infringer that causes any loss of money to a copyright holder will fall under the criminal liability provisions. Opponents of the current draft argue that the broad definitions in the criminal liability provision puts casual file-sharers at risk of prison-time. Additionally, the maximum prison term for copyright infringement is to be increased five-fold from two to ten years. TorrentFreak posits a nightmarish scenario for a young woman who downloads a single film after the passing of the Bill.

A group of experts sent a letter to the UK Government last week arguing that the criminal liability at Clause 35 of the Bill is too wide. (*N.B. the letter refers to clause 28 because it was published before the latest amendment of the Bill.) The letter argues that clause 35 is not compatible with the foreseeability and proportionality principles found in EU law and the European Convention on Human Rights (“ECHR”).

The foreseeability test

Per the letter sent to the government, the foreseeability test

“requires that the law needs to be sufficiently clear and precise in its terms to afford individuals an adequate indication of the circumstances where, and the conditions upon which, online copyright infringement may attach criminal liability i.e. specifically in particularly serious or commercial-scale online copyright infringement cases.”

The current drafting of the provision is broad enough to envision that an individual could potentially spend ten years in prison for sharing one file. The writers of the letter argue that “the Bill should explicitly state that criminal liability may attach only to commercial-scale or particularly serious copyright infringers.”

The proportionality test

It is argued in the letter that clause 35 does not adhere to the proportionality test found within EU law and the ECHR. Proportionality as it is applied to internet usage monitoring in investigating suspected infringers is used to bolster the argument that the provision in clause 35 is too broad to be proportionate. In the case of proportionality of internet usage monitoring, two factors are of importance;

1.       The depth and scale of the internet usage monitoring

2.       The scale of the infringement against which the monitoring is being carried out (commercial-scale would be justified, whereas it is more difficult to justify internet usage monitoring in small-scale infringement)

The issue with the current drafting in terms of adherence to the proportionality principle is that there is no differentiation between commercial-scale and small-scale infringement.

The solution

The solution, as proposed, would be to draft the provision so that ‘commercial-scale loss’ of income by copyright holders attracts criminal liability, rather than any loss. Additionally, ‘risk of loss’ should not attract criminal liability in infringement circumstances, and only ‘serious risk of causing commercial scale loss’ should attract criminal liability. This small amendment would lift the threshold for criminal liability to apply to those seeking to generate income from copyright infringement, rather than to encompass individuals engaging in non-commercial infringement.

The Bill is due to have its 3^rd reading in the House of Lords this Wednesday, 5^th April 2017. We await with anticipation as to whether this amendment will be made.

US Supreme Court NOT to hear case on whether safe harbour applies to pre-1972 music recordings

The US Supreme court has refused to hear the appeal filed by Capitol records relating to pre-1972 song recordings. The judgement handed down by the 2^nd Circuit on 16 June 2016 stands.

Background – safe harbour

Safe harbour is the qualified limitation of liability for hosting providers which host third party content, where users have uploaded copyrighted content (the law can be found here). It was introduced through the Digital Millennium Copyright Act (“DMCA”). Many in the music industry are opposed to the current formulation of the safe harbour principle, citing the ‘music value gap’ as a major loss of revenue (for more on this, please see here). Both the DMCA and the 1976 Copyright Act (which the DMCA amended) are federal laws because they emanate from Congress – the safe harbour principle is a creation of federal law. The 1971 Sound Recordings Amendment Act - an Act designed to protect against unauthorised duplication and piracy of sound recordings - is also a creation of federal law. The 1971 Sound Recordings Amendment Act came in to force in 1972.

At stake in this case was whether pre-1972 sound recordings are covered under the safe harbour rule, since pre-1972 sound recordings are protected under state law rather than federal law.

Capitol Records et al. argued that the safe harbour rule should not apply to pre-1972 song recordings, thereby inducing liability for Vimeo for the uploading of pre-1972 song recordings onto its platform.

The 2^nd circuit court found for Vimeo, stating that “we find no reason to doubt that § 512(c) [the safe harbour provision] … protects service providers from all liability for infringement of copyright, and not merely from liability under the federal statute.” This decision stands, and all infringement of copyright on Vimeo et al. by 3^rd party users is still covered by the safe harbour principle.

UK’s PRS for Music launches new online tool for live music performances

PRS for Music recently launched a new online tool designed to help rights holders manage royalty income from live performances.

The online tool allows users to upload set lists or programmes from performances whilst on the move with a phone or tablet. Over 1,000 set lists and programmes were reported to PRS in the first 24 hours of the launch, covering performances across 23 countries. The ease and convenience of the new tool is an essential factor in helping rights holders gain income from their copyrighted works. Members can report all live performances – including a small gig at a pub, DJing at a club, a classical concert or a sold-out stadium show.

PRS for Music members should log on to their online account and click ‘report your performance’ to access the new tool.                                                     

Reintroduction of Fair Play, Fair Pay Act in the US

A group of bipartisan legislators in the US have reintroduced a bill which is designed to put AM/FM radio into the same situation as webcasters – such as Pandora and iHeartRadio.  AM/FM radio stations pay nothing to perform music yet webcasters are required to pay statutory royalties for playing music on their online radio platforms.

A joint statement from the bipartisan group stated that "Our current music licensing laws are antiquated and unfair, which is why we need a system that ensures all radio services play by the same rules and all artists are fairly compensated."

A statement by Content Creators Coalition asserted that "for decades, artists have been forced to let their music generate billions of dollars of advertising profit to the corporate investors of radio companies while not being paid one cent for their art. It is past time for Congress to right this wrong."