US Moves to Leave "Axis of Evil" poses PPL a problem

Slightly after the event, it is admitted, but the February introduction of a Performances Rights Act in the US Senate may, if the Act is passed, throw Phonographic Performance Ltd (PPL) into something of a quandary here in the UK.

The Chairman of the US Senate Judicial Committee, Sen. Patrick Leahy (any relation to Dick?) introduced legislation which will oblige AM and FM radio stations to make licence payments for the broadcast of sound recordings and the recorded performances thereon. China, Iran and North Korea are as out of step as the USA in this respect and clearly the USA wants to join the "good guys".

Applauded by Tony Bennett (swoon) and Bono, such a new income stream would provide useful income to US recording artists still waiting to recoup their advances under their recording agreements (here in the UK this income is not applied to recoupment but paid direct to artists).

The UK joined other Rome Convention signatories in 1964 and initially record labels in the UK (via collecting society PPL) shared this type of revenue with performers by private agreement. In 1996 performers became entitled to this equitable remuneration for broadcast and public performance of their recorded performances by law - albeit asserted against the producer as opposed to the user (as is the case in other jurisdictions). So PPL, which had distributable revenues of £110.3 million in 2008, shares the income between its record label members and thousands of UK musicians and performers.

Natch, the Recording Industry Association of America (RIAA) welcomed the initiative, highlighting the international inequity of US labels and performers not being able to collect overseas royalties for music that is, after all, the core business of music stations. Songwriters and music publisher are paid via ASCAP, BMI and SESAC - but not record companies or performers. The popularity of US artists worldwide prompted the RIAA to label the lack of such a law "an inequity that costs American artists tens of millions of dollars each year". And there's the rub.

While PPL merrily collects from broadcasters in the UK and shares the revenue with UK performers, what becomes of the revenue from the licence fees that are attributable to the broadcast of work from US labels and artists? Is it distributed in the UK to UK beneficiaries? Or perhaps the licence fees only represent UK radio stations' broadcast of repertoire by UK labels and artists?

So, if the USA comes onstream with this new right, will licence fees to broadcasters go up because additional monies will have to be collected and paid to US labels and artists? My, how the broadcast community in the UK will love that! Or, will UK labels and artists be asked to sacrifice a percentage of their income so that it can be paid across to the new, true rightholders across the pond?

Does PPL have a plan?

Copyright War -- and it's free

There's a free online webcast summit coming up next week on “Copyright War”, on Tuesday 9 June. The summit, hosted by BrightTALK™, promises seven presentations from leading legal experts on topics including:

• “Online Legal Issues: Facebook, MySpace, Twitter, YouTube, Blogs” — Jefferson Coulter;
• “Recording Industry v the People” — Ray Beckerman, Attorney at Law, Ray Beckerman, P.C.
• “Successfully Defending Software Audits” — Robert J. Scott, Managing Partner, Scott & Scott, LLP
• “Creative Commons: The Sharing Standard” — Fred Benenson, Outreach Manager, Creative Commons

You can review the agenda and register for the Copyright War summit here.  If you'd like any further details, you can get them from Donna Suen.

Latest EIPR

The June 2009 issue of Sweet & Maxwell's monthly European Intellectual Property Review (EIPR) leads with an opinion by New Zealand lawyer and scholar Paul Sumpter, "Copyright in slogans: another bald spot exposed", which subjects to critical analysis a September 2008 New Zealand High Court decision, Sunlec International Pty Ltd v Electropar Ltd, in which the words "Field Friendly--the best choice for field work" were held entitled to copyright protection as an original literary work. 

The same issue also contains a note by Christian Rütz on Re Software, a November 2008 decision of the Landgericht, Dusseldorf on the application of exhaustion of rights doctrine to the sale of copies of computer software.

For a complimentary inspection copy of the EIPR email Jo Slinn.

Cablevision – is that it?

On Friday the Obama administration declared its stance on the following copyright question: if you press your TV’s remote to record a programme and it’s recorded at your cable company’s servers, could the cable company be infringing copyright?

In 2006 Cablevision, a US cable TV company, announced plans to launch a ‘remote-storage digital video recorder’ (RS-DVR) service. Customers, instead of downloading a TV programme through a set-top box and storing a copy there, would copy and store programmes on Cablevision’s hard drives at a central remote server. Cablevision was sued for copyright infringement by CNN and Cartoon Network, joined by Twentieth-Century Fox, Universal, Paramount, Disney, CBS, ABC and NBC.

In 2007, a district court held that Cablevision was infringing the content providers’ copyrights in three ways: (1) before the customer makes any choices, all programming is saved in ‘buffers’, albeit in sections not longer than 1.2 seconds that are constantly being overwritten; (2) when a customer records a programme, the copies are made by Cablevision; (3) in transmitting the copies to customers, Cablevision is infringing the content owners’ right to perform.

In August 2008 this decision was reversed by the court of appeals, Second Circuit (judgment here), saying: (1) the buffering would not create copies as defined by the Copyright Act as they were not fixed for long enough; (2) the RS-DVR functions like a VCR: the customer would be selecting what to copy, so was liable for making the permanent copies; (3) no ‘public’ performance occurs because each transmission is made to a single subscriber using a single unique copy produced by that subscriber.

In October 2008, the content providers appealed to the Supreme Court and in January 2009 the Supreme Court invited the Solicitor General, Elena Kegan, to express the views of the United States. On Friday (29 May) Kagan delivered her brief (here), which recommends that the Supreme Court should not review the Second Circuit's ruling. The Supreme Court doesn't always follow the Solicitor General's advice, but it is often persuaded by it.

Kagan said that the copyright issues were potentially significant but this case isn’t the place to address them because: (1) the Second Circuit decision was the first on such a case, so (a) the decision didn’t conflict with any other Supreme Court or appeals court decision and (b) the Supreme Court would be in a better position to assess the legal issues when similar cases had come before appeals courts; (2) Plaintiffs had not raised contributory infringement and defendants had not raised a fair-use defence. It would not be possible to clarify the proper application of copyright without considering them; (3) the RS-DVR is equivalent to a VCR or set-top DVR, rather than a video-on-demand service. The customer is using Cablevision’s service just like a self-service photocopying shop.

These reasons seem an unsatisfactory way to sign off this case. The analogy of the RS-DVR to a VCR or photocopying shop is debatable and deserves thorough re-examination. Think of a photocopying shop set up solely to copy works against copyright owners’ wishes. You don’t go in and put the book you want on a machine but contact the shop to request a copy. There are people there running the machines that make the offending article...


Other opinions: John Palfrey, Harvard Law School. Mike Masnick, Techdirt.

On-demand streaming royalties and ad-supported content

As has been widely reported, PRS for Music (the collective formerly known as the PRS/MCPS Alliance) has announced (via this press release) its new royalty rates for that rapidly-growing sector of the online music market; the on-demand streaming services.

The widely criticised minimum per-track royalty (previously 0.22p per track) is plummeting to 0.085p per track - or 85p per 1,000 tracks served, or what the advertising industry refers to as CPM (cost per thousand).

That still looks like a tough order when it comes to advertiser-supported content. For these sites, just to cover this new reduced royalty, an ad-supported site that plays an ad before every track has to sell that advertising at a CPM of 85p - if it only wants an advert one track in 10, then it needs to sell at a CPM of £8.50 - which is two to three times what a typical TV advertising campaign costs in the UK. And that is just to cover the PRS costs, let alone pay record labels, technology suppliers and make any money for itself.

The other moving part is the royalty rate - up from 8% to 10.5% of revenue - this is a neat move by PRS for Music - because the minima are still relatively high, it is likely that most business plans will focus on those numbers and not on the percentage rate, while PRS will have a headline royalty rate that, perhaps for the first time in a consumer market, will top 10% and which PRS will doubtless use as a reference point in other negotiations and Copyright Tribunal proceedings.

Finally a word on the process - the author (declaration of interest - he has represented interests adverse to PRS for Music on many occasions) notes that PRS asserts that an "extensive seven month consultation period" preceded the announcement, but that the concept that what customers think might be as important, or more important, than what a society's members think, still seems a challenge. It would be wonderful if some economists could invent some kind of bargaining process which would force collecting societies to negotiate as if in a real market situation.

Written by John Enser.

EU questions GBS

EU countries want the European Commission to investigate the economic implications of Google’s book search project amid fears that it will harm the European publishing industry, it emerged yesterday (26 May), EurActiv reports here.

Facebook v Power.com: the party-pooper, the gatecrashers and us

Power.com aims to bring your social-networking sites together on to one screen - but not everyone wants to join in (spot the difference, right). At the end of last year when negotiations with Facebook broke down, Power continued to offer access to FB. FB sued for a string of reasons including copyright infringement. Power has attempted to have FB’s claim dismissed but the court held on 11 May: ‘Defendants correctly assert that Facebook does not have a copyright on user content, which ultimately is the information that Defendants’ software seeks to extract. However, if Defendants first have to make a copy of a user’s entire Facebook profile page in order to collect that user content, such action may violate Facebook’s proprietary rights.’

While these two slug it out over an F-word and some discreet web design, let’s not skirt round the copyright elephant that towers in the corner of the courtroom. Though the elephant isn’t a party to this lawsuit it’s very, very big: Facebook’s 200 million users, who upload more than 850 million photos and 8 million videos every month.

Depending on the outcome of this case, FB users may not be allowed to access their own content through Power because they are incidentally infringing FB’s copyright by copying peripheral design features etc. FB users might feel this is monopolistic and tight-fisted when they give FB ‘a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content’.

On the other hand, is the user-friendly Power really acting in the interests of FB users? If Power accesses FB, it’s potentially not just FB’s IP that’s copied without permission, but other users’ content too. Your friends have chosen to give Facebook a licence - not Power and not even you.

Copyright Future: Copyright Freedom

Today and tomorrow Australians are debating the future of copyright. The Copyright Future: Copyright Freedom conference was opened by Attorney-General Robert McClelland, who enjoined: ‘Copyright interests are often diametrically opposed. But that is no excuse for not seeking compromise and fair outcomes. In this respect, I see copyright as essentially about players acting in good faith.’ Speakers include Adrian Sterling and Lawrence Lessig and you can follow it all (live if you’re an early bird tomorrow) on twitter and blogs - here.

Programme here.