The COPYKAT: from Fallout Shelters to your local library

These days, a cursory search for “copyright” online will likely result in one thing more than any other: headlines about the [insert scary adjective here] draft for the Directive on Copyright in the Digital Single Market. It’s certainly something to keep an eye on, and the CopyKat has covered the DSM Directive here and here. But in other copyright news…

Is Warner Bro's Westworld game a blatant rip-off?

Bethesda Softworks is suing Warner Bros. and Fallout Shelter co-developer Behaviour Interactive over the recently released Westworld. Bethesda Softworks alleges that not only is the mobile game based on HBO’s TV series a “blatant rip-off” of Fallout Shelter, but that it also uses the same code as Fallout Shelter. The lawsuit, filed on 21 June in Maryland District Court, is a civil action for breach of contract, copyright infringement, unfair competition, and misappropriation of trade secrets.

a scene from HBO's hit show, Westworld

The original Fallout Shelter was released in 2015 for mobile devices, and is now available for play on Nintendo Switch, Windows PCs, PlayStation 4, and Xbox One. Fallout Shelter is a free-to-play simulation game, which has in-app purchases, where players build and manage a post-apocalyptic bunker full of workers (Variety). The Westworld game, which is currently available only on Android and iOS mobile phones, allows players to manage a virtual replica of the  theme park from HBO's hit Westworld TV show. The mobile game also features an “underground facility” that is similar to the vault in Fallout Shelter.

Bethesda accuses Warner Bros. of copying “the subtle sway, bounces, and minute movements in idle characters that give them and the scene a constant sense of motion and a distinctive feel as a result of unlawfully copying Bethesda’s code.” With these common elements discussed above in mind, Bathesda asserts that “there is more than a substantial similarity between Fallout Shelter and the Westworld mobile game.” 

Of course, questions of inspiration can be argued either way. Importantly for Bethesda’s case, both Fallout Shelter and the Westworld game share the same developer: Behaviour Interactive. The company, which is Canada's largest independent video game development studio, is also a named defendant in the claim, which states: 

“Warner Bros., sharing a similar consumer demographic, and recognizing Bethesda’s significant success in bringing its Fallout Shelter game to a broad audience on mobile devices, engaged and collaborated with Behaviour to develop a mobile app for its own science-fiction property, Westworld. To bring the Westworld mobile game to market, Behaviour and Warner Bros. utilized Bethesda’s intellectual property without authorization to develop a mobile game with the same or substantially similar gameplay experience as that provided by the copyrighted Fallout Shelter mobile game.”

The evidence continues to stack in Bethesda’s favour, with the publisher pointing out that the Westworld game even included the very same bugs or defects that were present in the early development stages of Fallout Shelter. Bethesda, which also publishes the popular Fallout, The Elder Scrolls, and DOOM games, is seeking an unspecified amount in damages from Warner Bros., and to have the Westworld game removed from app stores.

Social network, media company, host provider, neutral intermediary... what's in a name for YouTube?

Austrian commercial TV broadcaster ProSiebenSat1Puls4 has achieved a key victory in its four-year legal battle with YouTube. According to the Handelsgericht Wien (the Vienna Commercial Court) in its judgement of 6 June 2018, YouTube is not a neutral intermediary, but is rather jointly responsible for copyright breaches that take place on its video platform.

Puls4, a private broadcaster affiliated with the major broadcasting group ProSiebenSat.1, accused YouTube of complicity in copyright infringement. In 2014, Puls4 sued YouTube, arguing that the media giant had allowed Puls4’s stolen content to appear on the YouTube platform. YouTube responded by asserting the Host Provider Privilege set out in Article 14 of the E-CommerceDirective, which in certain situations exempts host providers like YouTube from liability for infringing activities by their users.

Austria's former Chancellor Christian Kern appears on Puls4 TV.

It is important to remember that the Host Provider Privilege only applies if the entity in question indeed qualifies as a “host provider” within the meaning of the E-Commerce Directive. This means that YouTube would have to prove it (a) does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or (b) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.

Speaking to German newspaper Der Standard, Puls4’s CEO Markus Breitenecker explained that if YouTube “leaves its neutral intermediary position and assumes an active role, which could provide it with a knowledge of or control over certain data, it cannot rely on the liability privilege in this respect. And that is exactly what has happened in this case.”

Although (as of 25 June) the official judgement has not been published, the court cited the YouTube’s “links, mechanisms for sorting and filtering, in particular the generation of lists of particular categories, its analysis of users’ browsing habits and its tailor-made suggestions of content.” This led the court to determine that YouTube was prohibited from “playing the role of a neutral intermediary.”

In a statement to The Local Austria, YouTube said it was studying the ruling and “holding all our options open, including appealing” the decision. Both sides have four weeks to petition the court before it issues its binding ruling. In the meanwhile however, YouTube noted that it takes protecting copyrighted work very seriously.

If the preliminary decision is upheld, YouTube must perform a content check upon upload, instead of simply removing copyright infringing content upon notification. In respect of this, the Viennese court stated that “YouTube must in future — through advance controls — ensure that no content that infringes copyright is uploaded.” YouTube began beta testing a feature called Copyright Match last month, which shows rights holders who have had their work stolen and lets them ask YouTube to delete the guilty party’s video.

Although Austrian case law is not binding for other EU member states, the Commercial Court’s judgment sets a precedent for denying Host Provider Privilege to YouTube under EU law. This may encourage similar decisions in the future which are based on the same line of argument.

As Breitenecker put it, “the media companies who call themselves social networks will have to recognize that they, too, have to take on responsibility for the content with which they earn their millions.” 

For creatives in California, a recent employment law case may raise concerns over copyright

A California court ruling from April has raised concerns regarding its potential impact on copyright ownership. In Dynamex Operations West, Inc. v. Superior Court of Los Angeles, the matter before the court was a wage dispute, which required the court to consider the standard to apply in determining whether workers should be classified as employees, or as independent contractors. 

Nowhere in the 85-page judgement is “copyright” or even “intellectual property” mentioned. 

However, in a state with so many media and software companies, the new ruling could affect whether a creator or a company gets to claim ownership as the original author of a work. In deciding if a worker is eligible for statutory employment protections, Dynamex replaced a complex multi-factor consideration with a simple three-part “ABC” test. Now, Californian companies are burdened with the requirement to prove that all three parts weigh against an employment relationship. 

What does this mean for copyright law? The rise of the gig economy, which is characterised by short-term contracts and freelance work, poses new questions for intellectual property ownership. To determine if someone is an employee for purposes of copyright authorship, American Federal courts currently use a test in the US Treasury Department’s Internal Revenue Service code. 

If, however, the courts start looking to the Dynamex case for guidance, people’s expectations might change. Speaking to Bloomberg Law, music industry lawyer Michael S. Poster explained: “If, under California law, a lot more people are going to be treated as employees rather than as independent contractors, chances are that a lot of their work product that they would have retained a copyright interest in might belong to their employer.” 

Although the Copyright Act of 1976 provides authors with initial copyright interests, under the work-made-for-hire doctrine, it is the employer that is considered to be the author. (Section 201(b)). On the other hand, if the author is an independent contractor or freelancer – rather than an employee – ownership is retained by the individual creator, unless there is a contractual agreement to the contrary. 

For participants in the gig economy, the Dynamex ruling could simply prompt media and software companies to hire fewer independent contractors, and instead only hire people as employees. Although the copyright implications of Dynamex are unknown, the decision underscores the need for employers and workers alike to ensure that any contract for services includes a carefully drafted intellectual property rights clause – especially for those in creative industries.

And finally, for those of us still using our local library…

The Digital Economy Act 2017 (Commencement No 6) Regulations 2018 (SI 2018/690) have passed and will come into force this week in England, Wales and Scotland. The regulations give effect to section 31 (lending of e-books by public libraries) of the Digital Economy Act 2017. This impacts the Public Lending Right scheme, which in the United Kingdom is a programme administered by the British Library intended to compensate authors for the potential loss of sales from their works being available in public libraries.

The new section amends the definition of "lent out" in the Public Lending Right Act 1979 (PLRA 1979) thereby extending it to “communication by means of electronic transmission to a place other than library premises.” Being “lent out” now captures the remote lending of e-books and audio-books, resulting in the extension of the public lending right under the PLRA 1979 to remote lending. The provision also amends the Copyright, Designs and Patents Act 1988. 

Copyright in an e-book or e-audio-book within the public lending right scheme is not infringed when borrowed through a public library, provided that the e-book or e-audio-book in question has been lawfully acquired by the public library. Additionally, the lending must comply with any purchase or licensing terms to which the book may be subject.

The COPYKAT celebrates World IP Day

Following the celebrations of World Book and Copyright Day and World IP Day we are bringing you the latest news from the copyright world.

Monkeys Lack Standing to Sue for Copyright Infringement – 9^th Circuit Rules on ‘Monkey Selfie’ Case

On April 23rd the long dispute over the infamous ‘monkey selfie’ (covered here, here and here), which was taken by a Macaque monkey, named Naruto, has finally been decided. Following PETA’s complaint in 2015 where the organisation had requested to have any profits that will be gained from the photo taken by Naruto should go to the monkey and preserve its habitat, last year in July the Ninth Court has heard the parties’ arguments. Subsequently, two months later the parties have reached the settlement and filed a motion to dismiss the case but the motion was denied by the court.

The Ninth Circuit Court of Appeals held that the monkey, which was named as the plaintiff, lacked statutory standing to bring an action for copyright action under the Copyright Act. Neither it was possible for PETA to validly assert ‘next friend’ status that would allow it to represent the monkey “both (1) because PETA has failed to allege any facts to establish the required significant relationship between a next friend and a real party in interest and (2) because an animal cannot be represented, under our laws, by a ‘next friend’”.

Bulgaria brings amendments to its Copyrights and Neighbouring Rights Act

Bulgaria was one of the four countries which have failed to pass the laws that will fully implement EU Collective Rights Management Directive (Directive 2014/26/EC). On 7^th December 2017 the European Commission said it will refer Bulgaria to the Court of Justice of the EU and request a fine of €19,121.60 per day for failure to transpose the Directive which the country was supposed to enact by April 2016. The main aim of the Directive is to improve the operation of collective management organisations and set common standards for the multi-territorial licensing of rights for musical works that are distributed online.

In light of the Directive, Bulgaria has recently passed several amendments to is Copyrights and Neighbouring Rights Act. The new provisions will now allow non-profit organisations and other commercial legal entities (independent companies) to conduct the collective management of copyrights. In order to do so, independent companies will have to enter into a separate agreement for copyright management with the rightholders and register in the Rights Management Organisations Register at the Ministry of Culture. Furthermore, amendments introduced to the Copyrights Act regulate the responsibilities of the parties in the event of live performances, shift the control of copyright compliance to municipalities and provide the Minister of Culture with a power to oversee the collective management of rights.

SET TV Service Provider sued by Amazon, Netflix and Several Major Hollywood Studios

Several major Hollywood studios, including Disney, Paramount Pictures and Warner Bros, together with Netflix and Amazon, have formed a new (another?!) anti-piracy partnership, Alliance for Creativity and Entertainment (ACE), and have brought an action against Set Broadcast LLC, seller of the popular IPTV service SET TV. Following their actions against Tickbox and Dragonbox devices, members of ACE have filed a complaint against Set Broadcast accusing it of facilitating mass copyright infringement. In the view of the Plaintiffs, the software offered by Set Broadcast allows its buyers to stream copyright infringing content. As stated in the complaint, “Defendants market and sell subscriptions to “Setvnow,” a software application that Defendants urge their customers to use as a tool for the mass infringement of Plaintiffs’” copyrighted works. Additionally, Defendant invites its customers to download and install the software on their portable devices and computers. Apart from the software the company also offers preloaded boxes which enable their users to watch ‘on demand’ content and live streams of TV Channels. Plaintiffs claim that “[f[or its on-demand options, Setvnow relies on third-party sources that illicitly reproduce copyrighted works and then provide streams of popular content”. Therefore, ACE members are claiming in their action statutory damages and seeking an injunction to close the service and seize all the devices that are in Defendant’s possession. ACE spokesperson said that piracy software such as ‘Setvnow’ impair films and TV shows market, and cause harm “to a vibrant creative economy that supports millions of workers around the world”. Therefore, ACE is committed to “protecting creators and reducing online piracy through dedicated actions against illegal enterprises”.

Seinfeld Takes Action to Dismiss Copyright Complaint Over “Comedians in Cars Getting Coffee” Series

Earlier this year in February, director Christian Charles has filed a complaint in the Southern District of New York alleging comedian Jerry Seinfeld, together with companies involved in the production of the Comedians in Cars Getting Coffee web series. Charles claims that he has come up with the concept of the series and although he created the pilot episode, he is now out of the production, and royalties, as well as profits in violation of his copyright. In response to the lawsuit, (as reported by IPWatchdog), on April 4^th Seinfeld filed a memorandum to support the motion to dismiss the case. He asserts that the copyright claim should be dismissed for being time-barred given the claims were filed after the expiration of the statute of limitations. In the situation, where the Court finds the claims cannot be dismissed on the time limit basis, Plaintiff’s claims should be dismissed on the basis that they fail to provide a protectable copyright interest. In the view of Seinfeld and others, the concept of comedians in cars that has been followed by similar concepts such as Carpool Karaoke and Cougars in Cars Getting Cosmos, which “consists of nothing but ‘common stock ideas’ and unoriginal scènes à faire that do not rise to the level of original protectable expression”. Additionally, the Defendants claim that Charles has fraudulently obtained his copyright by registering similar title “designed to mislead the Copyright Office into accepting a copyright application that directly conflicted with the one filed by Mr. Seinfeld.”

Can A Tattoo be Protected by Copyright? – Continued

In the previous CopyKat [look here] we have looked at the dispute between Solid Oak Sketches and Take-Two over copyright infringement of tattoo designs. During the last week, a new lawsuit has been filed which addresses the issue of tattoo’s copyright protection. In her action against WWE and 2K Gamers, tattooist, Catherine Alexander who inked WWE wrestler Randy Orton argues that her designs were used in a commercial manner without her consent. Similarly to the NBA2K game, here video games from WWK2K series prominently feature Orton’s multiple tattoos in digital designs. According to Alexander, the games display Orton’s tattoos in a manner that is same or substantially similar to her copyrighted works. The question that the Court will have to answer, as indicated by Forbes, will be whether WWE and 2K Games have actually copied the work and whether there is a similarity between Alexander’s protectable designs and works in the video games. In the view of Alexander, “there is no doubt that her designs have been ripped off and reproduced in an effort to make them seem as close to real-life as possible”. 


In 2017 China’s Internet Copyright Industry Grew by Over 27%

In a recently released report, The National Copyright Administration of China reveals that its internet copyright industry grew by over 27% last year and has reached over  636 billion yuan, (US$100 billion). The biggest contributors are online news portals and online games which account for 73% of the total market value. In 2017 online news and information market grew by 40%, whereas online gaming increased by 32% and reached 235.5 billion yuan. Live streaming and short videos over the past two years have seen the most rapid growth, achieving a number of 422 million live streaming users. Mr Zhang Qinkun, Secretary-General of the Internet Copyright Industry Research Center, in observing prospects in the industry for the coming years said that businesses should concentrate on improving the quality of their content in order to attract users.

At the same time, the National Office for the Fight Against Pornography and Illegal Publications revealed in its report that China has dealt with over 460 cases in the first three months of the year that involved copyright infringement. According to the National Office, in connection with the cases more than 1.5 million illegal publications, such as e-books, videos and games were confiscated.

Swedish Patent and Registration Office (PRV) Wants to Promote Legal Streaming

The Swedish Patent and Registration Office (PRV) has created national aggregator called Streamalagligt.se (‘stream legally’), which aims to promote legal streaming among Swedish citizens. The platforms allow for searching of copyrighted works, such as films, TV shows, music, and sports events providing a single access point to find legal digital content. Streamalagligt.se is part of agorateka, portal of the European Intellectual Property Office (EUIPO) that intends to raise awareness and allow the search for legal content through national-level portals. Through the creation of its portal, Sweden joins 14 other EU countries that already have aggregator websites as part of agorateka programme.

For more information click here and here, and watch the video here.

This update by Mateusz Rachubka

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