The CopyKat

Jacobsen egg chair

A change in copyright law has now come into effect in the UK, which looks to protect classic designs from imitation. The repeal of section 52 of the Copyright, Designs and Patents Act 1988 came into effect on 28 July, and means that iconic design products will now be protected for 70 years after a designer dies - and this would include products such as Arne Jacobsen’s Egg Chair and Charles and Ray Eames’ DSW plastic chair. The change means that no replica products can be sold after 28 January 2017, which will mark six months after the legislative amendment. Additionally, no new replica products can be manufactured between now and January, unless the company gains rights from the original copyright holder. To be granted this right, 3D designs must qualify as “works of artistic craftsmanship”, according to the Intellectual Property Office – this means they have required special training and skill to make, they are seen as a “piece of art”, and the designer purposefully intended to create a work of art.

Billboard reports that a German court has ruled that file-sharing platforms that illegally distribute and exploit copyright-protected music, film and television are liable to pay damages to rights holders. The ruling, which has potentially far-reaching consequences, came in a legal case between German collecting society GEMA and file-sharing service Uploaded.net, operated by Swiss tech company Cyando AG.  GEMA demonstrated to the court that Uploaded.net had not only failed to remove large numbers of illegal files, but, by its design and application, increased the likelihood of copyright infringement. As an “accomplice” in the distribution of pirated content, the court ruled that Uploaded should assume responsibility for infringement. “The Regional Court [of Munich] has decided in the interest of our members. Their ruling confirms that file-sharing hosts play a significant role in the proliferation of music piracy” said  Dr Tobias Holzmüller, GEMA’s General Counsel, welcoming the decision. “Online service providers have previously only been obliged to remove contents infringing copyright from their platforms. By pronouncing the liability to pay damages for file-share host Uploaded, composers, lyricists and music publishers at least get a small compensation for the rights infringements of their works that have been committed on a massive scale.”

AgencySpy is trying to find out who filed a Digital Millennium Copyright Act (DMCA) takedown request with their parent company’s legal team earlier this year, using a fake name, a fake employer and a fake job description - trying to remove two articles from 2010  headlined “Hot Ad (Wo)Man of the Day: Torrence Boone” and “Google Hires ‘Unemployable’ Torrence Boone”. The articles aren't very nice - and clearly as Mr Boone is currently VP of global agency sales and services at Google he is employable ... but what's been going on with the takedown notices?

Universal Music Group is $20m richer thanks to a settlement from a two-year copyright infringement case. The major label has accepted a settlement package from in-flight entertainment provider Global Eagle that could be worth more than $40m in total. Universal launched a lawsuit against Global Eagle in May 2014, alleging that 4,500 of its tracks – including those from The Beatles and Taylor Swift – had been infringed via the on-demand music platform available on American Airlines flights.

Having determined a $14 million fund for anyone previously charged to use ‘Happy Birthday’ by previous publisher Warner/Chappell, U.S. District Judge George H. King supported the award of 33% of that amount for attorney’s fees, totalling around $4.6 million.  The remaining funds from Warner/Chappell Music will be used to reimburse those who had paid to license the song.

And finally, TorrentFreak tells us that the Swedish Internet service provider Bahnhof is launching a direct attack against Spridningskollen, the group that's spearheading copyright trolling efforts in Sweden. Bahnhof accuses the anti-piracy outfit of trademark infringement and demands the shutdown of its website. Bahnhof is accusing the group of trademark infringement, noting that they have a claim on the “spridningskollen” mark. “Bahnhof was the first to apply for the Spridningskollen trademark rights at the Swedish Patent and Registration Office,” the ISP announced. 

Universal and Capitol fly high with copyright win

Universal Music and Capitol Records have obtained summary judgment against IFP and parent company Global Eagle, an in flight music licensing company, and the two recoded music companies can now look forward to a jury deciding the quantum of damages to be awarded, with reports saying this "could be worth hundreds of millions of dollars."

IFP is a worldwide provider of in-flight entertainment from movies to songs and IFP provided American Airlines (and later US Airways) with music playlists obtained via physical CDs and digital downloads. In 2008 the company approached the major labels for a deal and what followed has been described as a "few years of painstaking negotiations over advances and revenue apportionment, complicated by some catalogs not being available for in-flight licensing as well as IFP not wishing to let the cat out of the bag about the lack of licenses."

Added to this was the fact that although IFP was based in Los Angeles, and had completed some of the early reproduction work there, the company said that duplication and encoding was taking place in the U.K. under a different licensing regime. Added to this was the position advanced by IFP that it had reached oral or implied license and that the record companies committed fraud and tortiously interfered with its contracts with American and United. 

In his summary judgment ruling, U.S. District Judge George Wu wrote: "At best, there is evidence that the parties discussed various terms, but never reached any final agreements" and further, "There is ample evidence that IFP knew it had no licenses from Plaintiffs and that it could be sued for copyright infringement, and no evidence that Plaintiffs ever indicated to IFP that any such licenses were forthcoming or misrepresented any existing fact."

Wu also found that IFP acted wilfully by collecting money from airlines for copyright licenses in anticipation that it would one day have to make amends. The judge wrote: "As Plaintiffs aptly state, '[i]f IFP’s infringements were not wilful, no infringements could ever be.'”

Judge Wu also had to decide on the issue of pre-1972 sound recordings not protected by federal copyright law, but now being interpreted under state law to protect against misappropriation. To this, IFP threw up an argument that such claims were pre empted by the federal Airline Deregulation Act, but that argument failed because in-flight entertainment is deemed as a "service" under the statute and that the connection with state law claims is substantial. 

The case is now set for a damages trial on May 10 with more than 4,500 copyrights involved. 

http://ipkitten.blogspot.co.uk/2016/05/universal-music-secures-summary.html

http://www.hollywoodreporter.com/thr-esq/universal-wins-big-ruling-copyright-886886

Image: CuriMedia  https://www.flickr.com/people/14035760@N03

The CopyKat - no goals please for the Football Premier League

The the major record labels (Sony, Universal Music and Warner Music) have finally begun their case against Russian social media site VKontakte (VK) for "large-scale" music piracy. Dubbed "Russia's Facebook" and the 22nd most popular site in the World, VK allows users to upload music and videos but is accused of refusing to strike licensing deals with rights holders. Now a combined case from the labels has gone before the St Petersburg and Leningrad region arbitration court and a series of substantive hearings will begin on 8 September, and is expected to run into October. The labels are seeking £1m in damages and an order requiring VK to implement fingerprinting technology to delete copyrighted works and prevent them from being re-uploaded. According to labels trade body the IFPI, growth of licensed digital services in Russia is only $0.50 per capita; the European average is $8.40 and licensed services in Russia including local services Yandex, Trava and global services iTunes and Deezer are suffering with IFPI boss Frances Moore saying ""VK hurt competitors because they are not paying anyone for anything - you cannot compete with that". 

It seems the delay in passing the new exemption from copyright for parody into British law (or indeed allowing Scotland to devolve to pass its own parody laws) may well have caused a problem for one of the productions at this year's Edinburgh Fringe festival. The Times tell us that The Edinburgh Book Club - the producers of 50 Shades the Musical  - have received a letter from legal representatives of 50 Shades of Grey writer EL James and her publishers. The musical was created in the USA by producers Baby Wants Candy under the somewhat more generous 'fair use' provisions found stateside. More here.

The mural ' Castillo'

A still from The Zero Theorem

Three street artists, two Argentinian and one Canadian, and known as Jaz, Ever and Other, have accused the Monty Python actor and film director Terry Gilliam of plagiarising one of  their murals in his latest movie The Zero Theorem. Deadline reports that "To make their point, the three try to show with the vast array of images and pictures in their complaint that similar faces and undershirt wearing animal figures from the mural were used in the film" adding "To further their claim, the trio notes that they registered the mural with the Copyright Office in Argentina, under the title Castillo effective on November 15, 2013." Here are the two images - the 2010 mural on Buenos Aires first,  and a still from the film second: 

Angelina Jolie emerged victorious in court last year when a judge ruled she had not copied another author's work for her film In The Land Of Blood And Honey - and you can see Eleonora's article on the background to this case here.  But journalist and writer James Braddock is now appealing against the decision.  In papers filed in March 11 this year, the Croatian author claims the original judge in the case 'used a poor system to determine if Jolie had infringed on his copyright,' for his book The Soul Shattering reports says the Daily Mail.  Claiming his book was not translated accurately, Braddock says in the appeal papers: 'The Court’s decision noted a number of material errors, starting with clear descriptions that are interpreted or translated incorrectly, to the downgrading of a complex of the work. 'The court did not compare the whole scene at all elements, but he pulled the individual parts! In this way, the bit violated all the rights of the Appellant’s, violated the law and the tests that were performed were not executed in the right way.'

Motherboard reports that the Trans-Pacific Partnership (TPP) trade agreement negotiations have resumed, and a "troubling" provision has come to light. The United States government is using an enhanced version of the provision known as "certification," which allows it to change other countries' domestic obligations at will. This has internet freedom activists worried that the US may enforce draconian copyright laws globally. The Times (Saturday 16.08.14) also had a warning from celebrity chef Jamie Oliver that the TPIP could downgrade high food safety standards in the UK - to rules that prohibit food grown and reared using pesticides, hormones, carcinogens and dodgy additives were watered down to help US farmers and food producers - and sate the US need for 'free trade'. Hang on the CopyKat thought - what's THIS TPP - ahhhhh - it's the Trans-ATLANTIC Trade and Investment Partnership - just one letter different - but oceans apart ........... hopefully. 

The Premier League is set to clamp down on 'unofficial' videos of goals in the social media posted on platforms  such as Twitter and Vine - uploaded by fans, stating that they break copyright laws. Premier League’s director of communications Dan Johnson told the BBC that it is developing technologies like gif crawlers and Vine crawlers to stop the behaviour saying "You can understand that fans see something, they can capture it, they can share it, but ultimately it is against the law. And here's a question - is that videos ripped from Sky TV, BT Vision or the BBC - or their own videos - taken (usually) on mobiles? And does it matter? More from Eleonora over on the IP Kat: http://ipkitten.blogspot.co.uk/2014/08/uploading-goal-videos-online-copyright.html .

The CopyKat - a heady mix of gorillas, monsters, social media and books!

if you missed this in the UK, then I can inly presume you must have been in a deep underground pit for three days, but a gorilla sculpture, painted to resemble the Queen frontman Freddie Mercury, has been removed after a complaint from Queen's manager Jim Beach on behalf of the Freddie Mercury estate. The organisers of Go Go Gorillas, a public art trail in Norwich, were told that the painted suit "worn" by the gorilla "breached copyright". It asked for the Freddie "Radio Go Go" Gorilla sculpture, which Norfolk artist Mik Richardson took three days to create, to be removed from public view. Mr Richardson told the BBC the order its removal was "absolutely shocking". Mr Richardson was paid £800 to design and paint the gorilla and he explained "I'm a mural artist and I have to be very careful about copyright" adding "I didn't copy the suit exactly. I alter enough so that it's fan art, rather than a copy of it. The "Radio Go Go" gorilla is one of 53 life-size gorillas decorated by Norfolk artists and displayed on the streets of Norwich over the summer. An additional 67 baby gorillas, painted at local schools, made up the 120-strong public art trail. The Freddie Mercury gorilla sculpture will be repainted with a "new and exciting design" and should be back in place within 10 days.

A Kickstarter campaign to raise money for a sequel to Maurice Sendak’s “Where the Wild Things Are” has run into a problem after the estate of Maurice Sendak who write the original objected to the new project. The project, a poem entitled “Back to the Wild,” written by Geoffrey O. Todd with illustrations by Rich Berner, involves a sentimental journey for Max as he returns with his daughter, Sophie, to see the “Wild Things” 30 years later.

I have to be brief in this post, as I am off to the Exit  Festival in Novi Sad, Serbia, and and the parallel GO Group conference on green events: but this one caught my eye: after our previous reports about the impact of Russia's new copyright laws, it seems that  Russia's top social network "VKontakte" is in negotiations to find a way for its users to listen legally to the music from the world biggest record labels’ catalogues. CEO and founder of "VKontakte", Pavel Durov, told Vedomosti that the social network was together with Sony Music, Warner Music and Universal Music are looking for options to accommodate the music industry’s interests "without affecting the Russian internet users."

A new research paper by University of Illinois law professor and Bournemouth University scholar Paul J. Heald titled "How Copyright Makes Books and Music Disappear (and How Secondary Liability Rules Help Resurrect Old Songs)" seeks to explain why on Amazon there are three times more books available from the 1850s than from the 1950s - and the blame reportedly comes down to the copyright industries  - works in the public domain are more likely to stay in the marketplace than are works that are owned, or orphan works but in particular copyright owners with business priorities might not see sufficient value in a given copyright at a given moment. But if a work is available to all, it's far more likely that someone, or maybe lots of someones, someone will find it worthwhile, and potentially profitable, to publish it. As Heald points out, copyright owners spend a lot of time and money pushing policymakers for longer copyrights tend to provide the "incentive to create" - But it seems that Heald's study shows that the incentive to create requires a relatively short copyright life. Once the big money has been made, copyright ownership is often of only marginal benefit to the owner. If the margin is deemed too small to invest in distribution of a work, the public is deprived of that work until the copyright runs out. You can download the paper here.

Grooveshark employees settle labels' action

Four former and one current employee of the controversial streaming music service Grooveshark have signed agreements with the major music companies, led by Universal, who are suing the site and a  number of individuals, agreeing in a consent judgment that they will never again infringe the labels' copyrights, or to work for a company that "systematically infringes" copyrights.  Those individuals who had been targeted for infringement will now be removed from the lawsuit. 

Grooveshark lets users upload music into its libraries, meaning tracks are routinely available on the streaming service without the permission of relevant copyright owners. Because Grooveshark has a takedown system, removing infringing copyright material if made aware of it, the company argues it is operating within the US's DCMA ' safe harbor' provisions, even if taken-down tracks are soon replaced by users.

Grooveshark itself is far from out of the water regarding the copyright infringement case: TorrentFreak has published the relevant court documents, and points out that Grooveshark’s co-founders Sam Tarantino and Josh Greenberg have not yet signed similar agreements and  the label's case has focused on the question of whether the company’s own employees were involved in reuploading tracks taken down through that “strict compliance” policy. Tarantino recently described himself as “literally broke” and said 2012 was “a year of getting punched in the face 10,000 times”. 

For their part, Grooveshark owners Escape Media welcomed the development, telling reporters: "We are pleased that the case between Universal Music and Escape Media has been narrowed and simplified by the removal of some individual defendants from the case upon their stipulation to simply obey the law - something Escape Media does every day through its active licensing of millions of tracks and its strict compliance with the Digital Millennium Copyright Act. Escape Media Group will continue to deliver innovative new solutions and services that revolutionise music consumption for its growing audience of 30 million plus fans around the world".

Last month UMG secured a judgment in the New York State appellate court that held that the DCMA "safe harbor" defence did NOT apply to pre-1972 sound recordings.

http://musically.com/2013/05/20/grooveshark-copyright-case-moves-on-with-individual-settlements/

Veoh ruling adds clarity to US 'safe harbor'

The Ninth Circuit Court of Appeals in the US has issued a clarifying judgment in the action brought by Universal Music Group (UMG) against Veoh. The case explores issues similar to Viacom vs. Youtube and gives further clarity to how the doctrine of "safe harbor" protection from copyright claims under section 512 of the Digital Millennium Copyright Act will be applied.

The clarification follows on from the December 2011 judgment the court gave, where it said that Veoh was protected from copyright liability, and broadly brings the Veoh decision into line with the Second Circuit’s more recent decision in YouTube.

UMG  had pushed three main arguments against Veoh’s right to qualify for safe harbor: 

1.  The appellant argued that the functions performed automatically by Veoh's software didn't fall within the plain meaning of "infringement of copyright by reason of the storage [of material] at the direction of a user." Universal had promoted the theory that the DMCA should be interpreted narrowly to apply to web hosting services, rather than more general services that including hosting capabilities. 

For the Ninth Circuit, Judge Raymond Fisher disagreed :

"UMG's theory fails to account for the reality that web hosts, like Veoh, also store user-submitted materials in order to make those materials accessible to other Internet users. The reason one has a website is so that others may view it. As amici note, these access activities define web hosting - if the web host only stored information for a single user, it would be more aptly described as an online back-up service." 

See no evil, hear no evil .....

2.  UMG also challenged the contention that Veoh was never made aware of infringing material on its network. One reason why the music giant was unsuccessful in the lawsuit at the District level was because Veoh was able to show that it had removed materials after receiving takedown notices; However Universal also pointed to other ways Veoh could had gained knowledge of infringements on the website. 

Judge Fisher noted there are music videos that could legally appear on Veoh and that it's the responsibility of the copyright holder to let the ISP know of what's not legal. 

Safe? With all those rocks?

"Requiring specific knowledge of particular infringing activity makes good sense in the context of the DMCA, which Congress enacted to foster cooperation among copyright holders and service providers in dealing with infringement on the Internet. Copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers like Veoh, who cannot readily ascertain what material is copyrighted and what is not". 

The ruling continues:

"We therefore hold that merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one's services could be used to share infringing material, is insufficient to meet the actual knowledge requirements....We reach the same conclusion with regard to the [DMCA provision's] inquiry into whether a service provider is 'aware of facts or circumstances from which infringing activity is apparent...'. We hold that Veoh's general knowledge that it hosted copyrightable material and that its services could be used for infringement is insufficient to constitute a red flag." 

Judge Fisher added that a service provider cannot "wilfully bury its head in the sand" -- known as wilful blindness - but saw no evidence of this 

3.  Finally, Universal Music challenged whether Veoh qualified for safe harbor under the provision that entitles an ISP only if it "does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity. Here Judge Fisher seems to put the Ninth Circuit in line with the Second Circuit and the YouTube case: 

"We agree with the Second Circuit and hold that, in order to have the 'right and ability to control such activity' the service provider must 'exert substantial influence on the activities of users.' 'Substantial influence' may include, as the Second Circuit suggested, high levels of control over activities of users, as in Cybernet. Or it may include purposeful conduct as in Grokster" and Veoh's interactions with users didn't rise to that level, the judge said.

https://www.eff.org/deeplinks/2013/03/win-safe-harbors-umg-v-veoh and 
http://www.hollywoodreporter.com/thr-esq/appeals-court-hands-veoh-win-428588

The thorny issue of competition in the music industry

Sony and UMG - big fishes in a small pond?

Three news items caught my eye this week, all of which made me think about the impending sale of EMI's recorded music division to the Universal Music Group, creating a super music major with a near 50% share of the market in the creation and supply of recorded music in some territories.

The first story concerned reports that a Nielsen survey showed that ownership of smartphones amongst young teenagers (13-17 years old) in the USA had reached nearly 60%, and a whopping 73% of the 25-34 year old sector own smartphones. Overall across all age groups the rise of the smartphone has resulted in a 55% market penetration - and these are users who want content, and they want it now. and they WILL get it, legally or otherwise. Everything is just one click away.

Secondly was a report in the US press that showed that cinema attendance levels in the USA last weekend had reached their lowest level for two decades. The figures have reinforced Hollywood's fears that it is losing its allure to the internet, to competition from video games and of course to internet piracy. Its a situation the music industry faced some time ago and many commentators will just say that the film studios should have seen this coming and should have put in place new business models fit for the broadband era years ago.

Neelie Kroes

Thirdly was a report on the IPKat about comments made by EU Digital Agenda Commissioner Neelie Kroes at the 2012 Intellectual Property and Innovation Summit where Kroes compared the fragmented EU market with the American market - one territory governed by one federal copyright law - asking whether the European system was "consistent and relevant within the real world" adding that in an assessment of whether more changes were necessary to promote growth and stimulate innovation she was open to ideas, saying "Each day we fail to respond, we are missing out. Consumers miss out on easy legal access to their favourite products. The creative sector misses out on new markets, new innovations, new opportunities.  We miss out on new ways to share, recognise and appreciate our cultural heritage. And our economy misses out on the chance of new growth". Kroes had previously said that "too many barriers still block the free flow of online services across national borders" and resolved to rectify that within the EU.

The rhetoric echoes claims from new market entrants that the complexity of licensing for digital start ups is maddening and frustrating, sometime terminally. These are global businesses having to seek content licences on a country by country basis - even within the EU's 'single market'. 

In the EU and elsewhere, the recorded music sector and the allied music publishing sector are interesting examples of the tension between the need to establish business models fit for the 'real world' and the fear that ever ongoing consolidation is a real risk to diversity, and will result in a real lack of competition - to the detriment of consumers, artists and innovative new businesses. The fact remains that for a new digital start up in the European Union wanting to enter the music market, they will usually need to deal with collection societies in all 27 member nations, which are organised on a national basis, and that's just for Europe. The EU have looked long and hard at how collection societies operate and the Commission has brought an action before the European Court of Justice to determine the legality of the collection societies business methods and reciprocal representation mandates, and whether these constitute concerted unlawful practice which would fall foul of EU competition law and are an unlawful partitioning of the single market (the 'CISAC case). A final judgment is still awaited. The architect of the UK's proposed Digital Copyright Exchange, Richard Hooper, noted in his final report that the EU has 30 plus potential music licensors and that the EU should attempt to make the licensing regime multi-territorial, reducing the number of licensing bodies to perhaps 6 -10, each offering different, competitive repertoire. But why not reduce it to just one collection society for music - and one for recorded music? Or just one!  Now that would be an effective 'one stop' shop!

A combined EMI-Universal would have a 37.8% market share (2011 figures) for recorded music - and the already approved Sony-EMI tie up has a 31.1% market share in music publishing. If  UMG and Sony were to work in tandem, they would control 58.7% of the recorded music sector and 53.3% of the music publishing market - and that is starting to look like a 'one stop' licensor one its own - and surely would fit the needs outlined by Neelie Kroes.

The $2.2 billion sale of EMI's music publishing business to a Sony led consortium was approved by both US and EC competition regulators with the latter saying that the fact that Sony music publishing (Sony-ATV) was already run as a partnership with Michael Jackson's estate, and the new investors who came on board as part of a consortium for the purchase, coupled with divestment of EMI's Famous Music and Virgin Music catalogues, allayed competition concerns. But just how relevant those factors are remains to be seen.

Whilst it might make licensing sense, there are real fears of anti competitive behaviour should UMG get permission to buy EMI. Unfortunately the major labels, Sony and UMG included, have a poor track record to, say the least. Back in 2004 the then five major record labels  and the then three leading music retailers in the USA agreed to a $143 million court settlement for fixing the price of CDs in the USA at artificially high levels - which is not good for consumers! And artistes have perhaps fared even worse, and even after repeated success in the UK courts on the grounds of unreasonable restraint of trade, recording industry contracts often remain appallingly one sided and unfair: the recent spate of claims brought by artistes over artificially reduced digital royalties and other long established business practices  have been further witness to this.

But what of the third fear - that working together Sony and UMG could block new entrants to the digital market. well again, there is history, and perhaps history the major labels would like us to forget. Back when the internet was a young thing, between them the majors created two services, PressPlay (Sony and UMG) and MusicNet (Warners, BMG and EMI) which they launched as the solution to the sale of music on the internet. More recently the majors have failed to have an anti-trust case (Starr v Sony) dismissed in the US appellate courts which charges the majors with an attempt to monopolise the distribution of digital music and fix the price and terms on which is was supplied through those two platforms. The case is ongoing. More interestingly one could look at at the ownership of two of the current 'big' players providing new music platforms - the streaming service Spotify and the video platform Vevo. Sony owns 5.8% and UMG 4% of the former, and jointly own the latter along with investment from the Abu Dhabi Media Company. 

The success of Apple's iTunes re-taught the majors the importance of ownership of distribution channels - they lost control to Apple - and now Vevo and Spotify are two of the most important new channels. It also taught the majors the importance music has in creating new value and new business. Until iTunes launched, Apple was a successful but still niche computer company. It's now the second most valuable company in the USA. One of the arguments put forward in support of allowing UMG and EMI to merge is that artistes now have many ways they can independently reach consumers without needing a record label - but that becomes more clouded when those 'independent' pathways are owned by .... the record labels. But there again, UMG and Sony are minnows when compared to Amazon, Google, Facebook and Apple ........ so what's the worry?

What we seem to have are competition regulators applying 'analogue' solutions to a 'digital' issue. I am not sure that requiring UMG to sell off catalogues makes any sense at all (Parlophone, Mute,Virgin and the Chrysalis catalogues have all been suggested) . Nor do I think that issues of ownership (rather than control) has much relevance now. Indeed, one could argue we should allow MORE mergers to proceed to facilitate easier end-use licensing. Is that what Neelie Kroes needs? 

I am giving a talk at the Reeperbahn Festival Campus in Hamburg next week exploring what should and could be done by competition regulators, not least to protect diversity in the music industry, but the underlying issue that remains is that with the internet we have a global market, whether we like it or not, and if new entrants are barred from entering that market because of licensing complexities and there is failure to provide compelling legal services, we will end up with compelling illegal services. Its as simple as that. But conversely, allowing one or two companies to completely dominate the supply chain from the creation of music to the distribution of music to the provision of music to consumers could effectively bar any new entrants from entering the market without their permission, as well as allowing the potential for monopolistic behaviour with both consumers and the creators of music and songs. If licensing copyrights is the key, then it's licensing copyrights that the regulators should focus on, not the divestment of catalogue. The question is how? What would stop the UMG-EMI merger impeding investment, innovation and competition in the future? What would stop UMG and Sony shaping the digital future to suit their own ends? A requirement on UMG and Sony to licence other digital businesses openly, transparently and fairly? Might that protect new market entrants and consumers? An obligation to withdraw from platforms that interface with consumers (eg the sale of shareholdings in Vevo and Spotify) and a bar against future ownership - would that deliver a competitive market open to all? Or would a future requirement that UMG and Sony owe a fiduciary duty to songwriters and recording artistes offer protection to the creators of copyrights, especially if backed with criminal sanctions and a bar on so called 'royalty reducers'? The Murphy case brought into sharp relief the tensions between copyright and competition - and they can be complex, and the solutions even more so.

In the UK, the Copyright Tribunal has been an effective regulator of copyright licensing schemes. In the European Union the EC can fulfil this function. But if we need 'global licensing' then we would need 'global regulation' and no such thing exists - nor do I know of any such  plans on any politician's agenda anywhere. One to ponder, but we will know soon enough about EMI and UMG in Europe at least, with an EU set deadline of September 27th for a decision.

Detail on the Reeperbahn Festival Campus sessions "Diversity at Risk?" here and here 

Image of Neelie Kroes: European Parliament Flickr photostream and more on her address here on this Blog .

A new solution for label disputes - re-record your back catalogue!

Def Leppard have announced plans to re-record their entire back catalogue because of an ongoing royalty dispute with their label of 30 years, Universal Music Group. Its more bad news for UMG who are seeking EU ad US regulatory approval to swallow up EMI's recorded music division enabling the new group to control almost 50% of the global recorded music market. Along with the ongoing claim from Eminen producers FBT over digital royalties, Def Leppard frontman Joe Elliott told Billboard that the English band were "at loggerheads" with Universal over royalty payments, especially compensation for digital downloads. "We just sent them a letter saying: 'No matter what you want, you are going to get "no" as an answer, so don't ask," adding "That's the way we've left it. We'll just replace our back catalogue with brand new, exact same versions of what we did."

Def Leppard have already recorded fresh versions of Rock of Ages and Pour Some Sugar on Me, two of their biggest hits, to coincide with the release of the film Rock of Ages  starring Tom Cruise. 

Elliott admitted to Billboard that it was no easy task  to recapture the sound of decades past - the band formed in Sheffield in 1977 - saying  "You just don't go in and say: 'Hey guys, let's record it,' and it's done in three minutes … Where am I gonna find a 22-year-old voice? I had to sing myself into a certain throat shape to be able to sing that way again. It was really hard work, but we did have a good laugh over it here and there." Def Leppard also plan to record a new album and are currently touring with Poison and Lita Ford to support their live album Mirrorball as well as the newly recorded Rock of Ages and  Pour Some Sugar On Me. None of these albums are on Universal labels and they have been released digitally worldwide, and in the USA by exclusive tie up with supermarket chain Walmart. In their history the band have sold 100 million albums worldwide. 

One word of caution - many bands have re-recording restrictions in their contracts with record labels which may preclude the re-recording of at least the more recent tracks in 'their' catalogue and labels may try to use these clause to prevent others to do what Def Leppard are doing - albeit with an eye on falling foul of the doctrine  'restraint of trade' in the UK.

http://www.defleppard.com/

Royalty reducers back in the spotlight

Judge Philip Gutierrez is not a man to be messed with, as lawyers for the Universal Music Group have found out as the 'Eminen' digital royalty case progresses onwards.  


This is one of the claims brought by artistes and here producers (FBT Productions) to try to force record labels to pay a higher royalty on digital sales of sound recordings. This case was the first to reach a conclusion which favoured artistes, although another major claim by artistes including Cheap Trick and the Allman Brothers was settled by Sony. 


So what's happened now? Well, having lost the battle to keep royalties at the lower 'per unit' sales basis on appeal, Universal Music Group’s still hoped that royalties could be paid on 'net receipts'. But their lawyers really didn't want their royalty reducing practices to fall under the court's scrutiny,  As UMG had argued in court that any royalty that had to be paid to FBT (even at a higher rate for digital) should be paid on a “net receipts” basis they thought that this was settled and agreed by the judge. FBT had other ideas having discovered that only about 29% of international revenue actually returns to the major's Aftermath division (the relevant label here) with the other 71% being kept by the local Universal companies that actually sell the product - so a net receipts basis made a massive difference - reducing royalties by a whacking 71%.


One can see why FBT might not want this as the basis for accounting, but UMG felt that the Judge had already accepted the “net receipts" basis. Judge Gutierrez was having none of this,  and made it clear in a written judgement that [a] he did not mean to make a ruling on this matter when asked for clarification on "our net receipts" last year, and [b] he doesn't believe that FBT were aware that Universal intended for the international royalties issue to be resolved via that clarification either, because there would be no logic in them choosing to ignore the matter until later. On the latter point, the judge wrote: 


"The court is deeply troubled by defendants' argument. While it is hard to see what FBT could gain by feigning ignorance, it is now quite apparent what defendants could hope to gain by bamboozling the court and plaintiffs on this issue. Defendants' current stance makes it appear as though defendants carefully inserted the issue into the motion for summary judgment before they had notified FBT or the Court of what percentage of the revenues from foreign sales of permanent downloads would be paid to FBT. An attempt to dupe the court into a premature ruling will not serve as the basis to deny FBT an opportunity to challenge defendants' accounting practices". 


Harsh criticism and UMG will also no doubt be horrified that royalty reducers have been put in the spotlight as they attempt to convince regulators in US, EU and elsewhere that they are a safe haven for EMI’s recorded music division and artistes.


http://www.hollywoodreporter.com/thr-esq/judge-universal-eminem-royalties-case-342699 

Of pirates and safe harbours: UMG, Veoh get their ruling

 

Looking for a safe harbour

Yesterday in the United States the Ninth Circuit Court of Appeals handed down its decision in UMG v Veoh (which can be read in full here; briefly referred to in this blog here), a case addressing copyright liability for ISPs that host infringing works.

Veoh operates a publicly accessible website that enables users to share videos with other users. UMG is one of the world's largest recorded music and music publishing companies. In addition to producing and distributing recorded music, UMG produces music videos.

Although Veoh has implemented various procedures to prevent copyright infringement through its system, users of Veoh's service have in the past been able, without UMG's authorisation, to download videos containing songs for which UMG owns the copyright.

UMG responded by filing suit against Veoh for direct and secondary copyright infringement back in 2007. Two years later, the US District Court for the Central District of California granted summary judgment to Veoh after determining that it was protected by the DMCA "safe harbor" limiting service providers' liability for "infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider." 17 U.S.C. §512(c).

UMG appealed the decision and made several arguments before the Ninth Circuit, including that the district court too broadly construed the scope of §512(c).

UMG never disputed that, when Veoh became aware of allegedly infringing material as a result of the RIAA's DMCA notices, it removed the files. It claimed, however, that Veoh had knowledge or awareness of other infringing videos that it did not remove. In particular, argued UMG, the district court erred by improperly construing the knowledge requirement to unduly restrict the circumstances in which a service provider has "actual knowledge" under subsection (1) and setting too stringent a standard for "red flag" awareness based on facts or circumstances from which infringing activity is apparent.

Judge Raymond Fisher, in an unanimous decision, referred to Congress' express intention that the DMCA "facilitate making available quickly and conveniently via the Internet ... movies, music, software and literary works". Being this the service Veoh provides, the Court did not find UMG's narrow interpretation of §512(c) be plausible. In fact, if merely hosting material which falls within a category of content capable of copyright protection, with the general knowledge that one's services could be used to share unauthorised copies of copyright-protected material, was sufficient to impute knowledge to service providers, the §512(c) safe harbor would be rendered a dead letter.

The onus to first identify infringing materials is on rights owners. Indeed, said the Court, copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers like Veoh, who cannot readily ascertain what material is protected by copyright and what is not. These considerations are reflected in Congress' decision that DMCA notification procedures place the burden of policing copyright infringement on copyright holders, as well as in the "exclusionary rule" which prohibits consideration of substantially deficient §512(c)(3)(A) notices for purposes of "determining whether a service provider has actual knowledge or is aware of facts and circumstances from which infringing activity is apparent."

In the light of these and other considerations, the Court affirmed the district court's determination on summary judgment that Veoh is entitled to §512(c) safe harbor protection.

As our readers will know, many of these issues are at the centre of another case currently pending before the Second Circuit, this being Viacom v YouTube. We'll see what happens there, as well as how the debate around the SOPA develops in parallel with case law.

More on UMG v Veoh on The Hollywood Reporter here.

Universal goes shark hunting

Wikipedia describes the US based Grooveshark as the “international online music search engine, music streaming service and and music recommendation web software application, allowing users to search for, stream, and upload music that can be played immediately or added to a playlist”. But is it legal? Well, the World’s biggest record company thinks not. Universal Music Group has reportedly filed a lawsuit against music service Grooveshark over alleged copyright violations saying that records show that senior management at Escape Media Group, the company which operates Grooveshark, had led an effort to upload more than 100,000 songs to the music service and claims to have supporting emails and documents, including evidence showing that staff members Sam Tarantino, Paul Geller and Ben Westermann-Clark uploaded 1791, 3452 and 4600 unlicensed songs respectively. Many of those tacks would be presumed to be Universal tracks given the major's market share in the recorded music sector.

Universal is reported to be seeking the maximum in damages of $150,000 per infringing act. Whilst Grooveshark has negotiated direct licenses with EMI and numerous independent labels and aggregators, it has no deal with Universal - but as the service allows user to upload music so UMG tracks will appear – although Grooveshark says that, like YouTube, it will remove unlicensed tracks when notified.

Grooveshark relies on the ‘safe harbour’ provisions in the US’s DMCA which protects an online service from the infringing activities of its users in some specific situations. Grooveshark does not use filters to (theoretically) screen out unlicensed material, although filters are seemingly not as yet required by law in the USA to fall under safe harbour abut insists it has a valid "takedown" system. YouTube does use filters. But in the USA if a service has any direct knowledge of infringing content on its network, it must remove or disable access to that content before being contacted by the copyright owners. If Grooveshark’s management led an effort to upload copyrighted material, as the lawsuit alleges, that would certainly be considered direct knowledge! Universal says that whilst it is committed to "supporting legitimate and innovative" digital business models, it claims "Grooveshark did not build its business legitimately; its business is built on wilful infringement."

The UMG lawsuit also reportedly notes a recent article from Digital Music News about the problems King Crimson guitarist Robert Fripp had in trying to get his music removed from Grooveshark, including an anonymous post in the comments section of that article purporting to come from someone working for Grooveshark, who claims staff there were routinely instructed to upload music to the streaming service's platform. The comment adds that Escape Media senior management were aware of Fripp's takedown requests, but ignored them because they believe Fripp hadn't the resources to sue.

Last year Universal filed a lawsuit in the New York County Court claiming Grooveshark violates copyright by providing free access to its pre-1972 recordings. This is now provably an irrelevance as the court in the recent EMI v MP3tunes.com case said that differentiating between pre and post-1972 works was not necessary, and that DMCA safe harbour applied irrespective of the year of copyright protection.

Grooveshark also faced a copyright infringement lawsuit brought by EMI in 2009. That lawsuit ended with a licensing deal that added EMI's roster to Grooveshark's catalogue.


http://www.billboard.biz/bbbiz/industry/legal-and-management/universal-music-group-sues-grooveshark-report-1005545152.story

Artist’s digital royalty beef will go to court

A class action between a number of recording artistes and Universal Music over how digital royalties are calculated will go to court. A federal judge in California has given the green light for a class action lawsuit against Universal Music by a number of long established artists, led by White Zombie, Whitesnake, and the estate of Rick James. The music major had requested the case be dismissed. The case will be a major test of how artiste digital royalties are calculated by record labels in the absence of specific contract wording: The label would like to calculate the royalty based on the same accounting process as a normal (physical) sale – whilst artistes want a share of the income which will almost certainly be a substantially greater share of the revenues. Almost all pre-internet contracts make no mention of digital releases beyond CD (and many predate CDs) let alone downloads and streaming and artistes have argued that because digital removes label's manufacturing and distribution costs, the risks of sales are almost non-existent, and when a label makes its catalogue available to a service such as iTunes, it is actually a licensing deal and therefore the higher artist royalty should be paid.

There is a precedent here – the so called ‘Eminen’ case that actually involved FBT Productions, the production house involved in some early Eminem recordings, who took Universal to court over digital royalties and succeeded in achieving the higher royalty rate: FBT argued they had a right to a 50/50 split of profits with Universal on sales of digital music and ring tones through online retailers such as iTunes and Sprint as these 'Master Licensing' deals attracting the higher royalty. The contract did not specifically mention income from download stores like iTunes, or what share the artist (and therefore FBT) should get from such sales but Universal have been treating download sales as being equivalent to CD sales paying a lower rate of 12-20%% as if these were physical sales. Whilst a district court refused summary judgment saying the agreement was ambiguous, The U.S. Ninth Circuit Court of Appeals in San Francisco agreed with FBT saying that the higher royalty should apply.

The major insists that the FBT case related to the specific wording of the production company's contract, and the precedent in that case did not apply to every other pre-download record contract. That said, the new litigation means that all artists signed to Universal with pre-internet contracts could benefit from any positive outcome, with lawyers for the claimants saying that they believed Universal "engaged in a broad scheme to underpay numerous royalty participants, including formulating an opaque and artificial method for accounting for and paying its royalty participants for income derived from such licenses and engaging in a sustained public relations effort designed to convince the public that it had employed 'groundbreaking' and 'enlightened' accounting practices that actually benefited (rather than cheated) the Class".

In a separate case, Sony have also been taken to court by a group of artistes including the Allman Brothers and Cheap Trick over how royalties should be calculated. The action, stated in 2006 in the United States District Court Southern District of New York, shows how the different parties calculate how the artist’s royalty should be paid. On the sale of 1000 downloads at 0.70c per unit (total income of $700) Sony BMG thought the appropriate payment would be a royalty payment based on 85% of all downloads sold after deducting mechanical royalties to the songwriters, a container charge of 20% and an audiophile reducer for new technology of a further 50%. This gave a total royalty payment of $45.05. The Allman brothers felt they should be paid one half of the income from 100% of all units sold, less just the mechanical royalty payable to songwriters. This gave a royalty due of by Sony BMG to the Allman Brothers of $315.50 with attorney Brian Caplan saying at the time "Sony Music is presently engaged in a widespread attempt to underpay its recording artists".

In the new Universal case the court said that the allegations were enough to justify the matter being treated as a class action.

Thank you Amanda for reminding me to post this blog!

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=31498&terms=%40ReutersTopicCodes+CONTAINS+'ANV'