THE COPYKAT

Kylie Minogue’s fashion range loses copyright It claim

Australian pop star Kylie Minogue is associated with a range of interior design and bed linen products, produced by Ashley Wilde. In a recent action, this design company went on to sue BCPL, a brand which sells bed linen products, primarily owned by another well-known model and TV star Caprice Bourret. The subject of the litigation was with respect to a duvet cover (the cotton shell which covers a comforter) and a matching runner. The allegations of similarity were concerned with the following factual determinations (as reported in the IPKat):

- The choice of a the pattern of scallop-style pleats in repeating horizontal rows; 
- The relative size of each pleat; 
- The relative spacing between each pleat; and
- The relative spacing between each horizontal row. 

Justice Melissa Clarke firstly went on to establish that a presumption of copying will exist if the works are primarily substantially similar and there is proof of access to the prior work. However, she then went on to reiterate the rule that the question of copying concerns with the quality of the work, and not merely the quantity taken, and whether the intellectual expression and creation of the author is appropriated or not. It is not just the similarities but also the differences which need to be looked at, and the copyright needs to be determined as a whole. The differences cannot be downplayed, as was done in the case at hand.

These jurisprudential notes in combination with the determination that scallop-style pleats were relatively commonplace in the fashion industry and could not be monopolized due to it being a concept (Idea-Expression dichotomy), led the court to reject a finding of presumption of copying. Apart from this, the court found that the expression of such scallop-style pleats in the conflicting designs, in fact, encompassed sufficient differences and were not in any case substantially or extensively similar to bring in a case for the presumption of copying. The differences in the method of pleating the scallops, the number of pleats in the pleated scallops, the size of the pleated scallops and the shape of the pleated scallops, the number of repeated scallop motifs were rendered to be sufficient to avoid a claim for infringement and to establish an original distinct expression of a design made out of the concept of a scallop-styled pleat. In lieu of the same, the court rejected a finding of copyright infringement and Ashley Wilde was unsuccessful in the action.

Interestingly, this case reinforces the importance of factual evaluation and the fine line between inspiration and infringement especially in the fashion industry, to recognize the multitude of possibilities of expression in a copyrightable design and its dominion, and balance the interests of the copyright holder and the general public (other designers in the fashion industry) accordingly. It reinforces the principle of creative freedom and the leeway of experimentation on similar ideas, provided in copyright, to account for designs, which may prima facie seem similar intuitively, but are much more detailed and different when such details are analyzed. The judgment can be found here.

Versace sues Fashion Nova for infringement of the gold “Barocco” print

In yet another infringement action concerning the Fashion industry, Italian brand Versace has sued Fashion Nova to seek a remedy and redress with respect to the copyright infringement of its apparel involving the black and gold “Barocco-57” print, pop-hearts design the “Jungle print dress” that was worn by Jennifer Lopez in the Grammy Award functions. This case has been lodged in the US District Court for the Central District of California, as reported by the World IP review. The claim of Versace revolves around the principle of Fashion Nova deliberately riding on the popularity and renown of Versace’s signature designs and its valuable goodwill and business reputation, to make profits. (Trademark logic?) The use has been alleged to be within the content, text, and meta-tags of the Fashion Nova website, as well as on social media websites, wherein “Fashion Nova” results pop-up upon a search of Versace products, due to this infringing action, resulting in alleged misdirection of consumers. A notice has already served and despite the same, Fashion Nova has not allegedly taken down these infringing designs which are substantially similar to Versace’s copyrights, from its web-portal. Interestingly Kim Kardashian took to twitter to address this claim by tweeting: “ It’s devastating to see these fashion companies rip off designs that have taken the blood, sweat, and tears of true designers who have put their all into their own original ideas.”

David Gilmour involved in a legal battle for the 2015 solo-single “Rattle That Lock”.

In a suit for copyright infringement, Pink Floyd’s iconic guitarist David Gilmour has been sued by French jingle composer Michaël Boumendil, over a four-note jingle, which Gilmour was first exposed to at a French train station and was instantly charmed. According to reports, he had approached Boumendil to seek a license to use the music in a song, wherein the agreement stipulated co-authorship for the resultant song.  In a suit filed by Boumendil it is alleged alleged that instead of replaying the notes (as was stipulated in the licensing contract), Gilmour went on to interpolate the exact recorded notes. The claimant sought damages worth 450,000 Euros. When the court had to decide upon this, it was noted by the court that this infringement suit was a year after the stipulated release of the song, and hence was time-barred. But Boumendil has now more recently appealed this decision and is seeking damages for the alleged unlicensed use of this jingle, and a breach of the contract between the parties.

Jay-Z sues Australian retailer over lyrics

American rapper Jay-Z (Shawn Carter) has filed a copyright infringement lawsuit against Australian Jessica Chiha and her business “The Little Homie”, which sells hip-hop inspired clothing and apparel. The subject matter of infringement refers to the book “AB to Jay-Z” which has been created by this online retail business, to teach kids alphabets in terms of names and pictures of rappers. Since then, their imagery and names have been expended to use in a coloring book as well as clothing retail options. After being served with a legal notice, the company has maintained its defence of transformative use and fair use and has resisted the claim, which has consequently landed them in court. As far as the claim over lyrics is concerned, the lawsuit refers to the famous quote by Jay- Z: “If you’re having girl problems, I feel bad for you son, I got 99 problems but a bitch ain’t one”, which has allegedly been appropriated by the Children’s book, as it displays on its front page a quote on the same lines, which states: “If you’re having alphabet problems, I feel bad for son, I got 99 problems but my ABC’s ain’t one.”

These actions and use of the image, likeness, and quotes purported by Jay-Z have been alleged to be “a deliberate attempt to trade-off the reputation and goodwill of Jay-Z for own commercial gain”. As reported by Pitchfork, there have been multiple cease and desist notices sent to Chiha, however this retail business is adamant of this use being fair.

Can a claim of fair and transformative use subsist on the facts? It seems so - however, the main issue before the court would be the task to balance the transformative use factor with the commercial advantage factor of fair use and the acknowledgment of a violation of the publicity rights of Jay-Z. Use in clothing, unauthoriasedly, raises a direct claim under violation of Publicity rights, but as far as the use of likeness in the Children’s book is concerned, there is no direct commercial benefit accruing out of the use of the likeness of Jay-Z and it can be argued to be merely incidental and a transformative use of his identity. It will be interesting to see how this case shapes up in court.

Indian Production House Yash Raj Films booked for an alleged failure of royalty payments to the tune of 100 Crores to Authors

The Indian Performing Rights Society, which represents composers, lyricists and music producers has accused Bollywood production house YRF of unauthorisedly collecting and not distributing royalties worth 100 crores, legitimately belonging to authors  as reported by the IPRMENT law blog. A First Information Report has been filed before the Mumbai Police Economic Offences Wing. Further, an allegation of pressurising artists to enter into signing illegal agreements has also been raised. The FIR claims that while YRF managed to extract royalties from TV broadcast platforms, it hasn’t been able to collect the same from telecoms, radio stations and music streaming platforms to pay up. The core issue involved here is the non-membership of YRF in the IPRS collecting society, which is one of the major copyright societies indulging in revenue distribution. The lacunae is primarily because of the Indian Copyright Act as although it intends that royalties must be paid to the authors via a copyright society, it does not explicitly state so. The Copyright Act does not take into account the following questions, as reported in the IPRMENT law blog:

Who is supposed to pay these non-assignable and non-waivable royalties?
Who is supposed to collect these royalties?
Are authors and the assignee of their works compulsorily required to become members of a registered copyright society to claim royalties or can they continue dealing in their own works without becoming members 

Hence, due to no statutory compulsion to act through a copyright society, such dubious practices are being entered into by the Production houses, which have allegedly denied authors their claim to royalty. Recently, music composer/singer duo Salim-Sulaiman came forward in a journalistic report to state that they haven’t indulged in a work-based relationship with YRF in the last 4 years due to continuous non-payment of royalties, in spite of having allegedly collected the same. Such practices deny the authors their inalienable right to reproduction and right to receive royalty, on such assignments and the prime reason for the same is the lacunae and vagueness in the drafting of the Copyright Act of India.

 $1 Billion Lawsuit on Spotify by PRO Music Rights and Sosa Entertainment

A law suit has been filed by PRO Music Rights, LLC and SOSA Entertainment, LLC alleging that Spotify failed to pay royalties on over 550,000,000 streams. Pro music rights intends to ask a Florida based jury at the trial to hold Spotify responsible for its conduct and alleged infringement, and unfair and deceptive trade practices. The case was filed on 25th November at the United States District Court for the Middle District of Florida. The suit involves an allegation of removal of content for anti-competitive reasons, engaging in unfair deceptive and business practices and inter alia refusing to pay royalties - and publicly performing songs without a licence. According to the petition, Spotify removed the Plaintiff's profile without an advance notice without ever informing the claimant why these songs were removed. The Plaintiff's songs had genuine 550,000,000 streams before being removed an  was one of the most popular playlists. The petition further states:

“As it knows and claims to do, Spotify is required to remit royalty payments to Plaintiffs for the streams of their songs and to obtain public performance licenses for the public performance of songs on its platform. To date, however, Spotify has not paid full royalties for the 550,000,000+ streams of Plaintiffs’ songs on Spotify’s service”

It has also been alleged that the motive for removal of all these songs is linked with its equity deal with Music and Entertainments Rights Licensing Independent Network in order to pressurize MERLIN to terminate its contract with SOSA, as high stream counts from unknown independent acts do not generate close to the same revenue for Spotify from advertisements, as compared to mainstream acts, and do not offset the royalties owed. Further, it was alleged that 99% of the users responsible for the 550,000,000 streams of Sosa’s songs were ad-supported users rather that subscription users. Is this as a result of such discrimination on the part of Spotify against less established artists?  the Plaintiff thinks so and says it's musicians have suffered economic loss. This has been alleged to be an anti-competitive practice to oust independent musicians from the music market, merely due to less revenue for streaming services. In continuation, Sosa has also alleged that”

“Spotify continues to unilaterally profit from Plaintiffs’ music; despite purporting to remove Plaintiffs’ content, some of the Plaintiffs’ music continues to stream without license via Spotify-generated playlist(s), and without any compensation made to copyright holders, in blatant disregard of the Copyright Act. Spotify is legally obligated to pay royalties for streaming music.”

This battle will be interesting for the survival and growth of the Independent music circuit. The math can be done here:

1)    Mainstream artists are targeted by companies with a higher marketing budget, due  to the expectation of more number of streams and popularity, resulting in more consequent advertisements (of the company). These companies offer large sums to Spotify, in lieu of the advertisements – which gives Spotify its revenue 

2)    Independent Artists and non-mainstream music artists have a low budget advertisement attached to them, which provides less money per stream for Spotify, due to budget advertisement companies being associated therein (less revenue per stream as compared to mainstream songs).

3)   Royalties to be paid in lieu of streaming is equal because of it being a statutory amount and does not in any way vary upon the artist being mainstream or not. 

4)  This leads Spotify to a situation that with  the enhanced popularity and number of streams of non-mainstream and indie music as well (550,000,000), they get less revenue for a large number of streams (as compared to what they would have gotten, had the streams been on mainstream songs), and they have to pay equivalent royalties to both mainstream as well as indie artists.

5)  The ultimate conclusion out of this analysis is the low earning on the part of Spotify through indie artists, and equal royalties to be paid, which has led them to oust them from the market, in order to attract more streams for mainstream artists only which would lead to a higher ad revenue per stream for Spotify (when balanced with the amount of royalty to be paid, which remains constant).

At the core of this is the allegation that Spotify is contributing to the already persisting anti-competitive and unequal structure of distribution of music, wherein mainstream artists who have more funds to produce and market the music and are signed to a bigger record label are able to flourish, whereas independent artists are left marginalised - and fail to get fair compensation - or reach.

From the point of view of a musician, this is a sad state of affairs, where mere economic benefit is being preferred on the cost of access of more genuine and original content to the public, which was, in fact, the goal of copyright in the first place. This arguably de-incentives the musicians (especially independent ones) from creating music (to some extent),  due to the lack of marketing capability (although money is not the sole incentive), and is not competitive or ethical practice. True or not - does that matter in a court of law?

It will be interesting to see how the court approaches this and if it enters into this socio-economic aspect of survival of musicians who do not have much access to funds to market their music and content.

Plaintiff’s petition can be read here.

This Copykat by Akshat Agrawal

THE COPYKAT

1)    YouTube in the NEWS

In the last fortnight, there have been a couple of extremely interesting developments in the copyright regime operated by the online video platform YouTube.

Firstly, YouTube has taken a step to forbid manual claims by copyright holders and specifically record companies, which is done to claim revenue upon videos including extremely short music clips or “unintentional music.” Inculcating the importance of quantitative content in a video, YouTube in a blog post has revealed this change. The reason provided for the same move reads: “These claims can feel particularly unfair, as they transfer all revenue from the creator to the claimant, regardless of the amount of music claimed.” However, although manual claiming of money has been restricted, the ability to block or disable putting ads on videos using the manual claims tool will still exist. YouTube has gone on to acknowledge that in the short run, this might result in a lot more videos being blocked, however it is pragmatically focussing on the long term impacts. Even “Timestamps” to recognise exactly which part of the video is infringing have been brought in place for all manual claims, for invoking copyright claims in a balanced and fair manner. As reported by Variety, if YouTube creators feel that their use of unlicensed content falls within the fair use bracket, they can always dispute the same in the service’s appeals process.

Now, Secondly, YouTube has resorted to the DMCA to take action and file a suit against a major alleged copyright troll whi they have identified as one Chris Brady, and who YoTube says has been making extraneous and illegitimate copyright claims. The basis of the complaint is that Brady has taken aim at the Minecraft gaming community, alleging several infringing claims against two users - not only to extort money - but to allegedly slander as well as part of the 'trolling'. It has apparently been also reported that these copyright takedown notices were allegedly abusive and involved an element of blackmail wherein the message read that the YouTuber ought to pay Brady 150 $ via PayPal, or another copyright strike would take place. This information was conveyed to YouTube after multiple efforts, finally through another video, upon which YouTube has restored the videos and filed a suit against Bardy. A false accusation suit has been filed. Upon being enquired, as reported by The Verge, YouTube has released a statement that: “We regularly terminate accounts of those that misuse our copyright system. In this case of particularly egregious abuse, where the copyright removal process was used for extortion, we felt compelled to pursue further legal action and make it clear that we do not tolerate abuse of our platform or its users.” An issue highlighted in this system of YouTube is the focus of scrutiny on the accused rather than the accuser. The assumption is an extremely good faith oriented one that focusses on every takedown request being legitimate. It is imperatively needed that a balanced approach is followed for proper implementation of the Copyright system on such vulnerable intermediary platforms.

2)    Meanwhile, Spotify catches the attention of the Copyright world, yet again

There have been two recent occasions when Spotify has hit the (legal) news - and the music streaming platform been on both sides of a lawsuit concerning copyright.

Firstly, on the plaintiff side Spotify filed their appeal, joining Amazon, Google and Pandora, on the Copyright Board’s decision regarding the rates to be paid to sing writers and music publishers under the mechanical rights regime, by digital platforms. The challenge is at its core upon the decision which increases the per song royalty rate from 10.5% to 15.1%. This increase has been brought in the first place to harmonize, to some extent, the American policy, to the prevailing international normative practice followed by various copyright societies. This move has been subject to fair amount of criticism due to the songwriters claiming inadequate payments for exploitation of their creative endeavor. In an attempt to negate the criticism, Spotify and other digital streaming companies have resorted to being okay with the rate change, however, have claimed procedural misconduct on the part of CRB. The core of the claim is on the ground of lack of stakeholder consultation and cross-evidence provision, and not the rate in principle. Further, the publishers have argued that merely offering family plan discounts or student ones do not support the proposition of low willingness to pay for streaming music. It will be interesting to see how the appeal court approaches this. Read more here.

Now, Secondly, and on the receiving end of a law suit, Spotify, as reported by Variety, has been sued by Eight Mile Style, the publishing company that hollds the rights to Eminem’s earlier works, for copyright infringement. The major claim revolves around the unlicensed exploitation and streaming of 250 of Eminem’s songs. It has alleged Spotify to have paid a mere fraction of the payments properly  due and have remitted such without any license in place. Further Spotify has also been alleged to have mischievously concealed the accreditation of certain well-known songs like “Lose Yourself” claiming inability to trace Copyright holder. Further, an obligation to live up to the responsibilities provided under the Music Modernization Act was emphasized upon, which was not fulfilled by Spotify in the present case. To claim a liability limitation under the Music Modernization act, it is imperative for Spotify to have not known the copyright owner of the composition or the work was unmatched with previous sound recordings, after proper due diligence. This also has been alleged to not have been complied with, in the suit.

3)    US Dept. of Justice release Amicus Brief in favor of Led Zeppelin in infamous Copyright Suit

Analyzing the 'thin' copyright provision in the US, the US Deptartment of Justice, giving reasons akin to that of the trial judge, sided with Led Zeppelin in the Stairway to Heaven case. previously covered here and here against Randy California, the now deceased songwriter with the band Spirit. Under old US law (the 1909 Copyright Act), sound recordings weren't conferred protection. Songs were, and pre-1978 unpublished works would be as represented by sheet music.  The song at the centre of the copy claim, Taurus, was written by California in 1968. And so surely all that could be used at the trial to determine infringement (or not) was the sheet music? The trial judge concurred.  On appeal, the 9th Circuit then decided that the sound recording should have been played plus held that the jury was improperly advised about unprotectable music elements and standards of originality. But the new opinion relies on the fact that prior to 1972, it was only sheet music that was covered under copyright and audio recording need not be heard by the jury to find out whether there was an infringement or not. The “thin” copyright protection has been emphasized upon. The DoJ's  amicus brief goes on to claim that the Ninth Circuit was wrong to overturn the finding of the lower court which stated the compared compositions to not be sufficiently similar for copyright infringement. The U.S. government explains that "even if deposit copies do not capture all details of a composition, they generally include the elements of a song, such as the melody and lyrics, that are of most importance to the copyright owner. Failure to incorporate elements such as these in the deposit copy would reflect a failing on the part of the copyright owner or its agent, not an insurmountable obstacle imposed by the statutory scheme." The Amicus Brief argues that the only similarity between the allegedly infringing work and the original is the selection and arrangement of two basic musical elements: an A minor chord and a descending chromatic scale. These have argued to not substantially be the base of the challenge as a small standard selection and arrangement gets a fairly thin copyright protection due to the “creative” standard of Originality being prevalent in the United States. Virtual Identicality needs to be proved, which has not been done in the present case according to the brief. This interpretation as a friend of the court has consciously been taken up the DoJ in order to foster intentional and sound interpretation of copyright laws. It will be interesting to see the force of this brief when ultimately deciding the case, for the second time. The amicus brief can be found here.

4)    Victory for Universal Studios in “Nightcrawler” Copyright Case

As reported by the Hollywood Reporter, a Utah Federal judge delivered a summary opinion in the 4 yearlong copyright case  dealing with the film Nightcrawler, wherein the accused Oscar winning writer director Dan Gilroy, was alleged to have plagiarised a work by Richard Dutcher called Falling. The judge devised an important precedent recognising certain scenes a faire elements in films and eradicating the same from the scope of the analysis of any copyright infringement. In the opinion, the District Judge held that to establish a copyright claim there are two separate enquiries to be undergoneL The first is whether the defendant factually copied portions of plaintiff’s work, and second being those expressions that have been copied are protectable expressions and important to the copied work, citing Gates Rubber Co. v. Bando Chem. Indus Ltd. It is imperative for protected elements to be copied. The abstraction test requires separation of non-protectable ideas and then warrants a mere comparison of the protectable elements.  Here the court looked at what elements were “standard, stock, or common” to the stringer (newsman) profession and material that necessarily followed from that theme and setting (citing Autoskill 994 F.2d 1494). The court held that Falling is not the first film to portray stringers in action and on a review of previous stringer films, it was found that there were no independent claims in Falling that did not exist state of the art. The court held the similarities between Falling and Nightcrawler were (primarily) due to both focussing on the role of the Stringer. Apart from these generic similarities, the court held the plots to be quite different. The court also held the cliché journalistic phrases found in Falling as non-protectable and were scenes a faire expressions. After deducing these elements, the court used the ordinary observer test to eradicate infringement claims, holding the aesthetic appeal to be different.

This CopyKat from Akshat Agrawal

Songwriters and music publishers furious with Spotify over US rate appeal

US publishers and songwriters have hit out at an appeal made by the US streaming services, including Amazon and Spotify, who have  now formally objected to the new mechanical royalty rate set by the recent Copyright Royalty Board (CRB) ruling, with royalty rates for streaming and other mechanical uses set to rise 44% for the compulsory licences over the next five years. That decision was ratified last month (February 5th), when the CRB published the final rates and terms for songwriters. The top line revenue share figure to be paid by streaming services will rise, over a number of years, from 10.5% to 15.1%. 

The streaming companies were given 30 days to lodge official opposition to the ruling if they wished: Apple Music declined, but Spotify and Amazon, have now both filed a notice of appeal. Pandora and Google have also asked the CRB to review its decision. In a statement yesterday the National Music Publishers Association (NMPA) said that a “huge victory for songwriters is now in jeopardy” due to the streaming services’ filings. The NMPA called the appeal a “shameful” move which equates to “suing songwriters”.

Amazon, Spotify and Pandora issued a joint statement saying: "The Copyright Royalty Board, in a split decision, recently issued the US mechanical statutory rates in a manner that raises serious procedural and substantive concerns. If left to stand, the CRB's decision harms both music licensees and copyright owners. Accordingly, we are asking the US Court Of Appeals for the DC Circuit to review the decision".

The CEO of the NMPA, David Israelite, said last month, when the CRB's decision was confirmed, that if any of the tech companies did appeal the CRB ruling it would "in effect declare war against songwriters". He added: "Apple has announced it will not appeal. The others won't say. We will know soon whether some digital companies want to be partners or want to attack the songwriters who make their businesses possible. Stay tuned".

With the appeal process now confirmed, Israelite criticised the tech companies, noting that whilst the whole industry had collaborated to ensure the passing of the Music Modernization Act in the US, but that any hope that this kind of collaboration would become the norm "was snuffed out today when Spotify and Amazon decided to sue songwriters in a shameful attempt to cut their payments by nearly one third".

He added: "The Copyright Royalty Board spent two years reading thousands of pages of briefs and hearing from dozens of witnesses while both sides spent tens of millions of dollars on attorneys arguing over the worth of songs to the giant technology companies who run streaming services. The CRB's final determination gave songwriters only their second meaningful rate increase in 110 years. Instead of accepting the CRB's decision which still values songs less than their fair market value, Spotify and Amazon have declared war on the songwriting community by appealing that decision".

"No amount of insincere and hollow public relations gestures, such as throwing parties or buying billboards of congratulations or naming songwriters 'geniuses' can hide the fact that these big tech bullies do not respect or value the songwriters who make their businesses possible" adding "We thank Apple Music for accepting the CRB decision and continuing its practice of being a friend to songwriters. While Spotify and Amazon surely hope this will play out in a quiet appellate courtroom, every songwriter and every fan of music should stand up and take notice. We will fight with every available resource to protect the CRB's decision".

In a blog post, Spotify again responded saying that it believes “songwriters deserve to be paid more”, but argued that there are “significant flaws” in the CRB’s new rate structure. MBW says that although Spotify’s language on these “flaws” is, in parts, a little vague, but saying “We are supportive of US effective rates rising to 15% between now and 2022 provided they cover the right scope of publishing rights. But the CRB’s 15% rate doesn’t account for all these rights. For example, it doesn’t consider the cost of rights for videos and lyrics.” Israelite rubbished that suggestion too when contacted by MBW. He stated: “Wow. I didn’t think Spotify could sink much lower – but they have. This statement is one giant lie. I’m sure a PR team spent a great deal of time and energy crafting a statement to try to deceive artists and songwriters. They must think artists and songwriters are stupid. They are not.”

Elsewhere, Spotify's spat with Warner/Chappell in India continues, with Spotify insisting it can rely on compulsory licences provided for by Indian copyright law. Earlier this week the International Confederation Of Music Publishers said it supported the Warner publishing company in fighting Spotify's claim that where direct deals are not possible it can utilise a compulsory licence when streaming songs in India.

And whilst we are on Spotify, in Europe the streaming company has announced that it is filing a competition (anti-trust) complaint against Apple with the European Commission, regarding the latter's somewhat controversial 'app tax'. Apple currently charges any third-party app developer a 30% commission on all sales made through the Apple App Store – including music streaming subscriptions. Spotify co-founder and CEO Daniel Ek  posted a blog saying: "In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience – essentially acting as both a player and referee to deliberately disadvantage other app developers. After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition" adding "Apple requires that Spotify and other digital services pay a 30% tax on purchases made through Apple’s payment system, including upgrading from our Free to our Premium service. If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn’t something we can do.

Apple have now responded.

https://www.adweek.com/digital/spotify-amazon-google-and-pandora-appeal-44-hike-in-music-streaming-royalties/

https://www.musicbusinessworldwide.com/spotify-accused-of-giant-lie-as-it-defends-attempt-to-block-songwriter-pay-rise-in-the-us/

https://musically.com/2019/03/13/spotify-complaint-european-commission-apple/

https://www.musicbusinessworldwide.com/spotify-backed-by-rival-music-streaming-platforms-in-apple-app-tax-row/

https://www.musicbusinessworldwide.com/apple-blasts-spotify-for-suing-music-creators-as-it-defends-app-tax/

The COPYKAT: licensing, lawsuits, and legislative updates

Community Health Systems fails Microsoft check-up on licensing

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

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

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

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

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

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

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


"Grande" victory on vicarious liability in RIAA piracy case

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

Title II, entitled “Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS) Act” will focus on public performance rights for pre-1972 recordings. In particular, musicians with pre-1972 recordings will receive royalty payments when their tracks are played on the radio, with royalties then allocated for recordings played on the Internet, cable, and satellite radio. 

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

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

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

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


Spotify turns up the volume on licensing technology

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

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

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

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

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


This update by Kelsey Farish

The CopyKat dips a paw into the fast flowing stream

In China. the the National Copyright Administration has updated its policies on music streaming, updating saying online streaming services must stop providing unlicensed music to users. Service providers were required to remove unlicensed music by the end of July . The NCA said in a stament that the move was in line with China's copyright law and regulations. Those who do not follow the order will be 'seriously punished'. Duan Yuping, an official from the NCA, said the violation of copyright is common in China. “(Music streaming providers) infringed the rights of royalty holders, disturbed the order of the online music market, and also impacted the development of our music industry” - the latter being a common thread amongst comments with artistes, record labels and music industry executives supporting the fight against piracy. 

And Jack Ma’s e-commerce giant Alibaba is launching a music division to join its existing film and video units in China. Ali Music Group will be run by singer-songwriter and TV host Gao Xiaosong, who serves as chairman, and Song Ke, a former Warner Music executive, as CEO. Alibaba already has a number of licensing deals in place with the likes of BMG, Rock Records and HIM Records for their content to play on its platforms. 

In the UK, The Intellectual Property Office (IPO) has released data that shows that the number of UK consumers accessing digital content through legal download or streaming platforms has risen 10% since 2013 - but one in five consumers continues to access music, movie, TV or gaming goodies from unlicensed sources online. The IPO survey says that 15.6 million UK internet users now access music online, with twelve million streaming and 10.5 million downloading - confirming the rise of the streams in recent years whic has been a common thread amionst recent figures from the recorded music sector showing streaming income rising at a very fast rate. whilst Spotify and Amazon are amongst the most use streaming music platforms in the UK, 54% of online music was consumed via YouTube - which whilst a licensed service certainly for songs via its licence with PRS for Music - its not seen as a primary revenue source by record labels and music publishers.  10 million UK internet users have accessed films online. Netflix, Amazon and YouTube were the top platforms for film downloads and streaming with Netflix responsible for 44 per cent of all activity. With TV, 15 million UK internet users have accessed a TV programme online. BBC iPlayer, You Tube and ITV Player were the top platforms for accessing TV programmes online with BBC iPlayer responsible for 62 per cent of activity. 21 per cent of users accessed some content illegally. The IPO survey highlighted 62% of internet users in the UK have downloaded or streamed music, TV shows, films, computer software, videogames or e-books. This is up from 56% in 2013. The survey showed that there was a 10% increase in UK consumers accessing content through legal services. One in five consumers still access some content illegally. The survey was published in parallel with research in Australia and shows that while British and Australian users consumed online media at similar rates, illegal downloading for UK consumers was half the rate of their Australian counterparts. 

Last week representatives from the UK’s creative industries, supported by the UK government confirmed the agencies that will help to deliver a major multi-media education campaign aimed at encouraging consumers to do the right thing and access content from a wide range of legal services as part of the Creative Content UK initiative.  The education programme will target 16-24 year-olds, their parents, those responsible for household internet connections, as well as others who influence young people’s attitudes to accessing content. A second part of the initiative will be a subscriber alerts programme that will be co-managed and co-funded by ISPs and content creators and due to begin at a later date.  Participating ISPs will alert and advise subscribers when their accounts are believed to have been used to infringe copyright. The four largest ISPs in the UK- BT, Sky Broadband, TalkTalk and Virgin Media are partnering with Creative Content UK: other partners include the BBC, the Independent Film & Television Alliance (IFTA), the Musicians’ Union and UK Music. 

And YouTube's dominance has prompted the major labels (Universal, Sony and Warner) to start to explore ways to loosen YouTube’s grip on free ad-supported music videos - not least by supporting rival sites like Vessel and Snapchat. The New York Post says that separately, the labels are weighing going nuclear — "potentially yanking rights to the Web’s most valuable and highly trafficked content" with one industry source telling the Post "They are not serious about monetizing music on behalf of creators and, as a result, music companies are realizing they have to reset the current relationship,” The labels are far keener on subscription streaming services such as Spotify's top tier. Industry body RIAA says ad-supported streaming services (both visual and audio) contributed just $295 million in 2014 to the US record industry — with YouTube’s contribution estimated to be about half of that sum. Google has said that YouTube has paid out billions of dollars to the music industry over the last few years and that partner revenue has increased 50 percent year on year the last three years in a row. More on Music Busines Worldwide here.

And Recent statistics explain why the record labels are so focussed: The income of Germany's recorded music market grew 4.4% year-on-year in the first half of 2015. That was mainly driven by a whopping 87% rise in streaming subscription revenues, which easily offset a decline in CD album sales. Download sales also increased. Germany’s record industry, the world’s third-biggest music territory behind the US and Japan, accrued €686m in the first half of 2015. The income of Sweden's recorded music market rose 4.2% in the first six months of 2015 - with streaming growing once again to claim 83.9% of revenues. According to new data from IFPI Sweden analysed by MBW, the market's recorded music turnover in Jan-June this year stood at 507.5m SEK (€54.6m), up from 486.9m SEK in H1 2014 (€52.4m).
And the income of the Italian recorded music market jumped up 22% in the first half of 2015, according to new figures published by Deloitte. The total revenues of the region stood at €65.55m, compared to €53.61m in H1 2014. A strong release schedule by local pop artists helped lift the total physical market by 22% to €37.3 million. Digital revenues increased 37% to €21.18m, with download sales up by 6% to €10.82m. Streaming, increased its year-on-year H1 income by 37%, up to €17.36m.

The Russian government's top Internet regulator has officially warned YouTube that it could be added to the Kremlin's Internet blacklist unless it removes unauthorised copies of Russian TV shows. It's the second time the agency has warned YouTube about the shows in question, and now the video streaming site must comply in a matter of days. A Moscow city court ruled on April 7th that YouTube was violating Russian copyright law by hosting copies of “Chernobyl” and “Fizruk.” YouTube removed the offending cntent but the shows have been uploaded again since, along with another 137 illegal videos. YouTube has until July 27 to remove the URLs in question or be included on the Russian RuNet blacklist, according to Global Voices Online, which tracks Russian media freedom.

The pit at Glastonbury (Denis O'Regan)

ImageRights International has announced the first "fully automated copyright registration service" designed specifically for the needs of professional photographers, "revolutionizing the process for registering photographs with the United States Copyright Office (USCO)". To be clear - ImageRights is a business - not a government or a free service - but makes the point that they have statistics that show that the time, cost, and complexity of registration has deterred 97% of US professional photographers from registering their work with the USCO, potentially losing out on "hundreds of thousands of dollars" in licence fees and indeed statutory damages from copyright infringement claims. There is a cost of course, but any interested (and unregistered) photographers can find out more here.

Oracle has asked a U.S. judge for permission to update its copyright lawsuit against Google Inc to include the Android operating system's current market dominance - Google's Android operating system is now the world's best-selling smartphone platform.  Oracle said it wants to update the copyright lawsuit, filed in October 2010, to add that Google continues its copyright infringement through updated versions of Android in both existing and new markets and this is resulting in harm to Oracle and (of course!)  benefit to Google. More here.  In June the US Supreme Court denied Google's writ of certiorari to re-examine the 2014 decision of the Court of Appeals for the Federal Circuit in favor of Oracle which held that application programming interfaces (APIs) in Java were subject to copyright protection. The next stop for these two companies is back to the trial court to determine whether Google has a defense to copyright infringement under the doctrine of  “fair use.” 

And finally a couple of technology updates - and sorry I have drifted into patents - not the CopyKat's field at all - but fascinating for all lovers of copyright too:

First up, Techcrunch tells us that "Researchers at the University of Cambridge have linked musical taste to thinking style, with possible implications for how future algorithms might better tailor music recommendations. Not to mention the flip side: how music streaming services could psychologically classify their users based on what they like to listen to".

And Mashable says that Apple has filed a fingerprnt sensitive patent application posted to the U.S. Patent and Trademark Office's website on Thursday -  "Apple detailed technology for a specialized TV remote control which could be used to access a person's TV preferences, bypass passcodes for services such as Netflix, enable child proofing and even control smart products in the home, such as garage doors and thermostats."