Intellectual Property Law Updates

Law Updates also provides hyperlinks to other sites which may be of use or interest to students and those involved in the music industry. These are provided at the end of Law Updates under 'Music Business Law Links'.

This resource is compiled by Ben Challis. Ben is a UK lawyer specialising in entertainment law and a graduate in law from Kings College London and The City University. He also holds the degree of Master of Arts in Mass Communications from the University of Leicester. Ben is a fellow of the Royal Society of Arts. Ben acts as General Counsel for 3A Entertainments, one of the UK's leading concert promoters, and is Executive Producer for television of the Glastonbury Festival. Glastonbury is the UK's leading music and arts festival attended by over 150,000 people. For Glastonbury, Ben combines the role of managing the Festival's broadcast and other media rights alongside acting as General Counsel for the Festival. Ben's other clients have included the Prince's Trust, the Granada Media Group, Pioneer LDCE and British Telecom. Ben regularly writes articles and other material on music business and intellectual property law, contributes to books and is a regular conference speaker in particular on the live music industry. He is currently preparing a collection of cases and materials on music business law for publication. Ben is a visiting Senior Lecturer in Law at Buckinghamshire Chilterns University College in England and sits as a magistrate (Justice of the Peace) in Hertfordshire, England.

We are interested in your views on the Law Updates resource. Please forward any comments to : musiclaw01@aol.com

July 2005

COPYRIGHT
Record Labels, software, Internet
-Sweden updates copyright laws to prohibit illegal downloading-
Sweden has made it illegal to download copyright material from the Internet and approved measures to discourage people from burning copies of CDs and DVDs. The law, which takes effect July 1, also bans technology and software used to circumvent protections on copyright material, including music, movies and games mirroring similar legislation in the USA. Previously whilst it was prohibited in Sweden to make copyright material available for others to download, downloading itself was legal. The new law also makes it illegal to copy an entire book, including text books, on a copying machine. Sweden does not forbid making a copy of a CD or DVD for personal use but there is a 24% tax on recordable CD and DVD-discs.

See: http://www.qlinks.net/quicklinks/copyrigh.htm and http://www.theregister.co.uk/2005/06/06/swedish_file_sharers/

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COPYRIGHT
Record Labels, Internet
-Infringements under US Artist Rights and Theft Prevention Act limited to true distribution-
Federal judge Marilyn Hall Patel presiding over the Napster copyright litigation has clarified that the Artists' Rights and Theft Prevention Act of 2005 does not establish that the operator of a peer-to-peer Internet file-sharing service who maintains and posts on the Internet an index of downloadable files embodying copyrighted sound recording and musical compositions infringes on the copyright owners' distribution rights. The Artists' Rights and Theft Prevention Act of 2005 (the ART Act) was signed into law in April 2005. Section 103(a) of the ART Act creates criminal liability for certain acts of willful copyright infringement, including the willful infringement of a copyrighted work that is "being prepared for commercial distribution." The ART Act specifically provides at Section 103(a)(1)(C) that "[a]ny person who willfully infringes a copyright shall be punished. .. if the infringement was committed. .. by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution." According to Judge Patel, "if Congress wanted to make clear that the distribution right was broad enough to encompass making a work available to the public without proof of actual distribution, it is perfectly capable of doing." However, nothing was identified in the legislative history of the ART Act, or in the statute itself, that "suggests Congress' intent to clarify Section 106(3) in such a manner." Thus, the first judge who has been called upon to rule on the issue has determined that the ART Act does not create copyright infringement liability for simply making copyrighted works available to the public without evidence of true distribution of those works.

From an article by Eric Sinrod first published by USA Today. Eric Sinrod is a partner in the San Francisco office of Duane Morris LLP (http://www.duanemorris.com.
His own website can be found at: http://www.sinrodlaw.com

See: http://www.usatoday.com/tech/columnist/ericjsinrod/2005-05-25-copyright-clarification_x.htm

Richard Potter QC, Editor of E-Tips (a publication of Deeth Williams Wall LLP) comments:
In four consolidated actions (Napster Litigation) against Napster Inc (Napster) and other parties, including Bertelsmann AG (Bertelsmann) (collectively, Defendants), plaintiffs in the media industry such as Capitol Records Inc have recently scored mixed success in a ruling by Justice Patel in the US District Court for the Northern District of California.
The ruling came in response to motions by the Defendants seeking summary judgment in the Napster Litigation. The claims were for copyright infringement relating to the P2P Internet file-sharing network formerly operated by Napster. Even though Napster took the benefit of insolvency legislation, ceased operation on July 1, 2001 and is no longer a party, the proceedings continued, with the plaintiffs "taking aim at the still-solvent entities that invested in Napster before it ceased operations", to quote from the reasons for judgment. The allegations (secondary claims) included one that by investing in Napster and assuming control of the Napster file-sharing network the Defendants "contributorily and vicariously infringed the plaintiffs' exclusive rights under the Copyright Act".
The plaintiffs advanced three theories of direct infringement as the basis for the secondary claims: two of the claims involved alleged direct infringement by Napster users when downloading and uploading, respectively, and therefore involved the unauthorized distribution of the plaintiffs' copyrighted works. The third claim involved alleged infringement by Napster by way of the indexing of MP3 files that its users posted on the Napster network.
For the claims relating to uploading and downloading of files, the Court held that, especially since discoveries had not been completed, the plaintiffs had met the burden of advancing evidence sufficient to establish genuine disputes. For example, there was evidence that almost 15 billion files were downloaded by Napster users between September 2000 and May 2001 and that at least some of those files contained copies of the plaintiffs' copyrighted works.
However, in relation to the claims that Napster itself infringed copyright simply by maintaining a centralized indexing system listing the file names of all MP3-formatted music files available on the Napster network, these claims were struck as not satisfying the plaintiffs' burden of proof. This was the burden of proving that Napster or its users directly infringed the plaintiffs' copyrighted musical compositions. For this, the Court held that the plaintiffs had to show one of two things: either actual dissemination of the work or an offer to distribute that work for the purpose of its further distribution or public performance, not merely an offer to distribute the work.

For the full reasons for judgment, visit:

See: http://decisions.fca-caf.gc.ca/caf/2005/2005caf172.shtml

Deeth Williams Wall website is at: http://www.dww.com

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BROADCAST REGULATION
Television, radio, communications
-ARTICLE : New OFCOM Broadcasting Code-

by Robin Hilton, solicitor

The 89-page Code seeks to balance the interests of those who need protection (in particular those under 18) with broadcasters' freedom to include more challenging material. It covers areas such as fairness and privacy, protecting the under 18s, harm and offence, and sponsorship and commercial references. Subject to certain exceptions, the Code applies to radio and television content in services licensed by Ofcom, services funded by the BBC licence fee and to Welsh broadcaster S4C. Certain sections dealing with impartiality, elections, sponsorship and commercial references do not apply to BBC services funded by the licence fee.

Protecting the Under 18s
In order to ensure that people under 18 are protected, no material may be broadcast that might seriously impair their physical, mental or moral development. The 9pm watershed is also upheld, although the transmission of 12-rated and 15-rated services before 8pm on premium subscription film channels is now permitted, provided there are protection systems in place such as PIN numbers.

Potentially offensive material must be justified by its context: this includes a number of factors including time of broadcast, size of audience and the likely composition of the potential audience. Ofcom has also decided not to allow the broadcast of R18 material (hard core pornography).

Fairness
Certain practices must be followed to ensure "fair" treatment, such as obtaining informed consents and not obtaining information through misrepresentation or deception (although this may be warranted in certain "public interest" situations).

Privacy
These provisions deal with what is meant by "a legitimate expectation of privacy". This may vary, so that even in public places people, in certain circumstances, may reasonably expect a right of privacy. The Code also explores what may be a "warranted" infringement of privacy (e.g. detecting crime, protecting public health, disclosing incompetence that affects the public, etc).

Sponsorship and Commercial References
As with the earlier ITC Codes, the overriding principle of editorial independence is maintained, although there has been some helpful deregulation. Programmes must not be distorted for commercial purposes and it is key to ensure that there is a distinction between advertising, sponsorship messages and programmes. All sponsorship arrangements must be "transparent".

Undue prominence of products or services where there is no editorial justification is still prohibited. However, there is now scope for "non-promotional" references to products or services if these can be editorially justified and are incidental. The ban on product placement has not been lifted, although Ofcom has suggested that it will consult on product placement later this year in the context of a wider assessment of the broadcast advertising market. With traditional broadcast advertising coming under great pressure, Ofcom recognises that programme-makers and commercial broadcasters need to find other sources of funding for programmes. These rules are designed to prevent programmes from being used "merely as advertising platforms" and Ofcom therefore believes that separate rules on merchandising are not required. This will be welcome news to broadcasters and programme-makers.

Sanctions
Where the Code has been breached, Ofcom will publish its findings and, if the broadcaster deliberately, seriously or repeatedly breaches the Code, Ofcom may impose statutory sanctions (fines, shortening/revocation of the broadcasting licence) against the broadcaster.

Although it is the responsibility of the broadcaster to comply with the Code, programme-makers will doubtless be required to deliver programmes that comply with the Code. How Ofcom will interpret its own codes remains to be seen, but programme-makers and broadcasters should be alive to particular issues, such as door-stepping and surreptitious filming, coverage of emergency situations such as scenes of disaster, programmes made for children, sponsored programming and product placement.

The Code can be found at: http://www.ofcom.org.uk/tv/ifi/codes

This update is © The Simkins Partnership.
The Simkins Partnership website is at: http://www.simkins.com

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COPYRIGHT
Record Labels
-Weblisten finally shut down after admission of criminal liability-
Weblisten, the Spanish based website Weblisteb, which had offered many thousands of international and local songs for download and streaming through its website has been shut down by a court order. The move follows Weblisten's admission of criminal copyright infringement in a Spanish court hearing on May 31. Weblisten had been making copyrighted music files available online since 1997, despite successive legal actions against it over six years. Civil and criminal copyright infringement proceedings were taken against it by AGEDI, the Spanish producers' collecting society, on behalf of the country's music industry, as well as by seven independent and major record companies. Until now, Weblisten maintained that it was operating legally, even though it had secured licences only from music publishers and not the affected record labels. As part of the final order to be issued in the case, Weblisten will be required to destroy its databases of unauthorised music, pay a fine and refrain from engaging in any similar such activities in the future. Spain has a growing market for online music, with at least ten legitimate online music services operating in the country including iTunes, MSN Music Club, Tiscali, Vitimanic Music Club and Wanadoo.

See: http://www.ifpi.org

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COPYRIGHT
Record Labels
-First Norwegian conviction for file swapping-
The Oslo municipal court has sentenced a 36-year-old man for running an illegal file sharing service on the Internet, the first conviction of its type in Norway. The court ruled that the man had willingly and knowingly made a significant number of film and music files available to at least 300 people at a time and had violated copyright law. The Sandefjord man placed material on his employer's (telecom company NetCom's) server to facilitate transfer. A police raid revealed more than 60,000 pirated film and music files. It is expected that the Norwegian recording industry will now bring a civil action for damages.

See: http://www.aftenposten.no/english/local/article1050773.ece

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COPYRIGHT
Record Labels
-Welsh pirate caught after test purchase from Ebay-
James Russell Harley, 26, used his ten year old son's name to register an Ebay account and sold copied pirate CDs on the worldwide web. He was caught when special investigators made a test purchase. The British Phonographic Institute bought a counterfeit CD and made a complaint to Flintshire public protection department. A search found more than 1,300 CDs and DVDs at Harley's home in Broughton, North Wales as well as a computer and copying system, which was capable of producing 11 copies from a single CD . Harley admitted 11 trademarks and copyright offences involving various CDs including School of Rock, Elton John Sings the West Coast and Now 86, and asked for 100 similar offences to be taken into consideration. Richard Powell, prosecuting, said investigators found 540 names or email addresses, which showed the defendant had received payments of between £5 and £50. Flintshire magistrates said that they were considering a community punishment order but adjourned sentence for a report from the probation service.

See: http://icnorthwales.icnetwork.co.uk/news/regionalnews/tm_objectid=15583096&method=full&siteid=50142&headline=dad-sold-fake-cds-in-name-of-son--10-name_page.html

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CONTRACTS AND COPYRIGHT
Music Publishers, Internet, Record Labels
-Waits challenges download royalties based on physical product sales-
Third Story Music, a Los Angeles-based music publishing firm and the successor to the production company that managed singer-songwriter Tom Waits early in his career, has filed a federal suit against Warner Music Group, alleging that Waits has been shortchanged on the sale of digital downloads. The action, filed in U.S. District Court for the Central District of California in Los Angeles stems from 1972 and 1977 contracts signed by Third Story principal Herb Cohen and Warner-owned Asylum Records regarding Waits' services. According to the suit, under the terms of the two contracts, Waits was entitled to royalties of either 25% or 50% from revenues derived from third-party licenses. Third Story maintains that digital music downloads constitute a form of third-party license, and that Waits is entitled to payment at that level. Wait's 2003 and 2004 royalty statements to Third Story from WMG computed royalties from Waits' digital download sales at the same (and much lower) rate as royalties from the sale of physical product. - on those calculations Waits would be entitled to either 9% or 13% of the 67 cents received by WMG from each 99-cent download. Third Story seeks a declaration that compensation for downloads is governed by the third-party license provisions of the Asylum agreements, and damages in an amount to be determined.

See: http://abcnews.go.com/Entertainment/wireStory?id=811817

COMMENT : This could be a very important case and highlights the inequity of applying a standard physical product royalty to a download. Clearly physical product royalties were/are calculated to take into account the cost of manufacture of the physical carrier (CD, DVD, cassette) along with artwork and packaging. These are not present with a download giving the label a far larger profit margin - a far bigger 'share of the pie'. The royalty on physical product also take into account distribution costs - again not present with downloads (or at least marginal, perhaps the cost of digitisation) again increasing the label's profit share. The difference between a 15% royalty and a 50% royalty on a dealer price is substantial and most artists would want to fight this sort of label practice to achieve the latter!

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COPYRIGHT
Artists
-Trent Reznor wins $2.9 million judgment against former manager-
Former Nine Inch Nails manager John Malm has been ordered to pay up $2.9 million for allegedly cheating Trent Reznor out of millions of dollars. Reznor filed the lawsuit in 2004 in New York claiming that former manager John Malm mismanaged the bands finances and stole money from them. Allegedly, Malm had tricked Reznor into signing a contract that assigned the manager 20 percent of Gross earnings (rather than Net). The judgment also awarded trademarks back to Reznor.

See: http://www.internetdj.com/article.php?storyid=615

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COPYRIGHT
Record Labels, Artists
-George Clinton wins back master tape rights-
Federal Judge Manuel L. Real of Federal District Court of Los Angeles returned ownership of the master recordings of four albums George Clinton made in the 1970's with his band Funkadelic: In winning possession of the recordings, Mr. Clinton can now control licensing and distribution of the music and lay claim income from past licensing fees. The ruling came as the latest twist in a 12-year legal fight over the rights to the recordings and the copyrights to the songs of Funkadelic and of Parliament, Mr. Clinton's other funk band. Mr. Clinton may be entitled to income from past licensing fees from record labels whose artists lifted samples, or snippets, from Parliament and Funkadelic albums. Mr. Clinton also has grounds to seek compensation for the re-release of the albums in 2002 by Priority Records, now a unit of the music giant EMI Group.

See: http://www.nytimes.com/2005/06/07/arts/music/07funk.html?

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COPYRIGHT
Record Labels
-Court of Appeals re-affirms Westbound Records and Bridgeport Music v No Limit Films and Dimension Films-
The U.S. Court of Appeals for the Sixth Circuit today has reaffimed the position that it first announced last year - that there is no "de minimis" rule when looking at the use of sound recordings as samples. Under the court's latest ruling in even two notes sampled from a sound recording without permission would amount to copyright infringement. (The court acknowledged that taking one note probably would not amount to infringement, since copyright law defines a sound recording as "the fixation of a series of musical, spoken, or other sounds.") The case involves a two-second, three-note guitar riff sampled from the song "Get Off Your Ass and Jam," which was changed in pitch and "looped" into another song, "100 Miles." "100 Miles" was used in the soundtrack of a movie and the moviemakers were the defendants in the case. A federal trial court ruled that the copying was de minimis and therefore not actionable under copyright law. The Sixth Circuit reversed this decision last year, but then agreed to grant "rehearing." It has decided not to change its stance.

For Comment see: http://www.fepproject.org/news/bridgeport.html and see : http://www.musicjournal.org/03thesongremainsthesame.html

UPDATE Newton v Diamond and Others (2004) 04-0129
In a similar decision the 9th Circuit US Court of Appeals upheld the judgment of then lower court against jazz artist James W Newton who contended that the Beastie Boys had infringed the copyright in his composition by unauthorized use in their recording 'Pass The Mic' The band had secured a licence to use the sound recording of Newton's track 'Choir' but the band did not licence the use of the composition in the six second three note sample. The Courts agreed with the Beastie Boys reasoning that the use of the actual composition was not distinctive enough to infringe Newton's copyrights.

See: http://news.yahoo.com/news?tmpl=story&u=/ap/20050613/ap_en_mu/scotus_beastie_boys_1

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COPYRIGHT
Record Labels
-Anti-piracy group broke Swedish data laws-
Sweden's anti-piracy group, Antipiratbyrån (APB), broke the personal data act in its hunt for illegal file-sharers, the country's Data Inspection Board has ruled. At the beginning of March, a large number of Swedish citizens reported the film and games industry-backed non-governmental organisation for its method of tracking the downloading of copyright-protected files. APB used new software to record the IP-addresses of file sharers, as well as the alias, the file name and the server through which the connection was made. The Data Inspection Board ruled that if an IP address can be linked to an individual it is classed as personal information and therefore falls under the Personal Data Act and is protected. As a private company the APB has no right to use the information and indeed could be classed as a criminal offence (although it could be held to be a minor infringement). APB have now stopped collecting the data, passing on details of suspected file swappers to the police although APB are entitled to apply for an exemption from the Personal Data Act.

See: http://www.thelocal.se/article.php?ID=1581&date=20050610

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PERFORMERS' RIGHTS
Artists
-Experience Hendrix LLC v Purple Haze Record Ltd and Another-
The Court of Appeal has now given directions for the conduct of the appeal by Purple Haze Records Ltd against the summary judgment obtained by Experience Hendrix LLC. The case alleges infringement of performers' rights and was brought by Experience Hendrix LLC (the successor in title to the Jimi Hendrix estate) against Purple Haze Records Ltd and Lawrence Miller for the release of an album with a performance by Jimi Hendrix and his band that had been recorded in Stockholm in 1969. At the time of the recording, UK legislation did not protect performers unless the recording itself was unauthorised - performers' rights in their present form were only introduced in the UK in 1998. However, the High Court found in its summary judgment that later legislation could be applied retrospectively.

See Law Updates June 2005

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© 2005 Ben Challis