Discussion of Copyrightand Music Law

AdU, thinkLA

April 21, 2015

© 2015 Reed Smith LLP

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Kathyleen A. O'Brien, Partner Reed Smith LLP Tel.: +1 310 734 5268 (Century City, CA) Email: kobrien@reedsmith.com

Dominique Pietz, Senior AssociateReed Smith LLP Tel.: +1 310 734 5215 (Century City, CA) Email: dpietz@reedsmith.com

Todd Mumford, AssociateReed Smith LLP Tel.: +1 310 734 5260 (Century City, CA) Email: tmumford@reedsmith.com

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Copyright

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• U.S. copyright law is set out in the Copyright Act of 1976

• Protects “original works of authorship”

• The work is protected as soon as “fixed in any tangible medium of expression”

• Unless a work is reduced to tangible form it cannot be regarded as a “writing” within the meaning of The United States Constitution authorizing federal copyright legislation (Article I, Section 8, Clause 8)

• Limited duration – the general rule: Author’s Life + 70 years

BASICS

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Threshold Question

Is my awesome idea for a kid-centric cookbook protected by copyright?

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Expression versus Idea(or “How does this work again?”)• Copyright protects expression, not ideas

v.

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Idea v. Expression

• Cookbook “Sneaky Chef” (by Melissa Lapine) v. “Deceptively Delicious” (by Jessica Seinfeld)

• Ideas – not protectable- Cookbook with recipes to help get their kids to eat

vegetables- Hide vegetables from your kids by mixing them in with foods

they like (e.g., chicken nuggets that use broccoli puree in the recipe)

• Tangible Expression - protectable- The actual recipes- Pictures- Written descriptions of foods 7

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Idea v. Expression• Lapine accused Seinfeld of copyright infringement

• Court found for Seinfeld, stating that “Stockpiling vegetable purees for covert use in children's food is an idea that cannot be copyrighted“

• The similar elements of the two cookbooks were unprotectable because they naturally flowed from the general premise

• This is akin to Scène à faire (the “scene that must be done” – the idea that certain characters, places, story elements, actions, etc. are typical to a particular style or genre and, as such, are not capable of copyright protection. E.g., a horror movie with zombies as the main antagonist and all of the elements you would expect to see in that movie (flesh eating, slow walking, groaning, blood spewing, etc.

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Pitching an Idea

• What if I tell a client my ideas during a pitch?

• What rights do I have to protect those ideas?

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Idea Submission Claims

• You can’t stop someone from using a mere idea under copyright – alternate legal theories must be relied on• Property-based Theories (e.g., plagiarism,

misappropriation)• Contract Law Theories (e.g., breach of express contract,

breach of implied-in-fact contract)• Miscellaneous Tort Theories (e.g., breach of confidence,

unfair competition)

• You can stop someone from using your idea if you have copyright protection• Your idea must be “an original work of authorship, fixed in a

tangible medium of expression”

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• Original Expression (protected work)• Access by the alleged infringer• Substantial Similarity of the works

Proving Copyright Infringement - Essential Elements

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Affirmative Defenses to Infringement• Fair Use (factors: purpose and character of your use

[transformative?]; the nature of the copyrighted work; the amount and substantiality of the portion taken, and the effect of the use upon the potential market)

• Parody/Satire (a Fair Use defense)

• Difference between “parody” and “satire”? – imitation for comic effect vs. arousing reader disapproval by holding subject (a vice or faulty belief) up to ridicule

• Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994) (“Pretty Woman” Case) – Defendant’s prevailed in an unauthorized sampling case on a theory that the 2 Live Crew song was a parody of the original Roy Orbison song

• Independent Creation

• Laches (but this has recently been called into question by Petrella v. Metro-Goldwyn-Mayer, the “Raging Bull” case (134 S.Ct. 1962 (2014)) 12

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Fair Use - Patrick Cariou v. Richard Prince

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“Yes Rasta” (Cariou) “Graduation” (Prince)

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Patrick Cariou v. Richard Prince

• Prince appropriated images from Cariou’s photography book titled Yes Rasta “for a series of dystopian works called ‘Canal Zone,’ which were exhibited at the Gagosian Gallery in 2008 and generated more than $10 million in sales.” (NY Times)

• Cariou sued Prince for copyright infringement – Prince claimed his use of Cariou’s images was a fair use and thus allowed under copyright law

• The trial court found in favor of Cariou, holding that for fair use to apply the new work must “in some way comment on, relate to the historical context of, or critically refer back to the original work”

• Prince appealed and prevailed with the appeals court finding that “the law does not require that a secondary use comment on the original artist or work, or popular culture,” but only that a reasonable observer find the work to be transformative – however, there is still some question as to whether some of Prince’s works in the series will be deemed a fair use

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Fair Use - North Jersey Media Group v. Fox News

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North Jersey Media Group v. Fox News • North Jersey Media Group publishes the NJ-based newspapers The Record and

Herald News and is the copyright owner of the 9/11 photo, which was taken by one of NJMG’s staff photographers (work-made-for-hire!)

• Fox used the 9/11 photo, juxtaposed against the iconic Raising the Flag on Iwo Jimaphotograph, on a Facebook page in connection with its promotion of its Justice with Judge Jeanine program (Fox also included a hashtag across the combined image -#neverforget)

• North Jersey sued Fox for copyright infringement, to which Fox asserted a fair use defense and moved for summary judgment

• The trial court denied the motion, finding that Fox’s use of a low-res version of the 9/11 photo next to the Iwo Jima photo along with the hashtag was not sufficiently transformative as a matter of law and that there was not apparent commentary on the events (they were using the photo to promote one of its programs)

• North Jersey also asserted that allowing a defense of fair use in this case would have a detrimental effect on the market for the licensing of photographs (North Jersey has earned more than $1,000,000 in licensing revenue from the 9/11 photo)

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Catcher in the Rye v. 60 Years Later: Through the Rye• Swedish author writes a book based on character Holden Caulfield from “Catcher in

the Rye” and includes phrase “Through the Rye” in title (premise: “Mr. C” (Holden Caulfield) is now an old man and goes to me JD Salinger in person)

• Salinger sued for copyright infringement claiming the new book was a derivative work of his original protected work

• Author’s lawyers argued, among other things, that the new work, titled “60 Years Later: Coming Through the Rye,” did not violate copyright because it amounted to a critical parody that had the effect of transforming the original work

• Salinger prevailed at trial; defendant’s appeal successful in 2nd Circuit

• Parties eventually settled

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Copyright Notice

• Copyright Notice (e.g., © 2015 Reed Smith

LLP)• Effect of lack of notice:

- Innocent Infringement defense- Statutory Damages

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Music

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Music is an integral part, and often the centerpiece, of many forms of entertainment

content, including advertisements, motion pictures, TV programs and videogames.

As a content creator, it is imperative to understand the music rights landscape.

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Music Rights Primer

• The music rights landscape is … not always easy to navigate

• There are multiple rights involved and many rights holders

• Industry custom and practice play a big part in how deals are done and the terms that one should expect

• Let’s break it down…

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Copyright Protection for Music • Copyright protection for music is found in two

ways:

1. Musical Work: This is the “song” and is generally referred to as the “musical composition”

• It’s the notes, lyrics and melody that make up the song

2. Sound Recording: This is the recorded version of a song

• When the public buys a CD or downloads an album from their favorite band, that CD or album is really a collection of individual sound recordings (or copies of such recordings)

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Recording vs. Composition

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Song Sound Recording by Musical Composition by

Manic Monday The Bangles Prince

Blame It On The Rain Milli Vanilli (or so they said) Diane Warren

R.E.S.P.E.C.T. Aretha Franklin

(Otis Redding)

Otis Redding

Single Ladies Beyoncé Beyoncé Knowles, Thaddis Harrell, Terrius Nash, Christopher Stewart

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Exclusive Rights (U.S. Copyright Act)

• In a Composition:

1. Reproduce

2. Distribute copies

3. Publicly perform

4. Publicly display

5. Prepare derivative works

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• In a Sound Recording (fixed after 02/15/72): • Reproduce

(in phonorecords)• Distribute copies • Publicly perform

(digital only)• Prepare derivative

works

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Music Rights

• Commissioning a new piece of music- Work-Made-for-Hire Agreement – the party that hires the

songwriter or the performer is the “author” and therefore owner of the work for purposes of copyright

- Can always commission a cover recoding of a popular musical composition, but beware of soundalikes

• Acquiring ownership of an existing piece of music- Assignment from original author or current rights holder

(e.g., a producer, the songwriter’s estate or a record label)

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Music Licensing - Preliminary Considerations

• A party that wishes to use a piece of exiting music must determine:The rights necessary for the intended use

Whether a license is needed

If so, the type of license and scope of rights needed

Who controls the necessary rights

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Requesting a LicenseMusic licenses generally boil down to the following types and cover most of the exclusive rights in a music copyright:1. Synchronization/Master Use: a license to “synch” music

with visual images (e.g., a TV program, video game, online mobile app).

• A license is needed for each of the musical composition and sound recording and the rights granted in such licenses usually include a combination of reproduction, distribution, performance and derivation rights.

2. Public Performance: a license to perform or transmit to the public.

3. Mechanical: a license to reproduce and make copies of a musical composition in phonorecords (physical and digital).

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Synch and Master Use Licenses

• Grants to the licensee the right to “synchronize” a musical composition (a “synch license”) or sound recording (a “master use license”) with visual images - e.g., films, television programs, video games, online/mobile apps, commercials, music videos, etc.

• Synch license – obtained from the publisher(s) of the composition (there can be one or multiple publishers of a single composition)

• Master Use license – generally obtained from a record label (usually just one owner of a particular sound recording)

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Synch and Master Use Licenses (continued)• Scope: Both the synch and master use license will include a

grant of rights allowing the licensee (producer of the audiovisual work) to synchronize the composition/master in the audiovisual work and then exploit that audiovisual work in certain media, certain territories and for a certain period of time.

• Considerations for Licensee: Fees are based on various factors (e.g. popularity of

song, territory, term, type of A/V work).

As the licensee, it is imperative to make sure you obtain all of the rights you need from the licensor to exploit the work you are creating and to obtain, if possible, representations and warranties that the licensor has the ability to grant the rights included in the license…but,

A synch or master use license will rarely grant public performance rights.

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Public Performance RightsGrants to the licensee the right to perform a work “publicly” or to transmit or communicate a performance of the work “publicly” by any device or process.

• Musical Compositions: Includes exclusive right to publicly perform

• Sound Recordings: No general performance right; certain digital audio performances only

Licensor:

• Musical Compositions: industry custom has been that this right is administered by “Performing Rights Societies” or “PROs”

• Sound Recordings:

• SoundExchange – administers and collects royalties for non-interactive streaming services (e.g. Pandora) exercising their statutory rights.

• All other digital audio transmissions – the owner of the sound recording retains and controls this right and licenses directly, including to interactive streaming services (e.g. Spotify).

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Public Performance Rights through PROs

• Public performance rights are mainly licensed by Performing Rights Organizations (“PROs”)

• PROs license “small performance” rights, set rates and collect royalties – e.g., jukeboxes, TV, internet, stadiums, arenas and other places where music is publicly performed

• Licensing is generally through “blanket licenses” covering the entire repertoire of a particular PRO with the entity that disseminates the content – e.g., TV stations, music streaming services, websites, radio stations, bars, stadiums, etc.

• In Europe, PROs may also license mechanical and other Europe-specific reproduction rights depending on the territory and the PRO

• Many PROs have reciprocity agreements that allow them to license the works of foreign writers/publishers

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PROs• Currently, there are three main Performing Rights

Organizations (PROs) in the U.S.:

ASCAP (American Society of Composers, Authors and Publishers)

BMI (Broadcast Music, Inc.)

SESAC (Society of European Stage Authors and Composers)

o NOTE: Global Music Rights – newly created entity set up to administer public performance rights

• Many PROs throughout Europe and other territories of the world: PRS, PRS UK, GEMA, CELAS, ARESA, STIM, Kobalt (kstar), KODA, NCB, CSI, CMRRA, SODRAC, SOCAN, TOMO, SACEM, ZAiKS, AKM, SUISA, MESAM, MSG, COMPASS, SAMRO, PAECOL 34

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Public Performance: Download v. Streaming

• Download: NOT a performance

• Downloads are transmitted at one point in time and performed at another.

• Streaming: IS a performance

• Because, in a streaming transmission, like a television or radio broadcast, the song is played — and, thus, perceived — simultaneously with the transmission

• See United States v. Am. Soc’y of Composers, Authors, and Publishers, 627 F.3d 64 (2d Cir. 2010)

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Mechanical License

• Grants the right to reproduce and distribute to the public a copyrighted musical composition on phonorecords and digital phonorecord deliveries (DPDs) – does not apply to audiovisual works

o Phonorecord: includes audiotapes and CDs, but excludes physical formats for audiovisual works (e.g. DVDs)

o DPD: Each individual delivery of a phonorecord by digital transmission of a sound recording, sufficiently permanent or stable (includes permanent and tethered or conditional downloads).

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Mechanical License (continued)

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There are two types of mechanical licenses -

1. Negotiated: The terms are freely negotiated by the licensor and licensee – the terms usually fall in line with the statutory rates but are sometimes less.

2. Compulsory Statutory License:

a. Only available once phonorecords of a nondramatic musical work have been distributed to the public in the United States under the authority of the copyright owner (Section 115 of the Copyright Act.

b. Subject to certain notice and accounting requirements; rates are set by the Copyright Royalty Board (CRB) and are based on playing time (currently $.091 for songs of 5 minutes or less in duration).

c. No compulsory license exists for audiovisual works.

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Union Considerations When Using Music • Unions: SAG-AFTRA and AFM

• Historically not nearly as strong as the actor’s unions (or any other of the entertainment industry unions), but merger of SAG and AFTRA may lead to better enforcement and collection

• Key issues:

- Session Fees (for initial recording of song)

- New Use Fees (for use other than what song was initially created for)

- Re-Use Fees (if initial use was limited by agreement)

- “Conversion” if an existing song originally recorded for a sound recording (audio record) is then used for another purpose, e.g., in a TV spot 38