Audio Technology from a Legal Perspective Updates in 2014/2015 – IP Law

Kevin D. Jablonski

Overview of Discussion Topics

Proposed legislation regarding music licensing recently embraced by the US Copyright Office

Alice Corp. v. CLS Bank – Is software still patentable?

Marvin Gaye or Robin Thicke/Pharrell Williams/T.I. – the Blurred Lines of copyright infringement.

Additional mind-numbingly boring cases before the Supreme Court

Overview of Intellectual Property

Patent

Copyright

Trademark

Trade Secret

Publicity

Rights Conveyed by Copyright

The right to reproduce the work

The right to prepare derivative works based on the original

The right to distribute copies to the public

The right to perform the work publicly

The right to display the work publicly.

The right to digitally stream a work.

Copyright and the Music Marketplace

On February 5 2015, US Copyright Office “embraces” proposed legislative rules changes.

Regulate Musical works and Sound Recordings in a Consistent Manner

Extend Public Performance Rights in Sound Recordings to Terrestrial Radio

Federalize pre-1972 Sound Recordings Establish Government enforced Fair-Market

rate setting.

Regulation of Musical Works vs. Sound Recordings Sound Recordings are distinguished from

underlying musical works in terms of rights reserved by a creator

17 USC 112 exempts terrestrial radio from paying royalties on performances of sound recordings but not underlying musical works

17 USC 114 makes licensing of a digital performance of a sound recording mandatory but not the underlying musical work

Terrestrial Radio and PRO

Currently, sound recordings are exempt from requiring a public performance license on terrestrial radio

But, internet radio stations, satellite radio, and generally anything else (other than AM and FM) does require a public performance license from a PRO

Proposal would eliminate the terrestrial radio exemption

Federalize Pre-1972 Sound Recordings

Currently, record labels and artists (sound recording owners) are not paid for digital performances of the sound recordings that are prior to 1972

Proposed legislation would fold pre-1972 sound recordings into Sound Exchange (or whatever new government-controlled “free-market” entity is established).

Rate Setting

Currently, mechanical rights are set to 9.1 cents per copy (per CD or download)

Department of Justice oversees royalty rates at PROs (ASCAP and BMI)

Proposal would enable Copyright Royalty Board and set market rates for public performances

Proposal would offer bundled rights that include synchronization rights

Proposal would also provide for opt-out rights

Fair Play Fair Pay Act of 2015

Jerrold Nadler, John Conyers, Jr., John Deutch and Marsha Blackburn introduced this legislation in the House on April 13, 2015.

Addresses the terrestrial radio issue and the pre-1972 issue

Has been tried before.

Songwriter Equity Act of 2015

Introduced to the House by Hakeem Jeffries and Doug Collins on March 4, 2015

Addresses the Rate Setting issues

Alice Vs. CLS

Decided by The Supreme Court on June 19, 2014 by unanimous decision

The issue – Is a computer-implemented, electronic escrow service for facilitating financial transactions simply an “abstract idea” ineligible for patent protection?

Established a two-part “Alice” test as to whether claims are eligible subject matter for patents

The Alice effect

USPTO is now rejecting claims having any manner of software

Courts have been invalidating existing patents at a four to one rate when any manner of software is involved

Likely to have crippling effect on economies reliant upon software innovation

Patent Bar pushing back and USPTO and Courts are running amok

Blurred Lines of Copyright Infringement

Marvin Gaye is famous

Robin Thicke/Pharrell Williams/T.I. are less famous but want to be more famous

When young less-than-famous artists want to become more famous, artist do well to emulate famous artists

E.g., who are your influences?

Historical Perspective of Copyright Infringement by Substantial Similarity Bright Tunes Music v. Harrisongs Music – aka George

Harrison and The Chiffons

The Chiffons recorded “He’s So fine” in 1962

George Harrison recorded “My Sweet Lord” in 1970

Case established the “substantial similarity” test

George Harrison ordered to surrender a majority of royalties for his song

The Chiffons later covered “My Sweet Lord”

George Harrison later purchased “He’s So Fine”

HORRIBLE JURY DECISION

Jury awarded 7.4 million dollars to the estate of Marvin Gaye on March 10, 2015

Jury based in decision on the sheet music – was barred from actually hearing Marvin Gaye’s recording of Got to Give it Up

Thicke et al. plan to appeal

Interesting Case:Garcia V. Google

Cindy Lee Garcia appeared for five seconds in the 12-minute You Tube video “The Innocence of Muslims”

Sued You Tube (Google) for copyright infringement claiming that she did not perform as a work for hire because she was tricked

Ninth Circuit agreed with Garcia and held that she has copyright in her performance

Now before the Ninth Circuit en banc (all the judges)

Copyright Office denied the registration and also stated “[her claim] runs contrary to basic tenets of copyright and First Amendment law”

Interesting Case:American Broadcasting v. Aereo Aereo is (was) a company that records broadcast

television and provides time-shifted viewings to paying customers or customers who are subject to advertisements (as directed by Aereo) while watching

Supreme Court held (6-3 decision) that the transmission of the recorded show is a public performance and is not licensed

Justices Scalia, Thomas and Alito dissented “The Court manages to [conclude public performance]only by disregarding widely accepted rules for service-provider liability and adopting in their place an improvised standard (“looks-like-cable-TV”) that will sow confusion for years to come.