SXWW 2017 - Blurred Lines Music Industry Damages Calculations … · 2019-02-12 · blurred lines |...

Blurred Lines | Music Industry Damage Calculations 1

BLURRED LINES MUSIC INDUSTRY DAMAGE CALCULATIONS

Prager Metis CPAs, LLC

BRUCE KOLBRENNER

Meloni & McCaffrey

Nevium Intellectual Property Solutions

DOUG BANIA

ROBERT S. MELONI

MARCH 15, 2017 @ 5PM


THE BASICSElements Needed to Prevail on Copyright Claim

Must prove ownership and copying

OWNERSHIP + COPYING

Either direct copying or access and

substantial similarity

COPYING

Only matters for statutory damages,

and whether infringer's

costs/expenses can be deducted from infringer’s profits in

determining profits to award

INNOCENT OR WILLFUL INFRINGEMENT

Can be copyright owner's actual

damages and/or Infringer’s profits

DAMAGES


DEFENSES

05INDEPENDENT CREATION

04DE MINIMIS

02FAIR USE

01SCÈNES À FAIRE

03STATUTE OF LIMITATIONS

3 YEARS LOOK BACK


HANDLING PRE-LITIGATION CLAIMS

COPYRIGHT OWNER ASSERTS CLAIMS; CEASE & DESIST LETTERS

HOW TO HANDLE RESPONSE TO CLAIM/C&D LETTERS

PRE-LITIGATION SETTLEMENTS DESIGNED TO AVOID LITIGATION: PROS AND CONS

CONTRACTUAL INDEMNITIES: ARTIST/LABEL, SONGWRITER/PUBLISHER & PRODUCER/ARTIST

TYPICAL PARAMETERS OF PRE-LITIGATION SETTLEMENTS

COMPARE RESULTS IN PRE-LITIGATION VS. LITIGATION


EXPERTS USED IN A COPYRIGHT CASE

Provide opinions as to damages (copyright owner’s lost profits,

infringer’s profits,

deductible expenses)

DAMAGES - ACCOUNTANTS & ECONOMISTS

Offer opinions solely to assist

the fact finder

STANDARD

Plaintiff’s musicologist underscores the similarities between the works, while the defendant’s musicologist

underscores the differences

MUSICOLOGISTS


HISTORY OF MUSIC COPYRIGHT INFRINGEMENT CASES

OUR HISTORY

LAST 50 YEARS

Growing number of music copyright infringement claims


2000 - 2016

BETWEEN 1950 - 2000

Courts issued over 50% of opinions published between 1950 and 2000

Courts issued more than 2X the number of opinions in this area than they did between 1900 and 1950


15

10

78

15

31

3534

1940-1949 1950-1959 1960-1969 1970-1979 1980-1989 1990-1999 2000--2009 2010-2013 8

MUSIC COPYRIGHT CASES FILED 1940 - 2013Source: Music Copyright Infringement Resource (USC Gould School of Law)


MUSIC COPYRIGHT DISPUTES ARE COMMON, BUT OFTEN DON’T GO TO TRIAL

Settlements – typically a “get lost” payment to the plaintiff – keeps disputes

off court dockets, but may promote attenuated claims by plaintiffs seeking similar

payoffs based on convenience and economic

expediency.

02SETTLEMENTS

Judicial opinions represent only a small portion of

music copyright infringement claims; most

are settled long before trial.*

01JUDICIAL OPINIONS

Predilection towards settlement, however, ultimately reflects its

wariness of unpredictable results of litigation

(particularly jury trials) and expense of litigation.

03PREDILECTION TOWARDS SETTLEMENT

Source | I Hear America Suing: Music Copyright Infringement in the Era of Electronic Sound, (USC Gould School of Law, Legal Studies Research Papers Series No. 14-6, March 2014)


O V E R 8 0 % O V E R W H E L M I N G

V E R Y F E W O N L Y 1 6 . 1 8 %of cases in which there was an explicit winning party, defendant won a little more than half THE TIME (54.10%) and the plaintiff a little less (45.90%)*

terminated by trial (2.87%) or by dispositive motion or other dismissal (16.98%)

majority of cases (85.41%) the case was dismissed with neither party winning an adversarial judgment over the other

of copyright infringement cases terminated voluntarily through settlement

WHO WON? WHO SETTLED?

Source | Copyright’s Topography: An Empirical Study of Copyright Litigation, Christopher A. Cotropia & James Gibson, Texas L. Rev. [Vol. 92:1981]

VOLUNTARY DISMISAL 34.46% 80.15%

SETTLEMENT 29.50%

AGREED JUDGMENT 16.19%

TRIAL 2.87%

DISPOSITIVE MOTION OR OTHER DISMISSAL

16.98%

80%


HANDLING PRE-LITIGATION CLAIMS

PLAINTIFF'S ACTUAL DAMAGES (E.G., LOST LICENSE REVENUES)

PLAINTIFF REQUIRED TO PRESENT PROOF ONLY OF THE INFRINGER’S GROSS REVENUE, AND DEFENDANT REQUIRED TO PROVE HIS OR HER DEDUCTIBLE EXPENSES AND THE ELEMENT OF PROFIT ATTRIBUTABLE TO FACTORS OTHER THAN THE COPYRIGHTED WORK

DEFENDANT’S PROFITS NOT ATTRIBUTABLE TO ACTUAL DAMAGES (E.G., REVENUES FROM SALE OF RECORDS, CONCERT AND MERCHANDISE PROFITS, TV OR MOVIE SYNCHRONIZATION FEES)


RHYTHMIC FEELComparison: Got To Give It Up vs. Blurred Lines


RHYTHMIC FEELCOMPARE: “Juggernaut” from The Wild Party vs. Action Bronson’s “Moonstruck”


Got To Give It UpWords and Music by Marvin Gaye






COMPETING DAMAGES THEORIES IN BLURRED LINES

Williams/Thicke responded that Blurred Lines was not nearly that profitable, arguing that the track's success wasn't due entirely to the music --noting that the racy video and social media promotions should also be considered.

WILLIAMS / THICKE

Both sides in Blurred Lines

case gave estimation

of potential damages.

BOTH SIDES

The Gaye family claimed Thick and Williams' profits from the

track totaled roughly $40 million and that according to general

practices for licensing, they are due about half of that.

THE GAYE FAMILY


Nancy Stern, testified that appropriate license for the portions of Got to Give It Up copied by Blurred Lines would have been 50% percent of publishing revenue if the license had been obtained before the release of Blurred Lines, and 75% to 100% percent if it were obtained afterwards.

GAYE'S DAMAGES EXPERT REASONABLE MARKET VALUE

a hypothetical license may be determined by reference to similar licenses that have been granted in the past or evidence of benchmark licenses in the industry approximating the hypothetical license

in question.

Gaye sought actual damages under a “hypothetical

license theory.”

GAYE

Based on a hypothetical-license theory - amount a willing buyer would have been reasonably required to pay a willing seller at the time of the infringement for the actual use made by the infringer of the plaintiff's work.

MARKET VALUE OF THE INJURY

ACTUAL DAMAGE THEORY ASSERTED IN BLURRED LINESHypothetical License Theory


DETERMINING FACTORS ATTRIBUTABLE TO SUCCESS OF BLURRED LINES (THE COMPOSITION)

Apportionment: The portion of product-level incrementalProfits due specifically to the contribution of an identifiedIP asset

As it relates to the Blurred Lines case: The portion of profitsdue specifically to use of the Got to Give it Up Composition Copyright


EVERY SONG HAS TWO COPYRIGHTS

Song(100%)

Sound Recording Copyright

(50%)

Lyrics(25%)

Other Elements

= = =

Composition Copyright

(50%)Music Elements

(25%)Claimed IP

• The Gaye family only had legal rights to a portion of the profit the composition copyright generated

• Based on typical industry custom and practice, Thicke/Williams argued the Gaye family is only entitled to 25% of profit generated if infringement is determined

• Based on the 25%, there are other factors that contributed to the success of Blurred Lines

• Difficulties when the infringing work inextricably intermingles non-infringing material with the plaintiff’s protectable material.


Factors Contributing to the Success of Blurred Lines1 The Musical Elements

2 Celebrity And Star Power

3 Awareness Related To The Videos

4 Marketing Activities Undertaken By UMG

5 Social Media Activities

A written composition sitting on your desk will not generate revenue on its own


THE SUCCESS OF BLURRED LINES WAS DEFINED BY THE SOUNDSCAN DATA

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000So

undS

can/

Wee

k

Single Blurred Lines Album


THE VOLUME OF MARKETING EVENTS AND SOUNDSCAN DATA

0

5

10

15

20

25

30

35

40

45

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Num

ber o

f Mar

ketin

g Ev

ents

Dur

ing

the

Wee

k

Soun

dSca

n/W

eek

SoundScan

Events


MARKETING EVENTS AND SOUNDSCAN DATASo

undS

can/

Wee

k


LIST OF MARKETING EVENTS

Event Description Date Event Description DateA VideoSneakPeak 3/19/2013 P BETAwardsPerformance 6/30/2013

B YoutubeUnratedVideoRelease 3/26/2014 Q InterviewswithVH1,FUSE&MusicChoice 7/18/2013

C UnratedVideopulledfromYouTube 3/29/2013 R TwitterChat,#ASKTHICKEDebacle 7/23/2013

D BeatsCommercialAired 4/28/2013 S InterviewswithRyanSecreast,VanityFair,HowardSternandSIRIUSbetween7/24/13and 7/29/2013

E VideoaddedtoFusePop&VHI 4/29/2013 T AlbumReleasedinUS 7/30/2013

F NYCPromo:Power105,GQ,VH1,HOT97 5/1/2013 U TheTodayShow ,BETY106,PARK,America'sGotTalent Performances 7/30/2013

G TheVoice PerformancewithThicks,PharrellandT.I. 5/14/2013 V TheView andJimmyFallon Performances 8/2/2013

H InterviewswithKissFM&Power106 5/15/2013 W ThickeAppearsonTheColbertShow 8/6/2013

I EllenPerformance 5/16/2013 X TheMTVVideoMusicAwardsPerformancewithMileyCyrus 8/25/2013

J LeGrandPerformance&InterviewswithMadmoizelleandPauletteMag 5/18/2013 Y OprahShow Appearance 10/14/2013

K InterviewswithMetro,Booska,PurechartsandSkyrock 5/20/2013 Z 12LiveShowsinMajorMarketsbetween12/2/2013and 12/29/2013

L GrahamNorton Performance 6/6/2013 AA RyanSecreastRockin' Airs 12/31/2013

M NYCPromo:Z100,WTKU,Hot97,CBSOnline,WNOWandWBLS 6/10/2013 AB PerformanceattheGrammy's 1/26/2014

N JimmyKimmelPerformance 6/13/2013 AC ESPNSuperbowlPartyPerformance 1/31/2014

O InterviewwithCentric 6/27/2013


GROSS MARKETING EVENTS AND SOUNDSCAN DATA

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

Mar

ketin

g Sp

end

Soun

dSca

n/M

onth

MARKETING EXPENSE

SOUNDSCAN


FIRST RADIO SPIN HISTORY AND SOUNDSCAN DATA

0

10

20

30

40

50

60

70

80

90

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

RAD

IO S

TATI

ON

S

SOU

ND

SCA

N/W

EEK

SOUNDSCAN

RADIO STATIONS

Number of radio stations in which “Blurred Lines” was first played.

0

100

200

300

400

500

600

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

MA

RKET

SIZ

E IN

MIL

LIO

NS

SOU

ND

SCA

N/W

EEK

SOUNDSCAN

MARKET SIZE

Combined size of audience in which “Blurred Lines” was first played on the radio.


ROBIN THICKE’S YOUTUBE CHANNEL DATA

86%

14%

MARCH 2013

MaleFemale

88%

12%

“BLURRED LINES” VIDEO

MaleFemale

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

VIEWS

54%

46%

ALL OTHER MONTHS

MaleFemale


NUMBER OF ITUNES VIDEO REVIEWS AND SOUNDSCAN DATA

0

10

20

30

40

50

60

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

ITU

NES

VID

EO R

EVIE

WS

SOU

ND

SCA

N/W

EEK SOUNDSCAN

REVIEWS


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

RETW

EETS

SOU

ND

SCA

N/M

ON

TH

T.I.PHARRELLTHICKESOUNDSCAN

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

FAV

ORI

TES

SOU

ND

SCA

N/M

ON

TH

T.I.PHARRELLTHICKESOUNDSCAN

TWITTER ACTIVITY AND SOUNDSCAN DATA


10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

LIKE

S O

N P

OST

S M

ENTI

ON

ING

BLU

RRED

LIN

ES

SOU

ND

SCA

N/M

ON

TH

LIKES

SOUNDSCAN

Posts mentioning “Blurred Lines”

NUMBER OF LIKES ON ROBIN THICKE’S FACEBOOK POST AND SOUNDSCAN DATA


0

20

40

60

80

100

120

140

160

180

200

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

MED

IA M

ENTI

ON

S

SOU

ND

SCA

N/M

ON

TH

MEDIA MENTIONS

SOUNDSCAN

The Voice Performance

NUMBER OF MEDIA MENTIONS AND SOUNDSCAN DATA


0

50,000

100,000

150,000

200,000

250,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

SMA

RTU

RL C

LICK

S

SOU

ND

SCA

N/M

ON

TH

SMARTURL TOTAL CLICKS

SOUNDSCAN

SMARTURL CLICKS AND SOUNDSCAN DATA


APPORTIONMENT

Song(100%)

Sound Recording Copyright

(50%)

Lyrics(25%)

Other Elements

= = =

Composition Copyright

(50%)Music Elements

(25%)Claimed IP

• Damages will always be a decision for judge and jury

• The Apportionment Expert serves to educate and teach how IP contributes to financial performance

• Apportionment is the process of identifying the portion of product level incremental profits due specifically to use of an IP asset






STIPULATED FACTS (PROFITS) IN BLURRED LINES CASE TOTAL PROFITS – ARTIST, PRODUCER, LABEL

COMBINED FOUND LIABLE PUBLISHING NET (WRITER SPLITS) ARTIST PRODUCER

Thicke 5,658,214 YES 1,404,569 (23%) 4,253,645

Williams 5,153,457 YES 4,293,124 (64%) 860,333

Harris (TI) 704,774 NO 679,362 (13%) 25,412

TOTAL $11,516,445 $6,377,055 (100%) $4,279,057 $860,333

Interscope 1,343,674 NO

UMGD 217,150 NO

Star Trak 3,598,412 NO

TOTAL $16,675,681

TOTAL PROFITS - PUBLISHING

Thicke 1,404,569

Williams 4,293,124

Harris (TI) 679,362

TOTAL $6,377,055


During deliberations, the jury posed a Written question to the Court that read -“Juror Question: Can you clarify or explain the intentions of what this sentence means? ‘You may not include in an award of profits any amount that you took into account in determining actual damages.’”

Counsel agreed to the following written response to be presented by the Court -“The parties agreed that approximately $8 million was received by the writers of Blurred Lines in publishing revenue. In calculating actual damages, it is the $8 million you should take into consideration. If you decide to consider awarding profits, you should not take into consideration the same $8 million.”


POST-TRIAL MOTION

Counsel for Thicke Parties argued this instruction was a “mistake,” and that “[t]he Court’s reference to “approximately $8 million” was “grossly inaccurate,” because “the stipulated amount of publishing revenue was $6,377,055 for all three writers.


DISPUTED FACTS IN BLURRED LINES CASE

Gaye parties maintained

should be included

THICKE TOUR INCOME (BLURRED LINES)

Gaye parties maintained

should not be deducted

OVERHEAD (BLURRED LINES)


VERDICT


VERDICT


VERDICT


VERDICT


DAMAGES AWARDED IN BLURRED LINES CASE: ACTUAL DAMAGES

PARTIES HAD STIPULATED GROSS PUBLISHING REVENUES FOR BLURRED LINES TOTALED $6,377,055 (DID NOT INCLUDE COMMISSIONS TO MANAGERS/ACCOUNTANTS/LAWYERS).

THICKE/WILLIAMS ARGUED THAT THE AWARDOF PROFITS AS TO BOTH THICKE AND WILLIAMS SHOULD BE REMITTED TO “NO MORE THAN 5% OF THE ACTUAL NON-PUBLISHING PROFITS” OF THICKE AND WILLIAMS STIPULATED TO AT TRIAL. THIS POSITION PREMISED ON TESTIMONY OF SANDY WILBUR THAT “THE HANDFUL OF ELEMENTS IN GOT TO GIVE IT UP CLAIMED TO BE COPIED IN BLURRED, EVEN IF CREDITED, AMOUNT TO NO MORE THAN 5% OF BLURRED.”

JURY AWARD OF $4 MILLION CONSISTENTWITH THEORY JURY APPLIED 50% LICENSING FEE ABOUT WHICH STERN TESTIFIED.

ACTUAL DAMAGES (LOST LICENSING INCOME - PUBLISHING): JURY AWARDED: $4,000,000 AS AGAINST THICKE/WILLIAMS ONLY


REMITTER (ACTUAL DAMAGES)

“REMITTER”: A REMEDY DESIGNED TO CURE AN AWARD OF DAMAGES THAT IS GROSSLY EXCESSIVE, OR COMPLETELY OUT OF LINE WITH THE DAMAGES PROVENIN THE CASE, WITHOUT THE NECESSITY OF A NEW TRIAL OR AN APPEAL.

REMITTED AMOUNT OF $3,188,527 = 50% OF $6,377,055 (TOTAL PUBLISHING PROFITS FOR THICKE & WILLIAMS NET OF COMMISSIONS TO LAWYERS/ACCOUNTANTS/MANAGERS).

COURT DETERMINED THAT $4 MILLION AWARD “NOT REASONABLY SUPPORTED BY THE EVIDENCE.”

HOWEVER, JURY AWARD FOR ACTUAL DAMAGES (PUBLISHING) WAS LATER REMITTED (LOWERED) BY COURT TO $3,188,527


PUBLISHING DAMAGESJURY VERDICT v. REMITTER

JURY AWARD REMITTTER INCREASE (DECREASE) DAMAGES

Robin Thicke 2,000,000 702, 284 (1,298,716)

Pharell Williams 2,000,000 2,146,562 146,562

Cliff Harris (TI) - 339,681 339,681

3,188,527

NET PUBLISHING AS PER STIPULATION

PERCENT APPLIED REMITTER AMOUNT

Robin Thicke 1,404,569 50% 702,284

Pharell Williams 4,293,124 50% 2,146,562

Cliff Harris (TI) 679,362 50% 339,681

TOTAL STIPULATED 6,377,055 3,188,527


DAMAGES AWARDED IN BLURRED LINES CASE: LOST PROFITS

Jury found that Williams received profits of $1,610,455.31, and that Thicke had received profits of $1,768,191.88, which were not taken into account in calculating actual damages. HOW?

HOW JUDGE DETERMINED REMITTER AMOUNTS:Award against Thicke: $1,768,191 = 41.5689% of $4,253,645 Thicke artist royalties.(stipulated)Award against Williams: $1,610,455 = 187% of $860,333 Williams’ producer royalties.(stipulated)$1,768,191.88 ÷ 4,253,645 = 41.5689%

CALCULATIONS OF PROFIT DAMAGES

Williams’ profits-to-damages ratio of 187% was 4.7 times GREATER than the 41.5689% ratio used to calculate damages re Thicke profits.


REMITTER (WILLIAMS’ PROFITS)

Court applied 41.5689%: what jury applied to

award of Thicke profits - to the

$860,333 in producer royalties paid to Williams

41.5689% of $860,333 = $357,630.96

Award of Pharrell Williams’ profits remitted from $1,610,455.31 to $357,630.96

Total reduction: $1,252,824.44

040201 03


REMITTER (THICKE’S PROFITS)

No change to Damage Profits for Thicke.


REMITTER (HARRIS’ PROFITS)

No change to Damage Profits for Harris.


ATTORNEYS FEES & EXPERTS (GAYE ONLY)


FINAL APPORTIONMENT CONCLUSIONS

Did the claimed Got to Give it Up musical elements have a minimal contribution to the success of the Blurred Lines?

Did the videos, marketing and social media related to Blurred Lines each make substantial contributions to the success of Blurred Lines, as measured using data from SoundScan?

If the Defendants establish liability, would the Defendants only be entitled to a fraction of any economic benefits derived from the success of Blurred Lines?


Will definition of music copyright infringement in the US need to be revisited?

The “similarity” between the two songs came from the “rhythmic feel” rather than the lyrics, melody or chord progressions, an issue which also caused evidentiary problems in the trial.

If the Defendants establish liability, would the Defendants only be entitled to a fraction of any economic benefits derived from the success of Blurred Lines?

Many of those in the music industry concerned that this verdict, if upheld on appeal, will prevent artists from creating any music which may evoke past genres.

Jury verdict has no precedential value.

OTHER RAMIFICATIONS OF BLURRED LINES VERDICT


CONTACT US

BRUCE KOLBRENNER DOUG BANIAROBERT S. MELONI

Prager Metis CPAs, LLC

pragermetis.com

310 820 1201

Nevium Intellectual Property Solutions

nevium.com

858 255 4361

Meloni & McCaffrey

robertmeloni.com

212 520 6090

Date post:	15-Mar-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

SXWW 2017 - Blurred Lines Music Industry Damages Calculations … · 2019-02-12 · blurred lines |...

Documents