Second time not the charm for Jammie Thomas, nor the RIAA

“Illegal, but common” were the words in the judge’s decision to grant a new trial in Capitol Records v. Thomas that made me end my run as a blogger.   As a copyright attorney who works with a range of clients to protect their assets, reading a federal judge’s opinion that downloading music might be illegal but so common that damages the jury set were unreasonable.  The amount the jury had awarded was $220,000.

After a four day trial that drew lawyers and journalists from around the country, the jury returned a verdict that apparently surprised everyone in the courtroom.  Jammie Thomas, the jury found, had willfully violated the copyright in 24 songs by uploading them onto Kazaa, a p2p file sharing network.  That the jury found her guilty of willful infringement may not have been that surprisng, no the greatest surprise was the amount of damages the jury awarded:  $ 1.92 million.

$1.92 million dollars?  That is a lot of smackeroos.  Considering the outrage expressed over the initial amount, there is no surprise that the interwebs are going crazy over the verdict.

Of course this is not a win for the RIAA.  Just as I wrote for news.com in 2007, wins do not help the RIAA.  People like to paint the organization and its members as greedy, horrible corporate monsters.

But the RIAA did not set the damages.  12 jurors, including 2 college students, considered the evidence and found Thomas guilty.  Based on the statutory damages for willful infringement, the jury set damages at $80,000 per song.  The range from which they could choose was $750 to $150,000.  Personally, I think it is telling that this jury set the amount at just over 50% of the rate.

Why?  Because evidence suggests that Ms. Thomas may not have been 100% truthful during the trial.  Again she had an excuse as to how the music from her computer ended up on Kazaa, this time it was her kids!

While the damages are shockingly high, the jury set them based on the law presented to them.  The RIAA had nothing to do with it, other than for suing the defendant to enforce their members’ rights.    But that will not matter on the interwebs…

Conjuring a Ghost: Copyright and Rowling prevail in the Harry Potter Encyclopedia Case

Fair use, like obscenity, is something that judges in America seem to know when they see it.  With the rise of the Internet, fair use seems to be becoming a more popular defense, and even an offense, in copyright infringement cases.   What qualifies for fair use in one case, may likely not qualify in another for a variety of reasons.  As Professor Paul Goldstein has pointed out in his treatise on copyright “[a] use that is fair one day may be unfair the next.”

That there is no easily identifiable standard of fair use has caused a great deal of conflict between the creators of content and those who use and/or repurpose it.   Using law schools as their pulpits, professors have promulgated proposed solutions and standards for the fair use debate.  For example, Stanford’s Center for Internet and Society hosts the Fair Use Project which provides pro bono legal defense to those accused of copyright infringement.  Other schools have joined Stanford in the fight to define fair use as it seems the cool thing to do. Fairly recently, under the auspices of the American University Center for Social Media, a group of law professors created the Code of Best Practices in Fair Use for Online Video.

As most of the solutions law school professors advocate wrest control of copyright protected works away from the creator and/or owner, copyright owners and creators have not jumped on their bandwagon.  Nor are they lining up to support organizations, like EFF and Public Knowledge, that similarly advocate decreased control over how copyright protected works can be used without permission from, or compensation to, the owners of the copyright.

America is unique among other countries in that those accused of copyright infringement have a viable defense that they have made a “fair use” of the work, and are not liable for infringement.   The doctrine of fair use dates back to 1841, when a publisher sued the publisher of the “Life of Washington” in Folsom v. Marsh for copyright infringement over the inclusion of 353 pages of materials lifted directly from its “Writings of President Washington.”

Justice Joseph Story heard Folsom v. Marsh, and recognized immediately that the task before him was not an easy one:

This is one of those intricate and embarrassing questions, arising in the administration of civil justice, in which it is not, from the peculiar nature and character of the controversy, easy to arrive at any satisfactory conclusion, or to lay down any general principles applicable to all cases.

Significantly, the defendant in Folsom v. Marsh argued that there could be no copyright infringement because the works in the “Writings of President Washington” were factual in nature and not protected by copyright.  Justice Story found that copyright did extend to the materials for a number of reasons, including that their  creator, President Washington, had treated them as private property.

The issue as to whether or not the author of another work without permission from the copyright owner had the right to use the protected works was novel in the United States.  Therefore, Justice Story looked to England for guidance.  Significantly, the courts in England had recognized that third parties had the right to abridge protected works for use in newspapers and other similar materials.

However, in Lewis v. Fullarton, the defendant in a piracy action claimed that he had made “fair use” of materials from the plaintiff’s “A Topographical Dictionary of England” in his competitive dictionary.

Similar to the argument set forth in Folsom v. Marsh, the defendant’s claim was that the materials were not subject to copyright protection as they were factual in nature.  While Lord Langdale acknowledged that the defendant may have believed no copyright attached, he stated that “whilst all are entitled to resort to common sources of information, none are entitled to save themselves trouble and expense by availing themselves, for their own profit, or other men’s works still subject to copyright and entitled to protection.”

If no copyright protection extended to compilations of factual based works, Lord Langdale noted:

it is plain no protection whatever could be given to any work in the nature of a gazetteer, dictionary, road book, calendar, map or any other work in the subject-matter of which is open to common observation and enquiry; and that every man who had bestowed any amount of labour or expense in collecting and arranging the information requisite for the production of such work, might immediately on its publication, be deprived of the fruit of his industry and ability.

Affirming the copyright in the “Topographical Dictionary of England,” Lord Langdale issued an injunction against the defendant’s continued publication of its dictionary because the amount and nature of the use of the infringing materials was the fundamental base of the competitor’s work.

In Folsom v. Marsh, Justice Story considered whether or not the defendant

had a right to abridge and select, and use the materials which they have taken for their work, which though it embraces the number of letters above stated, is an original and new work, and that it constitutes, in no just sense, a piracy of the work of the plaintiffs.

Relying greatly on Lord Langdale’s analysis in Lewis v. Fullarton, Justice Story held that the use of the materials from the “Writings of President Washington” constituted copyright infringement. Based on the number of letters, and the percentage of the final work that the letters comprised, Justice Story held that the use of the letters from “Writings of President Washington” was not justified. According to Justice Story “every one must see, that the work of the defendants is mainly founded upon these letters, constituting more than one third of their work, and imparting to its greatest, nay, its essential value.“

In Folsom v. Marsh, Justice Story set forth the factors that have served as the foundation of the Fair Use doctrine, and have been incorporated into the Copyright Act:

In short, we must often, in deciding questions of this sort, look to the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supersede the objects, of the original work.

Recently, the ghosts of Justice Story and Lord Langdale appear to have paid a visit to Judge Robert Patterson as he considered the facts in Warner Bros. Ent. v. RDR Books, commonly referred to as the Harry Potter Encyclopedia case.    A major fan of the Harry Potter series, Steven Vander Ark, compiled materials from the Harry Potter books and ancillary materials to create the Harry Potter Lexicon.  His publisher, RDR Books, marketed the book as the “definitive” Harry Potter encyclopedia.

The Lexicon purported to be an “A-to-Z guide to the creatures, characters, objects, events and places that exist in the world of Harry Potter.”  The manuscript, according the decision, was more than 400 pages long, with close to 2,500 entries.   The entries culled information from the entire series, and ancillary works, to create the encyclopedic feel to the book.

However, according to the evidence and testimony presented during the trial, the judge found it “difficult to quantify how much of the language in the Lexicon is directly lifted from the Harry Potter novels and companion books.”  In fact, Ms. Rowling testified that “if Mr. Vander Ark had put quotation marks around everything he has lifted, most of the Lexicon would be in quotation marks.”   Judge Patterson provides a number of examples where Vander Ark lifted a definition directly from one of Rowling’s works.

The defendants claimed that they were not liable for the use of the Harry Potter materials because they had made a fair use of the works.  Applying the fair use factors codified in the Copyright Act, Judge Patterson considered whether the use qualified as fair.

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and(4) the effect of the use upon the potential market for or value of the copyrighted work.

Here, the judge paid particular attention to the transformative nature of the use of the Harry Potter materials. He found that the primary purpose of the use of the works was not to “add some new insight, of whatever value,” to Harry Potter. Additionally, the use was not consistently transformative as Vander Ark “often lack[ed] restraint in using Rowling’s original expression for its inherent entertainment and aesthetic values.”

Similarly, the amount and substantiality of the works used was a concern to the judge. He found that the “verbatim copying and close paraphrasing of language from the Harry Potter works” was beyond an amount reasonably necessary.  The defendant would “retell parts of the storyline rather than report fictional facts and where to find them.”   Judge Patterson provided:

While it is difficult to draw the line at each entry that takes more than is reasonably necessary from the Harry Potter series to serve its purposes, there are number of places where the Lexicon engages in the same sort of extensive borrowing that might be expected of a copyright owner, not a third party author.

Judge Patterson rejected the defendants’ fair use claim, finding that their use of Rowling’s works was not transformative and used an unreasonable amount of the original materials.  He held that:

In striking the balance between the property rights of original authors and the freedom of expression of secondary authors, reference guides of works of literature should generally be encouraged by copyright law as they provide a benefit [to] readers and students; but to borrow from Rowling’s overstated views, they should not be permitted to ‘plunder’ the works of original authors ‘without paying the customary price’ lest original authors lose incentive to create new works that will benefit the public interest.

Or, as Lord Langdale provided way back in 1839:

it appearing to me, under these circumstances, that if the parts affected with the character of piracy were taken away, there would be left, I cannot say nothing but a few broken sentences, but there would be left an imperfect work, which could not, to any useful extent, serve the purposes of a gazetter…

YouTube– Revenue for whom???

Chad Hurley, co-founder of YouTube, announced that the company would share revenue with users who upload content at the World Economic Forum in Davos earlier this year. According to an article on Variety.com posted yesterday afternoon, YouTube the launch is imminent.YouTube will allegedly share revenue on a 50-50 basis with users who opt to have advertising coordinate with their videos.

Of course, according to the Variety report, users who choose to participate in the revenue sharing program will have to own all the rights to the works incorporated in the video.

Since its launch, YouTube has relied on content that users upload to attract users to its site. It has exhibited no concern about who owns the rights to the underlying copyrights for the past two years.

Good Poets Borrow, Great Poets Steal…

A reporter for NPR’s Morning Edition used my favorite misquote in her “Stanford Center Advocates for Fair Use on the Web” piece that aired on May 7, 2007. Though the quote is usually attributed to T.S. Eliot, the reporter attributed a slightly altered version of “Good poets borrow, great poets steal” to Picasso, this time it was “good artists copy, great artists steal.”

I heard the quote “good poets borrow, great poets steal” for the first time on December 16, 2006, in a commentary about fair use and copyright Bill Hammack, a chemical engineering professor, made on MarketPlace.

My mind was blown. In my earlier, more literate, youth, poetry and poets occupied a great deal of my time. I could not imagine T.S. Eliot would have said such a thing.

I had my aunt consult Bartlett’s Familiar Quotations and other sources in her library, and she did not find anything. I searched the Internet and found that the quote mostly appeared only where Bill Hammack was quoted or in articles he had written. He always attributed it to T.S. Eliot.

When I failed to find any reliable reference to the quote, I decided to go to the source; or, to a source that would lead me in the right direction. I knew there had to be a scholarly society dedicated to T.S. Eliot.

Lo and behold, I found the T.S. Eliot Society. Even better I discovered that one of the officers was a professor of English at my undergraduate alma mater, University of Wisconsin, Madison. I had to know if T.S. Eliot really said “good poets borrow, great poets steal” so I reached out to Professor Cyrena Pondrom.

I honestly did not expect to hear back from Professor Pondrom for two reasons: (1) would you respond to some random girl asking a random question and (2) it was December 16!

While sitting in the movie theater watching Casino Royale, my BlackBerry alerted me that I had received a message. To my amazement, Professor Pondrum responded with the actual quote as it appeared in T.S. Eliot’s critical essay on the playwright Philip Massinger, and his works. Apparently, the playwright Massinger may have relied a bit too heavily from time to time on William Shakespeare, with whom he overlapped in time.

So, here is the paragraph from the essay which contains the language which Bill Hammick has bastardized to make a statement that neither T.S. Eliot nor Picasso ever made:

One of the surest tests [of the superiority or inferiority of a poet] is the way in which a poet borrows. Immature poets imitate; mature poets steal; bad poets deface what they take, and good poets make it into something better, or at least something different. The good poet welds his theft into a whole of feeling which is unique, utterly different than that from which it is torn; the bad poet throws it into something which has no cohesion. A good poet will usually borrow from authors remote in time, or alien in language, or diverse in interest.

Eliot, T.S., “Philip Massinger,” The Sacred Wood, New York: Bartleby.com, 2000.

In his essay on Philip Massinger, T.S. Eliot makes an argument that mature, strong poets use other people’s works in a transformative manner that contributes something new to society and culture. He does not argue that “stealing” someone elses works is appropriate or justified as a means to the end. He seems to argue that poets and authors can use other people’s writings as a base for their works as long as the reuse takes the work to a new place, and introduces it to a new audience.

On Monday, Ms. Sydell used a version of the “good poets borrow, great poets steal” quote that has been attributed to Picasso. I have not gone to the lengths I went to debunk the T.S. Eliot version but my research thus far does not support that Picasso ever uttered the phrase “good artists copy, great artists steal.”

In fact, the publisher of a range of resources for quotations has made all of the books, including Bartletts and Columbia, available online. Only two quotes using the word copy are attributed to Picasso, none with steal or borrow.

Paraphrasing is fine, but attributing a paraphrase as a quote is intellectually and academically dishonest. Both versions of the quote have been adopted and implemented into culture by people justifying broad fair use arguments or their own habits. Significantly, it is unfair that either of the great artists have been affiliated with a quote that does not reflect them, or their work.

This post receives a great deal of traffic from search engines.  I would greatly appreciate hearing feedback from you.  For example, did the information in the post change the way you used the quote?   A comment would be great, or you can email me at nancyprager at yahoo dot com.  Thanks!

Creative Commons, contracts and copyright…

How many of you use a Creative Commons branded document to license your songs, text, art or photograph?

<Nancy scans the crowd, sees many hands go up.>

How many of you read anything other than this handy pictograph chart Creative Commons provides?

<Scanning the crowd, only a few hands remain in the air.>

So, how long are you licensing your works for under the very popular Creative Commons’ Attribution NonCommercial Sharealike 3.0 Unported license, as well as in most of the other CC 3.0 licenses?

<silence from the crowd>

Nobody?  Well, would it surprise you to learn that once you license a work through the CC 3.0 license you have given someone the right to use the work perpetually (i.e. forever).

<crickets>

Or how about that you give someone the right to adapt (i.e. make a derivative work) your work forever.

<still nothing>

Sure, the license is technically for non-commercial purposes, but really that is a technicality.  The contract provides that a licensee may not use the works “in any manner that is primarily intended for or directed toward commercial advantage or private monetary compensation.”  Who sets out to make a documentary for commercial advantage or private monetary compensation?  Or choreographs a ballet for the money?  Writes poetry?  Maintains a blog?

In all seriousness, those who use Creative Commons branded licenses should take great care to really understand the impact, both short term and long term, that using the license might have on their career or their works.  More importantly, even though Creative Commons refers to the full document as “Lawyer Readable Legal Code,” like any other contract you should read and understand it before signing it.

Especially since like most contracts, there is a strong likelihood that if you end up litigating a Creative Commons brand license in the United States it will be enforced.   Recently, a federal court of appeals upheld the “Artistic License,” a form of open source license, that the developer of a software for model trains had used to distribute the program.  (Jacobsen v. Katzer)

In Jacobsen v. Katzer, a collective of computer programers who happen to be model train enthusiasts had created an application that they licensed through the Java Model Railroad Interface (“JMRI”) under the Artistic License.  Katzer allegedly incorporated elements of the JMRI program into its competing software application without complying with the terms of the Artistic License.  In addition to claiming copyright infringement due to the breach of the license, Jacobsen and JMRI sought to invalidate a patent Katzer had obtained on elements of the underlying software.  Initially the lower court held that the issue in Jacobsen v. Katzer was one of breach of contract, not infringement of copyright.

However, on appeal the court held that where the use of a copyright protected work falls outside the terms of a license infringement has occurred.  Applying standard contract theory, the Judge held that the license grant in the Artistic License was limited in scope, that the terms of the license served as conditions to the grant and that those conditions are “vital to enable the copyright holder to retain the ability to benefit from the work of downstream users.”

Significantly, however, is that Jacobsen v. Kertzer joins a long line of cases where courts enforce contracts.  Technically the court has declared that the Artistic License is an enforceable agreement.  Breaching it as it relates to the underlying copyright results in copyright infringement because the use is outside of the grant of the license.

But if the license grant is as broad as those included in many of the Creative Commons branded agreements, it might be hard to find a use that falls outside the grant to support a copyright infringement claim.   So when you opt for the convenience of a Creative Commons branded license agreement it is important to take the time to read and comprehend what the contract really means, both for the present and the future.

A supplement to the New York Times article on YouTube and its VideoID initiative

In “Some Media Companies Choose to Profit from Pirated YouTube Clips” the New York Times reports that content companies from Universal Music to Lionsgate Film have opted to participate in a program that allows user uploaded content to remain on YouTube with advertising revenue diverted to the owners of the content.

As you may recall, a few weeks ago I reported that I had been watching an Unnamed Premium Cable Show on YouTube. It was wonderful keeping up with the show even though I did not subscribe to the Premium Cable Channel on which it appeared.

When YouTube/Google finally released its long promised application to identify copyright protected works, it was not merely implemented. No, Google offered the YouTube Video Identification application with choices for copyright owners. They may (a) remove the content; (b) leave the content as is or (c) “if a copyright holder chooses to partner with us—create revenue from them.”

According to the article, Eric Schmidt, the CEO of Google, announced during the call that Lionsgate had had the “good judgment” to participate in the revenue sharing, leaving their content on the site through the Video ID program.

Hmmm… Curious… hmmm…

Last week, lo and behold, all of the content related to the Unnamed Premium Cable Show was gone from YouTube, from micro-clips to the longer segments. When I first noticed the clips had disappeared, the traditional notice from YouTube alerting users that the clip had been removed because of a copyright claim … from Lionsgate as the producer of the show, Weeds!

According to the article, Lionsgate had recognized the marketing value of having clips on YouTube, no matter who uploaded them. While I understand, and applaud, Lionsgate’s removal of the Weeds content, I think the article misrepresents the purpose and value of the VideoID advertising partnership program. Companies like Lionsgate are able to choose which content they want to leave on YouTube, and YouTube has provided a revenue sharing mechanism to encourage companies to leave content on its site. All, fine and good.

But the article makes it seem like content companies are falling all over themselves to participate in the advertising sharing program. Google claims that users of the VideoID program have chosen to leave 90% of the copyright infringing content on the site seems incredulous. Not only has all the content from Weeds been removed, I have been hard pressed to find much content from major films and television programs.

The exceptions where “name brand” entertainment remains on YouTube seem to be well conceived marketing and promotion plans for movies, artists and television shows, or uses that do not cannibalize the market for the underlying content. With services like Hulu.com for streaming and ITunes for sales available to content owners, YouTube has emerged as a marketing resource rather than a broadcast replacement.

Nearly a year into the launch of the Video ID program it is still in Beta. The application to participate asks for a variety of information, including how many videos the applicant creates specifically for the web a week. It seems to be aimed at copyright owners primarily interested in marketing, rather than protecting their content from infringement.

Of course, I suspect the major content companies, like those highlighted in the New York Times article, do not use the online form to join programs YouTube offers like Video ID. No, YouTube has a business development team that fosters relationships directly with the major content companies. Considering the major labels, studios and broadcasters are still responsible for the majority of popular content it makes sense that resources are dedicated to developing those relationships.

Yet, the market for independent professional content is nearly as great in some segments. Has YouTube negotiated rates with Merlin for music or the Independent Film and Television Alliance (yes, Lionsgate is a member but their membership includes itty bitty producers as well) for television and film?

Fundamentally, however, my concern with YouTube’s efforts like Video ID and its other business development activities is that content companies and other copyright owners should not release YouTube/Google from liability for copyright infringement in order to participate in the program. That Billion Dollar valuation was not the result of homemade videos of babies and cats, it was the result of concert footage, movie clips and television shows. The creators and rightsholders deserve to participate in the payout from Google as much as any investor in YouTube.

Oh, Mamma Mia, Sex and the City: a little bit about derivative works

The right to make a derivative work is one of the most valuable of the exclusive rights granted to the owner of a copyright. In the United States, reformulating preexisting copyright protected works for a new purpose, like a movie version of a book, creates a derivative work of the original work.

The Swedish pop band ABBA may have hung up their dancing shoes in 1982, but their music has enjoyed many twirls around the dance floor in the following years. Most significantly, their songs are the basis for the inaugural “jukebox” musical Mamma Mia. Not only are their songs the soundtrack, two of the members of the band transformed the songs to serve as both the score and as the plot device. The musical has introduced ABBA to countless new fans who span generations.

Derivative works come in all shapes and sizes, and can be many degrees removed from an original work. The television show Sex and the City is a derivative work of authorCandac e Bushnell’s columns published under the same name in a New York newspaper. Ms. Bushnell assigned Darren Star all of her rights to the stories she wrote, including the right to make derivative works. The most recent derivative work from the original stories is the blockbuster movie based on the television show, which was based on the columns. So the movie is a derivative work of a television show which is a derivative work of a collection of columns.

Similarly many of the great summer blockbusters are derivative works of comic books. The Incredible Hulk is doing incredible business at the box office this summer. Bruce Banner and his alter ego the Hulk have had many lives, starting out as a two-dimensional character in Marvel comic books in the early 1960’s, landing on television as both an animated and live action series, and two feature films. Marvel Comics has shepherded the character through each version contributing new stories to our popular culture along the way.

Yet, many people, including Larry Lessig, point to the ease in which individuals can reformulate content in the Digital Age as a justification for diminishing the extent of the exclusive rights of copyright, including the derivative right. In the documentary Good Copy, Bad Copy, Lessig claims that as an author he knows what it is like to have creative works reformulated because students do all kinds of crazy things with books in class. Students writing, or interpreting a book, is significantly different than Girl Talk or Danger Mouse significantly sampling and reworking an underlying protected work.

Way back in 2004, the deejay Danger Mouse combined the Beatle’s White album with Jay Z’ Black album to create the Grey album. As a reformulation of the underlying copyrights the Grey album was a derivative work of the other album. Danger Mouse should have obtained permission from the rights holders of the two underlying records. However, he did not.

Danger Mouse pressed at least 1,000 copies of the album with the intent of making money to, at the least, recoup his expenses.   The album leaked onto the Internet and became a hit, some people liked it while others were just curious. The rightsholders to the underlying works were not amused and there was some legal action. In keeping with the anarchist nature of the Internet, netizens made the album available on their websites for free. In the end, neither Jay Z nor the Beatles were compensated for the use of the music which propelled Danger Mouse to fame.

Of course, Siva Vaidhyanathan argues that the Danger Mouse Grey album episode is a great example of how restrictive copyright law can be. In Good Copy, Bad Copy, he argues that Danger Mouse was within his rights to create the album which he only distributed to friends and for which no money had been made. However, Danger Mouse has acknowledged that his use of the Beatles and Jay-Z materials might not have been legal.

As the Internet challenges the foundation of copyright, preserving the exclusive right to make a derivative work is essential for creators, heirs and other rightsholders. Mamma Mia is a great example of the power of the derivative right, ABBA could not have imagined their songs would become the basis for a hit musical well after the band had hung up their dancing shoes.

Some practical advice for rock stars in the Digital Age

Last week I co-sponsored the “Distributing and Marketing your Music on the Internet” panel at Artomatic with the Future of Music Coalition and the Washington Area Lawyers for the Arts. In lieu of a policy or legal discussion, the panelists offered practical advice to musicians and others interested in marketing and distributing music online.

Eric Gordon, a noted DJ in the real and virtual world, led Erik Gilbert, Vice President of Content for IODA, Amy Schrieffer, product manager of music for NPR, Kristin Thomson, Education Director for the Future of Music Coalition, Greg Beshers, musician, and Chris MacDonald, founder indiefeed.com, through the steps artists should take to not just get their music online but to also get consumers to hear, and buy, it.

The panelists discussed the opportunities available to individual musicians, as well as labels, for digital distribution. For example, services like TuneCore and CD Baby allow artists to make their music available on digital retailers in the same manner that labels have access through services including IODA.

Though the panelists discussed the value of sites like MySpace and YouTube, they all agreed that it is important for active bands to have an official website. Among other reasons, it looks more professional for you to be able to refer someone to www.bandsname.com instead of www.myspace.com/bandsname. Furthermore, the band’s own website can serve as a centralized location for all of its online presences.

But just getting your music on digital retail websites and having a digital presence is not enough according to the panel. The beauty of the Internet is that musicians can interact directly with fans. However, fans have to be able to find you.

Therefore, it is important, according to the panelists, for musicians to stay up on the websites, blogs and other sites that serve as tastemakers for the type of music you create. Each of the panelists agreed that musicians should do their research before submitting music to such tastemakers to better their chances of having their music highlighted. According to a couple of the panelists there is significant value in making a one-on-one connection with the tastemakers in your genre.

Similarly the panelists agreed that there is value in “free music” to the degree it is given away in a strategic matter. That is, letting people who visit your website take away some music has a greater value than handing it out to random people at coffee shops.

The panelists all agree that this is a great time to be in the music business even though sales of product have decreased. There are more options and opportunities for musicians to have their music heard, and to be compensated for the performance of the music. However, musicians will have to take an active role in their career, rather than relying on third parties, to attain success.

Fundamentals of Copyright and the Problem with Lost Owners: unintended consequences (Part Two)

As discussed in The Fundamentals of Copyright and the Problem with Lost Owners (Part One) the exclusive rights of copyright attach automatically to a work, whether a photograph or a poem, once it has been transposed into tangible form. However, for works created before 1978, authors and artists had to take affirmative steps to secure the copyright in their works. They also had to notify the public through the use of the (c) symbol or other notice that copyright had been claimed.

Since 1978, registration has been an option to authors and creators which provides a few additional, yet significant, benefits. Registration is required prior to filing a lawsuit for infringement, or other issue. A registered work is entitled to greater awards of damages than non-registered works. However, creators often choose not to register their works because it is expensive and its value is not obvious.

Also, the requirement that works for which copyright protection has been claimed be marked with some kind of notice to the public was abandoned in 1988 when the United States became a party to the Berne Convention for the Protection of Literary and Artistic Works. Therefore, for the past 20 years everyone from illustrators to songwriters could publish their works without including the (c) symbol or other notice.

As time has passed, creators and/or copyright owners of many works have been lost leaving many works without parents. The copyright registrations may not have been kept up to date to reflect change in ownership or contact information. Modern works for which registration is not required may not have been marked clearly or efficiently to provide third parties notice as to whom the creator and/or owner is. Such works are commonly referred to as Orphan Works.

Significantly the exclusive rights of copyright still apply to Orphan Works. Unlike with real property, there is no such thing as an abandoned copyright. Therefore, publishers, filmmakers and other third parties are wary to use an Orphan Work for fear that a parent might emerge to reclaim the copyright, and claim infringement which could result in monetary or injunctive relief.

Orphan Works are the unintended consequence of automatic copyright without formalities. It is doubtful that Victor Hugo, a driving force behind the Berne Convention, could have predicted the vast array of works to which copyright would apply by the end of the 20^th Century, or the plethora of platforms through which such works can be delivered and used. Nor, one would think, could anybody anticipate the impact the fear of being sued for copyright infringement would have on end users.

In January 2005 Congress charged the Copyright Office of the Library of Congress to review the Orphan Work problem and propose statutory language. The Copyright Office issued its report a year later which outlines that yes there is an Orphan Works problem. The statutory language they proposed, however, left much to be desired so Congress reclaimed the project. The “Orphan Works Act of 2006″ was eventually included in the “Copyright Modernization Act of 2006″ which did not become law.

Congress has revisited the problem of the Orphan Work. This time both the House and Senate subcommittees with jurisdiction for intellectual property are considering legislation to alleviate the liability users of Orphan Works would otherwise be exposed to for copyright infringement. Each version provides that a user of an Orphan Work may avoid, or limit, liability as long as certain conditions have been met.

To qualify for the limited liability for copyright infringement under both the House and Senate versions, users must perform and document a “qualifying search, in good faith” for the owner of the Orphan Work. Both versions provide that for a search to qualify as a diligent search, Users will have to establish that:

1. the search method was “reasonable and appropriate under the facts;”
2. the search was within the “best practices” the Register of Copyrights has issued; and
3. the search was commenced prior to the use of the Orphan Work.

Under neither the House or Senate version would a user of an Orphan Work avoid liability or the need for a search due to the lack of identifying information about the copyright owner on a copy or phonorecord.

Furthermore, to qualify for the limitation on liability, the House version requires users of Orphan Works to file a “Notice of Use” with the Register of Copyrights. The notices would include:

1. the type of work being used;
2. a description of the work (NOTE: the language in this provision is awkward as “work” is not defined; is Congress referring to the Orphan Work or the user’s intended work?);
3. a summary of the search;
4. identifying information about the owner of the Orphan Work (NOTE: there is an 800 pound guerrilla in the room: who is the copyright owner of a work? What if you know the identifying information of the creator but the creator assigned his/her interest to a third party?);
5. a certification from the user that a search was made in good faith; and
6. the user’s name and how the Orphan Work will be used.

Though the House directs the Copyright Office to create an archive for the notices it is unclear how the records will be available to the Public. Such notices will only be available according to the regulations of the Copyright Office.

Under both versions, users of Orphan Works will have to provide attribution to the owner of the copyright, if known to a “reasonable degree of certainty.” Again, neither version addresses the 800 Pound Guerrilla in the room: Who is the Owner of a Copyright? Technically, a creator of a work, unless the work qualifies as a work made for hire, is the owner of the copyright. However, copyrights may be assigned to another person in whole or in part.

Finally, both versions will require users of Orphan Works to include a “symbol or other notice” to provide the world notice that an orphan is incorporated into the work.

Users who comply with the conditions set forth in the Orphan Works legislation do not necessarily get a free pass for the use of the work. No, users will have to pay “reasonable compensation” for the use. Under both versions of the proposed legislation “reasonable compensation” has been defined as “the amount on which a willing buyer and willing seller would have agreed with respect to the infringing use of the work immediately before the infringement began.”

Additionally, in ascertaining what qualifies as “reasonable compensation” the House version rewards those who register their works with the Copyright Office. Specifically, the House version provides:

If a work is registered, the court may, in determining reasonable compensation under this paragraph, take into account the value, if any, added to the work by reason of such registration.

Significantly both the current versions provide that the owner of an Orphan Work may be entitled to injunctive relief. In the original versions, injunctive relief was specifically denied to owners of Orphan Works. However, where the Orphan Work has been recast, transformed, adapted or integrated into the new work which includes a “significant amount” of the user’s “original expression” injunctive relief should be limited.

The most significant difference between the House and Senate version might be that the House would deny the limitation of liability to certain commercial users of Orphan Works. Specifically, the House version provides:

The limitations on monetary and injunctive relief under this section shall not be available to an infringer for infringements resulting from fixation of a work in or on a useful article that is offered for sale or other distribution to the public.

Therefore, if enacted, a greeting card or calendar company would not be able to rely on the Orphan Works limited liability to use illustrations or photographs that might appear to be orphans.

It may not be likely Congress will adopt any version of Orphan Works legislation this term. However, legislation is necessary to address the unintended consequences of automatic copyright–> many works with lost owners.

Yes, copyright protection automatically attaches to works under the current copyright law. However, automatic copyright is not necessarily effective copyright. Registration is required to obtain the full bundle of rights available to copyright owners. Similarly, creators and owners of a copyright protected works should also maintain accurate records and provide notice to the world that you are the owner of a work.

It would also be helpful if the Copyright Office took some affirmative steps to alleviate the hurdles copyright owners face maintaining accurate records. Significantly, the filing fee for amending a copyright registration is too high. At $115 per application, owners of registered works would have to spend three times as much to update the registration as it cost to file the original application.

Also, creators should let their voices be heard in the debate to let Congress know your views. To learn more about how Orphan Works legislation might affect you:

• National Music Publishers
• National Press Photographers Association
• American Society of Media Photographers
• The Illustrators’ Partnership
• Public Knowledge

Update:  The Future of Music Coalition has prepared a great Fact Sheet on the Orphan Works controversy as related to sound recordings, and other works.  More importantly, in its blog, the Future of Music Coalition highlights the complexity of determining who should be considered the parent of a work, whether it is the creator or the copyright owner, and what happens if you can find one party and not the other.

Fundamentals of Copyright and the Problem with Lost Owners (Part One)

Many people find the comparison of real property to intellectual property disconcerting or inappropriate. The arguments I have heard include “one is tangible, the other is intangible” or ” a finite number of people can use one, while millions of people can use the other.”

Regardless, the legal vehicles for ownership and management of real and intellectual property are very similar. The owner of either may transfer complete ownership of the property to a third party through sale, descent or bankruptcy. Likewise, both intellectual property and real property may be leased out to third parties for full or limited use. Similarly, the owner of a shopping mall allows guests on its property without transferring any indicia of ownership in the same way that website operators allow users to visit the site without the user walking away with an ownership interest.

Ownership in real property requires proof. The owner of property must file title with a government entity through which a chain can be created back to the original owner. In the United States, however, once a work has been transposed to tangible form copyright automatically attaches. Though you may register your work with the Copyright Office of the Library of Congress, registration is not required to get the majority of the benefits available to a copyright owner. In fact, no formalities, including notice to the world through the c in the circle, are necessary to secure your rights in a protected work!

Sidebar: In 1988, the United States of America became a signatory to the Berne Convention for the Protection of Literary and Artistic Works. The Berne Convention began its life as an international treaty in 1886! Significantly it reflects the European approach to copyright that includes the droits moraux (the “Moral Rights”) of the creator in protected works. While the Framers of the Constitution included copyright, they seem to have limited copyright to its economic elements without concern for the Moral Rights of the creators (see U.S. Constitution, Article One, Section 8: “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

Somehow, though, America ended up becoming a signatory in 1988 without actually adopting the droits moraux concept. Similarly, under the Berne Convention there were not supposed to be any formalities to securing copyright. Yet in America copyright owners do not get the full benefit of the rights without registration. So, there are still some formalities.

However, the owners of real property have to take steps to protect their interests and to maintain ownership. In the event that an owner lapses in the oversight of the property and somebody squats on it for a statutorily defined period of time we stand to loose our ownership interest through a process called “adverse possession.”

Additionally, through a variety of means the government may acquire the ownership of real property. Owners of property, generally, have to pay taxes on the property. Failure to do so may result in the state seizing the property. Similarly, if an owner dies without heirs or a will, the property may escheat to the government. Likewise, the government can acquire the property for a fair market value through the exercise of its eminent domain power.

On the other hand, creators, and their assignees and licensees, do not have to take any steps to secure their rights in copyright protected works, or in fact to maintain them. Once copyright attaches to a work it is automatic. While ownership of a work may be subject to loss through bankruptcy, descent or otherwise, the exclusive rights that attach to a protected work are still enforceable and are not subject to loss.

The passage of time is the only surefire way for a protected work to loose the exclusive rights associated with copyright. Works created after 1978 are entitled to almost an indefinite period of protection. For example, individually created works are protected for the life of the author plus 70 years. A photograph taken when an artist is 20 years old will be subject to copyright for her entire life and then another 70 years. Legitimately that photograph might be subject to copyright for over 140 years!

Unlike with real property, there may never be a “chain of title” for a protected work, nor may there be any notice that a copyright has been claimed on the actual work. Registration with the Copyright Office has not been required to establish copyright interest since 1978. There has been no requirement that creators mark works with any copyright notice since America became a signatory to the Berne Convention in 1988.

Sidebar: Under the Copyright Act of 1909, which was effective through 1978, registration and notice were both required to enforce a copyright. There term of copyright in effect when the Copyright Act of 1976 was enacted was 28 years, with a onetime renewal of 28 years. The Copyright Act of 1976 amended the renewal term to 47 years, and such renewal time was extended again in 1998 (yes, the Bono Act) for 20 more years. For all works created prior to January 1, 1964, a renewal application had to be filed with the Copyright Office to obtain the extended protection. For works created after January 1, 1964, but before December 31, 1977, renewal and extension after the initial 28 year term is automatic.

While it has been a great benefit to creators for copyright to attach automatically, there has been a significant unintended consequence to the automatic attachment: Third parties have had a difficult time obtaining the appropriate permission to use works because they have not been able to track down the owner of a work.

Consider a photograph taken in 1967 which may have been registered with the Copyright Office under a woman’s maiden name. She marries, takes her husband’s name but does not update her copyright registrations. Time passes, and so does she. Having found the photograph in a clippings file about his subject, a historian now wants to include the photograph in a book. His publisher wants to use it on the cover.

The publisher being extremely risk adverse, not wanting to be sued for copyright infringement, proceeds to obtain the permission from the copyright owner to use the photograph. A search of the records at the Library of Congress reveals that the work is registered, and thus subject to copyright. The publisher attempts to locate the photographer to obtain permission but due to the change in her name or other factors is not able to find her or any current owner of the rights in the work.

For more information, visit Part Two—> HERE

Uh oh, here we go again…

In what may be a historic decision, Judge William Conner of the Southern District Court of New York (“SDNY) has set a rate for the blanket licenses of the songs in the American Society of Composers and Publishers (“ASCAP”) catalog to AOL, Yahoo, and RealNetworks (operator of Rhapsody and other music services). The companies had each individually approached ASCAP for a blanket license to cover all of their uses of music.

Sidebar: Recall that there are two distinct protected elements of a song that you hear, the underlying lyrics/composition and the sound recording. Owners of rights in each of the works have a number of exclusive rights. For example, Songwriters have the exclusive right to perform the work. Technically speaking every public space where you hear music should have a license to perform the songs. Well, it would be a bit cumbersome if the operator of the parking lot had to contact every songwriter to ask for permission to play the song much less to negotiate individual rates. In the United States, songwriters and publishers join a “performing rights organization” (a “PRO”) of which ASCAP is one, to collectively license the songs to end users.

Yahoo, AOL and RealNetworks had individually attempted to obtain a blanket performance license from ASCAP for the use of the songs in its repertory that would apply to the wide range of services/sites the companies offer. The companies each agreed that they needed a license. However, ASCAP and the parties were not able to reach mutually satisfiable agreements. While temporary licenses were put in place, ASCAP filed a request with the SDNY for it to set the final rate.

Sidebar: ASCAP, and its competitor Broadcast Music, Inc. (“BMI”) are collectives that negotiate for many as one. Technically speaking they exercise a monopolistic power through their collective representation of rightsholders. Since the beginning of time, okay not really but close, ASCAP and BMI each operate with the consent of the Department of Justice of the United States. An element of the ASCAP consent decree is that the Southern District Court of New York serves as “rate court” in situations where ASCAP is unable to negotiate a license fee with a potential customer. Either ASCAP or the licensee has the right to go to the court after a period of time has passed to request that the court determine a “reasonable” fee for the requested license.

Rate setting proceedings at the SDNY are handled in the same manner as day to day litigation. The parties engage in discovery, present evidence and testimony, on which the judge bases his/her decision. Oh, and of course the lawyers get paid.

Here, ASCAP had originally proposed that AOL and Yahoo pay a 3% royalty based on music related revenues defined to mean the “total amount of time users of AOL and Yahoo!, respectively, spent streaming [music and music videos], as tracked internally by the companies.” For RealNetworks and AOL Music Now, ASCAP proposed that the 3% royalty would be based on all domestic revenue.

The licensees proposed paying ASCAP a license rate specific to 5 different revenue categories, or “buckets.” The blended rate would include: 2.5% of net revenue directly attributable to on demand audio streaming content; 1.615% of net revenue of directly attributable to audio webcasting services; 0.9% of revenue directly attributable to streaming music videos; and 0.1375% of revenue directly attributable to non-entertainment programming.

According to the licensees “directly attributable” revenue would be limited to “revenue generated from the sale of advertising and sponsorships that appear on the music player through which the music is streamed, as well as a pro rata share of revenue from subscription services that include music performance.” The licensees specifically exclude “all revenue from advertising placed off the player, including ads on webpages behind the player or anywhere else on the [licensees'] websites, and it excludes the value of any house ads and promotions of the [licensees'] sites and services.”

To determine the reasonableness of the proposed rates, the court considered other licenses and agreements the parties had entered. The court reviewed the licenses ASCAP has granted to radio, television and cable companies. It noted that the agreements the licensees had with the major labels were of particular interest as the agreements were entered in the free market (i.e. they can negotiate with 4 companies easily while negotiating with thousands of songwriters/publishers not so much). Also, the court reviewed agreements BMI had entered with some of the licensees but limited their relevance since the licenses were not blanket licenses.

In fact, Judge Conner noted “[i]n this novel proceeding, there are no perfect comparables. No other ASCAP licensee offers the full panoply of music uses and options available to each of the Applicants or the myriad ways in which they use music to generate revenue.” The Judge continued that “[t]his unprecedented capability to make millions of songs available to the entire nation all at once far outstrips the music distribution capabilities of all other, passive media such as radio and television.”

In the end, Judge Conner settled on a flat royalty rate of 2.5% of the applicant’s music related revenue. The closest license structure the court could find that was similar, and negotiated at arms-length between the parties, was the blanket license between ASCAP and Music Choice at a 2.5% royalty rate. Remember that each of the companies has a temporary license in place under which they have to pay ASCAP retroactively for any royalties due. According to press reports the difference between the amounts the Applicants proposed to pay and the amount the court has set as the rate are multi-millions per year. For example, AOL would have paid $872,000 in 2006 under its proposal, but now will pay ASCAP $7.8 million.

The moral of the story is fairly simple, judges recognize the value of music even if technology and new media companies do not.

Billy Bragg rocks and royalties

Peter Jenner, rabble rouser extraordinaire, and I had a meeting a few years ago at SXSW where we discussed many things related to copyright, music and the Digital Age.  One of the main points during the conversation was that sites like MySpace had provisions in its terms and conditions that claimed a license in the content people uploaded to the site greater than needed.  While Peter and I did not necessarily agree on the copyright related issues we discussed, on the need for reasonable terms we did agree.

After SXSW that year, Peter discussed the matter with his client Billy Bragg who was outraged that MySpace would claim a relatively broad license in posted content that could be used for any purpose in connection with the service.  In protest, Billy removed his music from MySpace and issued a press release stating his reasons for the action.  Within days of the second press release, MySpace revised its terms to clarify the license claimed and the purposes for which user posted content could be used.

Two years later, the issues related to the use of music, and compensation to rights holders, are no closer to being resolved than when Peter and I first met.   Not only did I have the wonderful opportunity to hear Billy Bragg perform during SXSW this year, he and I had a few chances to talk.  His commitment to civil rights and social justice is as awe inspiring as his music.

Now, in The Royalty Scam Billy has highlighted an even more insidious problem related to the use of music on the Internet–> companies that have based their business models on the use of music for which they have not paid being sold for, or invested in, at high values without sharing the funds with the musicians or other rights holders in the content.   Musicians have unwittingly served as angel investors in companies like BeBo and YouTube that use content without paying licenses.  Therefore, as Billy implies, musicians should participate in the windfalls that the founders of the companies receive.