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Streaming Music to be Streamlined

A bipartisan Congressional group wants to bring the Copyright Act into the digital age of streaming with the Music Modernization Act. Somewhat unusual in the world of new legislation, the bill seems to have garnered support from music publishers, songwriters and the digital streaming services that distribute the music.  The House version is H.R. 4706  and Senate version is S.2334.

While there are a number of areas the proposed legislation seeks to update, the heart of this legislation is a major change in the way streaming services pay ‘mechanical’ royalties – the commissions paid to songwriters and publishers when their musical compositions are recorded or reproduced. Currently, under Section 115 of the Copyright Act, anyone can automatically get a license to reproduce a musical composition – to get access to the song, simply file a Notice of Intention through the Copyright Office and pay a set rate. But streaming music services complain they can’t find the authors for every single song and songwriters view the music services claims as an excuse to avoid paying royalties until (and if) they are sued.

Although the new Act won’t prohibit the digital music business from negotiating license agreements directly with the copyright owners, the new Act would create a central database called the “Mechanical Licensing Collective” and instead of requiring individual “Notices,” streaming music companies could pay a blanket license fee for their on-demand, digital music services (e.g. streaming music). The ‘Collective’ would be responsible for allocating payments of these mechanical royalties, which go to songwriters and publishers when their musical compositions are recorded or reproduced, to the rightful owners. The blanket license would cover every song in the Collective’s database – a database funded by the streaming music services, but administered by the music publishers. For the digital music companies, it would eliminate the liability associated with infringement lawsuits from songwriters and publishers since now the database administrators would be responsible for identifying the owner and making sure payments are made.

Which brings us to another major change the Act would implement. Currently, the Copyright Royalty Board, sets the rates paid for mechanical licenses, based on a set of public-interest directives known as 801(b)(1) factors which are intended, in essence, to balance competing interests – availability to the public versus the disruptive effect on the parties in interest. The new Act would use a more ‘fair market value’ type system (already used to set digital radio performance royalty rates) that would be intended to more closely resemble free-market dynamics.

There are numerous other changes the legislation would make to existing licensing and royalty schemes. For example, today, the major music licensing services (e.g., ASCAP, BMI) consistently have the same 2 judges that oversee the rate courts which decide compensation for songwriters. The new legislation would eliminate that process and assign judges, as with other Federal litigation, on a randomly rotating basis. The Act would also repeal the current rule (Section 114(i)) that prevents courts from hearing certain types of evidence when considering the calculation of performance royalties – the money paid when a musical composition is broadcast on radio or otherwise publicly (e.g., elevators, health clubs, etc.).
With broad bipartisan support and industry consensus, it seems likely the the Music Modernization Act, at least in some form closely resembling the bills introduced in both the House and Senate, will become law in the current Congressional session. Stay tuned – literally!

Rimon has lawyers with decades of experience in the music industry, representing artists, as well as publishers and industry associations and if you have questions, need help or would like to know more, feel free to contact me, Joe Rosenbaum, or any of the lawyers at Rimon with whom you regularly work.

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FCC Opens Radio and Television Broadcasting to Foreign Entities

by Stephen Díaz Gavin

For more than 80 years, Section 310(b) of the Communications Act of 1934 has been interpreted as prohibiting direct foreign ownership of more than 20% and indirect ownership of 25% or more of US radio and television broadcast stations.  Effective January 31, 2017, this will change as the Federal Communications Commission (“FCC”) has removed longstanding prohibitions against these limitations on foreign ownership, although it has preserved the right, on a case-by-case basis, to block a foreign acquisition of a broadcast license in excess of 25% (e.g., for reasons of national security).

Foreign entities, for quite some time, have already been permitted to acquire control over non-broadcast licenses (e.g., nationwide cell carrier T-Mobile is majority owned by Deutsche Telekom). But the FCC has steadfastly enforced its longstanding foreign ownership control policies over broadcast station licenses.  Most famously, Rupert Murdoch had to become a U.S. citizen before being able to acquire control over what we know today as Fox Broadcasting.

Changes adopted to the rules of the FCC will enable approval of up to and including 100% aggregate foreign beneficial ownership (voting and/or equity) by foreign investors in the controlling U.S. parent of a broadcast licensee, subject to certain conditions.  The revised rules, which newly define and in certain respects create different rules for “named” and “un-named” investors, they will allow a named foreign investor that acquires less than 100% to increase its controlling interest to 100% at some time in the future.  If a named foreign investor acquires a “noncontrolling” interest, that investor will now be permitted to increase its voting and/or equity interest up to and including a “noncontrolling” interest of 49.99% in the future, if it chooses to do so.

Although the FCC’s expansive “public interest standard” in approving sales and investments in broadcast licenses, coupled with input from other Executive government agencies, could significantly delay or block investments from some countries, the strong support of this initiative by the remaining Republican members of the FCC would tend to indicate the FCC will be disposed to allow most transactions to proceed to closing.  Indeed, the FCC has already signaled its willingness to do so, by approving just such a foreign ownership acquisition in a recent declaratory ruling issued even before the new rules take effect, ending a decades long back-and-forth haggling over Mexican ownership of Univision.

For more information regarding the new FCC rules or assistance in handling the regulatory and transactional aspects of such an investment, contact the author, Stephen Díaz Gavin, or Phil Quatrini or Sandy Sterrett, all partners at Rimon, P.C.

Of course, you can always contact me, Joe Rosenbaum, the Editor!

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Thought Leadership

Thought leadership is a state of being in which one or more individuals articulate innovative ideas – ideas that stimulate thought and are futuristic or leading-edge.

Thought leadership requires confidence and a willingness to share ideas in the form of insights and principles that inform and guide future considerations.

Thought leadership is often controversial. New or different ideas, like innovative technology, can cause evolutionary change, but can also create disruptive or revolutionary change.

Although not all thought leadership must be actionable, it is often the basis for a re-evaluation of existing pathways, and a guidepost for new roads ahead.

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mHealth – Mobile Health Care

Last year, I was invited to participate in and present a paper at the “mHealth and the Law Workshop” in Washington, D.C. [See mHealth – The Future of Mobile Health Care].

Then last month, I was invited to participate in a panel at the Mobile FirstLook 2015 Conference in New York, and as a result of my participation, the editors of Mobile Marketer asked if they could republish (with attribution of course), the paper.

In case you missed it, you can view “Exploring legal challenges to fulfilling the potential of mHealth” online, or you can download the original from the Legal Bytes posting above.

As always, if you have questions, or need advice or guidance, just contact me, Joe Rosenbaum, or the lawyer with whom you regularly work at Rimon.

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Looking Forward to 2015

As we say goodbye to 2014 . . .

For those of you who are loyal readers and followers of Legal Bytes, you know this is the time of year when I break tradition and write a non-legal, personal and philosophical Legal Bytes post. If ancient Babylonians, who celebrated the New Year upon seeing the first new moon after the vernal equinox, could start a tradition that lasted for about 4,000 years – the least I can do is try to keep up. Although my tradition doesn’t date back nearly that far, this post will contain no links to distract you (until the very end when hopefully it won’t be a distraction). Nor will there be any citations to legal doctrine, references or background information. I won’t try to dazzle you with facts or intrigue you with today’s news. This is my opportunity to philosophize and dispense my thoughts and opinions – with absolutely no credentials, qualifications or expertise to do so.

There are two traditions I wish to continue, although I did not originate either one. First, let me take this the opportunity to wish each of you, your families, friends, loved ones and, yes, even an enemy or two, a beautiful and joyous holiday season and a healthy, happy new year, filled with wonder and magic, health and joy, challenge and opportunity, and prosperity and success. Second, as many of you know, for numerous years I have avoided sending out mass mailings of cards and gifts. Not only are they too lost in the seasonal flurry or delayed by the strain on delivery services, but the truth is that most of us don’t really need or want the trinkets that never express the real sense of appreciation or gratitude we might feel for friends and colleagues, families and loved ones, wherever they may be. We might deceive ourselves into believing it “personalizes” the warmth of the season, but after a few weeks they ultimately go into a drawer or the trash bin, or they are relegated to a closet filled with decades of Lucite, or sometimes they are re-gifted. In reality, there is nothing really personal about that process.

As many of you may already know, my second tradition is one I’ve borrowed from an old friend years ago, and which was originally intended to replace the mass cards, emails and impersonal trinkets with a more meaningful gift. Each year, I make a contribution to a charitable organization for all the family members, friends, loved ones, colleagues and acquaintances I want to honor, in memory of those I have lost this past year, and in recognition of those who have given me a reason to celebrate – in all, far too many to list and certainly all more deserving of something better than a card or bottle of wine. In that spirit, as I have done for a number of years, I have made a donation to the St. Jude Children’s Research Hospital – my way of trying to help some children in need who might benefit from the kindness of a stranger. Sometimes, random acts of generosity and kindness can bring surprising results – whether a smile, an unexpected warmth of spirit, or simply knowing it’s not all that difficult to do something to help make the world a better place – even just a little. Try it sometime.

Continue reading “Looking Forward to 2015”

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What One Lawyer Has Learned About Social Media (But There Are Still 5 Days Left)

Last week I received a novel invitation – call it a ‘dare’ from a long-time colleague and friend in a faraway land. He and I have never actually met, but we have interacted so often professionally and we keep trying to figure out how and when we can end up at the same conference, perhaps even sharing a speaking opportunity or panel so we can finally say ‘Hello’ in person – even split a bottle of wine. The invitation was a novel twist on attracting speakers to a professional conference – specifically the 2014 Webit Global Conference to be held in Istanbul.

Although the agenda was pretty full already, the organizers decided to create some ‘buzz’ by allowing people to vote for a few speaking slots as “Audience Choice” selections. Imagine that, a professional conference with a ‘power to the people’ format. While obviously hoping to increase attendance and excitement for the conference, the balloting is online and you don’t have to be registered to vote.

Now I’m wise enough, with enough experience, to appreciate that a practicing lawyer will NEVER win a popularity contest. I mean seriously – who normally says “I love my lawyer and really want to hear him talk!” I believe this to be true, even if we aren’t charging by the hour!

But I do love a good challenge and I thought it would be a good opportunity to conduct an informal, completely unofficial and invalid experiment. So I sent requests to people I’m connected to on LinkedIn, tweeted on Twitter and provided a link, with ‘Please vote for my presentation’ on my email signature block. Here is what I know and what I learned so far:

1. On this Legal Bytes blog, there have been more than 120,000 visitors, with 76,000 of them unique. So far just this month, there have been more than 2,500 visits. My own contacts – friends, family, professional colleagues, adversaries and people I have met over the years – number well over 6,000. As of this morning, I had 3,677 direct connections on LinkedIn. That means, according to the platform, there are 18,240,386 professionals in my network. That’s more than 18 million people! Eat your heart out Ellen and Ashton! Who’s ‘trending’ now?

2. Although Legal Bytes gets posted on Facebook, I don’t use Facebook otherwise and I only have a little over 480 ‘followers’ on Twitter (most of whom I don’t know), but that may simply be because my tweets, like my Facebook posts, are simply feeds from my blog. Perhaps those other 76,000 people are getting their information here and don’t need to duplicate it on Facebook or Twitter. Further study may be required (not really).

3. If you don’t have a Facebook profile, the organizers won’t let you vote – an interesting condition for a professional conference. Not sure why they didn’t pick a different platform or not require any pre-condition of membership in a network.

4. The organizers apparently won’t let you vote even if you are registered with Facebook, if you don’t have enough ‘friends’ on your profile (a few of my lawyer friends tried to vote and they are just as unpopular as I am). I’m guessing the conference organizers only want people who can spread the word to lots of others.

5. As of this morning I had 92 (yes, 92) votes.  Although I can’t really tell how many total potential speakers entered the contest, I am number 234 and some people have almost 1,000 votes already.

So far, my little experiment has led me to the following observations:

(a) My connections don’t vote, don’t want to vote or are out of the office and will get back to me as soon as they return;
(b) My connections really don’t like lawyers;
(c) My connections either don’t like this lawyer; prefer not to vote for this lawyer; prefer not to vote at all; didn’t qualify to vote (I may ask for a recount); or didn’t like the description.
(d) My thousands, hundreds of thousands and even millions of linked and networked connections don’t mean that much – it’s the people who know me that really count.

Perhaps there are or will be other lessons. After all, there are still 5 days left and if I ultimately end up with more than 18 million votes, I will be forced to admit I was totally wrong about the real power of social networks.

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Entertainment Media Crowd Funding Oscar (No, Not That One)

In 1918 there were no Academy Awards. But there was another Oscar! Oscar Micheaux, who taught us something about financing media and entertainment projects – perhaps the first crowd funding entrepreneur in the publishing and motion picture industry.

If you would like to know more about crowd funding and what’s new and what’s next (and about Oscar), you can read about it in Volume 25, Issue 3 of the Entertainment Law Review, where an article about crowd funding, authored by Joseph I. Rosenbaum, was first published by Sweet and Maxwell in London (a Thomson Reuters (Professional) UK Limited company.

You can read Joe’s entire article or download the PDF for your own personal use (i.e., not for redistribution) right here: Crowd Funding – A Funny Thing Happened on the Way to the Investment Bank. [PDF]

As always, if you want to know more about Crowd Funding (or any other matter requiring legal representation, counsel or guidance, please contact me, Joe Rosenbaum, or the Rimon attorney with whom you regularly work.

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U.S. Court Protects Middle Earth. Hobbits, Not Inmates, Take Over Asylum.

A United States District Court for the Central District of California has granted plaintiffs Warner Bros., New Line Cinema, MGM and Saul Zaentz – the motion picture studios and producer behind the forthcoming film "The Hobbit: An Unexpected Journey" – a temporary restraining order against Global Asylum (also known as The Asylum of Burbank), blocking the release of "Age of the Hobbits." The plaintiffs previously filed suit against Global Asylum (Warner Brothers Entertainment, et al. v. The Global Asylum, Inc.; CV 12 – 9547 PSG (CWx)), seeking an injunction against infringement and damages for trademark dilution, false designation of origin, copyright infringement, false advertising, unfair competition and violations of California’s Business and Professions Code. The Peter Jackson film, a motion picture adaptation of J.R.R. Tolkien’s classic book slated to open tomorrow, December 14, continues the successful "middle earth" franchise created by the success of The Lord of the Rings film series. The motion picture epic trilogy reportedly has gleaned more than $3 billion to date.

Asylum has a history of creating relatively low-budget films with parodied titles of Hollywood blockbusters (e.g., "Snakes On A Train," "Transmorphers: Fall of Man," "American Warships"). The studios pointed out these alleged parodies are always timed to coincide with release of each major motion picture counterpart and use "confusingly similar titles."

In granting the restraining order, Judge Phillip S. Gutierrez said the plaintiffs satisfied the legal standard requiring a plaintiff to demonstrate it has a valid copyright infringement claim, that there would be imminent danger to the plaintiff if the order is not granted, that the plaintiff would suffer more and that the order would advance the public interest. The judge’s decision specifically notes that: "The evidence of the advertising and promotion for ‘Age of Hobbits,’ as well as the media coverage the film has received, provides support for Plaintiffs’ contention that Asylum intended to deceive consumers by associating its movie with Plaintiffs’ works." You can read the Order in its entirety right here, Order Granting Plaintiff’s Ex Parte Application for a Temporary Restraining Order.

As always, if you need help or more information, contact me, Joseph I. Rosenbaum (joseph.rosenbaum@rimonlaw.com), or any of the Rimon lawyers with whom you regularly work.

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I See Paris, I See France: Google’s Street View Draws French Fine

On December 20, 2010, a Legal Bytes blog entitled Look! Out the Window! It’s a Peeping Tom! No, It’s Google Street View noted the problems Google was facing as a result of a faux pas in connection with its Street View automobiles roaming the streets equipped with cameras. As we reported earlier, Google’s picture-capturing vehicles appear to have accidentally gathered data over unsecured Wi-Fi systems in more than one country and city around the globe – including France.

Although Google agreed to delete the Wi-Fi data collected accidentally and has apologized, if one picture is worth a thousand words, France has apparently decided that Google’s pictures were worth about €100,000. This is reportedly the highest fine imposed by the CNIL (the National Commission for Information Freedom – the French data-protection regulatory body) since it was given the authority to levy financial penalties in 2004. The financial sanctions were levied because Google’s activities were considered to be "unfair collection" of data under French law, data that Google was able to collect for economic advantage. The "accident" resulted from some "sniffing" programming code that ostensibly carelessly found its way into the equipment capturing Street View data in the cars as they roamed highways and byways.

While other countries are considering fines and investigations that are on-going, some countries (e.g., the United States) have apparently dropped the investigations or are not considering penalties at this time. This is not the last we will hear of location-based or geo-targeted information raising an uproar, as people "check in" and the surveillance society becomes closer to reality than we often care to admit. The law and regulation are not harmonized around the globe, and many regulators and laws don’t even adequately address the problem – often created because, like so many other issues in our digital world, some information is being shared voluntarily, some is not, and some is a blend.

As always, if you need advice and counsel about your own advertising and marketing efforts, or privacy and data protection guidance from legal representatives who deal with these issues – in the United States and around the globe – every day, feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the Rimon attorneys with whom you regularly work.

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Pardon Me, Your Name is Showing (Perception or Reality?)

Before we moved online to a blog format, from 1996 through the end of 2008, Legal Bytes was published as a one-page, monthly newsletter. But even then we had Useless But Compelling Facts, a feature our readers tell us they like! That said, the threads of continuity continue to haunt us. Witness the following:

In March 2004, the Useless But Compelling Fact question asked how “The Doors” got its name. The answer was that Jim Morrison decided to call his band The Doors after reading The Doors of Perception (1954), a novel written by Aldous Huxley about his use of hallucinogens. Huxley was made famous by his 1932 novel, Brave New World.

Although Legal Bytes was not yet a blog back in 2008, we have digitized and uploaded Legal Bytes material from as far back as 2004! Why is this relevant? Because in 2008, Legal Bytes published a short article entitled "The Doors of Perception Can Sometimes Lead to Harsh Reality," about a false advertising case involving the use of Jim Morrison’s name, likeness or other distinctive characteristics, in advertising by a concert band that included two former members of the original The Doors. Now it seems that Jim Morrison’s fans, followers, administrative agencies and regulators continue to seem intent on protecting and restoring Mr. Morrison’s good name.

There is a joke that goes something like, “if you remember the 1960s, you probably weren’t there.” For those of you who do recall, you will remember Mr. Morrison was convicted of profanity and indecent exposure stemming from allegations he exposed himself during a concert at the Dinner Key Auditorium in Miami in 1969. At the time of his trial, other band members insisted he never actually exposed himself, but fans offered conflicting versions of what happened and he was ultimately convicted. That conviction was being appealed by Mr. Morrison at the time of his death in Paris in 1971.

Well a few days ago—more than 40 years from his conviction and at the request of outgoing Florida Governor Charlie Crist—the Clemency Board in Florida unanimously voted to pardon Mr. Morrison (posthumously) for his conviction. Rest in peace.