Monday, September 28, 2009

Cedar Boschan to Give Royalty Rate Update at California Copyright Conference - October 13

I will discuss on October 13, 2009 Copyright Royalty Board actions and potential legislation at the California Copyright Conference's annual "Legal Update" panel.

My fellow panelists are some of the best in the West, so don't miss it:

KENNETH D. FREUNDLICH, ESQ., Freundlich Law
DINA LAPOLT, ESQ., LaPolt Law
MICHAEL PERLSTEIN, ESQ., Fishbach, Perlstein, Lieberman & Almond
PATRICK ROSS, Copyright Alliance

Moderator:
STEVEN WINOGRADSKY, ESQ., Winogradsky/Sobel

This event is usually a very well attended meeting, so please make your reservations early. One (1) hour of MCLE credit is available to California attorneys.

Register at the California Copyright Conference Web site or see more details pasted below:

_____________________________________________

Annual "LEGAL UPDATE" Panel
Tuesday, October 13, 2009
6:15 PM Check-In * 6:30 PM Cocktails * 7:00 PM Dinner
COURTYARD BY MARRIOTT, 15433 Ventura Blvd, Sherman Oaks, CA 91403 (Near Sepulveda & Ventura Blvd., just west of the 405 freeway)
Parking entrance on Orion Avenue
Free parking with validation.

Appetizer: California Mixed Green Salad Salad
Entrée: Chicken Marsala, Beef Stir-fry or Vegetarian Pasta
Dessert: Chef's Choice

CCC Members $40 per person / Non-members $50 per person

RESERVE YOUR SEAT NOW - RESERVATIONS ACCEPTED UNTIL
10:00 AM FRIDAY, Oct 9, 2009

Please help us make this an enjoyable experience for everyone by using the reservation system. A failure to reserve by the deadline may result in not receiving your preferred choice of dinner entree.

Register online with your credit card at www.theccc.org
Or use our voicemail system (818-379-3312)
Dinners payable at the door by cash or check only. No credit cards.

To join the California Copyright Conference or to renew your membership, please visit the website for more info: http://www.theccc.org/join.php

Film, TV and Music Audit Rights Discussion at the Beverly Hills Bar Association

My business partner Matthew A. Hurewitz, CPA appeared September 16, 2009 at The Beverly Hills Bar Association's Entertainment Section luncheon. Hurewitz told "The Truth About Net Profits and Audits" with other auditors and litigators Neville L. Johnson, Esq. and Miles J. Feldman, Esq.


Author Moses Avalon covered some aspects of the discussion on his blog here, and I will post below some video footage of Hurewitz's comments, when we shorten it to less than ten minutes.


You may still be able to earn 1.5 MCLE credits if you pay $105 to view the complete panel discussion at West LegalEdCenter.


The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Monday, September 7, 2009

Is China Ready to Hold Accountable Infringers of Foreign Copyrights?

China's Ministry of Culture ("MoC") implemented on August 26, 2009 new regulations for online music. In what might be the first in a series of MoC rule changes, online music ventures are now required to obtain MoC approval in order to legally distribute imported online music products in China, including audiovisual files and mobile distributions.

Such new regulations may impact China's 338 million Internet users, as well as search engine and music services in China, including Sohu's SoGou, Alibaba/Yahoo! China, Google and Baidu, which was described in IFPI's 2009 Digital Music Report as "the biggest single violator of music copyrights and by far the greatest obstacle to legitimate digital commerce in China."

Barron's Tech Trader Daily blogger Eric Savitz says analysts disagree on the impact of China's new set of rules on "deep-linking" search engines such as Baidu. Savitz and other bloggers such as Caitlin Cimpanu of Softpedia cite Pali Research analyst Tian Hou's blog report that music searches represent 80% of Baidu’s traffic. Therefore, the new regulations may obligate Baidu to drastically change its business practices by linking only to licensed music services.

On the other hand, Savitz observed:
"UBS analyst Wenlin Ly... says Baidu believes the worst case scenario would be to remove the MP3 search button from its main page ... [and] MP3 search is now under 10% of query traffic."
The true Baidu music search traffic figures may fall between Hou and Ly's estimates. Leena Rao of Tech Crunch reported:
"According to comScore, Baidu had 145 million unique visitors in July of 2009 worldwide (with more than 95 percent of those coming from Asia), while its MP3 search engine attracted 47 million uniques, which is only 32 percent but still significant. For July, Baidu was ranking fifth amongst most visited search engines worldwide, behind Google, Yahoo, Bing and Ask.com."
Whatever the figures, music search and "deep links" compelled Baidu to become a licensed online music service when it obtained from the MoC a newly required "Internet culture license," according to spolkspeople for both the MOC (see the JLM Pacific Epoch blog) and Baidu (see the Wall Street Journal).

We must wait to see whether search engines such as Baidu comply voluntarily with other new MoC regulations, and whether China enforces such regulations in 2010. As The Wall Street Journal pointed out, the MoC is not responsible for enforcing copyright protection.

In the meantime, I endeavored to analyze Google's English translation of the MoC's Chinese language document dated September 4, 2009. [Is there an English language statement from the MoC of which I have failed to locate a copy?] According to my haphazard analysis of the Google-translated MoC document, online music services - including Baidu's deep linking service - must:

(a) Subject content to MoC "Internet Literary Review" with the goal of "purifying the online music market in China" by "strengthening the ban on obscenity, pornography, violence, superstition, and undermining national customs and other harmful social morality music"

(b) Submit "signed import contracts (agreements)" for MoC verification of compliance with "strict requirements" (e.g., "the authorization period of imported network music should be more than one year"). Such contracts which are not directly signed by Mainland China businesses are invalid.

(c) Deem online music from Hong Kong China, Macao Special Administrative Region and Taiwan to be imported

(d) Submit for MOC review by December 31, 2009 imported music that was previously distributed online in China

The MoC is now ambitiously obliged to review during the next four months untold multitudes of content including lyric translations for hundreds of thousands of songs, as well as license agreements and other documents. Is this possible? As one who analyzes music licenses professionally, I suspect China may underestimate the tasks at hand: censoring content and vetting worldwide copyright ownership and license agreements. Therefore, the process will continue well beyond 2010 and/or it will be unthorough.

In addition to announcing the new regulations described above, the MoC saught to:
  1. Further clarify the definition of "online music" as:
    (a) "music products" that are "not material entities..." and are "...digitally transmitted through the information network..." which includes "...the Internet, mobile communications network, the fixed communications network can be achieved via a variety of interactive, real-time communication, sharing of common information network."

    (b) including "not only the usual sense of the songs, music and other forms of digital music products, but also ... the content of the performance of music accompanied by images of the MV [music videos], Flash and so on."

  2. Set forth innovative and clear review procedures and requirements
    (a) The MoC introduced an online music registration system through which online music ventures may request MoC approvals

    (b) The MoC offers a "rapid 'review of access' system" to provide expedited 3-day approvals in certain cases

    (c) The MoC has adopted certain procedures to eliminate duplicate reviews of music content

  3. Clarify the responsibilities of online music ventures:
    (a) "The enterprise must establish a system of self-examination"

    [As an auditor, I caution the MoC against relying solely on music service ventures like Baidu to comply voluntarily with MoC regulations.]

    (b) "Users [who]... upload their own innovations of the network and performing music is not" subject to content review... "Domestic online music business units, especially in providing Internet users create their own compilation and performing services such as online music upload business units should be strictly in accordance with 'Interim Provisions on Administration of Internet Culture,' the provisions of Article XVII of the online music content to enhance the review, ensure that the provision of the legality of online music content." [sic]
This leaves me with dozens of questions, such as:
  • How do you think China's new rules will change the music market?
  • Will reportedly legal Chinese music services like Orca Digital and Google's Top100.cn become profitable?
  • Will Google China increase its search market share dramatically?
  • Will foreign territorries such as Hong Kong, Taiwan and the USA collect billions of dollars in copyright royalty payments from China?
  • Will Baidu and other reported purveyors of unlicensed music find a way around the new regulations?
  • If you are a music copyright holder, have you any deals directly with China?
  • Does anyone disagree with this on grounds of censorship?
  • Is this a "tax" or "disincentive" for music services to import music?
  • Will fewer regulations stimulate demand for domestic Chinese music?
  • What is popular in China's music markets?
The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Sunday, August 23, 2009

LAUNCHcast Wins - Service Deemed Noninteractive by US 2nd Circuit Court of Appeals

Those who are calculating CRB royalties may be interested to read this decision published August 21, 2009 in the Federal Register.

The US Court of Appeals' Second Circuit upheld a 1997 jury decision that Yahoo's LAUNCHcast - a webcasting service now operated by CBS that provides Internet radio stations customized for individual users – is not an "interactive service" as defined in 17 U.S.C. §114(j)(7):

An “interactive service” is one that enables a member of the public to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording, whether or not as part of a program, which is selected by or on behalf of the recipient. The ability of individuals to request that particular sound recordings be performed for reception by the public at large, or in the case of a subscription service, by all subscribers of the service, does not make a service interactive, if the programming on each channel of the service does not substantially consist of sound recordings that are performed within 1 hour of the request or at a time designated by either the transmitting entity or the individual making such request. If an entity offers both interactive and noninteractive services (either concurrently or at different times), the noninteractive component shall not be treated as part of an interactive service.

Specifically, the US Court of Appeals found that LAUNCHcast's
  1. Users could not request specific musical works through LAUNCHcast
  2. Transmissions were not specially created for the user within the meaning of §114(j)(7)

Nobody disputes point #1 above, but point #2 is debatable. At least I found BMG's argument that "...Any service that reflects user input is specially created for and by the user and therefore qualifies as an interactive service" to be compelling. But the court did not "read the statute so broadly." Ultimately, the intent of §114(j)(7), as revised, guided the court to its decision.

The decision means that LAUNCHcast may pay statutory master performance royalties to SoundExchange instead of negotiating fees for each master with various record companies. The designation of a music service as "non-interactive" impacts royalties reportable to music publishers as well.


"Other cases in other circuits would not be bound by this decision, though they will no doubt find it to be instructive."
Do you agree with the Second Circuit?

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Thursday, August 20, 2009

NYT on Google Class Action Settlement

Microsoft, Yahoo and Amazon are now funding the fight against a pending settlement between Google, publishers and authors according to this week's New York Times article by Miguel Helft.

Authors: Do you support the Google class-action settlement with publisher and author groups? Why?

Publishers: Have you sent takedown notices to Google? How long did it take Google to remove your work(s) from its library?

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Wednesday, August 12, 2009

Transparency Initiatives

A transparency initiative in Nigeria disclosed questionable oil and gas transactions (see link here). If only the USA Interior Department and the states were as proactive in auditing our natural resource contracts!

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Monday, August 3, 2009

CRB Retroactove Rates for Limited Downloads Prior to 2008

I recently began an analysis of the publishing royalty rates adopted by the United States Copyright Royalty Judges in November 2008 pursuant to an agreement reached by all of the participants in the proceeding (e.g., the RIAA, NMPA and DiMA) with respect to interactive streaming, limited downloads and incidental digital phonorecord deliveries.

Among other things, my analysis has so far caused me to question which rates apply to limited downloads prior to 2008. Interestingly, I have not heard this topic reported in the media or discussed by my colleagues in the music industry.

Section 385.11 of the Copyright Royalty Judges' Final Determination of Rates and Terms (page 77) states that:
"A limited download is a general digital phonorecord delivery under 17 U.S.C. 115(c)(3)(C) and (D)."

As published in the February 9, 1999 Federal Register, 37 CFR part 255.5 was revised in 1999 to set rates for digital phonorecord deliveries in general. As a result, US Register of Copyrights Marybeth Peters wrote in the January 26, 2009 Federal Register:
"With respect to limited downloads, the previous rate-setting proceeding established royalty fees that clearly applied to limited downloads, whether such downloads were promotional or not."

The Copyright Royalty Judges must have mostly concurred because they responded by amending their Final Determination of Rates and Terms to strike provisions including one that allowed licensees to report no royalties for certain limited downloads deemed to be promotional, including limited downloads that occurred prior to 2008.

Setting aside the issue of promotional units, according to the logic of the Register of Copyrights, it seems that the statutory mechanical royalty rates for all limited downloads through December 31, 2007 are equal to unit rates applicable to permanent downloads and physical records:

Playing time 0:00 - 5:00 minutes:
1996-1997 = $0.0695
1998-1999 = $0.071
2000-2001 = $0.0755
2002-2003 = $0.08
2004-2005 = $0.085
2006-2007 = $0.091

However, the participants' agreement and the Copyright Royalty Judges Final Determination of Rates and Terms (as amended) set forth contrary rates for limited downloads prior to 2008.

Is the Register of Copyrights correct that "the previous rate-setting proceeding established royalty fees that clearly applied to limited downloads"? Which rates do you think apply and for which time periods?

Based on the summary of reportable rates that the Harry Fox Agency published, it represents that the rates for limited downloads prior to 2008 are set forth in the participants' agreement, not the rates applicable to all digital phonorecord deliveries in general.

While I think this may have been the intent of the participants (and the 1999 rate setting panel), perhaps the Register of Copyrights is technically correct that this would be impermissible retroactive rulemaking because when the participants and the CRJs deemed limited downloads to be general digital phonorecord deliveries, they subjected licensees to the same statutory royalty rates that were applicable to other general digital phonorecord deliveries (i.e., permanent downloads) through 2007. Attention attorneys: Please feel free to post comments or email me at boschan@royaltyauditors.com to tell me what you think.

Regardless of what the answer is, that the Copyright Royalty Judges did not clarify rates applicable to limited downloads during the period from inception to December 31, 2007 is troubling to those of us who must compute and audit royalties therefor.

Regrettably, this point is but one example of the confusion arising from the labyrinthine rates that the US music industry took over a decade to issue. The challenge of complying with such royalty rate calculations is great for my business, which reports, certifies and audits such royalties, but bad news for the music business as a whole. I think the Copyright Royalty Judges and the participants cost the music industry much needed profit in choosing to adopt such complex rates.

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Friday, July 24, 2009

US Interior Department Must Account to Native Americans

The Blog of Legal Times is the first report I have found on this important news:

D.C. Circuit Rules Interior Department Must Account for Indian Royalties

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Friday, July 10, 2009

Sound Exchange Monopoly Preserved... For Now

Billboard reports today that D.C.'s US Appeals Court Declined To Rule On CRB due to a missed deadline.

Some background: Royalty Logic had filed a motion questioning the constitutionality of the US Copyright Royalty Board (CRB). If the courts agreed with Royalty Logic's arguments, rates previously set by the CRB may have been invalidated, which is why many groups, including the NMPA, opposed the motion.

The good news about the US Appeals Court's choice is that the rate setting process will not have to restart at square one. However, I think it is bad news that left intact is the CRB's effective decision to grant Sound Exchange a limited monopoly as the sole designee entitled to collect master performance royalties in the United States.

Royalty Logic had originally filed its motion because it too wanted to be an master performance royalty collection agent.

I do not support Royalty Logic's positions on all matters, but ultimately I am concerned that recording artists and record labels will have no choice of collection agents for the master performance royalties contemplated by the Digital Milennium Copyright Act (unlike songwriters and publishers, which may choose to affiliate with one of three major performance rights societies: ASCAP, BMI or SESAC).

Sound Exchange may have won this battle, but perhaps there will soon be another opportunity to introduce competition in the master performance royalty collection marketplace. After all, one thing that set the US music industry apart from the rest of the world is that it allowed competition amongst collection agents.

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Wednesday, July 8, 2009

How to Copyright a Song

James in Indiana asks:


"What is the best way to copyright your songs? My band is going to do a live streaming web show and I'm leery of playing original material over the web without it being copyrighted."

James, your composition is already "copyrighted" if you have recorded it. According to US copyright law, a song (i.e., a "work") is created when it is "fixed." That means, when you transcribe your song on paper or record it for playback, you automatically own the copyright to that work. You may print the circle-c copyright symbol on any copies of your compositon at this point.

However, in order to protect your copyright, I recommend that you register your copyright with the Library of Congress ("LOC") using one of the following methods:


  • Electronic registration ($35 per work): Register and upload a copy of your work electronically at https://eco.copyright.gov/eService_enu/ (see a list of acceptable file formats here)
  • Complete Form CO on your personal computer, print it out, and mail it along with a $45 check or money order and your deposit (i.e., one copy of your unpublished work or two copies of your published work). (Form CO is here, instructions are here, and a FAQ is here)
  • Complete the old hardcopy Form PA, and mail it along with a $45 check or money order and your deposit. The LOC is phasing out these paper forms, so Form PA not accessible on the Copyright Office website; however, you may request that the LOC send you a copy of Form PA by postal mail here.
By the way, you can register your sound recordings too (use Form SR instead of Form PA and a circle-P symbol), the copyright to which is separate from the underlying composition, which is an important distinction to understand.

Certain attorneys have suggested as a money-saving strategy collective registeration of multiple works as a single work. Any registration is better than nothing, but I advise against it for a number of reasons. Most importantly, databases of works and ownership information are key. If you do not register each individual work with the Library of Congress, I am concerned that in the future, users of your song may not be able to find it in the LOC databases if it is listed under the title of a collection of works. If a user cannot find the work, it won't find its owner and your work may be deemed an "orphan work," which may entitle such users to make and distribute copies of your work without a license and not pay you until you can prove that the work is yours. Further, you may not be entitled to damages. Therefore, for maximum copyright protection, I suggest you register each work individually. However, this is just my opinion.

There is an easier and cheaper method to protect your copyright than LOC registration, but it won't offer you the same level of protection that a LOC registration offers: The so-called "Poor Man's Copyright," whereby you mail yourself a copy of your song and save the unopened envelope with the post office's date stamp intact to prove the date of the copyright. The Poor Man's Copyright is better than doing nothing (it can help prove you are innocent if someone accuses you of plagiarism), but there are at least two big problems with this method:


  1. If you have not properly registered your copyright with the Library of Congress, you will not be entitled to damages.
  2. As I mentioned above, I believe detailed databases of works and ownership information will be used in the future more than ever. If you do not register your work with the Library of Congress, users of your work may not be able to find its owner and your work may be deemed an "orphan work," which may entitle such users to make and distribute copies of your work without a license and not pay you until you can prove that the work is yours. Therefore, register your copyrights with the Library of Congress!
That said, even if you do everything right, it costs a lot of money to go after an infringer. The best thing musicians have going for them is their prolific creativity and the knowledge that individuals and entities may infringe on your copyright, but that won't stop you from creating something better in the future. Don't let the reality of infringement and scam artists keep you from making - and sharing - great music!

Next time maybe I will post about streaming royalties, since a lot of independent musicians like James are making their music publicly available this way.

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Tuesday, June 23, 2009

Will your audit damage your business relationship?

Australians fear that audits may damage their business relationships. Do you?

In this case, answer the following question: "Why is my licensee reluctant to allow me to verify its calculations?"

Remember, it's business as usual for big licensees to submit to audits. Transparency, power to renegotiate and recovery of cash are the most common outcomes.

Consider what you and your business partners can learn by reviewing past production, design, distribution, quality control and cost information, etc.

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Friday, June 19, 2009

Techdirt asks: Why Can't Major Record Labels Provide Accurate Accounting To Bands?

It's not every day that I agree with Mike Masnick on Techdirt:

http://www.techdirt.com/articles/20090619/0323015288.shtml

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Thursday, June 11, 2009

What is "Bad Faith?" Plus, Lindt's 3D Trademark on Chocolate Bunny

Swiss chocolate maker Lindt is trying to enforce in Europe a 3D trademark it registered for a foil-wrapped hollow chocolate Easter bunny with a bell tied around its neck. The competitors it has sued for infringement argue:
  1. Lindt acted in "bad faith" by registering a trademark for something (hollow chocolate bunnies) that had been produced since the 1930s (tomorrow a court in Austria will rule on the definition of "bad faith")
  2. Hollow chocolate bunnies must be manufactured in the same shape as Lindt's because of function - most other designs will collapse

Regardless of the chocolate, does not the foil, ribbon and bell give the Lindt bunny a distinctive 3D appearance that is not merely "functional?"

Read the Wall Street Journal article and Techdirt's comments, with which I tend to disagree.

Also, how should "bad faith" be defined? Considering an altogether different example, do you think memory IC chip designer Rambus acted properly or in "bad faith" when it registered patents for industry standards while such standards were being set by an industry committee?


The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Wednesday, June 10, 2009

Station Tacticts Re: Artist Performance Royalty

I support performance royalties for both composition and sound recording works. Meanwhile, radio stations face obsolescence.

Stations Boycott Artists Supporting Performance Royalty?

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.

Does Settlement with Publishers Grant Google a Monopoly?

I am familiar with the issue of orphan works as it relates to the music industry, but writers and book publishers have been strangely silent.

Should Uncle Sam approve Google's settlement with book publishers?
See http://www.nytimes.com/2009/06/10/technology/companies/10book.html.

What do you think?

The posts on this blog confer no rights or warranties. The opinions expressed on this site are my own and may not represent those of my firm. © 2009, Cedar Boschan. To request permission to reproduce, please contact boschan@royaltyauditors.com.