Audio Technology from a Legal Perspective Updates in 2014/2015 – IP Law Kevin D. Jablonski

Overview of Discussion Topics  Proposed legislation regarding music licensing recently embraced by the US Copyright Office  Alice Corp. v. CLS Bank – Is software still patentable?  Marvin Gaye or Robin Thicke/Pharrell Williams/T.I. – the Blurred Lines of copyright infringement.  Additional mind-numbingly boring cases before the Supreme Court

Overview of Intellectual Property  Patent  Copyright  Trademark  Trade Secret  Publicity

Rights Conveyed by Copyright  The right to reproduce the work  The right to prepare derivative works based on the original  The right to distribute copies to the public  The right to perform the work publicly  The right to display the work publicly.  The right to digitally stream a work.

Copyright and the Music Marketplace  On February , US Copyright Office “embraces” proposed legislative rules changes.  Regulate Musical works and Sound Recordings in a Consistent Manner  Extend Public Performance Rights in Sound Recordings to Terrestrial Radio  Federalize pre-1972 Sound Recordings  Establish Government enforced Fair-Market rate setting.

Regulation of Musical Works vs. Sound Recordings  Sound Recordings are distinguished from underlying musical works in terms of rights reserved by a creator  17 USC 112 exempts terrestrial radio from paying royalties on performances of sound recordings but not underlying musical works  17 USC 114 makes licensing of a digital performance of a sound recording mandatory but not the underlying musical work

Terrestrial Radio and PRO  Currently, sound recordings are exempt from requiring a public performance license on terrestrial radio  But, internet radio stations, satellite radio, and generally anything else (other than AM and FM) does require a public performance license from a PRO  Proposal would eliminate the terrestrial radio exemption

Federalize Pre-1972 Sound Recordings  Currently, record labels and artists (sound recording owners) are not paid for digital performances of the sound recordings that are prior to 1972  Proposed legislation would fold pre-1972 sound recordings into Sound Exchange (or whatever new government-controlled “free-market” entity is established).

Rate Setting  Currently, mechanical rights are set to 9.1 cents per copy (per CD or download)  Department of Justice oversees royalty rates at PROs (ASCAP and BMI)  Proposal would enable Copyright Royalty Board and set market rates for public performances  Proposal would offer bundled rights that include synchronization rights  Proposal would also provide for opt-out rights

Fair Play Fair Pay Act of 2015  Jerrold Nadler, John Conyers, Jr., John Deutch and Marsha Blackburn introduced this legislation in the House on April 13,  Addresses the terrestrial radio issue and the pre issue  Has been tried before.

Songwriter Equity Act of 2015  Introduced to the House by Hakeem Jeffries and Doug Collins on March 4, 2015  Addresses the Rate Setting issues

Alice Vs. CLS  Decided by The Supreme Court on June 19, 2014 by unanimous decision  The issue – Is a computer-implemented, electronic escrow service for facilitating financial transactions simply an “abstract idea” ineligible for patent protection?  Established a two-part “Alice” test as to whether claims are eligible subject matter for patents

The Alice effect  USPTO is now rejecting claims having any manner of software  Courts have been invalidating existing patents at a four to one rate when any manner of software is involved  Likely to have crippling effect on economies reliant upon software innovation  Patent Bar pushing back and USPTO and Courts are running amok

Blurred Lines of Copyright Infringement  Marvin Gaye is famous  Robin Thicke/Pharrell Williams/T.I. are less famous but want to be more famous  When young less-than-famous artists want to become more famous, artist do well to emulate famous artists  E.g., who are your influences?

Historical Perspective of Copyright Infringement by Substantial Similarity  Bright Tunes Music v. Harrisongs Music – aka George Harrison and The Chiffons  The Chiffons recorded “He’s So fine” in 1962  George Harrison recorded “My Sweet Lord” in 1970  Case established the “substantial similarity” test  George Harrison ordered to surrender a majority of royalties for his song  The Chiffons later covered “My Sweet Lord”  George Harrison later purchased “He’s So Fine”

HORRIBLE JURY DECISION  Jury awarded 7.4 million dollars to the estate of Marvin Gaye on March 10, 2015  Jury based in decision on the sheet music – was barred from actually hearing Marvin Gaye’s recording of Got to Give it Up  Thicke et al. plan to appeal

Interesting Case: Garcia V. Google  Cindy Lee Garcia appeared for five seconds in the 12- minute You Tube video “The Innocence of Muslims”  Sued You Tube (Google) for copyright infringement claiming that she did not perform as a work for hire because she was tricked  Ninth Circuit agreed with Garcia and held that she has copyright in her performance  Now before the Ninth Circuit en banc (all the judges)  Copyright Office denied the registration and also stated “[her claim] runs contrary to basic tenets of copyright and First Amendment law”

Interesting Case: American Broadcasting v. Aereo  Aereo is (was) a company that records broadcast television and provides time-shifted viewings to paying customers or customers who are subject to advertisements (as directed by Aereo) while watching  Supreme Court held (6-3 decision) that the transmission of the recorded show is a public performance and is not licensed  Justices Scalia, Thomas and Alito dissented “The Court manages to [conclude public performance]only by disregarding widely accepted rules for service- provider liability and adopting in their place an improvised standard (“looks-like-cable-TV”) that will sow confusion for years to come.