Rondor Music, who owns the rights to the Beach Boys’ “California Girls,” has sent a letter to Capitol Records, Perry’s record label, demanding that Mike Love and Brian Wilson – the two Beach Boys who actually scribed the 1965 Billboard hit – be given a writing credit and a portion of the royalties for Perry’s chart topper.

In a recent E! News interview, a spokesperson for Rondor Music chastised Katy Perry, as well as the writers and publishers of “California Gurls,” saying, “Using the words or melody in a new song taken from an original work is not appropriate under any circumstances, particularly one as well-known and iconic as ‘California Girls.’” The spokesperson elaborated, stating that “Rondor Music…is committed to protecting the rights of its artists and songwriters, and with the support of the writers, that is exactly what we are doing.”

The Beach Boys, however, are singing a decidedly different tune. When asked for his thoughts on “California Gurls,” Mike Love insisted that “[t]he Beach Boys are definitely not suing Katy Perry, in fact we are flattered that her fantastically successful song is bringing to mind to millions of people our 1965 recording of the Beach Boys’ ‘California Girls.’” In harmony with his co-writer and band mate, Brian Wilson similarly stated, “We think her song is great and wish her all the success in the world.”

As with any copyright infringement case, the legal issues that would need to be addressed if this case were to proceed include whether the lyrics “I wish they all could be California Girls” are sufficiently original to be entitled to copyright protection.

Jeopardy Facts about the Beach Boys’
“California Girls”

“California Girls” is part of the The Rock and Roll Hall of Fame’s list of the “500 Songs that Shaped Rock and Roll.”

In 2004, “California Girls” was ranked #71 on Rolling Stone’s list of “The 500 Greatest Songs of All Time.”

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Music Downloads

Music downloads, which result in copies of the music being transferred to end users, implicate the copyright owners’ rights to reproduce and distribute the copyrighted music.  An example is iTunes.  Music downloads require master use licenses to cover the sound recordings and mechanical licenses to cover the musical works (the mechanical license could be secured through the Section 115 compulsory license exception).

Music publishers have taken the position that music downloads also constitute a public performance and, therefore, require a performance license.  However, on April 25, 2007, the U.S. District Court for the Southern District of New York ruled that music downloads are not public performances but, rather, just reproductions of the original song.  See U.S. v. ASCAP, 485 F. Supp. 2d 438 (S.D.N.Y. 2007); see also In re Cellco Partnership, 2009 WL 3294861 (S.D.N.Y. Oct. 14, 2009).

Recently, music publishers asked Congress to revise the copyright law to clarify that digital downloads implicate the public performance right.  Not only could this affect music downloads, but it also could affect downloads of movies and television shows.  This could be particularly significant given the potential shift of the public’s viewing habits from television (for which significant public performance fees are paid) to on-demand downloads to iPods and laptops (which are not now considered public performances). 

Podcasting

Music “podcasting” is a hybrid of streaming and music downloads.  Typically, “podcasts” are full-length radio programs that the end user downloads (either automatically or on demand) to their computer or mobile device, such as an iPod, MP3 player, or “smart” phone.  Like streaming, music “podcasts” can include multiple songs within the “podcast.”  But, unlike the transient nature of streaming, “podcasting” results in the end user having a copy of the entire program, including all music included in the program.  Because “podcasting” results in a copy, master use and mechanical licenses are required for “podcasting” songs.  In lieu of negotiating with the publisher, a mechanical license for the podcast of a musical work can be secured using the Section 115 compulsory license.  A master use license for a podcast must be voluntarily negotiated.  The performing rights organizations (ASCAP, BMI, and SESAC) have taken the position that “podcasting” involves a public performance, and, therefore, they offer “podcasting” licenses (but see U.S. v. ASCAP above).

Non-Interactive Internet Streaming (Internet Radio)

Unlike music downloads or podcasts, streaming does not result in permanent copies of songs being transferred to the listener.  Rather, streaming is transient and any resulting copies are typically only temporary cache or buffer copies (also known as “ephemeral” copies).  As such, master use and mechanical licenses are generally not required for streaming copyrighted music.  In general, all a non-interactive webcaster needs to stream copyrighted music are public performance streaming rights.  Streaming rights could be negotiated for each and every song to be streamed on a website.  However, “clearing houses” make the licensing process simpler for streaming.  In general, music publishers in the United States are members of ASCAP, BMI, and/or SESAC (collectively “PROs”), which offer public performance licenses (and collect and distribute royalties) for songs owned by their members.  As for the record companies, Section 114 of the Copyright Act provides a statutory (or “compulsory”) performance license that is automatically granted by operation of law, provided certain conditions are satisfied.  The statutory license is administered by an organization called SoundExchange, which collects and distributes streaming royalties to record companies and performers.  Licenses from ASCAP, BMI, SESAC, and the SoundExchange statutory license, unlike master use and mechanical licenses, are known as blanket licenses.  So, once these licenses are obtained, a website operator can stream most copyrighted songs without having to get individual licenses for each song.

ASCAP, BMI, and SESAC streaming licenses can be obtained directly from each PRO.  Standard on-premises PRO licenses that many establishments may already have generally do not cover streaming—rather, specific streaming licenses must be secured.  For permission to stream the widest possible catalog of music, webcasters should secure licenses from all three PROs.  Fees for these licenses are generally based on the number of listeners to the Internet stream and/or revenue generated in connection with the website.  For purposes of calculating fees, ASCAP, BMI, and SESAC licenses typically require periodic reporting of playlists, listenership data, and financial data.

Unlike PRO licenses, SoundExchange generally does not offer or negotiate a license agreement.  Rather, a webcaster just has to file a “Notice of Use” with the U.S. Copyright Office along with a $20.00 fee before it starts streaming.  Upon filing, a website is automatically entitled to the Section 114 statutory streaming license, provided the webcaster complies with the statutory conditions, including the following:   

• For a nonsubscription-based stream, the primary purpose of the webcast must be to provide to the public audio or other entertainment programming.
• The webcast cannot be interactive (that is, songs cannot be played “on demand” and songs cannot be played within one hour of a request or at a time designated by the listener).
• The webcast must include the information encoded in the sound recording by the copyright owner, such as the title, featured, artist, and other related information.
• The webcaster cannot, during any 3-hour period, play more than 3 sound recordings from one album (and no more than 2 songs played consecutively) or 4 sound recordings from the same artist or from any set or compilation.
• The webcaster cannot publish an advance program schedule or make a prior announcement of when specific songs will be played.
• The webcast cannot be part of an archived program of fewer than 5 hours duration, an archived program of 5 hours or greater in duration that is made available for a period exceeding 2 weeks, a continuous program fewer than 3 hours duration, or an identifiable program in which songs are played in a predetermined order (other than an archived or continuous program).
• The webcaster must file a “Notice of Use of Sound Recordings Under Statutory License” with the Copyright Office prior to commencing its transmission service.
• The webcaster generally must file monthly “Reports of Use of Sound Recordings” with SoundExchange containing certain information on all sound recordings performed during the month (referred to as “census” reporting).
• The webcaster must make monthly payments to SoundExchange at the statutory rate determined by the Copyright Royalty Board (which varies depending on the type of service provided).  SoundExchange, after deducting operating costs, disburses 50% of the collected royalties to the copyright owner (typically the record company), 45% to the featured recording artists, and 5% to the non-featured musicians and vocalists.  The statutory license fees were most recently established for the years 2006 through 2010 and have been very controversial, as they are significantly higher than the pre-2006 fees and are based on a model that drastically increases the cost of streaming music.  A new rate proceeding launched in 2009 will establish streaming fees for 2011 through 2015.  In lieu of the statutory license fees, SoundExchange has entered into settlement agreements/licenses with different groups of webcasters, including certain larger webcasters, noncommercial webcasters, college broadcasters, traditional over-the-air radio broadcasters, and certain “small webcasters.”  For example, the “small webcasters” license could be an attractive option if a website (and any of its affiliates in a media- or entertainment-related business) has total annual revenues of $5,000 or less and annual expenses of not more than $10,000.  In this case, the annual license fee is $500, and the webcaster can pay an additional annual fee of $100 to be exempt from having to file song usage reports. 

Streaming technology requires copies of sound recordings to be made on computer servers for purposes of facilitating a streaming transmission.  Such copies are generally covered as ephemeral recordings under the Section 112(e) compulsory license.  The royalty for Section 112(e) copies is included in the Section 114(d)(2) royalty (discussed above).

Server copies made in connection with streaming also include copies of musical works.  In light of The Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), some take the position that such temporary copies are not “copies” under the Copyright Act and thus do not require a license.  Relevant parties agree that non-interactive, audio-only streaming services do not require reproduction or distribution licenses from musical work owners. 

Interactive / On-Demand Streaming

Interactive or on-demand streaming services allow the listener to select and play any song on-demand.  Rhapsody and MySpace are examples.  Public performance and mechanical/master use licenses are required for these services.  With respect to the musical works, public performance licenses can be obtained from ASCAP, BMI, and SESAC, and mechanical license rights can be secured using the Section 115 compulsory license (while mechanical licenses are not required for non-interactive streaming, they are required for interactive streaming).  With respect to the sound recordings, the Section 114 public performance compulsory license does not apply, so both public performance licenses and master use licenses must be secured directly from the owners of the sound recordings. 

Limited or “Tethered” Downloads

Other services provide limited or “tethered” downloads, in which copies are made to user devices; however, the copies become unusable (or “expire”) after a certain period of time or when the user stops paying a service fee (and the copies may be usable only on certain devices).  With respect to the musical works, mechanical license rights covering the downloaded copies can be secured using the Section 115 compulsory license.   With respect to the sound recordings, licenses for the downloaded copies must be secured directly from the owners of the sound recordings.  Generally, limited or “tethered” downloads do not require performance royalties; however, some disagree (but see In re Cellco Partnership below).

Ringtones

Ringtones are digital copies of songs, typically around 30 seconds in duration, that are designed to be played on a mobile phone in order to signal an incoming call in the same manner as would a telephone ring.  Ringtones come from a variety of sources, but, most commonly, mobile phone customers download ringtones from their service providers, such as AT&T, Sprint, or Verizon.  Ringtones come in two types:  (1) synthesized (either monophonic, which have only a single melodic line, or polyphonic, which have both melody and harmony); and (2) mastertones (which are digital excerpts of sound recordings).  Synthesized ringtones only require a mechanical license to cover the musical work, while mastertones require both a mechanical license and a master use license to cover both the musical work and the sound recording.  In October 2006, the Register of Copyrights issued an opinion holding that both types of ringtones can qualify for the compulsory Section 115 license (to cover just the musical work) dependant upon whether the ringtone is simply a copy of the original musical work or whether the ringtone has recast, transformed, or adapted the original work in a way that takes it outside of the scope of the compulsory license.  See Docket No. RF 2006-1, U.S. Copyright Office, Oct. 16, 2006. 

Recently, the United States District Court for the Southern District of New York ruled that publishers are not entitled to public performance royalties for mobile phone ringtones.  See In re Cellco Partnership, 2009 WL 3294861 (S.D.N.Y. Oct 14, 2009).  For the past few years, publishers have argued that mobile phone carriers should pay copyright performance royalties when ringtones are downloaded and used by mobile phone customers.   The decision is not surprising as it comes on the heels of a 2006 decision by the Register of Copyrights that held that ringtones can qualify for the Section 115 compulsory mechanical license under the Copyright Act, which is only applicable for qualifying “private uses.”  The Register of Copyrights ruled that the primary purpose of ringtones is for private, not public uses.  See Docket No. RF 2006-1, U.S. Copyright Office, Oct. 16, 2006. 

Website Background Music

To use recorded copyrighted music as background music on a website, you need permission from both the musical work owner and sound recording owner.  Statutory compulsory licenses (such as Section 115) generally do not apply to website background music, since website background music involves incorporation of the music with images (or “synchronization”).  Permissions would need to cover both the required server copy and the public performance of the music on the website.

Web Videos

To use an existing sound recording in a web video, both a mechanical license from the publisher and a master use license from the record company are required.  Since web videos will involve the synchronization of music with images, these licenses should clearly grant synchronization rights.  Performance licenses are also required for videos played on websites, which for the musical works are typically secured from ASCAP, BMI, and SESAC as blanket licenses.  Note that for music videos, publishers typically permit the record companies to sublicense the underlying musical work, so in these cases, full permission to use music videos on a website may be secured directly from the record companies.

This post is the one in a series of posts discussing the basics of music copyright law.  This series of posts can be located by selecting the Blog category “Copyright 101.” 

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Following are descriptions of common music licensing agreements.  In a later post,  I will discuss some of the specific ways in which music is used on the Internet and the types of licenses required. 

Mechanical Licenses:  This type of license authorizes the reproduction of a musical work, which is typically controlled by a music publisher.  For example, a record company will enter into a mechanical license agreement with a music publisher or other musical work owner to authorize the reproduction and distribution of a recording of the musical work.  As discussed in more detail below, mechanical license fees are generally governed by a statutory compulsory license under Section 115 of the Copyright Act for which fees are set by the Copyright Royalty Board.  In cases where the recording artist has written the musical work, the mechanical license fees paid by a record company will often be 75 percent of the statutory mechanical rate.  Often a mechanical license at the statutory rate can be secured through The Harry Fox Agency at www.harryfox.com.  The Harry Fox Agency represents music publishers by issuing a variation of the compulsory license and collecting and distributing royalties on the publishers’ behalf.  In the case where the compulsory license might not apply, say in the case of music used in a video, mechanical license fees can vary widely.

Section 115 Compulsory License:  The Section 115 compulsory (or statutory) license is a statutory exception to an exclusive copyright that permits anyone, subject to certain conditions and the payment of statutory license fees, to make certain uses of a copyrighted musical work without the copyright owner’s permission.  The Section 115 compulsory license permits a user to reproduce and distribute copies of nondramatic musical works, subject to certain conditions.  Such copies may include physical copies, including CDs and records, or copies made in connection with digital transmissions (defined as “digital phonorecord deliveries” or “DPDs”), including digital downloads, limited or “tethered” downloads, interactive streaming, and ringtones.  The conditions of the Section 115 license include the following:

• The copyright owner must have distributed the musical work to the public (that is, the copyright owner has the right to control the first use of a musical composition); 
• The user’s primary purpose must be to create and distribute “phonorecords” or DPDs to the public for private use (the use of the terms “phonorecords” and DPDs means that there is no compulsory license for audiovisual works); 
• The user may make a musical arrangement of the work to the extent necessary to conform it to the style or manner of interpretation of the performance involved, but the user may not change the basic melody or fundamental character of the work; 
• The use cannot involve the copying of a sound recording (unless separate permission is obtained from the owner of the sound recording); 
• The user must send a Notice of Intention to Obtain Compulsory License to the owner of the musical work before or within 30 days after making, and before distributing, copies of the work; and 
• The user must pay the musical work copyright owner (provided the owner has registered the musical work) the compulsory license royalty for each copy made and distributed.    The rates are set by the Copyright Royalty Board, which is composed of 3 full-time judges appointed by the Librarian of Congress who each serve staggered 6-year terms.  The statutory rate for physical copies and permanent downloads (or “DPDs”) is 9.1 cents or 1.75 cents per minute of playing time or fraction thereof, whichever amount is larger (the rate is 9.1 cents for a song of up to 5 minutes in duration).  For limited downloads and interactive streaming, in general, the royalty is 10.5 percent of revenue less the amount paid to ASCAP, BMI, and SESAC (see below) for performance royalties.  For non-interactive streaming, relevant parties have agreed that no Section 115 royalty is due.  For ringtones, the royalty is 24 cents per ringtone.

Master Use Licenses:  This type of license authorizes the reproduction of a sound recording, which is typically controlled by a record company.  For example, one would need a master use license to put together a compilation record of existing recordings, to use a “sample” of an existing recording in a new song, or to use an existing recording in a film.  There is no statutory compulsory license for the reproduction of sound recordings, so master use license fees can vary widely.   

Synchronization Licenses:  This type of license, also known as a “synch” license, authorizes the reproduction of a musical work to be used in connection with visual images, such as a motion picture, television show, or television commercial.  Again, synch license fees can vary widely.  And, keep in mind that synch licenses generally only cover the musical work.  If an existing sound recording is to be used in the new audiovisual work, a master use license is also required from the record company. 

Performance Licenses:  The performance of musical works, for example, by playing songs on the radio, on television, on a website, or in stores, restaurants, bars, and nightclubs, is generally permitted under performance licenses issued by the three performing rights organizations (“PROs”):  ASCAP (www.ascap.com), BMI (www.bmi.com), and SESAC (www.sesac.com).  On behalf of affiliated writers and publishers, PROs generally issue blanket performance licenses to music users, and license fees are based on a variety of factors.  For example, performance license fees for a restaurant will be based on the capacity of the restaurant, the number of speakers or televisions in the restaurant, whether customers are charged a fee, and the frequency with which music is played.  Performance licenses for the use of sound recordings are only necessary when the performance is via digital audio transmission, for example, Internet radio stations (note, however, that legislation is currently pending in Congress that would require traditional over-the-air radio stations to secure performance licenses for sound recordings).  In certain cases, the right to publicly perform a sound recording digitally can be secured through a compulsory license under Section 114 of the Copyright Act (which I’ll discuss in further detail in a later post), subject to the compulsory licensing requirements and fees.

Print (Lyric) Licensing:  This type of license, secured from the songwriter or music publisher, permits the re-printing of the lyrics to a song, for example, for karaoke CDs, sheet music, websites, T-shirts, and posters. 

Creative Commons Licensing:  Creative Commons licensing (www.creativecommons.org) is a relatively new form of licensing pursuant to which the copyright owner relinquishes various copyright protections to permit the open public use of a work under certain conditions.  For example, a Creative Commons license may permit the open use of a work provided that (1) credit is given to the author, (2) the use is for noncommercial purposes, and (3) any derivative work must be distributed under a license identical to the Creative Commons license that governs the original work.  Variations of Creative Commons licensing mix and match the preceding conditions (such as permitting any use, whether commercial or noncommercial, with only attribution, or permitting any use with attribution but with a prohibition on derivative works).  Creative Commons has been credited by some musicians as a way to help gain wide distribution by getting their music out to the public for free.  Of course, however, once certain rights are relinquished under Creative Commons, those rights cannot be restored back to the original copyright owner.

This post is the one in a series of posts discussing the basics of music copyright law.  This series of posts can be located by selecting the Blog category “Copyright 101.” 

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The Complaint asks the court “to restrain and prevent SESAC from perpetuating the unlawful exercise of the monopoly power SESAC has amassed, unilaterally and collectively in conspiracy with and among SESAC [copyright holders], . .  . over the licensing to Plaintiffs and other Class Members of the music performance rights they need to broadcast their scheduled programming.”  In layman’s terms, the television broadcasters have asked the court to force SESAC to stop its anti-competitive conduct with respect to licensing SESAC public performance rights that are embedded in network and syndicated television programming.  The Complaint also seeks treble money damages from SESAC for its alleged violations. 

As mentioned above, the lawsuit was filed as a class action, which means that the named plaintiffs are proceeding on behalf of themselves and other members of a particular class—the class in this case is identified generally as local commercial television broadcasters.  If the judge certifies that the case should proceed as a class action, other television broadcasters will be given an opportunity to participate as members of the class and, thus, to be bound by the outcome of the case.  For example, if the court awards monetary damages to the plaintiffs, then participants in the class should also be entitled to some portion of that award.  As of November 18, 2009, the judge has not yet certified the class.  (Assuming the court certifies the class, procedures to notify local commercial television broadcasters and the methods by which class members may choose to or decline to participate in the lawsuit will be ordered by the court.) 

Three entities offer music performance rights licenses for virtually all music broadcast by local television stations—ASCAP, BMI, and SESAC.  Local stations must acquire licenses from each of these organizations because their repertories are exclusive of one another.  For decades, ASCAP and BMI have been operating under consent decrees following the U.S. Department of Justice’s investigation into alleged antitrust violations by those two entities (“Consent Decrees”).  SESAC is not a party to the Consent Decrees and not bound by their terms.  According to the Complaint, “SESAC flaunts its freedom from the competitive safeguards afforded by the Consent Decrees and has clearly  demonstrated its intention to take full advantage of its monopoly power by engaging in many of the very same practices that ASCAP and BMI were barred from continuing . . . .” 

One of two key factual allegations made in the Complaint is that SESAC has taken anti-competitive actions that are “exactly the type of conduct” prohibited by the ASCAP and BMI Consent Decrees and cause the same anti-competitive effects against which the Consent Decrees were designed to protect.  Specifically, the lawsuit claims that SESAC has: 

• Refused to offer broadcasters an economically viable alternative to its all-or-nothing blanket license and is not required to do so.
• Purported to offer a per program license alternative to its blanket license, but the terms are “so egregious” that the offer is meaningless.
• Enhanced the “competition-foreclosing power” of its blanket license by serving as the exclusive licensing agent for its rights holders for many compositions in its repertory.
• Threatened to withhold access to its entire repertory as a means to extract “supracompetitive” fees from broadcasters.
• Strategically raided ASCAP and BMI to entice composers whose compositions either are embedded in established syndicated and unlicensed network programming, are widely incorporated in broadcasters’ locally produced programs, or are included in enough commercials that it would be essentially impossible for broadcasters to avoid the compositions.
• Unfairly refused to disclose accurately the full contents of its repertory, making it impossible to avoid using SESAC music. 
• Coordinated with its affiliated rights holders an anticompetitive scheme to aggregate compositions from hundreds of different sources into a single repertory.

The Complaint also alleges that SESAC’s scheme to restrain trade and eliminate price competition has had “actual injurious effects” on television broadcasters.  For example, the lawsuit points out that from 2005 to 2007 SESAC offered stations a per program license fee.  The terms of the license for that period were set by an independent panel of arbitrators following a lengthy arbitration proceeding.  According to the Complaint, more than 250 local stations chose to operate under this lower cost, per program structure rather than the blanket license structure.  However, following the expiration of the 2005-2007 license period, SESAC changed the terms of the per program license.  Under the 2005-2007 agreement, only five percent of certain kinds of third-party programming was deemed to contain SESAC music (on which royalties were due); after the 2005-2007 agreement expired, SESAC deemed that 50 percent of such programming would be deemed to contain SESAC music—greatly increasing the fees due from broadcasters to SESAC.

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The fact is that virtually every contract involves unique circumstances. In the case of copyright transfers and licensing, contractual language can be critical. Under the Copyright Act, a written and signed document is required to transfer ownership of a copyright or to transfer exclusive rights to a copyright.

A recent case from the Fifth Circuit Court of Appeals demonstrates the pitfalls of an ambiguously drafted copyright transfer.

In that case, Alvert Music, a publishing company, claimed ownership of the composition copyright to various songs, including “Whoomp! (There It Is).”

Alvert sued DM Records, claiming DM Records had infringed Alvert’s copyright. DM Records claimed that Alvert couldn’t sue because Alvert had transferred the copyrights to a third party, Bridgeport Music, and thus, Alvert didn’t own the copyrights.

In 2004, Avert had executed a “Short Form Copyright Assignment” covering the compositions at issue which stated:

In consideration of the sum of One Dollar ($1.00) and other good, valuable, and adequate consideration, the receipt and sufficiency of which is acknowledged, the undersigned does hereby sell, assign, transfer, and set over to Bridgeport Music, Inc., its respective successors and assigns, fifty percent (50%) of his interest now owned or subsequently procured in the universe-wide copyright in and to the following musical composition(s) set forth in Exhibit A attached hereto, and all of the universe-wide right, title, and interest of the undersigned, vested or contingent, therein and thereto, including all claims for infringement of the copyrights whether now or hereafter existing, for the maximum terms of copyright, including any extensions and/or renewals thereto, throughout the universe.

DM Records argued that Alvert no longer owned the copyright because of the language stating that Alvert had transferred to Bridgeport “all of the universe-wide right, title, and interest of the undersigned, vested or contingent, therein and thereto, including all claims for infringement of the copyrights whether now or hereafter existing, for the maximum terms of copyright.” The lower court agreed and threw out Alvert’s case.

However, Alvert appealed and argued that it still owned 50 percent of the copyright because of the language stating that Alvert transferred to Bridgeport “fifty percent (50%) of his interest now owned or subsequently procured in the universe-wide copyright in and to the . . . musical composition.” The Court of Appeals agreed with Alvert and reinstated Alvert’s case.

While the two clauses in the assignment contract seemingly conflicted with each other, the Court of Appeals reasoned that the proper reading of the two clauses is that clause cited by DM Records operates as a clarification of the 50% interest assigned in the clause cited by Alvert.

While the decision of the Court of Appeals doesn’t indicate whether the assignment language was from a form book or specifically drafted for Alvert’s particular circumstances, the fact is that the assignment language resulted in litigation that was reviewed by two courts and undoubtedly cost the parties significant time and money.

Just imagine the multiple ways the assignment language could have been made clearer and the whole mess could have been avoided.

The bottom line is that you should always be careful before preparing and entering into any legal document. Contractual language may seem insignificant at the time, but as this case demonstrates, even the simplest language can become very significant when a dispute arises.

Beware of taking shortcuts, as some shortcuts can result in significant consequences, including significant expenses. Before you sign, please be sure to have your legal counsel review any important legal document.

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Ringtones are digital copies of songs, typically around 30 seconds in duration, that are designed to be played on a mobile phone in order to signal an incoming call in the same manner as would a telephone ring.  Ringtones come from a variety of sources, but most commonly, mobile phone customers download ringtones from their service providers, such as AT&T, Sprint, or Verizon.

The distribution of ringtones via downloads triggers publishers’ copyright rights to reproduce and distribute musical works.  With respect to such rights, mobile phone carriers pay royalties (commonly referred to as “mechanical royalties”).  

In addition to mechanical rights, publishers also control the right to publicly perform musical compositions.  The recent New York District Court decision addresses whether ringtones, which are often played “in public” when a phone “rings,” require payment of performance royalties to publishers (and/or other owners of musical works).  

The District Court’s decision involves a dispute between Verizon Wireless and ASCAP, a performing rights organization that licenses public performance rights to musical works on behalf of it members (publishers, composers, and songwriters).  Verizon sued ASCAP in the District Court in the court’s capacity as a “rate court” pursuant to the US Department of Justice’s 1941 antitrust consent decree with ASCAP.  The consent decree established the “rate court” as a forum to resolve disputes with ASCAP (and BMI) over public performance fees. 

ASCAP argued that Verizon engages in public performances of musical works when (1) it downloads ringtones to customers and (2) when mobile phones play ringtones to signal incoming calls. 

Downloading Ringtones 

The Copyright Act provides that performing a song “publicly” means either (1) playing a song at a place open to the public or (2) transmitting a song to the public whether the individuals receiving the song hear it played at the same place and time or different places or times.  The parties agreed that the sole act of downloading a ringtone is not the same as playing a song under the first clause of the “publicly” definition.  However, ASCAP argued that the transmission of downloads invoke the “transmitting” clause.  

The Court held that because each act of downloading a ringtone only involves the transmission of a unique copy of the song to one customer, the transmission is not made to the public.  The Court also considered whether a download is just the first link in a chain of transmissions ending when the customer uses the ringtone to alert her to an incoming call.  Citing the Court of Appeal’s decision in Cartoon Network v. CSC Holdings, 536 F.3d 121 (2^nd Cir. 2008) , the Court observed that a link of transmissions would only be considered “to the public” under the “transmitting” clause where it is clear that the final link in a transmission is “undisputedly a public performance.”  As discussed below, the Court concluded that playing a ringtone does not qualify as a public performance, and thus concluded that the “transmitting” clause is not applicable. 

In addition to rejecting ASCAP’s argument under the “transmitting” clause, the Court also determined that ringtone downloads are also not “performances” because a performance requires “contemporaneous perception.”  Since a ringtone download is a transmission of data rather than a musical broadcast, the download itself is not a perceptible rendition of a song.  In support of this conclusion, the Court referenced its prior decision in United States v. ASCAP, 485 F. Supp. 2d 438 (2007), in which it held that the downloading of music itself is not a public performance. 

Playing Ringtones 

The Court also rejected ASCAP’s argument that there is a public performance when mobile phones play ringtones to signal incoming calls.  The Court considered two exemptions to the public performance right in the Copyright Act:  (1) performances that occur within “the normal circle of a family and it social acquaintances” and (2) performances without the expectation of “direct or indirect commercial advantage.”  

The Court ruled that both of these exceptions apply to the mobile phone customer’s playing of ringtones because even when a phone “rings” in a public setting, the phone user is not playing the ringtone with the expectation of any profit.  

And, even if the “ring” on a customer’s phone were not exempt, the Court held that Verizon would not be liable because Verizon does not (1) control when a phone rings or which ringtone is played or (2) profit specifically from act of playing a ringtone.

Conclusion

While the Court’s decision is a defeat for ASCAP and publishers, it is not surprising.  The decision comes on the heels of a 2006 decision by the Register of Copyrights that held that ringtones can qualify for the compulsory mechanical license under the Copyright Act which is only applicable for qualifying “private uses.”  The Register of Copyrights ruled that the primary purpose of ringtones is for private, not public uses.  See Docket No. RF 2006-1, U.S. Copyright Office, Oct. 16, 2006. 

Furthermore, ASCAP was not necessarily the most sympathetic party here.  The fees requested by ASCAP could be perceived, in effect, as a “double dip,” since publishers are already paid mechanical royalties for ringtones.  Granted, such mechanical royalties are generally limited in amount by the compulsory license rate. 

This is likely not the end of the story.  Recently (and prior to the Court’s ruling), publishers asked Congress to revise the copyright law to clarify that digital downloads implicate the public performing right.  Such a law could effectively reverse the Court’s decision.  And, not only could this affect ringtones and music downloads, but it also could affect downloads of movies and television shows.  This could be particularly significant given the potential shift of the public’s viewing habits from television (for which significant public performance fees are paid) to on-demand downloads to iPods and laptops (which are not now considered public performances). 

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The duration of copyright protection depends on when the song was created:

• Songs created on or after January 1, 1978, are protected for 70 years after the death of the individual author.  Where there are two or more individual authors, the term lasts for 70 years after the last surviving author’s death.  For “works made for hire,” the term of protection is 95 years from publication or 120 years from creation, whichever date is earlier.  (A “work made for hire” is “a work prepared by an employee within the scope of his or her employment” or “a work specifically ordered or commissioned for use as a contribution to a collective work, [or] as part of a motion picture or other audiovisual work … if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”  In the case of a “work made for hire,” the employer, not the individual writer, is the “author” and owns the copyright.)

• The copyright term for songs created before but published or registered after January 1, 1978, is generally computed in the same way as for works created on or after January 1, 1978 (provided that in no case would the term of such copyright expire before December 31, 2002, and for works published on or after that date, the term will not expire before December 31, 2047).

• Songs created and published or registered before January 1, 1978, are generally protected for 75 years from the date the work was published with a copyright notice or on the date of the registration if the work was registered in unpublished form.  For such pre-1978 copyrights still subsisting on October 27, 1998, Congress extended the term by 20 years providing for a total term of protection of 95 years.

The song Happy Birthday to You is an oft-cited example of the durability of copyright protection.  The melody to Happy Birthday to You was first published in 1893, and the song was copyrighted in 1935.  Today, the company claiming to own the copyright to the song says it is valid until 2030, and it collects nearly $2 million in licensing fees every year on the song.  Though the validity of this claim is in question, it is an example of the peril of assuming that something extremely old and extremely widely used is in the public domain.

The website www.publicdomainsherpa.com has a web-based copyright term calculator to help you determining whether (or when) a particular song is (or will be) in the public domain.

This post is the one in a series of posts discussing the basics of music copyright law.  This series of posts can be located by selecting the Blog category “Copyright 101.” 

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Dayna Staggs, a singer and songwriter, filed a copyright infringement action in the United States District Court for the District of Maryland claiming that “Good Life” was identical in sound and melody to the chorus of Staggs’ song, “Volume of the Good Life.”  On August 14, the Court granted, in part, Universal’s request to dismiss the case.  

The Court’s ruling related to Staggs’ claim that “Good Life” violated his copyright in the musical composition and lyrics of “Volume of the Good Life.” 

The Court stated that “an ordinary listener . . . would quickly determine that the melodies of the songs are not similar.  In fact, the Court was unable to hear any portions of the songs that contained similar melodies.”

As to the lyrics, Staggs claimed that Kanye’s lyrics “Now throw ya’ hands up in the sky” are identical to Staggs’ lyrics “Hold your head up high.”  The Court ruled that these allegedly identical phrases, and other similar words or phrases, such as “good life” are simply not copyrightable.

The Court cited Section 202.1(a) of the Copyright Office regulations which states:

The following are examples of works not subject to copyright and applications for registration of such works cannot be entertained:

(a) Words and short phrases such as names, titles, and slogans; familiar symbols or designs; mere variations of typographic ornamentation, lettering or coloring; mere listing of ingredients or contents;

While the Court dismissed the case as to the musical work claim, the Court left open the question of whether Staggs holds a copyright in the sound recording and whether Kanye’s song violated that right, presumably by sampling Staggs’ song.  The Court gave Universal 30 days to challenge Staggs’ sound recording copyright claim.

As an aside, note that the “Good Life” samples from Michael Jackson’s “P.Y.T.”

Check it out.  The sample used throughout “Good Life” appears at 3:15 of “P.Y.T.”:

I understand that the “P.Y.T” sample was cleared for “Good Life.”

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On Tuesday, I’ll be conducting a seminar on music copyright law:  The Top 10 Things DJs Should Know about Copyright Law.  The seminar will be at 2:30 in Diamond Room D at the Trump Taj Mahal.  I’ll also be conducting free 30 minute one-on-one legal consultations throughout the Expo.

Click here for more information about the Expo and other seminars and workshops.

Shoot me an e-mail to sign up for a free legal consultation during the following blocks:

• Tuesday between 4p and 5p
• Wednesday between 11a and 1p

If neither of these blocks work for you, let me know and I can try to work in another time for you during the Expo.

Hope to see you there.

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The good news is that as long as it is your original song and you’ve written it down or recorded it, the song is entitled to copyright protection.  Under the Copyright Law, a song is immediately entitled to copyright protection upon the satisfaction of the following criteria:

1. It must be an “original work[] of authorship”; and
2. It must be fixed “in any tangible medium of expression, now known or later developed,” such as written sheet music or a CD, MP3, or other recording.

Unless you created the song as part of your job in your capacity as an employee, or unless you created the song for someone else as a “work made for hire” pursuant to a written agreement, you, as the creator of the song own the copyright interests in the song.  As discussed in an earlier post, those interests would generally include the musical work copyright and the sound recording copyright.

So, is that is?  Once you record an original song you own the copyright? 

That right.  There is no requirement that you actually publish, distribute, or register your copyright with the U.S. Copyright Office.

However, while it is not necessary to register a copyright with the U.S. Copyright Office to enjoy copyright protection, there are certain advantages to registration, including the following:

1. Registration creates a public record of the copyright claim;
2. Registration is required before an infringement suit can be brought in federal court;
3. Registration of a musical work is required to receive compulsory license fees;
4. Registration before publication or within 5 years of publication establishes a presumption of the validity of the copyright;
5. Registration within 3 months after publication or prior to an infringement entitles the owner to statutory damages and attorneys’ fees; and
6. Registration permits registration with the U.S. Customs Service for protection against the importation of infringing copies.

So, while registration is not required, copyright owners are well advised to file their copyrights with the Copyright Office.  As a case I discussed in a prior post demonstrates, the failure to timely register a copyright can create serious legal hassles and expenses that can be easily avoided with early registration.

In lieu of registration, some people elect to take the “poor man’s” copyright route.  The idea is that you mail yourself a copy of your song and don’t open the package so as to have proof of the date by which the song was created from the postmark.  While this is certainly better than nothing, as noted above, the failure to register the copyright upon creation means you may not have the right to compulsory license fees, statutory monetary damages, and attorneys’ fees in the event your copyright is infringed.  Without compulsory license fees, statutory damages, and attorney’s fee, the failure to properly register may help to make sure that you continue to be a “poor man” in the event you have to enforce your copyright.

Registration is easy and relatively inexpensive.  A music copyright can be registered on-line at www.copyright.gov/register/. The fee for registering a copyright is $35.00, and you can simultaneously register musical work and sound recording copyright interests on one form:  Form SR.  To register the interests separately, use Form PA for the musical work and SR for the sound recording.

Once you have a copyright, be sure to let the world know by including a copyright notice with the distribution of the song.  A copyright notice should contain the following elements:

1. The symbol ©, the word “Copyright,” or the abbreviation “Copr.” (or for “copies” of sound recordings, the symbol (P) (the letter P in a circle)); and
2. The year of first publication of the work; and
3. The name of the owner of the copyright.

Here are two examples:

 “© 2009 DJ Counsel.com”

“(P) 2009 Counsel Records, Inc.”

The use of a copyright notice is not technically required, but it helps you demonstrate that you’ve informed the public of your rights and can help prevent someone from claiming that they didn’t know about your rights.

This post is the one in a series of posts discussing the basics of music copyright law.  This series of posts can be located by selecting the Blog category “Copyright 101.” 

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