Avoiding Liability Through Continued Education

     As a business professional in the entertainment industry one should remain a firm believer in, and constant practitioner of, continued education. This is especially true where there is opportunity to study cases that set precedent(s) in our industry or evaluate existing cases, laws, and statutes that still have a tendency to effect how we do business everyday. As a publisher, record executive, or producer, the information below can help to remind one to stay on the "up-and-up" when it comes time to do research, make promises, and handle agreements through not only the use of what most would consider standard industry practice, but also by knowing what is currently changing to protect oneself in/from the future. As a consultant on these matters, it becomes even more obvious why one should stay apprised on all possible matters relating to the law and how it may affect a party on "either side of the fence" ensuring proper advice is always delivered.

     Two of the podcasts used for analysis this week come from Gordon Firemark's "Entertainment Law Update" series. The first, titled "Lawyers, Libel, Logos, and Lolipops" covers some changes to infringement process through language clarification for ISPs, and the findings of the 9th circuit regarding clarification of language in the Eminem (FBT) v UMG/Aftermath royalty dispute case. Because this is a blog, and meant for a comfortable read, I will not get into the technical specifics of the cases regarding Viacom, YouTube, Veoh, etc, and just say there comes a time when companies, and individuals, need to know exactly what their responsibilities are, and why. In this case the question is, what (or how much) does an ISP have to know regarding the use of a service for purposes of infringement before they take action or send notice (and to whom) in order to be safe under the DMCA. This could also be worded the other way to ask, how much attention does an ISP have to pay to cases of infringement within their networks and how little can they know before they have to bother going out of their way? Thankfully the answer from the 2nd and 9th circuits reflects that ISPs have to alert copyright owners when an infringement complaint is filed. This is a good thing as the copyright owner is much more likely to act both quickly and aggressively instead of waiting on a mammoth ISP to drag their heels.

     Next we have F.B.T. Productions bringing claim in California to show that product sold digitally (iTunes, etc) are to be determined as "digital licenses" and not sales under the same terms as physical product. The difference is huge in terms of the royalty paid per the agreement made between Plaintiff and Aftermath, Interscope, UMG; digital licenses carry a 50% royalty in lieu of the 12% being paid on simple "sales." The case was handed off to the 9th circuit of appeals for clarification on the language and for a final determination as to whether digital product indeed qualified as license or sale, and thus carried a 50/50 split. The 9th circuit has concluded that products sold digitally are in fact a digital license per the terms of the agreement and are to be paid per the higher rate. This is where the case gets even more interesting.

     It could seem to anyone who has been in the industry for a while that this lack of proper payment was intentional, but now the judge has caught on and has accused UMG of trying to "bamboozle the court." It gets worse, F.B.T. now claims that not only has UMG intentionally paid a lower rate on product sold digitally, but that this revenue, from source, is then intentionally cycled through foreign subsidiaries to further lessen the pot that is available for Aftermath, and hence a much smaller pot from which F.B.T. may take their percentage. In other words, instead of getting 12% (now deemed to be rightfully 50%) of 100% (net) they are actually receiving 12% of 29%. Against the arguments of UMG, et al, the court has agreed to allow F.B.T. an amendment to their original claim. I urge everyone reading this blog to follow this case as closely as possible. Just try not to throw things while reading in public.

     In podcast #27 of Gordon Firemark's series there is interesting conversation regarding a case that serves as a reminder for how important it is to not only have a very firm understanding of copyright law, i.e. specific rights and lengths of term, but to also properly execute, as well as administer, the imperative forms and contacts required to implement these rights. Take for instance, the example given for discussion in this podcast regarding the song "Santa Claus Is Coming to Town." An Heir of the writer of this song claimed the writer had terminated the original grant of rights during the first "window" of availability in the early 80's but faced difficulties and the process was never fully completed. Since the Sonny Bono Act allows for a second "window" the family of the writer has once again tried to terminate the grant of rights and take the rights back for themselves.

     EMI, the current holder of the rights says they have paid out considerable sums of money since the early 80's, after having paid the writer not to terminate. Further, EMI states that a writer or heir can only use the termination process one time, even if there are two windows, the termination can only be attempted once thereby rendering the second termination attempt void as they are no longer entitled to terminate. This case is a great reminder of how important it is to read carefully, and to have a great entertainment attorney or consultant who can help sift through the language and offer an educated and experienced interpretation. Indeed, it should be a part of any professional's original business plan to find and retain the absolute best entertainment attorney or consultant one can afford, as well as continually keep close eye on the court opinions provided on the Internet through direct findings, or even the press.

     Finally, in a talk given by a Duke University School of Law IP concentration professor during a visit to Suffolk University, we find a great conversation on net neutrality, as well as brief descriptions of trade, patent, copyright, and trademark laws. Also discussed is what is needed to properly back these rights up in an ever-changing, digital world. This podcast is titled "What is net neutrality, regulating the onramp to the Internet." Because this talk covers in great length what net neutrality is, the philosophical and reality-based harms that could be done if too much power is given to only a few large companies, as well as the previously mentioned backgrounds and defenses of patents, copyrights, etc, I encourage you to follow the links provided within this text to listen to this podcast and educate yourself on any parts of this you do not yet fully understand.

     I have included this information within the context of this blog because as mentioned in the opening statements, this article has been written as a reminder to keep up with current cases, expert opinion, and any situations, which may arise that allows for precedents to be set within our industry. As publishers, representation, entertainment business consultants, or even producers, we become liable in the way of civil law, contract law, and even infringement when we do not stay at the forefront of what is going on in our industry, and have an established entertainment attorney woven into the very fabric of our business plans. It would be a shame for any professional in this industry to wind up severely in the red for never properly following through on processes set by statute or setting up deals that can later leave one liable for damages.