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.

Can’t Win’em All

Case 1 - AVELA v. Estate of Marilyn Monroe

     This is a case dealing with publicity rights, which are protected at the state level and are different in each state. This is no different for the publicity rights of the deceased and the laws of the state in which you died govern your post mortem publicity rights. (Butler, 2007, p. 128) Apparently the estate of Marilyn Monroe has been sending cease and desist letters over the years to several companies and in the most recent case sent one to AVELA, a company licensing images to a manufacturing company, Silver Buffalo that slaps the images of celebrities on cups, key-chains, etc. Now AVELA is suing the estate of Monroe for "tortiously interfering with its contracts."  (Gardner, 2012)

     Further, AVELA claims that the Monroe estate has already been dealt with by federal judges in both California, and New York who "previously determined that Monroe's estate was estopped from claiming an enforceable post mortem right of publicity." (Gardner, 2012) Consequently, New York is also where Marilyn Monroe died, so any ruling regarding her post mortem publicity rights here should be paid close attention.

     Here, is my opinion regarding post mortem publicity rights in the case of a celebrity such as Marilyn Monroe. I believe there should be some sort of mechanism that provides royalty to the estate where another seeks to profit from the likeness of the deceased. I would agree there should be a limit on time, or number of generations that control this right, however, and it should generally apply where the estate actually holds copyright for the image used.

Case 2 - Black Keys Sue Pizza Hut and Home Depot

     It is hard to imagine being the artist or manager who is going about their normal everyday business when something in the background, say television noise, catches your attention, and it is one of your songs a company is using without your permission or previous knowledge. I imagine that even more shocking is the irresponsibility; some may say stupidity, of those who know better. Now imagine that you are The Black Keys and it happened twice, in instances not so far apart in time.

     Both Home Depot and Pizza Hut are being sued for infringement by The Black Keys for using parts of their songs in advertisements without any permission whatsoever. According to an article by Anthony McCartney on Billboard.biz, the two songs in question were both featured on the duo's most recent album titled "el Camino" that has since sold almost 900,000 copies. The band is seeking both damages and asking that the ads be taken down permanently. (McCartney, 2012)

     I say that if it is in fact blatant infringement, then good for The Black Keys for standing up for what they believe in and protecting their art. I have no tolerance for outright theft, especially when the companies involved have ample resources to put licenses and permissions in place.

Case 3 - Developments in Eminem (FTP) v. Universal Royalty Case

     For those of you who are not aware of this case (if you're in the industry you should be) then here are the most basic and general points in a long and technical case. FTP productions is the company that originally signed Eminem and they have taken Universal/Aftermath to court over contract language that deals with percentages of revenue regarding sales and licenses of songs online. There is large money at stake and many other artists have taken notice, are watching closely, and others have already similarly filed against their respective handlers/labels. (Gardner, 2012) FTP argues that a digital sale is a "license" and as such should carry a 50/50 split instead of the mere 12% earned on sales of physical product(s). (Gardner, 2012)

     Beyond this, many other technical details such as container fees have been disputed that UMG has wrongfully applied to digital sales though there is no packaging to speak of. Elements of this case was passed to the 9th circuit for a final ruling as to whether or not digital sales qualify as licenses instead of sales and the 9th circuit agreed that digital sales should be considered licenses. (A.P., 2010) With this clarification both side have headed back to court where the judge has essentially accused UMG of intentional dishonesty and trying to "fool" the court. (Gardner, 2012)

     Further, the judge has allowed FTP to amend their original complaints against UMG to include details that UMG has not only been paying 12% where they know they should be paying 50%, but that the revenues from which these percentages are taken have been routed through foreign subsidiaries so that only 29% of the original dollar amount is left. This forces FTP to take 12%-50% of 29% instead of 29% of the "whole pie." UMG argues that they have already reached a summary judgment on the words "our net receipts" in a prior hearing and that the word "our" is to apply to Aftermath. (Gardner, 2012)

     UMG says since this summary judgment is "clear" that FTP knew they were only getting a percentage of what made it to Aftermath and that FTP should not be able to raise this question or be granted an option to amend. In my opinion UMG is desperately grasping at straws in an attempt to avoid having to pay out millions of dollars they know they kept wrongfully, and that's even if one only wants to consider the "container charges" being taken from digital sales. I am glad that in this case there is a judge who not only sees straight through UMG and the tactics taken, but that he also takes personally being lied to and used as a tool to cover up lies to other people, not to mention there is theft involved here. I look forward to a final judgment, and hope beyond hope that all involved get exactly what is coming to them.