CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

[Blogmeister’s Note: We haven’t heard much about porn copyright trolls in a couple of years, but a recent decision by a federal judge in California caught our eye. The judge slammed a troll operation, and he did it with flair – his opinion opens with a quote from a Star Trek movie (“The Wrath of Khan”) and proceeds to riff off the Star Trek theme throughout its 11 pages. Our colleague Tony Lee volunteered to report on the decision because – or so we thought – he had been involved with porn copyright trolls in the past (defending against them, he assures us). What he didn’t tell us is that he is a major league Star Trek fan. The result: the following homage to both Star Trek and the federal judge who mind-melded with the Trekker universe. Tony has graciously prepared a separate, annotated version of his post – accessible here – for anyone who might be interested. And yes, we know that the title of this piece conjures Star Wars, not Star Trek – it’s the best the headline-writing department here at CommLawBlog.com could come up with.]

In Star Trek-infused opinion, a federal judge beams copyright trolls to Planet Loser.

In a decision chock-full of Star Trek references, U.S. District Judge Otis D. Wright, II has levied planet-wasting (or at a minimum, career-ruining) sanctions against a collective of porn copyright trolls looking to assimilate the pocketbooks of alleged porn downloaders. 

The trolls incurred the Wrath of Wright by weaving a complicated Tholian web of deceit using the court as an unwitting but crucial element of their nefarious scheme. As the Judge put it: “[W]hen the Court realized [the trolls had] engaged their cloak of shell companies and fraud, . . . the Court went to battlestations.”

Before delving into the hull-breaching sanctions resulting from the Judge’s full volley of photon torpedoes, a little background. 

The case began as porn troll cases generally do.

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Proposed law looks to address multiple aspects of TV in the MVPD era, including bundling, broadcast abandonment and blackouts.

True to his reputation as a maverick, Arizona Senator John McCain has authored a bill seemingly designed to please nobody, while arguably disserving just about everybody. Dubbed the “Television Consumer Freedom Act of 2013”, it consists of clumsily crafted legislative language that mashes together in one bill three disparate and contentious aspects of the current video delivery system. In only one of those three areas does McCain’s proposal come to remotely practical terms with the problem it seeks to address.

McCain’s bill aims to: (1) promote “a la carte” program availability for MVPD subscribers; (2) discourage broadcasters from removing their programming from over-the-air availability (in response to the success that Aereo has recently enjoyed); and (3) eliminate broadcast blackouts of sports coverage in certain situations.

Promoting “A la Carte” MVPD offerings

McCain has long been an advocate of an a la carte approach to program availability. Under that approach, cable and satellite TV subscribers would be able to sign up for only those channels they want to watch – no more required “bundles” or “tiers”, i.e., packages of channels including some really desirable choices and a bunch of others that probably won’t be watched much, if at all. 

The practice of “bundling”, of course, is not unique to the MVPD operator/MVPD subscriber relationship.

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Thoughtful prediction of 6-3 vote for petitioners proves wrong, big time, as 9-0 Court upholds Virginia citizens-only FOIA provision.

[Blogmeister’s Note: Paging Dr. Heimlich! A couple of months ago, our Supreme Court Haruspicator Extraordinaire, the Swami (a/k/a Kevin Goldberg) confidently predicted that the petitioners in McBurney v. Young would win, 6-3, in the Supreme Court. That’s the case involving a constitutional challenge to Virginia’s FOIA law, which is available only to Virginia citizens.  The decision is now out and, oops, the Court went 9-0 the other way. When we were finally able to track the Swami down for a follow-up post on the decision, his initial response was to send us a tear-stained resignation letter expressing his sense of commitment, his pride, his dedication to process, etc., etc. Upon closer examination, however, the letter turned out to be a transparent semi-plagiarism of Richard Nixon’s 1974 resignation speech. We talked the Swami off the ledge, leaned on him a bit, and he has now provided the following take on the Court’s decision.]

Yep, I was wrong, but seriously, nobody – and I mean NOBODY – saw this coming. Sure, plenty of folks might have thought the Court would uphold the law. But none of them would have put their own hard-earned money on a 9-0 verdict.  Not even the most accommodating bookie would have given odds on a unanimous verdict in this one.  And even knowing the final result, I stand by my earlier words that “Justices Ginsburg, Sotomayor and Kagan seemed clearly to favor Messrs. McBurney and Hurlbert”. 

So I’m shocked – not only by the result, or the Court’s unanimity, but by the overwhelming and radical antipathy toward open records laws expressed by the entire Court through Justice Alito’s pen. And I’m angry at the Court’s liberal block for signing onto that position (more on that below).

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Broadcasters ask full Second Circuit to review panel’s decision allowing Aereo to continue to operate pending trial of infringement claim

We told you the Aereo saga wasn’t over. 

Having lost the most recent (but certainly not the last) round in their litigation war with Aereo, the broadcast plaintiffs have filed a “petition for rehearing en banc” with the U.S. Court of Appeals for the Second Circuit. In that petition, the broadcasters are asking the full 13-member court to review the 2-1 decision of a three-judge panel that affirmed a lower court ruling allowing Aereo to continue to operate while the trial of the case moves ahead.

[Before we get into the nitty-gritty of the petition, let’s take a brief introductory side trip into the world of appellate procedure. Each of the 13 federal courts of appeals consists of between six (in the First Circuit, covering New England) and 29 (in the Ninth Circuit, which sprawls across nine western states and a couple of territories) judges. When an appeal is filed, it is normally heard by a panel consisting of three judges from the particular circuit court where the appeal is filed. 

After the panel issues its decision, if the losing party believes that that decision was wrong, the loser has three options. It can ask: (1) the three judges to re-think their disposition of the case; (2) all the judges in the circuit, sitting “en banc”, to review the panel’s decision; or (3) the Supreme Court to look the case over. Supreme Court review is usually the longest of long shots. Similarly, since the panel has just deliberated over the issue and come up with the result at hand, it’s usually a pretty good bet that the panel won’t be eager to reverse itself. But en banc review brings a bunch of different judges into the mix, so it presents at least some source of hope to the party unhappy about the panel decision.

But the rules are set up to make en banc review hard to get.

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Fox seems to think that the Second Circuit’s decision was a Big Deal. We’re not so sure.

So Aereo recently kept its winning streak alive with a favorable ruling from the U.S. Court of Appeals for the Second Circuit . . . and the next thing you know, the Fox Network is making noises about kissing good-bye to its over-the-air operations and moving to some alternative delivery system, possibly as a subscription service.

If you were to buy into Fox’s over-the-top reaction, you might get the impression that the Second Circuit’s decision marks a major, and possibly irreversible, turning point in the struggle between broadcasters and the proponents of various Internet-based programming systems. But that’s why you read CommLawBlog, right?

 As Mike LaFontaine might say, “Wha’ happened?”

Correct answer: Very little, at least as far as we can tell from the Second Circuit decision.

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Delaware judge, USPTO take actions in long-running patent matter, but it’s hard to say what it all means.

Talk about mixed signals! March 25 very likely marked a crucial turning point in the up-and-down, back-and-forth tug of war between Mission Abstract Data (MAD) and many radio broadcasters, but it’s hard to tell for sure which way it turned and in whose favor.

On the one hand, in the federal court lawsuit in Delaware, on March 25 the judge denied MAD’s motion to lift the stay that has held that case in suspended animation for more than a year already. But in the same order the judge held that the stay would be lifted “upon the issuance” by the U.S. Patent and Trademark Office (“USPTO”) of “Notices of Intent to Issue Reexamination Certificates” (NIRCs) with respect to MAD’s two patents. As our loyal readers know, those patents have undergone not one, but two separate reexaminations at the USPTO over the last year or two.   Indeed, it appears that the judge in Delaware has held his case in abeyance until the USPTO reaches some final conclusion about the nature and validity of the patents.

But in a remarkable coincidence, also on March 25 it appears that the USPTO issued an NIRC relative to Patent No. 5,809,246 (the 246 Patent) and a “final rejection” relative to at least some aspects of Patent No. 5,629,867 (the 867 Patent). (The term “final rejection” appears in the PTO’s online description of the document.)

If you weren’t confused already, hang on.

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Supreme Court rejection may be the end of the road for the upstart, Internet-based MVPD wannabe.

It looks like the Supreme Court may have dumped a final, fatal treatment of Roundup on ivi, Inc.  In a standard nine-word order (“The petition for a writ of certiorari is denied.”), the Supremes unceremoniously rejected ivi’s last-gasp effort to get out from under the preliminary injunction imposed by the federal District Court in NYC two years ago.  As a result, ivi is still barred from operating in the Second Circuit, and its future prospects are decidedly dim.

We’ve reported on several occasions on ivi.  It’s one of a handful of companies seeking to revolutionize television viewing by making broadcast signals available to viewers via the Internet.  ivi’s approach involves a liberal interpretation of the Copyright Act that would allow it to stream television programming directly to your computer, tablet or smartphone.  

ivi claims that its Internet-based streaming operation is the equivalent of a cable system as defined in Section 111 of the Copyright Act.  Under that theory, it has argued that it’s entitled to retransmit broadcast programming without the prior consent of the broadcasters as long as it pays applicable copyright royalties.  The broadcast industry has disagreed, naturally; in 2010, even before ivi started operation, broadcasters peppered ivi with cease and desist letters.  Undaunted, ivi went on the offensive, filing a lawsuit in the U.S. District Court for the Western District of Washington seeking a declaratory judgment that ivi is a cable system under the Copyright Act.  The broadcasters promptly countered with their own suit (alleging copyright infringement) in New York.

ivi’s Washington case was tossed by the judge there in January, 2011.  The following month, the broadcasters convinced the judge in the New York case to preliminarily enjoin ivi from operating pending the outcome of the case.  ivi appealed that ruling to the Second Circuit, to no avail.  In its trip to the Supreme Court it was trying to get the Supremes to lift the injunction.

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See and hear Mitchell Lazarus bypass his limited typing skills with a short video interview on cell phone unlocking.

Following up on his recent post on the cell phone unlocking ban, our colleague, Mitchell Lazarus, had the opportunity to speak with Colin O'Keefe of LXBN on the matter.  Happily, the interview was recorded and is now available for all to see - just click on the video below.   In the brief interview, Mitchell explains the latest developments and offers his thoughts on why Congress is likely to take action on the ban soon. 

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White House, FCC gang up on Librarian of Congress, seek reversal of recent rule.

If you buy something, it’s yours, to do with as you want. Right?

Don’t be silly.

We first encountered the concept of limited ownership with purchases that lacked any physical existence, like e-books and online music. If I buy an online movie from Amazon, I can watch it on my Kindle Fire forever – but I can’t donate it to my local library. I can buy a book for my Kindle reader, but having read it, cannot pass it on to my wife. We don’t fully own these things because they’re not really things. They are made of bits, not atoms. What we buy is only a license for particular uses.

But when we buy an actual thing, made of atoms, then it’s ours, and we can use it in any way that we want.

Not any more. Not if the thing is a cell phone.

Most people buy a phone at much less than the real price. I paid Verizon $200 for mine, which actually costs more like $700. Over the next two years Verizon will recoup the difference out of my monthly payments. If I leave Verizon before the two years are up, they will charge me an “early termination fee” to make up the shortfall. That’s part of the deal that got me a $700 phone for $200.

But now let’s say my two years are up. The phone is paid for. My contractual obligations to Verizon are satisfied. Now I can walk away from Verizon and use the phone with Sprint-Nextel’s service instead. Right?

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If at first you don’t succeed, try, try again. Faced with what appeared to our non-expert eyes to have been a pretty negative ruling from the U.S. Patent and Trademark Office (USPTO) last December, our friends at Mission Abstract Data (MAD) have responded to that ruling with the submission of more materials to the USPTO. Their lawyer apparently also had a chat with the patent examiner on February 12.

Again, we won’t try to divine the precise meaning of MAD’s latest materials – we’re not patent lawyers, after all. But in the interest of putting those materials out there for everyone to take a gander at, here they are, fresh from the USPTO’s website: the documents filed by MAD in connection with its “246” and “867” patents. (Note that the “Electronic Acknowledgement Receipt” listing the submissions about the “867” patent indicates a number of materials that aren’t included in the linked document. Our link is to a compilation of all the documents that were showing up on the USPTO website relative to the “867” patent as of noon on February 20. We’ll try to circle back around to that site every now and then and may update this post if the other listed documents surface there.)

We won’t begin to speculate on the interrelationships of (a) this filing and the February 14 lawsuits initiated by MAD (through DigiMedia) or (b) those lawsuits and the February 12 conversation between MAD’s lawyer and the patent examiner or (c) any of this and the upcoming hearing in the federal District Court in Delaware relative to the possible lifting of the stay in that litigation. Obviously, there appear to be a number of moving parts at work here. We’ll try to keep track of as many as possible and report on developments that might be of interest. Check back here for updates.

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Texas Hold ‘Em or Texas Hold Up? MAD goes all in in East Texas.

Like that gambler who just doesn’t know when to quit, always looking for the big score, our friends at Mission Abstract Data (MAD) – through their latter-day identity, DigiMedia – are back at the table.  On February 14, DigiMedia filed lawsuits against four radio companies with stations in Texas, arguing that the companies have engaged in patent infringement. (You can find links to the complaints, sans attachments, here, here, here and here.) The allegations are essentially identical to those advanced by MAD in federal court in Delaware against seven large radio companies back in March 2011.  The fact that the new lawsuits aren’t markedly different from those earlier, still pending, suits actually raises some questions.

We’ve been dutifully following and reporting on the Mission Abstract Data (now “DigiMedia”) patent saga for nearly two years.  (Standard disclaimer: we are NOT patent attorneys, and make no claim to special familiarity with patent law in general or as it might apply to MAD’s arguments.) As of late December it looked like the saga was nearing its end. That’s when the United States Patent and Trademark Office (USPTO) – for the second time – reexamined the patents underlying MAD’s claim and appeared to narrow the scope of those patents dramatically. 

Despite that apparent setback, MAD has now come roaring back, suing four separate licensees with FM stations in Tyler, Greenville, Denison and Palestine, all in Texas.

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Webcasters have until JANUARY 31 to file Statement of Account forms, pay annual fees to SoundExchange

According to famed lyrical poet Paul Hewson (“Bono” to his millions of friends), “nothing changes on New Year’s Day”. He reportedly started writing the song as a love paean to his wife, although it eventually morphed into a political statement inspired by the Polish Solidarity Movement. Regardless of the song’s broader political statement (or anybody’s personal notions about the significance of New Year’s Day), the plain statement isn’t true: things do change on New Year’s Day. 

Compliance with the statutory license applicable to webcasting is one of those things. 

When the ball drops in Times Square, webcasters are faced with updated forms to fill in and submit, a new cycle for reporting, and a clock ticking down the 31 days until the annual minimum fees of $500 per channel must be sent to SoundExchange. 

Thankfully, much like last year, the changes from 2012-2013 are pretty minor. The rates have increased slightly. The forms have changed a little (with a new look and feel), although that shouldn’t be anything to worry about if you’ve done this before. And, in perhaps the most noteworthy change, there are actually fewer forms for some webcasters to file. Here’s an overview of what will be expected of webcasters in 2013.

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Yet again, the NFL provides evidence of its aggressive efforts to protect both trademarks it owns and trademarks it doesn’t own.

With four minutes to go in the AFC Championship game and the Ravens looking good for a trip to Super Bowl XLVII®, I noticed that the hashtag #Harbowl was already blowing up on my Twitter feed.  That’s because a Ravens victory would mean that, for the first time in NFL history, two brothers – those would be John and Jim Harbaugh, of the Ravens and Forty-Niners, respectively – would be facing each other as head coaches in the Super Bowl®.  Look for “Harbowl” to become the unofficial moniker for the game.

Being a trademark lawyer geek, I immediately flashed on two thoughts: (1) how quickly could  I get an application on file with the U.S. Patent and Trademark Office (USPTO) to register “Harbowl” as a trademark (for hats, shirts, bumper stickers, temporary tattoos and all the other impulse items that NFL fans will be craving for the next two weeks); and (2) what are the chances that I could get that application granted?

Answer to Question One: I might be able to have an “intent to use” application on file before the game is done – it’s just that easy to file for trademark protection.  (Tip to readers: The ease of filing for such protection is a reason all of you should consider protecting your call signs, program names, slogans and other important brands by filing applications for federal trademark registrations.)

Answer to Question Two: “slim” and “none”, since – thanks to federal trademark law – I’d probably need the permission of the Harbaugh brothers to trademark something referencing their names. 

And that’s before the NFL has its say.

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Disagreeing with the Second Circuit, a district judge in the Ninth Circuit has enjoined Aereokiller from transmitting its opponents’ over-the-air programming.

Remember Aereo, the Barry Diller-backed startup seeking to revolutionize the way we watch television? (Hint: It’s the video delivery service that uses rooms full of dime-sized antennas, each assigned to a different subscriber, enabling said subscriber to watch broadcast television via any mobile, Internet-based device.) As we reported last summer, Aereo won a key legal battle in New York in July, when a federal judge OK’d the continued provision of Aereo’s service at least temporarily. (Technically, the judge refused to issue a preliminary injunction requiring Aereo to shutter its service while it’s being sued by a number of broadcasters claiming that the Aereo service infringes their copyrights.) 

You may also recall Alki David, the owner of several services providing online distribution of over-the-air television (and other) programming. The most relevant for our purposes are FilmOn.com and Aereokiller. 

David’s Aereokiller service seems to have drawn inspiration (not to mention its name) from Aereo’s service. While not absolutely identical to Aereo, Aereokiller rests on the same general technology and the same basic legal principles as Aereo. (In its court filings, Aereokiller argues that it is not only technologically analogous to Aereo but, in fact, “better and more legally defensible”). And further highlighting the influence of Diller’s Aereo service on David’s Aereokiller service, the latter was originally launched via a website found at www.barrydriller.com (though it has now migrated to David’s FilmOn.com site and is available via an Aereokiller app); it appears to be operated by the David-owned “Barry Driller Content Systems, PLC”. At least I think I’ve got that corporate structure right (there’s clearly a lot going on here). 

In any event, it’s easy to suppose that David may have Aereo and Barry Diller in his sights, at least competitively. But a recent decision by a federal judge in Los Angeles could deep-six both Aereokiller and Aereo: Judge George Wu from the United States District Court for the Central District of California has issued a preliminary injunction against at least some aspects of Aereokiller’s operation.

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USPTO rejects validity of most of MAD’s patentability claims, undermining MAD’s assertions that many radio broadcasters may be liable for patent infringement.

Holiday cheer came a little early for many radio broadcasters this year: Santa Claus (disguised as patent examiners at the U.S. Patent and Trademark Office (USPTO)) issued two “Detailed Actions” with respect to challenges that had been directed to the two patents held – and vigorously brandished – by Mission Abstract Data (MAD). Both of those “Detailed Actions” (one related to Patent No. 5,629,867, the other to Patent No. 5,809,246) rejected multiple claims to the patentability of MAD’s technology.

As a result, the likelihood that MAD (or its successor, Digimedia, or its licensing agent, IPMG AG) might receive a significant damage award in any patent infringement litigation which it has broadly hinted at has been reduced substantially.

Regular CommLawBlog readers should be familiar with the MADness that has afflicted the radio industry since 2011. (New to the subject? Get a refresher course by checking out our archives on the subject here.)

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The Copyright Royalty Board (CRB) has announced its final determination of the rates and terms for use of copyrighted works by noncommercial educational (NCE, a/k/a “public”) broadcasters for 2013-2017.  This wraps up the proceeding I’ve kept readers up to speed on through a couple of posts over the eight months.  (You can check them out here and here.)  The new rates and terms will be in effect from January 1, 2013 through December 31, 2017.

So now all NCE broadcasters – small community stations, educational institutions and large scale public radio and television stations) – know exactly how much they’ll be paying to ASCAP, BMI and SESAC for the right to use the underlying music and lyrics in all songs included in their over-the-air broadcast programming for the next five years.  (As I have previously mentioned, the new rates/terms technically also cover the use of pictorial, graphic and sculptural works, but the reality is that it’s all about the music.)  

Important note: the CRB’s determination does not relate to the use of sound recordings for webcasting purposes.  The current webcasting royalties, for both commercial and noncommercial webcasters, were set back in 2010, as I described in my post back then.  (As to webcasting royalties, NCE stations should not forget that their annual reports, payments and (in some cases) elections will be due in January, 2013.  Check back here for additional reminders on that score -- although I'll be sending out reminders to many of our clients starting next week.)

The proceedings leading up to the adoption of the 2013-2017 royalties could not have gone more smoothly (even though it did take almost two years to reach this point).

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Antitrust lawsuit looks to bring SESAC under federal court supervision, like ASCAP and BMI.

The Radio Music License Committee (RMLC) has sued SESAC in an effort to bring SESAC within the same general judicial constraints as the other two major performance rights organizations (PROs), ASCAP and BMI. According to the RMLC, SESAC (initially founded as the “Society of European Stage Authors and Composers”, but since officially shortened to just “SESAC”) is violating a number of antitrust laws.

The case pits two somewhat misunderstood organizations against each other. 

SESAC, of course, is a PRO, i.e., an organization which represents song composers and to which broadcasters must pay royalties for the right to perform the musical works of SESAC-affiliated composers over the air and online.  (In fact, unlike ASCAP and BMI, which are not-for-profit entities, SESAC is a for-profit PRO).  Comments I’ve received about SESAC from a number of broadcasters have tended to be negative, if not flat-out vitriolic. That may be because of significant royalty rate hikes in recent years, or possibly SESAC’s perceived reluctance to negotiate or otherwise deal with broadcasters when problems arise. Or maybe it’s the fact that SESAC requires radio broadcasters to get a separate license when engaged in webcasting (ASCAP and BMI incorporate webcasting into the existing radio license).

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Dueling bills to modify calculation method for some royalties could level the playing field among music media . . . or not.

Most people don’t think about how copyright royalties are calculated – they just think that whatever they’re paying (or receiving) is too high (or too low). That’s true regardless of who you are or what you pay.

The recording industry thinks that recording artists don’t get enough compensation for their copyrighted works – especially from broadcasters who have always enjoyed a full exemption from paying royalties for over-the-air performance of sound recordings (i.e., the version of a song you’re actually hearing at that particular moment). 

Each of the various services that provide recorded music to the public – broadcasters , stand-alone Internet radio operators and even Sirius XM – seems to believe that they’re getting a raw deal compared to the way the other such services are treated. For instance, Sirius XM doesn’t like that they have to pay for all their transmissions – both via satellite and the Internet – while broadcasters get that over-the-air exemption. Broadcasters think the per-performance rate for online streaming is too high, especially given online advertising hasn’t increased at a similar rate, which means that increased listenership increases costs but not revenues. And Pandora feels as though it’s at a disadvantage to both, because it, too, pays a rate higher than Sirius XM and doesn’t enjoy any exemption like broadcasters do.  

The disparity in the royalties each of the services get tapped for is the fault of Congress, which has established distinct approaches to royalty calculation for each.

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As ICANN processes applications for new top level domains, four applicants are in the running for the .RADIO TLD.

We recently reported that the Internet Corporation for Assigned Names and Numbers (ICANN) received 1,930 applications for new top level domains (TLDs) – including dozens of applications for broadcast- and media-related applications including .MEDIA, .MUSIC and .VIDEO.

But the four applicants for .RADIO caught our eye. They seek to offer services to radio broadcasters around the world, and may well change the way radio broadcasters operate, both on the Internet and offline. Their applications merited a closer look.  

Before diving in, we need to define a number of terms that are central to the TLD system.

First, “Registry”. In ICANN parlance, a registry is an entity which, under contract to ICANN, provides the authoritative master database of a single TLD and manages all “second-level” domain names registered within that TLD. Example: “.COM” is a TLD, and “FHHLAW.COM” is a second-level domain name registered with the “.COM” TLD.  Verisign is the Registry for .COM. Registries may not generally sell directly to the public. Each of the four .RADIO applicants is seeking to be the registry of .RADIO.

Next, “Registrar”. A registrar is an entity accredited by ICANN and under contract to a Registry.  The registrar adds, deletes, updates and transfers second-level domain names. Registrars are the “salesmen” of domain names. GoDaddy is the largest registrar in the world.

When it comes to new TLD applications, there are two types:

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. . . and the broadcasters have notified the Delaware judge of the USPTO orders

When last we visited the Mission Abstract Data (MAD) fracas, the U.S. Patent and Trademark Office had ordered that one of MAD’s patents be re-examined.  (That would be  Patent No. 5,629,867.)  Two days later, a similar order was issued with respect to the other patent (i.e., Patent No, 5,809,246) that MAD is relying on in its efforts to convince radio licensees to sign up with MAD for the right to utilize technology that MAD claims is covered by those patents. (If you’re new to L’Affaire Mission Abstract, you might want to check out our previous posts on the subject, which may be found at this link.)

We’ll leave the process of dissecting the USPTO’s orders to the patent mavens although, as we previously observed, those orders are probably not welcome news chez MAD.

By contrast, the USPTO orders were probably greeted with open arms by the broadcasters who MAD sued in U.S. District Court in Delaware. They have wasted no time in bringing the orders to the court’s attention in a supplement to their opposition to MAD’s motion to lift the stay which is currently in place, effectively freezing the litigation. (Note that copies of the two USPTO orders are included as attachments to that supplement.) As we suggested in our previous post, the fact that the patents underlying MAD’s lawsuit are being re-examined could convince the judge in the lawsuit to keep the case on ice a little while longer (i.e., probably at least until the USPTO review is resolved). Why, after all, would the court insist on forcing the parties through extensive litigation about alleged patent infringement if the patents in question are still being re-examined?

If we were betting bloggers, we’d guess that the next thing we’ll see will be a response from MAD to the court, probably trying to explain why the USPTO re-examinations shouldn’t make any difference. Check back here for updates.

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It’s official! Royalty agreement now fully in place through 2016.

We notified you last June that BMI and the RMLC had reached an agreement in principle regarding the rates to be paid by broadcasters for the right to publicly perform musical works. At that time, we were able to lay out the basic agreement but cautioned that it was subject to approval by the United States District Court for the Southern District of New York.

The RMLC has now announced that, on August 28, Judge Louis Stanton of that District Court approved the agreement, making the rates and terms specified in the deal effective through 2016. The highlight from our perspective is not just a presumed lowering of the rates for most stations (due in no small part to an industry-wide $70.5 million credit against 2010-2011 payment), but a simplified calculation method based on gross revenue. That puts an end to the old calculation method that was tied to a base fee, a method that many in recent years considered to be way out of date and extremely cumbersome. As indicated in the RMLC announcement, radio stations should already have reaped the benefit of the 2010-2011 credit, as it was being applied to their BMI accounts starting in June 2012.

Kudos once again to Bill Velez and his crew for great work in representing radio broadcasters.

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Second Circuit affirms injunction preventing would-be online “cable system” from carrying over-the-air content.

ivi TV, the company that burst onto the video delivery scene two years ago with a business plan based on an innovative reading of Section 111 of the Copyright Act, has suffered a major setback at the hands of the U.S. Court of Appeals for the Second Circuit. The court has upheld a lower court’s order enjoining ivi TV from infringing the copyrights of the broadcast networks that sued ivi TV back in 2010. 

The lower court’s injunction effectively put ivi TV’s operation on life support. The Second Circuit’s decision may have pulled the plug entirely.

ivi TV’s idea was relatively simple, if outside the box. ivi TV wanted to stream broadcast stations online in real time. It wasn’t a cable company in the traditional sense: no headend, no wires, no set top box. But according to ivi TV, it was entitled to retransmit over-the-air broadcast signals, without the broadcasters’ permission, because ivi TV’s operation was essentially a “cable system” as that term is used in Section 111. Section 111 gives “cable systems” the statutory right to such retransmission, provided they pay governmentally-established royalties (which ivi TV said it was willing to pay).

The district court disagreed with ivi TV’s reading of Section 111 back in 2011. And now the Second Circuit has piled on, concurring with the district court that Congress “did not intend for § 111 licenses to extend to Internet retransmissions”. That conclusion largely guts ivi TV’s claims.

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Reexamination of Patent No. 5,629,867 ordered as further questions of “patentability” surface.

Our friends at Mission Abstract Data (and, in turn, their friends at Digimedia and IPMG AG – as is our custom, we’re refer to them all collectively as MAD) got some disappointing news from the U.S. Patent and Trademark Office (USPTO) on August 21. A USPTO Patent Reexamination Specialist has issued an order granting a request for reexamination of one (i.e., Patent No. 5,629,867) of the two patents on which MAD has been relying in its efforts to convince radio broadcasters to enter into licensing arrangements with MAD in order to avoid patent infringement liability.

[We expect to have a link to the USPTO order available soon. It’s already available through the USPTO website, but getting to it through the USPTO’s, um, unusual system takes a lot of effort and some guesswork. Check back here over the next couple of days. UPDATE: Here is the promised link to the USPTO's order.]

We won’t revisit the history of MAD’s efforts. You can get a reasonably good idea from our past posts collected here. And in keeping with our repeated disclaimer about our acknowledged lack of patent law expertise, we also won’t delve deeply into the nitty-gritty of the order.

But we have read the order, and were struck by the fact that the USPTO specialist concluded that “substantial new question[s] of patentability” have been raised as to all ten claims comprising the ‘867 patent.

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Out of the ashes of one MVPD wannabe rises another.

To paraphrase T.S. Eliot, this is the way the MVPD wannabe ends, not with a bang but a whimper. . . and a $1.6 million settlement payment.

You remember FilmOn.com. They’re the folks who were going to revolutionize the video biz by legally delivering broadcast signals via the Internet . . . until they got immediately sued for copyright infringement by the major broadcast networks. 

“Oh, you mean Aereo, right?”, you reply. 

That would be the Barry Diller-financed entity that captures broadcast signals via a series of individual antennas, stores them on individually assigned remote DVRs and allows subscribers to watch programming in (almost) real time or via delay over the Internet. But, no, they’re not who we’re talking about here. Aereo still exists and has even won the first round in its legal battle against the broadcasters, surviving a motion for preliminary injunction.

“Oh, right . . . you’re talking about ivi TV?”, you protest, referring to the wannabe “first online cable system”. No, not them either (but you’re close).

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 Judge denies broadcasters’ request for injunction.

In the Aereo v. the Broadcasters smackdown, Round One has gone to Aereo. In a thorough 52-page opinion, Judge Alison Nathan, U.S. District Judge in the Southern District of New York, has rejected efforts by the broadcaster plaintiffs (i.e., the major broadcast networks) to get the court to enjoin Aereo’s operation. That means that Aereo can continue to serve its subscribers while the broadcasters’ various substantive claims against Aereo (consisting of claims of various flavors of copyright infringement) are litigated.

That’s bad news for the broadcasters. But what’s worse is how Judge Nathan got to that result. 

(If you’re fuzzy on just what the Aereo litigation is all about, take a look at our initial post about the case.)

Judge Nathan concluded that Aereo’s system is, for purposes of copyright law analysis, essentially the same as the Remote Storage DVR (RS-DVR) system that, according to the U.S. Court of Appeals for the Second Circuit, does not infringe copyrights. While her opinion grants a number of points to the broadcasters, her conclusion about the similarities between Aereo and the RS-DVR system deals the death blow to the broadcasters’ injunction request – and, looking down the line, very likely also to its overall claims of infringement.

We’ll delve into Judge Nathan’s decision a bit more below. But first, a brief primer on litigation procedure may give readers not versed in the Litigation Arts an understanding of what has happened thus far and what it means going forward.

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As July slips into August, it’s time again to remind television broadcasters that Copyright Royalty Claim forms – for cable retransmission copyright royalties and/or satellite copyright royalties earned during 2011 – are due at the Copyright Royalty Board by 5:00 p.m. on Tuesday, July 31, 2012.  (The CRB's site doesn't specify that that's 5:00 p.m. Eastern Time, but it's probably best to assume that that's what they mean.)  This is your opportunity to lay claim to a share of the annual fund from which television broadcast stations get paid for their programming that is retransmitted by cable and satellite service providers outside of their respective service areas.

In general, TV stations that are carried on cable systems as a distant signal, and those stations that provide programming to other stations that are carried as a distant signal, are entitled to royalty payments.  A cable system is “distant” vis-à-vis a station if the system is: (1) outside the station’s DMA; and (2) at least 35 miles from the station’s city of license; and (3) outside the station’s predicted Grade B contour.  Stations whose programming is carried on satellites to subscribers outside the station’s DMA are also entitled to royalty payments.

The Copyright Office encourages stations to file their Claim Forms online.  The forms can be found at:  http://www.loc.gov/crb/claims/.

If you would like assistance in the preparation and filing of royalty claims, please contact Davina Sashkin at sashkin@fhhlaw.com or (703) 812-0458.

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Arguing again for lifting of stay, MAD claims it’s the victim of a “sophisticated”, “multi-pronged”, “coordinat[ed]” effort to “attack” and “derail” MAD. 

In keeping with our commitment to try to keep our readers on top of ongoing developments in the Mission Abstract Data (MAD) patent litigation in Delaware, here’s the latest: a link to MAD’s most recent pleading in its effort to get the stay of that litigation lifted. Attentive readers will recall that the U.S. District Court in Delaware put a hold on the litigation last year at the request of the defendants, a number of Big Broadcasters. Last month MAD petitioned the court to get things moving. Not surprisingly, the Big Broadcasters opposed that petition, and now MAD has replied to that opposition.

Since (as we have repeatedly acknowledged) we here at CommLawBlog are not patent experts, we won’t opine about MAD’s various arguments. They look pretty much like what you might expect. MAD generally belittles the litigation claims of the Big Broadcasters (and BEI, which has challenged MAD’s patents in the U.S. Patent and Trademark Office) and bemoans the fact that its case hasn’t progressed. Folks familiar with litigation probably won’t be surprised by anything in MAD’s reply.

Perhaps most interesting is MAD’s repeated insistence that continued delay has been and continues to be prejudicial to its “licensing program”. That “licensing program”, of course, is the repeated, insistent effort by MAD (and its cohort, including DigiMedia and IPMG AG) to browbeat radio broadcasters into agreeing to pay for the right to use MAD’s patented technology, whatever that may be. (MAD reads its patents very broadly; others disagree with MAD’s interpretation. That’s where the USPTO and the Delaware court come into the picture.)

MAD’s business – which it describes as “non-litigation intellectual property licensing” (points for making this argument in the context of litigation with a straight face) – will be prejudiced by continued delay, according to MAD, because:

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From unconstitutional to constitutional in a couple of pages, the Copyright Royalty Board has dodged a bullet, thanks to the D.C. Circuit.

The U.S. Court of Appeals for the D.C. Circuit has concluded that the structure of the Copyright Royalty Board (CRB) violates the Appointments Clause of the Constitution. As a result, a CRB rate determination under appeal has been vacated and the matter remanded to the CRB for further consideration. 

But wait, you say – why remand it to the CRB if the CRB is unconstitutional? In a deft demonstration of judicial legerdemain, the court also concluded that CRB’s unconstitutionality could be remedied if the court were simply to write some inconvenient language out of the governing CRB statute – and that’s just what the court did. So while the CRB may not have been constitutional before the court’s decision, it will be constitutional as of that decision, as will CRB determinations made after the court’s decision.

The case involves a challenge to the CRB’s 2011 decision setting copyright royalty rates for certain noncommercial webcasters. Intercollegiate Broadcasting System, Inc. (Intercollegiate), an association of noncom webcasters unhappy about the decision, appealed.

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Broadcast defendants shed useful alternative light on current status and future prospects for MAD claims. 

It’s Mission Abstract Update Time! In the lawsuit brought by Mission Abstract Data (MAD) against a bunch of Big Broadcasters, those Big Broadcasters have recently filed a pleading that radio broadcasters should take a look at. You can check out a copy here.

Alert readers will recall that, in its suit, MAD claims that the defendant radio broadcasters have infringed patents that MAD bought up a year or two ago. And with that suit making headlines, MAD (along with its pals DigiMedia and IPMG AG) has been putting the hard sell on other radio broadcasters, trying to get them to sign onto “license” agreements authorizing them to use MAD’s patents. 

That hard sell campaign (which features hefty FedEx packages full of impressive-looking documents, followed up by insistent sales calls from slick salesmen) had died down somewhat after the Delaware court put the lawsuit on hold last fall. But the campaign flared back to life recently, rattling the nerves of the targeted radio stations. (Who was targeted? Based on a conversation I had with a MAD rep, I gather that they’re going after radio stations that play music and have a website. Those two factors, apparently, are evidence that the station has a computer, which leads MAD to figure that the station is using technology which violates the patented technologies.)

We’ve tried hard to keep our readers updated on the lawsuit and related matters.

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 CRB seeks input on last piece of NCE royalty rate puzzle for next five-year period.

A couple of months ago, we reported that the Copyright Royalty Board (CRB) had invited comments on a number of proposals to govern copyright royalties owed by noncommercial (NCE) broadcasters to ASCAP, BMI and SESAC from 2013 through 2017. The various proposals covered a substantial portion of the NCE universe, with one important exception. As we noted, the CRB’s notice did not mention proposed rates for NPR or PBS stations.

Now we know why.

It appears that NPR and PBS were still working on their proposed rates. But that work has now been concluded. In joint comments filed in May with the CRB, NPR and PBS have outlined their proposed approach, which would require payment based on the use of the musical work (or piece of art), the type of station performing it, and the manner in which it is performed. And now the CRB wants to know what everybody else thinks of the NPR/PBS proposal.

As in our earlier post, we’ll forego a detailed listing of all fees in favor of a general overview:

The overall structure would be unchanged from the 2008-2012 period. Unlike non-NPR, non-PBS stations – which will pay a blanket fee to ASCAP, BMI and SESAC (with a reduced fee option available to stations that favor news/talk/sports over music) – NPR and PBS stations would pay for the use of each individual piece of music.

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The 1,930 “strings” include brand names, famous place names, and generic words.

ICANN (Internet Corporation for Assigned Names and Numbers) has published the list of 1,930 “strings” people around the world have requested for new top level domain names. On “Reveal Day,” June 13, the Internet Community paused for a moment from its busy activities to stop and look at the nearly 2,000 new words and letters submitted by companies and organizations as possible additions to the Internet’s global nomenclature. None have yet been accepted, but the formal process of evaluation and objection has begun.

At 8:15 a.m. ET, ICANN sponsored a press and public event in London with its CEO Rod Beckstrom and Senior VP Kurt Pritz, featuring a big-screen scroll through the requested names, followed by questions from the press. The list has brand names, including .DELOITTE and .NOKIA, famous place names, including .ISTANBUL, .PARIS, .OSAKA and .LONDON, and generic words, including .RUGBY, .VIP and .KETCHUP.

I’ve been intimately involved in helping to negotiate the rules of new generic top level domain names for four years. What I will remember most about this event is the non-English new gTLDs that jumped off the screen, written in Chinese, Arabic, Japanese, and Cyrillic.  These foreign script new gTLDs represent a range of companies, geographic regions, and generic uses – such as BAZAAR.  Although they are only 116 of the 1,930 new applications, they represent a huge step forward, because they open the previously English-oriented Internet domain name system to a range of languages and to a majority of the world -- a key reason many of us worked so hard on this process.

The formal objections – based on legal rights, public interest, and possible confusion – will soon fly.  Some will involve fights among those who spent money in applying for the same new gTLDs, including seven applicants for .WEB, five for .FREE, and four for .RADIO. 

But before that happens, it’s good to take a moment to pause and celebrate. ICANN issued an invitation to the world to apply for new gTLDs. They were expensive, and the application process was difficult. Frankly, we weren’t sure who would show up. But the world responded. Just as many of us suspected, there is a global need for growth and innovation in domain names.

To celebrate Reveal Day, I’ll share some of the strangest new gTLDs that I found. The rest are posted on the ICANN website:

.FOO      .BOO     .GOO

.VIVA    .BABY    .LOVE

.PLAY     .POKER .FISH

.AND     .ARE       .OOO

.PARTY .FUN      .ONE

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Similar to ASCAP deal inked earlier this year, new arrangement sets rates through 2016

Earlier this year, the Radio Music License Committee (RMLC) and ASCAP reached a deal setting the royalty rates to be paid, through 2016, by broadcasters to perform musical works by composers repped by ASCAP.   The major components of the deal were (a) a simplified payment process and (b) a basic licensing fee equal to 1.7% of gross revenues.

We had since heard through the grapevine that RMLC and BMI had reached a deal, also running through 2016, for use of BMI-represented musical works. Good news – on June 11 RMLC and BMI issued a joint press release confirming the deal, and providing a summary of the details. Though the agreement must still be formally approved by the United States District Court for the Southern District of New York (because of some antitrust litigation involving ASCAP and BMI that goes back several decades), the prospects for approval are generally good. And that’s welcome news for broadcasters, because the BMI deal is very similar to the ASCAP deal.

Here are the high points:

Most importantly, the old “benchmark fee” based computation system is gone. It’s being replaced by a much simplified percentage of revenue payment rate, with broadcasters paying the same 1.7% of gross revenues to BMI that they are paying to ASCAP. 

Broadcasters can also take a standard deduction of 12% for revenue derived from terrestrial/analog and HD multicasting broadcasts and 25% for revenue attributable directly to new media.

The “per program” option reducing a news/talk station’s royalties by at least 50% from its blanket license is being retained. There is a base fee of 0.2958% of gross revenue with the same deductions as above.

There is also expanded rights coverage to accommodate new media uses.

This translates into a $70.5 million credit across the industry which will be reflected in broadcasters’ June, 2012 statements.   So what we have here are lower rates and a simplified computation mechanism that will apply to both ASCAP and BMI. 

That’s what is known in legal circles as a “win-win”.  Kudos to Bill Velez and his team over at RMLC for their great work.

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MAD files motion to lift the court-imposed stay of its patent infringement suit

As expected, on June 6, Mission Abstract Data (again, we’ll refer here to the company and its cohorts as “MAD”) filed a motion with the United States District Court in Delaware requesting that the stay in its lawsuit against a number of Big Broadcasters be lifted. (Note: our link here is to the Memorandum in support of the motion. As is customary, the motion itself is bare-bones in nature; the gist of MAD’s argument, such as it is, is set out in the memorandum.) Secondarily, the motion also asks that the court substitute DigiMedia Media Holdings Group, LLC (DigiMedia) as the plaintiff/counterclaim defendant in that suit.  

We’ve been waiting for this, hoping that MAD’s request (and the broadcasters’ response, which will probably be filed in a couple of weeks) would shed useful light on what the recent actions at the USPTO might mean.

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 Claiming recent victory at the USPTO, patent troll again seeks to get radio broadcasters to license automated programming system – but questions still remain

They’re baaaaaack!

Mission Abstract Data – or, more accurately, its successor (Digimedia), its licensing agent (IPMG AG), and a bunch of very aggressive reps (for simplicity’s sake, we’ll just refer to them all collectively as MAD) – are back, trying to convince radio broadcasters that they should be signing licensing agreements covering certain technology for which MAD claims to be the patent holder. While MAD’s materials do not expressly threaten that non-signing broadcasters will be sued, recipients might still feel the cold chill of potential litigation as they consider MAD’s pitch.

The technology in question involves automated programming systems. MAD itself didn’t create the systems or get them patented. (That honor goes to a gentleman named Robert J. Goldman, who obtained the two patents in 1997.) But MAD acquired the patents and has, for more than a year, been seeking to extract licensing deals from the radio broadcast industry. In March, 2011, MAD sued a passel of very large broadcast groups for patent infringement; soon thereafter it began peppering radio operators large and small with mailings and phone calls.   You can read our previous posts about MAD’s activities here.

As we reported last fall, the MAD lawsuit (pending in the U.S. District Court for the District of Delaware) was stayed pending further review of the underlying patents at the United States Patent and Trademark Office (USPTO). The stay made sense, particularly in view of the apparently impermanent nature of the USPTO’s determinations relative to the validity of the patents in question. Those patents were originally approved back in 1997. But then approval of major elements of them was withdrawn in October, 2011.

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[Blogmeister’s Note: Recently, the CommLawBlog Contracts Guy, Steve Lovelady, conferred with Kathy Kleiman, Fletcher Heald’s Internet Maven, in the preparation of transaction documents involving the sale of a broadcast station, a sale which involved a number of important Internet-related assets. The two concluded that 20th Century asset sale/purchase agreements – even agreements that contracting parties still use, often out of force of habit – don’t include adequate provisions for 21st Century intellectual property issues. They prepared the following post based on that experience. The Contracts Guy is especially grateful for the Internet Maven’s extensive familiarity with the Internet, which came in handy in identifying and capturing the substance, and value, of a station’s online intellectual property assets.]

 Contracts for the purchase/sale of broadcast stations are a bit like recipes. Particular broadcasters and their lawyers tend to have their favorite versions which include provisions that they happen to like. Maybe they drafted those provisions themselves. Maybe the other party to some deal they did a long time ago drafted them and our particular broadcasters (and their lawyers) liked the way the provisions worked. Who knows?

Whatever may be the case, when a new deal pops up, those broadcasters (and their lawyers) normally don’t waste time creating a brand new asset purchase agreement from scratch. No. More often than not they rummage through their file of previous deals. When they find a contract that comes close to the outlines of the new deal, they tweak the old contract as necessary to make it work for the new deal – just as a chef, in assembling a new meal, starts off with tried-and-true recipes that can be tweaked here and there to accommodate the guest’s tastes and the ingredients available.

That approach tends to work well. It’s efficient and economical. And it affords contracting parties the psychological comfort of using documents they’re familiar with.

But reliance on the old can cause problems. Contracts handed down from year-to-year and deal-to-deal may need to be freshened up, just like old recipes. And that’s particularly true with respect to broadcast deals in the 21st Century.

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List of applicants to be disclosed on June 13.

The universe of Internet addresses will soon be expanding. On June 13, the Internet Corporation for Assigned Names and Numbers (ICANN), the organization formed in the late 1990s to oversee the global domain name system, will unveil the 2000+ applications for a host of new “Generic Top Level Domains” (gTLDs). Once in place, these will change how all of us use the Internet.

First things first. A top level domain (TLD) is the term that appears “to the right of the dot” in Internet addresses. It comes in two flavors: a “country-code” top level domain, or ccTLD (e.g., “.US”, “.FR”, “.UK”) and a “generic” top level domain (or gTLD), including most of the ones we use every day, such as “.COM”, “.ORG”, and “.GOV”.

Since ICANN took over domain name management in 1999, it has added a few gTLDs, but there are only 21 now available for the world to use. Each gTLD is entrusted to a Registry which is responsible for the TLD’s technical management, including proper operation of the registry zone servers and dissemination of the TLD zone files. Registries play a role key in the technical management of Internet infrastructure and in stability and security of the Net.

Registries do not sell domain names to the public. That task is reserved for “Registrars,” who handle the retail side of the domain name operation. They register “second level domain names” to the left of the dot, e.g., “fhhlaw” in fhhlaw.com. GTLD Registrars, like gTLD Registries, are under contract to ICANN, which encourages competition among them. GoDaddy, famous for its Super Bowl commercials, is the largest of these.

ICANN is now introducing competition to the top level as well.

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Internet expert returns to co-head Internet Law and Policy Group.

Fletcher Heald & Hildreth, P.L.C. is pleased to welcome Kathy Kleiman back into the FHH fold.  Kathy was an associate with the firm in the 1990s, but she left to explore the then-just-developing world of Internet Law (but not before she had co-founded the firm’s Internet Law Group, one of the first of its kind).  She now returns as FHH’s Internet Counsel to co-lead its Internet Law and Policy Group. 

To say Kathy is well-suited for the job is an understatement.  She helped found the Internet Corporation for Assigned Names and Numbers (ICANN), the organization that coordinates the domain name system without which the Internet wouldn’t be the Internet.  Kathy was a key drafter of the domain name dispute policy everyone uses today, and an editor of many sections of the rules governing new top-level domains.  She has traveled to ICANN meetings in more than a dozen countries on six continents and spoken on Internet Free Speech, intellectual property protections, fair use, privacy and due process around the world.

Kathy is Beantown-educated – Harvard undergrad, BU law (both with honors, thank you very much).  She currently lives in Falls Church, Virginia, where she dabbles in community leadership and politics when she’s not tending to her two kids.  In what passes for free time chez Kleiman, she is also producing a documentary about the six women who programmed ENIAC, the world’s first modern computer, and thus founded the field of modern programming. (Want to know more about Kathy’s background? Check out her extensive résumé here.)

Kathy will be working with clients on a wide range of projects relating to: domain name conflicts; challenges and opportunities likely to be encountered in connection with new top level domains; website protections; and Free Speech and intellectual property issues in the Internet age.  And, if the Blogmeister has anything to say about it, she’ll be a regular contributor here.

She can be reached at 703-812-0476, by email at Kleiman@fhhlaw.com, or at Skype ID Kathy.kleiman.

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Comments, objections, due by May 25, 2012

If you’re a noncommercial educational (NCE, a/k/a “public”) broadcaster, heads up. The Copyright Royalty Board (CRB) has issued proposed rates and terms for the use of various copyrighted works by public broadcasters from January 1, 2013 through December 31, 2017. You’ve got 30 days – to May 25, 2012 – to sift through the complex series of rate schedules the CRB has put on the table.

So just what’s on the table? The rates that NCE broadcasters will have to pay to copyright holders (through those holders’ agents, including ASCAP, BMI and SESAC) for the right to broadcast, during 2013-2017, the underlying music and lyrics in all those copyright holders’ songs. (Technically, the CRB proposal also covers the use of pictorial, graphic and sculptural works, but those tend to have less impact on broadcasters.) For the CRB’s purposes, the universe of NCE broadcasters encompasses all entities treated as NCE licensees by the FCC, including educational institutions and large scale public radio and TV licensees.

The proposed rates are the product of an arcane ratemaking process that began on January 5, 2011. First, the CRB invited potentially interested parties to, in effect, sign up to participate. Who showed up? The usual suspects. For the copyright holders, there were: ASCAP; BMI; SESAC; the National Music Publishers Association and the Harry Fox Agency; and the Church Music Publishers’ Association. Broadcasters on board included: the Educational Media Foundation; NPR/PBS/CPB; the National Religious Broadcasters Noncommercial Music License Committee; the Catholic Radio Association; and the American Council on Education. 

The CRB then turned all the players loose for a three-month negotiation period. The goal was to see if the parties could come to agreement on the rates to be applied to the various subsets of noncommercial broadcasting.  Some specific agreements were reached between specific public broadcasting entities and specific copyright owners (or their representatives). Those were not, and will not be published, in the Federal Register, as their reach is limited to the particular parties to the various agreements.

The more generally applicable agreements are submitted to the CRB for its approval.

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 One monopoly sues another -- for antitrust violations!  Is this a great country or what?  The Swami weighs in.

In some confrontations, it’s tough to say who to root for. Godzilla vs. Mothra, for instance. Or Duke vs. UNC. Or Liverpool vs. Manchester City.   (For the record, I’m going with (1) Godzilla, (2) UNC and (3) a draw with a number of red cards and several non-career threatening injuries thrown in for good measure.)

And now we have SiriusXM vs. SoundExchange.

SiriusXM – the monopolistic satellite radio provider that many radio broadcasters view as an archenemy – has sued SoundExchange – the monopolistic digital music licensing agency that many radio broadcasters view as an archenemy. SiriusXM’s claim is that SoundExchange (along with a co-defendant, the American Association of Independent Music (A2IM)) has engaged in antitrust violations and tortious interference with prospective economic advantage.

(The notion that SiriusXM, an entity created by the merger of the only two satellite radio providers, would complain that somebody else is violating the antitrust laws is rich with irony. But I digress.)

It’s still way too early for me, the Swami, to try to predict how this suit might eventually end up. But I don’t think it’s too early to imagine who the overall winners and losers might be as this litigation plays out. We’ll get to that in a minute.

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Don’t be surprised when Broadband the FCC Cat pops up on your screen.

The Commission has long bemoaned the fact that the Great Unwashed are “woefully ignorant” of the nitty-gritty details of their Internet access. Not for long. That bell you just heard was signaling the start of classes at the University of FCC, Online Division. Attendance is required. Prepare to get schooled.

In a surprising move – made all the more surprising by the low-key way in which it was disclosed – the Commission is taking aggressive steps to correct the rampant problem of high tech know-nothingism.

Meet NOITALS – the Nationwide Online Information Tracking and Logistics System. (Apparent pronunciation: “KNOW-IT-ALLS”.) In a public notice announcing, among other things, an expansion of the 2012 Measuring Broadband America Performance Study of Residential Broadband Service in the U.S., the Commission mentions NOITALS, pretty much in passing, without any fanfare at all. The Commission plans to use NOITALS to measure everybody’s Internet access speed, along with other parameters of Internet performance). 

How’s it going to do that? 

It seems that NOITALS enables the Commission to see what’s going on in each individual computer, nationwide, without the intervention of the computer’s user.

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“Specialty station” list updated; MPAA objections rejected

As we reported last November, the U.S. Copyright Office (CO) was then in the process of updating its list of “specialty stations”. Those are stations that, when carried on cable systems as “distant signals”, trigger lower royalty burdens for the cable operator than other “distant” stations do. (Check out our earlier post for a more detailed explanation of how that works.) 

The CO has now completed its updating process. In a Federal Register notice, it has announced that all stations that had claimed to be “specialty stations” will be included in its official listing. This should not come as much of a surprise, since the CO has long accepted self-certifications from stations looking to get on the list.  Think of it as a kind of honor system.

That didn’t stop the Motion Picture Association of America (MPAA) from objecting to several of the proposed additions to the list. MPAA’s members receive distributions from the copyright royalty pool generated by (among other things) distant signal royalty payments. So MPAA’s members benefit more from distant signal carriage charged at full copyright rate, rather than carriage at the discounted “specialty station” rate. In its objections, MPAA urged that the CO both can and should wade into – and independently resolve – disputes concerning “specialty station” status. Needless to say, MPAA also argued that some of the claims of “specialty” status were just self-serving noise.

Sorry, the CO has now ruled – we stand by the position we’ve always taken, which is that we don’t have any legal authority to resolve disputes of that kind. We will maintain our self-certification honor system. Here’s our new specialty station list, which includes the stations whose status was contested.

What happens now?

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Another day, another way to move video to the Internet . . . and another set of lawsuits.

Welcome to the latest bout in the Alternate Video Delivery System Smackdown Series. In this corner, the upstart challenger, Aereo (formerly known as Bamboom Labs, Inc.); in that corner, pretty much every major broadcast network.

Aereo is the latest innovator seeking to bring video content from one source (in Aereo’s case, over-the-air broadcasting) to subscribers in some alternate fashion – a fashion that ideally makes it attractive enough to cause consumers to fork over $12/month to Aereo. Aereo plans to deliver a full (or at least nearly full) array of over-the-air broadcast programming to you through the Internet. That, of course, means that you would be able to access that programming through whatever Internet-accessible device you might choose – tablet, smartphone, desktop, big screen TV in your living room, etc. The programming could be streamed as it is being broadcast, or it could be accessed on a delayed basis, just like shows you might otherwise save on a DVR.

And that’s Aereo’s angle: as Aereo sees things, its service “enables consumers to access broadcast television via a remote antenna and DVR”. Actually, make that “cloud DVR”, a term Aereo slips into its on-line response to the two lawsuits brought against it by the major TV networks.

What exactly is a “cloud DVR”? It’s a quasi-imaginary device – actually, a combination of devices – that affords the user the ability to access streamed or recorded content from broadcast stations through the Internet. A crucial element of the technology is a teeny-weeny antenna – about the size of a dime (see illustration, above, taken from the Aereo website) – that Aereo uses to receive OTA broadcasts. When you subscribe to Aereo, you are assigned one such antenna – it’s yours and (supposedly) nobody else’s. It’s hooked to “massive amounts of storage and super-fast Internet connections”. You are then given an “elegant interface” with which to “control your antenna”. You can pick a channel to watch or you can tell it to record for later viewing.

So it’s just like sitting in your living room, fiddling with your cable remote, right?

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New deal sets ASCAP rates through 2016

The Radio Music License Committee (RMLC) and the American Society of Composers, Authors and Publishers (ASCAP) have announced a deal regarding the rates and terms to be paid by radio stations for the right to perform musical works through 2016. You may recall one of our earlier discussions of this topic; if you do, you're already aware that setting these rates and terms is a rather extensive process, since ASCAP (and BMI) must have its agreements approved by a United States District Court for the Southern District of New York, a condition of a consent decree which settled a lawsuit back in the 1940s.   

This particular go-round seemed pretty intense, even by RMLC-ASCAP standards. After the prior agreement expired at the end of 2009, a "bridge fee" was set as both sides began dual sets of negotiations -- first working on an interim rate that would be in place until this permanent deal was reached. 

We've heard rumors for a few weeks that the final deal was reached but, of course, nothing is final until the Southern District says it is final. The Southern District has spoken and we think broadcasters will like what they hear. 

According to a press release issued by RMLC, the broadcast industry will pay rates closer to those paid in 2009 than what they'd expect in 2012. In fact, broadcasters are getting a rebate! Part of the deal involves a $75 million credit against amounts paid in 2010 and 2011, which will be instituted in increments of $ 15 million per year (and is on top of $ 40 million in industry-wide rebates implemented when the interim rate was approved in 2010). So check your statements, there should be an immediate fee decrease of about 30% per station starting this month!

Other aspects of this deal that broadcasters will find attractive:

Those using the “blanket license”" (most stations and probably all music stations) will be especially happy to know that the calculation and reporting process will be simplified: you'll now pay a straight 1.7% of gross revenue. The icing on the cake is the ability to deduct 12% for revenue from multicasting sources and a 25% for revenue from new media.

Those using the “per program” option (mainly news and talk stations) will also pay a straight percentage of gross revenue, in this case its 0.2958% with the same deductions as above.

Finally, agreement will allow for greater innovation in terms of expanding into new media

Radio broadcasters should look for new license forms to be available within a month and should also hope that this will spur a similar resolution in the RMLC's negotiations with BMI.  They should also thank Bill Velez and the folks over at RMLC for some great representation on their behalf.

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[Blogmeister’s note: Kevin Goldberg, our resident Swami when it comes to predicting Supreme Court decisions, is also our guru (Swami? Guru? Yes, he’s that multicultural) for all things trademark. Since it’s That Time Of The Year, we asked him to re-visit the NFL’s perennial effort to control the use of the term “Super Bowl®”. The Swami initially larded his response with tons of references to Tim Tebow in a transparent attempt to attract all kinds of hits to his post. But we’re obviously above the kind of cheap ruse that would depend on repeated use of the name “Tim Tebow” to improve CommLawBlog®’s hit stats. Accordingly, we have edited out of Kevin’s post the name “Tim Tebow” (who plays for the Denver Broncos® – who aren’t even playing in the Super Bowl® this year. Everybody knows it’s the New York Giants® and the New England Patriots®, featuring Tom Brady).]

Football is a game of numbers. Here are some interesting Super Bowl®-related numbers for you:

455      The number of trademark applications that have been filed listing the “National Football League” as the applicant/owner

141      The number of federally registered trademarks owned by the “National Football League”

9          The number of trademarks containing the word “Super” that are owned by the National Football League

11        The number of international classes in which these trademarks exist

Ideally you’ve figured out by now that this post serves as our annual reminder – for the fourth year running – that the National Football League takes its trademarks very seriously. The league uses those marks to protect its exclusive right to use the term “Super Bowl®”. As the NFL®  sees it, that right extends not only to the game itself, but also to a mind-numbing range of stuff from clothing to jewelry to party invitations/napkins/decorations/posters to sporting goods to a concert series to things like . . . television broadcasting services.

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Meet the new year, same as the old year, as webcasting royalty regimen remains largely unchanged.

“Evergreen” stories – The kind of stories that recur regularly. Stories like “NFL reminds non-paying universe never to utter the words ‘super bowl’”.  You’ve seen them before.

And if you haven’t yet figured it out, you’re reading one right now.

Welcome to the annual reminder materials that have to be filed with SoundExchange under the statutory license applicable to the digital transmission of sound recordings. This applies to webcasters and streamers.

The fact that this is an evergreen, of course, doesn’t mean you should stop reading right now. Quite the contrary. An evergreen – well, at least this evergreen – comes back every year because it relates to stuff that merits attention every year. 

And the webcasting requirements are especially right for the over-and-over-and-over evergreen treatment because I know that, no matter how often I expound on the subject – here on CommLawBlog, at broadcast conferences, in e-mail outreach – there are broadcasters out there who still don’t get it. Maybe they’re unaware of the requirements, maybe they’re aware of but confused by them – or maybe they regard the requirements as something less than “real law”, despite the fact that those requirements have become more and more ingrained into the fabric of the radio industry with each passing year.

Whatever. My mission is to do what I can to lay out the annual SoundExchange filing requirements so that everybody that has to comply with them can know what to do. 

Let’s get to it.

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A new way to put the quick kibosh on cybersquatters – but it will help if you’ve registered your trademarks first

For years I’ve urged readers to register their major identifiers – corporate names, slogans, call signs, etc. – as federal trademarks. (Check out a couple of my posts dating back to 2007 and 2009 if you doubt me.) And now the time has come to beat that drum again, with the impending roll-out of a new “Uniform Rapid Suspension System” (URS) designed to make it easier to protect such marks against cybersquatters. 

Cybersquatters are folks who register Internet domain names based on recognizable trademarks or tradenames belonging to others. Their goal might be to use the familiarity of the underlying mark to attract a lot of traffic to their site, or it might be to try to sell the domain name to the owner of the trademark/tradename, usually at a ridiculously inflated price.

The Internet Corporation for Assigned Names and Numbers (ICANN) – the international body that regulates domain names, among other things – has a system in place to help rightful holders of trademarks targeted by cybersquatters. That’s the Uniform Domain Dispute Resolution Policy (UDRP),which provides initiate a reasonably quick arbitration process aimed at squelching unauthorized use the mark and transferring control of the infringing domain name to the trademark owner. (Additionally, trademark owners can also sue for infringement in federal court – if they have the time, money, patience and masochistic inclination to undertake a serious piece of litigation.)

But ICANN is reportedly on the verge of implementing the URS.

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Patent infringement lawsuit put on hold while Patent Office decides whether there were any patents to infringe

Mission Abstract Data (previously, now, and always, to us: “MAD”) has been dealt another setback. MAD is the company trying to hold pretty much the entire radio broadcast industry accountable for alleged patent infringement. Now, less than a month after the United States Patent and Trademark Office (PTO) rejected several of the claims underlying MAD’s patents (those would be Nos. 5,629,867 (the 867 patent) and 5,809,246 (the 246 patent), the U.S. District Court for the District of Delaware has granted a stay sought by radio broadcasters who are on the wrong end of MAD’s patent infringement suit. As a result, that case is now on hold pending final resolution of the PTO’s reexamination.

But broadcasters might want to hold off on the celebrations just yet.

While many figured that a stay in the Delaware infringement action would effectively resolve that litigation in favor of the defendant broadcasters (and secondarily kill off MAD’s efforts to extract licensing fees from the rest of the industry), we’re not convinced that you can read that much into the court’s opinion. Sure, it’s a blow to MAD, which could have used a victory to put further pressure on the defendants and potential licensees to settle rather than litigate.  But it’s not the slam dunk that many expected.

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CO seeks comments on latest “specialty station” list

Like Santa Claus, Oskar Schindler, David Letterman and Joe McCarthy, the Copyright Office (CO) has a list. The CO’s list consists of TV stations which claim to be “specialty” stations, a desirable status for some in the copyright world (more on that below). The CO is in the process of updating its list, and it has invited comments on some possible changes.

Not that the CO is in the business of deciding who should or shouldn’t be on the list. 

But before we get into all that, a bit of history may be in order. Back in the 1970s, the FCC’s regulation of the cable TV industry included limits on carriage of TV stations beyond the reach of their over-the-air service (known as "distant signals"). Those rules had been adopted against the background of a continuing policy debate about the implications of extended-area cable carriage for copyright owners, who like to be able to restrict distribution of their product, and the public, which likes to be able to watch more stations. Generally speaking, if a cable system carried a distant signal, the system had to pay more in copyright fees. But the FCC recognized that cable carriage of certain “specialty stations” might be desirable even if they originated far away from the cable system, because specialty stations are usually not locally available outside the largest markets. Accordingly, the Commission established a regulatory classification for such stations, which were defined as stations that

generally carrie[d] foreign language, religious, and/or automated programming in one-third of the hours of an average broadcast week and one-third of the weekly prime-time hours.

With the enactment of an overhaul of the copyright law in 1976 that largely eliminated prohibitions on distant signal carriage while imposing a higher royalty premium for such carriage, the need for Commission involvement waned, and in 1981 the FCC repealed its distant signal carriage rules and generally stopped worrying about “specialty stations”. A station’s self-identification as a “specialty station” may still come into play in some limited circumstances before the FCC – for example, if such a station seeks to be added to a DMA for must-carry purposes, its burden might be a tad lighter – but for the most part it’s a dead issue at the FCC.

Not so in Copyright Land.

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PTO Office Actions threaten to gut MAD claims of patent infringement

Bad news for Mission Abstract Data (whom we’ll once again dub “MAD”). They’re the folks claiming to own two patents supposedly being infringed by almost every radio broadcaster in the country. (Unclear on the background here? Read our last two posts on the subject. We’ll wait for you.)    

In this, our third installment of “As the Patent Turns”, there’s been a major development in MAD's quest for broadcast domination. Those patents it claims to own? Turns out MAD may have spoken too quickly. 

When last we left MAD and its targets, the United States Patent and Trademark Office (PTO) had just announced that it would be reexamining the underlying patents, raising the possibility that the foundation of MAD’s whole approach is nothing but, well, nothing.

We told you to stay tuned for the next exciting installment, and now here it is.

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“Reexaminations” could put the kibosh on MAD patent infringement claims against radio stations

Has the United States Patent and Trademark Office (PTO) upended a litigation strategy threatening to upend the radio broadcast industry? It’s still too early to tell, but word out of the PTO could be bad news for Mission Abstract Data. You remember the folks at Mission Abstract – they’re the ones looking to obtain “licensing fees” from radio broadcasters using automated programming software (which at this point can be defined as “all radio broadcasters”).

I wrote about Mission Abstract (we called them “MAD” back then – we’ll keep doing it here) a couple of two months ago. To recap: MAD claims that it has patents covering pretty much any kind of computer-based radio program automation. Wielding that impressive claim, MAD filed a patent infringement lawsuit against several of the largest radio broadcast groups in the country. The case is still in its early stages. 

But MAD may be looking to invite a lot more folks to its little party. As I reported, MAD had already been contacting a “second round” of broadcasters, mainly smaller station groups, to offer a “licensing agreement” containing a release from any legal action. And more recently, we understand that yet a third round of broadcasters have lately been receiving similar come-ons from MAD. (The third round includes smaller broadcasters, even some single station licensees.) While no overt threats of new lawsuits are made, it’s not too hard to get the impression that declining the offer of a licensing agreement could get you a seat at the defendant’s table if another round of lawsuits gets filed.

Best I can tell, none of the “second round” broadcasters have signed the proffered licensing agreement.  (I’d have expected a MAD-issued press release issued by MAD if that had happened – what better way to spur others to go with the flow?)  

Meanwhile, the patent infringement lawsuit against the really big broadcast groups has inched forward with no real surprises or important action points: discovery’s gotten started, some court-ordered settlement conferences, too – but there’s been no indication that either side has gained any advantage.

Until now.

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We’ve told you before and we’re telling you again: federal trademark registration of your call signs, slogans and other identifiers is a GOOD IDEA. Here’s yet another reason.

As any right-thinking broadcaster should know by now, it’s important to register – in the federal trademark system – your call signs, slogans and the other station identifiers you’ve used to create your station’s identity. It’s not like I haven’t harped on that before – not once, not twice, but three times. Still, I suspect that there are some of you out there who resist my urging – so this time, I’m going to turn to one of the oldest tricks in the book to get your attention:

PORN!!! SEX!!! NUDITY!!!

Sorry about that, but this is really important, because yet another reason for registration has entered the scene: you don’t want your call sign associated with an adult-oriented website, do you?

It could happen.

The organization responsible for the system used in naming Internet sites – that would be the Internet Corporation for Assigned Names and Numbering (ICANN) – recently established a new “top level domain”, i.e., the last part of your basic internet web address. Think “.com”, “.org”, “.gov”, “.edu”.

Now you can add “.xxx”, a domain that will be reserved for “adult-oriented websites”.

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As July slips into August, it’s time again to remind television broadcasters that Copyright Royalty Claim forms – for cable retransmission copyright royalties and/or satellite copyright royalties earned during 2010 – are due at the Copyright Royalty Board by August 1, 2011 (since July 31, the normal deadline, falls on a weekend this year). This is your opportunity to lay claim to a share of the annual fund from which television broadcast stations get paid for their programming that is retransmitted by cable and satellite service providers outside of their respective service areas.

In general, TV stations that are carried on cable systems as a distant signal, and those stations that provide programming to other stations that are carried as a distant signal, are entitled to royalty payments.  A cable system is “distant” vis-à-vis a station if the system is: (1) outside the station’s DMA; and (2) at least 35 miles from the station’s city of license; and (3) outside the station’s predicted Grade B contour.  Stations whose programming is carried on satellites to subscribers outside the station’s DMA are also entitled to royalty payments.

The Copyright Office encourages stations to file their Claim Forms online.  The forms can be found at:  http://www.loc.gov/crb/claims/.

If you need our assistance in preparing the forms, please let us know.

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Group that decries hidden interests keeps its true interests well hidden.

Here in Washington, we’re used to a certain amount of hypocrisy. It’s part of the atmosphere, like exhaust fumes from the high school tour buses.

But once in a while even we get taken aback. No, not about the debt-limit debate, although that also strains our tolerance. We are referring to an unusual spate of filings in one of the FCC’s rulemaking dockets.

The rulemaking itself is an inside-the-Beltway matter. The FCC allows interested parties to file views on its proceedings even after the published comment schedule has expired. These late submissions are called “ex parte” filings, from the Latin for “one-sided,” which they generally are. In the past, they offered a way to put useful technical and policy information before the FCC staff. With the advent of electronic filing, the ex parte process has also become a way for special interest groups speaking through complaisant individuals to flood the FCC with dozens, sometimes hundreds, of nearly identical statements.

The rulemaking in question asks for comment on whether groups filing ex parte statements should have to identify who they really are. After all, an organization called “Citizens for Better Phone Service” may in fact be a telephone company seeking relief from regulation. “Coalition for a Free Internet” may be a front for a cable company opposed to network neutrality rules. And so on. Such groups are often called “AstroTurf®” entities: an artificial construct masquerading as a grass-roots organization. (AstroTurf ® is a registered trademark, even if the registration doesn't cover this particular use of the term.)

In addition to the usual suspects – lobbying groups that make frequent ex parte filings with the FCC – this rulemaking has attracted well over 200 identical submissions signed by individuals. They all read as follows:

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Mission Abstract Data is asserting patent rights to automated radio programming systems – but its claims remain to be validated

Here’s a quick quiz for radio broadcasters: Mission Abstract Data. Ever heard of them? Does business as “DigiMedia”. Maybe that rings a bell.

You’ve probably never heard of them under either name. They don’t own a single radio station. Yet they might just become the most influential company in radio broadcasting this year.

That’s because Mission Abstract Data (MAD) is trying to enforce its rights in two patents granted in 1997. According to MAD, those patents are crucial to the automation of radio programming. So if you happen to be one of the many stations relying to any degree on program automation, you might be hearing from these folks sooner rather than later.

The patents in question are Numbers 5,629,867 and 5,809,246. They are very similar, with nearly identical descriptions of a system for “retrieval of music from a digital database”. They cover:

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S. 978 passes Senate Judiciary Committee, heads to full Senate

Just last month we reported on the introduction of S. 978, the bill that would impose felony penalties for some unauthorized streaming of copyrighted audio or audiovisual content. We opined that the bill was likely be getting some attention and movement.

Right we were.

On June 16, S.978 passed the Senate Judiciary Committee by a simple voice vote, less than one month after introduction. Maybe not the fastest legislative action we’ve ever seen, but certainly fast enough to suggest strong prospects for passage in a Congress where any forward motion is news. It’s also worth noting that a “related” bill cracking down on copyright infringement – S. 968, the PROTECT IP Act of 2011 (short for “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011”, but you probably already had that figured out) – made it through that same Committee three weeks ago, so there’s a good chance that both could go to the Senate floor at the same time.

Check back here for updates – we’ll keep you posted.

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Four more decisions from U.S. District Judge Beryl Howell, thousands more disappointed "John Doe" defendants.  Welcome to Washington, DCT (District of Copyright Trolls)!

To paraphrase Chief Brody, they’re gonna need a bigger courtroom down at the U.S. District Court for the District of Columbia. That’s because Judge Beryl Howell has been at it again. As we reported last month, in March Judge Howell hung out the welcome sign in a big way for plaintiffs seeking to bring “John Doe” lawsuits alleging copyright infringements by 1,000+ unnamed defendants. And now she’s issued four more similar decisions in cases with as many as 5,000 defendants! (Check them out here, here, here and here.)

Welcome to D.C., your go-to spot for BitTorrent litigation. Troll out the red carpet!

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Senate bill would criminalize unauthorized streaming.

The White House and Congress have finally managed to agree on something. We’ll concede that it’s a relatively minor issue . . . unless you’re engaged in the illegal streaming of copyrighted content, in which case you could be looking at up to five years, maybe even ten, in the Big House and a hefty fine to boot.

In March we reported on a “White Paper” in which the President’s U.S Intellectual Property Enforcement Coordinator laid out a number of “Intellectual Property Enforcement Legislative Recommendations”.   One of those recommendations: Congress should “clarify that [copyright] infringement by streaming . . . is a felony in appropriate circumstances.” 

The White Paper wasn’t clear whether the recommendation applied to music, video, or both. Nor did it say exactly what standard of culpability would apply. For instance, would innocent mistakes – the streaming of audiovisual content for which you thought you had cleared all copyrights – be subject to the felony penalty? We surmised that the Administration was mainly concerned with illegal streaming of video, which is occurring with increasing regularity but not technically punishable under existing law. (Federal criminal law currently applies to illegal file sharing or downloading, but not to instantaneous streaming.)

A bipartisan trio of Senators has now acted on the White House’s recommendation. On May 12, 2011, they introduced S. 978, which would amend 18 U.S.C. §2319 and 17 U.S.C. §506 to include streaming within the definition of felonious criminal conduct. (For those of you who keep track of such things, Minnesota Democrat Amy Klobuchar is technically the bill’s sponsor, but she is joined by fellow Democrat Christopher Coons from Delaware and a Republican from Texas, John Cornyn.)

The bill makes two fundamental changes involving 17 U.S.C. §506 (the section of the Copyright Act that defines “criminal infringement”, i.e., the kind of copyright infringement that can result in jail time) and 18 U.S.C. §2319 (the section of the federal criminal code that spells out the potential penalties for criminal infringement).

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More signs of the need for a fresh approach to copyright licensing for audiovisual content

In recent months I’ve suggested – here and here, for example – that changes in the video delivery landscape around us demand a good, hard look at the various laws which govern transmission and, especially, retransmission of audiovisual content usually seen on television.   It’s fair to say that, while I don’t advocate any particular approach, I support change that brings the various laws in this area into line with the viewing habits of an increasing amount of television watchers.   

But that would entail a herculean effort involving potential changes to the regulations of two major government agencies: the FCC and the Copyright Office. The FCC would be looking, or re-looking, at such things as the definition of an MVPD as well as rules governing must carry, retransmission consent, fin/syn and program exclusivity. The Copyright Office would have to examine its regs covering cable and satellite compulsory licenses. Changes there and elsewhere would have to be justified in light of actual evidence that the media delivery landscape is changing.  (I’m sold on this, but – if you can believe this – the Administrative Procedure Act requires more than my personal stamp of approval).

So that’s why I’m happy to see signs of serious inquiry on two fronts.

 One such sign is the FCC’s Further Notice of Inquiry in the Matter of Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming (FNOI), released on April 21.   On its face, this is a pretty mundane request by the FCC for information relating to competition in the video marketplace. In fact, it’s the Commission’s 14th annual review since Congress first directed the FCC to conduct such reviews back in the 1992 Cable Act.

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Signs point to tensions between the laws of the past and the technology of the present and future

Not to go all chicken little on you, but the world may be coming to an end – the world of copyright and compulsory licensing as we have known it for the past several decades, that is. I’ve been following the evolution of content delivery across all platforms (including the legal systems which underlie content delivery), and have in recent months noted a recurring theme: the legal rules governing delivery of content – and audiovisual programming, especially – are falling farther and farther behind the state of the technological art. Traffic rules developed during the horse-and-buggy days don’t really help anybody in an age of superhighways and high-performance cars. So maybe it’s time for legislators and regulators to roll up their sleeves and get to work developing a copyright licensing system for the 21st Century.

Examples? How about online streaming providers ivi, Inc. and Filmon.com, who have been trying to cram the square peg notion of an “on-line cable system” into the round hole system of traditional compulsory licensing. They’re clearly outliers making long shot attempts to revolutionize television viewing. From a legal standpoint they’re still on the outside looking in, as both have been told by federal courts that they are not acting within the boundaries of the Copyright Act. Yet, as we reported on these cases, we prophesied that ivi.Inc and Filmon.com may simply be ahead of their time.

Our predictions weren’t far off the mark.

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With decision from D.C. judge, copyright trolls may have found a new go-to jurisdiction

Score one for the trolls . . . the copyright trolls, that is. A recent preliminary decision by U.S. District Judge Beryl Howell may lead those trolls to funnel much if not most of their litigation through the U.S. District Court in Washington, D.C. Judge Howell’s decision will almost certainly make it easier for the trolls to pressure their defendants – including even purely blameless defendants – into pre-trial settlements favorable to the trolls.

Disclosure: I know Judge Howell. It’s not like we’re friends or anything, but I did meet her when she was working on FOIA legislation with the Senate Judiciary Committee. She’s extremely smart, well-intentioned and easy to work with. 

But as the newest addition to the U.S. District Court in DC, she has certainly not endeared herself to those interested in First Amendment rights – which clearly includes me – with her recent ruling in Call of the Wild Movie, LLC, v. Does 1-1,062.

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Three weeks ago we reported on the release of a Notice of Proposed Rulemaking (NPRM) addressing the thorny issue of retransmission consent.  With the publication of the NPRM in the Federal Register, the deadlines for comments and reply comments have now been set. Comments are due by May 27, 2011; reply comments are due by June 27, 2011. Additionally, if you would like to comment on the “information collection” aspects of the Commission’s proposals (in connection with the Paperwork Reduction Act), you have until May 27, 2011. Check out the Federal Register notice for details.

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Administration white paper urges creation of performance right for broadcast of sound recordings

Last June, the White House officer charged with protecting “the ideas and creativity of the American public” – that would be the U.S Intellectual Property Enforcement Coordinator – issued a Strategic Plan on the enforcement of Intellectual Property. Prepared in coordination with a wide range of Federal agencies, the Strategic Plan examined existing laws to identify (among other things) “deficiencies that could hinder enforcement” of intellectual property (IP) rights. Following up on that initial effort, the White House has now issued the Administration's White Paper on Intellectual Property Enforcement Legislative Recommendations (White Paper), in which it offers suggestions for legislation to beef up IP enforcement.

Much of the 20-page report – which addresses such esoteric as corporate espionage, drug counterfeiting and criminal sentencing standards – is probably of limited direct interest to our readers. But two items in the White Paper do warrant attention here.

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At Congress’s direction, Copyright Office opens inquiry on alternatives to compulsory licenses

While much attention in the MVPD/broadcaster world has recently been focused on the FCC’s inquiry into possible changes to the retransmission consent process, a separate proceeding is cranking up over at the Copyright Office that could eventually lead to far more fundamental changes to the must-carry/retrans system. The Copyright Office is exploring the possible elimination of the compulsory copyright licenses that form the core of the system that determines how, and by whom, over-the-air broadcast programming can be retransmitted. So while the FCC may be contemplating various changes, significant or otherwise, within the existing box, the Copyright Office is not just thinking outside that box; rather, it’s contemplating a situation in which that box no longer exists at all.

Are we surprised? Not at all (and not just because we have predicted eventual changes in this area as television delivery methods continue to evolve). Anyone familiar with the minutiae of STELA (i.e., the Satellite Television Extension and Localism Act of 2010) has seen this coming, because a provision (Section 302, if you’re looking) in STELA ordered the Copyright Office to report on possible “mechanisms” or “methods” that might be used to “phase-out” compulsory licensing requirements.  Are we scared? Not really, since this is just a very preliminary step in a process that might go nowhere.

Nevertheless, when a majority of both Houses of Congress makes noises about “phasing-out” the compulsory licenses, attention should be paid.

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FCC proposes modest – but possibly significant – changes to rules regulating MVPD/broadcaster retransmission consent negotiations

The long-awaited Notice of Proposed Rulemaking (NPRM) addressing the thorny issue of retransmission consent has been released. When it comes to the ebb and flow of the on-going debate about the retrans system, some had hoped that the Commission might jump into the deep end while others had hoped that it would stay comfortably high and dry in the lifeguard’s chair – but it looks like the FCC isn’t inclined toward either of those options. Instead, it proposes, in effect, to dip its toe, maybe even roll up its pants to wade in a bit. In other words, even if some change in the retransmission consent negotiation process is possible, the likely scope of the change on the immediate horizon appears limited. 

Then again, the Commission has invited comments, so who knows where this may end up?

Retransmission consent is one component of the perennial tug-of-war between television broadcasters and multichannel video program distributors (MVPDs, i.e., cable, satellite systems, and the like) relative to carriage of broadcast programming on MVPD systems. Broadcasters periodically elect either “must carry” or “retransmission consent” status. Must carry status more or less guarantees carriage within the stations’ local markets, but without compensation to the broadcaster for such carriage. 

By contrast, retransmission consent allows broadcasters to negotiate for compensation for carriage, the risk being that carriage must cease if the parties can’t come to terms. Occasionally a broadcaster and a cable operator fail to reach an agreement; in that case, the cable operator must cease carriage of the station at issue, which in turn deprives cable subscribers of cable-fed access to the programming (including, in some instances, high profile items like the World Series, football play-offs, special award shows and the like). This typically results in a burst of consumer outrage, a bout of finger pointing between the cable operator and broadcaster, and a round of concerned statements from elected officials and the FCC.

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Webinar recording now available at SoundExchange site

Hey, it’s good news for all you webcasters who didn’t tune into the SoundExchange webinar on January 27 to catch FHH guru Kevin Goldberg address such useful issues as protecting one’s business and the nitty-gritty of sound recording licensing! You’ve got a second chance, because SoundExchange has posted a recording of the session on its website. You can find it here. Check it out. (And next time, try to catch Mr. G live – we can’t promise you’ll get lucky like this every time he strews his pearls of wisdom hither and yon.)

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 Heads up – the NFL is watching you . . .

It’s time for that most evergreen of January stories: the annual reminder that you have to be careful about using the words “super” and “bowl” together in any way. That’s because the NFL is on the look-out for “unauthorized” uses of its registered trademarks, and one of those trademarks happens to be “Super Bowl®”. We put “unauthorized” in quotation marks here because the No Fun League has a somewhat (how can we say this delicately?) expansive view of its own ability to prevent anybody from uttering those two words – a view which is not universally shared.

The League’s position, as far as we can tell, is that pretty much any non-news use of the Two-Word-Phrase-That-Shall-Not-Be-Spoken necessarily implies an affiliation with the NFL. To the NFL, this in turn apparently means that the NFL is absolutely entitled to control who can utter the Unutterable Phrase and when It can be uttered. Whether that view is supported by, say, the law is far from clear. (But, as Gene Pitney once cogently observed, in some instances “a law book [does] no good.”)

However the law might stack up on this, it’s probably best to view the NFL as you would the obnoxious loud-mouth jerk down at the other end of the bar who’s had a few and is loudly insisting that his knowledge of sports trivia is superior to everybody else’s. Maybe he’s right, maybe he’s not – but who wants to bother to find out?

So here’s what you need to know.

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New year brings filing deadlines for noncommercial webcasters

The beginning of another year brings renewed obligations for all broadcasters who are operating a non-interactive webcast (as opposed to an on-line service that provides interactive downloads or podcasts). That universe is populated by three separate and distinct types of webcasters, each of which has slightly different obligations from the others. Those three types are: (1) commercial webcasters; (2) noncommercial webcasters; and (3) noncommercial educational webcasters.

Important definitional note: For purposes of webcasting royalties, the distinction between commercial and noncommercial is not based on the nature of the underlying broadcast license. Rather, it’s based on the reporting entity’s status under Section 501 of the Internal Revenue Code. If a webcaster is exempt from taxation under Section 501, it is deemed to be NONcommercial when it comes to webcaster royalty matters. And if a noncommercial webcaster’s operation is substantially staffed by students, it is a noncommercial educational webcaster. This post is addressed to noncommercial licensees. (Simultaneously with this item we are also posting similar items for the other two types of webcasters – so if you happen to be commercial webcaster or a noncommercial educational webcaster, look elsewhere here on CommLawBlog.com for a post addressed to your own particular situation.)

If you are engaged in the NONCOMMERCIAL WEBCASTING of one or more streams, your first filing of the new year – primarily consisting of an annual minimum fee statement of account with payment of $500 per channel – is due on January 31, 2011.  But your obligations continue throughout the year with statements of account and playlist reports of use required on a monthly basis. 

Noncommercial webcasters (unlike their commercial and educational counterparts) have several decisions to make. The eligibility requirements described below should be reviewed carefully.

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New year brings filing deadlines for noncommercial educational webcasters

The beginning of another year brings renewed obligations for all broadcasters who are operating a non-interactive webcast (as opposed to an on-line service that provides interactive downloads or podcasts). That universe is populated by three separate and distinct types of webcasters, each of which has slightly different obligations from the others. Those three types are: (1) commercial webcasters; (2) noncommercial webcasters; and (3) noncommercial educational webcasters.

Important definitional note: For purposes of webcasting royalties, the distinction between commercial and noncommercial is not based on the nature of the underlying broadcast license. Rather, it’s based on the reporting entity’s status under Section 501 of the Internal Revenue Code. If a webcaster is exempt from taxation under Section 501, it is deemed to be NONcommercial when it comes to webcaster royalty matters. And if a noncommercial webcaster’s operation is substantially staffed by students, it is a noncommercial educational webcaster. This post is addressed to noncommercial educational licensees. (Simultaneously with this item we are also posting similar items for the other two types of webcasters – so if you happen to be commercial webcaster or a noncommercial (but not an “educational”) webcaster, look elsewhere here on CommLawBlog.com for a post addressed to your own particular situation.)

If you are engaged in the NONCOMMERCIAL EDUCATIONAL WEBCASTING of one or more streams, your first filing of the new year – primarily consisting of an annual minimum fee statement of account with payment of $500 per channel – is due on January 31, 2011.  But your obligations continue throughout the year with statements of account and playlist reports of use required on a monthly basis. 

Here’s a list of the routine filing obligations facing a noncommercial educational webcaster:

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New year brings filing deadlines for commercial webcasters

The beginning of another year brings renewed obligations for all broadcasters who are operating a non-interactive webcast (as opposed to an on-line service that provides interactive downloads or podcasts). That universe is populated by three separate and distinct types of webcasters, each of which has slightly different obligations from the others. Those three types are: (1) commercial webcasters; (2) noncommercial webcasters; and (3) noncommercial educational webcasters.

Important definitional note: For purposes of webcasting royalties, the distinction between commercial and noncommercial is not based on the nature of the underlying broadcast license. Rather, it’s based on the reporting entity’s status under Section 501 of the Internal Revenue Code. If a webcaster is exempt from taxation under Section 501, it is deemed to be NONcommercial when it comes to webcaster royalty matters. And if a noncommercial webcaster’s operation is substantially staffed by students, it is a noncommercial educational webcaster. This post is addressed to commercial licensees. (Simultaneously with this item we are also posting similar items for the other two types of webcasters – so if you happen to be noncommercial webcaster or a noncommercial educational webcaster, look elsewhere here on CommLawBlog.com for a post addressed to your own particular situation.)

If you are engaged in the COMMERCIAL WEBCASTING of one or more streams, your first filing of the new year – primarily consisting of an annual minimum fee statement of account with payment of $500 per channel – is due on January 31, 2011.  But your obligations continue throughout the year with statements of account and playlist reports of use required on a monthly basis. 

Any commercial webcasting service operating as a broadcaster (that is, operating an FCC-licensed AM or FM station simulcasting at least one channel on the Internet) will fall into one of the two categories outlined below.

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 Hey all you Webcasters – Listen up! Kevin Goldberg, FHH’s resident expert on all things webcasting, will be participating as a “special guest” in a webinar conducted by (drum roll, please) SoundExchange.  SoundExchange, of course, is the non-profit performance rights organization that collects statutory royalties from webcasters (as well as satellite radio operators like SIRIUS XM, cable TV music channels and similar platforms for streaming sound recordings).  It offers free webinars to provide the webcasting community insight into the requirements of the Copyright Act.  Kevin will be discussing some “frequently encountered problems or questions" that he receives from webcasters across the country. The webinar is scheduled for Thursday, January 27 at 2:00 p.m. (ET). 

If you’re a webcaster and want to hear the real deal from the people that matter, you'll want to be on the line for this event. (Did we mention that it’s FREE?)  You can register here. (When you sign up, you can also submit questions that you’d like Kevin to answer during the webinar.)

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Copyright Royalty Board announces webcast royalty rates for 2011-2015

Yo, all you non-interactive webcasters thinking about your budgeting for, say, the next five years: the Copyright Royalty Board (CRB) has announced the rates and terms that will apply to your operations for the period January 1, 2011-December 31, 2015. Check out the table below for details of the CRB’s “Initial Determination of Rates and Terms in the Matter of Digital Performance Rights in Sound Recordings and Ephemeral Recordings” (Webcasting III).

In getting this decision out as quickly as it did, the CRB has managed to do two things this time around that it failed to do in the ratemaking proceeding for 2006-2010.  First, it managed to crank out a final result in a timely fashion. (By way of contrast, the deecision setting the rates for 2006-2010 (“Webcasting II”) wasn’t published in the Federal Register until May, 2007, at which point it had to be applied retroactively to the preceding 16 months or so.)  And second, the CRB appears to have achieved relative consensus. (Again by way of contrast, Webcasting II resulted in both a two-year court challenge and an attempted legislative response).

As some psychologists tell us, even a worm can learn. And that adaptive phenomenon may be at work here as well. The CRB’s ability to achieve a quick and seemingly harmonious result almost certainly derives from its previous experience. Recall that the Copyright Act mandates that royalty rates for non-interactive webcasters be based on a “willing buyer/willing seller” standard, a standard that calls for rates that “most clearly represent the rates and terms that would have been negotiated in the marketplace”.  The rate system adopted in Webcasting II was attacked as contrary to that statutory mandate.   But eventually a series of webcaster settlement agreements were struck among various sectors of the webcasting industry (including both commercial and noncommercial broadcasters), so the heavy lifting was done: those agreements, negotiated by the private parties at arms’ length, provided a mutually agreeable resolution between willing buyers and willing sellers.

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But (some of) the show still goes on at Internet cable operation

Bad news for FilmOn.com. On November 22, a federal judge in New York ordered it not to “infring[e] by any means, directly or indirectly”, any copyrights owned by CBS, NBC, ABC or Fox. Judge Naomi Reice Buchwald made sure that the scope of her order included (but wasn’t limited to), the “streaming over mobile telephone systems and/or the Internet of any of the broadcast television programming in which any plaintiff [that would be any of the networks] owns a copyright”.

The order – technically termed a Temporary Restraining Order or (among the cognoscenti) a TRO – will be in effect pending a full hearing on the nets’ related request for a preliminary injunction against FilmOn.com.

This isn’t necessarily the end of the road for FilmOn.com, though.  As we pointed out when we first described FilmOn.com to our readers last month, there are many moves to be made on the various litigation chessboards already in play.  And even in this particular case, a TRO is just a first step in the process. The networks have asked for more permanent relief – in the form of an injunction – against FilmOn.com’s allegedly infringing activities. But before an injunction can issue, the court will let all the parties submit written arguments and then hold a hearing. The hearing date hasn’t been set yet, but the judge’s order specifies that all papers must be filed by December 13, so it doesn’t look like there’s going to be much foot-dragging here.

Nor does the fact that a TRO has issued necessarily mean that the court will issue an injunction. It just means that the judge was satisfied that the networks had a good enough case to warrant putting a hold on FilmOn.com’s activities until a hearing could be held to sort everything out.

According to a statement issued by FilmOn.com, it has “temporarily ceased retransmission of free network television” on its service. It’s still “open for business”, though, relying on its own “library of content” along with several independent broadcasters who have apparently signed up with it. Check back here for updates.

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Aggressive litigants may pose problems for the careless and unwary

There’s a new monster on the prowl, and you or your business could be its next victim. Don’t bother looking over your shoulder, because you won’t see it coming. The first you’ll know about it will be when the threatening letter arrives, or perhaps the notice of the Federal lawsuit, or the subpoena. 

And at that point, it may be too late.

We’re talking about the Copyright Troll, a recent unfortunate phenomenon of the Internet Age identified several years ago and recently brought into clear focus through the vigilant efforts of the Electronic Frontier Foundation (EFF), in particular, as well as other protectors of our civil liberties.

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A hard bargain: Proposal would accept new performance right burden for broadcast while easing burden on non-broadcast side.

The NAB has endorsed a “Term Sheet” which, IF fully adopted and implemented by all concerned (note the big “if”), would establish the existence of a “performance right” requiring radio licensees to pay royalties to musical artists (in addition to composers). 

And from that I think it’s safe to conclude that, while we have a ways to go before this becomes reality, there will one day be a performance right adopted into copyright law.  Despite the NAB’s continued insistence that it opposes the concept of a performance right – and despite the fact that the Term Sheet is, at least for the time being, still just a unilateral proposal and not a universally-embraced agreement – I’m convinced that a performance right will happen. This isn’t an endorsement or repudiation of the concept. It’s just a gut feeling of inevitability. My real questions involve “when” and “how much”.

The NAB’s Term Sheet, issued and delivered to the musicFirst Coalition on October 25, 2010, is couched as a “take it or leave it” offer to jointly move the Performance Rights Act (PRA) through Congress. As I’ve said before, taking affirmative steps to resolve the long-running/long-rancorous PRA issue in Congress may not be a bad thing. That’s especially true as long as the NAB (a) continues to hold the upper hand on the Hill vis-à-vis the PRA, and (b) takes care to ensure that all of its members, big and small, are satisfied that their interests are being adequately protected.

For now, the NAB must feel it does have that upper hand: the Performance Rights Act is not likely to pass in 2010, so if the music industry wants some performance right sooner rather than later, it will have to work with, not against, the NAB.  But is the NAB’s offer a show of strength or a retreat in the face of inevitability? 

Let’s take a look at the major provisions of the Term Sheet, which amounts to an outline of performance rights legislation that the NAB (and, if it signs on, musicFirst) would seek to push through Congress.

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FilmOn.com joins ivi TV in claiming status as cable carrier, streams OTA broadcast content online 

Online service = cable company? The concept has yet another proponent – FilmOn.com, Inc. (FilmOn).  Launching an online service featuring over-the-air content (in late September, just in time for the start of the new TV season), FilmOn has joined ivi TV in the fray over the alleged right of the upstart online companies to webcast broadcast programming to subscribers. And already FilmOn is on the wrong end of a lawsuit brought by folks looking to nip that claim in the bud.

The result could accelerate a final and authoritative disposition of the issue, one way or the other.

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Would-be Internet cable service causes irritating rash among broadcasters and programmers

A Seattle-based Internet company – ivi TV (ivi) – has popped up with a novel theory: ivi thinks that its online-only service is the functional equivalent of a cable TV system. Relying on that theory, ivi is claiming that it has a statutory right to retransmit over-the-air broadcast programming. Suffice it to say that, if validated, that theory could radically alter the broadcast carriage landscape as contemplated by the Copyright Act.

Coming out of nowhere with a bold stance, a strong message and, it seems, at least moderate funding, ivi has managed thus far to irritate major networks, broadcasters and even sports leagues. Not surprisingly, it has found itself on the receiving end of several “cease and desist” letters. 

But rather than fold, ivi has upped the ante. It has effectively gone “all in”, asking a Federal District Court in Washington State for a declaratory judgment that ivi hasn’t infringed anybody’s copyrights and that it is, in fact, entitled to retransmit over-the-air programming. 

The question is whether the company can cash out even if it wins this hand.

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The Copyright Royalty Board (CRB) has announced that noncommercial webcasters must pay a $500 per channel annual minimum fee to perform copyrighted sound recordings during the 2006-2010 rate term.  Big deal? Not really. Why not? Several reasons:

1. The 2006-2010 rate term is ending in about three months, with a ratemaking proceeding ongoing to determine the rates applicable to webcasting during 2011-2015 rate term.   So this “new” annual per channel minimum may change sooner rather than later (though we actually doubt it). 
2. We’ve put “new” in quotation marks above because the original decision of the CRB, adopted back in 2007, set the annual minimum fee for both commercial and noncommercial webcasters at $500 per channel per year – so it’s not like anybody should really be surprised at the concept of such a fee.
3. When the CRB’s 2007 decision was challenged in federal court, the only aspect of the decision remanded to the CRB for more consideration was the amount of the annual minimum payment – at which point we predicted that the CRB would simply reinstate the $500 per channel annual minimum fee.
4. Before the CRB could validate our prescience, SoundExchange (representing the copyright owners) entered into settlement agreements with several types of webcasters – and each of those agreements provided for a $500 per channel annual minimum fee. This is important not only because it made the most recent CRB ruling easy to predict but also because it means that, technically, that ruling applies only to those noncommercial webcasters who hadn’t already entered into one of the three noncommercial webcasting settlement agreements.
5. When the CRB did wrap up the initial phase of its post-remand chores – relative to the fee to be applied to commercial webcasters – it reinstated the $ 500 per channel annual minimum.

So the re-imposition of the $500 fee for noncommercial webcasters is not really an earth-shattering or completely unexpected surprise.  In fact, its actual impact may be extremely limited, since most noncommercial webcasters probably assumed they were on the hook for a $500 annual minimum payment for each channel anyway, budgeted for it accordingly, and made the 2010 payment without a second thought.

Why bother to post about the CRB’s decision then? Because it does provide a couple of points to consider.

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Brilliant stratagem or craven sell-out? It’s too soon to tell – so concentrate and ask again later.

Despite the fact that things on the Performance Rights Act (PRA) front remain quiet down on Capitol Hill, talk about the PRA has been burning up the trade press and the blogosphere lately. The reason? Reports that the National Association of Broadcasters (NAB) sat down with representatives from the music industry to discuss, among other things, the question of performance rights. Throw in a statement from an NAB spokesman alluding vaguely to “possible alternatives to pending legislation” (i.e., presumably, the PRA), and you’ve got the grist for a blog-tastic free-for-all in which anybody and everybody has an opinion, even though most lack a complete picture of exactly what might be going on.

CommLawBlog has done its fair share of writing on the PRA, but it’s been a while. In the midst of the sturm und drang, I think it might be useful to clarify what we know and what we don’t know before the chatter gets out of hand (and if you know something that we don’t, feel free to chime in in the comment section). 

Here’s what we know:

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Tony Davis says video giant owes him for using his 1979 persona in Madden ’09

It’s an annual occurrence. Like when the circus comes to town. Only more lucrative. The release of a new version of EA Sports’ popular “Madden NFL” video game. 

And just as the circus brings with it a certain amount of mess to clean up and (at least these days) controversy and litigation, so too does Madden NFL. It seems that each new release triggers an inevitable lawsuit by one or more current or former athletes who feel that their rights are being violated by the makers of this video game (or other similar media). So prevalent are these lawsuits that it’s almost impossible to keep track of things, or know who all the players are, without a scorecard. (Fortunately for you, we’ve prepared a scorecard showing where most of the major currently-pending image rights cases stand. Check it out here.) 

The list includes suits filed by former college football and basketball players against EA Sports, by former pro football players against NFL films, by current pro football and baseball players against fantasy sports websites. So that’s former pro athletes, former college athletes and current pro athletes suing video game makers, fantasy sports purveyors and filmmakers, in almost every combination. Has this genre of lawsuit finally run its course?

Apparently not.

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At last, another piece of the ongoing ASCAP/BMI ratemaking puzzle has fallen into place – at least for a while. Last month the good folks at the Radio Music License Committee negotiated a final interim deal with BMI, good until a final non-interim deal is worked out and approved. The new interim arrangement – which replaces the old interim deal (which apparently is properly referred to as a “provisional interim” deal) – should stabilize things for the foreseeable future.

And the good news is that the new interim deal is better than the old one, so life is good for the time being.

The ASCAP/BMI ratemaking proceedings will determine just how much radio broadcasters will be paying in royalties ASCAP and BMI for performance of musical works for the period beginning January 1, 2010. We’ve been following the goings-on closely, so closely, in fact, that we think we finally understand what’s going on.

Let’s review the bidding so far.

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As July slips into August, it’s time to remind television broadcasters that Copyright Royalty Claim forms -- for cable retransmission copyright royalties and/or satellite copyright royalties earned during 2009 -- are due at the Copyright Royalty Board by August 2, 2010.  This is your opportunity to lay claim to a share of the annual fund from which television broadcast stations get paid for their programming that is retransmitted by cable and satellite service providers outside of their respective service areas.

In general, TV stations that are carried on cable systems as a distant signal, and those stations that provide programming to other stations that are carried as a distant signal, are entitled to royalty payments.   A cable system is “distant” vis-à-vis a station if the system is: (1) outside the station’s DMA; AND (2) at least 35 miles from the station’s city of license; AND (3) outside the station’s predicted Grade B contour.  Stations whose programming is carried on satellites to subscribers outside the station’s DMA are also entitled to royalty payments.

The Copyright Office encourages stations to file their Claim Forms online.  The forms can be found at:  http://www.loc.gov/crb/claims/.

If you need our assistance in preparing the forms, please let us know.

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CDA Section 230 shelters operators from liability for third-party posts; Fall-out from well-intentioned promises by the operators themselves is another matter.

Section 230 of the Communications Decency Act (CDA) is a statute we’ve written about on several occasions.   For website operators, it’s akin to the Gardol Invisible Shield: Section 230 effectively immunizes website operators from liability arising from most (but not all) of the bad things that visitors to their sites might say or do. (Cautionary note: Section 230 does not help you when you’re accused of copyright or trademark infringement based on third-party posts to your site.) (Promotional note: we can offer tutorials on both Section 230 of the CDA and Section 512 of the Digital Millennium Copyright Act, which covers the copyright/trademark area. Let me know if you have any interest.)

If you like your Internet a bit raucous, you can thank Section 230. Its immunity provisions are directly responsible for the virtual absence of any decorum on most Internet discussion boards, chat rooms and comment areas.  Those provisions relieve website operators of the hassle and expense involved in extensively moderating their sites for improper comments – and that, in turn, opens the doors for robust exchanges of often controversial views that might otherwise go unexpressed, or at least unposted for fear of potential litigation. Section 230 has proven to be a rock solid protector of website operators (and, many would say, free speech).

But in a couple of recent cases from the U.S. Court of Appeals for the Ninth Circuit, website operators have been less than invulnerable to the reach of courts prodded by individuals unhappy about third-party-posted content. What happened to Section 230?

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Court ruling reduces aggregate interim annual fee due to ASCAP, but specific details are still in the works

Late last week a judge in the U.S. District Court for the Southern District of New York threw an interim bone to radio broadcasters in their quest for lower royalties paid for performance of musical works.  Before you start setting off the fireworks, though, know that the precise effect on individual stations is still unknown. And it will in any event be limited because of its interim nature. Oh yeah, and it’s subject to retroactive adjustment at some point down the line.

But, hey, take ’em where you can get ’em, that’s what we always say.

We previously wrote about the need for interim royalty rates to be paid by radio stations to ASCAP and BMI for the performance of musical works (the underlying music and lyrics in each song transmitted over-the-air and on the Internet). The previous rate-setting arrangement expired on December 31, 2009, and rates for the next term are still in negotiation – so interim rates needed to be established to “ensure a reasonable flow of funds” to ASCAP and BMI. We thought the interim rate was going to amount to a seven percent reduction in the rates previously paid by radio stations to ASCAP. Our thinking was based on an agreement announced between the Radio Music License Committee (RMLC) and ASCAP in January. But now Judge Denise Cote has issued a Memorandum Opinion and Order which supersedes that agreement and further reduces the amount paid across the board. 

Judge Cote’s decision is short on analysis – in fact, at three pages (and two lines), it’s just plain short. She offers no details at all. Instead, she points out that she has read the submissions of the various parties and has heard their arguments, and without further ado she announces that “the interim fee payable by the RMLC is $192,413,111 per year” – a figure that amounts to $40 million less than that which was paid in 2009.

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CRB takes path of least resistance, bases proposal on privately-negotiated settlements

When it comes to setting the royalty rates and related terms governing webcasting, the Copyright Royalty Board (CRB) rules.   It does so through formal proceedings which result in rates/terms applicable for five-year periods. This time around, the CRB appears to be acknowledging that the private sector might have a better handle on things than does the CRB. Rather than propose a new, CRB-developed structure for 2011-2015, the CRB is looking to impose overall terms and conditions identical to those reached in privately-negotiated settlement agreements developed in 2009.

The CRB’s approach is a concession to the shortness of life and the difficulties of the rulemaking process. Last time around, the CRB’s proceedings dragged on so much that its ultimate decision didn’t make it into the Federal Register until May, 2007, almost a year and a half after the term to which that decision applied (i.e., 2006-2010) applied. When it finally was issued, the decision was almost immediately panned by just about all concerned.  It was appealed (without much success). Legislation aimed at deep-sixing it was introduced (also without much success).

And eventually, the parties to whom the CRB’s ruling was meant to apply took matters into their own hands. In 2009 they negotiated alternative royalty rates and playlist reporting requirements which allowed them to effectively side-step the ruling.

This time around it looks like the CRB has learned from its last experience. The first step of the 2011-2015 ratemaking process required a three-month negotiation period between all parties. The idea, presumably, was that the CRB will encounter far less resistance if it adopts an approach to which those subject to the approach have already agreed. They appear to have hit the nail on the head, as these initial negotiations have borne fruit for some webcasters.

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Consumer-friendly (?) Big Cable seeks Big Cable-friendly overhaul of retransmission consent process

A group consisting of some of the major multichannel video program distributors (MVPDs) has run to the Commission asking for changes in the retransmission consent rules. The group – for convenience, let’s refer to them collectively as “Big Cable”, although they include (in addition to major cable operators) non-cablers DirecTV, Dish, a couple of phone companies, and even some supposedly independent advocacy/think tank groups – is concerned that Big Cable’s ability to call the shots when it comes to carriage of broadcast signals has gone away, and Big Cable understandably wants it back. Who wouldn’t?

In a Petition for Rulemaking, Big Cable declares that the retransmission consent system is “broken”. Not surprisingly, Big Cable had this particular epiphany immediately after several very public sets of carriage negotiations in which, e.g., Fox and ABC demonstrated their negotiating acumen, and clout, in facing down some very major cable operators. Who “won” or who “lost” those negotiations is, of course, a matter of opinion and spin. But Big Cable is now urging the FCC to impose a mandatory arbitration process and to require that MVPDs continue to carry stations when parties can’t reach a deal.

Sure sounds like Big Cable may be thinking that, nowadays at least, the broadcaster-MVPD negotiation process isn’t exactly what it was cracked up to be . . . at least for Big Cable.

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Judge denies Live365 preliminary injunction request based on constitutional challenge to CRB

Inferiority never felt so superior. By successfully painting themselves as “Inferior Officers”, the judges of the Copyright Royalty Board (CRB) have dodged a preliminary bullet. And while the odds seem pretty good that they’ll make it through to the end of this particular round, there’s plenty of reason to believe that the fight won’t be over for some time to come.

The main issue: is the CRB unconstitutional? As we reported last summer, in a CRB-related appeal decided by the U.S. Court of Appeals for the D.C. Circuit, Judge Brett Kavanaugh issued a concurring opinion in which he questioned the CRB’s constitutionality. When a U.S. appeals judge goes out of his way to opine that an agency may be unconstitutional, people take notice.

Live365 did just that. Live365 is an aggregator of digital radio stations which is subject to the compulsory copyright license scheme overseen by the CRB. In particular, Live 365 must suffer through the prolonged trial-type rate-setting proceedings CRB uses to set rates and establish terms, and Live365 must live with the (expensive) results of those proceedings.  

Sensing an opportunity, Live365 took the initiative to file a complaint in the U.S. District Court for the District of Columbia (not coincidentally, the court whose rulings are reviewed by Judge Kavanaugh and his D.C. Circuit colleagues) seeking a determination that the CRB is unconstitutional. Needless to say, if Live365’s suit were successful, it would throw the entire rate-making process into massive disarray, possibly scuttling for an extended period the collection and distribution of copyright royalties for webcasting. 

We outlined Live365’s September, 2009 presentation, deeming it “a very good initial argument”, but cautioning that you really can’t put too much stock on a complaint without first checking out what the other side has to say. 

Truer word was never spoken.

Judge Reggie Walton has recently denied Live365’s request for a preliminary injunction. But Judge Walton also rejected motions to dismiss Live365’s case, so it lives on as Live365 presses for a permanent injunction and a final declaration that the CRB is unconstitutional. And while Judge Walton’s denial of the preliminary injunction must be disappointing to Live365, the Judge acknowledged that the law in this area is not at all clear. What is clear is that we probably haven’t heard the last of this matter.

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Federal judge rejects motions to dismiss, allows videogame suits against NCAA, Electronic Arts to proceed

Update Time! For those of you wondering what ever happened with the efforts of Ed O’Bannon, Sam Keller and Craig Newsome – former college athletic stars all (but you probably knew that already, didn’t you?) – to protect their right to control the use of their images, the answer is: Lots. While none has yet emerged victorious over the NCAA, Electronic Arts (EA) and other various foes, progress has been made recently.

As loyal readers of this blog know, the field of “image rights” has been the subject of extensive litigation over the last couple of years. Former professional athletes (including no less a luminary than Jim Brown) and their college counterparts have sued a range of defendants in an effort to protect their ability to control, and profit from, the use of their images. And while Jim Brown’s attempt was stopped at the line of scrimmage, recent rulings in the cases of O’Bannon, Keller and Newsome may provide a path to victory for them (and other similarly situated celebs).

Keller and Newsome were big-time college football players, while O’Bannon played hoops. Since I happen to be partial to b-ball – as opposed to football (in large measure because of my distaste for the whole BCS ridiculousness) – here’s some background on O’Bannon. Originally recruited to play basketball at UNLV, he ends up at UCLA when UNLV’s program is put on probation. He gets injured bad (ACL) as a frosh, but fights back and, as a senior in 1995, is named college player of the year, stars when the Bruins win it all at the NCAA’s Big Dance, gets his UCLA number retired, the works. As college careers go, it doesn’t get more Story Book. Pro-wise, not so much: he went high (9th) in the NBA draft, but lasted only two seasons, followed by some play in the foreign leagues, and then retirement to a new career as a pretty successful car salesman.

Fast forward a decade or so. As the story goes, O’Bannon notices a friend’s son playing a video game featuring the 1995 UCLA Bruins. The video team includes an unnamed player startlingly similar – actually pretty much identical – to O’Bannon: same position, same number, same stats, same shooting hand, etc. His friend remarks, “You know what’s sad about this whole thing? You’re not getting paid for it.” O’Bannon thinks, “Wow, you’re right.” He lawyers up and sues.

O’Bannon and Newsome went after the NCAA. Keller, in a separate suit which was ultimately joined with the O’Bannon/Newsome action, named the NCAA and EA as defendants. The gist of the suits is that somebody – maybe the NCAA, maybe EA, maybe others – is making a boatload of cash from video games which depict (without specifically identifying) real people who are readily identifiable through various aspects – stats, player numbers, years, etc. Why should those real people not be entitled to share in the profits since their images are central to enterprise?

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As expected (and as we predicted here), the Copyright Royalty Board (CRB) has reinstated the $500 per channel annual minimum fee for both commercial and noncommercial webcasters. The great irony, of course, is that it has taken until the final year of the current five-year royalty term to confirm these annual minimum payments. 

The official reinstatement of the fee is likely to have no more than a minimal effect on many, if not most, broadcasters. The final rule, published by the Copyright Royalty Board on February 8 (but technically not effective until March 10), applies only to those commercial or noncommercial webcasters who elected to continue webcasting under the terms and conditions of the March, 2007, Copyright Royalty Board decision.

Many broadcasters have signed on to one of the webcasting settlement agreements available to commercial or noncommercial webcasters – and, in so doing, they agreed to the same annual minimum fee of $500 per channel. We expect that those who didn’t sign on to one of the settlement agreements probably assumed the $500 per channel annual minimum would be reinstated and went ahead and paid it by January 31 (or at least have already factored it into their webcasting budgets).

If you (a) are webcasting, (b) did not sign on to one of the settlement agreements, (c) did not already make a minimum payment to SoundExchange for 2010, and (d) would like more information about how to make that payment, feel free to get in touch with us.

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NFL backs off trademark claim to "Who Dat"

We weren’t the only ones who weighed in on the NFL’s questionable decision to claim trademark rights in “Who Dat”. As we reported, Senator David Vitter was all over the issue like a cheap suit, as was Louisiana Governor Jindal and his Attorney General Buddy Caldwell, according to reports here and here (among others). And the winners in the beat down are: common sense, reason, the Who Dat Nation, and just about everybody but the NFL.

Of course, the NFL couldn’t just cowboy up and fess up to a mess up. No, it sniffed that it wasn’t really trying to stop the widespread use of “Who Dat” – rather, it was just trying to prevent use of that phrase “only if a Who Dat item also contained NFL or Saints trademarks or if it is falsely claimed that an unauthorized item is affiliated with the Saints or NFL”, according to an MSNBC report.

Wait a minute. The Wall Street Journal’s WSJ.com reported that in late January the NFL had filed in Florida to register (under Florida’s local trademark laws) the expression “who dat” on apparel. And the Journal quoted the NFL’s blunt instrument cease-and-desist letter as saying that using “who dat” is likely to “confuse the purchasing public into believing” that items with the slogan are sponsored by the NFL. The Journal also quoted an NFL rep as saying that for 20 years the NFL has been “using and enforcing its rights in the ‘who dat’ mark to refer to Saints football”.   So the latest spin they’re trying to apply to their problem appears to be, well, spin.

Be that as it may, reason has apparently prevailed here, so now we can get back to the matter at hand: getting ready to stuff ourselves beyond belief on food and alcohol while a bunch of overly large men beat each other senseless.

And, we’ll remind you yet again, that the NFL does have a valid, registered trademark in the term “Super Bowl” and will, if prior experience is any indication, continue to prosecute unauthorized uses of that term to the fullest extent possible.

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The NFL illustrates our point, again.

A couple of days ago we ran our annual alert about the fact that some folks – large professional sports organizations in particular – seem to be trying to take control of our language by registering as trademarks just about every word or phrase in sight . . . and then telling us we have to pay to use those words and phrases. For those who may not have believed us, check this out: reports out of New Orleans indicate that the NFL is claiming that “Who Dat” – long the catch-phrase of the Super Bowl-bound (oops, make that Super Bowl ®-bound) Saints, and before that a staple of minstrel shows and vaudeville acts back into the 1800s – is a registered NFL trademark. 

According to those reports, the NFL has gone after local Big Easy tee-shirt vendors, trying to get them to stop selling their own home-grown “Who Dat” tees. Seems a bit heavy-handed, particularly in view of the hard times folks in N’awlins have suffered in recent years. (That’s what Senator David Vitter thought, at least. He fired off a letter to the NFL advising that he is printing up, for sale, a bunch of tee shirts emblazoned with the message “WHO DAT say we can’t print Who Dat!” His message to the NFL: “Please either drop your present ridiculous position [asserting control of “Who Dat”] or sue me.”)

“Ridiculous” seems about right to describe the NFL’s practice of going after local business owners for something like this. That’s especially so when any rational person would understand that this is one of those situations where you're better off cultivating support for one of your more hard-luck franchises, even if it costs you a few bucks here or there.  

But for our purposes here at CommLawBlog.com, it helps us make our point: if the NFL is willing to swim against the tide of goodwill that’s flowed into New Orleans since Hurricane Katrina, you should figure that the NFL will be perfectly happy to go after you for misuse of “Super Bowl” – darn, we messed up again – “Super Bowl ®”. Who dat ® say you haven’t been warned?

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Our annual cautionary reminder about trademark protection

Hmmmm. Rumour has it that there’s some kind of important football game coming up in a week or so, down in Miami (the anglicized spelling is another nod to the fact that I don’t consider this “real football”). 

That means it’s time for the obligatory reminder that the term “Super Bowl ®” has been registered as a trademark by the NFL, so using the term without the NFL’s permission . . . yadda, yadda, yadda, serious financial penalties for infringement.

There’s a term for this type of recurring annual story in the journalism world: “evergreen”.   Rather than waste your time and ours, we’ll simply link to the story we posted on this issue last year.  Just substitute “Colts” and “Saints” for “Steelers” and “Cardinals”. The legal principles remain exactly the same.

We should also point out that the NFL is not the only organization which has managed to stake a claim to particular words or phrases that get considerable public attention periodically. For example, just over the horizon but closing in fast we have the “Olympics ®”, the “Oscars ®”, and the “FIFA World Cup ®” (you know, the real football). And there are lots more where these came from. Some trademark owners are more obnoxious than others about enforcing their rights in the mark against every little Tom, Dick or Harry – the NFL’s hard-nosed efforts along those lines are quasi-legendary. Still, the fact is that, by jumping through the trademark registration hoops, these folks have obtained the right to control the use of their marks to a significant degree. They have also obtained the right to sue anyone who infringes on their marks. You should contact us if you have any questions as to whether a term by which you might ordinarily refer to a major event – sporting or otherwise – is a registered trademark subject to these limitations.

The preceding has been brought to you as a public service by CommLawBlog ®.

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January 31 brings deadlines for payment of annual minimum fees and filing of election notices

Attention NONcommercial webcasters. January 31, 2010 brings deadlines for you just as it does for your commercial counterparts.  But the January 31, 2010 deadline – for making the annual payment and, if appropriate, filing a Notice of Election to participate in one of the available Noncommercial Webcasting Settlement Agreements – is perhaps more important to noncommercial webcasters. That’s because most noncommercial webcasters, whether or not they have elected to participate in a settlement agreement, will end up paying the $500 per channel annual minimum payment and nothing more (unless the webcaster exceeds the allowable 159,140 aggregate tuning hour monthly maximum triggering additional payments). So there’s no reason that you’d be late with this lone payment.

Timely filing of a Notice of Election to participate in either the General Noncommercial Webcasting Settlement Agreement or the Noncommercial Educational Webcasting Settlement Agreement is equally important, as it can alleviate some of the onerous playlist filing requirements the webcaster must make through the year. 

What follows is a summary of the immediate and ongoing filing and payment obligations applicable to noncommercial webcasters for 2010. Note that, for webcasting purposes, the commercial v. noncommercial distinction rests with the webcaster’s status under Section 501 of the Internal Revenue Code, not the webcaster’s FCC license (if there is one). 

If you are (a) a webcaster exempt from taxation under Section 501 of the Internal Revenue Code (or have applied for that status) or (b) a government organization operating your webcast consistent with your public purpose, read on. If none of these apply, you should go here for our similar summary applicable to commercial webcasters.

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The January 31 deadline for payment of annual minimum fees and filing of election notices is fast approaching

This the first, last, and,  possibly, only reminder to all commercial webcasters that January 31 is the deadline for filing the first of what will be many Statements of Account to SoundExchange with payment of copyright royalties for performance of sound recordings over the Internet during 2010. For some of you, there is a concurrent requirement to file a Notice of Election to obtain or retain the special status offered under one of the many webcasting settlement agreements. 

If you are a noncommercial webcaster (determined not by your FCC license but by whether the webcasting entity is exempt from taxation under Section 501 of the Internal Revenue Code), click here for a similar guide laying out your deadlines. 

Set forth below is a summary of the immediate and ongoing obligations for every commercial webcaster in 2010. And guess what? It's now in 3D! On Ice! Well, not exactly, but we do offer a direct link to every form as it appears on the SoundExchange website.

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At Court’s insistence, CRB runs the $500 annual minimum payment for non-interactive webcasters back through the rulemaking machine – Comment deadline is January 22, 2010

Today we’re playing “Copyright Jeopardy!”. The category is “Annual Minimum Payments”, and the answer is: $500.

Contestant No. 1: “What is the amount required to be paid by non-interactive webcasters at the beginning of each year for the right to perform sound recordings over the Internet?”

Host: “No, I’m sorry. That would have been the right answer, except the United States Court of Appeals declared that required payment to be arbitrary and capricious earlier this year.”

Contestant No. 2: “What is the amount that will probably soon be required to be paid by non-interactive webcasters at the beginning of each year for the right to perform sound recordings over the Internet?”

Host: “Correct!”

A subtle but important distinction: the $500 fee is not now in effect, but the Copyright Royalty Board (CRB) is working to change that.

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Back before the end of the year, we suggested that broadcasters who had not already signed up with the Radio Music License Committee (RMLC) might look into doing so pronto. The RMLC, you will recall, represents broadcasters in negotiating with ASCAP and BMI relative to copyright royalty rates.  You can be part of the RMLC team, but you have to expressly sign up with them. 

There’s even more reason to check into doing so now that we have turned the corner into the New Year.

In the waning days of 2009, the RMLC agreed to terms with both ASCAP and BMI covering the “bridge” period between expiration of the last agreement (which technically went away on December 31) and the approval of new terms by the U.S. District Court which oversees the RMLC/ASCAP/BMI ménage à trois. The interim deal may have some appeal. According to Radio Ink, royalties due to ASCAP and BMI from radio stations will be discounted seven percent per month starting on January 1, 2010. The discount (which should be reflected in the latest round of bills being sent out by ASCAP and BMI) will be in effect until RMLC and ASCAP and/or BMI come to terms for the period beginning 2010 – or until the supervising Court steps in because the parties can’t manage to reach an agreement. (Call us crazy, but we suspect that the latter is the more likely scenario, what with the RMLC Chair being quoted in the trades as saying that “the gap in [the parties’] respective positions was so vast that it made it virtually impossible to reach a voluntary agreement.” That could just be a negotiating ploy, though.)  

Once the rate for the next term is set, it will be retroactively applied to January 1, 2010, so depending on how things shake out, stations could end up having to payback all of the cash saved through the interim seven percent discount.  But that might not happen for a year or more – meaning that the cash will stay in the stations’ pockets, rather than the ASCAP/BMI coffers, at least for the time being.

Again, stations which have already authorized RMLC to negotiate on their behalf – and thus agreed to be bound by any eventual deal that gets approved (along with the seven percent discount for the bridge period) – don’t have to do anything. But stations that (a) have not authorized the RMLC to rep them (or stations that aren’t certain if they have done so) but (b) still but want to be subject to these terms, can still opt in by completing this form and sending it to the RMLC.  (Note: the third major performing rights organization, SESAC, engages in separate negotiations with the RMLC not subject to court oversight).

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With existing royalty arrangement expiring at year’s end and negotiations for new deal underway, parties notify radio broadcasters of opportunities to participate

Some of you radio broadcasters out there might have received letters recently from one or more of the following:

The American Society of Composers, Authors, and Publishers (ASCAP)

Broadcast Music, Inc. (BMI)

The Radio Music License Committee (RMLC)

It’s our understanding that these letters are being sent to broadcasters who have not already authorized RMLC to negotiate licensing arrangements on their behalf with ASCAP and BMI. RMLC is already engaged in such negotiations for a lot of broadcasters, and when those negotiations are completed, the agreed-to arrangements will set the terms on which participating broadcasters will be able to transmit – over-the-air and by internet webcast – musical works owned by songwriters represented by ASCAP and BMI.  The letters which have been arriving recently provide to anybody who hasn’t signed up yet an opportunity to take advantage of those arrangements.

First, a little background.

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Judge comes down for Facebook in defamation action

We've previously written about Section 230 of the Communications Decency Act (CDA), a statute which immunizes an “interactive” content provider or other computer service from most liability for content posted to the site by third parties. To the gazillions of people whose feelings have been hurt by something that got posted about them somewhere on the Internet, Congress said in effect: “If you can find the people who actually wrote the stuff that upset you, feel free to sue them. But don’t bother to sue the host services which those people used to get their words out onto the Internet.”

Where’s the fun in that? After all, it’s darn near impossible to pull back the dark and heavy curtain of Internet anonymity and ID any particular poster. And even if you happened to find the right person, odds are that he/she doesn’t have any money. By contrast, many Internet hosts – large, recognizable, deep-pocketed household names like AOL, or MySpace, or Craigslist – are (a) easy to find and (b) seemingly flush with cash.

No wonder a significant number of people still try to shoot the messenger, regardless of what Congress said.

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But the odds are still against PRA enactment

The American public is seriously into zombies just now – how else to account for the fact that Zombieland took in some $25 million during its first weekend, and Pride and Prejudice and Zombies has spent considerable time on many best seller lists? So we should not be surprised that, on October 15, the Senate Judiciary Committee passed S.379, the Senate’s version of the Performance Rights Act (PRA), by a 21-9 vote. 

Yes, that means that S.379, like its House counterpart, H.R. 848, is still alive and kicking, in an undead sort of way. And either version could, theoretically, become law – if, that is, it survives a floor vote in its own chamber, gets approved by the other chamber, and is eventually signed by the President. Should all those stars happen to align, broadcasters would for the first time be required to pay copyright royalties for over-the-air performance of sound recordings.

No, we still don't know how either bill will actually survive. After all, 250 members of the House have co-sponsored the “Local Radio Freedom Act”, a nonbinding statement of opposition to the performance right embodied in H. R. 848 and S.379. Since 250 votes would constitute a majority of the House, the defeat of H. R. 848 in the House would still seem to be a mortal lock, thus pounding a stake through the PRA’s heart.  (For the record, we’re not surprised at all that S.379 passed the Senate Judiciary Committee, since that Committee’s Chairman, Patrick Leahy – like his House counterpart, John Conyers – is a supporter of the legislation, and that alone can be enough to get legislation through a committee.)

That’s all we feel the need to say on the matter right now.

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Final playlist reporting requirements for webcasters announced

After years of proposals and deliberations and interim policies, the Copyright Royalty Board (CRB) has at long last published “final rules” dictating the playlist reporting requirements for webcasters. But like so many things in this day and age of fast-paced technological and regulatory development, the “new” rules, which take effect on November 12, 2009, are likely to be of little more than academic interest to many. That’s because intervening events – including multiple separate agreements among various webcaster groups and SoundExchange – have largely marginalized the significance of the CRB’s role in this aspect of webcasting.

The rules won’t be of particular interest to

• “smaller” Internet-streaming broadcasters, i.e., operators with such a small on-line listenership that they never exceed the $500 annual minimum payment in a given year, to whom the full-time “census” reporting of playlist information does not apply; or
• broadcasters who have elected to participate in one or more of the agreements (general noncommercial and noncommercial educational or CPB or commercial broadcaster) to settle outstanding appeals of the March 2, 2007 decision of the CRB to institute rates and terms for the statutory license for the period 2006-2010. 

Still, if you are in the dwindling universe of webcasters who remain subject to the CRB’s reporting requirements, you should familiarize yourself with the “new” rules.

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Federal judge rejects former NFL star’s Lanham Act claim of “false endorsement” by EA Sports

In recent months we have focused a LOT of attention on the issue of the image rights of athletes. That issue has popped up in lawsuits filed by former college football and basketball players seeking to get their hands on some of the money generated by the very popular – and lucrative – video games produced by EA Sports. Recently, a similar effort has been made by some retired NFL players looking for a cut of the cash from the NFL’s film operations.

These suits are based in several different causes of action, but they all generally boil down to the fundamental claim that the defendant is engaging in the unauthorized use of the player’s likeness in some way (even though that use often does not always identify the player by name or team or number).

In late September a new opinion was issued by a Federal District Judge in California. The case involved a former NFL player, and it’s a big one – “big” referring both to the player and the decision.  The player in question is one James “Jim” Brown.  Yes, that Jim Brown. The core of the Cleveland Browns’ offense from 1957-1965.  The player often considered the best pure running back in NFL history, who retired after just eight seasons as the NFL’s all-time leader in career rushing yards – a record which stood for more than two decades.   (He was also one helluva lacrosse player, if you didn’t already know that.)

Much like Jim Brown himself, the District Court’s opinion plowed through any opposition, but still left you begging for more.

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“Interactive”. For webcasters, it’s a word that makes a huge difference. Webcasters who provide non-“interactive” music services avoid a world of bureaucratic hurt when it comes to copyright royalties. Those lucky souls get to take advantage of the statutory license, which means that copyright clearance is essentially automatic – all they have to do is jump through some hoops established by the Copyright Royalty Board. But “interactive” webcasters? They have to negotiate separate copyright clearance deals with each copyright holder of each recording that they might want to play.  Ouch!

Historically, it hasn’t been easy to determine precisely when a webcast service crosses the line between non-interactive and interactive. But here’s the good news: the U.S. Court of Appeals for the Second Circuit has recently become the first U.S. appellate court to consider, and shed definitive light on, the meaning of “interactive”. 

Many webcasters have a very limited view of what constitutes an interactive service. They’d have you believe a service is “interactive” only if it lets a listener choose the exact artist and song to be heard, much like an iTunes download.  In this pleasant, if not entirely realistic, view, anything else – including services offered by the likes of TheRadio.com or Pandora, where the listener can identify an artist, or even a song, and find an entire channel with similar music – is viewed as "non-interactive".

The Second Circuit has now provided us all with some guidelines to help sort this all out.

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Internet radio network seeks ruling that CRB is unconstitutional

“Billions of dollars and the fates of entire industries can ride on…decisions [by the Copyright Royalty Board (CRB), which] exercises expansive executive authority analogous  to…FERC, the FCC, the NLRB, and the SEC [even though] unlike those similarly powerful agencies…[CRB Judges] have not been nominated by the President and confirmed by the Senate.”

If these words seem familiar to you, then you're either a regular reader of CommLawBlog or a fan of Judge Brett Kavanaugh of the United States Court of Appeals for the District of Columbia. He wrote them in a concurring opinion (which we discussed here back in July) in which he -- without provocation – questioned the constitutionality of the CRB.

Those words are also found in the opening paragraph of a complaint filed in the U.S. District Court for the District of Columbia this week by Live365 which seeks:

• a declaration that the statute providing for appointment of the CRB’s judges is unconstitutional and, therefore, they really have no power or authority at all; and
• a preliminary and permanent injunction staying all further proceedings before the CRB – including the proceeding to set webcasting rates for the years 2011-2015 which is just starting up before the CRB. 

Neither Judge Kavanaugh nor Live365 pulled this one out of thin air. We had that story for you, too, back in July. There we pointed out how, in the course of rejecting challenges to the CRB’s March, 2007 decision setting the 2006-2010 webcasting rates, the D.C. Circuit pushed aside one party’s challenge to the overall constitutionality of the CRB.   But the Court slid past that argument, saying that the thorny constitutional issue needn’t be addressed because it hadn’t been raised soon enough.

So the table was set for this type of challenge; Live365 was just the first to answer the dinner bell.

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We have previously reported about the burgeoning field of litigation involving the use of athletes’ images, personal information and statistics by various secondary industries, such as fantasy sports, video games and other marketing endeavors. Good news. That field continues to burgeon with the recent suit filed by several former NFL starts against (and here’s a twist) the NFL itself. Don’t bother to stay tuned for film at 11 – read on!

As the old saying goes, you can't tell the players without a scorecard.  So let’s recap the lawsuits that are already on the books.

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Latest SoundExchange agreements published in Federal Register, Election dates now set

Last week we reported that SoundExchange had reached a couple of agreements affecting non-CPB noncommercial webcasters. The terms of those agreements have now been published in the Federal Register. Our summary follows. If you are subject to these agreements, pay attention: your opportunity to opt in may be subject to a September 15, 2009, election deadline.

One of the two agreements – we’ll call it the “General Agreement” – covers all noncommercial webcasters. (This is noteworthy because the agreement was negotiated with a committee of National Religious Broadcasters. Despite that, the agreement is not limited solely to religious webcasters.) The second agreement covers only noncommercial educational entities, who have the best of all possible worlds: they can elect to be subject to the terms of the noncommercial educational agreement or they can elect the General Agreement instead.

Interested in the details?  Read on.

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Where’s the FCC’s copy of the MusicFIRST Request been hiding?

As we reported recently, the FCC has invited comment on the Request for Declaratory Ruling filed by the MusicFIRST Coalition. For the convenience of our readers, we provided a link to a copy of the Request. Good thing that we did. Apparently the FCC has been having quite a time trying to track down any copy in its files reflecting a “received” stamp from the Secretary’s office. 

As an apparent result, as of 5:00 p.m. today (August 12, 2009) no copy at all of the Request had been posted in Docket No. 09-143 on ECFS, even though the public notice inviting comments was supposedly released five days ago – so anybody who (a) might have wanted to read the Request between then and now and (b) hasn’t thought to look for it on CommLawBlog.com would have had a bear of a time finding it. 

We’ve heard from one source who suggested that it’s not clear that the Request ever made it to the Secretary’s office. To be sure, the copy of the Request that we have in hand (no thanks to the FCC) includes a certificate of service indicating that it was being filed at the appropriate FCC filing address – but ordinarily, when things are filed at that address, stamped copies are made and retained by the Commission for future reference. So if it did pass through the Secretary’s office, it’s unclear why it didn’t get stamped in . . . and if it did get stamped in, it’s unclear why it’s taking so long to get a stamped copy posted for public review.

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The mystery of the fourth SoundExchange settlement agreement has been solved.

As we reported last week, SoundExchange announced that it had entered into four agreements establishing webcasting royalty rates. The terms of three of those agreements were described in our blog last week, but SoundExchange withheld details about the fourth . . . until now. As it turns out, the fourth agreement is with the Corporation for Public Broadcasting (CPB), and it extends through 2015 (with some tweaks) the terms of the SoundExchange/CPB agreement reached months ago.

Under the original deal, which covered the years 2006-2010, the nearly 500 eligible stations make their royalty payments to NPR Interactive, which then makes a $1.85 million lump sum payment to SoundExchange on behalf of the participating stations. To be eligible, a station must:

• Be licensed by the FCC;
• Originate programming (that is, it can’t be solely a repeater station);
• Be either (a) a member or affiliate of NPR, American Public Media, Public Radio International, Public Radio Exchange, the National Federation of Community Broadcasters or (b) a public radio station that is qualified to receive funding from CPB;
• Qualify as a “noncommercial broadcaster” under the statutory licensing rules; and
• Webcast as part of the mission that entitles the owner to be exempt from taxation under Section 501 of the Internal Revenue Code, or, if it is owned by a government entity, operate for a public purpose.

The new deal extends the original deal an extra five years – through 2015 – which provides certainty about future royalty rates for participating stations. (Adopting an end-date of 2015 also brings the CPB deal into conformity with other SoundExchange royalty agreements.) In 2011 there will be another lump sum payment – this time to the tune of $2.4 million (although that may increase based on increased listenership at the covered stations). Most stations will continue to enjoy the more relaxed requirement pertaining to the reporting of information about songs played (two seven-day periods per quarter), although more music-oriented stations will get stuck with census reporting.  

Again, CPB is providing the lump sum payment, so eligible stations need to keep an eye out for more information from CPB or NPR which should be arriving in the near future.

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FCC invites comments on alleged improprieties in Performance Rights Act debate

A new front has been opened in the on-going struggle over the Performance Rights Act (PRA). The new battleground is the FCC, which has invited comment on a “Request for Declaratory Ruling” filed by MusicFIRST Coalition back in June.

As we have previously reported (here and here, for example), the PRA would require radio stations to pay for the on-air performance of copyrighted sound recordings. That would be over and above the royalties broadcasters already pay to the composers of the underlying works (through ASCAP, BMI and SESAC). Historically, of course, radio has provided on-air exposure to recording artists for free, just as the artists have made their recordings available to broadcasters for free. That quid pro quo arrangement has served everybody – artists, broadcasters and the listening public – well for decades. The artists – well, at least some of the artists, and certainly the record companies for which they work – now want to change the deal.

Whether the proposed change makes much sense is a matter of considerable (to put it mildly) debate. (See our colleague Peter Tannenwald’s post here for an interesting take on the situation.) But thus far, the debate has been thrashed out in Congress, in connection with various bills which would either impose a new performance rights royalty obligation or not. (While no final votes have been taken, some observers – including our colleague Kevin Goldberg – have concluded that the PRA is doomed to failure in this Congress.)

Perhaps sensing a need to expand the battlefield, MusicFIRST – a “partnership of artists and organizations in the music community who support compensating performers for their work when it's played over the air” – has tried to lure the FCC into the fray. 

And the FCC has taken the bait.

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Last month we wrote about a settlement that established the royalty rates to be paid by so-called “pureplay webcasters” for performance of sound recordings solely via the Internet.  This was one more in a series of such settlements designed to provide alternatives to the royalty rates established by the Copyright Royalty Board (CRB) in March, 2007. Since the “pureplay” settlement seemed to cover the last corner of the webcasting universe left uncovered by the earlier settlements (which related to non-commercial radio stations that are part of the public radio/CPB system, and commercial radio stations), we referred to the “pureplay” settlement as the “final piece” of the webcasting puzzle.

 Our bad.  Turns out there were more settlements – four separate ones, to be exact – still to be completed.

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Hearing on doomed Performance Rights Act scheduled anyway

The Senate Judiciary Committee has scheduled a hearing on the Performance Rights Act for 2:30 pm on August 4.   No idea yet on who will be testifying for and against the bill, but we wonder if it even matters, given the clear message from the House that this legislation WILL NOT PASS.

There are now over 240 House co-sponsors of the "Local Radio Freedom Act", with more signing on earlier this week.  Shoot, there are now 22 co-sponsors of the Senate version of the Local Radio Freedom Act (S Con. Res 14).  If the House members are good to their word, HR 848, the House version of the Performance Rights Act is -- and we believe this is the mathematically accurate  term -- dead in the water. 

Is holding a hearing on a bill that has virtually no chance of being enacted into law a good use of the Committee's time (especially when they still haven't passed the Free Flow of Information Act, among other, more pressing and realistic pieces of legislation)?    Committee Chair Patrick Leahy apparently doesn't think so, as he won't even be presiding over this hearing.  Instead, he has passed that task on to Senator Dianne Feinstein (D-CA). 

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A decision from a Federal judge in New York should spur copyright owners to register their copyrighted works (“copyrighted works” meaning just about anything your create).    Those who fail to do so may lose the ability to recover valuable statutory damages if they end up having to go to court against an infringer.

The decision was issued in a class action lawsuit brought by several foreign and domestic copyright owners – largely broadcasters and television/movie producers alleging copyright infringement – against YouTube and parent company Google. The plaintiffs claimed that YouTube/Google failed to prevent repeat instances of infringement when works were posted to the YouTube site without permission and not taken down in a timely manner.

There are at least three ways to put a dollar figure on the damages that a party claiming copyright infringement can seek from an infringer. First, and most obvious, is “actual damages” – which are determined by the amount of actual, demonstrable profits gained by the infringer, or lost by the plaintiff, as a result of the infringement. The trouble with this measure is that it tends to be difficult – sometimes impossible – to prove what such “actual damages” amount to.

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Issue of CRJs’ constitutionality is again raised but, again, left unresolved

Decision deferral is one of the practiced arts in Washington. Decisions may need to be made, but often they aren’t. Instead, the particular situation is left to simmer, perhaps because other matters are of a higher priority, perhaps in the hope that, in the end, things will work themselves out and no decision will need to be made after all. And sometimes that’s how things work out.

It is hard to imagine a better illustration of this phenomenon than recent activity on the webcasting royalty front – activity which, coincidentally or not, occurred after the underlying issues had largely been resolved privately.

The backstory here may best be told with a simple timeline:

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Pureplay webcasters nail down royalty rates through 2015

It’s only been a few weeks since the Webcaster Settlement Act was enacted and already it’s working! A settlement agreement reached under that Act covers webcast royalty rates for “pureplay” webcasters for the years 2006-2015. (“Pureplay” webcasters provide non-interactive web-only service. A broadcaster who simulcasts on the Internet is not a pureplay ‘caster.)  This pretty much brings to a close the legislative and litigious efforts to overturn the March, 2007 decision of the Copyright Royalty Board (CRB) that was seen as a harbinger of the Death of Internet Radio – or at least the death of popular sites like Pandora.

As a result of the latest settlement, royalty rates for almost every aspect of the webcasting community are now covered by negotiated agreements. Many (but not all) public radio stations are subject to the terms of the agreement between SoundExchange and the CPB. Commercial broadcasters simulcasting on line are subject to the SoundExchange/NAB agreement. The only major class of webcasters still subject to the terms of the March, 2007 CRB decision consists of noncommercial broadcast stations that are not part of the SoundExchange/CPB deal.

The settlement for pureplay webcasters is retroactive to 2006. Going forward, it covers not only the 2006-2010 period encompassed by the March, 2007 CRB decision, but also the 2011-2015 period that is the subject of a newly-commenced CRB ratemaking proceeding.  Any pureplay webcaster can, but does not have to, choose the terms of this agreement over the terms of the March, 2007 CRB decision.

The terms of the pureplay settlement are as follows:

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But separate opinion questions CRJ’s constitutionality

The U.S. Court of Appeals for the D.C. Circuit has released its decision in SoundExchange v. Librarian of Congress, No. 08-1078, affirming the royalty rate set by the Copyright Royalty Judges (CRJ) for performance of sound recordings by satellite radio services, i.e., XM Sirius.  The CRJ are the members of the Copyright Royalty Board.   While there is little surprising in majority opinion, a separate concurring opinion from one member of the three-judge panel could spell trouble for any decision coming out of the CRJ for the foreseeable future.

SoundExchange had appealed a 2008 CRJ ruling requiring satellite radio services to pay royalties in the amount of six percent of their gross revenue in 2007, with the rate eventually increasing to eight percent of their gross revenue in 2012. The CRJ also had to attribute a portion of the royalty for the making of an “ephemeral copy” of each sound recording played.  (The ephemeral copy is the digital copy stored by the satellite operator prior to playing the sound recording; because it is a “reproduction” of the sound recording, not a "performance" of the sound recording, a separate royalty rate is required.)

SoundExchange argued that the CRJ's decision was arbitrary and capricious.   According to SoundExchange, the CRJ, in setting the rates, improperly over-emphasized some considerations and under-emphasized others.   The Court disagreed, holding that the CRJ acted well within the bounds of its discretion.  No surprise there.

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It’s that time of year again! Claims for cable retransmission copyright royalties and/or satellite copyright royalties earned during 2008 must be submitted to the Copyright Royalty Board of the Library of Congress by Friday, July 31, 2009. 

Eligibility for royalties is based on carriage of your station's programming outside of your local service area.  As a general matter, a station is eligible to receive royalties if its programs were retransmitted on "distant" cable systems and/or carried on satellites to subscribers outside the station's Designated Market Area (DMA).   A cable system is “distant" vis-à-vis a staion if the cable system is:  (1) outside the station's DMA; AND (2) at least 35 miles from the  station's community of license; AND (3) outside the station's predicted Grade B contour.

If you would like assistance in the preparation and filing of royalty claims, please contact Davina Sashkin at sashkin@fhhlaw.com or (703) 812-0458.

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A couple of recent court cases touch on issues we've discussed recently regarding the licensing of image and other trademark-type rights claimed to be held by athletes and sports leagues.  

Licensing of NFL Apparel

The big news is that the United States Supreme Court has agreed to hear oral argument in a case involving the National Football League's ability to engage in exclusive licensing of its merchandise.  The case  is an appeal by a company called American Needle of an adverse decision in the United States Court of Appeals for the Seventh Circuit.  For some 20 years American Needle (along with a number of competitors) had been licensed by the NFL to produce and sell caps bearing NFL logos. But then the NFL decided to enter into an exclusive marketing deal with only one company.  After Reebok was awarded the exclusive deal, American Needle challenged the right of the NFL to strike such an exclusive deal.  American Needle lost the last round in the Seventh Circuit.

Sports law experts are watching the case because, in a separate petition for Supreme Court review, the NFL itself had asked the Court to broaden the antitrust exemption the NFL currently enjoys.  The relief the NFL sought could affect not only all aspects of the NFL's operation, but also the status and operation of other major professional sports leagues.  Since the Supremes appear to have granted only American Needle's petition for cert, and not the NFL's, it's not clear whether the NFL's requested relief will be fair game when the case is presented.  But we'll be watching to see whether the Court makes any pronouncements that might shed light on how it would rule in other areas regarding licensing of team or player trademarks or image rights. 

While the American Needle case involves an overtly commercial use of these trademarks, there is an outside chance that the Court could make a broader pronouncement about the licensing of these rights generally which would affect the ongoing lawsuits by CBS Interactive and Yahoo against the NFL regarding the use of player images and information in fantasy sports. We'd rate this as "highly unlikely" but may attend the oral argument nonetheless. 

Use of College Football Player Image Rights in Video Games

More former college football players are stepping up in the pocket to file suit against Electronic Arts for that company's use of their likenesses in its "NCAA Football" video game.  We previously discussed the lawsuit filed by former Nebraska and Arizona State quarterback Sam Keller.  That case was filed in the United States District Court for the Northern District of California.  Now former Rutgers quarterback Ryan Hart has filed a similar action in a state court in Somerville, NJ.  He is joined in this lawsuit by former University of California quarterback Troy Taylor. 

So, while college football players may or may not attend class, at least a few former players might become part of a class action lawsuit.

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You may have read somewhere that both the House and Senate have passed the Webcaster Settlement Act of 2009, readying it for Presidential signature.  And if you did, you may have the following questions: 

1. Didn't I read somewhere that a Webcaster Settlement Act was already passed some time ago?    
2. And didn't I also read in CommLawBlog that various settlements have been reached to reduce the royalty payments made by webcasters – you know, the settlement between SoundExchange and the Corporation for Public Broadcasting and the other settlement between SoundExchange and the National Association of Broadcasters?
3. If a Webcaster Settlement Act was already passed, and if settlement agreements have already been entered into, what difference would the Webcaster Settlement Act of 2009 make to me?

The answers:

1. Maybe
2. Hopefully
3. It depends.

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If so, act now!

For a website that received over 222 million unique visitors in December 2008 (or roughly 55,000 times the usage of Commlawblog), meaning one in every five people who used the Internet that month made a trip to the site), Facebook doesn't do a great job of getting its own news out.  Case in point:  the effect on intellectual property rights that occur through the addition of "usernames" that will make it easier to find individual Facebook pages. 

Granted, the proposal was announced less than a week before its 12:01 am, June 13 effective date, but most corporate (and many individual) users didn't take heed of the small notice in the upper corner of each Facebook page. Fewer understood that the new program carries the potential for rampant cybersquatting or how to combat it. 

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Way back when we reported on a settlement between certain public radio entities and SoundExchange regarding the payment of royalties and filing of certain information regarding songs played over the Internet for the years 2006-2010,  the best we could tell you was "if you're eligible, you'll no longer be dealing with SoundExchange".

We've got a little more information now on who these stations will be dealing with:  the winner is "NPR Public Interactive"!

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Cue Brent Musberger: "You're looking live at the Warren E. Burger Federal Building and United States Courthouse in St. Paul, Minnesota"

Thank you, Yahoo!, for allowing us to continue engaging in some lame sports metaphors and puns (and for the ability to use an exclamation point as a letter).   

The Internet company filed a complaint in the United States District Court for the District of Minnesota on June 1 against the National Football League Players Association, the National Football League and Players, Inc., seeking a Declaratory Judgment that: 

NFL Players may not seek to control the use of names, likenesses (including, without limitation, numbers), pictures, photographs, voices, facsimile signatures and/or biographical information of NFL players in connection with NFL fantasy games and may not continue to extract money for the use of this publicly available information. 

Sound familiar?  Yeah, this is an instant replay of the case we described a few weeks ago in which the same federal District Court in Minnesota ruled that CBS Interactive did not violate NFL players' rights of publicity via its fantasy football game. 

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Opposition to a performance right applicable to over the air radio reached 218 and beyond as five more Representatives signed on as co-sponsors to the Local Radio Freedom Act (H. Con. Res. 49).  While this is a non-binding resolution, its plain language is clear: 

That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings

We've added the emphasis on "any" because House Judiciary Chairman John Conyers continues to work toward passage of  the Performance Rights Act, which would impose precisely the kind of new performance fee that the Local Radio Freedom Act would bar.  Conyers recently introduced amendments to the Performance Rights Act in the hopes that it would be more palatable to opposing Member; he also held a "Town Hall" meeting in his home district on Tuesday.  But with support for the Local Radio Freedom Act now exceeding a majority of the House, the prospects for success of Conyers's contrary proposal appear non-existent.

We always knew that HR 848 would pass Conyer's committee, but despite his best efforts, it's hard to believe that the number of co-sponsors for the Local Radio Freedom Act will do anything but continue to increase. 

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Radio stations: Put you thinking caps on -- it's contest time!

The NAB is running a cool new contest through its "NoPerformanceTax.org".  Entrants can help in the fight against the move for performance rights.  And one lucky radio broadcaster can win $ 2,500.00 and coach airfare, hotel for two nights and registration for two to the NAB Radio Show in Philadelphia on September 23-25 (where, as an added bonus not being touted by the NAB, you'll likely get the chance to meet real live Fletcher, Heald & Hildreth, PLC attorneys). 

The "Don't Tax That Dial" contest invites over-the-air radio broadcast stations within the United States to submit an original 30 second advertisement by July 1, 2009 that advocates against the imposition of a performance right applicable to over-the-air broadcasting.  The advertisement must specifically play off of one of these themes:

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Last week, I delivered to House Speaker Nancy Pelosi a letter urging her to look into the impact on minority broadcasters of the Performance Rights Act (PRA) pending before Congress. I signed the letter as a Director of the Spanish Broadcasters Association and Washington counsel to the Puerto Rico Broadcasters Association. Co-signers included David Honig, Executive Director of the Minority Media and Telecommunications Council, and Barbara Arnwine, Executive Director of the Lawyers' Committee for Civil Rights Under Law.  

Two weeks ago I moderated a panel of Spanish language radio broadcasters from across the country who gathered on Capitol Hill top brief Congressional staffers on the detrimental effects of such legislation.  If passed into law, the PRA would impose hundreds of millions of new fees on local radio stations for music aired free to listeners. Fifty percent of the new fee would go directly to the record label companies, three out of four of which reside outside the United States.

The bill was approved by the House Judiciary Committee last week, over the objections of various minority groups that wanted a hearing on the potential effects of the bill.  As we said in our letter to Speaker Pelosi, the PRA "would disproportionately harm present and future minority radio broadcasters and their listening communities" and could bankrupt as many as one-third of all minority-owned radio stations.  Another point we make in the letter is that there has been no examination of whether radio should be compensated for the promotional value of their airplay; as a result, the PRA “is not ripe for floor consideration”.  

While the bill is not, by any means, a uniquely minority-focused issue, it is clear that many minority owned stations, which frequently struggle in a healthy economy, and are barely surviving in the economic downturn. They could be snuffed out entirely by the imposition of an additional performance fee. As Amador Bustos of Bustos Media noted during the Capitol Hill briefing I moderated, "The performance tax would be the added and final nail in the coffin for these small broadcasters like ours, and I think that it is just absolutely ludicrous that the record companies are trying to sort of bite the hand that feeds them." The encouraging news is that while our letter was making its way to the Speaker’s desk, additional lawmakers threw their support behind a bipartisan resolution opposing "any new performance fee, tax, royalty, or other charge" on local radio stations.

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We reported yesterday that the House Judiciary Committee was preparing to mark up HR 848, the Performance Rights Act that would require over-the-air broadcasters to pay for the right to perform sound recordings.  The Committee has now passed the bill by a 21-8 margin.  However, by all indications, things will be a lot closer -- if not an outright defeat for HR 848 -- when it gets to the House floor. 

The Judiciary Committee also took up action that will allow even more webcasters to reach agreements with SoundExchange, Inc. regarding the royalties paid to perform sound recordings via the Internet through 2015. 

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The House Judiciary Committee is poised to "mark up" (vote on) HR 848, the Performance Rights Act, this Wednesday, May 13.   

With HR 848 currently boasting 41 co-sponsors, and the opposition movement claiming formal support from 184 Representatives who have signed on to H Con Res 49, the Local Radio Freedom Act, the future of this legislation is currently wide open. 

Both sides have been jockeying for position and more support.  Opponents of the performance right received a huge boost from the Hill itself, when members of the Congressional Black Caucus and Congressional Hispanic Caucus wrote to Judiciary Chairman John Conyers, seeking another hearing on the issue, one which would focus specifically on how a performance right would affect minority broadcasters. Outside groups, including the Rainbow PUSH Coalition, the Lawyers Committee for Civil Rights Under Law and the Leadership Conference on Civil Rights, have also sent letters of opposition to Chairman Conyers.  But the timing of this first formal vote comes at an awkward moment for the NAB, due to the recent departure of CEO David Rehr. 

On the other side, Rep. Conyers might move to curry more support for the bill.  Radio and Records is reporting that Conyers will attempt to bring opposing Representatives into his camp by easing the bill's impact on small, mainly community-oriented broadcasters. Conyers will apparently propose a $500 annual fee for "small broadcasters", though that term has not yet been defined.  (Earlier definitions as applied to the "Small Webcaster" exemption to an analogous webcast-related performance right defined  a "small broacaster/webcaster" as an entity with gross annual revenues below $1.25 million). 

Stay tuned for more updates.

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A lawsuit filed  on May 5 in federal district court in Northern California by a former college football quarterback is the latest extension of a series of cases that have defined who "owns" sports statistics, facts and personal image rights. 

While it has traditionally been the case that every person can ultimately control who makes money off of his or her name and "image" -- with that right getting stronger if the person in question has some commercial value in that personal image -- recent years have seen a shifting of the balance between this personal "publicity right" and the First Amendment right to use facts and information.  Just one week ago, the NFL became the third major professional sports league to be told that it does not have exclusive control of statistical and other information about its games and about its players -- so it's probably fourth and long for our erstwhile collegian in this struggle for control of potentially profitable information.

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Spanish-language broadcasters bring the fight to Capitol Hill.

“It’s like throwing a surprise party for a friend, and at the end of the night your friend charges you for an appearance fee.”

That's how Spanish Broadcasting System VP/GM Frank Flores described the push by record labels to impose a performance fee on radio stations. Flores’s comparison, which was a reference to the roughly $2 billion in music sales that the Free Radio Alliance claims is earned by the record industry as a result of the free airplay of their songs on commercial radio, was made during a May 5 panel discussion by leading Spanish-language radio broadcasters, which I moderated. The broadcasters gathered on Capitol Hill to brief Congressional staffers on the potential impact of a performance royalty on their stations. Flores went on to say that "we have worked real hard with the record labels and the artists.  And to be honest with you, a lot of these artists wouldn't be where they are if it wasn't for these radio stations."

Univision Radio's top morning show host, Eddie "Piolín" Sotelo, and ten other Spanish-language radio broadcasters told a room of Congressional staffers that a new performance tax on local radio stations could mean bankruptcy and more job losses for many Hispanic stations. “The performance tax would be the added and final nail in the coffin for these small broadcasters like ours, and I think that it is just absolutely ludicrous that the record companies are trying to sort of bite the hand that feeds them," Amador Bustos of Bustos Media told the audience.

Border Media's Miguel Villarreal noted the potential for more layoffs in the radio business. After the panel discussion, the broadcasters walked the halls of Congress through the afternoon, meeting with members of the Congressional Hispanic Caucus. 

The event was organized by the Free Radio Alliance, which opposes passage of HR 848, the bill which would impose a performance fee on radio stations that air recorded music. Under the terms of the bill, 50% of the royalties would go directly to the recording labels. After the panel discussion, the broadcasters met with members of the Congressional Hispanic Caucus throughout the afternoon. According to one broadcaster, the broadcasters were able to obtain additional support in opposition to the bill and in favor of the Local Radio Freedom Act, a non-binding resolution opposing the performance fee.

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I think broadcasters have let the record companies put them on the defensive by establishing a one-sided framework for the public discussion of the performance royalty issue. And that may be why broadcasters seem to be having trouble in the struggle with record companies over that issue.  Maybe it’s time to change that framework.

At the NABOB annual awards dinner a couple of months ago, I listened to NABOB President Jim Winston bemoan the burden that would be placed on struggling minority station owners if they had to pay the “performance royalties” being touted by the record industry. I thought to myself that the performance royalty debate has been in favor of recording artists, because the record companies have managed to cast their side as poor suffering recording artists who have supposedly been victimized by a freeloading broadcasting industry.  Artists have worked hard to create these recordings – as the argument generally goes – so why should they have to let their work be used for free by fat-cat broadcasters?

That approach, of course, misses the other side of the debate: the undeniable truth that airplay provides artists with valuable, if not vital, exposure to vast audiences, exposure that helps those artists sell records (pardon me – I mean CDs and downloads), fill concert seats, move merchandise, and establish the public images which are so crucial to their popular success. You will notice that in most music awards shows, artists give an appreciative shout-out to the radio industry in their acceptance speeches.

Broadcasters have historically provided exposure for free, just as the artists have made their recordings available to broadcasters for free. That quid pro quo arrangement has served everybody – artists, broadcasters and the listening public – well for decades. But if artists now want to change the deal by charging for the use of their recordings, that is a two-way street. Why not let broadcasters ask artists to pay for the exposure they get on the radio?

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Aldav, LLC claims big radio companies infringed patented content-substitution methods

Radio stations that stream their content onto the Internet will want to keep an eye on a patent lawsuit filed in the United States District Court for the Eastern District of Texas. Several major radio companies have been accused of patent infringement by engaging in “content replacement” – that is, they substituted Internet-friendly content in place of more locally-oriented content that went out over the air. While the complaint provides no details, it suggests that the local content which was removed consisted, at least in part, of commercials. 

The suit, filed April 16, pits Plaintiff Aldav, LLC against a list of defendants comprising a virtual who’s who of Big Name National Radio Operators: Clear Channel, CBS Radio, Citadel, Cox Radio, Cumulus, Entercom, Gap Broadcasting, Radio One, Regent, Saga, Univision and the Aloha Station Trust (which is operating some Clear Channel stations).

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With the Performance Rights Act creeping like a weed around Capitol Hill, the NAB is going grassroots, having created a new website that allows broadcasters to take action to defeat the legislative proposal that would require them to, for the first time, pay to perform sound recordings  in radio broadcasts. 

The "No Performance Tax" website contains:

• Basic background information on the issue.
   
• Multimedia and Resources, including video from the recent House Judiciary Committee hearing on the Performance Rights Act, galleries of radio and print advertisements and congressional resources.
   
• A "Newsroom" containing articles, editorials, op-eds and letters to the editor that have appeared in major media on this issue.

Most importantly, broadcasters can take the matter into their own hands by registering through the site to get sample scripts for radio advertisements, advocacy letters directed at Members of Congress and other ideas. 

The Performance Rights Act currently has 39 co-sponsors in the House (HR 848) and 6 in the Senate (S 379).  A resolution opposing the application of a performance right  to over-the-air broadcasting, the Local Radio Freedom Act, has the support of 168 Representatives and 3 Senators. 

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Regular readers interested in webcasting will already know that the Copyright Royalty Board (CRB) recently accepted comments on a proposal to require webcasters to file information on a monthly basis regarding each song played  in the month (the current requirement mandates filing this information for two seven-day periods each quarter).  The filing of these playlist reports is intended to assist SoundExchange, Inc. in fairly distributing to copyright owners the royalties it collects for performance of sound recordings over the Internet.  However, the CRB's rulemaking has hit a snag:  the judges are now going back to the well and have issued a Notice of Inquiry intended to tackle the most crucial issue raised by both sides of this issue:  how much of a burden would increased recordkeeping and filing requirements impose? 

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Just a quick update on some recent stories we've had on CommLawBlog.  There's a common thread running through all three.  A free CommLawBlog subscription to the first person who can find it...

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You may remember our post from last month about the CUT FATT petition. CUT FATT is a “coalition” asking the FCC to adopt rules limiting the royalties which patent holders can charge DTV set manufacturers. We had a good chuckle about the oddness of the CUT FATT acronym (full name: Coalition United to Terminate Financial Abuses of the Television Transition) and the coalition’s somewhat limited membership (since only two companies, VIZIO and Westinghouse Digital Electronics, were identified as members). 

The initial petition appeared to be the kind of altruistic project that a “public interest” law school class, or maybe an Eagle Scout, might undertake: an effort to Do Good for Everybody Because, Gosh Darn It, It’s The Right Thing To Do.

It turns out that there was considerably more here than first met the eye. In the tradition of the late Paul Harvey, here is the rest of the story.

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There's been a lot of talk about the agreements reached by SoundExchange, Inc. with the National Association of Broadcasters (NAB) and with the Corporation for Public Broadcasting (CPB) that provide substitute royalty rates and playlist reporting requirements for eligible webcasters who elect to participate in these deals. 

The most common refrains we hear are: "What does this mean for me?” and, from the more practical-minded, “What do I have to do?"  These are by no means dumb questions, since the new agreements – and especially the SoundExchange/NAB deal – create multiple subcategories of webcasters, each with slightly different benefits and responsibilities. 

No worries. We here in the CommLawBlog bunker are prepared to walk you through the process, step-by-step. Literally.

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The scheduled -- and then cancelled --  House Judiciary Committee hearing on the Performance Rights Act is back on.  The Committee website says it will now be held on Tuesday, March 10 at 10:00 a.m.  Even better: RBR claims to know the identity of some of the witnesses for the broadcasters (Steve Newberry and Larry Patrick). 

As that RBR article notes, the Local Radio Freedom Act, the nonbinding resolution demonstrating opposition to creation of a performance right applicable to over-the-air radio, now has 135 co-sponsors.  Only 83 more to go...

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We now understand that  Wednesday's House Judiciary Committee hearing on the Performance Rights Act (which we mentioned to you earlier today) has been postponed. 

The Committee's calendar makes no mention of the cancellation (though information regarding the hearing has never been updated).  However, other outlets are reporting the cancellation (with the Radio and internet Newsletter ("RAIN") site surmising that the hearing has fallen victim to a conflict with a Joint Address to Congress by British Prime Minister Gordon Brown, also scheduled for 10 am on Wednesday, March 4).    A call to the House Judiciary Committee confirms what the Committee website will not:  the hearing is off. 

As our own Frank Jazzo said, "Probably just as well from the broadcasters' perspective".  That's especially true given that the number of supporters for the counter-movement known as the "Local Radio Freedom Act" (LRFA) is up to 131 -- did the scheduling of this hearing which never actually occurred spur more Representatives to add their names to the list of LFRA supporters?

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There will be a hearing on the Performance Rights Act, but will it be fair?  This week's schedule for the House Judiciary Committee shows that the Committee will hold a hearing on H.R. 848 Wednesday, March 4, at 10:00 a.m. in Room 2141 of the Rayburn House Office Building, As we have previously discussed, H.R. 848 would require payment of copyright royalties by broadcast radio stations for performance of sound recordings.

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Coalition (of two) urges FCC to oversee patent licenses as well as broadcast licenses

Now and then we get an item down here in the CommLawBlog bunker that leaves us scratching our heads.

This week’s baffler is a Petition for Rulemaking from an entity calling itself the “Coalition United to Terminate Financial Abuses of the Television Transition LLC,” or CUT FATT. As far as we can tell from its own description of itself, the membership consists of a grand total of two manufacturers of TV sets. (Any fewer, of course, and it loses its “Coalition” status.) 

CUT FATT states as follows:

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The National Association of Broadcasters ("NAB") and SoundExchange, the designated "receiving agent" that collects and distributes copyright royalties paid as part of the statutory license applicable to webcasting, have announced a settlement under the "Webcaster Settlement Act" which sets the royalty rates to be paid by broadcasters streaming music on the Internet during the years 2009-2010. 

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Talk about irony. Just one day after the 50th Anniversary of “The Day the Music Died”, legislation – the Performance Rights Act (PRA) – was introduced that could hasten the death of all music on over-the-air radio.

If you believe PRA supporters (including perhaps most prominently the Recording Industry Association of America), payment of copyright royalties for performance of sound recordings is nothing more than fair and just compensation for intellectual property. 

Opponents of the proposal – including the NAB, State Broadcast Associations and others – see it differently. In their view, it’s a new tax that would cripple broadcast radio. The opposition goes further: the ultimate effect of the PRA would also be disastrous for the recording artists and record companies who are pushing for its enactment. That’s because the revenues many recording artists and record labels seek in exchange for performance of their copyrighted recordings would be reduced, while the essentially free broadcast advertising of concerts (and related merchandise) that has existed for years would also dwindle, leaving everybody involved worse off than before. And the record industry would have no one to blame but itself.

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Apparently there is some kind of big football game upon us. Not really caring for the sport myself and wanting to stay out of trouble, I won't actually say the name of the game or the teams involved.  What's that?  You didn't know about the implications of using the NFL's registered trademarks without their permission? 

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We haven't fully resolved the ongoing controversy surrounding the copyright royalties paid by webcasters in exchange for the right to perform sound recordings during the years 2006-2010, but it's already time for non-interactive webcasters (which includes radio stations simulcasting an over-the-air signal on the Internet) to worry about another increase in the rates for 2011 and beyond.  With the appeal of Copyright Royalty Board's ("CRB")  March 2007 ratesetting decision still pending in the United States Court of Appeals for the District of Columbia Circuit, the CRB is already starting up the next ratemaking proceeding.  Of course, this also comes as the CRB considers extending the requirement that webcasters must file reports containing certain information about all songs performed from two seven day periods per quarter to a comprehensive, year round, "census" filing. 

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The window opens on December 3 for registering ".tel" domain sites. ".tel" is a new top level domain name that is intended to  identify repositories of corporate and personal contact information. As we become increasingly reliant on our Blackberries, iPhones, Palms, Treos and even plain old mobile phones, ".tel" domains are likely to become essential resources for accessing important information that once required a computer or even those old things known as "books".

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It's been almost a year since we first brought you the story of a woman who decided to file a lawsuit against Universal Music Publishing Company alleging that their filing of a Notice and Takedown Request with YouTube to remove this video of her 13 month old son dancing to Prince's "Let's Go Crazy" constituted legal misappropriation in violation of her rights:  

 

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According to this article, the Rock and Roll Hall of Famer is suing timepiece maker Seiko for copyright infringement based on Seiko's use of the melody to "Bridge Over Troubled Water" as the wakeup chime for a line of alarm clocks.   The lesson behind this one is clear:  copyright infringement is not limited to unauthorized copying or performance of songs in their exact format.  Transforming a song into a ringtone or other limited use commercial format, including alarm clock chimes, whether one is using the entire song or just a few notes, is a bad idea (you can discount the notion of fair use when you're using "just a little bit") to sell over 100,000 alarm clocks... 

But, we can't let this go without noting the other very bad decisions Seiko made here. 

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The fight over the application of a "Performance Right" royalty payment to over-the-air radio had two major developments this week but is unlikely to produce any changes to the ultimate resolution of this issue in 2008.

We have previously informed you of the RIAA's efforts to ensure copyright holders in sound recordings (the individual performer of every song, as opposed to the songwriter, who owns a copy in the "musical work") receive royalties for performance of their works.  The main legislative proposal to create such a right, HR 4789 passed the Subcommittee on Courts, the Internet, and Intellectual Property of the House Judiciary Committee on Wednesday.  That was not surprising, given that the bill's chief sponsor and proponent, Rep. Howard Berman (D-CA) is the chair of that subcommittee.  

What remains to be seen is whether HR 4789 can continue what is likely to be a very uphill climb in this year and beyond.  With little legislative time left in 2008, things would have to move fast and it is unclear how the full Judiciary Committee feels about this bill.  Clearly standing in the way is the commitment of 219 Representatives -- enough to block this legislation against application of this right to over-the-air performance of sound recordings.  221 Representatives have co-sponsored H. Con. Res. 244, known as the "Local Radio Freedom Act"   If all 219 Representatives (2 of the co-sponsors are no longer in the House) hold their position, there is no chance the legislation will pass; prospects for 2009 are unclear as well, as Rep. Berman will no longer chair this key committee.  So, as always, stay tuned.  

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There has been an uptick in activity on the issue of performance rights in the past few weeks, with the addition of co-sponsors of a key House resolution opposing imposition of a performance right for over-the-air radio and introduction of a similar resolution in the Senate leading to speculation that the issue will come to a head this summer and also having possible repercussions with regard to the royalty rates paid for performance of sound recordings over the Internet.

We have touched on the issue of performance rights in several past postings.  Efforts to overturn the sharp increase in royalty rates applicable to Internet webcasters were the subject of significant discussion during the Spring and Summer of 2007 after the Copyright Royalty Board issued a final decision on March 2 and then dismissed a Motion to Rehear its Decision on April 16.  A Motion to Stay the implementation of the new rates was denied by the United States Court of Appeals on July 11, resulting in implementation of the new rates four days later.

Angered by the prospect that they would pay three times the royalties in 2010 that had been paid in 2005, webcasters turned to Congress for help.  The Internet Radio Equality Act was introduced in the House and Senate  but neither gained much traction, largely because legislators were appeased by promises originating from SoundExchange, Inc., representing recording artists, that early discussions regarding a more tenable rate were proving fruitful. As is often the case, a month later, there was no resolution of the issue and Congress had begun to focus on other issues. 

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Penguin Classics is getting into e-books starting with the launch of Pride & Prejudice formatted for Amazon's Kindle e-book reader. The Kindle has become a hot commodity over at Amazon, and with Sony re-entering the market e-books may finally be coming into their own after years of hype.  In fact, since the Kindle launched e-book sales have risen 24% (from $2.5 million to $3.1 million).

But what is intriguing about this development is the idea that booksellers will try to sell content that is in the public domain and widely available for free in a format that will work on the same device. Penguin Classics has been selling works that are in the public domain for years. The model has been to distinguish their offerings in print in much the same way they will online, by bundling in some extras to help give the book some historical context and meaning. And this model has been successful in the offline world. Whether this will work online remains to be seen (ahem, music industry)?

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Yes, you read the singular use of  "form" correctly. Whereas in the past, commercial webcasters could choose between calculating monthly royalty payments to SoundExchange for digital performance of sound recordings on either an aggregate tuning hour or a per performance basis, only the latter will be allowed for January 2008 and beyond. The form filed in previous years to notify SoundExchange of the elected method of calculation will obviously not be utilized; instead a commercial webcaster's only choice is whether to complete the Statement of Account form in Excel or PDF format. 

Noncommercial webcasters still have their own form which takes into account the fact that noncommercials pay a $ 500 annual minimum and nothing more unless the station exceeds the last vestige of an aggregate tuning hour calculation; if a noncommercial webcaster exceeds 159,140 aggregate tuning hours in a given month, it will also need to calculate a payment for that month on a per performance basis ($ 0.0014 per performance).

Is this a big deal? Based on conversations with our clients, the answer appears clearly to be yes. Most broadcast radio stations offering an Internet simulcast and/or other streams of music online have used the aggregate tuning hour method to calculate royalty payments. It is simply an easier calculation to make, as it requires only counting the number of listeners per hour. The per performance option requires the webcaster to know exactly how many listeners heard each song that was streamed.

Although the first Statements of Account are not required until March 16 (45 days after the last day of January in this leap year), webcasters must obviously be attentive to the change now, as they must already be employing software or other means of making the per performance calculation.

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To the surprise of few - other than perhaps the timing of the event - bills were introduced in both Houses of Congress that would create, for the first time, a performance right requiring payment of copyright royalties for playing sound recordings on terrestrial radio stations.  The performance right found in Section 106 of the Copyright Act has always required payment of copyright royalties for performance of the underlying musical work (the composed music and lyrics), which are often collected by ASCAP, BMI and SESAC. These royalties are also paid for performing the musical work on the Internet. But when Congress created the  performance right in sound recordings (the actual version of the song heard on the radio or webcast) that is found in Section 114 of the Copyright Act, it declined to apply that right to over-the-air broadcasters.   

The recording industry has for years clamored to resolve the perceived inequities resulting from the existence of a performance right in sound recordings applicable to every medium other than terrestrial radio, such as webcasting, music played via cable or satellite television, and satellite radio, and the existence of that right in virtually every technologically advanced country in the world other than the United States.  Meanwhile, broadcasters consistently point to the non-monetary benefits received by recording artists whose works are played over the air.  

The introduction of the Performance Rights Act takes this debate from the theoretical to the practical.  Introduced in the Senate by Patrick Leahy (D-VT) and Orrin Hatch (R-UT) and in the House by Howard Berman (D-CA) and Darrell Issa (R-CA) the bill explicitly amends the definition of the performance right to include public performance "by means of an audio transmission".  At the same time, it says that radio stations will be able to take advantage of a statutory licensing scheme in order to pay for the right to perform these sound recordings over the radio, similar to statutory licensing schemes applicable to the other media discussed above.

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Start getting those brooms out, we're headed for a sweep, I think: This week the United States Court of Appeals for the Eighth Circuit held that baseball players - and their licensee, MLB Advanced Media - do  not have the right to prohibit the use of their names and other factual information in connection with fantasy sports games.  This is the 2^nd time that a sports league has lost this matchup, with the National Basketball Association having been on the receiving end of a similar scoreline against Motorola in a case ten years ago.

This case, C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P., saw intervention by heavy hitters in both camps.  The Major League Baseball Players Association intervened in the case to protect the players' rights. Their side was supported by virtually every major sports league.  Meanwhile, C.B.C. was supported by the Fantasy Sports Trade Association and other online database companies that saw the importance of a decision that might overturn years of precedent allowing for free use of factual information.

In essence, this case, as are most cases, was all about money.  CBC had for years licensed from the MLB Players Association the use of player names and information for use by fantasy baseball players.  When their latest agreement with the MLB Players Association expired in 2002, CBC decided not to renew. The Players Association then allowed MLB Advanced Media to have the exclusive right to use this information "for use in exploitation of all interactive media."  Thus, Major League Baseball would now control both the real thing and its fantasy counterpart.  MLB Advanced Media did offer CBC the right to promote MLB Advanced Media's fantasy games on its website, but CBC declined and went to court seeking a declaratory judgment against MLB Advanced Media on the basis that it had "a reasonable apprehension: of being sued if it continued to host its own fantasy games.

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Those of you outside the DC area (and perhaps those in the area that didn't read today's Business Section of the Washington Post) might be interested in an article that addresses a topic of concern to many website operators: the possibility of being sued for copyright infringement based on material that others have posted you your site.

While the specific article discusses a lawsuit relating to the unauthorized use of the Prince song "Let's Go Crazy" in a YouTube clip of a baby dancing to the song that was posted by the baby's mother, there are broader lessons to be learned.

Universal Music Publishing Group ("Universal") took advantage of a provision the Digital Millennium Copyright Act ("DMCA") to require YouTube to remove the 29 second clip from its website. Specifically, Universal invoked Section 512 of the DMCA, a provision that favors removal of allegedly infringing material posted by a third party by offering a safe harbor to any website that has a Designated Agent for receipt of a "takedown notice" of a possible infringement and timely complies with such a request. The twist in this instance is not that Universal sent a takedown notice to YouTube -- YouTube gets hundreds of these notices a day and just this week announced that it has created new filtering software to assist it in proactively identifying potentially infringing uploads -- but rather that the woman who originally posted the material has sued Universal for its attempts to bully her into submission.

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We notice that the Senate Commerce, Science and Transportation Committee has noticed a hearing for next Wednesday, October 24, at 10 am in Room 253 of the Senate Russell Office Building entitled "The Future of Radio". Although, we fear that the Committee has bitten off more than it can chew in tackling such a vast topic (and we want to know what they are taking if they can accurately pull this off), it would not surprise us or anyone else if at least a few of the witnesses - none of whom have been identified yet - testify as to the possible effect on radio of a performance right requiring payment of copyright royalties for over the air radio. This alone would make it worth attending the hearing or watching via the <>Commitee's website.

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While all eyes were focused on the offer by SoundExchange and the rejection by small webcasters of a deal that would have reinstated the "percentage of revenue" basis for calculating royalty payments to be made by webcasters with a gross annual revenue of under $ 1.25 million and a monthly listenership of less than 5 million, it was the larger webcasters that eventually cut themselves a deal.

The Digital Media Association (DIMA) and SoundExchange reached an agreement yesterday that will benefit the biggest of the big -- those webcasters with many, many, many, many, many, many (times infinity) channels, each of which is subject to a $ 500 annual minimum fee. Of course, all these manys (times infinity) add up pretty quickly, meaning that DIMA member sites such as AOL, Yahoo! LaunchCast, Pandora, Live365, MTV, and RealNetworks would find themselves paying an exorbitant amount before per performance royalties even began to accrue each year.

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We reported to you yesterday on a development in the controversy over the increase of copyright royalty fees for Internet radio.

Statements from several small webcasters and reports in the trade press indicate that there will be no deal. These webcasters are apparently balking for three reasons:

1. They are insulted by yet another attempt to "subdivide and conquer" the Internet radio industry by providing short term relief to one (vocal) segment with an eye to preventing major reforms for the longer term.
   
2. The $ 1.25 million annual gross revenue cap for small webcasters -- carried over from 2002 -- is too low and neither reflects the reality of the way in which Internet radio has grown and will continue to grow.
   
3. The 5 million listener cap per month is too low, both for present and future purposes.
   

This appears to stall negotiations once again. We'll see if Congress finally steps back into the breach when it returns in September.

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It appears that at least one segment of the webcasting community - that which has largely been the most vocal throughout this process and perhaps has the most at stake from reining in runaway royalty rates - might have reached an accord with SoundExchange, the company which collects royalties from those performing copyrighted material over the Internet.

As we have described in repeated postings small webcasters have been the hardest hit by the Copyright Royalty Board's March 2 decision to increase royalty rates for Internet radio.

While the new rates apply across the board, the large commercial webcaster population is generally made up of established radio stations simulcasting an over-the-air radio signal on the Internet. The station simply needs to make a business decision as to whether the increased royalties are worth the benefit of streaming the signal on the Internet and whether the over-the-air operation can essentially subsidize the Internet operation.

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The Subcommittee on Courts, the Internet and Intellectual Property, chaired by Rep. Howard Berman (D-CA) will hold a hearing on Tuesday, July 31 at 10 am entitled "Ensuring Artists Fair Compensation: Updating the Performance Right and Platform Parity for the 21st Century". The witness list has not been released for this hearing yet, but you can get that information and more -- and even watch the hearing via Internet webcast -- on the Judiciary Committee's homepage.

The Subcommittee will likely examine the performance right in sound recordings -- songs -- that is so controversial due to the sharp increase in royalty rates paid by those streaming music over the Internet. However, the proposal to create a similar performance right for over-the-air radio broadcasts will certainly be discussed as well, as recording artists have been pushing for these payments (often called a "performance tax" by those opposing the idea) and have created a new "Musicfirst" coalition to reach that end.

Interested broadcasters or individuals should consider sending a quick note to their Member of Congress if he or she sits on this subcommittee.

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What does this mean? In the immediate short term, it means that the new rates will go into effect on July 15. As outlined in both the Memorandum to Clients article and a more recent blog posting webcasters should be prepared to file royalty payments utilizing new forms available through SoundExchange, Inc. for 2006 and 2007. These forms will allow the webcaster to calculate the difference between the amount owed at the new royalty rate and the amount paid for 2006 and January through May 2007 according to the previous royalty rates.

In the longer term, this likely shifts the focus back to Congress, where the Internet Radio Equality Act is pending in both the House and the Senate. Congress almost certainly will not act before July 15, so webcasters will continue to negotiate with SoundExchange for a more reasonable royalty rate structure that can be agreed to by all parties and sanctioned by the Copyright Royalty Board. Finally, though the United States Court of Appeals for the District of Columbia Circuit denied the Motion for Stay, the underlying appeal remains pending before that Court. The Court of Appeals' one sentence order denying the Motion for Stay simply stated that the parties seeking the stay hadn't met the very high burden required of them, so it offers little insight into what the court will do on the merits of the case. Though one factor a court will consider in deciding a Motion to Stay is whether there is a likelihood that the party seeking the stay will win on the merits, it will also consider whether irreparable harm would ensue if the stay were not issued, the harm that would ensue if the stay were issued and the public interest in issuing the stay. The Court of Appeals' curt decision offered no insight into which of these factors carried the most weight in its decision. There is also no indication as to how quickly the Court will move on this appeal.

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It is looking increasingly likely that the increase in copyright royalty rates for Internet webcasting will go into effect as planned on July 15, 2007. There has been no action from the United States Court of Appeals or Congress, and the series of offers from SoundExchange to various factions of the Internet radio community have been rejected out of hand. We have previously discussed the various scenarios that could lead to a stay or change in the rules.

So webcasters should be prepared to file two forms and, potentially, a lot of cash, with SoundExchange by July 15. One form will calculate the amount owed for streaming operations during 2006, subtracting the amount actually paid in that year from the amount required to be paid according to the new rates. The other will do the same for all months through May 2007.

The forms vary according to the webcaster's commercial/noncommercial status (remember that there is no separate designation for "small webcasters" under the new royalty scheme) and, if the webcaster is a commercial webcaster, according to whether the rates are being calculated under the "per performance" or "aggregate tuning hour" option for 2006 and 2007. The forms are available on the SoundExchange website. Commercial webcasters should look here while noncommercial webcasters should go here.

Please do not hesitate to contact a Fletcher, Heald & Hildreth attorney if you have any questions about the new rate structure.

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A decision from the WIPO Arbitration and Mediation Center reiterates our previous advice to broadcasters to file for federal service mark protection for their call signs. The case is Gray Television Group, Inc. v. Manila Industries, Inc.

Manila Industries registered 32 Internet domain names which incorporated several call signs of Gray Television stations. Some of these domain names simply involved the call sign itself; others appended a descriptive term to the call sign such as "news", "weather", "sports" or the channel number of the station. Gray had procured federal service mark registrations for some, but not all, of these call signs.

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