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

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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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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"You probably don't even hear it when it happens." - Bobby Bacala, from "Sopranos Home Movies", The Sopranos. July 15 is the effective date of new royalty rates to be paid by those who stream copyrighted music over the Internet. As that date fast approaches, many are hoping for a last minute reprieve from the sharp increase that would severely impact or, in many cases, silence Internet webcasters. Various conspiracy theories abound as to what will happen in the last minutes of July 14. Some place their hopes on the United States Court of Appeals issuing a stay of execution pending appeal of the Copyright Royalty Board decision to increase royalty rates; others are hoping Congress will step in. Some believe there is still time for an agreement to be reached by those representing digital music providers and those representing copyright holders. We have discussed the details of these issues in previous blog posts on April 26, May 2, and May 31.

Two things seem to be certain: there will be silence. And then there will be a lot of talking. June 26 has been designated a "Day of Silence" by the Savenetradiocoalition, who is asking webcasters to such off their streams in order to demonstrate what the Internet will be like if webcasters are forced off the air by impossible royalty payment obligations (I'm already trying to figure out how I'll make it through the day without my favorite Internet radio programs to guide me). If Bobby Bacala and Tony Soprano were unlikely to engage in nonviolent protest, they were probably equally unlikely to take their grievances to the law. But that's the other road to salvation at this point: the Internet Radio Equality Act, which has been introduced in both Houses of Congress as HR 2060 and S 1353. HR 2060 has been quietly and consistently gaining momentum. As of today, it has 119 co-sponsors. This issue will now have its day before Congress. The House Committee on Small Business has announced that it will hold a hearing entitled "'Assessing the Impact of the Copyright Royalty Board Decision to Increase Royalty Rates on Recording Artists and Webcasters" on June 28 at 10 am in Room 2360 of the Rayburn House Office Building. The witness list for this hearing is not complete, but it will likely include representatives from the recording industry, broadcasters and Internet webcasters of various shapes and sizes in an attempt to determine the effect of the CRB decision on small webcasters. Though the Committee does not have jurisdiction over the Internet Radio Equality Act (that bill has been referred to the House Committee on Energy and Commerce and the House Judiciary Committee), we can reasonably expect that the bill will be discussed as well. Anyone can make his or her views known to a Congressional Committee, even if it is not from the witness table. Written submissions can be directed to the Committee on Small Business; we can help you draft or submit such testimony, which would be especially persuasive if your Representative is a Member of that Committee.

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As expected, Internet webcasters filed a motion with  the United States Court of Appeals for the District of Columbia that seeks a stay in the implementation of new Internet radio royalty rates that are due to go into effect on July 15, 2007 as a result of a "Final Determination of Rates and Terms" issued by the Copyright Royalty Board on March 2, 2007 (and revised slightly in an Order Denying Motions for Rehearing that was issued on April 16, 2007).  We have reported these changes on several occasions in both this blog and our Memorandum to Clients.  We have also discussed the prospects of the Internet Radio Equality Act, which was introduced in both the House and the Senate as a means of overturning this decision and restructuring the royalty rate process for Internet radio.

The motion was filled by all facets of the Internet radio industry, as large commercial webcasters, small webcasters and noncommercial webcasters joined in the filing.  The Court is expected to rule in coming days. Stay tuned.

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Quick Update on the April 26, 2007 posting, "Internet Radio Law Introduced":  The Copyright Royalty Board has pushed the due date for new Royalty Rates back to July 15 (it was previously supposed to be May 15).    Forms should be available on the SoundExchange website in advance of the revised deadline. 

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In a move that is being welcomed by Internet radio operators, Congress took a first step this afternoon toward overturning the March 2, 2007 decision to increase royalty rates for stations streaming over the Internet during the years 2006-2010.  We previously summarized this decision in the March 2007 "Memo to Clients" and updated the status of this proceeding in an April 2007 MTC article describing the effect of the Copyright Royalty Board's denial of Petitions for Rehearing of the March 2, 2007 decision.

With the May 15, 2007 implementation of the harsh new rate structure hanging like a dark cloud over the future of Internet radio, Rep. Jay Inslee (R-OK), joined by 8 other Representatives, introduced the "Internet Radio Equality Act."  This bill explicitly states that the Copyright Royalty Board's March 2, 2007 and April 17, 2007 rulings with regard to webcasting are "not effective and shall be deemed never to have been effective."

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