Digital Fingerprints on Your Copyright

I haven’t written here in awhile because as some may know, I am busy selling my first book, “Amalfi Blue, lost & found in the south of Italy,” Over on Kickstarter. (Just 4 days left over there so run now).  Also, with so many irons in the writing well, to cross-pollinate puns, the lines often blur between ex-rock journalist, network reporter, travel concierge, author and entertainment attorney, whew!  How do I sleep?

Anyway, while thinking about the book while driving this AM (there is no law against thinking while driving yet!), it dawned on me that the old school method of “poor man’s copyright” for a creative work may actually be obsolete when it comes to protecting intellectual property.

Back in the day, my musician and writer friends would send a tape/disc or printout of their creation to themselves by registered mail, return receipt.  All of the post clerks knew what to do.  They would even direct the novice artists who used the wrong envelopes, etc.

Well, when I went to mail a copy of “Amalfi Blue” to myself last week, the postal clerk didn’t know what to do and I had to instruct her.  Then it dawned on me that every thing we do on our computers, EVERYTHING, has a digital fingerprint, so is the “poor man’s copyright” necessary any longer?

It was called such because it was a way to “prove” you created something at some point in time without actually registering it at the U.S. copyright office, thereby saving the fees for the “poor man.”  In actuality, even registering something at the Copyright Office doesn’t prove date of creation in a court of law.  It only proves who was smart enough to document it first.

Image courtesy: Renjith Krsihnan/FreeDigitalPhotos.net

Therefore, if every digital file is date-stamped by your computer and every transaction can be digitally traced across the ethers, perhaps the new “poor man” copyright is even more economical.  Maybe it’s as easy, and as free, as simply emailing your creative file to yourself and saving a copy of the email.  True, there is no date stamp from a governmental agency but when the governmental workers no longer recognize the process once used to protect artistic works.  Maybe it’s time for poor artists to rest their faith in the ethers.

I haven’t researched case law on this issue but it would be interesting to see if this has been used in a copyright challenge in court?  Anyone know?

NOTE:  Writer here would truly appreciate any comments here from digital forensic experts.

Termination Rights Just May be the Musical Nail in the Coffin

My colleague and good friend Joe Messina recently showed me an interesting article by Larry Rohter in the New York Times, “Record Industry Braces for Artists’ Battles Over Song Rights,” which for this entertainment attorney raised more issues than it solved regarding the termination of copyrights under changes to federal Copyright Law which occurred more than 25 years ago.

Image courtesy: Renjith Krsihnan/FreeDigitalPhotos.net

As of 1978, §203 of The Copyright Law allows the writer, author, creator who assigns a copyright, OTHER THAN A WORK FOR HIRE (which I’ll address below) to place the assignee on notice 2 years prior to the 35 year period that they intend to terminate the assignment of rights.  The statute does not allow for any waiver of this termination of rights under contract.  Please also keep in mind that this provision is only in the United States.

For years, major record labels raped up and coming musicians of their song publishing rights, taking away a large revenue stream from musicians who were already indebted to their labels when their first hit went gold or platinum. That’s because the music industry business model worked this way: The label would place a new artist in a studio with a producer chosen by the label and often with session men also chosen by the label. The starry-eyed newbie thought this was just fantastic because they were in a “recording studio” which had A/C and electricity that their parents were not paying. Yet, they were paying big time because the label advanced all these upfront costs but recouped them on the back-end when the song was a hit. The revenue was generated through the sale of records and CDs and through the mechanical licenses. Those so-called payments for “mechanical rights” were paid to the publisher and the writer for each record sold; therefore, the labels were paying themselves. So, if the record company owned the publishing rights then they were not only earning revenue from the sale of discs but also from the mechanicals.

Big labels (I now say that tongue in cheek) had publishing divisions. If you were signed to one of the WEA (Warner – Elektra – Atlantic) labels you often assigned your publishing rights to Warner-Chappell Music. It was a perfect fit for the megalithic labels but a sour note for the musicians.

For the inexperienced out there – look at the deal as a musical pie with only three slices – recording, publishing, writing.  So, an all-American act named the B.Boys comes to the label.  The record costs $250,000 to make in the studio (not including the costs to manufacture and distribute the discs which the label has yet another division to manage).  The B.Boys now owe $250,000 to the label before the first disc is ever sold or played on the radio.  If their piece of the “pie” only nets them 1¢ per album (OK, that might be an exaggeration but only by about a dime!!!) that means they would have to sell 25 million discs just to break even with the record company……….and that’s not discounting for the commissions they owe to their managers and agents.  Also, I cannot even begin to address music industry math in this short space but it boggles the mind to see how they can consistently calculate the “net” of a project out to zero.  It’s “magical math,” quite astonishing.

Image courtesy: Nuttakit/FreeDigitalPhotos.net

So, the acts go on tour and live their lives in a bus to live one step better than a homeless shelter.  Thus, that first tour lasts for years just so the band can pay off everyone!

Then, lo and behold, the digital age is born and David Bowie is the first big act to take control by releasing an album solely through digital download and without owing one dime for its production to any record label.  Well, let’s just say that was not Ziggy’s most successful album.

The digital landscape placed a stranglehold on the music industry, which now blames its demise on illegal downloads over the Internet.  Musicians began fighting back long ago which is why the 1978 change in Copyright Law pre-dated the Internet revolution so let’s not misplace the blame here.  The blame lies squarely with high-living industry executives who wanted to be the rock stars and balanced their libidinous desires on the broken backs of the working artists.  Instead of the labels morphing the business model as the landscape changed, they locked themselves in marble towers like the cry-babies many of them were and refused to see or manage business differently.

At the end of this year, acts who released material in 1978 can now start the process to exercise their termination rights and recoup the publishing rights to songs they created.  I highly doubt, however, it will be as easy as pie since the law has yet to be tested in court and since there is no bright line definition in the statute as to what will happen to the recordings themselves.

§203 clearly carves out termination rights as not applying to “works made for hire” and strong arguments can be made that the “Master Recordings” were owned by the labels themselves.   I don’t think anyone who’s passed the bar and practices entertainment law could successfully argue that the musicians were “employees” of the labels.  Clearly they were independent contractors and as such, the work can only be deemed a “work for hire” and outside the parameters of “termination rights” if it comes under one of nine statutory provisions or if the work had been “specially ordered or commissioned” by the label and the parties agreed to that project status in a written contract.  Therefore, each artist’s rights to the recordings themselves will be evaluated in light of their individual contracts.

These battles will only just begin as this year comes to an end but keep in mind we are talking about acts and songs who peaked 35 years ago.  Does anyone but their families care any longer?

Still Gray over Grey Market Goods in Omega Case

In a country where the first sale doctrine has been at play for more than 100 years, you would think an enlightened Supreme Court would uphold such longstanding precedent.  Yet, I have learned to always expect the unexpected.

A 4-4 ruling in Omega S.A. v. Costco Wholsesale Corp., 541 F.3d 982 (9th Cir. 2008) this week leaves a very gray area over grey market goods.  The case involved the Omega watch company’s ability to basically control the pricing of its goods in the after-market by riding the coattails of the Copyright Act and they prevailed in the nation’s high court, much to my surprise.

 

Image: renjith krishnan / FreeDigitalPhotos.net

The watches are made overseas and sold overseas at a  much cheaper price than they retail in the US.  An unidentified vendor bought them overseas and sold them to  a New York company, which in turn sold them to Costco for distribution in California.  Although Omega authorized the foreign sale, it claimed it did not authorize the importation of those same watches into the U.S. and claimed copyright infringement of its logo under 17 U.S.C. §§106(3) and §602(a).  Costco, on the other hand, cross-moved under 17 U.S.C. §109(a) arguing they were protected under the “first sale doctrine,” which allows a purchaser to transfer a lawfully made copy of a copyrighted work without permission from the copyright holder.

The “first sale doctrine” was established more than 100 year ago in Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908) and it was later codified in the U.S. Copyright Act, 17 U.S.C. §109.  In Bobbs-Merrill, a publisher sold a novel with a statement on the first page indicating that no dealer could sell the book lower than $1.00.  R.H. Macy & Co. ignored that and sold the book at a discount after buying it wholesale from an authorized distributor.  The high court sided with Macy’s stating that the Copyright statute protected the rights holder’s “right to vend” and multiply the work but it did not afford it greater protection than set forth in the statute by allowing the holder to limit future resales.  This case of first impression set forth what was subsequently codified in 17 U.S.C. §109 as the “first sale doctrine” and has been subsequently upheld by SCOTUS numerous times.

The 4-4 split (Justice Kagan sitting this one out because of her stint as US Solicitor General) was issued without an opinion so we don’t know why any of the justices voted the way they did, nor does the decision clarify control of  so-called “gray market goods.”  What is clear, however, is that manufacturers now have a wider port to dance through when trying to control the pricing of goods made cheaper overseas and sold at inflated prices in the US.  Why would anyone pay $2,000 for a watch anyway?