Does The First Amendment Allow Journalists To Lie To Their Subjects? U.S. Senator Accuses Documentary Film Makers Of Fraud

Capture

On April 1, 2014, West Virginia Senator Joe Manchin issued a press release accusing Adroit Films of fraud. Manchin had agreed to be interviewed by the media company for a documentary about the Upper Big Branch mine disaster, which caused the death of 29 miners in 2010. However, Manchin reports that when the documentary was released on March 31, 2014, he was horrified to find that it was nothing more than a propagandistic defense of Don Blankenship, the CEO of Massey Energy, who is under investigation for his role in the disaster.

Senator Manchin claims that he was deceived by the filmmakers in two ways. First, they failed to tell him that they were affiliated with Blankenship (had he known that, he would have declined to be interviewed). Second, the filmmakers told him that the film would be mostly about “mine safety,” but that was not really the case. Manchin has demanded that distribution of the film cease, and announced that he will “pursue every legal recourse.”

Possible Claims Against Lying Filmmakers

So what options are available to a documentary subject who has been lied to? It might be helpful to divide the universe of potential claims into two categories. In the first category are claims based on the content of the film itself, i.e., did the film defame the subject, or violate his privacy, or misappropriate his name or likeness? These claims would be subject to strong First Amendment defenses, especially where (as here) the plaintiff is a public official or public figure.

In the second category are potential claims based not on the content of the film, but on the way in which the film was made. Depending on the circumstances, one can imagine that some filmmakers in the process of making a documentary might trespass, or steal or — as alleged by Manchin – make a fraudulent misrepresentation. Is this second category of torts, when allegedly committed by the media, also subject to First Amendment defenses? The First Circuit considered this issue in somewhat similar circumstances in Veilleux v. NBC.

Parents Against Tired Truckers: Veilleux v. NBC

PATTIn 1993, an overtired long-distance trucker employed by Raymond Veilleux caused a fatal highway accident in Maine. After the accident, journalists working for Dateline NBC contacted Veilleux and allegedly made two important representations. First, the journalists claimed that they were making a documentary that was going to cast the long-distance trucking industry in a “positive light.” Second, Veilleux told the filmmakers that he did not want to appear in the same program as Parents Against Tired Truckers (“PATT”), an advocacy group founded by the families of the accident victims. The journalists assured Veilleux that they “had no intention of including PATT in the program.” In fact, this was false: they had already interviewed PATT for the program. Based on these representations, Veilleux granted the journalists access to one of his drivers, and the results were disastrous. The final program not only included PATT, but also included evidence of the driver’s drug use and other illegal acts. Veilleux subsequently lost customers and contracts.

Veilleux sued NBC for defamation based on the content of the program, and also for fraudulent misrepresentation based on the alleged assurances from the journalists. The jury awarded Veilleux $100,000 in connection with his defamation claim and $150,000 in pecuniary business losses stemming from the misrepresentation. On appeal, the First Circuit reversed the defamation claim on various First Amendment grounds, including because the plaintiffs had not shown that any statements in the program were materially false.

Misrepresentation Claim Not Barred by First Amendment

But the Court refused to afford the same First Amendment protections with respect to the misrepresentation claim. The Court opined that, even though the press does enjoy certain First Amendment protections when it is reporting truthful information, it does not enjoy general immunity from tort liability for the way in which (even truthful) information is acquired. Citing the Supreme Court in Cohen v. Cowels Media Co., the First Circuit held that “the First Amendment is not offended by the operation of a generally applicable law that, when enforced against the press, has merely an incidental effect on its ability to gather and report the news.” Moreover, the plaintiff here was seeking only pecuniary — not reputational — damages from the misrepresentation, so this was not a case where defamation was being disguised as something else in order to avoid First Amendment strictures.

Therefore, Veilleux’s misrepresentation claim could stand, as long as the alleged promises on which it was based were specific enough to satisfy the elements of the tort. The Court first addressed the alleged misrepresentation that the film would portray the trucking industry in a “positive light.” This promise was not specific enough to give rise to a claim of misrepresentation. However, the alleged promise to exclude PATT from the program was clear and specific, and the court held that it could support a misrepresentation claim.

But there were still additional hurdles for Veilleux to overcome. The jury had not been asked to decide if the harm to Veilleux’s business was caused “specifically and directly” by the misrepresentation about PATT. Veilleux could not “recover generally for all harm flowing from the entire broadcast,” but only the pecuniary damages arising from the fact that PATT was included in it. The Court, while acknowledging that such causation would be very difficult to prove, remanded the matter for further proceedings on the issue. Veilleux chose to settle rather than take his chances in a new trial.

Senator Manchin’s Potential Claims

So, where does this leave Senator Manchin? We assume that any case brought by the Senator would include several counts based on the content of the film: defamation, invasion of privacy, right of publicity, etc. But as to a misrepresentation claim, Senator Manchin would have to show that he participated in the film because he relied on a specific material misrepresentation made by the filmmakers. Promises about the overall content of the show may not be specific enough – after all, how much “mine safety” content is required before a film is about mine safety? But perhaps the Senator will be able to show that Adroit’s failure to disclose its affiliation with Blankenship was an omission equivalent to a specific misrepresentation. The Senator will also have to prove that he suffered non-reputational harm that was “specifically and directly” caused by this misrepresentation.

Categories: Uncategorized Comments Trackbacks

Highlights of Digital Millennium Copyright Act Congressional Hearings

On March 13, 2014, the Judiciary Committee of the United States House of Representatives, through its Subcommittee on Courts, Intellectual Property and the Internet, held hearings regarding the copyright infringement notice and takedown procedures set forth in 17 U.S.C. § 512, the Digital Millennium Copyright Act. The focus of the discussion concerned whether the DMCA fairly allocates the burdens of copyright enforcement and administration of the takedown process among copyright owners, internet service providers and internet users. Underlying the discussion was also the desire to balance the exclusive rights of content creators with the First Amendment rights of internet users or, as Representative Blake Farenthold (R-TX) put it, “I want to respect your copyright but I also want some music on my cat video.”

Representative Bob Goodlatte (R-VA) introduced the hearing by identifying three issues of particular interest to him: (1) the “whack-a-mole” problem copyright owners face, whereby infringing material that has been taken down reappears almost immediately on the same website; (2) the impact of takedown notices on fair use and the First Amendment; (3) the problem of fraudulent takedown notices.

Following is our summary of highlights from the witness testimony:

Professor Sean O’Connor, University of Washington School of Law

O'ConnorProfessor O’Connor testified about the “relentless reposting of blatantly infringing material” after a takedown notice has already been sent, which has significantly increased the overall volume of takedown notices and the concomitant administrative burdens.  At the same time, internet companies have no incentive to monitor or police content until they receive a takedown notice, in part because having “red flag” knowledge of potential infringement can cause a forfeiture of the DMCA safe harbor. Professor O’Connor proposed two ways to reduce the volume of takedown notices: (1) establishment of a “notice and stay down” procedure, either voluntarily or by legislation, to identify infringing material the first time it is the subject of a takedown notice and prevent its subsequent reposting; and (2) in order to encourage internet companies to monitor for copyright infringement, amend the DMCA so that the safe harbor can be lost by a company that is “willfully blind,” i.e., that it has an institutionalized policy prohibiting or discouraging the investigation of copyright infringement. Although courts are already applying a similar doctrine, the DMCA should define “willful blindness” in order to provide certainty to all players.

Professor Annemarie Bridy, University of Idaho College of LawBridy

Professor Bridy, by contrast, testified that Section 512 has struck the right balance between the rights of copyright owners, internet users and internet companies. Perfect enforcement is not possible, but Section 512 facilitates a fair and workable enforcement regime in which the copyright owners and internet companies share the burden.  The DMCA was intended to facilitate the global growth of the internet, and it has done just that. The administrative costs of takedown notices are decreasing with the expanding availability of automated takedown processes. Professor Bridy acknowledged that peer-to-peer networks create the biggest enforcement difficulties and were not a technology anticipated by the DMCA, the language of which exempts routing and transmission services. However, this problem has been in part addressed through voluntary efforts, such as the Copyright Alert System, by which copyright owners help internet companies identify repeat infringers.  Additionally, peer-to-peer services are becoming less popular as legal alternatives continue to emerge.

Paul F. Doda, Global Litigation Counsel at Elsevier Inc.

DOdaMr. Doda described his company’s “futile attempt to keep pace” with repeat online copyright infringement. Elsevier issued over 20,000 takedown notices per month in 2013, many of them to rogue sites which in effect harbor infringement and on which unauthorized works appear over and over.  He provided one example of a textbook that was uploaded 571 times to the same site. In order to reduce the number of takedown notices and instances of repeat infringement, Doda recommended voluntarily technical measures, in particular filtering technology to automatically remove content that “matches” the “fingerprint” of other content already known to be infringing. Such technology is already in use by Scribd and Google. Doda further recommended that Congress either require the use of such technology or incentivize its adoption by providing for injunctive relief against websites that refuse to adopt it and repeatedly repost the same infringing work.  He also endorsed suggestions by the Association of American Publishers regarding the streamlining and automation of the takedown notice submission processes.

Katherine Oyama, Senior Copyright Policy Counsel at Google Inc.Oyama

Ms. Oyama testified that the provisions of the DMCA, and the legal certainty they provide, have been an effective and important foundation to the success and growth of the modern internet and e-commerce.  The amount of material copyright owners are seeking to have removed from Google has grown, in part due to streamlined takedown procedures, from 3 million allegedly infringing items in 2010 to 230 million in 2013. Despite this growth, Google has been speeding up its takedown response time, which now averages less than 6 hours. Google’s position is that the best way to fight piracy is not to increase takedowns but to find compelling legitimate alternatives that allow copyright owners to monetize content rather than have to repeatedly remove it. Towards that end, Google has implemented Content ID technology that allow rights holders to track, monetize or block the use of their work. At the same time, Google has taken steps to discourage “rogue sites,” including by cutting off  Google advertising revenue and by calibrating the Google search algorithm so that repeat valid takedown notices will tend to lower a site’s search result ranking.

Picking up on the concept of Content ID, Representative David Cicilline (D-RI) suggested that, if the right filtering technology exists, the “whack-a-mole” problem of repeat posting could be solved by amending the DMCA to give internet service providers the affirmative duty to prevent the reposting of material that had already been identified in a valid takedown notice (i.e., take down and stay down). Ms. Oyama “underst[ood] how that would sound attractive,” but stated that she did not agree with the proposal because it would be impractical to enforce and because it would chill online speech.

Maria Schneider, Grammy Award Winning Composer

SchneiderMs. Schneider testified that the present DMCA takedown system is “broken” and that it “creates an upside down world” in which she, as an individual artist, is saddled with the impossible task of policing the internet and spending “countless hours” issuing takedown notices. Schneider proposed three solutions: (1) that content creators be able to prevent unauthorized uploading before infringement occurs, through the use of technologies like Content ID, thus effectively creating a list of content that cannot be uploaded (which she analogized to a “do not call” list); (2) shifting some of the monitoring burden to uploaders to show that the content they are uploading is not infringing; (3) encouraging systems that prevent repeat “whack-a-mole” infringement of the same work.

Paul Siemenski, General Counsel of Automattic Inc. (WordPress)Siemesnki

Mr. Siemenski testified that, while the DMCA “process works well overall,” his company has seen firsthand the shortcomings of the system, which include (1) the abuse of the DMCA takedown process; (2) the heavy compliance burden on companies who try to fulfill their DMCA obligations in a responsible manner; (3) the lack of any recognition of fair use in the DMCA; and (4) that the counter-notification process does not work for most internet users because it is complicated, intimidating and requires them to reveal personal information.

Mr. Siemenski’s comments on the abuse of the DMCA takedown process were particularly interesting.  We’ve previously written (here and here) about WordPress’ unusual and commendable decision to fight back against clear abuse of the DMCA, in particular where it involves attempts to censor undesirable speech. For example, WordPress joined blogger Oliver Hotham in a suit against “Straight Pride UK,” a group that was using the DMCA to censor Hotham’s article on gay rights. Siemenski provided additional examples of abuse by individuals and corporations alike, including:

  • “A medical transcription training service using forged customer testimonials on their website submitted a takedown for screenshots of the fake testimonials in a blog exposing the scam”
  • “A physician demanded removal of newspaper excerpts posted to a blog critical of the physician, by submitting a DMCA notice in which he falsely claimed to be a representative of the newspaper”
  • “A frequent submitter of DMCA notices submitted a DMCA notice seeking removal of a screenshot of an online discussion criticizing him for submitting overreaching DMCA notices”

Representative Howard Coble (R-NC) asked Mr. Siemenski whether Section 512(f) (which provides for awards of damages and attorneys’ fees against those who make material misrepresentations in takedown notices) has been effective in deterring abuse of the takedown procedure.  Mr. Siemenski felt that the provision had not been effective. Suits are rare under Section 512(f) because of the relative imbalance of power and resources between those who typically send takedown notices and those who typically receive them. Both Mr. Siemenski and Professor Bridy suggested adding a statutory damages mechanism for DMCA takedown abuses under Section 512(f).

 

ICANN Top-Level Domain Name Opportunities and Risks

ICANNICANN’s new generic top-level domain name (gTLD) program has introduced opportunities and risks for companies, and probably not in equal measure.  Several weeks ago, we posted some guidance  regarding steps all brand owners should be taking to secure their valuable trademarks in connection with the launches of the new top-level domain names.  Joshua Jarvis, a member of Foley Hoag’s Trademark, Copyright & Unfair Competition group, has co-written an article for the IPO Law Journal summarizing these steps.  As this process is important for establishing a brand presence in the new gTLD regime, as well as a critical component of any organization’s overall trademark protection strategy, we encourage you to check it out.

Brand Wars: Will the Real Ronald McDonald Please Stand Up (and Eat a Taco Bell Taco on Camera)?

McDonald 1

Last week, Taco Bell released a TV commercial featuring real men named Ronald McDonald enjoying Taco Bell’s new breakfast items. This is very creative advertising, but is not for the faint of heart. Using a competitor’s trademarks is always a risky business. Do not try this at home. At least not without calling your trademark lawyer first.

As we have reported previously on this blog, character names and likenesses can be protected by trademark and copyright law. In this case, Taco Bell deliberately chose to advertise its products featuring real men named Ronald McDonald in a playful dig at its burger franchise competitor. Taco Bell was careful not to do anything to suggest that any of these men were the “real” Ronald MacDonald, and in fact included the disclaimer: “These Ronald McDonalds are not affiliated with McDonald’s Corporation and were individually selected as paid endorsers of Taco Bell Breakfast, but man, they sure did love it.”

When a company uses a brand name of its competitor in its own advertising, such as in comparative advertisements, courts will often apply the doctrine of nominative fair use in determining whether there is a violation of trademark rights. The nominative fair use doctrine generally considers three factors: (1) whether the company had a need to use the trademark of its competitor in order to identify the competing product; (2) whether the company went beyond the use of the trademark to the extent necessary to make the identification, such as by using the associated trade dress or images; and (3) whether the company did anything else to suggest that there was endorsement by or affiliation with the competitor.

McDonald 2In this case, none of the “Ronald McDonalds” in the Taco Bell commercials wore the familiar make up or costumes of the McDonalds character, and Taco Bell went out of its way to include a disclaimer. On the other hand, did Taco Bell really “need” to refer to Ronald McDonald in order to make its point? It is an interesting question. We may never know how the nominative fair use factors would apply to this unusual fact pattern, as McDonalds has not brought an action for trademark infringement or dilution and seems unlikely to do so.  The McDonald’s Facebook page shows the “real” Ronald McDonald petting a Chihuahua – the Taco Bell mascot — and observes that “Imitation is the sincerest form of flattery.”

Copyright Claims Based on Submission of Prior Art to Patent Office Finally Dismissed: Were They The “Weakest Infringement Claims of All Time”?

wea

In April 2012, we reported on four copyright lawsuits filed by the American Institute of Physics (AIP) and John Wiley & Sons. Ltd, the publishers of a range of scientific literature.  These suits alleged that four law firms in Illinois, Kansas, Minnesota and Texas had infringed the AIP’s copyrights by submitting certain scientific articles to the Patent and Trademark Office (PTO) as “prior art.” In other words, these law firms essentially were being sued for doing what patent law firms across the country do every day: prosecute patent applications. On March 25, 2014, the last of these cases came to a conclusion.

AIP had alleged that, even though the submission of prior art to the PTO was required by law, it was nevertheless infringement to make any unauthorized copies “in connection with researching, filing and prosecuting certain patent applications.”  AIP initially argued that this included the mere submission of a copyrighted scientific article to the PTO. The closest analogy we could find to this claim were a pair of cases that Professor Nimmer calls the “Weakest Infringement Claims of All Time,” in which parties had attempted to use copyright law to prevent the submission of adverse evidence by opponents in civil actions.

However, AIP softened its stance as the cases progressed. It eventually acknowledged that submitting a copy to the PTO (and retaining a copy of the PTO submission) was fair use, but argued that any other copying by the law firm was off limits without a license, including “downloading, storing, making internal copies of, and distributing the Articles by email.”  This more focused theory of the case was clearly intended to invoke the Second Circuit’s 1994 opinion in American Geophysical Union v. Texaco. In that case, Texaco had purchased only one or two subscriptions to scientific periodicals, to be shared among 400 to 500 research scientists.  Some of the scientists made unauthorized copies of the publications for their own libraries.  The Court held that this was not fair use.

So maybe AIP was on to something after all. Let’s see. Here’s a recap of how these four cases came out.

American Institute of Physics v. Hovey Williams LLP (D. Kansas)

The Kanas matter was a promising start for AIP. On June 22, 2012, a few months after the case was filed, it settled. Reportedly, the law firm didn’t want the distraction of a long legal battle and agreed to purchase a blanket license from the Copyright Clearance Center.

American Institute of Physics v. Schwegman, Lundberg & Woessner, P.A. (D. Minnesota)

In the Minnesota case, the defendant law firm had copied and used in patent applications approximately eighteen articles published by AIP, most of which it had obtained from the PTO’s Public PAIR website. The defendant also saved these scientific articles in its electronic document management system. After discovery, the defendants (supported by the PTO, which intervened in Minnesota, Texas and Illinois) moved for summary judgment.

On July 30, 2013, Magistrate Judge Jeffrey Keyes issued a Report recommending that summary judgment be granted for the defendant because the copying was fair use. As to the “purpose and character” of the use, Judge Keyes held that a “reasonable jury could only conclude that [defendant’s] purpose in downloading and making internal copies . . . was to ultimately comply with the legal requirement to provide prior art to the USPTO and to represent its clients’ interests.”  And as to the effect on the market, AIP had produced no evidence that the use of the articles by patent lawyers had harmed its traditional target market of scientists, academics and the like.

Judge Keyes also rejected the plaintiffs’ analogy to the Texaco case. In Texaco, the intended target market was scientists and the intended purpose of the original work was to aid scientific research. Texaco was creating additional copies of the work for the same market for the same purpose, just without paying. Here, by contrast, lawyers aren’t the traditional audience for scientific articles, and those articles were not primarily intended for use in patent applications, so fair use applies. Leery of being misinterpreted, however, Judge Keyes warned in a footnote that he was not establishing a copying exception for lawyers. Attorneys who make unauthorized copies of legal texts (for which they are the target audience) are likely to fall on wrong side of the Texaco line.

Judge Keyes also went to some length in his fact section to point out that the law firm’s archiving of articles in its document management system did not allow personnel to perform text searches. Presumably, this was significant because it meant that the system could not become an aid to general scientific research or a substitute (in future patent prosecutions by the firm) for legitimate access to online research databases. However, Judge Keyes did not explain how this fact impacted his legal conclusions on fair use, so its relevance remains unclear.

The Court adopted the Magistrate Judge’s recommendations and dismissed the case.  AIP filed a notice of appeal to the Eighth Circuit but dropped the appeal in February 2014.  The defendant’s motion for fees was denied on the grounds that the AIP’s claims were “colorable” and that outcome was “by no means a foregone conclusion.”

American Institute of Physics v. Winstead PC (N.D. Texas)

The Texas case involved more or less the same issues.  AIP alleged that the defendant patent law firm made unauthorized copies of approximately 13 scientific articles in the process of preparing patent applications, most of which were obtained from clients. This firm did not maintain an archive of articles, but did make what AIP charged were “excessive” internal copies. The defendants filed a motion to dismiss, and the Court converted it to a motion for summary judgment.

In an opinion issued December 3, 2013, the Court dismissed the action on the grounds of fair use. The court divided the “purpose and character” analysis into three parts: (1) the defendant’s use was transformative because, despite consisting of exact copies, these copies had a different function from, and did not supersede, the original; (2) the defendant’s copying was not commercial because, even though it charged its clients $.18 per page for copying, this did not result in a profit; and (3) the defendant’s copying provided a public benefit, to wit, an efficient patent system.  The Court went on to hold that this “public benefit” was also the determinative issue with regard the effect on the market.

This time, AIP didn’t bother to file a notice of appeal.

American Institute of Physics v. McDonnell Boehnen Hulbert & Berghoff, LLP (N.D. Illinois)

That left only the Illinois case, which lasted a little bit longer because it appears to have been aggressively litigated on both sides and because the defendant introduced a twist.  In addition to fair use, the defendant law firm asserted the affirmative defense of Noerr-Pennington immunity. On December 11, 2013, Court announced that the Noerr-Pennington argument was “not fully developed” in the parties’ summary judgment papers and ordered an extra round of briefing on that issue.

Noerr-Pennington immunity, a First Amendment doctrine derived from a pair of antitrust cases in the 1960’s, provides that efforts to petition or influence the government (whether by filing lawsuits or by lobbying the legislative or executive branches) are immune from antitrust liability even if the intent the activity is to eliminate competition. Here, the law firm defendant claimed that, since a patent application is a petition to the federal government, Noerr-Pennington applies and makes such activity immune from copyright infringement actions.  AIP responded that application of Noerr-Pennington immunity was limited to antitrust matters.  The PTO chimed in that the whole Noerr-Pennington debate was a pointless distraction because the fair use doctrine would resolve the case and render Noerr-Pennington immunity moot.

It turned out that the PTO was right, at least about the Noerr-Pennington debate being pointless, because the Court never got to rule on the issue. By early 2014, the AIP had apparently had enough and threw in the towel. In March 2014, AIP moved to voluntarily dismiss on the grounds that it had already lost in both Minnesota and Texas, and dismissing the Illinois case too was the “pragmatic” thing to do. The law firm defendant opposed but, on March 25, 2014, the Court allowed the motion, thus ending the last of the “weakest infringement claims of all time.”

Not So Weak After All?

There are a few important takeaway points from these cases. First, there is no special copyright exception for lawyers. Darn. Second, the use of copyrighted materials to fulfill legal obligations in governmental proceedings is most likely fair use, but it’s not the “slam dunk” defense that many once thought it was. Courts may not dismiss these cases out-of-hand, but rather may subject the parties to a factual inquiry to determine (a) whether the defendant’s activities represent the traditional function of and market for the plaintiff’s work; and (b) whether the “internal” activity leading up to and related to the governmental proceeding crossed the line from fair use into systematic commercial copying. Finally, Texaco is alive and well, but it does not provide the answer to every copyright question.

Categories: Uncategorized Comments Trackbacks

Copyright Office to Study Music Licensing

Copyright Office LogoThe United States Copyright Office has announced the initiation of a study of the effectiveness of existing methods of music licensing. Three types of licenses were mentioned in the announcement: (1) compulsory licenses for the reproduction and distribution of musical compositions; (2) licenses for the public performance of compositions through ASCAP and BMI; and (3) licenses for the relatively new right in the digital public performance of sound recordings.

Among the issues that will be considered are:

Compulsory Licenses for Reproducing and Distributing Musical Compositions

The owner of a musical composition has a “mechanical” right, which is the exclusive right to make and distribute copies of the composition (including records, CDs, digital downloads, etc.).  This right is subject to a compulsory licensing scheme set forth in 17 U.S.C. § 115. In practical terms, this means that if you are a musician who wants to record and sell a version of a song someone else composed and published, you have to get a license from that composer. Licenses have to be obtained on a song-by-song basis, and the rates are set by the Copyright Royalty Board. The Copyright Office intends to assess the “current need for and effectiveness” of this system, including whether the marketplace would be better off with blanket licenses instead of song-by-song licenses, particularly in the case of online music services.

Public Performance of Musical Compositions

The owner of a musical composition also holds an exclusive right to the public performance of the work, for example on radio and television.  These rights are generally administered by three Performance Rights Organizations (PROs) — ASCAP, BMI and SESAC — which issue blanket licenses to broadcasters and others covering the performance of all music in their repertories. These PRO licenses are not compulsory, but they are generally subject to antitrust considerations, including consent decrees with the Department of Justice (a topic we recently addressed in more detail here). The Copyright Office will be considering whether the current system is effective, and whether the consent decrees (originally established in 1941) are still serving their intended purpose.

Digital Transmission of Sound Recordings

In 1995, Congress enacted the Digital Performance Right in Sound Recordings Act (DPRSRA). The DPRSRA granted the creators of sound recordings (as distinct from composers of the underlying musical composition) a limited exclusive right to the digital transmission of a sound recordings, for example through an online radio service. This right is subject to statutory licensing and rate setting by the Copyright Royalty Board, pursuant to 17 U.S.C. § 112 and  § 114. As recently discussed at great length by the Southern District of New York in In re Petition of Pandora Media, Inc., the result of this legislation is that online music services such as Pandora have to obtain both a mechanical reproduction license from the owner of the composition and a digital public performance license from the owner of the recording.  The Copyright Office intends to study the effectiveness of this regime, including:

  • Whether the disparate forms of and systems for licensing mechanical rights and performance rights is effective, or whether the two types of licenses should be more unified in their form or availability.
  • The impact of 17 U.S.C. § 114(i), which requires that, in any judicial or administrative proceeding to set the mechanical license rates, the amount the licensee is already paying for the public performance right (to ASCAP, BMI, etc.) “shall not be taken into account.” As described by the court in the Pandora matter, Pandora pays over half of its revenues to record companies for the sound recording right alone, but these payments cannot be considered by any adjudicator setting the rate for the mechanical right.
  • Whether this digital public performance right should be extended to pre-1972 sound recordings. For more on this issue, see our recent blog post here.

Written comments on these and other issues are due by May 16, 2014.