What's up with Music Copyrights? Overview

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What’s Up with Music Copyrights? Prof. Lydia Pallas Loren Lewis & Clark Law School

Intellectual Property Section Oregon State Bar Nov. 6, 2019

2 Overview

•Some Basics of Music Copyrights

• Music Modernization Act • Recent high-profile litigation

1 3

Music Law 101 MONDAY, NOVEMBER 18, 2019 6:00 PM 7:30 PM LOCATION: CD BABY

WWW.OREGONVLA.ORG/EVENTS

Music Copyright Basics – two ©s 4

1. Musical works -notes & lyrics 2. Sound Recordings (fixed in “copies”) (fixed in “phonorecords”) Added to federal copyright in 1831 Added to federal copyright 1972 – Reproduction & Distribution – Reproduction & Distribution • Sheet music (and deriv.) • Recordings • Rights do not include “sound – 115 mechanical alikes” compulsory license – Public Performance (“cover” recordings) • Only 106(6): “by means of a – Public Performance digital audio transmission” • Broad general rights • 114 statutory license for non- • Licensed by PROs (e.g. ASCAP) interactive streaming services (Admin. by SoundExchange)

2 Reproduction §115 Compulsory & & Distribution Negotiated licenses 5

Musical Work Sync & Other uses Derivative Work Negotiated licenses ©

ASCAP, BMI, SEASAC, GMR Public Performance Blanket Licenses “song”

Reproduction (limited to actual recorded & sounds) Negotiated Licenses Sound Distribution Recording Sync & Sampling (limited to actual recorded ℗ Derivative Work sounds) Negotiated License

Public Performance by (1) Exempted means of a digital audio (2) Negotiated License transmission (3) Statutory License (Sound (§106(6) & §114) Exchange)

The Music Modernization Act 6 Orrin G. Hatch-Bob Goodlatte Music Modernization Act, Public Law 115-264, 132 Stat. 3676

• Title I: Musical Works Modernization Act – Creates a “blanket license” under 115 for certain digital uses of musical works – New entity, the “mechanical licensing collective,” will administer the 115 license (and has related obligations) • Title II: Classics Protection and Access Act – Pre-1972 sound recordings: provides rights under the federal copyright system and subjects those rights to the compulsory licenses of the Copyright Act (esp. 114 license (streaming)). • Title III: Allocation for Music Producers Act – Potential for some producers, mixers, and sound engineers to obtain a small portion of compulsory license revenue for digital public performance rights for sound recordings (Sound Exchange collected).

3 Reproduction §115 Compulsory & & Distribution Negotiated licenses

Musical Work Sync & Other uses Derivative Work Negotiated licenses ©

ASCAP, BMI, SEASAC, GMR Public Performance Blanket Licenses “song”

Reproduction (limited to actual recorded & sounds) Negotiated Licenses Sound Distribution Recording Sync & Sampling (limited to actual recorded ℗ Derivative Work sounds) Negotiated License

Public Performance by (1) Exempted means of a digital audio (2) Negotiated License transmission (3) Statutory License (Sound (§106(6) & §114) Exchange)

Music Modernization Act 8

• Complex deals worked out by industry insiders to “fix” aspects of the licensing markets viewed as broken – Added to the Copyright Act: 24,072 words – The Copyright Act of 1976: 33,759 words • Title I – Musical Work Modernization Act (MWMA) – Complex licensing agreement for musical works codified in the statute • 18,500 words total • Section 115 mechanical licenses – created a new “blanket license” 2,742 words → 18,324 words – Musical works – Mechanical copies – “covered activities” (key part: interactive streaming)

4 Blanket License – the cozy side 9 (what each side got)

• Streaming services: • MW copyright owners: path to licensing all (presumably) higher musical works royalty than before – Includes “unmatched – Adjustments to rate setting works,” i.e. those works standards used by the for whom the copyright Copyright Royalty Judges owner is unknown or – Seeking: rates similar to SR cannot be located rates (albeit for Pub. Performances)

Blanket License – the scratchy side 10 • Mechanical Licensing Collective (MLC) – Designated by the Copyright Office • Music Licensing Collective, Inc. designated in July, 2019 • Sponsored by the NMPA – Paid for by the streaming services • Royalties for unmatched works – held for 3 yrs: – “equitably distributed to known copyright owners” • Transaction costs problem “solved” – By calling “interactive streaming” a mechanical copy! • Parity (with SR) fallacy

5 Equality and Fairness? 11 Reproduction and distribution Interactive Streaming Non-interactive Streaming

Musical Works §115 Mechanical Copy (!) Not a mechanical copy – no (songwriters) (willing buyer/willing seller license needed standard)

Sound Recordings ?? (presumably taken into §112(e) statutory license (performing artists) account in the arms-length agreements)

Equality and Fairness? 12 Public Performance Interactive Non-interactive Non-digital Streaming Streaming transmission

PROs ASCAP/BMI PROs ASCAP/BMI PROs ASCAP/BMI Musical Works (antitrust decree (antitrust decree (antitrust decree supervision) supervision) supervision) (songwriters) SEASAC/GMR SEASAC/GMR SEASAC/GMR Arms-Length Deals Statutory License – No Rights! Sound Recordings §114 (willing buyer/ (performing artists) (Sound Exchange- willing seller standard) administrator only) Sound Exchange

6 Reproduction §115 Compulsory & & Distribution Negotiated licenses

Musical Work Sync & Other uses Derivative Work Negotiated licenses ©

ASCAP, BMI, SEASAC, GMR Public Performance Blanket Licenses “song”

Reproduction (limited to actual recorded & sounds) Negotiated Licenses Sound Distribution Recording Sync & Sampling (limited to actual recorded ℗ Derivative Work sounds) Negotiated License

Public Performance by (1) Exempted means of a digital audio (2) Negotiated License transmission (3) Statutory License (Sound (§106(6) & §114) Exchange)

Title II: Classics Protection and 14 Access Act • New Chapter 14 of Title 17: “Unauthorized Use of Pre-1972 Sound Recordings” – Pre-1972: prior to February 15, 1972 – Previously: state law copyrights • Entitled to rights & remedies for “covered activities” – 106 rights, 602 rights, violations of 1201 and 1202 • DMCA Notice-and-takedown applies to pre-72 SR (1401(f))

7 15 CPA Act - notables • Rights are granted to whoever owns the reproduction right under state law at time of enactment – Subsequent transfers are subject to 201 & 204 requirements (signed writings) – No termination of transfers for transfers prior to enactment • Recording rules to be eligible for statutory damages- recording with the copyright office • Duration: 95 years from publication + “transition periods” of 3 to 15 years

Equality and Fairness? 16 Pre and Post 1972 Sound Recordings Digital streaming royalty Digital streaming royalty Termination Rights payments- non-interactive payments- interactive

Pre-72 Direct payments to Direct payments to None performing artists performing artists

1972-1976: §304 terminations Post-72 Direct payments to No requirements §203 terminations performing artists (arms-length agreements) 1978-present: §203 terminations

8 17 Resource for listening & more: https://blogs.law.gwu.edu/mcir/ Recent high-profile musical work cases • Concluded litigation – Marvin Gaye v. Robin Thicke & Pharell Williams • On-going litigation – Led Zeppelin – Stairway to Heaven – Ed Sheeran – Thinking Out Loud – Taylor Swift – Shake it Off – Katy Parry – Dark Horse

18 Williams v. Gaye, 895 F.3d 1106 (9th Cir. 2018) • Claim: Blurred Lines copied elements of Marvin Gaye’s 1977 hit Got to Give it Up • Jury trial (March 2015): $7.3 million jury award – Judge reduced to $5.3 million – Ninth Cir. upheld the verdict (except as to two defendants – remanded) • Amended judgement (December 2018): $5 million + 50% songwriter and publisher revenue going forward

9 Skidmore v. Zeppelin 19

• Claim: Zeppelin’s Stairway to Heaven, released in 1971, copied elements from Taurus, by Randy Skidmore in 1967. – Jury verdict: insufficient similarity for improper appropriation – Ninth Cir. Panel vacated and remanded for new trial (Sept. 2018) – En Banc granted – oral argument heard 9/23/19

Skidmore v. Zeppelin 20 • Issue #1: Scope of protection for “unpublished” musical works under the 1909 Act – 1909 Act federal protection begins: • Upon publication with proper notice, or • Upon registration of an unpublished work* – Distribution of phonorecords is not a publication of the musical work (17 U.S.C. 303(b)) – Taurus was registered with sheet music deposit

10 Skidmore v. Zeppelin 21 • Issue #1: Scope of protection for “unpublished” musical works under the 1909 Act – Dis. Ct. ruled: deposit copy defines scope of protection (original panel: affirmed) • En banc judges seemed inclined to affirm – Dis. Ct. ruled: recording of Taurus could not be played ~ would be too prejudicial FRE 403 – Original 9th Cir. panel: abuse of discretion – limiting instruction can reduce prejudice

Skidmore v. Zeppelin 22 • Issue #2: Jury instructions on selection and arrangement of unprotected elements, and on originality – Dis. Ct. did not give jury instruction on S&A (both sides offered one) • Original panel: error requires a new trial • En Banc: focus at oral argument on whether plaintiff waived this objection

11 Skidmore v. Zeppelin – why now? 23

• Petrella v. MGM, 572 U.S. 663 (2014) – Laches is not a defense where infringement is ongoing – The “rolling statute of limitations” – each new reproduction made, copy distributed, public performance, etc. is a new act of infringement • Damages reachback is limited to 3 years (statute of limitations)

24 Townsend v. Sheeran – S.D.N.Y. • Claim: Sheeran’s Thinking Out Loud copied major harmonic progressions and rhythmic elements from Marvin Gaye’s 1973 “Let’s Get it On” (Townsend co- wrote) o 1973: has the same 1909 Act deposit copy issue • Judge Louis Staton canceled a scheduled September 2019 jury trial – waiting for en banc ruling in Skidmore v. Zeppelin

12 Hall v. Swift – C.D. Calif. 2018 25 • Claim: Swift’s Shake it Off copied two phrases from lyrics of plaintiffs’ song: “Playas, they gonna play / And haters, they gonna hate” – Shake it Off: “Cause the players gonna play, play, play, play, play / And the haters gonna hate, hate, hate, hate, hate • Dis. Ct: 12(b)(6) dismissal granted- “no reason to delay the inevitable” – too brief, unoriginal, and uncreative to warrant protection under the Copyright Act.

26 Hall v. Swift -9th Cir.2019

• October 28, 2019 – reversed & remanded: • “By concluding that, ‘for such short phrases to be protected under the Copyright Act, they must be more creative than the lyrics at issues here,’ the district court constituted itself as the final judge of the worth of an expressive work.” • Unpublished Memorandum decision, non-precidential U.S.Ct. of App. 9th Cir. Rule 36-3

13 27 Gray v. Perry – C.D. Calif. July 2019 • Claim: Katy Perry’s song Dark Horse copied elements of plaintiff’s 2008 song “Joyful Noise” – Jury trial July 2019: $2.7 million – 22.5% of profits attributable to the musical passage infringed – Appeal filed October, 2019

Resources 28 Books: • Donald S. Passman, All You Need to Know About the Music Business (10th Ed. 2019) Articles: • Lydia Pallas Loren, Copyright Jumps the Shark: The Music Modernization Act, 99 Boston Univ. Law Rev. (2019) (forthcoming). https://ssrn.com/abstract=3481413 • Lydia Pallas Loren, The Dual Narratives in the Landscape of Music Copyrights, 52 Houston Law Review 537 (2014). https://ssrn.com/abstract=2551342 Three Blog posts by Prof. Tyler Ochoa: • An Analysis of Title II of Public Law 115-264: The Classics Protection and Access Act, TECH. & MARKETING L. BLOG (Oct. 24, 2018), https://blog.ericgoldman.org/archives/2018/10/an-analysis-of- title-ii-of-public-law-115-264-the-classics-protection-and-access-act-guest-blog-post.htm [https://perma.cc/L9E4-ZFYF] • An Analysis of Title I and Title III of The Music Modernization Act, Part 1 of 2, TECH. & MARKETING L. BLOG (Jan. 22, 2019), https://blog.ericgoldman.org/archives/2019/01/an-analysis-of- title-i-and-title-iii-of-the-music-modernization-act-part-1-of-2-guest-blog-post.htm • An Analysis of Title I and Title III of The Music Modernization Act, Part 2 of 2, TECH. & MARKETING L. BLOG (Jan. 23, 2019), https://blog.ericgoldman.org/archives/2019/01/an-analysis-of- title-i-and-title-iii-of-the-music-modernization-act-part-2-of-2-guest-blog-post.htm.