Tuesday, March 9, 2010

Copyright Rights Demystified: A Practical Guide to Copyright Licensing, The Final Act!

Alright copyright licensors and licensees!  By now, I hope you’re feeling pretty comfortable with the way copyright rights break down; or, at least, more comfortable than you were before.  We’re finally in the home stretch, and today we’ll be tackling the last two rights in the copyright owner’s “bundle”: public display & derivative works.  I’ve saved these for last simply because they are generally more specific and less utilized than some of the other rights, particularly in the world of music.  But they are still important, and I advise that you ignore them at your peril.

Public display somewhat functions the same in public performance, at least with regard to the “public” part.  Once again, in order to qualify as a licensable right, is must be displayed to more than mere family or close friends in a private gathering; it must be a place that is generally open to the public, even if the display in a particular instance is during a private event in public.  Please see my blog on public performance for more detailed information on what constitutes a copyrightable work being in “public.” 

Assuming your display of the work is in “public,” you must obtain a license from the owner.  As you can probably surmise, this really isn’t applicable to music because music isn’t visual (philosophical arguments aside); this right mainly covers works of visual art and sometimes literature.  With regard to works of visual art, it is the right that needs to be licensed and needs to be negotiated straight with the copyright owner via a private agreement (to the best of my knowledge, there is no licensing agency for these situations, except maybe the gallery housing the work… although they are often the licensee!).  Like music, where the finer points of audio and performance are often hotly debated, so the elements and aspects of the display of art is of great import.  Whether you’re a licensor or a licensee, must sure your agreement covers the most detailed description of display possible.  Some things to consider are:

1)    Angle of display;

2)    Size of wall (required and/or preferred/mandated);

3)    Framing (if applicable);

4)    LIGHTING, including natural light;

5)    Placement within an actual space (featured, grouped with paintings of similar theme/ origin, etc)

6)    Space conditions, including temperature, air pressure/quality (lighting comes into play here, too);

7)    Moral Rights

8)    Length of display and/or rotation;

9)    Insurance;

10) Transportation and storage of the piece(s) before and after, including liability and responsible parties depending on the location of the art

The last consideration is especially important, given that visual art is often VERY expensive and irreplaceable.  If you are an artist, you want to strive for FCA with regard to transportation; this means as soon as the piece arrives in the hands of a “common carrier” (i.e. UPS, USPS, Fed Ex), it becomes their responsibility.  In contrast, so-called FOB shipping means that liability doesn’t shift to the carrier until it’s actually loaded on “board” – so if something happens before that time, you (artist) could be left holding the bag.  Not a good thing.

If you’re an artist living in Massachusetts, you should familiarize yourself with MGL 104A, the consignment art law.  It was revised a few years ago and lays out detailed (and rather strict) requirements for anybody or anything holding your art on consignment (which is almost always the case with galleries). 

Another important right exclusive to fine art is the idea of “moral rights.”  Basically, moral rights gives the copyright owner extended creative control over their art, even after it leaves their hands.  It protects against destruction of the art (and not just total destruction), as well as misappropriation (either putting someone else’s name on your art or putting your name on art you don’t want to be associated with).  Moral rights has been an area of constant debate and contention, particularly here in the US, where moral rights are extremely weak as compared with some of the origin countries of these rights, including France and other European countries, and Mexico.  As the US is a signatory to the Berne Convention, many feel that we need to beef up our moral rights to meet European standards.  However, this is another blog for another time.  For now, here is some light reading on moral rights, including the US and global comparison.

If you are involved with visual, graphic or fine art, I would highly recommend aligning yourself with an attorney that specializes in this area of law.  I don’t mean merely copyright law, either; there are a myriad of considerations are both important and specific to visual art, ranging from transportation to estate planning. 

Alright, that’s my 2 cents on that!  On to our last right: derivative works!

As defined by the Act, a derivative work is: “a work based upon one or more pre-existing works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship.” (17 USC §101). 

So what the HECK does that mean in normal terms?  It means that you changed the essential “character” of a work; that is, more than a mere cover (which is covered by a mechanical license, remember?!), but, say a POLKA cover of Metallica’s “Enter Sandman.”  If you change the “heart” of the work, be prepared to license the right to create a derivative work.

If is also important to remember that even though you, new artist, is creating a “new” work with it’s own, separate copyright, you don’t have any sort of copyright ownership over the original content you used; only the “new” stuff you created.  So, for example, if you take a series of short stories from the 60’s, let’s say, you only hold a copyright over the “new” work.  Generally, that’s the arrangement of the stories (assuming it’s unique enough to qualify for copyright), and any new material such as a foreword, epilogue, annotations, etc. 

What constitutes a derivative work is often difficult to quantify, given that it often walks the line between statutory licensing and another beast of copyright law… the dreaded FAIR USE DEFENSE (*shudder!!*).  The simplest advice I can give is to err on the side of caution – if you think your new work might be so transformative as to create a new work out of an already-created work, get a license.  I know this can seem like a pain in the ass, especially if you don’t think your work will garner enough to expose to warrant the payment of licensing fees.  But I PROMISE YOU, copyright litigation is lengthy and expensive, not to mention a complete pain in the ass.  If you reach out directly to the copyright owner, depending on how “big”/”popular” the work is, they will often charge a nominal or reasonable one-time fee.  I can assure this will NOT be the case if your work makes it big and you didn’t get permission. 

I think that’s really the lesson overall with copyright licensing – in case of doubt, simply ask.  You may be surprised at what the copyright owner has to say.  At its core, copyright is designed to create of balance of artistic dissemination and artistic protection.  And, often, it’s the sense of fairness and respect for your fellow artists that is at the heart of copyright licensing.  In a time when no one wants to pay for copyrighted materials, it’s important for copyright owners and content users to pave the way for new licensing deals that respect both the value of artistic expression and the new free market.

I hope you’ve found this series interesting and educational!  If you have any questions, please do not hesitate to post them here on the blog (I check it often as do some other copyright nerds), or visit our site at www.newleaflegal.com and email info@newleaflegal.com.  And for more information and cool blogs specifically covering licensing deals and issues, visit my partner Steven Shapiro’s blog, Brand Licensing – YEAH!  Happy licensing!

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Tuesday, March 2, 2010

Copyright Rights Demystified: A Practical Guide to Copyright Licensing, Part Trés

Ok, my soon-to-be copyright gurus, we’re half way through our riveting discussion of the separate rights that come with each copyright!  Today’s amazing break down covers a right that is fairly new to the Copyright Act: the right to public performance via digital transmission. 

Though a newer addition to our law, since this new rights initial inception into the Act in the 1990’s, it has been the subject of constant debate.  The most memorable recent debate is one most of the public is actually familiar with; the settlement between webcasters and the RIAA.  Just in case you’re not into reading Congressional rulings, here’s the skinny: fees for public performance were wiping out webcasters left and right, basically making it impossible for them to exist profitably as a business.  This was because, before the settlement, a webcaster had to pay a fee each time a song was played, and for each user that was playing it.  Although that fee was mere hundredths of a penny, it adds up FAST.  Let’s do a quick math problem: 15 songs per hour (approx 4 minutes/song), and let’s say 100,000 people are listening to a webcasted station at a given moment.  I can’t remember the exact old fee, but let’s say it is .007 cents.  That’s a whopping $10,500 PER HOUR for a webcaster!!  Hell, even if I completely off and it is $1,500, that’s still astronomical.  According to this article, under the old fee arrangement, even giants like Pandora were sending about 75% of their revenue straight out the door for this licensing fee.  And to add insult to injury, we’ve officially approached a time in history where no one wants to pay anything for music, leaving webcasters to rely solely on advertising income to stay afloat.  The system was clearly broken.

Luckily, after years of negotiation, a settlement was reached.  I won’t get into the nitty gritty of the exact figures (truth be told, I’m having a bit of trouble finding them online), but the fees are now structured around a percentage of revenues that increases with revenue size (i.e. Pandora pays more than your local radio station that simultaneously webcasts).  Also, content providers should not that subscription stations have different rates – in fact, there are quite a few different rates based on the type of digital broadcast you’re providing.  I would highly recommend spending some time on Sound Exchange, particularly in the FAQ (for both content providers and content owners) and in the Service Provider and Owner sections, respectively. 

Besides the fees themselves, the most important thing to ask is: Who is getting paid?  Well, this particular right belongs to the owners of sound recordings – not the owners of the songs themselves, who get paid under the Public Performance Rights that we discussed last time.  Thus, it’s mostly record labels that are seeing the benefit of this moolah, although there are some artists that have retained the rights to their sound recordings, particularly in the hip hop industry.  Sound Exchange is basically the “PRO” of sound recordings; much like ASCAP, BMI and SESAC oversee payment directly to publishers and songwriters, so Sound Exchange oversees the payment of royalties to the owners of sound recordings. 

PLEASE NOTE: if you are an artist and your own your own recordings (most likely where you are NOT signed to a label), you should register with Sound Exchange here.  Much like the PROs, Sound Exchange has a complex system for tracking plays of recordings and may have money for you!!  So get on the ball, people.

As a final note, I would like to briefly address the Performance Rights Act, which would essentially extend the “digital” rights to terrestrial radio… aka “regular” radio.  It is currently stalled up Capital Hill.  You may have heard some PSAs (Public Service Announcements) regarding this possible amendment, which essentially threaten to start charging people for radio and incorrectly label it a “tax” on radio.  I am not taking an official position on this, but you should note two bias things here: 1) these commercials were paid for by the broadcast industry, who are the direct targets of these new proposed fees; 2) the original proposal regarding payment on sound recordings was meant to encompass both analogue and digital broadcasts, but as a result of a tremendous lobbying effort by the broadcasters, it was limited to “digital” transmissions.  On the flip side of the coin, here is an article opposing the Act, and some perfectly logical reason supporting the proposition.

So there’s your crash course in digital transmissions.  Hopefully I’ll be able to button it all up real nice for you later this week when we round out with the last two rights: public display and derivative works.  As always, please feel free to email me directly @ shannon@newleaflegal.com

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