Entertainment Law Outline

I. COPYRIGHT LAW GENERALLY

US Constitution Article I, Section 8
Congress shall have the power to promote the progress of science and useful arts, by securing
for limited times to authors and inventors the exclusive right to their respective writings and
discoveries
Copyright Act
Section 102 Subject Matter:
 Literary works (books)
 Musical works (compositions)
 Sound recordings
 Dramatic works (plays, choreographic notation)
 Pictorial works (maps, globes, charts, photos)
 Choreographic works (musicals, dances)
 Audiovisual works (movies)
 Architectural works

Section 106 Exclusive Rights

If you own a copyright over one of the above subject matters, then you own . . .
1. Reproduction
2. Distribution
3. Public performance
o For SRs, this right is limited to digital public performance
4. Public display
5. Adaption (derivative works)

Section 201 Originality and Fixation

 It must be an:
o Original Work
o Fixed in tangible medium of expression
 Can’t be a mere idea
 Discoveries, inventions and trademarks protected by patent not CR law

Who owns the copyright?

 (1) Creator
 (2) ER if it is a work made for hire:
o (A) EE makes something in scope of employment
o (B) He hires IC to make the work
 Both parties must sign agreement
 Must be a contribution to collective work, part of a motion picture, as a
translation, a supplementary work, as a compilation, as in instructional
text, as a test, as answer material for a test, or as an atlas.
 (3) Multi-authors: Co-Authorship: 2 people have intent to create a work (collaboration on
a song) then they have equal copyright ownership under default rules

Assignment:
 After 35 years a work made for hire is still with ER??
 After 35 years an original copyright owner can terminate assignment and get the rights
back but only in US territory

Claiming Infringement:
 Elements:
o (1) Ownership of valid copyright at time of infringement
o (2) Copying
 Access + Substantial Similarity
 Defense: fair use
o Consider:
 (1) Purpose + Character of use
 Commercial = less fair
 Transformative use = more fair
 (2) Nature of copyrighted work
 Non-published works = less fair than published works
 Creative/Non-factual works = less fair than factual works
 (3) Amount + Substantiality of portion used in relation to the CR work as a
whole
 Quantitative + qualitative approach
 (4) Effect of the use upon potential market for or value of CR work
 Most important consideration
 If work is essentially a substitute for the original then less fair
o Hoefheinz Case: P’s alleged that the D’s committed copyright infringement when
D’s included 20 seconds of footage from promotional trailer for P’s movie in D’s
biography of Peter Graves. No copyright in the trailer but the scenes in the trailer
are from the movie which P does own a copyright in. Court held it was fair use: (1)
The biography was copyrightable and had a transformative use—educating the
public. (2) trailer was creative, not factual, film hardly ever shown today and
trailer not shown at all (maybe more justification for reproducing it); (3) it was
less than 1% of film, the snapshots were out of sequence, disclosed nothing about
story-line, and (4) no market damage here bc virtually no market for the film and
source of clips was credited to the film.
 Defense: de minimis
 Remedies: actual or statutory + atty fees
  NOTE: if not registered, you can register later and then you’ll receive right to sue but
limited to actual damages
 Married At First Sight Case: P registered her treatment for a reality show w/ Copyright
Office and then uploaded it to Writer’s Vault to pitch it to various producers. 1 yr later P
received notice that a Lifetime TV Executive had downloaded it. Then FYI promoted and
aired a TV Series called “Married At First Sight” Court said NO violation b/c P does not
have copyright in all reality shows w/ her concept. She only has copyright in the
organization and sequence of her treatment and the two aren’t substantially similar in
this case. Treatment = two contestants marry each other after 1 12 hour date w/ goal of
remaining married for 6 moths to receive prizes. 3 men/3 women live in house together.
Others act as judges/matchmakers while 2 are out on date. TV audience could vote.
Learned Hand—ordinary observer test

Section 115 Compulsory Licensing

 (1) nondramatic work
 (2) audio-only
 (3) for private use
 (4) not substantial change
 (5) work is previously recorded + distributed
 Record company pays for each sale of record 9.1c

II. MOVIES AND TV

-------------------------------------------------------Television-----------------------------------------------------------
Right of Publicity: Indiana Law
 Right in one’s: name, voice, signature, photograph, image, likeness, distinctive
appearance, gestures, mannerisms
 Rule: Cannot use an aspect of a person’s right of publicity for commercial purposes
during the personality’s lifetime or for 100 years after their death unless you obtain
previous written consent.
o Violation must have occurred in Indiana + after June 30, 1994
 Commercial Purpose:
o (1) in connection w/ product, merchandise, goods, services, or commercial
activities
o (2) for ads or solicitations of purchase of products, merchandise, goods, services
or for promoting commercial activities
o (3) for purpose of fundraising
 EXCEPTIONS: not applicable to use in these circumstances:
o Literary works, theatrical works, musical compositions, film, radio, TV
o Material that has political or newsworthy value
o Original works of fine art
o Promotional material or an ad for news reporting or entertainment medium that:
  Uses all or part of a past edition of the medium’s own broadcast or
publication; and
 Does not convey or reasonably suggest that a personality endorses the
news reporting or entertainment medium
o An ad or commercial announcement for a use described in this subdivision
o Truthfully identifying them as author
o In connection w/ reporting an event/topic of general or public interest
o A personality whose publicity only has value b/c of being formally charged w/
crime
 You can grant the use of your right of publicity (aka Celebrity Endorsement Agreements)
o Grant of Right: should not be narrower than the statute in celebrity’s jurisdiction
o Term: blackout period so can’t endorse competitor
o Territory: might only want to sell your right outside of US to protect reputation
o Exclusivity: could apply to type or category of products; if it is going to restrict
right to appear in TV ads the deal better be lucrative
o Availability of celeb for photos, TV, film ads, radio, internet, personal appearances
o Right of approval to all aspects of ad in which celeb appears
o Failure to Perform: no payment if so and if celeb gets into moral trouble that
might hurt brand’s reputation then don’t have to pay celeb either
o Be clear about who owns IP and who will own CR in new created works
o Reserve celeb’s right in all her trademarks
o Celeb approval of produced goods, quality control, safety and assurances that
manufacturer is going to comply w/ applicable law
o Consideration:
 Fixed Sum payable per annum w/ possible increases at certain sale points
 Signing bonus (not advance, just incentive)
 Royalties on sold products
 Hotly negotiated
 Might be based on adjusted gross
 Be wary of vague terms like “production” or “marketing” costs
 Scope: know whether you’re getting them based on all sales of
product or only sles directly connected to celeb’s efforts
 Advances & Guarantees (deductible but not refundable)
 Deceptive Ad Liability under FTCA
o Protect celeb from personal liability for deceptive ads or PL claims
 Procedures for being informed about the product and reasonable basis for
the claims made about the product
 Access to evidence for substantiation for claims made in ads
 Personal use of product so endorsement is made based on celeb’s good
faith belief and opinion
 Celebs = members of SAG-AFTRA which means that any TV/radio ad companies must be
signatories to the SAG-AFTRA agreements and abide by those rules
  Warrants and reps that nothing in product or ads violates any rights of any 3rd parties and
that products fully comply w/ all applicable laws
o Celebrity indemnification against all claims
o Adequate IP and PL insurance by getting certificate of insurance that includes
celeb as named insured
Shaw Family Archives v. CMG: D was using Marilyn Monroe’s name, image and likeness on T-
shirts that it marketed and sold in Indiana. P sued for right of publicity infringement. P’s won b/c
Indiana statute not allowed to apply retroactively. Monroe didn’t have right of publicity in her
name at the time of her death b/c such right didn’t exist so she couldn’t devise any such
nonexistent right in her will. After this case, IN law was changed so as to allow retroactive
application.
Zacchini: only supreme court case on right of publicity and it may more fairly be called right of
performance case. Human cannonball successfully sued local TV for unauthorized broadcast of
his 15 second performance b/c it diminished # of viewers and hurt his ability to make a living and
show was a result of P’s own talents, energy, time, effort, and expense

Reality TV Releases:
 An individual can expressly agree to accept a risk of harm arising from another’s
negligence but only if agreement is valid and not against public policy.
 Language of release must be clear, explicit and comprehensible in each of its essential
details
 In CA it’s against public policy to contractually exempt someone from responsibility for
their own fraud, willfull injury to another, or violation of law (willfull or negligent)
 Focus: was the release willingly given; was there an opportunity to negotiate; was it a
contract of adhesion w/ no opportunity to negotiate; were the terms of agreement
unconscionable and against public policy
 Higgins v. Superior Court: 5 orphaned siblings sued producers of Extreme Makeover
claiming that the arbitration provision in their release was unenforceable. Court agreed.
A contract of adhesion = standardized contract that is unconscionable. Unconscionability
has a procedural (oppressive, surprise) and substantive element (overly harsh one sided
results). BOTH must be present for a contract to be unenforceable. The contract in this
case was lengthy, standardized, no customization, drafted by more powerful party and
presented in a few minutes on a take ir or leave it basis so (adhesive) the surprise or
oppression standard met b/c children were young and unsophisticated, vulnerable and
provision was buried in a larger misc. section, wasn’t highlighted, or printed in bold or
larger font; substantively unconscionable b/c it was unfairly one-sided. Production
company wasn’t limited to same arbitration reqs
----------------------------------------------Movie Idea Submissions-------------------------------------------------
How do you protect your idea?
  Contract Claim
o CaliforniaP must show that he (a) prepared the work, (b) disclosed the work to
the offeree for sale, (c) did so under circumstances where offeree voluntarily
 accepted the disclosure knowing the conditions on which it was tendered and the
reasonable value of the work
 There can be an implied contract w/ material that isn’t novel and couldn’t
be copyrighted
 Ex: Desny v. Wilder: Desny pitched a movie idea for a screenplay to
secretary who responded “if Billy Wilder of Paramount uses the story,
naturally we will pay you for it” Paramount made a film based on factual
news story in Desny’s synopsis. No copyright claim but CA court found an
implied contract.
o New York P must prove that material was novel to the recipient
  Copyright Violation put it in an expressed (protectable) format
o P must show:
 (1) ownership of valid copyright and
 Registering a copyright allows you to sue, get statutory damages,
and get Attny fees
 (2) copying of constituent elements of the work that are original
o (1) access and (2) substantial similarity
o Ideas are not copyrightable, only expressions
 Married At First Sight Case: P registered her treatment for a reality show
w/ Copyright Office. Court said only organization and sequence of her
treatment was copyrighted, not her idea. Thus Q was weather the
organization and sequence of the treatment and the subsequent show
were substantially similar—answer = no. There was access but the
organization was different so no violation.
  Misappropriation: idea disclosed in confidence + used in manner that breaches that
confidence
o Material must be absolutely original + novel
o Not enough for recipient to not know about it, nobody can know about it
o Doesn’t have to be copyrightable necessarily
o Falls under IP law of the state
 Note: Grosso and Montz held federal copyright law doesn’t preempt Desny Claim so you
can sue for (1) and (2) as long as “promise to pay” is element of Desny Claim

How does producer protect himself?

 NDA + Release: makes prospective writer sign it stating there is no deal, no expectation
of payment and releases producer from liability for any claim that idea was “stolen” from
writer
----------------------------------------------Film Based on A Book-----------------------------------------------------
Types of Agreements:
 Option Agreements: Producer has exclusive right to novel for $X and X time.
o Producer exercises optionpurchases rights to novel
 Producer’s earlier payment = advance
o Producer declines optionall rights go back to owner
  Owner keeps producer’s earlier payment
 Purchase Agreements: Producer purchases exclusive rights to novel
o More common w/ very popular books
o Author can still get more payments if book is later made into movie
Option Agreement Terms:
 Property
 Territory
 Consideration
 Option
o 12-18 months
 Extended option
o optional, takes more $$ that won’t be considered an “advance”
o Producer has right to extend or not
 Authorization
o producer’s right to create treatments + screenplays which producer will retain
ownership rights in even if option not exercised (but he can’t use them unless
option exercised)
 Purchase Price
o Applies if option = exercised
o Usually based on % of going-in budget
 Ex: 2% of budget not less than $100K or more than $350K
 Usually 3-5%
 Net Profit Participation rarely gets you any money, so you want a higher
option payment and/or guaranteed purchase price
 Bonuses
o Maybe box office bonus if x amount of tickets sold
 Granted Rights
o Exclusive Rights
o Remakes, sequels, prequels, games, merchandise, TV
 Reserved Rights
o Print publication, radio, live theater, stage adaptation
o Holdback: can’t make the play until x amount of time has lapsed
 Reversion: option exercised but film never made . . . rights go back to author after X years
 Credit: based on a book by author
 OTHER:
o Audiovisual works, right to use name/likeness of author or if it’s a biography, your
name
o If book is about specific real people, want to get life story rights

----------------------------------------------------Life Story/Documentaries-----------------------------------------
Life Story Rights
 Public Figures not necessary
 Private Figures necessary
 o Can sue for defamation, Libel, IIED, Public Disclosure of Private Facts, False Light,
Right of Publicity; Lanham Act: false endorsement/false advertising
o If film comes from a written work, producer must get complete release to use
name and to dramatize and fictionalize the story at his sole discretion
 Policy-wise: good to get regardless b/c you get exclusive cooperation w/ person and
access to abundance of material

---------------------------------------------------------Financing---------------------------------------------------------
Sources of Financing: (know generally)
 Studio
o Green lights projects, others go into turnaround and can shop for another studio
 Production-Financing Distribution Agreements
o Indep. Producer or production company owns all the rights and sells itself to
studios
 Pre-Sales
o Based on talent of actors; advances or letters of commitment
 Negative Pick-Up
o Indep. Producer agrees to sell studio movie upon completion of final negative.
Studio’s written confirmation = bank collateral
DISTRIBUTION FEES
Revenue Distribution + Deductions
30% goes to US Distributor
35% goes to UK/Canada Distributor
Gross 40% everywhere else
Proceeds DISTRIBUTION COSTS
Note: not gross
box office Printing, ads, overhead charges on expenses of 10%
receipts
PRODUCTION COSTS
Negative cost of film + interest and overhead charge of 15%
DEFERRALS
$ due to cast who agreed to postpone their fee

What is leftover? NET PROFITS split 50% Producer + 50% Studio

 Producers 50% subject to deductions for profit participants
o Above-the-line-talent: Director, writer, owners of underlying rights
 If this would reduce producer’s distribution to < 10% can put in place a
 Batfilm Productions v. Warner Bros: P’s had received no net profit pay-outs per their
contract even though Batman was one of highest grossing films. Argued the definition
used by D was unconscionable. Court said NO. To be unconscionable, a contract must
“shock the conscience”, “harsh, oppressive, and unduly one-sided”
 Study profit participation from 44-47 and Batfilm Case
o Alternatives to net profit participation
 You can negotiate for 1st dollar gross/adjusted gross (44, 45,46, 47)
  Understand that if you’re not getting net profits, there are
alternatives; big stars will negotiate for 1st dollar gross
 66 fair game

-------------------------------------------------Music in Film + TV------------------------------------------------------

Licensing from 3rd Parties:
 Type of Music:
o Sound Recording Master License
o Musical CompositionSynch License
o Production Music  Libraries offer master and synch license as packaged deal
o Commissioned Score depends
 Composer retains publishing rights but production company has universal
and perpetual and exclusive right to the score as used in the film
 Production company retains the publishing rights
 Terms
o Non-exclusive
o Usually must be in perpetuity
o Licensor determines the fee depending on various factors

---------------------------------------------------------Budgeting--------------------------------------------------------
Budget Breakdown:
 Above the Line items: rights to underlying story, screenplay costs, director fees, fees for
lead actors
 Below the line: remaining cast/crew, studio costs, transportation, location costs
Importance:
 Influences financing, contracts w/ talent, calculating net profit, must know if exercising
option to purchase b/c purchase price is usually 1-2% of budget

Iowa Film Production Services: whether state had right to publicly disclose budgets for films that
received state tax credits under state’s Open Records Act. S.Ct said it was OK but producers
didn’t want it bc: Confidentiality: actors and directors working below normal salary +Undermine
profit b/c public would have expectation based on budget. It mattered that there was no
evidence that budget was kept a secret amongst production members. Takeaway: If you want
budget to be kept confidential, must req those who come into contact w/ the budget info to not
disclose it; (Stamp confidential on documents;Have it as a policy of employment;NDA might not
be totally effective all the time)

Errors and Omissions Insurance

 Req for most films
 Covers IP infringement, rights of publicity and privacy
 Is it fair use? If you’re going to ask anyways, are you sure you’re going to get a “yes”? If
not, don’t’ ask. B/c when you go to get E/O insurance, you’re going to have to tell the
truth (and increase cost/risk coverage) or lie (which you shouldn’t do)
------------------------------------------------Location Agreements--------------------------------------------------
 Most cities have film officers that take care of permitting use of certain spaces for film
 Usually not limited in filming exterior of a public location unless it has received trademark
status
o Right to Enter
o Authorization to Photograph
 If owner warrants and represents that they have right to allow you to take
pictures of copyrighted work on their property, you have an additional
level of protection
o Fee
o Alterations and Damages
o Name and Likeness
o Subject Matter
o Permits and Licenses
o Security
o Owner’s Use of Premises
o Insurance
 Sherwood Associates v. Sony Corp of Am: no trademark violations in Spiderman film
picture of Times Square. If you’re properly permitted to shoot in NY, you can’t get around
showing buildings.
o Note: there is architectural copyright but not an issue here. These laws are really
more aimed at stealing blueprints/copying competitors plans. Has to be “highly
original”. Specifically exempts taking pictrues of buildings. (versus if you took a
picture of artwork, would have to argue fair use).

-------------------------------------------------Film Clearances---------------------------------------------------------
Third Party Copyrights
 When something appears in a film which may appear as if it is a “reproduction” which is
an exclusive right of the copyright holder—then need to be worried about getting
clearance
 Whether a copyrighted work included in a film arises to the level of copyright
infringement is a highly fact sensitive inquiry
 Ringgold v. Black Entertainment TV: P was an artist of a poster that appeared in a movie
set created by show’s art dept. Shown 9 times for 26.75 seconds total. Characters in
movie never referenced the poster or highlighted it in any way. P sued for copyright
infringement.
o D argued:
 De minimis use
 Response: it wasn’t de minims bc several times it was shown next
to one of the main characters. De minimis analysis looks at amount
that was copied as well as observability of the work (determined
 by the time the work appears, its prominence as revealed by
lighting/positioning)
 Fair Use
 Response: art is sold for decorative value, when used as part of TV
set, not qualified as fair use
 Gottlieb Development v. Paramount: SDN applied de minims copyright infringement test
to pinball machine in background of movie set. Granted D’s M2D bc the use was de
minims. It appeared only sporadically in a scene lasting 3.5 minutes and was always in the
background. Never mentioned and played no role in the plot.
 Krupnik v. NBC: P bikini model signed release in connection w/ photos she licensed to a
stock photography company. A scene in film showed model as a part of a brochure that
elicited suggestive comments from one of characters in film. Studio had paid $500
licenses fee for photo which appeared for 9 seconds. Ct held that P had no claim and that
the release also forbid any defamation claim
 No copyright infringement where actor says one 9-word line from another movie and
fully credits the author.

3rd Party Trademarks

 Standard: whether or not consumers are confused regarding the source or origin of
goods, including matters of endorsement and affiliation
 Mere depiction of a trademark not actionable unless P shows consumers likely to be
confused or if use was such that trademark, in eye of public, was damaged in value
 Rogers v. Grimaldi: no trademark violation
o Lanham Act inapplicable to artistic works as long as D’s use of the mark is
 (1) artistically relevant to the work and
 Very low standard, satisfied unless no artistic relevance at all
 (2) not explicitly misleading” as to the source or content of the work.
 Particularly compelling finding that members of public likely to be
confused/ believe P endorsed
o Artistically relevant and explicitly not misleading w/ regard to the sponsorship
 Dallas Cowboys Cheerleaders v. Pussycat Cinema: depiction of cheerleaders’ uniforms in
move not ok. Pre Rogers. Making the public believe that the cheerleader in movie was
employed by Cowboys was clear attempt to capitalize on success of team
 Caterpillar v. Disney: no infringement based on trademarked bulldozers in movie which
were being disparaged and no damage to trademark
o Class Notes: if something is famous enough, it may develop secondary meaning
 Documentary Films
o Huge issue b/c by their very nature they’re using real experiences on film
o Low budget but huge need for 3rd party licenses
o Often emphasize 1st AM fair use and educational arguments
o Transformative Fair Use
 o Irrespective of the law, distributors have no interest in risking litigation so they
will often still make producers guarantee and sign off on the fact that all third-
party material is licensed even though that isn’t really REQUIRED
 In response, documentary filmmakers attempt to educate rights holders
and film distributors regarding copyright law’s fair use principles

----------------------------------------------------Film Titles -------------------------------------------------------------

Motion Picture Association of America (MPAA)
 Voluntary registration entity that prevents public from being confused about films w/
similar titles
o Subscribers are bound by its rules
o If you register your movie title and don’t’ want someone else to use it—if they’re
not a member it doesn’t matter—only those who are in the “club” with you
o MPAA sets up binding arbitration process
 Trademark Protection not available for most titles bc they don’t create an association
which perpetuates a secondary meaning. It’s just the name of the movie. Not the same
thing as a product which will be sold again and again
o When title has established the trademark req of secondary meaning in the mind
of consumers, and signify a specific commercial produce source, they are eligible
for trademark protection
o Harry Potter, Game of Thrones, Lord of the Rings, anything that is more than a
single film is a series of creative works that utilize the same name which receive
automatic trademark protection b/c deemed to have assumed secondary
meaning immediately

III. BOOK PUBLISHING

Publishing: use of technology to capture creative works in a fixed format, so that work can be
owned, reproduced and sold as widely as market will bear

Fundamentals of a Publishing Agreement:

 Creation of work
 Scope and duration of rights granted
 Delivery
 Publication format and timing
 Royalties, including any advances against royalties

The Operative Grant

 Grant either:
o 1. Exclusive license from authorpublisher
 Author retains copyright ownership
 Publisher obtains exclusive rights to print
 More common
o 2. Assignment of copyright from authorpublisher
  Author sells copyright to publisher
 Note: author can terminate license in both cases 35 yrs after grant is made

Works Made For Hire

 Includes the following works, when created by an IC, pursuant to an agreement signed by
both parties that the work will be considered on made for hire:
o Contribution to collective work (magazine type format)
o Translation
o Supplementary work (introduces, explains, revises, etc.)
o Instructional Text
 Section 101 Copyright Act: Works made for hire can only be created by:
o EE’s in scope of employment (no need for written agreement)
o One of nine categories in 101
o When there is a written agreement signed by the commissioning party and the IC
saying the works is done for hire
 NO right of termination

Book Formats
 Types:
o Hard Cover
o Trade paperbacks
o Mass market paperbacks (books that can fit in your back pocket)
 Author can limt the grant of rights to a specific format
 Random House v. Rosetta: found that tdigiital or electronic book rights not incuded in
contractual langague in a license that was granted to pubish a work “in book form”
o New technologies case depending on contract language not copyright
 Peter Mayer v. Shilovskaya: held that taking an existing printed translation and digitizing
it as an e-book lacked the requisite originiality to constitute a derivative work. Translator
could offer existing translation into a digitized e-book and didn’t need a new license
o Expect scenario based on new technologies as addressed by Vonnegut e-book
case
Publisher-Author Contract
Publisher likely to ask for:
 Primary Rights
o Exclusive
o Worldwide
o Perpetual rights in hardback, trade, mass-paperback editions
 Subsidiary Rights
o Book clubs (publisher usually keeps)
o Anthologies (publisher usually keeps)
o First serial rights (negotiable)
o Second serial rights (publisher usually keeps)
o Merchandising (negotiable)
 o Foreing language (negotiable)
o Audio book (negotiable)
o E-books (negotiable)
o Performance rights for movie, TV, theatre (author usually retains)
 Commercially satisfactory form + content
o Author will want technically satisfactory
 Non-compete clause
o Author wants to limit scope
 No guarantee that he will publish/market a book (industry accepts an implied duty only)
 Assignment of copyright (NOT the standard)
 Work-For-Hire if book is technical work
 Author’s guarantee to obtain 3rd party copyright clearances

Defining The Work:

 Description can have copyright consequences
 Author has interest in defining the work narrowly
Territories:
 Author’s advantage to limit territorial grant to US and its territories and Canada
 Exclusive right in some territories and non-exclusive rights in others
Term:
 Publisher will typically propose that agreement endure for the full term of the copyright
 An agreement made in form of work for hire automatically makes publisher the statutory
author and owner for full term which is 95 yrs from publication or 120 years from date of
creation
Advance Against Royalties:
 To entice author to enter into an agreement //entices publisher to make book a success
so that they get their money back
 Usually split into three payments:
o 1/3 upon signing
o 1/3 upon publisher’s acceptance of the complete manuscript
o 1/3 upon publication of work (no later than specified time after acceptance)
 Deducted from subsequent royalty statements until it is reouped at which point author
receives additional royalties
 If author has > faith in his long-term success then might forego an advance and negotiate
for larger royalites
 Author never req to repay if publisher doesn’t recoup the costs
 But if author fails to deliver acceptable manuscript or defaults then would have to pay
back
o Author may negotiate to delay this repayment until book is placed w/ another
publisher and then first publisher gets “first proceeds”
 p. 156
Delivery & Acceptance of Manuscript:
 Delivery deadlines
  Publisher can accept or reject
o Usually agrees to give written notice of reasons
o Author given sufficient time to cure
 Publisher may send to legal group to make sure there is no libel, defamation and maybe
can make changes itself or may allow author to do so
Proofreading & Correction:
 Publisher will make no changes other than copyediting w/o author’s consent
 Author will promptly read and make necessary changes
 Publish may absorb costs if they don’t’ exceed 10% of total typesetting fees paid by
publisher
Publication:
 Publisher bears all costs
 Author has consultation right regarding cover art
 Deadline for publishing
Promotion:
 Use of author’s name, passages from book, author reasonably available to make
appearances
Author Copies:
 Author entitled to reasonable # of free copies w/ option to purchase more at 40-50%
discounted price
 Author should make personal use—not reselling for more $$
Copyright & Credits:
 Exclusive license basispublisher will publish book w/ copyright notice in name of author
and a file to copyright registration w/ Copyright Office in name of author
 Assignmentcopyright notice in name of publisher and copyright registration application
will list publisher as claimant
 Size, location of other credits on book
Royalties:
 Domestic Royalties
o Royalty paid based on:
 cover price of book (certainty in amount due)
 Net amounts actually received (uncertain)
o Hardback Royalty % ideally starts at no less than 10% + bumps triggered by unit
sales
o Paperback Royalty % start at 7.5% and maybe 8%
o E-Books: 20-25%
 Foreign Royalties
o Publisher will lower royalties anywhere from 25-50% b/c overseas distributors
charge heavy distribution fee and shipping costs are higher
o Icentivizes authors to restrict rights and make separate agreements w/ oversees
distributors
o Issues w/ calculating “source” price –foreign currency?
 o Cordell v. McGraw-Hill Companies: class of authors sued publisher for lowering
royalty %’s in connection w/ overseas sales which were handled by publisher’s
own international book division. P’s argued self-dealing at artificially low prices
which breached implied duty of good faith and fair dealing under NY law. Court
dismissed b/c contract expressly laid out what publisher was going to do and gave
publisher all of these rights
 Step-Up Contracts
o If you have prior dealings w/ a publisher, as an author you’re going to ask for
more favorable royalties/terms becaue of your past dealings and bc you have
history of negotiating w/ this publisher, know what they can offer, and are just
skipping them hem-hawwing around
Subsidiary Rights:
 Revenue from sub-licensing books
o Rights Granted to Publisher
 First and second serialization
 Book club custom printings
 Permissions
 Trade or mass market paperback
 Anthology excerpts
o Rights Reserved by Author:
 Translations
 Merchandise
 Sequels
 Dramatization
 Performance rights
 Audio books
 Commercial endorsement
 Interactive media
 Characters and right to future stories w/ them
Audio Rights
 Sound recording of the text
 7-10% royalties
o Author should seek higher royalty payments for digital uses
 Selection of talent for reading, whether any cuts to text will be made
Use of Third Party Materials
 Usually authors responsibility to obtain licenses to use copyright materal for photos,
quotes, etc.
 Publisher will want to obtain an all in cleranace for photos, covering all territories, print
runs, translations, and the life of copyright and if such rights can’t be obtained, consider a
different photograph
Statements of Account and Audit Rights
 Usually twice a year accounting provided to author and payments made w/in 3-4 months
later
  Audit rights for author
o No more than 1x/year and no more than two or three years after receipt of
disputed royalty statement
o Reasonable notice and time
o Publisher should reimburse author for lacking payments in excess of 5% and for
audit costs
Competitive Works
 If going to restrict author’s right to make competitive works, then need to be explicit and
provide sufficient incentive
Next Publication Option
Inserts, Back of Book Ads
Remainders
Out of Print and Reversion
Warranties and Indemnification
Agency
Ghostwriters

Examples of common rates and escalations:

Base =
Suggested Retail Price/Cover Price
Or
Wholesale/ “net receipts”
Hardcover:
10%
12.5% @10,000 sold
15% @15,000 sold
Trade: 7.5%
Mass: 8%
E-books: 15-25%

Warranties + Indemnifications
 Authors have burden to defend copyright, libel, invasion of privacy, etc.
 Publisher can withhold royalties pending disposition
 Author should attempt to narrow coverage of indemnification to say there are no
violations that the author knows of
Future Revisions
 Author given right of first refusal but if author passes on the right publisher can revise the
book
Future Options
 Authors often tied to multiple options
 Alternatives:
o Rights of first negotiation
o Rights of first refusal
 o Matching rights
Misc.
 Publisher can assign agreement
 30-60 days to cure a breach after notified of it
 Author grants license to use his name/likeness to publicize the book
 Co-author is jointly and severally liable


Random House, Inc. v. Rosetta Books, LLC

Background: Authors gave Random House Inc the right to “print, publish and sell the works in
book form”. Random House Inc sued Rosetta for copyright infringement when Rosetta tried to
sell digital format of the same works. Rosetta responded that it wasn’t infringing upon the rights
of Random House b/c the grant of publishing rights to Random House didn’t include ebook
publishing.
Holding: Random House’s motion for prelim injunction denied
Rule: “book form” doesn’t include ebooks
Reasoning:
 Ebooks Defined: digital books that you can read on a computer screen or on an electronic
device
 State Contract Law of NY applies
o A written contract is to be interpreted to give effect to intention of parties as
expressed in the contract’s language. Court must consider whole contract
o In the contract, the paragraph making the grant specifies different book forms
that are being granted and this wouldn’t be necessary if all-encompassing rights
were granted in the first place. The fact that authors struck out certain grants
from the contract show that authors didn’t intend to give publisher broadest
rights in their works
 2 Circuit Neutral Interpretation approach
nd

o Bartsch
 Author of play granted publisher motion picture rights throughout the
world, including gthe right to copyright, vend, license and exhibit such
motion picture photoplays throughout world together with sole and
exclusive rights by mechanical or electronic means to record, reproduce,
and transmit sounds including spoken words.
 Publisher assigned rights to Warner Bros which transferred to MGM
 MGM licensed a motion picture of the play for TV viewing
 Judge Friendly said that words used in grant were designed to give MGM
broadest rights, broad enough to cover TV use (new)
o Boosey
 P inherited composer’s copyrights. Composer had licensed use to Disney
for motion picture Fantasia. 52 years later Disney released Fantasia in
 video format. The language was similarly broad here and did include right
to make motion picture
 What governs is reasonable interpretation of the language of the contract
 Publishing industry understands the grant language in this contract to be limited
o Field v. True Comics: limiting language of “in book form” is much more limited
than other grants. It’s often understood in industry to mean only the right to
publish a hardcover trade book in English for distribution in America
Random House’s Arguments:
 “in book form” means to faithfully reproduce the author’s text in its complete form as a
reading experience. Ebooks contain the complete text and therefore Rosetta can’t alos
possess this publication right.
o Response: this definition doesn’t distinguish other formats specifcialy mentioned
in the contract such as book club editions and reprint editions
 Non-compete clause is evidence that authors granted it broad and exclusive rights
o Response: the grant of rights follows from the grant language alone. Non-
compete clauses must be limited in scope to be enforceable in NY. Even if there
was a breach of this clause, the remedy is a breach of contract action against
authors not copyright infringement against Rosetta
 The photocopying clause giving Random House the right to Xerox and other forms of
copying means it had exclusive right
o Response: taken in context, it clearly refers only to new developments in
xerography and other forms of photocopying. Stretching it to include new forms
of publishing would make rest of contract superfluous bc there would be no
reason for authors to reserve rights to forms of publishing now in use

IV. MUSIC LAW

Sound Recording Composition
Definition Recorded Performance of the underlying The music and lyrics as they would be
composition printed on paper (but do not have to be)
Copyright Record Label or Musician Songwriter or Publisher
Owner
Agreement Recording Agreement Publishing Agreement
MusiciansRecord Label SongwriterPublisher
Exclusive ??
For Services ??
Licensing Master Usenegotiated Mechanical115 Compulsory if:
 Non-dramatic song
Synchnegotiated  It has been previously recorded +
distributed
Digital Performance  Is only used in audio-format
Interactivenegotiated
 Digital Performance Noninteractive—
Compulsory under DPRA
Use + Licensing Digital Radio Performance
 Interactive (Spotify, Apple)
negotiated master license
 Noninteractive (Pandora, Sirius)
Sound Exchange
Compulsory
Regular RadioNo right
Samples negotiated Master Use License
Synchronizationnegotiated Master Use
License
Royalty SoundExchange
Distributor/
Collector
Hypos:
1. Radio station plays a song on the AM/FM radio
o Composition blanket public performance license from ASCAP, BMI, SESAC
o Sound Recording no license
2. Song played on Pandora
o Composition public performance license ASCAP, BMI, SESAC
o Sound Recording compulsory license
Then record company pays for each record
distributed 9.1cents/song up to 5 minutes
and 1.65 cents for each fraction of a minute
thereafter; Harry Fox
Synchnegotiated
Samplenegotiated
Public Performance discretionary blanket
licenses w/ ASCAP, BMI, SESAC, GMR
Print negotiated
Public Performance  Public Performance
License
Digital Radio Performance
 Interactive public performance
 Noninteractive public performance
license
Samples/Interpolations  negotiated
Covers
 Recorded
 115 Compulsory Mechanical
 Played Live
 Public Performance License
Synchronization negotiated
ASCAP, BMI, SESAC, GMR: collect public
performance royalties and issue blanket
licenses
Harry Fox Agency: collects mechanical
royalties from record companies
 3. Song played on Apple Music
o Composition public performance license ASCAP, BMI, SESAC
o Sound Recording negotiated master use license
4. Song played on background of movie
o Composition negotiated
o Sound Recording negotiated
5. Artist makes a remix
o Composition
o Sound Recording
6. Artist samples lyrics
o Composition negotiated sample use license
o Sound Recording if she didn’t use sound recording then doesn’t need one
7. Artist samples sound recording
o Composition negotiated sample license; mechanical license harry fox
o Sound Recording negotiated master use license
8. Cover band plays a song live
o Composition public performance license ASCAP, BMI, SESAC
o Sound Recording nothing
9. Band makes a recording of its cover
o Composition compulsory mechanical license Harry Fox Agency?
o Sound Recording nothing?
10. Singer does a cover song and posts video of it w/ lyrics?
o Composition
o Sound Recording

---------------------------------------------------Music Publishing------------------------------------------------------
Music Publishers:
 Sells Songs (plugging)
 Creative Direction (finding co-writers)
 Licensing (grant mechanical, negotiate synchronization, print, work w/ theatrical
producers to make broadway musicals, )
o Streaming Services should pay direct mechanical license to the publishers so that
if you want to post a song that you’ve covered, you shouldn’t have to go through
songfile website example. BUT if you’re going to make products—i.e. put out a CD
of covers, then you do need mechanical licensing
o Grand Rights = dramatic works (ballet, musicals); different from small performing
rights b/c those are nondramatic works licensed by ASCAP, BMI, CSAC, GMR
 Collects Monies (in US and through sub-publishers)
 Pays writers and other co-publishers

Publishing Deals:
o Standard
o Split 50/50 between Publisher’s Share and Writer’s Share
o Nobody does this anymore
 o Combination
o Half of Publisher’s Share goes back and is retained by the writer
o They’re offering to give you an upfront advance in exchange for them getting
share of publishing rights
o Administrative
o 85-90% to writer
o Good if you think you’re going to be super successful
Agent and Sub-Publisher Fees, Deductions and “At Source” Accounting
o Writers may want to be paid at source meaning the royalty is split w/o accounting for
foreign agency fee
Co-Publishing Agreements
o 1: used to indicate overall copyright ownership status of a sogn where there are 2
songwriters each w/ different music publisher. Here, the term means that two music
publishing companies own the rights (MACRO use)
o 2. Used to refer to type of agreement between writer and music publisher (MICRO use)
Income Sources:
 Royalties
o Mechanicals
 115 Compulsory if:
 (1) song is non-dramatic
 (2) song is previously recorded and distributed
 (3) song is used only in audio format
 (4) fundamental character isn’t changed
 User pays 9.1c/copy  Publisher
 Question: at what point does this become a derivative work? Look at
copyright section 115 “but the arrangement shall not change the basic
melody or fundamental character of the work, and shall not be subject to
protection as a derivative work under this title.” Not a clear answer
 They don’t own the copyright in the derivative work but they do own the
copyright in what they added
o Public Performance
o Synchronization
 Publisher can charge w/e he wants for use of composition in tv show
 Print
o 10-12% of publisher’s printed edition list price
 Digital Catchall
 Permissions
 Rental of Orchestral Materials
o Unique to classical music publishing
o Two income streams: the rental fee charged to orchestra dn public performance
royalties that will be generated by performance
o Fee typically split 50/50 between publisher and composer
Copyright Infringement
 Proof of:
o Direct copying or
o Access + Substantial Similarity
 Substantial similarity =
 Intrinsic evidence
o Ordinary observers say it sounds like it was copied
 Extrinsic evidence
o Experts say it was copied
o BrightTunes v. Harrisongs: Bright Tunes won against Harrison for copyright infringement
of composition, even though Harrison only subconsciously plagiarized.

-----------------------------------------------Recording Agreements--------------------------------------------------
Record Companies:
 Production
 Distribution
 Marketing
 Expertise
 Exclusivity

Income Sources:
 Future Royalties
o Note: unlike other entertainment transactions, usually the record company’s
expeditures are treated as advances and reduce future royalties. If the artists
never recoups the costs, he does not have to pay back any advances to the record
company so ultimate risk is still w/ record company

Record Company Deals:

 Scope of exclusive services the artist must provide to record co.
 # of projects or albums that must be delivered pursuant to ‘options’ held by record co.
 Advances payable to artist for each album
 Royalty costs for producer of recordings
 Type and amounts of record co.’s recoupable costs to be charged against royalty account
 Limitation on mechanical royalties that record co. is willing to pay
 360 deals where record co. entitled to share in profit from earnings from other sources
such as live concerts
 Can be Royalty Based or Net Profit Splits
o Royalty Based: Record Co. sells something and pays the artist a %
 Standard Range: 15-20%
 Multiplying that % by . . .
 Public Retail Price or
 o Problem: not transparent; had all of these hidden
deductions
 Wholesale
 Escalations: once you hit certain # of sales, you get an increase
o Net Profit Based: Record Co. and label split profits 50/50 or some other agreed %
 Any loans the Record Co gives to artist are taken off of artists share
 i.e. Deficit Tour Support: Record Co gives you a check to support
your tour; artist has to take that $$ out of it’s 50% share (not taken
off of the top)
 As an artist, you want everything taken off of the top b/c you’re sharing
everything with record company so they have to split all of your costs
 No escalations
o NOTE: whether royalty deal or net profits deal any tour support comes out of
your pocket
Producer Royalties
 Producer assigns copyright-Record Company or Artist
o Producer gets 3-4% royalty
o It is deducted off of artists’ all in royalty (which is usually 15%-18%)
 Others may want producer credit/royalty
o Ex: venue that hosts the recording of a performance
 Artist to be cautious in negotiating deal so that her obligation doesn’t exceed her own
royalty obligation
 Recoupment in Royalty Deals: see slide
Sampling
 Fees are artist’s responsibility and can be charged against her royalty account
o May have to pay mechanical royalties to publisher of underlying musical
composition
Mechanical Royalties:
 Agreement between: Record Company + Artist
o Will address use of underlying compositions in sound recordings
 If composition written or owned by recording artist Controlled
Compositions
 Record company usually requires artist to take a reduced
mechanical royalty for controlled compositions
 Record company will have first recording rights
 Record company only has to pay 75% of statutory mechanical
royalty rate (6.8cents not the 9.1)
o Limited to 5 minute rate (no additional for longer songs)
o Limited to statutory rate in force at time album is delivered
or released
o 10-song limit per album (10 songs X 6.8cents = 68cents)
o Reductions for sales in record clubs
o None paid for public domain arrangements
  If song not written/controlled by recording artist Outside Composition
 Record co. reqs artist to be responsible for amounts paid for
outside comps above certain levels
 Record Company still only has to pay 75% of statutory mechanical
rate even though obligation to 3rd party will be full amount so artist
must provide the additional funds
o Mechanical Royalties
 Caps them
 Ex: record co. will pay no more than 10-12x the controlled
composition rate for any album that is released
o If album has > 12 tracks or where 3rd party publisher wants
100% rate, artist pays the difference
 Copyright Act 115I(3)I: recording agreements entered into after June 1995
can’t have a cap on DPDs
 Doesn’t apply to CD’s
Videos & Touring
 Rec. Co. might absorb half the costs of a music video, up to certain limit, beyond which all
costs would be charged against artist’s royalty account
o Rec. Co. can recoup
Licensing Approvals
 Artist will want approval rights before rec. co. can license master recording for use in
film, TV, or ads
 Can insert prohibitions “NC-17” rated films + alcohol ads
 Time limit: if artist fails to approve/disapprove in 10 days then deemed to have approved
Audit Rights
 Frequency that artist can request an audit
 How much notice is req
 What period of past time the audit can apply to
o Should be at least the same prevailing SOL on breach of contract claims in the
jurisdiction
 Provisions req rec. co. to keep complete and accurate books and records
o NOT allowed to discard records after a period of time
 Provision preventing artist from using an auditor who is already auditing for other artists
 If there are discrepancies in artist’s favorartists will remit amounts immediately and
not in next accounting period
 If error is 5% or >, record company should reimburse artists for reasonable costs of audit
 Scope = cross checking payments and dealings w/ 3rd parties
o Ex: mechanicals to publishers; union fees to AFM; licenses to record clubs
Termination, Suspension, Reversion of Rights
 Broad rights to rec. co.
 Artist may have termination right if record com fails to release a recording after notice
and cure provisions have been observed
o Ownership of any masters recorded to date will likely remain w/ record company
Recording Agreement Negotiation
 Recording Studios
 Quality Control
 Reserve Accounts
o Clifford v. Concord Music Group
 Featured v. Nonfeatured Artists
o Paid a flat fee as union members or as non-union IC’s
 Production Agreements
o Aim: Building artist’s career
o Create demos
o Shop for record labels
 Brick & Mortar Retail

FBT Productions & Em2M, LLC v. Aftermath

 Background:
o 1995: FBT signed Eminem and received exclusive rights to his recordings
o 1998: FBT assigned exclusive recording services to Aftermath
 FBT to receive:
 Records Sold Provision:
o 12%-20% of adjusted retail price of all “full price records
sold in the US . . . through normal retail channels.”
o No definition of normal retail channels
 Masters Licensed Provision:
o 50% of Aftermath’s net receipts “on masters licensed by us
. . . to others for their manufacture and sale of records or
for any other uses”
o Master = a recording of sound, w/ or w/o visual images,
which is used or useful in the recording, production or
manufacture of records
o 2002: Aftermath (UMG) made agreement w/ Apple to sell Eminem’s masters and
sound recordings through iTunes as permanent downloads.
o 2003: Aftermath made agreements w/ major cell companies to sell sound
recordings as mastertones
o 2003: FBT & Aftermath terminated old agreement and made a new one
 Increased royalties
 Same Records Sold/Masters Licensed provisions
o 2004: FBT & Aftermath amended agreement to provide:
 Sales of albums by permanent download shall be treated as normal retail
channel net sales for purposes of escalations
 Except as modified, agreement to remain in full force and effect
o 2006: FBT sued Aftermath after audit showed Aftermath had ben applying the
Records Sold provision to calculate the royalties due to FBT based on permanent
downloads and mastertones.
 Question: Which provision of the contract sets the royalty rate for sales of Eminem’s
records in form of permanent downloads and mastertones?
o P’s Arg: Masters Licensed Provision controls
o D’s Arg: Records Sold Provision controls
 Permanent downloads and mastertones are records, and iTunes is a
normal retial channel in the US
 History: Judge denied MSJ for P’s. Jury returned verdict for Aftermath
 Holding: REVERSED—the contracts are ambiguous and MSJ should have been granted to
FBT stating that Masters Licensed Provision controls. FBT entitled to 50% royalty
 Reasoning: The agreement says “notwithstanding” the Records Sold Provision, FBT should
receive a 50% royalty on masters licensed by Aftermath to others for their manufacture
and sale of records or for any other uses. THUS, use of “notwithstanding” plainly
indicates that even if a transaction falls w/in scope of Records Sold, FBT should still
receive 50% royalty if Aftermath licenses an Eminem master to a 3rd party for any use
o a contractual term is not made ambiguous just b/c it is broad
o The Masters Licensed Provision applies to:
 (1) masters
 (2) that are licensed to third parties for the manufacture of records or for
any other uses
 (3) notwithstanding the record sold provision
o SO THE QUESTION BECOMES Did Aftermath license Eminem masters to 3rd
parties?
 (1) Did Aftermath license to 3rd parties? YES
 D’s Arg: didn’t license in a technical sense
 Court: but words of contract are to understood in their popular
sense, i.e. did Aftermath give someone else permission to act? YES
 Federal Copyright Law supports this conclusion
o In copyright act, the terms “license” and “sale” have
different meanings
 Sale = transfer in title of an individual copy or a sale
of all exclusive IP rights in a work
 Application: Aftermath didn’t “sell” anything
to download distributors—they didn’t
obtain title to the digital files and ownership
remained w/ Aftermath. Aftermath had right
to regain possession of files at any time and
obtained recurring benefits in $$ payments
based on volume of downloads
 License = copyright owner transfers copy but
retains title and limits uses and is compensated
periodically
 Application: that is exactly what is going on
here
  (2) Was the sound recording a “master”?
 Aftermath admits that the sound recordings are records
 They were “used or useful” in production of permanent downloads
 So, they were masters
 Note:
o Aftermath argues that the 2004 AM set Records Sold provision as appropriate for
permanent downloads
 Response: in context, plain meaning of language = sales of permanent
downloads by 3rd parties count towards escalations on royalties. It does
NOT state or imply that the royalty rate for sale of permanent downloads
by 3rd parties is set by the Records Sold provision
 Evidence about industry custom and parties’ course of performance also
don’t support
 Permanent downloads only came int existence from 2001-2003 so
fact that Masters Licensing Provision had never been applied to
those forms before is immaterial
 No evidence that parties wanted to confine the contract to state of
the industry in 1998 –it actually contemplated technological
advances “media now known and hereinafter developed”
 Evidence that FBT hadn’t rejected earlier immaterial b/c no
evidence that FBT knew what was going on
 CLASS NOTES:
o Not necessarily binding on anyone else b/c everyone’s contracts are different

Grand Upright Music, LTd v. Warner Bros. Records, Inc

 Background:
o composition “Alone Again” written and performed by Gilbert
o D admits that Biz Markie album uses 3 words from “Alone Again” composition and
portion of music from Gilbert’s recording
 D’s Argument: Others in rap music business are also engaged in illegal activity
 Holding:
o The D’s conduct violates the 7th Commandment and the Copyright Act
o Preliminary injunction against D’s = granted
o Matter referred to US Attny for S.D.N.Y. for consideration of prosecution of these
D’s
 Reasoning:
o D’s clearly knew they were violating the P’s rights and rights of others
o Warner ros. Records had a dept specifically set up to obtain the right clearances
o Cold Chillin’ Records Inc knew it needed the clearances
o Biz Markie’s attnys knew of obligation to obtain consents

Newton v. Diamond
 Background:
 o 1978 Newton composed the song “Choir”
o 1981: Newton performed and recorded “Choir” and licensed all rights in sound
recording to ECM Records for $5K
 License covered only sound recording, Newton retained all rights to
composition “Choir”
o 1992: Beastie Boys obtained license from ECM Records to use portions of sound
recording of “Choir” in various renditions of their song in exchange for a one time
$1K fee, did NOT obtain license to use composition from Newton
o Beastie Boys used a 6 second, 3-note segment of a performance of P’s
composition—looped this sample throughout their song
 Appears > 40x
o Newton sued in 2000 alleging:
 Violation of his copyright in composition
 Lanham Act violation for misappropriation and revere passing off
 History:
o District Ct: MSJ for D’s
 No license for underlying composition was req b/c as a mattr of law the
notes in question lacked sufficient originality to merit copyright protection
& even if it was original, Beastie Boys’ use was de minimis and therefore
not actionable
 Holding: AFFIRM—use was de minimis
 Rule:
 Reasoning:
o For an unauthorized use of copyrighted work to be actionable, there must be
substantial similarity between P’s and D’s works. i.e. must be substantial
 Fisher v. Dees: use = de minimis only if average audience wouldn’t
recognize the appropriation
o In this case Beastie Boys properly licensed Newton’s performance so now court is
only looking an non-licensed elements-the notes in the composition
o Even where there is a high degree of similarity, it’ really a matter of substantiality
o Fragmented Literal Similarity:
 Exists where D copies a portion of P’s’ work exactly or nearly exactly, w/o
appropriating the work’s overall essence or structure
 Was the labor of the original author diminished?
o Sampled portion is not quantitatively or qualitatively significant when viewed in
relation to Newton’s composition as a whole
 Quantitatively: 3 note sequence appears only 1x
 Qualitatively: this section no more significant than any other section
o Newton’s experts fail to address ^^^ or to distinguish between sound recording v
composition
 They’ve called it a simple, common, trite, sequence
 Dissent:
 o A jury could reasonably find that Beastie Boys’ use of sampled material was not
de minimis so MSJ inappropriate
o Even though yes Newton’s performance adds the distinctive elements, the
composition, standing alone, is distinct enough for a jury to reasonably conclude
that the average audience would recognize the appropriation of the sampled
segments and therefore that it isn’t de minims
o Few notes don’t mean insignificant
o Newton presented evidence that the composition = distinctive and recognizable
 1. Olly Wilson UofC Berkeley letter
 2. Christopher Dobrian of Uof C Irvine

Synch Licenses:
 1. Who is the publisher of the composition?
o If you re-record all of the music then you don’t need to get license for SR—you
still need a synch license but not the master synch license
 2. Who is the Record Label for the Sound Record?
o Called a master synch license
 3. Determine Scope of Use
o TV show and streaming but no theatrical
o Nonexclusive
o Territory: could be just US, worldwide, etc
o Term: going to want it in perpetuity
 4. What is it worth?
o Depends on song and publisher/record label
 Class Notes:
o 3 ways you’re going to get paid as an artist for publishing:
 Mechanicals
 Film soundtrack
 Synch
 Performance
 Everytime the show airs
 Only dealt w/ in synch contract to extnt it should say producer of
TV show should be sure and make a cue list that is filed w/
performing rights industries so that artists can get paid
 Sheet Music

Two kinds of performances that matter in digital sphere:

1. Interactive
a. Apple Music, Spotify
b. Record companies and provider negotiate for license fees---- there is no
compulsory rule that says spotify gets to interactively stream all songs; they
negotiate through industry groups
 2. Noninteractive
a. Pandora, Sirius XM
b. SoundExchange
i. Compulsory license Section 114
1. Note: (Section 115 other part of code where we saw a compulsory
license w/ regard to mechanical royalties and covers)
3. Downloads
a. ITUNES
b. Harry Fox Agency (clearinghouse that collects mechanical royalties from record
companies and pays out to publishers) (not necessary for controlled
compositions)
i. Mechanical royalties
1. You need when you’re trying to license publishing for use of song
in sound recording

(3) Digital Performance Rights in Sound Recording

 What is being played?
o Sound Recording
 Who benefits?
o Performing artists and their record companies
 Who does NOT benefit?
o Songwriters and music publishers
 What media is it available through?
o Digital—i.e. streaming websites and satellite radio
 What are the fees?
o Compulsory
o Set by Copyright Office
o Not subject to negotiation by copyright owner of sound recording
 Types of uses
o (1) Non-Interactive Streaming
 Streaming is subject to Sound Recording Performance Complement
 A set of restrictions aimed at keeping streamed music random
enough so listeners don’t have advance notice of particular songs
 Subject to compulsory licensing
 Pure Streams = public performance and must be licensed by ASCAP, BMI,
and SESAC
 Not subject to mechanical licensing
 Website streaming sound recordings Need 2 types of blanket licenses:
 (1) traditional ASCAP/BMI/SESAC for public performance of
underlying composition
 (2) a statutory license administered by Sound Exchange for digital
performance of the sound recording themselves
o (2) Interactive On-Demand Streaming
  Subject to negotiated licenses w/ sound recording copyright owners and
must be licensed by ASCAP, BI, and SESAC to obtain performance rights to
underlying musical composition
 Conditional downloads licensed pursuant to Copyright Office’s Copyright
Royalty d
o (3) Digital Phonorecord Deliveries
 Itunes
 No compulsory licensing scheme
 License = discretionary w/ copyright owner and not represented by any
collective licensing organization
 Mechanical royalty for underlying musical composition = Digital
Phonorecord Download that must be paid by record companymusic
publisher w /respect to each recording digitally delivered
 DPD rate same as for physical recordings
 No performance rights b/c digital download of musical work not a
performance
 Licensing Procedures
o (1) Filing of Notice
 All non-interactive streaming websites must file a Notice of Use of Sound
Recordings Under Statutory License
o (2) Reporting Requirements
 Report usage of sound recordings on either per-performance basis or
aggregate tuning hour basis
 Regular reports must be filed
 Reports to include: specific identifying info to enable SoundExchange to
distribute royalties to copyright owners and performers entitled to such
royalties
 Name of service making transmissions
 Identification of transmission category from 1/11 choices
 Name of featured artist
 Sound recording title
 Album title and marketing label or ISRC
 Aggregate tuning hours, channel or program name, and play
frequency OR total performances

Types of Transfers:
 Non-exclusive license: no writing (i.e. can be oral or implied)
 Exclusive license—signed by transferor (i.e. licensor)
 Assignment—signed by transferor ( i.e. assignor)
 Work made for hire—signed by both parties (i.e. hiring party and independent contractor)
or employment relationship
 Elements of Personal Manager Contract:
Note:
 don’t want manager to book the artists w/o being registered b/c artist can void the
contract as a remedy
 as an artist, you always want a handshake deal
 typical Team:
o Talent + :
 Manager
 10-20% (music industry 15-20%) and agent gets 10% gross or
adjusted gross
 Business Manager
 5% or hourly
 Accounting
 Lawyer
 5% or hourly gross or AGI
 Agent
 10% gross of booked performance
 Key Man: the person you contact w/ at agency

Exercise #3
 Throughout the world appointment not favorable
 As an Artist, might light the limited definition of Entertainment Industry bc less
compensation do
 Manager has option don’t like that
 “thereafter language” unclear from the time of release or from the time after contract
ends?
 I don’t think it should say that the term ends at 2 years when the contract binds the
parties for up to 5 years after termination
o I would prefer 1 year
 Provision to revoke post term income
 Scope: as a peroanl manager or as Artists’s personal manager?
 Key man/woman?

Approaching Music Multiple Choice Questions:

1. What copyright is involved?
 Composition copyright
 Sound recording copyright (masters)

2. What is the use?

 If composition use = playing live in bluebird what is involved here? Not a master
license, this is a public performance use of composition so only thing needed is public
performance license
  If composition beyonce samplingcomposition and master involved is there a
performance? Not in this question so no need to go down ASCAP, BMI. Is it a digitigal
performance sound exchange. Mechanical license not enough bc that ‘s just a cover of
song. Sample = deriivtaive work. Need master sample licnese. No synch license needed.
Need sample license from record company.
 SIRIUS XM playing hip-hop song on nonineractive digital broadcastnonineractive
streaming of digital masters and composition used as well. Performance license from
SoundExchange. Master not needed. Synch not needed. Perforamnce rights from ASCAP,
BMI
 Spotify streaming music interactively, o ndemandimmediatley think, interactive,
performance license from soundexchange not enough.
o When digital song or composition is streamed through spotify, apple music, etc. it
is a combo of performance royalties that are paid and a small amount of
mechanical b/c copyright law treats streaming as a physical mechanical
reproduction
o For on demand streaming

Stopped at 34 minutes

Ent Law Questions and Answers.

QUESTION :Do we have to know how to calculate royalty problems? In general, how much math
should we know?
ANSWER: OK, here are some thoughts about math on the exam. There are quite a few numbers in
the facts sections of questions but not that many actual calculations necessary to answer questions.
For example, there will be dates, numbers of options, numbers of years in terms, royalty rates, and
dollar amounts. Some of that info is not necessary to make actual calculations, but rather for context
of the overall questions. I believe there are actually only about half a dozen math calculations on the
exam, and they do not require a calculator. They are of the nature of being able to multiply or divide
a simple number by 10 (e.g., divide 500,000 by 10), or multiply by a percentage (e.g., multiply
500,000 by 20%). Many of you will be able to do this in your head. Others can use scratch paper for
the very simple calculations. I cannot say what each of you believes is a "difficult" calculation. But I
will say that, in my opinion, if you are going down a road where the math seems difficult, you are off
track. Also, most of these math questions occur in the first third of the exam, If you wanted to avoid
these in the beginning, feel free to start with the T/F a the end of the exam, where there are no
calculations. Finally, don't get stuck on the "math" quesitons. Just move on and go back to them
later. Even if you missed every single "math" question (which you probably will not--because they
are multiple choice) , you could still do just fine on the overall exam.

QUESTION: Do we need to know percentages for print music licenses?

ANSWER: No

QUESTION: On slide 42 dealing with interactive streaming, you stated that there is no mechanical
license for interactive streaming but in the first set of questions on Canvas you said there is a
mechanical streaming license. There is a mechanical license but it is just a streaming mechanical
license?
ANSWER: Mechanical royalties are paid to songwriters and artists when music is sold physically
(e.g., CD or vinyl) and also when music is streamed (“streaming mechanicals”) on-
demand/interactive (e.g., Spotify)—but not for non-interactive (e.g., Pandora). You don't need to
know any details or actual numbers/rates with regard to streaming of any kind--just concepts of
when general licenses are required in different scenarios.

QUESTION: Can you explain all the scenarios when you need a master sound recording license?
ANSWER: Anytime you use master without a compulsory license (like with Soundxchange for non-
interactive streaming) or its not fair use or other narrow exceptions in copyright act (we didn’t cover
classroom, library exceptions). So, main ones are for use of masters in ads, films, tv; also in
sampling.

QUESTION: Does the Digital Performance Right in Sound Recording Act of 1995 apply a public
performance copyright in both interactive and non-interactive streaming? Or just one of them?
ANSWER: To both. It’s only compulsory for non-interactive. Must be negotiated for interactive.

QUESTION: Does the producer have to give notice before extending the option period for a book?
ANSWER: Usually they have to simply give notice prior to the end of the first option period--and the
notice immediately activates the extensino . But is really "depends what it says in the contract"!

QUESTION: In a management agreement, is the option to extend the contract only for the manager
or does it have to be mutually agreed to by the manager and talent?
ANSWER: Manager’s option. Otherwise you don’t need an option; you’d just leave it blank and both
parties could renegotiate. The point of an option is to give one party the unilateral power to extend.

QUESTION: Does the sunset provision for management contracts mean that the manager continues
to get paid for revenues that started before the contract ended and that their portion of the income
decreases over time to zero? In the personal management agreement example, it seems like the
manager is getting paid for things that happened after the contract ended and not during the
contracting time. Is that still a sunset provision?
ANSWER: Sunset provision means manager gets paid after term somehow, usually “sunsetting” or
decreasing over period of years; the “how” depends what it says in the contract specifically.

QUESTION: General question about registration of copyrights and remedies.

ANSWER: Statutory damages, attorney’s fees, costs are all available for works registered at the time
of the infringement (or within 3 months of publication). Only actual damages are available otherwise.
Also, you need to be registered to sue. So, you could register and sue for prior infringement and get
actual damages only.