Entertainment & Media Law Signal : Canadian Entertainment Lawyers for Licensing, Intellectual Property & New Media Matters

The US Federal Court of Appeals for the Second Circuit decision in US v ASCAP (sometimes referred to as ASCAP v RealNetworks) (text of decision is available here) has generated a surprising amount of commentary - particularly from practitioners and academics outside of the United States.  The two cruxes (cruxii?) of the decision are that the downloading of a digital song file does not constitute a "public performance" for purposes of US copyright law - and so entities (such as RealNetworks and Yahoo!, who were applicants and appellees in the case) who offer music downloading services to end-users are not liable to make payment to performing rights organizations such as ASCAP - and that the district court charged with setting the royalty which ASCAP could charge to online service providers made some analytical errors in deciding on a rate.  For purposes of this post, only the first issue, that relating to public performances, will be discussed.

As Barry Sookman has noted (in a comprehensive post on the matter), the decision highlights differences between Canadian and US copyright law.  Ben Chaliss, writing at the 1709 Copyright Blog (and from a UK perspective), also provides a useful review of the decision in "Internet rates, rights (and wrongs)".  As Barry notes,

[t]he decision highlights a significant difference between US and Canadian law on whether copyright owners of the performance rights in musical works are entitled to royalties when a copy of a music file is transmitted over a network

I'd like to explore how that "significant difference" arises, because I think it's worth highlighting the fact that it stems from fundamental differences in how our respective copyright legislation conceptualizes the "bundle of rights" which comprise copyright, and not from divergence about how to interpret the same right.  In short, the same activities (selling a song for download over the internet) are treated differently on either side of the border because our copyright legislation characterizes the rights which are engaged in completely different ways.

In the United States, as has now been confirmed by the 2nd Circuit Court of Appeals, the downloading of a song does not constitute a "public performance" - an exclusive right of the copyright owner accorded by Section 106(4) of the US Copyright Act - and so no royalty is payable to ASCAP (or, presumably, BMI or SESAC, the other public performance collectives).

In Canada, by contrast, the federal appeals courts appear to have determined that SOCAN (the Canadian equivalent of ASCAP, BMI and SESAC) is entitled to a royalty when a song is downloaded - but not because the song has been "publicly performed".  Instead, under Canadian law, a royalty is payable because the composition has been "communicated to the public by telecommunication", a right which is exclusively controlled by SOCAN (see the Tariff 24 Ringtones Decision (2008 FCA 6) and the SOCAN v Bell Canada decision (released September 2, 2010)).

Compare the wording of the relevant pieces of legislation:

• in the US Copyright Act: "the owner of copyright under this title has the exclusive rights to do and to authorize ... in the case of ... musical ... works ... to perform the copyrighted work publicly" (Section 106(4))
  
• in the Canadian Copyright Act: "“copyright”, in relation to a work, means the sole right to ... perform the work or any substantial part thereof in public ... and includes the sole right ... in the case of any ... musical ... work, to communicate the work to the public by telecommunication" (Section 3(1))

ASCAP is not entitled to a royalty when a song is downloaded because that song has not been "publicly performed".  Under Canadian law, however, whether the song has been "performed" or not (whether publicly or otherwise) is largely irrelevant  - SOCAN is entitled to receive a royalty when a song is downloaded because the song has been "communicated to the public by telecommunication".  Canadian courts are not relying on an expansive concept of "performance" (whether public or not) when affirming the right of SOCAN to collect a royalty for downloads - they are recognizing the existence of a distinct, separate (even if logically subordinate) right.

The foregoing isn't to say that the decision which the Canadian courts have reached about downloads and communications to the public is unimpeachable.  While it's difficult to find fault with the US 2nd Circuit's ruminations on the nature of a "performance" and its conclusion that downloading a song doesn't resemble anything we would normally think of as a performance (as the court rather drily noted, "a download plainly is neither a 'dance' nor an 'act'"), the conclusion of the Canadian Federal Court that a download constitutes a communication to the public seems somewhat less secure.  The Federal Court in the SOCAN v Bell decision notes that there is a distinction between the concepts of a "performance in public" and a "communication to the public", but focuses its analysis only on the latter - and ends with the conclusion that one can communicate to the public "by means of a series of private communications" (supplemented by the notion that it is mostly the intention to communicate to the public which is conclusive, even if you only succeed in being "heard" (or downloaded) by one person).  The Court used an apt metaphor to describe its reasoning: a store sells goods "to the public" even if it only sells items one at a time.  That being said, the stability of that analysis, being heavily dependent on context, is open to question, and, as Sookman alludes, a Supreme Court confirmation would be welcome.

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CNN reports that Max Weinberg is not going to be the band leader (or have any other role) on Conan O'Brien's new late-night show.  It's a fairly unremarkable story, but it reminds me of this anecdote, told by Weinberg and contained in a Rolling Stone article written by David Fricke, which I've always enjoyed (and which might come in handy in contract negotiations):

About 10 years ago, a well-known actress on an NBC sitcom (Weinberg doesn’t reveal her name) requested a sabbatical from the series to make a movie. NBC said no. Her agent pointed out that Weinberg was allowed to go off [from the NBC show Late Night with Conan O'Brien] for six months at a time to play with Springsteen. “The NBC lawyer thought for a second, then said, ‘The next time Bruce Springsteen asks your client to play drums with him, she can do that.’ ” Weinberg grins, noting that in the NBC legal department, “it is known as the Weinberg-Springsteen Rule.”

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The Toronto Star has been publishing an excellent series of articles by Kate Taylor on Canadian culture in a digital age - the series is a great demonstration of the potential power of long-form journalism.  A couple of particular highlights for me were the discussion about the need for "Canadian content" radio regulations in light of the sense that the Canadian music industry has matured to the point where such content mandates may no longer be required, and "The downloading debate: when it comes to copyright, it’s impossible to satisfy everyone", whose title pretty much speaks for itself.  With respect to the latter article, Chris Castle has posted a response to the proposal raised by Eddie Schwartz for an internet-wide music licensing scheme.

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CBC News reported earlier this week about the lack of availability in Canada of online/mobile streaming services in Canada such as Pandora and Spotify: "Mobile music service rejects Canada, blames fees".  As noted in the CBC story:

...in Canada, the idea is barely getting off the ground, and one of the biggest players in the industry is blaming royalties sought by major record labels.

"These rates … are astronomical," Tim Westergren, founder of California-based Pandora wrote in an email to The Canadian Press.

 "As long as rights societies take this approach, they will prevent Pandora from launching to Canadian users."

The story lit up Canadian websites and Twitter feeds, cited as evidence that Canadian music industry copyright owners were seeking excessive royalties, thereby keeping out desired services (and, for the record, I personally loved using Pandora during the brief period of time it was available in Canada and would welcome its speedy return).

It strikes me, however, that the story is somewhat more nuanced than that: it should be understood as a story about the collective administration of copyright in Canada, the effects of government intervention in the marketplace and how those two factors impact business negotiating strategies.  The words of Tim Westergren are probably best seen as a snapshot of a moment in time in the back-and-forth negotiations between a licensor and licensee - and in this post I'll try to describe what it is about the Canadian copyright licensing milieu which explains the narrative set out in that CBC story.

Before going further, it should be noted that Canada is hardly unique when it comes to Pandora: as the FAQ on the Pandora website notes, Pandora only offers its music streaming service in the United States - so Pandora hasn't been able to obtain the licenses it needs on terms it finds agreeable in any country except <strike>Canada</strike> the United States [CORRECTED: 9.26.10].  Additionally, as the CBC story notes, "other [similar] services are willing to pay the fees" - MOG has plans to enter the market soon (and hasn't to date because of Canada's "relatively small population", and Rdio is already here, having entered into agreements with the relevant rights collectives.  In other words, read the story long enough and it starts to look like the problem lies less with Canada's copyright licensing scheme than with Pandora's willingness to accede to the rates which are being put on the table in front of it.

And therein lies the crux of this story: Pandora and Re:Sound, one of the copyright collectives from which Pandora needs to obtain a license to stream music in Canada, are still in the midst of negotiations about the royalties which Pandora would be obliged to pay.  But, because of the structure of the Canadian copyright licensing regime, the dynamic at work is not simply two commercial entities negotiating in an open market - it involves two entities negotiating in a situation where one of them has the ability to resort to the enforceable decision of a state entity (the Copyright Board of Canada) if it thinks it can get a higher rate than what the party across the table is willing to <strike>give</strike> agree to [CORRECTED: 9.26.10].

In Canada, there are three sets of rights-holders whose interests are engaged when a service like Pandora proposes to stream music online: rights in the compositions (owned by composers and music publishers), rights in the sound recordings (usually owned by record companies) and rights in the performances contained on the sound recordings (often owned by record companies, though the performers usually retain a right to receive royalties).  In order to obtain those rights, Pandora need not track down each individual owner, but rather can obtain a license from a collective which acts on behalf of its members - in the case of online streaming, Pandora would need to deal with SOCAN (for public performance rights in the compositions), CMRRA/SODRAC Inc. (CSI) (for reproduction of the compositions) and Re:Sound (formerly the Neighbouring Rights Collective of Canada) (for public performance of the sound recording and performers' performances) (and potentially AVLA/SOPROQ for reproduction of the sound recording in the event that AVLA/SOPROQ elect to file a tariff).  Thus, at least three sets of negotiations are required - while seemingly straight-forward, they are complicated by the fact that collectives in Canada have the ability to have tariffs certified by the Copyright Board of Canada.  The certification of a tariff means that the applicable collective no longer needs to enter into individual negotiations with an end-user - they can simply offer the license on the terms set out in the tariff.

Making matters even more complicated is the fact that there are no currently certified tariffs applicable to the online streaming of music in the current year. SOCAN's Tariff 22.A, which covered "online music services" which "deliver[] streams to subscribers", only covered the years 1996-2006.  SOCAN's proposed tariffs for subsequent years await certification by the Board.  Similarly, the CSI certified tariff for online music services covered only the years 2005-2007 - they also have filed various proposed tariffs for subsequent years (for further details on their most recent tariff proposal applicable to online music services, see here).  Re:Sound, however, has never had a certified tariff for online music services - they have recently (July 2010) filed a proposed tariff with the Copyright Board which would cover what the proposed tariff describes as "semi-interactive webcasting" (a term, it should be noted, which does not appear in either the SOCAN or CSI tariffs) - and it is that Re:Sound proposed tariff which raised the eyebrows of the CBC reporter who wrote the Pandora story under discussion.  As noted in the CBC story:

[Re:Sound] wants to charge web-based music sites that stream to mobile devices the greater of two figures: 45 per cent of the site's gross revenues in Canada or 7.5-tenths of a cent for every song streamed. While that 45% number certainly seems high on first glance, to understand its significance it has to be put into context: the number is just Re:Sound's "opening bid", so to speak, in a process taking place before the Copyright Board.  Re:Sound will almost certainly not get a number in the final tariff which is anywhere near what they've requested - but they have every incentive to ask for the highest plausible amount, knowing full well that the number will be countered with a much lower number by interested parties who object to it, and that the Board will in all likelihood end up at a number somewhere between the opening numbers offered by the participants.  It's a bit like a segment on Pawn Stars: if you're looking to sell something, go in asking for an outrageous amount in the expectation that Rick is going to come back with a low-ball counter and you'll end up somewhere in the middle.  But obtaining a license in Canada is like a really strange version of a negotiation, because if you can't come to a mutually agreeable price, one party gets to go to (what is in effect) a government agency and have them set the price. And that's where Pandora seems to find itself: at a guess, they opened negotiations with Re:Sound, couldn't come to an agreement on what the royalty rate should be, and Re:Sound said something along the lines of "Fine, then we'll have the Copyright Board set the royalty" and started the process by asking for a massive (and likely unsustainable) amount.  The CBC story, however, glosses over that entire process. But this isn't a uniquely Canadian problem, and none of this will be a surprise for anyone who has followed Pandora: it was only fairly recently that they were able to come to terms in the United States for the exact same rights as those controlled by Re:Sound:

The long, strange saga surrounding webcaster royalty payments is (mercifully) over after a multiyear fight.

Back in 2007, the US government's Copyright Royalty Board set royalty rates for the online streaming of music that many in the business felt were unrealistically high for a nascent market, leading at least one prominent streaming service, Pandora, to threaten to pull the plug. Negotiations over an alternate pricing scheme broke down earlier this year, leaving things looking grim. With a slight nudge, however, the parties returned to the table and today announced an agreement that provides webcasters with a new royalty structure.

The fact that negotiations were even happening took Congressional action. In 2008, Congress passed the Webcaster Settlement Act, which gave the webcasters roughly a year to come to terms with SoundExchange, the entity that collects royalties on behalf of the rightsholders. But the deadline set in that act expired earlier this year, an event that triggered the breakdown of the negotiations.

Pandora founder Tim Westergren tells Ars that the parties were reasonably close to an agreement at that point, but backed away once the deadline passed. Westergren credited a number of factors for getting things back on track, including pressure from the webcasters' audience and some innovative ideas from A2IM, a trade group which represents independent musicians; he also praised Representative Howard Berman (D-CA) for getting the parties an extension on the deadline.

If there were no government presence in the marketplace, it's possible these negotiations would be resolved more quickly - the ability to resort to the binding decision of the Copyright Board means that the parties aren't fully incentivized to conclude negotiations between themselves.  Compare the lengthy saga, described above, that Pandora endured in the US with SoundExchange (which levies royalties which are subject to the oversight of the US Copyright Royalty Board, and so is broadly similar to the situation in Canada) with the apparent lack of drama that SoundExchange faced with ASCAP, BMI and SESAC (whose royalties are not subject to the oversight of a government agency).  The problem isn't so much that collectives are seeking to maximize the fees they receive (that's not only rational, but what we would expect any actor in a marketplace to do), the problem is the distorting effect of having a government-sanctioned decision imposed on the parties and the agonizing slowness of those decisions being made.  By having negotiations over the royalty rate for Canadian music licenses modulated by the Copyright Board (which, because it is, broadly speaking, a government actor is obliged to observe various due process requirements which end up slowing down the process), we end up with a cumbersome, expensive system which may not be well-placed to respond to the pace of change in a digital world.

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[Good artists copy - great artists steal (I'm so hardcore I won't even provide an attribution for that aphorism).  To that end, we're going to slightly alter our "Questions and Answers" feature: instead of just linking to question/answer posts found at other blogs, we're going to steal their questions and provide our own answers!  (Innovative, yes?)  There's a practical reason for this, however: many entertainment and media law blogs are written by and for residents of the United States, and so the same question posed by a Canadian would result in a different answer.  Inspiration for this post was provided by Jesse Saivar at Law Law Land.]

So, you've written a novel, composed a song, taken a photograph or drawn a picture - assuming you're not an employee and created that work in the course of your employment, congratulations, you're the author of that work and own copyright in it.  Is it necessary to register your copyright?  No, it is not necessary to file a registration, but there are certain advantages to doing so under the Copyright Act (Canada).  What are those advantages?  Section 53 of the Copyright Act (Canada) provides the details:

(1) The Register of Copyrights is evidence of the particulars entered in it, and a copy of an entry in the Register is evidence of the particulars of the entry if it is certified by the Commissioner of Patents, the Registrar of Copyrights or an officer, clerk or employee of the Copyright Office as a true copy.

(2) A certificate of registration of copyright is evidence that the copyright subsists and that the person registered is the owner of the copyright.

(2.1) A certificate of registration of an assignment of copyright is evidence that the right recorded on the certificate has been assigned and that the assignee registered is the owner of that right.

(2.2) A certificate of registration of a licence granting an interest in a copyright is evidence that the interest recorded on the certificate has been granted and that the licensee registered is the holder of that interest.

In short, registering your copyright (or the interest which you have acquired in copyright by means of an assignment or license) provides prima facie evidence that you in fact have the rights which you claim to have.  That can be very handy in the event that you find yourself in court - if a copyright owner sues someone for infringement, the first argument which the defendant will try to raise is to require the plaintiff to prove that (a) copyright actually exists in the work in question, and (b) the plaintiff actually possesses the rights it claims to have.  A certificate of registration from the CIPO will be proof of both - in the absence of such a certificate the plaintiff will be obliged to provide some other relevant evidence (such as documentation relating to the creation or publication of the work, contracts indicating that the plaintiff is the owner or licensee of the rights, etc.).  That $65 filing fee can save a lot of hassle down the road.

In addition, Section 39(1) of the Act provides that an injunction is the only available remedy for infringement if the defendant "was not aware and had no reasonable ground for suspecting that copyright subsisted" in the work in question.  But that limitation does not apply if the work was registered on the date of infringement.

It should be noted that this is quite different from United States law as it relates to copyright registration: in the United States, a registration with the Library of Congress is required in order to bring an action in US federal court, and statutory damages and recovery of legal fees are only available if registration was obtained in a timely manner - none of those limitations apply in Canada.  Finally, the very different nature of the Canadian copyright registry, as compared to that in the United States, should be remarked upon: in the United States an actual copy of the work in question must be deposited in order to obtain registration; in Canada, no deposit is required or even permitted.

The Canadian Intellectual Property Office (CIPO), the good folks who maintain Canada's copyright registry, offers a handy online guide to filing an application for registration of a copyright. 

Important legal stuff (which can also be found in our Disclaimer): This post contains information of a general nature that is not intended to be legal advice and should not be considered or relied on as legal advice. Any reader of this post who has legal matters involving information addressed in this post should consult with an experienced entertainment lawyer. This post does not create an attorney-client relationship with any reader.

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        (L-R: Clark Hallen, Rob Friedman, Joe Drake, Laurie May, Daniel Steinman and John Nendick)

As Paul mentioned in an earlier post, Heenan Blaikie LLP, in conjunction with Ernst & Young LLP hosted their 4th annual film industry town hall panel discussion on Monday September 13, 2010 at the Park Hyatt Hotel in Toronto. The panel of industry leaders held an interactive discussed the current state of film financing and how it has been affected by home entertainment market, online sales and the economic climate.

The panelists included Clark Hallren, Managing Partner at Clear Scope Partners; Laurie May, Co- President and Co-Founder of Maple Pictures Corporation; Joe Drake, President of the Motion Picture Group at Lionsgate, Rob Friedman, Co-Chairman and CEO at Summit Entertainment LLC; and Daniel Steinman, Film Finance Agent at the Creative Artists Agency.

In addition to the panel discussion, the audience of over 170 were asked to provide their input to the discussion through real-time polling. Here are the questions and the results:

1. In the current environment, what do you feel is affecting the home entertainment market the most?

A. Market maturity 2%

B. Economic conditions 12%

C. Rapid growth of entertainment options 68%

D. Piracy 17%

E. Shift to rental 1%

Among the most telling results was that 68% of the audience feel that the rapid growth of entertainment options negatively affected the home entertainment market. Rob Friedman noted that too many options on the market confuses the consumer. Observing the diversity of content within the short films premiering at the Festival, Joe Drake also indicated that the industry has to also factor in what potential viewers want to see along with how they want to see it.

2. What will get the home entertainment market growing again?

A. Changes to pricing 19%

B. Adding extra features 11%

C. “Windowing” – delaying new releases to DVD rental outfits 9%

D. New delivery methods 54%

E. It will not grow again 7%

Obviously over the past decade, DVD sales have proven lucrative for people who are not willing to pay $13.50 for a movie that might not live up to their expectations, but will shell out $6.99 to watch the same movie in the confines of their living room. But how can the film industry recoup revenue that is lost through empty theatre seats if DVD sales are dwindling? Because of the amount of new technologies being offered in home entertainment, panelists believed that consumers are a bit leery of determining the best value for their dollar – you might shell out a few hundred bucks only to find out a year later that your nifty gadget doesn’t compare to what is currently on the market.

It was announced this week (and briefly discussed at the panel) that Netflix has launched an online video-streaming service in Canada for movies and television shows. What does this mean? Well, it was announced on Thursday that Blockbuster has filed for Chapter 11 bankruptcy protection in the US, after being slammed by online DVD rental sites. 

The panelists thought that while film companies changed their business strategies earlier in the decade, moving from focusing on renting DVD’s to focusing on DVD sales, what has happened more recently is that companies realized that they needed to direct equal focus to creating new or managing the platforms where these services were being offered. Companies were a bit slow on the uptake in evaluating how online sales and social media techniques could benefit not only their bottom line, but also growing consumer demands. For instance, using Netflix, consumers can use their Xbox 360, PS3 and Wii to view movies on their television sets and can download a free app from Apple to watch on their iPad and iPhones, accessing as many movies and television shows they can view for as little as $7.99 a month.

3. In the next five years, the contribution of revenues outside the US and Canada will:

A. Not change meaningfully 11%

B. Change slightly 7%

C. Change moderately 30%

D. Change significantly 10%+

4. In the next few years, who will be the next players in film financing?

A. Private equity 24%

B. Banks 6%

C. Co-productions ( two or more production companies working together) 42%

D. Other (future trading, artist investment/concessions, tax credits, government assistance) 28%

The fragile economy and the affect it has had on home entertainment also means that film companies have to re-evaluate their business models. 42% of the audience felt that the collaboration between production companies would be a good way to assist with film financing, and 28% felt that other means of financing, such as government assistance, futures trading and artist investments would be the best way to bolster financing in the next few years.

Laurie May added that film companies need to be more creative, not only in their business models but also in their marketing initiatives and also added that her company, Maple Pictures is utilizing social media applications to the fullest extent and has found that online marketing campaigns, which increase the exposure of their films to a viral audience, have been successful.

In terms of the future of film financing, the panelists also discussed the importance of not only collaborating with national and international production companies to assist with financing but also how these collaborations can expand their viewership. Using examples of well-known films they had produced, they discussed how population demographics, and in some cases, the “star status” of the actors involved in a film dictated what and how films would be financed, distributed and marketed. 

Overall, many in the room were quite optimistic about the future of film financing, but acknowledged that film companies and industry workers need not only to tighten their belts, they also need to remember that ultimately it is the consumer that dictates the market and the industry’s success.  

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Following up the earlier post "Canadian Copyright and Derivative Rights in Non-Fiction Books", Christina Bohannan has recently published Taming the Derivative Works Right: A Modest Proposal for Reducing Overbreadth and Vagueness in Copyright ((2010) 12 Vanderbilt Journal of Entertainment & Technology Law 669) which has a nice explanation of how US copyright law treats the matter of "derivative works".  Bohannan advances the argument that the US derivative works right is possibly unconstitutional for vagueness or over-breadth, and recommends two interpretive approaches [citations omitted]:

First, courts should ensure that violation of the derivative works right requires not only that the allegedly infringing work is based upon the copyrighted work but also that it substantially incorporates copyrighted expression from that work. Many courts already limit the derivative works right in this way, but all courts should do so consistently. This requirement is the only way to maintain the idea/expression dichotomy; otherwise, copyright holders could prevent others from borrowing uncopyrightable ideas from their works in making new works. ...

Second, the catch-all language in the derivative works right must be interpreted more narrowly. As previously discussed, the language, "any other form in which a work may be modified,transformed, or adapted," renders the derivative works right overbroad. Courts currently interpret this language as applying to nearly all uses of copyrighted material that change the copyrighted work in some way, including uses that change not merely the form but also the content or message. This interpretation is not necessarily the best one, even on the definition‘s own terms. ... it should be interpreted under the principle noscitur a sociis in light of the more specific examples that precede it. Those examples reflect common forms of a copyright holder‘s own expression, not new works containing very different expression. For instance, works such as satire, parody, guide books, trivia books, etc. are conspicuously absent from the list of statutory examples; yet the catch-all language is clearly broad enough to include those types of works. A narrower and more reasonable interpretation of the language would cover the conversion of the copyright holder‘s own expression into other forms or media but would not cover subsequent works comprised largely of new substantive content. That is, this interpretation would include common forms of the copyright holder‘s own expression that are similar to the listed examples, but would not include works that borrow from a copyrighted work to create a work with different content.

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Peter Nowak at the CBC recently had an interesting discussion with Kobo chief executive Michael Serbinis (Kobo is "a global eBook retailer" backed by, among others, Canada's own Indigo Books & Music) about e-books and their impact on the book publishing industry (E-books: A New Chapter Begins).  Serbini discusses the deal-making process for e-book distributors, the new possibilities accorded to authors by e-books and the possibility that print publication will become an afterthought - well worth checking out.

On a related note, Wired attempted to answer the burning question: Why do e-books cost so much?

“People vastly overestimate how much a publisher saves,” says Erik Sherman, an analyst and author who studies ebook economics. Turns out, the physical aspects of book production can account for as little as 15 percent of the cost of the title. The rest can be divvied up among the author, editor, designer, marketers, publicists, distributors, and resellers. A lot of fingers dip into that $14.99 money pie before the house takes a slice.

“People would have heart attacks if they knew all the costs associated with digital publishing,” says Maja Thomas, senior vice president of the Hachette Book Group’s digital division. Tacking an e onto a book requires antipiracy software, digital warehousing, extra legal support, and programmers to adapt each title for Android, iPhone, Kindle, and all the other formats. That’s on top of the regular costs of turning a manuscript into a finished product.

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In light of the expectation that copyright reform, and in particular Bill C-32 (The Copyright Modernization Act), will be a priority issue for Parliament this fall and winter, I thought it might be useful to collect some of the notable commentary on the Bill since our last round-up.

• www.copyrightgetitright.ca (featuring some heavyweight partners) recently launched
• Howard Knopf speculates on how Bill C-32 might fare in the legislative committee process
• James Gannon published an op-ed in the Toronto Star entitled "Bill C-32, copyright and digital locks"
• Michael Geist provides his "Perspective on the Key Issues"
• The Toronto Star itself published an editorial entitled "Copyright bill needs changes" (in turn prompting this Howard Knopf response)
• Michael Geist breaks down the responses of various music industry organizations to Bill C-32 and opines on various criticisms of the proposed fair dealing amendments
• Jenna Wilson and Sangeetha Punniyamoorthy wrote in the Lawyers Weekly on their view that Bill C-32 "disturbs rights balance between creators and users"
• James Gannon compared Dutch copyright law and the reforms proposed by Bill C-32
• Artists Carole Pope (Putting a value on creation) and Maia Davis published op-eds as well - the Davis piece is evidently no longer available online, but it prompted two lengthy responses at IPilogue, one from Stuart Freen (Maia Davis Mixes Music Biz Morality and Economics) and one from Nathan Fan (Maia Davies Redux: Artists and TPMs)

As a reminder, here at the Signal we're going to do our best over the next few months to keep tabs on developments and commentary, from a variety of perspectives, surrounding Bill C-32, so we invite readers to check back often (clicking the "Bill C-32" tag below will bring you to an index of all posts on the Signal about the topic).

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On Monday, September 13, 2010, Ernst & Young and Heenan Blaikie LLP hosted a TIFF panel discussion at the Park Hyatt in Toronto. We hope to have an audio version of the panel discussion available on this blog in the coming days. In the meantime, I was able to ask some follow-up questions to one of the panellists following the conclusion of the film festival.

Rob Friedman, Co-Chairman and CEO of Summit Entertainment, was kind enough to extend the panel discussion onto this blog and share his thoughts on TIFF and beyond. 

Q: The final question of the panel was in regards to who the big players are in film financing. Before time ran out, the next question was going to be about what your own financiers are telling you. 

A: Everybody is ready, willing and able to continue to lend. Obviously, pricing is different than it was when we first got our facilities in place and we still have plenty of time on our facilities, but we are exploring new banking arrangements and everybody wants to play.

Q: There was an interesting conversation on the panel with regards to genre and impressions from various financiers with regards to producing certain kinds of films. Are you feeling any external pressure in terms of what should be produced?

A: No, not as it relates to financiers. You tend to get a different appetite in the users in the international marketplace but you never discuss specific movies with the financiers – at least I don’t.

Q. It was reported in a local paper that deal making has been “as slow as molasses” this year at TIFF. Was that your impression this year?

A: Well a lot of the movies that were there already had distributors. The last week has shown a lot of deal making. I just don’t think that there was the usual bidding frenzy because I think there were a lot of movies that were well received but didn’t necessarily fill the needs of distributors.

Q. Have you seen a shift in the kinds of films that are being showcased at festivals like TIFF? What is the current trend? 

A. I think you saw a fair number of more exploitive films for "midnight madness" , but I think the mainstream fare was pretty consistent – smattering of comedies, a smattering of dramas, obviously great filmmaking prowess. Year in and year out it is different just because the movies are different. I didn’t see any trending.

Q. In the next year or so, what do you think the biggest difference will be in the marketplace in terms of what distributors will be doing.

A. I don’t think you are going to see any big change. I don’t think we are going to see any massive life changing event. I think you are going to see slow progress to exploring new windows and new distribution opportunities. I think it’s going to be slow and steady. I don’t think you are going to see anything dramatic.

Q. A few years ago and even now, ‘pirating’ became the most terrifying term in the industry. What are distributors afraid of these days?

A. I think it’s the fractionalization of consumer decision making as it relates to viewing their content. I think the sooner that can start to coalesce into some very specific trends, it will help everybody.

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Yes, we know, TIFF is over.

Hundreds of films are screened during the 10 days of the Festival, but that doesn't necessarily mean we are going to see them in the movie theatres anytime soon. Luckily for us - and for you -our friends over at Darius Films  premiered A Beginners Guide to Endings, which is slated for theatrical release very soon. 

Film Synopsis (from TIFF.net): Duke White (Harvey Keitel) hasn’t been an ideal father to his five boys. An inveterate gambler who never experienced a windfall he couldn’t blow within twenty-four hours, he has come to the end of his rope, literally.

Years ago, he signed up his three eldest sons for unsafe drug tests that turned out to have dire consequences: the boys’ life expectancy have been substantially reduced. Upon receiving the news after their father’s funeral, the sons return to their family home in Niagara Falls, where they respond to their eminent demises in different yet equally hilarious ways. Womanizing Cal (Scott Caan) is determined to hook up with Miranda (Tricia Helfer), the one girl who got away. Cautious Jacob (Paulo Costanzo), the only son with a real job, is determined to take every risk he didn’t take earlier, usually accompanied by Duke’s youngest son, Todd (Siam Yu). And finally there’s his eldest, Nuts (Jason Jones), a boxer turned promoter who seems to have inherited his father’s love of the calamitous long shot.

Written and directed with a keen sense of father-son awareness, Jonathan Sobol’s A Beginners Guide to Endings features crackling dialogue and bravura performances. Keitel is hilarious and affecting as a man who can’t even broach a subject without calculating the odds. Caan is perfect as the cocksure Cal, who’s never experienced self-doubt and is now forced to wrestle with it. Costanzo is endearing as a man who never pursued excitement and now can’t get enough of it. Finally, Jason Jones delivers a letter-perfect incarnation of a man who finally realizes that his actions have an impact on others as well as himself. Rounding out the stellar cast are Wendy Crewson as Duke’s first wife and the always reliable J.K. Simmons as Uncle Pal, a preacher in a roadside chapel who tries to counsel the boys (usually to no avail). A Beginners Guide to Endings is a bawdy paean to those of us who have never entirely worked out our relationship with our fathers (which may include pretty much everyone). -  Steve Gravestock

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(From Tiff.net): In 1968, the female workers at Dagenham’s Ford factory in the UK went on strike in protest of what they perceived to be sexual discrimination. Rita O’Grady led nearly two hundred women to protest their primitive working conditions and their long and arduous hours. But the straw that broke the camel’s back – and turned a bunch of ordinary working ladies into passionate advocates for equal pay – was Ford’s decision to classify them as unskilled workers.

Nigel Cole, whose Calendar Girls had a brash, populist touch, has dramatized this incident in British labour history and turned it into a vibrant, uplifting story about a group of working stiffs who happen to be women. Rita (Sally Hawkins, also starring in Mike Leigh’s Another Year) is rather meek and mild-mannered, and primarily sees herself as a wife and a mother. She and her fellow workers manage to keep their spirits high through good-natured banter and a wonderful sense of camaraderie. One day, she is persuaded by her union rep (Bob Hoskins) to attend a meeting with the local shop steward and Ford’s head of Industrial Relations. Asked to meekly nod and smile, Rita is amazed to discover that she has a voice, and a rather strong one at that, when her blood boils at what she hears in the meeting. Outraged at the lack of respect shown to her and her co-workers, she sets out to find justice.

Intercut with documentary footage of the Dagenham factory, the strike and its resolution – which involved Rita and her friends meeting with Minister of Labour, Barbara Castle – Cole and his spirited cast take us into the hearts and minds of these resolute women, who begin to realize that David actually stands a chance against Goliath. The inspirational story of a group of women who challenge a corrupt and unjust system, Made in Dagenham is a delightful mix of female banter, male bluster and poker-faced negotiation.

The premiere for Made in Dagenham was actually this Saturday, September 11 and it was also screening on Sunday, September 12, but if you have gone to see a movie in the theatres in the past month, you know that not only has this film generated quite a substantial buzz, but that it will be coming to a theatre near you on November 19.

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(From Tiff.net): One man, buried underground, with only his wits and two gadgets to save him. It’s a high-stakes thriller carried off with such technical brilliance and polish that it would make Alfred Hitchcock proud.  

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UPDATED BELOW

In a Decision released on August 30^th, the CRTC has confirmed that Canada's major telephone companies must make their existing wholesale high-speed internet access services available to competitors under a "speed-matching" requirement. "Speed Matching" is a regulatory requirement that applies to phone companies (referred to by the CRTC as “incumbent local exchange carriers”, or “ILECs”) who offer broadband internet access to residential customers. The CRTC applies similar rules to cable companies when they act as “cable carriers” in offering high speed internet access via their cable facilities. Under the speed matching rules, the ILECs and cable carriers must ensure that internet speeds provided to smaller companies that rent portions of the ILEC and cable carrier networks (known as “wholesale” services) match the speed that the ILECs and cable carriers offer to their own retail customers.

The ILECs (the major ILECs are Bell Canada, Telus and MTS/Allstream) provide retail high speed internet service using aggregated asymmetric digital subscriber (ADSL) technology for use with their copper or hybrid copper-fibre facilities. On the cable side, cable carriers including Rogers, Shaw and Videotron provide high speed third-party Internet access (TPIA) service using its DOCSIS technology alongside hybrid fibre-coaxial facilities.

CRTC Chairman Konrad von Finckenstein has referred to retail broadband access as “a key foundation for the digital economy”. The CRTC believes that requiring facilities-based operators to provide access to their networks on fair and equitable terms (including matching speeds) will lead to more opportunities for competition in retail internet services which will better serve consumers.

The CRTC’s August 30^th Decision confirms the regime that the CRTC had previously established to apply speed matching requirements to both cable carriers’ TPIA services and to ILECs’ aggregated ADSL services. After the CRTC initially established the rules in 2008, the major ILECs petitioned the federal cabinet to reverse these rules, following which the Government issued an Order in Council in December 2009 requiring the CRTC to reconsider the ILEC rules. The CRTC conducted a proceeding earlier this year to address the Government’s Order.

In its Decision, the CRTC was careful to underscore the need to balance the goals of competitive broadband access at the retail level while at the same time ensuring that the ILECs continue to have the necessary incentives to innovate and invest in broadband facilities. The CRTC stated the importance of building out fibre networks closer to Canadian homes and businesses, which allows for faster internet connections.

To effect this balance among competing concerns, the CRTC approved wholesale tariff rates to ILEC competitors that reflect an additional markup of 10 per cent on its incremental costs. The purpose of the mark-up was to recognize the higher cost of capital for the ILECs needed to construct “fibre-to-the-node” (FTTN) facilities on a widespread basis. According to the CRTC, the new mark-up gave sufficient comfort to preclude any “undue disincentive” for ILECs to continue to invest in FTTN facilities. The ILECs have criticized the CRTC’s Decision as ignoring the significant risks and costs associated with investing in high speed facilities. The ILECs argue that, by mandating access to the ILECs network without putting any risk capital in the ground, the CRTC has effectively permitted competitors to “free ride” off ILEC investments in their transmission facilities.

Some commentators have also raised the concern that the speed matching Decision could have unintended consequences in other markets that depend on access to the ILEC and cable carrier pipe. An example of competing uses of the broadband platform is Bell Canada’s recent announcement of the launch of its new Internet based TV service, known as IPTV.  Bell's IPTV offering is an integrated broadband service which will offer a full TV menu of signals to customers. Bell’s IPTV service offers digital television signals over fibre and last-mile DSL phone lines. Bell is also using this same platform to offer “Fibe”, a premium higher-speed Internet service to customers.

With competing demands on bandwidth for uses such as full TV service, high speed Internet service and now speed-matching for wholesale access to competitors, something had to give. In July, Rogers, one of the cable carriers, announced that it would impose more restrictive usage limits on its “Extreme” and “Lite” services. The new limits will effectively mean that it will take a smaller number of streamed videos before a Rogers’ customer reaches his or her monthly bandwidth cap.

It is interesting to note that some have attributed Rogers’ decision to lower the usage limits on its services to the anticipated entry of services such as Netflix and GoogleTV into Canada. The lower usage limits would make a service such as Netflix arguably less attractive due to the effective economic limits on streaming video over a broadband connection. At the same time, it appears that Rogers has been careful to structure its revised usage limits in accordance with the CRTC’s 2009 Internet traffic management regime, also known as the Canadian “net neutrality” rules. Usage limits that vary according to set prices would be permissible as “economic ITMPs” under the CRTC’s rules.

But back to speed matching: in contrast to providers such as Rogers, competitors who obtain wholesale access to ILEC or cable carrier platforms in many cases do not employ download caps. For example, one such competitor, TekSavvy, offers usage plans for lower fees on an unlimited basis. As a result of these disparate internet traffic management practices between resellers of high speed access and the cable carriers and ILECs, some are speculating that the speed matching Decision could induce a substitution effect, in which customers migrate to high speed Internet services provided by smaller ISPs who can stream high-quality video in huge volumes. This development could boost the success of “over-the-top” internet content-streaming services such as AppleTV and Netflix, to the extent that resellers will be able to obtain wholesale bandwidth at matching speeds and offer access without any bandwidth caps. The proponents of this argument also note that such a substitution effect would also thwart the take-up of the ILECs’ new IPTV offerings.

Whether this purported “zero-sum game” between “over-the-top” internet content-streaming services such as AppleTV and Netflix and the potential success of IPTV can be laid on the shoulders of the speed-matching rules, is debatable. But as increasing demands are made for access to the high speed platform, you can count on seeing more disputes, much of which will be played out along the fault line demarcating CRTC-regulated services such as IPTV and cable television from unregulated uses of the broadband plant by “over-the-top” providers such as Netflix, AppleTV and GoogleTV.

And the debate is far from over: the ILECs have already announced that they will appeal the CRTC’s August 30th Decision to the federal cabinet.*

*UPDATED September 14, 2010:  Technically, the ILECs have no further appeal to Cabinet becuse the current CRTC proceeding was the result of the Cabinet ordering the CRTC to reconsider its 2009 determinations.  Under the Telecommunications Act, the Cabinet now has 90 days to vary or rescind the CRTC's August 30th Decision.

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Heenan Blaikie LLP has participated in industry-related events during the Toronto International Film Festival for several years. With our new blog comes an opportunity to use this forum to support our clients who are premiering films at the 2010 Festival.

For the duration of TIFF we will be posting film screening times, dates and trailers from industry clients who are premiering their films at TIFF.  In addition, Heenan Blaikie LLP, along with Ernst & Young, will also be hosting our fourth annual film industry town hall discussion on September 13, 2010 at the Park Hyatt Toronto. We will be providing a recap on the topics covered during the discussion on the blog in the days following the event.

To kick off our TIFF Spotlight series here is the film trailer for BIUTIFUL, starring Javier Bardem, from Maple Pictures. Enjoy! 

Screening Times:

Saturday September 11 - AMC 6  - 9:00am

Synopsis(From www.tiff.net):

Acclaimed auteur Alejandro González Iñárritu hits all the right notes in his long awaited directorial follow-up to 2006’s Academy Award®-winning Babel. Biutiful is also González Iñárritu’s first film to be made in his native Spanish since his landmark feature debut, Amores perros. Adding further pedigree to this heavy-hitting drama is an all-star cast led by Academy Award®-winner Javier Bardem (No Country for Old Men), who recently won the best actor award for this role at the Cannes Film Festival. Together, they make a powerful match, as evidenced from the opening moments of this transfixing work.

Forgoing González Iñárritu’s usual proclivity for enormous casts and non-linear narratives and timelines, Biutiful features a significantly more stripped-down approach to storytelling. Bardem delivers a typically devastating performance as Uxbal, a son, father and lover living in Barcelona. Working as a shady businessman, he helps Chinese immigrants find illegal jobs. His previous line of work as a drug dealer still haunts him and leaves him guilt-ridden. To further complicate matters, his bipolar wife works as a prostitute. But things are about to get even worse, as Uxbal discovers that he may not live much longer. And when he is confronted by a childhood friend who now works as a police officer, his world takes an even darker and more dangerous turn.

Fraught with technical ambition, Biutiful is further elevated by the work of renowned cinematographer Rodrigo Prieto (who has photographed all of González Iñárritu’s films) and Academy Award -winning editor Stephen Mirrione (Traffic). The film’s craft, like its narrative, feels both effortless and brutally meticulous. The result is a tour de force that takes us on a unique and compelling journey down the rocky road of human existence - Michèle Maheux

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The Canadian Audio-visual Certification Office (CAVCO) has announced a new policy (CAVCO Public Notice 2010-01) relating to the submission and retention of documentation required to prove that an individual is Canadian for purposes of obtaining "Canadian content" tax credits.  Instead of producers being required to collect and retain copies of documents (such as passports or birth certificates), CAVCO will be maintaining a central database of documents submitted directly to CAVCO by individuals.

From the text of the CAVCO public notice:

1. To be eligible to receive a tax credit under the CPTC program, production companies must, among other things, staff "Canadians" as producers and in a minimum number of key creative positions.  "Canadian" is defined in subsection 1106(1) of the Income Tax Regulations (Regulations) to include Canadian citizens and permanent residents.

2. In her report tabled to the House of Commons on November 22, 2005 (Chapter 5 - Support to Cultural Industries), the Auditor General of Canada concluded that CAVCO's former practice of having producers and key creative personnel sign a "Declaration of Citizenship or Permanent Residency" form was not rigorous enough to ensure that Canadian content requirements were being met under the CPTC.

3. In response, CAVCO implemented its "Policy on Documentation Demonstrating that Certain Individuals are Canadian" (Public Notice 2009-01).  The policy, effective June 1, 2009, made the applicant responsible and accountable for ensuring that the producers and key creative positions identified for Canadian content points were Canadian by retaining a copy of documentation, e.g. valid passport or permanent resident card, sufficient to demonstrate that each individual satisfied the Regulations' definition of Canadian.  Documents were subject to audit by CAVCO on a random basis.

4. Because of concerns raised by the industry regarding the security of personal information that was being retained by production companies, CAVCO is amending its citizenship policy.

The Policy

5. The CPTC applicant (the producer) is no longer required to retain a copy of an individual's Canadian citizenship or permanent residency documentation.  Under the amended policy, individual producers and key creative personnel eligible for Canadian content points under the CPTC must send a copy of their proof of Canadian citizenship or permanent residency, e.g. valid passport, birth certificate or permanent resident card, directly to CAVCO using the secure CAVCO Online application system or by mail.  Further details on the process are attached in the annex.

6. Each person confirmed by CAVCO as a Canadian citizen or permanent resident will be assigned a unique CAVCO personnel number.  Canadian citizens do not need to resubmit proof of citizenship for future productions. Permanent residents will need to resubmit proof of permanent residency status only when their permanent resident card expires.

Privacy concerns, which appear to have informed the new CAVCO policy, and particularly federal and provincial statutory obligations, are an area of law which could use more attention from independent producers and their counsel.  I provided some additional background on this in a paper I wrote a few years back entitled We Know Where You Live – BC Privacy Commissioner Provides Guidance to Producers on How to Collect Residency Information from Cast and Crew [originally published in Ontario Bar Association Entertainment, Media and Communications Section Newsletter, Vol. 16, No. 2, November 2006].

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When you're one of the biggest rap stars in the world, it shouldn't be surprising to find news of one of your recent court victories splashed all over the mainstream news; when that court victory prompts reactions like "staggering", no one should be shocked to see major news stories about the court decision being carried by major outlets all over the world (a sampling of coverage: the Toronto Star; the Los Angeles Times; the Wall Street Journal).  And so it is with the US Ninth Circuit Court of Appeals decision in the case of F.B.T. Productions et al v Aftermath Records et al (full text of the decision is available here), a court case relating to the works of Marshal B. Mathers III, otherwise known as Eminem.  (For ease of reference in the following discussion I'm going to use the term "artist" and "label" to refer to the plaintiffs (FBT et al) and the defendants (Aftermath, et al), respectively, even though, technically, the plaintiffs in this case weren't necessarily limited to the artist and the defendants weren't limited to the record labels.)

The background to the dispute between the parties is fairly simple.  Most recording contracts between an artist and a record label provide that the artist is entitled to received royalties in at least two different situations: first, where there is a "sale" of a "record" (ie the physical object on which the music is embodied); second, where there is a "license" of the rights to duplicate or make another use of the record.  A "sale" is pretty straightforward: someone goes into a record store and buys a CD (the "sale" which a record contract is usually concerned with is not that sale, but the sale by the record label to a wholesaler or distributor, but set that aside for now).  A "license" is little more esoteric: historically it was limited to licensing the master recording for use in a compilation or for use in a film, television show or commercial.  The distinction was important because two different royalty rates are applied: for a "sale", the artist received either a percentage of the sale price or the revenues received by the label (the percentage itself generally ranged from 10-25%, the upper end being rarely accorded and reserved largely for "superstar" acts); for a "license", convention was to provide a 50% royalty.  All other things being equal, then, the artist would prefer to encounter many more licenses than sales.

Enter the internet and the downloading of digital versions of songs.  Is that a "sale" or a "license"?  Where a track came laden with digital rights management (DRM) protections, the issue was even fuzzier: if I give you something but make it subject to a bunch of restrictions on how you can make use of it, does that seem more like I've sold something to you or more like I've licensed something to you?  In this case, with reference to the Eminen tracks, the label entered into contracts enabling providers like Apple's iTunes service to make the digital tracks available for download.  The label took the position that such a contract involved a "sale" (and hence was subject to the lower royalty rate) - presumably their argument was something along the lines of "Consumers are purchasing a track which they can download to their computer and in meaningful sense they then 'own' that track - that looks like selling a single LP or CD, and so should be characterized as a 'sale'".  The artist took a contrary position, arguing that the iTunes contract should be treated as a license - their argument presumably went something like this: "There hasn't been a 'sale' of anything, because there hasn't been a physical object to which ownership has been transferred; all you've done is given iTunes the right to make digital copies of the song and to, in turn, authorize others, upon payment of a $0.99 fee, make their own digital copies - which looks an awful lot like a 'license'".

The US Ninth Circuit Court of Appeals has come down on the side of the plaintiffs:

[9] When the facts of this case are viewed through the lens of federal copyright law, it is all the more clear that Aftermath’s agreements with the third-party download vendors are “licenses” to use the Eminem master recordings for specific purposes authorized thereby—i.e., to create and distribute permanent downloads and mastertones—in exchange for periodic payments based on the volume of downloads, without any transfer in title of Aftermath’s copyrights to the recordings. Thus, federal copyright law supports and reinforces our conclusion that Aftermath’s agreements permitting third parties to use its sound recordings to produce and sell permanent downloads and mastertones are licenses.

One of the reasons the decision is noteworthy is that it provides further evidence that seemingly novel issues arising at the interface of copyright and technology can be, in the forum of a litigation matter, be resolved with reference to relatively simple legal principles:

[7] There is no dispute that Aftermath was at all relevant times the owner of the copyrights to the Eminem recordings at issue in this case, having obtained those rights through the recording contracts in exchange for specified royalty payments. Pursuant to its agreements with Apple and other third parties, however, Aftermath did not “sell” anything to the download distributors. The download distributors did not obtain title to the digital files. The ownership of those files remained with Aftermath, Aftermath reserved the right to regain possession of the files at any time, and Aftermath obtained recurring benefits in the form of payments based on the volume of downloads. ...

[8] Under our case law interpreting and applying the Copyright Act, too, it is well settled that where a copyright owner transfers a copy of copyrighted material, retains title, limits the uses to which the material may be put, and is compensated periodically based on the transferee’s exploitation of the material, the transaction is a license. See, e.g., Wall Data Inc. 13410 F.B.T. PRODUCTIONS v. AFTERMATH RECORDS Case: 09-56069 09/03/2010 Page: 11 of 15 ID: 7462343 DktEntry: 42-1
v. Los Angeles County Sheriff’s Dep’t, 447 F.3d 769, 785 (9th Cir. 2006); MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993); United States v. Wise, 550 F.2d 1180, 1190-91 (9th Cir. 1977); Hampton v. Paramount Pictures Corp., 279 F.2d 100, 103 (9th Cir. 1960). [emphasis added]

(As a side note, it strikes me that the Ninth Circuit's analysis of the distinction between a sale and a license of copyright is broadly consistent with how a Canadian court would approach the matter.)

What's the impact of this decision (noting that the defendants have indicated they will appeal)?  As the news report indicate, views on that question range from an artist's manager who calls the decision "staggering" and says "it affects everyone" (as recounted in the Toronto Star), to much more circumspect and conservative.  Ethan Smith, writing the in the WSJ, probably has it correct when he says:

while Friday’s ruling may be philosophically intriguing, in most cases, the song is likely to remain the same

In short, this decision is highly unlikely to result in a windfall for many artists.  I think that's because of a few different factors: First, the decision enunciates not a principle of copyright law but a finding of contract interpretation - the contract under consideration in the Eminem case was particularly unclear as to whether, as between the parties, digital downloads should be treated as sales or licenses; such ambiguities are, for the most part, and particularly in the case of major label contracts, a thing of the past.  Certainly any major label recording contract signed in the last five to eight years, which, to be clear, accounts for an awful lot of the songs which are being digitally downloaded on major commercial sites, will specifically set out that digital downloads are to be treated as sales and thus subject to the lower royalty rate.

Second, while the decision may have some bearing on older contracts, it appears (at least according to the WSJ report) that even in those cases many of the artists and record labels have amended or re-negotiated the terms of the contracts to more clearly address the treatment of digital downloads.

Finally, for contracts which don't fall into either of the foregoing categories (ie contracts which are so old that they are unclear on what royalty rate applies to digital downloads and which have not been amended or otherwise updated), those contracts are in many cases going to be for artists whose tracks don't see much activity on legitimate commercial download sites and, hence, won't have an obvious economic incentive to bring a court action seeking redress (if your song has been downloaded 300 times in the last five years, it's going to cost you a lot more just to describe the situation to your lawyer than you could possibly recover in a claim).

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An important part of an entertainment lawyer's job is determining what rights need to be obtained or licensed when a client wants to make some kind of use of a copyrighted work (eg making a movie based on a novel) - and part of that process is determining whether the work in question is even protected by copyright law at all.  The task is complicated by a number of factors, particularly where the work in question originated in another country.  With a tip of the hat to Simon Fodden at slaw, Creative Commons Canada offers a useful flowchart for determining whether a work is in the "public domain" in Canada (ie is of sufficient age that it has fallen out of copyright protection such that it is no longer subject to the restrictions on use contained in the Copyright Act).  

The flowchart has some parts which are confusing (I have no idea what the box at the top of the flowchart is meant to say) or unclear (how one determines whether something is "Crown Copyright" is left vague), but it provides a helpful starting point (though it should be noted that if Bill C-32 comes to pass, the portion of the chart dealing with photographs will have been rendered obsolete).  Fodden also helpfully points to Kenneth D. Crews short article Researching the Copyright Status of a Book: Protected or Public Domain? which, though written from a US standpoint (thus requiring considerably more complexity in the analysis because of the various renewal obligations which US copyright law once required), again offers practical guidance for any lawyer undertaking a similar inquiry.

For a thoughtful academic treatment of the matter of the public domain, Carys Craig's "The Canadian Public Domain: What, Where, and to What End?" (2010) 7 Canadian Journal of Law & Technology 221, is well worth the investment of time.

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Diane Krausz has posted a valuable item: Whose Life is it Anyway? Clearance of Life Story Rights in Film.  The article is particularly interesting for her concise provision of this heuristic, which I think nicely articulates what many entertainment lawyers reflexively do when analyzing clearance issues for projects based on real people or events:

specifically, to classify the characters of a script into the "living" or "dead", "private" or "public” citizen, and the specific issues in a scene (“newsworthy”, “private matter” or “public matter”), as this can make all the difference when determining whether the depiction of a particular individual in a specific scene constitutes infringement on someone’s ”right to publicity” or is permissible because of “fair use.” Note that a right to privacy is a protected right of an individual to non-interference by others, while the right of publicity is an individual’s right to exploit and profit from the exploitation of the exact things he or she is entitled to protect under the right of privacy

While Krausz's article is written with reference to US law, it provides, in addition to the quoted paragraph, additional practice points and guidance for Canadian lawyers who need to navigate the life story rights matrix.  Among the notable ones:

• the creation of "composite" characters which enable the depiction of aspects or actions of various actual individuals without the need for obtaining clearance
• the importance of analyzing/clearing the rights of "ancillary" individuals (ie those are depicted but who are not the "main" characters)
• being aware of when contested versions of the truth have been made publicly available (eg when depicting the events which are the subject of litigation, each party to the litigation may have filed public documents which offer a different account of various events)
• finally, this gem of an observation: "ultimate resolution is often an imperfect combination of financial, practical, creative, legal and business considerations unique to the particular project in question"

Also worth tracking down in this context is Nghia Nguyen's "Lights, camera, fiction! : Analyzing the Legal Framework for Protecting the Docudrama in Canada" (1995) 9 Intellectual Property Journal 127, which explores many of the clearance issues relating to the depiction of real people.

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On Wednesday, September 29, 2010, the OBA's Entertainment Media and Communications Law Section is presenting their annual "New Media Conference" (which also has been accredited as a CLE program for Law Society of Upper Canada purposes) - this year's program is entitled Interactive and Digital Media: The (R)evolution Continues.  Online registration is available at the preceding link, and a brochure for the program is available here.  Topics to be covered include the Canada Media Fund, the Documentary Organization of Canada's Copyright and Fair Dealing Guidelines for Documentary Filmmakers, Branded Content and Video and Online Games and New Distribution Platforms.  The conference will also include a keynote address by The Hon. Leo Housakos, Deputy Chair of the Sentate Standing Committee on Transportation and Communications.  (*cough* I will be moderating the DOC Guidelines panel *cough*)

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How much would it cost a reality show participant who revealed a secret storyline twist before the episode was broadcast?  If the show in question is Survivor, the tattle-taler (tattle-teller?) could be looking at lawsuit from the producers for $5 million.

Eriq Gardner at THR, Esq. points out some of the highlights in his report on the matter: 'Survivor' Contestants Owe $5 Million If They Spill Secrets.  The website reality blurred has uploaded a copy of the Survivor participant agreement (it was first uploaded back in May, then taken down due to a copyright infringement claim, but is currently back online), and offers a detailed look at its provisions, including releases for infliction of severe mental stress and the granting of an option to enter into a talent agreement following the show (which makes perfect sense: if the network is going expend capital in turning someone into a "star", they're going to want to realize on that investment). 

While Survivor is a celebrated legend in the world of reality TV, readers may also be interested in the participant agreement from the 2007 series Kid Nation - a sort of ersatz Lord of the Flies.

Finally, Rachel Wilkes at Law Law Land provides some details about The Reality of Court-Themed "Reality" Shows:

To participate in the show, the parties must sign an agreement to dismiss their court claims and submit the case to binding arbitration. ...  in The People’s Court the show pays any judgment, and pays both parties a nominal amount for their time regardless of the outcome.

So, not only is The People's Court not really a court, the parties aren't even obligated to pay the awards?  Colour me disillusioned...

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Matt Galsor (writing at Law Law Land) answers the question:  I Want to Write a Screenplay About a Guy Who Uses a Particular, Published Book. Do I Still Need to Option the Book?  The question relates to using a book as the basis for a movie - not using a novel, however, but using a non-fiction instructional book (let's pretend it's Seven Steps to Becoming the Best Entertainment Lawyer You Could Possibly Be).  Let's pretend someone writes a screenplay featuring a character who buys 7STBTBELYCPB, a screenplay which chronicles the character's inspiring implementation of those seven steps.   What rights would the screenwriter (or producer) need from the author of the book?  Matt's answer, which he offers from a US perspective, is one with which every entertainment lawyer should be able to agree:

while you may not need to option the book (which would give you the ability to acquire the exclusive right to turn the book into a movie), what you do need is an agreement, akin to a release, in which the author grants you permission to use the book in the manner in which you want to use it (e.g., to use it as a plot point, to reproduce certain quotes, to use the title)

What's of particular interest is how Matt reaches his conclusion and the slight (but important) differences between US and Canadian copyright law which the analysis exposes.  Matt's conclusion is of course informed in part by a practical, E&O-based concern (ie E&O insurers will want to see some kind of release even if, strictly speaking, the copyright law basis for that requirement isn't completely clear-cut) - and that concern is shared north of the border as well.  In focusing just on the copyright analysis, however, Matt says the following:

One of the most important rights held by a copyright owner is the exclusive right to create derivative works based on her original copyrighted material. Derivative works are new original works that contain copyright-protected elements from a pre-existing copyrighted work. A movie based on a book is considered a derivative work because it will share with that book many of its copyright-protected elements (like characters and scenes). Therefore, at the outset, every author of a book owns the exclusive right to create a movie based on that book. ...

The question here is whether a movie about a guy following an instructional guide is a derivative work of that book. Unlike a typical situation in which the movie is going to contain many of the copyright-protected elements of the book on which it is based, your movie is simply using the book as a plot point and likely won’t be making use of elements such as the plot and characters (since such elements likely don’t even exist). Therefore, you may not need to acquire the movie rights to the book like you would in the traditional sense.

Matt's analysis hinges on the question of whether a movie which depicts the steps contained in an instructional book is a "derivative work" (he concludes that it might be, but even if it's not, given the aforementioned E&O-driven practical concerns, obtaining a release is still advisable).  It's the "derivative work" question where Canadian and US copyright law diverge.  Canadian copyright law does not have a distinct "derivative work" concept (unlike the US, where "derivative work" is defined in the US Copyright Act) - instead, the ability of our purported author to claim infringement would rest on two alternative theories: first, the author could claim that the screenplay/movie copies a substantial part of his original work in a material form (and the right to make a copy of a substantial part in a material form is an exclusive right of the copyright owner, per Section 3(1) of the Copyright Act (Canada)); alternatively, the author could claim that the movie infringes the author's sole right (found in Section 3(1)(e)) to reproduce, adapt and publicly present a "literary work" as a movie (or "cinematographic work").  (It's worth noting, parenthetically, that a "literary work" need not be "literary" in any meaningful sense - so long as it is in writing, it qualifies as "literary" - and so our imaginary instructional book would qualify.)

In short, I think under Canadian law we can more easily conclude that the screenplay and/or resulting movie would be an infringement of the author's copyright in the instructional book - and so obtaining a release or license would be imperative, rather than being subject to a cost/benefit analysis.

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Writing at the NYSBA's The Entertainment, Art and Sports Law Blog, Bennett Liebman reports on the recent expansion of New York State's film and TV production (and post-production) tax credits - and also offers, among other things, a snapshot of tax credit programs across the US, a handy capsule history of film/TV tax credits in the United States, and references to studies on the economic benefits of film/TV tax credits.

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A flurry of stories appeared in August 2010 about the stymied efforts of Nicole "Snooki" Polizzi, cast member of the MTV hit Jersey Shore, to register her nickname as a trade-mark in the United States.  The news stories themselves (such as this item at The Smoking Gun) focused on the rejection of Snooki's application because the USPTO (Patent and Trademark Office) examiner thought there would be a likelihood of confusion with the already-registered mark "The Adventures of Snooky", which is based on a children's story book series. 

Polizzi's situation is slightly more nuanced than that, however: it appears that the Snooki application was not rejected outright, but only as it related to the category of "books" (the purported text of the rejection can be found here).  A quick search of the USPTO online database reveals there are a surprisingly large number of registrations for various iterations of "Snooky" (including one for "electric motors operating blinds") and "Snookie's".  As might be expected, however, there is only one application for "Snooki".  The "Snooki" application reveals that registration was sought for two categories: "printed matter, namely books" and "entertainment in the nature of personal appearances by a television personality".  Only the former category was rejected, so presumably Snooki's application for registration in the latter category is still alive.

Eriq Gardner, writing at THR, Esq., posed the question: Which 'Jersey Shore' Star Could Actually Trademark Their Name?, and reported on the efforts to obtain US federal trademark registrations by DJ Pauly D (two applications (here, here), both rejected on a preliminary basis due to likelihood of confusion with registration for "DJ Paulie's Worldwide Countdown"), The Situation (application rejected (and now suspended) due to likelihood of confusion with registered mark (though I'm unable to find a record of the Situation's application)) and Jwoww (application still alive, though clarifications have been requested by the USPTO). 

Eriq's post leads, naturally, to the question: Which 'Jersey Shore' Star Could Actually Trade-mark Their Name in Canada?

Things look good for the GTL (or GFF or IFF) crowd.  The Trade-marks Act (Canada) contains (in Section 12(1)(a)) a restriction on the types of words which can be registered as trade-marks in Canada: a word that is "primarily merely the name or the surname of an individual who is living" (or who has died within the last thirty years) is not registrable.  Unless, that is, one can qualify under Section 12(1)(b), which provides that if a person's name or surname has been used in Canada so as to become "distinctive", then that name is registrable as a trade-mark.  (Hence, for example, the fact that "Britney Spears" is a registered trade-mark in Canada.) 

Helpfully, however, for most of our trade-mark seeking Jersey Shore gang, they aren't seeking to register their own names, but rather nicknames (though in the case of DJ Pauly D, his proposed mark is at least in part comprised of his actual first name).  Nicknames of famous people don't seem to be registered all that often in Canada (though homegrown wrestling legend Bret "Hitman" Hart has a registered mark).  A quick search of the Canadian Intellectual Property Office's online trade-mark database reveals that our favourite Shore-ites are unlikely to face any obstacles from registered marks: there is no "Snooky" or "Snooki" registered, nor any obviously conflicting registered mark which uses the word "Situation", nothing which seems to conflict with the registration of "Pauly" (or even "Paulie") (though there are 107 search results for marks with "DJ" present in them) and, though it probably goes without saying, "Jwoww" likewise seems not to appear too often in marks which have been registered to date.

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