The Skins Controversy - A Canadian Perspective

The recent premiere of MTV's show Skins (which was shot in Toronto, and is based on a show of the same name originally broadcast in the UK by E4) has ignited a minor controversy: multiple media outlets have reported that some advertisers are pulling from the show and TV watchdog groups have raised the spectre of a violation of US child pornography laws (see Brian Stelter reporting in the New York Times, Nellie Andreeva at Deadline Hollywood, and Raju Mudhar in the Toronto Star).  An allegation of creating or distributing child pornography is one of the most incendiary statements that can be made - and I'll leave it to others (like, say, lawyers in the US) to assess whether the allegation has any legal basis in the United States - what I'd like to take a look at is what Canadian law says about "child pornography" in the context of artistic works.  As we'll see, it would be exceedingly unlikely that Skins would be found to constitute "child pornography" for purposes of Canadian criminal law.

Section 163.1 of the Criminal Code (Canada) sets out various offences relating to child pornography (such as making, transmitting, possessing and accessing).  As compared to the United States, the analysis in Canada as to whether something constitutes "child pornography" is greatly simplified by the fact that we have a single criminal code which governs the entire country - whereas each US state also has its own idiosyncratic criminal laws, Canadian provinces do not have constitutional authority to legislate in respect of criminal activity (though they can legislate "regulatory" offences, and, of particular relevance to the issue under consideration, they can and do legislate in respect of the classification, theatrical exhibition and sale of films and television programs - but that's for another post).  In short, in Canada, we have only one definition of "child pornography" about which to worry.  The definition encompasses visual representations of a person who is under 18 (or who is depicted as being under 18) engaged in (or depicted as engaged in) "explicit sexual activity".  The definition also includes visual materials of which the "dominant purpose" is the depiction, for a sexual purpose, of the sexual organs of a person under 18.

Section 163.1(6) sets out a "legitimate purposes" defence to a charge under the section:

(6) No person shall be convicted of an offence under this section if the act that is alleged to constitute the offence

(a) has a legitimate purpose related to the administration of justice or to science, medicine, education or art; and

(b) does not pose an undue risk of harm to persons under the age of eighteen years.

To satisfy the elements of the definition of child pornography, then, Skins would have to depict individuals who are under 18 (or who are over 18 but are portrayed as being under 18) engaged in "explicit sexual activity".  For greater verisimilitude, the producers of Skins elected to hire age-appropriate actors - so there are no 25-year olds playing the part of 10th-grade 15-year olds.  But what constitutes "explicit sexual activity"?  The Supreme Court of Canada, in the R. v. Sharpe (2001 SCC 2, [2001] 1 S.C.R. 45) decision, held that the phrase is to be interpreted in a "restrained" manner, meaning that only "acts which viewed objectively fall at the extreme end of the spectrum of sexual activity – acts involving nudity or intimate sexual activity, represented in a graphic and unambiguous fashion" would qualify.  Of the possibly problematic scenes in Skins which have been mentioned in the news reports, only one would appear to be of any concern under the Canadian Criminal Code definition: according to the Deadline Hollywood report, one scene depicts "a 17-year-old girl who appears to be having sex".  Even there, we should note that the reporter has qualified the description ("appears to be"), whereas the Supreme Court has indicated that off-side depictions must be "graphic and unambiguous".

Imagine for a moment, though, that the Skins depiction was deemed to be "explicit sexual activity" - what then?  There would still be a defence available under Section 163.1(6).  What are the contours of that defence?  Section 163.1(6) has an interesting history: prior to 2005, it used very different language, stating that an accused was to be found not guilty if the material in question had "artistic merit or an educational, scientific or medical purpose".  The R v Sharpe decision noted above, which considered the constitutionality of the entire section, including the "artistic merit" defence, and upheld it, was hugely controversial - and led to the amendment of 163.1(6) into the form in which we find it today, which contemplates a defence where the act alleged to constitute the offence has a "legitimate purpose" (which may include "art") and does not "pose an undue risk of harm" to persons under 18 years of age.

When the Supreme Court considered the earlier version of the defence (the "artistic merit" version), the majority held that the defence "must be construed broadly".  In expanding on that point, Chief Justice McLachlin stated the following:

“artistic merit” should be interpreted as including any expression that may reasonably be viewed as art.  Any objectively established artistic value, however small, suffices to support the defence.  Simply put, artists, so long as they are producing art, should not fear prosecution under s. 163.1(4).

The Supreme Court has not yet reviewed the new "legitimate purpose" defence, but the Ontario Court of Appeal did so last year in R v Katigbak (2010 ONCA 411 (CanLII)).  In Katigbak, the Court of Appeal stated that the post-2005 version of the defence was deliberately narrower than the previous "artistic merit" version, and held

While the shape of that defence has changed with the November 2005 amendments, it remains still an important statutory bulwark against the unconstitutional infringement of the s. 2(b) Charter value.  At the same time, though, Parliament has determined that not all acts relating to education or the arts (or the other enumerated spheres of valued activity) in this context will be immune from prosecution in the interests of buttressing freedom of thought and expression – only those that serve a legitimate purpose will be, and then, only those that do not pose an undue risk of harm to minors. [para. 62]

In para. 63 of the Katigbak decision, the court notes that "while [the defence] is to be liberally construed, [it] must not be construed in a manner that renders the child pornography offences essentially inoperative".  

In assessing whether the creation and broadcast of Skins has a "legitimate purpose" related to art, it would be difficult to conclude otherwise: any of the scenes which are purportedly pornographic exist fleetingly in the context of an episodic television series which contains multiple characters and story arcs - such long-form expression, irrespective of whether it is "good" or "bad" or "high" or "low", is indisputably "art".  The original UK version of the show has, in addition to garnering respectable ratings, received considerable critical praise and has been nominated for and received numerous awards - though those facts are merely indicative (and of the source material only, not the actual US version of Skins), they are indicative of some kind of purpose "related" to artistic activity.

The second step of the Section 163.1(6) defence, that the activity "not pose an undue risk of harm" to persons under 18, is also relatively easy to meet in these circumstances.  If the concern is with the actors themselves, few workplaces are as controlled as the television set of a big-budget production, particularly where underage actors are involved.  The risk of harm to other minors (such as viewers of the show) is, at best, speculative, and such an analysis would need to show multiple causal links which would be difficult in the extreme to demonstrate.

CRTC Requests that CBSC Reconsider "Money for Nothing" Decision

Further to our earlier post on the matter (CBSC Decision on Derogatory Terminology), in what appears to be an unprecedented step, the CRTC (Canadian Radio-Television and Telecommunications Commission) has sent a letter to the CBSC (Canadian Broadcast Standards Council), asking the CBSC to reconsider its decision that the use of the word "f****t" in the Dire Straits' song "Money for Nothing" contravenes the CAB's (Canadian Association of Broadcasters) Code of Ethics and Equitable Portrayal Code.

The text of the CRTC's January 21, 2011 letter to the CBSC can be found here.  It states, in part:

In light of the national scope of this matter, the strong public reaction to the Atlantic Panel’s decision, and the considerable experience of the CBSC in reviewing such matters, the Commission hereby is taking the following two steps:

  1. We are sending you all the correspondence we have received in respect of this matter since your decision was published.

  2. The Commission is of the view that the CBSC should appoint a panel with a national composition to reconsider the matter and review the new correspondence regarding this song.

Such reconsideration should, after seeking submissions from the public by means of a public request for comments via your website, take into consideration all relevant factors, including:

  • the context of the particular wording in the song’s theme and intended message,

  • the age and origin of the song and the date of its performance,

  • the prominence of the contested word in the song and the use of that word over time, and

  • the length of time and frequency that it has been playing on the airwaves.

The letter is particularly notable because the CRTC has no actual authority over the CBSC - the CBSC is a private independent body which does not report to the CRTC.

CCA Status of the Artist in Canada Report

The Canadian Conference of the Arts has released its report Status of the Artist in Canada - An Update on the 30th Anniversary of the UNESCO Recommendation Concerning the Status of the Artist. (The text of the original UNESCO recommendation is available here.)  As the report notes, "Status of the Artist describes a category of legislation and other public policies directed at improving the economic and social status of professional artists".  The report covers a variety of legal areas, including taxation, collective bargaining, federal and provincial policies and health and safety issues.

Canadian Copyright and Campaigns

The CBC is reporting about another copyright flare-up involving Canadian political parties:

The federal Conservatives are rejecting a demand by the CBC to withdraw file footage from the national broadcaster that appears in new Tory ads targeting their political opponents.

The Conservatives did not seek permission to use CBC content in three ads that were posted online and broadcast on TV on Monday, says CBC spokesman Marco Dube says.

This seems to be a bit of a recurring theme with the Conservatives: I had written earlier about the 2007 spat which arose because the Conservatives used footage from the 2006 Liberal leadership debates.  As I noted then:

The incident afforded an opportunity to reflect on a larger issue: should there even be a possibility of infringement in situations like this?  In Canada, this appeared to be a case of prima facie infringement - while American readers might have been thinking that there was at least a plausible argument that the use qualified as "fair use".  But Canada lacks a "fair use" concept, instead having a more limited "fair dealing" concept.  The Copyright Act enumerates certain exceptions to infringement - and if you can't fit yourself into one of them, you've infringed copyright.

I concluded then that the chances that the unauthorized use of footage in a political ad would constitute "fair dealing" under Canadian copyright law would be slim - but that such a conclusion was regrettable, since on freedom of expression grounds it almost certainly should be permissible to use short clips or stills, particularly from political debates and particularly from pool or public broadcaster footage, in the context of a political ad.  The 2007 copyright dispute does not appear to have ever had a publicly disclosed resolution - and I suspect the 2011 dispute will end in much the same way.

DOC Fair Dealing Roadshow

The Documentary Organization of Canada (DOC) is hosting a National Fair Dealing Roadshow.  Next Thursday, January 27, 2011, the Roadshow stops in Toronto and there will be a panel discussion in which I will be participating.  From the DOC's website for the event:

The National Fair Dealing Road Show aims to introduce potential users to DOC’s Copyright and Fair Dealing - Guidelines for Documentary Filmmakers, published in May 2010.  Filmmakers are encouraged to bring their “war stories” on copyright and to engage on case studies presented for discussion. As an exercise in building community-based consensus the panels also discuss copyright myths and argue whether a particular use of copyright-protected material would meet the Fair Dealing exclusion or not.

Company Buys Marilyn Monroe's Image Rights - But For How Long?

It reads like a bit of a stretch to find some "Canadian content", but when CBC News reported late last week that a company had purchased the "image rights" to Marilyn Monroe (the CEO of the company is evidently based in Toronto, and the company appears to have an office in Canada but otherwise appears, from the info on their website, to be primarily a US company) it actually raised some interesting issues about post-mortem publicity rights held by the estates of deceased celebrities.

As has been previously discussed on the Signal, rights in a celebrity's image, particularly for purposes of endorsements and use of the image in connection with merchandise or services, are an element of what in the United States are called "publicity rights" and which in Canada would be covered by the tort of "appropriation of personality" or, in certain provinces, accorded protection by a provincial Privacy Act (British Columbia, Manitoba, Saskatchewan and Newfoundland and Labrador).  Protection for publicity rights in the United States is similarly jurisdiction-dependent: different states offer protection of different forms and duration.  The critical question for purposes of considering rights in Marilyn Monroe's image is the extent to which publicity rights extend to deceased celebrities

In the United States, different states offer differing degrees of protection: for example, California protects the publicity rights of deceased celebrities (for a period of 70 years following death), whereas New York does not recognize such rights.  In Canada, a similar jurisdiction-specific analysis must be undertaken: the Privacy Acts in BC, Saskatchewan and Newfoundland expressly exclude deceased individuals from the protection offered by the Act.  Manitoba's legislation is silent on the matter.  There is common law protection for what we can loosely call "publicity rights" (under the guise of the tort of appropriation of personality), but we don't know for how long such a right persists after a celebrity passes away.  The Ontario Supreme Court in Gould Estate v. Stoddart Publishing Co., 1996 CanLII 8209 (ON S.C.) stated that

The right of publicity, being a form of intangible property under Ontario law akin to copyright, should descend to the celebrity’s heirs. Reputation and fame can be a capital asset that one nurtures and may choose to exploit and it may have a value much greater than any tangible property There is no reason why such an asset should not be devisable to heirs ... and it seems reasonable to conclude that whatever the durational limit, if any, it is unlikely to be less than 14 years.

So, with respect to deceased celebrities in Canada, the most we can conclude is that their heirs do have a protectible interest at common law, and that such right likely lasts for at least 14 years.  Beyond that, we're into the realm of speculation.  Absent a trade-mark registration, the rights which have been purchased in the image of Marilyn Monroe (who died in 1962, almost 50 years ago) may not be enforceable in Canada (at least by means of the common law tort - and certainly are not enforceable in BC, Saskatchewan and Newfoundland and Labrador under their respective Privacy Acts).  For a detailed analysis of these issues, see David Collins' "Age of the Living Dead: Personality Rights of Deceased Celebrities" (39 Alta Law Rev 914 (2001-02)).

Prohibiting Online Impersonations - California and Canada

California recently added a new section (Section 528.5) to their Penal Code which makes it a criminal offence to

knowingly and without consent credibly impersonate[] another person through or on an Internet Web site or by other electronic means for purposes of harming, intimidating, threatening, or defrauding another person

California being California, questions were immediately raised: Is It Now Illegal To Pretend You're A Celebrity Online?  Christina Santana at the JETLaw Blog provides some background details on the impetus for the law, which apparently is intended to address a rather large lacuna in California's legal code: when the leader of a Silicon Valley industry association had his email accounts hacked and illicit emails sent in his name, he was angered by the fact that California law provided no apparent recourse.  The bill, intended to address cyber-bullying and cyber-harassment as well as electronic impersonation, has raised some concerns from civil liberties groups who worry that the law does not adequately allow for parody and political activism (see this BBC News story).  The new Penal Code provision makes explicit reference to "opening an e-mail account or an account or profile on a social networking Internet Web site in another person's name".

 

As this Vancouver Sun story notes, Canadians (whether celebrities or otherwise) already can rely on the Criminal Code to protect against online impersonations (or, in the deathless prose of the Code, "personations"): Section 403 of the Canadian Criminal Code prohibits:

personat[ing] another person, living or dead,

(a) with intent to gain advantage for themselves or another person;
(b) with intent to obtain any property or an interest in any property;
(c) with intent to cause disadvantage to the person being personated or another person; or
(d) with intent to avoid arrest or prosecution or to obstruct, pervert or defeat the course of justice.

Because the language of Section 403 is agnostic (indeed, silent) with regards to technology, the section can presumably be used to prosecute online (im)personation just as readily as physical (im)personations (to date, most prosecutions under Section 403 appear to be for matters such as forged passports and driver's licenses or fraudulently using someone else's credit cards).

US 9th Circuit: Promotional CDs Not Subject to Restrictions on Sale (and Its Canadian Relevance)

In UMG Recordings, Inc. v Troy Augusto, the US Court of Appeals for the Ninth Circuit confirmed that promotional CDs which are distributed by record companies are not subject to restrictions on their sale (hat tip: Barry Werbin). As the court noted, many record companies distribute music CDs to various individuals or organizations (such as music critics and radio stations) in an attempt to develop marketing buzz.  The CDs are often marked with phrases such as "Promotional Use Only - Not for Sale", or even bear printed statements such as:

"This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws."

Universal Music Group was chagrined to find that Mr. Augusto was obtaining promotional CDs and selling them on eBay - and sued Augusto for copyright infringement (on the basis that Augusto had infringed on UMG's exclusive right to distribute the CDs).  Augusto, in defence, raised the US "first sale" doctrine (found in Section 109(a) of the US Copyright Act, which states that "the owner of a particular copy or phonorecord ... is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord" (Section 109(b) nonetheless prohibits the "rental, lease, or lending" of the CD).  UMG argued that there had never been a "sale" of the CDs, only a license on particular terms - terms which were breached by Augusto's subsequent sales on eBay.

The Ninth Circuit Court of Appeals held that no license had been created: there did not need to be a "sale" of the CD in order to trigger the "first sale" doctrine, only a transfer of title - and title had been transferred by the fact that the CDs were mailed out without any prior agreement (or even discussion) with the recipient as to how the CDs were to be handled.  Simply printing words on the CDs was not sufficient to create a license or to otherwise restrict the ability of the recipient to deal with the CDs.  The court also held that, in the alternative, Augusto was able to rely on the provisions of the Unordered Merchandise Act, which results in the CDs effectively being treated as "gifts" and confers on recipients the right to dispose of the merchandise as they see fit.

(Although not much attention was paid to the matter, the Ninth Circuit distinguished software licenses mostly on the basis that software owners are able to "control" what software users/licensees are able to do with their software - and there seems to be an implicit recognition that software users need to affirmatively "accept" a software license and that the software itself can impose restrictions on what users are able to do with the software (such as the use of copy controls).  However, while that analysis might work for "click-wrap" licenses, it is unclear whether it would work for "shrink-wrap" licenses.)

Canadian copyright law does not enjoy the benefit of a codified "first sale" doctrine, though there is some limited recognition of the concept of "exhaustion", which would be functionally equivalent (see previous Signal discussion about the "first sale" doctrine).  Pascale Chapdelaine, in an IPilogue post we previously highlighted, offers some detailed thoughts about Canadian recognition of a first sale doctrine:

The doctrine of first sale finds its roots in the English common law rule against restraints on alienation of property. In effect, it modulates two competing property interests in the copyrighted work, e.g. the intangible exclusive rights of the copyright holder in the copyrighted work and the property rights in the tangible embodiment of this work by the purchaser. One limits the rights of the other and vice versa (although very asymmetrically, as the exclusive rights conferred by copyright impose greater limitations on copy ownership than the reverse).  First sale is also consistent with the normative values of freedom and autonomy that underlie property including chattels, as well as the instrumental goals of copyright to encourage the creation and dissemination of copyrighted works, when viewed from a broader perspective that also encompasses users of copyrighted works.

Pascale notes that Bill C-32 (The Copyright Modernization Act) incorporates references to the first sale/exhaustion doctrine.  Bill C-32 would, if passed in its current form, appear to result in Canadian law being consistent with the decision in UMG v Augusto.  Clauses 4, 9 and 11 of Bill C-32 create what is colloquially referred to as a "making available" right - similar to the exclusive right to distribute a work created by Section 106(3) of the US Copyright Act.  Clause 4 of Bill C-32 would add a new subclause (j) to Section 3(1) of the Copyright Act (Canada), which would result in the section reading as follows [emphasis added]:

3.(1) For the purposes of this Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right...

(j) in the case of a work that is in the form of a tangible object, to sell or otherwise transfer ownership of the tangible object, as long as that ownership has never previously been transferred in or outside Canada with the authorization of the copyright owner,

Clause 11 of Bill C-32 would modify Section 18 of the Copyright Act (Canada) by adding a new Section 1.1 reading as follows:

(1.1) ... a sound recording maker’s copyright in the sound recording also includes the sole right to do the following acts in relation to the sound recording or any substantial part of it and to authorize any of those acts: ...

(b) if it is in the form of a tangible object, to sell or otherwise transfer ownership of the tangible object, as long as that ownership has never previously been transferred in or outside Canada with the authorization of the owner of the copyright in the sound recording.

That would have the effect of making the decision of a Canadian court faced with facts similar to those in Augusto almost certainly the same as the Ninth Circuit's decision (at least with respect to copyright issues - I'll leave commentary on whether Canada has anything similar to the Unordered Merchandise Act to someone else).  The new Section 3(1)(j) and 18(1.1) would give record companies the exclusive right to transfer ownership of the tangible object on which a sound recording was embodied - in other words, the physical CD.  But, they would enjoy that right only if ownership had never previously been transferred with the authorization of the record company.  Note that the language does not require a "sale" - only a "transfer of ownership".  Thus, just as the Ninth Circuit held, a Canadian court would likely determine that ownership of the CD had been transferred when the record company mailed out the promo CDs, and that the recipient of the CD, and anyone to whom they transferred the CD, would be free in turn to sell or transfer the CD. 

Of course, the analysis in the preceding two paragraphs depends on Bill C-32 being passed with the relevant language intact.  In the absence of Bill C-32 being passed, Canadian copyright owners do not enjoy an express "making available" right, so Canadian record companies would appear to be in an even less enviable position than their US counterparts when trying to prevent unauthorized sales of promotional CDs.  The possible arguments they could raise would be limited to a copyright infringement action due to a breach of a license term, or a straightforward breach of contract case; without having done any research on the matter, I'm not sure I can see why Canadian courts would be any more receptive to such arguments than the Ninth Circuit was.  Possibly, if the album or single in question had not yet been made publicly available for sale, the record companies could argue that the work on the CD was "unpublished" and that selling a promotional CD was an infringement of their right to "publish" the work - but surely that would be a very time-limited prospect.  Presumably, then, the brisk trade in promo CDs on online auction sites and in used record stores will continue unimpeded on both sides of the border.

Online Celebrity Endorsements in Canada, the US and the UK

In the UK, the Daily Mail is reporting that the Office of Fair Trading (OFT) will be monitoring celebrity tweets for undisclosed paid endorsements (hat tip: THR, Esq.):

Dozens of celebrities, including actress Liz Hurley and singer Lily Allen, face possible court action over claims that they are endorsing luxury items on their internet blogs and Tweets without declaring that they have been paid by the companies concerned.

Actors, pop stars and TV presenters who fail to mention that they have a financial interest in ‘plugging’ goods such as cars or perfumes online could be contacted by the Government’s consumer watchdog in the coming weeks. ... [OFT] enforcement officers are examining possible breaches of the law by celebrities involved in secret deals with manufacturers of luxury goods.

The story appears to be referring to the UK's Consumer Protection from Unfair Trading Regulations 2008 (see also this Guidance published by the OFT), which make it an unfair trading practice for a celebrity to promote a product without disclosing that the promotion has been in some fashion compensated (which appears to include the provision of free goods).

The United States appears to be, by far, the market leader (so to speak) in regulating online celebrity endorsements, particularly with reference to social media.  In 2009 the US Federal Trade Commission published its guidelines concerning celebrity endorsements and testimonials:

Suffice it to say that paid endorsements in the United States communicated via social media (such as Twitter or Facebook) are required by the FTC Endorsement Guides to make mention of the fact that the endorser is being compensated for their statement (no form of disclosure is mandated, but the FAQ suggests using the hash tag “#paid ad” for tweets).

Suffice it also to say that Canada's legislative and regulatory regimes do not address these matters in anywhere near the detail found in the FTC Guides.  While the Competition Act (Canada) prohibits making of a false or misleading representation in connection with the sale of a product, we're left to query whether not disclosing that you've been paid to endorse a product (or given free samples of a product in the expectation that you will promote its use) constitutes a "misrepresentation" (and a "material" one at that).

CBSC Decision on Derogatory Terminology

The Canadian Broadcast Standards Council (CBSC), the private body which administers the codes of standards and conduct created by the Canadian Association of Broadcasters (CAB), has rendered a decision (via its Atlantic Regional Panel) concerning the broadcast of the unedited version of the song “Money for Nothing” by Dire Straits by a radio station in St. John's, Newfoundland and Labrador.  The CBSC has made the full text of the decision available, as well as having issued a media release about the decision.  (The decision was made in October 2010, but not publicly released until January 2011.)

The decision is notable for a couple of reasons.  First, it represents confirmation from the CBSC that use of the word "f****t" (I confess I'm not sure what the exact etiquette of using derogatory words in an explanatory context on a law firm website is, so I'll leave it to readers to click through to the decision if they feel the need to read an unexpurgated usage of the term) contravenes Clause 2 of the CAB Code of Ethics, and Clauses 2, 7 and 9 of the CAB Equitable Portrayal Code (all of which counsel against the use of language which is abusive, offensive, derogatory or results in negative portrayal on the basis of, among others, sexual orientation).

Additionally, the decision makes reference to Clause 9b of the CAB Equitable Portrayal Code, what I'll call the "evolution of language" clause, which reads as follows:

It is understood that language and terminology evolve over time. Some language and terminology may be inappropriate when used with respect to identifiable groups on the basis of their race, national or ethnic origin, colour, religion, age, gender, sexual orientation, marital status or physical or mental disability. Broadcasters shall remain vigilant with respect to the evolving appropriateness or inappropriateness of particular words and phrases, keeping in mind prevailing community standards.

As the decision notes, the wording of that clause of the Code "does not restrict the direction of the evolution, which may, in some cases, head toward greater permissiveness, and in others greater restrictiveness".  In the case of "Money for Nothing", released in 1985, the impugned word "even if entirely or marginally acceptable in earlier days, is no longer so ... it has fallen into the category of unacceptable designations".  In other words, the fact that the song had been broadcast for nearly twenty-five years without formal objection could not be relied upon to justify contemporary broadcast.  (The decision makes reference to previous decisions by other CBSC panels which concluded that the word "f**" could be acceptable in certain broadcast contexts, though the Atlantic Panel seemed to be less than thrilled with those decisions.)  The lyrics in the song were controversial even when it was first released - and alternative edits, with the offending word either garbled or entirely removed, are available, and the Panel noted that broadcast of such an altered version of the song would not contravene either Code.

UPDATE: Graham Purse, at the University of Alberta Faculty of Law blog, provides a run-down of other CBSC decisions which examined song lyrics.  Radio guy Alan Cross has written a lengthy post which explores the workings of the CBSC from a broadcaster's perspective (hat tip: Andrew Potter).

OBA Entertainment Media and Communications Law Section CLE

The Ontario Bar Association's Entertainment Media and Communications Law Section is presenting a breakfast CLE on Thursday, January 27, 2011 entitled Collective Cohesion: Understanding the hurdles & differences between the WGA/WGC and SAG/ACTRA collective agreements.  Christina Buchli, a partner here in our Entertainment Law Group, will be speaking on the key differences between the collective bargaining agreements of the WGC and the WGA, ACTRA and SAG, and will explain how Canadian production companies can hire members of the American unions and guilds to work in the Canadian marketplace.

Settlement Reached in Canadian Music Industry "Pending Lists" Lawsuit

A settlement, which remains subject to court approval, has been reached in the "Pending Lists" class action copyright infringement lawsuit: Major Canadian Record Labels Reach Agreement Regarding Payments to Songwriters and Publishers.  From the press release:

EMI Music Canada Inc., Sony Music Entertainment Canada Inc., Universal Music Canada Inc. and Warner Music Canada Co. have reached an agreement to pay songwriters and music publishers for outstanding "pending list" claims and to resolve a proposed class action lawsuit.

The current music licensing system allows for recordings to be issued without preclearance from copyright owners but subject to licensing agreements with CMRRA and SODRAC, who represent most publishers and songwriters. The vast majority of royalties owing for such sales have always been and will continue to be paid promptly by the record labels. The proposed agreement settles all alleged copyright infringement liability related to that small minority of unlicenced works that have accumulated over the years. The proposed agreement also establishes a new mechanism that will expedite future payments of mechanical royalties to music rights holders.

As also noted in the press release, the "settlement is a compromise of disputed claims and is not an admission of liability or wrongdoing by the record labels".  Michael Geist is reporting that the settlement involves a $45 million payment (though that number doesn't appear in the press release).  The amended Statement of Claim in the class action can be found here.  The plaintiffs' lawyers maintain a website with details about the lawsuit here.  It will be particularly interesting to see the details of the "new mechanism" which has been agreed to, which, in the words of Alain Lauzon, the General Manager of SODRAC, "will keep the pending list problem from building up again".

The Pending Lists lawsuit became the subject of online debate about a year ago, when Michael originally reported on it (Canadian Recording Industry Faces $6 Billion Copyright Infringement Lawsuit), which prompted a fairly blistering response from Barry Sookman (Geist inflates pending lists claim to vilify record labels).  The legal press also got in on the action, with The Lawyers Weekly providing coverage.

UPDATE (1/10/11 - 1pm): The Harrison Pensa website for the case has been updated to include copies of the various settlement agreements with each of the defendants.

Bill C-32: Commentary Round-up

Selected materials for consideration about Bill C-32 (The Copyright Modernization Act):

Epstein on Independent Film Financing

Edward Jay Epstein, author of such much-reads as The Big Picture: Money and Power in Hollywood and the upcoming The Hollywood Economist: The Hidden Financial Reality Behind the Movies, has written a great post which offers one of the most lucid explanations I've come across regarding how independent films are financed: Why Indie Movies Are An Endangered Species (the post isn't nearly as gloomy as the title suggests).

Epstein writes for a primarily US-based audience, but the information he provides is just as useful for Canadian producers and their advisers.  The Ontario Media Development Corporation offers Canadian independent film producers the opportunity to download for free the Canadian Production Finance Handbook (written by Kathy Avrich Johnson), which is an absolute treasure trove of information, including multiple precedent agreements.

US Federal Tax Incentives for Film and TV

THR, Esq. reports on news that the US Congress has renewed a federal tax incentive program through 2011: Production Tax Incentives Extended, but Should Hollywood Care?  (The text of Section 181 of the US Internal Revenue Code can be found here.)  Unlike Canadian tax incentives for film and television productions, which are structured as tax credits (meaning that the eligible applicant receives an actual payment from the government), the US federal incentive is structured as a tax deduction -  meaning that it can be used only to lower taxes which would otherwise be payable.  The THR, Esq. article includes an interesting debate between various entertainment lawyers, some of whom laud the federal credit and others who question its practical utility:

At the most basic level, cautions tax counsel Bernard Topper of New York entertainment law firm Frankfurt Kurnit Klein & Selz, people confuse tax deductions with tax credits. Credits reduce taxes dollar for dollar: a $100 tax credit reduces your taxes by $100.

In contrast, a deduction comes off of taxable income. That results in a lower savings. For instance, if you’re being taxed at 30%, then a $100 tax deduction saves just $30 in taxes.

Many state and foreign production incentives are tax credits, whereas Section 181 provides a deduction, which is less valuable. Still, says Topper, the combination of federal and state incentives is “fairly powerful.” He asserts that Section 181 has helped reduce foreign runaway production – the flight of film production to foreign countries.  ...

[Schuyler Moore] couldn’t disagree more. Where Selz sees a provision that’s “very valuable” to investors and has been used “fairly aggressively,” Moore sees “kind of a hill of beans” for the independent world.

Why the difference in opinion? Section 181 provides investors with “passive losses,” since most don’t actively participate in making the movie. Those passive losses can only be offset against passive income, such as income from the movie itself or from certain other investments, such as real estate or oil and gas wells.

For previous Signal discussion about US and Canadian tax incentives for film and TV projects, see here.

Music Making Money

A round-up of music-related items which have collected in my Reader over the last little while:

Tamera Bennett posted a couple of items of interest relevant to music law:

As sales of recorded music continue to fall (which is to say, sales of physical media are falling faster and further than increased digital sales can make up for), of increasing importance to artists and performers are other forms of revenue:

For additional cheery reading, check out New BPI Report Shows Illegal Downloading Remains Serious Threat to Britain's Digital Music Future (hat tip: Entertainment Law Reporter).

Big Bang Theory and Negotiating TV Star Salaries Redux

Following up on an earlier post, it appears that cast negotiations for all of the lead roles in the hit comedy The Big Bang Theory have been completed.  Simon Helberg, who plays Howard Wolowitz, was reported by Deadline Hollywood to have secured a salary bump from around $40,000 per episode to in the range of $100,000 per episode.  Kunal Nayyar, who plays Rajesh Koothrappali, is also reported by Deadline Hollywood to have closed a deal for a salary bump to around $75,000 per episode (headliners Sheldon, Leonard and Penny are reported to be in the $200,000 per episode range).  At twenty-two episodes per season, that means that Nayyar would be grossing north of $1.5 million.

As discussed in the earlier post, these negotiations (and their reported results) are fascinating from a variety of standpoints, but particularly because of the dynamic at play amongst the various actors.  It appears from reports that the three leads closed their deals either simultaneously or around the same time - and that either the offers extended to them or the demands they made were on a "favoured nations" basis (that is, all three were getting the same terms).  Interestingly, Wolowitz and Koothrappali (sorry, I have trouble using their real names) evidently elected not to take a favoured nations approach, at least vis-a-vis each other - which seems to have worked out particularly well for one of them.

Visual Artist's Resale Right / Droit de Suite in Canada

Following up on an earlier Signal post (Visual Artist's Resale Right / Droit de Suite in Canada), the 1709 Blog has posted two additional items on the topic which are worth attention:

Oddly enough, the discussions in Canada about introducing an artist's resale right even prompted commentary on the matter from Peter Worthington, writing in the Toronto Sun: This artist doesn't want 'greedy' handout.  The Liberal Party of Canada also included the introduction of a resale right as one of their highlighted copyright reform proposals.

2010 CLawBies - Canadian Law Blog Awards

We were chuffed to learn that this blog was a co-winner of the Best New Law Blog Award in the 2010 CLawBies (Canadian Law Blog Awards).  The co-winners of the award, for whom and with whom we're equally chuffed to share the prize, were the Toronto Estates & Trusts Monitor, published by Megan F. Connolly and Adam’s Law Blog, published by Toronto criminal lawyer Adam Goodman.

Congratulations to all of the CLawBies nominees and winners, and we encourage readers to check out the excellent Canadian Law Blogs list of - wait for it - Canadian law blogs.  Special thanks to Steve Matthews and Jordan Furlong, titans of the Canadian law blogging scene, for putting in the time and effort necessary to make the CLawBies a success each year.  We endeavour to spend 2011 crushing our blogging competition making the Signal an increasingly timely and informative read.