How to solve the digital download problem in a flash

Here's another attorney guest post. Schuyler Moore is a well-known film finance lawyer at Stroock and an adjunct professor at UCLA Law School and the UCLA Anderson School of Management. He's now a regular commentator for the print Hollywood Reporter, where this article first appeared.

By Schuyler M. Moore

Oh, what a shame it is that the U.S. is a Third World country -- at least when it comes to Internet download speeds for massive files like movies. 

How Veoh's demise could impact copyright law

By Eriq Gardner

We were as shocked as everyone to hear Veoh is laying off employees and heading towards bankruptcy. Just a few years ago, the company seemed poised to challenge Google's YouTube as the go-to video-sharing website, having attracted major funding, including tens of millions of dollars from Time Warner, Goldman Sachs and former Disney chairman Michael Eisner, who sat on the company's board.

Perhaps more importantly, Veoh emerged as an underground hero among many copyfighters after beating Universal Music Group in court in the biggest signal yet that the DMCA provides a copyright infringement "safe harbor" to tech companies so long as strong take-down measures are in place. (YouTube is still battling on this front against Viacom.)

Cheech and Chong win back domain name

By Matthew Belloni

A New Jersey man's dream of owning a Cheech and Chong domain name has gone up in smoke.

The pot-loving comedy duo has wrested cheechandchong.com away from Ryan Tracy and his Traced, Inc., winning a WIPO administrative panel ruling that the domain was registered in bad faith to take advantage of Cheech Marin and Tommy Chong's famous trademark.

WIPO panelist William R. Towns found that Traced registered the name "to intentionally attract Internet users to its website for commercial gain, by creating a likelihood of confusion with the (duo's) mark as to source, sponsorship, or affiliation," according to the 11-page ruling released Friday.

It's pretty standard for WIPO to side with well-known entertainers against those who have piggy-backed on their exact names. (Madonna.com and  tomcruise.com come to mind as examples of domains awarded back to their namesakes.)

But there's a twist in this case. Traced first registered the domain in 1998, years after Marin and Chong had stopped performing as the duo, and it was initially operated as a fan forum without any merchandise for sale or links to ads. Even though Marin and Chong objected to the site in 2004, they apparently changed their minds and consented in 2006, and Tommy Chong even started providing merchandise to be sold on the site. Only when Cheech and Chong decided to get back together and tour in 2008 did they re-assert their objections, which eventually led to the filing of a WIPO complaint in September.

The arbitrator, interestingly, didn't seem to care about the previous consent, ruling that "while (Traced) claims to have obtained the (duo's) consent for its comercial use of the domain name in 2006, such consent, if any, was revoked."

The ruling sends a pretty clear message to reps for talent: even if you might have looked the other way and allowed a fan site to use your client's famous name, you can change your mind if you don't like what they're doing.  

Cheech and Chong were together repped by Marvin Gelfand and a team at Beverly Hills' Weissmann Wolff firm. Traced was repped by solo practitioner Michael J. Brown.

UMG motion to dismiss Allman Brothers case rejected

By Eriq Gardner

A New York federal judge has agreed to send to trial a major case concerning the royalties that record companies should paid musicians on sales of digital downloads.

Members of the Allman Brothers Band have filed multiple lawsuits on this front against two major labels, Universal Music Group and Sony. Until now, the band was having a tough time getting a claim heard — a district judge had previously dismissed the lawsuit for failing to state a proper claim — but earlier this week, Judge Kevin Castel denied a motion to dismiss by UMG and ordered discovery to proceed. The case is now scheduled to go to trial in 2010.

At issue is whether online sales in arenas like iTunes constitute "distribution" or "licensing" arrangements. If the former, a digital sale will be treated much like the sale of a CD, and UMG would only have to fork over a few cents to the band per transaction. The band argues that because UMG doesn't have to pay physical packaging costs and didn't even "spend a dime marketing them or promoting the band," a digital sale is more like a license. As such, UMG would be required to make a much higher 50% royalty payment.

Earlier this year, producers of some early Eminem works challenged and lost on this same issue. A different jurisdiction offers the potential for a new outcome, however.

Interestingly, Judge Castel's ruling comes the same week that music publishers are arguing they deserve more compensation from digital downloads. Publishers already get statutory rates on sales of downloads, but are now arguing that ASCAP and BMI should be able to collect performance rights fees as well. In other words, hardly anything has been settled about how to slice that digital sales pie.

Don't hold your breath for The Beatles on iTunes

By Eriq Gardner

Today is a big day for fans of John, Paul, George and Ringo.

Fans will be snapping up the video game Beatles: Rock Band, as well as re-mastered versions of the band's albums. But 09/09/09 might not be quite as eventful as many had hoped.

On this same day, Apple Inc. held a big event to introduce new developments to the iPod and the iTunes media player. The spectacular timing led many frothing in anticipation that the catalog of The Beatles would finally be available for digital purchase on iTunes. After all, the marketing opportunity was ripe. And Yoko Ono had been sending strong hints.

Alas, like similar rumors of a deal from prior years, it's not meant to be.

Paul LiCalsi at Mitchell Silberberg & Knupp represents Apple Corps Lld. — the company founded by The Beatles in 1968 to manage the band's financial interests — and says he hasn't been a part of any negotiations with the other Apple. If the band had struck a deal with Steve Jobs, LiCalsi would probably know.

And it doesn't sound like we should expect songs by The Beatles to appear on iTunes anytime soon either.

Most people assume that the difficulty arises from bad blood between Apple Inc and Apple Corps. over the use of a fruity trademark. After Apple Inc got into the music business with its iPod, Apple Corps sued, contending the computer company had violated an agreement. But that dispute was resolved a couple years ago, and in recent interviews, Paul McCartney has expressed some hope that the band's songs would eventually be sold through iTunes.

No, the hang-up to a deal seems to be ongoing animosity between Apple Corps and EMI, the company that owns the master recordings. At issue is what percentage of royalties EMI should pay to the band, a problem we've seen come up in ongoing legal disputes between musicians and labels. "If one (EMI) employee decides to take it home and wap it on to the Internet, we would have the right to say, 'Now you recompense us for that,'" says McCartney. "And they're scared of that."

How the RealDVD ruling could reshape copyright law

By Eriq Gardner

Hollywood studios got a huge win yesterday when Judge Marilyn Hall Patel of the Northern District of California issued a preliminary injunction against the release of a technology produced by RealNetworks that lets consumers save copies of DVDs to their computer hard drive.

The 58-page decision is long, complicated, and likely to be very important in the copyright battles ahead.

This case between studios and Real has more at stake than just a singular product the movie industry fears will make it easier for folks to trade copyrighted materials online. More than 10 years ago, Congress passed the Digital Millennium Copyright Act with a key provision —"1201" — that prohibited circumvention of access controls on copyrighted material. Since its passage, there's been a lot of confusion about the boundaries preventing circumvention. For example, if a company licenses use of a technology and makes an application that falls within "fair use," is the company still liable for violating the DMCA?

In issuing the injunction yesterday, Judge Patel says yes. Even though RealNetworks licensed the CSS encryption technology used to protect DVDs, the court finds that RealNetworks didn't license the technology from the studios themselves and further acted outside the scope of its license. Judge Patel also takes a broad view of the 1201 statute, ruling that it is "aimed at circumvention tools that control access to protected works...not, as Real asserts, solely intended to thwart hackers."

That brings the discussion to Real's claim that it was giving consumers a fair use of the DVD product--that consumers have a right to make backup copies. And here, Judge Patel, famous for her ruling against Napster nearly 10 years ago, makes a startling declaration that has the potential to reshape copyright law.

In 1984, in the famous "Sony/Betamax case," the Supreme Court outlined various fair uses of copyrighted material and gave a safe haven to technological innovators. In yesterday's decision, Judge Patel writes:

• "The court begins its analysis by noting that Sony came down before the DMCA was enacted and, thus, is superceded to the extent that the DMCA broadened copyright owners' rights beyond the Sony holding."

Judge Patel accepts the theory that the DMCA, to large extent, overruled Sony. "So while it may well be fair use for an individual consumer to store a backup copy of a personally-owned DVD on that individual's computer, a federal law has nonetheless made it illegal to manufacture or traffic in a device or tool that permits a consumer to make such copies," she writes.

We think this is a very important decision that may get some review at the appeals circuit. In the meantime, it could not only shape how companies deal with DVDs, but also how application developers treat a range of other products, from videogames to iPhones. Stay tuned.   

Patent fight brewing over podcasting and downloads

By Eriq Gardner

Patent troll alert!

VoloMedia has announced it's been awarded a patent for a method for "providing episodic media," which it claims covers podcasting and all episodic media downloads.

Company CEO Murgesh Navar made the announcement on its website in somewhat of a bizarre fashion.

Navar starts out by introducing his patent before getting a little defensive. "I do not wish to debate the merits of the U.S. patent system, but just acknowledge there are two sides to the issue of patent awards..."

If that's not a hint that VoloMedia plans to demand licensing fees and sue if necessary, how about this? "VoloMedia's intent is to continue to work collaboratively with key participants in the industry, leveraging its unique range of products to further grow and accelerate the market," Navar writes. (boldface ours)

Not convinced? OK, how about the name of a possible target?

"There will come a day when all the content on Hulu is available as an episodic download," he writes.

In other words, if Hulu ever decides to switch from commercial-supported streaming to paid downloads, VoloMedia will be watching. But forget Hulu. We just downloaded the second season of Mad Men from the iTunes Store. VoloMedia probably thinks it deserves a cut, of course. In an interview with NewTeeVee, Navar says he's in talks with Apple and TV networks, among others, "about growing the business and market."

Growing whose business?

Google legal eagle flies to Twitter

By Eriq Gardner

This one's not entirely shocking. Twitter has poached Google's Alexander Macgillivray to be its general counsel.

Macgillivray served as deputy general counsel for products and intellectual property at Google. At the company, the 36-year-old lawyer was involved in crafting the settlement with book publishers and authors and was part of the team fighting big copyright lawsuits, including Viacom's claims against YouTube.

Twitter hasn't gotten into as much legal trouble so far. 

St. Louis Cardinals manager Tony La Russa sued Twitter earlier this year for trademark infringement after an impersonator made comments using La Russa's name. The case was later settled. Twitter has also been on the periphery of a defamation battle involving Courtney Love, although the service itself was not a defendant in that lawsuit.

However, it's fair to say that Twitter will be seeing more legal action soon. For instance, Twitter users are increasingly using the service to share music and share videos with each other. The development of Twitter apps has been a little slow, but if the company plans to build out its network, open it to developers, and realize the full potential of micro-blogging, having a seasoned lawyer like Macgillivray on board makes sense.

Breaking: Supreme Court Turns Down Cablevision Case

By Eriq Gardner

This just in: The Supreme Court has denied a writ of certiorari in Cable News Network, Inc., et al., v. CSC Holdings, Inc.

This means that the landmark ruling last year by the 2nd Circuit that legitimized Cablevision's plan to allow subscribers to store TV programs on the cable operator's computer servers instead of on a hard-top box has been allowed to stand.

This is a big blow to the entertainment industry. 

Content holders and broadcast networks pushed hard on the case, arguing on appeal that this was the most important copyright case since the Supreme Court defined the boundaries of fair use in 1984 in the Sony Betamax case. The Supreme Court's decision today to deny cert may make it easier for time-shifting technologies to appear in the marketplace and may also threaten burgeoning video-on-demand licensing revenue throughout Hollywood.

UPDATE: No satisfying conclusion just yet in Citizens United v. Federal Election Committee, the case concerning whether a documentary about Hillary Clinton should have been regulated by campaign finance laws. The Supreme Court announced that the case will be reargued and decided next term. 

According to Tom Goldstein at the SCOTUSblog, it's very rare that the Court doesn't resolve all of its cases before the end of a term. 

In its announcement today, the Court directed the parties to address the validity of Section 203 of the Bipartisan Campaign Reform Act of 2002, indicating that it plans to take a broader look at campaign finance laws in relation to free speech.

Piracy verdict still reverberating

By Eriq Gardner

Last week's verdict in the Jammie Thomas-Rasset case continues to generate reaction.

The guilty defendant and her lawyer appeared on CBS' "The Early Show" to tell her story and arouse some sympathy.

Meanwhile, the RIAA is slowly becoming less shy about touting the verdict. On its "Music Notes" blog, vp Joshua Friedlander offers an interesting interpretation of the verdict, saying we can learn the views of a majority of Americans from this 12-person, industry-outsider jury. He writes: "Despite the protestations of some pundits who suggest that the digital world should resemble some kind of new wild west, the majority understands and believes that the same laws and rules we follow every day apply online."

The case has received so much attention that it might actually be overshadowing a court decision in Germany that's arguably more consequential.

Thomas-Rasset was accused of sharing copyrighted songs on the Kazaa network. But these days, most pirates have largely eschewed massive peer-to-peer file-sharing services like Kazaa in favor of private torrent networks or nimble hosting services like Rapidshare and Megaupload connecting users to desired copyrighted material on a much more ad hoc basis. 

In all the talk about the Thomas-Rasset verdict, and what the jury's expression actually meant, few have devoted attention to the fact that Jammie was caught using a P2P client that's seen as being largely obsolete in many quarters.

Which brings us to yesterday's decision in Germany, where a regional court in Hamburg ruled that Rapidshare is "now responsible for making sure that none of the music tracks concerned are distributed via its platform in the future. This means that the copyright holder is no longer required to perform the ongoing and complex checks."

In recent years, Rapidshare has emerged as a giant in the file hosting world, and while there will no doubt be services that take its place, at least this verdict targets a technology that's in vogue in the piracy community. In the meantime, Rapidshare COO Bobby Chang downplays the ruling as not being a "breakthrough" because he thinks "the courts of appeal tend to restrict the scope of the decisions made by the lower courts."

We'll see.