Copyright Law Blog: Exclusive Rights

Category Archives: Compulsory License

Bombay High Court: Authority to grant compulsory licenses exclusively vested with Copyright Board

Shourin Sen - 9 February 2010 – 9:00 am

Filed under Compulsory License, Copyright Royalty Board, India, Music, Royalty Collection Societies, Sound Recordings

Music Choice India Private Limited v. Phonographic Performance Limited, Appeal No. 150 of 2009 in Suit No. 2124 of 2007 (High Court at Bombay 2010)

Music Choice India wanted to launch a 24 hour music channel in India that would only play music and static graphics. The broadcaster entered into negotiations with Phonographic Performance, a royalty collection society, for the necessary rights. The negotiations stalled (with Music Choice offering 4-7% of prorated net profits and Phonographic Performance demanding 50% of end user price), and in March 2007 Music Choice filed an application for a compulsory license under section 31(1)(b) of the Indian Copyright Act to the Copyright Board at New Dehli.

It can take over two years for the Copyright Board to rule on an application. So in August 2007, Music Choice also filed suit in a trial court in Bombay seeking, inter alia, a declaratory judgment that it had a license to begin broadcasting immediately on the condition that it pay the compulsory royalty rate set by the Copyright Board, when the Board was able to rule on its application; or in the alternative, that the Court allow for it to pay the 4-7% of prorated net profits it proposed in negotiations or another amount set by the court until the Board had a chance to rule on its application. The trial court dismissed for lack of jurisdiction.

On appeal, the Bombay High Court affirmed, holding that the district court did not have jurisdiction to hear the suit. The High Court found that, although it could hear appeals from the Copyright Board on compulsory license applications, it did not have jurisdiction to hear a similar suit brought from a Bombay trial court. Section 9 of the Code of Civil Procedure states that “[c]ourts shall have jurisdiction to try all suits of civil nature excepting suits of which cognizance is either expressly or impliedly barred.” The Bombay High Court found that the legislation enabling the compulsory licensing regime was a special statute and a self-sufficient piece of legislation, which barred general civil trial courts from hearing applications.

(h/t Prashant Reddy at Spicy IP)

Supreme Court denies cert in Arista Records v. Launch Media

Shourin Sen - 26 January 2010 – 1:26 pm

Filed under Compulsory License, Copyright Royalty Board, Digital Audio Transmission, Music, Supreme Court

On Monday, the Supreme Court denied Sony BMG’s cert petition in Arista Records, LLC v. Launch Media, Inc., 2009 WL 2568733 (2d. Cir. 2009). If a person offers an “interactive service,” as defined in the Act, she must pay an individual licensing fee for musical selections and not just the compulsory license rate set by the Copyright Royalty Board. The general rationale behind the provision is to ensure that webcasters must individually clear songs if they offer an on-demand musical service, not just pay the compulsory royalty rate.

Launch Media provided an internet radio site that allowed users to create stations from their preferences, such as a genre, artist or song. Sony argued it was an interactive service, defined in the Act as a service “that enables a member of the publc to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording …, which is selected by or on behalf of the recipient.”

The Second Circuit found that Launch Media service was not an “interactive service” and that the company only needed to obtain a compulsory license to offer musical selections. Sony BMG petitioned the Supreme Court, and was denied.

2d Cir. finds that Yahoo’s LAUNCHcast is not an interactive service; entitled to CRB compulsory licensing regime

Shourin Sen - 25 August 2009 – 9:00 am

Filed under Compulsory License, Digital Audio Transmission

Arista Records, LLC v. Launch Media, Inc., 2009 WL 2568733 (2d. Cir. 2009)

The Second Circuit (Calabresi, Droney, Wesley writing) released a delightfully brief decision on Friday that addressed the definition of an “interactive service” for purposes of 17 U.S.C. 114(d)(3)(C).

Launch Media, Inc. provided an internet radio site that allowed users to create stations from their preferences, such as a genre, artist or song. BMG brought suit alleging that it was entitled to an individual licensing fee, and not just the compulsory license rate set by the Copyright Royalty Board, because the web service was an “interactive service.”

Section 114(j)(7) defines an “interactive service” as a service “that enables a member of the public to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording …, which is selected by or on behalf of the recipient.” BMG argued a bright line rule, that “under the DMCA there is no tipping point for the level of influence a user must assert before the program becomes an interactive service-all that matters is that the alleged copyright infringer is “transmi [tting] … a program specially created for” the user.” The Court disagreed:

Justice Oliver Wendell Holmes once wrote that “[a] word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used.” Towne v. Eisner, 245 U.S. 418, 425 (1918) (internal citation omitted). Holmes’s observation seems pertinent here. The meaning of the phrase in question must significantly depend on the context in which Congress chose to employ it.

The Second Circuit’s decision was ostensibly based on the theory underlying the structure of 114(j)(7). The Court found that the web service as designed would not provide a market substitute for the purchase of digital downloads.

Based on a review of how LAUNCHcast functions, it is clear that LAUNCHcast does not provide a specially created program within the meaning of § 114(j)(7) because the webcasting service does not provide sufficient control to users such that playlists are so predictable that users will choose to listen to the webcast in lieu of purchasing music, thereby-in the aggregate-diminishing record sales.

First, the rules governing what songs are pooled in the hashtable ensure that the user has almost no ability to choose, let alone predict, which specific songs will be pooled in anticipation for selection to the playlist. . . Second, the selection of songs from the hashtable to be included in the playlist is governed by rules preventing the user’s explicitly rated songs from being anywhere near a majority of the songs on the playlist. . .Finally, after navigating these criteria to pool a hashtable and generate a playlist, LAUNCHcast randomly orders the playlist. This randomization is limited by restrictions on the consecutive play of artists or albums, which further restricts the user’s ability to choose the artists or albums they wish to hear.

What constitutes a fatal error on a notice of intention to use a compulsory license?

Shourin Sen - 1 April 2009 – 9:00 am

Filed under Compulsory License, Mechanical royalties

EMI Entertainment World, Inc. v. Karen Records, Inc., 2009 WL 805264 (S.D.N.Y. 2009)

Judge Richard J. Holwell of the Southern District of New York issued an order this past Friday that addressed what is a fatal mistake on a notice to use a composition under the 17 U.S.C. § 115(b) compulsory license provision. The bottom line? Don’t send a permissions request if you’re actually sending a notice.

Karen Records, a Latin recording label, attempted to give notice that it planned to use four different EMI songs under Section 115(b). After a series of disputes concerning unpaid royalties, EMI brought suit for copyright infringement, alleging, among other things, that Karen’s notice filings were invalid.

Nonfatal errors

Karen’s attempted notice for three songs featured:

Karen’s name and contact information
the names and authors of the compositions for which Karen sought licenses
the publishers that owned the rights to the compositions
the album the songs would be included on
the notation “Please issue and release license from 7/6/99”

Judge Holwell found that while Karen’s letter didn’t fulfil all of the requirements set forth in 37 C.F.R. 201.18, the errors weren’t fatal:

True, Karen’s form requests did not comply with § 201.18′s requirements to the letter. They were not, for example, signed by “a duly authorized officer or agent of the corporation,” § 201.18(e)(1), nor were they entitled “Notice of Intention to Obtain a Compulsory License for Making and Distributing Phonorecords,” § 201.18(d). But as already noted, such errors are not fatal to a notice unless they “materially affect[ed] the adequacy of the information required to serve the purposes of [17 U.S.C. § 115(b) ].” 37 C.F.R. § 201.18(g). Karen’s notices clearly indicated its intent to acquire mechanical licenses to EMI’s works, specifically identified the compositions it sought licenses for (as well as the albums those compositions would appear on), and identified Karen with enough specificity for EMI to easily enforce its rights (witness this suit). The purposes of § 115(b) were served.

Fatal errors

A forth song was requested using a letter that was different than the previous notice in three respects:

the letter was titled “Request for Mechanical License”
the request contained a line for “publisher[']s approval” that Harry Fox never countersigned
the form didn’t contain the “Please issue and release …” language

Judge Holwell found that the notice was defective and no compulsory license was granted:

The Court next turns to La Colegiala. The form Karen faxed to Harry Fox for this song differed in important ways from the forms it sent to Harry Fox for Cuando Acaba el Placer, Corazón Partío, and Fuiste Mia un Verano. Unlike the earlier forms, the La Colegiala form explicitly requested a license. Furthermore, it did not contain the earlier forms’ “Please issue and release …” language, and thus never expressed a clear intent to make use of La Colegiala. The Court concludes that as a result of these differences, Karen never acquired a license for this composition.