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Month: November, 2012
Copyright Termination For ’70s Hits Won’t Spark Lawsuit Fever
Category: Press | Friday, November 30th, 2012 | Comments Off on Copyright Termination For ’70s Hits Won’t Spark Lawsuit Fever
Law360, New York (November 26, 2012, 10:00 PM ET) — Musicians who recorded hit songs in the late 1970s will gain the right to reclaim ownership of their work starting in January under a 1978 copyright law provision, and while record labels are expected to fight to retain control of lucrative music, 2013 is unlikely to bring a flood of litigation, attorneys said.
Revisions to the Copyright Act that took effect at the beginning of 1978 gave authors of new works the ability to terminate the assignment of rights to entertainment companies after 35 years. As a result, termination rights will become available on Jan. 1, 2013, for any sound recordings for which the rights were assigned on Jan. 1, 1978, and will kick in for other 1978 works throughout the year.
Although termination rights give artists the potentially valuable ability to control distribution of their works — which labels will seek to curtail as much as possible — the cost of litigation and other factors likely will mean a court battle over the issue may not arise for some time, said Paul Fakler of Arent Fox LLP (/firms/arent-fox).
“There are very few albums that are worth so much money where it even remotely makes sense to fight with the label,” he said. “There are so many things that have to line up to get one of these cases that it could be we don’t see one for a couple of years, even though 2013 is here.”
Rather than taking the fight to court, it is far more likely that a copyright termination notice from an artist will serve as a jumping-off point for negotiations with the label on a new contract, said Eric Custer of Manatt Phelps & Phillips LLP (/firms/manatt-phelps).
“New deals will be made, and it won’t lead to litigation unless the artist really can’t stand their label or really wants to take control of their work,” he said. “There will be some examples where people want to prove a point, but whether the case will proceed to a resolution on the legal issues is hard to say.”
Congress created the copyright termination right to allow authors to renegotiate their deals once the true value of the work becomes known, since many artists often sign over their copyrights to record labels without any idea of whether the work will be successful.
Even if most artists never actually reclaim the rights to their work and use the threat of termination to leverage a better deal, the copyright termination provision may have served its purpose of improving the bargaining power of artists, said Ken Basin of Greenberg Glusker Fields Claman & Machtinger LLP (/firms/greenberg-glusker).
“I don’t think this will create a massive upheaval for the industry, but with respect to really popular works, it could realign the revenue-sharing balance between companies and artists,” he said.
The copyright termination statute requires artists to notify the label two years in advance of their intent to terminate the rights, so labels have been aware since at least 2011 of any potential terminations next year, providing time to reach a new deal.
In addition, the 35-year mark is “less like a deadline than an opening bell,” said Dori Ann Hanswirth of Hogan Lovells (/firms/hogan-lovells). The termination window lasts five years, so a copyright grant made in 1978 can be terminated any time between 2013 and 2018, giving artists who have not yet served a termination notice plenty of time.
“With that much time in hand, it is unlikely that all, or even most, of the 1978 grants will be disputed next year,” Hanswirth said. “A gradual stream of increased termination activity is the more likely outcome.”
A copyright termination dispute that may lead to litigation likely will involve an album that still is selling enough today for it to be worthwhile for the artist to invest in the legal cost of reclaiming it, attorneys said.
In addition, it would likely have to be recorded by an artist who is no longer releasing music, since anyone from the 1970s who is still popular today probably has enough pull to secure a new deal without going to court and may not want to antagonize their label.
“It would have to be an artist with deep pockets as well,” said Bryan Sullivan of Early Sullivan Wright Gizer & McRae LLP. “But if it’s valuable enough, there’s going to be an artist who will fight it.”
Even in cases where a lawsuit is filed, it may be more advantageous to both the artist and the label to negotiate a new deal rather than pursue the case to a resolution, Custer said.
“Presumably there will be some splashy case filed in 2013, but how quickly it will move and how strongly they’ll want to litigate is hard to say,” he said. “I wouldn’t be surprised if there’s a settlement for improved deal terms and the parties are not prepared to fight to the ends of the earth.”
There are a few situations in which a copyright termination lawsuit may arise, attorneys said. For instance, an artist could notify the label of his or her intent to terminate the copyright, leading the label to file a suit seeking to have the termination declared invalid.
If the label ignored a termination notice, the artist could sue, claiming that continued sales of music for which the rights have been reclaimed constitutes infringement. Or if the artist reclaimed the rights and started selling the music themselves, the label might sue them for infringement.
Any termination suit that is fully litigated will be closely watched, as it will establish precedent on important areas of music copyright law that have never been examined by a court, attorneys said.
For one, termination rights do not apply to works made for hire, which the Copyright Act defines as a work done by an author in the scope of his or her employment. Record labels are expected to fight back against termination notices by arguing that the musician’s work was made for hire, but whether that designation can apply to sound recordings has never been legally resolved.
The record industry has taken the position that sound recordings fall into two categories of works that the law identifies as per se works for hire: compilations or contributions to collective works. Artists maintain that neither of those categories apply to albums by most musicians, and a termination suit will provide a test case on the issue.
Essentially the only way a copyright termination wouldn’t be effective would be if the work is found to have been made for hire, so “it’s close to inevitable that we’re eventually going to hit a case that deals with that,” Fakler said.
While artists would prefer a court ruling that says sound recordings can never be considered a work made for hire, it will likely have to be resolved on a case-by-case basis, he said.
“Work for hire can be so fact-specific that whether one decision will stick and solve the whole problem seems unlikely,” Fakler said.
Another unresolved question, particularly for cases involving songs from 1978, is whether the termination right attaches to the date the song was assigned to the label after it was recorded or the date when the artist signed with the label, Custer said.
Labels are expected to argue that artists don’t have a termination right to albums recorded in 1978 if it was made under a record deal signed years before, he said. The courts will have to address the issue because the statute is not clear on that point.
The intricacies of copyright law present many complications like that, and labels can be expected to “argue everything under the sun,” Custer said. At a certain point, it may not be worth it for artists to fight out every point, leading to a settlement, he said.
There is so much uncertainty around how copyright termination for sound recordings will work that disputes will be resolved without litigation whenever possible, Hanswirth said.
Any artist that has a valuable recording from the late 1970s should be filing a notice to reclaim the rights now and using that to negotiate a new agreement, she said.
“In a reasonable, rational world, that’s what would happen in the next year, but there will always be disputes,” she said.
Source: Ryan Davis, Law360
Elmo’s Kevin Clash Accusers: How Hush Money Works (and Doesn’t) in Sex Scandals
Category: News, Press | Saturday, November 24th, 2012 | Comments Off on Elmo’s Kevin Clash Accusers: How Hush Money Works (and Doesn’t) in Sex Scandals
Bryan Sullivan was quoted in Leslie Gornstein’s article “Elmo’s Kevin Clash Accusers: How Hush Money Works (and Doesn’t) in Sex Scandals.”
The full article can be found here.
Source: Leslie Gornstein, E!
Judge grants Miley Cyrus civil restraining order
Category: News, Press | Saturday, November 17th, 2012 | Comments Off on Judge grants Miley Cyrus civil restraining order
LOS ANGELES (AP) — A judge has granted Miley Cyrus a three-year civil restraining order against a man convicted of trespassing at her home in Los Angeles.
The stay-away order was granted Friday against Jason Luis Rivera by Superior Court Judge William D. Stewart.
The 40-year-old Rivera was convicted in October of trespassing at the singer’s home and sentenced to 18 months in jail.
He is scheduled to be released in May. Authorities said at the time of Rivera’s arrest in September that he was carrying scissors and ran into the wall of Cyrus’ home as if trying to break in.
Rivera did not respond to Cyrus’ petition.
The 20-year-old former star of “Hannah Montana” did not attend the hearing. Her attorney Bryan Sullivan declined comment.
Source: The Associated Press
Numerous other publications, such as Newsday, AOL, E!, Perezhilton and TMZ also ran the story.
Crowdfunding Rules: 3 Keys for Kick-Starting a Business with Web Money
Category: News, Press | Friday, November 9th, 2012 | Comments Off on Crowdfunding Rules: 3 Keys for Kick-Starting a Business with Web Money
Once the domain of artists and philanthropists, crowdfunding — in which several investors put up cash for a project or business idea posted to the Web — has become a major source of capital for start-up entrepreneurs.
According to data compiled by Crowdsourcing.org, Massolution, and more than 130 crowdfunding platforms, or CFPs, the industry is on track to raise more than $2.8 billion this year alone, up 91% from 2011 and more than triple 2010’s total.
President Obama deserves at least some credit for crowdfunding’s rise. Earlier this year, he signed the JOBS Act into law and in the process gave entrepreneurs the ability to raise as much as $2 million in seed capital without jumping through a bunch of oversight hoops, providing the business in question provides financial statements.
But even without said statements, it’s possible under the law to raise $1 million from investors who can pitch in as much as 10% of their income, up to $10,000 each. Fewer restrictions makes obtaining capital easier, which is the point.
An Imperfect Model
Yet easy money has its drawbacks. Critics of the crowdfunding model say that cheap access to capital could create a legal and PR nightmare.
In a recent blog post, Nick Petri of OpenView Venture Partners argues that lawsuits are all but inevitable: “If you’re taking on 1,000 investors who you’ve never met, you’re practically inviting one to sue you. Public companies don’t spend millions in legal fees on their IPO for fun — it’s to bullet-proof their financials and offering docs against litigation if the investment sours.”
Over at Forbes, attorneys Bryan Sullivan and Stephen Ma argue that crowdfunding is designed to appeal to “a less sophisticated investor who will invest in any project they think will be the next Facebook.” Cynical? Undoubtedly, but this same view is shared by several of my colleagues, as well as the Secretary of the Commonwealth of Massachusetts.
Finally, at TechCrunch, JOBS Act contributors Jason Best and Sherwood Neiss argue that appealing to a large base of equity owners can become an investor relations nightmare for the unprepared entrepreneur.
“Could you imagine adding an extra 10 hours a week of email management to your schedule? For crowdfunded companies that do not plan and execute properly, this can become their new reality,” they write.
Order in the Court… At Least So Far
For now, complaints and lawsuits have proven scarce. But that could change quickly when (not if) a high-profile crowdfunded start-up goes bust. Under the JOBS Act, investors may sue for a refund should there be evidence of a material misstatement or omission in prepared materials.
Think about the potential lawsuits. Public market investors are almost never made whole, even in cases of outright fraud, and still there are active class action suits against Citizens Republic Bancorp (CRBC) and Facebook (FB), among others. Crowdfunded failures could bring exactly the sort of windfall in attorneys’ fees that Petri envisions.
3 Pieces of Advice From a Veteran
So is crowdfunding for you, the entrepreneur? Salt Lake City start-up Xi3 took its shot and failed, but not before receiving commitments for $90,000 of the $250,000 it was seeking for producing a new line of grapefruit-sized gaming computers built as modules for easy upgrading.
“Future introductions of I/O Boards that feature new components [and] connectors are expected to allow Xi3 Modular Computers to enjoy useful lives of 6-10 years instead of the standard 3-5 years of traditional PCs,” the company said in its now-ended Kickstarter pitch.
Xi3 wasn’t looking to trade equity for cash so much as goodies and high-end systems, but its try at financing a signature product via Kickstarter offers lessons for those thinking of taking advantage of the new rules put in place by the JOBS Act. CEO Jason Sullivan offered three pieces of advice in a recent interview.
1. Experiment! Sullivan says to think of crowdfunding as cheap research. In the case of Xi3’s Modular Computer, the company promised early access to the machine, among other perks, in order to gauge interest.
“It’s like a test market, only better. That’s because the backers don’t tell you they would buy — they actually do buy through their pledge [or] backing,” Sullivan says. “This means they have confirmed interest in your product, at a set price, along with your market assumptions … all at the same time.”
2. Spread your bets. Sullivan says one of his regrets is not looking beyond Kickstarter when deciding to launch the Modular Computer via a crowdfunded campaign. Indiegogo.com rates as a popular second choice, one Sullivan says might have brought benefits to Xi3 because it lacks the screening that can lead to delays in working with Kickstarter. (Two weeks in Xi3’s case.)
Sullivan says, “According to Crowdfunding.org there are nearly 500 active crowdfunding services today. Is it possible that one platform will be better for a specific campaign than another? Even if the number of monthly visitors is lower — even significantly lower — than another platform? Perhaps so.”
3. Get comfortable with discomfort. Sullivan calls crowdfunding “social creation,” in that entrepreneurs and creators offer ideas, get feedback, and adjust, all before the product is delivered. Handling the inevitable back-and-forth with clients (provisional ones, at that) can be challenging.
“Crowdfunding is not for the faint of heart because it is very live and very real. So if your project is not put together well, the community will rightfully call you on it,” Sullivan says.
And what of the money? How much should you try for? How many investors? Sullivan doesn’t say, and maybe that’s the point. Regulators may see crowdfunding as a way to diversify or increase access to capital, but for entrepreneurs like Sullivan, it’s just another way to build a market.
Source: Tim Beyers, The Motley Fool
Indie filmmakers navigate wild west of foreign film distribution
Category: News, Press | Friday, November 9th, 2012 | Comments Off on Indie filmmakers navigate wild west of foreign film distribution
Overseas distribution transactions can involve shady players
More independent filmmakers with just a script and an actor or two attached are striking deals with foreign buyers eager to pick up distribution rights to the finished product. But while such deals provide them with a way to raise cash to make their movies a reality, entertainment lawyers caution that the market for foreign distribution rights is still a wild west filled with shady players.
“Many of them are fly-by-night operators with a loosey goosey way of doing business,” said entertainment litigator Alex Weingarten of Weingarten Brown LLP, who has sued foreign film distributors for breach of contract. “But ultimately, the problem is that you have international transactions that are frequently small, and that makes it difficult to justify pursuing the people involved.”
Last week’s American Film Market in Santa Monica saw an uptick in buyers who have come from around the world to trade rights in 442 films. There were more Asian and Latin American buyers than in years past, and companies from Korea and Japan increased the most among countries in attendance. And for the first time in years, major studios like Sony Pictures and Paramount Pictures, which have access to global operations, were hawking the foreign rights to their movies, the Los Angeles Times reported.
That mutual interest reflects the difficulty of financing films in the economic downturn, as well as the growing clout of overseas markets. Foreign box office receipts are rising while U.S. ticket sales decline, and Brazil, India, Korea and Japan in particular have a growing appetite for American movies.
“These foreign markets have become not just an important revenue stream, but they functionally enable movies to get made,” said Ken Basin, an entertainment lawyer at Greenberg Glusker Fields Claman & Machtinger LLP who advises independent filmmakers. “Sometimes you can finance nearly all of the picture that way.”
Foreign presale contracts are a key consideration in how banks determine how much in loans to dole out to independent film projects. The more revenues promised from a reputable distributor or sales agent, the more the bank will be willing to lend, using the presale agreement as collateral.
However, collecting on the royalties once the movie’s made and sent abroad often poses problems for filmmakers, lawyers said. Foreign distributors who perform accounting sleights of hand, resell rights they don’t own or who vanish altogether are only too commonplace.
Lawyers said doing due diligence on the other party is important.
Weingarten said he’s heard of distributors who have bought theatrical rights, only to illegally resell them to a TV station – once the movie hits TV screens, few viewers will go to the box office, and there’s nothing the filmmaker can do about it. He recalled another instance in which all of the assets of the distributor were encumbered by other liens.
“It’s very, very difficult to nail people down and find their assets, and most of the foreign film markets are small titles,” he said.
Bryan Sullivan, an entertainment litigator at Early Sullivan Wright Gizer & McRae LLP, said he advises his clients to get as much money upfront as possible, rather than wait to collect a share of the profits if the movie becomes a hit.
“You just don’t know how much the distributor’s really collecting, and they often don’t have the best bookkeeping – maybe on purpose,” he said.
Another helpful consideration is designating the International Film and Television Alliance as the arbitrator in the contract. According to IFTA rules, the losing party is barred from the U.S. film market if it doesn’t satisfy the judgments that come out of arbitration.
“To the extent the other party wants to participate in the U.S. market, that gives you more of a practical incentive because it impedes their ability to do business in a significant marketplace,” Basin said.
But even if the American film company wins a default judgment through arbitration, there’s no guarantee that it will get any money back, lawyers said.
Still, the process may be worthwhile, if only to clear the title pre-emptively.
“What’s important,” Sullivan said, “is to get a declaration that they don’t have any right or title in the film throughout the world.”
Source: Jean Yung, Los Angeles Daily Journal