Court Rules No Public Performance Fees for Ringtones

Recently, the United States District Court for the Southern District of New York ruled that publishers are not entitled to public performance royalties for mobile phone ringtones.  See In re Cellco Partnership, 2009 WL 3294861 (2009).  For the past few years, publishers have argued that mobile phone carriers should pay copyright performance royalties when ringtones are downloaded and used by mobile phone customers.

Ringtones are digital copies of songs, typically around 30 seconds in duration, that are designed to be played on a mobile phone in order to signal an incoming call in the same manner as would a telephone ring.  Ringtones come from a variety of sources, but most commonly, mobile phone customers download ringtones from their service providers, such as AT&T, Sprint, or Verizon.

The distribution of ringtones via downloads triggers publishers’ copyright rights to reproduce and distribute musical works.  With respect to such rights, mobile phone carriers pay royalties (commonly referred to as “mechanical royalties”).

In addition to mechanical rights, publishers also control the right to publicly perform musical compositions.  The recent New York District Court decision addresses whether ringtones, which are often played “in public” when a phone “rings,” require payment of performance royalties to publishers (and/or other owners of musical works).

The District Court’s decision involves a dispute between Verizon Wireless and ASCAP, a performing rights organization that licenses public performance rights to musical works on behalf of it members (publishers, composers, and songwriters).  Verizon sued ASCAP in the District Court in the court’s capacity as a “rate court” pursuant to the US Department of Justice’s 1941 antitrust consent decree with ASCAP.  The consent decree established the “rate court” as a forum to resolve disputes with ASCAP (and BMI) over public performance fees.

ASCAP argued that Verizon engages in public performances of musical works when (1) it downloads ringtones to customers and (2) when mobile phones play ringtones to signal incoming calls.

Downloading Ringtones

The Copyright Act provides that performing a song “publicly” means either (1) playing a song at a place open to the public or (2) transmitting a song to the public whether the individuals receiving the song hear it played at the same place and time or different places or times.  The parties agreed that the sole act of downloading a ringtone is not the same as playing a song under the first clause of the “publicly” definition.  However, ASCAP argued that the transmission of downloads invoke the “transmitting” clause.

The Court held that because each act of downloading a ringtone only involves the transmission of a unique copy of the song to one customer, the transmission is not made to the public.  The Court also considered whether a download is just the first link in a chain of transmissions ending when the customer uses the ringtone to alert her to an incoming call.  Citing the Court of Appeal’s decision in Cartoon Network v. CSC Holdings, 536 F.3d 121 (2^nd Cir. 2008) , the Court observed that a link of transmissions would only be considered “to the public” under the “transmitting” clause where it is clear that the final link in a transmission is “undisputedly a public performance.”  As discussed below, the Court concluded that playing a ringtone does not qualify as a public performance, and thus concluded that the “transmitting” clause is not applicable.

In addition to rejecting ASCAP’s argument under the “transmitting” clause, the Court also determined that ringtone downloads are also not “performances” because a performance requires “contemporaneous perception.”  Since a ringtone download is a transmission of data rather than a musical broadcast, the download itself is not a perceptible rendition of a song.  In support of this conclusion, the Court referenced its prior decision in United States v. ASCAP, 485 F. Supp. 2d 438 (2007), in which it held that the downloading of music itself is not a public performance.

Playing Ringtones

The Court also rejected ASCAP’s argument that there is a public performance when mobile phones play ringtones to signal incoming calls.  The Court considered two exemptions to the public performance right in the Copyright Act:  (1) performances that occur within “the normal circle of a family and it social acquaintances” and (2) performances without the expectation of “direct or indirect commercial advantage.”

The Court ruled that both of these exceptions apply to the mobile phone customer’s playing of ringtones because even when a phone “rings” in a public setting, the phone user is not playing the ringtone with the expectation of any profit.

And, even if the “ring” on a customer’s phone were not exempt, the Court held that Verizon would not be liable because Verizon does not (1) control when a phone rings or which ringtone is played or (2) profit specifically from act of playing a ringtone.

Conclusion

While the Court’s decision is a defeat for ASCAP and publishers, it is not surprising.  The decision comes on the heels of a 2006 decision by the Register of Copyrights that held that ringtones can qualify for the compulsory mechanical license under the Copyright Act which is only applicable for qualifying “private uses.”  The Register of Copyrights ruled that the primary purpose of ringtones is for private, not public uses.  See Docket No. RF 2006-1, U.S. Copyright Office, Oct. 16, 2006.

Furthermore, ASCAP was not necessarily the most sympathetic party here.  The fees requested by ASCAP could be perceived, in effect, as a “double dip,” since publishers are already paid mechanical royalties for ringtones.  Granted, such mechanical royalties are generally limited in amount by the compulsory license rate.

This is likely not the end of the story.  Recently (and prior to the Court’s ruling), publishers asked Congress to revise the copyright law to clarify that digital downloads implicate the public performing right.  Such a law could effectively reverse the Court’s decision.  And, not only could this affect ringtones and music download, but it also could affect downloads of movies and television shows.  This could be particularly significant given the potential shift of the public’s viewing habits from television (for which significant public performance fees are paid) to on-demand downloads to iPods and laptops (which are not now considered public performances).

* * * *

Copyright 101: Every Recorded Song Has At Least Two Copyrights

It is a common misunderstanding that a song only has one copyright.  For anyone who creates music, uses existing music, or is otherwise involved in the music business, it is important to understand that there are actually at least 2 copyrights involved in every recorded song:  (1) the musical work copyright and (2) the sound recording copyright.

The “musical work” copyright, also known as a “musical composition,” protects the underlying musical arrangement and accompanying lyrics of a song, whether the composition is fixed in written sheet music, recorded, or otherwise.  Musical works are created by songwriters and the copyright therein is often assigned, partially, to music publishers.

The “sound recording” copyright protects the actual recording of a musical composition, as contained on a CD, in an MP3 file, on a computer hard drive, or other “phonorecords.”  “Phonorecords” are defined in the Copyright Act as material objects in which sounds are fixed “by any method now known or later developed” (but does not include fixations of audiovisual works, which are separately protected, as discussed below).  As a technical matter under the Copyright Act, copies of sound recordings are “phonorecords” and not “copies.”  Sound recordings are created by the artists and musicians who record a musical work, and the copyright therein is often owned by or transferred to record companies.

In addition to musical works and sound recordings, copyright law also protects dramatic works, such as theatrical plays, and audiovisual works, such as movies and television programs, each of which may also include music.

Music licensing agreements will be discussed in a later post, but it suffices to say here that, for every recorded song, there can be multiple interests at stake.

Take, for example, the song Atomic Dog.  The song was written and performed by George Clinton, with publishing rights owned/controlled by both Bridgeport Music and Southfield Music (the owner/controller of the musical work copyright).  The song was first recorded on the album Computer Games, released by Capitol Records (owner of the sound recording copyright).  Thus, if you wanted to use Atomic Dog on a compilation mix CD, in a commercial, as a sample, or otherwise, you would need permission from at least Bridgeport Music, Southport Music, and Capitol Records.

This post is the first in a series of posts discussing the basics of music copyright law.  This series of posts can be located by selecting the Blog category “Copyright 101.”  Future posts in this series will cover, among other topics, the exclusive rights under copyright law, the creation and registration of a music copyright, how to determine whether a song is in the public domain, common music licenses, and various other “basic” music copyright law issues.

* * * * *

Copyright 101: Creation Of A Copyright

Now that you’ve written and recorded a song, how do you protect it?  How do you copyright it?

The good news is that as long as it is your original song and you’ve written it down or recorded it, the song is entitled to copyright protection.  Under the Copyright Law, a song is immediately entitled to copyright protection upon the satisfaction of the following criteria:

1. It must be an “original work[] of authorship”; and
2. It must be fixed “in any tangible medium of expression, now known or later developed,” such as written sheet music or a CD, MP3, or other recording.

Unless you created the song as part of your job in your capacity as an employee, or unless you created the song for someone else as a “work made for hire” pursuant to a written agreement, you, as the creator of the song own the copyright interests in the song.  As discussed in an earlier post, those interests would generally include the musical work copyright and the sound recording copyright.

So, is that is?  Once you record an original song you own the copyright?

That right.  There is no requirement that you actually publish, distribute, or register your copyright with the U.S. Copyright Office.

However, while it is not necessary to register a copyright with the U.S. Copyright Office to enjoy copyright protection, there are certain advantages to registration, including the following:

1. Registration creates a public record of the copyright claim;
2. Registration is required before an infringement suit can be brought in federal court;
3. Registration of a musical work is required to receive compulsory license fees;
4. Registration before publication or within 5 years of publication establishes a presumption of the validity of the copyright;
5. Registration within 3 months after publication or prior to an infringement entitles the owner to statutory damages and attorneys’ fees; and
6. Registration permits registration with the U.S. Customs Service for protection against the importation of infringing copies.

So, while registration is not required, copyright owners are well advised to file their copyrights with the Copyright Office.  As a case I discussed in a prior post demonstrates, the failure to timely register a copyright can create serious legal hassles and expenses that can be easily avoided with early registration.

In lieu of registration, some people elect to take the “poor man’s” copyright route.  The idea is that you mail yourself a copy of your song and don’t open the package so as to have proof of the date by which the song was created from the postmark.  While this is certainly better than nothing, as noted above, the failure to register the copyright upon creation means you may not have the right to compulsory license fees, statutory monetary damages, and attorneys’ fees in the event your copyright is infringed.  Without compulsory license fees, statutory damages, and attorney’s fee, the failure to properly register may help to make sure that you continue to be a “poor man” in the event you have to enforce your copyright.

Registration is easy and relatively inexpensive.  A music copyright can be registered on-line at www.copyright.gov/register/. The fee for registering a copyright is $35.00, and you can simultaneously register musical work and sound recording copyright interests on one form:  Form SR.  To register the interests separately, use Form PA for the musical work and SR for the sound recording.

Once you have a copyright, be sure to let the world know by including a copyright notice with the distribution of the song.  A copyright notice should contain the following elements:

1. The symbol ©, the word “Copyright,” or the abbreviation “Copr.” (or for “copies” of sound recordings, the symbol (P) (the letter P in a circle)); and
2. The year of first publication of the work; and
3. The name of the owner of the copyright.

Here are two examples:

“© 2009 DJ Counsel.com”

“(P) 2009 Counsel Records, Inc.”

The use of a copyright notice is not technically required, but it helps you demonstrate that you’ve informed the public of your rights and can help prevent someone from claiming that they didn’t know about your rights.

This post is the one in a series of posts discussing the basics of music copyright law.  This series of posts can be located by selecting the Blog category “Copyright 101.”

* * * * *

COPYRIGHT 101: AN “OLD” SONG IS NOT NECESSARILY IN THE PUBLIC DOMAIN

A common misconception is that all “old” songs are not protected by copyright law.  While this is certainly true in some cases, it’s important to understand that determining the length of copyright protection for any particular song is not that simple.  Copyright protection can last for a very long time.

The duration of copyright protection depends on when the song was created:

• Songs created on or after January 1, 1978, are protected for 70 years after the death of the individual author.  Where there are two or more individual authors, the term lasts for 70 years after the last surviving author’s death.  For “works made for hire,” the term of protection is 95 years from publication or 120 years from creation, whichever date is earlier.  (A “work made for hire” is “a work prepared by an employee within the scope of his or her employment” or “a work specifically ordered or commissioned for use as a contribution to a collective work, [or] as part of a motion picture or other audiovisual work … if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”  In the case of a “work made for hire,” the employer, not the individual writer, is the “author” and owns the copyright.)

• The copyright term for songs created before but published or registered after January 1, 1978, is generally computed in the same way as for works created on or after January 1, 1978 (provided that in no case would the term of such copyright expire before December 31, 2002, and for works published on or after that date, the term will not expire before December 31, 2047).

• Songs created and published or registered before January 1, 1978, are generally protected for 75 years from the date the work was published with a copyright notice or on the date of the registration if the work was registered in unpublished form.  For such pre-1978 copyrights still subsisting on October 27, 1998, Congress extended the term by 20 years providing for a total term of protection of 95 years.

The song Happy Birthday to You is an oft-cited example of the durability of copyright protection.  The melody to Happy Birthday to You was first published in 1893, and the song was copyrighted in 1935.  Today, the company claiming to own the copyright to the song says it is valid until 2030, and it collects nearly $2 million in licensing fees every year on the song.  Though the validity of this claim is in question, it is an example of the peril of assuming that something extremely old and extremely widely used is in the public domain.

The website www.publicdomainsherpa.com has a web-based copyright term calculator to help you determining whether (or when) a particular song is (or will be) in the public domain.

* * * * *