On October 25, the U.S. Copyright Office issued a notice of proposed rulemaking (NPRM) in the Federal Register to clarify the application of the derivative works exception to copyright termination rights within the context of blanket licenses administered under the Music Modernization Act (MMA). The Office is hoping to correct what it sees as a legally erroneous dispute resolution policy established by the Mechanical Licensing Collective (MLC), which administers the MMA’s blanket licenses to digital music providers, regarding the payment of royalties after songwriters exercise their termination rights to regain copyright ownership from music publishers.
A recent series of five articles on IPWatchdog address various aspects of licensing cellular standard essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms by examining statements from entities involved with licensing. The authors also provide their commentary on the statements and cite various authorities that they suggest are consistent or inconsistent with principles advocated in the statements. The articles lean heavily in favor of the positions of a few companies that derive significant revenue from SEP licensing. For this reason, they fail to present a balanced view. Indeed, to read the series, one might conclude that the major priority for SEP licensing should be to extract excessive revenues for SEP patent owners. Quite the contrary, a key priority should be applying FRAND safeguards against outsized, windfall profits resulting from abuse of SEPs to the detriment of innovative companies that engage in research and development and supply products to the marketplace. Those safeguards include applying well-established principles of patent law to SEPs, including when it comes to patent valuation and patent litigation, where a patent holder is rewarded with fair royalties that reflect the incremental value of any infringed and valid SEP.
During a 2019 Tax Executives Institute conference in Washington, D.C., the Commissioner of the U.S. Internal Revenue Service (IRS), Charles Rettig, proclaimed, “[I am] not a commissioner who believes that the IRS loses because a judge rules against us in a transfer pricing case, . . . [I am] a commissioner who thinks the IRS loses if it doesn’t keep bringing [transfer pricing] cases.” (see Lydia O’Neal, Rettig Doubles Down on Transfer Pricing Cases, Bloomberg Tax: Daily Tax Report (Apr. 1, 2019). This declaration speaks volumes to Rettig’s intention of closing down in transfer pricing cases. Specifically, the IRS under Rettig, has targeted improper transfer pricing of intellectual property (IP) royalties remitted from foreign subsidiaries to U.S.-based parent companies (for instance, Coca Cola Co. v. Comm’r, 149 T.C. 446, 446 (U.S. T.C. 2017; Medtronic, Inc. v. Comm’r, 900 F.3d 610, 610, 8th Cir. 2018). This focus is particularly alarming for international companies with subsidiaries in Brazil because Brazil’s IP royalty remittance laws directly conflict with the United State’s transfer pricing policies.
Courts consistently focus on the availability of non-infringing substitutes as of the date of the hypothetical negotiation. In most of the cases reviewed, the determination of available substitutes was limited to those available at the date of first infringement. If an alternative introduced after the hypothetical negotiation was considered, its impact was discounted to reflect uncertainty as of the date of the negotiation. For example cases, please contact the author. From a review of the above cases, it is clear that the book of wisdom can be relevant and useful, but it is not always allowed by courts. Use and acceptance of the book of wisdom is case and court specific.
When Congress permitted sound recordings to be copyrighted over four decades ago, it didn’t extend that coverage to pre-1972 recordings. This issue, and the piecemeal nature of licensing for digital music on a per-work, per song basis, were part of the impetus for the stakeholders in the music industry to work together to create the Music Modernization Act, signed into law on October 11, 2018… Not all issues in the music industry were solved by the Music Modernization Act: licensing of physical sound recordings (vinyl and CDs) will still occur on a per-work, per song basis. Terrestrial radio pays songwriters and publishers royalties for playing music, but it doesn’t pay performance or sound-recording royalties. And while the goal of one public database is laudable, the responsibility still lies with songwriters and publishers to submit copyright applications and to submit all of their musical works and sound recordings to the MLC… While there is still work to be done, the Music Modernization Act does solve some long-standing issues in the music industry.
In October 2016, the creators of the classic mockumentary film This Is Spinal Tap filed suit against a group of defendants including the French mass media conglomerate Vivendi S.A. alleging that Vivendi engaged in anticompetitive business activities to defraud the Spinal Tap creators of profits earned from the movie. On August 28th of this year, U.S. District Judge Dolly Gee of the Central District of California allowed the case to move forward by denying a motion filed by defendants to dismiss the case based on the economic loss rule, a rule that otherwise operates to require recovery of damages under contract rather than for an action for fraud. Judge Gee also determined that copyright reversion claims presented a sufficiently ripe controversy for consideration by the court.
Suppose you are valuing a large patent portfolio with issued patents and pending applications in more than 20 countries throughout the world. One of your tasks would be to project how much royalties each patent could collect in each of the subject countries over time. After plotting out your expected revenue streams, you would have to apply a discount rate to these projected royalty revenue streams to reflect the risks associated with entering into governing licensing agreements. Which risks are embodied in discount rates (also known as costs of capital)?
The somewhat jarring Olympics tradition of juxtaposing athleticism and grace with instrumental versions of popular songs you might hear in the grocery store came to an end in Pyeongchang. After the Sochi games in 2014, the International Skating Union (ISU) decided to shake things up (or shake it off, Taylor Swift?) and began allowing skating to music with lyrics. This is not at all surprising given the demographics of the skaters, who are much more likely to enjoy “Single Ladies” than “Clair de Lune.” Pleasing Generation Z and millennial skaters, however, was not the main goal of the rule change; rather, the ISU wanted to appeal to younger audiences who tune in to watch the Olympics and other major figure skating events.
Less than 48 hours before the 60th Annual Grammy Awards in New York City, the Copyright Royalty Board (CRB) ruled to increase royalty payments to songwriters and music publishers from music streaming companies by nearly 44 percent, the biggest rate increase granted in CRB history. These rates will go into effect for interactive streaming and limited download services like Amazon, Apple, Google, and Spotify for the years 2018-2022, and will transform how songwriters are paid by these interactive streaming services.
Patent damages law is one of the most complex areas in patent law and it is constantly evolving. Attorneys and courts often confuse the principles and get the law wrong. Further, even without the backdrop of constantly evolving and complex damages law, proving damages at trial is one of the hardest aspects of patent litigation. And properly apportioning damages can be one of the most difficult aspects of damages law to get right. The Federal Circuit’s two recent decisions in Exmark Man. Co. v. Briggs & Stratton Power Prods. Grp., No. 2016-2197, __ F.3d __ (Fed. Cir. Jan. 12, 2018) and Finjan, Inc. v. Blue Coat Sys., Inc., No. 2016-2520, __ F.3d __ (Fed. Cir. Jan. 10, 2018) shed light on calculating damages for multi-component products. Together, these cases show that the royalty rate must be apportioned based on the incremental value the novel elements add to conventional elements of a claim, while the royalty base must be apportioned based on the incremental value the patented features add to the accused product.
The Federal circuit heard the case on AbbVie Inc. v. MedImmune Ltd. AbbVie and MedImmune entered a development and licensing agreement in 1995. The agreement stemmed from a research collaboration between the parties, resulting in the antibody adalimumab, the active ingredient in Humira… In general, parties may not seek a declaratory judgment to litigate one issue in a dispute that must await adjudication of other issues for complete resolution of the dispute. In limited circumstances, courts may permit this type of action where litigation is pending that would resolve the remaining questions.
Crafting a proper hypothetical claim is a prerequisite to whether a theory of infringement under the doctrine of equivalents would also ensnare the prior art. The burden to present a proper hypothetical claim cannot be shifted, and a hypothetical claim cannot be broader for the alleged range of equivalents, and not otherwise narrower.
In traditional music recording, artists have had to choose to license their music through major music industry organizations like ASCAP and BMI. In the age of streaming music through Spotify, Pandora and other services what is the purpose of these organizations? The licensing groups have served as clearinghouses for smaller players in the music industry who cannot feasibly deal with multitudes of licensees on their own. But with Taylor Swift and other “major” artists choosing to deal—or not deal—with the streaming services that opens the question about blanket music performance licenses.
It’s not just businesses and corporate environments that need intellectual property protection – artists of all kinds must protect their work too. Specifically, musicians have a lot to copyright and trademark – band names, original music, and album art, to name a few… When it comes to YouTube, today, musicians should pay close attention to monetization of their IP rights, according to Umanoff. This means making sure that YouTube has reference files, which are samples of the copyrighted materials, so that YouTube can attempt to recognize an artist’s work when incorporated in user-generated content.She said, “The artist must also ensure that their reference files contain accurate metadata so that YouTube knows who to pay when copyrighted works are streamed. Independent companies specializing in confirming that YouTube content is monetized by uploading reference files and manually checking metadata are emerging and growing a new frontier of music technologists.”
Though much of today’s proposed patent legislation is controversial, removal of the Brulotte rule remains largely uncontested by analysts and has historically garnered support on both sides of the political divide. Replacing the Brulotte rule with the rule of reason from antitrust law would improve market efficiency and spur innovation by increasing the dissemination of intellectual property in the marketplace. To unlock those benefits, Congress must modernize how Federal Courts evaluate post-expiration patent royalty cases.