It's All Latin to Me

Lawyers have become better at writing in plain English since I began to practice law in the Middle Ages. However, we could all do a better job at explaining certain things. One of the reasons that lawyers write in a certain way is to make sure that the point they are making is completely understood and not subject to interpretation. That’s why lawyers will occasionally use obscure Latin phrases. The other day I prepared a will for a client and she asked what the phrase per stirpes meant; a perfectly valid question.

Per Stirpes is legalese. It technically means a method of dividing up a share of an estate to a group or class of distributees, who take the share that a deceased person would otherwise have been entitled to. In other words, if you intend a share of your estate to go to your brother and he predeceases you AND you want the share that he would have received to go to his children, this is how you achieve that.

However, although there is an important reason to use this term in the document itself, it is equally important to make sure that the client understands what it means.

Next week we’ll discuss nunc pro tunc.

Happy Holidays !

Curb v. Tim McGraw Round One

I have slowly been trying to write a short book about some of the common disputes that arise in the music business. I had just begun work on the chapter concerning recording agreements and I thought to my self, "this topic has been done to death. What else is there to write about?" Then came the news two weeks ago about Tim McGraw's preliminary victory over Curb Records in the Davidson County Chancery Court.

This case has all of the necessary elements of a legal drama – high-powered artist battles even higher-powered label over arcane language in a recording agreement first entered into in 1992.

As I understand it, Curb first sued McGraw claiming that he had not delivered the required number of albums under the agreement, even though he in fact had delivered what he considered to be the final album under the agreement in 2010 (and Curb even released a single from the recordings).McGraw has counterclaimed alleging that Curb's actions (including multiple releases of greatest hits albums) are "a naked attempt to create a perpetual recording contract, forcing Tim McGraw into a repressive environment of infinite duration …".

I am assuming that the hearing held on November 30 concerned Curb's attempt to enforce the injunctive relief provisions of its agreement and to keep McGraw from recording for another label during the course of the litigation. I have reviewed McGraw's answer and counterclaim and have to say that it is one of the most eloquent pleadings I have ever encountered. (here's a link:www.tennessean.com/assets/pdf/DN174765524.PDF). It literally reads like a novel where you follow McGraw's career from 1992 through 2010 as well as a textbook analysis of how the delivery process and recording restrictions in a recording agreement can be manipulated.

I don't know how this will play out but if it goes further it will provide fascinating insight into some of the more esoteric provisions of recording agreements, often ignored during negotiations. It may also show us how some these overlooked provisions might come back to bite both parties.

A Special Place in Hell

I read with visceral disgust an article in last Saturday’s Wall Street Journal about a new specialty of debt collectors, who contact the relatives of deceased people who have died leaving debts, and try to convince them that they have a moral obligation to pay the debt. This is a growing business. One such company advertises its services as “a proven approach that yields high returns at a low risk to the client’s reputation.” Translation: we can get your money without making you look bad for harassing grieving widows and orphans.

A relative is not generally responsible for a decedent’s debts unless they were jointly liable prior to the death (e.g. a joint credit card account or a mortgage). If someone dies leaving a will or dies intestate (without a will) with debts and assets the survivors will have to deal with all of this. This is what the probate process is for. It can be hard enough dealing with probate and dealing with the inevitable collection agencies that refuse to recognize the fact that someone may actually be dead (you would not believe some of the automated letters I have seen). However, to claim that the survivors somehow have a legal or a moral duty to pay these debts out of their own pockets is both reprehensible and in violation of Federal Law. It’s hard enough to deal with the loss of a loved one and to settle their affairs- but to be bullied and lied to during the process is repugnant. There is a special place in Hell for these folks.

Let Us Now Praise Phonoluxe

I love used record stores. My favorite job ever was working at the Great Escape in Nashville where my duties included running the store’s rare record auctions. Accordingly, I have been honored to represent Phonluxe Records since the company’s founding in 1987. The store is run by Mike Smyth, an Englishman who knows more about American music than anyone I know and Jeff Knutson, ably assisted by a dedicated group of music aficionados, who are friendly and lack the whole High Fidelity vibe.

Mike is one of those people who truly understand the consumer side of the record business. When the CD revolution began in earnest in the early 90’s, Mike began buying the vinyl records everyone was so happy to get rid of. Now, having carefully preserved these treasures, he’s happily selling them back to these same people. I imagine that he’s now buying up used CD’s patiently waiting for the day that America’s youth tire of MP3’s.

Earlier this year, the store switched from a traditional 7 days a week schedule to being open only Friday through Sunday. The results appear to be really positive; it somehow emphasizes the special, rewarding experience of shopping at Phonoluxe. I love the fact that I can go in there with a record in mind and leave with something else that I didn’t know I needed until I found it.

Here’s to another 25 rockin’ years.

Reading about the Civil Wars

I have been reading Adam Gold’s cover story in last week’s Nashville Scene about the Civil Wars (not the Civil War, I wrote about that here: http://tripaldredgelaw.blogspot.com/2009/02/oliver-wendell-holmes-said-it.html)and wondering how I missed all of this until recently. I have had several people tell me about this group but I never got around to listening to them. The duo made their debut at a club not two blocks away from my house and their management/record company/significant other is apparently in my building. They’ve sold 200,000 albums and 250,000 downloads. This is a phenomenal story but the real back-story is even more interesting from Christian music to a failed record deal to television commercials for hot dogs-and at the end of the day real talent which can take a band from the French Quarter Café to the Royal Albert Hall in two years. I am impressed by the genuineness of the story and can’t help thinking about the Civil Wars and their organic success as I also read about Citigroup finally unloading the once hallowed EMI Music Group. These are two very different stories of success in the music business. The band’s manager is speaking at a Nashville Bar Association CLE in a few weeks and I am looking forward to hearing him.

Copyright Office studies Remedies for Small Copyright Claims

This is interesting. The Copyright Office just announced that it is soliciting public comment through its notice of inquiry process on how copyright owners handle “small” copyright claims “and obstacles they have encountered as well as potential alternatives to the current legal system that could better accommodate such claims.”

While our Copyright Act provides significant muscle in stopping infringement, the whole process from registration (a prerequisite to filing a copyright infringement lawsuit) onwards is byzantine and for many copyright owners too expensive.

I am sure that many people will come up with suggestions and I don’t know what the Copyright Office will ultimately come up with but this seems like a golden opportunity to simplify the system and provide some clarity as to the rules. I don’t know if Congress could create something like a small claims court for small copyright claims but the concept is intriguing.

This will be a conversation worth following.

On Splother

I had lunch yesterday with my friend Dave Durocher to learn more about his new venture, Splother. I wanted to write about Splother earlier when the Nashville Scene featured the company in its list on 10 new innovative companies in Nashville but to be honest I didn’t really understand what it was the company did. I do now.

I’ve known Dave for a long time and I have always admired him as one of the true good guys involved in music publishing. What I did not know is that he is also a computer whiz who, with some other talented people, has figured out how to streamline the music licensing process to create true one stop shopping for companies looking for independent music for film, television and other uses.

Most artists know that the traditional record deal no longer exists so the mantra has been to get your music into film and tv. However, the gatekeeper process in this world has been as complex and daunting as in the major label world. So, the brilliance of Splother is that it removes the artificial A+R bias and allows the music to compete on its own merit. One can argue (as I sometimes have) that there needs to be a filtering process but the companies and services that provide that are still alive and well. This is something for the truly independent artist.

There may be competing models out there but this site seems intuitive and smart and could become really significant as it develops. Dave’s enthusiasm for the concept is obvious and that’s a great thing to see these days. I’ve also enjoyed reading his partner Steve Toland’s blog comments on the website. This is a company worth watching carefully.

Can't Get a Job? Sue Your Law School

I am still bemused by an article I read in the Wall Street Journal; a few weeks ago which detailed two lawsuits filed by graduates of Thomas M. Cooley Law School in Michigan and New York Law School. The plaintiffs, graduates of the two schools, are suing the schools for allegedly distorting the employment records of their graduates. The suits seek tuition refunds and damages. All of this seems ironic to me. Lawyers can’t get jobs so they sue their law schools. Everybody knows that there are too many lawyers but can we really say that is the intentional fault of the law schools? I don’t remember my law school promising me anything other than to teach me “to think like a lawyer” (or was that Professor Kingsfield from The Paper Chase?) With many years of hindsight I see the benefits of a legal education and I have seen many lawyers successfully apply their training in non-legal careers. I think that it is unfortunate that so many people go to law school thinking that graduation is an automatic ticket to a great job but I don’t think that this is necessarily the fault of the institutions. It will be interesting to see how these lawsuits play out.

Not So Fast

Some time ago, I wrote a blog post about what I perceived to be a turning in the tide of the RIAA’s litigation against file sharers. I was probably a bit naive in my thinking. While the RIAA may have changed its strategy, the cases that it filed originally continue to evolve through the court system. Most recently, in the case of Sony BMG Music Entertainment, et. al. v. Tenenbaum, the U.S. Court of appeals reinstated the jury verdict of $675,000 against graduate student Tenenbaum, who had admitted to downloading 31 songs from Kaaza. The trial judge had reduced the statutory damages awarded against Tenenbaum to $67,500 (that’s still $2,177.41 a song) on constitutional grounds. Apparently the Appeals Court ruled that the issue of constitutionality was premature. Tenenbaum’s lawyer, Charles Nesson had convinced the District Court Judge that the high statutory damages provided by the Copyright Act violate the Due Process Clause of the U.S. Constitution. There may yet be some viability to that argument. However, liability in this case and others like it remains a slam dunk.

The moral to all of this is that despite the fact that suing single mothers and college students is not the way for the music industry to win the hearts and minds of the public and stop illegal downloading and file sharing, it is still illegal, and potentially expensive.

Health Insurance for Artists.

The Arts and Business Council in Nashville is sponsoring a seminar on November 14 on the topic of health insurance for artists. I know so many people who struggle with the issue of obtaining and maintaining health insurance. It's an issue for me every October when my insurance company jacks up its rates.

Anyway, this seems like something that could be helpful for a lot of people, so here's the link:

https://app.e2ma.net/app/view:CampaignPublic/id:7943.10845326270/rid:dbd47f01afddfbc6a4bc7b0d6389be08

National Estate Planning Awareness Week

The folks at the National Association of Estate Planners and Councils have alerted me to the fact that this is National Estate Planning Awareness Week. Ordinarily, I am a bit wary of these things but because I believe that good estate planning is essential for everyone, I am happy to remind people of the following facts.

1. Young people with small estates and no dependents need, at the very minimum, a health care directive (or durable power of attorney for health care as we call them in Tennessee) so that they have someone selected to handle health care decisions for them in the event of an emergency.

2. For families with minor children, wills are essential, to appoint a guardian and provide for the children in case something happens to both parents.

3. For anyone with an estate of any value, planning is essential to avoid probate where possible, to avoid state and federal estate taxes, and to have some control over where your property goes.

4. Protection of assets may also be important, especially in dealing with heirs who may have ‘issues” (ranging from bad marriages to financial mismanagement to drug or alcohol problems).

The more I get involved in this area, the more I see how simple planning can be so beneficial for people at all stages of life. I also know, from firsthand experience, how easy it is to put this stuff off and be in denial about the inevitable.

This stuff is essential. If you have any questions regarding these issues, feel free to contact me.

When I Paint My Masterpiece

Bob Dylan continues to fascinate me on so many levels. Several years ago I wrote about (and tortured my Copyright Law students with) the story of how Dylan had apparently ‘appropriated’ large chunks of the lyrics to some of the songs on his 2001 album Love and Theft from Japanese writer Junichi Saga.( http://tripaldredgelaw.blogspot.com/2008/11/what-does-bob-dylan-have-to-do-with.html). A couple of weeks ago, I read an article in the New York Times that revealed that several of Dylan’s paintings in his current gallery show at New York’s Gagosian gallery were actually copied from photographs taken by such well know photographers as Henri Cartier-Bresson and Leon Busy.

As always with Dylan, I am not sure what to make of this. Is it copying? It is plagiarism? Is it copyright infringement? Is it all protected fair use?

It turns out that the Gagosian Galley which is hosting the Dylan show is the same gallery that was sued along with artist Richard Prince, another artist whose work fascinates me, for copyright infringement based upon Prince’s work. Apparently, the defendants lost a summary judgment but the case will surely be appealed. (Cariou v. Prince, et. al., no 08-civ-11327).I have been really interested in this and the whole debate between attribution and copyright infringement in art and I wish I had more time to study it. This is endlessly fascinating stuff.

Technological Nostalgia Part II

Once I had an assistant who obsessively saved every scrap of paper we produced. I recently found a notebook full of telephone call logs from 2002. Being a conservationist (i.e. cheap) I am using these old telephone logs as scrap paper, yet I am also fascinated reading the the messages I received back then. It’s like a quick trip back in time. These are a few observations.

1. I used to get a lot more phone calls before the eventual domination of email. On the day I am looking at I had over 30 calls.
2. I had a number of calls from a client that I did a lot of work for who eventually filed bankruptcy, leaving me with a large amount of unpaid fees.
3. I had several calls that day from a good friend who passed away shortly thereafter.
4. The international side of the music business used to be a lot more fun. A bunch of the calls that day dealt with a client’s record deal in England.
5. I am still unnerved when I see the message “needs to speak to you TODAY”.
6. At the time, I had several calls from a client who had discovered several unpublished photographs of Elvis Presley—that was fun.
7. I am gratified to see 7 or 8 names on that list of clients I still do work for today. I am grateful.
On the whole, I don’t know what’s more efficient, email or the phone. Getting a lot of phone calls and/or emails is evidence that your business is heading in the right direction but it can still be overwhelming and it can be a challenge to respond to everyone in a timely manner.

Let Us Now Praise Dennis Scott and Fab Fan Memories the Beatles Bond

My friend and client (and Grammy Award Winner) Dennis Scott has had a long and storied career, but obviously, his first love is the Beatles. For the past few years, in addition to his successful career writing and producing children’s music, Scott has led a great Beatles tribute band called the WannaBeatles.

A while ago, Dennis told me he was creating a CD of Beatles’ fans talking about their memories of the fabs. My Beatles obsession knows no bounds so I was both encouraging and somewhat apprehensive about the project. After all, Beatles projects have varied from the sublime to the awful. I shouldn’t have worried, Dennis' album, Fab Fan Memories, the Beatles Bond brings together the sincere memories and observances of both ordinary fans (first generation and onwards) and celebrities such as Janis Ian, Melissa Manchester, Billy Swan and Phil Keaggy. I even learned something new about my friend Ed Salamon from listening to the disc. However, it is the collective experience of listening to the entire disc-from a fan recalling riding from Nashville to Memphis on a bus to see the Beatles in 1966 to Janis Ian talking about how excited she was as a teenaged recording artist to discover that Paul McCartney had ordered her records.

The disc is divided into sections and narrated by George Harrison’s sister Louise (who once refused to autograph my copy of her album “All About the Beatles”-but that’s another story…). Ms. Harrison’s habit of introducing each section with a question becomes a bit monotonous, but, hey’ she’s George Harrison’s sister. Background music is supplied by the WannaBeatles and the Liverpool Legends.

On the whole, this is a really well done piece of work and well worth searching out. Congratulations Dennis.

Two Passings

I want to take the opportunity to note the passing of two fine people. First, Bob Sullivan, who died about two weeks ago after a 14 month struggle with leukemia. I knew Bob for at least 25 years and he was the kind of lawyer I aspire to be. He was a smart and zealous advocate for his clients while at the same time, a true gentleman. Always fun to talk to. At his memorial service last Saturday, his brother in law described him as a ‘great guy’, the exact phrase that was running through my head right before he said it. I am going to miss Bob.

On Sunday night, I learned that Paul Kirby had died at the far too young age of 48. I knew Paul from his first real band “Walk The West” which should have been huge as well as his second band “The Cactus Brothers,” who I had the privilege of representing. To my mind, the Cactus Brothers were both timeless and a decade ahead of their time-kind of a cosmic country band with great songs that made people dance. I have no doubt that today’s Americana world would have totally embraced the Cactus Brothers. I didn’t know Paul really well but I respected him as a songwriter and many of his songs have been running through my head for years and especially over the last few days.

In my less cynical moments I realize that both these guys made Nashville a special place to live and work.

Revenge of the Bratz

I remember reading a few years back that the Mattel Toy Company has obtained an injunction against the makers of the Bratz dolls because of their alleged similarity to the Barbie Doll. I was confused-on the surface the two dolls are not at all similar. The case, Mattel v. MGA was premised upon Mattel’s argument that the Bratz dolls infringed upon Mattel’s copyrights’ among other claims. Ultimately, Mattel’s argument was based upon the mistaken premise that one can assert a copyright in a mere idea or concept. Remember that this is the same company which unsuccessfully sued a group for recording the song “Barbie Girl”.

The kicker to the Bratz case is that in prevailing, the Bratz manufacturer was awarded a judgment for its costs and attorneys fees in the amount of $137,000,000 (yes, one hundred thirty seven million.I triple checked it.) Section 505 of the Copyright Act provides that the prevailing party in a copyright infringement case is entitled to petition the court for an award of its costs and attorneys fees. This point was famously demonstrated in the case Fantasy v. Fogerty, wherein John Fogerty recovered his attorney’s fees in defending himself against his former publisher’s erroneous claim that he had somehow infringed his own work.

This is the reason one has to be dead certain of their legal position before instituting a copyright infringement case and it is, I believe, one of the main deterrents to more frivolous copyright lawsuits being filed. Still, if you can afford to pay $137 million in legal fees, I guess deterrence is not really an issue.

My Netflix Rant

As if raising their prices exorbitantly overnight and then by way of apology (after losing more than one million subscribers) announcing that they were splitting the company into two separate services, (i.e. one for tradition mail delivery of DVDs and one for the streaming service- with two different websites, pricing plans and billings), Netflix has now taken corporate insensitivity to a new level.

In reviewing a Customer Satisfaction Survey I received from the company last week, I came across a question that innocently asked me to identify other ways I received movies for home viewing. The drop down menu identified such obvious services as Redbox, Blockbuster, HBO, Showtime, etc. and then in the last position, it asked me if I ever illegally download movies by Torrent or similar application.

If I was illegally downloading films (which I’m not) would I implicate myself? Think of such questions as “have you stopped beating your wife yet?” or “are you now or have you ever been a member of the Communist party?” On the surface, this is an absurd question. On a more sinister level, perhaps Netflix is getting ready to sue its customers. After the events of the last few weeks, who knows?

The Indemnity Clause

Do you want to see a client’s eyes glaze over? Heck, do you want to see a lawyer’s eyes glaze over? Then spend a little time reviewing the indemnity cruise of a typical recording contract or music publishing agreement. Here’s an example:


Indemnity: Writer hereby indemnifies, saves and holds Publisher, its successors and assigns, and its parent, subsidiary and affiliated companies and its and their respective officers, employees and agents harmless from any and all liability, claims, demands, loss and damage (including, without limitation, reasonable attorneys' fees and court costs) arising from or connected with any claim, demand or action or by a third party which is inconsistent with any of the warranties, representations or agreements made or assumed by Writer in this Agreement which is reduced to a final adverse judgment or settled with Writer’s written consent. Pending the determination and/or settlement of any claim, demand or action which is inconsistent with any of the warranties, representations, covenants or agreements made or assumed by Writer in this Agreement, Publisher shall have the right, at Publisher's election, to withhold payment to Writer of any monies otherwise payable to Writer under this or any other agreement between the parties, and or any of their affiliates in an amount reasonably related to the amount of that claim, demand or action and the reasonably estimated amount of Publisher's costs, expenses or other damages in connection therewith (including, without limitation, legal costs and attorneys' fees). Upon the resolution of any claim, any monies withheld by Publisher as aforesaid may be used by Publisher to satisfy Writer's indemnity obligations hereunder and to the extent that the withheld sums exceed such indemnity obligations they shall be treated as additional Receipts. Publisher shall have the right, at Publisher's election and without limitation for any reason, to withhold and recoup and recover the amount of any and all costs and expenses (including, without limitation, legal costs and reasonable attorneys' fees) which are paid or incurred by Publisher or on Publisher's behalf to defend, respond to, negotiate or prosecute any claim, demand or action which is inconsistent with any of Writer's warranties, representations, covenants or agreements hereunder from any monies payable to Writer hereunder or under any other agreement to which Publisher or Publisher's affiliates are a party. Notwithstanding the forgoing, any amount so withheld shall be released if (and to the extent that) legal action shall not have been commenced with respect thereto in a court of competent jurisdiction within one (1) year following such withholding, it being agreed, however, that Publisher shall have the right to again withhold monies thereafter in the event such claim continues to be asserted, is reasserted or suit is later filed. Writer shall reimburse Publisher, on demand, for any payments made by Publisher at any time with respect to the actual amount of any claim, demand or action to which this indemnity applies. Writer shall have the right at Writer's expense, to participate in the defense of any such claim, demand or action with counsel of Writer's choice. The defense and settlement of that claim, demand or action, however, shall be controlled and determined in Publisher's sole discretion.


This is the clause, usually buried somewhere towards the end of the agreement that nobody wants to deal with but it is hugely important. Most people have some hazy idea of what indemnity means, informed perhaps by the classic film noir “Double Indemnity” rather than Black’s Law Dictionary. Nevertheless, here’s how Blacks’ defines indemnity “ A collateral contract or assurance by which one person engages to secure another against being damnified by the legal consequences of an act or forbearance on the part of one of the parties or some third person. Term pertains to liability for loss shifted from one person held legally responsible to another person”.

In plain English, this means that the indemnifying party assumes the responsibility for any legal consequences caused by their acts or warranties. The problem of course is that in its unmodified, un-negotiated form, the indemnifying party can be responsible for even all unsubstantiated or invalid claims asserted against the indemnified party. As everyone knows, anyone can sue anyone else for anything under the sun, so it is important to try and limit one’s exposure for all the various claims that can arise, especially those that are bogus.

I have always argued from an artist’s perspective that an artist should not be responsible for nuisance claims filed against a record company or a publishing company. At some basic level, those companies should be in a better position to absorb the cost of defending these claims as a cost of doing business. I have been involved in defending against many of these types of nuisance claims and while they are almost always dispensed with, the cost can be staggering.

The negotiation of this section of an agreement is always different and can head off in a multitude of directions. Very often, an artist can limit their liability to claims actually reduced to judgment or settled with their consent. The important part is to know what to ask for.

The Book Business

There was an interesting article in Monday's Wall Street Journal, "The Book Business, a Rewrite" which pointed out the obvious; to quote directly “the economics of the book business are changing so rapidly, the industry barely looks like it did just six months ago". That's putting it mildly. Those of us who watched the slow ugly death of the traditional music business should not be surprised by the speed of the evolution of the book business. Still it is shocking to realize that there is not a legitimate new retail book business within the city limits of Nashville (unless you count Books-a-Million, which I just can't). I often reflect on this fact while driving to Franklin to buy a magazine (we have no newsstands either). To be fair, Nashville has a booming used book business (thanks Rhino, McKay’s and Bookman/Book Woman)and has two new bookstores slated to open soon, Anne Patchett’s much anticipated Parnassus Books and the Barnes and Noble/Vanderbilt University joint venture slated to open in the old Borders location on West End.

From a lawyer's perspective this is intriguing. As a reader who grew up in the book business, I am sort of repelled by Kindle and the whole concept of digital literature but I see the potential for many author's backlists and the few deals I have done in this area have been fascinating. More significantly, I know of some authors with devoted cult followings whose work would benefit significantly from a personal, immediate digital relationship with their audience.

The bottom line is that the book business is transforming itself like the music business, but apparently at a much faster rate. As practitioners and readers, we need to be ready.

What Nancy Thinks

My wife, the newly minted PhD. Nancy McGuire Roche just started her own blog where she intends to write
“about cinema, television, culture studies, popular culture, gender studies, feminism, and perhaps even pedagogy”. Those are her words. Don’t tell her that I don’t know what pedagogy is. She’s awfully smart and entertaining so I highly recommend reading this, especially if you are interested in film.

Here’s the link:


http://nancyroche.wordpress.com

The Music Industry is Dead. Long Live the Music Industry 2.0

Adam Gold’s article “The Music Industry is Dead. Long Live the Music Industry 2.0” in the August 25 issue of the Nashville Scene is the best overview of the current state of the music industry, let alone the Nashville music industry that I have read in some time. Here’s the link:


http://www.nashvillescene.com/nashville/the-music-industry-is-dead-long-live-the-music-industry-20/Content?oid=2610420

Gold does a great job of talking to all the major players and synthesizing a lot of information into something that is both enlightening and thorough. It’s also optimistic, which is nice to read in this day and age.

Everything You Ever Wanted to Know About Entertainment Law (But Were Afraidto Ask)

I get those flyers in the mail from the National Business Institute advertising upcoming Continuing Legal Education seminars on a near daily basis. I’ve attended a bunch of NBI CLE classes in the past and I generally think that they provide a pretty good value. Having said that, I had to laugh today when I received a brochure for an upcoming seminar called “Entertainment Law 101”. I know two of the presenters and they are excellent attorneys. What I found amusing was the breadth of the program. In 7 hours they propose to cover
1. Film Industry Basics
2. Music Industry Basics (including record deals, 360 deals and publishing deals)
3. Copyright law
4. Literary Purchase agreements
5. Acting Agreements
6. Legal compliance in fund raising and securities law
7. Insurability of Entertainment risks

If I had time I would list all of the individual sub-category listings.

I think they are going to cover more in one day than I cover in the entire semester entertainment law course I teach. Clearly any one of these topics merits at the very least an entire day of study. Perhaps the real point of the seminar is to scare other lawyers away from the practice of entertainment law (as if they shouldn’t be scared away already). That’s generally how I feel after I spend a couple of hours in an estate tax seminar.
If you’re interested though, here’s the link: http://www.nbi-sems.com/SemTeleDetails.aspx/Entertainment-Law-101/Live-Seminar

I should also point out that the Nashville Bar Association puts on excellent Entertainment Law CLE’s twice a year, at the end of August and the beginning of December.

Incorporating Touring Activities

I have just been reading articles about the horrible tragedy at the Indiana State Fair, where five people died when an outdoor stage collapsed. One article pointed out that this was at least the third such incident this summer.

I am often asked why I advise artists to incorporate their touring businesses. This is the main reason: liability. Undoubtedly, there will be lawsuits arising from the Indiana State Fair and undoubtedly the artists involved will likely be sued – even if they had absolutely nothing to do with the accident. Even if the artists ultimately prevail in court they still have to go through the necessity of dealing with the potential liability. The purpose of incorporating is to create a shield between this potential liability and your personal assets.

This is a real threat. Several years ago one of my clients managed a hugely successful country artist whose touring corporation was routinely sued for every person who slipped and fell or got hit with a random bottle of Wild Turkey at their concerts. On another occasion I represented a band that chose to tour without any type of liability protection. When a belligerent drunk got himself beaten up at an outdoor festival that they appeared at, they had to endure more than a year of costly litigation before the case was dismissed. They had to live with the uncertainty that their personal assets (houses, etc.) were at risk.

The liability protection afforded by proper corporate protection is a good first step in managing the risk inherent in touring and performing. The cost is negligible compared to the benefits and peace of mind such protection can provide

Mike Tyson's Tattoo

I have resisted writing about this for as long as I have resisted seeing the movie but by now everyone has heard about the recently settled lawsuit arising from "The Hangover Part II" specifically over Ed Helms replica of Mike Tyson's face tattoo.

Victor S. Whitmill, the tattoo artist who first gave Tyson his signature Maori-warrior inspired facial tattoo sued Warner Brothers for "reckless copyright infringement".

The concept may appear silly or sinister until one is reminded of the purpose of copyright --which is to protect "original works of authorship" including works of visual art. I have never represented a tattoo artist but I have represented professional photographers and graphic artists and I can attest that their rights are routinely violated by others who are either ignorant or unconcerned with their intellectual property rights in and to their own work. In this respect, Mr. Whitmill's lawsuit against the makers of "The Hangover Part II" has real significance.

Because the lawsuit settled we will never get to examine the more fascinating issues of the case – Warner Brothers' apparent defense of fair use (i.e. Mr. Helms' tattoo was allegedly a parody of Mike Tyson's tattoo) or my initial question – was Mr. Whitmill's tattoo "fixed in a tangible medium of expression"( as is required by Section 102 of the Copyright Act) but scholars will still have an opportunity to debate these issues for some time to come.

Termination of Assignments of Sound Recording Copyrights

A few weeks ago I wrote an article for Billboard Magazine about the Copyright Office amending the rules regarding termination of assignments of copyright. The editor wisely omitted the last sentence where I mused about whether the Copyright Office would ever take a stand on the issue of artists attempting to terminate their assignments of sound recording copyrights.

Now the New York Times has addressed the issue in an August 15 article “Record Industry Braces for Artist Battles Over Song Rights”. The article is a great primer on this complex and controversial matter. While it is clear that one of the purposes of the Copyright Act of 1976 was to give songwriters and other authors the right to recapture their work after 35 years, it is not clear whether or not the same rights apply to recording artists. This is because the termination provision specifically excludes “works made for hire” and nearly every recording contract from the 1970s on refers to sound recordings a “works made for hire”. The problem for the record companies is that the Copyright Act also has a very specific definition of “works made for hire” and sound recordings are not part of that definition. Further most record contracts go to great lengths to state that the artist is an independent contractor and not an employee of the record company, which further damages the work made for hire argument.

The New York Times article also addresses some of the confusing side issues in this debate. For example, how will the law address other “authors” of a sound recording including producers and engineers? How will the law affect artists who sign contracts in other countries subject to different laws (e.g. every major band from England)?

Although there is much discussion and debate on the issue, the battle will properly commence until January 1, 2013 when works created on or after January 1, 1978 become eligible for termination. Things are going to get very interesting. I would urge any recording artist who executed an agreement during the 1970’s to have that contract reviewed by a lawyer asap.

Contracting With Minors

Watching a Justin Bieber documentary with my daughter (there goes my indie cred) I am reminded that the median age of music performers is getting younger. This trend has been apparent since Taylor Swift's initial success. I am sure that I am not the only Nashville lawyer who has faced a singing 10 year old in my office. However, signing minors to contracts is serious business and is often misunderstood. Legally, minors can't contract. Hence contracts signed by minors are generally unenforceable, unless a very specific process is followed. This process varies from state to state. In Tennessee the process is covered by the "Tennessee Protection of Minor Performers Act". T.C.A. Sec. 50 5-201 which sets forth a court approval procedure for "contracts pursuant to which a minor person is employed . . . or agrees to perform or render artistic or creative services". The process may include a provision by which the court appoints a guardian ad litem to represent the minor's interest.

Interestingly, the statute contains an apparently little known section that requires a trust to be set up for a portion of a minor's earnings. While most practitioners are generally aware of this statute very few people seem to be aware of this section, meaning, I am not sure how often the statute is followed in short-term employment situations (such as hiring a child actor for a small movie role or local commercial). However for any type of long-term personal services contracts such as a recording agreement, publishing agreement or management agreement. court approval is absolutely essential in order to have a valid binding contract. There are also other issues to consider in these types of agreements, including choice of law and jurisdiction. Sometimes these contracts are affirmed in more than one state. If your company is thinking about contracting with a minor, the important thing is to not ignore this court approval process.

new article in Billboard on termination of copyright grants

I have a small piece in the Legal Matters section of the July 30, 2011 issue of Billboard entitled "Confusion Emerges Over the right to terminate U.S. Copyright Grants". It's fairly arcane but could be beneficial to those who assigned copyrights after 1978 pursuant to agreements dated before January 1, 1978.
Unfortunately, there does not seem to be an internet link to the article but left me know if you're interested in reading the article.

F with a G on Top: Copyrighting George Harrison

I recently had a client ask me an intriguing question. He wanted to know if George Harrison’s iconic opening chord at the beginning of “A Hard Day’s Night” was protected by copyright.

Being inquisitive, I first had to learn what chord George is actually playing. Not surprisingly, there is some debate on this issue but George himself apparently identified the chord as an “F with a G on top”.” Whatever chord he is actually playing, the sound of George’s 12 string Rickenbacker changed the world.

I don’t believe that a single chord in and of itself is capable of copyright protection. The issue would be, did the chord by itself have sufficient originality and even if it did, would the use in another song be considered ‘de minimus’. Think, for example of the Beastie Boys sampling case, Newton v. Diamond. I also wonder if a possible use of the chord would be protected by the doctrine of fair use, since you can’t play the chord without thinking of the Beatles and “A Hard Day’s Night”.

But here’s another interesting question. Could the sound itself be capable of trademark protection? Attorney Robert Scott Lawrence in his blog “Who Is Your Lawyer?” points out that over 157 “sensory trademarks” have been registered by the United State Patent and Trademark Office, including the MGM lion’s roar, AOL’s “You’ve Got Mail,” and Homer Simpson’s “D’oh”. A quick scan of the USPTO’s webs site does not indicate any registration for George‘s “F with a G on top” but I am not entirely sure that such a registration might not be possible.

I am not sure I answered my client’s question but it was a fun distraction.

In Praise of Cat Ladies and Charitable Tax Deductions

I have known many cat ladies in my life-my mother and my former assistant for starters, so I read the headline in last Saturday’s Wall Street Journal “A Cat Fancier Finds a New Way to Skin the Tax Man” with mild curiosity. What I discovered is good news for anyone who wants to know how to properly claim a charitable tax deduction for unreimbursed expenses incurred for volunteer work.

In the reported case before the U.S. Tax Court, Jan Van Dusen successfully challenged the IRS disallowance of $12,000 in expenses she incurred in caring for over 70 stray cats for a local IRS approved cat rescue organization,. The key, according to the article, is to keep detailed receipts and (this is important) to secure a letter from the charity acknowledging the gift. The donor has to secure the letter before the tax return is filed. Again, the charity has to be approved by the IRS.

This really seems to be an important victory for all types of volunteers and the charities that depend on them. As always, check with your tax professional.

The Rick James Lawsuit

I have been following with interest the recently filed case Rick James v. UMG Recordings, Inc. in which attorneys for a trust established by the late James A. Johnson, Jr. have sued Universal Music Group over the same contractual royalty clause successfully litigated by the plaintiffs in F.B. T. Productions v.Aftermath Recordings, a case tacitly upheld by the United States Supreme Court.
The well-known clause found in numerous pre- digital recording agreements provides “ with respect to records sold by (Motown’s) licensees…Motown will pay…a royalty equal to fifty percent (50%) of Motown’s net receipts based on actual sales…” The plaintiff’s argument is that this clause applies to income from digital downloads and ringtones etc. Universal has blatantly argues that such sales are not third party licenses but are something called “resale agreements”. This defense ignores the plain language of these agreements and the 9th Circuit said as much. The labels simply did not anticipate that this type of income would exist when they drafted these contracts but they still need to honor their contractual commitments if they choose to exploit the source of the income.
The most interesting thing about the Rick James case is the plaintiff’s attempt to have the case certified as a class action lawsuit. The potential damages could be astronomical—just think of the potentially affected artists on Motown’s roster.
Of course the operative words are “could be”. The big question in my mind is how many artists and how many contracts does this apply to? How many successful recording artists from the pre-compact disc era are still operating under their original (non-renegotiated) contracts and if so, how many labels are still treating legitimate third party license income as something else entirely? I am not really sure how many artists this affects. However, the 9th Circuit case apparently had some effect on another class action case originally filed by the Allman Brothers against Sony/BMG. This case had been dismissed once before and apparently has been reinstated. Both of these cases and the cases that are sure to follow in the wake of the F.B. T. Productions case are significant and well worth watching.

We are defining a business model that doesn't exist

"We are defining a business model that doesn't exist"--
Simon Fuller quoted in yesterday's Wall Street Journal on his new venture with Chris Blackwell. This could be interesting and is certainly worth watching. Everything Chris Blackwell has done has been worth watching and as much as the music snob in me might hate to admit it, Simon Fuller is a marketing genius who created an entirely new paradigm for breaking artists.

Producers in Peril

I have noticed that a lot of my producer clients don’t call me to negotiate agreements as often as they used to. They are not calling my competitors either because I’ve talked to them about this. I can’t blame anyone for not wanting to pay legal fees to negotiate a contract where the advance is small and there is a fairly good chance that they will never earn royalties.

I am thinking that one of three things is happening:

1. The producers are actually negotiating the agreements themselves, in which case, more power to them.
2. They are not signing contracts at all, in which case the record company (or artist) and the producer are acting at their own peril.
3. The producer is just signing what is put in front of him—which is what I worry about.

While it is probably statistically most often the case that most albums won’t sell enough to recoup their recording costs, there are also numerous examples of records that yield a soundtrack master use or television commercial years after their initial release. Without an unambiguous binding agreement and (hopefully) a letter of direction the producer may not have the ability to collect their share of the future income. I have seen examples of master use licenses pushing recordings from unrecouped to recouped status years after their initial release and the producer relying on their ancient agreements to get paid. It’s a beautiful thing.

I also worry that producers may be ignoring their share of Sound Exchange royalties, which are becoming a not insignificant source of income (and which are not subject to recoupment).

Finally, I worry that without carefully reviewing the document, producers might be agreeing to such punitive clauses as controlled composition clauses for producer/writers and my pet peeve, the re-producing restriction (no, not a form of state mandated population control).

I would urge any producer reading this to have the lawyer of their choice at least read the next agreement they are presented with. I can’t help but think that even a quick review be a worthwhile investment.

David Byrne, Charlie Crist and a Public Apology

I have been following with great interest this line of cases where politicians have infringed upon artist's copyrights by using their songs in campaign commercials without permission. Apparently the most recent case involves Charlie Crist, the governor of Florida who used the Talking Heads song "Road to Nowhere" without permission. Crist, the former attorney general of the state of Florida should have known better--this really is stuff they teach you in law school.

Byrne sued for $1 million. The most interesting allegation in the complaint is his claim under the Lanham Act that by using Byrne's song without permission the governor is implying a false endorsement.

Byrne is a creative guy and he came up with a very creative remedy. Part of the settlement involved Crist making a public apology for his infringement. This is good. Its about time that politicians acknowledge that they have to respect intellectual property rights. See the video here:

Two Views of the Current State of the Music Industry

A couple of weeks ago, I took part in a great panel discussion called “Taking the Pulse of the Music Industry.” The panel, held at Trevecca Nazarene University in Nashville was intended to help the students in the music business program get some perspective on career paths in the changing music industry.

I was excited to find that I was on the panel with Kissy Black who runs the company Lotus Nile Media. At one point in the not so distant past one would have referred to Kissy as a publicist, but she is much more than that. She is a 21st century marketing guru and an evangelist for convincing artists to take hold of their careers and promote themselves. Her explanation of how artists and entrepreneurs can and should use the internet to promote their careers, manage their fan bases and distribute their product was brilliant. I left that night feeling like I had seen the future of the music industry and it was going to be OK.

A week or so later, on April 4, I read my friend and fellow lawyer Steve Weaver’s blog post which cited a survey conducted by Reverb Nation and Digital Music News. The poll found that “3 out of 4 artists would love to be signed to a recording agreement.”

It’s an interesting dilemma; for the first time ever, many types of artists are not dependent on the major label platform (or the independent label platform for that matter) yet 75% of artists surveyed still apparently yearn for that traditional avenue. It’s hard to know how to advise artists in this climate. I can see both sides of this issue but I remain energized by Kissy Black’s presentation and what the future holds for artist and entrepreneurs.

How to Hire a Business Manager

I am please to be quoted in this week's (4/2/2011) Billboard article on "How to Hire a Business Manager". Its the issue with the great picture of Dave Grohl and crew on the cover. Glenn Peoples wrote the article and there's a lot of good information there.When Billboard asked me to contribute to the piece, I realized just how important and personal the relationship between business manager and artist really is. I don't think its something that thought about all that often so I highly recommend the article.

I Discover Law and the Multiverse

Last fall I wrote about a fun blog I stumbled across called Preslaw.com, which reported all of the major court decisions involving Elvis Presley. Tonight, I heard a story on NPR about a relatively new blog called "Law and The Multiverse," run by two lawyers who are also self described comic book nerds. Their goal is to study the application of the law to those fictional characters who inhabit the universe of comic books and superheros.

Don't snicker too loudly. this stuff is fascinating and the authors are extremely well read and intelligent. Even though my comic book tastes never went much further than Batman and Superman, this material is ripe for legal analysis. I have to admit that my favorite posts dealt with such civil procedure topics as "Shape Shifting and Trial Testimony,""Superheros and Alter Egos" and "The Multiverse and Res Judicata".

For anyone with a passing interest in the outer limits of the law, this is great stuff.

A Seminar on Covering Your Assets

I received an email from the Nashville Arts & Business Council regarding an upcoming seminar on artists of all types protecting their assets in the even of an emergency. Given the floods of last May, tornadoes and the horrible disasters we are witnessing in Japan right now this seems like a timely topic, so I wanted to pass the information on:


Cover Your A's (Art, Assets, and Archives)
Emergency Preparedness for Artists 101

Were the May floods in Nashville a wake-up call for you? Can your
career sustain the losses of a flood, studio fire, tornado, or burst
water line? Did you know that most homeowner's and renter's insurance
does not cover losses or liability for your art business?

What: The Arts & Business Council's April Seminar
When: Saturday, April 9, 2011, 9:30 a.m.-1 p.m.
Where: The new auditorium in the Howard School Complex (700 Second Avenue South)
To attend: $15 (includes brunch and free copy of Studio Protector).
Register now. Attendance limited to the first 25 participants.

This workshop will help you get started in protecting your career from
losses from both natural disasters and individual emergencies. Most of
the preparedness steps involve a little time and little or no money.
We will have an insurance expert on hand to demystify the topic of
business insurance and to answer your questions, and an artist who was
affected by flood to share lessons learned from the experience. Craig
Nutt, an artist and Director of Programs of CERF+ ( Craft Emergency
Relief Fund + Artists' Emergency Resources) will lead the session and
talk about emergency resources that are available to artists.
Participants will each receive a free copy of the Studio Protector:
The Artist's Guide to Emergencies®.




Presented in partnership with CERF+, Metro Nashville Arts Commission and Tennessee Association of Craft Artists with support from: Windgate Charitable Foundation, Nathan
Cummings Foundation and the Joan Mitchell Foundation.

Let Us Now Praise Foster & Lloyd

I am pleased to note that my friends Bill Lloyd and Radney Foster are about to release their first new album in a few years (...like 20+). I am also pleased to report that the record. "It's Already Tomorrow" sounds great: the same fantastic combination of vocals, guitars, more guitars and great songs that made them a breath of fresh air the first time around. This time, the record is released on their own Effin Ell label and is available for pre -orders at their website. The record really is an unexpected surprise.

Statistics and Pop Music in Nashville

Richard Florida, writing for The Atlantic, just published a fascinating article called
The Changing Geography of Pop Music .

The article confirms, via statistics, that Nashville leads the world by a hefty margin in its concentration of music businesses (i.e., record labels, publishers, publishers, distributors, recording studios, etc.). The article establishes with quantitative facts what we all have been feeling for years, that there’s something going on here. Despite the clear decline of major label’s country presence, there has been an organic growth of other genres, that can no longer just be seen as an anomaly - as well as a healthy repositioning of the country market. It’s a triumph of an infrastructure that has existed since Owen Bradley and Chet Atkins first started recording here. This infrastructure encompasses everything from studios and engineers, to gear rental companies to CPA’s and lawyers. This is largely why artists as diverse as Bob Dylan, The Who, Neil Young, Elvis Costello, Robert Plant and The White Stripes have quietly been recording here for the past 40 years. It’s a good place to get stuff done. As Florida writes, “The ongoing evolution of Nashville has made it into something of a Silicon Valley of the music business, combining the best institutions, the best infrastructure, and the best talent.”

Interestingly, the next top four cities are Los Angeles, Montreal, Toronto and Vancouver. What (besides Justin Beiber and the Arcade Fire) is going on in Canada?

Technological Nostalgia

Reading Lindsay Ferrier’s recent piece
in the Nashville Scene on the death of video rental stores started a wave of nostalgia which I have not yet been able to shake. When I teach my copyright law class, I tell students about the 1983 Sony Betamax case, and the fact that, for a brief period of time, before the Supreme Court stepped in, the sale of videocassette recorders was potentially illegal in the United States. The motion picture studios thought these devices would lead to rampant copyright infringement. I try to get my students to imagine this time the 1980’s, when a lot of this revolutionary technology was being created, and they have no idea what I am talking about.

This then reminded me about the summer of 1982, when I was clerking for a Nashville entertainment law firm. One of my biggest memories from that summer involve one of the firm’s clients (a cutting edge Nashville band that I hate to label as “New Wave” – but, hey, it was the early ‘80’s) who was about to release their own independent EP. I don’t know if Jason & the Scorchers had released their first EP yet, but the concept of a band being able to release its own independent recording, without the assistance of a major label – was really mind-blowing. It seemed impossible. My other significant memory of that clerkship was reviewing a license agreement for one of the first compact discs. I believe that the label in question was contracting directly with the manufacturer, Phillips, to manufacture the disc. At that time, we thought of those things as novelty items for high-end audio buffs.

I contemplate all these developments not to date myself, although that is a by-product of these ruminations, but to demonstrate the constant march of technology and the curious and often parallel tracks of art and law. I can’t help but think about this attached graph (which made the rounds on the internet last week) showing the rise and fall of the compact disc market. In many ways, 2011 feels like 1982 again, without the big hair.

The Watermelon/Antones Tragedy: A Post Mortem Analysis

I represented Watermelon Records for most of the 1990's. I was proud of the artists they championed,including the late great Don Walser. I hated to see the label file for bankruptcy protection back in 1999, although it was inevitable. Although I stayed in touch with the principals of the company, I was not involved in the second bankruptcy or the lawsuit filed by Don Walser's heirs. It was confusing and mildly depressing watching the Walser lawsuit from the sidelines though. I had vivid memories of Don and the great comeback he got to experience late in his life.

The Walser case was tried last spring in Austin. Last week, US Bankruptcy Judge Craig A Gargotta issued a 46 page opinion clearing Watermelon's successors of most of the allegations raised against them in the lawsuit, other than the simple claim of breach of contract.

Austin bankruptcy lawyer Stephen Sather wrote about the case and the whole sad saga and I found his analysis to be the most cogent writing I have seen on the subject. Mr. Sather graciously allowed me to reproduce his original blog, which follows:



Antone's Records: A Tragedy in Three Acts and 46 Pages

Austin prides itself on being the Live Music Capital of the World. While many musicians travel to Austin with stars in their eyes, the reality is that it is difficult to earn a living in the music business, either as an artist or an independent record label. For the past eighteen months Bankruptcy Judge Craig Gargotta has received an extensive education on what can go wrong in relationships between record labels and their artists. This education was on full display in a 46 page opinion he wrote in Walser v. Antone’s Records, et al, Adv. No. 09-1010 (Bankr. W.D. Tex. 1/24/11). You can find the opinion here.

However, Judge Gargotta was not the only one receiving an education. I represented the debtors and the case was a real eye opener for me. This is the story of Antone’s Records, a tragedy in three acts.

Act I: Watermelon Records

During the 1980s and 1990s, Antone’s Records and Watermelon Records were hometown competitors in the music business. Watermelon was founded by Heinz Geissler, a German immigrant. Its catalog focused on Americana music. Antone’s Records was founded by nightclub owner Clifford Antone and focused on blues music. At some point during the 1990s, Dallas investor and music lover James Heldt acquired a majority stake in Antone’s.

Watermelon Records was the first to fall. Watermelon Records filed for chapter 11 relief in 1998. At the time, many of its artists were unhappy with the label. After a contentious three year case involving competing plans and shifting alliances, Watermelon confirmed a plan in which its assets were sold to Texas Clef Entertainment Group, Inc. Texas Clef was an affiliate of Antone’s Records which was formed to make the acquisition.

Few of the artists filed claims in the Watermelon Records bankruptcy case. A group of artists was very active in the case and succeeded in having their records carved out of the sale. The plan of reorganization confusingly provided that artists who filed proofs of claim would be treated as parties to executory contracts and would receive a cure offer. Since most of the artists did not file claims, this provision applied to only a few parties. However, the artists did not receive cure offers. Instead, they received a pro rata share of the funds available to unsecured creditors.

Even though the plan was not followed, none of the parties seemed to take notice. Texas Clef re-released many of the Watermelon titles.

Act II: The Walser Suit

Antone’s, Texas Clef and sister label, Texas Music Group, drew the ire of many of their artists and publishers when they were slow to issue royalty statements and pay royalties.

In 2004, Texas yodeler Don Walser, known as the Pavarotti of the Plains, hired a lawyer and demanded that the label provide him with his royalty statements. After three tries, the label rendered an accurate statement and paid most of the royalties. However, this occurred after the expiration of a deadline to cure defaults. Nonetheless, Mr. Walser accepted the payments. Nothing more occurred until March 2005, when Mr. Walser filed a suit against the label timed to coincide with the South by Southwest Music Festival.

While many of the artists would dispute this, my belief is that the Antone’s labels were guilty not of malice, but failure to keep up with rapidly changing technology. During the 2000s, the sale of music began to shift from cassettes and compact discs to digital downloads. This new distribution channel multiplied the label’s reporting requirements exponentially. Compact discs are sold as a unit containing all the tracks. The record label generally used one domestic distributor and one or more foreign distributors. With digital downloads, consumers could purchase individual tracks or albums. In the early days of digital downloads, there were many competing digital download sites who often provided their reporting in inconsistent formats. It required many man hours to assemble all of this data into a statement. Having downsized its operation to save costs after Mr. Heldt was unwilling to continue subsidizing the labels’ losses, the labels were simply unable to keep up with reporting for over 100 releases. It was not until 2009, after chapter 11 had been filed, that in-house computer wiz Tristan Ader developed an automated database which synthesized the information received into a statement.

Meanwhile, the Walser lawsuit rocked along in Texas state court. The suit metastasized to include six defendants, including the three record labels, James Heldt, Heinz Geissler (now an Antone’s employee) and label president, Randolph Clendenen.

Act III: The Antone’s Bankruptcy

On November 18, 2008, on the eve of trial in the state court action, the three labels filed for chapter 11 relief. Ironically, it was during the bankruptcy case that the labels first began to generate timely statements and make timely royalty payments.

The Walser case was removed to bankruptcy court. The suit remained on hold for a lengthy period while the U.S. District Court considered a Motion to Withdraw Reference.

History repeated itself as competing plans were once again filed. The debtors filed a plan based on payments from cash flow and a new capital contribution from James Heldt. The Official Creditors’ Committee filed a plan proposing to sell the debtor’s assets to a new label for $125,000. At the last moment, the Creditors’ Committee sought to move up the auction from after confirmation to the confirmation hearing itself. An auction was held at the confirmation hearing with James Heldt making the high bid. However, the court rejected his bid and accepted the next highest bid, which came from New West Records. During the bidding process, the sale price doubled from the original offer.

In a mediated settlement, the Debtors, the Official Creditors’ Committee and James Heldt agreed to allow the New West sale to go forward at a slightly higher price with several other concessions. At this point, it became clear that Antone’s would not continue as an independent label. However, there was still the Walser suit to try. This trial was held in bankruptcy court over three days in May 2010. Although Mr. Walser’s estate had filed a proof of claim for $300,000, the estate’s attorney asked for damages of $1 million in closing argument.

On January 24, 2011, the Bankruptcy Court rendered its opinion denying substantially all of the relief requested by the Walser estate.

The Court’s opinion methodically analyzed and rejected the claimant’s theories. Among other findings:

· The Walser estate could not claim the masters embodying his recordings. When a record company pays for the recording of a musical performance, that recording belongs to the record company. The Court found that any claim for rescission of the recording agreement was pre-empted by the Copyright Act and that the Walsers had failed to meet the high standard for imposing a constructive trust under Texas law.

· The record company did not owe a fiduciary duty to the artist. Where Mr. Walser had representation from both an agent and an attorney, he did not rely on the record company to act on his behalf. There was not a relationship of trust and confidence under state law where he affirmatively distrusted the record company. In its ruling, the Court distinguished a case involving Apple Records and the Beatles.

· The record company did not commit fraud when it failed to provide royalty statements in a timely manner. As the Court stated, “No evidence exists that demonstrates actual fraud.”

· The Walsers could not recover damages for emotional distress or punitive damages on a breach of contract claim.

· The Walsers could not pierce the corporate veil to impose liability on the individuals associated with the record labels. Under Texas law, mere failure to observe corporate formalities was not a ground for piercing the corporate veil. On a contract claim, it was necessary to show actual fraud rather than merely constructive fraud to pierce the corporate veil. Where James Heldt had loaned millions of dollars to the company and had never taken a salary, there were no grounds for piercing the corporate veil.

The Court’s opinion is a valuable resource for cases involving constructive trusts, rescission, breach of fiduciary duty and piercing the corporate veil. Many of these issues involve routine Texas state law questions. However, there are so many questions addressed in this opinion that there is something for many people.

In the end, the Walser estate was awarded an unsecured claim for $28,161.41, an amount conceded by the Debtors and which had been tendered prior to bankruptcy, together with pre-judgment interest of $1,025.15, which was the amount the Debtors conceded was owed. The Court also allowed the Walser estate to apply for an award of attorney’s fees, but cautioned that it must segregate out the time spent on relief which was not granted.

This is a case brimming with ironies. The suit which pushed the debtors into bankruptcy was ultimately rebuffed. However, because the artist and publisher creditors did not support the plan proposed by the Debtors, the assets of the Debtors were sold to a new label. Hopefully for the artists, the third time will be the charm.

BMI Live

BMI announced earlier this month that it has created a a new program for performing songwriters, “BMI LIVE,” which allows their writers to register their set list online and be paid the performance royalties for the concert performance, no matter the size of the venue.

The first payment is scheduled for BMI’s June distribution and will cover those performances from July 1, 2010 through December 31, 2010 which are entered before March 30, 2011.

I know that SESAC has had a similar program for some time and I presume ASCAP has something similar in existence or in the works. As revenue streams continue to shift for artists, this is a welcome development and if you are a BMI writer/performer, I urge you not to ignore it.

The XM Satellite Radio Litigation

I have had a number of songwriters and artists ask me about the proposed settlement in the XM Satellite Radio Copyright Litigation Class Action pending in the United States District Court for the South District of New York.

The lawsuit essentially claimed that by virtue of its involvement with so-called “XM Recording Devices,” XM Radio facilitated copyright infringement. The case was certified as a class action and was recently settled by XM agreeing to pay out approximately $5 million to various owners of sound recordings and musical compositions broadcast on XM between March 30, 2006 and December 6, 2010. Settlement notices and proofs of claim were sent to potential claimants last week. In the packet I reviewed, the attorneys had identified the sound recordings belonging to my client, although other people have told me that the proof of claim forms they received were left blank.

If you think you might have a stake in this agreement and have not received settlement documents, you should contact the settlement administrator at 877-398-1139 or through their website www.notavxm.com.

Clearly there is some amount of money out there and it would be foolish to leave it on the table.

Who Owns Your Status Updates?

Years ago (it was 1994 to be exact), I purchased a book at the Harvard Coop Bookstore, Who Owns Information? by Anne Wells Branscomb. I was determined to digest the contents of the book and become an expert in the then-emerging field of internet privacy. Sadly, I never made it through the book but it still looks impressive sitting on my office bookshelf.

I was reminded of this the other day when a potential client asked me who owns the information she posts on Facebook. I have to admit that is a question I had not given much thought to, but like everyone else, I had heard all sorts of rumors about Facebook and privacy issues. So I did what they taught us in law school. I looked it up. It seems the answer is clearly posted on Facebook’s site:

You own all of the content and information you post on Facebook, and you can control how it is shared through your privacy and application settings. In addition:

1. For content that is covered by intellectual property rights, like photos and videos ("IP content"), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook ("IP License"). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

There is a lot more interesting information in this section under the “Statement of Rights and Responsibilities,” and it is well worth reading. Thus we can be assured that Mark Zuckerberg does not own your vacation photos, “likes” and i-Pod lists. At least for now.

The Man Who Needed a Will

I have spent quite a bit of time over the last few years preaching to people about the need to have a Will. I can think of no better cautionary tale than that of Steig Larsson, the best-selling author of the Millenium Trilogy books.

Larsson died in 2004, before the books were published and became an international phenomenon. Larsson also died without a Will, leaving his companion of thirty years, Eva Gabrielsson, nothing. By Swedish law, his Estate went to his next of kin, his brother and father, from whom he was reportedly estranged.

I am pretty sure Larsson did not plan to die at 50. It is also unfair to speculate as to what his intent would have been for his Estate (which of course had not been fully realized at the time of his death). However, just like the sad case of Steve McNair, this just seems plain irresponsible, especially for a man whose real life career was reportedly as dangerous as that of his journalist protagonist ( and who, reportedly smoked three packs of cigarettes a day). I really hate hearing stories like this.

Let Us Now Praise Webb Wilder

I am happy to share the news that my great friend and long time client Webb Wilder is going to be inducted into the Mississippi Musicians Hall of Fame next Tuesday January 18th. This honor puts Webb in the company of such notables as Jerry Lee Lewis, Elvis Presley, Mose Allison, Tammy Wynette, Bo Diddley and of course, his aunt Lillian McMurry.

I've wanted to post something about Webb for sometime just because, in all honesty, he is a beacon of rock and roll. The music that he and his cohorts make, defies categorization (other than perhaps the term "swampadelic") and never fails to inspire me or lift my spirits. Webb also serves as a great example of how to age gracefully in this business while still delivering the goods. After 20+ years of albums and movies it is gratifying to see the last of the full grown men get the recognition that he deserves from his home state.

Kickstarter: The New Patronage Model

A few weeks ago the manager of my office building asked if I could please leave work early one evening because a production company would be filming on my floor. I was happy to have an excuse to leave early, so I readily obliged.

The next day I was pleasantly surprised to see Steve Taylor filming with a crew on my floor. I don’t know Steve all that well, but I know of him as a sort of renaissance guy: musician (he was an amazing front-man in the band Chagall Guevera), writer, record company exec, producer, video director, and now apparently filmmaker.

I later learned that the film Steve was making is an adaptation of Donald Miller’s book Blue Like Jazz. I just read an article in the Nashville Scene about the financing of the film.
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And here is where it gets interesting. Apparently the original funding for the film fell through and the producers turned to the online service Kickstarter to raise money for the production. According to the article, they raised $345,992 in one month making it “the largest crowd funded creative project in American history,” according to the Scene.

I have heard of other amazing stories about Kickstarter. Coincidentally, I have a client who raised $14,000 to record an album in one month through approximately 155 donors (that averages around $121 each). Kickstarter keeps 10% of the money raised (5% for itself and 5% for Amazon for handling the transaction).

I have always been wary of most patronage type arrangements but this seems to be emerging as a significant new model. Any artist with a devoted fan base can look to their fans for actual support. This is a very direct way for an artist to connect with their audience and is yet another way that technology is supporting the independent artist.