17 USCA Sec. 411(a) and the law of Unintended Consequences

A couple of weeks ago, I attended an end of the year Continuing Legal Education seminar which featured two respected Nashville attorneys, Jim Harris  and Richard G. Sanders discussing an ongoing copyright infringement case they were involved in.  The case was a bit technical and the discussion initially focused on aspects of the Digital Millennium Copyright Act.  I was about to fall victim to one of those mid‑afternoon slumps when the discussion suddenly turned to the dreaded Section 411(a) of the Copyright Act.

            I was surprised to discover that the plaintiff’s attorney in this case had fallen victim to the same procedural problem I had recently faced.  Section 411(a) of the Copyright Act states that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”  Thus, as we constantly tell our clients and  students, while your copyright exists from the moment the work is first fixed in a tangible medium of expression, you can’t protect it (i.e. you can’t get into court) until the work is actually registered.

            What does this actually mean?  There is a split in the federal circuits as to what it takes to satisfy the registration requirement. In the 9^th Circuit, the registration requirement is met once the owner files the application to register the work with the copyright office.  Unfortunately our circuit, the 6^th Circuit currently follows the narrower approach, which requires the actual completion of the registration process before a plaintiff is allowed to proceed with his or her lawsuit.

            The odd part of this whole scenario is that Section 411(a) allows a party to go forward with a lawsuit even if the registration is refused.  Many commentators, including Nimmer have pointed out that if such is the case, the 9^th Circuit approach makes the most sense. 

            The problem of course is that the registration process can take a long time (especially in this era of government shutdowns and sequesters) and the damage caused by an infringer can be potentially fatal while the applicant waits for his registration certificate.  (There is an expedited registration process but many would find the fee $760.00 to be cost prohibitive.)

            I guess the policy argument here is that Congress intended to encourage registration by making it a prerequisite to filing an infringement lawsuit but it appears that many copyright owners choose not to register their work – or in some cases are not even aware that their work is protected by copyright until an actual infringement has occurred.

            In the case I was involved in, the court initially dismissed our complaint for infringement without prejudice. (this means that we could refile the lawsuit as soon as we received the registration certidicate).  I filed a motion to reconsider and while the court was considering this motion my registration certificate magically appeared, allowing the case to proceed to a successful conclusion.  Nonetheless I think that the requirement of actual registration under Section 411(a) is an outdated unworkable restriction which has the unintended consequence of causing harm to many plaintiffs.  In this context, the 9^th Circuit position seems much more fair. Congress should amend this section of the Copyright Act.

Merry Twismas and Happy Holidays to all!

You Gotta Have a License

My old friend, former restaurateur and new attorney, Jody Faison has written an article for the Nashville Bar Journal explaining why and how the performing rights organizations, BMI, ASCAP, and SESAC go about licensing the public performance of music to the bars, clubs and restaurants which  provide music to the public. 

            Jody does a good job in explaining this whole process which to the new proprietor is most likely bewildering. Those who have not been raised in an environment which understands intellectual property rights are often shocked when they find out they have to pay for the privilege of providing music, live or otherwise, in their facility.  Jody also points out that unless the proprietor fits into one of the narrow examples provided by the Fairness in Music Licensing Act, there is really no way around the licensing requirement and paying licensing fees to each of these  organizations.  I can speak from personal experience from representing  bar owners in the past that the consequences of not being properly licensed can be disastrous.  I am obviously a  fan of performing rights organizations but their enforcement and litigation strategies can seem merciless.

            The article “Blueprint for the Blues: Building Strategies for Performing Rights Fees” in the November 2013 Nashville Bar Journal should be required reading for anybody going into the restaurant or bar business and  those who advise them.

Why Is an Entertainment Lawyer Writing about Health Insurance?

I don't have a dog in the health insurance fight.  I think it is outrageous how much I have to pay for health insurance.  However I also believe that no one should be forced to go without health insurance.  Most of my clients are involved in the arts in some capacity and I am concerned for their well-being. I am pretty sure that a lot of these folks  don’t have health insurance.  Nate Rau recently reported in the Tennessean that out of a recent survey of professional musicians, actors, dancers, visual artists and film makers, nearly 43 percent were without health insurance and out of this number, 88 percent claimed that they simply could not afford it; no surprise there.

                Artists typically do not have "employers" in the traditional sense so up until now the only alternative for them has been self-insurance, a market which seems to raise its rates every time the wind blows.  Insurance is too expensive; yet I have seen the devastating effects of unexpected medical costs on families and have to say that having some form of health insurance is the only prudent solution.

                So this gets us to the Affordable Health Care Act.  Against the will of the Tea Party that thinks that it is too much and the left that thinks that it is not enough, the government has taken the first steps to try and fix the insurance inequity problem in this country.  I have been reading about the so called "marketplace" available at www.healthcare.gov and I can't see a reason for an uninsured person not to investigate it.  On the face, the rates seem quite reasonable.  If you are completely confused by all of this  I recommend reviewing a pamphlet from the Legal Aid Society called "Here's How the Affordable Health Care Act/Health Care Law Can Help You".  This does a good job of explaining how the new law works.  For those who complain that the web site is slow or wonky all I can say is "remember dial up internet access?"  It's time to stop complaining and start researching.

Trouble for California Entertainment Attorneys

Most entertainment attorneys are vaguely aware of California Labor Code 1700,  The Talent Agencies  Act.  We remember the broad outlines:  the law  originally had something to do with the movie business, it was once used against the Jefferson Airplane’s manager in the 1960s.  We all routine admonish our manager clients that they cannot “procure employment” for a client, even if this statute does not reach outside of California.

            Incredibly the law was recently employed by Labor Commissioner of California to punish a California attorney who did nothing more than negotiate  a contract on behalf of a client.  The case, Solis v. Blancarte, first reported on JD Supra, involves an attorney who negotiated an employment agreement for a sports reporter and charged a fee equal to 5 percent of the compensation earned by the client.  According to the opinion, the relationship between attorney and client lasted for several years.

            While the practice of charging a percentage of earnings is not prevalent among Nashville  attorneys, it is by no means unusual in California.  I am aware of many law firms which operate this way.  What is striking about this opinion is that it punished the attorney for doing the job he was hired to do.  The opinion quotes from the labor code which defines “Talent Agency” as  a person…who engages in the occupation of procuring, offering, promising or attempting to procure employment engagements for an artist or artists”.  Crucially, the statute also states that “the activity of procuring, offering or promising to procure recording contracts for an artist or artists shall not of itself subject a person to regulation and licensing under this chapter.”

            So while soliciting and negotiating record deals is exempted from this statute, everything else that an attorney might negotiate for an artist client is not.  Interestingly, even though there was no evidence that the attorney was attempting to solicit a reporting job for his client (i.e. the job was offered to the client and the attorney’s job was to negotiate the contract) the Labor Code Commissioner saw fit to stretch the definition of “procure” to include those activities which “bring about” the deal, i.e. the act of negotiating the contract. This is what lawyers do: they negotiate.

            I am not in California,  have very few California clients and have rarely represented an artist on a contingent fee but this ruling is still shocking.  Imagine a governmental agency arbitrarily deciding that an otherwise legal and legitimate professional activity was suddenly illegal and that your earned legal fees had to be forfeited.  This seems so far removed from the original purposes of this statute.  I hope that Attorney Blancarte challenges this ruling and I am sure that we have not heard the end of this California saga.

How the Government Shut Down Affects Me

Like most Americans, I tend to be incredibly oblivious to things that do not affect me directly.  I can complain about Congress but if I don’t personally suffer  because of the current governmental shutdown I might not even notice it.  But I began to wonder, how does the government shut down actually affect me and my clients?  Turns out, a great deal.

  I do a lot of copyright work – registering copyrights, and enforcing my clients’ copyrights.  There is currently a sign on the copyright office web site that reads “The U.S. Copyright Office is closed and www.copyright.gov is not available due to the federal government shutdown … copyright registrations will not be processed until the Copyright Office reopens.”

This has the potential to become a huge problem. If copyright owners can’t register their copyrights, they can’t get into court to protect their rights.

 I also do a lot of trademark work.  I went to the USPTO.gov site and discovered that due to some pre‑planning the trademark office is using “prior year reserve fee collections” to remain open for “approximately four weeks”.  Then the trademark office would shut down except for a “very small staff” that would continue to accept new applications.  However,  presumably the new applications would not be processed. 

  Finally I wondered what the effect of the shutdown would be on the Federal Court System.  I learned that because the Constitution guarantees criminal defendants the right to a speedy trial, the Federal courts must remain open as an essential government service.  However, most commentators think that civil litigation would be suspended and that so‑called non‑essential employees (the people in the clerk’s office—who are pretty essential in my book ) will be furloughed without pay and the system will grind to a halt. 

 If the shutdown continues,  the ripple effects are going to be significant.  I was already disgusted after hearing about Head Start daycare programs being shut down as well as the exacerbation of the problems in the Veteran’s Administration but I did not think that my practice or my ability to serve my clients would be affected.  Apparently I was wrong.  

 This needs to end.