State Bar of Texas Blog

SXSW CLE Wrap-up

Part I: Cool Things v. Consumer Privacy, Filming Unsuspecting Subjects, and Streaming Pay Scales

By the end of South by Southwest 2014—held in Austin from March 7 to March 16—attorneys were referring to the festival’s official legal program as “Camp CLE.” Like the much larger SXSW spectacle, the CLE room was full of lawyers from around the country, as well as a mix of artists, publishers, and other entertainment industry professionals. Put on by the Midwest-based Lommen Abdo Law Firm, a total of 12 sessions were held, led by 30 law experts. The Texas Bar Journal reports on several of these events below. Stay tuned to the State Bar Blog for additional SXSW CLE articles.

 

The Sentient Economy: Law and Policy for the IoT. Session leader Gerard Stegmaier—of counsel to the technology-focused firm of Wilson Sonsini Goodrich & Rosati in Washington, D.C.—explained that the Internet of Things “is like looking into the crystal ball,” which consists of objects that people use in their everyday lives that have the ability to connect to the online network. Smart phones, personal activity trackers, even refrigerators with interactive computers make up the IoT. These devices often ask for the user to provide a varying amount of personal information so that the user’s experience can be individually customized—oftentimes to motivate the user to achieve a specific goal.

Stegmaier quipped that this “machine-to-machine” connection is dangerous because it is a billion-dollar industry that involves controversial consumer privacy matters. “And when there’s that much money at stake,” he said, “lawyers come running.” Privacy law issues, Stegmaier believes, will either inhibit or prohibit the growth of the IoT. Because most consumers value being notified—or being asked for permission—any time their personal data is captured, Stegmaier recommended that tech companies consider taking such “privacy by design” approaches.

Businesses that supply objects within the IoT can get into trouble for violating deceptive-trade laws, either by being outright deceptive (when the writing used is determined to be misleading) or by being unfair (when substantial consumer injury outweighs any potential benefits). While the IoT “makes cool things possible,” he said, lawyers need to make sure consumers and companies aren’t at risk.

 

All About Hidden Camera and Investigative Reporting. A handful of attorneys mixed with dozens of filmmakers and media professionals at this CLE session, led by entertainment attorney Michael Donaldson of Donaldson & Callif in Beverly Hills. The discussion focused on the recommended practices for documentary films and news programs that film non-actors—or “unsuspecting subjects”—and wish to publicly distribute the recordings.

Donaldson noted that it is always a good idea to start by researching the relevant states’ laws on recording conversation and to try and obtain releases from any unsuspecting subjects who are filmed. The movie Borat, for example, employed a release (although not for all filmed subjects) that courts found to be “rock solid” because it was absolutely clear, in plain language, and short.

When no releases are obtained—as is commonly the case for undercover and investigative reporting pieces—the most important factor that courts have considered is the filmed individual’s expectation of privacy. A TV news show that secretly filmed a physician inappropriately prescribing painkillers lost in court based on the doctor’s reasonable expectation of privacy in his own office. On the other hand, a suit brought on by a performer who was filmed backstage beating apes that were used in his circus show was unsuccessful because the court found that he had little reasonable expectation of privacy backstage, where stage hands and other performers were frequently present.

 

Screaming About Streaming. Said to be the hot topic of this year’s SXSW CLE, this three-person panel focused on online streaming and the copyright and royalty issues related to the increasingly popular way of consuming music. Panelists included Ken Steinthal of King & Spalding in San Francisco; Colin Rushing, senior vice president and general counsel to SoundExchange; and John Simson, of counsel to Lommen Abdo Law Firm. They explained that music streaming involves two separate copyright issues: one for the composition’s publishing and another for the master recording. And, streaming itself is divided into two categories: interactive streaming (i.g., Spotify) and non-interactive (i.g., Sirius XM and—controversially—Pandora).

To illustrate this complex legal situation, panelist Steinthal focused on the recent court case involving Pandora and the American Society of Composers, Authors and Publishers, in which Pandora sought to pay the same rate that traditional radio pays (1.7 percent of revenue) for ASCAP-registered material. (Pandora insists that it is guaranteed protection to have such low rates, while publishers and ASCAP argue that it is unfair and results in an industry where millions of hits on a single song generate less than $600 in compensation.)

Panelist Rushing of SoundExchange gave the audience some historical background, noting that traditionally, radio stations had to buy the rights only to a song. But after 1995, all sound recordings broadcast via digital public performance also required publishing rights. While technically the publishing copyrights are compulsory and masters copyrights are voluntary when dealing with interactive streaming services (and vice-versa for non-interactive streaming), Steinthal and Rushing explained that it is probably best to acknowledge both copyrights.

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