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.

SXSW Panel: Remixing, Mashups, and Copyright Law

Music and law experts explain how to reuse original compositions while staying in the legal clear. 

The take-away from the South by Southwest Music Festival panel titled “Remixing, Mashups, and Copyright Law,” was to play it safe when creating derivative musical works. Panelists included Christiane Kinney, musician and partner in the LeClairRyan law firm’s Los Angeles office; Sean Kinney, a music and film industry consultant; and Dean Serletic, head of marketing and licensing for Music Mastermind Inc. All three stressed to the audience of artists, producers, and a handful of attorneys to obtain a license if wishing to distribute a remix of an existing song or a mashup of several songs and/or videos. If the license is for using just a portion—however small or large—use just that part of the original and nothing more. And don’t even think about claiming the Fair Use Doctrine to support non-licensed remixes or mashups.

Serletic pointed out that, at one time, the music world only occasionally featured remixes and mashups. But with technology’s rise, the changing trends in musical sound, and relatively inexpensive home recording equipment, these creations are now much more common. Many amateur users who post their reinterpretation of songs and videos to YouTube have no idea that there is a law regulating such actions. Still, some of these uploads are flagged and removed. After all, YouTube enables its users to make money from advertisements on their page, so there is revenue being generated from the original owners’ content.

While he believes the music industry should accept that art sometimes relies on existing work to create reinterpretations, which can have significant impact, Serletic added that he would like general consumers and recreating artists to understand who owns the composition. Both parties need to openly negotiate—and do so before the reused work is distributed in a public way, which gives the re-creators more bargaining power. When this happens, Serletic said, both sides win because content is being purchased fairly and derivative works can be shared freely.

Panelist Christiane Kinney noted that indie musicians looking to license their work for usage in a remix, mashup, commercial, movie, etc., should request reasonable royalties. Apparently, many indie artists request higher payments than The Rolling Stones request for usage of their rich body of work. Sean Kinney added that the creators of derivative works must ensure that they too have contracts on the derivative work to include anybody and everybody that had a role in producing the end product.

A less desirable course to take when remixing or mashing original compositions is to distribute the derivative work without obtaining licensing beforehand and then claiming that this action was legal under the Fair Use Doctrine. Christiane Kinney called this “an excuse for copyright infringement.” For more information, go to Christiane Kinney’s entertainment law blog at musicalredhead.com.

Twibel, Tumblr, and the First Amendment: Ongoing themes at SXSW Interactive

With the option to hide behind avatars, handles, and screen names, people can be downright mean, even libelous, while communicating online. When defamatory statements are published online and a victim chooses to take action, who is to blame?

For websites like Tumblr and Twitter, which provide outlets for anyone with a username to publish content, the answer is somewhat complicated. But one thing is certain—it’s not them.

Under Section 230 of Title 47 of the United States Code, passed as part of the Communication Decency Act of 1996, web hosts have protection against legal claims arising from hosting information written by third parties. This includes content such as hate speech and sex trafficking.

During a March 9, 2014, SXSW Interactive panel “The Fragile Law that Protects Online Speech,” Ari Shahdadi, general counsel to Tumblr, explained how the company applies Section 230 to cases where unhappy users ask for negative posts concerning them or their affiliated groups to be removed from the site, sometimes threatening legal action. Examples included rants against ex-boyfriends and bad business reviews, which Shahdadi noted are protected under the First Amendment. Taking them down, he argued, might discourage the positive grassroots conversations that also take place on the site. “You’re either committed to free speech or you’re not,” he noted.

Tumblr, however, has chosen to remove select posts, such as uploads that glorify self-harm.

According to Ellyn Angelotti of the Poynter Institute for Media Studies and Catherine Cameron with Stetson University College of Law—panelists in the March 10, 2014, conversation “Twibel: Fight Bad Speech with More Speech”—the social media site Twitter is facing similar questions when dealing with libelous posts. But despite numerous instances of online defamation, few cases have actually gone to court. Angelotti and Cameron, along with audience members, speculated that this could be a reflection of the costs associated with suing or simply an understanding that “that’s just the way things are online.”

Recognizing that traditional mediation and dispute resolution approaches are not always practical in online defamation cases—where more often than not, a victim desires for the situation to simply never have happened—Angelotti and Cameron discussed alternative approaches, such as community monitoring, as a system for combating libel.

Both Tumblr and Twitter offer community guidelines. Still, questions regarding the rights and responsibilities of both users and hosts linger and appear likely to remain present until additional legislation is passed.

SXSW Interactive Wrap-up: With Lightning Speed

South by Southwest has a tradition of encouraging innovators to push the tech envelope. But with new developments come new legal questions, and technology often moves faster than the legislative process.

During the opening days of SXSW Interactive, tech and law experts converged to discuss some of the legal issues currently at play regarding tech development. From patent control to protecting personal information, the topics were hot—and the opinions surrounding them were just as heated.

A session dubbed “Clubbing the Patent Trolls: How We Can Fight Back” featured U.S. Representatives Hakeem Jeffries (New York) and Blake Farenthold (Texas); Alan Schoenbaum, of counsel to Rackspace Hosting in San Antonio; Michael Petricone, senior vice president of government affairs for the Consumer Electronics Association; and Julie Samuels, staff attorney and the Mark Cuban Chair to Eliminate Stupid Patents at the Electronic Frontier Foundation. Panelists took the stage to address the alleged overuse of patents as legal weapons and explained that both big and small businesses can be targets of patent trolls—groups that threaten litigation against companies they argue are infringing on their protected patents, though the patents are arguably broad and commonsense, such as public wi-fi, and not always the claimant’s original creation. In turn, companies threatened with litigation might pay the “trolls” to go away instead of facing expensive court costs to fight the accusations, which are reportedly usually erroneous.

While the issue is currently being discussed in courts across the nation, panelists say the process is moving too slow and stressed the importance of a push for reform, encouraging grassroots efforts and legislative action. They also suggested that in the meantime, pro bono attorneys could assist small businesses that have limited funds to combat litigation.

But some audience members responded with concerns that stricter limitations on patent lawsuits could jeopardize honest businesses and universities that have legitimate patents on products they worked hard to develop.

Slower-than-lightning-speed lawmaking is also an issue when it comes to app development and security. According to panelists in “Mobile Security & the Future of the App Economy,” U.S. lawmakers are struggling to keep up with monitoring and protecting user rights within the ever-changing mobile development sector. Panelist Jaclyn Louis, legislative director and counsel to congressman Tom Marino of Pennsylvania. pointed out a study that showed 95 percent of the top 200 free apps exhibit risky behaviors, further explaining that major threats to consumers include premium-service abuse, data theft, and adware.

Yet many Washington leaders want to avoid stifling development, which could potentially be an effect of stricter requirements on app producers. Louis noted that the idea of a voluntary badge for apps (think Energy Star) could be an effective method of vetting apps for consumers without too much government oversight. To follow updates from other law-related sessions at SXSW, look for #SXSBOT on Twitter. Follow us @statebaroftexas, @lowellmbrown, @hkid, and @LSMader.