A recent panel at South by Southwest examined some prominent copyright cases from the last year and delved into the changes in effect and coming into effect from the Music Modernization Act, or MMA.
The panel started with a focus on the 2019 ruling by the U.S. Supreme Court in the 4th Estate Public Benefit Corp. v. Wall-Street.com case.
“The 4th Estate deals with the question of registration versus application and when your copyright is effective,” said Todd Dupler, senior director of advocacy and public policy for Recording Academy.
At dispute in the case were articles that 4th Estate had licensed for use on Wall-Street.com, but the agreement had run out. Wall-Street.com did not remove the articles from the site, and 4th Estate sued for copyright infringement, Dupler said.
“[4th Estate] had filed applications to register these articles as copyrighted works,” Dupler said. “The registration had not been granted yet.”
The Supreme Court ruled unanimously in favor of Wall-Street.com with Justice Ruth Bader Ginsburg writing the opinion.
The Supreme Court “held that on this question of registration versus application, that it’s only effective when the registration is granted,” Dupler said. “You cannot file a claim based on your application.”
The court decision presented a real problem for the U.S. Copyright Office because the office was not processing registrations in a timely manner, Dupler said.
“Decades ago, you needed a few days or weeks to get your registration,” Dupler said. “Now, that backlog is typically six months. If you have an application that requires back and forth with the Copyright Office … that can stretch up to nine months.”
Waiting for nine months can essentially cause the applicant to lose their rights, Tom Matson, counsel to Fox Rothschild said, especially in the digital era when infringement can happen instantly.
“The problem for litigation of copyrights is that you need a registration as a pre-requisite for filing in court and getting injunctive relief,” Matson said. “If you have to wait nine months to bring injunction, which is happening right now, you are losing those rights.”
Dupler said the ruling in 4th Estate quickly drew attention from Congress and the Senate Judiciary Committee. Sens. Thom Tillis, of North Carolina, and Chris Coons, of Delaware, composed a letter to the Copyright Office on March 14, 2019, asking the office about the handling of the registration backlog and to find out what resources the office needed to solve the problem.
The MMA brought many needed changes to update music licensing for the digital era, Dupler said.
“Basically, we had a music licensing system that was built for the eight-track era,” Dupler said. “The last major copyright legislation, the DMCA [Digital Millennium Copyright Act] was passed in 1998, and the Copyright Act of 1996 all passed before we were listening to music on our phones.”
The MMA passed 415 to 0 in the House of Representatives and was co-sponsored by 81 senators. Dupler said the ease in passing the act through Congress was the result of collaboration between record labels, music publishers, songwriter groups, artist groups, performing rights organizations, streaming services, and broadcasters.
A significant change to the MMA deals with the licensing of music for streaming services and the filing of notices of intent, or NOIs, Dupler said.
“If you were streaming and you needed a license to clear millions of tracks, you were bulk noticing the Copyright Office with millions of NOIs for songs that you wanted to use,” Dupler said.
The MMA changed that and streamlined the process for acquiring song licenses while also creating an agency to manage those licenses, collect the royalties from the licenses, and distribute royalties—the Mechanical Licensing Collective, or MLC.
“If you are a streaming service, you can have a blanket license to get all the music that you want to play, all the mechanical licenses for songs,” Dupler said.
In December 2018, the Copyright Office noticed the creation of the MLC and laid out the statutory requirements for the agency, Dupler said. In July 2019, the Copyright Office will decide on who comprises the MLC, and in January 2021, the MLC will start as the new licensing system, Dupler said.
Another component of the law was changes to how rates are set for performance rights through the American Society of Composes, Authors, and Publishers, or ASCAP, and Broadcast Music, Inc., or BMI. The rates are currently regulated by the Department of Justice under anti-trust consent decrees, Dupler said.
The two changes allowed judges to admit more evidence when setting rates under consent decrees and established a “wheel of judges” to set the rates for ASCAP and BMI, so that one judge does not have all the power, Dupler said.
Another aspect of the MMA was closing the “pre-1972 loophole,” Dupler said.
“Sound recordings were not added to federal copyright until 1971, effective in February 1972,” Dupler said. “That means if you recorded something after February ’72 you’re covered by the copyright law. If you recorded it before February ’72 you were covered by state law.”
Dupler said an attorney for an internet-based radio station looked at this loophole and decided the streaming service didn’t have to pay for any songs pre-1972 and it became the business model for companies like SiriusXM, iHeart Radio, and Pandora.
With the closing of the loophole, “federal law says that all of these pre-’72 recordings fall under the public domain in 2067,” Dupler said. “But as a compromise, as part of the MMA, some of these older songs, typically from the ’20s and ’30s will fall into the public domain section faster.”
The panel also addressed music created by artificial intelligence, or AI, and to whom the copyright of such works belonged, or if those works infringed on another’s copyright.
“When you’re putting copyright works into a machine to help it learn and that machine generates output, is that an infringement?” said Katie Baron, of Alter, Kendrick & Baron.
Matson said there is no copyright for machine-created works and that songs created by computers could pose legal problems.
“Obviously the computer is learning and actually using the pre-existing works to create a new work,” Matson said. “That creates a clear issue of whether that’s infringement.”
However, the creators of the AI may argue that the music is not being used as a work but rather as data for the computer, Baron said.