Copyright "band-aids" and the Future of Reform

• Publication year: 2011

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 34, No. 4SUMMER 2011

NOTES

Copyright "Band-Aids" and the Future of Reform

Kurt E. Kruckeberg (fn*)

I. Introduction

A young couple shares a romantic dinner at a posh, softly lit restaurant. Having just finished dessert, the young man rises from the table, reaches into his pocket, and removes a small velvet-wrapped jewelry box as he drops to one knee. Opening the box and his mouth to issue a marriage proposal, he is interrupted by the vocal stylings of Nazareth issuing from a mobile telephone stashed in a purse under a nearby table:

Love hurts, love scars

Love wounds, and mars

Ooh, ooh, love hurts.(fn1)

Has the young couple been victimized by fate or merely subjected to a public performance of Nazareth's work? While the question of fate is beyond the scope of this Note, the question of what constitutes a public performance was recently addressed by the United States District Court for the Southern District of New York.(fn2)

In the case of In re Cellco Partnership, the "Ringtone Decision," the court held that a ringtone does not constitute a public performance for which a mobile carrier must acquire a license.(fn3) But to reach its decision, the court had to grapple with precedent that is difficult to reconcile.(fn4) The court interpreted "public performance" under the Copyright Act(fn5) one way in one context, and a different way in another context.(fn6) This malleable interpretation dependent on context is reminiscent of Professor Jessica Litman's statement:There are moves that copyright lawyers make when the law isn't working well for them. They avoid inconvenient statutory language by persuading courts that the words of the statute mean one thing in one context and a different thing in another context. . . . Copyright lawyers sit down with other copyright lawyers and negotiate a series of band-aid solutions in which they agree to behave with one another as if the statute on the books said what they wished it said.(fn7) The Ringtone Decision is one such "band-aid solution" and indicates that we are due for another "wholesale copyright revision."(fn8)

But the Ringtone Decision reveals another flaw in our current copyright regime. The copyright system is flawed because songwriters are increasingly separated from their works, leaving copyright disputes to be litigated between copyright intermediaries.(fn9) This separation is caused by the increasing vertical integration(fn10) of the music industry: four multinational media corporations receive a majority of global music revenues from copyright. With the intended beneficiaries of copyright-artists and the public-arguably absent from the courtroom, the court could not reach a satisfactory result. If the court held for the cellular telephone companies, it would award them a windfall by allowing them to profit from the performance of works without paying royalties. But if the court held for the American Society of Composers, Authors, and Publishers (ASCAP), it would disgorge profits of cellular-telephone innovation and award much of the profits to corporate interests that, through the vertical integration of the music industry, have substantially divorced songwriters from equitable remuneration for their creative work. The court was doomed to fail in reconciling an aging Copyright Act with rapidly developing technology and a music industry colored by collective dominance.

As we enter a new period of wholesale copyright revision, this Note examines the interplay of copyright and technology through a brief exploration of the Ringtone Decision. Part II of the Note explores the history of copyright reform, the music industry, and performance-rights organizations. Part III explores the Ringtone Decision and reveals that the decision is symptomatic of both a Copyright Act and music industry in need of reform, and is at odds with the normative value of copyright as an incentive for creators. Part IV explores how we should restore this normative value by rebalancing the bargaining power of songwriters and the vertically integrated music industry. It further argues that the appropriate rebalancing can occur by amending the Copyright Act with two provisions inspired by German copyright law: First, our Copyright Act should have a contract-reformation provision for instances in which a copyright transferee benefits disproportionately from new technology. And second, our Copyright Act should offer a limited reversionary right to the creator when a copyright transferee opts not to exploit the work through new technology. Part V concludes the Note.

II. Copyright Legislation and the Vertically Integrated Music Industry

On October 19, 1976, the current Copyright Act was signed into law.(fn11) Ford was President,(fn12) "Disco Duck" topped the Billboard charts,(fn13) and the cassette was on its way toward eclipsing the LP as the most popular medium for music delivery.(fn14) Today, despite several amendments, the Copyright Act remains largely in its 1976 form. Far from the days of "Disco Duck" and the choice between cassette and LP, today's consumer can purchase Beyoncé's album, I am . . . Sasha Fierce, in one of more than 260 formats.(fn15) As a result, courts are struggling to apply the Copyright Act to technologies unimaginable at the time of the Act's drafting.

To understand where copyright reform for music is headed, we must understand its history. Section A of this Part explores the legislative process traditionally used to enact copyright reform generally and reviews the development of public performance rights throughout the history of the Copyright Act in particular. Section B explores the vertical integration of the music industry that has accompanied legislative reform. And section C analyzes the role of performance-rights organiza-tions-particularly ASCAP-in the music industry.

A. The Legislative Process in Copyright Reform and the Development of the Public Performance Right

Prior to 1856, the Copyright Act provided protection only for reproduction and distribution rights.(fn16) In 1856, the first federal public performance right was granted, and authors of "dramatic compositions" obtained "the sole right 'to act, perform, or represent their work or cause it to be acted, performed, or represented.'"(fn17) The public performance right was extended from dramatic compositions to musical compositions in 1897.(fn18)

Copyright law continued to develop in tandem with technological discoveries that expanded the economic potential of creative works. The popularity of the piano roll,(fn19) for example, led to a larger market for musical works in the early twentieth century.(fn20) Manufacturing companies began reproducing songs through the distribution of thousands of piano rolls without authorization from composers.(fn21) Composers sought a judicial remedy to the exploitation of their work without proper compensa-tion.(fn22) But the Court held that songwriters were not entitled to revenue from the sale of piano rolls because piano rolls were not really "copies" of a musical work.(fn23)

In response to the lobbying efforts of composers and others interested in a piece of the expanding copyright pie, Congress set about reforming American copyright law by tasking representatives of songwriters, publishers, and manufacturers with crafting legislation that would appeal to all represented interests.(fn24) The 1909 Copyright Act was the result; it established a compulsory mechanical license for reproductions of music.(fn25) The compulsory mechanical license allowed piano-roll manufacturers to use copyrighted works without permission of the rights holder, but the manufacturer was obligated to pay the rights holder a statuto-rily determined fee for the use.(fn26)

In the 1909 Act, Congress extended copyright protection beyond dramatic and musical compositions to additional genres of work, and Congress limited protection of musical compositions to for-profit per-formances.(fn27) In interpreting the Act, the Court would later adopt a broad construction of the phrase "for profit," acknowledging that copyright infringement is not limited to performances "where money is taken at the door."(fn28) In the Court's view, "performances [that] are not eleemosynary . . . are part of a total for which the public pays."(fn29)

The task of applying the 1909 Act to new innovations fell to the Judiciary because the Legislature could not anticipate not-yet-invented technologies. For example, the development of the "word roll," a piano roll with lyrics printed next to the roll's perforations, was unanticipated by negotiators of the 1909 Act.(fn30) Thus, the Judiciary had to determine whether the inclusion of lyrics on a piano roll constituted infringement of the lyricist's copyright under the language of the 1909 Act.(fn31)

In the decades that followed the 1909 Act, developments in technology widened the economic potential in copyright, which created a desire for reform among traditional members of and newcomers to the music industry. In response to industry lobbying and a proposal from Congress to revise the 1909 Act, the Register of Copyrights issued a report in 1961 voicing its concern about various proposed alterations to the structure of the 1909 Act.(fn32) In particular, the Register's report addressed new modes of identifying public performance exemptions.(fn33) According to the report, an attempt to specify discrete...