Sen. Orrin G. Hatch, R-Utah, the chairman of the Senate Judiciary Committee, introduced a late-session bill June 22 that would allow artists and labels to sue peer-to-peer companies that profit from e






Breaking News

Hatch's Induce Act Targets P2P Services

By Bill Holland

Orrin G. HatchWASHINGTON -- Sen. Orrin G. Hatch, R-Utah, the chairman of the Senate Judiciary Committee, introduced a late-session bill June 22 that would allow artists and labels to sue peer-to-peer companies that profit from encouraging minors and others to commit copyright infringement.

The one-page bill, the "Inducement Devolves into Unlawful Child Exploitation Act of 2004," says that whoever "intentionally induces," or "intentionally aids, abets, counsels or procures" any violation of copyright "shall be liable as an infringer." Hatch removed language from the bill, which is nicknamed the Induce Act, that would have applied it to lawyers who take on P2P services as clients.

The Induce Act could sidestep the defense against contributory infringement used in the KaZaA and Grokster court rulings that employment of potentially copyright-infringing technology is legal if it also has a non-infringing use.

Co-sponsors of the legislation include Sens. Patrick Leahy, D-Vt.; Senate majority leader Bill Frist, R-Tenn.; Senate minority leader Tom Daschle, D-S.D.; Lindsey Graham, R-S.C.; and Barbara Boxer, D-Calif.

"Tragically, some corporations now seem to think that they can legally profit by inducing children to steal," said Hatch in a statement. "Some think they can legally lure children into breaking the law with false promises of 'free music.' This carefully drafted, bipartisan bill would simply confirm that existing law should allow artists to bring civil actions against parties who intend to induce others to infringe copyrights."

The RIAA applauded the bill, citing the April 2003 ruling of U.S. District Court Judge Stephen Wilson on the liability of Morpheus and Grokster. According to the trade group, Wilson wrote, "The court is not blind to the possibility that Defendants may have intentionally structured their businesses to avoid secondary liability for copyright infringement, while benefiting financially from the illicit draw of their wares. While the court need not decide whether steps could be taken to reduce the susceptibility of such software to unlawful use, assuming such steps could be taken, additional legislative guidance may be well-counseled."

Mitch BainwolRIAA chairman/CEO Mitch Bainwol says of the new bill, "Sens. Hatch and Leahy, and a distinguished group of supporters, have crafted narrowly focused but meaningful legislation. This bill places the spotlight squarely on the bad actors who have hijacked a promising technology for illicit means and ignoble profits. Legitimate uses of peer-to-peer are upheld, while those who intentionally lure consumers into breaking the law are held to account. Under this legislation, the path to legitimacy remains clear: respect the law and block the exchange of works the copyright owner has not authorized."

Fair-use groups and Internet freedom groups criticize the bill as draconian. Before the bill was introduced, the Electronic Freedom Foundation posted a warning about the potential legislation on its Web site. "Even a moment's reflection should make the danger to innovators clear -- you now have to worry not just about contributory and vicarious liability, but an entirely new form of liability for building tools that might be misused," the group said.

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Confab Tackles Digital Legal Issues

By Chris Morris and Jill Kipnis

Park Hyatt Hotel
LOS ANGELES -- Attorneys and label executives mulled the cloudy present and uncertain future of online entertainment during the Digital Entertainment Distribution conference June 22-23 at the Park Hyatt Hotel in L.A.

The event was organized by the American Conference Institute.

While panelists reached few definitive conclusions, a wealth of opinion, some of it contentious, was offered.

During a panel on litigation against peer-to-peer services, Cary Ramos of Paul, Weiss, Rifkind, Wharton & Garrison predicted that the case against Grokster -- currently before the Ninth Circuit Court of Appeals -- would ultimately go to the Supreme Court or be resolved through congressional legislation.

Cary RamosRamos' firm has represented songwriters and publishers in various suits against song-swapping services.

Senior staff attorney Fred von Lohmann of the Electronic Frontier Foundation, which has helped defend Grokster, Morpheus and other P2P companies, noted, "In a world where every college student is able to create P2P software, it is not in litigation that the solution lies."

Taking the opposing view, Dean Garfield, VP of legal affairs for the Motion Picture Assn. of America, said, "The liability for those who choose to profit on the back of technology is appropriate."

Also during the confab, Verizon Communications VP/associate general counsel Sarah B. Deutsch discussed her company's successful defense against a suit brought by the RIAA.

She characterized the RIAA's efforts to get the names of Verizon clients as an attempt to "twist the (Digital Millennium Copyright Act) into a new roving subpoena power" that would give private companies more clout than the Patriot Act.
"To us, there were very serious privacy and safety issues," Deutsch added.

During a panel on contributory and vicarious infringement, litigator Ramos looked at pending Napster-related actions involving Hummer Winblad, which invested in the P2P service.

"You should look to the investors," Ramos said. "They should be held responsible if they were actively involved in the (infringing) business ... They should be held responsible for their conduct."

Michael Page of Keker & Van Nest, who has defended Grokster and other P2P firms, said that if a third party's control of an infringer is the issue, "there is no end to the doctrine ... The courts are going to have to focus on what it means to have control."

Mark RadcliffeMark Radcliffe of Gray Cary said that the pending contributory cases have had a chilling effect on the investment community: "No venture capitalist will invest in anything that's P2P."

Moderator Ken Steinthal of Weil, Gotshal & Manges noted that in cases of contributory infringement, "The hard part here is drawing lines. Can you come up with any meaningful way, once you open those floodgates, to keep (litigation) from getting out of hand?"

Rapidly developing business models have created a thicket of legal issues for the music business, according to execs speaking during the online music distribution panel.

Universal Music Group senior director of business affairs David Weinberg noted that just a few years ago, "The issue was, for us, was it a good thing to put (music) up (digitally)? Today it's, How fast can we put it up?"

Getting people to pay for content is still a problem, Weinberg noted: "The No. 1-selling CD in '03 was a blank CD."

Some debated the virtues of subscription-based and computer-tethered music models. Sony Music senior VP of business affairs and new technology Mark Eisenberg said, "One of the outcries of the public was, 'It's not as good as a CD because I can't own it. I want portability.' "

William Growney, general counsel for Roxio (which operates Napster), called subscription services "the future of the business."

However, after only four people in the panel room acknowledged that they subscribed to online services, MusicNow general counsel Thomas Leavens noted, "The modest number of people who have subscriptions represents the challenge."

Publishing licensing for online distribution -- which often presents issues not addressed in traditional contracts -- remains a morass.

Jay Morgenstern, executive VP/general counsel for Warner/Chappell Music, quipped, "It's sort of like the guy who comes home, and his wife says, 'Sweetie, you want to come upstairs and make love?' And he says, 'I can't do both.' "

Acknowledging that publishing issues are a persistent problem, Morgenstern said an independent body would have to be formed to issue the kind of one-stop licenses the industry is seeking.

At a panel on wireless and mobile content, participants discussed some of the legal issues that will involve ringtones.

Milton Olin of Altschul & Olin said that providers would like to offer ringtone files as part of packaged pricing deals with full-track Internet downloads. However, he noted, "Labels want to keep these things separate with integrated pricing."

Jonathan Schreiber, CEO of Xingtone, said it is "hard to figure out the value chain" for payment in the mobile phone space, and that such packaged deals could be complex.

Future relationships with ringtone providers and labels may also be strained if labels try to enter the business on their own, said Robert Tercek, chief strategy officer for the Mforma Group.

Additionally, Schreiber said, ringtone providers will have to resolve legally "whether a ringtone counts as a public performance" of a song, in which case royalties would have to be paid out.

At a panel on digital music rights, Steinthal presented information about the two universes of music rights owners: owners of musical works and owners of sound recordings.

Bobby RosenbloumRights in the new-media space are being debated. For example, Steinthal said that for musical works, "Some publishers say mechanical licenses should not apply to services selling monthly subscriptions which time out or terminate at the end of a subscription."

He added that for permanent downloads, "Some publishers say they are entitled to a statutory royalty rate on a per-copy basis."

Bobby Rosenbloum of Greenberg Traurig added, "The No. 1 problem facing the industry is that new business models are being developed daily without applying laws. There is no clarity."

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PPL, SoundExchange Forge Reciprocal Agreements

By Emmanuel Legrand

LONDON -- The reciprocal agreement between Britain's Phonographic Performance Ltd. (PPL) and its U.S. counterpart, SoundExchange Inc., is viewed as a significant step forward in international cooperation between collecting societies.

The societies earlier this month announced a reciprocal agreement benefiting their featured artists. SoundExchange will now collect and distribute PPL's recording royalties to the American artists it represents, while PPL will collect and distribute SoundExchange royalties to its artists.

Fran NevrklaPPL executive chairman Fran Nevrkla, who in January signed a new three-year contract to remain at the helm of the organization, has made the creation of reciprocal agreements one of his top priorities. He says the deals will lead to the creation of "a single pipeline for collecting overseas royalties."

The SoundExchange deal follows recent similar arrangements PPL has struck with collecting societies in Germany, France, Japan, Italy and other countries.

Says Nevrkla, "After just a few weeks, we now have agreements with the U.S. and Germany, two of the largest markets in the world. We look forward to concluding many more such agreements in the coming months."

Through the terms of the agreements, SoundExchange will send one check to PPL for all digital royalties earned by artists represented by PPL and its affiliated organizations.

John L. Simson"These agreements are extremely significant, as they mark the beginning of a partnership between two of the world's most dynamic music centers," says John L. Simson, executive director of SoundExchange. "So much of the world's repertoire comes from the United Kingdom and the United States, and it's important that we ensure that performers see the benefit when money is collected for the use of their works. This is especially true in America, where the performance right for featured and non-featured performers is still so new and developing."

SoundExchange has made similar reciprocal agreements with SENA in the Netherlands and RAAP in Ireland.

PPL works as a conduit for the collection and the payment of overseas royalties on behalf of several organizations representing British artists. Last December, PPL struck a major collaborative agreement with several U.K. performers' organizations -- the Assn. of United Recording Artists, Music Producers Guild, Musicians' Union and Performing Artists' Media Rights Assn.

Nevrkla's aim is to build PPL into a one-stop shop for collection and payment of royalties to performers and labels.

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BMI Legal Exec Theodora Zavin Dies

Theodora ZavinTheodora Zavin, a copyright attorney who worked for 49 years at BMI, died Monday (June 21) at New York's Columbia Presbyterian Hospital afer a brief illness. She was 82.

Zavin joined BMI in 1952 as head of its legal department, rising to senior VP/special counsel before her retirement in 2001. She founded the BMI Foundation in 1985 and served as its president until her retirement and president emeritus until her death.

BMI says Zavin will be remembered for combining her legal skills with a personal touch when dealing with songwriters, composers and music publishers. She worked closely with Simon & Garfunkel, Billy Joel, Carole King, Neil Sedaka, Don Kirschner, Dick James and many others.

Zavin was a graduate of Hunter College, where she was a member of Phi Beta Kapa, and the Columbia School of Law, where she was Notes and Comments Editor of the Law Review. She served as president of the Copyright Society of the U.S.A., and was a member of the United States Copyright Office Advisory Committee and the Copyright Committee of the Bar Association of the City of New York. Internationally, she represented American interests as a leader of the Legal and Legislative Committee of the International Confederation of Societies of Authors and Composers (CISAC).

Zavin is survived by two sons and three granddaughters. A memorial is being planned.

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Impala Could Face Tough Legal Battle Over Sony BMG

By Leo Cendrowicz and Emmanuel Legrand

Mario MontiBRUSSELS -- A legal challenge by opponents to the proposed merger of Sony Music and BMG is unlikely to succeed, according to some legal experts here.

On June 17, sources at the European Commission said Competition Commissioner Mario Monti planned to recommend approving the merger. Officials say a legal challenge is possible in the same way that Sony and BMG could challenge the EC in court if the merger was not authorized.

In a letter sent to Monti on June 22, independent labels body Impala said its members "protest fiercely" at reports that he was going to allow the proposed merger to proceed, without concessions from either Sony or BMG.

In the letter, Impala writes: "Any decision to approve the merger ... would be fatally flawed. Our lawyers have identified numerous errors in the Commission's analysis and process. That would leave us with no choice but to appeal before the Court of First Instance in Luxembourg."

It is typically up to 18 months before an appeal before the Court in Luxembourg is heard, although there is the possibility of an expedited procedure that could see the case brought up in nine to 10 months.

Martin Mills"We are investigating all the options," says Martin Mills, chairman of British indie company Beggars Group and a vice chairman of Impala.

Impala believes that authorizing the merger "without any conditions" would be an error of economic, cultural, political and legal terms.

"This is a very significant battle," Mills says. "Even more so when you consider that we could be in danger of going through yet another merger after this one. We are very concerned about market consolidation."

However, the chances of Impala succeeding with a legal appeal are considered slim. "It's so close to zero that it is effectively zero," says one Brussels-based anti-trust lawyer. "Impala would be throwing money away with this appeal."

The lawyer says that in the unlikely event the decision to approve the merger is overturned, it would then be appealed again at the EU's highest court, the European Court of Justice (ECJ). And again, if the ECJ ruled to overturn the decision, Sony and BMG could they themselves appeal, starting a new legal process.

"Even if every step went Impala's way, there would be no resolution for at least eight years -- by which time, who knows? No one would be listening to CDs anymore," says the lawyer.

Since 1990, a handful of merger decisions have been successfully appealed, but only by the parties directly involved, not by third parties like Impala. "Why should the Commission listen to Impala and now ask for conditions?" the lawyer asks. "Impala themselves have not provided any evidence that they did not produce four years ago."

Many observers were shocked that the merger was cleared in spite of a scolding Statement of Objections (SO) issued by the Commission in May. The SO accused the music majors of tacit collusion. But the evidence was never convincing, officials conceded.

"If we had blocked the merger on the basis of the SO, we would have been taken to court by the parties, and we would probably have lost," admitted one EU official.

Mills says the EC does not appear to have evidence of market collusion among the major record companies, but he believes the issue is larger than that. "There are more issues of greater importance," he says. "It is about access to the market, access to the media, leverage power, vertical integration, all the things we've seen happening recently will be getting exacerbated. We are concerned that the Commission has not looked at all the implications of the merger."

Sony and BMG declined comment for this story.

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Tokai Responds To Gibson Trademark-Infringement Claims

By Christopher Walsh

NEW YORK -- A top executive at Japanese guitar/bass manufacturer Tokai says the company is no longer interested in selling its "Love Rock" guitars in the United States. The remark comes after Gibson Guitar Corp. in May filed a trademark-infringement suit over the model in the Middle District of Tennessee (ELW, June 21).

"We have no intention to break U.S.A. law or rules," insists Shohei Adachi, president of Tokai.

Gibson claimed that the Love Rock models infringe on the design of its Les Paul electric guitar.

Tokai's Love Rock GuitarTokai's Love Rock guitars were first sold in the U.S. in 1983, says Adachi. In 1987, the year Gibson applied for trademark registration for the Les Paul, "we stopped selling our guitars in the U.S. because of the exchange rate," Adachi says. "The value of Japanese yen became about double to U.S. dollar. So we (gave) up selling our guitars to the U.S. market.

"In 2001," he continues, "our Canadian distributor asked us to sell our guitars in the U.S., and they advised us to change the body figure and the headstock figure of Love Rock because of Gibson's registered trademarks. Our Canadian distributor talked to Gibson's attorney and designed our new Love Rock models."

Tokai exhibited the new Love Rock and other guitars at the biannual NAMM trade shows in 2002, 2003 and January 2004. The NAMM show is produced by, the International Music Products Assn.

"We thought we did not have any problem with our new Love Rock models with Gibson," says Adachi. "We talked to our Canadian distributor and at NAMM 2004 (in Anaheim, Calif.), we exhibited our new Love Rock models and our original guitars through our new U.S.A. distributor, Godlyke Inc.

"Godlyke checked our new Love Rock models with their attorney carefully before exhibiting. So we did not worry with Gibson. So now we are surprised at Gibson's act, and we leave this matter to Godlyke."

Clifton, N.J.-based Godlyke Distributing Inc. did not immediately respond to a request for comment.

"We look at everyone's designs," responds Gibson general counsel Joel Cherry, "and there are many we conclude that legally we have no right (to oppose). That's fine; there is a basic design or look to a guitar. But to the extent that elements are protectable, we go after the infringers."

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Washington Report

Boucher Bill Raises Ire At House Judiciary Committee

By Bill Holland

Rick BoucherWASHINGTON -- A public shouting match, the likes of which is seldom seen here, is going on between two House of Representatives committees that are of importance to content holders and users.

The Republican and Democrat leaders of the House Judiciary Committee are criticizing one of the body's own members, and crying foul that an industry bill was routed to a committee other than their own.

At the center of the dust-up are Rep. Rick Boucher, D-Va., who is a member of both the Judiciary Committee and the Energy and Commerce Committee, and his bill, the Digital Media Consumers' Rights Act, H.R. 107.

Boucher introduced the measure in January 2003. It contains a provision that would require accurate and clear labeling of copy-protected product. But the provision that raised hackles would modify the Digital Millennium Copyright Act (DMCA) to grant greater fair use to consumers by letting them circumvent copy-protection measures encoded in digital music and movie media, as long as the copying is for private, non commercial use.

Boucher drafted the bill so that the consumer component was pronounced. The legislative counsel that determines where a bill will be heard therefore gave it dual jurisdiction: firstly, to the Energy and Commerce Committee, and secondly, to the Judiciary Committee. Under House rules, once the primary referred committee votes to pass a measure, the second committee cannot vote down any of its provisions.

Boucher's reasoning for pushing H.R. 107 toward the Energy and Commerce Committee rather than the Judiciary Committee, which has jurisdiction over copyright issues, is that, in his view, the DMCA isn't really a copyright law.

The DMCA, he tells ELW, "is mislabeled, in a sense. It really doesn't amend the copyright law. It 'rides on top' of the Copyright Act, and creates a new offense of circumventing technical protection measures. That's really what it does. It does not alter copyright principles in any way."

James Sensenbrenner Jr.That kind of language has aggravated the chairman of the Judiciary Committee, Rep. F. James Sensenbrenner Jr., R-Wisc. Also upset are ranking member John Conyers Jr., D-Mich., and Rep. Lamar S. Smith, R-Texas, chairman of the Judiciary's Subcommittee on Courts, the Internet and Intellectual Property.

Adding to the rancor is the fact that the Boucher bill finally got a hearing before the Energy and Commerce Committee on May 12.

Record and movie executives opposed the bill at the hearing, saying it would leave the door open for hacking pirates. They also testified that such a law would put an unacceptably heavy burden on copyright holders to prove that copying was for an infringing use.

Still, the bill seems to have momentum. It now has 20 sponsors, including Rep. Joe Barton, R-Texas, chairman of the Energy and Commerce Committee.

Adding fuel to the fire, on June 22, Barton issued a clarion call for the bill's passage following a press conference with the Personal Technology Freedom Coalition.

The measure, he said, "ensures the free and fair use of products legally purchased by consumers."

Beyond consumer protection, Barton added a new anti-terrorist wrinkle to what the measure will allow. "The bill fosters technological innovation and supports our nation's national security efforts by (allowing the) breaking (of) encryption systems used by terrorists in cyberattacks," he said.

Barton said his committee plans to mark up and pass the bill in July.

In response, in a written statement, the trio of Judiciary Committee leaders fumed: "We strongly oppose the substance of H.R. 107. This legislation would eviscerate a key provision of the ... DMCA, which is successfully protecting copyrighted works and providing consumers access to more digital content than ever before."

"In fact," Sensenbrenner and his colleagues continued: "a DVD player is now as common a household item as the VCR was 15 years ago, precisely because of the (protections afforded by the) DMCA. H.R. 107 would undo a law that is working and destroy the careful balance in copyright law between consumers' rights and intellectual property rights."

They added: "Furthermore, our strong objections to the substance of H.R. 107 are matched by our objections to what appears to be a bold jurisdictional power grab. The Judiciary Committee has -- and has long had -- exclusive jurisdiction over copyright law. Rest assured, we will wholeheartedly oppose this move in a bipartisan fashion, as we would expect Energy and Commerce Committee leaders to do if we attempted to write energy legislation."

Boucher hints that Sensenbrenner's committee tilts toward the interests of content owners.

"On most issues, where the content community takes one position and where a user community takes another position, the center of gravity of the House Judiciary Committee is on the side of the content community," he says. "That has historically been true, and it's true today. And I think by and large, on a case by case basis, Mr. Sensenbrenner will take those positions."

Boucher confidently predicts that his bill will go forward this session: "I expect the bill to be considered on the House floor this fall," he says.

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International Section

Russian Web Site Owner Faces Criminal Charges

By Emmanuel Legrand

LONDON -- International trade body the IFPI reports that the owner of a Russia-based Web site faces criminal proceedings for allegedly offering CDs of pirated music for sale.

The owner of the site, russian-cds.com, is subject to a criminal procedure for contravention of Section 2 of Article 146 of Russia's Penal Code.

Following an initial investigation by anti-piracy officials from the IFPI's regional office in Moscow, officers from the Russian Federation's Ministry of Interior monitored the site, which is believed to be operating from a city in a remote part of eastern Russia.

Britney SpearsAfter making an initial test purchase, investigators bought 176 discs from the site in March 2004; the IFPI and police established that all the discs appeared to be counterfeit. CDs by international artists such as Britney Spears, Robbie Williams, Sting, Texas and Yanni were among the items purchased.

The IFPI says it believes the site had been distributing discs to the United Kingdom, United States, the Netherlands, Finland, Germany, Switzerland, Spain, France, Italy, Korea, Canada and other countries.

The case was presented by an officer from Russia's Ministry of Interior High-Tech Crime Department to a local prosecutor, who began criminal proceedings June 4.

The same day, searches by police at two locations believed to be associated with the Web site revealed up to 3,000 optical discs, CD inlays, two computers belonging to a charged individual and about 300 money-order receipts. A subsequent raid on two warehouses in Izhevsk revealed 14,000 pirate discs and DVDs with music and computer games. Investigations are continuing.

Jay Berman, chairman of the IFPI, comments: "This action against one of the many Russian Web sites offering allegedly infringing product for sale is encouraging and to be applauded. We urge the authorities to maintain the pressure on those who seek to profit from the creativity of international stars, as well as holding back the development of Russia's own domestic music talent."


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Denmark's Roskilde Fest Wins Domain-Name Dispute

By Lars Brandle

LONDON -- Organizers of Denmark's annual Roskilde Festival have won a Web site domain-name infringement case at the World Intellectual Property Organization (WIPO).

Geneva-based WIPO ruled that four separate domain names registered by Martin Vindheim of Farsund, Norway, were either identical or "confusingly similar" to the Roskilde Festival registered trademark.

The domain names in question were roskilde-festival.com, roskilde-festival.info, roskilde-festival.biz and roskildefestival.biz. The event's official Web site is at roskilde-festival.dk.

Moreover, WIPO notes that the respondent attempted to sell or rent the domain names to the complainant or others, thereby attempting to make money off of the goodwill connected with festival.

WIPO's Arbitration and Mediation Center ordered that the domain names be transferred to the complainant.

Foreningen Roskilde Festival filed the case with WIPO on April 21 (case no. D2004-0285).

The Roskilde Charity Society organizes the festival, which is held 22 miles west of Copenhagen. It is a non-profit event that employs 18 full time staffers and enlists the help of thousands of paid volunteers.

The inaugural Roskilde Festival in 1971 was attended by about 10,000 music fans. That number has risen to more than 110,000 during recent editions.

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Cantat Withdraws Appeal in Homicide Case

By Emmanuel Legrand

Bertrand CantatLONDON -- French rock singer Bertrand Cantat will not appeal the court decision in which he was sentenced to eight years in prison. He was found guilty of the homicide of his actress girlfriend, Marie Trintignant, by a tribunal in Vilnius, Lithuania, last March.

The family of Trintignant has also decided to withdraw their appeal on Cantat's sentence, meaning the eight-year prison sentence is final.

Cantat's lawyers have started procedures to extradite him back to France, where they expect him to serve his time. France and Lithuania have a judiciary convention that authorizes the transfer of convicted persons to serve sentences in their country of origin.

Cantat is currently jailed in the prison of Lukiskiu in Vilnius.

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Dutch Audio Producers Seek Share of Neighboring Rights

By Cesco van Cool

AMSTERDAM -- Dutch audio producers' organization Gong has renewed its claim that it should receive fees from neighboring rights from SENA, the local collecting society.

Neighboring rights are paid for use of music in public spaces by broadcasters, bars, restaurants and shopping malls.

SENA collects the fees and distributes them to labels and performers. Unlike in Belgium, the United Kingdom, Germany and other countries, Dutch producers are not included in the group that benefits from these payments.

Gong spokesperson Chris Pilgram says that since 1993, when neighboring rights came into effect under Dutch copyright law, producers have been lobbying for a share.

Gong is requesting that SENA, which claims that it is abiding by the law, discuss the matter again at its annual meeting June 28.

Says Pilgram, "Behind every great artist stands a great producer. A triangle player gets money from SENA, but the producer that made the recording possible gets nothing."

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Dream Makers & Deal Breakers

This Week's Dream Makers & Deal Breakers:

Richard NeffLONDON The members of intellectual-property/technology firm Neff Law Group are joining Greenberg Glusker in L.A., effective July 1.

Richard Neff has been named chairman of Greenberg Glusker's IP and technology department. Also joining from Neff Law Group are partner Michelle Cooke, associate Luz Lettiere and foreign attorney Claudio Magliona.

Neff Law Group clients include Yahoo!, Intuit and Veritas Software; the firm is also involved in anti-piracy programs at major computer software companies in Latin America. The practice includes licensing and commercial transactions, Internet agreements, technology deals and trademark/domain-name clearance and enforcement.

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Case Analysis

Recent Cases & Filings:

Case: John Anthony Cutshall vs. Mark Anthony Chavez II, Timothy Fluckey, Mike Ransom, Dave Deroo, Kris Kohls

Issue: Cutshall alleges that he was denied credit and payment for two songs he co-wrote, which he claims helped the members of the band Adema (the defendants) secure their record deal with Arista.

Cite: California Superior Court, County of Los Angeles (case no. BC317050)

Filing attorneys: Jason M. Adams and J. Toby Noblin of Adams Noblin & Vrataric.

Jason M. AdamsJ. Toby Noblin

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Commentary

First Amendment Protection for Videogames: The Unspoken Implications

By Y. David Scharf

Since the 1980s, videogame producers unsuccessfully litigated to obtain First Amendment protection for their releases. This battle has been fought in the context of (i) attempted government regulation of facilities having or selling video games and (ii) those seeking to impose tort liability or to have violent content regulated like pornography.

For more than 20 years, videogames were not afforded First Amendment protection. However, it is time to explore the implications of this protection on the heels of the first anniversary of the first case recognizing that videogames were protected by the First Amendment.

The First Amendment permits authors of written works to use names or trademarks to lend an air of verisimilitude, and permits the writing of unauthorized biographies without violating the subjects' rights of commercial exploitation. Would the First Amendment protect the video producers who used an image of a well-recognized building like Trump Tower and its signage as a backdrop for a crime scene manipulated by the player? Is it any different than a fiction author describing a character as "a real estate mogul in the style of Donald Trump"?

The author of these words conveyed specific meaning to the reader. The depth of the imagery has changed, markedly, since the airing of Trump's hit TV show "The Apprentice." The glistening office and residential towers bearing his name, the resort communities and golf courses that bear his crest, the private 727 and glittery casinos all come to mind. The imagery is now more defined.

Does the resounding success of "The Apprentice" deprive the fiction author from invoking those images? The First Amendment protects the author's use, provided the use is incidental or relevant to the story.

Ultimate Mortal Kombat 3Until 2001, videogame manufacturers did not receive that benefit. Producers received their first glimmer of hope when the Seventh Circuit Court of Appeals shunned years of legal precedent -- established for less-sophisticated video arcade games -- in a ruling on behalf of the American Amusement Machine Assn. and others. The Seventh Circuit ruled that videogames like "The House of the Dead" and "Ultimate Mortal Kombat 3" were protected "stories" because they utilize full-motion video, detailed animation and surround sound that bring the story lines and characters to life.

However, this victory was seemingly short lived. A District Court in Missouri was asked to follow the lead of the Seventh Circuit and declined, ruling that even sophisticated computer and videogames have "no conveyance of ideas, expressions or anything that could possibly amount to free speech."

But the Eighth Circuit's decision in June 2003, in favor of the Interactive Digital Software Assn. and others, overturned the Missouri court, changing the landscape back to the reality and recognition that videogame technology has progressed into animatronic adventure, akin to movies and other literary works that are afforded First Amendment protection.

Thus, until the Supreme Court of the United States rules on an appeal filed by St. Louis County from the Eighth Circuit's decision, or until other Circuit Courts that previously did not confer First Amendment protection for relatively unsophisticated videogames (like Ms. Pac-Man) speak on the issue of sophisticated games, it appears that the leading word on the topic has been pronounced: The advanced technological reality of videogames now engenders expressive speech.

The protection colors copyright, fair-use and trademark confusion issues, as well as rights of privacy/publicity. This will be the new legal battleground. Can the producers of, for example, "True Crimes" have their next sequel take place in the streets of New York near Trump Tower, emblazoned with the Trump name, and have the player steal a valet-attended automobile?

The permissibility will depend on the degree of use in the story. If the appearance of a well-recognized "name" building in a game scene taking place in New York is either incidental or relevant to the story, it would not be infringing. However, the greater the tie-in to a public figure and the perception that there is commercial exploitation, the more likely it is that the First Amendment will not provide immunity. Clearly, it would not be permissible to advertise and market the game using the name or image, giving rise to the public perception that it is a sponsored product.

While the battle as to whether videogames are entitled to First Amendment protection is far from over, the technological reality should continue to prevail that this medium is no less worthy of protection than movies and books.

This new-found protection is sure to spawn a spate of new litigation, as videogame producers, who push the parameters of grotesque and grisly to new heights, will seek to make their games more realistic by interposing recognizable images of people and things into their two-dimensional worlds so that they are more reflective of the 3-D world. Stay tuned for the next sequel.

Y. David Scharf

Scharf is a partner and member of the executive committee in the New York law firm of Morrison Cohen. He practices in the area of commercial litigation, with an emphasis on real estate, entertainment and securities litigation. His firm represents videogame manufacturers and producers, and he represents celebrities, business entrepreneurs and entertainers in litigation and business counseling matters.





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