Microsoft, Yahoo And Real Sued For Failing To Get All Necessary Licenses For Music Stores

from the oops dept

Want to know just how incredibly confusing and impossible copyright law has become? Just take a look at this lawsuit, filed yesterday by some music publishing companies against Microsoft, Yahoo and Real Networks, claiming that the online music stores each of them runs (the Zune store, Yahoo Music and Rhapsody) infringe their copyrights (thanks Eric Goldman for sending this over). How can that be, you ask? Surely these companies properly licensed the music they offer in their streaming/download offerings, right? Well, the lawsuit doesn't provide that much in the way of detail (and I've spoken to a few copyright lawyers -- none of whom seem to agree with each other!), it sure looks like the claim is that Microsoft, Yahoo and Real may have licensed the copyrights on the recordings, but did not license the copyright on the compositions. It sounds like (though, again, the details are fuzzy) that the record labels did licensing deals with these music services, but publishers and labels are separate entities (even if the labels own many publishers), and the rights are separate.

It's pure speculation until more details come out, but one imagines that the licensing deals with the record labels included some sort of assurances that the publishing rights were covered as well -- and for songs whose publishing rights were covered by the major record labels, that's probably the case. But for songs where the publishing rights were owned by independent companies -- such as MCS Music America, the claim appears to be that the publishing rights were never cleared -- and thus, Microsoft, Yahoo and Real were streaming/downloading music to which they only held some of the rights. Yikes.

Most of the complaint details which songs were offered without (allegedly) having secured all the rights. And, of course, the publishers are claiming that every time a song was streamed or downloaded, it counts as a separate act of infringement. If the court agrees, this could represent a massive liability for Microsoft, Yahoo and Real, given the fines we all know can be issued over a single instance of infringement.

That said, this is yet another example of the convoluted house of cards that copyright has become. The idea that you can license a recording, but then need to get a separate license from a totally different party for the rights to the "underlying composition" (and don't get us started on the need to make sure you're covered for reproduction, distribution and performance rights -- three separate issues under copyright law), and you begin to get a sense of the problem. Basically, every time some new technology or innovation comes along, the copyright holders run to Congress to slap on another right, rather than actually innovating on the business model side. And on top of it, when new technologies like the internet come along, it's not at all clear which rights really apply and who controls/owns what rights. Suddenly, you have a massive mess for a company trying to do something as simple as let people listen to music. Just for that, you get a massive lawsuit like the following:

It's the sort of system only a greedy copyright lawyer could love: it's designed not to incentivize creation (copyright's stated purpose) or to facilitate the distribution of content -- but instead designed for the exact opposite: to confuse and hinder (but to keep copyright lawyers quite busy and gainfully employed).

50 Comments | Leave a Comment..

Real DVD Copying Case Gets Off To An Inauspicious Start

from the not-a-good-sign dept

The latest joke of a lawsuit from Hollywood, over Real Networks' RealDVD software, began today. The movie studios were actually able to get the judge to close the courtroom and kick out the press, despite not following the normal procedures to request such a move. If you haven't followed the case at all, basically Hollywood is suing RealNetworks for making software that allows you to back up your own DVDs, though it places significant limitations on them. What's really odd about this is that there are tons of free DVD rippers out there that put no restrictions whatsoever. In Real's case, it puts significant limitations on the backup copies -- and courts have shown in the past that making a backup of a digital good is accepted as fair use. Taking Real's product off the market makes almost no sense at all.

However, it seems like Hollywood's argument is based on the claim that Real somehow is using "hacker" technology in its product that violates the DMCA. It's not clear why using hacker technology should make the situation any different than having built your own. The MPAA is also claiming that there is no fair use defense to backing up a DVD, which is difficult to believe, given that fair use covers backups of music and software. What makes a movie so different? Well, the MPAA, of course, will claim (as it did in a previous case, against 321 Studios) that the encryption makes it illegal.

And that's where the problems come in. Thanks to the anti-circumvention clause of the DMCA, an action that is clearly fair use (backing up a movie) becomes illegal not because of the backup, but because of the circumvention of the DRM. That should go against all common sense: if the action itself is legal fair use, why should it matter how it's done (or who made the software)? Unfortunately, we don't often see common sense win out in these cases... and the early reports from the court room suggest that the judge is siding with the MPAA. Perhaps this isn't a surprise. Marilyn Hall Patel is the same judge who declared Napster illegal as well, despite a strong safe harbor defense. In this case, she told RealNetworks:

"They have the copyright. That's the issue here right? They have the copyright. They have the right to exclude."

That's actually a somewhat scary quote from the judge who should know better. Copyright does give them a right to exclude, but a limited right, which is supposed to be weighed against the rights of consumers, including their rights to fair use for things like (drum roll....) making a backup.

86 Comments | Leave a Comment..

How Could A Game That Has Made Scrabble Popular Again Be A 'Bad Precedent' For Mattel?

from the please-explain dept

Back in January, we explored the news that both Hasbro and Mattel (who own the rights to the board game Scrabble in different regions) were upset and threatening to sue about the incredibly popular knockoff version Scrabulous on Facebook. As we pointed out at the time, shutting down the game would quickly piss off 2.3 million Scrabble fans -- many of whom were interested in the game for the first time, most likely leading to real sales of the board game. While the situation still has not been resolved (and Scrabulous remains online), the New York Times has the latest details that suggest that Real Networks is negotiating with Scrabulous' creators. Since Real has a deal to produce an online version of Scrabble (the article first says the deal is with Hasbro, and later says it's with Mattel, so it's not clear who the deal is with), perhaps this will all be worked out for the best. However, the article does mention that executives from Mattel are against the idea of settling with the creators of Scrabulous, fearing that it "would set a bad precedent."

That's lawyers speaking, not marketers. How could a fun online game that has rejuvenated interest in what was seen as a rather dull board game among many folks today, be considered a "bad precedent?" How could having millions of new fans of your game and treating them right, rather than depriving them of what they want be considered a "bad precedent?" Some may answer that the "bad precedent" would be that it would encourage others to create similar knockoffs of other Mattel games, but, again, if they drove as much interest in the originals as Scrabulous did, isn't that a good thing? Some may claim that it would deprive Mattel the opportunity to license the games for lots of money, but again looking at Scrabble as an example, the bigger fear for Mattel should have been the fact that many people didn't care about the game at all. By letting random people create the games for it, it can quickly determine which games work well online and then work with the creators of those games to put an official stamp on it. The Agarwalla brothers created this game at no cost to Mattel, who otherwise would have spent a ton of money to create it after which it might not have caught on in the same way Scrabulous did. This way the game has been created, tested and even built up an audience at no cost to Mattel. Shouldn't they consider that to be a good thing?

48 Comments | Leave a Comment..