Ayo Makun @aycomedian instagram photos and videos

Ayo Makun @aycomedian instagram photos and videos

Nollywood – Africa’s biggest motion picture industry – might be ready for its “first big” right of publicity lawsuit. Nigeria’s foremost comedian, Ayo Makun, popularly known as “AY” (he goes by “aycomedian” on his Instagram page) posted on Instagram a disclaimer about a print ad for a movie entitled “The Number One Fan” which the film distributor is now marketing as “Inspector AY” with AY’s image boldly in the center of the print ad, with still photos from the scene of the movie. AY claims in his disclaimer that this came to him as a surprise as he played a supporting role in the movie and never agreed to the use of his brand in marketing the movie. He plans to use “all legal instruments available within the country’s – Nigeria’s – copyright laws (sic) to correct this illegality…”

Obviously, this is not a copyright issue. Copyright law protects the expression of an idea that is original and fixed in a tangible form. AY may likely claim copyright in his performance; however, copyright in the entire movie including AY’s performance is held by the producer of the movie since AY was employed by the producer to provide his on-screen acting services. See Section 9 (2) of Nigeria Copyright Act. If the exact photograph is owned by AY or his photographer and the distributor used it without authorization, then there is a case for copyright infringement with respect to the use of that particular photograph. In the US movie industry, producers will often require an agreement with actors and other talent making their services “work for hire” and assigning any copyright therein to the producer.

There are at least two grounds upon which AY may be able to maintain an action against the distributor; unfortunately these grounds are not well-developed in Nigeria. The big issue here is “right of publicity”. Right of publicity is derived from the common law tort of invasion of privacy codified in some states in the United States that protects a person (usually celebrities or public figures) against the unauthorized exploitation of his/her image, name, or likeness. Variants of this concept can be found in Section 3344 of the California Civil Code and Sections 50 and 51 of Civil Rights Law of New York (where the concept is referred to as “right of privacy”). Right of privacy/publicity has four distinctive causes of action which include: (i) misappropriation of a person’s identity – i.e. name, likeness, or image; (ii) intrusion upon a person’s seclusion; (iii) public disclosure of private facts; and (iv) attributing a belief which is untrue to someone – i.e. false light. The other issue, which is similar to the misappropriation of a person’s identity, will be false advertising based on misattribution of credit. This is a statutory concept that can be found in various state laws in the United States and in the Trademark Act. See for example Sections 17200 and 17500 of the California Business and Professions Code and Section 42(a)(1)(A) of the US Trademark Act.

The US Trademark Act provides that “any person who… uses… any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities of another person… shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”
Although the likelihood that the laws in the US and their judicial interpretations will apply – in view of the fact that there are no strikingly similar laws in Nigeria – appears slim, however having an understanding of the developments in the US may help as Nigeria’s entertainment industry develops.

The Nigerian Trademark Act expressly frowns at infringement or unauthorized use of another person’s brand and requires that, in maintaining an action for infringement, such brand must be a registered trademark. Nonetheless by virtue of Section 3 of the Act, such owner of an unregistered brand can sue the infringer for passing off – another concept in tort law which is well developed in Nigeria – his goods (and by extension services) as the goods or services of the original brand owner. See Omnia Nigeria Limited v. Dyktrade Limited S.C. 176/2003; judgment delivered on July 13, 2007. While there are laws governing advertising practices in Nigeria including the requirement for submission of advertisements for vetting by the Advertising Standards Panel, there are no guidelines in these laws or codes on ensuring that there is no passing off, false advertising or misappropriation of a person’s identity.

The concept of attributing credit to performers in a movie is a known practice all over the world but more particularly made famous by Hollywood. In fact, a lot of attorney billable hours go into negotiating the credit provision in a talent agreement, covering whether it will be above the main title, on a single card, and the size and position of such credit. Where an actor is “miscredited” or not credited, a lot of billable hours go into fighting this in a court of law. The rationale for this is the understanding of the inherent commercial value in the name, image, and likeness of these public figures and the need to guard against unjust enrichment by an unauthorized person. In order to avoid any confusion like in AY’s case, producers are advised to have a written agreement with talent on attributing credit and using the talent’s “image, name, likeness and approved bio”.

How do the above apply to AY’s case? In the event that there is an agreement between AY and the producer regarding the use of his image, name and likeness, such agreement will govern and the court will likely rely on the agreement in deciding the case. Assuming there was no agreement, the court will likely refer to the custom and practice within the entertainment industry, particularly in Nigeria and by extension, Hollywood. The distributor is likely to argue that since AY performed in the movie, and the distributor acted in good faith when it attributed credit to AY and displayed his picture on the print ad. On the other hand, AY may be able to argue that the attribution of credit and use of image were done in bad faith on the ground that (i) he performed in a supporting role and he never consented to the use of his name or brand to market the movie; and (ii) the use of his name as the title of the movie in conjunction with his image (which constitute his brand as an entertainment professional) misrepresented to the consumers that he participated in a principal role or that the film was produced by or co-produced with him, thus creating confusion as to the origin of the movie. A glance at his Instagram page is enough evidence. AY will likely not succeed on a trademark infringement claim unless he can show that “AY” is a registered trademark; however, he will likely succeed on the claim of passing off upon a holistic view of the use of his image boldly in the center of the print ad in conjunction with his name in the title, now being marketed for the movie.

I will close with a disclaimer that while the above represents my hypothetical view in case AY decides to pursue a legal action, the court will determine the best argument. Parties may also choose to settle out of court. Whichever way it goes, this action if pursued is likely to expand Nigeria’s jurisprudence in relation to the entertainment industry as its practices continue to evolve.

The life of a filmmaker is very interesting. In fact the process of transforming that idea into a movie with lots of box office receipt, if the filmmaker is lucky, is far more interesting. While many processes towards getting the idea into a movie abound, co-production if properly structured can be a veritable process towards getting the movie made.

Co-production is basically the collaboration between two or more entities (in this case film producers) in the development, finance, production and in some cases distribution of a movie. Just in case you don’t know, filmmaking is both an art and a business. This article will walk you through co-production as a tool to getting your movie made and the process and structure of a co-production deal.

What are the types of co-production deals out there? Co-production can evolve in either of the following three forms, which are not mutually exclusive since these forms could in fact work cumulatively in some cases: (i) an investment in return for equity in the film; (ii) a creative collaboration on the production between or among the parties; and (iii) investment in return for distribution rights (which could be domestic or international, or both). Keep in mind that the distribution right could be an outright acquisition by one of the parties, or the distributor playing a passive role in the creative process, or an ownership/profit share arrangement. Co-production may also be a pure collaborative effort between the parties involved or structured under a co-production treaty in order to get the necessary benefit under applicable treaty.

A co-production treaty is a bilateral agreement between two countries that provides the framework upon which film producers in member countries can collaborate on film projects. Yes, it’s that simple but complying with the treaty and local rules may sometimes be complex thus requiring you to engage a good entertainment attorney with great understanding of these deals.

Apart from getting your film made, doing a co-production deal whether or not it’s under a co-production treaty has great benefits. Some of these benefits include national treatment of the co-production movie in treaty countries. This provides access to the box office market of the country. A good example will be the China-France Co-Production Treaty of 2006. A film co-produced by a French filmmaker and a Chinese filmmaker or financier will be treated as a Chinese (and French) movie thus avoiding the quota system which limits the number of foreign films that can be shown in China. Other benefits include access to finance in the form of grants and equity investment from the government and other film funds, tax incentives (credit or rebate) and other practical measures including crew and equipment; movement of technical equipment and filming materials on a temporary admission basis and free of import duties and taxes; facilitation of entry of nationals from treaty countries; etc.

Whichever form or type of co-production deal you choose, it will very likely follow the process and structure discussed below:

(i) Acquisition of Underlying Right
You probably know by now that entertainment business is premised on “RIGHT” and lots of negotiation go into who owns or controls it. Since the co-production deal is premised on the ownership of the right and collaboration of parties involved in producing the right in the property, acquiring the right is very important. This is basically the chain of title to the movie which starts with whether the production entity in fact owns the right in the underlying work which could be a book, a movie, newspaper article, a screenplay, etc. upon which a movie is based. The producer who is party to the co-production deal could either own this originally or have an option to develop and purchase the underlying work. It could also be acquired as a commissioned work under the work-for-hire process. Oftentimes one of the co-producers may already have the right to this underlying work and will be contributing that work towards the co-production of the movie.

(ii) Establish A Production Entity
This is important for many reasons, chief among them are the tax implications and the ability to hold the copyright in the film. The production entity could be in the form of an LLC or a corporation. In the United States, an LLC is favored because of its “pass-through” taxation benefit and ease in structuring the preferred return unlike in corporation where you have to create different classes of shares. However, a non-US resident investor may not be able to take this benefit unless they set up an entity here in the States.

(iii) Divide Responsibilities and Entitlements
Now this is the meat of the co-production process. This part of the process will cover the rights, obligations and entitlements of each party. Will party A contribute the screenplay to make the film? Will party B provide financing? Who will provide production services? Who gets the domestic distribution rights? Who takes the international rights? Who has the authority to sign? How is the proceeds shared among the producers (the “Waterfall” provision”)? What about credit, approval rights, control, etc.? It is important to note that a co-production deal is a form of a partnership or joint venture deal and usually these issues will be addressed in the Co-Production Agreement. Keep in mind that parties will still need to negotiate and structure the LLC Operating Agreement (for LLC) or the Shareholder Agreement (for corporation). For the most part, the organization agreement will mirror the terms of the Co-Production Agreement.

(iv) Secure Foreign Distribution Agreement
In case you do not know, foreign presale is crucial to independent film production and distribution. Foreign presale helps the filmmaker raise financing and get distribution for the movie at the same time. This is how it works. Prior to making the movie but after putting the essential elements together (e.g. attaching the lead actor, director and/or producer), the filmmaker approaches sales agent (e.g. Arclight, Summit) who presell the distribution right to the film to certain marketable territories. The distributors in those territories will make a commitment of a dollar amount for the distribution right to the movie in their respective territories. The filmmaker can then collateralize these commitments to obtain production loan from a bank.

(v) Secure production financing
Production finance comes in creative ways for independent films. The co-producers will most likely be equity investors in the project. That does not mean that there might not be more investors who play passive roles. Nonetheless, the co-producers may borrow against their presales from the bank or finance the gap between the foreign presales and the shortfall (“gap lending”) or even get mezzanine (subordinate) financing with higher interest rate. Other form of financing include tax incentive financing whereby the filmmakers approach tax incentive brokers who will lend at a discount against the estimated tax incentive.

(vi) Secure creative service agreements, completion bond and production insurance, and fund escrow
Now that all the elements are in place and the producers are ready to shoot the movie, all talent agreements (above and below the line), producer agreement as well as completion bond (banks and investors may request this so the completion guarantor – a company providing this sort of services – can take up and complete the project in case things fall out of hand). You also need to get error and omission insurance to cover any risk that might arise during or after production. Lastly, you will need to fund the escrow with the amount of the production budget which will be disbursed by the unit production manager in order to ensure that the project is in line with the budget.

A client recently asked me to prepare a cease and desist letter to be sent to his former band members. He was less concerned about the physical assets of the band but more about the intangible assets – the intellectual property – of the band. He was so much into the creative process when the band was formed and never paid attention to the business and legal sides of things. The band only had a two-page partnership agreement with little or nothing protecting him but now he has to go through the painful process of breaking off with his former band members while scrambling to retain control of rights in his contributions to the band’s intellectual property.

The provisions contained in a recording contract with a solo artist will very much apply to the band but instead of having just one artist, there are multiple artists in such contract. Ordinarily, the relationship of the band and the recording label for the exploitation of the band’s mechanical right, or the publishing company for the exploitation of the publishing right, will be governed by the recording agreement and publishing agreement, respectively. Such agreements, depending on how sophisticated the record label or publishing company is, will most likely make provisions applying to the band break up. For example, the agreement may provide for the “key member” concept whereby the withdrawal from the band by the lead artist may lead to the band’s breakup and the end of the recording contract. This may not apply if the drummer or the pianist leaves the group. However, the internal structure of the band as to who gets what share of the royalties or what happens when the band actually breaks up, among others, are often left to the band to determine.

The most important thing to note is that even though the band might have gotten together solely for creative purposes, it is still a business in the eyes of the law. That’s why it’s a “show business”. If there is no proper structure as to the kind of entity formed, the law will infer a partnership even if that is not the intent of the band members. Section 202 (a) of the Revised Uniform Partnership Act (See Section 16101 (9) of the California Corporations Code) defines partnership as “an association of two or more persons to carry on as co-owners a business for profit…” But partnership may sometimes not be the appropriate entity for band members given the partners’ unlimited liability, whereby third parties can attach not just the partnership’s assets but the partners’ assets. Things are a bit different for “limited partnership” where there is one general partner and other limited partners. In this situation, the general partner has unlimited liability and oftentimes it is a corporation which provides limited liability to its shareholders, while the other partner’s liabilities are limited to the amount of their contributions. Since members of a band are natural persons, they will very likely be treated as a “general partnership”.

A better way of ensuring that members are protected against liability and ensuring that their assets are properly held in an entity is to form a corporation or limited liability company (“LLC”). A corporation and a LLC are formed upon filing the necessary document, usually an article of incorporation or organization with the secretary of state. The benefit of forming a corporation or LLC is the limited liability protection it affords its members as their liability is limited to the amount of their contributions to the entity. The other benefit that LLC has over a corporation applies to taxation. As a corporation, its income is taxed at the source and if it makes distribution or pays dividend to its shareholders, the latter also gets taxed thus creating a double taxation scenario. For LLC, there is a pass-through taxation whereby the members of the LLC are taxed on their income drawn from the LLC.

Why create an entity and structure the relationship of band members before a break up happens? Each of the entities discussed above has an agreement which guides the operation of the entity and the relationship of its members. For a partnership, there is a Partnership Agreement. For the corporation, there is a Bylaw and for the LLC, there is an Operating Agreement. Through this agreement, the members are able to determine how their assets and liabilities, operation of the band, its intellectual property rights covering the mechanical, publishing, synchronization, public performance, merchandising, the name, trade name and trademark and right of publicity of each band member will be exploited and how much percentage or interest in the company each member has. The agreement will also provide for the control of the band. Will it be a “majority control” or control by whoever started the band? Will the entity (i.e. the band) continue to exist after a member withdraws from it? Will this lead to dissolution? Can the remaining band members continue the business? How does the band buy out the withdrawing member? Will the buyout apply only to tangible assets? How does the band value those assets? What about the intangible assets like intellectual property? What will happen to the band’s name (which may be its most valuable asset)? Does the withdrawing band member continue to get royalties on licenses of the band’s assets before his/her withdrawal? Does s/he continue to get royalties on merchandising using the band’s name?

These and many issues are what the band members should consider before setting up the band. The band will need an entertainment attorney who understands the issues in the music business in setting up the entity and provides ways of handling them in the organization document. It is advisable that the band consult an attorney not because members anticipate a break up but to cater for it in case it happens.

The Hollywood Reporter reported recently that Tess Gerritsen, the author of the book, “Gravity”, upon which the movie of the same name starring Sandra Bullock and George Clooney and directed by Alfonso Cuaron is based, has just suffered another setback in her case against Warner Bros. You can see the article here. Gerritsen filed the action on April 29, 2014 against Katja Motion Picture Corporation (“Katja”), New Line Productions, Inc. (“New Line”) and Warner Bros Entertainment, Inc. (“WB”) (collectively, “Defendants”) alleging breach of contract and guaranty on the option/purchase agreement entered into in 1999 and that she is owed a portion of the profits from the movie comprising of bonus and profit participation. Gerritsen based her claims on two theories: (i) direct breach; and (ii) indirect or vicarious breach.

The court allowed the defendants’ motion to dismiss the plaintiff’s direct liability claim on the ground that Gerritsen has not shown any connection between WB and Katja/New Line since the former was not party to the agreement. The court held further that the guaranty claim, even though is based on the main contract, is a standalone claim that should be pled separately and since it did not form the original complaint, the plaintiff cannot add it to the amended complaint. The court concluded that the plaintiff has not shown any alternative theory to make WB liable under direct breach. The plaintiff claimed under the second theory of indirect breach that WB is liable (i) as successor-in-interest to Katja and New Line, (ii) as alter ego of Katja and New Line and asked the court to use third party reverse piercing of the corporate veil, and (iii) because Katja and New Line acted as agents of WB which the latter ratified when it took the benefit of the assignment agreement between Katja and Gerritsen and made the movie. Gerritsen based her claim on the consolidation of defendants’ businesses in 2008 shortly after the acquisition of New Line and WB by Time Warner. The court upheld the defendants’ motion to dismiss the plaintiff’s claim mainly on the ground that she has not shown enough evidence or facts to support her claim and that her assertions are conclusory. The court gave Gerritsen an opportunity to amend her complaint for this purpose.

Gerritsen wrote the book, “Gravity” and Katja, the then literary properties acquisition and development arm of New Line, acquired the movie right in the book. Katja developed the film based on the book with New Line and Artists Production Group (“APG”), which is the production affiliate of the management company Artists Management Group (“AMG”), whose clients include Alfonso Cuaron. The project went into development by attaching Cuaron who created the screenplay for the movie. Gerritsen claimed that she assisted with the screenplay by adding additional scenes. In 2009, Cuaron with his son working on the movie, allegedly granted all rights in the Cuaron Gravity Project to WB which produced and distributed the film.

It is not unusual in the development and production process of a movie to have different assignment of rights from a production company or studio to another. This oftentimes occurs in independent film productions where the producer, in sourcing development and production finance, has had to assign rights acquired through the literary right option/acquisition agreement to the finance company, a bigger production company or studio. While it is normally expected during negotiation of the finance, production and/or distribution deals that the assignment of the movie rights to a book from the producer to the finance company, studio or distributor does not absolve the producer from its obligation as it may still be secondarily liable, there is also the presumption of law that assignment to and acquisition of benefits of a contract by an assignee also come with its obligation. See sections 1589 and 3521 of the California Civil Code. These obligations may include without limitation payment of bonuses and profit participation, according credit, honoring the reserved and/or frozen rights and other obligations in the agreement. Many production finance and distribution agreements will address these obligations by either acknowledging them and making sure that they take priority over any investment return or payment of loan plus interest; or pass the obligation along to the assignee or licensee of the movie distribution rights in making sure that any bonuses and profit participation payments are made by the distributor to be recouped as distribution expenses. The fact that these issues may not have been clearly spelled out in the option/acquisition deal may be one of the problems affecting Gerritsen’s claims.

Let’s take a look at a typical “right to assign” clause in an option/acquisition agreement. Given the entertainment industry’s response to the case of Gardner v. Nike Inc., 279 F. 3d 774 (2002) in which the court held that unless expressly stated in the contract, the assignee cannot license or assign the right granted under the agreement, you will often find the following clause “right to assign” in option/acquisition agreements:

Right To Assign. Company shall be free to sell, assign, license, mortgage, encumber or otherwise transfer this Agreement and its rights hereunder, and/or to delegate any or all of its duties hereunder at any time and from time to time to any person or entity. Upon such assignment of this Agreement, Company shall be released and discharged of and from any and all of its duties, obligations and liabilities arising under this Agreement if such assignment is to: (i) a person or entity into which Company merges or is consolidated or (ii) a person or entity which acquires all or substantially all of Company’s business and assets or (iii) a person or entity which is controlled by, under common control with, or controls Company or (iv) any major or “mini-major” motion picture company, United States television network or affiliates of such entities or (v) a person or entity who supplies a substantial amount of Company’s motion picture financing or financing for any Production produced hereunder or (vi) other financially responsible party who assumes in writing the performance and obligations of Company hereunder to be performed from and after such assignment. Owner may not assign this Agreement or Owner’s rights hereunder, or delegate Owner’s duties under this Agreement in whole or in part.”

Although the above clause allows the assignee of movie rights to assign their right and be released and discharged from all obligations and liabilities arising under the agreement if such assignment is made to any of the entities listed in the clause, it does not address where such assignment is only an “asset sale” (thus excluding liability or obligation under the agreement) or any instance whereby the assignee, like in the Gravity case, can claim that even though there is a combination of the businesses between the original assignee of the movie right and the second assignee, there is no evidence to show that any obligation or liability flows from the original assignee to the second assignee. It is very likely that Gerritsen will be able to supply more evidence to show that in proving the chain of title of the movie either while getting financing or distribution through the in-house process of WB, there were some documentation or agreements that transfer the rights and obligations under the option/acquisition agreement from Katja/New Line to WB. There is no doubt that Katja was the development arm of New Line and most option/acquisition deals of New Line were done through Katja. It may also not be difficult to get documents through discovery to show that upon consolidation of New Line with WB, there were documentation and agreements flowing from New Line to WB even though WB got an assignment of the screenplay from Cuaron. Note that Cuaron’s screenplay is a derivative work of Territsen’s book, the subject of the option/acquisition deal.

Apart from the issue in the ‘Gravity’ case, there may be an instance where upon assignment of the option/purchase agreement, the producer/original assignee jets into sunset and is no longer involved in the production of the movie. It is therefore important that in that case, the author will want to make sure that s/he is a part of the film making process to ensure that the assignee’s now transferred obligations are honored. So, how does the author or any copyright owner in an option/acquisition deal anticipate these issues and address them during negotiation of the agreement? Firstly, the original assignee must be secondarily liable for its obligation under the contract in spite of the assignment to the third party. Such clause will likely be drafted as follows:

Assignment: Purchaser shall have the right to assign any or all of its rights under this Agreement to any person, and upon such assignment Purchaser shall have no further obligations to Owner hereunder; provided that Purchaser shall remain secondarily liable for all of its obligations.” [underline mine].

The other option (perhaps a supplementary one) is for the author or copyright owner to state in the agreement that all assignment of right by the original assignee shall be invalid except the author’s consent is obtained and that such assignment shall have the effect of an assignment of rights as well as the obligations and liabilities of the original assignee under the contract, provided however that the original assignee shall remain secondarily liable for all of its obligations. The aim of this option is to ensure that the author is involved in the film making process in order to ensure that all obligations due to him or her are honored. Such assignment must anticipate all kinds of assignment including direct or indirect one which may be inferred from consolidation or merger and acquisition. This clause may be drafted as follows:

Assignment (or Right to Assign): Company shall have the right to assign any or all of its rights under this Agreement to any person provided that Author’s consent is first had and obtained. Any such assignment shall have the effect of an assignment of rights as well as the obligations and liabilities of the Company hereunder; provided, however, that the Company shall remain secondarily liable for all of its obligations and liabilities under this Agreement.”

While we await how this plays out in court as Gerritsen makes another attempt in her case, rights owner should carefully consider and have their attorneys review the “right to assign” clauses in their option/acquisition deals to avoid a similar situation in the future.

Recently, some Nigerian film makers made headlines, not because of how well their movies are doing at the box office, but about the widespread piracy of their films. They alleged that some film marketers in Alaba market in Lagos, Nigeria are saboteurs of their works. Interestingly, there are businesses in Alaba and Onitsha markets which officially distribute and market entertainment content, mostly on DVDs. Nigerian music superstars have in fact made deals with these distributors by licensing the distribution right in their music.

Film is a copyright work protected under the Nigerian Copyright Act. Nigerian films will not only enjoy the protection of the Act but will do so abroad under the international copyright treaties. One of the rights protected under the copyright law is the right of the copyright owner to control, exclusively, the distribution of their work. The exploitation of this right and the transactions involved seem to be a missing link between film producers and the distributors.

The Nigerian film industry is no different from the independent film industry in United States and across the world with many producers belonging to an organization called the International Film and Television Alliance (IFTA – www.ifta-online.org). The independent film business is however a lot different from the studio film business, which process is built in-house. An independent film will always start with an idea from the producer. The producer will then set up an entity, usually a corporation or limited liability company, which will operate as the vehicle for the production and other business and legal affairs of the film. The process often starts with obtaining an option or outright acquisition of a literary right upon which the screenplay to the film will be based. This could be a movie right to a book, a news article, a movie (in terms of production of a prequel, sequel or spin-off), screenplay or even a television show, etc. The process then leads to financing which could be through equity investment or debt financing. Thereafter, it leads to production legal works including negotiating and drafting all necessary talent agreements, location agreements, music and other rights clearances, music composer agreement (if applicable), etc. If the movie gets through all these processes, then the independent producer will start looking for distribution.

The way distribution works for independent films could happen at either of these two stages: (i) financing or (ii) distribution. One of the ways for obtaining financing for independent film is through foreign pre-sales. This happens when the producer contacts sale agents and distributors in foreign territories to license the right to distribute the movie in those territories. The distribution right could be an “all-rights” deal or be limited to any of the following windows: theatrical, home video, hotels and in-flight, per-per-view, video on demand (VOD), electronic sell through (EST), etc. The producer will then obtain a minimum guarantee (that is, the license fee which will be an advance against gross receipts to be shared at negotiated percentages, e.g. 60/40) from the distributor for the distribution rights. The producer thereafter puts the pre-sale agreements with those minimum guarantees together and approaches a bank by tendering them as collateral for the production loan. The industry term for this is called “lending against the presale”. The bank will often lend about 30% of the production budget or 50% of the pre-sale guarantees.

The other instance of distribution will arise either during production or after production of the film. If a movie is already in place, you will likely find independent producers at international film markets like Sundance, Toronto or Cannes Film Festivals (or other film festivals in Europe, Asia and Africa) seeking distribution deals. Oftentimes subsidiaries or independent film divisions of major movie studios will be on hand seeking to acquire distribution rights to these movies. This could be an outright sale without any right to share in proceeds or a license with all the terms including profit sharing properly negotiated by the producer and the distributor. Instead of making rounds at film festival, the producer may approach a major studio or distribution company for a distribution deal. Why the studio? The major studios, which are based in United States, have proven to have the financial strength and requisite resources for the nationwide or worldwide marketing and distribution of movies. More so, the budget for distribution expenses covering print and advertising alone could run into $45 million. That doesn’t mean there are no distribution companies other than the studios in the distribution business.

Now let’s talk about how distribution deals could work in Nigeria towards reducing piracy.

In getting the distribution deal done, the producer will license the right to distribute the movie to the distributor. This right, like in a pre-sale deal, could also be an “all-rights” “throughout the universe” “in perpetuity” deal or it could be structured in a way to explore different rights in the movie. Oftentimes, independent producers will prefer to control different rights and explore those rights by licensing them to different distributors, in different territories and across different platforms. For example, the producer may license the theatrical right to the distributor for the sole purpose of distributing the movie across the theaters. The right could also be limited to different territories; for example, “the right to distribute the movie theatrically in the “Territory”. “Territory” shall mean the English speaking countries of West Africa, including but not limited to Nigeria, Ghana, English-speaking Cameroon, Liberia…””

Keep in mind that the licensed right will determine the value of the licensed fee. The licensed fee could be a fixed and final amount to be paid for the right to distribute or could be a minimum guarantee. A minimum guarantee is the minimum amount which the distributor pays to the producer for the distribution right as an advance against the producer’s share of net proceeds. This means that where the distributor pays the producer $200,000 for the distribution right of its movie in Africa as a minimum guarantee, the producer will get a base amount of $200,000 from the distributor whether or not the distributor distributes the movie within the Term. If the distributor distributes the movie, the distributor will be entitled to recoup the license fee, distribution fees (which is often about 25% of the gross proceeds), distribution costs and other expenses, which may include conversion/transmission costs, collection costs, guild payments of residuals and re-use fees, foreign version costs, reediting costs, physical material costs, royalties (for copyright works used in the movie), insurance costs, copyright registration costs, copyright infringement costs, claims and litigation costs, third party participation (where producer has negotiated assignment of this obligation to the distributor) and of course, print and advertising. The producer will then start to share with the distributor, at a negotiated percentage, in the net proceeds from the film distribution.

Although there are marketers, distributors and sales agents in Nigeria, it is however not clear if their business executives and attorneys understand the intricacies of the above business and legal affairs issues in structuring those distribution deals and how it can help to stem the tide of piracy in Nigeria. I believe that the Copyright Act, as it is, is a good regulatory framework which could cater to the piracy problem; however not from enforcement by the Nigerian Police Force or other government agencies. I believe business people and stakeholders in the media and entertainment industry could actually control how their works get out through distribution deals. Piracy thrives because demand of entertainment content far outweighs the supply. A way of fixing this is through distribution.

Film production is not cheap. Even the low budget movies are produced with the aim of making money through distribution. Since many of Nigerian distributors are based in Alaba and Onitsha markets, these distributors could either individually or through joint ventures (and I envisage that in order to do more, these companies may need to consider merger or acquisition of smaller distribution companies) license the distribution rights to these independent films. Since these Alaba and Onitsha market distributors will now have stake in these films, they will do their best to police the channels of distribution. They have the incentive to do this since they will be able to recoup copyright infringement costs and the producer’s attorneys can always negotiate a cap on those costs and the right to audit the books of the distribution company. With time, some of these distribution companies will either rise to the occasion to become major studios with all the financial and logistic resources. Just maybe sooner than we think, they will be able to release a blockbuster with lots of box office receipts.

Legal Issues in Entertainment Business with Segun Aluko, Esq

Attorney, Segun Aluko Law

“Entertainment Deals in Scripted Television” is a presentation delivered on May 11, 2015 at the Artist Resource Center, North Hollywood. It describes various agreements and other business and legal issues encountered in scripted television and the role of the entertainment attorney.

Download Slides: Entertainment Deals in Scripted Television

Music in the Cloud – Legal Issues in Cloud Computing in relation to Music

Written by Segun Aluko*

 

  • Introduction

 

A New York Times article reported that last year (2013), the music industry shrank to 40 percent of its size in 1999 according to inflation-adjusted revenue data from the Recording Industry Association of America (RIAA)[1].  The widely acclaimed reason behind the dearth of sales in the music industry has been attributed to technology. The industry has had its own share of disruption as a result of technological advancement, whether it is vinyl, radio cassette, Compact Disc or as it is now, the internet. At different stages of this evolution, the content creators whether through the RIAA in the music industry or its sister in the audio visual industry, the Motion Picture Association of America (MPAA), have continued to wage wars against the technology, towards protecting, as they seem best, the interests of their members. Rather than fight these days, it seems that the better approach is to embrace the technology. The latest of these technological advancements is cloud computing. This article will discuss shortly the concept and technology of cloud computing, the use of the technology for accessing and using digital music and some legal issues that may arise which include infringement/piracy, user’s privacy and system security, and transfer of music files.

  •  Why the Cloud?

 

Many authors have attempted the definition of cloud computing[2]. For the purpose of this article, I will adopt David M. Given’s definition[3] that cloud computing is a hosted service providing scalable access by a computer user to personal computer files remotely stored on one or more host servers. This definition is apt for the purpose of this article because it explains how users access music files on online services through the cloud.

 

The advent of internet brought with it a lot of disruptions in the music industry particularly through the peer-to-peer file sharing networks. Napster, Limewire and other peer-to-peer websites perpetrated copyright infringement and college students and other users patronized these sites while music piracy thrived. Even though the music industry had good and successful fights by ending the reign of Napster,[4] Grokster[5], and MP3.com[6] for wide infringing uses of music, some of these sites still thrive today. Apple, Inc. introduced what seemed to be the answer to the turmoil by offering users a song for 99c on its iTunes store. This became a monumental move that earned the erstwhile CEO so many accolades in the industry. The players in the music industry, as a result of that move, have often required digital music lockers to obtain license for providing users remote access to their music files anywhere and anytime through their devices.

 

Recent dispute arose between the music industry and Amazon when it introduced its Amazon Cloud Player. The Amazon Cloud Player in fact operates like any other digital music locker. A user may purchase music from the Amazon.com which is then downloaded to their Amazon Cloud Player, or upload music which they already own from their computer to the Amazon Cloud Player, which they may access at any time through any device inasmuch as they have the Amazon Cloud Player application or the web application. One difference between the Amazon Cloud Player and the peer-to-peer networks is that users may only access music files purchased or uploaded from their computers and cannot access music files of other users. Amazon denied that it needed to obtain license to operate the Amazon Cloud Player but may consider obtaining one with respect to deduplication whereby it is able to replace multiple copies of the same music track uploaded by different customers with a single server copy that could be used by all customers with the same track[7]. It is not clear if Amazon like Google with its Google Music service in fact obtain any license to operate their music cloud storage service.

 

In the wake of these disputes, many other digital music lockers which provide slightly different services in the form of music streaming and online purchases have sprung up including Spotify, Pandora and Rhapsody, among others, which allow users to stream for free (but supported by ads) music, and with payment of a nominal fee each month, stream music without any ads. There is no doubt that these online music service providers must have obtained license for this. It seems that there will not be any issues respecting infringement by users since users cannot upload to the lockers; so the purely music streaming model is not the concern of this article.

 

Basically, the digital music cloud storage service is no different from other cloud storage services like Microsoft SkyDrive, or with respect to music, the Windows Media Player. The rationale behind these services is that users already own these music files either in a physical form and in this case, it will be CDs given the ability to rip its content and convert it into digital files stored on the digital lockers. The cloud service therefore makes it easier for users to access their music on the go by ensuring portability of their music files from one device to the other. But in doing this, there are many issues that have arisen and are still prevalent which this article will now address.

 

  1. Copyright Infringement

 

The United States Copyright Act, section 106[8] provides the exclusive rights of the owner of copyright to do and authorize reproduction, distribution, public performance, making a derivative work out of and public display of their work. In relation to the digital music lockers, the exclusive rights of copyright owner which are likely to be infringed will be reproduction and public performance right. Distribution will not be an issue here given the fact that these digital lockers which sell music on their platforms must have obtained authorization to do so. The making of derivative work from music is not in issue either. Infringement as it relates to music cloud services may be direct infringement or indirect infringement which is sub-categorized as contributory infringement, vicarious infringement and inducement.

 

  • Direct Infringement

 

The MP3.com case[9] addressed the legality of music cloud storage for the first time, which in this case excludes the peer-to-peer sharing sites. MP3.com allowed its users to upload songs on their computers to the MP3.com digital locker which are thereafter streamed to the users. In ripping the user’s CDs after it is inserted into the computer, MP3.com utilized a fingerprint solution which calculated and compared the music file to the fingerprints of thousands of ripped CDs that MP3.com had already loaded to its servers. This allowed MP3.com verify that the particular user in fact owned the original CD to be ripped and uploaded to its locker. Users did not actually upload their music because if upon verification by MP3.com that the user in fact had the particular CD, it just used the ripped copy it already had[10]. The Court held that the streaming by MP3.com infringed copyright holder’s performance right. That case later settled for $53.4 million.

 

In the latter case widely known as the Cablevision case[11], the 2nd Circuit determined that Cablevision’s “remote storage” DVR did not infringe the plaintiff’s public performance right. Cablevision created a remote storage DVR which allows its subscribers to record shows as they would have done on a traditional DVR, but instead of storing the recorded shows on a physical DVR, it stored them in Cablevision’s remote server room to be accessed by users. Cablevision likened its service to users owning a long range remote control and argued that all recordings were done at the discretion of users and separate copies of content were kept for each subscriber.

 

The Cablevision decision of course opened the gate for digital music lockers like Amazon Cloud Player, Google Music and recent music players like Beats (which has now been acquired by Apple, Inc.)[12] to launch their respective music cloud services. The issue here is whether these music cloud storage services infringe the reproduction and public performance rights of copyright holders. Depending on the service, once a music file is uploaded to the service, it automatically makes a copy that is then streamed to the users. In other cases, also depending on the type of service, music file may also be downloaded on a user’s device while streaming the music. Does this violate the reproduction right of the copyright holder?

 

On the service provider’s part, this may not be an infringement since the service provider did not in fact reproduce the music files. The service provider basically provides the services which the users may then use to store their music file for later access. The service provider will likely rely on the Sony Betamax case[13]. In that case, Sony manufactured the VCR called Betamax which allowed users to record television shows for later viewing, the process of which is called “time shifting”. The court in its decision noted that while users are likely to use the VCR to perpetrate copyright infringement, the VCR itself is not an infringement. The court held for Sony on the fair use defense showing that the VCR is capable of many non-infringement uses which therefore trumps any possible infringing use. In a later decision of the 9th Circuit in RIAA v. Diamond[14] based on the Audio Home Recording Act of 1994, the Court held that the defendant’s “Rio” device is not a digital audio recording device and therefore not capable of copyright infringement.

 

In distinguishing Sony v. Universal City Studios, Cablevision and Rio from UMG v. MP3.com, we must note that while in the latter case, the service provider or manufacturer of the service or device in issue played a passive role in how users access the already legally obtained copyright work on their services or devices, the opposite was the case in MP3.com where the defendant played an active role with its “beam-it services”. Apart from Sony where the fair use defense (which MP3.com canvassed unsuccessfully) was upheld, Cablevision and Rio were based on the argument that there was no infringement.

 

If there was no infringement of copyright holder’s reproduction right, how about infringement of the holder’s public performance right. The concept of public performance is performance to the public. EMI argued in MP3.com that the streaming of its music was a broadcast which violates its public performance right. The services of the digital lockers appear not to be different from a remote access DVR. Ordinarily, the users own the music files which they ripped from their CDs and upload to the digital lockers as their stored music on the assumption that those music files were obtained legally. What the digital music locker does for the users is to enable the users to access the music and play it back at any time. It is unlike a streaming service which the users do not have control over, which will amount to a broadcast. On that basis, service providers of digital music lockers are likely to successful argue that their service does not infringe copyright holder’s public performance right.

 

  • Indirect Infringement

 

While the music cloud service provider may argue that it is not directly infringing the copyright music, the copyright holder may be able to argue that the digital locker service is an indirect infringement in either of (i) contributory infringement, (ii) vicarious infringement or (iii) inducement. Contributory infringement occurs where there is a direct infringement by a third party and the service provider knows of and materially aids the infringement[15]. The Court found contributory infringement on the part of MP3.com in spite of its argument that its services are capable of substantial non-infringing uses as held in Sony. More so, MP3.com was aware of infringing uses of its platform without taking much action even after takedown notices under the DMCA[16] were issued to it by EMI.

 

Vicarious infringement will arise if the service provider has the right and ability to control the infringer’s act and receives a direct financial benefit from the infringement. Unlike contributory infringement, the service provider need not have knowledge of the infringement[17]. Inducement arises where the service provider is seen as inducing users to actually engage in infringement as seen with the peer-to-peer file sharing platforms[18].

 

So for the service provider to be liable for indirect infringement it must be aware that its platform is being used to perpetrate infringement and that it is gaining an economic advantage. Nonetheless, it might be able to argue the “safe harbor” defense under DMCA by taking down the infringing music from its platform upon receiving notice from the copyright holder. Other defense available to the service provider will be the fair use defense[19].

 

  • User Privacy/System Security

 

Another issue likely to come up in accessing music files from the cloud is the user privacy and system security. Users are usually required to share certain personal and security information, including credit card information, social security number, and billing address online which could be subject to loss, system shutdown and cyber-attack. As a result, user’s personal and security information are likely to be compromised. A case in point is the recent hack into iCloud accounts of some celebrities and the release of their private pictures over the internet[20]. Also recently, Sony Pictures Entertainment’s servers were hacked by some group with links to North Korea over the release of a satire comedy entitled “The Interview” that portrayed the assassination of the North Korean leader. As a result, several personal information of executives and employees of Sony Pictures, including their social security numbers, addresses, salaries and other information were leaked on the internet. News reports show that a number of employee litigation is likely to arise out of this incident[21].

 

Service providers are likely to anticipate and cover this issue under their End User License Agreement, Service Level Agreements or Software License Agreements. Other mechanisms include the service providers’ Term of Use Policy and Privacy Policy which will disclose to users the possibility of being victims of cyber-attack and their devices being contaminated with viruses and malware. Users are therefore required to consent to these agreements before using the services.

 

  • Transfer of Music Files

 

Another issue that may arise is the ability of users to transfer their music files uploaded to or purchased from the digital music locker either inter vivos (i.e. during the user’s life) or by will upon the user’s death. Currently, there are no particular laws in place except for the Virginia law passed in 2013 which addresses aspects of the issues thus making it easier for family members to see the content in case of death of a minor. The State of Delaware also recently passed a law that seeks to ease access to content[22]. The Uniform Law Commission[23] is currently working on a law, called the Uniform Fiduciary Access to Digital Assets Act[24] that will guide easier access to content while also honoring a user’s privacy wishes.

 

For the most part, access to content by family members upon death of the user may be subject to the User Privacy Policy of the service provider. For example, Google’s Inactive Account Manager[25] allows users to designate up to 10 people to receive content from sources like user’s mail, documents and blogs. The user may also choose to have content deleted.

 

There have been arguments from different quarters on whether a sale of digital music should be considered a “sale” or “license”. Music copyright holders would like the music recording companies and users to regard such sale of digital music as a license for many reasons. From the user’s perspective, a good reason for this will be to avoid the first sale doctrine argument.[26] From the recording companies’ perspective, on the other hand, a good reason will be to get a higher royalty split since a synch or master use license for TV commercial or a movie is shared 50/50[27]. From the Terms of Use[28] reviewed, it appears that users may only do whatsoever they want with the music they stored on the music lockers, which will include downloading and transferring the music files to third parties. However for purchased music files, users only have a non-exclusive, non-assignable and non-transferable license to access and listen to the music files through any devices.

 

Some authors[29] have argued that common law doctrine of copyright exhaustion should be applied to digital works including music purchased from music lockers so as to allow users to easily assign their interest in it. They argued in their article that following Congress’ enactment of Section 117 of the Copyright Act, which provides the right of copy owners to use and redistribute copies of computer programs, and the establishment of the National Commission on New Technology Uses of Copyrighted Works (CONTU)[30], same rationale that motivated Congress to clarify the application of the exhaustion principle to computer programs should apply to all digitally encoded works[31]. The benefit of applying the exhaustion principle to digital works, the authors argued, will increase access, enable preservation and privacy, promote transactional clarity, spur innovation and encourage platform competition, which are all appropriate considerations that can provide courts with helpful criteria in balancing the equities between copy owners and copyright holders in particular[32].

 

 



* Segun Aluko is licensed to practice in Nigeria and California. He currently works with the Entertainment, Technology and Advertising Practice of Sheppard Mullin Richter & Hampton, LLP out of the firm’s Century City office where he advises and counsels clients on motion picture, documentary and television production, financing, licensing and distribution transactions.

[1] Jeff Sommer, The Harmony They Want to Hear, NY Times (May 17, 2014) http://www.nytimes.com/2014/05/18/business/the-harmony-they-want-to-hear.html, accessed on 12/15/2014 at 5:50 pm.

[2] See Vineeth Narayanan, Harnessing the Cloud: International Law Implications of Cloud-Computing, 12 Chi. J. Int’l L. 783 (2012) wherein the author described Cloud Computing as follows: “The cloud-computing service is a system by which individuals can access computing power remotely by storing data on centralized servers, as if in a cloud. See also Daniel J. Gervais & Daniel J. Hyndman, Cloud Control: Copyright, Global Memes and Privacy, 10 J. On Telecomm. & High Tech. L. 53 (2012) wherein Cloud Computing is defined as “a global technological infrastructure in which the user of a computer accesses and uses software and data located outside of the user’s personal computer or other digital device.”

[3] David M. Given, Music in the Cloud – A Business and Legal Primer, 30-SPG Ent. & Sports Law. 1 (2012).

[4] See A&M Records, Inc. v. Napster, Inc., 239 F. 3d 1004 (2001).

[5] MGM Studios, Inc. v. Grokster, Ltd. 545 U.S 913 (2005).

[6] See UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349 (2000).

[7] See Cullen Kiker, Amazon Cloud Player: The Latest Front in the Copyright Cold War, 17 J. Tech. L. &Pol’y 235 (2012)

[8] 17 USC § 106

[9] UMG Recordings, Inc. v. MP3.com, Inc. (supra)

[10] Timothy B. Lee, Are Google Music and Amazon’s Cloud Player illegal? Ars technica, CNN Tech (2011)  http://www.cnn.com/2011/TECH/web/07/11/google.music.amazon.cloud.ars/ accessed on 12/16/2014 at 3:18 pm

[11] Cartoon Network v. CSC Holdings, Inc. 536 F. 3d 121 (2d Cir 2008)

[12] At the time Amazon launched its Cloud Player and Google, its Music Beta service (now Google Music), Apple, Inc. was in fact negotiating with the recording labels a licensing deal for its iCloud service. See Timothy B. Lee, id.

[13] See Sony Corporation of America v. Universal City Studios, Inc. 464 U.S. 417 (1984)

[14] See RIAA v. Diamond Multimedia System, Inc. 180 F. 3d 1072 (1999)

[15] See David M. Given, id at 15

[16] Digital Millennium Copyright Act, 17 USC §512 (c). Under the DMCA, liability for copyright infringement by an online service provider (“OSP”) is limited if: (i) a third party initiates or requests transmission of copyright material, (ii) the service provider does not select the material, (iii) the service provider does not select recipients of the material, (iv) the provider does not retain copies of the material, and (v) the service provider transmits material through its system without modification of its content.

[17] Id, at 15

[18] See MGM Studios v. Grosker, Ltd, 545 U.S. 913 (2005) where the court held that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

[19] 17 USC §107 – Fair Use Defense consists of the following four factors: (i) the purpose of the use; (ii) the nature of the work; (iii) the amount and substantiality of the portion used, and (iv) the impact of the use on the actual or potential market. See also Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994). See also Sony v. Universal City Studios (supra)

[20] Alan Duke, FBI, Apple investigate nude photo leak targeting Jennifer Lawrence, others (2014) http://www.cnn.com/2014/09/01/showbiz/jennifer-lawrence-photos/ accessed on 12/19/2014 at 10:29 am.

[21] Tom Huddleston, Jr. Ex-Sony Pictures employees file lawsuit over hack, exposed personal info  (2014) http://fortune.com/2014/12/16/sony-pictures-hack-lawsuit/ accessed on 12/19/2014 at 10:35 am. See also Ted Johnson, Sony Hit With Class Action Lawsuit by Ex-Employees, (2014) http://variety.com/2014/film/news/sony-hit-with-class-action-lawsuit-by-ex-employees-1201380668/# accessed on 12/19/2014 at 10:37 am.

[22] Thomas J. Fitzgerald, How to Digitally Avoid Taking It to the Grave, (2014) http://www.nytimes.com/2014/07/03/technology/personaltech/how-to-digitally-avoid-taking-it-to-the-grave.html  accessed on 12/19/2014 at 11:02 am.

[23] The National Conference of Commissioners on Uniform State Laws – www.uniformlaws.org

[24] Thomas J. Fitzgerald, id

[25] id

[26] Cullen Kiker, id at 267. Under the first sale doctrine, once a legal copy of an expression is sold, the copyright holder, with limited exceptions, cannot control how the copy is later used.

[27] See Joel Rose, Download Sales: Will Money Stay With Labels Or Go To Musicians? (2011), http://www.npr.org/blogs/therecord/2011/05/04/135714914/download-sales-will-money-stay-with-labels-or-go-to-musicians accessed on 12/19/2014 at 11:23 am.

[28] See Amazon Music Terms of Use, last updated June 11, 2014 http://www.amazon.com/gp/help/customer/display.html?nodeId=201380010 accessed on 12/19/2014 at 12:28 pm. Section 3.1 (Rights Granted) – “You may use the Services only for your personal, non-commercial purposes, subject to the Agreement. You may not use the Services to store, transfer or distribute content of or on behalf of third parties, to operate your own content application or service, to resell any part of the Services or for any form of unlawful file sharing. We grant you a non-exclusive, non-transferable right to use Purchased Music, Prime Music Content, Matched Music and any additional Music Content we provide you access to through the Music Library Service only for your personal, non-commercial purposes, subject to the Agreement. Except as set forth in the preceding sentence, you may not redistribute, transmit, assign, sell, broadcast, rent, share, lend, modify, adapt, edit, license or otherwise transfer or use Purchased Music. We do not grant you any synchronization, public performance, public display, promotional use, commercial sale, resale, reproduction or distribution rights for Music Content you purchase or access through the Services. You must comply with all applicable copyright and other laws and with the terms of any licenses or agreements to which you are bound in your use of the Services and Music Content you purchase or access through them”. See also Google Play Terms of Service April 8 2014, https://play.google.com/intl/en_us/about/play-terms.html accessed on 12/19/2014 at 12:30 pm. For example, Section 6 (Sale, Distribution or Assignment to Third Parties) provide thus: “Sale, Distribution or Assignment to Third Parties. You may not sell, rent, lease, redistribute, broadcast, transmit, communicate, modify, sublicense or transfer or assign any Content or your rights to Content to any third party without authorization, including with regard to any downloads of Content that you may obtain through Google Play. Use of any tool or feature provided as an authorized part of Google Play (for example, “Social Recommendations”) shall not violate this provision so long as you use the tool as specifically permitted and only in the exact manner specified and enabled by Google.” Section 7 (Music on Google Play) – “Use of Music Locker Services. By storing Music Products and Stored Content in Music Storage, you are storing a unique copy of such content and requesting Google to retain it on your behalf and to make it accessible to you through your Google account. By using the Music Locker Services, you are requesting that Google make all of the necessary functions and features of the Music Locker Services available to you in order to facilitate your use of Music Products and Stored Content. Additionally, by accessing or using Music Products and Stored Content through the Music Software, you are initiating and performing the corresponding functions on Google’s servers, together with any related steps necessary to achieve them, through the Music Locker Services. You understand that Google, in performing the required technical steps at your direction to provide you with the Music Locker Services, may (a) transmit Music Products and Stored Content over various networks and in various media and (b) make such changes to Music Products and Stored Content as are necessary to conform and adapt it to the technical requirements of connecting networks, devices, services or media. You confirm and warrant to Google that you have the necessary rights to store in Music Storage any Stored Content that you direct Google to upload or store in Music Storage, and to instruct Google to perform the actions described in this section.”

[29] See Aaron Perzanowski and Jason Schultz, Digital Exhaustion 58 UCLA L. Rev. 889 (2014) at 920 – 921, 935, 937 – 944

[30] CONTU is a panel of experts established by Congress in 1979 and charged with studying the relationship between new technologies and copyright protection and recommending changes to existing laws.

[31] Aaron Perzanowski and Jason Schultz, id at 935.

[32] Id, at 937.