Archive | October 2013

Radio Royalties Bill Envisions Bold Music-Licensing Changes

Most countries require both traditional radio stations and digital stations like Pandora to pay for recorded music and the underlying compositions, but traditional American stations are only legally required to pay for the compositions. However, a newly proposed bill, if passed, would change this by eliminating compulsory licensing for both digital and over-the-air stations altogether.


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Emerging Trends: US Film Industry Finds New and Growing Market in China

by Nicole Joyce, Arther Law’s Industry Insider

A sign of things to come? Movies such as "Cloud Atlas" failed to ignite U.S. box offices but found business in China. (P.S. See "Cloud Atlas")

A sign of things to come? Movies such as “Cloud Atlas” failed to ignite U.S. box offices but found business in China. (p.s. see “Cloud Atlas”)

On October 19th there was a panel in Beverly Hills California called “China’s Entertainment Industry: The Next Chapter.” Panelists and attendees discussed how China represents a growing market for American films.

It is projected that the Chinese box office will double the US box office in 10 to 15 years. Currently, movies like Pacific Rim made USD $10 million more in China than it did in the United States. This was even after the movie was released 3 months apart with enough time for the bootleg market to start production of the movie.

Cloud Alas made 700,000 dollars more in its Chinese release than in the US one. This is also after almost half an hour of the movie was censored out.

Analysts such as Bank of America/Merrill Lynch Global Research estimate that the Chinese box office could yield $5 billion in value potential for Hollywood studios by 2017. This is compared to approximately $2.2 billion today, including imported and local productions.

The Panelists also discussed the growth of Chinese directors who have demonstrated strong skills in story telling.

Attention Inventors: New USPTO Patent Filing and Maintenance Rules Now in Effect


Jose Landivar, Arther Law’s Industry Insider

This past Monday, the U.S. Patent and Trademark Office recently published final rules in the Federal Register updating procedures for filing and processing patent applications. Supporters of the changes say that the new rules will serve to harmonize U.S. patent and filing statutes with two treaties, the Patent Law treaty and the Hague Agreement, signed more than 20 years ago. Read More…

Crisis Fixer: Judy Smith, The Real Olivia Pope


ABC’s smash hit show isn’t completely fictional, Shonda Rhimes based her drama on the crisis management world through the life of Judy Smith. Smith is the founder and President of Smith & Co, a leading strategic and crisis communications firm with offices in Washington D.C. and Los Angeles.  Just as Olivia Pope, Smith has worked with high profile clients including Monica Lewinsky during her scandal with former President Bill Clinton, Senator Craig from Idaho, actor Wesley Snipes, NFL quarterback Michael Vick, Clarence Thomas during his Supreme Court Confirmation hearings, Kobe Bryant and his legal issues, and the family of Chandra Levy. She also worked with the congressional inquiry of Enron, and the United Nations Foundation and World Health Organization response to the SARS epidemic. Recently Paula Deen hired Smith to help her battle her racism allegations.

Smith’s “fixer” skills aren’t the only thing she has going for her, she also works as a corporate consultant for BellSouth, Union Pacific, Nextel, United Healthcare, Americhoice, Wal-Mart, Radio-One Inc., Waste Management Corporation, and American International Group, Inc. (AIG) assisting them with corporate communications issues such as mergers and acquisitions, product recalls, intellectual property litigation, corporate positioning, and diversity.

Smith’s role in the White House coincides with Pope’s role because both women held the position as Press Secretary for the White House.  Smith however, was an Assistant United States Attorney and was Special Counsel to the U.S. Attorney of the District of Columbia, where she oversaw legal and communications work on a number of high profile criminal and civil cases prior to joining the White House staff.

Before the show, Smith floated well below the radar.  In 2012, it was reported that Smith’s crisis management and communications firm, Smith & Co., was not listed in phone directories and had no Web site. Smith also said she did not have business cards.  When asked to meet, she insisted on coming to you. Her caller id only showed “Verizon”.  Olivia Pope portrays this same life, and demonstrates the importance of confidentiality and concealment that is beneficial to both Pope’s and Smith’s clients.

Crisis Management is a field that Smith dominates. Attempting a Google search for “Crisis Fixer” yields the top 20 results all referencing Ms. Smith.  Contrary to a quick Google search, Smith is not the only crisis manager out there. Crisis management is a field that lawyers sometimes find themselves in, working as solo practitioners or  with firms.  Companies also use internal legal personnel to serve this purpose.  Legal professionals are equipped with the communication skills, legal expertise, and strategic thinking to attack crisis and create a solution.  However, it is evident that Ms. Smith has created a monopoly in this area by being the most sought after “fixer” to solve high profile problems.

Judy Smith serves as Co- Executive Producer of Scandal and provides insight and technical expertise on crisis management issues, but continues to maintain confidentiality for her clients by not sharing information regarding their specific situations.

Scandal airs on ABC on Thursday nights at 10/9c.

The Gridiron: Retired NFL Players Vow to Keep Pressing Ahead in Spite of Settlement


Nicholas Guarino. Arther Law’s Industry Insider


Retired NFL players unsatisfied with the NFL’s recent settlement for violations of likeness and publicity rights are fighting a request by the League for an extended injunction against the players’ independent lawsuits. Read More…

How Governments and Companies can Fight Cyberespionage

While rapid technological advances have been leading to greater connectivity and data storage and global growth, they have also been resulting in greater cyberespionage and intellectual property theft, especially trade secrets. Businesses are now more at risk than ever to having their corporate networks breached and having their trade secrets stolen. On average, trade secrets comprise of about two-thirds of the value of firms’ information portfolios, and once they are made public or obtained by a competitor, their value may be substantially or entirely lost.

This phenomenon is occurring globally. General Keith Alexander, the head of the National Security Agency and U.S. Cyber Command, stated that U.S. companies lose $250 billon per year due to IP theft. A survey conducted for the European Commission showed that over the past 10 years, approximately one in five respondents experienced at least one attempt or act of misappropriation. South Korea estimates that costs from economic espionage more than tripled between 2004 and 2008. It is also estimated that the largest global organizations could face $35 million in losses over a two-year period from attacks on cryptographic keys and digital certificates.

In an effort to combat increasing cyberespionage, the Obama administration released a “Sttrategy to Mitigate the Theft of U.S. Trade Secrets” in February 2013, and an issuance of Executive Order 13636 on “Improving Critical Infrastructure Cybersecurity” shortly after. The order focuses primarily on protecting critical infrastructure, and there is still room to enact laws to protect intellectual property that may be held more broadly by U.S. businesses.

The strength in trade secret laws has an effect on the level of cyberespionage in each country. Trade protection in the U.S. is relatively more advanced than in most of the rest of the world. Much of the rest of the world has very weak laws and enforcement practices, including the large emerging economies such as China, Brazil, Russia, and India. As supply chains and operations expand globally, weak rule of law and ineffective enforcement in countries will harm companies’ ability to protect their trade secrets.

What can governments and companies do to address these trade secret threats? First, a company should have its own protection program and make investments on strong security technologies and procedures. A study shows that companies that obtained “sufficiently budgeted resources” for security saved around $2.2 million annually. Governments should utilize trade policy tools to raise the importance of trade secrets protection and promote more effective deterrence. U.S. ties through the Trans-Pacific Partnership (TPP) Agreement with 11 other Asian-Pacific nations and the Trans-Atlantic Trade and Investment Partnership (T-TIP) with the European Union give it means to do so. Trade secret protection should also be considered in regional organizations and the World Trade Organization (WTO) Council for Trade-Related Aspects of Intellectual Property Rights. The U.S. government should also improve internal coordination among agencies responsible for cybersecurity and protection of trade secrets. Overall, protection from cybersecurity will require a collateral effort from companies and governments worldwide.

Sirus XM Sued Over Pre-1972 Recordings

With respect to federal law there were no copyright protections until 1972. The Supreme Court has ruled that state laws govern for pre-1972 recordings. Most states like California and New York extend exclusive ownership rights to pre-1972.


Sirus’ legal troubles began with a class action lawsuit from the founding members of the Turtles suing under California state law to recover for use of their pre-1972 songs by Sirus XM. California state law gives the artists the exclusive rights until 2047.


Now Sirus is facing even more charges from big labels. Capitol Records LLC, Sony Music Entertainment, UMG Recordings Inc. and Warner Music Group Corp. have all now sued Sirus in California state court to recover for intellectual property right violations. The complaint alleges that Sirus refused to obtain the licenses for the songs that it distributes to millions of listeners.


Sirus has also been sued by SoundExchange, a nonprofit performance rights organization appointed by the federal government to manage copyright and trademark royalty terms, for $50 million in underpayments of digital royalties. SoundExchange alleges that Sirus illegally deducted the pre-1972 recordings from their digital royalties.

All this litigation against Sirus XM also affects radio stations, television networks, and others who play pre-1972 recordings. Typically these songs are played under blanket licenses that cover the musical compositions, but not the sound recordings. This opens these entities up to possible state law intellectual property charges.