UNDERSTANDING TRADEMARKS: WHAT IS A TRADEMARK? AND WHAT ARE TRADEMARK RIGHTS?

A trademark is a name, slogan or logo which identifies someone's goods or services and indicates source or quality. The purpose of a trademark is to identify and distinguish one person's products or services from those of another. A trademark functions as a symbol of quality and goodwill. Trademark rights accrue to the owner of a mark based on the "use" of a mark and these rights vest in the first user of a mark when the mark is used in connection with the trademark owner's goods or services. In other words, you own rights in your trademark from the moment you start using it to identify your products or services  These rights are applicable in the music business to the names used by rock groups, DJs, and rappers as well as by management, production and record companies.

Just how protectable your trademark is varies depending on whether it is deemed to be: 1) arbitrary and fanciful (the most protectable category); 2) suggestive; 3) descriptive (which is only protectable if "secondary meaning" can be established); or 4) generic (which is given little or no protection). In simple terms, the more unique your name is the more easily protection is available for it as a trademark. That is one reason that some of the strongest trademarks are words that were invented just for the purpose so that they fall into the first "arbitrary and fanciful" category. Such invented names include "Nike", "Rolex", "Exxon", and "Microsoft". When it comes to rock bands, names such as "Smashing Pumpkins", "Foo Fighters" and "Brooklyn Funk Essentials" would obviously fall into this distinctive arbitrary and fanciful category.

The first person to use a trademark has superior rights over a subsequent user of a similar trademark. The criterion for determining infringement of a trademark is the "likelihood of confusion" test. Under the Lanham Act (which is U.S. Federal Law governing trademarks), use of a trademark likely to cause confusion, mistake or deception by the public is prohibited. If your name or mark is deemed to be confusingly similar to a previously existing trademark, the prior user will have grounds for a trademark infringement action against you.

Therefore, before investing too much time, effort and money in establishing your prospective trademark it is a good idea to do a trademark search to make sure nobody else has been using the same or a confusingly similar name before you. Keep in mind that a mere search of current Federal trademark registrations may not be sufficient. In the event that a full nationwide search from one of the companies that specializes in doing such searches is beyond your budget, then at least do an online search through Google and other online search engines.  This is important because trademark rights are based on "first use."  Therefore, even if someone does not file for or procure a Federal trademark registration, certain rights vest in that person under state law from the moment they start using the name.  If they were using a particular name similar to yours prior to when you first started using your name then, under state law, even if you file a Federal trademark registration before that prior user files, he or she could still prevent you from using your name (and prevent or limit the release of your records under your name). The usual solution to such a problem is to buy out that person's rights, but this can be costly. However, the last thing you want to do is find out of the eve of your first big record release that someone else was using the name you have printed on all of the CD covers before you were using it, and you now have to scrap all of your records.

Once you are sure that the name you want to use is clear, the best way to protect your rights is to file an application for Federal trademark registration. Although certain ownership rights accrue to you in your trademark from the time you first start using it as a source identifier for yourself or your band, Federal registration will give you, among other things, a legal presumption of first use and ownership of the name nationwide. It will allow you to commence legal action in Federal court and may entitle you to injunctive relief (which is an order by the court that the infringer cease using the name until the case is resolved), treble damages and legal fees.

Therefore, having determined that no other person or entity is using the name that you want to use as our trademark, the next step is to file an application for trademark registration in the U.S. Patent and Trademark Office. The filing starts a process that can span several months. Although the time between filing the application and actually receiving your trademark registration certificate could be six months to a year, the effectiveness of the registration is retroactive to the date of first use. Therefore, once you start using a name is it best to continue. In fact, in order to maintain your trademark rights you must continue to use the name and you must police your trademark and beware of others who may use a confusingly similar name to yours.

In summary, the best way for a new artist or group to proceed is to choose as unique a name as you can think of, do a comprehensive search to be sure that it is uniquely your own, and then file an application for Federal trademark registration. Most importantly, remember that trademark rights are based on use so once you choose a name - use it or loose it!

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School.  www.wallacecollins.com 

This INTERNATIONAL BUSINESS TIMES article quotes me several times starting at paragraph 4

http://www.ibtimes.com/aurous-legal-ad-free-music-streaming-service-was-sued-riaa-it-doesnt-look-promising-2142693

BEWARE THE "CONTROLLED COMPOSITION" CLAUSE IN RECORD CONTRACTS

Under U.S. Copyright law, Congress has seen fit to legislate a minimum statutory mechanical royalty rate for songwriters and their publishers.  Based on an upward-sliding scale tied to a cost-of-living index, the mechanical royalty rate is set by the Copyright Royalty Tribunal on a per song per record basis. The current rate in effective is $.091 per song.  However, most record companies use their substantial leverage over fledgling recording artists to cause them to enter into record contracts which purport to reduce this minimum rate pursuant to the "controlled composition" clause - and this provision might also be made to apply to producers and songwriters who do work for those artists.

The controlled composition clause is one of the most insidious of a plethora of royalty-reducing provisions in any record contract. It reduces the mechanical rate for a songwriter/recording artist and its publisher on songs written or otherwise "controlled" by the artist.  Most such clauses not only reduce the payment per song, but may also put a limit on the total number of songs on which such payment will be made and may fix the point in time at which such calculation will be made (thereby circumventing the cost of living index increase). This is an issue not only for the songwriter/recording artist but for the producer/songwriter and for non-contractual songwriters who may chose to collaborate with an artist who is signed to a recording agreement with a controlled composition clause.

A full analysis of a controlled composition clause is beyond the scope of this article.  However, for a simplified example of how it works, lets assume a typical clause where the songwriter/artist will receive 3/4 of the minimum statutory mechanical rate (assuming the minimum rate is 6 cents per song at the time) on a maximum of 10 songs per LP. The mechanical royalty on the artist's entire LP usually has a "cap" of 68.25 cents (3/4 of $.091x 10 songs) so that, even if the songwriter/artist writes 12 songs for its own album, the artist's publishing is not worth $1.09 per album ($.091 x 12 songs) but only 68.25 cents.

To further illustrate, assume the 12 song album has 6 songs written by the artist and 6 songs from outside publishers. Unless otherwise agreed, the outside publishers are not subject to the artist's 3/4 rate so the 6 outside songs get the full rate and are entitled to a total of 51 cents. Since the mechanical royalty on the entire LP has a "cap" of 68.25 cents, the songwriter/recording artist is limited to applying the remaining 13 cents to the songwriter/artist's 6 songs, so that the artist's publishing is worth a little more than 2 cents per song. And keep in mind, if the artist's producer agreement has language tying the record producer to the artist's controlled rate or an outside songwriter's mechanical license has similar language, then both the producer and the outside writer would also be subject to the reduced rate and the "cap."

To take it one step further, imagine a case where 8 of the 12 songs on the LP were from outside publishers. The outside publishers would be entitled to at least 72 cents in mechanical royalties ($.091 x 8 songs).  Since the artist's contractual cap is 68.25 cents, then for each LP sold the songwriter/record artist would actually lose mechanical royalties and owe its record company a few cents for each record that sells which would be deducted out of the songwriter/artist's recording royalties. The net effect is that the songwriter/artist's own 4 songs receive no mechanical royalties at all.

A controlled composition clause may also contain language which further reduces the mechanical rate on mid-priced and budget sales, etc., providing for a 3/4 rate on the 3/4 rate.  In addition, record contracts often contain several subparagraphs that eliminate royalty payments for free goods and records sold below wholesale price, etc.  Several of these categories would ordinarily be subject to mechanical royalties absent the controlled composition clause.  Moreover, although this provision reduces mechanical royalties on the artist's publishing, it does not reduce payments to outside publishers since they are not subject to the clause.

The most treacherous dilemma for the songwriter/artist is that, even if the record company does not acquire the artist's publishing in its contract, the value of the artist's publishing may so greatly be reduced by the controlled composition clause that the artist may find it difficult to get a publishing deal elsewhere.  This is especially true if the mechanical royalties are cross-collateralized with the artist royalties since, until the artist is recouped, no mechanical royalties will be payable to the songwriter/recording artist or its publisher.

The foregoing scenarios raise numerous legal issues including antitrust, interference with prospective financial advantage and restraint of trade.  Another issue raised is whether, under partnership law (where one partner can bind the partnership), a co-writer who is not actually a signatory to the record contract is subject to the 3/4 rate by virtue of being a "partner" in the song's creation.

These days almost every record contract contains a controlled composition clause.  Although certain aspects of a controlled composition clause can be made less onerous by some persistent negotiation (such as escalations of the rate based on sales thresholds), record companies are generally inflexible in their insistence *on this provision and their position can only be tempered by their desire to sign a particular artist or by an artist's importance and stature. This provision should be reviewed very carefully by an artist and his lawyer; any artist's lawyer who failed to discuss this clause and explain its ramifications to the client (under the assumption that it is "standard" in every record contract) would certainly be inadequately representing the client, and may suffer the consequences when the actual effect of the provision is eventually revealed to the artist.

In fairness to record companies, with the exorbitant cost and high risk of the record business, record companies need to cut costs where they can to try to make a profit on the few artists who do succeed.  However, the question is one of whether devaluing the artist's publishing is a fair way of doing it.  Record companies contend that, since they are financing the production and marketing of the artist's recordings, the artist should give them a break on the publishing royalties they would otherwise have to pay.

By way of analogy, imagine a particular record company, in order to cut costs, decided that, despite the Federally mandated minimum wage, any employee who wanted to work for that label would have to accept three-quarters of the minimum wage.  It is unlikely such a preposterous policy would hold up in court.  When it was tried by calling in an "internship program" the Courts did now permit it. Whether the contractual reduction by a record company of a Congressionally legislated minimum royalty rate would hold up in a court of law has yet to be tested.

Wallace Collins is an entertainment and intellectual property lawyer with more than 30 years of experience based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

Rick Ross Loses Legal Claim Over LMFAO’s ‘Shufflin’ Shirts

An interesting Federal Court decision on summary judgment was handed down this week in Florida. Judge Kathleen Williams, a Federal Judge in Florida, shot down a big part of the lawsuit from hip-hop superstar Rick Ross over LMFAO’s chart-topping 2010 song “Party Rock Anthem,” which contains the phrase “Everyday I’m shufflin’ “ in the chorus.

Ross had alleged that the Los Angeles-based electro-pop duo’s hit is a copyright infringement of his own chart-topper “Hustlin" which contains the lyric “Everyday I’m hustlin’.” The song was released on Ross’ 2006 debut album, Port of Miami. U.S. District Judge Kathleen Williams was asked to address on summary judgment whether Ross’ three-word phrase is original enough to be copyrightable.

In making the determination, the Judge stated that “The question presented, however, is not whether the Iyrics of Hustlin’, as arranged in their entirety, are subject to copyright protection... the question is whether the use of a three word phrase appearing in the musical composition, divorced from the accompanying music, modified, and subsequently printed on merchandise, constitutes an infringement of the musical composition Hustlin’. The answer, quite simply, is that it does not.”
The Judge's decision points out other cases where short phrases like “you got the right one," "uh-huh,” “holla back,” “we get it poppin’,” and “caught up” failed to meet the originality threshold when divorced from the music. She also writes there’s evidence that Ross wasn not the first to come up with the lyric “Everyday I’m hustlin’.”

The Judge added that even if Ross’ phrase was copyrightable for this merchandise context, he would fail the intrinsic test, the one where ordinary observers judge similarity. “The average lay observer
would not confuse t-shirts bearing the phrase ‘everyday I’m shufflin’’ with the musical composition Hustlin’, nor without reference to Party Rock Anthem and Hustlin’, would an average lay observer
recognize the merchandise as having been appropriated from Hustlin’.” The Federal lawsuit will now continue but will only be about the songs.

Wallace Collins is an entertainment and intellectual property lawyer. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

THE IMPORTANCE OF CREATING A PAPER TRAIL WHEN SUBMITTING YOUR WORK

When pitching a project, whether a TV program or game show concept, a video game idea, a proposal for a book or magazine article or circulating a demo of your song, it is a good idea to file a copyright registration on it before making it public. It is also important to create a paper trail in order to keep track of where and to whom your work is submitted. In the event that you someday decide that someone stole your work or "infringed" your copyright you will need to prove two things in order to win a copyright infringement lawsuit: (1) access to your work and (2) substantial similarity between your work and the allegedly infringing work.

"Substantial similarity" is a legal term of art which compares one work to another to decide if they are too similar or so similar that the connection is strikingly similar. However, most cases are thrown out before the issue of substantial similarity is proven because they fail to show access.  The threshold of "access" basically means that the person who you think infringed your copyright actually had access to your work before they created or developed their work. In other words, unless your work was already widely accessible (e.g., a Top 10 hit record or a website broadcast show) you are going to have to show that the alleged infringer somehow had access to your work.

Although you can prepare a confidentiality or non-disclosure agreement, it is unlikely that most people you contact will be willing to sign it in advance. In fact, some of the bigger media corporations have a policy whereby they insist that before they will accept or review any submission you sign a document waiving any claims you might later have against them (although their position is they might already be working on a similar idea and do not want to be sued such agreements must still be approached with great caution as they tend to be ambiguous and overly broad in scope).

I am not suggesting that you plan a lawsuit, just that you be prepared in case someone infringes your work. You can create a paper trail by following these procedures:

- keep a journal or daily diary of who you give or send your work to, and start a correspondence file of your own keeping copies of all your cover letters (and even the rejection letters you might receive as they also show access).

- mark all submitted materials with the appropriate copyright notices.

- if you are lucky enough to get an appointment to present your work in person, write a self-serving letter to confirm the meeting and retain a copy of the letter for your file.

- if there is a visitor's log available, upon arrival sign in and note the date and time of arrival.

- take note who is in attendance at the meeting and their positions with the company.

Again, I am not suggesting that you start any frivolous lawsuits but it can be an unscrupulous business and you should be prepared for every eventuality. It is good practice to get in the habit of keeping a paper trail in the ordinary course of doing your business. It just might come in handy if something goes wrong somewhere down the line.

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

ENTERTAINMENT LAWYERS: WHO? WHAT? WHEN? WHERE? & HOW MUCH?

            As an artist or creator in the entertainment industry you do not need to know everything about the business in order to succeed, but you should hire people who do. When I was a teenage recording artist some years back, I can remember being intimidated by the "suits". Now that I am on the other side of the desk, I have a broader perspective. I am here to tell you that those "suits" can help you; provided, however, that like any other aspect of your life, you use your instincts in making your selection.

            The best place for you to start building your "team" of representatives is with a competent lawyer who specializes in entertainment law, which is a combination of contract, intellectual property (copyright and trademark) and licensing law. Eventually, your team could possibly include a personal manager, an agent and a business manager/accountant. Your lawyer can assist you in assembling your team. He may then function as the linchpin in coordinating the activities of your team and insuring that these people are acting in your best interests.

            A good lawyer will navigate you safely through the minefield that is the entertainment industry. Entertainment contracts can be extremely complicated. Proper negotiating and drafting requires superior legal skills as well as knowledge of entertainment business and intellectual property practice. Your lawyer can explain the concepts of copyright and trademark to you and assist you in securing proper protection for your work. In addition to structuring and documenting a deal to maximize the benefits to you, some lawyers also actively solicit deals for their clients. Moreover, if you are not properly compensated in accordance with your contract, you may look to your lawyer to commence a lawsuit to enforce the terms of your contract.

            When looking for a lawyer, you should not be afraid to speak with a few before retaining one. Some lawyers are with large firms but many are solo practitioners. Lawyers have various personalities and legal skills and you should seek out a situation where the "vibe" is right. Although your first contact may be on the telephone or online, most likely you will have an initial consultation for which there may be a modest charge, although some lawyers may not charge for that first meeting depending on the circumstances. Remember, your lawyer's time is money, so be prepared and be on time for your appointment.

            It is not necessary that your lawyer like or even understand your creative endeavors be it an app, a book, music, your film or TV pilot idea. It is more important that you feel he or she is a trustworthy and competent adviser. The lawyer/client relationship is known as a "fiduciary" relationship which means that a lawyer must always act in your best interest and not his own or that of anyone else. Your lawyer is also under a duty to keep your conversations with him confidential. It is often in your best interest that it stay that way.

            Keep in mind that a lawyer with other big name clients is not necessarily the best lawyer for you; if it comes down to taking your calls or those of a superstar, which do you think will get preference? 

             You are probably wondering, "How much will this cost?" Well, remember that the only thing a lawyer has to sell is his time. A lawyer, much like a doctor, is selling services, so if you go to him for advice you should expect to pay. With the odds of success in this business being what they are, very few lawyers will agree to work for you and wait for payment until you are successful and can pay your bills. A lawyer specializing in the entertainment field usually charges an hourly fee or a percentage of the money value of your deal. Hourly rates generally run from $300-$500 and up. Percentages on a pending deal are based on the "reasonable value of services rendered" in connection with a particular contract and generally run around 5-10% of the deal depending on how it is structured. A few lawyers may charge a set fee to review and negotiate certain documents. Check around to see if the fee arrangement proposed is competitive. Most lawyers will require a payment of money in advance or "retainer", which can range anywhere from $500 to $10,000 (and more for litigation matters). Even those who take a percentage of the deal as a legal fee may require that you pay some amount as a retainer deposit. In addition to the hourly fee or percentage, you are usually required to reimburse your lawyer for his out-of-pocket costs, including long distance telephone calls, photocopies, postage, fax, etc. 

            You should realize that in retaining a lawyer you are making a contract even if your agreement is not written. In return for a fee, the lawyer promises to render legal services on your behalf. However, some lawyers may want a fee arrangement in writing (specifically in connection with a percentage deal) and/or a payment direction letter. A cautious lawyer will advise you that you have the right to seek the advice of another lawyer as to the propriety of a percentage fee arrangement.

            You should consult a lawyer if you are asked to sign anything. Too many aspiring creative artists want to get a deal so badly they will sign almost anything that promises them a chance to do it. Even successful careers have a relatively short life span, especially when it comes to careers in music, movie and television. Therefore, it is important for you to get maximum returns in the good years and not sign away rights to valuable income.

            Do not rely on anyone else (or even their lawyer) to tell you what your contract says. Your lawyer will "translate" the deal for you and explain to you exactly what you are getting into. Do not let anyone rush you or pressure you into signing any agreement. There is really no such thing as a standard "form" contract. Any such contract was drafted by that party's attorney to protect that party's interests; your lawyer can help negotiate more favorable terms for you. Everyone needs someone to look out for his or her interests. That is why you need a lawyer. If you believe in yourself and your talents, give yourself the benefit of the doubt, invest in legal representation and do not sign anything without consulting your lawyer and making sure it is the right deal for you.

            As a final piece of free legal advice: never sign anything – other than an autograph - without having your own lawyer review it first.

Wallace E.J. Collins III is an entertainment and intellectual property lawyer. He was a songwriter and recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; wallacecollins@gmail.com; www.wallacecollins.com 

Sony Music Defeats "Iron Man" Composer's Lawsuit (At Least For Now)

A New York Federal Courts' recent decision concerning a "work for hire" determination could prove controversial. The Court's ruling involved "Iron Man", a rapper from the Wu-Tang Clan and a music composer working in television back in the 1960s.

Federal Court Judge Naomi Buchwald granted summary judgment to defendant Sony Music over plaintiff' Jack Urbont's claims the artist "Ghostface Killah" sampled the "Iron Man Theme" on two tracks of the rapper's second album, "Supreme Clientele.". In ruling in Sony's favor, the Judge examined how Marvel's Stan Lee had set up Urbont to create music for a certain the 1960s television show. She determined that Urbont contributed his materials as a "work made for hire," meaning that Marvel really owns the work and Urbont had no standing to claim an illegal sample. Sony is the beneficiary of this determination, but the opinion steps on controversial territory and might set off a flurry of amicus briefs should Urbont take the matter to a higher authority.

According to The Hollywood Reporter and Billboard, in the 1960s and 1970s, the House of Marvel operated in a loose collaborative working group environment known as the "Marvel Method." In part because of a lack of documentation around the time, there's been many subsequent fights over intellectual property rights. For instance, Marvel fought for years with "Ghost Rider"creator Gary Friedrich and they battled Jack Kirby when the comic book legend attempted to terminate a copyright grant. In those disputes, the issue of whether the artists had created their works as "made for hire" was closely examined, and in the Kirby case, judges applied what is known as the "instance and expense" test, or what happens when the "employer induces the creation of the work and has the right to direct and supervise the manner in which the work is carried out."

Last September, Marvel settled with Kirby just days before the U.S. Supreme Court was scheduled to discuss whether to grant a review. The high court sent out signals that it was indeed interested in picking up this case, and when that happened, there was a flurry of amicus briefs from intellectual property scholars and Hollywood labor guilds arguing a "critically important case" where Judges overseeing the Kirby dispute had applied the wrong standard when looking at commissioned works.
Judge Buchwald's decision over the "Iron Man Theme" raises the prospect of reviving this debate -- although there are wrinkles here that could arguably make it even more important. In coming to her conclusion, the judge addresses Urbont's situation back in the '60s. Urbont, whose later musical work includes That 70's Show, Oprah, 20/20 and The View, wasn't familiar back then with Marvel superheroes before getting in touch with Lee by a mutual friend. The composer wished to create songs for Marvel Super Heroes, and after reviewing comic books, he absorbed the nature of the characters and composed a theme and presented it to Lee's approval. After the songs were accepted, he received $3,000, which he used to record the music including the "Iron Man Theme."
There was no written agreement at the time, and Urbont didn't initially get royalties, but he was issued a certificate of registration. In the 1990s, he sued Marvel for unauthorized use of the theme and came to a settlement agreement, which referred to Urbont as the "owner" and Marvel as the "licensee."

Sony wasn't a party to Marvel's relationship with Urbont, and yet the judge allows the music company to challenge ownership anyway. As Urbont's lawyer put it in a motion brief, "It is outrageous for Sony to claim that the Works are works for hire, when the supposed employer does not itself claim that the Works are works for hire."

Nevertheless, the judge gives Sony standing to argue that "Iron Man Theme" is a work for hire, and once she does, Buchwald applies the same "instance and expense" test that became the focus of an attempted Supreme Court review in the Kirby case. She liberally quotes the 2nd Circuit's language in Kirby in guiding her analysis.

Eventually, she concludes that "the Iron Man Composition was created at Marvel’s instance because it was developed to Marvel’s specifications and for Marvel’s approval. As in the Kirby case, Urbont’s compositions 'were hardly self-directed projects in which he hoped Marvel, as one of several potential publishers, might have an interest...'" She writes that Marvel retained a right to direct Urbont's work and that the composition "was created at Marvel’s expense because Urbont was paid the fixed sum of $3,000 for his work."

This decision could prompt an appellate review -- a motion for reconsideration might be the first step --on the same grounds as the Kirby case, but there's something of further interest here too. As Urbont's briefs to the judge stress, Sony is not the employer and there's no cited cases where "a third party infringer seek[s] a finding that a particular work is a work made for hire when there is no dispute between the supposed contractor and author." Another difference between Urbont and Kirby?
"In Kirby, plaintiff could offer no testimony regarding the understanding of the parties because the plaintiff was deceased," Urbont's lawyers wrote. "In this case, Urbont is able to testify and has testified to a contemporaneous understanding with the producers of the television series that he owned the Works."

In other words, Urbont at least wants the treatment that Friedrich got when the 2nd Circuit vacated a summary judgment ruling and ruled there were triable issues. Judge Buchwald doesn't seem to think it matters what Marvel and Urbont called the working relationship, or how the settlement agreement referred to Urbont as the "owner." She says that a settlement doesn't really mean that Marvel conceded that Urbont was the owner, and further "case law within the copyright infringement context affirms that a licensing or settlement agreement should not supplant a court’s independent determination of copyright ownership." So, as a result of Judge Buchwald's ruling, Marvel seems to be the owner of the "Iron Man Theme" - and didn't even ask for it.

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656;  www.wallacecollins.com