Pankhuri Malik is an IPilogue Writer, IP Innovation Clinic Fellow, and an LLM Candidate at Osgoode Hall Law School.

Streaming giant Pandora has been hit with . In early February 2022, Pandora was sued in a series of lawsuits from the estates of comedians such as Robin Williams, George Carlin, Bill Engvall, and Ron White for publicly broadcasting, reproducing and distributing their copyright protected content without obtaining licenses.

Initial lawsuits

Pandora was named in a series of copyright infringement suits in early February this year that were later combined into one action before the United States District Court in the Central District of California.

The plaintiffs contended that comedy works are subject to the same copyright rules as musical works. This means that, like musical works, comedy works are also subject to two separate copyrights: one in its recording and one in the underlying literary work. While musical works are licensed as two separate rights accordingly, comedy works are only licensed as recordings without the underlying literary license. The plaintiffs contend that this constitutes copyright infringement.

According to Pandora’s own reports, in January 2022, Bill Engvall, George Carlin, and Ron White garnered 227,000,  81,000, and 233,000  monthly listeners, respectively. The total valuation for damages in the suit exceeds $70 million.

The tussle between comedians and streaming services is not new. Following pressure from artists for appropriate licensing and royalties for the underlying literary content, Spotify recently chose to belonging to multiple comedians that are represented by literary works rights agencies, such as John Mulaney, Kevin Hart, Jim Gaffigan, Larry the Cable Guy, and Jeff Dunham.

However, Pandora’s case is distinguished by its alleged admissions of copyright infringement in to the United States Security and Exchange Commission (SEC) from 2011 to 2017. The plaintiffs claim that Pandora admitted that it does not have the necessary public performance licenses for their comedy recordings and may face copyright infringement actions from rights-owners. Following the filing of the lawsuits, Pandora has also removed the comedians’ content before issuing its response. 

Pandora’s response

Pandora filed a counterclaim accusing Word Collections, the comedians’ performing rights collection agency, of anti-competitive practices. Pandora claims, as it did in its SEC filings, that its licensing of only the sound recording, without obtaining the underlying rights, conforms with “industry-wide custom and practise” and Word Collection is attempting to illegally monopolise its content in contravention of the .

Industry-Wide Custom and Practice?

While Pandora’s claim of its actions being in line with industry-wide custom and practice may not be unfounded, this is a valid defence in a copyright infringement action.

Pandora also claims that the system of licensing rights separate from the different right owners for musical compositions is inconvenient, “”, and should not be adapted to cover comedy recordings. Pandora argues that unlike musical works, comedy is written and performed by the same artist and therefore does not need separate protection.

This argument, however, may not have sufficient merit since a) various musicians write and perform their own music; and b) the licensing process simply being complicated is no excuse to forego it.

What’s next?

There has been increasing backlash against Pandora, among other streaming services like Spotify, outside of Court. Another prominent comedian, Lewis Black, issued a public statement asking Pandora to remove his works from its platform. Black said that while he does not need the money or exposure that Pandora claims to offer, it is time for comedians to be recognized and compensated for their writing in addition to performance.

Many expect the suit against Pandora to illuminate the stance of the law going forward. If the comedians succeed, it would open a floodgate of actions against streaming services for appropriate licensing of comedic works.

The post No laughing matter – Lawsuits for protection of copyright in Stand-up Comedy appeared first on IPOsgoode.

Adding fuel to the fire, another webcaster, , recently , and has subscribers. However, beyond the important business implications, the Board must revisit the legal question at the heart of the Re:Sound proposals - the extent to which copyright royalty standards of the United States (US) ought to influence Canadian royalty rates.

Tariff 8.A covers both simulcasting and non-interactive webcasting. Simulcasting is the communication of a traditional radio signal over the Internet, and is used by many Canadian broadcasters. Non-interactive webcasting is generally understood as the streaming of original Internet broadcasts, or web-radio. Canadian examples include and . Semi-interactive webcasting, covered by Tariff 8.B, involves the streaming of content which is influenced by user-inputted preferences such as genre and artist. This is the service provided by Pandora.

Re:Sound proposed that commercial semi-interactive webcasters pay a royalty rate calculated as the greater of:

��)���������� 25 to 30 per cent of the gross revenues; and

��)���������� 0.0023 to 0.004 per-play, with a minimum fee of $500 per channel up to maximum of $50,000 annually.

The issue of public consciousness is the argument of Pandora against per-play royalty rates, which it stating, “[t]here is such a disconnect, as has been demonstrated by the U.S. ... between the per-play rate and the fundamental economics of the business.” However, as recognized by , this sort of opposition is business-oriented rather than legal. The parties’ Statements of Case (available to the public by request) present a variety of important, even novel, questions, such as whether Re:Sound has the legal authority to compel webcasters to implement technological protection measures to prevent stream-ripping. However, the most significant legal issue relates to Re:Sound’s foundation for the proposed rates.

Re:Sound justified its proposal by arguing that the online music industry has outpaced the statutory licence regime in Canada, and thus the Board ought to take into account the global licensing market, and in particular that of the US “in order to encourage the entry of international services and foster the development of its online music market.” By the same token, Re:Sound advocated that the Board adopt the statutorily mandated royalty standard of of the US Copyright Act – “rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller.” As found by the Copyright Royalty Arbitration Panel (CARP) in , this hypothetical marketplace is proved by furnishing evidence of actual voluntarily negotiated agreements. Hence, Re:Sound confidentially submitted several contracts between Canadian rights-holders and webcasters for communication rights, which presumably include royalty rates roughly similar to those in the US.

Pandora and the Canadian Association of Broadcasters (CAB) both argued against any consideration of US rates for a variety of reasons. Most importantly, that US legislation grants full copyright in sound recordings in certain circumstances, rather than the right to equitable remuneration in s. 19 of the Canadian . The US found this distinction to be sufficient grounds to reject comparisons in its royalty decision. Similarly, for a variety of reasons the Board in Canada has expressed scepticism in the usefulness of American standards, most resolutely in the 2005 decision.

The Board, however, has not categorically rejected the application of the willing buyer/seller standard. For example, in the 2002 the Board acknowledged its usefulness as a starting point, but “only when it offers some basis for comparison with the industry under examination.” Furthermore, the Board has that executed agreements are “prima facie relevant to the task of setting a performing rights tariff…” As such, even if the Board rejects the US royalty rates on the basis of the inapplicability of US standards to determinations of Canadian royalty rates per se, Re:Sound may successfully advocate for the adoption of US-styled royalty rates as contained within the voluntarily negotiated contracts submitted as evidence.

Pandora and CAB countered Re:Sound by pointing out that the certified , which includes webcasters, sets out a markedly different royalty scheme for communications of musical works. The Board that the equitable remuneration to be paid for the use of sound recordings to Re:Sound is to be determined by first identifying the applicable SOCAN tariff over the same use, and then setting a 1:1 ratio, is long-standing.

The core of Re:Sound’s proposal was that the Board ought to adopt the US-approach to royalty determination, by estimating hypothetical market prices. However, as recognized, the Board has historically asserted “not only that a market price is only one of several possible rational bases for a tariff, but that in certain circumstances, public policy would lead it to ignore market considerations altogether.” Whether Re:Sound argued with sufficient persuasion that webcasting ought to fall within the cases decided by the market, rather than public policy or other factors, will be the most important determination of the Board.

Ken Anderson is a JD Candidate at Osgoode Hall Law School and is currently enrolled in Osgoode’s Intellectual Property Law and Technology Intensive Program.  As part of the program requirements, students are asked to write a blog on a topic of their choice.

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