Category Archives: Blog

The Format License

So you’re sitting there watching “American Idol” and you’re wondering, “Man, I wish I thought of this. Where did they get the idea to make a show like this? I could be as rich as Simon Cowell by now!”

While, the Simon Cowell part might be a bit far-fetched, the rest of it actually has a pretty simple explanation. The creators of “American Idol” (and a continually expanding number of other reality and/or format shows) are not original at all. They based their shows on foreign formats and licensed those formats to create new versions of the same show.

Example: “The Office” is based on a UK original of the same name and was licensed to US producers on conditions which kept original producers, Gervais and Merchant, involved.
Example: “Homeland” is actually based on an Israeli original called “Hatufim” (“Prisoners of War”).
Example: “Dancing with the Stars” is actually based on a UK original called “Strictly Come Dancing“.

The foregoing examples have been radically simplified to illustrate the point that, essentially, as long as you can license the underlying concept of a program, you can adapt it for your own marketplace.

How do you get one of these licenses? Well, that’s really a question for a Producer, but it involves a lot of lunches and travel.

If, however, you are drafting or negotiating a Format License, there are a variety of factors to watch out for. I’ve included some more pertinent ones in my experience below:

  • Rights: This is generally the most comprehensive aspect. Essentially, while you (if a producer) or your client (if counsel) may be licensing rights to the format, which rights are you actually licensing? Do you have to use the same script? Are you obligated to use the same producers? What about languages? Does the licensor wish to allow you to create a version in the same language as the original, or must you create it in a different language so as not to compete? If its a sitcom, can you change the plot substantially? Do you have to use the same characters? If a reality or game show, does it have to look the same, with same set decoration, format of game, etc.? Are any of the rights sublicenseable?
  • Spin Offs: related to the above, will you or your client be able to create spin offs from the version created based on the format? What if one character takes off but the new version bombs? Do you need that right?
  • Exclusivity: will you (if producer) or your client (if counsel) be the only party to license the format? If so, where? Which brings me to the next issue…
  • Territory: where will you or your client be producing and/or distributing the formatted program? And, in what languages? Are there any limitations on where it can be distributed?
  • Term: for how long do you or your client want to produce the licensed version of the program? Or rather, how long do you want to have the right to do so? If you don’t produce, does the licensor get a right of reversion to take back the license? How long after production of the version can you distribute the program or cause others to do so?
  • Reps and Warranties: generally speaking, you or your counsel will want to be sure that the licensor has the rights to give what they are giving and that the format being licensed is wholly original. Of course, there are many others which you and/or your counsel will want to discuss.
  • Credits: what credits will the original producers get? What about the new producers?
  • Payment: This is the biggie in most cases. What is the licensor going to get as compensation for the license? Is the deal going to be structured on the front end (i.e. upfront license payment) or back end (i.e. royalties on distribution fees, revenue received through exploitation, minimum guarantees, broadcaster fees, etc.). Will payment be structured a combination of the two? What about timing of payment? On execution? Or, rather, part on execution and if back end payments, then after collection? Is anything contingent on commencement or completion of principal? Or, does any payment depend on securing financing by the new producer? If royalties, on what are the calculated (gross vs. net revenues) and how do you define either or both of those?
Of course, in each case, there are going to be a variety of factors which need to be considered, above and beyond those I’ve outlined above. Some of the foregoing may never even be discussed. But, as a simple example of some issues I’ve had to consider, this may serve as a helpful summary.

Yoga and the Law – Together at Last

As some of you may know, yoga and law have historically been large parts of my life. I taught yoga for a while after articles and still practice regularly. And the law – well, here I am.

But, like nuts and gum, the two have come together at last (obscure Simpsons reference, in case you weren’t paying attention) in a juicy piece of litigation involving none other than the Rolls Royce, Rolex wearing guru - Bikram Choudhury.

The litigation surrounds the intellectual property Bikram claims to own in his series of 26 postures taught in hot rooms around the world in the many studios who have all paid both training and license fees to use and instruct his “method”. In fact, the U.S. Copyright Office has issued a copyright registration to Mr. Choudhury for the sequence (but more on that later).

The suit claims that a “proprietary and discrete series of twenty-six (26) yoga positions and two (2) breathing exercises, which are always performed in precisely the same sequence, in a room heated to at least 105 [degrees] Fahrenheit,” has been infringed by Gumucio, Bikram’s former right hand man, who after leaving the employ of Bikram, decided to start up a little chain of yoga studios called “Yoga To The People“. The suit also claims trademark infringement, unfair business practices and breach of contract.

(FYI: The YTTP studios took off, and Gumucio, on his low cost, “socialist” yoga studio model, has managed to find itself in cities around the US, many in the same vicinities as those of his former boss, Bikram.  Around the same time, Gumucio had also helped to found Open Source Yoga Unity. Premised on the same notion as open source software, OSYU is a non-profit organization dedicated to the sharing of yoga and the prevention of any one entity “owning” yoga (if it could be owned at all).

Bikram sued OSYU in 2005, a case which was settled confidentially, but in which the California US District Court held that USYU had, in fact, violated the copyright which Bikram had in the series.

Given Gumucio’s continued successes and the competition he represents, Choudhury decided to sue Gumucio once again. (He also sued another former instructor in Bikram’s Yoga College of India, L.P. v. Raiz).

Choudhury relies heavily on the fact that, as mentioned above, the US Copyright Office had registered copyright in Bikram’s series. On June 22, 2012, however, the US Copyright Office in Federal Register Volume 77, clarified its position on copyright in compilations, and in particular, sequences of yoga poses. In fact, the Copyright Office made clear that “a claim in a compilation of exercises or the selection and arrangement of yoga poses will be refused registration. Exercise is not a category of authorship…and thus a compilation of exercises would not be a copyrightable subject matter.”

Even though Choudhury insisted in the OSYU suit of 2005 that his sequence was original, aesthetically pleasing, and provided the outcome of health benefits, the Copyright Office clarifies that “while such a functional system may be aesthetically appealing, it is nevertheless uncopyrightable subject matter”. Therefore, the Copyright Office “finds that such registrations were issued in error.”

While it would have been interesting to have seen how this litigation turned out, this week, Gumucio and Bikram settled their dispute. As of February 2013, under the terms of the settlement, Gumucio and the teachers at YTTP will no longer be allowed to teach traditional hot yoga and in exchange, Bikram agreed to drop the lawsuit.

And, while the US Copyright Office did suggest that Bikram’s copyright in his sequence should have not been copyrightable, this new policy would not retroactively effect previously issued copyrights (like Bikram’s). This evidence was introduced into the case in the early summer but had still not been ruled on as of November.

The outcome? Well, it looks like Bikram wins and, as long as there is no judicial decision to renege on his copyright registration in the Bikram yoga series, the idea that a yoga sequence is not copyrightable, while correct in theory, won’t be correct on the ground.

Upcoming Ontario Bar Association Media and Entertainment Sizzler

The Ontario Bar Association’s Entertainment, Media and Communications Law Section is presenting a CPD session on Thursday, November 29: Morals Clauses in Athlete Endorsement Agreements: High Profile Cases and Practical Tips for Counsel.  Sports lawyers David Goldstein and Layth Gafoor as they review high profile cases and offer practical considerations for counsel when drafting, negotiating and invoking morals clauses.  The session will be held at the OBA offices, with breakfast starting at 8:00am and the session running until 9:30am.  Covering a critical area for those involved in the drafting or negotiation of endorsement, hosting, athletic and other personal services contracts, the sessions will provide access to David’s and Layth’s cumulative years of experience.  

You should come. Yes, you.

SCC Rules on Performance Royalties for Music in Video Games

I’ve been a bit behind on newsletters and blog posts lately, so although this may not be the most timely discussion, I still think its interesting. Last month the Supreme Court of Canada came down with a few quite notable copyright decisions. Among them was a decision to not require video game publishers to pay tariffs to SOCAN on music used by publishers in video games distributed digitally.

The Players: 

The Entertainment Software Association (and its Canadian cousin) (“ESA“) an entity representing a coalition of video game publishers and distributors who enable customers to download video games from the Internet.

- and -

The Society of Composers, Authors and Music Publishers of Canada (“SOCAN“) an entity which administers the right to “communicate” musical works on behalf of copyright owners by managing who uses music and how it is used, as well as by collecting tariffs on behalf of artists for the use and/or distribution of music (i.e. by online sale, through download, “brick and mortar”, etc.).

The Problem:

SOCAN applied to the Copyright Board for the imposition of a tariff on downloads of musical works via the Internet. The Copyright Board concluded that the download of a file containing a musical work was a “communication” within the meaning of the Copyright Act (the “Act“), and therefore, SOCAN artists’ are entitled to collect a tariff on games containing music when downloaded, even if publishers already paid a license fee to artists prior to distribution of the games containing such works.

The ESA appealed to the Federal Court, which upheld the decision. The ESA then appealed to the SCC…

The Decision:

The SCC held that the appeal should be allowed and a separate tariff should not apply to games digitally distributed online which contain musical works. Why, you might ask? Well, the majority argued that there is no real difference btween buying a copy off the shelf and downloading a copy of the game online. When you buy it at your nearest game dealer, you don’t pay a separate tariff. So, why should the artist be able to essentially “double dip” when the distribution is done online? In fact, the majority thought that to do so would “impose a gratuitous cost for the use of more efficient, Internet-based technologies.” In particular, the majority held that the Copyright Board’s mistake lay in the fact that they defined a download as a “communication” thus bringing the action within the wording of relevant sections of the Act. Rather, the majority interpreted a “download” as “an additional, more efficient way to deliver copies of the games to customers. The downloaded copy is identical to copies purchased in stores or shipped to customers by mail, and the game publishers already pay copyright owners reproduction royalties for all of these copying activities.”

Talk amongst yourselves:

Although the decision makes some sense to some (and no sense to others) I was left with a question regarding streaming of games. As we know, streaming of games from the “cloud” is a new and definitely viable method of game distribution. The key difference, as I’ve discussed before, is that a download allows the transmission of a durable copy whereas a stream is a temporary transmission with little to no fixed imprint following the cessation of the stream.

Two key phrases in the decision led me to thinking about this:

  • First, the reference to s. 3(1) of the Act at para. 5, which states that , “the principle of technological neutrality…describes a right to produce or reproduce a work ‘in any material form whatever’”
  • Second, the majority’s statement that “The Internet is a technological taxi that delivers a durable copy of the same work to the end user.”

These two statements are not to be taken independently, and surely, the second ought to be read in light of the first. With regards to streaming, it seems evident that “technological neutrality” would treat streaming much the same way as downloading, and in this case in particular, also deny music creators additional royalties on music which is communicated via stream as well as download. In all likelihood, if the question were to be put to the court re: streaming of games and music royalties, the court would end up with the same outcome based on its understanding of “communicate” as well as that the Act allows one with the right to do so, to reproduce a work in any material form whatever.” 

Moving on. The second statement, in light of the first, would, on the face of it, be taken to mean the same thing: the streamed copy of the game is a durable copy which constitutes a communication inclusive of music to which initial payments were made, and to which additional royalties won’t apply.

Read independently, however, an issue arises: a streamed copy of anything is not, in its essence, a “durable copy”. It’s existence is fleeting. Although certain components necessary to run the game on a user’s system will reside on said system permanently, the gameplay itself (including the music forming an underlying element of the game) do not sit anywhere before, during or after the streaming session, except for the cloud from which the game is streamed. Notwithstanding the fact that, although not “durable”, a streamed video game is a more or less material reproduction (all the necessary elements to interact with the game and use it as intended are there) the durability of such a reproduction may, at least somewhat, the “materiality” of such a reproduction and, therefore, question the validity of technological neutrality in such circumstances.

Then again, “neutral” is just that – neutral. The law as intended ought to treat streaming as it does any other technologically reproduced copy of a copyrighted work.

All in all, I have no answer. I do believe, though, that the historical copyright decisions in relation to stage performance, particularly the debates surrounding the passing nature of a performance’s existence, will influence how we look at streamed content and copyright in the future.

You can read the decision in its entirety here.

This discussion is not to be taken as legal advice. Please contact a lawyer before making any decisions which require legal advice.


Embrace the Remix

I will start this by saying: this is not an original blog post. It’s not even an original idea. I was sent this video by a colleague of mine, and surely, he saw it by virtue of someone else’s input. He thought it was pertinent to what I do – and I agreed. And because of what the video below is about, it’s fitting that nothing I am saying here is original.

Kirby Ferguson posits that we must “embrace the remix”. By examining examples of anyone from Bob Dylan to Steve Jobs essentially “stealing” ideas, he explains that everything is a remix, because ultimately, we essentially “borrow” when being creative.

In particular, Ferguson discusses patent and copyright laws, their intents, and how they have now not necessarily encouraged creativity but rather, potentially stifled it.

Does this mean the end of originality? Maybe. But maybe it’s also an acknowledgement of the fact that, on our own, our creativity is never as good as when it is collaborative.

Embrace the Remix from Kirby Ferguson on Vimeo.

Streaming vs. Downloading: Supreme Court Eliminates some Fees on Downloads

Forgive me for the long delay since my last blog post – it’s been a crazy summer! Business is busy, the Open Roof Festival is going well, and between the various trips, concerts and other adventures the summer holds, blogging has taken a back seat. Until now…

Today, the Supreme Court of Canada handed down five rulings related to music and copyright. Among those were a decision that 30-second song previews on iTunes (and other online music stores) are not copyright infringements and therefore, warranted no royalties.

The Court also decided on whether Internet service providers (ISPs) are responsible for royalty payments to artists when consumers stream or download music. The Court ruled that there is a real difference between downloaded and streamed music. This indicates a real change in thinking to reflect the real change in how we, as consumers, experience and consume music.

The court held that, while streaming music will continue to be considered as a “performance” (and thus, performance fees will continue to be paid on streamed music), downloaded music (i.e. a la iTunes) will not be subject to such fees. The fees include those administered by SOCAN, Re:Sound and other organizations which collect tariffs or artists fees so that, among other reasons, artists can recapture revenues lost on music not sold or distributed traditionally.

This further clarifies that downloads are not performances or “public” as the Copyright Act once held through unclear language prior to the passing of the Copyright Modernization Act, but rather, that downloads are private, single instance transaction. On the other hand, streaming is akin to “communication to the public” and, as such, qualifies as a performance.

You can read the entirety of the text of the decision relating to streaming vs. download royalties here. 

How Video Games Might be worth more than just Entertainment

As we’ve been seeing in recent times, the “gamification” of just about everything has been a valuable (albeit, sometimes abused tool) in the marketing world. From trying to click on a moving target in the sidebar of your browser, to mobile game apps designed and released in connection with film and television, to the in game advertising and branding, games are proving to be a much more useful tool than once thought in the business world. 

However, with the recent release of Lumosity.com (an online gamified resource for brain training, memory improvement, problem solving and so on), we are now seeing just how useful games can be in other areas. (An interesting note on Lumosity is that, years ago, Nintendo came out with Brain Age, a handheld game used to do basically the same thing that Lumosity does. The marketing of it on a handheld gaming platform largely designed for children may have been why Brain Age didn’t do as well with the adult market).

One area in particular that games are making waves are in the teaching of empathy to children. At the University of Wisconsin (with assistance from the Bill and Melinda Gates Foundation) professors in the school of Education are leading the Games Learning Society Initiative.

The Initiative’s focus is test two educational video games that help eighth graders develop social and emotional skills such as empathy, cooperation, mental focus and self regulation.

You might be thinking that video games for eighth graders typically don’t focus on these aspects of social being. For example, the last time I played Call of Duty, I didn’t think much about self regulation or empathy. Instead, I focused on killing as many enemies as I could while also telling myself at 2 am, “It’s OK. Just one more 15 minute round.” Not much self regulation there. (Note: Call of Duty does require a ton of cooperation (in team mode) and focus).

Richard Davidson, who is in charge of the initiative, is encouraging the teaching of kindness and mindfulness through video games. For instance, he has included mindfulness into the program as it cultivates a capacity to regulate attention, which is useful in all learning environments. Kindness encourages individuals to cooperate and has connections with all  levels of success in life, team building, leadership, and so on.

The first game they are working on will involve breathing exercises. This encourages mindfulness and focus, much in the same way done through yoga or meditation.

The second will be to teach youngsters how to recognize certain facial patterns or expressions, and interpret emotions, thereby teaching sensitivity, kindness and other useful and necessary tools to functioning in an increasingly solitary and digital social sphere.

They plan to analyze responses in kids to these techniques through many traditional and non-traditional neuroscience analytical methods and factors, and with that feedback, continue to evaluate and develop the games in question. Looking at academic performance on an ongoing basis will also allow researchers to see just how much impact their research and these games are having.

Davidson has said, “Our hope is that we can begin to address these questions with the use of digital games in a way that can be very easily scaled and, if we are successful, to potentially reach an extraordinarily large number of youth.”

Sounds awesome. And definitely a better use of our digital resources than killing zombies on a PS3 (at least most of the time).

As of this week, your wedding might cost just wee bit more

The Copyright Board of Canada has, for the first time, decided to charge fees to anyone who uses recorded music as part of a public event. That means anyone who plans on using tunes to get the party started will need to dig a little deeper before hitting play on the iPod.

What that means is that, like concerts, festivals, bars and restaurants who play music, if you are going to rely on your iPod at your graduation party or wedding, you may have to pay certain fees to collectives like SOCAN and Re:sound.

This isn’t big news in a lot of ways – most DJs, food and beverage establishments and other venues playing music (whether live or recorded) have had to kick up fees to the collectives. Given the widespread use of pirated music, this is one of the only ways some artists can recover lost revenues as a result of illegal music downloads.

The difference now is “The new rules include any event in which music is played – weddings, ice shows, street parties, circuses, parades and karaoke bars are all named in the official notice from the country’s copyright board.

  • Fees for receptions, conventions, conventions, assemblies and fashion shows are determined by attendance. Less than 100 people costs, $9.25 per event. More than 500 is $39.33. Party animals be warned: if there’s dancing, the fee doubles.
  • Any business that offers karaoke must pay $86 for fewer than three days a week, or $124 for the entire week.
  • Festivals, exhibitions and fairs will pay up to $42 a day if there are fewer than 100,000 attendees. Any more than that, and the cost rises incrementally per 100,000.
  • Circuses, ice shows, fireworks displays and light shows are on the hook for at least $61 a day, or .8 per cent of all ticket sales.
  • Parades will want to count their floats carefully – each one that plays recorded music will cost oganizers $4, with a minimum fee of $32.55 per day.
  • Anyone playing music at an event on a street or in a park must kick out $16 a day, up to $111 every three months.

Do, how do you avoid those costs at your wedding? I guess you could try no dancing. Or, just sing songs together. Might not be much fun, but you’ll save a few bucks.


*with content from the Globe and Mail

** the contents of this blog post aren’t to be taken as legal advice.