The Texas Moving Image Incentive Program Needs You!
Currently, the State of Texas provides funding to a program designed to encourage the production of movies and TV shows in Texas. This program is called The Texas Moving Image Industry Incentive Program, and it reimburses productions in Texas for a portion of their costs, as long as the productions meet specified criteria (Criteria for qualification may be found here:http://www.governor.state.tx.us/film).
The program is available to qualified advertising productions as well as film & television production, so many advertisers have a direct interest in seeing that the program remains fully funded. Unfortunately, in the current fiscal climate, there are doubts as to whether this will be possible.
The program received $60 million in state funding in 2010, but as recently as January of this year it was proposed that the program only receive $10 million in 2011. Although a more recent proposal only cuts funding down to $32 million, this is still nearly a 50% decrease from last year.
A recently released study by The University of Texas at Austin IC2 Institute demonstrates that for every dollar of incentives paid out by the State, more than $18 dollars of economic impact was generated. This is proof positive that these incentives serve as an investment in our state, not as expenditure.
The study also shows that the Texas program is one of the most efficient state programs, despite the fact that Texas requires its applicants to jump through hoops in order to qualify. The Texas program is less expensive than similar incentive programs offered by our nearest neighbors, Louisiana and New Mexico, costing a mere $58 million in reimbursements last year. This relatively inexpensive investment generated a calculated economic impact of $1.1 billion in our state.
If you want to lobby your state representative to keep The Texas Moving Image Industry Incentive Program fully funded, you may find a summary of the IC2 report on the AdFed website. Your representative may appreciate knowing that, in addition to the 1:18 economic multiplier of the incentive program, the program has safeguards to ensure that productions really are spending money in Texas. For instance, no funds are provided for non-Texas residents, crews, or vendors. Productions are required to submit payroll records which are audited to check that wages were paid to Texas-based talent and crews and the productions demonstrate that the reimbursable funds were spent in Texas. Finally, the Texas Film Commission and the Governor’s Office review all submissions before reimbursements are released.
The Troubled Adaptation of Copyright Law to the Internet
The growth and proliferation of the internet as a widely accessible tool for communication, commerce, and information sharing has revolutionized the way we live life and do business.Many historically traditional institutions have struggled to adjust to these fundamental changes.
One such institution bears the responsibility of protecting and defending people’s rights- our legal system.Unfortunately, our current system of laws, based upon hundreds of years of experience in the world before instant global connectivity, fails to adequately answer all of the complex questions that have arisen as to how to enforce analog laws in a digital age.
The digital era has created a crisis in copyright law, especially. Nowhere in popular culture is this crisis more acute than in the music and film industry.
Exhibit A: Sony BMG Music Entertainment et al. v. Tenenbaum. The defendant, Joel Tenenbaum, a college physics student at the time, downloaded 31 songs from the file sharing service Kazaa, among others. His downloading activities were detected by Sony and other copyright owners, and Tenenbaum was sued for copyright infringement. In 2009, the trial judge found him guilty of copyright infringement and a jury awarded the plaintiffs $675,000 dollars in damages, or the equivalent of an outrageous $22,500 per song. This summer, the damage award was reduced by a judge to a tenth of this amount, to $67,500 - still a hefty fine of $2,250 per illegal download. (LINK)
Exhibit B: Harper v. Maverick Recording Company:In another high profile case, the United States Supreme Court refused to hear the case of a Texas woman sued by Sony and others for downloading music using peer-to-peer file sharing software. In this case, an appeals court held that the woman was liable for as much as $750 per song in damages. (LINK)Copyright law currently provides statutory damages as high as $150,000 for each instance of willful infringement. It almost seems as if each and every downloaded song represented “an instance” of willful infringement in these cases, which could explain why the jury awards have been so jaw-droppingly large.
Exhibit C:Arista Records v Lime Group LLC:In a related development, in a suit brought by the Recording Industry Association of America (RIAA), a judge ordered the popular peer-to-peer file sharing service Limewire to disable its file sharing software. In addition, the creator of the Limewire service, Mark Gorton, was found personally liable for copyright infringement. Damages are yet to be determined.In one report, RIAA was glad to be taking down "the massive piracy machine that Limewire and Gorton used to enrich themselves immensely." (LINK)
Exhibit D:US Copyright Group v John Doe {IP 123.12.1234}:The firm of Dunlap, Grubb, and Weaver out of Virginia has devised an eyebrow raising strategy in the pursuit of infringers under the moniker “US Copyright Group”.The US Copyright Group reaches out to independent filmmakers whose movies have been pirated by file sharing, and then helps these artists find and bring suit against the masses of downloaders. (LINK)The infringers are labeled “John Does” in the lawsuit proceedings - until subpoenas uncover their identities.Instead of pursuing lengthy litigation against these downloaders, however, the US Copyright Group typically settles for two or three thousand dollars, splitting the money with the filmmakers.Their high-volume litigation tactics have been a great success, leading to the necessity of a “pay your settlement by credit card” link on their website to manage receipts from the thousands of defendants they have caught.
Defenses
These cases are instructive, each in their own way, about copyright law. Tenenbaum attempted to assert a "fair use" defense for his downloading. The court's opinion is a persuasive discussion about the proper role of fair use in copyright law, with the take home point being that not-for-profit personal use of a copy does not mean the copy is a fair use. Tenenbaum's defense got me to thinking - if personal use is a defense, why isn't it a defense against theft?Could Sony actually have pressed charges for theft, rather than claim a copyright infringement? Of course, when an item like a book is stolen, the book is physically gone from inventory. Obtaining a digital copy of a song is not quite stealing because the original file persists unharmed.Copyright law offers a remedy to this internet-enabled infringement.
In the second case, the Texas woman asserted a defense of “innocent infringement”. She was 16 when she downloaded music illegally, and she claimed she thought the way she got the music was simply like listening to an online streaming radio station. The plaintiffs claimed that she was a long time, massive infringer, and that she couldn't have been innocent because the record companies put copyright notices on the CDs of their music. This raises the interesting question of whether copyright notices in the physical world should have any bearing in the online world. Online music files, obviously, do not present visible copyright notices.
In Exhibit C, Limewire was shut down because it was found to be "inducing" people to infringe copyright. Under a rule developed by the Supreme Court in the “Grokster” case, an earlier peer-to-peer file sharing case, a company or person can be liable indirectly even though its acts were not themselves infringing and even though it did not substantially contribute to infringement, so long as the person induced infringement by others. Providing free peer-to-peer file sharing software is, apparently, an inducement to share files.The somewhat confusing standard of secondary liability for technology providers is discussed in more depth in the current issue of The Texas Intellectual Property Law Journal, in the feature article:Pull too hard and the Rope May Break. (LINK)
Finally, the US Copyright Group has enriched itself through high volume litigation in which the majority of downloaders generally choose not even to mount a defense.It is troubling that the attorneys, as I understand the scheme, affirmatively seek out plaintiffs and presumably pitch the strategy, convincing the film makers to pursue unknown infringers.Although the filmmakers are entitled to compensation, my feelings about this strategy are mixed.It’s hard to not to be impressed by the cleverness, boldness and sheer scale of the Copyright Group’s strategy.But at the same time, as an attorney myself, witnessing lawsuits instigated by lawyers leaves me feeling a little queasy – because encouraging litigation tends to blemish the reputation of our entire profession.
History
Getting digital music for free online through peer-to-peer file sharing was defended in the early days of the internet as being analogous to make a cassette tape of a vinyl album so you could listen to it in your car. Eventually, copies were no longer generated for personal use - you also gave them to friends and especially new girl friends. This where the expression "mix tape" comes from. Nowadays, the mix tape has been replaced by audio and video playlists. And people still burn playlists onto CDs to play in their car or give to friends. To my knowledge, this type of copying has not been challenged.
The internet was an ideal and natural home for buying, sharing, and listening to music and watching film from the moment of its inception.But before iTunes, there really wasn’t a mass market tool available to buy digital music and movies legally. This lag in the marketplace left a vacuum that peer-to-peer sharing filled. Once people became acclimated to downloading free music, it was tough to convince them to switch to iTunes or Amazon to pay for digital music. In the Tenenbaum case, the trial judge chided the defendant for continuing to download music for free long after iTunes - the legal medium - was available. Movies had typically been lower quality, slower to download, and therefore were less infringed upon until recently.
Solutions
In reaction to the eye-popping damage awards copyright owners have won from juries in digital music downloading cases, consumer groups and music journalists have called for an updating of copyright law. While it is rare to see proposed specific changes to the current law, the creation of a new tier of statutory damages for peer-to-peer copyright infringement might be a useful start. The new tier could establish penalties severe enough to discourage illegal downloading, but not so severe that infringers are financially ruined, or that damages awards are so absurdly high that the plaintiffs have no hope of getting paid.
The industry could certainly help solve the problem by standardizing the placement of copyright notices on digital files. iTunes uses proprietary digital rights management (DRM) digital encryption as a technological fix to prevent songs obtained from iTunes to be played back on incompatible devices. While this solution has irritated many users (and has led many consumers to Amazon to buy non-DRM encrypted music) it does seem to meet the historically acceptable standard- the music can be “burned” onto a CD for your car or your girlfriend, but it cannot be copied for further distribution on other computers.Many new DVDs and Blu-ray discs are also being sold with “Digital Copy” rights in recognition of this time-honored practice of acceptable copying.
Another suggested solution involves enablers such as Internet Service Providers and telecommunications companies charging subscribers a few pennies per month to create a fund for compensating content creators.Such a fund might reduce or even eliminate the need for lawsuits on the scale the US Copyright Group engages in.
Now that they have successfully made their point in court, copyright owners would be wise to pursue alternative strategies that better address the problems of illegal downloading.The end goal of protecting their property should be met without alienating the end consumer.
How the Financial Reform Bill Will Affect Advertisers
By: Matthew Burr VP of Government Affairs
Agencies beware! In certain situations, the new financial reform bill will hold agencies, media conglomerates, and marketers liable for the content of the advertising client’s message.
In the past, the responsibility to create honest and comprehensible messages for financial services fell solely upon the shoulders of the advertising client, freeing agency minds to explore creatively and focus on the development of memorable, lucid, and cohesive campaigns. With the passage of the Frank-Dodd Financial Reform and Consumer Protection Act, agencies and media companies may be held responsible for the integrity of the clients’ messages by the Federal Trade Commission.
Advertising agencies have long been prohibited from creating and distributing messages for illegal products or services. However, if specific claims furnished by the advertising client were found fraudulent, the agency was usually not held accountable. This no longer stands true. According to the American Advertising Federation, “an advertising agency that prepares creative for a client, but does not have the expertise to verify the substance of an offer could nevertheless be subject to potential liability for false or deceptive claims”.
Not only agencies are at risk, however- media companies may also be liable under the new legislation. Media brokers that “solely sell space and time” will remain protected, but media broadcasters and publishers are already required to perform a review of their advertisements for obscene or offensive content. This cursory review, which is often unavoidable under FCC guidelines, may create liability for the media agency that checked a financial advertisement for overt sexuality or crude language, but missed the fraudulent messages regarding the returns on bank tools such as complex derivatives.
The Consumer Protection Act demands clearer and simpler communication from banks and other financial service providers in order to shield consumers from proceeding with financial transactions under misguided notions. A new federal agency called the Consumer Financial Protection Bureau will be responsible for punishing those institutions that continue to mislead clients by creating contracts so complex and difficult to decipher that they have become modern day usury.
The new Consumer Bureau will be watching the agencies, the advertisers, and the advertised messages far more closely than in the past. This may lead to increased overhead for agencies that work on large scale financial campaigns, since hiring a financial analyst or a legal finance team to protect themselves could very well become standard agency practice.
Because of the novelty of the reform bill, there is still no way to know for certain exactly how the new law will be interpreted. A strict interpretation may lead to regular government interference with agencies, hindering creativity and increasing overhead, while a more lenient interpretation would offer more freedom to agencies while holding the banks to a far more fiscally responsible standard.
As we wait to discover exactly how the new regulations will affect the industry, I urge you to use caution and certainly have your financial messages reviewed by a business attorney or financial analyst familiar with the new legislation for accuracy and integrity before publishing or broadcasting. With this protection, your creative minds are free to do what they do best (free from adverse risk), and you can be sure to avoid possible legal penalties as well.
