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Finland: Government Bills Implementing the Payment Services Directive Published in Finland

2009-11-11

Government Bills for the Act on Payment Institutions and the Payment Services Act implementing the Directive 2007/64/EC of the European Parliament and of the Council on Payment Service in the Internal Market (the “Payment Services Directive”) were published and handed to the Parliament on 2 October 2009. The objective of the Payment Services Directive is to provide the legal framework for the creation of an EU-wide single market for payments.

The Ministry of Justice working group has prepared the implementation of Titles III and IV of the Payment Services Directive through a Government Bill including a proposal for the Payment Services Act. The new Act regulates the terms and conditions for entering into agreements on payment services as well as the execution of payment services. The Act on Payment Institutions which implements Titles I and II of the Payment Services Directive has been prepared by the working group of the Ministry of Finance. The Act on Payment Institutions regulates license and other requirements for institutions providing payment services and the supervision of such payment institutions.

Although the Payment Services Directive aims at a full harmonization approach, there are some optional provisions including, inter alia, waivers for small players and so called “corporate opt-out” articles leaving discretion to the Member States in the implementation of the Directive. The Government Bill for the Act on Payment Institutions proposes a waiver for small players and the Government Bill for the Payment Services Act proposes implementation of the corporate opt-out articles only to the extent that the payment service user is not a consumer. The proposal thus excludes the option of non-application of certain provisions when the payment service user is not a micro enterprise.

The Act on Payment Institutions and the Payment Services Act are intended to enter into force in November 2009 and in May 2010, respectively. The new Acts are expected to give rise to significant costs for credit institutions and credit card companies relating e.g. to the updating of terms and conditions for payment transactions in order to comply with the requirements of the new Acts.

Finland: Employee or Entrepreneur?

2009-11-11

The Finnish Supreme Court has rendered judgment KKO:2009:65 regarding the scope of application of the Finnish Employment Contracts Act. This matter concerned a situation where two private persons (A and B) agreed, on behalf of a company to be incorporated, to take care of the sales activities of an interior decoration company©. A and B’s company was obligated report the sales to C on a daily basis and C had had the right to supervise the quality and pricing of the products.

After the business had turned out unprofitable and the agreement had expired, A and B claimed that they had de facto been in an employment relationship with C. In its reply C argued that the parties’ intention had been to enter into an agreement between two companies and that A and B were entrepreneurs.
The Supreme Court found that the agreement had placed A and B and their partnership firm in a subordinate position as regards C and the financial risk had also remained with C. However, the financial outcome of the business had been substantially dependent on A and B’s own decisions and performance and the parties’ initial intention had been an entrepreneur relationship. The Court also stated that especially in the service industry the risk of a capital loss is not an essential prerequisite for entrepreneurship.

Taking into consideration the situation as a whole, the Court held that A and B had not been in an employment relationship with the interior decoration company C.

United States: Employ America Act

2009-11-11

Senators Sanders (D-VT) and Grassley (R-Iowa) have drafted the Employ America Act. The bill would prohibit the Department of Homeland Security from approving any employment visa filed by an employer that has, within the preceding twelve (12) months, provided a mass layoff notice pursuant to the Worker Adjustment and Retraining Notification Act (WARN Act). The bill would also require the employer to terminate any existing foreign workers who obtained work visas during the preceding twelve (12) months.

Specifically, the bill would:

prohibit the Secretary of Homeland Security from approving any visa authorizing employment in the United States unless the employer certifies to the Secretary of Labor that it (i) has not provided notice of a mass layoff pursuant to the WARN Act within the last twelve (12) months, and (ii) does not intend to provide notice pursuant to the WARN Act. The provisions would not be triggered by a WARN plant closing notice;
require the Secretary of Homeland Security to terminate the employment visas of any existing employees approved during the prior year. The visas would terminate sixty (60) days after the WARN notice; and

exempt employers from the requirements of the bill if the employer certifies in writing that the total number of workers who are U.S. citizens and are working in the United States has not been, and will not be, reduced as a result of the layoff.

The WARN Act is a federal law that requires certain employers to give advance notice of significant layoffs to employees and others. In general, a notice of mass layoffs is required under WARN if the layoff will result in an employment loss at an employment site during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33% of the employer’s active workforce. To determine how many employees an employer has under the WARN Act, the employer must count all employees at every location, not just the location where employees are being laid off.

BAL Analysis:

As currently drafted, the bill would affect any petition for a “visa authorizing employment” filed by an employer. This would presumably cover both temporary visas and immigrant visa petitions.

In addition to barring an employer from sponsoring any new foreign nationals for employment for a full year, the bill would be extremely disruptive to an employer’s existing workforce. The bill would require DHS to terminate employment visas issued during the prior twelve month period and it would preclude approval of any extension applications that must be filed during the twelve months subsequent to issuance of the WARN notice.

It is unlikely that the bill will be passed as a stand-alone bill, but Senators Sanders and Grassley could seek to add it as an amendment to another bill. BAL Government Relations will monitor the bill’s progress and provide updates.

United States: New York Requires Employer-Written Notifications and Additional Recordkeeping for New Hires

2009-11-11

A recent amendment to Section 195 of the New York Labor Law requires an employer to give written notice to a newly hired employee of the employee’s rate of pay and regular payday designated by the employer. The amendment further requires an employer to give each newly hired employee that is eligible for overtime pay by law or regulation written notice of such employee’s overtime wage rate. This new law applies to all new employees hired on or after October 26, 2009.

Additionally, an employer is required at the time of hiring to obtain from a new employee a written acknowledgement of the employee’s receipt of the required written notice. To meet the statute’s requirements, the New York State Department of Labor issued the following form: Notice and Acknowledgement of Wage Rate and Designated Payday. The Department of Labor also published an explanatory fact sheet titled Notice of Pay Rate and Payday for New Hires.

Prior to the amendment, employers were required to give new employees notice of their rate of pay and regular payday. However, there was no requirement that the notice be in writing or acknowledged, or that the employer give notice of the overtime rate. Section 195, as amended, now imposes the recordkeeping requirement that the notice and confirmation of its receipt be in writing, as well as the notice of the overtime wage rate.

What This Means for Employers

Employers should immediately update their hire letters to include this required compensation information and require that the DOL form be provided to and signed by the employee upon the commencement of the working relationship. As with other payroll-related records, the signed form must be kept by the employer for six years.

United States: Lawyers Who Want Better Visibility on Avvo Can Pay for It

2009-11-11

Lawyers who want to beef up their Avvo listings and learn more about their online visitors should be prepared to pay for the privilege.

Avvo is offering a new premium service called Avvo Pro that costs $49.95 a month, although the first month is free, according to Robert Ambrogi’s LawSites. Avvo Pro has three features, according to the story:

Subscribers can add a custom field to their profiles in which they can add a tag line or describe their practices. They can also feature two client testimonials from the ones that have been submitted. And they can integrate their blog and Twitter feeds.

Subscribers who offer comments or appear elsewhere on the Avvo site will be designated with a “pro” badge.

Subscribers will get more detailed information about their online Avvo visitors.

On Monday, lawyers and other professionals who use both LinkedIn and Twitter became able to make their tweets to appear as LinkedIn updates and vice versa, Reuters reported. LinkedIn also gives users the option to install a Twitter widget on their profiles and display their most recent tweets, Ian Paul writes in a “Do’s and Don’ts” article for PC World. But Paul advises against this.

“Sharing an update about your recent promotion on LinkedIn via Twitter is a great idea, but all those drunken tweets you send out on Saturdays won’t look so hot on your professional profile,” Paul wrote

United States: Glenn Beck Loses Trademark Claim Over Domain Name

2009-11-10

Glenn Beck has lost a trademark claim over a domain name that is part of a parody of his interviewing style.

An arbitrator with the World Intellectual Property Organization rejected Beck’s claim against glennbeckrapedandmurderedayounggirlin1990.com, Online Media Daily reports. The arbitrator said the site’s creator, Isaac Eiland-Hall, was making a political statement that was a legitimate noncommercial use of Beck’s name.

The site was created after a commenter on Fark.com asked, with no basis in fact, “Why haven’t we had an official response to the rumor that Glenn Beck raped and murdered a girl in 1990?”

Eiland-Hall had argued the website was a parody using the same rhetorical techniques that Beck uses on air. Eiland-Hall’s lawyer, Marc Randazza, also claimed there was no possibility of confusion. “Only an abject imbecile could believe that the domain name would have any connection to the complainant,” Randazza wrote in legal papers.

The story said a contrary decision would have encouraged subjects of online parodies to take their complaints to WIPO rather than U.S. courts, where First Amendment protections apply.

United States: FCC's "Net Neutrality" Looking to Regulate the Internet?

2009-11-10

On October 22, 2009, the Federal Communications Commission (FCC) launched a potentially controversial proceeding that looks toward regulation of the Internet. The FCC has proposed to formally codify certain Internet-openness policies that it has followed for the past several years, while adding two more policies.

The four existing policies state that consumers are entitled to run the lawful applications of their choice, to connect legal devices of their choice, to access the lawful Internet content of their choice and to have competition between and among Internet access providers.

The fifth principle would ban discrimination by Internet access providers between and among lawful content, applications and services.

The sixth principle would require providers to disclose their network management practices. All six principles would be subject to an exception for “reasonable network management” by the provider, as well as to the needs of law enforcement and public safety.

The principles would be applied to all broadband providers—wireline and wireless. However, the FCC suggests that how the policies would be applied might vary from one technology platform to another, and has asked for public comment.

The Commission voted unanimously to initiate the proceeding. However, the two Republican Commissioners only concurred with the agency’s decision to open the process, and dissented to the notion that there are problems with the Internet market that the FCC can and should address.

The FCC’s Notice of Proposed Rulemaking poses a multitude of questions, including an appropriate definition of reasonable network management; whether net neutrality principles, if adopted, would infringe First Amendment rights of providers and, if so, whether those rights are outweighed by the rights of others; whether there should be an exception for managed or specialized services, such as those provided to large business users; and many other issues.

The definition of reasonable network management is vital. A small fraction of Internet users consume most of the available bandwidth, primarily via file-sharing and Internet downloads, often to the detriment of the majority of users.

The central issue in the proceeding seems straightforward: Is the Internet broken, and if so, is the federal government the entity to fix it? However, upon closer examination of the issues, the complexity of the undertaking becomes apparent.

A notable example is that the network increasingly exhibits at its core the kind of intelligence that one finds at the edges with Yahoo, Google, Facebook and eBay. A potential risk with the type of policies supported by net neutrality advocates is that those policies may relegate providers of the underlying facilities that make the Internet possible—e.g., AT&T, Comcast and Verizon—to little more than providers of transport facilities.

Of the six principles, the one garnering the most attention is the fifth, the non-discrimination provision. Non-discrimination in telecommunications is a common carrier concept. Section 202(a) of the Communications Act bans “unjust or unreasonable discrimination” by common carriers.

Inclusion of the concept, even without the “unjust or unreasonable” qualifier, may invite the kind of litigation that characterizes common-carrier regulation. The FCC’s Notice stressed that the agency intends to fill out the contours of its policy via case-by-case adjudication.

The FCC’s proceeding is likely to be significant, given the agency’s repeated decisions holding that wireline and wireless broadband providers are information services, not to be regulated as common carriers—and therefore not subject to the non-discrimination provisions of Title II of the Communications Act. Cable modem service, for example, was held to be an information service in 2002, a distinction that was upheld by the U.S. Supreme Court in the Brand X case.¹

Legal consistency aside, a chief policy issue is whether adoption of a non-discrimination provision would deter investment in broadband facilities. Even the prospect of Internet regulation has raised concern that the Obama administration’s chief domestic communications goal—the spread of broadband facilities—may be undermined by the pursuit of one of its other objectives: Net neutrality.

At a minimum, the FCC needs to address whether there is a market failure. However, no evidence of a pattern of problems exists to date. To the contrary, only a handful of cases involving alleged discriminatory conduct by an Internet service provider have been presented, and the Commission has dealt with these matters.

In the words of Commissioner Robert M. McDowell, the FCC conducted a two-year-long inquiry in a search for broadband market failure, and “we came up empty.” ²

Rather, most of the impetus for regulation has stemmed thus far from concern over what might happen, given the possible means and motives of broadband providers to favor their own services and applications.

The FCC has established a lengthy comment period: Until January 14, 2010, for opening comments; and until March 5, 2010, for reply comments.

Notes

¹ NCTA v. Brand X, 545 U.S. 967 (2005).
² Statement of Commissioner Robert M. McDowell, Concurring in Part, Dissenting in Part.

Sweden: Svea Court of Appeal Sets Aside Decision on the First Information Injunction under the IPRED Law

2009-11-10

The District Court of Solna was the first Swedish court to issue an information injunction under the new Section 53© of the Swedish Copyright Act (SFS1960:729), as amended due to the implementation of the IPRED Directive (2004/48/EC). In the decision rendered on 25 June 2009, the Court ordered the broadband distributor Ephone to disclose information regarding the user of a certain IP addresses (case No. Ä 2707-09). The injunction had been requested by five audio book publishers, and the District Court found that the audio books on the server had been made available to the public, even though they could not be accessed without a password. This decision has now been set aside by the Svea Court of Appeal, which on 13 October 2009 found that the publishers had not sufficiently established probable cause for infringement of copyright (case No. ÖÄ 6091-09). The decision was the result of a two-two vote by the judges, the chairman’s vote decided the matter.
The Court of Appeal held that a formal limitation of the circle of persons that may access certain works protected by copyright, such as for example a membership requirement, does not rule out the possibility that the works could be considered available to the public. However, unlike the District Court, the Court of Appeal found that since no evidence had been presented with respect to how the necessary login information could be acquired, no certain conclusions could be drawn regarding the prerequisites of access to the audio books. Thus, there was no basis for the Court to make conclude anything on the purpose, size, characteristics, conditions or constancy of the circle of people having access to the server. Consequently, the Court concluded that the publishers had not presented sufficient evidence that the copyrighted works would have been available to the public, and, consequently, no probable cause for copyright infringement had been established.

The Svea Court of Appeal’s decision has been appealed to the Supreme Court of Sweden. Whether the Supreme Court will try the case remains uncertain, but, for the time being, Ephone has been prohibited, under penalty of a fine, from destroying the information requested by the publishers.

Finland: European Commission Discusses Challenges and Opportunities of Online Digital Content

2009-11-10

The European Commission has published a reflection document concerning the challenges that the digital market of creative content, such as books, music, films and video games, is facing (Creative Content in a European Digital Single Market: Challenges for the Future, published 22 October 2009). According to a survey presented by the Commission, a harmonized and unrestricted market for creative online content could quadruplicate the revenues available from said content.
The growing importance of digitization technologies and online content is opening up new possibilities for the distribution of creative content but at the same time, it presents a number of challenges. Firstly, the free movement of creative digital products and services faces both legal and regional obstacles that may hinder creativity and innovativeness. Further, the Commission notes that large scale illegal downloading may jeopardize the development of an economically viable single market for creative content. The Commission invites all interested parties to submit their comments on the reflection document by 5 January 2010.

The Commission has also on 19 October 2009 accepted a Communication on Copyright in the Knowledge Economy, which aims to address the great cultural and legal challenges facing the mass scale digitization and dissemination of books. The challenges are of particular importance in the context of the collections of European libraries.

In the Communication, the Commission discusses the measures that it is planning to take to tackle issues such as digital preservation and dissemination of scholarly and cultural material and of orphaned works, as well as improved access to digital content for persons with disabilities. The digitization and dissemination of orphaned works poses a significant challenge: As the right holder cannot be identified, the users of said content may not obtain required authorization for the use of the content and the book cannot be digitized. A very substantial part of the collections of European libraries consist of orphaned works and the aim of the Commission is to create an EU-wide solution, alleviating the digitization and dissemination of orphaned works and establishing common standards to recognize orphaned status across the EU. The Commission has convened a public hearing for this purpose.

United States: BigLaw Firms Still Struggle for Balance

2009-11-09

Although the legal economy has been looking up in recent weeks, revenue at Allen & Overy dropped by seven percent during the six-month period that ended Oct. 31, the London-based “magic circle” law firm has announced.

It is not planning any further layoffs to follow A&O’s earlier elimination of 450 positions, including 47 partners. But a salary freeze for all staff will remain in place until May, reports the London Times.

Meanwhile, megafirm Clifford Chance plans to cut another eight attorneys from its capital markets practice group at its London headquarters after the elimination earlier this year of 200 jobs and an unknown number of partners. No additional attorney layoffs are planned after the eight attorneys in the current “redundancy consultation” are dealt with.

These moves by the elite London-based flagship firms suggest that the legal sector is still fine-tuning the sudden adjustments in law practice that were required by the global financial downturn last year, according to the newspaper.

While transactional work is still flat, there has been a recent pickup in the firm’s bankruptcy and litigation work, Wim Dejonghe, who serves as managing partner of A&O, tells the Times.

Sweden: Competition: Court of First Instance rejects application for interim measures by appellant against calcium carbide and magnesium based reagents cartel decision

2009-11-09

The Court of First Instance (“CFI”) rejected an application for interim measures lodged by Novácke chemické závody (“NCZ”) against the Commission’s decision in the calcium carbide and magnesium-based reagents cartel. In its July 2009 decision, the Commission imposed a total fine of EUR 61 million on nine companies for breaching Article 81 EC by participating in a price-fixing and market-sharing cartel for calcium carbide powder, calcium carbide granulates and magnesium granulates.

NCZ asked the CFI to suspend the enforcement of the Commission’s decision to the extent that it is ordered to pay the fine imposed until the CFI has ruled on the appeal against the Commission’s decision lodged by NCZ. NCZ claimed that if the obligation to pay the fine is not suspended, it will be forced to apply for the commencement of liquidation proceedings. The CFI rejected the application on the grounds of lack of urgency, as NCZ had already started national insolvency proceedings. Therefore, interim measures would serve no purpose, as the harm had already occurred and could not be avoided by the grant of the interim measures sought.

Further, NCZ had not shown that it was objectively impossible for it or another company in its group to provide the bank guarantee requested by the Commission or that providing such guarantee would jeopardize its existence or that of its corporate group. Source: Case T-352/09R – Novácke chemické závody, a.s., v Commission, Order of the President of the CFI 29/10/2009

United States: Legal Sector Lost 5,800 Jobs Last Month, Labor Bureau Says

2009-11-09

As the nation’s unemployment rate topped 10 percent last month, lawyers were not spared.

The legal sector lost 5,800 jobs, according to seasonally adjusted statistics in a just-released report (PDF) from the U.S. Bureau of Labor Statistics. When not seasonally adjusted, the figures show a gain of 1,500 jobs, but that is probably attributable to the elimination of summer associates from law firm payrolls, reports the Am Law Daily.

After slowing down for a few months over the summer, it appears that the pace of law firm layoffs is now picking up a bit, the legal blog notes.

Among the firms that have recently trimmed their rosters are Drinker Biddle & Reath; Foley & Lardner; and Wilmer Cutler Pickering Hale and Dorr.

France: Merger control: Commission refers examination of the planned acquisition of Keolis and EFFIA by SNCF and CDPQ to French Competition Authority

2009-11-09

The Commission referred the matter of examining the acquisition of joint control over the French companies Keolis and EFFIA by Société Nationale des Chemins de fer français (“SNCF”), of France, and the Caisse de Dépôt et de Placement du Québec (“CDPQ”), of Canada. Keolis specializes in public passenger transport by bus and coach. EFFIA, which is currently an SNFC subsidiary, specializes in services connected with public passenger transport.

SNCF operates passenger rail transport services on France’s rail network, as well as other rail transport services, including international services. Further, SNCF manages the infrastructure of the French rail network. CDPQ is an institutional fund manager that administers the pension and insurance scheme funds of public and private bodies. The French Competition Authority requested that the examination of the acquisition be referred to it, as the proposed acquisition may significantly affect competition in the French public passenger transport markets through potential conglomerate effects, i.e. anti-competitive effects connected with the presence of the new group throughout the entire transport chain.

Following an inquiry among customers and competitors of the companies concerned, the Commission acceded to the French Competition Authority’s request. Source: Commission Press Release 30/10/2009

Slovakia: Competition: Commission sends reasoned opinion to Slovakia in relation to Slovakia’s remonopolization of the hybrid mail sector

2009-11-09

The Commission sent a reasoned opinion to Slovakia requiring it to implement a Commission decision on hybrid mail. Hybrid mail is a service whereby the content of a communication is electronically transmitted from the sender to the service provider, which then prints, envelopes, processes and delivers the postal item to the final addressee.

In 2008, the Commission found that an amendment to the Slovak postal law remonopolized hybrid mail services to the benefit of the postal incumbent, Slovenská pošta, in breach of EC competition rules. Slovenská pošta has appealed the Commission’s decision. However, the appeal does not suspend Slovakia’s obligation to comply with the Commission’s 2008 decision.

To date, Slovakia has not informed the Commission of any measures taken to implement the Commission’s decision. The reasoned opinion follows a letter of formal notice send in December 2008, to which Slovakia has not provided a satisfactory reply. If Slovakia does not company with the Commission’s reasoned opinion within two months, the Commission may being the matter to the European Court of Justice. Source: Commission Press Release 29/10/2009

United States: EEOC Posts Updated "EEO is the Law" Poster on its Website

2009-11-06

On October 22, the EEOC posted on its website a revised Equal Employment Opportunity is the Law poster that reflects current federal employment discrimination law, including the ADA Amendments Act of 2008 (effective on January 1, 2009) and the Genetic Information Nondiscrimination Act of 2008 (effective November 21, 2009). The revised poster also includes updates from the Department of Labor. Employers are required to post notices describing the federal laws prohibiting job discrimination based on race, color, sex, national origin, religion, age, equal pay, disability and genetic information. The updated EEOC poster is available in English, Arabic, Chinese and Spanish.

Finland: Competition: Commission sends reasoned opinion to Slovakia in relation to Slovakia’s remonopolization of the hybrid mail sector

2009-11-06

Sweden: Competition: Court of First Instance rejects application for interim measures by appellant against calcium carbide and magnesium based reagents cartel decision

2009-11-06

The CFI rejected the application on the grounds of lack of urgency, as NCZ had already started national insolvency proceedings. Therefore, interim measures would serve no purpose, as the harm had already occurred and could not be avoided by the grant of the interim measures sought. Further, NCZ had not shown that it was objectively impossible for it or another company in its group to provide the bank guarantee requested by the Commission or that providing such guarantee would jeopardize its existence or that of its corporate group. Source: Case T-352/09R – Novácke chemické závody, a.s., v Commission, Order of the President of the CFI 29/10/2009

United States: Holiday Processing Times May Delay December/January Start Dates

2009-11-06

As the traditional holiday season approaches, companies considering global assignments starting between December 2009 and January 2010 should expect delays in the processing of work and residence permit applications by the labor and migration authorities in many countries. It is, therefore, advised that companies considering global assignments initiate immigration paperwork prior to December 2009.

Immigration and Labor offices in certain Latin American and European Union (EU) countries may close or operate with significantly reduced staff in December and early January. In this regard, many consular posts observe both the host country’s and the home country’s holiday schedules.

BAL has prepared a list of varying processing times and anticipated holiday closures in 40 countries in various regions of the world. Please note those countries denoted with an asterisk (*) may have significant consular processing requirements which may also be affected by the accepting Consulate’s holiday schedule.

Since immigration offices and consular posts may change their holiday schedules with little or no advance public notice, we strongly recommend that our clients check with the host country immigration/labor office and/or their local consulates for possible closures.

United States: Law Prof Drops Privacy Suit Against Above the Law; Blog Offers Prof Guest Spot

2009-11-06

A law professor at the University of Miami has seemingly changed his mind about the federal invasion of privacy suit he filed only last week against the publisher of Above the Law over a 2007 post on the self-described tabloid law blog.

Plaintiff Donald Marvin Jones today voluntarily dismissed the Southern District of Florida action in a one-sentence filing to which the Wall Street Journal Law Blog provides a link.

As detailed in an earlier ABAJournal.com post, Jones asserted privacy claims against ATL’s characterization of a 2007 arrest that did not result in any prosecution and, according to the law prof, concerned a situation in which his only mistake was to make a wrong turn in his Mercedes Benz into a rough section of Miami.

Jones, who is African-American contended that the ATL post did not accord with the facts of his case and encouraged readers in a “racist series of rants.”

The law prof didn’t immediately respond to a request for comment from the newspaper about his reasons for dismissing the case.

In a post about the dismissal, Above the Law says it has made no changes to its prior posts and paid no money to Jones. “The case was dismissed by the plaintiff without anything from our side, except a letter from our lawyer.”

ATL has, however, offered Jones the opportunity to post a guest column explaining his side of the story, if he wishes.

Attorney Marc Randazza, who wrote the letter for the law blog, is quoted as saying that the suit was without merit.

United States: Bizarre Beatles Song-Selling Defense: Techies Created—and Can Copyright—New Tunes

2009-11-06

The music of the Beatles isn’t legally available on the Internet. However, a little-known company is not only offering the back catalog of the famous 1960s rock ‘n’ roll group online but is trying to copyright it, based on what Ars Technica’s Law & Disorder blog characterizes as a “entertainingly weird” legal theory.

The theory is explained in the federal copyright action that almost immediately resulted. It was filed Tuesday in the Middle District of California with other music company plaintiffs by EMI Christian Music Group Inc., the company that controls the sale of Beatles music on CDs. BlueBeat and its backing company, Media Rights Technologies, responded yesterday.

By using new “psycho-acoustic simulation” technology to copy the classic Beatles songs and adding some new images into the MP3 files, MRT contends, it creates new “audio-visual works” that can not only be legally sold but qualify for copyright protection.

“I authored the sound recordings that are being used by psycho-acoustic simulation,” explains Hank Risan, who heads MRT, to the general counsel of the Recording Industry Association of America in a recent e-mail. “I hope this satisfies your concerns.”

It didn’t, of course. An outraged EMI is seeking a restraining order preventing further BlueBeat sales of Beatles songs in what it contends is not only copyright infringement but blatant piracy, Law & Disorder recounts.

Responds MRT in its filing:

“Plaintiffs are not likely to succeed on the merits because defendants’ website markets and sells an entirely different sound recording than that copyrighted by plaintiffs. Section 114(b) of the Copyright Act explicitly states that the fixation of other sounds than those in a copyrighted sound recording does not constitute a copyright violation.”

U.S. District Judge apparently wasn’t any more persuaded by this argument than Law & Disorder: He granted a restraining order against BlueBeat today, reports Epicenter blog of Wired magazine.

Epicenter provides links both to the complaint (PDF) and the judge’s order (PDF).

Damages in the Los Angeles copyright case could total in the millions of dollars, Epicenter says.