Trust the Leaders

Trust the a publication of smith, gambrell & russell, llp

Summer 2015

SGRLAW.com

Entertainment, Arts & Sports The role of law in the pastimes we love

Trust the Summer 2015

3 Editor’s Letter 4 Legal Briefs

The latest news and views from the offices of Smith, Gambrell & Russell.

8 Recent Developments in Art Law

How the recent and dramatic increase in the price of fine art affects disputes over authenticity, provenance and entitlement.

17 Film Credits

Monetizing moviemaking in Georgia.

18 Proposed Changes to the Business of Music

Why artists and musicians could benefit from proposed revisions to the copyright law.

22 Man Made Music, Inc.

Meet the SGR client that leverages the power of sound to create emotive brand experiences and consumer engagement.

26 Finish Line

When not practicing law, many SGR attorneys share their knowledge and skills in an academic setting.

14 LIGHTS, CAMERA, ACTION!

We retrace the growth and progression of the movie industry from its origins in Jacksonville.

Smith,Gambrell

&Russell, llp Attorneys at Law

1230 Peachtree Street, N.E. Promenade, Suite 3100 Atlanta, GA 30309-3592 editor@sgrlaw.com editor-in-chief

Dana Richens editorial advisory board

Peter Goodman Joyce Klemmer Brett Lockwood Jim Monacell Stacy Yeung

sgr marketing team

Lee Watts Amelia Calloway Sabina Farman Claire Lawther Hank Sforzini

Trust the Leaders is published on behalf of Smith, Gambrell & Russell, LLP by Fourth Element Creative.

The information contained herein has been obtained from sources believed to be reliable.

The content and information in this publication do not constitute legal advice, do not in all cases reflect the opinions of SGR or its attorneys and are not in all cases complete or current as of the publication date. This publication is not intended to and does not create an attorneyclient relationship or provide legal advice or legal opinion. Legal advice should be obtained from one’s legal counsel.

Permission is granted to use and reproduce this publication in whole or in part for internal and personal reference, provided that proper attribution of authorship is given. Except for material in the public domain, this publication may not be further copied, modified, used or distributed, in whole or in part, in any form or by any means without the written permission of Smith, Gambrell & Russell, LLP. All other rights expressly reserved. © 2015 Smith, Gambrell & Russell, LLP. Leaders

used with permission of Leaders Magazine, Inc.

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TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Editor’s Letter

Editor’s Letter Welcome to the Summer 2015 issue of Trust the Leaders.

Summertime brings with it the opportunity to enjoy an

IN THIS ISSUE

abundance of leisure activities with family and friends.

Maybe you will take in a ballgame. Or see a blockbuster movie. Or road trip to another city to visit its parks and museums, as my family often did when I was growing up.

But sporting events, movies, exhibitions and other forms of entertainment don’t just happen. There are a host of legal considerations – contracts, intellectual property rights and

William Barron p.8

William explains how the recent rise in the price of fine art has implications for claims of ownership and authenticity.

the like – that permeate such events in this day and age.

The two dozen attorneys in SGR’s Entertainment, Arts & Sports Practice represent artists, writers, actors, producers, managers, agents, sports figures, and other professionals and companies engaged in the music, film, performing and visual arts, literary publishing and sports industries. We assist these clients in connection with industry-specific agreements and transactions, such as book publishing and film production agreements, music licensing and clearances, visual art gallery and commissioning agreements, life-story rights acquisitions, sponsorships and endorsements. And as a full-service law firm, we provide a full complement

Carolyn Herman p.14 & p.18

Carolyn retraces the Jacksonville movie industry, and looks at how proposed changes to the copyright law could affect musicians and artists.

of other individual and corporate legal services to these clients.

In this issue, you will read about recovery of stolen artwork, and securing film production tax credits. You will learn about proposed changes to federal copyright law that could radically alter the financial balance of the music industry. And you will learn more about the entertainment industries themselves, as we look at the history of Jacksonville (home to SGR’s Florida office) as the silent-movie hub of the early 20th century, and explore the power of sound with SGR client Man Made Music, Inc.

John Tyler and A.J. Rollins p.17 The authors highlight how investors can monetize moviemaking in Georgia using film credits.

Best wishes for a safe and enjoyable rest of the summer!

Anne Pitter p.22

Dana Richens

Anne introduces you to SGR client Man Made Music, Inc., which creates emotive brand experiences using sound.

Editor-In-Chief editor@sgrlaw.com

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LEGAL BRIEFS

THE LATEST NEWS AND UPDATES FROM THE SGR OFFICES

ATTORNEYS IN THE NEWS SGR is proud to be a founding benefactor of Georgia Patents. Established

by Georgia Lawyers for the Arts and the Intellectual Property sections of the State Bar of Georgia and the Atlanta Bar Association in collaboration with the U.S. Patent and Trademark Office, Georgia Patents is an innovative pro bono program to assist inventors in need of legal counsel. Local innovation supports the local economy, and this program will help ensure that Georgia’s inventors have the legal protection they need to thrive. Joyce Klemmer and Gibson Lanier, both members of the Atlanta Bar Association IP Section Board, also serve on the Advisory Committee of Georgia Patents.

Kristen Lewis was a

worth families from around the

nonprofit that facilitates foster care

featured speaker at the

country. Kristen then headed to

and adoption of medically fragile

National Academy of

San Francisco in May to speak at

children with special needs.

Elder Law Attorneys

the annual ALI-CLE Practical Trust

Annual Summit in Newport Beach,

and Estate Planning program,

CA, presenting on “Advanced

coordinated by Emory Law School

Drafting Considerations for Third-

Professor Jeffrey Pennell, addressing

Party Special Needs Trusts.” In

elder financial abuse.

March, she addressed the Estate

Locally, Kristen has presented

Planning Council of Northeast

several workshops on special needs

Georgia on special needs planning

planning for the families served by

and elder financial abuse. In April,

All About Developmental Disabilities

Kristen was one of an elite group

and Exceptional Opportunities.

of “thought leaders” at the Autism

Kristen also recently accepted a

Innovation Roundtable hosted by

position on the Advisory Board

UBS in Nashville, TN, for high net

of Child Kind, an Atlanta-based

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TRUST THE LEADERS | Summer 2015 | SGRLAW.com

NEWS IN BRIEF Tom Rhodes, head of SGR’s Antitrust and Trade Regulation Practice, has been recognized by the General Practice and Trial Section of the State Bar of Georgia as the recipient of the 2015 Tradition of Excellence Award for Defense Counsel in the State of Georgia.

Tom has practiced antitrust and trade regulation law for more than 35 years.

Dana Mark was a member of a panel on planned giving presented by the New York Common Pantry and the Ukrainian Institute of America. The New York Common Pantry is the largest community-based food pantry in New York City. The panel addressed ways of integrating financial and estate planning with charitable giving, and discussed the use of appreciated securities, charitable remainder trusts, private foundations and donor-advised funds.

LITIGATION SUCCESSES SGR wins on summary judgment in patent case SGR prevailed in a patent infringement case on behalf of its client, SMM Manufacturing, Inc. d/b/a Biocide Systems. Odorstar Technology, LLC filed suit in the United States District Court for the Southern District of Florida against Biocide and two of its principals, alleging willful infringement of a patent for producing an aqueous chlorine dioxide solution.

After SGR successfully moved for dismissal of the case against the individual defendants, each of the parties moved for summary judgment

and submitted competing claim construction briefs.

The main issue hinged on a means-plus-function claim featured in every asserted independent claim. After largely adopting Biocide’s proposed claim constructions, the district court granted summary judgment to Biocide. In January, the United States Court of Appeals for the Federal Circuit affirmed the district court’s findings without opinion. The SGR team in the district and appellate courts included Ed Pennington, John Moy, Sean Phelan, Jen Feldman and John Pennington.

Court dismisses claims asserted against NYC client James Lotito and Michael Regan successfully moved to dismiss all claims asserted against the principal of their client, a New York based-construction company. SGR’s client commenced an action in New York State Supreme Court seeking to be paid its contract balance for certain construction services and materials that it provided as part of an extensive interior fit-out of a commercial building on Fifth Avenue in New York City. In response, the defendants filed a third-party lawsuit and asserted various claims, including

fraud and RICO, against the construction company’s owner in an attempt to derail the lawsuit.

In a thorough decision, the court dismissed all claims against the company’s owner.

SUSTAINABILITY SPOTLIGHT Georgia stays light years ahead in solar legislation

New water preservation initiative passed In April, Emory University dedicated the WaterHub, an adaptive ecological water reclamation system that will save 110,000,000 gallons of drinking water every year by reclaiming and reusing domestic sanitary wastewater generated on campus as make-up water for the University’s heating

and cooling facilities and for flushing toilets. Scott Cahalan and Tom Spillman assisted Emory’s legal department in drafting and negotiating the innovative water purchase agreement for the project, which is a combination ground lease, development, operation, maintenance and financing contract inspired by public-private partnership, or “P3,” agreements.

Georgia has taken a major leap forward in the development of distributed solar power in the state, outpacing all other states in the region. With the enactment of The Solar Power Free-Market Financing Act of 2015 in May, Georgia became the first state in the Southeast to legislatively approve private sales of electricity from onsite solar systems as a means of financing solar energy for Georgia businesses, institutions, schools and homes. The Act establishes that “solar energy procurement agreements,” or “SEPAs,” also known as “power purchase agreements,” or “PPAs,” are a lawful way to finance the construction and operation of a

solar electric generation system.

A solar company can now finance the construction of solar panels for a Georgia home, business or institution, including military bases, public schools, government buildings and universities, and be repaid through payment by the property owner for the electricity produced by the solar system. “Georgia has created a market for solar energy financing that did not previously exist in any southeastern state,” said Steve O’Day, head of SGR’s Sustainability Practice and a principal negotiator of the legislation. “We hope Georgia sees a surge in free market financing and development of solar energy projects across the state.”

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

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LEGAL BRIEFS THE LATEST NEWS FROM THE SGR OFFICES

ATTORNEYS IN THE NEWS

NEWS IN BRIEF

Don Mitchell was involved in the efforts to pass Georgia HB 18, which was signed into law by Governor Nathan Deal in May. The law amends Georgia’s professional licensure statute to exempt aerospace engineers from state licensing requirements.

The amendment addresses an inconsistency in state law that has existed for many years, in that aerospace engineers are required to be licensed, but have no means to be licensed by the state or any other organization. The state will now formally rely on the long-standing federal (including military) framework for oversight of aerospace engineering.

Don worked on this bill as part of his work with the Georgia Department of Economic Development. Don, along with Jonathan Giesen, presented to the General Assembly’s Aviation Subcommittee and provided additional

n SGR represented Colombian

the 2014 South America Deal of

support as the bill went through review.

airline Avianca in connection with

the Year by Airfinance Journal.

It is believed the new law will be

the U.S. Export-Import Bank-

The deal team included Nick

beneficial to jobs creation and make

backed, French leveraged lease

Ivezaj, Howard Turner, Jeanne

Georgia more competitive with Florida

financing of two Boeing 787-8

Forsyth, Steven Richman and

for new aerospace jobs.

aircraft. The transaction was named

paralegal Lorna Virts.

Students write a brief and argue

Elizabeth Borland and associate

a case in regional and national

Courtney Adams reviewed and

competitions before a panel of

graded briefs that were submitted on

volunteer lawyers, judges and

this year’s topic, which raised issues

Sponsored by the International

members of the Trademark Trial

of trademark “tacking” (using the

Trademark Association, the

and Appeal Board. Joyce Klemmer,

priority date of an original trademark

annual Saul Lefkowitz Moot Court

a partner in SGR’s Intellectual

for a revised, modernized mark)

Competition brings together

Property Practice, served as a judge

and the applicability of the

approximately 80 teams of law

in the regional competition held

presumption of irreparable injury

students from across the country.

in Atlanta in February. Partner

in a trademark case.

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TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Marcie Ernst was recently named one of three Outstanding Alumni by Leadership Sandy Springs in recognition of her participation as a volunteer in the community and her efforts to make a difference. Marcie is a 2000 graduate of Leadership Sandy Springs. More recently, she was a member of the Advisory Committee of Youth Leadership Sandy Springs, where she had previously served as secretary and mock trial coach and judge for the student participants. Marcie also serves the City of Sandy Springs as a Municipal Court judge.

Rodgers Lunsford, one of the firm’s IP litigators and a member of the Kiwanis Club of Atlanta, has been appointed by the Club’s President as Club and Board Parliamentarian.

ATTORNEY INTERVIEW

10 minutes with…

Lisa Carrasco Partner in SGR’s Executive Compensation and Employee Benefits Practice, Jacksonville Tell us about your educational and legal background.

I graduated from the University of Florida with a degree in zoology due to my interest at that time in becoming a veterinarian.

After working as a vet tech for a few years, I changed my career path and decided to go to law school at Stetson University College of Law in St. Petersburg, Florida. I love writing and served as a Notes & Comments Editor on the Stetson Law Review. I also attained a Masters in Taxation (LL.M.) and a Certificate in Employee Benefits from Georgetown University Law Center.

How did you come to work at SGR? After my first winter outside of Florida, in D.C., I wanted to return home. After graduating from Georgetown, I was hired by Andy Fawbush, who was head of the Executive Compensation and Employee Benefits Group of LeBoeuf, Lamb, Greene & McRae, LLP. While LeBoeuf was an international, NewYork based firm, the benefits practice was based in Florida. In 2009, I joined SGR to work with Laura Andrew, who had moved SGR’s ERISA and Employee Benefits Practice to Jacksonville.

Tell us about your practice.

I focus mainly in employee benefits and ERISA. I assist clients with implementing and maintaining qualified retirement plans – for example, 401(k) plans, profit-sharing plans and pension plans – and health and welfare plans. I also help clients with employee benefit and executive compensation issues in connection with mergers and acquisitions, including post-closing integration of benefit plans, and in complying with the Affordable Care Act.

What is your practice working on right now?

Among other things, we are assisting employers with random audits of their employee benefit plans by the IRS and the Department of Labor. We are also assisting clients in complying with health care reform, including new reporting requirements and the so-called “Cadillac tax,” and preparing for potential HIPAA audits.

What do you like most about your work?

My practice area is intellectually stimulating due to its complex nature and its fluidness.

New guidance is issued almost daily by either the IRS, the Department of Labor or the Department of Health and Human Services.

I also enjoy the opportunity for involvement in law firm activities such as SGRow, which is committed to the advancement of professional women by encouraging and fostering work-related relationships, mentoring our colleagues and helping our community. We are currently preparing for American Business Women’s Day, which recognizes the significant contributions of women to our economy.

What do you like to do in your spare time?

I enjoy spending time with my husband and our twin 3-year-old girls, Ariana & Sabrina.

This summer was spent teaching them how to swim. I also enjoy travelling – my favorite place so far was Egypt, especially Karnac.

How do you serve your community?

I am very involved with the Children’s Home Society, Buckner Division. I have served on the Board of Directors for six years. CHS helps to protect and heal children, build and strengthen families, rescue and embrace teens that are struggling to survive on their own, and prepare youth for bright futures.

AWARDS & RECOGNITION SGR Recognized as a 2015 Am Law 200 Firm

SGR has been recognized by The American Lawyer as a 2015 Am Law 200 firm. The Am Law 200 is a diverse group of law firms throughout the country that range in size and geographic diversity. These firms represent clients all over the world and specialize in many different practice areas.

“We’re pleased the firm met the practice and performance benchmarks necessary to be acknowledged among the top firms in the country,” said Steve Forte, SGR’s Chairman and Managing Partner. “This recognition is consistent with the firm’s proud history and strategic initiatives in many practice areas that service our clients in the U.S. and around the world.”

SGR Recognized as a BTI Most Recommended Law Firm

SGR has been recognized on BTI’s Most Recommended Law Firms 2015 list. The list is based solely on in-depth telephone interviews with leading legal decision makers. This comprehensive analysis trends data from more than 4,000 corporate counsel client interviews conducted over the span of 14 years. SGR is one of only 42 firms to make the list two years in a row.

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

07

ART LAW

ART LAW RECENT DEVELOPMENTS IN

As the market value of paintings, prints and fine art has escalated in recent years, the need to prove authenticity has never been greater

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TRUST THE LEADERS | Summer 2015 | SGRLAW.com

BY WILLIAM BARRON

R

ecent technology has ignited an explosion of access to information, and the impact on the art world has been profound. This development has been accompanied by

an enormous rise in the market value of paintings, prints and other fine art, which has resulted in striking changes in how the art market addresses disputes as to authenticity, provenance and entitlement to oncelost works.

Authenticity – Is It Genuine?

The upward spiral of fine art values has created new incentives and potential rewards for forgery. Thus, it is of great financial importance to the buyer or seller of an artwork claimed to be from the hand of a famous artist to have comfort that the attribution is correct.

But conclusions on authenticity are usually no more than opinions; they are often based on the views of people considered to be experts in such matters. For example, in France, it is often the heirs of a deceased artist whose opinions are the final word on authenticity questions.

One result of increased litigation in recent years has been that auctioneers and other experts have declined to give opinions with respect to the authenticity of a work, increasingly considering it more trouble than it

for comparison. However, because the commonly

is worth. But some auction houses decline to market

published images of an artwork often fail to adequately

some artworks unless authenticated. The New York

show the artist’s signature, we engaged art students

legislature has been considering a bill that would

in several countries to view and take good photos of

give protection to authenticators of artworks, but the

the signatures. Modern technology now makes it quite

legislation would only tighten the claimant’s burdens

easy for such a squadron to take excellent photographs

of pleading and proof and provide for fee-shifting in

with their cell phones or similar devices and promptly

favor of a successful defendant. Thus, authenticators

forward them electronically to our team. We found a

will continue to be reluctant to become participants

total of only two purported signatures of the artist with

in authenticity disputes, since litigation has become a

the same oddity as the one questioned. Extensive and

common risk, and defending even a frivolous complaint

time-consuming investigation regarding each of the

is usually expensive.

works’ provenance showed that all of them had been

Conclusions on authenticity are usually no more than opinions of people considered to be experts in such matters.

sold by the same German dealer. This was suspicious to

Is That the Artist’s Signature?

say the least, but then we found a reference in an early

In one case, our team advised a group of European

art essay that this dealer was believed to sometimes

investors who were interested in a famous work

“improve the provenance” of works he sold. (In the

by an old master but who had been told by

art world, people often use polite euphemisms, e.g.,

someone more familiar with the artist’s work that the

not saying that something is a forgery, but simply that

signature seemed odd. Technology now allows rather

it is “not right.”) The conclusion of our investigation

easy investigation of artworks and signatures via

occurred when we noted that the signature on one of

computerized databases and photographs to gather a

the other works actually misspelled the artist’s name.

very large sampling of an artist’s works and signature

This is a common indication of forgery, called “sign

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

09

ART LAW

After World War II, West Germany established programs for reparations and restitution to victims of the Nazi era, funded with billions of deutsche marks.

painter’s error.” The investors decided not to acquire

of ownership as part of a picture’s provenance, in part

the artwork.

because prior transfers may not have been reported and there is no official registry (as there is, for example,

Provenance

for land transfers and automobile registrations). Many

Provenance – an artwork’s lineage or pedigree – is a

sales, even of expensive artworks, have often been

chronology of its ownership, exhibition and locations

poorly documented, and reports of sales by auction

since the time it was created. A “good provenance”–

houses often simply state that the seller or buyer

for example, if the picture has been owned by

was “anonymous” or an “American [or European, or

prominent collectors, galleries or museums – is often

Japanese, etc.] collector.”

taken as an indication of authenticity because one

by Willem de Kooning purchased by our client in the

Prominent or well-attended exhibitions of a picture

1950s. The only evidence of the purchase was a simple

are also taken as not only indications of value but also

receipt from a well-known New York gallery that the

some evidence of authenticity and ownership, the

painting was sold to “Mr. and Mrs. [Name].” When,

logic being that an artwork would not be frequently

decades later, the elderly wife secretly sold the painting

displayed if its authenticity were questionable or

for more than $10 million to an undisclosed buyer, a

if there were a dispute as to ownership. Even if

dispute ensued as to whether she could pass good

not useable in court as evidence of authenticity or

title and, if so, also keep the proceeds. The matter was

ownership, such evidence may be admissible to oppose

eventually settled.

a new claim of ownership on the legal doctrine of

laches (prejudice caused by undue delay by a claimant

Archives and Databases

in coming forth with a claim).

In Europe, provenance research has been hampered

It is often not possible to establish a complete chain

10

One case our team handled involved an early work

thinks “they would not buy it if it were not authentic.”

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

because many state archives and even court records

we filed our suit, he alleged that his father had been a good-faith purchaser after World War II at an auction in Germany, and then had possessed the painting for many years, giving him good title under civil law.

This principle (German: Ersitzung) is common in civil law countries. The son identified the German auction house and the date of his father’s alleged purchase at auction. Our investigation ultimately produced a copy of the actual auction catalog from the 1950s in the archives of the Getty Research Institute. It confirmed that other paintings by the artist in question had been sold at the auction, but not the one we sought to reclaim. The case promptly settled and the painting was delivered to the artist’s heirs.

Post-World War II Restitution Claims After World War II, West Germany established programs for reparations and restitution to victims of the Nazi era, funded with billions of deutsche marks. But relatively few of the countless victims whose property was taken under duress, or their heirs, filed claims. Those who did file claims benefited from relaxed burdens of proof, and some received compensation awards even if their artworks could have historically been closed to the public due to

not be found.

extensive privacy laws much stricter than in the United

The pursuit of such restitution claims changed,

States. Since the recent litigation in the United States

beginning in the 1990s. In that decade, claims and

involving European museums (described below) and

class actions were brought in the United States against

the extensive public attention they received, many

German companies or their subsidiaries by victims (or

European archives have now been opened. There

their heirs) who had been subjected to forced labor

are now also several accessible electronic databases

in Europe before and during World War II. More than

containing provenance information. One of particular

one million such victims were still alive in 1999, and

note is the Getty Provenance Index, maintained by

Germany established a compensation program for

the Getty Research Institute. It is a vast collection

them funded with more than four billion euros.

of digitized records that is expanded on a regular basis.

The Getty archives proved indispensable in one case handled by our team, in which we represented the heirs (now living in the United States) of a

With the heightened awareness and public attention to wartime wrongs of the Nazi era, focus was brought to bear on the taking of artworks and other property from Jews and others. These forced

famous German artist seeking

takings had occurred before and

recovery of a painting that had

during the war, including when

been taken in 1943 by the

the victims sought to leave

Nazi Schutzstaffel, or SS. The

Germany or Nazi-occupied

possessor of the painting, a

countries. Some suits were

European, sent it to New York

brought in the United States,

to be auctioned, contending that he inherited it from his father. After

but court jurisdiction over such cases was problematic. Unless

DECEPTION AND THE LIMITS OF EXPERTISE Technology, expertise and exhaustive research cannot resolve all doubts on authenticity. A former director of one of New York City’s greatest museums is reported to have opined that, of all the thousands of artworks he looked at over the years, 40 percent were either misattributed, unrecognizable due to bad restoration or fake. Many works have been continually subjected to analysis and dispute – some once considered fake are now believed to be unquestionably genuine, and vice versa. Many nonfiction books present riveting stories of fraud and misattributions. Two enjoyed by this author are Provenance: How a Con Man and a Forger Rewrote the History of Modern Art by L. Salisbury and A. Sujo, and The Lost Painting: The Quest for a Caravaggio Masterpiece

by J. Harr.

Science has sometimes led to questionable conclusions; works once dismissed as modern fakes have been shown by scientific testing to be much older, only to have the tests themselves later invalidated.

Certainty repeatedly proves ephemeral and elusive.

Gone are the days when to have an “eye” was the important thing. The tools of scientific investigation grow more formidable all the time, but there are still many works on which the art world has yet to make up its collective mind.

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

11

the artwork or other property was now located in the

case because the Austrian museum showed that the

United States, or the current owner could be sued

painting had been recovered from the Nazi dealer by

here, it was difficult for a United States court to assert

the U.S. forces shortly after the war, so it was no longer

jurisdiction in the case.

“stolen” property subject to forfeiture when imported

A tidal change in the public mind occurred in 1998,

to New York for the MoMA exhibition 60 years later.

when a case brought in New York City successfully

The dismissal was superseded by ensuing proceedings,

restrained the return to an Austrian museum of a

and after years of litigation the case was settled and

painting in a large collection that was on special

the property returned to the Vienna museum. The case

exhibition at the Museum of Modern Art (MoMA).

received much attention when it was filed, including

The U.S. Attorney based the restraint on the theory

long articles in the mainstream press.

that the painting was “stolen property” because it had

Subsequent to the filing of the MoMA case, 49

been taken under duress in 1938 by a long-deceased

nations adopted the so-called “Washington Principles,”

Nazi art dealer from a Jewish dealer in Vienna, and

a nonbinding agreement, paragraph 8 of which

that the painting was illegally imported into the United

states: “If the pre-War owners of art that is found

States for the MoMA exhibition in violation of the U.S.

to have been confiscated by the Nazis and not

National Stolen Property Act.

subsequently restituted, or their heirs, can be identified,

This was not a complaint by the heirs of the victim

steps should be taken expeditiously to achieve a just

(who had died in London long after leaving Austria),

and fair solution, recognizing this may vary according

but by the U.S. Attorney, who claimed the painting was

to the facts and circumstances surrounding

subject to forfeiture to the U.S. government, which

a specific case.”

could then turn it over to the heirs of the Jewish dealer.

The federal court in New York initially dismissed the

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TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Although the agreement is very general and does not have the force of law, at least one court decision

With the heightened awareness and public attention to wartime wrongs of the Nazi era, focus was brought to bear on the taking of artworks and other property from Jews and others.

ART LAW

has opined that it is consistent with the foreign policy of the United States. In 2004, the U.S. Supreme Court issued a landmark decision in litigation against the Republic of Austria for recovery of Gustav Klimt paintings in a Vienna museum that had been owned by the plaintiff’s relative before the war. The Court ruled for the first time that the Foreign Sovereign Immunities Act of 1976 retroactively applied and permitted a lawsuit challenging actions that occurred in Austria decades earlier during the Nazi era.

The decision was highly publicized and has been dramatized recently in the film Woman in Gold.

The decision resulted in similar lawsuits in the

The German government found more than 1,400 artworks in the Munich apartment of Cornelius Gurlitt, the 81-year-old son of an art dealer for Hitler.

to his will has recently been rejected (the decision is being appealed), and the Bern museum has announced that artworks will be “restituted soon” to families from whom they were taken during the Nazi era. A Gurlitt Task Force has been established to make recommendations on individual restitutions, but so far it has issued only four such recommendations.

Much remains to be done concerning the Gurlitt collection, but it seems unlikely that the restitution issues will be decided in U.S. courts. The artworks are all in Europe, and a procedure has been established there to pass on restitution claims. One heir living in

United States against foreign countries and their

the United States filed suit in 2014 against the Federal

instrumentalities, including Hungary, Spain and the

Republic of Germany and the State of Bavaria, but the

Netherlands. In the case filed against Spain and its

defendants have filed a motion to dismiss, and the

alleged instrumentality (a museum in Madrid), a

parties announced in April 2015 that they have settled

federal district court recently granted summary

this case. Subject to approval by a German court, the

judgment dismissing the complaint. The court held

U.S. case will be dismissed. n

that Spain’s adverse possession laws were applicable and that the museum had possessed the painting

SGR’s team of lawyers and experts have

as owner publicly, peacefully and continuously for

substantial experience in issues involving

more than the statutory number of years, thus

authenticity, provenance and restitution of

acquiring full ownership.

works of art.

Interestingly, despite – or perhaps because of – the failure of victims or their heirs to pursue restitution claims, companies have now sprung up that use modern computer technology to search worldwide for possible distant relatives of victims,

William Barron is a Partner in SGR’s International and Litigation practices. He concentrates in business and commercial law, litigation, art law and the law of artifacts. wbarron@sgrlaw.com.

whom such companies offer to represent. At least one lawsuit in the United States resulting from such activities has been filed, and it remains to be seen if there will be more.

The Gurlitt Trove One of the most dramatic recent events in the world of artwork restitution is the 2013 disclosure that the German government found more than 1,400 artworks in the Munich apartment of Cornelius Gurlitt, the 81-year-old son of an art dealer for Hitler. The trove included works by Chagall, Picasso, Matisse and others. Some 200 additional artworks were subsequently found and seized in Gurlitt’s Salzburg, Austria home, including works by Renoir, Monet and other French impressionists.

Gurlitt died in 2014 and willed the entire collection to the Kunstmuseum Bern in Switzerland. A contest

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

13

“LIGHTS, CAMERA, ACTION!” THE ROLE OF JACKSONVILLE IN THE

SILENT FILM ERA

Before Hollywood became the hub of the worldwide entertainment industry, Jacksonville was the epicenter of the movie world in the early 1900s

BY CAROLYN HERMAN

14

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Jacksonville and The Movies

E

veryone is familiar with the three words

In 1914, Oliver “Babe” Hardy, later of the comedic film duo Laurel & Hardy, began his motion-picture career in Jacksonville.

with luxury resorts and high-rise buildings.

that signal the start of the filming of a

In 1914, Oliver “Babe” Hardy, later of the

movie. But what you may not know is

comedic film duo Laurel & Hardy, began his

that these words were heard over and

motion-picture career in Jacksonville. Silent-film

over again in the early 1900s in none other

stars such as Rudolph Valentino, Lionel and

than the City of Jacksonville, Florida. Production

Ethel Barrymore and, by some accounts, Mary

studios were built in a day, silent-film stars could

Pickford, also made their way to Jacksonville.

be seen strolling down Main Street, and crowds

In 1915, Theda Bara, a.k.a. “The Vamp,” filmed

would spontaneously gather in the street to

the movie A Fool There Was almost entirely in

and may be seen from the Arlington Expressway.

watch. Here’s how it all happened.

St. Augustine.

The studio buildings recently were added to the

That same year, Joseph Engel started Metro

National Register of Historic Places, largely due

Early Move to Jacksonville

Studio, later merging with another production

to the efforts of a local nonprofit group.3

In the first decade of the 20th century, the

company to become the now-famous studio

That group has been actively renovating the

nascent motion-picture industry was based

Metro-Goldwyn-Mayer (MGM). In 1917, the first

buildings in an effort to create a silent-film

primarily in New York City. Thomas Edison

feature-length movie made in Technicolor, The

museum and greater national recognition for the

owned most of the industry’s patents, while

Gulf Between, was filmed in Jacksonville. In total,

contributions Norman made to the industry.

Eastman Kodak owned the patent on raw stock

more than 300 silent films, mostly short, one-reel

film. In 1902, Edison began notifying distributors

movies, were made on the banks of the St. Johns

Demise as a Film Production Center

and exhibitors that they would be subject to

River over a 10-year period.

In the beginning, the political climate of

litigation if they did not use Edison machines and

Jacksonville favored the growing film industry.

Bringing Film to Segregated Audiences

After the Great Fire of 1901, Jacksonville eagerly

competitors, along with Eastman Kodak, reached an agreement known as the “Edison

Around the same time, Jacksonville also played

as a way to stimulate its economy. However,

Trust.” The Trust established a virtual monopoly

a crucial role in bringing the film industry to

for a variety of reasons, the film industry lost

on all aspects of filmmaking, including where

African-Americans. In 1920, the former Eagle

its original glamour and by 1915 it took the

films could be screened, the content of film

Studios and its five-building complex were sold

successful re-election of J.E.T. Bowden, who had

and methods of cost control, using federal law

to Norman Laboratories. Richard Norman, a

been mayor during the Great Fire, to see that the

enforcement officials and “thugs” to prevent any

producer of films from nearby Middleburg, made

film industry survived in Jacksonville for at least

unauthorized use.

the complex his creative center. Norman, who

another two years. Bowden was a big booster of

was white, had been bothered by the way black

the film industry and held election parties hosted

film historian and professor, “it was largely

movie actors always appeared in subservient

by Oliver Hardy.

against this background that independent

roles; he also saw an untapped market for

moviemakers began looking for a new location

segregated black audiences.

films exclusively. In 1908, Edison and his principal

1

According to Dr. Nadia Ramoutar, filmmaker,

to film.”2 As Dr. Ramoutar explains, the

sought to rebuild and embraced the film industry

But, by 1917, even Bowden could not save the industry in North Florida. As Dr. Ramoutar

Norman began to make movies that portrayed

explains, “Jacksonville’s relatively conservative

independents were “attracted to Jacksonville

black actors in a more positive light and utilized

residents had enough of the disruption of

with its warm climate, exotic locations, diverse

black crew in all aspects of production. Known

their daily lives by the never-ending film crews,

architecture, excellent rail access (the end of

as “race movies,” these African-American films

the number of swarthy individuals who took

the line at the time), local political support, and

continued to be made by Norman Studios

advantage of the less sophisticated citizens, and

cheaper labor.”

throughout the 1920s. One of those films,

the far too risqué nature of the filmmakers and

The Flying Ace, was shot in 1926 in both

their stars.

Kalem Studios was the first to open a permanent studio in 1908, and over 30 silent

Mayport and rural Arlington. Still in existence,

film companies followed within 10 years.

the film is archived at the Library of Congress.

Kalem produced 18 films during its first winter,

“For example, some filmmakers pulled fire alarms so they could capture speeding fire trucks

But Jacksonville’s silent-film production

on film. One advertised a parachute jump from

including Civil War yarns and numerous

eventually dwindled. Norman Studios lasted

a tall building so he could draw the large crowd

sensational stories about Florida “crackers”

almost 10 years more, but never made the

he needed. Another drove a car into the river,

drinking, killing and cheating. Jacksonville earned

transition to “talkies,” even though it touted

not letting on that it was just a movie. And on

the title of “The Winter Film Capital of the

the equipment to do so. The five buildings

Sundays, when everyone was at church and the

World” and became a thriving tourist destination

comprising Norman Studios are still standing

streets were empty, that’s when they could shoot

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

15

Jacksonville and The Movies

the shootout at the O.K. Corral. There was no

Under the Gun, the science fiction cult-favorite

air-conditioning then, church windows were

film Zaat, and the infamous horror flick Creature

open, and the mayhem could clearly be heard

from the Black Lagoon.

In 1979, Florida Governor Bob Graham created

from the pews. The women wore pants and they all frequented bars, and their mob scenes would

a favorable atmosphere for the development of

routinely get out of hand. It was more than the

film and TV production, and shortly thereafter

good citizens of Jacksonville could stomach.”4

Jacksonville Mayor Jake Godbold authorized

During this time, Jacksonville also began to

the creation of a Film Office to attract movie

build reputable insurance and banking industries

crews to the town. In the 1990s, Jacksonville

and no longer needed to rely on the film industry

once again became a hot spot for high-

to support its economy. Moreover, the Edison

profile productions of movies, TV shows and commercials, including G.I. Jane starring Demi

Trust, having now made its way down to Florida, continued to enforce its patents, often heavy-

Hollywood just had too many advantages over

Moore, The Devil’s Advocate starring Al Pacino

handedly, causing filmmakers to look for a

Jacksonville. The West Coast’s glamour and

and Keanu Reeves, and Tigerland starring Colin

new location.

momentum became unstoppable.

Farrell. Several episodic TV shows also were

Finally, Los Angeles (Hollywood), with its warm weather and increased rail, and later air, service, began to lure filmmakers westward

While Jacksonville’s loss of the silent-film industry was Hollywood’s gain, according to Dr. Ramoutar, the real loss lay in the demise of the silent-film industry altogether.

and, lacking any other dominant industry,

filmed there.

More recently, Jacksonville has hosted several major productions, including the Emmy Awardwinning Recount, Basic, The Year of Getting

promised filmmakers a place where they

“The film industry always had sound

to Know Us and Lonely Hearts, starring Kevin

could mold the film industry to their

in the form of background music

Spacey, Denis Leary, John Travolta, Samuel

desires. When John Wellborn Martin

and effects. But when language

L. Jackson, Jared Leto, Salma Hayek, James

challenged Bowden in the 1917 mayoral

was added to film, the moviegoer lost

race, Martin ran his campaign on the

almost 70 percent of the message being

promise that he would not be ruled by the

conveyed by the actor.”

shady filmmakers and, as a result, won the move west began in earnest.

The Florida Film Office, the local film offices and various industry organizations are currently working to secure additional tax incentives and

Jacksonville and the Film Industry Today

election. The die was now cast, and the

Gandolfini, Jimmy Fallon and Sharon Stone.5

In 1918, the transition was further

Despite the industry’s westward

hastened by an influenza epidemic in

transition, Jacksonville enjoyed

Jacksonville, which made moviegoers

something of a film-industry renaissance

reluctant to mingle in theaters. Also, the

beginning in the middle of the last

Great War had disrupted transportation

century. In the 1950s, Jacksonville and

and stripped the film industry of much

environs hosted the filming of several

of its work force. More than anything,

movies, including the gritty film noir

other advantageous tax treatment to help secure Jacksonville’s continued place in the annals of motion picture history. n Carolyn Herman is Counsel in SGR’s Entertainment, Arts & Sports Practice. Her practice focuses on negotiating and drafting music, film, and literary publishing contracts, and resolving royalty disputes. cherman@sgrlaw.com.

END NOTES 1. Unless specifically noted, the author acknowledges that the information contained in this article is a composite of information that may be found at the following web pages: www. jacksonville.com; www.coj.net; www.normanstudios.org.

2. Dr. Nadia Ramoutar is the director

16

and creative force behind the documentary film Hollywood East: Florida’s Silent Film Legacy, produced as a fundraiser for the Norman Studios nonprofit group. She is also a Professor of Film at the Art Institute of Jacksonville. Two of her students recently won Student Academy

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Awards for films produced under her tutelage. Her most recent work, It’s Huge, tells the story of five men who are seeking to lose between 100 to 200 pounds in one year, of their own volition, provided only with a medical doctor and a nutritionist to oversee the transformation. The documentary

is scheduled for release later this year.

3. See www.normanstudios.org/ about/history. For more information about the nonprofit group, see generally www.normanstudios.org.

4. See www.jacksonville.com.

5. See generally www.coj.net.

Georgia Film Credits

FILM CREDITS

actual market is usually 85 to 90 cents per dollar.

Credits are treated as payments in the year in

MONETIZING MOVIEMAKING IN THE STATE OF GEORGIA

which the credit was created. This means that a taxpayer with a prior-year liability can purchase prior-year credits and eliminate interest and

Since its passage in 2008, the

penalties, which can be a large additional savings.

Georgia Entertainment Industry

There are several ways a buyer of credits can

Investment Act (the “Act”) has

satisfy itself that the credits are bona fide. First,

become widely known, and the

BY JOHN TYLER

together. Buying credits can save 10 percent or

qualifying expenditures and issue a binding

credits” – have led to the growth

more of an expected state tax liability. There’s not

letter setting forth the Department’s findings.

of the film industry in Georgia.

a legal minimum, but, as a practical matter, sellers

Alternatively, purchasers often rely on a “comfort

or brokers usually have a minimum sales amount

letter” provided by an independent CPA firm. And,

of at least $10,000.

of course, a seller with sufficient assets can provide

In 2013, the direct investment in the State of Georgia attributable to the Act exceeded $1 billion,

BY A.J. ROLLINS

the Georgia Department of Revenue will audit

tax credits it creates – called “film

Prior to the beginning of principal filming, the

a binding guarantee. State audits have a slight

with a resulting economic impact

production company submits an application to

premium over comfort letters from independent

of approximately $3.1 billion. In

the Georgia Film Office for certification of the

CPAs because the audits are binding and are not

Georgia, the entertainment industry now employs

production (minimum expenditures of $500,000).

subject to adjustment. The disadvantage of the

some 25,000 people and engages over 1,000

After submission, the Film Office certifies that the

state audit is timing – the wait for the state audit is

production suppliers and vendors. Since passage

production qualifies for film credits, but does not

often at least six months after production. The state

of the Act, over 700 entertainment productions

specify the actual amount of the credits.

audit is preferred by larger production companies,

have been filmed in Georgia.

Planning and accounting are key to maximizing

The production company makes qualified production expenditures in Georgia. The accrued

but smaller production companies are often in a hurry to monetize the credits.

the amount of revenue from the sale of film

credits may be used by the production company

credits and minimizing the amount of time it takes

against income taxes or employer withholding

Audits

to monetize the credits. Setting up an accounting

taxes, or sold to a third party for use against

There is a fundamental difference between an

system on the front end that not only tracks

income tax, but not employment tax.

IRS audit and a film credit audit. Only qualified

expenses but also identifies the qualifying Georgia

Georgia has several excellent brokers for sales

Georgia expenditures are eligible for the film

expenses will save both time and money when it

of film credits. The price is determined by market

credits. In addition to showing that an expenditure

comes time to sell the film credits.

forces in the transferrable tax credit markets with

was made, it is necessary to show it was made

a minimum of 60 cents per dollar; however, the

in Georgia. If the accounting system is not set up

Overview of the Act Film credits are available for qualified production expenditures incurred in Georgia as part of a statecertified production in Georgia. The base credit is equal to 20 percent of the qualified production expenditures in Georgia, and an additional credit equal to 10 percent is available for using a Georgia film logo in the credit crawl. The total credit with the Georgia logo is 30 percent of qualified production expenditures in Georgia. The credit applies to pre-production, production and post-production activities in Georgia.

Film credits are not issued for the cost of a script.

The buyers of film credits are taxpayers with a Georgia income tax liability.

Usually a broker puts buyers and sellers

SGR LAWYER GIVEN MOVIE CREDIT Ali and Dorothea Muhammad, the producers of The Last Punch, gave their lawyers, including SGR’s John Tyler, a different kind of credit – a movie credit. Filmed entirely on location in Georgia, The Last Punch is the true story of Ali S. Muhammad, formerly known as James Cornelius, who promoted the last fight of the legendary boxer Muhammad Ali against Trevor Berbick. At the time, Cornelius was a street hustler who, despite opposition from Don King and the FBI, promoted the fight – dubbed “The Drama in the Bahamas” – without money or experience. The Last Punch is based on Ali S. Muhammad’s book of the same name.

correctly, the result can be a delay or, at worst, a loss of the film credits. The key for a seller is to get assistance and input from qualified advisors when setting up the accounting system before starting production, and, if planning to rely on a CPA comfort letter, to have the accounting firm commit at the time of engagement to the timing of the postproduction audit. In summary, using experienced advisors will save time and money. n

John Tyler and A.J. Rollins are Counsel in SGR’s Tax Practice. John is also a certified public accountant. jtyler@sgrlaw.com. A.J.’s focus is on operations, tax planning and tax controversies. ajrollins@sgrlaw.com. John and A.J. regularly represent buyers and sellers of film credits, and work with brokers of such credits.

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

17

THE TIMES THEY ARE A-CHANGIN’

COPYRIGHT LAW AND THE BUSINESS OF MUSIC Technology has had a disruptive effect on the music industry, but proposed revisions to copyright laws could tilt the balance in favor of artists and creators

BY CAROLYN HERMAN

18

TRUST THE LEADERS | Winter 2014 | SGRLAW.com

The Business of Music

H

ave you ever wondered why the Grammy Song of the Year is often different from the Record of the Year?1 To answer that question – and to appreciate the

significance of the U.S. Copyright Office’s proposed revisions to laws affecting the music industry – a basic understanding of the way in which the industry makes money is essential.

Music Copyrights and Sources of Income Recorded Music At the outset, there are two separate and distinct copyrights in recorded music. One is the copyright in the master recording, i.e., the fixed sound of the musical composition embodied therein – the “master”–

them. Over the years, the consent decrees have been

which is usually owned by the record label. The other

amended numerous times.6

2

copyright is in the musical composition – the “song”– which is usually owned jointly by the writer of the

Labels, featured artists and nonfeatured artists,

words and the writer of the music and/or the music

including musicians, also receive public-performance

publishing company, which markets and administers

royalties from Internet providers whenever masters are

the song.3

digitally transmitted – either, pursuant to the Act, when

When masters are sold, whether through physical

the music is delivered without interaction, or, by way

sales or by permanent music downloads, both the label

of separate agreements, when the music is delivered

and the recording artist receive royalties from the sale

on demand. These royalties are collected and for the

in accordance with the agreement between them and

most part distributed by Sound Exchange, a nonprofit

the distributor or Internet service. The writer and the

entity also authorized by statute.7 Artists performing

publisher also receive royalties pursuant to a statutory

live on tour or in bars and restaurants also receive

scheme under the Copyright Act (the “Act”), which

public-performance royalties from the PROs, again

requires them to license the song for rerecording by

based on a formula, and, in some instances, through

different artists for a fee set by the Copyright Royalty

self-reporting.

4

Board (CRB). This process is generally referred to as compulsory mechanical licensing.5

Other Sources of Income Writers, publishers, labels, artists and performers

Publicly Performed Music

have many other sources of income when their

The income recipients will differ when music is publicly

music is used – for example, in movie sound tracks,

performed live, e.g., on stage, on broadcast, satellite

as ringtones, in greeting cards, during karaoke, in

or Internet radio, on television, in restaurants, bars,

jukeboxes and on sheet music. The recipient(s) of that

elevators, stores and offices, or through any form of

income again will depend on whether the song is used

Internet streaming. Writers and publishers receive

with or without a specific recording. For example, if a

their public-performance royalties directly from the

song is used on a movie sound track, a licensing fee

performing rights organizations (PROs) with whom

is almost always paid to the writer and the publisher.

they are registered.

However, if the film producer decides to hire his/her

If they are registrants with either BMI or ASCAP, the

own musicians to record the song in timed relation

two principal PROs in the United States, royalties will

with the action, i.e., in synchronization with the film,

be based on rates set by “Rate Courts” established by

the original label will not be entitled to receive any fee.

the consent decrees entered in decades-old antitrust litigation brought by the Justice Department against

From this discussion, you should now be able to answer the question posed at the outset of this article.

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

19

The Business of Music

The Song of the Year will be awarded to the writers and their publishers. But the Record of the Year will be awarded to everyone involved in the actual production of the record, i.e., the master. So, while the Grammy voters may really like the words and the music of a song, they may not like the way it was produced – that is, how it sounds as a recording – and prefer another.

The Need for Change Because new technology has vastly changed the way music – especially recorded music – is delivered to consumers, the ability to properly license and be paid royalties has become increasingly cumbersome under existing law. For example, an interactive (on demand) Internet streaming service has to contact each individual writer or publisher or their PRO, and each label, to work out an agreement to use their works.

Proposed Revisions to the Act

The music industry – from the labels to the artists to

1. The Act should be amended to grant recordings

the performers to the writers/publishers – all claim

the same public performance royalties as songs, i.e.,

to have suffered major financial losses due to piracy

not just from digital transmission. The Office first

and the difficulty in monetizing the many new uses

reasoned that conventional radio no longer serves

made of recorded music. As a result, to the extent they

as free advertising for the purchase of recordings, as

are not prohibited by the Act, many celebrity writers

it had in the past. In addition, the United States is

and artists simply are refusing to license their works

the only major country that still exempts recordings

because, among other things, they do not believe they

from that source of income and, as a consequence,

are being paid fairly.

other countries will not pay royalties for overseas conventional broadcasts.

Proposed Revisions

2. Because recordings did not receive copyright

In March 2013, Register of Copyrights Maria A.

protection until 1972, many such recordings are now

Pallante first made public her recommendation to

being streamed without any payment whatsoever.

embark on drafting the “the next great copyright act.”

Recent litigation has shown that these recordings may

Shortly thereafter, she conveyed her views to Congress,

implicate a variety of conflicting state law theories.

which then authorized a series of hearings around the

The Office proposes that the Act be amended to grant

country to discuss proposed revisions.

copyright protection to pre-1972 recordings, thereby

Over the next two years, the various stakeholders,

preempting any state law and providing uniformity in

including the industry personnel described above,

the way protection is provided.

their respective trade associations, online music service

3. Because writers/publishers are subject to the

providers, leading entertainment and intellectual

previously described compulsory licensing for the

property lawyers, and others expressed what they each

rerecording of songs, known as “covers,” the Office

saw as the best way to resolve the current issues facing

proposes to allow certain “celebrity performers” to

the music industry.

be exempt from its requirements. The Office also

In February 2015, the Copyright Office (the “Office”)

recommends that songs be made subject to the same

released its 202-page report summarizing the results of

compulsory licensing provisions as recordings when

those hearings and recommendations for revisions to

they are performed publicly on noninteractive services,

the Act and consent decrees, titled “Copyright and the

and to create specific auditing provisions for both

Music Marketplace.”8

songs and recordings for compulsory uses. The Office

20

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Because new technology has vastly changed the way music – especially recorded music – is delivered to consumers, the ability to properly license and be paid royalties has become increasingly cumbersome under existing law.

further proposes that copyright owners of songs be

governmental music rights organizations (MROs) be

permitted to directly negotiate for performance rights

authorized where music service providers can obtain all

for interactive services, which, as more fully explained

the licenses they need to deliver music to consumers.

below, may be precluded by recent decisions involving

As mentioned, online music services need to obtain

the consent decrees.

mechanical licenses from the writer/publisher, publicperformance licenses from the applicable PRO and

Proposed Revisions to the Consent Decrees

master-use licenses from the label. In many cases, the

1. Both ASCAP and BMI are governed by consent

or cannot be found, resulting in “orphan works.”

decrees regarding what they may license and what

Also, the provider, after due diligence, may request the

rates they may charge, requiring them to petition the

license for orphan works from the MRO. The proposal

United States District Court for the Southern District of

goes on to say that any organization with a market

New York (the “Rate Court”) for any needed changes.

share of at least five percent administering works, e.g.,

However, the Rate Court judges do not always agree

ASCAP, BMI or the Harry Fox Agency, could become

on whether the rates should be changed, or whether

an MRO. All parties would be exempt from antitrust

copyright owners may unbundle rights granted to the

provisions and the CRB would resolve disputes.

owners of works sought are not affiliated with a PRO

PROs for any given song.

In addition, the Rate Court judges are mandated

Conclusion

by the consent decrees to use fair market value when

None of these proposals is a slam dunk. The

determining rates, while the CRB, in determining

stakeholders all have different perspectives and

rates for compulsory licensing of recordings for

opinions. Consequently, it may take years to make

noninteractive services, applies a willing seller/willing

any revisions at all. In the interim, private entities are

buyer standard. The Office proposes that the consent

doing their best to deal with the issues by making

decrees be adjusted to allow for carveouts, and have

agreements and finding new ways to capture and to

all rate setting migrated to the CRB, where only one

monetize their rights. Stay tuned! n

END NOTES 1. The Grammy Awards are presented annually by the National Academy of Recording Arts and Sciences, providing recognition to those in the recording industry who have made outstanding contributions in a variety of categories.

2. 17 U.S.C. § 102(7).

3. 17 U.S.C. § 102(2).

4. 17 U.S.C. § 101, et seq.

5. 17 U.S.C. § 115.

6. The consent decrees in the original cases, United States v. ASCAP (No. 411395, S.D.N.Y.) and United States v. BMI (No. 64-3787, S.D.N.Y.), have both been amended numerous times since the original judgment.

7. 17 U.S.C. §§ 106 (6) and 114.

8. www.copyright.gov/docs/musiclicensingstudy/copyright-and-themusic-marketplace.pdf.

standard would be used.

2. Perhaps the most controversial of all proposals, which would also require either substantial adjustments to the consent decrees or their termination altogether, is the Office’s recommendation that certain

Carolyn Herman is Counsel in SGR’s Entertainment, Arts & Sports Practice. Her practice focuses on negotiating and drafting music, film, and literary publishing contracts, and resolving royalty disputes. cherman@sgrlaw.com.

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

21

SONIC BRANDING SGR CLIENT PROFILE

HARNESSING THE POWER OF SOUND

Award-winning composer Joel Beckerman’s Man Made Music leverages the power of sound to create emotive brand experiences

L

that the sequel did not have enough of the Ghostbusters catchy theme song.

Sound can inform: the wail of the sirens tells you that there is a crisis of some kind and emergency vehicles are on the way. Sound can sway you: you would rather not sit next to the person coughing and sneezing, so you sit someplace else. Sound can instantly transport you: a song can bring you back to the first dance at your wedding or your prom (hopefully a good memory). Sound can prompt you, such as with a mnemonic: many of a certain age recall how a bill becomes a law thanks to Schoolhouse Rock!

Sound can inspire, such as with the music at church. Sound can influence: you hear the jingle of the ice cream truck and, suddenly, you have a Pavlovian reaction and salivate for that Popsicle or ice cream cone. And sound can identify: let’s go back to where we started – you hear the bass notes from the Jaws theme “dun-dun! dun-dun! dun-dun-dun-dun-dun-dun-dun, da-na-na” and you immediately think Jaws and menacing sharks

et’s start with an age-old question: if a

is the essence of what SGR client Man

(I know you can hear the actual riff in your head,

tree falls in the forest and there is no one

Made Music, Inc. is all about.

which is in and of itself a prime example of the

around to hear it, is there sound? The scientific answer is no: while sound waves

power of sound).

The Power of Sound

are created and impulses are sent through the air,

How powerful is sound? As an experiment,

The Man Made Music Process

there is only silence, unless the sound waves hit

try watching your favorite music video (let’s

Man Made Music’s objective is to harness all of

an eardrum, triggering the electrical activity and

say Pharrell Williams’s “Happy”) without the

these attributes of sound to create an overarching

vibrations that result in the perception of sound.

sound. Or watch the classic movies Jaws or Star

sonic branding experience. Its founder, Joel

To put it another way, sound is interactive – a

Wars stripped of their iconic soundtracks. The

Beckerman, believes that music and sound are

collaboration of sorts between the producer and

experiences are just not the same. I recall one

not being used to their full potential. Many

the consumer. It is that interactive experience that

reviewer of Ghostbusters II who complained

companies do not recognize or fully appreciate the

BY ANNE PITTER

22

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Client Profile: Man Made Music, Inc.

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

23

Katherine Welles / Shutterstock.com

power of sound. A brand can latch onto a current hit song or hot singer and think it is creating a sonic experience by leveraging that popularity and using either (or both) in an ad campaign. But, in Joel’s opinion, that is a wasted opportunity.

The song and the singer have a life of their own independent of the brand. They may fade away into a distant memory without any lasting impact, and that chance to use sound to create a distinctive brand identity will have disappeared.

Instead, Man Made Music implements an intellectual and strategic approach using sound to create an emotional story that will become

Man Made Music aims to tell a brand’s story

synonymous with the brand. Sound will create

by developing an “anthem” – a long-form

a connection with the brand and a strong,

expression of the story, not unlike a country’s

consistent and ownable identity that can be used

national anthem. The anthem can be adapted and

in different ways across different aspects or touch

reinvented for all types of uses surrounding the

points of the brand.

brand, such as ads, tradeshows, retail stores and

Man Made Music delves deeply into the story

sponsorship opportunities. The brand’s story can

the client wants to tell and into all aspects of the

also be distilled into a short form – a few notes

brand. It uses a proprietary, seven-step, strategic

that become the “sonic logo” for the brand.

approach to translate that story into sound. This

The three notes you hear when you see the NBC

is the highly creative part of the process. While

peacock symbol are an example of a logo – and

been so successful that a second AT&T/Man

there is no formula, there are some basics that

also an example of the accidental or haphazard

Made Music collaboration is underway. AT&T

can be applied. For example, strings can suggest

use of sound. Those three tones were developed

has charged Man Made Music with enhancing

passion or warmth, horns can indicate power or

in the 1920s to notify the viewer of the station’s

the in-game fan experience at AT&T Stadium,

bravery, drums can create a primal feeling, and an

identification, which was a requirement at the

formerly Cowboys Stadium, in Arlington, Texas.

electric guitar can denote rebellion and energy.

time. The chimes are recognizable now as a result

Musical moments will reflect what is going on in

Different rhythms, beats, tempos and syncopation

of the passage of time and endless repetition, but

the game and be part of interactive kiosks around

also matter – think about the elegant ¾ waltz

they were not originally developed as part of an

the stadium.

timing versus an upbeat polka or a sexy salsa.

overall sonic strategy.

The Man Made Music team includes club DJs,

The sonic branding strategy for AT&T has

Football was the subject of yet another Man Made Music project: the Super Bowl on NBC. NBC

arrangers, writers, sound engineers, designers and

Sample Projects

approached Joel and his team to modernize the

musicians from all kinds of musical, ethnic and

Man Made Music developed the anthem for AT&T

style of John Williams’s (think Star Wars and Jaws)

cultural backgrounds. Each one brings his or her

as well as the four-note logo that you hear at the

“Wide Receiver” theme song and to extend the

years of experience and a different dimension and

end of all AT&T ads. The intent was to tell a story

theme to additional uses and other story points in

musicality to the process.

that was humanizing, purposeful and inventive.

the game. Man Made Music provided NBC with

That sonic identity is being incorporated into

eight derivative works based on “Wide Receiver”

The Elements of Sonic Branding: Jingles, Anthems and Logos

the AT&T retail-store experience (including the

for its broadcast of the 2008 Super Bowl. In 2012,

company’s flagship innovation store in Chicago),

NBC turned to Man Made Music again, just a few

Most of us equate “sonic branding” with a

into ringtones, and at AT&T-sponsored venues.

weeks before kickoff. Man Made Music gave NBC

jingle. Recall the “plop-plop-fizz-fizz” of the Alka-Seltzer “what a relief it is” jingle. But jingles, as fun and as catchy as they can be, are not the state of the art for sonic branding. They are memorable for a particular product but not meaningful as part of the whole brand story.

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Man Made Music aims to tell a brand’s story by developing an “anthem” – a long-form expression of the story, not unlike a country’s national anthem.

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Client Profile: Man Made Music, Inc.

MEET JOEL BECKERMAN

FOUNDER AND CEO OF MAN MADE MUSIC, INC.

that contributes to in-hospital deaths. Hospitals and equipment manufacturers use sounds to alert doctors and nurses to changes in their patients’ conditions. The most insistent and strident sounds can signify a crisis demanding immediate attention. But what happens when there are constant sounds and only a few distinctions among the beeps, blips, buzzes and alarms? All that sound becomes white noise, fading into about 72 sound bites of music in different lengths,

the background. Hospital workers become so

styles and moods that NBC could incorporate into

accustomed to the constant drone that they

the many situations that arise during the course of

subconsciously ignore the sound, sometimes to

America’s game.

the detriment of their patients and the high level

Man Made Music also developed the

of care that hospitals strive to provide.

anthem for Univision. Univision was a unique and challenging project that required building

Conclusion

a unified, sonic identity that bridged diverse

Sound is instrumental (pun intended) in creating

Spanish-speaking peoples (Mexican, Puerto Rican

an experience that captures your imagination and

and Caribbean, to name a few) and had to take

engages you. Do you consciously notice all of the

into account a unique combination of Latino and

uses of sound around you? Probably not, but that

American cultural experiences. The multitalented

is the point. If sound becomes such an integral

Man Made Music staff created a vibrant and

part of the experience that you recognize its

celebratory anthem that draws on a variety of

uniqueness and use it to identify an idea, product

cultural traditions and influences.

or company, then Man Made Music has achieved its objective and created that sonic brand. n

What’s Next?

In April, CEO Joel Beckerman was the keynote

SGR is proud to represent Man Made

speaker at MIT’s Grand Hack. The Grand Hack

Music in contract negotiations, financing,

is one of the largest health “hackathons”

real estate, employment and intellectual

in the world – a weekend-long event where

property.

clinicians, engineers, designers, developers and businesspeople get together to tackle real healthcare challenges. The focus of Joel’s presentation: alarm or sound fatigue. Nineteen out of 20 hospitals report alarm fatigue as a major concern

Anne Pitter is a Partner in SGR’s Corporate and Real Estate practices. She represents a variety of businesses, including media and communications companies. apitter@sgrlaw.com.

Joel Beckerman – a 20-year veteran of the music-for-media business – and the team at Man Made Music have all been recognized for their amazing creativity. To give you an idea of the rarified company it keeps, Man Made Music was named the third-most innovative music company by Fast Company in 2010 (behind Apple Corps [the Beatles] and Spotify). Joel has received the prestigious ASCAP Most Performed Themes award eight years running, and the entire team has received 12 Promax Gold Muse awards and the Broadcast Design Association Pinnacle award.

• Joel discovered music at age 7, begging for piano lessons after hearing a gospel piano player at school. At age 11, he started creating sound tracks at home with his brother for classic horror films as a way to control his fear of the scary-movie plots. As an adult working in New York City, he was a producer and engineer on publishing demos for songwriters by day, and, by night he was the manager at a different studio, working on TV-spot sound tracks.

• Inspired by his mentors and encouraged by his family, Joel started Man Made Music in 1998. While Joel’s formal job description is “producer and composer for television and strategic brand consultant,” he describes himself as a “tireless student of the power of music and sound and their effects on our lives.”

• Joel is also the author, with Tyler Gray, of The Sonic Boom: How Sound Transforms the Way We Think, Feel, and Buy (Houghton Mifflin Harcourt 2014).

The book is an in-depth discussion of the power and science of sound. Joel has been interviewed by PBS and the Wall Street Journal (among many other media), has appeared on NPR and CBS News, and is often on the lecture circuit, speaking about his favorite subject. It’s a wonder he has time to compose and produce!

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

25

ADJUNCT PROFESSORSHIPS SGR lawyers take to the classroom to share talents

W

hen SGR attorneys are not

Billy Hearnburg

practicing law, many of them

Teaches federal criminal post-conviction practice

are sharing their knowledge and

and procedure at Mercer University’s Walter F.

experience in an academic setting. Here are just

George School of Law.

a few examples of SGR lawyers giving back, as

“I taught high school English and Latin before

well as their thoughts on the allure of teaching

law school, and teaching as an adjunct has been

the next generation of legal talent.

an enjoyable return to the classroom.”

Pete Barlow

Greg Kirsch

Guest lecturer on international aviation financing

Teaches “Patent Practice and Procedure” as

and leasing laws for the Master of Laws (LL.M.)

an adjunct professor at Emory University School

program in air and space law at the University of

of Law during spring semesters, and also

Mississippi School of Law.

teaches “Intellectual Property Protection for

“I enjoy teaching LL.M. students. Talented

Computer Software” over a long weekend

lawyers in their own right, they are well

at Washington University School of Law in

informed on the issues and are eager learners

St. Louis.

program so enriching is that I am part of a

who challenge me to communicate a thorough

“The teaching materials that I’ve developed

process of helping professionals both learn and

understanding of the material.”

for these classes are drawn from real-world

collaborate about emerging trends in law and

examples that I’ve encountered over 25 years

business. Sharing this information and helping

of practicing IP law. Yet the students continually

other professionals navigate this area of work is

Teaches construction law and graduate-level

challenge me to further refine and improve

extremely rewarding.”

design and construction law at the Georgia Tech

my understanding of the many nuances of this

School of Building Construction.

ever-evolving legal field.”

Scott Cahalan

“I enjoy seeing my students become enthusiastic

David Moore and Andy Thompson Adjunct professors at Emory University School of

about construction law, while I ‘pay it forward’

Roy Kozupsky

for those teachers who inspired me.”

Lecturer on family business planning, estate

litigation course.

planning considerations for family enterprises

Andy: “The students at Emory Law repeatedly

and philanthropic planning at the Graziadio

demonstrate an interest in and enthusiasm

Adjunct professor at Emory University School of

School of Business and Management, Pepperdine

for environmental law that is inspiring, and

Law, teaching an energy law course that Peter

University (Malibu, CA), Certificate in Financial

through their coursework and dialogue in

developed for the school seven years ago.

Management for the Family Office program.

class have helped broaden my knowledge

“It is very rewarding to work with aspiring

Students are professionals who serve within

of water law.”

lawyers as they learn to think like practicing

family businesses and family offices.

David: “Teaching tomorrow’s lawyers is a

lawyers.”

“What makes teaching in this one certificate

great way to serve the legal community and

Peter Crofton

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TRUST THE LEADERS | Summer 2015 | SGRLAW.com

Law, co-teaching a water law and environmental

Finish Line

Steve Rossum Adjunct professor teaching aviation and aerospace law at the Dwayne O. Andreas School of Law, Barry University (Orlando, FL). Steve utilizes his relationships in aviation to introduce his students to industry leaders including from Southwest Airlines Co., United Airlines, JetBlue Airways, the U.S. Department of Justice and Signature Flight Support.

“I enjoy teaching immensely. I learn so much from the students and they challenge me. I have had so many wonderful mentors during my career – both professors and practitioners – and I am delighted to ‘pay it forward’ for the next generation of legal and business leaders.”

Paul Sowell Adjunct instructor at the NYU School of Professional Studies, teaching estate planning as part of the certified financial planning program.

“I enjoy teaching because it gives me the opportunity to take the knowledge that I have gained in my estate planning practice to another level. It is one thing to understand a

“Teaching tomorrow’s lawyers is a great way to serve the legal community and profession. I have learned as much from the students as I hope I have taught them.”

– David Moore

concept and apply it to the practice of law, profession. I have learned as much from the

but to take that same concept and articulate it

students as I hope I have taught them, and have

in such a way so that somebody else can fully

enjoyed the relationships developed with Emory

comprehend it requires a much deeper dive

School of Law and its students.”

into the subject. The results oftentimes are a refreshingly different perspective on what is

Steve O’Day

being taught.

Part-time instructor of environmental law and policy at the Georgia Tech School of Public Policy,

Matt Warenzak

and teaches an environmental law segment of

Teaches patent prosecution and procedure at

the School’s Legal Practice course. Also an invited

the University of Georgia School of Law.

speaker annually at Georgia State University’s

“I have the opportunity to offer insight in my

business school’s Global Partners Program and at

area of practice – an opportunity that was not

the Rollins School of Public Health’s Sustainability

present when I was a student. But, on the flip

Seminar at Emory University.

side, I feel that teaching gives me an opportunity

“I enjoy the interaction with bright young

to really focus on the law, making sure that

people seeking their way academically and

I have a firm grasp of the material that I am

professionally. I enjoy locating where they are

presenting. It’s like preparing for oral argument

on their journey and helping them just a little

at trial or on appeal, but multiple times within a

along the way.”

shorter time frame.” n

TRUST THE LEADERS | Summer 2015 | SGRLAW.com

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Trust the Leaders is printed on recycled paper