3) Legal Frameworks Primer

3 Legal Frameworks Primer

3 Legal Frameworks Primer

In discussing the background on our research topic, we also decided to include a primer on the relevant legal frameworks applicable to music licensing. The legal frameworks primer will provide basic information on:

International copyright treaties;
United States of America (USA) legal frameworks;
European Union (EU) legal frameworks; and
Alternative dispute resolution.

This primer is intended to provide further clarity on the legal frameworks applicable to music licensing, and the extent of the legal complexity of music licensing for non-legal audiences. We chose the USA and EU because the majority of automation approaches (projects, organizations, technologies, etc.) are based in these two geographical areas, and the USA, France and Germany (EU member-states) are in the top ve (5) largest music markets in the world (as of 2018).⁵⁹⁶

3.1 International Copyright Treaties

International copyright has been heavily shaped by the following non-exhaustive list of treaties and agreements:

the Berne Convention for the Protection of Literary and Artistic Works, first accepted in Berne, Switzerland, in 1886;
the Universal Copyright Convention, adopted in Geneva, Switzerland, in 1952, then amended in Paris, France, 1971;
the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, Rome, Italy, 1961;
the Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms, Geneva, 1971;
the World Intellectual Property Organization (WIPO) Copyright Treaty, 1996, under the Berne Convention;
the WIPO Performances and Phonograms Treaty, 1996;
the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement), 1995, within the World Trade Organization (WTO); and
the Beijing Treaty on Audiovisual Performances, 2012.⁵⁹⁷

Treaties and international agreements provide minimum legal standards that the international parties to these acts (i.e., member-states) must comply with on a national level.⁵⁹⁸ Setting an international framework for copyright was necessary to secure interests of the right owners across national borders.⁵⁹⁹ Thus, international treaties help avoid major discrepancies between jurisdictions, allowing for a better exchange - of goods, services, art and ideas. However, it is often argued that, these international treaties, some of which are over 100 years old, are ill-equipped to deal with the challenges and opportunities presented by technology today.

⁵⁹⁶Global Music Report 2019: State of the Industry. Tech. rep. The International Federation of the Phonographic Industry (IFPI), Apr. 2019, p. 40. url: https://www.ifpi.org/news/IFPI-GLOBAL-MUSIC-REPORT-2019.

⁵⁹⁷International Issues | U.S. Copyright Office. url: https : / / www . copyright . gov / international - issues/ (visited on 10/12/2019).

⁵⁹⁸IP-related Multilateral Treaties: World Trade Organization (WTO) - Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) (1994). en. url: https://www.wipo.int/treaties/en/text.jsp?file_id=305907 (visited on 10/12/2019).

⁵⁹⁹Ibid.

The international copyright treaties that have had the most in uence in the past 100 years are the Berne Convention, Universal Copyright Convention, WIPO Copyright Treaty (WCT), and the TRIPS Agreement.⁶⁰⁰ The Berne Convention requires contracting states to abide by three basic principles and provide minimum protections to copyrighted works of other contracting states.⁶⁰¹ The three basic principles are:

[w]orks originating in one of the Contracting States must be given the same protection in each of the other Contracting States as the latter grants to the works of its own nationals”;
“[p]rotection must not be conditional upon compliance with any formality”; and
“[p]rotection is independent of the existence of protection in the country of origin of the work.”⁶⁰²

The minimum protections required by contracting states are:

Providing protection for artistic, literary, and scientific works; and
The following exclusive rights of authors:
the right to translate, the right to make adaptations and arrangements of the work,
the right to perform in public dramatic, dramatico-musical and musical works,
the right to recite literary works in public,
the right to communicate to the public the performance of such works,
the right to broadcast,
the right to make reproductions in any manner or form,
the right to use the work as a basis for an audiovisual work, and the right to reproduce, distribute, perform in public or communicate to the public that audiovisual work.”⁶⁰³

The Berne Convention also provides moral rights for authors.604 Lastly, the Berne Convention requires duration of copyright to last for at least fifty (50) years.⁶⁰⁵

The WCT is an agreement under the Berne Convention that requires contracting states to adopt national legislation that protects computer programs and compilations of data as copyrightable⁶⁰⁶ The WCT recognizes the rights of 1) distribution, 2) rental, and 3) communication to the public, in addition to the rights granted under the Berne Convention.⁶⁰⁷The WCT is an agreement under the Berne Convention that obliges contracting states to adopt national legislation that provides legal remedies against circumvention of technological measures and removal or alternation of rights information.⁶⁰⁸

The Universal Copyright Convention (UCC) is an alternative copyright convention to the Berne Convention developed by the United Nations Educational, Scienti c and Cultural Organization, primarily for developing countries.⁶⁰⁹ The main features of the UCC are:

⁶⁰⁰International Issues | U.S. Copyright Office.

⁶⁰¹Summary of the Berne Convention for the Protection of Literary and Artistic Works (1886). en. url: https://www.wipo.int/treaties/en/ip/berne/summary_berne.html (visited on 10/12/2019).

⁶⁰²Ibid.

⁶⁰³Ibid.

⁶⁰⁴Ibid.

⁶⁰⁵Ibid.

⁶⁰⁶Summary of the WIPO Copyright Treaty (WCT) (1996). en. url: https://www.wipo.int/treaties/en/ip/wct/summary_wct.html (visited on 10/12/2019).

⁶⁰⁷Ibid.

⁶⁰⁸Summary of the WIPO Copyright Treaty (WCT) (1996).

⁶⁰⁹Universal Copyright Convention as revised at Paris on 24 July 1971, with Appendix Declaration relating to Article XVII and Resolution concerning Article XI. url: http://portal.unesco.org/en/ev.php-URL_ID=15241&URL_DO=DO_TOPIC&URL_SECTION=201.html (visited on 10/12/2019).

contracting states should not accord domestic authors more protection than authors of other contracting states;
“a formal copyright notice must appear in all copies of a work”;
copyright duration must be the life of the author plus twenty-five (25) years; and
all contracting states must grant “an exclusive right of translation for a seven-year period, subject to a compulsory license under certain circumstances for the balance of the term of copyright.”⁶¹⁰

Out of the agreements and treaties listed above, the TRIPS Agreement is considered the most comprehensive.⁶¹¹ The TRIPS Agreement supports the rules set out previously in the Berne Convention and the Paris Convention.⁶¹² The rules laid out in the TRIPS Agreement relevant to copyright are:

constraining national exceptions to copyright law under Article 9(2) (i.e., the Berne three-step test)
computer programs are protected as literary works under the Berne Convention
compilations of data are protected as copyrightable
duration of copyright must be fifty (50) years unless calculated based on the life of the author.⁶¹³

3.2 United States of America (USA)

3.2.1 Copyright Law

General Copyright Law Under Article I, Section 8, Clause 8 of the United States Constitution, Congress has the enumerated power to legislate concerning copyright and patents. Pursuant to its enumerated power, Congress has passed multiple acts related to copyright, with the Copyright Act of 1976 being the most recent version.⁶¹⁴ Under the Copyright Act, only works of original authorship can receive federal protection.⁶¹⁵ To receive federal protection, a work must satisfy three elements.⁶¹⁶ First, there must be a human author (i.e., a human being creates the work).⁶¹⁷ Second, the work must be original, i.e., it must exhibit a minimal degree of creativity.⁶¹⁸ Third, the work must be xed in a tangible medium of expression, such that it may be perceived, reproduced, or communicated for more than a short time. ⁶¹⁹ If all three conditions are met, the author’s copyright in the work is automatic, i.e., no formalities such as registering with the Copyright O ce is required.⁶²⁰

Under 17 U.S.C. 102, the types of works eligible for copyright protection are:

“literary works;
musical works, including any accompanying words;
dramatic works, including any accompanying music;
pantomimes and choreographic works;

⁶¹⁰Universal Copyright Convention. en. url: https://www.britannica.com/topic/Universal-Copyright-Convention (visited on 10/12/2019).

⁶¹¹IP-related Multilateral Treaties.

⁶¹²Ibid.

⁶¹³Ibid.

⁶¹⁴Circular 1 Copyright Basics. url: https://www.copyright.gov/circs/circ01.pdf.

⁶¹⁵Ibid.

⁶¹⁶Ibid.

⁶¹⁷Ibid.

⁶¹⁸Ibid.

⁶¹⁹Circular 1 Copyright Basics.

⁶²⁰Ibid.

pictorial, graphic, and sculptural works;
motion pictures and other audiovisual works;
sound recordings; and
architectural works.”⁶²¹

An author under 17 U.S.C. 106 is granted an exclusive bundle of rights and may have more rights depending on the type of work.⁶²² The six rights granted under 17 U.S.C. 106 are:

to reproduce the copyrighted work in copies or phonorecords;
to prepare derivative works based upon the copyrighted work;
to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.⁶²³

Additionally, an author may have additional rights such as moral rights under the Visual Artists Rights Act (VARA), speci cally the right to attribution and integrity, if their work can be described as a work of visual art under 17 U.S.C. § 101.⁶²⁴ However, rights under copyright are limited by defenses such as fair use, antitrust law and freedom of expression, case law, and other specific limitations under the Copyright Act.⁶²⁵ Specific to sound recordings, 17 U.S.C. § 114 limits the scope of rights granted under § 106.⁶²⁶

Copyright duration, as of the Sonny Bono Copyright Term Extension Act of 1998 that amended the Copyright Act of 1976, is the life of the author plus seventy (70) years.⁶²⁷ For works created on or after January 1, 1978, the duration of copyright is the life of the author plus seventy (70) years.⁶²⁸ Copyright in the USA is under an international exhaustion scheme since the United States Supreme Court determined in Kirtsaeng v. John Wiley & Sons, Inc. that the rst sale of an authorized copy of a work in any market in the world will exhaust the author’s right to control further disposition of that copy.⁶²⁹ An author is not required to undergo any formalities to obtain copyright to a work, but registration with the US Copyright O ce provides certain litigation advantages.⁶³⁰ Any right under copyright may be transferred or licensed to a third party (as a whole or percentage), and such transfer or license need not be recorded with the U.S. Copyright O ce.⁶³¹ Only exclusive agreements are required to be written and signed by the transferor or their authorized agent.⁶³²

Because the research topic of this report is automated music licensing, we shall specifically mention copyright as it relates to musical works (composition, sound recordings, streaming, etc.).⁶³³ For musical works, there are two

⁶²¹Ibid.

⁶²²Ibid.

⁶²³Ibid.

⁶²⁴17 U.S.C. 106A

⁶²⁵Circular 1 Copyright Basics.

⁶²⁶Ibid.

⁶²⁷Ibid.

⁶²⁸Ibid.

⁶²⁹568 US 519 (2013);ibid.

⁶³⁰Ibid.

⁶³¹Ibid.

⁶³²Circular 1 Copyright Basics.

⁶³³Circular 56 Copyright Registration of Musical Compositions and Sound Recordings. url: https://www.copyright.gov/circs/circ56.pdf.

primary copyrights, one in the musical composition (e.g., sheet of music), and one in the sound recording.⁶³⁴ The musical composition refers to the music ( melody, rhythm, and/ or harmony expressed in a system of musical notation ) and lyrics of a composition, while a sound recording refers to the fixation of a performance of a musical composition.⁶³⁵ The sound recording of the musical composition is often referred to as the master. ⁶³⁶ Under 17 U.S.C. § 101, phonorecords are defined as material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Phonorecords includes the material object in which the sounds are first fixed. The distinction between musical composition and sound recording is very important because the rights granted under copyright differs between the two. For example, only the copyright holder of a sound recording has the exclusive right to publicly perform a sound recording by means of a digital audio transmission.⁶³⁷

Digital Millennium Copyright Act The Digital Millennium Copyright Act (DMCA) of 1998 is an act that prohibits the circumvention of technological measure, or the trafficking of such technological measures, put into place by a copyright holder, to prevent unauthorized access to a copyrighted work (i.e., access controls), or that affects the copyright holder’s exclusive rights under the Copyright Act (i.e., copying controls).⁶³⁸ The DMCA provides legal protection against copyright infringement on for internet service providers (ISPs) if the ISP qualifies for one of four safe harbor categories under 17 U.S.C. § 512(a)-(d).⁶³⁹

For an ISP to avail themselves of any safe harbor category, they must meet the following criteria:

Qualify as a service provider under 17 U.S.C. § 512(k)(1)(B),
Meet conditions of eligibility under 17 U.S.C. § 512(i), including having a repeat infringer policy,
Accommodate standard technical measures implemented by copyright holders/owners, and
Meet the specific requirements of a safe harbor category.⁶⁴⁰

The Librarian of Congress can promulgate regulations to exempt classes of works from anti-circumvention rules if it would adversely affect users’ ability to make non-infringing uses of such works under.⁶⁴¹ Under the DMCA, copyright holders can send a notice-and-takedown to an ISP to remove certain infringing content on the ISP’s website.⁶⁴²

Music Modernization Act

The Music Modernization Act (MMA) of 2018 passed into public law three separate acts as titles:

The Music Modernization Act (Title I),
Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society (CLASSICS) (Title II), and

⁶³⁴Ibid.

⁶³⁵Ibid.

⁶³⁶Music Copyrights 101 - Protect and Copyright Your Music. en-US. url: https://www.tunecore.com/guides/copyrights-101 (visited on 10/12/2019).

⁶³⁷17 U.S.C. 106(6)

⁶³⁸17 U.S.C. 1201;Section 1201 Study | U.S. Copyright Office. url: https://www.copyright.gov/policy/1201/ (visited on 10/12/2019);2019); Compare MDY INDUSTRIES, LLC v. Blizzard Entertainment, Inc., 629 F. 3d 928 (9th Cir. 2010) with Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d 1178 (Fed.Cir.2004); Overview. en. url: https://dmca.harvard.edu/ pages/overview (visited on 10/12/2019)

⁶³⁹Viacom Int’l, Inc. v. YouTube, Inc., 676 F. 3d 19, 27 (2d Cir. 2010).

⁶⁴⁰Viacom Int’l, Inc. v. YouTube, Inc., 676 F. 3d 19, 27 (2d Cir. 2010).

⁶⁴¹17 U.S.C. 1201(a)(1)(C).

⁶⁴²17 U.S.C. 1201

The Allocation for Music Producers (AMP) Act (Title III).⁶⁴³

The MMA primarily amended Sections 114 and 115 of the Copyright Act.⁶⁴⁴ Title I of the MMA amended Section 115 to replace the bulk Notice Of Intent (NOI) with a Mechanical Licensing Collective (MLC), a non-government agency which will act as the respondent for mechanical licensing requests, collection of mechanical royalties from digital downloads and digital streaming, and distributor of such royalties to licensors.⁶⁴⁵ Title I of the MMA also creates a song ownership database that is transparent and publicly accessible, allow publishers to claim missing royalties based on songs in the database, and an audit right for songwriters and publishers.⁶⁴⁶ The database will be funded by digital streaming services.⁶⁴⁷ Title I amended the rate setting dispute procedure (process for royalty rate disputes), so that instead of only one judge in the Southern District of New York overseeing the dispute, a district judge in the Southern District of New York would be randomly assigned from the wheel of district judges for rate setting disputes (aka wheel approach) . ⁶⁴⁸ Title I amended Section 115 to require the Copyright Royalty Board, the administrative judges who determine and adjust royalty rates and terms applicable to the statutory copyright licenses, to use the willing buyer/willing seller (fair market value) standard for determining rates, for all online music platforms.⁶⁴⁹ Lastly, Title I of the MMA repealed 17 U.S.C. § 114(i) to allow rate court judges to consider royalties paid to recording artists when determining what streaming services will pay songwriters for the exact same performance as evidence in setting performance royalty rates for songwriters and composers.⁶⁵⁰

Title II of the MMA granted federal copyright protection for public performance of sound recordings fixed pre-1972 and granting protection until 2067.⁶⁵¹

Title III of the MMA granted licensing collectives the ability to follow a letter of direction from a musician to distribute royalties for a sound recording to a producer, mixer, or sound engineer who was part of the creative process that created the sound recording. ⁶⁵²

3.2.2 Contract Law

We shall provide a very brief introduction to the core elements of USA contract law because other than intellectual property law, music licenses are also subject to contract law. The basic topics discussed here are also discussed in greater detail by Giancaspro.⁶⁵³

At common law in the United States, a contract is a legally enforceable set of promises between two or more parties.⁶⁵⁴ A legally enforceable contract requires three elements:

⁶⁴³Overview of the Music Modernization Act. url: https://lieu.house.gov/sites/lieu.house.gov/files/Overview%5C%20of%5C%20the%5C%20Music%5C%20Modernization%5C%20Act.pdf; Dani Deahl. The Music Modernization Act has been signed into law. en. Oct. 2018. url: https://www.theverge.com/2018/10/11/17963804/music-modernization-act-mma-copyrightlaw-bill-labels-congress (visited on 10/12/2019); The Music Modernization Act. en. url: http://www.ascap.com/aboutus/stand-with-songwriters (visited on 10/12/2019).

⁶⁴⁴Overview of the Music Modernization Act; Deahl, The Music Modernization Act has been signed into law; The Music Modernization Act.

⁶⁴⁵Overview of the Music Modernization Act; Deahl, The Music Modernization Act has been signed into law; The Music Modernization Act.

⁶⁴⁶Overview of the Music Modernization Act; Deahl, The Music Modernization Act has been signed into law; The Music Modernization Act.

⁶⁴⁷Overview of the Music Modernization Act; Deahl, The Music Modernization Act has been signed into law; The Music Modernization Act.

⁶⁴⁸Overview of the Music Modernization Act; Deahl, The Music Modernization Act has been signed into law; The Music Modernization Act.

⁶⁴⁹Overview of the Music Modernization Act; Deahl, *The Music Modernization Act has been signed into law; The Music Modernization Act.

⁶⁵⁰Overview of the Music Modernization Act; Deahl, The Music Modernization Act has been signed into law; The Music Modernization Act.

⁶⁵¹Overview of the Music Modernization Act; Deahl,* The Music Modernization Act has been signed into law; The Music Modernization Act*.

⁶⁵²Overview of the Music Modernization Act; Deahl, The Music Modernization Act has been signed into law; The Music Modernization Act; The Fair Play Fair Pay Act. en-US. url: https://www.soundexchange.com/advocacy/reintroduction-fair-playfair-pay-act/ (visited on 10/12/2019).

⁶⁵³Supra Section 1.6.2.

⁶⁵⁴Legal Elements of a Contract. url: https://hnr.k-state.edu/doc/rres-690/legalelementsofacontract.pdf.

offer,
acceptance, and
consideration.⁶⁵⁵

An offer is a manifestation of the willingness to enter into a bargain so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it. ⁶⁵⁶ An acceptance is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the o er. ⁶⁵⁷ At common law, an acceptance is required to mirror the exact terms of the o er (aka the mirror-image rule).⁶⁵⁸ For a valid o er and acceptance, there must be a meeting of the minds between the parties, such that based on an objective view of the facts, the parties mutually understood and assented to the terms of the agreement.⁶⁵⁹ Consideration is a present exchange bargained for in return for a promise between the parties that causes a change in the position of the either party. Consideration may be satis ed when a party makes:

“a promise to do something you’re not legally obligated to do, or
a promise not to do something you have the right to do.”⁶⁶⁰

Other than the three basic elements, contract formation also requires the subject matter of the agreement to be sufficiently described.⁶⁶¹

Uniform Commercial Code Article 2 (UCC Art. 2) is the contract law framework that is generally applicable to contracts between merchants, and between merchants and non-merchants for the sale of goods.662 Common law is generally applicable to contracts for services and other subject matter not under UCC Art. 2.⁶⁶³ UCC Art. 2 provides di erent rules from the common law, such as the abandonment of the mirror image rule discussed above for a less stringent acceptance rule.⁶⁶⁴ UCC Art. 2 is not applicable to music licenses because copyrighted works are not goods under UCC Art. 2-105 (i.e., since copyrighted works are intangible assets, they are not movable).⁶⁶⁵

3.2.3 Electronic Records & Signatures

At the federal level, Congress has passed the Electronic Records in Global and National Commerce Act ( Esign ) to regulate electronic records and signatures.⁶⁶⁶ Under E-sign, electronic signatures are de ned as an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record. ⁶⁶⁷ Under E-sign, electronic records are de ned as a contract or other record created, generated, sent, communicated, received, or stored by electronic means. ⁶⁶⁸

E-sign does not expressly preempt state law in this eld, thus forty-seven (47) states have passed their own electronic signatures and records law, namely, a version of the Uniform Electronic Transactions Act (UETA) that is consistent with E-sign.⁶⁶⁹ E-sign and UETA’s main objective is to give electronic transactions the same

⁶⁵⁵Ibid.

⁶⁵⁶Ibid.

⁶⁵⁷Ibid.

⁶⁵⁸Ibid.

⁶⁵⁹Ibid.

⁶⁶⁰Richard Stim and Attorney. Consideration: Every Contract Needs It. en. url: https://www.nolo.com/legal-encyclopedia/consideration-every-contract-needs-33361.html (visited on 10/12/2019).

⁶⁶¹Legal Elements of a Contract.

⁶⁶²General Obligations under UCC Article 2. url: https://saylordotorg.github.io/text_advanced-business-law-and-thelegal-environment/s11-04-general-obligations-under-ucc-.html (visited on 10/12/2019).

⁶⁶³Ibid.

⁶⁶⁴Ibid.

⁶⁶⁵Ibid.

⁶⁶⁶Edward Walker. PRACTICAL GUIDE TO E-SIGN AND THE UNIFORM ELECTRONIC TRANSACTIONS ACT. 2002. url: https://cwrolaw.com/wp-content/uploads/2009/08/esign-uniform-electronic-transaction-act.pdf.

⁶⁶⁷15 U. S. C. 7006(5); ibid.

⁶⁶⁸15 U. S. C. 7006(4); Walker, PRACTICAL GUIDE TO E-SIGN AND THE UNIFORM ELECTRONIC TRANSACTIONS ACT

⁶⁶⁹Ibid.

enforceability and legal interpretation as transactions memorialized on paper.⁶⁷⁰ For a valid electronic signature under UETA and E-sign, four requirements must be met:

“Intent to sign”,
“Consent to do business electronically”,
“Association of signature with the record”, and
“Record retention.”⁶⁷¹

In the electronic agreement context, the federal courts have had relatively few chances to consider whether a transfer of copyright in an electronic agreement would satisfy 17 U.S.C. § 204(a).⁶⁷²

In Metro. Reg’l Info. Sys., Inc. v. Am. Home Realty Network, Inc., the Fourth Circuit Court of Appeals considered whether a transfer of copyright via an electronic agreement satis es the writing requirement of 17 U.S.C. § 204(a).⁶⁷³ Specifically, the Court needed to resolve whether a subscriber, who clicks yes’ in response to MRIS’s electronic TOU prior to uploading copyrighted photographs, has signed a written transfer of the exclusive rights of copyright ownership in those photographs consistent with Section 204(a). ⁶⁷⁴ The Court ultimately concluded that a written transfer of copyright had occurred by referring to the Federal Electronic Signature Act (E-Sign) for guidance.⁶⁷⁵ The Court determined that Sections 7001(b) and 7003 of the E-sign Act conclude that a transfer of copyright may occur via electronic agreement.⁶⁷⁶ Section 7001(b) applies to 17 U.S.C. § 204(a) because 7001(b) states that the E-sign Act only affects a requirement that contracts or other records be written, signed, or in nonelectric form , and 17 U.S.C. § 204(a) requires transfers be “written” and “signed.” ⁶⁷⁷ Section 7003 applies to 17 U.S.C. § 204(a) because 7003 does not specifically enumerate agreements to transfer copyright as a specific contract or record excepted from the E-Sign Act’s applicability.⁶⁷⁸ The District Court for the Southern District of Florida reached a similar conclusion to the Fourth Circuit Court of Appeals in Vergara Hermosilla v. Coca Cola Co., but only offered a brief analysis on the issue.⁶⁷⁹

3.3 European Union (EU)

3.3.1 Digital Single Market

There are several areas which can be covered by the European Union (EU) legislation.680 One of the foundations of the EU is the single market policy, effected through principles and legislation concerning free movement of goods and services, alongside free movement of persons, capital, labor and establishment. One of the policies currently

⁶⁷⁰Walker, PRACTICAL GUIDE TO E-SIGN AND THE UNIFORM ELECTRONIC TRANSACTIONS ACT; . Electronic Transactions Act - Uniform Law Commission. url: https://www.uniformlaws.org/committees/community-home?CommunityKey=2c04b76c2b7d-4399-977e-d5876ba7e034 (visited on 10/12/2019).

⁶⁷¹US electronic signature laws and history. url: https://www.docusign.com/learn/us- electronic- signature- laws- andhistory (visited on 10/12/2019).

⁶⁷²Metro. Reg’l Info. Sys., Inc. v. Am. Home Realty Network, Inc., 722 F.3d 591 (4th Cir. 2013) Although the Copyright Act itself does not contain a definition of a writing or a signature, much less address our specic inquiry, Congress has provided clear guidance on this point elsewhere, in the ESign Act.

⁶⁷³Id. at 600 (Courts have elaborated that a qualifying writing under Section 204(a) need not contain an elaborate explanation nor any particular magic words, Radio Television Espanola S.A. v. New World Entm’t, Ltd., 183 F.3d 922, 927 (9th Cir.1999), but must simply show an agreement to transfer copyright. Lyrick Studios, 420 F.3d at 392 (citation omitted).)

⁶⁷⁴Metro. Reg’l Info. Sys., Inc. v. Am. Home Realty Network, Inc., 722 F.3d 591, 600 (4th Cir. 2013)

⁶⁷⁵Id. at 601.

⁶⁷⁶Id (Courts have elaborated that a qualifying writing under Section 204(a) need not contain an elaborate explanation nor any particular magic words, Radio Television Espanola S.A. v. New World Entm’t, Ltd., 183 F.3d 922, 927 (9th Cir.1999), but must simply show an agreement to transfer copyright. Lyrick Studios, 420 F.3d at 392 (citation omitted). ).

⁶⁷⁷Id.

⁶⁷⁸Id.

⁶⁷⁹Id citing Vergara Hermosilla v. CocaCola Co., 2011 WL 744098, at 3 (S.D.Fla. Feb. 23, 2011), *a’d by per curiam opinion, 446 Fed.Appx. 201 (11th Cir.2011).

⁶⁸⁰Areas of EU action. en. Text. url: https://ec.europa.eu/info/about-european-commission/what-european-commission-does/law/areas-eu-action_en (visited on 10/12/2019).

building the single market in the EU is the Digital Single Market, announced in 2015.⁶⁸¹ Acts related to the Digital Single Market include directives and regulations related to digital marketing, e-commerce and telecommunications, covering also such areas as copyright, data protection, cybersecurity, electronic signatures, digital administration services and other issues specific to digital and online activities.⁶⁸² Some of the achievements of the DSM were the end of the roaming charges within the EU, research initiatives concerning artificial intelligence and cybersecurity. There are several acts relevant from the perspective of music license contracts.⁶⁸³ The short description provided below is not exhaustive, in particular it does not consider issues such as competition or data protection that often require the most attention from non-EU establishments.⁶⁸⁴ Contract law is not unified per se across the EU the areas that can be observed as common relate to selected aspects, such as competition, very often consumer protection, e-commerce, copyright or various aspects of jurisdiction and the conflict of law rules, which have a great impact on contract law in practice.⁶⁸⁵

3.3.2 Copyright

Copyright is regulated in the EU by several acts, mostly directives that require national legislation to achieve their purposes (harmonization) and some regulations, applicable directly. Certain aspects or copyright are not harmonized (such as the moral rights), while the economic aspects of copyright are harmonized.

The acts regulating copyright in the EU include:

Regulation on cross-border portability of online content services in the internal market (“Portability Regulation”) (June 2017);686
Directive and a Regulation implementing the Marrakesh Treaty in the EU (September 2017) concerning the visually impaired persons;⁶⁸⁷
Directive on copyright and related rights in the Digital Single Market (May 2019), regulating several issues related to copyright (this Directive is in the process of being implemented by Member States);⁶⁸⁸
Directive on television and radio programmes (May 2019), facilitating access to online TV and radio across borders - these are the acts initiated under the Digital Single Market policy;⁶⁸⁹
Directive on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market (“CRM Directive”) (February 2014);⁶⁹⁰

⁶⁸¹Ibid.

⁶⁸²Ibid.

⁶⁸³Ibid.

⁶⁸⁴Ibid.

⁶⁸⁵Ibid.

⁶⁸⁶Regulation (EU) 2017/1128 of the European Parliament and of the Council of 14 June 2017 on cross-border portability of online content services in the internal marketText with EEA relevance. en. June 2017. url: http://data.europa.eu/eli/reg/2017/1128/oj/eng (visited on 10/12/2019).

⁶⁸⁷Directive (EU) 2017/1564 of the European Parliament and of the Council of 13 September 2017 on certain permitted uses of certain works and other subject matter protected by copyright and related rights for the benet of persons who are blind, visually impaired or otherwise print-disabled and amending Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society. en. Sept. 2017. url: http://data.europa.eu/eli/dir/2017/1564/oj/eng (visited on 10/12/2019).

⁶⁸⁸Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC (Text with EEA relevance.) en. May 2019. url: http://data.europa.eu/eli/dir/2019/790/oj/eng (visited on 10/12/2019).

⁶⁸⁹Directive (EU) 2019/789 of the European Parliament and of the Council of 17 April 2019 laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes, and amending Council Directive 93/83/EEC (Text with EEA relevance.) en. May 2019. url: http://data.europa.eu/eli/reg/2019/789/oj/eng (visited on 10/12/2019).

⁶⁹⁰Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market Text with EEA relevance. en. Mar. 2014. url: http://data.europa.eu/eli/dir/2014/26/oj/eng (visited on 10/12/2019).

Directive on the harmonisation of certain aspects of copyright and related rights in the information society (“InfoSoc Directive”) (May 2001);⁶⁹¹
Directive on rental right and lending right and on certain rights related to copyright in the held of intellectual property (“Rental and Lending Directive”) (December 2006);⁶⁹²
Directive on the resale right for the benefit of the author of an original work of art (“Resale Right Directive”) (September 2001);⁶⁹³
Directive on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (“Satellite and Cable Directive”) (September 1993);⁶⁹⁴
Directive on the legal protection of computer programs (“Software Directive”) (April 2009);⁶⁹⁵
Directive on the enforcement of intellectual property right (“IPRED”) (April 2004);⁶⁹⁶
Directive on the legal protection of databases (“Database Directive”) (March 1996);⁶⁹⁷
Directive on the term of protection of copyright and certain related rights amending the previous 2006 Directive (“Term Directive”) (September 2011);⁶⁹⁸
Directive on certain permitted uses of orphan works (“Orphan Works Directive”) (October 2012);⁶⁹⁹ and
Directive on certain permitted uses of certain works and other subject matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print-disabled (Directive implementing the Marrakech Treaty in the EU) (September 2017).⁷⁰⁰

Most of the above acts may be relevant specifically to the music industry sector although one of these acts regulates the music industry sector specifically (the CRM Directive). The CRM Directive deals with certain issues related to the operations of the collective rights management organizations (CMOs), attempting to make them more democratic and to tackle the issue of the value gap, bringing certain new accountability and transparency requirements for the CMOs, as well as requirements to speed up royalty payments (which had in practice taken a long time in the EU). The preparations for the 2014 CRM Directive involved a few extensive reports analyzing, i.e., transactions costs of music licensing.⁷⁰¹ The Directive introduced the multi-territorial licensing scheme, aiming at improving competition in that sector and larger music portfolios.

⁶⁹¹Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. en. June 2001. url: http://data.europa.eu/eli/dir/2001/29/oj/eng (visited on 10/12/2019).

⁶⁹²EUR-Lex - 32006L0115 - EN - EUR-Lex. en. url: https://eur-lex.production.op.aws.cloud.tech.ec.europa.eu/legalcontent/EN/ALL/?uri=CELEX%5C%3A32006L0115 (visited on 10/12/2019).

⁶⁹³Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art. en. Oct. 2001. url: http://data.europa.eu/eli/dir/2001/84/oj/eng (visited on 10/12/2019).

⁶⁹⁴EUR-Lex - 31993L0083 - EN - EUR-Lex. en. url: https://eur-lex.production.op.aws.cloud.tech.ec.europa.eu/legalcontent/EN/ALL/?uri=CELEX%3A31993L0083 (visited on 10/12/2019).

⁶⁹⁵Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (Codified version) (Text with EEA relevance). en. May 2009. url: http://data.europa.eu/eli/dir/2009/24/oj/eng (visited on 10/12/2019).

⁶⁹⁶DIRECTIVE 2004/48/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004 on the enforcement of intellectual property rights (Text with EEA relevance). en. Apr. 2004. url: http://data.europa.eu/eli/dir/2004/48/oj/eng (visited on 10/12/2019).

⁶⁹⁷EUR-Lex - 31996L0009 - EN - EUR-Lex. en. url: https://eur-lex.production.op.aws.cloud.tech.ec.europa.eu/legalcontent/EN/ALL/?uri=CELEX%3A31996L0009 (visited on 10/12/2019).

⁶⁹⁸Directive 2011/77/EU of the European Parliament and of the Council of 27 September 2011 amending Directive 2006/116/EC on the term of protection of copyright and certain related rights. en. Oct. 2011. url: http://data.europa.eu/eli/dir/2011/77/oj/eng (visited on 10/12/2019).

⁶⁹⁹Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on certain permitted uses of orphan works Text with EEA relevance. en. Oct. 2012. url: http://data.europa.eu/eli/dir/2012/28/oj/eng (visited on 10/12/2019).

⁷⁰⁰EUR-Lex - 32017L1564 - EN - EUR-Lex. en. url: https://eur-lex.production.op.aws.cloud.tech.ec.europa.eu/eli/dir/2017/1564/oj (visited on 10/12/2019).

⁷⁰¹Reports and Studies about Copyright. en. Text. url: https://ec.europa.eu/digital-single-market/en/reports-andstudies/75982/73820 (visited on 10/12/2019).

There have been several initiatives and studies concerning the music industry sector in the EU, including a “Licences for Europe” stakeholder dialogue⁷⁰² between 2012 and 2013, with certain statements made by participating stakeholders and Music Moves Europe (MME) framework of the European Commission active since 2015. Within the MME, EU provides funding for music-related projects under the umbrella of the Creative Europe Project Results platform, with plans to provide additional funding after 2020 with such goals in mind as promoting diversity, creativity and innovation in the eld of music, in particular in the distribution of musical repertoire in Europe and beyond. In terms of policy and adoption of new legal acts, there have been efforts to make the marketplace for music more transparent and fairer - such purposes were set out both for the CRM Directive and the new Copyright in the Digital Single Market Directive. MME allows also for dialogue through conferences and exchange of ideas, as well as awards for achievements in the eld of popular and contemporary music. A competition under the MME framework produced a book including 10 winning business models for online and offline distribution of music, none of which used blockchain or distributed ledger technology.⁷⁰³

In the EU, the framework of rights subject to licensing is set out in the Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001⁷⁰⁴on the harmonisation of certain aspects of copyright and related rights in the information society, including the rights of reproduction (Art. 2), rights of communication to the public of works and right of making available to the public other subject-matter (Art. 3), the rights of distribution (Art. 4). The rights which may be granted under licenses are listed in EU legislation and international treaties, leading to the same scope being reflected at national levels though using different wording, categorization and specific rules.⁷⁰⁵

3.3.3 Electronic Identification

Another large topic falling under the scope of the Digital Single Market policy, is related to e-signatures and digital exchanges requiring a high degree of trust. The eIDAS Regulation (Regulation (EU) No. 910/2014 on electronic identification and trust services for electronic transactions in the internal market, July 2014),⁷⁰⁶ sets out a legal framework for authentication solutions and schemes which may be adopted by people and businesses, and allow to facilitate (or digitalize) citizen-government exchanges and filings. The eIDAS Regulation is particularly relevant to technological solutions utilizing blockchain or distributed ledger.

As mentioned at the beginning of this section, the Digital Single Market tackles also the issues of data protection and cybersecurity. The main act related to the protection of personal data is the Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, known as the General Data Protection Regulation (GDPR).⁷⁰⁷ The Regulation applies across the EU since May 2018. The Regulation applies directly, however, there are a number of country-specific

⁷⁰²Anonymous. *“Licences for Europe” stakeholder dialogue. *en. Text. Dec. 2017. url: https://ec.europa.eu/digitalsingle-market/en/news/licences-europe-stakeholder-dialogue (visited on 10/12/2019).

⁷⁰³Jamie KENDRICK. Music Moves Europe. en. Text. May 2017. url: https : / / ec . europa . eu / programmes / creative -europe/actions/music-moves-europe_en (visited on 10/12/2019).

⁷⁰⁴Regulation (EU) No 167/2013 of the European Parliament and of the Council of 5 February 2013 on the approval and market surveillance of agricultural and forestry vehicles Text with EEA relevance. en. Mar. 2013. url: http://data.europa.eu/eli/reg/2013/167/oj/eng (visited on 10/17/2019).

⁷⁰⁵Act of February 4, 1994, on Copyright and Related Rights (as amended up Act of September 25, 2015). url: https://wipolex. wipo.int/en/legislation/details/16154 (visited on 05/23/2020) (For instance, the approach taken in the Polish jurisdiction (one of the EU member states), the approach taken involved listing of fields of exploitation (exemplification of fields on which a license can be granted: 1) within the scope of fixing and reproduction of works “production of copies of a piece of work with the use of specic technology, including printing, reprographics, magnetic fixing and digital technology; 2) within the scope of trading the original or the copies on which the work was fixed “introduction to trade, letting for use or rental of the original or copies; 3) within the scope of dissemination of works in a manner different from dened in subparagraph 2 “public performance, exhibition, screening, presentation and broadcast as well as rebroadcast, and making the work publicly available in such a manner that anyone could access it at a place and time selected thereby.).

⁷⁰⁶Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identication and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC. en. Aug. 2014. url: http://data.europa.eu/eli/reg/2014/910/oj/eng (visited on 10/12/2019).

⁷⁰⁷Data protection in the EU. en. Text. url: https://ec.europa.eu/info/law/law-topic/data-protection/data-protection-eu_en (visited on 10/12/2019).

provisions enacted in every Member State. Another act covering the protection of personal data is the Directive (EU) 2016/680 on the protection of natural persons regarding processing of personal data connected with criminal offences or the execution of criminal penalties, and on the free movement of such data, with the transposition deadline for the Member States in May 2018. A wide framework of initiatives has been set for the development of cybersecurity in the EU, with examples such as (i) the European Cybersecurity Act in force since June 2019 concerning cybersecurity certifications issued by ENISA, the EU Agency for Cybersecurity,⁷⁰⁸ and (ii) the NIS Directive (Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union, July 2016)⁷⁰⁹ which sets out standards, collaboration topics and supervision sectors concerning cybersecurity issues across the EU.

3.4 Alternative Dispute Resolution

Alternative dispute resolution (ADR) is a dispute resolution process that does not involve litigation (i.e., disputes are resolved outside of the traditional court system).⁷¹⁰ Generally, ADR can be used to resolve any dispute or conflict between parties.⁷¹¹ The supposed benefits of ADR are that it is cheaper and faster than litigation, the processes are less formal, and the rules are more flexible, and that the parties can have a greater participatory role in resolving their conflict.⁷¹²

Mediation and arbitration are the two primary types of ADR.⁷¹³ In mediation, a neutral third party tries to help disputants come to a consensus on their own. Rather than imposing a solution, a professional mediator seeks to assist the conflicting sides in exploring the interests underlying their positions. ⁷¹⁴ Generally, mediation is a voluntary and non-binding process for dispute resolution, i.e., the mediation is not a final resolution of the dispute.⁷¹⁵

In arbitration, [], a neutral third party serves as a judge who is responsible for resolving the dispute. ⁷¹⁶ Generally, arbitration is an involuntary and binding process for dispute resolution, i.e., arbitration is a final resolution of the dispute.⁷¹⁷ The parties can usually negotiate the terms of the arbitration, such as who chooses and pays for the arbitrator, the arbitration venue, whether the arbitration is confidential, and the arbitration rules.⁷¹⁸ Then there is a mediation-arbitration hybrid where disputants will first attempt to resolve their dispute by mediation, and if unsuccessful, will then arbitrate their dispute.⁷¹⁹ Arbitration is a legally recognized ADR procedure in the USA under the Alternative Dispute Resolution Act (28 U.S.C. 651), in the EU under Directive 2013/1/EU, and in international law under the United Nations Commission on International Trade Law’s (UNCITRAL) model law on international commercial arbitration.⁷²⁰

⁷⁰⁸European Commission - PRESS RELEASES - Press release - State of the Union 2017 - Cybersecurity: Commission scales up EU’s response to cyber-attacks. url: https://europa.eu/rapid/press-release_IP-17-3193_en.htm (visited on 10/12/2019).

⁷⁰⁹EUR-Lex - 32016L1148 - EN - EUR-Lex. en. url: https://eur-lex.production.op.aws.cloud.tech.ec.europa.eu/eli/dir/2016/1148/oj (visited on 10/12/2019).

⁷¹⁰Katie Shonk. What is Alternative Dispute Resolution? en-US. Nov. 2019. url: https://www.pon.harvard.edu/daily/dispute-resolution/what-is-alternative-dispute-resolution/ (visited on 12/11/2019).

⁷¹¹Dispute Resolution Processes. en. url: https://www.americanbar.org/groups/dispute_resolution/resources/DisputeResolutionProcesses/ (visited on 12/11/2019).

⁷¹²Dispute Resolution Processes; Shonk, What is Alternative Dispute Resolution?

⁷¹³Dispute Resolution Processes; *Shonk, *What is Alternative Dispute Resolution?

⁷¹⁴Dispute Resolution Processes.

⁷¹⁵Dispute Resolution Processes; Shonk, What is Alternative Dispute Resolution?

⁷¹⁶Shonk, What is Alternative Dispute Resolution?

⁷¹⁷Ibid.

⁷¹⁸Ibid.

⁷¹⁹Shonk, What is Alternative Dispute Resolution?

⁷²⁰Narozhny, Is Kleros Legally Valid as Arbitration?