Sound Recording Copyrights Aren’t Just for Songs

Here’s another example of how the application of copyright law to some common, situations can be counter-intuitive and even a little strange.

Swatch, the swiss watch-maker, was having a regular conference call with investors and securities analysts about its business, earnings, outlook, and things like that.  This is a fairly common occurrence among publicly-traded companies.  As was typical with such calls, it started with Swatch’s CEO giving some brief remarks; then Swatch executives took questions from the investors and analysts.  Unless you are an investor, a security analyst or a financial reporter, these things are as dull as can be.

Bloomberg, the financial journal and overall font of financial information, wasn’t invited to be on the call, but it wasn’t difficult to dial into it.  It was Bloomberg’s regular practice—-to listen in on such calls, record them, transcript the recording, and publish both the recording and the transcript.  I suspect this is the regular practice of a lot of other financial journals.

As it happens, Swatch arranged to have the call recorded as well.  From a copyright standpoint, this might not have worried Bloomberg very much.  You can only obtain copyright in works that are “fixed” in some way.  Most of the call was extemporaneous, so there was no pre-existing script that would be subject to copyright.  By making and publishing the transcript of the call, Bloomberg was infringing on no copyright.

If you’re in the music business, you’re probably already familiar with this aspect of copyright law.  Let’s say I transcribe and publish the lyrics to “Don’t Want to Miss a Thing” (the Aerosmith version), which was written by Diane Warren.  I don’t violate Aerosmith’s copyright in the sound recording, but I do violate Ms. Warren’s copyright in the underlying song.  But in Bloomberg’s case, there is no analog to the underlying song–there’s not preexisting script–so there’s no copyright to infringe.

Except that we overlooked the sound recording.  That’s understandable because we associate sound recordings with music or other forms of entertainment–and Swatch’s conference call was about as far away from “entertainment” as you can get.  (I dunno.  Maybe the CEO made a witty comment or something.)  But copyright law doesn’t care about artistic merit, or even marketability.  It doesn’t make value judgments.  A recording of the dullest investor conference call is as deserving of copyright protection as the toe-tappingiest song ever.*

There’ll be a difference in damages, though.

So Bloomberg isn’t accused of infringing the text of the conference call.  It is accused of infringing the sound recording in the conference call.

But wait.  Didn’t we just say that you only get copyright in works that have been “fixed,” and didn’t we just say that Swatch and Bloomberg made their recordings of the un-fixed conference call independently at the same time?  If that’s the case, Bloomberg couldn’t have infringed on the copyright in Swatch’s sound recording because Swatch’s sound recording wasn’t fixed yet; and besides, Bloomberg was recording the source material.

The Copyright Act makes an exception for audio and visual recordings of live events.  When the fixation occurs at the same time as the sounds or images are being transmitted, the work is considered “fixed” at the moment of transmission.  Otherwise, there would be nearly impossible to obtain a useful copyright in live events, like sporting events.  Hundreds of others could make their own recordings of the event, each recording having its own copyright, which would undermine the subsequent market for the fixed work.

Again, Swatch’s conference call was about the exact opposite of, say, an exciting football game.  But, if you analogize Swatch to the NFL, you can see that it’s the same thing in terms of copyright law.

This decision was made at the “pleadings” stage, i.e., at the very beginning of the case, and the judge was required to take all of Swatch’s allegations as true, so the case has a long ways to go.  In particular, Bloomberg has an intriguing fair-use argument that the court wisely punted at this stage because it was too fact-intensive.  Bloomberg might be motivated to litigate that defense all the way, since Swatch is threatening Bloomberg’s regular business practice.

Then again, couldn’t Bloomberg just hire a bunch of court reporters (stenographers) and have them transcribe these calls directly, so no intermediate sound recording is made?  Let me tell you: court reporters record things even more boring than investor conference calls–they record depositions!

A final note, which is of interest to copyright wonks only:  Bloomberg also argued that Swatch didn’t comply with Section 411(c) of the Copyright Act, which provides:

(c) the case of a work consisting of sounds, images, or both, the first fixation of which is made simultaneously with its transmission, the copyright owner may, either before or after such fixation takes place, institute an action for infringement under section 501, fully subject to the remedies provided by sections 502 through 505 and section 510, if, in accordance with requirements that the Register
of Copyrights shall prescribe by regulation, the copyright owner—

(1) serves notice upon the infringer, not less than 48 hours before such fixation,
identifying the work and the specific time and source of its first transmission,
and declaring an intention to secure copyright in the work; and

(2) makes registration for the work, if required by subsection (a), within
three months after its first transmission.

The court rejected Bloomberg’s argument on grounds that (1) it was impossible for Swatch to comply, and (2) Section 411(c) is an alternative to the procedures set forth in Section 411(a) (which Swatch said it did comply with).  And that’s fine.  My question is:  Congress clearly has some specific problem in mind when it drafted Section 411(c), but what problem?  I get that the idea is to allow the rightsholder to get an injunction before the transmission of the work.  But when would you know that someone was intending to record your transmission such that you could identify that person and send him or her the required notice?

Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.