If you ever thought that no one would ever actually legally attack Creative Commons and, if they did, you'd hear about it, consider this the article you "hear about it". A draft copyright bill from the Czech Republic has leaked online and it may be one of the most disturbing copyright bills ever created.

The draft states that: "If a right holder not represented on the basis of the agreement expresses his will to exclude the effect of cumulative agreement while providing gratuitous license, the effect of cumulative agreement is excluded to the extent of provided license in respect to the collective administrator at the moment when the collecting administrator is provably notified of the provided license." That means that in order to achieve free distribution of copylefted work, the author has to notify the collecting society and he carries the burden of proof, that is, he has to prove that license has been provided, or if you like, the user of gratuitous license has to prove the collecting society has been notified, which is even harder. The amendment draft thus violates the declared support of public licenses.

When was the last time you burned a CD or a DVD? If you haven't done that in a while, you aren't alone according to a copyright collective that collects royalties on blank discs. With slumping blank disc sales, the royalty collecting agency is scrambling to find the next thing to tax to keep revenue money flowing.

Income generated from a copy fee built in to the price of recordable CDs and DVDs – and shared among artists and copyright holders – has almost halved over the last two years. In 2007, sales of blank discs generated 200 million kronor ($28 million) for artists, compared to just 113 million kronor in 2009.

“We’re seeing a technology shift whereby the discs in themselves are no longer of interest. File sharers and others have started using different technologies. Things can instead be stored on people’s computer hard drives or their telephones,” Copyswede’s managing director Mattias Åkerlind told news agency TT.

Copyswede’s proposed fee would add around 100 kronor to the cost of a mobile phone with 32 gigabytes of memory. But negotiations have stalled of late, with the organisation enjoying scant support from electronics retailers opposed to price hikes on goods like telephones and hard disks.

Yesterday, we reported that ASCAP said that organizations like Creative Commons were undermining their copyrights. Today, we've received an official response from Creative Commons with regards to the letter writing campaign.

It’s not hard to see why the RIAA (Recording Industry Association of America) wants this bill passed. Just read this part of a PC Mag article:

Stations with annual revenues of less than $100,000 would pay a flat fee of $500 each year. Stations with revenues between $100,000 and $500,000 would pay $2,500, and those earning between $500,000 and $1.25 million would pay $5,000 annually.

Stations making any more than that each year would have to negotiate royalty payments with the Copyright Royalty Board (CRB), a government body that sets royalty rates.

Stations that gross less than $5 million per year would not be subject to these fees for three years, and stations making more than $5 million would not have to pay for one year.

Essentially, it would mean a brand new stream of revenue. The bill cleared committee with a 21 to 9 vote and is now moving to the House for a full vote.

Of course, the National Association of Broadcasters isn’t amused. There’s some history between radio broadcasters and the record industry. In a previous incident where the record industry demanded additional royalty payments from radio broadcasters, the provision was that every time radios played their music, the radio stations would have to pay royalties to the labels. Once that became the case, then the radio broadcasters boycotted the major record labels and played independent music. Once the major record labels saw their music sales tank, they had to renegotiate with the broadcasters again and were forced to back down on the royalty demands.

So what’s the difference between then and now? According to a summary from Open Congress, the Performance Rights Act, or H.R. 4789, the bill would “establish a flat annual fee in lieu of payment of royalties for individual terrestrial broadcast stations with gross revenues of less than $1.25 million and for non-commercial, public broadcast stations”. Clearly, the record labels have learned from history and the broadcasters are not amused. Judging by the summary, you could play nothing but public domain Beethoven music all day long and still have to pay royalties to the record labels. Not hard to see why the National Association of Broadcasters are furious over this – it almost appears to be an existence tax.

As Techdirt notes, the history goes beyond just a royalty dispute. Techdirt’s article says, “of course, the most damning argument against the recording industry’s demand for money here is the fact that, for decades, the industry has (illegally) had the money go in the other direction. The system of payola has shown, quite clearly, how much the recording industry values airtime, in that it’s willing to pay radio stations to play its music.

So, can anyone explain why it’s illegal for record labels to pay radio stations to play music, but it’s okay for Congress to force radio stations to pay the record labels for playing their music? It defies common sense.”

Techdirt goes as far as calling this an RIAA bailout, but other bloggers go so far as to calling this a Britney bailout.

As we’ve alluded to throughout the article, the National Association of Broadcasters aren’t entirely amused by the whole idea. They even started a website at noperformancetax.org which has this to say:

In recent years, the record labels have seen sales of albums decline as more listeners opt for digital downloads. However, radio remains the number one promotional vehicle for music – it’s not responsible for the label’s resistance to the digital age, and it shouldn’t be on the hook to fix it. Radio already provides between $1.5 to $2.4 billion dollars annually in music sales for artists and record labels. By pushing a tax on local radio, record labels are biting the hand that feeds them.

Where does the money go?
In short, the money would flow out of your community and into the pockets of the record labels – the great majority of which are foreign-owned. The record labels would like for you to think this is all about compensating the artists, but in truth the record labels would get at least 50% of the proceeds from a tax on local radio.

How does this affect me?
If you’re one of the 235 million people who listen to radio each week, a tax could reduce the variety of music radio stations play, and all but eliminate the possibility of new artists breaking onto the scene. The tax could particularly affect smaller, minority-owned stations, some of which may have to switch to a talk-only format or shut down entirely.

It also affects your community. Radio stations are major contributors to public service – generating $6 billion in public service annually and providing vital news and community information and free airtime to help local charities. If a tax were imposed, stations’ critical public and community service efforts could be reduced.

And worst of all, if you’re one of the 106,000 Americans employed by local radio your job could be in jeopardy. In these troubling economic times, the last thing local radio needs is to be hit with a tax that some analysts estimate could be $2-7 billion annually.

It’s hard to say where this is going to go, but one thing is for sure, any movement on this legislation is bound to create some fireworks given that there are two huge US associations butting heads over this.

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There was some considerable debate over rules being put in place for radio last year. Many say that the per song license fees, among other things, would force many US web radio stations offline. Another controversial aspect was the idea that royalties would have to be payed, even if the artists being played was not a member of SoundExchange and actually gave permission to air their music.

Now, Billboard Magazine is reporting that Royalty Logic is challenging the constitutionality of the CRB. Royalty Logic was a part of the net radio rate trials wanting authority to compete with SoundExchange. The Copyright Royalty Board denied Royalty Logic.

The report continues:

The deadline for filing legal briefs with the Appeals Court has passed. Therefore, Royalty Logic is asking the court to permit the filing of additional arguments for consideration.

If permitted to file the brief, Royalty Logic will argue that the law creating the CRB violates the appointments clause of the U.S. Constitution. In other words, Congress improperly permitted the Librarian of Congress, which controls the Copyright Office, to appoint the three Copyright Royalty Judges.

If a court held that the law is unconstitutional, it is conceivable that decisions made by the CRB would be null and void.

About Royalty Logic:

Royalty Logic is a private copyright management organization, founded and managed by experienced industry professionals and authorized by the Librarian of Congress to negotiate, license, collect and distribute royalties generated from the digital delivery of sound recordings.

The United States copyright industry is credited for numerous instances of enforcing their copyright’s internationally. The most recent example is the case between the IIPA and Israel. While far from the first instance of enforcement of “intellectual property rights”, it may be a surprise to some to see the United States receiving a complaint about enforcing copyright laws from abroad.

This is exactly what has happened. The complaint comes from the ambassador from Europe to the United States John Bruton who says, “As the stakes continue to grow in the intellectual property arena, the U.S. should not weaken its voice in the debate by ignoring treaty obligations and WTO decisions. American delay on fixing the ‘Irish Music’ and ‘Havana Club’ cases diminish the arguments that both the U.S. and EU countries have against China and other countries that continue to tolerate widespread intellectual property rights infringement.”

“Happily, our relatively few – but important – cases are to be seen in the larger transatlantic context where cooperation on intellectual property enforcement is working successfully to combat piracy and counterfeiting. Today’s counterfeit goods aren’t just handbags and clothing, after all. They are fake medicines, toys, and electrical appliances, even knock-off airplane parts! Think about that as you board your next flight.”

One of the two cases involves the royalties of music – music that’s being retransmitted. Known as the “Irish Music” case, the United States is accused of halting royalty payments to copyright holders since 2004. The accusation is that commercial establishments in the US have played music and not paid ‘satisfactory’ royalties long before 2004. The World Trade Organization looked at the case and ruled in favor of Europe saying that this activity was in violation of the TRIPS agreement. The disagreement continues on to this very day.

The ambassador does have a very interesting point. It would make enforcement of intellectual property rights difficult if the members that are applying pressure in the first place are in disagreement with each other in the first place. A rift between the partners over piracy could prove much more damaging than the lost compensation in question given that other countries could rightfully ask if their intellectual property rights would be respected in a similar manner should they decide to enter into any intellectual property rights agreements with the United States who seem more than happy to enforce copyright laws in other countries.

Hat Tip: The IP Factor

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“I would allow the applications for judicial review, quash the decision of the Copyright Board dated July 19, 2007,” Writes the Ontario court, “and refer the applicants’ motions back to the Copyright Board for reconsideration and disposition in accordance with these reasons.”

CIPPIC (Canadian Internet Policy and Public Interest Clinic) notes, “The Court of Appeal’s decision suggests that the act of copying one’s own CDs onto an iPod infringes copyright under the current law, and underscores the need for revising the Act in a balanced manner that accommodates common consumer practices.”

Howard Knopf, a copyright lawyer in Canada who was involved in the case commented that the levy would have put up to 75$ on iPods and “other Digital Audio Recorders.” he also noted that the court took less than 24 hours to reach a decision.

Internet law professor Michael Geist added that the CPCC (Canadian Private Copying Collective) could very well appeal the decision.

Given that the court reportedly acted on a previous decision, it may well be unlikely that an appeal would be successful. On the other hand, if Copyright Reform were successful and it included a levy on such “recording devices”, the law may yet still change.

In a three-page lawsuit filed in Manhattan Supreme Court and made public on Wednesday, Ono alleges that Capitol Records and its parent company EMI Group PLC not only stiffed the estate out of millions from Lennon’s solo records by under-reporting royalties but that they were dishonest in their accounting statements.

The breach of contract filing includes a summons alleging that Capitol/EMI “breached these agreements and have abused the nearly half-century-old relationship of trust and confidence by willfully and knowingly underreporting royalties.”

The suit offers no specific details other than asking for at least $10 million plus interest.

Ono’s lawyer, Paul LaCalsi, was unavailable for comment.

Copyright holders will net eight per cent of the gross earnings from their work, less VAT. A minimum of four pence will be paid if tracks are discounted.

An alliance of the Mechanical Copyright Protection Society and the Performing Rights Society (MCPS-PRS) had proposed a new licence to cover electronic distribution. MCPS-PRS was demanding a 12 per cent cut of revenues from digital sales of whole tracks, above the 6.5 per cent it currently collects on CDs. Mobile ringtones are not covered by the new arrangement.

At the time, BPI general counsel Geoff Taylor complained: “The licence that the alliance is trying to impose for online music is unreasonable and unsustainable. It is charging a royalty rate on a download that is double the rate it charges for a song on a CD.”

By a 410-15 vote on Thursday, politicians approved a bill that would effectively require that “chat rooms” and “social networking sites” be rendered inaccessible to minors, an age group that includes some of the Internet’s most ardent users. Adults can ask for permission to access the sites.

Even though politicians apparently meant to restrict access to MySpace, the definition of off-limits Web sites is so broad the bill would probably sweep in thousands of commercial Web sites. Tech lobbying groups and libraries are protesting the measure.

“Social networking sites such as MySpace and chat rooms have allowed sexual predators to sneak into homes and solicit kids,” said Rep. Ted Poe, a Texas Republican and co-founder of the Congressional Victim’s Rights Caucus. “This bill requires schools and libraries to establish (important) protections.”

Even though politicians apparently meant to restrict access to MySpace, the definition of off-limits Web sites is so broad the bill would probably sweep in thousands of commercial Web sites that allow people to post profiles, include personal information and allow “communication among users.” Details will be left up to the Federal Communications Commission.