Legal Stuff

Should Government Criminalize Violent Artistic Expression?

17 March 2019

From Clannco:

Think of an artwork, song, film, video, poster, or photograph. In fact, with the omnipresence of social media, think of expression that any person—layperson or self-proclaimed artist—may disseminate into public space and which may be perceived as threatening to a group or individual. The creator of this expression may believe that her expression is just a “passive” and aesthetic expression of her thoughts and feelings and not an expression with intent to cause actual harm to a person or group. However, that person or group may believe, right or wrongly, that the expression constitutes a true threat against them. How then do we assess whether this threatening expression is in fact “true”?

In November 2013, a Pennsylvania trial court convicted a young, black rap artist, Jamal Knox, aka “Mayhem Mal,” for terroristic threats, witness intimidation, and conspiracy to commit terroristic threats. Knox appealed his conviction but the Pennsylvania Supreme Court affirmed the trial court. The conviction was based solely on the content of a song created in 2012 by Knox and Rashee Beasley, aka “Soldier Beaz,” that was uploaded to Facebook and Youtube. Knox’s song, “Fuck tha Police”—an obvious homage to NWA’s seminal 1988 release—contains lyrics about police generally as well as two Pittsburgh police officers who were involved in arresting Knox in 2012. The song lyrics expressed, in part, “I’ma jam this rusty knife all in his guts and chop his feet,” “artillery to shake the mother fucking’ streets,” and in relation to a police officer’s “shift over at three and I’m gonna fuck up where you sleep.” A Pittsburgh police officer who had been monitoring Knox and Beasley’s online presence discovered the song three days later, leading to the criminal charges against Knox and Beasley.

Can we objectively believe that Knox’s song constitutes a true threat? I don’t think so. In fact, Knox’s song presents us with a long standing tradition not only in rap but also other music genres (think heavy metal, punk, country) of including what some individuals deem to be violent and threatening lyrics.

. . . .

There is widespread disagreement among federal and state courts as to how to assess whether a statement is a “true threat” and thus unprotected by the First Amendment. Most courts apply what is called an objective standard, where the government is required to show that a reasonable person would regard the statement as a sincere threat. A minority of courts apply the subjective standard, which requires the government to show only the speaker’s intent to threaten. The U.S. Supreme Court had provided us with an answer to this question before, holding, in Watts v. United States (1969) that the First Amendment protects statements that a reasonable person would not regard as threatening. However, as often happens in Supreme Court jurisprudence, in a 2003 case, Virginia v. Black, concerning the constitutionality of a Virginia statute that criminalized the burning of a cross in public view “with the intent of intimidating any person,” the U.S. Supreme Court confused years of precedent by holding that true threats were “those statements where the speaker means to communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals.” This confusion led some courts to read Black to mean that the standard now is purely subjective, and thus the government must show only the speaker’s subjective intent to threaten. Both Pennsylvania courts applied the “subjective” test in convicting Knox.

. . . .

Allowing the government to regulate expression that is in fact threatening to a person or group is reasonable. However, and as with any form of government action, this permission to regulate must be narrowly tailored. Allowing the government to convict and incarcerate individuals for expression that is not objectively threatening will restrain artistic speech and is contrary to First Amendment principles. In fact, the U.S. Supreme Court itself agreed, stating in Virginia v. Black that a ’hallmark’ of the constitutional right to free speech is “to allow ‘free trade in ideas’—even ideas that the overwhelming majority of people might find distasteful or discomforting.”

Link to the rest at Clannco

 

Seven Negotiation Lessons from Amazon’s Hq Disaster in Queens

16 March 2019

From Working Knowledge, The Harvard Business School:

As Amazon’s stunning pullout from New York fades into the news archives, its potent lessons for business negotiators risk being lost. Highly promising deals in diffuse multiparty settings with many potential spoilers, like Amazon’s planned headquarters in Queens, often collapse as a result of negotiating too narrowly with those who have formal power and authority. Negotiation experts have a patriarchal name for a version of this classic—and avoidable—mistake: Decide-Announce-Defend or DAD.

Along with gaining the full-throated support of New York Mayor Bill de Blasio and Governor Andrew Cuomo, Amazon officials understandably figured that the prize it offered New Yorkers would sell itself: 25,000+ jobs paying in excess of $100,000 each with all the ancillary economic benefits. Decide (on Long Island City, Queens), Announce (the choice), and Defend (from attacks) … and, if you’re still standing, you win.

Except, Amazon decided, announced, defended, lost, and abruptly pulled out, blindsiding virtually everyone involved. As New York’s chief negotiator for the deal mourned, this “was supposed to have been a coronation but instead was more like a coronary.”

. . . .

This surprisingly common result is why an “A” is often appended to DAD: “DADA” means Decide-Announce-Defend-Abandon. An apparently irresistible deal blessed by the top authorities runs aground on unanticipated opposition. The trail of such failed deals is long;

. . . .

For instance, consider the award of the 2024 Olympics to Boston over Los Angeles, San Francisco, and Washington DC. Boston’s successful bid was driven by the support of the state’s governor, Boston’s mayor, and many of its most influential citizens. Yet a small group of opponents catalyzed a local movement that, despite being outspent 1,500 to one by the bid’s boosters, ultimately caused the city to back out in 2015.

. . . .

The frequent failures of DAD-style negotiation have led some project advocates to seek consensus among all stakeholders. In a city like Queens, riven with many factions and political agendas, Amazon would never have reached full consensus and didn’t try. Requiring full consensus in a multiparty deal makes you hostage to the most extreme or reluctant party. When you can anticipate unconditional opponents, or skeptics with diverse agendas who may opportunistically band together, don’t hand them blocking power.

So let’s assume that, with many contenders, Amazon had powerful reasons to choose New York. Comparative advantages presumably ranged from a large and highly educated employee pool to big incentives and to local entertainment options galore—not to mention that, once Amazon’s new headquarters were built, much of New York’s congressional delegation could be counted on for political support . . . in addition to that from Washington State and elected officials from its other new headquarters in Virginia. Apart from avoiding the DAD and full consensus traps, what could Amazon have done to retain these New York advantages? What are the broader lessons for those facing similarly challenging negotiations?

. . . .

The goal should be to build “sufficient consensus” for a “winning coalition” in spite of potential blockers. This means earning enough support among enough of the right parties to gain agreement on your proposal and ensure successful implementation. Building such a sustainable winning coalition involves systematic steps that my colleague David Lax and I call a “negotiation campaign”.

  • In a complex, multiparty setting, don’t take victory for granted, ever. Today, social media can quickly amplify the views of even a few vocal opponents, giving voice to latent negative concerns of many otherwise passive groups. As Amazon learned, an apparent “movement” can seemingly spring up from nowhere. It can rapidly gain traction, surprising and thwarting the confident protagonists of an apparently popular project.

. . . .

  • Identify and nurture potential allies before you need them. To Amazon, the supporters seemed self-evident; after all, more than 200 cities desperately vied for the prize it bestowed on New York. Yet well-organized opponents overcame the unorganized supporters of the deal. Old-school reliance on the mayor and governor, powerful power brokers, proved unable to mobilize sufficient backing. Beyond cultivating elite support, a project sponsor should systematically work with community groups and local leaders so they feel intense personal and tangible stakes in the proposal. Detailed preliminary discussions with construction trades should make the huge amount of new work crystal clear. Early “job fairs” with sample applications could help persuade lower-skilled groups that thousands of new support jobs and training opportunities would be forthcoming along with the $100,000+ job bonanza for high-skilled workers. Community groups looking for improved parks, sidewalks, and local amenities could be nurtured at relatively low cost with “good neighbor” credible commitments. Failing to send CEO Jeff Bezos to New York to stroke the egos of local supportive politicians and learn firsthand of any qualms was a missed opportunity. Having identified and nurtured supporters, they can be activated in favor of your project if and as needed.

. . . .

  • Remember that negotiation does not end with a “yes,” but requires enough ongoing support for implementation and sustainability. The kind of negotiation campaign that I’ve sketched is designed to build a sufficient, sustainable “winning coalition” on behalf of an initiative like Amazon’s. But as this experience shows, an initial “yes” is only the entry point to a successful project, which requires sustained support for long-term success.

Link to the rest at Working Knowledge

At a recent lunch with a group of attorney friends, the discussion turned to negotiation successes and failures.

PG was reminded of an interest in Negotiations Studies from several years ago and did some online research to follow up with his lunch companions on a couple of discussion points.

Negotiation Studies is a serious field for academic research. The topic often overlaps both business and law schools since graduates of both will be involved in negotiations during their careers.

All business people, including authors, are likely to be involved in more than one business negotiation in connection with their work, so PG will drop a negotiation item into TPV from time to time. Publishing contracts immediately leap to mind. However, negotiated agreements with cover artists, editors and book designers are also possibilities for indie authors.

One of the basic ideas in Negotiation Studies is that a successful negotiation leads to a successful conclusion for both parties and, where applicable, a mutually-beneficial long-term business relationship. Seeking a win-win resolution is the optimum result for the large majority of business negotiations. The disastrous end of the Amazon/New York HQ2 negotiations results, as the OP indicates, at least in part, a failure to apply good negotiation practices and principles to putting the deal together.

One example of a poor negotiation outcome, at least in the United States, often involves negotiating the price and terms for buying a new or used automobile.

Shoppers worry about being subjected to high-pressure negotiation tactics, paying more than they should have paid for the vehicle, etc., etc. There are certainly enough short-sighted auto salespersons to provide some basis for that fear.

However, if the auto dealer or salesperson considers the lifetime value of a satisfied customer, it’s clear that being on the winning side of a zero-sum psychological manipulation sales session is not the best outcome.

One of the largest expense items for a great many businesses, including auto dealers, is attracting customers. Billboards, television commercials, radio ads, direct mail, the cost of an attractive dealership facility in a good location, etc., etc., are an enormous expenditure focused on having individuals who are interested in purchasing an automobile come to the dealership (and not go to a competing dealership).

If a customer has a positive car-buying experience, all sorts of additional benefits accrue to the dealership. When the time comes for the customer to purchase another automobile, are they more likely to return to a dealer (and individual salesperson) that provided them with a good acquisition experience than they are to take a chance on having a poor experience by patronizing an unknown dealer?

When it’s time to service their vehicle, is a satisfied customer more or less likely to bring the vehicle back to the dealership that treated them fairly (and, with a smart dealer, provides a positive service experience)?

If a friend or relative mentions they would like to buy a new car, is the satisfied customer more likely to recommend the dealer and salesperson who provided a good purchase experience and sold the vehicle at a fair price? Other than the purchase of a home, an automobile is likely to be the most expensive purchase a resident of the US (and perhaps other countries as well) will make during their lifetime. An auto dealer that makes the purchase process feel fair and easy is providing a service to the customer by reducing the anxiety that might otherwise accompany the expenditure of so much money.

Bringing the discussion back to authors and books, PG suggests the negative experiences that accompany some of the take-it-or-leave-it negotiation tactics many publishers employ do not redound to the publishers’ benefit over the long term. Effectively requiring that an author who feels competent to negotiate her/his own publishing contract to retain and pay for a literary agent is another poor business practice in the field.

Amazon, Draft2Digital, Smashwords, etc., are a delightful change for many authors who were previously published traditionally. Choosing their own editor and cover designer is another relief for authors who experienced revolving door editors and cover designs that were obviously created by the lowest bidder.

Viewpoint Discrimination

14 March 2019

As some visitors to TPV will already understand, the First Amendment to the United States Constitution reads as follows:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

This amendment protects four fundamental rights of US citizens:

  1. Freedom to exercise their religious beliefs and prohibition against the creation of a government-approved religion
  2. Freedom of individual and collective speech and of the press
  3. The right to peaceably assemble for political and other purposes
  4. The right to communicate with government entities and individuals within the government regarding the improper operation of government

Among the elements of the First Amendment, freedom of speech and of the press – a means of disseminating speech beyond an individual or small group to a broader audience – has often been described as the most fundamental of the rights of a free people and the most necessary if government oppression and overreach is to be avoided.

First Amendment law is a wide-ranging and extensive field that has evolved and expanded over time. At the time of its passage, the “press” was based upon the printing press and generally comprised the printing of newspapers, books, pamphlets and posters.

Broadcast media of various types, including satellite broadcasting (which media are subject to government licensing and, in some cases, international treaties, due to the limits to the usability of various portions of the spectrum and the potential for interference with signal reception without some sort of system for allocating exclusive use of slices of spectrum bandwidth) and the Internet are also subject to First Amendment protection in the US.

The prohibition against unreasonable restrictions on freedom of speech generally affects restrictions by government, not by private individuals or organizations. A private homeowner can prohibit an individual or group of people from loudly protesting on the front lawn of the lot on which the home is built with virtually no restrictions. However, if the protest is held on a public sidewalk in front of the homeowner’s property, the circumstances under which the local government may prohibit or restrict such a protest fall under the ambit of the First Amendment’s speech protections.

One element of First Amendment law is Content Discrimination by government, described as:

[G]overnment has no power to restrict expression because of its message, its ideas, its subject matter, or its content. . . To permit the continued building of our politics and culture, and to assure self-fulfillment for each individual, our people are guaranteed the right to express any thought, free from government censorship. The essence of this forbidden censorship is content control. Any restriction on expressive activity because of its content would completely undercut the ‘profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open. (Wikipedia)

An especially-protected sub-part of Content Discrimination is Viewpoint Discrimination. Restrictions that apply to certain viewpoints but not others are usually overturned by courts when challenged.

Viewpoint discrimination is a form of content discrimination particularly disfavored by the courts. When the government engages in content discrimination, it is restricting speech on a given subject matter. When it engages in viewpoint discrimination, it is singling out a particular opinion or perspective on that subject matter for treatment unlike that given to other viewpoints.

For example, if an ordinance banned all speech on the Iraq War, it would be a content-based regulation. But if the ordinance banned only speech that criticized the war, it would be a viewpoint-based regulation. (The First Amendment Encyclopedia)

In the United States, particularly in some colleges and universities, some specific terms have come to be regarded as beyond the pale. The use of terms that are deemed disparaging to certain ethnic groups have fallen into that category, regardless of whether they were historically used as a neutral description of individuals of a certain race.

From Forbes:

Imagine that a group of musicians called themselves The N-Words. The uproar would be loud and swift, but should government deny them the right to use that name? As abhorrent as we might find that name, the answer is no. Government should be neutral on art, not judge it.

Censorship should not be wielded as a tool to suppress creativity in the marketplace , but it has been at the U.S. Patent and Trademark Office (PTO) until earlier this summer.

The Slants, an Asian-American band which adopted the slur against Asian people in hopes of turning it into something “beautiful or a point of pride,” were denied when they applied for a trademark by the PTO to protect their band’s name. Trademarks, a type of intellectual property, prevent other businesses from using similar marks or names that could cause confusion. They also allow the PTO to police against copycats and bring legal action against those who infringe.

The Slants’s application was denied on the grounds that the name violated the “disparagement clause” of federal trademark law. This clause prohibits the government from granting trademarks that insult any group of people. The Slants successfully appealed their case in various courts, but the PTO held firm and took the case to the Supreme Court, where The Slants won on free speech grounds (Matal v. Tam).

The Supreme Court unanimously struck down the disparagement clause as unconstitutional. Justice Samuel Alito Jr., who wrote the opinion, affirmed a “bedrock” principle of the First Amendment: speech cannot be banned because it offends. Alito noted, “We have said time and again that ‘the public expression of ideas may not be prohibited merely because the ideas are themselves offensive to some of their hearers.’”

. . . .

Government does not have license to shut down art that offends or messages they disapprove of – even those that others might find offensive, distasteful, and hurtful. The proper role of government is to provide and protect intellectual property rights — no more.

This case came at a critical moment. From college campuses to the entertainment industry, speech police are trying to ban any speech that offends their sensibilities. The Supreme Court has affirmed that every American has a right to express his or her thoughts – even if they offend others. The First Amendment precisely protects minority and dissenting views such as using a slur as the name of a band.

Link to the rest at Forbes

PG realized that the term “beyond the pale” has also fallen into disuse, although he is not aware of anyone describing it as “The BTP-Words”.

From The Phrase Finder:

‘[P]ale’ is the noun meaning ‘a stake or pointed piece of wood’, a meaning now virtually obsolete except as used in this phrase, but still in use in the associated words ‘paling’ (as in paling fence) and ‘impale’ (as in Dracula movies).

The paling fence is significant as the term ‘pale’ came to mean the area enclosed by such a fence and later just figuratively ‘the area that is enclosed and safe’. So to be ‘beyond the pale’ was to be outside the area accepted as ‘home’.

Catherine the Great created the Pale of Settlement in Russia in 1791. This was the name given to the western border region of the country, in which Jews were allowed to live. The motivation behind this was to restrict trade between Jews and native Russians. Some Jews were allowed to live, as a concession, ‘beyond the pale’.

Pales were enforced in various other European countries for similar political reasons, notably in Ireland (the Pale of Dublin) and France (the Pale of Calais, which was formed as early as 1360).

The phrase itself originated later than that. The first printed reference comes from 1657 in John Harington’s lyric poem The History of Polindor and Flostella. In that work, the character Ortheris withdraws with his beloved to a country lodge for ‘quiet, calm and ease’, but they later venture further:

“Both Dove-like roved forth beyond the pale to planted Myrtle-walk”.

Such recklessness rarely meets with a good end in 17th century verse and before long the lovers are attacked by armed men with ‘many a dire killing thrust’. The message is clear – ‘if there is a pale, decent people stay inside it’, which conveys exactly the figurative meaning of the phrase as it is used today.

Link to the rest at The Phrase Finder

Business Musings: Ghostwriting, Plagiarism, and the Latest Scandal

26 February 2019

From Kristine Kathryn Rusch:

Recently, I’ve been getting a lot of questions from interviewers that I have never gotten before. They ask, “Are you going to join the latest trend and hire ghostwriters to put out more books in your series?”

So far, I have managed to refrain (at least on podcasts) from responding, “Are you fucking kidding me?” and simply say, “No, I’m too much of a control freak.”

But I have a longer answer in my head. The answer is complicated. Let me see if I can break it down for you.

Readers don’t buy plots. They buy a writer’s point of view, her style, and the way she tells a story. Some idiot whose name I will not repeat and whose blog I will not link to wrote in response to the latest scandal (which I will discuss below): “What constitutes plagiarism in a genre in which formulaic storylines and themes are the norm?”

If the idiot understood copyright, she would know the answer to that question: What gets copyrighted is the form the work takes, not tropes or the formula.

Readers like tropes and formulas. They like familiar stories well told. They also like familiar stories with twists that take the familiar and make it something new.

Readers follow writers, as a brand, and readers are very smart. Readers know that a book by James Patterson will have one voice, but a book by James Patterson and Maxine Paetro will have a completely different voice. Readers will often say (even in the reviews) that they might like Patterson by himself, but refuse to read the books he’s written in collaboration with someone else.

The voice changes when someone else writes a book in the same series. Ian Fleming’s James Bond is not the same as Jeffrey Deaver’s, no matter how hard Deaver (whose work I love) tried to catch Fleming’s Bond.

If I want to remain true to my characters and my readers, I will never bring in a ghostwriter. Never.

If I worked with another writer, that writer would get credit in a shared byline.

. . . .

I’m also aware of the fact that writing in someone else’s universe is a skill that not every writer has. I’ve played in other people’s universes. I’ve written more tie-in novels than I want to think about. My favorites were Star Trek novels, but I have written a Star Wars novel, and X-Men, and several others, often in collaboration with my husband Dean. Note that these are media properties that already have more than one writer on board. In fact, they have an entire team of people putting the properties together, because media properties are, by definition, assembled collaboratively.

And still, people oversee these novelizations. The licensors review them with a fine-tooth comb. They make sure that nothing violates the rules of the universe and that the characters are consistent and that everything fits into what the fans expect.

. . . .

Because fans get angry when someone writes something that doesn’t fit in an established universe. Some established universes bring in lawyers. And all involve contracts state in unequivocal terms that the writer is writing original material in a particular universe, and that the words and writings are the writer’s own, not cribbed from other sources.

Here’s the thing about contracts: the lawyers who write them try to see every eventuality, but sometimes they miss. And when they miss, they rectify that miss in the next contract. So the fact that there are long clauses about originality and plagiarism and libel and all of those things in traditional publishing work-for-hire contracts means that somewhere, somewhen, someone plagiarized or libeled someone in a work-for-hire project.

. . . .

When I watched the collaboration start in the indie world—and when one big selling KDP author told me that he doesn’t have contracts with his collaborators because they all trust each other, well, I just about had a fit. I tried to talk him into contracts, but no, that’s a trust thing, apparently. And it’ll bite him one day, in a very bad way.

Then, shortly thereafter, I learned that dozens of big selling indie authors can’t produce books fast enough to game the Amazon algorithms, so those writers started hiring ghostwriters to produce more books, so the writer had time to write more books too.

I remembered thinking: that’s not how it works. A writer with a dozen ghostwriters would be spending all her time overseeing those writers, not writing more. She’d have less time not more.

Unless she hired someone to oversee them. And then she’d have to trust that person implicitly. I thought about the infrastructure it would take to maintain that, the readers and the lawyers for the contracts and thought, well that’s a blog post one day, warning writers away from doing this.

. . . .

In the last twenty-four hours, things got even more complicated. A few people Serruya had hired as ghostwriters –and who quit when they saw what they had to work with—claim that Serruya cobbled the books together from random quotes from various novels, and had the ghostwriters polish the damn things.

. . . .

[W]hat’s to stop the ghostwriters from plagiarizing? It’s not their name on the manuscript. And I know some of the writers who are hiring ghostwriters. Those writers aren’t vetting the books. They’re not doing the kind of due diligence that college professors and high school teachers do to see if the writing is plagiarized.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

PG will add a note to the description of standard legal contracts in the OP.

Standard contracts that a large organization uses never get shorter. Over time, they grow. When a situation arises that hasn’t been clearly addressed in the contract, a new contract provision is drafted and inserted. If a new court decision comes down relating to the subject of the contract, a clarifying paragraph is added. If a lawyer for the company sees a similar contract from another company that includes a provision the lawyer hasn’t seen before, the new provision will be dropped into the standard contract.

If the contract is used over a period of several years, it grows and grows and grows. A ten-page contract becomes a twenty-page contract on its way to becoming a thirty-page contract.

If counsel is not paying attention to a long contract, a new provision might conflict with or create an ambiguity in the meaning of a prior provision in the contract, so the careful lawyer will do at least a quick review of the entire document to avoid this problem.

On the question of copyright protection for contracts, technically, there is nothing in the U.S. copyright laws that precludes registering a contract for copyright protection. Undoubtedly, it has happened at some time, but PG hasn’t heard of any litigation filed by one lawyer successfully asserting infringement of a copyright on a contract by another lawyer. (He would be happy to learn about such litigation in the comments if anyone knows of such happening.)

Law books containing form contracts of various types are available for purchase through major legal publishers. As far as copyright for individual contracts in such a book, the purpose for which attorneys purchase such publications is to use them as a basis for drafting contracts for their own clients. One might argue an implied license to do so accompanies each such book.

Back to a copyright claim for an individual contract, PG suggests it might be difficult for the author to establish he/she had not utilized material created by others in the creation of the contract and to demonstrate the contract as a whole was the result of original creative work by the author.

PG will note that an interesting lawsuit was filed several years ago by an insurance company which had labored to create a plain-English version of its previous policies and related documents which were definitely-not-plain-English. Another insurance company copied the plain-English versions verbatim and was sued by the first company. In that case, the court found the first company had a valid copyright to its documents and the second company had infringed those copyrights.

In the fraternity/sorority of lawyers, PG suspects any attorney who claimed a copyright in a contract form would certainly be regarded as a jerk. Again, lawyers copy from the legal work of other lawyers all the time, in part, as a way of saving clients the expense of paying a lawyer to create a contract from a blank screen.

Yes, Retailers Are Colluding to Inflate Prices Online

26 February 2019

From Fast Company:

Have you ever searched for a product online in the morning and gone back to look at it again in the evening only to find the price has changed? In which case you may have been subject to the retailer’s pricing algorithm.

Traditionally when deciding the price of a product, marketers consider its value to the buyer and how much similar products cost, and establish if potential buyers are sensitive to changes in price. But in today’s technologically driven marketplace, things have changed. Pricing algorithms are most often conducting these activities and setting the price of products within the digital environment. What’s more, these algorithms may effectively be colluding in a way that’s bad for consumers.

Originally, online shopping was hailed as a benefit to consumers because it allowed them to easily compare prices. The increase in competition this would cause (along with the growing number of retailers) would also force prices down. But what are known as revenue management pricing systems have allowed online retailers to use market data to predict demand and set prices accordingly to maximize profit.

These systems have been exceptionally popular within the hospitality and tourism industry, particularly because hotels have fixed costs, perishable inventory (food that needs to be eaten before it goes off), and fluctuating levels of demand. In most cases, revenue management systems allow hotels to quickly and accurately calculate ideal room rates using sophisticated algorithms, past performance data and current market data. Room rates can then be easily adjusted everywhere they’re advertised.

. . . .

These revenue management systems have led to the term “dynamic pricing.” This refers to online providers’ ability to instantly alter the price of goods or services in response to the slightest shifts in supply and demand, whether it’s an unpopular product in a full warehouse or an Uber ride during a late-night surge.

. . . .

However, new algorithmic pricing programs are becoming far more sophisticated than the original revenue management systems because of developments in artificial intelligence. Humans still played an important role in revenue management systems by analyzing the collected data and making the final decision about prices. But algorithmic pricing systems largely work by themselves.

. . . .

The algorithms study the activity of online shops to learn the economic dynamics of the marketplace (how products are priced, normal consumption patterns, levels of supply and demand). But they can also unintentionally “talk” to other pricing programs by constantly watching the price points of other sellers in order to learn what works in the marketplace.

These algorithms are not necessarily programmed to monitor other algorithms in this way. But they learn that it’s the best thing to do to reach their goal of maximizing profit. This results in an unintended collusion of pricing, where prices are set within a very close boundary of each other. If one firm raises prices, competitor systems will immediately respond by raising theirs, creating a colluded non-competitive market.

Monitoring the prices of competitors and reacting to price changes is normal and legal activity for businesses. But algorithmic pricing systems can take things a step further by setting prices above where they would otherwise be in a competitive market because they are all operating in the same way to maximize profits.

This might be good from the perspective of companies, but is a problem for consumers who have to pay the same everywhere they go, even if prices could be lower. Non-competitive markets also result in less innovation, lower productivity and, ultimately, less economic growth.

. . . .

The European Commission has warned that the widespread use of pricing algorithms in e-commerce could result in artificially high prices throughout the marketplace, and the software should be built in a way that doesn’t allow it to collude.

Link to the rest at Fast Company

In the US, price-fixing is illegal under U.S. antitrust laws.

From The Federal Trade Commission:

Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors. When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement.

A plain agreement among competitors to fix prices is almost always illegal, whether prices are fixed at a minimum, maximum, or within some range. Illegal price fixing occurs whenever two or more competitors agree to take actions that have the effect of raising, lowering or stabilizing the price of any product or service without any legitimate justification. Price-fixing schemes are often worked out in secret and can be hard to uncover, but an agreement can be discovered from “circumstantial” evidence. For example, if direct competitors have a pattern of unexplained identical contract terms or price behavior together with other factors (such as the lack of legitimate business explanation), unlawful price fixing may be the reason. Invitations to coordinate prices also can raise concerns, as when one competitor announces publicly that it is willing to end a price war if its rival is willing to do the same, and the terms are so specific that competitors may view this as an offer to set prices jointly.

Not all price similarities, or price changes that occur at the same time, are the result of price fixing. On the contrary, they often result from normal market conditions. For example, prices of commodities such as wheat are often identical because the products are virtually identical, and the prices that farmers charge all rise and fall together without any agreement among them. If a drought causes the supply of wheat to decline, the price to all affected farmers will increase. An increase in consumer demand can also cause uniformly high prices for a product in limited supply.

. . . .

Antitrust scrutiny may occur when competitors discuss the following topics:

  • Present or future prices
  • Pricing policies
  • Promotions
  • Bids
  • Costs
  • Capacity
  • Terms or conditions of sale, including credit terms
  • Discounts
  • Identity of customers
  • Allocation of customers or sales areas
  • Production quotas
  • R&D plans

A defendant is allowed to argue that there was no agreement, but if the government or a private party proves a plain price-fixing agreement, there is no defense to it. Defendants may not justify their behavior by arguing that the prices were reasonable to consumers, were necessary to avoid cut-throat competition, or stimulated competition.

. . . .

Q: The gasoline stations in my area have increased their prices the same amount and at the same time. Is that price fixing?

A: A uniform, simultaneous price change could be the result of price fixing, but it could also be the result of independent business responses to the same market conditions. For example, if conditions in the international oil market cause an increase in the price of crude oil, this could lead to an increase in the wholesale price of gasoline. Local gasoline stations may respond to higher wholesale gasoline prices by increasing their prices to cover these higher costs. Other market forces, such as publicly posting current prices (as is common with most gasoline stations), encourages suppliers to adjust their own prices quickly in order not to lose sales. If there is evidence that the gasoline station operators talked to each other about increasing prices and agreed on a common pricing plan, however, that may be an antitrust violation.

Q: Our company monitors competitors’ ads, and we sometimes offer to match special discounts or sales incentives for consumers. Is this a problem?

A: No. Matching competitors’ pricing may be good business, and occurs often in highly competitive markets. Each company is free to set its own prices, and it may charge the same price as its competitors as long as the decision was not based on any agreement or coordination with a competitor.

Link to the rest at The Federal Trade Commission

Price fixing is illegal whether competitors set minimum or maximum prices or establish a range of prices within which they will price their goods.

One of the key elements of illegal price-fixing is an agreement (written, verbal, or inferred from conduct) among competitors. A third party that mediates, organizes or facilitates price-fixing among competitors is also guilty of price fixing. (See, for example, Apple and a group of major publishers agreeing to fix prices on ebooks and force Amazon to increase its ebook prices, in PG’s indescribably humble opinion, one of the more inept attempts at price fixing in the hundred-plus years that the practice has been outlawed in the U.S.).

The OP raises an interesting question about whether pricing systems executed by computers using artificial intelligence constitute illegal price fixing.

Under present law, it is clear that price-fixing agreements established among competitors through a third party are illegal and, per Apple and other cases, the third party is also chargeable with price-fixing. If each competitor appoints a third party and the third parties agree to fix prices or set up a system for establishing uniform prices, PG believes that’s also a slam-dunk price-fixing violation.

The issue of whether artificial intelligence systems that look at the same market data and set prices in a similar manner are engaged in price-fixing is very interesting.

Competitors who each look at market, pricing and available competitor data without using artificial intelligence and set the same prices are not guilty of price-fixing so long as there is no agreement between them to fix prices. Competitor A can look at the prices being charged by Competitor B and use that information to adjust its prices. As described in the OP, that’s how many gas stations typically set prices within a given geographic area.

In the gas station illustration, each station is sending pricing signals to the general public, including other gas stations.

If gas station A reduces its price, other gas stations may respond by matching the price cut, cutting prices below those of A as a competitive move, or leaving prices higher than A and banking on other competitive advantages – a more convenient location or better prices on Diet Coke, for example – to offset A’s pricing advantages.

Not matching a price cut represents a temporary strategy, however, because, based on its own decision factors, a competing station can adjust its prices at any time if it perceives its pricing strategy is less than optimum.

Going back to the OP, PG doesn’t see that AI systems watching the prices other AI systems are setting constitutes illegal collusion. If the AI systems somehow communicated with each other and simultaneously increased or dropped prices, the owners of those systems might be guilty of price-fixing.

However, in the absence of some sort of connection beyond closely watching the public pricing activities of competitors, PG doesn’t see any sort of illegal collusion or conspiracy to fix prices. Setting prices to maximize profits is not, by itself, a violation of any law of which PG is aware. It’s a fundamental principle of capitalist economies.

Back to the gas station example – If two gas stations are located across the street from each other and each station assigns an employee to watch the posted prices of the other station and immediately change prices whenever the station across the street changes its prices, that’s not an illegal price-fixing agreement between the two stations.

 

 

How Can Museums Copyright the Works of Old Masters?

12 February 2019

From Artrepreneur:

Go to any art museum in the world and you’ll find hundreds of visitors with cameras in hand, snapping photos of their favorite, well-known works. Many of these great pieces no longer have copyright protection yet, these institutions often sell merchandise such as posters that claim the Museum has copyright ownership. As a copyright holder, that institution would have the exclusive right to reproduce the work, make derivatives of it, publicly display it, and distribute it. Conversely, that also means the copyright holder can stop anyone else from doing those things. Take the Monet poster of The Four Trees from the Metropolitan Museum of Art in New York City, shown here. This poster includes a copyright notice:  © 2010 MMA.

If the Monet is in the public domain, meaning free from copyright protection, then how can the Met Museum claim copyright on such an old work? If The Four Trees is really copyright free, then can someone sell an image of the work? Can the Met Museum stop someone from taking a photo of the painting and selling that photo or creating posters from it?  For that matter, who would hold a copyright on a photo of a copyright-free work?

. . . .

Let’s start with some basic tenets of copyright protection. First, the Copyright Act says that copyright protection is available for “original works of authorship fixed in any tangible medium of expression . . . ”  That’s just a fancy way of saying that the work is new and unique. It isn’t a copy or based on someone else’s work and the work has been produced onto something tangible that enables it to be perfectly reproduced and shown to others, such as a work on paper, photos from a digital camera, or a .jpg image file.

. . . .

In addition, the courts have said that for a work to be copyrightable, it must have some level of creativity. Admittedly, this is somewhat subjective and there is no “bright line” from which we know must be crossed to determine the level of creativity required. However, in general, the required level of creativity is very low.

So, if a work fits these criteria; original, tangible and creative, then copyright is automatic and immediate. For example, if you take a photo of your friends with your iPhone camera, the photo is automatically copyrighted because 1) the composition of the photo such as the placement and position of your friends and the setting is unique and original; 2) the choices you made when taking the photo, such as the angle  and distance is considered creative; 3) the photo is captured by the camera sensor so it is fixed in a tangible medium. All three criteria are therefore met.

. . . .

Now that we know the basic factors for copyright eligibility, let’s use these concepts to analyze whether the Met Museum can claim a copyright for the Monet poster. First, we know the poster is fixed in a tangible medium. In this case, it is the paper the poster is printed so that part is fine.

What about originality? One could argue that the Met Museum has merely reproduced Monet’s work so from that perspective it is just a copy and therefore, not original. In addition, Monet’s The Four Trees was created in 1893, and as discussed, any work created prior to 1924 is in the Public Domain. Reproducing artwork that is in the Public Domain cannot extend copyright protection; otherwise, every time a creative work had reached the end of its copyrightable life, the author could just take a picture of it to renew its copyright. The requirement for a limited time would essentially be meaningless.

If the Monet Poster is merely reproducing the Monet, then it cannot claim copyright protection.

. . . .

Well, the copyright isn’t in the Monet painting but in the poster itself.  If the creator of a work incorporates preexisting material from another creator, such as public domain or other copyrighted works, into his or her new work, the new work can receive a copyright if 1) the creator disclaims the preexisting material and 2) the remaining part of the work is copyrightable (i.e. original, in a tangible medium) and has some creativity.

. . . .

The Monet poster is no different. Monet’s The Four Trees is not the sole element on the poster but includes text that is not haphazard but designed, even if the design is a simple one. The position of the text on the page, the font, and size, as well as the choice of color (or lack thereof), are all creative choices and are unique to this poster. So, the Met Museum is claiming copyright protection for the layout of the poster, not the Monet itself, which it would have to disclaim.

. . . .

While taking a photo of a Public Domain work is free to sell from a copyright perspective, there are other legal issues to consider. One of these issues is contract law. When you buy your ticket to enter a museum, even if the museum is free to enter, there are usually Terms of Service that you agree to in exchange for entering the museum. The terms dictate behavior and rules of the museum and can be far-reaching, including expected behavior, age limits, use of certain equipment or even what size bag you are allowed to bring into the museum.

You automatically agree to the Terms of Service when you step onto the museum grounds. An explicit agreement, acknowledgment, or even knowing where to find them is not required. The Terms of Service are unique to each museum and can vary widely, especially between private, public or government-subsidized institutions. Most will include a section related to photography.

The Met Museum’s photography policy states:

“Still photography is permitted for private, noncommercial use only in the Museum’s galleries devoted to the permanent collection. Photographs cannot be published, sold, reproduced, transferred, distributed, or otherwise commercially exploited in any manner whatsoever. Photography is not permitted in special exhibitions or areas designated as “No Photography”; works of art on loan from private collections or other institutions may not be photographed. The use of flash is prohibited at all times and in all galleries. Movie and video cameras are prohibited. Tripods are allowed Wednesday through Friday, and only with a permit issued by the Information Desk in the Great Hall. “

According to these terms, despite the copyright issues discussed earlier, selling photos taken within the museum is prohibited and override any issues of copyright. So even though the work is in the Public Domain and the only place to take a true photo is at the Met Museum, you would still be unable to sell the photo taken there.

. . . .

So how can museums copyright paintings from old masters? As we have seen, they can’t. What they can do, though, is copyright the poster and place the copyright notice in such a way that it misleads people into thinking that they have this right.

Link to the rest at Artrepreneur

PG suggests that a wise museum director would think twice before attempting to enforce a “contract” printed in mouse type on the back of a ticket. (As a point of clarification, prior to the existence of computer mice, “mouse type” referred to tiny, almost unreadable type sizes used for disclaimers of various sorts).

A couple of litigation strategies and some other thoughts come to mind:

  1. One might argue that the form of the contract was inherently deceptive and unenforceable in that it was purposely designed to discourage reading.
    1. One might interview a random sample of museum patrons to ask them what agreements they made with the museum when they entered the museum and whether they had even noticed the existence of a contract on the back of their ticket.
    2. In such case, PG posits that one would be lucky to find one patron out of one thousand who knew anything about the terms of the “binding contract.” Is this a species of consumer fraud perpetrated by the Met?
  2. Since young persons frequently come to art museums, is the museum attempting to bind them to a contract when they are too young to enter into contracts under state law?
    1. As can be attested by large numbers of parents and grandparents, any child can take a photo with an iPhone.
    2. If a child takes a photo of a Monet on a school outing, can the child’s parent who was at work and didn’t go to the museum (and thus, was not bound by the “contract” on the back of the child’s ticket) exploit it commercially?
    3. In fact, if a group arranges a visit to the Met, does each member of the group actually receive a ticket with the “contract” language on the back? If the group is comprised of school children, does each parent sign a document that includes the terms of the Met’s contract, agreeing to be bound by that contract?
  3. PG has not entered the Met Museum for many years, but he doubts mouse type on the back of the Met’s tickets meets legal requirements necessary to accommodate those with vision impairment or other disabling conditions under various federal and state laws.
  4. One might argue that the Met’s photography policy is a poorly-disguised attempt to circumvent the copyright laws of the United States and France (and the various international copyright treaties entered into by each country over the years since Monet made his painting) by effectively extending copyright protections far beyond the terms permitted under the laws of the United States and such treaties.
    1. As the OP describes, the US Constitution permits Congress to enact copyright laws for the purpose of “securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries”.
    2. Whatever copyright protections Oscar-Claude Monet, the creator of the work, may have held have long expired, but the Met still deceptively attempts to treat the painting as somehow protected from unauthorized copying and reproduction in a manner equivalent to copyright protection.
    3. The Met helpfully provides the provenance of the painting:
      1. [Knoedler, New York, until 1893; stock no. 7287; their sale, American Art Association, New York, April 14, 1893, no. 362, as “The Four Trees (Poplar Series),” for $1,175 to Durand-Ruel]; [Durand-Ruel, New York, 1893–95; stock no. 1063; sold on January 12, 1895 to Havemeyer]; Mr. and Mrs. H. O. Havemeyer, New York (1895–his d. 1907); Mrs. H. O. (Louisine W.) Havemeyer, New York (1907–d. 1929; cat., 1931, p. 160, ill., as “Landscape—Les Quatre arbres”)
      2. In each of the transfers of the painting, beginning with its sale by Monet, was copyright to the painting explicitly transferred or, in the absence of an explicit copyright transfer, did Monet retain copyright and merely transfer the painting itself? Where’s the proof?

PG has blathered for too long. As an amateur photographer, he has always been annoyed by museums’ attempts to force patrons to purchase an often second-rate photograph of an artwork from the museum instead of permitting PG to take a more pleasing (at least for him) photo of his own for his personal enjoyment.

GTA V Cheat Maker Has to Pay $150,000 in Copyright Damages

8 February 2019

From TorrentFreak:

Over the past two years, there’s been a wave of copyright infringement lawsuits against alleged cheaters or cheat makers.

Take-Two Interactive Software, the company behind ‘Grand Theft Auto V’ (GTA V), is one of the major players involved. The company has filed several lawsuits in the US and abroad, targeting alleged cheaters.

Last August the company filed a case against Florida resident Jhonny Perez, accusing him of copyright infringement by creating and distributing a cheating tool. The software, known as “Elusive,” could be used to cheat and grief, interfering with the gameplay of others.

The “Elusive” cheat was previously sold online at prices ranging from $10 to $30, depending on the package. Before filing the lawsuit, Take-Two attempted to find out exactly how much money was made in the process, but Perez failed to hand over detailed financial records.

. . . .

According to the company, it’s clear that the cheat maker is guilty of both direct and contributory copyright infringement. As such, it asked the New York federal court for the maximum statutory damages amount of $150,000, plus $69,686 in attorney’s fees.

Take-Two argued that these damages are warranted because the cheating activity resulted in severe losses. According to an estimate provided by the company, the harm is at least $500,000. In addition, the maximum in damages should also act as a deterrent against other cheat developers.

. . . .

“Mr. Perez’s Elusive program creates new features and elements in Grand Theft Auto which can be used to harm legitimate players, causing Take-Two to lose control over its carefully balanced plan for how its video game is designed to be played,” he writes.

In addition, the Judge notes that the cheat discouraged users from future purchases and gameplay and that the unlimited currency cheat undermined Take-Two’s pricing and sales of legitimate virtual currency.

. . . .

In addition to the monetary damages, the Court also issued a permanent injunction prohibiting the cheat maker from continuing infringing activities moving forward.

Elusive hasn’t been available for sale since last year. It was taken offline after Perez was contacted by Take-Two.

“After discussions with Take-Two Interactive, we are immediately ceasing all maintenance, development, and distribution of our cheat menu services,” a public announcement read at the time.

At the time, the cheat maker informed its users that it would donate the proceeds to a charity which Take-Two could pick. However, the default judgment makes it clear that this money should go directly to the game company instead.

Link to the rest at TorrentFreak

PG says that, unsurprisingly, the author of the OP doesn’t seem to understand the difference between obtaining a court judgment against an individual defendant and actually collecting money from that defendant.

PG will make a few comments about collecting debts under the US federal and state court systems below. Different states have different laws and practices concerning the collection of a civil judgment against an individual or corporation, so, if anyone visiting TPV is trying to collect such a judgment, he/she will have to contact an attorney in the jurisdiction that issued the judgment.

As a general proposition, in the United States, an individual is not going to be sent to jail for failing to pay a civil court judgment such as the one which appears to be involved in the OP. While a great many states used to have debtor’s prisons, imprisonment for an unpaid civil debt is, for all intents and purposes, unconstitutional in the US unless it is clear the individual has the money to pay the debt.

If an individual fails to pay a criminal fine and a court determines that the individual has the means to do so, after being warned to pay the fine or work out a payment plan with the district attorney/state’s attorney/city attorney/etc., such an individual may be subject to imprisonment for contempt of court and would typically be held in jail until he/she paid the fine. After all, it would not be unusual for a violation of a criminal law to carry the threat of being sent to a local jail or imprisoned in a state or federal penitentiary as potential punishment. “Pay the fine or do the time,” is often a short-hand summary for criminal punishment.

Similarly, payment of court-ordered child support is treated as a special case and the failure to pay support when the individual has the means to do so may result in jail confinement for contempt of court. In this type of case, the court will often require that the non-custodial spouse pay a lump sum toward back child support and promise to continue regular child support payments thereafter as a condition of release.

Suffice to say, if an individual is unable to work, he/she is unlikely to continue to receive the fruits of his/her labor for very long, so those who are entitled to receive child support and family law courts will often try other means of pressuring an individual to make payments in lieu of incarceration.

For example, if the individual with the child support obligation is self-employed and works Monday-Friday, a court might order the individual jailed on Saturday and Sunday for contempt, then released on Monday morning to go back to work.

If an individual is employed by a third party, at least a portion of the money the third party owes that individual as salary may be garnished by the court so the employer pays part of the salary to the individual and part of the salary to the court to be turned over to the person who has a judgment against the employee.

Bank accounts, real estate, automobiles, etc., are also subject to seizure and, in the case of real estate and automobiles, for sale at an auction or some other public method of turning things into cash for payment of an individual’s civil debts.

Court records in most cases are public documents, so a judgment issued against an individual will almost certainly be discovered by various credit bureaus and be added to an individual’s credit report to that individual’s detriment. Ditto for judgment issued against a company.

The process of collecting most judgments in the United States will vary from state to state and between different courts operating within the same state. The disappointing bottom line for some people who win a court case in which the loser is ordered to pay the winner some money is that the winner will have to retain counsel for additional assistance in collecting the money. The court will usually not provide much in the way of affirmative assistance to help an individual collect the money the court has just awarded the individual.

PG’s general suggestion, one he has provided to countless clients over the years, is, “Don’t do business with crooks.” The chances of enjoying a profitable and hassle-free business relationship with a crook are not very good.

A corollary in the world of romance is “Don’t marry a crook” and, married or not, “Don’t have children with a crook.”

PG’s practical advice about avoiding crooks applies to the publishing world just like it does everywhere else. While a great many people are honest, at least some crooks infest every line of business. If a publisher fails to faithfully honor its obligations to other authors, including its obligations to calculate royalties fairly and pay them promptly, the chances that publisher will make an exception to its normal dishonest business practices for any particular new author are remote.

PG will repeat his standard disclaimer once again:

Nothing PG posts on TPV should be understood or relied upon as legal advice. You obtain legal advice by retaining a lawyer, not by reading a blog. PG only provides an overview of various legal topics on TPV for the general information of authors and others, not to assist anyone in understanding or resolving a particular legal issue.

PG is a lawyer, but he is not your lawyer unless and until you and he have a conversation about your legal issues and both of you signs a written retainer agreement under which PG is to provide legal services to you.

 

Musicians Attempt Class Actions Against UMG, Sony to Reclaim Rights to Recordings

7 February 2019

From The Hollywood Reporter:

For the past decade, a number of prominent musicians including Tom Petty and Bob Dylan have quietly attempted to reclaim rights to songs by serving notices of termination to publishers and record labels. Often, like in the case of Prince, these notices become invitations to renegotiate deals for more favorable royalty arrangements. But according to lawsuits filed Tuesday in New York federal court, in the face of hundreds of termination notices, UMG Recordings and Sony Music have “routinely and systematically refused to honor them.”

The named plaintiffs in the UMG case are John Waite, a solo artist and former lead singer of the 1970s group The Babys, and Joe Ely, who has recorded 18 solo albums and also was a performer on works by The Clash and Rosie Flores. In the Sony case, David Johansen of The New York Dolls, John Lyon (known as Southside Johnny) and Paul Collins of The Beat are hoping to lead the charge.

They are looking towards the Copyright Act of 1976, which extended the term but also gave artists who bargained away rights during the early part of their careers a second bite at the apple by allowing them to terminate copyright grants during the latter portion of the copyright term.

. . . .

The newest lawsuits state that UMG and Sony are regularly taking the position in response to termination notices that recordings are “works made for hire” because of contractual language in recording agreements.

“As a result of UMG’s policy, UMG has refused to acknowledge that any recording artist has the right to take over control of the sound recordings, or enter into an agreement with a different label for the exploitation of recordings, after the effective date of termination,” states the complaint. “In many instances, UMG has continued to exploit the recordings after the effective date, thereby engaging in willful copyright infringement of the United States copyright in those recordings.”

. . . .

Not only are UMG and Sony being sued for infringing the copyrights of many of the songs in their respective catalogs, but the plaintiffs seek declaratory relief that sound recordings can’t ever be considered “works made for hire” under the law, that release of sound recordings in album format doesn’t constitute a “contribution of a collective work” or “compilation” (other exceptions to termination), that foreign choice of law provisions in contracts don’t have any effect on U.S. copyright law with respect to the termination powers, that sound recordings aren’t “commissioned works,” and that recording artists aren’t barred from terminating based on the use of loan-out companies.

Link to the rest at The Hollywood Reporter

Attentive readers will note the term, “loan-out companies” in the OP and wonder what those are.

From Forbes:

Entertainers such as actors and musicians often set up loan out corporations as a way to protect their assets and obtain certain tax benefits. The basic way a loan out corporation works is that the entertainer – an actor, for instance – is an “employee” of the loan out corporation. The corporation then enters into contracts with other businesses such as a production company. Then the loan out corporation “loans out” the services of the actor to the production company.

How does it work? The loan out corporation receives monies from contracts with other businesses and pays a salary to the entertainer for services performed. Meanwhile, the loan out corporation provides essential services to the entertainer, from accounting and legal, to coaching and agency fees. All business expenses incurred are deductible because the entertainer is officially an employee of the loan out company. 

“Wealthy celebrity clients are increasingly approaching advisors about the benefits of loan out corporations. The structures are easy to establish and maintain while offering a wide array of tax mitigating possibilities,” explains Evan Jehle, a partner at LVW/Flynn. “Loan out corporations are also being utilized as vital components of asset protections strategies for high-profile ultra-wealthy families. Wealth and fame make athletes and entertainers particularly attractive targets for financial predators and frivolous lawsuits. Because loan out corporations are separate legal entities, the personal wealth of the entertainers is protected from liability connected to the corporation.”

Link to the rest at Forbes

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