Source: https://schlissellaw.wordpress.com/2009/09/
Timestamp: 2019-04-22 12:50:52+00:00

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Stephen M. Kramarsky, in yesterday’s New York Law Journal (subscription only), reported on the Second Circuit Court of Appeals recent decision in Arista Records, LLC et al. v. Launch Media Inc., which held that customized internet “radio” services were free to pay a legally established royalty, rather than having to negotiate with each individual copyright holder.
The issue there was online services that let users create “customized” internet radio stations like Pandora Radio, Slacker, and Last.fm. These services allow users to create an internet radio channel that features the specific artists and styles that they designate. They also generally allow users to indicate which songs and artists they want to hear more or less of.
Generally, if a customized internet radio station is considered to be an “interactive service” (as defined in 17 USC § 114(j)), the service provider will have to negotiate royalties with each individual copyright holder, which entails more work, and probably higher royalties. It goes without saying that internet radio stations would prefer not to be in this category. If, on the other hand, a service is found to be “non-interactive,” they they are entitled to pay a standard statutory royalty, which service providers generally prefer.
The Second Circuit held held that § 114 of the copyright law should be interpreted in light of the reason Congress enacted it, which was to “prevent the diminution in record sales through outright piracy of music or new digital media.” Using that measuring stick, it held that “because the webcasting service does not provide sufficient control to users such that playlists are so predictable that users will choose to listen to the webcast in lieu of purchasing music, thereby- in the aggregate – diminishing record sales,” it does not qualify as an “interactive service,” which would require individualized royalty negotiations with copyright holders.
As customized internet radio websites and their users breathe a collective sigh of relief, it is notable that, as Mr. Kramarsky pointed out, this is the first case of a federal appeals court defining what “interactive” means in the context of the copyright law. It will be interesting to see whether other Circuits follow the Second Circuit’s example, or whether they will handle the issue differently, possibly setting up a split that would make the issue ripe for eventual Supreme Court treatment.
Picture courtesy of Watts Up With That.
Many people inquire at our office regarding Alternative Dispute Resolution (“ADR”) options like mediation and arbitration. These have certain advantages over traditional litigation, although they have certain disadvantages as well which should be considered. Mediation and arbitration are also very different from one another, and parties should consider those differences before deciding whether to pursue arbitration, mediation, or regular litigation.
Mediation: First, mediation is a process whereby a third party works with disputing parties to assist them in reaching an agreement. The mediator does not represent either party and nothing that happens in a mediation is binding on either party until they both sign some kind of settlement agreement that memorializes the argreement that they reached with the help of the mediator. The advantage of mediation is that it avoids the excessive attoreys feels and costs of a litigation and helps the parties come to an agreement in a more amicable manner that may not be as acrimonious as an all-out litigation. The disadvantage is that it will only work if both parties are willing and able to come to a mutual agreement because the mediator cannot force any resolution on the parties.
Arbitration: An arbitration is a quasi-judicial process whereby the parties agree in advance to have their dispute resolved by a third-party arbitrator. The arbitrator will conduct some form of judicial proceeding and then issue a ruling which will be binding on the parties and which the courts will enforce. Parties often have attorneys and even “trials” in arbitration proceedings so the cost savings are not as significant as they are in mediation, but where the parties are unable to come to a resolution on their own and need someone else to settle the dispute without the full cost of a regular litigation, artbitration may be the best choice.
There are many independant organizations that provide independent, third-party arbitration services like the American Arbitration Association (“AAA”) or National Arbitration and Mediation (“NAM”). Some people prefer to have their cases decided by arbitrators who use religious law in deciding cases like the Jewish Beth Din of America and the Institute of Christian Conciliation. One of the difficulties in arbitration is that althought U.S. and state courts will generally enforce arbitration decisions, they do not always do so.
Furthermore, Congress also supports the enforcement of contractual agreements to arbitrate future disputes. “A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
However, there are federal and state law exceptions to the general enforcability of arbitration agreements. We wrote earlier about the nullification of an arbitration award by a rabbinical tribunal back in January by a Brooklyn court in the context of an employment dispute, Brisman v. HAFTR. There, a teacher was let go, the parties went to binding arbitration with a rabbinic tribunal, the tribunal awarded the teacher his job back as well as back pay, and then a Brooklyn judge vacated the arbitration award. The teacher’s appeal of that case is now pending before the New York State Appellate Division. UPDATE 2/19/10: The teacher won the appeal.
On the other end of the spectrum, Prof. Howard Friedman of the Religion Clause blog recently reported that an Indiana Federal court recently upheld an agreement to engage in “biblically based” Christian arbitration pursuant to an employment agreement. Easterly v. Heritage Christian Schools, Inc., 2009 U.S. Dist. LEXIS 76269 (S.D.IN. Aug. 26, 2009. This case also involved a teacher who was let go from a religious school. One difference between this case and the rabbinic tribunal case is that this teacher, Dorothy Easterly, made federal law claims against her former employer, so her challege to the Christian biblically based arbitration agreement was heard in federal court, rather than state court.
The bottom line is that mediation or arbitration can be a great way to settle a dispute without the cost of a full-blown litigation, but one should make sure to take all of the benefits and potential pitfalls into account before making a decision.

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