Commercial Awareness Update – W/C 1st May 2023

ED SHEERAN’S LEGAL WOES: COPYRIGHT INFRINGEMENTS IN THE MUSIC INDUSTRY

The music industry is no stranger to controversy and legal battles, and the latest case involves none other than Ed Sheeran. The British singer-songwriter is facing a lawsuit in the US over allegations of copyright infringement in his hit song ‘Thinking Out Loud’.

The accusation? That Sheeran has lifted parts of Marvin Gaye’s classic song ‘Let’s Get It On’.

The Case

At first glance, the two songs may seem vastly different. The lyrics are entirely different, and the tunes are not the same. However, the issue lies in the similarities between the ‘cord progression and harmonic rhythm’ between the two songs. And this is where the legal trouble begins.

Sheeran is no stranger to the Copyright Designs and Patents Act 1998, the UK legislation he was previously accused of breaching in his song ‘Shape of You’. In that case, Sheeran won the lawsuit. But will he be so lucky this time around? Let’s take a closer look at the legal factors at stake and the various practice areas that would get involved in such a case.

The Law

Firstly, this trial is taking place in New York, which means it will be subject to US law. However, for our purposes, let’s suppose the trial was taking place in the UK. There are a few key aspects to consider regarding copyright law in the music industry.

• The first of these is subsistence. This refers to the fundamental requirement that a work must meet in order to be protected by copyright. To be eligible for copyright protection, a work must be original and fixed in a tangible medium of expression. In the context of music, this means that the ‘cord progression and harmonic rhythm’ of a song would qualify for copyright protection as a ‘musical work’ under the Copyright Designs and Patents Act 1998, with the written lyrics protected as a ‘literary work’.

If Ed Sheeran is found to have infringed on the copyright of Marvin Gaye’s song, he could be in trouble. The financial implications of such a finding could be significant and could affect both the profits generated by ‘Thinking Out Loud’ as well as future royalties and earnings from the song.

• The second aspect to consider is copying. In this context, copying means reproducing the work in any material form. If the music or lyrics are copied entirely, this is a clear copyright infringement. However, it is often trickier to detect infringement when only part of the music or lyrics has been copied. For infringement to be found, it must constitute a ‘substantial part of the work’.

So, how do you measure what is a ‘substantial part’ of a work? The test is quantitative, not qualitative. The judge will decide whether the infringement constitutes a ‘substantial part’ of the work, and this is where the legal battle becomes more complex.

How does it impact the legal sector?

It is always interesting to consider which lawyers would advise Sheeran or the Claimant (Marvin Gaye’s family) in this case.

• Intellectual property lawyers would play a key role in advising Sheeran and his team on the complex legal issues involved in copyright infringement.
• Music lawyers would also be involved in navigating the specific issues that arise in the music industry, including licensing agreements and royalty payments.
• Litigators. This case has already gone to court, and therefore, they will represent Sheeran’s interests and defend him against the allegations of copyright infringement.

As the case plays out in court this week, it will be interesting to see how the legal issues are resolved and what impact the outcome will have on the music industry as a whole.

One thing is certain; this is not the last we will hear of copyright disputes in the music world.

Article written by Avishai Marcus

THE DIGITAL MARKETS, COMPETITION AND CONSUMER BILL

The Digital Markets, Competition and Consumer Bill was introduced to the House of Parliament on 25^th April 2023, following the government’s proposals in its Digital Strategy.

Deemed the most significant reform to UK consumer rights and competition law, the Bill proposes a wide range of antitrust measures for the enhanced regulation of digital markets, engendering greater protection for consumers and businesses alike, with those measures including the amendments of the 1998 Competition Act and Enterprise Act 2022.

The Bill is the UK’s counterpart to the EU Digital Markets Act 2022 (EU DMA 2022), which comes into force on 2^nd May 2023. However, there are some dissimilarities between the two pieces of legislation, with the most prominent regarding the enhanced scope of the Competition and Markets Authority (CMA)’s enforcement powers.

The Bill primarily aims to dissipate the disadvantageous exercise of power by large tech firms over smaller businesses. In many cases, this exertion effectively oppresses the growth of SMEs, subsequently forcing them out of the market.

Some of its key provisions

1. The conferring of additional powers on the CMA includes:

• Scrutinizing antitrust issues through pro-competition interventions (PCIs), so long as those issues relate to designated activities, with the power to directly enforce consumer rights and competition law through administrative processes, as opposed to enduring lengthy court procedures to procure remedies.
• The CMA’s Digital Markets Unit (DMU)’s amplified capabilities in holding senior managers personally accountable for compliance failures regarding information requests and for failing to ensure firms uphold competitive measures through civil penalties, the disqualification of directors for up to 15 years for regulatory breaches, and civil and criminal penalties imposed for providing false information either recklessly or knowingly, including individual fines of up to £300,000.
• The capacity to fine firms for regulatory breaches of up to 10% of their global turnover, 1% for failing to comply with investigative requests and a daily penalty of up to 5% for interminable breaches, with such decisions being conditional on judicial review by the Competition Appeal Tribunal (CAT).
• Intervening in circumstances concerning commissioning, facilitating, advertising, submission, and posting fake reviews without taking steps deemed reasonable to check for their legitimacy.
• Intervening in situations whereby it is apparent firms are utilising ‘subscription traps’ owing to the lack of transparent consumer communication or a dearth of mechanisms to facilitate subscription cancellations.
• Requiring businesses to compensate consumers for consumer law breaches.

2. Facilitating the DMU to assign ‘strategic market status’ (SMS) to firms engaging with specific digital activities and with significant market presence and power. This will apply to firms with a UK turnover of £1 billion-plus or a global turnover of £25 billion or more. Said status means the mandatory conformance to strict codes of conduct concerning pro-competitive measures. However, some SMSs may be exempt from this adherence on proof that specified behaviour produces benefits which outbalance any adverse impact on competition within a market.
3. Reworking existing merger thresholds in asserting the CMA’s jurisdiction over M&A transactions, with the target turnover test increasing from £70 million to £100 million.

Additional reading on the Bill is available here.

The impact on the legal sector

Digital firms, especially those likely to be designated an SMS, have a critical, albeit ongoing laborious task in ensuring compliance with the Bill’s measures while upholding deference to the parallel EU DMA 2022.

Consequently, law firms specialising in corporate disciplines, more specifically, in public and private M&As, joint ventures and digital markets, look set to have a busy period ahead in advising clients on the new measures to better understand, for example, the CMA’s widened scope of investigatory and enforcement powers, and increased compliance threats for those businesses dealing with consumers first hand.

Also, the resources of business lawyers will be procured to restructure subscription services to ensure those services include the new measures, including greater transparency regarding signups, renewals, and cancellations, whilst advising shareholders owing to the mandatory public consultations on the new Bill.

Lawyers and firms specialising in EU competition and consumer laws will likely be involved at various stages of the above processes. All lawyers as mentioned above, may, at some point, be engaged in advocacy should their clients fail to accede to the new measures.

Article written by Aqua Koroma

MANDATORY MEDIATION IN LOW-LEVEL FAMILY COURT CASES

On 23^rd March 2023, the government announced proposals for mediation to be compulsory amongst separating couples and in suitable low-level family court cases.  The proposals mean that child custody arrangements and financial matters must preferably be settled out of court, with litigation being the absolute last resort.

The government hopes that the adverse effects of separation on children will be drastically mitigated and that the backlog of family law cases will start to lessen and lighten their workload.

This measure would help overturn the impact of LASPO 2012, the Act which eliminated legal aid for private family law cases from within its ambit.

Reasons for implementation

An estimated 19,000 separation cases await court hearings and judgments, and resultantly, family courts are in a crisis. There are several reasons for this backlog, with the most germane as follows:

• In November 2022, HM Courts and Tribunals Service (HMCTS) estimated at least 110,000 open cases, with 85,706 private family law cases, a respective increase from 103,000 and 83,655 in September 2021, and with the effects of the pandemic further amplifying the issue. Consequently, on average, family law cases progress at a rate of 43 weeks from initiation to final decisions.
• Court closures have been another substantial factor. According to the National Audit Office, HMCTS closed 127 courts and tribunals with the intent to sell, citing additional reasons to include reducing operational costs and with the funds from subsequent sales to be used for funding reform. Additionally, there is a planned disposal of 77 courts by 2025/2026, which could stall any plans to reduce case backlogs.
• The increase of litigants in person owing to the eradication of legal aid for private family law cases, has meant that court proceedings are often cumbersome, leading to unavoidable delays in processing cases.
• The number of family law court judges has decreased; therefore, although the workload steadily increases, the judiciary working through said caseload is drastically reduced, leading to processing delays.

The resulting backlog is evidenced to have adverse effects on those party to litigation proceedings, including the onset of mental health issues, stress caused by ongoing court delays and dealing with distressing problems, and the reliance on benefits owing to costs, often disproportionate, in ensuring they gain access to justice. Except for financial costs, the same applies to legal professionals privy to such circumstances, which means there is a greater likelihood that said legal professionals, although the happenstance is rare, may err during sensitive case reviews, thus increasing unjustly decisions and catastrophic results.

The measures

It is cited that the primary reason for introducing the measures is to protect children from the grisly nature and consequences of separation and, in many cases, divorce proceedings. Qualified mediators will be appointed for the mediation sessions, with the government funding the scheme. Until the funding is implemented, the government plans to extend the Family Mediation Voucher Scheme, which provides up to £500 towards the cost of mediation for couples undergoing separation, to April 2025.

The proposed scheme does not apply to cases involving allegations or histories of domestic abuse, and according to a press release issued by the government, ‘making mediation compulsory will allow the family courts to prioritise better and provide protection for the most serious cases with safeguarding concerns, where it is not an option, such as domestic abuse and child safety’.

Furthermore, the proposed measures permit judges to impose fines or costs orders on parents who refuse to make reasonable attempts to engage with the mediation process and if ‘they harm a child’s wellbeing by prolonging court proceedings’.

Impact on the legal sector

There is every chance that compulsory mediation will reduce the need for legal service providers. For example, family lawyers will not be required for advocacy owing to the absence of the litigation process. Some individuals may need family law solicitors as advisers and for representation during the mediation process, as according to Lord Chief Justice Lord Burnett, ‘getting lawyers involved at an early stage and giving their clients clear advice about what is likely to happen is very likely to see cases sort themselves out rather than fight’.

The mediation sector, however, looks set to reap the benefits of this shift. The Ministry of Justice estimates that an additional 24,700 mediation cases will be generated because of the mandatory measures, thereby increasing income and profitability for said professionals.

It is still being determined whether other methods of ADR, such as arbitration and expert determination, will be included in the proposals. Also, there are plans to review the workability of the proposed scheme in cases whereby no children are involved.

Nonetheless, this scheme aims to help achieve what is seemingly impossible; freeing up family law courts to facilitate access for distressing family cases that command the most urgent attention and decisions.

Article written by Aqua Koroma