In early 2021, Abigail Barlow and Emily Bear began releasing videos on TikTok, of songs they had written and composed inspired by the hit Netflix show, Bridgerton. What started as fan fiction content soon turned into a viral success. 

In March 2021, Barlow and Bear's legal team approached the streaming giant for its blessing to record an album and to perform the songs at a charity show. Netflix, according to the details in its lawsuit, said that it wouldn’t authorise the activity, but also wouldn’t “[stand] in the way.” Barlow and Bear went on to release a 15-song " The Unofficial Bridgerton Musical" album, which led to the duo winning the 2022 Grammy Award for Best Musical Album.  

Following Barlow and Bear’s album release, Netflix, according to the suit, informed the two that it would not authorise any live performances. 

So why is Netflix suing now? 

On 26 July, Barlow and Bear staged a sold-out performance at the Kennedy Centre in New York City, with tickets ranging between $29 and $149, plus VIP upgrades. The duo also went on to announce that there would be another live performance in September at the Royal Albert Hall in London. 

According to Netflix's complaint, upon hearing of the planned live performances', the streaming platform, "offered Barlow and Bear a license that would allow them to proceed with their scheduled live performances at the Kennedy Center (which went ahead on 26 July) and Royal Albert Hall, continue distributing their album, and perform their Bridgerton-inspired songs live as part of larger programs going forward." However, the pair refused the licence (for reasons unknown) and proceeded with the performance at the Kennedy Centre. 

This performance seems to have been a step too far for Netflix; the suit named four counts against Barlow and Bear including copyright infringement and infringement of registered trade marks, alleging that Barlow and Bear have "taken valuable intellectual property from the Netflix original series Bridgerton to build an international brand for themselves." 

Barlow and Bear have since cancelled their performance at the Royal Albert Hall. It is not known whether this is in response to another issue raised in Netflix's complaint that the London show "threatens Netflix's plans for the "Bridgerton Experience in the United Kingdom" and that the Washington 'Bridgerton Experience' had been harmed by the concert at the Kennedy Centre.  The 'Bridgerton Experience' is an immersive performance Netflix currently has running in six cities in the US (with other leading Netflix shows having similar immersive experience attractions, such as Stranger Things).

A defence based on fan fiction? 

Given that intellectual property laws are inherently territorial, the position in the case as pleaded in the US does not necessarily map directly across to issues to be considered under English law.  

Netflix takes issue in the US with Barlow and Bear’s reported suggestion that they should be protected from allegations of infringement because what they are producing ultimately amounts to “fan fiction”.  Netflix said:

“Barlow & Bear’s conduct began on social media, but stretches ‘fan fiction’ well past its breaking point.” 

Barlow and Bear’s potential arguments in the US could be framed around fair use on the basis that the work is 'transformative' and adds new meaning to the original work.

If the legal issues were to develop on this side of the Atlantic, there would be interesting questions around the scope and parameters of the defences such as parody and/or pastiche, and the extent to which any of Barlow and Bear’s works copy a substantial part of copyright-protected works.

Whatever the legal position, there are often delicate issues to balance when it comes to fan culture and fan fiction. Having an engaged fan community can be a huge positive for rightsholders (and the brands who may want to be associated with them). 

Rightsholders are perennially faced with weighing up the need to protect their economic and business interests versus maintaining positive relationships with consumers and fans. With a little assistance from platforms like TikTok, fandom communities have the ability to turn shows, movies, books or songs (amongst many other mediums) into over-night successes and viral sensations. 

What’s next for 'The Unofficial Bridgerton Musical'?

Dearest readers we will have to wait and see how Barlow and Bear choose to respond and, if the case does go to court (in the US and/or elsewhere), what implications this may have for the future of fan fiction.

Many were waiting with bated breath to see what the outcome of the Competition and Markets Authority (CMA) report would be.

The CMA has now published its interim report. The report primarily focuses on whether having such small numbers of digital companies within music streaming, and the resulting flow of money in the supply chain, poses any competition law issues for consumers. Based on its findings, the CMA has taken the view that it will not be launching any formal investigation. A parallel study currently being run by the UK's Intellectual Property Office (IPO) may still shed further light on renumeration, transparency and data issues in the music industry.

What are the findings?

The CMA report is filled with statistics offering fresh insights into the size and scale of the music streaming industry, including the following:

• Streaming of back catalogues still remains hugely popular: back catalogue streaming (which means streaming of anything over a year old) has increased to 86% in 2021 – an increase of 10% - from 76% in 2017.

• Streaming is still the preferred way of accessing music: recorded music revenues reached £1.1 billion in 2021, with 80% of recorded music now listened to via streaming services. Last year there were over 138 billion music streams in the UK with streaming service prices falling in real terms. 

• More artists are finding global audiences: the numbers of artists streaming music has doubled between 2014 and 2020 - from around 200,000 to 400,000. This means greater access for local artists to international listeners.

• The music market remains challenging for many creators: even though the industry's income is broadly stable, many smaller artists are finding it harder to make sufficient money from streaming of their music. For one million streams per month, the CMA estimates that an artist would earn around £12,000 a year. For high profile and heritage artists this may be less of an issue, as they continue to earn more revenue through listeners accessing a greater number of back catalogue streams and more well publicised streams. 

• Major record labels: the major record labels continue to play key roles in the recorded music industry. The major labels generated 73% of the revenue from UK music streams – down from 78% in 2017. The CMA felt however, that this concentrated activity is not causing any harm to consumers or driving the main concerns of artists. The CMA also feels that neither labels nor streaming services appear to be making sustained excess profits which would raise competition concerns.

• Contracting in the industry: in relation to legal contracts in the industry, the CMA does suggest that labels could give artists more information on streaming and how their earnings are calculated but clarified that this a concern better addressed by the UK's IPO.

The CMA concluded that the recorded music industry is delivering good consumer outcomes on balance, however it will be keeping on close eye on whether innovation is stalled and whether there are any shifting power balances. 

The record labels, music publishers and streaming services speak out

The biggest players in the music industry welcomed these findings, citing that accessibility to music and the growth of the music community has given fans more choice than ever. Many executives feel this study is a positive outcome fostering greater collaboration and would help ensure that the "UK music remains world leading." 

The Digital Entertainment and Retail Association (which represents retail and wholesale providers of music streaming services), commented that the report vindicated their view that music streaming platforms have been overwhelmingly positive for consumers as well as for the music industry. In their view streaming services have "rescued a sector that had been shrinking rapidly due to piracy and have delivered over £5 billion of new revenue in the UK alone.”

Artists and song writer perspectives

Several music makers and managers however have commented that the report has under-delivered in their eyes, and that the power balance in the broader music sector has been left unchecked. Newer artists, benefitting from the digital wave may have more choice of business partners, however older pre-digital artists may be locked into more restrictive legacy deals. The CEO of the Music Managers Forum and Featured Artists coalition noted that the CMA report does not represent realistic assessments of record label profits and ignores the complex issue raised by artists in the context of weak contractual negotiation positions.

Hipgnosis founder Merck Mercuradis, called the latest developments, "a missed opportunity," that leaves songwriters to continue earning "pitiful returns from streaming," because things are not being shared fairly and equitably.

What can we expect next?

The IPO's work is ongoing, and though its findings may be influenced by the CMA's most recent report, creatives in the music sector could still see some of their concerns addressed. We have also not heard the last from the CMA on this matter, with further consultations and feedback scheduled till 19 August and a final reporting setting out its findings of 26 January 2023. 

The CMA is also planning to collect more evidence to understand what the ‘value gap’ might be between what user-uploaded content platforms pay the music industry, and what other streaming services do. It will share that data with the DCMS and the IPO, as well as with the Centre for Data Ethics and Innovation to help inform their work examining whether artists' rights can be strengthened for music streaming. 

For now, consumers can stream on.

Interested in reading more? The link to the CMA's market study update entitled "Music and streaming" is available here.

The impact of Brexit on the UK music industry

The music industry added approximately £5.8 billion to the UK economy before the pandemic and employs almost 200,000 people across the UK (ore than the steel and fisheries sectors combined). With the decrease in physical music sales and increase in streaming, most of that revenue is driven by live music and international touring of artists – many of which was a result of cheap access to the European live music market.

As a result of the changes brought in by Brexit, the music industry (including major artists such as Ed Sheeran, Radiohead and Sir Elton John) has been complaining about rising red tap impacting musicians' ability to tour within Europe and new complicated restrictions on short-term working in the EU for UK music workers. This lead to 2021's #LetTheMusicMove campaign, which campaigned against post-Brexit bureaucracy affecting the music industry. 

Following discussion with stakeholders in the industry, the All-Parliamentary Group on Music has issued a report detailing a number of urgent recommendations aimed at improving the TCA and the export of UK music. The report warns that UK music workers are “facing more costs, more complications and getting fewer opportunities” since the UK left the EU at the end of January 2020.

What are the recommendations?

1. Improving provisions under the TSA

• The TCA currently only allows music workers (including artists, backing musicians, stage technicians, drivers and technical workers) visa free business visits to the EU for market research or trade fairs, but not for those workers to work for pay or tour in the EU. 
  
  
• Music workers have to rely on local EU visas (such as Schengen visas) and are generally restricted to travel of up to 90 days in any 180 day period. The approach across EU countries is not however harmonised with different time periods applying in different countries. Individual EU states also place specific restrictions on the work that can be carried out by non-EU citizens – limiting the actual work that UK musicians can carry out in the EU.
  
  
• The All-Parliamentary Group recommend that the UK government agrees an exemption for music workers supporting 'cultural performances' under the TCA (similar to exemptions made for architects and advertisers), and for the UK government to work with individual member states to get all EU states up to the current 90 in 180 day limit for working musicians.
  
  
• Specific exporting requirements (including export compliance and tax requirements) are now required for acts to export music-related merchandise into the EU. The All-Parliamentary Group recommends expanding the number of checks points where export documents can be verified (including at Eurostar checking points) as well as improving UK border force training.
  
  
• The Group also recommends improving road haulage rules, which have severely impacted UK event hauliers working in the EU.

2. Other key recommendations

• To implement its recommendations, the Group recommends that the Government enters into a general agreement with EU countries to reduce bureaucracy and allow hauliers to properly support tours. 
  
  
• The Group also suggests appointing a “Touring Tsar” to co-ordinate the response of Government and other stakeholders to the issues facing touring cultural workers. The "Touring Tsar" would work across various government departments to get rid of restrictions that are seen to be hampering the growth of the music industry and creation of new jobs. The chair of the Group has stated that "without urgent action there is a very real risk that the talent pipeline on which the UK music industry relies will be badly damaged for years to come.”
  
  
• The creation of a Transitional Support Fund to help UK music exporters deal with increased costs of trading in Europe post-Brexit is also seen as a key issue. The fund would be used to address EU transition costs (allowing live music exporters to overcome the new barriers) as well as bolstering existing programmes run by the BPI and PRS (such as The Music Export Growth Scheme and Showcase Fund). 

What are the next steps?

• CMA closes investigation into online gaming sector: https://uk.practicallaw.thomsonreuters.com/w-035-2362?transitionType=Default&contextData=(sc.Default)&firstPage=true 
• CMA launches investigation into online gaming companies’ roll-over contracts: https://www.simmons-simmons.com/en/publications/ck0b06xc876pi0b949t5zlb49/090419-cma-launches-investigation-into-online-gaming-companies-roll-over-contracts 
• Sony and Nintendo update gaming subscription auto-renewals after UK investigation: https://www.theverge.com/2022/4/13/23023955/sony-nintendo-microsoft-updating-subscription-practices-uk-competition-markets-authority-cma 
• CMA secures changes to Xbox auto-renewal practices: https://www.rpc.co.uk/snapshots/technology-digital/spring-2022/cma-secures-changes-to-xbox-auto-renewal-practices/
• CMA secures changes to Xbox auto-renewal practices: https://www.gov.uk/cma-cases/online-console-video-gaming
• CMA secures changes to Xbox subscription practices: https://www.gov.uk/government/news/cma-secures-changes-to-xbox-subscription-practices 
• CMA welcomes Sony and Nintendo’s gaming subscription: improvementshttps://www.gov.uk/government/news/cma-welcomes-sony-and-nintendo-s-gaming-subscription-improvements

The government has promised a new "golden age" of programming with proposals which the DCMS says will help public service broadcasters compete in the digital age and support the independent production sector.  These include: 

1. A new public service remit

• The government plans to 'overhaul and simplify' broadcasting legislation, including revisiting the definition and role of a public service broadcaster ('PSB').  Public service broadcasting refers to broadcasting intended for public benefit rather than purely to serve commercial interests.  Currently all PSBs must achieve the purposes and objectives set out in s. 264 Communications Act 2003.  Each PSB also has their own unique remit set out in legislation, and additional commitments in their broadcasting licences.  The DCMS intends to simplify this structure by creating a new, shorter, remit that will recognise 'that public service takes many forms, including culturally relevant, economically important and democratically impactful content'.   Each PSB will continue to have their own individual channel remit.
• A consultation will be launched on new rules to protect distinctively British programming (deemed by some as "Rules for Britishness").  The consultation arises from concerns that the globalisation of broadcasting may result in programmes produced in the UK becoming indistinguishable from those produced elsewhere.
• PSBs will be given greater flexibility in how they deliver their remits.  Content streamed via on-demand platforms could soon be counted in the quota of "public service" content that PSBs are required to produce; at present only content from linear channels counts towards this quota.
• The government does not intend to open up the public service broadcasting system to other providers (as recommended by Ofcom in July 2021) but says it will keep this under review.

2. Regulation of online streaming services

• The government intends to bring larger non-UK video-on-demand services ('VoD') under Ofcom regulation and subject to a new regulatory Code.  The proposed scheme, announced following the government's consultation on audience protection, aims to promote consistent standards across linear and on-demand services.  Regulation will take place in a two-tier system, whereby larger VoD services which target UK audiences but are not currently regulated in the UK will have similar obligations to traditional UK broadcasters, but on-demand services that have a smaller audience size and pose lower risks to viewers will continue under existing rules.  There will be scope for niche streaming sites, which cater for a select audience and may be more likely to broadcast harmful material, to be brought under the scope of the enhanced regulations through powers awarded to the Secretary of State.
• Most UK VoD services are already required to adhere to existing On-Demand Programme Services ('ODPS') regulations around product placement, protecting under-18s, and prohibitions on inciting hatred.  Whilst these regulations will continue, designated UK VoD services will also be subject to the new Code, which is expected to introduce stricter rules around a broader range of potentially harmful material, including unchallenged health claims or COVID misinformation (essentially bringing across the existing Broadcasting Code but with the rules and guidance tailored to the requirements of on-demand distribution).  DCMS has recognised the difficulties this could pose with potential 'double-layering of obligations' and says the proposed system will need careful consideration by Ofcom.
• UK viewers will have an enhanced ability to complain to Ofcom about content on streaming platforms, and Ofcom will have an enhanced duty to assess the audience protection measures put in place.  Age ratings and content warnings for streaming services will not be mandated but will continue to be encouraged.  It is envisaged that penalties under the new Code could be up to £250,000 or 5% of annual turnover, equivalent to the maximum penalties available under the Broadcasting Code. 

3. Updated prominence regulation

• The government intends to update prominence rules so that online television platforms, including smart TVs and pay TV services, are legally required to carry designated PSB on-demand services and to ensure their services are easy to find on these interfaces.  The proposal envisages that PSBs will be required to "offer" their on-demand services to platforms, and platforms required to "carry" these services.  Ofcom will acquire a dispute resolution function to intervene to support negotiations between platforms and PSBs, as well as enforcement powers and the ability to impose fines if appropriate.

4. Changes to the broadcasting landscape

• The government has reiterated its intention to privatise Channel 4, claiming this will diversify its revenue streams and allow it to better compete with streaming services.  The decision has been fiercely opposed by many in the industry, with warnings that privatisation would deal a heavy blow to the independent sector, dilute creativity, and only serve government interests. 
• The government will also consider whether to introduce a revenue cap for "qualifying independent" producer status in light of the emergence of "super indies" in the sector.  The aim is to ensure that independent producer status remains effective for promoting growth and diversity in the sector.  Other plans include updates to the "terms of trade" rules which protect independent producers in their commissioning negotiations with PSBs; updates will address the increasing importance of on-demand commissioning to both broadcasters and production companies.

5. Reform to sports broadcasting rights

• Rules governing broadcasting rights for sporting events are set to be updated, with DCMS looking to designate certain "crown jewel" sporting events as a benefit awarded exclusively to public service broadcasters.
• Currently, linear broadcasting rights are covered by the "listed events" regime; this ensures all major sporting events can be viewed live and for free by the UK public.  Qualification to broadcast these events requires a service that is free to view and accessible to 95% of the UK; all services which currently qualify are operated by the free-to-air PSBs.  However, this regime does not include digital rights, meaning PSBs are forced to compete with streaming platforms for the coverage of important sporting events.  The government will launch a review to consider whether the scope of the listed events regime should be extended to include digital rights, which would ensure that the public could view significant sporting events free on digital platforms.

What's the justification?

The government cite rapid technological developments, changes in viewing habits and the globalisation of programming as reasons behind the reform of the Communications Act, which they view as retrograde and built for an analogue age.  DCMS says that the proposed reforms will allow public service broadcasters to compete in the digital age and will ensure consistent standards across the industry.

Is it necessary? 

It is undeniable that competition for viewers and advertising revenue has increased rapidly over recent years, and the shape of the broadcasting landscape is markedly different in 2022 to that in place in 2003, when significant broadcasting reform last occurred.   

Whilst consistent standards across VoD and linear channels are important to ensure adequate viewer protections and fair and accurate programming, in practice PSBs that also operate on-demand services will already be commissioning and producing programmes for those services which comply with the stringent requirements set out in the Broadcasting Code.  Larger non-UK streaming services also have their own audience protection measures in place, and many will adhere to UK regulation and Ofcom decisions voluntarily.  So, whilst Ofcom's duties and powers of oversight and enforcement are expected to massively increase, the practical effect of a new VoD Code on actual standards of programming is uncertain.   

Industry commentators also warn that the unique role fulfilled by PSBs in the UK should not be forgone or forgotten by the government in the interests of reform.  Invigorating competition in the digital age is no doubt important, but the importance of protecting and promoting democratic debate on difficult subjects cannot be understated. 

(1) White paper: Up next - the government’s vision for the broadcasting sector

Kelly-Marie Smith composed and wrote a song called "Can You Tell Me" which had never been released commercially, but which was acoustically recorded for a promotional video in October 2007. 

Various members of Rudimental, together with James Newman and Edward Harris, composed and wrote the song "Waiting All Night" which was released as a single and in an album by Rudimental in April 2013. 

Smith alleged that the defendants copied the lyrics and melody of the chorus from Can You Tell Me. During the trial, it transpired that the copying allegation actually related only to James Newman, as the other defendants' contributions related to aspects of the song which were not said to have been 'copied'.

The decision – band new or copied? 

(i) similarities

The Court held that, despite the similarities, including repetition of the same phrase ("tell me that you")  sung to four semi-quavers and the melody placing stress on certain words, there are important differences between the two songs; such as, for example, the same words being sung to different notes in each song. It was also held that the phrase "tell me that you need me" was a commonplace expression and not particularly original, making it unsurprising that two people writing a popular song would use that phrase. The melody was also simple and primarily driven by the words. 

(ii) availability of and access to Can You Tell Me

Although the promotional video containing Smith's song was available on social media sites, the clip of the video which contained the song only started 12 minutes into the video. The judge saw no direct evidence that James Newman ever heard Can You Tell Me before composing Waiting All Night – it was highly unlikely that the video created in 2007 was being promoted in 2012 when Waiting All Night was composed and the suggestion that Newman would have heard the claimant's song through "overlapping circles" was based on tenuous connections. 

(iii) evolution of Waiting All Night

James Newman provided contemporaneous evidence by way of a voice memo as to how he composed the song; he wanted to compose a hit song for Rudimental, similar to that recently composed for Rudimental by his brother, John, called "Feel The Love". The judge held that Newman had a basic idea for the start of the song before recording the voice memo, but made up the rest on the spot, with the allegedly copied phrase "tell me that you need me" and melody emerging through trial and error. 

Comment

When considering whether a defendant has copied a copyright work, the Court must determine whether the works are sufficiently similar and (assuming they are) consider which of the following four possible explanations as to what has caused the two works to be so similar is most likely:  (a) the defendant has copied the claimant; (b) the claimant has copied the defendant; (c) both parties have used a common source to create their works; (d) complete coincidence.  

Where there is a sufficiently high level of similarity, and it can be shown that the defendant had access to the claimant's work whilst creating its own, there is a presumption (that can be rebutted with evidence) that the defendant has copied the claimant.  From a practical perspective, these cases often turn on the documentary evidence available in relation to the origin or creation of the works in question.

In reaching its decision in this case, the Court was clearly persuaded by the evidence that Newman adduced regarding his independent creation of his work.  It is not enough to merely show that the relevant lyrics or melodies of a song are materially similar (or even the same).  It is a timely reminder that all composers should maintain a contemporaneous record of their creative process in order to demonstrate exactly how a song was composed. This is particularly important where simpler or more common phrases or melodies are used, as that may present more of a risk of two or more composers creating the same or similar works.  

Steve Jones and Paul Cook (the former guitarist and drummer of the Sex Pistols, respectively) have accused John Lydon (AKA Johnny Rotten) of living up to his moniker in refusing to authorise a licence of the band's music for Danny Boyle's new six-part FX series, Pistol. 

The series, revolving around Jones' memoir, Lonely Boy: Tales From A Sex Pistol, has Disney's backing, but has been snubbed by Lydon, who claims that he is portrayed (in the book) in a "hostile and unflattering light", and that the series script had been written, and an actor chosen to play him, without his participation or consent. 

Jones and Cook have asked the High Court to permit the licensing of the music (mainly from the album Never Mind The B******s) arguing that, pursuant to a band agreement made in 1998, any licensing requests would be dealt with on a "majority rules basis", and that they have the support of the estate of the late Sid Vicious, as well as the original bassist Glen Matlock. Lydon contends that no licence can be granted without his consent. 

On Monday 23 August, Sir Anthony Mann ruled that the band agreement was both valid and active. Mann agreed that the "majority voting rules" could overrule Lydon's attempt to do things "My Way". 

Mann found it likely that Lydon had been fully advised about the band agreement and its consequences, as he had English and US lawyers as well as his manager on his side, who would have undoubtedly explained the effects of such agreement. 

Regardless of whether Lydon had read the agreement itself, Mann stated that it was "highly likely" that Lydon would have understood its effects, having been fully advised, and in light of the fact that Lydon's evidence revealing that the protection of the Sex Pistol's legacy was important to him.

In any event Lydon's rights had "No Future" as Mann observed that he had previously "signed away his power to control the use of music rights" to BMG and Warner Chappell Music, and only retained qualified rights of approval as a result. The record companies could, in effect, act as they saw fit, even if they had previously elected to seek Lydon's permission to use the music.

Whilst not a particularly surprising decision, the following take-away points arise, particularly for artists: 

1. when licensing rights to your work, don't assume that you will still have the ability to restrict how it is used because you are the artist / author, unless this is expressly stated in the relevant contract; 
2. in the case of joint authors (such as band members), it is worth bearing in mind when entering into agreements regarding jointly-owned rights (such as band agreements) that the state of affairs can change, and it may be worth including a clause allowing the parties to re-consider, every few years (for example), whether the arrangements are still suitable for them; 
3. even if such agreements are put in place, disputes may still arise (as in this case) and it is worth thinking about (and drafting into the contract) how you would like them to be resolved; and 
4. finally, if you instruct lawyers or other advisors to help you on a deal, do make sure you take note of their advice, as the Court will assume that you have!

Ofcom has issued a call for evidence to explore whether the existing media ownership restrictions in the Communications Act are still relevant and appropriate in 2021. It's possible that regulatory reforms that come out of this consultation will have far reaching implications, particularly for broadcasters, print, online content providers and intermediaries.

Why are Ofcom consulting on this now?

Ofcom has noted that the media market has seen traditional news sources rapidly expand their online offering since the early 2000's, which in turn has been increasingly curated by online intermediaries before making its way to consumers. Online consumption of news has largely come at the expense of traditional news consumption, namely broadcasters and newspapers. Since the turn of the century, the print market has experienced a major decline in traditional readership and revenue with a growing consolidation of news providers and has also seen many exits, particularly at the local level. Similarly share of audience on traditional television and radio has largely fragmented by age group and there is a growing use of online platforms to access news.

In response to this, Ofcom has announced that it will be carrying out a review of media ownership rules in the UK. Plurality of media has been an ongoing debate in the UK, flaring up at certain flashpoints such as in the proposed 21st Century Fox/Sky merger in 2018 and the UK government's suggestion that the Evening Standard newspaper has been part sold to the Saudi Arabian state. This also follows similar developments taking place in Australia, France and Germany. Arguments generally centre around the premise that media plurality is needed to preserve diversity and free speech and open debate. As part of its ongoing research, Ofcom also regularly tracks the media consumption habits of the British public to inform any future regulatory changes – our take on Ofcom's latest research on viewing habits over the course of the pandemic here.

What are the key areas to watch out for?

Online intermediaries

Search engines, social media outlets and news aggregator apps have been identified as playing an increasingly important role as filtering and choosing which stories make it from news content creators to consumers. The diversity of these intermediaries influences how consumers access their news, which news is provided, and the extent of exposure to news sources which consumers otherwise would not have come across. Accordingly, Ofcom is concerned that if there is excessive consolidation between intermediaries and market dominance by a handful of intermediaries who control news exposure that consumers have. This means that consumers may be left in the dark about the basis on which their news is selected (by the intermediaries as curators) and left with a less diverse set of viewpoints.

Algorithms

Ofcom is concerned about the impact of algorithms (often used by the online intermediaries) which learn users' behaviour to tailor content. Intermediaries often use algorithms to tailor content to their audiences and make it easier for users to find the content they are most interested in. Concerns are often expressed that algorithms are designed purely to maximise user engagement, rather than ensuring that consumers are exposed to a diversity of opinions. Ofcom believes there is a lack of transparency around the way in which different algorithms give prominence to different news sources. To preserve the plurality of media, Ofcom's view is that more transparency is needed on how news sources are prioritised by these algorithms. However due to the relatively complex technology and impact of algorithms, it is still unclear whether algorithms could be regulated to ensure that there is plurality in the news selected for or chosen by consumers.

Market changes

The current rules focus on cross-ownership between print and traditional broadcasters, and doesn't account for the role that platforms and intermediaries now play in the broader media ecosystem. Currently, there is also no mechanism available to assess media plurality issues outside of mergers in the market. However, Ofcom acknowledges that market changes in other ways such as through organic growth in market share, or changes to technology or news consumption by consumers need to also to be taken into account. It is these less measurable areas that could pose a challenge to media plurality in the UK which Ofcom is now looking to address.

In terms of specific changes, Ofcom is also looking at bringing a much wider range of "news creators" into the scope of its public interest tests (rather than just print and traditional broadcasters) when looking at plurality. Ofcom is also consulting on whether a number of the historical restrictions on broadcasting licensing (such as advertising agencies being prohibited from holding broadcasting licences) should be relaxed, or whether they are still needed to ensure plurality.

What is Ofcom asking for?

In order to inform its thinking on the next steps for media plurality in the UK, Ofcom wants to hear from stakeholders on their views on:

• the impact of online intermediaries on the news consumption journey of UK consumers and the wider UK media landscape;
• if, how and to what extent algorithms impact on media plurality;
• how the changing market (outside of the context of a merger) has impacted the news consumption journey of UK consumers and the wider UK media landscape, and how the changes should be regulated;
• the applicable changes that need to be made to the Communications Act to address these issues.

What can I do?

The potential for regulatory change is massive and could see a major overhaul to some of the key provisions in the Communications Act. These changes are relevant to news producers, intermediaries, platforms, newspapers and broadcasters. If you are affected by these changes and want to respond to the consultation, you will need to do so using this form by 10 August 2021.

Like they do on the 'Warner Bros.' Discovery Channel 

Discovery CEO David Zaslav will soon lead the newly named Warner Bros. Discovery platform (whose strapline is "the stuff that dreams are made of").  The agreement was announced on Monday 17 May 2021, and it is reported that the deal will see AT&T receive $43 billion (in cash and debt securities) in exchange for its shareholders receiving 71% of the new company (with Discovery's shareholders owning the remaining 29% of stock). Both AT&T and Discovery's boards have approved the merger. 

Should the deal fall through, AT&T and Discovery have reportedly agreed termination fees of $720 million and $1.8 billion respectively.

The $3 billion expected savings on annual cost synergies will be invested in content and digital innovation, with Zaslav saying that the target is for the new platform to put $20 billion per year towards new content. The combined company will be worth approximately $132 billion (including $56 billion in debt), with an estimated annual revenue of approximately $52 billion.  

Whilst the WarnerMedia side of the business is much bigger than Discovery (counting Warner Bros. HBO, DC Comics and CNN on its roster), Discovery is able to harness reach in over 200 countries and brings with it a growing sports and news business in Europe, together with its portfolio of reality TV shows.  The merger is subject to various regulatory checks and hurdles, with AT&T and Discovery explaining that they expect the merger to finally complete in mid-2022.

A view to a merger

MGM, which runs the James Bond franchise, had put itself up for sale towards the end of 2020, with many commentators citing the rocketing value of streaming content.  It was announced last week that Amazon and MGM have signed an agreement for Amazon to acquire MGM for a purchase price of $8.45 billion.

According to Mike Hopkins, Senior Vice-President of Prime Video and Amazon Studios:  "The real financial value behind this deal is the treasure trove of intellectual property in the deep catalogue that we plan to reimagine and develop together with MGM’s talented team".

Not all of the big five Hollywood studios are expressing a desire to be part of the streaming consolidation.  Kenichiro Yoshida, Chief Executive at Sony, has denied that the company would be selling its film and TV studio (which according to press reports is being valued at c. $30 billion).
It will be interesting to see where this ever-increasing vertical integration is headed, as well as any reactions from legislators and regulators as the mergers work their way through various competition / anti-trust hurdles before completion.  

AT&T announcement here and Discovery announcement here.

Amazon and MGM agreement here.

This case attracted a lot of media attention in 2019, particularly in the music industry, when TuneIn, a US-based digital radio aggregator, was found by the High Court to have infringed the copyright of Warner Music and Sony Music Entertainment (which, between them, account for about 43% of the global market for digital sales of recorded music).

TuneIn had argued that TuneIn Radio was nothing more than a directory or search engine, which indexed and aggregated links to digital radio stations which were already freely available online, and that a finding against it would "break the internet".

However, the Court considered that TuneIn was different from a conventional search engine as (amongst other things) users could stream music from the various radio stations directly on TuneIn's website (as a 'one-stop shop', rather than being forwarded on) and TuneIn played its own advertisements.

The High Court therefore found that TuneIn's links, which it had repackaged and commercialised, amounted to a "communication to the public" for the purposes of copyright infringement, and - where the relevant radio station was not licensed in the UK - this was a communication to a "new public" which was not authorised by the copyright owner.

Only the links to radio stations which were licenced in the UK by PPL (e.g. BBC Radio 2 and Classic FM) were found not to be infringing, as TuneIn was simply connecting UK users to licensed UK radio stations.

TuneIn appealed to the Court of Appeal, which handed down its judgment last month essentially upholding the High Court's judgment, to the record labels' great relief. 

This decision, although unsurprising, highlights to a certain extent the tension between music licensing, which is still carried out to a large extent on a territory-by-territory basis by local collecting societies, and the increasingly globalised music streaming landscape.

The background

The litigation began in the Düsseldorf Regional Court, when, in 2016, German law firm 'MBK Rechtsanwalte' (MBK) took action against another law firm, 'mk advokaten' (MKA). MBK claimed that by trading under the names 'mbk rechtsanwälte' and 'mbk advokaten', MKA had infringed its 'MBK' trade mark, which was registered in Germany for legal services. The Düsseldorf Regional Court found in MBK's favour and ordered that MKA was prohibited from using the letters 'mbk' for legal services, "under pain of fine".

MBK later discovered that when its name was entered into a Google search, some of the results led to certain directory websites, including one, in Das Örtliche, which advertised the legal services of MKA. MBK therefore asked the Court to fine MKA for breaching the 2016 prohibition. In its defence, MKA explained that although it had originally advertised with Das Örtliche using the infringing mark, that advert had been removed, at MKA's request, following the 2016 trial. It therefore appeared that other directories had picked up the listing and linked the 'MBK' search term with MKA, without its knowledge.

The question for the CJEU

At first instance, the Düsseldorf Regional Court found in MBK's favour and fined MKA for non-compliance. MKA appealed to the Düsseldorf High Court, which in turn referred a question to the CJEU, regarding the meaning of "using" under Article 5(1) of Directive 2008/95 (Article 5(1)).

Specifically, the CJEU was asked:

"Is a third party referenced on a website in an entry that contains a sign identical with a trade mark "using" that trade mark, within the meaning of Article 5(1), if the entry was not placed there by the third party itself, but was reproduced by the website’s operator from another entry that the third party had placed in infringement of the trade mark?"

In plain language: Does a person who has arranged for an infringing advert to be placed on a website 'use' a sign which is identical with the infringed trade mark where third-party website operators reproduce that advert on other sites?

The CJEU's ruling

On 2 July 2020, the CJEU issued its preliminary ruling, concluding as follows:

• Offering goods or services under a sign which is identical with or similar to another person's trade mark and advertising those goods or services under that sign constitutes 'use' of that sign;
• It is settled case-law that 'use' of a sign that is identical or similar to another person's trade mark exists where that sign is selected by an advertiser as a keyword in an online referencing service and is used as the trigger to display an advert, even where that sign does not appear in the advert itself;
• It follows that if someone directs an operator of a directory website to publish an ad, which contains, or is triggered by, a sign that is identical with or similar to a registered trade mark, that conduct constitutes 'use', for the purposes of Article 5(1);
• However, by contrast (and relevant to this case), a person cannot be liable for the independent actions of other economic operators with whom it has no direct or indirect dealings and who act on their own initiative and in their own name. If the website operators are acting on their own initiative then the economic operator whose goods or services are promoted (in this case, MKA) cannot be regarded as their customer, and is not the 'user' of the sign; and
• In the context of Article 5(1), "using" involves active conduct and direct or indirect control over the use. On that basis, Article 5(1) cannot be interpreted as meaning that a person 'uses' a sign, irrespective of their conduct, simply because the use provides them with a financial benefit.

It is now for the referring Court to determine, on the facts, whether MKA's conduct indicates that it had a direct or indirect relationship with the operators of the third-party websites in question. If no such relationship is found to exist then MBK's claim under Article 5(1) looks set to fail. However, MBK may still have a claim in restitution under local German law and/or be able to bring an action against the website operators direct.

The ruling should offer some comfort to online advertisers: It suggests that as long as steps are taken to procure the removal of any infringing ads that advertisers have placed, or directed someone else to publish, they will not be held liable for infringement, based on independent republications. The logic behind this seems sound: in a world where content can be reproduced many times over with only a few clicks, it would seem harsh to hold content originators liable for reproductions that they had no knowledge of, or involvement in.

In Germany however, the position appears to be more onerous for advertisers. It is settled German case-law that, where an online advert infringes another person’s rights, the person who ordered the ad must not only arrange for it to be deleted but also, "with the help of the usual search engines", ascertain whether other website operators have reproduced it. If they have, then the person who ordered the ad must also make a "serious attempt" to have subsequent referencing deleted. The rationale behind this is that any display of an infringing ad benefits the person whose goods or services it promotes and that it therefore falls on that person to procure the removal of all instances of the advert. In the present case, this prompted the referring Court to question the compatibility of German case-law with certain principles of EU law.

The CJEU's preliminary ruling can be read, in full, here.

In the past two weeks, the European Commission has issued two "Notices to Stakeholders" (i.e. rights owners) – one on 18 June 2020 and another on 23 June 2020. The Notices summarise the impending changes to various EU intellectual property rights, in light of Brexit. Whilst we have known about most of the changes for some time, others are new and with the transition period now definitively set to expire on 31 December 2020, an overview of the forthcoming changes seems timely.

EU Trade Marks (EUTMs) and Registered Community Designs (RCDs)

• Conversion of registrations: On 1 January 2021, the UK Intellectual Property Office (UKIPO) will automatically convert EUTM and RCD registrations into equivalent, but entirely independent, UK "re-registered" rights, without examination. Conversion will also take place for international registrations that designate the EU. 
• Conversion and renewal fees: No costs will be payable to the UKIPO for the conversion of existing registrations. However, once converted, UK and EU registrations will need to be renewed individually, with separate renewal fees payable to each of the UKIPO and EUIPO. At present, both UK trade marks and EUTMs must be renewed every 10 years. 
• Dates: "Re-registered" design rights will retain their RCD registration, application and renewal dates and will inherit any priority dates. "Re-registered" trade marks will likewise retain their EUTM filing and priority dates.
• Pending applications: There will be no automatic conversion of EUTM applications that remain pending on 1 January 2021. If protection is required in the UK, Applicants will need to file a separate application for an equivalent UK right. Applicants will have 9 months to do so (i.e. until 30 September 2021) and an additional filing fee will be payable to the UKIPO.
• Registrations approaching expiration: An equivalent UK right will be noted on the UK register for RCDs and EUTMs that are due to expire between 1 July 2020 and 31 December 2020. These rights will be assigned an "expired" status by the UKIPO and their continuation will be dependent on the late renewal of the corresponding RCD or EUTM, within 6 months. No costs will be payable in connection with the re-registration of "expired" rights but if no action is taken, they will be removed from the UK register.  
• Cancellation proceedings: Where an EUTM or RCD is subsequently declared invalid, revoked or cancelled as a result of proceedings that were ongoing on 31 December 2020, the corresponding "re-registered" right will also be declared invalid, revoked or cancelled, by the UKIPO.

EUTMs only

• Use: After the transition period, the use of a "re-registered" trade mark, in the UK, will no longer constitute genuine use in the EU. This could be problematic for EUTMs that are predominately (but not exclusively) used in the UK and will leave any such EUTMs, which have been registered for more than 5 years, vulnerable to revocation for non-use.  
• Non-use: "Re-registered" trade marks will not be liable to revocation on grounds that the corresponding EUTM was not used in the UK before the end of the transition period. As "Re-registered" rights will assume the filing dates of the EUTMs that they will derive from, this should allay concerns about UK marks that will technically be more than 5 years old, when they are created.
• Seniority: Once the transition period has expired, all existing seniority claims in EUTMs that are based on UK national trade marks will cease to have effect in the EU.
• Ownership: A slightly unusual change, which was announced in the 18 June "Notice to Stakeholders" is that after the transition period, the ownership of EUTMs (as objects of property) by UK based entities and individuals will be regulated by Spanish law, unless the proprietor has a "real and effective establishment in an EU Member State". If they do, the law of the member state where the proprietor is established will apply. Brand owners should consider the Spanish and/or local law implications of this, before the transition period expires.  

Unregistered Community Designs (UCDs)

• Continuance: UCDs which arise before the end of the transition period will continue to be protected in the UK, for the remainder of their three-year terms. 

Copyright and database rights 

Both the UK and the EU are contracting parties to various multilateral international copyright agreements and the UK's exit from the EU will have no bearing on this. It will mean however that certain protections, which are specifically afforded to member states, under EU law, will no longer apply to the UK. This impacts:

• Sui generis database rights (SGDRs) – UK based owners of databases created on or after 1 January 2021, will no longer be entitled to receive a SGDR for EU databases. A reciprocal principle will apply to EU based owners of UK databases. Under the Withdrawal Agreement, databases that are already in existence, when the transition period expires, will maintain protection in the UK or EU (as applicable) for the rest of their duration. 
• Broadcasting: After the transition period expires, the protections afforded by the Satellite and Cable Directive will no longer apply to UK broadcasters. At present, the Directive localises copyright clearance so that it need only be obtained in the member state where the signal is introduced. From 1 January 2021, UK broadcasters will have to obtain clearance in all member states where the signal is received, making the process significantly more onerous.
• Digital content subscriptions: The Portability Regulation will no longer apply, meaning that UK residents will cease to benefit from their digital content subscriptions when they are in the EU. Where UK providers of online content wish to offer their services to subscribers in the EU, they will need to comply with local laws, including clearing all relevant rights.
• Orphan Works: The UK and EU will no longer practice mutual recognition of orphan works. This could mean that infringement arises regarding works that were previously lawfully available online and could present particular problems, for cultural institutions.

Action points

At present, intellectual property law is (largely) harmonised across the EU. After Brexit, it seems inevitable that the two regimes will diverge, perhaps significantly. Between now and 1 January 2021, it is therefore crucial that brand owners identify how their IP portfolios will be affected by the changes and determine whether preparatory action is required, to maintain maximum protection. This may include: 

1.Ensuring any RCD and/or EUTM applications that could still be pending on 1 January 2021 have been identified – the UKIPO will only convert existing registrations and action will be required to secure UK protection for pending applications;

2.Evaluating the pros and cons of applying for EUTMs and RCDs before 1 January 2021, noting that an additional fee will be payable, if the mark has not proceeded to registration by 31 December 2020; and  

3.Determining the extent to which EUTMs are currently used in member states other than the UK. Any EUTMs, which are predominately used in the UK, will be vulnerable to revocation, if or once they have been registered for more than five years. Action can be taken during the next 6 months, to protect against this.