Companies tune up for musical battle

The British record label Ministry of Sound has diversified into a multimedia entertainment business. Picture: Getty

WHO CAN remember the good old days of the mix tape? Well, the cassette may now be dead and the music industry in decline, but the modern equivalent of the mix tape, collecting music into playlists and streaming it, appears to be giving the industry (which, despite numerous doomsday prophecies, still generated worldwide revenues of £9 billion last year) a new lifeline.

Figures published by the International Federation of Phonographic Industry in March showed an additional eight million worldwide customers of paid streaming services in 2013, taking the total to 28 million. Anything which is growing rapidly and involves intellectual property in the modern day and age is going to be a magnet for legal challenge and Spotify, one of the primary streaming services, is no different.

The growth and undoubted profile-raising of Spotify last year certainly caught the attention of Ministry of Sound (“MoS”), a legend in music compilation circles for over a decade. It became aware of Spotify users creating playlists compiled with identical songs, and in the same order, to those featuring on the various dance music compilation albums MoS sells. Those playlists could be accessed, and listened to, by all Spotify’s subscribers.

Spotify refused to remove those playlists, so MoS raised court proceedings against Spotify.

MoS didn’t have an issue with the users listening to the tracks; they are licensed to MoS and Spotify from record labels, and those labels (not MoS) receive the royalties when the tracks are played. Rather, the question was one of the actual order of songs featuring on the playlists. Compiling the albums in the way it does is part of the Ministry of Sound brand and the foundation of its music sales business.

The High Court was tasked with making a decision on a) whether copyright exists in selecting songs to feature on a compilation album and b) deciding which order they play in.

MoS based its claim on copyright protection in databases. For copyright to apply under the relevant UK legislation, MoS would have to demonstrate that it exercised sufficient skill, labour and judgment. This UK law is very wide and unspecific and European Union law has helped to clarify the position a little.

Databases, under EU law, are any collection of independent copyright works which are individually accessible and systematically or methodically arranged. It appears that, for EU copyright protection to apply, what is to be protected is the creator’s own intellectual creation. A recent European judgment shed some more light on this by specifying that a database creator would have had to have demonstrated “a creative ability in an original manner by making free and creative choices” in order for copyright protection to apply.

So, for MoS to be granted copyright protection for their compilation albums, they would have to convince the court that analysing music to determine optimal song choices and running order for their target audience involved enough creative skill, and produced a unique database – no easy task.

They would also be up against the wording of the EU Database Directive which specifically says: “The compilation of several recordings of musical performances on a CD does not come within the cope of this Directive… it does not meet the conditions for copyright protection.” That said, ultimately there has to be some skill in what MoS do for them to have built such a successful brand of compilation albums, which has value and could be argued to be the type of intellectual property which should attract legal protection.

Ultimately, Spotify and MoS settled the matter last month, so there will be no court judgment. A good result for the parties, but from a legal standpoint a clarification of the law on copyright protection in music compilation albums would have been helpful for others creating and using databases of this sort.

MoS recognised that there was a value in the specific skills and qualities it possesses, which allow it to make its compilation albums and it quite rightly wanted to protect that. There are still many businesses out there which don’t recognise the value of their intellectual property and adequately protect it, who would do well to dance to MoS’s tune. Intellectual property is becoming increasingly important, not only in the digitised world, but also in adding value to many businesses.

Prevention, as always, is better than cure. It is far easier to deal with any infringement of your intellectual property rights if you have staked your claim to them and got appropriate legal protections in place at the earliest opportunity.

• Pamela Abbott is a solicitor with CCW Business Lawyers www.ccwlegal.co.uk