BE PREPARED, THERE ARE SPOILERS AHEAD!!!

In 2019’s “Yesterday”, aspiring singer/songwriter Jack Malik is one of only three people in the world who, after a worldwide blackout hits, remembers The Beatles.  Jack rises to fame and is on the way to fortune after claiming The Beatles’ songs are his and signs a record deal with a major label. Jack, however, becomes overcome with guilt and eventually announces to the world that it was not he, but John, Paul, Ringo and George who had written the songs, much to the chagrin of his manager.

While the movie itself is (in my opinion) wonderful, it also brings up an interesting legal question: if no one, including John, Paul, Ringo and George, knows that The Beatles wrote the songs, who owns them for copyright purposes?

BACKGROUND LAW

Copyrights are governed by Federal Law, and while the statutes governing copyrights can be found under Title 17 of the US Code, copyrights are one of the few areas of law which the Constitution specifically grants to Congress, under Article I, Section 8. Unlike trademarks, which are used to identify the source of goods in commerce, and patents, which protect the rights to an invention, copyrights protect original works of authorship. Falling under the protection of copyrights are books, movies, music, computer software and even architecture.

While copyright protection exists prior to the registration of a copyright, in order to apply for a copyright, and be able to bring infringement suits to protect it, the author of an item, or if the item is a “work made for hire”, the person or entity who paid for the item, must file an application with the United State Copyright Office. Once filed and eventually reviewed and approved, the owner of the copyright may prevent others from using the copyrighted item for any reason (with some exceptions), up to the statutory time limit (generally, the life of the author plus 70 years). Alternatively, the owner may license the item to one or more persons for their use, whether that be through their playing of a movie on television, performing a “cover” of the song on an album, or putting an image on clothing.

The Copyright Act, while expansive in its discussions regarding proper use and enforcement, does not define “author.” However, when a word is not defined by statute, courts look instead to the “plain meaning” of the word. In past cases, author has been defined as “ the party who actually creates the work, that is, the person who translates an idea into a fixed, tangible expression entitled to copyright protection.” Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 737, 109 S. Ct. 2166, 2171, 104 L. Ed. 2d 811 (1989). Further, under the Copyright Act, joint works, more specifically defined as “a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole” are also allowed, with all authors each having ownership, albeit shared with the other joint authors, of the copyright. When disputes related to ownership of a copyright exist, while the actual registration provides the registered owner with prima facie evidence of ownership, this can be overturned through the providing of proof to the contrary by other claimants.

In instances where a copyright is filed, and granted, but is later challenged under a claim that the information contained within the application is false, the court hearing the case will request that the Copyright Office review the application of the granted copyright in order to ascertain whether the applicant knew the information was inaccurate or whether, had the Copyright Office known that the information was inaccurate, they would have refused the application. Importantly, for an omission or misrepresentation in an application to be fatal, and the previously granted copyright revoked, in addition to being inaccurate, the omission or misrepresentation must be material (important) as well as an intentional or purposeful concealment of relevant information by the applicant.

So, What Does This Mean for the “Yesterday” Universe?

Given that in the movie, we are not given the nitty-gritty details related to the behind-the-scenes legal maneuvering (which would not have made for great cinema), we will look at three possibilities:

1.       The record company applied for the copyrights but have not been approved.

We see in the movie that the whole process was a whirlwind of activity. From start to finish, it only covers a few months of time. For anyone who has ever dealt with the Federal Government, this might as well be the blink of an eye. Thus, it seems safe to say that, while the applications have been submitted, they are likely sitting on a desk somewhere. So, what does that mean for Jack and the record company? It likely means that, when the Copyright Office eventually finds the application, given Jack’s admission that he was not the author, the applications will be denied. Only the author of a work may apply for a copyright and Jack made it extremely clear that he was not the author. Whether or not The Beatles existed, or any of the men had any idea they wrote the songs, is irrelevant. As Jack is not the author, Jack cannot apply.

2.       The record company had the copyrights approved.

With my apologies to the Copyright Office for my previous doubts, it is possible they approved the applications in a timely fashion. So, what does that mean now? Well, for an easy hypothetical, we will assume that one or more of The Beatles, or their families, brought a claim to invalidate Jack’s copyright. While the burden would rest on the challenging parties, given Jack’s admission in front of tens of thousands of people, as well as the testimony of the other two individuals in the world who remember The Beatles, it seems highly plausible that the copyrights would be invalidated, as the identity of the author in the application is inaccurate and a “material” fact,  and Jack was fully aware when applying that he was not the author.

3.       What happens to The Beatles?

While the first two scenarios are relatively straightforward, the question of who owns the rights to a song they do not remember creating is an entirely different question. Thankfully, however, we do have one comparable event with which to frame this question.

In 2000, in conjunction with the film’s release, the soundtrack for the film “O Brother, Where Art Thou” was released.  It immediately began climbing country music charts before eventually winning a Grammy for Album of the Year, as well as Best County Collaboration and Best Male Country Vocal Performance in 2002 and selling nearly 8 million copies worldwide. Included on the album is the song “Po’ Lazarus.” Described as a “bluesy, melancholy old work song about a man who is hunted and gunned down by a sheriff with a .44,” the song was recorded by Mr. Alan Lomax in 1959, and features Mr. James Carter, an inmate in the Mississippi State Penitentiary, leading fellow prisoners in the song. The song was included in Mr. Lomax’s archives, before eventually being discovered by the producer of the film and used in the movie.

While the song was placed into the public domain by Mr. Lomax, and thus was not able to be copyrighted, Mr. Carter was, as the only person identifiable on the recording used on the album, entitled to royalties. This was in spite of the fact that, when asked, Mr. Carter had no recollection of ever performing the song.

But what does this mean for John, Paul, Ringo and George? While there appear to be no court cases which discuss amnesic authors, it is possible that the testimony of the three people who remember The Beatles, particularly Jack, who had more to lose than anyone else from the disclosure, could allow for the copyright to be registered. However, it is equally possible a court could rule that, as the authors are otherwise unable to testify as to their authorship, and as The Beatles members had (at least, supposedly) never met, that the songs belonged to both no one, and by extension, everyone.

 

While, usually, we finish these blog posts with something about how this applies to you, unless you are the only person in the world to remember Led Zeppelin, or someone claims that you actually wrote dozens of hit songs without you, or anyone else, remembering it, this post has little to no bearing on your life. However, should you wish to have something copyrighted, call our office, and ask how to protect your next multi-platinum hit.

 

Starting a new business can be a daunting and expensive process for any new entrepreneur. For a brick-and-mortar business, this process typically includes all of the usual stopping points between a mere business concept and finally opening the doors to customers. This may include finding a space in which to operate, creating a brand presence through a creative name and specialized product/service, and creating the necessary framework to handle employee and tax obligations. This process can take an entrepreneur from a few weeks, months, and sometimes several years and can require the advice of a multitude of professionals: commercial bankers, real estate agents, business attorneys, and accountants, just to name a few.

 

For an entrepreneur seeking to provide video game related services to potential customers via the internet, however, he or she may begin creating content by streaming on Twitch or YouTube, spreading awareness for their work on social media, or professionally all in a single day with nothing more than a computer. Part of the excitement of platforms like Twitch or YouTube is that someone pursuing video-gaming streaming, a form of artistry, or other content creation as a way to make a living can potentially transform from a complete unknown, to an internet sensation, virtually overnight.

 

Beyond this, a new content creator on Twitch and YouTube is typically much younger than someone who decides to open a new brick-and-mortar business, and the former may be relying on their own parents as their primary source of guidance in getting their venture off the ground. While there is ample evidence throughout Twitch and YouTube to support the fact that youth is surely not a detriment to the potential success of the business, a sixteen, eighteen, or twenty year-old is simply not going to have the same network of professional contacts to assist them with their business venture as a sixty-five year old who has retired and wants to start their own small business.

 

This disconnect between the traditional business creation process for these internet-based service businesses, combined with the ease of entry to the industry (through Twitch, YouTube, and social media), and the relatively lower average age of these entrepreneurs, creates the perfect environment for an inexperienced decision-maker to enter in to contractual arrangements with little to no thought of their future impact. The situation between Tfue and FaZe Clan is a perfect example of how this situation can result in future problems for a successful content creator.

 

TFUE v. FaZe Clan

Although the issue may have arisen far before it reached our ears, the recent legal issue between Turner Tenney (professionally known as “Tfue”) and Faze Clan Inc. (known as “FaZe Clan”), a professional sports organization has shaken the video gaming community over the past week. Tfue is a gamer who primarily plays the popular battle-royale video game Fortnite, both professionally and as a streamer on Twitch. FaZe Clan is a sports entertainment organization, which primarily enters in to contracts with professional gamers to play certain video games on behalf of FaZe Clan, including Fortnite, Player Unknown’s Battlegrounds (“PubG”), and my personal favorite, Counter-Strike: Global Offensive (“CSGO”), among others.

 

Based upon the information available to the public from the Hollywood Reporter article on the subject, the issue between Tfue and FaZe Clan surrounds Tfue’s “Gamer Agreement”, which Tfue and FaZe Clan allegedly signed on April 27, 2018. While we only currently have the Complaint filed in the California Superior Court for the Central District of L.A. County, the basic allegations Tfue’s Complaint regarding his contract can be briefly summarized as follows:

 

 

Counts I & II              Tfue is alleging that the Gamer Agreement is void and invalid as a matter of law, or should be considered so by the court, to be, under both California contract law and California’s “Talent Agency Act” because of the language within the contract and surrounding circumstances, including the following:

 

 

a.    The Gamer Agreement allows FaZe Clan to extract a finder’s fee of “up to eighty percent (80%) of the revenue paid by third-parties for Tfue’s services.

 

b.    The Gamer Agreement restricts Tfue from lawfully pursuing his trade and profession by prohibiting Tfue from providing his services to any other gaming company than FaZe Clan, from appearing in, sponsoring, promoting, endorsing, or otherwise providing services on behalf of companies competitive with the products or services of FaZe Clan.

 

c.    The Gamer Agreement permits FaZe Clan to reject any third-party requests (including from sponsors) for Tfue’s services, the result of which could be a declination of an offer to Tfue from a third-party, which would have otherwise been profitable to Tfue.

 

Count III                     FaZe Clan’s use of the Gamer Agreement as described above constitutes unfair and unlawful business practices in violation of California law, and to the detriment and damage of Tfue.

 

Count IV, V, & VI          FaZe Clan recieved funds from third-party sponsorships for Tfue's services that were not distributed to Tfue as required. These separate counts each provide different    legal theories which allegedly support why Tfue is entitled to money damages based on this alleged conduct by FaZe Clan.

 

Count VII                   FaZe Clan acted against Tfue’s interest by preventing Tfue from moving forward with a sponsorship deal with HyperX (a company that is, in my opinion, most notable for its gaming headsets, but also a manufacturer of keyboards, mice, and other PC accessories) despite the fact that the rejection of this deal was detrimental to Tfue. Tfue also alleges that FaZe Clan rejected this deal because of a clear conflict of interest as a result of FaZe Clan’s relationship with another sponsor (although the identity of this sponsor is not in the Complaint, it seems to me that they are likely referring to SteelSeries, a direct competitor of HyperX in the PC accessory industry).

 

The Gamer Agreement

It is evident from the above that Tfue signed an Agreement with FaZe Clan that he now wishes he hadn’t signed. Based upon the limited provisions that are included in Tfue’s Complaint, it is clear that the Gamer Agreement is both comprehensive and restrictive. If the financial implications are true, it also creates a massive windfall to FaZe Clan for Tfue’s success and puts him in a position where he has little decision-making power in terms of which sponsors he deals with and whom he provides services to. Below are my thoughts on Tfue’s position, and the lessons that can be gleaned from his situation:

 

Tfue

Based on the above, and the timing of the signing of the Gamer Agreement, it is likely that Tfue signed the Gamer Agreement when he was relatively unknown, and while he likely always possessed the gaming skill he does today, his circumstances were not such to monetize his skills in the manner he is today. Think Eminem before Dr. Dre, or Drake before Lil’ Wayne.

 

A review of Tfue’s alleged historical Twitch subscriber data shows a drastic increase in subscribers to his Twitch account from 2,886 in April of 2018 (when he signed with FaZe Clan), to a whopping 65,633 in January of 2019. While this does not necessarily mean cause and effect, it is hard to ignore the timing and infer a correlation. Further, I doubt that as a twenty-year-old, excited to be signing an agreement with a major gaming organization, Tfue considered the impact the Gamer Agreement may have if he went from making several thousand dollars to making millions.

 

As a result, a restrictive contractual agreement with FaZe Clan which may have helped him, at least in part, to make such a meteoric rise is now (according to Tfue’s Complaint) restricting his freedom to perform services, curtailing his ability to make his own decisions regarding his own career, and potentially directing large amounts of money away from Tfue to FaZe Clan. I am assuming that the Gamer Agreement is of a lengthy duration as well, as it appears that Tfue’s attempt to negotiate a new agreement with FaZe Clan fell through, leading to the lawsuit. As such, Tfue’s only options were to 1) suffer the consequence of his decision to sign the Gamer Agreement until it ran its course, or 2) pursue legal action against FaZe Clan to attempt to get out of the Gamer Agreement.

 

The lesson here is simple. Always have an attorney review a contract before you sign it. It doesn’t matter if you have 65,633 Twitch subscribers, or 1,000 YouTube followers, the only time you can be certain to avoid the consequences of a restrictive contract is before you sign it. The terms of this agreement could bind you to something that could ruin your business, your career, and your livelihood. It could also lock you in to a financial arrangement you can’t get out of, and could divert the fruits of your labor to another person or organization. Although legal action is always an option, the results are never guaranteed, and will likely require a hefty amount in attorney’s fees to get your chance to get out of the agreement.

 

For Tfue, based upon Tfue’s Complaint and the limited portions of the Gamer Agreement therein modification of the agreement as follows could have prevented his situation: a contract with 1) a shorter duration; 2) less restrictive language; and/or 3) more control/direction by Tfue based on financial performance may have solved his issues before they began.

 

1)         If the contract were of a shorter duration, Tfue could simply weather the storm that is the Gamer Agreement and part ways with FaZe Clan when the Agreement expired. While he would still lose out in the short term, knowledge that his long-term career is not at risk would be the more important victory.

 

2)         If there had been thorough examination of the Gamer Agreement prior to its signature, the provisions cited within the same jump off the page as both comprehensive and restrictive. Often in reviewing contracts for my clients, my final advice to them is that it is okay to come to the conclusion that you are simply not willing to sign the contract with certain provisions left in. If the other party refuses to change the contract, it is almost always better to not sign the contract, rather than to agree to something you can’t do (either literally, figuratively, or morally).

 

3)         It makes perfectly good business sense that FaZe Clan would expect to “recoup their investment” in Tfue at the time of signing the Gamer Agreement. Rather than arguing against these provisions at the time of singing, perhaps Tfue could have asked for a provision that required the Gamer Agreement to be renegotiated or to terminate after certain financial performance. While FaZe Clan may not have been willing to budge on some of these provisions, it is unlikely their attorneys would have been absolutely unwilling to agree to any reasonable modifications to the Gamer Agreement. If they were, see #2 above.

 

FaZe Clan

The biggest takeaway from FaZe Clan’s side of the current situation is that regardless of the result of the dispute or of who is “right” or “wrong”, it is a publicity nightmare for FaZe Clan. While it appears that the Gamer Agreement does have some confidentiality language in it, in terms of what Tfue can disclose to third-parties regarding the Gamer Agreement, this language did not stop the disagreement between them from reaching the public. Only time will tell what kind of damage the fallout will do to FaZe Clan’s business and reputation.

 

Here are some tools FaZe Clan (by and through their attorneys) could have implemented in their Gamer Agreement to avoid this publicity nightmare:

 

1) Confidential Pre-litigation Mediation Clause – This clause requires any dispute between the parties to the agreement to submit to facilitated mediation as a condition precedent to filing a lawsuit or submitting a claim for arbitration. Mediation is a form of facilitated negotiation, where an impartial third-party attempts to find a resolution to the issue(s) that are agreeable to all parties. In short, it requires the parties to attempt to work things out before proceeding to litigation or arbitration. Most courts will enforce these clauses as a good faith attempt to avoid formal court action and promote settlement.

 

On the one hand, this lets an uninterested third-party mediator (typically a practicing attorney in that area of law or an alternative dispute resolution attorney) review each party’s claims, and try to find a resolution that is agreeable for both parties. On the other, this process not only often results in settlement, but it also gives the parties a better idea of what the other party’s interests in the dispute are beyond their legal claims. If the mediation is unsuccessful, the parties could still make their claims in the appropriate court or via arbitration if the contract contains an arbitration clause.

 

The kicker here is that this entire proceeding is confidential (assuming the contract drafter utilizes the proper language). None of this process would be public, and would have allowed FaZe Clan a chance, by and though their attorneys, to approach Tfue (and his attorneys) to attempt to reach an amicable resolution.

 

2) Arbitration Clause – Similar to the Confidential Pre-litigation Mediation Clause, an arbitration clause drafted with proper language would have further served to privatize the dispute if it were to move beyond negotiation or mediation. Arbitration is an alternative to litigation that can be selected by parties to a contract, which is typically less formal than litigation. This could also have aided FaZe Clan in avoiding the publicity headache that FaZe Clan now faces, and the potential backlash from their and Tfue’s fans.

 

Final Thoughts

Before you sign any contract, including a contract in the video game streaming, e-sports, and other online content creation industries, it is extremely important that you hire an experienced business attorney to review the document and represent you in contract negotiations.

 

While it is best to find a business attorney who has experience representing clients in your particular industry, if you are grasping at straws to find a qualified and trustworthy business attorney, here a couple suggestions on tracking one down:

·         Ask family and friends who own a small business for a referral;

·         Connect with other business professionals (financial advisors, CPAs, etc.) that you currently use for other services for a recommendation of someone they work with.

 

While many landowners, when asked to consider what their land consists of, would only think of the visible surface, this only encompasses one-third of their actual ownership. Through a concept known as cujus est solum, ejus est usque ad coelum et ad inferos (roughly, whoever owns the soil, owns all the way to the heavens and down to hell), ownership of the surface also gives ownership of the space below and above. While this doctrine has been impeded over time, most notably with the introduction of airplanes, it is still, in large part, intact.

Because of this doctrine, property owners are able to sell off portions of their land which still allow them to otherwise inhabit the surface, namely their mineral and airspace rights. Mineral rights have long been, and continue to be, a major concern for property owners, particularly where, as in Michigan, there is an abundance of oil and gas beneath the surface. But oil and gas are not the only things lurking beneath the surface.

The Backstory:

In 2005, Jerry and Robert Severson sold their ranch to the Murray family, but retained for themselves two-thirds of “all right title and interest in and to all of the oil, gas, hydrocarbons, and minerals in, on and under, and that may be produced from the [Ranch],” meaning that while both had the rights to the minerals, two-thirds of any profits would belong to the Seversons. However, what was found in 2006 was neither oil, nor gas, but instead several of the rarest, and most valuable dinosaur fossils ever found, including the unique “Dueling Dinosaurs” fossil, as well as one of only twelve completely intact Tyrannosaurus Rex fossils ever found (learn more about the fossils HERE). The Murrays were able to sell several of the fossils, with the T-Rex alone being sold for “several million dollars,” and the Dueling Dinosaurs being appraised between seven and nine million dollars. The Seversons, however, disputed the Murrays’ ownership, stating that the fossils qualified as “minerals” and, per the terms of the sale, they were entitled to two-thirds of the proceeds of the sale. When the Murrays were unwilling to part with the disputed monies, the Seversons filed suit. What followed was a case of Jurassic proportions.

The Science:

During the initial hearing at the United States District Court for the District of Montana, both the Murrays and the Seversons produced experts to testify as to the composition of the fossils. The Seversons’ expert testified that, while the bones of living vertebrates contain the mineral hydroxylapatite, during the fossilization process, that mineral would recrystallize into another mineral, francolite. Following tests on the fossils, the Seversons’ expert concluded that this recrystallization had occurred in these fossils, and because of this they qualified as “minerals.” Unsurprisingly, the Murray’s expert disagreed, stating that no recrystallization had occurred, and that the bones found in the soil were no different than a modern bison bone. The District Court, weighing both the scientific evidence, as well as what the District Court believed to be the definition of “mineral,” agreed with the Murrays.

The Legal:

The Seversons, disagreeing with the District Court’s decision, filed an appeal with the United States Court of Appeals for the Ninth Circuit, arguing that the plain definition of “minerals” included the fossils. In the Ninth Circuit, just as in Michigan, the Court noted that “words in a contract are interpreted ‘in their ordinary and popular sense unless the parties use the words in a technical sense or unless the parties give a special meaning to them by usage.” Here, to find the “plain meaning” of the word, the Court looked first to dictionary definitions of minerals, but found not only that dictionary definitions varied, but also that the interpretation of those definitions varied. While the Murrays argued that minerals only included items which were valuable because of their ability to be refined and used commercially, such as gold, diamonds, oil and gas, the Seversons argued that the fossils could also be used commercially, as evidenced by the Murray’s sale, and as such fell squarely within the Murray’s definition.  The Court, after weighing each of these arguments, along with several arguments specifically focused on Montana law, decided that dinosaur fossils fell inside the definition of “mineral,” and ordered the District Court to enter an order conforming with such a decision (Read the full decision HERE)

The Effect:

                While the Murrays may still appeal this decision to the Supreme Court, until such a time that they do so, and until the Supreme Court overrules the Ninth Circuit’s decision, the effect on landowners, both in Montana and around the country, is clear. Even though Ninth Circuit decisions are not binding upon cases in Michigan, as Michigan falls under the Sixth Circuit, as this is the only case which deals with fossils in the context of a mineral estate case, it would almost certainly be looked to for guidance. So, if you, or a friend, neighbor or family member, are looking to purchase or sell mineral rights, be sure to discuss whether or not fossils fall within the definition of “mineral,” so you don’t wake up with a pain in the neck big enough to bring down a brontosaurus.

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The Firm, deeply rooted in Livingston County, has its origins in 1994 when it was founded by Tim Williams.  After having practiced predominantly in tax law for many years with larger firms, Tim decided to start a new firm that centered around working with people rather than with only highly complex tax issues. The Firm is centered in working with entrepreneurs and individuals with a personal touch.  The goal of the Firm has always been to create a relationship-driven rapport with its clients to establish long-lasting, personal relationships.  From the time it was founded, the Firm has specialized in business law and estate planning and probate practice.  Many of the Firm’s clients rely upon its attorneys for business guidance as well as legal counselling. The Firm has always made it a priority to devote time to giving back to the Livingston County community and its residents by working with and giving to charitable and service organizations.  The firm plans to continue to grow its client base in Livingston County and the surrounding areas.

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