In Robert Plant’s world, all that glitters is not gold, and all that sounds like another artist’s work is not stolen from that artist. Fortunately for Plant and his Led Zeppelin bandmates, a Los Angeles jury agreed. That jury found on Thursday that the estate of Randy Craig Wolfe, the lead guitar player for a Zeppelin contemporary, Spirit, had not proved that the iconic opening guitar riff to “Stairway to Heaven” was lifted from Spirit’s “Taurus.”

The Lawsuit

The suit alleged that Led Zeppelin copied parts of Stairway from Spirit’s single, “Taurus.” Wolfe, who wrote Taurus, stated prior to his death that “it was a rip-off” of his music. His estate now seeks damages and writing credit for Wolfe.

After listening to Taurus,  it is safe to say that even casual fans of Zeppelin’s work can likely identify the chords that Wolfe believed Zeppelin to have “ripped off.” There is also little question that Page and Plant had access to Spirit’s work. Between 1968 and 1969, the two bands played five shows together. Spirit played “Taurus” at each of those shows.

The Jury’s Findings

Indeed, the jury expressly found that members of Led Zeppelin had heard “Taurus.” Nonetheless, a half-an-hour after listening to both songs one last time, the jurors issued their verdict that the songs lacked substantial similarity in their extrinsic elements.

Wolfe’s estate has already vowed to appeal the decision, perhaps based on U.S. District Judge R. Gary Klausner’s refusal to allow the jury to hear alternative versions of Spirit playing “Taurus.” Judge Klausner ruled that the jury should not hear these recordings because Wolfe’s copyright extended only to the sheet music filed with the U.S. Copyright Office.

Vindication of Oft-Accused Artists

Thursday’s verdict comes as something of a vindication for a band that has repeatedly faced copyright infringement claims and accusations. The opening lyrics for “Whole Lotta Love” are remarkably similar to the final verse of the Muddy Waters song “You Need Love.” “The Lemon Song” contains a number of lyrics similar to Howlin’ Wolf’s “Killing Floor,” a song Zeppelin played routinely during the same 1968-1969 American tour in which it opened five shows for Spirit. Copyright infringement suits related to both of these works, as well as several others, resulted in out-of-court settlements and song-writing credit given to the plaintiff. “Stairway” is the first song over which the band has litigated infringement claims through trial.

[Note: This post was authored by Jason Horst.]

Moving from the celebratory to the spiritual, the lawyers who (literally) brought you “Happy Birthday” once again find themselves looking to overcome entrenched copyright interests related to one of the country’s most well-known anthems.  Attorneys Mark C. Rifkin and Randall Scott Newman, who recently succeeded in bringing “Happy Birthday” into the public domain, are aiming for a follow-up hit, filing suit against The Richmond Organization (TRO) and Ludlow Music over the copyright to the Civil Rights anthem “We Shall Overcome.”

TRO has held copyrights for “We Shall Overcome” since the early 1960s and has collected millions of dollars in fees for its use since then.  “We Shall Overcome” was popularized by folk singer Pete Seeger in the late 1940s and returned to prominence during the Civil Rights Movement in the 1960s.

Seeger Did Not Write “Overcome”

Rifkin and Newman, as they did in the “Happy Birthday” case, assert on plaintiffs’ behalf that the song is derived from works pre-dating the copyrighted versions.  “We Shall Overcome,” they say, is virtually identical in its musical and lyrical composition to “We Will Overcome,” which Mr. Seeger published and copyrighted in 1948.  Thus, say Rifkin and Newman, “[b]ecause the copyright to the 1948 publication of People’s Songs, Reg. No. B184728, was never renewed and thus expired  in September 1976, … We Shall Overcome entered the public domain no later than that date.”

Origins of the Song Date Back to Early 1900s

The attorneys actually believe that the song entered the public domain far earlier.  Indeed, “We Will Overcome” is a turn-of-the-20th-Century African-American spiritual that Mr. Seeger freely admits learning from a friend.  According to a Library of Congress blog post from 2014, the song appears to have roots in two different songs from that period, one from which its lyrics are derived, and the other from which it draws its melody.  The individual(s) who combined the two, however, is not currently known.

Only time will tell whether Rifkin and Newman turn out to be one hit wonders, or whether they can “Overcome” once again.  If only there were a song they could use to motivate themselves…

[This post was written by Jason Horst.]

Debate over the most influential band from the 1960s will generally include names like the Beatles, the Rolling Stones, and Led Zeppelin, but a lesser-known act from one of music’s greatest eras, the Turtles, may have just changed all of that. Flo & Eddie Inc., a corporation owned by the two founding members of the Turtles, just prevailed in a lawsuit against SiriusXM sure to rock the music industry and, perhaps, take a lot of music out of circulation.

The Turtles, while not as big as the Beatles, did have some hits that many will recognize, including “Happy Together,” which have been played frequently on SiriusXM, broadcast radio, and other sources for music-listening. Because federal copyright laws apply only to recordings “fixed” starting in 1972, the Turtles are not protected or entitled to royalties under these laws. Last week, however, United States District Court Judge  Philip Gutierrez granted summary judgment in favor of Flo & Eddie, holding that pre-1972 recordings may be protected under state copyright laws and are protected by California copyright law.

The SiriusXM Suit, Pandora and SoundExchange

The suit against SiriusXM is similar to one recently filed against Pandora in New York state court. The SiriusXM and Pandora suits involve a challenge encountered in integrating the music industry’s royalty system: millions of people listening to music using media that did not exist even 15 to 20 years ago, let alone in 1972. Yet, when copyrighted songs are played on SiriusXM radio, Pandora, or streaming webcasts, the holders of the copyrights are still entitled to royalties.

Many companies that broadcast or provide access to digital recordings, including SiriusXM and Pandora, use a company called SoundExchange to track usage, collect digital royalties, and distribute them to copyright holders. Problem solved, right?  Unfortunately, there’s a catch. SoundExchange may not track usage of material recorded or “fixed” before 1972, meaning that it would not collect or distribute royalties on such recordings.

Assuming that the SiriusXM ruling stands and that other state courts follow its lead, those who want to provide access to pre-1972 recordings online or via satellite radio will have to find a way to efficiently track usage for the purposes of calculating royalty payments. And, of course, they will have to pay royalties to artists whom they were not previously paying. These expenses, in turn, will likely mean greater cost, more commercials, or even loss of access to certain works.

Federal Copyright Law Does Not Apply to Pre-1972 Recordings

The issue in both the SiriusXM and Pandora cases is a loophole of sorts in federal copyright law. On February 15, 1972, Congress brought sound recordings under federal copyright law. Prior to 1972, however, musical recordings were protected only be state copyright laws, many of which are based in common law, court-made rules that are not codified in statutes and, at least in many instances, do not require registration in order to protect recorded material. The suit against Pandora is based on New York common law. Works that are copyright protected by state common law are harder to track than those protected by a registered federal copyright.

The artists and record companies in both suits have contended that they have not been paid for usage of their pre-1972 recordings. Pandora, at least, appears to tacitly acknowledge as much. According to the complaint against the company, Pandora told the SEC that if it were required to obtain licenses for the reproduction and public performance of pre-1972 sound recordings, the expense of compliance may be so prohibitive that Pandora would simply remove all pre-1972 recordings from its service.

We have yet to hear the final word in either the SiriusXM or Pandora cases.  Barring an out-of-court settlement, SiriusXM will almost certainly appeal the trial court’s ruling to the Ninth Circuit Court of Appeals. Given the substantial financial interests at stake, even a trip to the Supreme Court is not out of the question. These cases could end up significantly diminishing both services and adding cost to consumers, or they could make it easier for new media companies such as Pandora and SiriusXM to climb the charts, while leaving artists like the Turtles continue to receive no royalties for use of their performances.

I’m listening to my Classic Rock station on Pandora, and Keith Richards’ timeless guitar licks begin to blast from my laptop speakers.  I instinctively pick up my air guitar and start to wail.  Mick comes in:  “I. Can’t. Get. No. . .”  Then . . .  nothing.  I snap out of my rock star fantasy and wildly click over to Pandora to figure out what happened.  Over the picture of the Stones’ Out of Our Heads album cover, there is a message from Pandora: “This track is no longer available on Pandora.  We apologize for the inconvenience.”

Ok, the Stones didn’t really disappear.  Not yet.  In actuality, Mick went right on singing, Keith went right on riffing, and I went right on wailing on the air guitar.  Nonetheless, the following two facts are absolutely true:  1) you don’t care about the rest of my jam session—which was complete with kicked-over “mic stands” (coat racks) and a T-shirt thrown into the “crowd” (my mortified wife and children)—and 2) fans of the Stones, Beatles, Elvis, Miles, Coltrane, and many other musicians with pre-1972 recordings could soon see these recordings removed from Pandora—and other commonly-used media—if record companies prevail in a recent suit filed against the Oakland-based company.

The Pandora Suit and SoundExchange

The suit against Pandora, which the record companies filed in New York state court, involves a challenge encountered in integrating the music industry’s royalty system:  millions of people listening to music using media that did not exist even 15 to 20 years ago, let alone in 1972.  Yet, when copyrighted songs are played on Pandora, satellite radio, or streaming webcasts, the holders of the copyrights are still entitled to royalties.  Many companies using digital recordings, including Pandora and SirusXM, use a company called SoundExchange to track usage, collect digital royalties, and distribute them to copyright holders.  Problem solved, right?  Unfortunately, there’s a catch.  SoundExchange may not track usage of material recorded or “fixed” before 1972, meaning that it would not collect or distribute royalties on such recordings.

The Problem With Pre-1972 Recordings

On February 15, 1972, Congress brought sound recordings under federal copyright law.  Prior to 1972, however, musical recordings were protected only be state copyright laws, many of which are based in common law, court-made rules that are not codified in statutes and, at least in many instances, do not require registration in order to protect recorded material.  The suit against Pandora is based on New York common law.  Works that are copyright protected by state common law are harder to track than those protected by a registered federal copyright.

The record companies in the Pandora suit, as well as in a California suit against SirusXM, contend that they have not been paid for usage of their pre-1972 recordings.  Pandora appears to tacitly acknowledge as much.  According to the complaint, Pandora told the SEC that if it were required to obtain licenses for the reproduction and public performance of pre-1972 sound recordings, the expense of compliance may be so prohibitive that Pandora would simply remove all pre-1972 recordings from its service.

We will watch the Pandora and SiriusXM cases with great interest, as the cases could end up significantly diminishing both services, as well as my living room concert series.

More than 40 years after releasing what many music aficionados consider to be the greatest classic rock song ever written, Led Zeppelin faces a lawsuit alleging that it was written (in part) by someone else. At issue is the chord progression instantly recognized the world over as the iconic opening to the song “Stairway to Heaven.” The progression is remarkably similar to that used in a song by a band called Spirit, which toured with Zeppelin in the late 1960s. Perhaps inspired by the Supreme Court’s recent “Raging Bull” decision, the estate of Spirit’s lead guitarist filed suit on May 31, 2014, alleging that the legendary song-writing duo of Jimmy Page and Robert Plant copied Spirit’s work.

The Lawsuit Against Led Zeppelin

The suit in question was filed in the Eastern District of Pennsylvania by the estate of Randy Craig Wolfe, also known as “Randy California,” the lead guitar player for Spirit. The lawsuit alleges that Led Zeppelin copied parts of Stairway from Spirit’s single, “Taurus.” Wolfe, who wrote Taurus, stated prior to his death that “it was a rip-off” of his music. His estate now seeks damages and writing credit for Wolfe.

Without opining on whether Stairway actually infringes, after listening to Taurus,  it is safe to say that even casual fans of Zeppelin’s work can likely identify the chords that Wolfe believed Zeppelin to have “ripped off.” There is also little question that Page and Plant had access to Spirit’s work. Between 1968 and 1969, the two bands played five shows together. Spirit played Taurus at each of those shows.

Why now? “Raging Bull” and the Doctrine of Laches

It is possible that a month ago, Spirit’s attorneys may have been reluctant to bring this lawsuit, given how ubiquitous Stairway has been on the radio and elsewhere throughout the past four lawsuit-free decades, during the entirety of which Spirit likely knew of the alleged infringement. While copyright claims can be raised as to sales taking place any time in the three years preceding a lawsuit, the doctrine of laches was thought to bar infringement claims that could have been raised far earlier. Laches is an affirmative defense available to bar claims where a plaintiff has unduly delayed in bringing suit.

The face of the Zeppelin suit makes clear that the basis for the claim was known in 1997, and likely much, much earlier. A previously-uncontested, 40-year-old act of alleged infringement would seemingly be the textbook case for a laches defense.

On May 19, 2014, however, the Supreme Court ruled in Petrella v. Metro-Goldwyn-Mayer, Inc. that the doctrine of laches did not bar the heir to Frank Petrella, co-author of the screenplay for “Raging Bull,” from bringing a copyright claim against the movie studio capitalizing on the work, despite the fact that she knew of the potential for a copyright claim for nearly two decades. The Court, through Justice Ginsburg, stated that “in face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief.” For the attorneys representing a party holding a 40-year-old potential copyright claim against work that continues to net Led Zeppelin millions of dollars each year, the Court’s holding had to be music to their ears.

Remaining Challenges for Spirit

Just because Zeppelin may not have an affirmative defense of laches does not mean that Wolfe’s estate has a smooth path to success. The estate’s attorneys will still have to establish, among other things, that chord progressions are copyrightable and that anything copied from Taurus should not be considered a de minimus use, too minor to be actionable.

Interestingly, this is far from the first time that Led Zeppelin has faced copyright infringement claims. The opening lyrics for “Whole Lotta Love” are remarkably similar to the final verse of the Muddy Waters song “You Need Love.” “The Lemon Song” contains a number of lyrics similar to Howlin’ Wolf’s “Killing Floor,” a song Zeppelin played routinely during the same 1968-1969 American tour in which it opened five shows for Spirit. Copyright infringement suits related to both of these works, as well as several others, resulted in out-of-court settlements and song-writing credit given to the plaintiff. A similar result is not unlikely in this case.

If a competitor circulates false advertising about your products you can sue under federal law, but what do you do when the person making the false claim is not a competitor? Sue them anyhow.

What’s False Advertising?

Under the typical case, a company sues its competitor for making a false claim about either the competitor’s products or its own products. Remember the viral (and false) rumor that Taco Bell’s beef contained sawdust? If Del Taco ads repeated that rumor, Taco Bell could sue under federal law. Likewise, if Puma falsely claimed its running shoes included tufts of cheetah fur that made you run faster, Nike could sue Puma for false advertising.

Supreme Court Expands Standing

The Supreme Court’s recent decision expands the reach of false advertising claims to advertisers who do not compete with the victim. The Court clarified and expanded the standing requirement for filing such claims for products or services in interstate commerce under the Lanham Act (15 U.S.C. § 1125(a)). This is important because a plaintiff without standing (the right to sue) quickly finds himself knocked out of court.

Anything That’s Fit to Print?

The Court’s decision involved toner cartridges for printers, the ones you always need to replace when you are finally printing something for work, instead of Game of Thrones maps, pictures of kittens or directions to the bowling alley. Defendant Lexmark sells printers and replacement cartridges and sought to control the replacement cartridge market for its printers. Plaintiff Static Control reverse-engineered Lexmark’s microchips, creating functional equivalents without copying/infringing Lexmark’s intellectual property, that effectively replaced the chips on Lexmark cartridges. But Static Control didn’t actually manufacture replacement cartridges. However, Static Control’s chips enabled other companies (Lexmark competitors) to sell generic cartridges, which liberated consumers from purchasing Lexmark’s more expensive replacement cartridges. Unhappy about lost market share, Lexmark sent notices to most of the replacement cartridge manufactures, alleging that using Static Control’s chips was illegal. Static Control sued Lexmark claiming false advertising under the Lanham Act, the trial court dismissed the lawsuit, the Sixth Circuit reinstated the lawsuit and the Supreme Court affirmed, allowing Static Control to continue to prosecute its claims against Lexmark.

New Standing Standard

Prior to this decision, the thirteen federal circuit courts (12 plus the Federal Circuit) had applied a smorgasbord of standing requirements, which generally limited standing to direct competitors. But the Court reviewed the circuits’ standing requirements and unanimously voted “none of the above.” Instead, the Court held that a plaintiff has standing if: (A) it suffers an injury to its commercial interest in reputation or sales, and (B) the injury flows directly from the deception caused by the defendant’s advertising:, which occurs when the deception causes consumers to withhold trade from the plaintiff. In the Lexmark case, Static Control had standing because Lexmark’s (allegedly) false statements influenced Static Control’s customers (Lexmark’s competitors) to stop purchasing Static Control’s chips. The Court reinstated Static Control’s lawsuit, even though Lexmark does not directly compete with Static Control. If Static Control ultimately prevails, the court could force Lexmark to stop making false statements, issue “corrective” advertising and pay damages and attorneys’ fees.

What’s Next?

So, advertisers and other commercial “speakers” beware. If you make false claims that injure companies selling products or services interstate, even if those companies are not your competitors, you’re exposing yourself to liability under the Lanham Act. And if a company makes false claims that impact your business, feel free to make a federal case out of it. Of course, you can also make a state case out of it, as many states have their own false advertising/competition laws, like California’s which begins at Business and Professions Code section 17200.

The attorneys of Wendel Rosen’s Technology Practice Group have compiled this list of 10 common mistakes they’ve seen in the trenches. Smart companies will take the time to address these issues early in formation to prevent a future situation that could turn into a company killer.

1. Choosing the Wrong Type of Entity
A big decision prospective company founders face is determining the type of entity formation their company should take – a “C” corporation, an “S” corporation or a limited liability company (LLC). In a nutshell, LLCs and “S” corporations have significant tax advantages. However, “S” corps can offer only a single class of common stock. That eliminates them as an alternative for most fast-growing tech companies, since investors typically want a different class of stock than those desired by company founders and employees. LLCs can offer different classes of ownership interests. However, some investors dislike LLCs, because the company’s income and loss will be reported on the owners’ personal tax returns.  Many outside investors prefer “C” corporations. Therefore, the discussion generally starts with forming a “C” corporation and then explores whether the tax benefits of LLCs or “S” corps outweigh the presumption in favor of the “C” corporation. California companies with a social or environmental mission now have the option to become Benefit Corporations. While companies organized under the State’s general corporate law must consider solely the interests of shareholders in the profits of the business, Benefit Corporations must consider impacts on society, employees and the environment, as well as the interests of shareholders in profits, and may prioritize these at their discretion. For further reading on this type of entity, please visit http://bcorporation.net/publicpolicy.

2. Not Planning for Early Exits
What happens when one of a company’s founders decides to leave or the other founders decide they’ve had enough? The founder leaves (either willingly or unwillingly) while the other founders work 24/7 to make the company successful. And what happens to the founder’s stock?

Often, people don’t think about that scenario when they are launching their next great idea.
They think about it only when someone’s walking out the door. The remaining founders may resent the fact that while they are working hard, the person who left is still benefiting from their labor. Founders should discuss the possibility of an early split in the beginning. Clear shareholder agreements provide for various exit scenarios, including the remaining founders’ reserving an option to buy all or a portion of the original founder’s shares.

3. Not Documenting Stock and Equity Promises
Sometimes, company founders make vague promises to employees that they will receive a certain number of shares of stock or that they will get a “percentage” (e.g. 2%) of the company as an equity incentive. These promises are typically verbal or contained in an email without being very specific. The founder and the employee plan to work out the details in “paperwork” later.

“Doing the paperwork later” is a common source of problems in fast-growing tech companies. People are so busy that they postpone so-called nonessential paperwork. However, doing it later opens the door to disagreements over what was intended at the time the promise was made. If an employee was offered a set number of shares, what happens if many more shares are offered to investors in the interim? Should the employee’s number of shares be increased to the same percentage as would have existed at the earlier date? And, if the employee was offered a percentage of the company, is the number of shares calculated based on the number of shares outstanding when the offer was made or when the shares are ultimately issued? Moreover, if the value of the company has increased, then the price of the shares needs to reflect that increased
value. The shares can’t be offered at the original low bargain price without unfavorable tax
effects. For these reasons and others, when a young, fast-growing company wants to offer equity, it should have a written equity incentive plan and related contracts in place first.

4. Failing to Lock Up Trade Secrets
All too often, a business realizes it has trade secrets only after a former employee or potential investor starts using or disclosing the business’s proprietary information. By then, it may be too late. To protect its trade secrets, a business needs to develop, disclose and, most importantly, consistently execute policies to protect its trade secrets. To prevail in court, a business must prove that the alleged trade secrets are not readily available to others and that it took reasonable steps to protect the information. The courts look at what is reasonable under the circumstances.

For example, a court will require a greater effort by Apple regarding its marketing strategy for its next “i” product than it would for a venture capital company’s list of investors. Customer and prospect lists frequently spark trade secret disputes, because they are the lifeblood of almost every business. The simplest way to evaluate whether you have trade secrets that need protection is to ask yourself, “If some of our key employees left today and joined a competitor, is there any information they could take that would hurt my business?”

5. Carrying Inadequate (or No!) Insurance
Business is inherently unpredictable and risky. For example, it’s not unusual (although highly frustrating) to be sued – sometimes for a frivolous and baseless claim. You don’t want the first time you read the fine print of your insurance policy to be after you’ve been served with a notice of a pending lawsuit, only to find out that the claim is not covered.
Every company needs to assess its potential risks to make sure the more likely ones are covered. There are insurance policies for nearly every imaginably risk (although some of them may be cost-prohibitive), from your standard Commercial General Liability policy, Error & Omissions policy, Employment Practices Liability policy, and property insurance policies to policies for intellectual property claims, privacy claims, and loss of electronic data. And, of course, the amount of your coverage should be sufficient to allow you to carry on with continued operations.

6. Using Outdated Privacy Policies
Online privacy is an ever-shifting area. New laws are being proposed in both the U.S. and
abroad. The European Union is in the process of overhauling its privacy regulations, and Latin American countries are expected to follow. Scholars and policymakers are in dispute over the fundamental theoretical framework for the regulation of online privacy issues. Emerging technology changes the way companies collect and use data, with new uses cropping up constantly – both online and through mobile apps. Against this backdrop, does your company have an adequate – and updated – privacy policy and privacy notice? Transparent and detailed notices and policies should be the starting point for all businesses that handle and collect private data.

7. Not Getting Written Assignments of Intellectual Property Rights
Intellectual property rights are the key assets for most new technology companies, but often young companies fail to secure rights in IP.  An assignment of copyright or patent rights must be in writing, not an oral agreement. Work product, such as software code created by an independent contractor, may not qualify as a “work for hire” under the federal Copyright Act. Assignments of trademarks must also include an assignment of the goodwill associated with the mark. In addition, company founders or early employees often register domain names, blogs and social media accounts in their own names; these should be transferred to the company.

8. Failing to Register Patents, Trademarks and Copyrights
Along the same lines, emerging companies often put off or delay applying for registrations for patents, trademarks, and copyrights in order to save a bit of money. For patents, this can be fatal due to the “one-year bar” requiring an application be filed within one year of public use, sale, offer to sell, or description of the invention in a published document. For copyrights, failure to register may prevent one from obtaining certain remedies in court, like statutory damages and fees. For trademarks, one advantage of registration is that it establishes nationwide constructive notice of the mark, even if a company has not yet used its mark in every state.

9. Treating Social Media as the Wild West
Social media sites, such as Facebook, LinkedIn and Google+, present new challenges to
companies in terms of marketing issues, intellectual property protection, and employee confidentiality and privacy. Too often, however, companies have few guidelines for monitoring use of their intellectual property on such sites or employee usage of social media. These issues confront both established and emerging companies, but emerging companies need to be particularly mindful of such issues, as they may not have the resources to litigate disputes. It’s a good practice to establish and follow a formal social media policy.

10. Mismanaging an International Launch
Today, emerging companies are often ready to immediately offer goods and service to foreign markets. Too often, however, they are not ready or have not researched how to deal with the laws and regulations of foreign countries. For example, as noted above, European privacy and data protection laws differ markedly from U.S. laws and are continually evolving. An emerging company that collects certain consumer information from consumers living abroad must be mindful of these differences.

As you can see, there are a number of challenges companies need to anticipate. With a little forethought and preparation, you can make sure your company avoids some of these costly ones.