Author: tonyjnrnwachi

Written By: Imani Modahl 

The topic of cryptocurrencies and Non-fungible Tokens (NFTs) are cropping up more and more in conversation. With stories of NFTs being sold for millions and cryptocurrency values dramatically rising and falling, it is easy to see why people are interested. 

In the context of the music industry, the digital world has the potential to bring new opportunities to musicians including: 

• the ability to sell NFTs as collectibles alongside traditional physical merchandise; 
• virtual performances within games like Fortnite and Roblox; and 
• perhaps most importantly, the ability to have more control over their work. Earlier this year, GRM Daily reported that rapper and TV presenter Big Narstie released his single “Gas the Set” as an NFT and said “I’m building my own music NFT so we can run a line in the NFT ends and have our own assets to resell and make p’s from”

In this instalment of Law, Schooled by Urban Lawyers, we will be looking at Non-Fungible Tokens (NFTs) in the context of the music industry from an intellectual property (IP) law perspective. 

What is an NFT?

NFTs are digital assets that are held on a blockchain, most NFTs are stored on a blockchain called Ethereum. NFTs are uniquely identifiable because each NFT has its own digital signature. Depending on the design of a particular NFT, it can sometimes be bought and sold, in the same way that you would with a piece of artwork or trading cards and in any event, the rights of ownership in an NFT may be transferred to another. 

What does fungible mean?

When an asset is fungible, it holds the same value as another identical item, for example a pound coin holds the same value as another pound coin or two fifty pence pieces. In contrast, non-fungible means that the item is unique. With NFTs, two NFTs may look the same, however the unique digital signature behind the NFT is different.

Where can you buy NFTs?

NFTs are sold on marketplaces such as OpenSea and Rarible. Some marketplaces allow customers to use regular bank cards to buy NFTs, however most require that customers pay with cryptocurrencies. It is important to check which cryptocurrency each marketplace supports because not all cryptocurrencies may be compatible. 

What are IP rights? There are a number of IP rights which may be relevant to NFTs in the music industry, including:

Copyright

This is an automatic right which applies to original works such as photos, videos or text. Generally, the person that created the work will be the copyright owner. For example, if you plan on releasing an album cover as an NFT, the photographer and/or graphic designer will be the copyright owner in relation to that album cover. There are exceptions to this rule, for example if the work was created in the course of a person’s employment, then the employer is likely to be the owner. 

In November 2021, British artist Damien Hirst released free NFTs which were “loosely based” on the Certified Lover Boy album artwork he created for Drake, Mr Hirst made it clear that the NFTs were being released with “Drake’s support and blessing”.

Trademarks 

A trade mark acts as a badge of origin which allows consumers to be able to distinguish the source of goods and/or services. There are different trade mark classes for different goods or services, for example last month, Kanye West’s company Mascotte Holdings, Inc. applied to register stylised word marks for ‘YEEZUS’ in: 

• class 41 (which includes “metaverse experiences”), artists including Travis Scott and Charli XCX have performed in the metaverse, Mr West may also be planning to do this in the future; and 
• class 35 (which includes “providing an online marketplace for buyers of blockchain-based non-fungible collectibles, assets, currencies and tokens; operating on-line marketplaces featuring digital and crypto collectibles and blockchain-based non-fungible assets, currencies and tokens; providing an online retail store services featuring downloadable movies, videos, television, music, entertainment, digital art, and non-fungible currencies, assets and tokens”). 

This is a u-turn from his previous stance on NFTs. In February he said “my focus is on building real products in the real world…do not ask me to do a…NFT…ask me later”.

Mr West’s trade mark applications show that he has the intention of expanding into the world of NFTs in the future. Once a trade mark is registered, the trade mark owner has the exclusive rights to use and licence the trade mark to others within the classes that they have registered their trade mark for. If registering a trade mark in the UK, you have to put the mark to genuine use within 5 years, if not the trade mark could be at risk of being revoked and removed from the trade mark register.

Passing off: 

This is a right which may be relied on by celebrities or brands. To bring a successful passing off claim, one would have to show that: 

• They have acquired goodwill – this is often confused with reputation, however goodwill goes further than being well known and was described by Lord McNaghten in the case of IRC v Muller as the attractive force that brings in custom;
• There has been a misrepresentation – for example, that an NFT featuring their image/content without their consent conveys the impression that they endorse the NFT when they don’t; and
• The misrepresentation has caused damage – for example a loss of sales or a loss of control.

Musician Lil Yachty suing music distributor Ditto, its owner Lee Parsons and NFT company Opulous over an alleged unauthorised collection which featured images of him and his name. The Defendants have said that they were authorised and in any event, they are seeking to have the claim thrown out because they say that Lil Yachty has brought the claim in the wrong jurisdiction due to Mr Parsons being British and Ditto being an English company. 

To bring a claim like this in the UK, passing off would be one of the IP rights musicians could seek to rely on, although it is not easy to bring a successful passing off claim. Proceedings in the context of NFTs are fairly recent so we are yet to see how matters unfold and the challenges faced by IP owners and NFT creators and how the Courts address those challenges.

How to minimise the risk of IP infringement

It is important to check if the person/company minting the NFT owns the relevant IP. If not, ownership should be assigned (transferred) or at the very least the creator should enter into a licence agreement with the IP owner. When preparing a licence agreement, thought should be taken into what happens after the licence ends. 

Failure to consider and minimise potential risks could result in lengthy and costly legal disputes. 

Benefits of utilising your IP portfolio in the metaverse

IP rights do not only exist to protect IP rights, they can also be monetised. NFTs have the potential to bring extra revenue to IP owners. For example, as set out above owners can license their rights to be used on NFTs / within the Metaverse, terms can include taking a percentage of secondary sales to NFTs which is something that would not really be possible with secondary sales of physical items like posters or CDs. 

As mentioned above, releasing music as an NFT may also give artists more control over their projects. The traditional route of signing with a record label has benefits, however releasing music as NFTs may be an attractive alternative to artists that want more control over their work by allowing them to get their work directly to fans.

What happens next?

The crypto market is volatile and we are in the middle of a “crypto crash”. It will be interesting to see how the use of NFTs develops over time and how the law develops in the context of IP the digital world.

Written By: André Carty

In this article, I will be outlining what is a trademark, why it is relevant in music and by the end of this article; you should have a clear understanding of the basics of trademark law and how to apply for a trademark of your own.

On the premise that the music industry is a business, and like any other business you may seek to register the business name you are trading in the industry which will, in turn, protect you and your brand against those who seek to corrupt it. If you are in the music industry, there is a strong chance you would have seen the symbol “®” everywhere, which indicates that the name/brand is trademarked. The mark offers the owner recourse if you or your brand has been impersonated or counterfeited. You have the right to reclaim your name on any website including social media or at the very least to have any replicas shut down. 

The legal definition of a trademark is outlined in Section 1 of the Trade Marks Act 1994  as: “any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings.” Trademarking is not to be confused with copyright despite both offering protection to the creator of artistic work.

The distinction lies in the level of protection, particularly as a musician. Copyright is protection awarded automatically to creators or owners of original pieces of work, whilst trademarks are strictly registration of artistic work to show the distinction and identification of a particular business or artistic work from another. Trademarks are applicable across all industries. So depending on your musical aspirations it’s worth noting that copyright lasts a lifetime irrespective of how active you are in the industry whereas trademarks last ten (10) years provided that you are active in the business to maintain eligibility. Additionally, your activity will be beneficial when it comes around to renewing your trademark.

Just to be clear there is no legal obligation for you to protect yourself. However, if you have dedicated time, effort and money to curate thousands of followers, strong brand recognition and a platform to promote your music then your craft is worth protecting, as your musical catalogue grows with time and so does its value.

In 2018 the UK artist group Section Boyz did an interview on NFTR. The hit project Don’t Panic was a huge success debuting at #3 in the UK Chart and remaining in the top 40 during the first week. They explain their name change from Section Boyz to Smoke Boys and how it came about. In short, while they were busy in the studio recording focusing on the music, someone had registered the trademark ‘Section Boyz’. Consequently, the group was entangled in litigation with intellectual property barristers going back and forth for years over the said name. Since the group is now known under a different name as a result of the foregone litigation, they cannot go by ‘Section Boyz’ anymore as someone had beaten them to the registration mark. Consequently,  they have to start rebuilding the brand. The reality for artists is that the sooner you are protected the better to avoid such calamities.

Can you imagine building your name, branding yourself and growing your fan-based  all for someone to force you to change your name? It could confuse fans, misdirect streams and ticket sales or even worse an artist is involved in a scandal that results in you getting cancelled innocently. The sooner you protect yourself the better to avoid such pitfalls.  

Is trademarking for everyone?

Early protection is prudent but before starting you should give some consideration to the following:

1. Your career ambitions – Not everyone wants to be the next Digga D or Adele or DBE. You may want to consider teaching and helping the local community or performing sporadically so it may not be suitable for your needs. 
2. Group or solo artist. Depending on which one you decide it may be worth trademarking the group or just yourself.
3. Trademarking involves costs and even lawyers.
4. The uniqueness of your name. This can work for you in the beginning as trademarking may not be imperative if you self manage and plan to keep a low profile career. However, if you are selling apparel and have a large volume of streams and high profile album plus website then trademarking is a must.
5. Your position. Are you the pianist or drummer or guitarist? Perhaps then trademarking your name would not be useful. You could perfectly conduct business with your name as many do in the industry. 
6. Further things to consider is the location which is vital in the world we live in now where an international booking is a direct message ‘dm’ away. Does my trademark protect me internationally? And If I want that extra international security how would I begin?

At this point, you should have a basic understanding of the relevance of the law in music and after careful consideration; you have your answers to the 6 questions above. Now let us see how it can work for you and give you or your artist the protection that is needed. 

Where do I begin:

1. Choose a name and Check.

Before going through the effort of trademarking your name it is worth running a check. Let’s begin with UK registration. There is a search tool on the government website which can be found at https://www.gov.uk/search-for-trademark. This is to ensure that the name is available for use. You may want to exercise further checks for other artists using similar names and their following to prevent them from challenging your trademark if they see fit due to their audience.

1. Pick a location

Location is vital. In the digital age where a booking can come from a ‘DM’ on social media, it is worth considering international registration. Registration in the UK does have its limits. American courts may not respect the UK trademark to protect your name; you must register there for the courts to honour your trademark. Due to the Madrid Agreement, you may not need to register in every single country.

1. Registration Stage

Once you have completed the checks and are satisfied that no one poses a threat to challenge your name then the registration stage can begin. During this time you will not be able to change your trademark so be certain of your name. Remember the legal definition, you must ensure that your name meets that criteria and specifically the right class for your purpose which is also crucial. If you choose the wrong class your trademark is worthless. That being said, the class that usually applies for artists and musicians would be under ‘category 41’. They would be relevant to your publishing, recording, printed music and live music, to say the least. The application process takes four months, during this time people have the opportunity to challenge it. It would be wise still to enlist the services of an intellectual property rights lawyer to help as you make your application since you can only apply once and choosing the right class can be abstruse. You may make similar applications however they can be an arduous process. Once accepted then and only then you can make your international application. 

1. Costs involved

There are costs involved with this process: first, you pay £100 initially, plus £50 for each additional class. You’ll then get a report telling you if your application meets the rules. If you want to instruct a solicitor you can however kindly bear in mind their fees will be considerably higher. The international trademark fees are structured differently according to how many countries you seek to be protected in. In addition, the 10-year duration will still apply and can be renewed simultaneously with the UK application.

Trademark your name only?

In recent years producers have become just as notable as artists with taglines such as ‘m1 on the beat’ or ‘we got London on da track’ or Tion Wayne’s infamous ‘mmm-hmm’. Producers should think about trademarking their music also as many can profit from your brand that you worked diligently to craft. Imagine if someone is making £5,000 a month on Depop from selling apparel with your tagline on them it can be damaging to your brand especially if those products are associated with poor quality.

You can trademark almost anything within reason sounds included so long as it suffices the legal definition. It is important to note that you cannot trademark a name or lyric that you are about to use, trademark bodies frown upon this as many seek to collect and stockpile trademarks to limit others’ usage. 

That extra cheque most artists miss out on

Frequently you might hear artists speaking on new hot topics on publishing, recording, printed music, lyrics and live music. This is because some artists are beginning to become aware of the many ways they can be paid for the same songs outside of royalties. For example, most refer to royalties concerning licensing music to be played whereas mechanicals are in relation to licensing music to sell it. Labels must pay to print the music and then sell it to the fans. They cannot simply take their copy and duplicate it multiple times without paying those who made the song. So they have to obtain licensing rights from the publisher, which is usually the same person who made the song. For instance, you are a writer as in the creator of the music and the publisher as in the licensor of the music.

You would get two streams of income one as the writer and the other as the publisher since the label/seller has to pay them every time the song is distributed. Artists often fail to see the importance of negotiating their publishing deals effectively which can mean you miss out on an extra income stream long after your career is over which could equate to hundreds of thousands or even millions.

This can be seen in the notable case of the Caribbean songstress, Sister Nancy with her infamous track “Bam Bam”. Conversely, Master P of No Limit records understood the business of the industry and ‘mastered’ it with respect to intellectual property rights such as trademarking and copyrighting. This was most notably said within the interview of Snoop Dogg where he credited Master P for teaching him many of which he did not know whilst he was with and after the then infamous Death Row Records. 

To conclude, you should have a clear understanding of the basics of trademarking and its importance in music. You should also have the information to decide as to whether trademarking is worth having based on your position in the industry.

Written By: Al-Amin Amusan

In 2018, the late rapper Juice Wrld released his hit single “Lucid dreams,” which was from his debut studio album Goodbye & Good Riddance. As one of his most popular songs, it has received 1.9 billion Spotify streams. However, Juice Wrld and his estate own a negligible portion of the song’s rights and have received less than 15% of the royalties. How is this possible? Nick Mira, one of Juice Wrld’s frequent producers, interpolated the melody from Sting’s “Shape of my heart,” and when Sting caught on, he sued for copyright infringement.

Since Nick Mira and the Juice Wrld crew never got the sample cleared, Sting won the lawsuit and was awarded the song’s rights and royalties. Juice Wrlds team should’ve contacted the owner of the master recording (which appears to be Sting himself) and the owners of the publishing to discuss and agree upon a set of terms and a clearance fee which we will touch on later. This situation is an example of Entertainment law in action. 

In music people sign record deals everyday, and for a lot of artists it’s a measure of success. In the past decade the music industry has changed a lot with the advent of streaming companies. It has become the main way people listen to music in today’s day and age. However, it has left a lot of artists dejected. Most streaming companies practice a stream share system, in which all the money received by the company is then distributed per stream to all artists.

On the surface, the system seems to be beneficial and fair to all parties, but in reality it is unfair to smaller artists and it has been criticised as such. So much so that a bill has been proposed in parliament to remedy these issues and create a more equitable environment for artists that have been affected. This could help create an equitable payout and industry for upcoming artists who are unable to make a living due to the inequality of the stream share system that is currently in place.

In the meantime there’s a couple ways artists can use different systems in place to be more efficient and maximise profits. This can be achieved by starting an LLC(limited liability company) or LLP(limited liability partnership) if it’s a band. One of the good reasons an artist or band would want to start creating an LLC, would be to protect your personal assets against music related claims. You would not be sued personally for a legal scenario affecting your music after incorporating an LLC because the LLC owns your music.

Furthermore, it’ll be more efficient to have all your different royalties collected by the same entity that would be under your control. You could get your publishing, master and sync royalties all going to the same place and with the help of a good accountant you could minimise taxes paid. In the case of a group of artists, a LLP would help sort out splits and who owns what share of the partnership. This could help prevent any future disputes and misunderstandings that often occur. 

The different splits between writers and producers is often hard to delegate due to different types of royalties. For example, the aforementioned publishing royalties. Publishing pertains to all of the rights that songwriters have over their songs, such as the right to publicly play a song, such as on the radio or in a live performance, as well as the right to duplicate a song. To collect all royalties earned from these activities, you’ll need a publishing administrator to register your works with collection societies across the globe, license your rights, and collect royalties. There are several reliable publishing administration companies such as songtrust. 

Another way musicians make money is through licensing. This is essentially when you give another entity the right to play your music publicly, and you’re owed royalties for that. Similar to publishing royalties there are companies in charge of this. In the UK that company is PPL, and they collect the royalties for music placed on TV, played in public or on the radio. Sync licensing in particular is a very lucrative venture for artists (that’s getting your music into things like TV shows). These companies like Songtrust, ASCAP, BMI and PPL are all very important because they can also help find out who owns what when it comes to sampling and clearing. Samples are a staple of hip-hop, but can be very tricky to clear, so to avoid risk of losing royalties it’s simply smarter to contact the rights owners of the music you want to sample and agree on a set of terms. Another way to claim royalties, is claiming on songs that have infringed on your intellectual property. 

Additionally, on the topic of intellectual property, Several rappers and singers have catchphrases, terms and words that they invented and are associated with their brand, this can be part of their intellectual property and all artists should endeavour to protect this property as they would any other asset. One of the ways to protect these terms, for example when Skepta says “GREAZE” is to trademark the term. A trademark is a term, name, symbol, or device, or a mix of these, used by a business or person  in commerce to distinguish its goods and services from those of others. 

Trademark rights can be used to prohibit others from using a mark that is confusingly similar to yours. It helps you prevent others from stealing things, terms and ideas that are closely related to your brand and using it in theirs, without negotiating with you first. In order to obtain national trademark rights, which serve as proof of ownership of the mark and allow the owner to sue for infringement in court, the owner must first apply to register the mark at the relevant institutions, which in the United States is the USPTO and in the United Kingdom you can apply online on the UK GOV website. Copyright kind of works the same way, but the benefits or necessity of registration differs from place to place.

On the other hand a lot of these rights are lost when artists sign record deals and contracts, most of these contracts come with recording advances (money paid to artists to record the music) in which the artists take in exchange for the rights to their work as a songwriter or performer. The same applies for producers/beat makers who are technically songwriters since they made the composition. All of these people and roles are entitled to different types of royalties and rights that are usually given away, most people don’t sign away all their rights but usually the record label gets a larger share because they take on the risk of investing in the artist.  To simplify and explain the flow of royalties in the Music industry i’ve attached a simplified diagram created by Tunecore below:

Entertainment law can be very complicated and is always evolving, but hopefully this article would help give people just coming into the industry some insight on how to best navigate the industry. There’s many ways to monetise your art and a good understanding of the laws surrounding it is never a bad way to start.

Be sure to let us know what else you’d like to see us unpick in the world of music and entertainment law, and keep it locked on GRM Daily for the next instalment of Law, Schooled.