Michael Duboff – Edwards Creative Law

Music Performance Agreements – Legally, What You Need to Know

Michael Duboff — Mon, 26 Feb 2024 18:17:47 +0000

Performing music live is a prime objective of many artists. The performance may be a one-off show at a local bar, part of a tour, or a corporate gig. The variabilities of artists’ performances and the related business considerations are vast. Whether you are the artist, represent the venue, or are the event operator (in which case you might also be the venue representative) challenges may arise if the terms of the performance are not clear and confirmed by all parties. For this reason, like all other business engagements, we encourage written performance agreements to be entered into between artist and party engaging them – either a venue or event operator (also referred to as a promoter). This blog discusses primary legal considerations of performance agreements.

While venues are referenced below, depending on the circumstances, it may be the promoter as opposed to a venue which is taking into account the considerations below.

Basic Logistics

A few essential items in a performance agreement are the venue address and contact information, the call time and sound check time, and the duration of the set/performance. Everyone wants to avoid inconsistent expectations. We want to avoid the artist thinking they are performing for an hour with ample sound check time vs. a promoter who wants the artist on for three hours with no prep.

Compensation

Is the compensation a flat fee, or a percentage of tickets? It could also be a free show (not ideal for artists – you can’t pay rent with promotion). If it is a paid performance, is there a deposit or guarantee? When is the compensation paid? Is part or all of it being paid before the performance (how long before?), after the performance date or on the performance date? What is the method of payment? Is tax included or added on, if applicable? Is there interest added if it’s late?

Hospitality

Are there amenities that the venue will provide for the artist? For example, are accommodation or travel being covered in one way or another, from reimbursing the artist to the venue paying for such costs directly. Is there a per diem for food… or whatever the artist wants to use it on? Additionally, are there amenities provided for the artist at the venue itself on the date of the performance, from preferred food and drink (the rider!)?

Backline & More

It’s important for all parties to be on the same page about the backline, lighting, sound and any other equipment considerations.

Recording and Artist Assets

Is the venue recording any portion of the artist’s performance – through photography and/or video? If so, there should be a grant of rights section wherein the artist grants the venue the right to record, as well as other necessary rights relating to the venue’s intended use of the recording, for example, posting on social media. Similarly, the venue should also receive a grant of rights for use of any of the artist’s assets that it may use to promote the gig. This may be use of the artist’s name, photos, music and/or artwork. From the artist’s perspective the question is whether this is reasonable. Also to be considered by all parties are the relevant publishing rights.

Merchandise

Is artist merchandise being sold at the show? If so, who will be managing the merch table – the artist or the venue? The venue may demand a percentage of sales, whether they do the selling or not. This has become a hot topic among all parties in the live music space.

Cancellation and Default

Another key element is about cancellation of the performance or a party defaulting on their obligations. What are the implications where one party unilaterally cancels the performance? Are there instances where cancellation may be allowed or perhaps mandated? Some examples are extreme weather, death and illness. What if the artist fails to show up or the venue fails to keep the stage in a suitable condition for the performance?

Liability, Indemnity and Insurance

Liability, indemnity, and insurance are terms common to most commercial agreements. What happens if injuries occur at the venue during the performance? Similarly, what if damage occurs – either to the artist’s equipment or to property at the venue? Who is responsible? What if a lawsuit is brought against either the artist or the venue in relation to an incident that occurred during the performance. Often, a relevant insurance policy will be in effect that will dictate processes to follow. At the same time, indemnity clauses may say that one party must defend and hold harmless the other party for any claims brought against them.

Conclusion

This blog provides a summary of some of the legal considerations relating to performance agreements. It is not an exhaustive list. Novel situations and circumstances often arise leading to further legal considerations to discuss and have incorporated into your agreements.

For any questions you may have relating to music law and performance agreements, please get in touch with us. We would love to help.

Edwards Creative Law is Canada’s Entertainment Law Boutique, providing legal services to Canadians, and international clients who partner with Canadians, in the Film & Television, Music, Video Games and Apps, Publishing and Literary industries.

For more information or to set up a minute Discovery Call with one of our entertainment lawyers please feel free to Contact Us.

* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.

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Five New Year’s Resolutions From Your Local Entertainment Lawyers

Michael Duboff — Thu, 21 Dec 2023 21:49:27 +0000

It’s getting to that time of year where individuals reflect on the previous year’s accomplishments and everything they want to work on and improve in the coming year. At Edwards Creative Law, we are no different!

This year, we have come up with a few potential New Year’s resolutions for our creative blog readers out there – but since you’re a regular reader of this blog, you probably already know this stuff!

These fundamental considerations are for creatives of all types to keep in mind when working with others – whether it is a longtime partner, a new collaborator, or someone engaging you for a job.

New Year’s Resolution #1: Don’t Rush

Starting a new project is always an exciting time. However, it is important to take time to make sure that the project, and individuals you will be working with, are the right fit. It’s easy to rush into things when excitement abounds. However, putting the time in upfront can avoid trouble down the road.

It may be much more difficult (and expensive) to resolve a dispute that arises 10 months into a project – after everyone has already put in a bunch of time, effort, and money – than if that issue had been identified and dealt with at the outset because the parties had taken more time to consider their agreement.

It may be a red flag if a prospective partner is putting pressure on you to sign agreements before you have had the opportunity to thoroughly review them.

New Year’s Resolution #2: Know Your Partners

As part of your due diligence before making any commitments, you should spend time getting to know your partners. Have conversations with them. Discuss each of your expectations of the project and of each other. Complete independent research.

Look up the individuals or organizations online to see if they have credits or a virtual footprint. For example, if the partner is selling themself based on prior work and successes, this can often be found online. In addition, speak to mutual acquaintances for their thoughts.

You never know how long you may be tied to a partner, and therefore, you want to make sure they are the right fit.

New Year’s Resolution #3: Discuss Key Terms

Once you are confident in who you are working with, make sure to have conversations with them about the project. Key terms and expectations should be discussed at an early stage.

What are the obligations or services that each party needs to perform? Are there deliverables, and if so, what are the details? Is anyone contributing finances? Who is entitled to receive compensation and/or revenue from the project? What does ownership of the project look like?

New Year’s Resolution #4: Agree on Terms

A direct follow-up to the previous point is to make sure there is agreement on the key (essential) terms of the relationship. Some key terms are identified in the previous paragraph. Recording the agreed terms in some form is important.

While a long-form agreement is not required, a recording that sets out the agreed-upon terms as well as both parties’ agreement of those terms is important in creating an enforceable contract. The parties’ agreement can be shown through signature or a clear communication (such as, an email) wherein each party writes that they agree to the terms.

New Year’s Resolution #5: Work with an Entertainment Lawyer

If you have any questions, issues or need assistance with the topics discussed in this blog (or other entertainment legal topics), know that there are entertainment lawyers to whom you can always turn.

Our job is to advocate for you in legal matters relating to the entertainment industry. This may be to discuss legal considerations relating to your work, draft, and review agreements, evaluate legal risks and discuss how to minimize or avoid them, and many other types of legal services.

Conclusion

This blog identifies a few fundamental legal considerations for creatives to keep in mind as we enter the new year. Remember to take your time, make sure the opportunity is the right one for you, and make sure that the key terms to the relationship are discussed and agreed upon.

If at any time you have questions and are uncertain how to proceed, we encourage you to reach out to an entertainment lawyer for assistance.

From all of us at Edwards Creative Law, we wish you a happy and safe holiday season!

For more information or to set up a minute Discovery Call with one of our entertainment lawyers please feel free to Contact Us.

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Publishing Law 101: Comic Books and Graphic Novels – What are the Legal Considerations?

Michael Duboff — Tue, 24 Oct 2023 21:05:40 +0000

Comic Books and Graphic Novels – What are the Legal Considerations?

Developing a comic book or graphic novel (we’ll collectively refer to as “comics” in this blog) is an exciting adventure to embark upon. While making comics may share similarities to writing prose, comics come with their own set of novel legal considerations (pun intended).

For one, the comic may be based on existing characters or stories. Another unique aspect is that it may be a joint venture involving several creators in the production of the comic. As well, publishing or distribution of comics can be unique due to their serialized form of storytelling. Each of these elements lead to legal considerations that will be discussed in this blog.

The Origin Story: What Intellectual Property is the Comic Based On?

The comics industry has a habit of reusing characters and concepts. Characters like Batman and Spider-Man have continuously starred in their own comics for close to a century. However, any individual cannot simply publish a new comic starring Batman or Spider-Man. This is due to intellectual property rights being exclusively held by certain entities.

The exclusive rights to Batman and Spider-Man (and their storylines, villains, and other supporting characters, imagined settings, etc.) are owned by DC Comics and Marvel Comics, respectively. This is why it is important to assess what your comic is about early on. If you produce a comic that uses established characters – such as ones published by DC, Marvel, or Image – then your publication will likely constitute copyright infringement.

The best way to legally use these established characters is obtaining permission from the copyright owner. Practically, it would be extremely difficult to get permission to use some of the most famous comic characters the world has ever known. Easier, though not necessarily guaranteed, is to get the right to create a comic based on a lesser-known character. There are no legal risks to producing your comic if it is an original work – based on original characters and concepts that you have developed.

Collaboration Agreements: Legal Considerations for Working with other Creators

Working and collaborating with other creators – writers, artists, inkers, letterers – can be an exciting and fun process. However, there are important legal questions to consider, and to discuss with your creative partner(s).

While these may seem unnecessary early on, if your comic ends up being successful and profitable, then the following questions are particularly important. This is why it is recommended to discuss these items early and, if possible, to incorporate them into a writing or collaboration agreement. (We can help with that.)

Copyright Ownership

If the comic is original, who will own the copyright to the comic, its characters, and its stories?

Decision-Making

How are business and creative decisions made among the creators? Is it a majority vote? What happens if there is a tie? Does one person have a veto?

Deliverables

Are there deliverables that one creative owes to the other(s)? If so, what is the scope and what are the timelines? Are there required formats for the deliverables (such as, electronic pdfs)? Do the deliverables require approval from the other(s)?

Credit

How are the credits apportioned between the creatives?

Future Stories

Who, if anyone, has the power to create future stories, such as sequels, prequels, or spinoffs, based on the original comic? Can either the writer or artist develop these future stories? Does either need the consent of the other?

Creator Leaves

What happens if one creative leaves prior to the comic being finished or published? Do they retain any ownership? Do they receive any compensation? Can the remaining creative(s) continue developing the comic?

Compensation

How are all the creatives being compensated? Is there a fixed fee for performing services? Who is paying whom? Is there back-end contingent compensation – i.e., royalties from gross sales or profit from sales after publication? What if the comic is adapted to film or other creators create a new comic based on the original that you published?

Publishing Agreements: What to Know When Publishing Comics

While not all comics are produced in serialized single-issue formats, publishing and distribution in comics can often be unique when compared to other forms of written publications. Publishing agreements may require deliverables from the creators at various stages to correlate with the stages of comic production (being script, pencils, inks, colours, and letters).

Each of these stages may also have particulars for the format of delivery of the work. Where the publication is single-issue serialization, these delivery requirements may be on an ongoing basis, such as, every month.

One of the most important clauses in any creative agreement is the grant of rights. For publishing and distribution agreements relating to comics, it is important to understand the scope of the rights being granted by the creator to the publisher and distributor.

The related questions include:

Are the rights to a full comic series (and each individual issue)?
Do the rights include the rights to create and distribute derivative works such as sequels, prequels and spin-offs?
What formats are covered – print only, or print and digital?
Are the rights granted for the whole world or some specific territories (locations)?

Conclusion: Legal Considerations for Comic Books and Graphic Novels

Creating comics can be a rewarding endeavor, especially when you work with other talented creatives. However, comics have unique characteristics that lead to particular legal considerations. To plan for success and to reduce the likelihood of challenging issues in the future, make sure you understand copyright and contractual considerations as they apply to the creation and distribution of comics.

For any questions you may have relating to comic book law and intellectual property matters, please get in touch with us. We would love to help as you create your story.

For more information or to set up a minute Discovery Call with one of our entertainment lawyers please feel free to Contact Us.

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Corporate Law: The Meaning and Importance of Shareholders’ Agreements in Canada

Michael Duboff — Tue, 15 Aug 2023 18:34:56 +0000

Shareholders’ Agreements in Canada

Corporate law is an important aspect of entertainment law because many entertainment businesses choose to incorporate. Often, a business will choose to incorporate after it has reached a certain point in its growth; this may relate to an increase in its personnel numbers or in its output capacity. For a more detailed discussion on incorporation, including why a business should incorporate, we recommend you read our blog Corporate Law: Why, When & How to Incorporate Your Entertainment Business.

Upon incorporation, a business will have incorporators and directors. One of the first activities of the corporation’s directors is to issue shares.

A person who has shares issued in their name is a shareholder. Shareholders are not owners of corporations however a shareholder’s broad rights to control the direction of a corporation are often likened to ownership.

What is the Role of a Shareholder?

Shareholders elect directors, they may have a right to receive profits, they confirm or reject by-laws of the corporation, and they confirm or reject major corporate activities such as mergers or acquisitions. Shareholders often enter into a shareholders’ agreement to define the terms of the relationship among the shareholders. This blog provides information about the three key parts of a shareholders’ agreements.

Is a Shareholders’ Agreement Required?

No, a shareholders’ agreement is not required but it can be very useful. A shareholders’ agreement, like most other legal contracts, is a document that can help to prevent or resolve disputes between the contracting parties – in this case, the shareholders.

This is because a shareholders’ agreement clarifies the rights and obligations that each shareholder has to the others as well as to the corporation. It also protects the corporation and shareholders.

For example, a shareholders’ agreements may protect a minority shareholder who has no day-to-day decision-making power because they can always be outvoted by the majority shareholder(s). A shareholders’ agreement can change this situation.

What are the Main Components of a Shareholders’ Agreement?

Key parts of a shareholders’ agreement set terms on the transfer of shares (or restrictions on the transfer of shares), define the decision-making powers of its shareholders and directors, set out what happens when certain events affect a shareholder, and provide a dispute resolution process.

Transfers of Shares

A shareholders’ agreement will set out restrictions on the right of the shareholders to sell their shares in the corporation. This is important in a closely held private corporation, in which each shareholder wants to know and control who the other shareholders are. Typically, a shareholders’ agreement will prohibit a shareholder from selling their shares to a third-party without the permission of the other shareholders.

In this way, the other shareholders can control who becomes a shareholder and, where relevant, maintain the status quo with respect to majority and minority shareholders.

Common Share Transfer Provisions:

Right of First Refusal

Before a shareholder can sell their shares to a third-party, they must first offer those shares to the other shareholders who may purchase the shares in a quantity that is pro rated to their current ownership.

Drag-Along Rights

A majority shareholder that sells their shares to a third-party has the right to force the minority shareholders to sell their shares as well.

Tag-Along Rights

If a shareholder sells their shares to a third-party the other shareholders have the right to force the third party to buy their shares on the same terms.

Pre-Emptive Rights

If the corporation issues new shares the existing shareholders may purchase a pro rated number of the new shares, maintaining their ownership percentage of the total outstanding shares.

Shotgun Clause

One shareholder may offer to buy the shares of another shareholder at a set price; the second shareholder can either accept to sell their shares at the set price or purchase the shares of the offering shareholder at the same price.

Decision-Making

How decisions are made among shareholders may be set out in a shareholders’ agreements. How many votes does each shareholder have? What types of matters require a simple majority vote? What matters require more than a simple majority (i.e., 2/3, 3/4 or unanimous votes)? What constitutes quorum for shareholders’ meetings?

These sections are important in addressing minority and majority shareholder dynamics. For example, a corporation in which one shareholder is the principal source of funds may require that shareholder’s approval of some or all decisions, even if that shareholder is in the minority.

Another aspect of decision making relates to the directors of the corporation. How are the directors chosen? Does the corporation have a minimum or maximum number of directors? Does each shareholder have the right to elect one director?

Events Affecting a Shareholder

It can be important in a closely help private corporate to set out what will happen when there is a change in the nature, status, or capacity of a shareholder. For example, a shareholders’ agreement will often provide for the death of a shareholder.

Are the shares inherited by the shareholder’s next of kin or does the corporation redeem them (buy them back and cancel them). Similarly, there may be provisions governing the permanent incapacity of a shareholder or providing for a shareholder that ceases to be an employee of the corporation, or that is subject to family law proceedings.

Resolving Disputes

One of the key objectives of a shareholders’ agreement is to prevent and resolve disputes between shareholders. For this reason, there is typically a section devoted specifically to dispute resolution. For example, if a vote of the shareholders on an issue results in a tie the agreement may provide that a particular shareholder has a tie-breaking vote or that a third party, such as an arbitrator, determines the issue.

Conclusion

The relationship among shareholders can be complex from an emotional, business, and legal standpoint. A shareholders’ agreement – to clarify and codify the obligations and rights of the shareholders – can be a strong tool to ensure that it functions effectively and in the best interests of the shareholders and the corporation.

For further information about shareholders’ agreements and corporate law, we encourage you to visit our website or contact one of the Edwards Creative Law lawyers.

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What is an Entertainment Lawyer & How to Hire One

Generative AI & Copyright Protection – Part 1

Generative AI & Copyright Protection – Part 2

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Film and Television Law
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Manitoba Tax Credit Bonuses – Filming in Manitoba Series: Part 2

Michael Duboff — Fri, 23 Jun 2023 15:47:00 +0000

What Makes Manitoba an Appealing Destination for Filmmakers?

Manitoba has a strong film tax credit program. With base tax credit percentages of 45% and 30% for its cost-of-salaries (“MBCOS”) and cost-of-production (“MBCOP”) programs, respectively, the province has become one of the most appealing and cost-effective locations to film in Canada.

How Can Manitoba’s Film Tax Credits Be Increased Further?

What may not be known is that both of Manitoba’s primary tax credit options can be increased further when a production utilizes tax credit bonuses.

The MBCOS tax credit can be increased from its base 45% to a total of 65% when all three of its available bonuses are applied and the MBCOP tax credit can increase from 30% to 38% when its singular available bonus is applied.

What is the MBCOS Frequent Filming Bonus and How to Qualify?

A production will be eligible for the frequent filming bonus of 10% where the subject production is the third film that the applicant production company has shot in Manitoba within a two-year period.

This can become a rolling bonus as long as the ratio of three film projects in two years is maintained. For series, projects will earn one frequent filming credit for every two hours of airtime. Therefore, after the first four hours, the series will have the required credits to qualify for the frequent filming bonus and the bonus can be applied to the remainder of the series.

In order for the production to be eligible, ownership of the production must be identified to confirm that each of the three films in the two-year period are owned by the same entity (referred to as the Principal Owner). This bonus is applied for via the Frequent Filming Bonus Eligibility Form that can be found here.

How Can Manitoba Producers Benefit from the MBCOS Producer Bonus?

A production can receive a 5% bonus where the applicant production company has a Manitoba resident fill the role of Producer, Co-Producer or Executive Producer.

To qualify, the Manitoba resident must receive a screen credit for any of these three roles in the production. This bonus is applied for within the MBCOS application form in both the Part A – Registration Certificate and the Part B – Completion Certificate.

What is the MBCOS Rural and Northern Bonus and How to Qualify?

A production can increase its refundable credit amount by another 5% via the rural and northern bonus. A production is eligible for this bonus where at least 50% of its Manitoba shooting days occur at least 35 km / 22 miles from Winnipeg’s center (a “rural day”), which is measured by the most direct driving distance from the intersection of Portage Avenue and Main Street in the city.

A rural day is defined as 7.5 hours of principal photography occurring in the rural location. To calculate the number of rural days, take the total number of hours spent on principal photography in the rural area and divide that number by 7.5.

In addition to the shooting requirement, at any time during principal photography, the applicant production company must have a permanent establishment in Manitoba that is located at least 35 km / 22 miles from Winnipeg’s center. Like the Producer Bonus, this bonus is applied for within the MBCOS application form in both the Part A – Registration Certificate and the Part B – Completion Certificate.

Can Federal Programs be Combined with MBCOS?

One additional production tax credit bonus that isn’t technically a “Manitoba tax credit bonus” is the availability to utilize the federal Canadian Film or Video Production Services Tax Credit (PSTC) on top of the MBCOS tax credit.

The MCBOS tax credit will reduce the production costs on which the PSTC is applied. Where a production is also eligible for the PSTC, the 65% tax credit (where all three former bonuses are applied) is increased to a total 70.6% refundable credit on eligible Manitoba labour!

What is the MBCOP Production Company Bonus and How Does it Benefit Productions?

The only bonus available for the MBCOP tax credit is one that most productions will utilize. This is an 8% tax credit bonus for eligible productions that co-produce with an eligible Manitoba production company increasing the base credit for 30% to 38%.

This production tax credit bonus is applicable to eligible productions where principal photography commences after May 31, 2020.

How Can You Successfully Navigate Manitoba Film Tax Credits for Your Production?

Like all film tax credit programs, Manitoba’s available tax credits and added bonuses provide substantial benefits to productions that film in the province.

However, the programs and their various regulations and processes often can be difficult to navigate to determine which tax credit routes are the most beneficial to your production. Being aware of the available bonuses and how they operate, as discussed in this blog, and determining which tax credits and bonuses are the most beneficial to your production, is just one piece of the picture to help you plan for your production’s success.

For further information about Manitoba’s tax credit programs, we encourage you to visit our first blog entitled Tax Credit Overview – Filming in Manitoba Series: Part 1.

For more information or to set up a minute Discovery Call with one of our entertainment lawyers please feel free to Contact Us.

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Generative AI and Copyright Protection – Part 2

Michael Duboff — Mon, 12 Jun 2023 14:25:56 +0000

Can AI Generated Works be Copyrighted in Canada?

In Part One of this blog series we begin our legal exploration of generative AI (artificial intelligence) looking at training data and rights needed to use the AI data. The general rule is that it is important for programmers to acquire licenses where training data is copyright protected.

The exceptions to this are if the AI training data is now in the public domain or if it is an allowable use of the copyrighted material, such as through the fair dealing exception.

In Part Two we continue our discussion on generative AI, exploring the copyright protections available for generated creative works.

What Artistic Works are Eligible for Copyright Protection in Canada?

Copyright laws in Canada are governed by the Copyright Act. Copyright subsists in every original literary, dramatic, musical, and artistic work if it meets certain requirements set out in the Act.

The threshold for what is “original” for copyright protection purposes is not particularly high. What is required is an exercise of skill and judgment: the work must be more than a mere copy of another work, but it need not be creative.

In CCH v Law Society of Upper Canada, the Supreme Court of Canada has written the following about the exercise of skill and judgement:

[Skill, means] the use of one’s knowledge, developed aptitude or practiced ability in producing the work. [Judgment means] the use of one’s capacity for discernment or ability to form an opinion or evaluation by comparing different possible options in producing the work. This exercise of skill and judgment will necessarily involve intellectual effort. The exercise of skill and judgment required to produce the work must not be so trivial that it could be characterized as a purely mechanical exercise. For example, any skill and judgment that might be involved in simply changing the font of a work to produce “another” work would be too trivial to merit copyright protection as an “original” work.

How Does the Canadian Intellectual Property (“CIPO”) Treat Generative AI Copyright?

In 2021, the Canadian Intellectual Property Office (“CIPO”) approved the copyright registration of a work entitled, Suryast. As noted in its application, this work was co-authored by an individual and RAGHAV Painting App, a generative AI system.

While notable, this copyright registration carries little weight and should not be seen as a precedent. At the time that the ai copyright protection was approved, no commentary was provided by CIPO and there is no way of knowing if the AI aspect was considered.

Does Generative AI Exercise Skill and Judgment in Copyright?

We therefore return to the question that is at the core of Canadian copyright jurisprudence: what constitutes an “exercise of skill and judgment”. When it comes to generative AI, skill and judgment can be assessed at different stages.

Is it the programmer’s coding of the generative AI system, the user’s text inputs into the software, or the AI (aka the software) running the code, to which we must look for the exercise of skill and judgment?

How does the US Copyright Office Treat Generative AI Copyright?

Earlier this year, the US Copyright Office (“USCO”) provided a statement that may help guide Canada’s analysis of the issue. On March 16, 2023, USCO released a guide on AI generated works stating that a work created with the assistance of AI may be copyrightable if it involves sufficient human authorship.

This statement aligns with longstanding US copyright law that requires human authorship for a work to be copyright protected. Elaborating on this, USCO states “when an AI technology receives solely a prompt from a human and produces complex written, visual, or musical works in response, the ‘‘traditional elements of authorship’’ are determined and executed by the technology—not the human user”. This explanation, which aligns with the common foundation of generative AI software that relies upon text inputs, illustrates that many current systems do not meet the required human authorship threshold.

However, the US Copyright Office elaborated further giving an example that will constitute human authorship wherein a user “may select or arrange AI-generated material in a sufficiently creative way”. The conclusion, therefore, is that it is the precise way that AI software is used that determines whether the generated work will be copyright protected. If the only human interaction is a text input, then the work is not eligible for copyright.

On the other hand, if the user manipulates the AI generated work into something further – such as through human-controlled editing – then it may be copyrightable.

Are AI Generated Works Eligible for Copyright Protection?

The question of whether generative AI works are copyrightable is clearly at the forefront of many AI-related conversations. As we have now seen in the US, guiding information is beginning to be disseminated on the topic.

Whether through the courts or copyright office, it is only a matter of time until Canada also addresses the question of whether AI generated works are copyrightable. As was similarly asked in part one, a seminal question is how the courts and legislators will balance the intellectual property and economic rights of creators and the pubic in deciding whether or not to allow AI generated works to be protected through copyright.

Part three of this mini-series will continue our look at generative AI and discuss ownership of AI generated content.

For more information or to set up a minute Discovery Call with one of our entertainment lawyers please feel free to Contact Us.

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Film and Television Law
Music Law
Video Game and App Law
Publishing and Literary Law
Employment Law
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Generative AI & Copyright Protection – Part 1

Michael Duboff — Tue, 11 Apr 2023 15:06:25 +0000

For as long as the concept of artificial intelligence (AI) has existed, it has prompted novel and important questions. These questions and the ensuing discussions span various sectors, from biotech and medicine to intellectual property law and ethics.

What is Generative AI?

Recently, a new form of AI technology – “generative AI” – has emerged which raises foundational issues regarding copyright laws. Generative AI technology refers to online programs that use massive amounts of “source data” to generate new content based on user text prompts. These generative AI systems may generate text – answer questions, write stories or code – music, or images.

Important Legal Questions about Generative AI Copyright

This blog mini-series will introduce some of those important legal questions concerning copyright and intellectual property rights that will affect both programmers and users of generative AI. As well, we will address the questions that our courts and legislators must eventually answer regarding the material generated.

Copyright and Generative AI Source Data

Generative AI systems rely on the consumption of massive quantities of “source data” to build its models and to generate its outputs. The training data can be information in almost any form. In this context, the important fact is that much of the source data is copyright protected.

What is Copyright Protection and What Works are Eligible for Copyright?

Generally, copyrighted creative works are original ideas that have been fixed in a form. An idea in someone’s head, for example, is not eligible for copyright protection. It becomes copyrighted material if it is an original idea and is “fixed” – written down, filmed or recorded in such a way that it is tangible.

How Long Does Copyright Protection Last?

In Canada, the lifespan of copyright protection in most works is 70 years after the death of the author. Once the copyright has lapsed, the work goes into the public domain. This means that any person can use and exploit the work as they wish.

Examples of Copyright Law and Public Domain

For example, in 2022, A.A. Milne’s beloved Winnie the Pooh entered the public domain. Very soon after, new adaptations and interpretations were announced that likely would not have been allowed while the character and story were still protected by copyright. A quick google of “Winnie the Pooh adaptations” will illustrate some of these radical uses.

What is a License and What is Copyright Infringement?

To use copyrighted material, the user must be licensed by the copyright holder. A license is a grant of rights from the copyright owners with limitations. Using copyrighted material, for commercial purposes or otherwise, without a license is considered a violation of the copyright owner’s rights called copyright infringement.

A copyright owner may bring a copyright lawsuit against unlicensed users of their work, which may include a claim for equitable relief (for example, an injunction) or monetary damages.

When is a License Needed for Generative AI?

Like other creators, programmers using generative AI tools to produce works must do their due diligence by obtaining licenses for copyrighted material in their source data. Countless stories have emerged of copyright owners who claim that AI generated works violate their copyright protections, particularly as it relates to AI art.

Some AI generated works are instantly recognizable as being “in the style” of a specific artist – a style that the user may have specifically prompted the AI tools to emulate. An even more obvious example is AI generated images with key elements of works created by the copyright owner – in some cases, including some part or all of the original artist’s signature.

Copyright Infringement in AI Generated Works

Claims of copyright violation are often difficult to navigate, particularly when the claim centers on use of an artist’s style. Direct use of a portion of artistic works is less uncertain.

Copyright Infringement in Music

An analogous situation is the use of samples in the music industry. Samples are excerpts from previously recorded and published songs that another artist uses as part of a new song (see our blog on Music Interpolations).

Unless the original song has entered the public domain, the sample is copyrighted and cannot be freely used. The common practice in music is for the second artist to enter into a license agreement with the first artist to use the sample.

Further Questions Regarding Generative AI Copyright

As in music, respecting the intellectual property rights of the creators of source materials would seem to require the creators of generative AI systems to obtain licenses for use of all source data.

As a practical matter, obtaining one or a few licenses for limited samples, as is the case with the music example, is possible. Obtaining hundreds of thousands or millions of licenses for the copyrighted works created in the large data sets used by generative AI models might not be.

How will the courts and legislators balance the intellectual property and economic rights of creators – which are of fundamental importance to the law and to the arts – and users, in the context of generative AI technologies? Read Generative AI & Copyright Protection – Part 2

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