July 26, 2014

Center for Art Law Case Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

Matter of Richard L. Feigen & Company, 824996. (N.Y.T.C, July 22, 2014) -- J. Winnifred Maloney of the Division of Taxation denied art dealer Richard Feigen sales tax refund claim from 2011 seeking $215,626 on the sale of a forged Max Ernst painting "La Foret" that was sold in 2004. To recover the sales tax, the dealer should have claimed his refund within a three-year window after filing his sales tax return, which closed in 2008. While the dealer argued he should have been able to avail himself of the statute of limitations contemplated by the CPLR 213, and thus have six years, the decision was based on Tax Law §1139(c), which stipulates that financial matters close sooner. The decision upheld earlier determinations of the Division of Taxation's Audit Division and the Bureau of Conciliation and Mediation Services. In other words, this ruling allows the U.S. government to reap financial benefits from unfortunate sales of fake art; whether the risk is to be born exclusively by the dealer may yet be revisited on appeal. Attorney for Feigen, Malcolm Taub, partner at Davidoff Hutcher & Citron.

Anders Karlsson v. John Leo Mangan III, Art Possible LLC, et al.,2:14-cv-04514-R-JPR (S.D.C.A, Jun. 11, 2014) -- Arizona Plaintiff is seeking damages from residents in New York, Florida, Colorado and California, alleging multiple fraudulent schemes to sell fake artworks of famous artists together with fake authentication and provenance documents. Plaintiff is seeking, among other reliefs, compensatory damages, actual damages, punitive damages and attorney fees. Attorney representing Plaintiff is Meir Westreich.

Schoeps v. Free State of Bavaria, Case No. 13 Civ. 2048 (JSR) (S.D.N.Y June 27, 2014) -- J. Rakoff denies jurisdiction in a Nazi-era looted art dispute over Picasso's "Madame Soler" portrait.

http://itsartlaw.com/2014/07/07/case-review-schoeps-v-free-state-of-bavaria-june-2014/?utm_source=Center+for+Art+Law+General+List&utm_campaign=c432440020-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-c432440020-346773625

Sotheby's v. Kwok (UK, June 2014) -- Auction house sues a client for £3m for failure to pay for purchases.

http://www.telegraph.co.uk/culture/art/art-news/10932158/Sothebys-sues-art-sale-glamour-girl-for-3m-after-client-fails-to-pay.html?utm_source=Center+for+Art+Law+General+List&utm_campaign=c432440020-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-c432440020-346773625

U.S. v "Madonna and Child" (June 2014)" -- On June 23, the U.S. Attorney's Office in New York filed a forfeiture action to cease a 13th-century painting that was probably illegally imported into the United States. The painting went missing from a Swiss safety deposit in the late 1980s.

http://www.courthousenews.com/2014/06/24/68973.htm?utm_source=Center+for+Art+Law+General+List&utm_campaign=c432440020-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-c432440020-346773625

U.S. v. Mask of Ka-Nefer Nefer, No. 12-2578 (8th Cir. June 12, 2014) -- on appeal, the technical decision to deny the government to amend civil forfeiture complaint was affirmed. Judge Murphy concurred, but he wrote: "While this case turns on a procedural issue, courts are bound to recognize that the illicit sale of antiquities poses a continuing threat to the preservation of the world's international cultural heritage. Museums and other participants in the international market for art and antiquities need to exercise caution and care in their dealings in order to protect this heritage and to understand that the United States might ultimately be able to recover such purchases."


The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

Week in Review

By Martha Nimmer

From Panamanian Dictator to Lawsuit Plaintiff

Manuel Noriega, former Panamanian dictator and federal inmate, has sued the publisher of "Call of Duty: Black Ops II", over its unauthorized of his name and likeness. The lawsuit, filed last week in Los Angeles County Superior Court, accuses publisher Activision Blizzard Inc. of portraying Noriega as "a kidnapper, murderer and enemy of the state" in the latest "Call of Duty" game.

The Santa Monica-based company released the "Black Ops II" title back in November 2012. In just two weeks, the game had managed to bring in more than $1 billion in sales. While Activision Blizzard oversees a number of video game titles, "Call of Duty" is arguably the most well known. According to a fan website, Noriega helps the CIA capture the game's antagonist before turning on the U.S.

Noriega became dictator of Panama in 1983. American military action in the Central American nation in 1989 ended his dictatorship, leading to his imprisonment on drug-trafficking charges. For a time, he had been an ally of the U.S. government. Noriega returned to Panama in 2011 after two decades in American and French custody.

http://touch.latimes.com/#section/-1/article/p2p-80816671/

Tackling the Vikings

Following the Minnesota Vikings' release last week of a summary of the investigation into homophobic remarks made by special teams coordinator Mike Priefer, former Vikings punter Chris Kluwe announced that he planned to file suit against the team in Minnesota state court. Now, Kluwe appears to be backing off from that initial threat, opting instead to continue talks with the Vikings. Clayton Halunen, counsel for the former Vikings player, said in an email to ESPN that he had spoken with the Vikings' attorney, and that both lawyers "agreed to recommend continued discussions to their clients." Kluwe intended to file suit against the team to compel it to release the full report from a six-month independent investigation into his claims against Priefer.

Law firm Littler Mendelson was tasked by the Vikings with reviewing the investigation report and creating a summary of the investigation findings. The 29-page summary did support Kluwe's claim that Priefer had made a homophobic remark, but the summary did not confirm Kluwe's accusations that "Priefer had made multiple homophobic statements, or that the Vikings had released the punter because of his activism." Unsurprisingly, Kluwe and his attorney were critical of the report, saying it was rife with inaccuracies and "designed to make [Kluwe] look bad." Kluwe's attorney also called the summary a "'scrubbed version' of the report designed to position the team for possible litigation."

Before the report was released last week, Kluwe's legal counsel "offered the Vikings a set of non-negotiable settlement terms . . . asking the team to suspend Priefer for four to eight games, donate $1 million to LGBT-friendly charities and release the full report." The Vikings, however, did not agree to the terms, instead deciding to release the investigation summary and donate $100,000 to charity; the team also suspended Priefer for two to three games. Despite the initial failure to come to a settlement, it appears that an agreement may, according to ESPN, be back on the table.

Read the summary here: http://espn.go.com/pdf/2014/0718/DSP-MEMO-Re-Kluwe-Investigation.pdf

http://espn.go.com/nfl/story/_/id/11253469/chris-kluwe-file-suit-yet-continue-discussions-minnesota-vikings

Back to Business as Usual?

Retail powerhouse Amazon has started to accept DVD pre-orders of Warner Brothers DVDs, a sign that the companies appear to be moving closer to resolving a pricing dispute. As part of its hardball strategy with Warner Brothers, Amazon had stopped accepting pre-orders for Warner Brothers movies, including The Lego Movie, 300>: Rise of an Empire and Winter's Tale. Now, however, Amazon customers may begin placing pre-orders for Warner Brothers titles.

Amazon has been mired in disputes with various companies as it seeks to use its position as the world's largest online retailer to extract better deals from its suppliers and vendors. Amazon is currently involved in a dispute with Hachette Book Group over e-book pricing.

http://www.bloomberg.com/news/2014-06-24/amazon-resumes-warner-bros-dvd-preorders.html

The Mask

The Eighth Circuit has ruled that the Mask of Ka-Nefer-Nefer, a 3,200-year-old Egyptian mummy, will stay in the St. Louis Art Museum, because the federal government failed to prove that the antiquity was stolen from Egypt when it went missing in 1973. The mask later turned up in 1998, when the St. Louis Art Museum acquired the item from Phoenix Ancient Art of New York and Geneva, an antiquities seller. Once the Egyptian government learned of the mask's reemergence, Egyptian officials asked for its return. Despite these numerous requests, the museum has refused to return the mask.

The federal government eventually became involved in the dispute between the Egyptian government and the Missouri museum, filing a forfeiture action against the mask. In the forfeiture claim, the United States stated that "because the mask was stolen, it could not have been lawfully exported from Egypt or lawfully imported into the United States." A federal judge was unconvinced, however, and ruled for the museum, reasoning that just because the mask went missing in 1973 did not mean the item was illegally imported into the United States.

On appeal, "the government argued that the lower court erred by dismissing its complaint without giving it leave to first amend its pleading." The Eighth Circuit did not agree. Judge James Loken, writing for the three-judge panel, said that the government had sufficient time to amend its pleading before dismissal, but chose not to: "[t]he government knew many months prior to the order of dismissal of the possible need to amend its pleading and elected to 'stand or fall' on its untested legal theory. The government then spent another three months after the order of dismissal was entered urging the court to reconsider its interpretation of the statute before finally deciding it would attempt to plead around the interpretive problem, rather than appeal this legal issue."

So, at least for now, it appears that the mask will remain in the "Show Me" state.

http://www.entlawdigest.com/2014/06/18/3194.htm

Release Removed

The NCAA has removed the controversial name-and-likeness release from the forms that Division I athletes regularly sign before a playing season. The name-and-likeness provision of the "Student-Athlete Statement" gave the NCAA or an associated third party the power to use a player's name or likeness to promote NCAA championships or other events, all without having to compensate the athlete. The decision to eliminate this release comes as the NCAA awaits a decision in the O'Bannon v. NCAA case, which concerns the use of college athletes' names and likenesses. The NCAA had previously stated publically that players were not required to sign the releases, but some plaintiffs in the O'Bannon case submitted evidence showing that college presidents and members of the Atlantic Coast Conference believed that athletes would be ineligible to play if they did not sign the releases.

The elimination of the name-and-likeness release led to the delayed publication of the 2014-15 version of the Student-Athlete Statement. Kris Richardson, NCAA director of academic and membership affairs, wrote that the delay was "necessary to enable appropriate review, including legal review, of the change to this year's form." Despite this change to NCAA rules, "some conferences and schools, including the Big Ten Conference schools, have been requiring athletes to sign more specific name-and-likeness release forms." The form employed by the Big Ten Conference states that by signing the release, an athlete gives the college and conference "'the right to publish, duplicate, print, broadcast or otherwise use in any manner or media, my name, photograph, likeness or other image of myself for any purpose' the school or conference determines is in its interest." According to the form, permissible uses can include "promotional and marketing materials and uses by the Big Ten Network, CBS, ABC and ESPN. ... I agree that neither I nor my heirs shall be entitled to any compensation for the use of my name, photograph, likeness or other image of myself." Therefore, despite the changes to NCAA rules, colleges and conferences seem determined to continue using the name-and-likeness releases in their own Student-Athlete Statements.

http://www.usatoday.com/story/sports/college/2014/07/18/ncaa-name-and-likeness-release-student-athlete-statement-form/12840997/


July 16, 2014

Center For Art Law Case Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

• Schoeps v. Free State of Bavaria, Case No. 13 Civ. 2048 (JSR) (S.D.N.Y June 27, 2014) -- J. Rakoff denies jurisdiction in a Nazi-era looted art dispute over Picasso's "Madame Soler" portrait. http://itsartlaw.com/2014/07/07/case-review-schoeps-v-free-state-of-bavaria-june-2014/?utm_source=Center+for+Art+Law+General+List&utm_campaign=1f0b40784d-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-1f0b40784d-346773625

• Sotheby's v. Kwok (UK, June 2014) -- Auction house sues a client for £3m for failure to pay for purchases. http://www.telegraph.co.uk/culture/art/art-news/10932158/Sothebys-sues-art-sale-glamour-girl-for-3m-after-client-fails-to-pay.html?utm_source=Center+for+Art+Law+General+List&utm_campaign=1f0b40784d-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-1f0b40784d-346773625

• [U.S. v "Madonna and Child"] (June 2014)" -- On June 23, U.S. Attorney's Office in New York filed a forfeiture action to cease a 13th-century painting that was probably illegally imported into the United States. The painting went missing from a Swiss safety deposit in the late 1980s. http://www.courthousenews.com/2014/06/24/68973.htm?utm_source=Center+for+Art+Law+General+List&utm_campaign=1f0b40784d-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-1f0b40784d-346773625

• U.S. v. Mask of Ka-Nefer Nefer, No. 12-2578 (8th Cir. June 12, 2014) -- on appeal, the technical decision to deny the government to amend civil forfeiture complaint was affirmed. Judge Murphy concurred, but he wrote "While this case turns on a procedural issue, courts are bound to recognize that the illicit sale of antiquities poses a continuing threat to the preservation of the world's international cultural heritage. Museums and other participants in the international market for art and antiquities need to exercise caution and care in their dealings in order to protect this heritage and to understand that the United States might ultimately be able to recover such purchases."


The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

Garcia v Google Amended Opinion

By Barry Werbin

On Friday, July 11th, the Ninth Circuit issued an amended opinion in the controversial Garcia v. Google case (Innocence of Muslims film case addressing an individual actor's own copyrightable performance right). Chief Judge Kozinski tries to backpedal a bit by sticking to his earlier divisive opinion, but saying:

"It suffices for now to hold that, while the matter is fairly debatable, Garcia is likely to prevail based on the record and arguments before us. Nothing we say today precludes the district court from concluding that Garcia doesn't have a copyrightable interest, or that Google prevails on any of its defenses. We note, for example, that after we first issued our opinion, the United States Copyright Office sent Garcia a letter denying her request to register a copyright in her performance. Because this is not an appeal of the denial of registration, the Copyright Office's refusal to register doesn't "preclude[] a determination" that Garcia's performance "is indeed copyrightable." OddzOn Prods., Inc. v. Oman, 924 F.2d 346, 347 (D.C. Cir. 1991). But the district court may still defer to the Copyright Office's reasoning, to the extent it is persuasive. See Inhale, Inc. v. Starbuzz Tobacco, Inc., 739 F.3d 446, 448-49 (9th Cir. 2014). After we first published our opinion, amici raised other issues, such as the applicability of the fair use doctrine, see 17 U.S.C. § 107, and section 230 of the Communications Decency Act, see 47 U.S.C. § 230. Because these defenses were not raised by the parties, we do not address them. The district court is free to consider them if Google properly raises them." [Emphasis added]

The opinion is available here: Garcia v Google Amended Opinion.pdf

July 10, 2014

Judge Rakoff Finally Explains His Fair Use Rationale Respecting Lawyers' Briefs Filed With Courts

By Barry Werbin

Over a year ago in White v. West Pub. et al (S.D.N.Y.), Judge Jed Rakoff granted summary judgment, but deferred issuing an opinion, in favor of West Publishing and Reed Elsevier (LexisNexis) in a copyright infringement class action suit brought by several lawyers, who alleged that West and Lexis/Nexis had infringed copyrights in their electronically filed court briefs by aggregating them in a key-word tabbed and text-based searchable database that was made accessible for a fee. On July 3, 2014 (17 months later), Judge Rakoff finally issued his opinion explaining the reasoning for finding fair use. [The decision can be accessed here: http://www.nysd.uscourts.gov/cases/show.php?db=special&id=412]

After assessing each of the four Section 107 factors, Judge Rakoff initially concluded that under the first factor this was a transformative use, for two reasons: "First, while White created the briefs solely for the purpose of providing legal services to his clients and securing specific legal outcomes in the Beer litigation, the defendants used the brief toward the end of creating an interactive legal research tool.... Second [notwithstanding the commercial aspect of defendants' use], West and Lexis's processes of reviewing, selecting, converting, coding, linking, and identifying the documents 'add[] something new, with a further purpose or different character' than the original briefs."

With respect to the second factor, he noted that the nature of the underlying copyright-protected [arguably] briefs "are functional presentations of fact and law, and this cuts towards finding in favor of fair use."

On the third factor, Judge Rakoff opined: "Although defendants here copied the entirety of White's briefs, such copying was necessary to make the briefs comprehensively text searchable. Thus the Court finds that defendants only copied what was reasonably necessary for their transformative use, and that the third factor is therefore neutral."

Finally, on the fourth factor, he found there was no impact on the potential market for the works. In particular, Judge Rakoff emphasized that "West's and Lexis's usage of the briefs is in no way economically a substitute for the use of the briefs in their original market: the provision of legal advice for an attorney's clients. White himself admits that he lost no clients as a result of West's and Lexis's usage....Furthermore, no secondary market exists in which White could license or sell the briefs to other attorneys, as no one has offered to license any of White's motions, nor has White sought to license or sell them." The reason there is no secondary market for licensing or selling the briefs, said Judge Rakoff, is "because the transactions costs in licensing attorney works would be prohibitively high."

So in the interest of transformative use, all us litigators should keep our fees high!

Interview Questions Not to Ask

By Kristine A. Sova
www.sovalaw.com

Employers sometimes forget that it's not just employees who can sue them, but applicants as well. With the cost of defending a claim of discrimination at several hundred thousand dollars, and new laws in place (http://sovalaw.com/blog/2013/06/04/final-days-for-nyc-employers-to-check-their-hiring-practices-before-unemployed-law-goes-into-effect/?utm_source=Sova+Law+Blog+Newsletter&utm_campaign=c872c1132e-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_eff3a758ca-c872c1132e-62893717) that provide increased hiring protections for candidates, it is more critical than ever for employers to conduct lawful employment interviews.

As most employers know by now, it is unlawful to discriminate against a person on the basis of a protected characteristic, such as race, color, sex, marital status, religion, creed, national origin, disability, age, and sexual orientation when making employment decisions. This includes hiring decisions, and by extension, the interview, when otherwise seemingly innocent questions like, "Where did you grow up?", can be used to support a claim that a hiring decision was based on a protected characteristic.

There are a number of questions, frankly, that employers should not ask during interviews. Some of them will vary by jurisdiction, but for the most part, they are the same. While not a comprehensive list, below are some examples of questions of which employers should steer clear:

• Is this your maiden name?

• What's your spouse's name?

• Do you wish to be addressed as Miss? Mrs.? Ms.?

• Do you have, or plan to have, kids?

• Are you a U.S. citizen?

• What is your native language?

• How long have you lived here?

• How did you acquire your ability to read, write or speak a foreign language?

• What clubs do you belong to?

• What religion do you practice?

• Which religious holidays do you observe?

• How old are you? What is your birth date?

• What are the ages of your children?

• What year did you graduate?

• Do you have any disabilities?

• Have you had any recent illnesses?

• Have you ever been arrested?

Keep in mind that, while a good start, simply avoiding asking the questions above won't insulate an employer's hiring process from challenge. Not only are there many more forbidden questions, but the hiring process involves much more than just the interview, such as job advertisements, application forms, background checks, and testing materials, each of which is fraught with legal land mines. If you or your hiring managers have been "guilty" of asking the questions above, you should consider consulting with an employment attorney to review your hiring process and to train your hiring managers on the dos and don'ts of that process.

July 8, 2014

Center for Art Law Case Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

• Schoeps v. Free State of Bavaria, Case No. 13 Civ. 2048 (JSR) (S.D.N.Y June 27, 2014) -- J. Rakoff denies jurisdiction in a Nazi-era looted art dispute over Picasso's "Madame Soler" portrait.

http://itsartlaw.com/2014/07/07/case-review-schoeps-v-free-state-of-bavaria-june-2014/?utm_source=Center+for+Art+Law+General+List&utm_campaign=33b55f7965-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-33b55f7965-346773625

• Sotheby's v. Kwok (UK, June 2014) -- Auction house sues a client for £3m for failure to pay for purchases.

• [U.S. v "Madonna and Child"] (June 2014)" -- On June 23, U.S. Attorney's Office in New York filed a forfeiture action to cease a 13th-century painting that was probably illegally imported into the United States. The painting went missing from a Swiss safety deposit in the late 1980s.

http://www.courthousenews.com/2014/06/24/68973.htm?utm_source=Center+for+Art+Law+General+List&utm_campaign=33b55f7965-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-33b55f7965-346773625

• U.S. v. Mask of Ka-Nefer Nefer, No. 12-2578 (8th Cir. June 12, 2014) -- on appeal, the technical decision to deny the government to amend civil forfeiture complaint was affirmed. Judge Murphy concurred, but he wrote "While this case turns on a procedural issue, courts are bound to recognize that the illicit sale of antiquities poses a continuing threat to the preservation of the world's international cultural heritage. Museums and other participants in the international market for art and antiquities need to exercise caution and care in their dealings in order to protect this heritage and to understand that the United States might ultimately be able to recover such purchases."

The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

July 3, 2014

Post-Aereo: Has The Supreme Court Clouded the Future?

By Barry Werbin
Herrick, Feinstein LLP

By now, everyone is probably tired of reading the myriad blogs and articles on the Supreme Court's June 25th decision in American Broadcasting Company, Inc. v. Aereo, Inc. Yet the real question raised by the decision -- which did not set any bright-line tests -- is what its impact will be on other existing and future technologies that permit consumer end-users to access subscribed content anywhere in the world and at any time over the Internet.

In the 6-3 decision, the majority took a fairly straightforward approach in going through the two primary issues presented: whether Aereo was engaging in a "performance" by using its system of dime sized antennas to deliver one-to-one content to its subscribers, and whether such performance was "public" so as to impose direct copyright liability on Aereo. The court answered both questions in the affirmative, pointing out that even a home user watching television "performs" a broadcast merely by turning on a television and flipping channels, and that Aereo essentially acted no differently than a cable system, even when it only enhanced its subscribers' ability to receive and view over-the-air broadcast programming.

The Court emphasized that Aereo was not merely an equipment provider and, while its system remained "inert" until a subscriber indicated what he or she wanted to watch, Aereo nevertheless was communicating the same content to multiple persons and was thus engaging in a public performance. Noting that in enacting the Transmit Clause in the 1976 Act, Congress had clearly overruled prior Supreme Court precedents that had permitted CATV systems to operate (no issue here), the majority interpreted the Transmit Clause as applying to any entity that acts like a CATV or more modern cable system (conjuring up the adage that "if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck"). Despite Aereo's system remaining inert until a subscriber designates which programming he or she wants to watch, the Court nevertheless equated Aereo's system with the CATV systems outlawed under the 1976 Act.

Consistent with the "looks like a duck" analogy, the Court said that Aereo's "technological differences" only concern "behind-the-scenes" ways in which Aereo delivers television programming to its viewers' screens, and these differences did not render Aereo's commercial objective any different from that of cable companies. Nor did Aereo's system significantly alter the viewing experience of its subscribers.

Justice Scalia's dissent said that the majority analyzed "performance" wrong, because it focused on the overall purpose of the technological system rigged by Aereo as opposed to where the "volitional" conduct was taking place. To the dissenters, the focus should have been on the individual subscribers, who controlled what programming to watch and when the allocated mini antennae would be activated in response to subscribers' commands.

This is where it gets murky. If we were to ignore all technological interfacing between, say, a cloud service provider and its subscribers, and focus only on the "commercial objective" of the provider, then all one has to do is find a for-profit motive in the context of any form of online content delivery, thereby essentially rendering meaningless the volitional conduct requirement for finding direct infringement. The Court doesn't go quite that far. In fairness to the majority, Aereo really was not such a difficult case, because the Transmit Clause covers the transmission of content to individuals at the same place or in different places, and at the same time or in different times, and has always arguably been broad enough to encompass Aereo's system.

Another key distinguishing factor, of course, is that Aereo paid no licensing fees, unlike cable and satellite operators; in the latter case, once a home subscriber lawfully receives fully licensed broadcasts, the subscriber has a fair use right under Sony to record broadcast programming and "time-shift" at will when he or she views that programming. Merely transplanting that mechanism into the cloud (à la Dish Network's "Hopper"), using a technological system developed by a provider, arguably does nothing more than what the individual subscriber is lawfully entitled to do in his or her home.

The majority itself recognized this scenario and threw a comfort blanket to the tech sector by saying: "In other cases involving different kinds of service or technology providers, a user's involvement in the operation of the provider's equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act." Therefore, volitional conduct on the subscriber end really is not dead. We just have no test for the "may well bear on" assessment. Maybe the duck knows.

Providing some small assistance, the majority made a clear distinction between the specific facts in Aereo and other situations where "subscribers receive performances in their capacities as owners or possessors of the underlying works." Justice Breyers' majority bloc noted that whether a transmission to "a set of people" constitutes a public performance "often depends on their relationship to the underlying work." Courts will continue to grapple with this general guidance in assessing what constitutes being an "owner" or "possessor" and what types of relationships between end users and underlying works remove a content delivery system from the realm of infringing conduct.

Surprisingly absent from the majority's decision was any discussion that the content at issue was free over-the-air broadcasts, which any citizen within reception range could lawfully receive with a digital antenna and a digital-ready TV. It seems that what really irked the Court was Aereo taking commercial advantage of what it viewed as a loophole in the language of the Transmit Clause. The venture capitalists who funded tens of millions of dollars into Aereo (primarily Barry Diller's IAC/InterActiveCorp) likely did not do so for some high altruistic purpose (despite some of the press releases to the contrary); they did it to make money and realize significant returns on their investments. Even the dissent said that it did not really like what Aereo was doing, but was bound to apply the provisions of the Act as written; and it was the job of Congress, not the Court, to correct any ill-phrased language in the Transmit Clause.

Absent also, albeit not surprisingly, from the majority's opinion, was any mention of the now infamous Cablevision case (The Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121(2d Cir. 2008), cert. denied), to which the dissent cited several times with approval. Cablevision involved a remote storage DVR system that was offered to paying subscribers, where the Second Circuit found no direct infringement of the public performance right by Cablevision because its DVR customers were the ones who made the copies carried out by the DVR system. Yet in keeping with its focus specifically on the facts of Aereo, the Court's majority tried to avoid making any overreaching statements or addressing matters that were not directly before the Court. Avoiding any discussion of Cablevision was therefore prudent.

Similarly, in the Dish Network litigation in California, involving Dish's "Hopper" technology called "Sling," the Ninth Circuit ruled last year against the broadcaster plaintiffs. (Fox Broadcasting Company, Inc. v. Dish Network L.L.C., 723 F.3d 1067 (9th Cir. 2013).) The Ninth Circuit specifically found that "operating a system used to make copies at the user's command does not mean that the system operator, rather than the user, caused copies to be made. Here, Dish's program creates the copy only in response to the user's command." Fox News immediately ran back to the Ninth Circuit last week for reconsideration after the Supreme Court decided Aereo.

Certainly, the Aereo Court's majority's opinion was circumspect and cautiously avoided any overreaching language that could impact new technologies, whether cloud based or otherwise. Indeed, with a nod to the warnings identified in various amicus briefs submitted by representatives of the technology industry and the United States government itself, the Court expressly stated that "we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content." (Emphasis added)

Yet a clear bright-line test was not provided, and we are perhaps left with "if it looks like a duck" gut assessment, which does not make for good law. The decision will undoubtedly keep judges and copyright litigators busy for some years to come. That is, unless the media broadcast industry sits down with providers like Dish Network and others (as NBC is currently doing) to work out reasonable business models that compensate content owners fairly and yet permit the public to receive lawfully licensed content anywhere they want, and at any time, as this is the age we live in and there is no going back. Even the duck would agree.

June 27, 2014

Week in Review

By Martha Nimmer

No to Aereo

The U.S. Supreme Court has ruled that streaming service Aereo violated U.S. copyright law by capturing television broadcasts via miniature antennas and "performing the works publicly within the meaning of the Transmit Clause" of the Copyright Act. The 6-3 decision is a decisive victory for television broadcasters, and a major blow to Aereo, whose future as a business remains decidedly uncertain just two years after being founded.

During oral arguments in April, broadcasters argued that Aereo's services were harming highly valuable revenue sources, and threatened to remove their signals from the airwaves if the court ruled for Aereo. Aereo countered that its service was akin to what subscribers could do with rabbit ear antennas: watch broadcast TV over public airwaves, for free. Justice Stephen G. Breyer, writing for the majority, said that Aereo was "not simply an equipment provider," but was instead acting like a cable system.

Unsurprisingly, television broadcasters celebrated the high court's decision. Leslie Moonves, CEO of CBS, stated, "for two years they have been in existence, trying to hurt our business. They fought the good fight. They lost. Time to move on." Understandably, Aereo founder and chief executive, Chet Kanojia, was less pleased with the ruling, calling it a "massive setback" for consumers. Previously, Kanojia had remarked that Aereo "had no Plan B" if the company lost in court. Following the Court's ruling, Kanojia was slightly more upbeat, saying that Aereo would keep working "to create innovative technologies;" he did not indicate, however, how the company would move on following the ruling. Commentators and legal experts have said that Aereo would be "left with few options" in light of a decision that rejected all of the company's major arguments.

Read the decision here: http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf

Getting Ahead of Head Injuries

FIFPro, the union for world soccer players, has asked FIFA to investigate the head injury suffered last week by Uruguay left back/midfielder Alvaro Pereira. The team member was knocked unconscious after colliding with English player Raheem Sterling's knee during Uruguay's victory over England. Pereira was out cold for a minute or two before walking to his team bench; he eventually returned to the game in the 63rd minute. "After the hit, I only recall that I was unconscious for an instant," Pereira said. "It was like the lights went out a little bit."

Although doctors from the Uruguayan team and FIFA examined the player after the match concluded, a concussion has "yet to be diagnosed." In addition to an investigation of the Uruguayan team member's head injury, FIFPro "is seeking urgent talks and immediate assurances that FIFA can guarantee the safety of the players . . . ." The players' union has stated that if those assurances are not made, the group will call for independent medical practitioners to be used at future matches.

FIFA's policy towards player concussions uses a "recognize & remove" approach to head injuries, which, FIFPro says, fails to protect players adequately, at least as currently applied. Under the concussion protocol, any athlete who is suspected of suffering a concussion should be evaluated for "visible clues or signs and symptoms, such as loss of consciousness, lying motionless on the ground or being unsteady on one's feet," among other symptoms. If a player exhibits these symptoms, he "should be IMMEDIATELY REMOVED FROM PLAY, and should not be returned to activity until they are assessed medically," FIFA's concussion guide says. Unfortunately for Pereira and other soccer players, it does not appear that those safeguards were enforced last week.

Clearly, the topic of head injuries remains an issue of utmost concern in professional sports, with greater attention being focused on soccer in light of the World Cup tournament this summer.

http://m.washingtonpost.com/blogs/soccer-insider/wp/2014/06/20/world-soccer-players-union-calls-on-fifa-to-conduct-concussion-investigation-after-alvaro-pereiras-injury/

Uncapped

Head injuries in sports continue to make news in the United States. Just yesterday, the National Football League (NFL) and attorneys for plaintiffs announced that a revised settlement had been reached in the NFL concussion lawsuit pending before the U.S. District Court for the Eastern District of Pennsylvania. Under the revised agreement, the NFL will remove the $675 million cap on damages from the concussion-related claims of former NFL players. As a result of this revision, any retired player who develops a "qualifying neurocognitive condition" will be able to receive funds from a compensation program for former players. This change comes, in part, after presiding U.S. District Judge Anita Brody questioned whether $675 million amount would be sufficient to pay for the plaintiffs' damages.

Another major facet of the revised settlement is that former players will no longer be barred from suing the NFL. The original agreement, writes Forbes, "included a provision that eliminated those players from ever suing the NCAA or other amateur sports entities for concussion-related injury." Now, under the altered settlement, that ban has been lifted. One reason behind this change was the NFL's fear that Judge Brody would refuse to accept any settlement that included a ban on future litigation, writes Forbes.

Other aspects of the settlement remain unchanged, however. Consistent with last year's accord, the revised agreement provides a "wide range of benefits to retired NFL players and their families, including a separate fund to offer all eligible retirees a comprehensive medical exam and follow-up benefits, and an injury compensation fund for retirees who have suffered cognitive impairment, including dementia, Alzheimer's, Parkinson's or ALS." Additionally, the agreement also stipulates that the NFL set aside $10 million for concussion education, "as well as pay the costs of providing notice to the class and for administration of the settlement."

http://www.nfl.com/news/story/0ap2000000361552/article/revised-settlement-in-concussion-suit-reached-funds-uncapped

http://www.forbes.com/sites/rogergroves/2014/06/25/new-nfl-concessions-in-concussion-settlement-also-mean-nfl-v-ncaa/

Bills, Bills, Bills

After failing to pay nearly $2 million in legal fees, singer and songwriter George Clinton may soon find that his copyrights are up for sale in an effort to satisfy his staggering legal bill. Earlier this week, the Ninth Circuit ruled that a receiver may sell the copyrights to several songs by the funk artist to satisfy his debt to a Seattle law firm.

Law firm Hendricks & Lewis represented Clinton in copyright disputes from 2005-2008, and had been trying for several years to collect the $1.7 million owed to them by their former client. Clinton claimed that the firm's fee collection practices had made it "impossible for him to earn a living." The recording artist also brought a malpractice claim as part of a countersuit against the firm. While that legal drama was playing out, "a court-appointed receiver took possession of the master sound recording copyrights to four of Clinton's songs from the 1970s: 'Hardcore Jollies,' 'One Nation Under a Groove,' 'Uncle Jam Wants You,' and 'The Electric Spanking of War Babies.'"

Clinton had argued before the Ninth Circuit that Section 201(e) of the Copyright Act protected him from such an "involuntary transfer" of his copyrights to a court-appointed receiver, but the three-judge appellate panel disagreed. First, Clinton was not, for purposes of the Copyright Act, the author of the songs; even assuming he was, the involuntary transfer provision would offer no help. "There is no question that Clinton transferred any interest that he had in the Masters to Warner Bros., and, as part of a settlement arising from unrelated litigation, Warner Bros. subsequently agreed to transfer ownership back to Clinton," Judge Morgan Christen wrote for the panel. For the protections of Section 201(e) to apply, the original author could not have "previously been transferred voluntarily by that individual author . . . ." As the singer had previously transferred his interests in the copyright, Section 201(e) would not apply.

http://www.entlawdigest.com/2014/06/24/3208.htm

June 26, 2014

Case Solved: Conan Doyle Estate Loses Copyright Dispute Over Sherlock Holmes

By Barry Werbin and Laura Tam, Herrick, Feinstein LLP

It didn't take much deducing for the Court of Appeals for the Seventh Circuit to rule on June 16th that Sherlock Holmes and Dr. Watson, the famous character sleuths created by Sir Arthur Conan Doyle in the early 19th century, are in the public domain and free for public use. The resolution of this closely-watched copyright dispute has significant implications for the creation of future works featuring the Holmes and Watson characters because most aspects of these characters, according to the Seventh Circuit, are now "fair game."

As the Seventh Circuit pointed out, Arthur Conan Doyle published 56 stories and four novels about Sherlock Holmes. The first story was published in 1887 and the last 10 stories were published between 1923 and 1927. Due to the 1998 Copyright Term Extension Act, the American copyrights on the final 10 stories will expire between 2018-2022, 95 years after the respective dates of first publication. The copyrights on the other 46 stories and the four novels, however, previously expired and are in the public domain.

The case began when the Conan Doyle Estate (the Estate) threatened to prevent the distribution of Leslie S. Klinger's proposed compilation of modern stories depicting Sherlock Holmes and Dr. Watson. Klinger had previously co-edited an anthology of such stories entitled A Study in Sherlock: Stories Inspired by the Sherlock Holmes Canon, which was published by Random House in 2011. After the Estate told Random House that it would have to pay $5,000 for a copyright license, Random House paid the license and published the book. In 2012, Klinger decided to publish a sequel to A Study in Sherlock to be called In the Company of Sherlock Holmes and entered into negotiations with Pegasus Books and W.W. Norton & Company. After the Estate threatened to prevent the distribution of the anthology and sue for copyright infringement, Pegasus refused to publish the book until Klinger obtained a license from the Estate.

Instead of obtaining the license, Klinger sued the Estate, seeking declaratory judgment that he is free to use the material from the Sherlock Holmes stories and novels that are no longer under copyright. After the Estate defaulted by failing to appear or respond to Klinger's complaint, the district court gave Klinger leave to file a motion for summary judgment. After Klinger filed his motion, the Estate responded with two main arguments. First, the Estate argued that the district court did not have subject matter jurisdiction, because there was no actual case or controversy between the parties. Second, the Estate argued that even if the court had jurisdiction, the Estate was entitled to judgment on the merits because the copyright of fictional characters, such as Sherlock Holmes or Dr. Watson, whose complexity is not fully developed until a later story, remains under copyright until the expiration of the later story's copyright. The district court granted Klinger's motion for summary judgment, and the Estate appealed to the Seventh Circuit.

First, the Seventh Circuit rejected the Estate's argument that the district court did not have jurisdiction. The Court held that the Estate's threats "to block the distribution of the book by major retailers and to sue for copyright infringement" created an actual controversy that justified the declaratory judgment action. Second, the Court determined that there was no basis for extending a copyright beyond its expiration and that "[w]hen a story falls into the public domain, story elements -- including characters covered by the expired copyright -- become fair game for follow-on authors." (Citing for support the Second Circuit's decision in Silverman v. CBS Inc., 870 F.2d 40, 49 -51(2d Cir. 1989), which involved the fictional characters Amos and Andy).

Although the Estate attempted to draw a distinction between "flat" and "round" fictional characters, arguing that Holmes and Watson did not become fully "rounded" until the last story that Doyle published, the Court stated that it did not "see how that can justify extending the expired copyright on the flatter character." Thus, while the characters of Holmes and Watson were copyrightable, the Court determined that any subsequent features that were added to the characters (for example, that Holmes has grown to like dogs or that Watson has been married twice) did not revive the expired copyrights on the original characters. The Court emphasized that "[t]he copyrights on the derivative works, corresponding to the copyrights on the ten last Sherlock Holmes stories, were not extended by virtue of the incremental additions of originality in the derivative works."

As the Seventh Circuit noted, "[E]xtending copyright protection is a two-edged sword from the standpoint of inducing creativity, as it would reduce the incentive of subsequent authors to create derivative works . . . by shrinking the public domain." The Court seemed particularly concerned about the "spectre of perpetual, or at least nearly perpetual, copyright" and that the Estate was attempting to curtail creativity by "extending the copyright protection of literary characters to . . . extraordinary lengths." Indeed, the Court succinctly rejected the Estate's argument that allowing Holmes and Watson to enter the public domain would disincentivize authors from improving and perfecting their works. As the Court noted, "[O]ther artists will have a greater incentive to improve it, or to create other works inspired by it, because they won't have to pay a license fee to do so provided that the copyright on the original work has expired."

While the Seventh Circuit's decision means that the Estate's heyday of collecting significant copyright license fees and royalties is largely over, it also ensures that artists and authors like Klinger will not be pressured into paying license fees for character rights that have entered the public domain.

A copy of the Seventh Circuit's decision is available here: http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2014/D06-16/C:14-1128:J:Posner:aut:T:fnOp:N:1363624:S:0.