February 12, 2016

The Copyright Royalty Board Releases Decision on Webcasting Royalties for 2016-2020 (Webcasting IV)

By Barry Skidelsky, Esq.

The Copyright Royalty Board (CRB) recently released its full decision (http://www.loc.gov/crb/web-iv/web-iv-determination.pdf) concerning royalites that webcasters must pay to Sound Exchange for the public performance of sound recordings that are digitally distributed over the Internet and to mobile devices.

For most commercial webcasters who stream (including FCC licensed broadcasters), the royalty rate actually dropped, which may be the first time in any CRB proceeding where rates went down as the result of a CRB decision. The CRB essentially left in place the rates for non-commercial webcasters. The subscription rates for "pure-play" webcasters (such as Pandora) also decreased, although their non-subscription rates saw a modest rise. All rates are subject to periodic cost-of-living increases.

Most royalty terms remain unchanged from prior years, including requirements for payment of minimum fees at the end of each January in addition to payment of monthly fees. Sound Exchange audits must still be performed by a CPA, a requirement that the music licensing collective had sought to eliminate.

Although prior settlements allowed small commercial webcasters to avoid certain regulatory burdens and pay based on a percentage of their revenue (rather then be subject to the more complicated per-performance formulas generally used as part of the United State's balkanized approach to music copyright licensing), there were no small commercial webcasters who litigated this proceeding (known as Webcasting IV), which obviously precludes their direct participation in any possible appeal. It remains to be seen what actions, if any, Sound Exchange and/or the other players may take next in the wake of this CRB decision.

A Berklee-trained musician and former radio broadcaster, Barry is a member of EASL's Executive Committee, and he Co-Chairs the Section's Television & Radio Committee. A former co-chair of the NY chapter of the Federal Communications Bar Association (whose members practice before the FCC in Washington DC), Barry's practice focuses on communications, entertainment and technology. (bskidelsky@mindspring.com or 212-832-4800)

Darlene Love v. Google Are Publicity Rights Needed in Addition to Master & Synchronization Licenses?

By David Jacob
Marc Jacobson, P.C.

A recent lawsuit filed on behalf of Darlene Love against Google and its ad agency, 72 & Sunny, may have far-reaching implications on long-standing music licensing practices. When ad agencies or brands want to use a song in a commercial, U.S. copyright law requires them to obtain a master use license (from the label) and a synchronization license (from the publisher). These licenses allow the reproduction of the master recording and musical composition. However, in Love's lawsuit, there is no copyright infringement claim. She does not allege that Google or its ad agency failed to obtain these licenses (it should be noted that 72 & Sunny claims that it was not involved in the production or licensing of the advertisement that is the basis of the lawsuit). Instead, she claims a violation of her right of publicity under California law. Therefore the issue arises as to whether ad agencies and brands need additional consent from artists, even if they already have master use and licenses from the applicable label and publisher.

Love's lawsuit alleges that the defendants infringed on her right of publicity under California common law. The California courts have developed the following four-step test (White v. Samsung, 971 F.2d 1395, 1397 (9th Cir. 1992)), in which Love must allege:

1. The defendant used plaintiff's "identity";
2. Defendant appropriated plaintiff's name or likeness to defendant's advantage, commercially or otherwise;
3. Lack of consent; and
4. Resulting injury.

For the sake of discussion, let's assume the use of the licensed song satisfies step 1 & 2, and that Love was injured by not having an approval right or not being paid a fee for her right of publicity. If that is the case, then the issue may come down to whether the master use license was sufficient to grant this permission. This may be a question of fact that is dependent on the terms of Love's original recording agreement.

The recording at the center of the dispute is "It's a Marshmallow World" recorded by Love in 1963 for the album, A Christmas Gift for You From Phil Spector. Most major recording agreements will include some clause clarifying that the label has the right to use the artist's name and likeness in connection with the promotion and sale of the works created under such agreement. Therefore, the question may come down to whether Love's original recording agreement included a broad enough provision to cover the use of the artist's voice for commercial purposes in connection with the work. If so, then its reasonable to assume that the record label can provide the necessary consent, and the artist's permission is not needed to further exploit the work. If the recording agreement is silent on the matter, Love may have a stronger argument.

Another wrinkle in this dispute is Love's statement that she "and virtually every successful recording artist records with labels which are signatories to the AFTRA collective bargaining agreement..." Perhaps Love's main complaint may be that the AFTRA Phono Code did not require the label to get artist approval right before it can license the work for a commercial. Most modern publishing agreements and recording agreements will require the artist's written approval for certain commercial uses. If an artist approves such a use with its label or publisher, or if the recording agreement explicitly grants the label the artist's right of publicity in connection with sales or licenses of the Work, it would be very difficult for that artist to claim there was an infringement on his or her right of publicity. Similarly, the decision may rest on whether the AFTRA Phono Code includes any provisions regarding the use of any artist's name or likeness in connection with the promotion or sale of a work.

Another complicated issue briefly mentioned in an article by Eriq Gardner in The Hollywood Reporter (http://www.hollywoodreporter.com/thr-esq/darlene-love-sues-google-using-857220) is whether federal law should preempt the state law claim. In most circumstances, federal copyright law will preempt a right of publicity claim if the allegedly infringing use is based on the use of a sound recording. The use of a sound recording alone, without appropriating any other aspect of that individual's identity, should be a claim based in copyright law. However, in Gardner's article, Love's attorney argue: "This is a pre-1972 recording and under 17 USC § 301(c), there is no preemption of state law until 2067." This argument may limit the scope of the issue only to the use of pre-1972 recordings. If the claim were based on the use of a properly licensed recording from 1972 or after, the claim would certainly fail and be preempted by federal copyright laws.

Regardless of how this lawsuit shakes out, labels would be wise to ensure that their contracts include the right to use the artist's name, voice and likeness in connection with all sales or licenses of the work. Similarly, ad agencies and brands should ensure that these rights are included in their master use licenses, along with an indemnification provision against any third party claims, including but not limited to copyright infringement and right of publicity claims.

February 6, 2016

Week in Review

By Ben Natter

Cosby Case Moves Forward

Judge Steven T. O'Neill ruled that an oral promise made by the former Montgomery County District Attorney Bruce Castor not to prosecute Bill Cosby was not binding on the court. Although the former prosecutor agreed with Cosby's argument that the agreement should bar prosecution, Judge O'Neill sided with the current district attorney. The case will move forward with a preliminary hearing scheduled for March 8th.


U.S. Soccer Sues Union

U.S. Soccer, the governing body for the sport in the United States, has filed suit against the union representing the United States women's national team, seeking "declaratory relief" from the court. The disagreement between the two parties involves the validity of the current Collective Bargaining Agreement (CBA), which is set to expire in December. The original CBA expired in 2012, however there was a memorandum signed by the parties in 2013 to extend the CBA through the end of 2016.

This past December, the player's union informed U.S. soccer that the memorandum was not valid, and if a new CBA was not agreed to by February 24th, the CBA would terminate and the players would potentially strike. The complaint, filed in the U.S. District Court for the Northern District of Illinois, disclosed the players' addresses and contact information, which did not help tensions between the two parties.


Calgary Flames' Dennis Wideman Suspended for 20 Games for Hitting Official

Earlier this week, the National Hockey League (NHL) Department of Player Safety suspended Dennis Wideman for crosschecking a linesman during a game against the Nashville Predators. The NHL Players Association filed an appeal, and argued that Wideman was "woozy" or "foggy" after being hit just prior to colliding with the linesman. The suspension is the second longest in NHL history for "abuse of an official", and most expected Wideman to appeal immediately. Patrick Burke, who heads the NHL's Department of Player Safety, was not involved in the decision, as his father is the president of hockey operations for the Calgary Flames.


Quarterback Ken Stabler Diagnosed with C.T.E.

Ken Stabler, who passed away on July 8th from cancer, had agreed to donate his brain to Dr. Robert Cantu of Boston University for C.T.E. research. The researchers were able to determine that Stabler had advanced C.T.E., which can unfortunately only be diagnosed posthumously through examination of the brain. The finding is significant, due to the fact that there was a perception that quarterbacks are not exposed to the same risk of head injury as players on the offensive and defensive lines. Stabler's long-time partner describes the later years of Stabler's life and his struggle with post-concussive syndrome and CTE in a video available at nytimes.com.


Sticky Situation for Owner of Super Bowl I Footage

Over the past five years, the owner of a copy of the only known video footage of Super Bowl I has been in a stalemate, as he attempts to negotiate to sell the footage to the National Football League (NFL). Due to the fact that the video is an unauthorized and infringing copy of the original footage, the NFL has made it clear that it will pursue legal action should the owner attempt to sell it. The owner of the copy of the footage is asking for $1 million from the NFL, and the NFL has countered with $30,000. The copy, which was recorded by the current owner's biological father, was professionally restored and certain portions and an interview with the owner were scheduled to be aired during the Super Bowl in exchange for a $25,000 payment and Super Bowl tickets, both provided by CBS. The owner claims that the NFL blocked the deal.


Music Festival Company Declares Bankruptcy

SFX Entertainment (SFX), the company behind the Electric Zoo and Tomorrowland music festivals, has filed for Chapter 11 bankruptcy protection. SFX was carrying $300 million in debt, and the Chapter 11 filing will allow it to restructure and transition to a private company. Shares of SFX had been declining consistently since it went public in 2013. That same year, two attendees of SFX festivals died of drug overdoses.


Experts Testify in Knoedler & Company Trial

Two experts testified in Manhattan federal court that their opinions and endorsements were misrepresented in connection with the authenticity of a forged Mark Rothko painting sold by Knoedler & Company (Knoedler) for $8.3 million. The owners of the forged painting, Domenico and Eleanor De Sole, are suing the gallery for fraud. Knoedler sold more than 30 fraudulent paintings said to be from artists such as Jackson Pollock and Robert Motherwell, that were instead actually created in a garage in Queens by an artist named Pei-Shen Qian, and then supplied to Knoedler though an art gallery in Long Island. Before the forgeries became public knowledge, some experts authenticated these questionable paintings in exchange for fees and others withheld their opinions due to a fear of being sued by the gallery.


Fantasy Sports Loses Major Payment Processor

In response to the challenges fantasy sports operations are facing from Attorneys General across the country, Vantiv Entertainment Solutions, a major payment processor for Fantasy Sports, informed its clients that it would cease operations at the end of the month. DratfKings made a statement that Vantiv would need to continue to fulfill contractual obligations. Draftings and FanDuel both argue that their games are games of skill and not chance, and should thus not forms of gambling.


Chiropractor to Professional Athletes Assists Canadian Anti-Doping Investigation

Gerry Ramogida, a prominent chiropractor who works with Olympic and professional athletes, is assisting the Canadian antidoping program in its investigation in the wake of an Al Jazeera investigation that implicated a network of medical professionals involved in supplying performance enhancing drugs to athletes. Mr. Ramogida denies any involvement in doping, but is cooperating with the investigation involving his associates.


Choice to Conduct Independent Tennis Review Has Ties to the Sport

Adam Lewis, the London-based lawyer appointed to head an independent review of the tennis anticorruption program, has had clients that include an array of tennis programs, championships, governing bodies, and many professional tennis players who have been involved with high profile suspension cases. Lewis currently heads the the Tennis Integrity Group, which is an internal watchdog for the sport.

Amid accusations of corruption and heightened suspicion in the wake of FIFA's troubles, an independent review of corruption is an important step. However, many would have preferred a review conducted by a group with no ties to the sport.


The European Union Data Deal Deadline Has Passed

The U.S. and the European Union (E.U.) have failed to come up with a new agreement to keep transatlantic data transfers legal. Without an agreement, U.S. and E.U. companies that regularly move data back and forth are in limbo. U.S. and E.U. agencies gave a deadline of February 1st before they would implement a new policy if the sides could not agree. Major sticking points include U.S. surveillance and E.U. citizens seeking remedies in U.S. courts for data-related privacy violations. Although the deadline has passed, no major company is expected to change it data transfer procedure.


February 5, 2016

A Fine Lesson...(for IP and Creative Arts Attorneys)

By Whitney McGuire

The Internet is still very much the Wild West, and there is no better example of this idea than that of the Fine Brothers saga. In case you missed it, YouTube sensations the Fine Brothers (https://en.wikipedia.org/wiki/Fine_Brothers) became Internet pariahs over the span of 24 hours last week, when they announced the creation of a licensing program -- the first of its kind on YouTube -- that would trademark the "react" video format (including the word "react", https://en.wikipedia.org/wiki/Fine_Brothers#React_series) and allow other creators to use the brothers' formats in exchange for part of their profits. The react videos feature the Fine Brothers, off-camera, showing children, elders, teens, adults, and YouTubers of all ages viral videos or pop culture trends and having the viewers react to the content. The videos have become wildly popular and appropriated for use by others, and the Fine Brothers even singled-out Ellen DeGeneres for appropriating the concept for her show (https://ww.youtube.com/watch?v=3CMS9xnBRkc). Here's an example of a "react" video: https://www.youtube.com/watch?v=NeGe7lVrXb0.

Essentially, the Fine Brothers did what many brick and mortar corporations do outside of the digital landscape; they took advantage of an opportunity to expand through franchising. They compared their licensing idea to a chain restaurant, in which they started the original company, and helped outfit franchisees with logos and support for a share of the franchisees' profits, at a 30% share. However, the Fine Brothers rooted their franchise idea in trademark law, which earned fury, mockery and accusations from other YouTube creators. As a result, the Fine Brothers lost tens of thousands of followers by the hour. According to the BBC, they became "the convenient face of many people's frustrations." These creators, according to The Washington Post, claimed that the Fine Brothers were trying to "'own' an entire genre of online videomaking -- in direct opposition to the democratic, DIY spirit that many YouTubers have embraced." (https://www.washingtonpost.com/news/the-intersect/wp/2016/02/02/after-youtube-outrage-the-fine-bros-decide-not-to-trademark-react/)

One week later, the Fine Brothers have done a complete 180. According to The Washington Post, the brothers have discontinued their licensing program, and decided not to pursue infringement claims against other creators who sample their works or borrow the tropes of the "react" genre (https://www.washingtonpost.com/news/the-intersect/wp/2016/02/02/after-youtube-outrage-the-fine-bros-decide-not-to-trademark-react/). They even deleted the videos in which they explained and promoted the licensing program on their YouTube page. Many questions remain as the dust begins to settle.

Why did the users react so strongly to this incident when this type of expansion happens so often in business? What is it about Intellectual Property (IP) law that is frustrating to people? The obvious answer, quite frankly, is most don't understand it. This was made apparent as I scrolled through social media reactions, often stating that the Fine Brothers were trying to copyright the word react. What people don't understand, they tend to instinctively oppose. Why was there such indignation towards a body of law that, in theory, is designed to protect the very product of a creator's innovation? Outside of the digital landscape, this protection is widely accepted (even passively), but on the Internet, creators are staunchly opposed to certain aspects of the ideology and enforcement of the law. Aside from the very bad decision to trademark the word "react," what the Fine Brothers sought to do, many have done before, maybe just not as visibly and maybe not within the YouTube/ DIY community. Does this indignation originate and rest with the user within the DIY digital landscape, or has IP law, in practice, begun to stifle creativity and innovation to the point where any exercise of it in a creator-centric environment, is rejected? Gregory Mandel, Associate Dean for Research and Professor of Law at Temple University, expounds upon the latter inquiry. According to Mandel, psychology research provides significant insight into the creative process and has indicated that certain IP law hinders the very creativity the law is designed to inspire. While his study is based primarily on patent and copyright law, trademark falls within the scope of his findings as well.

How the law is understood by individuals has a significant effect on how it influences creativity. According to Mandel, to the extent that IP law is perceived as creating competition, constraint or providing rewards for task (not creative) performance, the law may produce extrinsically motivated efforts that are less creative. (Gregory Mandel, Research Paper, To Promote the Creative Process: Intellectual Property Law and the Psychology of Creativity, 86 Notre Dame L. REV. 1999 (2011)., at 11.) Mandel identifies a motivation spectrum inherent in most people. Extrinsic motivation is produced or prompted by extrinsic demands and pressures, while integrated or internal motivation is produced when an individual engages in behavior that is contingent upon a desired outcome, although not as a result of external factors. (Id.) In other words, intrinsic motivation inspires or produces activities that an individual identifies with as an expression of his or her own self. Intrinsic activity is self-determined activity. A vast majority of the YouTube/DIY community consists of intrinsically motivated individuals. Although the monetary reward for subscribers is an external motivator, DIY is an alternative to modern consumer culture's emphasis on relying on others to satisfy needs, and is therefore, an intrinsically motivated movement. According to Mandel, "as motivation moves from the external towards the internal side of the motivation spectrum, individuals' work product tends to become more creative." (Mandel, at 9-10.)

Let's consider user innovation as an example. This refers to innovation produced by technology users, as opposed to individuals whose profession it is to develop technology. (Id.) Such innovation occurs when users modify products they have purchased (or subscribed to) in an effort to provide a more enjoyable user experience. These modifications can produce significant advances. (Id.) Examples of user innovation, including the YouTube celebrity, range from simply programming an iPod or cellphone, to cyclists who invented the mountain bike due to an interest in off-road biking, or surgeons who modify and improve surgical equipment for their own uses. User innovation, according to Mandel, is by definition, "often largely intrinsically motivated, and therefore may be expected to produce particularly creative results. YouTubers utilize both the site and their own technological resources to create content that is personally relevant. These users are intrinsically motivated to create.

Further, intrinsically motivated creation and innovation is often associated with, and enhanced by, collaboration. Creativity usually requires a combination of prior ideas and work, and such combination, according to Mandel, is routinely accelerated by collaboration. Successful collaboration involves individuals building on each others' ideas in a synergistic manner that enhances individual creative activity. This is evident from the myriad of "react" videos made by YouTube users and others, aside from the Fine Brothers. These videos are not frame by frame copies of original Fine Brothers videos, but are inspired by the concept to which the Fine Brothers claimed ownership. If collaboration promotes creativity, then by claiming ownership to the "react" concept (or video elements, which were never clearly defined by the brothers), they threatened the creative freedom that their supporters and fans felt entitled to, within the DIY community. What, then, can be done? I honestly don't know, but I agree with Mandel, who maintains that IP law should promote collaboration. While joint creator law could be considered a viable IP solution to or motivator for collaborative work, it is still an external motivator. Furthermore, most people either don't know that these laws exist or misunderstand the laws' applications.

With regard to copyright, the requirements of intent to be a joint author and for an individual to provide an independently copyrightable contribution protect the primary developer of a copyrightable work at the potential expense of a secondary contributor. (Id. at 14.) Commentators, including the Ninth Circuit, have identified this unintentional bias. (See Aalmuhammed v. Lee, 202 F.3d 1227, 1232 (9th Cir. 2000).) Like most creators, the Fine Brothers did not consider their community as collaborators, but if they had -- if they took a second to think about the community that makes YouTube so successful and how it would "react" to this concept, perhaps they might have thought twice about the most effective way to monetize their idea while not becoming Internet pariahs. The Fine Brothers saga exemplifies the thin lines between autonomy and control, and between individualism and social connection; both sets are necessary for successful collaborative creativity. Mandel proposes a solution:
"Intellectual property law...may work well in the large-scale collaboration motivational context, despite its potential problems as an extrinsic motivator. The prospect of a patent or copyright [or trademark] on the final group output may help to focus individual contributors on a coherent group target, and unify the contributors so that they see themselves more as members of a single group rather than isolated individual contributors. The prospect of an intellectual property reward based on group effort may also increase group cohesiveness, leading to greater collaborative effort." (Mandel, at 21.) Essentially, the IP reward is protection from infringement, which really is bestowed individually.

The Fine Brothers created a problem when they thought they were creating a solution. They relied on IP law for the solution, but Internet users reacted adversely. The problem exacerbated, and the Fine Brothers' solution was not achieved. Mandel offers a different perspective and approach to this commonly sought solution (IP protection) for creatives. While his perspective may seem a bit utopian, I gleaned from his article that more collaboration between and among attorneys and individuals across industries will inevitably lead to a better understanding of how we advise our clients who, if they have not already, will conduct their business within the digital landscape.

February 1, 2016

Center for Art Law Case Law Updates

Mueller v. Michael Janssen Gallery, No. 1:15-cv-04827 (S.D.N.Y. June 22, 2015) -- Ohio-based collector Scott Mueller filed suit in federal court alleging several causes of action arising from his purchase of Cady Noland's "Log Cabin" from a German gallery. Noland objected to the sale when she learned that Mueller planned to restore the 1990 work. Mueller then exercised his contractual rights under the buy-back option. However, the seller has returned only $600,000 of the $1.4 million purchase price.

Williams v. Roberto Cavalli S.p.A., CV 14-06659-AB JEMX (C.D. Cal. 2015) -- A federal court in California denied defendant Roberto Cavalli's motion to dismiss claims by three San Francisco street artists that the Italian designer appropriated the plaintiffs' artwork for use in its clothing designs. In addition to alleging copying, the artists also claimed that their stylized signatures were replaced by the "Just Cavalli" mark on the final designs, constituting unlawful removal of copyright management information and a false designation of origin.

Tierney v. Moschino S.p.A., No. 2:15-cv-05900 (C.D. Cal. Aug. 5, 2015) -- Brooklyn graffiti writer "Rime" has filed suit against Moschino and Jeremy Scott in federal court, alleging that the designers reproduced his 2012 mural "Vandal Eyes" on their high-profile apparel. The plaintiff further alleges that the defendants added his name and falsified his "Rime" signature on the clothing and in advertisements.

The Creative Foundation v. Dreamland Leisure Limited [2015] EWHC 2556 (Ch) -- England's High Court of Justice recently held that a tenant was not entitled to remove a Banksy mural from its exterior walls. Although the work was painted without consent, the court held that, in cutting the mural out from the wall and planning to sell it in the United States, the tenant was not merely carrying out its repair obligations under the lease agreement, but unlawfully removing a valuable chattel from the premises without the landlord's consent.

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.

Proposed Legislative Language to Amend the Definitions of "Theatrical Employment Agency" Under NYS GBA and NY Arts and Cultural Affairs Law

By Marc Jacobson and Steve Richman

The Entertainment Arts and Sports Law Section (EASL) of the New York State Bar Association (NYSBA) recommended to the Executive Committee of the NYSBA that legislation be introduced and enacted amending the definition of "Theatrical Employment Agency" to specifically exempt attorneys duly licensed and actively practicing in the State of New York from these licensure requirements of the General Business Law and the Arts and Cultural Affairs Law.

On Thursday, January 28, 2016, the Executive Committee unanimously approved the recommendation. Beginning this week, members of the staff of the NYSBA and members of the EASL Executive Committee will work to identify appropriate legislators to introduce the legislation.

This proposed legislation would protect attorneys from additional regulatory requirements as well as potential civil and criminal sanctions in performing legal services for clients who are Artists as defined under the New York General Business Law §171.8-a. Such services may include procuring or attempting to procure employment or engagements for such Artists. The current language of General Business Law §171.8 and Arts and Cultural Affairs Law §37.01.3 exempts personal managers from the license requirement if they only incidentally seek employment for their clients. This proposal would add a similar exemption for licensed attorneys at law.

The legislation would add the following concluding sentence to both General Business Law §171.8 and Arts and Cultural Affairs Law §37.01.3.:

AN ACT to amend the definitions of "Theatrical Employment Agency" under the New York State General Business Law, Article 11, §171.8 and the New York Arts and Cultural Affairs Law, Article 37, §37.01.3, to exempt attorneys duly licensed in the State of New York from the requirement of securing an employment agency license to negotiate or otherwise assist in obtaining employment contracts for Artists.

1. Section 171.8 of the General Business Law is amended by adding the following concluding sentence:
The provisions of this subdivision shall also not apply to persons duly engaged in and admitted to the practice of law in the State of New York, pursuant to the rules of the Court of Appeals of the State of New York and in good standing in accordance with the provisions of the New York State Judiciary Law, §468 and the rules of the Chief Administrator of the Courts.

2. Section 37.01.03 of the Arts and Cultural Affairs Law is amended by adding the following concluding sentence:
The provisions of this subdivision shall also not apply to persons duly engaged in and admitted to the practice of law in the State of New York, pursuant to the rules of the Court of Appeals of the State of New York and in good standing in accordance with the provisions of the New York State Judiciary Law, §468 and the rules of the Chief Administrator of the Courts.

A more detailed memorandum will be prepared and made available when the legislation is introduced.

Upcoming /IP Pro Bono Clinic - February 28th

Information about the upcoming Pro Bono Clinic is available at http://www.nysba.org/EASLHomePage/

January 29, 2016

Week in Review

By Michael B. Smith

Florida State University Settles with Jameis Winston Rape Accuser

On Monday, Florida State University (FSU) announced that it agreed to settle with Erica Kinsman for $950,000, and will implement sexual assault awareness programs for at least five years. Kinsman is an alumna who accused the university of violating Title IX by failing to adequately investigate her claim that former Seminole quarterback Jameis Winston (now with the Tampa Bay Buccaneers) raped her. The university did not admit liability.

The settlement does not put an end to the ongoing investigation by the Department of Education's (DOE) Office for Civil Rights, but does stipulate that Kinsman will not accept any monetary relief the DOE may order FSU to pay. Kinsman is suing Winston for assault, false imprisonment, and emotional distress; Winston is suing Kinsman for defamation.


Heirs Fight Swiss Museum Over Looted Painting

Alain Monteagle, heir to the substantial art collection of the Jaffe family, from which more than 200 works were taken during World War II, is trying to recover a painting by John Constable called "Dedham for Langham" from the Musée des Beaux-Arts in Switzerland. The Art Recovery Group (ARG), which is assisting Mr. Monteagle and his family, says that the work was bequeathed to Monteagle's family but auctioned at a forced sale in 1943.

The museum concedes that the painting was "auctioned without entitlement," but refuses to return the work because it was gifted by purchasers in good faith. Although Swiss law does not require the Musée des Beaux-Arts to return the painting, the ARG has called upon the museum to do so "to set a great example to others."


Disney Accused of Visa Violations

Two former Disney employees have filed lawsuits in the Middle District of Florida, alleging that Disney colluded to use temporary H-1B visas to replace American workers with immigrants previously separated by dividing mountains and wide oceans.

The Spring issue of the EASL Journal will have a more in depth analysis of this issue.


Gallery Tells Jury Forgeries Were Too Good

Luke Nikas of Boies Schiller told jurors in his opening statement on Tuesday that a fake Rothko (one of dozens of forgeries sold by the gallery) was so well done that his client, New York art gallery Knoedler & Company, could not have been expected to know the work was fake. The gallery is accused of racketeering and fraud by couple who paid $8.3 million for the faux Rothko, one of dozens of forgeries sold by Knoedler & Company. The forgeries apparently were all painted by one man in Queens, and have been authenticated by various experts over the years. The trial, which is expected to last a month, is pending in the Southern District of New York.

On the second day of the trial, MoMA's chief curator emeritus testified that he had alerted Knoedler & Company years ago to the "dubious" provenance of a different work and was surprised when the gallery sold the painting anyway.



Museum Officials Face Discipline for Damaging King Tut's Mask

Eight officials at the Egyptian Museum in Cairo are accused of gross negligence in connection with the botched repair of the 3,300-year-old gold mask of King Tutankhamen. Workers at the museum accidentally knocked the beard off the mask while repairing a light fixture, and then caused further damage trying to glue it back on.

Experts have since restored the mask by replacing the epoxy with beeswax, the adhesive used by ancient Egyptians. The mask still bears scratches from attempts to remove glue stains with a sharp object.



Former Giants Safety Posthumously Found to Have CTE

Tyler Sash, who was cut from the Giants after receiving at least five concussions, died from an accidental overdose of pain mediations at the age of 27. Last week, experts in Boston diagnosed Sash with a surprisingly advanced stage of chronic traumatic encephalopathy (CTE), a degenerative brain disease caused by repeated trauma. Of 91 former NFL players who donated their brains for research after death, 87 tested positive for CTE. CTE, which can only be diagnosed posthumously, can cause depression, aggression, and loss of memory and motor skills. Researchers believe repeated minor head trauma, and not just major concussions, can cause CTE.

Both the NFL and NCAA recently settled lawsuits over CTE. In September 2015, the same month Sash died, the NFL reached a $1 billion settlement with thousands of former players suffering from neurological disorders. Earlier this week, U.S. District Judge John Z. Lee granted initial approval of a settlement between the NCAA and players over the NCAA's handling of head injuries. The NCAA settlement, which does not include a cash award to the plaintiffs, calls for the creation of a $70 million fund for neurological screenings of former athletes, and mandates new requirements for athletes who sustain head injuries.




Attorney General Finds Ticket Sales Unfairly Gouge General Public. No One Surprised.

On Thursday, New York Attorney General Eric Schneiderman announced the findings of a multi-year investigation into consumer abuses in the live entertainment ticket industry. The investigation found that, on average, over half of all tickets were withheld from the general public and reserved for industry insiders (16%) or non-public groups such as holders of particular credit cards (38%). The investigation also found that sellers like Ticketmaster regularly tacked on fees of over 20% and, in some cases, more than the price of the ticket. Third-party brokers were found to be using illegal specialty software called "ticket bots" to quickly purchase as many tickets as possible and sell them at margins of 49 to over 1,000%.


FCC Proposes Set-Top Box Choice

On Wednesday, the FCC announced a proposal that would allow cable and satellite subscribers to pick the devices they use to watch programming. The proposed rule would give TV-connected device manufacturers like Amazon, Google, and Apple access to cable and satellite programming. Currently, 99% of subscribers lease one or more set-top boxes from cable/satellite providers, generating an estimated $20 billion in annual revenue. The new arrangement would surely disrupt existing content licensing and distribution agreements.


Group Charged to Prevent Corruption in Tennis to be Reviewed

In the wake of stories alleging that tennis authorities had suppressed evidence of match-fixing and failed to investigate allegations of corruption, the Tennis Integrity Board will be conducting an investigation into the effectiveness of the Tennis Integrity Unit, including whether it has adequate funding.


Prominent Chinese Artist Closes Exhibit to Protest Asset Seizures

Chinese artist Ai Weiwei closed an exhibition at the Faurschou Foundation in Copenhagen in response to the Danish Parliament's approval of a proposal that would authorize police to seize refugees' assets to cover the costs of food and housing.


Give me an J! Give me an E! Give me a T! Give me an S! Give me a Fair Wage!

52 cheerleaders will each receive $2,500 per season and $400 per photo shoot in a settlement with the New York Jets of a lawsuit claiming inadequate compensation. The $325,000 class action settlement is only the latest in a series of wage claims cheerleaders have brought against NFL teams.

The Summer issue of the EASL Journal will have a more in depth analysis of this issue.


States Take Varying Approaches To Fantasy Sports Websites

On Wednesday, the California State Assembly approved a bill that would permit pay-to-play fantasy sports websites such as DraftKings and FanDuel to operate in California. AB1437 is now before the California Senate. If approved, it would create a licensing regime that would permit daily fantasy sports websites to operate under regulation by the state. Website operators would undergo background checks and pay annual registration fees. They also would be required to report player winnings to state taxation authorities.

In addition, two bills that would legalize daily fantasy sports games made it through committees in the Florida House and Senate, and the Attorney General of Hawaii issued a formal opinion that daily fantasy sport games are illegal gambling under Hawaii state law.




Disney Again Faces Worry, Strife, in "The Jungle Book" Reversal

On Wednesday, a California appellate court reversed the dismissal of a lawsuit against Disney by Eliza Gilkyson, who wrote the song "The Bare Necessities," which Disney used in the animated "The Jungle Book" movie. Gilkyson transfered ownership and authorship of the copyright in that and several other songs to Disney in exchange for royalties for shares of sheet music and the mechanical reproduction rights. The contracts expressly excluded royalties for use in "moving pictures, photoplays, books, merchandising, television, radio and endeavors of the same or similar nature." Gilkyson alleges that Disney nevertheless owes royalties in connection with DVDs and VHS tapes containing "The Bare Necessities". Disney contends that "mechanical reproduction rights" does not include audiovisual media under the agreements.

Disney asserted the 4-year breach of contract statute of limitations. Gilkyson argued that the statute was tolled by the "continuing violation doctrine," or in the alternative, that she was entitled to royalties due within the four years preceding the filing of the lawsuit under the "continuous accrual doctrine." The trial court granted Disney's demurrer, but the appellate court reversed, finding that Disney's obligation to pay royalties was "unquestionably a continuing one," and noted that Disney continued to issue quarterly royalty statements. The appellate court declined to follow the Central District of California's decision in Mappa Music (2001 U.S.Dist. LEXIS 24554), finding that a single breach of contract claim accrued the first time the licensee failed to play royalties, over 40 years prior to plaintiff filing suit.


Theater Chain Accuses Largest Competitor of Antitrust Violations

On Tuesday, Landmark Theaters (owned by Mark Cuban) filed a Sherman Act lawsuit against Regal Entertainment, which controls 91% of film theater seats in Northwest Washington DC. Landmark alleges that Regal has used its monopoly power in DC and its substantial theater ownership across the country, to prevent Landmark from getting first-run films.


Ninth Circuit Revives Capitol Records Royalties Row

Dale Bozzio, former frontwoman of '80s band "Missing Persons," claims that Capitol Records and EMI breached their recording contract by improperly treating download and streaming sales as record sales rather than licensing revenue. The District Court dismissed the lawsuit, finding that Bozzio lacked capacity to sue, since the agreement in question was with the band's loan-out company, Missing Persons Inc., which is a suspended corporation. The Ninth Circuit reversed, noting that "[n]o California case has decided whether a party's status as a former shareholder or officer of a suspended corporation negates that party's ability to bring suit as a third-party beneficiary of a contract entered into by the corporation." The court also found no support in the record for the District Court's finding that Bozzio had control over the loan-out and the ability to revive it.


January 28, 2016

New York's Increasing Expansion of Member and Shareholder Liability for Unpaid Wages

By Kristine A. Sova

Wage theft prevention remains a priority in New York so much so that, in recent years, the state has incrementally expanded the personal liability of Limited Liability Company (LLC) members and corporate shareholders for the unpaid wages due their organization's employees.

Early last year, Section 609 of New York's LLC Law was amended with the addition of two new subsections that specified that the 10 members of an LLC with the largest percentage ownership interests will be held, jointly and severally, personally liable for any unpaid wages owed to their LLC's employees. These new provisions in New York's LLC Law echoed a similar obligation long embodied in New York's Business Corporation Law, under which employees may recover unpaid wages from the 10 largest shareholders of a domestic corporation. This change took effect on February 25, 2015.

This month, however, the domestic incorporation limitation in Section 630 of New York's Business Corporation Law was removed, in effect rendering the 10 largest shareholders of domestic and foreign corporations, jointly and severally, personally liable for any unpaid wages owed to their corporation's employees so long as the unpaid services were performed in New York. This change took effect on January 19, 2016.

The definition of "wages" is broad under both statutes and includes all compensation and benefits, such as salaries, overtime, vacation, holiday and severance pay; employer contributions to or payments of insurance or welfare benefits; employer contributions to pension or annuity funds; and any other moneys properly due or payable for services rendered by an employee, including any related liquidated damages, penalties, interest, attorneys' fees or costs.

Personal liability, however, is not automatic under New York's LLC Law or Business Corporation Law. Before an employee can charge a member or shareholder for unpaid wages:

The employee must first provide written notice to the member/shareholder that the employee intends to hold the member/shareholder liable for the employee's unpaid wages under the LLC Law or Business Corporation Law. Employees must provide this notice within 180 days after termination of employment. However, if the employee demands and receives the opportunity to examine the corporation's books and records (available only under the Business Corporation Law) during that 180-day time frame, then the notice can be made within 60 days of examination.

The employee must also begin a lawsuit seeking a judgment against the LLC or corporation for unpaid wages, and attempt to execute the judgment. Once an execution is returned unsatisfied, the employee must commence a second lawsuit against the members/shareholders within 90 days.

January 27, 2016

Hip Hop Artist's Copyright Ownership Claim Time Barred

By Barry Werbin

Hip hop artist Tyrone Simmons could not rap his way out of his delay in pursuing a claim of ownership of exclusive copyright licensing rights against hip hop producer William C. Stanberry, Jr., rapper 50 Cent, and several entities that had been involved with producing and distributing a song called "I Get Money" that was released in 2007. On January 15, 2016, the Second Circuit held (per curium) in Simmons v. Stanberry, that Simmons' claim was time-barred under the Copyright Act's three year statute of limitations because he became aware of Stanberry's repudiation of his license rights and release of the song more than three years before suit was filed.(2d Cir. 1/15/2016)

The Court applied its prior decision on copyright ownership in Kwan v. Schlein (634 F.3d 224 (2d Cir. 2011)), where it held that where a claim for ownership was time-barred, so too were any attendant infringement claims. The Court held that the exclusive license allegedly held by Simmons was legally equivalent to copyright ownership because Section 101 of the Copyright Act "recognizes that an exclusive license is effectively a transfer of ownership over the rights licensed. The Act includes exclusive licenses among the list of transactions that can effect a "transfer of copyright ownership...."

The case reinforces the risk of delay in pursuing claims of copyright ownership in the face of an express repudiation of rights. It further highlights the distinction as to how the Copyright Act's three year statute of limitations is applied differently with respect to ownership claims versus infringement claims. With respect to infringement claims where ownership is not in issue, the three year limitations period only bars damages going back more than three years preceding the filing of the complaint, where an infringement is ongoing.