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May 2009 Archives

May 6, 2009

Getting Your Early Stage Venture off the Ground

The Technology and Venture Law Committee invites members of NYSBA to:

Getting Your Early Stage Venture off the Ground

Thursday, May 7, 2009
10:00am – 12:00pm
The Penn Club of New York
30 West 44th Street
New York, NY

Co-Sponsored by
The New York State Bar Association and MasurLaw
The barriers to launching a technology venture are lower than they’ve ever been, and the time to launch is now, while things are cheap. Savvy entrepreneurs are leveraging the power of open source tools, outsourced labor and guerilla marketing techniques to help them build quickly for success. This panel will address the minimum setup needed to build your company on a solid foundation. Topics include LLCs versus S Corps, founder’s agreements, the best tax set up, taking investment, employment and contractor agreements, stock option plans, trademarks, terms of service, privacy policies and more.
Moderator: Jonathan Lutzky, Esq., MasurLaw, Director, Early Stage Services Group
Mark Davis, DFJ Gotham Ventures, Associate
Douglas Sipe, CPA
Frits Abell, Progress Partners, Managing Director
Jeff Stewart, Monitor110, Inc., Founder and Chairman (Former Founder of Mimeo and Angel Investor)
David Friedensohn, BigStar Entertainment, CEO, University of Maryland Baltimore County, Professor of Entrepreneurship (former CEO, Upoc Networks, Former Director VH1)

1.5 CLE credits are anticipated for this program, contingent upon review and approval of meeting materials.

Space is limited: RSVP to sbugos@nysba.org. Registration is on a first-come-first-served basis, first preference being given to Technology & Venture Law Committee members.

There is no charge for this program for Business Law Section members. Non-Section members will be invoiced at $59 for 1.5 CLE credits.

If you are unable to attend the meeting and would like to participate in the conference call, dial-in information is below:
Conference Call-in: 866.409.4300 (U.S. and Canada)
Participant code: 540628#
If you plan to call in, RSVP to sbugos@nysba.org.
Steven R. Masur, Esq., Chair
David J. Mazur, Esq., Programming Co-Chair
Technology and Venture Law Committee

May 8, 2009

Income Tax Treatment of NYS Tax Credits for Films

The earlier post regarding NYS' tax credit raised a question for one producer, regarding the income tax treatment of New York State tax credits for films. The receipt of these credits would not be taxable at the federal level, but to the extent the credit reduces the NYS tax it would also serve to reduce the deduction for state taxes otherwise available on the federal return. Since the credits simply reduce state income tax, they would not be taxable at the New York level either. The credits will not affect basis in the film since these credits are not a credit against against a particular asset, but rather a credit for a qualified expenditures within NYS.

Marc Jacobson
Of Counsel
Greenberg Traurig, LLP | MetLife Building | 200 Park Avenue | New York, NY 10166
Tel 212.801.6516 | Fax 212.805.5516 | Cell 516.459.0436

May 14, 2009

U.S. Supreme Court Revisits Indecent Broadcast Programming

By Barry Skidelsky, Esq.

On April 28, 2009, by a vote of 5-4 (with 5 additional and separate opinions also being released), the U.S. Supreme Court reversed and remanded to the U.S. Court of Appeals for the Second Circuit its decision in Federal Communications Commission v. Fox Television Stations, Inc. In writing the Supreme Court's majority opinion, Justice Scalia held that, contrary to the Second Circuit's view, the FCC did not act arbitrarily and capriciously in violation of the Administrative Procedure Act (“APA”), but rather did adequately explain the Agency's departure from its generally hands-off policy regarding so-called fleeting expletives . The Supreme Court specifically declined to rule on the constitutionality of the indecency finding, as the Second Circuit had not made its decision on that ground, and despite extended "dicta" by the Second Circuit that it was very skeptical of the constitutionality of the FCC's new approach.

Most observers recognize that the Supreme Court's ruling changes very little on the indecency front in the near term, at least until the issue likely returns to our country's top court following this remand to the Second Circuit and a companion remand to the Third Circuit in connection with the so-called "wardrobe malfunction" of Janet Jackson during a Super-bowl half-time show broadcast on CBS. However, many fail to recognize the real import of Fox is the major APA shift it creates. The Supreme Court has now made it easier for administrative agencies to depart from precedent without necessarily explaining why the reasons which underlay its to-be-abandoned policy are no longer persuasive, as a mere statement of preference for the new policy (as the FCC articulated in Fox) may suffice, rather than having to explain reasons why the new policy is better. This profound shift to a lower standard of accountability has far-reaching consequences and should be of great interest to anyone involved with administrative law at any level of government, going well beyond federal regulation of broadcast media.

In his dissent, Justice Stevens disagreed with the majority's assessment that the FCC need not fully explain its departure from prior policy, concluding that the Supreme Court's 1978 majority opinion in Pacifica (which Stevens wrote, and which involved the late George Carlin's monologue about seven dirty words) was meant to be limited to sexual or excretory "activities or organs", and should not now be expanded to treat as indecent any expletive that has a sexual or excretory "origin". In the questionably indecent words of Bono, that's "fucking brilliant!"

Also of interest is the concurring opinion of Justice Thomas in Fox, in which he expressed the view that the "scarcity" rationale -- the traditional justification for governmental regulation of broadcast media (which is treated dramatically differently than other non-electronic and electronic media) -- may no longer have any validity, if it ever had any. Escaping scrutiny for now, the Supreme Court may likely be compelled to address the issue of treating broadcasting differently than other media for First Amendment purposes, depending on how the Fox and CBS remands play out.

Barry Skidelsky is Co-Chair of both the NYSBA/EASL/TV & Radio Committee and FCBA/New York Chapter; contact: bskidelsky@mindspring.com or (212) 832-4800.

May 18, 2009

Score One Touchdown in the Endzone for the Washington Redskins

Score one touchdown in the endzone for the www.redskins.com/gen/index.jsp>Washington Redskins. After a 17 year court battle over their trademark, which depicts a drawing of an Indian along with their name Redskins, the U.S. Court of Appeals for the D.C. circuit ruled that the plaintiffs waited way too long to challenge this mark. See: www.ipwatchdog.com/ip-cases/trademark-cases/pro-football-v-harjo-may-15-2009/>Pro-Football, Inc. v. Harjo (D.C. Cir. 2009)

A group of Native Americans had challenged the mark alleging it was disparaging to their ethnic group. Yet, the court held there was too great a delay between when the NFL team began using the mark in 1967 and when the mark was first challenged in this action back in 1992.

Unfortunately for the Redskins, the Court did not address the merits of the claim and whether or not the mark en.wikipedia.org/wiki/Disparagement> disparaged Native Americans under the meaning of the Lanham Act §2, 15 U.S.C.§1052(a). Instead, Judge David Tatel, writing for the Court, based the decision on the team's defense of laches. Judge Tatel stated that the Redskins suffered great economic and trial prejudice because of the long lag time. Oddly, this was the second time this issue had been before the Circuit, which previously ruled against the team and remanded back to the District Court in 2005, See: Pro Football, Inc. v. Harjo, (Harjo II), 415 F.3d 44, 50 (D.C. Cir. 2005)

The trial clock had actually been set in 1984 when Mateo Romero, the youngest of the seven plaintiffs turned 18, the age of majority, and nothing happened between 1984 and 1992. Romero would've been one year old in 1967 when the team first began using the mark, so on remand, the district court deemed the period between 1984 and 1992 the Romero Delay Period. See: Harjo III, 567 F.Supp.2d 46, 53-56 (D.D.C. 2008) During this Romero Delay Period, Edward Bennett Williams, the team's former president, unfortunately died. Williams had reportedly met with Native Americans to get their opinions on the team's mark and he could no longer testify. The court determined that the near eight year delay also made it more difficult to obtain contemporaneous evidence of public attitudes toward the mark.

Romero had also made a claim against the NFL team's cheerleaders, the Redskinettes, which were not borne of the team until 1990. However, Romero shot himself in the foot there too. He noted for the district court that the allegedly disparaging mark for the Redskinettes was so closely tied to the disparaging nature of the team's mark that the court held it would have to look at the team's mark to assess the nature of the claim against the cheerleaders and it was prevented from doing so by the defense of laches.

While this decision does not address the merits of the case, it does put it to rest but that is not enough for Intellectual Property attorneys. In this ridiculously politically correct society of ours why does freedom of speech and expression always take a back seat to the hurt feelings of a chosen few seeking their 15 minutes in the spotlight? The word Indian dates back to the 15th century when Christopher Columbus mistakenly thought he landed on a sub-continent of India and thereby referred to the indigenous people of the new land as Indians. What is disparaging about that?

Perhaps as a New Yorker I should be insulted if someone from the south calls me a Yankee. However, as an intelligent woman I am not; in fact, I am proud to be a Yankee, now if only Derek Jeter would call.

www.LisaFantino.com>Lisa Fantino is an award-winning journalist turned attorney with a general and entertainment practice in Mamaroneck, NY

May 20, 2009

ENTERTAINERS AND ATHLETES MUST REPORT THEIR FOREIGN BANK ACCOUNTS TOO

By Daniel J. Scott

If you were not already aware, the United States Treasury requires all citizens and residents of the United States (including all forms of entities, trusts and estates), and certain nonresident aliens and foreign entities (discussed below), who have a financial interest in or signature authority over foreign financial accounts (including bank accounts, brokerage accounts, mutual funds, debit and prepaid credit cards, or other types of financial accounts) with an aggregate value exceeding $10,000 at any time during the calendar year to report such accounts by filing a Form TD F 90-22.1 – Report of Foreign and Financial Accounts (commonly referred to as an "FBAR") on or before June 30th of the succeeding year.

Failure to file an FBAR can result in civil penalties of up to the greater of $100,000 or 50 percent of the amount in the foreign account at the time of the violation, as well as criminal prosecution resulting in fines of up to $500,000 and 10 years imprisonment. This means that clients with a financial interest in or signature authority over foreign financial accounts exceeding in total more than $10,000 for the 2008 calendar year have just over a month to file an FBAR. Subject to some exceptions, the types of accounts that a person must disclose include any foreign account (i) of which such person is the owner of record or in which a person is acting as an agent, nominee or otherwise on his or her behalf, (ii) over which such person has signature authority or can exercise power comparable to signature authority, (iii) that is owned by a corporation or partnership in which such person owns more than 50 percent of the shares or voting power (in the case of a corporation), or more than 50 percent of the profits or capital (in the case of a partnership), and (iv) that is owned by a trust in which such person has a beneficial interest in more than 50 percent of the assets or receives more than 50 percent of the income.

Due to a recent change in the FBAR instructions, nonresident aliens and foreign entities are now required to file an FBAR disclosing all foreign financial accounts (if the aggregate value of such financial accounts exceeds $10,000 at any time during the calendar year) if they are "in and doing business in" the United States. While the FBAR does not provide a definition of "in an doing business in" the United States, the IRS has recently published guidance on its website. According to the IRS website:

Whether a person is considered, for FBAR purposes, to be in, and doing
business in the United States is determined based on an analysis of the facts
and circumstances of each case. Generally, a person is not considered to be in,
and doing business in the United States unless that person is conducting business
within the United States on a regular and continual basis. Persons who are merely
visiting the United States or who sporadically conduct business in the United States,
are not in, and doing business in, the United States for FBAR reporting purposes.

With respect to entertainers and athletes, the IRS states that "artists, athletes and entertainers who are not citizens or residents of the United States and who only occasionally come to the United States to participate in exhibits, sporting events, or performances, do not have to file FBARs." Therefore, an entertainer or athlete who is neither a citizen nor resident of the United States may nevertheless have to file an FBAR disclosing all of his or her foreign financial accounts if he or she regularly comes to the United States to participate in exhibits, sporting events, or performances.

With the Obama administration cracking down on offshore tax havens and perceived abuses in the international banking arena, the IRS will most certainly closely scrutinize the disclosure of foreign financial accounts. The last thing any entertainer or athlete wants or needs is negative publicity, and even the appearance of an attempt to evade taxes or related reporting can cause an entertainer or athlete to lose favor with the public, which can be detrimental to his or her career. Therefore, it is imperative that entertainers and athletes seek professional tax advice to ensure that all U.S. reporting requirements are met.

Daniel Scott is an associate at Chadbourne & Parke LLP in New York. His practice focuses on domestic and international estate, tax and wealth planning for high net worth individuals, their families and businesses, including issues particular to entertainers and athletes.

Increased Delays at the U.S. Copyright Office

According to a May 19, 2009 report in The Washington Post, the U.S. Copyright Office is experiencing processing delays that can last from six to 18 months. Apparently, due to the influx of paper applications, the delays will probably grow longer over the summer. These delays exclude any filing that is accompanied by the expedited special handling fee of $685.

The hope is that most applicants will use the electronic system rather than filing with paper applications, and to encourage users to due so, it will raise its paper application fee to $65 in August. It currently takes six months to process electronic applications, and the electronic filing fee will remain at $35.

May 31, 2009

Copyright Office Improves Processing Time and Service

From the U.S. Copyright Office as of May 29, 2009:


A recent Washington Post article focused on the lengthy processing times the Copyright Office is experiencing in wake of its transition from a paper-based to an electronic processing environment. The Copyright Office is working diligently to improve processing times and service to the public in general. To clarify, current processing times by filing method are as follows:

E-Service with Electronic Deposit: 5 months for 90% to be completed; 33% completed in 2.5 months
E-Service with Physical Deposit: 6.5 months for 90% to be completed; 33% completed in 3 months
Paper Claims: 18 months for 90% to be completed; 33% completed in 12 months
You can save money and time and help us improve our services by filing claims online via eCO. Please visit www.copyright.gov for more information.

About May 2009

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in May 2009. They are listed from oldest to newest.

April 2009 is the previous archive.

June 2009 is the next archive.

Many more can be found on the main index page or by looking through the archives.