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August 2012 Archives

August 3, 2012

Weekly Issues In The News

By Geisa Balla


NDTV, a leading Indian television network, filed a lawsuit against the Nielsen Company in New York Supreme Court, accusing its Indian joint venture of providing "false, fabricated and manipulated data" on TV ratings for almost a decade and taking kickbacks from other networks. The lawsuit was filed against Nielsen, its Indian joint venture TAM Media Research, and Kantar Media Research. NDTV, best known for broadcasting a 24-hour English language news station, alleges that employees of TAM manipulated ratings in exchange from kickbacks from other TV networks. NDTV further alleges that TAM, Nielsen and Kantar executives did not address the problems when NDTV presented "evidence of corruption and manipulation" to them in several meetings. NDTV claims that TAM ratings were easily manipulated because the company collected data only on the TV watching habits of 8,150 homes equipped with electronic monitoring devices. NDTV alleges that the sample size for TV ratings in China, a country of comparable size, is 55,000 homes. NDTV said two field employees of TAM met its executives in April and offered to help the channel lift its ratings if it agreed to pay them $250 to $500 for each home that they brought in to watch NDTV's channels. NDTV is seeking several billion dollars in damages.


The Walt Disney Company

The Ninth Circuit affirmed the dismissal of a copyright infringement complaint against The Walt Disney Company. Plaintiff Jake Mandeville-Anthony brought suit against defendants The Walt Disney Company, Walt Disney Pictures, Disney Enterprises, Inc., Pixar d/b/a Pixar Animation Studios for copyright infringement and breach of implied contract, alleging that he owns the copyright in two works, Cookie & Co. and Cars/Auto-Excess/Cars Chaos, that defendants had access to those works when they created the animated films CARS and CARS 2. Defendants moved to dismiss the complaint, arguing that plaintiff's works were not substantially similar to their films, and their works were independently created. The district court granted the motion, dismissing the copyright infringement claim without leave to amend, reasoning that defendants had shown that their movies were not substantially similar to plaintiff's works. The court also dismissed plaintiff's claim for breach of implied contract as time barred under California's two-year statute of limitations. The Ninth Circuit affirmed the district court's dismissal of the copyright claim, finding "no substantial similarity between protected elements of his copyrighted works and comparable elements of the defendants' works as a matter of law, and any similarity in the general concepts of car racing and anthropomorphic cars is unprotected." The Ninth Circuit also affirmed the dismissal of the breach of implied contract claim as time barred, rejecting arguments that the doctrines of "delayed discovery" and "continuing violations" applied to extend the statute of limitations.


Roy Lichtenstein

A Roy Lichtenstein painting missing since 1970 has surfaced at a New York City warehouse. Lichtenstein created "Electric Cord" in 1961, which depicts a coiled cord in black and white. It was purchased for $750 in the 1960s by art collector Leo Castelli, and disappeared in 1970 after Castelli sent the painting out for cleaning. Barbara Castelli, who inherited the art gallery when her husband Leo died, listed "Electric Cord" with the missing and stolen artwork in 2007. Castelli learned last week that an art dealer had contacted the Roy Lichtenstein Foundation seeking assistance to authenticate "Electric Cord", which was sitting at a storage facility on Manhattan's Upper East Side. Court records show that the painting was shipped from a gallery in Bogota, Colombia. New York Supreme Court Justice Peter Sherwood issued a temporary restraining order this week, barring the painting from being removed from the warehouse. Attorneys for Castelli claim the painting is currently worth $4 million.



Comcast is seeking reversal of an FCC ruling on discriminatory treatment against the Tennis Channel. The Tennis Channel filed a complaint with the FCC in 2010, alleging discriminatory treatment, and seeking distribution on par with other networks. Last month the FCC upheld an administrative law judge's ruling that Comcast discriminated against the Tennis Channel when it placed the network in a more expensive viewing tier than Comcast's affiliated sports networks. Comcast was ordered to pay $375,000 and to add the network to an additional 18 million households, which would cost Comcast millions of dollars in costs. On August 1, 2012, Comcast filed appeals papers, seeking a reversal of the FCC ruling. Comcast called the FCC decision "arbitrary" and "capricious" and argued that it violated constitutional rights. Comcast also argued that its 2005 contract with the Tennis Channel stipulated placement of the channel in a more expensive sports tier sought by fewer subscribers.



Singer-songwriter Devin Star Tailes, better known as Dev, filed a lawsuit on July 30, 2012 in Los Angeles Superior Court, claiming that its contracts with her record label Indie-Pop violate California's "Seven Year Rule." The contracts allegedly give her label and former manager and attorney 75% of her income, and allow them to deduct expenses "off the top" of her share. The singer alleges that the agreement she signed in 2008 at the age of 18 was an "onerous, one-sided agreement" that should be "null and void." Tailes says she that signed the deal after she was told the defendants would serve as her manager and "look after her best interests." She adds that she had little time to review the contract because she was told that she "could lose out on important opportunities if she did not the sign the document right away," and that she was "showered" with "flattery and praise" and that the defendants "manipulated her into believing that she could trust them fully." Tailes claims that the contract violates California's Seven Year Rule, which prohibits personal service contracts for longer than seven years. In addition, Tailes claims that defendants breached their fiduciary duty and participated in constructive fraud by failing to provide Tailes with independent legal counsel.



The Federal Trade Commission proposed tougher rules for online child privacy. The recommended rules are aimed at boosting privacy safeguards and mobile devices and ensuring that third party data brokers get parental permission before they collect children's data. The FTC would make websites, mobile apps and data brokers responsible for data collected about children by third parties, strengthening a proposed update on its Children's Online Privacy Protection Rule that it released last September. Previously it was unclear who had responsibility for third party collection. "The commission did not foresee how easy and commonplace it would become for child-directed sites and services to integrate social networking and other personal information collection features into the content offered to their users, without maintaining ownership, control or access to the personal data."


August 10, 2012

Weekly Issues in the News

By Geisa Balla

Competitive Cheerleading

The Second Circuit Court of Appeals held on August 7, 2012 that competitive cheerleading does not qualify as a sport under Title IX. The case was brought by members of Quinnipiac University's women's volleyball team, who alleged that the University's decision to replace volleyball with competitive cheerleading violated Title IX. The decision to categorize a varsity sport under Title IX is made by the U.S. Department of Education's Office of Civil Rights (OCR). In determining Title IX compliance, the OCR considers factors, such as whether the number of men and women on sports teams is proportional to the respective numbers enrolled at the school. In 2010, U.S. District Judge Stefan Underhill found that Quinnipiac had manipulated its team rosters by undercounting men and overcounting women to make it appear as if the genders were equally represented. Judge Underhill ruled that none of Quinnipiac's competitive cheerleaders counted as varsity athletes because the cheerleading was not recognized as a varsity sport by the OCR. On appeal, the Second Circuit Court held that Quinnipiac discriminated against women. While competitive cheerleading is "physically challenging" and requires competitors to possess "strength, agility and grace," Quinnipiac's program does not yet have the hallmarks of a varsity athletic sport, the court held. "(W)e do not foreclose the possibility that the activity, with better organization and defined rules, might someday warrant recognition as a varsity sport," U.S. Circuit Judge Reena Raggi wrote. "But, like the district court, we conclude that the record evidence shows that 'that time has not yet arrived.'"


Gibson Guitar

Gibson Guitar Corp. will pay a $300,000 penalty under a criminal enforcement agreement with federal prosecutors, after it admitted to possible illegal purchases of ebony from Madagascar. The U.S. Justice Department began investigating the guitar maker in 2009 when it suspected that Gibson was importing banned or protected wood from Madagascar and India. "As a result of this investigation and criminal enforcement agreement, Gibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit over-harvesting and conserve valuable wood species from Madagascar, a country which has been severely impacted by deforestation," said U.S. Assistant Attorney General Ignacia Moreno of the Justice Department's Environment and Natural Resources Division. "Gibson has ceased acquisitions of wood species from Madagascar and recognizes its duty under the U.S. Lacey Act to guard against the acquisition of wood of illegal origin by verifying the circumstances of its harvest and export, which is good for American business and American consumers," Moreno said. The Lacey Act, originally passed to decrease trade in bird feathers, was amended in 2008 to require U.S. companies to make detailed disclosures about wood imports. In addition to the $300,000 penalty, Gibson will forfeit $261,844 worth of wood that was seized in the course of the investigation, and will pay $50,000 to the U.S. National Fish and Wildlife Foundation.


World Wrestling Entertainment Inc.

World Wrestling Entertainment Inc. finally settled a decade-old dispute over its former name WWF with the World Wide Fund for Nature. World Wide Fund for Nature works to save endangered species. The Switzerland-based World Wide Fund for Nature sued the WWE's predecessor company, World Wrestling Federation Entertainment, in 2000 in the United Kingdom. In May 2002, The World Wrestling Entertainment formally announced its WWE identity.



MGA has emerged victorious in its recent retrial against Mattel. Mattel sued MGA for copyright infringement in 2001 when MGA released the Bratz dolls. Mattel claimed that it owned the copyright to the doll as it was created by Carter Bryant, a former Mattel employee. At the initial trial in 2008, a jury awarded Mattel $100 million in damages, MGA was ordered to stop making and selling Bratz products, and to transfer to brand to Mattel. The U.S. Court of Appeals for the Ninth Circuit reversed the verdict and ordered a retrial. At the retrial, an eight-person jury unanimously rejected Mattel's copyright claims and absolved MGA of any wrongdoing in relation to stealing of trade secrets from Mattel. Instead, it found that Mattel was responsible for stealing trade secrets from MGA in relation to unreleased product information, and awarded MGA $88.5 million in compensation. Mattel was awarded only $10,000 on the claim that MGA and its chief executive had interfered with Mattel's contractual relations with Carter Bryant. Mattel lawyers are said to be seeking a retrial.


Sports Betting in New Jersey

U.S. college and professional sports leagues filed a lawsuit in the District Court of New Jersey on August 7, 2012, seeking to stop New Jersey from legalizing sports betting. The lawsuit claims that a law signed in January to allow sports betting at the state's racetracks and at Atlantic City casinos violates a broad federal ban on wagering on sports events. The law, signed by Governor Chris Christie, is expected to be fully implemented this fall. Once it is, New Jersey racetracks and casinos will be allowed to apply for licenses and open gambling operations for amateur and professional sports. Betting on college events taking place in New Jersey, or involving a New Jersey college team will still be prohibited. The lawsuit claims that allowing New Jersey to open sports gambling would "irreparably harm amateur and professional sports by fostering suspicion that individual plays and final scores of games may have been influenced by factors other than honest athletic competition." The lawsuit also said the New Jersey law was precluded by the Professional and Amateur Sports Protection Act, passed by Congress in 1992 to impose a broad ban on sports gambling.


The New Yorker

On August 9th, U.S. District Judge Paul Oetken dismissed most of a defamation claim brought by a Canadian art expert over a 2010 New Yorker magazine article. Peter Paul Biro, an art expert, claimed that the article defamed him. He brought defamation and injurious falsehood claims, challenging roughly two dozen passages of an article written by New Yorker staff writer David Grann. The article described Biro as a self-styled "forensic art expert" who claimed to have pioneered a new way to authenticate paintings. The article expressed skepticism about Biro's claims, discussed several lawsuits filed against him, and raised questions about Biro's business motives. Biro said his reputation was destroyed by the article, and is seeking up to $2 million in damages. "The article as a whole does not make express accusations against Biro or suggest concrete conclusions about whether or not he is a fraud," Oetken wrote. "Rather it lays out evidence that may raise questions, and allows the reader to make up his or her own mind." However, the court allowed Biro to go forward with a handful of defamation claims. The New Yorker said in a statement: "We are gratified that Judge Oetken has already dismissed the vast bulk of Mr. Biro's claims, and we are confident that we will prevail."


August 14, 2012

New Development In Google Books Case

The 2nd Circuit has granted Google the right to appeal the class status of the plaintiff authors, overturning Judge Chin's May 31st grant to the authors to form a class and sue Google as a group.

There is no indication as to when the 2nd Circuit will hear the appeal.

August 17, 2012

Weekly Issues in the News

By Geisa Balla

Beastie Boys

The Beastie Boys filed a copyright infringement lawsuit against Monster Energy (Monster) on August 7th over the unauthorized use of their music in a Web promotional campaign. The complaint was filed in Southern District of New York and alleges that the beverage maker used Beastie Boys music in promos, including a video for an event called "Ruckus in the Rockies". The compositions and recordings were used for more than three minutes. The complaint also alleges that Beastie Boys music was used in a video posted on Monster's website and in social media, and that Monster linked to an MP3 with a 23-minute medley of Beastie Boys music. The lawsuit argues that by featuring the name "Beastie Boys" in text, as well as the name of Adam Yauch, the Beastie Boys' member who died on May 4, 2012, Monster gave the impression that group granted its permission for the use of the music. Incidentally, Adam Yauch's will reads "in no event may my image or name or any music or any artistic property created by me be used for advertising purposes." The lawsuit seeks a preliminary and permanent injunction, as well as statutory damages of $150,000 for each infringement of the works.


Fox Entertainment

The plaintiffs in a class-action minimum wage and unpaid overtime lawsuit against Fox Searchlight are seeking to amend their complaint to expand the scope of the suit. Last fall, two interns who worked on "Black Swan" filed a lawsuit against Fox Searchlight, alleging that the company's unpaid internship program violated minimum wage and overtime laws. The plaintiffs are now seeking to amend their complaint and "broaden the scope of the case to include all interns who participated in Fox Entertainment Group's internship program." According to the recently filed motion, an investigation in the case "shows that the same hiring, personnel and company policies that applied to Searchlight interns applied to all interns who participated in [Fox Entertainment Group's] internship program." The plaintiffs claim that until 2010, interns hired to work for 20th Century Fox, for example, were not paid, even though they were required to fill out I-9 forms, sign confidentiality agreements and were deemed "employees" covered under workers' compensation laws. Fox Entertainment Group changed its policy in 2010, requiring that all interns be paid about $8 per hour. The plaintiffs also want to distinguish two classes of interns: those were "corporate interns" at Fox and those who were "production interns" at Fox. Oral arguments on the motion to amend will be held on August 24th.


Monge v. Maya Magazines

The Ninth Circuit Court of Appeals recently issued a decision against a tabloid seeking to use the fair use defense after it published copyrighted photographs of a secret wedding between two celebrities. The decision is seen as a huge victory for celebrities.

The case involved pop singer/model Noelia Lorenzo Monge, who secretly married Jorge Reynoso, her music producer. The couple were married in Las Vegas in 2007 and kept the marriage secret from everyone. To ensure privacy, the couple brought their own cameras and had chapel employees take pictures. The photos were kept private until a Viqueria (a paparazzo), who also worked as a bodyguard and driver, found a memory chip in the ashtray of his vehicle let to Reynoso. Viqueria tried to extort money from the couple, and when that effort failed, he sold the photos for $1,500 to Maya, which publishes TV Notas, a Latino tabloid. TV Notas published the photos. The couple registered the copyrights to the photos and brought suit for copyright infringement and misappropriation of likeness. The district court dismissed the case on fair use grounds.

On August 15th the Ninth Circuit reversed the decision and remanded the case back to district court. Circuit Judge Margaret McKeown examined the factors of the fair use doctrine in the decision. "We have little doubt that the gossip magazine's sensational coverage of the wedding qualifies as news reporting," wrote McKeown. "Our role in this regard is not as a literary critic." However, the judge noted that being newsworthy is just one factor, and that "fair use has bounds even in news reporting, and no per se public interest exception exists." When looking at the degree of transformation, the judge noted that the photographs were reproduced essentially in their entirety, and that "neither minor cropping nor the inclusion of headlines or captions transformed the copyrighted works." Regarding the issue of the amount of copyrighted material, the judge stated that the magazine copied 100% of the photos. "While we do not discredit Maya's legitimate role as a news gatherer, its reporting purpose could have been served through publication of the couple's marriage certificate or other sources rather than copyrighted photos... Even absent official documentation, one clear portrait depicting the newly married couple in wedding garb with the priest would certainly have sufficed to verify the clandestine wedding. Maya used far more than was necessary to corroborate its story." With regard to the effect of the use upon the potential market, the court stated that though Monge and Reynoso were not actively seeking to earn money from their photos, the images were valuable and the subjects could have sold them had they wished. "Recognizing that fair use focuses on potential, not just actual, market harm, we note there is little doubt that an actual market exists for the photos," the judge wrote.


The Insane Clown Posse

The Insane Clown Posse (ICP) announced that it is going to file a lawsuit against the Federal Bureau of Investigation (FBI)for classifying its fans as a "loosely organized hybrid gang" in the FBI's National Threat Assessment. The announcement was made at the 13th annual Gathering of the Juggalos. The Juggalos (and the Juggalettes) are the names given to ICP fans. The FBI's classification puts the ICP fans in the same category with Bloods, Crips and the Aryan Brotherhood. ICP launched juggalosfightback.com, where Juggalos are encouraged to share their stories of how their rights were impacted for being fans of ICP. "We want to show our appreciation and support for our fans and we are prepared to assist you in learning about your legal rights and to fight for you in Court, if possible," reads the statement on the website, which promises to "assist you in getting the legal help that you deserve as a Juggalo." ICP's legal counsel, Howard Hertz of Hertz Schram PC, released the following statement: "We are seeking individual Juggalos whose rights have been violated as a result of the mistaken belief that they are a 'gang member.' If you or someone you know has suffered any negative consequence with an employer, governmental representative, including law enforcement, border patrol, airline security, or other local, state or federal governmental agency or employee as a result of your status as a Juggalo, we want to know about it."


Alexander Wang

Alexander Wang has settled the $450 million lawsuit brought against his company by former employees who alleged that they worked under sweatshop conditions in Wang's Chinatown factory. The plaintiffs in the purported class action lawsuit alleged that Wang violated labor laws by failing to provide proper compensation, denied the workers bathroom breaks, and fired them when they complained about their work conditions. The parties settled the dispute for an undisclosed settlement amount. The court dismissed the case on Monday, August 13th, following a request to dismiss the case with prejudice submitted by the parties.



A federal judge has tentatively approved a $40 million settlement between Skechers USA Inc. and consumers who bought the company's toning shoes in a class action lawsuit. The lawsuit was filed over ads that consumers say made unfounded claims that the shoes would help people lose weight and strengthen muscles. Three months ago Skechers settled with the Federal Trade Commission over the advertisement for its shoes. Skechers has denied the allegations, but claims it is settling to avoid prolonged litigation.


Geisa Balla is an attorney practicing in New York, NY. She can be reached at geisa.balla@gmail.com.

August 26, 2012

Weekly Issues in the News

By Geisa Balla

Federal Trade Commission

On August 23rd the Federal Trade Commission ("FTC") won a $478 million judgment against the marketers of a series of get-rich-quick real estate infomercials. The FTC filed the lawsuit in June 2009 against the marketers of the three "systems" for making money quick, including "John Beck's Free & Clear Real Estate System," which promised to teach consumers how to buy homes for pennies on the dollar during government sales. The FTC claimed that those behind the system made false and unsubstantiated claims about how much money consumers could make, and nearly all those who bought the products at $39.95 actually lost money. U.S. District Judge Jacqueline Nguyen in Los Angeles also imposed a lifetime ban from infomercial production and telemarketing against three defendants. An attorney for two of the defendants, Douglas Gravink and Gary Hewitt, stated that they would likely appeal the order to the extent it imposes a lifetime ban. Jeffrey Klurfeld, director of the western region of the FTC, said in a statement: "This huge judgment serves notice to anyone thinking of using phony get-rich-quick schemes to defraud customers."


Lance Armstrong

U.S. District Judge Sam Sparks has dismissed Lance Armstrong's lawsuit against the U.S. Anti-Doping Agency ("USADA"). Armstrong's suit attempted to block a probe into whether Armstrong cheated by using performance-enhancing drugs. The Court dismissed the initial complaint in July 2012, calling the lawsuit a "lengthy and bitter polemic." Armstrong filed an amended complaint, which was dismissed on August 20, 2012 without prejudice. USADA chief executive Travis Tygart said in a statement that the agency was pleased with the ruling, and that the agency had "protected the rights of athletes for over a decade." The USADA formally charged Armstrong in June 2012 with doping and taking part in a conspiracy with members of his championship teams. In a letter to Armstrong which was published in the Washington Post, the agency said that it had blood samples from 2009 and 2010 that are "fully consistent" with doping.
Following the dismissal of his lawsuit, Armstrong announced on August 23rd that he would no longer fight the doping charges. USADA responded immediately, stating that it would strip Armstrong of his seven Tour de France titles. USADA did in fact erase his titles on Friday, August 24th, and issued a lifetime ban for Armstrong.




CBS has dropped its lawsuit against ABC over the alleged copying of its long-running reality TV series "Big Brother." CBS initially filed its suit against ABC in May in the U.S. District Court, Central District of California. The lawsuit claimed that ABC copied several elements of "Big Brother" when it created "Glass House." "Glass House" also employed 19 former producers and staff of "Big Brother." In the week ending Aug. 12th, "The Glass House" ranked 87th among broadcast TV shows by number of viewers, with an audience of 1.59 million, according to Nielsen. In a statement CBS said "Viewers have spoken and delivered the ultimate form of justice against 'The Glass House."" CBS voluntarily dismissed the case, and it will arbitrate its contract and trade secrets claims against former "Big Brother" producers accused of violating confidentiality agreements.



Imane Boudlal, a former Disneyland restaurant employee, filed a lawsuit against Walt Disney Co. on August 13th, alleging that she was fired because she wanted to wear a Muslim head scarf at work. The former employee worked as a hostess at the Storytellers Café inside Disney's Grand California Hotel & Spa at Disneyland in Anaheim, California. She alleges that two years into the job she asked permission to wear a hijab while at work. She said she offered to wear a scarf that matched the colors of her uniform or featured a Disney logo. She alleges that her managers denied her request, saying it would violate the company's policy for how employees "look" while on the job. Boudlal said she was given the choice of working in a back area, away from customers, or wearing a fedora-style hat on top of her head scarf. When Boudlal refused, she was fired, the lawsuit states. Boudlal also claims she was subject to anti-Arab and anti-Muslim slurs, including being called "terrorist" and "camel" by co-workers and supervisors. "Disneyland calls itself the happiest place on earth, but I faced harassment as soon as I started working there," Boudlal said in a statement released by the American Civil Liberties Union of Southern California. "It only got worse when I decided to wear a hijab." Disney claims it offered Boudlal several options for a costume that would accommodate her religious beliefs, as well as four different jobs where she could wear her own hijab. "Walt Disney Parks and Resorts has a history of accommodating religious requests from cast members of all faiths," Disneyland Resort spokeswoman Suzi Brown said in a statement. "Unfortunately, (Boudlal) has rejected all of our efforts and has since refused to come to work," Brown said. Boudlal is seeking punitive damages and an order that Disney may not prohibit employees from wearing hijabs.



The National Football League ("NFL") filed a lawsuit in Los Angeles Superior Court on August 15th against nearly three dozen insurance companies, seeking to force them to defend it against mounting brain injury claims by former players and their families. The suit names virtually every insurer in the country, as all the firms provided coverage for the NFL at some point between 1960 and the date of the lawsuit. The NFL claimed that it was a defendant in 143 bodily or personal injury lawsuits, and its insurers were obligated to defend the NFL under its general liability policies. "As a direct and proximate result of said insurers' breach of their contractual duty to defend the NFL and NFL Properties in and against the injury lawsuits, Plaintiffs have suffered damages in attorneys' fees and other costs incurred to defend against those suits," the NFL alleges in its complaint, adding that it was entitled to at least $5 million in damages.

The following week, on August 22nd, several subsidiaries of Travelers Companies Inc. filed suit against the NFL in New York Supreme Court, seeking to avoid paying to defend the NFL against the brain injury claims by former players and their families. Travelers claims that it is not required to pay any of the defense costs of the NFL. According to the Travelers lawsuit, the company provided liability coverage for NFL Properties, the NFL's merchandising arm, but not the NFL, and should not be required to pay for a joint defense. The insurer points out that a "master complaint" filed jointly by some 2,000 former players in June alleges 14 counts against the NFL, but only two against NFL Properties. "Last week, the NFL filed a comprehensive lawsuit in California against 32 insurers to ensure an orderly and comprehensive determination of its insurance rights and its carriers' obligations," NFL spokesman Greg Aiello said. "This new filing by Travelers does not alter our objectives."



Christian Laboutin

Customs agents in Los Angeles seized 20,457 pairs of fake Christian Laboutin shoes shipped from China. The counterfeit "red sole" shoes could have brought $18 million if they had reached consumers. The Director of Field Operations for U.S. Customs and Border Protection in Los Angeles stated that "CBP maintains an aggressive and proactive posture on intercepting shipments containing counterfeit and pirated items." Five shipments were seized at the Los Angeles/Long Beach seaport on July 27th and August 14th, the Customs and Border Police release said. "Often available on illegitimate websites and underground outlets, counterfeit high fashion commodities multiply the illegal profits of smugglers and traffickers...The public is misguided into believing they are buying an original product at a significant discount."


Lululemon v. Calvin Klein

Lululemon Athletica Inc., the Canadian producer of athletic apparel, filed a design patent infringement lawsuit against Calvin Klein and manufacturer G-III Apparel Group Ltd. on August 13th in the United States District Court, District of Delaware. Lululemon alleges that some of Calvin Klein's "Performance" pants infringe on Lululemon's "Astro Pant" patent. Lululemon has three design patents that cover the Astro style: one of the actual waistband, the other two for two specific styles of the pant. To succeed Lululemon would have to show that Calvin Klein's pants look like its patented pants. Calvin Klein could strike back with a "prior art" argument, claiming that other made similar pants before Lululemon. Calvin Klein has already removed both styles of pants named in the suit from its website.


Geisa Balla is an attorney practicing in New York, NY. She can be reached at geisa.balla@gmail.com.

Eastern District Deals Bad Hand to Government in Poker Game

By Gordon M. Daniell

Required card play references aside, Hon. Jack B. Weinstein of the Eastern District ruled on Tuesday that Texas Hold'Em- a style of poker which has grown exponentially in popularity in recent years, is not gambling under the Illegal Gambling Business Act (18 U.S.C. 1955), because it is a game of skill, rather than one of chance.

The court in United States v. DiCristina (1:11-cr-00414-JBW) dismissed the defendant's indictment under the statute, and overturned his conviction after a lengthy analysis. The opinion, running to nearly 120 pages, features a detailed discussion of poker, its history, and its play, as well as graph featuring an analysis of winnings by skilled players versus unskilled players over time, the chance of winning with a particular hand given a player's skill level, and the percentage of the time a skilled player would defeat a lesser skilled player after a given number of hands. Further analysis is given to both the history of the statutes involved, and the reasoning behind each respective piece of legislation (Including pre and post IGBA laws, and the Indian Gambling Regulatory Act, among others).

It is the court's analysis of the statute that holds the best cards. In analyzing the IGBA and its application to the facts of the case, the court first found that while the statute did criminalize the running of "gambling businesses", it was unclear as to what "gambling" actually was. As an aside, it is not the gambling itself which the IGBA makes illegal, simply the running of the game; the business of gambling. The court first began with an analysis of the statute itself, and determined that the text makes it illegal to operate a gambling business that is illegal under the laws of the state where it takes place, has more than five participants who direct, manage and supervise the business, and is undertaken for more than 30 days or nets more than $2,000 in a single day. It also includes a non-exclusive list of activities, including "pool-selling, bookmaking, maintaining slot machines, roulette wheels, or dice tables and conducting lotteries, policy, bolita or numbers games, or selling chances therein." Judge Weinstein ruled that the language of the statute, pegging illegal gambling businesses to the state in which they are active, but also including a non-exhaustive list of activities, was ambiguous, because it could be read to limit the list of what constituted gambling (as the Defense contended) or expanded the activities violating the statute to all of those violating state law, as the Government contended. The court next analyzed the legislative history of the statute, and finding no clear indication of whether poker was a) included or b) a game of chance or one of skill. Finding no help from other statutes as well, Judge Weinstein determined that the rule of lenity must favor the defendant - in other words that a draw must favor the accused.

When considering the statute for itself, the court reasoned that Congress, when drafting, could have included poker as part of its list of activities that constitute gambling. Citing to numerous and varied authority for this point, including Bilski v. Kappos (a recent patent case from the U.S. Supreme Court) the court determined that to be gambling, poker must fall under the general definition of the list of games in the statute, but that it does not. Judge Weinstein, in the absence of controlling case authority, and because the statute is unclear as to whether poker is a game of skill or of chance, conducted a thorough analysis of poker. The judge largely adopted the position offered by the defense, that poker is a game of skill because it is not "house banked" and requires skill to play successfully, rather than chance. Summarizing its earlier difficulty in finding a firm definition of what constitutes gambling in the statute and the legislative history, the court returned largely to the testimony of defense and prosecution expert witnesses, a large portion of which is included in the earlier sections of the opinion itself. The court compared poker to golf or the card game Bridge, and found that while some degree of chance is inherent in all three (weather conditions produce harder greens or a more difficult shot in golf, the draw of cards introduces the chance into bridge, as it does to an extent in poker), the major question is one of whether skill or chance predominates the game in question.

As is clear from its outcome, Judge Weinstein found that evidence introduced by the defense expert Dr. Heeb (himself a poker player) was persuasive. In poker, Dr. Heeb was able to demonstrate, skill can affect the outcome more than 50% of the time in as many as 240 hands - the number typically played in a social game of poker - or the amount played in a single session at the defendant's location. According to the evidence, skillful players earn more than unskilled players, and are more successful than unskilled players with every starting hand. Despite evidence from the prosecution's expert, Dr. DeRosa, that the proper data set was a single hand, rather than a longer set of games, the court ruled in favor of the defense, finding that overwhelmingly poker was a game of skill.

The question remains in the ruling: that of its impact. While it dealt federal prosecutors a bad hand in their attempts to include poker in the list of prohibited activities under the IGBA, the court noted that there are still other laws that may be used to bring the power of the federal government to bear against illegal activity; including RICO laws and other legislation designed to prevent organized crime from infiltrating card games. Of course, it need not be mentioned that the opinion is one of a single court in a single judicial district, but it is worth considering the element of territoriality inherent in the decision. Finally, consider also that Mr. DiCristina had already been convicted of running an illegal poker game in Richmond County Supreme Court under a New York law which includes poker in its list of prohibited games of chance.

Yet it is no bluff to say that, at least for now, and at least in the Eastern District of New York, poker is a game of skill, and that those who run poker games may not be charged under the IGBA. That, they can bet on.

August 29, 2012

Hero Takes a Fall: Armstrong v. Tygart and United States Anti-Doping Agency

By Carter Anne McGowan

When, in February 2012, the U.S. Justice Department quietly ceased its investigation into whether Lance Armstrong and several other cyclists on the U.S. Postal Service cycling team had engaged in prohibited blood doping and steroid use while receiving U.S. government funds, one chapter in the ongoing saga of Armstrong's did-he-or-didn't-he doping scandal came to a close.

Yet that was far from the end of the story. The next chapter in the confused morality tale seemingly came to an abrupt and unexpected halt last week when Armstrong, after receiving an unfavorable ruling from U.S. District Judge Sam Sparks in the case of Armstrong v. Tygart and the United States Anti-Doping Agency, announced that he would no longer fight the U.S. Anti-Doping Agency (the "USADA") in its attempts to prove him a doper and strip him of his Tour de France victories and Olympic medal. At the same time, Armstrong maintained his innocence and decried what he called an "unconstitutional witch hunt" by the USADA.

Before discussing the specifics of Judge Sparks' decision, a brief description of the many different agencies involved in cycling at the national and international levels, and the role of various anti-doping agencies in the sport, may prove useful. As an Olympic sport, cycling is governed by national and international bodies. At the very top of the control pyramid for Olympic sports sits the International Olympic Committee (the "IOC"). The IOC recognizes the World Anti-Doping Agency ("WADA") and its World Anti-Doping Code ("WADC," which went into effect in 2004) as its chosen means of promoting harmonized rules prohibiting doping and regulating testing therefor across the Olympic movement.

Beneath the IOC sit the International Federations ("IF"). The IF for cycling is the International Cycling Union (known by its French acronym, "UCI"). The UCI maintains a set of anti-doping rules similar to those of WADC. Finally, each nation has a National Governing Body ("NGB") for each Olympic sport; in this case, USA Cycling, a member of UCI, controls competitive cycling. Under the Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. §§22051-220529, U.S. NGBs, among other responsibilities, conduct competitions among eligible athletes and determine which athletes meet the sport's eligibility standards. The anti-doping rules set out by the USADA, the respondent in the Armstrong case, are incorporated by reference into USA Cycling's regulations, and the USADA is explicitly given authority for drug testing and test results in USA Cycling-controlled events.

The USADA first charged Armstrong and five other members of his team in June 2012 with blood doping and steroid use for the period dating back to 1998 and gave the charged parties the choice of admitting to the charges (and facing severe penalties) or going to arbitration to fight the charges. Three members of the team chose arbitration (those arbitrations have not yet taken place); two members chose not to fight the charges and received lifetime bans from the sport of cycling. Armstrong, understandably discontent with the choice of arbitration or banishment, brought a civil action against USADA alleging a violation of his due process rights and a lack of a valid agreement between himself and the USADA to arbitrate. Judge Sparks disagreed with Armstrong on both theories.

With regard to the due process claims - based on the comparative narrowness of discovery during the arbitral process, the lack of options available for judicial review, and the possibility of bias in the arbitrators - Judge Sparks followed significant Supreme Court precedent in rejecting due process challenges to arbitration. The charging document provided by USADA, however, did give Judge Sparks pause, as he described it as both deficient and "woefully inadequate." Despite these concerns, the court found that, even if the charging document as written did violate due process, the USADA could simply issue a more substantial document, and, furthermore, Armstrong was entitled to receive "more detailed disclosures regarding USADA's claims against him at a time reasonably before arbitration." Armstrong at 17. Therefore, Sparks found that Armstrong had received "all the process to which he was due" at the time of the lawsuit, but fired a shot across the USADA bow, warning that if it didn't follow through on providing additional information in a timely fashion, and Armstrong refiled suit, the "USADA is unlikely to appreciate the result."Armstrong at n. 26.

With regard to the additional jurisdictional and contractual claims, the court found that the Ted Stevens Sports Act and the USA Cycling licenses signed by Armstrong barred these claims. In his reliance on the Ted Stevens Sports Act, Sparks followed significant precedent tending to keep courts out of amateur sports. The court found that the Sports Act granted NGBs themselves the right to set procedures for determining eligibility. Therefore, the court found, "Congress intended for eligibility questions to be decided through arbitration, rather than federal lawsuits," unless the NGB acted with wanton disregard for its own rules.Armstrong at 20.

Finally, the court found that Armstrong, by agreeing to abide by the rules of USA Cycling in some of his cycling licenses (which rules incorporate USADA Protocols), agreed to that portion of the USADA Protocol which set out arbitration - including arbitration with regard to the arbitrability of the dispute - as the appropriate dispute resolution mechanism.

Despite ruling entirely against Armstrong, Judge Sparks indicated throughout his ruling that he was troubled by the USADA's behavior, which included consolidating Armstrong's case with those of several other athletes over whom neither USA Cycling nor the USOC had any jurisdiction and allegedly promising lesser penalties to other cyclists in return for their testimony against Armstrong. This sympathy, however, did nothing to change the fact that, once the decision was handed down, Armstrong had three days to elect arbitration or sanctions. By refusing to carry the fight to arbitration, Armstrong in effect accepted the sanctions...

...or so it seems. As Judge Sparks noted in his concluding words on the case, while the USADA was fierce in its determination to force Armstrong to arbitrate or accept sanctions, UCI desired that proceedings against Armstrong be discontinued. USA Cycling, breaking with its own anti-doping agency, sided with UCI. Therefore, although the USADA has now banned Armstrong for life and stated that he will be stripped of his titles, UCI - the actual keeper of the record books - has not yet agreed. Instead, UCI is requiring that USADA submit a "reasoned decision" explaining the actions it has taken, as Article 8.3 of WADC requires that when no hearing is held regarding a doping sanction, the anti-doping agency submit its decision to UCI, WADA, and the alleged wrongdoer before UCI will take any action. See Press Release: UCI's Statement on Lance Armstrong's Decision; http://www.uci.ch/Modules/ENews/ENewsDetails.asp?source=SiteSearch&id=ODYzOA&MenuId=MTI1ODA&CharValList=&CharTextList=&CharFromList=&CharToList=&txtSiteSearch=Lance+Armstrong&LangId=1

If the Floyd Landis case serves as precedent, UCI will accept USADA's decision and write Armstrong out of the record book. As of today however, there may yet be another chapter in the saga of Lance Armstrong.

August 31, 2012

Weekly Issues in the News

By Geisa Balla

Spider-Man: Turn Off the Dark

A settlement has been reached between Julie Taymor, the former director of the Broadway musical "Spider-Man: Turn Off the Dark," and its producers. Ms. Taymor was fired from the Spider-Man production in March 2011 amid disputes over changes to the show's script and staging. In November Ms. Taymor filed a breach of contract suit against the musical's producers, alleging that they were continuing to profit from her creative contributions to the show without compensating her. The producers filed a countersuit in January saying that she violated the terms of her contract and "could not and would not do the jobs" she was hired to do, and thus was not entitled to further royalties. On Thursday, August 30, 2012, Judge Katherine B. Forrest of the Southern District of New York issued a notice that the parties had reached an agreement. The terms of the settlement were not disclosed.


Dish Network Corp

Fox Broadcasting Company has moved for a preliminary injunction against Dish Network Corp. over Dish's new digital feature that enables consumers to skip commercials. Lawsuits and countersuits were filed in May in the Central District of California between Dish and TV networks CBS Corp, News Corp's Fox, Comcast Corp's NBC Universal and Disney's ABC. The networks are suing over Dish's new DVR feature "AutoHop," which allows customers to press one button to automatically skip commercials. While this feature would please viewers, it would undermine advertisers, the networks' main source of revenue. Fox moved for preliminary injunction on August 22nd against Dish, claiming that it was likely to suffer irreparable harm while the companies litigate further. In addition, Fox claims that Dish's "PrimeTime Anytime" feature, a service that records all of the prime-time TV programs on ABC, CBS, NBC, and Fox with one click and then keeps them saved for up to eight days, violates Dish's contract related to accessing video programming on demand. A Dish Network spokesman said in an email on Sunday: "DISH believes consumers have the right to control their television-viewing experience. We're disappointed at Fox's continued fight against that right."


Victoria's Secret

Zephyrs, a New Jersey based hosiery supplier, filed a lawsuit against Victoria's Secret Stores Inc. and its parent company Limited Brands Inc., for breach of a 2001 agreement and deliberately selling cheaper "knockoffs" to customers. The complaint alleges that Victoria's Secret is misleading customers by selling less expensive legwear while deliberately using images of Zephyrs-designed legwear on packaging and in-store displays. Zephyrs is the former hosiery supplier for Victoria's Secret. Joseph Gioconda, counsel for Zephyrs, stated "Victoria's Secret changed the product in the packaging but didn't change anything else except Made in Canada on the back of the package. It used to say Made in Italy." Gioconda said Victoria's Secret has sold "at least $120 million worth of Zephyrs-designed product throughout all 50 states, through the Victoria's Secret chain of retail stores, the Victoria's Secret print catalogue and the popular Victoria's Secret Web site" since 2001. The suit seeks $15 million in damages, as well as corrective advertising and a recall of the allegedly knockoff products.


Macy's v. J.C. Penney

Macy's filed a lawsuit against J.C. Penney on August 16th, claiming that J.C. Penney is interfering with its contract with Martha Stewart. Macy's had filed a prior lawsuit against Martha Stewart Living, claiming that it had exclusive rights to sell certain Martha Stewart products, including soft furnishings, dinnerware and cookware, in attempt to block the sale of Martha Stewart products at J.C. Penney. In July 2012, Macy's won a preliminary injunction against Martha Stewart, temporarily blocking plans by Martha Stewart Living to sell certain branded products at J.C. Penney stores. Macy's new lawsuit against J.C. Penney seeks to stop J.C. Penney from taking any actions that would violate Macy's agreement with Martha Stewart, and to stop J. C. Penney from using product designs that Macy's argued were illegally obtained from Martha Stewart. In the lawsuit, Macy's contends that the agreement with Martha Stewart includes language that says that monetary damages will not be able to remedy any breach of the contract. "The fact that J. C. Penney is a less upscale retailer compared to Macy's compounds the injury," the lawsuit said. Martha Stewart has countered that the items to be sold at J. C. Penney do not fall under the exclusive categories granted to Macy's.

Macy's also moved for preliminary injunction against J.C. Penney, seeking to block J.C. Penney from proceeding with plans to sell a number of Martha Stewart Home good products in its stores. On August 30th, the court denied the injunction. The court was unconvinced that Macy's had shown a likelihood of success on its claim against J.C. Penney. Recognizing that in July the court issued an injunction against Martha Stewart, the court stated "It's one thing to enjoin [Martha Stewart] because that company is the centerpiece of these actions," he said. "It's another thing to enjoin a retail company from doing business. We live in a free-market society."


Marilyn Monroe

The Ninth Circuit Court of Appeals in California upheld the right of a Marilyn Monroe photo library to license images of the film star taken by a celebrity photographer who was one of her business partners. Milton H. Greene Archives Inc. has been in a long-running court battle with Anna Strasberg, widow of Monroe's acting coach, Lee Strasberg, and her licensing agent CMG Worldwide, which have controlled use of Monroe's image for years. Green was a fashion photographer who became friends with Monroe, and the two formed a production company. The legal battle over Greene's images hinged on where Monroe was living at the time of her death on August 5, 1962. In a decision on August 30th, a lower court decision was upheld that allowed Greene Archives to license its images of Monroe. The court ruled that Monroe resided in New York and therefore she did not have the posthumous right of publicity based on the state's law. "Because no such right exists under New York law, Monroe LLC did not inherit it ... and cannot enforce it against Milton Greene or others similarly situated," Judge Kim McClane Wardlaw wrote for the court.


Kim Kardashian v. Old Navy

Old Navy and Kim Kardashian have settled a lawsuit filed by Kardashian in 2011, which had alleged that an Old Navy television commercial violated her publicity right by using look-alike model Melissa Molinaro. "The lawsuit was resolved to mutual satisfaction of both parties, but beyond that it's the only statement we have," said Kardashian's attorney Gary Hecker. The settlement details were not released.


Geisa Balla is an attorney practicing in New York, NY. She can be reached at geisa.balla@gmail.com.

About August 2012

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in August 2012. They are listed from oldest to newest.

July 2012 is the previous archive.

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