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February 1, 2013

Week in Review

By Martha Nimmer

Food Fight

Custom Television Productions (Custom TV) has sued television producer Kyra Shelgren and her loanout company, Another Division, calling Shelgren's business practices "tantamount to extortion." Shelgren and her company, which helped produce a Food Network TV series entitled "$," is accused of refusing to "hand over dozens of consent forms signed by people on the show, unless the plaintiff company [paid] her $14,000." Custom TV is seeking damages for breach of oral contact and conversion, and seeking delivering of roughly thirty photography releases. As a general practice, Food Network requires releases from anyone filmed as part of a show segment. The network has withheld payment of $93,000 to Custom TV until it supplies the required releases.

Shelgren was hired by Custom TV president Steve Stockman as a producer in connection with a pilot called "$24 in 24 Hours," to air on Food Network. The series follows host Jeff Mauro "as he travels to a different city each week to track down the best breakfast, lunch and dinner he can find with only $24 in his pocket." Stockman later learned, however, that Food Network never received approximately 30 releases for the last episode of the show, shot in Philadelphia, despite promises from Shelgren that she would send the show's remaining paperwork to the channel. According to the complaint, "[o]n or about December 5, 2012, Mr. Stockman requested that Ms. Shelgren immediately send him the releases to give to The Food Network. On or about December 8, 2012, Ms. Shelgren stated that she would not return the releases unless Mr. Stockman paid her $14,000 via wire transfer, a demand tantamount to extortion."

It is unclear when--or if--the new television show will air.


It Is About the Book

More bad news for Lance Armstrong. A federal class action has been brought in Sacramento, CA, alleging that Armstrong and his publishers defrauded consumers by marketing and selling the athlete's book as nonfiction. It's Not About the Bike spent weeks on the bestseller list after being released in 2000. Armstrong's second book, Every Second Counts, also met with similar success.

The lead plaintiff in the suit, Rob Stutzman, has sued the cyclist, Penguin Group, G.P. Putnam's Son, Random House and others for fraud, negligent misrepresentation and various business law violations. In his complaint, Stutzman states that he bought the bestseller, It's Not About the Bike, "sometime between 2001 and 2003." The plaintiff claims that he met Armstrong in 2005 when Stutzman was a member of then-Governor Arnold Schwarzenegger's public relations staff; Stutzman allegedly told Armstrong that he (Stutzman) had recommended the book to friends.

This suit comes on the heels of Armstrong's revelations earlier this month that he used banned, "performance-enhancing drugs" to win all seven of his Tour de France victories. As a result of this revelation, he was stripped of his Tour de France titles, and has lost virtually every single one of his endorsement deals.

The 59-page complaint demands an accounting, restitution, attorney's fees, damages and an injunction. Now, we wait to see if purchasers of the once-ubiquitous yellow "Livestrong" bracelets file suit against the disgraced cyclist.


Bell of the Bar

Forgetting Sarah Marshall star Kristen Bell has sued the managers of Hollywood tequila bar L Scorpion, claiming that the bar failed to repay a $20,000 loan made by the actress. She also accuses the managers of skimming profits. Bell, along with several television executives and producers, seek damages for breach of fiduciary duty, breach of contract, conversion, unjust enrichment, unfair business practices and access to the defendants' books and records.

According to the complaint, defendants Meridian Restaurant Group, Scorpion Management and managers Christopher Heyman and Joshua Woodward "orchestrated a scheme to raise $400,000 from investors, including plaintiffs, to funnel the funds into their failing businesses and rob plaintiffs of their investment." Bell and other plaintiffs allegedly each invested $20,000 in the Hollywood Boulevard L Scorpion bar, in exchange for a 5% aggregate ownership interest in the bar. The actress claims that in July 2005, "Scorpion Management and its parent company Meridian agreed to repay Bell and the other investors 115 percent of their original investment, and distribute pro rata net profits." Despite this promise, Heyman and Woodward are accused of diverting food, money, and beverages away from L Scorpion to the defendants' other, failing businesses. According to the complaint, these funds and items were never repaid. Notably, no one seems to be sure if the bar is even still in operation: "[c]urrently, plaintiffs and the remaining investors do not know if the L Scorpion is still open for business, who is managing the restaurant, and who owns the licenses."

Looks like the party's over.


Touchdown for Free Speech

Citing First Amendment concerns, U.S. District Judge Kurt Engelhardt issued an injunction last week restraining the city of New Orleans from enforcing its "Super Bowl Clean Zone" law, which restricted signs and banners from being displayed during Super Bowl week. The Super Bowl will be played this Sunday, February 3rd, at the Mercedes Benz Superdome in New Orleans, Louisiana.

The suit was brought by Tara Jill Ciccarone, an Occupy NOLA protester, and Reverend Troy Bohn, a street preacher in the iconic and historical French Quarter. The city enacted the controversial law on December 6th, with the goal of restricting the use or placement of signs throughout the downtown area of the city as well as the French Quarter. The ban was to be in place from January 28th to February 5th. Violations were punishable by a $500 fine and up to six months in jail. The law prohibited "[i]nflatables, cold air balloons, banners, pennants, flags, building wraps, A-frame signs, projected image signs, electronic variable message signs, and light emitting diode signs of any kind shall be prohibited except for those sanctioned or authorized by the City. . . or by the National Football League." Yes, you read that correctly--the city of New Orleans placed partial control over citizens' free speech rights in the hands of the NFL.

In response to the ordinance, Ciccarone sued, stating that she and other Occupy NOLA protesters planned to demonstrate in the city and display signs, and that these constitutionally-protected activities would be infringed if the Clean Zone law were enforced. The signs that the protesters planned to display read "M]oney is not more important than constitutional rights, despite what Clean Zone would indicate" and "Your Tax Dollars Working to Help the Rich Get Richer." Rev. Bohn and his congregation regularly preach on Bourbon Street, carrying crosses and signs such as "I Love Jesus" and "Ask Me How Jesus Changed My Life." Ciccarone and Bohn argued that the city violated the Constitution "by vesting unbridled discretion in a private entity - the National Football League - to control the content of signs and other public media in the Clean Zone."

In a victory for free speech and sanity, Judge Engelhardt agreed with the plaintiffs, ruling that "plaintiffs have demonstrated a likelihood of success that this likely infringement is impermissible under the First Amendment to the United States Constitution."


Billionaire vs. Millionaire

Three paintings by renowned artist Jasper Johns are at the center of a lawsuit commenced late last week by billionaire Henry Kravis and his wife against art collector and businessman Donald L. Bryant, Jr. According to the Kravises, they purchased Johns' "Tantric Detail" series jointly with Bryant, with the intention of sharing the works and eventually donating them to New York's Museum of Modern Art (MoMA). The Kravises decided to purchase the paintings with Bryant in 2008, and worked out an agreement wherein one owner would transfer possession of the works to the other owner's chosen residence annually, so that Kravis and Bryant could each enjoy the paintings until they were eventually donated to the museum. Such an arrangement successfully took place between 2008 and 2012, according to the complaint. On January 14th of this year, however, the agreement appeared to fall through when Bryant allegedly refused to transfer the paintings to the Kravises. Instead, the complaint states that Bryant is holding the works "hostage" until a new agreement is worked out, one without the pledge to give the works to MoMa.


Striking Out Performance Enhancing Drugs

The Drug Enforcement Agency (DEA), along with Major League Baseball (MLB), are investigating the link between self-described Miami "biochemist" Anthony Bosch and MLB players Alex Rodriguez, Melky Cabrera, Gio Gonzalez, Nelson Cruz and Bartolo Colon. Bosch is currently being investigated by the DEA for his work at his now-defunct anti-aging clinic in south Florida.

The names of the baseball players, along with detailed patient files, payment records and handwritten notes were found in Bosch's files at his clinic. The players' names were then "leaked to a South Florida weekly paper by a former employee of the clinic," the New York Daily News reports. Alex Rodriguez's name also allegedly appears many times in Bosch's reports and in a notebook, under Rodriguez's real name as well as the aliases "Alex Rod" or "Cacique." The notebook is said to contain information that shows that Rodriguez received testosterone cream and insulin-like growth factor and other types of growth hormone from Bosch. Upon learning of this revelation, Rodriguez hired a Miami-based attorney.

According to sources, "MLB, which has turned over information from its own investigation to the DEA, will now move to question the players and will ask for assistance from the feds in verifying the report." Baseball's drug program, run jointly by MLB and its Players Association, permits "MLB to discipline players for performance-enhancing drug infractions, even if players had not tested positive for controlled substances." Readers will recall that in 2009 MLB suspended Los Angeles Dodgers pitcher Manny Ramirez under this drug program policy. Ramirez was suspended for 50 games when MLB discovered through a review of the player's medical records that he had received a prescription for a banned drug.

Read more: http://www.nydailynews.com/sports/baseball/new-balco-a-rod-big-name-stars-linked-new-probe-article-1.1250257#ixzz2JOWuSwFM

Stranger Than Fiction

More legal drama has sprung from the Broadway show that never was--"Rebecca." Producers for the failed production have sued the show's former publicist, Marc Thibodeau, for defamation, breach of contract and bread of fiduciary duty. The producers allege that Thibodeau "scared off" a potential investor whose last-minute monetary investment could have saved the production from folding.

The anonymous investor retracted his $2.25 million offer in September, supposedly after receiving an email from a fictitious "Sarah Finkelstein." The email from the fictitious Finkelstein describes the various problems that plagued the doomed show, warning that "the walls are about to cave in" on "Rebecca" and its lead producer, Ben Sprecher. The Broadway production of "Rebecca" was indefinitely postponed in early fall, following "revelations that a middleman had concocted four investors who were responsible for $4.5 million of the show's $12 million capitalization, followed by a separate fiasco, the departure of the last-minute investor in response to Mr. Thibodeau's e-mail."

The alleged scheme by the middleman, Mark C. Hotton, came to light after a New York Times article "questioned the existence of one Hotton investor, "Paul Abrams," who had supposedly died of malaria in London." Hotton is now facing federal charges for fraud; he was arrested at his Long Island home by federal authorities in early October 2012.

In response to the suit filed against Thibodeau, several Broadway compatriots rose to the publicist's defense. In an email to the New York Times, veteran press agents and business partners Chris Boneau and Adrian Bryan-Brown wrote "Marc Thibodeau is one of the most outstanding press agents in the business. His extreme loyalty and dedication over three decades speaks for itself." Thibodeau's lawyer has also stated that his client was only trying to warn the innocent investor "that the show was caught in a 'web of deceit.'" The attorney applauded his client's efforts, calling him "an innocent whistle-blower."

The plot thickens.


Read the complaint here: http://www.nytimes.com/interactive/2013/01/30/theater/20130129-rebecca.html

How to Value a Celebrity Athlete's Right of Publicity

Beyond the Field of Play:
Analyzing and Valuing a Celebrity Athlete's Rights of Publicity

By CONSOR Intellectual Asset Management

The Right of Publicity (ROP) is "the inherent right of every human being to control the commercial use of his or her identity." (Thomas McCarthy, Rights of Publicity and Privacy, 1:3)

However, unlike patent,trademark, and copyright law, ROP is governed by a patchwork of state statutes and common-law decisions, rather than by a single federal statute (Thomas McCarthy, Rights of Publicity and Privacy, 6:3, 6:8); and unlike trade secret law, ROP is not the subject of a uniform state law adopted in the vast majority of states.( Roger M. Milgram, Milgram on Trade Secrets 1.01[2][b]) As with the analysis of other intellectual property assets, ROP valuations need to consider the unique characteristics of the subject asset and the context of the valuation assignment.

Typically, ROP valuation assignments are needed for one of three reasons: when negotiating a transaction (such as endorsements and licensing); calculating infringement damages for ROP violations; or valuing celebrity estates and trusts. Each ROP asset is unique and each of these contexts varies, posing some unique challenges for reasonable analyses of ROP assets.

Read the complete article (PDF)

February 7, 2013

U.S. Supreme Court Holds Covenant Not To Sue Moots Counterclaim For Trademark Cancellation

By Sarah Robertson, Susan Progoff, Fara Sunderji and Jena Tiernan of Dorsey & Whitney LLP

The United States Supreme Court in Already, LLC v. Nike, Inc., Appeal No. 11-892, 568 U.S. __, 2013 WL 85300 (January 9, 2013), held that a covenant not to enforce a trademark against a competitor's existing products and any future "colorable imitations" moots the competitor's action to have the trademark held invalid.
Nike designs, manufactures and sells a line of shoes under the trademark AIR FORCE. Already sells a line of competing shoes under the trademarks SOULJA BOYS and SUGARS. Nike brought suit for trademark and trade dress infringement, and Already counterclaimed to have Nike's trademark registration cancelled.

Eight months after Nike filed its complaint, and four months after Already counterclaimed, Nike issued a covenant not to sue, in which it "unconditionally and irrevocably" agreed not to make "any" claim or demand against Already or any of its related business entities, distributors, employees or customers for trademark infringement, unfair competition or dilution based on the appearance of "any of Already's current and/or previous footwear product designs, and any colorable imitations thereof. . ." After issuing the covenant not to sue, Nike dismissed its claims against Already with prejudice and moved to dismiss Already's counterclaim as moot. The district court dismissed the counterclaim, holding that because there was no evidence that Already sought to develop any shoes that would not be covered by the covenant, there was no longer a controversy to support declaratory judgment jurisdiction. The Second Circuit affirmed.

The Supreme Court affirmed the dismissal of Already's counterclaim. There must be an actual controversy at all stages of a litigation. Here, Nike dismissed its claims with prejudice and issued its covenant, which called into question the existence of any continuing case or controversy. The Court found that Nike's covenant is unconditional and irrevocable. It prohibits Nike from making any claim or demand. It extends to Already's distributors and customers. It covers existing designs and any colorable imitation. Further, because Nike has taken the position with the court that there is no prospect of any new shoe design that would potentially infringe its trademark and not fall within the scope of the covenant, Nike would be hard pressed to assert to the contrary in the future.

Already claimed that it would be harmed because (1) investors would be reluctant to invest so long as Nike is free to assert a trademark claim; (2) in view of Nike's decision to sue in the first place, Nike's trademarks will hang over Already's operations like a Damoclean sword; and (3) as one of Nike's competitors, Already inherently has standing to challenge Nike's trademarks. The Court found none of these injuries was sufficient to create Article III standing.

In a concurring opinion, Justice Kennedy clarified that the burden in this case was on Nike to show that the case was moot, not on Already to show that a justiciable controversy remained.

Prom Dresses Decorate the Second Circuit, but Receive No Copyright Protection

By Sarah Robertson, Susan Progoff, Fara Sunderji and Jena Tiernan of Dorsey & Whitney LLP

On October 15, 2012, the Second Circuit affirmed the dismissal of Jovani Fashion Ltd.'s (Jovani) copyright claim against Fiesta Fashions for copying its prom dress design. The Second Circuit rejected Jovani's argument that the "arrangement of decorative sequins and crystals on the dress bodice; horizontal satin ruching at the dress waist; and layers of tulle on the skirt" are copyrightable based on a theory of conceptual separability. For conceptual separability to apply, the designer must have exercised artistic judgment separate and apart from the functional purpose of the article. However, the dress in this case could not be copyrightable because "the aesthetic merged with the functional to cover the body in a particularly attractive way for that special occasion," and thus the prom dress at issue fell squarely into the definition of a useful article. The court's opinion focused on the two main functions of clothing: decorating the body and covering it. Interestingly, the court distinguished Halloween costumes, which can contain copyrightable elements if they invoke a character rather than adding to the clothing function of the costume. The Second Circuit's opinion reaffirmed that fashion designs are not protected from copying under the current law.

Intentional Infringer Subject to Suit in IP Owner's Home Court

By Sarah Robertson, Susan Progoff, Fara Sunderji and Jena Tiernan of Dorsey & Whitney LLP

The Ninth Circuit Court of Appeals recently decided a jurisdictional case that should make it easier for IP owners to bring infringement actions in the owner's home state instead of where a remote defendant may be located. In Washington Shoe Company v. A-Z Sporting Goods, Inc., 105 USPQ2d 1138 (9th Cir. 2012), the court held that a defendant who operated a single store in Arkansas was subject to suit for copyright infringement in Washington State, where the copyright owner was located. The defendant, A-Z Sporting Goods (A-Z), purchased shoes from Washington Shoe, the plaintiff and copyright owner. One of Washington Shoe's sales representatives visited A-Z's store, noticed that A-Z was selling infringing shoes and subsequently Washington Shoe's counsel sent A-Z two cease and desist letters. When A-Z received the letters, it removed the infringing shoes from its store but sold its remaining inventory of those items to a thrift store.

The Ninth Circuit applied the "purposeful direction" or "effects" test, analyzing whether A-Z (1) committed an intentional act, (2) that was expressly aimed at Washington, the forum state, and (3) that caused harm that A-Z knew would likely be suffered in Washington. The court answered all three questions in the affirmative. A-Z intentionally purchased and sold the infringing boots. Although these acts took place in Arkansas, they were expressly aimed at the copyright of Washington Shoe because A-Z knew or should have known after receiving the cease and desist letters that its intentional acts would affect Washington Shoe's copyright. A-Z also either knew or should have known that Washington Shoe was a Washington corporation. The economic harm caused by the copyright infringement occurred both in Arkansas, where the infringing sales took place, and in Washington, where the copyright holder was located. Thus, A-Z could have "'reasonably anticipate[d] being haled into court' in Washington." As a result of this decision, willfully infringing a copyright may provide sufficient minimum contacts requisite for personal jurisdiction in the copyright owner's home forum.

Patent Infringement Suit Over Yoga Pants

By Sarah Robertson, Susan Progoff, Fara Sunderji and Jena Tiernan of Dorsey & Whitney LLP

Lululemon, maker of fashionable yoga and exercise pants with an adjustable waistband, recently sued Calvin Klein Inc. and its supplier, G-III Apparel Group Ltd., in the United States District Court for the District of Delaware for infringement of three design patents covering Lululemon's adjustable waist pants.

As it is unusual for a patent infringement suit to involve an article of clothing, particularly something as fashionable as Lululemon's yoga pants, the case attracted a great deal of attention. A confidential settlement agreement reached before either defendant responded to the complaint has prevented the parties from disclosing details of the dispute's resolution.

Fendi Awarded At Least $12 Million Against Counterfeiter

By Sarah Robertson, Susan Progoff, Fara Sunderji and Jena Tiernan of Dorsey & Whitney LLP

The Second Circuit Court of Appeals in Fendi Adele, S.R.L. v. Ashley Reed Trading, Inc., No. 11-3025, 2013 WL 48688 (2d Cir. January 4, 2013), affirmed summary judgment, holding the defendants liable for willful counterfeiting for their sale of counterfeit FENDI bags. The district court awarded Fendi $12 million in trebled damages, prejudgment interest, costs and attorneys' fees based on the defendants' profits from selling counterfeit FENDI bags in 2005 and 2006. The defendants appealed the judgment, alleging that the district court committed various evidentiary errors. Fendi cross-appealed, claiming that, based on the district court's finding that the defendants were liable for counterfeiting from 2001 through 2004, in addition to the years on which the damages award was based, the award should be increased to account for the defendants' profits during those years as well.

The Court of Appeals held that the defendants were properly found to be willful counterfeiters. The evidence showed that after receiving a cease and desist letter from Fendi in 2001, the defendants were clearly on notice that they might be selling counterfeit FENDI merchandise. After being put on notice, the defendants failed to inquire about the authenticity and original sources of the products they purchased. The defendants' suppliers provided them with "sanitized" invoices that did not disclose the original sources and in some cases, refused to provide any paperwork. The defendants failed to maintain records of their transactions with suppliers and did not maintain any documentation of their purported side-by-side comparisons of their merchandise with genuine FENDI products. In addition, what the court characterized as "most telling," the defendants returned their remaining FENDI merchandise to their supplier when Fendi filed suit, so that the merchandise could not be inspected, and did not keep any records relating to these goods or their return. Based on this evidence, the court held that no reasonable jury could have found that the defendants acted with sufficient care. Accordingly, the court affirmed the finding of liability for willful counterfeiting.

As the defendants were found to have sold counterfeit FENDI bags from 2000 through 2006, the court found the district court's award of damages for only 2005 and 2006 to have been facially inconsistent. Consequently, the Second Circuit vacated the damage award and remanded the case to the district court to determine whether it would be equitable to award damages only for 2005 and 2006, or whether damages should be awarded for the entire period for which the defendants were found to have sold counterfeit FENDI products.

Sale Of Counterfeit UGG Products Leads To Domain Name Transfer And Asset Freeze

By Sarah Robertson, Susan Progoff, Fara Sunderji and Jena Tiernan of Dorsey & Whitney LLP

In an unpublished decision in Deckers Outdoor Corporation v. Does 1-100, Docket No. 12 C 10006 (N.D. Ill. January 16, 2013), the court converted a temporary restraining order into a preliminary injunction against a collection of individuals and business entities residing in China and other foreign countries who operate websites selling counterfeit UGG merchandise. The defendants' websites used domain names that incorporated the UGG trademark and depicted their products using Deckers' copyrighted images. After being served with the temporary restraining order, the defendants did not appear in the lawsuit and did not contest the preliminary injunction motion. The court enjoined the defendants from further violating Deckers' trademark and copyrights, ordered the transfer to Deckers of the defendants' domain names and froze defendants' PayPal and other accounts associated with the defendants' websites.

February 12, 2013

Macmillan Settles Antitrust Action

By Joel L. Hecker

As you probably know by now, the U.S. Justice Department commenced a civil antitrust action against five of the six major book publishers in the United States as well as Apple, Inc. This action arose out of allegations that the defendants conspired to raise the price of e-books over a period of time in response to the practice by Amazon.com of selling e-books for $9.99.

The parties had extensive negotiations prior to the filing of the action and the government reached a settlement with Hachett Book Group, Inc., HarperCollins Publishers, LLC, and Simon & Schuster, Inc., three of the publishers. As a result, simultaneously with the filing of that complaint, the government also filed a Stipulation of Settlement and Consent Decree along with a Competitive Impact Statement. That settlement was approved by Judge Cote of the Southern District of New York on September 5, 2012, at which time she granted the government's motion for a final judgment against these three publishing defendants. (Please see my article in the Fall/Winter 2012 Edition of the EASL Journal for a detailed description of the terms of that settlement.)

In December 2012, the fourth publishing defendant, the Penguin Group (Penguin), a division of Pearson PLC, Penguin Group (USA) Inc. abandoned its defense and also agreed to settle on the same terms as previously approved by Judge Cote. The public comment period on that settlement runs through March 5, 2013, after which Judge Cote will hold a hearing on the government's motion to approve that Consent Decree and whether to grant the government's motion for a final judgment against Penguin.

As a result, Macmillan (actually Verlagsgruppe Georg Von Holtzbrinck GMBH, Holtzbrinck Publishers, LLC d/b/a Macmillan) was left as the only remaining publishing defendant in the action (along, of course, with Apple). On February 8, 2013, Macmillan gave in and agreed to settle on the same terms previously agreed to by the other four publishing defendants. The reasons given for abandoning its defense were spelled out, in a letter by Macmillan's CEO, John Sargent, that Macmillan "settled because the potential penalties became too high to risk even the possibility of an unfavorable outcome." Sargent also wrote that, "I had an old-fashioned belief that you should not settle if you had done no wrong. As it turns out, that is indeed old-fashioned." Aside from being old-fashioned, the government obviously takes issue that Macmillan had done no wrong!

Another reason that Macmillan reached the settlement was that the market for e-books seems to have not led to any noticeable drop in e-book prices, which was the great fear of the publishers. Therefore, Macmillan had been out of step in the marketplace.

Macmillan will now go through the same process of having the government file a Stipulation of Settlement and Consent Decree along with a Competitive Impact Statement. There will then be a period for public comment, followed by a motion by the government before Judge Cote for approval and for a final judgment.

This leaves Apple as the only defendant in the action with a trial date currently set for June 2013.

February 13, 2013

Morris v. Young

By Barry Werbin

Another new interesting artwork photography/art fair use - "transformative use" - decision was issued 1/28/2013 by the C.D. California (Morris v. Young (CD Cal. 2013)), mirroring the same issues as in Cariou v. Prince, 784 F. Supp. 2d 337, 349 (S.D.N.Y. 2011) [on appeal]. In this case, the defendant, Young, was an artist who created a series of works based on photographic images of the punk band the Sex Pistols that he found on the Internet, which Young believed were in the public domain because they bore no copyright notice. The photos had been taken by the plaintiff photographer Morris, who had published two books on the Sex Pistols originally in the UK. The books contained original photographs of the Sex Pistols on tour, taken by Morris, including the photograph in issue (Subject Photograph), which depicts Sid Vicious and Johnny Rotten performing on stage.

Young took that photo and created three different "artistic" variations of it. One was called "Sex Pistols in Red" and depicts the Subject Photograph, "cropped slightly to more closely frame the subjects and tinted in a deep red color." The second one was called "Sex Pistols" and "depicts the Subject Photograph, printed using black enamel on an acrylic background." Young "altered the colors and shades, deepened the contrast between the black and white portions of the image, and added 'grittiness' to the image by printing it in black enamel on an acrylic background." A third a piece called "White Riot + Sex Pistols," depicts two images of the Subject Photograph side-by-side, "with a Union Pacific logo and the words "White Riot" and red stars graffitied atop the images."

On a motion for summary judgment by plaintiff Morris, the court held that Young's fair use defense failed as to the first two of the three images identified as "Sex Pistols" and "Sex Pistols in Red" because they were "not transformative works", and Young failed to carry his burden on the four traditional fair use factors. In particular, the court cited favorably to Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 609 (2d Cir. 2006) and Cariou v. Prince. The court found that the "works were [not] created for any reason other than to emphasize the characteristics with which the band was already associated" and such use of the Subject Photograph was "not transformative because it lacks any significant expression, meaning, or message that is unique vis à vis the works' original purpose."

However, with respect to the third work, "White Riot + Sex Pistols," the court denied summary judgment finding the image "bears certain aesthetic characteristics that raise the question of transformation, and, by extension, fair use." [Here we have a court, in my view, using the judicially created concept of "transformation" as a test seemingly apart from "fair use" itself.] "[U]nlike the other two Accused Works, 'White Riot + Sex Pistols' incorporates images beyond the band itself and arranges them such that the composition may convey a new message, meaning, or purpose beyond that of the Subject Photograph." Citing the Supreme Court's decision in Campbell v. Acuff-Rose Music Inc., 510 U.S. 569 (1994), the court held there were issues of fact "as to whether the work does more than 'merely supersede[] the objects of the original creation,' and therefore a trier of fact may reasonably deem it transformative. Campbell, 510 U.S. at 579. The transformative character of a work bears upon the weight and meaning of the other fair use factors."

February 15, 2013

The Batmobile Is A Protectable "Character"

By Barry Werbin

A very interesting decision from January 26th out of the C.D. Cal., ruling on cross summary judgment motions, finds in favor of DC Comics (Warner) that the iconic Batmobile® is akin to a "character" protectable by copyright as opposed to an unprotected functional automobile.

The defendant, Gotham Garage, is a manufacturer of television and movie replica vehicles. Gotham and its co-defendant individual owner lost their "useful article" defense. A copy of the lengthy decision is available at http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/batmobile.pdf.

As the court holds:

"The Batmobile is a character and exists in both two- and three-dimensional forms. Its existence in three-dimensional form is the consequence of the Batmobile's portrayal in the 1989 live-motion film and 1966 television series. [...] Defendant did not copy the design of a mere car; he copied the Batmobile character. The fact that the unauthorized Batmobile replicas that Defendant manufactured -- which are derivative works -- may be 'useful articles' is irrelevant. A derivative work can still infringe the underlying copyrighted work even if the derivative work is not independently entitled to copyright protection."

-- and --

"The Batmobile, and the so-called functional elements associated with it, is not a useful object in the real world, and incorporates fantasy elements that do not appear on real-world vehicles. The 'functional elements' - e.g., the fictional torpedo launchers, the Bat-scope, and anti-fire systems - are only 'functional' to the extent that they helped Batman fight crime in the fictional Batman television series and movies. Thus, the Batmobile's usefulness is a construct."

The decision also sets forth a detailed history of copyright protection for fictional characters in the Ninth Circuit. The first part of the decision addresses trademark infringement and unfair competition claims, also ruling in favor of DC Comics on both counts.

February 19, 2013

Week in Review

By Martha Nimmer

Flunking Franco

Whoever said that 90% of life is just showing up should probably share that bit of wisdom with actor James Franco, who is facing a default judgment in New York State Court. This default action, filed last week by Francoʼs former NYU professor Jose Angel Santana, stems from a defamation suit filed by Santana in September. Francoʼs former professor filed the lawsuit against the actor based on allegations that Franco had made disparaging and inaccurate public statements" against Santana after receiving a "D" in his class in 2010.

Santanaʼs suit concerns public comments by Franco that his former teacher was "awful," and that Franco "didnʼt feel like [he] needed to waste [his] time with a bad teacher." In response to Franco's comments, Santana's attorneys argue that Franco's actual reason for not attending class was having to work on the film 127 Hours. New York University, a co-defendant in Santanaʼs action against Franco, answered the plaintiffʼs suit in November. In its answer, NYU stated that the suit was nonsense; the university added that Francoʼs comments "consisted of nothing other than Franco's personal opinions regarding Santana's teaching skills" and hence could not be considered defamatory.

Franco could easily make the same argument, but for this to happen, he first has to hire an attorney and actually show up to court.


From Gospel to Gangsta Rap

Gospel singers Clara Shepherd Warrick and Jimmy Lee Weary have sued some of the biggest names in rap music: last week, the musicians brought suit against Rick Ross, Dr. Dre, Jay Z, Universal Music Group, Universal Music Publishing Group and Island Def Jam Music Group in federal court in Illinois. Warrick and Weary claim that the hip-hop superstars sampled their music without permission on Ross's Grammy nominated album "God Forgives, I Don't," and "laced plaintiffs' gospel work" with profanity and other offensive language.

The gospel work at issue, "Iʼm So Grateful," was created by the plaintiffs in 1976. According to the complaint, "Plaintiffs' song was first distributed circa 1976 by their gospel singing group, Crowns of Glory, on an album titled ʻGod Save the Children.ʼ Since the release of the song, Shepherd and/or Weary have performed plaintiffs' song all over the world." Last July, Rick Ross and Def Jam released the rap album "God Forgives - I Don't," which contains a song entitled "3 Kings." It is in this song, the plaintiffs complain, that the unauthorized sampling occured: "Defendants sampled and copied additional, substantial original elements of plaintiffs' Song without plaintiffs' permission, when they wrote, recorded, performed and made derivative works of the 3 Kings song."

Unfortunately for the gospel singers, "3 Kings" contains some pretty foul language. Unsurprisingly, the plaintiffs are not happy that their music has--allgedly--been used in such a way. Warrick and Weary argue that "Defendants' use of plaintiffs' work in the manner used continues to destroy the commercial value of the song in gospel circles. Defendants' use of plaintiffs' work is also destroying rather than enhancing the overall integrity and longevity of plaintiffs' gospel song. After the current use of plaintiffs' copyrighted work on the rap album by Rick Ross, Dr. Dre, Jay Z and Jake One, Plaintiffs' song will soon have no value in the gospel community."

It should also come as no surprise that Warrick and Weary object to the "3 Kings" music video, which "features a montage of clips of Rick Ross, Dr. Dre and Jay Z throughout their careers." According to the complaint, this video has received millions of views, and "upon information and belief, the video was prepared at the direction of defendant Dr.Dre. The video includes very graphic depictions of drug use, vulgarity, nudity, gun violence, criminal conduct, actions demeaning to women and many other items that are certainly inconsistent with plaintiffs' wishes for how plaintiffs' song would be portrayed." The plaintiffis seek an injunction prohibiting the defendants from performing "3 Kings" or selling the album that contains the offending song. Weary and Warrick also seek punitive damages for copyright infringement, unfair trade practices, unfair competition, conspiracy and unjust enrichment.


Pennsylvania Goes to Court for Penn State

Earlier this month, the NCAA filed suit in Pennsylvania court, asking a federal judge to throw out a lawsuit brought by the stateʼs governor that challenged the penalties imposed on Pennsylvania State University following the Jerry Sandusky child-abuse case. According to the NCAA, Pennsylvania Governor Tom Corbett lacks standing to
bring the case, and is seeking to undo an agreement "freely entered into" by Penn State officials. "This lawsuit is an inappropriate attempt to drag the federal courts into an intra-state political dispute," the NCAA added.

Readers will recall that Governor Corbett sued the NCAA in January, challenging a $60 million fine imposed on Penn State for its failure to prevent sexual abuse perpetrated by former assistant football coach Jerry Sandusky, who was convicted last year of molesting ten boys. The stateʼs complaint accuses the NCAA of using the Sandusky
crimes as a "pretext" to impose unprecedented sanctions, which, Governor Corbett aruges, violate antitrust laws. In addition to the multimillion dollar fine, the NCAA stripped Penn State of 112 football wins from 1998 through 2011, and barred the school from bowl games for four years.

According to the NCAA, Penn State has the authority under Pennsylvania law "to manage its own athletics program, voluntarily join the NCAA and agree to contracts." The governor, who is a member of the Penn State governing board that approved the NCAA agreement, is attempting to "usurp the discretion that the legislature delegated to PSU," the NCAA wrote.

Pennsylvania will seek an injunction against all the sanctions. The case is Corbett v. National Collegiate Athletic Association, 13-cv-6, U.S. District Court, Middle District of Pennsylvania (Harrisburg).


To the Batmobile!

Cue the Batman theme music, because we have some important news! In a victory for DC Comics, a federal court in California ruled last week that the iconic Batmobile is a "copyrighted comic book character" that cannot be replicated by an autobody business. DC Comics introduced the famous Batmobile back in 1941. The black, streamlined car was also featured in the "Batman" TV show, starring Adam West in the 1960s, and in the 1989 Batman movie, starring Michael Keaton.

DC Comics sued Mark Towle, owner of California-based auto shop Gotham Garage, in May 2011. The plaintiff claimed that Towle's work constituted copyright infringement, unfair competition and trademark infringement. DC Comics owns the copyright on the words "Batman" and "Batmobile", as well as the Batman logo, the licensing of which has proven to be an extremely lucrative business. Towle and Gotham Garage do not hold such a license, but this did not prevent them from turning cars into Batmobiles, "styled as either the model in the 1966 TV show or the 1989 movie."

In ruling with the plaintiffs, U.S. District Judge Ronald Lew found that Towle "copied not only a car, but a character." In that regard, Lew wrote: "the Batmobile, in its various incarnations, is a highly interactive vehicle, equipped with high-tech gadgets and weaponry used to aid Batman in fighting crime. Even though the Batmobile is not identical in every comic book, film or television show, it is still widely recognizable
because it often contains bat-like motifs, such as a bat-faced grill or bat-shaped tailfins in the rear of the car, and it is almost always jet-black." The judge also pointed out the importance of the Batmobile to the plot of Batman: "[t]he comic books portray the Batmobile as a superhero. The Batmobile is central to Batman's ability to fight crime and appears as Batman's sidekick, if not an extension of Batman's own persona." Judge Lew ultimaltey ruled that Towle's use of the Batmobile and Batman-related symbols were likely to cause confusion in the marketplace.

At least for now, it looks as if Gotham City can rest easy that no unlicensed Batmobiles are out on the streets...


February 21, 2013

Ashby Donald and others v. France

By Barry Werbin

A fascinating and unusual decision of first impression (published only in French) from the European Court of Human Rights (ECHR) involves the rights of photographers to use photographs taken at French fashion shows. Under French law, the fashion houses own the copyrights to any photos taken at a show. In the case, Ashby Donald and others v. France [ECtHR (5th section), 10 January 2013], the Court clarified for the first time that a copyright infringement conviction based on illegally reproducing or publicly communicating copyright protected material can be deemed an interference with the rights of freedom of expression and information under Article 10 of the European Convention.

The petitioners were three fashion photographers (one being an American), two of whom republished on their own fashion website for their own purposes photos taken by one of the other plaintiffs at fashion shows without permission of the fashion houses. They were ordered by a Paris court to pay fines and damages to a clothing designer and five fashion houses, totaling €255,000. After losing an appeal to the French Supreme Court, the photographers appealed to the ECHR.

Article 10 provides for an EU right to freedom of expression, that "may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society..." en.wikipedia.org/wiki/Article_10_of_the_European_Convention_on_Human_Rights. French copyright law has an exception "allowing the reproduction, representation or public communication of works exclusively for news reporting and information purposes." echrblog.blogspot.com/2013/01/copyright-vs-freedom-of-expression.html.

The ECHR found for the first time that national copyright laws may have to yield in proper circumstances to this EU law of freedom of expression (similar to the First Amendment in the context of a fair use debate), but noting that "[t]he Court hereby confirms its approach that while freedom of expression is subject to exceptions, these exceptions must be construed strictly, and the need for any restrictions must be established convincingly." Id.

However, based on the facts of this case, the ECHR held there was no violation of Article 10 because the use of the photos was "not related to an issue of general interest for society and concerned rather a kind of 'commercial speech.'" Id. It also emphasized that national laws are entitled to wide deference. In addition, the ECHR found the fines and substantial damages award not to be disproportionate to the legitimate goals of the French copyright law, noting that the petitioners presented no evidence that the monetary awards had "financially strangled" them. Id.

So we are not alone in the U.S. in struggling with finding the right balance between copyright protection and freedom of expression in a modern Internet age.

If you read French, you may access the opinion at: hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-115845

An excellent blog by a German professor that interprets and translates parts of the opinion is available at: echrblog.blogspot.com/2013/01/copyright-vs-freedom-of-expression.html. Of interest is the professor's note that "the Court's judgment is a clear illustration of the difference between, on the one hand, expression and content contributing to an issue of public debate or a debate of general interest for society, and on the other hand, 'commercial speech'. Speech, messages, pictures and content which are merely money driven do not enjoy the added value of the protection guaranteed by Article 10 of the Convention."

February 22, 2013

Week in Review, Part 2

By Martha Nimmer

Free Sherlock

How can a literary work, which first appeared some 125 years ago, still be subject to copyright protection? That, essentially, is the question posed by Sherlock Holmes scholar Leslie Klinger in a civil complaint filed last week in Illinois federal court. Klinger argues that many licensing fees paid to the Arthur Conan Doyle estate have been unnecessary and not legally required, as the main characters and elements in Sherlock Holmes are derived from materials published before January 1, 1923, and thus no longer subject to the protection of U.S. copyright law.

Leslie Klinger is a renowned scholar on the subject of Sherlock Holmes, and serves as the editor of the three-volume, nearly 3,000-page Annotated Sherlock Holmes. According to The New York Times, Klinger's complaint "stems from In the Company of Sherlock Holmes, a collection of Holmes-related stories by various authors, edited by Mr. Klinger and Laurie R. King, herself the author of a successful mystery series featuring Mary Russell, Holmes' wife." According to the complaint, the estate of Sherlock Holmes author Sir Arthur Conan Doyle contacted the publisher of In the Company of Sherlock Holmes, hinting that the sale of the work could be threatened unless the estate received a licensing fee. Klinger states that he reluctantly paid the fee along with his co-editor. Unhappy with having paid the fee, and reportedly tired of the thinly veiled threats from the Conan Doyle estate, Klinger has asked the court to make a declaratory judgment that the basic "Sherlock Holmes story elements" are in the public domain.

Klinger points out that the goal of his legal action is not to interfere with the estate's legitimate rights in ten Sherlock Holmes stories that were published after January 1, 1923, and enjoy copyright protection until 2023. Given the huge success of Sherlock Holmes-inspired series "Elementary" and "Sherlock," as well as the hit Robert Downey, Jr. film, when the remaining Holmes stories enter the public domain in 2023, more legal drama is likely to play out.


Read the complaint here: http://www.scribd.com/doc/125554239/Sherlock-Holmes-Complaint

The Central Park Five

In a victory for "the precious rights of freedom of speech and the press," a federal judge in New York quashed a subpoena by New York City that demanded notes and outtakes from the Ken Burns documentary film The Central Park Five. The film details the story of the five men wrongfully convicted in the infamous 1989 "Central Park Jogger" rape case. The men were released from prison eight years ago "after another man in an upstate prison confessed to the crime and provided DNA that exonerated the five." Following their release from prison, the five men filed a $50 million lawsuit against New York City, claiming that their confessions were coerced. The city is still defending the lawsuit, and sought the documentary's outtakes to "support its arguments that authorities were acting in good faith and relying on the best information available at the time."

In response to the city's subpoena, Florentine Films, the producer of the documentary, argued that the outtakes and other non-confidential news-gathering materials were protected by New York's Journalist Shield Law. The law, N.Y. Civ. Rights Law § 79-h, codifies the First Amendment privilege that protects journalists from the forced disclosure of confidential sources or materials obtained while gathering information for reporting purposes. U.S. District Judge Ronald Ellis agreed with Florentine Films that a reporter has a qualified evidentiary privilege for information gathered as part of a journalistic investigation, adding that "any discussion of the reporter's privilege begins with an inquiry into whether a journalist can first establish entitlement to the privilege by demonstrating the independence of her journalistic process." The "independence standard," however, is a challenging one to satisfy, and has been the death knell of journalist shield litigation in the past. For instance, in an example cited by The Hollywood Reporter, filmmaker Joseph Berlinger failed to satisfy the independence standard when he attempted to prevent outtake footage from his documentary Crude from being obtained by oil company Chevron. Chevron subpoenaed the material to aid the company's defense of litigation in Ecuador stemming from the alleged contamination of an indigenous community in the Amazon Rainforest.

Judge Ellis ruled that Florentine Films had established its independence, rejecting various arguments from city attorneys that argued to the contrary. The city argued, for instance, that the Central Park Five filmmakers had a "point of view in favor of the plaintiffs," which would eviscerate any argument in favor of journalistic independence. Dismissing this argument, Justice Ellis wrote that having a point of view was not dispositive of whether the filmmakers were, in fact, independent under Berlinger. Other factors to consider in resolving the question of independence--funding for the work, editorial independence, among others--weighed in Florentine Films' favor. Additionally, the court found that the city had failed to make a sufficient showing that the information demanded was of likely relevance, and not reasonably available from another source.


Read the decision here: http://www.scribd.com/fullscreen/126303350?access_key=key-1e3c52kg79vfn9hjhkze

Read the text of the Journal Shield Law here: http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=$$CVR79-H$$@TXCVR079-H+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=15272944+&TARGET=VIEW

Penney Pains

Martha Stewart is no stranger to legal woes, and now, her company--Martha Stewart Living Omnimedia, Inc. (MSLO)--is being sued by Macy's Inc. (Macy's) in New York State Supreme Court. Macy's, one of the largest U.S. department-store chains, is hoping to block MSLO's agreement with retailer J.C. Penney to produce Martha Stewart-branded home goods. A nonjury trial in the case began earlier this week before state Supreme Court Justice Jeffrey K. Oing in Manhattan. Justice Oing previously granted Macy's preliminary injunction in July, which barred MSLO from developing home goods products with J.C. Penney. The company in December 2011 acquired a 17% stake in MSLO for $38.5 million, as part of an effort to revive sales with new mini-stores dedicated to Martha Stewart and other brands.

According to Macy's pre-trial memorandum, "Macy's contracted with MSLO at a time when the MSLO brand was associated with the significantly downscale Kmart and Ms. Stewart was just being released from prison." Macy's eventually moved the brand into "soft home goods upscale," which, Macy's attorneys called, "a herculean task" that initially resulted in financial losses for the Ohio-based retailer. Macy's attorneys argue that MSLO is now trying to reap the rewards of Macy's rebranding efforts, which took the Martha Stewart Living brand from the barren shelves of K-Mart into the more reputable Macy's storefront.

MSLO, in turn, has defended its agreement with J.C. Penney, accusing "Macy's of breach of contract and saying the retailer stocked and priced Martha Stewart products in a manner that favors private-label brands." Specifically, lawyers for MSLO argue that its original 2006 agreement with Macy's permitted it to "design and sell products within the exclusive categories as long as they are sold through the Internet, television or at any retail store branded with the Martha Stewart name that's operated by the company or its affiliates or "prominently" features the brand." In other words, the original 2006 contract "gives Macy's the exclusive right, with important exceptions [emphasis added], to sell Martha Stewart-branded products in certain exclusive product categories." The agreement, as construed by MSLO, does not give Macy's an exclusive right to design, promote or sell any product outside certain named categories.

Justice Oing has set aside three weeks for the trial. Martha Stewart may be called to testify at trial, according to lists of potential witnesses.

The cases are Macy's Inc. v. Martha Stewart Living Omnimedia Inc., 650197/2012, and Macy's Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan).


Developments in the Oscar Pistorius Murder Case

South African police have replaced the lead investigator in the Oscar Pistorius murder case in light of revelations that lead investigator Hilton Botha is being charged with attempted murder in an unrelated case. Botha, who is facing seven charges of attempted murder, was replaced by Lieutenant-General Vinesh Moonoo. Prosecutor Gerrie Nel said that the attempted murder charges arise from a 2011 incident wherein Botha and two others fired at a minibus taxi that they were trying to stop.

The replacement announcement followed a bail hearing in a Pretoria Magistrates court where Botha stated that Pistorius and his girlfriend, Reeva Steenkamp, argued before he fatally shot her. Pistorius' lawyer called Botha's evidence "tainted," adding "Botha was not a credible witness." "We cannot sit back and take comfort he is telling the full truth," Pistorius' lawyer added.

The prosecution has disputed Pistorius' account of how he shot Steenkamp through a bathroom door at his home during the wee hours of Valentine's Day; Pistorius said that he thought Steenkamp was a burglar. If convicted of premeditated murder, Pistorius faces a maximum term of life in prison. The state considers Pistorius a flight risk, and opposes bail. The athlete's family said in a statement that his "iconic status internationally" made it highly unlikely that he poses a flight risk.

Pistorius, deemed "Blade Runner" because of his prosthetic running blades, was born without fibulas and had both legs amputated below the knee at 11 months old. The runner was included on Time Magazine's list of the world's 100 most-influential people, and is the winner of six Paralympic gold medals. Pistorius was the first amputee runner to compete at the Olympic Games.

In other developments, sporting-goods company Nike has reportedly suspended its contract with Pistorius. Additionally, a spokesman for eyewear company Oakley said that the company also suspended its contract with the athlete "effective immediately." Finally, Clarins SA's Thierry Mugler perfume brand said on Twitter that it was "removing all campaigns featuring Oscar Pistorius, out of respect and sympathy to families involved in the tragedy."


February 25, 2013

The Next Big Thing

By Pamela Jones

An application filed with the USPTO on August 21, 2011 and published on February 21, 2013 suggests that a new platform for the distribution of audiovisual content may be immerging in the not-too-distant future. At first blush, the hype around Apple's patent, dubbed the "iWatch", and news of Samsung's "Altius", may have already faded from the headlines, but this patent application may be a harbinger of the next big thing. Owners of copyrightable content who carefully parse out the bundle of copyrights, and their attorneys who draft "rights" definitions should take note, in order to avoid granting rights that one day soon may become a separate licensable platform.

Last week's story, as reported by the New York Times, The Wall Street Journal, Bloomberg et al., describes a "flexible communication device linked to a portable electronic device worn by the end-user". The speculation is that the "slap bracelet' would link to the computer by means of Bluetooth or possibly Wi-Fi. Earlier patents filed by Apple for "solar cell multi-touch panels", "curved glass" and "shake to charge" technology, in combination with this recently publicized patent, suggest that engineers may have overcome what experts hypothesize is the greatest challenge to wearable computers, battery life.

By all accounts, the terms "wristwatch" or "slap bracelet" are misnomers for what the patent, and prognosticators, suggest this device may ultimately be capable of delivering, including a credit card replacement (referred to by some as the "iWallet"), a health monitor and the real time display of video content. In view of the foregoing, it is more important than ever to carefully craft "rights" definitions and always include a reservation of rights provision when licensing audiovisual content.

US Patent Application 20130044215

About February 2013

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in February 2013. They are listed from oldest to newest.

January 2013 is the previous archive.

March 2013 is the next archive.

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