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June 2, 2013

Week in Review

By Martha Nimmer

It's Bananas

After more than a year of legal wrangling, attorneys for the Andy Warhol Foundation (the Foundation) and the band The Velvet Underground (the Band) have reached a settlement over one of the "most famous album covers of all time." The album cover, created by Andy Warhol for the 1967 album The Velvet Underground & Nico, features a drawing of a yellow banana on a white background. When the album debuted in the 1960s, the banana design was not registered with the Copyright Office, and the album was reportedly not published with a copyright notice. The famous artwork stirred up legal controversy after reports circulated that the Foundation planned to license the design for iPod and iPad products, such as iPad cases. In January 2012, the Band sued the Foundation in New York federal court, claiming that the cover art had become "a symbol, truly an icon, of the Velvet Underground." In that regard, the Band sought a declaratory judgment that the image was in the public domain, thus barring the Foundation from asserting any copyright ownership over the image. The plaintiff, however, withdrew that claim after the Foundation "offered the band a covenant not to sue on copyright grounds."

Still remaining, however, was the issue of trademark law; specifically, the likelihood of confusion: the Band said that the Foundation's licensing activities were "likely to cause confusion or mistake as to the association of Velvet Underground with the goods sold in commerce by such third parties." The defendant pointed out, however, that the Band broke up over 40 years ago, in 1972, and had not licensed its album artwork or any images associated with the Band for over a decade. On Tuesday, however, the case came to a close: a federal judge dismissed the case after receiving a letter from an attorney for the Foundation, announcing that a confidential settlement had been reached between the parties.


Chew On This

Only in New York court could a piece of art made with chewing gum be valued at $500,000.

Earlier this month, the Stephan Stoyanov Gallery was alleged to have bounced a check for $585,000 to a collector in a "like kind exchange" featuring chewing gum art valued at $500,000. Art collector Jane B. Holzer sued the Stephan Stoyanov Gallery and Stephan Stoyanov in New York County Supreme Court last week, claiming that she and Stoyanov agreed to exchange four artworks, two on each side, in a "like kind exchange" under Section 1031 of the Tax Code. The pieces at issue are Mike Kelley's 1985 acrylic "Rainbow Coalition" and Dan Colen's 2010 "Cardboard Cutout," created with chewing gum on an unprimed canvas. In exchange, Stoyanov planned to give Holzer two Richard Prince works from 2012, both called "Untitled (Cowboy)." These pieces are said to be worth $405,000 and $585,000.

According to the Entertainment Law Digest, "Section 1031 exchanges are common transactions and may involve all manner of property, with strict time limits within which the trade must be done. Section 1031 exchanges may include "boot" -- commonly, the money paid in one direction to even out the exchange." For the boot, Holzer claims, she paid Stoyanov $253,000, in checks of $166,500 and $86,500, plus a transaction fee of $1,500 for each. The plaintiff also alleges that Stoyanov wrote a check to the Gagosian Gallery for $405,000 for the smaller of the "Untitled (Cowboy)" works, then a $585,000 check two weeks later to the same gallery for the larger Prince work. The complaint states that Stoyanov promised the Gagosian Gallery, which is not a party to this case, that he would "arrange to cover the check from his current location in Belgium but, failing that, he would make the check good upon his return to the United States by the end of the week." Holzer claims, however, that Stoyanov's check for the larger "Untitled (Cowboy)" work was dishonored and subsequently returned, and Stoyanov failed to return to United States because, he claimed, he had to travel back to Bulgaria for a family matter. Stoyanov insists, however, that the bounced check was a "mix-up," but Holzer claims "Stoyanov has been diverting and expending proceeds from plaintiff's escrowed funds for his own benefit on his current travel to Europe." Holzer demands $585,000, with interest, and punitive damages for breach of contract, breach of fiduciary duty and unjust enrichment.


The Cat's Meow

Yes, it's true: the 2013 Meme of the Year, Grumpy Cat, now has a movie deal, which begs the question: "do animals have likeness rights?"

In case you are not familiar with Grumpy Cat, allow me to dazzle you: last year, Bryan Bundesen posted pictures online of his sister's cat, Tardar Sauce (AKA Grumpy Cat). After the famously grumpy-faced cat hit the World Wide Web, a digital star was born. Now, after all of this online success, Grumpy Cat has found herself an agent, Ben Lashes, who represents other cats made famous online. (Yes, you read that correctly: "other cats made famous online.") According to the Wall Street Journal, "this week, Mr. Lashes helped negotiate the sale of a film option based on Grumpy Cat's persona... Terms of the one-picture deal weren't disclosed." So, now that Grumpy Cat has a film deal, the question arises whether she also possesses likeness rights.

Likeness rights, which fall under the umbrella right of publicity, evolved from the right of privacy. As The Hollywood Reporter points out, deceased legal scholar Melville Nimmer wrote in 1954 that likeness rights could, in fact, extend to animals: "It is common knowledge that animals often develop important publicity values. Thus, it is obvious that the use of the name and portrait of the motion picture dog Lassie in connection with dog food would constitute a valuable asset. Yet an unauthorized use of this name could not be prevented under a right of privacy theory, since it has been expressly held that the right of privacy 'does not cover the case of a dog or a photograph of a dog.'" Unfortunately for famous animals, this view has not gained much traction over the years, but that trend may be changing in light of the growing popularity of funny online animal videos. Take, for example, the case of "Keyboard Cat": after Charles Schmidt made a video of his cat Fatso wearing a shirt and sitting upright at a keyboard, the video went viral and the Keyboard Cat meme was born. Now, Schmidt is suing Warner Brothers and 5th Cell Media, "alleging that the studios have ripped off the meme in a computer game called Scribblenauts Unlimited." The complaint avers that the Keyboard Cat meme is entitled to copyright and trademark protection. The Hollywood Reporter points out that although the suit does not include any direct likeness claim, the complaint does state that Schmidt did not "authorize defendants to copy, reproduce, perform, or use Keyboard Cat or Fatso's image in any Scribblenauts game." For now, at least, it remains to be seen how this case develops and if a judge will treat Keyboard Cat like a movie or TV show character.

In the meantime, here are the famous cats' websites: http://www.grumpycats.com/ and http://playhimoffkeyboardcat.com/


Read the Keyboard Cat case here: http://www.scribd.com/doc/144705848/Keyboard-Cat

.book is Big Business

Facing the very real possibility that Amazon.com may control URL addresses ending in .book, a trade group of more than 450 booksellers has joined Barnes & Noble Inc. (B&N) in objecting to the online retailer's application to obtain ownership of the .book domain. The Internet Corporation for Assigned Names and Numbers (ICANN), the non-profit Web administrator that manages Internet functions under a contract with the U.S. Commerce Department, is examining applications for more than 1,400 new top-level domains, i.e. the words to the right of the dot, such as .com or .net. The first of the new domain names are expected to launch by the end of the year.

Amazon and countless other companies paid $185,000 for each application for a new domain. Google, for example, applied for 101 domains, including .search, .map and .mail. Given how much money and publicity the Internet generates, it is no surprise that companies across the world are vying for these new, eye-catching domain names. In addition to attracting new customers, "winning applicants can make money by charging for new addresses under their domains, or could use new domains for just proprietary content."

This rush to assume control over a new domain promises to lead to conflict and legal battles. According to ICANN, 230 names have more than one applicant, and disputes over who gets control may have to be resolved through auctions. The U.S. Polo Association, which governs the sport, has objected to Polo-brand clothing maker Ralph Lauren Corp.'s application for .polo. The new domains also raise competition concerns: Amazon, which controls around 60% of the market for e-books and 25% of the market for printed books, would use the addresses "to stifle competition," New York-based B&N said in a letter to ICANN. In its application, Amazon stated that it would use the .book domain "as needed to reflect Amazon's business goals." This revelation, some critics believe, would hurt competition and drive out smaller businesses. In light of such concerns, the European Commission has launched an investigation into whether Google harms competition in the market for Web searches. The U.S. Federal Trade Commission concluded its review in January of Google's search business without taking action.

Other criticisms of the new domain names also deal with concerns other than financial gain and market competitiveness. For instance, the government of Montenegro, the smallest former Yugoslav republic, has asked ICANN to deny Google's request for .meme. The term, the government claims, is too similar to Montenegro's established domain, .me, and "will only serve to cause substantial confusion in the domain name market." These objections, according to an ICANN spokesman, will go before three independent bodies, "which may resolve some arguments by August while others linger for 'a few months.'"


Meet The Bluths (Again)

After a seven year hiatus, cult comedy "Arrested Development" has returned, this time as a semi-original series on Netflix. The video streaming service reported that within just 24 hours of the show's premier, it had been pirated over 100,000 times. The show, cancelled by Fox in 2005, tells the story of a wealthy, yet highly dysfunctional, Orange County, California family who struggle to stay together despite a crumbling a family business brought down by an unscrupulous father.


Pro Bono Legal Clinic

On July 31st, the EASL and IP Sections will be co-sponsoring a Pro Bono Clinic at the New York Foundation for the Arts (NYFA). The Clinic will take place between 4:00 and 7:00 p.m. at NYFA's offices in Dumbo, at 20 Jay Street, 7th Floor, Brooklyn.

If you would like to volunteer for one or more of the 30 minute time slots, please email Elissa Hecker at eheckeresq@eheckeresq.com and specify your contact information (name, firm/company, phone number and email address), which time slot(s), area(s) of expertise, and whether you are an EASL and/or IP Section member. Please also indicate any other areas of practice that you may have that would be helpful to the clients, including incorporating and/or dealing with 501(c)(3)s, immigration, patents, real estate, etc., that may be of concern to NYC artists.

If you do not have pro bono liability insurance, you may be covered under EASL and IP's policy for this Clinic. Please also indicate if you need such coverage.

We look forward to hearing from you.

Best regards,

Elissa D. Hecker and Kathy Kim
EASL Pro Bono Steering Committee

June 5, 2013

Job Opportunity - Television Industry Experience Necessary

Resources Global Professionals is seeking entertainment attorneys with television industry experience to join our Tri-State practice. New York Bar Admission required. As a consultant with Resources Global Professionals, you will have the ability to play an instrumental role in assisting clients in a variety of challenging projects.

Professional Qualifications:

-Cable or network television experience, with (1) extensive experience negotiating and drafting programming and production agreements (Writer's Guild experience preferred), and/or (2) experience handling rights and clearances for television productions (experience developing processes and procedures for rights and clearances desirable).
8+ years legal experience; in-house experience required.

-Admitted to practice law in New York and in good standing.

-Excellent communication skills.

-Detail oriented.

-Ability to multi-task and demonstrate a sense of urgency.

Our Consultants enjoy the flexibility and autonomy to choose the client projects that interest them, while continuing to build professional relationships within our global community of Consultant and business professionals. We offer a comprehensive compensation and benefits package including health and life insurance, a 401(k) savings plan which includes a discretionary company match, employee stock purchase plan, paid personal time off program, professional development and certification courses.

Submit Resume: https://rcant.rcconnect.com/initialapp/resumeform.asp?jobid=13547&emid=2222&Svcln=LEG

New Yorkers for Dance

The first 10 New Yorkers for Dance videos are now live on YouTube.com/DanceNYCorg!

In case you missed it, here's the link to The New York Times exclusive on the campaign, "Bringing New York City Dance Into the Limelight:" http://www.nytimes.com/2013/06/03/business/media/bringing-new-york-city-dancing-into-the-limelight.html?_r=0

Please join us in getting the word out about dance in New York City through your networks. Just 3 ways you can help us help dance:

1. Subscribe to Dance/NYC's YouTube Channel to follow the campaign: http://www.youtube.com/dancenycorg

2. Post to your Facebook pages. Ours is https://www.facebook.com/DanceNYCorg

3. Tweet the links to your videos using @DanceNYC #newyorkersfordance on Twitter.

June 8, 2013

Week in Review

By Martha Nimmer

Trademark Trouble for Oprah

The Second Circuit doesn't seem to be a fan of Oprah, at least from a legal standpoint.

Late last week, the U.S. Court of Appeals for the Second Circuit ruled that Oprah Winfrey failed to prove that her use of the "Own Your Power" mark qualified as fair use. This decision reverses the lower court's ruling and revives the Lanham Act claim of Simone Kelly-Brown, owner of the motivational services company Own Your Power Communications Inc., against Winfrey, her company Harpo Productions Inc. and the Hearst Corporation, the publisher of O The Oprah Magazine.

In addition to hosting a motivational radio show, Brown writes a blog and organizes conferences and other events aimed at "owning" one's power. She registered the "own your power" mark in May 2008. While the registration was pending, Winfrey, Harpo Productions and Hearst Corporation tried to register a mark in a new venture, the Oprah Winfrey Network, or OWN. Two years later, the Winfrey defendants "launched a series of publications, events and online initiatives using the phrase "Own Your Power." For instance, states the complaint, "the Sept. 13, 2010, edition of O used the words "Own Your Power" followed by subheadings reading "How to Tap Into Our Inner Strength"; "Focus Your Energy"; and "Let Your Best Self Shine." Following the launch of these events and publications, Brown claims that she began to receive phone calls from people who were confused about her business and whether it was connected to Oprah Winfrey and her television network. Brown later filed suit in July 2011, but Southern District Judge Paul Crotty granted the defendants' motion to dismiss in 2012, stating that the use of the words "Own Your Power" constituted fair use. Undeterred, Brown appealed to the Second Circuit.

Judge Chester Straub, writing for the three-judge panel, concluded that the plaintiff had plausibly alleged that "Oprah was attempting to build a new segment of her media empire around the theme or catch phrase 'Own Your Power,' beginning in the October Issue and expanding out from there." Turning to the defendants' fair use argument, the court wrote that the defendants had failed to prove good faith, even going so far as to state that it was "implausible" that someone as famous as Oprah "would attempt to trade on the goodwill of someone relatively obscure like Kelly-Brown." Unconvinced, the court wrote, "We agree that these allegations do plausibly suggest that the defendants had knowledge of Kelly-Brown's mark, liked it, and decided to use it as their own. In other words, defendants' allegations that they did not intend to trade on Kelly-Brown's good will, even if true, do not preclude a finding of bad faith." This decision will thus clear the way for Brown's trademark lawsuit against Oprah and the other defendants.

In the meantime, it seems unlikely that the Second Circuit's ruling will make Oprah's Book Club.


En Garde!

The French appear ready to declare "defeat" in their efforts to crack down on digital media piracy.

Facing decreased media industry revenue, French lawmakers launched new efforts in 2009 aimed at fighting unauthorized file-sharing; this effort was touted by some as "the toughest anti-piracy law in the world." According to the New York Times, "repeat offenders who ignored two warnings to quit downloading movies or music illegally were confronted with the prospect of a suspension of their Internet connection." Now, however, it appears that French President Francoise Hollande is ready to give up, shutting down the agency created to enforce the new anti-piracy law put in place by his predecessor, Nicolas Sarkozy. Fleur Pellerin, the French minister in charge of Internet policy, essentially stated that the policy was unenforceable, likening Internet access to access to clean water: "Today, it's not possible to cut off Internet access," she said. "It's something like cutting off water."

Now, instead of cutting off Internet access, the French government may choose to impose a 60 Euro fine on Internet pirates. Some members of the government have even suggested doing away with the entire warning system and accompanying potential penalties. These same lawmakers, however, fail to offer other ideas for cracking down on France's media piracy problem, which, by all accounts, is getting worse. SNEP, a French recording company, said Friday that "industry revenue fell by 6.7 percent in the first quarter of the year. More alarmingly, revenue from digital outlets fell by 5.2 percent -- the first quarterly decline -- though the organization said several special factors played a role in this." At the same time, however, visits in France to illegal music sites grew by 7 percent in just two years.


Batter Up

It was only a matter of time until we heard more about the sale of the Dodgers. On Wednesday, a Los Angeles Superior Court judge ruled that the terms of the 2012 sale of the baseball team should be made public. Guggenheim Baseball Management purchased the team for, if rumors are to be believed, $2.15 billion. Readers will recall that the Dodgers were sold after team owner Frank McCourt reached a $131 million divorce settlement with his then-wife, Jamie. Following the sale of the team, the former Mrs. McCourt sued to void the settlement on the grounds that the team's value was "grossly undervalued" in the divorce proceedings.


BMI Battles with TMZ

Someone should probably tell TMZ what "exclusive" means.

On Wednesday, TMZ reported that Broadcast Music Inc. (BMI), one of the main organizations that collects public performance royalties on behalf of songwriters, composers and music publishers, had sued 12 bars and restaurants in the United States for the unauthorized use of its clients' musical works. Even though BMI sues numerous establishments across the country every year, TMZ thought that this case was special and decided to call its report "exclusive." Not shy about pushing the envelope, TMZ went further with its story and said that BMI would be to blame if "a bunch of small-town bars possibly get[] forced out of business for the capital offense of playing their songs." TMZ also reported that BMI "thinks it is entitled to $150,000 for every song played." Apparently, no one at TMZ is familiar with copyright law, which "theoretically allows successful plaintiffs to collect up to $150,000 per infringement." BMI, unsurprisingly, was unhappy with these remarks, and demanded a retraction, calling the TMZ story a misrepresentation.

TMZ should probably stick to taking unflattering photos of celebrities on the beach and leaving the legal interpretation alone.


Read the TMZ story here: http://www.tmz.com/2013/06/05/bmi-lawsuit-michael-jackson-lil-wayne-lady-gaga-rolling-stones-small-bars/

June 15, 2013

The Fox Searchlight Ruling and What It Means for Unpaid Internships

By Kristine Sova

On June 11th, U.S. District Judge William H. Pauley III ruled that two interns who worked on a movie produced by Fox Searchlight Pictures Inc. (Fox Searchlight) were improperly classified as unpaid interns under federal and New York laws, and were actually employees who should have been paid. The case is Glatt v. Fox Searchlight Pictures Inc., Civil Action No. 11 Civ. 6784, pending in the Southern District of New York.

Reports from the non-legal press cast the decision as the death knell for unpaid internships. Yet is it? Technically, no (at least for the time being). However, practically, for any business taking notice, particularly those that have long relied on internship programs for staffing, the answer could very well be yes.

In reaching his decision, Judge Pauley applied the six criteria for determining whether an internship at a for-profit institution may be unpaid under the Fair Labor Standards Act. The six criteria are as follows: (1) the internship is similar to training that could be given in an educational environment; (2) the internship experience is for the benefit of the intern; (3) the intern does not displace regular employees, but rather, works under closer supervision of staff; (4) the entity derives no immediate advantage from the intern (and, on occasion, the entity's operations may actually be impeded); (5) the intern is not necessarily entitled to a job at the conclusion of the internship; and (6) the intern has been notified, and understands, that he or she is not entitled to wages for time spent participating in the internship.

However that is not the test that Judge Pauley applied - it's the test that he did not apply - that ended up being the game changer for Fox Searchlight. In reaching his decision, Judge Pauley rejected the request of Fox Searchlight and the other defendants to also apply a "primary benefit test," deeming the test "subjective" and "unpredictable." Had the court applied the primary benefit test, Judge Pauley would have also determined whether "the internship's benefits to the intern outweigh the benefits to the engaging entity." If they do, then arguably the internship was properly an unpaid one.

Significantly, only five weeks earlier, another district court judge in the same district (Judge Harold Baer Jr.), albeit in a different case, denied the plaintiff interns summary judgment on the same issue. The case is Wang v. The Hearst Corporation, Civil Action No. 12 Civ. 0793. While the facts and circumstances of the underlying internships are not the same, the arguments made were. What was Judge Baer's view of the primary benefit test? It is a key consideration, and one that should be considered in addition to the six criteria.

So where does the Fox Searchlight decision leave us? When considered in conjunction with Judge Baer's, it is without a definitive test for unpaid internships in the Southern District of New York.

The good news for employers is that Judge Pauley's decision is just one opinion that may be overturned on appeal. (Representatives for Fox Searchlight have indicated that the company intends to pursue an appeal.) The bad news for employers is that Judge Baer's decision may be overturned instead. (The plaintiff interns in Wang have requested leave to appeal Judge Baer's decision.) Other bad news for employers is that unless a higher court steps in and resolves this split, other judges in the Southern District of New York might follow Judge Pauley's lead.

In the meantime, while certainly not a death knell for unpaid internships, Judge Pauley's decision might be the tipping point in the battle over this subject, particularly as more intern lawsuits are filed by the plaintiffs' bar. Indeed, only two days after Judge Pauley rendered his decision, the firm representing the plaintiff interns in both Fox Searchlight and Wang filed a lawsuit on behalf of two former interns against Condé Nast.

For some employers, this increased risk of getting sued over an unpaid internship program will be incentive enough to simply hire interns as workers and pay them the minimum wage. For other employers, it will not be, and there's nothing wrong with that. Unpaid internships are not illegal so long as they are structured correctly. Any employers who utilize them, and who have not already done so, should be making sure that they meet the most rigid reading of criteria required for internships to be unpaid under applicable federal and state laws. For New York employers, this means meeting all six criteria under the federal test, as well as five more criteria under a state test.

Kristine Sova is a solo practitioner focusing on the representation of employers in labor and employment law matters. She can be found at www.sovalaw.com.

June 17, 2013

Job Opportunity - Sirius XM Radio

Position: Entertainment Attorney
Employer: Sirius XM Radio
Location: New York, New York
Position Summary: Primary duties will consist of drafting on-air talent and licensing deals for talk, music and sports programming for distribution on channels on all Sirius XM platforms, etc...

Click Here to view full job description: http://www.jobtarget.com/link.cfm?c=ssrRkuYYdFdS

June 24, 2013

While a Quarterback Looper tries to take down the NCAA Football, National Collegiate Athletic Association is on the Defensive for Publicity Right Violations

By Irina Tarsis

Contrary to popular belief, IP law does not protect our rights to exploit our own likenesses for commercial purposes. Celebrities like David Beckham, Angelina Jolie, Justin Bieber and Bruce Willis cannot trademark, patent or copyright their names, likeness, voices, or mannerisms. However, individuals may preclude others from using these personal attributes for commercial exploitation without their consent under the right of publicity doctrine. Most states have codified their privacy laws to classify appropriation of another's likeness as a form of an invasion of privacy. Thus, under rights of publicity, companies are required to obtain permission from individuals, including celebrities, for using their attributes in promoting a commercial product.

On May 21st, the U.S. Court of Appeals for the Third Circuit handed down a long anticipated decision in Hart v. Elec. Arts, Inc., 2013 U.S. App. LEXIS 10171 (3d Cir. N.J. May 21, 2013). It reversed the granting of summary judgment and held that the First Amendment does not shield Electronic Arts, Inc.'s (EA) unlicensed use of college football players' likenesses in NCAA Football sports videogames. Ryan Hart, Plaintiff/Appellant, is but one member of a Class made up of dozens of athletes whose identities and likenesses were incorporated into the game without authorization.

Originally released in the early 1990s, the NCAA Football videogame has been revamped and re-released annually to work with different game consoles and their next generation models. It evolved to include several Division I-A teams, as well as offer gamers options to recruit players, customize interfaces and offer trophies. Only the players who were chosen to adorn the covers of the game boxes were compensated for their participation. Historically, EA was careful not to use official logos of individual teams or the names of the actual players; however, college teams are listed by city and players are identified and identifiable by their actual numbers, class year, home team and vital statistics.

Ryan Hart is a former Rutgers college football player whose avatar is recognizable on the Rutgers virtual team as player number 13. However, EA did not license his likeness. In his original complaint, Hart alleged misappropriation of his likeness and biographical information, and sought, among other forms of relief, actual damages, statutory damages, punitive damages, disgorgement of all profits, enjoining future use of his and other class members' identities and likenesses in videogames, legal fees and destruction of all the copies of the videogame to the extent permitted by law. The case was initially dismissed on a summary judgment motion on First Amendment grounds.

A reversal in Hart may bolster another pending rights of publicity class action case brought by former NCAA athletes against the NCAA and Collegiate Licensing Company, alleging that the defendants violated sections of the Sherman Act, the federal antitrust laws, and unlawfully used the athletes' likeness and images in videogames produced by EA, television contracts, rentals and on-demand streaming, apparel and other products. O'Bannon, et al., v. N.C.A.A., 4:09-cv-01968-CW (Argued June 20, 2013). Before addressing the merits of the allegations in O'Bannon, U.S. District Judge Claudia Wilken first will need to decide whether to certify for a class action suit the former basketball and football players, including lead plaintiff O'Bannon, a former University of California basketball player.. The class suit would proceed under the legal theory that O'Bannon and other similarly situated athletes were injured in their right of publicity while the NCAA was unjustly enriched from retention of proceeds from sale of the products depicting the uncompensated athletes.

In Hart, EA conceded that NCAA Football infringed on the right of publicity as recognized in New Jersey. Thus, Judge Greenaway, writing for the majority, focused only on "whether the right to freedom of expression overpowers the right of publicity." Hart v. Elec. Arts, Inc., 2013 U.S. App. LEXIS 10171 (3d Cir. N.J. May 21, 2013).

Presented with a case of first impression, in Hart the Court relied heavily on a number of other states' decisions, including Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. N.Y. 1989) and Comedy III Productions v. Gary Saderup, Inc., 21 P.3d 797 (Cal. 2001), both which had more general IP holdings. Comedy III Productions in particular was important to the Hart Court because there, the California court introduced a balancing test to determine when individuals may or may not be allowed to demand payment or deny permission for depicting them in commercial projects. Specifically, the test focused on "whether the work in question adds significant creative elements so as to be transformed into something more than a mere celebrity likeness or imitation." 21 P.3d 797, 799. There the court inquired as to "whether a product containing a celebrity's likeness is so transformed that it has become primarily the defendant's own expression rather than the celebrity's likeness." Id.

The test that the Saderup case ultimately formulated would favor the celebrity "when an artist's skill and talent is manifestly subordinated to the overall goal of creating a conventional portrait of a celebrity so as to commercially exploit his or her fame, then the artist's right of free expression is outweighed by the right of publicity." In Hart, as in Saderup, the "marketability and economic value of [an offensive] work derives primarily from the fame of the celebrities depicted." Hart v. Elec. Arts, Inc., 2013 U.S. App. LEXIS 10171 (3d Cir. N.J. May 21, 2013) citing Comedy III, 21 P.3d at 810.

In applying the Transformative Use Test to the instant case, the Court decided that mere creation of a virtual Hart did not satisfy the test, and the game did not sufficiently transform Hart's physical and biographical attributes. It believed that NCAA Football sought to create a realistic depiction of college football, and thus a purposeful depiction of athletes.

In Hart, dissenting Judge Ambro posits that the majority's application of the Transformative Use Test "underplays the creative elements of NCAA Football by equating its inclusion of realistic player likenesses to increase profits with the wrongful appropriation of Hart's commercial value." Therefore, "[t]his approach is at odds with the First Amendment protection afforded to expressive works incorporating real-life figures."

Judge Ambro also writes that "The Transformative Use Test I support would prevent commercial exploitation of an individual's likeness where the work at issue lacks creative contribution that transforms that likeness in a meaningful way. I sympathize with the position of Hart and other similarly situated college football players, and understand why they feel it is fair to share in the significant profits produced by including their avatar
likenesses into EA's commercially successful video game franchise. I nonetheless remain convinced that the creative components of NCAA Football contain sufficient expressive transformation to merit First Amendment protection."

Unless the parties settle now, Hart will proceed to discovery and trial to determine whether and to which extent Hart's privacy was violated. As for O'Bannon, Judge Wilken is likely to grant class certification, which too would probably lead to settlement. In the world where winning is gold, settlement of legal dispute may be platinum.

June 30, 2013

Week in Review

By Martha Nimmer


College athletes may one day be eligible to receive compensation for appearing on televised sports events. Last week in California federal court, U.S District Judge Claudia Wilken heard arguments over class certification in a case that began as a suit involving former NCAA athletes, but has quickly evolved into a suit that could include current NCAA players. Judge Wilken, The Hollywood Reporter writes, must decide "whether to certify a class of former athletes like Ed O'Bannon, Bill Russell and Oscar Robertson; to certify a class of athletes playing the games right now; to certify both; or to certify neither." Observers at the hearing report that the judge may be going for "the big one," that is, certifying a class of both former and current NCAA athletes.

At the hearing last Thursday, Judge Wilken remarked that she anticipates asking for an amended complaint, which is expected to include the name of a current NCAA athlete as a class representative. In response, the lead attorney for the plaintiffs stated that he had "been anticipating this for quite some time and there are a number of current athletes who have expressed a desire and an interest in joining the case." It remains unclear, however, who that current NCAA athlete will be.

The lawsuit, which now potentially affects thousands of current and former NCAA players, has changed dramatically over the course of four years. The suit, originally filed in 2009, initially involved publicity rights. In its sports-themed videogames, videogame maker Electronic Arts (EA) allows users to go into "dynasty mode" to "control characters with the same jersey numbers and other identifiable characteristics" of former NCAA players." This feature, among other factors, helped form the basis of the plaintiffs' initial suit. The NCAA argued, however, that Ed O'Bannon and other ex-players relinquished their publicity rights in release forms signed at the time they were in school; unfortunately for the NCAA, that argument shifted the focus of the lawsuit to "alleged antitrust injuries inherent in forcing athletes to sign waivers and having licensing partners enforce a boycott against ex-players making their own deals." Later, an amended complaint proposed that current NCAA athletes be included as a class to discipline the NCAA for allegedly creating "collusive restraints" not to pay athletes for "their names, images and likenesses in connection with live television broadcasts of games and video games."

When determining whether to certify the proposed classes, Judge Wilken will weigh a handful of factors, including whether the named plaintiffs adequately represent a class, whether there is commonality "in the questions of law and fact that support the claims," and whether a class action is the best avenue for deciding the case.


U.S. Releases its 2013 Joint Strategic Plan on Intellectual Property Enforcement

Last week, the Obama Administration issued its annual report on intellectual property (IP) enforcement. Included on the "action items" list of the 2013 Joint Strategic Plan on Intellectual Property Enforcement (the 2013 Report)is improving transparency in IP lawmaking and international negotiations, in addition to enhancing law enforcement communication with IP owners and educating authors on "fair use."

The 2013 Report provides a survey of recent activity by the administration on the IP front, from negotiations with trade partners abroad to crackdowns on counterfeit goods, ranging from counterfeit pharmaceuticals to infringing purses. Included in the report are statistics about how various departments and agencies of the federal government, such as Immigration and Customs Enforcement (ICE) and the Justice Department, have been fighting IP theft. According to The Hollywood Reporter, "the past year was also one in which Hollywood studios and ISPs enacted voluntary initiatives to discourage piracy -- something noted amid the administration's willingness to foster more cooperation among what it calls the stakeholders." The report also includes a section on transparency, underscoring the administration's long-stated goal of being more open. As part of this plan for increased transparency, IPEC has maintained an "open door policy, meeting with hundreds of stakeholders, large and small, across a broad range of sectors in developing and implementing the Administration's strategy for intellectual property enforcement."

Although the 2013 Report's section on enforcement efforts is not terribly specific, it does discuss the need for federal law enforcement officials "to continue to regularly engage rights-holders." Included in the section are statistics about various law enforcement efforts in the United States and abroad. According to the 2013 Report, customs seizures and criminal IP actions have risen modestly since President Obama took office. Since 2009, the U.S. Attorney's Offices have filed 178 IP cases against 254 defendants--a 2% increase in cases filed, and a 14% increase in defendants charged, compared to the previous year. Additionally, ICE and Homeland Security initiated 1,251 IP investigations and effected 691 arrests last year, compared to 730 investigations and 266 arrests in 2009.

Enforcement efforts are not limited to the United States, however. In November, for instance, the IPR Center issued its first international intelligence bulletin to INTERPOL, Europol, and the World Customs Organization reporting the dangers of counterfeit airbags. ICE, Homeland Security and the National Traffic Highway Safety Administration (NHTSA) issued a safety advisory to U.S. consumers in October, "as a result of testing conducted by the NHTSA of airbags purchased online by ICE-HSI agents during the course of criminal investigations into the distribution of counterfeit airbags through online sales." The airbags, the report states, were ordered online directly from China or from foreign-based wholesale business to wholesale business websites, and were described as the genuine manufacturer's part. "In an effort to share information with international partners, the IPR Center transmitted an international intelligence bulletin to consumers outside the U.S. who could be at risk if these airbags are installed in their vehicles."

The 2013 Report also includes a section on educating authors about fair use, stating "the Administration believes, and the U.S. Copyright Office agrees, that authors (including visual artists, songwriters, filmmakers, and writers) would benefit from more guidance on the fair use doctrine." To that end, the Copyright Office will soon begin publishing "major fair use decisions, including a summary of the holdings and some general questions and observations that may in turn guide those seeking to apply the decisions to their own situations."

Read the full report here: http://www.whitehouse.gov/sites/default/files/omb/IPEC/2013-us-ipec-joint-strategic-plan.pdf


Problems with Picasso

Citing concerns from Italian law enforcement that the painting was part of an embezzlement and bankruptcy fraud scheme, U.S. customs officials intercepted the sale of Pablo Picasso's 1909 work "Compotier et tasse" last month. Special agents with U.S. Immigrations and Customs Enforcement located and recovered the Picasso piece in New York on May 21st, where the work was being offered for $11.5 million as part of a private sale. The United States plans to repatriate the work to Italy in the coming weeks.

The painting's current owner, Gabriella Amati, is under criminal investigation and prosecution in Italy for numerous counts of embezzlement and fraud. Prosecutors in Milan had charged Amati and her late husband, Angelo Maj, with embezzlement and fraudulent bankruptcy offenses, according to the Justice Department. Amati and Maj are alleged to have worked with a Naples government official on various schemes to misappropriate city tax receipts. These schemes to embezzle Naples' tax revenue included "the use of fraudulent service contracts, forged accounting records, inflated operational expenses and fraudulently claimed refunds to Naples taxpayers," according to the Justice Department. The couple is charged with causing Naples to sustain $44 million in losses by transferring taxes that were collected for the city to the couple's own bank accounts.


Siri, Do I Have a Claim?

A federal judge in California ruled last week that Apple does not need to compensate a photographer for the company's use of an image of actress Zooey Deschanel's band in an iPhone commercial. The commercial aired from April 5, 2010 through April 18, 2010, showing numerous images including an iPhone 3GS, a demonstration of the phone's "Shazam" application and album cover art for the band. The photo in questions appears in the video montage for less than 5 seconds of the 30-second commercial.

Taea Thale, the photographer who shot the photo, sued Apple for copyright infringement in 2011, claiming that the company lacked permission to include her photo of the band, She & Him, in the commercial for iPhone 3GS. Thale did concede that she licensed the photograph to Merge Media for "limited use in magazines and posters to promote the band's appearances," but stated that the license explicitly excluded the right to use the photo to promote other entities or products. Unfortunately for the plaintiff, U.S. District Judge Yvonne Gonzalez Rogers agreed with Apple that Thale failed to "proffer sufficient non-speculative evidence to support a causal relationship between the infringement and the profits generated indirectly from such infringement." Judge Gonzalez Rogers added that Thale "misinterpreted her burden on this motion for summary judgment and her factual support on causation is lacking." Adding to Thale's list of legal deficiencies, the judge also pointed out that the plaintiff mistakenly relied on precedent from different circuits, an error usually confined to first year law students. Thale, for instance, cites an 8th Circuit decision in Andreas v. Volkswagen of America Inc., which "reinstated a jury's profit award where the infringing use was 'the centerpiece of a commercial that essentially showed nothing but the TT coupe.'"

The plaintiff, the court wrote, also failed to prove that her photo was the "centerpiece" of Apple's commercial and helped promote the company's image. "Even assuming arguendo that these facts are undisputed, they are not material to causation, and in fact, they fail to address causation between the use and revenue altogether," Rogers wrote. "At best, Thale's facts establish that Apple liked the photo, used it, approved of the 'Concert' commercial, and hoped that it would generate sales of iPhones." Thale, in a tautological argument for the ages, also tried to argue "the only reasonable conclusion is that the intentional selection and use of the Thale photograph did have an impact in iPhone sales - no other logical conclusion can reasonably be reached." (Emphasis in ruling.) Judge Gonzales Rogers ruled, however, that "logical and reasonableness ... do not equate to causation for the purposes of this motion."

Maybe next time, Thale should ask Siri for legal advice.


About June 2013

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

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