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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.


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This page contains a single entry from the blog posted on June 2, 2013 10:23 AM.

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