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November 1, 2013

Week in Review

By Martha Nimmer

Stocks, Bonds and Professional Athletes

Houston Texans running back Arian Foster and San Francisco 49ers tight end Vernon Davis have signed brand contracts with athlete stock corporation, Fantex, Inc. As part of the deal, Foster will "receive $10 million in exchange for Fantex's receipt of a right to 20 percent of the running back's future on-and-off field income." Additionally, Davis recently "agreed to $4 million in return for a 10 percent interest in the tight end's brand income (as defined in the brand contract)." These payments, however, are contingent on Fantex's ability to obtain financing to pay the purchases prices. The company hopes to secure this funding by selling shares in a "tracking stock" that is linked to a player's economic performance, a metric that includes the value of playing contracts, brand endorsements and appearance fees. Fantex also hopes to expand beyond football players and into other sports and entertainment fields in the near future.

Since news of Fantex's deal with Arian Foster was released two weeks ago, the company has been causing quite a stir on and off the playing field. In evaluating the economic potential of Fantex, some financial professionals appear unconvinced, citing Fantex's "complex structure and many risks, including the chance that an injury could cut short a player's career and earnings potential." Additionally, Forbes raises another important question, namely, "who controls the Arian Foster brand and determines what opportunities are best for him?" Fantex CEO Buck French responded: "[w]e absolutely will provide advice and perspective on who we believe are endorsements or partners that align with the [athlete's] brand. It's advice that he does not have to take. He is in charge of his own brand . . . we are just at the table. Arian is represented by William Morris Endeavor; they will decide what they want to do and whether they want to take our advice or not. The ultimate decision rests with the athlete." That answer, however, may not sit well with traditional investors, who are accustomed to companies acting in the best interest of the shareholder. Additionally, potential investors may be hesitant to invest in a company where they lack any discernible power to shape the future of the brand or determine the future of the company. These are concerns that Fantex will have to tackle head on, so to speak, if the company wants to attract the necessary financing needed to keep Foster, Davis and other potential NFL players on its payroll.

For the braver investors among us, however, reservations for customers interested in purchasing "Fantex Series Arian Foster Convertible Tracking Stock" will open next week. Currently, however, the company is not accepting orders for the I.P.O.s.



Family Feud

For decades, the families of renowned American sculptor Alexander Calder and his art dealer Klaus G. Perls enjoyed a bond founded on what one descendant of Calder described as complete trust. Now, however, that bond appears to be severed for good. In a complaint filed in New York State Supreme Court, the Calder estate claims that the Perls family secretly kept hundreds of Calder's works and, writes The New York Times, "swindled the artist's estate out of tens of millions of dollars." Shockingly, the suit also claims that Perls -- "a dealer with a sterling reputation who campaigned to rid his industry of forgeries" -- sold dozens of fake Calder works. The suit goes on to claim that Perls was a tax cheat who hid millions of dollars in a Swiss bank account, "a secret his daughter said she maintained by paying off a former gallery employee with $5 million." In response, attorneys for the Perls family claim in court papers that the Calder lawsuit is a "sham and manufactured claim." The Perls family has asked the court to dismiss the case, adding that the statute of limitations has expired.

The family feud and ensuing legal battle began in 2010 with a "chance discovery" at a Canadian art gallery. The gallery, unnamed in The New York Times article, contacted the Calder Foundation about a $1.5 million wooden mobile, "Standing Constellation." The piece had reportedly been purchased from the Perls Foundation, a trust set up following the shuttering of the Perls Gallery in 1997. Alexander S.C. Rower, chairman of the Calder Foundation and grandson of the late sculptor, said he was "puzzled because 'Standing Constellation' had not been listed on an inventory of holdings provided by the Perls Gallery after Calder's death, nor had the Calder estate received any payment from its sale." His interest piqued, Rower set out to track down the history of the sculpture in question. Rower, who "has spent more than 15 years compiling the definitive catalog of Calder's work," consulted the Foundation's provenance records and "said he found several other works in the Perls inventory that were later sold without the estate's knowledge." Many of the pieces were listed as being delivered by a woman in Switzerland known simply as "Madame Andre," because what art mystery would be complete without a shadowy character named "Madame Andre"? Armed with this information, Rower and the rest of the Calder family eventually sued the Perls estate, Perls' daughter, and the woman known as "Madame Andre."

"Standing Constellation" was just one of many unaccounted for pieces in the Perls family's possession, the Calder investigation revealed. According to court papers, "nearly 700 Calder bronze sculptures, jewelry and other works worth well in excess of $20 million that had been in the Perlses' hands and are unaccounted for." Eventually, the Calder family also learned that "Madame Andre" was not a person, but a Swiss bank account: "Katherine Perls [daughter of dealer Klaus Perls] acknowledged in an affidavit, 'Madame Andre' was a euphemism for her father's Swiss account, 'perhaps even a humorous or shorthand reference for this account, or to avoid disclosing to others who were present that he did have this Swiss account.'" Additionally, the Calder family has claimed that a former employee of the Perls Gallery said that the gallery had sold approximately 30 fake Calders.

With familial betrayal, international intrigue and millions of dollars of priceless art at stake, the plot in this family feud is undoubtedly due to thicken.


Legendary Producer v. the King of Pop

Grammy Award winning music producer Quincy Jones has sued Michael Jackson's record label, MJJ Productions, and Sony Music Entertainment in Los Angeles Superior Court for $10 million in royalties that the plaintiff and his production company claim the defendants owe him on contracts from 1978. In the complaint, the plaintiff "alleges that master recordings he worked on were wrongfully edited and remixed so as to deprive him of backend profit participation." Jones also claims that he has been denied credit for his work on the singer's posthumous releases and that MJJ Productions and Sony have entered into "side deals" that divert profits that should have been included in the calculation of royalties owed to Jones.

Quincy Delight Jones Jr. -- winner of 27 Grammy Awards and producer of the King of Pop's best-selling albums Off the Wall, Thriller and Bad -- co-produced Michael Jackson's 1982 Thriller album with Jackson. Over 66 million copies were sold, making it the best selling record in history. Jones also co-produced Jackson's 1987 album Bad, which sold 45 million copies, and wrote music for the 1978 movie "The Wiz", which starred Jackson. Jones claims that he entered into agreements with the pop legend in 1978 and 1985 for work on the singer's solo albums. The contracts, according to the complaint, "stipulated that Jones be given the first opportunity to re-edit or remix any of the master recordings, that the coupling of master recordings with other recordings required his prior written consent, and that he be given producer credit for each of the master recordings." The deal also entitled Jones, as producer, to additional compensation, including upfront payment and a "backend" percentage if remixed masters were released.

Following Jackson's death in June 2009, the pop star experienced a huge "resurgence of popularity." Seeking to capitalize on the singer's renewed fame, Columbia Pictures released "This Is It" from AEG Live and The Michael Jackson Company, which showed footage of preparations for what would have been the singer's final concert tour. Two years later in 2011, Cirque du Soleil debuted a show entitled "Michael Jackson: The Immortal Tour," which is rumored to have grossed an astounding $300 million to date. Earlier this year, Cirque du Soleil also began a new production called "Michael Jackson: One." Soundtracks for "This Is It" and the Cirque du Soleil shows have also been released. Despite the enviable commercial success of the remixes and re-edits of the Michael Jackson works, Jones, however, is not pleased, stating that the terms of his deal with Jackson and Sony "were breached when MJJ allowed third parties to exploit these works 'without first providing a reasonable opportunity to Jones to perform such remixes and/or re-edits.'"

Jones is seeking at least $10 million in damages for breach of contract and demands an unspecified amount of "unpaid royalties due to him, remixing fees that would otherwise have been paid, and compensation for the loss of the value of credit he would have received." He is also demanding an accounting.

The complaint is available at: http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/quincyjones.pdf



CMJ Business Law Seminar

By Candy Santana

Change, change, change, the common theme at the Entertainment Business Seminar, coupled with recent decisions by the courts and their implications on the industry. The panel devoted to copyright, which was led by Christine Lepera, was the culmination to a day filled with informative discussions. This panel was significant because as noted, Congress is in the early stages of renovating the Copyright Act for the first time since 1970. This section consisted of an amazing array of panelists who conversed about a wide variety of topics, such as recent developments in intellectual property law, the first sale doctrine, and fair use. The panel also touched upon several recent cases, including the Pandora v. ASCAP, Kirtsaeng v. John Wiley & Sons, and Cariou v. Prince.

Gary Greenstein began by tackling the issues with musical works: underlying compositions, notes and lyrics, direct licensing, and Performance Rights Organizations. He discussed with great detail ASCAP's consent decree, along with an analysis of Pandora v. ASCAP, which, as Mr. Greenstein stated, is "Shaking up the world of ASCAP." Why is this decision shaking things up? The court held that the ASCAP blanket license must include its entire repertoire, including the songs of the publishers who are trying to withdraw their digital rights. The court reasoned along with other issues that in the consent decree the language "unambiguously" states that ASCAP has to provide Pandora a license to perform all of the works in the repertory and ultimately granted the motion for summary judgment in favor of Pandora. Due to the fact that this decision just came down recently, we shall see what the implications will be with respect to licensing.

Next, Joe Salvo, the current president of the Copyright Society of the U.S.A., discussed cases that dealt with the first sale doctrine, starting with Kirtsaeng v. John Wiley & Sons. He began by addressing the question: To what extent does the first sale doctrine apply when a copy or copyrighted work is manufactured and sold abroad? In Kirtsaeng v. John Wiley & Sons, the issue was whether the "first sale" doctrine applied if the copy of work was printed abroad and then initially sold with the copyright owner's permission, and whether the buyer of the work is allowed to bring the copy into the United States and distribute the work as the buyer desired. As noted by Mr. Salvo, the owner of the particular copy lawfully made under this title is permitted without the authority of the copyright owner to sell or otherwise dispose of that particular copy. However, section 602 of the Copyright Act indicates that importation into the U.S. without the authority of the owner of a copy of work acquired outside the U.S. is a violation of the copyright. The court reasoned with the geographical limitations and suggested that Congress wanted to even out the playing field for those manufactured copies made in the U.S. and those made abroad. The Court addressed the other issues raised by both parties, but ultimately held that the "first sale" doctrine applies to copies of a copyrighted work lawfully made abroad.

Mr. Salvo continued with the inquiry of to what extent does the first sale doctrine apply to digital copies and digital music? He stated that, as a matter of public policy, once the copyright owner has reached the economic benefit of the copyrighted work, we are not going to let the copyright owner continue to control the distribution of the copyrighted work. He summed up his discussion with an analysis of Capitol Records, LLC, v. Re Digi Inc, where the court held that the owner of a digital music file, lawfully made and purchased, can not resell its file through ReDigi under the first sale doctrine.

Lastly, Moderator Christine Lepera discussed Cariou v. Prince in her presentation of the fair use doctrine. Ms. Lepera began by introducing background facts of the case and continued with the District Court's analysis. In Cariou v. Prince, the court rejected Prince's fair use defense and concluded that Prince did not intend to comment on Cariou or Cariou's photos, or on aspects of popular culture closely associated with Cariou or the photos when he appropriated them. However, the Second Circuit reversed the District Court's decision, holding that all works except five of Prince's artworks were considered fair use of Cariou's work as a matter of law. What is interesting about this case (as provided in Ms. Lepera's Power Point presentation), is that the Second Circuit held that "what is critical is how the work in question appears to the reasonable observer, not simply what an artist might say about a particular piece or body of work." It is fascinating to see how the court used a "reasonable observer" standard in order to determine if the work was transformative. The question then becomes: What is a reasonable observer? How would the reasonable observer measure transformative use? It will be interesting to see how this case would effect the entertainment industry with respect to copyright infringement.

The panel ended with questions led by the Moderator and the audience. Change seemed to be the common theme and the key developments discussed by the panel left us thinking about what will be the future of entertainment business and law.

November 2, 2013

2013 Entertainment Business Law Seminar Presented by CMJ & EASL

By David Jacob, Esq.
Marc Jacobson, P.C.

Collective Versus Direct Digital Licensing

The first panel of the day featured speakers with varying perspectives as to whether copyright owners are better off having the Performance Rights Organizations (PROs) collectively license their performance rights for new media or negotiate the deals directly themselves. Marc Jacobson of Marc Jacobson, PC led the discussion, which featured representatives from Spotify, Sound Exchange, music publishers and an economist.

James Duffet-Smith, Head of Licensing Business Affairs for Spotify, stated that from its point of view, direct licensing makes sense when dealing with recordings because of the way the transaction is handled. The labels deliver recordings, which Spotify is able to match in its system, and track and pay out directly based on the number of plays. However, in the context of music publishing, there is not any content actually changing hands. A publisher does not deliver any actual recordings, and it is more difficult for companies in Spotify's position to pay out the many songwriters or publishers that could be involved in a particular song in a particular territory. The problem is the lack of a central database upon which everyone can rely for intellectual property ownership information.

One thing that everyone seemed to agree on, which was also reiterated later in the day by keynote speaker David Israelite, CEO and President of the National Music Publishers Association, Inc., is that the PROs are doing as good a job as can be expected; although they are working in a broken system that needs to be updated in the digital age. The panel suggested that one way to do this is to adjust how the consent decree operates, or remove it altogether. The consent decree limits a PRO's ability to exploit the full value of its catalog, and is the main reason why publishers are attempting to withdraw their new media rights from the PROs. It was suggested that having the publishers involved in the rate court process could be one way to have all parties properly represented throughout the process.

Film Finance: It's To Your Credit: Getting the Full Use of Tax Credits for Film Production

This panel gave an overview of how New York State offers film tax credits. New York has made great strides over the last decade to get more talent and production into the State for various types of productions. As one of the speakers pointed out, there was once a time where most films would go to Toronto and Montreal to film "New York" scenes, simply because their tax credits were more attractive to the producers.

New York City's efforts to change this trend have been extremely successful, as 2012 was the busiest year yet, with 26 prime time episodic shows produced in NYC, along with 162 films and more than 160 TV shows. The entertainment industry now employs over 130,000 New Yorkers, and contributes $7.1 billion to the city's economy.

In addition to focusing on attracting film productions to New York, efforts have also been made to increase commercial productions and post-production services. Generally speaking, a producer can receive transferable tax credits of up to 30% for qualified film production or post-production costs, or 20% of qualified production costs for commercials.

Ethics: The Law of Anyplace: Ethical Considerations of Lawyering Without Borders (Virtual Practices, Outsourcing, Technology)

Professor Stephen Gillers, Elihu Root Professor of the New York University School of Law, led the ethics discussion for the day. His presentation focused primarily on the ability for an attorney to represent clients in other states and at what point does this amount to "practicing law" in a state in which one may not be licensed to practice. Technology has made it very easy for an attorney to provide legal services from almost anywhere in the world, and the lines are becoming blurred as to when one may commit malpractice.

The logic that one can represent a client in another state as long as the attorney stays at his or her computer in a state in which the attorney is licensed seems to be dated. If that same attorney goes to meet his or her client and offers legal services and advice directly in that state, then he or she may be committing malpractice by performing the unauthorized practice of law.

Professor Gillers also argued that the bar exam and general law school curriculum might be a poor approach to evaluate how fit an attorney is to practice law. Most attorneys are fairly specialized in the type of law in which they practice. Furthermore, while an attorney may be licensed to practice law in New York, it doesn't mean that he or she is fit to practice any type of law. As an ethics attorney in New York, Gillers is licensed to practice any type of law, but he would still be committing malpractice by representing a client in a specific field in which he is not familiar or competent. Alternatively, he questioned that as an attorney who specializes in copyright law, which is federal law and the same in every state, what is the point of requiring that the attorney be licensed in every state in which he or she actively practices?

Changing the Channel: Recent Cases and Developments Redefining the Television Landscape

Much of this panel focused on the ongoing controversy surrounding the Aereo lawsuits. The panel focused on Aereo's attempts to circumvent the copyright laws by claiming that its service does not constitute a public performance. Rather, Aereo claims that each transmission is a private performance, because each user has its own specific antenna that transmits a unique copy of specific content directly to an individual user. This argument comes from the Cablevision rulings, which the panel stressed, are being exploited in ways that can be very detrimental to the entire broadcasting industry and content owners.

As Rick Stone, partner at Jenner & Block, included in his presentation, Aereo threatens revenues from retransmission fees and has the potential to completely collapse the broadcast TV model as we know it. He went on to discuss two main mistakes made by the Cablevision ruling. First, the Cablevisioncourt ruled that a transmission is in itself a performance, and consequently, it becomes necessary to determine who is capable of receiving each particular transmission. Stone argued a public performance could consist of multiple transmissions to different places at different times, and that it was the court's focus on the individual transmission of a unique copy that was Cablevision's second mistake. Stone stated that Cablevision tried to distinguish each transmission and decide if any individual transmission would amount to a public performance. However, Stone clarified that the Transmit Clause in question makes no mention of "copies" or "master copies", but rather the statute simply focuses on whether a "work" is transmitted.

The panel was hopeful that the Supreme Court would hear this case in the near future and distinguish or overrule the Cablevision ruling to further protect the rights of distributors and content owners. If the courts uphold the Aereo business model, it essentially creates a roadmap for copyright infringement.

Sync or Swim: Licensing Music for Film/TV/Video Games in a Digital World

This panel focused on some of the basic factors to keep in mind when dealing with synchronization licensing. This segment of the music industry has become a reliable source of income as well as an important tool for breaking artists. TV shows, commercials, video games and movies all present different obstacles in placing and negotiating a song in such a project.

For TV shows, Jeff Brabec, Vice President Business Affairs at BMG Chrysalis/BMG Rights Mangagement, spoke about the different strategies that certain shows will take in order to negotiate the best deals. Some of the music-oriented shows, such as "American Idol" and "Dancing With the Stars", will employ a standard license that pays all songs the same rate based on the amount of time the song is used. These shows are essentially a "take it or leave it" license that allows no room for negotiation. The standard license for most TV shows includes media rights to the effect of "all media now known or hereafter devised" and a term of "in perpetuity." However, Brabec was quick to point out that as a publisher, he can only grant the rights to what he controls. As such, he will always cross out "in perpetuity" and simply write "for life of copyright."

The panel also focused on scoring and licensing music for video games. In this context, most people will think of games like Guitar Hero and NBA2k13 (music supervised by Jay-Z). However, in the grand scheme of video games, the music is normally one of the last things to be added. Very few games will provide for a large budget for music unless it is to be a major focus of the game. Even games like Grand Theft Auto that let users control a number of different radio stations throughout the game still have relatively small music budgets compared to the overall budget of the production. Most of the time, composers will be added at some point near the end of the game development and will use storyboards and screen shots to begin scoring a soundtrack that will be used in various scenes.

Chris Hajian, the lone composer on the panel, spoke about the different projects in which he has been involved and the types of work-for-hire contracts he has become accustomed to signing. However, he also shared some words of caution that there are still many artists and composers who are taken advantage of because they don't know the value of their own works and the long-term royalties that can be generated after the licenses. His advice for up-and-coming composers was to read the contracts and understand the rights that are being signed over. His one horror story was from a colleague of his from years ago that scored a nice little jingle and was convinced to sign it over as a work-for-hire for a new TV show. By doing so, this composer gave up any future royalties in the song and only received the fairly small upfront licensing fee. It just so happened that this song became the theme song for a fairly successful TV show that you might have heard of..."The Price Is Right".

Copyright 2013

The last panel of the day focused on recent developments surrounding intellectual property law. Notably, the panel touched on the Cablevision/Aereo controversy and the court's focus on the potential audience of a particular transmission, rather than the potential audiences, of the underlying work. While the Second Circuit has focused on this analysis, the Ninth Circuit has focused more on the transmission of the underlying work, which could lead to a Circuit split.

Another interesting topic of this panel was the discussion of the First Sale Doctrine and how it is applied in the digital context. The panel first touched on the conflict between the First Sale Doctrine and the limitations on the unauthorized importation of copyrighted material. The Supreme Court ruled earlier this year that the First Sale Doctrine trumps the importation limitation and does apply to foreign manufactured goods that are lawfully made (Kirtsaeng v John Wiley & Sons, Inc.).

The First Sale Doctrine discussion continued with a summary of the recent Capitol Records v ReDigi decision. ReDigi is an online marketplace for used digital music. Its software would analyze a user's music files and allow the upload and sale of such files. Upon each sale, the ReDigi software would erase the seller's copy of the music on the user's hard drive. The key factor that killed this service was the process of uploading a seller's music files to ReDigi's "cloud locker." This process created unauthorized reproductions of the works. Although ReDigi argued the First Sale Doctrine protected it, the courts disagreed because the service violated the copyright owner's exclusive reproduction right. Within this decision the court strongly rejected the expansion of the First Sale Doctrine to cover digital files.

November 11, 2013

Week In Review

By Martha Nimmer

Lost & Found

After being hidden away for almost seven decades, over 1,500 works of art stolen by the Nazis have been discovered in an unassuming apartment in Munich. The collection is said to include pieces by Henri Matisse, Pablo Picasso, Paul Klee and Marc Chagall.

The priceless collection of art, considered "degenerate" by the Third Reich and confiscated from Jewish collectors during World War II, "eventually made their way to a German art collector, Hildebrand Gurlitt," during World War II, writes NBC News. Gaining control of such an unparalleled art collection was not just a stroke of good fortune, however, as the The New York Times makes clear. As it turns out, Hildebrand Gurlitt was one of the Nazi era art dealers chosen by Joseph Goebbels to gather degenerate art from Jewish collectors. In some instances, certain confiscated art would be "paraded in an exhibition of shame." The exhibition, however, proved too popular, which met with dismay and disapproval from the Third Reich. After that, instead of being paraded around, thousands of stolen works of art simply disappeared, whereabouts unknown for decades -- that is, however, until some of those works of art turned up in 2011 in a Munich apartment following a raid by Bavarian police. Police officials, writes NBC, raided Gurlitt's apartment as part of a 2010 inquiry into his finances.

The works, re-discovered back in 2011, were hidden by the now deceased Gurlitt's son, Cornelius. According to NBC News, Cornelius "kept the works hidden in darkened rooms, selling a painting every now and then when he needed a cash infusion . . . ." The paintings' time out of the shadows was short lived, however. After their initial discovery, they were transported to a Munich warehouse for storage and safe keeping. Since then, German officials have been silent about their discovery "due to the diplomatic and legal complications stemming from the loot," particularly claims for restitution.

Unsurprisingly, this week's revelation by the German government of its two-year old discovery has raised many questions for European and North American governments and Holocaust survivor advocates. Just last Wednesday, The Wall Street Journal reported that the U.S Department of State was considering "a formal push to get Germany to cooperate more with other governments and private groups in returning the Nazi-confiscated artworks discovered in a Munich apartment to their rightful owners . . . ." According to an unnamed source close to the State Department, the Department "believes that prosecutors in Germany violated the Washington Principles of 1998, international norms that govern the handling of claims to art seized or looted by the Nazis. The specific provision violated calls for a speedy publication of information regarding the discovery of stolen works." The source also indicated that the State Department would push Germany to revise its "30-year statute of limitations for filing claims in cases where the artwork is found to have been held by a private individual," although such a move, with its far-reaching implications for German sovereignty, is unlikely to succeed.

Advocates for Holocaust survivors and their families, along with the State Department, have also demanded that the German government release a full list of the recovered art. Last Thursday, New York's superintendent of financial services, Benjamin Lawsky, sent a letter to German prosecutors, urging them to release a complete list of the artworks contained in the Gurlitt cache; Lawsky's Department oversees New York's Holocaust Claims Processing Office. In the letter, Lawsky also urged Reinhard Nemetz, the Augsburg, Germany, prosecutor leading the investigation, to permit the international community to assist in the identification and return of the stolen art.

Given the vast number of priceless works of art involved, and the deeply sad and painful history behind their disappearance, it is clear this controversy is just beginning to unfold.





Polo Prevails

October was a good month for what some have called the sport of kings: polo. In mid-October, the sport of kings prevailed against Ralph Lauren Corporation (RLC) in a dispute over ownership of the .polo top level domain.

The expert panel of the International Chamber of Commerce, acting under the authority of the Internet Corporation for Assigned Names and Numbers (ICANN), "upheld a community objection filed by the United States Polo Association against Ralph Lauren Corporation's application to run the .polo top level domain name." In siding with the U.S. Polo Association, the panel wrote that "[a]s the registration of the '.polo' domain names would only be available to RLC and its affiliate entities and as RLC would be allowed unlimited automatic renewals of ".polo", RLC would have the ability to own and operate the ".polo" domain to the exclusion of all others, including members of the polo sports community. This barrier to entry cannot be counterbalanced by the Applicant's statement that it will not allow any secondary domains in its gTLD to infringe trademark rights of others." The panel went on to air its concern that the interests of the polo sports community would not be safeguarded if RLC was to own and operate the .polo domain, adding "RLC fails to provide effective security protection for internet users wishing to access the webpages of members of the polo sports community."


Read the decision here: http://domainnamewire.com/wp-content/polo.pdf

One Fish Two Fish Red Fish Sue Fish

Two collectors of Dr. Seuss books have sued a New York gallery in New York Supreme Court, claiming that the defendant lost "two rare and very valuable" consigned artworks from Dr. Seuss's book You're Only Old Once!

Plaintiffs Clifford Davis and James Otis stated in their complaint that they jointly purchased artworks associated with one of Dr. Seuss' books for adults, You're Only Old Once! A Book for Obsolete Children, in October 2008. They later consigned the artworks to the defendant Illustration House Gallery on November 13, 2012, expecting the pieces to be sold or returned within 60 days. That, however, never occurred. Otis claims that shortly after the 60-day period expired, he contacted the gallery by phone and by email. Gallery president Roger Reed told Otis "the two Dr. Seuss artworks were missing and could not be located by Illustration House, Inc. Staff," according to the complaint.

The complaint goes on to say that in April this year, an Illustration House, Inc. administrative assistant contacted Otis by email, indicating that the gallery would contact the plaintiffs as soon as it had located the artworks; according to the plaintiff, he indicated that he "would need the two Dr. Seuss artworks within ten (10) days so that the works could be displayed at the art gallery of Linda Jones Enterprises." The plaintiffs, however, never received the Dr. Seuss works; Otis nows claims that he lost the opportunity to sell the pieces to an interested buyer in May because the works had not been returned. Otis and Davis seek replevin and damages for conversion, breach of consignment agreement and breach of fiduciary duty. The pieces of art are each valued at $75,000.


Mike Pouncey Served Last Month

Less than an hour after the Patriots defeated the Miami Dolphins at Gillette Stadium in Foxborough, Massachussetts, Dolphins center Mike Pouncey was served with a grand jury subpoena related to Aaron Hernandez's possible role in interstate gun trafficking. A source with knowledge of the investigation told Sports Illustrated that investigators in several states, including New York, Massachusetts and Florida, are focusing on business dealings and transactions that the disgraced former Patriots player had in those locales. If evidence emerges that Pouncey was connected to those transactions, he may also face charges. In September, Hernandez was indicted and pleaded not guilty to six charges, including first-degree murder. The other five charges were weapons-related, "as police seized at least three different types of ammunition."

Mike Pouncey and his twin brother, Maurkice, a Steelers center, were close to Hernandez. The three men lived together in Gainsville for periods of time when they played for the University of Florida. The Steelers declined comment when asked if Maurkice Pouncey had been served with a grand jury subpoena.

The grand jury subpoena of Mike Pouncey is just one of many controversies in which the NFL has found itself embroiled as of late. The subpoenaing of the Dolphins player suggests, according to an analysis by attorney and Sports Illustrated contributor Michael McCann, that "Hernandez's alleged wrongdoing was not entirely disconnected from other NFL players. The possibility that multiple NFL players may have engaged in questionable dealings through the sale of guns would be a devastating turn for the NFL as it tries to distance itself from Hernandez."

Read More: http://sportsillustrated.cnn.com/nfl/news/20131028/mike-pouncey-subpoena-legal-analysis/#ixzz2k1b17Mc8



Planning Your Holiday Party? Have a Glance at This Liability Prevention Checklist

By Kristine A. Sova

Employer-sponsored holiday parties are a good way to maintain employee morale and allow employees to bond, but they can also result in unexpected legal liability. Holiday parties often involve alcohol, and alcohol, which has a tendency to lower inhibitions, may result in inappropriate or irresponsible behavior on the part of employees, in turn generating legal liability for a company.

While certainly not a festive thought, there are definite steps one can take to reduce exposure without scrapping the holiday party altogether. Below is a checklist to help employers limit those legal risks.

How to Limit Alcohol-Related Incidents:

Employer liability for injuries caused by employees who consume alcohol at company functions varies from state to state. Despite those variations, where an alcohol-free party is neither practical nor desirable, there are steps employers can take to reduce the risk of alcohol-related injuries. For example:

 Hold the event at an off-site location, such as a restaurant or bar, where professional bartenders, who know how to respond to excessive drinking, will serve alcohol.

 Or, for onsite parties: hire professional bartenders, waiters, or caterers to serve alcohol; ensure that the hired staff carries liability insurance; and instruct hired staff not to serve anyone who is visibly intoxicated.

 Ensure that there are non-alcoholic drinks and plenty of food available at the party to avoid people becoming intoxicated.

 Limit the amount of alcohol that can be consumed by providing drink tickets and/or setting a cut-off time for alcohol service.

 Schedule the party to occur during the day, when employees will be less likely to drink to excessive levels, if at all.

 Hold the party on a "school night." Employees who know they have work the next day will be less likely to overindulge in drinking.

 Provide a variety of activity-based entertainment (such as dancing, trivia, and other games), so that drinking is not the focus of the party.

 Arrange transportation for employees leaving parties where alcohol is served.

How to Prevent Claims Related to Harassment and Discrimination

Employees often act less reserved at holiday parties than they do at work. Add alcohol to the mix and the potential for inappropriate behavior increases. Steps employers can take to reduce the likelihood of harassment and discrimination include:

 Allow employees to bring significant others or guests. Employees tend to be more reserved around their significant others, as well as around people with whom they are not familiar, reducing the likelihood of offensive conduct.

 Forego hanging mistletoe. Holiday customs - even in a festive atmosphere - should be appropriate to a workplace. By the same token, be sensitive with holiday decorations and invitations as well. Not all employees celebrate Christmas, and employers should make sure that everyone feels included by remaining religiously neutral.

 Conduct a refresher of your sexual harassment, anti-discrimination, personal conduct, safety, and dress code policies with employees in advance of any holiday parties, and ensure that employees understand that management will not tolerate any misconduct at the party (and that management will adhere to those policies as well).

How to Prevent Wage-and-Hour Claims by Non-Exempt Employees

Some employees may actually be entitled to be paid for their attendance at employer-sponsored holiday parties. If the company doesn't plan on paying non-exempt employees for their attendance at the holiday party, ensure that:

 Employee attendance at the party is entirely voluntary.

 The holiday party is held outside of the regular work day.

 No business is conducted at the party. This includes speeches about business matters and distribution of bonuses.

 Employees are not expected to (and do not) perform any functions at the party for the benefit of the employer.

Happy holidays (in advance), and best wishes for litigation avoidance this holiday season and in the New Year.

November 12, 2013

Seven Arts v. Content Media and Paramount Pictures Corp

By Barry Werbin

An important Ninth Circuit decision of first impression for that Court issued November 6th in Seven Arts v. Content Media and Paramount Pictures Corp. Seven Arts Filmed Ent Ltd v Content Media Corp .pdf. The Court held that "an untimely ownership claim will bar a claim for copyright infringement where the gravamen of the dispute is ownership, at least where, as [in this case], the parties are in a close relationship."

Here, the plaintiff had been embroiled with the defendant Content Media on ownership issues respecting copyrights in motion pictures in Canadian courts (based on a forum selection clause), where the plaintiff ultimately prevailed in an action originally filed in 2003. While the Canadian action was pending, the plaintiff also filed suit in California in 2005, claiming sole copyright ownership of the movies in question (and disputing the validity of an underlying agreement between the parties), but that suit was stayed pending the outcome of the Canadian action. In 2008, the California district court dismissed the California action for lack of prosecution. Meanwhile, Paramount had expressly repudiated the plaintiff's claim of ownership of the copyrights in 2005.

In 2011, the plaintiff won a declaratory judgment in the Canadian action that it was the sole owner of the copyrights under the U.S. Copyright Act. Immediately after, the plaintiff filed this new action in California in 2011 against Paramount based on the Canadian judgment, making the same ownership claims as in its 2005 action, which had been dismissed, but also claiming copyright infringement. The district court construed the gravamen of the claims as ownership claims and dismissed them as time-barred under the three year statute of limitations for ownership claims based on "when plain and express repudiation of co-ownership is communicated to the claimant, and [such claims] are barred three years from the time of repudiation."

The Ninth Circuit agreed that the case was fundamentally about ownership. The Court framed the issue as "whether a claim for copyright infringement in which ownership is the disputed issue is time-barred if a freestanding ownership claim would be barred." As an issue of first impression in the Ninth Circuit, the Court looked to precedent in the Second and Sixth Circuits. [The Second Circuit case being Kwan v. Schlein, 634 F.3d 224, 229 (2d Cir. 2011)]. The Ninth Circuit also cited Nimmer, and held that "Our sister circuits' approach makes good sense -- allowing infringement claims to establish ownership where a freestanding ownership claim would be time-barred would permit plaintiffs to skirt the statute of limitations for ownership claims and lead to results that are 'potentially bizarre....'" Of particular importance was the fact that the plaintiff's predecessor had started a relationship with Paramount over the movie production rights as early as 1998; the Court thus found that Paramount was not a third party stranger to the underlying transactions but was in a "close relationship" among the parties.

The decision thus aligns with those in the Second and Sixth Circuits. The Court expressly declined the plaintiff's urging to create a rift among the Circuits. Of particular interest is the Court's policy statement: "'the creation of a circuit split would be particularly troublesome in the realm of copyright.'.... Creating '[i]nconsistent rules among the circuits would lead to different levels of protection in different areas of the country, even if the same alleged infringement is occurring nationwide.'...Such would contravene Congress's intent in revising the Copyright Act."

It will be interesting to see whether this policy statement affects the Ninth Circuit's much awaited decision in the Aerokiller case or if it will set up a rift with the Second Circuit's Aereo decision.

November 13, 2013

EASL Section Fall Meeting

The Entertainment, Arts & Sports Law Section's Fall Meeting takes place THIS Thursday, November 14th, at Herrick Feinstein LLP, 2 Park Avenue at 33rd Street, from 3 p.m. until 6 p.m.

We have two outstanding CLE panels. The first will focus on Labor and Employment Law Essentials for attorneys who advise TV and film producers. The other will cover Hot Topics for the Entertainment Guilds.

We are excited to announce that the first panel has extended its program. Attendees of the Fall Meeting will now receive a total of 3.5 CLE credits in Professional Practice.

Following the program, there will be a Networking Reception in Herrick, Feinstein's beautiful entertaining salon just outside the amphitheater where the panels will take place. This event will be the culmination of EASL's 25th Anniversary Year.

It's not too late to register: http://www.nysba.org/store/events/registration.aspx?event=EASLFA13

November 19, 2013

Google Books copyright infringement lawsuit dismissed

By Michael Furlano

In a landmark decision JudgeChinSJdecision-c.pdf, Federal District Court Judge Denny Chin dismissed copyright infringement claims against Google's Google Books project. The decision caps an eight-year legal battle brought by the Authors Guild and other individual copyright holders. The plaintiffs alleged that Google's reproduction, distribution, and display of millions of copyrighted books infringed their copyrights, while Google has always claimed that the project was fair use. The court held that Google's searchable book index that scanned, copied, and displayed copyrighted text is fair use under § 107 of the Copyright Act.

In making its decision, the court analyzed four fair use pillars:

1. The purpose and character of the use;
2. The nature of the copyrighted work;
3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. How the use affected the potential market or value of the copyrighted work

The court's decision rested on two main factors: (1) the purpose and character of the infringing use, and (2) the infringing use's effect on the copyrighted work's potential market or value.

Purpose and Character

The main consideration of purpose and character is whether the infringing use is transformative. Here, the court held that Google's use was highly transformative, because it used the copyrighted text to create a searchable book index, similar to how using thumbnail images as a search tool is fair use. This is different than using the material solely for consumption purposes. The court also found that the index opened up new research possibilities by facilitating word usage data mining. Finally, the court stated that Google's commercial nature did not outweigh Google Books' "important educational purposes."

Nature of Copyrighted Work

Analyzing the nature of copyrighted works requires examining how much of the work's market and value is foreclosed by the infringing use. The court rejected the plaintiff's argument that Google Books would replace the market for physical and digital books. It noted that Google restricts access to full books, except for libraries that provided the originals to scan, and it is not possible to circumvent those restrictions. Instead, Google Books actually enhances book sales by facilitating book discovery and providing links to purchase those books.

The court summarized its analysis by stating that Google Books provides "significant public benefits" and "advances the progress of the arts and sciences." This is good news for Google, who would have faced damages of up to $150,000 per infringement. This is also good news for fair use advocates, as it further clarifies the Copyright Act's fair use doctrine. The plaintiffs, however, plan to immediately appeal.

Authors Guild Inc., et al v. Google Inc. (The Google Books case)

By Michael Cataliotti

"Fair Use" is arguably one of the most powerful aspects of the U.S. Copyright Act of '76, as it has been a fundamental basis to argue that, even though permission to use the original work was never obtained, the owner's rights have not been infringed upon. While fair use is generally accepted as proper when utilized by scholarly individuals and entities, the question of whether a clearly for-profit entity has the right to argue fair use is one that has not been as hotly contested as it has in light of Google's "Google Books", a digital gateway of works of authorship made available to the public either through a few sentences or in sum. Of particular concern to The Authors Guild was Google's use of any portion of those works for which authorization had not been obtained. Additionally, The Authors Guild appeared concerned with the fact that Google could be profiting from this venture without remitting any form of royalties to copyright owners.

Despite Google not obtaining permission to reprint certain works online for public consumption, after weighing the elements of fair use, it was the opinion of Judge Denny Chin that "Google Books provides significant public benefits", and went on in great detail to explain why this is so. Ultimately, the decision holds firmly that Google Books does not in fact infringe upon an author's rights. Though some may see this as detrimental all around, a quick search of the decision demonstrates that the world at large appears to favor this decision in order to reinvigorate public interest in works that would never otherwise see the light of day. Time will tell whether Google Books's virtuousness will be eroded in favor of profits causing a hindrance to writers, but in the meantime, it appears that relatively unknown works can be enjoyed or brought to life once again. While doing so, we must wait for the appeal that is inevitable to be filed and see how this situation will progress.

The decision: JudgeChinSJdecision-c.pdf



November 20, 2013

Fashion Law Legislative Update

By Hilary F. Jochmans

The headlines coming out of Washington DC recently have focused on the shutdown, the near default and the general toxic political environment. However, now that the government is once again open for business and we have averted defaulting on our debts, Congress can consider other legislative matters of particular interest to the fashion and retail communities, such as comprehensive tax reform, including on-line sales tax regulation, immigration, copyright reform, and the focus of this summary: trade.

Trade Promotion Authority

Granted by Congress, Trade Promotion Authority (TPA) allows the White House to submit trade agreements to Capitol Hill for a straight up-or-down vote without amendment. It is often seen as the key to completing trade deals, since other countries can be comforted that the U.S. Congress cannot change the final negotiated deal.

This authority has lapsed and President Obama is now seeking a renewal in order to conclude, by the end of the year, the Trans-Pacific Partnership (TPP). This regional free trade agreement, with 11 other countries in the Asia-Pacific Rim, would be the largest such deal in history and have major implications for the textiles, apparel, and footwear industries in the areas of labor, quotas, and tariffs.

TPA needs to be considered by the Senate Finance Committee, led by Democratic Senator Max Baucus from Montana, and the House Ways and Means Committee, led by Republican Dave Camp from Michigan. Interestingly, both of these elected officials have announced that they are retiring at the end of this Congressional year. To date, legislation re-authorizing TPA has not yet been introduced.

General Information

You may remember the old lottery commercial - "You've got to be in it to win it!" Well, that same axiom applies to government and politics. If there are issues you care about, then it is imperative to communicate this to your elected officials. Over 3,000 bills have been introduced in Congress this year, and the representatives need to hear from their constituents about which ones are of importance to them. You can learn who your representatives are and how to contact them, as well as track legislation at: www.congress.gov.

November 21, 2013

Victoria's Secret Accused of Some Serious Hanky Panky

By Erika Maurice

Hanky Panky Ltd. (Hanky Panky), a small New York-based underwear company, has accused the lingerie goliath Victoria's Secret and its parent company, Limited Brands, Inc. (Victoria's Secret), of trademark infringement. In its complaint filed on October 31, 2013 in the Southern District of New York, Hanky Panky states that Victoria's Secret inappropriately used the name "After Midnight" to launch a new collection of products consisting of an "aphrodisiac" candle, massage oil, perfume product and room spray, which are virtually identical to Hanky Panky's "After Midnight" line of sensual products. Hanky Panky, a company that rose to fame by selling its 4811 lacy thong panty to the likes of Cindy Crawford, claims that it registered the "After Midnight" mark in 2012 and has since invested substantial time and money into the mark which has evolved secondary meaning. "To make matters worse" the complaint continues, Victoria's Secret has also used Hanky Panky's advertising slogan, "Release Your Inner Flirt" in connection with the sale of its new sleepwear, which, according to Hanky Panky, "betrays a studied and deliberate misappropriation of [its] valuable intellectual property." Hanky Panky claims that it has been using the "Indulge" slogan since 2003 and later registered the mark in 2007.

Hanky Panky alleges that Victoria's Secret's misappropriation of its marks has caused harm to its reputation and will lead the public into believing that the two companies are affiliated. Additionally, Hanky Panky stated that, due to Victoria's Secret's relatively larger size and marketing power, Victoria's Secret's use of the marks could lead to reverse confusion and somehow mislead the consuming public into believing that Hanky Panky is infringing on Victoria's Secret's brand. Hanky Panky further claims economic damages, asserting that Victoria's Secret alleged misappropriation prevents it from capitalizing on the time and expense invested in the "After Midnight" and "Indulge" marks, which has thwarted its "economic opportunities", and caused loss of sales and profits. The complaint continues to list two counts of trademark infringement for the misappropriation of both the "After Midnight" and "Indulge" marks, as well as additional counts for false designation of origin and common law unfair competition. In addition to money damages, which includes the cost of corrective advertising to mitigate any consumer confusion, Hanky Panky is seeking an injunction and has also asked the court that all infringing material be handed over to Hanky Panky for destruction. Victoria's Secret has yet to make a public comment or respond to the allegations in the complaint.

Shoes, Shoes, and More Shoes: The Battle over Intellectual Property Protection for Shoe Designs Wages on After Louboutin v. YSL

By Melissa B. Berger

Although not receiving nearly as much publicity as the fight between Christian Louboutin and Yves Saint Laurent over red soled shoes, numerous other federal lawsuits continue to be filed regarding the degree of intellectual property protection that should be afforded to shoes and their design elements. This blog summarizes a sampling of those cases filed during September and October of 2013.

Converse, Inc. v. Autonomie Project, Inc.

On September 9, 2013, Converse, Inc. (Converse) filed a Complaint in the District of Massachusetts against Autonomie Project, Inc. (Autonomie) (Case No. 13-cv-12220), alleging federal trademark infringement, false designation of origin, unfair competition, and dilution, as well as common law trademark infringement, unfair competition, and dilution, and unfair business practices under Massachusetts law.

Prior to initiating this lawsuit, Converse sent a cease and desist letter to Autonomie. Having not received its requested response, Converse now maintains that it has common law and federal trademark rights in various aspects of the trade dress used in connection with the "Chuck Taylor All Star" shoes, "including but not limited to the design of two stripes on a midsole, the design of a toe cap, the design of a multi-layered toe bumper featuring diamonds and line patterns, and the relative position of these elements to each other," covered by four federal trademark registrations.

Converse alleges that, since 1917, it has sold over one billion pairs of shoes bearing this aforementioned trade dress, which "has become a famous and well-known indicator of the origin and quality of Converse footwear." Converse also emphasizes that its trade dress is "the subject of widespread and unsolicited public attention," including "acclaim in books, magazines, and newspapers" and "frequent appearances in movies and television shows." For instance, Converse cites to books that describe its trade dress "as an icon of American footwear and the most famous athletic shoe in history." Converse therefore alleges that its trade dress has acquired both fame and secondary meaning and that it has "a distinctive appearance using unique and non-functional designs."

Converse alleges that Autonomie, without any authorization from Converse, has been selling, and continues to sell, footwear bearing design elements that are confusingly similar to Converse's trade dress. Converse alleges that, on its website, Autonomie even makes numerous comments acknowledging that its products are very similar in appearance and style to Converse shoes, and even more specifically to the Chuck Taylor All Star shoe. Converse has consequently alleged that Autonomie's infringement is "intentional, willful, and malicious."

Converse asserts that Autonomie's activities are likely to cause consumer confusion and have caused, and will continue to cause, Converse substantial and irreparable injury to its goodwill and reputation. As relief, Converse seeks a preliminary and permanent injunction enjoining Autonomie's alleged activities, an order requiring the destruction of all products and materials related to the alleged infringing products, as well as an award of Autonomie's profits, actual damages, enhanced profits and damages, attorneys' fees and costs, and even punitive damages. Autonomie did respond to Converse's Complaint, which Answer was due on October 30th.

Tommy Hilfinger U.S.A., Inc. and Tommy Hilfiger Licensing LLC v. Jumbo Bright Trading Limited

Just two days after the Converse suit was filed, on September 11th, Tommy Hilfiger U.S.A., Inc. and Tommy Hilfiger Licensing LLC (together, Tommy Hilfiger) filed a Complaint for Declaratory Judgment in the Southern District of New York against Jumbo Bright Trading Limited (Jumbo Bright), which distributes Charles Philip brand footwear. This filing was in response to a number of cease and desist letters that Tommy Hilfiger received from Jumbo Bright regarding its use of a vertical stripe pattern, known as the "Ithaca Stripe," on the inside of its shoes (Case No. 13-cv-06386). Jumbo Bright asserted, in those letters, that it owns common law trademark rights to what Tommy Hilfiger describes as a "vertical stripe pattern used on the interior lining of its footwear, along with three vertical stripes on the shoe rim near the heel" and that Tommy Hilfiger's use of its vertical stripe pattern infringes upon those common law trademark rights.

As a result, Tommy Hilfiger is seeking a declaration from the court that Jumbo Bright's stripe pattern does not function as a trademark because it is merely ornamental, is aesthetically functional, and lacks secondary meaning. Tommy Hilfiger asserts that Jumbo Bright cannot own common law rights in said stripe pattern, as it is merely decorative, fails to serve as a source indicator or to distinguish Jumbo Bright's goods from those of others, and furthermore, that granting any trademark rights in such a design would hinder fair competition within the footwear industry.

Tommy Hilfiger supports its claims by emphasizing that Jumbo Bright previously filed two applications with the U.S. Patent and Trademark Office (USPTO) to try to protect its vertical stripe pattern, both of which were rejected as lacking inherent and acquired distinctiveness and as being merely ornamental or decorative in nature and therefore failing to function as a trademark. Furthermore, despite Jumbo Bright's attempts to overcome these initial refusals, the USPTO maintained its rejections, to which, it appears, Jumbo Bright did not respond. Both of these applications have since been deemed abandoned by the USPTO.

Tommy Hilfiger further claims that, even if Jumbo Bright's stripe pattern was entitled to trademark protection, Tommy Hilfiger has prior use of its "Ithaca Stripe" pattern over Jumbo Bright's usage. Tommy Hilfiger therefore seeks declaratory judgment that its use of the "Ithaca Stripe" pattern does not constitute trademark or trade dress infringement, is not likely to cause any consumer confusion as to source, and does not constitute false designation of origin or unfair competition. Jumbo Bright appears to have executed a waiver of service and its Answer is therefore due on November 12th.

AirWair International Ltd., v. Cels Enterprises, Inc. d/b/a Chinese Laundry

A week after the Tommy Hilfiger suit was filed, on September 18, 2013, AirWair International Ltd., the producer of Dr. Martens footwear (AirWair), brought a suit very similar to Converse, against Cels Enterprises, Inc. d/b/a Chinese Laundry (Cels) in the Northern District of California (Case No. 13-cv-04312). AirWair is alleging federal trademark infringement, false designation of origin, and dilution, as well as California Statutory unfair competition and dilution, and common law unfair competition, in connection with Dr. Marten's registered trade dress, featuring "yellow stitching in the welt area of the sole and a two-tone grooved sole edge," as well as "a distinctive undersole design consisting of a unique horizontal grid pattern." AirWair claims ownership of five trademark registrations covering its trade dress, all of which, it states, have been in use in the United States since 1984.

AirWair asserts that its trade dress has acquired distinctiveness, is non-functional, and is world famous, that Dr. Martens has become one of "the world's greatest and most recognizable brands," and that its boots and shoes are "iconic." AirWair alleges that Cels is selling, under its Chinese Laundry brand, footwear that is confusingly similar to and contains trade dress that is "substantially indistinguishable" from, or "substantially identical to," AirWair's registered trade dress. AirWair also alleges that Cels' copying and infringement is done with knowledge, is deliberate, constitutes unfair competition and an attempt to trade upon Dr. Martens' popularity and reputation, and constitutes a false designation of origin. AirWair further alleges that it has suffered and will continue to suffer reputational damage, as well as lost sales and profits, as a result of Cels' alleged unlawful activities. AirWair further states that Cels has been unjustly enriched by its "unlawful use and imitation of AirWair's registered Trade Dress" and that Cels' actions are likely to "dilute, blur and tarnish the distinctive quality" of that trade dress and to "lessen the capacity of AirWair's marks to identify and distinguish the company's products."

AirWair is therefore seeking a preliminary and permanent injunction of Cels' alleged unlawful activities, as well as an Order requiring Cels to either destroy, or turn over to AirWair, any and all products containing the infringing trade dress, means of making such products, packaging, marketing materials, and any other goods related to its alleged unlawful activities. AirWair has also requested an accounting of Cels' profits arising from its alleged unlawful activities, an award of either actual damages sustained by AirWair or statutory damages, an award of treble damages, pre- and post-judgment interest on all damages awarded, as well as attorney's fees and costs. As of October 29th, the docket did not reflect that a Summons has been returned executed or, consequently, that an Answer has been filed.

Skechers U.S.A., Inc. and Skechers U.S.A., Inc. II v, Shoe Confession LLC, Perry Ellis International, Inc., PEI Licensing Inc., and other Doe defendants

Yet another Complaint, this time alleging design patent infringement, in addition to trade dress infringement and unfair competition, was filed on October 11, 2013, by Skechers U.S.A., Inc. and Skechers U.S.A., Inc. II ("Sketchers") against Shoe Confession LLC, Perry Ellis International, Inc., PEI Licensing Inc., and other Doe defendants (collectively, the "Perry Ellis Defendants") in the Central District of California (Case No. 13-cv-07573).

This suit concerns Skechers' shoe entitled the "Skechers Go Run." Sketchers alleges ownership of "exclusive and protectable trade dress rights" in what it terms a "sole bottom trade dress" and an "outsole periphery trade dress" for its Skechers Go Run shoe, which Skechers asserts has acquired distinctiveness and has "an ornamental configuration that uniquely identifies the shoe as emanating from a single source, Skechers." Skechers is alleging that the Perry Ellis defendants' "Pro Player Phaze 2M" shoe infringes its trade dress by using the same repeating cleat and nub patterns used by Skechers, which "deceive[s] consumers into buying defendants' shoes in the mistaken belief that defendants' shoes emanate from Skechers and are genuine Skechers shoes."

Skechers also alleges willful infringement of each of its four U.S. design patents covering various ornamental features of the sole bottom and outsole periphery of its Skechers Go Run shoe. Skechers states that the USPTO, in issuing these patents, has acknowledged that Skechers' designs are "novel, nonobvious, and ornamental." Skechers states that the Pro Player Phaze 2M shoes "embody the patented invention[s] disclosed in" Sketchers' patents and that the shoe so closely resembles the inventions disclosed in its four patents that "an ordinary observer would be deceived into purchasing the Pro Player Phaze 2M shoe in the mistaken belief that it includes the invention[s] disclosed in" those patents.

Skechers' Complaint also includes a claim that "Defendants are willfully, fraudulently, oppressively, maliciously and unlawfully attempting to pass off, and are passing off, their infringing footwear as those approved and/or authorized by Skechers," a violation of common law unfair competition, which Skechers alleges has resulted in irreparable injury to its business reputation. As a result, Skechers seeks preliminary and permanent injunctions enjoining the Perry Ellis defendants from engaging in the alleged activities and an order directing the destruction of all goods and "instrumentalities used in the production" of such goods, as well as a recall of any and all goods and materials infringing any of the Skechers patents. Skechers further seeks treble damages, plus interest, for each claim of trade dress and patent infringement, as well as the Perry Ellis defendants' profits from any sales of the alleged infringing footwear, punitive damages, restitution, and attorneys' fees and costs. As of October 29th, no Answer had been filed in this case.

In conclusion, as all of these cases make clear, the controversy regarding the proper level of intellectual property protection that should be afforded to shoe design is still alive and kicking in the courts in the wake of Louboutin v. YSL.

Hoodlove, LLC v Roc Apparel Group, LLC

By Emma Brady

On August 26th, New Jersey-based company, Hoodlove, LLC (Hoodlove) filed a lawsuit in the United States District Court for the Southern District of New York against, among others, New York-based Roc Apparel Group, LLC (Roc Apparel), alleging trademark infringement, dilution, unfair competition, and false advertising, all in violation of federal and state laws. The mark in question are the words "Hood Love" (Hood Love Mark), which was federally registered by the plaintiff for use in connection with clothing, including baseball caps, headwear, t-shirts, and sweat shirts, in May 2010. The complaint states that Hoodlove is a "for-profit company that focuses on the social and economic development of poverty-stricken communities commonly known as 'the hood.'"

According to the complaint, the defendant, Roc Apparel, distributes and sells the brand "Rocawear", launched by and associated with, rap artist Jay-Z. Hoodlove contends that Roc Apparel has misappropriated the Hood Love Mark to promote and sell apparel on its website and elsewhere without authorization and is likely to cause confusion and to deceive customers and potential customers into believing that the goods are in fact those of Hoodlove or are otherwise connected or associated with Hoodlove.

Hoodlove seeks an injunction restraining the defendants from engaging in trademark infringement, dilution and passing off by distributing and selling the allegedly infringing apparel as well as an award of monetary damages.

Former Donna Karan Intern Sues for Unpaid Wages

By Nadine Etienne

On August 28th, Valentino Smith, a former Donna Karan intern, filed a class action lawsuit against Donna Karan International Inc. and Donna Karan Studio LLC for failure to pay wages pursuant to the New York Labor Law in New York Supreme Court. (On November 8th, the caption of the complaint was amended from Valentino Smith against Defendants Donna Karan International, Inc. and Donna Karan Studio LLC to Valentino Smith against the Donna Karan Company Store LLC and the Donna Karan Company LLC.) Smith worked as an undergraduate intern at the company's Seventh Avenue headquarters in 2009, but now claims he was mischaracterized in contravention of New York Labor Law.

According to the U.S. Department of Labor (DOL) Fact Sheet #71, an unpaid internship must meet a set of criteria that benefits the intern in order to be considered lawful. Specifically, the internship must be similar in training to an educational institution, must be for the benefit of the intern, must not displace regular employees, and may not inure to the employer's immediate advantage. The DOL does not require the internship to entitle an intern to a later permanent position. Additionally, the intern must understand that the position is unpaid.

The New York Minimum Wage Act and Wage Orders Fact Sheet for For-Profit Businesses (Minimum Wage Fact Sheet) applies the DOL's criteria as well as its own in determining an employment relationship. The Minimum Wage Fact Sheet requires intern supervision by persons who have sufficient knowledge of the industry. Interns may not be eligible for employee benefits, and should receive training in skills transferable to any business and not just the specific job with the employer. The Minimum Wage Fact Sheet also requires that internship job postings and advertisements clearly discuss education or training rather than employment.

Recently, in Glatt v. Fox Searchlight, Judge William Pauley issued a ruling in favor of unpaid interns to pursue their class action against Searchlight for unpaid wages in federal court. (No. 11 Civ. 6784 (S.D.N.Y. June 11, 2013)). Conde Nast also has a pending wage and hour lawsuit in federal court from two former interns who worked at The New Yorker and W Magazine. (Lauren Ballinger and Matthew Leib, et al., v. Advance Magazine Publishers, Inc. d/b/a Conde Nast Publications, No 13 Civ. 4036 (S.D.N.Y. June 13, 2013)). In October, Conde Nast announced that it is ending its internship program. The wage and hour suit against Donna Karan may spawn further class action litigation and may have a similar affect on internship programs offered by New York fashion houses.

Louis Takes on Sogo: The Case for Authenticity

By Amelia Wong

On October 7th, Louis Vuitton alleged trademark infringement against Sogo, a Japanese-style department store. Louis Vuitton's claim, filed to the High Court in Hong Kong, described the allegedly infringing objects (articles, advertisements, signs, letterheads, labels, packing materials) and called for their destruction, claiming that Louis Vuitton, as a famous mark, is protected under the Paris Convention.

The company took similar stands earlier this year against a Shau Kei Wan salon and Mong Kok boutique. This no-nonsense attitude towards infringement and counterfeits is firm, and significant. Giant fashion companies are finding new avenues to take a stand against the problem of counterfeiting.

Previously, large companies would struggle to enforce their rights in Hong Kong due to a different type of intellectual property system. Problems with enforcement involve kickbacks to government officials by corrupt corporations and institutional attempts to cover up these issues. The Hong Kong and Chinese governments claim to be dealing with these problems, and certainly have made moves to enforce intellectual property rights. However, problems remain.

Louis Vuitton is demonstrating this pro-active approach and addressing the problem directly. Yet the future of counterfeiting remains in China even while Chinese tourists line up outside of the Louis Vuitton store on Fifth Avenue to bring genuine bags back home. Louis Vuitton's move against Sogo reinforces these tourists' belief in the importance of authenticity, and will perhaps, in itself, be a driving force towards China becoming a more "authentic" society.

November 22, 2013

Week in Review

By Martha Nimmer

Settled, Not Stirred

After more than five decades, it appears that the ownership rights of Agent 007 have been settled. Last week, Danjaq, LLC (Danjaq), the producer of James Bond films, and Metro-Goldwyn-Mayer (MGM), the films' distributor, announced that they had reached an agreement with the estate of Kevin McClory.

In 1959, McClory met with Ian Fleming, the author who created the famous British secret agent. According to McClory, at that meeting, he proposed the idea for making the Fleming spy novels into motion pictures. A writer was eventually hired to create the movie "Thunderball", which later became a Fleming novel. In 1961, after the Thunderball novel was released without credit to McClory, he filed suit, claiming co-authorship and creation of "Thunderball" characters and elements. Fans of the Bond films will realize, however, that "Thunderball" was not the first Bond movie; as it turns out, instead of making "Thunderball" into the first Bond film ever released, Fleming licensed "Dr. No" into production, which came out in 1962. Eventually, Fleming and McClory arrived at a settlement, thereby paving "the path for the latter's Thunderball in 1965."

That period of harmony was short lived, however. According to the firm BakerHostetler, which represented McClory, "interpretation over the intellectual property rights granted in the McClory/Fleming settlement resulted in law suits over Bond for decades. Most famously, a significant ruling in the London courts in 1983 held that McClory was allowed to produce James Bond films." Armed with that court ruling, McClory went on to make the 1983 Bond film "Never Say Never Again". Years later, McClory eventually tried to sell his rights to make Bond films, but a judge enjoined the attempted sale to Sony in 2001. McClory died in 2006.

Now, as part of an agreement with MGM and Danjaq, those companies will acquire the McClory family's rights to make Bond films. So for now, the James Bond character is safe. Evildoers beware.


Unsportsmanlike Conduct

The National Collegiate Athletic Association (NCAA) has sued video game maker Electronic Arts Inc., or EA Sports, claiming that the company has "breached contractual and fiduciary duties when acting as its business partners in producing popular college-sports videogames [sic]." The suit, filed in the Superior Court of Fulton County, Georgia, also names as a defendant the licensing rights firm Collegiate Licensing Co. (CLC), which manages licensing rights for many universities, as well as the NCAA. CLC, the complaint states, "failed to adequately supervise" co-defendant EA Sports. According to the NCAA, this failure has thus "subjected the NCAA to potential liability in several lawsuits currently being litigated relating to EA's alleged use of NCAA student athletes' names, images, and likenesses in EA's NCAA-themed video games."

The lawsuits to which the NCAA is referring include the Ed O'Bannon NCAA likeness case commenced by the former UCLA player in 2009. The NCAA's filing against EA Sports came just two months after a "$40 million settlement agreement announced in September by EA Sports and CLC, which used to be co-defendants with the NCAA in the O'Bannon case." The NCAA's suit against EA Sports and CLC says that CLC breached its duties, including the prohibition against self-dealing, when CLC acted in settlement negotiations without the NCAA's knowledge, authorization or participation." The NCAA seeks to prevent EA Sports and CLC from completing the $40 million settlement agreement, and hopes to have EA Sports held responsible for future liability judgments and legal fees.


Just Say No

Pharmaceutical company AbbVie Inc. (AbbVie), the owner of prescription pain medication Vicodin, has sued California-based boutique Kitson in Los Angeles federal court for trademark infringement. According to the complaint, the popular store sells a line of sweatshirts and jerseys made by designer Brian Lichtenberg, which feature the names of prescription drugs, such as Vicodin, Xanax and Adderall. The clothing bearing the mark Vicodin, AbbVie avers, "makes it seem as if 'popping Vicodin is a cool, 'in' thing to do.'" To make matters worse, the plaintiff claims, Kitson also displays the apparel in its window with the slogan "Just What the Doctor Ordered."

In addition to claims of trademark infringement, AbbVie also claims that the items featuring the Vicodin name harm the public by glamorizing illegal and irresponsible prescription drug use. "This harm is especially acute for those influenced by fashion trends promoted through trendsetting retailers like Kitson, as they will be led to believe that AbbVie thinks popping Vicodin is a cool, 'in' thing to do," the company writes. The plaintiff added that it intentionally avoids marketing Vicodin directly to the public; additionally, AbbVie has also invested in promoting "safe and responsible prescription drug use," which the company fears may be undone by the production and sale of the Vicodin jerseys.

AbbVie Inc. seeks an injunction and an unspecified monetary award, which the pharmaceutical company says will be donated "in its entirety to prescription drug abuse outreach and educational programs."


Collecting on Copyrights

The copyright industry added one trillion dollars to the United States Gross Domestic Product in 2012, according to a study by the International Intellectual Property Alliance, a Washington-based trade group. The study tracks the economic contributions of U.S. industries that create, produce, distribute or exhibit copyright materials, such as books, newspapers, music, films and video games.

According to the report, 2012 marks the first year that U.S. copyright industries added one trillion dollars to the American economy in a single year. That figure also accounts for almost 6.5% of the nation's economy. Furthermore, the copyright industries also generated a staggering $142 billion in foreign sales and exports. Additionally, these industries employ nearly 11.1 million workers, roughly 8.4% of the U.S workforce. On average, these workers receive annual compensation of $75,926, which is 18% higher than the average annual U.S. wage.

Bravo, copyright industry!


Read the report here:


By Barry Werbin and Bryan Meltzer, Herrick, Feinstein LLP

The highly publicized, now eight year old, "Google Books" class action case came to a close at the district court level on November 14th, with Southern District Judge Denny Chin granting Google summary judgment on its copyright fair use defense. The Authors Guild, Inc., et al. v. Google Inc., 05 Civ. 8136 (S.D.N.Y. Nov.14, 2013). In the process, Judge Chin revealed that he is among those who believe that Google has changed the world for the better. Retaining the action at the district court level despite his recent appointment to the Second Circuit Court of Appeals, Judge Chin found that Google Books is "transformative" and benefits "all society."

As the backdrop to the unusual trajectory of the case, in 2004 Google turned its attention to the mass digitalization of books by starting an ambitious project called "Google Books." Under the program, Google entered into agreements with various major research libraries to digitally scan their entire collections with optical technology that would permit full text searching. The digital copies would then be made available to participating libraries and Google would permit public online searches of the content. In response to search queries, only portions, or "snippets," of a book's content would be displayed to anyone having Internet access and a computer. As of today, over 20 million books have been scanned for the project.

The Authors Guild and three authors/copyright holders, the plaintiffs in the Google Books case, filed a class action, alleging that Google was committing mass infringement of authors' copyrighted material by digitally scanning and storing the entire contents of the books and displaying the snippets without their permission. The case was assigned to Judge Chin, who was then a District Court judge. After initial extensive litigation and several years of intense negotiation, all the parties reached a complex class action settlement agreement that would have granted broader rights to Google in exchange for a $125 million settlement payment. However, when the settlement was presented to Judge Chin -- who by then had been appointed to the Second Circuit -- for approval in 2011 (as class action settlements require judicial approval), he rejected it in response to many objections filed by interested parties, including the Justice Department, which voiced potential antitrust concerns.

Judge Chin then certified the plaintiff class before addressing any of the substantive copyright issues and Google's fair use defense. Google appealed the class certification to the Second Circuit, which issued an unusual ruling earlier this year in which it reversed the class certification as being premature and remanded the case to Judge Chin for a decision on Google's fair use defense, on the grounds that "the resolution of Google's fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues...." Authors Guild v. Google Inc., 721 F.3d 132, 134 (2d Cir. 2013).

After the case was remanded and discovery completed, both plaintiffs and Google moved for summary judgment with respect to the "fair use" defense. Following the judicial trend of focusing on whether the alleged infringement was "transformative," Judge Chin has now held that Google's use of the copyrighted books constitutes "fair use" under Section 107 of the Copyright Act.

The statutory "fair use" defense is derived from the Constitution's directive in Article I, Section 8, that the purpose of copyright, along with patents, is "[t]o promote the Progress of Science and useful Arts." The "fair use" doctrine is codified in Section 107 of the Copyright Act, which requires courts to asses at least four delineated factors, namely: (1) the purpose of the use (i.e., is the use for commercial or nonprofit educational purposes), (2) the nature of the copyrighted work, (3) the amount and substantiality of the infringed portion used compared to the copyrighted work as a whole, and (4) the effect of the infringement upon the potential market for or value of the copyrighted work. While a court must consider these four factors in evaluating a fair use defense, the court is free to consider any other relevant factors, a point also noted by Judge Chin.

Judge Chin cited to Judge Pierre Leval's notable 1990 Harvard Law Review article entitled Toward a Fair Use Standard, where the "transformative use" theory was first articulated. Judge Leval there opined that the use of a copyrighted work should be deemed a "fair use" if it is "transformative" (i.e., "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message ...") 103 Harv. L. Rev. 1105, 1111 (1990). Following Judge Leval's lead, in 1994 the Supreme Court ruled in the context of a commercial parody that under the first fair use factor, "the enquiry focuses on whether the new work merely supersedes the objects of the original creation, or whether and to what extent it is 'transformative,' altering the original with new expression, meaning, or message. The more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use." Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994). Since then, courts have increasingly decided "fair use" defenses by analyzing whether the alleged use was "transformative."

In finding that Google Books' use of the copyrighted works was "transformative" and protected as "fair use," Judge Chin considered each of the four factors enumerated by Section 107.

First, with respect to the purpose and character of Google Books' use, Judge Chin found that, while Google's "principle motivation is profit, the fact is that Google Books serves several important educational purposes." In particular, Judge Chin found that Google Books (i) "transforms expressive text into a comprehensive word index that helps readers, scholars, researchers and other find books," (ii) serves as "an important tool for libraries and librarians and cite-checkers as it helps to identify and find books," (iii) helps "users locate books and determine whether they may of interest" and (iv) transforms "book text into data for purposes of substantive research, including data mining and text mining in new areas, thereby opening up new fields of research."

Judge Chin also found that Google did not directly profit from the use of the copyrighted material because it did not sell its scans of the copyrighted works, did not sell the snippets that it displays and did not run ads on the "About the Book" pages that contain the snippets. Accordingly, Judge Chin found that the first factor concerning the use of the copyrighted material "strongly favor[ed] a finding of fair use."

Second, with respect to the nature of the copyrighted works, Judge Chin found that the vast majority of books found in Google Books are non-fiction, published and available to the public. As non-fiction books that can be found in the public domain are afforded less protection, Judge Chin found that the second factor concerning the nature of the copyrighted material favored a finding of fair use.

Third, with respect to amount and substantiality of the copyrighted material used, Judge Chin found that while Google scans the full text of the books verbatim, "it limits the amount of text that it displays in response to each search." However, despite his approval of Google's limitation on the amount of text displayed, Judge Chin concluded that the third factor "slightly" favored a finding against fair use.

Fourth, with respect to the effect of the use upon the potential market or value of the copyrighted works, Judge Chin rejected the plaintiffs' argument that Google Books negatively impacted the market for the books and served as a "market replacement." To the contrary, Judge Chin found that "a reasonable factfinder could only find that Google Books enhances the sales of books to the benefit of copyright holders." In particular, he found that Google Books promotes the authors' works and improves their book sales. Accordingly, Judge Chin found that the fourth factor concerning the effect of the use of the copyrighted material weighed strongly in favor of a finding of fair use.

Weighing these factors and considering what he perceived to be Google Books' other public benefits, such as its ability to preserve old books and enable disabled and underserved populations to actually have access to the books, Judge Chin found that Google Books is "transformative" and its alleged infringement of the copyrighted works is protected by the "fair use" doctrine. He further found that Google could provide its partner libraries with digital copies of the books they already owned because such actions (by both Google and the libraries) also constitute "fair use."

Based on these findings, Judge Chin granted Google's motion for summary judgment in its entirety. In doing so, he further solidified Judge Leval's "transformative" use doctrine.

The case is clearly headed back to the Second Circuit. As that Court previously punted the class certification issue to allow Judge Chin to decide the "fair use" question because it could "moot" the certification issue, many practitioners believe that it is likely that the Second Circuit will affirm Judge Chin's decision.

November 26, 2013

Leeman v. NHL: Former NHL Players File Lawsuit Against the NHL for Damages Stemming From Head Injuries

By Michael Furlano

On Monday November 25th, 10 former National Hockey League (NHL) players filed a class action lawsuit against the NHL for damages stemming from the latter allegedly misrepresenting and concealing the effects of repetitive head impacts on long term health.

The suit alleges fraudulent misrepresentation and concealment by the NHL for neither publicizing the link between head impacts and long term brain trauma, nor taking effective action to reduce head impacts during the game.

The plaintiffs argue that:

1. The NHL knew or should have known about the link between repetitive head impacts and an increased risk in neuro-cognitive disability;

2. The NHL, by adopting safety protocols and programs, had voluntarily assumed the duty to protect and inform players of this link;

3. The NHL did not inform players;

4. The NHL did not take sufficient action to reduce head trauma, such as banning fighting and body-checking; and

5. This concealment and misrepresentation led to uninformed players and resulting in reduced interest in player safety initiatives.

The plaintiffs also seek an injunction creating a "court-supervised, NHL-funded medical monitoring program" facilitating the "diagnosis and adequate treatment of Plaintiffs for neuro-degenerative disorder or disease."

The plaintiffs admonish the NHL for creating and promoting a culture of violence/NHL-procured highlights of physical play, players afraid of losing their position if injured, and even third-party produced media focusing on fighting. The complaint states that the NHL should have banned fighting and body checking because the actions create dangerous head impacts and increase the risk of long-term brain injury. It alleges that the NHL is at fault because it did not ban such physical play.

The class action seeks to include all former NHL players as of February 14, 2013 suffering from injuries associated with concussions and sub-concussive events sustained while playing in the NHL. The plaintiffs state that this number could include over 10,000 former players.

The 10 former NHL players named as plaintiffs are: Gary Leeman, Bradley Aitken, Darren Banks, Curt Bennett, Richard Dunn, Warren Holmes, Robert Manno, Blair James Stewart, Morris Titantic, and Rick Vaive. Rick Vaive and Gary Leeman are the most prominent plaintiffs; both are the only Toronto Maple Leaf players to have scored over 50 goals in a single season.

Read the complaint here: NHL-Concussion-Litigation-Complaint-filed.pdf

About November 2013

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

October 2013 is the previous archive.

December 2013 is the next archive.

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