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April 3, 2014

NFL Athletes' IPOs

By Matthew Luchs

In 1997, musician David Bowie pioneered the use of Bowie bonds, which were some of the first bonds to represent intellectual property as the underlying collateral. It was an asset-backed security, which used current and future revenue from albums recorded by Bowie to pay investors. (http://www.investopedia.com/terms/b/bowie-bond.asp). However, these ventures to sell future earnings are not always favorably looked upon within different organizations.

In 2010, the Motion Picture Association of America lobbied Congress to make the use of the Hollywood Stock Exchange (a place where investors could buy stock in exchange for future box office earnings of motion pictures) illegal. (http://nymag.com/movies/theindustry/67275/). Now, companies like Fantex have begun to sell stocks of athlete's future earnings. (http://profootballtalk.nbcsports.com/2013/10/18/more-details-emerge-on-arian-foster-stock-sale/).

In October 2013, Fantex announced that Houston Texan's running back, Arian Foster agreed to trade 20% of all future National Football League (NFL) related earnings for $10 million from investors. To avoid potential action from the NFL, Fantex filed a Form S-1 with the SEC, warning potential investors that "Our business model depends on the cooperation of various third parties... There may be influential parties with interests that are adverse or perceived to be adverse to our business, such as sports leagues, sports teams, fantasy sports networks or gambling institutions." (http://profootballtalk.nbcsports.com/2013/10/18/more-details-emerge-on-arian-foster-stock-sale/).

Fantex also released a number of disclaimers and warnings about the high risks associated with buying stocks in professional athletes. Foster himself indirectly expressed concerns about whether he would make more than $10 million over the course of his career. He agreed to give up $2 million of his next $10 million and 20% of any other profits made beyond that. The Form S-1 also explained that, if Foster retired before October 17, 2015, he would be required to pay back $10.5 million, minus any money paid to Fantex over the course of those two years. (http://profootballtalk.nbcsports.com/2013/10/18/more-details-emerge-on-arian-foster-stock-sale/).

Although it may seem that investors are buying stock directly in the professional athletes through Fantex, that is technically untrue. In reality, it is Fantex stock, with performance and perceived value tied directly to the amount of money Foster pays back to Fantex over the balance of his career, that investors are buying. (http://profootballtalk.nbcsports.com/2013/10/18/more-details-emerge-on-arian-foster-stock-sale/). The deal only proceeds if all stocks are sold. Fantex would then make a one percent commission on all sales and purchases of the stock. Once the $10 million is raised the risks pass to the investors. Fantex also maintains the right "to dissolve the tracking stocks at any time and convert them into shares of the management company." (http://dealbook.nytimes.com/2014/01/28/fantex-moves-forward-with-football-player-i-p-o/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1). Fantex's stock will be traded on an exchange operated by Fantex, where there is no guarantee of liquidity.

In November 2013, before the official release of Fantex stock, Arian Foster was placed on injured reserve and required back surgery. Fantex's CEO, Buck French, released a statement saying that it was postponing itsventure with Foster. In the statement, French expressed that he felt this was a prudent course of action under the current circumstances. He further stated that Fantex continues to support Foster and his brand, and wish him well in his recovery. Fantex vowed to continue to work with him through his recovery and intends to continue with this offering at an appropriate time in the future based on an assessment of the events. (http://profootballtalk.nbcsports.com/2013/11/12/fantex-postpones-arian-foster-stock-offering/). Buck French believes that the injury to the athlete made prospective investors more aware of the risks of purchasing Fantex's stock. There has been no attempt to renovate the planned stock offering of Arian Foster, but Fantex has moved forward with other ventures. (http://dealbook.nytimes.com/2014/01/28/fantex-moves-forward-with-football-player-i-p-o/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1).

Currently, Fantex has agreed to a similar arrangement with San Francisco 49ers tight end Vernon Davis. Davis has agreed to receive $4 million up front in exchange for 10 percent of his future earnings, as long as Fantex sell enough stock to finance the $4 million investment. (http://dealbook.nytimes.com/2014/01/28/fantex-moves-forward-with-football-player-i-p-o/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1). However, what makes this deal different from Foster's, is that Davis agrees not only to pledge 10% of his future earnings from playing contracts, but he also agrees to offer another 10% of his corporate endorsements and appearance fees. Fantex expects to sell 421,100 shares at $10 each, raising $4.2 million. For investors to make money, the total value of Davis's future income has to be more than $4.2 million. The company has valued that potential money pot at $51 million. (http://dealbook.nytimes.com/2014/01/28/fantex-moves-forward-with-football-player-i-p-o/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1).

There are many growing concerns that come with the introduction of a business of this type. This may very well be a way for teams and players to circumvent the salary cap system. Through such investments, players can receive more money earlier in their career than their team's salary cap would ordinarily permit. There also exists the possibility that if the endeavor with Davis is successful, Fantex will not only target other current NFL members, but also begin to pursue younger players entering the NFL. These rookies have a potentially long and hopefully successful careers ahead of them, with more earnings and profits to come, making them attractive for investments.

This could lead to the manipulation of young talent, as it may be seen as a way for them to receive guaranteed money up front. Making more money early in their careers may entice these individuals, but it may very well end up hurting them in the long-term. If these athletes do not become as successful as projected, or if they do not attain a certain contract or salary, they may find that they owe money back to Fantex under certain provisions. This may sway public opinion and appeal against it, causing its stock to heavily plummet, and hurting its chance of future earnings. Whatever the consequences of Fantex's operations are, its first official offering and its success, or failure, will weigh heavy on the minds of investors and future athletes, and it may very well force the NFL to take action.

The Dispute of Financial Fair Play in European Soccer

By Maximilian Querci

"The Beautiful Game" known as soccer has evolved over the past century from a recreational sport to matches being played in astounding stadiums and observed worldwide. Today, soccer clubs dominate lists of the most valuable franchises in the world, Manchester United is at the top, valued at $2.32 billion. The soccer market is progressively expanding. Soccer's appeal in North America has reached an all time high. As result, monetary figures for players are constantly reaching new heights. Record transfer fees are constantly being broken with each transfer season. However, with this influx of money, there are concerns about how exactly teams are able to make such high-profile purchases while complying with the fair and competitive nature of the sport. The Union of European Football Associations (UEFA) has taken a stance against the increased spending with the implementation of the Financial Fair Play Rules ("the Rules"), bywhich all European Union (EU) soccer clubs must abide.

The Rules were created to curb overspending by EU soccer clubs in order to insure their own financial stability. The Rules were implemented to stop what UEFA General Secretary Gianni Infantino referred to as "greed, reckless spending and financial insanity within European football." (Richard Conway, UEFA Investigates 76 clubs over Financial Fair Play, ((Feb. 29,2014), http://www.bbc.com/sport/0/football/26390770) The Rules put into effect a "break-even" requirement where a club's expenses must not exceed its income and a club must not record losses of more than €45 million over a three-year period.( Ed Thompson, Financial Fair Play, (Feb. 29,2014), http://www.financialfairplay.co.uk/financial-fair-play-explained.php) Failure to meet the "break-even" requirement may lead to serious fines, player transfer bans, or even possible denial of a license to compete in UEFA competitions, namely the Champions League and Europa League tournaments, which generate high revenues for its participants. (Are UEFA's Financial Fair Play Rules headed for an early bath?, Taylor Wessing LLP (Feb. 29, 2014), https://www.taylorwessing.com/news-insights/details/are-uefa-s-financial-fair-play-rules-headed-for-an-early-bath-2013-12-18.html).

According to Infantino, 41 clubs have been excluded from European Competition, and five have been excluded in the current season for failing to meet the strict criteria since 2009. (Joe Wright, Financial Fair Play Is Working Insists UEFA, (Feb. 28, 2014), http://www.goal.com/en-us/news/1956/europe/2013/08/08/4174569/financial-fair-play-is-working-insists-uefa?ICID=AR_RS_1) Yet many in the game feel this is not enough.

International law firm Taylor Wessing LLP serves as advisor on competition law and free movement rules. The firm reports that the Rules resemble similar salary cap programs in place in North American sports leagues, but do differ in some respect. Salary caps in American leagues place limitations on how much money a club may spend on the wages of individual players and total wage expenditures. (Taylor Wessing LLP., https://www.taylorwessing.com (Feb. 29, 2014)) The purpose of a salary cap is to promote protection of a competitive balance by limiting the amount of money a team can pay its players in salary. Yet representatives from smaller EU clubs criticize the Rules for promoting the opposite, as the Rules do not curb or limit player transfer fees or the salaries clubs pay their players. They only require teams to meet the "break-even" provisions, which many of the richer clubs have no problem doing, especially with the backing of wealthy owners and investors.

The limitations on spending established by the Rules unfortunately make it difficult for financially inferior clubs to challenge against powerhouse teams who "bought their success" prior to the implementation of the Rules. This is why many opponents of the Rules claim that they may "institutionalize the competitive imbalance that currently exists," because they do not really directly attack the problem. Id. Infantino has insisted, however, that the Rules were not created to isolate clubs. He claims that the Rules are about financial sustainability, which will lead to a more competitive and economically sound region of soccer, as prominent teams cannot "break the bank" to bring in top talent without regard to accumulating large amounts of debt. (Enis Koylu, FFP Not Out to Isolate Clubs, Say UEFA, (Feb. 28, 2014), http://www.goal.com/en us/news/1956/europe/2014/03/03/4659515/ffp-not-out-to-isolate-clubs-says-uefa?ICID=HP_BN_8)

Another notable complaint, made by a prominent agent, is that the Rules breach fundamental EU laws on competition and free movement. The complaint also alleges that the Rules may reduce high profile big-money transfers in the EU. As a result this will make it more difficult for European agents to earn commissions from player transfers. (Taylor Wessing LLP., https://www.taylorwessing.com (Feb. 29, 2014)) The most important issue stemming from the complaint is the risk that the Rules may violate European laws. The complaint asserts that the Rules contravene the EU Treaty principles protecting the free movement of workers (reduction in the number of player transfers), capital (reduction in club investment amounts), and services (reduction in sports agents abilities to generate revenue through transfers). (Id.) The Rules also have been alleged to be in breach of Article 101 of the EU Treaty, constituting anti-competitive agreements between competing firms to reduce their spending and investing to pre-determined levels. Anti-competitive agreements may be permitted as long as the restriction constitutes a pursuit towards a legitimate aim, and the restriction must be no more restrictive than is required to achieve that aim. (Id.)

Unfortunately for UEFA, there are doubts as to whether the Rules could satisfy such a standard. While protecting the financial stability of European soccer would be considered a legitimate aim, there are other less restrictive approaches UEFA could adopt in place of the Rules. One example is revising the revenue sharing model, where smaller EU clubs could have a greater proportion of broadcasting and sponsorship revenues allocated to them, which could aid financial stability amongst all clubs. Another alternative could be to adapt a salary cap system like American professional sports leagues. However, this could lead to a hampering of transfer activity and potential earnings, which would raise similar concerns to those present with the Rules. (Id.)

Vice President of the European Commission and Commissioner for Competition, Joaquin Almunia, has already given his full support for the Rules, despite the legitimate concerns. However, the Commission has still set a goal of responding to any claims within four months of receipt. If the Commission gives an inadequate response, any aggrieved club or agent could try an alternative process, mainly by bringing an action in a domestic court. This may prove a viable option because the domestic courts of EU member countries are obliged to apply the provisions of the EU Treaty and may deem certain rules unenforceable. (Taylor Wessing LLP., https://www.taylorwessing.com (Feb. 29, 2014))

UEFA announced in February that currently in the 2013/2014 season, 76 clubs are being investigated for possible breaches of the Rules. Surprisingly, soccer conglomerates such as Chelsea F.C. and Real Madrid C.F., both of whom are known for their over spending habits, are not on the list. Real Madrid made world history this year by having the biggest transfer signing to date with Gareth Bale's €100 million transfer fee from Tottenham Hotspurs. Infantino asserts that while such a signing does raise questions with regards to compliance with the Rules, Real Madrid is matching its expenses in revenues annually, and thus is in compliance with the break-even requirement. Chelsea has a different source of its funds and its ability to spend; it is due to its billionaire owner Roman Abramovich constantly injecting money into his team. Thus, keeping debt low and matching expenses is not an issue for Chelsea. Many smaller clubs see this as loophole and unfair advantage.

Smaller teams further question whether clubs like Real Madrid and Chelsea are actually adhering to the Rules, because it appears unlikely that a purchase of a single player for €100 million can be made without incurring debt. This also calls into question whether the Rules are beneficial in promoting financial fairplay in any regard. Yet despite the criticism, clubs are being investigated. For example, a new financial powerhouse, A.S. Monaco F.C. of France, has recently seen an enormous spike in its spending on players with new ownership. "Questions have been asked as to how Monaco, with its modest crowds, pulls off big-money transfers and salaries for stars like Radamel Falcao, Joao Moutinho and James Rodriguez without overstepping UEFA's 45 million euro deficit limit." (Kris Voakes, A political and legal minefield awaits the continent's best sides this summer as FFP laws finally kick in. But will members of the elite really be ousted from the UCL?, (Feb. 29, 2014), http://www.goal.com/en-us/news/86/italy/2014/02/16/4623745 /champions-league-in-the-courtroom-how-europes-biggest-clubs?ICID=SP_FT_2)

After the investigations are thoroughly conducted, actions will be brought against any teams who have breached the Rules. Clubs will have the right to appeal decisions against them to the Court of Arbitration for Sport, who will then make judgments between July and mid-August of 2014. At the beginning of the 2014/2015 season, UEFA shall have the right to exclude non-complying teams from both the Champions League and Europa League. (Richard Conway, http://www.bbc.com (Feb. 29,2014)) With the passion that surrounds the beautiful game today, such exclusion would not only be a disappointment to any club, but a sword in the heart of its fans.

April 4, 2014

Teller v Dogge

By Barry Werbin

The Teller (from Penn & Teller) case that raised the question of copyrightability of one of Teller's classic illusion acts (called "Shadows") as pantomime or a dramatic work, was decided March 20, 2014, by the District of Nevada, which held that such a performance qualified as a protectible dramatic work for copyright purposes.

"Shadows" had been registered as a dramatic work with the Copyright Office in 1983. The court viewed Teller's performance not just as an uncopyrightable magic act, as the defendant had urged, but as a performance akin to a pantomime or other dramatic work that the Copyright Act expressly protects, as also evidenced by the registration. The defendant had essentially copied Teller's entire performance by creating two YouTube videos "offering to sell the secret to one of Teller's signature illusions." As the court emphasized: "The mere fact that a dramatic work or pantomime includes a magic trick, or even that a particular illusion is its central feature does not render it devoid of copyright protection." The court also noted that "Teller's certificate of registration describes the action of 'Shadows' with meticulous detail, appearing as a series of stage directions acted out by a single performer."

Funny side bit is Teller only uses "Teller" as his full name - see the caption:

April 5, 2014

Week in Review

By Martha Nimmer

Notorious Sampling

Even though rapper Notorious B.I.G. passed away almost two decades ago, his estate may face a copyright lawsuit for his sampling of a 1974 song by soul singer Leroy Hutson and Michael Hawkins. Now, hoping to get ahead of such a suit, the estate of the Notorious B.I.G.--born Christopher Wallace--has filed its own suit in California federal court, seeking declaratory relief that the song "The What" on the album "Ready to Die" does not infringe Hutson and Hawkins' song, "Can't Say Enough About Mom." The estate's lawsuit also accuses Hutson of copyright misuse for "threatening legal action with alleged knowledge of no real infringement."

What sets this case apart from others is that Wallace admitted sampling the 1974 song. The plaintiff's estate, however, appears untroubled by this past revelation, arguing that the sampling is de minimis and fair use, "as only 'two nonsequential tones' were used, adapted, modified and supplemented." Additionally, any infringement claims would be time-barred, according to the plaintiffs.

The Biggie song at issue, "The What," was written in 1994 by the deceased artist, Osten Harvey Jr. (known as Easy Mo Bee) and Clifford Smith (known as Method Man). Harvey produced the song, and the plaintiff's suit states that he "sampled the final 1.9 seconds of 'fade-out' from the defendant's song -- a faint 'wah-wah' sound which oscillated between high and low frequencies." On "The What," the song excerpt is said to have been "transposed" to match an E-flat minor tone. According to The Hollywood Reporter, the song's "low-end frequencies were removed, and the high-end frequencies were chopped into short and bass tones."

As there is no dispute over whether sampling occurred in "The What," the judge hearing the suit will be left to decide what amount of sampling is permissible.


Stolen Snowman?

An animator who claims that Disney copied "original elements" of her snowman character for its movie and trailers for the hit film "Frozen" is not, in the words of "Frozen" soundtrack artist Adina Menzel, going to "let it go." Earlier this week, animator Kelly Wilson sued the Walt Disney Company and its affiliates for copyright infringement in California federal court.

"Frozen", Disney's $1 billion animated hit, tells the story a young girl and her friends who save their kingdom from eternal winter. In contrast, Wilson's 2D animated movie tells the story of "an average Joe snowman" who loses his nose -- made out of a carrot -- and must retrieve the nose before it is eaten by hungry rabbits. The majority of Wilson's complaint focuses on a teaser trailer for "Frozen" and its similarities to her brief film. According to the artist's complaint, the June 2013 teaser for "Frozen" is "substantially similar to 'The Snowman', and it is almost identical to the original element of 'The Snowman', including but not limited to: the plot, themes, dialogue, mood, setting, pace, characters and sequence of events." Specifically, Wilson claims that the Disney trailer uses the same plot -- a snowman who has lost his carrot nose -- but instead of rabbits, the snowman must keep a moose from eating the nose. Wilson claims in her suit that Disney took the idea from her during the 54th San Francisco International Film Festival in 2011 after she won "Youth Work Honorable Mention" for "The Snowman". Notably, her film competed against a short film created by a Pixar Animation Studios employee; Pixar is a subsidiary of Disney.

Wilson seeks a share of profits as well as attorney's fees.


Trouble in the Jersey Shore

MTV's controversial reality television show, Jersey Shore, is no stranger to legal trouble. Now, add to that list a class action lawsuit from a former video editor on the series. In his suit, filed on Friday in Los Angeles Superior Court, video editor Philip Pucci accuses 495 Productions, the producer of Jersey Shore and other reality shows, of unfair business practices, failing to pay for overtime work and failing to comply with minimum wage laws. According to the complaint, Pucci worked as an assistant editor for 495 Productions from October 2012 through February 2013. He claims that he was paid "$1,250 per week and was only paid overtime if he worked more than 60 hours in a single week."

The suit goes on to describe what it calls "a pay scheme" that forced "non-exempt employees to accept a flat salary for 60 hours of work a week." Essentially, the suit avers that the pay scheme was "positioned as 40 hours plus overtime," but it turned out to be a fixed salary for every employee in Pucci's situation, regardless of the number of additional or overtime hours worekd. According to the suit, this scheme was set up "in order to make it falsely appear the defendants pay scheme complies with California overtime laws." Pucci goes on to allege that the number of employees in the class are "so numerous" that it was not "feasible" to identify all of them by the time the action was filed. At least 100 other employees of 495 Productions were subject to the unlawful pay scheme, the complaint states.


Psihoyos v. Wiley

On April 4th, the Second Circuit joined other circuits in deciding that the Discovery Rule applies to the statute of limitations in copyright infringement cases.

Here is the first paragraph of the decision:

Photographer Louis Psihoyos sued publisher John Wiley & Sons, Inc.("Wiley") for copyright infringement based on Wiley's publication of textbooks containing Psihoyos's photographs. The United States District Court for the Southern District of New York (Rakoff, J.) determined that the applicable three‐year statute of limitations barred none of Psihoyos's infringement claims because Psihoyos, exercising reasonable diligence, did not discover the infringements until fewer than three years prior to bringing suit. The District Court nonetheless granted Wiley's motion for summary judgment as to several of the infringement claims on the ground that Psihoyos had failed to register the relevant photographs with the Copyright Office prior to instituting suit as required 1 by 17 U.S.C. § 411(a). After a jury trial in which the jury awarded statutory damages concerning three of the remaining photographs, the District Court (Oetken, J.) denied Wiley's motion for remittitur or, in the alternative, for a new trial. We AFFIRM.

The opinion is available here:Wiley-Psihoyos_-_2d_Cir_Opinion_(00716964).pdf

April 8, 2014

Minor League Baseball Players File Suit

By Jeffrey Biel

On February 7, 2014, three former prospects, Aaron Senne of the Miami Marlins, Oliver Odle of the San Francisco Giants, and Michael Liberto of the Kansas City Royals filed a federal lawsuit against Major League Baseball (MLB), commissioner Bud Selig, the Royals, Marlins and Giants for violations of federal and state wage and hour laws (Senne v. MLB). While Minor League Baseball has been in existence since the 1800's, this will mark the first time that MLB will have to answer and defend the low wages it pays to Minor League players. While elite prospects receive large bonuses to cover their expenses throughout the year, most players must work second and third jobs to make ends meet and cover the training expenses expected in the off-season.

Sports law professor and Sports Illustrated columnist Michael McCann recently wrote an article for Sports Illustrated detailing the paltry salaries earned by typical Minor Leaguers. In fact, most players earn between $3,000 to $7,500 for a five-month season. In comparison, a typical fast food worker earns between $15,000 and $18,000 a year. With the federal poverty level at $11,490, most Minor League players are consistently below this level. Although many players do receive a signing bonus, the complaint alleges that the average signing bonus is only $2,500. Minor Leaguers do receive a salary increase as they climb the ladder from AA to AAA teams, but many players will never reach those levels and could remain playing A ball for a substantial amount of time.

Minor League Players typically sign contracts in the six-year range, which gives players no leverage to renegotiate until they becomes free agents. For the lowest level of the Minor Leagues, the maximum that players can earn is $1,100 per month. The federal minimum wage is $7.25 per hour and over a typical 40-hour work week, that totals $1,160. Thus, even the players that are making the maximum (excluding signing bonuses) at the lowest levels are being paid below the federal minimum wage.

Critics of the complaint argue that unhappy Minor League players should quit and find other jobs, but this does not answer the facts alleged in the lawsuit. Minor League players have been unable to form a player's union like their Major League counterparts, which is part of the reason that these conditions still exist. Additionally, baseball is the only sport that still enjoys a blanket antitrust exemption, making it very difficult to sue the MLB for issues of salaries or unfair working conditions. In this new case, the players are attempting to bring a class action lawsuit alleging violations under the Fair Labor Standards Act, which guarantees minimum wage and overtime pay. It will be extremely interested to see how MLB answers this complaint.

For more reading on the case and MLB's possible defenses, please see: http://sportsillustrated.cnn.com/mlb/news/20140212/minor-league-baseball-players-lawsuit/

April 12, 2014

Week in Review

By Martha Nimmer

NHL Head Trauma Developments

Claiming that the National Hockey League (NHL, the league) "intentionally created, fostered and promoted a culture of extreme violence," nine former NHL players have filed a class action lawsuit against the league in Manhattan federal court. This is the second class action lawsuit against the NHL that seeks damages arising from the NHL's treatment of players and player head trauma. Last year in May, the family of New York Rangers player Derek Boogaard brought a wrongful death lawsuit against the league, claiming that the NHL was "responsible for the physical trauma and brain damage Boogaard sustained in six seasons as one of the league's top enforcers." Boogaard died in 2011 of an accidental overdose of prescription painkillers and alcohol.

Although both the NFL and NHL lawsuits raise similar claims of failure to warn players of the dangers of repeated head trauma, this latest NHL lawsuit sheds light on the "role of enforcers in the N.H.L." and the role of extreme, glorified violence in the sport: "through the sophisticated use of extreme violence as a commodity, from which the N.H.L. has generated billions of dollars, the N.H.L. has subjected and continues to subject its players to the imminent risk of head trauma and, as a result, devastating and long-term negative health consequences," the lawsuit states. The plaintiffs in the second suit are the former players Dan LaCouture, Dan Keczmer, Jack Carlson, Richard Brennan, Brad Maxwell, Michael Peluso, Tom Younghans, Allan Rourke, and Scott Bailey. In a 2011 interview, Peluso announced that he was suffering from concussion-related seizures and depression, and criticized the poor pension benefits and health insurance offered by the N.H.L. and the N.H.L. Players' Association. "There is no question in my mind that brain injuries and depression are linked," Peluso said.

The case will be heard by Judge Shira A. Scheindlin. Plaintiffs seek damages, including punitive damages, and equitable relief on behalf of a class of all former and current NHL players.



Katherine Heigl's Least Favorite Drugstore

Duane Reade may say that it is "New York City's favorite drugstore," but it is undeniable that actress Katherine Heigl does not consider herself one of the store's fans. On Wednesday, the former Grey's Anatomy star filed suit in Manhattan federal court against the pharmacy chain, alleging unfair competition and violations of the Lanham Act and New York civil rights law. The controversy stems from a photo tweeted by Duane Reade earlier this year, showing Heigl exiting the store, two Duane Reade shopping bags in tow. The tweet accompanying the photo read "Love a quick #DuaneReade run? Even @KatieHeigl can't resist shopping #NYC's favorite drugstore." The tweet has since been deleted.

At the heart of Heigl's lawsuit are claims that Duane Reade sought to "capitalize on [her] image by turning it into an ad for the company." After all, the lawsuit reasons, the primary purpose of the company's Twitter account is to advertise products: "[f]or example, on March 14, 2014, Defendant tweeted 'Crunch, crunch Munch! It's National Potato Chip Day! Enjoy!' followed by a link to an advertisement for Defendant's own 'DeLish' label food product." The lawsuit goes on to state that Heigl's attorney sent a cease-and-desist letter to Duane Reade on March 19, 2014, but that the letter was ignored.

Heigl has asked for a jury trial, and is seeking compensatory, punitive and treble damages, in addition to attorney's fees.

Read the complaint here: http://online.wsj.com/public/resources/documents/0410_heiglsuit.pdf


The Boy Who Cried Defamation

Martin Scorsese's hit movie, "The Wolf of Wall Street", found itself at the center of a federal defamation lawsuit last month. Andrew Greene, who worked for the corrupt brokerage firm Stratton Oakmont depicted in the film, sued Paramount Pictures, claiming that he was the basis for the film's character Nicky "Rugrat" Koskoff. On Monday, Paramount went on the offensive, asking the judge to dismiss the lawsuit. The studio, writes The Hollywood Reporter, also took the opportunity to draw attention Greene's less than stellar legal career; the plaintiff, the studio says, is an inactive member of the California State Bar and was "intimately involved in the pervasive fraud and corruption that characterized the Stratton Oakmont securities operation in the 1990s."

Despite these shots across the bow, Paramount is not arguing that the suit should be dismissed because "The Wolf of Wall Street" was substantially true; rather, the studio is arguing, "the lawsuit should fail because the film's portrayal of 'Nicky Koskoff' was not 'of and concerning' Greene." Rather, the Nicky Kosoff character was a "composite" of several less-than-upstanding individuals associated with the brokerage house. After all, "[t]he book did not have only one dishonest executive with a notable toupee," states Paramount's motion to dismiss, touching on "self-proclaimed Swiss-banking expert Gary Kaminsky" as one notable example. Additionally, if that argument does not prevail, Paramount believes that Greene's suit should be dismissed because the movie is "artistic and expresses the 'newsworthy' nature of financial fraud."

"The Wolf of Wall Street", starring Leonardo Dicaprio, tells the (wild) story of Jordan Belfort, founder of brokerage firm Stratton Oakmont, which perfected and utilized a "pump-and-dump" securities scam in the 1990s until (spoiler alert!) being prosecuted by federal authorities.

Read the motion to dismiss here: http://www.scribd.com/doc/216889093/Wolf-Response


Mega Trouble for Megaupload

The Recording Industry Association of America (RIAA) has now added its name to the growing list of parties suing Megaupload and its eccentric founder, Kim Dotcom. On Thursday, Warner Music, Universal Music, Sony Music and Capitol Records filed a copyright infringement lawsuit against Megaupload, Kim Dotcom, Mathias Ortmann and Bram van der Kolk. This move comes three days after movie studios filed the same claims against the defendants.

The RIAA alleges that from 2005 until 2012, Megaupload "openly encourag[ed] users to upload" popular content files onto its servers, ultimately amassing a trove of millions of files. Until mid-2011, the complaint continues, Megaupload even paid users to engage in this infringement. The lawsuit claims that the defendants ultimately earned over $175 million in illegal profits, while causing more than "a half a billion dollars in harm" to the copyright owners. Included in the record labels' suit is an exhibit listing the infringed works, which include songs from Katy Perry, Beyonce, Britney Spears, Carrie Underwood, Kesha and others. Eighty-seven songs are listed in total, "putting theoretical maximum statutory damages at $13 million." "Alternatively," notes The Hollywood Reporter, "the plaintiffs seek actual damages and defendants' profits."


April 13, 2014

Second Concussion-Related Lawsuit Filed Against the NHL

By Carrie Anderer

On April 8th, the National Hockey League (NHL or the League) was hit with a second concussion-related class action lawsuit brought by nine former players (Plaintiffs) in Manhattan federal court. While this second lawsuit is substantively similar to the lawsuit filed in November 2013, it notably places more emphasis on what it deems to be the League's unique culture of extreme violence, alleging that the NHL fostered violent fighting between players during games and sold this "commodity" of violence to its fans to help generate billions in revenues. The complaint ultimately alleges that the NHL acted negligently, intentionally and fraudulently in its failure to protect its players from head injuries, and seeks, inter alia, compensatory and punitive damages, as well as medical monitoring for the Plaintiffs' brain injuries sustained during their NHL careers.

The Plaintiffs argue that the NHL knew about the linkage between repeated blows to the head and debilitating brain injuries, and yet took no affirmative steps to adequately and meaningfully address the issue. Furthermore, the Plaintiffs claim that the League intentionally concealed what it knew about these devastating and long-term negative health consequences from players. The complaint criticizes the NHL's self-initiated Concussion Program, which was implemented by the League in 1997 to research and study brain injuries affecting players. The Plaintiffs allege that the first written report issued by the Concussion Program in 2011 "amounted to little more than a statistical analysis of concussions suffered and time lost by players." The Plaintiffs also contend that the League has not implemented any effective rule changes aimed at reducing head injuries sustained by players on the ice. For example, in 2011, Rule 48 was amended to ban all deliberate blows to the head. However, as the complaint points out, this rule change only prohibits hits which result in contact with an opponent's head "where the head is targeted and the principal point of contact." According to the Plaintiffs, Rule 48 is ineffective because it does not prohibit a player from deliberately targeting the head of another player during a body check.

Many of the complaint's substantive allegations center on the NHL's "inextricable ties to extreme violence" and its "sophisticated use of extreme violence to bring fans to the game of hockey." The Plaintiffs allege that the NHL has historically fostered a culture in which fights between players, typically instigated by players known as "enforcers," are an acceptable outlet for players' emotions, a means for players to protect their teammates and an expected element of play. As a result, players who already faced the risks of incurring concussions due to the inherently dangerous aspects of playing in the NHL are also exposed to non-inherent risks as a result of "unnecessary violence, including brutal fighting." The complaint describes the traumatic brain injuries suffered by some of the League's most iconic players, several of which were the result of blows to the head during a fight with another player.

The Plaintiffs face a difficult road ahead in terms of legal obstacles. First, they face the threat that their claims are preempted by federal labor law because they are arguably dependent upon or inextricably intertwined with an interpretation of the collective bargaining agreements. Second, it will be difficult for the Plaintiffs to prove causation by establishing that their long-term injuries were the direct result of concussions sustained while playing in the NHL. Third, they may face difficulty certifying the class since it is arguable that their individual injuries and unique factual circumstances will predominate over common questions of fact. Fourth, the Plaintiffs will likely face the argument that they assumed the risks associated with playing in the NHL, and that the medical evidence linking head injuries and neurological diseases has long been publicly available. Finally, the NHL will certainly argue that it took appropriate measures to protect players, including the implementation of the Concussion Program and certain rule changes.

Given that the complaint was recently filed, it is currently unclear what strategy the NHL will adopt; whether it will choose to defend itself in court, or whether it will consider reaching some type of settlement with players. One thing is clear: these types of lawsuits will continue to be filed, and the safety of players must become a number one priority.

April 16, 2014

Psihoyos v. Wiley: Second Circuit Joins Other Circuits in Holding that Discovery Rule Applies to Statute of Limitations in Copyright Infringement Claims

By Barry Werbin and Laura Tam, Herrick, Feinstein LLP

On April 4th, in Psihoyos v. John Wiley & Sons, Inc., the Second Circuit joined almost every other federal Courts of Appeals in holding that the discovery rule applies to the statutory three-year statute of limitations in copyright infringement claims. The case began in March 2011, when photographer Louis Psihoyos (Psihoyos) sued publisher John Wiley & Sons, Inc. (Wiley) for copyright infringement. Wiley had published eight of Psihoyos's unlicensed photographs in various textbooks from 2005 to 2009 and, in 2010, Wiley sought a retroactive licensing arrangement with Psihoyos, prompting Psihoyos to sue. After discovery was complete, Wiley moved for summary judgment, arguing that (1) the Copyright Act's statute of limitations barred Psihoyos' infringement claims since the infringements occurred more than three years prior to suit, and (2) Psihoyos had failed to register three of the photographs at issue with the Copyright Office prior to filing suit. More than a week after Wiley moved for summary judgment, Psihoyos submitted applications for copyright registration of the three photographs.

The district court rejected Wiley's first argument regarding the statute of limitations, holding that copyright infringement claims accrue upon actual or constructive discovery of infringement. Since Psihoyos did not discover Wiley's infringement until 2010 and filed suit shortly thereafter, the court determined that Psihoyos' claim was timely. With respect to Wiley's second argument, the district court held that pending copyright registration applications did not satisfy the Copyright Act's registration requirement under 17 U.S.C. § 411(a). Accordingly, the court granted partial summary judgment in Wiley's favor, leaving four of Psihoyos's infringement claims for trial. At trial, the jury found no infringement for one photo, awarded $750 in damages for non-willful infringement of one photo, and found willful infringement of the remaining two photos, resulting in an award of $300,000 and $100,000 in damages, respectively. Wiley moved for remittitur or, alternatively, for a new trial, but the district court denied the motion. Wiley then appealed the district court's partial denial of summary judgment and the denial of its motion for remittitur or a new trial, and Psihoyos cross-appealed the district court's partial grant of summary judgment in favor of Wiley on the photographs with pending copyright registration applications.

The Second Circuit affirmed the district court's decision that "an infringement claim does not 'accrue' until the copyright holder discovers, or with due diligence should have discovered, the infringement." In rejecting Wiley's argument that there should be "different accrual rules for ownership and infringement claims, both of which are governed by 17 U.S.C. §507(b)," the Court noted that "[i]n doing so, we join every Circuit to have considered the issue of claim accrual in the context of infringement claims," citing decisions from the First, Third, Fourth, Sixth, Seventh, Eighth, Ninth, and Tenth Circuits. The discovery rule conformed with Congress's intent and the text and structure of the Copyright Act, as well as policy considerations. Accordingly, the Court held that the Copyright Act's statute of limitations did not bar Psihoyos's claims of copyright infringement.

With respect to the Copyright Act's registration requirement, the Second Circuit acknowledged that the Courts of Appeal were divided as to whether a pending application satisfied Section 411(a)'s requirement of copyright registration as a prerequisite for litigation. Nonetheless, the Court determined that "[w]e need not resolve the dispute or otherwise embroil ourselves in this circuit split because . . . Psihoyos had not even filed the applications for registration of the relevant works prior to instituting the action claiming infringement of the copyright in these works, as required by the plain terms of the statute." Since Psihoyos did not apply for copyright registration until after the completion of discovery and Wiley's motion for summary judgment, "he failed to satisfy the preconditions to suit under § 411(a)."

Finally, in reviewing the district court's denial of Wiley's motion for remittitur or a new trial, the Second Circuit held that the district court did not err in denying Wiley's motion and did not abuse its discretion in refusing to alter the jury's award of statutory damages. Although Wiley argued that the district court erred in failing to consider whether the award of statutory damages was reasonably related to Psihoyos's actual loss, the Second Circuit soundly rejected this argument, nothing that "[a]lthough revenue lost is one factor to consider, we have not held that there must a direct correlation between statutory damages and actual damages." The Second Circuit recognized that the jury may have considered other relevant factors to determine the damages award, including evidence of Wiley's willfulness, the substantial profits it earned, and the need for deterrence.

With this significant decision, the Second Circuit now joins most other Circuits in applying a discovery rule to the three-year statute of limitations for copyright infringement actions.

The Authors Guild Appellate Brief

Here is a link to the Authors Guild's brief in the Google Books appeals:


April 18, 2014

Week in Review

By Martha Nimmer

Out of the Furnace and Now, Possibly Out of Court

Earlier this week, producers of the film "Out of the Furnace" asked a New Jersey judge to throw out a defamation lawsuit brought by members of a northeastern Native American tribe, the Ramapough Lunaape Nation. The 17 plaintiffs are unhappy with the film's portrayal of the Lunaape Nation, which is referred to in the movie as the "Jackson Whites" family, a group of violent "inbreds." The lawsuit says that the term "Jackson Whites" is a historical and racial slur, and that the film's setting in northern New Jersey, along with the use of surnames like "DeGroat" and "Van Dunk," are "too specific to the Ramapough plaintiffs to be chance, coincidence or happenstance," and thus, put the plaintiffs in a false light.

The defendants, which include Relativity Media, Scott Free Productions, Red Granite Pictures and Leonardo DiCaprio's Appian Way Productions, do not agree, arguing that the film does not "rise to libel;" in their brief in support of the motion to dismiss, the defense goes on to say that allowing such a lawsuit to go forward would harm free speech: "[p]laintiffs' lawsuit, if permitted to proceed beyond the pleading state, will chill free speech by subjecting creators and distributors of movies and other works of fiction to liability whenever some members of a distinct ethnic, cultural, social or other definable group dislike how their group is presented." The lawsuit should also fail, according to the defendants, because the plaintiffs have failed to demonstrate that the allegedly defamatory statements are "of and concerning" them. Additionally, the defendants also point to the "group libel doctrine," which "prohibits defamation claims that are based on a plaintiff's membership in a group if there's no reason for anyone concluding the statement's particular reference to one of its members."

"Out of the Furnace", released last year, stars Christian Bale as he searches for his younger brother, played by Casey Affleck, whom Bale's character fears has fallen victim to a crime ring led by Harlan De Groat, played by Woody Harrelson.

Read the defendants' brief here: http://www.scribd.com/doc/218274231/Furnace-Brief


Opening Pandora's Music Box

Pandora, the popular online music streaming service, has just been sued by major record labels in New York state court over the company's use of sound recordings made before February 15, 1972. The record companies, which include divisions of Sony, Warner and Universal, claim that artists and their labels have been deprived of "tens of millions of dollars" every year by streaming services, such as Pandora. "Pandora's refusal to pay Plaintiffs for its use of these recordings is fundamentally unfair," decries the lawsuit. Some of the artists whose songs are said to be infringed include Bob Dylan, The Beatles, David Bowie, Elvis Presley, James Brown and Led Zeppelin.

Last year, a similar action was brought against satellite radio company, Sirius XM. According to The Hollywood Reporter, "[t]he subject of the [Sirius] lawsuit has to do with the fact that sound recordings didn't begin falling under federal copyright protection until the above date. As such, the streaming service might not be able to rely upon SoundExchange, the performance rights organization that collects digital and satellite royalties on the behalf of sound recording copyright owners." The record labels are now testing this belief, arguing that songs recorded prior to February 15, 1972 are not, in fact, covered under federal copyright law, but have instead been protected by state common law.

The consequences of this lawsuit, should the plaintiffs prevail, would be significant, to say the least. Pandora risks losing many popular pre-1972 songs because "Capitol Records, Sony Music, Universal Music, Warner Music and ABKCO Music are demanding an injunction in addition to compensatory damages, punitive damages and all proceeds gained as a result of the exploitation of pre-'72 music." Such a substantial hit to Pandora's music catalogue is likely to upset its 250 million users, who may look elsewhere to get their music fixes.



Organized Sports or Organized Crime?

Calling the group a "racketeering enterprise," a Texas attorney has brought a federal lawsuit in the Eastern District of Texas against his son's high school lacrosse team. The 39-page suit filed earlier this month by William Munck claims that the team set up a "pay to play" scheme that limited players' on-field time at Episcopal School of Dallas "because coaches affiliated with that high school team and two other local powerhouses used their influence to reward others who participated in a Dallas Lacrosse Academy, a private for-profit travel team with which the coaches are involved."

The suit goes on to allege that the defendants involved in the operations of the Dallas Lacrosse Academy violated the Racketeer Influenced and Corrupt Organizations (RICO) Act by "tactics that forced others to contribute to the success of the private for-profit DLA team." Munck goes on to state "DLA and the RICO defendants pushed their student athletes to participate in DLA if they wanted to play or succeed in their youth and high school programs." Additionally, the suit continues, "[t]hrough the use of illegal and fraudulent conduct, including threats, intimidation, and even extortion, defendants have tried to ensure that student athletes who want to play lacrosse in North Texas have to pay for play and have to go through defendants' enterprise."

The defendants argue, however, that this is simply the case of an "over-involved" parent unhappy with his child's playing time, not a nefarious racketeering enterprise. According to the defendants' motion to dismiss, Munck "has used his position as a lawyer and owner of the law firm Munck Wilson Mandala ... as a tool directed at various lacrosse coaches in the North Texas community." In reality, the defendants continue, their "only sin is failing to recognize and appreciate the athletic talents of Munck's son."

Munck's wife and son are also plaintiffs in the case. They seek injunctive relief, treble damages and attorney's fees.


Saving Detroit, One Painting At A Time

Plans for the Detroit Institute of Arts to keep its art collection intact have hit another snag. Earlier this month, two groups of creditors served the Detroit Institute of Arts (DIA) with subpoenas for records "covering the past hundred years and documenting the ownership history of every work in its 60,000-piece collection." The first subpoena, issued on March 28th, demands "an exhaustive swathe of documents including the museum's financial, tax and insurance records." Syncora, the bond insurer and the creditor behind the first subpoena, also asked for internal studies performed by the museum "on visitor trends and exhibition performance as well as all documents that address the DIA's complex relationship with the city of Detroit, a history that stretches back to 1919." A committee of retirees served the DIA and auction house Christie's with a second subpoena on April 1st. Last year, Detroit hired Christie's to appraise the museum's city-owned collection, but some creditors chafed at the auction houses' appraisal -- $454 million to $867 million -- calling it too low.

The April 1st subpoena was issued just one day after Detroit's emergency manager, Kevyn Orr, filed an amended plan aimed at lessening some of Detroit's growing debt. The amended plan is said to include "a penalty for retirees if they do not quickly agree to the settlement's terms and wave their rights to the DIA's art collection." The settlement plan also includes a "grand bargain" that would protect the museum's collection, while "shor[ing] up Detroit's ailing pension funds." Michigan governor Rick Snyder, along with the DIA and a group of local and national foundations, have also pledged $816 million to the cause.


Dos and Don'ts of Comp Time

By Kristine A. Sova

If you're a private employer and you allow employees to take compensatory (or comp) time, you might be making a big mistake.

Comp time is when employers allow employees to bank overtime hours for use as vacation time or other paid time off at a later date instead of immediately paying the employee overtime for hours worked in excess of 40 per workweek. While this may seem like a win-win situation for employers and their employees, more often than not, it's an unlawful practice.

It need not be so, though, and here we offer some tips for private employers in New York looking to offer comp time.

Non-Exempt Employees Must be Paid Overtime

If an employee is non-exempt under either federal or New York law, the employee must be paid overtime wages. The federal Fair Labor Standards Act (FLSA) specifically prohibits the payment of comp time in lieu of overtime wages by private employers to their non-exempt employees. Further, while comp time is not per se unlawful under the New York Labor Law (https://labor.ny.gov/legal/counsel/pdf/Other/RO-09-0161%20-%20Compensatory%20Time.pdf), New York's requirements regarding the frequency of payment of wages )http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=@SLLAB0A6+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=28171207+&TARGET=VIEW) have the effect of prohibiting payment of comp time to all non-exempt employees.

Non-Exempt Does Not Mean Hourly

Hourly wages are not synonymous with non-exempt status. As discussed previously in my blog (http://sovalaw.com/blog/2014/02/27/some-of-your-salaried-employees-may-be-entitled-to-overtime-pay/), some of your salaried employees may be non-exempt and therefore entitled to overtime wages. If you're going to offer comp time to exempt employees, make sure you first review the job duties of your employees to confirm which occupations are actually exempt from overtime pay under federal and state law.

New York Overtime Laws Still Apply to Some Occupations Exempt under the FLSA

Some occupations that are exempt from overtime under the FLSA are still entitled to overtime under the New York Labor Law. While these occupations must be paid overtime, New York Labor Law requires an overtime rate of one-and-a-half times the state minimum wage for their overtime hours, regardless of the amount of their regular rate of pay. This is another reason to review the job duties of the occupations in your business before offering comp time.

New York Does Not Permit Payment of Comp Time to All Exempt Employees

New York's requirements regarding the frequency of payment of wages (http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=@SLLAB0A6+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=28171207+&TARGET=VIEW) also have the effect of prohibiting payment of comp time to exempt employees who earn less than $900/week. This is a small but important point to remember since the threshold for the salary-basis exemptions under New York Labor Law is actually a lower amount ($600/week at the time of this posting).

Be Thoughtful About Using Comp Time with Exempt Employees

Although the permissibility of comp time is limited, some private employers in New York will still find it useful to reward exempt employees earning over $900/week with extra time for working extra additional hours. Providing hour-for-hour time off may not be advisable, however. If comp time is offered regularly, employees may come to expect it every time they work additional hours. In addition, some employees may take advantage by working additional hours unnecessarily so they can bank extra days off in the future. If you do offer comp time, make sure to outline the rules clearly in a written policy.


Not per se unlawful: https://labor.ny.gov/legal/counsel/pdf/Other/RO-09-0161%20-%20Compensatory%20Time.pdf

Frequency of payment of wages: http://public.leginfo.state.ny.us/LAWSSEAF.cgi?QUERYTYPE=LAWS+&QUERYDATA=@SLLAB0A6+&LIST=LAW+&BROWSER=BROWSER+&TOKEN=28171207+&TARGET=VIEW

Prior post: http://sovalaw.com/blog/2014/02/27/some-of-your-salaried-employees-may-be-entitled-to-overtime-pay/

Postscript to "Nazis, Monuments Men, Hidden Treasures, and the Restitution of Looted Art"

By Leila Amineddoleh

I recently authored an article "Nazis, Monuments Men, Hidden Treasures, and the Restitution of Looted Art" to appear in the Entertainment, Arts and Sports Law Journal Spring issue(publication any day now...). The article discusses legal concerns related to the Munich Art Trove (the collection of works hidden by the Gurlitt Family for decades, discovered in Germany in March 2012, and then disclosed to the public in November 2013). Since I wrote the article in January, there have been many developments in the matter.

In addition to the 1,400 works that were hidden by Cornelius Gurlitt in Munich, an additional 238 works were discovered at another one of his properties in Austria. It was also determined that at least 310 of the works in the trove are legitimately Cornelius Gurlitt's property because his father, an art collector, acquired them before the Nazis came to power.

Due to fear that all restitution cases will be dismissed on statute of limitations grounds, two months ago, a bill was introduced to the German legislature to eliminate the 30-year limitations period for certain cases involving stolen property, such as Nazi-looted art. The legislation would apply retroactively and prevent someone from acquiring an object in bad faith and then invoking the limitations period to avoid restitution. On the same day that the new legislation was introduced, Cornelius Gurlitt filed a lawsuit claiming that German authorities used false charges of tax evasion to illegally seize the art; he demanded that his property should be returned to him immediately. Gurlitt asserts that there is no legal basis for the German government to possess the works.

Then earlier this month, a major development was announced. Gurlitt and the German government reached an agreement. Gurlitt will allow provenance researchers to investigate the works once they are released from police custody. An appointed task force will research the provenance of works suspected of having been confiscated by the Nazis. The group of researchers will include someone appointed by Gurlitt, and the investigation must be completed within a year. Artworks suspected of being Nazi loot will remain in secure custody and on www.lostart.de. This process is being funded by the German federal government and state of Bavaria. As part of the agreement, works for which the Task Force has not completed provenance research within the year will be returned to Gurlitt, but the researchers will have continued access for their examination. Gurlitt also agreed to recognize the Washington Principles (non-binding principles intended to assist in resolving issues related to Nazi-confiscated art) by means of restitution for persons claiming ownership of the works. And works that are definitively determined not to have been confiscated by the Nazis will be returned to Gurlitt and deleted from the Lost Art website. This agreement takes effect when the works are released to Gurlitt. Fortunately for claimants, the agreement bypasses the damning 30-year statute of limitations.

However, there are major problems with the agreement. It has been argued that the 1-year research deadline is insufficient, and that it is unlikely that true owners will file a claim without knowing the identity of works in the collection (at this point, fewer than 600 works have been listed on www.lostart.de). The solution also leaves too much in the hands of the selected provenance investigators. Most troubling is that the burden of proof is on claimants to prove ownership. As discussed in my article, proving ownership is a formidable task. The difficulty in filing a claim is reflected in the surprisingly low number of claims already filed. Gurlitt's spokesperson stated that he does not expect more than five percent of the works to be claimed by those in search of works stolen or extorted by the Nazis, and that the bulk of the collection was legally acquired by his family. In fact, thus far only six demands for restitution have been made. One of those works is now being claimed by two separate parties.

One of the first works that Gurlitt agreed to return was "Seated Woman", by Matisse, which was set to be restituted to the heirs of Paul Rosenberg (he was a prominent art dealer in Paris, known for representing famous artists, including Picasso and Matisse). Although negotiations had taken place and Gurlitt consented to the return of Seated Woman, the deal quickly came to a halt earlier this month when a second person came forward to claim the painting. The restitution process has been indefinitely delayed as authorities are required to investigate the new claim.

Although claimants were hopeful because Cornelius Gurlitt agreed to cooperate in the restitution process, the struggle for the arts' return continues to be difficult. Not only is the one year deadline insufficient, but proving ownership is an insurmountable hurdle for the vast majority of claimants. However, it should also be noted that the agreement negotiation involved the German government and Cornelius Gurlitt; therefore, claimants are not obliged to resolve their claims exclusively by terms of the settlement agreement.

Yet this is not the end of the drama. Some of the biggest questions will occur after Gurlitt's death. Cornelius Gurlitt is 83 years old and does not have any heirs (except for a few far-removed cousins). He purportedly drafted a will that includes provisions for the art trove. At that point, another slew of legal questions will arise.

April 22, 2014

Capital Records v. Harrison

By Barry Werbin

A very interesting opinion (Capital Records v. Harrison.pdf) was issued by NY Supreme Court Judge Shirley Kornreich on April 14th. The decision addresses the proper statute of limitations under the CPLR for copyright infringements of pre-1972 sound recordings. Judge Kornreich sets up a possible split among the very few judges who have ruled on the issue in NY, as to whether it should be three years as under the federal Copyright Act, analogizing infringement to a tort or injury to property type claim, or the six-year residual limitations period for causes of action for which there is no specific statute of limitations. A case to be followed unless it settles.

April 23, 2014

Oral Argument in ABC et al v. Aereo

The U.S. Supreme Court Transcript of the oral argument in ABC et al v. Aereo has been provided courtesy of Barry Skidelsky, Esq. (Co-Chair NYSBA EASL's TV and Radio Committee), and is available at:


For more information, you may contact Barry at: bskidelsky@mindspring.com or 212-832-4800.

April 25, 2014

Job Opportunity - Television Production, Legal

There is a 6 month consulting opportunity at an entertainment/media company for a New York attorney with 6 to 10 years of experience to do TV production work (production agreements, license agreements, etc.).

If you are interested, please contact Alison S. Berger Esq., Director, Legal & Regulatory Services of RGPLegal.com, at alison.berger@rgp.com.

April 30, 2014

Center for Art Law Updates

The following case selection first appeared in the Center for Art Law April newsletter:

Caterbetti v. Bloomgarden, et al. (NY Sup. Ct. Complaint Mar. 28, 2014) -- Argentine citizen is suing individual named defendants and Belenky Gallery in New York for losing and/or damaging artworks consigned to them. Plaintiff is seeking damages for an amount in excess of $500,000. Attorneys for the claimant are Matthew Kesten and Daniel Kokhba of Kantor, Davidoff. Complaint is available at https://docs.google.com/file/d/0B9yHAtGD-3ZGQUcwM0R2VnFqLUFCd1o4Z21pUUVHLTFYYkVj/edit?pli=1.

Scher v. Stendhal Gallery, 2014 N.Y. App. Div. LEXIS 2082 (First Dept., Mar. 27 2014) -- On appeal, J. Friedman ruled that Paula Scher, an established graphic artist owned the works she consigned to Stendhal Gallery on the basis of the agency law and not the New York Arts and Cultural Affairs law.

Yale University v. Konowaloff (Conn. Mar. 20, 2014) -- J. Alvin Thompson ruled against plaintiff Pierre Konowaloff, having used act of state doctrine "in which U.S. courts don't examine the validity of foreign governments' expropriation orders." http://www.csmonitor.com/USA/Latest-News-Wires/2014/0322/Van-Gogh-painting-Why-Yale-can-keep-120-million-painting?utm_source=Center+for+Art+Law+General+List&utm_campaign=1a83f0be0d-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-1a83f0be0d-346773625 Our earlier report on Konowaloff claims available at http://itsartlaw.com/2012/12/21/konowaloff-v-met-decision-met-can-keep-cezanne/?utm_source=Center+for+Art+Law+General+List&utm_campaign=1a83f0be0d-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-1a83f0be0d-346773625.

Latipac, Inc. v. Metropolitan Museum of Art(N.Y.S. Mar. 10, 2014) -- Plaintiff and Defendant own two identical items and Plaintiff seeks to sell it. Museum is understood to be denying the authenticity of the object owned by the Plaintiff (see Museum item: Head of King David, ca. 1145, http://www.metmuseum.org/toah/works-of-art/38.180?utm_source=Center+for+Art+Law+General+List&utm_campaign=1a83f0be0d-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-1a83f0be0d-346773625) and Plaintiff is seeking injunction against slander of title and defamation among other actions.

Cramer v. Calder Foundation, (S.D.N.Y. Feb. 28, 2014) -- case involving authenticity of a Calder sculpture owned by the Gerald Cramer Estate. Causes of action include product disparagement and antitrust violations. Attorneys for the estate are Michael Lacher and Adam Rader.

Bilinski, et al v. Keith Haring Foundation, Inc, Complaint, 14-cv-1085 (S.D.N.Y. Feb. 21, 2014) -- last week Brian Kerr filed a complaint against the Keith Haring Foundation, accusing it of defamation, interference with business relations and false advertising in violation of Trademark Law among other illegal actions. The case is assigned to Judge Cote.

The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

About April 2014

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in April 2014. They are listed from oldest to newest.

March 2014 is the previous archive.

May 2014 is the next archive.

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