Week in Review

By Martha Nimmer

Cutting it Close on Constitutionality

The Ninth Circuit Court of Appeals will rehear a case disputing the constitutionality of the 1976 California Resale Royalties Act (CRRA). The suit, brought by artists Chuck Close, Laddie John Dill, and the estate of the sculptor Robert Graham, challenges "the rejection of their class action lawsuit against Sotheby's, Christie's and online auction giant eBay for violating the California law that entitles artists to claim five percent of resale royalties on any work sold for more than $1,000, so long as the seller resides or the transaction happens in California."

The law has received little attention since it went into effect over 40 years ago, but that changed in 2012 when U.S. District Judge Jacqueline Nguyen dismissed Close, Dill and the Graham Estate's claims, saying they ran "afoul" of the Commerce Clause of the U.S. Constitution. In that vein, Judge Nguyen wrote, "the following example illustrates the CRRA's problematic reach. Assume a California resident places a painting by a New York artist up for auction at Sotheby's in New York, and at the auction a New York resident purchases the painting for $1,000,000." Accordingly, even though the sale took place in New York and the artist is a New York resident, the mere fact that the seller is a California citizen could end up "spark[ing] a lawsuit over royalties." As a result, the judge determined "that the 'practical effect' of the law was controlling interstate commerce even though it may have some 'effects within the State.'"

Undeterred, the artists appealed the case to the Ninth Circuit, which heard oral arguments last April. In the newest development for the case, it was announced late last month that a fuller panel of appellate judges on the Ninth Circuit would rehear arguments in December. What makes that move unusual, according to The Hollywood Reporter, is that "no opinion from the Ninth Circuit ever came after that April hearing." Instead, it appears that the appellate circuit has chosen to proceed directly to the en banc hearing.


He Belongs to the Ages

The U.S. Supreme Court declined earlier this month to hear a case brought by the estate of Sir Arthur Conan Doyle. The suit alleged that authors who sought to publish stories about the famous detective Sherlock Holmes were required to pay the estate a licensing fee. The Supreme Court's refusal to hear the appeal will leave in place a June decision by Seventh Circuit Court of Appeals Judge Richard Posner; in his opinion, Judge Posner held that most of Doyle's Sherlock Holmes stories are no longer protected by copyright, and are, in fact, in the public domain.

The legal drama over whether Sherlock Holmes was in the public domain began sometime last year, when Doyle's estate "demanded a licensing fee from the publisher Pegasus, which had planned to release an anthology called In the Company of Sherlock Holmes, edited by Laurie R. King and Leslie S. Klinger." After being met with the licensing fee demand, Klinger sued the Doyle estate and later won.

Now that the Supreme Court has refused to take up the case, Doyle's estate is "out of options," at least in the U.S. Although the lower court's decision does preserve copyright on 10 later Sherlock Holmes stories by Doyle, the decision "leaves most of the author's work and characters in the public domain." This development means that viewers of the BBC hit television series Sherlock can also breathe a sigh of relief: according to the Los Angeles Times, "Holmes fans can occupy themselves by writing their own stories while they're waiting for the fourth season of the BBC hit "Sherlock," which likely won't debut for more than a year."


Dismissing the Dictator

Citing concerns over free speech, Judge William Fahey of Los Angeles Superior Court has dismissed former Panamanian dictator Manuel Noriega's lawsuit against Activision Blizzard, Inc. over his depiction in its video game "Call of Duty: Black Ops II." Judge Fahey granted the defendant's special motion to strike the case under a California statute that "seeks to prevent lawsuits stifling free speech," writes Reuters.

The former Panamanian dictator and ex-federal prisoner initiated the suit in July, accusing the video game developer of portraying him as "the culprit of numerous fictional heinous crimes," such as kidnapping and murder. Noriega claimed that Activision had "infringed his right to his own publicity, and sought unspecified damages." Activision countered, saying the depiction of the former Central American strongman was protected by the First Amendment. Jude Fahey agreed, adding that the plaintiff's right of publicity was "outweighed by the defendants' First Amendment right to free expression, and that there was no evidence of harm to Noriega's reputation."


Making the Merger Work

Earlier this month, the U.S. Department of Justice (DOJ) announced that Richmond, Virginia-based Media General, Inc. would divest of "several" television stations located across the country as the company seeks to complete its proposed $1.5 billion acquisition of LIN Media. Media General, which currently owns 31 television stations located in 29 metropolitan areas, announced its plan in March to purchase Austin, Texas-based LIN Media. LIN owns, operates or provides programming or sales services to over 50 television stations across 23 metropolitan areas.
Citing concern over advertising competition, the DOJ intervened earlier this year in the proposed merger. Specifically, the DOJ was concerned that the deal would "substantially lessen competition for spot advertising certain markets." Spot advertising, according to Entertainment Law Digest, "consists of those ads that are sold in the local market served by an individual television station;" those ads are typically purchased by advertisers who want to target potential customers in a specific geographic area.

In a complaint filed earlier this year in the District of Columbia's federal court, the Justice Department voiced concern over whether the merger would "combine stations that are either close substitutes or vigorous competitors in markets with limited alternatives." Representatives for the two media companies were able, however, to reach an agreement with the DOJ: Under the terms of its agreement with the DOJ, Media General will sell stations in Alabama, Georgia, Florida, Rhode Island, Massachusetts and Wisconsin. According to Bill Baer, assistant attorney general for the department's Antitrust Division, this sale "will ensure that these stations remain vigorous competitors in their designated market areas."


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This page contains a single entry from the blog posted on November 10, 2014 11:30 AM.

The previous post in this blog was "Julie of the Wolves" Litigation.


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