Main

ADR/Litigation Archives

September 29, 2009

Google Fairness Hearing Adjourned

Judge Chin has adjourned the fairness hearing scheduled for October 7th. The Judge agreed with many of the Copyright Office and Department of Justice's comments, in that there are many potential positive aspects to a settlement.

Judge Chin ordered the parties to the settlement to appear on October 7th for a status conference in order "to determine how to proceed with the case as expeditiously as possible".

The link to a PDF copy of Judge Chin's order is: here.">app.bronto.com/public/?q=ulink&fn=Link&ssid=896&id=j34eotazvv4nizkodyiqhotu4msq8&id2=4flt8qlr6hbvriss53izj4efwk4g7">here.

October 18, 2009

Shepard Fairey Lied

It appears that Shepard Fairey lied, deliberately destroyed evidence of the actual image used in the Obama Hope poster, and in a cover-up, created false documents to support his fraud. He has now issed the below press release in apology. Fairey's attorneys have given notice to AP that they intend to withdraw upon his acquiring new counsel.

For Immediate Release
Contact: Jay Strell- Sunshine, Sachs & Associates,
(212) 691-2800/ (917) 362-9248 cell
strell@sunshinesachs.com

STATEMENT BY SHEPARD FAIREY ON ASSOCIATED PRESS FAIR USE CASE
OCTOBER 16, 2009

In an effort to keep everyone up to date on my legal battle to uphold the principle of fair use in
copyright laws, I wanted to notify you of a recent development in my case against The
Associated Press (AP).

On October 9, 2009, my lawyers sent a letter to the AP and to the photographer Mannie Garcia,
through their lawyers, notifying them that I intend to amend my court pleadings. Throughout the
case, there has been a question as to which Mannie Garcia photo I used as a reference to
design the HOPE image. The AP claimed it was one photo, and I claimed it was another.
The new filings state for the record that the AP is correct about which photo I used as a
reference and that I was mistaken. While I initially believed that the photo I referenced was a
different one, I discovered early on in the case that I was wrong.

In an attempt to conceal my mistake I submitted false images and deleted other images. I
sincerely apologize for my lapse in judgment and I take full responsibility for my actions which
were mine alone. I am taking every step to correct the information and I regret I did not come
forward sooner.

I am very sorry to have hurt and disappointed colleagues, friends, and family who have
supported me in this difficult case and trying time in my life.

I am also sorry because my actions may distract from what should be the real focus of my
case - the right to fair use so that all artists can create freely. Regardless of which of the two
images was used, the fair use issue should be the same.

October 19, 2009

Shepard Fairey Litigation - The AP's Response

Statement from Srinandan R. Kasi, VP and General Counsel, The Associated Press

Striking at the heart of his fair use case against the AP, Shepard Fairey has now been forced to admit that he sued the AP under false pretenses by lying about which AP photograph he used to make the Hope and Progress posters. Mr. Fairey has also now admitted to the AP that he fabricated and attempted to destroy other evidence in an effort to bolster his fair use case and cover up his previous lies and omissions.

In his Feb. 9, 2009 complaint for a declaratory judgment against the AP, Fairey falsely claimed to have used an AP photograph of George Clooney sitting next to then-Sen. Barack Obama as the source of the artist’s Hope and Progress posters. However, as the AP correctly alleged in its March 11, 2009 response, Fairey had instead used a close-up photograph of Obama from the same press event, which is an exact match for Fairey’s posters. In its response, the AP also correctly surmised that Fairey had attempted to hide the true identity of the source photo in order to help his case by arguing that he had to make more changes to the source photo than he actually did, i.e., that he at least had to crop it.

After filing the complaint, Fairey went on to make several public statements in which he insisted that the photo with George Clooney was the source image and that “The AP is showing the wrong photo.” It appears that these statements were also false, as were statements that Fairey made describing how he cropped Clooney out of the photo and made other changes to create the posters.

Fairey’s lies about which photo was the source image were discovered after the AP had spent months asking Fairey’s counsel for documents regarding the creation of the posters, including copies of any source images that Fairey used. Fairey’s counsel has now admitted that Fairey tried to destroy documents that would have revealed which image he actually used. Fairey’s counsel has also admitted that he created fake documents as part of his effort to conceal which photo was the source image, including hard copy printouts of an altered version of the Clooney Photo and fake stencil patterns of the Hope and Progress posters. Most recently, on Oct. 15, Fairey’s counsel informed the AP that they intended to seek the Court’s permission to withdraw as counsel for Fairey and his related entities.

The AP intends to vigorously pursue its countersuit alleging that Fairey willfully infringed the AP’s copyright in the close-up photo of then-Sen. Obama by using it without permission to create the Hope and Progress posters and related products, including T-shirts and sweatshirts that have led to substantial revenue. According to the AP’s in-house counsel, Laura Malone, “Fairey has licensed AP photos in the past for similar uses and should have done so in this case. As a not-for-profit news organization, the AP depends on licensing revenue to stay in business.” Proceeds received for past use of the photo will be contributed by the AP to The AP Emergency Relief Fund, which assists staffers and their families around the world who are victims of natural disasters and conflicts.

October 20, 2009

Shepard Fairey Motion to Amend

Anthony T. Falzone (admitted pro hac vice)
Julie A. Ahrens (JA0372)
Stanford Law School
Center for Internet and Society
559 Nathan Abbott Way
Stanford, CA 94305
Telephone: (650) 736-9050
Facsimile: (650) 723-4426
Email: falzone@stanford.edu

Mark Lemley (admitted pro hac vice)
Joseph C. Gratz (admitted pro hac vice)
Durie Tangri LLP
332 Pine Street, Suite 200
San Francisco, CA 94104
Telephone: (415) 362-6666
Email: mlemley@durietangri.com
Attorneys for Plaintiffs and Counterclaim Defendants
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
SHEPARD FAIREY and OBEY GIANT ART, INC., Plaintiffs,
-against-
THE ASSOCIATED PRESS, Defendant and Counterclaim Plaintiff,
-against-
SHEPARD FAIREY, OBEY GIANT ART, INC., OBEY GIANT LLC and STUDIO NUMBER ONE,
INC. Counterclaim Defendants,
And
Case No.: 09-01123 (AKH)
ECF Case
MOTION TO AMEND PLEADINGS

MANNIE GARCIA, Defendant, Counterclaim Plaintiff and Cross-claim Plaintiff/Defendant,
v.
SHEPARD FAIREY AND OBEY GIANT ART, INC., Counterclaim Defendants,
And
THE ASSOCIATED PRESS, Cross-claim Plaintiff/Defendant.

Plaintiffs-Counterclaim Defendants Shepard Fairey (“Fairey”) and Obey Giant Art, Inc. and Counterclaim Defendants Obey Giant LLC and Studio Number One, Inc. by and through their attorneys, respectfully request leave to amend the following pleadings: (A) Plaintiffs Fairey and Obey Giant Art, Inc.’s Complaint; (B) Plaintiffs-Counterclaim Defendants Fairey and Obey Giant Art, Inc. and Counterclaim Defendants Obey Giant LLC and Studio Number One Inc.’s Answer and Affirmative Defenses to the Counterclaims of Defendant The Associated Press (“The AP”); and (C) Plaintiffs-Counterclaim Defendants Fairey and Obey Giant Art, Inc. and Counterclaim Defendants Obey Giant LLC and Studio Number One Inc.’s Answer, Affirmative Defenses, and Counterclaims to the Counterclaims of Defendant Mannie Garcia (“Garcia”). Plaintiffs and Counterclaim Defendants (“Plaintiffs”) move to amend these pleadings to reflect new information Plaintiffs’ counsel first learned on October 2, 2009 relating to the identity of the photograph Mr. Fairey used as a reference to create the Obama Works at issue in this case. The pleadings, with redlining indicating the proposed amendments, are attached to this motion as Exhibits A through C, respectively. The AP stated that it would not oppose this motion as long as Plaintiffs provide the Court with a full explanation as to why the amendment is necessary. Mr. Garcia’s counsel informed Plaintiffs’ counsel that Mr. Garcia does not oppose the motion so long as he is granted an additional 60 days for discovery. In Plaintiffs’ original complaint for declaratory judgment and in their answers to claims alleged against them by The AP and Mannie Garcia, Plaintiffs alleged that Mr. Fairey used a photograph of George Clooney and Barack Obama (identified in the original Complaint as the “Garcia Photograph” and identified by The AP in its Counterclaims as the “Clooney Photograph”) as a photographic reference to create the illustration of Barack Obama that appears in the Obama Works at issue in this case. In addition, Plaintiffs denied that Mr. Fairey used a photograph of Barack Obama alone (identified by The AP in its counterclaims as the “Obama Photograph”) as the photographic reference he used.

On October 2, 2009, counsel for Plaintiffs learned new information revealing that Plaintiffs’ assertions were incorrect. Mr. Fairey was apparently mistaken about the photograph he used when his original complaint for declaratory relief was filed on February 9, 2009. After the original complaint was filed, Mr. Fairey realized his mistake. Instead of acknowledging that mistake, Mr. Fairey attempted to delete the electronic files he had used in creating the illustration at issue. He also created, and delivered to his counsel for production, new documents to make it appear as though he had used the Clooney photograph as his reference.

On October 9, 2009, Plaintiffs’ counsel sent a letter to counsel for The AP and counsel for Mannie Garcia notifying them of the situation and of the need to amend Plaintiffs’ pleadings accordingly. Plaintiffs’ counsel enclosed proposed amendments with that letter, and specifically advised counsel for The AP and Mr. Garcia that Plaintiffs no longer contend Mr. Fairey used the Clooney Photograph in creating the Obama Works at issue in this case and that Plaintiffs do not deny he used the Obama Photograph. In this letter, Plaintiffs’ counsel also informed opposing counsel that Plaintiffs no longer contend that certain documents Plaintiffs produced in discovery (bearing Bates numbers FAIREY00669 through FAIREY00672) were used in the creation of the Obama Works, and that Mr. Fairey had created these documents in 2009, after the original complaint was filed in this matter. Plaintiffs’ counsel also produced additional documents (bearing Bates numbers FAIREY104735 through FAIREY104766) and explained that Mr. Fairey had attempted to delete some or all of these documents at or around the same time he created the documents bearing Bates numbers FAIREY00669 through FAIREY00672, but that he had been unsuccessful in deleting all copies of them. Finally, the letter corrected certain misstatements Plaintiffs’ counsel had previously made (understanding them to have been true at the time) while meeting and conferring on discovery.

Plaintiffs therefore respectfully request that the Court grant their motion to amend their pleadings in light of the information above.

DATED: October 16, 2009 Respectfully Submitted,
/s/
Anthony T. Falzone (admitted pro hac vice)
Julie A. Ahrens (JA0372)
Stanford Law School
Center for Internet and Society
559 Nathan Abbott Way
Stanford, CA 94305
Telephone: (650) 736-9050
Facsimile: (650) 723-4426
Email: falzone@stanford.edu

Mark Lemley (admitted pro hac vice)
Joseph C. Gratz (admitted pro hac vice)
Durie Tangri LLP
332 Pine Street, Suite 200
San Francisco, CA 94104
Telephone: (415) 362-6666
Email: mlemley@durietangri.com
Attorneys for Plaintiffs and Counterclaim
Defendants

Shepard Fairey Motion to Amend Exhibits

The Exhibits to the Motion to Amend may be found at: http://www.ap.org/iprights/fairey.html.

October 21, 2009

AP's Response to Fairey's Motion

AP's Motion to Amend the Pleadings and exhibits thereto are available at: http://www.ap.org/iprights/fairey.html.

January 28, 2010

Today is the Deadline for Objections and New Opt-outs in the Google Books Settlement

By Mary Rasenberger

Today is the deadline for filing objections to the amended settlement agreement in the Google Books case. It is also the deadline for opting back in to the settlement (for those who opted out of the original settlement) and for opting out (for those who did not opt out of the original settlement and wish to do so now). There are clear directions on the Google Books Settlement site http://www.googlebooksettlement.com for opting out or opting back in.

The original settlement agreement, filed in October 2008, was the result of two years of negotiations among the named parties in the class action lawsuit brought by U.S. authors and publishers claiming that Google infringed their copyrights by scanning their books and displaying excerpts without authorization. The amended settlement agreement was filed this past November in response to objections submitted by the U.S. Department of Justice and numerous class members.

We'll see what today brings, but so far it's been relatively quiet compared to the storm of filings that preceded the original September 4th deadline for objections to the original settlement agreement. Hundreds of objections had been filed well in advance of that deadline.

The first objections to the amended settlement agreement were filed Tuesday; and less then a dozen appear on the court's docket as of this writing. A couple dozen opt-outs have been filed with the court, some expressing their objections - although anyone who opts out technically does not have standing to file objections. Ursula LeGuin's petition requesting that the United States be exempt from the settlement and signed by over 350 authors does not appear on the docket yet - but she states on her website that the petition has been filed. In addition, a couple of letters in support of the amended settlement have been filed.

One explanation for the apparent relative apathy is that objectors and supporters feel they have already said their piece in objections filed to the original settlement and don't have much to say about the amendments. Indeed, the amendments do not address most of the objections to the original settlement raised by class members, but are mainly directed to the anti-trust and class action concerns that the Department of Justice raised in its brief. Judge Chin clearly instructed in his November 19, 2009 order that objections be limited to the amendments, which thus far most objectors seem to be heeding to.

Most of the actual objections filed thus far (i.e., not amicus or opt-outs) focus on the amended definition of the settlement class. Class members are now limited to authors or publishers of a book published and registered in the U.S., or published in, the U.K., Australia or Canada prior to January 5, 2009. This amendment was clearly intended to remove many foreign rights holders and their objections from the settlement, including the Germans and French, whose governments had filed objections. Over three-quarters of the more than 400 objections to the original settlement were filed by foreign rights holders. The new definition does not actually remove many foreign right holders, however. It encompasses right holders of any book published at any time prior to January 5, 2009 in any of the named countries; and this includes numerous books by authors and publishers of excluded countries. Go to any foreign language or university book store in Canada, the U.K. or Australia, and you will find many foreign language books. Thus, many of the objectors this time around have complained that the new definition is murky and does not resolve their concerns.

Another explanation for the relative quiet around this deadline might be mere ennui - is this becoming like the health bill - how much longer can we talk about it? Also, there appears to be a coming to terms with the settlement, or perhaps its inevitability, at least among some of the former opponents. Gail Steinbeck, an early and vocal opponent of the settlement, has recently come out in support of it.

The filing that will undoubtedly have the most influence is the U.S. Department of Justice Statement of Interest on the amended settlement agreement, due next Thursday, February 4th. It will be interesting to see what positions Justice takes to the amendments, since so many of them are intended to directly address its objections -- mainly the more easily remedied specific anti-trust concerns. The amended settlement agreement does not fully address all of Justice's concerns, however, most notably the issues Justice raised about the opt-out provisions for out-of-print works, especially as applied to unclaimed works. Justice indicated that converting the opt-out to an opt-in would resolve many of the problems with the settlement, but never stated that it was necessary to eliminate the opt-out provisions. The opt-out is likely an area of some contention within the government, given Google's heavy lobbying and public insistence that eliminating the opt-out would kill the deal, side by side with a recognition that opt-outs in copyright law are better suited to legislation. As such, I would expect to see continued ambiguity in the government's brief.

The Fairness Hearing scheduled for February 18, 2010. Objectors and supporters may discuss issues related to the original settlement and the amendments. If you wish to appear, you must file your notice of intent to participate by next Thursday, February 4th.

Mary Rasenberger is an attorney with Skadden, Arps, Slate, Meagher & Flom. This blog entry represents her personal views in her individual capacity and not those of Skadden, any other law firm or any client. This blog is not sponsored by Skadden or any other law firm, or any client.

February 1, 2010

Christoph Büchel's VARA Victory

By Monica Pa

On January 27, 2010, the First Circuit Court of Appeals issued an important decision protecting the scope of artists’ rights under the Visual Artists Rights Act (“VARA”), 17 U.S.C. § 106A. In this much-publicized lawsuit, the Swiss artist Christoph Büchel was commissioned by the Massachusetts Museum of Contemporary Art Foundation, Inc. (“Mass MOCA”) to construct a mammoth art installation, roughly the size of a football field, entitled “Training Ground for Democracy” (“Training Ground”). The work included several major components, such as a vintage movie theater interior, a house, a variety of vehicles, a burned out 737 aircraft fuselage, and a bomb carousel. Mass MOCA was solely responsible for the cost of acquiring these items for the installation, which ultimately amounted to an upwards of $300,000 (nearly twice its initial budget) for materials and labor. Remarkably, the parties never memorialized the terms of their relationship or their understanding as to the intellectual property rights at issue. Communications between the artist and the museum became so strained that the artist refused to continue working on the unfinished installation. The museum, nevertheless, continued putting together the work in accordance with Büchel’s latest instructions. Unable to convince Büchel to return to the project, on May 21, 2007, Mass MOCA filed a complaint in federal court seeking a declaration that it was entitled to exhibit this unfinished work and a retraining order preventing Büchel from interfering. Büchel responded with a five-count counterclaim, asserting, among other things, that showing his unfinished work would violate his rights under VARA.

In July 2008, Judge Michael A. Ponsor in the District Court of Massachusetts ruled in favor of Mass MOCA, 565 F. Supp. 2d 245 (D. Mass. 2008), holding that VARA did not protect unfinished works of art. As such, the museum was entitled to show the Training Ground work so long as it included an accurate disclaimer. In any event, Büchel’s rights of attribution and integrity under VARA were not implicated by the museum’s conduct. The district court then dismissed Büchel’s copyright claims, finding that the display of “covered components of an unfinished installation” was neither an infringement of Büchel’s exclusive right to publicly display his work or to create derivative copies. Accordingly, the district court entered judgment in favor of the museum and dismissed all five of Büchel’s counterclaims.

In a substantial victory for artist rights advocates, the First Circuit reversed. Most important, Judge Lipez, writing for the unanimous panel, held that the “statute’s plain language extends its coverage to unfinished works”, as well as the statute’s history and purpose. The court concluded that Büchel’s rights in his Training Ground work “were protected under VARA, notwithstanding its unfinished state.” VARA protects an artists “right of integrity” which allows the artists to prevent distortions, mutilations or modifications of their works that are prejudicial to their reputation or honor. The record contained “sufficient evidence to allow a jury to find that Mass MOCA’s actions [namely modifying the “Training Ground” work over his objections] caused prejudice to Büchel’s honor or reputation.” The court, however, dismissed Büchel’s right of attribution claim. Since VARA’s protection for a right of attribution is only enforceable through injunctive relief, this claim was moot because the Training Ground work no longer existed after the museum dismantled it.

This decision is also notable for its copyright holding. Acknowledging the intersect between VARA and the Copyright Act, the First Circuit held that the record revealed a factual dispute as to whether Mass MOCA violated Büchel’s exclusive right to publicly display his work when it repeatedly and deliberately showed Büchel’s unfinished works on numerous occasions to various individuals without his permission. The court, however, held that because Büchel’s counsel did not adequately develop the claim that the museum’s modification of the Training Ground work constituted the creation of an unauthorized derivative work, this copyright right was waived on appeal. This case was remanded for further proceedings on Büchel’s reinstated VARA and copyright claims. In a recent statement to the press, Büchel’s counsel has indicated that Büchel, now represented by the Volunteer Lawyers for the Arts, Wachtell, Lipton, Rosen & Katz in New York City, and K&L Gates LLP in Boston, intends to litigate this case “to the fullest extent possible.”

This litigious debacle has, interestingly, reemerged in Büchel's other works. At the latest Art Basel Miami Beach show in December 2007, he presented a smaller version of the Training Ground work, which featured litigation papers and correspondence about the failed show. Reportedly, this work was purchased by a collector for $250,000, and donated to the Hamburger Bahnhof museum in Berlin.

February 8, 2010

TV Writers Settle Decade-Long Age Discrimination Litigation

By Barry Skidelsky, Esq. (co-chair NYSBA/EASL/TV-Radio Committee; contact: bskidelsky@mindspring.com or 212-832-4800).

On January 22, 2010, 17 television networks and production studios and 7 talent agencies settled 19 of 23 separate class actions filed in Los Angeles Superior Court, based on alleged intentional and unintentional age discrimination in the selection, employment and representation of television writers. As three companion cases had previously settled, Creative Artists Agency (CAA) is left as the lone holdout.

The procedural history of the TV writers’ cases (which is set forth in Alch et al v. Time Warner Entertainment et al, 122 Cal. App. 4th 339 (2004), subsequent history omitted), began in 2000 as a federal court action under applicable federal law, including the Age Discrimination in Employment Act (which generally protects workers aged 40 or more). That action was dismissed with leave to amend in 2002. Rather than pursue their federal case, Plaintiffs then instead filed 23 separate complaints in California state court, based on state law statutes involving fair employment, civil rights and unfair competition. The parties litigated aggressively over 10 years in the trial courts before five different judges, during which period 20 of the named plaintiffs died and five different appeals ensued, two of which reached the California Supreme Court (primarily involving class certification and discovery matters). Although the past decade saw thousands of pages of documents produced and thousands of interrogatories answered, discovery was still at an incipient stage and the class not yet certified. Thus, with final resolution still years away, the parties agreed (without any admission of liability by defendants) that it made sense to now bring these protracted cases to a close and obtain preliminary approval of the settlement.

The amount of the settlement is $70 million, the largest-ever settlement in the history of age discrimination litigation. Of that sum (two-thirds of which is to be funded by insurance carriers), about $25 million is expected to be paid to plaintiffs’ counsel; and, about $2.5 million is to be set aside into a so-called Fund for the Future to be created (which intends, inter alia, to make loans and grants to TV writers). The remainder of the record-breaking settlement sum is to be paid pursuant to a single formula to class members, which includes both professional and aspiring writers, subject to withholding taxes and union pension or health and welfare deductions as may be appropriate (interestingly, the Writers Guild was not a party to this litigation).

Writers who believe they were unlawfully denied a TV writing opportunity during the class period (from October 22, 1996 to January 22, 2010) and want a piece of this pie must file a claim form (available at www.tvwriterssettlementadmin.com) no later than April 13, 2010. A final approval hearing of the TV writers’ settlement is scheduled for May 5, 2010, in L.A. Superior Court.

It should also be noted that the United States Equal Employment Opportunity Commission (EEOC) has reported a significant uptick in age discrimination complaints. The latest figures show that for the 2008 fiscal year, 24,582 charges of age discrimination were filed with the agency, almost a 29% increase over the prior year, and by far the largest number of such charges filed in the past 10 years. No employer, not even a law firm, is immune. In fact, on January 28, 2010, the EEOC filed an age discrimination complaint in federal court in Manhattan (SDNY) against the nationally known law firm of Kelly Drye and Warren, the details of this action being beyond the scope of this article. Suffice it to say that, without doubt, the difficult economic circumstances we all face today is having a disparate impact (no pun intended) on baby boomers and other older workers; and, all employers (including law firms) would be well advised to review and improve their hiring and other employment practices.

February 15, 2010

Justice Department's Statement of Interest - Google Books Case

By Mary Rasenberger


A careful reading of the Statement of Interest filed in the Google Books case by the Justice Department last week shows a harsher assessment than was evident in its earlier filing. The government’s brief rejects the amended settlement agreement (“ASA”), finding that the parties’ attempts to cure the issues the government identified in its earlier brief do not go nearly far enough: “Despite this worthy goal [trying to create a mechanism to allow for lawful large-scale book digitization], the United States has reluctantly concluded that the use of the class action mechanism in the manner proposed by the ASA is a bridge too far.”

Given the stakes and pressures that were likely put to bear on the government, it is an incredibly strong document. It will be remarkable if Judge Chin (or his successor in the case, if he is moved up to the Second Circuit soon) approves the ASA as-is, even after the substantial responses filed by the parties.

The government’s main issue with the ASA is that it uses the class action suit to create a far-reaching commercial arrangement that looks far into the future (indeed in perpetuity) and far beyond the claims off the suit. It does this by granting Google legal rights that it never could have obtained through a private arrangement or through a judicial resolution of the suit – and these legal rights fly in the face of “the core principle of the Copyright Act that copyright owners generally control whether and how to exploit their works during the term of copyright.” Secondarily, providing these rights, the government argues, confers significant, possibly anti-competitive advantages to Google.

The government’s September 18th brief focused on the anti-competitive concerns and more technical class action issues, and did so in an equivocal enough way that it left room for the parties to make the minor changes they did in the ASA and be able to wipe their hands with a straight face. The recent brief, in contrast, does not mince words and hits hard on the underlying problem many objectors have with the ASA - it attempts to use the class action process to get around the existing legal system rather than to support it. As Marybeth Peters, the Register of Copyright, has said, and many have repeated: the settlement turns copyright on its head. It creates a whole new legal system of opt-out regime for the benefit of a single entity, which is totally at odds with copyright’s grant of exclusive rights to authors.

To summarize the government’s brief at a very high level, there are three key objections to the ASA:

1. Class action law does not permit settlements to replace commercial transactions that go far beyond the claims at issue in the case or restructure the law;

2. The settlement turns copyright on its head by creating an opt-out regime for the vast majority of works at issue; and

3. Granting an across-the-board license to Google for non-commercial works on an opt-out basis creates potential anti-competitive advantages, as no competitor will be able to obtain those rights, especially in the case of unclaimed works.

At the same time, the government is rightly sympathetic with the parties’ attempt to use the class action process in this way. The current law and practice is arguably defective, and makes mass-digitization, even when it serves a good public purpose, impossible to do legally. Orphan works legislation might help some, as would collective licensing arrangements or perhaps a statutory license for libraries. But you don’t have to be a class action lawyer to know that Rule 23 (the civil procedure rule allowing for class action lawsuits) is not intended to be used to create new law. We have one mechanism for fixing the law in this country – legislation. As judges in countless cases have said: you have a problem with the law, take it to Congress.

Sure, it’s been impossible in recent years to pass copyright legislation, but that doesn’t mean we get to amend the law ourselves in class action lawsuits.

For those interested in more detail, I’ve summarized some of the specific arguments in the government’s February 4th Statement of Interest below. The arguments are made in the context of two separate sets of laws: class action law and antitrust law.

Class Action Law Related Issues

The Government’s brief states: “The Supreme Court has cautioned that 'Rule 23… applied with the interests of absent class members in close view, cannot carry the large load of restructuring legal regimes in the absence of congressional action – however sensible that restructuring might be.'”

The arguments regarding non-compliance with the Rule 23 class action rules are some of the more interesting and compelling ones raised in the case. The Rule 23 law gets at some of the smell test issues in this case, described above – i.e., even though it sounds good, it looks good, it doesn’t smell quite right. It seems at odds with some of our underlying basic legal principles to allow a class action law suit filed by a small group of associations and individuals, who admittedly do not represent all author and publisher class members throughout the world or even the U.S., to take away hundreds of thousands (if not millions) of individuals’ rights without their consent. It’s even odder when you consider that the law suit was brought to enforce those very rights.

It turns out, according to one Justice (and certain other objectors, e.g., Microsoft, Amazon, Scott Gant) that the class action law does have standards, if not crystal clear ones, that don’t necessarily promote this kind of sweeping conversion of rights.

Both the parties’ and the government’s briefs discuss the standards set forth in the Supreme Court’s Firefighters case (Local Number 93, Int’l Assoc. of Firefighters v. City of Cleveland, 478 U.S. 501 (1986)). Under Firefighters and its progeny, the Court may approve a settlement that meets the following three-prong test: (1) the settlement springs from and serves to resolve a dispute with the Court’s subject matter jurisdiction, (2) the settlement comes within the general scope of the case made in the pleadings, and (3) it furthers the objectives of the law on which the complaint was based. The government concludes that:

1. It’s difficult to see how this settlement meets the first prong in that it resolves future claims by absent class members for activities well beyond the facts underlying the complaint;

2. The ASA does not meet the second prong because it creates a business relationship that covers future conduct that goes way beyond the claims in the complaint and provides Google with benefits that it never could have obtained through the litigation itself or even through a privately negotiated deal (i.e., the opt-out for non-commercial works); and

3. The ASA does not further the objectives of copyright law, but is inconsistent with the policy of Copyright Act, which provides for exclusive rights and not opt-outs.

The government concedes that a settlement of a class action may go “somewhat” beyond the conduct complained of in the complaint, but can’t go so far as “to abridge or enlarge substantive rights” and “usurp the legislative function.”

The government further states that the ASA does not remedy the lack of adequate representation of the interests of a large number of members (namely, unclaimed work owners, foreign rightsholders) in the settlement negotiations, and that appointing a fiduciary with limited powers for unclaimed works at the Registry does not solve the problem. It also exhorts the Court to look more closely at the notice provided to potential class members to determine if it was adequate, specifically requesting that the Court “undertake a searching inquiry to ensure both that a sufficient number of class members have been or will be reached and that the notice provided fives a complete picture of the broad scope of the ASA…”

Last, the government raises concerns about Attachment A of the ASA. Attachment A is a sub-agreement that controls potential disputes between authors and publishers, mainly regarding possession of rights and splits, and supersedes all agreements between publishers and authors, even foreign ones. The government notes that there may be a conflict of interest between subclasses of authors and publishers, which raises “serious questions” regarding adequacy of representation under Rule 23.

Antitrust Issues

The antitrust issues discussed in the brief are essentially the same ones addressed in the government’s September 18th brief; and they are the primary issues that the parties attempted to address in the ASA’s amendments. The government states that the parties made “constructive revisions” to address these potential anti-competitive problems, but that the amendments do not go far enough to remedy:

1. The creation of an industry-wide revenue-sharing formula at the wholesale level applicable to all works;

2. The setting of default prices and the effective prohibition on discounting by Google at the retail level; and

3. The control of prices for orphan books by the known publishers and authors with whose books the orphan books likely will compete.

With respect to the first issue, the government notes that the ASA gives Google the right to renegotiate the wholesale revenue split with rights holders, but only for commercially available works. The government believes that the carve-out for non-commercial works may render the amendment somewhat meaningless, given the fact that the vast majority of works at issue are not commercially available under the ASA’s definition and that this will be especially true if the publishers take commercially available books out of the settlement, as many have suggested they will do.

The government also does not believe that the “fixes” regarding the use of pricing algorithms go far enough to prevent a de facto horizontal agreement. It analogizes the publishers’ and authors’ agreement to allow Google to price the works (using its algorithms) to the delegation of pricing to a common agent - a practice found to be unlawful. Far preferable would be actual bilateral negations than the ability to opt-out of the default use of algorithms.

The government’s biggest concern, however, relates to the pricing of orphan works, since the Registry’s board, consisting primarily of commercial publishers and authors, would have the ability and incentive to limit competition from unclaimed works. The parties have responded to this criticism (also in the government’s September brief) by providing in the ASA for an “Unclaimed Works Fiduciary,” but this fiduciary’s powers are limited – for instance, he or she will not have the ability to set prices for works, or renegotiate splits. As such, the government does not believe the appointment of fiduciary cures the underlying problem.
Last and most importantly perhaps, the government finds that the amendments do not address Google’s de facto exclusive rights to use orphan and rights-uncertain works. The government states that no other entity will have the ability to offer these works legally. Although the ASA attempted to address this concern by expressly allowing resellers to provide access to these works, the government does not equate these reseller rights with the right Google has to freely exploit orphan and other unclaimed works. It concludes: “the reseller clause cannot create new competitors to Google.”

So now what?

The government’s brief advises the Court that the public interest would best be served by direction from the Court encouraging the continuation of settlement discussions between the parties. But if we can be realistic for a moment – what are the chances of Google agreeing to all of the concessions that Justice’s analysis would require to make the settlement copasetic? Google has made it clear that, from its perspective, the opt-out for out-of-print works, and especially the orphans, is essential to the deal. If you read the government’s brief carefully, it does not appear that its cumulative objections all could be adequately addressed without getting rid of the opt-out for non-commercial works. The government does state, however, that if the opt-out is retained, Google should be required, among other things, to conduct a search for unclaimed work prior to their use, similar to the reasonable search requirement in the last iterations of the orphan works bill. Google has publicly stated that, although it supports orphan works legislation, that legislation would not provide it with the flexibility it would need to create the inclusive database envisioned.

Briefs Filed in Support of the Amended Settlement Agreement in the Google Books Case

By Mary Rasenberger

An impressive number of pages were filed this past Thursday (February 11, 2010) by the parties in the Google Books Search case in support of the amended settlement agreement (“ASA”). Only a week after the Justice Department filed its brief, both Google and the named Plaintiffs (publishers and authors collectively) filed briefs worthy of fat binder clips. The Plaintiffs' briefs alone comprise nearly 250 pages, including a 170 page Supplemental Memorandum Objecting to Specific Objections (and with the numerous declarations and exhibits the parties' papers amount to over 2,500 pages altogether).

The briefs remind the Court of the benefits of and support for the settlement, and as would be expected, address the government’s concerns set out in its February 4th Statement of Interest. Google’s brief addresses the government’s objections in great detail supported by substantial case law; the brief also discusses a somewhat random, handful of objections filed by others (fairness to third parties, burden of determining whether a book was registered, inaccuracies in the database, security, and time limit on removal).

The Plaintiffs’ principal brief makes some compelling arguments as to why the ASA is preferable to the alternative outcomes in this case (e.g., protracted litigation, the risk of an on/off decision) and why the settlement is reasonable in light of the case. It summarizes the ASA and its benefits and takes on some of the Rule 23 and other concerns raised by the government. The Plaintiffs’ supplemental brief appears to take on the entire catalog of objections filed by all objectors with standing. Impressive as it is, the supplemental brief may have bit off more than it could chew. Some of the responses, some even to significant objections, come off as non-responsive or conclusory. Moreover, the same objections in some cases are addressed separately in the two briefs, not always completely consistently. They don’t always cross-reference arguments made in the other brief (e.g., the discussion of adequacy of notice in the supplemental brief seems very conclusory if not read alongside the discussion in the principal brief, which is not referenced).

For instance, in response to arguments that the ASA cannot bind foreign members of the class because (1) the law is at odds with that of other countries and (2) the Court lacks personal jurisdiction, the Plaintiffs state in the supplemental brief (pp. 61-63) that members of the class can be bound so long as notice meets the Rule 23 requirements, and that notice was compliant (here referencing their arguments as to why it was compliant). Admittedly, I have not read the cases they cite, but maybe they could explain why compliant notice would address these concerns.

In response to Justice’s and others’ concerns about the fact that Google alone will have the right to offer orphan works (i.e., books for which a copyright owner cannot be located) and the impossibility for others to obtain the rights to the orphans and enter that market, in the Supplemental Motion (pp 149-150), the Plaintiffs summarily respond: "This argument relies on unsupported and illogical speculation that the subset of out of print [orphan] books is so uniquely valuable and desired that other subscription products will be unable to compete with the Institutional Subscription."

Considering that the government and many others viewed this as a significant issue, the response seems flippant. Of course, a subscription database that includes all books, including out-of-print books for which no owner has come forward, is much more valuable than one that is created on an opt-in basis and so would not include orphans. As a library, which one would you chose? And if these works don’t increase the value of the database, then why is the opt-out so crucial to the settlement? Why does Google insist it needs these out-of-print works (a huge portion of the books at issue in the settlement)? If the out-of-print, unclaimed works really are so valueless, then make them available to Google on an opt-in basis and 95% of the objections go away.

Some odd responses aside, the parties’ recent briefs keep the ball in play. Perhaps most interestingly, filing these briefs indicates that the parties do not intend to go back to the negotiating table again as the government recommended. Moreover, the briefs contain some solid, convincing arguments. They are worth a thorough read for the interested – who have a lot of free time. (It does feel like reading the original settlement agreement all over again.) Most importantly, one hopes that Judge Chin will have the time to read it all. He may just want to run for the hills when he sees all that paper. I mean the Second Circuit.

The briefs have good table of contents, as you’d expect. One approach to reading the briefs is to do so on a topic by topic using the table of contents, rather than try to read them in linear fashion. And for those of us who’d love to see a list of all objections filed in the case, the supplemental brief serves as a pretty good proxy.

April 23, 2010

Judge Chin Confirmed to Second Circuit

In a unanimous 98-0 vote, Judge Denny Chin was confirmed to a seat on the Second Circuit. We will have to wait to see what this will mean for the Google Book Project/Authors Guild proposed settlement. What we do know is that the class action suit brought against Google by photographers and visual artists will be reassigned to someone else.

Elissa D. Hecker

June 19, 2010

Don't Despair: Even Without a Presumption of Irreparable Harm You Are Still Likely to Win a Preliminary Injunction in Copyright Litigation after Establishing a Likelihood of Infringement

By Andrew Berger

Plaintiffs seeking a preliminary injunction in a copyright infringement case have long benefited from a presumption of irreparable harm that followed a showing of a likelihood of success on the merits. The presumption was a free pass; show success and the court assumed irreparable harm. Irreparable harm is actual and imminent injury that cannot be remedied by monetary damages if a court denies the injunction and waits until the end of trial to resolve the harm.

The Supreme Court in eBay v. Merc-Exchange threw out that presumption in patent cases. The Second Circuit in Salinger v. Colting recently held that eBay also ends that presumption in copyright and trademark cases.

As a result you will need to show irreparable harm to be entitled to a preliminary injunction. But it is unlikely the new standard will make much practical difference in most cases. Salinger was careful "not to say that most copyright plaintiffs who have shown a likelihood of success on the merits would not be irreparable harmed absent preliminary injunctive relief (emphasis added).

Nevertheless, because of Salinger we may all need a quick refresher course in demonstrating irreparable harm. Here are a few suggestions.

Loss of Market Share

You may want to focus first on loss of market share, which has traditionally been viewed as irreparable. That is because, as Salinger noted, citing to an earlier 2d Circuit opinion in Omega Importing v. Petri-Kine "'to prove the loss of sales due to infringement is ... notoriously difficult.'" The viral nature of unauthorized digital distribution on the Internet increases the loss of market share. Each user is capable of making a perfect copy of an infringing file, thereby exponentially multiplying the number of unauthorized copies available for distribution.

Market Confusion

Market confusion caused by illegal copying also produces irreparable harm. The confusion, as Clonus Assocs. v. Dreamworks pointed out, results in damage to the copyright holder in "incalculable and incurable ways." For instance, the defendant's illegal copy may be so poor in quality that prospective purchasers will turn to other competitors rather than buy from either the plaintiff or the defendant. Or that illegal copy may be so good and priced so low that consumers would have no reason to continue to buy the plaintiff's work.

Loss of Monopoly Control

You might also focus on the loss of control over one's copyrights caused by infringement. A copyright is a grant of a limited monopoly which gives the holder the right to control the use of its work. Without a preliminary injunction the copyright holder loses the power to control the exploitation of its property giving the wrongdoer what is in effect a compulsory license to profit from its infringement until the case is over. Courts find that loss of control results in incalculable damage.

Loss of Incentive to Create

Loss of incentive to create may also win you an injunction. As Salinger noted, copyright provides "individuals a financial incentive to contribute to the store of knowledge." Infringement damages the incentive. In Warner Bros. v. RDR Books, J.K. Rowling, the author of the Harry Potter series, convinced the court, based solely on her self-serving testimony, that the continued sale of the defendant's unauthorized companion guide to that series would "destroy" Rowling's incentive to write her own companion guide. That loss of will to create, which may be difficult to rebut on cross-examination, coupled with the loss of sales resulted from the presence of the infringing guide, were enough to establish irreparable harm even in the absence of the presumption.

Continuing Threat of Further Infringement

Finally, if a defendant's past history of infringement is likely to continue absent a preliminary injunction, irreparable harm will also be present. As Powell v. Walt Disney indicates, a repeat infringer's convenient plea that it will infringe no more may not be enough to avoid an injunction.

The More Things Change ...

In sum, has Salinger "changed the contours of copyright litigation" as two noted and respected commentators have stated in an article published in a NY Law Journal article on May 21, 2010. Only slightly. Plaintiffs will have to pay more attention to proof of irreparable harm. But because that harm is usually clear in infringement cases, I suggest that courts will continue with the same frequency to issue preliminary injunctions in most copyright infringement cases.

Andrew Berger is a copyright/trademark lawyer at Tannenbaum Helpern Syracuse & Hirschtritt LLP in New York.

http://www.ipinbrief.com/blog/

June 28, 2010

YouTube Wins Landmark Copyright Case

By Barry Skidelsky, Esq.

In a 30 page decision dated June 23, 2010 (Viacom et al v. You Tube et al, CV Civ. 2013), Judge Louis Stanton of the United States District Court in the Southern District of New York granted summary judgment sought by defendant Google-owed YouTube, dismissing before trial copyright infringement claims brought by plaintiff Viacom seeking more than $1 billion in damages in connection with video clips culled from the media giant’s cable channels such as Comedy Central and MTV.

The opinion and order focused on whether the defendants were entitled to so-called “safe harbor” protections found at 17 U.S.C. § 512(c) in the Digital Millennium Copyright Act (DMCA), which 12 year-old statute provides protection against copyright infringement claims brought against various types of on-line providers who qualify.

To qualify for this protection, the DMCA in part requires that service providers designate an agent to receive statutorily defined notices of alleged copyright infringement, as well as establish and follow certain notice and take-down policies. After a lengthy review of the DMCA’s legislative history, the court found that the safe-harbor did apply here.

A key issue involved whether the defendants had either actual knowledge or a form of constructive knowledge of copyright infringing activity or material, as specified in the statute. The court interpreted this to require “... knowledge of specific and identifiable infringements of particular individual items. Mere knowledge of prevalence of such activity or material is not enough.” The court went on to find that YouTube lacked the requisite specific knowledge that would disallow the safe harbor.

Reportedly, about 24 hours of new video is uploaded by users to YouTube every minute, which the court found YouTube had no obligation to affirmatively monitor or police for possible copyright infringement. That burden more properly lies with copyright holders. The court also noted that Viacom had spent several months compiling a list of 100,000 videos that it attached to the single takedown notice it sent YouTube in February of 2007; and, that by the next business day, YouTube had removed virtually all of them.

To some, the plaintiff’s case is seen as one of sour grapes, given that Viacom tried to buy YouTube but was out-bid by Google -- which successfully purchased the enormously popular video web-site in 2006 for $1.76 billion, likely motivated in part by the DMCA’s safe harbor provisions. To others, this case is seen as a victory for creative expression and maintenance of the internet as both an outlet for expression and a participatory medium.

Barry Skidelsky co-chairs EASL’s TV & Radio Committee. A former broadcaster and musician, Barry previously served as General Counsel to an Internet Service Provider where his work in part involved the DMCA safe-harbor issues raised in this case. Now in private practice, Barry offers a broad range of legal and business services to those involved directly and indirectly with traditional and new media, telecommunications, technology and entertainment. Contact: bskidelskly@mindspring.com or 212-832-4800.

June 30, 2010

More on Viacom v. YouTube: Another View

After reading Barry Skidelsky's description of the decision in Viacom v. YouTube, a case that will certainly be brought up on appeal, I thought it appropriate to make a few observations. In my view, the court, by requiring "item specific" knowledge in all circumstances before a service provider could be disqualified for protection of the DMCA safe harbor, ignored significant aspects of the statute's language, legislative history and important policy considerations. (Full disclosure - I currently represent a client adverse to YouTube and my firm represented one of the amici who submitted a brief in support of Viacom.)

For example, the statute, in listing certain conditions which a service provider must meet to enjoy the safe harbor does state that the provider must not have "actual knowledge" of infringing material. With respect to the other conditions, however, there is no such requirement of lack of "actual knowledge." Indeed, Sec 512(c)(1)(A)(ii) - the so called "red-flag" knowledge section - explicitly provides that "in the absence of such actual knowledge" the service provider must also "not [be] aware of facts or circumstances from which infringing activity is apparent." By reading the need for item specific knowledge into the red flag exception, the court essentially eviscerated the statute's distinction between red flag constructive knowledge and the actual knowledge applicable to the earlier provision. Given the court's reading, there is essentially no instance of red flag knowledge which would not also constitute actual knowledge.

Congress's intention in adopting the DMCA was not simply to shield service providers from the threat of unpredictable litigation, but also to control piracy on the Internet and to forge cooperation between content owners and service providers in preventing widespread infringement. DMCA did not simply set up a notice-and-takedown system, and I believe Judge Stanton's ruling virtually reduces the legislation to just that.

Most importantly, the decision puts an enormous burden on content owners, especially harmful to independent or individual copyright holders, to monitor vast Internet sites which, if they simply adopt a notice-and-takedown system, may operate even if - in Judge Stanton's words - such sites "not only were generally aware of, but welcomed, copyright-infringing material being placed on their website[s]." Moreover, as a practical matter, the decision will likely discourage the use of the kind of filtering technology several service providers - including YouTube - have begun to employ to respond to the needs of copyright owners. If "actual knowledge" of specific infringing items is the only disqualifier from the safe harbor, why would any service provider go to the expense and trouble of adopting a filtering system which is designed to acquire such knowledge? This is a serious danger which hopefully will be considered by the Second Circuit.

Paul LiCalsi co-chairs EASL's Litigation Committee. He is a partner at Mitchell Silberberg & Knupp LLP

July 17, 2010

Judge Reduces Constitutionally Excessive Damages in Infringement Case

By Elizabeth Gonsiorowski

On July 9, 2010, in Sony BMG Music Entertainment v. Tenenbaum, Judge Nancy Gertner of the United States District Court for the District of Massachusetts held that a jury award of $675,000 was unconstitutionally excessive. Though the award was within the statutory range, Judge Gertner reduced it by 90% and found that it was "far greater than necessary to serve the government's legitimate interests in compensating copyright owners and deterring infringement," and that it bore, "no meaningful relationship to those objectives." Ultimately, this decision (available at: http://pacer.mad.uscourts.gov/dc/cgibin/recentops.pl?filename=gertner/pdf/tenenbaummotnewtrialjuly9th2010.pdf) may mark a shift in the way courts perceive damages for copyright infringement in the digital age, and it highlights the issues that arise when large-scale copyright holders seek damages from individuals.

In 2003, the Recording Industry Association of America (RIAA) embarked on a campaign to curb online piracy, and ended up filing proceedings against about 35,000 people. Not surprisingly, its strategy generated bad press when record companies filed proceedings against a dead person, a 13-year-old girl, and several single mothers. By 2008, the RIAA decided that the proceedings were not an effective deterrent and decided to work directly with ISPs. ("Music Industry To Abandon Mass Suits", available at: http://online.wsj.com/article/SB122966038836021137.html) Though they stopped initiating proceedings, the record companies continued to pursue suits that had already been filed.

One such suit was Joel Tenenbaum's. Unlike the defendants in the cases that proved to be public relations disasters for the recording industry, Tenenbaum doesn't garner much sympathy. His file sharing history stretches back to when kids ripped Britney Spears' (first) single off of Napster in 1999 --and continued even after the plaintiffs sent him a cease and desist letter in 2007. No matter how willful his infringement may have been, the recording companies suffered "minimal harm," and Tenenbaum did not obtain any financial gains as a result of downloading the 30 songs in question. Ultimately, the court found the jury award to be "arbitrary and grossly excessive"--with good reason.

Judge Gertner considered the fact that Congress hasn't addressed the relevant damages provisions since the Digital Theft and Copyright Damages Improvement Act of 1999, which bumped statutory damages up to their current levels ($750 to $150,000 per work for willful infringement).( 17 U.S.C. 504(c)) In deciding not to defer to Congress's statutory damages with respect to Tenenbaum's infringement, she reasoned that, "the timing of the Act suggests that legislators did not have in mind the problem of consumers sharing music through peer- to-peer networks when the Act was drafted." Though Napster was in its infancy, the legislative history did not suggest that Congress had file-sharing in mind while drafting the Act.

The court also compared the $22,500 per song jury award to the damages that recording companies have generally accepted; most cases have resulted in default judgments or settlements where the recording companies requested that the court impose the $750 minimum. Notably, in the widely publicized Thomas-Rasset case (Capitol Records v. Thomas, 579 F. Supp 2d 1210 (D. Minn. 2008)), the plaintiffs rejected a remitted award of $2,250 per song. Here, the court offered the same remitted award, and the plaintiffs (four of which were plaintiffs in Thomas- Rasset) made it clear they would not accept. "To put it mildly," Judge Gertner wrote, they "were going for broke."

If the recording industry set out to prove a point, it may have done more harm than good. If the recording companies were primarily interested in monetary compensation, the remitted award should have been more than enough -- Judge Gertner went so far as to say that the reduced award of $67,500 "is still severe, even harsh." Instead of deterring copyright infringement, as the recording industry presumably intended, this decision demonstrates the issues related to practical application of copyright laws in the 21st century, and with respect to digital piracy, it calls the foundation of statutory damages into question.

Are File-Sharing Willful Infringers Now a Judicially Protected Class?

By Andrew Berger

On July 9, Judge Nancy Gertner in Sony BMG v. Tenenbaum did what no court has ever done before. The court held unconstitutional an award of statutory damages within the statutory range set by Congress. This ruling, if affirmed on appeal, will change the shape of copyright litigation for years to come.

In finding the verdict of $675,000 for defendant's willful infringement of 30 songs "unconstitutionally excessive," Tenenbaum applied the three "guideposts" established in BMW of North America, Inc. v. Gore, 517 U.S. (1996). The Gore framework assesses an award of punitive damages based on the (1) degree of reprehensibility of the defendant's misconduct; (2) disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and civil penalties authorized or imposed in comparable cases.

Judge Gertner's opinion is clear and well written. But I respectfully suggest the court got it wrong. I agree with the plaintiffs (their post-trial brief is located at: http://www.ipinbrief.com/wp-content/uploads/2010/07/Sonys-post-trial-brief-in-Tenenbaum.pdf) and the government (its post-trial brief is located at: http://www.ipinbrief.com/wp-content/uploads/2010/07/us-post-trial-memo-tannenbaum.pdf) that the standard for assessing the constitutionality of a statutory damages award is better tested by applying St. Louis, I.M. & S. Ry. Co. Williams, 251 U.S. 63 (1919).

Because this is a long post, let me explain what's below. I first discuss why Gore's guideposts are inapplicable, then indicate why Williams applies, and end with the adverse consequences Tenenbaum creates.

Why the Gore Guidelines Make No Sense Here

The Supreme Court has never indicated that the Gore analysis applies to a statutory damages case. Further, the Gore guidelines are an ill fit for the following reasons:

A. Gore dealt with punitive damages which are designed to punish in amounts that are usually unrestrained. But statutory damages are different. They are not only intended to punish, but also to compensate, impose appropriate damages on wrongdoers, deter future infringements and promote the creation of intellectual property.

B. Gore's guideposts derive from the need to give a defendant notice of the severity of the penalty that may be imposed. But the statutory damages scheme already gives notice. Congress has established and periodically adjusted the range of statutory damages and a verdict within that range is entitled to substantial deference.

C. The second Gore guidepost weighs the relationship between the punitive award and the actual harm. But this guidepost has no application to statutory damages which may be awarded without any showing of harm.

D. The third Gore guidepost judges the propriety of the award by focusing on its relationship with the applicable civil penalty. But this guidepost makes no sense here because the award is by definition the applicable civil penalty.

The Court Creates a Safe Harbor for File Sharers

Tenenbaum attempted to avoid the identity between the award and the penalty by deciding that Congress did not intend to apply the statutory damages scheme to "noncommercial infringers sharing and downloading music through peer-to peer networks." The court reached this extraordinary conclusion by a "careful review" of the "legislative history" of the Digital Theft Deterrence Act of 1999. But the history the court credited consisted of off-hand comments made by Senators Hatch and Leahy at hearings held after Congress passed that statue.

In fact, the legislative history demonstrates the opposite--that the aptly-named Digital Theft Deterrence Act sought to address the growing online theft of intellectual property by all infringers. Congress expressed the need for this legislation in words that echo Tenenbaum's conduct:

By the turn of the century ... the development of new technology will create additional
incentives for copyright thieves to steal protected works. Many computer users ...
simply believe that they will not be caught or prosecuted for their internet conduct. Also
many infringers do not consider the current copyright infringement penalties a real
threat and continue infringing even after a copyright owner puts them on notice.

The text of the 1999 amendment does not distinguish between classes of infringers nor immunize file sharers from statutory damages. Instead the statute applies the same damage scheme to all. Because the statutory language was plain, there was no need for the court to examine congressional intent, much less rely on post hoc comments from two Senators.

In light of the above, it is not surprising that Tenenbaum is the first to apply the Gore guideposts in a due process review of a statutory damages award. Other courts have opted for the more deferential standard in Williams (holding that a statutory damages award of $75, for a violation that resulted in actual damages of 66 cents, was within the statutorily-authorized range of $50 to $300 and thus was constitutional).

The Williams Standard is Applicable

Applying the Williams standard makes more sense here because that case also reviewed the constitutionality of an award that fell within a statutorily authorized damage range. Williams examined such an award as "so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable" giving "due regard for the interests of the public, the numberless opportunities for committing the offense, and the need for securing uniform adherence to [the law]." The Court expressly rejected the defendant's attempt to test the constitutionality of the "large" penalty by comparing it with the actual damage, stating that statutory remedies for "public wrongs" are not required to "be confined or proportioned to [plaintiff's] loss or damages."

The jury's verdict in Tenenbaum appears to fit within the Williams framework. The award was 15% of the maximum of $4.5 million the jury could have been assessed and therefore seems not "obviously unreasonable" or "oppressive" considering that Tenenbaum's conduct defines willfulness.

Tenenbaum's Adverse Impact on Copyright Enforcement

What is especially troubling about Tenenbaum is the negative impact it will have on copyright enforcement if affirmed.

The requirement in Tenenbaum that a plaintiff obtains statutory damages only by first demonstrating actual damage from the infringement means that many copyright cases will never be brought.

That's because a copyright owner may be unable to prove actual damages for a few reasons. First, the value of a copyright is, by its nature, difficult to establish. How much is an unpublished novel worth? Second, in cases involving public performances, the only direct loss is the lost license fee; as the Copyright Office recognized years ago, an award in such amount is an invitation to infringe with no risk of loss to the infringer. Third, actual damages are often less than the cost of detecting, investigation and, for sure, litigating. So why bother. Finally, an infringer may have made little or no lost profits or may have destroyed or never kept records making any profit calculation impossible.

Hopefully the First Circuit will be less willing to make illegal behavior affordable.


A version of this blog comment may be found at http://www.ipinbrief.com/are/

August 15, 2010

Report on the ABA Forum on the Entertainment and Sports Industries –Part II: “Clash of the Titans: Viacom v. YouTube – Will Copyright Law Undo Goggle’s Internet Juggernaut?”

By Monica Pa

This panel was held on Friday, August 6, 2010 at the InterContinental Hotel in San Francisco.
The panel included Jennifer Golinveaux, Marc Greenberg, and Jennifer Seibly and was moderated by David Given.

This panel raised some unique points about this heavily discussed litigation, including several interesting background facts surrounding this case. Even before the litigation was filed, there was a fair amount of trash talk by Viacom. When YouTube debuted, Viacom issued negative press about YouTube’s business model. Viacom has a lock on the “youth-market” as far as cable TV content (it owns MTV, VH1, Comedy Central, and Nickelodeon). Billions of dollars every year are earned in licensing fees and advertising revenue from programs on these channels. Viacom was appropriately concerned about YouTube, given that a significant percent of the youth market was trending towards turning to the Internet for media consumption. Google purchased YouTube in 2006, one year after YouTube’s public launch, for 1.65 billion dollars (a tremendous price for a company that has never made a profit), and Viacom filed suit shortly thereafter in March 2007.

Viacom’s lawsuit claimed that YouTube and Google were guilty of massive copyright infringement. The initial reaction was that, given the results in Napster and Grokster, this should be a slam dunk case for copyright infringement. Viacom’s complaint anticipated many of the defenses that YouTube would raise under the DMCA, accused YouTube of willful copyright infringement (which allows for enhanced statutory damages), and sought preliminary and permanent injunctive relief.

At the close of discovery and summary judgment briefing, there were supposedly “smoking gun” documents leaked to the media. Notably, the first source of that leak was a former subsidiary of Viacom (CBS.com), which suggested that there was evidence adduced at discovery extremely detrimental to YouTube’s defenses, including documents showing the state of YouTube’s knowledge and encouragement of infringing activities.

Turning to the merits of the decision, Professor Marc Greenberg from Golden Gate University Law School pointed out that this case turned on the straight forward issue of how to interpret the safe harbor provision of the DMCA, which provides that the content owner must give notice to the ISP identifying where on the website the infringing materials is located, and then the ISP must investigate this claim and perhaps take it down. The district court’s decision carefully parsed the DMCA provisions and legislative history, focusing on the question of whether it was sufficient for the content creator to provide only general notice to the ISP of a problem.

The court held that general notice is not sufficient; instead, the DMCA requires the content owner to provide specific information about infringements of particular individual items. This is a burden shifting issue - who should, in the first instance, be required to identify infringing works and police infringement. The court makes clear that the DMCA places the burden on the copyright holder to identify the infringing activity.

The panel discussed the fact that the more significant issue, and what the appeal may hang on, is the availability of the statutory exception for a “representative list,” which provides that, if copyright owner can identify a representative class of infringing items, then the burden shifts to the ISP to take down similar instances of infringement. Specifically, the statute provides that “works” may be described representatively, so long as the content owner provides
“information reasonably sufficient to permit the service provider to locate the material.” The very purpose of this exception is to relieve copyright owners of the need to specifically identify each and every infringement. The court found that merely giving a representative sampling of infringing content undermines the DMCA’s general requirement for content owners to identify the location of the infringing material. But, this undermines the fact that the apparent purpose of the statutory exception is to shift the burden to the ISP. As such, the district court’s construction and application of the “representative list” exception may be Viacom’s strongest argument on appeal.

The panel also discussed the decision in UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F. Supp.2d 1099 (C.D.Cal. 2009), with counsel for Veoh speaking on the panel. Veoh’s counsel pointed out that it is not easy for an ISP to identify what constitutes infringing content. For example, when a content owner says to take down unlawful copies of a music video, a broad sweep for videos containing a particular song may capture home videos with someone playing that song on the piano or kids dancing to that song. She argued that content owners are the ones in the best position to identify infringing content. You do not want ISPs guessing at what is infringing; this is not the case of “know it when you see it.”

She pointed out that in both UMG and Viacom, neither ISPs were ignoring infringement notices. As soon as they received a DMCA notice, they immediately took the infringing materials down. For example, when Viacom sent more than a hundred thousand DMCA infringement notices to YouTube on the eve of litigation, by the next business day, the majority of those allegedly infringing files had been taken down. She argued that this shows that the “take down” method actually works.

The panel also discussed the potential for a technological fix for these legal problems. Viacom argued that YouTube could have used filtering technology early on. Notably, Viacom’s infringement claim is predicated only on infringement occurring before YouTube enacted filtering technology. It’s unclear why Viacom would choose to limit liability for pre-filtering activity because the use of such technology is not relevant under the DMCA, which does not predicate the availability of safe harbor immunity on the use of filtering technology.

Early on, there was hash filtering software, which is a more precise but limited filtering system. It identifies any identical files on the system and disables them. But, all a user has to do to avoid this filter is to crop off one or two seconds at the end of the film clip. Veoh and YouTube employed more advanced and less precise “Audible Magic” fingerprinting filtering technology, which matches the “fingerprints” within a file with other files on the system. Thus, the file need not be identical to be captured by the filter. This is one of the most effective filtering software available right now.

These filtering fixes, however, are not without their issues. The EFF is vocal about over-filtering, especially since much non-infringing original content is being taken down without the ISP serving a DMCA counter-notice to the poster. Robust and broad filter technology takes away the opportunity to challenge a take down of allegedly infringing files, and also undermines the chance to consider fair use and other defenses.

As a final point, it bears observing that, when the DMCA was enacted in the late 90’s, there were no social networking sites (which is essentially how YouTube operates). It is extremely burdensome for content owners like Viacom, which generates thousands of hours of programming that results in thousands of infringing uploads on YouTube on a daily basis. The problem may be that legislation has not caught up with technological advances. The DMCA is just a poor fit to address user generated content on social networking sites. The 2d Circuit Court of Appeals may uphold this decision, or perhaps overturn the “representative sampling” holding, but the panel expects some language in the decision asking Congress to revisit the “take down” structure in the DMCA.

August 24, 2010

Update in Fairey v. AP (Obama Hope Poster Case)

By Joel L. Hecker

This copyright infringement proceeding in the U.S. District Court for the Southern District of New York case became a little simpler on August 20, 2010, when the parties filed a stipulation with the court dismissing AP photographer Mannie Garcia from the case. As you may recall, Garcia was the photographer who took the photograph which was used as the basis for Shepard Fairey's poster. Although Fairey initially claimed that he relied upon a different photo, he later recanted, admitting that he had lied, thereby removing the question of which photo was copied.

Garcia dropped his claim that he owns the copyright to the photo and AP dropped its counterclaim against him. This is not surprising since the documentary evidence filed in the case appeared to clearly establish that the copyright did in fact belong to AP.

Judge Hellerstein, who has in the past pushed for a resolution to the case, has now scheduled what he anticipates to be a three week trial for March 21, 2011, at which time the selection of an eight person jury will commence.

Joel L. Hecker, Of Counsel to Russo & Burke, 600 Third Avenue, New York, NY 10016, practices in every aspect of photography and visual arts law, including copyright, licensing, publishing, contracts, privacy rights, and other intellectual property issues. He can be reached at (212) 557-9600, website www.RussoandBurke.com, or via email: HeckerEsq@aol.com.

September 15, 2010

Message from EASL Chair Judith B. Prowda

I am pleased to announce the appointment of Jason Aylesworth as EASL's liaison to the Dispute Resolution Section. Jason also serves as the Young Lawyers Section's liaison to EASL as well.

Jason is an Associate at Sendroff & Baruch, LLP, where he practices transactional entertainment and intellectual property law in the areas of theatre, music, film and television. Jason received his undergraduate degree from Fordham University, and his juris doctorate from Touro Law Center. While in law school, Jason served as President of Touro's Alternative Dispute Resolution Society. As an active participant in numerous American Bar Association ADR competitions, Jason won both the Negotiation Competition and Arbitration Competition at his school and placed second in the Client Counseling Competition. In addition to representing his school in the regional ABA Negotiation Competition in New York and ABA Arbitration Competition in Oklahoma, he competed successfully in two regional ABA Mediation Competitions.

Thank you Jason for serving as the liaison among the Young Lawyers, Dispute Resolution and EASL Sections!

September 19, 2010

EASL Fall Meeting

What: Dispute Resolution Section and EASL Section Joint Fall Meeting

HOW TO MAXIMIZE RESULTS IN MEDIATION AND ARBITRATION

An Illuminating and Engaging Day of Interactive Role Play with Experienced Mediators, Arbitrators and Counsel

When: Tuesday, October 12, 2010

Where: Fordham Law School
McNally Auditorium
140 West 62nd Street
New York City

For more information about the program, please visit EASL's website at: http://www.nysba.org/AM/Template.cfm?Section=Entertainment_Arts_and_Sports_Law_Home1&CONTENTID=42436&TEMPLATE=/CM/ContentDisplay.cfm

For a registration form, please visit EASL's website at: http://www.nysba.org/AM/Template.cfm?Section=Entertainment_Arts_and_Sports_Law_Home1&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=42438

September 29, 2010

Second Circuit Confirms Digital File Download is Not a Public Performance

By Joel L. Hecker
HeckerEsq.com

The United States Court of Appeals for the Second Circuit has just issued its decision, dated September 28, 2010, affirming the district court ruling that a download of a digital file containing a musical work does not constitute a public performance of that work under the U.S. Copyright Act. However, the appellate court vacated the district court's assessment of fees for a blanket ASCAP license and remanded it for further proceedings. The decision can be found at US v. American Society of Composers, Authors and Publishers, decided September 28, 2010, docket number 09-0539-CV.

Digital File Downloads

The first issue before the court on appeal was whether a download of a digital file containing a musical work constitutes a public performance of that work. It was not disputed that playing the music after it had been downloaded is a public performance, since the downloading of the files actually created copies of the musical work. Therefore, the copyright owners must be compensated for these downloads. However, the case involved the public performance right, which is a separate and distinct copyright right.

The court first turned to Section 101 of the Copyright Act, which defines "performance" to mean to "recite", "render", "play", "dance", or "act it". The court stated that a download is plainly neither a "dance nor an act", and went on to determine whether the download falls within the meaning of the terms "recite", "render", or "play".

The court had no difficulty determining that the ordinary sense of these words entail what is called contemporaneous perceptibility. That is, a "recital" is a performance before an audience and a performance, as defined in the audio-visual context of Section 101, requires such contemporaneous perceptibility.

The court also dismissed ASCAP's interpretation of the definition of "publicly", holding that "publicly" simply defines the circumstances under which a performance will be considered public and does not define the meaning of "performance".

In further support of its decision, the court juxtaposed the parties' agreement that stream transmissions constitute public performances because streaming entails a playing of the song that is perceived simultaneously with the transmission. In contrast, said the court, downloads do not immediately produce sound. That only occurs after a file has been downloaded and played back. Accordingly, the court concluded that transmittal without a performance does not constitute a "public performance" under the Copyright Act.

Fee Determination for Using the ASCAP Repertory

The district court had determined royalty rates for blanket licensing fees for the uses involved in the case. The Second Circuit found that the district court did not adequately support the reasonableness of its methods or royalty rate applied. Accordingly it remanded the case to the district court to redetermine reasonable fees for the licenses in light of the guidelines set forth in the opinion. A discussion of those guidelines is too involved for this blog and the reader is referred to the opinion itself.

Joel L. Hecker, Of Counsel to Russo & Burke, 600 Third Avenue, New York, NY 10016, practices in every aspect of photography and visual arts law, including copyright, licensing, publishing, contracts, privacy rights, and other intellectual property issues. He can be reached at (212) 557-9600, website www.heckeresq.com, or via email: HeckerEsq@aol.com.

October 19, 2010

Dora Explores a Minor Platform

By Diane Krausz and Jennifer Bellusci

Chapter Nine "Contracting with Minors", in the recently published Counseling Content Providers in the Digital Age, describes and compares the approval procedures required by New York and California courts for agreements signed by minor performers. Glenn Litwak and I, as the co-writers of the Chapter, conclude as follows: "...California offers a more streamlined and less expensive process than that required under the laws of the State of New York." For this reason, apparently, many New York based production companies have decided not to petition for court approval when dealing with agreements for minor performers with, until now, very little publicly reported consequences.

On October 7, 2010, it was reported that a complaint had been filed by Caitlin Sanchez, performing as the voice of "Dora the Explorer", against MTV Networks, et al. Ms. Sanchez, who is now 14 years old, lives in New Jersey. Her services for Dora were performed in New York City pursuant to an agreement with Uptown Productions, Inc., a production entity of Nickelodeon. The complaint claims that Ms. Sanchez was "swindled", "deceived" and signed a contract with "convoluted, vague, incomplete and misrepresented terms." It also claims that both MTVN (Nickelodeon's parent company) and CESD, Ms. Sanchez's agent, failed to pay Ms. Sanchez appropriate compensation for her services in connection with the program, including residuals, merchandise products, and recordings. The complaint does not contain even one citation for a law, statute or case in support of its position. More interestingly, it fails to allege or even mention, what if true, is the most important fact: Neither of the contracts signed by Ms. Sanchez was submitted to a court and was not court approved pursuant to New York State Arts and Cultural Affairs Law 35.03, and therefore, Ms. Sanchez, a minor, has the right to disaffirm and void the contracts as a matter of law.

A minor disaffirming a production, agent, or manager contract is nothing new. This is precisely why Section 35.03 was enacted, to provide a mechanism similar to the California procedure where a production company/employer could have a minor's employment contract approved and rendered not able to be disaffirmed. In New York, this procedure is neither required nor used as often as in California, where its frequent application and use is limited mostly to certain counties in the Los Angeles area. Further, the extent of effort and time required to file a petition either in New York Supreme or Surrogates' Court is often a significant deterrent to a company's desire to protect the enforceability of its minors' contracts. In many instances, a minor’s reputation and employability are factors in that decision, i.e., who wants to hire someone, even a minor, who would void an agreement after the fact? So it is interesting that the Sanchez case was brought at all, and that when it was in fact commenced, the claims contained no grounds that involved her status as a minor, but rather, included claims that could apply to any actress of majority that had been allegedly treated improperly in contractual dealings.

There is virtually no case law in New York that deals with what should occur where a minor disaffirms on a completed services agreement that has not been approved by the court. The law has been upheld to allow a manager or agent to collect the value of his or her respective commission for the work done to date, on a quantum meruit theory (see Scott Eden Mgmt vs. Kavovit (149 Misc 2d.262, 563 N.Y. S. 2d. 1001 (Sup Ct. Westchester Co. 1990) and Rice v Butler (160 N.Y. 578)), which held that a talent manager or an agent must be paid for commissions actually earned, even if a contract was disaffirmed.

In the case of Sanchez, it appears that with a non-court approved contract, provided that the producer does not remove the minor's services from the continued exploitation of the program, it is likely that the minor will be able to claim a greater amount of compensation, as well as a full accounting of "back-end" merchandising and other royalties given the subsequent huge success of the "Dora" franchise. This is, of course, provided that the complaint is re-pleaded in the future in accordance with the comments in this article.

October 21, 2010

Photographer Wins Lawsuit against Homeland Security to Photograph Outside of Federal Courthouses

By Joel L. Hecker

Antonio Musemeci, a software developer who works with the radio show Free Talk Live, and is a member of the Manhattan (New York) Libertarian Party, was arrested by an officer of the United States Department of Homeland Security's Federal Protective Service on November 9, 2009 while taking photographs of another Libertarian party member who had been handing out pamphlets in front of the Daniel Moynihan United States Courthouse at 500 Pearl Street in Manhattan.

The arresting officer took his camera and memory card and charged him with violating 41 CFR Section 102-74.420, which places restrictions upon photographing certain federal property. The criminal charge was eventually dismissed and on April 22, 2010 Musemeci filed a lawsuit in the United States District Court for the Southern District of New York. The case, Musemeci v. US Department of Homeland Security, Docket No. 10 Civ. 3370 (RJH), sought to enjoin government officials from restricting non-commercial photography in outdoor public areas where pedestrians have an unrestricted right of access. He was represented by the New York Civil Liberties Union.

That case has now been settled with a complete victory to Mr. Musemeci, other photographers and the public at large. In the settlement agreement filed on October 15, 2010 FPS agreed to provide a written instruction to its officers and employees engaged in law enforcement, stating that for federal courthouses under its protective jurisdiction, there are generally no security regulations prohibiting exterior photography by individuals from publicly accessible spaces, absent a written local rule, regulation or order. The instruction will also inform FPS officers and employees that the public has a general right to photograph the exterior of federal courthouses from publicly accessible spaces.

The settlement does not preclude FPS or any other government agency from taking any legally permissible law-enforcement action, including but not limited to approaching any individual taking photographs and asking for the voluntary provision of information such as the purpose of taking the photographs or the identity of the individual, or taking lawful steps to ascertain whether unlawful activity or reconnaissance for the purpose of a terrorist, or unlawful, act is being undertaken.

FPS also agreed to release Musemeci's memory card which it had seized for use as possible evidence in the initial criminal matter. In addition, FPS will pay Musemeci the sum of $1,500 in damages and $3,350 for his attorney's fees and costs. The stipulation also included mutual general releases.

This settlement and directive would appear to clarify what professional and amateur photographers may do when taking photographs of certain federal courthouses, subject to the specified permissible security measures. Such photographers however, need to be aware of local laws or regulations which might apply to taking photographs in public places.

This settlement is obviously a welcome and long-coming clarification of this federal statute, and what photographers as well as the public at large may do in these situations.

Joel L. Hecker, Of Counsel to Russo & Burke, 600 Third Avenue, New York, NY 10016, practices in every aspect of photography and visual arts law, including copyright, licensing, publishing, contracts, privacy rights, and other intellectual property issues. He can be reached at (212) 557-9600, website www.heckeresq.com, or via email: HeckerEsq@aol.com.

November 25, 2010

Score: SAP – 0, Oracle – 1.3 Billion

By Andrea Ruth Grace Annechino

“Whatever money is, it's just a method of keeping score now. I mean, I certainly don't need more money.”
– Larry Ellison, CEO of Oracle Corporation

Larry Ellison may not need more money, but more he shall get - - loads more. By awarding Ellison’s Oracle Corporation $1.3 billion in damages from SAP, a federal jury set a new record for copyright infringement cases. The Oracle award easily takes the top spot, beating out the second by a factor of ten - - and the intellectual property in that case involved songs by The Material Girl, The King *and* The Godfather of Soul.

After SAP admitted liability, the only open question was how much it would pay for it. The jury was instructed to award Oracle actual damages in either the amount of the fair market value for the rights infringed or the amount of profits Oracle lost as a result of SAP’s swipe. Oracle fought for the former, claiming damages of up to $3 billion. SAP lobbied for the latter, aiming for $40 million, but the jury would have none of it - - according to the foreman, no jury members considered anything less than $500 million. Another juror explained: “It was the principle of the whole thing. If you take something from someone and use it, you have to pay.”

The view from SAP’s seat is bleak. The billion-topping award dwarfs the $160 million the company set aside for this litigation and constitutes one-third of their cash holding. Probably worse than the financial hit, though, is the potential impact of the reputation stain. SAP is now officially The Bad Guy, as well as the subject of a Department of Justice investigation that could raise the specter of criminal charges. This could make life rather difficult for its sales force when seeking new business or renewing existing contracts. The only glint of a PR bright spot for SAP is the chance that Oracle’s sharp tactics will reap a bit of sympathy for SAP. As for SAP’s legal options, the appeal process is available and the award may be reduced, although probably not by much.

One way or another, Mr. Ellison will be getting more.

November 30, 2010

Harper v. Maverick

By Barry Werbin

The news of the moment is that yesterday, Nov. 29., the U.S. Supreme Court denied cert. in the Harper v. Maverick case, which had raised the question of whether the Copyright Act's innocent infringer defense could apply to when a person downloads digital music files so as to further reduce the minimum statutory damages award below the $750 threshold per work infringed to as little as $200 under 504(c)(2). The Fifth Circuit had held that Section 402(d) foreclosed application of the innocent infringer defense because it provides that if a copyright notice "appears on a published phonorecord or phonorecords to which a defendant had access...then no weight shall be given to...a defendant's interposition of a defense based on innocent infringement in mitigation of actual or statutory damages."

Justice Alito, however, filed a dissent, which can be accessed here for anyone interested: www.supremecourt.gov/orders/courtorders/112910zor.pdf. He noted that Section 402(d) is limited to "phonorecords," which the Act defines as including only "material objects." He argues that this Section was adopted in 1988, long before the digital revolution, and a person who downloads a digital music file does not and cannot see any copyright notice. In such a case, he argues (as did the District Court that was reversed by the Fifth Circuit) that the defendant (here, 16 years old) should have the opportunity to establish that she was not aware of or did not have reason to believe she was engaging in illegal infringing activity. The Fifth Circuit interpreted 404(d) as only requiring that the original phonorecord display a copyright notice, and that an infringer could have ascertained the work was copyrighted. Justice Alito wrote that "The Fifth Circuit did not specify what sort of inquiry a person who downloads digital music files is required to make in order to preserve the §402(d) defense, but it may be that the court had in mind such things as research on the Internet or a visit to a local store in search of a compact disc containing the songs in question."

December 1, 2010

HarperCollins Publishers v. Gawker Media

By Barry Werbin

The HarperCollins case settled on Nov. 30 according to the latest news reports, after the court ordered Gawker last Saturday to remove 21 pages. "'In settling the case, Gawker has agreed to keep the posted material off its website and not to post the material again in the future,' HarperCollins spokeswoman Erin Crum said in a statement."

Please see the following link for more information: http://www.stuff.co.nz/entertainment/books/4405549/Gawker-com-settles-Sarah-Palin-book-dispute

December 20, 2010

Golan v. Holder: The Long Road to Restoration

This blog is an update to the article of the same title in the current issue of the EASL Journal.

By Joan McGivern and Christine Pepe

In 1994, Congress amended our copyright laws to allow for the restoration of foreign copyrights, which had lapsed into the public domain, thereby, placing the U.S. in compliance with our foreign treaty obligations under the "Uruguay Round Agreement". (Section 514 of the Uruguay Round Agreements Act (URAA), Pub. L. No. 103-465, 108 Stat. 4809, 4976-80 (1994), codified as 17 U.S.C. §104A, 109. As stated in Golan v. Holder, the Uruguay Round General Agreement on Tariffs and Trade included the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). The TRIPs agreement required, in part, that its signatories, which included the U.S., comply with Article 18 of the Berne Convention, and thus, extend copyright protection to all works of foreign origin whose term of protection had not expired. See Golan v. Holder, 2010 WL 2473217 at *1-3 (10th Cir. 2010), citing Berne Convention for the Protection of Literary and Artistic Works, Art. 18, Sept. 9, 1886, revised at Paris July 24, 1971.) Foreign copyright owners rejoiced; many had lost valuable rights due to their inability or lack of knowledge of the arcane formality requirements imposed under the U.S.'s pre-1976 Copyright Act. U.S. copyright owners also stood to benefit because their copyrights, due to the U.S.'s failure to comply, were not being similarly protected through restoration abroad.

However, people in the U.S., who had built livelihoods in reliance on these works being in the public domain, were not happy. They alleged that once a work was in the public domain, the work had become part of the common culture and could never be "restored." Some alleged that their First Amendment rights were encroached and that no action by Congress, even to comply with an international treaty obligation, can justify the "unconstitutional" action of trammeling their First Amendment rights. Congress had also enacted detailed provisions to address and balance the concerns of such users of public domain works with the rights of foreign copyright holders of restored works. Nonetheless, the users of these public domain works were not satisfied.

And with these allegations, so began a long challenge, which seemingly came to an end this past summer, with the Tenth Circuit, on its second review of Golan v. Holder, upholding Congress' authority to restore foreign copyrights. (See generally Golan v. Holder, Docket Nos. 09-1234, 09-1261, 2010 WL 2473217 (10th Cir. 2010)).

Nearly a decade of litigation . . .

The statute at issue is Section 514 of the Uruguay Round Agreements Act (URAA) (now codified in the Copyright Act at 17 U.S.C. §§104A, 109), an important copyright provision that restores copyright status to certain foreign works that had fallen into the public domain due to failure to comply with statutory formalities.( Section 514 of the Uruguay Round Agreements Act (URAA), Pub. L. No. 103-465, 108 Stat. 4809, 4976-80 (1994), codified as 17 U.S.C. §104A, 109). Section 514 places the United States in compliance with Article 18 of the Berne Convention, which requires each signatory to provide the same copyright protections to authors in other member countries that it provides to its own members. (Berne Convention for the Protection of Literary and Artistic Works, Art. 18, Sept. 9, 1886, revised at Paris July 24, 1971). The statute contains certain provisions to protect "reliance parties"--that is, people that had been using the formerly public domain work. For instance, in order to enforce the restored copyright, an owner must file a notice with the Copyright Office or otherwise place the reliance party on notice. (17 U.S.C. §104A(d)(2)). Further, a reliance party has a twelve month grace period in which they may continue to sell or exploit the restored work (although they cannot make additional copies of the work). (Id. at §104A(d)(2)(A)(ii), §104A(d)(2)(B)(ii)). And, only after that period had elapsed, would a license fee be due to the copyright holder, or the reliance party had to cease its use of the work.

In 2001, the plaintiffs, consisting of educators, performers, publishers, film archivists, and motion picture distributors, each claiming to rely on the use of public domain works to support themselves, brought suit in the United States District Court for the District of Colorado against the government seeking to enjoin on constitutional grounds the enforcement of Section 514 and the Copyright Term Extension Act (CTEA). (Golan v. Ashcroft, 310 F.Supp.2d 1215 (D. Col. 2004)). Plaintiffs included violinist and conductor Lawrence Golan and the Symphony of the Canyons, who had publicly performed restored works such as Prokofiev's Classical Symphony and Peter and the Wolf and Stravinsky's Petroushka. Plaintiffs also included film distributors, who had invested significant resources identifying and restoring public domain films such as Hitchcock's 1932 film, Number Seventeen, and the 1940 British film, Night Train to Munich. (Golan v. Gonzales, 501 F.3d 1179, 1182 (10th Cir. 2007)). These "reliance parties" claimed that Section 514 not only harmed their free speech, but also their economic interests, having spent time and money restoring or preparing the works on the expectation that the works would remain in the public domain.

The case was stayed briefly because the Supreme Court had agreed to hear the Eldred v. Ashcroft case, discussed below, which similarly involved First Amendment challenges to the Copyright Act. (Eldred v. Ashcroft, 537 U.S. 186 (2003)). Upon the lift of the stay, the district court dismissed plaintiffs' claims, concluding that Congress had the authority under the Copyright Clause of the Constitution to remove works from the public domain and there was a rational basis for enactment of Section 514, i.e., the protection of American authors' copyrights abroad. (Golan v. Gonzales, 2005 U.S. District Lexis 6800 at *42, 43-47 (D. Col. 2005)). The district court did not fully analyze the Plaintiff's First Amendment claims.

Plaintiffs appealed on the basis that the Supreme Court's Eldred v. Ashcroft decision required further First Amendment scrutiny of Section 514. The Tenth Circuit agreed and reversed, holding that although Congress has the authority under the Copyright Clause to enact Section 514 and restore protection to foreign works in compliance with the Berne Convention, the legislation "must still comport with other express limitations in the Constitution," notably the First Amendment. (Golan v. Gonzales, 501 F.3d 1179, 1187 (10th Cir. 2007), citing Eldred v. Ashcroft, 537 U.S. 186 (2003)). The Circuit Court found that copyright works historically followed the same sequence: creation, copyright, then public domain. Because Section 514 presented a departure from this sequence (by restoring copyright to public domain works), the court, relying on Justice Ginsberg's language in Eldred, held that Section 514 "altered the traditional contours of copyright protection" and on this basis, remanded the case to the district court for further First Amendment analysis.( Id).

The district court, finding that Section 514 was content-neutral, applied an intermediate level of scrutiny, as opposed to a heightened scrutiny standard. (Golan v. Holder, 611 F. Supp.2d 1165, 1170 (D. Col. 2009)). Nonetheless and even though the district court recognized that Section 514 advances a significant governmental interest, it concluded that the Berne Convention did not require full restoration of copyrights because the reliance parties could have been completely exempted.( Id. at 1174). In finding a First Amendment violation, the court concluded that Section 514 was substantially broader than necessary to achieve the government's interests.( Id). The government appealed to the Tenth Circuit.

Nine years after the initiation of the lawsuit and three U.S. attorney generals later, on June 21, 2010, the Tenth Circuit reversed the district court, holding that Section 514 did not violate the First Amendment. (Golan v. Holder, 2010 WL 2473217 (10th Cir. June 21, 2010)). In Golan v. Holder, the Court found that the statute satisfied intermediate scrutiny because it (1) advanced important governmental interests unrelated to the suppression of free speech and (2) did not burden substantially more speech than necessary to further those interests (or was "narrowly tailored").( Id. at *4).

As to the first prong, the Circuit Court found important governmental interests on the basis that securing foreign copyrights for American works preserves the authors' economic and expressive interests.( Id. at *5). In assessing the government's asserted harm, the Circuit Court held that substantial deference, particularly in matters of foreign affairs, should be given to Congress in its judgments of potential harm: "Our sole obligation is to assure that, in formulating its judgments, Congress has drawn reasonable inferences based on substantial evidence."( Id). The Court pointed to testimony before Congress at the time of Section 514's passing that the United States' historically lax position on copyright restoration had been harming our citizens' copyright interests abroad. (Id. at *7). The theory adopted by the Court was that if the U.S. was to pass restorative legislation for foreign works, other nations would be more likely to pass similar legislation.( Id).

As to the second prong, the plaintiffs argued that there was a less restrictive way of implementing copyright restoration, specifically urging the adoption of the United Kingdom model where the reliance party is allowed to continue making those uses of the work it had made, or incurred commitments to make, before the copyright is restored, but the reliance party can be bought out by the owner of the restored copyright.( Id. at *12-13). In rejecting this argument, the court held that even if there were other options available to Congress, the less restrictive analysis is never a part of the inquiry into the validity of a content-neutral statute, so long as the means chosen are not substantially broader than necessary to achieve the government's interest.( Id. at *13). Moreover, the court noted that there was no real different between Section 514's protections for the reliance parties and the U.K.'s protections, stating that the difference between the "buy out" and "notice" is only that one is economic protection and the other expressive protection. (Id. at *14).

The Importance of International Treaty Compliance

The Tenth Circuit's decision in Golan represents significant progress in the United States' compliance with international treaties relating to the protection of intellectual property. In upholding Section 514, the Court considered the evidence presented to Congress in support of Section 514's passing, such as evidence that foreign countries were willing to provide, at most, reciprocal copyright protections to American works. (Id. at *7 citing General Agreement on Tariffs and Trade (GATT): Intellectual Property Provisions: Joint Hearing on H.R. 4894 and S. 2368 Before the Subcomm. on Intellectual Property and Judicial Administration of the H. Comm. on the Judiciary and the Subcomm. on Patents, Copyrights, and Trademarks of the S. Comm. on the Judiciary, 103d Cong., 2d Sess. 249 (1994) (hereafter "Joint Hearings") at n.2, statement of Eric Smith, Executive Director and General Counsel of the International Intellectual Property Alliance). Otherwise stated, foreign countries would restore American copyrights only if the U.S. restored copyrights of their citizens. The Court also noted evidence in the legislative history that the U.S. often served as an example to other countries--U.S. restoration to foreign works in our public domain would induce other countries with whom the U.S. recently established copyright relations to follow suit. (Id., citing Joint Hearings at 225, statement of Irwin Karp, Counsel, Committee for Literary Studies).

While at first this appears to be a copyright protection quid pro quo, the facts presented to Congress indicated that the United States would continue to lose billions of dollars each year because foreign countries were not providing copyright protections to American works. (Id. at *6, citing Joint Hearings at 225, statement of Eric Smith). Projections from RIAA Chairman and CEO Jason S. Berman supported this, stating "[t]here are vastly more US works currently unprotected in foreign markets than foreign ones here, and the economic consequences of [granting retroactive copyright protection] are dramatically in favor of U.S. industries." (Id. at *6, citing Joint Hearings at 262, statement of Jason S. Berman, Chairman and CEO of the Recording Industry Association of America). The U.S. has a strong economic incentive to comply with international treaties, particularly given the increasing importance of export revenue from U.S. intellectual property.

While much of the Golan analysis focused on the reliance parties, it is important to remember that a significant number of foreign copyright owners routinely lost their rights because of a failure to comply with U.S. formalities that were in place prior to the 1976 Copyright Act. Under the 1909 Copyright Act, in order to create a valid copyright under U.S. law -even if the work was already in published form--a creator or owner was required to post a notice of copyright on the work, i.e., "©", and register the work with the United States Copyright Office. (Copyright Act of 1909, Pub. L. No. 60-349, 35 Stat. 1075 (March 4, 1909)). The 1909 Act also required a renewal to be filed after the expiration of the first 28-year term of copyright (to extend protection for another 28-year term). (Id).

The 1976 Act abandoned these formalities as a pre-requisite to a valid copyright, and instead, provided that copyright is created when expression is fixed in a tangible form. (Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541 (October 19, 1976), codified as Title 17 of the United States Code). Now, notice of copyright and registration are only required in order to bring a lawsuit for infringement and obtain statutory damages and attorneys' fees. (17 U.S.C. §§411, 412). Somewhat ironically in view of Golan, a primary goal of the 1976 Act (and its abandonment of formalities) was to harmonize U.S. copyright law with international treaties and practice, where formalities were not a requirement for copyright protection.

Authority over matters relating to international treaty obligations and the consequences of non-compliance lies exclusively with the Executive Branch. And as the Tenth Circuit ultimately acknowledged in its recent decision, when it comes to matters of foreign policy and international affairs, Congress should be afforded significant deference.

Heightened First Amendment Scrutiny of Copyright Legislation

In Eldred v. Ashcroft, the Supreme Court upheld the constitutionality of the Sonny Bono Copyright Term Extension Act and in doing so, refused to apply anything beyond the rational basis review. (Eldred v. Ashcroft, 537 U.S. 186, 205 (2003)). The Court noted that the Copyright Act's "built-in free speech safeguards" are generally adequate to address First Amendment concerns. (Id). Only if Congress altered the "traditional contours of copyright protection," the court stated, would further First Amendment scrutiny be necessary. (Id. at 221). The "traditional contours of copyright protection" referred to by the Eldred Court comprise copyright law's "built-in free speech safeguards" of fair use and the idea/expression dichotomy (i.e., that ideas are not copyrightable).

Given that the Tenth Circuit in Golan ultimately applied intermediate scrutiny (as opposed to rational basis review), it would follow that Section 514 was found to be outside the "traditional contours of copyright protection." In Tenth Circuit's first Golan decision, the court interpreted Eldred quite broadly, finding that the "history of American copyright law" should inform its inquiry. The Circuit Court then performed a detailed analysis of the history of the Copyright Act and its treatment of the public domain (including the Framers' intent) and concluded that there simply was no history or tradition of removing works from the public domain. As such, the Court found that the statute presented a departure from the traditional creation, copyright, and public domain sequence. The Court did not specifically analyze the impact of the statute on fair use or the idea/expression dichotomy--if it did, it would see that those protections remained in tact regardless of whether a work was restored from the public domain.

If such a broad interpretation of Eldred was to persist, Congress' discretion would be hindered. It is important for the Copyright Act to continue to evolve--particularly in view of new media and technology developments as well as the growing international landscape for intellectual property. For instance, the Digital Millennium Copyright Act was a game-changing addition to copyright laws, and certainly in many ways, had no precedent. (Digital Millennium Copyright Act of 1998, Pub. L. No. 105-304, 112 Stat. 2860, 2887, enacted October 28, 1998, codified as Title 17 of the United States Code).

In closing, although Section 514 appears to have survived First Amendment scrutiny, it wouldn't be surprising if further attacks are brought against the Copyright Act on the basis that certain amendments exceed the Act's "traditional contours." Lawrence Lessig (in connection with the Stanford Law School Center for Internet and Society) represented the plaintiffs in both the Eldred and Golan cases, and given the Center's zeal in challenging the Copyright Act, it was somewhat predictable that on October 20, 2010, a petition for writ of certiorari was filed with the Supreme Court seeking review of the Tenth Circuit's Golan decision. It will be interesting to see if the Supreme Court is willing to accept certiorari to clarify what the Court meant in Eldred with regard to the "traditional contours of copyright protection."


January 10, 2011

J.K Rowling Succeeds in Copyright Infringement Case

By Barry Werbin

On Jan. 6, Judge Shira Scheindlin rejected a copyright suit brought by Paul Gregory Allen, as Trustee for the Estate of Adrian Jacobs, against Scholastic, alleging that J.K. Rowling's 4th Harry Potter novel, published in 2000, copied parts of a 1987 book about a character named Willy the Wizard, which was published in the UK in 1987. The court found that no reasonable trier of fact could find any substantial similarities between the works at a copyright level.

What is particularly interesting from an infringement litigation perspective is that the court, after reading the books and engaging in a "detailed examination of the works themselves," granted Scholastic's motion to dismiss under Rule 12(b)(6) at the outset of the case before any factual discovery record was developed. On this point, Judge Scheindlin noted that: "'When a court is called upon to consider whether the works are substantially similar, no discovery or fact-finding is typically necessary, because what is required is only a visual comparison of the works.' Thus, while the question of substantial similarity often presents a close issue of fact that must be resolved by a jury, district courts may determine non-infringement as a matter of law 'either because the similarity between two works concerns only non-copyrightable elements of the plaintiffs work, or because no reasonable jury, properly instructed, could find that the two works are substantially similar.'"

The court emphasized that the contrast between the "total concept and feel" of the two works - a test particularly appropriate given that the two works targeted children - was "so stark that any serious comparison of the two strains credulity." Just one example was the comparative lengths of the two works - 734 and 16 pages, respectively. Significant differences also were found in the works' "structure, mood, details and characterization" and other general similarities were expected under the scenes a faire doctrine.

UMG v. Augusto

By Barry Werbin

In another case testing the bounds of the first sale doctrine, on Jan. 4, 2011, the Ninth Circuit upheld a district court's decision that a record label's printing of a restrictive stamp on promotional CDs that the CDs could not be re-distributed did not create a license agreement, such that promotional CDs can be resold under the first sale doctrine without further permission from the record label. The decision in the case, UMG vs. Augusto, can be accessed here: http://www.ca9.uscourts.gov/datastore/opinions/2011/01/04/08-55998pdf.

The case was filed in 2007, when Universal Music Group (UMG) sued a California resident, Troy Augusto, who sold promotional CDs on eBay. Promotional CDs are given away by record labels to "music industry insiders" to provide publicity and exposure for upcoming commercial releases of new CDs. In 2008, a district court ruled against UMG on the ground that the promo CDs were gifts under federal law and that the terms under which the CDs were furnished were consistent with ownership, not a license. Augusto, who was not a music industry "insider," acquired promo CDs from music shops and online auctions, then resold them on eBay, advertising them as "rare collectibles not available in stores."

The Ninth Circuit held in pertinent part: "Because the record here is devoid of any indication that the recipients agreed to a license, there is no evidence to support a conclusion that licenses were established under the terms of the promotional statement. Accordingly, we conclude that UMG's transfer of possession to the recipients, without meaningful control or even knowledge of the status of the CDs after shipment, accomplished a transfer of title." The court noted that "nothing on the packaging of the Promo CDs or in the licensing label requires that the recipient return the Promo CDs to UMG" and "UMG receives no recurring benefit from the recipients' continued possession."

Further supporting the concept of a "gift" is The Postal Reorganization Act, which prohibits "the mailing of unordered merchandise" without "the prior expressed request or consent of the recipient." The court found that under this statute, such unsolicited materials "may be treated as a gift by the recipient, who shall have the right to retain, use, discard, or dispose of it in any manner he sees fit without obligation whatsoever to the sender." UMG, however, argued that The Postal Reorganization Act applied only to "consumers", and record industry insiders were not "consumers." Nevertheless, in what appears to be a novel interpretation, the court deemed such insiders as the equivalent of "consumers", because "music industry insiders consume the Promo CD just as any other purchaser would, by listening to it. The reason these insiders are selected to receive the Promo CD is because they are not just consumers, they are consumers with influence."

Significantly, just a few months earlier, the Ninth Circuit went in the opposite direction when it decided the long awaited Vernor v . Autodesk case, in which it held that various "license" terms accompanying software - in that case the popular AutoCAD program - which restricted its transfer or lease, did not convey "ownership" of the particular copy of the software purchased by an end user. As only the "owner" of a particular "copy" of a copyrighted work may resell it under the first sale doctrine, one who only possesses but does not own a particular copy of software cannot resell or further distribute it without violating the rights of the copyright owner.
Without mentioning the Vernor case, the UMG Court contrasted cases involving computer software: "Unlike the use of software, which necessitates a license because software must be copied onto a computer to function, music CDs are not normally subject to licensing. Therefore, the benefits of a license for software do not exist under these facts."

January 16, 2011

AP/Shepard Fairey Settlement Agreement

AP Press Release

AP and Shepard Fairey announce agreement in Obama poster case

The Associated Press, Shepard Fairey and Mr. Fairey's companies Obey Giant Art, Inc., Obey Giant LLC, and Studio Number One, Inc., have agreed in principle to settle their pending copyright infringement lawsuit over rights in the Obama Hope poster and related merchandise.

Mr. Fairey used an AP portrait photograph of Mr. Obama in making the Hope poster. Mr. Fairey did not license the photograph from the AP before using it. The AP contended that Mr. Fairey copied all of the original, creative expression in the AP's photograph without crediting or compensating the AP, and that Mr. Fairey's unlicensed use of the photograph was not a fair use. Mr. Fairey claimed that he did not appropriate any copyrightable material from the AP's photo, and that, in any event, his use of the photograph constituted a fair use under copyright law.

In settling the lawsuit, the AP and Mr. Fairey have agreed that neither side surrenders its view of the law. Mr. Fairey has agreed that he will not use another AP photo in his work without obtaining a license from the AP. The two sides have also agreed to work together going forward with the Hope image and share the rights to make the posters and merchandise bearing the Hope image and to collaborate on a series of images that Fairey will create based on AP photographs. The parties have agreed to additional financial terms that will remain confidential.

"The Associated Press is pleased to have reached resolution of its lawsuit with Mr. Fairey," said Tom Curley, president and CEO. "AP will continue to celebrate the outstanding work of its award-winning photographers and use revenue from the licensing of those photos to support its mission as the essential provider of news and photography from around the world. The AP will continue to vigilantly protect its copyrighted photographs against wholesale copying and commercialization where there is no legitimate basis for asserting fair use."

"I am pleased to have resolved the dispute with the Associated Press," said Mr. Fairey. "I respect the work of photographers, as well as recognize the need to preserve opportunities for other artists to make fair use of photographic images. I often collaborate with photographers in my work, and I look forward to working with photos provided by the AP's talented photographers."

The AP's copyright infringement lawsuit against Obey Clothing, the marketer of apparel with the Hope image, remains ongoing.

February 23, 2011

Google Books Settlement - Deadline to File a Claim Extended

By Mary Rasenberger

After a year of almost complete silence from the court in the Google Books Settlement case, it has approved a stipulated request by the parties to extended the deadline for filing a "claim" for an upfront payment in the Google Book Settlement from the upcoming March 31, 2011 deadline until one year after the Court's final approval of the settlement to file.

Any author or publisher whose works were scanned by Google on or before May 5, 2009 may be entitled to claim a Cash Payment as compensation for the scanning. Google has agreed to pay for works it scanned prior to that date, at least US$60 per Principal Work, US$15 per Entire Insert, and US$5 per Partial Insert.

For more information on how to file a claim and to determine whether a book was scanned, go to the Google Books Settlement site at http://www.googlebooksettlement.com/

Per the court's order the following should soon appear on the Google Books Settlement site:
The parties amended the Settlement by extending the deadline to make a claim for a Cash Payment. The deadline has been extended from March 31, 201 1 to the one year anniversary of the date on which the Court grants final approval of the Settlement. (If the Court does not grant final settlement approval, then, of course, there are no longer any deadlines). Please visit www.googlebooksettlement.com and read the "Important Update" for details on how to make a simplified claim for a Cash Payment. Also, please visit that website periodically to learn when the Court has made its determination whether or not to grant final settlement approval.

The deadline to remove works from the Google databases remains unchanged. It is still April 5, 2011. An author or publisher may request that a book not be scanned or if it has already been scanned that it be deleted from the database. Google is only obliged to honor these requests if made prior to the April 5th deadline if the work has already been scanned. After April 5th, the author or publisher may request that no display uses, including display of snippets and display of the entire work for a fee, be made, but cannot prevent Google from making non-display uses such as indexing and data-mining.

Once a book is removed, the digital copies of it will not be accessible to Google, other than on back-up tapes or other electronic back-up storage media. There is no guarantee that it will later be added back in to the database if the rights holder changes their mind and decides that they want it included, as the book may have to be rescanned.

The case is still before Judge Chin, now sitting by designation in the Southern District of New York after being elevated to the Second Circuit, and the Amended Settlement Agreement is still awaiting approval. It is hoped that a decision will be forthcoming soon.

See the Authors Guild's announcement at:

http://www.authorsguild.org/advocacy/articles/google-book-settlement-update-court-extends.html

March 22, 2011

Fair Use Decision

By Monica Pa

On March 18, 2011, the Southern District of New York (Batts, J.), 08 Civ. 11327, issued a decision in the closely-watched copyright infringement case involving the well-known "appropriation" artist Richard Prince. In a surprising decision, the court held that images created by Price infringed the plaintiff Patrick Cariou's copyright in photographs of Rastafarians in a series of collages and paintings created by Prince and sold by his art dealer, co-defendant the Gagosian Gallery.

In 2000, Patrick Cariou published Yes, Rasta, a book of photographs that was released by PowerHouse Books. The book featured photographs of portraits of Rastafarian individuals in and landscapes of Jamaica.

Richard Prince is a well known artist who has shown at numerous museums and other institutions, including a solo show at the Guggenheim Museum in New York City. He is represented by the Gagosian Gallery, Inc., which is owned by Lawrence Gagosian. Prince admits that he used 41 images from the plaintiff's book as artistic elements in a series of paintings titled "Canal Zone", which was first exhibited in St. Barts and then in a 2008 exhibition at the Gagosian Gallery in New York City. The work included images taken from Yes, Rasta, some in their entirety, some where only portions were used, some were collaged, enlarged, cropped, and/or painted-over. The "Canal Zone" included photos and works from other sources as well.

The defendants argued that Prince's use of the plaintiff's photographs was a permissible fair use, which allowed him to use copyrighted materials for purposes like commentary, criticism, news reporting, and scholarship, as set forth in Section 107 of the Copyright Act.

The court, however, held that Prince's use of plaintiff's photographs in these collage works was not fair use. It reasoned that there is no "per se" exemption for appropriation art; instead, for the "fair use" defense to be available, there must be "a focus on the original works or their historical context[.]" Order at 16. Yet the court did not cite to any case law support for this proposition; instead, this rule appears to impose a wholly new element for a fair use defense. The court argued that, based on its reading of prior precedent, those cases all "impose[] a requirement that the new work in some way comment on, relate to the historical context of, or critically refer back to the original works." Id. It concluded that "Prince's paintings are transformative only to the extent that they comment on the Photos; to the extent they merely recast, transform, or adapt the Photos, Prince's Paintings are instead infringing derivative works." Id. at 18.

The decision appears to contravene the Second Circuit decision in Blanch v. Koons, 467 F.3d 244 (2d Cir. 2006), which held that the fair use defense was available to the "appropriation" artist Jeff Koons who had used the plaintiff's photograph in his collage painting. In Blanch, the court held that "[w]hen, as here, the copyrighted work is used as 'raw material,' in the furtherance of distinct creative or communicative objectives, the use is transformative." Id. at 254. Judge Batts, however, distinguished Richard Prince's collage paintings from Jeff Koon's paintings by holding that Koon's work was transformative; specifically, the purpose of Koons' paintings, unlike Prince's paintings, was "to comment on the role such advertisements [like the plaintiff's photographs] play in our culture and on the attitudes the original and other advertisements like it promote." Order at 17.

The district court's recent decision in Prince should certainly concern artists and galleries who had previously relied on Koons in the creation, distribution, and sale of "appropriation" art. The decision appears to add a new and poorly-defined element to the "fair use" defense (e.g., the necessity that works actually "at their core focus on the original works or their historical context"). Finally, in reading this decision, it is unclear whether and to what extent the attorneys for Prince relied on Blanch, which should have served as a playbook for their litigation defense. Certainly, it would not have been difficult to argue that, like Koons, Prince was also commenting on plaintiff's allegedly appropriated image. Indeed, it is surprising that Prince's attorneys thought to argue initially that there was no copyright in the plaintiff's photographs whatsoever, a position that is against well-settled law that has, for decades, held that photographs are worthy of copyright protection. Order at 10.

The decision is available at: http://www.scribd.com/doc/51219154/Cariou-v-Prince-S-D-N-Y-Mar-18-2011.

March 23, 2011

Judge Chin Rejects the Amended Settlement Agreement in the Google Books Case

By Mary Rasenberger

Judge Chin issued his long-awaited decision in the Google Books case yesterday, rejecting the Amended Settlement Agreement (ASA). He did so on the grounds that the ASA does not meet the "fair, adequate and reasonable" standard for class actions settlements. Acknowledging the many benefits of the ASA, Judge Chin nevertheless found that the ASA "would simply go too far."

As described in prior posts on this blog, the ASA was the result of a copyright infringement lawsuit brought by the Authors Guild and the Association of American Publishers against Google for Google's scanning all of the books found on the shelves of its library partners - the libraries of major academic institutions - and then displaying snippets of those books on its Google Book Search service. The parties negotiated a settlement agreement in the form of a class action settlement on behalf of all authors and publishers of a book (or "Insert," portion of a book, such as an article, chapter, or preface) and their assignees or heirs who owned a copyright interest in the book as of January 9, 2009. The ASA, a complex 160-plus page agreement (and a true masterpiece of an agreement), released Google from claims for its scanning and past snippet use of the books and Inserts and gave Google the rights, among others, to display and sell copies of out-of-print books without permission (but a right holder cold opt-out) and of in-print books with permission.

Judge Chin notes that approximately 500 submissions were filed commenting on the settlement, with the vast majority objecting, and that 6,800 class members opted out altogether. He succinctly summarizes the principal legal arguments made objecting to the ASA and addresses each in turn:

1. Inadequate notice to the class: Some class members argued that as huge an effort as the notice was (1.26 million individual notices were sent), it did not reach all class members.

Judge Chin rejected this argument because of the number of individual notices, the fact publisher and author associations worldwide were notified, and a website was established to provide information, as well as the enormous publicity surrounding the case, which together ensured adequate notice. He states that "it is hard to imagine that many class members were unaware of the lawsuit."

2. Inadequate class representation: Certain objectors argued that they were part of a group of authors or publishers that were not adequately represented by the author and publisher class representatives because they had different interests. This included academic, foreign and insert authors, as well as those who have not claimed their works but who, by their silence, would be granting Google a future license.

The court concluded that "there is a substantial question as the existence of antagonistic interests between the named plaintiffs and certain members of the class" and viewed the differing interests as "troubling."

3. The forward-looking and opt-out licenses exceed what a court is permitted to approve under Rule 23: One of the main arguments put forth by various objectors was that the claims in the suit related to Google's acts of scanning and making snippets available, activities Google argued were fair use, but the relief included broad grants of future licensees, including from those who never consented. These licenses would relieve Google and others from future claims for acts not necessarily contemplated in the lawsuit. In other words, the settlement releases "claims not properly before the Court."

Judge Chin concludes that the licenses for future uses do exceed what the court is permitted to approve under Rule 23. He quotes the Justice Department's brief stating that the ASA "is an attempt to use the class action mechanism to implement forward looking business arrangements that go far beyond the dispute before the Court." Judge Chin finds three aspects of the ASA particularly troubling under Rule 23 - inadequate representation (discussed above), over-breadth of the releases and the encroachment of Congress' authority to create and revise the copyright laws (discussed below). In particular, Judge Chin finds that the released claims do not come within the scope of the pled claims under the Firefighters and Wal-mart Stores standards.

4. The ASA encroaches on Congress' legislative prerogative to enact and amend copyright laws: Congress alone, and not the courts, has the right to address issues presented by new technologies. The ASA's opt-out provisions for out-of print books (i.e., the automatic license to Google unless a right holder comes forward and opts out) expropriates rights of authors and publishers without permission in contravention of the exclusive rights of copyright in the U.S., international treaties, foreign copyright laws and section 201(e) of the Copyright Act -- which expressly prohibits any government body (including the judiciary) from expropriating or taking any copyright rights without voluntary transfer of the copyright owner.

The court agrees with these arguments -- that Google's license to display and sell out-of-print books without the permission of the rights holders (who may only opt-out) encroaches on Congress' authority to enact and amend copyright laws. Judge Chin cites to Supreme Court and other precedent stating that it is up to Congress to determine whether and how copyright should be amended to address issues such as orphan works and mass-scale digitization. He also concurs with many of the objectors who argued that the opt-out provision for out-of-print books is contrary to the fundamental principles of copyright -- "that it is incongruous with the purpose of copyright law to put the onus on copyright owners to come forward ... when Google copies their works without first seeking their permission."

5. The ASA would give Google a de facto monopoly over unclaimed works: Only Google will have the right to make all out-of-print books available without having to seek permissions on an individual basis. No one else can effectively compete with that, as no one else will have the rights to the out-of-print, unclaimed works.

This is perhaps the most troubling aspect of the ASA - that it would give Google a "right, which no one else in the world will have..." (citing the Internet Archives' submission), giving it a monopoly over unclaimed (or orphan) out-of-print books. No other entity will be able to license as complete a database as Google. The ASA would also arguably give Google even more control over search, given its exclusive rights to the data on the unclaimed books.

6. The ASA does not provide enough protection for privacy of users: The concern is that Google will be entitle to collect enormous amounts of data from users and their use of Google Books Search and has not agreed to sufficient protections in the ASA.

Judge Chin is sympathetic to these arguments, but does not find them to be severe enough that they alone would provide a sufficient basis for rejecting the ASA.


This well-reasoned, sound decision itself explains the long wait. It is clear that Judge Chin carefully reviewed all of the briefs and submissions, as well as scholarship on the case and case law precedent, and carefully and judiciously weighed the various arguments in light of the precedent. While there is certain to be an appeal, this will be a very hard decision to overturn.

June 28, 2011

Video Games, Even Violent Ones, Are Protected by the First Amendment

By Marie-Andrée Weiss

The U.S. Supreme Court decided by 7 to 2 in Brown v. Entertainment Merchants Association that video games, even violent ones, are protected by the First Amendment.

Representatives of the video game and software industries had challenged a California statute barring selling violent video games to minors. The U.S. District Court for the Northern District of California concluded that the statute violated the First Amendment and permanently enjoined its enforcement. The Ninth Circuit affirmed, and the Supreme Court granted certiorari last year.

Justice Scalia, writing for the majority, affirmed that:

"Like the protected books, plays, and movies that preceded them, video games communicate ideas--and even social messages--through many familiar literary devices (such as characters, dialogue, plot, and music) and through features distinctive to the medium (such as the player's interaction with the virtual world). That suffices to confer First Amendment protection."

This decision is not surprising if one remembers that the Supreme Court struck down last year in U.S. v. Stevens a federal law criminalizing the commercial creation, sale, or possession of certain depictions of animal cruelty "in which a living animal is intentionally maimed, mutilated, tortured, wounded, or killed," holding the law to be an impermissible content-based restriction on speech. Justice Scalia wrote that Stevens controls Brown.

Indeed, both laws are similar. Just as the federal law in Stevens, the California law prohibits the depictions of unsavory acts, not the actual commission of these acts. Cal. Civ. Code Ann. §§1746-1746.5 (West 2009) prohibits the sale or rental of "violent video games" to minors, that is, video games which would feature "killing, maiming, dismembering, or sexually assaulting an image of a human being." Disgusting acts indeed,"but disgust is not a valid basis for restricting expression", wrote Justice Scalia.

Indeed, "as a general matter ... government has no power to restrict expression because of its message, its ideas, its subject matter, or its content" (Ashcroft v. American Civil Liberties Union, 2002). There are however some exceptions and the content of speech may be restricted in a few limited areas, such as obscenity and fighting words.

The California statute only prohibits video games depicting such acts "in a manner that ... [a] reasonable person ... would find appeals to a deviant or morbid interest of minors, [or]... is patently offensive to prevailing standards in the community as to what is suitable for minors, [or if] the game, as a whole ... lack[s] serious literary, artistic, political, or scientific value for minors." Yet Justice Scalia wrote, somewhat caustically, that "mak[ing] violent-speech regulation look like obscenity regulation... does not suffice" as the obscenity exception to the First Amendment only covers depictions of "sexual conduct" (Miller v. California, 1973).

Speech about violence is not obscene, and therefore protected by the First Amendment, even though the California statute "mimics" a New York law prohibiting the sale to minors of sexual material that would be obscene from the perspective of a child, which the Supreme Court upheld in Ginsberg v. New York (1968). Justice Scalia noted that the United States does not have "a longstanding tradition... of specially restricting children's access to depictions of violence..." and added that children's books, such as the famous Grimm's Fairy Tales "contain no shortage of gore," reminding us that "Hansel and Gretel (children!) kill their captor by baking her in an oven."

Since the California statute imposes a restriction on the content of protected speech, the standard of review was strict scrutiny, and thus the statute must be justified by a compelling government interest and be narrowly drawn to serve that interest. California could not however, convince the Court of a direct causal link between violent video games and harm to minors, nor could it convince that the statute restrictions were justified by the substantial need of parents wishing to restrict their children's access to violent video games but who are not able to do so.

The opinion can be found at http://www.supremecourt.gov/opinions/10pdf/08-1448.pdf.

July 1, 2011

Take Me Out to the Courts: the Los Angeles Dodgers File for Bankruptcy

By Marie-Andrée Weiss

On Monday June 27th, the Los Angeles Dodgers, owned by Frank McCourt, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware. Bankruptcy filing is the last episode of a saga that had been featured in the news for some two years now.

The bankruptcy filing lists the creditors holding the 40 largest unsecured claims. Among them are Manny Ramirez, the now-retired slugger who is owed $20,992,086, and Andruw Jones, now playing for the New York Yankees, who is owed $11,075, 000. The assets of the team are listed in the filing as being 500,000,001 to one billion dollars. Major League Baseball (MLB) Commissioner Bud Selig issued a statement the same day, writing that "[t]he action taken today by Mr. McCourt does nothing but inflict further harm to this historic franchise."

Indeed, the Dodgers are an historic baseball team, still dear to many New Yorkers, whether or not they can remember when the Brooklyn Dodgers became the Los Angeles Dodgers in 1958. It is the team of Jackie Robinson, Sandy Koufax, and Pee Wee Reese, a team which won six World Series titles, one of these titles while still playing at Ebbets Field.

Jamie and Frank McCourt bought the franchise in 2004. After the couple commenced divorce proceedings in 2009, the question of whether the team was community property, and thus co-owned by Ms. McCourt, or whether it was owned solely by Mr. McCourt, became contentious.

Citing "deep concerns regarding the finances and operations of the Dodgers and to protect the best interests of the Club, its great fans and all of Major League Baseball," Commissioner Selig seized control of the Dodgers on April 20, 2011, and took over day-to-day operations of the club. Mr. Selig then appointed Tom Schieffer, a former president of the Texas Rangers, to monitor the franchise.

On June 17, 2011, Frank and Jamie McCourt agreed to a binding divorce settlement. The court would then have conducted a one-day trial to characterize the Dodger's assets as community property, or as Mr. McCourt's sole property. However, the agreement was contingent upon MLB approving a proposed transaction with Fox. Mr. Selig, however, rejected a 17-year, $2.7 billion deal with a Fox, citing the "best interests of Baseball" clause of the MLB Constitution when rejecting the deal between the Dodgers and Fox. Mr. McCourt planned to use some $150 million from the deal to settle his divorce with Jamie McCourt, and to pay off some of his debts.

MLB and its two constituent members, the National and the American Leagues, is largely self-regulated, and operates under its own private rules, the MLB Constitution, the document governing all major league baseball franchises. Article II § 2(b) of the MLB Constitution describes the Office of the Commissioner of Baseball as being "Chief Executive Officer of Major League Baseball" and gives him the power to "investigate, either upon complaint or upon the Commissioner's own initiative, any act, transaction or practice charged, alleged or suspected to be not in the best interests of the national game of Baseball."

Indeed, the office of the Commissioner stems from the "Black Sox scandal" of 1919, when players of the White Socks team "threw" World Series games. Baseball club owners (16 at the time) decided in 1920 to have one sole commissioner of baseball, and Judge Kenesaw Mountain Landis was appointed in 1921 as the first Commissioner of Baseball. The team owners pledged to "loyally... support the Commissioner in his important and difficult task..."

Baseball clubs are still privately owned, by persons of great wealth, and more often than not, big personalities. George Steinbrenner will not be forgotten any time soon in New York, and Frank and Jamie McCourt were wealthy real estate developers when they bought the team. However, Article II § 3(c) of the Baseball Constitution gives the Commissioner the right to suspend or remove any owner of a Major League club. The sale of a team must be approved by a vote of the MLB owners, who indeed voted unanimously in 2004 to approve the sale of the Dodgers to the McCourts.

Pursuant to article II § 4(ii)(l) of the MLB Constitution, "[t]he rights, privileges and other property rights of a Major League Club hereunder and under any other Baseball-related agreement may be terminated... if the Club in question... files a voluntary petition in bankruptcy." The New York Times reported on June 30 that MLB may plan to use this rule and to ask the court to let it take control of the Dodgers.

What could be next? According to the New York Times, the Dodgers and the MLB agreed on June 29 to let the Dodgers accept interim financing from an outside lender in order to continue to operate, and agreed that the loan would not have to be tied to a sale of the team's future television rights. This compromise was approved by Judge Kevin Gross in the U.S. Bankruptcy Court in Wilmington, Delaware. However, the MLB contended in court that the Dodgers should have first obtained approval from Mr. Schieffer, the MLB-appointed monitor, before filing for bankruptcy.

Two other baseball teams have filed for bankruptcy in the last two years, the Chicago Cubs in 2009, and the Texas Rangers in 2010. Before that, the Seattle Pilots was the last baseball team to have filed for bankruptcy in... 1970. In the case of the Texas Rangers, the general partnership operating the Rangers had entered into an agreement with the Commissioner of Baseball, giving the Commissioner certain rights concerning the sale of the team, and the Commissioner contended that the agreement gave him the right to bar any unapproved sale of the team. The bankruptcy Judge, however, ordered the team to be sold at an open auction, not to a preferred bidder.

Meanwhile, baseball is still America's favorite summer pastime. The MLB reported the best weekend attendance since 2008 during last Father's Day weekend, when 1,646,000 spectators attended the 45 games played over the weekend.

Bankruptcy filing: http://online.wsj.com/public/resources/documents/dodgers.pdf

Bud Selig statement re bankruptcy filing, June 2011: http://mlb.mlb.com/news/press_releases/press_release.jsp?ymd=20110627&content_id=21076822&vkey=pr_mlb&fext=.jsp&c_id=mlb

Bud Selig statement re Dodgers, April 2011: http://mlb.mlb.com/news/press_releases/press_release.jsp?ymd=20110420&content_id=18038724&vkey=pr_mlb&fext=.jsp&c_id=mlb


Entertainment Merchants Association

By Jason E. Carlie

On Monday, the Supreme Court struck down a California statute that prohibited the sale or rental of "violent video games" to minors, required modification of the labeling of their packaging, and established a civil fine of up to $1000 for violations. Cal. Civ. Code Ann. §§1746-1746.4 (West 2009). The statute, challenged by representatives of the video game industry, covered games "in which the range of options available to a player includes killing, maiming, dismembering, or sexually assaulting an image of a human being, if those acts are depicted" in a way that "[a] reasonable person, considering the game as a while, would find appeals to a deviant or morbid interest of minors," "patently offensive to prevailing standards in the community as to what is suitable for minors," that "causes the game, as a whole, to lack serious literary, artistic, political, or scientific value for minors." Id. at §1746(d)(1)(A).

The majority opinion written by Justice Scalia, with Justices Kennedy, Ginsburg, Sotomayor and Kagan concurring, concluded that videogames communicated ideas and as such, were protected by the First Amendment.

Relying upon its decision in United States v. Stevens from the previous term, the majority stated that "new categories of unprotected speech may not be added to the list by a legislature that concludes certain speech is too harmful to be tolerated." Under Stevens, a facial challenge based on the First Amendment can succeed only if "a substantial number of its applications are unconstitutional, judged in relation to the statute's plainly legitimate sweep." U.S. v. Stevens, 559 U.S. __,___ (2010). It is more difficult to mount a facial First Amendment attack on a statute that seeks to regulate activity that involves action as well as speech. Broadrick v. Oklahoma, 413 U.S. 601, 614-615 (1973). The Court stated that Stevens controlled Entertainment Merchants Association, and opined that "California has tried to make violent-speech regulation look like an obscenity regulation by appending a saving clause" and analogized the statute at issue attempting to mimic the obscenity-for-minors statute upheld in Ginsberg v. New York.

The Court noted that "[i]t is rare that a regulation restricting speech because of its content will ever be permissible." California acknowledged that it could not show a direct causal link between violent video games and harm to minors. The Court criticized the State's reliance on Turner Broadcasting System v. FCC, 512 U.S. 622 (1994), which applied intermediate scrutiny to content-neutral regulation. The California statute at issue in Entertainment Merchants Association, however, is content-specific, and as a result, must meet a strict scrutiny which requires that the California law must be "narrowly tailored" to further a "compelling interest" without there being a "less restrictive" alternative that would be "at least as effective." Reno v. American Civil Liberties Union, 521 U.S. 844, 874, 875, 879 (1997).

The California statute at issue suffered from three insurmountable issues. It was under-inclusive in two respects. First, it singled out video game creators and compared them against other kinds of speakers, such as "booksellers, cartoonists, and movie producers," without giving any "persuasive reason why." As such, the statute raised "serious doubts about whether the government is in fact pursuing the interest it invokes, rather than disfavoring a particular speaker or viewpoint."

Second, the Court felt that the statute was under-inclusive, in that California is "perfectly willing to leave this dangerous, mind-altering material in the hands of children so long as one parent [or guardian]" approves of it. Further, the majority also notes that there weren't any requirements to verify the nature of the relationship. This appeared to the court to be a rather lax way to address "a serious social problem."

As a result, California could not show that the statute's restrictions "meet a substantial need of parents who wish to restrict their children's access to violent video games but cannot do so." The Court then pointed to the video-game industry's voluntary rating system designed to inform consumers about each games' content.

Third, the Court held that the Act was wildly over-inclusive. It pointed out that "[n]ot all of the children who are forbidden to purchase violent video games on their own have parents who care whether they purchase violent video games." The Statute's entire effect, according to the Court, "is only in support of what the State thinks parents ought to want." (emphasis in original). Thus, the statute was not narrowly tailored to assisting parents, as the First Amendment requires.

Justice Alito, in his concurrence, would reach the same conclusion, but instead chose to focus on the "impermissibly vague" argument that the video-game industry raised.

Justice Alito started by citing the due process rule, requiring that laws give people of ordinary intelligence fair notice of what is prohibited. Grayned v. City of Rockford, 408 U.S. 104, 108 (1972). Then he pointed out several deficiencies that, in his opinion, rendered the statute void for vagueness. First, the California statute did not define "violent video games" with the "narrow specificity" the Constitution requires. Second, California "relied on undefined societal or community standards" as to what is suitable for minors. The California law is heavily dependent on the identification of generally accepted standards regarding the suitability of violent entertainment for minors, while leaving such critical terms as "deviant" and "morbid" undefined in the statute.

Moreover, the fact that there is no jurisprudence on the books regarding the standards for expression related to violence further weakens the state's failure to define what he felt were critical terms.

Justice Alito disagreed with the majority that Stevens controlled the analysis, because the statute in that case was sharply different from the one in Entertainment Merchants Association. Stevens related to a law that "broadly prohibited any person from creating, selling, or possessing depictions of animal cruelty for commercial gain." The Justice stated that the California statute in Entertainment Merchants Association "limited the sale or rental of violent video games to minors," and pointed out that there was no restriction on the creation of the games, nor was there one against adults from purchasing them.

Stevens, according to Alito, does not support the proposition that a law like the violent video games law has to satisfy strict scrutiny. For Justice Alito, the end result is that the majority opinion is a "sweeping" suggestion that "no regulation of minors' access to violent video games is allowed - at least without supporting evidence that may not be realistically obtainable given the nature of the phenomenon in question."

Justice Thomas' dissent took a novel approach. He did not rule on the statute on First Amendment grounds, essentially holding that minors have no constitutional right to speak or be spoken to without their parents' consent. There is no case citation supporting that proposition. It appeared to be an exercise in discerning what the Framers envisioned for the First Amendment's application to children via extended references to historical books on the nature of colonial- and post-Revolutionary War- era childrearing.

Justice Breyer's dissent applied a more conventional approach. He applied both the Court's vagueness precedents, and Stevens. He opined that the special category of protection is not "depictions of violence," but rather the protection of children. He would hold that the California statute provides fair notice of the prohibition, and therefore, it isn't impermissibly vague, in contrast to Justice Alito's concurring opinion. Breyer also believed that the California law survived strict scrutiny in that it was narrowly tailored, furthered a compelling state interest, and there was no less restrictive alternative that was at least as effective. Applying that rule, he would find that California's law imposed merely a modest restriction on expression, prevented no one from playing a video game, no adult from buying one, and no minor from getting one if a parent got one for them. To him, the California law advanced a compelling state interest in that the basic parental claim to authority over childrearing makes it proper to enact laws designed to further that cause, and the State's independent interest in the well-being of youth. He eschewed the majority's acknowledgement of the video-game industry's voluntary rating system as a less restrictive alternative as least as effective. Thus, he found that the law is not fatally under-inclusive, and cited many psychological studies to support his opinion.

July 5, 2011

DANCING AROUND THE ISSUE OF COPYRIGHT OF CHOREOGRAPHIC WORKS

By Merlyne Jean-Louis

Identical twins Laurent and Larry Bourgeois (known professionally as Les Twins), who are currently touring with Beyonce Knowles, are two of new style/studio hip-hop dance's rising stars. In 2010, on the San Diego leg of the World of Dance Tour, the brothers performed an eight minute self-choreographed routine that displayed their remarkable technical ability and quirky personalities. (See http://www.youtube.com/watch?v=_XLGYxeL1iQ.) In June 2011, Fox broadcasted a portion of the audition piece of D*Day, an Atlanta hip-hop dance duo, on the dance competition "So You Think You Can Dance." For one minute, practically step for step, D*Day performed a sequence from Les Twin's routine. As a result, judges allowed D*Day to proceed to the next stage of the competition. Some of Les Twins' outraged fans posted on YouTube videos that compared both routines to ensure that the "biters" did not become finalists on the show. (See http://www.youtube.com/watch?v=3s1doSilyQc.) If Les Twins desired to do something about this controversy, they would have a powerful weapon in their artillery: copyright.

Note: Because the twins are from France, they would probably choose to enforce their copyright under French Law or the Berne Convention. To simplify the legal analysis, I use American law.


Requirements of Copyright Protection for Choreographic Works

To qualify for copyright protection under the Copyright Act of 1976, a choreographer must satisfy three requirements. First, a choreographer must create a choreographic work. Although the 1976 Act defines the majority of copyrightable subject matter, the statute does not define the term choreographic works. However, the U.S. Copyright Office provides a standard definition for the term choreography ("the composition and arrangement of dance movements and patterns, and is usually intended to be accompanied by music") and dance ("static and kinetic successions of bodily movement in certain rhythmic and spatial relationships"). (Compendium of Copyright Practices ("Compendium II") §§ 450, 450.01 (1984).) Although Compendium II prohibits the copyrighting of dance steps and simple routines, such as the basic waltz step, the manual permits copyright registration of dances that incorporate of improvisation, which is relevant to many forms of hip-hop dance. Given these provisions, even though it contains improvised moves, the Les Twins' piece does constitute a choreographic work.

Second, the choreographic work must also qualify as an "original work[] of authorship." (Copyright Act of 1976, 17 U.S.C. § 102(a) (2010).) Today, a work is deemed to be original if it is "independently created by the author [and if] it possesses at least some minimal degree of creativity." (Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991).) A choreographic work can be deemed to be original if similarity to another piece is "fortuitous [and] not the result of [deliberate] copying." (Id.) Thus, because the twins created the work and it is creative, the Les Twins piece is original.

Third, the choreographic work must be "fixed in any tangible medium of expression" in a manner that it "can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." (17 U.S.C. § 102(a).) Currently three forms of fixation for choreography satisfy the Act's requirement: video recording, notation, and computer technology. As the Les Twins' piece was recorded and posted on YouTube by Yak Films, the work was fixated. Thus, assuming that the Bourgeois brothers 1) jointly claim copyright of the piece and 2) do not encounter work for hire issues, Les Twins own the copyright of the World of Tour piece under American law.

Potential Claims of Les Twins

As copyright protection provides the holder with a bundle of exclusive rights, Les Twins could have three major claims. First, the brothers could sue D*Day for infringing upon their right to perform, because D*Day performed most of Les Twins' piece in front of judges and other dancers in Atlanta's Fox Theater. (See 17 U.S.C. §§ 101 (defining public performance), 106(4) (enumerating exclusive right).) Second, because D*Day used dance moves that differed from those used in the Les Twins' piece, the Bourgeois brothers could claim that D*Day created a derivative work of their piece. (See 17 U.S.C. § 106(2).) Finally, Les Twins could sue Fox Television for transmitting the infringing D*Day piece to the American audiences via television and the Internet. (See 17 U.S.C. § 101.)

Potential Defenses of D*Day and Fox

D*Day and Fox could have some potential defenses to such a lawsuit. D*Day could claim that use of the Les Twins piece constituted fair use, because the members were somehow commenting on the piece or teaching the judges about new style/studio hip-hop dance. Balancing the four factor test of fair use, this defense would probably fail, however, because D*Day used a substantial portion of the Les Twin piece and used it for a commercial purpose (to audition for a show on which they could ultimately win $250,000). (See 17 U.S.C. 107.) With respect to the second claim, although D*Day could claim that the piece was sufficiently original and unlike that of Les Twins', this claim would also probably fail because D*Day stated that the piece was a tribute to and inspired by Les Twins. Finally, with respect to Les Twins' third claim, Fox could state that the piece was not transmitted over the Internet, because a viewer would have to take proactive steps to download and view the video of the show that displayed the D*Day audition piece. This defense could survive.

The Implications of a Suit by Les Twins

Although Les Twins can benefit from copyright protection of their works, they have chosen not to enforce their exclusive rights. This is most likely because of the dance culture: choreographers are honored and feel respected when others perform their pieces. According to D*Day, Les Twins told the group not to worry about the negative feedback from Les Twins' fans and wished them luck in the next stage of the dance competition. When Les Twins were asked about the D*Day incident by a dance magazine, Les Twins avoided answering the question. They do not even realize that Fox Television, whose legal department ensures that it secures all licenses for the music used on "So You Think You Can Dance" to avoid lawsuits, is not concerned about a suit from choreographers whose works they transmit on television.

Thus, my hypothetical suit will not occur. As evidenced by the action of the fans, most members of the hip-hop dance community may not even know about copyright protection. Until dance's most recognized choreographers start to enforce their copyright, all choreographers (especially the average, less known choreographers) will not be able to fulfill their earning potential.

The State of Copyright Protection for Choreographic Works in General

Using copyright law is an excellent tool because it assists most who devote their time to creating art to reap the financial benefits of their works. While copyright protection can serve well other artistic industries, the law as it stands does not help most choreographers. In essence, average choreographers encounter hurdles from the moment they attempt to secure copyright protection to when they file infringement suits because of the lack of clear standards from the judiciary as to the boundaries of their copyrights.

How is the state of copyright protection and choreography? Currently, the two are not dancing in unison.

August 17, 2011

Hosers or Hosed? Labatt Brewing Co. Ltd. v. NHL Enterprises Canada and the Battle over Beer Rights

By Carter Anne McGowan

Few if any sponsorships are more lucrative in professional sports than beer sponsorships. The National Hockey League (NHL or League) - long sponsored by Anheuser-Busch-owned Labatt in Canada - recently found itself embroiled in litigation brought by Labatt alleging that the League breached its Canadian beer deal when it entered into a U.S./Canada beer sponsorship with Labatt's archrival, Miller Coors (Molson Coors in Canada). On June 3, 2011, two days after NHL Commissioner Gary Bettman trumpeted the Molson Coors deal in his annual state-of-the-game speech at the Stanley Cup Finals, Justice Frank Newbould of the Ontario Superior Court ruled that the League engaged in double-dealing when it contracted with Molson Coors regarding rights the court deemed already granted to Labatt.

The case presents a fact pattern only a contracts professor could love: at issue were law school favorites like the interpretation of a renewal clause, waiver, the point at which an agreement becomes binding, and agreements to agree. In brief -- as brief as one can be - the NHL twice expressly extended a period of exclusive negotiation provided in the renewal terms of the 2008 contract between the League and Labatt, and then, instead of further express extensions, made casual intimations that extensions "would not be an issue" as they progressed toward an agreement. Labatt and the NHL exchanged non-binding term sheets and letters of intent setting forth their agreed upon deal points through November and December 2010 and, instead of signing any of these, agreed to go directly to a long-form agreement. After a month of exchanging mark-ups, on February 8th of this year, the NHL told Labatt it was terminating negotiations. On that same day it signed the biggest beer sponsorship in League history: a seven-year, $375 million deal with Molson Coors.

Molson Coors had approached the NHL regarding sponsorship rights on January 3, 2011. Over the next several weeks, various NHL-related sources informed Molson Coors that the NHL already had a Canadian deal with Labatt. On January 26th, the NHL proposed exclusive U.S. beer sponsorship rights to Molson Coors; Molson Coors responded that it was only interested if the sponsorship was for the United States and Canada. The next day, the NHL agreed that it was able to grant such rights. Molson Coors agreed to the deal with the proviso that the NHL indemnify it against any claim brought by Labatt. Thirteen days later, the NHL and Molson Coors agreed to terms and signed a letter of agreement, including the requested indemnity. Labatt promptly brought suit. (Labatt Brewing Co. Ltd. v. NHL Enterprises Canada, L.P. (2011 ONSC 3219).)

At trial, Labatt argued that after its exclusive negotiating period was twice expressly extended, the NHL then waived the time limit (or, in the alternative, represented an intention not to be bound by the express exclusivity period due to its course of conduct), and the parties had come to "terms of renewal" as stated in the renewal clause of the 2008 contract which, although less than fully-negotiated terms of agreement - required the parties to continue to negotiate until they reached agreement on all business terms. The NHL countered by claiming that the exclusive negotiation period ended on October 22nd, irrespective of the NHL's continued negotiating thereafter, and that requiring it to continue negotiating until the parties reached agreement on all business terms after agreeing on terms of renewal constituted an unenforceable agreement to agree.

Justice Newbould, taking a view that comported entirely with neither NHL nor Labatt arguments, held for Labatt, finding that the negotiating period was indefinitely extended by the NHL; "an agreement" was reached on November 12th and therefore there was no obligation that Labatt and NHL ever reach a long-form agreement; and the NHL was precluded from negotiating with Molson Coors as of November 12, 2010.

As the clock ticked inexorably toward the 2011 - 12 season - without a pro season start minus the seemingly necessary beer sponsor in place - the NHL requested and received an expedited appeal at the Ontario Court of Appeals. In a brief eight-page ruling that did not even discuss three of the NHL's four grounds for appeal, the Court of Appeals reversed Justice Newbould's decision. (Labatt Brewing Company Limited V. NHL Enterprises Canada L.P. (2011 ONCA 511).) The reversal came on procedural grounds, with the appellate court finding that Justice Newbould had erred in determining that the NHL and Labatt had reached a binding sponsorship agreement as of November 12th when neither party had argued that a binding agreement was reached on that date. Citing many precedents in Canadian law, the Court of Appeals found that it was procedurally unfair to the NHL to determine a case based on a novel theory of liability not raised by either party at any point during litigation, as that left the NHL without the ability to rebuff the assertions made under the theory.

As of this blog, the 2011-12 NHL season will commence with Molson Coors as the League's beer sponsor. However, Labatt is contemplating further legal action and has acquired direct beer sponsorships with three Canadian teams, which sponsorships include the extremely important pouring rights in those teams' arenas. Meanwhile, the case will not go down as one of the finest moments in the NHL's legal history, as it appears that neither the NHL nor Molson Coors acted in an altogether upstanding fashion during these negotiations. Perhaps the current result is legally correct, but the whole affair leaves a bad taste in the mouth...perhaps the taste of spoiled beer.

September 13, 2011

Copyright Trolls and the Importance of § 512(c) Protections

By William Leef

After launching its first set of lawsuits in May 2010, copyright troll Righthaven, LLC ("Righthaven") finds itself close to declaring bankruptcy. Righthaven filed a motion last week requesting that a Nevada judge not stay an order requiring it to pay $30,000 for a defendant's legal fees. Some see this turn of events as Righthaven getting its comeuppance, yet had more websites chosen to take advantage of the "safe harbor" protections, which require little more than submission of a $105 filing fee, many of these claims would not have been able to proceed.

Contracting with newspaper groups Stephens Media (publisher of the Las Vegas Review-Journal) and MediaNews Group (owner of The Denver Post as well as 50 other publications), Righthaven was granted the sole right to sue on these ownership groups' behalves for copyright infringement. However, the Strategic Alliance Agreement ("SAA") between Righthaven and Stephens Media stated, "Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery." The ownership groups still maintained an exclusive interest to exploit, license and distribute their own protected works.

Acting under authority granted by the SAA, Righthaven has since filed approximately 275 copyright infringement claims, finding quick settlements in many actions, against websites and media organizations both large and small. However, in a key ruling, a Federal Judge for the District of Nevada recently dismissed Righthaven as a party in its case against Democratic Underground, a satirical political blog. The dismissal and sanctions that followed will likely spell the end of the remaining cases brought by Righthaven.

In the case of Righthaven v. Democratic Underground, Righthaven alleged infringement when a Democratic Underground user posted a comment containing a link and a few paragraphs from a Las Vegas Review-Journal article about Sharon Angle and the Tea Party. Contrary to the limited grant of rights pursuant to the SAA, Righthaven went on to allege in its complaint that:

Righthaven holds the exclusive right to reproduce the Work;
Righthaven holds the exclusive right to prepare derivative works based upon the Work;
Righthaven holds the exclusive right to distribute copies of the Work; and
Righthaven holds the exclusive right to publicly display the Work
Righthaven, LLC v. Democratic Underground, LLC Case No.: 2:10-cv-01356

According to Section 501(b) of the 1976 Copyright Act, 17 U.S.C. §101 (2010) (the "Act") only the "legal or beneficial owner of an exclusive right under a copyright is entitled...to institute an action for any infringement..." The bare right to sue, not being one of the exclusive rights defined and limited by the Act, cannot be transferred in a manner that confers standing - a crucial requirement for anyone wishing to bring a claim for copyright infringement. In a June 14, 2011 ruling on various motions for dismissal and summary judgment, Chief District Judge Roger L. Hunt went as far as to call Righthaven's interpretation of the SAA with Stephens Media "disingenuous, if not outright deceitful." Judge Hunt ordered Righthaven dismissed from the case for lack of standing, and ordered Righthaven to show cause as to why it should not be sanctioned. On July 14, 2011, Righthaven was ordered to pay $5,000 in sanctions and to file the court transcript containing the rebuke in the other copyright cases for which it was a party.

This holding came on the heels of a May 2011 order, where a Colorado Federal Judge froze 35 pending lawsuits due to lack of standing. (Righthaven, LLC v. William Sumner and Dailykix.com, Civil Action No. 1:11-cv-00222-JLK.) This past week, MediaNews Group's chief executive John Paton said that the newspaper publisher would be ending its relationship with Righthaven, which was "a dumb idea from the start" (David Kravets, Newspaper Group Drops Righthaven - 'It was a Dumb Idea,' Sept, 8 2011, http://www.wired.com/threatlevel/2011/09/medianews-righthaven-dumb-idea/). Further. Righthaven recently requested a stay of judgment pending appeal to prevent an order that it pay $30,000 in legal fees for another infringement claim where (aside from the lack of standing), the court determined that the defendant's use of third party content qualified as a proper fair use. (Righthaven, LLC v. Wayne Hoehn, Case No.: 2:11-cv-00050-PMP-RJJ.)

While it looks as though Righthaven may soon have to declare bankruptcy, many blogs and websites could have avoided the entire ordeal by registering a DMCA takedown agent with the U.S. Copyright Office. Registration under section 512(c) of the Digital Millennium Copyright Act requires the completion and submission of an Interim Designation of Agent to Receive Notification of Claimed Infringement form accompanied by a $105 check or money order. In addition to these technical requirements, immunity is enjoyed so long as the website (1) does not receive a financial benefit directly attributable to the alleged infringing content, (2) does not have actual knowledge of the alleged infringement; and (3) promptly removes the infringing material once notified (See 17 U.S.C. § 512(c)(1)(A)(i)-(iii)).

Plagiarismtoday.com provided some factors for determining whether a website should register an agent:

For a blog that gets relatively few comments, it probably isn't worthwhile. The comments can be easily moderated and suspicious material is usually removed long before anyone else is aware of the infringement. However, a larger forum where users upload a wide variety of content that is almost impossible to moderate may want to look at designating a DMCA agent. (Jonathan Bailey, How $105 Can Help you Avoid a Copyright Lawsuit http://www.plagiarismtoday.com/2011/03/28/how-105-can-help-you-avoid-a-copyright-lawsuit/.)

It appears as if Righthaven was specifically targeting websites and media organizations that lacked § 512(c) protections. Knowing that they could potentially be subject to $150,000 in liabilities, many organizations would rather settle quickly and move on. Yet in a landscape where the risk of infringement by a user is so great, and it is nearly impossible to detect each instance of infringement, it would be in the best interest of websites that see a great deal of user comments and submissions to register a DMCA agent.





September 19, 2011

The Google Books Project: Now the Authors File a Lawsuit Against the Libraries

By Caroline Camp

Six years after filing a lawsuit against Google, the Authors Guild has taken aim at another group involved in the Google Books Project - the libraries themselves. On September 12, 2011, the Authors Guild, along with other individual authors and associations of authors, filed a complaint against HathiTrust and five American universities for copyright infringement. (Authors Guild, et al. v HathiTrust, et al., 11 Civ 6351 (S.D.N.Y., Sep. 12, 2011)).

HathiTrust is a partnership of libraries and universities that was formed in 2008 as a central repository for digitized collections. HathiTrust now has digital collection of nearly 10 million works, most of which had been scanned by Google.

As it is now commonly known, Google had contracted with several public and university libraries to create digital archives of their library collections. Under the agreements with these libraries, Google was able to reproduce and retain digital copies. Eventually, Google planned to index the archives so users could search them in its online search engine. In the 2005 complaint, the Authors Guild alleged that these acts of reproduction were in violation of the copyright holders' rights.

The Google Books lawsuit remains unsettled. After years working on the Amended Settlement Agreement [ASA], and after some 500 letters of opposition were filed against it, Judge Denny Chin finally rejected the proposed settlement on March 23, 2011 (The Authors Guild et al. v Google Inc., 05 Civ. 8136 (S.D.N.Y.)). Chin extolled the benefits of realizing the digital books project, but determined that the ASA, in granting prospective licenses, went too far. "The establishment of a mechanism exploiting unclaimed books is a matter more suited for Congress than this Court."

In response to Chin's opinion, HathiTrust issued the following statement: "Libraries are not leaving the future of digital books to Google. In light of Judge Chin's rejection of the Google Books Amended Settlement Agreement, HathiTrust will maintain our commitment to long-term digital preservation of library collections curated by generations of librarians at great research libraries around the world." (http://www.hathitrust.org/hathitrust_asa_response).

Before the next scheduled hearing for the Google Books suit had even taken place, the Authors Guild filed a complaint against HathiTrust, seeking an injunction. "These books, because of the universities' and Google's unlawful actions, are now at needless, intolerable digital risk," said Authors Guild president Scott Turow. (http://www.publishersweekly.com/pw/by-topic/digital/copyright/article/48739-authors-guild-sues-libraries.html). Yet why go after the libraries themselves?

Unlike Google, the libraries may have a potential safe harbor under § 108 of the Copyright Act, as modified by the Digital Millennium Copyright Act. According to a statement issued on September 15, 2011, HathiTrust's primary motive has been, and remains, preservation. However, the complaint alleges that members of HathiTrust, by contributing copies of the works in their collections to its digital library, are acting outside the limited circumstances under which libraries are permitted to reproduce and distribute copyrighted works.

In addition creating digital archives of library collections, HathiTrust has also embarked upon a related Orphan Works Project. HathiTrust and its partners claim to make great efforts to locate and contact copyright holders. If researchers are unable to make contact with the rights holders, they will publicly list the works and their relevant bibliographic information as Orphan Candidates for 90 days. If no rights holder materializes, a work is made accessible to the University of Michigan community.

HathiTrust has argued that the complaint assumes that all U.S. works published between 1923 and 1963 are in copyright, but HathiTrust's Copyright Review Management System has reviewed 200,000 such works and has found that over 50% of them are in the public domain. Systematic digitization of these works is intended to support HathiTrust's mission of sharing the record of human knowledge by making these public domain works available.

However, the benefits of the Orphan Works Project are unlikely to hold sway with the court. Judge Denny Chin rejected the ASA in large part because of the Book Rights Registry, which also addressed the problem of orphan works. "The questions of who should be entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters more appropriately decided by Congress than through an agreement among private, self-interested parties." Further, he pointed out that Congress has made many efforts to address the issue of orphan works.

Perhaps it is a bit optimistic to say that the legislature is handling the matter. Orphan works legislation was first introduced in 2006, and then again in April 2008. The Shawn Bentley Orphan Works Act passed the Senate in September 2008 and was referred to the House Committee on the Judiciary, but no House vote was ever taken, the Bill never came into law, and the 110th Congress ended. No new orphan works legislation has been introduced before Congress.

Google and HathiTrust could make great strides towards a solution to the problem of orphan works, without the help of Congress. In so doing, they might violate copyrights as well as gain control over a vast array of unclaimed works. This is part of the antitrust concern evinced in the initial complaint against Google.

At the latest hearing for the Google Books case on September 15th, the parties said they would continue to negotiate an agreement (http://www.nytimes.com/2011/09/16/business/media/judge-sets-schedule-in-case-over-googles-digital-library.html). According to one New York Times reporter, the negotiations have been "damped" by news of the latest lawsuit. On September 19th, HathiTrust backed down and announced that it would suspend the release of over 100 orphan works whose copyright owners cannot be found. (http://online.wsj.com/article/AP5ab1b6b427af4629908cd835590c1feb.html).

Update on Google Books Settlement

By Mary Rasenberger

In a new twist in the Google Books case, it appears that the publishers and authors may be going separate ways. The parties had a conference with Judge Denny Chin this past Thursday September 15th. Judge Chin had admonished the parties in the last conference on July 20th to hasten their settlement discussion and to come prepared on September 15th with a new settlement agreement, and if no settlement could be reached, a discovery and briefing schedule on the merits. From the start of the conference, it was clear that the parties had not come prepared to discuss a new settlement.

Michael Boni, the attorney for the Authors Guild, commenced the conference by proposing a scheduling order that provides for discovery and briefing on Summary Judgment to be completed by the end of July 2012. Judge Chin followed up with the obvious question - whether this meant they had given up on settlement. The parties indicated that settlement discussions will continue as they proceed on the merits. Bruce Keller for the publishers and Daralyn Durie for Google stated that they were close to settlement. Keller explained that the publishers believed they had made sufficient movement forward that they did not think they would need to rely on the schedule. Durie agreed that it "appears to be probable" that they will reach a settlement. The Authors Guild did not appear as optimistic about settling, although Boni conceded that the authors would like to "continue a dialogue."

Boni and Keller also indicated that they may want to separate their cases (by filing amendments to the joint third Amended Complaint); further suggesting that the publishers may settle without the authors and the Authors Guild might proceed alone with the suit on the merits. When asked if Google was agreeable to the proposed schedule, Durie stated that Google would like to see the proposed amendments to the complaint before it agrees to the schedule.

Judge Chin agreed to the scheduling order proposed by the Authors Guild. Noting that the case would then continue for almost another year, he called the schedule "generous," but agreed with Keller that the parties may need extra room in the schedule to continue settlement discussions. The schedule will have discovery completed by the end of May and all briefs on summary judgment motions submitted by the end of July 2012. Judge Chin noted that he would pick a day for a hearing, but that they will have to find another courtroom, as he will finally lose his in the Southern District (having been promoted to the Second Circuit over a year ago).

Judge Chin seemed anxious to see a settlement in the case and asked if there was anything the court could do to help the parties reach a settlement, offering first to obtain a mediator, which was rejected by Google as unhelpful, since the discussions had thus far been among principals. He then discussed finding a new magistrate judge to assist with settlement if needed, and identified Judge James Cott, the magistrate assigned to the parallel photographers' case against Google. (Judge Chin reported that Judge Eaton, the magistrate judge originally assigned to the case, has since retired - the case was originally filed in 2005 after all.) The Authors Guild is amenable to such assistance, according to Boni, who did not think the discussions necessarily had to continue between principals of the parties, rather than the attorneys.

More GBS Litigation: Authors Guild et al. v. HathiTrust et al.

Another indication of a possible rift between the publishers and authors regarding Google Books is the complaint filed last Monday in the Southern District of New York (see: http://authorsguild.org/advocacy/articles/authors-3.attachment/authors-v-hathitrust-9834/Authors%20v.%20HathiTrust%20Complaint.pdf ) by the Authors Guild --without the publishers--against the principal libraries participating in the Google Books Search case, only several days before the awaited conference in the Google Books case. The Authors Guild, together with authors' groups from Australia, Quebec, the U.K. and a small group of authors, sued HathiTrust and 5 state universities whose libraries are participating in HathiTrust's digital repository, 4 of which have also joined a consortium of HathiTrust members called the HathiTrust Orphan Works Project.

Although key participants in the Google Books Search project (as Google scanned books in the libraries' collections to create the Google Books Search database), the libraries were not part of the Google Books litigation and only participated in the periphery of settlement discussions. Pursuant to separate agreements with Google, each participating library had agreed to let Google scan the books in its library and Google in return agreed to provide the library digital copies of the scans to use for its own purposes. The HathiTrust, a partnership of more than 50 research institutions, was formed to combine the partners' digital libraries, which are comprised largely of the Google scans delivered to the libraries thus far, to create a shared digital repository. According the authors' complaint, approximately 73% of the 10 million volumes already in this digital collection, called the HathiTrust Digital Library, are protected by copyright.

Users can search bibliographic data of the scanned works in the HathiTrust Digital Library and can search the texts for the number of times a search term appears. In addition, full access to works identified as "orphaned" is provided to authorized users. The Orphan Works Project was initiated by HathiTrust to identify those works for which a copyright owner could not be found and to make those works available online through the HathiTrust Digital Library. Using a modified version of the "reasonable search" requirement outlined in the several iterations of the never-enacted orphan works legislation, the Orphan Works Project, led by the University of Michigan library, is researching the ownership status of various works. According to the HathiTrust's protocol, if a copyright owner cannot be identified through a specified multi-step diligence process, the HathiTrust will then post the work on a HathiTrust Orphan Candidates webpage for 90 days. If no copyright owner comes forward during that 90 day period, the work is made available for "full" view to authenticated users of the universities' libraries, including students, faculty, other staff and possibly alumni.

The complaint alleges infringement of the reproduction right by virtue of the various copies of copyrighted works in the HathiTrust Digital Library made in the course of scanning, ingesting, storing and preserving digital copies, providing back-ups and access to bibliographic data or search and, in the case of the designated orphans, full viewing. In addition, the complaint alleges unauthorized distribution, presumably of the designated "orphans." The authors also noted concerns with the security employed by the HathiTrust against further copying and distribution of the works in the HathiTrust repository. Wherein the proposed Google Books Settlement, rejected by Judge Chin, the authors and publishers had negotiated an agreement with Google to provide specific robust security measures; it is not clear how the works will be protected in this repository.

Oddly, the complaint also alleges violations of § 108 of the Copyright Act, which contains specific exceptions applicable to libraries and archives, including for preservation of unpublished works, making replacement copies of damaged or destroyed published works and for certain inter-library loans. One condition to the preservation and replacement exceptions is that any digital copies not be made available outside of the premises of the library or archive. While the activities of the HathiTrust alleged in the compliant are certainly outside the scope of what is permitted under § 108, it is difficult to see how those acts are "violations" of § 108 rather than violations of the § 106 reproduction, distribution and display rights that fail to qualify under the § 108 exceptions. (Section 108 sets out exceptions, not a basis for a separate cause of action.) It is all the more peculiar in that § 108(f)(4) expressly states that nothing in § 108 "in any way affects the right of fair use as provided by section 107." Fair use, of course, is the defense the HathiTrust and participating libraries are relying upon (in addition to the fact they are each state entities and so protected from damages by sovereign immunity).

In the meantime, according to the Authors Guild, it, its members, and others have identified or found leads to the owners of the literary property rights to 50 of the 167 or so books that the Orphan Books Project had already identified as orphaned and was ready to be made available next month. In a statement (located at: http://www.lib.umich.edu/news/u-m-library-statement-orphan-works-project) released last Friday by the University of Michigan Library, the Library announced the temporary suspension of the Orphan Works project due to errors that had been discovered, stating: "The close and welcome scrutiny of the list of potential orphan works has revealed a number of errors, some of them serious. This tells us that our pilot process is flawed." Michigan promised to re-examine its procedures for identifying orphans, explaining that it has no intention to make available any works that are not in fact orphaned. In the statement, the library explained: "The widespread dissemination of the list [on the HathiTrust Orphan Candidates webpage] has had the intended effect: rights holders have been identified, which is in fact the project's primary goal. And as a result of the design of our process, our mistakes have not resulted in the exposure of even one page of in-copyright material."

Stay tuned...

*Submitted by Mary Rasenberger, Partner, Cowan DeBaets Abrahams and Sheppard.

**Any views expressed in this blog are personal views of the author and not of Cowan DeBaets or any client of the firm.

September 21, 2011

Richard Prince's Appeal Allowed to Go Forward

By Judith B. Bass

The Second Circuit Court of Appeals last week refused to dismiss appropriation artist Richard Prince's appeal of the district court ruling that found that Prince had violated the copyright of photographer Patrick Cariou in using Cariou's photographs in a series of collages and paintings known as "Canal Zone."

In March, Judge Deborah A. Batts of the United States District Court for the Southern District of New York found that Prince's use of 41 of Cariou's photographs was not allowable as a fair use. Specifically, she held that Prince's use was not transformative in that it did not comment on the original works. The court then ordered all unsold copies of Prince's "Canal Zone" paintings to be impounded or destroyed, as the plaintiff determined. The defendants were also required to notify current or future owners of the paintings that they could not "lawfully be displayed."

In refusing to grant Cariou's motion to dismiss Prince's appeal, the Second Circuit stated that the questions raised by the case remained "a continuing controversy capable of redress by this Court." See http://artsbeat.blogs.nytimes.com/2011/09/15/court-allows-richard-prince-to-appeal-copyright-decision/.

October 5, 2011

U.S. Supreme Court Denies Certiorari in ASCAP v. United States


By Brendan Mee

On Monday October 3rd, the Supreme Court denied certiorari in American Society of Composers, Authors and Publishers (ASCAP) v. United States, ending ASCAP's bid to have digital downloads over the Internet characterized as "performances" under the Copyright Act. (American Society of Composers, Authors and Publishers (ASCAP) v. United States, 627 F.3d 64 (2d Cir. 2010), cert. denied, 565 U.S. __, (U.S. Oct. 3, 2011)(No. 10-1337).)

Under an antitrust consent decree from 1941, the Southern District of New York has rate-setting authority to determine what ASCAP can charge users for a blanket license to publicly perform compositions from the ASCAP catalog. Thus, the United States was the defendant in the appeal, while the underlying dispute was between Yahoo! and Real Networks (the Internet providers), and ASCAP, over the terms of the blanket license.

The question presented in the cert Petition was whether a music download constitutes a "performance" for which ASCAP was owed a royalty under Section 106(4) of the Copyright Act. The Second Circuit made a sharp distinction between music downloads and music streaming, and agreed with the district court that the plain meaning of the Copyright Act could only be read to imply that a "performance" requires a "contemporaneously perceptible performance." Therefore, the Second Circuit did not consider a music download to be a "performance."

Ted Olsen presented the case for ASCAP, which had its own "plain meaning" argument, relying to some extent on "neighboring provisions" of the Act, rather than on the Act's definition of "perform," the latter on which the Second Circuit relied heavily to reach its decision. The Petitioner also argued that the Second Circuit's distinction between downloading and streaming would be unworkable in practice as technology developed. Most interestingly, ASCAP argued (along with several amici) that the decision was inconsistent with the United States' obligations under the WIPO Copyright Treaty. ASCAP argued that as a result of the consent decree, the Second Circuit had exclusive jurisdiction over the "vast majority of disputes" regarding public performance rights, and therefore. Further, the Petitioner argued that other appellate courts were unlikely to hear such cases, and the importance of the case at hand warranted resolution on the merits, even in the absence of a circuit split on the issue.

In the Respondent's Brief in Opposition, the United States echoed the Second Circuit's statutory construction. It reiterated that there was no circuit split warranting review by the Supreme Court, and argued that the Second Circuit's application of U.S. law was fully consistent with the United States' obligations under the WIPO Copyright Treaty, which in its view merely required that the acts covered under the Treaty are covered by some exclusive right under U.S. law.

One cannot speculate what prompted the Supreme Court to decline the case. Certainly it was a tough case for the Petitioner in light of the language in the Copyright Act defining "performance;" but the loss for ASCAP was also another hard break for songwriters and composers already badly hurt by technology shifts.

Below are links to the briefs:

Petition for certiorari : http://sblog.s3.amazonaws.com/wp-content/uploads/2011/06/10-1337.pdf

Brief in opposition: http://sblog.s3.amazonaws.com/wp-content/uploads/2011/08/09-26-Composers-BIO.pdf

Amicus brief of Broadcast Music, Inc.: http://sblog.s3.amazonaws.com/wp-content/uploads/2011/08/09-26-Composers-Broadcast-Music.pdf

Amicus brief of Independent Music Publishers et al.: http://sblog.s3.amazonaws.com/wp-content/uploads/2011/08/09-26-Composers-Independent-Music-Publishers.pdf

Amicus brief of Ralph Oman: http://sblog.s3.amazonaws.com/wp-content/uploads/2011/08/09-26-Composers-Ralph-Oman.pdf

Petitioner's reply: http://sblog.s3.amazonaws.com/wp-content/uploads/2011/08/09-26-Composers-Petitioners-reply.pdf

October 6, 2011

Authors Guild Press Release re Hathitrust

U.K. SOCIETY REPRESENTING 50,000 BOOK AUTHORS, ALONG WITH CANADIAN, NORWEGIAN, AND SWEDISH WRITERS' UNIONS, JOINS LITERARY PROPERTY RIGHTS SUIT AGAINST HATHITRUST AND FIVE U.S. UNIVERSITIES

J.R. Salamanca, Author of "Orphaned" Book, Also Enters Lawsuit. Action Seeks to Impound Unauthorized Digital Scans of 7 Million Copyright-Protected Books, Pending Congressional Action.

NEW YORK - The U.K. Authors' Licensing and Collecting Society, the Norwegian Nonfiction Writers and Translators Association, the Swedish Writers Union, The Writers' Union of Canada, and four individual authors are among the new plaintiffs in an amended complaint filed today in Authors Guild v. HathiTrust. Individual authors joining the lawsuit include University of Oslo professor Helge Rønning, Swedish novelist Erik Grundström, and American novelist J. R. Salamanca. The Authors League Fund, a 94-year-old organization supported by Authors Guild members that provides charitable assistance to book authors and dramatists, is also now a plaintiff, as holder of rights of to an "orphaned" book by Gladys Malvern.

The defendant universities have pooled the unauthorized scans of an estimated 7 million copyright-protected books, the rights to which are held by authors worldwide, into an online repository called HathiTrust. In June, the University of Michigan, which oversees HathiTrust, announced plans to permit unlimited downloads by its students and faculty members of "orphaned" books (some consider works whose rights-owners cannot be found after a diligent search to be "orphans"). Michigan devised a set of procedures -- including a protocol for searching for an author and posting the names of "orphan work candidates" at the HathiTrust website for 90 days - to determine whether it would deem a work an "orphan." Several other schools joined the project in August.

Within days of the suit's filing on September 12th, the Authors Guild, its members, and others commenting on its blog had developed strong leads to dozens of authors and estates holding rights to the first 167 works listed as "orphan candidates" at HathiTrust's website. Four living authors were on HathiTrust's list. So were significant literary estates, such as those of Pulitzer Prize winners James Gould Cozzens and Walter Lippmann and the philosopher Sidney Hook. Foreign authors were also on the list, including André Missenard, who died in Paris in August. At least three of the works are still in print. Simple Google searches turned up most of the leads in minutes, including one that led to the author of "The Lost Country," J. R. Salamanca. Under Michigan's protocols, unlimited e-book downloads of Mr. Salamanca's book were scheduled to be made available to an estimated 250,000 students and faculty members on November 8th.

"How is it they couldn't find Jack Salamanca?" asked literary agent John White, who has represented the author for more than ten years. "He's a bestselling novelist, he's lived in suburban Maryland for decades, he's in the University of Maryland's current online catalog as an emeritus professor, and he signed an e-book agreement for "Lilith" four weeks ago. It boggles the mind."

Michigan announced on September 16th that it was suspending, but not ending, its "orphan works" program. Its online servers continue to host an estimated 7 million digitized, copyright-protected books. Millions of those books are believed to be in print, with e-book versions available for many of them.

"You don't just take someone's property," said Mats Söderlund, chairman of the Swedish Writers Union. "If they want a digital book, they should pay for it. If it's not yet available digitally, it probably will be soon. Things are moving very quickly."

"These are major, well-funded U.S. research institutions capable of great things," said Greg Hollingshead, chair of The Writers' Union of Canada. "They could have found most of these authors had they cared to, but it seems they didn't. They just wanted to release e-books for free. They don't take literary property rights seriously, so why should any of us trust their security measures? If they're hacked, and digital files of 40,000 Canadian books are released, how are Canadian authors ever again to receive significant revenues from those works?"

"I've been in this business for decades, but this is one of the craziest things I've ever seen," said Trond Andreassen, president of the Norwegian Nonfiction Writers and Translators Association. "These American universities, with Google's help, decide to digitize and put on their servers thousands of books that were published in Norway. Why didn't they ask? We can find the authors, but those authors have rights, and sometimes the answer might be no."

The Authors' Licensing and Collecting Society, based in London, has licensed secondary uses of its member-authors' works for more than 30 years. "We represent more than 50,000 book authors," said chief executive Owen Atkinson. "On behalf of our members, we negotiate agreements that enable legal access to hundreds of thousands of books, including at least 35,000 books that appear to be on HathiTrust's servers. It concerns us greatly that our members have neither consented to the digitization nor have they any say in how these works might be used in the future."

Although many U.S. universities, including Harvard, Princeton, and Stanford, have participated in Google's library digitization program, most allow Google to scan only books that are in the public domain. Only a few, principally defendants Michigan and California, have allowed Google to scan books protected by copyright. As state-run institutions, both schools are shielded by 11th Amendment sovereign immunity protections from paying damages for copyright infringement.

"Universities are important cultural bastions, valued by all of us," said Scott Turow, president of the Authors Guild, "but they need to play that role thoughtfully. In this case, university defendants are using their immunity from money damages to act as pirates, rather than custodians, of our literary heritage. The massive unauthorized digitization project in which they participated has now imperiled the literary property rights of millions of authors from all over the world. Many of those authors have devoted much of their careers to creating works they hope will have cultural or educational significance. Universities should be at the forefront of safeguarding authors' rights and livelihoods, so their libraries can continue to find many new books worth collecting."

--------------------------------
Feel free to forward, post, or tweet. Here is a short URL for linking: http://tiny.cc/ysawa


The Authors Guild | 31 E 32nd St | Fl 7 | New York, NY 10016 | United States


October 7, 2011

Golan v. Holder Supreme Court Argument

The transcript of oral arguments before the Supreme Court in Golan v. Holder are available at: http://www.supremecourt.gov/oral_arguments/argument_transcripts/10-545.pdf.

October 25, 2011

Sarver v. The Hurt Locker LLC et al.

By Carter Anne McGowan

In 2010, director Kathryn Bigelow's The Hurt Locker nearly swept the major awards at the Oscars, winning Best Picture, Best Director, and Best Original Screenplay. Recently, a lawsuit brought by Jeffrey Sarver, alleging not only that The Hurt Locker wasn't entirely original but was also defamatory and a violation of Sarver's rights to privacy and publicity, was tossed out by the District Court for the Central District, California, under that state's anti-SLAPP (Strategic Lawsuits Against Public Participation) Law.

Jeffrey Sarver serves in the U.S. Army. While serving in Iraq from July 2004-January 2005, he worked as an Explosives Ordinance Disposal (EOD) Technician. In December 2004, journalist Mark Boal was embedded with Sarver's unit. In addition to interviewing Sarver, Sarver's unit, and several other units, Boal photographed and videographed them. When Sarver returned to the U.S., Boal spoke with him again. In August 2005, Boal's article was first published in Playboy and later published as an abridgement in Reader's Digest. In what Sarver alleged was a surprise to him, the article focused entirely on Sarver, instead of on the units with which Boal was embedded.

Boal later wrote the screenplay for The Hurt Locker and also served as a co-producer on the film. The film featured a main character named "Will James," a damaged, antiheroic cowboy of a soldier who lives for danger and flouts the chain of command. When released in 2009, the film contained a disclaimer that it was a work of fiction. In March 2010, Sarver sued Boal, Bigelow, and the production companies behind the film, alleging: (1) a violation of his right to publicity due to misappropriation; (2) false light invasion of privacy; (3) defamation; (4) breach of contract; (5) intentional infliction of emotional distress; (6) actual/intentional fraud; (7) constructive fraud/negligent misrepresentation. The defendants filed a Motion to Strike the complaint under California's anti-SLAPP statute, Cal. Code. Civ. Proc. §425.16, and, last week, Judge Jacqueline Nguyen held in their favor and struck the complaint in its entirety.

The California anti-SLAPP provision, which shall be "construed broadly", §425.16(a), provides: "A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." §425.16(b)(1).

Therefore, a defendant must initially show that those acts alleged to be violative are (a) First Amendment protected acts (rights of petition or free speech) and (b) made in connection with a "public issue." The Sarver court easily found the The Hurt Locker to fall under the First Amendment's protection, citing Burstyn v. Wilson (343 U.S. 495 (1952)), in finding that "Motion Pictures are a significant medium for the communication of ideas" (Burstyn, 343 U.S. at 501), and therefore protected speech.

With regard to the second prong of the defendants' burden - that of a public issue - California courts have taken to heart the legislative exhortation to construe the statute broadly. The court, in finding that the alleged portrayal of Sarver is related to an issue in the public interest, relied upon Tankin v. CBS Broadcasting, Inc. (193 Cal. App 4th 133, 144 (2011)), which stated, "an issue of public interest...is any issue in which the public is interested. In other words, the issue need not be 'significant' to be protected by the anti-SLAPP statute." The Sarver court then went on to list several aspects of Sarver's story that made it to be "of public interest": (1) Sarver's service in the Iraq War; (2) the importance of EOD Technicians in the War; (3) the danger of Sarver's job; and (4) "Sarver's claim that he disarmed more IED's than any single team." (Sarver at 3.)

Once the court found that the defendants had met both prongs of their burden under anti-SLAPP, the burden of proof shifted to plaintiff Sarver to prove that the facts of each cause of action, if believed by the fact-trier, would support a judgment as a matter of law in favor of the plaintiff. The second half of anti-SLAPP motions are, in this way, similar to summary judgment motions.

In short order, the court struck down each of Sarver's causes of action as failing to establish the necessary prima facie showing necessary for a judgment as a matter of law:

Right of Publicity/Misappropriation. Relying on the common law definition of misappropriation, and California's willingness to extend misappropriation claims to non-celebrity plaintiffs, the court nevertheless found that, pursuant to the "transformative use" defense adopted by the California Supreme Court in Comedy III Productions, Inc. v. Gary Saderup, Inc. (25 Cal. 4th 387 (2001)), the defendants were protected by their First Amendment rights, as The Hurt Locker contained "significant transformative elements", such as personal differences between Sarver and the Will James character in the film, the dialogue in the film, and the direction of the film. Furthermore, "the value of The Hurt Locker unquestionably derived from the creativity, and skill, of the writers, directors, and producers...whatever recognition or fame Plaintiff may have achieved, it had little to do with the success of the movie. Thus, Plaintiff's misappropriation claim is banned by the First Amendment as a matter of law." (Sarver at 15.)

Right of Privacy/False Light: Successful false light claims must prove that not only must the depictions of the harmed individual be false, but they also must be highly offensive to a reasonable person. In less than one paragraph of analysis, the court did away with this claim as (1) redundant to the defamation claim and (2) unsupportable, as, in the court's opinion, "Will James" is presented as a war hero, which would not be a highly offensive portrayal to a reasonable person.

Breach of Contract: Sarver alleged that he was a third party beneficiary of the agreement between Boal and the U.S. Department of Defense, and that Boal "breached the contract by reporting about Plaintiff's personal life." (Sarver at 19.) Unfortunately, Sarver presented no evidence of such a contract.

Intentional Infliction of Emotional Distress: In another brief dismissal, the court did not even reach the second and third requirements for success under this cause of action, holding that the defendants' actions were not "extreme and outrageous" under the first requirement for intentional infliction of emotional distress, as there was nothing extreme or outrageous about writing a screenplay based on reporting (although, notes this blogger, the court earlier in its decision relied on the disclaimer alleging the film to be fictional) and that it was not outrageous to use a fictional name for a character, even if it was based on Sarver.

Fraud/Negligent Misrepresentation: The court bundled these last claims together, holding that Sarver did not submit any evidence that Boal misrepresented his intent to write about EOD Techs, and that he did not "obfuscate[] the fact that he was writing a screenplay based on the Playboy article..." (Sarver at 22.)

Finally, as if to add insult to (non)injury, the court awarded attorney's fees to the defendants, as defendants who succeed in an anti-SLAPP special Motion to Strike are entitled to reimbursement of attorneys' fees. Although the court held that Sarver's rights were not violated in The Hurt Locker, it certainly put him in one.

Yet there is something about this case that nags a bit at the conscience. The speed and lack of analysis with which the court did away with Sarver's claims, combined with its reliance on fairly flimsy arguments like disclaimers and character names, combined with its statements later in the decision that the film was based on the Playboy article, leave questions as to how thoroughly the court analyzed the issue before it.

Also, is this the sort of case to which we want anti-SLAPP motions should apply? In California, anti-SLAPP Motions to Strike immediately stay discovery. This case seems to be a case where discovery is warranted. It hardly seemed to be a "strategic lawsuit" of the type we saw during the civil rights movement, designed to chill free speech. Despite the gung-ho language of the California anti-SLAPP statute, this case may be one in which a statute meant to be construed broadly was indeed construed too broadly.

November 10, 2011

The Next Chapter in CBS Corp. v FCC

By Nili Wexler

CBS won another battle with the Federal Communications Commission (FCC) regarding a 2004 indecency claim. A panel of three judges in the Third Circuit Court of Appeals ruled last week that the fine imposed on CBS by the FCC for the infamous Janet Jackson "wardrobe malfunction" at the 2004 Super Bowl was inappropriate. (CBS Corp. v. F.C.C., No. 06-375 (3rd Cir. Nov. 2, 2011))

During the 2004 Super Bowl halftime performance by Justin Timberlake and Janet Jackson, Mr. Timberlake pulled down a part of Ms. Jackson's costume, which revealed a portion of her breast for nine-sixteenths of a second. In response to the incident, the FCC fined each of 20 CBS-owned television stations with the maximum penalty of $27,500, resulting in a cumulative fine of $550,000. (http://www.cbsnews.com/stories/2004/07/01/entertainment/main626925.shtml)
CBS appealed the FCC decision, and in 2008 the Third Circuit ruled in favor of CBS in F.C.C v. CBS Corp
. (535 F.3d 167 (3rd Cir. 2008)) Subsequently, the Supreme Court ordered a review of the case after it found in an unrelated matter that the FCC was permitted to exercise its enforcement powers to regulate unscripted indecency. (http://idolator.com/6065022/janet-jackson-cbs-super-bowl-wardrobe-malfunction-appeals-case)

The Third Circuit Court's Decision

The court based its decision on prior FCC rulings that were incompatible with the FCC's decision regarding the Super Bowl incident, and ruled that the action against CBS was an inappropriate deviation from the FCC's own policies. "We again set forth our reasoning and conclusion that the FCC failed to acknowledge that its order in this case reflected a policy change and improperly imposed a penalty on CBS for violating a previously unannounced policy." The court claimed that the FCC had acted "arbitrarily and capriciously" in doing so. (CBS Corp. v. F.C.C., No. 06-375 (3rd Cir. Nov. 2, 2011))

Reactions to the Decision

In reaction to the Third Circuit's decision, a CBS spokesman commented, "We are gratified that once again the court has ruled in our favor. We are hopeful that this will help lead the FCC to return to the policy of restrained indecency enforcement it followed for decades." (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/11/cbs-wins-again-over-fcc-in-janet-jackson-case.html)

An FCC spokesman who was disappointed with the ruling commented that the FCC would continue to "use all of the authority at its disposal to ensure that the nation's broadcasters fulfill the public interest responsibilities that accompany their use of the public airwaves." (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/11/cbs-wins-again-over-fcc-in-janet-jackson-case.html). The FCC is reviewing whether it will appeal the ruling, and if so whether it will appeal to the Third Circuit or the Supreme Court.

Family advocacy groups were outraged over the decision, calling it a "sucker punch to families everywhere" and asking, "[h]ow can nudity and a striptease in front of ninety million unsuspecting TV viewers not qualify as indecency?" (http://www.cnn.com/2011/11/02/justice/cbs-wardrobe-malfunction/)

Constitutionality Issues in FCC Enforcement

The decision in F.C.C. v. CBS hinged specifically on the FCC's ruling from an administrative law perspective, and did not address whether the FCC's enforcement policy was unconstitutional.

However, in another FCC case involving Fox Television (Fox), the Second Circuit questioned the constitutionality of the FCC's enforcement policies. The instances at issue involved two live broadcasts of Fox's Billboard Music awards. In 2002, musician Cher used profanity while accepting an award, and in 2003 Nicole Richie uttered profanities while presenting an award. The FCC issued notices of liability for indecency to the network, though it levied no fines. (http://lawprofessors.typepad.com/firstamendment/2008/03/cert-granted-fc.html) The appeals court ruled that the FCC's new policy against "fleeting expletives" was "arbitrary and capricious" for "failing to articulate a reasoned basis for its change in policy" and vacated the FCC's order. (Fox Television Stations, Inc. v. F.C.C., 489 F.3d 444 (2nd Cir. 2007))

The FCC appealed the Second Circuit's decision, and in June of this year the Supreme Court agreed to hear the case. It is expected to rule on the issue in 2012. Justice Sotomayor, who formerly served on the Second Circuit, has recused herself from the hearing. (http://www.nytimes.com/2011/06/28/business/media/28fcc.html?_r=1) The Supreme Court will limit its consideration to "whether the Federal Communications Commission's current indecency enforcement regime violates the First or Fifth Amendment to the United States Constitution." (F.C.C. v. Fox Television Stations, Inc., 613 F.3d 317 (2nd Cir. 2007), cert. granted, 79 U.S.L.W. 3629 (U.S. June 27, 2011) (No.10-1293))


The Demise of Righthaven Litigations May Finally Have Arrived

By Joel L. Hecker

Most of you are probably familiar with the saga of the litigations brought by Righthaven, LLC, a Nevada limited liability company wherein Righthaven filed in excess of 250 lawsuits for copyright infringement with many of them being brought in the United States District Court, District of Nevada.

The business model for Righthaven was to acquire certain rights from its affiliate, Stephens Media, LLC, which owns the Las Vegas Review-Journal, a newspaper located in Nevada. Righthaven then would basically commence copyright infringement litigation against website owners and others, accusing them of copyright infringement in connection with alleged improper uses of the news articles first appearing in the Las Vegas Review-Journal.

The lawsuits were usually commenced without any previous contact or attempt to negotiate a cease and desist of the allegedly infringing material. Many of the cases were immediately settled because of the cost to defendants in opposing them. This business model has been called nothing less than a blatant money-making venture and not a legitimate attempt at copyright protection. It has acquired the perhaps unflattering nickname of "copyright troll suits".

The judges in the District Court of Nevada in effect finally put a stop to Righthaven's activities by first questioning the legitimacy of Righthaven's claim of copyright ownership and by ruling in the few cases that were actually litigated that the uses in such cases were in fact fair uses.

On November 1, 2011, in what may be one of the final acts in this Righthaven saga, pursuant to an order in Righthaven LLC v. Wayne Hoehn, case number 2:11-cv-00050, of the District Court of Nevada, the clerk of the court issued a writ of execution against Righthaven in the sum of $63,720.80. This writ was issued on a motion of Mr. Hoehn, who successfully defended the case resulting in a decision that use of a newspaper article in his blog was, in fact, a fair use of the material and, in addition and perhaps more important, that Righthaven never owned the underlying copyright in the first place and therefore lacked standing to bring the action.

In another case in Nevada which Righthaven lost, the court assessed a substantial amount against Righthaven for legal fees incurred by the defendant.

All in all, with Righthaven's losing any sense of legitimacy for its business model, judicial decisions holding that it does not have standing to bring these "troll" actions, and the substantial judgments being entered against it, we have undoubtedly seen the end of these copyright trolls.


Joel L. Hecker, Of Counsel to Russo & Burke, 600 Third Avenue, New York, NY 10016, practices in every aspect of photography and visual arts law, including copyright, licensing, publishing, contracts, privacy rights, and other intellectual property issues. He can be reached at (212) 557-9600, website www.RussoandBurke.com, or via email: HeckerEsq@aol.com.

November 19, 2011

Why the Music Industry Isn't Ready for Redigi

By Kyler McGillicuddy

Redigi has been receiving a lot of attention by both the music industry in general and the Recording Industry Association of America (RIAA). The reason for this focus is the type of business Redigi is attempting to create. Redigi is a web based used digital music store. Though it has come up with a unique business plan for digital music, I don't believe that the courts should allow it to continue operating due to the potential market results. To really get a handle on the problem at hand, please bear with me as I explain a bit more.

Redigi works by requiring a user to download its program, which then searches the user's music library for acceptable music to sell. Acceptable music is any that has been legally downloaded, and therefore does not include tracks copied from a CD. Once it has indicated a music track to sell, the program uploads the copy onto Ridigi's website and deletes the corresponding file on the user's computer. Once uploaded, the track is assigned a number and is sold. Redigi does not sell more than 1 track per track uploaded. It works just like a retail store. For example, if 3 people upload the same track, then there are 3 of that particular track for sale. Once 3 people purchase the tracks, that particular track is no longer available until someone else uploads another.

In traditional physical music sales this would not be cause for much concern, passing legal muster by relying on the first sale doctrine of copyright law. The first sale doctrine allows owners of copyrighted material bought legally from the copyright holder to resell without infringement. If one wants to sell a used CD, one simply has to hand over the CD in exchange for money. Although this seems like this would be a fairly simple translation to a used digital music store, but there are some quirks of electronics that make it more complicated than first appears.

The problem with this transaction in the digital realm is that Redigi has to make a copy of the track at least twice; once when it removes it from the computer, and again when the track is sold to someone else. This is the legal basis for the cease and desist complaint brought by the RIAA against Redigi. The way I see it, the argument hinges on whether or not Redigi can copy music to take advantage of the first sale doctrine.

For the time being, I'm going to assume that all of the programming involved in Redigi's business plan works perfectly. This means that no pirated files are allowed, no copying tracks from CD's, and the original is deleted once uploaded. With those assumptions in mind, how would a decision allowing Redigi to continue effect the market and copyright?

First, consider the market. Redigi pays $.32 per track and sells each as low as $.59, considerably lower than iTunes. As a used digital track is just as good as a new one, basic economics would tell us that an identical good offered at a lower price will shift demand towards the cheaper one, so the market for new music will decline. There is a potential for an upswing to the market if people are more willing to purchase new music knowing that they can resell it, but of music users, I highly doubt the approximate $.30 difference in cost is restricting any current purchases.

Second, allowing Redigi to continue would hurt artists. Artists rely on sales of new music to survive. Artists do not get paid for used music sales. Used music sales would also affect artist contracts, as many contain escalation royalty provisions. Escalation provisions increase the percentage of royalty the artists receive as their sales figures increase. A used digital market would reduce the number of new tracks, and correspondingly reduce artist earning potential.

Finally, what about copyright? The courts would have to stretch copyright law to allow copying of digital music for resale. That places the digital copyright arena on an interesting slope. Just how much copying is allowed? What about movies? Will knowing there is a profit to be made from selling used music increase infringing copying? Are there other circumstances where copying to reach the first sale right is not infringing? The decision would have to alter copyright and the market to favor an outcome for Redigi. So let us consider what would happen should Redigi lose the battle.

First, the market would not change. The digital track sales will continue to increase and physical album sales will remain on a steep decline, and new music sales would continue to affect artist contracts. Second, copyright would also be unchanged. No change to the law is needed in order to find Redigi as an infringer, since the necessary copying it employs to upload and sell the track is illegal under the Copyright Act.

Redigi has come up with a novel business plan in the realm of digital music, and should be commended for the achievement. However, the drastic changes necessary to the marketplace and copyright law to accommodate its business plan are too destructive to allow.

December 12, 2011

Jesse Eisenberg Sues for the Misappropriation of his Image in the Film Camp Hell

By Geisa Balla (geisa.balla@gmail.com)

"No good deed goes unpunished" begins the complaint filed by Jesse Eisenberg in the Superior Court of the State of California on November 22, 2011. In this lawsuit Jesse Eisenberg, an actor who starred in the horror film Zombieland, and best known for Academy-nominated performance in The Social Network, alleges that defendants Lions Game Entertainment Inc., and Grindstone Entertainment Inc., capitalized on Eisenberg's fame and public persona by falsely advertising the film Camp Hell as a film starring Jesse Eisenberg.

In this complaint Mr. Eisenberg alleges that he appeared in the low budget film Camp Hell as a favor to a friend. The plot of Camp Hell centers on teenagers who travel to a Christian Bible Camp led by a charismatic priest played by Bruce Davison. In the film, the Bible Camp turns into a nightmare when it becomes possessed by a demonic presence. The two main characters in the film are teenagers who are played by Will Denton and Connor Paolo. Mr. Eisenberg was approached by friends who were producing Camp Hell, and was asked to appear in a small role. He worked on the film for one day and appears on screen for five minutes, primarily in flashbacks of Bruce Davison's character. He accepted only $3,000 for this role, the SAG minimum compensation, and his name appears last in the list of cast credits.

The film was released on DVD on August 9, 2011. The cover of the DVD features a large photo of Mr. Eisenberg's face, and Mr. Eisenberg's name in large letters appears above the title of the film. The names or the photos of the three lead actors of the film do not appear on the cover (http://www.bloodygoodhorror.com/bgh/reviews/08/22/2011/camp-hell-camp-hope).

According to the complaint, Mr. Eisenberg was informed that his image would be featured on the cover of the DVD prior to its release. He objected to this use of his image and demanded that the defendants cease and desist from using it. However, the ddefendants refused to do so, and admitted to Mr. Eisenberg their intent to exploit his fame by prominently featuring him as the star of the film, hoping to lure in young viewers familiar with Mr. Eisenberg's work.

Mr. Eisenberg is seeking $3 million in damages. In his misappropriation of right of publicity claim, Mr. Eisenberg alleges that the defendants' unauthorized use of his image and their fraudulent and misleading advertising for Camp Hell has damaged his name, likeness and goodwill. In his quantum meruit claim, he states that he provided valuable services to the defendants by performing in the film and being featured in its advertising. The complaint also brings a claim for unfair business practices, alleging that the defendants have received ill-gotten results from their fraudulent advertising.

To view the full complaint, see http://images.eonline.com/static/news/pdf/eisenberg.pdf.

January 9, 2012

UMG v. Veoh Makes the DMCA Safe Harbor Even Safer. What Will the 2d Circuit Do in Viacom?

By Andrew Berger

The safe harbor created by Section 512(c) of the Digital Millennium Copyright Act (DMCA) may now be an Internet service provider's Bali Hai.

That's because on December 20, 2011, the Ninth Circuit held in UMG v. Veoh (www.ipinbrief.com/wp-content/uploads/2011/12/DecisionUMGvVeoh-ninth-circuit.pdf) that a webhost will only lose its safe harbor immunity under this section if it has specific knowledge of infringing content on its site and fails to take down that content. Because UMG failed to demonstrate that Veoh had specific knowledge, the Ninth Circuit affirmed the district court's grant of summary judgment dismissing the action against Veoh. (http://www.ipinbrief.com/wp-content/uploads/2011/12/veoh-district-court-pdf.txt)

Is this opinion a death knell for Viacom's pending appeal in the 2d Circuit? I don't think so. But first here is some background and analysis of Veoh.

The Safe Harbor at Issue in Veoh and Viacom

Section § 512 of the DMCA creates four statutory "safe harbors" to help Internet service providers ("ISPs") predict and manage their legal exposure to copyright infringement. The safe harbor at issue in Veoh and Viacom is at § 512(c), dealing with storage of content initiated by a user.

The section shields ISPs from monetary liability for hosting copyright infringing material on their sites if they either:
(a) have no "actual knowledge that the material or an activity using the material is infringing" and (b) have no "aware[ness] of facts or circumstances from which infringing activity is apparent" (17 U.S.C. § 512(c)(1)(A)(i) & (ii)) or
(c) expeditiously remove infringing material which they know or are aware of upon receipt of a DMCA-compliant take-down notice (17 U.S.C. § 512(c)(1)(A)(iii)).
Courts refer to the two knowledge standards as actual and red-flag knowledge. The Ninth Circuit held that Veoh lacked either actual or red-flag knowledge.

UMG Fails To Demonstrate that Veoh Had Actual Knowledge

UMG inexplicably chose to forgo what the Ninth Circuit labeled "as the most powerful evidence of a service provider's [actual] knowledge"--take down notices. UMG never advised Veoh of a single infringement before it filed its action and then failed to identify any infringing videos until Veoh moved to compel that information on the eve of the close of discovery. Veoh's motion is available at http://www.ipinbrief.com/wp-content/uploads/2011/12/veoh-motion-compel-list-infr4ing.pdf. UMG chose to rely on takedown notices sent by the Recording Industry Association of America ("RIAA"); but the notices referred only to the names of the songs and never mentioned UMG.

UMG instead argued before the Ninth Circuit that Veoh knew the music videos it hosted were infringing because Veoh never licensed any of them from the 4 major music companies. But the district court found, and the circuit court agreed, that Veoh had "arrangements" "with major copyright holders, such as Sony/BMG" to display their music videos.

UMG also argued that Veoh must have had actual knowledge of the presence of infringing videos on its system given its general knowledge that its service could be used to share unauthorized content. The Ninth Circuit again disagreed stating that, if merely hosting material that falls within a category of content capable of copyright protection, with the general knowledge that one's services could be used to share unauthorized copies of copyrighted material, was sufficient to impute knowledge to service providers, the § 512(c) safe harbor would be "a dead letter."

UMG Also Fails to Show that Veoh Had Red Flag Knowledge

UMG fared no better in its argument that Veoh had red flag knowledge. The circuit court rejected UMG's assertion that Veoh's purchase of Google adwords containing the names of some of UMG's artists demonstrated Veoh's knowledge of infringing activity. The Ninth Circuit stated that artists are not always in exclusive relationships with recording companies and "so just because UMG owns the copyright to some of Brittany Spears songs does not mean it owns the copyright for all" of them.

UMG also argued that Veoh should have used search and indexing tools to locate and remove any other content by the artists identified in the RIAA notices. But the Ninth Circuit stated that § 512(m) of the DMCA did not impose investigative obligations on ISP. UMG finally pointed to news articles exposing the availability of copyrighted materials on Veoh. The appellate court was not persuaded stating that, if Veoh's awareness of these news reports "was enough to remove a service provides from DMCA safe harbor eligibility, the notice and takedown procedures would make little sense and the safe harbors would be effectively nullified."

The Ninth Circuit did suggest that Veoh might have gained red flag knowledge if third party users had notified it of "specific particular infringing material" on the Veoh site. In that instance Veoh would then lose its safe harbor immunity if it failed to expeditiously take down the infringing material.

Webhosts May Remain Passive But Still Avoid Liability

The Ninth Circuit's opinion thus places the burden of policing copyright infringement on the owners of the copyrighted material. Content owners must constantly monitor the entire and ever-changing repertoire of every webhosting site on the Internet, in every file format, to locate infringing content. That is a burden that many individual authors cannot sustain.

Although webhosts are better able with advances in filtering technology to automatically identify and block materials as they are loaded, Veoh allows webhosts to remain passive and abstain from taking any affirmative measures to protect against infringement.

This result seems counter intuitive. If a mall owner knows from press and police reports of criminal activity on its property, would the owner still be immune from liability if it failed to investigate and at least attempted to work with law enforcement to end that criminal activity? Yet Veoh holds that ISPs need only quickly respond to takedown notices to avoid liability.

Should the Interests of Copyright Holders Be Policed by Third Parties?

Equally problematic is the Ninth Circuit's suggestion that a third party user's notice of infringement could act as a red flag under §512 (c)(1)(A)(ii). How will a third party user who clicks onto a webhost know that the music video she is enjoying contains infringing content? License agreements between webhosts and music companies are not public information. Even absent a license, the music may be protected by fair use. Will Veoh create a regime where the interests of copyright holders on websites are policed by third party trolls? The potential for third-party abuse (whether intentional or not) is substantial.

Viacom

Now let's turn to Viacom's pending appeal in the 2d Circuit raising identical issues of actual and red flag knowledge.

YouTube was quick to advise the 2d Circuit of Veoh's victory in the Ninth Circuit. YouTube's post-argument letter re Veoh is available at http://www.ipinbrief.com/wp-content/uploads/2011/12/youtube-post-argument-letter-re-Veoh-decision.pdf.

Some Reasons Why the 2d Circuit May Reverse

Nevertheless, I think there is a reasonable chance that Judge Stanton's thinly-reason decision in favor of YouTube will be reversed. First, Judge Cabranes during the oral argument in Viacom raised five questions of material fact that could have possibly defeated summary judgment. See the New York Law Journal's account of the oral argument at http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202519347558&slreturn=1.

Second, the appellate court following oral argument was apparently troubled by YouTube's argument that specific knowledge of infringement is all that is required for actual and red flag knowledge. The appellate court therefore ordered the parties to provide supplemental briefs on the issue "whether and how the red-flag knowledge provision would apply" if only specific knowledge of infringement triggers a red flag. (http://www.ipinbrief.com/wp-content/uploads/2011/12/viacom-order-from-2d-circuit-directing-letter-briefs-on-red-flag.pdf) The responses from YouTube and Viacom are located at http://www.ipinbrief.com/wp-content/uploads/2011/12/youtube-post-argument-letter-re-Veoh-decision1.pdf and http://www.ipinbrief.com/wp-content/uploads/2011/12/viacom-post-argument-letter-brief.pdf.

Here is what Viacom said:
Because awareness of "infringing activity" requires less specificity than "actual knowledge" of "infringing material," a website operator who "welcome[s]" and is aware of infringing activity on its site - here in the range of 75-80% of views according to YouTube's own analyses - clearly satisfies § 512(c)(1)(A)(ii) even if it avoids knowing most of the specifics. And though operators do not have an independent obligation to monitor their sites for infringement, once they have this kind of awareness of infringing activity they have a duty to act to address the problem under § 512(c)(1)(A)(iii).

I side here with Viacom. The district court, by holding that knowledge of specific infringing clips satisfies the actual and red flag standards, effectively jettisoned the red flag standard. When Congress enacted the two standards of knowledge it must have intended they be different and that the red flag standard be a separate basis for imposing liability on a service provider. Why else have two standards? Further, the legislative history and the face of § 512 (c)(1) indicate that the red flag standard requires something less than actual knowledge of infringement. But the district court in Viacom held both standards require the same specificity. Therefore, if a service provider has red flag knowledge, it also must have actual knowledge. As a result, Judge Stanton read the red flag standard out of the DMCA. The Second Circuit may not do the same.

A third reason why the Second Circuit may reverse is that the district court had determined that YouTube was "not only generally aware of, but welcomed copyright-infringing material being placed on their website," which "enhanced defendants' income."(http://www.ipinbrief.com/wp-content/uploads/2011/12/viacom-youtube-opinion-district-court.pdf) Isn't that enough to at least raise a triable question regarding red flag knowledge? In other words, as I told the Wall Street Journal in its fine article about the pending appeal (http://online.wsj.com/article/SB10001424052748703741004575651041817080912.html? - subscription required), "When you welcome a thief in your house, you probably know he's there."

The copyright industry now awaits the 2nd Circuit; your predictions on what may happen are welcome. My earlier posts on Viacom are on the Viacom litigation home page, located at http://news.viacom.com/.

************************************

This post was originally published on www.ipinbrief.com, an IP blog written by Andrew Berger. Links to the cases referred to above may be found at http://www.ipinbrief.com/umg-v-veoh-makes-the-dmca-safe-harbor-even-safer-what-will-the-2d-circuit-do-in-viacom/.

January 20, 2012

Weekly Issues in the News

By Geisa Balla

On January 18, 2012, more than 10,000 of the world's favorite websites, including then English Wikipedia, Reddit and Google, made their opposition to the Stop Online Piracy Act ("SOPA") and the Protect Intellectual Property Act ("PIPA"). The English Wikipedia blacked out entirely on January 18, 2012, in protest of SOPA and PIPA. As one of the largest and best-coordinated online protests, this media blackout had a lot of people talking, and did in fact seem to change the minds of some of the bill's sponsors. "Earlier this year, [the Protect IP Act] passed the Senate Judiciary Committee unanimously and without controversy," wrote Republican senator Marco Rubio of Florida, a co-sponsor of the bill, on his Facebook page. "Since then, we've heard legitimate concerns about the impact the bill could have on access to the Internet and about a potentially unreasonable expansion of the federal government's power to impact the Internet. Congress should listen and avoid rushing through a bill that could have many unintended consequences."
http://www.nytimes.com/2012/01/19/technology/web-protests-piracy-bill-and-2-key-senators-change-course.html?_r=1

On January 19, 2012, the United States Department of Justice shut down Megaupload.com, one of the most popular file-sharing services on the web. The Department of Justice charged seven individuals and two corporations, Megaupload Limited and Vestor Limited, with running an international organized criminal enterprise, and generating more than $175 million in criminal proceeds and causing more than half a billion dollars in damages to copyright owners. In its press release, the Department of Justice states "This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime."

http://www.justice.gov/opa/pr/2012/January/12-crm-074.html

Five employees filed a class action lawsuit against Forever 21 in the San Francisco Superior Court on January 18, 2012. The employees allege that Forever 21 systematically failed to pay them for hours worked, and denied them meal breaks. Forever 21's loss prevention policy mandates bag searches before employees clock out, and plaintiffs here allege that Forever 21 routinely searched their bags after they clocked out, and failed to pay them for that time.

http://www.huffingtonpost.com/2012/01/18/forever-21-lawsuit-class-action_n_1214359.html?ref=style&ir=Style

Mike Sorrentino, Jersey Shore's "The Situation", has been sued by an apparel company, Serious Pimp, for breach of contract. Serious Pimp and Mr. Sorrentino entered into an agreement whereby Mr. Sorrentino would promote Serious Pimp's line of t-shirts in exchange for a $25,000 advance payment. Serious Pimp now claims that Mr. Sorrentino took the money and failed to comply with his contractual obligations.

http://www.tmz.com/2012/01/13/the-situation-serious-pimp-lawsuit-t-shirts-michael-sorrentino/

Kim Kardashian filed a lawsuit against The Gap in July of 2011, alleging that The Gap created confusion in the marketplace and violated her rights to her name and likeness when it used model Melissa Molinaro in a TV commercial. Ms. Kardashian claimed that The Gap violated her legal rights by using this particular model that looked strikingly similar to Ms. Kardashian. The Gap's defense strategy in its litigation against Kim Kardashian seems to hinge on the value of Ms. Kardashian's reputation and value to her various endorsement deals. The case is now in the discovery stage, and it appears that The Gap is seeking to unveil financial records to reveal Ms. Kardashian's true financial value from her various endorsement deals.

http://www.hollywoodreporter.com/thr-esq/kim-kardashian-gap-reputation-lawsuit-282648

Golan v Holder Supreme Court Decision

Held: Section 514 does not exceed Congress' authority under the Copyright Clause. (a) The text of the Copyright Clause does not exclude application of copyright protection to works in the public domain.

The Supreme Court opinion in Golan v Holder can be found at:

http://www.supremecourt.gov/opinions/11pdf/10-545.pdf

January 21, 2012

Is It Just Me? Federal Magistrate Invalidates Federal Registration for "We Not Me" Trademark

By Gordon M. Daniell

Giving designers and practitioners alike an example of the phrase "say what you mean, and mean what you say," a Federal Magistrate in the Southern District of Oregon granted summary judgment for the Defendants (Adidas, The NBA, The Boston Celtics Basketball Team and Kevin Garnet); voiding an attorney's registered trademark for the phrase "We Not Me" for use on clothing, because the attorney failed to demonstrate a bona fide intent to use the phrase on the all of the goods listed on his application for federal trademark registration. Yet all was not lost for the Plaintiff, as Judge Paul Papak found that the Plaintiff had used the phrase in a trademark sense on hats and t-shirts, and could proceed on this ground.

For those in the Fashion, Apparel and Trademark worlds, the case is useful for two reasons: 1)It serves as a reminder to Trademark practitioners to ask clients about what their intentions are with the marks, and 2) to make clients aware of the dangers of failing to properly account for intended uses. For designers, it gives an excellent guide for claiming rights through use of a company's trademark outside of the garment's label or hang tag.

For Practitioners, a Cautionary Tale

As initially reported in the New York Law Journal (http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202537395046), the case revolves around "Naperville's Idea Man" W. Brand Bobsky, an attorney, real estate broker, and philanthropist in Naperville, IL. (http://www.brandrealtyco.com/about.cfm) Bobsky first developed the phrase "We Not Me" in 2000, and throughout the next several years, took steps to bring the concept to a wide audience. He printed the phrase on lapel pins, key chains, beer cups, and encouraged its use by celebrities, including Regis Philbin and Oprah Winfrey. Bobsky filed for Federal Trademark registration in 2004, under the "INTENT TO USE" ("ITU") section of the Lanham Act, which allows applicants with a bona fide intent to use the mark in commerce on goods or services to file for protection based on that intent. The application claimed an ITU on several types of products initially, but was amended after Bobsky, seeking to enforce his rights in "WE NOT ME", was threatened with a fraud claim by Adidas' Inhouse Counsel. Amended, the claim extended only to hats. He filed a second ITU application, this time including "hats, clothing namely shirts and sandals." He continued to use the mark on hats, as well as on the sleeve of shirts and on sandals.

Judge Papak voided Bobsky's claims to the first application, ab initio because Bobsky could not provide or show through testimony that he intended to use the mark in commerce on all of the goods listed in either of the applications. Citing case-law as well as McCarthy on Trademarks, the court noted that proving intent to use a mark in commerce commonly requires a written "plan of action", and that statements of subjective intent are not sufficient in themselves to prove intent. The court noted further that, without that documentation, the burden shifts to the applicant to show why those documents do not exist. Bobsky could not produce a plan of action, and testified that he thought the list of goods in the first application "came with the territory." The court found further that even though Bobsky had used the mark on hats in the second registration, he could not show that he had intended to use the mark on all of the goods listed. Again turning to Bobsky's testimony, Judge Papak ruled that because the applicant must have a bona fide intent to use the goods on all of the goods or services listed in the application, and Bobsky could not show that he did (and testified even that he did not), the second application was also ruled void ab initio.

This creates a red flag for practitioners filing trademarks on behalf of their clients. Taking the time to consult with qualified Trademark counsel regarding the client's marks and mark strategy will pay dividends should the mark come to litigation. Practitioners should ask the hard questions about whether, how, and on what the client intends to use the mark, and should make sure to counsel the client that he/she/it should retain all business plans, minutes of meetings, and emails, which could later be used to prove intent.

For Designers, the Gift that Keeps on Giving

Clearly, Judge Papak meant his December 29th opinion to be a holiday gift to those in the world of Design and Apparel. The second half of his opinion provides an easy to understand discussion of how a designer may use its logo on clothing as a mark, without its becoming a merely "ornamental design."

Despite the registrations for "We Not Me" having been found void ab initio, the phrase does appear on hats as well as shirts and sandals. Thus, assuming the phrase is used as a trademark on those goods, Bobsky would be able to continue in his claim against Adidas et. al. under the Lanham Act.

The court turned its analysis to whether Bobsky had engaged in "trademark use." Unfortunately, not everything that appears on a label may receive trademark protection. Those rights come from its use to identify the product, as something exclusive of all other products in the market. This type of use must exist in order to find trademark infringement. To make things more complicated, designs may serve as ornamentation, but also as a trademark. Putting a mark or logo on garments that someone else produces can constitute trademark use; and the question of whether or not the mark/logo/design is used as a trademark will be one of fact. There is no specific place where one must put one's logo, and even putting the logo across the front of the garment (see NFL, NCAA, NASCAR, or the U.S. Army, for example) can still create trademark use as long as it identifies the logo's owner. Citing the Trademark Manual of Examining Procedure, Judge Papak noted that "the size, location, dominance and significance of the alleged mark as applied to the goods are all factors which figure prominently in the determination of whether it also serves as an indication of origin".

Bobsky used the phrase in one small spot on the sleeve of his shirts bearing the ® symbol of a registered trademark, and another medium sized logo over the breast. His use on hats was a similar, slightly larger logo relative to the overall size on the rear of the hat, with the logo on the front. Judge Papak found an issue of fact existed as to whether the use in question was enough to constitute "trademark use." The sandals found less success, as the logo was the only ornamentation, and was much larger relative to the size of the sandals, and possessed no ® symbol.

For Designers, this case offers some guidelines of using a logo outside of its common place on a tag buried at the back of a garment. Trademark rights may be had, even if the logo serves a decoration, as long as it also serves to identify the designer's brand. To suggest source, rather than be a nice design, the mark must be kept relatively small, should have an ® or "TM" symbol, and should not be intertwined with a design, or included in a pattern that covers the entire garment. Think of it as putting the tag on the outside or using it like a corporate polo-style shirt. The logo is there, but isn't there for its design qualities.

The case number is CV IO-630-PK.

January 27, 2012

Golan v. Holder: A Victory for Copyright

By Christine A. Pepe

On the heels of Congress' shelving of the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), the Supreme Court's January 18, 2012 Golan v. Holder decision represents a glimmer of hope that protection of copyright is not dead and can co-exist with the First Amendment.

In Golan v. Holder, the petitioners (conductors, musicians, publishers and others who exploited certain works that entered the public domain), challenged the constitutionality of Section 514 of the Uruguay Round Agreements Act (URAA) , which is now codified in the Copyright Act as 17 U.S.C. §§104A, 109. Section 514 offered restored copyright protection to certain categories of works that are protected in their countries of origin but lack protection in the U.S. Many of such works fell into the U.S. public domain due largely to a failure to comply with certain arcane formalities unique to American copyright law as it existed at the time. Section 514 contains some built-in protections to cushion the impact of the restoration on certain reliance parties, e.g., the parties that exploited the works thought to be in the public domain. In broad terms, these protections include a notice requirement, removing liability for use of foreign works prior to the notice of restoration, and allowing reliance parties to continue to use the restored works for one year following notice.

Importantly, Section 514 was enacted in response to a mandate by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) that the U.S. fully comply with its obligations as a member of the Berne Convention. Initially, when the U.S. first became a member of Berne in 1989, Congress adopted a minimalist approach to compliance. For example, despite Berne's instruction that member countries protect foreign works under copyright in the country of origin, U.S. law provided no protection for foreign works that fell into the public domain in the U.S. but remained protected in their countries of origin. Beginning in 1994, however, TRIPS required compliance with Berne under penalty of World Trade Organization (WTO) enforcement. At this time, it became clear that many Berne member countries were outraged at the United States' refusal to grant protection to foreign works that remained protected in their countries of origin. On top of this, several countries balked at protecting U.S. works that remained under copyright in the U.S. but not abroad--until the U.S. reciprocated. It was against this backdrop that Congress passed Section 514.

The Supreme Court rejected petitioners' argument that in removing certain works from the public domain, Congress violated the Copyright Clause's confinement of copyright to a "limited time." Notably, the Court stated: "In aligning the United States with other nations bound by the Berne Convention and thereby according equitable treatment to once disfavored foreign authors, Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights." The Court relied heavily on its decision in Eldred v. Ashcroft, 537 U.S. 186 (2003), where it rejected a similar argument that the Copyright Term Extension Act (CTEA) was unconstitutional. The Court also dismissed petitioners' argument that the public domain was "inviolate," citing several historical examples where Congress protected works once freely available.

The Court also cast aside petitioners' claim that Section 514 fails to "promote the Progress of Science" as required by the Copyright Clause. Petitioners, and Justice Breyer in his dissent, urged that production of new works must always be a precondition to any grant of copyright; because Section 514, they argued, simply restricts the dissemination of old works, it does not promote the progress of science. As it did in Eldred, the Court refused to adopt such a singularly utilitarian view of copyright. The Court emphasized that Section 514 would expand the foreign markets available to U.S. authors, invigorate protection against piracy of U.S. works abroad, and as a result, ensure profitable international dissemination of existing and future U.S. works.

Finally, the Court declined to find that the restoration provisions of Section 514 trampled on the First Amendment. A content neutral statute, Section 514 must be upheld if "narrowly tailored to serve a significant government interest." Drawing again in large part from Eldred, the Court concluded that because copyright's built-in First Amendment protections, specifically the idea/expression dichotomy and the fair use doctrine, remained unscathed, there was no need for heightened review. Section 514's stated purposes of ensuring compliance with international treaty obligations, securing greater protection for U.S. authors abroad and remedying unequal treatment of foreign authors, clearly satisfied First Amendment scrutiny. Moreover, given the various protections to reliance parties discussed above, Section 514 implemented a calibrated transition from a national scheme to an international copyright regime. The Court also responded to Justice Breyer's concern over the potential difficulty in identifying or locating copyright owners, especially with regard to orphan works. The Court concluded that the orphan works issue is not peculiar to works restored under Section 514 and should be addressed through legislative not judicial methods.

In the end, the Court reiterated its powerful words from Harper & Row, 471 U.S. 539 (1985), that copyright protection is not simply a "limit on the manner in which expressive works may be used"--it is also "an engine of free expression: By establishing a marketable right to the use of one's expression, copyright supplies the economic incentive to create and disseminate ideas." Overall, this decision represents a significant victory for creators and one that hopefully will resonate with Americans as they continue to be bombarded with uninformed messages that any copyright law impinges on their First Amendment rights.

February 9, 2012

Google Challenges Class

From the American Society of Media Photographers' Website:

Google Asks Court to Rule Against ASMP

Google has filed court documents challenging the standing of ASMP and the other associations as plaintiffs in the 2010 class action copyright infringement lawsuit filed over Google's unauthorized and massive scanning of library books and its related actions. Google argues that because of the requirements of copyright claims, plaintiffs must be actual rightsholders rather than associations acting on their behalf. It has also challenged the standing of the Authors Guild in its related lawsuit filed against Google in 2005.


http://asmp.org/news/current-news.html

February 16, 2012

What Your Trade Association Can Do For You: The Issue of Associational Standing to be Addressed in American Society of Media Photographers v. Google and Authors Guild v. Google

By Mary Rasenberger and Joseph Gregory

Last week in the Google Books case, the Authors Guild (the "Authors Guild") and the American Society of Media Photographers ("ASMP") filed oppositions to Google's motions to dismiss the copyright infringement claims brought by the Authors Guild and ASMP on behalf of themselves and their members. In Google's motions, filed in December, it argues that the associations lack the requisite standing to bring infringement claims on behalf of their members. Google argues that, in order for ASMP and the Authors Guild to be eligible for "associational standing"--on which it presumes the Authors Guild and ASMP rely to sue on behalf of their members, it must be shown that participation of each association's individual members in the lawsuit is not necessary to the claim asserted or to the relief requested. In this case, Google contests, each individual work alleged to have been infringed must be separately analyzed, including as to the fair use defense; and, as such, the associations lack standing to assert copyright infringement on behalf of their members.

In their briefs in support of their oppositions to Google's motions to dismiss, both ASMP and the Authors Guild respond that the associational standing "requirement" is merely a prudential requirement aimed at administrative convenience and that district courts have discretion is deciding whether or not it must be satisfied for a party to attain associational standing. ASMP further argues that the Supreme Court has allowed associational standing in cases such as this, recognizing the benefits of the participation of the association. The Author's Guild also counters Google's contention that each work needs to be analyzed separately under the fair use defense.

ASMP's Response

In its brief, ASMP first points out that Google's position is "particularly incongruous, given that Google has copied and distributed plaintiffs' works en masse without performing the individualized analysis it now avers is required." ASMP explains that "Google's consistent position to date has been that its actions are categorically protected as fair use irrespective of the individual work at issue." Ironically, Google's argument to support its motion to dismiss undermines its defense on the merits.

ASMP sets forth multiple legal theories as to why the District Court for the Southern District of New York should deny Google's motion. First, ASMP argues that the issue of whether the associations have "association standing" is wholly unnecessary with regard to the overall standing issue. ASMP cites numerous cases in support of a "well settled" principle that where at least one plaintiff has satisfied the standing requirements to bring a claim, a court need not consider whether other named plaintiffs (i.e., the associations) also have standing. In this case, individual representative members of ASMP are indeed named as co-plaintiffs to the suit, and Google apparently concedes the fact that such individual member plaintiffs do have standing to bring their respective infringement claims. Therefore, the issue of associational standing should be moot and the case should be allowed to proceed with the associations as co-plaintiffs.

Benefits Provided by Associational Standing

ASMP also relies on Supreme Court precedent that emphasizes the importance of permitting associations to have standing, along with individual plaintiffs, in order to ensure that individual members' claims are properly litigated. Among the justifications that the Supreme Court has provided in favor of allowing associational standing include: (i) the ability of associations to draw upon a preexisting reservoir of expertise and capital; and (ii) the primary reason people join an organization is often to create an effective vehicle for vindicating interests that they share with others. (See Int'l Union, United Auto, Aerospace & Agricultural Implement Works of Am. V. Brock, 477 U.S. 274, 289-90 (1986).)

ASMP also addresses Google's argument that since one of the requirements for associational standing--namely, a requirement that that neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit--is lacking, the associations should be barred from proceeding as plaintiffs in the suit. ASMP cites Supreme Court case law, which indicates that this requirement is merely a matter of administrative convenience and efficiency, meaning, the requirement has no impact on constitutional standing and the district courts therefore have discretion in deciding whether or not to apply it. ASMP argues that practical obstacles prevent each and every individual association member concerned from instituting individual actions, and therefore any such prudential rationale regarding administrative convenience is outweighed. Thus, the district court should exercise its discretion and allow the association plaintiffs to proceed as parties to the suit.

The Authors Guild's Response

The Authors Guild similarly argues that no prudential considerations compel the dismissal of the Authors Guild as an associational plaintiff. Citing the fact that it has already actively participated in the case as an associational plaintiff for over six years, the Authors Guild argues that, not only will its continued participation present no administrative difficulties, but its participation furthers the interests of judicial economy. Like ASMP, the Authors Guild is quick to point out that Google did not make a book-by-book determination as to whether to include each book in its library; thus, to deny group relief to those collectively affected by Google's copying would be manifestly unjust.

The Authors Guild also deconstructs Google's fair use defense to determine whether, as Google claims, it must be analyzed on a case-by-case basis for each individual member of the Authors Guild. In analyzing fair use, courts consider the following factors: (i) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (iv) the effect of the use upon the potential market for or value of the original work. Google argues that the individualized participation of every Authors Guild member is necessary to assess the second and fourth fair use factors.

The Authors Guild counters that, although the scope of fair use may be greater with respect to some works as compared to others, the Court is not required to separately analyze every book. Specifically, courts need not require individualized proof directed toward the second fair use factor, the nature of the work, in cases where large groups of works were infringed. In the cases cited by the Authors Guild, the courts either analyzed the works at issue by dividing them into separate large categories, or reviewed a sampling of the works to analyze the second factor. Neither approach requires the analysis as to each and every individual work.

With respect to the fourth fair use factor, the Authors Guild argues that the relevant evidence will be common to all of its individual members. Specifically, the Authors Guild argues that the potential market for and value of all in-copyright books will be adversely affected in similar ways by Google's use, and that this factor therefore can be fairly analyzed by the Court without the participation of each individual Authors Guild member.

What does this mean for future copyright litigation?

The Court's decision with regard to the associational standing theory in copyright infringement cases may have a profound impact on the ability of trade associations such as the Authors Guild and ASMP to enforce rights on behalf of their members. As discussed above, the reason why many people choose to join these organizations is for that exact reason; members seek to pool their interests and resources so as to receive protection when they need it most - i.e. when their interests are being violated in such a manner that litigation remains the only method of recourse. Further, given the expense associated with instituting individual lawsuits, the ability of such associations to adjudicate claims on behalf of their members may be the only way certain members might ever see relief.

Mary Rasenberger, Partner, Cowan DeBaets, Abrahams & Sheppard
Joseph Gregory, Law Student, New York Law School

March 5, 2012

Google Books Case Developments: Google Responds to ASMP and Authors Guild

By Mary Rasenberger

In the Google Books case, Google filed its responses on February 17, 2012 to the American Society of Media Photographers' (ASMP) and the Authors Guild's oppositions to Google's motions to dismiss ASMP and the Authors Guild for lack of standing. (See What Your Trade Association Can Do For You, http://nysbar.com/blogs/EASL/2012/02/what_your_trade_association_ca.html). Google took issue with the Plaintiffs' assertions, in their oppositions, that the third prong of the Hunt test for association standing is merely a prudential consideration that the Southern District need not apply rigidly. See Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 343 (1977). The Supreme Court in Hunt set out a three-part test for determining whether an association has standing to bring a claim on behalf of its members; the third prong at issue in Google's motions is a requirement that neither the claim asserted nor the relief requested requires the participation of the individual members in the lawsuit.

Google's Response

Google first argues that the requirements in Hunt are an important limitation on federal jurisdiction; whereas ASMP and the Authors Guild had argued that the third prong is instead a discretional consideration concerned with administrative convenience.
While Google concedes that the Supreme Court in United Food & Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 556-57 (1996), held that this third Hunt prong was not a "constitutional necessity," it argues that the Court still considers the prong to be an important limit on federal jurisdiction, rather than an optional inquiry for a court to simply disregard: "To see Hunt's third prong as resting on less than constitutional necessity is not, of course, to rob it of its value." 517 U.S. at 556. Thus, Google argues that, although the prong may be a prudential rule of self-governance susceptible to Congressional abrogation, the prong is nonetheless a rule that courts are not entitled to overlook.

The third prong of the Hunt test for associational standing requires that neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Under Google's strict reading of this prong, it argues that the associations' copyright claims, and Google's fair use defense, require the participation of each individual ASMP and Authors Guild member because the injuries suffered by each association member is particular to the individual, requiring individualized proof in analyzing the copyright claims and fair use defenses.

First, Google argues that the copyright claims need to be analyzed on a case-by-case basis, particularly the issue of copyright ownership, as there are factual issues surrounding copyright ownership of the works, including whether they were "works for hire." Additionally, Google maintains that individual inquiries are relevant in analyzing its fair use defense. Three of the four fair use factors set out in Section 107 of the Copyright Act require in an inquiry that will vary from book to book. These three factors are: (i) the nature of the copyrighted work; (ii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (iii) the effect of the use upon the potential market for or value of the original work. (17 U.S.C. §107 (2)-(4).) Google argues that because the facts differ from book to book, these inquiries require analysis of individualized evidence. In other words, it states that its fair use defense cannot be assessed in a collective manner.

Google distinguishes the cases that the associations rely on in support of the proposition that association standing is permissible in copyright cases similar to the Google Books case, including Itar-Tass Russian News Agency v. Russian Kurier, No. 95 Civ. 2144 (JGK), 1997 WL 109481 (S.D.N.Y. Mar. 10, 1997), rev'd in part, 153 F.3d 82 (2d Cir. 1998). ASMP had argued that Itar-Tass in particular is "most pertinent to this Court's analysis." In Itar-Tass, the district court held that an association of Russian journalists had associational standing to bring copyright infringement claims on behalf of its members. Google distinguishes Itar-Tass on the grounds that the factual issues regarding ownership in that case did not vary among the works at issue, and the case did not involve fair use.

The Second Circuit's Decision may have Important Implications for Associational Standing

As discussed above, courts have in some cases found associational standing to be appropriate in the context of copyright litigation. Questions remain, however, regarding how broad a trade association's right is to adjudicate copyright claims involving issues of ownership and fair use on behalf of its members. Judge Chin's decision on these motions thus likely will set important precedent in determining what the limits are on a trade association's associational standing in fair use cases.

Putting the Motions in the Context of the Litigation on the Merits

The positions taken by Google in its motions and responses are also interesting for what they say about Google's strategy in the case on the merits. Will it continue to assert on the merits, as it claims here, that individualized inquiry need be made with respect to ownership of each work and fair use need be analyzed on a work by work basis? Will it request discovery on a case-by-case basis in an attempt to drag the case on indefinitely? There are millions of works at issue in the case. The idea of the court's analyzing each work on a case by case basis is, of course, absurd - all the more absurd given that Google claimed fair use for its scanning and fragment use on an across-the-board basis, with no consideration of individual factors.

Scheduling Dispute Regarding ASMP's Request to Brief Fair Use before Class Certification

ASMP and Google filed letters with the court on February 17th and 22nd, respectively, regarding an expedited discovery and briefing schedule on the issue of fair use. ASMP proposed that any motions for summary judgment as to infringement or fair use be filed on an expedited schedule, before a decision on class certification. Google states that this proposal "is both unworkable and unjust," and that resolving the merits before considering the question of class certification is appropriate only "where the merits of the plaintiffs' claims can be readily resolved on summary judgment, where the defendant seeks an early disposition of those claims, and where the plaintiffs are not prejudiced thereby."

March 7, 2012

Madoff Trustee Wins Partial Summary Judgment in Suit Against Mets Owners; Jury to Hear Remaining Claims


By Pamela R. Shisler

Mets fans have dealt with a slew of bad news recently. On the field, promising young first baseman Ike Davis was diagnosed with a likely case of Valley Fever, and beloved third baseman David Wright was placed out indefinitely with a rib-cage injury. On Monday, off the field, S.D.N.Y. Judge Jed Rakoff dealt the beleaguered fan base another blow in the form of a four-page order in the high-profile suit by Madoff bankruptcy trustee Irving Picard against New York Mets owners Fred Wilpon and Saul Katz (Picard v. Katz, No. 11 Civ. 3605).

Judge Rakoff characterized the brief order as a set of "bottom line" rulings on the parties' summary judgment motions, indicating that a full opinion is still to come. In the order, which followed full discovery, the court granted the trustee's motion for partial summary judgment, holding that the trustee was summarily entitled to recover up to $83 million from the defendants. The $83 million represents the net profits beyond their principal investment that the defendants had received from the Madoff fund during the applicable two-year look-back period. In an earlier opinion dated September 27, 2011, the court ruled that federal bankruptcy law entitled the trustee to "avoid" or claw back any of the net profits paid out by the fund within two years prior to the bankruptcy filing, unless the defendants could show that the profits were received "for value". In Monday's order, Judge Rakoff held that the "value" the defendants gave to the Madoff fund was limited to the amount of their principal investment. Thus, the trustee was entitled to recover up to the $83 million in profits that were paid to the defendants. The exact amount recoverable by the trustee and the apportionment of that amount among the various defendants will be determined in a subsequent order.

The court also denied the defendants' motion to dismiss the trustee's remaining claims to recover the amount of principal investment that was returned to the defendants during the two-year look-back period, approximately $303 million. In his earlier opinion, Judge Rakoff had ruled that the trustee could only succeed on these claims by showing that the defendants had invested the principal with Madoff in bad faith. Rejecting the more lenient "inquiry notice" standard advanced by the trustee, the court had ruled that the trustee could only rebut the defendants' presumption of good faith by showing that the defendants had been "willfully blind" to the Madoff fraud. In Monday's order, Judge Rakoff held that the trustee had presented enough evidence to allow the issue of the defendants' good faith to proceed as a question of fact for the jury at trial. However, in the brusque language that has come to characterize Judge Rakoff's opinions in this case, he stated in no uncertain terms that he remained skeptical of the trustee's ability to ultimately succeed on the issue. Mets fans might see a silver lining in Judge Rakoff's stated concern that much of the trustee's evidence of bad faith presented during summary judgment proceedings may not be admissible at trial under the Federal Rules of Evidence. "Nevertheless," he wrote, "there remains a residue of disputed factual assertions from which a jury could infer either good or bad faith depending on which assertions are credited."

As the case proceeds to trial, the principal issue to be resolved will be the question of the defendants' good faith in making their investments with the Madoff fund, which will determine whether the trustee can claw back the $303 million principal investment, in addition to the $83 million in profits. Judge Rakoff's order stressed, as he has in past rulings, that the trial date in the case remains firmly fixed for March 19th, so any delay in the start of the trial seems unlikely. Coincidentally, March 19th is also one of the few off days in the Mets' spring training schedule, so expect all Mets-interested eyes to be on the courtroom that day, instead of on the field.

March 30, 2012

Gagosian Gallery Trials and Tribulations

By Gergana Miteva

Gagosian Gallery e-mails reveal the "behind the scenes" of the litigated sale of Girl in Mirror. (http://www.nytimes.com/2012/03/27/arts/design/revealing-e-mails-by-gagosian-gallery-in-lichtenstein-suit.html)

Recently, the embattled Gagosian Gallery suffered another legal setback. New e-mails have come to light, suggesting that in his negotiations to sell a painting, Larry Gagosian, the owner of the Gagosian Gallery, ardently solicited a "low ball" bid from a buyer. In January, Jan Cowles, a prominent New York art collector, filed a lawsuit against Gagosian and his gallery for conversion, fraud, breach of fiduciary duty, and unjust enrichment over the sale of a painting from her collection. The piece in question is Roy Lichtenstein's 1964 Girl in Mirror, which is one of a series of eight pieces in epoxy enamel on metal. In her complaint, Mrs. Cowles alleged that in the fall of 2008, Mr. Gagosian struck a deal with her son, without her knowledge or consent, to sell the painting on consignment for $3 million and retain half a million dollars as commission. The plaintiff maintains that the piece's market value at the time had been $4.5 million. Mrs. Cowles further alleged that her son, who had been an art dealer for many years, had no authority to sell the painting and acted without her knowledge only because he was in a "desperate financial condition." (See Jan Cowles' complaint, available at (http://www.courthousenews.com/2012/01/20/Gagosian.pdf).

Mr. Gagosian eventually sold the piece for $2 million and retained a $1 million commission. The plaintiff claimed that Mr. Gagosian induced her son to accept the "below market sales price" by falsely representing that the painting was badly damaged. She argued that if there had been any damage to the work, Gagosian Gallery's staff would have documented it before accepting the painting on consignment, which is a customary practice in the industry to avoid subsequent disputes about the value and condition of the artwork. Mrs. Cowles further implies that at the time of the sale of the painting, the Gagosian Gallery had a second piece from the Girl in Mirror series that may have been damaged. Her theory is that Gagosian sold the damaged painting for $2 million while her painting may still be in Gagosian's possession. If Mrs. Cowles is able to back up this admittedly cinematic hypothesis, she would provide a plausible explanation of the sold painting's condition report, which describes the damage as "numerous dark inclusions and small pits in the yellow field," "three areas of discoloration," "altered texture" and "noticeable prior restoration."

As The New York Times reported, the latest papers filed by Mrs. Cowles' attorney reveal the e-mail negotiations between Mr. Gagosian and the art collector who eventually bought the painting. Apparently, Gagosian represented that the seller of the work was "in terrible straits and needs cash" and invited the art dealer to make "a cruel and offensive offer" for the painting. This new evidence, coupled with Mrs. Cowles' theory that the piece had been swapped with a damaged one, may account for why it was sold for less than half of its claimed market value at the time. (Randy Kennedy, Frank E-Mails Reveal Negotiations at Art Gallery, N.Y. TIMES, March 26, 2012, http://www.nytimes.com/2012/03/27/arts/design/revealing-e-mails-by-gagosian-gallery-in-lichtenstein-suit.html)

This is not the first time Mr. Gagosian and his gallery have been sued over the sale of a painting from Mrs. Cowles collection. Last year, Mrs. Cowles filed a lawsuit in Federal court for the gallery's sale of The Innocent Eye Test by Mark Tansey, another piece her son had put up for sale. Apparently, she had donated 31 percent of her interest in the painting to the Metropolitan Museum of Art, where the painting was on display for many years, with the intention of eventually transferring her entire interest in the work to the museum. Mrs. Cowles sued Gagosian for the return of the painting and the British collector who purchased it sued him for fraud. The case was settled for $4.4 million after the piece was returned to Mrs. Cowles, who then donated it to the museum. This prior implicit victory for Mrs. Cowles adds more ammunition to the merits of her case in the current dispute with Gagosian. (Randy Kennedy, Collector Sues Gagosian Gallery for Selling Him a Painting Partially Owned by Met, N.Y. TIMES, March 11, 2011, http://artsbeat.blogs.nytimes.com/2011/03/11/collector-sues-gagogosian-gallery-for-selling-him-a-painting-partially-owned-by-met/).

Mrs. Cowles is seeking $4.5 million in compensatory damages and $10 million in punitive damages for the Girl in Mirror sale.

April 2, 2012

Nike v. Reebok: Reebok takes Advantage of Tebow-Mania

By Jenna Norys

While Jeremy Lin has created hysteria and cause for sportscasters all over the world to exhaust their creativity with Lin-puns, one would think that the previous sensation, the man that inspired YouTube to explode with "Tebowing", had finally lost steam to another. Oh how some of us underestimated the fanaticism that is Tim Tebow. On March 21st of this year, Lady Liberty herself was seen to kneel with her fist to her head as the New York Jets announced its acquisition of the clean cut Christian Quarterback. Jets fans all over the nation could not wait to get their hands on Jets t-shirts with Tebow's name proudly sprawled across the back. However, Tim Tebow's team affiliation was not the only thing that changed in the NFL. This year the NFL ended its longstanding relationship with Reebok as its official apparel company, and signed on to a 5-year deal with Nike.

These relationships give rise to the recent conflict between Nike and Reebok slated to be battled out -not on, but in the court of the Southern District of New York. While Reebok's rights were said to have ended prior to Tebow's move to the Jets, a complaint filed by Nike explains that as soon as the announcement was made, Reebok t-shirts bearing the name of Tebow were sold all over the nation. (Nike, Inc. and Nike USA, Inc., v. Reebok International Ltd. 12 cv. 2275, Complaint Available at: http://docs.justia.com/cases/federal/district-courts/new-york/nysdce/1:2012cv02275/393953/1/)

Nike's complaint came only one week after the purported sale. It claimed violations of the Lanham Act, misappropriation of rights of publicity, tortious interference with current and prospective business relationships, and unjust enrichment. On March 28th, Judge Kevin Castel granted Nike's request for a Temporary Restraining Order blocking Reebok from distributing, manufacturing or selling anymore Tebow gear.

Part of this case comes down to the licensing schemes of respective NFL entities. Reebok has had past licenses with the NFL for the use of its teams' trademarks, as well as a group license from the NFL Players Association for individual players. While Reebok is apparently allowed to sell off its remaining products, however, what it has purported to do in this situation is to take 2 previous licenses and lump them together where only one was permissible. This is a catch-22 in all senses: had Reebok sold its Jets t-shirts without Tebow's name, there would be no issue, yet there would not likely be an influx of sales either.

A Chargers fan myself, my thoughts went to Peyton Manning and his move to Denver as being the critical NFL player change this year (who wants Peyton anywhere near their division?!). Thinking this was big news, I thought why would Nike sue only on Tebow's name? Are Denver fans eating up Bronco shirts reading "Manning" just as fast? Apparently not, for as the Nike complaint points out, New York is the largest market for sports in the nation and the public interest in Tebow is a unique phenomenon that has made his jersey the second most popular of all NFL players in 2011, only second to Aaron Rogers.

There is a unique issue in this case, in that Nike did not actually acquire the rights to the NFL trademarks until April 1st, but has the licensing for Tebow individually. One concern is that neither Reebok nor Nike could have lawfully sold a Jets Tebow t-shirt from March 21st - April 1st due to the fact that each had rights to only one aspect of the product, Reebok having the Jets' rights and Nike having Tebow's.

Nike has alleged that it has been prevented from capitalizing on the market for New York-Tebow apparel in the immediate aftermath of the trade. While the arguments are persuasive in the complaint, it is clear that Nike would not be able to capitalize on the trade at the height of the event. It has only been 10 days since the trade, and since then there have been a number of people who are downplaying the trade as a PR stunt, and speculating whether Tebow will even play or if he was only drafted to neutralize the Jets' "bad boy" image (Associated Press Mar. 30, 2012 available at: http://espn.go.com/new-york/nfl/story/_/id/7757218/new-york-jets-tim-tebow-unsure-ever-starting-quarterback-again, Davenport, Gary, "Tim Tebow to Jets is Nothing More Than Publicity Stunt," Mar. 30, 2012, available at: http://bleacherreport.com/articles/1125723-tim-tebow-to-jets-is-nothing-more-than-publicity-stunt).

In the trend-driven environment that we all live in, instant gratification seems to drive the market. What makes this lawsuit intriguing is that Nike probably did not suffer so much from the sales as Reebok gained. This is because it is not clear that Nike would have actually kept the Tebow hype up until after its scheduled April 3rd grandiose jersey unveiling ceremony and it could not have sold the Jets-Tebow gear until April 1st. Additionally, it may be that the new style of Nike jerseys will lead to consumers throwing out those Reebok threads in favor of a newer sleek style. Of course that fact is somewhat irrelevant, as the claims are based on the unjust enrichment of Reebok, but it is interesting that where there was a market demand, legally speaking, these two parties cancelled each other out and could have prevented consumers from obtaining the product they wanted in that small window of opportunity. It will undoubtedly be interesting to see how Reebok responds as its answer is due on April 18, 2012.

April 7, 2012

Poindexter v. EMI

By Barry Werbin

This quietly noteworthy music copyright infringement decision was issued March 27th by Judge Swain (SDNY), and reminded me of the 6th Circuit's 2005 decision in Bridgeport Music Inc. v. Dimension Films (410 F.3d 792 (6th Cir. 2005)), where that Circuit, in a case of first impression, held there was no "de minimus" copying defense as a matter of law in music sampling infringement cases (Bridgeport addressed a two-second sample of a rap song used in a film). Now, in Poindexter, a case that primarily addresses lack of standing and scope of work for hire/assignment agreements, Judge Swain also held that the subject sample consisting of a single "F-sharp" note played on a piano for less than two seconds was de minimus and not subject to copyright protection because a single note is not copyrightable, citing Swirsky v. Carey (376 F.3d 841 (9th Cir. 2004)).

The decision can be accessed here: http://docs.justia.com/cases/federal/district-courts/new-york/nysdce/1:2011cv00559/374395/40/.



Second Circuit Interprets DMCA Safe Harbor Provision in Viacom International v. YouTube

By Brendan Mee
www.bmeelaw.com

On April 5, 2012, the Court of Appeals for the Second Circuit vacated a summary judgment order from the Southern District for the State of New York in the closely watched Viacom case. (Viacom International v. YouTube, No. 10-3270, 2012 WL 1130851 (2d Cir. Apr. 5, 2012)). The suit now returns to the District Court on remand for fact finding as to whether the defendants had "actual knowledge or awareness" of specific acts of copyright infringement, and whether the defendants made "deliberate effort to avoid guilty knowledge" of infringement (i.e., were willfully blind to specific acts of infringement). (Id. at *34). However, damages may only be recovered where the defendants are shown to have knowledge of specific acts of infringement. Thus, the massive damages award sought by the plaintiffs at the outset of the suit is no longer on the table.

Background

The Digital Millennium Copyright Act,17 U.S.C. § 512 (the DMCA) provides a safe harbor for internet service providers, such as YouTube, so that the service providers are not liable for copyright infringing material on their websites provided they meet the criteria set forth in the statute and expeditiously comply with the "take-down" provisions. The Viacom case has been viewed as an important test of the DMCA safe harbor. No less than 28 amicus briefs were filed in the appeal of the District Court decision, and the decision to vacate the summary judgment order has already been widely reported in the general press.

In reaching its conclusions, the Second Circuit construed several aspects of the DMCA safe harbor provisions, specifically 17 U.S.C. § 512(c), which "covers infringement claims that arise 'by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.'" (Id. at *10).

"Actual knowledge" Under 17 U.S.C. § 512(c)(1)(A)

The safe harbor applies only if a service provider "does not have actual knowledge that the material or an activity using the material on the system or network is infringing." 17 U.S.C. § 512(c)(1)(A). Thus, the principal issue in this case was what constitutes "actual knowledge" of infringement that will disqualify a defendant such as YouTube from taking advantage of the DMCA safe harbor provisions.

Although the Second Circuit remanded, it adopted the essential aspects of the District Court's construction of the DMCA safe harbor provision: Actual knowledge means "knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement." (Id. at *15). The Second Circuit pointed out that this interpretation flowed from the statute, because "the nature of the removal obligation itself contemplates knowledge or awareness of specific infringing material." (Id. at *16).

The initial suit sought infringement damages for copyright infringement of some 79,000 YouTube clips. (Id. at *8). Of course, showing specific knowledge of each such infringement would be a monumental burden of proof. Thus, under the knowledge standard adopted by the Second Circuit, a huge damages award of the type initially sought will be impossible to win.

However, the Second Circuit did find evidence in the record that YouTube executives had knowledge of specific cases of infringement, and remanded to the district court to determine whether any of those cases were among the 79,000 charged. (Id. at *21). The court also held that actual knowledge could be shown by willful blindness, and on remand the District Court will review whether the defendants were willfully blind with respect to any of the 79,000 specific acts of infringement charged. (Id. at *24).However, discovery on both actual knowledge and willful blindness is over; the Second Circuit deems the record to be complete with respect to these issues. (Id. at *35).

"Right and ability to control" Under 17 U.S.C. § 512(c)(1)(B)

The Second Circuit also remanded to the District Court on a second aspect of the safe harbor provision, in Section 512(c)(1)(B), which provides that an eligible service provider must not "receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity." The question was what constitutes "right and ability to control" infringing activity under the statute. (Id. at *28).

The Southern District had favored the defendant's view that "right and ability to control" the infringing activity required item-specific knowledge of the infringement, which essentially merged the issue with the "actual knowledge" requirement. The Second Circuit rejected this interpretation, as it would have rendered the neighboring provision in Section 512(c)(1)(A) superfluous. (Id. at *25).

Likewise, the court rejected the theory advanced by the plaintiffs, who argued that the common law standard for vicarious liability for copyright infringement should apply. Instead, the Second Circuit indicated that "'something more than the ability to remove or block access to materials posted on a service provider's website'" was required to show the right and ability to control. (Id. at *27). The "something more" required to show control under the statute was left somewhat vague, but the court remanded to the District Court for fact finding on the issue of whether the defendants "exerted substantial influence on the activities of users, without necessarily--or even frequently--acquiring knowledge of specific infringing activity."(Id. at *28).

Given the original decision from the District Court, it appears very unlikely that the Southern District would find that YouTube exerted that kind of control over its users' content. Rather, the detailed directions to the District Court on remand indicate the Second Circuit's intent to have its interpretation of the DMCA safe harbor provision completely articulated in the record, conscious that its interpretation may become the "gold standard" for other Circuits going forward.

"By reason of storage at the direction of a user. . ." 17 U.S.C. § 512(c)(1)

The final statutory construction issue addressed by the appellate court involved functionality offered by YouTube to its customers. The statute limits application of the safe harbor to instances where the infringement occurs "by reason of the storage at the direction of a user of a material . . . ". The question was whether certain activities on YouTube met this criterion, because the infringement in these instances occurred (at least arguably) at the direction of YouTube rather than at the direction of the user.

The court reached the conclusion that transcoding of videos into a standard display format, and the playback of videos on "watch" pages merely facilitated access to user-stored material, and consequently the safe harbor applied. Likewise with the thumbnail function in YouTube, which displays related content in a side bar when a video is viewed--the court agreed with the District Court that to allow such activities to fall outside the scope of the safe harbor would have eviscerated the protection afforded to service providers under the DMCA, even though the display of additional content is generated automatically by YouTube. (Id. at *30).

The court did allow that certain activities undertaken by YouTube, specifically licensing of certain videos to mobile telephone companies for use with mobile devices would likely not fall within the scope of the safe harbor. However, in order to avoid delivering an advisory opinion on the challenged activities, the court chose to remand the case to the district court for confirmation that none of the clips asserted in the litigation were ones that had been licensed to the mobile companies. (Id. at *31-32).

Conclusion

YouTube spins the Second Circuit's decision as a victory, notwithstanding the remand, because "actual knowledge" requires knowledge of specific acts of infringement, which likely precludes the kind of huge damages award that was originally sought. However, the Second Circuit opinion contains some subtleties regarding the boundaries of the safe harbor provision, of which all of the service providers will have to take careful note to ensure that they fall within the protections of that provision.

The decision can be reviewed at: http://www.ca2.uscourts.gov/decisions/isysquery/fb25d6fa-bee5-4c8d-8748-a1989496c9dc/5/doc/10-3270_10-3342_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/fb25d6fa-bee5-4c8d-8748-a1989496c9dc/5/hilite/

April 27, 2012

Weekly Issues in the News

By Geisa Balla

Trade Secrets During Discovery

New York Supreme Court Justice Shirley Werner Kornreich issued a decision on April 23, 2012, holding that plaintiffs who claim their trade secrets were misappropriated must identify what those secrets were during discovery. The decision was issued in a lawsuit by MSCI, which alleged that a former employee and his new employer misappropriated MSCI's source code for risk management software to sell to investment institutions. In a November ruling, the judge permitted MSCI to identify only which portions of its source code were not trade secrets. The defendants argued that it was unfair to expect defendants to deduce what secrets were at issue. The judge sided with them, holding that MSCI must identify "with reasonable peculiarity" the trade secrets were allegedly misappropriated. "Only by distinguishing between the general knowledge in their field and their trade secrets, will the court be capable of setting the parameters of discovery and will defendants be able to prepare their defense," Kornreich wrote. "Plaintiffs who have brought this action, bear the burden of proving their allegations," the judge continued. "Merely providing defendants with plaintiffs' 'reference library' to establish what portions of their source code are in the public domain shifts the burden to defendants to clarify plaintiffs' claim."

http://newsandinsight.thomsonreuters.com/Legal/News/2012/04_-_April/Plaintiff_must_identify_trade_secrets_during_discovery,_judge_rules/


Apple and Motorola


The International Trade Commission (ITC)issued a preliminary ruling that Apple Inc. infringed on a Motorola Mobility Inc. patent in making its iPhones and iPads. The patent at issue covered eliminating noise and other interference during voice and data transmissions. A full commission will review the preliminary decision and make a final ruling in August. Motorola also accused Apple of violating three other patents, but the ITC did not rule in Motorola's favor on those patents. Motorola, who is being acquired by Google Inc., has filed related lawsuits against Apple in federal courts in Illinois and Florida. These legal battles are part of the larger market share battle between Apple's products and Google's Android software. Google has not yet been directly involved in the lawsuits because it does not make its own phone, but that will change once it acquires Motorola.

http://newsandinsight.thomsonreuters.com/Legal/News/2012/04_-_April/Apple_infringes_on_Motorola_Mobility_patent-ITC_judge/

Facebook and AOL

Facebook will pay Microsoft Corp $550 million for 650 patents and patent applications, as well as a license to another 275 patents and applications owned by Microsoft. Earlier this month Microsoft purchased more than $1 billion in AOL Inc. patents. Microsoft's General Counsel stated that the Facebook deal allows Microsoft "to recoup over half of our costs while achieving our goals from the AOL auction." In the meantime, Facebook is also in a legal battle with Yahoo Inc. Yahoo sued Facebook earlier this year, alleging that Facebook infringed 10 Yahoo patents, and Facebook countersued alleging that Yahoo infringes 10 of Facebook's patents.

http://newsandinsight.thomsonreuters.com/Legal/News/2012/04_-_April/Facebook_pays_Microsoft_$550_mln_for_AOL_patents/


Google

Google has agreed to pay a $25,000 fine to the Federal Communications Commission (FCC) for allegedly impeding the agency's investigation into whether Google violated federal rules when its street-mapping service collected and stored data from unencrypted Wi-Fi networks. The FCC stated that Google executives "deliberately impeded and delayed" its investigation. A Google engineer who developed the code for Google's Street View service declined to testify and invoked his Fifth Amendment rights against self-incrimination. Google responded that it did not provide "untimely" responses, but the delays by the investigators lengthened the FCC's review. Google told the FCC in a letter that it "disagrees with the premise" of the fine, but "has determined to pay the forfeiture proposed [by the FCC] in order to put this investigation behind it." The FCC stated it did not find enough evidence to conclude that Google violated federal law designed to prevent electronic eavesdropping.

http://online.wsj.com/article/SB10001424052702304811304577368161801112488.html?mod=WSJ_Tech_LEFTTopNews

May 11, 2012

CBS Broadcasting Inc. v. ABC, Inc.

By Kim Endelson

CBS filed a complaint today against ABC and several producers and staff in the U.S. District Court, Central District of California, alleging, among other claims, misappropriation of trade secrets, breach of contract, and copyright infringement. CBS contends that ABC's new show "Glass House" is a "carbon copy" of its show "Big Brother", and that 19 former "Big Brother" producers and staff now work on "Glass House."

"Glass House" is a reality show featuring 14 contestants who live in a large house and are filmed continuously. Viewer votes determine which contestants will remain in the house, with the final contestant receiving a six-figure cash award.

CBS is seeking an injunction to stop the airing of the show, scheduled for June 18th, as well as $500,000 for each violation of non-disclosure agreements signed by the former "Big Brother" employees.

CBS claims that the "imitation" is an "obvious attempt" to capitalize on the success of "Big Brother." ABC said the lawsuit has no merit. An ABC spokesperson commented, "The differences between 'Glass House' and 'Big Brother' are both fundamental and obvious, ranging from 'Glass House's' interactive elements and audience participation to its deployment of cutting edge technologies."

http://newsandinsight.thomsonreuters.com/Legal/News/2012/05_-_May/Report_--_CBS_sues_ABC,_says_new_show_copies__Big_Brother_/

http://www-deadline-com.vimg.net/wp-content/uploads/2012/05/CBS_v_ABC_et_al_Complaint_-_CV12-04073_MMM_JEMx__120510213528.pdf

Scorpio v Willis Decision - Termination of Post-1977 Grants

Case 3:11-cv-01557-BTM-RBB Document 30

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

SCORPIO MUSIC S.A., et al.,
Plaintiffs,

v.

VICTOR WILLIS,
Defendant.

Case No. 11cv1557 BTM (RBB)

ORDER GRANTING MOTION TO DISMISS

Defendant Victor Willis ("Willis" or "Defendant") has filed a motion to dismiss Plaintiffs' Complaint. On March 20, 2012, the Court held oral argument on the motion. For the reasons discussed below, Defendant's motion is GRANTED.

I. FACTUAL BACKGROUND

Defendant Victor Willis is the original lead singer of the Village People. This lawsuit concerns Willis's attempt to terminate his post-1977 grants to Can't Stop Music of his copyright interests in 33 musical compositions ("Compositions"), including the hit songs, "YMCA," "In the Navy," and "Go West."

Plaintiff Scorpio Music S.A. ("Scorpio") is a French corporation engaged in the business of publishing and otherwise commercially exploiting musical compositions. (Compl. ¶ 1.) Plaintiff Can't Stop Productions, Inc., ("CSP") is the exclusive sub-publisher and administrator in the United States of musical compositions published and owned by Scorpio Music. (Compl. ¶ 2.) Can't Stop Music ("CSM") is a division of Plaintiff Can't Stop Productions, Inc.

Plaintiffs allege that between 1977 and 1979, they hired Willis to translate the lyrics of and/or create new lyrics for certain musical compositions which were owned and published in France by Scorpio. Copyright registrations for the 33 Compositions at issue credit Willis as being one of several writers. (Compl. ¶ 12.) By way of Adaptation Agreements, Willis transferred his copyright interests in the subject Compositions to CSM, and CSM thereupon assigned to Scorpio its rights in the lyrics. (Compl. ¶ 11.) The Adaptation Agreements provided that Willis would receive a set percentage (12%-20%,depending on the composition) of CSM's gross receipts from exploitation of the Compositions.

In January 2011, Willis served on Plaintiffs a "Notice of Termination of Post-1977 Grants of Copyright on Certain Works of Victor Willis" with respect to his interests in the 33 Compositions. (Ex. A to Complaint.)

On July 14, 2011, Plaintiffs commenced this lawsuit. Plaintiffs challenge the validity of the termination and seek a declaratory judgment that Willis has no right, title, or interest in the copyrights to the Compositions, requiring Willis to withdraw the notice of termination, and enjoining Willis from making any claims to the copyrights in the Compositions. In the event that Willis is found to have a right to terminate, Plaintiffs seek a declaration that (1) Willis's reversion of rights be limited to "the same percentage ownership as he receives as compensation relating to the Compositions and as set forth in the Adaptation Agreements"; and (2) Willis be enjoined from terminating any licenses issued or derivative works authorized, by Plaintiffs, which existed prior to the termination of the copyright assignment.

II. DISCUSSION

A. Valdiity of the Notice of Termination

Plaintiffs' main argument is that Willis's notice of termination is not valid because Willis is the only author who served a notice of termination. According to Plaintiffs, under 17 U.S.C. § 203(a)(1), a majority of all of the authors who transferred their copyright interests in a joint work, whether their transfers were part of the same transaction or separate transactions, must join in a termination for it to be valid. Willis and Amicus Songwriters' Guild of America ("SGA"), on the other hand, contend that since Willis was the only person who executed the grants of his copyright interests in the Compositions, he alone has the ability to terminate those grants. The Court agrees with Willis and SGA.

Because the transfers of copyright at issue in this case occurred after January 1, 1978, the Copyright Act of 1976 ("Act") governs. The Act provides authors and their statutory successors with the ability to terminate a transfer of copyright or license by serving advance notice under specified time limits and conditions.

17 U.S.C. § 203 provides:

(a) Conditions for Termination.--In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination under the following conditions:
(1) In the case of a grant executed by one author, termination of the grant may be effected by that author or, if the author is dead, by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author's termination interest. In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it; if any of such authors is dead, the termination interest of any such author may be exercised as a unit by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author's interest.

Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant. 17 U.S.C. § 203(a)(3).

To terminate a grant, a termination notice must be served on the grantee or grantee's successor not less than two nor more than ten years before the date of termination specified in the notice. 17 U.S.C. § 203(a)(4)(A).

The issue before the Court is whether, in a case where joint authors of a work transfer their respective copyright interests through separate agreements, a single author may alone terminate his separate grant of his copyright interest in the joint work or whether a majority of all the authors is necessary to terminate that grant. Upon consideration of the language and purpose of 17 U.S.C. § 203 in conjunction with the law governing the rights of joint authors, the Court concludes that a joint author who separately transfers his copyright interest may unilaterally terminate that grant.

When interpreting a statute, we start with the "plain meaning" of the statue's text. In re Roman Catholic Archbishop of Portland in Oregon, 661 F.3d 417, 433 (9th Cir. 2011). As explained by the Supreme Court, "courts must presume that a legislature says in a statute what it means and means in a statute what it says there." Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54 (1992). However, "we do more than view word or sub-sections in isolation. We derive meaning from context, and this requires reading the relevant statutory provisions as a whole." Hanford Downwinders Coal., Inc. v. Dowdle, 71 F.3d 1469, 1475 (9th Cir. 1995).

Section 203(a)(1) provides, "In the case of a grant executed by one author, termination of the grant may be effected by that author." Section 203(a)(1) goes on to provide, "In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it." When referring to a grant executed by two or more authors of a joint work, section 203(a)(1) refers to a "grant" in the singular, not "grants." Thus, under the plain meaning of the statute, if two or more joint authors join in a grant of their copyright interests, a majority of the authors is necessary to terminate the grant. If, however, a single joint author enters into a grant of his copyright interest, that author alone can terminate his grant.

The Court's reading of section 203(a)(1) harmonizes with the law governing the rights of joint authors, both as it existed at the time of the passage of the Act and as it exists today. As recognized in the House Report accompanying the passage of the Copyright Act of 1976, "Under the bill, as under the present law, coowners of a copyright would be treated generally as tenants in common, with each coowner having an independent right to use of [sic] license the use of a work, subject to a duty of accounting to the other coowners for any profit." H.R.Rep. No. 94-1476, at 121 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5736. (The Act added section 201(a), which states, "The authors of a joint work are coowners of copyright in the work.")

Then, as now, each co-owner of a joint work becomes a holder of an undivided interest in the whole. Pye v. Mitchell, 574 F.2d 476, 480 (9th Cir. 1978) (citing to 1 Nimmer on Copyright § 69 (1976)). Thus, "[i]n the absence of an agreement to the contrary, one joint owner may always transfer his interest in the joint work to a third party, subject only to the general requirements of a valid transfer of copyright." Nimmer on Copyright § 6.11 (2011) ("Nimmer").

Congress was aware that a single joint author may grant his interest in the joint work separately from his co-authors or may join in a grant with one or more of his co-authors. Knowing this, Congress legislated that "[i]n the case of a grant executed by two or more authors of a joint work," a majority of the authors who executed the grant is necessary for termination. 18 U.S.C. § 203(a)(1) (Emphasis added.) In other words, when two or more authors of a joint work execute a joint grant, a majority of the authors who executed the grant is necessary to terminate the grant. Section 203(a)(1) certainly does not require that a joint author enter into a joint grant with one or more of his co-authors. Nor does the statute provide that where two or more joint authors enter into separate grants, a majority of those authors is needed to terminate any one of those grants.

Plaintiffs argue that the term "grant" as used in section 203(a)(1) refers collectively to all transfers by joint authors, even if the transfers were separate transactions. This argument is not persuasive. Nowhere does the statute indicate that the term "grant" has a special meaning and encompasses all transfers of interest by joint authors, regardless of whether the joint authors individually transferred their interests through different instruments at different times. (In this case, it also appears that at least some of the joint authors granted their copyright interests to Scorpio, not CSM, as Willis did. Thus, Plaintiffs would include under the umbrella of a "grant," separate transactions where copyright interests were transferred to related but different entities.)

Furthermore, it makes sense to interpret the term "grant" to refer to a single transaction whereby the rights of one or more joint authors was transferred, because the time for terminating a grant is calculated from the date of execution of the grant. Under Plaintiffs' interpretation, in the case of separate transfers by joint authors, there would be uncertainty regarding the date of execution, which could become a moving target. For example, if joint authors A, B, C, and D each separately transferred their interests, with an interval of several years between each transfer, would the "date of execution" keep changing as each author transfers his/her interest? If so, it could be many years after A's transfer that the "grant" is considered "executed."

Finally, it would be contrary to the purpose of the Act to require a majority of all joint authors who had, at various times, transferred their copyright interests in a joint work to terminate the legally permissible separate grant by one joint author of his undivided copyright interest in the work. The purpose of the Act was to "safeguard[ ] authors against unremunerative transfers" and address "the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until it has been exploited." H.R. Rep. No. 94-1476, at 124 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5740. Under Plaintiffs' interpretation, it would be more difficult to terminate an individual grant than it would be to make it in the first place.

Plaintiffs attempt to support their position by pointing to the law governing pre-1978 grants. Grants executed prior to January 1, 1978 are terminable by each executing joint author (to the extent of the particular author's interest), even if a majority of the executing joint authors do not join in the termination. 17 U.S.C. § 304(c)(1). As discussed in Nimmer, § 11.03, it appears that Congress treated pre-1978 grants differently because if a grantor of renewal rights failed to survive until such rights vested, the renewal rights would pass to the grantor's successors and the original grantee would take nothing. Accordingly, "[b]ecause joint-author grants of renewal rights thus terminate individually by operation of law upon an author's death, it was thought 'inappropriate' to require anything more than individual termination via the termination provisions." Id. The stricter requirement for termination of post-1977 grants begs the question of whether a "grant" may encompass separate transfers of interest by joint authors and does not shed any light on the matter before the Court.

Plaintiffs attempt to support their position by relying on language in Sweet Music, Inc v. Melrose Music Corp., 189 F. Supp. 655 (S.D. Cal. 1960), where the court explained that it did not make a difference to the outcome of the case that plaintiff joined in the same assignment agreement as the deceased co-author as opposed to having executed a separate assignment. However, Sweet Music concerned the enforceability of an assignment of renewal interests by one author where a co-author, who also assigned his renewal interests, died prior to renewal. Sweet Music did not concern the termination of grants under the Copyright Act of 1976 and does not shed light on the issue before the Court.

The Court concludes that because Willis granted his copyright interests in the Compositions separately from the other co-authors, Willis may, under 17 U.S.C. § 203, unilaterally terminate his grants. Thus, Plaintiffs' declaratory relief claim fails to the extent it is based on the inability of Willis to terminate his grants of copyright. To be clear, Willis's termination affects only the copyright interests that he previously transferred (his undivided interest in the joint work). The copyright interests transferred by the other co-authors will not
be affected by Willis's termination.

B. Writer for Hire

In their Complaint, Plaintiffs allege that Willis has no rights in the copyrights at issue because he was a "writer for hire" who rendered his services as an employee of CSM. At oral argument, counsel for Plaintiffs represented that they were withdrawing this claim.

C. Percentage of Copyright Interest

In the event Willis is found to have a right to terminate his grants of copyright interest in the Compositions, Plaintiffs seek a declaration that Willis "be limited to the same percentage ownership as he receives as compensation relating to the Compositions and as set forth in the Agreements." (Compl. at 9.) However, Plaintiffs' claim is not supported by the law.

Upon termination, Willis would get back what he transferred - his undivided interest in the whole. See 17 U.S.C. § 203(b) (explaining that upon the effective date of termination, "all rights under this title that were covered by the terminated grants revert to the author . . . .") Absent a different agreement among the joint authors (of which there is no evidence in this case), the joint authors shared equally in the ownership of the joint work, even if their respective contributions to the joint work were not equal. Nimmer, § 6.08. Thus, if Willis was one of three joint authors of a musical composition, Willis would have a 1/3 undivided copyright interest in the composition. If Willis granted his copyright interest in the composition to CSM and then later terminated that grant, Willis would get back his 1/3 undivided copyright interest, regardless of what percentage royalty he was paid during CSM's ownership of the copyright interest.

Plaintiffs do not claim that the royalty percentages, which ranged from 12 to 20%, were based on the percentage of Willis's copyright interests, and it does not appear that this was the case. For example, Willis is one of three authors listed on the copyright registration for "YMCA." (Def. Ex. C.) Assuming the three authors were actually joint authors, Willis has a 1/3 undivided interest in the copyright. However, the Adaptation Agreement pertaining to YMCA provides for a 20% royalty. (Def. Ex. B.)

Plaintiffs do not cite any legal authority supporting the proposition that upon termination of his grants, Willis does not get back the percentage of copyright interest he granted, but, rather, is limited to a percentage of ownership equal to the royalty percentage. The Court concludes that Plaintiffs' position lacks merit and dismisses Plaintiffs' declaratory relief claim on this issue.

It appears that there is a dispute between Plaintiffs and Willis, with respect to some or all of the Compositions, regarding the percentage of copyright interest Willis originally held, granted, and wants back. At oral argument, counsel for Willis indicated that Willis contends that Henri Belolo, one of the individuals listed as an author on the copyright registrations for some or all of the Compositions, was not actually a joint author. If Willis is correct, his undivided interest in the Compositions is larger than it appears. For example, Willis would have a 1/2 undivided interest in YMCA instead of a 1/3 undivided interest.

The Complaint makes a passing reference to the dispute regarding authorship. The Complaint states that upon information and belief, Willis claims the right to recapture at least half of the copyrights in each of the Compositions. (Compl. ¶ 34.) The Complaint also states that Willis "ignores the existence of other people listed as writers of the Compositions to claim that he, alone, wrote all of their lyrics." (Compl. ¶ 35.) However, the Complaint does not seek a declaration regarding the determination of the issue of authorship and the percentage of copyright interest Willis granted and is entitled to receive back.

It is necessary for Plaintiffs to know what percentage of the copyright interest Willis is entitled to receive back, because, among other things, it will affect Plaintiffs' duty to account to Willis and the other joint author(s). Therefore, the Court will allow Plaintiffs to amend their Complaint to seek declaratory relief on this issue.

D. Statute of Limitations

In the Complaint, Plaintiffs allege that Willis's claim to the copyright in the Compositions is somehow time-barred.

To the extent Plaintiffs argue that Willis is time-barred from arguing that a "co-author" listed on a copyright registration is not actually a joint author, this argument is premature. As already discussed, Plaintiffs have not yet sought a declaration regarding the percentage of Willis's copyright interest in each of the Compositions. To the extent Plaintiffs argue that Willis is time-barred from claiming that the percentage of his copyright interests exceeds the royalty percentages set forth in the Adaptation Agreements, the Court rejects Plaintiffs' argument. For the reasons discussed above, Plaintiffs' claim that the percentage of copyright interest recoverable by Willis is capped by the royalty percentage has no legal basis, and Plaintiffs have not explained why Willis should be time-barred from asserting his rights under the law.

E. Termination of Existing Licenses and Derivative Works

Plaintiffs also seek a declaration that Willis is precluded from terminating any licenses issued or derivative works authorized by Plaintiffs prior to the termination of the copyright assignment. Willis does not dispute that existing derivative works may continue to be exploited under existing licenses under the terms of the grants and the existing licenses. See 17 U.S.C. § 203(b)(1). Therefore, it does not appear that there is a controversy in this regard. If Plaintiffs can point to facts showing that there is a controversy regarding utilization of derivative works prepared prior to the termination of the grants, Plaintiffs may amend their Complaint to include these facts.

III. CONCLUSION

For the reasons discussed above, Willis's motion to dismiss is GRANTED. Plaintiffs' Complaint is DISMISSED for failure to state a claim. The Court grants Plaintiffs leave to file an amended complaint within 30 days of the entry of this Order. If Plaintiffs do not file an amended complaint, this case shall be closed.

IT IS SO ORDERED.

DATED: May 7, 2012

BARRY TED MOSKOWITZ, Chief Judge United States District Court
10 11cv1557 BTM(RBB)

May 16, 2012

From the Village to the Arena: Copyright Termination Issues Left Unsung In Aftermath of the Village People Ruling

By Lisa A. Alter
lisa.alter@alterandkendrick.com
(212) 707-8377

The Los Angeles District Court ruling that Village People Songwriter Victor Willis is entitled to terminate his grants of rights in 33 musical compositions is being hailed as a landmark decision that "will send shock waves through the record industry." The case is the first to be decided under the provision of the U.S. Copyright Act that affords authors (including composers and lyricists) and their heirs the right to terminate grants under copyright made by the author on or after January 1, 1978. That provision, 17 U.S.C. Section 203, was specifically designed by Congress to allow creators the chance to recapture their creations 35 years after contracting them away (or 40 years after the works were first published, whichever date arrives sooner). While Section 203 of the Copyright Act (like Sections 304(c) and (d) which govern terminations of grants made prior to 1978) was intended to protect the interests of authors who all too frequently entered into inequitable contracts due to their unequal bargaining position, the lobbying efforts of book and music publishers anxious to hold on to these copyrights made the resulting legislation far more complex. Indeed, the termination provisions and the Copyright Office regulations that complement them are sufficiently confusing so that it is difficult for a creator to reclaim his or her rights without consulting with a lawyer specifically working in the copyright area.

That said, the question addressed by the court in Scorpio Music S.A. v. Victor Willis was actually quite simple: was it necessary for Willis' co-authors to join him in serving notice of termination on the publisher, Scorpio Music. This is an issue that never should have gone to court. The Copyright Act states plainly and succinctly that where 2 or more authors execute a grant of copyright a majority of those authors are required to terminate the grant. However, "In the case of a grant executed by one author, termination of the grant may be effected by that author." No other songwriters were party to the contracts entered into by Willis and Scorpio Music; presumably, his co-writers entered into separate agreements with the music publisher. Based on this fact and the "'plain meaning' of the statute's text" the Willis court held that "a joint author who separately transfers his copyright interest may unilaterally terminate that grant." While it is gratifying that the first time the Section 203 termination right (commonly referred to as the "35 Year Termination Right") has come under judicial scrutiny the court ruled in favor of the author, the very limited fact pattern reviewed in this case makes the decision fairly inconsequential. The law is quite clear as to how many authors must serve notice of termination based on the number of authors who are signatory to a specific grant, but there are other areas of ambiguity in the statute which, if litigated, will have a far greater impact on the music industry than Willis.

Foremost among the open issues is a question that goes straight to the heart of the record industry: may recording artists terminate agreements entered into with record labels and recapture the rights to their sound recordings? Since the enactment of the Copyright Act, many songwriters, composers and heirs have successfully invoked the statutory termination provisions. However, due to the fact that sound recordings were not within the scope of federalcopyright laws prior to February 15, 1972, until recently there has been little consideration of the application of the termination provisions to grants of rights in sound recordings. Clearly allowing recording artists to assert termination rights would further the intent of Congress to "safeguard authors against unremunerative transfers." If the balance of power in the negotiation between a songwriter and publisher is inequitable, how much more so is that of the negotiation between the artist and record company?

Yet record labels, concerned about imminently losing control of valuable sound recordings from the late '70s and early '80s, have mounted a 2-prong argument against allowing recording artists to exercise their statutory termination rights. First, claim the labels, sound recordings are by definition works made for hire and thus outside the scope of the statutory termination provisions. However, while in certain circumstances a sound recording may be found to be a work made for hire (meaning, in essence, that the record company is the "author" of the work), this is a factual determination that must be made (or potentially litigated) on a case by case basis. The Copyright Act does not state that sound recordings are by definition works made for hire and, indeed, most sound recordings would fail to meet the work for hire criteria set forth in the Copyright Act.

The record companies' second line of attack is that, in the event that sound recordings are not works made for hire, multiple parties may have authorship standing and thus be entitled to assert a termination right. These parties, the labels assert, could include not only artists, but also producers, mixers, sound engineers, and editors, among others. While this is an interesting question (the Copyright Act does not define "author" in any instance other than to state that the "author" of a work made for hire is the employer) it is clearly not grounds for preventing an artist from asserting the 35 Year Termination Right with respect to a contract entered into between the record company and that artist. Since this issue may also be the subject of litigation (one can envision the action brought by a record company served with notice of termination by a mixer or editor) it would certainly be prudent for Congress to circumvent the matter by amending the Copyright Act to provide a definition of the author of a sound recording as the featured artist or artists, or, in the event there is no featured artist, the featured producer.

While the recent decision in the Village People songwriter case is frequently mentioned in the same sentence as the record industry, the case involved the rights of a songwriter versus a music publisher with respect to musical compositions written by the songwriter. Record rights were not involved at all. The Willis case was a frivolous lawsuit brought by a desperate music publisher not well versed in the U.S. copyright law. It is probable, however, that more substantive cases will be brought under Section 203 of the Copyright Act, and highly likely that those cases will focus on the right of an artist to terminate a grant of rights in a sound recording.

Hopefully, the decision of Judge Moskowitz to uphold Willis' right to terminate the grant of rights in his songs based not only on the plain meaning of the law but also on the recognition of the Congressional purpose in enacting the termination provisions, will offer guidance to future courts examining the termination rights of recording artists.

May 24, 2012

Village People's Original Lead Singer Victorious in Termination Lawsuit

By Christine A. Pepe, AVP ASCAP

In Scorpio Music S.A., et al. v. Victor Willis, Judge Moskowitz of the Southern District of California ruled that Victor Willis, song writer and original lead singer of the Village People, could unilaterally exercise his right of termination under the Copyright Act and reclaim his interests in 33 musical compositions, including iconic works such as "Y.M.C.A." and "In the Navy." The decision represents a victory for songwriters and performing artists who typically license or assign their copyrights to music publishers or record labels. To summarize, if an author of a joint work individually executes a grant of copyright to a third party, he or she may unilaterally terminate that grant without majority consent of the other joint authors.

In July 2011, defendant Willis served on the plaintiffs, music publishers to whom Willis had previously transferred his copyright interests in certain compositions, a notice of termination of grants of copyright for 33 musical works. The plaintiffs brought suit against Willis seeking declaratory judgment that: (1) Willis' notice was invalid and (2) should the court find the notice to be valid, Willis' reversion of rights is limited to the royalty percentage that he received under the agreements between the parties.

As Willis' transfer of copyright occurred after January 1, 1978, Section 203 of the Copyright Act applies, which reads in relevant part as follows:

(a) Conditions for Termination.--In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise, than by will, is subject to termination under the following conditions:

(1) In the case of a grant executed by one author, termination of the grant may be effected by that author . . . . In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it . . .

See 17 U.S.C. § 203 (emphasis added).

With regard to the validity of Willis' termination, the plaintiffs argued that under Section 203 (a)(1), because the subject compositions were joint works, a majority of all authors who transferred their copyright interests in a particular work must join in a termination. In other words, Willis could not unilaterally terminate his grant of copyright. The plaintiffs argued that the statute's language, "In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it" applies. They urged that the term "grant" as used in this phrase refers collectively to all grants by authors of a joint work, even if they were separate transactions.

Starting with the plain meaning of the statute, the court noted that when referring to a grant executed by two or more authors of a joint work, section 203(a)(1) refers to a "grant" in the singular--not "grants." Based on this observation, the court concluded that if two or more joint authors execute a single grant, only then is a majority necessary to effectuate a termination. If a single author of a joint work executes an individual grant, as Willis did, then that co-author can unilaterally terminate the copyright grant without obtaining consent of the other authors. Such a reading, the court held, harmonizes with the law governing copyright co-ownership--that each co-owner of a joint work holds an undivided interest in the whole and in the absence of an agreement to the contrary, may always transfer or license his or her interest in the joint work to a third party, subject only to a duty of accounting to the other co-owners. As the termination time is calculated from the date of grant execution, the court also found plaintiffs' proposed construction unwieldy. If the term "grant" consists of multiple separately executed grants by joint authors, how would the "date of execution" be calculated? Such a reading, the court determined, would create uncertainty "regarding the date of execution, which could become a moving target."

In the event that Willis' termination notice was valid, the plaintiffs alternatively argued that his reversion of rights should be limited to the royalty percentage that he received under the agreements between the parties. Again relying on traditional principles of copyright co-ownership, the court rejected this argument. Absent an agreement to the contrary, joint authors share equally in the ownership of the joint work, even if their contributions to the work were not equal. In other words, if Willis was one of three joint authors, he would have 1/3 undivided copyright interest in the musical work and upon an effective termination, he would get back exactly that--1/3 undivided copyright interest. The royalty percentage that was negotiated has no bearing on the copyright interest.

Obviously, this decision represents a victory for songwriters and recording artists who wish to terminate their copyright grants. Going forward, it is likely that music publishers and record labels will, as a matter of practice, attempt to have all joint authors execute one single grant so that majority consent is required for there to be an effective termination.

Aereo

By Gergana Miteva

Aereo is one of several startups that pioneered the concept of streaming TV over the Internet and making it viewable on every available gadget, including smart phones, tablets, and even good old computers. However, Aereo and other similar services never bothered to request licenses or offered to pay anything to the content owners of the broadcasted programming, and they were all promptly sued. Unlike other companies, though, an injunction has not yet been placed on Aereo, and the company has been seamlessly offering online television since March of this year. The plaintiffs in the case, which include Fox, CBS, NBC, and PBC, are claiming that Aereo infringed upon their copyrights by publicly performing and reproducing copyrighted works. They are also claiming unfair competition under state law. (Complaint available at https://www.eff.org/document/wnet-v-aereo-complaint)

Aereo has brought a number of novel concepts to the technological and legal discussion in this highly litigated area. First, according to its pleadings, unlike other similar services, Aereo does not provide access to cable-subscription-only networks such as CNN, USA, and TNT, which has allowed it to argue that it is not offering its subscribers any content they were not already entitled to. Second, it has devised a very cheap to manufacture tiny antenna, which every subscriber would install on his or her rooftop. Unlike other over-the-air signal intercepting antennae, these are not shared among subscribers; each one is dedicated to a single consumer. Third, the programming is not streamed directly to a subscriber's device, rather, the signals are intercepted by the miniscule antenna and retransmitted to and stored on Aereo's remote infrastructure. Then the signal is encoded for streaming over a digital device and transmitted back to the subscriber. (Aereo's Pre-hearing Memorandum of Law available at: http://archive.recapthelaw.org/nysd/392874/)

According to the defendant, no "streaming" takes place, even when the subscriber requests the "watch now" option of its service. Indeed, Aereo claims that the "record" and "watch now" functions trigger exactly the same mechanism of recording the signal on Aereo's infrastructure. The only difference between the two functions is that the "watch now" option plays back the content while it is still being recorded, causing a short delay for the subscriber. Another legally significant detail of Aereo's setup is that only one subscriber would have access to and ability to play the stored content. Even if another subscriber requests the same content at that same time, a unique copy of the program would be stored for that subscriber.

This technological setup may be capable of skillfully bending around many of the obstacles Aereo's brethren have tripped over. Aereo is hoping to defeat the public performance claim by arguing that no public performance takes place when each subscriber is playing his or her unique copy of recorded programming which is exclusive and unique for this subscriber. If this argument sways the court, Aereo would have its cake and eat it too, because from a subscriber's perspective, he or she is watching live, streaming television; while from a legal perspective, subscribers are watching pre-recorded programs, and enjoying the same functionality as provided by DVR or TiVo.

This week, the Southern District of New York dismissed the plaintiffs' state law claim for unfair competition. The court noted that the question of whether private performances of copyrighted works are actionable under New York's unfair competition statute is one of first impression. Concluding that the claim is preempted by the Copyright Act, the court agreed with Aereo that imposing liability on private performances of copyrighted works would extend copyright protection beyond the scope of the Copyright Act. The court reasoned that Congress specifically excluded from copyright protection performances to "a normal circle of a family and its close social acquaintances," to indicate its intent to not impose liability for this type of activity. (Opinion available at: http://www.mediabistro.com/tvspy/aereo-scores-legal-victory-over-broadcasters_b49496)

Stay tuned, because the "season finale" on the copyright infringement claims under the theories of public performance and reproduction of copyrighted works, is coming up next...

June 1, 2012

Google Books Update

By Mary E. Rasenberger

Judge Chin issued his decisions today in the two motions in the Google Books case. He refused to dismiss the Authors Guild and ASMP for lack of associational standing, as predicted, and he certified the authors' class represented by the Authors Guild.

The case will go forward on the merits this summer.

Judge Chin called Google on the inconsistency of its arguments (as noted in the Authors Guild's and ASMP's briefs). Google scanned works indiscriminately claiming fair use - with no case-by-case analysis whatsoever - and here it is now arguing that fair use issues have to be analyzed on a case-by-case basis (and hence the right holders can't all be represented by an association).

Here's a quote from the decision:

Furthermore, given the sweeping and undiscriminating nature of Google's unauthorized copying, it would be unjust to require that each affected association member litigate his claim individually. When Google copied works, it did not conduct an inquiry into the copyright ownership of each work; nor did it conduct an individualized evaluation as to whether posting "snippets" of a particular work would constitute "fair use." It copied and made search results available en masse. Google cannot now turn the tables and ask the Court to require each copyright holder to come forward individually and assert rights in a separate action. Because Google treated the copyright holders as a group, the copyright holders should be able to litigate on a group basis.

The decision is availiable at: http://blog.authorsguild.org/wp-content/uploads/2012/06/2012-May-31-Authors-Guild-v-Google-Class-Cert-Opinion.pdf

June 29, 2012

Grant of Cert for Nike in Trademark Case

By Gergana H. Miteva
Miteva Law PC www.mitevalaw.com


On Monday the United States Supreme Court granted certiorari to a case involving a Nike shoe design trademark (http://www.supremecourt.gov/orders/courtorders/062512d4f1zor.pdf). In early 2010, only a few months after Nike sued another shoe manufacturer for trademark infringement, it "abruptly" dropped the case and presented the defendant with a "Covenant Not to Sue", promising not to challenge any of the defendant's current or previous shoe designs. The defendant, apparently unconvinced by the covenant, moved to proceed with its counterclaim to invalidate the mark and cancel its registration. Both the Southern District of New York and the Second Circuit court sided with Nike (http://www.pattishall.com/pdf/Nike_v_Already.pdf), and held that since the defendant was no longer exposed to potential litigation pursuant the covenant not to sue, the court had no subject matter jurisdiction over the counterclaim. [http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=50949&terms=%40ReutersTopicCodes+CONTAINS+%27ANV%27]

The defendant's successful petition for certiorari (http://newsandinsight.thomsonreuters.com/uploadedFiles/Reuters_Content/2012/06_-_June/Trademark%20Nike.pdf) argued that the Second Circuit's decision diverged from a Ninth Circuit decision issued in 2000 (http://archive.ca9.uscourts.gov/coa/newopinions.nsf/2E84E99FE610B5F88825695200757AB0/$file/9915099.PDF?openelement) which allowed counterclaims challenging the validity of a trademark to proceed despite the plaintiff's promise not to sue. In the California case, the plaintiff offered to waive all of its trademark infringement, dilution, and unfair competition claims against the defendant's use of the "masters.com" domain. The court held that the plaintiff's promises did not divest the court from jurisdiction to hear the defendant's counterclaims.

This case taps into the very core of strategic decision making for trademark owners. Nike placed itself in a somewhat precarious situation by first suing to enforce its trademark and later voluntarily dismissing the suit, signaling apprehension that its mark may be invalidated. This move, planned or not, may backfire regardless of the outcome. Even if the Supreme Court finds that there is no jurisdiction over the counterclaim, Nike might still be vulnerable to competitors wishing to get a free ride on its popularity. Nike's apparent lack of confidence in the validity of this trademark might embolden opportunistic companies to manufacture products with similar designs and names.

Owners of valuable trademarks, however, also stand to benefit greatly from a favorable outcome in this case. If they gain the ability to enforce their marks without fearing invalidation, the risk of going to court to enforce them would decrease substantially. The down side of this is that it may inspire an increase in big name trademark owners flexing their muscles against small competitors by going to court with the option to voluntarily dismiss the case if the other side signals ability and willingness to litigate all the way.

July 20, 2012

Aereo Update

By Gergana H. Miteva www.mitevalaw.com

There were some firecracker developments in the eagerly anticipated Aereo case last week. The Southern District of New York denied the broadcasters' motion for a preliminary injunction (http://www.scribd.com/doc/99853009/American-Broadcasting-Companies-WNET-v-Aereo-TV#download), which was immediately appealed to the Second Circuit (http://www.scribd.com/doc/99939213/Broadcasters-Appeal-Decision-in-Aereo-Case) - clearly the plaintiffs were prepared for a negative outcome of their motion. As previously reported on this blog (nysbar.com/blogs/EASL/2012/05/aereo.html), broadcasters such as NBC, CBS, ABC, FOX, PBS and Univision sued Brooklyn-based Aereo for re-transmitting their content via an army of mini antennas to Aereo subscribers' digital gadgets.

This case presents an interesting stress test of the copyright framework in the context of a copyright owner's exclusive right to public performance. In a nutshell, Aereo argued that its antennas do not publicly perform the plaintiffs' content because its system stores a unique copy of the content and then individually performs it for each subscriber. This, Aereo contends, amounts to a private and not public performance of the plaintiffs' content.

Aereo's second defense to copyright infringement of the exclusive right to public performance was that the performance occurs not at Aereo's will, but at the will of the viewer - it is he/she who controls the operation of Aereo's system and initiates the performances. In its decision denying the broadcasters' request for preliminary injunction, the court went into a very detailed analysis of whether Aereo's technological setup and transmission of the plaintiffs' content amounts to a public performance. It did not reach Aereo's "willful performance" argument.

At stake in this stage of the litigation was whether the court should pull Aereo's plug before the conclusion of the case to prevent any further copyright infringement of the plaintiffs' content. The broadcasters' motion for a preliminary injunction was based on the part of Aereo's functionality, which allows contemporaneous viewing of copyrighted programs - in other words - the service allowing Aereo subscribers to view programs at the same time as viewers watching them on their televisions.

A major disputed point was the tiny antennas' ability to function independently of each other, which is essential to showing that every Aereo transmission to a subscriber is unique, and therefore private. The broadcasters contended that the antennas are too small to be able to handle the bandwidth necessary to provide the service. Their expert witness claimed that the antennas function in unison and multiple antennas need to be engaged to deliver content to each subscriber. Aereo's expert witness, on the other hand, insisted that each time a subscriber uses its service, a dedicated antenna is ascribed and that antenna alone is doing all the heavy lifting necessary.

The court was not persuaded by the broadcasters' expert witness' conclusion that the antennas could not function independently. For the court, Aereo's proposition that a sufficiently strong signal may overcome the obstacles associated with the size of the antennas, was more persuasive. The seemingly insignificant factual finding in Aereo's favor, that its antennas function independently, may prove quite important because it would affect not only the decision on the preliminary injunction but, if it stands on appeal, but it may also strongly tilt the outcome of the ultimate question - whether Aereo is engaging in unauthorized public performance of copyrighted content.

To determine whether it should grant a preliminary injunction for the broadcasters, the court also looked to its controlling precedent - Cartoon Network LP, LLLP v. CSC Holdings, Inc., (536 F.3d 121 (2d Cir. 2008)) ("Cablevision"). In Cablevision, the technology in question allowed customers who did not have DVRs to record cable programs at Cablevision's remote facilities and view them at times and locations of their choosing. Similarly to Aereo's position, Cablevision's argument was that each of its customers wishing to record a program had a unique copy of that program created and only that customer could play the program back from that copy. Like Aereo, Cablevision also argued that its technological setup privately performed the copyrighted content and did not infringe the copyright owner's exclusive right to public performance.

In Cablevision, the Second Circuit clearly defined how it interprets the meaning of "public performance" within the copyright framework. The court reasoned that it did not matter that the same copy of the content broadcasted was then transmitted to multiple viewers, because each such transmission was a separate performance of the content. Thus, the inquiry as to whether that performance was public should be focused on the manner in which the re-transmission reaches the viewer and not on the manner in which the content reaches the re-transmitter. In other words, the relevant question is: who is capable of receiving the re-transmitted performance? If it is multiple people, then the performance is public, if it is one person, then it is private. In the Cablevision context, the court concluded that a performance of a unique copy of a program sitting on the Cablevision system, which may only be viewed by one customer, was a private performance and did not infringe the copyright owners' exclusive right to publicly perform it.

The broadcasters in Aereo's case argued that Cablevision should not apply because Aereo is merely using a "technological gimmick" to re-transmit the very copy the broadcasters are transmitting since the customers are able to watch the content at "real-time" - with minimal or no delay. The court rejected this argument. It held that Aereo's transmissions, like Cablevision's, are of a unique copy on Aereo's system, and the viewer's ability to watch the program contemporaneously with its broadcast was not legally significant. To reach this conclusion, the court distinguished the process of "buffering," which merely serves as a fleeting repository for the copyrighted content, with Aereo's storing of the content, even when the "watch" function is engaged. The significance of this is that Aereo's system makes a copy from which the content is separately performed for the viewer, as opposed to a "buffer" which would effectively retransmit the "master" copy broadcasted by the plaintiffs.

The court further rejected plaintiffs' contention that, for Aereo to be effectuating a performance separate from the broadcasted performance, there needs to be a "break in the chain of transmission" or "complete" time-shifting (meaning that a complete copy of the program must be stored before it is performed for the viewer). Even if this was an inquiry relevant to other issues, such as if Aereo's use amounted to fair use or whether it copied copyrighted content without permission, it was not an inquiry relevant to the determination whether there was an unauthorized public performance of copyrighted content. Finally, the ability to view Aereo's transmissions on a number of different devices, such as smart phones and iPads, as opposed to a television set or a single device, was immaterial to the discussion.

Having concluded that the plaintiffs would not likely prevail on the merits of the public performance claim, the court ran through the remaining preliminary injunction factors, anyway, to facilitate the anticipated appeal of its decision, which promptly followed. Once again the stakes in this case have been raised - it not only gives the federal courts an opportunity to precisely define the meaning of "public performance" within the copyright framework, but it is also representative of the times we live in, it is another clash between the technological giants of yesterday with those of tomorrow.

August 14, 2012

New Development In Google Books Case

The 2nd Circuit has granted Google the right to appeal the class status of the plaintiff authors, overturning Judge Chin's May 31st grant to the authors to form a class and sue Google as a group.

There is no indication as to when the 2nd Circuit will hear the appeal.

August 26, 2012

Eastern District Deals Bad Hand to Government in Poker Game

By Gordon M. Daniell

Required card play references aside, Hon. Jack B. Weinstein of the Eastern District ruled on Tuesday that Texas Hold'Em- a style of poker which has grown exponentially in popularity in recent years, is not gambling under the Illegal Gambling Business Act (18 U.S.C. 1955), because it is a game of skill, rather than one of chance.

The court in United States v. DiCristina (1:11-cr-00414-JBW) dismissed the defendant's indictment under the statute, and overturned his conviction after a lengthy analysis. The opinion, running to nearly 120 pages, features a detailed discussion of poker, its history, and its play, as well as graph featuring an analysis of winnings by skilled players versus unskilled players over time, the chance of winning with a particular hand given a player's skill level, and the percentage of the time a skilled player would defeat a lesser skilled player after a given number of hands. Further analysis is given to both the history of the statutes involved, and the reasoning behind each respective piece of legislation (Including pre and post IGBA laws, and the Indian Gambling Regulatory Act, among others).

It is the court's analysis of the statute that holds the best cards. In analyzing the IGBA and its application to the facts of the case, the court first found that while the statute did criminalize the running of "gambling businesses", it was unclear as to what "gambling" actually was. As an aside, it is not the gambling itself which the IGBA makes illegal, simply the running of the game; the business of gambling. The court first began with an analysis of the statute itself, and determined that the text makes it illegal to operate a gambling business that is illegal under the laws of the state where it takes place, has more than five participants who direct, manage and supervise the business, and is undertaken for more than 30 days or nets more than $2,000 in a single day. It also includes a non-exclusive list of activities, including "pool-selling, bookmaking, maintaining slot machines, roulette wheels, or dice tables and conducting lotteries, policy, bolita or numbers games, or selling chances therein." Judge Weinstein ruled that the language of the statute, pegging illegal gambling businesses to the state in which they are active, but also including a non-exhaustive list of activities, was ambiguous, because it could be read to limit the list of what constituted gambling (as the Defense contended) or expanded the activities violating the statute to all of those violating state law, as the Government contended. The court next analyzed the legislative history of the statute, and finding no clear indication of whether poker was a) included or b) a game of chance or one of skill. Finding no help from other statutes as well, Judge Weinstein determined that the rule of lenity must favor the defendant - in other words that a draw must favor the accused.

When considering the statute for itself, the court reasoned that Congress, when drafting, could have included poker as part of its list of activities that constitute gambling. Citing to numerous and varied authority for this point, including Bilski v. Kappos (a recent patent case from the U.S. Supreme Court) the court determined that to be gambling, poker must fall under the general definition of the list of games in the statute, but that it does not. Judge Weinstein, in the absence of controlling case authority, and because the statute is unclear as to whether poker is a game of skill or of chance, conducted a thorough analysis of poker. The judge largely adopted the position offered by the defense, that poker is a game of skill because it is not "house banked" and requires skill to play successfully, rather than chance. Summarizing its earlier difficulty in finding a firm definition of what constitutes gambling in the statute and the legislative history, the court returned largely to the testimony of defense and prosecution expert witnesses, a large portion of which is included in the earlier sections of the opinion itself. The court compared poker to golf or the card game Bridge, and found that while some degree of chance is inherent in all three (weather conditions produce harder greens or a more difficult shot in golf, the draw of cards introduces the chance into bridge, as it does to an extent in poker), the major question is one of whether skill or chance predominates the game in question.

As is clear from its outcome, Judge Weinstein found that evidence introduced by the defense expert Dr. Heeb (himself a poker player) was persuasive. In poker, Dr. Heeb was able to demonstrate, skill can affect the outcome more than 50% of the time in as many as 240 hands - the number typically played in a social game of poker - or the amount played in a single session at the defendant's location. According to the evidence, skillful players earn more than unskilled players, and are more successful than unskilled players with every starting hand. Despite evidence from the prosecution's expert, Dr. DeRosa, that the proper data set was a single hand, rather than a longer set of games, the court ruled in favor of the defense, finding that overwhelmingly poker was a game of skill.

The question remains in the ruling: that of its impact. While it dealt federal prosecutors a bad hand in their attempts to include poker in the list of prohibited activities under the IGBA, the court noted that there are still other laws that may be used to bring the power of the federal government to bear against illegal activity; including RICO laws and other legislation designed to prevent organized crime from infiltrating card games. Of course, it need not be mentioned that the opinion is one of a single court in a single judicial district, but it is worth considering the element of territoriality inherent in the decision. Finally, consider also that Mr. DiCristina had already been convicted of running an illegal poker game in Richmond County Supreme Court under a New York law which includes poker in its list of prohibited games of chance.

Yet it is no bluff to say that, at least for now, and at least in the Eastern District of New York, poker is a game of skill, and that those who run poker games may not be charged under the IGBA. That, they can bet on.

August 29, 2012

Hero Takes a Fall: Armstrong v. Tygart and United States Anti-Doping Agency


By Carter Anne McGowan

When, in February 2012, the U.S. Justice Department quietly ceased its investigation into whether Lance Armstrong and several other cyclists on the U.S. Postal Service cycling team had engaged in prohibited blood doping and steroid use while receiving U.S. government funds, one chapter in the ongoing saga of Armstrong's did-he-or-didn't-he doping scandal came to a close.

Yet that was far from the end of the story. The next chapter in the confused morality tale seemingly came to an abrupt and unexpected halt last week when Armstrong, after receiving an unfavorable ruling from U.S. District Judge Sam Sparks in the case of Armstrong v. Tygart and the United States Anti-Doping Agency, announced that he would no longer fight the U.S. Anti-Doping Agency (the "USADA") in its attempts to prove him a doper and strip him of his Tour de France victories and Olympic medal. At the same time, Armstrong maintained his innocence and decried what he called an "unconstitutional witch hunt" by the USADA.

Before discussing the specifics of Judge Sparks' decision, a brief description of the many different agencies involved in cycling at the national and international levels, and the role of various anti-doping agencies in the sport, may prove useful. As an Olympic sport, cycling is governed by national and international bodies. At the very top of the control pyramid for Olympic sports sits the International Olympic Committee (the "IOC"). The IOC recognizes the World Anti-Doping Agency ("WADA") and its World Anti-Doping Code ("WADC," which went into effect in 2004) as its chosen means of promoting harmonized rules prohibiting doping and regulating testing therefor across the Olympic movement.

Beneath the IOC sit the International Federations ("IF"). The IF for cycling is the International Cycling Union (known by its French acronym, "UCI"). The UCI maintains a set of anti-doping rules similar to those of WADC. Finally, each nation has a National Governing Body ("NGB") for each Olympic sport; in this case, USA Cycling, a member of UCI, controls competitive cycling. Under the Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. §§22051-220529, U.S. NGBs, among other responsibilities, conduct competitions among eligible athletes and determine which athletes meet the sport's eligibility standards. The anti-doping rules set out by the USADA, the respondent in the Armstrong case, are incorporated by reference into USA Cycling's regulations, and the USADA is explicitly given authority for drug testing and test results in USA Cycling-controlled events.

The USADA first charged Armstrong and five other members of his team in June 2012 with blood doping and steroid use for the period dating back to 1998 and gave the charged parties the choice of admitting to the charges (and facing severe penalties) or going to arbitration to fight the charges. Three members of the team chose arbitration (those arbitrations have not yet taken place); two members chose not to fight the charges and received lifetime bans from the sport of cycling. Armstrong, understandably discontent with the choice of arbitration or banishment, brought a civil action against USADA alleging a violation of his due process rights and a lack of a valid agreement between himself and the USADA to arbitrate. Judge Sparks disagreed with Armstrong on both theories.

With regard to the due process claims - based on the comparative narrowness of discovery during the arbitral process, the lack of options available for judicial review, and the possibility of bias in the arbitrators - Judge Sparks followed significant Supreme Court precedent in rejecting due process challenges to arbitration. The charging document provided by USADA, however, did give Judge Sparks pause, as he described it as both deficient and "woefully inadequate." Despite these concerns, the court found that, even if the charging document as written did violate due process, the USADA could simply issue a more substantial document, and, furthermore, Armstrong was entitled to receive "more detailed disclosures regarding USADA's claims against him at a time reasonably before arbitration." Armstrong at 17. Therefore, Sparks found that Armstrong had received "all the process to which he was due" at the time of the lawsuit, but fired a shot across the USADA bow, warning that if it didn't follow through on providing additional information in a timely fashion, and Armstrong refiled suit, the "USADA is unlikely to appreciate the result."Armstrong at n. 26.

With regard to the additional jurisdictional and contractual claims, the court found that the Ted Stevens Sports Act and the USA Cycling licenses signed by Armstrong barred these claims. In his reliance on the Ted Stevens Sports Act, Sparks followed significant precedent tending to keep courts out of amateur sports. The court found that the Sports Act granted NGBs themselves the right to set procedures for determining eligibility. Therefore, the court found, "Congress intended for eligibility questions to be decided through arbitration, rather than federal lawsuits," unless the NGB acted with wanton disregard for its own rules.Armstrong at 20.

Finally, the court found that Armstrong, by agreeing to abide by the rules of USA Cycling in some of his cycling licenses (which rules incorporate USADA Protocols), agreed to that portion of the USADA Protocol which set out arbitration - including arbitration with regard to the arbitrability of the dispute - as the appropriate dispute resolution mechanism.

Despite ruling entirely against Armstrong, Judge Sparks indicated throughout his ruling that he was troubled by the USADA's behavior, which included consolidating Armstrong's case with those of several other athletes over whom neither USA Cycling nor the USOC had any jurisdiction and allegedly promising lesser penalties to other cyclists in return for their testimony against Armstrong. This sympathy, however, did nothing to change the fact that, once the decision was handed down, Armstrong had three days to elect arbitration or sanctions. By refusing to carry the fight to arbitration, Armstrong in effect accepted the sanctions...

...or so it seems. As Judge Sparks noted in his concluding words on the case, while the USADA was fierce in its determination to force Armstrong to arbitrate or accept sanctions, UCI desired that proceedings against Armstrong be discontinued. USA Cycling, breaking with its own anti-doping agency, sided with UCI. Therefore, although the USADA has now banned Armstrong for life and stated that he will be stripped of his titles, UCI - the actual keeper of the record books - has not yet agreed. Instead, UCI is requiring that USADA submit a "reasoned decision" explaining the actions it has taken, as Article 8.3 of WADC requires that when no hearing is held regarding a doping sanction, the anti-doping agency submit its decision to UCI, WADA, and the alleged wrongdoer before UCI will take any action. See Press Release: UCI's Statement on Lance Armstrong's Decision; http://www.uci.ch/Modules/ENews/ENewsDetails.asp?source=SiteSearch&id=ODYzOA&MenuId=MTI1ODA&CharValList=&CharTextList=&CharFromList=&CharToList=&txtSiteSearch=Lance+Armstrong&LangId=1

If the Floyd Landis case serves as precedent, UCI will accept USADA's decision and write Armstrong out of the record book. As of today however, there may yet be another chapter in the saga of Lance Armstrong.

September 4, 2012

Friends Actress Lisa Kudrow's Former Manager Seeks To Reap The Fruits of His Labor

By Aleeshea Sanders

Howard Entertainment, Inc. et al., v. Lisa Kudrow et al.

On August 22nd the California Court of Appeal opened the door for the former manager of the well-known sitcom "Friends" actress, Lisa Kudrow a/k/a "Phoebe", to finally reap the fruits of his labor. In this ongoing legal battle for breach of contract between Kudrow and Scott Howard, the Second District California Court of Appeal sided with Howard, reversing the trial court's summary judgment for Kudrow, and ruling admissible Howard's proffered expert testimony relating to the customary practice in the entertainment industry with regard to post-termination commissions. (Howard Entertainment, Inc. et al. v. Lisa Kudrow et al., No. B234962, (Cal. Ct. App. 2nd Dist. August 22, 2012); see also http://www.courts.ca.gov/opinions/documents/B234962A.PDF.).

The dispute arose when, after a 16-year management relationship, Kudrow terminated Howard in early March 2007. She then refused to pay him commissions for work that he handled during the term of their agreement. In 1991, Howard and Kudrow had orally agreed that Howard would provide management services for Kudrow in return for ten percent commission on her income. In 2000 and 2004 respectively, the parties again made modifications to their verbal agreement, which included a reduction in Howard's commissions on certain earnings for "Friends", and then a reduction in Howard's commissions to five percent.

In 2008, Howard brought suit against Kudrow for breach of contract alleging that she failed to make more than $50,000 in continuing post-termination commission payments. Howard sought declaratory relief that he was entitled to receive commissions on all of Kudrow's continuing earnings for work done between 1991 and 1997.

Howard attempted to offer the expert testimony and declaration of Martin Bauer that it was customary for a personal manager to be paid post-termination commissions on work handled during the management term. Bauer stated, "[F]rom at least the early 1980s, it had been the custom and practice in the entertainment industry for a personal manager to be paid post-termination commissions on the services that their clients rendered, and on engagements that their clients entered into, when the personal manager was representing them." (Howard Entertainment, Inc. v. Lisa Kudrow, 2010 WL 3758592, (Cal. Ct. App. Sept. 28, 2010)).

However, Kudrow objected to the inclusion of Bauer's testimony, and the court granted summary judgment on the grounds that Bauer's opinion lacked foundation as it did not adequately reflect specified knowledge of the customary entertainment industry practices with regard to a manager's post-termination commissions at the time the parties entered into their agreement. Howard requested a continuance to address the deficiencies in Bauer's declaration. The trial court concluded that it did not have the discretion to grant Howard a continuance, so it granted Kudrow's motion and dismissed the case.

In the Court of Appeal's unpublished decision, it ruled that the trial court erred in concluding that it had no discretion to allow an opportunity to supplement the declaration, and that it abused its discretion in failing to grant a continuance to allow Howard to file a supplemental expert declaration with sufficient foundation. (See http://scholar.google.com/scholar_case?case=4321723798193235120&hl=en&as_sdt=2&as_vis=1&oi=scholarr.). The court stated, "If Bauer supplied the necessary foundation, arguably there would be a triable issue of fact as to whether the custom and usage was of such 'general and universal application that [Kudrow] may be conclusively presumed to know of the custom.'" (Howard Entertainment, Inc. v. Lisa Kudrow, 2010 WL 3758592, (Cal. Ct. App. Sept. 28, 2010) [quoting Miller v. Germain Seed & Plant Co. (1924) 193 Cal. 62, 69 (Miller)]).

The court stated that "custom and usage" in the entertainment industry may become part of the oral agreement between the parties to explain whether Howard was entitled to receive post-termination earnings, and it relied on long-standing precedent which states:

"'[A] reasonable usage may supply an omitted term or otherwise supplement an agreement." (Varni Bros., Corp. v. Wine World, Inc. (1995) 35 Cal. App. 4th 880, 889 [quoting 1 Witkin, Summary of California Law (8th ed. 1987) Contracts, § 696, p. 630]; see also Civ. Code § 1655.); and

"Custom and usage is considered 'in determining the intent of the parties, and are in effect a part of the contract unless the contract manifests a contrary intention.'" (Miller v. Germain Seed & Plant Co., supra, 193 Cal. at p. 77; accord Civ. Code § 1655.).

The court continued, "Evidence of custom and usage in the entertainment industry, even if Kudrow was unaware of that custom and usage, may therefore be relevant to explain or disclose an ambiguity in the agreement or provide by implication a missing term." (Miller v. Germain Seed & Plant Co., supra, 193 Cal. at p. 69 italics added.) "[A] party to a contract may be bound by a custom not inconsistent with the terms of the contract, even though he is ignorant of the custom, if that custom is of such general and universal application that he may be conclusively presumed to know of the custom." (Miller v. Germain Seed & Plant Co., supra, 193 Cal. at p. 69, italics added.).

The Court of Appeal concluded that Howard should have been granted a continuance, and it reversed the summary judgment.

On remand, the trial court accepted Bauer's supplemental declaration that detailed the basis for the expert's understanding about the relevant custom and practice, but again, it granted summary judgment for Kudrow, explaining that Bauer's knowledge provided an insufficient basis to admit his declaration because he did not include details of his personal experience in handling the exact type of transactions involving the exact custom and practice that he described.

Now, on Howard's second appeal, the Second District Court of Appeal once more reversed the trial court in a published opinion holding that, again, it improperly granted summary judgment in favor of Kudrow. The court explained, "An expert may rely upon experiences and conversations he or she has had and information he or she has obtained without the necessity of providing the specifics of such experiences and conversation." The court concluded that "there is no requirement that an expert set forth specific persons, conversations, or dates of such conversation for the formation of the opinion, as apparently required by the trial court." (Howard Entertainment, Inc. et al. v. Lisa Kudrow et al., No. B234962, (Cal. Ct. App. 2nd Dist. August 22, 2012)).

Thus, the trial court erred in requiring Bauer to provide names and dates to back up his opinion based on his experience that it is custom and practice to continue paying commissions to talent managers after a contract is terminated. The Court of Appeal reversed the summary judgment for Kudrow and ruled as admissible Bauer's expert testimony that it is customary practice to pay managers post-termination commission. (Howard Entertainment, Inc. et al. v. Lisa Kudrow et al., No. B234962, (Cal. Ct. App. 2nd Dist. August 22, 2012)).

However, despite a 16-year entertainment-industry marriage, and the laborious four-year-old legal separation and divorce that have come along with it, Kudrow's attorney stated that she is considering taking the legal dispute to the California Supreme Court. "The bottom line at this point in time is we are taking a look at possibly petitioning the California Supreme Court to look at the matter and at the same Ms. Kudrow is looking forward to having the matter decided in front of a jury if the matter proceeds to a trial court for a determination." (See http://abcnewsradioonline.com/entertainment-news/lisa-kudrow-may-take-legal-dispute-with-ex-manager-to-state.html).

September 21, 2012

Kernel Records Oy v. Timothy Z. Mosley p/k/a Timbaland, et al.

By Barry Werbin

A very interesting and detailed case addressing what constitutes a published "US work" in the context of global online publishing and distribution, is Kernel Records Oy v. Timothy Z. Mosley p/k/a Timbaland, et al. (11th Cir. Sept. 14, 2012). The plaintiff, a Finnish record company, had purchased rights to a musical computer arrangement called Acidjazzed Evening, which was first published by the original author allegedly in Australia in August 2002 as a "disk magazine" called Vandalism News, and later by a Swedish website, which had uploaded it. The defendants (including UMG, EMI and other music publishers) created, distributed and marketed an allegedly infringing (sampled) song called Do It. Kernel failed to apply for U.S. copyright registration, but alleged that because the work was first published outside the U.S., no U.S. registration was required as a prerequisite to sue. Mosley argued, however, that by making Acidjazzed Evening available for download from an "Internet site," the work was simultaneously "published" in every country of the world having Internet service and, thus, the work was subject to the U.S. registration requirement. The Florida District Court agreed and dismissed the case on a summary judgment motion based on its view that the Copyright Act dictates that a work simultaneously published in every country of the world should be treated as a "United States work" under Section 411 of the Act, and therefore is subject to the Copyright Act's registration requirement.

The 11th Circuit affirmed on alternative grounds under Section 411 of the Act but rejected the District Court's analysis and basis for the summary judgment grant, stating: "The district court...confounded 'the Internet' and 'online' with 'World Wide Web' and 'website.' Because of the strict temporal and geographic requirements contained in the statutory definition of 'United States work,' conflating these terms had a profound impact on the district court's evidentiary analysis. By confounding 'Internet' with 'website,' the district court erroneously assumed that all 'Internet publication' must occur on the 'World Wide Web' or a 'website.' The district court then erroneously assumed all 'Internet publication' results in simultaneous, worldwide distribution. [A] proper separation of the terms yields a very different analysis." The Court ultimately held that Mosley failed to meet his factual burden in establishing the exact nature of the online posting of the song and its intended scope of distribution to support summary judgment in defendants' favor. The Court noted that "proof of distribution or an offer to distribute, alone, is insufficient to prove publication. Central to the determination of publication is the method, extent, and purpose of distribution" and in the context of whether a work was first published abroad, also relevant is the "timing and geographic extent of the first publication."

However the Court ruled alternately that, based on discovery in the case, summary judgment was still warranted because "[t]he record reveals a lack of sufficiently probative evidence to determine that Acidjazzed Evening is a foreign work" because there was no evidence that the Australian "disk magazine" site was ever made "publicly accessible." The Court concluded that there was only "simple speculation that Acidjazzed Evening "was published on the Internet [in Vandalism News] in August 2002. A reasonable fact-finder could not find that a simultaneous, worldwide publication occurred in August 2002. Because the record lacks sufficiently probative evidence of simultaneous worldwide publication, we need not determine what effect simultaneous worldwide publication would have under 17 U.S.C. §101's definition of a United States work." As Kernel Records bore the burden of proving compliance with statutory formalities, the Circuit affirmed summary judgment on this alternative ground.

Therefore the core issue remains of what constitutes a "U.S. work" for first publication purposes in the context of online/Web/Internet uploading first done outside the U.S.

September 24, 2012

Effective Representation in a Mediation

Space is Limited

Effective Representation in a Mediation
Wednesday, October 3, 2012
Registration & Lunch: 12:00PM-12:30PM
Program: 12:35 - 2:00PM

Andrews Kurth LLP
450 Lexington Ave (Corner of 45th Street)
15th Floor
New York, NY 10017

Sponsored by the Alternative Dispute Resolution Committee of the Entertainment Arts & Sports Law Section of the New York State Bar Association

Alternative Dispute Resolution Committee Chair: Judith B. Prowda, Esq.

Speaker: Simeon H. Baum, Esq.

Simeon H. Baum, Esq. is President of Resolve Mediation Services, Inc. (www.mediators.com). Mr. Baum has mediated over 1,000 disputes, including the Studio Daniel Libeskind-Silverstein Properties dispute over architectural fees relating to the redevelopment of the World Trade Center site and Trump's $ 1 billion suit over the West Side Hudson River development. Since 2005 he has annually been selected for New York Magazine's "Best Lawyers" and "New York Super Lawyers" listings for ADR, and was chosen Best Lawyers' Lawyer of the Year for ADR in New York for 2011. He teaches Negotiation Theory & Skills at Benjamin N. Cardozo School of Law, and is a frequent speaker and trainer on ADR.

In this interactive program, our guest speaker, Simeon H. Baum, Esq., the founding Chair of NYSBA's Dispute Resolution Section and an experienced mediator, will guide us though the steps in a mediation. How can we, as lawyers, represent our clients effectively in a mediation? What do we need to understand about the nature and potential of the mediation process in order to make the most out of this opportunity?

1.5 MCLE Credit in Professional Practice & Skills is Pending Approval

Register Today: www.nysba.org/EASLADRProgram

For More Information: bgould@nysba.org

October 5, 2012

Publishers And Google Reach Agreement

Press Release from the Authors Guild

Mountain View, CA and Washington, DC; October 4, 2012 - The Association of American Publishers (AAP) and Google today announced a settlement agreement that will provide access to publishers' in-copyright books and journals digitized by Google for its Google Library Project. The dismissal of the lawsuit will end seven years of litigation.

The agreement settles a copyright infringement lawsuit filed against Google on October 19, 2005 by five AAP member publishers. As the settlement is between the parties to the litigation, the court is not required to approve its terms.

The settlement acknowledges the rights and interests of copyright-holders. US publishers can choose to make available or choose to remove their books and journals digitized by Google for its Library Project. Those deciding not to remove their works will have the option to receive a digital copy for their use.

Apart from the settlement, US publishers can continue to make individual agreements with Google for use of their other digitally-scanned works.

"We are pleased that this settlement addresses the issues that led to the litigation," said Tom Allen, President and CEO, AAP. "It shows that digital services can provide innovative means to discover content while still respecting the rights of copyright-holders."

"Google is a company that puts innovation front and center with all that it does," said David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer, Google. "By putting this litigation with the publishers behind us, we can stay focused on our core mission and work to increase the number of books available to educate, excite and entertain our users via Google Play."

Google Books allows users to browse up to 20% of books and then purchase digital versions through Google Play. Under the agreement, books scanned by Google in the Library Project can now be included by publishers.

Further terms of the agreement are confidential.

This settlement does not affect Google's current litigation with the Authors Guild or otherwise address the underlying questions in that suit.

The publisher plaintiffs are The McGraw-Hill Companies, Inc.; Pearson Education, Inc. and Penguin Group (USA) Inc., both part of Pearson; John Wiley & Sons, Inc.; and Simon & Schuster, Inc. part of CBS Corporation.

October 19, 2012

Jovani Fashion v. Fiesta Fashions

By Barry Werbin

The Second Circuit, in an unpublished Oct. 15th short opinion, addressed fashion design functionality and copyright in JOVANI FASHION v. FIESTA FASHIONS, No. 12-598-cv. Jovani sued Fiesta for copyright infringement of its design of a prom dress. To avoid the "utilitarian" functionality defense to copyrightability under Copyright Act Section 101's definition of a ""useful article," Jovani alleged that the dress merited copyright protection because its design constituted a combination of features "that can be identified separately from and are capable of existing independently of, the utilitarian aspects of the article," specifically, "the arrangement of decorative sequins and crystals on the dress bodice; horizontal satin ruching at the dress waist; and layers of tulle on the skirt." The Second Circuit's response: "We are not persuaded." Dismissal followed.

The Court held that in the context of clothing designs, "[p]hysical separability can be shown where one or more decorative elements 'can actually be removed from the original item and separately sold, without adversely impacting the article's functionality.'"....That is plainly not the case here. Jovani has not alleged, nor could it possibly allege, that the design elements for which it seeks protection could be removed from the dress in question and separately sold."

The Court also addressed "conceptual separability," where a designer exercises artistic judgment "independently of functional influences," rather than as "a merger of aesthetic and functional considerations." In this case, the Court found that the artistic judgment exercised with respect to the alleged design elements "does not invoke in the viewer a concept other than that of clothing... these design elements are used precisely to enhance the functionality of the dress as clothing for a special occasion. In short, here the aesthetic merged with the functional to cover the body in a particularly attractive way for that special occasion." The Court's discussion also addressed the seminal Barry Kieselstein-Cord case (Kieselstein-Cord v. Accessories by Pearl, Inc., 632 F.2d at 993) and Halloween costume cases (such as Chosun Int'l, Inc. v. Chrisha Creations, Ltd., 413 F.3d 324, 328 (2d Cir. 2005) and Whimsicality, Inc. v. Rubie's Costume Co., 891 F.2d at 455).


October 22, 2012

HathiTrust

By Barry Werbin

On the heels of Google's settlement of long-running claims by the Association of American Publishers concerning the Google Library Project, on Oct. 10th, Judge Harold Baer (SDNY) granted a motion for summary judgment that had been filed by defendants in The Authors Guild, Inc. et al v. Hathitrust et al. HathiTrust and other defendants had been sued by the Authors' Guild and others for copyright infringement based on the HathiTrust project's planned scanning of books owned by various universities, including the University of Michigan, University of California, University of Wisconsin, Indiana University and Cornell University, which were also named as defendants. In addition to the Author's Guild, the other plaintiffs included various individual authors and other U.S. and foreign authors' associational organizations. The National Federation of the Blind also was permitted to intervene.

In addition to the summary judgment motion concerning the substantive copyright claims and fair use defense, the court also ruled on the defendants' motion to dismiss asserting a lack of standing by the associational plaintiffs (to the extent they asserted rights of their members) and that claims concerning the Orphan Works Project (OWP) were not ripe for adjudication.

Background

The university defendants had entered into agreements to allow Google to create digital copies of works in the universities' libraries, in exchange for which Google would provide digital copies to the universities (referred to as the Mass Digitization Project or MDP). According to the complaint, this digital repository at the time of filing the action held some 10 million digital volumes, of which approximately 73% were protected by copyright. Once digitized, Google also makes "snippets" of the books available for viewing online, and the universities also "contribute" their digital copies to the HathiTrust Digital Library (HDL), a partnership of the participating universities.

In addition, as described in the court's opinion, for works by known authors, such digitized works within the HDL are used in three ways: (1) full-text searches; (2) preservation; and (3) access for people with certified print disabilities, such as the blind. For works that are not in the public domain or for which the copyright owner has not authorized use, "the full-text search indicates only the page numbers on which a particular term is found and the number of times the term appears on each page."

The universities (except for Indiana) also had agreed to participate in the OWP, an initiative to "identify and make available to University students, faculty and library patrons full copies of so-called 'orphan works'--works that are protected by copyright but whose rights holders theoretically cannot be located..." If initial attempts to contact a copyright owner/author or an orphan work failed, the HathiTrust would then list bibliographical information for such works on an Orphan Candidates webpage for 90 days, after which the works, if not claimed, would be fully viewable to students, professors and other authorized users at participating universities. After the filing of the original complaint, however, the University of Michigan announced that it would temporarily suspend the program because the OWP procedures had allowed many works to be included on the Orphan Works Lists in error. On a side issue, because the OWP was being challenged based on what it would in the future create, Judge Baer held that such claims were not ripe for adjudication.

Standing

The defendants challenged both associational (constitutional) standing and statutory standing under the Copyright Act. The court found that the three-part test for associational standing established in Washington State Apple Advertising Commission v. Hunt, 432 U.S. 333, 343 (1977) were satisfied because individual members of the Authors Guild would otherwise have standing to sue, the interests involved were germane to the Authors Guild's purposes, and participation of the Authors Guild's individual members was not necessary, in accordance with the recent ruling in Author's Guild v. Google, Inc., 2012 WL 1951790, at *6 (S.D.N.Y. May 31, 2012) [currently on appeal].

With respect to statutory standing under the Copyright Act, however, Judge Baer held that the U.S. domestic associational plaintiffs, including the Authors Guild, lacked such standing because the Copyright Act's standing clause, 17 U.S.C. 501(b), expressly limits who may enforce copyright claims to "the legal or beneficial owner of an exclusive right under a copyright...." Looking for guidance outside the Second Circuit, Judge Baer concluded that statutory standing for U.S. associations is not permitted under the Copyright Act.

With respect to foreign associational plaintiffs, the court also had to assess the issue under the "national treatment" provisions of the Berne Convention and Universal Copyright Convention. Citing the Second Circuit's decision in Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 89 (2d Cir. 1998), which permitted a Russian reporters' organization to bring copyright claims in the U.S. where Russian law authorized the creation of such organizations "for the collective administration of the economic rights of authors," Judge Baer concluded that "whether a foreign association has satisfied the statutory standing requirements necessary to assert a claim is determined by foreign law." While four of the foreign associational plaintiffs asserted they had similar authority under their national laws, Judge Baer held that because the defendants "do not challenge the actual foreign law basis for the assertion of statutory standing by these three associations," he would not raise any objection to such standing.

Fair Use

Similar to the pending Authors Guild v. Google case now on appeal to the Second Circuit, the key issue was whether the book scanning and digitization project was subject to a fair use defense, which Judge Baer found was applicable after assessing each of the statutory fair use factors under 17 USC § 107, and also assessing the limited library exception in Section 108 of the Copyright Act (which allows libraries to make a limited number of copies of certain works for specified purposes, but without affecting any separate fair use right under Section 107). Judge Bear initially rejected the defendants' argument that Section 108 limited any fair use defense.

With respect to the first fair use factor, the "purpose and character of the use," the court found that the intended purpose here -- "scholarship and research" --met this first prong. In addition, Judge Baer held that the use of the works within the HDL was "transformative because the copies serve an entirely different purpose than the original works: the purpose is superior search capabilities rather than actual access to copyrighted material." Such use also was deemed "transformative" because it facilitated "access for print-disabled persons."

As for the second factor, the "nature of the copyrighted works," Judge Baer found that because the use is transformative -- "intended to facilitate key-word searches or access for print-disabled individuals" -- this second factor was not dispositive and he essentially ignored it.

The third factor, the amount of the work copied, was found not to be a bar either because making complete "[i]ntermediate" copies of entire works "may not be infringing when that copying is necessary for fair use," concluding that making entire copies were necessary in order to facilitate searches and provide access for print-disabled individuals.

As for the final factor, the effect on the market for the copyrighted works, drawing on the "Betamax" case, Judge Baer held that where a challenged use is non-commercial, "the plaintiff must show 'by a preponderance of the evidence that some meaningful likelihood of future harm exists,'" under Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 455 n.40 (1984). He concluded that the plaintiffs failed this test as well, based on the alleged facts. Even if the defendants had purchased additional copies of the books, "purchase of an additional copy would not have allowed either full-text searches or access for the print-disabled individuals, two transformative uses that are central to the MDP." Finally, he found that defense arguments concerning potential loss of existing and potential licensing opportunities was "conjecture" and hypothetical, making the interesting comment that "[a] copyright holder cannot preempt a transformative market."

One significant take-away from the decision, which will be appealed, is the overriding impact of a "transformative use" finding under the first statutory factor, and how it carried the day in the court's assessment of the other three factors in the case. Despite "transformative use" being a judicially created doctrine not found expressly in Section 107, we have seen this trend evolve in this direction in recent years across federal jurisdictions. Regardless of how the Second Circuit ultimately will assess "transformative" use and the fair use factors in this case, and perhaps the pending Authors Guild v. Google case if it ever gets to that substantive stage, will be one of the seminal copyright rulings of the modern era.

November 5, 2012

Pole Dancing Not an Artistic Performance Under New York Law

By Marie-Andree Weiss

The New York Court of Appeals ruled on October 23th that a New York club is not exempt from paying sales taxes on pole and lap dances performed there. The case is interesting, as the judges had to question whether exotic dancing may indeed be considered a dramatic or musical arts performance by New York Tax Law and thus exempt from sales tax under Tax Law § 1105(f)(1).

Nite Moves is an adult club located in the Town of Colonie in Albany County. It is described on its own web site as an "Albany Strip Club" and "the hottest gentleman's club in the Capital District with many exotic dancers. It also boasts having "the largest staff of adult dancers in the Albany area" and being "the only gentleman's club in Albany with fully nude private dancers."

Customers have to pay an admission fee to enter the club, where they can see dancers performing on stage, using a pole. They may chose to pay an extra fee for a private lap dance performance in one of the club's private rooms. Dancers perform part of their acts dressed in costumes, which standards are set by the club, and part of their acts in the nude.

Nite Moves was audited in 2005 by the Division of Taxation, which found that both the door admission charges allowing patrons to see dancers on stage, and the sales of private dances were subject to sales tax, which Nite Moves had not paid. The club sought a redetermination, arguing that the dances performed both on stage and in the private rooms were "dramatic or musical arts performances" and thus are exempt from taxation under New York Tax Law § 1105 (f) (1). This law imposes a tax of four percent on admission charges above ten cents for "places of amusement," but provides an exception for "dramatic or musical arts performances."

The Administrative Law Judge agreed with the club's argument, and found that Nite Moves was not taxable under § 1105 (f) (1). The judge also rejected the Division of Taxation's argument that the club should be taxed under § 1105 (f) (3), which imposes a tax on cabaret charges, and under § 1105 (d) (1), which taxes the sale of drinks in restaurants, taverns and similar establishments.

However, that decision was reversed by the Tax Appeals Tribunal (the Tribunal), and the club commenced a CPLR Article 78 proceeding to challenge the Tribunal's determination. The Third Judicial Department of the Appellate Division of the New York Supreme Court affirmed the judgment of the Tribunal and the club appealed.

Are Pole and Lap Dancing... Well...Dancing?

Pole dancing is fast becoming a popular fitness activity in the U.S., and, as mentioned by the appellant's attorney when appearing in front of the Court of Appeals, may soon become an Olympic sport. As such, it is not a discipline which can be learned overnight. Dancers use the pole as a vertical beam to perform a variety of different moves and spins around the pole, and sometimes rather acrobatic inverted moves. However, a new dancer may learn a basic routine in an hour or two, especially if she had former training in other dances.

Under 1105 (f) (1), admission charges for places of amusement are taxable, and such places include carnivals, but also athletic exhibits, according to 20 NYCRR 527.10. Therefore, neither stating that pole dancing is a sport, nor that it is some 'Hoochie Coochie' dance performed at a fair, are efficient arguments for the petitioner.

New York Tax Law § 1101 (d) (5) defines an admission charge for purposes of the tax exemption of New York Tax Law § 1105 (f) (1) as "[a]ny admission charge paid for admission to a theatre, opera house, concert hall or other hall or place of assembly for a live dramatic, choreographic or musical performance."

Are Pole Dancing and Lap Dancing Choreographed?

For the Court of Appeals, in order to qualify for the exemption, petitioner had to prove that the fees paid by patrons to see the dancers "constituted admission charges for performances that were dance routines qualifying as choreographed performances" (Opinion p. 3).

New York Court of Appeals Judge Smith said during the debate that the New York Tax Law uses "dance" as a synonym for "choreographic" (Transcript p. 15).

Chief Judge Lippman asked during the argument in front of the Court of Appeals: "Is there a difference between the ballet dancer and these pole dancers in terms of their artistic value or their benefit to the world? And could that be the basis for what the tribunal found, or does it have nothing to do with that?"(Transcript p. 25).

Judge Smith asked the attorney of the Commissioner of Taxation and Finance during the argument: "I could imagine the possibility that something other than dance goes on in those rooms once in a while. But you're really saying they weren't dancing, or you're just saying it wasn't very high class dancing?" (Transcript p. 26)

He answered that dancing was only one component of the adult entertainment provided by the club, and, when dancers where not on stage, they also mingled with customers and performed lap dances, noting that the Tax Appeals Tribunal "reasonably concluded that just sitting and moving in a patron's lap is not a choreographed performance" (Transcript p. 27).

Counsel for the club argued that "the State of New York doesn't get to be a dance critic" and "has no business differentiating between the Bolshoi and what [the club] do[es]" (Transcript p. 30).

The petitioner had introduced as evidence in front of the Tribunal YouTube clips of pole dancing routines used as inspiration by its dancers, and stated that its dancers often used such resources available over the Internet to learn new techniques and new dance moves to be used in their pole routine.

Nite Moves had also presented as evidence the expert opinion of Dr. Judith Hanna, a professor at Maryland University who has extensively studied exotic dancing, and she "stated as her expert opinion that the video [of dancers performing at the club] represented choreography, or arrangement, of about 61 different moves with them and variation patterns with repetition. She identified the use of locomotion, gesture, pole, mirror and floor work at variable levels in response to music."

However, the Tribunal dismissed her interpretation of what constitutes choreographed performance as "sweeping," adding that if one accept her definition, "all one needs to do is to move in an aesthetically pleasing way to music, using unity, variety, repletion, contrast, transition."

All there is? One can argue that, to the contrary, that this is quite difficult, and that moving "in an aesthetically pleasing way to music" is quite difficult, especially if one wants to engage a paying audience, as anybody who ever danced on a public stage can attest.

The expert did not convince the Third Department either, which stated that "petitioner failed to meet its burden of establishing that the private dances offered at its club were choreographed performances." The Court of Appeals noted that the \Tribunal had articulated a rational basis for discriminating the expert, as she had stated that dances performed privately and publicly were the same, even though she had not observed what occurred in the private rooms (p. 4).

Indeed, one can regret that Dr. Hanna did not describe the dances performed at the Albany club, whether privately or publicly, using specific choreographic terms used in pole dance or jazz dancing. Pole dance uses a specific vocabulary, understood by all pole dancers, such as the "fireman spin," or the "inverted scorpio." Even lap dancing may be choreographed, using the chair, and the customer's lap as a prop, such as done, for example, in jazz dance.

Maybe a bona fide pole dancer and/or instructor would have been a more convincing witness, and would have been able to break down the video presented by the club using specific choreographic terms.

Is Improvised Dancing Art?

Judge Smith also asked the attorney for the Commissioner of Taxation and Finance during the debate whether in his opinion only choreographed dances were exempt, not improvised dance, and the representative said yes (transcript p. 22). However, improvisation of a dance is also choreographed, albeit done at the spur of the moment, and only dancers trained in their art are able to improvise and still capture the attention of the public. Chief Judge Lippman asked this question during the argument: "Wouldn't you say that the most creative performers are often ones who don't have every move choreographed before they start, and that creative artistic people, particularly in the dance mode, certainly there are many instances of that - - - are kind of creative? They're designing their moves as they go along, although they have a whole repertoire of different moves that they might have. Isn't that couldn't that be ... artistic or choreographic? (Transcript p. 23-24)

Judge Smith wrote in his dissent that it would be absurd to suggest that the Legislature meant to tax improvised dance, but not choreographed dance, noting, however, that this was not what the Court of Appeals' opinion had stated.

Pole Dancing May Very Well Be Dancing After All

The Court of Appeals ruled against the petitioner. However, it can be argued that whether pole dancing or lap dancing is carefully choreographed, or improvised on the spur of the moment, it is still dance. Judge Smith wrote in his dissent that "[i]t does not matter if the dance was artistic or crude, boring or erotic. Under New York Tax Law, a dance is a dance" and regretted that the majority have "implicitly defined the statutory words "choreographic... performance" to mean "highbrow dance"" (Dissent p. 2).

Judge Smith continued by stating that, while he himself found this particular form of dancing "distasteful," he nevertheless thought of it as a dance under New York Tax Law. Such dance should not be taxed based on its level, or lack thereof, of cultural and artistic value. Doing so would be, according to Judge Smith, like taxing Hustler magazine, but not the New Yorker. Indeed, dance is speech, and thus protected by the First Amendment. Even nude dancing was recognized by the Supreme Court in 1975 in Doran v. Salem Inn, Inc.

Taxing exotic dancing, while exempting other types of dance is discrimination according to Judge Smith and thus would "surely be unconstitutional."

Tax Appeals Tribunal Decision: http://www.nysdta.org/Decisions/821458.dec.htm

New York Appellate Decision: http://decisions.courts.state.ny.us/ad3/decisions/2011/509464.pdf

Appellant's brief: http://www.andrewmccullough.org/pdf/Nitemoves.br1A.pdf

Transcript of the argument in front of the Court of Appeals:

http://www.nycourts.gov/ctapps/arguments/2012/Sep12/Transcripts/090512-157.pdf

Opinion of the New York Court of Appeals Decision , and Judge Smith's dissent:

http://www.nycourts.gov/ctapps/Decisions/2012/Oct12/157mem12.pdf

February 12, 2013

Macmillan Settles Antitrust Action

By Joel L. Hecker

As you probably know by now, the U.S. Justice Department commenced a civil antitrust action against five of the six major book publishers in the United States as well as Apple, Inc. This action arose out of allegations that the defendants conspired to raise the price of e-books over a period of time in response to the practice by Amazon.com of selling e-books for $9.99.

The parties had extensive negotiations prior to the filing of the action and the government reached a settlement with Hachett Book Group, Inc., HarperCollins Publishers, LLC, and Simon & Schuster, Inc., three of the publishers. As a result, simultaneously with the filing of that complaint, the government also filed a Stipulation of Settlement and Consent Decree along with a Competitive Impact Statement. That settlement was approved by Judge Cote of the Southern District of New York on September 5, 2012, at which time she granted the government's motion for a final judgment against these three publishing defendants. (Please see my article in the Fall/Winter 2012 Edition of the EASL Journal for a detailed description of the terms of that settlement.)

In December 2012, the fourth publishing defendant, the Penguin Group (Penguin), a division of Pearson PLC, Penguin Group (USA) Inc. abandoned its defense and also agreed to settle on the same terms as previously approved by Judge Cote. The public comment period on that settlement runs through March 5, 2013, after which Judge Cote will hold a hearing on the government's motion to approve that Consent Decree and whether to grant the government's motion for a final judgment against Penguin.

As a result, Macmillan (actually Verlagsgruppe Georg Von Holtzbrinck GMBH, Holtzbrinck Publishers, LLC d/b/a Macmillan) was left as the only remaining publishing defendant in the action (along, of course, with Apple). On February 8, 2013, Macmillan gave in and agreed to settle on the same terms previously agreed to by the other four publishing defendants. The reasons given for abandoning its defense were spelled out, in a letter by Macmillan's CEO, John Sargent, that Macmillan "settled because the potential penalties became too high to risk even the possibility of an unfavorable outcome." Sargent also wrote that, "I had an old-fashioned belief that you should not settle if you had done no wrong. As it turns out, that is indeed old-fashioned." Aside from being old-fashioned, the government obviously takes issue that Macmillan had done no wrong!

Another reason that Macmillan reached the settlement was that the market for e-books seems to have not led to any noticeable drop in e-book prices, which was the great fear of the publishers. Therefore, Macmillan had been out of step in the marketplace.

Macmillan will now go through the same process of having the government file a Stipulation of Settlement and Consent Decree along with a Competitive Impact Statement. There will then be a period for public comment, followed by a motion by the government before Judge Cote for approval and for a final judgment.

This leaves Apple as the only defendant in the action with a trial date currently set for June 2013.

February 13, 2013

Morris v. Young

By Barry Werbin

Another new interesting artwork photography/art fair use - "transformative use" - decision was issued 1/28/2013 by the C.D. California (Morris v. Young (CD Cal. 2013)), mirroring the same issues as in Cariou v. Prince, 784 F. Supp. 2d 337, 349 (S.D.N.Y. 2011) [on appeal]. In this case, the defendant, Young, was an artist who created a series of works based on photographic images of the punk band the Sex Pistols that he found on the Internet, which Young believed were in the public domain because they bore no copyright notice. The photos had been taken by the plaintiff photographer Morris, who had published two books on the Sex Pistols originally in the UK. The books contained original photographs of the Sex Pistols on tour, taken by Morris, including the photograph in issue (Subject Photograph), which depicts Sid Vicious and Johnny Rotten performing on stage.

Young took that photo and created three different "artistic" variations of it. One was called "Sex Pistols in Red" and depicts the Subject Photograph, "cropped slightly to more closely frame the subjects and tinted in a deep red color." The second one was called "Sex Pistols" and "depicts the Subject Photograph, printed using black enamel on an acrylic background." Young "altered the colors and shades, deepened the contrast between the black and white portions of the image, and added 'grittiness' to the image by printing it in black enamel on an acrylic background." A third a piece called "White Riot + Sex Pistols," depicts two images of the Subject Photograph side-by-side, "with a Union Pacific logo and the words "White Riot" and red stars graffitied atop the images."

On a motion for summary judgment by plaintiff Morris, the court held that Young's fair use defense failed as to the first two of the three images identified as "Sex Pistols" and "Sex Pistols in Red" because they were "not transformative works", and Young failed to carry his burden on the four traditional fair use factors. In particular, the court cited favorably to Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 609 (2d Cir. 2006) and Cariou v. Prince. The court found that the "works were [not] created for any reason other than to emphasize the characteristics with which the band was already associated" and such use of the Subject Photograph was "not transformative because it lacks any significant expression, meaning, or message that is unique vis à vis the works' original purpose."

However, with respect to the third work, "White Riot + Sex Pistols," the court denied summary judgment finding the image "bears certain aesthetic characteristics that raise the question of transformation, and, by extension, fair use." [Here we have a court, in my view, using the judicially created concept of "transformation" as a test seemingly apart from "fair use" itself.] "[U]nlike the other two Accused Works, 'White Riot + Sex Pistols' incorporates images beyond the band itself and arranges them such that the composition may convey a new message, meaning, or purpose beyond that of the Subject Photograph." Citing the Supreme Court's decision in Campbell v. Acuff-Rose Music Inc., 510 U.S. 569 (1994), the court held there were issues of fact "as to whether the work does more than 'merely supersede[] the objects of the original creation,' and therefore a trier of fact may reasonably deem it transformative. Campbell, 510 U.S. at 579. The transformative character of a work bears upon the weight and meaning of the other fair use factors."

March 12, 2013

SOFA Entertainment, Inc. v. Dodger Productions, Inc.

By Barry Werbin

The Ninth Circuit issued a March 11, 2013 decision in SOFA Entertainment, Inc. v. Dodger Productions, Inc. The Court affirmed the district court's grant of summary judgment and attorneys' fees in a copyright infringement suit regarding use in Jersey Boys of a seven-second clip of Ed Sullivan's introduction of the Four Seasons on "The Ed Sullivan Show".

Per the Court staff's case summary: "[T]he panel held that the defendants were entitled to prevail on their fair use defense as a matter of law. The defendants used the clip in Jersey Boys, their musical about the Four Seasons, to mark a historical point in the band's career. The panel held that this was a fair use because by using the clip for its historical significance, the defendants had imbued it with new meaning and had done so without usurping whatever demand there was for the original clip."

To the chagrin perhaps of the "transformative use" study group, the substantive part of the decision on the Section 107 fair use factors begins: "The central inquiry under the first factor is whether the new work is 'transformative.' Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 1994). Transformative works 'add[] something new' to an existing work, endowing the first with 'new expression, meaning, or message,' rather than merely supersed[ing] the objects of the original creation.' Id. By using [the clip] as a biographical anchor, Dodger put the clip to its own transformative ends...."

The Court also "doubted" whether the clip even qualified for copyright protection.

The discussion on awarding attorneys' fees to the defendant also bears note. Citing the prior case of Elvis Presley Enters., Inc. v. Passport Video, 349 F.3d 622, 629 (9th Cir. 2003), also involving use of a clip, the court harshly stated that SOFA should have received an "education" and "should have known from the outset that its chances of success in this case were slim to none." The Court also agreed with the district court's assessment that suits of this type have a "chilling effect on creativity insofar as they discourage the fair use of existing works in the creation of new ones."

To read the decision, click here: SOFA.pdf

March 20, 2013

UMG Recordings, Inc v. Veoh Networks, Inc. et al

By Barry Werbin

On March 14, the 9th Circuit came down with a lengthy superseding opinion in UMG Recordings, Inc v. Veoh Networks, Inc. et al [prior withdrawn opinion is at 667 F.3d 1022 (9th Cir. 2011)], holding that Veoh, the video sharing site and service, is entitled to a defense under the DMCA's "safe harbor" in 17 U.S.C. § 512(c), which limits a service provider's liability for "infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider."

In affirming a Cal. District Court's grant of summary judgment in favor of Veoh, the Court agreed with the Second Circuit's opinion in Viacom Int'l v. YouTube, Inc., 676 F.3d 19, 31 (2d Cir. 2012), in rejecting UMG's arguments that that the DMCA safe harbor did not apply because: "(1) the alleged infringing activities did not fall within the plain meaning of 'infringement of copyright by reason of the storage [of material]at the direction of a user;' (2) genuine issues of fact remained about whether Veoh had actual knowledge of infringement, or was 'aware of facts or circumstances from which infringing activity [wa]s apparent;' and(3) Veoh 'receive[d] a financial benefit directly attributable to . . . infringing activity' that it had the right and ability to control." [from Court's Summary]

In particular, the court rejected UMG's arguments that Section 512(c) of the DMCA only applied to web hosting services as opposed to a much broader class of "service providers," such as Veoh, and that the statute limited the safe harbor only to "storage" but not "facilitation of access." As the Court stated: "To carry out their function of making websites available to Internet users, web hosting services thus routinely copy content and transmit it to Internet users....We cannot see how these access-facilitating processes are meaningfully distinguishable from Veoh's for § 512(c)(1)purposes." (at p. 25)

With respect to "actual knowledge" and "red flag" awareness, the Court held that the district court was correct in finding that UMG "failed to rebut Veoh's showing 'that when it did acquire knowledge of allegedly infringing material - whether from DMCA notices, informal notices, or other means - it expeditiously removed such material.'" (at p. 28) "We therefore hold that merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one's services could be used to share infringing material, is insufficient to meet the actual knowledge requirement under §512(c)(1)(A)(i)." (at p. 33)

With respect to "red flag" knowledge --whether a provider is "aware of facts or circumstances from which infringing activity is apparent" -- the Court held that "Veoh's general knowledge that it hosted copyrightable material and that its services could be used for infringement is insufficient to constitute a red flag." (at p. 34) Consistent with the Second Circuit's opinion in Viacom v. YouTube, the Court observed that while a service provider can't "bury its head in the sand to avoid obtaining such specific knowledge," after "viewing the evidence in the light most favorable to UMG as we must here, however, we agree with the district court there is no evidence that Veoh acted in such a manner. Rather, the evidence demonstrates that Veoh promptly removed infringing material when it became aware of specific instances of infringement. Although the parties agree, in retrospect, that at times there was infringing material available on Veoh's services, the DMCA recognizes that service providers who do not locate and remove infringing materials they do not specifically know of should not suffer the loss of safe harbor protection." (at p. 34)

The Court also affirmed the District Court's finding that "Veoh did not have the necessary right and ability to control infringing activity and thus remained eligible for safe harbor protection." (at p. 40) In part, the Court rejected UMG's view that "control" under Section 512(c) should be equated with common law vicarious liability (which was applied in Napster), an interpretation also rejected by the Second Circuit in Viacom. The Ninth Circuit held:

"We agree with the Second Circuit and hold that, in order to have the 'right and ability to control,' the service provider must 'exert[] substantial influence on the activities of users." Id. 'Substantial influence' may include, as the Second Circuit suggested, high levels of control over activities of users... Or it may include purposeful conduct, as in Grokster. In this case, Veoh's interactions with and conduct toward its users did not rise to such a level."

There's a lot more discussion and interesting reading about additional facts relating to "knowledge," such as emails sent to Michael Eisner, one of Veoh's investors, by Disney's CEO citing specific infringing content. But the Court viewed this as a "deficient" DMCA notice coming from a copyright owner, and that the cited content was thereafter promptly removed anyway.

A copy of the decision is available at: umg_veoh_Decision.pdf

March 23, 2013

Penguin v. American Buddha

By Barry Werbin

Attached is a "post-script" opinion of the SDNY, dismissing Penguin's long-standing suit vs. American Buddha based on lack of personal jurisdiction, following the Second Circuit's remand after the New York Court of Appeals, on a certified question, ruled in 2011 that the "situs" of a copyright injury for purposes of New York's long arm statute was where the copyright owner was located, not where the infringing activity took place. The defendant is an Oregon non-profit corporation that operates in Arizona. Its website had hosted unauthorized copies of the plaintiff's copyrighted books as an online library, which was not primarily involved in sales of the works.

The court now finds there is no jurisdiction under CPLR 302(a)(3)(ii) because the evidence showed that the defendant's revenues from the infringing activity amounted to only about $2,000, and this was not sufficient to be deemed revenues derived from "substantial" interstate commerce.

For litigators, the case has interesting language on modern Internet-based jurisdiction.

Here is the decision: Order3-7-13-PenguinvAmericanBuddha.pdf

April 1, 2013

WNET v. Aereo

By Barry Werbin

The Second Circuit's decision in WNET v. Aereo, affirming the denial of a PI, found that the District Court "correctly concluded that Aereo's system is not materially distinguishable from the system upheld in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008)." Judge Chin dissented.

The Court focused on whether Aereo's service infringes the plaintiffs' public performance right under the Copyright Act. The plaintiffs argued that the "Aereo's transmissions of broadcast television programs while the programs are airing on broadcast television fall within the plain language of the Transmit Clause and are analogous to the retransmissions of network programming made by cable systems, which the drafters of the 1976 Copyright Act viewed as public performances."

Looking at its Cablevision decision and a reading of the Transmit Clause, the Court noted that "the Cablevision court concluded that Cablevision's transmission of a recorded program to an individual subscriber was not a public performance....Each transmission of a program could be received by only one Cablevision customer, namely the customer who requested that the copy be created. No other Cablevision customer could receive a transmission generated from that particular copy."

The Court found that the two key features of the Cablevision system are also present in the Aereo system: (1) the creation of "unique copies of every program a Cablevision customer wished to record," and (2) the "transmission of the recorded program to a particular customer was generated from that unique copy; no other customer could view a transmission created by that copy." As described by the Court, in Aereo's system: "when a ... customer elects to watch or record a program using either the "Watch" or "Record" features, Aereo's system creates a unique copy of that program on a portion of a hard drive assigned only to that Aereo user. And when an Aereo user chooses to watch the recorded program, whether (nearly) live or days after the program has aired, the transmission sent by Aereo and received by that user is generated from that unique copy. No other Aereo user can ever receive a transmission from that copy. Thus, just as in Cablevision, the potential audience of each Aereo transmission is the single user who requested that a program be recorded."

The plaintiffs' argument that Cablevision had a license as opposed to Aereo was rejected, because the Court found there was no public performance and, therefore, no license was needed. The Court also rejected plaintiffs' argument that discrete transmissions should be aggregated to determine whether they are "public performances," noting that this interpretation of the Transmit Clause had been rejected by Cablevision. The Court emphasized that the interpretation adopted by Cablevision "focuses on the potential audience of the performance or work being transmitted, not the potential audience of the particular transmission."

The Court also rejected the plaintiffs' argument that the two cases also should be distinguished because "Cablevision was decided based on an analogy to a typical VCR, with the RS-DVR simply an upstream version, but Aereo's system is more analogous to a cable television provider." The Court explained that its interpretation of the public performance right in Cablevision was not "influenced by any analogy to the stand-alone VCR."

Further, the Court rejected the plaintiffs' analogy of the Aereo system to Internet streaming as a public performance. The Court found that an Aereo' user's "volitional control over how the copy is played makes Aereo's copies unlike the temporary buffer copies generated incident to internet streaming."

The Court found nothing wrong with Aereo designing its system to avoid copyright liability. In this respect, the Court further analogized Aereo to "many cloud computing services, such as internet music lockers..." Despite the plaintiffs' concern, shared by Judge Chin, that complex technological workarounds should not excuse functionality that would otherwise constitute a public performance, the Court observed: "Perhaps the application of the Transmit Clause should focus less on the technical details of a particular system and more on its functionality, but this Court's decisions in Cablevision and NFL, 211 F.3d 10, held that technical architecture matters." In interpreting the public performance provisions of the Copyright Act, the Court noted that "[i]n the technological environment of 1976, distinguishing between public and private transmissions was simpler than today" and new devices such as RS-DVRs and Slingboxes complicate the analysis. Nevertheless, while "Aereo's service may resemble a cable system, it also generates transmissions that closely resemble the private transmissions from these devices."

Lastly, the Court made the interesting observation that "[o]ne panel of this Court...'cannot overrule a prior decision of another panel'....We are 'bound by the decisions of prior panels until such time as they are overruled either by an en banc panel of our Court or by the Supreme Court.'" [Emphasis added] This assuredly is not the end of this issue.

Notable is Judge Chin's strong 27-page dissent, which starts out by characterizing Aereo's system as "a sham. The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law." Judge Chin concludes that Aereo's transmission of live public broadcasts over the
Internet to paying subscribers are unlicensed transmissions 'to the public.'"

The decision is available at: WNET v Aereo Opinion-2d Cir 12-2786.pdf


June 24, 2013

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

By Irina Tarsis

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

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

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

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

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

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

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

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

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

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

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

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



July 18, 2013

Polo Ralph Lauren Wins Twin Matches from United States Polo Association

By Sarah Robertson, Susan Progoff, and Fara Sunderji

Two recent decisions were issued in a war that has raged on and off since 1984 between PRL USA Holdings, Inc. (PRL) and United States Polo Association (USPA). PRL and USPA have been battling for years over the right to use a logo consisting of a polo player on a horse and the word POLO as trademarks for clothing and other products. The dispute officially began in 1984, when USPA and its licensees sought a declaratory judgment against PRL that various types of merchandise bearing USPA's horse and rider logo did not infringe PRL's horse and rider logo. PRL counterclaimed for trademark infringement. The court denied USPA's request for a judgment of non-infringement and enjoined USPA and its licensees from using any confusing marks, and from making commercial use of the name UNITED STATES POLO ASSOCIATION or any other name that emphasizes the word POLO in a manner that is likely to cause confusion with PRL or its trademarks. However, the 1984 order specifically permitted USPA to conduct a retail licensing program using its name, a mounted polo player or equestrian or equine symbol that is distinct from PRL's Polo Player logo, and other trademarks that refer to the sport of polo.

In 2000, PRL brought suit against USPA and its master licensee affiliates seeking to bar the use of USPA's name and its Double Horsemen Mark on apparel and related products. This lawsuit was settled in 2003 with a settlement agreement that set forth the terms under which USPA could use its name and certain designs on apparel, leather goods and watches. The settlement agreement incorporated certain provisions of the 1984 order.

In 2009, USPA filed another complaint against PRL seeking a declaratory judgment that it had the right to sell fragrance products bearing the trademarks U.S. POLO ASSN., the Double Horsemen Logo and 1890, the year the association was founded. PRL and its licensee, L'Oreal, who intervened in the action, counterclaimed for trademark infringement and sought a preliminary injunction. On May 13, 2011, Judge Sweet in the Southern District of New York issued an opinion holding that USPA's use of a logo consisting of two mounted polo players and its use of composite word marks in which the word POLO predominated infringed PRL's marks. The May 13th opinion also found that USPA acted in bad faith in adopting its Double Horsemen mark for fragrances, and enjoined USPA's use of the Double Horsemen mark and the word POLO for fragrances and related products, in addition to enjoining its use of any PRL trademark for any product or service in a manner that is likely to cause confusion.

On February 11, 2013, the Second Circuit Court of Appeals, in a summary order, affirmed the District Court's May 13, 2011 opinion (Appeal No. 12-1346-cv). On appeal, USPA argued that the District Court erred in finding that USPA acted in bad faith in light of USPA's previously granted right to use its Double Horsemen Logo and U.S. POLO ASSN. in connection with apparel. Dismissing this argument, the Court of Appeals concluded that USPA's authorization to use the mark in one industry does not necessarily mean that it acted in good faith in using the mark in a different industry. USPA also claimed that because of the similarities between fragrances and apparel, it had the right to expand the use of its mark into fragrances. The Court rejected USPA's position. Finally, USPA challenged both the District Court's application of a presumption of irreparable harm in deciding to enter an injunction, and the scope of the injunction as excessively broad. The Court found both of these arguments to be meritless. The District Court did not rely upon a presumption of irreparable harm. Rather, it found irreparable harm in PRL losing control over its reputation and goodwill through USPA's infringement. The Court found the injunction's scope to be appropriate in view of USPA's history of repeated infringement.

At the same time the appeal was moving forward, PRL moved in the District Court to have USPA held in contempt of the May 13, 2011 injunction because of USPA's sale of sunglasses bearing the Double Horsemen Logo. The court found the injunction clearly and unambiguously prohibited USPA from using any image that is likely to cause confusion with PRL's Polo Player logo, irrespective of the product on which the logo is used. After reviewing the parties' marks, the court held that PRL showed by clear and convincing evidence that the Double Horsemen mark that USPA was using on its sunglasses was a simulation of PRL's Polo Player trademark and therefore was prohibited by the injunction. Because PRL had known of USPA's use of the Double Horsemen logo since 2010, however, the court held that PRL had acquiesced in USPA's use of that mark, a factor that was relevant to the consideration of an appropriate sanction. Due to PRL's acquiescence, the court found PRL to be entitled only to the future profits from the sale of any sunglasses bearing the Double Horsemen logo for a period of 60 days after the date of the court's order on the motion for contempt.

Anti-Counterfeiting Update

By Sarah Robertson, Susan Progoff, and Fara Sunderji

Recently, the designer Tory Burch was awarded relief in two different cases pending before the United States District Court for the Northern District of Illinois. In Tory Burch LLC v. The Partnerships and Unincorporated Associations Identified on Schedule "A," Civil Action No. 13 C 2059 (March 27, 2013), Judge Kendall granted an ex parte temporary restraining order against an inter-related group of Chinese-based individuals and business entities alleged to be working in concert to manufacture and sell counterfeit TORY BURCH merchandise, which was offered through hundreds of websites and online marketplaces. The court also authorized the transfer of the defendants' domain names to Tory Burch and froze the defendants' financial assets that were subject to the court's jurisdiction, such as PayPal accounts and other means by which the defendants received payment for their counterfeit products. As the defendants had provided false addresses to the domain name registrars, the court permitted them to be served by e-mail and electronic publication. Finally, the court granted the plaintiff's motion for expedited discovery of the defendants' bank and payment system accounts, finding good cause for such discovery because the defendants were located overseas and had gone to great lengths to conceal their identities.

In the second case, Tory Burch LLC v. The Partnerships and Unincorporated Associations Identified on Schedule "A," Civil Action No. 13-cv-1396 (April 8, 2013), the court entered a default judgment against a group of defendants who were selling counterfeit TORY BURCH merchandise online. In addition to granting the same kind of injunctive relief to Tory Burch, the court in this case awarded the plaintiff statutory damages of $2 million from each defendant, and directed that all monies held by PayPal in the defendants' accounts be released to the plaintiff as partial payment of the damages award. The plaintiff also received ongoing authority to serve the court's order on any banks, other financial institutions and financial service providers in the event that a new account controlled by the defendants is identified and, upon receipt of the court's order, the financial institution or provider is required to transfer any funds in any such account to the plaintiff.

Adidas and Reebok obtained similar relief from the United States District Court for the Southern District of Florida in Adidas AG v. Adidascrazylight2.com. Civil Action No. 13-21230-CIV-ALTONGA (April 16, 2013), in which Adidas and Reebok sought a temporary restraining order and preliminary injunction against a series of partnerships and unincorporated associations that operate websites selling infringing ADIDAS and REEBOK merchandise. The court granted a temporary restraining order prohibiting the defendants from advertising or selling counterfeit or infringing merchandise and from disposing of any products or evidence relating to the manufacture or sale of such merchandise. In addition, the court directed the defendants to discontinue all use of the plaintiffs' trademarks in connection with the defendants' websites, and in any domain names, metatags, source code, advertising links, search engines' databases or cache memory, and in any other form that is visible to computer users. The defendants were also enjoined from transferring the domain names in issue during the pendency of the lawsuit and the domain name registrars were directed to transfer the domain names to the plaintiff for deposit with the court. The court further ordered the privacy services for the domain names in issue to disclose the owners of the domain names to the plaintiff.

Those Red Soles are Back in Court

By Sarah Robertson, Susan Progoff, and Fara Sunderji

Earlier this month, Christian Louboutin filed another lawsuit claiming infringement of its red soles. This time, the target is Charles Jourdan Fashion Footwear, which sells shoes to retailers such as DSW and Designer Shoe Warehouse. Citing to the now famous Second Circuit opinion, Christian Louboutin S.A.S v. Yves Saint Laurent America Holding, Inc., 696 F.3d 206 (2nd Cir. 2012), the complaint declared that "The United States Court of Appeals for the Second Circuit conclusively found that Plaintiffs' marks have achieved strong secondary meaning and are entitled to be protected against infringing uses when such use, as by Defendants herein, is of a Red Sole in contrast with the remaining parts of the shoe. Thus, this is the law of the case." Christian Louboutin S.A.S v. Charles Jourdan Fashion Footwear, LLC No. 13-CV-3776 (S.D.N.Y. June 4, 2013) (internal citations omitted). The parties reportedly settled the matter on July 15, 2013.

Juicy Couture Proves U.S. Infringement, but Court Refuses Injunction Elsewhere

By Sarah Robertson, Susan Progoff, and Fara Sunderji

Juicy Couture recently brought suit in the United States District Court for the Southern District of New York against a group of six defendants, five of which were based in Hong Kong, for trademark counterfeiting, infringement, and cybersquatting arising out of the defendants' use of the trademarks JUICY GIRL, JUICYLICIOUS, and JG in connection with the sale of women's clothing. Juicy Couture, Inc. v. Bella International Limited, Civil Action No. 12 Civ. 5801 (March 12, 2013). The court found that since 1995, the defendants had been operating a chain of retail stores primarily in Hong Kong, China, and Macao, in which they sold several different brands of clothing, although their primary brand was JUICY GIRL. The defendants used social media, such as Facebook, Twitter, and Sina Weibo, which was directed largely to China, to promote their products. Although the vast majority of the defendants' sales were made outside the U.S., they sold less than $3,000 of JUICY GIRL merchandise into the U.S. through their website www.juicygirl.com.hk. This website is maintained and operated in Hong Kong, but it accepts orders from around the world through PayPal.

Applying the factors from Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961), the court held that there is a likelihood of confusion in view of the strength of the plaintiff's JUICY, JUICY GIRL and related JUICY formative marks, the similarity between the parties' respective marks, and the similarities of the products, trade channels and consumers involved. The court also found irreparable harm flowing from the plaintiff's inability to control its reputation, and that the balance of hardships tipped in the plaintiff's favor in view of the small volume of the defendants' sales that take place in the U.S. Accordingly, the court granted a preliminary injunction against the defendants' use of the JUICY GIRL mark in the U.S.

The plaintiff also sought an order disabling the defendants' Hong Kong website. Although one of the six defendants was based in the U.S., that defendant did not exercise any control over the defendants' operations, let alone the type of control that would allow the court to ignore the foreign status of the remaining five defendants. In addition, there was a parallel lawsuit pending in Hong Kong in which the defendants claimed to be the prior users of the JUICY GIRL trademark. An extraterritorial injunction issued by the U.S. court might conflict with the defendants' valid rights in Hong Kong, an issue still to be determined by the Hong Kong court. Further, the defendants' sales in the U.S. were so minimal that they did not create a substantial effect on U.S. commerce. Based on these facts, the court denied a preliminary injunction as to the defendants' activities outside the U.S., but allowed the plaintiff to renew its request if discovery discloses facts that warrant the court's reconsideration of the issue.

August 12, 2013

Dereck Seltzer v. Green Day, Inc. et al

By Barry Werbin

The Ninth Circuit issued its significant opinion on Aug. 7th in Dereck Seltzer v. Green Day, Inc. et al., affirming on fair use grounds the District Court's grant of summary judgment to the rock band Green Day and its concert tour video producer and photographer, who had created a four-minute video that included an image of the plaintiff's copyright-protected "Scream-Icon" poster affixed to a wall on Sunset Boulevard. The still image of the poster was taken by the photographer and set designer, Roger Staub, initially for his personal use, who also was a co-defendant and made the video. The video added graphic elements to the plaintiff's work, and was played as a backdrop for one of Green Day's songs ("East Jesus Nowhere") on its 2009-10 national concert tour, including at some 70 concerts and the MTV Video Music Awards.

The Court recognized this was a "close and difficult case," but found that this was a fair use and was [no surprise] "transformative." Yet the Court to its credit delves into the propriety and scope of "transformative use," including as it has been applied by other courts and discussed in various respected law review articles and commentaries.

From the case syllabus: "First, the purpose and character of the use was transformative because the video altered the expressive content or message of the illustration, and the use was not overly commercial. Second, the illustration was a creative work, but its nature included its status as a widely disseminated work of street art. Third, the defendants copied most of the illustration, but it was not meaningfully divisible. Fourth, the video backdrop did not affect the value of the illustration."

The court's description of the video and how the image was "modified" is important and is analogous to Cariou v. Prince (which is referenced in the opinion):

"The video depicts a brick alley way covered in graffiti. As "East Jesus Nowhere" is performed, several days pass at an accelerated pace and graffiti artists come and go, adding new art, posters, and tags to the brick alleyway. The graffiti includes at least three images of Jesus Christ, which are defaced over the course of the video. Throughout the video, the center of the frame is dominated by an unchanging, but modified, Scream Icon. Staub used the photograph he had taken at Sunset and Gardner, cut out the image of Scream Icon and modified it by adding a large red "spray-painted" cross over the middle of the screaming face. He also changed the contrast and color and added black streaks running down the right side of the face."

With respect to the first Section 107 factor, the Court cited to the Supreme Court's statement in the Campbell case (1994) that the "central purpose" of this factor is to see "whether and to what extent the new work is transformative." However, the Court noted (citing to the dissent in Cariou) that "whether a work is transformative is a often highly contentious topic." The Court described the legal body of transformative use cases and commentaries as "treacherous waters." In particular, it focuses on the creation of the doctrine in Campbell based on Judge Leval's 1990 Harvard Law Review article, and found that under that analysis, the use of the poster here was transformative because Scream Icon is only one component of "what is essentially a street-art focused music video about religion and especially about Christianity." While the "message and meaning" of Scream Icon "is debatable," it "clearly says nothing about religion."

The Court also noted that "Although the law in this area is splintered ... our conclusion on transformation is generally in line with other appellate authority on transformative use. In the typical "non-transformative" case, the use is one which makes no alteration to the expressive content or message of the original work.... In contrast, an allegedly infringing work is typically viewed as transformative as long as new expressive content or message is apparent. This is so even where--as here--the allegedly infringing work makes few physical changes to the original or fails to comment on the original." [Citing Cariou v. Prince]

Last, under the first factor, the Court found that "Green Day's use of Scream Icon was only incidentally commercial; the band never used it to market the concert, CDs, or merchandise. Under these circumstances, the first fair use factor weighs in Green Day's favor."

With respect to the second factor, while "Scream Icon is a creative work, meriting strong protection," at the same time the Court considered as a mitigating factor that Scream Icon also had been widely published initially by Seltzer himself as street art, including on the Internet, which "weighs only slightly in Seltzer's favor."

On the third factor, because it is a single image, "Scream Icon is not meaningfully divisible..." Thus, "this court has acknowledged that this factor will not weigh against an alleged infringer, even when he copies the whole work, if he takes no more than is necessary for his intended use."

Finally, on the fourth potential market harm factor, the Court noted that "Where the allegedly infringing use does not substitute for the original and serves a 'different market function,' such factor weighs in favor of fair use." This factor also weighed in favor of fair use because: "The original, created six years before Green Day's use, was primarily intended as street art. Green Day's allegedly infringing use, on the other hand, was never placed on merchandise, albums, or promotional material and was used for only one song in the middle of a three hour touring show. In this context, there is no reasonable argument that conduct of the sort engaged in by Green Day is a substitute for the primary market for Seltzer's art."

The Court did reverse the District Court's award of legal fees against Seltzer, finding that his position not "objectively unreasonable" especially in this case: "This was a close and difficult case. We concluded that Seltzer's work was transformed by Green Day's use. But that transformation was far from obvious given Green Day's only slight alterations to the original. Furthermore, of the remaining three factors, one was in Seltzer's favor, one was in Green Day's favor, and one was neutral. There is simply no reason to believe that Seltzer "should have known from the outset that [his] chances of success in this case were slim to none."

A copy of the decision is attached.Green Day decision.pdf

Dish Network

By Barry Werbin

On July 24, 2013, the Ninth Circuit affirmed the District Court's denial of a preliminary injunction against Dish Network over its "Hopper" DVR that skipped over commercials, as well as its PrimeTime Anytime service. The Court held that the record did not establish that the provider, rather than its customers, made copies of television programs for viewing. The broadcaster did not establish a likelihood of success on its claim of secondary infringement because, although it established a prima facie case of direct infringement by customers, the television provider showed that it was likely to succeed on its affirmative defense that the customers' copying was a "fair use." Applying a "very deferential" standard of review, the panel concluded that the district court did not abuse its discretion in denying a preliminary injunction based on the alleged contract breaches. (The contract claims related to the broadcast contract between Fox and Dish and are not summarized here).

In order to skip over ads on DVR recorded programs, an end user consumer has to enable an "Auto-Hop" feature for programming recording within the Dish PrimeTime Anytime service, which option is not selected by default. Once enabled, however, the consumer only sees the first and last few seconds of an ad. The ads themselves are not deleted from the recording. To create the Auto-Hop functionality, Dish technicians "manually view Fox's primetime programing each night and technologically mark the beginning and end of each commercial. The program content is not altered in any way." These "marked" files are then uplinked and transmitted to subscribers in a special "file" made available to subscribers after a prime time show has aired. Simultaneously with the uplink, Dish records the marked programs for transmission in three selected states for quality assurance testing purposes to make sure that no parts of the programs themselves are cut off.

Citing the Second Circuit's 2008 Cablevision decision (which has been getting quite a lot of mileage lately, but notably had been rejected by the Cal. District Court in the Fox v. Aereokiller case now on appeal), the Court note that "Cablevision's remote-storage DVR system did not directly infringe the plaintiffs' copyrights", because even though a copy made by a user was stored on Cablevision's server and not the user's own equipment, it was akin to making a copy with a VCR. Although here Dish exercised some discretion in setting up the Hopper system, ultimately it was the end user who "must take the initial step of enabling" the prime time viewing option where Auto-Hop was available as an option. Thus, the Court agreed there was no direct infringement because "operating a system used to make copies at the user's command does not mean that the system operator, rather than the user, caused copies to be made. Here, Dish's program creates the copy only in response to the user's command." (This may foreshadow the Ninth Circuit's approach in the Aereokiller appeal with respect to the validity of Cablevision, even though it is a different issue.)

Although the District Court had also found that "Dish likely breached its contract with Fox and directly infringed Fox's reproduction rights" by making the quality assurance copies, it held that Fox was not entitled to injunctive relief because it failed to establish "irreparable harm" as a result of those copies, and the Ninth Circuit agreed, because money damages could be assessed and awarded and "the harms Fox identified - including "loss of control over its copyrighted works and loss of advertising revenue" - did not "flow from" the quality assurance copies themselves, but from the entire AutoHop program."

With respect to secondary infringement, the Court noted that Fox would first have to establish direct infringement by its end users. While the Court agreed that Fox had "established a prima facie case of direct infringement by Dish customers because Fox owns the copyrights to its shows and the users make copies," Dish established that such end use was fair use under Section 107, citing to the Sup. Ct.'s 1984 Sony decision (the "Betamax" case). Fox argued that the time-shifting involved in Sony differed from ad skipping and library building (although the Sony Court had briefly discussed ad skipping by some users and had noted that 25% of users had been fast-forwarding past ads on their Betamax recorders). However the Sony Court never decided whether such skipping was fair use.

Nevertheless, the Ninth Circuit agreed with the District Court that "commercial-skipping does not implicate Fox's copyright interest because Fox owns the copyrights to the television programs, not to the ads... If recording an entire copyrighted program is a fair use, the fact that viewers do not watch the ads not copyrighted by Fox cannot transform the recording into a copyright violation."

With respect to the PrimeTime Anytime service, the Court found that Dish made out a fair use defense. PrimeTime Anytime recordings are stored locally on a customer's Hopper device for a preselected number of days. On the first Section 107 factor, the Court found home viewing was a non-commercial use, as in Sony, because PrimeTime Anytime was a form of time-shifting.

Sony also was cited to support the second and third Section 107 factors, addressing the "nature of the copyrighted work" and "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." The Ninth Circuit found that "the fact that Dish users copy Fox's entire copyrighted broadcasts does not have its ordinary effect of militating against a finding of fair use."

Finally, with respect to the fourth market harm factor, the Court held that this is the "most important element of fair use." As end users record for non-commercial uses, harm to the potential market for the copied works cannot be presumed but must be proven. Unlike in Sony, where no secondary market existed, here Fox licensed its programs to distributors, including Hulu and Apple. However, the Court noted that the trial court record establishes "that the market harm that Fox ... allege[s] results from the automatic commercial-skipping, not the recording of programs through PrimeTime Anytime. Indeed, Fox often charges no additional license fees for providers to offer Fox's licensed video on demand, so long as providers disable fast-forwarding." Thus, "the commercial skipping does not implicate any copyright interest."

A copy of the decision is attached here.Fox v Dish 9th Cir .pdf

August 19, 2013

Metropolitan Regional Information Systems v. American Home Realty Network

By Barry Werbin

Metropolitan Regional Information Systems v. American Home Realty Network (4th Cir. July 17, 2013) is an interesting and important decision involving compilation registrations and copyright protections in databases, here consisting of real estate multiple listing service (MLS) data and related photos. The case also addresses the novel but important question of the enforceability of online electronic transfers of copyright ownership interests under E-Sign.

Metropolitan Regional Information Systems (MRIS) offers an online fee-based MLS to real estate brokers and agents. Defendant American Home Realty Network (AHRN) "circumvents those brokers and agents by taking listing data from online database compilers like MRIS and making it directly available to consumers on its 'real estate referral' website." Brokers/agents subscribing to the MRIS service assign to MRIS their copyrights in photos submitted along with the listing data. MRIS also registers is databases with the Copyright Office under regulations covering automated computer databases, which include the photos, text and the collection and compilation of the MLS listings.

The District Court, which is affirmed by the 4th Cir., issued a preliminary injunction against AHRN based on copyright infringement but limited it pending the appeal to enjoining only AHRN's use of the MRIS photos, not the compilation itself or any textual elements. On appeal, the Fourth Circuit initially rejected AHRN's blanket argument that there was no copyright protection in the MLS database as a whole because of a lack of originality as a compilation, citing the Supreme Court's 1991 decision in Feist; however the Court did not rule on that issue in the context of the MRIS database because the scope of the preliminary injunction was limited to the photos.

AHRN made two arguments against the preliminary injunction: (1) when MRIS registered the database it failed to properly register its copyright in the individual photos; and (2) MRIS did not possess copyright interests in the photos because the subscribers' electronic acceptance of MRIS's terms of use failed to transfer those rights. The Court characterized these arguments as presenting "novel questions," but ruled in favor of MRIS.

The Court discusses the copyrightability of "compilations," noting that the "protection afforded to a compilation is independent of any protection that might be afforded to its individual components." However, "compilations made up of individual components which are themselves copyrightable are called 'collective works.'" Section 201(c) of the Copyright Act also provides "a default presumption that the author of a collective work does not own the copyright in any component part" in the absence of an express transfer of copyright.

With respect to the first question on scope of protection arising from the registration of the compilation, the Court held that Section 409, which provides for registration of compilations, "[a]s applied to a collective work whose author has also acquired the copyrights in individual component works, the text of Section 409 is ambiguous at best." The Register of Copyrights, however, has promulgated regulations on this process under 37 C.F.R. § 202.3(b)(5)-(10), "allowing for group registration of certain categories of collective works: automated databases..." "Under this provision, the author of an automated database may file a single application covering up to three months' worth of updates and revisions, so long as all of the updates or revisions (1) are owned by the same copyright claimant, (2) have the same general title,(3)have a similar general content,including their subject, and(4)are similar in their organization."

The Circuit noted that "courts have disagreed on how to apply the Copyright Act's registration requirement to collective works and their component parts," particularly as to whether the underlying "authors" of the components must be identified in a registration application as a precondition to bringing suit for infringement, as was the ruling in a 2010 SDNY case, Muench Photography, Inc. v. Houghton Mifflin Harcourt Publ'g Co., 712 F. Supp. 2d 84.

Here the Fourth Circuit adopts the view that such disclosure is not necessary and that "[t]he Copyright Office is optimistic that those decisions will be overturned on appeal." As MRIS owned the copyrights in the constituent photos that had been transferred prior to its database registration applications, and listed "photographs" as the basis for updating its database registration claims, "'it would be... [absurd and] inefficient to require the registrant to list each author for an extremely large number of component works to which the registrant has acquired an exclusive license.'" [Citation omitted] "Adding impediments to automated database authors' attempts to register their own component works conflicts with the general purpose of Section 409 to encourage prompt registration... and thwarts the specific goal embodied in Section 408 of easing the burden on group registrations."

[Note that there is a new Copyright Office regulation effective August 8, 2012, requiring that "when a registration is made for a database consisting predominantly of photographs, and the copyright claim extends to the individual photographs themselves, each of those photographs must be included as part of the deposit accompanying the application."]

With respect to the second issue, the Court upheld MRIS's argument "that an electronic transfer may satisfy Section 204's writing and signature requirements, particularly in light of the later-enacted Electronic Signatures in Global and National Commerce Act (the "E-Sign Act"), 15 U.S.C. § 7001 et seq...." The Court discusses this point in detail under E-Sign, particularly in the context of the enforceability of an online terms of use that are affirmatively "accepted" by subscribers. The Court found that none of the express exceptions to coverage in E-Sign applied to copyright transfers and emphasized it was not about to imply any such exception. It did note that there has been only one other case to date in the Southern District of Florida that has addressed electronic copyright transfers, where the court held that email conveyance of copyrights was sufficient. The Fourth Circuit thus concluded that "[t]o invalidate copyright transfer agreements solely because they were made electronically would thwart the clear congressional intent embodied in the E-Sign Act. We therefore hold that an electronic agreement may effect a valid transfer of copyright interests under Section 204 of the Copyright Act."

A copy of the Fourth Circuit decision is available here: MGIS decision (4th Cir ).pdf

Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., et al

By Barry Werbin

The decision in Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., et al., (N.D. Miss. July 18, 2013) dealt a quick Rule 12(b)(6) dismissal death-knell to a widely criticized claim by the Faulkner folks who alleged that Sony infringed the copyright in Faulkner's book Requiem for a Nun, where, in Woody Allen's film Midnight in Paris, Owen Wilson's character (Gil Pender) at one point misquotes a line from that book (with attribution credit). The misquoted and original lines are:

Original: "The past is never dead. It's not even past."

Misquote: "The past is not dead! Actually, it's not even past. You know who said that? Faulkner. And he was right. And I met him, too. I ran into him at a dinner party."

The District Court had no trouble finding this was fair use. The court in particular cited to Fifth and Second Circuit precedents for the contention that "the substantiality of the similarity is measured by considering the qualitative and quantitative significance of the copied portion in relation to the plaintiff's work as a whole." Qualitative and quantitative significance of course are one of the four core fair use factors under Section 117 of the Copyright Act.

The court also referenced the de minimis copying doctrine, which has been recognized in the Fifth Circuit but without having "specifically enunciated its proper place in the infringement analysis." The doctrine "is part of the initial inquiry of whether or not the use is infringement in the first instance, as opposed to the fair use inquiry, which is an affirmative defense." Either way, the court deemed "both the substantial similarity and de minimis analyses in this case to be fundamentally related, and wholly encompassed within the fair use affirmative defense." As the de minimis doctrine is "largely undeveloped" the court was "reluctant to address it, except within the context of Sony's affirmative defense, fair use."

With respect to the first fair use factor, the court found that "[t]he speaker, time, place, and purpose of the quote in these two works are diametrically dissimilar... It is difficult to fathom that Sony somehow sought some substantial commercial benefit by infringing on copyrighted material for no more than eight seconds in a ninety minute film." Other factors included the comedic context of the film and that the "minuscule" nine words in issue "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." (quoting Campbell) Thus, the court readily found "heavy [in] favor of transformative use that... diminishes the significance of considerations such as commercial use that would tip to the detriment of fair use."

The second factor (nature of the copyrighted work) was found to be "neutral" - the court was not prepared to characterize the film as a parody, but nevertheless did say it was "highly transformative under the first factor, whether parody or not."

Under the third "substantiality" factor, Falkner argued that the quote described the "essence" of Requiem for a Nun, that "there is no such thing as past." Yet the court deemed this to refer to the qualitative theme of Requiem itself, not the "not the qualitative importance of the quote itself." The ideas embodied in Requiem for a Nun cannot be protected, only its expression, which here "constitutes only a small portion of the expression of this idea throughout the novel." The quote itself in the film "is a fragment of the idea's expression."

Interestingly, the court on this factor also held that "the quote at issue is of minuscule quantitative importance to the work as a whole. Thus, the court considers both the qualitative and quantitative analyses to tip in favor of fair use. The court concludes that no substantial similarity exists between the copyrighted work and the allegedly infringing work." [Emphasis added]Query in light of this finding of no "substantial similarity" why fair use even had to be addressed as fair use presupposes there is infringement.

On the last potential market effect factor, the record in the case was silent. In any event, the court considered this factor "to be essentially a non-issue in light of the stark balance of the first factors weighing in favor of Sony..." Nevertheless, the court did not see any relevant market harm resulting from Sony's use of the quote. If anything, the use in the film helped Faulkner's legacy.

Finally, the court expressed its frustration at the entire lawsuit: "How Hollywood's flattering and artful use of literary allusion is a point of litigation, not celebration, is beyond this court's comprehension."

A copy of the decision is available here: Faulkner decision (ND Miss ) (2).pdf

August 25, 2013

Unclaimed Property Recovery Service, Inc., v. Kaplan

By Barry Werbin

The Second Circuit issued a decision of first impression filed on August 20th in Unclaimed Property Recovery Service, Inc., v. Kaplan, holding that "that where the holder of a copyright in a litigation document has authorized a party to the litigation to use the document in the litigation, this constitutes an irrevocable authorization to all parties to the litigation (and to their attorneys, as well as the court) to use the documents thereafter in the litigation throughout its duration."

Here, the plaintiff failed to state a claim for copyright infringement tied to the defendant's use of a complaint written by co-plaintiff Gelb and copyrighted by plaintiff Unclaimed Property Recovery Service, where the plaintiffs alleged that the defendant's amendment of the pleadings infringed on their copyrights.

The Court held:

"This case presents an issue of first impression: whether the holder of a copyright in a litigation document who has authorized a party to a litigation to use the document in the litigation may withdraw the authorization after the document has already been introduced into the litigation and then claim infringement when subsequent use is made of the document in the litigation. We hold that such an authorization necessarily conveys, not only to the authorized party but to all present and future attorneys and to the court, an irrevocable authorization to use the document in the litigation thereafter."

Click here for a copy of the decision: OpenAppellateOpinion aspx.pdf

September 16, 2013

Fox Television Stations, Inc. v FilmOn X, LLC, et al.

By Barry Werbin

On September 5th, the District of D.C. issued a preliminary injunction against FilmOn X, LLC (FilmOn X), in favor of Fox Television Stations, Inc. (Fox) and other over-air broadcasters in the D.C. area, including Disney and Telemundo. FilmOn X isn't a stranger to these claims, as it was previously known as AereoKiller, under which name it was enjoined by a California district court earlier this year in a case currently on appeal to the Ninth Circuit. (After trademark complaints by Brooklyn-based Aereo, AereoKiller changed its name.)

Like Aereo, FilmOn X uses tiny individual antennas to capture broadcast signals over the airways and retransmit them to subscribers. A specific antenna is assigned to one specific individual subscriber only when that subscriber is watching broadcast TV through the system; once a user is done watching TV, the same antenna is then assigned to a different user. No single antenna is used by more than one user at a time. Broadcast data are routed from the antenna to a FilmOn X server, where it is stored in a "unique" directory for each user. After a user stops viewing a program, the data in the user's unique directory is deleted. FilmOn X also employs a DVR that allows its subscribers to pause live programming or record shows for later viewing. User access for standard definition broadcasts is free; hi-definition and selecting shows for later viewing incur fees.

The plaintiffs relied on the AereoKiller decision in California, Fox Television Systems, Inc. v. Barry Driller Content Systems, PLC, 915 F. Supp.2d 1138 (C.D. Cal. 2013), while FilmOn X relied on WNET, Thirteen v. Aereo, Inc., 712F.3d 676 (2d Cir. 2013), reh'g denied 2013 WL 3657978 (2d Cir. July 16, 2013), and the "Cablevision" case - Cartoon Network, LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008). The D.C. court here made it clear that it was not making a simple "blind choice" between the two.

[Note - Oral argument in the AereoKiller case took place before the Ninth Circuit during the last week of August, so a decision there is imminent. Interestingly, a visiting judge on the Ninth Circuit panel was Hon. Brian Cogan (formerly of Stroock) from the SDNY, where the Second Circuit had upheld Aereo's defenses, finding no infringement.]

The court held that "the Copyright Act forbids FilmOn X from retransmitting Plaintiffs' copyrighted programs over the Internet. Plaintiffs are thus likely to succeed on their claim that FilmOn X violates Plaintiffs' exclusive public performance rights in their copyrighted works." The court first undertook a detailed analysis of the respective decisions in the Barry Driller, Cablevision and Aereo decisions, also emphasizing Judge Denny Chin's strong dissent in Aereo. The court then took a close look at the core issue in all the cases - the proper interpretation and application of the Copyright Act's "Transmit Clause" in 17 U.S.C. § 101.

After analyzing the legislative history, the D.C. court found that such history and the plain language of the Transmit Clause respecting the meaning of the phrase to "perform or display a work 'publicly'" by any "device or process," compelled the conclusion that by "making available Plaintiffs' copyrighted performances to any member of the public who accesses the FilmOn X service, FilmOn X performs the copyrighted work publicly...." The court found the definitions within the Transmit clause are broadly encompassing of new technology, especially in light of the terms "device," "'machine," or "process" being defined as "now known [i.e., in 1976] or later developed." The court thus found that FilmOn X "transmits (i.e., communicates from mini-antenna through servers over the Internet to a user) the performance (i.e., an original over-the-air broadcast of a work copyrighted by one of the Plaintiffs) to members of the public (i.e., any person who accesses the FilmOn X service through its website or application) who receive the performance in separate places and at different times (i.e. at home at their computers or on their mobile devices)."

FilmOn X's one-to-one customer relationship was characterized as a "charitable description" of its technological arrangement. The court emphasized that the "the mini-antennas are networked together so that a single tuner server and router, video encoder, and distribution end point can communicate with them all....This system, through which any member of the public who clicks on the link for the video feed, is hardly akin to an individual user stringing up a television antenna on the roof." The aggregation of new technologies cannot avoid liability, said the court, because Congress defined "device or process" broadly to encompass "any other techniques and systems not yet in use or even invented." The court expressly agreed with Judge Chin's dissent in Aereo, stating in a footnote that the Second Circuit in "Cablevision and Aereo mistakenly substituted 'transmission' for 'performance' in its analysis."

Last, the court had no difficulty in finding, as has every court that has visited the issue (including the District Court in Aereo), that "unauthorized Internet streaming of television and other video programming causes irreparable harm to the copyright owners...." In particular, the court highlighted several findings of non-economic injury that plaintiffs likely would suffer in the absence of injunctive relief: "harm to their ability to negotiate with advertisers; damage to their contractual relationships and ability to negotiate with authorized retransmitters; interference with their proprietary and licensed online distribution avenues...and the loss of control over the distribution and quality of their copyrighted programs." The court concluded that a nationwide injunction was proper but excluded the Second Circuit, "where Aereo is the binding precedent."

The decision is attached and can also be accessed here: http://www.scribd.com/doc/165845374/filmonx

Are Strip Club Entertainers Employees?

By Kim Swidler

Last week the news was filled with eye catching headlines declaring that "New York strippers now have labor rights".

The articles concerned a Southern District decision on cross-motions for summary judgment regarding a class action that had been commenced by several exotic dancers, also known as entertainers, who had performed at Rick's Cabaret International Inc. (Rick's), a strip club located in Manhattan (Matter of Sabrina Hart et al v. Rick's Cabaret International Inc., No. 09cv3043, U.S. District Court for the Southern District of New York 2013).

The dancers asserted that they were employees of Rick's, and alleged violations of the Fair Labor Standards Act (FLSA) as well as the New York Labor Law (NYLL) and regulations promulgated thereunder by the New York State Department of Labor. The requested damages included minimum wage payments.

Rick's countered, in part, that the plaintiffs had at all times worked as independent contractors and, therefore, fell outside the coverage of FLSA and NYLL. However, based upon the evidence presented, Judge Paul A. Engelmayer disagreed and found that the dancers had, in fact, been employees of that entity.

As in other New York labor related matters, a major factor in making this determination concerning the issue of employer-employee relationship was the degree of direction and control that Rick's exercised over the plaintiffs.
As an example, in those controversies where there is a request for worker's compensation benefits, the court has held that the relevant factors in finding an employer-employee relationship include the right to control the work, set the schedule, the method of payment, the furnishing of equipment, the right to discharge and the relative nature of the work (Matter of Bugaj v Great Am. Transp. Inc., 20 AD3d 612 [ 2005]). No single factor is deemed dispositive, and the decision may be based on any one or a combination of the relevant factors (Matter of Gregg v Randazzo, 216 AD2d 747 [1995]).

In this case, Judge Engelmayer found that Rick's club-imposed written guidelines carried numerous restrictions that helped demonstrate that an employer-employee relationship had existed. The entertainers were forbidden to chew gum, have a bad attitude, use cell phones while on the [dance floor] or use public restrooms. The Judge also noted that the guidelines addressed the hours at which dancers could be scheduled to work, restrictions concerning tattoos, procedures for checking in and checking out, the range of fees that dancers were required to pay, appearance and dress, and the method and manner in which dancers could dance.

A spokesperson for Rick's has stated that it will appeal this finding and that the subject guidelines are no longer in effect.

The court's decision may also create other consequences for the owners of establishments such as Rick's. The workers' compensation laws require employers to obtain proper workers' compensation coverage for those who are designated as their employees. Failure to do so might result in various negative ramifications, including a fine of $2,000 for every 10 days of noncompliance. The business may also be shut down pursuant to a Stop Work Order until proof of proper coverage has been obtained. Furthermore, an injured employee might expose the uninsured entity to liability for medical and compensation awards.

So should all exotic dancers now be considered employees within the definition of the NYLL? That decision will still be made on a case by case basis. The burden of proof is on the claimant to prove an employer-employee relationship, and not all exotic dancers have been as successful. In Matter of Gallagher's 2000, 2013 NY Wrk 0511882, the claimant, also an exotic dancer, sustained an injury when she was kicked in the face by another dancer during a performance. Using the above noted factors, the New York State Workers' Compensation Board (the Board) held that the dancer was not an employee and disallowed the claim. The Board considered, among other factors, the fact the claimant received no remuneration and that she retained the discretion to decide which days she would work.

The opinion, views, and statements set forth in this post do not represent the views of the NYS Workers' Compensation Board.

September 23, 2013

IN RE PETITION OF PANDORA MEDIA, INC.: SDNY Allows Pandora to Maintain License to ASCAP's Repertory

By Barry Werbin

On September 17th,Judge Cote in the SDNY issued an interesting decision in favor of Pandora, holding that ASCAP cannot remove individual songs from Pandora's blanket license for streaming purposes without also removing them from its entire catalog, notwithstanding that some of ASCAP's licensors restricted certain songs from being licensed for "new media rights." ASCAP was held to be bound by its longstanding antitrust consent decree from doing that, and thus preferring one customer over another. The court distinguished the Copyright Act's divisibility of the bundle of exclusive copyright rights from the superseding restrictions imposed by the consent decree, which defines "works" as compositions not individual rights.

http://www.hollywoodreporter.com/thr-esq/judge-allows-pandora-maintain-license-631671

September 25, 2013

Sony, Warner, UMG, ABKCO v. SiriusXM

By Mark L. Belkin

On September 11, 2013, a consortium of music industry giants brought action against satellite radio leader SiriusXM in California, over the defendant's use of their back catalogs that pre-date 1972. In February 1972, the Copyright Act was amended to allow for protection of all fixed sound recordings of copyright holders, but only on those works created after February 15, 1972. SiriusXM has been using those recordings created before 1972 on its numerous channels, and the recording industry claims that it must pay royalties for such uses.

The companies involved represent the majority of the music industry, including Sony Music Entertainment, Capitol Records, Warner Music, UMG, and ABKCO, and they are not alone in bringing action against SiriusXM. Of late, there are at least four other lawsuits filed. These include $100 million dollar lawsuits from Flo and Eddie of the Turtles and SoundExchange over similar royalties issues on pre-1972 recordings - implying that more are sure to come.

At the heart of the plaintiffs' argument is that SiriusXm profits immensely from the pre-1972 recordings of many artists by using their intellectual property to attract and maintain over 25 million subscribers to its service. The plaintiffs are asking the courts to force SiriusXM to obtain licenses and pay royalties on those artists that contribute to channels which play music from 1940's, 1950's, 1960's, and up to February of 1972. SiriusXM applies the federal copyright standard to itself and does not provide royalties for pre-1972 recordings, but what about state law? A vital factor for the action being filed in Los Angeles County, is the plaintiffs' argument that for at least the last 30 years, sound recordings have been protected statutorily by Section 980 of the California Civil Code. "The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior sound recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording." Civil Code § 980(a)(2). Even though the 1972 amendments to the Copyright Act did not protect recordings already fixed, Congress understood that the recording industry already relied on statutes and common law to protect its intellectual property, and amended the legislation to preserve "any rights or remedies under the common law or statutes of any State" with respect to sound recordings that were fixed before February 15, 1972. 17 U.S.C. § 301(c).

In Goldstein v. California, the Supreme Court ruled on this very subject in 1973, holding that federal law did not preempt state laws for pre-1972 recordings. Finding that "[u]ntil and unless Congress takes further action with respect to recordings fixed prior to February 15, 1972, the California statute may be enforced against acts of piracy such as those which occurred in the present case." Congress did not enact a federal law on the subject and therefore state law applies.

Does the recording industry want federalization of those protections on pre-1972 recordings? The Copyright Office in 2009 released a report recommending that pre-1972 recordings be brought under federal copyright protections. (http://www.copyright.gov/docs/sound/pre-72-exec-summary.pdf). Through the RIAA, the recording industry argued that federalization would pose a problem for record companies. RIAA's Senior Vice President of Business and Legal Affairs, Susan Chertkof, stated that the cost of registering each album with the Copyright Office and other legal complications, led to the recording industry generally opposing a move by Congress to federalize pre-1972 rights. (http://www.copyright.gov/docs/sound/meeting/transcript-06-02-2011.pdf). It would seem that the recording industry has a preference for establishing precedence through the courts and maintaining state level protections for pre-1972 works. However, as anything in major industries, this is subject to change.

The complaint claims that SiriusXM earned $3.4 billion in revenue and it already pays royalties on those recordings fixed after the 1972 Amendments to the Copyright Act. The labels are asking for actual and punitive damages, as well as a preliminary and permanent injunction enjoining the defendants from infringing on all the pre-1972 fixed recordings. The precedent established would affect other music services, including digital providers like Pandora, and businesses such as bars and sports venues which currently are not obligated to pay royalties on fixed recordings outside federal protections.

The complaint is available here:
http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/bc520981.pdf

September 26, 2013

North Jersey Media Group, Inc. v. Roger Nunn and John Does Nos. 1-5

By Frank J. Colucci

Below is a copy of Judge Sweet's recent decision from September 18th in North Jersey Media Group, Inc. v. Roger Nunn and John Does Nos. 1-5, Case 1:13-CV-01695-RWS, granting the defendant's motion to dismiss the complaint for lack of personal jurisdiction.

The decision is of particular interest in that the defendant, a California resident, made only one sale of the allegedly infringing photo for $5.00 in response to an order placed by the plaintiff's New York counsel for the purpose of obtaining jurisdiction pursuant to New York's long arm statute.

A copy of the decision is available here: North Jersey Media.pdf

Scorpio Music S.A., et al v. Victor Willis

By Michael Cataliotti

The 35-year copyright termination clause within the 1976 Act is a topic that has been discussed industry-wide for some time now; yet with the precedent-setting dismissal of the plaintiffs' complaint for failure to state a cause of action that was recently handed down by Chief District Judge Barry Moskowitz of the Southern District of California, many questions have arisen as to the fate of those prominent compositions by Bob Dylan, Tom Petty, the Eagles, and their contemporaries. A quick search for the case will bring up an array of articles about the potential impact of Victor Willis's seeming ability to recapture copyright in and to 33 of those compositions he co-authored, "Y.M.C.A." being one of the most notable. What those articles do not reference so often, however, is that despite this, no appeal has yet to be filed, and should Scorpio Music and its co-plaintiffs seek review of the District Court's determination, it is entirely unclear what will come from the Ninth Circuit.

Should the decision be upheld, the impact on the recording industry may be tremendous, but the impact on other avenues could be even more grandiose, as Mr. Willis has openly stated that one of the things he has learned over the years is that "[y]ou can stop somebody from performing your music if you want to, and I might object to some usages." From this, the impact on all sorts of publishing (from songs to books), tours, cover bands, venues, and the like, could be disastrous. Only time will tell at this point.

http://www.nytimes.com/2013/09/11/arts/music/a-copyright-victory-35-years-later.html?_r=2&adxnnl=1&adxnnlx=1378856059-G/Ypm+OljGyed7hfaI7slw&

http://www.billboard.com/articles/news/5687347/village-peoples-victor-willis-wins-copyright-victory


A Copyright Claim Cannot Bar Use of Briefs and Pleadings in a Pending Litigation

By Joel L. Hecker

All attorneys who litigate at one time or another create new material as part of pleadings and briefs. To some extent this original work may be considered to be copyrighted material, with the copyright owned by the author/attorney. In a case of first impression, the United States Court of Appeals for the Second Circuit was called upon to rule on an appeal from the Eastern District's dismissal of such a copyright infringement claim. The case is Unclaimed Property Recovery Service, Inc. and Bernard Gelb v. Norman Alan Kaplan (Docket No. 12-4030, decided August 20, 2013).

The Circuit Court phrased the facts as follows: "this case concerns a novel attempt to use Copyright Law in furtherance of sharp litigation practices". The plaintiffs were two of the named plaintiffs in a class action and Kaplan was the class action plaintiffs' attorney. The plaintiffs alleged that Gelb wrote the Amended Class Action Complaint and compiled 305 pages of accompanying exhibits (the "First Exhibits"). The plaintiffs claimed that they owned the copyrights in these documents.

Kaplan signed and filed the First Amended Complaint and the First Exhibits on behalf of the class action plaintiffs, including UPRS and Gelb. The District Court dismissed the class action as time-barred, and Kaplan appealed on behalf of all the class plaintiffs. While the appeal was pending, Kaplan and Gelb (who is not an attorney) had a falling out and Kaplan informed Gelb that he would no longer represent Gelb and UPRS. Gelb and UPRS thereupon retained new attorneys to represent them in the class action, but Kaplan remained the attorney of record. New counsel for UPRS and Gelb then moved to withdraw the pending appeal in its entirety. However, the court only granted the motion with respect to them and the appeal proceeded without them. The Second Circuit vacated the District Court dismissal of the class action and on remand Kaplan filed a Second Amended Class Action Complaint and accompanying exhibits (the "Second Exhibits") on behalf of the class plaintiffs. The key component of this case was that significant portions of the Second Amended Complaint and Second Exhibits were identical to portions of the First Amended Complaint and First Exhibits in which Gelb and UPRS claimed copyright ownership.

Thereafter, Gelb and UPRS brought suit against Kaplan, alleging that Kaplan had infringed their copyrights when he incorporated portions of the First Amended Complaint and First Exhibits into the Second Amended Complaint and Second Exhibits. The District Court dismissed the action for failure to state a claim upon which relief can be granted, holding that they had granted Kaplan an irrevocable implied license to file the amended documents. The District Court did not reach the issue of whether they had valid copyright interests because this decision was dispositive.

The issue on appeal, as framed by the Circuit Court, was "whether the holder of a copyright in a litigation document who has authorized the party to a litigation to use the document in the litigation may withdraw the authorization after the document has already been introduced into the litigation and then claim infringement when subsequent use is made of the document in the litigation."

The Circuit Court affirmed the District Court in dismissing the case but on different grounds. It held that "such an authorization necessarily conveys, not only to the authorized party but to all present and future attorneys and to the court, an irrevocable authorization to use the document in the litigation thereafter". (The court in a footnote stated that it does not suggest that permission of the copyright holder is needed for use of a copyrighted document in litigation since the ruling only concerns the grant of authorization for use in litigation which the holder then purports to withdraw.)

The Second Circuit, in what seems to be an obvious conclusion, held that litigation could not be conducted successfully unless the parties to litigation and their attorneys are free to use documents that are a part of the litigation since the parties rely on such documents as a means of establishing the nature of dispute and the facts and legal arguments that have been put forward by each party.

In addition, the Court found that a court's ability to perform its function depends on the ability of the parties and their attorneys to submit copies of documents in contention and to serve one another with copies of such documents. Finally the Court said that courts could not thoroughly and fairly adjudicate a matter if suddenly in the midst of litigation the parties lost the right to give the court copies of documents already used in the litigation that support their argument.

Accordingly, held the Circuit Court, the copyright holder's authorization will be construed to encompass the authorization, irrevocable throughout the duration of the litigation, not only to the expressly authorized party, but to all parties to the litigation and to the court, to use the document for appropriate purposes in the conduct of the litigation.

The Circuit Court severely criticized the conduct of the plaintiffs and their questionable litigation practices, stating that they attempted to influence the class action litigation by means of this novel use of copyright law after the Circuit Court, in its earlier decision, had refused to allow them to withdraw the class action appeal on behalf of all of the named plaintiffs.

In what the Circuit Court described as particularly troubling, the plaintiffs' theory, if successful, would permit the replaced attorney to use copyright law to hamper the former client's ability to select his own new counsel - a right that is one of the foundations of our systems of justice.

Finally, the theory put forth by the plaintiffs would allow the author of a legal pleading to also bar the district court from exercising its discretion with respect to the management of the case, as courts often permit a party to amend a pleading in part but not in full. That would obviously require that an amended pleading retain a portion of the original pleading.

All in all, the Circuit Court rejected all of the plaintiffs' claims in what was a very sound and well-reasoned decision, leaving litigation attorneys wondering why this issue ever reached the Circuit Court of Appeals in the first place!


October 4, 2013

The Supreme Court's New Copyright Case Is Not a Copyright Case

By Adam Beasley

On Tuesday, the Supreme Court granted certiorari in a number of cases it has agreed to decide during this term. One such case, Petrella v. Metro-Goldwyn-Mayer, No. 12-1315, asks the Court to interpret the Copyright Act. SCOTUS rarely takes copyright cases, so it is understandable why copyright geeks, like myself, might become giddy at the possibility of a new groundbreaking decision. However, a closer look at the case itself reveals that Petrella, which comes to the Court on appeal from the Ninth Circuit, does not actually involve a copyright issue. Instead, the Court is being asked to resolve a Circuit split over the relationship of federal statutes of limitation to the common law laches defense -- a decision likely to require a meticulous interpretation of separation of powers issues rather than questions of creativity or authorship.

The plaintiff is Paula Petrella, the daughter of deceased author and screenwriter Frank Petrella a/k/a Peter Savage. In the 1960's, Frank Petrella wrote a book and several screenplays about former boxing champion and Petrella's childhood friend Jake LaMotta. The Petrella screenplays became the basis for the highly successful movie Raging Bull, starring Robert De Niro, who earned a Best Actor Oscar for his role playing LaMotta in 1981, and directed by Martin Scorsese, who received a Best Director nomination. The defendants claim to own the rights to Raging Bull.

The lawsuit asserts that because Mr. Petrella died in 1981, before the original term of the copyright grant expired, the rights to the screenplays reverted to his heirs. See Stewart v. Abend, 495 U.S. 207, 219 (1990). Paula Petrella, who claims to own her father's reversion rights, began contacting MGM about her potential claim in the mid-1990s. Unfortunately, she waited over a decade -- 18 years according to the defense -- before bringing her claim in 2009. The suit for copyright infringement, unjust enrichment and an accounting names MGM and it subsidiaries as well as United Artists and 20th Century Fox as defendants.

On August 29, 2012, the Ninth Circuit affirmed a decision of the District Court for the Central District of California granting summary judgment to the defendants, holding that Ms. Petrella's claims were barred by the "equitable doctrine of laches." http://cdn.ca9.uscourts.gov/datastore/opinions/2012/08/29/10-55834.pdf The Ninth Circuit opined that the laches defense could bar the lawsuit regardless of whether the claim is brought within the explicit three year statute of limitations contained in the Copyright Act.

The plaintiff argued in her petition for certiorari http://sblog.s3.amazonaws.com/wp-content/uploads/2013/08/Petrella-v-MGM-filed-cert-petn-w-app.pdf that there was a Circuit split concerning whether the laches defense could shorten a statute of limitations provision contained in a federal statute. Now, the Supreme Court is prepared to decide the issue.

The laches defense is a doctrine grounded in equity that bars a suit from proceeding if the plaintiff "sleeps on its rights" and waits too long before bringing a claim. Courts determining whether the defense applies consider the amount and reasonableness of the delay and whether the defendant has changed its position as a result.

Historically, laches has yielded to federal statutes of limitation. As Lord Redesdale wrote in the archaeological discovery Hovenden v. Annesley, 2 Sch. & Lef. 607, 629-30 (1806), "I think it is a mistake in point of language to say that Courts of Equity act merely by analogy to the statutes; they act in obedience to them. ... I think, therefore, courts of equity are bound to yield obedience to the statute of limitations upon all legal titles and legal demands, and cannot act contrary to the spirit of its provisions."

The Ninth Circuit, which has long been accused of broad "hostility to copyright plaintiffs -- specifically, creators filing suit against conglomerates within the entertainment industry," http://sblog.s3.amazonaws.com/wp-content/uploads/2013/08/CSEL-cert-amicus-brief.pdf disagreed, finding the claim barred without an analysis of the defense's relationship to the Copyright Act's three year statute of limitations. 17 U.S.C. § 507(b). Section 507(b) states that "No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued." Since the defendants continue to exploit the film, the statute of limitations has not expired.

The case may also give the Supreme Court the opportunity to revisit its 1990 decision Stewart v. Abend, 495 U.S. 207, which established the "Abend Rule", concerning the distribution of a derivative work during the copyright renewal period of the underlying work. The Abend court held that when an author dies before a renewal period begins, his or her statutory successors are entitled to renewal rights, even when the author has previously assigned those rights to another party. Abend, 495 U.S. at 219. As Ms. Petrella's father died in 1981 during the original 28 year term of his copyrights, his renewal rights in the screenplays to Raging Bull reverted to his heirs.

However, the Supreme Court is expected to focus on the separation of powers issues involved in the case, specifically whether the laches defense can bar a civil copyright lawsuit within the express three year statute of limitations provision in Section 507. A decision narrowly focused on this issue would have far reaching affect outside the copyright context to any federal statute with an express limitations period, making this copyright case hardly a case about copyright.

Adam Beasley is an entertainment and intellectual property attorney in New York City. He can be reached at www.adambeasleylaw.com. A previous version of this post can be found at http://adambeasleylaw.com/supreme-courts-new-copyright-case-copyright-case/.

October 10, 2013

Aereo Decision

By Barry Werbin

In the ongoing battle between over-the-air-broadcasters and Aereo, as well as Aereo's copycat competitor FilmOn (formerly known AereoKiller), the U.S. District court of Massachusetts issued its anxiously awaited decision on October 8th. The court denied Hearst Stations Inc. (as the owner of a local TV station) a preliminary injunction against Aereo, which rolled out its retransmission streaming over-the-Internet antenna service in the Boston area in May and continues to aggressively expand into other parts of the country. The court sided with the Second Circuit's opinion in WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013), which held that Aereo's technology system incorporating single-user dedicated dime-size antennas resulted in the transmission of a unique copy of a copyrighted broadcast work to a single unique user, and was therefore not a "public performance" that infringed the broadcasters' exclusive right to publicly perform their works.

The Second Circuit previously affirmed the issuance of a preliminary injunction against Aereo in New York and denied the broadcasters' petition for a rehearing en banc, with a strong dissent from Judge Denny Chin. The broadcasters will file a petition for certiorari to the Supreme Court.

Meanwhile, district courts in the District of Columbia [Fox Television Stations, Inc. v. FilmOnX LLC, 2013 WL 4763414 (D.D.C. Sept, 5, 2013)] and California [Fox Television Stations, Inc,. v. BarryDriller Content Systems PLC, 915 F. Supp. 2d 1138 (C.D. Cal. 2012)] have both ruled in favor of a group of broadcasters in their separate suits against FilmOn, with the D.C. court recently issuing a nationwide injunction (excluding the Second Circuit) against FilmOn. Oral argument before the Ninth Circuit recently took place and a decision from that Circuit is imminent. On October 7th, a group of broadcasters sued Aereo in the District Court of Utah.

In its decision, the District Court of Massachusetts essentially adopted the reasoning of the Second Circuit but without an extensive discussion, citing to the legislative history behind the so-called "Transmit Clause" in Section 101 of the 1976 Copyright Act, which in the court's view favored Aereo's "unique copy/unique user" theory that was essentially adopted by the Second Circuit.

The Boston-based court also found that Aereo likely did not violate the broadcasters' exclusive right to make copies of their broadcast content when Aereo made more than "transitory" copies of those works on hard drives every time one of its subscribers chose to watch or record a program. The court found that Aereo itself did not engage in any "volitional conduct"; rather, it was "likely that the user supplies the necessary volitional conduct to make the copy." However, the court found that this was "a closer question than the issue of public performance", and that discovery "could disclose that Aereo's service infringes WCBV's right to reproduce its work."

Finally, the court found that Aereo's transmissions did not infringe the broadcasters' exclusive distribution right because courts have interpreted the distribution clause to require the "actual dissemination" of copies. As Aereo was not permitting the downloading of programming but only its streaming, Aereo was deemed to be "performing," rather than "distributing," copyrighted works. The court also summarily dismissed a claim that Aereo's transmissions created derivative works by converting the audio/video content into a different digital format compatible with Internet streaming.

With respect to the request for injunctive relief, the court further found that the balance of hardships did not favor one side over the other because each side made cogent arguments concerning irreparable harm, and that these respective contentions "balance out."

A copy of the decision is available here:Aereo-Boston-Ruling.pdf

October 17, 2013

Postal Stamp Infringement Valuation Determined

By Joel L. Hecker

Frank Gaylord created and is the copyright owner of his sculptures called the "Column", which consist of a group of 19 stainless steel soldiers which form the centerpiece of the Korean War Veterans' Memorial on the National Mall in Washington, D.C. In January 1996, an amateur photographer named John Alli visited the Memorial during a snowstorm and took a photograph of the Column. In 2002, the United States Postal Service licensed the photograph for use on the 37 cent stamp commemorating the memorial. However, the Postal Service did not get Mr. Gaylord's consent to use the photograph of his copyrighted sculptures.

Prior Judicial History

Gaylord sued the Postal Service for copyright infringement (Frank Gaylord v. United States, US Court of Federal Claims, Index No. 06-539C). In a torturous tangle of proceedings, the United States Court of Federal Claims initially found that the Postal Service's use of the photograph of the Column was a fair use and therefore it was not liable for copyright infringement. On appeal, the Federal Circuit Court of Appeals reversed that finding and found that the Postal Service had indeed infringed Gaylord's copyright in three categories: 1) stamps used to send mail; 2) unused stamps retained by collectors; and 3) retail goods featuring an image of the stamp.

On remand, the Court of Federal Claims awarded $5,000 in damages on the grounds that this amount was the largest the Postal Service had ever paid to use an image on a stamp. Gaylord appealed the damage award and the Federal Circuit once again vacated the Court of Federal Claims order and remanded the case for a determination of the fair market value of such infringing use. As instructed, the Court of Federal Claims has now determined the amount of damages due to Gaylord in an Opinion and Order filed September 20, 2013.

Stamps Used to Send Mail

On the second remand, the Court of Federal Claims was required, for the first element (stamps used to send mail), to calculate the value of a license granted based upon "a hypothetical, arms-length negotiation between the parties". In addition, the mandate instructed the court to determine whether an ongoing royalty of a one-time fee more accurately captures the fair market value of a license for stamps used to send mail. However, since Gaylord was no longer seeking damages for stamps used to send mail, the court awarded no damages for this category.

Unused Stamps Purchased by Collectors

The analysis for this category differs from used stamps, because the latter represent nearly pure profit for the Postal Service. The Federal Circuit instructed the Court of Federal Claims to consider whether the evidence supports an ongoing royalty rate or a lump sum royalty payment for the estimated $5.4 million collected from unused stamps. The Court found that a 10% running royalty is the appropriate approach, and thereby awarded $540,000 in damages for this component of the case (this stamp is no longer being sold by the Postal Service and therefore a finite amount of damages award could be made).

Commercial Merchandise

The record reflected that Gaylord has consistently licensed images of his Column for retail and commemorative items at approximately a 10% royalty, and therefore in the hypothetical negotiation he would have likely received that 10% royalty on merchandise. Accordingly, he was awarded damages equal to 10% of the estimated $330,919 collected by the Postal Service or $33,092.

Pre-Judgment Interest

Lastly, the Federal Circuit determined that Gaylord was entitled to pre-judgment interest in order to make his compensation complete. By stipulation between the parties, that amount was calculated at $111,752.94.

Total Award

The total award granted to Gaylord against the Postal Service therefore aggregated the sum of $684,844.94. Gaylord, after having the dismissal of his case reversed, as well as a reversal of the minimal $5,000 award, and with the benefit of two Federal Circuit Court decisions in his favor, has finally been awarded what he considers to be just compensation for the infringement of his copyrighted work. Perseverance indeed sometimes does pay!


Joel L. Hecker, Of Counsel to Russo & Burke, 600 Third Avenue, New York, NY 10016, can be reached at (212) 557-9600, fax (212) 557-9610, www.RussoandBurke.com, or via email: HeckerEsq@aol.com.


October 22, 2013

Sorry For Partying, But It's Fair Use

By Barry Werbin and Laura Tam
Herrick, Feinstein LLP

A recent decision by the district court for the Western District of Wisconsin tests the boundaries of the "transformative use" doctrine in the ongoing fair use debate concerning works of visual art. In Kienitz v. Sconnie Nation LLC, 2013 WL 4197454 (W.D. Wis. Aug. 15, 2013), the court held that an apparel company's use of a respected photojournalist's photograph of Paul Soglin, the mayor of Madison, Wisconsin, in modified form, did not constitute copyright infringement. Citing the Second Circuit Court of Appeals' decision in Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013), the court determined that the use of the modified photograph on shirts intended to make a political statement, that were manufactured and sold by the apparel company, was transformative and fair.

In 2011, the plaintiff, Michael Kienitz, photographed Soglin at the mayoral inauguration ceremony. Kienitz, a long-time political supporter of Soglin, gave the mayor permission to use the photograph for any noncommercial purposes, including the official website for the City of Madison, as well as the mayor's Facebook profile.

In 2012, the defendants, Sconnie Nation LLC and Underground Printing - Wisconsin, LLC, decided to create and sell shirts to criticize Soglin's opposition to the Mifflin Street Block Party, a controversial annual event that began in 1969 as part of the student protest movement on a local college campus. Ironically, Soglin had been arrested at the first Mifflin Street Block Party when he was a student protest leader, but had publicly stated in 2011 that he was interested in ending the event. In their search for a recognizable image of Soglin, the defendants downloaded Kienitz's photograph from the City of Madison's website, altered the photo as a high-contrast, monochrome image and colored the mayor's face lime green, adding the phrase "Sorry For Partying" across the image. Fifty-four of the shirts were sold for a net profit of $910.

After Kienitz brought suit for copyright infringement, both parties moved for summary judgment on the issue of whether the use of the Kienitz's photograph was a fair use.

With respect to the first statutory fair use factor under 17 U.S.C. §107, the court determined that the modified image used on the shirt was "transformative," even though it was a commercial product and did not comment on the photograph itself. Kienitz had argued that the shirt was really a derivative work and that the concept of transformative use was meant for cases where there was a commentary on the original work (e.g., a parody), whereas here the shirt was not commenting on the photo itself. The court, however, found Kienitz's argument "debatable." The court noted that by altering the photograph, "the character and expressing of the image is completely different from the original." Moreover, "[d]efendants employed this photograph for the diametric purposes of sophomoric humor and political critique." Citing to Cariou v. Prince, the court noted that "a 'work could be transformative even without commenting on [the author's] work or on 'culture'--'[w]hat is critical is how the work in question appears to the reasonable observer.'" The court found that the "robust transformative nature of defendants' . . . shirts tips this first factor toward fair use, even taking into account the fact that the shirts were a commercial product."

The court determined that the second factor (nature of the copyright work) was a "toss-up." Although the court seemed to agree with the defendants' argument that the photograph did not contain as much artistic expression as photographs in other fair use cases, the court determined that the photo was nevertheless entitled to copyright protection [it was registered with the Copyright Office] because Kienitz "would have made at least some artistic/creative decisions with respect to composition, lighting and timing."

Under the third "substantiality" factor, the court determined that the amount and substantiality of the defendants' use was reasonable since the defendants "did not take the 'heart' of Kienitz's work", as it "figuratively revers[ed] the tenor of the image." Moreover, the court found that this factor favored the defendants because "the artistic elements claimed by Kienitz (e.g., the lighting, expression and pose) fade to insignificance on the [defendants'] shirts, if they do not evanesce completely."

Last, the court acknowledged that the U.S. Supreme Court in Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 566 (1985), had characterized the fourth potential market effect factor as "'the single most important element of fair use.'" The court found that the image of the mayor on the defendants' shirts was not a substitute for Kienitz's photograph, because the market for the photograph and the market for the shirts "are skew, as in nonintersecting and not even parallel." Kienitz admitted that he would never have licensed his photograph "for the purpose of criticizing, mocking, parodying or satirizing Mayor Soglin." Since it was unlikely that the shirts would reduce the demand for Kienitz's photograph, the court easily found that this factor favored the defendants.

After balancing all the relevant factors, the court held that the defendants were entitled to summary judgment on Kienitz's copyright infringement claim.

The case is yet another example of the ongoing arguable erosion of the exclusive right of copyright owners to create derivative works from their original works of authorship in the field of visual arts. Consider that the term "derivative work" in 17 U.S.C. 101 is defined in relevant part as "a work based upon one or more preexisting works, such as a[n] ... art reproduction.. or any other form in which a work may be recast, transformed, or adapted." (Emphasis added). Notably, while this definition expressly uses the word "transform," the word "transformative," being a judicial-made doctrine, does not appear anywhere in Section 107, which defines the fair use defense. It will be interesting to see how future fair use decisions outside of the Second Circuit will be influenced by that court's analysis in Cariou v Prince.

A copy of the decision is available here: http://bloximages.chicago2.vip.townnews.com/host.madison.com/content/tncms/assets/v3/editorial/d/49/d49b304a-6b21-5b94-9cd2-420d8a9041ff/520e5e96e5b5a.pdf.pdf

October 31, 2013

IsoHunt Goes Out with a Bang

By Angele Chapman

BitTorrent websites like IsoHunt.com have become the "underground" way to illegally download music, movies, and more without paying. BitTorrent is a file distribution protocol that enables torrent files to be shared between users through a peer-to-peer file sharing software. These torrents usually contain media files that are hot commodities for those who wish to avoid paying for movies, music, programs, and other products. This new blast of technology is opening up the doors to copyright infringement and a great deal of lawsuits in the entertainment industry.

In March of this year, the U.S. Court of Appeals for the Ninth Circuit affirmed a summary judgment ruling in favor of seven film studios, finding that the defendant Gary Fung, who is the founder of IsoHunt, induced third parties to download infringing copies of the plaintiffs' copyrighted works. (Columbia Pictures Industries, Inc., et al. v. Gary Fung, et al., Case No. 10-55946 (9th Cir., Mar.21, 2013) (Berzon, J.)). Fung failed in his attempt to use the DMCA's safe harbor provision as a defense against parties such as Disney Enterprises, Inc, Paramount Pictures Corp., and Warner Bros Entertainment, Inc. Fung asserted, "A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider's transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing or providing connections..." (Columbia Pictures Indus. v. Gary Fung, 710 F.3d 1020, 1040 (9th Cir. Cal. 2013)).

After this case, other companies whose business has been affected by IsoHunt's copyright infringement have joined in seeking an injunction. As result, IsoHunt and the Motion Picture Association of America recently reached a settlement for $110 million, three weeks before their trial was set to begin. IsoHunt will finally shut down, after over 10 years of operation, to its 7.5 million unique visitors. This settlement also includes a global prohibition against founder Gary Fung from further profiting from the infringement of MPAA member studio content. (Popular BitTorrent Site IsoHunt Shutdown, Forced To Pay $110 Million, RT (Oct. 18, 2013, 3:46 PM), http://rt.com/usa/bittorrent-isohunt-shutdown-forced-340/)

What this Means for IsoHunt

IsoHunt has agreed to cease all of its international operations, leading to the shutdown of another top BitTorrent file sharing website. Gary Fung agreed to this settlement as it became apparent he was fighting a losing battle. Another motivating factor may have been that the MPAA warned Fung that it was seeking as much as $600 million in damages if the case proceeded to trial. Nonetheless, this settlement sends a strong message to other BitTorrent websites that continue to infiltrate the entertainment industry and profit from illegal business practices by enabling users to engage in copyright infringement. (Eriq Gardner, IsoHunt To Shut Down After Settlement With Hollywood Studios, THE HOLLYWOOD REPORTER (Oct. 17, 2013, 9:31 AM),
http://www.hollywoodreporter.com/thr-esq/isohunt-shut-down-settlement-hollywood-649203).

This settlement speaks volumes for the power that large media companies have to shutdown file sharing websites. Specifically, it places a duty on websites to regulate the files being shared in order to avoid copyright liability. It also causes great concern for those companies who have evolved primarily on their access to such illegal activity. However, there seems to be an apparent difference between decisions stemming from courts in Europe and the United States. For example, The Pirate Bay, another torrent website, was handed a judgment against it in Swedish courts, yet the website is still in operation. Both websites were sued by the MPAA, yet The Pirate Bay has been able to survive that lawsuit. Regardless of what country in which the website is based, the March decision and recent settlement between IsoHunt and MPAA illustrates that enforcing copyright infringement is essential to major corporations.

As of October 23rd, the IsoHunt website no longer existed. The founder wrote a farewell letter to his users and advised as to how they might go about obtaining sought-after torrent files. He noted, "about 95% of those torrent files can be found off Google regardless and mostly have been indexed from other BitTorrent sites in the first place." His quote depicts that while the content companies may feel as if they have won the battle here, the war is far from lost.


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 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

http://www.scribd.com/doc/184162035/Google-Books-ruling-on-fair-use-pdf

http://thejournal.com/articles/2013/11/18/judge-rules-googles-book-scanning-project-fair-use.aspx

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.

November 22, 2013

GOOGLE BOOKS IS (LEGALLY) "TRANSFORMATIVE"

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

December 1, 2013

Alls GoldieBlox, Inc. Really Wants is Fair Use? Or is it?

By Justin Joel

On November 21st, GoldieBlox, Inc. (GoldieBlox) filed a complaint (http://www.scribd.com/doc/186402972/Beastie) with the United States District Court for the Northern District of California seeking a declaratory judgment that its promotional video did not infringe the copyrights in the Beasties Boys' song "Girls" and was a fair use. The resulting transgressions have prompted an interesting discussion about fair use, each party's handling of the situation, and GoldieBlox's underlying motives for filing the complaint.

Background

GoldieBlox, a toy company, was "founded upon the principle of breaking down gender stereotypes, by offering engineering and construction toys specifically targeted to girls." In furtherance of this goal, the company utilizes a series of promotional videos depicting girls engaged in so-called "nontraditional" activities. GoldieBlox's most recent video depicts three girls who choose to construct a complex Rube Goldberg mechanism instead of dressing up as princesses. The video was set to the Beastie Boys' song "Girls" with modified lyrics. A portion of the pertinent lyrics in Beastie Boys' version of the song are: "Girls - to do the dishes / Girls - to clean up my room / Girls - to do the laundry / Girls - and in the bathroom / Girls, that's all I really want is girls." GoldieBlox's video replaced these lyrics with: "Girls - to build the spaceship / Girls - to code the new app / Girls - to grow up knowing / That they can engineer that / Girls. That's all we really need is girls."

GoldieBlox seeks Declaratory Judgment

GoldieBlox alleges in its complaint that the Beastie Boys acted first "by threaten[ing] GoldieBlox with copyright infringement." The Beastie Boys later claimed that they were "simply ask[ing] how and why [the Beastie Boys'] song 'Girls' had been used in [GoldieBlox's] ad without [the Beastie Boys'] permission."

In response to the alleged threats, GoldieBlox filed a complaint with the United States District Court for the Northern District of California seeking a declaratory judgment that its video did not infringe the copyrights in the Beastie Boys' song "Girls" and was a fair use. GoldieBlox also sought an injunction to prevent the defendants, Island Def Jam Music Group, Brooklyn Dust Music, the Beastie Boys, Sony/ATV Music Publishing Group LLC, Universal Music Publishing, Inc., Rick Rubin, and Adam Horovitz from "any efforts to enforce any copyright in Girls against the GoldieBlox Girls Parody Video, including through the use of DMCA takedown notices or otherwise."

Fair Use?

To determine whether GoldieBlox made a fair use of the Beastie Boys' song in its video, the court would consider at least the four factors contained in Section 107 of the Copyright Act: (i) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (iv) the effect of the use upon the potential market for or value of the copyrighted work.

Most of the discussion surrounding the dispute has focused on the first fair use factor. It seems clear that despite its underlying social message, GoldieBlox's video has a commercial purpose. GoldieBlox is a toy company that uses its videos to promote and sell toys. In an open letter response to GoldieBlox's action, the surviving members of the Beastie Boys, Michael "Mike D" Diamond and Adam "Ad-Rock" Horovitz, stated that while they "were very impressed by the creativity and the message behind [the] ad . . . make no mistake, your video is an advertisement that is designed to sell a product, and long ago, we made a conscious decision not to permit our music and/or name to be used in product ads." In addition, the late Adam "MCA" Yauch's will prohibits use of his "image or name or any music or any artistic property created by me . . . for advertising purposes."

However, "the commercial or nonprofit educational purpose of a work is only one element of the first factor enquiry into its purpose and character." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 584 (1994). The fact that the alleged infringing use is of a commercial character does not in itself prevent a fair use finding, nor is the use's commercial nature dispositive as to the first factor. Id. at 584-85.

Rather, "the central purpose of this investigation is to see . . . whether the new work merely 'supersede[s] the objects' of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is 'transformative.' Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright, and 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." Id. at 579.

GoldieBlox's main argument in support of its fair use claim is that its video is a parody. The Supreme Court has recognized a distinction between parody and satire, and this distinction would likely weigh heavily in a court's decision as to whether or not GoldieBlox's video is a fair use. A parody, for purposes of copyright law, is "the use of some portion of a work in order to 'hold it up to ridicule,' or otherwise comment or shed light on it." Henley v. DeVore, 733 F.Supp.2d 1144, 1151 (C.D. Cal. 2010). Whereas the copyrighted work is the target in a parody, the copyrighted work is merely a vehicle to poke fun at another target in a satire. Dr. Seuss Enters. v. Penguin Books USA, Inc., 109 F.3d 1394, 1400 (9th Cir. 1997). The Supreme Court has recognized that parody has a stronger claim to fair use than satire. "If . . . the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another's work diminishes accordingly (if it does not vanish), and other factors, like the extent of its commerciality, loom larger. Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim's (or collective victims') imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing." Campbell, 510 U.S. at 580-81. However, the Supreme Court also stated that: "the use . . . of a copyrighted work to advertise a product, even in a parody, will be entitled to less indulgence under the first factor of the fair use enquiry than the sale of a parody for its own sake . . ." Id. at 585.

GoldieBlox argues that its video is a parody, "with specific goals to make fun of the Beastie Boys song, and to further the company's goal to break down gender stereotypes and to encourage young girls to engage in activities that challenge their intellect, particularly in the fields of science, technology, engineering and math." According to GoldieBlox, in "Girls'" lyrics, "girls are limited (at best) to household chores, and are presented as useful only to the extent they fulfill the wishes of the male singers." GoldieBlox claims that its video "takes direct aim at [Beastie Boys'] song both visually and with a revised set of lyrics celebrating the many capabilities of girls."

Most Recent Developments:

On November 27th, GoldieBlox removed the original version of its video that utilized the Beasties Boys' song with modified lyrics from its website. The company replaced the video with one with similar music, but no lyrics. GoldieBlox also issued a statement offering to withdraw its complaint if the Beastie Boys' lawyers made no further threats against the company. However, GoldieBlox reiterated that it still believed that the video was a parody and a fair use. As of this writing, the Beastie Boys have yet to issue a response. However, at least one commentator is speculating that the Beastie Boys will request a sincere apology and a charitable donation. Some have speculated that GoldieBlox only filed the complaint in order to bring attention to its company for the holiday shopping season. Stay tuned, as this situation is clearly still developing.


December 3, 2013

Judge Ronald M. Whyte Issues a Ruling in San Jose v. MLB Lawsuit

By Benjamin Clack

A decision has already been issued in San Jose's case against Major League Baseball (MLB), less than four months after the lawsuit was filed. In June, the city of San Jose asserted federal and state antitrust law and tort claims against MLB. This was relating to MLB's failure to approve the proposed relocation of the Oakland Athletics. Thereafter, MLB moved to dismiss the suit citing to its long standing exemption from antitrust law. Judge Ronald M. Whyte issued a decision in this case last week.

Primarily focusing on the antitrust issue, Judge Whyte's opinion granted MLB's motion to dismiss in part, but also denied it in part. Specifically, although Judge Whyte was quick to criticize baseball's unique antitrust immunity, he concluded that the exemption ultimately precluded San Jose's claims under the Sherman Act. Following a thorough review of the applicable case law, Whyte adopted a broad view of the baseball exemption, concluding that it protected the business of baseball, which includes franchise relocation issues from antitrust law. In the process, he rejected San Jose's claim that the exemption only applied to labor disputes.

Judge Whyte then held that San Jose's state antitrust and unfair competition claims also should be dismissed because the Supreme Court effectively preempted the application of such to professional baseball in its 1972 decision Flood v. Kuhn 407 U.S. 258 (1972). However, Whyte did conclude that San Jose had sufficiently pled its tortious interference claim under state law, insofar as MLB's delay in resolving the proposed relocation had, in and of itself, arguably harmed the city aside from any antitrust concerns. However, the opinion was clear to note that the ultimate decision of whether to allow the Athletics to move was still MLB's alone. It also stated that San Jose could only pursue damages arising from MLB's delay in resolving the dispute, and not the potential rejection of the relocation itself.

Interestingly, despite deciding the merits of the substantive legal claims, Judge Whyte opted not to resolve the issue of whether San Jose lacked standing to pursue the case. Although one would typically expect a court to determine whether standing exists before ruling on the merits of the underlying case, Judge Whyte instead concluded that the city could potentially possess standing under Section 16 of the Clayton Act. However, he felt that he did not have to decide the issue at the current time, in light of his ruling on the antitrust exemption issue.

Consequently, although San Jose can proceed with one of the tort claims in its suit, Judge Whyte's decision is nevertheless a big win for MLB. The most serious claims in the case were dismissed pursuant to the sport's antitrust exemption, and the lone remaining claim can only result in a damages award, and not a court order mandating that the Athletics be allowed to move to San Jose.

Although San Jose would like to seek an immediate, interlocutory appeal of the ruling, Judge Whyte failed to certify the antitrust issues for an immediate, interlocutory appeal in his decision. Therefore, under 28 U.S.C. 1292(b), San Jose is currently unable to appeal the decision immediately to the Ninth Circuit.

The mere fact that many believe that baseball's antitrust exemption should be overturned would not constitute a "substantial ground for difference of opinion," and therefore would not warrant an immediate, interlocutory appeal under 28 U.S.C. 1292(b). Even if Judge Whyte were to believe otherwise and certify the appeal, the Ninth Circuit would still have to agree to take the case in order for it to be appealed immediately under 1292(b). Therefore, unless Judge Whyte were to decline to exercise his jurisdiction over the remaining tortious interference claim, and thus enter a final judgment in the case, San Jose may very well be unable to pursue an appeal on the antitrust exemption issue until the conclusion of a trial on the tort claim.

Meanwhile, in addition to the continued threat to baseball's antitrust exemption, San Jose's remaining tort law claim could also give the city some leverage over MLB as the case moves forward. MLB would undoubtedly prefer not to proceed with discovery in the case in order to avoid publicly airing the details of its internal deliberation process. Therefore, the tort claim could further help encourage MLB to resolve the Athletics' situation.

All in all, though, MLB certainly has to be happy with Judge Whyte's decision.

Thus, San Jose appears to have a difficult decision to make in the case. In order to pursue an immediate appeal on the antitrust issue, the city could presumably request that Judge Whyte dismiss the remaining tort law claim and issue a final judgment on the antitrust-related issues, but in the process temporarily forgo the opportunity to pursue discovery against MLB. Alternatively, the city could press the tortious interference claim through to trial, but that claim would not result in an order forcing MLB to approve the Athletics' relocation, and would require San Jose to indefinitely postpone its appeal on the antitrust exemption issue. In hindsight, San Jose may thus wish that it had requested a preliminary injunction in the case. If it had, and Judge Whyte declined to issue such an order, the city could then have immediately appealed under 28 U.S.C. 1292(a).

San Jose v. MLB: Judge splits decision on claims over A's South Bay plans
http://www.mercurynews.com/politics-government/ci_24290747/judge-dismisses-san-jose-antitrust-claims-against-mlb

San Jose v. MLB Case No. C-13-02787 RMW
http://www.scribd.com/doc/175439480/San-Jose-v-MLB-District-Court-Opinion

December 21, 2013

Daniel v. Goliath: Photographer Daniel Morel Awarded $1.2 Million for Copyright Infringement from Photo Agency Giants AFP and Getty

By Barry Werbin and Laura Tam, Herrick, Feinstein LLP

On November 22, 2013, a federal jury ordered Agence France-Presse (AFP) and Getty Images (Getty) to pay a whopping $1.2 million to Daniel Morel (Morel), a freelance photojournalist, for their unauthorized use and distribution of eight photographs Morel had posted to Twitter. The jury determined that AFP and Getty had willfully violated the Copyright Act and the Digital Millennium Copyright Act (DMCA) when they widely disseminated Morel's photographs of the devastation of the 2010 Haiti earthquake without his permission. Morel asserted that AFP and Getty had infringed on a number of exclusive rights granted by 17 U.S.C. § 106, including the rights of reproduction, public display and distribution.

On January, 12, 2010, hours after a devastating earthquake struck Haiti, Morel took photographs of the aftermath and posted them to Twitter through a TwitPic account. The photographs were reposted by Lisandra Suero (Suero) and were picked up by the AFP and uploaded to its database. The images, however, were wrongly credited to Suero. The AFP then transmitted the photos to Getty, since the stock agencies had a license agreement with reciprocal rights to license each other's images. From there, the photographs were published on Getty's website, and numerous clients, including The Washington Post, licensed and published the images. Soon thereafter, the agencies realized their mistake, issuing kill notices for Morel's photographs and alerting subscribers of the copyright issue. While Morel's images from the AFP's database were removed after the issuance of the kill notice, Morel's photographs that had been attributed to Suero remained on Getty's website until February 2, 2010, when they were finally removed.

The AFP initiated legal action by filing a lawsuit against Morel in March 2010, seeking a declaration that it had not infringed Morel's copyrights in the images. In response, Morel filed counterclaims against AFP, Getty and The Washington Post for willful infringement.

On January 14, 2013, the Southern District of New York granted Morel's motion for summary judgment, finding that AFP, Getty and The Washington Post were liable for direct copyright infringement. The Washington Post later settled with Morel for an undisclosed amount. The court rejected the stock agencies' affirmative defenses, including that (1) by posting the photos on Twitter, Morel had granted AFP a license to use his images, (2) Getty was entitled to the benefit of the DMCA safe harbor provision, and (3) Getty had not engaged in volitional conduct to impose liability.

First, the court determined that the Terms of Service of Twitter or TwitPic did not grant the AFP a license to sell and distribute Morel's photographs. Pointing to specific language in the Terms of Service, which provided that "[y]ou retain your rights to any Content you submit, post or display" and "what's yours is yours -- you own your own content," the court determined that the AFP was not a third party beneficiary to the Terms of Service and therefore not insulated from liability.

Second, the court rejected Getty's argument that it was protected by 17 U.S.C. § 512(c)(1), the safe harbor provision of the DMCA for service providers. The court noted that "an entity that is directly licensing copyrighted material online is not a 'service provider.'"

Finally, the court also rejected Getty's argument that it had not taken affirmative acts to violate Morel's copyrights. The court stated that there were genuine disputes of fact on this issue, since a jury could infer that Getty took volitional acts to distribute Morel's photographs in violation of his copyrights, including entering into a license agreement with AFP, setting a price for the photographs, and maintaining the website on which the images were displayed. After the court granted summary judgment to Morel, the case proceeded to trial on the sole determination of damages.

The jury awarded Morel $1.2 million, $150,000 for each of the eight photographs that were infringed, which is the maximum amount of statutory damages available under 17 U.S.C. § 504(c)(2). The jury also determined that AFP and Getty had violated the DMCA a total of 16 times under 17 U.S.C. §§ 1202(a) and 1202(b), and awarded Morel $20,000 in total for the 16 violations; however, that DMCA award is under dispute because the DMCA's statutory damages provisions provide for a minimum award of $2,500 per violation. Morel's attorneys thus argued in a letter to the court in early December 2013 that the minimum DMCA statutory award for Morel must be $40,000.

The landmark decision is one of the first cases to address the commercial use of content posted by individuals through social media, but it certainly won't be the last. A copy of the January 14, 2013 decision is available here: http://www.scribd.com/doc/120501947/AFP-v-Morel-10-Civ-02730-AJN-S-D-N-Y-Jan-14-2013.

January 8, 2014

Capitol Records, LLC et al. v. Vimeo LLC et al., case number 1:09-cv-10101, (SDNY)

Blurb adapted from a report by Andrea Calvaruso

On January 2nd, Judge Ronnie Abrams of the SDNY ruled to allow Vimeo LLC (Vimeo), a video-sharing service, to file an immediate appeal with the Second Circuit regarding whether the DMCA safe harbor for copyright infringement covers pre-1972 recordings covered by state copyright law. Vimeo's questions regarding what constitutes red flag knowledge were also certified.

The court rejected the right to appeal of the other questions regarding the DMCA safe harbor mid-case, including Vimeo's repeat infringer policy, whether it was willfully blind and "right and ability to control "the allegedly infringing activity, whether it acted with "willful blindness" and whether it had a repeat infringer policy in place.

The Judge Abrams also allowed the plaintiffs to amend the complaint to add more claims of infringement, finding the amendment timely.

January 13, 2014

The NFL Concussion Litigation: Settlement Hits a Snag

By Carter Anne McGowan

On Monday, January 6th, attorneys in the consolidated NFL Concussion Litigation (In Re: National Football League Players' Concussion Injury Litigation, No. 2:12-cv-03224-AB (E.D. Pa. Mar. 6, 2012)) (Concussion Litigation) submitted a motion to the court requesting approval of the terms of the settlement agreement (the Settlement Agreement) reached by the player-plaintiffs in the class action suit and the NFL. This Settlement Agreement, revealed in detail for the first time as an Exhibit appended to the motion, immediately resulted in controversy among the players.

The Settlement Agreement proposes a fairly complicated methodology of compensating former players suffering from some form of neurocognitive impairment greater than Level 1 Neurocognitive Impairment (i.e. the neurocognitive impairment must amount to at least early dementia in order to be compensable under the Settlement Agreement). Amyotrophic Lateral Sclerosis (ALS, or Lou Gehrig's Disease), Chronic Traumatic Encephalopathy (diagnosed post-mortem), Parkinson's Disease, Alzheimer's Disease, and Levels 1.5 and 2 Neurocognitive Impairment (early or moderate dementia) are compensable under the Settlement Agreement, with ALS eligible for compensation at a maximum amount of $5 million dollars, and the maximum compensation for Level 1.5 Neurocognitive Impairment being $1.5 million dollars. If players played in the NFL for fewer than five years or were over 45 years of age at diagnosis, they are not eligible for maximum compensation, and the Settlement Agreement sets forth in chart form the reductions in compensation for impairments diagnosed in former players over 45 years and in players who played fewer than five "Eligible Seasons" (seasons in which the player was on the active list or out with a head injury for a combination of three regular season or post-season games or on the practice squad for eight games, which earns a player half an eligible season).

While this structure does provide predictability with regard to the amount of compensation players and their families can expect, the Settlement Agreement faced immediate criticism, as the amounts to be received by most players will be far lower than the $5 million per player bandied about in early press regarding the settlement. In addition, legal fees will further reduce those amounts received by players who sued the NFLe, while those players who did not sue, but who remain beneficiaries of this Settlement Agreement, do not bear legal fees; already one attorney has indicated that he will file an objection to this perceived inequity. (Ken Belson, With NFL Concussion Deal, Two Tiers of Payouts, N.Y. TIMES, January 11, 2014. http://www.nytimes.com/2014/01/12/sports/football/with-nfl-concussion-deal-two-tiers-of-payouts.html?_r=0. The NFL has in addition agreed to pay $112.5 million in legal fees; however, these fees are intended to pay the lead attorneys on the case, and not all the attorneys, many of whom were working on contingency, and represented individual players before they joined the class action.) This alone could create a conflict of interest between the players who sued (numbering 4,500) and the number of beneficiaries of the Settlement Agreement (numbering 18,000) which could result in the settlement being struck down on appeal. (Id., quoting Prof. Lester Brickman of Cardozo Law School.)

Once Judge Anita B. Brody approves the Settlement Agreement, the player-plaintiffs will have 60 days to opt in or opt out of the settlement. With some players unhappy about the lower-than-expected payouts or the lack of NFL admission of responsibility for the players' neurocognitive impairments, it is possible that there will be a large number of opt-outs. At some point, then, this settlement may become irrational for the NFL, as the NFL would be left in the position of having settled one case for a large sum of money while still having to defend numerous lawsuits from former players. Under Paragraph 16.1 of the Settlement Agreement, the NFL does have the "absolute and unconditional right... to unilaterally terminate and render null and void this Class Action Settlement and Settlement Agreement for any reason whatsoever following notice of Opt Outs and prior to the Fairness Hearing."(Concussion Litigation, Document 5634-2.)

While it is still much too early to determine whether this settlement will fail, the warning signs are there, and this case - initially thought to be settled quickly and elegantly by the NFL and the plaintiffs - may still have some rough going in the months ahead.

January 14, 2014

Update on NFL Concussion Settlement

By Carter Anne McGowan

Today, Judge Anita B. Brody issued a preliminary denial of the motion to approve the settlement reached by the NFL and its retired players in the lawsuit relating to neurocognitive impairments suffered by retired NFL players (In Re: National Football League Players' Concussion Injury Litigation, No. 2:12-cv-03224-AB (E.D. Pa. Mar. 6, 2012). In her denial of the motion, the judge cited concerns about whether the amount to be funded by the NFL in order to compensate neurocognitively impaired former NFL players would be adequate to pay all potential claimants. For example, if only 1,000 members of the possibly 20,000-strong class were able to prove Level 1.5 Neurocognitive Impairment, the amount allocated to the compensation fund would fall far short of the $1.5 billion necessary to compensate the impaired players. Judge Brody was unconvinced by representations from both the plaintiffs and defendants, as well as the declaration of the mediator on the case (retired U.S. District Judge Layn Phillips), that the analysis of independent economists justified the parties' belief that the fund would be adequate, as the statements made were conclusory and the record lacked supporting evidence. Therefore, Judge Brody ordered the parties to provide additional documentation supporting their conclusions.

Perhaps this is a minor snag in the process or perhaps - given that the standards for preliminary approval of a class action settlement are fairly low - it signals something more, but for now, the settlement recently presented is on hold.

Insane Clown Posse

By Michael Cataliotti

Insane Clown Posse, better known as ICP and comprised of two members, Joseph Bruce and Joseph Utsler, have been on the fringe of the music industry for decades with its "horrorcore" rap style. Although predominantly underground, ICP's fanbase is loyal and comprised of individuals who are passionate about everything ICP and being "juggalos". "Juggalos" is a moniker used by ICP fans to describe themselves, similar to "Deadheads" for Grateful Dead fans or "Little Monsters" for Lady Gaga's followers.

In 2011, the FBI designated the "Juggalos" as a "loosely organized hybrid gang" in its 2011 National Gang Threat Assessment. In response, ICP sought evidence as to how this determination was made and filed a FOIA request. That request has gone unanswered in any substantitive manner.

ICP and four "Juggalos" have filed suit in order to combat the gang designation which they allege has "violate[d] fans' constitutional rights, including free speech, freedom of association and the right to due process", as well as having caused significant financial harm to Insane Clown Posse and its label.

While the suit is not likely to impact the industry on a grand scheme or cause a large-scale ripple effect, it is interesting to note that other mainstream artists have fans who are rather zealous, but certainly should not be deemed a "loosely organized hybrid gang", such as Lady Gaga's "Little Monsters", Justin Bieber's "Beliebers", and Opie & Anthony's "Pests".

http://www.cnn.com/2014/01/08/showbiz/juggalo-gang-lawsuit/index.html

Yet Another Fight in Hockey

By Jonathan Goeringer

The Official 2012-2013 National Hockey League (NHL) Rulebook has dedicated an entire rule, Rule 46, with 22 provisions stipulating how, when, and with whom fighting may occur during an NHL contest. (http://www.nhl.com/nhl/en/v3/ext/pdfs/2012-13_RuleBook.pdf) With only a minor change to its 2013-2014 Rulebook, which has not been publicly released in its entirety, the NHL has made every effort to ensure that fighting, a long-standing component of this sport, remains firmly entrenched in hockey culture.(http://espn.go.com/blog/nhl/post/_/id/26690/2013-14-season-new-rules-defined) Surely the fans, who derive only an enjoyable, entertainment-based benefit from watching the combative game within a game will continue to support and encourage fighting's presence in the NHL. However, for those players that have felt the tangible, negative impact of hand-to-hand combat, the fighting has only just begun, and this time, the opponent is the NFL.

In August 2013, the National Football League (NFL) settled a widely publicized lawsuit involving thousands of former NFL players to compensate those players' damages incurred as a result of playing in a league without adequate protective measures and safety information provided (http://nysbar.com/blogs/EASL/2014/01/update_on_nfl_concussion_settl.html, http://nysbar.com/blogs/EASL/2014/01/the_nfl_concussion_litigation_.html). Prior to its settlement, the impending ramifications of resolution with those former players brought with it a wave of changes to current NFL policy so as to thwart future issues of the same ilk. One of those changes, enacted prior to the 2011-2012 NFL season, involved moving kickoffs forward five yards and reducing the distance between defensive players and such kickoffs. In doing so, the NFL was able to reduce both the amount of speed defensive players could build in anticipation of the kick and the liklikehood that a receiver of the kick would chose or have the ability to physically engage in the play. As a result, in a sport where concussions had been on the rise since 2006, the rule change was vastly effective for its purpose. That season, the NFL saw an overall decline in the amount of concussions sustained across the league, and a steep 46% decline in the amount of concussions on kickoffs specifically. (http://www.nfl.com/news/story/0ap1000000047303/article/concussions-decline-after-change-to-kickoff-rule) Still, despite the coinciding uproar from fans who relished the opportunity to witness the unparalleled excitement that kickoffs used to bring, the NFL managed to increase revenues by over 5%, showing that doing so could still leave owners and the likes financially unaffected in the face of fan disapproval.(http://www.businessinsider.com/sports-chart-of-the-day-nfl-revenue-still-dwarfs-other-major-sports-2012-10) However, even with a safer environment in which to play this sport, some of the players themselves were left with no sport to play.

For players like Devin Hester, kick return extraordinaire for the Chicago Bears, their livelihoods have been dramatically affected by such rule changes. In response to disallowing return men from earning a Pro Bowl (all star) selection,and thereby making the earning of bonuses in satisfaction of that condition impossible, Hester said, "they are trying to change up the whole game of football and they're messing with people's jobs and lives." In response to the same rule change, Joshua Cribbs, another of the NFL's best return men said, "we have a great league filled with tradition and history but I'm not sure about that now." In support of Cribbs, punter Chris Kluwe said, "[I] wonder if NFL teams are planning on altering any contracts of kick returners who have Pro Bowl contingent bonuses. Only seems fair." While these players represent a small sample of those visibly affected by policy changes, their plight does not even come close to accounting for the countless others who can no longer find employment as members of the NFL due to their irrelevant but once coveted skill-set. For those that currently find themselves in the employ of the NHL due to their ability to literally beat opponents, that same concern may very well be shared in due time.

Former NHL player Jim Thomson, a self-proclaimed enforcer during his heyday, had this to say about fighting in hockey: "Todd Ewen, an enforcer who had more fights than I did said, 'take it out'...I was friends with Bob Probert, maybe the best fighter of all time. He hated it. He hated what it did to him; he hated the demons he had to live with. I could go through the list." Those "demons," or symptoms about which Thomson spoke, reside in many former NHL and NFL players who suffer from chronic traumatic encephalopathy (CTE), a degenerative disorder spurred on by multiple concussions that can cause severe depression, confusion, memory loss and aggression. The very demons that haunt these players through retirement are the same demons that may now haunt the NHL. On November 25, 2013, 10 former NHL players filed a lawsuit, Leeman v. National Hockey League, citing many of the same issues raised in the NFL lawsuit. The players intend to argue that by creating safety protocols, the NHL assumed the duty to protect the players from injury, and that they further failed to adequately inform the players of the potential risks involved in the playing, among other issues. With the threat of litigation as much a reality now as it was when the NFL instituted its policy changes, the likelihood of the NHL taking the same course of action becomes greater with each punch. General Manager of the Tampa Bay Lightening and former Detroit Red Wings legend Steve Yzerman, supported by a contingent of other NHL General Managers, released this statement mere weeks after the NFL settlement: "either anything goes and we accept the consequences, or take the next step and eliminate fighting." While Yzerman's statement may echo the sentiment of former players, including Thomson, now united in their potential opportunity to cash in on former league policy, it equally demonstrates the disconnect between NHL officials and those who still rely on their league's current policy.

In 2011, the National Hockey League Players Association (NHLPA) and CBC Sports conducted a poll of 318 current NHL players, which yielded a telling result-- 98% of players are opposed to a ban on fighting.(http://www.thestar.com/sports/hockey/2013/11/07/nhl_fighting_survey_shows_canadian_hockey_fans_want_ban_players_dont.html ) According to the 6'8", 260 pound Buffalo forward John Scott, "[t]here are not many concussions if you watch fighting. I think it's the easiest target that people go after: Get fighting out of the game and it'll solve everything. I think when fighting's out of the game then everyone's going to be taken off on stretchers because of hits from behind and high-sticks and dirty checks. It'll be a little different story." Of course, Scott, currently serving a suspension for an illegal check of his own, makes his living by dropping the gloves and would instantly feel the direct affect of any change in policy. However, Scott raises the valid point that may be the lone differentiating factor between what has taken place in the NFL and what may transpire in the NHL, that eliminating fighting affects all players on the ice. Georges Laraque, Yzerman's former teammate may have stated it best when he said: "Because of them [tough players], Steve Yzerman had all the room he needed to be a successful player. [They] put him on the road to the hall of fame...And he's spitting on that job [by saying], 'lets take fighting out of the game.'" According to Laraque, one of the most notorious fighters NHL fans have ever seen, the skill players require a certain level of protection from the brutality of an already contact-driven and ruthless game. In removing that level of protection, the NHL runs the very real risk of having to supplement fighting with far-reaching and imposing protective measures that might forever change the face of hockey as its loyal fans have known it.

The debate currently permeating the NHL can be synthesized into this question-- is protection of league image through policy changes and compensation of its former players worth a change in culture that has the potential to affect the viewers, current players and the game in a way that could prove far more detrimental than was seen in the NHL? The answer is yet to be written.

Alex Rodriguez's Ongoing Legal Battle to Overturn His MLB Suspension

By Danielle Browne

On January 11th, Fredric Horowitz, an independent arbitrator, upheld the majority of a 211-game suspension levied against New York Yankees' Alex Rodriguez. Rodriguez's suspension is based on his role in the Biogenesis performance enhancing drug (PED) scandal. Horowitz ruled there was "clear and convincing evidence" that Rodriguez used three banned substances (testosterone, Insulin-like Growth Factor-1, and human growth hormone) in violation of the Joint Drug Agreement (JDA), and twice tried to obstruct Major League Baseball's (MLB) drug investigation in violation of the Collective Bargaining Agreement (CBA). Horowitz's ruling stated that "[d]irect evidence of [the JDA] violations was supplied by the testimony of Anthony Bosch [Biogenesis founder] and corroborated with excerpts from Bosch's personal composition notebooks, BBMs [Blackberry messages] exchanged between Bosch and Rodriguez and reasonable inferences drawn from the entire record of evidence."

Although Horowitz trimmed the suspension to 162 games (the entire 2014 regular season and postseason), it remains the largest penalty for PED use in MLB history. In his decision, Horowitz wrote, "[w]hile this length of suspension may be unprecedented for a MLB player, so is the misconduct he committed."

Just two days after Horowitz's ruling, Rodriguez filed a lawsuit in U.S. District Court against MLB and the Major League Baseball Players Association (MLBPA), seeking to overturn the season-long suspension. Specifically, the lawsuit seeks to vacate Horowitz's decision, hold the MLBPA responsible for its alleged breaches of the duty of fair representation, and hold the MLB responsible for violating the CBA by imposing a suspension on Rodgriguez without just cause.

Vacating the Arbitration Award

Rodriguez's complaint alleges that Horowitz's ruling must be vacated for four reasons:

(1) It "does not draw its essence from the collectively bargained agreements." Rodriguez argues that the 162 game suspension disregards the "progressive, disciplinary framework set forth in the JDA." The JDA establishes a 50-game suspension for the first doping offense, 100 games for the second offense and a lifetime ban for the third. While Rodriguez proclaims his innocence, he argues that he should have been suspended for 50 games, at most, as a first-time offender under the JDA;

(2) Horowitz "exhibited a manifest disregard for the law." Rodriguez claims that Horowitz denied his legal team the opportunity to cross-examine Bosch and Selig. Additionally, Rodriguez's legal team was denied the right to examine the BlackBerry devices that MLB alleges were used to transmit incriminating text messages between Rodriguez and Bosch;

(3) Horowitz "acted with evident partiality"; and

(4) Horowitz refused to "entertain evidence that was pertinent and material to the outcome."

Courts, generally, review arbitration awards with great deference. If the arbitration proceeding is conducted in a fair and impartial manner, courts do not vacate the ruling or interfere with the arbitrator's relaxed evidentiary standard. The U.S. Court of Appeals for the Second Circuit has held that an arbitral decision may be vacated when an arbitrator has exhibited a manifest disregard for the law (i.e. something beyond and different from a mere error in the law or failure on the part of the arbitrators to understand or apply the law.) This is difficult standard to meet. Although Rodriguez's legal team has alleged that Horowitz's conduct meets the standard, it is not clear that this is true.

Duty of Fair Representation

The duty of fair representation obligates unions to represent its members fairly, in good faith, and without discrimination. Rodriguez's complaint alleges that the MLBPA "completely abdicated its responsibility to Rodriguez to protect his rights" by failing to stop MLB from leaking prejudicial information and using abusive investigative tactics. Further, the complaint alleges that"[t]his inaction by the MLBPA created a climate in which MLB felt free to trample" on Rodriguez's confidentiality rights.

Like challenges to arbitration awards, the courts have taken a deferential approach when reviewing union-member conduct. The courts have held that a union only breaches the duty of fair representation when it acts arbitrarily, discriminatorily or in bad faith. Furthermore, the courts have refused to classify union decisions as arbitrary as long as they were based on a reasoned decision by the union. Therefore, Rodriguez will likely have a difficult time proving his duty of fair representation claim.

Barring success in the federal court, Rodriguez stands to lose $25 million in salary for 2014, lost opportunities for bonuses, and playoff money. Additionally, Rodriguez will be turning 40 years old in the 2015 season, and there are substantial doubts that he can return to the plate with success after this suspension.

The complaint: https://s3.amazonaws.com/s3.documentcloud.org/documents/1004908/ar-complaint-1.pdf

February 3, 2014

Swatch Your Back -- Copyrighted Corporate Earnings Calls Are Fair Game

By Barry Werbin and Sharon O'Shaughnessy
Herrick, Feinstein LLP

In The Swatch Group Management Services Ltd. v. Bloomberg L.P., 12-2412-cv (2d Cir. Jan. 27, 2014), a Second Circuit panel unanimously decided that Bloomberg L.P. (Bloomberg), the prominent financial news and data reporting service, did not infringe on The Swatch Group Management Services Ltd's (Swatch) copyright in an invitation-only recorded Swatch earnings call, by obtaining a copy of the recording without authorization and making it available to Bloomberg's paying subscribers. Despite the failure of Bloomberg to manifestly transform the recording in any way before publication, the Second Circuit nonetheless held that Bloomberg's use of the recording qualified as fair use under Section 107 of the Copyright Act. The court emphasized that American investors and analysts are entitled to receive newsworthy financial information and that Bloomberg's conduct is protected by the First Amendment.

On February 8, 2011, Swatch released its 2010 earnings report, which was subsequently made available to the public. Swatch then convened an earnings call with 132 analysts, who were informed that they were expressly prohibited from recording the call for publication or broadcast. Bloomberg, while not invited to the call, obtained a sound recording and written transcript of the call and made both available online, without alteration, to its subscribers. Swatch then sued for copyright infringement. In an opinion and order entered on May 17, 2012, Southern District Judge Alvin Hellerstein sua sponte granted summary judgment to Bloomberg, finding that Bloomberg's copying and dissemination of the recording qualified as fair use.

On appeal, the Second Circuit engaged in its own analysis of the fair use factors under 17 U.S.C. § 107 and affirmed the district court's grant of summary judgment in favor of Bloomberg, concluding that "the copyright law's goal of promoting the Progress of Science and useful Arts would be better served by allowing [Bloomberg's] use than by preventing it."

Turning to the first statutory fair use factor, "purpose and character of use," the court held that, although Bloomberg obtained the recording without authorization and put it to commercial use without transforming it, Bloomberg's use served an important public purpose of ensuring the wide dissemination of important financial information.

The court emphasized that "Bloomberg's overriding purpose here was not to 'scoop[]' Swatch or 'supplant the copyright holder's commercially valuable right of first publication," but rather simply to deliver newsworthy financial information to American investors and analysts. That kind of activity, whose protection lies at the core of the First Amendment, would be crippled if the news media and similar organizations were limited to authorized sources of information."

Moreover, after stressing that "transformative use" is not absolutely necessary for a finding of fair use, the court held that, in the context of news reporting and analogous activities, "the need to convey information to the public accurately may in some instances make it desirable and consonant with copyright law for a defendant to faithfully reproduce an original work rather than transform it."

With respect to the second statutory fair use factor, "the nature of the copyrighted work," the court determined that the balance tipped decidedly in Bloomberg's favor because, while the recording had not been "published" by Swatch as that term is applied under the Copyright Act, Swatch itself publicly disseminated the spoken performance embodied in the recording before Bloomberg's use and the earnings call was factual in nature. As the court noted, "the scope of fair use is greater with respect to factual than non-factual works."

Next, while the court declined to weigh the third "substantiality" factor in either party's favor, it did find that Bloomberg's use of the entire recording was nonetheless reasonable "in light of its purposes of disseminating important financial information to American investors and analysts."

Lastly, the court determined that the fourth statutory factor, "the effect of the use upon the potential market for or value of the copyrighted work," weighed in favor of fair use because Second Circuit case law limits the court's consideration to a use's "impact on potential licensing revenues for traditional, reasonable, or likely to be developed markets" and the possibility of receiving licensing royalties in no way factored into the creation of the earnings call. Furthermore, the court highlighted that the "value" of the copyrighted expression for Swatch rested in its capacity to convey important information about the company to interested investment analysts and that Bloomberg, "[b]y making the recording available to analysts who did not or could not participate in the call initially... simply widened the audience of that call, which is consistent with Swatch Group's initial purpose."

This decision continues what many see as a trend in the Second Circuit to expand the contours of the fair use doctrine. Interestingly, this is only the sixth time the Second Circuit has addressed the fair use doctrine in the past decade in a reported decision.

A copy of the Second Circuit decision is available here: http://caselaw.findlaw.com/us-2nd-circuit/1655777.html.

February 5, 2014

Quentin Tarantino Files Copyright Infringement Suit Against Gawker

By Shane Wax

On January 22nd, Gawker Media LLC (Gawker), the popular media and entertainment gossip and news website, published a blog entry about the unauthorized leak of the script for Quentin Tarantino's next film, "The Hateful Eight," and his exasperated response. Tarantino had decided that he would no longer proceed with the film. The next day, Gawker posted links to third party websites where anonymous individuals had uploaded a copy of the leaked a script. A week later, Tarantino's lawyers hastily filed a lawsuit against Gawker Media and 10 Doe defendants in U.S. District Court in Los Angeles. Gawker responded to the lawsuit in yet another blog entry, claiming that it shared the links to the leaked scripts "because it was news."

The complaint in Tarantino v. Gawker Media, No. 14-cv-00603 (C.D. Cal.) alleges that the Doe defendants infringed Tarantino's right to reproduction, distribution and display of the script by illegally uploading the script to one of two websites. It further alleges that Gawker contributed to this infringement of Tarantino's copyrights by encouraging or inducing the upload.

However, what did Gawker actually do? For one, it did not upload the script itself. Rather, Gawker learned that the script was uploaded by anonymous third parties to other websites, and then provided its readers with links to those webpages. Gawker's alleged contribution stems from a statement on the first blog entry telling readers, "if anyone would like to name names or leak the script to us, please do so." While the complaint tries to claim that Gawker acted as the "first source" to offer the links, Gawker never claimed to be the exclusive or first source in either blog entry. In fact, it offered two separate links where users could find the leaked script.

Tarantino's main challenge will be the binding legal precedent set by the Ninth Circuit in the Perfect 10 cases. Those cases adopted the "server test," a rule which requires that a website maintains the copyrighted content on its own server to be held liable for public display.

While Tarantino's lawyers, perhaps aware of this precedent, are not alleging that Gawker is directly infringing the copyright attached to the script, it is unclear to what impact that holding will have on the contributory infringement claim.

Another notable decision that may pose both a challenge and a boon to Tarantino's legal team is the Seventh Circuit's 2012 decision in Flava Works v. Gunter. There, Judge Posner implicitly adopted the server test to find that the website owner could not be held directly liable for the digital performance of copyrighted videos that were framed within the website, i.e., accessible through links. As may be relevant to Tarantino, Judge Posner concluded that linking to copyrighted content could not give rise to contributory liability because there was no evidence that this conduct had an "effect on the amount of infringement" occurring. In other words, a website that allows its members to link to copyrighted material does not necessarily cause people to unlawfully upload the copyrighted content in the first place.

Importantly, however, Judge Posner also wrote that if a website "invited people to post copyrighted videos on the Internet without authorization," it could be held liable for inducement. This is more or less what Tarantino alleges, and what the Seventh Circuit found noticeably absent in Flava Works. It is therefore plausible that the outcome of this case could depend upon whether the court finds that Gawker's passive invitation encouraged the infringement.

A copy of the Complaint can be found here: http://msnbcmedia.msn.com/i/TODAY/Entertainment/_ENT%20archive%20and%20storage/PDFs/TarantinoVGawker.pdf

The Gawker webpage that lead to the lawsuit can be found here:
http://defamer.gawker.com/here-are-plot-details-from-quentin-tarantinos-leaked-1507675261

Quentin Tarantino v Gawker Media

By Kara Buonanno

Edgy, Oscar winning filmmaker Quentin Tarantino is demanding real-life revenge from Gawker Media LLC (Gawker) for the latter's publishing of online links to a downloadable version of the script to his latest movie, "The Hateful Eight." On January 27th, Tarantino filed a lawsuit against Gawker in U.S. District Court in Los Angeles, alleging contributory copyright infringement. The lawsuit also names as a defendant AnonFiles.com, the file share website that made the actual script available for viewing.

The suit alleges that Gawker promoted and disseminated "unauthorized downloadable copies of the leaked unreleased complete screenplay". Additionally, court documents state that Gawker has "failed and expressly refused to remove their directions to and URL links to get the infringing materials". More specifically, on both January 23rd and 24th, Gawker received DMCA notice and takedown letters stating that links to access the screenplay appeared at URL locations on its website. Pursuant to these notices, the plaintiff demanded removal of the directions and URL links leading to the script.

According to court documents, Tarantino submitted a copyright registration application for "The Hateful Eight" on January 23, 2014, prior to the alleged infringements.

The director is seeking actual and statutory damages, along with Gawker's profits of at least $1 million for each count of copyright infringement.

Tarantino is represented by Los Angeles-based attorney Marty Singer of Lavely and Singer PC. Singer is commonly and endearingly referenced as the "Pit Bull Litigator" or "Guard Dog to the Stars" by the media. He has represented a multitude of celebrities in various litigation matters, including Charlie Sheen, John Travolta, Arnold Schwarzenegger and Scarlett Johansson. Gawker has dealt with Singer before. In 2009 and 2010 Singer represented Eric Dane and his wife Rebecca Gayheart in a copyright infringement suit against Gawker for the posting of a sexually explicit video. The case settled for an undisclosed six-figure sum, and Gawker pulled any traces of the video from its website.

Gawker Editor-In-Chief John Cook stated that Gawker planned to fight Tarantino's lawsuit and denied any allegations of copyright infringement in a post on Gawker.com, where he claimed that its role was only to provide users a link to the script. The post states: "Gawker received a tip from a reader informing us that the script was on the AnonFiles site, after which Gawker published a story reporting that the script had surfaced online."

As a result of the script leak, Tarantino has publicly claimed that he will no longer make "The Hateful Eight". According to IMDB.com, the project has been shelved.

February 28, 2014

Utah District Court Issues First Preliminary Injunction Against Aereo

By Barry Werbin

In a marked turn of events for Aereo, the disruptive provider of dime-size antennae over-the-air rebroadcast services, on February 19, 2014, the Utah federal District Court (Judge Dale Kimball) became the first court to issue a preliminary injunction against Aereo, finding that it infringed the plaintiff broadcasters' public performance copyrights in the transmissions of their broadcasts under the Copyright Act's Transmit Clause. The court barred Aereo from operating within the Tenth Circuit, which covers the states of Utah, Colorado, Montana, New Mexico, Oklahoma and Wyoming. The case, which consolidates two separately filed actions in Utah by different sets of broadcasters, is Community Television Of Utah, LLC v. Aereo, Inc., No. 2:13CV910DAK. A copy of the decision can be accessed here: Aereo Utah.pdf.

Aereo was sued in the Utah cases after being victorious before the Second Circuit (albeit with a strong dissent from Judge Denny Chin) in WNET v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013), cert. granted sub nom ABC, Inc., et al, v. Aereo, Inc., Sup. Ct. (Jan. 10, 2014). The Supreme Court will hear argument on April 22nd and a decision is expected by June. Aereo also won before the District Court of Massachusetts in Hearst Stations Inc. v. Aereo, Inc., 2013 WL 5604284 (D. Mass. Oct. 8, 2013), which is on appeal to the First Circuit.

On the other hand, another Aereo-type tiny antenna service, FilmOnX (formerly Aereokiller), had a resounding defeat in the Central District of California, in a case now sub judice before the Ninth Circuit, where FilmOnX is presently subject to a preliminary injunction. FOX Television Stations, Inc. v. BarryDriller Content Systems PLC, 915 F.Supp. 2d 1138 (C.D. Cal. 2012), appeal pending. FilmOn also lost in the District of Columbia, where the court issued a nationwide preliminary injunction, excluding the Second Circuit. Fox Television Stations, Inc. v. FilmOn X LLC, 2013 U.S. Dist. LEXIS 126543 (D.D.C. Sept. 5, 2013).

In all these cases, including the new Utah decision, the core issue is whether these types of retransmission services violate the Transmit Clause under Section 101 of the Copyright Act, which defines a "public performance" -- one of the exclusive rights reserved to a copyright owner -- as the right "to transmit or otherwise communicate a performance or display of the work to a [public place] or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times."

The Utah court characterized Aereo's retransmissions of over-the-air broadcasts as being "indistinguishable [to] a cable company" and that its services fall "squarely within the language of the Transmit Clause." The court examined the holdings of all these prior decisions, but because there is no existing Tenth Circuit law on the issue, it conducted its own analysis. In doing so, it concluded that "California and D.C. district court cases as well as Judge Chin's dissent in the Second Circuit case are the better reasoned and more persuasive decisions with respect to the proper construction of the Transmit Clause and its application to Aereo's operations."

In particular, the court examined the "plain language" of the Transmit Clause and the applicable definitions in the Copyright Act, and concluded that such "definitions in the Act contain sweepingly broad language and the Transmit Clause easily encompasses Aereo's process of transmitting copyright-protected material to its paying customers. Aereo uses 'any device or process' to transmit a performance or display of Plaintiff's copyrighted programs to Aereo's paid subscribers, all of whom are members of the public, who receive it in the same place or separate places and at the same time or separate times."

The court further examined the legislative history behind the Transmit Clause. In particular, it cited to Congress' intent in the 1976 Act to expressly overrule prior Supreme Court decisions, which had validated community antenna television systems (precursors to modern cable systems) under the 1909 Copyright Act and to "bring a cable television system's transmission of broadcast television programming within the scope of the public performance right."

Aereo relied on the Second Circuit's opinion and that decision's reliance, in turn, on the Second Circuit's earlier opinion in the Cablevision case, Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), which had upheld a remote DVR system made available to end-users who already subscribed to Cablevision's services (and where Cablevision was otherwise paying legally required retransmission fees to broadcasters). The Utah court, however, said "the Second Circuit [in Cablevision] proceeded to spin the language of the Transmit Clause, the legislative history, and prior case law into a complicated web" by focusing "on discerning who is 'capable of receiving' the performance to determine whether a performance is transmitted to the public." Judge Kimball noted that "such a focus is not supported by the language of the statute. The clause states clearly that it applies to any performance made available to the public," regardless of whether such performance was public or private, and "encompass all known or yet to be developed technologies." Judge Kimball also faulted the Second Circuit in Cablevision for effectively changing the wording of the Transmit Clause from "members of the public capable of receiving the performance" to "members of the public capable of receiving the transmission."

In assessing the legislative history, Judge Kimball also quoted freely from Judge Chin's dissent in the Second Circuit's decision, and concluded that "[b]ased on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs' programs. Despite its attempt to design a device or process outside the scope of the 1976 Copyright Act, Aereo's device or process transmits Plaintiffs' copyrighted programs to the public."

Despite a dispute as to whether any financial harm would befall the plaintiffs during the pendency of the action, the court held that preliminary injunctive relief was nevertheless warranted because, from the perspective of irreparable harm, "if Aereo were permitted to continue to infringe Plaintiffs' copyrights... Aereo's infringement will interfere with Plaintiffs' relationships and negotiations with legitimate licensees, impede and effect Plaintiff's negotiations with advertisers, unfairly siphon viewers from Plaintiffs' own websites, threaten Plaintiffs' goodwill and contractual relationships with Plaintiffs' licensed internet distributors, lose their position in the competitive marketplace for Internet content, and cause Plaintiffs to lose control of quality and potential piracy of its programming."

With respect to the balance of harm element, because the court limited the preliminary injunction only to the Tenth Circuit, "the harm to Aereo's business is limited only to its ability to expand into the geographic area of the Tenth Circuit. The harm to Aereo's business, therefore, will not put Aereo out of business, it merely impacts its expansion."

Finally, the court found its ruling was consistent with the public interest because "[t]he public has an interest in continuing to receive unique, local programming provided by the Plaintiffs. Original local programming, covering local news, sports, and other areas of interest, costs millions of dollars to produce and deliver to the public and the public interest plainly lies in enjoining copyright infringement that threatens the continued viability of such local programming."

Post-script: Aereo promptly moved to stay enforcement of the injunction pending its appeal to the Tenth Circuit, particularly in light of the pending Supreme Court proceeding. In a February 25th order, the court denied Aereo's motion to stay entry of the preliminary injunction but granted a 14-day temporary stay pending the Tenth Circuit's ruling on an emergency motion to stay.

More to come!

March 2, 2014

Garcia v. Google, Inc.: Does An Actor Have A Copyright Interest In His Or Her Performance In A Film?

By, Ning Yu Wu

On February 26th, the United States Court of Appeals for the Ninth Circuit rendered the decision on Garcia v. Google, Inc., known as "the Innocence of Muslims "case. The opinion appears to surprise many legal experts and copyright lawyers because it innovatively concludes that in the absence of work made for hire, an actor could have an independent copyright interest in his or her performance in a film. (http://cdn.ca9.uscourts.gov/datastore/opinions/2014/02/26/12-57302.pdf)

The plaintiff-appellant Cindy Lee Garcia, who was cast in a low budget independent film with the working title "Desert Warrior" at the time, subsequently learned that her recorded performance was altered and used in another film titled "Innocence of Muslims." Garcia's voice in the film was partially dubbed. The final version of the film, which seemed to be extremely controversial and offensive, was uploaded to YouTube by the filmmaker Mark Youssef. Garcia, who appeared in the 13-minute film for approximately five seconds, among other individuals involved in making of the film, allegedly received threats because of such participation. Garcia had repeatedly requested YouTube, LLC. (YouTube), a subsidiary owned by Google, Inc. (Google), to remove the film. YouTube, however, denied her requests. Accordingly, Garcia filed a lawsuit against YouTube and Google, and claimed that the controversial film on YouTube had infringed the copyright in her performance. The district court denied the relief, and Garcia appealed.

Garcia could have pursued a case against the filmmaker in the state court to resolve the issues involving any privacy and tort related claims, and compel the filmmaker to direct YouTube to remove the videos. Perhaps for strategic reasons, Garcia decided to commence the case in the district court pursuing a copyright infringement claim against YouTube and Google directly. The Ninth Circuit addressed Garcia's independent copyright interest claim, the work for hire doctrine, and whether there was an implied license granted by the plaintiff to distribute the film via YouTube. Chief Judge Kozinski ruled that Garcia had an independent copyright interest in her performance in the film, in the absence of finding the work was made for hire.

Section 102(a) of the 1976 Copyright Act protects "original works of authorship fixed in a tangible medium of expression." Accordingly, the two essential elements for a valid copyright are (1) originality and (2) fixation in a tangible medium. Judge Kozinski noted that because an actor's performance embodied "body language, facial expression and reactions to other actors and elements of a scene," it equips at least some minimal degree of creativity. Accordingly, even the creative contribution is minor, it is still copyrightable when the performance is fixed in a tangible medium. Many legal experts are troubled by this novel position. As noted in the dissent written by Judge Smith, Garcia herself admitted that she had no creative control over the script of her performance. Since a script is written by a playwright, and directions are given by a director, an actor's creative endeavor is to perform or act on the materials given. It is unclear that whether such portrayal of a character falls into the purview of the protectable subject matter, especially as Section 102(b) of the 1976 Act specifies that: "In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work."

Assuming that an actor's portrayal of a character provides at least a modicum of creativity under the 1976 Act, a more significant issue is the fixation requirement. In the opinion, Judge Kozinski provides that when an actor's performance is fixed, his or her performance can be deemed a derivative work of the original. Accordingly, the actor may claim the copyright in his or her own contribution to the extent not exceeding the "preexisting material." Pursuant to Section 101 of the Act: "A work is "fixed" in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration."

Accordingly, the opinion acknowledges that a derivative work produced based on the result of infringing the original work would not be copyrightable. Here, the court ruled that because the filmmaker Youssef hired Garcia, gave her the script to act, and filmed her performance on camera, Youssef implicitly granted her a license to perform the screenplay. Therefore, the video recording of Garcia's performance was sufficiently fixed.

The ruling appears to surprise many practitioners. When publicly performing a copyrightable musical composition, for example, a license from the copyright owner/publisher or one of the performing rights organizations is required. Having secured a license for public performance does not automatically imply that a mechanical license is also attached to allow the music to be recorded during the performance for phonorecords. To record a musical composition, a separate mechanical license (namely, via The Harry Fox Agency, Inc., or directly from the publisher) must be sought. Here, even though Garcia was given an implied license to perform the screenplay; the scope of the implied license (if any) was limited to the performance of the script. She was never granted a license, express or implied, by the filmmaker Youssef to prepare a derivative work, even the performance was incidentally fixed in a recording. Without the authority of the author granting such license beyond the performance on camera, saying that Garcia has a copyright interest immediately attached to her performance perhaps is immaterial.

Garcia's position is certainly sympathetic. The court acknowledges that the case is troubling. Nevertheless, the ruling has created a precedent, at least in the Ninth Circuit and below, that under limited circumstances, an actor may have a copyright interest in his or her performance in a film. Google announced that it was going to appeal the decision. In the meantime, for filmmakers, it is always a good idea to have a comprehensive agreement and other evidence to support that the performance on camera was a work was made for hire.

March 20, 2014

2-4-6-8 Varsity Cannot Copyright

By Barry Werbin and Bryan Meltzer
Herrick, Feinstein LLP

Whether colors and designs placed on useful or functional objects are protected under the Copyright Act is one of the more troublesome issues in copyright law. Tackling this legal fine line, the Western District of Tennessee recently found that cheerleading uniforms featuring geometric, color and other design elements are not copyrightable. Varsity Brands, Inc. (Varsity) is one of the largest designers and manufacturers of cheerleading and dance uniforms. In Varsity Brands, Inc., et al. v. Star Athletica, LLC, 10 Civ. 2508 (W.D. Tenn. March 1, 2014), Judge Cleland found that the designs and colors placed on cheerleading uniforms produced and designed by Varsity, which Varsity alleged were infringed by Star Athletica, LLC (Star), could not be conceptually or physically separated from the cheerleading uniforms themselves because such designs and colors were at the core of "cheerleading-uniform-ness." As a result, Judge Cleland held that even though Varsity held copyright registrations for the designs at issue, it could not maintain its claims against Star for copyright infringement.

As Judge Cleland recognized, "[c]lothing possesses both utilitarian and aesthetic value." If a design "'can be identified separately from, and is capable of existing independently of, the utilitarian aspects'" of the clothing, the design may be copyrightable. But when the design is not separable from its utilitarian function, it will not be copyrightable. Noting that there is "considerable disagreement regarding the proper standard to apply when considering whether the elements of protectable [pictorial, graphic and sculptural works] are separable from their utilitarian function," Judge Cleland based his analysis on two key clauses found in 17 U.S.C. §101: first, "whether the court can conceive of the allegedly copyrightable features as separate from the utilitarian article" (i.e., conceptual separability), and second, whether the design can "exist independently of the utilitarian article" (i.e., physical separability).

With respect to conceptual separability, Judge Cleland found that the uniform designs, which included combinations of braids, chevrons and stripes, did not "invoke any concept other than that of clothing," especially since the copyrighted design sketches depicted the designs on the uniforms worn by cheerleaders. In other words, "a cheerleading uniform is 'a garment specifically meant to cover the body in an attractive way for a special occasion" and "[t]he artistic judgment that is exercised applying stripes, patters, and chevrons, 'does not invoke in the viewer a concept other than that of clothing.'" Id. The court noted in particular that without the colors and designs, a cheerleading uniform ceases to be recognized as a cheerleading uniform, and that the designs actually made the garments into utilitarian uniforms. Accordingly, Judge Cleland found that the designs of the cheerleading uniforms merged with their utilitarian function.

Turning to physical separability, Judge Cleland similarly found that "removing the lines, patterns, and chevrons from the [cheerleading uniforms] and placing them on a different canvas [did] not remove their association as cheerleading uniforms" since the "fabric evokes the image and concept of a cheerleading uniform." In other words, the designs could not exist independently of the uniforms.

Since he found that the designs were not conceptually or physically separable from the utilitarian aspect of the uniforms, Judge Cleland held that the designs were not copyrightable and granted Star's motion for summary judgment, dismissing Varsity's claims.

Judge Cleland's decision is significant because it shows that even copyrighted designs will not be protected if the designs are not "separable" from their functions. Yet how to assess such "separability" remains a challenge for courts. For example, if school logos and other designs were used not only on cheerleader uniforms, but also on school signage, pennants and the like, those designs could be viewed as "separable" as they would not be limited to use on cheerleader uniforms to define such garments as utilitarian uniforms.

The decision will surely upset fashion designers and the entire uniform industry, which may be left with scant copyright protections, and may be troublesome to some copyright practitioners as well.

The decision:Varsity cheerleader decision.pdf

March 24, 2014

Prince Settles with Cariou

After more than five years and a decision from the Second Circuit favoring appropriation artist Richard Prince, the parties settled last week. Cariou agreed to withdraw any claim he had to the works in Prince's "Canal Zone" series, which appropriated images from Cariou's Rastafarian photographs. It appears that each party will pay its own legal fees.

According to theartnewspaper.com:

Cariou's lawyer Dan Brooks confirmed the case had been settled but said he could not discuss the specifics or his client's feelings about the outcome. Prince's lawyer Josh Schiller said that the artist "is pleased to have this settlement and be able to focus on his work without further distraction". He added: "It is important that artists know they need not justify their new expressive work without first ensuring compliance with legally constructed statements of purposes of intent." A spokeswoman for Gagosian Gallery says, "Gagosian Gallery is very pleased by the Second Circuit's decision and that the matter has now been finally resolved."

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:
telle591.pdf

April 5, 2014

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 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:

http://www.medialaw.org/images/medialawdaily/authorsamicus.pdf

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:

http://www.supremecourt.gov/oral_arguments/argument_transcripts/13-461_o7jp.pdf


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

May 11, 2014

Fair Use Considerations in DMCA Misrepresentation Claims: First Circuit "Cases of Interest" No Longer Very Interesting

By Amanda Schreyer
http://fierstkane.com/amanda-schreyer

In my recent article, "Misrepresentation Under the DMCA: The State of the Law", NYSBA Entertainment, Arts, and Sports Law Journal (Spring 2014, Vol. 25, No. 1), I discussed two recent, interesting cases out of the First Circuit: Tuteur v. Crosley-Corcoran (Tuteur v. Crosley-Corcoran, 1:13-cv- 12028 (D. Mass. filed January 25, 2013))(the "Blogger-Giving-the-Finger Photo Case"), and Lessig v. Liberation Music Pty Ltd. (Lessig v. Liberation Music Pty Ltd., 1:13-cv-10159 (D. Mass filed May 20, 2013))(the "Lessig Lisztomania Case"). In those cases, an issue before the District Court of Massachusetts was whether the defendant knowingly made a material misrepresentation in its Digital Millennium Copyright Act (DMCA) takedown notice in claiming that the plaintiff's use of the defendant's copyrighted work was infringing. Between the writing of the article and its publication, both cases were dismissed. Tuteur had survived Crossley-Corcoran's motion to dismiss, but Lessig only got as far as an amended complaint before settling. (According to the Electronic Frontier Foundation, Lessig's counsel in the case, the settlement contained the following statement: "Liberation Music agrees that Professor Lessig's use of the Phoenix song 'Lisztomania' was both fair use under US law and fair dealing under Australian law." According to Tuteur (via her blog): "We've settled the lawsuit. The parties have entered into a settlement agreement which has resolved all claims and controversies to their mutual satisfaction.")

In both Tuteur and Lessig, the plaintiffs claimed that the defendants were liable under §512(f) of the DMCA because they knowinglyv and materially misrepresented that the plaintiffs' use of the defendants' copyrighted works was infringing when they sent takedown notices to the plaintiffs' service providers. Under §512, within a copyright owner's takedown notice, the copyright owner must state that "the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law." (§512(c)(3)(A)(v)). While the statute does not provide per se liability for a violation of §512(c)(3)(A)(v), Congress did impose liability on a copyright owner who "knowingly materially misrepresents" that the material it is requesting to be taken down is infringing. Section 512(f) provides:

Any person who knowingly materially misrepresents under this section . . .that material or activity is infringing, ... shall be liable for any damages, including costs and attorneys' fees, incurred by the alleged infringer, by any copyright owner or copyright owner's authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing...

Therefore, a copyright owner should be held liable under §512(f) if he or she "knowingly misrepresents" that he or she has a "good faith belief" that the work is infringing.

Fortunately, the well-known case, Lenz v. Universal (the "Toddler-Dancing-to-the-Prince-Song YouTube Video Case") - a case in which the plaintiff claimed that her use of the defendant's copyrighted work was fair use under the Copyright Act and thus "authorized under the law" - persists in the Ninth Circuit after seven years. In Lenz v. Universal, 572 F. Supp. 2d 1150 (N.D. Cal. 2008)("Lenz II") the district court held that a copyright owner must evaluate whether the use of the copyrighted work is a fair use prior to sending a takedown notice in order to demonstrate the "good faith belief" that the work is infringing under §512(3)(c)(A)(v), and denied both parties' summary judgment motions. Both parties have appealed to the Ninth Circuit. (Lenz v. Universal, 13-16106 (9th Cir. filed May 31, 2013)).

Tuteur and Lessig were important for DMCA case law because the plaintiffs in both cases also claimed their use of the defendants' copyrighted works was fair use. The Tuteur court, in its order denying the defendant's motion to dismiss, rejected Lenz II, holding that in order for a copyright owner to make a "good faith belief" that the use of the work is not "authorized by the law," the owner must consider whether the use of the material is fair use. In addition, that court held that the standard to be applied to the copyright owner sending the takedown notice is the subjective test (See Rossi v. Motion Picture Ass'n of Am., Inc., 391 F.3d 1000 (9th Cir. 2004)) of whether a plaintiff can provide sufficient evidence that the defendant "had some actual knowledge that its [t]akedown [n]otice contained a material misrepresentation," but did not conclude whether Crossley-Corcoran had such actual knowledge.

The dismissal of these cases is disappointing because a decision on the merits would have added to the body of law interpreting the statutory meaning of misrepresentation under the DMCA. It is still unclear what the terms "good faith belief," "authorized by the law" and "knowingly misrepresent," mean in the context of §512. Therefore, the law remains unsettled across the country as to what level of analysis of the use a copyright owner must have taken, and what facts the copyright owner must have known, before sending a DMCA takedown notice, in order to be held liable for misrepresentation under the DMCA.

May 14, 2014

Center for Art Law Updates

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

• Marjorie Maciunas v. George Maciunas Foundation (N.Y., 2014) -- Plaintiff, resident of Virginia, agreed to sell three works by George Maciunas to the Foundation and she is seeking either return of the property or payment owed to her. Founded by Harry Stendhal in 2009, George Maciunas Foundation Inc. has been active since November 2011. George Maciunas was a Lithuanian-born American artist who died in 1978. Complaint does not seem to explain the relationship between the artist and eponymous plaintiff.

• Feritta III and Maclean v. Knoedler Gallery, 14 Civ. 2259 (S.D.N.Y. Apr. 1, 2014) -- Patterson Belknap Webb & Tyler LLP filed yet another complaint against Knoedler Gallery et all alleging selling a forged Rothko to their clients in 2008. The work that is now believed to be a forgery from the Rosales trove was titled Untitled (Orange, Red and Blue).

• Kolodny v. Meyer, Dorfman and Dorfman Projects LLP, 14 Civ. 3354 (S.D.N.Y. May 8, 2014) -- the case brought by Grossman LLP involves sale of multiple Jasper Johns artworks believed to be stolen by the defendant James Meyer, John's studio assistant. Plaintiff purchased some of the stolen art from Defendants having received assurances that the works could be lawfully sold by Defendants.

• Thome v. Calder Foundation, 14 Civ. 3446 (S.D.N.Y. May. 13, 2014) -- Calder Foundation continues making headlines, this time it is being sued for antitrust violations, including conspiracy of monopolization and restraint of trade, having denied authentication and inventory numbers for the stage set created before Calder's death.

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.

May 20, 2014

Supreme Court Ensures Copyright Suit against MGM "Rages" On

By Barry Werbin and Sharon O'Shaughnessy
Herrick, Feinstein LLP

In Petrella v. Metro-Goldwyn-Mayer, Inc., the Supreme Court delivered a TKO to MGM when it decided, in a 6-3 decision on May 19, 2014, that the equitable defense of laches cannot be invoked as a defense to preclude claims brought within the Copyright Act's three-year statute of limitations for successive acts of copyright infringement. As a result, screenwriter Paula Petrella (Petrella) may continue to pursue more than $1 million in damages for MGM's continued distribution of the classic film Raging Bull. The decision likely sounds the death knell for laches as an affirmative defense in copyright infringement litigation and has the potential to expose Hollywood studios, music labels and media companies to an onslaught of cases brought by copyright holders' heirs and estates seeking a share of profits from classic films, TV shows, music recordings and other creative works that are re-released in various formats.

By way of background, Frank Petrella collaborated with renowned boxer Jake LaMotta on a screenplay about LaMotta's life, which inspired the Oscar-winning film Raging Bull. The screenplay was copyrighted in 1963. In 1976, Frank Petrella and LaMotta assigned their rights and renewal rights, which were later acquired by United Artists, then a subsidiary of MGM. In 1980, MGM released Raging Bull and registered a copyright in the film. MGM continued to market the film, including converting it into DVD and Blu-ray formats, which did not exist in 1980.

Frank Petrella died in 1981, during the initial copyright term, thereby vesting the copyright in the screenplay with his daughter, Paula, who renewed the copyright in 1991, thus becoming its sole owner. For works copyrighted under the 1909 Copyright Act (pre-1978), the Supreme Court had previously confirmed in Stewart v. Abend, 495 U.S. 207, 221 (1990) that when an author who has assigned her rights away "dies before the renewal period, . . . the assignee may continue to use the original work only if the author's successor transfers the renewal rights to the assignee."

In 1998, Petrella's counsel advised MGM that its exploitation of Raging Bull violated her copyright and threatened suit, repeating such threats over the next two years. Petrella, however, did not actually file suit until January 6, 2009, when she filed claims against MGM seeking (i) monetary damages due to acts of infringement resulting from MGM's continuing commercial use of the film (as a derivative work of the screenplay) after January 6, 2006 (including its continual release of the film on DVD and other digital formats); and (ii) injunctive relief prohibiting further distribution of the work without compensation.

Under Section 505(b) of the Copyright Act, copyright plaintiffs have three years to bring suit from the accrual date of a claim. However, if acts of infringement are repeated anew, the statute of limitations operates on a "rolling" basis that allows a plaintiff to collect damages going back three years before the claim accrues. In barring Petrella's action, however, the district court and the Ninth Circuit disregarded the Copyright Act's three-year look-back period for statute of limitations purposes and, instead, held that the equitable defense of laches precluded Petrella from bringing suit because she had unreasonably delayed suit by not filing until 2009. The Ninth Circuit affirmed and agreed with the studio's argument that Petrella's 18-year delay was unreasonable in light of Petrella having been aware of her potential claims many years earlier. The Supreme Court then granted certiorari to resolve a Circuit split concerning the application of laches to infringement claims brought within the three-year statute of limitations under the Act.

MGM argued that delayed copyright lawsuits could impact studios' investments made towards the distribution of works and also pointed to the challenges of trying a case on a delayed basis, such as difficulty in obtaining records and the fact that, as here, key witnesses may be deceased. The Court, however, was unpersuaded. Justice Ruth Bader Ginsburg, writing for the majority, held that the Copyright Act's bar on lawsuits initiated more than three years after a claim accrued did not bar Petrella's lawsuit because, in this instance, there was ongoing copyright infringement and Petrella only sought damages for the three years preceding the filing of her lawsuit. The Court explained that the concept of laches originally served as a guide when no statute of limitations controlled, but could not be invoked as a rule for interpreting a statutory prescription established by Congress. Put simply, laches does not trump the statute of limitations protections that the Copyright Act provides for copyright owners whose works are infringed on an ongoing basis, so long as the owners only seek relief for acts of infringement occurring during the limitations period.

In addressing MGM's claim that an open-ended period to file copyright claims makes it difficult for companies to make future business decisions, Justice Ginsburg emphasized that the "'sue soon or forever hold your peace' approach" advocated by MGM is imprudent because it would force copyright owners to initiate infringement litigation at a time when the value of the copyrighted work was not being undercut or there was no detrimental effect on the original work. Instead, Justice Ginsburg explained that the three-year limitations period "allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle. She will miss out on damages for periods prior to the three-year look-back, but her right to prospective injunctive relief should, in most cases, remain unaltered." The Court observed that allowing Petrella's lawsuit to go forward would put at risk "only a fraction" of the income that MGM earned during that three-year period and would work no unjust hardship on consumers who have purchased copies of Raging Bull. To the extent key witnesses no longer are available, the Court noted that the plaintiffs would be affected equally because they have the burden of proving infringement.

Another equitable "out" was provided, however, by the Court's observation that where a copyright owner intentionally engages in misleading representations concerning his or her abstention from suit, and an alleged infringer detrimentally relies on such deception and would be harmed, reasonable reliance on such copyright owner's past actions could give rise to an estoppel defense. Unlike laches, estoppel does not undermine the Copyright Act's statute of limitations because it rests on misleading acts or omissions. Perhaps anticipating this issue being raised on remand, Justice Ginsburg noted that "Petrella notified MGM of her copyright claims before MGM invested millions of dollars in creating a new edition of Raging Bull" and that "[t]he circumstances here may or may not (we need not decide) warrant limiting relief at the remedial stage."

The decision only addresses the narrow, procedural issue of whether the Copyright Act's statute of limitations for ongoing infringement precludes the assertion of laches. On remand, Petrella must prove her case on the merits. While Petrella is now able to seek damages back to 2006, Justice Ginsburg indicated that laches may come back into play before the district court, where Petrella's delay in commencing action may properly be taken into account at the remedial stage in determining damages and the scope of any appropriate injunctive relief.

Lastly, all is not lost for a company that must defend against a "delayed" claim of continuing copyright infringement. Laches may still play into the remedial stage of an action. and, as the Court pointed out, a defendant may retain any "investment shown to be attributable to its own enterprise, as distinct from the value created by the infringed work."

In a dissenting opinion joined by Chief Justice Roberts and Justice Kennedy, Justice Breyer argued that the majority's opinion undercut basic principles of fairness and could encourage the type of gamesmanship resulting from a claimant sitting back for years until the economics of the exploitation of a copyrighted work make the timing of suit more valuable.

The decision can be accessed here: http://www.supremecourt.gov/opinions/13pdf/12-1315_ook3.pdf

May 23, 2014

A Tough Pill to Swallow: Retired Players' Suit Raises Questions About NFL's Safety Record

By Alexandra Goldstein

Former National Football League (NFL) players filed suit in the U.S. District Court for the Northern District of California on Tuesday, May 20th, alleging that the NFL encouraged rampant painkiller use for players, at the expense of players' long-term health and well being. The suit, Dent et al v. National Football League (Case Number 4:14-cv-02324), comes on the heels of a class action concussion suit from retirees that similarly took aim at the NFL's safety record. Dent names eight plaintiffs and notes that more than 500 additional retirees have signed retention agreements to join the suit against the NFL.

The complaint points to a series of increasing demands on players, including a shorter off-season, the emergence of Thursday night games, and a longer season, all of which they claim have resulted in greater strain on players' bodies and less recovery time. In 1966, each of the NFL's 15 teams and the AFL's nine teams played a 14 game schedule, preceded by four pre-season games; only six teams advanced to the playoffs, making the post-season relatively short by today's standards. The suit contrasts the modest 1966 schedule with the NFL's current scheme, noting that the NFL has "expanded to 32 teams, each of which played a four game pre-season, 16 regular season games . . . and could face up to four post-season games if they played in the Wildcard game before advancing to the Super Bowl." The complaint alleges that the increased scheduling demands have given rise to a surge in injuries, leaving the NFL with the choice of benching players or leveraging their on-field time with the aid of prescription medications.

The players further assert that they were given little to no choice in the administration of various painkillers, and even less information about what they were ingesting. They point to the NFL's bottom line as a motivating factor: "[T]he NFL has illegally and unethically substituted pain medications for proper health care to keep the NFL's tsunami of dollars flowing." Former NFL defensive end and named plaintiff, Richard Dent, reveals a startling pattern of injury and medication throughout his 14-year career. He divulges that he "received hundreds, if not thousands, of injections from doctors and pills from trainers" and that "[n]o one from the NFL ever talked to him about the side effects of the medications he was being given." After breaking a bone in his foot during the 1990 season, team doctors advocated that he forego surgery, opting instead to increase his supply of painkillers, in order to keep him on the field. The complaint alleges that he now suffers from permanent nerve damage in the injured foot.

Former San Francisco 49er Jeremy Newberry, also a named plaintiff of the suit, alleges that the NFL administered a similar cocktail of prescription medication to keep him on the field; as a result, Newberry "has Stage 3 renal failure and suffers from high blood pressure and violent headaches for which he cannot take any medication that might further deteriorate his already-weakened kidneys." The complaint proceeds in detailing the starkly similar circumstances of the six additional named plaintiffs. While their individual claims arise from different time periods over the last 50 years, they allegedly "involve common questions of law and fact that predominate over individual issues."

The suit wades through a list of medications administered to players; while the plaintiffs acknowledge that "the specific medications have changed", the NFL has consistently administered opioids, non-steroidal anti-inflammatory medications (NSAIDs), and local anesthetics, namely Lidocaine. The alleged flagrant uses were done without prescriptions or consideration for any of the players' medical histories, in direct violation of the (1) Comprehensive Drug Abuse Prevention and Control Act, codified as 21 U.S.C §801 et seq., (2) Foods, Drug, and Cosmetic Act which gave rise to prescription-based medications, and (3) ethical obligations governing doctors.

To that end, the nine-count complaint includes counts of fraud, fraudulent concealment, negligent misrepresentation, negligence per se, loss of consortium, and negligent retention. The plaintiffs seek compensatory and punitive damages, as well as a court-supervised and "NFL-funded testing and medical monitoring program to help prevent the occurrence of [m]edication-caused addictions and other injuries."

To overcome the applicable statute of limitations, the plaintiffs point to the NFL's "intentional, reckless and negligent omissions" that concealed the underlying foundation for the suit. As a result, they assert that the statute is tolled.

The case has been assigned to Magistrate Judge, Kandis A. Westmore. The parties are due in court later this summer for a case management conference, scheduled for August 19, 2014 at 1:30PM PDT.

The complaint is available at: http://cbssanfran.files.wordpress.com/2014/05/2014-05-20-nfl-complaint.pdf

June 13, 2014

HathiTrust Racks Up Fair Use Victory But Heads Back to the Stacks on Preservation Copies

By Barry Werbin and Bryan Meltzer, Herrick, Feinstein LLP

In a much-awaited decision, the Second Circuit held on June 10, 2014, that university libraries are permitted to electronically scan their copyrighted books to (i) create a full-text searchable database, and (ii) provide print-disabled people with access to the copyrighted works. In Authors Guild, Inc. v. HathiTrust, the Court found such uses by the HathiTrust Digital Library (HDL), set up by the HathiTrust -- an organization comprised of colleges, universities and other nonprofit organizations that contributed their book collections to create a massive digital database of over 10 million works -- were protected by the copyright fair use doctrine. The Court remanded on the issue of whether HathiTrust's "preservation" copies were protected as fair use.

As a threshold matter, the Court found that the U.S. association and union plaintiffs lacked standing under §501 of the Copyright Act to bring copyright claims on behalf of their member authors. That section prohibits a copyright holder from choosing a third party to bring suit on his or her behalf. On the other hand, the Court found that the foreign association and union plaintiffs had standing to bring suit on behalf of their members because foreign laws provided them with exclusive rights to enforce the copyrights of their foreign members.

The Court then proceeded to apply the fair use doctrine to the plaintiffs' claims. The Court noted that the Copyright Act "'is designed [] to stimulate activity and progress in the arts for the intellectual enrichment of the public.'" Based on this intention, the fair use doctrine "allows the public to draw upon copyrighted materials without the permission of the copyright holder in certain circumstances."

In assessing a fair use defense under §107 of the Copyright Act, courts are required to consider the following four nonexclusive factors: (1) the purpose and character of the use (e.g., for a commercial or educational purpose); (2) the nature of the copyrighted work; (3) the amount of the copyrighted portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. With respect to the first factor, it has become de rigueur for courts to assess whether the purpose of an allegedly infringing use is "transformative" or not, that is, "whether the work 'adds something new, with a further purpose or different character, altering the first with new expression, meaning or message...'" (Quoting Campbell v. Acuff‐Rose Music, Inc., 510 U.S. 569, 579 (1994).)

As for the HDL's full-text searchable database, the Court found that such use is protected by the fair use doctrine because (i) it constitutes a "transformative" use that adds something new "with a different purpose and a different character" from the copyrighted material (emphasizing, however, that contrary to the District Court's opinion, "a use does not become transformative by making an 'invaluable contribution to the progress of science and cultivation of the arts...." but by serving "a new and different function from the original work"); (ii) while there is no dispute the plaintiffs' works are protected by copyright, the second factor is of "'limited usefulness where,' as here, 'the creative work . . . is being used for a transformative purpose,'" (citing to the Court's own opinions in Cariou v. Prince and Bill Graham Archives v. Dorling Kindersley Ltd.); (iii) the extent of the libraries' copying of the copyrighted material is not excessive and is reasonably necessary to enable the full-text search function (which by its nature required copying of the entire texts of the books); and (iv) because the full-text search does not serve as a "substitute" for the books being searched, the plaintiffs will not suffer any non-speculative harm (the Court emphasizing that the only type of economic injury to be considered under the fourth fair use factor is that which results from the secondary use serving "as a substitute for the original work"). Based on these findings, the Court held that while the works were the type that would otherwise be protected by the Copyright Act, the full-text searchable database constituted a fair use of the works.

Of particular interest is the Court's observation that its finding of a transformative use here was even more compelling than the transformative uses the Court had approved in Cariou and Bill Graham Archives because "full‐text search adds a great deal more to the copyrighted works" (a likely portent of how the Court will soon rule in the pending Google Books appeal).

Of great concern to the plaintiff author groups under the fourth factor was an alleged security risk posed by the existence of the HDL that "might impose irreparable damage on the Authors and their works" if, hypothetically, "hackers were able to obtain unauthorized access to the books stored at the HDL" and then freely disseminate globally those digital copies, thereby decimating the traditional market for those works. However the Court rejected this theory, finding that the record on appeal documented "the extensive security measures the Libraries have undertaken to safeguard against the risk of a data breach."

Similarly, the Court also found that providing access to the blind and print-disabled is a fair use of the copyrighted material. While the Court found that such use is not "transformative" (as was the full-text searchable database) and appears to create "derivative works over which the author ordinarily maintains control," it found that "transformative" use is not "absolutely necessary" for a finding of fair use. In particular, the legislature and Supreme Court have both stated that making copyrighted materials accessible for the use of blind people is protected by the fair use doctrine. The Court further found that in the "unique circumstances presented by print‐disabled readers," (i) the extent of the libraries' retention of the works is reasonable, and (ii) that the market for books accessible to the handicapped is so insignificant that the value of the copyrighted material would not suffer. Accordingly, the Court held that "the doctrine of fair use allows the Libraries to provide full digital access to copyrighted works to their print-disabled patrons."

The Court also considered whether the HDL could preserve digital copies of the scanned books and permit its member libraries to replace their copies if (i) the member already owned an original,(ii) the member's original copy was lost, destroyed or stolen, and (iii) a replacement copy was not available at a fair price. The Court found that this issue was not ripe for its determination primarily because the district court record had not established whether any of the plaintiffs' copyrighted materials were irreplaceable at a fair price and, "thus, would be potentially subject to being copied by the Libraries in case of the loss or destruction of an original." If the plaintiffs' works could be replaced at a fair price, then the works would not be replaced by the HDL. Accordingly, the Court held this claim did not "present a live controversy for adjudication," vacated the district court's judgment "insofar as it adjudicated this issue without first considering whether plaintiffs have standing to challenge the preservation use of the HDL", and remanded for the district court to make that determination.

Finally, the Court held that the plaintiffs' claims against defendant the University of Michigan regarding its project known as the "Orphan Works Project" or "OWP" was not ripe for adjudication, because the program had been suspended after the case commenced, and it was unclear whether the University would reinstitute the OWP in a manner that would infringe the plaintiffs' copyrights and cause them harm.

The trajectory of the Second Circuit's application of the "transformative" use doctrine continues its climb in HathiTrust, following on the heels of the Courts' expansive application of fair use in Cariou v. Prince. With the Google Books case coming up next, and other Circuits having already adopted the transformative use test, the copyright bar is readying itself for transformative use as the fair use paradigm of the 21st century, particularly as digital technologies continue to push the envelope of an aging Copyright Act.

June 20, 2014

Klinger v. Conan Doyle Estate Appeal

By Joseph Perry

Oral Argument and Holding

The Seventh Circuit of Appeals heard oral arguments from the parties on May 22nd, in which the Conan Doyle Estate challenged the district court's judgment in two ways: 1) the district court had no subject matter jurisdiction because there was no actual legal controversy, and 2) the copyrights of round, complex characters like Sherlock Holmes remain protected under copyright law until the last Conan Doyle story falls into the public domain. On June 16th, the Seventh Circuit affirmed the district court's motion for summary judgment and declaratory judgment in favor of Klinger, which stated that materials in 50 pre-1923 Sherlock Holmes novels and stories are in the public domain, but materials in post-1923 Sherlock Holmes stories are protected under copyright law.

Jurisdiction

The Seventh Circuit held that the district court had federal subject matter jurisdiction over Klinger's lawsuit because the Conan Doyle Estate's threat to sue Pegasus Books for copyright infringement and to block distribution of In the Company of Sherlock Holmes created a sufficient threat to constitute an actual controversy. The Conan Doyle Estate argued that Klinger's suit was unripe because In the Company of Sherlock Holmes was not complete, and thus, copyright infringement could not be decided until the book was finished. The court rejected the Conan Doyle Estate's argument because the only issue was whether Klinger could "copy the characters of Holmes and Watson as they are depicted in the stories and novels of Arthur Conan Doyle that are in the public domain," which could be determined without knowing the contents of the book. Thus, the Seventh Circuit held that the district court had federal subject matter jurisdiction over Klinger's lawsuit.

Copyright Infringement

The Seventh Circuit held that the pre-1923 Sherlock Holmes and Dr. Watson characters were in the public domain. The court rejected the Conan Doyle Estate's argument that a "'complex' character in a story, such as Sherlock Holmes or Dr. Watson, whose full complexity is not revealed until a later story, remains under copyright until the later story falls into the public domain." Essentially, the Conan Doyle Estate sought "135 years (1887-2022) of copyright protection for the character of Sherlock Holmes as depicted in the first Sherlock Holmes story," and the court stated that "we cannot find any basis in statute or case law for extending a copyright beyond its expiration. Thus, the Seventh Circuit held that the pre-1923 Sherlock Holmes and Dr. Watson characters are in the public domain.

Conclusion

The Seventh Circuit of Appeals affirmed the district court's motion for summary judgment and declaratory judgment in favor of Klinger, which stated that materials in 50 pre-1923 Sherlock Holmes novels and stories are in the public domain, but materials in post-1923 stories are protected under copyright law.

The Seventh Circuit's opinion is here: doyle.pdf

June 22, 2014

Washington Redskins' TM Issues

By Mike Furlano

On June 18th, the Trademark Trial and Appeal Board of the Patent and Trademark Office (the TTAB) cancelled the National Football League's (NFL) Washington Redskins' trademark registrations for the mark "Redskins", because it determined that Redskins was disparaging to Native Americans. This is the biggest development in a long line of controversy surrounding the NFL team's use of the Redskins name.

The six Native Americans Petitioners tasked the TTAB with determining whether the name Redskins was, at the times of registration, disparaging to Native Americans under Section 2(a) of the Trademark Act. Section 2(a) prohibits the registration of a mark that may disparage persons or bring them into contempt or disrepute. The TTAB found that the name Redskins was indeed disparaging, and must be cancelled.

Legal Analysis

Whether a mark is disparaging requires a two-step inquiry. The TTAB first determines the meaning of the mark before asking whether that meaning may disparage a person or group. Intent plays no role in the analysis if the mark refers to the group claiming disparagement. The TTAB used this two-step inquiry to find that the term redskins disparaged Native Americans during 1967-1990, when the Washington Redskins' trademark registrations were filed and re-filed.

Step 1: Meaning of the mark Redskins

The TTAB quickly determined that the mark Redskins refers to both the Washington Redskins football team and Native Americans. The TTAB referenced the team's use of its Native American chief logo, marching band's headdress costumes, and various team promotional materials depicting Native Americans. It was clear that the mark Redskins referred to, in part, Native Americans.

Step 2: Does the mark's Native American meaning disparage Native Americans?

This was the crux of the issue. The TTAB determines whether a mark disparages a group by looking at the views of that group rather than the American public as a whole. A sizeable portion, or substantial composite, of a group is sufficient for the TTAB's purposes.

Here, the TTAB determined that a substantial composite of Native Americans are disparaged by the Redskins mark. It cited two evidential categories in its determination: First, the TTAB looked at redskins as a dictionary entry. From 1967-1983, most redskin entries label the term offensive, disparaging, contemptuous, or not preferred. After 1983, all entries include these labels. Second, the TTAB referenced a resolution passed by the National Congress of American Indians (NCAI), the oldest and largest nationwide organization representing Native Americans. In 1993 the organization passed a resolution identifying the term redskins as "pejorative, derogatory, denigrating, offensive, scandalous, contemptuous, disreputable, disparaging, and a racist designation" towards Native Americans. It identified the Washington Redskins' usage as having been, and continuing to be, offensive, disparaging, scandalous and damaging to Native Americans. The TTAB noted that because the NCAI is a democratic organization consisting of over 30% of Native American tribes, it constituted a substantial composite of Native American views.

Honorable intent and the way the Washington Redskins used the term was inconsequential, because the analysis hinges on what Native Americans felt about the term. Moreover, the Washington Redskins' argument that some tribes do find the term endearing and honorable failed, because a substantial composite need not be a majority. The TTAB noted that 30% is a sufficient number, because otherwise it would be acceptable for a mark to disparage 1 out of every 3 individuals in a group.

Thus, because the term redskins refers to Native Americans, and a substantial composite of Native Americans finds the term disparaging, the TTAB cancelled the Washington Redskins' trademarks.

What does this mean?

Not as much as you would think. The TTAB only has the power to cancel trademark protection. It cannot prohibit or enjoin the use of the mark. The Washington Redskins are still free to use the name. The cancellation, however, removes the federal protections enjoyed by federal trademark owners, such as enforcement mechanisms concerning counterfeit and import issues. Yet even federal cancellation does not, by itself, invalidate the Washington Redskins' state and common law trademarks. These will also have to be litigated to determine their validity. Finally, the Washington Redskins has 60 days to appeal the TTAB's decision. If the team decides to appeal, and it is likely that it will, then the cancellation is frozen until the appeal's conclusion.

June 25, 2014

U.S. Supreme Court Decision Favors Broadcasters over Aereo

By Barry Skidelsky

Today the Supreme Court decided 6 to 3 against Aereo, the innovative Internet broadcaster. Although this case (American Broadcasting Cos., Inc., et al v. Aereo, Inc. aka Bamboom Labs, Inc) primarily involved television and cable retransmissions, it will likely have a strong impact on anyone involved at the intersection of entertainment and communications law and business with wide ranging repercussions yet to be felt.

For example, terrestrial radio and television may find that the Aereo case could be used as ammunition in the current effort to pass federal legislation imposing a performance royalty for sound recordings, which are currently applicable only to digital transmissions and paid through Sound Exchange (the licensing collective organized by the record labels), although broadcasters currently also pay performance royalties for compositions through the Performing Rights Organizations of ASCAP, BMI and SESAC. Other well known copyright related reforms are also underway.

For the moment, at least, Aereo does not appear to put television broadcasters at risk of loss for the retransmission fees (an estimated $2.4 billion in 2013) that they receive from cable and satellite distributors -- despite Justice Breyer's comment for the majority that "Aereo's system is, for all practical purposes, identical to a cable system." Justice Breyer also said that: "We believe that resolution of questions about cloud computing, remote storage DVRs and other novel items not now before us, should await a case in which they are clearly presented."

Aereo, backed by Barry Diller (inter alia a co-creator of Fox Broadcasting), operates in 11 major cities and had plans to expand. However, the ruling today by our nation's top court -- finding in key part that Aereo publicly performs the petitioners' works within the meaning of the Transmit Clause of the Copyright Act -- threatens to put Aereo out of business. A link to the Supreme Court's decision is found here: http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf.

Barry Skidelsky is a New York City based attorney, whose practice is primarily focused on communications, entertainment and technology related matters. An Executive Committee member of the EASL Section of the NYSBA, Barry also co-chairs EASL's Television and Radio committee, and he is a former chair of the NY chapter of the Federal Communications Bar Association -- whose members practice before the FCC in Washington, DC. In addition to serving as an attorney, Barry also offers services as consultant, broker, arbitrator and bankruptcy trustee or receiver for lenders and others directly or indirectly involved in these fields. Barry can be reached at 212-832-4800 or bskidelsky@mindspring.com.

June 26, 2014

Case Solved: Conan Doyle Estate Loses Copyright Dispute Over Sherlock Holmes

By Barry Werbin and Laura Tam, Herrick, Feinstein LLP

It didn't take much deducing for the Court of Appeals for the Seventh Circuit to rule on June 16th that Sherlock Holmes and Dr. Watson, the famous character sleuths created by Sir Arthur Conan Doyle in the early 19th century, are in the public domain and free for public use. The resolution of this closely-watched copyright dispute has significant implications for the creation of future works featuring the Holmes and Watson characters because most aspects of these characters, according to the Seventh Circuit, are now "fair game."

As the Seventh Circuit pointed out, Arthur Conan Doyle published 56 stories and four novels about Sherlock Holmes. The first story was published in 1887 and the last 10 stories were published between 1923 and 1927. Due to the 1998 Copyright Term Extension Act, the American copyrights on the final 10 stories will expire between 2018-2022, 95 years after the respective dates of first publication. The copyrights on the other 46 stories and the four novels, however, previously expired and are in the public domain.

The case began when the Conan Doyle Estate (the Estate) threatened to prevent the distribution of Leslie S. Klinger's proposed compilation of modern stories depicting Sherlock Holmes and Dr. Watson. Klinger had previously co-edited an anthology of such stories entitled A Study in Sherlock: Stories Inspired by the Sherlock Holmes Canon, which was published by Random House in 2011. After the Estate told Random House that it would have to pay $5,000 for a copyright license, Random House paid the license and published the book. In 2012, Klinger decided to publish a sequel to A Study in Sherlock to be called In the Company of Sherlock Holmes and entered into negotiations with Pegasus Books and W.W. Norton & Company. After the Estate threatened to prevent the distribution of the anthology and sue for copyright infringement, Pegasus refused to publish the book until Klinger obtained a license from the Estate.

Instead of obtaining the license, Klinger sued the Estate, seeking declaratory judgment that he is free to use the material from the Sherlock Holmes stories and novels that are no longer under copyright. After the Estate defaulted by failing to appear or respond to Klinger's complaint, the district court gave Klinger leave to file a motion for summary judgment. After Klinger filed his motion, the Estate responded with two main arguments. First, the Estate argued that the district court did not have subject matter jurisdiction, because there was no actual case or controversy between the parties. Second, the Estate argued that even if the court had jurisdiction, the Estate was entitled to judgment on the merits because the copyright of fictional characters, such as Sherlock Holmes or Dr. Watson, whose complexity is not fully developed until a later story, remains under copyright until the expiration of the later story's copyright. The district court granted Klinger's motion for summary judgment, and the Estate appealed to the Seventh Circuit.

First, the Seventh Circuit rejected the Estate's argument that the district court did not have jurisdiction. The Court held that the Estate's threats "to block the distribution of the book by major retailers and to sue for copyright infringement" created an actual controversy that justified the declaratory judgment action. Second, the Court determined that there was no basis for extending a copyright beyond its expiration and that "[w]hen a story falls into the public domain, story elements -- including characters covered by the expired copyright -- become fair game for follow-on authors." (Citing for support the Second Circuit's decision in Silverman v. CBS Inc., 870 F.2d 40, 49 -51(2d Cir. 1989), which involved the fictional characters Amos and Andy).

Although the Estate attempted to draw a distinction between "flat" and "round" fictional characters, arguing that Holmes and Watson did not become fully "rounded" until the last story that Doyle published, the Court stated that it did not "see how that can justify extending the expired copyright on the flatter character." Thus, while the characters of Holmes and Watson were copyrightable, the Court determined that any subsequent features that were added to the characters (for example, that Holmes has grown to like dogs or that Watson has been married twice) did not revive the expired copyrights on the original characters. The Court emphasized that "[t]he copyrights on the derivative works, corresponding to the copyrights on the ten last Sherlock Holmes stories, were not extended by virtue of the incremental additions of originality in the derivative works."

As the Seventh Circuit noted, "[E]xtending copyright protection is a two-edged sword from the standpoint of inducing creativity, as it would reduce the incentive of subsequent authors to create derivative works . . . by shrinking the public domain." The Court seemed particularly concerned about the "spectre of perpetual, or at least nearly perpetual, copyright" and that the Estate was attempting to curtail creativity by "extending the copyright protection of literary characters to . . . extraordinary lengths." Indeed, the Court succinctly rejected the Estate's argument that allowing Holmes and Watson to enter the public domain would disincentivize authors from improving and perfecting their works. As the Court noted, "[O]ther artists will have a greater incentive to improve it, or to create other works inspired by it, because they won't have to pay a license fee to do so provided that the copyright on the original work has expired."

While the Seventh Circuit's decision means that the Estate's heyday of collecting significant copyright license fees and royalties is largely over, it also ensures that artists and authors like Klinger will not be pressured into paying license fees for character rights that have entered the public domain.

A copy of the Seventh Circuit's decision is available here: http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2014/D06-16/C:14-1128:J:Posner:aut:T:fnOp:N:1363624:S:0.

July 3, 2014

Post-Aereo: Has The Supreme Court Clouded the Future?

By Barry Werbin
Herrick, Feinstein LLP

By now, everyone is probably tired of reading the myriad blogs and articles on the Supreme Court's June 25th decision in American Broadcasting Company, Inc. v. Aereo, Inc. Yet the real question raised by the decision -- which did not set any bright-line tests -- is what its impact will be on other existing and future technologies that permit consumer end-users to access subscribed content anywhere in the world and at any time over the Internet.

In the 6-3 decision, the majority took a fairly straightforward approach in going through the two primary issues presented: whether Aereo was engaging in a "performance" by using its system of dime sized antennas to deliver one-to-one content to its subscribers, and whether such performance was "public" so as to impose direct copyright liability on Aereo. The court answered both questions in the affirmative, pointing out that even a home user watching television "performs" a broadcast merely by turning on a television and flipping channels, and that Aereo essentially acted no differently than a cable system, even when it only enhanced its subscribers' ability to receive and view over-the-air broadcast programming.

The Court emphasized that Aereo was not merely an equipment provider and, while its system remained "inert" until a subscriber indicated what he or she wanted to watch, Aereo nevertheless was communicating the same content to multiple persons and was thus engaging in a public performance. Noting that in enacting the Transmit Clause in the 1976 Act, Congress had clearly overruled prior Supreme Court precedents that had permitted CATV systems to operate (no issue here), the majority interpreted the Transmit Clause as applying to any entity that acts like a CATV or more modern cable system (conjuring up the adage that "if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck"). Despite Aereo's system remaining inert until a subscriber designates which programming he or she wants to watch, the Court nevertheless equated Aereo's system with the CATV systems outlawed under the 1976 Act.

Consistent with the "looks like a duck" analogy, the Court said that Aereo's "technological differences" only concern "behind-the-scenes" ways in which Aereo delivers television programming to its viewers' screens, and these differences did not render Aereo's commercial objective any different from that of cable companies. Nor did Aereo's system significantly alter the viewing experience of its subscribers.

Justice Scalia's dissent said that the majority analyzed "performance" wrong, because it focused on the overall purpose of the technological system rigged by Aereo as opposed to where the "volitional" conduct was taking place. To the dissenters, the focus should have been on the individual subscribers, who controlled what programming to watch and when the allocated mini antennae would be activated in response to subscribers' commands.

This is where it gets murky. If we were to ignore all technological interfacing between, say, a cloud service provider and its subscribers, and focus only on the "commercial objective" of the provider, then all one has to do is find a for-profit motive in the context of any form of online content delivery, thereby essentially rendering meaningless the volitional conduct requirement for finding direct infringement. The Court doesn't go quite that far. In fairness to the majority, Aereo really was not such a difficult case, because the Transmit Clause covers the transmission of content to individuals at the same place or in different places, and at the same time or in different times, and has always arguably been broad enough to encompass Aereo's system.

Another key distinguishing factor, of course, is that Aereo paid no licensing fees, unlike cable and satellite operators; in the latter case, once a home subscriber lawfully receives fully licensed broadcasts, the subscriber has a fair use right under Sony to record broadcast programming and "time-shift" at will when he or she views that programming. Merely transplanting that mechanism into the cloud (à la Dish Network's "Hopper"), using a technological system developed by a provider, arguably does nothing more than what the individual subscriber is lawfully entitled to do in his or her home.

The majority itself recognized this scenario and threw a comfort blanket to the tech sector by saying: "In other cases involving different kinds of service or technology providers, a user's involvement in the operation of the provider's equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act." Therefore, volitional conduct on the subscriber end really is not dead. We just have no test for the "may well bear on" assessment. Maybe the duck knows.

Providing some small assistance, the majority made a clear distinction between the specific facts in Aereo and other situations where "subscribers receive performances in their capacities as owners or possessors of the underlying works." Justice Breyers' majority bloc noted that whether a transmission to "a set of people" constitutes a public performance "often depends on their relationship to the underlying work." Courts will continue to grapple with this general guidance in assessing what constitutes being an "owner" or "possessor" and what types of relationships between end users and underlying works remove a content delivery system from the realm of infringing conduct.

Surprisingly absent from the majority's decision was any discussion that the content at issue was free over-the-air broadcasts, which any citizen within reception range could lawfully receive with a digital antenna and a digital-ready TV. It seems that what really irked the Court was Aereo taking commercial advantage of what it viewed as a loophole in the language of the Transmit Clause. The venture capitalists who funded tens of millions of dollars into Aereo (primarily Barry Diller's IAC/InterActiveCorp) likely did not do so for some high altruistic purpose (despite some of the press releases to the contrary); they did it to make money and realize significant returns on their investments. Even the dissent said that it did not really like what Aereo was doing, but was bound to apply the provisions of the Act as written; and it was the job of Congress, not the Court, to correct any ill-phrased language in the Transmit Clause.

Absent also, albeit not surprisingly, from the majority's opinion, was any mention of the now infamous Cablevision case (The Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121(2d Cir. 2008), cert. denied), to which the dissent cited several times with approval. Cablevision involved a remote storage DVR system that was offered to paying subscribers, where the Second Circuit found no direct infringement of the public performance right by Cablevision because its DVR customers were the ones who made the copies carried out by the DVR system. Yet in keeping with its focus specifically on the facts of Aereo, the Court's majority tried to avoid making any overreaching statements or addressing matters that were not directly before the Court. Avoiding any discussion of Cablevision was therefore prudent.

Similarly, in the Dish Network litigation in California, involving Dish's "Hopper" technology called "Sling," the Ninth Circuit ruled last year against the broadcaster plaintiffs. (Fox Broadcasting Company, Inc. v. Dish Network L.L.C., 723 F.3d 1067 (9th Cir. 2013).) The Ninth Circuit specifically found that "operating a system used to make copies at the user's command does not mean that the system operator, rather than the user, caused copies to be made. Here, Dish's program creates the copy only in response to the user's command." Fox News immediately ran back to the Ninth Circuit last week for reconsideration after the Supreme Court decided Aereo.

Certainly, the Aereo Court's majority's opinion was circumspect and cautiously avoided any overreaching language that could impact new technologies, whether cloud based or otherwise. Indeed, with a nod to the warnings identified in various amicus briefs submitted by representatives of the technology industry and the United States government itself, the Court expressly stated that "we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content." (Emphasis added)

Yet a clear bright-line test was not provided, and we are perhaps left with "if it looks like a duck" gut assessment, which does not make for good law. The decision will undoubtedly keep judges and copyright litigators busy for some years to come. That is, unless the media broadcast industry sits down with providers like Dish Network and others (as NBC is currently doing) to work out reasonable business models that compensate content owners fairly and yet permit the public to receive lawfully licensed content anywhere they want, and at any time, as this is the age we live in and there is no going back. Even the duck would agree.

July 8, 2014

Center for Art Law Case Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

• Schoeps v. Free State of Bavaria, Case No. 13 Civ. 2048 (JSR) (S.D.N.Y June 27, 2014) -- J. Rakoff denies jurisdiction in a Nazi-era looted art dispute over Picasso's "Madame Soler" portrait.

http://itsartlaw.com/2014/07/07/case-review-schoeps-v-free-state-of-bavaria-june-2014/?utm_source=Center+for+Art+Law+General+List&utm_campaign=33b55f7965-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-33b55f7965-346773625

• Sotheby's v. Kwok (UK, June 2014) -- Auction house sues a client for £3m for failure to pay for purchases.

• [U.S. v "Madonna and Child"] (June 2014)" -- On June 23, U.S. Attorney's Office in New York filed a forfeiture action to cease a 13th-century painting that was probably illegally imported into the United States. The painting went missing from a Swiss safety deposit in the late 1980s.

http://www.courthousenews.com/2014/06/24/68973.htm?utm_source=Center+for+Art+Law+General+List&utm_campaign=33b55f7965-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-33b55f7965-346773625

• U.S. v. Mask of Ka-Nefer Nefer, No. 12-2578 (8th Cir. June 12, 2014) -- on appeal, the technical decision to deny the government to amend civil forfeiture complaint was affirmed. Judge Murphy concurred, but he wrote "While this case turns on a procedural issue, courts are bound to recognize that the illicit sale of antiquities poses a continuing threat to the preservation of the world's international cultural heritage. Museums and other participants in the international market for art and antiquities need to exercise caution and care in their dealings in order to protect this heritage and to understand that the United States might ultimately be able to recover such purchases."

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.

July 10, 2014

Judge Rakoff Finally Explains His Fair Use Rationale Respecting Lawyers' Briefs Filed With Courts

By Barry Werbin

Over a year ago in White v. West Pub. et al (S.D.N.Y.), Judge Jed Rakoff granted summary judgment, but deferred issuing an opinion, in favor of West Publishing and Reed Elsevier (LexisNexis) in a copyright infringement class action suit brought by several lawyers, who alleged that West and Lexis/Nexis had infringed copyrights in their electronically filed court briefs by aggregating them in a key-word tabbed and text-based searchable database that was made accessible for a fee. On July 3, 2014 (17 months later), Judge Rakoff finally issued his opinion explaining the reasoning for finding fair use. [The decision can be accessed here: http://www.nysd.uscourts.gov/cases/show.php?db=special&id=412]

After assessing each of the four Section 107 factors, Judge Rakoff initially concluded that under the first factor this was a transformative use, for two reasons: "First, while White created the briefs solely for the purpose of providing legal services to his clients and securing specific legal outcomes in the Beer litigation, the defendants used the brief toward the end of creating an interactive legal research tool.... Second [notwithstanding the commercial aspect of defendants' use], West and Lexis's processes of reviewing, selecting, converting, coding, linking, and identifying the documents 'add[] something new, with a further purpose or different character' than the original briefs."

With respect to the second factor, he noted that the nature of the underlying copyright-protected [arguably] briefs "are functional presentations of fact and law, and this cuts towards finding in favor of fair use."

On the third factor, Judge Rakoff opined: "Although defendants here copied the entirety of White's briefs, such copying was necessary to make the briefs comprehensively text searchable. Thus the Court finds that defendants only copied what was reasonably necessary for their transformative use, and that the third factor is therefore neutral."

Finally, on the fourth factor, he found there was no impact on the potential market for the works. In particular, Judge Rakoff emphasized that "West's and Lexis's usage of the briefs is in no way economically a substitute for the use of the briefs in their original market: the provision of legal advice for an attorney's clients. White himself admits that he lost no clients as a result of West's and Lexis's usage....Furthermore, no secondary market exists in which White could license or sell the briefs to other attorneys, as no one has offered to license any of White's motions, nor has White sought to license or sell them." The reason there is no secondary market for licensing or selling the briefs, said Judge Rakoff, is "because the transactions costs in licensing attorney works would be prohibitively high."

So in the interest of transformative use, all us litigators should keep our fees high!

July 16, 2014

Garcia v Google Amended Opinion

By Barry Werbin

On Friday, July 11th, the Ninth Circuit issued an amended opinion in the controversial Garcia v. Google case (Innocence of Muslims film case addressing an individual actor's own copyrightable performance right). Chief Judge Kozinski tries to backpedal a bit by sticking to his earlier divisive opinion, but saying:

"It suffices for now to hold that, while the matter is fairly debatable, Garcia is likely to prevail based on the record and arguments before us. Nothing we say today precludes the district court from concluding that Garcia doesn't have a copyrightable interest, or that Google prevails on any of its defenses. We note, for example, that after we first issued our opinion, the United States Copyright Office sent Garcia a letter denying her request to register a copyright in her performance. Because this is not an appeal of the denial of registration, the Copyright Office's refusal to register doesn't "preclude[] a determination" that Garcia's performance "is indeed copyrightable." OddzOn Prods., Inc. v. Oman, 924 F.2d 346, 347 (D.C. Cir. 1991). But the district court may still defer to the Copyright Office's reasoning, to the extent it is persuasive. See Inhale, Inc. v. Starbuzz Tobacco, Inc., 739 F.3d 446, 448-49 (9th Cir. 2014). After we first published our opinion, amici raised other issues, such as the applicability of the fair use doctrine, see 17 U.S.C. § 107, and section 230 of the Communications Decency Act, see 47 U.S.C. § 230. Because these defenses were not raised by the parties, we do not address them. The district court is free to consider them if Google properly raises them." [Emphasis added]

The opinion is available here: Garcia v Google Amended Opinion.pdf

July 26, 2014

Center for Art Law Case Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

Matter of Richard L. Feigen & Company, 824996. (N.Y.T.C, July 22, 2014) -- J. Winnifred Maloney of the Division of Taxation denied art dealer Richard Feigen sales tax refund claim from 2011 seeking $215,626 on the sale of a forged Max Ernst painting "La Foret" that was sold in 2004. To recover the sales tax, the dealer should have claimed his refund within a three-year window after filing his sales tax return, which closed in 2008. While the dealer argued he should have been able to avail himself of the statute of limitations contemplated by the CPLR 213, and thus have six years, the decision was based on Tax Law §1139(c), which stipulates that financial matters close sooner. The decision upheld earlier determinations of the Division of Taxation's Audit Division and the Bureau of Conciliation and Mediation Services. In other words, this ruling allows the U.S. government to reap financial benefits from unfortunate sales of fake art; whether the risk is to be born exclusively by the dealer may yet be revisited on appeal. Attorney for Feigen, Malcolm Taub, partner at Davidoff Hutcher & Citron.

Anders Karlsson v. John Leo Mangan III, Art Possible LLC, et al.,2:14-cv-04514-R-JPR (S.D.C.A, Jun. 11, 2014) -- Arizona Plaintiff is seeking damages from residents in New York, Florida, Colorado and California, alleging multiple fraudulent schemes to sell fake artworks of famous artists together with fake authentication and provenance documents. Plaintiff is seeking, among other reliefs, compensatory damages, actual damages, punitive damages and attorney fees. Attorney representing Plaintiff is Meir Westreich.

Schoeps v. Free State of Bavaria, Case No. 13 Civ. 2048 (JSR) (S.D.N.Y June 27, 2014) -- J. Rakoff denies jurisdiction in a Nazi-era looted art dispute over Picasso's "Madame Soler" portrait.

http://itsartlaw.com/2014/07/07/case-review-schoeps-v-free-state-of-bavaria-june-2014/?utm_source=Center+for+Art+Law+General+List&utm_campaign=c432440020-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-c432440020-346773625

Sotheby's v. Kwok (UK, June 2014) -- Auction house sues a client for £3m for failure to pay for purchases.

http://www.telegraph.co.uk/culture/art/art-news/10932158/Sothebys-sues-art-sale-glamour-girl-for-3m-after-client-fails-to-pay.html?utm_source=Center+for+Art+Law+General+List&utm_campaign=c432440020-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-c432440020-346773625

U.S. v "Madonna and Child" (June 2014)" -- On June 23, the U.S. Attorney's Office in New York filed a forfeiture action to cease a 13th-century painting that was probably illegally imported into the United States. The painting went missing from a Swiss safety deposit in the late 1980s.

http://www.courthousenews.com/2014/06/24/68973.htm?utm_source=Center+for+Art+Law+General+List&utm_campaign=c432440020-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_022731d685-c432440020-346773625

U.S. v. Mask of Ka-Nefer Nefer, No. 12-2578 (8th Cir. June 12, 2014) -- on appeal, the technical decision to deny the government to amend civil forfeiture complaint was affirmed. Judge Murphy concurred, but he wrote: "While this case turns on a procedural issue, courts are bound to recognize that the illicit sale of antiquities poses a continuing threat to the preservation of the world's international cultural heritage. Museums and other participants in the international market for art and antiquities need to exercise caution and care in their dealings in order to protect this heritage and to understand that the United States might ultimately be able to recover such purchases."


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.

September 18, 2014

Kienitz v. Sconnie Nation LLC.- Seventh Circuit

By Barry Werbin

A significant new decision (9/15/14) by the Seventh Circuit has affirmed the district court's finding of fair use in Kienitz v. Sconnie Nation LLC, but expressly rejected the concept of transformative use. This was a well-publicized case that used a posterized, low resolution, photograph of Paul Soglin, the mayor of Madison, Wisconsin, on a T-shirt to make a political commentary about his having participated in the Mifflin Street Block Party many years earlier.

This is the first Circuit court to expressly reject transformative use, and it has done so rather emphatically. The court found it unnecessary to address transformative use, finding that it was "not one of the statutory factors" under Section 107, despite the Supreme Court having previously mentioned it in Campbell v. Acuff-Rose Music. It specifically expressed skepticism about the Second Circuit's application of transformative use in the Cariou case, emphasizing that: "asking exclusively whether something is 'transformative' not only replaces the list in §107 but also could override 17 U.S.C. §106(2), which protects derivative works. To say that a new use transforms the work is precisely to say that it is derivative and thus, one might suppose, protected under §106(2). Cariou and its predecessors in the Second Circuit do not explain how every 'transformative use' can be 'fair use' without extinguishing the author's rights under §106(2)."

The Court ultimately affirmed the finding of fair use based on a direct application of the four factors in §107, placing particular emphasis on the fourth factor concerning the effect on the potential market for the copyrighted photograph: "A t-shirt or tank top is no substitute for the original photograph. Nor does Kienitz say
that defendants disrupted a plan to license this work for apparel. Kienitz does not argue that defendants' products have reduced the demand for the original work or any use of it that he is contemplating." The Court further emphasized that Kienitz had licensed the photograph to Soglin (which had been taken at Soglin's 2011 inauguration) for "no royalty" and was "posted on a public website for viewing and downloading without cost."

The fact that the defendant intended the shirt to make a political statement also influenced the Court's decision under the first factor. Nevertheless, the Court took the further unusual step of noting its displeasure with "lazy appropriators," who were not intended to be protected by §107, emphasizing that the defendant did not need to use the plaintiff's photograph to create its lampoon, and that the T-shirt was not used to mock (parody) the photograph itself but Mayor Soglin. The Court further noted that Kienitz, as a photographer, could have his livelihood negatively affected if his clients going forward believed portraits taken for dignified purposes could end up on T-shirts and be used in a derogatory manner. Nevertheless, because Kienitz failed to raise these additional arguments, the Court was compelled to find fair use.

Whether this signifies a slow shift among courts away from transformative use remains to be seen, but if so, that would be a sea change. Kienitz v Sconnie Nation - 7th Circuit.pdf

Photographers Action Against The Google Book Project Is Settled

By Joel L. Hecker

This suit, American Society of Media Photographers, Inc. et al v. Google, Inc., Case No. 10-CV-02977 (DC) in the Southern District of New York, arose out of the 2005 Authors Guild and Association of American Publishers class action lawsuit against Google (the Authors Guild Litigation) in connection with Google's scanning of books from university libraries, without the consent of the copyright owners of the books scanned, which became known as the Google Book Search Project litigation. The Authors Guild Litigation alleged that Google's acts, as part of the Google Book Search Project, constituted copyright infringement.

The Authors Guild Litigation eventually reached the point where a proposed settlement was submitted to the court for approval. However, the Amended Proposed Settlement specifically excluded almost all photography and graphic art works. As a result, the American Society of Media Photographers (ASMP), Graphic Artists Guild (GAG), Picture Archive Council of America (now known as Digital Media Licensing Association (PACA)), North American Nature Photography Association (NANPA), and various other organizations and individual photographers attempted to intervene in the Authors Guild Litigation and thereby have such organizations and the visual artists they represented be included in any resulting settlement.

On November 4, 2009, Judge Denny Chin, who was assigned to the case, denied the motion and refused to permit such intervention, concluding that these visual artists had acted too late (the case was then four years old), and in his view, the Google Book Search Project primarily involved textual content and not visual works. Judge Chin stated in his denial of the motion that: "Frankly, in the context of an online database that is searchable using keywords, it makes sense to prioritize the rights of word-based material." [It should be noted that these words, written in 2009, have basically been made obsolete by technology and circumstances, as searchable pictorial content is very much an everyday occurrence in 2014.]

ASMP and the others disagreed and filed their own class action lawsuit against Google on April 7, 2010, alleging copyright infringement by Google of visual artwork arising out of the Google Book Search Project.

The ASMP Complaint

The 21 page complaint alleged that it was "designed to redress the most widespread, well-publicized and uncompensated infringement of exclusive rights in images in the history of book and periodical publishing." That "evil" was, of course, the Google Book Search Project, under which Google was essentially scanning entire library collections and thereby creating digital archives of what eventually was intended to be an online database of all of the world's books.

All in all, the complaint can be summarized as alleging that Google was committing massive copyright infringements of visual works similar to its infringements of text-based works (as alleged in the Author's Guild Litigation) and that the visual artists must be included in the process.

Dismissal of the Authors Guild Litigation

Judge Chin, now an appellate judge sitting on the Second Circuit Court of Appeals, initially approved class action status in the Authors Guild Litigation, which decision was reversed by the Second Circuit as premature since he had not first ruled on the Fair Use defense raised by Google. On remand, Judge Chin found that Google's acts did indeed constitute fair use and accordingly dismissed the Authors Guild complaint. That decision is now on appeal.


The Photographers Action Settlement

The parties to the photographers' case issued a press release on September 10, 2014 indicating that they are "pleased to have reached a settlement that benefits everyone and includes funding for the PLUS Coalition, a non-profit organization dedicated to helping rights holders and users communicate clearly and efficiently about rights in works."

Further terms of the agreement are apparently confidential. The parties pointed out that since the settlement is only between the parties to the litigation, court approval of the terms of the settlement is not required. This is so because, although the action was commenced as a class action on behalf of photographers and other visual artists similarly situated, no motion had yet been made to confirm a class or classes in the litigation, and therefore this settlement will not be binding on any party other than the parties to the action.

The settlement also does not affect the current appeal in the Authors Guild Litigation from Judge Chin's dismissal of their class action against Google on the grounds that Google's Book Project constituted fair use.

October 8, 2014

Kirby/Marvel Settle - Law Surrounding "Work for Hire" Remains Unsettled

By Jacob Reiser

Last week, the Estate of Jack Kirby (the Kirby Estate) and Marvel Entertainment (Marvel) announced a settlement agreement, bringing to resolution a lawsuit that had been ongoing since 2009. The settlement came only days before the United States Supreme Court was scheduled to decide whether to accept the Kirby Estate's Petition for Writ of Certiorari (the Petition) and was a shock to those following the progress of the case. The settlement brings an end to the Kirby dispute but leaves in place bad precedent for independent contractors who want to reclaim copyrights to work they sold prior to 1978, the effective date when the Copyright Act of 1976 took effect.
Although the settlement renders the Petition moot, it is still worth discussing the issues it raised because many of those issues will likely be challenged again soon.


The Amazing Jack Kirby and The Quest To Reclaim His Works

If you are a comic book fan, you have probably heard of Jack Kirby; but if you're a human being living on planet Earth, you have definitely heard of the characters he helped create. Jack Kirby was a legendary comic book artist who played a major role in creating such enduring and popular superhero characters as Spiderman, Thor, Ironman, Hulk, The X-Men, Captain America, The Avengers and The Fantastic Four (the characters). The characters have dominated pop culture and the box office in the past decade, with no signs of slowing down, and grossed enormous sums of money for Marvel and its parent, The Walt Disney Company.

The case began when the Kirby Estate served various Marvel entities with Termination Notices, purporting to exercise its statutory termination rights under Section 304(c)(2) of the Copyright Act of 1976, for over 262 works created by Jack Kirby and published by Marvel between 1958 and 1963. The Copyright Act of 1976 grants an author, or the children of a deceased author, the right to recover an author's copyrights granted or transferred to another party by statutorily terminating the prior grant or transfer. However, this termination right does not apply to works made for hire.

In response to the Termination Notice, Marvel immediately filed suit and moved for Summary Judgment, seeking a declaration that the Kirby Estate had no termination rights because the characters were created as works made for hire, and thus never belonged to Kirby. The District Court ruled in favor of Marvel and found that the works at issue were made for hire, because they were made at Marvel's "instance and expense." Therefore, the court ruled that the Kirby Estate could not wrest back ownership of the characters because Marvel was considered under law as the statutory author. In August 2013, the Second Circuit Court of Appeals affirmed the lower court's ruling. The Kirby Estate then petitioned the Supreme Court for Certiorari. Although the Court was scheduled to hold a conference on September 29th to decide whether to hear the case, the case was settled several days before.

The Dastardly "Instance and Expense Test"

To understand the significance of the issues disputed in this case, it is necessary to briefly summarize the history of work made for hire under the Copyright Act of 1909.

Under present copyright law, the Copyright Act of 1976, an author is deemed to hold the copyright for his or her work by default unless the parties expressly agree in a written instrument that the work shall be considered a work made for hire. Yet under the old Copyright Act of 1909, the rights of a commissioned artist were less clear. Regarding works made for hire, the 1909 Act stated simply: "[t]he word author shall include an employer in the case of works made for hire" but the statute fails to define the phrase "works made for hire".

Initially, courts gave the word "employer" its common law meaning and ruled that only works made for an employer by a traditional employee were deemed works made for hire. However, the courts were soon faced with an issue - what about work made by freelancers for a commissioning party? How could the commissioning party feel secure in hiring a freelancer if the freelancer could turn around and sell the work to someone else? To solve this problem, the court, as articulated in Yardley v. Houghton Mifflin Co, 108 F.2d 28, 30 (2d Cir. 1939), created a default rule that, unless expressly stated otherwise, an independent contractor is deemed to have impliedly assigned his or her copyright to the commissioning party for the first copyright term (i.e. 28 years under the 1909 Act). To be clear - the independent contractor still owned the copyright. He or she was merely deemed to have assigned it to the commissioning party for the first copyright term. Accordingly, when the term expired 28 years later, the independent contractor was free to reclaim the copyright as his or her own.

However, the Second Circuit, in a string of cases beginning in 1972 with its decision in Picture Music, Inc. v. Bourne, Inc., 457 F.2d 1213, 1216 (2d Cir. 1972), retroactively re-interpreted the established work for hire precedent and created a new doctrine called the "instance and expense" test. Under the instance and expense test, a work is made at the hiring party's instance and expense when the employer induces the creation of the work and has the right to direct and supervise the manner in which the work is carried out. In practice, the instance and expense test creates what the Second Circuit called in Estate of Burne Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149, 166 (2d Cir. 2003), "an almost irrebuttable presumption that any person who paid an another to create a copyrightable work was the statutory 'author' under the work for hire doctrine."

The phrase "instance and expense" first appeared in a case called Brattleboro Pub. Co. v. Winmill Pub. Corp., 369 F.2d 565, 567 (2d Cir. 1966). In Brattleboro, in a short and otherwise unremarkable decision, the Court found an implied assignment of an independent contractor's advertisement to a publisher of a newspaper. In support of its conclusion, the Court reasoned that where an independent contractor is solicited by a commissioning party to execute a commission for pay, fairness demands a presumption that the hiring party desires to control the publication and the artist consents. The court termed this analysis "instance and expense."

Nowhere in the decision, however, did the Brattleboro Court grant ownership of the copyright to the hiring party or demonstrate an intention to depart from the implied assignment precedent. Yet the instance and expense analysis soon took on a life of its own.

In the 1972 case of Picture Music, the Second Circuit, formally recognized the instance and expense test as the only consideration in determining the ownership of an independent contractor's copyright. Citing a combination of Yardley and Brattleboro as support for its ruling, the court retroactively re-interpreted established precedent to imply that an automatic assignment of a copyright while retaining the right of renewal actually meant that the commissioned material is in fact work made for hire i.e. the property of the commissioning party, if it was made at the "instance and expense" of the commissioning party. Relying on its decision in Picture Music, the Court erroneously continued with this new analysis in a string of cases, thus entrenching the doctrine of instance and expense as the law.

The 2nd Circuit Thwarts The Supreme Court

The United States Supreme Court, in Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730 (1989), criticized the Second Circuit's use of the instance and expense test to grant copyrights for work created by an independent contractor to a commissioning party. In dicta, the Court made the following three points: First, the instance and expense analysis gave a different meaning to the plain language of the word "employer" in the 1909 Act, which by its established common law meaning excludes independent contractor. Second, the factors used in the instance and expense test were vague, subjective and overbroad. Third, the instance and expense test was contrary to decades of established precedent in the Second Circuit. (The Petition filed by the Kirby Estate urging the Supreme Court to hear the Kirby case largely mirrored all three of these points.)

The Second Circuit, for its part, is well aware of its re-interpretation of the law and has admitted as much. In Hogarth, the Court engaged in a thorough discussion of the history of work for hire case law and conceded that Picture Music misconstrued Yardley and Brattleboro to re-interpret established precedent. Furthermore, the Court acknowledged the Supreme Court's criticisms, and that the "content of a Supreme Court opinion . . . permits us to reject a precedent of this Court without the need for in banc reconsideration." Still, in what can only be described as a bizarre decision, the Court declined to overrule Picture Music and other subsequent cases and dismissed the Supreme Court's criticisms as non-binding dictum and "an insufficient basis to warrant a panel's disregard of two clear holdings of this Court".

A Hero Must Rise

The Kirby case may have been settled, but we will almost certainly see the issue of an independent contractor's work for hire status challenged again. As those following news about the termination right provision are aware, the music industry has been deluged with Termination Notices in the past two years and issues like the exact nature of work for hire are almost inevitably lurking in the background. (See the EASL Blog entry on the topic http://nysbar.com/blogs/EASL/2011/10)

According to the Amici Curiae Brief by the Screen Actors Guild and other unions representing creative artists, over 200 of the songs on Rolling Stone's top 500 list of all time were released before 1978. As record labels' copyrights terms on those songs expire, the Brief argued, the artists who sold their rights will be unable to reclaim them under the so-called instance and expense test.

There is no way to know for sure if the Supreme Court might have picked up the Kirby case for review; but in the months leading up to scheduled conference on September 29th, there were growing signs it might indeed have done so. The Petition for Certiorari had received significant support from various artist organizations and unions and five Amicus Curiae briefs were filed by influential individuals, urging the Supreme Court to hear the case. Marvel, for its part, was sufficiently concerned by this possibility that it settled a case it had just won on Summary Judgment at the Second Circuit Court of Appeals.

For now, we must wait for another copyright crusader to bring the evil instance and expense doctrine to justice. However one can be sure, with the termination rights for many works just now becoming ripe, we likely won't have to wait too long.

A CALIFORNIA FEDERAL DISTRICT COURT'S DECISION IN A CASE AGAINST SIRIUS XM HAS BROADER IMPLICATIONS THAN JUST WHETHER INTERNET RADIO AND SATELLITE SERVICES MUST PAY FOR PRE-1972 SOUND RECORDINGS

By Steve Gordon

The author would like to thank his associate, Anjana Puri, and law intern, Teronse Miller II, for their research assistance.

Federal copyright law applies to sound recordings but only to those produced on or after February 15, 1972. (Sound Recording Act of 1971, Pub. L. No. 140, 85 Stat. 39). Those older recordings are protected by individual states' statutes or common law. A recent spate of lawsuits has raised the issue of whether Pandora's Internet radio service and Sirius XM's satellite service have the right to play sound recordings produced prior to February 15, 1972, without permission from and without paying the owners of the copyrights in those recordings or the artists performing in those recordings. Pandora and Sirius argue that since federal law does not apply to such recordings, the Digital Performance Right in Sound Recordings Act of 1995 (DPRA), which created a right of public performance for sound recording when transmitted digitally, does not apply to pre-1972 recordings and that therefore they do not need permission from the owners of the copyrights in such sound recordings or the artists who performed on them.

Pre-1972 recordings include some of the most commercially successful records of all time, including those featuring the Beatles, the Rolling Stones, Elvis and Sinatra, as well some of the greatest Motown recordings by artists such as Diana Ross and the Supremes, the Temptations, and many others. According to a recent article in Billboard, pre-1972 recordings account for about 5% of plays at Pandora and 15% at Sirius XM ("SoundExchange Launches Campaign for Royalties on Pre-1972 Recordings" by Glenn Peoples, 5/29/14). Therefore, this is an important issue for both Pandora and Sirius. But a federal trial court decision in one of these cases, i.e., Flo & Eddie Inc. v. Sirius XM Radio Inc., et al. (Case No. CV 13-5693 PSG (CD Cal, Sept 22, 2014)), has even broader implications and potential impact than whether these digital streaming services have to pay for pre-1972 recordings. To understand those implications, it's necessary to provide some background.


A Brief History of Copyright and Public Performance Rights for Recorded Music

In 1897 the federal copyright law was amended to protect public performance rights in musical compositions. (http://www.copyright.gov/circs/circ1a.html). This meant that venues at which songs were publicly performed had to acquire licenses to perform musical compositions. There were no such things as sound recordings at the time. In 1914, a group of prominent writers (including Irving Berlin) and their music publishers came together to form the American Society of Composers, Authors and Publishers (ASCAP) to collect royalties from places that played their songs at nightclubs, taverns and bars. Monies generated by the public performance of songs received a major boost when commercial radio emerged in the 1920's. ASCAP started offering its blanket license to radio stations for the right to play any musical composition in its repertoire. However, by the 1930's the radio stations felt they were paying too much money and created a public rights organization (PRO) of their own, Broadcast Music, Inc. (BMI), to compete against ASCAP. Later, another PRO emerged in the U.S. to collect public performance royalties on behalf of contemporary classical composers, SESAC (which originally stood for Society of European Stage Authors and Composers).

In the 1930's through the 1950's, the record business emerged as a significant sector in the U.S. entertainment industry. Led by a myriad of mostly small independent labels such as Sun Records (Elvis Presley), Atlantic (Ray Charles), Stax (Otis Redding) and Mercury (Sarah Vaughan), these labels were led by entrepreneurs who constantly tried to get local radio stations to play their records. Often they would actually offer cash (and other forms of "consideration") to DJs or station managers to play their tracks. The practice was known as "payola." Following hearings exposing these practices in the late 1950's, Congress made it illegal for any radio station to receive consideration for broadcasting particular records unless it disclosed that fact along with the identity of the person furnishing such consideration. (47 U.S.C. § 317 (1960)). Despite the law against payola, as recently as 2005 the record companies have been caught trying to bribe radio stations to play their records. Former New York State Attorney General Eliot Spitzer prosecuted payola-related crimes in New York and settled out of court with Sony BMG Music Entertainment (now Sony Music) in July 2005, Warner Music Group in November 2005 and Universal Music Group in May 2006. The three majors agreed to pay $10 million, $5 million, and $12 million respectively in fines. Spitzer's office found that the companies had used a broad array of illegal "pay for play" tactics to secure airplay for its music, including bribing programmers with laptop computers, luxury hotel stays and even free tickets to Yankee games.

Nonetheless, starting in 1999, as income from recorded music has plummeted, the recording industry, led by the majors, has been lobbying hard to change the federal copyright law to make radio pay them for playing their records. The latest incarnation of this effort was the introduction in September 2013 of the Free Market Royalty Act (HR 3219). Like the earlier failed Performance Rights Act, this Act would require AM/FM broadcasters to pay performers and copyright owners. As hard as record industry has tried however, the broadcasting community, led by the National Association of Broadcasters (NAB), has pushed back by lobbying effectively against a general right of public performance in sound recordings. (However, as discussed below, the record companies were successful in persuading Congress in 1995 to create an exclusive public performance right for digital transmissions of sound recordings).

In 1971, as mentioned above, Congress passed the Sound Recording Act, making any recordings fixed on or after February 15, 1972 subject to the protection of the Copyright Act - but this statute specifically provided that the federal copyright law would not protect public performance rights for sound recordings, thereby allowing broadcasters to continue to pay nothing to the labels. The legislation was basically a compromise between the recording industry, which wanted to create uniform federal protection against physical piracy rather than continue to fight against it in each state, and the broadcast community, which did not feel that it should have to pay the labels for playing their records and thereby promote record sales. Then in 1976 Congress overhauled the old 1909 Copyright Act to conform to international standards, including changing the term of protection from a 28 year term with a renewal term of another 28 years, to 50 years after the death of a creator or 70 years for corporate works (these periods were later extended 20 years each). Once again, however, the broadcast community was able to persuade Congress to maintain the carve-out of public performance rights for sound recordings. The 1976 Act also included another provision that the recording industry did not favor. Congress included a right to terminate grants of copyright after 35 years. The reasoning for this right of termination was that since young creators would often sell or assign their copyrights for little money at the beginning of their careers, they or their families should have the right to recapture those copyrights. Yet if this provision applied to recordings made before the implementation of the Act on January 1, 1978, any record older than 35 years would be subject to possible termination by artists. Therefore, instead of asking Congress to apply the new Copyright Act to records made before 1972, the industry urged that records continue to be protected by state law. Consequently, the Act specifically provided that pre-1972 sound recordings would remain subject to state or common law copyright.

As discussed above, the recording industry has been thus far unsuccessful in trying to obtain public performance rights under federal law, but in 1995 it did manage to obtain exclusive digital public performance rights. The DPRA granted owners of a copyright in sound recordings an exclusive right "to perform the copyrighted work publicly by means of a digital audio transmission." The DPRA was enacted because the recording industry was able to persuade Congress that digital technology would threaten its business by allowing people to make perfect copies from digital transmission thus displacing record sales. They only significant opposition was a little company based in Horsham, Pennsylvania, called Music Choice. In the next several years, the Internet started to take off and new services such as AOL and Yahoo! were successful in getting a compulsory license through Congress as part of the Digital Millennium Copyright Act (DMCA) of 1998. This meant that non-interactive digital streaming services could use any recording without permission, provided that they qualified for licenses. The two major qualifications were that the services were non-interactive and that they paid the required royalty rate. Both Sirius XM and Pandora operate under that regime today. They pay SoundExhange, a not-for-profit that collects royalties from statutorily covered services and redistributes the monies to record companies and artists on a 50-50 basis. Yet both Sirius XM and Pandora take the position that they are not legally required to pay for pre-1972 recordings, because neither the DPRA nor DMCA apply to such recordings.

The Current Pre-1972 Cases

There are at the current time six cases questioning Sirius XM or Pandora's position that they do not have to ask for permission or pay for pre-1972 recordings. There are now four lawsuits brought by Flo and Eddie Inc., a corporation created in 1971 that is owned and exclusively controlled by Howard Kaylan and Mark Volman, two of the founding members of the music group "The Turtles." Flo and Eddie Inc. started three lawsuits against Sirius XM in California, Florida and New York, and filed another one earlier this week against Pandora in California. We discuss the recent decision in favor of Flo and Eddie Inc. in California, below. The recording industry lead by Capitol, a wholly owned label of Universal Music, is suing Sirius XM in California and Pandora in New York. All of these suits raise the issue of whether digital music services must ask permission to play pre-1972 recordings. (SoundExchange has also brought a separate suit against Sirius XM, but the issue in that case is not whether Sirius XM can deduct monies for pre-1972 sound recordings but how much it should be allowed to deduct).

The issue presented in these six cases is immensely important because it has implications that go far beyond just whether Pandora and Sirius XM should be paying for pre-1972 records. The reason is that the state law statutes and most of the case law applying to sound recordings predate the digital era. For instance, in both Capitol and Flo and Eddie Inc.'s case against Sirius XM in California, the plaintiffs argue that a 1982 amendment to California's Civil Code provides statutory protection for pre-1972 recordings. Therefore, if this statute is found to protect digital public performances of sound recordings, it would necessarily protect all public performances of sound recordings. Such a finding would implicate many other businesses at which sound recordings are publicly performed (including not only terrestrial radio, broadcast TV and cable), but also any other physical place such as every bar restaurant and nightclub in the United States, as well as any other physical venue that plays music publicly (amusement parks, bowling alleys and stadiums). Indeed, if a court were to rule in favor of the record business in these cases, that decision could radically change the landscape of music licensing in the United States.

Judge Gutierrez's decision

Yet that's exactly what Judge Gutierrez decided in Flo and Eddie Inc.'s lawsuit against Sirius XM in California. The judge declared: "The Court finds that copyright ownership of a sound recording under § 980(a)(2) includes the exclusive right to publicly perform that recording. See Cal. Civ. Code §980(a)(2). Accordingly, the Court GRANTS summary judgment on copyright infringement in violation of §980(a)(2) in favor of Flo & Eddie." Flo & Eddie Inc. v. Sirius XM Radio Inc., et al. (Case No. CV 13-5693 PSG (CD Cal, Sept 22, 2014)).

It's clear that, if upheld, this decision would mean that both Pandora and Sirius XM would have to seek permission and pay for pre-1972 recordings. However, would nightclubs, bars, restaurants as well as radio stations have to seek permission to play and pay performance royalties for pre-1972 records? On its face, yes. The judge based his ruling on the wording of the statute which reads in relevant part: "The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording." Cal. Civ. Code § 980(a)(2). Judge Gutierrez emphasized that there is nothing in the statutory language what would preclude performance rights in pre-1972 sound recordings. He wrote in relevant part: "...the Court infers that the legislature did not intend to further limit ownership rights, otherwise it would have indicated that intent explicitly."

Judge Gutierrez concluded: "that copyright ownership of a sound recording under § 980(a)(2) includes the exclusive right to publicly perform that recording." This interpretation of California law would make the exclusive right of public performance in sound recordings apply to any public performance of a pre-1972 recording, whether on a digital service or otherwise, including performances in terrestrial radio or television broadcasts, nightclubs, restaurants, bars and any other public places. In other words, they would all have to seek permission from the copyright owner of each pre-1972 recording - usually the record company. (Unlike the Turtles, most commercially successful artists do not retain rights in their records). The owners of such recordings could then charge any amount they wished, or deny permission altogether.

On October 6th, Sirius XM announced that it would appeal Judge Gutierrez's ruling. In the meantime, all the other lawsuits against it and Pandora are ongoing.

The RESPECT Act

In May 2014, proposed legislation favored by the major labels titled "Respecting Senior Performers as Essential Cultural Treasures" or the RESPECT Act, was introduced into the House of Representatives. The bill proposes an amendment to the federal copyright law that would specifically require non-interactive digital radio services to pay royalties for pre-1972 recordings "in the same manner as they pay royalties for sound recordings protected by federal copyright that are fixed after such date." This would mean that services that are currently paying SoundExchange to play post-1972 recordings, including Sirius XM and Pandora and other smaller Internet radio stations, such as Songza and iHeart Radio, would have to pay SoundExchange to play pre-1972 recordings. That money would then flow to the labels and the artists on 50-50 basis after SoundExchange took a modest administrative fee.

The RESPECT Act would also provide a remedy under which performance royalties for the transmission of such recordings may be recovered in a civil action in federal court if a digital music service failed to make such payments. However, it would prohibit an infringement action against a transmitting entity from being brought under a state law if the appropriate royalty was paid under this Act, thus prohibiting lawsuits such as the current ones against Sirius XM and Pandora.

Finally, the RESPECT Act would not confer federal copyright protection to pre-1972 recordings, which would continue to be protected under applicable state laws notwithstanding the payment of royalties under federal statutory licensing requirements. Thus, the termination right would not be available for pre-1972 recordings.

Possible Outcomes and Conclusion

If Judge Gutierrez's decision is upheld on appeal, it is possible to imagine a plethora of lawsuits against radio and TV stations subject to California law, as well as bars, restaurants and other venues for playing pre-1972 sound recordings without permission. For this reason, followers of "judicial realism" may reasonably speculate that the Ninth Circuit will find a way to disagree with the district court's statutory construction.

In a 2011 report, the Copyright Office opined that pre-1972 sound recordings should be federalized except that the termination provisions of the Copyright Act should not apply. This opinion is in basic agreement with the RESPECT Act - both would require Internet radio to pay for pre-1972 sound recordings while avoiding the termination provisions of the 1976 Act.

If the RESPECT Act is passed, the need for any lawsuits against Pandora and Sirius XM would be eliminated. Further, since the RESPECT Act states that digital services would pay royalties for pre-1972 recordings "in the same manner" as they pay royalties for later recordings, SoundExchange would receive those monies and this would mean that 50% would go directly to the artists. That would be a good thing.


October 24, 2014

Aereo Decision

Aereo has lost the argument in the Southern District that it should be considered as a cable company and allowed to operate under the compulsory license scheme following the Supreme Court's opinion that its transmissions were similar to that of a cable company. Judge Nathan found that: "The Supreme Court in Aereo III did not imply, much less hold, that simply because an entity performs publicly in much the same way as a CATV system, it is necessarily a cable system entitled to a ... compulsory license ... Stated simply, while all cable systems may perform publicly, not all entities that perform publicly are necessarily cable systems, and nothing in the Supreme Court's opinion indicates otherwise." The Judge also stated that: "The void left by Aereo III's silence on 111 is filled by on-point, binding Second Circuit precedent, which has already resolved the issue presented here." AereoSDNYDecisionreCompulsoryLicense.pdf

October 28, 2014

Internet Streaming of Live Broadcast Television

By Rachele Morelli

In a recent decision, American Broadcasting Companies, Inc. v. Aereo, Inc., the Supreme Court of the United States granted to television broadcasters a sigh of relief under the Copyright Act of 1976. 573 U.S. __ (2014). The Supreme Court held Aereo, the internet-based broadcast television streaming service, infringed copyright holders' exclusive right to "perform" their works "publicly" within the meaning of the Transmit Clause of the 1976 Copyright Act. Id.

Prior to the 1976 amendment, the 1909 Copyright Act (the 1909 Act) granted copyright owners the right to publicly perform their works. Am. Broad. Cos. v. Aereo, Inc., 874 F. Supp. 2d 373 (S.D.N.Y. 2012). However, under the 1909 Act, to perform a copyrighted work publicly required a literal performance of the work. Id. The United States Supreme Court decided two cases under the 1909 Act that discussed cable television systems which received broadcast signals through antennas and then retransmitted those signals to its subscribers via coaxial cable. Id. Ultimately, the Court found that the defendants, the cable television systems, were not infringing the copyright holders' exclusive right to publicly perform, because the systems were not actually "performing" the copyrighted works through their transmittals. Id. Congress was extremely dissatisfied with the outcome of these cases and began efforts to amend the 1909 Act to account for the rapid advances in technology. Id.

In 1976, the Copyright Act (the 1976 Act) was amended with the intention of encompassing cable system providers within its scope. The 1976 Act provided that a copyright owner has the exclusive right to perform his/her copyrighted work publicly. See 17 U.S.C. §101; 17 U.S.C. §106(4). Further, the 1976 Act clarified that to "perform" an audiovisual work means "to show its images in any sequence or to make the sounds accompanying it audible." Id. Further, the addition of the Transmit Clause clarified that an entity performs a work "publicly" when it transmits or otherwise communicates a performance of the copyrighted work to the public. Id.

A significant case decided under the 1976 Act was "Cablevision". Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008). There, the court found that Cablevision's transmission of a recorded program to an individual customer through its remote server Digital Video Recorder (RS-DVR) system was not a public performance, but rather more similar to a private performance. Id. at 137-40. The court premised its holding on two major facts: 1) that the RS-DVR system created unique copies of every program, and 2) that the transmission of the recorded program to each specific customer was produced solely from that unique copy. Id. at 137. The court reasoned that each private performance created a one-to-one relationship, because each user made an individual copy that was viewable only by that user. Id. The court found that the RS-DVR's private performances did not violate any rights because the 1976 Act only protects the right to make a public performance of a copyrighted work. Id.

In light of the Cablevision holding and the explosion of innovative portable Internet enabled devices, numerous services have emerged that offer online streaming of live broadcast television. Most services have formulated their streaming in accordance with the Cablevision case rationale and have devised systems that attempt to create a one-to-one relationship with each user to ensure that the performances would remain "private" rather than "public." These novel progressive services have produced widespread implications for the future of all broadcast television.

Aereo, Inc. is a part of this group of services that allows users to stream live broadcast television from any Internet-enabled device without giving proper compensation to the owners of the copyrighted material it transmits. The television producers, marketers, distributors and broadcasters that own the copyrights in many of the programs Aereo streams sued Aereo for infringing on their right to "perform" their copyrighted works "publicly." Aereo, Inc., 134 S.Ct. 2498, 2503 (2014). The case was first decided in July 2012 by the District Court for the Southern District of New York (Aereo, Inc., 874 F. Supp. 2d at 373), and affirmed in April 2013 by the Second Circuit (WNET, THIRTEEN, Fox Television Stations, Inc. v. Aereo, Inc., 712 F.3d 676). Both lower courts declined to find infringement because they analogized Aereo's service to the RS-DVR in Cablevision. Aereo, Inc., 874 F. Supp. 2d at 382-96; Aereo, 712 F.3d at 684-95.

The Supreme Court granted certiorari and heard Aereo unsuccessfully argue that its streamed Internet transmissions were not made "publicly" under the 1976 Act. Aereo, Inc., 573 U.S. at __. Aereo attempted to persuade the Court that its streams were not "public," and similar to the RS-DVR in Cablevision, because Aereo's system generated separate copies of each program and the transmission to each individual subscriber was created solely from those unique copies. The Court relied heavily on Congress' regulatory objectives and refused to allow the "behind the scenes" technological differences to distinguish Aereo from an ordinary cable provider that does publicly perform. Overall, the Court ruled in a 6-3 decision that Aereo transmits a performance of the copyrighted works to the public within the meaning of the Transmit Clause of the 1976 Act. Id. As a result of the Supreme Court's decision, the case was remanded to the lower court and Aereo suspended its services on June 28, 2014.

In coming to its decision, the Supreme Court predominantly focused on the actual purpose of Aereo's service: To provide live broadcast television in the same manner as a cable provider while circumventing the statutory obligations that are inherent in being a cable provider. Today, there is still great debate as to whether the streaming of websites marks an infringement under the 1976 Act. Regardless of the Supreme Court's ruling, it is highly unlikely that any of the website streaming services, like Aereo, will completely cease to exist. This case and many others in history have proven that there are often consequences when one attempts to combat technology rather than embrace it. The next step to resolve this issue, which stems from our society's inevitable advances in technology, would be statutory reform.

The primary issue presented in this matter is whether these online streaming services should be considered "cable system providers" under the 1976 Act. If these services are indeed viewed as cable system providers, as the Supreme Court found, then the statute should be amended to indicate their inclusion. The 1976 Act allows cable system providers to retransmit copyrighted works from broadcast television stations in exchange for paying a compulsory license fee, which is then distributed accordingly to the copyright holders. Aereo, 712 F.3d at 685. The statutory decision to include these online streaming services under the umbrella of "cable system providers," thereby allowing them to pay the ordinary license fees associated with retransmitting, may be the solution to the technological challenges we are confronted with today.

November 15, 2014

Amazon and Hachette Shake Hands on Distribution Deal; Hachette Authors No Longer in Limbo

The Author's Guild reported on Thursday, November 13th:

"This morning, after a nasty and very public corporate stalemate, Amazon and Hachette jointly announced they have come to terms. Their new multiyear contract will allow Hachette to set its own e-book prices, but that arrangement will be tempered by 'financial incentives' for Hachette to keep those prices low, according to the companies' joint statement."

More at http://www.authorsguild.org/advocacy/amazon-and-hachette-shake-hands-on-distribution-deal-hachette-authors-no-longer-in-limbo/#more-6562

November 20, 2014

Pre-1972 Sound Recordings Could Kill the Radio Stars

By Barry Werbin and Sharon O'Shaughnessy
Herrick, Feinstein LLP

On the heels of the Central District of California's related September 2014 decision, Judge Colleen McMahon of the Southern District of New York, has denied Sirius' motion for summary judgment on Flo & Eddie, Inc.'s class action complaint alleging that Sirius XM Radio (Sirius) committed common law copyright infringement and engaged in unfair competition by publicly performing pre-1972 sound recordings of The Turtles, and by reproducing those recordings in aid of its performances. Flo & Eddie, Inc. v. Sirius XM Radio, Inc. (S.D.N.Y. Nov. 14, 2014). Absent Sirius convincing the court by December 5, 2014, that there are remaining issues of material fact that would require a trial, Judge McMahon will enter summary judgment in favor of Flo & Eddie as to copyright infringement liability and proceed to an inquest on damages.

Ultimate victories for Flo & Eddie, Inc., which owns the copyrights to The Turtles' master recordings, could be disastrous to Sirius, a subscription-based satellite and Internet radio services provider, which operates 24/7, devotes entire channels to pre-1972 sound recordings, and, like other streaming music providers, has never paid separate royalties to perform sound recordings. Damages could reach millions of dollars, and this sea of change after decades of status quo non-enforcement will surely result in copycat lawsuits that will turn the broadcast and streaming music industry on its head.

Sirius and other providers pay music license royalties covering the underlying musical compositions, but music is the only type of creative work that has two independent copyrights: (i) a copyright in the composition (lyrics and music) that generally is held by the composers of works or their music publishers; and (ii) a copyright in the sound recording, which is the medium in or on which a particular performance of a musical composition is fixed for posterity and for playback. As Judge McMahon explained, "In essence, a copyright in a sound recording is a copyright in the performance -- not in the work being performed."

While federal law has protected copyrights in musical compositions since 1831, Congress only made sound recordings eligible for federal statutory copyright protection in 1971. This protection operates prospectively and, consequently, recordings that were "fixed" (i.e., recorded) prior to February 15, 1972, are not eligible for federal copyright protection. As Congress did not adopt a federal copyright scheme for pre-1972 sound recordings, holders of sound recording copyrights seeking to exercise their rights must look to state common law to determine the copyright protections and remedies to which they are entitled.

Enter Flo & Eddie, Inc., a California corporation that is wholly owned by Mark Volman and Howard Kaylan. Vol