Main

Copyright and Trademark Archives

April 13, 2009

Social Media Offers Good News/Bad News for Lawyers

By Lisa Fantino

Social networking sites like Facebook, MySpace, Friendster, and more recently Twitter, are blazing a new frontier in cyberspace and forging new ground for entertainment lawyers. That's good and bad news. The bad news is that Facebook alone has 175-million users across the globe who are clueless about copyright law and were simply outraged because they thought Big Brother was watching them. The good news is that creates a pool of hundreds of millions of new problems for entertainment lawyers to solve.

Facebook CEO Mark Zuckerberg is no dummy; after all, he created the fastest growing communications network in a downward global economy. And the Harvard educated billionaire would presumably have highly-paid and skilled Internet lawyers advising him; yet, that doesn't seem to be the case. Oh, they have coached Zuckerberg big-time since the brouhaha over content started on thewww.msnbc.msn.com/id/21134540/vp/29427147#29427147" target="_blank"> Today Show , but Facebook should never have been in this mess from the get-go.

Often what I find is that transactional lawyers and corporate counsel who draft "policy" and Net guidelines are not skilled at issue-spotting when it comes to potential pools of litigation and that's music to the ears of entertainment and Internet litigators.

The laundry list of issues, as I humbly see it, starts this way and grows:

1. Content ownership:
Zuckerberg has side-stepped the issue, stating on the Today Show, "If you sign up for the site and then you decide that you want to take that information down, then none of that information will be shared with anyone going forward." OK, it won't be shared with your former Facebook "friends" but where does it go? In the absence of a formal waiver or transfer to the contrary, the copyright rests with the content's creator (www.copyright.gov/title17/92chap2.html" target="_blank">See: §§201, 204 of the U.S. Copyright Law ); however, does Facebook have any license rights, and if so, what are they, or what should they be?

If the Facebook user is inherently granting a license to Facebook by virtue of its registration and subscription for an account, then when exactly does that grant of rights terminate? §203(3)-(4) of the U.S. Copyright Law states the parameters for termination of the grant and it's not clear that a Facebook subscriber can immediately terminate that license by withdrawing the content and/or deleting an individual account.

I'll address the implications of using third-party applications via Facebook in a follow-up blog next month.

2. Digital archives:
While Facebook is not serving as either editor or publisher of content, the information does reside on its servers and it would be illogical to think that it will not keep a digital archive for a respectable amount of time. Without such a corporate policy, would Facebook not then open itself to possible issues of spoliation of evidence, even in the absence of any legal duty to do so? While it is true that most courts have been reluctant to allow such third-party spoliation claims (www.law.cornell.edu/nyctap/search/display.html?terms=basil&url=/nyctap/I04_0025.htm target="_blank">See: MetLife Auto & Home v. Joe Basil Chevrolet, Inc., 303 A.D.2d 30 (N.Y. App. Div. 2002), aff'd 2004 1 N.Y.3d 478, 775 N.Y.S.2d 754 (2004) ), corporate counsel should be aware that Facebook, MySpace, Twitter, and the like may face direct charges in a lawsuit where spoliation would be based on very fact-specific information. Therefore, it is likely that these social networks will archive content for a respectable amount of time, as it would be financially imprudent for them not to do so, since paying for digital storage now could save millions in claims and legal fees at some future date.

3. Corporate Governance:
Facebook is soliciting comments from its users regarding corporate policy and has stated that it will re-visit its privacy and content policies after this "open door discussion" period ends on March 29th. The users of Facebook and MySpace are not shareholders; therefore, is Facebook just downright insane to allow its "friends" to even remotely suggest what would be the best use of its servers? Maybe, just maybe each Facebook "friend" should cough up the $240-million that Microsoft did for a 1.6% share in Facebook; at least that would make each of them a minority shareholder! If this doesn't stop them from tweeting all about then maybe Facebook users should invest $9.99 at Godaddy.com and buy their own domain. Then no one could tell them what to do; how to do it; or what to say. Then, any and all lawsuits that fly at them through cyberspace could be borne by them as well.

In the end, as ladylitigator.wordpress.com target="_blank">Lady Litigator sees it, the entire universe of social networking is a potential goldmine for us lawyers.

Hey, wanna be my Facebook fan">www.facebook.com/pages/Mamaroneck-NY/Lady-Litigator-The-Law-Office-of-Lisa-Fantino/50052159868" target="_blank">Facebook fan ? LOL

Lisa Fantino is an award-winning journalist turned attorney with a general and entertainment practice in Mamaroneck, NY. www.lisafantino.com" TARGET="_blank">Law Office of Lisa M. Fantino

April 21, 2009

Fairey v. Associated Press Pleadings

For those interested in following the Fairey v. Associated Press copyright infringement litigation concerning the Obama "Hope" poster and fair use issues, the pleadings are available electronically at the website for the U.S. District Court for the Southern District of New York, under Docket Number 09 civ 01123. Judge Hellerstein is the judge assigned to the case.

Joel L. Hecker, Esq.
Russo & Burke
600 Third Avenue
New York, NY 10016
(212) 557-9600
Fax: (212) 557-9610
www.RussoandBurke.com.

May 18, 2009

Score One Touchdown in the Endzone for the Washington Redskins

Score one touchdown in the endzone for the www.redskins.com/gen/index.jsp>Washington Redskins. After a 17 year court battle over their trademark, which depicts a drawing of an Indian along with their name Redskins, the U.S. Court of Appeals for the D.C. circuit ruled that the plaintiffs waited way too long to challenge this mark. See: www.ipwatchdog.com/ip-cases/trademark-cases/pro-football-v-harjo-may-15-2009/>Pro-Football, Inc. v. Harjo (D.C. Cir. 2009)

A group of Native Americans had challenged the mark alleging it was disparaging to their ethnic group. Yet, the court held there was too great a delay between when the NFL team began using the mark in 1967 and when the mark was first challenged in this action back in 1992.

Unfortunately for the Redskins, the Court did not address the merits of the claim and whether or not the mark en.wikipedia.org/wiki/Disparagement> disparaged Native Americans under the meaning of the Lanham Act §2, 15 U.S.C.§1052(a). Instead, Judge David Tatel, writing for the Court, based the decision on the team's defense of laches. Judge Tatel stated that the Redskins suffered great economic and trial prejudice because of the long lag time. Oddly, this was the second time this issue had been before the Circuit, which previously ruled against the team and remanded back to the District Court in 2005, See: Pro Football, Inc. v. Harjo, (Harjo II), 415 F.3d 44, 50 (D.C. Cir. 2005)

The trial clock had actually been set in 1984 when Mateo Romero, the youngest of the seven plaintiffs turned 18, the age of majority, and nothing happened between 1984 and 1992. Romero would've been one year old in 1967 when the team first began using the mark, so on remand, the district court deemed the period between 1984 and 1992 the Romero Delay Period. See: Harjo III, 567 F.Supp.2d 46, 53-56 (D.D.C. 2008) During this Romero Delay Period, Edward Bennett Williams, the team's former president, unfortunately died. Williams had reportedly met with Native Americans to get their opinions on the team's mark and he could no longer testify. The court determined that the near eight year delay also made it more difficult to obtain contemporaneous evidence of public attitudes toward the mark.

Romero had also made a claim against the NFL team's cheerleaders, the Redskinettes, which were not borne of the team until 1990. However, Romero shot himself in the foot there too. He noted for the district court that the allegedly disparaging mark for the Redskinettes was so closely tied to the disparaging nature of the team's mark that the court held it would have to look at the team's mark to assess the nature of the claim against the cheerleaders and it was prevented from doing so by the defense of laches.

While this decision does not address the merits of the case, it does put it to rest but that is not enough for Intellectual Property attorneys. In this ridiculously politically correct society of ours why does freedom of speech and expression always take a back seat to the hurt feelings of a chosen few seeking their 15 minutes in the spotlight? The word Indian dates back to the 15th century when Christopher Columbus mistakenly thought he landed on a sub-continent of India and thereby referred to the indigenous people of the new land as Indians. What is disparaging about that?

Perhaps as a New Yorker I should be insulted if someone from the south calls me a Yankee. However, as an intelligent woman I am not; in fact, I am proud to be a Yankee, now if only Derek Jeter would call.

www.LisaFantino.com>Lisa Fantino is an award-winning journalist turned attorney with a general and entertainment practice in Mamaroneck, NY

May 20, 2009

Increased Delays at the U.S. Copyright Office

According to a May 19, 2009 report in The Washington Post, the U.S. Copyright Office is experiencing processing delays that can last from six to 18 months. Apparently, due to the influx of paper applications, the delays will probably grow longer over the summer. These delays exclude any filing that is accompanied by the expedited special handling fee of $685.

The hope is that most applicants will use the electronic system rather than filing with paper applications, and to encourage users to due so, it will raise its paper application fee to $65 in August. It currently takes six months to process electronic applications, and the electronic filing fee will remain at $35.

May 31, 2009

Copyright Office Improves Processing Time and Service

From the U.S. Copyright Office as of May 29, 2009:


A recent Washington Post article focused on the lengthy processing times the Copyright Office is experiencing in wake of its transition from a paper-based to an electronic processing environment. The Copyright Office is working diligently to improve processing times and service to the public in general. To clarify, current processing times by filing method are as follows:

E-Service with Electronic Deposit: 5 months for 90% to be completed; 33% completed in 2.5 months
E-Service with Physical Deposit: 6.5 months for 90% to be completed; 33% completed in 3 months
Paper Claims: 18 months for 90% to be completed; 33% completed in 12 months
You can save money and time and help us improve our services by filing claims online via eCO. Please visit www.copyright.gov for more information.

July 9, 2009

From the Copyright Office

The Copyright Office has published a final rule establishing adjusted fees for its services. The adjusted fees will recover a significant part of the costs to the Office of registering claims and will recover full costs for many other services the Office provides that benefit only or primarily users of the services. The new fees are based on the cost of providing services and reflect cost savings associated with the implementation of electronic processing in the Copyright Office in 2007. The fee for online registration of a basic claim will remain $35. The registration fee for fill-in Form CO will rise from $45 to $50; however, if a faulty version of Form CO is submitted, making it necessary to process the claim as a paper filing, the fee will increase to $65. The fee for paper filings on Forms PA, SR, TX, VA, SE will rise from $45 to $65. Two fees have been adjusted downward to reflect decreased costs resulting from the availability of records online. The adjusted fees take effect August 1, 2009.

July 24, 2009

An Aesthetic Decision in the Narrowest Confines: Salinger v. Colting

By Vince Manapat
www.vincemanapat.com

Imagine a judge deciding that your favorite book - the one you got from the drug store with the barbarian on the cover - cannot be sold because it did not meet a particular standard of beauty. Or the formulaic romantic comedy to which you turn in times of fatigue and ennui (and which you hide from your more intelligent friends) cannot be watched because a judge declared it "ugly." The thought of judges making aesthetic decisions makes almost anyone who cares about art or free speech nervous. Aesthetic decisions are complex, and judges possess no special abilities or training that make them suited to make such determinations. It was out of this fear that Justice Holmes famously wrote: "[i]t would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations, outside of the narrowest and most obvious limits." (Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251 (1903)). Nevertheless, judges can and must be able make aesthetic decisions, and the recent decision by Judge Deborah Batts enjoining the sale of 60 Years After: Coming Through the Rye (60 Years), a purported parody of Catcher in the Rye (Catcher), is a perfect example of how these decisions can be within "the narrowest confines and most obvious limits" as Justice Holmes phrased it. (Salinger v. Colting, No. 09-cv-5095, 2009 WL 2009 WL 1916354 (S.D.N.Y.)).

On May 14, 2009, the Guardian announced that a sequel to Catcher in the Rye, entitled 60 Years Later: Coming Through the Rye, by "J.D. California" (the pen name of Frederick Colting) was going to be published. (Alison Flood, Catcher in the Rye sequel Published, but not by Salinger, Guardian.co.uk, May 14 2009, http://www.guardian.co.uk/books/2009/may/14/catcher-in-the-rye-sequel). In the sequel, a geriatric Holden Caufield ("Mr. C") leaves an old age home and goes through many of the original scenarios in Catcher. Initially, the book was marketed as "a marvelous sequel to one of our most beloved classics." The author said he "wanted to be respectful" and "tried to handle it very delicately" and even characterized the 60 Years as a tribute. His attempts at respect, however, had very little effect on J.D. Salinger, and within two weeks of the Guardian story, Mr. Salinger sued Colting and his publisher to enjoin the work's publication.

The case raised strong emotions from every quarter. Some were incensed by the level of control Salinger exercised over his works, and saw this as one more example of a powerful author restricting society's access to the arts. (Howard Knopf, Salinger Sues for Sequel, http://excesscopyright.blogspot.com/2009/06/salinger-sues-for-sequel.html.). Others saw the "sequel" as nothing more than a money grab, and "a flimsy, cheap, attention-seeking piece of opportunistic schlock clinging with whitened knuckles to the coattails of literary greatness." (Stuart Evers, Put an end to the Catcher in the Rye Sequel: 60 Years Later Coming Through the Rye is on its Way. Oh God, I Wish it Wasn't. http://www.guardian.co.uk/books/booksblog/2009/may/14/catcher-in-the-rye-sequel). Whatever the views on the propriety of publishing 60 Years, no one could dispute the fact that 60 Years took substantial portions of Catcher in both style and content. Salinger's complaint and Judge Betts's decision note striking similarities and even particular sentences lifted almost word for word. For instance, in Catcher, Holden says, "[i]'ll just tell you about this madman stuff that happened to me around last Christmas just before I got pretty run-down and had to come out here and take it easy." In the sequel, Mr. C has a similar observation: "I keep my eyes closed and think about all the madcap stuff that happened to me around last Christmas, before I got so run down I had to come out to this place to rest."

This is without a doubt infringement, but the defendant argued the defense of fair use and parody. At the hearing to show cause, it was immediately apparent that Judge Batts was not amenable to this claim. She made it clear early in the proceeding that she saw several problems with the parody argument. At one point, she cut off the defendants' attorney, Edward H. Rosenthal, and pointedly asked "how is it criticism?" a question repeated several times through the proceeding and to which no answer satisfactory to the judge seemed forthcoming. When the court's decision was published on July 1, 2009, its result was no surprise.

The defendants' parody argument had two parts. First, 60 Years was a comment on the relation between Catcher in the Rye and J.D. Salinger. Second, 60 Years was to "critically examine the character Holden, and his presentation in Catcher as an authentic and admirable (maybe even heroic) figure." As elaborated by defendants' experts, the same laconic reflections we read in Catcher would "fall flat" when spoken by an older man in a new world. Holden Caulfield's reflections in Catcher seem honest and endearing, but in the sequel, the same reflections coming from an older Holden "evoke Aristotelian fear and pity" and "force readers to ask whether such anomie is all we fans of Holden may expect in old age."

The court rejected both of the defendants' arguments. First, the court held that 60 Years did not comment on the original because Holden as we know him in Catcher is already miserable, unconnected, and absurd. These characteristics led to many of Holden's failures in Catcher, such as being expelled from boarding school and becoming a patient in a psychiatric hospital. In the court's words, the effects of "Holden's uncompromising world view," as defendant characterized it, "were already thoroughly depicted and apparent in Salinger's own narrative." The public seems to remember Holden mostly for his rebelliousness, but as the court pointed out, this does not mean that Holden's "tendency toward depressive alienation" was not present in the original. Ultimately, the court decided that "[i]t is hardly parodic to repeat that same exercise in contrast, just because society and the characters have aged."

Second, the court rejected the defendants' argument that criticism of the author of a work will raise an infringing copy to the level of parody. In the court's view, the parody of the author must relate in some way to the work. 60 Years ostensibly commented on Salinger's "fierce protection" of his rights, but this is not in itself a comment on Catcher, since there is nothing in Catcher about the protection of copyrighted works. The court distinguished a recent case on these grounds stated, "60 Years contains no critique of Salinger that also critiques Catcher by extension."

To understand why Judge Betts's decision is correct, one must inquire into the basis for the fair use and parody defense. Fair use fulfills the Constitution's directive to "promote the Progress of Science..., by securing for limited Times to Authors . . . the exclusive Right to their . . . Writings." (William Patry, 11 Cardozo Arts & Ent. L.J. 667, 668 (1992) (quoting U.S. Const. art. I, S 8, cl. 8). The economic basis of the defense is that fair use reduces transaction costs and makes possible uses of copyrightable material that would not otherwise be available. For instance, a professor writing an article will use paraphrases and direct quotes from many different authors. If we required this professor to get a license from each author he quoted, the cost of the transactions taken together would be very high. For that reason, there is an exception in copyright law for "fair use," enabling the professor to use the quotes (which in all probability the authors would allow) and not risk lawsuits for infringement. Society benefits from the new article, and in many cases, the quoted authors benefit as well from the publicity. (Posner at 69).

Parody, however, is a different case. Authors are unlikely to license parodies of their own works, and even if they did, it would reduce the credibility of the parody, so some protection must be given to these socially valuable works. (William Landes & Richard Posner, The Economic Structure of Intellectual Property Law 150 (2003)). The Supreme Court has held that in some circumstances, parodies will be protected, even if the amount the parody borrows from the earlier work is substantial. (Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 581 (1994)). At the same time, the parody justification cannot be a carte blanche to infringers, which the Supreme Court (Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 581 (1994) (holding that judges must draw the line at some point despite parody's claim to legitimacy)) and the Second Circuit (Elsmere Music, 623 F.2d at 253 n. 1 "[a] parody is entitled at least to 'conjure up' the original. Even more extensive use would still be fair use, provided the parody builds upon the original, using the original as a known element of modern culture and contributing something new for humorous effect or commentary.") have made clear. The question is where to draw the line; that is, when the amount copied is so great and the commentary so weak or non-existent, that a work is not entitled to protection as a parody. But this presents a problem: any work of art that alters another is arguably making some form of comment and criticism, so some factfinder must decide whether the commentary is insufficient. The range of opinion about literary matters one can find in the academy at any time in history shows that this is a complex field ripe for manipulation in courts. An ostensible parodic purpose posited by the infringer cannot be enough to entitle him or her to fair use protection. The factfinder must be able to evaluate the claim, even if it means making an aesthetic decision.

This kind of evaluation will inevitably be aesthetic because it is a decision about how one piece of art relates to another. Any aesthetic decision will present manifold perils, particularly with respect to subjectivity. But this is no different from other difficult decisions that judges make every day in other areas of the law. For instance, a judge is in an equally bad position to decide whether someone "intended" to commit a certain act (because judges are not necessarily psychologists), or whether an act was a proper business purpose (because judges are not necessarily business people). Nevertheless, judges must make these decisions in order for the law to function. Our society has given judges the power to make these decisions because the alternative, having no laws, is untenable to most.

In this case, the defendants posited a parodic purpose. In fact, they presented two of them, and backed them up with expert testimony from literature professors. The court, however, rejected them both, and in doing so, stayed within the "the narrowest confines and most obvious limits" of aesthetic decisionmaking. Critics of the decision must contend with the sheer amount of copying involved in this case, and the particular manner in which the idea of making Holden 60 years older was executed. It is conceivable that a book which makes Holden Caulfield 60 years older could be written in a way that provides a meaningful addition to American literature. That, however, is not what happened here. The author of 60 Years merely increased Holden's age and took him, in rote fashion, through every scenario found in the original. This is like taking a piece of music, putting it in a different key, and claiming that it is a parody; it's an merely an exercise in transposition. The similarities between the books are vast and limited only by the inclusion of Salinger as a character (which appears, for the most part, in one chapter). This situation can be distinguished from Suntrust Bank v. Houghton Mifflin Co. where the parodying work, though it took substantial portions from the original, told the story through a completely different viewpoint and with a well-defined commentary on the original. (268 F.3d 1257, 1270 (11th Cir. 2001) (holding reference to original plot and characters were in service of parodist's general attack on Gone With the Wind). Suntrust is not without its critics. In one of the most remarkable passages of William Patry's Copyright treatise, he wrote: "The use in SunTrust was neither a parody nor fair...SunTrust is the first, and hopefully last, politically correct fair use decision: there should be no illusions that had the original been a cherished work in the liberal firmament, and the "parody" a right-wing attack, an identical, excessive, nontransformative taking would have been swiftly and sanctimoniously enjoined." Patry on Copyright § 10:98).


Here, an earlier case of literary adaption , that of Pierre Menard's Quixote is illustrative. Menard was the author of numerous works including a monograph on Leibniz's Characteristica universalis, and a technical article on the possibility of enriching the game of chess by eliminating one of the rook's pawns. Menard saw adaptions such as Colting's as "parasitic." In his opinion, these works were "good for nothing but occasioning a plebian delight in anachronism or (worse yet) captivating us with the elementary notion that all times and places are the same, or are different." With this in mind, Menard set himself to the task of writing Don Quixote; not another Don Quixote, or a mechanical reproduction of Don Quixote, but the Don Quixote, word for word. One critic, writing in 1939, praised Menard's version (which was never completed) as being "more subtle than Cervantes'." The critic set two passages side by side. First, Cervantes':
...truth, whose mother is history, rival of time, depository of deeds, witness of the past, exemplar and advisor to the present, and the future's counselor.
Menard's version reads:
...truth, whose mother is history, rival of time, depository of deeds, witness of the past, exemplar and advisor to the present, and the future's counselor.
Menard's version, according to the critic, is affected; he was not a native speaker of Spanish and so could not write with the same naturalness as Cervantes could. In addition, the second passage was written by a contemporary of Bertrand Russell and William James. In essence, the second passage was written from a far different perspective, that of a foreigner living in a future world. (Jorge Luis Borges, Collected Fictions, Pierre Menard, Author of the Quixote 88-95 (1998)).

Of course, that was a Borges story. But the lesson of Pierre Menard is nonetheless important to understanding parody law. Judged by the text, the two works are exactly the same, yet the unnamed critic and narrator of the story provides significant differences between the two. These differences, while important in the context of literary theory, should not be sufficient to render Menard's version a "parody," just as the reasons posited by Colting should not be sufficient to protect his work.

Parodies are socially valuable, and their place in our society should be protected - what would our culture be without Ghostface Killah's take on It's a Wonderful World (Rogers v. Koons, 960 F.2d 301 (2d Cir. 1992)), or Jeff Koons's Puppies? (Abilene Music, Inc. v. Sony Music Entertainment, Inc., 320 F.Supp.2d 84 (S.D.N.Y. 2003)). But the line between parody and infringement must be drawn somewhere, and this will require limited aesthetic decisionmaking on the part of judges. Judge Batts's decision was well within the confines of Holmes's "narrowest and most obvious limits." If works such as 60 Years are considered parody, then the parody defense has no function but to allow unrestricted copying; its contours will be so broad and wide that anyone copying another work could merely posit an ex post facto critical purpose and their infringement will be protected. Judges should have the ability to evaluate these critical purposes and determine whether they are sufficient for a work to be considered as critical of another. This framework will allow the law to fulfill the Constitution's directive to promote progress.

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

Photographs and International Copyright Issues

The below case cite is to a decision from the U.S. Court for the District of Delaware that held that a photograph posted on the Internet from a foreign server is not a “United States work” within the meaning of section 411 of the Copyright Act, and thus needs not be registered in the U.S. in order to bring suit for infringement.

Moberg v. 33T LLC, Civil No. 08-625(NLH)(JS) (D. Del. Oct. 6, 2009).

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 20, 2010

Back door to fashion copyright protection?

By Marie-Andree Weiss

In a case filed on December 18, 2009 in the New York Southern District Court, Nygård International Partnership claims that the Canadian Broadcasting Company (CBC) copied without authorization plaintiff's copyrighted performance/material.

Here are the facts of the case, as stated in the complaint: Nygård opened a store in Manhattan last November, and organized a fashion show featuring Nygård merchandise as part of the opening celebration. Nygård invited only a limited number of preapproved media members, and had them all sign an agreement limiting their rights to record the show. CBC had not been invited to the show, and thus had not signed the agreement. One of its employees nevertheless allegedly made an unauthorized recording of the event, even after having been asked by a Nygård employee to leave the store. A cameraman who may be a CBC employee also made an unauthorized video recording of it.

Count 1 of the Complaint claims that defendant infringed Nygård's exclusive rights in its copyrighted works. Which works are they, the fashion clothes or the fashion show?

Plaintiff applied for copyright registration for the show. Searching the copyright office database reveals that it holds two copyright registrations for a motion picture of the fashion show, one contained on four DVDs, and one contained on one DVD. Nygård claims that the distribution of images of its fashions prior to their release in the marketplace would give its competitors an unfair advantage, and could cause Nygård to lose control over its intellectual property.

But which intellectual property is it? Nygård's competitors are fashion houses, not media companies. It seems that by claiming copyright protection of the movie picture depicting the fashion show, Nygård is trying to indirectly protect its fashion creations. As we know, clothes, even highly fashionable ones, are not protected by U.S. copyright laws, because they are useful articles

By claiming copyright protection of the recording of a fashion show, featuring fashion clothes not protected by U.S. copyright, could fashion designers protect their creations? If successful, this case could allow protecting fashion clothes using a back door, or perhaps one should say, a stage door.

What could be the outcome of this case? In a similar case, Sarl Louis Féraud Inter v. Viewfinder Inc. (S.D.N.Y 2005), the S.D.N.Y. dismissed French Fashion house plaintiffs Féraud and Balmain's action to enforce two judgments issued by the Tribunal de Grande Instance de Paris against Viewfinder, an American company. Viewfinder's Internet site had reproduced photographs of plaintiff's fashion shows.

One of Viewfinder's arguments had been that the French judgment was repugnant to the New York public policy because it was inconsistent with American intellectual property law. Fashion designs are indeed protected by French copyright law: article L.112- 2 14° of the French Intellectual Property Code (thereafter French IP Code) specifically lists as protected works "creations of the seasonal industries of dress and articles of fashion." Interestingly, fashion shows, although not expressly protected by the French IP Code, are protected under its article L112-1 which grants protection to the "rights of authors in all works of the mind, whatever their kind, form of expression, merit or purpose." This rather large definition encompasses fashion shows. Until recently though, French Courts had not explicitly held that fashion shows were protected, even though legal IP scholars, such as Professor Pierre-Yves Gautier, argued that they ought to be. The Criminal Chamber of the Cour de Cassation, France's Supreme Court, finally held in February 2008 that a fashion show is protected by French IP laws, and thus the persons who reproduced it illegally were indeed guilty of the crime of counterfeiting (Cass. Crim. February 5, 20008, number 07-81.387).

Since plaintiffs could not copyright their dress designs in the U.S., Viewfinder's argued that its photographs could thus not be found to violate plaintiffs' property interests under U.S. law. The S.D.N.Y refused to enforce the French judgment, stating that doing so would have been repugnant to the public policy of New York State under C.P.L.R. § 5304 (b)(4). However, it did not decide that enforcing the Paris court's judgment would be repugnant because the French intellectual property laws differ so from those of the United States, but because enforcing it would violate Viewfinder's First Amendment rights. Even if the plaintiffs' designs were copyrightable, U.S. copyright law provides "as a matter of First Amendment necessity, a "fair use" exception for the publication of newsworthy matters (Viewfinder, 406 F.Supp.2d at 284). The Court noted that "fashion shows are a matter of great public interest, for artistic as well as commercial purposes" and that "the extensive coverage given to such events in various mass media makes clear that there is widespread public interest in these matters."

This argument did not fare well with the Court of Appeal for the Second Circuit (Feraud v. Viewfinder, 489 F.3d 474 (2nd Cir. 2007), which vacated the lower court's order for failure to conduct the full analysis necessary to reach the conclusion that Viewfinder's First Amendment rights would be violated. The Second Circuit noted that the First Amendment does not provide a categorical protection, and it must co-exist with intellectual property laws: "the fact that an entity is a news publication engaging in speech activity does not, standing alone, relieve such entities of their obligation to obey intellectual property laws."

As for the 'fair use' argument, the Second Circuit cited Harper & Row, 471 U.S. at 557, 105 S.Ct. 2218, where the Supreme Court had found that publishing "newsworthy matters" is not necessarily fair use. This precedent may be helpful to Nygård, should the defendants invoke fair use as a defense. Regardless, this interesting case should be monitored closely by those interested in finding a way to protect fashion designs in the United States.

Link to Nygard complaint:
http://www.scribd.com/doc/24376395/Complaint-Copyright-Trespass-CBC

Link to French IP Code:
http://195.83.177.9/code/liste.phtml?lang=uk&c=36&r=2494

Link to Sarl Louis Feraud Int'l v. Viewfinder, Inc. (2nd Cir. 2007): http://vlex.com/vid/sarl-louis-feraud-int-l-viewfinder-28797792

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 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.

March 9, 2010

Supreme Court Clarifies Jurisdictional Requirements; Revives Copyright Class Action Settlement

By Cliff Sloan, Judith Kaye, Mary E. Rasenberger & David W. Foster

On March 2, 2010, in Reed Elsevier, Inc. v. Muchnick, the Supreme Court reinstated a class action settlement, approved by the district court, of copyright claims entered into by freelance authors, publishers and electronic database companies. In doing so, the Supreme Court provided important guidance on whether mandatory pre-conditions for suit, such as the requirement for copyright registration in the copyright statute, are jurisdictional.

The Reed Elsevier case involves a longstanding dispute between freelancers and publishers and databases. Nearly a decade ago, in New York Times Co. v. Tasini, 533 U.S. 482 (2001), the Supreme Court held that “owners of online databases and print publishers had infringed the copyrights of six freelance authors by reproducing those authors’ works” in electronic databases “without first securing their permission.”

After Tasini, attention turned to a class action lawsuit by freelance authors against publishers and databases in the Southern District of New York. After years of negotiation and mediation, the freelancers, publishers and electronic database companies agreed on a global settlement. Although the copyright statute requires registration of a creative work before a copyright infringement suit can be brought, the class action settlement resolved potential claims regarding both registered and unregistered works. The district court certified the class and approved the $18 million settlement.

Ten freelancers objected to certain provisions of the settlement on procedural and substantive grounds, and they appealed. The Second Circuit sua sponte asked the parties to address whether the district court lacked jurisdiction to approve the settlement because it included unregistered works. All parties maintained that there was no jurisdictional problem with the settlement, but the Second Circuit disagreed. Ruling that the district court lacked jurisdiction, it threw out the settlement.

The publishers and databases then sought certiorari from the Supreme Court, which was granted. Because none of the parties agreed with the Second Circuit’s holding on jurisdiction, the Supreme Court appointed a law professor as amicus to defend the Second Circuit’s opinion. Skadden filed an amicus brief in the Supreme Court supporting reversal on behalf of ten leading media and publishing companies and organizations.

In an 8-0 ruling (with Justice Sotomayor recused), the Supreme Court reversed. It held that the copyright registration requirement — Section 411(a) of the copyright statute — is mandatory, but not jurisdictional and thus the Second Circuit should not have thrown out the settlement on jurisdictional grounds. Writing for the court, Justice Thomas applied the rule from Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), for distinguishing between jurisdictional statutes, which govern a court’s power to hear a case, and mandatory claim processing rules. The court held that Congress had not clearly stated that the limitations in Section 411(a) are jurisdictional. As a result, the court would not conclude that the mandatory registration requirement is jurisdictional.

Justice Ginsburg, joined by Justices Stevens and Breyer, concurred in part and concurred in the judgment. They stated that there appears to be some tension between the rule announced in Arbaugh and the result in Bowles v. Russell, 551 U.S. 205 (2007), which found that a time limit for an appeal was jurisdictional. The concurring justices resolved that tension by reading Bowles to apply only when a long line of Supreme Court cases has held a statute to be jurisdictional, and that interpretation has been left unchallenged by Congress.

The Supreme Court emphasized the limits of its Reed Elsevier decision. In sending the case back to the Second Circuit, the court expressed no opinion on the merits of the settlement. It also observed that the registration requirement remains a “precondition to suit,” and left open the possibility that “district courts may or should enforce sua sponte” the registration requirement by “dismissing copyright claims involving unregistered works.” The court also noted that it did not reach the question whether, even if the registration requirement were jurisdictional, the court would have authority to approve the settlement.

Beyond the impact in the Reed Elsevier case itself, the most important effect of the decision is the court’s emphasis that it will not lightly presume that statutory requirements are jurisdictional. A conclusion that a requirement is jurisdictional is warranted only if it is clearly stated or mandated by Congress. The court stressed, as it has in other recent opinions, that it will look skeptically at “drive-by jurisdictional rulings” ­— casual statements about “jurisdiction” in past opinions that are unsupported by clear authority in statutory language or intent.

The decision leaves open the question of whether and how compliance with section 411(a) may be waived by a defendant, whether expressly or by default. Until there is a fully developed body of law on the issue, copyright litigators would be wise to raise failure to comply with section 411(a) at the earliest practical moment in the litigation.


Cliff Sloan, Judith Kaye, Mary E. Rasenberger, David W. Foster are attorneys with Skadden, Arps, Slate, Meagher & Flom. This blog entry does not represent the views of Skadden, any other law firm or any client. This blog is not sponsored by Skadden or any other law firm, or any client. The blog is provided for educational and informational purposes only and is not intended and should not be construed as legal advice.

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

CopyRight and Risk in Film Practice Program

Co-sponsored by the Young Professionals Division of the Copyright Society of the USA
and the New York State Bar Association's Entertainment, Arts and Sports Law Section

Date: April 29, 2010
Time: 6:00 p.m - 7:00 pm.: FREE Cocktails
7:00 p.m. - 8:00 p.m.: Program (will start and end promptly)

Place: The Benjamin N. Cardozo School of Law, 55 Fifth Avenue, New York, NY

Cost: FREE

CLE: The Copyright Society of the U.S.A. is a NY CLE Approved Provider. This course is Transitional and Nontransitional, and provides 1 Credit (based on 60 minutes).

Please join us for a free, jointly-sponsored evening of cocktails and film discussions on Thursday night, April 29th, 2010 from 6-8 PM at the Benjamin N. Cardozo School of Law. Whether you are young or simply young-at-heart, the Young Professionals Division of the Copyright Society of the USA and the New York State Bar Association's Entertainment, Arts and Sports Law Section are excited to invite you to come, network and hear from some experts in the film industry. And, thanks to the generous support of the Cardozo Intellectual Property Society enjoy an open bar and snacks as well.

CopyRight and Risk in Film Practice

This panel will provide a look into business and copyright aspects of the film production, finance and distribution. Topics may include mitigation of production and distribution risk, chain-of-title, errors and omissions insurance, and determination of copyright infringement damages. The panel may also address the controversy surrounding the proposed Cantor Exchange which, if approved by federal regulators, will provide a platform for trading of derivatives based on domestic box office receipts.

SPEAKERS: We are privileged to present respected practitioners Ezra Doner and Dennis Angel and our moderator Professor Derek Bambauer (Brooklyn Law School).

To attend this exciting panel discussion, please complete the registration form, and mail or fax it to: The Copyright Society of the U.S.A., 352 7th Ave., Suite 739, NY, NY 10001, Fax # (212) 354-2847, by Tuesday April 27th. We look forward to seeing you on April 29th!

Go to www.nysba.org for a complete listing of association events and web resources.

April 27, 2010

USING MUSIC IN DIGITAL MEDIA: BUSINESS AND LEGAL ISSUES

Lunch Program on Wednesday – June 16, 2010
(12 – 12:30 p.m. lunch, 12:30 -2 p.m. program)
(re-scheduled from February 26 snow day, non-CLE)
at the New York City Bar Association Building, 42 West 44th Street, New York, NY
(between Fifth and Sixth Avenues in mid-town Manhattan)

Co-sponsored by:
The New York State Bar Association's Entertainment, Arts and Sports Law Section
- Television and Radio Committee
Co-Chairs: Pamela Jones and Barry Skidelsky
- Motion Picture Committee
Co-Chairs: Steve Rodner and Mary Ann Zimmer

and

The New York City Bar Association
- Copyright Law Committee
Chair: Joel Hecker

Speakers: David Oxenford and Robert Driscoll of Davis Wright Tremaine LLP

In today’s digital world, more and more companies want to use music for their business purposes – whether as the primary focus of an entertainment web-site, the background to a commercial or video, or otherwise.

This non-CLE program will focus on business and legal issues regarding the use of music in digital media, and discuss related rights and clearances that need to be obtained, other steps one should take to minimize potential legal liability, and current controversies that remain to be resolved by the Courts and Congress.

Registration:
Program Fee, including lunch, is $35 for members for either the NYSBA or the NYCBA.

$40 for all others.

Space is limited, so please register ASAP on-line at:

http://www.nycbar.org/EventsCalendar/show_event.php?eventid=1377

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.

Report on the ABA Forum on the Entertainment and Sports Industries –Part I: “From Music, Film and Art to Motorcycles and Other Sports: Hot Issues and Disputes in Entertainment, Art and Sports Licensing Deals”

By Monica Pa

This panel was held on Friday, August 6, 2010 at the InterContinental Hotel in San Francisco.

The panel included Richard J. Idell, Idell & Seitel; Jessica Darraby, the Art Law Firm; Samuel Lew, Feldman Gale PA; Jann Moorhead; and Rob Rieders, Pixar Animations Studios. This blog entry only discusses Rob’s presentation, which I thought raised excellent points about entertainment licensing by a content creator.

Pixar has been involved in numerous award-winning animated movies, including Toy Story, Up, Cars, etc. Rob’s presentation provided practice tips for how to negotiate and work with content owners, licensors, creative executives and the marketing team in setting forth the parameters of the licensing agreements and the scope of permissible use for creative works.

He used the movie Toy Story as an example of various entertainment licensing issues that come up in a movie. Toy Story licensed a tremendous number of characters (e.g., Ken and Barbie, Mr. Potato Head, Slinky the dog, lots of Fisher Price toys, etc.). When you are licensing a character, you want to consider all the artistic interpretations of the licensed elements and potential changes to the brand identity from these interpretations. For example, if you are licensing Mr. Potato Head, you want to think about what happens when a toy becomes a “living character,” animated with a voice, personality and 3D design. Similarly, if you are licensing a historic character like Kasper the Ghost, and the licensee intends to update this character, are these updates going to be appropriate for the character? Will it be positive for the brand and/or the overall line of business?

For example the movie Cars animated several iconic cars and gave them distinct personalities. Pixar depicted the 1960 VW Bus as an old hippie van narrated by George Carlin. The 1959 Chevrolet Impala was updated as a snazzy slick Hispanic car narrated by Cheech Marin. In Toy Story, Barbie and Ken were primary characters. Pixar was unsure whether Mattel would be comfortable with the depiction of Ken as a fashionista metrosexual. Barbie, on the other hand, was depicted as very intelligent, which Mattel liked. Similarly, Mr. Potato Head is an important brand for Hasbro (it's the company's Mickey Mouse), so it is protective of this character. In Toy Story, Mr. Potato Head was depicted as a folksy character narrated by Don Rickles. Pixar queried whether Hasbro would be comfortable with the fact that Mrs. Potato Head was depicted walking around for half the film without an eye. Notably, Mr. Potato Head was depicted with a bowler hat and mustache, which was not original to the toy. By doing this, Pixar added to the Mr. Potato Head character, thereby creating new intellectual property that Pixar now has some ownership interest.

In entertainment licensing, you want to continually consult with the licensor along the way. Even if you have a broad license, you do not want to have the licensor unhappy with the resulting product or be surprised about how its character was depicted. Once a film is made (which can take up to five years), it is extremely difficult and expensive to extract elements from the animated work if a dispute arises.

In licensing a character or toy, you’ll also want to consider unexpected uses of the licensed element. For example, Pixar created a Mr. Tortilla Head (which took Mr. Potato Head’s features and put it on a tortilla because at one point the toys needed to slide under a closed door.) Make sure the license provides for whether the elements of the intellectual property can be disembodied and whether it governs the “whole” work. Remember, people love mash ups.
In seeking to obtain a license for a character, as a preliminary consideration, analyze whether a license is even obtainable given the intended use. For example, in the current Toy Story, the nemesis was an evil teddy bear. There is no famous teddy bear brand (such as Paddington Bear) that would be willing to license their character for this use because this would be so detrimental to the brand. Accordingly, Pixar created its own teddy bear character that is pink, bitter and walks with a cane. Indeed, it’s sometimes better to create your own content rather than operate under a restrictive license where the licensor is uncomfortable with the intended use.

However, if you are going to license a character as a nemesis, e.g., a “Bad Guy”, make sure you fully and accurately disclose your intended use because, again, you do not want the licensor to be unhappy later. Put a full disclosure in writing setting forth the intended use (e.g., this character is going to be depicted as a homicidal maniac). Regardless of how the character is going to be used, the licensee should never agree to a “positive light” provision, which provides that the character will be portrayed positively; at most, agree to a “neutral light” provision. Also pay attention to the precatory language in the agreement, and be careful about boiler-plate provisions, including provisions for injunctive relief, venue, choice of law, and publicity rights the content creator should control the publicity of the film and not the licensor).
A content creator also wants to avoid giving the licensor script approval or final product approval. This, however, depends on the bargaining power of the respective parties, and on the reputation of the content creator. Pixar does not give story approvals, but they have good relationships with their licensors. They work closely with those companies to keep people on board all along the way. With smaller content creators, a licensor may want to be more careful and protective of their brand. In these instances, the licensor may want to push for some level of script approval.

Rob pointed out the challenges that arise when the creative team insists that an element is a “must have.” This results in the loss of negotiation leverage (e.g., the licensor know that you need them more than they need you). If the content creator has an unequal bargaining position (desperation can be obvious), the resulting license will not only be more expensive, it can be limited in the scope of granted rights, and other provisions (e.g., the representations and warranties, indemnification) may be compromised. The in-house lawyer should be willing to push back on the creative team. Try exploring available alternatives with them, such as creating a new character instead.

Another practice point is to make sure that the in-house lawyer is consistent with licensing methods and practices. If the company has a best practices policy, these should be consistently followed. For example, if Pixar is licensing several characters from various toy companies, all of the companies should be treated fairly and subject to similar deal terms. For example, do not give one company script approval when no other company go this and/or there is a company practice against this. Try not to make exceptions, even if the licensed elements is a “must have.” Bear in mind that the licensing community is tight knit and people talk.
In drafting, make sure the license contains contingent obligations. Obligations for payment and screen credit should be contingent on actual use. Without this provision, if the product or character does not actually appear in the film, there is a chance that the content creator will still need to pay the licensor.

License agreements should also contain certain non-contingent obligations, such as a strict confidentiality clause. If the creator discloses preliminary drafts of its film and marketing campaign with its licensing partners, this needs to remain confidential. Another non-contingent obligation should be that the creator reserves the right to use or not use any licensed element. The content creator wants to make sure that no one is shoving their product into a film or marketing campaign.

Finally, Rob pointed out that, in entering into a license, the content creator should assume success; meaning, the film is going to have sequels, toys, books, games, theme parks, etc. For example, there is a “Cars Land” theme park now based on the Cars movie. Try not to give away toy merchandising rights, book rights, and other derivative rights. The creative team may not think this far ahead and, if this is a “must have,” may be willing to forgo these rights in order to get the deal done.

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 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.

November 1, 2010

Copyright Office Notice of Inquiry

By Barry Skidelsky

On October 29th the Copyright Office released a Notice of Inquiry (NOI), asking whether federal protection should be extended to sound recordings made prior to February 15, 1972 (when sound recordings were apparently first protected under federal law). The following link should take you to the NOI: http://www.copyright.gov/docs/sound/FRDocument-2010-4-pre1972-sr.pdf.

One of the many complicated issues raised by the NOI is how a change in the law could affect royalties paid by or otherwise impact webcasters, satellite radio and other digital music providers under the statutory license of Copyright Act section 114 (regarding digital transmissions of sound recordings) -- although many such providers have not excluded pre-1972 recordings from royalty payments based on any possible exception, as that possibility has not been widely publicized.

The comments filed in this proceeding will help inform the record that will be created in connection with the Copyright Office making a recommendation to Congress about any suggested changes in the law. Comments are due on December 20th, with replies 30 days later.

November 10, 2010

CMJ Entertainment Business Law Seminar – Afternoon Session

By Eva Dickerman

Rights, Restrictions & Compatibility: The Challenges of Mobile TV
Seth Metsch, Digital Counsel, Business & Legal Affairs, A&E Television Networks (Moderator); Jeffrey D. Neuburger, Partner, Proskauer Rose LLP; Shirin Malkani, Vice President, Legal & Business Affairs, National Basketball Association; Sharon E. Kopp, Assistant General Counsel, Business & Legal Affairs Verizon FiOS TV & V CAST Video; Salil Gandhi, Co-Founder, Crybaby Media

Due to the increasing capabilities of mobile devices, the cell phone has become the primary gadget for Americans. Television content providers are eager to take advantage of the unique opportunity to get their programming quite literally into the pockets of consumers. As they negotiate the deals that make mobile distribution of television programming possible, the panel members are shaping the law in this area. The panel discussed the obstacles and issues they face in making top shows and events available to our fingertips.

How Should Clients Be Advised As They Draw Up New Deals?

One of the primary issues is that it is difficult to define a mobile device. Is it just a device that fits into your pocket? How should the iPad be categorized? If mobile but not Internet rights are granted, can the content be hosted on an iPad? One of the greatest difficulties with mobile video distribution is its very newness – in previously written deals there may not have been mention of mobile distribution.

Neuberger noted that there are no clear definitions of the different kinds of mobile devices. As technology evolves, we have to ask whether those distinctions are even meaningful. Neuberger suggests that licensing should be articulated in terms of functionality. Agreements written in the past defined scope of rights in terms of the device, but now the scope of rights should be defined in terms of functionality. Gandhi, referring to his experience at Joost, noted that the focus should be on branding and functionality rather than screen size.

Going forward, when negotiating deals, distributors will want to secure all rights in all media.

There is also the possibility of longer term contracts to define the license based on external factors that will exist even in spite of technological change (i.e. target demographics.)

The Evolution of the Mobile Platform

Kopp noted that Vcast serves as an aggregator. She described the unique position of Verizon – it seeks to provide content to customers in any format that customers might want – so the company is simultaneously negotiating television, mobile and Internet rights. The goal is to give customers a uniform experience across screens.

Vcast is offered using carrier bandwidth. The service has some streaming and downloadable programs. From the perspective of delivery method, Vcast uses mobile bandwidth, and, vis-à-vis the discussion above, is clearly a mobile service. An app that uses WiFi, however, will be harder to describe as a purely mobile app.

The Sports Context

Malkani discussed some of the idiosyncrasies of delivering sports content on mobile devices. All leagues do not deal with rights in the same way – there are some national rights and some team rights, the latter of which serve internal markets. It is hard to know if the consumer can ever have a single, unified package in light of these different markets.

Malkani also noted that although mobile is a desirable new format, traditional television is still incredibly important for sports because fans want to see the action on the big screen. Furthermore, since sporting events are live, fans want to watch a game when it’s happening. Malkani explained a little bit about NBA’s developing mobile strategy. The app Gametime allows users to get scores, stats, and video highlights. There is also a ‘league pass’ that is offered through the Gametime app. Although previously the NBA had separate apps for the League and the team, now users will get league updates or team versions within Gametime – in other words the strategy shifted to allow for a single streamlined app, rather than a set of disaggregated apps. Verizon also has an NFL app that has been quite successful – Kopp credited the ‘front and center’ branding of the app – when a Verizon user looks through the icons on a phone’s display screen, the NFL symbol is clearly visible.

How Important Is the Screen Size?

Several of the panelists noted that older deals articulated the distinctions between devices in terms of screen size. Neuberger suggested that screen size might not continue to be as relevant.

Indeed, the importance of the labels given to different devices is a shifting one. For example, in the past the terms “TV” or “television” were equivalent to broadcast television, but as time went on, the definitions came to include cable networks.

TV Remains a Driving Force…

However, the screen size issue does still matter to a certain extent. As the big cable networks pay content providers large license fees, the networks want to make sure that these agreements are still valuable to them by ensuring the uniqueness of the content that they are receiving.

Some of the Difficulties of Mobile Deals

As previously mentioned, there is an overarching issue of how to define mobile devices and how to determine the rights required to distribute programming via those devices. Some contracts limit the definition of mobile to ‘cellular technology’ – but what about the increasing reliance upon WiFi networks? What about the phone versus tablet distinction? In general, contracts are also more likely to grant broadband rights rather than mobile rights.

Another important question concerns how to deal with territory restrictions on content. The whole point of a mobile device is that its owner takes it with him or her wherever he or she may go. How can companies ensure that restricted content stays within authorized territories? Do there need to be authentication license-keys?

Malkani explained that when the NBA launched a mobile app, the vendor incorporated a geofiltering device to make sure that the streaming complied with the geographical blackouts mandated by the different cable companies. When Malkani herself used the mobile app, if she were to be in LA in the morning, then the corresponding blackouts in the California market would mean that certain content would be unavailable on her phone. If she were to return to NY later that day, then the corresponding blackouts in the NY market would also be reflected in the content available on her phone.

Several panelists noted that content providers will also want to insure that the video is captive within the device, and cannot easily be acquired within the mobile context but watched on different screens. In other words, providers do not necessarily want to grant users mobile access to content if these users will simply be hooking up their phones to their televisions, and watching the content through the latter rather than their mobile devices.

Talent and Mobile Content

Gandhi noted that talent is now going directly to consumers through apps. He noted that the advantage of straight-to-consumer delivery is the allowance of preserving the rights needed to build a brand. There is also the desire, in the attempts to build a brand, to try to maintain as many revenue streams as possible; one is doing oneself a disservice in the age of television everywhere. Distributors want to make content available to customers in any way, but talent may want to divvy up the rights.

Furthermore, there are important distinctions based on the device, since the expectation will be that consumers will pay for mobile uses but not on the Internet.

There is also the sense that it may be better for talent to use short-form content in the mobile context – consumers want to see new and specially produced content. The NBA too looks strategically for potential other content beyond the games. Vcast however is moving towards long-form programming.

Where Is the Business Model of Mobile Video Going?

Neuberger suggested that as there is increasing pressure on companies to collect revenue from all of their interactive applications, there may be an approaching end to free, meaningful content, and hence, more rigorous pay models will emerge.

The panelists agreed that social networking would make its way into the mobile app context. Since consumer engagement is the ultimate goal, having ‘check-ins’ as a way to make television more social may increase consumers engagement with the content that they are purchasing.

The Changing Landscape of Film Distribution: A Digital Vision
Marc Jacobson, Entertainment Attorney, Marc Jacobson, P.C. (Moderator); Betsy Rodgers, Vice President, Legal and Business Affairs, IFC Entertainment; Jessica Nickelsberg, Director of Legal and Business Affairs, Tribeca Enterprises; John Logigian, Attorney and Independent Film Consultant, Isil Bagdadi, Co-founder and President of Distribution, CAVU Pictures.

The panelists began the discussion by explaining their work within the film distribution industry, with a focus on new and emerging modes of distribution.

Betsy Rodgers explained IFC Entertainment’s "festival stunt” partnership with film festivals. IFC acquires films at festivals (such as Sundance and SXSW), or immediately prior to the festival’s start date. Then IFC releases the film on VoD concurrent with the festival. Since IFC already had an established relationship with the cable companies, this creative turn seemed to be a natural step. These partnerships require IFC to establish a legal relationship with the festivals, and IFC must gain licensing rights to the trademarks, branding and intellectual property of the festival. Rodgers said these partnerships are valuable to IFC as a distributor, because the buzz from the festival can help to get viewers excited about the films. This arrangement allows the distributor to capitalize on the value created at the festival. Furthermore, many of these films would not be able to reach audiences otherwise. It is also a cost-effective process, because prints are incredibly expensive to create.

However there are also some complications with festival stunts.

Time Constraints: In the case of the Sundance Film Festival, IFC might already have acquired some films before the festival has begun. In that case, the delivery materials might have been received from the filmmaker prior. The difficult situation is when IFC wants to license films that have not been acquired before the festival. By the time the IFC team discovers what films are in the festival, the delivery materials might already be due in order to ensure a concurrent release on the VoD platform. In this case, there needs to be an incredibly quick turnaround – in papering the agreement, making sure the films are fully cleared (which can be a challenge since often filmmakers will only have festival rights to music in their films), and in ensuring that the film is fully finished and can be encoded in time to make it onto the VoD platform.

Psychological Hurdles: Filmmakers often dream of having their films get wide releases in theatres. Since most big theatre chains will not take a film that has been previously released on VoD, accepting such a distribution ‘stunt’ for the filmmaker may mean giving up certain expectations. Furthermore, if the primary release of a film occurred on the VoD platform, the film might be disqualified from the big awards races.

Financial Hurdles: Producers need to read their agreements. Low budget films will often contain a provision that allows the use of SAG actors at a low rate. If the film is not given a theatrical release, however, there might be significant penalties.

Jessica Nickelsberg next explained the evolution of the Tribeca brand. From the flagship Tribeca Film Festival, Tribeca Enterprises has recently launched a new initiative, Tribeca Films, a distribution arm which underlying mission is to get independent films out to a wider audience. Tribeca Films distributes on a variety of platforms; in theaters, online, on DVD, and on demand.

Tribeca also has its own version of the festival stunt. During the 2010 festival, Tribeca Enterprises launched “Tribeca Film Festival Virtual,” a digital festival experience. For one week during the festival, viewers could (at the price of $45) go and watch eight feature films online (otherwise only available at the festival), at an encrypted site.

John Logigian focused on broader distribution trends within the industry. Traditionally it has been the ancillary markets (i.e., home distribution) that have been the big money earners. The profit margin is much greater in the home entertainment sphere than it is in the theaters. However, home entertainment is becoming less profitable for the studios. Now that delivery is digital, (whether digital streaming or downloading), there is no longer the ‘packaged goods’ element (i.e. selling of DVD’s at a retailer). Profit margin was much greater in the packaged goods market.

An upside of the digital revolution has been digital projection. Digital projection allows a reduction in the enormous cost of manufacturing and shipping of prints. Certainly there is a cost to convert to digital projection, but it is possible that companies will help theaters underwrite the costs of digital projection. Another notable development has been the spectacular growth of 3D.

Isil Bagdadi focused upon the growth of the DIY (do it yourself) movement in film. Her major concern was that filmmakers are losing ownership rights to their works by entering into certain agreements with distributors. Her concern with the festival relationships described above is that if festivals get into the distribution game, will there be favoritism in programming at the festivals themselves?

Bagdadi championed a ‘services deal’ agreement, in which a distributor gets a fee for providing the services of distribution, but does not get ownership rights. Bagdadi also suggested the possibility of self-distribution.

In response to Bagdadi, Logigian brought up some counterarguments to the benefits of the DIY approach. Although it looks great on paper to retain ownership rights, it is the distributors who have leverage in the ancillary marketplace – and most revenue comes from the ancillary marketplace rather than from the theatrical release.

The panel as a whole engaged in a discussion of the different types of financing arrangements for independent films. Investors will have different expectations and different risks depending on where their money is going. If investors are putting in money for marketing, then they will be the first individuals to be repaid. Investments in production, however, hold a different kind of risk profile.

The panel also discussed the option of bifurcating the investment (i.e., various parties investing money for production and marketing), which might allow the filmmaker to get a better deal. Logigian noted that the foreign pre-sales market (selling a film to distributors overseas before the film is made) has largely dried up except for the biggest-name films. The panel also briefly touched upon the value of getting a high net worth individual to put equity into a film if studio financing is not a possibility. Jacobson also mentioned the option of state tax credits as a means of filling gaps in the financing of a film, and providing early capital for a marketing or festival campaign.

How to (Legally) Make an App for That - Dealmaking in the Mobile Media and Gaming Arena
Kenneth N. Swezey, Esq., Managing Partner, Cowan DeBaets Abrahams & Sheppard, LLP (Moderator); Hayley Geftman, Esq., Vice President, Business and Legal Affairs, MTV Networks; Sam Howard-Spink, Clinical Assistant Professor of Music Business, NYU; Amy Lauren, Esq., Vice President, Digital Legal & Business Affairs, EMI; Stephen Sternschein, Esq., Founder, Heard Games; Artist Manager, Heard Games

Sam Howard-Spink began by discussing some sweeping trends. He noted that in the first half of 2010, between 2.6 and 2.9 billion dollars were spent on content (excluding consoles, controllers and other devices). Spink also noted the importance of the growing phenomenon of “in-app” purchasing; once a consumer is inside the app, the consumer makes a further purchase. Spink suggested that when a consumer has taken the effort to spend a few dollars to buy the app, the consumer is more likely to go spend more money on content within the app itself. Spink also noted the different ways that music can be used within app games: original compositions, the use of existing music licensed into the game, rhythm action games (i.e. Guitar Hero), and generative games (the user creates music in real time by using a set of protocols – although such games might pose greater licensing issues).

What Is the Best Business Model For An App?

Geftman noted that apps have had an increasing presence at MTV for the last few years. MTV has been involved in the apps world in different contexts: distribution of content to third party apps, creation of paid apps, free apps surrounding certain temporal awards, and ad-supported apps.

Sternschein noted that at Heard Games, apps are being built and designed to engage and monetize a particular brand. In other words, each app has a unique and specific approach on a band-by-band basis. Sternschein hopes for the growth of artist-based apps as a means to re-contextualize and repackage music in the digital environment. Apps may play a role in integrated marketing campaigns promoting artists.

Lauren noted that at BMI, apps are still a hybrid form. Certainly many apps are getting traction, and sometimes these apps are tied into the overall strategy of an album release.

Then the audience had some fun as Spink showed a few apps, including the Gorillaz app (BMI), Shinobi Ninja Attacks (Heard Games), and Bloom – a generative game. These apps are just a few examples of a new approach in the music industry. These games create a narrative framework, which is in turn tied to music and lyrics, and reward users for interacting with the content that is being promoted.

Licensing Issues:

a) Costs There are different costs associated with the development of apps depending on the level of involvement – if creating a highly customized app, the process might be quite expensive. There has to be a developer deal in place, in addition to due diligence review on all of the content going into the app. Geftman noted that there must be clear language about merchandising and marketing within app agreements, since apps generally will be tied to MTV’s content.

b) Artist Concerns v. Developer Concerns When working with a developer on an app, the primary concern of the artist will always be: what is the scope of the intellectual property rights being given away? Will use of the song be limited to one app? Developers, on the other hand, are trying to get as many rights as possible.

c) Licensing to Different Devices As previously discussed by the Mobile TV panelists, there is segmentation in the current licensing schemes – different rights are granted for mobile, television and Internet (and apps may be used in any of these contexts). Therefore rights owners must be very specific about the rights they are granting to developers.

It is possible that a ‘new creature’ might come about – that of the music game, in which music and coding is treated as a single creative gesture. Such an evolution of the app might be an alternative to the segmentation of rights.

App Developer Agreements

Geftman stressed that the developer agreement should stipulate that apps are being created as works for hire. The developer will own his or her own source code, but anything being built for the content provider, will remain the provider’s property. In general, the panelists concurred that there should be a flat fee, such that at the point of delivery the process is completed. BMI’s Amy Lauren noted that the app developer agreement has many similarities to a standard software development agreement.

There is also an understanding that terms of use and privacy terms need to be placed on the launch page, otherwise this information may be hard to fit into the app.

The Apple Deal

Although typically when dealing with Apple, content providers will serve as the retailers, in the context of apps, EMI or MTV may serve as the retailer. This arrangement shifts the risk from Apple, and is in some sense new terrain for record labels based on previous relationships with Apple. As a retailer, the content provider will face consumer issues, tax implications, and territorial issues. Although Apple has an end-user license agreement for retailers, this agreement may not address all of the issues relevant to the app. It can be difficult to renegotiate the terms of a developer agreement with Apple. Yet in the case of an independent entity (such as Heard Games), since there is less of a potential financial gain at stake, Apple may be more flexible with the types of marketing it allows.


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

Work for Hire: The Copyright Office's Online Registration Problem

By Elizabeth Russell

When it comes to copyright’s “work made for hire” doctrine, misunderstandings abound. And as it turns out, the Copyright Office itself may be contributing to the confusion.

Bottom line: it’s impossible using the Copyright Office online registration system (eCO) to register work that one company has engaged another to create, without incorrectly identifying the work as work made for hire.

With apologies to those for whom this is rudimentary, let’s start at the very beginning.

• General rule: The person who creates copyrightable material is the “author.”
• Ownership of copyright vests initially in the “author” of the work (17 USC §201[a]).
• As its owner, the author can keep the copyright; license all or parts of it to others; or assign ownership of the entire copyright to another party.

The “work made for hire” (WMFH) doctrine creates exceptions to these general rules. If WMFH applies, the creator of the work is not considered the author, and never owns the copyright -- even for a moment.

If we suspect that WMFH might apply, the threshold question is whether the work itself qualifies as WMFH. There are only two ways work can qualify as WMFH:

1. If the work is prepared by an employee within the scope of his or her employment; or
2. If the work is specially ordered or commissioned for use as:
a. A contribution to a collective work;
b. Part of a motion picture or other audiovisual work;
c. A translation;
d. A supplementary work;
e. A compilation;
f. An instructional text;
g. A test;
h. Answer material for a test; or
i. An atlas

Many people think if they paid someone else to create copyrightable work, it’s automatically WMFH. They also think that if in a contract they call the work WMFH, it is. Neither is true. If the person who created the work is an actual employee and created the work in the scope of his or her employment – OK. It’s WMFH. Otherwise, no matter who paid and no matter what a contract might say, the work is not WMFH unless a.) the work itself falls into one of those nine categories listed above; and b.) a written agreement is in place specifying that the work is WMFH.

Given these requirements, a lot of work that people assume to be WMFH – really isn’t. And as a result, many people who think they own the copyright to such work, really do not.

Assuming the work actually is WMFH, the employer or other person for whom the work was prepared is considered the “author” and thus owns the copyright from the very beginning.

Our problem, however, involves registering work that was created by an organization (as opposed to an individual) and is not WMFH.

Here’s the situation.

Client A engages Company X to develop a computer software application (or any other type of copyrightable material). Is the work WMFH? No. Company X is not an employee of Client A, and the software application does not fall into any of the nine categories of work that could, possibly, be WMFH. Knowing this, Client A obtained from Company X a written assignment of copyright to the software application. Had Client A not done this, Client A would not own the copyright. But Client A was well advised, and now (because of the assignment) does own the copyright.

Great. Now Client A goes to eCO to register its copyright in the software application.
Q: Who is the author?
A: Company X (because Company X created the work.)
Q: Who is the claimant?
A: Client A (because of the assignment.)

But here’s the problem: eCO’s online form doesn’t allow us to enter an organization as the author. It would allow us to enter an individual as the author and then indicate that copyright was acquired by written assignment. But if we enter an organization (Company X) as the author and then (correctly) indicate that the work is not WMFH, the following error message pops up: “If an organization is named as author, the ‘work made for hire’ question must be answered ‘Yes.’”

I pointed this out to the Copyright Office and our exchange went something like this:

Me: An organization was engaged to create the work, but it’s not WMFH and copyright was transferred by written assignment.
CO: You have to indicate that it was WMFH.
Me: But it isn’t.
CO: You have to indicate that it was WMFH.
Me: But it isn’t.
CO: Say it anyway.

See the problem?


December 15, 2010

The Zenith of the Omega Case on the Future of the "First Sale Doctrine"

By Lisa Fantino

When is a "supreme" decision not a decision? When the court is split down the middle and the deciding judge recuses herself. Just what we need - more grey area over gray market goods and the First Sale Doctrine but that's exactly what happened this week in Omega S.A. v. Costco Wholsesale Corp., 541 F.3d 982 (9th Cir. 2008).

The Court ruled 4-4, with Justice Kagan sitting back because of her stint as U.S. Solicitor General, thereby upholding the 9th Circuit's decision allowing Omega to control the price of its watches in the aftermarket. The essence of the argument is whether U.S. Copyright protections extend to goods made outside the United States and then sold overseas for U.S. distribution and this "non-decision" states that it does.

In a nutshell, Omega manufactures watches in Switzerland and sells them both overseas and in the United States to authorized distributors and retailers. In the instant action, Omega made and sold the watches overseas to an authorized distributor. An unidentified third-party bought them overseas and sold them to ENE Ltd., a New York company, which in turn sold them to Costco for distribution in California. Although Omega authorized the foreign sale, it claimed it did not authorize the importation of those same watches into the U.S. and claimed copyright infringement of its logo under 17 U.S.C. §§106(3) and §602(a). Costco, on the other hand, cross-moved under 17 U.S.C. §109(a) arguing that it was protected under the first sale doctrine, which allows a purchaser to transfer a lawfully made copy of a copyrighted work without permission from the copyright holder.

This hits home for consumers who don't want to pay nearly $2,000 for an Omega watch when they can purchase it for nearly 35% cheaper at a big box chain like Costco. That is the advantage for buying anything at a store like Costco, because it buys in bulk and passes the savings onto consumers who don't need all the frills and luxury of shopping in high-end stores for the same merchandise.

Since the Court was divided down the middle with no opinion issued, it leaves many questions on the extra-territorial nature of the First Sale Doctrine, especially with this practitioner. The decision seems to fly in the face of the High Court's long-standing precedent in Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908), where a publisher sold a novel with a statement on the first page indicating that no dealer could sell the book lower than $1.00. R.H. Macy & Co., ignored that and sold the book at a discount after buying it wholesale from an authorized distributor. The High Court sided with Macy's stating that the Copyright statute protected the rights holder's "right to vend" and multiply the work but it did not afford it greater protection than set forth in the statute by allowing the holder to limit future resales. This case of first impression set forth what was subsequently codified in 17 U.S.C. §109 as the First Sale Doctrine.

17 U.S.C. §109 states that "notwithstanding the provisions of §106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord." It is pretty much a bright-line rule except in a gray market, where goods are sold legally but not necessarily in the manner or to the parties intended by the original manufacturer.

Again, nearly 100 years after Bobbs-Merrill, in Quality King Distributors, Inc. v. L'anza Res International, Inc., 523 U.S. 135 (1998) SCOTUS specifically noted an eagerness to preserve goodwill for the United States in the global marketplace and hesitated at the idea that the intent of the statute was limiting. Further, the Quality King decision made it clear that the Court did not appreciate the fact that the manufacturer was using backdoor allegations of copyright infringement to justify its discounted marketing and pricing outside of the United States rather than to look to the statute as a tool to prevent the making of unauthorized copies.

Distribution channels and territories are no longer clearly delineated. More and more licensing and distribution agreements are drafted to encompass the world. More and more cyberpreneurs are purchasing goods in one country and selling them within the United States and vice versa, not to mention U.S.-based dealers who sell to domestic customers but have the orders drop-shipped directly from foreign distributors.

Today's "gray market" has become THE market. This decision does nothing to clarify the vague area between practice and statute. In fact, in my opinion it leaves a gaping hole for manufacturers to dance through and control pricing. They can make good overseas at a considerably reduced cost; slap a U.S.-copyrighted logo onto them; and then and limit their resale anywhere in the world without their permission. This first major decision of the October term did nothing to advance clarity in a growing global grey marketplace.

Lisa Fantino is an award-winning journalist and solo practitioner. She has a general practice firm in Mamaroneck, New York, where she focuses on entertainment as well as general transactional and litigation matters. She can be found at http://www.LisaFantino.com or blogging as http://ladylitigator.wordpress.com.

December 20, 2010

Golan v. Holder: The Long Road to Restoration

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."


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."


December 30, 2010

Common Law Copyright

By Joel L. Hecker

There is an interesting decision dated December 21, 2010, and published in the December 30, 2010 New York Law Journal, concerning common law copyright to the list created by Oskar Schindler, which became famous through the 1993 Steven Spielberg film "Schindler's List".. The case is Rosenberg v. Zimet, Index No. 601183/2010, Supreme Court, New York County.
 
Apparently there are three original versions of this list of "essential" workers, created by Schindler, which contain the names of the more than 1,100 Jews he saved. One list, discovered in his suitcase, is at the Yad Vashem Museum in Israel. A second one was left to the plaintiff by Schindler's widow, with the plaintiff claiming common law copyright in it. The third one was kept by his accountant, and then given to the accountant's nephew, who wants to sell it. This copy is nearly identical to the one owned by the plaintiff.
 
The court rejected plaintiff's motion for a preliminary injunction to prohibit the sale, on the grounds that the defendant intended only to sell the list, as opposed to publishing it. Since the sale is not a copyright right, held the court, plaintiff's purported copyright rights, which were in any event in dispute, were irrelevant.
 
The judge did refer to an earlier case (Chamberlain v. Feldman, 300 NY 135) concerning an unpublished Mark Twain manuscript, where that court barred publication under copyright law because of the inability of establishing a right to publish it, but held it did not apply to a sale.
 
Not addressed in the opinion is whether the exhibition of the list at Yad Vashem, or elsewhere, would constitute publication, and therefore place all of the lists in the public domain.
 
Thus, common law copyright appears to remain alive and well in the state courts!

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 8, 2011

The White House Will Propose New Digital Copyright Laws

See the 92 page report that is available at the White House website, at http://www.whitehouse.gov/sites/default/files/omb/IPEC/ipec_annual_report_feb2011.pdf.

February 23, 2011

A Friday Night: Reflections on the Critiques of "Would the Bard have Survived the Web?"

By Mary Rasenberger

The excellent op-ed entitled "Would the Bard have Survived the Web?," written by Scott Turow, Paul Aiken, and James Shapiro (the Authors Guild's President, Executive Director and a member, respectively) and published in the New York Times on February 15th (available at: http://www.nytimes.com/2011/02/15/opinion/15turow.htm?_r=2), generated numerous responses and a great deal of controversy in the blogosphere. The op-ed took a look at the golden age of English theater in the late 16th and early 17th centuries when there was "a wave of brilliant dramatists", and described how the erection of walls around theaters (literal pay-walls) allowed theaters to charge theater-goers, which enabled playwrights and actors to get paid by the public for the first time, rather than only by patrons. When authorities knocked the walls down in the mid-17th century to silence the seditious political ideas they feared were being expressed within, the ability to make a living from playwriting came to an end for a time and so did the "explosion of playwriting talent." The article warned that if we allow the copyright system we currently have in place to crumble under prevailing attitudes and internet piracy, the explosion of creative talent we have today may likewise dwindle. A number of letters to the editor and blogs have criticized the op-ed and used it against copyright law generally. The primary arguments can be summarized as follows: (1) there was no copyright at the time of Shakespeare, so clearly money can be made without copyright, and (2) Shakespeare copied from others, showing that copyright law restricts rather than induces creativity.

The first point does not even merit a response, since the op-ed authors themselves describe how copyright developed a half century later, providing a new, more stable way for authors to make a living. The second point belies a complete over-simplification and misunderstanding of U.S. copyright law. Incorporating elements of a prior work into one's own is not necessarily infringement and has always been part of the creative process. Copyright law, as construed by the courts, has long-since accommodated this process through, among other doctrines, the substantial similarity test, lack of protection for ideas, facts, common expression, and scènes a faire, the fair use doctrine, and for older U.S. works, formalities that put a large number of works into the public domain, as well as the almost 80 pages of exceptions and limitations in the Copyright Act. As a copyright practitioner, rarely a day goes by when I don't tell a client, usually a copyright holder, that it is free to use elements of another's work in some manner or another. While the courts don't always get copyright right, they often do, and through the last two centuries they have demonstrated enormous flexibility in their applications of the copyright law as technologies have shifted, including expanding fair use considerably in a manner that reflects evolving practices and technological advancements.

While the analogy to Shakespearean theater in the op-ed was imperfect, as most analogies are, the point of the article was clear and an excellent one - that "a rich culture", such as we now have requires a large number of creative individuals - "authors and artists", who devote their careers to their art. Indeed, our Founders were wise enough to understand that a true democracy requires a proliferation of free expression, that individuals not be beholden to any patron including the government, and that this can only be achieved by allowing professional creators to earn money from their works on the open market. Copyright is a brilliant way to achieve that end. The Shakespearean era theater grew out of the literal pay-wall described in the op-ed; our vast, prolific culture today has largely grown out of copyright law, a legal pay-wall.

The Guild's op-ed acknowledges that there is a place for free creative work online; and certainly there are those who will create for free, as many of the responses also point out. Indeed, many professionals who make a living from their works often will produce, perform and/or distribute works for free for any number of reasons (marketing, friendship, philanthropy, or the desire to see a particular work "out there"). Copyright gives creators the flexibility to do that - to decide when they want to assert their rights. Yet that is not what the op-ed is talking about; rather, it reminds us that copyright law enables artists and authors to make a living and is why we have the tremendous creative output we have today -- just as the theater's literal pay-wall was key to the creative burst in the theater in Shakespeare's time.

Let me give you a concrete example. Friday, after finally having acknowledged that my son was too sick to join my husband skiing, I cancelled our plans and we found ourselves with a delightfully free weekend ahead of us. I worked late and, among other things, read posts critiquing the op-ed forwarded to me by my co-teacher at Fordham Law (of a seminar "Copyright Reconsidered - Authorship in Historical Perspective"). Pondering the posts, I signed off and decided to indulge myself for the rest of the evening: I went to the gym and watched a movie on TV. As I later realized, it had been a truly indulgent evening -- over the next four hours my two kids (ages 13 and 14) and I had consumed millions and millions of dollars' worth of copyrighted works.

First, my daughter and I listened to the radio on the way to the gym, switching stations to find songs one or both of us liked; we heard some hard rock that was too hard for me, the Rolling Stones, Pink Floyd, and Rihanna (my choice --over her eye rolling). At the gym, she listened to her iPod, with a collection of about 2000 songs -- post-1990 alt-rock, punk rock and hard rock (all legally downloaded). I watched and listened to music videos licensed by the health club chain. I surfed between 6 or 7 stations, including dance, top hits, rock, alternative, rap, and whatever was playing songs that would keep me moving, some of which were creative and fun - lots of great choreography, dancing and/or special effects. On the way home, we listened to Evanescence (I'd been watching one of their videos when my daughter came to find me and we started to talk about it), and an Angels and Airwaves song that my daughter had heard in the locker room and wanted me to hear, on her iPod. She also played me a Blink 182 song and another sister band of Angels and Airwaves to compare the music.

At home, my son suggested I watch the "The Other Guys" on video-on-demand (a superb, hilarious movie). He listened to his iTunes songs (a collection of pre-1980 rock, also legally downloaded) on the computer while playing Wii Ski (which has wonderful artwork - it makes you feel like you are there on the powder covered mountain). He also watched the George Lopez sitcom simultaneously while checking out interactive ski trail maps. My daughter took pictures on her digital camera of our new kitten, then edited them and added special effects using iPhoto and Picnik software, chatted with friends on Facebook, texted others, all while listening to her iTunes collection on her computer. Then, we all got into bed and read - different books. (I read Just Kids by Patti Smith - a testament to the artistic soul and the difficulties creators experience for their art. Thanks to copyright, Smith's and Mapplethorpe's days of privation when "just kids" paid off and they both were eventually able to make a living off of their art.)

As spoiled as we are with an abundance of creative content, our activities on Friday evening were not completely atypical for Americans. I am sure that even those who object to copyright laws and believe that somehow art gets produced without it, also have iPods full of songs, watch TV and movies, read books, and rely on a large assortment of software programs, and would feel deprived without this "content."

The reason why I describe all this is because it's important to bear in mind that it took hundreds of professional creators who work full-time honing their art so that we can enjoy it to produce what the three of us consumed in just one evening. At a minimum, the following full-time creative professionals were involved in creating our evening at home, most of whom you can assume need to earn a living:

• Recorded music: performers (lead and side musicians) and song writers for about 50 songs, amount to at least several hundred people.

• Music videos: recording artists, professional dancers (hundreds among all the videos), choreographers, sound engineers, directors, cinematographers amount to several hundreds of people for all of the videos combined.

• Movie and TV: screen writers (probably several for just the movie), actors (who clearly added some of their own creativity/improvisation), directors, editors, cinematographers, special effects artists, sound artists. Don't forget the scores and accompanying background music, which are in addition to the music listed above.

• Wii Ski: visual artists, computer programmers -a couple dozen at least, I'd guess.

• Computer programs (iPhoto, Picnik, digital camera, cell phone, interactive maps, Facebook ... among others) - involving dozens, if not hundreds of people

• Books: Each one probably took the author the equivalent of at least one year (and probably much longer) of full-time work, plus there may have been ghost writers, and editors likely played a creative role.

All of those people make a living doing their work and had to get paid (in most cases, not a heck of a lot but enough to make a living) - before the big bad media companies who are, according to some, ruining the world with copyright, made a cent of profit. Although I paid for every item of content where payment was required, my amortized costs for our evening were maybe $20.

How fortunate we are. We have access to so much wonderful and creative art that brings us together in the ways we share and experience it. Yet we take all this content and the shared experiences it provides us for granted. Try to imagine our lives without music everywhere we go, TV, movies, books, newspapers and software. (What if we didn't have music, movies, TV, and books to share and talk about with our teenage kids? The arts afford so many opportunities for sharing thoughts, feelings and learning - and the kids don't even realize it!) The reason that we are able to have access to an abundance of really great content is that we live in a country with so many creative people who have devoted their lives to their art -- and they can do so because we have copyright laws that work.

What if we couldn't support professional creators anymore because no one could afford to pay them - which, as the Authors Guild op-ed warns, could happen if it becomes impossible to make money on content because everyone is stealing it online? The op-ed authors' point is that we, as a culture, have been lulled into taking that kind of creative output for granted, but there is no guarantee it will continue. While it's certainly true that there will always be people who will create regardless, do we really want to rely on the creativity of kids, academics, moonlighters and retirees, or, blogs for our culture? Without copyright, we certainly wouldn't have anyone to underwrite the significant costs of creating film, videos, computer games or software - so just say good bye altogether to those arts. There are few creators who could afford the time to write a book, write or record original music, or choreograph if they had to find other ways to make a living.

Copyright propelled a huge explosion of creative output in America. The production of our creative works is so vastly more complex than any patronage system could muster, even if we were willing to give up expressive and artistic freedom - which we are not. Furthermore, creativity is one of the things we are really good at in this country. We excel at teaching our kids to think creatively in and out of school, and as a society at large. As a result, copyrighted works are one of our largest exports. Let's celebrate that creativity. Let's not let rhetoric and the imperfections of current copyright law diminish it. Rather, let's learn from the past and help steer copyright law so that it continues to morph to accommodate the evolving technologies and practices of our arts today.

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 1, 2011

Maria Pallante Appointed as Register of Copyrights

By Mary Rasenberger

Today, concluding an 8 month search, the Librarian of Congress, Dr. James H. Billington, announced the appointment of Maria A. Pallante as the new Register of Copyrights.

Maria has been Acting Register since January 1st of this year following the retirement of long-time Register Marybeth Peters at the end of 2010.

Until her recent appointment as Acting Register, Maria served as Senior Advisor to the Librarian following two senior positions in the Copyright Office. She was the Associate Register for Policy and International Affairs from December 2008 to October 2010 and Deputy General Counsel from January 2007 to December 2008. While in those positions, Maria was instrumental in developing and implementing domestic and international policy initiatives, including policies relating to copyright exceptions for the reading disabled, orphan works, Google books and the gap in termination provisions under the copyright law. Before returning to the Copyright Office in 2007, Maria had already had a long, esteemed career in copyright law, including a former stint at the Copyright Office as Policy Advisor in 1996-97 and serving as intellectual property counsel and director of licensing for the Guggenheim Museums, on the legal staffs of the Writers Guild and the Authors Guild, as well as in private practice.

"The position of Register of Copyrights is extremely important to the copyright community, the Library of Congress and the United States, and requires a significant skill set," said the Librarian of Congress.

The Register of Copyrights, as director of the Copyright Office of the Library of Congress, administers the U.S. Copyright Office and is responsible for all administrative functions and duties under the U.S. Copyright Act, including overseeing the copyright registration system. In addition, the Register (i) advises Congress on national and international issues relating to copyright, (ii) provides information and assistance to Federal departments and agencies and the Judiciary on national and international issues relating to copyright, (iii) participates in meetings of international intergovernmental organizations and meetings with foreign government officials relating to copyright, including serving as a member of United States delegations as authorized by the appropriate Executive branch authority, (iv) conducts studies and programs relating to copyright and related matters, and (v) performs any other function vested in the Copyright Office by law, including educational programs conducted cooperatively with foreign intellectual property offices and international intergovernmental organizations and any other functions as Congress may direct.

We wish Maria the very best in her new position.

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.

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 18, 2011

EU Extension of Copyright Term to 70 Years

By Nili Wexler

On September 12th the Ministers of the European Union voted to extend copyright protection for performances of recorded music to 70 years from the date of the original recording. EU member states will have two years in which to incorporate these changes in their national legislation.

Voting with the 17- member majority were the United Kingdom, France and Spain. In a press release, the EU elaborated on its reasoning: "[p]erformers generally start their careers young and the current term of protection of 50 years often does not protect their performances for their entire lifetime. Therefore, some performers face an income gap at the end of their lifetimes." (http://www.nytimes.com/2011/09/13/business/global/eu-extends-royalty-protection-to-music-performers-and-producers.html?_r=1.)

This decision comes after a two-year long struggle by major record labels and by artists such as Paul McCartney and Cliff Richards, who sought to protect their rights in their works which would have otherwise expired in their lifetimes. These artists, along with other star artists of the 1960s, were due to lose copyright protection in their music. In the United Kingdom, the ruling is being termed "Cliff Richards' Law", as Mr. Richards led the campaign when his 1958 hit "Move It" lost its copyright protection. Joining Mr. Richards and Mr. McCartney were nearly 40,000 other musicians.

The copyright extension presents a windfall for a music industry that has faced decreasing revenues since digital music downloading, and who anticipate increased revenue from this extension. Last year, global sales of recorded music fell by nine percent to $15.9 billion. Notably, advocates of the amended law were unsuccessful in gaining an extension to the 95 year term used in the United States.

Musicians and music company executives have greeted the extension with elation. Opera singer Placido Domingo welcomed the extension as "great news for performing artists." (http://www.ifpi.org/content/section_news/20110912.html.) Francis Moore, the chief executive of IFPI, cited the improvement of "conditions for new investment in talent as a benefit that will accrue to both record companies and new artists who now enjoy a prolonged copyright period." (http://www.ifpi.org/content/section_news/20110912.html.) Supporters of the extension have expressed that it reflects a new fairness in the recognition of performers as crucial to a song's success by narrowing the gap between the protection extended to performers and the composers and authors of the songs.

IMPALA, the Independent Music Companies Association, argues that the extension will be particularly favorable for smaller record labels and artists. Helen Smith, executive chair of IMPALA claims, "Those most affected by the extension will be [the] hundreds of thousands of individual artists and performers, as well as thousands of micro, small and medium-sized companies...at a time when certain interests seek to weaken copyright for their own purposes, this sends a vital message that the right of creators to earn a living is taken seriously by the EU." (http://online.wsj.com/article/BT-CO-20110912-709354.html.)

Further, the new law includes the so-called "use it or lose it clause" to afford additional protection for the artists. This clause provides a springing copyright to artists if music companies that otherwise own the copyright fail to market the recording within "a reasonable period of time."

Not everyone is thrilled about the new law. In opposing the extension, EU member state Belgium argued that the move would largely benefit music producers over struggling musicians and artists. Belgium was joined by some industry observers in questioning how widely the benefits of the extension would be distributed. For example, Steve Gordon, a music attorney in the U.S., similarly cautions that the move may benefit recording companies, "superstar" artists who own their own recordings, and those who managed to negotiate a larger than normal royalty agreement, but that "it will probably offer little help to lesser-known artists." (http://www.digitalmusicnews.com/stories/091111eu.)

The argument that the move is simply a boon for recording companies who will not extend these benefits to artists was echoed by Shane Richmond, a writer for The Telegraph. He argues that recording companies clearly are not concerned with the best interests of their artists, and cites the U.S. termination rights issue as an example. A 1976 amendment in the U.S. (made law in 1978) allowed artists to reclaim their rights in recordings after 35 years. Some artists may begin claiming these rights in 2013, and Richmond asserts that what is expected is "that the record labels will argue that these artists were 'work for hire' and therefore not entitled to their rights back. Labels like to talk about the rights of artists until the artists' interests' conflict with their own. How will the IFPI spin this argument? We'll see soon enough." (http://www.telegraph.co.uk/technology/news/8759524/Will-copyright-extensions-ever-end.html.)

Some critics went so far as to attempt to block the extension. Chris Engstrom, along with 40 other members of the European Parliament asked the EU for a review of the recent decision, but their request was denied. Engstrom criticized the extension as an effort to "keep the various lobbyists for big business happy, in this case the big record companies that own the rights to 80 percent of all music that has been recorded in history. If the copyright term extension goes through this week, they will be very happy with their politicians who delivered." (http://www.pcworld.com/article/239533/pirate_politician_calls_for_block_on_eu_copyright_extension.html)


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 4, 2011

Copyright Termination Rights: The Looming Battle for Music Industry

By Lesley Chuang

2013 is going to be a big year for the music industry.

An amendment to the Copyright Act in 1976 gave musicians and songwriters the ability to unilaterally terminate any previous grant of transfer or license of copyright after 35 years. Since the amendment went into effect in 1978, the first set of copyright grants governed by the Act will become eligible for termination on January 1, 2013.

In the front and center of the copyright termination battle is Victor Willis, the original lead singer of the Village People. The New York Times recently covered Willis' attempt to regain control over his share of "Y.M.C.A." and 32 other songs. (http://www.nytimes.com/2011/08/17/arts/music/village-people-singer-claims-rights-to-ymca.html?pagewanted=all) "Y.M.C.A." reportedly generates upwards of $1 million per year. As the hits from the late 1970s continue to earn profits for the music industry, many predict a battle over termination rights in the years to come.

Termination Right Under §203

In 1976, Congress amended the Copyright Act to give creators of copyrighted material termination rights. For musicians and songwriters who, at the early stage of their careers, handed over their rights without much bargaining power, the amendment was intended to give them another bite of the apple.

Specifically, 17 U.S.C. §203 covers any "exclusive or non-exclusive grant of a transfer or license," such as assignments, exclusive and non-exclusive licenses. The section applies to any grant made by an author on or after January 1, 1978. Effectively, the provision limits a conveyance of rights to 35 years.

Invoking Termination Rights

Termination is an option and not automatic. Once the termination date is calculated, musicians and songwriters must give their publishers a statutory termination notice at least two years (up to 10 years) in advance. Without notice, previous grants will not be terminated. Importantly, termination rights are inalienable, even if there are contract provisions to the contrary.

Scope of Termination Rights

Termination rights are not limitless. For instance, a music publisher may continue to utilize derivative works prepared pursuant to the previous grant. In addition, termination rights are effective only in the United States. For a worldwide assignment, the publisher will retain all rights outside of the country. Furthermore, if there are multiple authors, a majority of the authors must agree to terminate the grant.

Works Made for Hire Exception

Termination rights do not apply to works made for hire. An example of a work made for hire is a work prepared by an employee within the scope of his or her employment. A commissioned work may also be considered as a work for hire. For works made for hire, the employer is considered the author and owns the copyright, unless the parties agree otherwise. This exception is the main area where most of the battle will take place, as companies are gearing up to challenge terminations as for hire.

Victor Willis' Case

In January 2011, Willis provided a termination notice to Can't Stop Productions for a number of his musical works, including "Y.M.C.A." and "In the Navy" and "Go West." In July, Can't Stop Productions and its French affiliate, Scorpio Music, filed a complaint for declaratory relief in the Southern District of California. (Case No. 11CV1557 BTM RBB.)

Can't Stop Productions and Scorpio Music first argue that Willis was employed as a writer for hire. They claim that The Village People were a concept group created by the companies, and Willis was an employee. Specifically, Willis was hired to "translate the lyrics of and/or create new lyrics for certain musical compositions ..." and he was provided with the material and a studio to record. Secondly, the companies claim that Willis does not have the right to terminate because he is only one of several authors of joint works. As mentioned earlier, a majority of the authors is required by law to terminate a grant.

Willis currently earns $30,000 to $40,000 annually from The Village People recordings. According to the New York Times, that could triple or quadruple if he succeeds in recapturing his rights to those recordings. The outcome of this case could have serious implications for the music industry.

Looking Ahead

Termination rights give musicians and song writers a second chance to earn royalties, because of "... the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until it has been exploited." (http://tmtblog.minterellison.com/2011/09/born-in-usa-recording-artists-in.html) In addition to Willis, some of the biggest stars from the same era - for example, Bruce Springsteen, Billy Joel, Tom Petty, and the Eagles - are reportedly beginning to invoke termination rights on their recordings and compositions.

On the one hand, some recording companies will suffer monetary loss because of terminated grants. Termination rights may exacerbate the loss in revenue from unauthorized file sharing and the decline in record sales. On the other hand, many recordings and compositions will be on the market for the first time since their creations, which could represent an opportunity for music publishers to negotiate a deal that will broaden or diversify their catalogs. As more musicians and songwriters invoke their termination rights, the year 2013 will signal the beginning of a long legal battle. Only time will tell the impact of termination rights on the evolution of the music industry.

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.

November 7, 2011

IF YOU SUE ME, YOU'RE OUT OF YOUR MIND - COPYRIGHT AND MORAL RIGHTS ISSUES SURROUNDING BEYONCÉ'S "COUNTDOWN" VIDEO

By Merlyne Jean-Louis

On October 6, 2011, the video for "Countdown," an upbeat single from the fourth studio album of Beyoncé Knowles (known mononymously as Beyoncé), premiered on MTV. The scenes in the video contained several pop culture references, including Funny Face and West Side Story, and displayed Beyoncé pregnant with her first child (See http://www.youtube.com/watch?v=2XY3AvVgDns). The video immediately sparked controversy because it featured several dance sequences that strikingly resembled choreography from "Rosas danst Santas" and "Achterland," two choreographic works of Belgian contemporary choreographer Anna Teresa De Keersmaeker. (See http://www.youtube.com/watch?v=3HaWxhbhH4c) (video comparing the dance sequences).) Beyoncé stated that she was inspired by the works and thus they were "used to bring the feel and look of ['Countdown'] to life." However, De Keersmaeker commented although she was neither angered nor honored by Beyoncé and her team's appropriation, De Keersmaeker felt they should have been aware of the "protocols and consequences to such actions." (See http://pitchfork.com/news/44269-Beyoncé-accused-of-ripping-off-belgian-choreographer-for-countdown-video/.) To which protocols and consequences did De Keersmaeker refer?

Protection of Moral Rights

If De Keersmaeker desired to simply be asked permission for use of her pieces, then she was probably concerned about her moral rights. Article 6bis of the Berne Convention, a long standing international treaty governing copyright to which the United States is party, provides that any author of a work possesses two moral rights: the right of attribution ("the right to claim authorship of the work") and the right of integrity ("the right . . . to object to any distortion, mutilation, or other modification of [the] work that would harm the author's honor or reputation.") (Berne Convention for the Protection of Literary and Artistic Works, Art. 6bis, Sept. 9, 1886, as revised at Paris, July 24, 1971.) These rights mirror the customary practices of the dance world, where parties ask permission to use the work of a choreographer, who in turn often demands formal artistic credit and the right to have a final say on the presentation of the work. Since the movement in the "Countdown" video could arguably be a distortion of De Keersmaeker's work, De Keersmaeker probably has a valid moral rights claim. However, treaties are non self executing in the United States, which means that the treaty provisions require the implementation of legislation to be valid. The only American federal act promulgated pursuant to Article 6bis is the Visual Artists Rights Act (VARA), which only protects the moral rights of creators of visual art works. (See 17 U.S.C. § 106A.) However, because of supplemental jurisdiction, if De Keersmaeker brought another type of federal claim in a federal court located in a state that had statutes that granted standing to foreigners to enforce their moral rights, then De Keersmaeker could possibly sue under state law for moral right protection. (See 28 U.S.C. 1367.) Thus, if interested, De Keersmaeker may be able to successfully bring a federal moral rights claim against Beyoncé or her team under American law.

Infringement of Copyright

If De Keersmaeker was concerned about the economic value of her works, then she was probably concerned about copyright protection. As her home country of Belgium is a party to several copyright treaties to which the United States is also a party, her work could theoretically be protected in the United States. (See Points of Attachment, International Copyright and Law and Practice, Paul E. Geller and Melville B. Nimmer, 2011, Matthew Bender & Company, Section 6[1][a]; 17 U.S.C. §104 (discussing copyright protection of works of authors of national origin).) Since De Keersmaeker is a foreigner and the alleged infringers would presumably be American, if she claimed a relief of at least $75,000 in damages, a federal court would have subject matter jurisdiction to hear her case if she initiated a copyright infringement action. (See 28 U.S.C. §1332(a)(2) (granting federal jurisdiction over cases between a U.S. citizen and a non-U.S. citizen).)

De Keersmaeker could set forth several claims of infringement of the copyright of her works. The first claim would be based on the holding in Horgan v. Macmillan, Inc., and would be related to De Keersmaeker's exclusive reproduction rights. In this case, the Second Circuit left open the possibility for a book containing still photographs of the production of legendary choreographer George Balanchine's Nutcracker Ballet to be an infringing "copy of Balanchine's copyrighted work because it portray[ed] the essence of the Balanchine Nutcracker." (Horgan v. Macmillan, Inc., 789 F.2d 157, 161 (2d Cir. 1986).) (See also 17 U.S.C. § 106 (1) ("[T]he owner of copyright . . . has the exclusive right[] . . . to reproduce the copyrighted work in copies.").) The court held that the lower court, in determining whether the right to reproduce has been infringed, had to determine whether the alleged infringing photos were substantially similar to the original choreography (not whether the original choreography could be recreated from the allegedly infringing copy, as the lower court had done before the appeal). (See Horgan, 789 F.2d at 162.) Since the parties settled however, the lower court never applied this test. Nonetheless, Horgan's odd holding (which, to the chagrin of the dance world, inferred that something besides actual movement could theoretically infringe the copyright of a choreographic work) is still law. Thus, if the actual physical film of "Countdown" was considered to embody the copy of De Keersmaeker's works, De Keersmaeker could argue that the creation of the film infringed upon her right to reproduce her works.

De Keersmaeker's second claim could set forth two arguments relating to her exclusive right of public performance. (See 17 U.S.C. §101 (defining "to perform...a work 'publicly'" as "to perform. . . at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family. . ."); §106(4) (enumerating exclusive public performance rights related to choreographic works).) The first argument is that the dancers (including Beyoncé) in the video infringed De Keersmaeker's right to publicly perform her works. For example, in one approximate 20 second sequence, Beyoncé and other background dancers perform the exact movement from a portion of "Rosas danst Santas." In another sequence, Beyoncé and the dancers perform only one movement (the shaking of hips and legs) from "Achterland." Thus, the main question that should be asked is how many dance moves or how much dance movement must be performed to constitute infringement of the right to publicly perform a work.

The second argument related to public performance is that broadcasters of the "Countdown" video, including MTV and Google (owner of YouTube), transmitted a public performance of De Keersmaeker's works. (See 17 U.S.C. §101 (defining "to perform . . . a work 'publicly'" as "to transmit . . . a performance . . . to the public, by means of any device or process . . .").) This argument could also simultaneously be set forth as a separate third claim of infringement of De Keersmaeker's exclusive right to display her works. (See 17 U.S.C. § 101 (defining "to display a work 'publicly' as "to display [work] at a place open to the public" or "to transmit . . . a . . . display of [a] work . . . to the public . . ."); §106(5) (enumerating exclusive display rights related to choreographic works).)

As portions of De Keersmaeker's works were performed in the video, De Keersmaeker's could set forth a further claim of infringement based on her right to create derivative works. (See 17 U.S.C §101 (defining "derivative work" as "a work based upon one or more preexisting works . . ."); 17 U.S.C. 106(2) (enumerating the derivative works right for all authors).)

Potential Defenses

There are several defenses to De Keersmaeker's claims. First, the alleged infringer (whether it be Beyoncé, a dancer, or a broadcaster) could argue that De Keersmaeker's works do not meet the United States originality requirement. (See 17 U.S.C. 102 ("Copyright protection subsists . . . in original works of authorship . . . ); Feist Publ'n v. Rural Tel. Servs., 499 U.S. 340, 345 (stating that "original" in the Copyright Act means "that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.").) The sitting court may strike down this defense because De Keersmaeker's works clearly possessed "a modicum of creativity." (Feist, 499 U.S. at 346.) However, choreographers must use dancers to create their works. Does that satisfy the "independent creation" portion of the Feist test? Second, the alleged infringers could attack each of the De Keersmaeker's claims of infringement by stating that the defendants did not engage in the activity for which they are accused. For example, with regards to the public performance claim against Google, Google could argue that it did not display or transmit the works because on the Internet, the only place to see YouTube videos, a viewer would have to take proactive steps to download and view the "Countdown" video. Thus, the viewer would actually be considered to be the infringer. In any event, the DMCA would likely preclude Google's liability, as it is an Internet Service Provider with a Registered Agent, and therefore qualifies for the Safe Harbor provisions. However, MTV would not be able to make this argument if it transmitted the "Countdown" video via television, because videos are transmitted without the requirement of viewers' involvement. Third, the infringers could argue that De Keersmaeker does not have standing to bring the case because the works are not registered under the Copyright Act. (See 17 U.S.C. §411 ("[N]o civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim . . .") (emphasis added).) However, as emphasized in the previous citation, this requirement only applies to works of American authors. Furthermore, presuming that De Keersmaeker is the legal owner of the copyright of her works under American law, she has the right to commence an action of her exclusive rights. (See 17 U.S.C. §501(b).)

"If You Sue Me...You're Out of Your Mind"

While the pulse of the dance world is the dancer, the heartbeat that sustains its life is the choreographer. Although there is current explicit copyright protection of choreographic works in America, it is believed that most choreographers do not utilize it. However, it should be noted that the Beyonce's song "Countdown" contains a sample of a countdown from the song "Uhhh Huh" by 90's boy group Boyz-2-Men. (http://www.youtube.com/watch?v=ci8hWx4CR-k). This approximate 10 second sample was sufficient to give the original members of the group songwriting credit, and thus, copyright protection. As a former semi-professional dancer and diehard Beyoncé fan, I find it disappointing that Beyoncé and her team did not follow dance cultural norms and simply ask De Keersmaeker for permission to use her works. However, if credit and recognition is all that De Keersmaeker sought, the use of her works in "Countdown" ironically brought her exactly that - everyone will now know De Keersmaeker's works because the internationally-recognized Beyoncé exposed them to the entire world. If that is the case, it would not make sense for De Keersmaeker to initiate any infringement claim, although the same cannot be said for a moral rights action.


Note: De Keersmaeker could possibly set forth her claims under Belgian law. "If you sue me...you're out of your mind" is a reference to the lyrics of "Countdown."

Merlyne Jean-Louis is a third-year law student at Duke University School of Law. Merlyne trained briefly in ballet, contemporary, and tap dance and specializes in hip-hop and and African dance. If you have any questions or thoughts, please e-mail Merlyne at mjeanlouis32@gmail.com.

November 10, 2011

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 11, 2011

California Resale Royalties Act

By Stacy Lefkowitz Brown

On October 18th artists Chuck Close, Laddie John Dill and the estate of Sculptor Robert Graham sued Sotheby's, Christies and Ebay seeking damages for the nonpayment of royalties under the California Resale Royalties Act (CRRA). The complaint also seeks punitive damages and appropriate injunctive and declaratory relief to ensure compliance with the CRRA in the future.

The California Resale Royalties Act and Caselaw

The CRRA effectively codifies the French concept of droit de suite, in which an artist retains the right to an economic interest in the sale proceeds of an artwork for transactions after the initial sale. It requires that a seller pay a 5% royalty to an artist for the resale of a work of fine art defined as a painting, drawing, sculpture or an original work of art in glass, where the seller resides in California or the sale takes place in California, and the artist is a U.S. citizen, or has been a California resident for at least 2 years at the time of the sale. (Ca. Civil Code § 986.) The royalty is to be paid within 90 days of the sale if the sale occurs during the artist's lifetime, or to an artist's legal heirs up to 20 years after the artist's death. (Id.) If the seller cannot locate the artist, the royalty fee goes to the California Arts Council. (Id.)

The CRRA does not apply to the initial sale of the work of art by the artist where the artist holds the legal title to the work at the time of the sale. (Id.) It also does not require a royalty where the initial purchaser is an art dealer who then resells the work of art to another art dealer within 10 years of the initial purchase. (Id.) Finally, the CRRA does not apply to stained glass attached to real property upon the sale or transfer of the property to which it is attached. (Id.)

The CRRA has been the focus of legal controversy in the past, withstanding Constitutional challenges on the grounds of Preemption and violations of Due Process and the Contracts Clause. The preemption issue was addressed most recently in Baby Moose Drawings v. Dean Valentine. There, the assignees of artist Mark Grothjahn's royalty rights sued a dealer to collect the 5% royalty due under the CRRA. (Baby Moose Drawings, Inc. v. Dean Valentine et al., 2011 U.S. Dist. LEXIS 72583.) The California District Court addressed the issue of preemption when the plaintiff moved to remand the case to the California State Court in response to the defendant's removal of the case to federal court. (Id.) The District Court held that the California state court was the appropriate venue as the federal court did not have original jurisdiction. (Id at 12.) A federal court has original jurisdiction over ". . .any civil action arising under any Act of Congress related to . . . copyrights." (Id at 1.) The defendant claimed that removal to federal court was justified because the Copyright Act preempted the CRRA. (Id at 6.) The court disagreed, stating that the Copyright Act did not preempt the CRRA, because the 5% royalty added an extra element of protection to artists. (Id at 8.) This extra element did not "infringe upon the exclusive rights provided by the Copy right Act." (Id.) Similarly, the "royalty right on resale amounts to artists is qualitatively different from the rights granted to copyright holders under the Copyright Act." (Id at 9.) Further, the court looked to Congressional intent to determine that the CRRA did not interfere with the federal law. Specifically, the court noted a Judiciary Committee report on Amendments to the Copyright Act in 1990, which stated:

[s]tate artists' rights laws that grant rights not equivalent to those accorded under the proposed law are not preempted, even when they relate to works covered by [the Copyright Act]. For example, the law will not preempt a cause of action for . . . a violation of a right to a resale royalty." (Id at 10. Emphasis added.)

Preemption was also at issue in Morseburg v. Babylon, which was brought as a test case for the CRRA. (Morseburg v. Babylon, 621 F.2d 972 (1980).) There, an art dealer sued the California Council for the Arts claiming that the 1909 Copyright Act preempted the CRRA. (Id at 975.) He argued that the CRRA interfered with federal law because it "impaired" his ability to "vend" a work of art and restricted the transfer of a work of art under the 1909 Act. (Id.) Morseburg relied on Sections 1 and 27 of the 1909 Act, which provided in Section 1 that "Any person entitled thereto . . . shall have the exclusive right: (1) to print, reprint, publish, copy and vend the copyrighted work." Section 27 stated, "Nothing in this title shall be deemed to forbid, prevent or restrict the transfer of any copy of a copyrighted work the possession of which has been lawfully obtained." (Id.) The Ninth Circuit held that the CRRA was not preempted by the 1909 Act because Congress had not intended to occupy the field, inasmuch as "Congress had evidenced no intent, either expressly, or impliedly, to bar the states from exercising their power." (Id at 977.) Notably, the Court opined that CRRA did not occupy the area of the 1909 Act and that CRRA could coexist and "function harmoniously rather than discordantly" with the 1909 Act. (Id). Neither did the Court view the CRRA as conflicting with the federal law, because nothing in the CRRA technically restricted the transfer of the works. (Id at 978). The Court reasoned that the CRRA did not require a lien on the work of art to secure the royalty, "nor is the buyer made secondarily liable for the royalty." (Id.) However, the Court acknowledged that the CRRA may have the effect of slowing down the marketplace, as it surmised that dealers and collectors may be more inclined to hold onto artworks for a longer period of time before resale. (Id.)

The Court then addressed the Contracts Clause issue. It stated that not all impairments of contracts are improper when serving a public need for the impairment. (Id at 979.) The Court then ruled that the CCRA did not violate the Contracts Clause because the impairment it caused to Morseburg's contract was not severe and served a "broad, generalized economic or social purpose." (Id.) Morseburg similarly fell short on his Due Process Argument in which he argued that the royalty required by the CRRA deprived him of property without due process. (Id.) The Court was not moved, as it did not find the acts of the legislature which adjusted the "burdens and benefits of economic life" to be arbitrary or capricious. (Id.)

A Federal Law's Time Has Come?

All the media attention these suits have garnered begs the question, is a federal law conferring resale royalty rights to artists an idea whose time has come? Although Senator Kennedy tried and failed to incorporate such a right into the Visual Artists Rights Act in 1987, there is new life for resale royalties in the form of a Bill sponsored by Senator Cole of Wisconsin. This Bill has the backing of The Artist Rights Society (ARS), an organization that monitors copyrights and licensing for over 50,000 artists worldwide, which has been lobbying for a federal version of the CRRA over the past year. The Bill is also championed by Bruce Lehman, former Commissioner of the United States Patent and Trademarks Office, and has the support of numerous artists, including Frank Stella, an ARS member. Federal resale royalty legislation on artworks would effectively level the playing field of visual artists with other artists who enjoy Copyright status; for example, authors, performers and musicians who receive royalties for each successive use of their work. However, such legislation may be viewed as more of a tax on artworks and may even work to the detriment of up and coming (read -- starving and/or struggling) artists, because collectors, curators, auction houses and dealers who make the market for these artists may be more likely to hold onto works for longer periods of time. Already established or famous artists are not likely to suffer from this, and in fact, may be the primary beneficiaries of any federal resale royalty law, since their works are already sought after and highly desirable in the marketplace. A federal resale royalty would also have administrative costs attached to it (unless built into the royalty) that dealers and auctions houses would most likely pass onto either the purchaser or seller of the art, creating another layer of cost to do business in the art world.

The Europeans Are Doing It

If the time for a federal resale royalty has indeed arrived, then Legislators may look to some of the European models to help determine what might be appropriate in the United States. As of 2006, the European Union required member states to implement an artist resale royalty (ARR) on artwork sold after the initial sale. Different member states treat this tax differently. The UK, in particular, uses a sliding scale, starting at 4% of the resale price to .25% for prices over € 500,000. In addition, when the ARR came into effect in 2006 in the UK, it only benefitted living artists. However, in January 2012, the ARR will go into effect there for deceased artists as well. In France, the ARR is 3% and in Germany 5%. Auction houses are aware of the ARR, and currently demarcate works which are subject to ARR in auction catalogues. This may not bode well for Sotheby's and Christies, if the allegations in the complaint are true, that they do not make the same or similar demarcation for works in their catalogues subject to CRRA, especially since the complaint accuses the auction houses of "an intentional election to flout" the law. (2011 WL 4947397 (C.D.Cal) (Trial Pleading).)

Stacy Lefkowitz Brown is a portrait artist and an attorney admitted to practice in the State of New York. She can be reached via email at stacylefkowitz@gmail.com.


December 10, 2011

Counterfeit Goods: Life After Seizure

By Connie Gibilaro

On November 15, 2011, Belal Amin Alsaidi, a 30 year old Virginia store owner, pleaded guilty to trafficking counterfeit goods. Alsaidi admitted that he sold counterfeit shoes and apparel at two of his stores from May 2007 through March 2009.

According to the U.S. Department of Justice (http://www.justice.gov/opa/pr/2011/November/11-crm-1492.html), Alsaidi admitted that he purchased over 1,400 packages of counterfeit merchandise from an individual in New York. The merchandise included knockoff apparel from brands including Nike, NFL, Lacoste, True Religion, and Coogi. Alsaidi faces a maximum penalty of 10 years in prison and a $2 million fine. The punishment illustrates law enforcement's attempt to deter potential counterfeiters from committing this crime.

So, what will happen to all of these seized items?

Alsaidi's indictment seeks to seize the counterfeit items and the profits from any sales. Government officials could burn the knockoff Nike apparel according to the 2010 Joint Strategic Plan on Intellectual Property Enforcement (http://www.whitehouse.gov/sites/default/files/omb/assets/intellectualproperty/intellectualproperty_strategic_plan.pdf), which states that infringing goods can be destroyed under the supervision of the Customs Border and Protection (CBP). However, the 2011 U.S. Intellectual Property Enforcement Plan (http://www.whitehouse.gov/sites/default/files/ipec_anniversary_report.pdf) did not mention that counterfeit goods can be destroyed after they have been seized. In fact, the word "destroy" does not appear in the entire 2011 plan. This might show the government's intent to preserve counterfeit goods.

The United States wouldn't be the first country to put infringing merchandise to good use. The Musée de la Contrafaçon (http://www.placesinfrance.com/counterfeit_museum_paris.html), or Counterfeit Museum, is a museum in Paris, France that exhibits more than 350 items and where each counterfeit is paired with its authentic original. The Union des Fabricants, an organization of manufacturers, established the museum in 1951 to portray the detrimental effects of counterfeiting on industries and world economies. However since no such museum exists in the United States, it is unlikely that Alsaidi's counterfeit apparel will be displayed for the American public anytime soon.

A central purpose of the Musée de la Contrafaçon has been to educate people on the differences between authentic goods and their infringing counterparts. It is unclear whether the United States IP Task Force (http://www.justice.gov/dag/iptaskforce/)supports similiar goals. According to the Department of Justice (http://www.justice.gov/), the mission of the IP Task Force is to "build on previous efforts in the Department to target intellectual property crimes and to address technological and legal landscape in this area of law enforcement."

The IP Task Force seems to be more concerned with enforcing intellectual property rights than informing the public on how to identify fake goods. Regardless, Alsaid's case portrays how the Task Force plays an integral role in the battle against counterfeiting.

Top 10 Seized Counterfeit Goods (Crime Inc.: Counterfeit Goods - CNBC http://www.cnbc.com/id/37824347):

1. Footwear

2. Consumer Electronics

3. Apparel

4. Handbags/Wallets/Backpacks

5. Media

6. Computers/Hardware

7. Cigarettes

8. Watches/Parts

9. Jewelry

10. Pharmaceuticals

Ad That Is Too Scandalous for Europe...

By Tyler Davis

They say any publicity is good publicity, but that is not always the case.

Britain's Advertising Standards Authority (ASA) has shut down Marc Jacobs' ad, for its Oh' fragrance Campaign, as it is just too scandalous. A recent ruling determined that the ad violated both the Social Responsibility and Harm and Offense codes (http://www.cap.org.uk/The-Codes/CAP-Code/CAP-Code-pdf-versions.aspx) in the UK. It depicts Dakota Fanning wearing a candy pink dress and eyeing the camera seductively, while the 17 year old holds a bottle of the perfume between her thighs (http://www.dailymail.co.uk/femail/article-2059097/Dakota-Fannings-sexually-provocative-perfume-ad-banned.html).

Who gets to decide when fashion and advertising cross the line? England has burdened the ASA (http://www.asa.org.uk/)with this job. According to its website, the ASA operates to "ensure ads are legal, decent, honest, and truthful;" and it functions on a complaint and ruling process. The general public is free to make comments and complaints to the ASA website regarding any ad campaign in England.

Fashion brands face legal and legislative obstacles when creating and publishing ads in global markets. What works in some venues, may just not be fashionable in another. It is important for everyone in design, marketing, and PR to communicate with in-house or outside counsel on matters of legality for copy and print in advertisements.

The ASA cited the ad as portraying "the young model in a sexualized manner," and that the positioning of the perfume bottle was sexually provocative. "We considered the ad could be seen to sexualize a child. We therefore concluded that the ad was irresponsible and was likely to cause serious offense."

So is fashion taking it too far? Marc Jacobs thinks not, and voiced his opinion on the matter stating many positive remarks about Ms. Fanning, "it's really unfortunate that people have taken anything negative from what we believe is a really good campaign, and one that so perfectly embodies the fragrance."

Fashion is art, and art is expression. Is letting the public decide what's acceptable the best way to regulate fashion advertising?

Eben-Seizure Scrooge: "Operation In Our Sites" Strikes Again on Cyber-Monday

By Jen Mecum

For the second year in a row, just in time for the holiday online shopping rush, "Operation In Our Sites" stormed the Internet, executing federal seizure orders against 150 domain names of websites selling and distributing alleged counterfeit goods and copyrighted works illegally.(http://www.forbes.com/sites/billsinger/2011/11/28/bah-humbug-operation-in-our-sites-nabs-150-websites-on-cyber-monday/)

The initiative, spearheaded by U.S. Immigration and Customs Enforcement (ICE) (http://www.ice.gov/), was launched in June 2010 to combat intellectual property piracy problems cropping up in online stores.

Undercover federal agents made purchases of various products, such as DVDs and sunglasses, that were advertised by their online retailers as bearing bona fide trademarks. The legal trademark and copyright holders were asked to verify the authenticity of such products. If the products did not pass muster, a federal seizure order was executed to essentially freeze the website. All seized websites (http://www.forbes.com/sites/billsinger/2011/11/28/bah-humbug-operation-in-our-sites-nabs-150-websites-on-cyber-monday/) bear a seizure banner and warning that willful copyright infringement is a federal offense.

Though Attorney General Eric Holder claims that the seized websites "are selling counterfeit goods for their own personal gain while costing our economy much-needed revenue and jobs," (http://www.wired.com/threatlevel/tag/operation-in-our-sites/) the initiative has been met with much opposition. One critic denounces the initiative as stretching due process "to its breaking point" by shutting down the websites, effectively giving the businesses no way to stay afloat while they defends their rights. (http://www.thewhir.com/blog/David_Snead/113011_Operation_in_our_sites_redux) Another critic argues that ICE is abusing its power to seize physical tools and products by enlarging its power to include seizure of domain names.(http://www.techdirt.com/articles/20110521/14304814372/why-operation-our-sites-is-illegal-needs-to-be-fixed-asap.shtml)

December 16, 2011

The Bikram Yoga Copyright Battle

By Caitlin Lee Dempsey

Traditional knowledge encompasses and protects the unauthorized use of images, music, and choreography, among other categories, and has become a hot topic among copyright and intellectual property lawyers. Yoga exemplifies the current controversy, which concerns Bikram Choudhury's copyrighted series of 26 yoga poses, famously to be known as "Bikram Yoga", which was registered in 2007. Choudhury designed a 9-week intensive course for aspiring Bikram Yoga teachers, encouraging them to help teach others how powerful and healing yoga may be - as long as they followed his rules (i.e. strict text, mirrors and carpets in the studio, and specific temperature, among others).

However, what happens when one of Bikram's former students opens a studio that almost follows his precise guidelines, to the former student's own benefit? Recently, Choudhury faced just that, and filed eight causes of action against the founder of Yoga to the People, Gregory Gumicio. The complaint alleged copyright infringement, trademark infringement, false delegation of origin, dilution, unfair competition, unfair business practices, breach of contract and inducing breach of contract. Choudhury's claims varied from injunction to over $1,000,000 for each allegation. (http://www.bikramyoga.com/AffiliatedStudioUpdates_9-28-11.php)

Gumicio, who entered into an agreement restricting his use of "Bikram Yoga" when he successfully completed Bikram's course, did not claim to be offering Bikram Yoga. He responded to the allegations with yogatruth.org, and argued that while copyright is limited to original works and systems, which is the category under which yoga would fall, yoga does not constitute "choreography" in the traditional sense of the word, and therefore cannot be copyrighted. While the U.S. Copyright Office has permitted yoga poses to be registered in the past, regulators recently reviewed the legislative history of copyright law and decided that exercise, such as yoga, does not "constitute the subject matter that Congress intended to protect as choreography." (http://cyber.law.harvard.edu/people/tfisher/Yoga/FischerLetter.jpg)

Moreover, Gumicio has a different take on the agreement he signed upon completion of the course. The diploma says that he "is hereby granted rights and privileges to teach Birkam's Basic Yoga System", which Gumicio does not believe includes the drastic limitations that Choudhury is claiming.

This is not the first case Bikram has taken to court on the matter. Prior suits ended with private settlements, with the defendants agreeing not to use Choudhury's name. Choudhury also brought suit against Evolution Yoga and Yen Yoga with similar claims. Moreover, Choudhury has an ongoing battle with Take Back Yoga of the American Hindu Foundation, which demands that Yoga's Hindu Philosophy remains alive.

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 15, 2012

Official White House Response to SOPA


Combating Online Piracy while Protecting an Open and Innovative Internet

By Victoria Espinel, Aneesh Chopra, and Howard Schmidt

Thanks for taking the time to sign this petition. Both your words and actions illustrate the importance of maintaining an open and democratic Internet.

Right now, Congress is debating a few pieces of legislation concerning the very real issue of online piracy, including the Stop Online Piracy Act (SOPA), the PROTECT IP Act and the Online Protection and Digital ENforcement Act (OPEN). We want to take this opportunity to tell you what the Administration will support--and what we will not support. Any effective legislation should reflect a wide range of stakeholders, including everyone from content creators to the engineers that build and maintain the infrastructure of the Internet.

While we believe that online piracy by foreign websites is a serious problem that requires a serious legislative response, we will not support legislation that reduces freedom of expression, increases cybersecurity risk, or undermines the dynamic, innovative global Internet.

Any effort to combat online piracy must guard against the risk of online censorship of lawful activity and must not inhibit innovation by our dynamic businesses large and small. Across the globe, the openness of the Internet is increasingly central to innovation in business, government, and society and it must be protected. To minimize this risk, new legislation must be narrowly targeted only at sites beyond the reach of current U.S. law, cover activity clearly prohibited under existing U.S. laws, and be effectively tailored, with strong due process and focused on criminal activity. Any provision covering Internet intermediaries such as online advertising networks, payment processors, or search engines must be transparent and designed to prevent overly broad private rights of action that could encourage unjustified litigation that could discourage startup businesses and innovative firms from growing.

We must avoid creating new cybersecurity risks or disrupting the underlying architecture of the Internet. Proposed laws must not tamper with the technical architecture of the Internet through manipulation of the Domain Name System (DNS), a foundation of Internet security. Our analysis of the DNS filtering provisions in some proposed legislation suggests that they pose a real risk to cybersecurity and yet leave contraband goods and services accessible online. We must avoid legislation that drives users to dangerous, unreliable DNS servers and puts next-generation security policies, such as the deployment of DNSSEC, at risk.

Let us be clear--online piracy is a real problem that harms the American economy, and threatens jobs for significant numbers of middle class workers and hurts some of our nation's most creative and innovative companies and entrepreneurs. It harms everyone from struggling artists to production crews, and from startup social media companies to large movie studios. While we are strongly committed to the vigorous enforcement of intellectual property rights, existing tools are not strong enough to root out the worst online pirates beyond our borders. That is why the Administration calls on all sides to work together to pass sound legislation this year that provides prosecutors and rights holders new legal tools to combat online piracy originating beyond U.S. borders while staying true to the principles outlined above in this response. We should never let criminals hide behind a hollow embrace of legitimate American values.

This is not just a matter for legislation. We expect and encourage all private parties, including both content creators and Internet platform providers working together, to adopt voluntary measures and best practices to reduce online piracy.

So, rather than just look at how legislation can be stopped, ask yourself: Where do we go from here? Don't limit your opinion to what's the wrong thing to do, ask yourself what's right. Already, many of members of Congress are asking for public input around the issue. We are paying close attention to those opportunities, as well as to public input to the Administration. The organizer of this petition and a random sample of the signers will be invited to a conference call to discuss this issue further with Administration officials and soon after that, we will host an online event to get more input and answer your questions. Details on that will follow in the coming days.

Washington needs to hear your best ideas about how to clamp down on rogue websites and other criminals who make money off the creative efforts of American artists and rights holders. We should all be committed to working with all interested constituencies to develop new legal tools to protect global intellectual property rights without jeopardizing the openness of the Internet. Our hope is that you will bring enthusiasm and know-how to this important challenge.

Moving forward, we will continue to work with Congress on a bipartisan basis on legislation that provides new tools needed in the global fight against piracy and counterfeiting, while vigorously defending an open Internet based on the values of free expression, privacy, security and innovation. Again, thank you for taking the time to participate in this important process. We hope you'll continue to be part of it.

Victoria Espinel is Intellectual Property Enforcement Coordinator at Office of Management and Budget

Aneesh Chopra is the U.S. Chief Technology Officer and Assistant to the President and Associate Director for Technology at the Office of Science and Technology Policy

Howard Schmidt is Special Assistant to the President and Cybersecurity Coordinator for National Security Staff

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 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 1, 2012

Use of Art Images in Gallery and Auction Catalogues: Copyright Minefield and Practical Advice

By Barry Werbin

A prominent NYC art gallery is preparing for a show highlighting a new exhibition of known and upcoming artists, some of whom are alive and others recently deceased. In preparing the show's catalogue, which will not be sold publicly, the gallery intends, as is long-standing custom, to include high-quality photographs of all the works in the exhibition. Most photos are obtained from the living artists themselves, or from the estates or trusts that control the underlying copyrights and reproduction rights of the deceased artists' works. In a few cases, however, the gallery will need to take its own photos. As a courtesy gesture, it intends to ask for approvals to do so from these few artists or their representatives.

A problem arises, however, when a deceased artist's administering trust questions the provenance of one of that artist's pieces in the exhibition and refuses to grant permission for the gallery to photograph any of the works for use in the catalogue or for any other purpose in connection with the exhibition. Can the gallery nevertheless take photos of these works and use them in its catalogue, which will not be sold or posted online but only given to attendees at the exhibition? Does it a make a difference if the catalogues will be sold or made available digitally on the gallery's website?

As the issue revolves around copying and displaying images of the original pieces of art, the answer should lie in several provisions of the U.S. Copyright Act of 1976 (the "Act"). But while providing critical guidance, the Act may not entirely provide a clear-cut answer.

Copyright Protection of Artworks

Copyright protects original works of authorship from the moment of their creation. In the case of an individual artist, the artist owns the copyrights of his or her original artworks, and the copyright term lasts for the life of the artist (the "author") plus another 70 years after his or her death. Section 106 of the Act reserves to the copyright owner specifically enumerated "exclusive" rights, which include (as relates to art) the rights of reproduction (copying), public display and distribution (by sale/assignment, rental, lease/license or lending), and the right to prepare derivative works based on the original. Notwithstanding these exclusive rights granted to the copyright owner, the Act carves out two important exceptions related to what is referred to as the "first sale doctrine" and, particularly germane to artworks, a limited display right granted to an "owner" of an original work. Before discussing these exceptions, however, it is important to recognize the significant difference between ownership of legal title and ownership of copyright.

Legal Title vs. Copyright

The purchaser of an original work of art only acquires legal title to that one original work; the underlying copyright is not transferred. Instead, copyright remains with the artist or his or her successor in interest. Thus, a consignor seller who owns an original work of art cannot grant to a gallery or auction house any rights greater than what that owner has (bare legal title) with no right to exercise any of the exclusive rights reserved to the copyright owner under Section 106 of the Act.

First Sale Doctrine

Without the statutory exceptions, there could never be a legal art exhibition or sale, as either would invoke the exclusively reserved "display" and "distribution" rights of the copyright holder. In its wisdom, however, Congress included two key exceptions in the Act that facilitate the resale of copyrighted works and grant a limited "display" right. These two exceptions are largely responsible for the legal existence of galleries, auction houses, and museums that display and sell works still under copyright.

First, Section 109, or the "first sale doctrine," provides that:

Notwithstanding the provisions of section 106(3) [the exclusive distribution right], the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

Thus, someone who owns an original work of authorship protected by copyright (referred to as a "particular copy" in Section 109) is free to sell it. That particular single work may then be resold innumerable times, without limitation, including by a gallery or auction house that is "authorized" by that owner to conduct a sale. The first sale doctrine is responsible for all aftermarket sales of copyrighted materials, including art, used records, music CDs, and books.

But what about the display right that also is exclusive to the copyright owner? Section 101 of the Act defines "display" as follows: "To 'display' a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process...."

While Section 106 reserves to the copyright owner the exclusive right to display a work publicly and the right of reproduction, Section 109(c) carves out a special limited exception (tied to the first sale doctrine) for the display of a copy of a work rightfully owned:

(c) Notwithstanding the provisions of section 106(5) [the exclusive display right], the owner of a particular copy lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located."

This Section is responsible for permitting all "displays" of copyright-protected art by galleries, auction houses, and museums. But Section 109(c) does not on its face permit any copying of a "particular" work, including the taking of any photographs and publishing them in a catalogue or on a website. This exception is further limited to a display only to "viewers present at the place where the copy is located."

The limited scope of the Section 109(c) exception seems pretty clear on its face. Nothing in Section 109(c) expressly permits our hypothetical gallery to take its own photos and use them in a catalogue in connection with an exhibition. Thus, the gallery's legal fallback becomes the complex and frequently litigated concept of "fair use" under Section 107 of the Act.

Fair Use Doctrine

The "fair use doctrine" has a long, complex, and tumultuous history in the courts that is beyond the scope of this article. In brief, the doctrine is intended to permit certain uses of copyright-protected materials as exceptions to what otherwise would be infringing activity. Section 107, which codifies the doctrine, provides a non-exclusive list of such permissible uses that are then subject to a non-exhaustive list of four specific criteria courts are required to address to determine whether "fair use" exists. The relevant text of Section 107 is rather brief:

[T]he fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use, the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(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) the effect of the use upon the potential market for or value of the copyrighted work.


Taking photos of artworks for use in an exhibition or auction catalogue does not fall squarely within the above-enumerated fair use examples, as such copying and display do not facially qualify as criticism, comment, news, teaching, research, or parody. (Although catalogues ultimately may be used for reference and research that is typically not the original reason a catalogue is created.) Section 107 does not make express exception for making copies for "descriptive" or "display" uses (i.e., to simply describe and display images of what is in an exhibition). This contrasts with U.S. trademark law, which does accept a "descriptiveness" defense where a third party's trademark is used merely descriptively and not in a trademark sense. The delineated statutory examples, however, are just that--examples--as the statute's preamble refers to "the fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as...." Thus, there is room for courts to find that copying for other purposes that are consistent with the policies underlying Sections 107 and 109(c) also qualifies as fair use. Arguably, such use is also commercial in nature if the catalogue will be sold or otherwise used to market an exhibition or auction at which the art will be offered for sale; but the existence of some commercial aspect of a work has not precluded a fair use finding in all cases because it is just one of the primary factors to be considered by a court.

The fourth fair use factor is particularly significant because taking photos of art for use in a catalogue will likely not have any negative effect "upon the potential market for or value of the copyrighted work." But the four listed factors also must be balanced by the courts. Even where one factor might win the day, the others may be more weighted either against or in favor of fair use, and courts must not lose sight of the fundamental principles underlying the fair use doctrine.

To complicate matters, in recent years courts have also read into the fair use statute a requirement that under the first factor ("purpose and character of the use"), to be "fair" and thus not infringing, a use must also be "transformative." This concept has become controversial as courts have disagreed over what that term means. Essentially, the "transformative" concept looks at the use made of the copy and whether it is for a purpose different from that of the original work. As the U.S. Supreme Court noted in Campbell v. Acuff-Rose Music, Inc. (510 U.S. 569, 579 (1994)), a work is generally deemed "transformative" when the new work does not "merely supersede the objects of the original creation," but rather "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." The non-exclusive permissible uses listed in Section 107, such as for commentary on or criticism of a copyrighted work (which includes parody), are themselves "transformative" uses.

As another example, Google has successfully defended its image search feature under a fair use argument. Google's image search results display digital thumbnail images, which are reduced, lower-resolution versions of full-sized images stored on third-party computers. The image search results are generated in response to end users' search queries for artwork, photos, and other graphical works on the Internet, thereby transforming the thumbnail copies displayed in the search results into a research tool. Google also generates advertising revenues by tying sponsored third-party ads to certain search results. The Ninth Circuit Court of Appeals ruled on this issue in a key 2007 decision, where it found that "the significantly transformative nature of Google's search engine, particularly in light of its public benefit, outweighs Google's superseding and commercial uses of the thumbnails in this case." (Perfect 10, Inc. v. Amazon.com and Google (amended opinion), 508 F.3d 1146 (9th Cir. 2007)).

Applying the Law

Back, then, to our hypothetical exhibition catalogue. Is photographing artwork to display in an exhibition or auction catalogue "transformative"? Does it satisfy the statutory fair use factors? Can an analogy be drawn to the Google image "search" service? Under a fair use paradigm, should the first sale doctrine and the "display" exception contained in Section 109 of the Act, by implication to carry out their intended purposes, permit a "descriptive" use of art photographs simply to describe the works in an auction or gallery exhibition catalogue? Denying such limited copying and display right arguably undermines the purpose of the display exception in Section 109(c), which facilitates auctions and exhibitions, because without it the ability to promote such sales and exhibitions is severely compromised. After all, this is visual art.

These are as of yet undecided legal questions, but there are cogent arguments that such use does not meet the fair use criteria under Section 107 as it is written, because such use is essentially "commercial," the entire image i s copied (photographed), and the copy is not being used for a "transformative" purpose. On the other hand, an enticing argument can be made that, while it may not truly be "transformative," when a photo is being used solely to identify the art in an auction or exhibition (where such display is authorized by Section 109(c) of the Act), the use of the photo in a catalogue for such limited purpose is merely incidental to a permissible use, and only improves the potential market for the work. It should therefore be considered fair use. But being the test case in the courts would be protracted and expensive.

Galleries and auction houses have always printed beautiful high-resolution catalogues with images of art not in the public domain. But the issue of seeking advance permissions rears its ugly head when an artist's representative objects to such photographic copying because, for example, the representative does not accept the provenance. Moreover, because the owner of an artwork seeking to sell it (unless it's the actual artist or his or her legal representative) owns only that "copy," and does not own the underlying copyright rights, the owner cannot legally grant a gallery or auction house permission to photograph the work from a copyright standpoint.

With all this in mind, the conservative approach would be to seek permission to photograph from the rights owner, his or her agent, or a clearinghouse, and to always do so if the image will be used on the cover of a catalogue or prominently in advertisements or marketing materials to promote an auction or exhibition. In most cases, this should not be an issue because, as a practical matter, most artists or their representatives are happy with this practice as it promotes the works and creates and maintains underlying markets for the art. But in the case of a deceased artist without an estate representative or non-U.S. works under copyright, for example, licensors or clearinghouses will need to be contacted for permission, which likely will require payment of some license fee tied to the notoriety of the artist, scope of use, and number of catalogues to be printed.

Real-World Examples

Gagosian Gallery, for example, always asks living artists for permission to photograph works going into its exhibitions for use in its catalogues. Andrea Crane, a Director at Gagosian Gallery in New York, says that doing shows with living artists requires a "close collaboration with the artists," who are pleased to cooperate. "The catalogues tend to benefit the artist by complementing the artwork," notes Alison McDonald, Gagosian's Director of Publications.
According to Ms. McDonald, Gagosian often deals with deceased artists' estates, which typically grant rights to photograph their artists' works for use in catalogues. In cases where estates cannot be contacted or don't exist, says Ms. McDonald, permissions are sought, typically for a fee, from artists' publishers and clearinghouses, such as Visual Artists and Galleries Association (VAGA), Artists Rights Society (ARS), and the Design and Artists Copyright Society (DACS). If consent cannot be obtained, an image of the artwork is not used.

Likewise, Christies auction house "always obtains permissions or licenses to use art images on the covers of its catalogues and in advertising collateral," says Karen Gray, Christies' General Counsel. Ms. Gray notes, however, that "there is a compelling fair use argument for using smaller photos of art tied to the applicable lot description within a particular catalogue, as this is consistent with the policy under Section 109(c), which permits display of the art without the copyright owner's permission, and principles of fair use." Catalogues retained for archival purposes (both in hard copy and digitally on Christies' website) serve a research and reference purpose, which falls more squarely within the traditional scope of fair use.

Conclusion

What guidance should gallery owners and auction house directors take away from all this? Apart from consulting with intellectual property legal counsel, prudence dictates taking a conservative and practical approach, especially in these litigious days in the art world. Some well-funded gallery or auction house may one day pick the fair use catalogue fight, but it will be expensive and protracted, and the outcome will be uncertain.

Barry Werbin is a partner and Chair of the Intellectual Property Practice at Herrick, Feinstein, LLP. This article was originally published in his firm's Art & Advocacy newsletter, Fall 2011, Vol.10.

Use of Art Images in Gallery and Auction Catalogues: Copyright Minefield and Practical Advice

By Barry Werbin

A prominent NYC art gallery is preparing for a show highlighting a new exhibition of known and upcoming artists, some of whom are alive and others recently deceased. In preparing the show's catalogue, which will not be sold publicly, the gallery intends, as is long-standing custom, to include high-quality photographs of all the works in the exhibition. Most photos are obtained from the living artists themselves, or from the estates or trusts that control the underlying copyrights and reproduction rights of the deceased artists' works. In a few cases, however, the gallery will need to take its own photos. As a courtesy gesture, it intends to ask for approvals to do so from these few artists or their representatives.

A problem arises, however, when a deceased artist's administering trust questions the provenance of one of that artist's pieces in the exhibition and refuses to grant permission for the gallery to photograph any of the works for use in the catalogue or for any other purpose in connection with the exhibition. Can the gallery nevertheless take photos of these works and use them in its catalogue, which will not be sold or posted online but only given to attendees at the exhibition? Does it a make a difference if the catalogues will be sold or made available digitally on the gallery's website?

As the issue revolves around copying and displaying images of the original pieces of art, the answer should lie in several provisions of the U.S. Copyright Act of 1976 (the "Act"). But while providing critical guidance, the Act may not entirely provide a clear-cut answer.

Copyright Protection of Artworks

Copyright protects original works of authorship from the moment of their creation. In the case of an individual artist, the artist owns the copyrights of his or her original artworks, and the copyright term lasts for the life of the artist (the "author") plus another 70 years after his or her death. Section 106 of the Act reserves to the copyright owner specifically enumerated "exclusive" rights, which include (as relates to art) the rights of reproduction (copying), public display and distribution (by sale/assignment, rental, lease/license or lending), and the right to prepare derivative works based on the original. Notwithstanding these exclusive rights granted to the copyright owner, the Act carves out two important exceptions related to what is referred to as the "first sale doctrine" and, particularly germane to artworks, a limited display right granted to an "owner" of an original work. Before discussing these exceptions, however, it is important to recognize the significant difference between ownership of legal title and ownership of copyright.

Legal Title vs. Copyright

The purchaser of an original work of art only acquires legal title to that one original work; the underlying copyright is not transferred. Instead, copyright remains with the artist or his or her successor in interest. Thus, a consignor seller who owns an original work of art cannot grant to a gallery or auction house any rights greater than what that owner has (bare legal title) with no right to exercise any of the exclusive rights reserved to the copyright owner under Section 106 of the Act.

First Sale Doctrine

Without the statutory exceptions, there could never be a legal art exhibition or sale, as either would invoke the exclusively reserved "display" and "distribution" rights of the copyright holder. In its wisdom, however, Congress included two key exceptions in the Act that facilitate the resale of copyrighted works and grant a limited "display" right. These two exceptions are largely responsible for the legal existence of galleries, auction houses, and museums that display and sell works still under copyright.

First, Section 109, or the "first sale doctrine," provides that:

Notwithstanding the provisions of section 106(3) [the exclusive distribution right], the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

Thus, someone who owns an original work of authorship protected by copyright (referred to as a "particular copy" in Section 109) is free to sell it. That particular single work may then be resold innumerable times, without limitation, including by a gallery or auction house that is "authorized" by that owner to conduct a sale. The first sale doctrine is responsible for all aftermarket sales of copyrighted materials, including art, used records, music CDs, and books.

But what about the display right that also is exclusive to the copyright owner? Section 101 of the Act defines "display" as follows: "To 'display' a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process...."

While Section 106 reserves to the copyright owner the exclusive right to display a work publicly and the right of reproduction, Section 109(c) carves out a special limited exception (tied to the first sale doctrine) for the display of a copy of a work rightfully owned:

(c) Notwithstanding the provisions of section 106(5) [the exclusive display right], the owner of a particular copy lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located."

This Section is responsible for permitting all "displays" of copyright-protected art by galleries, auction houses, and museums. But Section 109(c) does not on its face permit any copying of a "particular" work, including the taking of any photographs and publishing them in a catalogue or on a website. This exception is further limited to a display only to "viewers present at the place where the copy is located."

The limited scope of the Section 109(c) exception seems pretty clear on its face. Nothing in Section 109(c) expressly permits our hypothetical gallery to take its own photos and use them in a catalogue in connection with an exhibition. Thus, the gallery's legal fallback becomes the complex and frequently litigated concept of "fair use" under Section 107 of the Act.

Fair Use Doctrine

The "fair use doctrine" has a long, complex, and tumultuous history in the courts that is beyond the scope of this article. In brief, the doctrine is intended to permit certain uses of copyright-protected materials as exceptions to what otherwise would be infringing activity. Section 107, which codifies the doctrine, provides a non-exclusive list of such permissible uses that are then subject to a non-exhaustive list of four specific criteria courts are required to address to determine whether "fair use" exists. The relevant text of Section 107 is rather brief:

[T]he fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use, the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(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) the effect of the use upon the potential market for or value of the copyrighted work.

Taking photos of artworks for use in an exhibition or auction catalogue does not fall squarely within the above-enumerated fair use examples, as such copying and display do not facially qualify as criticism, comment, news, teaching, research, or parody. (Although catalogues ultimately may be used for reference and research that is typically not the original reason a catalogue is created.) Section 107 does not make express exception for making copies for "descriptive" or "display" uses (i.e., to simply describe and display images of what is in an exhibition). This contrasts with U.S. trademark law, which does accept a "descriptiveness" defense where a third party's trademark is used merely descriptively and not in a trademark sense. The delineated statutory examples, however, are just that--examples--as the statute's preamble refers to "the fair use of a copyrighted work, including such use by reproduction in copies ... for purposes such as...." Thus, there is room for courts to find that copying for other purposes that are consistent with the policies underlying Sections 107 and 109(c) also qualifies as fair use. Arguably, such use is also commercial in nature if the catalogue will be sold or otherwise used to market an exhibition or auction at which the art will be offered for sale; but the existence of some commercial aspect of a work has not precluded a fair use finding in all cases because it is just one of the primary factors to be considered by a court.

The fourth fair use factor is particularly significant because taking photos of art for use in a catalogue will likely not have any negative effect "upon the potential market for or value of the copyrighted work." But the four listed factors also must be balanced by the courts. Even where one factor might win the day, the others may be more weighted either against or in favor of fair use, and courts must not lose sight of the fundamental principles underlying the fair use doctrine.

To complicate matters, in recent years courts have also read into the fair use statute a requirement that under the first factor ("purpose and character of the use"), to be "fair" and thus not infringing, a use must also be "transformative." This concept has become controversial as courts have disagreed over what that term means. Essentially, the "transformative" concept looks at the use made of the copy and whether it is for a purpose different from that of the original work. As the U.S. Supreme Court noted in Campbell v. Acuff-Rose Music, Inc. (510 U.S. 569, 579 (1994)), a work is generally deemed "transformative" when the new work does not "merely supersede the objects of the original creation," but rather "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." The non-exclusive permissible uses listed in Section 107, such as for commentary on or criticism of a copyrighted work (which includes parody), are themselves "transformative" uses.

As another example, Google has successfully defended its image search feature under a fair use argument. Google's image search results display digital thumbnail images, which are reduced, lower-resolution versions of full-sized images stored on third-party computers. The image search results are generated in response to end users' search queries for artwork, photos, and other graphical works on the Internet, thereby transforming the thumbnail copies displayed in the search results into a research tool. Google also generates advertising revenues by tying sponsored third-party ads to certain search results. The Ninth Circuit Court of Appeals ruled on this issue in a key 2007 decision, where it found that "the significantly transformative nature of Google's search engine, particularly in light of its public benefit, outweighs Google's superseding and commercial uses of the thumbnails in this case." (Perfect 10, Inc. v. Amazon.com and Google (amended opinion), 508 F.3d 1146 (9th Cir. 2007)).

Applying the Law

Back, then, to our hypothetical exhibition catalogue. Is photographing artwork to display in an exhibition or auction catalogue "transformative"? Does it satisfy the statutory fair use factors? Can an analogy be drawn to the Google image "search" service? Under a fair use paradigm, should the first sale doctrine and the "display" exception contained in Section 109 of the Act, by implication to carry out their intended purposes, permit a "descriptive" use of art photographs simply to describe the works in an auction or gallery exhibition catalogue? Denying such limited copying and display right arguably undermines the purpose of the display exception in Section 109(c), which facilitates auctions and exhibitions, because without it the ability to promote such sales and exhibitions is severely compromised. After all, this is visual art.

These are as of yet undecided legal questions, but there are cogent arguments that such use does not meet the fair use criteria under Section 107 as it is written, because such use is essentially "commercial," the entire image i s copied (photographed), and the copy is not being used for a "transformative" purpose. On the other hand, an enticing argument can be made that, while it may not truly be "transformative," when a photo is being used solely to identify the art in an auction or exhibition (where such display is authorized by Section 109(c) of the Act), the use of the photo in a catalogue for such limited purpose is merely incidental to a permissible use, and only improves the potential market for the work. It should therefore be considered fair use. But being the test case in the courts would be protracted and expensive.

Galleries and auction houses have always printed beautiful high-resolution catalogues with images of art not in the public domain. But the issue of seeking advance permissions rears its ugly head when an artist's representative objects to such photographic copying because, for example, the representative does not accept the provenance. Moreover, because the owner of an artwork seeking to sell it (unless it's the actual artist or his or her legal representative) owns only that "copy," and does not own the underlying copyright rights, the owner cannot legally grant a gallery or auction house permission to photograph the work from a copyright standpoint.

With all this in mind, the conservative approach would be to seek permission to photograph from the rights owner, his or her agent, or a clearinghouse, and to always do so if the image will be used on the cover of a catalogue or prominently in advertisements or marketing materials to promote an auction or exhibition. In most cases, this should not be an issue because, as a practical matter, most artists or their representatives are happy with this practice as it promotes the works and creates and maintains underlying markets for the art. But in the case of a deceased artist without an estate representative or non-U.S. works under copyright, for example, licensors or clearinghouses will need to be contacted for permission, which likely will require payment of some license fee tied to the notoriety of the artist, scope of use, and number of catalogues to be printed.

Real-World Examples

Gagosian Gallery, for example, always asks living artists for permission to photograph works going into its exhibitions for use in its catalogues. Andrea Crane, a Director at Gagosian Gallery in New York, says that doing shows with living artists requires a "close collaboration with the artists," who are pleased to cooperate. "The catalogues tend to benefit the artist by complementing the artwork," notes Alison McDonald, Gagosian's Director of Publications.According to Ms. McDonald, Gagosian often deals with deceased artists' estates, which typically grant rights to photograph their artists' works for use in catalogues. In cases where estates cannot be contacted or don't exist, says Ms. McDonald, permissions are sought, typically for a fee, from artists' publishers and clearinghouses, such as Visual Artists and Galleries Association (VAGA), Artists Rights Society (ARS), and the Design and Artists Copyright Society (DACS). If consent cannot be obtained, an image of the artwork is not used.

Likewise, Christies auction house "always obtains permissions or licenses to use art images on the covers of its catalogues and in advertising collateral," says Karen Gray, Christies' General Counsel. Ms. Gray notes, however, that "there is a compelling fair use argument for using smaller photos of art tied to the applicable lot description within a particular catalogue, as this is consistent with the policy under Section 109(c), which permits display of the art without the copyright owner's permission, and principles of fair use." Catalogues retained for archival purposes (both in hard copy and digitally on Christies' website) serve a research and reference purpose, which falls more squarely within the traditional scope of fair use.

Conclusion

What guidance should gallery owners and auction house directors take away from all this? Apart from consulting with intellectual property legal counsel, prudence dictates taking a conservative and practical approach, especially in these litigious days in the art world. Some well-funded gallery or auction house may one day pick the fair use catalogue fight, but it will be expensive and protracted, and the outcome will be uncertain.

Barry Werbin is a partner and Chair of the Intellectual Property Practice at Herrick, Feinstein, LLP. This article was originally published in his firm's Art & Advocacy newsletter, Fall 2011, Vol.10.

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

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 20, 2012

Weekly Issues in the News

By Geisa Balla

Copyright Law and Gray Market Goods

The U.S. Supreme Court will examine two contradictory provisions in the Copyright Act in Kirtsaeng v. John Wiley & Sons. The competing provisions are the first sale doctrine, which permits the owner of a lawfully-produced work to resell the work without the authority of the copyright owner, versus the one controlling the importation of copyrighted material into the United States. The case at hand involves a Thai student, Kirtstaeng, who was selling used foreign-manufactured books on eBay at a profit. The student's position is that the first sale doctrine allows him to resell these books. John Wiley & Sons, whose Asian subsidiary produced some of the books in question, disagreed, and filed a copyright infringement lawsuit in 2008 in the Southern District of New York. The jury eventually found Kirtsaeng liable, and Kirtsaeng appealed. The Second Circuit upheld the verdict, ruling that the first-sale doctrine applies only to goods made in the United States. The Appellate Court also noted a "particularly difficult question of statutory construction" because of the competing Copyright Acts provision. The Supreme Court is expected to hear arguments in its October term for 2012.

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=45093&terms=@ReutersTopicCodes+CONTAINS+%27ANV%27


Louis Vuitton

The U.S. International Trade Commission (ITC) issued a decision this week, putting border agents on notice to block counterfeit Louis Vuitton goods from entering the United States. Louis Vuitton filed an ITC complaint in December 2010, alleging that various Chinese counterfeiters and some U.S. retailers were infringing its Toile trademark. Some of the defendants settled the matter before trial, and the remaining defendants failed to participate in the proceedings. The decision by Administrative Law Judge Charles Bullock doesn't specify a remedy, but says that the ITC may issue cease-and-desist orders to keep the alleged counterfeiters from "engaging in unfair acts in the importation and sale" of infringing articles. Vuitton's global intellectual property director, Valerie Sonnier, told Women's Wear Daily that, "The chief administrative law judge recognizes the importance of protecting intellectual property and took the welcome step of ensuring that its orders include all merchandise that infringes on our Toile Monogram Marks, and not just products of the respondents in this case."

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=45350&terms=@ReutersTopicCodes+CONTAINS+%27ANV%27

Superman and DC Comics

Attorney and businessman Marc Toberoff represented the heirs of Superman's creators, Jerome Segel and Joe Shuster, in a copyright dispute over the Man of Steel. After Toberoff won summary judgment for his clients in 2008, DC Comics filed a declaratory judgment action against him, his companies and his heirs. DC Comics contends that Toberoff induced Siegel and Shuster's families to break previous rights agreements, and in return, Toberoff would get 40% of whatever the families would earn from Superman rights. The court decided on April 17, 2012, that Toberoff cannot claim attorney-client privilege on the documents he turned over to prosecutors investigating a former associate who allegedly stole case documents from his office. DC Comics and Warner Brothers will now have access to the materials that support their arguments that the Siegel and Shuster families had entered into rights agreements before Toberoff interfered in their relationship with DC Comics. A Warner Brothers spokesperson stated, "We are extremely pleased that the 9th Circuit unanimously found in our favor. The ruling means that defendant Marc Toberoff must now turn over critical evidence in the pending litigation against him and others."

http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=45248&terms=@ReutersTopicCodes+CONTAINS+%27ANV%27

Teller

Magician and comedian Teller, of Penn & Teller, filed a lawsuit in the District of Nevada on April 11, 2012, against Dutch entertainment Gerard Dogge over Teller's copyright illusion known as "Shadows." The illusion involves a spotlight on a vase containing a rose, where the shadow of the rose is projected onto a white screen. Using a knife, Teller then severs the leaves and petals of the shadow, and the corresponding leaves and petals of the actual rose fall to the ground. The complaint alleges that Shadows is "the oldest most venerated piece of material in Penn & Teller's show." The illusion was registered with the Copyright Office in 1983. The defendant in this matter posted a YouTube video where he performs the illusion, and offers to sell the trick. Once Teller found out about the video, he directed YouTube to remove it and contacted Dogge, asking him to stop marketing the work, and even asked him to pay for it. Dogge countered, demanding a much higher sum from Teller, and threatened to disclose the secret to the illusion if Teller did not agree to Dogge's terms. The lawsuit seeks a permanent injunction against any copyright infringement, plus damages.

http://newsandinsight.thomsonreuters.com/Legal/News/2012/04_-_April/Teller_speaks_out,_sues_over_magic_trick/

The Bachelor

Two African-American men filed a class action racial discrimination lawsuit against ABC television and the producer of the reality show "The Bachelor" and "The Bachelorette." The plaintiffs are Nashville residents Nathaniel Claybrooks, an All-American football player, and Christopher Johnson, an aspiring NFL player. They claim that in the 10 years and 23 seasons of the shows, a person of color has never been featured in a central role. Both plaintiffs applied during an open casting in August 2011. Claybrooks claims that his interview lasted less than half the time of white applicants. Johnson alleges that he "did not get the opportunity to even make it to the second level," stating, "I was stopped by a young gentleman about five feet into the door. He saw fit to ask me exactly what was I doing here." Plaintiffs' counsel stated that he estimated there have been dozens or hundreds of contestants turned away because of their race, reasoning "How do you explain zero [Bachelors and Bachelorettes of color] for 23 [seasons]?" The plaintiffs refused to discuss their financial goals, but their attorney insisted: "This case is impact litigation... it can be a vehicle for change."

http://insidetv.ew.com/2012/04/18/bachelor-lawsuit-explained/

May 11, 2012

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

Oracle America, Inc. V. Google Inc.

10-3561, U.S. District Court, Northern District of Cal. (2012)

By Monica Corrine Moran


In a controversial decision dated May 7, 2012, United States District Judge William Alsup in the Northern District of California denied Oracle America, Inc.'s, (Oracle) request for a ruling that could have potentially established that the defendant Google, Inc. (Google) is liable for copyright infringement. Oracle requested that the court grant relief in its favor on the basis of fair use after a jury found, in part, that Google infringed parts of its Java platform language to create the Android mobile operating system. The jury however, was deadlocked over whether Google's use of the Java platform constituted fair use, as it could reasonably be found that Google's infringement was incompatible with Java platform system. (Rpt ¶ 288).

As articulated in Oracle's amended complaint, the Java platform is a bundle of related programs, specifications, reference implementations, developer tools and resources, that permits a user to develop applications written in the Java programming language on servers, desktops and mobile devices. (Case 3:10-cv-03561 - WHA). Oracle acquired ownership in the Java platform as a result of its purchase of Sun Microsystems, Inc. (Sun).

At the heart of Oracle's copyright claim was its contention that Google copied its Java code without obtaining a license to create the Android mobile operating system. In its response, Google asked the jury to consider that, prior to Oracle's purchase of Sun, it made the Java programming language freely available to the public and publicly approved Google's use of the Java in Android, and that Google adhered to fair use guidelines in developing Android with the free and open source code in Java APIs. In addition, Google argued that because Sun never licensed an incompatible version of Java to competitors, any hypothetical loss would be excessively speculative. (Br. 4, Supp. Br. 11-14).

Under U.S. copyright law, the doctrine of fair use states that anyone can defend a use of an unauthorized copyrighted work if the work is being used in the context of teaching, news reporting and commentary, or to advance the public interest.

This decision has the potential of leading to a new trial on the query of whether Google's infringement makes it liable for as much as two and a half billion dollars in damages through the end of 2012, based on a hypothetical lost license fee calculated at the fair market value of the copyright at the time of infringement. (Mackie v. Rieser, 296 F.3d 909, 917 (9th Cir. 2002)).

Following jury deliberations on this issue, this court will then hear arguments as to whether Google violated U.S. patents held by Oracle.

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 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.

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 28, 2012

Senator Schumer Reintroducing the Copyright Design Protection Legislation

By Sarah Robertson (Robertson.Sarah@dorsey.com), Fara Sunderji (sunderji.fara@dorsey.com), and Susan Progoff (progoff.susan@dorsey.com)

Senator Charles Schumer (D., N.Y.) introduced a modified version of the controversial Design Piracy Bill into the Senate on Monday, September 10, 2012. The Senate Judiciary Committee has now favorably reported the bill to the Senate. A copy of the bill as revised, S. 3523, the "Innovative Design Protection Act of 2012," can be found here. http://www.opencongress.org/bill/112-s3523/show. With Congress only expected to be in Session for a few more weeks prior to the election, it is unclear what progress the reintroduced Bill will make.

For information about EASL's Fashion Law Committee, contact Co-Chairs David Faux (davefaux@dhf-law.net) and/or Lisa Willis (lmw@cll.com).

October 4, 2012

MTV's Latin American TM Troubles

By Gergana Miteva

Last week, one of MTV's Latin America distributors, Sam Panama Trading Co. (SPT), sued the network and its parent company Viacom in New York federal court for not registering MTV trademarks in Latin America where SPT had contracted to exploit them. Apparently, SPT was selling merchandise carrying MTV branding in Latin America, and while those trademarks are registered in the United States, they are allegedly not registered in the various countries in which SPT was operating, which prompted it to file a complaint seeking $30 million in damages.
Reportedly, SPT struck a deal with MTV Networks to distribute various clothing and luggage goods carrying MTV branding in 30 countries in Latin America and the Caribbean and only recently discovered that MTV had licensed out rights it had not registered, after getting in hot water with the local authorities. (http://www.hollywoodreporter.com/thr-esq/mtv-sued-30-million-allegedly-logo-latin-america-372929). According to the complaint, the merchandise was "seized by authorities as infringing upon the trademark, copyright and proprietary rights of third parties." This lawsuit has embarked upon the very hairy waters of international trademark protection, so hopefully it will have its day in court and the legal community will get the benefit of a federal judge entangling it.

MTV/Viacom is an unusual suspect to get into this kind of trouble over failing to secure international trademark rights. Small companies are more commonly seen finding themselves in this position because they do not have budgets to hire attorneys to do due diligence, and certainly not to hire in-house counsel. Further, there is then the cost of securing international trademark rights, which can run into the millions of dollars when adding up the filing fees for each country and local counsel for policing the marks. While the Madrid Protocol (http://www.wipo.int/madrid/en/, an international treaty allowing registration of marks in multiple countries with one filing), alleviates significantly the administrative burden of registration, the cost of the filing fees and policing are still substantial. Granting trademark rights is essentially granting a monopoly over the use of a certain name, image, and/or slogan in the marketplace of that country, so it is not surprising that nations place a high price to granting these rights, in particular to foreign companies.

Another point worth mentioning is that not registering the marks may have been a calculated risk for MTV, and the network may still pull out of this one with only a few bruises on its wallet. It is a bit hard to believe that this was merely an oversight on the part of MTV's savvy army of lawyers; it is more likely that the burden of cost and process of registering the marks outweighed the fear of getting sued. In the United States, the entity that first uses a mark in commerce obtains the rights to that mark, in most other countries, the mark belongs to the first to register it. It may well be the case that MTV's legal team did its research and determined that a brand as famous as MTV need not be registered in every country it is used, and MTV, as I am sure, does a good job excluding local entities with substantial public exposure from using it. However, most "first to use" countries tend to have a background in the British legal tradition, so there is a high likelihood that the Latin American countries, where SPT had problems, follow the "first to register" doctrine, vesting all rights to a mark in the entity which first registered it in that country, rather than the one which first used it in commerce.

Even if SPT has a chance of winning this or of getting a sweet settlement, a better route for asserting its rights might have been the preventive one - due diligence and indemnification. It is quite standard for the licensee to ensure that the intellectual property rights being assigned exist before signing a contract, especially as large as this one. In addition, every licensing agreement should obligate the licensor to warrant that it owns all the rights it is bestowing, and failing that, the indemnification clause would save the day for the licensee and MTV would have had to pick the tab contractually for SPT's legal troubles in Latin America.

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 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.

February 21, 2013

Ashby Donald and others v. France

By Barry Werbin

A fascinating and unusual decision of first impression (published only in French) from the European Court of Human Rights (ECHR) involves the rights of photographers to use photographs taken at French fashion shows. Under French law, the fashion houses own the copyrights to any photos taken at a show. In the case, Ashby Donald and others v. France [ECtHR (5th section), 10 January 2013], the Court clarified for the first time that a copyright infringement conviction based on illegally reproducing or publicly communicating copyright protected material can be deemed an interference with the rights of freedom of expression and information under Article 10 of the European Convention.

The petitioners were three fashion photographers (one being an American), two of whom republished on their own fashion website for their own purposes photos taken by one of the other plaintiffs at fashion shows without permission of the fashion houses. They were ordered by a Paris court to pay fines and damages to a clothing designer and five fashion houses, totaling €255,000. After losing an appeal to the French Supreme Court, the photographers appealed to the ECHR.

Article 10 provides for an EU right to freedom of expression, that "may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society..." en.wikipedia.org/wiki/Article_10_of_the_European_Convention_on_Human_Rights. French copyright law has an exception "allowing the reproduction, representation or public communication of works exclusively for news reporting and information purposes." echrblog.blogspot.com/2013/01/copyright-vs-freedom-of-expression.html.

The ECHR found for the first time that national copyright laws may have to yield in proper circumstances to this EU law of freedom of expression (similar to the First Amendment in the context of a fair use debate), but noting that "[t]he Court hereby confirms its approach that while freedom of expression is subject to exceptions, these exceptions must be construed strictly, and the need for any restrictions must be established convincingly." Id.

However, based on the facts of this case, the ECHR held there was no violation of Article 10 because the use of the photos was "not related to an issue of general interest for society and concerned rather a kind of 'commercial speech.'" Id. It also emphasized that national laws are entitled to wide deference. In addition, the ECHR found the fines and substantial damages award not to be disproportionate to the legitimate goals of the French copyright law, noting that the petitioners presented no evidence that the monetary awards had "financially strangled" them. Id.

So we are not alone in the U.S. in struggling with finding the right balance between copyright protection and freedom of expression in a modern Internet age.

If you read French, you may access the opinion at: hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-115845

An excellent blog by a German professor that interprets and translates parts of the opinion is available at: echrblog.blogspot.com/2013/01/copyright-vs-freedom-of-expression.html. Of interest is the professor's note that "the Court's judgment is a clear illustration of the difference between, on the one hand, expression and content contributing to an issue of public debate or a debate of general interest for society, and on the other hand, 'commercial speech'. Speech, messages, pictures and content which are merely money driven do not enjoy the added value of the protection guaranteed by Article 10 of the Convention."

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 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 25, 2013

UMG Recordings Inc. v Escape Media Group Inc.

By Barry Werbin

Attached is a copy of the First Department's unanimous reversal of Justice Kapnick's prior decision in UMG Recordings, Inc. v. Escape Media Group, Inc., which held that pre-1972 sound recordings were covered by the DMCA despite such works not being covered by the Copyright Act. UMG Recordings Inc v Escape Media Group Inc.pdf The First Department noted that Justice Kapnick's decision had relied "heavily on Capitol Records, Inc. v MP3tunes, LLC (821 F Supp 2d 627 [SD NY 2011]), in which the United States district court tackled precisely the same issue and found that the DMCA embraced sound recordings fixed before February 15, 1972."

The Court held that to adopt defendant's view "would directly violate section 301(c) of the Copyright Act." Instead, it adopted UMG's view that "Section 301(c) forbids the Act from 'annull[ing]' or 'limit[ing]' the common-law rights and remedies of owners of such works, and the DMCA, if it were to bar infringement actions against Internet companies that otherwise comply with the DMCA, would do just that." The Court observed that in the absence of the DMCA, "there would be no question that UMG could sue defendant in New York state courts to enforce its copyright in the pre-1972 recordings, as soon as it learned that one of the recordings had been posted on Grooveshark [defendant's Internet music streaming service]." Thus, any "material limitation" on a copyright owner's New York common law rights, "especially the elimination of the right to assert a common-law infringement claim, is violative of section 301(c) of the Copyright Act."

Further, in reading the Act as a whole, the Court emphasized that the DMCA's textual references to "copyright" or "copyright infringers" pertains "only to those works covered by the DMCA. The DMCA expressly identifies the rights conferred by the Copyright Act in stating who a 'copyright infringer' is for purposes of the DMCA. Had Congress intended to extend the DMCA's reach to holders of common-law rights it would have not have provided so narrow a definition."

Lastly, the Court reconciled two underling policies: "The statutory language at issue involves two equally clear and compelling Congressional priorities: to promote the existence of intellectual property on the Internet, and to insulate pre-1972 sound recordings from federal regulation. As stated above, it is not unreasonable, based on the statutory language and the context in which the DMCA was enacted, to reconcile the two by concluding that Congress intended for the DMCA only to apply to post-1972 works."

In conclusion, the Court suggested that "it would be far more appropriate for Congress, if necessary, to amend the DMCA to clarify its intent, than for this Court to do so by fiat."

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.

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

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

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 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

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.

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 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 11, 2014

Bad Lawyering On "The Good Wife": Setting The Record Straight On Music Publishing Law

By Eric S. Goldman
http://ericgoldmanesq.com/blog/

Even though I'm not usually a fan of shows featuring lawyers, I am a big fan of "The Good Wife". So when "The Good Wife" ran an episode entitled David And Goliath that delved deeply into my legal wheelhouse, I was excited. The show was all about copyright law and music publishing, and I've been an entertainment lawyer for 20ish years. Yet as the episode unfolded, I kept finding myself saying: "Wait a minute, that's not right. That's not how the law works."

Things started out well, because the fact pattern was pretty interesting. Two little known singer/ songwriters recorded a pop version of a rap song entitled THICKY TRICK. Basically, the pop version took the entire song lyric from the rap song, slowed down the tempo and added a bubble gum melody. The singer/ songwriters thought that the pop treatment highlighted how ridiculous the lyrics were. The pop treatment of the song was then performed on a "Glee"-style television show. After the show, the pop version of the song became a top seller on iTunes, generating millions of dollars in sales.

The issue was: could the singer/ songwriters sue the television show for copyright infringement over the misappropriation of a song they did not write?

Sadly, things rapidly went downhill. The episode touched on a number of copyright and music publishing issues, and pretty much got them all wrong.

1. Compulsory License. First, a little background. The U.S. Constitution laid the groundwork for modern copyright law in Article 1, Section 8, Clause 8, which reads "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries". In other words, a copyright is a man-made bargain - authors give the public access to their work, and the authors get a state-mandated monopoly on the exploitation of that work.

In the music publishing world, a license of the right to record a song is called a mechanical license. The basic copyright bargain found in the Constitution has led to a compulsory mechanical licensing scheme. Artists can record and distribute their music, provided that anyone else can record and distribute new versions of that music by obtaining a government-mandated mechanical license. In other words, the government tells artists that the liberal licensing of their works is "compulsory."

In "The Good Wife", the manager for the singer/ songwriters obtained a compulsory mechanical license because he wanted to do the simplest thing. The problem is, no one in the music industry uses compulsory licenses because they are unduly burdensome. Insert joke about government-run programs here.

Compulsory licenses have vigorous accounting and record keeping requirements - the costs of complying with the terms of a compulsory license usually exceed the income generated by the use of the licensed song. So pretty much everyone in the industry obtains mechanical licenses for previously recorded songs from record labels and music publishers, who are in the business of granting those licenses and grant them pretty freely.

Mistake Number One: It would have been far easier and cheaper to get a mechanical license for the rap song from the music publisher or record label than it would have been to obtain and comply with a compulsory mechanical license.

2. Derivative Copyright. The lawyers on "The Good Wife" spent a fair amount of time running around trying to obtain a derivative copyright in the covered rap song. However, there is no such thing as a derivative copyright.

There is such a thing as a derivative work. A derivative work is a new work based on a pre-existing work. When someone produces a Broadway musical version of a film, the Broadway musical is a derivative work. There is also copyright in a derivative work. That Broadway musical qualifies for all of the protections available under copyright law as an original work of authorship. Yet there is no such thing as a derivative copyright.

The basic issue on the show was that the singer/ songwriters incorporated a new melody into the rap song. All of the lawyers on the show accepted without question the proposition that incorporating a new melody into the rap song made the cover version a derivative work. In order to create a legal derivative work, the singer/ songwriters would have had to obtain an underlying rights agreement giving them permission to create a new pop song based on the original rap song.

However, was the cover version a derivative work based on the rap version? Maybe not.

The singer/ songwriters obtained a compulsory mechanical license in the rap song. A mechanical license to record a previously recorded song, compulsory or otherwise, includes the right to make a new arrangement of that song to the extent necessary to conform it to the style or manner of interpretation of the performance involved. An arrangement can be defined as chord progression, harmonies, accompaniment rhythm and musical fill phrases which define the style and feel of a song.

It's not clear whether, by incorporating a new melody line, the singer/ songwriters created a derivative work, which was beyond the scope of their compulsory mechanical license, or merely created a new arrangement which would be within the scope of their license.

Mistake Number Two: There is no such thing as a derivative copyright. There is such a thing as copyright in a derivative work, and there is such a thing as an underlying rights agreement which grants permission to create a derivate work.

Mistake Number Three: It is not a foregone conclusion that incorporating new music into a song creates a derivative work. It is a question of fact whether the changes are merely a permitted new arrangement.

3. Satire. The lawyers for the singer/ songwriters, including The Good Wife herself, argued that the cover version was a satire of the rap version. Such assertion confused satire with parody, and then misapplied the parody defense to a copyright infringement claim.

A satire misappropriates material protected by copyright in order to comment on society as a whole. A parody misappropriates material protected by copyright in order to comment on the copied material. In Campbell v. Acuff-Rose Music, Inc., 510 US 569 (1994), the Supreme Court reasoned that, because of this distinction, it was much easier for a parody to qualify as a fair use than it is for a satire.

In this instance, the singer/ songwriters were intentionally making fun of the song they copied, as well as rap music in general. So, rather than arguing satire, the singer/ songwriters' lawyers should have been arguing parody, as parody was the stronger (and more accurate) defense.

That being said, this cover song took the entire lyric from the underlying rap song. While a parody may take enough from the original work in order to conjure up that original work in the minds of the audience, a parody may not take the entire original work.

Mistake Number Four: The best available defense was that the cover song was a parody, not that it was a satire.

Mistake Number Five: The parody cover song probably used too much of the original rap song to qualify as a fair use, since it took the entire lyric.

4. Master Recording Copyright. The dispute between the singer/ songwriters and the television show ultimately hinged on one thing. The TV show's version of the song included very specific background noise - bowling balls hitting pins. And the singer/ songwriters' version of the song was recorded in a bowling alley. Which proved that the television show actually broadcast the singer/ songwriters recording.

Lawyer Alicia Florrick noted: "That's just theft." Yes, but theft of what?

The lawyers had been arguing that the TV show stole the singer/ songwriters' song, violating the copyright in that song. Yet the case was resolved when it was demonstrated that the TV show stole the master recording of the singer/ songwriters' song, violating the copyright in the master recording.

This is a tricky concept. An MP3 recording of a song incorporates two copyrights. The first is the copyright in the song. The second is the copyright in the master recording of the song. If you want to make a new recording of the song itself, you get a mechanical license, compulsory or otherwise. If you want to use the specific master recording of the song incorporated into the .mp3 file, you have to get a master use license.

This distinction between the copyright in a work of art and the copyright in the physical copy of that work of art plays out in odd ways. For example, I own several original oil paintings. While I have the right to display the physical copies of those paintings in my possession, I do not have the right to make and sell copies of those paintings. The right to make and sell copies remains with the artists.

Why is this important in our episode? It is because while there was a lot of talk about whether or not the singer/ songwriters were entitled to a copyright in their cover version of the original rap song, there was absolutely no discussion about who owned the copyright in the master recording of the cover song. All parties concerned simply assumed that the singer/ songwriters owned the copyright in the masters.

The thing is, the artist almost never owns the copyright in master recordings. The label usually owns the copyright in the master recordings, because the label supplies the recording equipment and personnel necessary to create them. Here, the master recording was created in a bowling alley owned by an unidentified party, using recording equipment and people provided by an unidentified party. It's entirely possible that the singer/ songwriters don't own the copyright in the master recording of their cover song. Which means that the happy ending in the episode may be very, very short-lived.

Mistake Number Six. The lawyers did not distinguish between the copyright in the song and the copyright in the master recording of the song.

Mistake Number Seven. The lawyers assumed that the singer/ songwriters owned the copyright in the master recording of the songs.

Fortunately for all parties concerned, I don't think most people watch "The Good Wife" for its realistic portrayal of the legal profession. On the show, first year lawyers spend a lot of time in court; associates have reasonable expectations of making partner in their fourth year; litigators routinely handle both civil and criminal matters; and the current economy is the perfect time for a Chicago law firm to go national.

That being said, I can't help but feel a little disappointed. For a brief second, I felt validated by "The Good Wife", because what I do for a living was deemed interesting enough to supply the plot for an episode of a top-rated TV show. It's kind of like getting to sit at the cool kids' table at lunch, only to find out that it's because they want you to do their homework.

Maybe I just need to watch less television.

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 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 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

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 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

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 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.

December 10, 2014

Oral Argument in Authors Guild v. Google, 13-4829-cv, U.S. Court of Appeals for the Second Circuit, December 3, 2014

By Robert J. Bernstein

Robert J. Bernstein practices law in New York City in The Law Office of Robert J. Bernstein. He is a frequent author and lecturer on copyright law and litigation, an Honorary Trustee and past President of the Copyright Society of the U.S.A., a member of the Copyright and Literary Property Committee of the New York City Bar Association, and formerly served as Chairman of the Copyright Law Committee of the American Intellectual Property Law Association and as a member of its Board of Directors. Mr. Bernstein has been co-author of the New York Law Journal bi-monthly "Copyright Law" column for 28 years.

For those of you who could not attend last Wednesday's oral argument in Authors Guild v. Google and do not want to await the transcript/CD, or who have neither the time nor inclination to read or listen to the recording of the 75 minute proceeding, here is a summary of how the argument unfolded in chronological order:

Disclaimer: Your author represents as co-counsel, along with fellow co-counsel Peter Jaszi and lead counsel Daniel F. Goldstein, the National Federation of the Blind and four print-disabled individuals (collectively, the "NFB") in the case of Authors Guild, et al. v. Hathitrust, et al., 902 F. Supp.2d 445 (S.D.N.Y. 2012), affirmed 755 F.3d 87 (2014) ("HathiTrust"). In HathiTrust, although Google was not a party and its liability/fair use was not adjudicated, the Second Circuit held that the digitization by Google of the entire contents of several major university libraries for the purpose of enabling university students and scholars to conduct research, in particular searching for books containing the searched terms without displaying any text from the books, constituted a transformative fair use. The NFB had intervened in the district court proceedings in order to obtain full access to the digitized collections for print-disabled students and scholars under both the fair use doctrine and the Americans with Disabilities Act ("ADA"). The Second Circuit rejected the argument that such full text reading of the digitized text was a transformative use, viewing reading as reading whether via print or digitized text-to-speech software. Nevertheless, applying general fair use principles, and relying in part on the U.S. Supreme Court discussion of fair use for blind individuals in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 455 n.40 (1984), as well as Congressional recognition in the ADA of the public policy benefits of equal access for those with disabilities, the Second Circuit held that the NFB uses constitute fair use. The Second Circuit remanded certain issues relating to preservation uses to the district court, where the case now resides. The remanded issues do not impact the Second Circuit holding with respect to the NFB.

Comment on Disclaimer: Your author recognizes, both as a lawyer and legal commentator, the obligations to disclose any connection that could reasonably be considered to influence the contents of a published writing. However, the readers should also keep in mind that, in this posting, the author will be attempting to report on the unfolding of the oral argument as it happened, in real time, without editorializing. The transcript/CD will appear in due course, so the readers will be able to judge for themselves whether my attempt to report objectively has succeeded.

REPORT

The Panel: The Second Circuit panel hearing the appeal consisted of the Honorable José A. Cabranes, the Honorable Pierre N. Leval, and the Honorable Barrington D. Parker. Judge Cabranes, as the only active judge on the panel, would normally have presided, but as he was appearing via video from his chambers in Connecticut, the longest-serving senior appellate judge present, Judge Leval, presided. This may be viewed as fitting in view of the fact that Judge Leval introduced the concept of "transformative use" into the fair use lexicon in his 1990 Harvard Law Review article, "Toward A Fair Use Standard," 103 Harv. L. Rev. 1105, which the Supreme Court adopted four years later in its still-governing, but pre-digitization era, fair use decision in Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).

This same panel had also considered the earlier appeal of the class certification issue in Author's Guild v. Google (hereafter the case will be referred to as "Google," and non-italicized "Google" will refer to the defendant-appellee). In its Order remanding the case to the district court for a determination of the fair use defense, the panel, per curiam, directed the Clerk of the Court to assign any subsequent appeal of the case to the same panel. 721 F.3d 132 (2d Cir. 2013).

Two members of the panel, Judges Cabranes and Parker, were also members of the Second Circuit panel that decided HathiTrust, wherein, in an opinion by the Honorable Barrington D. Parker, the court held, inter alia, that the digitization of the entire contents of the university libraries for the purpose of search and without displaying any text constitutes a transformative fair use.

Prior Proceedings: The long-and-winding road leading to Courtroom 1703 of the Thurgood Marshall U.S. Courthouse is beyond the scope of this report. The only issue before the Court concerned the appeal of the grant of summary judgment to Google on its fair use defense. In his summary judgment opinion, the Honorable Denny Chin (who retained the case in the district court after his appointment to the Second Circuit) held that Google's digitization of the university libraries collections, and its own use of that corpus for purposes of enabling users of Google Books to search the database for books containing the searched terms (search function) and for reading "snippets" displayed on the Google Books website (display function), both constitute fair uses; and that Google's provision to the university libraries of copies of the digitized databases from each library's own collection, alleged by the Authors Guild to infringement the distribution right, also constitutes a fair use because it enabled the libraries to engage in the fair uses approved by the Second Circuit in Hathitrust. Google, ___ F.Supp.2d ___ , 2013 WL 6017130 (S.D.N.Y. Nov. 14, 2013).

Further Background: Readers interested in articles summarizing the decisions referred to above may find the following New York Law Journal (NYLJ) "Copyright Law" columns of interest: R. Bernstein and R. Clarida, "Fair Uses of Hathitrust Digital Library," June 18, 2014, p. 3; R. Bernstein and R. Clarida, "Google Granted Summary Judgment on Fair Use Defense," NYLJ, December 20, 2013, p.3; and D. Goldberg and R. Bernstein, "The Supreme Court Balances the Act," NYLJ, March 18, 1994, p. 3.

THE ARGUMENT

Judge Leval prefaced the proceedings by stating that due to the complexity and importance of the issues presented, the Court would disregard the 15-minute posted limits and instead allow each side 30 minutes, with the possibility of additional time if needed. As it turned out, the total time elapsed was close to 75 minutes. No other cases were on the docket at this 2:00 p.m. sitting.

The author will now report on the arguments, questions, comments and rebuttals as they unfolded chronologically. The names of the participants are boldfaced to indicate who is speaking. Quotation marks are only used when I am reasonably confident that I was able to capture the actual words in my notes Generally, but with many exceptions, each new paragraph starts when a different speaker enters the dialogue.

For Appellant the Authors Guild (Paul M. Smith, Jenner & Block, LLP [arguing]; and Edward R. Rosenthal, Frankfurt Kurnit Klein & Selz, PC):

Mr. Smith opened with the necessary acknowledgment that HathiTrust is the law of the Second Circuit, while reserving the right to challenge the holding in other circumstance (referring, sub silentio, to the possibility of a request for Supreme Court review). He then immediately introduced the reasons why the Authors Guild ("AG") contended that Google's uses were qualitatively different from those in HathiTrust, and why those differences mandated a holding of infringement rather than fair use. He stated that Google's uses are "quintessentially commercial," engaged in by a for-profit company to preserve its key asset - maximizing visits to its website in order to increase advertising revenues.

Judge Leval commented that, in his view, notwithstanding a distinction between commercial and noncommercial uses, classic holdings of fair use have involved commercial uses (that is, the user was at least significantly motivated by potential profit), and that he "would be surprised if [AG] win[s] on that basis."

Mr. Smith rejoined by stating that this case was different due to the enormity of the commercial use, leading Judge Leval to ask whether his proferred distinction was between "big profits" and "little profits," followed by this query: "If Google does not cause any harm" to the copyrighted works, what difference does it make how much profit it derives from the use?

Mr. Smith then turned to what he argued is the second determinative difference from the uses in HathiTrust: Google displays text (referred to as "snippets" to indicate their brevity), whereas no text was displayed in the libraries' uses. He stated that such displays harm an existing and emerging market to license books for digitization and related uses, which he characterized as "derivative uses" [referring to the copyright holder's exclusive right to create derivative works based on the copyrighted work]. Here, he cited a 1992 decision by then-district-court Judge Leval holding that photocopying of scientific articles by Texaco scientists was not a fair use. American Geophysical Union v. Texaco, Inc., 802 F.Supp. 1 (S.D.N.Y. 1992), aff'd, 60 F.3d 913 (2d Cir. 1994).

Judge Leval stated that he did not consider his opinion in Texaco to be of guidance here due to "big differences" between Texaco's and Google's uses, noting that, in Texaco, 80 in-house scientists made multiple copies of entire articles in order to have convenient access to them rather than purchasing additional journal subscriptions. In reply, Mr. Smith asserted that the test applied in Texaco - whether the use is one for which a license exists or is likely to emerge - is relevant to the emerging digitization marketplace.

Judge Leval responded that whether a market for the use is likely to emerge "is not a very useful test" with respect to transformative works because, no matter how transformative the use, someone at some price would be willing to license it to avoid the cost of litigation. Mr. Smith averred that a distinction should be made between uses that a copyright owner might never license, such as parody or criticism, and uses that the owner would be prepared to license for the right price, a proposition as to which Judge Leval asked if Mr. Smith had any case authority.

Mr. Smith also argued that it should be a policy decision for Congress whether "new derivative uses," which, in his view, include digitization, should be free of a license.

At this point, Judge Leval introduced two issues that he stated were of concern to him: (i) what limitations, if any, are there on what the libraries can do with the digitized collections provided to them by Google; and (ii) what vulnerabilities do libraries have to hacking and piracy? In this regard, Judge Leval asked: Even if we decide that Google's use is fair use, "if the upshot is the multiplication of copies and greater potential for hacking," how does that impact the analysis? He further asked whether this could be a particular concern with respect to "hot properties", such as a new Harry Potter book.

Rather than respond commenting immediately on these concerns, Mr. Smith initially directed his response to their predicate ("even if we decide Google's use is fair"). Thus, Mr. Smith argued that Google's use was not fair, inter alia, because, in providing copies of the digitized collections to the libraries, Google was using those copies as "currency" - a form of barter in lieu of monetary compensate in exchange for Google's access to and use of the books for digitization. Judge Leval stated that he "was not following" that point.

Mr. Smith than turned to another reason why he contends that Judge Leval's predicate ("assuming that we find fair use") to his stated concerns was faulty, arguing that in evaluating fair use, only the conduct and purpose of the initial user/defendant is relevant, but not those of downstream users or third parties (such as, in Mr. Smith's characterization, the libraries). For that reason, he contended, Google should not be entitled to rely on the fair use holding in HathiTrust to justify its own use.

Mr. Smith then addressed Judge Leval's stated concern about the vulnerability of digitized collections within library databases to hacking and piracy - arguing that in Google's agreement with the Stanford Library (which is not part of the consortium of university libraries constituting Hathitrust and was not a party in HathiTrust), students are not restricted from simultaneously reading entire texts online).

Judge Leval asked: "Is it Google's responsibility to be sure that Stanford's use is fair?" To which Mr. Smith replied: "Google assumed responsibility" for the library uses of the digital databases it provided to them. Judge Leval asked: "What do you mean?," and Mr. Smith responded: "If Google tries to ride on the libraries' uses," they should be responsible for the consequences.

Judge Parker then turned to a different issue, asking: "Are there any provisions in the documents that restrict the contours of what Google is doing? What keeps them from changing?"

Mr. Smith stated that nothing in the arrangements would prevent Google from expanding or otherwise changing its practices, and posited a multiplier effect: "What if everyone could do this? Isn't this a policy decision for Congress?"

Judge Leval observed that displaying 8 pages rather than snippets would be a different case, and Judge Parker posed his own rhetorical question: "You aren't seriously suggesting that we wait for Congress to Act?"

At which point Mr. Smith changed direction to focus on the "limited" remedies the AG was seeking. He articulated a bifurcated approach to Google's past and future conduct. He assured the court that AG was only seeking monetary damages for past alleged infringements, and was not requesting that the already existing database be undone. As to future digitization and related uses, AG seeks the imposition of a licensing requirement, but not injunctive relief.

Judge Leval then asked whether the present arrangements preclude digitization of a hot new book. Mr. Smith replied that most new books are already licensed in Google's Partners Program with publishers, which led Judge Leval to ask: "Are you saying that hot new books aren't part of the case?"]. Mr. Smith then clarified his position by responding that, "on the contrary," because not all publishers are part of Google's Partners Program and because authors can opt out of Google Books, many hot new books could be affected.

Judge Parker then asked: "What precisely is the mechanism" for an author to opt out? Mr. Smith stated that when an author opts out, the work is no longer displayed in snippets, but he understood that the work would still remain in the database, and may (he was not certain) still be available for search.

Mr. Smith then turned to AG's argument that the display of snippets itself causes harm, explaining, by way of example, that certain types of books are often referred to only for limited purposes and discrete information, and that snippet display could satisfy those readers' needs, resulting in the loss of a sale. Yet Judge Leval observed that dictionaries, for example, were excluded from snippet use. Mr. Smith rejoined by stating that other types of books, for example history books, may be used for short bits of information that could be obtained by viewing a series of snippets rather than purchase.

Mr. Smith then turned to an evidentiary point, contending that Judge Chin articulated no evidentiary basis for his rejection of the AG's argument that snippet displays cause market harm. [Questions of the proper allocation of burden of proof on this point were not addressed in any detail at the argument, but merely averted to].

Judge Cabranes posed a procedural question concerning the reasons why certain portions of the appendix were redacted. Mr. Smith referred to the protective order entered in the district court which required confidential treatment, but in response to further queries by Judge Cabranes and Leval, the parties agreed to advise the court whether there was any portion of the redacted materials which the parties still requested be redacted from any published opinion.

At this point, Google's counsel presented his case.

For the Appellee Google, (Seth P. Waxman, Wilmer Cutler, Pickering, Hale and Dorr LLP [arguing]; and Joseph C. Gratz, Durie, Tangri LLP):

Mr. Waxman commenced by enumerating what he characterized as three fundamental points: (i) Google's and the libraries' uses "quintessentially" promote progress in the arts in furtherance of copyright's constitutional purpose; (ii) all of these uses are products of a collaboration between Google and the libraries which allow each to engage in transformational uses that neither one could accomplish alone; and (iii) there is no evidence in the record of any market harm to authors.

Judge Leval immediately asked whether, even if there is no evidence of harm to any particular books, there is harm to a market for licensing digitization rights? In response, Mr. Waxman made two points: (i) HathiTrust, which is Second Circuit law, rejected that argument; and (ii) in any event, there is no evidence that any such market exists or is emerging.

Judge Leval then asked about record evidence of licensing digitization rights in Europe, to which Mr. Waxman replied: the European licenses grant the right to reproduce and display the entire book which is a materially different type of market.

Judge Parker asked how much Google has spent on the project, to which Mr. Waxman replied, over $120,000,000. In further colloquy it was stated that there is nothing in the record demonstrating the extent to which Google may have derived profits (direct or indirect) from the uses.

Judge Cabranes then asked a series of questions about the commerciality (or not) of the uses: "Is this only a charitable enterprise by Google? Is it solely designed for eleemosynary purposes?" "Is any part of the Google project for profit?" Judge Leval supplemented this inquiry by asking whether advertising is displayed in connection with the uses?

In response, Mr. Waxman noted that no ads are displayed on pages responding to search requests or on pages displaying snippets, and that Google makes no money from referring sales to third parties.

Judge Parker asked: "What keeps Google from changing the way it operates," such as by lengthening its display of text? Mr. Waxman replied that [presumably significant] changes would have to be evaluated separately under the fair use factors.

In further response, Mr. Waxman argued that if Google derives profit from the use, it would not distinguish this case from numerous fair use cases. He continued: "If Google didn't expect to make some return on this, it may never have engaged in this incredibly transformative use."

Judge Parker noted that in the class certification appeal, Google argued that fair use must be evaluated as to each individual book, but that on this appeal Google argues that fair use may be considered as to the entire corpus of digitized works, suggesting an apparent inconsistency between these two positions. Mr. Waxman replied that there was no inconsistency because in the class certification appeal Google did argue that the entire Google Book Project should be found to be fair use, but that, if the court did not conclude fair use as to the entire project, then questions of infringement would have to be evaluated one book at a time.

On the subject of the libraries' uses, Mr. Waxman noted that Google's agreements with each library required that any use by the library be consistent with copyright law. Judge Leval queried whether, even if the libraries complied with copyright law, weren't the digital copies stored on the libraries' databases vulnerable to hacking and the resulting infringing conduct of others?

In response, Mr. Waxman noted again that HathiTrust is Second Circuit law and that it determined that AG's security concerns did not make the uses unfair. Judge Leval stated that the finding in HathiTrust was merely that, on the record there, the possibility of a security breach was speculative.

Mr. Waxman replied that there is no evidence in the Google record to support AG's security risk argument. He asserted that there is no record of any instance of hacking into the libraries' digitized collections in the years since they were created. He further argued that there is good reason for a record devoid of hacking into the library corpus - digital copies of more recent and commercially popular books are already available on the Internet through, for example, Amazon. He asserted that, in contrast to Google's agreements with HathiTrust member libraries, the standard Amazon contract with publishers does not require Amazon to take security measures.

Judge Leval then asked: Are you saying that digital copies are more easily available elsewhere than from within the libraries' digital corpus? Mr. Waxman replied that, as a matter of policy, Google does not digitize books for search and snippet display until two years after their initial publication, which further reduces any possible substitutive effect.

Returning to a point raised earlier by Judge Parker, Judge Leval asked whether that policy could change? Mr. Waxman did not, at that point, address the possibility of change, but instead emphasized that the point of the Google Books is to allow users to find books, "and nothing else."

Judge Leval then asked: "Is the two-year blackout in the record as a characteristic that the court can base its fair use analysis on," and, if so, requested a record cite. Judge Leval later repeated this query, and Mr. Waxman undertook to reply "anon" (the archaic form of "soon").

Judge Leval then returned to his question regarding the impact of Google's agreement with Stanford, which contains no restrictions on the Stanford library's full text display of digital copies which could be read by students simultaneously. Mr. Waxman replied that under that agreement, Stanford is still obligated to only make such uses as are consistent with copyright law, and, in any event, even if Stanford were to breach its agreement with Google, that would not render Google's own use unfair.

Mr. Waxman then focused on the "copy-shop" cases relied on by AG, in which commercial copy shops created and sold coursepacks to students. He argued that this use was the polar opposite of Google's transformative use because the copy shops packaged and sold the coursepacks to students as substitutes for their purchase.

Judge Cabranes then stated: "Let us follow the dollars (even if ultimately it may not matter)". Toward that end, he engaged in an extended colloquy with Mr. Waxman that ended with this stipulation: Mr. Waxman: "I will stipulate, arguendo, that Google had [has] a profit motive because [the Google Books Project] would bring more eyes to Google." However, he qualified this stipulation in two ways, stating that (i) there is no evidence in the record that Google provided digital copies to the libraries to avoid paying for access to the libraries' hard copies; and (ii) that, on its most fundamental level, Google and the libraries were engaged in a collaborative project designed to make millions of books available for search by the public. With respect to the latter point, Mr. Waxman quoted from the agreement between Google and the University of Michigan which is prefaced with a statement of their joint purpose.

The Authors Guild Rebuttal (by Mr. Smith):

In a brief rebuttal argument, Mr. Smith made the following points:

(i) this case was decided by the district court on summary judgment, and therefore a holding of fair use cannot be based on any genuinely disputed material facts;

(ii) Google has the burden of proof on its fair use defense, and therefore, where proof is absent or insufficient, inferences must be taken in AG's favor;

(iii) the court should weigh in the balance the allegedly anti-competitive conduct of Google in allegedly using the digitization of library collections to maintain and increase its dominant market position in book digitization vis-à-vis Amazon and others; and

(iv) it would be inappropriate to impose on AG an impossible burden of proving that the display of particular snippets led to lost sales of particular books.

At this point in the rebuttal, Judge Cabranes interjected with this question: "What is the decree of court that you are seeking from us?" He observed that, in its brief, AG's requests broad relief, but that, in the oral argument, it appears that AG is seeking less.

In response, Mr. Smith repeated the remedies he outlined during his main argument, while elaborating by citation to the Supreme Court opinion in eBay, Inc. v. Mercexhange, L.L.C., 547 U.S. 388 (2006). [There, the court held that before issuing injunctive relief, a court must make findings of fact on four separate factors, rather than merely apply presumptions. For an excellent discussion of the impact of eBay in fair use cases, see R. Dannay, "Copyright Injunctions and Fair Use: Enter eBay -- Four-Factor Fatigue or Four-Factor Freedom?" 37th Annual Brace Memorial Lecture, Journal of the Copyright Society of the U.S.A.,Vol. 55, No. 4 (Summer 2008), p. 449-468)].

Summarizing, Mr. Smith stated that in light of (i) eBay; (ii) the passage of time; and (iii) the value of the database, "we do not request an injunction but monetization and licensing for future scanning."

Judge Cabranes then asked: "Do you think the case could be resolved by a sum certain?" Mr. Smith replied; "Yes," suggesting that the numbers could be worked out with the aid of expert testimony and computer software, and proffering the example of the recent settlement between Viacom, et al. and YouTube, in which he represented the plaintiffs against Google's YouTube subsidiary.

Judge Cabranes asked whether discovery is over, to which Mr. Smith replied "yes."

As a final point, Mr. Smith revisited the alleged risk of a security breach, citing by way of example the massive hacking of the JSTOR database of scholarly articles and journals by a proponent of the "research-must-be-free" point of view.

Judge Leval then declared the case submitted for resolution by the panel and adjourned the proceedings.




February 8, 2015

Gaylord v. U.S.

By Barry Werbin

This case involving use of a photo of the Korean War memorial sculpture on a .U.S stamp, has been up and down to the Federal Circuit twice and ongoing for a long time. In this final chapter (we hope), the district court's after-remand copyright damages award in favor of the plaintiff and against the U.S. Postal Service based on a 10% per-unit royalty, resulting in an award of $540,000 from sales of collector stamps sold by the Post Office, plus prejudgment interest, was affirmed by the Federal Circuit. The district court based the royalty on survey evidence showing the Postal Service's commissions in its ordinary course of business, and determined that the Postal Service received $5.4 million in revenue -- "'almost pure profit'"--from unused stamps depicting the image that had been sold to collectors during the limited life of the stamp issue.

Of particular interest is the Federal Circuit's re-affirmance of a reasonable royalty for copyright damages, an idea common in patent cases. The Court noted that: "Consistent with the conclusions of other circuits that have considered the issue, we held [in Gaylord II, 678 F.3d 1339 (Fed. Cir. 2012)] that actual damages for copyright infringement may be based on a reasonable royalty representing 'the fair market value of a license covering the defendant's use.'" While setting a royalty is typically tied to a hypothetical license/royalty negotiation, the Court emphasized that this "determination must be tied to the particular work at issue and its marketplace value--much as, in patent law, the determination must be tied to the particular patented technology and its footprint in the market."

After reviewing all the evidence assessed by the district court, the Federal Circuit concluded that "giving the Postal Service 90% of the profits and Mr. Gaylord 10%--is within the range of reasonable findings from the evidence." This was so even if the Postal Service might have negotiated a flat license fee instead of a running royalty due to "the uniqueness of the work at issue here, including its status as a distinctively recognized symbol of the Korean War for most Americans...."

A copy of the decision is available here Gaylord v. US.pdf

February 11, 2015

Supreme Court to Decide Whether Issue Preclusion Applies to TTAB Findings on Likelihood of Confusion in Infringement Litigation

By Tim Buckley

On December 2, 2014, the Supreme Court heard oral arguments in B & B Hardware v. Hargis Industries, which presents the following issues for resolution:

1. Whether the Trademark Trial and Appeal Board's (TTAB or Board) finding of a likelihood of confusion precludes a party from relitigating that issue in infringement litigation, in which likelihood of confusion is an element; and
2. Whether, if issue preclusion does not apply, district courts are obliged to defer to the Board's findings concerning likelihood of confusion absent strong evidence to rebut them.

Background

Since 1997, B & B and Hargis have been contesting each other's rights in the marks "SEALTIGHT" for aerospace fasteners and "SEALTITE" for construction fasteners, respectively. B & B was the first to the market and also won the race to the Patent and Trademark Office (PTO), receiving a certificate of registration in 1993 for "SEALTIGHT" based on an application filed in 1990. Hargis filed an application to register "SEALTITE" in 1996, but registration was refused based on a likelihood of confusion with B & B's senior mark. Multiple administrative and judicial proceedings ensued, and in 2007 the TTAB again denied Hargis's application to register SEALTITE based on a likelihood of confusion.

In a subsequent action for infringement by B & B against Hargis, the Eastern District of Arkansas refused to apply issue preclusion on the question of likelihood of confusion and submitted the case to a jury, which returned verdicts against B & B on all of its claims and for Hargis on all of its counterclaims. The United States Court of Appeals for the Eighth Circuit affirmed, reasoning that the TTAB is not an Article III court, and the likelihood of confusion issues decided by the TTAB were not the same as those brought in the action before the district court.

The doctrine of issue preclusion, or collateral estoppel, is appropriate where (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and actually decided, (3) there was full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits.

B & B maintains that Congress's use of the language "likely to cause confusion" throughout the Lanham Act at 15 U.S.C. §§ 1052(d) (registration), 1114(1)(a) (infringement of registered marks), and 1125(a)(1)(A) (infringement of unregistered marks) indicates that the concept has the same meaning in each context, and therefore the issue of likely confusion is the same in TTAB proceedings and in infringement suits. As the registration provision mandates consideration of a mark as it is "used on or in connection with the goods of the applicant," the TTAB's inquiry is not divorced from marketplace context. Moreover, because the TTAB follows the Federal Rules of Civil Procedure and Federal Rules of Evidence, B & B argues that TTAB proceedings are similar to civil actions, so preclusion should apply.

In opposition, Hargis argues that registration proceedings and infringement actions resolve distinct issues, in that the TTAB looks to whether an applicant's mark "so resembles" another mark that it is likely to cause confusion, whereas district courts are tasked with deciding whether a party's actual use of the mark in the marketplace is likely to cause confusion. At oral argument, Hargis's attorney, Neal Katyal, detailed technical aspects of trademark prosecution and paraphrased the Federal Circuit's decision in Mayer/Berkshire as follows:

[A] claim of infringement before the court and a . . . likelihood of confusion before this Board are different claims. . . . [I]n Board proceedings, likelihood of confusion is determined independent of the context of actual usage. In an infringement action, on the other hand, the context of the use of the mark is relevant. Mayer/Berkshire Corp. v. Berkshire Fashions, Inc., 424 F.3d 1229, 1233 (Fed. Cir. 2005) (internal quotations omitted).

Hargis's lawyer also distinguished the Lanham Act from sections 315 and 325 of the patent statute, which under certain circumstances explicitly provide for preclusion in civil actions after the Patent Trial and Appeal Board (PTAB) issues a final written decision. The Lanham Act contemplates some effects of TTAB decisions in the infringement context (e.g., presumptions of validity and ownership), but it is silent on the issue of preclusion.

The Circuit Courts of Appeal have taken scattered approaches to this issue. The Third and Seventh Circuits have each applied issue preclusion, albeit with different justifications. Jean Alexander Cosmetics, Inc. v. L'Oreal USA, Inc., 458 F.3d 244 (3d Cir. 2006); EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375 (7th Cir. 1984). The Fifth and Eleventh Circuits deny preclusive effect to TTAB decisions, but apply a form of deference. Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 10 (5th Cir. 1974); Freedom Sav. and Loan Ass'n v. Way, 757 F.2d 1176 (11th Cir. 1985). The Second Circuit, which is regarded by some practitioners as the preeminent court with respect to intellectual property law, conducts an "identity of issues" analysis and applies preclusion only when the TTAB has determined likelihood of confusion by reference to the entire marketplace context of the conflicting marks, as required in infringement actions. Levy v. Kosher Overseers Ass'n of Am., Inc., 104 F.3d 38 (2d Cir. 1997). J. Thomas McCarthy, author of the leading treatise on trademarks and unfair competition, endorses the Second Circuit's approach. 6 McCarthy on Trademarks and Unfair Competition § 32:101 (4th ed.).

Analysis

The Supreme Court will likely hold that issue preclusion does not attach to TTAB findings on likelihood of confusion. In its amicus curiae brief, the International Trademark Association (INTA) took the position that TTAB determinations should not have preclusive effect in subsequent civil court proceedings because of the significant differences in the standards and procedures applied by the TTAB and federal courts.

The Trademark Manual of Examining Procedure (TMEP) at section 1207.01(a)(iii) provides that the "nature and scope of a party's goods or services must be determined on the basis of the goods or services recited in the application or registration." (emphasis added). Section 1207.01(c)(iii) provides that if "a mark (in either an application or a registration) is presented in standard characters, the owner of the mark is not limited to any particular depiction of the mark. . . . The rights associated with a mark in standard characters reside in the wording (or other literal element, e.g., letters, numerals, punctuation) and not in any particular display."

The TTAB is required to consider trademarks in hypothetical scenarios that do not comport with reality. For instance, it must presume that a registered standard character mark could be used in the same manner of display as an applied-for mark presented in special form, even if the registered mark is in fact only used in one particular manner. In infringement litigation, by contrast, Article III courts consider how the marks are actually used in the marketplace and how consumers encounter conflicting marks. These different standards reflect the fact that the TTAB's primary focus is on the registrability of marks, whereas Article III courts are concerned with the actual use and effect of marks on consumers in the marketplace.

At oral argument Justices Scalia and Breyer apparently struggled to grasp the differences between the relevant inquiries in Board proceedings and infringement litigation. Justice Ginsburg was more receptive to the Respondent's arguments and noted at the outset that perhaps preclusion should not apply because the stakes are much higher in infringement litigation. Chief Justice Roberts proposed a general rule of preclusion unless the issue of use in litigation involves something "other than what the TTAB would have been looking at . . . ."

The high court may take a middle ground and align itself with the Second Circuit by requiring preclusion only if the likelihood of confusion issues before the TTAB and district court are in fact identical. Regarding the second issue presented, if preclusion does not apply, district courts may nevertheless be required to give deference to decisions of the TTAB because of that administrative body's expertise in the field.

The court's opinion is expected to be released by April or May. Further analysis will be provided at that time.

Timothy J. Buckley is an associate at the law firm of Powley & Gibson, P.C. in New York. The views expressed herein are those of the author and do not necessarily reflect those of the Powley & Gibson firm or its clients.

February 18, 2015

28th Annual Horace S. Manges Lecture - Columbia Law School

The Dean of the Faculty of Law and the Kernochan Center for Law, Media and the Arts at Columbia Law School kindly ask that you save the date for the 28th Annual Horace S. Manges Lecture, "Optional Copyright Renewal? Lessons for Designing Copyright Systems"

To be given by:

R. Anthony Reese
Chancellor's Professor of Law
School of Law, University of California•Irvine

Monday, February 23, 2015 at 6:30 p.m.
Columbia Law School • Jerome Greene Hall

Please direct inquiries to Cindy Tangorra at ctango@law.columbia.edu or 212-854-9073.

Kernochan Center for Law, Media and the Arts • 435 West 116th Street, Box A-17 • NY, NY 10027
t: 212-854-7424 • f: 212-854-9111
kernochancenter@law.columbia.edu • www.law.columbia.edu/kernochan

Jane C. Ginsburg
Morton L. Janklow Professor of Literary and Artistic Property Law; Faculty Director, Kernochan Center

June M. Besek
Lecturer-in-Law; Executive Director, Kernochan Center

Philippa Loengard
Lecturer-in-Law; Assistant Director, Kernochan Center

Old Rules, New Enforcement

By Angele Chapman

On March 24, 2014, the Bose Corporation extended its contract as a sponsor with the National Football League (NFL, league). The implications of this contract have changed the face of the NFL and how its players use products that are shown on television. On October 5, 2014, Business Insider reported that players were barred from wearing any non-Bose headphones during televised broadcasts.

Beats Electronics, a rival of the Bose Corporation, is a division of Apple Inc., which produces audio products. It gained its popularity and was co-founded by rap producer Dr. Dre and Interscope-Geffren-A&M Records chairman Jimmy Lovine. Many NFL players have contracts with Beats Electronics, commonly known as "Beats by Dre." Most recently, the public has been seeing star players like 49ers quarterback Colin Kapernick and Seahawks cornerback Richard Sherman, wearing "Beats by Dre" headphones during warm-ups and games.

The NFL released a statement confirming Bose's relationship as a sponsor. It was reported that: "Under the terms of its agreement with the league, the NFL confirmed, Bose received a broad set of rights that entitle it to prevent players (or coaches) from wearing any other manufacturer's headphones during televised interviews." The ban includes pre-season interviews and remains in effect until 90 minutes after a play has ended. An NFL spokesperson stated that:"The NFL has longstanding policies that prohibit branded exposure on-field or during interviews unless authorized by the league. These policies date back to the early 1990s and continue today." In 2006, running back Reggie Bush was fined $10,000 for wearing Adidas cleats because of the NFL's contractual partnership with Nike and Reebok that prohibited any other brand to be worn during games. This type of enforcement is similar to what occurred during the 2014 FIFA World Cup, when Beats headphones were banned because of FIFA's contractual agreement with Sony.

The question is: If the NFL had these brand exposure policies since the 1990s, why is it only recently enforcing them? Perhaps the league's new legal issues and criticism make it an easy target for heavy sponsors to void their contracts. After the recent incidents with Ray Rice's alleged domestic violence caught on video and Adrian Peterson's child abuse allegations, many sponsors like Procter & Gamble have taken the sidelines when it comes to supporting the NFL's decisions. While Procter & Gamble remains an NFL sponsor, it issued a statement that: "Domestic violence is completely unacceptable and we have strongly urged the NFL to take swift and decisive action to address this issue, and we will determine future actions as needed." This statement comes after Procter & Gamble decided to remove itself from the NFL's Breast Cancer Awareness campaign with its Crest Toothpaste brand. Other companies, such as Anheuser-Busch InBev, PepsiCo and Radisson Hotels, have questioned the NFL's handling of its recent legal issues with the players. The possibility of losing millions of dollars in sponsorships could be a reason why the NFL wants to hold on dearly and enforce the contracts with the sponsors that remain.

Another reason as to why the NFL may be enforcing this policy is because Bose sued Apple's Beats Electronics in July 2014 for patent infringement for allegedly infringing on its noise-cancelling technology. In the complaint filed in the United States District Court in Delaware, Bose Corporation alleges that Beats Electronics infringes on five patents, and seeks an injunction and damages for all infringing sales. Although the NFL denies that Bose's contract has influenced its enforcement policies, upcoming litigation may play an underlying role in NFL's decision. This theory is in comparison with Microsoft, which had a $400 million agreement for the NFL to exclusively use the Surface tablet on the field, but announcers and players are still referring to the tablets as "iPads", according to Business Insider.

Whatever reason the NFL gives for enforcing its branding policies, one can expect to see a difference in advertising among players (and coaches) and the technology they use during Monday night football and the upcoming season. While this level of brand enforcement is emerging, players such as Colin Kapernick decided to test how stringent the NFL is willing to go with its rules. After being fined $10,000 for wearing his Beats by Dre headphones during a conference, Kapernick decided to keep his headphones on, but put tape over the logo. So far, it seems as though the NFL is willing to accept the tape as conforming with the regulations and contractual obligations to its sponsors.

Sources:
https://globalpressroom.bose.com/uk-en/pressrelease/view/1318/FALSE/1

http://recode.net/2014/10/04/nfl-bans-beats-headphones-on-camera/

http://www.washingtonpost.com/blogs/early-lead/wp/2014/10/05/nfl-bans-players-beats-by-dre-headphones-on-camera-because-of-its-bose-deal/

http://bostinno.streetwise.co/2014/07/25/bose-suing-beats-by-dr-dre-bose-suing-apples-beats/

http://www.washingtonpost.com/blogs/early-lead/wp/2014/10/14/colin-kaepernick-sticks-with-beats-by-dre-with-a-little-tape-over-the-logo/

Bose Corporations v. Beats Electronics Complaint: https://docs.rpxcorp.com/lits/641/94801/dedce-55457.pdf?Signature=PoTMsCH7QY29PagvVajsar%2BnEmo%3D&Expires=1412564095&AWSAccessKeyId=AKIAI2UWKALIEYBVOKDA

March 27, 2015

Hau5 of Mau5: Deadmau5 and Disney in a Trademark Battle

By James West

The electronic dance music (EDM) artist's attempt to trademark his "Mau5head" sparked a legal battle with Disney in September. Deadmau5 (pronounced "Dead Mouse", a.k.a. Joel Zimmerman) attempted to register his logo, which is a replication of the mouse head mask he wears on stage during his performances. This logo is essentially three circles connected together, forming a head and two ears - similar to the famed Mickey Mouse logo used by the Walt Disney Company. Similar enough, in fact, for the latter to file an opposition to the registration. According to Zimmerman, Disney alleges that the trademark would be confusingly similar to its own Mickey Mouse logo.

Legal Background for Disney's Claim Against Deadmau5

The primary federal statute regulating trademarks is the Lanham Act, which states, in regards to trademark infringement, that any person who uses in commerce any word, term, name, symbol, or device, or any combination thereof which is likely to cause confusion shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such an act. 15 U.S.C.A. § 1125. In a series of tweets on the artists' Twitter page, Zimmerman complains that "Disney thinks [consumers] might confuse an established electronic musician/performer with a cartoon mouse." Zimmerman is oversimplifying here, as consumer confusion, while a factor, is not determinative when deciding if a trademark is confusingly similar to a preexisting trademark. This "likely to cause confusion" standard has been further extrapolated on by the courts. However, there is no bright-line rule. Even Judge Friendly, when establishing a list of factors to be weighed when determining the strength of the prior owner's chance of success when claiming infringement, wrote that the court may still take other variables into account. Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 495. Friendly's factors included the strength of the mark, the degree of similarity between the two marks, and the sophistication of the buyers. Id.

Disney's Likelihood of Success in its Claim Against Deadmau5

While Zimmerman's mark does have its differences from the traditional Mickey Mouse logo, such as a large smile on the face of the mark, ultimately the factors appear to weigh in Disney's favor. Disney's mouse logo is exorbitantly strong. It would not be remiss to say that it is one of, if not the most, recognized and popular symbols in modern culture, and has been so since the 1930s. It appears everywhere, on every type of merchandise available - from toys, to t-shirts, to pancakes, to car decals, to kitchen appliances. The Walt Disney Company is the second largest broadcasting company in the world, and its use of the mouse head logo is international household knowledge.

The marks are somewhat similar. Both contain three circles forming a head, with two ears and a face. However, Deadmau5's logo is distinct in that it has a large, toothy grin spread across the face, with two eyes with "X's" as pupils. Disney's mouse head logo contains either Mickey's face or no features at all. In this element they are distinguishable, however, they may be similar enough to affect the weight of other factors. While there seems to be no evidence of actual confusion, at least there has not been any presented yet, the sophistication of the buyers is a crucial factor to consider. Deadmau5 is by no means a household name, gaining his popularity in the realm of the EDM subculture. It is unlikely that unless someone is involved with the industry, or is a young adult who is aware of the subculture or partakes in it, has heard of Deadmau5. Even less likely is someone able to identify a piece of music created by him. On the other hand, even young children (and their parents) know the distinct Disney logo. There is a possibility that these buyers, not being aware of EDM or Deadmau5, could confuse the logo as being related to Disney in some way. The Deadmau5 logo does bear the distinct three circles that have been closely associated with Disney for so long. A child or parent, two groups likely to buy Disney products, could falsely presume something that bears the Deadmau5 logo is related to Disney in some way. While whatever type of product might bear both logos may be questionable, the possibility nevertheless exists.

In short, the possibility of Zimmerman prevailing is there. Of course, the court may consider other pre-established factors, or even factors that have not previously been considered. The analysis would then, of course, change; possibly even in favor of Zimmerman. However, the sheer strength and popularity of the Disney logo, combined with the similarity of the two products, weighs in favor of Disney.



April 21, 2015

EASL Fashion Law Committee Program - Identity Crisis! Legal and PR Aspects of Managing Brand Image in Celebrity Endorsements and Licensing Agreements [Gone Wrong]

Date: Wednesday, April 29, 2015
Time: 5:30 PM - 8:30 PM Eastern Daylight Time

Fashion Institute of Technology's Jay and Patty Baker School of Business and Technology.
Katie Murphy Amphitheatre
7th Ave at W. 21st Street
New York, NY 10001

5:30 p.m. - 6:00 p.m. - Welcoming Reception
6:00 p.m. - 8:05 p.m. - Panel/Q&A
8:05 p.m. - 8:30 p.m. - Networking

This program qualifies for 2.5 MCLE credits in Professional Practice, this program is not transitional so does not qualify for newly admitted attorneys

As you wait in the checkout line at your local supermarket, you are so bored that you grab a gossip mag from the display above the mints. (OK, so it's really because you secretly love the sleaze... but we won't tell.) Flipping through the pages, you are consumed by the latest celebrity news: love, heartbreak and... uh oh... scandal. The top news story recounts a young celebutant's night of partying that ended in her arrest. In the wake of this incident, said starlet has been dropped by the trendy clothing line for which she served as brand ambassador. "How can they do that!?" you think to yourself. "Isn't there a contract they have to honor?" "And what about free speech?"

Recently, such situations have become quite common, resulting in an increased importance placed on contract terms designed to protect a fashion brand's reputation. This need for image control does not stop at celebrity endorsements. A brand's reputation can be at risk if the brand is associated with manufacturers or factories alleged to be in violation of health, safety and labor laws.

NYSBA's Fashion Law Committee, in partnership with the Fashion Institute of Technology's Jay and Patty Baker School of Business and Technology, invites you to attend its annual CLE event for a lively discussion of these issues. Industry attorneys and PR professionals will discuss the ins-and-outs of image protection from a legal and public relations perspective. Hear as they relay best practices in negotiating celebrity endorsement deals, discuss the importance and effectiveness of morality clauses and advise on avoiding reputational damage in the event of a "rogue" brand representative. Panelists will also discuss these issues as they apply to labor and safety standards.

Moderator:
Kathryne E. Badura, Esq., International Trademark Association (INTA)

Speakers:
Marc Beckman, Founder & CEO of Designers Management Agency
Daniel Bellizio, Bellizio & Igel PLLC
Kristin G. Garris, Esq., Associate, Kilpatrick Townsend & Stockton LLP
Guillermo Jimenez, Esq., Professor-International Trade and Fashion Law at the Fashion Institute of Technology of the State University of New York.
Robin Sackin, Chairperson of the Jay and Patty Baker School of Business and Technology's Fashion Merchandise Management Program at the Fashion Institute of Technology of the State University of New York.

Marc Beckman, Founder & CEO of Designers Management Agency

Register Today!
EASL Members: $25.00
NYSBA Members: $50.00
Non-NYSBA Members: $85.00

To register over the phone please call our State Bar Service Center at 1-800-582-2452

For Questions: Beth Gould at bgould@nysba.org

June 1, 2015

Flo & Eddie Class Certification

Here is the decision of the California federal court certifying a class of owners of pre-1972 recordings that have been performed without authorization since August 2009 by Sirius XM. Flo&EddieCaliforniaClassActiondec.pdf

The court has already granted Flo & Eddie's summary judgment motion and found Sirius XM liable. The class is being certified for damages.

The parallel state court litigation has been certified for appeal, but the federal case has not.

June 30, 2015

Oracle v. Google

Yesterday, on June 29th, the Supreme Court denied cert in Oracle v. Google. There was no opinion. Therefore, it will be remanded back to the district court regarding the fair use issue, pursuant to the Circuit opinion.

July 10, 2015

The Statute of Limitations Invoked to Dismiss Copyright Claims

By Joel L. Hecker

On June 26, 2015, a decision of interest concerning the application of the statute of limitations and work made for hire doctrine in connection with copyright litigation was issued in the Southern District of New York. The case is Gideon Lewin vs. The Richard Avedon Foundation, docket No. 11-cv-8767 (KMW) (FM). The court dismissed the The Richard Avedon Foundation's (the Foundation) affirmative claims that photographs created by Lewin while he was acting as studio manager for Richard Avedon between 1965 and 1980 were works made for hire, since it waited too long to raise the defense. However, the work made for hire argument, ruled the court, is still available as an affirmative defense to Lewin's suit for declaratory judgment that he owns such copyrights. This article will discuss these aspects of the decision.

Disclaimer: I am counsel to the plaintiff, Gideon Lewin, in this action, which is ongoing.

Basic Facts:

Lewin had a special relationship with Avedon, which permitted him to take photographs on his own time and for his own clients, resulting in Lewin owning the copyright to such photographs (the Foundation claims such images are works made for hire.) In 2006, Lewin met with Norma Stevens, who was the executive director of the Foundation at that time, to discuss his plans to write a book about his years with Avedon. Lewin showed Stevens images that he created and that he owned. Stevens then sent an email to another director of the Foundation, which reported on this meeting. Stevens admitted in the email that Lewin had many pictures of Avedon working, and was preparing a "dignified" book. Stevens further wrote that she made it clear to Lewin that the Foundation couldn't prevent him from using his images.

Summary Judgment Motions:

After discovery was closed, the parties each moved for summary judgment. The court granted that part of Lewin's motion seeking dismissal of the Foundation's affirmative copyright ownership claims to his photographic images. The court found that at some point during this meeting with Stevens, Lewin made "an expressed assertion of sole authorship and ownership sufficient to put a reasonably diligent plaintiff on inquiry as to the existence of a right." The court found that Stevens acknowledged not simply that Lewin possessed these photographs, but that the Foundation was unable to prevent him from publishing them in the book he was seeking to write. Thus, the court held, Stevens's email put the Foundation on notice as early as 2006 that Lewin was claiming copyright ownership over these photographs. This notice created in the Foundation a duty to investigate Lewin's copyright claims, and it was at this point that the statute of limitations accrued. Once a party is aware, or put on notice, as to the existence of such a right, the statute of limitations begins to run. Since the Foundation did not bring its affirmative claims until more than three years after this meeting, the Foundation's affirmative claims as to these images were dismissed.

The Foundation argued that Lewin did not, during his meeting with Stevens, state outright that he owned the copyrights, and therefore the Foundation was not on notice of such a claim. The court dismissed this argument, holding that an overt discussion of copyright was unnecessary, since the email makes clear that Stevens understood that Lewin believed he owned the copyrights to the photographs he had shown to her, and that this, in and of itself, is sufficient to constitute an "expressed assertion of adverse ownership."

Work for Hire as an Affirmative Defense

Although the Foundation's direct claims that it owns the copyright to Lewin's photographic images as works made for hire was dismissed, the court determined that the work made for hire defense is not barred by the statute of limitations when it is used solely as an affirmative defense against a copyright claim. Accordingly, although the Foundation may no longer claim it owns the copyright to these images, the Foundation can still raise it as an affirmative defense against Lewin's declaratory judgment action and argue that Lewin is not the copyright owner of the work he created.

Regardless of whether or not Lewin prevails in his declaratory judgment claim, the Foundation no longer has standing to prevent Lewin from using his photographs.

Current Status of the Case

Since the court denied summary judgment to both sides on issues other than the above relating to other aspects of the relationship between the parties, the case is ongoing. Time will tell what the outcome will be, but I recommend a reading of the court's decision for its analysis of the juxtaposition of work made for hire issues relating to the statute of limitations.Wood.Decision.SJ.6.26.15.pdf


July 17, 2015

SPEAR MARKETING, INC. v. SPEAR MARKETING, INC.

By Barry Werbin

An important new decision of first impression out of the Fifth Circuit in Texas, issued on June 30th, holds that state law claims based on ideas - including trade secrets - that are fixed in tangible media are preempted by Section 301(a) of the Copyright Act, despite Section 102(b) excluding from copyright protection "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."

Section 301(a) is the preemption clause that bars state law claims concerning "all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103...."

The Court explained that the interaction between Sections 301(a) and 102, based on the reasoning of a majority of Circuits that have ruled on this issue (as well as Nimmer), "clearly delineates between the purpose of federal copyright preemption and that of federal copyright protection. Congress intended the Copyright Act to protect some expressions but not others.... Finding this reasoning is persuasive, we join the majority position and hold that state law claims based on ideas fixed in tangible media are preempted by §301(a)."

This aligns the Fifth Circuit with the Second, Fourth, Sixth, Seventh and Ninth (en banc) Circuits, whereas the Eleventh Circuit remains in the minority on this issue.

SPEAR MARKETING, INC. v. SPEAR MARKETING, INC., No. 14-10753 (5th Cir. 6/30/2015) - SPEAR MARKETING.pdf

August 21, 2015

Sixth Circuit Reversal in Varsity Brands v. Star Athletica

By Barry Werbin

In a significant decision, on August 19th, the Sixth Circuit in Varsity Brands v. Star Athletica reversed the WD Tenn.'s widely criticized decision that had held that stripes, chevrons, zigzags and color blocking imprinted on cheerleader uniforms were not copyrightable because these design elements could not be disaggregated from the cheerleader dress design, which were otherwise utilitarian. That is, the District Court found that the aesthetic features of a cheerleading uniform merge with the functional purpose of the uniform.

The Circuit Court addressed what it characterized as "the question that has confounded courts and scholars: When can the 'pictorial, graphic, or sculptural features' that are incorporated into 'the design of a useful article' 'be identified separately from, and [be] capable of existing independently of the utilitarian aspects of the article[?]'"

In reversing, the Court granted partial summary judgment for Varsity on the issue of whether Varsity's designs were copyrightable pictorial, graphic, or sculptural works, holding they were, because the design elements could exist independently of the utilitarian aspects of the cheerleading uniforms, thus qualifying as copyrightable subject matter.

First, the Court gave deference to the registrations that had been issued by the Copyright Office, finding that a "comparison between the designs at issue in this case and the other Varsity registered designs confirms that the Copyright Office consistently found the arrangements of stripes, chevrons, and color-blocking to be original and separable from the utilitarian aspects of the articles on which they appear, and therefore copyrightable."

Second, in expressly upholding the "conceptual separability" doctrine, the Court held that "the Copyright Act protects the 'pictorial, graphic, or sculptural features' of a design of a useful article even if those features cannot be removed physically from the useful article, as long as they are conceptually separable from the utilitarian aspects of the article." After summarizing various approaches to assessing conceptual separability, particularly from the Second and Fourth Circuits, the Court adopted a "hybrid approach" that asks a series of questions to initially segregate utilitarian elements of a work, followed by an assessment as to whether viewers can identify "'pictorial, graphic, or sculptural features ... separately from . . . the utilitarian aspects of the [useful] article....'" Finally, there must be an assessment of whether the "features" of the design of the useful article "'exist[] independently of[] the utilitarian aspects of the [useful] article.'"

Ultimately, the Court deemed the designs as "more like fabric design than dress design," emphasizing that Varsity's graphic designs do not "enhance the [cheerleading uniform's] functionality qua clothing" and that "[t]he top and skirt are still easily identified as cheerleading uniforms without any stripes, chevrons, zigzags, or color-blocking." Evidence further supported the conclusion that the "designs are transferable to articles other than the traditional cheerleading uniform" and were "interchangeable." The Court concluded that "the arrangement of stripes, chevrons, color blocks, and zigzags are 'wholly unnecessary to the performance of' the garment's ability to cover the body, permit free movement, and wick moisture" and are therefore copyrightable subject matter.

A copy of the decision is available here:Varsity Brands app decision.pdf

October 23, 2015

"...Quizno's Spoof Ad Is So Real, the Burning Man Festival Is Threatening to Sue"


By John E. Moore
Law Offices of John E. Moore

Quizno's, a sandwich chain, has released a video making fun of the Burning Man festival's growing corporate influence. (Abby Phillip, This Quizno's Spoof ad is so real, the Burning Man festival is threatening to sue, WASHINGTON POST, September 13th, 2015, at www.washingtonpost.com)

If you did not know already, Burning Man is a music and arts festival that takes place annually in the deserts of Nevada. The "burners" (that is, the party-goers) construct a series of themed camps around the "playa." In the center of the playa is a massive wooden sculpture--the man--which is burnt on the closing evening of every year's rave. Beginning with only 40 participants on a beach near San Francisco in 1986, it attracted over 65,000 in 2014. (See generally at http://burningman.org/)

The Burning Man has established an ethos tied up in 10 principles, the most important here is the "decommodification" principle. Burning Man intends to create social environments "unmediated by commercial sponsorships, transactions, or advertising." The organization stands ready to protect its culture from exploitation and to "resist the substitution of consumption for participatory experience." (See "Decommodification," at http://burningman.org/culture/philosophical-center/10-principles/) According to the Washington Post, however, Burning Man has been subject to growing criticism for allowing corporate executives to put up increasingly elaborate, corporate-sponsored camps that seem to undermine the "decommodification" principle.

Enter Quizno's with a video advertisement that mocks Burning Man and its excesses. (See "Burn Trials--Out of the Maze and onto the Playa," at https://www.youtube.com/watch?v=CBVBHRD5lNU)(the Ad). In the video, which also parodies "The Maze Runner" movie, a group of teens have escaped the maze (which is beyond the scope of this comment) and arrived on the "playa," an outpost that is supposedly preserving the outside world by "a very thin, non-GMO, cruelty-free organic hemp thread[!]" Yet the teens discover the camp's dangerous secret: it is only a veneer of counter-culturalism over "Phase 2" of a plan to get "millennials to fork over tons of cash for an over-crowded festival in the middle of the desert." The camp has become commodified. "You kids won't last a day out on the playa without subtle exposure to corporate influence," warns the camp leader who then looks to his left as a Quizno's $1 off pop up click box appears on screen. (See Ad.)
Burning Man, incensed at Quizno's ad, contacted its attorneys about its legal options. What could those be? Perhaps claims of defamation or trademark infringement. However, Burning Man would then have to contend with Quizno's defense that its ad is a parody.

For a defamation claim, Burning Man might state that Quizno's ad made public, false statements "of and concerning" Burning Man that have resulted in harm by lowering its reputation in at least some part of the community. A company or organization can be a plaintiff for libel and defamation.

Yet a defamation claim presents problems for Burning Man. First, the festival's organizers could have a hard time showing falsity. Quizno's is not the first to note the conflict between Burning Man's "decommodification" principle and the appearance of branding at the festival. Burning Man might also have trouble on the "of and concerning" prong. Authors have license to creatively interpret scenes of reality when there are no serious doubts that the portrayal is meant as the truth. Last, how would Burning Man show harm? Attendance in 2014 was 65,922, which was already down from 69,613 in 2013. Besides, as a public figure/organization (a 105 foot tall public figure), Burning Man would have to show that Quizno's statements were made with actual malice. That is, that Quizno's acted with knowledge that the statement was false, or with reckless disregard as to whether the statement was false or not. Either sets a high bar. And public figures have trouble overcoming the parody defense. (See Hustler Magazine v. Falwell, 485 U.S. 46 (1988) (Hustler Magazine's parodic description of the Rev. Jerry Falwell's "first time" occurring during a rendezvous with his mother in an outhouse was found not actionable.))

A more interesting path for Burning Man would be to make claims under the Lanham Act. Burning Man is a trademark registered with the U.S. Patent and Trademark Office, and the video clearly uses the words "Burning Man", giving the organization possible claims of infringement, blurring, and tarnishment. Each of those, though, could falter against the fair use defense of parody.

Parody, in trademark, is a complete defense; but it has to be a successful parody, and the viewer cannot be confused as to the ultimate source of the goods or services. A successful parody must convey two simultaneous, yet contradictory messages: that it is and is not the original. This differential should communicate some element of satire, humor, or ridicule.(See generally Louis Vuitton Malletier SA v. Haute Diggity Dog LLC, 507 F.3d 252 (4th Cir. 2007) (in which "Chewy Vuiton," a chewable dog toy modeled after Louis Vuitton designer handbags used "for casual canine destruction," was an unmistakable satire with no likelihood of confusion as to the ultimate source); also Jordache Enters., Inc. v. Hogg Wyld, Ltd., 635 F. Supp. 48 (D.N.M. 1985) (finding the use of "Lardashe" jeans for larger women to be a successful and permissible parody of "Jordache" designer jeans))

Quizno's ad is evidently parody. It continues the events immediately following Quizno's "Maze Runner" ad--itself a parody of a recent fantasy adventure film. In the new scenario, the earnest teens, having escaped the Maze, arrive at the "playa." Against a background of suspenseful music and sound effects, they are confronted with broadly drawn and ridiculous characters and situations. In one scene, a bearded, overweight "shaman" wearing a stuffed animal costume anoints the main character "Moon Pony." In another, the camp leader mysteriously asks "Don't you want to understand . . . how to look cool on Instagram?" The ad mocks the earnest excesses of the Burning Man festival. Yet even if the ad were found to be a successful parody, would the viewer be confused as to the actual source of the goods?

To make a confusion claim under the Lanham Act, Burning Man would have to demonstrate (1) the strength or distinctiveness of its mark; (2) the similarity of the two marks; (3) the similarity of the goods and services the marks identify; (4) the similarity of the two businesses' facilities; (5) the similarity of advertising used by the two parties; (6) the defendant's intent; and (7) actual confusion. Even assuming that "Burning Man" is a strong mark--not a foregone conclusion: ask your average 50-year old if she or he has ever heard of Burning Man--there is no similarity of the marks, the goods and services identified, the two businesses' facilities, or the advertising. As for Quizno's intent, an intent to use the mark is actually required for parody. However, an intent to parody a mark is not an intent to confuse the public. (See Jordache, 828 F.2d at 1486.) Further, a successful parody can co-opt most or all of the confusion factors to the defendant's benefit. The "Chewy Vuiton" court noted that, by concluding that the "Chewy Vuiton" dog toy was a successful parody, it implied that the defendant had mimicked part of the Louis Vuitton marks, but because the differences were sufficiently obvious, no consumer would mistake the source of a "Chewy Vuiton" as coming from Louis Vuitton. Here, it seems clear that an ad sponsored by Quizno's, where pop-ups continue to appear advertising $1 off sandwiches while poking fun at the supposedly silly seriousness of Burning Man, is not likely to lead to consumer confusion.

Burning Man would have similar difficulty showing dilution or tarnishment. Under the Trademark Dilution Revision Act of 2006 (TDRA), Burning Man would have to show it has a (1) famous, distinctive mark, (2) which is being used by the defendant and is diluting the famous mark, (3) that there is similarity between the two marks giving rise to association, and (4) that the association is likely to impair the distinctiveness of the famous mark ("blurring") or harm the mark's reputation ("tarnishment"). The TDRA provides that fair use--interpreted to included parody--is a complete defense as long as the use is not a designation of source for the person's own goods or services.

Here, a successful parody co-opts the dilution and tarnishment factors. Again, assume the Burning Man mark is famous and distinctive. A successful parody requires the viewer to make an association between the famous mark and the parody. However, as long as the viewer can distinguish that they are separate, there would be no blurring. In Hormel Foods, the court found that the Muppets parody character, Spa'am, a wild boar, increased public association of the Spam food product with its source and so no dilution existed. (Hormel Foods Corp. v. Jim Henson Prods., Inc., 73 F.3d 497, 506 (2d Cir. 1996)) Similarly, since a parody involves ridicule and mocking, which has at its core an intent to harm, how can there be tarnishment? In Hormel, the court found that Spam was already the butt of jokes, and thus no tarnishment existed. Similarly, Quizno's is mocking a recognized problem at Burning Man -- it already has been commodified in violation of its "decommodification" principle. As long as Quizno's use of the Burning Man mark is not a designation of source for Quizno's own goods, no blurring or tarnishment exists.

As an aside, note the tension caused if Burning Man were to use trademark law to protect its "decommodification" principle.

Many cautious attorneys advise their clients to shy away from use of a third party's name, likeness, or mark to avoid litigation, even though there is a fair use defense. To be sued in the first place is to lose. Yet a review of the ads on the Quizno's site shows that its legal and advertising departments are unfazed by the possibility. Quizno's executives seem confident that their parodies are fair use and, perhaps, that the cost of any suit would be offset by the publicity accruing to Quizno's. More power to them.

Now let's go get a sandwich and sit around a campfire somewhere.

November 9, 2015

Second Circuit Court Holds That Director Does Not Own Separate Copyright for His Contribution

By Robert L. Seigel

Over the years, there has been a metaphorical dance in which a media project's attorney often has to chase down cast or crew members to sign agreements that include the customary "work for hire" language. Some cast and crew members (and their respective representatives) have been less than helpful in this manner. Sometimes it is forgetfulness; however, sometimes these personnel and their representatives believe that if they do not sign their agreements, there will be a resulting problem with the "chain of title" for the production company. They often think that by not signing, they may hinder or prevent the production company from signing a sales or distribution agreement and completing delivery of the required elements of a media project to the sales company, distributor or licensee.

Then the case of 16 Casa Duse v. Merkin, No. 13-3865 (2d Cir. 2015) arrived on the legal landscape.

Robert Krakovski, the principal of the film production company 16 Casa Duse, LLC (Casa Duse), purchased the rights to a screenplay titled "Heads Up" from a third party, and asked Alex Merkin to direct the film. As part of standard operating procedure, Krakovski then hired a cast and crew for the film, and each cast and crew member (other than Merkin) signed an Independent Contractor Agreement with Casa Duse, which was a work-for-hire agreement providing that Casa Duse would own all rights in the film.

Everyone signed the agreement except for Merkin, despite Krakovski's repeated attempts requesting Merkin to sign the agreement. Despite Krakovski not receiving a signed agreement from Merkin, the film's production commenced and principal photography as well as post production occurred.

Compounding matters, Krakovski gave Merkin a hard drive that included the film's raw footage, so that Merkin could prepare an initial, or "rough cut" of the film. Although Merkin would not sign his director's agreement, he did sign a media agreement, which permitted him to edit the raw footage, but he could license, sell or copy the footage without the production company's permission.

However, a problem arose when Krakovski began submitting the film to film festivals, and scheduled a screening at the New York Film Academy (NYFA) with a reception to follow the screening. Krakovski placed a deposit of $1,956.58 for the reception. On the date of the screening, the NYFA canceled the screening because Merkin's attorney, Maurice Reichman, had sent it a cease-and-desist notice. This cancellation resulted in Krakovski losing his restaurant deposit.

To refute Merkin's claims that the production company was liable to Merkin for copyright infringement and that Merkin had a copyright interest in the film, the production company brought a declaratory action to address such issues, not only against Merkin, but also his attorney.

The district court granted a temporary restraining order and preliminary injunction enjoining Merkin from interfering with Casa Duse's use of the film. Casa Duse also moved for summary judgment on its claims and its requests for fees and sanctions. Merkin cross-moved for summary judgment, requesting that the district court vacate the preliminary injunction and dismiss the production company's request for fees and sanctions.

The district court declined to vacate the injunction and granted summary judgment to the production company on all claims, along with fees against Merkin and sanctions against Reichman. It also dismissed all of Merkin's counterclaims, except for his claim for breach of contract, which Merkin agreed to voluntarily dismiss without prejudice. The district court entered final judgment, awarding Casa Duse (1) $1,956.58 in damages resulting from Merkin's interference with the NYFA screening event; and (2) $185,579.65 in attorneys' fees and costs, of which Merkin and Reichman would be jointly and severally liable for $175,634 and Reichman would be solely liable for the remaining $9,945.65. Merkin and Reichman appealed to the Second Circuit.

The Second Circuit noted that the case presented a question of first impression in the Circuit: Can a contributor to a creative work whose contributions are inseparable from and integrated into the work maintain a copyright interest in his or her contributions alone? The question was answered in the negative.

The Court first addressed the competing copyright claims. Merkin argued that the district court erred in concluding that he could not copyright his creative contributions to the film, and that he lacked a copyright ownership interest in the "raw film footage." The production company countered that the individual contributions to a film, such as direction, are not themselves subject to copyright protection, and that the production company retained sole copyright ownership of the final film and the film's raw footage. The parties agreed that Merkin was not a "joint author" or "co-author" of the film under the Copyright Act, and that Merkin's efforts could not be deemed a "work made for hire," which would have precluded Merkin's copyright infringement claims.

The Second Circuit concluded that copyright protection does not subsist in creative contributions to a work that are inseparable from the work itself. The Copyright Act's definitional terms and legislative history supported the conclusion that Merkin's contributions to the film did not themselves constitute a "work of authorship" sufficient on its own to be provided copyright protection. Although the Copyright Act does not define "works of authorship," it does list examples of categories of "works of authorship," which do not include integral, non "stand alone" constituent parts of a work. The Second Circuit also relied upon the Ninth Circuit's decision in Garcia v. Google, Inc., which held that an actor did not own a copyright interest in her performance in a completed film, because such a theory of copyright law would result in a "legal morass" making "Swiss cheese of copyrights." According to the Second Circuit, filmmaking is a collaborative process that typically involves artistic contributions from large numbers of people, including producers, directors, screenwriters, actors, designers and cinematographers. Although these various contributors can contribute original artistic expressions that are arguably fixed in the medium of film footage, this alone is not sufficient. Authors are not entitled to copyright protection except for the "works of authorship" they create and fix, which does not include non-freestanding contributions to an integrated work.

The Second Circuit next considered the parties' competing copyright claims with respect to the raw film footage. It agreed with the district court that the production company was the "dominant author" of the film, based on the production company's decision-making authority over production of the film, its purchase of the underlying screenplay, and its work-for-hire agreements with the cast and crew. The record did not reflect any developments that occurred between the creation of the raw film footage and the production company's attempts to create a finished product that would alter the analysis as to the raw footage. Therefore, the production company, not Merkin, owned the copyright to the finished film and its prior versions.

Addressing the production company's claim for tortious interference with business relations under New York law, the Second Circuit disagreed with the district court, concluding that the undisputed material facts required judgment in Merkin's favor. To support its claim, the production company was required to show that Merkin's conduct rose to the level of a crime or a tort, or that Merkin engaged in the conduct solely for the purpose of inflicting intentional harm. The Court maintained that the production company failed to show that Merkin acted for a wrongful purpose, or used dishonest, unfair or improper means. It also rejected as insufficient the production company's argument that Merkin acted with a willful blindness to the factual and legal realities of his position. Finally, the Second Circuit held that the district court did not err in awarding fees and costs to the production company and imposing sanctions against Reichman.

On a practical level, does this decision mean that producers should not secure "work for hire" or assignment of rights agreements? Obviously not. The Second Circuit's decision leaves certain issues unaddressed, such as whether such contributions and a screenplay or a music score could be deemed an independent contribution. The licensees and purchasers of audio-visual media works, such as a motion picture feature, will still require such documentation for chain of title purposes to enter into such agreements, as well as secure Errors and Omissions (E & O) insurance. This decision, however (hopefully extended in such circuits as the Ninth), shall permit production counsel to take a collective breath when those that work on a media project (or their representatives) attempt to engage in what be called unfair and "strong-arm" tactics in negotiations.

November 12, 2015

Naruto v Slater Monkey Selfie Decision

By Barry Werbin

Here is a must-distribute 4-page brief (Naruto v. Slater dismissal brief.pdf) in support of dismissal filed by the defendant photographer Slater in the pending action brought by PETA in the N. D. Cal. on behalf of the monkey selfie "photographer." Slater originally set up the monkey to take a "selfie" and has since tried to no avail (and properly so) to enforce his claimed copyright in the resulting photo. Nevertheless, here PETA has alleged standing on behalf of the monkey, and Slater's short brief is magnificent, commencing with this opening paragraph:

"A monkey, an animal-rights organization and a primatologist walk into federal court to sue for infringement of the monkey's claimed copyright. What seems like the setup for a punchline is really happening. It should not be happening. Under Cetacean Community v. Bush, 386 F.3d 1169 (9th Cir. 2004), dismissal of this action is required for lack of standing and failure to state a claim upon which relief can be granted. Monkey see, monkey sue is not good law - at least not in the Ninth Circuit."

January 7, 2016

Class Action Filed Against Spotify for Copyright Infringement

By Joel L. Hecker

David Lowery, individually and on behalf of others similarly situated, has filed a class action against Spotify USA, Inc.(Spotify), alleging that Spotify has, and continues to, unlawfully reproduce and/or distribute copyrighted musical compositions to more than 75 million users via its interactive commercial music streaming service, as well as its offline listening service.

The complaint was filed on December 28, 2015 in the United States District Court for the Central District of California, Civil Action Case Number 15-cv-09929 (BRO) (RAO), and seeks injunctive relief to enjoin Spotify from continuing such alleged copyright violations, to have a third party auditor appointed to identify the owners of the works reproduced and/or distributed by Spotify without Spotify's first obtaining a mechanical license prior to such reproduction and/or distribution, and to require Spotify to remove all such works from its services until it obtains proper licenses for them. The plaintiff also seeks restitution of Spotify's alleged unlawful proceeds, including Spotify's gross profits, compensatory damages in an amount to be ascertained at trial, statutory damages as authorized by the Copyright Act, as well as attorney fees and costs and pre- and post-judgement interest.

Statutory damages may be awarded in the court's discretion up to $30,000 for each infringed work and, if willful, up to $150,000 per infringed work, plus attorney's fees. Therefore, given the scope and breadth of the purported class, the potential damages may well exceed $100 million (of course, these are all just allegations subject to proof of liability and of damages, assuming that class action status is granted).

The plaintiff, David Lowery, alleges he has been a fixture of the music industry for decades, is a prolific songwriter and producer as well as the author or co-author of more than 150 songs for his popular groups Cracker and Camper Van Beethoven.

Spotify, the defendant, is an interactive commercial music streaming service (among other services) that operates an Internet website (www.spotify.com), which permits users to customize listening choices for recorded music and to create Internet "radio stations." It is alleged in the complaint that Spotify claims to have played over 25 billion listening hours of music since its launch seven years ago. Attached to the complaint to substantiate this claim is an announcement by Spotify to the public boasting of such broad reach.

The complaint further alleges that Spotify offers its services to the public via both free non-subscription and premium paid subscription bases. Paid subscribers enjoy numerous specified benefits and users of its premium service pay a monthly fee of $9.99. Specifics of these services can be found at Spotify's website.

The complaint also alleges that Spotify claimed in writing in an exhibit attached to the complaint that as of June 10, 2015, it has 75 million active users and 20 million paid subscribers, and that it has paid more than $3 billion in royalties. In addition, the complaint alleges that Spotify sells the right to advertise to users on its website and mobile applications to earn revenue above and beyond paid subscriptions.

Spotify's alleged "egregious and willful violations" of the plaintiff's and the class members' rights as contained in the complaint refer particularly to Spotify's recent admissions regarding its failure to obtain licenses for the musical works it distributes and reproduces, as well as its failure to compensate copyright owners for its use of their works. In support of these allegations, the plaintiff attaches as an exhibit to the complaint Spotify's May 23, 2014 Comments to the United States Copyright Office's Notice of Inquiry made in connection with the Copyright Office's Music Licensing Study. In those comments, Spotify admits, it is alleged, that in some instances, "Spotify may not be able to identify the copyright owners from the sound recordings provided to Spotify". In addition, it is alleged that Spotify failed to pay songwriter royalties to a publishing company approximately 21% of the time.

One of the major issues raised by this complaint is the system in the U.S. for licensing music, which predates the Internet and all that it entails concerning distribution of music in mobile, streaming and other formats. The inability or difficulty to obtain consents from many of the varied owners of music rights has brought to the fore the tension between the presumed right of the public to gain access to the music, and the copyright owners' right to control the reproduction and distribution of their copyrighted works. A final solution probably should involve federal legislation, but given the mood of Congress these days, that seems highly unlikely, to say the least.


January 20, 2016

The 11 Contracts Every Artist, Songwriter & Producer Should Know: Video Production

By Steven R. Gordon

Steven R. Gordon (steve@stevegordonlaw.com, www.stevegordonlaw.com) is an entertainment attorney specializing in music, television, film and video. His clients include artists, songwriters, producers, managers, indie labels and music publishers as well as TV and film producers and digital music entrepreneurs. He also provides music and sample clearance services for producers of any kind of project involving music. Mr. Gordon is the author of The Future of the Music Business [www.futureofthemusicbusiness.com/] (Hal Leonard 4th ed. 2015).

The author gratefully acknowledges the assistance of Ryanne Perio, Esq. in the preparation of this article. Ryanne is a litigation associate at the WilmerHale law firm. He would also like to thank his intern Jena Terlip, 2L at Benjamin N. Cardozo School of Law, for her research and editing assistance.

DISCLAIMER
This series of articles and the forms included in them have been created for informational purposes only and do not constitute legal advice. This article and other articles in this series should be used as a guide to understanding the law, not as a substitute for the advice of qualified counsel. You should consult an attorney before making any significant legal decisions.

The eighth installment of this 11-part series on basic music industry agreements focuses on the business of producing music videos. This article contains a form agreement that can be used to hire a video producer, as well as releases for people and locations appearing in videos. Although MTV does not play many anymore, music videos have become more important in breaking new artists than ever before. Before making your own video, though, it's important to know the legal ins and outs of producing them.

INTRODUCTION

In the first part of this Introduction, I give a brief history of music video followed by a survey of how successful artists have used and continue to use them to launch their careers. The second part of the Introduction offers a summary of business considerations in producing videos.

PART I: HISTORY & CONTINUING IMPORTANCE OF MUSIC VIDEOS

1. Before Music Videos
Audiovisual presentations of music have existed since the first motion pictures containing sound. In fact, the first Hollywood "talkie," released in 1927, was a musical featuring Al Jolson called "The Jazz Singer." Before the invention of the video cameras, there were many musical short films featuring the performance of single songs, such as Frank Sinatra's patriotic "The House I Live In (That's America To Me.)" (https://www.youtube.com/watch?v=EWxW2Z5znWQ) These films were sometimes shown before main features at movie theatres. In the 1960s, artists like the Rolling Stones and the Beatles started to make short form films of individual songs to promote their albums. The dawn of what we think of as music videos began in the 1970s. For example, in 1975, Queen commissioned the production of a video for its new single, "Bohemian Rhapsody," to show on Top of the Pops, a popular British TV show showcasing the week's top hit songs. In the U.S., Video Concert Hall was launched on November 1, 1979 as the first nationwide video music program on American television, predating MTV by almost three years.

2. MTV and the Birth of the Era of Music Videos on Television
In 1981, MTV launched by airing "Video Killed the Radio Star," and began an era of 24-hour-a-day music videos on television.

The founders of MTV, including Robert Pitman (current chairman and CEO of iHeartMedia, Inc. (formerly Clear Channel)), convinced record labels to produce more videos and give them to MTV for free, just as they gave free records to radio stations. The pitch was that the videos would promote the labels' records and increase sales. The only money MTV paid to the labels was a relatively small fee to secure exclusive rights to play select videos for a limited period of time. For instance, MTV paid Sony Music $4 million a year for such rights.

By the mid-1980s, MTV grew to play a central role in marketing pop and rock music. Many important acts of this period-- most notably Madonna, Aerosmith, The Who, Phil Collins, John Mellencamp, Phil Collins and Billy Idol-- owe a great deal of their successes to the seductive appeal of their videos. After years of controversy regarding the lack of diversity among artists on the network, MTV aired Michael Jackson's "Billie Jean," "Thriller" and other videos, which helped Jackson become the best-selling pop artist of all time.

However, by the late 1990s, MTV sharply decreased the number of videos it showed on its airways. Former MTV president Van Toeffler explained: "Clearly, the novelty of just showing music videos has worn off. It's required us to reinvent ourselves to a contemporary audience." A decade later, MTV was playing an average of just three hours of music videos per day, preferring cartoons such Beavis and Butt-Head and, later, unscripted reality shows, such as Jersey Shore. MTV continued to play some music videos instead of relegating them exclusively to its sister channels (such as MTV Hits), but around this time, the channel began to air music videos only in the early morning hours and in Total Request Live , which aired the 10 most requested music videos of the day. As a result of these programming changes, Justin Timberlake implored MTV to "play more damn videos!" while giving an acceptance speech at the 2007 Video Music Awards. Despite the challenge from Timberlake, MTV continued to decrease its total rotation time for music videos in 2007 and shut down TRL in 2008.

3. YouTube and the Rise of Cover Videos
YouTube was created by three former PayPal employees in February 2005. In November 2006, it was bought by Google for $1.65 billion. The online video sharing site is this generation's MTV. Artists like Beyoncé and Taylor Swift regularly have hundreds of millions of views for new videos, and their record companies and music publishers monetize them by allowing ads. YouTube keeps approximately 40% of the ad income, although the details of its formulas for arriving at the exact amount is not public record, and the balance is paid to the copyright owners.

YouTube allows you to share your videos with a worldwide audience. However, the thing that makes YouTube great for new artists--that it's so easy to upload and reach a huge audience--also makes it incredibly competitive. YouTube reports that hundreds of hours of video content are uploaded to its servers each minute. Unfortunately, therefore, although you have a potential audience of millions who you can directly reach with your video, standing out in the sea of other content is a huge challenge.

One way new artists have used YouTube to attract attention is to "cover," that is, re-record hit songs. A good example of an artist who was discovered from making covers is Justin Bieber. Before he was the erratic "bad boy" that many love to hate, Justin Bieber was just a kid from Stratford, Ontario. At age 12 Bieber began to regularly post covers of hit R&B songs on his YouTube channel under the username "kidrauhl."

As his videos got more and more views, he was eventually discovered by talent manager Scooter Braun. After tracking Bieber down, Braun flew the then-13 year old to Atlanta to record some demo tapes. Braun introduced Bieber to Usher, who reportedly beat out Justin Timberlake in a bidding war to sign the young YouTube star. After being signed by Usher, Bieber recorded his first album, released the single "One Time," and proceeded to have his face put up on tween bedroom walls everywhere. He's had three multi-platinum albums that have all reached number one on the charts, and continues to play to sold-out arenas all across the world.

Another example of how cover videos have launched careers is Vazquez Sound, a musical trio known for its covers of hits, including Adele's "Rolling in the Deep," which has garnered over 172 million views. In September 2014, Vazquez Sounds released its first original album, which was an instant hit that earned a nomination at the 2015 Latin GRAMMYs for "Best New Artist." Another example is the pop duo, Karmin. Karmin broke a couple of years ago with a string of clever, sassy covers of hits by acts such as Lil Wayne, Nicki Minaj, and Katy Perry. Alessia Cara, a 19 year old Canadian singer and songwriter, is another example. She is currently signed to Def Jam and is best known for hit single "Here," which reached the Top 20 in the United States. Before her original album was released, though, Cara was known for her acoustic song covers on YouTube.

4. YouTube Musical Celebrities
Other artists have made careers by producing original content for their YouTube channels. A prime example is Lindsey Stirling. She plays the violin, dances and then does them both at the same time. Stirling began posting videos of herself performing in 2007 after failing to be signed by a major record label. Now, she claims they are begging to sign her, but it's too late--she doesn't need them anymore. Explains Stirling: "It's a very loyal fan base that wants you to succeed because they found you. It wasn't some big radio station or record label that shoved art down someone's throat." Coming in fourth in Forbes' round-up of the most financially successful YouTube personalities, Stirling raked in $6 million in earnings last year. She has also released two albums, "Shatter Me" and "Lindsey Stirling", scored a book deal, and developed a lucrative touring career.

5. YouTube's New Subscription Service
YouTube recently unveiled its long-discussed paid subscription service, "YouTube Red." The new service offers ad-free versions of all current YouTube videos and additional exclusive content from some of the site's top creators, including PewDiePie and Lilly Singh, both of whom perform music as well as comedy. It launched on October 28, 2015 and costs $9.99 per month. YouTube Red will have a big emphasis on music, providing access to music streaming service Google Play Music and a new app called YouTube Music, which offers a Pandora-like personalized playlist based on a selected song or artist. Both music apps also have ad-supported versions that non-Red users can access.

6. Self-Made Indie Videos Launching Careers On Social Media Such As Vine & Instagram
Over the past several years, with the advent of smart phones with video capability, as well as greater connectivity across social platforms, an entirely new phenomenon has occurred with singer songwriters as well as rappers catapulting themselves to recognition and commercial success. They use self-contained performances on social media in addition to, or other than, YouTube. One example is Shawn Mendes. In 2013, when he was 15, Shawn Mendes began posting cover videos on Vine and picked up millions of views. The next year he was signed to Island Records and became the youngest artist to debut in the Top 25 with a song on the Billboard Hot 100.

PART II: LEGAL AND BUSINESS ISSUES

1. Cover Videos
It is legally necessary to get a license from the owner of the song before making a cover video. However, YouTube has developed a system Content ID that deals with this issue. The system recognizes the identity of the cover song and then notifies the publisher. The publisher can then choose to order YouTube to take down the video, or let the video continue to play and "monetize" it. If the latter is chosen, YouTube splits the advertising revenue with the publisher. It is important to note that if the publisher chooses the second option, the artist performing the cover will not receive any of the fees generated by advertising. This, however, is to be weighed against the possibility of worldwide recognition discussed above.

Although Vine and Instagram do not employ Content ID, the music publishers have not, so far, cracked down on covers on these social networks. An argument could be made that the snippets played in these services are "de minimis," i.e., too trivial to amount to copyright infringement. It can also be argued in a litigation defense that these brief videos are "fair use." The argument would be that, under the doctrine of fair use, a person can use a brief excerpt of a copyrighted work if the new work is "transformative" of the original.

2. Work For Hire Production Contract
I was the Director of Business Affairs for TV & Video at Sony Music from 1991 to 2001. We produced over 250 videos each year that I worked there, and every video that Sony commissioned was a "work for hire." Under the copyright law, a work for hire is defined as follows:

(1) a work prepared by an employee within the scope of his or her employment; or
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

In the case of works made for hire, "the employer or other person for whom the work was prepared is considered the author ...[and] owns all of the rights comprised in the copyright."

Recently I worked with a small book publishing company that wished to produce a series of music videos to promote the new edition on one of its religious text books. The videos will feature songs by 12 different Christian rock acts. The agreement that we used to commission the videos was basically the same as Sony's work for hire agreement. I recommend to my artist clients the same business format for the production of their music videos. Re-published below is sample work for hire contract for producing a music video.

3. Releases
If you are either a new artist or a small label, and you wish to create a music video, in addition to using a work for hire agreement, you should also make sure that you will not have legal problems associated later on with any person or location depicted in your video. Although you should always have every side artist, model, dancer or actor in your video sign a release, some judgment is required when determining whether to secure a location release.

Personal Releases: If a label is commissioning a video, the artist's appearance in the video will generally be covered by the recording agreement between the artist and the label, which usually includes a provision specifically addressing music videos and giving the label the right to use the video for any promotional or commercial purpose. If an indie artist is appearing in a video, obviously he or she will not need a release for his or her own performance. Regardless of whether the commissioning party is a label or an artist, it will want to have any other person appearing or performing in the video sign a personal release giving the label or the artist, as the case may be, the right to use the video, including that person's appearance and/or performance in any and all media. Usually, the production company will handle this responsibility.

An example of a personal release is included below. Personal releases do not vary very much, although some contain more legalese than others. The basic point of any personal release, however, is that the person signing the release grants the artist or label all rights to use his or her appearance and/or performance in the video.

Note that the person signing such a release may have recorded the audio performance as a background vocalist or musician. A separate contract usually covers that audio recording, but the release contained below would cover that audio performance as well. Please also note that the release usually does not include financial remuneration; but if a musician, dancer or actor contributed a performance in the underlying audio track, there may be a separate agreement in which that person is compensated.

A cautionary tale about failing to secure proper releases: The producer of a video for an artist at a major record label used a picture of an old girlfriend from her Facebook profile in a spilt second of a still titled "Missing Persons" in a video featuring the artist singing about a romantic break-up. The ex-girlfriend noticed and was not pleased. She retained a lawyer who was able to negotiate a significant settlement.

Crowds and Audiences: If you are shooting in a public place, releases should be given to anyone wandering into the scene if anyone is are recognizable. If a person doesn't want to sign the release, you should avoid using that footage. If you are shooting in front of a live audience, you can use one or more signs at the entrance to the performance area informing the audience members that, by entering, they consent to appearing in the video. The sign (or signs) should be large enough and displayed in a place prominent enough that anyone entering will notice. However, if a person from the audience is featured, or especially if he or she appears on stage, a personal release should be signed.

Location Release: The location release at the end of this article is for a venue that agrees to let you shoot your video at the location without a fee. It is particularly useful if there is a sign or logo that people would recognize. The release will make it clear that no consideration was expected for the use of the location. Of course, sometimes a location, such as a restaurant or bar, will require a fee. In that case, the amount to be paid can be inserted in the release.

Public Places: Generally, if public venues and landmarks, such as the Empire State Building appear in the video, you do not need a release if the location is incidental to the action in the video. If, however, you are shooting in front of a well-known place, such as Nathan's hotdog restaurant in Coney Island, and its name appears prominently in the video, it would be wise to have the manager sign a location release.

4. Trademarks
The use of a trademark in a music video is generally protected by the First Amendment, but not always.

Likelihood of Confusion Test: The limited purpose of trademark protection set forth in the Lanham Trademark Act (15 U.S.C. § 1051 et. seq.) is to avoid confusion in the marketplace by allowing a trademark owner to prevent others from duping consumers into buying a product or using a service they mistakenly believe is sponsored by the trademark owner. Trademark law aims to protect trademark owners from a false perception that they are associated with or endorse a product or service. Generally, to assess whether a defendant has infringed upon a plaintiff's trademark, the courts apply a "likelihood of confusion" test that asks whether use of the plaintiff's trademark by the defendant is likely to cause confusion or mistake, or to deceive as to the affiliation, connection, or association of plaintiff's brand with defendant's product or service.

Applying these principles to music videos, the bottom line is that if a trademark is used in such a way that it is not likely to confuse a viewer into thinking that the brand sponsored the video, the producer may have a First Amendment right to use the mark (notwithstanding any licensing issues). The classic example is a rapper wearing a baseball cap or t-shirt. Just because the singer may be wearing a Yankees cap or Baltimore Orioles t-shirt doesn't mean that a reasonable person would think that the Yankees or Orioles sponsored or produced the video.

On the other hand, where a trademark is prominently featured, it may be reasonable to think that a brand is sponsoring the video. For instance, a number of brands are featured in the video for "Telephone" featuring Beyoncé and Lady Gaga. Yet in that case, the brands were actually sponsoring the video by paying for product placement. In fact, these days, many indie artists use brands to help pay for or at least defray the costs of their videos. However, if you have not received approval or received a sponsorship from a brand, it is important not to lead your viewers to believe that you have by drawing too much attention to the brand in your video.

Product Disparagement: This is also called product defamation, trade libel, or slander of goods; product disparagement is any statement about a brand that is false and likely to adversely affect its profits. Product disparagement includes negative statements about a product or service, false comparisons of competing consumer products or services, and statements harming the reputation of an artist.

When applying these principals to a music video, it is important to note that showing a brand's name or logo in a negative context could prompt a demand that the video be changed or not shown at all. Consider this real world example: A record label made a video in the early 1990s, when MTV was still playing videos, of a toy train running off the track and smashing into small models of people made of clay. During the video, close-ups of the artist as the conductor of the wayward train would appear. The video was lighthearted, and no one would think that the artist/conductor was actually running over real people. However, the name of the well-known U.S. railroad appeared on the toy train, and its representatives were less than amused. In fact, they sent a letter to MTV demanding that it stop playing the video. The label agreed to take the name off the toy train by blurring it, but the railroad still insisted that the video be banned because the color of the toy train--a particular shade of yellow--was the same color as its actual trains. The label reacted by changing the entire color of the video to sepia, which made the toy trains a different shade of yellow. Yet the railroad still had a problem because the cars were still yellow. The label defiantly re-released the video. However, the railroad company initiated a lawsuit against the label and was able to persuade a federal judge to permanently enjoin the further exhibition of the video on MTV and any other outlet. Later, the label settled the suit by paying damages to the railroad, in addition to agreeing to never use the video for any purpose again.

5. Artwork and Other Copyrighted Works
A best practice is to avoid using material protected by copyright. This will save you a lot of headaches, and possibly money. The case of Ringgold v. Black Entertainment Television is an important case in this regard. In the late 1990s, Faith Ringgold, a successful contemporary artist, sued BET for airing an episode of a television series called ROC in which a poster containing her artwork appeared. In the scene, at least a portion of the poster was shown a total of nine times. In some of those instances, the poster was at the center of the screen, although nothing in the dialogue, action, or camera work particularly called the viewer's attention to it. The nine sequences in which a portion of the poster was visible ranged in duration from a little more than one to four seconds. The aggregate duration of all nine sequences was approximately 27 seconds.

The case was decided by a federal appeals court in New York. The court found BET liable, rejecting the de minimis defense. As already noted in the section on "Cover Videos" above, if the amount of a work copied is so trivial as to fall below the quantitative threshold of substantial similarity, the copying is de minimis, and does not constitute copyright infringement. However, the court found that in addition to its appearance in the scene, there was also a qualitative connection between the poster and the show. The poster included a painting depicting a Sunday school picnic held by the Freedom Baptist Church in Atlanta, Georgia in 1909, and was intended to convey "aspects of the African-American experience in the early 1900s." ROC was a television sitcom series about a middle-class African-American family living in Baltimore, and the scene in question was of a gathering in a church hall with a minister.

In contrast to Ringgold, the case of Sandoval vs. New Line Cinema Corp stands for the proposition that use of copyrighted artwork in the background of a scene may be de minimis.

In Sandoval, the same court that decided the Ringgold case, found that the use of the plaintiff's copyrighted photographs in the motion picture "Seven" was de minimis and therefore not actionable. The photographs appeared in the film for a total of 35.6 seconds, but they were always in the background and never in focus. The court found that the "photographs as used in the movie [were] not displayed with sufficient detail for the average lay observer to identify even the subject matter of the photographs, much less the style used in creating them." The court distinguished the facts from Ringgold because there was no substantive connection between the appearance of the photos and the subject matter of the scene.  

---------------------------------------------------------------------------------------------------------------------------------

The agreement below contemplates that an artist is hiring a production company to produce a promotional video. The same form of agreement may be used by a record company. An artist may consider forming a corporate entity (i.e., C corporation, Subchapter S or LLC) in order to avoid any personal liability in regard to any agreement including a video production agreement. In addition, an artist would be wise to consult with an accountant or attorney about forming an LLC or S corporation for tax purposes including eligibility to deduct video expenses from his or her personal income.

DISCLAIMER
This form has been created for informational purposes only and does not constitute legal advice. You should consult an attorney before making any such legal agreements.


VIDEO PRODUCTION AGREEMENT


This agreement ("Agreement"), effective as of _____, 2016, is between __________ ("Artist") with an address of __________________, and _____________ ("Producer"), with an address at _____________________________.

WITNESSETH:

WHEREAS, Producer has recognized expertise in video production; and

WHEREAS, Artist wishes to engage Producer to record a music video featuring Artist performing a song titled "_____________" (the "Video").

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1. PRODUCTION SERVICES

1.1. Producer shall provide Artist with the video recording and production services (hereinafter "Production Services") described within this Agreement.

1.2. Principal photography shall begin on ____________, 2016. Producer shall make Delivery, as defined herein, of the Video to Artist no later than _________, 2016. "Delivery" shall consist of delivery of (i) a fully edited sound synchronized video master, and (ii) all other recorded elements created during production, including but not limited to all audio tracks, video footage and outtakes. Delivery will not be deemed to have occurred until Artist accepts the Video as suitable for commercial exploitation.

1.3. Producer shall provide the Production Services to Artist promptly with the degree of skill, attention and due care that is standard practice within the professional Production Services industry.

1.4. Producer and Artist agree that the budget attached in Schedule A shall represent 100% of the funds required to produce the Video (hereinafter "Budget"). This amount represents the Producer's total anticipated costs and profit.

The Budget should include all costs for producing the video including producer and director fees as well as post production editing costs. For examples of music video budgets ranging from "shoestring" to "commercial/studio" budgets, see http://garrettgibbons.com/music-video-budgets.


1.5. If the Producer hires a director (hereinafter "Director"), the Director shall be an employee of the Producer for purposes of the production and Delivery of the Video.

1.6. All employees and representatives of Producer providing the Production Services hereunder to Artist during the Term of this Agreement shall be deemed for all purposes (including all compensation, taxes and employee benefits) to be employees or representatives solely of Producer, and not to be employees or representatives of Artist or to be independent contractors of Artist.

1.7. The Video shall depict content to be included in a treatment or script to be approved by Artist prior to principal photography.

2. GRANT OF RIGHT: WORK MADE FOR HIRE

This clause transfers all rights to the person (or company as the case may be) commissioning the Video.


2.1. Production Services provided by the Producer and any other person providing such Services shall be deemed to be provided on a "work made for hire" basis as that term is defined under the U.S. copyright law. The Video and all other materials created or contributed by the Producer including all footage, outtakes and audio tracks (the "Materials"), shall be the sole property of Artist throughout the universe, free from any claims whatsoever by Producer; and Artist shall have the exclusive right to register the copyright(s) in such Materials in her name as the owner and author thereof and to secure any and all renewals and extensions of such copyright(s).

2.2. Without limiting the generality of the foregoing, Artist and any person authorized by Artist shall have the unlimited exclusive right, throughout the universe, to manufacture or create copies of the Video or any other Materials by any method now or hereafter known, or any work derived from the Video or the Materials and to sell, market, transfer or otherwise deal in same under any trademarks, trade names and labels, or to refrain from such manufacture, sale and dealing.

2.3 Artist or any Person authorized by Artist shall have the right throughout the universe, and may grant to others the right, to reproduce, print, publish, or disseminate in any medium the name, portraits, pictures, likenesses and biographical material concerning Producer and Director any other person providing Production Services, as news or information, or for the purposes of trade, or for advertising purposes, in connection with promotion marketing and sale of the Video. As used in this Agre