IP Law Chat : IP Law Chat -- Hendricks & Lewis, intellectual property, trademark, copyright and technology attorneys

Reading the introductory sentences in the Second Circuit's decision in Phillips v. Audio Active Limited, No. 05-7017, one might have thought that things did not bode well for the plaintiff, Peter Phillips, professionally known as Pete Rock:

"A plaintiff may think that as the initiator of a lawsuit he is the lord and master of where the litigation will be tried and under what law.  But if he is a party to a contract that contains forum selection and choice of law clauses his view of himself as ruler of all he surveys may, like an inflated balloon, suffer considerable loss of altitude."

But in the end, things could've been much worse for Pete Rock.

In Phillips, the musician Peter Phillips entered into a recording contract with Audio Active Limited/Barely Breaking Even ("BBE"), under which he agreed to produce no less than ten tracks and of which BBE would be the copyright owner.  The recording contract also provided that "[t]he validity[,] construction[,] and effect of this agreement and any or all modifications hereof shall be governed by English Law and any legal proceedings that may arise out of it are to be brought in England."  Phillips also signed a letter agreement that was attached to the recording contract, which stated that this letter agreement "shall be subject to the same laws and exclusive jurisdiction as the [recording contract]."

While Phillips was producing the songs under the recording contract, he recorded additional tracks which BBE and another recording company later sought Phillips' permission to release.  Phillips denied the request but BBE and others released the additional tracks anyway.  Phillips then filed suit against BBE and others alleging breach of the recording contract by BBE for failing to pay the second installment of an advance.  Phillips also asserted claims for direct and contributory infringement under the Copyright Act and related alternative state law claims for unjust enrichment and unfair competition based on the defendants' exploitation of the additional tracks created by Phillips.

Two of the defendants moved to dismiss Phillips' complaint on the ground that the recording contract's forum selection clause required Phillips to bring his suit in England.  The District Court agreed with the defendants, concluding that the forum selection clause was mandatory rather than permissive and that Phillips had failed to show that enforcing the clause would be unreasonable.  As to Phillips' copyright claims, the District Court held that the dispute concerning defendants' right to exploit Phillips' music was primarily contractual because defendants had acquired the music under the recording contract.
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In a brief but no less interesting per curiam opinion, the Ninth Circuit vacated an order compelling arbitration that was based on a modified service contract posted on the service provider's website without specific notice to the customer of the changes to the contract.

In Douglas v. United States District Court, the plaintiff contracted for long distance telephone service with America Online, which service was subsequently acquired by Talk America.  After the acquisition, Talk America made four additions to the service contract, including additional service charges and an arbitration clause, and posted the revised contract on its website.  According to the plaintiff, however, Talk America did not notify him that the service contract had changed.  After the plaintiff learned of the changes, he filed a class action lawsuit in federal district court and Talk America moved to compel arbitration based on the modified service contract, which the District Court granted.

The Ninth Circuit disagreed with the District Court, however, concluding that Talk America could not unilaterally change the terms of the contract and that the plaintiff was not bound by the terms of the revised contract when he was not notified of the changes.  Notably, merely posting the revised contract on the website was insufficient notice of the changes as "[p]arties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side."

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The case of Jean v. Massachusetts State Police, No. 06-1775 (1st Cir.) is one of those cases that leaves you wanting to know more about what was really going on between the people involved.

In that case, Mary Jean, described as a local political activist in Worcester, Massachusetts, had a website containing information critical of the former county district attorney.  In 2005, she was contacted by Paul Pechonis, whom she had never met, who told her that eight armed state police troopers had arrested him in his home on a misdemeanor charge.  The arrest had been audio and videotaped by a motion-activated "nanny-cam" and he provided a copy of that recording to Jean who then posted the recording on her website along with an editorial critical of the former county district attorney's performance in office.

The State Police ultimately discovered the recording on the website.  They wrote a letter to Jean telling her that her actions violated state law and were subject to prosecution as a felony, and that if she did not "cease and desist" within 48 hours from posting the recording, the police would refer the matter to the district attorney for investigation and possible prosecution.  The State Police later clarified their position by a second letter to Jean, stating that she would not be in violation of the law if she removed the audio portion of the recording from the website.

Jean apparently did not remove the recording from her website and instead filed a complaint in federal district court seeking a temporary restraining order and injunctive relief precluding the government officials from threatening her with prosecution or enforcing the relevant state law against her based on her right to free speech under the First Amendment.  The District Court granted Jean both a TRO and a preliminary injunction finding that, based on the Supreme Court case of Bartnicki v. Vopper, 532 U.S. 514 (2001), Jean had demonstrated a likelihood of success on her First Amendment claim because she had played no part in the allegedly unlawful recording of the video, she had obtained the recording lawfully, and the video related to a matter of public concern.  The First Circuit agreed with the District Court, ultimately finding that, because Jean's publication of the recording on the website was entitled to the same First Amendment protection as that involved in Bartnicki, she had demonstrated a likelihood of success on the merits and therefore affirmed the grant of a preliminary injunction.

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Eros, LLC, self-described as "one of the most successful merchants doing business within the virtual world platform known as Second Life, has sued a fellow virtual world citizen John Doe, "a/k/a Volkov Catteneo, a/k/a Aaron Long," in a real world court, claiming violations of the Lanham Act and copyright infringement by the defendant in the virtual world.

According to the complaint, Eros--through the marketing efforts of its chief executive officer, known in Second Life as "Stroker Serpentine"--has made a name for itself within the virtual walls of Second Life by selling adult-themed virtual objects under the "SexGen" mark.  Shortly before filing the complaint, Eros filed both an application to register the mark for "scripted animation system utilizing a defined menu to actuate avatars within a virtual world accessed through a 3-dimensional virtual platform," and a copyright registration application for the computer graphics/animation.  Eros apparently promotes its products by advertising and conducting "promotional events" within "virtual adult/social themed clubs" in Second Life.

Eros claims that at least as of April 2007, the defendant began making and selling unauthorized copies of Eros's adult-themed virtual objects using the "SexGen" mark, misrepresenting the copies as authorized and legitimate copies created by Eros, which has resulted "in actual consumer confusion regarding the origin of the copies."

You can find a copy of Eros's complaint, filed in the Middle District of Florida, here.

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