UPDATE: New Filings in Garcia v. Google, "Innocence of Muslims" Dispute

Garcia v. Google involves an actress's claim of a copyright interest in her acting performance in the controversial film "Innocence of Muslims" and her request for a preliminary injunction requiring Google to take down the film.  The actress's request for injunctive relief was denied in the district court but on appeal, a divided panel of the Ninth Circuit reversed that denial and ordered Google and YouTube to "remove immediately all or part of [the] film entitled 'Innocence of Muslims' from its platforms worldwide and to prevent further uploads."  You can read about the Ninth Circuit's decision here.

After the Ninth Circuit's decision, a judge of that court sua sponte requested a vote on whether to rehear en banc the panel's decision denying Google's request for a stay of the orders requiring it to take down the film.  The court thus directed the parties to file supplemental briefing limited to that issue.  The court's order can be found here.

The parties filed their respective supplemental briefing on March 12, 2014.  You can read the brief of the actress, Cindy Lee Garcia, here.  Google's briefing can be found here.  Although I haven't completed review of both briefs, one interesting item attached to Google's brief is a letter from the U.S. Copyright Office dated March 6, 2014, explaining why the office was refusing the actress's attempt to register a copyright in her individual performance in the film.

 

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Third Circuit Concludes That Courts Have No General Authority To Cancel Copyright Registrations

The Third Circuit recently addressed two issues of first impression in that circuit relating to two copyright issues:  (1) when an authorship claim arises and accrues; and (2) whether courts have authority to cancel copyright registrations.

Since the facts aren't necessary to the Third Circuit's answer to these questions--the rather long and somewhat involved facts are detailed in the court's opinion--I'm jumping right to the answers.

As to the first issue, the Third Circuit joined the Second, Seventh, and Ninth Circuits and adopted the "express repudiation" rule.  When that rule is fused with the discovery rule, which the Third Circuit follows in determining when a cause of action accrues, the court concluded that a copyright joint authorship claim arises "once a plaintiff's authorship has been expressly repudiated since he can only be on inquiry notice once his rights have been violated."  Again agreeing with its sister circuits, the Third Circuit also concluded that a copyright registration standing alone is insufficient to serve as the express repudiation of joint authorship.

As to the second issue, for several reasons, the Third Circuit held that courts do not have the general authority to cancel copyright registrations.  Most of the court's reasons were statutory-based.  For instance, the court noted that there is no language in the Copyright Act granting courts general authority to cancel copyright registrations.  To the contrary, the Act bestowed all administrative functions and duties on the Register of Copyrights except as otherwise specified.  Moreover, the court noted that one provision of the Act did bestow specific cancellation authority on courts with respect to "original designs," thus suggesting that the courts didn't have general cancellation authority.

The Third Circuit also noted that the Lanham Act explicitly provided courts with general authority to cancel trademark registrations.  Congress's failure to include such language in the Copyright Act with respect to copyright registrations thus suggested that it did not intend for courts to have general cancellation authority with respect to such registrations.

The Third Circuit concluded by emphasizing that the courts were not without authority to police copyright registrations or to invalidate copyrights:

It . . . goes without saying that courts are authorized to police copyright registrations through authorship claims and infringement claims. . . .

[W]e are in no way holding that courts are incapable of invalidating underlying copyrights.  While the two concepts are undoubtedly related, the distinction matters.  Holding that federal courts have the authority to cancel registrations would essentially be declaring that the judicial branch has the authority to order a legislative branch agency that is not a party to the litigation to take an affirmative action.  A federal court's finding that a copyright is invalid, on the other hand, is a determination of ownership which does not disturb the registration of a copyright.  Courts have no authority to cancel copyright registrations because that authority resides exclusively with the Copyright Office.

(Footnote omitted).

The case cite is Brownstein v. Lindsay, Appeal Nos. 12-2506 & 12-4471 (3d Cir. Jan. 29, 2014).

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Ninth Circuit Orders Google To Remove "Innocence of Muslims" Film Based on Copyright Claim of Actress

This opinion from the Ninth Circuit has created quite a stir and for good reasons, some of which are touched upon below.

Cindy Lee Garcia was cast in a minor role for a film with the working title "Desert Warrior," which she was told was an adventure film set in ancient Arabia.  She received the four pages of the script in which her character appeared and was paid approximately $500 for three and a half days of filming.

But instead of being part of an Arabian adventure film, Garcia's scene (partially dubbed over) was used in the anti-Islamic film "Innocence of Muslims," which was posted on YouTube.  As a result of her role in the film, Garcia received death threats.  She took security precautions and filed multiple unsuccessful takedown notices under the Digital Millenium Copyright Act trying to get the video removed from YouTube.

Garcia filed a suit against Google and others (her amended complaint can be found here) and sought a temporary restraining order seeking removal of the film, claiming that posting the video infringed her alleged copyright in her performance in her scene.

The district court, treating Garcia's application as one for a preliminary injunction, denied it, concluding in part that she had delayed in seeking an injunction and that she was unlikely to succeed on the merits of her copyright claim because she gave the film's writer and producer an implied license to use her performance in the film.  The district court's short decision can be found here.

In an opinion written by Chief Judge Kozinski, to which Circuit Judge Smith dissented, the Ninth Circuit reversed the district court, remanding for that court to enter a preliminary injunction.  In the interim, the Ninth Circuit also issued a temporary injunction requiring Google to take down all copies of the film "from YouTube and any other platforms within its control and to take all reasonable steps to prevent further uploads."

In reversing the district court's denial of the preliminary injunction, the Ninth Circuit's majority opinion discussed two issues of particular interest:  Garcia's claim of a copyright interest in her performance in the film (apparently consisting of a single scene) and the nature of the alleged irreparable harm that would result if the injunction based on her copyright claim wasn't granted.

As to the first issue, the Ninth Circuit concluded that the film wasn't a joint work of which Garcia was a joint author under the Copyright Act.  But that didn't end the analysis because "a copyright interest in a creative contribution to a work [doesn't] simply disappear[] because the contributor doesn't qualify as a joint author of the entire work."  Instead, as the majority opinion saw it, because Garcia's "artistic contribution" (i.e., her acting performance in the scene) was fixed, "the key question remains whether it's sufficiently creative to be protectible."

The Ninth Circuit concluded that Garcia's performance was sufficiently creative, rejecting Google's argument that she didn't make a protectible contribution to the film because the writer/producer wrote the dialogue, managed the production, and dubbed over a portion of her scene.  The majority opinion characterized an actor's performance as "far more than speak[ing] words on a page," describing it as an "external embodiment" including "body language, facial expression and reactions to other actors and elements of a scene."

Relying on a Supreme Court opinion involving the copyrightability of telephone book white page listings, Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991), the Ninth Circuit--giving remarkably short shrift to a seemingly more complex question--concluded that Garcia's acting performance possessed the "minimal degree of creativity" necessary to be independently copyrightable.

 After reaching this potentially broad conclusion--albeit only for purposes of deciding the propriety of preliminary injunctive relief in this case--the majority opinion attempted to limit it, concluding that Garcia granted the film's writer/producer a broad implied license to use her performance in the film.  But despite emphasizing that such an implied license should be "construed very broadly," the use in this case exceeded the scope of the license by using it in the controversial "Innocence of Muslims" film when Garcia believed she would be appearing in an Arabian adventure film.

The second particularly interesting issue involved the requirement that Garcia demonstrate that irreparable harm would result if an injunction didn't issue.  And more specifically, because the requested injunctive relief was based on her copyright infringement claim, she had to show that the harm alleged "is causally related to the infringement of her copyright."

The harm Garcia alleged, however, were the death threats she received, and presumably would continue to receive, which the majority opinion concluded was sufficient to justify a preliminary injunction on her copyright infringement claim:

[The film's writer/producer's] unauthorized inclusion of her performance in "Innocence of Muslims" undisputedly led to the threats against Garcia.  Google argues that any harm arises solely out of Garcia's participation in "Innocence of Muslims" and not out of YouTube's continued hosting of the film.  But Garcia has shown that removing the film from YouTube will help disassociate her from the film's anti-Islamic message and that such disassociation will keep her from suffering future threats and physical harm.

But while death threats certainly are a type of harm and even ignoring any issues as to causation, the Ninth Circuit never addresses the question whether it is the type of harm that was intended to be addressed by copyright law, or whether copyright law is the appropriate vehicle to address such harm.

Moreover, the majority opinion gives no meaningful attention to Google's First Amendment prior restraint argument, simply stating that the "First Amendment doesn't protect copyright infringement."  In so doing, the opinion does not address the issue whether, by issuing an injunction requiring Google to take down the film and thereby stifling speech (even offensive, troubling speech), the injunction is contrary to the public interest.

The dissenting opinion--emphasizing that an abuse of discretion standard of review applied to the district court's decision--focuses largely on the majority opinion's conclusion that Garcia's acting performance was independently copyrightable, arguing that she did not "clearly have a copyright interest in her acting performance, because (1) her acting performance is not a work, (2) she is not an author, and (3) her acting performance is too personal to be fixed."

The dissenting opinion also takes issue with the majority opinion's analysis of the irreparable harm issue and notes the "public's interest in a robust First Amendment," an interest implicated by the injunction forcing Google to take down the film.

Whether one agrees or not with the dissenting opinion's reasoning on any or all of these issues, the opinion is well worth reading if only because it offers a more nuanced discussion of what would seem to be much more complex issues than is apparent from the majority opinion.

The case cite is Garcia v. Google, Inc., Appeal No. 12-57302 (9th Cir. Feb. 26, 2014).

Framing Issue on Appeal Narrowly, Second Circuit Avoids Copyright Issues in Copyright Infringement Claim Arising From Amended Pleading Filed in Class Action

Unclaimed Property Recovery Service (UPRS) and Bernard Gelb were among the named plaintiffs in a class action in which Norman Kaplan was the plaintiffs' attorney.  According to the allegations in the later copyright infringement suit, Gelb conducted the research for the class action complaint, hired Kaplan to represent the class, wrote the amended class action complaint, and compiled 305 pages of accompanying exhibits.  Gelb and UPRS also alleged that they had copyrights in the amended complaint and exhibits.

Kaplan signed and filed the amended complaint and exhibits on behalf of the class action plaintiffs.  The district court later dismissed the class action as time-barred and Kaplan appealed on the plaintiffs' behalf.

But while the appeal was pending, Kaplan and Gelb had a falling out, Kaplan informed Gelb that he wouldn't represent Gelb or UPRS, who then retained new attorneys.  Kaplan remained attorney of record for three other class action plaintiffs.

New counsel for Gelb and UPRS later moved to withdraw the pending appeal, which the Second Circuit granted but only as to them.  After that decision, Gelb and UPRS obtained copyright registration certificates for the amended complaint and exhibits.

The appeal proceeded with respect to the other class action plaintiffs and ultimately, the Second Circuit vacated the district court's dismissal of the action.

On remand, the class action plaintiffs still represented by Kaplan were granted leave to file a second amended complaint, which Kaplan did on their behalf.  Significant portions of this second amended complaint and exhibits were identical to portions of the first amended complaint and exhibits in which Gelb and UPRS claimed copyright.

Gelb and UPRS then sued Kaplan, alleging in part that he infringed their copyrights in the first amended complaint and exhibits by copying portions of those documents in the second amended complaint and exhibits that he filed.

The district court dismissed the copyright infringement claim concluding that Gelb and UPRS had granted Kaplan an irrevocable implied license to file amended versions of the first amended complaint and exhibits.  The court thus did not reach the question whether Gelb and UPRS had valid copyright interests in the first amended complaint and exhibits in the first instance.  The district court then declined to exercise supplemental jurisdiction over the state law claims for conversion and unfair competition.

Gelb and UPRS appealed.

The Second Circuit framed the issue narrowly in a way that avoided broader copyright questions:  "[W]hether 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."

The Second Circuit answered that question in the negative, holding 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."

The court largely based its conclusion on practical considerations, noting that "[l]itigation cannot be conducted successfully unless the parties to the litigation and their attorneys are free to use documents that are a part of the litigation."

But the Second Circuit also questioned the plaintiffs' theory on policy grounds, stating that plaintiffs asked the court to endorse and enable "their questionable litigation practices" that would impinge on the trial court's discretionary case management authority by preventing it from allowing pleadings to be amended only in part.

In reaching its conclusion, the Second Circuit noted all the questions it (unfortunately) was not deciding:

Our decision today is based on the particularities of the facts before us.  We do not decide whether legal pleadings or other legal documents are subject to copyright law.  We do not decide whether a party who is authorized to file a legal pleading in one case is also authorized to file it in other cases.  We do not decide whether the parties to the litigation may use the pleading for other purposes unrelated to the litigation.

The court further qualified its conclusion by noting that it did "not mean to suggest that permission of the copyright holder is inevitably needed for use of a copyrighted document in litigation;" rather, its "ruling concern[ed] only the consequence of a grant of authorization for use in litigation which the holder then purports to withdraw."

The case cite is Unclaimed Prop. Recovery Serv., Inc. v. Kaplan, Appeal No. 12-4030 (2d Cir. Aug. 20, 2013).

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A Single Line From a Faulkner Novel Paraphrased in a Woody Allen Movie Not a Copyright Infringement, Court Concludes on a Motion to Dismiss

At issue in this litigation was Woody Allen's movie, Midnight in Paris, and William Faulkner's book, Requiem for a Nun, or, more specifically, quotes from the movie and the book.

The quote from the book was:  "The past is never dead.  It's not even past."  The quote from the movie was:  "The past is not dead.  Actually, it's not even past.  You know who said that?  Faulkner, and he was right.  I met him too.  I ran into him at a dinner party."  (The district court's opinion provides significantly more description of the movie and the book.)

Faulkner Literary Rights, LLC sued Sony Pictures Classics for the use of the line in the movie, alleging violations of the Copyright Act and the Lanham Act.  Sony moved to dismiss the complaint, which the district court granted based on a fair use analysis that led to a finding of non-actionable de minimis use.

The district court began with a discussion of the proper point in the copyright infringement analysis to consider the issue of de minimis use, ultimately concluding that it, along with the question of substantial similarity, would be encompassed within its assessment of the four fair use factors.

As to the first fair use factor--the purpose and character of the use--the district court found (1) that the "speaker, time, place, and purpose of the quote in these two works are diametrically dissimilar;" (2) that the "[c]haracters in both works use the quote for antithetical purposes of persuasion;" and (3) that the "transmogrification in medium" from "a serious piece of literature" to a "speaking part in a movie comedy" favored fair use.  In short, Sony's use was transformative:

These factors coupled with the miniscule amount borrowed tip the scales in such heavy favor of transformative use that it diminishes the significance of considerations such as commercial use that would tip to the detriment of fair use.  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.  Likewise, it is evident that this eight second clip serves as a thematic catharsis or apex in plot to neither Requiem nor Midnight.

The district court then concluded that the second fair use factor--the nature of the copyrighted work--was neutral and quickly moved on.

As to the third fair use factor--the substantiality of the portion used in relation to the copyrighted work as a whole--everyone was in agreement that from a quantitative standpoint, Sony's use was not substantial.

Instead, Faulkner urged that Sony's use was qualitatively important because the quote "'describes the essence of Requiem: there is no such thing as past[.]'"  But the district court rejected this argument, finding that it addressed "the qualitative importance of a theme" in the book "not the qualitative importance of the quote itself," which was the issue.  Thus, from both a quantitative and qualitative standpoint, the court concluded this factor too favored a finding of fair use.

Finally, with respect to the fourth fair use factor--the use's effect upon the potential market for or value of the copyrighted work--the district court noted that the record was silent.  Nonetheless, it found this factor "to be essentially a non-issue in light of the stark balance" of the factors favoring Sony and because it "is highly doubtful that any relevant markets have been harmed" by Sony's use.  Indeed, the court expressed a certain amount of incredulity on this point:  "How Hollywood's flattering and artful use of literary allusion is a point of litigation, not celebration, is beyond this court's comprehension."

Thus, ultimately, the court concluded "that no substantial similarity exists between the copyrighted work and the allegedly infringing work, and Sony's use . . . was de minimis," making the use not actionable.

The district court also gave short shrift to Faulkner's Lanham Act claim noting that it had not identified the specific provision(s) of the Act that Sony allegedly violated. 

Nor did the court find persuasive Faulkner's allegations that the movie would deceive or confuse viewers "'as to a perceived affiliation, connection or association between William Faulkner and his works, on the one hand, and Sony, on the other hand.'"  Although the movie alluded to Faulkner, "[a]llusion is not synonymous with affiliation, nor with appropriation," the court stated, and Faulkner had not demonstrated "that the mere use of a celebrity name in an artistic work somehow rises to the level of deception."

Finally, having dismissed Faulkner's federal claims, the district court declined to exercise supplemental jurisdiction over its remaining claim for commercial misappropriation under state law.

The case cite is Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., Case No. 3:12-cv-00100-MPM-JMV (N.D. Miss. July 18, 2013).

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Fourth Circuit Upholds Copyright Assignment Effectuated by Agreeing to Terms of Use Containing Assignment Provision

The parties to this case--Metropolitan Regional Information Systems and American Home Realty Network--are competitors in the real estate listing business.

Metropolitan Regional operates a listing service compiling property listings and related information.  Paying subscribers upload their real estate listings, including photos, to Metropolitan Regional's database.  To submit photos, subscribers must click a button assenting to Metropolitan Regional's Terms of Use Agreement which included a provision irrevocably assigning the copyrights in the photos to Metropolitan Regional.

Metropolitan Regional sued American Home Realty for copyright infringement for using Metropolitan Regional's photographs on its own real estate listings website.

Metropolitan Regional sought a preliminary injunction and American Home Realty moved to dismiss on various grounds.  The district court granted the motion for a preliminary injunction and denied the motion to dismiss.  American Home Realty appealed and the Fourth Circuit affirmed.

The only issues on appeal involved the validity of Metropolitan Regional's copyright registrations with respect to the photos (which were registered as component parts of a database) and its ownership of the copyrights in the photos.

As to the first issue, the Fourth Circuit noted a divide among courts. 

Some courts have barred infringement suits with respect to component works like Metropolitan Regional's photos, concluding that the registrations failed to comply with the requirement that authors of the component works be listed in the application to register the collective work.

But other courts have concluded otherwise, "at least so long as the registrant owns the rights to the component works as well."  The Fourth Circuit found this latter approach "more consistent with the statutory and regulatory scheme" and concluded that Metropolitan Regional's infringement suit with respect to its photos was not barred.

The second issue was somewhat more interesting.  American Home Realty argued that the subscriber's electronic agreement to Metropolitan Regional's TOU, which contained a copyright assignment provision, was insufficient to assign rights under Section 204 of the Copyright Act, which requires a signed writing.

But the Fourth Circuit rejected that argument and instead agreed with Metropolitan Regional's contention that an electronic transfer satisfies the Copyright Act's requirement of a signed writing.  Both the court and Metropolitan Regional also relied on the Electronic Signatures in Global and National Commerce Act ("the E-Sign Act") to support that conclusion.

The E-Sign Act states that an electronic signature cannot be denied legal effect simply because it is electronic and defines "'electronic signature'" as "'an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.'"

The Fourth Circuit noted that the only case relying on the E-Sign Act in the context of copyright assignments upheld the conveyance of a copyright interest by email.  See Vergara Hermosilla v. Coca-Cola Co., Case No. 1:10-cv-21418-KMM (S.D. Fla. Feb. 23, 2011).  It also relied on other decisions in which courts had held that "agreements reached by electronic means" were not invalid under analogous statutory requirements.

Thus, the Fourth Circuit held "that an electronic agreement may effect a valid transfer of copyright interests under Section 204 of the Copyright Act."

Although it was not raised by the parties, before launching into this discussion of ownership, the Fourth Circuit "note[d] the anomaly of allowing [American Home Realty] to fabricate for its own benefit a dispute between [Metropolitan Regional] and its subscribers over copyright ownership in the photographs."  Nonetheless, the Fourth Circuit went on to address the issue of ownership.

The case cite is Metro. Reg'l Info. Sys., Inc. v. Am. Home Realty Network, Inc., Appeal No. 12-2102 (4th Cir. July 17, 2013).

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Ninth Circuit Gives Green Day Fair Use Green Light For Concert Video Backdrop

In 2003, plaintiff Derek Seltzer, an artist and illustrator, created a drawing of a "screaming, contorted face" referred to as "Scream Icon."  Seltzer made some copies of "Scream Icon," which he both sold and gave away, and many posters of "Scream Icon" have been used as street art in, as relevant here, Los Angeles.

In 2008, defendant Roger Staub, a photographer and professional set-lighting and video designer, photographed a brick wall in Los Angeles covered by graffiti and posters including a "weathered and torn copy" of the "Scream Icon." 

Staub was subsequently engaged--through another company--to create the video backdrops for Green Day's 2009-2010 tour promoting its latest album, 21st Century Breakdown, and more specifically as relevant to the litigation, a song entitled "East Jesus Nowhere."

In creating the video backdrops, Staub listened to the album and studied the album art, which used graffiti and street art as "significant visual elements."  Staub's goal was to convey each song's "mood, tone or themes," which in the case of "East Jesus Nowhere," he described as "the hypocrisy of some religious people who preach one thing but act otherwise" and "the violence that is done in the name of religion."

The Ninth Circuit describes the approximately four-minute video Staub created (which description also suggests the court's ultimate decision):

The video depicts a brick alleyway covered in graffiti.  As "East Jesus Nowhere" is performed, several days pass at an accelerated pace and graffiti artists come and go, adding new art, posters, and tags to the brick alleyway.  The graffiti includes at least three images of Jesus Christ, which are defaced over the course of the video.  Throughout the video, the center of the frame is dominated by an unchanging, but modified, Scream Icon.  Staub used the photograph he had taken [in Los Angeles], cut out the image of Scream Icon and modified it by adding a large red "spray-painted" cross over the middle of the screaming face.  He also changed the contrast and color and added black streaks running down the right side of the face.  Staub's image further differs from Scream Icon because Staub's original photograph was of a weathered, slightly defaced, and torn poster.  Scream Icon is nonetheless clearly identifiable in the middle of the screen throughout the video.

Seltzer sued Staub, Green Day and others, alleging, in part, copyright infringement for their use of "Scream Icon."  Defendants moved for summary judgment in part on the ground of fair use under the Copyright Act, Section 107, which the district court granted.  The district court also later granted Green Day's motion for attorney's fees, awarding more than $200,000 in fees.  Seltzer appealed both decisions.

 Analyzing the four fair use factors, the Ninth Circuit concluded that Green Day's use of "Scream Icon" constituted fair use even though ultimately it found only two of the factors favored Green Day (one of the two remaining factors "slightly" favored Seltzer while the other was neutral).

Specifically, the transformative nature of Green Day's use of "Scream Icon"--a "key factor" in the fair use analysis--favored Green Day as did the Ninth Circuit's conclusion that Green Day's use was only "incidentally commercial" (which it also later described as "not overly commercial").  And the Ninth Circuit concluded that there was "no reasonable argument" that Green Day's use of "Scream Icon"--in a video backdrop for one song in a three-hour concert--was a substitute for the primary market for Seltzer's art.

Somewhat notably, in its discussion of the transformative nature of Green Day's use, although the Ninth Circuit noted that "the law in this area is splintered," it attempted to describe a distinction between "non-transformative" and "transformative" cases that had gone before.  In the case of "non-transformative" cases, "the use is one which makes no alteration to the expressive content or message of the original work."  But in "transformative" cases, "an allegedly infringing work is typically viewed as transformative as long as new expressive content or message is apparent," even when the "work makes few physical changes to the original or fails to comment on the original."

The Ninth Circuit did, however, reverse the grant of more than $200,000 in attorney's fees to defendants, concluding that the district court had "clearly erred" in finding that Seltzer's action was objectively unreasonable when he brought it.  The fact that he lost his case was not sufficient and the Ninth Circuit characterized it as a "close and difficult case."

The case cite is Seltzer v. Green Day, Inc., Appeal No. 11-56573 (9th Cir. Aug. 7, 2013).

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Court Again Partially Grants Summary Judgment in Warhammer 40K Dispute; Copyright Fair Use Defense Survives

Games Workshop, an England-based company, sells various science-fiction/fantasy products relating to a "dystopian fictional universe" called Warhammer 40,000, which was first created in 1987 with the release of the book Rogue Trader.

Most relevant to this case, Games Workshop created a tabletop miniature game based on Warhammer 40,000 lore in which players compete with miniature figurines.  Games Workshop sells its figurines online and at hobby stores in the United States.  The figurines are sold unpainted and often require assembly.

Chapterhouse Studios, begun by a Warhammer 40,000 fan at his home in Texas, began selling Warhammer 40,000 accessories, or "bit" parts, conforming to the scale used by Games Workshop for its figurines.  The "bit" parts largely included shoulder pads, shields, weapons, and miniature heads to use with Warhammer 40,000 and other figurines.  Chapterhouse sells its products online both at its website and on third-party websites like eBay.

In 2010, Games Workshop sued Chapterhouse for copyright infringement, trademark infringement, and related state and federal claims.

Both parties moved for summary judgment, which the district court granted in part and denied in part in November 2012.  At the time of the court's opinion, Games Workshop claimed that 95 of Chapterhouse's products infringed its copyrighted works and 110 products infringed its trademarks. 

In the November 2012 summary judgment decision, the district court addressed a number of issues including:  (1) Games Workshop's ownership of the copyrights at issue under English law (concluding it had largely established ownership); (2) the protectability of Games Workshop's figurines under U.S. copyright law (concluding that most of the figurines were protectable); (3) substantial similarity of the parties' respective works (concluding that the issue could not be resolved on summary judgment); (4) likelihood of confusion on Games Workshop's trademark claims (concluding that question could not be resolved on summary judgment); (5) Chapterhouse's alleged nominative fair use of Games Workshop's trademarks (again concluding that could not be resolved on summary judgment); and (6) trademark dilution (granting summary judgment to Chapterhouse on Games Workshop's dilution claim).  The November 2012 summary judgment decision can be found here.

After the district court granted Games Workshop leave to amend its complaint to add claims, the parties again moved for summary judgment and Chapterhouse additionally sought reconsideration of part of the court's earlier summary judgment ruling.

The district court denied Chapterhouse's request for reconsideration (which largely related to the protectability of an element of Games Workshop's figurines) although it did award Chapterhouse its costs relating to previously undisclosed correspondence it had obtained between Games Workshop and the Copyright Office.  The court similarly summarily denied Chapterhouse's motion for summary judgment, concluding that the court had already addressed the arguments in its earlier summary judgment decision and in discussing Chapterhouse's motion for reconsideration of that decision.

The district court then turned to Games Workshop's summary judgment motion which raised three issues:  (1) Games Workshop's ownership of the copyrights at issue; (2) Games Workshop's prior use of 87 of its alleged trademarks, which it claimed Chapterhouse had admitted; and (3) Games Workshop's request to strike certain of Chapterhouse's affirmative defenses.

Following fairly brief discussion, the district court resolved the first two issues largely, though not completely, in favor of Games Workshop.

More interesting is the district court's discussion of Games Workshop's request that certain of Chapterhouse's affirmative defenses be stricken, and more specifically, the copyright fair use and implied license defenses.

With respect to the fair use defense, the district court ultimately concluded that genuine issues of material fact precluded summary judgment with respect to virtually every fair use factor.

With respect to the first factor--the purpose and character of Chapterhouse's use--the district court concluded that Chapterhouse had presented evidence from which a reasonable jury could conclude that its products were transformative in that they added something new with a different character.

As to the second factor--the nature of the copyrighted work--although the district court concluded that Games Workshop's products were sufficiently original to warrant copyright protection and that they related to a fictional universe, it was still unclear to what degree this factor favored it:

[T]he characters that [Games Workshop] has created undoubtedly share many of their traits with other fictional characters in science-fiction and fantasy genres, and the Space Marines include traits and armor similar to those worn by real soldiers throughout history.  Thus although Warhammer 40K is undeniably fictional, many components of [Games Workshop's] products bear substantial similar[ity] to items found throughout history.

Factor three--the amount and substantiality of the portion used in relation to the copyrighted work as a whole--was also a jury question, the district court concluded, referring to its earlier discussion and its first summary judgment decision as to the extent that Chapterhouse's products copied Games Workshop's products.

Finally, only the fourth factor--the effect of the use upon the potential market for or value of the copyrighted work--more clearly favored Games Workshop, the district court concluded, because the evidence suggested that Chapterhouse's core business model was to attract Games Workshop's customers and sell them alternative figurine parts at a lower cost.

Thus, in light of these largely disputed issues, the district court concluded that summary judgment was inappropriate as to Chapterhouse's fair use defense.

Chapterhouse was not so fortunate, however, with respect to its implied license defense.  Although the discussion is brief, according to the district court, Chapterhouse contended that a page on Games Workshop's website entitled "What you can and can't do with Games Workshop's intellectual property," impliedly licensed use of its IP (the court's opinion didn't specify any specific language from that page to further explain Chapterhouse's contention).

Citing the policy statement on the website, which forbid "informal licensees" from using its IP "in relation to any commercial activity" and "creat[ing] a production run of conversions for sale" and "cast[ing] any materials that are based on Games Workshop material," the district court concluded that no reasonable jury could find in Chapterhouse's favor on the issue.  It therefore granted Games Workshop's summary judgment motion on Chapterhouse's implied license defense.

The case cite is Games Workshop Ltd. v. Chapterhouse Studios, LLC, Case No. 10 C 8103 (N.D. Ill. Apr. 1, 2013).

Collection of (Relatively) Recent Copyright Fair Use Decisions

Blogging has been sparse in recent months due to a busy schedule so I'm using the relatively recent spate of fair use opinions from various courts to belatedly summarize opinions of interest that have been issued over the last few months.

 Cariou v. Prince, Case No. 11-1197-cv (2d Cir. Apr. 25, 2013):

Patrick Cariou published a book of "classical portraits and landscape photographs" that he took over six years while living among Rastafarians in Jamaica. Richard Prince, an "appropriation artist", created a series of paintings and collages that altered and incorporated a number of Cariou's photographs that Prince exhibited at the Eden Rock hotel and the Gagosian Gallery in New York. Cariou sued Prince and others for copyright infringement, to which defendants raised a defense of fair use. On the parties' cross-motions for summary judgment, the district court rejected the fair use defense, granted summary judgment to Cariou, and granted injunctive relief that included the destruction of all of the infringing works of art.

The Second Circuit first concluded that the district court had applied an incorrect legal standard in requiring that, in order to qualify for a fair use defense, Prince's works must comment on Cariou, his pictures, "or on aspects of popular culture closely associated with" Cariou or his pictures.  The Second Circuit concluded that the

law imposes no requirement that a work comment on the original or its author in order to be considered transformative, and a secondary work may constitute a fair use even if it serves some purpose other than those (criticism, comment, news reporting, teaching, scholarship, and research) identified in the preamble to the statute.

Rather, to qualify as a fair use, a secondary work "generally must alter the original with 'new expression, meaning, or message.'"

Although the Second Circuit concluded that the district court applied the incorrect legal standard to its analysis of the fair use defense, the appellate court proceeded to examine the allegedly infringing works of art under the four fair use factors. In doing so, the court concluded that 25 made fair use of Cariou's photographs but that 5 presented "closer questions" and it therefore remanded to the district court to make the fair use determination with respect to those 5 artworks.

Because the Second Circuit reversed the district court's summary judgment decision, it also vacated the court's injunction and specifically noted that if the district court found defendants liable for copyright infringement with respect to the 5 artworks to be addressed on remand, destruction of Prince's artwork would not be a proper part of any injunctive relief, a proposition that the parties apparently agreed with.

Senior Circuit Judge Clifford Wallace of the Ninth Circuit sitting by designation dissented in part. Although he largely agreed with the majority's statement of the law, including the conclusion that the district court applied an incorrect legal standard, he argued that the entire fair use determination should be remanded for the district court to consider in the first instance applying the correct legal standard.

Associated Press v. Meltwater U.S. Holdings, Inc., Case No. 12 Civ. 1087 (DLC) (S.D.N.Y. Mar. 21, 2013):

In February 2012, the Associated Press sued Meltwater primarily alleging copyright infringement claims for using a computer program to scrape AP stories from the web and then providing excerpts of those stories to Meltwater's subscribers without the permission of the AP.  Meltwater raised a number of affirmative defenses, including, as relevant to this description of the case, fair use.

The district court's opinion provides a lengthy description of various aspects of Meltwater's services but the court provides a good, brief summary description:

Meltwater uses automated computer programs or algorithms to copy or "scrape" an article from an online news source, index the article, and deliver verbatim excerpts of the article to its customers in response to search queries.

The parties both moved for summary judgment on Meltwater's fair use defense, as well as other issues not discussed in this summary. The fair use discussion of the court's 91-page opinion is lengthy, so I will try only to hit the high points as to each of the four factors.

As characterized by the district court, Meltwater argued that its use of the AP articles at issue was fair because its service "functions as an Internet search engine, providing limited amounts of copyrighted material to its subscribers in response to their queries and thereby pointing its subscribers to a source of information online."  Such a service, Meltwater argued, was transformative of the original works and was therefore a fair use.

*Purpose and character of the use:  Contrary to Meltwater's assertions, the district court found that neither the purpose nor the use of the AP articles by Meltwater was transformative:

Meltwater uses its computer programs to automatically capture and republish designated segments of text from news articles, without adding any commentary or insight in its News Reports. Meltwater copies AP content in order to make money directly from the undiluted use of the copyrighted material; this is the central feature of its business model and not an incidental consequence of the use to which it puts the copyrighted material.

In discussing this first fair use factor, the district court referenced--as it would often do throughout the opinion--Meltwater's characterization of itself "as a search engine that directs users to a source of information online."  The court rejected that characterization, instead stating that Meltwater was "an expensive subscription service that markets itself as a news clipping service, not as a publicly available tool to improve access to content across the Internet."  The court then went on at some length to explain its reasons for rejecting Meltwater's characterization of itself as a search engine, distinguishing two cases from the Ninth Circuit--Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) and Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003).

The first factor thus did not support a finding of fair use, the district court concluded.

*Nature of the copyrighted work:  Because the AP articles were news stories, which are "more vulnerable" to the fair use defense, and Meltwater copied articles that had already been published, the district court concluded that this factor, which it found to be at best neutral, should weigh in favor of a finding of fair use.  That was the last good news for Meltwater in the fair use analysis.

*Amount and substantiality of the copying:  From both a quantitative and a qualitative perspective, the district court concluded that this factor weighed strongly against a finding of fair use because Meltwater copied between 4.5% and 61% of the articles at issue and automatically copied the lede from the stories, which "'convey[ed] the heart of the story.'"  The district court also again rejected Meltwater's attempts to justify its copying by characterizing itself as a search engine that took only that amount necessary to function as such.

*Effect of the use on the potential market or value of the work:  This factor also strongly favored the AP, the district court concluded, essentially because the AP (or its licensees) and Meltwater existed in the same "commercial space" and competed for the same customers.

*Balancing of fair use factors:  Based on the discussion of each individual fair use factor described above, the district court had no difficulty concluding that, on balance, the factors weighed heavily against Meltwater:

Meltwater's business model relies on the systematic copying of protected expression and the sale of collections of those copies in reports that compete directly with the copyright owner and that owner's licensees and that deprive that owner of a stream of income to which it is entitled.  Meltwater's News Reports gather and deliver news coverage to its subscribers.  It is a classic news clipping service.  This is not a transformative use.  As significantly, the rejection of the fair use defense here will further the ultimate aim of the Copyright Act, which is to stimulate the creation of useful works for the public good.

Discussion of the original filing of the case by the AP can be found here.

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SDNY Refuses to Dismiss Dental Patient's Claims Regarding Confidentiality Agreement and Copyright Assignment Required as Precondition to Treatment

In October 2010, Robert Allen Lee had a severe toothache and chose to visit Aster Dental because his insurance company listed it as a preferred provider.  According to Lee, Aster Dental told him he would have to pay it directly and then it would submit his paperwork to his insurer for reimbursement.

Before it would provide treatment, Aster Dental required Lee--as it allegedly required all patients--to sign a "Mutual Agreement to Maintain Privacy," which essentially prohibited Lee from commenting on Aster Dental and purported to assign to Aster Dental Lee's copyrights in any published comments.  Specifically, the agreement provided in part:

In consideration for treatment . . . Patient agrees to refrain from directly or indirectly publishing . . . commentary upon Dentist and his practice, expertise and/or treatment . . . .  If Patient does prepare commentary for publication about Dentist, the Patient exclusively assigns all Intellectual Property rights, including copyrights, to Dentist for any written, pictorial, and/or electronic commentary. . . .  This agreement shall be operative and effective at the time of creation (prior to publication) of the commentary. . . .  In addition, Patient will not denigrate, defame, disparage, or cast aspersions upon the Dentist; and . . . will use all reasonable efforts to prevent any member of their immediate family or acquaintance from engaging in any such activity.

According to Lee's complaint, he was in severe pain and therefore signed the agreement in order to obtain treatment to relieve the pain.  Lee was billed for and paid nearly $4,800 for the treatment but Aster Dental never forwarded his paperwork to his insurer for reimbursement.  When Lee requested a copy of his paperwork in order to submit his claim directly to his insurer, Aster Dental referred him to a third party that imposed a $200 charge.

In August 2011, Lee commented about his experience at Aster Dental on several websites, including Yelp, in which he criticized it for overcharging him and refusing to submit his insurance claim or provide his dental records.  The day after the comments, Aster Dental sent a letter to Lee threatening to sue him for breach of contract, defamation, and copyright infringement, stating that it would seek $100,000 in damages, and attaching a draft of a complaint.

In September and October 2011, Aster Dental also issued invoices to Lee, charging him $100 per day for copyright infringement.  Also in October 2011, Lee received a second letter threatening litigation.  And finally, also in September 2011, Aster Dental sent takedown notices to the websites where Lee had posted his comments.

Lee filed suit against Aster Dental and others seeking a declaration that, among other things, the confidentiality agreement he was required to sign was void for lack of consideration, was unconscionable and constituted a deceptive practice under New York law.  As relevant to the motion before the court, Lee also sought a declaration that his comments were not defamatory and that his comments constituted fair use under the Copyright Act.

The Aster Dental defendants moved to dismiss for lack of subject matter jurisdiction and failure to state a claim but the district court denied the motion.

The district court readily concluded that it had subject matter jurisdiction over Lee's claims.  First, because Lee sought a declaration that his postings constituted fair use under the Copyright Act and a declaration regarding copyright ownership, his claims arose under that act, providing an independent basis for the court's jurisdiction.

Second, the district court concluded that diversity jurisdiction existed, rejecting defendants' argument that Lee could not meet the jurisdictional amount of $75,000 because he only sought $4,766 in damages for breach of contract.  Pointing to defendants' threat to sue Lee for $100,000 in damages, the district court stated that they "cannot walk away from the jurisdictional amount, $75,000, by arguing that their $100,000 threats were meaningless."

The district court also rejected defendants' assertion that there was no actual controversy for purposes of Lee's request for declaratory relief, calling their arguments "specious" and "ridiculous":

Defendants cannot pretend now that their notices to Lee were "just kidding," or that Lee lacked any reasonable apprehension of liability.  A brief review of Defendants' conduct in response to Lee's exercise of basic rights shows how ridiculous their arguments are: (1) Defendants twice  threatened Lee with suit, the second notification being from an attorney who did not specify a deadline by which suit would commence; (2) Defendants prepared and sent a draft version of the complaint they would file in a New York state court . . .; and (3) Defendants sent two invoices, one which threatened referral to a collection agency.

Finally, the district court rejected defendants' argument that Lee's declaratory relief claims with respect to the Copyright Act failed because their alleged copyrights in Lee's postings were never registered.  Although Section 411(a) of the Copyright Act provides that a civil action for copyright infringement shall not be instituted until preregistration or registration of the copyright, Lee's claim was not one for copyright infringement, the district court noted.  Rather, he sought "relief from Defendants' assertion that Lee's comments about Defendants' hardly defensible practices are subject to copyright protection.  Defendants' argument that the copyright must be registered before relief can be granted to Plaintiff turns the law upside down."

The district court thus denied defendants' motion to dismiss Lee's claims.

Defendants answered Lee's complaint on April 10, 2013, which answer can be found here.  A copy of Lee's complaint, without the exhibits, can be found here.

The case cite is Lee v. Makhnevich, Case No. 11 Civ. 8665 (PAC) (S.D.N.Y. Mar. 27, 2013).

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Ninth Circuit: Righthaven and the Mythical Calf With Five Legs

I have much to catch up on after my blogging hiatus due to a very busy few months but the Ninth Circuit opinion today confirming the demise of Righthaven is short and to the point and worthy of a quick mention.

The gist of the case is that Righthaven filed copyright infringement claims against Wayne Hoehn and Thomas DiBiase for posting articles from the Las Vegas Review-Journal online.  Righthaven claimed it had the right to sue for copyright infringement based on assignment agreements from the original owner of the copyrights, Stephens Media LLC, the owner of the Las Vegas Review-Journal.

The district court concluded that Righthaven did not have standing to sue because the assignment agreements (as well as other related documents) gave Righthaven nothing more than the bare right to sue alleged infringers.  In the case of Hoehn, the district court also granted summary judgment in his favor on his fair use defense.  You can find more details about the cases at the district court level here and here.

I have to give credit to an opinion that starts off by describing a story Abraham Lincoln told and manages, fairly effortlessly, to tie the story to the case before the court:

Abraham Lincoln told a story about a lawyer who tried to establish that a calf had five legs by calling its tail a leg.  But the calf had only four legs, Lincoln observed, because calling a tail a leg does not make it so.  Before us is a case about a lawyer who tried to establish that a company owned a copyright by drafting a contract calling the company the copyright owner, even though the company lacked the rights associated with copyright ownership.  Heeding Lincoln's wisdom, and the requirements of the Copyright Act, we conclude that merely calling someone a copyright owner does not make it so.

The Ninth Circuit then went into more detail but essentially agreed entirely with the district court's conclusion that Righthaven lacked standing because under Silvers v. Sony Pictures Entertainment, Inc., 402 F.3d 881 (9th Cir. 2005) (en banc), "the assignment of the bare right to sue for infringement, without the transfer of an associated exclusive right, is impermissible under the Copyright Act and does not confer standing to sue."  "That covers Righthaven," the Ninth Circuit concluded, "for all it was really assigned was a bare right to sue for infringement."

But in the absence of standing to sue, the district court lacked subject matter jurisdiction over the case, the Ninth Circuit concluded, and therefore the district court's alternative basis for its decision in favor of Hoehn--fair use--could not stand.  The Ninth Circuit thus vacated that portion of the district court's decision addressing the fair use defense.

The case cite is Righthaven LLC v. Hoehn, Appeal Nos. 11-16751, 11-16776 (9th Cir. May 9, 2013).

You can also find much more prior coverage of Righthaven cases here, here and here.

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UPDATE: Ninth Circuit Suggests Parties "Play Nice" in Long-Running Bratz Dolls Dispute

For the second time, the long-running dispute between Mattel and MGA over the Bratz dolls made its way to the Ninth Circuit, which dispensed some painful conclusions to both parties.

The Ninth Circuit's earlier decision is discussed here along with more detailed facts of the underlying dispute.  Long story short, the dispute began when Carter Bryant conceived the idea for a line of Bratz dolls which he pitched to MGA while still employed by Mattel.  MGA liked the idea, Bryant signed a consulting agreement with MGA, MGA released the Bratz dolls, and the lawsuits began.

On the first appeal, the Ninth Circuit vacated the equitable relief at issue and remanded the case to the district court, noting that it was likely "the entire case will probably need to be retried."  Chief Judge Kozinski, who authored both opinions, apparently was prophetic as the case was retried.

After the retrial, the jury rejected Mattel's claim that MGA infringed Mattel's copyrights in connection with the Bratz dolls.  The jury also concluded that Mattel misappropriated MGA's trade secrets.  MGA was ultimately awarded approximately $170 million in damages in connection with its trade secret claim and received its attorneys' fees and costs with respect to that claim and under the Copyright Act.

As to MGA's successful trade secret claim, Mattel had moved to dismiss the claim arguing that the statute of limitations had run on the claim.  The district court denied the motion, concluding that MGA's claim was a compulsory "counterclaim-in-reply" to Mattel's own trade secret misappropriation counterclaim and was therefore permissible.  Mattel appealed that decision.

The Ninth Circuit agreed with Mattel that MGA's trade secret claim was not a compulsory counterclaim-in-reply because that claim and Mattel's claim "did not rest on the same 'aggregate core of facts'."  The court thus vacated the verdict in favor of MGA on that claim and the related damages, fees and costs and directed the district court to dismiss the claim without prejudice on remand.

But there was bad news for Mattel as well.  The Ninth Circuit upheld the award of attorneys' fees to MGA under the Copyright Act for successfully defending against Mattel's copyright claim, which the district court apparently characterized as being "stunning in scope and unreasonable in the relief it requested."  While the Ninth Circuit didn't explicitly agree or disagree with the district court's characterization of Mattel's claim, it readily concluded that the court had "properly exercised its discretion in awarding and calculating attorneys' fees and costs," which apparently were in the neighborhood of $140 million.

The case cite is Mattel, Inc. v. MGA Entm't, Inc., Appeal No. 11-56357 (9th Cir. Jan. 24, 2013).

UPDATE: Supreme Court Argument in Kirtsaeng v. John Wiley & Sons, Inc.

The Supreme Court heard argument on October 29, 2012, in a Second Circuit case addressing the question of the applicability of the first sale doctrine of the Copyright Act to copyrighted works that are legally acquired abroad and then resold in the United States.  The Second Circuit concluded that the first sale defense in Section 109(a) of the Copyright Act applies only to copies of copyrighted works manufactured in the United States.

You can listen to the Supreme Court argument in the case here.

And you can read the original post about the Second Circuit's decision in the case here.

The case cite is Kirtsaeng v. John Wiley & Sons, Inc., No. 11-697.

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Service Retransmitting TV Programming Over the Internet Not Entitled to "Cable System" Defense to Copyright Infringement

Plaintiffs, producers and owners of copyrighted television programming, sued ivi, Inc. and its chief executive officer for copyright infringement for streaming that programming over the Internet without their authorization.

Plaintiffs sought a preliminary injunction and the district court granted it, holding that plaintiffs were likely to succeed on the merits because ivi was not a "cable system" entitled to a compulsory license under Section 111 of the Copyright Act and that the other factors supported issuing an injunction.

Because it was undisputed that plaintiffs had valid copyrights in the television programming that ivi publicly performed without authorization, the principal issue on appeal was whether the district court was correct in concluding that ivi was not a "cable system" under Section 111 of the Copyright Act.  If ivi was a "cable system," it was entitled to a compulsory license to retransmit the programming and would therefore have a statutory defense to plaintiffs' copyright infringement claims.  If ivi was not, it had no such defense.

The Copyright Act defines a "cable system" in part as:

a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.

17 U.S.C. Section 111(f)(3).

The Second Circuit concluded that it was unclear, based on the statutory language alone, whether ivi (which the court described as "a service that retransmits television programming live and over the Internet") constituted a "cable system."  For instance, the court opined that it was "certainly unclear whether the Internet itself is a facility, as it is neither a physical nor a tangible entity; rather, it is 'a global network of millions of interconnected computers.'"

Thus, the Second Circuit looked to legislative history for any guidance as to whether ivi constituted a "cable system" under Section 111.  The court divined "two societal benefits" that Congress sought to balance in enacting Section 111:  "Congress enacted Section 111 to enable cable systems to continue providing greater geographical access to television programming while offering some protection to broadcasters to incentivize the continued creation of broadcast television programming."  From this history, the Second Circuit concluded that Congress did not intend Section 111's compulsory license to extend to Internet retransmissions.

The Second Circuit then took the second step of looking to the Copyright Office's interpretation of the statute, which is to be accorded deference provided that it is reasonable.  According to the court, the "Copyright Office has consistently concluded that Internet retransmission services are not cable systems and do not qualify for Section 111 compulsory licenses," a position the court found both "reasonable and persuasive."

The Second Circuit summarized its holdings:

(1) the statutory text is ambiguous as to whether ivi, a service that retransmits television programming over the Internet, is entitled to a compulsory license under Section 111; (2) the statute's legislative history, development, and purpose indicate that Congress did not intend for Section 111 licenses to extend to Internet retransmissions; (3) the Copyright Office's interpretation of Section 111 -- that Internet retransmission services do not constitute cable systems under Section 111 -- aligns with Congress's intent and is reasonable; and (4) accordingly, the district court did not abuse its discretion in finding that plaintiffs were likely to success on the merits of the case.

The court then readily concluded that the district court had not abused its discretion in finding that the other factors (irreparable injury, balance of hardships, and the public interest) supported its grant of a preliminary injunction.

The case cite is WPIX, Inc. v. ivi, Inc., Case No. 11-788-cv (2d Cir. Aug. 27, 2012).

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Second Circuit Addresses Availability of Copyright Protection for Architectural Drawings

Scholz Design, Inc. alleged, in part, that defendants infringed its copyrights in three front-elevation architectural drawings of homes it designed by copying and posting them on various websites.

Defendants moved to dismiss the complaint arguing that because the architectural drawings contained insufficient detail from which a building could be constructed, they could not be protected by Scholz's copyright.  The district court agreed, reasoning that

"copyright protection extends to the component images of architectural designs to the extent that those images allow a copier to construct the protected design," and therefore "the copied images do not fulfill the intrinsic function of an architectural plan and thus the act of copying them does not violate any right protected by a copyright for architectural technical drawings."

The Second Circuit reversed.  Specifically, the court disagreed with defendants' argument--adopted by the district court--that the architectural drawings were not entitled to copyright protection because they did not have sufficient detail to allow for construction of the home depicted in the drawings.

The Second Circuit opined that the district court's decision likely stemmed from a misunderstanding regarding the applicability of the Architectural Works Copyright Protection Act ("AWCPA"), which added protection to "architectural works."  Prior to the enactment of the AWCPA, although architectural structures themselves were not entitled to copyright protection, architectural plans, blueprints, and drawings like that at issue in the case were covered under the Copyright Act's protection of "pictorial, graphic, and sculptural works."

In this case, Scholz contended that the architectural drawings were protected under that latter pre-existing category of works subject to copyright protection and the Second Circuit agreed:

Sketches or drawings such as those allegedly infringed here . . . did receive protection before enactment of the AWCPA, although the architectural works they depicted did not.  The district court seems to have misunderstood the import and relevance of this distinction in concluding that under section 102(a)(5), architectural sketches or drawings are required to include a certain level of detail to receive protection.  Where the complaint alleges unlawful copying of a pictorial work registered under section 102(a)(5), there is no requirement of any level of detail.

Thus, the Second Circuit reversed the district court's grant of the motion to dismiss the copyright infringement claim, characterizing it "as a straightforward case of copyright infringement."

The case cite is Scholz Design, Inc. v. Sard Custom Homes, LLC, Case No. 11-3298 (2d Cir. Aug. 15, 2012).

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Eighth Circuit Upholds $222,000 Damages Award for Infringement of 24 Sound Recordings

This appeal followed a third jury trial of copyright infringement claims over file sharing involving 24 sound recordings.

The first jury trial found Jammie Thomas-Rasset liable for willful copyright infringement and awarded statutory damages of $9,250 per work for a total of $222,000.  The district court subsequently granted Thomas-Rasset's motion for a new trial based on an erroneous instruction to the jury that making sound recordings available for distribution on a peer-to-peer network violates the copyright owner's distribution right regardless of whether actual distribution has been shown.  The district court concluded that making a work available to the public is not "distribution."

The second jury trial again found Thomas-Rasset liable for willful copyright infringement and awarded statutory damages of $80,000 per work for a total of $1,920,000.  Upon Thomas-Rasset's post-trial motion, the district court remitted damages to $2,250 per work for a total of $54,000, finding that the jury's award was "shocking."  The record companies declined the remitted award and thus a third trial was held limited to the question of the amount of statutory damages.

The third jury trial awarded statutory damages of $62,500 per work for a total of $1,500,000.  Thomas-Rasset moved to alter the judgment, arguing that any statutory damages award would be unconstitutional or alternatively, that the award should be reduced under the Due Process Clause.  The district court granted the motion again reducing the award to $2,250 per work for a total of $54,000, the maximum amount the court concluded was permitted by the Due Process Clause.  The district court also entered a permanent injunction against Thomas-Rasset but refused to enjoin her from "making available" copyrighted works for distribution to the public.

The record companies appealed arguing that the district court erred in granting a new trial based on the "making available" jury instruction in the first trial and in holding that the Due Process Clause limited the statutory damages award to $2,250 per work.  The companies sought reinstatement of the first jury's statutory damages award of $222,000, and an injunction that included language prohibiting Thomas-Rasset from making the copyrighted works available to the public.

Thomas-Rasset cross-appealed arguing that even the minimum statutory damages award authorized by the Copyright Act would be unconstitutional.

The Eighth Circuit first addressed what it characterized as "tactical maneuvers" that sought to either, depending on the party, obtain or avoid review of the legal question whether making copyrighted works available is part of the copyright owner's distribution right under the Copyright Act.  Noting that it "reviews judgments, not decisions on issues," the Eighth Circuit stated that the only matters in controversy were whether the record companies were entitled to damages of $222,000 and an injunction that included the "making available" language.

As to the injunction issue, the Eighth Circuit accepted, without deciding, the district court's interpretation of the Copyright Act that the distribution right did not include an exclusive right to make the recordings available to the public.  But the appeals court concluded that the district court had still erred in refusing the language the record companies sought because it had authority to issue a broad injunction even if the conduct did not violate rights under the Copyright Act "where 'a proclivity for unlawful conduct has been shown.'"  The Eighth Circuit held that such a proclivity had been shown here.

As to the statutory damages issue, the Eighth Circuit held that the award of $9,250 per infringed work for a total of $222,000, did not contravene the Due Process Clause.  The court concluded that the award was "not 'so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable,'" noting that the award fell toward the lower end of the range established by Congress (currently $750 to $150,000 per infringed work).

The Eighth Circuit also rejected the notion that the noncommercial nature of the infringement made the award severe and oppressive or wholly disproportionate to the offense, again emphasizing the wide range of statutory damages available in the Copyright Act.  And "[f]or those who favor resort to legislative history," the court noted that Congress apparently "was well aware of the threat of noncommercial copyright infringement when it established the lower end of the range."

Thus, in the end, the Eighth Circuit remanded with instructions to enter judgment for statutory damages in the amount of $222,000, and to enter a permanent injunction that precluded Thomas-Rasset from making any of the record companies' copyrighted works "available for distribution to the public through an online media distribution system."

The case cite is Capitol Records, Inc. v. Thomas-Rasset, Case No. 11-2820 (8th Cir. Sept. 11, 2012).

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Fair Use Fracas Over Publication of Photos of Secret Celebrity Nuptials

Noelia Lorenzo Monge, a pop singer and model, and Jorge Reynoso, her manager and a music producer, are apparently Latin American celebrities who were secretly married in Las Vegas in 2007.  At their wedding, employees of the chapel, using Monge's camera, took three photos of the wedding, and three more photos were taken of the couple on the wedding night.  The photos were apparently intended to be only for the couple's private use.

They managed to keep their wedding a secret--even from their families--for two years but in 2009, a paparazzo who occasionally worked as a bodyguard and driver for the couple, took a memory chip containing the wedding photos along with other photos and videos and sold it to Maya Magazines, which publishes "TVNotas," a Spanish-language celebrity gossip magazine.  Maya then published six of the secret wedding photos, three from the ceremony and three from the wedding night.

After the pictures were published, the couple registered copyrights in five of the six photos published and then sued Maya alleging copyright infringement and misappropriation of likeness under California law.  The district court dismissed the two misappropriation of likeness claims on a motion to dismiss, concluding that the photos fell within the public affair and public interest exceptions to the prohibition against using another's likeness for advertising purposes without the person's prior consent.

The parties filed cross-motions for summary judgment and the district court granted Maya's motion, concluding that its publication of the photos constituted fair use under Section 107 of the Copyright Act.

In an opinion that included spirit exchanges between the majority and the dissent the Ninth Circuit reversed the district court on the fair use issue.

The majority opinion started with a brief history of the fair use defense and the relevant factors, describing them in a way that did not bode well for Maya and noting that the Supreme Court had not given "a fair use free pass to news reporting on public figures," a sentiment that would be repeated a number of times in the opinion.

Stating that news reporting was "not sufficient itself to sustain a per se finding of fair use," the majority opinion dove into an analysis of the fair use factors.

As to the question of the degree to which Maya's use of the photos was transformative, the majority concluded that the photos were published essentially in their entirety and that "neither minor cropping nor the inclusion of headlines or captions transformed the copyrighted works."  The majority also rejected the proposition that the photos' newsworthiness lead to transformation.  Nor did a difference in purpose between the couple's creation of the photos (to document their wedding) and Maya's publication of the photos (exposing the couple's secret wedding) constitute transformation for purposes of fair use.  Thus, ultimately, the majority concluded that "Maya's use--wholesale copying sprinkled with written commentary--was at best minimally transformative."

The majority also had no difficulty concluding that Maya's use of the photos was commercial in nature, again repeating that "newsworthiness, by itself, is insufficient to demonstrate fair use."

As to the nature of the copyrighted works at issue--the wedding photos--although they "were not highly artistic" the majority emphasized the unpublished nature of the photos before Maya's publication, concluding that this factor outweighed the claim of fair use.

As to the amount and substantiality of the portion used, the majority concluded that this factor weighed "decisively" against fair use because both quantitatively and qualitatively, "every single photo of the wedding and almost every photo of the wedding night were published" and the minimal cropping of the photos demonstrated that the "heart" of each copyrighted work was published.

And as to the final factor--the effect upon the potential market--the majority opinion again concluded that it did not weigh in favor of fair use, re-emphasizing the importance of the previously unpublished nature of the photos and the copyright owner's right to control first publication.  The majority also rejected the district court's conclusion that no potential market for the photos existed because the couple did not intend to sell publication rights stating that the "potential market for the photos exists independent of the couple's present intent."

Thus, the majority concluded that on balance the factors did not favor a finding of fair use as no factor tipped in Maya's favor.  The majority opinion concluded by referencing yet again the proposition that "[w]aving the news reporting flag is not a get out of jail free card in the copyright arena" and that "Maya's effort to document its expose does not automatically trump the couple's rights in its unpublished photos."

Circuit Judge Smith wrote a spirited dissent that saw troublesome implications in the majority's opinion:

The majority's fair use analysis . . . thwarts the public interests of copyright by allowing newsworthy public figures to control their images in the press. . . .  Under the majority's analysis, public figures could invoke copyright protection to prevent the media's disclosure of any embarrassing or incriminating works by claiming that such images were intended only for private use.  The implications of this analysis undermine the free press and eviscerate the principles upon which copyright was founded.  Although newsworthiness alone is insufficient to invoke fair use, public figures should not be able to hide behind the cloak of copyright to prevent the news media from exposing their fallacies.

The case cite is Monge v. Maya Magazines, Inc., Nos. 10-56710, 11-55483 (9th Cir. Aug. 14, 2012).

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Second Circuit: No Copyright Preemption of Breach of Contract Claim Over Network's Use of Idea for Television Series

Forest Park pitched an idea for a television series to the USA Network by mailing a written series treatment for the idea to the network and meeting with network representatives.  The concept was for a series called "Housecall," "in which a doctor, after being expelled from the medical community for treating patients who could not pay, moved to Malibu, California, and became a 'concierge' doctor to the rich and famous."  Forest Park alleged that at the meeting with the network, it was understood that the idea was being pitched with the intention of the network purchasing it for development.  Discussions ended between the parties without the network purchasing the idea.

About four years later, the USA Network produced and aired a show called "Royal Pains," "in which a doctor, after being expelled from the medical community for treating patients who could not pay, became a concierge doctor to the rich and famous in the Hamptons."

Forest Park then sued USA Network for breach of contract and the network moved to dismiss under Fed. R. Civ. P. 12(b)(6), alleging in part that the claim was preempted by the Copyright Act.  The district court agreed with the network and dismissed the complaint.

The Second Circuit disagreed, instead concluding that Forest Park had adequately plead a breach of contract claim that included an implied promise to pay, which was based on rights that were not the equivalent of those protected under the Copyright Act and was therefore not preempted.

As to the first requirement for preemption--that the work comes within the subject matter of copyright--the Second Circuit emphasized that a work may fall within the subject matter of copyright for preemption purposes even if it contains uncopyrightable material.  Put somewhat more succinctly, the "scope of copyright for preemption purposes . . . extends beyond the scope of available copyright protection."  This case was a good example of that proposition because the work at issue was Forest Park's ideas for the series manifested in the series treatments it prepared and it was the ideas embodied in those written materials that Forest Park alleged the network improperly used.   Thus, even though ideas are not copyrightable, the court found that the work still fell within the subject matter of copyright for purposes of the preemption question.

As to the second requirement for preemption--that the right asserted is equivalent to an exclusive right under the Copyright Act--the Second Circuit concluded that there were several qualitative differences between Forest Park's claim that there was an implied-in-fact agreement that required the network to pay for the use of its idea and a copyright violation claim:

  • "First, the Copyright Act does not provide an express right for the copyright owner to receive payment for the use of a work."
  • "Second, a plaintiff suing for failure to pay under a contract must prove extra elements beyond use or copying, including mutual assent and valid consideration."
  • "Third, a breach of contract claim asserts rights only against the contractual counterparty, not the public at large."

 The Second Circuit also noted that its sister circuits had also concluded that some contract claims do not involve rights equivalent to those under the Copyright Act and are therefore not preempted, including the Ninth Circuit in Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975 (9th Cir. 2011) (en banc) (previously blogged here).

The Second Circuit did not decide whether preemption is always precluded when there is a contract claim or only when the claim includes a promise to pay because here, the complaint specifically alleged a contract that included an implied promise to pay for the use of Forest Park's idea:

The alleged contract does not simply require USA Network to honor Forest Park's exclusive rights under the Copyright Act . . .; it requires USA Network to pay for the use of Forest Park's ideas.  A claim for breach of a contract including a promise to pay is qualitatively different from a suit to vindicate a right included in the Copyright Act and is not subject to preemption.

The case cite is Forest Park Pictures v. Universal Television Network, Inc., No. 11-2011-cv (2d Cir. June 26, 2012).

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Fourth Circuit Adopts Predicate-Act Doctrine Allowing Recovery of Damages for Foreign Violations of Copyright Act Linked to a Domestic Violation

Plaintiffs, domestic developers and producers of specialized tires for underground mining vehicles, alleged that defendants, foreign entities, manufactured and sold competing tires based on Plaintiffs' blueprints that had allegedly been stolen.

Five claims were submitted to the jury including claims under the Copyright Act and the Lanham Act.  The jury found in plaintiffs' favor on all counts and awarded them $26 million in damages.  On appeal, the Fourth Circuit made two holdings worthy of at least brief mention.

First, the Fourth Circuit joined the Second, Ninth, Sixth and Federal Circuits in adopting the "predicate-act" doctrine, which is an exception to the general rule that the Copyright Act has no extraterritorial reach.  Under that doctrine, "[o]nce a plaintiff demonstrates a domestic violation of the Copyright Act, then, it may collect damages from foreign violations that are directly linked to the U.S. infringement."

The Fourth Circuit also rejected the defendants' argument that the predicate-act doctrine did not apply where the Copyright Act's three-year statute of limitations barred the recovery of damages from the domestic violation of the Act.

Second, the Fourth Circuit declined to adopt the "diversion-of-sales" theory to extend the Lanham Act's extraterritorial reach.  The Lanham Act applies extraterritorially only when the foreign acts have a "significant effect" on U.S. commerce.  Under the "diversion-of-sales" theory, however, some courts have found such a "significant effect on U.S. commerce where sales to foreign consumers would jeopardize the income of an American company."

Although the Fourth Circuit noted that there were compelling reasons for the use of the doctrine in other cases, it concluded that it was not appropriate to apply it in this case.  Specifically, in those other cases, the courts had emphasized that the defendants were U.S. companies that also had substantial domestic business activity, neither of which was true in this case.

The case cite is Tire Eng'g & Distrib., LLC v. Shandong Linglong Rubber Co., Ltd., No. 10-2271 (4th Cir. June 6, 2012).

Seventh Circuit Affirms South Park Fair Use Ruling on Motion to Dismiss

Brownmark Films, the alleged co-owner of the copyright in the viral video "What What (In the Butt)" ("WWITB"), sued the entities involved in the production of South Park for copyright infringement relating to an episode of that show that included a parody of the video.

According to the district court's entertaining description, the original WWITB video was

a nearly four minute ditty regarding the derriere of the singer of the underlying work. . . .  The music video begins with an array of bizarre imagery -- from a burning cross to a floating pink zeppelin -- and only gets stranger from there.  The heart of the video features an adult African American male ensconced in a bright red, half-buttoned, silk shirt, dancing, grinning creepily at the camera, and repeatedly singing the same cryptic phrases:  "I said, what what, in the butt" and "you want to do it in my butt, in my butt."

The parody, which comprised 58 seconds of the 25 minute South Park episode, recreated much of the original but "star[red] Butters, a naive nine-year old, in a variety of costumes drawing attention to his innocence:  at various points he is dressed as a teddy bear, an astronaut and a daisy."

The South Park defendants moved to dismiss under Rule 12(b)(6) based on the affirmative defense of fair use.  Critically, Brownmark argued that the district court could not consider a fair use defense on a 12(b)(6) motion to dismiss but did not address the substance of the defendants' fair use claim.

Although the district court noted that evaluating a fair use defense at the pleadings stage was "irregular," it concluded that it was appropriate in this case.  The district court then "readily" concluded that "South Park's parody of the WWITB video falls squarely within the fair use protections afforded by the Copyright Act."  It thus dismissed Brownmark's complaint with prejudice.

On appeal, the Seventh Circuit's opinion spent a large portion of time on the procedural issues, concluding that the district court could and did properly consider the fair use affirmative defense on a summary judgment motion regardless of the caption for the motion used by the South Park defendants, and that therefore the district court could consider the videos proffered by the defendants in connection with their motion.

Having resolved those issues, the Seventh Circuit, like the district court, had no difficulty in resolving the substantive fair use question.

First, the court held that Brownmark had waived its fair use argument because it never opposed the substance of the fair use defense in the district court but instead had relied on its procedural arguments.

Second, even if the argument had not been waived, the Seventh Circuit held that "the South Park episode is clearly a parody of the original WWITB video, providing commentary on the ridiculousness of the original video and the viral nature of certain YouTube videos."

And because the Seventh Circuit specifically referred to the district court's opinion on the motion to dismiss as "well-reasoned and delightful," I just had to get a copy of it, which can be found here.  The district court also later granted the defendants' request for an award of attorneys' fees and costs, which order can be found here.

The case cite is Brownmark Films, LLC v. Comedy Partners, No. 11-2620 (7th Cir. June 7, 2012).

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Federal Circuit Reverses $5,000 Copyright Damages Award in Postal Service Stamp Case

Sculptor Frank Gaylord created a group of 19 statues for the Korean War Veterans' Memorial in Washington, D.C. referred to as "The Column."  In 2002, the United States Postal Service issued a stamp commemorating the 50th anniversary of the armistice of the Korean War that featured a photo of "The Column" licensed from photographer John Alli.  The Postal Service did not seek or obtain Gaylord's permission to use "The Column" on the stamp or related merchandise.

The Postal Service issued almost 87 million stamps bearing the image, sold merchandise carrying the stamp image, and licensed the stamp image to retailers.

Gaylord sued the government for copyright infringement.  In an earlier appeal, the Federal Circuit concluded that the trial court had erred in finding that the Postal Service's use was protected by fair use and remanded the case for a determination of damages.  A discussion of that earlier decision can be found here.

On remand, the trial court rejected Gaylord's claim for a 10% royalty on about $30.2 million in revenue and his claim for prejudgment interest.  Instead, the court employed a "zone of reasonableness" standard to determine Gaylord's damages, concluding that the appropriate range was between $1,500 and $5,000.  The court ultimately awarded Gaylord the maximum amount in that range, $5,000, as a one-time royalty.

The Federal Circuit reversed.  It held that the method used to determine actual damages under the copyright damages statute was the appropriate measure.  In this case, the court should have awarded actual damages based on the fair market value of a license that would cover the Postal Service's use, which value should be calculated "based on a hypothetical, arms-length negotiation between the parties."

Here though, the Federal Circuit concluded that the trial court had erred in limiting its analysis of this hypothetical negotiation inquiry to only one side of the negotiations.  Specifically, the trial court had incorrectly focused only on the Postal Service's assertion that it had never paid more than $5,000 for a license.  The Federal Circuit rejected this narrow focus, stating that "Defendants cannot insulate themselves from paying for the damages they caused by resting on their past agreements and by creating internal 'policies' that shield them from paying fair market value for what they took."

The Federal Circuit thus remanded for the trial court to consider all evidence relevant to the hypothetical negotiation inquiry and provided specific examples of the types of evidence it might consider, including evidence that the Postal Service itself licensed the stamp image to third parties to be used on merchandise for an 8% royalty.

The Federal Circuit likewise reversed the trial court's conclusion that Gaylord was not entitled to prejudgment interest, concluding that he was entitled to such interest "because it is necessary to make his compensation complete."

The case cite is Gaylord v. United States, No. 2011-5097 (Fed. Cir. May 14, 2012).

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Second Circuit Sends Viacom/YouTube Dispute Back to the SDNY

Because this decision was well covered during my hiatus from blogging, I'll (try to) keep this brief.

In June 2010, the Southern District of New York granted summary judgment in favor of YouTube on all of Viacom's copyright claims, finding that YouTube was entitled to the protections of the Digital Millennium Copyright Act's ("DMCA") safe harbor provisions.  (SDNY's decision here; my discussion of the decision here.)

On appeal, the Second Circuit:

  • concluded that the SDNY correctly held that the safe harbor provision of Section 512(c)(1)(A) "requires knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement";
  • concluded that the "willful blindness doctrine" may apply "in appropriate circumstances" to demonstrate the knowledge or awareness of specific instances of infringement required under Section 512(c)(1)(A);
  • vacated the grant of summary judgment because a reasonable jury could conclude that YouTube had the requisite knowledge or awareness under Section 512(c)(1)(A) and remanded for the SDNY to determine that issue and to consider the application of the "willful blindness doctrine";
  • concluded that the SDNY erred "by requiring 'item-specific' knowledge of infringement in its interpretation of the 'right and ability to control' infringing activity under 17 U.S.C. 512(c)(1)(B)," and reversed and remanded for further fact-finding on the issues of control and financial benefit;
  • concluded that the SDNY "correctly held that three of the challenged YouTube software functions--replication, playback, and the related videos feature--occur 'by reason of the storage at the direction of a user' within the meaning of 17 U.S.C. 512(c)(1)," but remanded for further fact-finding regarding a fourth software function, specifically involving syndication of YouTube videos to third parties.

In case its directions for remand were not clear, the Second Circuit also specifically directed that the parties be allowed to brief specific issues "with a view to permitting renewed motions for summary judgment as soon as practicable," including:

  • "Whether, on the current record, YouTube had knowledge or awareness of any specific infringements (including any clips-in-suit not expressly noted in this opinion);"
  • "Whether, on the current record, YouTube willfully blinded itself to specific infringements;"
  • "Whether YouTube had the 'right and ability to control' infringing activity within the meaning of [Section] 512(c)(1)(B); and"
  • "Whether any clips-in-suit were syndicated to a third party and, if so, whether such syndication occurred 'by reason of the storage at the direction of the user' within the meaning of [Section] 512(c)(1), so that YouTube may claim the protection of the [Section] 512(c) safe harbor."

The case cite is Viacom Int'l, Inc. v. YouTube, Inc., Docket Nos. 10-3270-cv, 10-3342-cv (2d Cir. Apr. 5, 2012).

There was extensive coverage of the Second Circuit's decision but Eric Goldman's Technology & Law Blog provides an excellent discussion of the case as well as a number of links to case materials.

SDNY Adopts Injury Rule for Determining When a Copyright Infringement Claim Accrues

Time for a few brief mentions of interesting cases and developments in the law after another busy period which kept me from blogging. 

Jack Urbont sued Sony and others alleging copyright infringement and New York common law claims relating to his rights to the musical composition and sound recording of the "Iron Man Theme."  Sony moved to dismiss in part Urbont's copyright infringement claims relating to alleged infringements occurring prior to May 21, 2007, asserting that those claims were untimely.

The question presented to the Southern District of New York was the proper rule to apply to determine when a copyright infringement claim "accrued" under the Copyright Act, 17 U.S.C. 507(b).

Sony urged the injury rule, under which a claim accrues at the time of each act of infringement regardless of the copyright owner's knowledge of the infringement.  Urbont, in turn, urged the discovery rule, under which a claim does not accrue until the copyright owner knows or has reason to know of the injury that forms the basis of the copyright infringement claim.

The SDNY noted that neither the Supreme Court nor the Second Circuit has ruled on the accrual rule applicable to federal copyright infringement claims and that district courts in the Second Circuit had followed both rules at different times.

But, after noting that since the 2004 decision in Auscape Int'l v. Nat'l Geographic Soc'y, 409 F. Supp. 2d 235 (S.D.N.Y. 2004), a majority of the district courts had applied the injury rule, and after its own review of the legislative history of the Copyright Act and Supreme Court and Second Circuit guidance, the SDNY concluded that the injury rule provided the appropriate approach for determining when a copyright infringement claim accrues.

The case cite is Urbont v. Sony Music Entm't, 11 Civ. 4516 (NRB) (S.D.N.Y. March 27, 2012).

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UPDATE: Supreme Court Grants Cert in Case Involving the First Sale Doctrine and Foreign Manufactured Work-

The Supreme Court granted cert yesterday in a Second Circuit case addressing the question of the applicability of the first sale doctrine of the Copyright Act to copyrighted works that are legally acquired abroad and then resold in the United States.  The Second Circuit concluded that the first sale defense in Section 109(a) of the Copyright Act applies only to copies of copyrighted works manufactured in the United States.

The case cite is Kirtsaeng v. John Wiley & Sons, Inc., No. 11-697.

You can find the original post about the Second Circuit's opinion here.

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UPDATE: Constitutionality of Law Restoring Copyrights of Certain Public Domain Foreign Works

UPDATE: Back in June 2010, I wrote about the Tenth Circuit's decision in Golan v. Holder, Nos. 09-1234 & 09-1261 (10th Cir. June 21, 2010), which upheld the constitutionality of Section 514 of the Uruguay Round Agreements Act (URAA).  The URAA granted copyright protection to certain foreign works that had been in the public domain in the United States.  To round out the discussion of the case, see here for the Supreme Court's January 2012 decision agreeing with the Tenth Circuit and concluding that Section 514 is constitutional.

And for more history on the case, here is my original report on the case from June 2010:

Plaintiffs are various persons and entities who made their livelihoods by performing, distributing and selling public domain artistic works.  Plaintiffs brought this action challenging the constitutionality of the Copyright Term Extension Act and Section 514 of the Uruguay Round Agreements Act (URAA), the latter of which granted copyright protection to certain foreign works that had been in the public domain in the United States.  Somewhat more specifically, Section 514 restored "copyrights in foreign works that were formerly in the public domain in the United States for one of three specified reasons:  failure to comply with formalities, lack of subject matter protection, or lack of national eligibility."  As a result, the plaintiffs were either prohibited from using such previously public domain works or were required to pay cost-prohibitive licensing fees to the copyright holders.  (The Tenth Circuit's opinion gives a significantly more detailed description of Section 514.)

The District Court for the District of Colorado initially granted summary judgment to the government and on appeal, the Tenth Circuit concluded that the plaintiffs' challenge to the Copyright Term Extension Act was foreclosed by the Supreme Court's decision in Eldred v. Ashcroft, 537 U.S. 186 (2003).  In addition, although the Tenth Circuit concluded that Section 514 of the URAA had not exceeded the limitations of the Copyright Clause of the U.S. Constitution, it held that the plaintiffs had "shown sufficient free expression interests in works removed from the public domain to require First Amendment scrutiny" of Section 514.  The matter was thus remanded to the District Court to determine and apply the appropriate level of constitutional scrutiny to Section 514.

Upon remand, the parties agreed that Section 514 is a content-neutral regulation of speech thereby subject to intermediate scrutiny.  On cross-motions for summary judgment, the District Court granted the plaintiffs' motion, concluding that Section 514 was unconstitutional to the extent it "suppresses the right of reliance parties to use works they exploited while the works were in the public domain."  Both parties appealed: the government argued that Section 514 did not violate the First Amendment and the plaintiffs argued that the District Court had failed to provide all of the relief they had requested.

On appeal, analyzing Section 514 as a content-neutral regulation of speech, the Tenth Circuit reversed the District Court's decision, concluding that "the government has demonstrated a substantial interest in protecting American copyright holders' interests abroad, and Section 514 is narrowly tailored to advance that interest."

As to the importance of the government interest asserted, the Tenth Circuit had "no difficulty in concluding that the government's interest in securing protections abroad for American copyright holders" satisfied the applicable standard.  Section 514 secured foreign copyrights for American works, which previously had been unprotected, and thereby preserved the authors' economic and expressive interests.  The court noted that some estimated that billions of dollars were lost each year because foreign countries were not providing copyright protections to American works in the public domain abroad.

The Tenth Circuit also concluded that Section 514 was narrowly tailored to further the substantial government interest asserted.  The court cited evidence that foreign countries could be expected to provide only as much protection to American copyright holders as the United States would provide to foreign copyright holders and that some countries might follow the United States' example in that regard.  Thus, in order to secure the benefits to American authors for their works abroad, the United States needed to impose the same burden on parties like the plaintiffs in the United States that it sought to impose on such foreign parties abroad.  In short, "the benefit that the government sought to provide to American authors is congruent with the burden that Section 514 imposes on [so-called] reliance parties."

The Tenth Circuit thus reversed the District Court's grant of summary judgment in favor of the plaintiffs, concluding that "because Section 514 advances a substantial government interest, and it does not burden substantially more speech than necessary to advance that interest, it is consistent with the First Amendment."

The case cite is Golan v. Holder, Nos. 09-1234 & 09-1261 (10th Cir. June 21, 2010).

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A Reminder That Damages Aren't the Only Danger in Copyright Infringement Cases

Nothing remarkable about this copyright infringement case except that it serves as a useful reminder that damages for infringement are not always the biggest money risk in such cases.  In this case, the statutory damages awarded totaled $36,000.  But the district court also awarded plaintiffs their attorneys' fees, totaling $162,728 and change, an award that was affirmed on appeal.

The case cite is Range Road Music, Inc. v. East Coast Foods, Inc., No. 10-55691 (9th Cir. Feb. 16, 2012).

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Sixth Circuit Addresses Vesting of Copyright Renewal Rights

This case involved the renewal copyrights to the songs by singer/songwriter Roger Miller who assigned his copyrights, original and renewal, to Sony's predecessor-in-interest.

Sony filed applications to register the renewal copyrights in Miller's songs in January and April 1992 and the copyrights were subsequently registered.  Miller, however, died on October 25, 1992, and in his will, he granted all his intellectual property interests to his wife who in turn assigned those interests to Roger Miller Music, Inc.

The basic issue before the Sixth Circuit was whether Sony owned the renewal copyrights when Miller was still living at the time Sony, his assignee, applied to register those copyrights but died before the actual start of the renewal term.

Looking to the statutory language of the Copyright Act, which states in part that the renewal copyright vests in any party entitled to it "at the time the application is made," and legislative history, the Sixth Circuit concluded that Sony, as assignee of the author, secured an interest in the renewal copyrights because Miller was alive at the time Sony applied for renewal.  That Miller subsequently died before the beginning of the renewal term did not divest Sony of its ownership of the renewal copyrights.

The case cite is Roger Miller Music, Inc. v. Sony/ATV Publishing, LLC, No. 10-5363 (6th Cir. Feb. 22, 2012).

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Court Rejects First Sale Defense Relying on Vernor v. Autodesk Test

Relying on the test recently established by the Ninth Circuit in the Vernor v. Autodesk, Inc. (see here for more on that case), the Northern District of California rejected a first sale defense in another software resale case.

Adobe sued defendants for copyright and trademark infringement for selling Adobe software via eBay and another website.  According to the court's opinion, the defendants obtained unbundled OEM versions of Adobe software from several companies including Dell and Hewlett-Packard and then sold that software.  Defendants argued, in part, that their actions were protected under the first sale doctrine.

To determine whether the first sale defense applied, the court had to answer the question whether Adobe sold or licensed copies of its software to the OEM companies from which defendants obtained their copies of the software.

Looking to the test established by the Ninth Circuit in Vernor, the court easily concluded that Adobe licensed, rather than sold, its software to OEMs and therefore the first sale defense was unavailable to defendants.

Under Vernor, to determine whether a software user is a licensee rather than an owner, the court looks at whether the copyright owner "(1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions."

In this case, Adobe's agreements specified that they granted a license (hardly a surprise).  The court also found that the agreements imposed both significant transfer and use restrictions, although the opinion is light on details as the agreements were apparently filed under seal.

Thus, because the court found that Adobe licenses, rather than sells, the OEM versions of its software, the first sale doctrine did not apply and the court granted partial summary judgment in favor of Adobe.

The case cite is Adobe Systems, Inc. v. Hoops Enterprise LLC, N. C 10-2769 CW (N.D. Cal.).

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AP Sues News Monitoring Service, Meltwater, for Copyright Infringement and "Hot News" Misappropriation

After sparse blogging due to a busy period, time to briefly highlight some of the more interesting legal opinions and cases that crossed my desk in the last couple/few months.

One of the more interesting (at least to me) new cases to watch is the case filed on Valentine's Day by the Associated Press against Meltwater (which, according to its website, offers a media monitoring service) for copyright infringement and "hot news" misappropriation.

In its complaint, the AP alleges that Meltwater employs a "parasitic business model" that involves "routinely copying, verbatim, the heart of AP's and other publishers' stories, and selling that infringing content to its subscribers."

Although, according to the AP, Meltwater characterizes itself as a "modern day commercial clipping service," the AP distinguished Meltwater's practices from other news aggregators:

8.     In contrast to the practice of other news sources and news aggregators who deliver the AP's news reports to the public, Meltwater does not license the content that it delivers to its subscribers.  Google News, Yahoo News, and AOL, for example, have negotiated arrangements with AP to distribute its content.  Further, unlike Google News or other news aggregators that deliver search results to the public for free, Meltwater is a closed commercial business that only provides news excerpts and other services after payment of a substantial annual fee.  Critical to Meltwater's business model is the fact that it incurs no expense to create or license the content it delivers, allowing it to reap substantial subscription fees with minimal expenses while undercutting its competitors--including the AP, and other entities who have paid valuable consideration to AP for licenses to distribute its content.

The AP's complaint also emphasized that its lawsuit was "not a general attack on news aggregators--many of whom are AP's licensees" nor did it "in any way seek to restrict linking or challenge the right to provide headlines and links to AP articles."

Extensive description of both the AP and its news-gathering process and Meltwater's news services can be found in the AP's 41-page complaint here.

The case caption is Associated Press v. Meltwater U.S. Holdings, Inc., et al., No. 12 Civ. 1087 (S.D.N.Y.), filed February 14, 2012.

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UPDATE: Capitol Denied Preliminary Injunction in Case Against ReDigi

Capitol Records was denied a preliminary injunction in its case against the owner of the "ReDigi" music service, which Capitol has sued for copyright infringement in connection with ReDigi's online marketplace for "used" digital music files.

The district court's order gives no reasons for the denial of the preliminary injunction, instead merely referring to the reasons that apparently were stated on the record at the hearing on the motion.

Earlier, the district court also denied the request from Google to file an amicus curiae brief apparently intended to "highlight the importance of the copyright law questions."  The court stated that it believed "that the parties are fully capable of raising these issues themselves -- and have every incentive to do just that[.]"

The original post about Capitol's filing of its complaint can be found here.

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Capitol Sues Music Service Offering "Used" Digital Music

Capitol Records has sued the owner of the "ReDigi" music service, which, according to Capitol, offers an online marketplace for "used" digital music files.  Although, according to Capitol, ReDigi "touts its service as the equivalent of a used record store," only for digital music, Capitol claims that it is in fact "a clearinghouse for copyright infringement."

In its complaint, Capitol alleges that ReDigi's service involves making multiple, unauthorized copies of digital music files.  Capitol quotes from ReDigi's pre-launch press release to illustrate the alleged copying:  "[A]fter downloading ReDigi's proprietary 'Music Manager' software, users designate the songs they wish to sell from their desktop computers.  'Eligible' tracks are then allegedly removed from the user's computer and 'synced' devices, 'stored in the ReDigi cloud and offered for sale on ReDigi's website.'"  Additional copies are made, Capitol alleges, when ReDigi stores the files in its "cloud" and when the files are downloaded to the purchaser's computer.

Capitol's complaint rejects several "excuses" ReDigi allegedly makes for its activities.  First, Capitol questions the efficacy of ReDigi's "Verification Engine," which Capitol alleges "analyzes each file uploaded for sale to ensure that the track was 'legally downloaded' by the user in the first instance and thus 'eligible for sale.'"  Second, Capitol likewise questions the claim that ReDigi makes sure "the original user will not 'willfully use/possess any copies of the sold item.'"

Finally, and perhaps most interestingly, Capitol rejects ReDigi's assertion that its service is protected by the first sale doctrine of the Copyright Act, 17 U.S.C. 109.  That doctrine provides that the "owner of a particular copy or phonorecord lawfully made under [the Copyright Act] is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord." 

Capitol alleges that ReDigi is not the "owner" of any particular copy of a copyrighted work as required by the doctrine, nor is it selling the actual "particular copy."  As to the latter point, Capitol argues that "[n]either ReDigi nor its users resell the original material object that resided on the original user's computer," rather, "ReDigi and its users duplicate digital files both in uploading and downloading discrete copies distinct from the original file that originally resided on a user's computer."

Capitol alleges claims for direct copyright infringement, as well as inducement of copyright infringement, contributory and vicarious copyright infringement, and common law copyright infringement for pre-1972 recordings.

The case cite is Capitol Records, LLC v. ReDigi Inc., Case No. 1:12-cv-00095-RJS (S.D.N.Y.), filed January 6, 2012.  A copy of Capitol's complaint can be found here.

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Ninth Circuit Again Rejects Copyright Misuse Defense in Connection With Apple's Copyright Infringement Claim

The primary point of interest in this case is the Ninth Circuit's rejection of the copyright misuse defense to a claim of copyright infringement alleged by Apple.  With this rejection, there is still only a single case in which the Ninth Circuit has upheld the use of the defense, Practice Mgmt. Info. Corp. v. Am. Med. Ass'n, 121 F.3d 516 (9th Cir. 1997), amended by 133 F.3d 1140 (9th Cir. 1998).

Beginning in April 2008, Psystar began manufacturing and selling personal computers originally named "OpenMac" and later renamed "Open Computers," on which Psystar had installed a copy of Mac OS X through use of imaging (details of the exact process are described in the Ninth Circuit's opinion).  Psystar shipped its Open Computers with an unopened copy of Mac OS X purchased from Apple or third party vendors.  "The unopened copy enabled Psystar to maintain it had purchased a copy of Mac OS X for each computer it sold, but the computer actually was to run on the copy of the altered Mac OS X installed in the Psystar computer."

Apple then sued Psystar for, among other things, copyright infringement and Psystar counterclaimed for a declaratory judgment that "Apple was misusing its copyright in Mac OS X by requiring purchasers to run their copies only on Apple computers."  Specifically challenged was the following provision of Apple's Software License Agreement ("SLA"):

This License allows you to install, use and run one (1) copy of the Apple Software on a single-Apple-labeled computer at a time.  You agree not to install, use or run the Apple Software on any non-Apple labeled computer, or to enable others to do so.

On cross motions for summary judgment, the district court concluded, in relevant part, that Psystar had infringed Apple's exclusive right to create derivative works and that Apple's SLA was not unduly restrictive and was therefore not copyright misuse.

The Ninth Circuit affirmed that conclusion

principally because [Apple's] licensing agreement was intended to require the operating system to be used on the computer it was designed to operate, and it did not prevent others from developing their own computer or operating systems.  These licensing agreements were thus appropriately used to prevent infringement and control use of the copyrighted material.

 In reaching that conclusion, the Ninth Circuit opined a bit about the proliferation of license agreements, rather than sales, in the software industry, which it stated was a result of the first sale doctrine.  The court also cited to its (relatively) recent opinion in Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010) (previously blogged here) in which it upheld a license agreement and rejected the first sale defense.  In particular, the Ninth Circuit cited the three-factor test adopted in Vernor to distinguish between a software license and a sale of a copy of copyrighted software:

[A] software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions.

Under this test, the Ninth Circuit readily concluded that those, like Psystar, who purchased copies of Mac OS X were licensees not owners of those copies because Apple's SLA states that the software is licensed, not sold (which still seems like a non-factor to me as most if not all owners of copyrighted software will characterize the transaction as a license) and imposed significant use and transfer restrictions with respect to the copies of the software.

Thus, because Apple's SLA was a valid license agreement that reasonably restricted use of the software without preventing the development of competing products, Psystar's copyright misuse defense failed.

The case cite is Apple Inc. v. Psystar Corp., No. 10-15113 (9th Cir. Sept. 28, 2011).

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Ninth Circuit: No Presumption of Irreparable Harm for Injunctive Relief in Copyright Infringement Cases

Keeping it short and to-the-point, in case it still was not clear, the Ninth Circuit reiterated that the presumption of irreparable harm for obtaining injunctive relief in copyright infringement cases is no longer good law after the Supreme Court's decisions in 2006 and 2008:

We conclude that presuming irreparable harm in a copyright infringement case is inconsistent with, and disapproved by, the Supreme Court's opinions in eBay [Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)] and Winter [v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008)]. . . .  Thus, our long-standing precedent finding a plaintiff entitled to a presumption of irreparable harm on a showing of likelihood of success on the merits in a copyright infringement case . . . has been effectively overruled. . . .  Accordingly, we hold that even in a copyright infringement case, the plaintiff must demonstrate a likelihood of irreparable harm as a prerequisite for injunctive relief, whether preliminary or permanent.

The case cite is Flexible Lifeline Systems, Inc. v. Precision Lift, Inc., No. 10-35987 (9th Cir. Aug. 22, 2011).

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Second Circuit Concludes First Sale Doctrine Does Not Apply to Copyrighted Works Manufactured Outside the U.S.

In an opinion that seemed almost uncomfortable at times with its conclusion, the Second Circuit joined the Ninth Circuit in holding that the Copyright Act's so-called "first sale" defense to copyright infringement does not apply to copies of copyrighted works manufactured outside the United States.

John Wiley & Sons publishes journals and books that are sold domestically and internationally.  Wiley's wholly-owned subsidiary ("Wiley Asia") manufactures the books sold in foreign countries.

To help subsidize his educational costs in the U.S., defendant Supap Kirtsaeng's friends and family shipped him foreign edition textbooks printed outside the U.S. by Wiley Asia, which he then sold on websites like eBay.

Wiley sued Kirtsaeng in the Southern District of New York alleging, in part, that Kirtsaeng's conduct constituted copyright infringement.

Kirtsaeng requested a jury instruction charging the jury that the first sale doctrine was a defense to copyright infringement but the District Court denied the request, rejecting the applicability of the defense to foreign editions of the books.

Along with evidentiary issues, Kirtsaeng appealed the conclusion that the first sale defense was unavailable but the Second Circuit affirmed.

The Second Circuit first looked to the statutory language of the first sale doctrine in Section 109(a) of the Copyright Act:

Notwithstanding the provisions of section 106(3), 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 sell or otherwise dispose of the possession of that copy[.]

(Emphasis added).

Focusing on the phrase "lawfully made under this title," the Second Circuit ultimately concluded that it was "utterly ambiguous text" because it

could plausibly be interpreted to mean any number of things, including: (1) "manufactured in the United States," (2) "any work made that is subject to protection under this title," or (3) "lawfully made under this title had this title been applicable."

Given this ambiguity, the Second Circuit concluded that it was "best" to interpret the first sale doctrine in a way that best comports with Section 602(a)(1) of the Copyright Act and the Supreme Court's opinion in Quality King Distributors, Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135 (1998).

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UPDATE: Ninth Circuit Takes Second Stab at Betty Boop Trademark Dispute

The Ninth Circuit first addressed this appeal involving copyright and trademark claims relating to the Betty Boop cartoon character in February, 2011, issuing an opinion affirming the District Court's decision with respect to both claims.  That decision was previously blogged here.

The Ninth Circuit has now withdrawn that opinion and issued a superseding opinion that reached the same conclusion as to the copyright claim but not as to the trademark claim.

 As described in my post describing the Ninth Circuit's February decision, the Ninth Circuit affirmed the dismissal of plaintiff Fleischer's trademark infringement claim

concluding that Defendant A.V.E.L.A. was using Betty Boop as a functional aesthetic component of the products, not as a trademark.  The Ninth Circuit further concluded that allowing Plaintiff Fleischer to assert a trademark infringement claim would run afoul of the Supreme Court's decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), by preventing the Betty Boop character from ever entering the public domain.

But in its new opinion, the Ninth Circuit took a different stance.

As to the use of the Betty Boop image as a trademark, the court concluded that Fleischer had failed to provide sufficient evidence of secondary meaning to withstand summary judgment.

But as to the Betty Boop word mark, the Ninth Circuit agreed that "the fractured ownership of a trademark may make it legally impossible for a trademark holder to prove secondary meaning."  Nonetheless, the court held that it could not resolve this issue as a matter of law because the only evidence was "the possibility that other copyright owners may be destroying the secondary meaning in the Betty Boop mark," which, standing alone, was insufficient to support summary judgment.

The Ninth Circuit also concluded that it could not "ascertain a legal basis" for the District Court's conclusions that there was no evidence that A.V.E.L.A.'s use represented a use of the Betty Boop word mark in commerce or that any such use was likely to cause consumer confusion.

The Ninth Circuit thus vacated the District Court's decision and remanded the case for further proceedings with respect to the trademark infringement claim relating to the Betty Boop word mark.

The case cite is Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317 (9th Cir. Aug. 19, 2011).

Another Dismissal Handed to Righthaven Based on a Lack of Standing

Another Righthaven copyright infringement case before the District of Nevada is headed for closed case status.

Yesterday, another judge from the District of Nevada granted defendant Dean Mostofi's motion to dismiss based on Righthaven's lack of standing.

The Court's standing analysis mirrored that of earlier decisions (see here, here and here):  to have standing to sue for copyright infringement, a plaintiff must be the owner of one of the exclusive rights of copyright and the bare right to sue for infringement is not one of those rights.  Here, the agreement defining the relationship between Righthaven and the original owner of the copyrights with respect to the copyrights (the Strategic Alliance Agreement ("SAA")) "expressly denies Righthaven any right from future assignments other than the bare right to bring and profit from a copyright infringement action."

The Court also declined to consider amendments to the SAA made since the filing of the complaint in the action, stating that the existence of federal jurisdiction is generally determined based upon the facts as they exist at the time the complaint was filed.

Additionally, the Court concluded that even if it were to consider the SAA amendments, "these cosmetic adjustments do not alter the fact that Plaintiff has failed to sufficiently allege whether or not Stephens Media assigned the copyrighted Work to Righthaven pursuant to the SAA, as amended or not."

Thus, "[b]ecause the SAA prevents Plaintiff from obtaining any of the exclusive rights necessary to maintain standing in a copyright infringement action and because Plaintiff fails to sufficiently allege an assignment of rights from Stephens Media to Plaintiff, the Court finds that Plaintiff lacks standing in this case."

Complaint dismissed.

The case cite is Righthaven LLC v. Mostofi, No. 2:10-CV-1066-KJD-GWF (D. Nev. July 13, 2011).

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Virtual Horses and Bunnies Smackdown -- Court Concludes that DMCA Preempts State Law Claims Based on Alleged Misuse of DMCA Takedown Notification

This is a case that I always intended to blog about but never quite got to; a recent decision in the case gave me an opportunity to follow up on the case.

Plaintiff Amaretto Ranch Breedables filed its original complaint against Ozimals in December 2010, alleging claims for, among others, misrepresentation under the Digital Millennium Copyright Act ("DMCA"), tortious interference, unfair competition and misuse of copyright.  The parties competed in the "market of virtual animal sellers" in Second Life; "Amaretto created a breedable horse and associated virtual horse food" and Ozimals sold "virtual breedable bunnies."

According to the original complaint, the dispute generally involved Ozimals' DMCA takedown notification issued to Second Life:

13.  On or about December 1, 2010 Ozimals submitted a DMCA Notification to Linden Research, Inc., owners of Second Life, claiming copyrights to "in world" items, such as "the scripts, the screen displays, expression and game play generated by those scripts for a breedable virtual animal in the form of a bunny" and that the "in world" Amaretto Horses Product Line infringed Ozimals' alleged copyrights, therefore requiring Second Life, pursuant to its Terms of Service and 17 U.S.C. [Section] 512, in order to preserve its Safe Harbor status, to takedown Amaretto's products during the present busy holiday shopping season.

14.  On or about December 9, 2010, Amaretto submitted a Counter DMCA Notification to Linden Research, Inc. requesting that it reject Ozimals [sic] claims for copyright infringement because the claimed copyright violation was based on mistaken information, misidentification of material in question, or deliberate misreading of the law.

At the time the original complaint was filed, no takedown of content had actually occurred however and the Court subsequently entered both a temporary restraining order and a preliminary injunction preventing a takedown of plaintiff's "Horse Product Line" in Second Life.

Ozimals then filed a motion to dismiss plaintiff's claims for (1) misrepresentation under the DMCA; (2) tortious interference; (3) unfair competition under California statutory law; and (4) copyright misuse, as stated in plaintiff's first amended complaint.

In April 2011, the Court granted Ozimals' motion to dismiss in part.  Specifically, the Court dismissed with prejudice plaintiff's claim for misrepresentation under the DMCA because there had been no takedown of plaintiff's content, which is required under the statute.  The Court likewise dismissed plaintiff's tortious interference claim but without prejudice to amend the claim to allege additional facts.

Plaintiff then filed a second amended complaint now alleging claims for:  (1) a declaratory judgment of invalidity and/or non-infringement of copyright and of misuse of copyright; (2) unfair competition under California law; (3) defamation; (4) trade libel; (5) intentional interference with contract; and (6) tortious interference with prospective business advantage.

Ozimals again moved to dismiss certain of the claims in plaintiff's second amended complaint, which the Court similarly granted in part.  Specifically, the Court granted the motion to dismiss plaintiff's common law unfair competition claim, its tortious interference claim and the other state law claims to the extent they were based on Ozimals' DMCA takedown notification.

As to the latter part of the Court's order, the Court held that plaintiff's state law claims based on Ozimals' allegedly improper DMCA takedown notifications were preempted by the DMCA, thereby agreeing with two earlier decisions from the Northern District of California.  See Lenz v. Universal Music Corp., No. C 07-03783 JF (N.D. Cal. Apr. 8, 2008); Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195 (N.D. Cal. 2004).  The Court concluded that

[t]hese cases stand for the propositions that (1) a DMCA Takedown Notification is a creature of a federal statutory regime, and (2) that regime preempts any state law claim based on an allegedly improper DMCA Takedown Notification.

The Court acknowledged the "rhetorical thrust" of plaintiff's argument against preemption, namely that "it is unfair to leave it without a remedy by holding both that (1) it cannot state a DMCA misrepresentation claim because no takedown occurred and (2) its related state law claims are preempted."

But the preemption analysis did not turn on whether plaintiff would be left without a remedy; rather,

the preemption analysis turns on whether federal law conflicts with state law and/or occupies a particular field.  Such is the case here because DMCA Takedown Notifications are a creature of federal law, and there is a specific federal remedy for their misuse.

Result...preemption.

The case cite is Amaretto Ranch Breedables, LLC v. Ozimals, Inc., No. C 10-05696 CRB (N.D. Cal. July 8, 2011).

First Circuit Affirms Attorneys' Fee Award that Far Exceeded Damages Award in Copyright Case

This case is an excellent reminder that there can be more to worry about in copyright infringement cases than damages.

Plaintiff Jason Spooner sued a number of defendants for copyright infringement based on the alleged use of plaintiff's song in an advertisement.

Plaintiff settled with certain of the defendants for $30,000 and plaintiff then prevailed at the bench trial against the remaining defendants.  The court found that defendants had willfully infringed plaintiff's copyright and granted plaintiff injunctive relief and $40,000 in statutory damages.  As to the $40,000 in statutory damages, the court set off the amount paid by the settling defendants, leaving plaintiff with a net additional recovery of $10,000 in statutory damages.

The court also determined that plaintiff was entitled to his attorneys' fees as the prevailing party, ultimately awarding $98,745.80 in fees.  Defendants appealed, primarily arguing that the attorneys' fee request was so extravagant that the request should have been denied entirely.

The First Circuit acknowledged, as did the trial court, that the attorneys' fee award "far exceeded both the statutory damages that the plaintiff had recovered ($40,000) and the lesser amount that he stood to collect after setting off the . . . settlement ($10,000)."  But the "law . . . does not demand strict proportionality between fees and damages," the First Circuit noted.

The trial court has discretion to deny fees entirely if the requested fees are "gluttonously high," the First Circuit stated, but noted that "denying fees altogether because of an overly ambitious fee request is a drastic step" that should "be administered sparingly and in only the most egregious cases."  Here, the First Circuit concluded that the trial court had "thoughtfully considered the question of fees, faithfully applied the lodestar method, and gave a plausible rationale for the amount of the award."  Attorneys' fee award affirmed.

The case cite is Spooner v. EEN, Inc., No. 10-2393 (1st Cir. July 5, 2011).

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Warner Bros. Largely Wins Appeal in Copyright Infringement Case Involving Use of Film Publicity Materials in the Public Domain

Warner Bros., owner of the copyrights to the films The Wizard of Oz and Gone with the Wind, as well as various animated Tom & Jerry short films, sued defendants, collectively referred to as AVELA, for copyright infringement, among other claims.

AVELA had obtained restored versions of publicity materials for these films such as movie posters and lobby cards.  From these materials, AVELA extracted images of the film characters and licensed the extracted images for use on a variety of items such as shirts, playing cards and three-dimensional figurines.  In some cases, AVELA modified the images extracted from the publicity materials and in other cases, combined images extracted from different publicity materials for use in a single product.

Warner Bros. claimed these uses of the extracted images from the publicity materials infringed its copyrights in the films.  AVELA in turn argued that because the publicity materials were distributed without copyright notice, under the 1909 Copyright Act (applicable under the facts), the materials were in the public domain.

In granting summary judgment in favor of Warner Bros. on the copyright infringement claim, the District Court did not decide the public domain question.  Instead, it concluded that even if the publicity materials were in the public domain, AVELA's modifications of the extracted images and use of the images on products infringed Warner Bros.'s copyrights in the films.  The District Court then entered a permanent injunction against all use of the images from the publicity materials except for exact duplication of those materials.

Unlike the District Court, in affirming in part the trial court's decision, the Eighth Circuit explicitly addressed the question whether the publicity materials were in the public domain.  The Court concluded that they were, rejecting Warner Bros.'s contention that the allegedly "limited publication" of the materials saved them from this fate.

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Closed Righthaven Copyright Infringement Cases (D. Nevada) -- Part One

According to a search on PACER for Righthaven as a party in copyright cases filed in the federal district court of Nevada, as of June 23, 2011, there were 217 Righthaven cases, 80 of which were still open.

In light of the recent decisions from that court unfavorable to Righthaven, that got me wondering what happened in the other 137 cases that were closed as of June 23rd.  Curiosity as usual getting the best of me, I searched PACER to see what I could find out about those 137 cases, the vast majority of which were voluntarily dismissed.  The following blog posts reflect what I found in summary fashion.

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Part Two -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. Klerks, et al., Case No. 2:10-cv-0741-GMN-LRL (D. Nev.) (J. Gloria M. Navarro) -- filed May 20, 2010.  Stipulation of voluntary dismissal with prejudice entered on February 18, 2011, stating that the parties had "resolved their differences through a written agreement."
  • Righthaven LLC v. Tuff-N-Uff Productions, Inc., et al., Case No. 2:10-cv-0794-PMP-PAL (D. Nev.) (J. Philip M. Pro) -- filed May 27, 2010.  Stipulation of voluntary dismissal with prejudice entered on September 9, 2010, stating that the parties had entered into a settlement agreement on or about September 7, 2010.
  • Righthaven LLC v. Nigam, Case No. 2:10-cv-00795-JCM-RJJ (D. Nev.) (J. James C. Mahan) -- filed May 27, 2010.  Stipulation of voluntary dismissal with prejudice entered on October 19, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. McCollough, Case No. 2:10-cv-00799-PMP-PAL (D. Nev.) (J. Philip M. Pro) -- filed May 27, 2010.  Matter voluntarily dismissed with prejudice on October 12, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Bisig Impact Group, Inc., et al., Case No. 2:10-cv-0814-RLH-LRL (D. Nev.) (J. Roger L. Hunt) -- filed May 28, 2010.  Stipulation of voluntary dismissal with prejudice entered on October 18, 2010, stating that the parties had entered into a settlement agreement on September 24, 2010.  The stipulation further states that defendants required 60 days from the effective date of the settlement agreement to comply with its terms and therefore requests the Court to retain jurisdiction of the matter.
  • Righthaven LLC v.ACDC-Bootlegs.com, et al., Case No. 2:10-cv-00815-LRH-LRL (D. Nev.) (J. Larry R. Hicks) -- filed May 28, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Odds on Racing, et al., Case No. 2:10-cv-00816-GMN-RJJ (D. Nev.) (J. Gloria M. Navarro) -- filed May 28, 2010.  Judgment entered on July 26, 2010, in favor of Righthaven for $5,000, based on a notice of acceptance with offer of judgment.
  • Righthaven LLC v. PreGame LLC, et al., Case No. 2:10-cv-00850-RLH-LRL (D. Nev.) (J. Roger L. Hunt) -- filed June 4, 2010.  Stipulation of voluntary dismissal with prejudice entered on August 23, 2010, stating that the parties had entered into a settlement agreement on or about July 15, 2010.
  • Righthaven LLC v. Stern & Co., et al., Case No. 2:10-cv-0851-JCM-LRL (D. Nev.) (J. James C. Mahan) -- filed June 4, 2010.  Stipulation of voluntary dismissal with prejudice entered on March 3, 2011, stating that the parties had "resolved their differences through a written agreement."
  • Righthaven LLC v. The Prescription LLC, et al., Case No. 2:10-cv-00852-JCM-GWF (D. Nev.) (J. James C. Mahan) -- filed June 4, 2010.  Matter voluntarily dismissed without prejudice on March 7, 2011, without reference to any resolution or settlement.
  • Righthaven LLC v. Emtcity.com, et al., Case No. 2:10-cv-00854--HDM-PAL (D. Nev.) (J. Howard D. McKibben) -- filed on June 4, 2010.  On October 20, 2010, the Court denied defendants' motion to dismiss without prejudice to renew the motion following limited discovery on the issues of standing and specific jurisdiction.  After defendants renewed their motion, the Court again denied the motion on January 24, 2011, stating that it was apparent the parties had not conducted limited discovery and the posture of the case had therefore not changed.  Stipulated dismissal with prejudice entered on May 10, 2011.
  • Righthaven LLC v. Motorcycle Racing Ass'n of Nevada, Case No. 2:10-cv-0855-KJD-RJJ (D. Nev.) (J. Kent J. Dawson) -- filed June 4, 2010.  Matter voluntarily dismissed with prejudice on September 23, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Wong, et al., Case No. 2:10-cv-00856-LRH-RJJ (D. Nev.) (J. Larry R. Hicks) -- filed June 4, 2010.  On July 15, 2010, defendant submitted a letter to the Court stating that the website apparently at issue was a blog, specifically, "an online diary, a chronology of my thoughts about felines and about the sacredness of all creatures."  The letter further stated that the blog referred to a fire at a nature sanctuary as reported by the Las Vegas Review-Journal and that "[f]ull credit and a link were given to the Las Vegas Review-Journal."  According to the docket, the Court held a hearing regarding defendant's letter, at the conclusion of which the Court ordered a settlement conference.  Matter voluntarily dismissed with prejudice on September 28, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Off Shore Gaming Ass'n, et al., Case No. 2:10-cv-00858-PMP-RJJ (D. Nev.) (J. Philip M. Pro) -- filed June 4, 2010.  Stipulation of voluntary dismissal with prejudice entered on August 12, 2010, stating that the parties had entered into a settlement agreement on or about July 29, 2010.
  • Righthaven LLC v. Shaker Advertising Agency, et al., Case No. 2:10-cv-00862-LRH-RJJ (D. Nev.) (J. Larry R. Hicks) -- filed June 4, 2010.  Matter voluntarily dismissed with prejudice on January 19, 2011, as the parties had "agreed to settle the matter by a written agreement."

 Continued....

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Part Three -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. Domains By Proxy, Inc., et al., Case No. 2:10-cv-0864-LRH-RJJ (D. Nev.) (J. Larry R. Hicks) -- filed June 7, 2010.  Matter voluntarily dismissed without prejudice as to Domains By Proxy on June 9, 2010.  On September 10, 2010, the Court granted the motion to dismiss of defendant Laurene Stewart, to which Righthaven filed no response, concluding that the evidence showed that she had sold the website at issue more than a year before the alleged copyright infringement had occurred.  Stipulation of voluntary dismissal with prejudice as to defendant Crime News entered on February 17, 2011, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Lojeck, Case No. 2:10-cv-00887-PMP-PAL (D. Nev.) (J. Philip M. Pro) -- filed June 9, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Commerce CRG Utah, LLC, et al., Case No. 2:10-cv-00888-RLH-RJJ (D. Nev.) (J. Roger L. Hunt) -- filed June 9, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. American Society of Safety Engineers, et al., Case No. 2:10-cv-01017-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed June 25, 2010.  Matter voluntarily dismissed with prejudice on August 25, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. LVA In The Media, et al., Case No. 2:10-cv-01018-LRH-RJJ (D. Nev.) (J. Larry R. Hicks) -- filed June 25, 2010.  Matter voluntarily dismissed with prejudice on October 18, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. No Quarter, et al., Case No. 2:10-cv-01022-JCM-GWF (D. Nev.) (J. James C. Mahan) -- filed June 25, 2010.  On March 16, 2011, the Court entered an order dismissing defendant No Quarter from the action without prejudice based on Righthaven's failure to file proof of service as that defendant.  On May 17, 2011, the Court also granted defendant Larry C. Johnson's motion to dismiss without prejudice and entered judgment in his favor.  Nonetheless, on May 27, 2011, a stipulation of voluntary dismissal with prejudice was entered with respect to defendant Johnson, stating that the parties had "resolved their differences as of April 14, 2011."
  • Righthaven LLC v. Thomas, Case No. 2:10-cv-01026-HDM-RJJ (D. Nev.) (J. Howard D. McKibben) -- filed June 25, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Prepster, et al., Case No. 2:10-cv-01030-JCM-RJJ (D. Nev.) (J. James C. Mahan) -- filed June 25, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Vegas Backstage Access, et al., Case No. 2:10-cv-01033-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed June 25, 2010.  Matter voluntarily dismissed with prejudice on September 3, 2010, as parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Salem Communications Corp., et al., Case No. 2:10-cv-01034-RLH-LRL (D. Nev.) (J. Roger L. Hunt) -- filed June 25, 2010.  Matter voluntarily dismissed with prejudice on August 17, 2010, as to defendant Salem Communications Corp. as the parties had "agreed to settle the matter by a written agreement."  Notice of voluntary dismissal with prejudice as to all defendants filed on February 11, 2011, again stating that the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Realty One Group, Inc., et al., Case No. 2:10-cv-1036-LRH-PAL (D. Nev.) (J. Larry R. Hicks) -- filed June 25, 2010.  The Court granted defendant Michael Nelson's motion to dismiss on October 19, 2010, concluding as a matter of law that his use was protected under the fair use doctrine.  The Court entered an order on February 8, 2011, dismissing the two remaining defendants.  Righthaven filed a Notice of Appeal of the judgment in favor of defendants Nelson and Realty One Group, Inc. to the Ninth Circuit on February 11, 2011.
  • Righthaven LLC v. Insite Security, Inc., et al., Case No. 2:10-cv-01044-RCJ-LRL (D. Nev.) (J. Robert C. Jones) -- filed June 28, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Santilli, Case No. 2:10-cv-01061-GMN-LRL (D. Nev.) (J. Gloria M. Navarro) -- filed June 30, 2010.  Matter voluntarily dismissed with prejudice on August 17, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Hyde Park Communications, Inc., Case No. 2:10-cv-001064-HDM-RJJ (D. Nev.) (J. Howard D. McKibben) -- filed June 30, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Honor, Inc., et al., Case No. 2:10-cv-01065-JCM-LRL (D. Nev.) (J. James C. Mahan) -- filed June 30, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."

Continued....

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Part Four -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. Gollner, Case No. 2:10-cv-01067-PMP-RJJ (D. Nev.) (J. Philip M. Pro) -- filed June 30, 2010.  Matter voluntarily dismissed with prejudice on July 21, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Omnia Alliance, LLC, et al., Case No. 2:10-cv-01102-JCM-PAL (D. Nev.) (J. James C. Mahan) -- filed July 6, 2010.  Matter voluntarily dismissed with prejudice on September 28, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Finn, et al., Case No. 2:10-cv-01103-RLH-LRL (D. Nev.) (J. Roger L. Hunt) -- filed July 7, 2010.  Matter voluntarily dismissed with prejudice on August 3, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Odds on Recording Studios, Inc., et al., Case No. 2:10-cv-01114-RLH-RJJ (D. Nev.) (J. Roger L. Hunt) -- filed July 8, 2010.  Stipulation of voluntary dismissal with prejudice entered on March 7, 2011, stating that the parties had "resolved their differences through a written agreement."
  • Righthaven LLC v. Independent Political Report, et al., Case No. 2:10-cv-01118-KJD-RJJ (D. Nev.) (J. Kent J. Dawson) -- filed July 8, 2010.  Court enters an Order on December 14, 2010, regarding Righthaven's failure to effectuate service and dismisses its complaint without prejudice against defendant Independent Political Report for failing to comply with Fed. R. Civ. P. 4(m).  Matter voluntarily dismissed with prejudice on December 15, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Pennwell Corp., Case No. 2:10-cv-01128-RLH-RJJ (D. Nev.) (J. Roger L. Hunt) -- filed July 9, 2010.  Matter voluntarily dismissed with prejudice on August 10, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Democratic Party of Nevada, Case No. 2:10-cv-01129-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed July 9, 2010.  Stipulation of voluntary dismissal with prejudice entered on September 30, 2010, stating that the parties had entered into a settlement agreement on or about September 14, 2010.
  • Righthaven LLC v. Bouzek, et al., Case No.2:10-cv-01134-RLH-PAL (D. Nev.) (J. Roger L. Hunt) -- filed July 12, 2010.  Matter voluntarily dismissed with prejudice on October 26, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. The Above Network, LLC , et al., Case No. 2:10-cv-01159-JCM-LRL (D. Nev.) (J. James C. Mahan) -- filed July 14, 2010.  Matter voluntarily dismissed with prejudice on October 5, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Nason, et al., Case No. 2:10-cv-01160-KJD-LRL (D. Nev.) (J. Kent J. Dawson) -- filed July 14, 2010.  Matter voluntarily dismissed with prejudice on October 11, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. VerticalScope USA Inc., et al., Case No. 2:10-cv-01174-PMP-LRL (D. Nev.) (J. Philip M. Pro) -- filed July 15, 2010.  Matter voluntarily dismissed with prejudice on October 4, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Grand, et al., Case No. 2:10-cv-01177-JCM-LRL (D. Nev.) (J. James C. Mahan) -- filed July 15, 2010.  Matter voluntarily dismissed with prejudice on October 8, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Wilcox, et al., Case No. 2:10-cv-01192-GMN-LRL (D. Nev.) (J. Gloria M. Navarro) -- filed July 19, 2010.  Stipulation of voluntary dismissal with prejudice entered on September 29, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Free Republic, LLC, et al., Case No. 2:10-cv-01194-LDG-RJJ (D. Nev.) (J. Lloyd D. George) -- filed July 19, 2010.  Stipulation of voluntary dismissal with prejudice entered on October 20, 2010, stating that the parties had entered into a settlement agreement on or about October 15, 2010.  The stipulation further states that the parties required six months from the filing of the stipulation to comply with the terms of the agreement and therefore requested that the Court dismiss the matter six months after the filing of the stipulation.
  • Righthaven LLC v. Burnett, et al., Case No. 2:10-cv-01200-RLH-RJJ (D. Nev.) (J. Roger L. Hunt) -- filed July 20, 2010.  Stipulation of voluntary dismissal with prejudice entered on September 30, 2010, stating that the parties had "resolved their differences."

 Continued....

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Part Five -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. Assured Lender Services, Inc., et al., Case No. 2:10-cv-01205-KJD-RJJ (D. Nev.) (J. Kent J. Dawson) -- filed July 20, 2010.  Matter voluntarily dismissed with prejudice on October 5, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Free Speech Systems, LLC, et al., Case No. 2:10-cv-01211-JCM-RJJ (D. Nev.) (J. James C. Mahan) -- filed July 21, 2010.  Matter voluntarily dismissed with prejudice on September 23, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Americans for Democratic Action, Inc., et al., Case No. 2:10-cv-01218-LDG-RJJ (D. Nev.) (J. Lloyd D. George) -- filed July 21, 2010.  Matter voluntarily dismissed with prejudice on October 5, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Bliss, Case No. 2:10-cv-01245-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed July 26, 2010.  Stipulation of voluntary dismissal with prejudice entered on October 6, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Fiato, Case No. 2:10-cv-01246-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed July 26, 2010.  Order of dismissal without prejudice entered on March 21, 2011, for Righthaven's failure to effectuate timely service pursuant to Fed. R. Civ. P. 4(m).
  • Righthaven LLC v. Serkadis.com, et al., Case No. 2:10-cv-01276-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed July 29, 2010.  Order of dismissal without prejudice entered on March 21, 2011, for Righthaven's failure to effectuate timely service pursuant to Fed. R. Civ. P. 4(m).
  • Righthaven LLC v. Greater Houston Partnership, Inc., et al., Case No. 2:10-cv-01277-JCM-LRL (D. Nev.) (J. James C. Mahan) -- filed July 29, 2010.  Matter voluntarily dismissed with prejudice on February 2, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Silver Matrix LLC, et al., Case No. 2:10-cv-01281-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed July 29, 2010.  Stipulation of voluntary dismissal with prejudice entered on October 19, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Jama, et al., Case No. 2:10-cv-01322-JCM-LRL (D. Nev.) (J. James C. Mahan) -- filed August 5, 2010.  Court entered an Order on November 15, 2010, directing Righthaven "to show cause why this case should not be dismissed under the 17 U.S.C. 107 Fair Use exception."  On March 18, 2011, the Court entered an Order denying defendants' motion to dismiss for lack of personal jurisdiction.  On April 22, 2011, the Court entered summary judgment in favor of defendants finding that defendants' use of the work at issue "constitute[d] fair use as a matter of law," stating that the "article has been removed from its original context; it is no longer owned by a newspaper; and it has been assigned to a company that uses the copyright exclusively to file infringement lawsuits."  The Court's Order further stated that Righthaven's "litigation strategy has a chilling effect on potential fair uses of Righthaven-owned articles, diminishes public access to the facts contained therein, and does nothing to advance the Copyright Act's purpose of promoting artistic creation."  Final judgment in favor of defendants entered on May 13, 2011.  Righthaven filed a Notice of Appeal to the Ninth Circuit on May 18, 2011.
  • Righthaven LLC v. Second Amendment Sisters, Inc., et al., Case No. 2:10-cv-01324-PMP-RJJ (D. Nev.) (J. Philip M. Pro) -- filed August 5, 2010.  Stipulation of voluntary dismissal with prejudice entered on October 5, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Baxter, et al., Case No. 2:10-cv-01328-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed August 6, 2010.  Order of dismissal without prejudice entered on March 21, 2011, for Righthaven's failure to effectuate timely service pursuant to Fed. R. Civ. P. 4(m).
  • Righthaven LLC v. Soltan, Case No. 2:10-cv-01329-GMN-LRL (D. Nev.) (J. Gloria M. Navarro) -- filed August 6, 2010.  Stipulation of voluntary dismissal with prejudice entered on October 21, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Potasnik, et al., Case No. 2:10-cv-01330-KJD-LRL (D. Nev.) (J. Kent J. Dawson) -- filed August 6, 2010.  Matter voluntarily dismissed with prejudice on October 11, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. DiBiase, Case No. 2:10-cv-01343-RLH-PAL (D. Nev.) (J. Roger L. Hunt) -- filed August 9, 2010.  On April 15, 2011, the Court entered an Order granting defendant's motion to dismiss Righthaven's request that the domain name be transferred to Righthaven, concluding that "Congress has never expressly granted plaintiffs in copyright infringement cases the right to seize control over the defendant's website domain."  The Court denied defendant's motion to dismiss Righthaven's claim for attorneys' fees, although it noted that defendant's argument--that "such relief requires an independent attorney-client relationship," which defendant argued did not exist because "Righthaven's principals are its lawyers"--had merit.  The Court also denied Righthaven's motion to dismiss defendant's counterclaim for a declaration that defendant had not infringed Righthaven's copyright.  On June 22, 2011, the Court entered an Order granting defendant's motion to dismiss, dismissing Righthaven's complaint for lack of standing (previously blogged here).  Final judgment entered on June 22, 2011.
  • Righthaven LLC v. Meenehan, Case No. 2:10-cv-01344-PMP-PAL (D. Nev.) (J. Philip M. Pro) -- filed August 9, 2010.  Matter voluntarily dismissed with prejudice on October 6, 2010, as the parties had "agreed to settle the matter by a written agreement."

 Continued....

 

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Part Six -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. Cirucci, Case No. 2:10-cv-01345-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed August 9, 2010.  Matter voluntarily dismissed with prejudice on October 5, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Internet Brands, Inc., et al., Case No. 2:10-cv-01346-KJD-LRL (D. Nev.) (J. Kent J. Dawson) -- filed August 9, 2010.  Stipulation of voluntary dismissal with prejudice entered on November 3, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Pruitt, Case No. 2:10-cv-01347-RLH-GWF (D. Nev.) (J. Roger L. Hunt) -- filed August 9, 2010.  Stipulation of voluntary dismissal with prejudice entered on February 16, 2011, stating that the parties had "resolved their differences through a written agreement."
  • Righthaven LLC v. Sohor, et al., Case No. 2:10-cv-01355-RLH-PAL (D. Nev.) (J. Roger L. Hunt) -- filed August 10, 2010.  Voluntary dismissal with prejudice filed on October 19, 2010, as to defendant Roman Sohor, stating that "[i]t has come to the attention of Righthaven, via additional research, that Mr. Sohor was improperly named as a defendant in the above captioned matter."  Order of dismissal without prejudice as to defendant Wayne Bellinger entered on April 15, 2011, for Righthaven's failure to effectuate timely service pursuant to Fed. R. Civ. P. 4(m).
  • Righthaven LLC v. Hepatitis C Support Project, et al., Case No. 2:10-cv-01431-ECR-PAL (D. Nev.) (J. Edward C. Reed, Jr.) -- filed August 24, 2010.  Matter voluntarily dismissed with prejudice on October 7, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Herbal Science Ltd., et al., Case No. 2:10-cv-01432-ECR-LRL (D. Nev.) (J. Edward C. Reed, Jr.) -- filed August 24, 2010.  Stipulation of voluntary dismissal with prejudice entered October 18, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Franklin, Case No. 2:10-cv-01442-ECR-LRL (D. Nev.) (J. Roger L. Hunt) -- filed August 25, 2010.  Matter voluntarily dismissed with prejudice on October 4, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Buckner, Case No. 2:10-cv-01455-RLH-PAL (D. Nev.) (J. Roger L. Hunt) -- filed August 26, 2010.  Matter voluntarily dismissed with prejudice on January 25, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. MedicCom BBS, et al., Case No. 2:10-cv-01456-LRH-RJJ (D. Nev.) (J. Larry R. Hicks) -- filed August 26, 2010.  Matter voluntarily dismissed with prejudice on November 8, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. P.O.W. Network, et al., Case No. 2:10-cv-01480-ECR-PAL (D. Nev.) (J. Edward C. Reed, Jr.) -- filed August 31, 2010.  Matter voluntarily dismissed with prejudice on October 20, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. American Political Action Committee, et al., Case No. 2:10-cv-01481-RCJ-LRL (D. Nev.) (J. Robert C. Jones) -- filed August 31, 2010.  Matter voluntarily dismissed with prejudice on October 13, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Kirvin Doak Communications, et al., Case No. 2:10-cv-01482-LRH-LRL (D. Nev.) (J. Larry R. Hicks) -- filed August 31, 2010.  Matter voluntarily dismissed with prejudice on September 7, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Americans for Legal Immigration Political Action Committee, et al., Case No. 2:10-cv-01483-KJD-RJJ (D. Nev.) (J. Kent J. Dawson) -- filed August 31, 2010.  Matter voluntarily dismissed with prejudice on February 2, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Nystrom, Case No. 2:10-cv-01490-JCM-RJJ (D. Nev.) (J. James C. Mahan) -- filed August 31, 2010.  Order of dismissal without prejudice entered on March 7, 2011, for Righthaven's failure to effectuate timely service pursuant to Fed. R. Civ. P. 4(m).
  • Righthaven LLC v. Gilbert, Case No. 2:10-cv-01491-RLH-RJJ (D. Nev.) (J. Roger L. Hunt) -- filed August 31, 2010.  Matter voluntarily dismissed with prejudice on October 5, 2010, as the parties had "agreed to settle the matter by a written agreement."

Continued....

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Part Seven -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. Americans Against Food Taxes, et al., Case No. 2:10-cv-01496-JCM-PAL (D. Nev.) (J. James C. Mahan) -- filed September 1, 2010.  Matter voluntarily dismissed with prejudice on February 2, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Angle, Case No. 2:10-cv-01511-RLH-RJJ (D. Nev.) (J. Roger L. Hunt) -- filed September 3, 2010.  Stipulation of voluntary dismissal with prejudice entered on November 17, 2010, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Trauma Intervention Program of Southern Nevada, Inc., et al., Case No. 2:10-cv-01512-PMP-PAL (D. Nev.) (J. Philip M. Pro) -- filed September 3, 2010.  Matter voluntarily dismissed with prejudice on November 29, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Lord, Case No. 2:10-cv-01524-JCM-RJJ (D. Nev.) (J. James C. Mahan) -- filed September 8, 2010.  Matter voluntarily dismissed with prejudice on February 15, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Rad Geek Enterprises, et al., Case No. 2:10-cv-01534-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed September 9, 2010.  Matter voluntarily dismissed with prejudice on January 18, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Glenn, Case No. 2:10-cv-01535-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed September 9, 2010.  Voluntary dismissal with prejudice filed on October 18, 2010, stating that the parties had "agreed to settle the matter by a written agreement" on October 4, 2010.  The voluntary dismissal further states that defendant required 60 days from the effective date of the settlement agreement to comply with the terms and therefore requested the Court to retain jurisdiction.  On November 29, 2010, Righthaven filed another voluntary dismissal with prejudice stating that the parties had "agreed to settle the matter by a written agreement."
  •  Righthaven LLC v. Wells, Case No. 2:10-cv-01542-KJD-RJJ (D.Nev.) (J. Kent J. Dawson) -- filed September 9, 2010.  Stipulation of voluntary dismissal with prejudice filed on February 17, 2011, stating that the parties had "resolved their differences."
  • Righthaven LLC v. Rawguru, Inc., et al., Case No. 2:10-cv--01570-PMP-PAL (D. Nev.) (J. Philip M. Pro) -- filed September 14, 2010.  Matter voluntarily dismissed with prejudice on October 6, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Parson, 2:10-cv-01571-KJD-RJJ (D. Nev.) (J. Kent J. Dawson) -- filed September 14, 2010.  Matter voluntarily dismissed with prejudice on October 6, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Bonnier Corp., et al., Case No. 2:10-cv-01573-JCM-PAL (D. Nev.) (J. James C. Mahan) -- filed September 14, 2010.  Stipulation of voluntary dismissal with prejudice filed on March 3, 2011, stating that the parties had "resolved their differences through a written agreement."
  • Righthaven LLC v. Ralph Roberts Realty, LLC, et al., Case No. 2:10-cv-01601-RCJ-PAL (D. Nev.) (J. Robert C. Jones) -- filed September 17, 2010.  Matter voluntarily dismissed with prejudice on November 2, 2010, as the parties had "agreed to settle the matter by a written agreement" on October 28, 2010.  Voluntary dismissal further stated that defendants required 180 days from the effective date of the settlement agreement to comply with its terms and therefore requested the Court to retain jurisdiction.
  • Righthaven LLC v. Schultz, et al., Case No. 2:10-cv-01605-PMP-LRL (D. Nev.) (J. Philip M. Pro) -- filed September 20, 2010.  Stipulation of dismissal with prejudice as to defendant Travis Nagle filed on November 23, 2010, stating that the parties agreed the matter "may be dismissed with prejudice, each party to bear its own fees and costs."  Stipulation of voluntary dismissal with prejudice as to defendant Donald K. Schultz filed on February 18, 2011, stating that the parties had "resolved their differences through a written agreement."
  • Righthaven LLC v. EMP Media, Inc., et al., Case No. 2:10-cv-01613-KJD-RJJ (D. Nev.) (J. Kent J. Dawson) -- filed September 20, 2010.  Matter voluntarily dismissed with prejudice on December 20, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Automotive.com, LLC, et al., Case No. 2:10-cv-01624-KJD-LRL (D. Nev.) (J. Kent J. Dawson) -- filed September 21, 2010.  Matter voluntarily dismissed with prejudice on November 8, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Rucker, Case No. 2:10-cv-01652-GMN-LRL (D. Nev.) (J. Gloria M. Navarro) -- filed September 24, 2010.  Matter voluntarily dismissed with prejudice on March 2, 2011, as the parties had "agreed to settle the matter by a written agreement."

Continued....

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Part Eight -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. Shermer, et al., Case No. 2:10-cv-01655-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed September 24, 2010.  Matter voluntarily dismissed with prejudice on December 20, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. AR15.com, LLC, et al., Case No. 2:10-cv-01671-GMN-LRL (D. Nev.) (J. Gloria M. Navarro) -- filed September 27, 2010.  Matter voluntarily dismissed with prejudice on February 1, 2011.
  • Righthaven LLC v. Easton, et al., Case No. 2:10-cv-01673-GMN-GWF (D. Nev.) (J. Gloria M. Navarro) -- filed September 27, 2010.  Order of dismissal without prejudice entered on March 21, 2011, for Righthaven's failure to effectuate timely service pursuant to Fed. R. Civ. P. 4(m).
  • Righthaven LLC v. National Wind Watch, Inc., Case No. 2:10-cv-01675-GMN-GWF (D. Nev.) (J. Gloria M. Navarro) -- filed September 27, 2010.  Matter voluntarily dismissed with prejudice on February 2, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Joe, Case No. 2:10-cv-01684-JCM-PAL (D. Nev.) (J. James C. Mahan) -- filed September 28, 2010.  Matter voluntarily dismissed with prejudice on December 7, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Scott, Case No. 2:10-cv-01685-GMN-LRL (D. Nev.) (J. Gloria M. Navarro) -- filed September 28, 2010.  Matter voluntarily dismissed with prejudice on October 28, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Mr News Breaker, et al., Case No. 2:10-cv-01735-PMP-GWF (D. Nev.) (J. Philip M. Pro) -- filed October 6, 2010.  Matter voluntarily dismissed with prejudice on February 23, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Arpajian, Case No. 2:10-cv-01764-KJD-LRL (D. Nev.) (J. Kent J. Dawson) -- filed October 12, 2010.  Matter voluntarily dismissed with prejudice on November 16, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Brotherhood of Locomotive Engineers Building Ass'n, et al., Case No. 2:10-cv-01765-KJD-RJJ (D. Nev.) (J. Kent J. Dawson) -- filed October 12, 2010.  Stipulation of voluntary dismissal with prejudice filed on January 11, 2011, stating that the parties had "resolved their differences."
  • Righthaven LLC v. The Second Amendment Foundation, et al., Case No. 2:10-cv-01771-LDG-PAL (D. Nev.) (J. Lloyd D. George) -- filed October 12, 2010.  Matter voluntarily dismissed with prejudice on December 7, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Browseblog, et al., Case No. 2:10-cv-01838-PMP-LRL (D. Nev.) (J. Philip M. Pro) -- filed October 20, 2010.  Matter voluntarily dismissed with prejudice on November 17, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Ratemycop.com, LLC, et al., Case No. 2:10-cv-01839-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed October 20, 2010.  Matter voluntarily dismissed with prejudice on November 4, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Gaminglaptops, et al., Case No. 2:10-cv-01841-PMP-GWF (D. Nev.) (J. Philip M. Pro) -- filed October 20, 2010.  Matter voluntarily dismissed with prejudice on May 18, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. The Ad Network, Inc., et al., Case No. 2:10-cv-01879-LDG-RJJ (D. Nev.) (J. Lloyd D. George) -- filed October 26, 2010.  Matter voluntarily dismissed with prejudice on November 9, 2010, as the parties had "agreed to settle the matter."
  • Righthaven LLC v. Leyden, Case No. 2:10-cv-01902-KJD-GWF (D. Nev.) (J. Kent J. Dawson) -- filed October 29, 2010.  Stipulation of voluntary dismissal with prejudice filed on May 4, 2011, stating that the parties had "resolved their differences."

Continued....

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Part Nine -- Closed Righthaven Copyright Infringement Cases (D. Nevada)

Summary report on the 137 Righthaven copyright infringement cases in the District of Nevada closed as of June 23rd continued:

  • Righthaven LLC v. RK, Inc., et al., Case No. 2:10-cv-01904-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed October 29, 2010.  Matter voluntarily dismissed with prejudice on March 4, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Bert L. Howe & Associates, Inc., et al., Case No. 2:10-cv-02004-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed November 16, 2010.  Matter voluntarily dismissed with prejudice on December 13, 2010, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Fan Sites Network, et al., Case No. 2:10-cv-02016-KJD-GWF (D. Nev.) (J. Kent J. Dawson) -- filed November 17, 2010.  Matter voluntarily dismissed with prejudice on January 20, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Connected Nation, Inc., Case No. 2:10-cv-02017-KJD-PAL (D. Nev.) (J. Kent J. Dawson) -- filed November 17, 2010.  Matter voluntarily dismissed with prejudice on February 11, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Leighton Law, P.A., et al., Case No. 2:10-cv-02067-JCM-GWF (D. Nev.) (J. James C. Mahan) -- filed November 24, 2010.  Stipulation of voluntary dismissal with prejudice filed on March 3, 2011, stating that the parties had "resolved their differences through a written agreement."
  • Righthaven LLC v. Associated Newspapers Ltd., Case No. 2:10-cv-02088-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed November 30, 2010.  Matter voluntarily dismissed with prejudice on February 22, 2011, as the "lawsuit has now been resolved to the parties' mutual satisfaction."
  • Righthaven LLC v. Threeall, Inc., et al., Case No. 2:10-cv-02089-GMN-PAL (D. Nev.) (J. Gloria M. Navarro) -- filed November 30, 2010.  Matter voluntarily dismissed with prejudice on February 15, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Drudge, et al., Case No. 2:10-cv-02135-KJD-GWF (D. Nev.) (J. Kent J. Dawson) -- filed December 8, 2010.  Matter voluntarily dismissed with prejudice on February 15, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Barham, et al., Case No. 2:10-cv-02150-RLH-PAL (D. Nev.) (J. Roger L. Hunt) -- filed December 10, 2010.  On June 22, 2011, the Court entered an Order granting defendant's motion to dismiss on the ground that Righthaven lacked standing and granting Righthaven's motion to dismiss defendant's counterclaim on the same ground.
  • Righthaven LLC v. Davis, Case No. 2:10-cv-02180-PMP-GWF (D. Nev.) (J. Philip M. Pro) -- filed December 16, 2010.  Matter voluntarily dismissed with prejudice on January 21, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. The Lone Star Foundation Inc., et al., Case No. 2:11-cv-00005-RLH-PAL (D. Nev.) (J. Roger L. Hunt) -- filed January 3, 2011.  Matter voluntarily dismissed with prejudice on March 2, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Mezmerizing Llama LLC, et al., Case No. 2:11-cv-00008-KJD-LRL (D. Nev.) (J. Kent J. Dawson) -- filed January 3, 2011.  Matter voluntarily dismissed with prejudice on April 13, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Higgins, Case No. 2:11-cv-00049-LDG-RJJ (D. Nev.) (J. Lloyd D. George) -- filed January 12, 2011.  Matter voluntarily dismissed with prejudice on March 3, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Hoehn, Case No. 2:11-cv-00050-PMP-RJJ (D. Nev.) (J. Philip M. Pro) -- filed January 11, 2011.  On June 20, 2011, the Court entered an Order granting defendant's motion to dismiss on the ground that Righthaven lacked standing and granting defendant's motion for summary judgment on the ground that defendant's use of the work at issue was fair (previously blogged here).  Final judgment was entered in favor of defendant on June 20, 2011.
  • Righthaven LLC v. Business Insider, Inc., et al., Case No. 2:11-cv-00052-JCM-PAL (D. Nev.) (J. James C. Mahan) -- filed January 12, 2011.  Matter voluntarily dismissed with prejudice on February 11, 2011, as the parties had "agreed to settle the matter by a written agreement."
  • Righthaven LLC v. Bear Den Holdings, Inc., et al., Case No. 2:11-cv-00109-JCM-LRL (D. Nev.) (J. James C. Mahan) -- filed January 21, 2011.  Matter voluntarily dismissed with prejudice on February 15, 2011.
  • Righthaven LLC v. Citadel Broadcasting Co., et al., Case No. 2:11-cv-00308-PMP-GWF (D. Nev.) (J. Philip M. Pro) -- filed February 24, 2011.  Matter voluntarily dismissed with prejudice on May 9, 2011, as the parties had "agreed to settle the matter by a written agreement."
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Another Standing Loss for Righthaven

Following in the footsteps of two recent previous decisions from the court involving Righthaven (previously blogged here and here), the federal district court in Nevada handed another loss to Righthaven on June 22, concluding that Righthaven lacked standing to pursue its copyright infringement action.

The district court's opinion was short and to-the-point:

Recently this Court determined that Righthaven lacked standing to pursue copyright infringement claims based on assignments made under the [Strategic Alliance Agreement (SAA)] because the SAA prevents subsequent assignments from transferring "the exclusive rights necessary to maintain standing in a copyright infringement action.["]  Righthaven v. Democratic Underground, 2:10-cv-01356-RLH-GWF, -- F. Supp. 2d --, 2011 WL 2378186 at *6 (D. Nev. June 14, 2011); see also Righthaven v. Hoehn, 2:10-cv-00050-PMP-RJJ, -- F. Supp. 2d --, 2011 WL 2441020 at *6 (D. Nev. June 20, 2011).  The standing issues in this case are the same as those in Democratic Underground and Hoehn.  Because the issues are the same, the same analysis applies and the Court directs readers to the reasoning in those cases on the issue of standing.  As the Court did in both of those cases, the Court dismisses Righthaven for lack of standing.

Given the large number of Righthaven copyright cases currently pending before the District of Nevada (according to a search of PACER on June 23, Righthaven is a plaintiff in 80 open copyright cases), similar decisions are likely to continue to issue from the court.

The case cite is Righthaven LLC v. DiBiase, Case No. 2:10-cv-01343-RLH-PAL (D. Nev. June 22, 2011).

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District Court in Nevada Hands Another Loss to Righthaven

Following close on the heels of a loss in another of its numerous copyright infringement lawsuits (previously blogged here), Righthaven suffered another defeat yesterday at the hands of the federal district court in Nevada.

Like the decision from last week, the district court concluded that Righthaven lacked standing to sue for copyright infringement because the relevant agreement establishing the contracting parties' relationship with respect to the copyright assignments gave Righthaven nothing more than the "bare right to sue" alleged infringers.  Absent the corresponding transfer of an exclusive right of copyright, Righthaven did not have standing to sue, the district court held.

The district court went further, however, concluding that the "Clarification and Amendment to Strategic Alliance Agreement"--entered into after the defendant in this case had filed a motion to dismiss for lack of subject matter jurisdiction--failed to provide Righthaven with any of the exclusive rights of copyright necessary to establish standing to sue:

The May 9, 2011 Clarification provides Righthaven with only an illusory right to exploit or profit from the Work, requiring 30 days advance notice to Stephens Media [the original copyright owner] before being able to exploit the Work for any purpose other than bringing an infringement action.  Stephens Media has, in its sole discretion, the option to repurchase the Copyright Assignment for a nominal amount within 14 days, thereby retaining the ability to prevent Righthaven from ever exploiting or reproducing the Work.  Stephens Media's power to prevent Righthaven from exploiting the Work for any purpose other than pursuing infringement actions is further bolstered by the Clarification's provision that every exploitation of the Work by Righthaven other than pursuing an infringement action without first giving Stephens Media notice constitutes irreparable harm to Stephens Media.  Stephens Media may obtain injunctive relief against Righthaven to prevent such "irreparable harm" and, pursuant to the Clarification, Righthaven has no right to oppose Stephens Media's request for injunctive relief.  Accordingly, Righthaven does not have any exclusive rights in the Work and thus does not have standing to bring an infringement action.

Notwithstanding its decision granting the defendant's motion to dismiss for lack of standing, the district court went even further, addressing defendant's motion for summary judgment on the issue of fair use.

On balance, the district court readily concluded that the fair use factors favored the defendant and therefore granted summary judgment in favor of the defendant:

There is no genuine issue of material fact that the above factors favor a finding of fair use.  Of the four factors, only the fact that [Defendant] Hoehn replicated the entire Work weighs against a finding of fair use.  Hoehn used the Work for a noncommercial and nonprofit use that was different from the original use.  The copyrighted Work was an informational work with only some creative aspects, and the Work was used for an informational purpose.  Righthaven did not present any evidence that the market for the Work was harmed by Hoehn's noncommercial use for the 40 days it appeared on the Website.

The district court thus granted defendant's motions to dismiss and for summary judgment and dismissed Righthaven's complaint.

The case cite is Righthaven, LLC v. Hoehn, No. 2:11-CV-00050-PMP-RJJ (D. Nev. June 20, 2011).

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Court Concludes -- In No Uncertain Terms -- That Righthaven Lacked Standing to Sue for Copyright Infringement

Righthaven--the plaintiff in hundreds of copyright infringement suits--suffered a resounding defeat yesterday when the chief judge for the federal district court in Nevada held that Righthaven did not have standing to assert a copyright infringement claim.

In an opinion that left no doubt that the court was less than impressed with Righthaven's arguments and conduct, the court concluded that the agreement which detailed the rights of the parties with respect to the copyright assignments under which Righthaven claimed the right to sue only gave Righthaven "the bare right to bring and profit from copyright infringement actions."  That conclusion was clear, the court found, from the unambiguous language of the Strategic Alliance Agreement ("SAA"):

7.2  Despite any such Copyright Assignment, Stephens Media [the alleged copyright assignor] shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and 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.

Relying on unambiguous language from the Ninth Circuit sitting en banc, the district court readily concluded that the mere transfer of the right to sue--apart from any of the exclusive rights of copyright--did not confer standing to sue on Righthaven:

Pursuant to Section 501(b) of the 1976 Copyright Act, . . . only the legal or beneficial owner of an exclusive right under copyright law is entitled, or has standing, to sue for infringement. . . .  Section 106 of the Act defines and limits the exclusive rights under copyright law. . . .  While these exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is ineffectual because it is not one of the exclusive rights. . . .  Since the right to sue is not one of the exclusive rights, transfer solely of the right to sue does not confer standing on the assignee. . . .  One can only obtain a right to sue on a copyright if the party also obtains one of the exclusive rights in the copyright. . . .  Further, to obtain a right to sue for past infringement, that right must be expressly stated in the assignment.

The court then proceeded to methodically reject each of Righthaven's arguments that, notwithstanding this clear statement of the law, Righthaven still had standing to sue for copyright infringement.

In one such argument, Righthaven contended that courts within the district had already determined that it had standing to sue based on the copyright assignment.  That contention did not sit well with the court, however:

At best, this argument is disingenuous.  As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles.  Righthaven did not disclose the true nature of the transaction by disclosing the SAA or Stephens Media's pecuniary interests.  As the SAA makes abundantly clear, Stephens Media retained the exclusive rights, never actually transferring them to Righthaven regardless of Righthaven's and Stephens Media's current contentions.  Further, Righthaven also failed to disclose Stephens Media in its certificates of interested parties, despite Stephens Media's right to proceeds from these lawsuits.

With respect to the latter point, the court ended its decision with an order directing Righthaven to show cause why it should not be sanctioned for its failure to disclose Stephens Media as an interested party in that case or any of the other approximately 200 cases filed in the district, characterizing that failure as a "flagrant misrepresentation to the Court."

Finally, the district court, in denying the motion of defendant Democratic Underground for summary judgment on Righthaven's claim as moot because Righthaven had been dismissed for lack of standing, the court specifically noted that its decision "does not affect Democratic Underground's right to bring a motion for attorney fees under the Act."

The case cite is Righthaven LLC v. Democratic Underground, LLC, Case No. 2:10-cv-01356-RLH-GWF (D. Nev. June 14, 2011).

You can also find more about the case on the EFF's website here.

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Second Circuit Addresses Personal Jurisdiction in Context of Online Copyright Infringement

Penguin Group sued American Buddha for copyright infringement in the Southern District of New York, alleging that American Buddha, an Oregon not-for-profit corporation with its principal place of business in Arizona, provided access on a website to four works published by Penguin.

American Buddha filed a motion to dismiss alleging that it was not subject to jurisdiction in New York.  Interpreting New York's long-arm statute, the district court granted the motion to dismiss, concluding that Penguin's injury occurred where the books were uploaded--Oregon or Arizona--and therefore Penguin could not show that it suffered injury within New York, as required by the statute.

On the appeal's first visit to the Second Circuit, the court certified a question to the New York Court of Appeals that it felt necessary to decide the case:

In copyright infringement cases, is the situs of the injury for purposes of determining long-arm jurisdiction under [New York's long-arm statute] the location of the infringing action or the residence or location of the principal place of business of the copyright holder?

In response, the New York Court of Appeals answered the following modified question:

In copyright infringement cases involving the uploading of a copyrighted printed literary work onto the Internet, is the situs of injury for purposes of determining long-arm jurisdiction under [New York's long-arm statute] the location of the infringing action or the residence or location of the principal place of business of the copyright holder?

The court answered that modified question as follows:

[A] New York copyright owner alleging infringement sustains an in-state injury pursuant to [New York's long-arm statute] when its printed literary work is uploaded without permission onto the Internet for public access.

According to the Second Circuit, the Internet played an important role in the New York Court of Appeals' jurisdictional analysis as did the copyright holder's right to exclude others from using its property.  As to the role of the Internet, the New York Court of Appeals concluded that

"it is illogical to extend" the traditional tort approach that "equate[s] a plaintiff's injury with the place where its business is lost or threatened" to the context of "online copyright infringement cases where the place of uploading is inconsequential and it is difficult, if not impossible, to correlate lost sales to a particular geographic area."

Thus, in light of the answer of the New York Court of Appeals to the Second Circuit's certified question (as modified), the court concluded that the situs of Penguin's alleged injury was New York.  The Second Circuit therefore vacated the district court's order dismissing the case and remanded it for consideration of the remaining jurisdictional requisites.

The case cite is Penguin Group (USA) Inc. v. American Buddha, Docket No. 09-1739-cv (2d Cir. May 12, 2011).

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Ninth Circuit Reverses Copyright Preemption Decision on En Banc Rehearing

This case was back before the Ninth Circuit for a second time, this time for a rehearing en banc. 

You can find a more detailed explanation of the facts of the case in my previous post reporting on the opinion of the three-judge panel.  The gist of the facts are that plaintiffs alleged that they pitched their concept for a new reality TV show to NBC Universal, Inc. and the Sci-Fi Channel and offered to partner "in the production, broadcast and distribution of" their concept.  The representatives turned plaintiffs down but NBC later partnered with others to produce a series on the Sci-Fi channel that plaintiffs allege was based on their material.

Plaintiffs sued alleging, in part, state law claims for breach of implied contract and breach of confidence but the District Court dismissed those claims, concluding that they were preempted by federal copyright law.

A three-judge panel of the Ninth Circuit affirmed the District Court's decision, concluding that the claims for breach of implied contract and breach of confidence were not qualitatively different from a copyright claim, distinguishing the prior Ninth Circuit case of Grosso v. Miramax Film Corp., 383 F.3d 965 (9th Cir. 2004) in the process.

The Ninth Circuit ordered a rehearing of the case en banc, this time reversing the District Court's preemption decision.

The Ninth Circuit emphasized that it had held in previous cases that an implied contractual claim, like that of the plaintiffs in this case, were not preempted by the Copyright Act because such a claim

requires that there be an expectation on both sides that use of the idea requires compensation, and that such bilateral understanding of payment constitutes an additional element that transforms a claim from one asserting a right exclusively protected by federal copyright law, to a contractual claim that is not preempted by copyright law.

Thus, the Ninth Circuit "again [held] that copyright law does not preempt a contract claim where plaintiff alleges a bilateral expectation that he would be compensated for use of the idea, the essential elements of a Desny claim that separates it from preempted claims for the use of copyrighted material."

The court likewise concluded that plaintiffs' claim for breach of confidence was not preempted because the "claim protects the duty of trust or confidential relationship between the parties, an extra element that makes it qualitatively different from a copyright claim."

The majority saw its approach to the preemption issue as filling a "gap that would otherwise exist between state contract law and copyright law in the entertainment industry":

The Desny innovation serves to give some protection for those who wish to find an outlet for creative concepts and ideas but with the understanding that they are not being given away for free.  Without such legal protection, potentially valuable creative sources would be left with very little protection in a dog-eat-dog business. . . .  Thus we were correct when we observed that "[c]ontract law, whether through express or implied-in-fact contracts, is the most significant remaining state-law protection for literary or artistic ideas."  Benay, 607 F.3d at 629.

The decision was not unanimous, however, as there were two dissenting opinions.

The dissenting opinion authored by Judge O'Scannlain argued that the District Court properly concluded that "an action to enforce a promise not to use or to disclose ideas embodied in copyrighted material without authorization asserts rights equivalent to those protected by the Copyright Act" and were therefore preempted.

The dissenting opinion authored by Judge Gould asserted that the majority decision would "lead to uncertainty by making state law--with its ambiguity, variability, and volatility--available to litigants who bring nebulous state law claims that in substance assert rights in the nature of copyright."

The case cite is Montz v. Pilgrim Films & Television, Inc., No. 08-56954 (9th Cir. May 4, 2011) (en banc).

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Creator of Mike Tyson Tattoo Sues Warner Bros. Over Alleged Use of Tattoo in Movie

The facts of this copyright infringement case are perhaps more interesting than the norm.

The creator of the tattoo on the face of former boxer Mike Tyson, S. Victor Whitmill, has sued Warner Bros. Entertainment in connection with Warner Bros.' alleged use of the tattoo on the Ed Helms' character in the upcoming movie The Hangover 2.  According to the complaint, Whitmill owns all rights to the tattoo and has registered the copyright in the tattoo (the Certificate of Registration attached to the complaint has an effective date of April 19, 2011).

Characterizing the tattoo as "one of the most distinctive tattoos in the nation," Whitmill alleges that The Hangover 2 features a "virtually exact reproduction" of the tattoo he created and that the "Pirated Tattoo" plays an important role in the movie and is featured prominently in marketing and promotional materials.  Whitmill alleges that Warner Bros. therefore infringed his copyright in the tattoo and seeks, in part, a preliminary injunction enjoining Warner Bros. from "copying, distributing, publicly displaying, or otherwise making any use of the Pirated Tattoo, both in the Movie and otherwise."

The case cite is Whitmill v. Warner Bros. Entm't Inc., No. 11-00752-CDP (E.D. Missouri).  A copy of the complaint can be found here.

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Recent Copyright & Trademark Filings in the Western District of Washington

Copyright

Northwest Territorial Mint, LLC v. Hangzhou Cool Eagle Hardware Mfg. Co., No. 11-00694-RSL (W.D. Wash.) filed April 25, 2011

 According to the complaint, Northwest Territorial Mint is a custom mint that designs, manufactures and sells coins and other collectables for the U.S. military, federal, state and local governments, and corporations.  NW Territorial Mint displays its coin designs and photographs of its coin artwork on its website, for which it obtained a copyright registration.

NW Territorial Mint alleges that Cool Eagle also sells coins and collectables through its online store as well as third-party resellers such as eBay.  According to the complaint, Cool Eagle's website and coins copied NW Territorial Mint's artwork.  In 2010, NW Territorial Mint complained to eBay that it was hosting auctions for Cool Eagle coins that copied NW Territorial Mint's designs.  In apparent response to that complaint, in March 2011, NW Territorial Mint received an email from Cool Eagle admitting that it had "infringed upon your intellectual property," apologized for doing so and indicating that it had taken action to correct the infringement.  Notwithstanding Cool Eagle's email, however, NW Territorial Mint alleges that Cool Eagle continues to copy its designs.

NW Territorial Mint alleges claims for copyright infringement, a constructive trust upon illegal profits and an accounting.

Complaint, minus attachments, here.

VendNovation, LLC v. Apex Indus. Technologies LLC, No. 11-00700-JLR (W.D. Wash.) filed April 26, 2011

According to the complaint, VendNovation develops software and hardware for use in vending machines, including server-hosted software that controls and remotely monitors vending machines through the web.  VendNovation alleges that Apex Industrial Technologies markets and sells vending machines.

VendNovation alleges that it and Apex entered into agreements (explained in greater detail in the complaint) under which VendNovation agreed to provide its software and control boards for use in vending machines that would be marketed, sold and installed by Apex.  In January 2011, VendNovation alleges that it learned that Apex had begun ordering vending machines without VendNovation's control boards and that Apex had instead developed its own control board and software to compete with VendNovation's works.  According to VendNovation, Apex's competing products used VendNovation's trade secrets and copyrighted works.

VendNovation alleges claims for copyright infringement, a constructive trust upon illegal profits, an accounting, breach of contract, breach of the implied covenant of good faith and fair dealing, misappropriation of trade secrets, unfair business practices, breach of the duty of loyalty and a declaration of exclusive ownership as to the enhancements or derivative works allegedly created by Apex.

Complaint, minus attachments, here.

Trademark

Goodrich v. Allen, No. 11-00687-RSM (W.D. Wash.) filed April 22, 2011

 According to the complaint, Debbie Goodrich's business "is devoted to providing education and entertainment pertaining to birds, particularly parrots, and other animals, as well as marketing and selling related products and services."  Goodrich alleges that she adopted the name "The Parrot Lady" in connection with presentations in Washington and later California.  In 2001, she obtained a Washington business license under the name The Parrot Lady Educational Entertainment and later obtained the domain name parrotlady.com and a Facebook page advertising her services and products.

Goodrich alleges that Karen Allen, a resident of California, markets and sells products and services related to birds and that she obtained a registration for the mark THE PARROT LADY in 2006 in connection with exotic bird breeding and grooming.  Goodrich further alleges that, among other things, Allen or her representatives contacted Facebook asserting rights in THE PARROT LADY mark, which led to the removal of Goodrich's Facebook page.  Goodrich also claims that Allen or her representatives contacted other of Goodrich's vendors, service providers and potential or actual customers asserting rights in THE PARROT LADY mark.

Goodrich alleges claims for a declaratory judgment of non-infringement, cancellation of Allen's registration, tortious interference with business expectancies and relations and unfair competition and trademark infringement under the Lanham Act.

Complaint, minus attachments, here.

Brian Carter Cellars, LLC v. Casa Bruno, LLC, No. 11-00723 (W.D. Wash.) filed April 28, 2011

 According to the complaint, Brian Carter Cellars owns a registration for the mark ABRACADABRA for red wine, white wine and wine.  Brian Carter Cellars alleges that Casa Bruno is an importer and distributor of wine, including a wine made by the French winery Domain le Chemin des Reves that is marketed under the mark ABRACADABRA.

Brian Carter Cellars alleges that Casa Bruno sells an "Abracadabra 2008 Rouge AOC Pic Saint Loup" red wine in the United States.  Brian Carter Cellars also alleges that in March and April 2011, it asked Casa Bruno to cease importing and selling ABRACADABRA wine from the French winery but that Casa Bruno refused to do so.

Brian Carter Cellars alleges claims for trademark infringement and false designation of origin under the Lanham Act and unfair competition under Washington state law.

Complaint, minus attachments, here.

SDNY on Definition of "Work" for Purposes of Statutory Damages under the Copyright Act

Plaintiffs had succeeded on proving liability for secondary copyright infringement on summary judgment, now the case proceeded to the damages stage.  In this order, the District Court addressed the issue of the definition of "work" for purposes of plaintiffs' claims for statutory damages under the Copyright Act.

At issue were 9,715 of plaintiffs' sound recordings.  Relying on Bryant v. Media Rights Productions, Inc., 603 F.3d 135 (2d Cir. 2010) (previously blogged here) and the language of Section 504(c)(1) of the Copyright Act, defendants argued that plaintiffs may only recover one statutory damage award for any sound recording that was made available as part of an album even if that individual sound recording was also issued as an individual track at some point.

The District Court rejected defendants' argument, concluding that "[n]othing in the Copyright Act [or Bryant] bars a plaintiff from recovering a statutory damage award for a sound recording issued as an individual track, simply because that plaintiff, at some point in time, also included that sound recording as part of an album or other compilation."  Thus, the District Court concluded that:

Plaintiffs may recover a statutory damage award with respect to each sound recording that (1) Plaintiffs made available as an individual track, and (2) that was infringed on the LimeWire system during the time period in which it was issued as an individual track.  However, for those sound recordings that Plaintiffs issued only as part of an album, Plaintiffs can recover only one statutory damage award for that album, not for each individual sound recording.

The case cite is Arista Records LLC, et al. v. Lime Group LLC, Case No. 1:06-cv-05936-KMW-DCF (S.D.N.Y. Apr. 4, 2011).

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Ninth Circuit Affirms Dismissal of Betty Boop Copyright and Trademark Infringement Claims

Max Fleischer, head of Fleischer Studios, Inc. (referred to by the court as "Original Fleischer"), created the well-known cartoon character Betty Boop in 1930.  Some 10 years later, Original Fleischer abandoned Betty Boop and sold the rights to her cartoons and her character and in 1946, Original Fleischer was dissolved.

In the early 1970s, Mr. Fleischer's family attempted to revive his cartoon business, incorporated a new entity (the plaintiff in the case) under the same name as the Original Fleischer and attempted to repurchase the rights to the Betty Boop character.  Based on those purchases, Plaintiff Fleischer believed that it was the exclusive owner of the Betty Boop character copyright and trademark and licensed the character for use on merchandise based on that belief.  (For whatever reason, the Ninth Circuit's factual statement of the case seems rather cursory and somewhat lacking in clarity.  The District Court's summary judgment opinion on the copyright infringement claim, found here, provides a more detailed explanation of the history.)

The defendants in the case also license Betty Boop merchandise based on a copyright on vintage posters featuring the Betty Boop image that defendant A.V.E.L.A. restored.

The parties disputed whether Plaintiff Fleischer owned the exclusive copyright to the Betty Boop character.  On summary judgment, the District Court concluded that plaintiff had failed to satisfy its burden of proof regarding the chain of title to the copyright ultimately leading to the plaintiff and therefore dismissed the plaintiff's copyright infringement claim.  The District Court also dismissed Plaintiff Fleischer's trademark infringement claim concluding that the plaintiff had failed to submit proper evidence of a registered federal trademark for the Betty Boop image, that the fractured ownership and use of the Betty Boop name destroyed plaintiff's trademark rights, and that the plaintiff did not establish common law trademarks of the Betty Boop name or image.

According to the majority opinion, Plaintiff Fleischer asserted several alternative chains of title to the Betty Boop character copyright before the District Court but had abandoned all but one of those chains on appeal.  Specifically, Plaintiff Fleischer asserted the following chain of title on appeal:

Original Fleischer transferred its rights to Paramount Pictures, Inc. (Paramount) in 1941; Paramount transferred those rights to UM&M TV Corp. (UM&M) in 1955; in 1958, UM&M transferred these rights to National Telefilm Associates, Inc. (NTA), which became Republic Pictures in 1986; and finally, Republic Pictures transferred the exclusive copyright to Fleischer in 1997.

In granting summary judgment on Plaintiff Fleischer's copyright infringement claim, the District Court specifically concluded that the plaintiff had failed to meet its burden of proof regarding the transfer of rights from UM&M to NTA and from NTA to Republic Pictures, thereby destroying the chain of title allegedly leading to the plaintiff.

 The Ninth Circuit affirmed the District Court's decision, concluding that Paramount did not transfer the Betty Boop character to UM&M under a 1955 purchase agreement, which transferred rights to certain Betty Boop cartoons.  The court relied on language in the agreement that stated:

Anything to the contrary notwithstanding, no grant or assignment is made hereunder to [UM&M] of the characters and characterizations contained in said Sold Photoplays or said literary material, or of the copyrights in said characters or characterizations, or of any production or other rights in said characters and characterizations, or to use said characters and characterizations or the names of said characters or trade names, trademark and names of the series of Sold Photoplays or of said literary material in any manner except . . . only as part of the particular Sold Photoplay in which they or any of them are contained. . . .

Although it questioned the propriety of looking to subsequent behavior given this contractual language, the Ninth Circuit did note Paramount's subsequent transfer of the Betty Boop character copyright to Harvey Films in support of its conclusion that Paramount did not transfer that copyright earlier to UM&M.

Thus, because the Ninth Circuit concluded that Paramount did not transfer the Betty Boop character copyright to UM&M the chain of title leading to Plaintiff Fleischer was broken and plaintiff's copyright infringement claim was therefore properly dismissed.

The Ninth Circuit also affirmed the District Court's decision dismissing Plaintiff Fleischer's trademark infringement claim (District Court's opinion can be found here) concluding that Defendant A.V.E.L.A. was using Betty Boop as a functional aesthetic component of the products, not as a trademark.  The Ninth Circuit further concluded that allowing Plaintiff Fleischer to assert a trademark infringement claim would run afoul of the Supreme Court's decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), by preventing the Betty Boop character from ever entering the public domain.

Circuit Judge Susan P. Graber filed a dissenting opinion taking issue with the majority's conclusions as to the chain of title issue on Plaintiff Fleischer's copyright infringement claim.

The case cite is Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317 (9th Cir. Feb. 23, 2011).

Second Circuit Holds Time-Barred Copyright Ownership Claim Barred Copyright Infringement Claim

A somewhat long story short, plaintiff brought a copyright infringement claim that involved a dispute as to plaintiff's ownership of the copyright.  Finding that it was time-barred, the District Court granted summary judgment on plaintiff's copyright infringement claim.

The Second Circuit affirmed, holding that where, as in that case, the copyright ownership claim was time-barred and ownership is the dispositive issue, the copyright infringement claim is likewise barred, agreeing with the Sixth and Ninth Circuits.

The case cite is Kwan v. Schlein, No. 09-5205 (2d Cir. Jan. 25, 2011).

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Seventh Circuit Concludes Garden Fails to Satisfy "Authorship" and "Fixation" Requirements for Copyright

Chapman Kelley, a nationally-recognized artist known for his paintings of landscapes and flowers, obtained permission to install a wildflower display in Grant Park in downtown Chicago.  The display, called "Wildflower Works," was promoted as "living art" and included two elliptical flower beds, each of which were nearly as large as a football field, featuring a variety of native wildflowers edged with borders of gravel and steel.

Wildflower Works existed for some 20 years (much more detailed history in the Seventh Circuit's opinion) but in 2004 the Chicago Park District made changes to the display, decreasing it from approximately 66,000 square feet to approximately 30,000 square feet and remaking the elliptical flower beds into rectangles.

Kelley then sued the Park District for, in part, violating his moral rights under the Visual Artists Rights Act of 1990 ("VARA"), specifically, the right "to prevent any intentional distortion, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation, and any intentional distortion, mutilation, or modification of that work is a violation of that right[.]"

Following a bench trial, the District Court found for the Park District on Kelley's VARA claim, concluding that although Wildflower Works could be classified as both a painting and a sculpture and therefore qualified as a work of visual art under VARA, it was insufficiently original for copyright, a foundational requirement for Kelley's claim.  Alternatively, the District Court concluded that Wildflower Works was site-specific art and that VARA did not apply to such art, following the First Circuit's decision in Phillips v. Pembroke Real Estate, Inc., 459 F.3d 128 (1st Cir. 2006).

The Seventh Circuit affirmed the judgment in favor of the Park District on the VARA claim but for different reasons than those stated by the District Court.

The Seventh Circuit first took issue with the District Court's conclusion that Wildflower Works was both a painting and a sculpture and therefore a work of visual art as defined in VARA.  The court emphasized that the definition in VARA was meant to be limiting with respect to the types of works to which VARA applied:

VARA's definition of "work of visual art" operates to narrow and focus the statute's coverage; only a "painting, drawing, print, or sculpture," or an exhibition photograph will qualify.  These terms are not further defined, but the overall structure of the statutory scheme clearly illuminates the limiting effect of this definition.  Copyright's broad general coverage extends to "original works of authorship," and this includes "pictorial, graphic, and sculptural works."  17 U.S.C. 102(a)(5).  The use of the adjectives "pictorial" and "sculptural" suggests flexibility and breadth in application.  In contrast VARA uses the specific nouns "painting" and "sculpture."  To qualify for moral-rights protection under VARA, Wildflower Works cannot just be "pictorial" or "sculptural" in some aspect or effect, it must actually be a "painting" or a "sculpture."  Not metaphorically or by analogy, but really.

Although clearly doubtful of the District Court's conclusion, the Seventh Circuit ultimately did not resolve the question because the Park District had not challenged the conclusion, an omission that the court called "astonishing."

Instead, the Seventh Circuit turned to the question of whether Wildflower Works merited copyright protection in the first instance, ultimately concluding that it did not.  The court disagreed with the District Court's conclusion that Wildflower Works lacked sufficient originality.  Rather, it concluded that the impediment to copyright was "that a living garden lacks the kind of authorship and stable fixation normally required to support copyright."

 A living garden like Wildflower Works is neither authored nor fixed as those terms are understood in copyright law, the Seventh Circuit concluded:

Simply put, gardens are planted and cultivated, not authored.  A garden's constituent elements are alive and inherently changeable, not fixed.  Most of what we see and experience in a garden--the colors, shapes, textures, and scents of the plants--originates in nature, not in the mind of the gardener.  At any given moment in time, a garden owes most of its form and appearance to natural forces, though the gardener who plants and tends it obviously assists.  All this is true of Wildflower Works, even though it was designed and planted by an artist.

Of course, a human "author"--whether an artist, a professional landscape designer, or an amateur backyard gardener--determines the initial arrangement of the plants in a garden.  This is not the kind of authorship required for copyright.  To the extent that seeds or seedlings can be considered a "medium of expression," they originate in nature, and natural forces--not the intellect of the gardener--determine their form, growth, and appearance.  Moreover, a garden is simply too changeable to satisfy the primary purpose of fixation; its appearance is too inherently variable to supply a baseline for determining questions of copyright creation and infringement.

Thus, because Wildflower Works was neither "authored" nor "fixed" for purposes of copyright, it could not qualify for moral-rights protection under VARA.

The Seventh Circuit also took issue with the District Court's adoption of the First Circuit's holding in Phillips that all site-specific art is excluded from VARA, questioning the First Circuit's interpretation of VARA.  Nonetheless, although the court clearly had doubts as to the First Circuit's holding, it ultimately did not decide the question because it resolved Kelley's VARA claim on other grounds.

The case cite is Kelley v. Chicago Park District, Nos. 08-3701 & 08-3712 (7th Cir. Feb. 15, 2011).

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Ninth Circuit Reiterates Presumption of Validity Afforded a Copyright Registration

United Fabrics International, Inc. holds a copyright to a collection of fabric designs that it alleges defendants C&J Wear, Inc., Lucky Kim International, Inc. and Macy's, Inc. infringed.  Although United Fabrics had a copyright registration for the collection, on summary judgment the district court sua sponte dismissed the case, concluding that United Fabrics lacked standing because it failed to establish ownership of a valid copyright.  Specifically, the district court concluded, in part, that United Fabrics' evidence was insufficient to establish the chain of title of the source artwork for the collection to United Fabric.

The Ninth Circuit reversed, concluding that both the district court's ruling and the defendants' argument suffered from the same defect, namely, the conclusion that United Fabrics had failed to offer sufficient evidence to establish ownership of a valid copyright.  That reasoning skipped a step, the Ninth Circuit concluded.  Specifically, United Fabrics' copyright registration was prima facie evidence of the validity of the copyright and the facts stated in the certificate.  It was therefore defendants' burden to rebut the presumption, which they had failed to do at least at this stage in the litigation:

As the copyright claimant, United is presumed to own a valid copyright, . . . and the facts stated therein, including the chain of title in the source artwork, are entitled to the presumption of truth. . . .  By failing to point to any evidence indicating that the copyright was invalid, . . . Macy's has failed to rebut the presumption.

The case cite is United Fabrics Int'l, Inc. v. C&J Wear, Inc., No. 09-56499 (9th Cir. Jan. 26, 2011).

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Ninth Circuit Concludes that Violation of WoW TOU Did Not Give Rise to Copyright Infringement Claim

On June 7, 2010, the Ninth Circuit heard oral argument in Seattle in three cases raising important and interesting issues under the Copyright Act.  The three cases are:  UMG Recordings, Inc. v. Augusto, No. 08-55998 (9th Cir.) from the Central District of California; MDY Industries, LLC v. Blizzard Entertainment, Inc., Nos. 09-15932, 09-16044 (9th Cir.) from the District of Arizona; and Vernor v. Autodesk, Inc., No. 09-35969 (9th Cir.) from the Western District of Washington.

The Ninth Circuit issued its first opinion in the cases on September 10, 2010 in the case of Vernor v. Autodesk, discussed previously here.  On December 14, 2010, the Ninth Circuit issued its second decision, this time in the case of MDY Industries, LLC v. Blizzard Entertainment, Inc.

The most complicated—both factually and legally—of the three appeals pits the creator of the wildly successful MMORPG World of Warcraft (Blizzard) against the creator of a piece of add-on software used in connection with WoW called Glider (MDY and its founder, Michael Donnelly).

Described at its most basic level, WoW allows players to assume the roles of various races (e.g., humans, elves, trolls, orcs, etc.) and level those characters from, currently, level 1 to 85 by, among other things, completing quests.  Reaching the maximum level (a time-consuming task) is desirous because it gives players access to more challenging content through which players can obtain better gear and other desirable items.  WoW also incorporates a "complex closed economy" in which players can buy and sell virtual items for virtual gold.  At the time of the District Court's opinions, WoW had some 10 million active players and generated more than $1.5 billion in revenue annually.

To play WoW, users must install the game client software during which they must choose to accept the End User License Agreement (“EULA”). Users must also create an account with Blizzard in order to play the game and pay a subscription fee.  As part of the account creation process, users are asked to accept or decline the Terms of Use Agreement (“TOU”). Once these steps are taken, users can begin playing by launching the WoW client and logging into the game server. Additionally, each time Blizzard updates the game with new content or fixes (known as "patches"), users must again accept both the EULA and the TOU before being able to play the game.

WoW has spawned a large market for "add-on" software to be used, in some form, in conjunction with WoW.  For example, numerous add-ons have been developed to allow customization of the WoW user interface, to provide information relating to the WoW economy, and to gather information and provide warnings during combat in the game.

Michael Donnelly, a software developer, created a software program called Glider, which played WoW for its owner, intended to speed up the leveling process.  Glider is known as a "bot," short for robot.  Donnelly offered Glider for sale through his company, MDY Industries, apparently with significant success.

In October 2006, three representatives of Blizzard appeared at Donnelly's home, demanding, according to Donnelly, that he stop selling Glider and turn over that day all the profits MDY had earned that day.  In response, Donnelly filed a declaratory judgment action against Blizzard, which responded with counterclaims against MDY and a third party complaint against Donnelly for tortious interference with contract, contributory copyright infringement, vicarious copyright infringement, violation of the Digital Millenium Copyright Act ("DMCA"), trademark infringement, unfair competition and unjust enrichment.

The District Court's Decisions.

As relevant to the appeal, the District Court issued two opinions in the case, one on July 14, 2008 on the parties' motions for summary judgment, and another on January 28, 2009 following a two-day bench trial.

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Recent Copyright and Trademark Cases Filed in the Western District of Washington

Arthemia Int'l SA v. Mohaghegh, No. C10-05812 KLS, filed Nov. 8, 2010

Arthemia International SA, a Swiss corporation, is the exclusive licensee of the Iranian language sitcom "Ghahve Talkh" or "Ghahveye Talkh," which is "about a history professor who travels through time to learn about Persian feudal history."  According to Arthemia, the show is one of the most successful sitcoms in the Iranian language.  Arthemia alleges that Defendant Bardia Mohaghegh, an individual allegedly living in Washington, and possible others, infringed its rights in the series by reproducing, distributing and displaying the series on the website iranproud.com.  Arthemia alleges claims for direct and contributory copyright infringement, violation of Section 1125(a)(2) of the Lanham Act, and conversion.

A copy of the complaint, without exhibits, can be found here (PDF, 11 pages).

Creature, L.L.C. v. Social Creature Media LLC, No. C10-01907 BAT, filed Nov. 22, 2010

 Creature, L.L.C. alleges that it is the owner of the federally registered service mark CREATURE for various advertising and marketing services, including design and web site design services.  Creature alleges that Defendant Social Creature Media LLC infringed Creature's rights in its CREATURE mark by using the mark SOCIAL CREATURE MEDIA in connection with similar services.  Creature alleges claims for trademark infringement under the Lanham Act and unfair competition under federal and/or state law.

A copy of the complaint can be found here (PDF, 8 pages).

Ninth Circuit Concludes Seller of Promotional CDs Entitled to First Sale Defense

On June 7, 2010, the Ninth Circuit heard oral argument in Seattle in three cases raising important and interesting issues under the Copyright Act.  The three cases are:  UMG Recordings, Inc. v. Augusto, No. 08-55998 (9th Cir.) from the Central District of California; MDY Industries, LLC v. Blizzard Entertainment, Inc., Nos. 09-15932, 09-16044 (9th Cir.) from the District of Arizona; and Vernor v. Autodesk, Inc., No. 09-35969 (9th Cir.) from the Western District of Washington.

The Ninth Circuit issued its first opinion in these cases on September 10, 2010, in the case of Vernor v. Autodesk (see previous post here) and its second opinion on December 14, 2010, in the case of MDY Industries, LLC v. Blizzard Entertainment, Inc. (see previous post here).  On January 4, 2011, the Ninth Circuit issued its opinion in the final case of the trio, UMG Recordings, Inc. v. Augusto.

Troy Augusto obtained a number of UMG promotional CDs generally sent to music industry insiders for the purpose of promoting and marketing new music from music shops and online auctions.  Augusto then sold these promotional CDs on eBay, advertising them as rare collectibles not available in stores.  Augusto’s actions prompted UMG to send Augusto a cease-and-desist letter claiming that the sale of these CDs infringed UMG’s copyrights and to notify eBay of the same claim.  In response, eBay temporarily stopped Augusto’s auctions and suspended his account, although it was later reinstated.

When Augusto continued to sell UMG promotional CDs however, UMG filed suit against him for copyright infringement, alleging that it retained the exclusive right to distribute and sell the promotional CDs.  Augusto counterclaimed for violation of the Digital Millennium Copyright Act (DMCA) alleging that UMG knowingly misrepresented to eBay that Augusto’s auctions infringed UMG’s copyrights.  Both parties then moved for summary judgment on UMG’s copyright infringement claim and Augusto’s DMCA counterclaim.

As to UMG’s copyright infringement claim, there was no dispute that UMG had established a prima facie case of copyright infringement.  Rather, the issue was whether Augusto’s actions were protected by the so-called “first sale” doctrine.  The District Court found in favor of Augusto on both issues, granting summary judgment to Augusto on UMG’s copyright infringement claim.

Under the first sale doctrine, codified in Section 109 of the Copyright Act, “the owner of a particular copy or phonorecord lawfully made” under the Act, “is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” 17 U.S.C. 109(a).  The District Court concluded that to establish a first sale defense to UMG’s copyright infringement claim, Augusto had to prove that (1) the promotional CDs were lawfully manufactured with UMG’s authorization (which was not in dispute); (2) UMG transferred title to the CDs; (3) Augusto was the lawful owner of the CDs; and (4) Augusto disposed of but did not reproduce the CDs (which was not in dispute).  The disputed issues therefore centered around the second and third elements.

Augusto argued that title to the promotional CDs was transferred to the music industry insiders—which would then make his subsequent sale of those CDs lawful under the first sale doctrine—under three theories: (1) UMG’s distribution of the promotional CDs to music industry insiders was a gift or sale not a license (as UMG argued) and title to the CDs was therefore transferred to the insiders; (2) the promotional CDs were unordered merchandise under Section 3009 of the Postal Reorganization Act and therefore title was transferred to the insiders; and (3) UMG abandoned the CDs under California law.  The District Court agreed with Augusto on the first two theories but rejected the claim that UMG abandoned the promotional CDs.

As to the first theory, UMG claimed that language on the promotional CDs created only a license between UMG and the music industry insiders under which UMG retained title to the CDs.  The long version (the parties apparently agreed that the long and abbreviated versions of the language stated essentially the same thing) of the language on the CDs that UMG argued created this license stated:

“This CD is the property of the record company and is licensed to the intended recipient for personal use only.  Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws.”

In resolving the question of whether a transaction involves a sale or a license, the District Court stated that it must look beyond the “license” label to the “economic realities” of the transaction.

The court concluded that several of these “economic realities” demonstrated that a gift or a sale, rather than a mere license, had taken place.  The fact that the music industry insiders were able to indefinitely possess the promotional CDs was a “strong incident of ownership through a gift or sale.”  Nothing required the recipients to return the CDs, UMG did not request return of the CDs and made no affirmative effort to recover them.  The absence of a recurring benefit to UMG, the copyright owner, also suggested that there was a gift or sale rather than a license.  And the court concluded that “the only benefit to a license for UMG is to restrain transfer of its music.”  The court then went on to make a statement—with no reference to the factual source—that arguably bears on the questions presented in two other cases before the Ninth Circuit:

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.

In light of these “economic realities,” the District Court concluded that a gift or sale of the promotional CDs had occurred, that title to the CDs had thus been transferred and Augusto was therefore protected by the first sale doctrine.

The District Court also concluded that title to the promotional CDs was transferred under Section 3009 of the Postal Reorganization Act, which prohibits the mailing of “unordered merchandise” without “the prior expressed request or consent of the recipient.”  Such merchandise may be treated as a gift by the recipient who has “the right to retain, use, discard, or dispose of it in any manner he sees fit without obligation whatsoever to the sender.” 39 U.S.C. 3009(b).  The District Court concluded that UMG’s distribution of the promotional CDs to music industry insiders fell within the strictures of the act, notwithstanding UMG’s arguments that the insiders were not “consumers” within the meaning of the act, that the act applies only to merchandise for which monetary payment is requested and that the act does not nullify agreements between the mailer and the recipient.

The full text of the District Court’s June 2008 opinion, granting summary judgment in favor of Augusto on UMG’s copyright infringement claim, can be found here.

UMG appealed the District Court’s summary judgment decision to the Ninth Circuit.  UMG’s briefing focused on its claim that the first sale defense of Section 109 of the Copyright Act applied only to “owners” of “copyrighted works” (as UMG often referred to the materials at issue, which seems a bit imprecise).  Therefore, because, as UMG argued, the music industry insiders received the promotional CDs subject to a license and were mere licensees, there was no “first sale” and Augusto could not obtain the protection of the first sale doctrine.

A copy of UMG’s opening brief, along with more information about the case, can be found on the Electronic Frontier Foundation’s website here.  UMG’s reply brief can be found here.  Augusto’s appellate brief can be found here.  The appeal also spawned two amicus curiae briefs: one from the Recording Industry Association of America in support of reversal (found here) and one from the Consumers Union in support of affirmance (found here).  You can listen to the oral argument before the Ninth Circuit on the appeal here.

The Ninth Circuit affirmed the District Court's grant of summary judgment to Augusto, concluding that he was entitled to the protections of the first sale defense.

Initially, the Ninth Circuit recognized that it was an open question whether plaintiff or defendant bore the burden of proving the applicability of the first sale defense but declined to answer the question because its decision would be the same regardless of who had the burden.

The Ninth Circuit readily concluded that UMG's distribution of the promotional CDs effected a sale rather than a license and therefore the first sale doctrine applied to UMG's copyright infringement claims against Augusto.  The Court's conclusion was based "largely on the nature of UMG's distribution."  The CDs were sent to the recipients without any prior arrangements, no attempt was made to keep track of them, and UMG had not established that the language on the CD labels created a license agreement.

In particular, the Ninth Circuit appeared offended by the idea of attempting to create a license agreement where there was no method to secure agreement from the recipient of the CDs:

It is one thing to say, as the statement [on the CD] does, that "acceptance" of the CD constitutes an agreement to a license and its restrictions, but it is quite another to maintain that "acceptance" may be assumed when the recipient makes no response at all.

The Ninth Circuit also found that the Unordered Merchandise Statute of the Postal Reorganization Act supported its conclusion that no license was created by UMG's distribution of the promotional CDs.  The Court pointed out, however, that it was not suggesting that the act applied to Augusto:

The significance of the Unordered Merchandise Statute is not that it applies to Augusto, but that it confers on the recipients the "right to retain, use, discard, or dispose of [the CDs] in any manner that [they] see[] fit, without obligation to the sender," UMG.  39 U.S.C. Section 3009(b).  This provision is utterly inconsistent with the terms of the license that UMG sought to impose on the recipients.  Because the statute grants to the recipients the right to treat the CDs as their own, shipping the unordered CDs to the recipients rendered the recipients owners, not licensees, of the CDs for purpose of the first sale defense.

A copy of the Ninth Circuit's opinion can be found here.

 

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Second Circuit Concludes That a Download of a Musical Work is Not a Public Performance

Yahoo! and RealNetworks sought blanket licenses to publicly perform the entire repertoire of copyrighted musical works licensed by the American Society of Composers, Authors and Publishers ("ASCAP").  In resolving that issue, the District Court concluded, in part, that the download of a digital file containing a musical work does not constitute a public performance of that work under the Copyright Act.  The District Court also assessed blanket license fees for the public performance of the ASCAP repertory by Yahoo! and RealNetworks.

Both of these issues were appealed to the Second Circuit, which affirmed the District Court's conclusion that the download of a musical work, which is not performed in any perceptible way during the download, is not a public performance under the Copyright Act.  But the Second Circuit reversed the District Court's assessment of fees for the blanket licenses and remanded for further proceedings on that issue.

The case cite is United States v. ASCAP, Nos. 09-0539-cv, 09-0542-cv, 09-0666-cv, 09-0692-cv, 09-1572-cv (2d Cir. Sept. 28, 2010).

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Ninth Circuit Addresses "Owner vs. Licensee" Determination in Applying First Sale Doctrine

On June 7, 2010, the Ninth Circuit heard oral argument in Seattle in three cases that, to one degree or another, raise important questions regarding the meaning of the term “owner” under the Copyright Act with respect to a copy of a copyrighted work and how to determine whether ownership of such a copy has been transferred or whether a mere license to use the copy was granted with no transfer of ownership of the particular copy.  The three cases are:  UMG Recordings, Inc. v. Augusto, No. 08-55998 (9th Cir.) from the Central District of California; MDY Industries, LLC v. Blizzard Entertainment, Inc., Nos. 09-15932, 09-16044 (9th Cir.) from the District of Arizona; and Vernor v. Autodesk, Inc., No. 09-35969 (9th Cir.) from the Western District of Washington.

The Ninth Circuit issued its first opinion in these cases today in the case of Vernor v. Autodesk.

Timothy Vernor makes a living from selling merchandise on eBay.  Autodesk makes computer-aided design or CAD software including AutoCAD, a software program for 2-D and 3-D design and drafting.

In 2005, Vernor purchased an authentic, used AutoCAD package (containing one or more CDs with the AutoCAD software, a copy of license agreement and perhaps other documentation) at a garage sale which he then put up for auction on eBay.  In response, Autodesk sent a DMCA notice to eBay claiming that Vernor’s sale would infringe its copyright. eBay suspended the auction and Vernor responded with a DMCA counter-notice claiming that the sale was lawful.  Autodesk did not respond, eBay reinstated the auction and Vernor sold the AutoCAD package.

In 2007, Vernor bought four authentic, used AutoCAD packages from an office sale at a Seattle architecture firm, Cardwell/Thomas Associates (“CTA”).  Vernor sold some of these packages on eBay but each time he posted an auction Autodesk sent a DMCA notice to eBay, Vernor’s auction was suspended by eBay, a counter-notice from Vernor was sent and the auction was reinstated.  When Vernor then attempted to sell others of these packages, however, following Autodesk’s DMCA notice, eBay suspended Vernor’s eBay account for one month for repeat infringement.

Vernor then filed suit against Autodesk seeking a declaratory judgment that his sales of the AutoCAD packages, including any future sales, would not violate the Copyright Act.  In May 2008, the District Court for the Western District of Washington denied Autodesk’s motion to dismiss Vernor’s complaint or to grant summary judgment.  The District Court concluded that the transfer of the AutoCAD packages from Autodesk to CTA was a sale that had “contractual restrictions on use and transfer of the software.”  As a result, it concluded that Vernor, who received the packages from CTA, could invoke the first sale doctrine.  A copy of the District Court’s May 2008 opinion can be found here.

Following discovery, the parties filed cross-motions for summary judgment.  The District Court noted that the parties’ motions presented the same issues addressed in the court’s May 2008 order, namely, (1) whether Vernor has a first sale right to resell the AutoCAD packages, and (2) whether Vernor’s sales are contributory copyright infringement.  The court had answered those questions in Vernor’s favor in May 2008 and did so again on the parties’ summary judgment motions.

The issue as framed by the District Court was the nature of the transaction between Autodesk and CTA.  Autodesk argued that it did not transfer ownership of the AutoCAD packages but rather licensed the packages to CTA while retaining ownership of the copies of the copyrighted software in CTA’s possession.  After describing in some detail the Autodesk software license agreement ("SLA"), the court further clarified the question presented:

There is no dispute that Autodesk licensed its software to CTA.  The court makes this observation because the parties and their witnesses too often suggest that their dispute is about whether Autodesk “sold” rather than “licensed” its software.  That dispute is not determinative, because the use of software copies can be licensed while the copies themselves are sold.  Autodesk unquestionably licensed the software in that it limits the right to use it. . . . There is also no question that most software is transferred to consumers via licenses that restrict and expand their right to use it, although no party has presented competent evidence of the terms of any other software maker’s license.  The question before the court is whether the Autodesk License is a license that transfers ownership of the software copies included in AutoCAD packages.  To capture that distinction, the court will use the terms “mere license” and “mere licensee” in reference to licenses that do not transfer ownership of any copies.  The question before the court is whether Mr. Vernor is the “owner” of the copies of the copyrighted material in the AutoCAD packages he acquired from CTA, or whether CTA was a mere licensee who had no ownership to transfer to Mr. Vernor.

Having concisely and precisely framed the question, the District Court examined relevant Ninth Circuit precedent and again concluded that it gave two different answers to the question of what distinguishes an “owner” from a “mere licensee.”  The court concluded that the earliest case, United States v. Wise, 550 F.2d 1180 (9th Cir. 1977), “establishes that even a transfer that places severe restrictions on the use and disposition of a copy of copyrighted material can transfer ownership of that copy.”  A trio of later cases—MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993); Triad Sys. Corp. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995); Wall Data Inc. v. Los Angeles County Sheriff’s Dep’t, 447 F.3d 769 (9th Cir. 2006)—“were more deferential to the characterization of a transaction as a mere license” and deemed the transfer of possession pursuant to a license to be a mere license with no transfer of ownership.

After examining this Ninth Circuit precedent, the District Court concluded that it was faced with an unavoidable conflict among these opinions.  Given that conclusion, the court cited the rule that it must follow the oldest precedent among conflicting opinions from three-judge Ninth Circuit panels, namely, Wise.  Applying that precedent, the District Court concluded that the transfer of the AutoCAD copies by Autodesk to CTA via the license agreement was a transfer of ownership which therefore entitled Vernor to assert the first sale doctrine.  Specifically, the court found that the license purported to reserve title in the copy to the copyright holder but made no provision for the copyright holder to regain possession of that copy; Autodesk licensees pay a single price to Autodesk at the outset; and the license severely restricted the use and transfer of the copy.

Having reached this conclusion, the District Court closed its discussion by touching upon the policy concerns raised by the parties.  Although it acknowledged that the parties’ “contentions make for interesting debate,” the court emphasized that its decision was not based on any policy judgment.  Rather, “[p]recedent binds the court regardless of whether it would be good policy to ignore it. The court has followed Wise solely for the reasons stated in this order, not because of any policy judgment.”

Autodesk appealed the District Court’s decision to the Ninth Circuit. Autodesk’s briefing on appeal argued that the District Court had misread Wise which in turn had relied upon an even earlier case, Hampton v. Paramount Pictures Corp., 279 F.2d 100 (9th Cir. 1960), in which the Ninth Circuit purportedly held that if a contract characterizes the transaction as a license, that characterization controls.  In short, Autodesk argued that Ninth Circuit precedent established that “where the parties’ agreement makes clear that the copyright holder is only licensing its property while retaining ownership, and imposes restrictions on the licensee’s use and right to transfer, the transaction is a license, not a sale.”  Thus, in that instance, the first sale defense would not be available.

A copy of Autodesk’s opening brief can be found here and its reply brief here.  Vernor’s appellate brief can be found here.  This appeal spawned four amicus curiae briefs: from the Motion Picture Association of America, Inc. in support of reversal (found here); from the Software & Information Industry Association in support of reversal (found here); a collective brief from several library associations, the Consumer Federation of America, the Electronic Frontier Foundation, Public Knowledge and the U.S. Public Interest Research Group in support of affirmance (found here); and from eBay Inc. in support of affirmance (found here).

You can listen to the oral argument before the Ninth Circuit on the appeal here.

In its opinion issued today, the Ninth Circuit reversed the District Court, concluding that Vernor was not entitled to invoke the first sale defense.

The Ninth Circuit framed the issue similarly to the District Court--if CTA was the "owner" of the AutoCAD packages received from Autodesk then Vernor's subsequent sales of those packages were non-infringing under the first sale doctrine.  Conversely, if Autodesk only licensed the packages to CTA, Vernor's sales are not protected under the first sale doctrine, which only applies to "owners" of copies of copyrighted works.

As an initial matter, the Ninth Circuit acknowledged that it had not yet resolved the disputed issue of which party bears the burden of proving the first sale and avoided deciding the question, noting that the facts in the case were undisputed.

Not surprisingly, the Ninth Circuit's opinion focused on an examination of the four cases addressed by the District Court, namely, Wise and the so-called "MAI trio."

From the Wise opinion, the Ninth Circuit gleaned the following guidance on the "owner vs. licensee" question:

Thus, under Wise, where a transferee receives a particular copy of a copyrighted work pursuant to a written agreement, we consider all of the provisions of the agreement to determine whether the transferee became an owner of the copy or received a license.  We may consider (1) whether the agreement was labeled a license and (2) whether the copyright owner retained title to the copy, required its return or destruction, forbade its duplication, or required the transferee to maintain possession of the copy for the agreement's duration. . . .  We did not find any one factor dispositive in Wise:  we did not hold that the copyright owner's retention of title itself established the absence of a first sale or that a transferee's right to indefinite possession itself established a first sale.

As to the MAI trio, the Ninth Circuit first concluded that those cases' construction of the phrase "owner of a copy" of copyrighted software for the "essential step defense" in the Copyright Act (17 U.S.C. Section 117(a)(1)) controlled the analysis of the meaning of "owner of a particular copy" of copyrighted software under the first sale doctrine.

After examining the facts and holdings of the MAI trio, the Ninth Circuit then reconciled those cases with Wise, concluding that together they

prescribe[d] three considerations that we may use to determine whether a software user is a licensee, rather than an owner of a copy.  First, we consider whether the copyright owner specifies that a user is granted a license.  Second, we consider whether the copyright owner significantly restricts the user's ability to transfer the software.  Finally, we consider whether the copyright owner imposes notable use restrictions.

To the extent there remained any doubt, the Ninth Circuit made it clear that these factors constituted the test for making the "owner vs. licensee" determination:

We hold today that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions.

Perhaps notably missing from this holding is any qualifier that other factors may be relevant to the analysis.

In any event, applying these elements, the Ninth Circuit readily concluded that they established that Vernor was not an "owner" of the AutoCAD packages and was therefore not entitled to invoke the first sale defense:

Autodesk retained title to the software and imposed significant transfer restrictions:  it stated that the license is nontransferable, the software could not be transferred or leased without Autodesk's written consent, and the software could not be transferred outside the Western Hemisphere.  The SLA also imposed use restrictions against the use of the software outside the Western Hemisphere and against modifying, translating, or reverse-engineering the software, removing any proprietary marks from the software or documentation, or defeating any copy protection device.  Furthermore, the SLA provided for termination of the license upon the licensee's unauthorized copying or failure to comply with other license restrictions.  Thus, because Autodesk reserved title to [the AutoCAD copies] and imposed significant transfer and use restrictions, we conclude that its customers are licensees of their copies of [AutoCAD packages] rather than owners.

Like the District Court, the Ninth Circuit recognized "the significant policy considerations" raised by the parties and amici but concluded that it was bound by its precedent.

The case cite is Vernor v. Autodesk, Inc., No. 09-35969 (9th Cir. Sept. 10, 2010).

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Right of Publicity Claim Preempted by the Copyright Act

Ashley Gasper is an adult movie actor performing under the name Jules Jordan and is the president and sole shareholder of Jules Jordan Video, which creates the videos in which Gasper appears.  Gasper and his company sued defendants for, among other things, copyright infringement and violation of his right of publicity in connection with 13 copyrighted adult DVDs Gasper alleged defendants had copied and sold.

These two claims went to trial and the jury returned a verdict in favor of Gasper and his company on both.  The trial court then granted defendants' motion for judgment as a matter of law in part, concluding that neither Gasper nor his company had standing to pursue the copyright claims.  But the court rejected defendants' argument that Gasper's right of publicity claim was preempted by copyright law.

The Ninth Circuit disagreed with the District Court on both questions.

As to the preemption issue, the Ninth Circuit concluded that the crux of Gasper's right of publicity claim is that the defendants reproduced and distributed the DVDs without authorization.  His claim thus fell within the subject matter of copyright and he asserted rights equivalent to those within the scope of the Copyright Act.  Gasper's right of publicity claim was therefore preempted by the Copyright Act.

As to the standing issue, the District Court had concluded that the adult movies were "works for hire" under the Copyright Act, that Gasper's company was the author of the works, and that Gasper therefore lacked standing to sue for copyright infringement.  The District Court also implicitly held that Gasper's company lacked standing because the copyright registration was invalid (presumably because Gasper rather than the company was listed as the author).

According to the Ninth Circuit, the issue hinged on whether the creative work was within the scope of Gasper's employment with his company.  The District Court apparently rejected Gasper's testimony on the issue as "concocted at trial."  But the Ninth Circuit found a fatal flaw in the District Court's analysis:

The problem with the district court's analysis is that JJV was a one-man shop.  Gasper was the sole officer, director, and shareholder of JJV, exercised complete control over it, and made all decisions concerning JJV and production of the films.  It was all Gasper all the time.  JJV as employer and Gasper as employee could certainly agree as to the scope of the employee's employment, and could agree that Gasper should retain all copyrights.  Since JJV was Gasper, JJV intended whatever Gasper intended, and if Gasper intended that his creative work be outside the scope of his employment with JJV, there was no one to disagree.

The Ninth Circuit also rejected the proposition that the mistake in listing Gasper as the author on the registration forms invalidated the copyright.

The Ninth Circuit thus held that the District Court erred in concluding that the movies were works for hire and reversed the District Court's decision invalidating the jury verdict of infringement.

The case cite is Jules Jordan Video, Inc. v. 144942 Canada Inc., No. 08-55075 (9th Cir. Aug. 16, 2010).

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Eleventh Circuit Finds Two White Plastic Bear Pacifier Holders Not Substantially Similar

Toys "R" Us came out the winner in a copyright infringement case brought by Baby Buddies over its pacifier holder (which attaches a pacifier to a baby's clothing via a tether).  Both Toys "R" Us' and Baby Buddies' pacifier holders consisted of a white plastic bear attached to a ribbon that forms an "X" shape behind the bear.  Baby Buddies' ribbon was aquamarine and Toys "R" Us' was light mint-green.

Toys "R" Us had sold the Baby Buddies pacifier holder but later decided to produce its own and hired a consultant to design several different holders.  The consultant later sent a copy of the Baby Buddies pacifier holder to a subcontractor with a note stating:

I need a new animal design.  The buyer likes this bear but I do not want to produce the same exact thing.  Can you please work on a similar design?

The subcontractor responded with pacifier holders featuring a bear as well as an angel, a duck, a bunny and balloons.

The District Court granted summary judgment to Toys "R" Us on two of Baby Buddies' three counts.  After separating the protectable elements from the unprotectable elements (the latter including the tether, the color of the tether, the clip attaching the holder to the baby's clothing and the bow) leaving only the plastic molded bear, the District Court concluded that there was no genuine issue of fact as to infringement.

The Eleventh Circuit affirmed the grant of summary judgment based on a similar analysis.  The court first concluded that the bear and bow were eligible for copyright protection although it ultimately held that the bow fell short of the admittedly low threshold of originality required for copyright protection.  As for the bears, after examining the features of the bears in minute detail, the court concluded that no reasonable jury could find that they were substantially similar.  (Pictures of the two pacifier holders are attached as exhibits to the court's opinion.)

The case cite is Baby Buddies, Inc. v. Toys "R" Us, Inc., No. 08-17021 (11th Cir. July 22, 2010).

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"Who owns Bratz?"

Despite years of litigation, that still appears to be an open question.

In an as always entertaining opinion written by Chief Judge Kozinski, the Ninth Circuit handed a big win to MGA Entertainment in its long-running battle with Mattel over the Bratz line of dolls.

The dispute has its origins in the idea of Carter Bryant for the line of Bratz dolls, which he pitched to MGA while still employed by Mattel, designing fashion and hair styles in the "Barbie Collectibles" department.  MGA liked the idea and Bryant signed a consulting agreement with MGA.  Bryant gave Mattel notice but before his employment ended, he provided preliminary sketches and prepared a preliminary sculpt for the Bratz to MGA.  MGA subsequently released the Bratz dolls, which apparently were a huge success.

When Mattel learned of Bryant's involvement with the Bratz, the lawsuits began.  Those consolidated proceedings were ultimately divided into two phases with phase 1 addressing ownership claims relating to the Bratz.  The present appeal dealt with equitable orders entered by the District Court at the conclusion of phase 1.  (Phase 2 was pending and would deal with the remaining claims.)

In phase 1, the jury found that Bryant thought of the "Bratz" and "Jade" names and created the preliminary sketches and sculpt while employed by Mattel.  Along with a finding that MGA committed three state-law violations relating to Bryant's involvement with the Bratz, the jury found MGA liable for copyright infringement and awarded Mattel $10 million in damages (compared to the more than $1 billion Mattel apparently had sought).

Based on these jury findings, the District Court entered equitable orders.  With respect to the state-law violations, the court imposed a constructive trust over all the trademarks, effectively transferring MGA's Bratz trademark portfolio to Mattel.  And with respect to the copyright claim, the court enjoined MGA from producing or marketing essentially all Bratz female dolls and any future dolls substantially similar to the copyrighted Bratz works.  "In effect, Barbie captured the Bratz."

The Ninth Circuit vacated the constructive trust imposed over all Bratz-related trademarks finding that it was overbroad.  The Ninth Circuit questioned whether Bryant assigned his "ideas" for the Bratz to Mattel under his employment agreement.  The agreement assigned "inventions" to Mattel which were defined to include a number of items but not specifically "ideas."  Although the agreement could be interpreted to include ideas, the Ninth Circuit concluded that the District Court erred in finding that it clearly covered ideas.  But the Ninth Circuit left the issue to be addressed by the trial court on remand because it vacated the constructive trust on other grounds.

The Ninth Circuit ultimately vacated the constructive trust on the ground that it was overbroad because it transferred the entire Bratz trademark portfolio to Mattel despite the fact that the value of the brand had been significantly increased by MGA's own efforts:

It is not equitable to transfer this billion dollar brand--the value of which is overwhelmingly the result of MGA's legitimate efforts--because it may have started with two misappropriated names.  The district court's imposition of a constructive trust forcing MGA to hand over its sweat equity was an abuse of discretion and must be vacated.

The Ninth Circuit also vacated the District Court's injunction on the copyright claim, which enjoined MGA from producing the Bratz dolls or any other substantially similar dolls.  The Ninth Circuit concluded that the District Court had erred in holding that Bryant's employment agreement with Mattel clearly assigned works made outside the scope of Bryant's employment.  Rather, because the agreement was ambiguous (stating that he assigned inventions created "at any time during my employment by the Company"), the issue should have been submitted to the jury.  That error was sufficient to require vacating the copyright injunction.

In light of its decision vacating the equitable orders and remanding for essentially a do-over, the Ninth Circuit also addressed MGA's appeal of the District Court's copyright rulings.  Specifically, the Ninth Circuit discussed the trial court's decision with respect to the scope of copyright protection afforded the Bratz sketches and sculpt created by Bryant (assuming for purposes of the discussion that Mattel owned those works).  In particular, the court focused on the distinction between an idea and a particular expression of an idea; the latter is protected by copyright while the former is not.

As to the doll sculpt, the Ninth Circuit concluded that the District Court had erred in affording broad protection to it and instead held that it was entitled to only "thin" protection against virtually identical copying.

As to the sketches, although the Ninth Circuit agreed with the District Court's conclusion that they were entitled to broad copyright protection against substantially similar works, it held that the trial court erred in failing to filter out all of the unprotectable elements of the sketches.  Specifically, the Ninth Circuit held that "Mattel can't claim a monopoly over fashion dolls with a bratty look or attitude, or dolls sporting trendy clothing--these are all unprotectable ideas."

Chief Judge Kozinski concluded the opinion with another Barbie reference:  "America thrives on competition; Barbie, the all-American girl, will too."

The case cite is Mattel, Inc. v. MGA Entm't, Inc., No. 09-55673 (9th Cir. July 22, 2010).

Ninth Circuit Finds State Law Claims Preempted by the Copyright Act

The plaintiffs--Larry Montz (a parapsychologist) and Daena Smoller (a publicist)--alleged that in 1981, Montz conceived of a new reality TV show involving a team of paranormal investigators who would investigate and occasionally debunk claims of paranormal activity.  Between 1996 and 2003, plaintiffs alleged that they presented screenplays, videos, and other materials relating to the proposed show to representatives of NBC Universal, Inc. and the Sci-Fi Channel "for the express purpose of offering to partner . . . in the production, broadcast and distribution of the Concept."  Although the reps allegedly were not interested in Montz's concept, NBC subsequently partnered with others to produce a series called Ghost Hunters on the Sci-Fi Channel that plaintiffs alleged was based on their material.

Plaintiffs then sued alleging claims for, among others, copyright infringement and two relevant state law claims:

(1) that "by producing and broadcasting" Ghost Hunters, the defendants breached an "implied agreement not to disclose, divulge or exploit the Plaintiffs' ideas and concepts without the express consent of the Plaintiffs, and to share with the Plaintiffs . . . the profits and credit for their idea and concepts"; and (2) that the defendants breached the plaintiffs' confidence "[b]y taking the Plaintiffs' novel ideas and concepts, exploiting those ideas and concepts, and profiting therefrom to the Plaintiffs' exclusion."

Defendants moved to dismiss the complaint for failing to state a claim for relief.  The District Court for the Central District of California held that the plaintiffs' complaint alleged sufficient facts to state a federal copyright claim but that plaintiffs' state law claims for breach of an implied in fact contract and breach of confidence were preempted by federal copyright law.  The District Court therefore dismissed those state law claims with prejudice and without leave to amend.  Subsequently, the parties stipulated to voluntary dismissal of plaintiffs' copyright claim and thereafter final judgment was entered in favor of defendants.

Plaintiffs then appealed the dismissal of their state law breach of implied contract and breach of confidence claims (as well as the District Court's denial of leave to amend those claims) on the ground that they were preempted by the Copyright Act.

Because there was no dispute that the first condition for preemption was met (that the claim comes within the subject matter of copyright), the Ninth Circuit's inquiry was limited to the second condition:  that the rights asserted under the state law claim are "equivalent" to the exclusive rights of copyright owners under Section 106 of the Copyright Act.  The Ninth Circuit concluded that the breach of implied contract claim satisfied this second condition and was therefore preempted:

The gravamen of the claim is that the defendants used the plaintiffs' work, without authorization, to create (and then profit from) a new television program.  The rights asserted by the plaintiffs under the implied contract are thus equivalent to the rights of copyright owners under Section 106--namely, the exclusive rights to use and to authorize use of their work.

In so concluding, the Ninth Circuit distinguished a prior case that upheld a similar claim by differentiating between the nature of the implied contracts involved in the two cases.  In the case in which the claim survived preemption, the implied agreement allegedly involved an implied promise to pay for use of the idea whereas here the alleged implied promise was not to disclose, divulge or exploit the ideas and concepts without the plaintiffs' express consent.  Therefore, according to the Ninth Circuit:

Whereas the breach of the alleged agreement in Grosso violated the plaintiff's right to payment on a sale, the breach of the alleged agreement in this case violated the plaintiffs' exclusive rights to use and to authorize use of their work--rights equivalent to those of copyright owners under Section 106.

For similar reasons, the plaintiffs' state law breach of confidence claim suffered the same preemption fate as it was "not qualitatively different from a copyright claim."

Interestingly, just days after this opinion, the Ninth Circuit issued an opinion in Benay v. Warner Bros. Entm't, Inc. in which it affirmed summary judgment on a copyright infringement claim against the plaintiffs but reversed summary judgment to defendants on the plaintiffs' state law implied in fact contract claim.  A discussion of the Benay case can be found here.

The case cite is Montz v. Pilgrim Films & Television, Inc., No. 08-56954 (9th Cir. June 3, 2010).

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D.C. Circuit Rejects RIAA's Challenge to Copyright Royalty Board's Rates for Compulsory Licenses

The Recording Industry Association of America (RIAA) brought suit challenging the decision of the Copyright Royalty Board, which sets the terms and rates for copyright royalties when copyright owners and licensees do not do so themselves. 

More specifically, the RIAA challenged the Board's decision with regard to royalty terms and rates for so-called Section 115 compulsory licenses under the Copyright Act.  Compulsory licenses allow "individuals to make their own recordings of copyrighted musical works for distribution to the public without the consent of the copyright owner."

As to those licenses, the Board institute a 1.5% per month late fee for late royalty payments and implemented a royalty rate structure for cell phone ringtones under which the copyright owners would receive 24 cents for every ringtone sold that used their copyrighted work.  The RIAA challenged both aspects of the Board's decision, claiming the decision was arbitrary and capricious.

As background, in 1996, the parties with an interest in compulsory licenses agreed to terms and rates for those licenses but also agreed that those terms and rates would expire in 10 years.  Therefore, in 2006, the Board instituted proceedings to set certain terms and rates to govern those licenses, the final determination of which were not published until 2009.  The RIAA's challenge to the Board's decision then followed.

The D.C. Circuit first noted that the Copyright Act requires the Board to balance four policy objectives when establishing reasonable terms and rates for Section 115 licenses:

(1) maximizing the availability of creative works to the public; (2) providing copyright owners a fair return for their creative works and copyright users a fair income; (3) recognizing the relative roles of the copyright owners and users; and (4) minimizing any disruptive impact on the industries involved.

With respect to the RIAA's challenge to the Board's imposition of a late fee, the D.C. Circuit readily disposed of each of the RIAA's arguments.

First, the court concluded that the Board appropriately considered market conditions when setting the late fee but was not required to adopt a fee that exactly matched the market rate.  Second, the court found that the existence of a right to terminate compulsory licenses for nonpayment did not negate the Board's authority to impose a late fee as the Copyright Act allowed for both.  Third, the court rejected the RIAA's argument that it was unreasonable to impose a late fee because it purportedly is uncertainty about what amount is owed to individual copyright owners of a jointly held copyright that causes late payments.  But, as the court noted, the regulations governing compulsory licenses provided a solution to that situation by allowing the licensee to satisfy its obligation by paying any one copyright owner.

The D.C. Circuit also rejected the RIAA's challenge to the structure of the cell phone ringtone royalty rate established by the Board on similar grounds.  The court concluded that the Board appropriately considered--but was not bound by--existing market rates for voluntary licenses.  And the court found that the Board considered the RIAA's claim that "plummeting" ringtone prices rendered the penny rate chosen by the Board inherently unreasonable and the RIAA had presented no basis to overturn the Board's decision on the issue.

The D.C. Circuit thus affirmed the Board's decision.

The case cite is Recording Indus. Ass'n of Am., Inc. v. Librarian of Congress, No. 09-1075 (D.C. Cir. June 22, 2010).

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Tenth Circuit Upholds Constitutionality of Law Restoring Copyrights of Certain Public Domain Foreign Works

Plaintiffs are various persons and entities who made their livelihoods by performing, distributing and selling public domain artistic works.  Plaintiffs brought this action challenging the constitutionality of the Copyright Term Extension Act and Section 514 of the Uruguay Round Agreements Act (URAA), the latter of which granted copyright protection to certain foreign works that had been in the public domain in the United States.  Somewhat more specifically, Section 514 restored "copyrights in foreign works that were formerly in the public domain in the United States for one of three specified reasons:  failure to comply with formalities, lack of subject matter protection, or lack of national eligibility."  As a result, the plaintiffs were either prohibited from using such previously public domain works or were required to pay cost-prohibitive licensing fees to the copyright holders.  (The Tenth Circuit's opinion gives a significantly more detailed description of Section 514.)

The District Court for the District of Colorado initially granted summary judgment to the government and on appeal, the Tenth Circuit concluded that the plaintiffs' challenge to the Copyright Term Extension Act was foreclosed by the Supreme Court's decision in Eldred v. Ashcroft, 537 U.S. 186 (2003).  In addition, although the Tenth Circuit concluded that Section 514 of the URAA had not exceeded the limitations of the Copyright Clause of the U.S. Constitution, it held that the plaintiffs had "shown sufficient free expression interests in works removed from the public domain to require First Amendment scrutiny" of Section 514.  The matter was thus remanded to the District Court to determine and apply the appropriate level of constitutional scrutiny to Section 514.

Upon remand, the parties agreed that Section 514 is a content-neutral regulation of speech thereby subject to intermediate scrutiny.  On cross-motions for summary judgment, the District Court granted the plaintiffs' motion, concluding that Section 514 was unconstitutional to the extent it "suppresses the right of reliance parties to use works they exploited while the works were in the public domain."  Both parties appealed: the government argued that Section 514 did not violate the First Amendment and the plaintiffs argued that the District Court had failed to provide all of the relief they had requested.

On appeal, analyzing Section 514 as a content-neutral regulation of speech, the Tenth Circuit reversed the District Court's decision, concluding that "the government has demonstrated a substantial interest in protecting American copyright holders' interests abroad, and Section 514 is narrowly tailored to advance that interest."

As to the importance of the government interest asserted, the Tenth Circuit had "no difficulty in concluding that the government's interest in securing protections abroad for American copyright holders" satisfied the applicable standard.  Section 514 secured foreign copyrights for American works, which previously had been unprotected, and thereby preserved the authors' economic and expressive interests.  The court noted that some estimated that billions of dollars were lost each year because foreign countries were not providing copyright protections to American works in the public domain abroad.

The Tenth Circuit also concluded that Section 514 was narrowly tailored to further the substantial government interest asserted.  The court cited evidence that foreign countries could be expected to provide only as much protection to American copyright holders as the United States would provide to foreign copyright holders and that some countries might follow the United States' example in that regard.  Thus, in order to secure the benefits to American authors for their works abroad, the United States needed to impose the same burden on parties like the plaintiffs in the United States that it sought to impose on such foreign parties abroad.  In short, "the benefit that the government sought to provide to American authors is congruent with the burden that Section 514 imposes on [so-called] reliance parties."

The Tenth Circuit thus reversed the District Court's grant of summary judgment in favor of the plaintiffs, concluding that "because Section 514 advances a substantial government interest, and it does not burden substantially more speech than necessary to advance that interest, it is consistent with the First Amendment."

The case cite is Golan v. Holder, Nos. 09-1234 & 09-1261 (10th Cir. June 21, 2010).

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Breach of Contract Claim for Alleged Use of Screenplay Without Permission Survives Despite Dismissal of Copyright Infringement Claim

Two brothers--Aaron and Matthew Benay--wrote and copyrighted a screenplay entitled The Last Samurai.  The Benays contended that the creators of the film by the same name copied their screenplay without permission.  The Benays sued, alleging copyright infringement and breach of contract under California law.  The District Court for the Central District of California granted summary judgment in favor of the defendants on both claims and the Benays appealed.

The Ninth Circuit affirmed the grant of summary judgment on the copyright infringement claim, concluding that the Benays had failed to establish sufficient similarity between the screenplay and the film once stripped of the elements not protected under copyright law.

Nonetheless, the Ninth Circuit reversed summary judgment to the defendants on the breach of an implied in fact contract under California law.  The court noted that "[c]ontract law, whether through express or implied-in-fact contracts, is the most significant remaining state-law protection for literary or artistic ideas" as other such protections had been preempted by federal copyright law.  But contract claims for protection of ideas have not been preempted because they allege an "extra element" that changes the nature of the action, namely, "the agreement between the parties that the defendant will pay for the use of the plaintiff's ideas, independent of any protection offered by federal copyright law."

The Ninth Circuit's decision reversing summary judgment on the breach of contract claim proved the truth of its statement regarding the continued importance of state contract law to the protection of ideas.  In implied-in-fact contract claims, the court applies a "substantial similarity" standard between the plaintiff's idea and defendant's production.  But notwithstanding the use of the copyright term "substantial similarity," the standard is broader in implied-in-fact contract claims in that it is not limited to comparison of elements protected under copyright law:  "Rather, because the claim is based on contract, unauthorized use can be shown by substantially similar elements that are not protected under copyright law."  Therefore, the Ninth Circuit's conclusion that the screenplay and film were not substantially similar for purposes of copyright infringement did not preclude a finding that they were substantially similar for purposes of an implied-in-fact contract claim under California law.

Ultimately, after comparing the screenplay and film, the Ninth Circuit concluded that they shared a number of similarities that were substantial for purposes of an implied-in-fact contract claim and therefore reversed the grant of summary judgment in favor of the defendants on that claim.

The case cite is Benay v. Warner Bros. Entm't, Inc., No. 08-55719 (9th Cir. June 9, 2010).

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9th Circuit Answers Question What It Means to "Register" a Copyrighted Work

The Ninth Circuit today answered a question that has split both circuit and district courts, namely, what it means to "register" a copyrighted work for purposes of Section 411(a) of the Copyright Act, which makes registration of a copyright a prerequisite to bringing an infringement suit.

The district court apparently followed what the Ninth Circuit referred to as the "registration approach," which concludes that a copyright is registered at the time the Copyright Office acts on the application and issues a registration certificate.

After examining the unhelpful language of the statute and guided by the broader context of the statute and its purpose, the Ninth Circuit rejected that approach in favor of the "application approach," which holds that a copyright is registered at the time the application is received by the Copyright Office.  Thus, the Ninth Circuit held "that receipt by the Copyright Office of a complete application satisfies the registration requirement" of Section 411(a).

In addition, following the Supreme Court's decision in Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010), the Ninth Circuit held that the district court erred in concluding that Section 411(a)'s registration requirement was a jurisdictional prerequisite to suit that deprived the court of subject matter jurisdiction.

The case cite is Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, No. 08-56079 (9th Cir. May 25, 2010).

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2d Circuit Addresses Question of Album's Status as a "Compilation" for Statutory Damages Award

Although the case does not warrant extensive discussion, the Second Circuit's opinion in Bryant v. Media Right Productions, Inc. is worth a passing reference if only for its discussion of an interesting, if perhaps not difficult, question of copyright law as it relates to statutory damages and albums.

Plaintiffs produced two copyrighted albums of music, each of which was comprised of 10 songs.  Plaintiffs were successful in proving that defendants committed direct copyright infringement of the albums but their share of the revenue from these sales was small however, apparently totaling only $331.06.

Presumably for that reason, Plaintiffs sought an award of statutory damages under the Copyright Act, which specifies a dollar range of damages to be awarded per work infringed and states that all parts of a compilation consists of one work.  Ultimately, the trial court awarded only $2400 in statutory damages, counting each album as one work.

Plaintiffs appealed arguing, in part, that each song on the two albums constituted a separate work because each song was separately copyrighted and the songs were sold individually.  The Second Circuit disagreed however, concluding that an album falls within the Copyright Act's "expansive" definition of compilation and therefore infringement of an album results in only one statutory damage award. 

The case cite is Bryant v. Media Right Productions, Inc., No. 09-2600-cv (2d Cir. Apr. 27, 2010).

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Recent Copyright Filings in the Western District of Washington

Oldcastle Precast, Inc. v. Granite Precasting & Concrete, Inc., No. CV10-00322 MJP, filed Feb. 24, 2010

Oldcastle Precast, Inc. designs and manufactures precast concrete products and does business under the trade name Utility Vault.  Oldcastle alleges, in part, that Granite Precasting & Concrete, Inc. infringed Oldcastle's copyrights in drawings contained in Oldcastle's "Utility Vault Catalog" and has used those drawings, designs and/or part numbers to successfully bid on numerous projects.  Oldcastle alleges claims for willful copyright infringement, breach of implied covenants, unfair competition under the Lanham Act, unjust enrichment, unfair and deceptive trade practices under RCW 19.86.010 et seq., and tortious interference.

A copy of the complaint, including exhibits, here (PDF, 54 pgs).

 

Blue Nile, Inc. v. Ideal Diamond Solutions, Inc., et al., No. CV10-00380 TSZ, filed March 8, 2010

Blue Nile, Inc., an online diamond and fine jewelry retailer, alleges that the defendants "willfully and egregiously" infringed Blue Nile's copyrights and trademark rights in its website content and BLUE NILE mark.  Blue Nile alleges claims for copyright infringement, trademark infringement, violation of the Anti-Cybersquatting Protection Act, common law unfair competition under Washington law, and civil conspiracy.

A copy of the complaint here (PDF, 20 pgs).

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Postage Stamp Depicting Portion of Korean War Veterans Memorial Not Fair Use of Sculpture

Through a fairly involved process (described in detail in the Federal Circuit's opinion), the plaintiff, Frank Gaylord, a nationally-recognized sculptor, was selected to create a sculpture  for the Korean War Veterans Memorial in Washington, D.C.  Ultimately, he created 19 stainless steel statues for the Memorial that represented a platoon of foot soldiers in formation that was referred to as The Column.  Gaylord received five copyright registrations relating to the soldier sculptures.

In 1995, photographer John Alli took a number of photographs of the Memorial as a retirement gift for his father, a veteran of the Korean War.  Some years later, Alli's photograph of the Memorial was selected to be used on a 37-cent stamp commemorating the 50th anniversary of the armistice of the Korean War to be issued by the Postal Service.  The Postal Service paid Alli $1500 for the use of his photograph.  It did not seek nor obtain Gaylord's permission to use The Column in the stamp.  The Postal Service received more than $17 million from the sale of almost 48 million stamps before the stamp was retired on March 31, 2005.

Gaylord then sued the government in 2006, alleging copyright infringement of his copyright in The Column.

At trial, the government made several arguments:  (1) that the stamp made fair use of Gaylord's work; (2) that it was a joint author of the work, which gave it an unlimited license in the work; and (3) that the stamp fell under the exclusion from copyright infringement liability for architectural works under the Architectural Works Copyright Protection Act.

The Court of Federal Claims disagreed with the government on two of its three arguments, finding that Gaylord was the sole copyright owner and that the work was not an "architectural work" under the AWCPA.  The Court agreed, however, that the government was not liable for copyright infringement because it had made fair use of the work.

The Federal Circuit affirmed the trial court's conclusions that the government did not have rights as a joint owner of the work and that the work was not subject to the AWCPA.  It parted ways with the trial court on the issue of fair use,  however, concluding that the factors did not favor fair use and that "allowing the government to commercially exploit a creative and expressive work will not advance the purposes of copyright in this case."

The Federal Circuit found that the purpose and character of the stamp, including the fact that the stamp clearly had a commercial purpose, the expressive and creative nature of Gaylord's work and the fact that Gaylord's work was the focus ("essentially the entire subject matter") of the stamp did not favor a finding of fair use.  The only factor working in favor of fair use was the trial court's conclusion, upheld on appeal, that the stamp had not and would not adversely impact Gaylord's efforts to market derivative works of The Column.

Circuit Judge Newman dissented from the majority opinion, arguing that:

[t]he use for governmental purposes of a photograph of the Korean War Veterans Memorial, a public monument that was designed and built with public money, is unambiguously covered by the contract and statutes under which this Memorial was built.  The court errs in its holding that Mr. Gaylord is entitled to damages for copyright infringement.

The majority and dissenting opinions in Gaylord v. United States, No. 2009-5044 (Fed. Cir. Feb. 25, 2010) can be found here (PDF, 36 pgs).

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Unfinished works of art and the Visual Artists Rights Act

The First Circuit took on a fairly specialized issue of copyright law in a lengthy opinion involving, among other claims, allegations that the Massachusetts Museum of Contemporary Art violated the rights of Swiss visual artist Christoph Büchel under the Visual Artists Rights Act ("VARA"), which protects certain so-called "moral rights" of some visual artists.

The 60-page opinion gives a long and detailed explanation of the history of the installation as well as the deterioration of the relationship between the Museum and Büchel.  In brief, the Museum and Büchel agreed to an installation art project entitled "Training Ground for Democracy" that Büchel described as "essentially a village, . . . contain[ing] several major architectural and structural elements integrated into a whole, through which a visitor could walk (and climb)."  Although the parties did not formalize their relationship with regard to the installation by executing a written instrument, they apparently did agree that Büchel would have sole title to any copyright in the completed work.

Unfortunately, as a result of numerous conflicts and a breakdown in the relationship between the Museum and Büchel, the project was never completed.  Thus, the Museum sought a declaration in federal court that it was entitled to present the materials and "partial constructions" of the installation to the public.  Büchel in turn counterclaimed under VARA and the Copyright Act seeking an injunction preventing the Museum from displaying the unfinished installation as well as damages for alleged violations of his rights.

On cross-motions for summary judgment, the District Court found for the Museum because, although it assumed that VARA applies to unfinished works of art, it concluded that there were no genuine issues of material fact.  The First Circuit agreed with the District Court in some respects but ultimately concluded that there were genuine issues of fact as to some of Büchel's claims under VARA and Section 106 of the Copyright Act.

The lengthy opinion is worth the read for those interested but here's a quick summary of some of the First Circuit's conclusions on the legal issues:

  •  VARA applies to unfinished but "fixed" works of art that, if completed, would qualify for protection under the statute
  • VARA does not provide a damages remedy for violation of the right of attribution, one of the "moral rights" protected under the statute
  • VARA does not cover the separate moral right of disclosure (also known as the right of divulgation), which protects the artist's authority to prevent third party disclosure of the work to the public without the artist's consent
  • The failure of claims under VARA does not, necessarily, signify the inadequacy of "more traditional copyright claims"

The cite is Massachusetts Museum of Contemporary Art Foundation, Inc. v. Büchel, No. 08-2199 (1st Cir. Jan. 27, 2010).

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Product Photography and Derivative Works

In Schrock v. Learning Curve Int'l, Inc., the Seventh Circuit took up the issue of the extent of originality necessary for a copyright in a derivative work as well as the question of what permissions are necessary for the author of the derivative work to have a copyright in the work.

HIT Entertainment owns the copyright to the "Thomas & Friends" train characters and licensed Learning Curve to make toy figures of its characters.  Learning Curve then hired professional photographer Daniel Schrock to take photos of the toys for promotional materials.  After Learning Curve stopped using Schrock's photography services, it continued to use his photos in advertising and product packaging.  Schrock then registered his photos for copyright protection and sued Learning Curve and HIT Entertainment for copyright infringement.

The district court granted the defendants' motion for summary judgment concluding that Schrock did not have a copyright in the photos.  The district court, classifying the photos as derivative works (derivative of the "Thomas & Friends" characters), held that for such works, Schrock needed permission from Learning Curve both to make the photos and to copyright them.  Because Schrock had only the former permission, the district court dismissed his claim for copyright infringement.

The Seventh Circuit reversed, concluding that the district court had made a number of errors of law in granting summary judgment to the defendants.

As an initial matter, the Seventh Circuit noted the "deep disagreement" regarding whether photos of a copyrighted work are derivative works but chose not to weigh in on the disagreement, concluding that it need not resolve the issue and assumed for purposes of the decision that Schrock's photos were derivative works.

Turning to the issues it was prepared to decide, the Seventh Circuit first addressed the question of what standard of originality Schrock's photos must meet to qualify for copyright protection.  Specifically, the defendants argued that the photos must meet a higher standard of originality, relying on language from an earlier Seventh Circuit decision, Gracen v. Bradford Exchange, 698 F.2d 300 (7th Cir. 1983).  In Gracen, the court stated that the plaintiff could not maintain a suit for infringement of a derivative work because that work was not "substantially different from the underlying work to be copyrightable."

The Seventh Circuit concluded that this language was not intended to establish a higher standard of originality for derivative works.  Reading Gracen in light of other Seventh Circuit authority, the court identified two general principles:  "(1) the originality requirement for derivative works is not more demanding than the originality requirement for other works; and (2) the key inquiry is whether there is sufficient nontrivial expressive variation in the derivative work to make it distinguishable from the underlying work in some meaningful way."

With respect to Schrock's photos, although they were "highly accurate product photos," there was "minimally sufficient variation in angle, perspective, lighting, and dimension to be distinguishable from the underlying works" to entitle the photos to the limited derivative-work copyright protection.

The Seventh Circuit next addressed the district court's conclusion that Schrock needed the permission of the owner of the copyright in the underlying work both to create the derivative work and to copyright the derivative work.

Noting that copyright in a derivative work--and any other work--arises by operation of law upon the fixation of the original expression in a tangible medium, the Seventh Circuit rejected the district court's reasoning.  Thus, as long as Schrock created the derivative works with permission--which he did--he owned the copyright in those works (assuming the other requirements for copyright were satisfied).  However, because the default rule--that copyright in a derivative work arises by operation of law--can be altered by agreement of the parties, the Seventh Circuit remanded the case to determine whether the parties had done so in this case.

The cite is Schrock v. Learning Curve Int'l, Inc., No. 08-1296 (7th Cir. Nov. 5, 2009).

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Recent Copyright Claims Filed in the Western District of Washington

For a change of pace, here are brief summaries of some of the recent copyright infringement complaints filed in the Western District of Washington:

Corbis Corp. v. Infinity Commercial Capital, LLC, No. CV09-00657 JPD, filed May 12, 2009

Corbis alleges that Infinity Commercial Capital ("ICC"), a business providing hotel and commercial mortgage lending services, downloaded, without authorization, at least 16 images from Corbis' website and uploaded and displayed those images on ICC's website.  Corbis alleges claims for direct and vicarious copyright infringement, as well as breach of contract.  In connection with the latter claim, Corbis alleges that, pursuant to the Corbis Content License Agreement, by using the Corbis images without authorization, ICC agreed to pay Corbis 10 times the licensing rate in addition to other fees, damages and penalties claimed by Corbis.

Complaint here (PDF, 22 pgs).

Global Research & Rescue v. Six Flags, Inc., No. CV09-00749 MJP, filed May 29, 2009

Global Research and Rescue ("GRR"), a non-profit "engaged in the activity of benefiting whales and other marine mammals by promoting public awareness of the existence of these animals," alleges that it is the owner of the copyrights in three films depicting killer whales in their natural habitat.  In 2004, GRR provide complete copies of these films to Six Flags Discovery Kingdom for purposes of demonstrating GRR's capabilities.  GRR alleges that Six Flags then used the films through at least the 2006 and 2007 tourist seasons at the Six Flags Discovery Kingdom Park in Vallejo, California without GRR's permission or authorization.  GRR alleges claims for copyright infringement and unjust enrichment.

Complaint here (PDF, 5 pgs).

Blue Nile, Inc. v. Gem Stone King, Inc., No. C09-0828 RSL, filed June 16, 2009

Blue Nile, the market leader in the online diamond and fine jewelry retail industry, alleges that Gem Stone King willfully and without authorization copied Blue Nile's distinctive diamond photographs and displayed those photographs on Gem Stone King's website.  Blue Nile alleges a single claim of copyright infringement against Gem Stone King.

Complaint here (PDF, 7 pgs).

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Third Circuit Adopts Discovery Rule for Claim Accrual under the Copyright Act

Although it is not hot off the presses, the Third Circuit's decision in William A. Graham Co. v. Haughey is worth a brief mention.

Most notably, the Third Circuit was faced with a question of first impression, namely, whether the discovery rule or the injury rule governed the accrual of claims under the Copyright Act.  Under the discovery rule, a claim accrues when the plaintiff discovers, or with due diligence should have discovered, the injury forming the basis of the claim.  Conversely, under the injury rule, a claim accrues at the time of the injury.

Ultimately, the Third Circuit joined the ranks of eight of its sister courts of appeals--the First, Eighth, Sixth, Ninth, Seventh, Fourth, Fifth and Second Circuits--and concluded that the discovery rule governed the accrual of civil claims under the Copyright Act.

The Third Circuit's opinion can be found here.

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First Circuit: Originality Does Not Equal Novelty for Purposes of Copyright Protection

This copyright infringement case involved two competitors that provide consulting services "aimed at improving employee communication and negotiation skills within the workplace."

The plaintiff, Situation Management Systems, Inc. ("SMS") had developed training materials focused on teaching these skills and specifically three training workbooks ("Positive Power & Influence", "Positive Negotiation Program", and "Promoting and Implementing Innovation").  After SMS was acquired in bankruptcy proceedings in 2001, a number of employees left the company, several of whom started defendant ASP. Consulting LLC ("ASP").  ASP then developed training workbooks including three that SMS claimed infringed its copyrights in its workbooks.

The district court found that ASP had in fact copied SMS's works but entered a judgment of noninfringement because it concluded that ASP's works were not substantially similar to the very limited protectable aspects of SMS's works.

The First Circuit disagreed with the district court, however, primarily with the district court's conclusions with regard to the "originality" necessary for copyright protection.  Ultimately, the First Circuit concluded that the "district court's originality analysis was obviously tainted by its own subjective assessment of the works' creative worth" which the First Circuit noted "displayed nothing but pejorative disdain for the value of SMS's works."  The quotations from the district court cited by the First Circuit appeared to support the characterization of the district court's opinion of SMS's works.

In concluding that SMS's works were "dominated by unprotectable material," the district court opined that

[t]hese works exemplify the sorts of training programs that serve as fodder for sardonic workplace humor that has given rise to the popular television show The Office and the movie Office Space.  They are aggressively vapid--hundreds of pages filled with generalizations, platitudes, and observations of the obvious.

Similar comments and characterizations are sprinkled throughout the district court's opinion along with seemingly tangential asides including a brief description of the Civil War's Battle of the Crater and a recitation of Shakespeare's Sonnet 18.  Also, in the footnote describing the Battle of the Crater, the district court stated that

[i]t is appropriate to note that law clerk Alex Ewing, Esq., the creative analyst behind this opinion, is the great-great-grandson of George Washington Condrey, a sergeant in Lane's North Carolina Brigade, who believed until his dying day that he had accidentally shot Stonewall Jackson.

And in another footnote in the district court's 34-page opinion, apparently in connection with its substantive discussion of originality, the court noted that "[a]propos of naming concepts, it is interesting to note that The Origin of the Species does not actually include the word evolution" and then quotes the passage of the book from which that word evolved.

Returning to the legal issues, the First Circuit readily concluded that SMS had satisfied the originality requirement for all of the three works at issue and remanded the case back to the district court to consider the question of substantial similarity in light of the standards articulated by the First Circuit.

The First Circuit's opinion in Situation Management Systems, Inc. v. ASP. Consulting, LLC, can be found here (PDF, 20 pages) and the District Court's (somewhat unusual) opinion can be found here (PDF, 34 pages).

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AP Files Answer and Counterclaims in Fair Use Case Over Artist's Use of Obama Photo

It is still in its infancy but the lawsuit between Shepard Fairey and The Associated Press over Fairey's use of a photograph taken by an AP photographer to create his well-known "Obama Hope" poster (and other related works) has already generated some interesting reading.  Specifically, the AP filed its answer to Fairey's complaint for declaratory and injunctive relief and asserted several counterclaims against Fairey and related entities for copyright infringement, a declaratory judgment and violation of the DMCA.

The core issue is whether Fairey's use of the AP photo constituted fair use.  Fairey contends that his use of the photo "as a visual reference" was fair use and emphasizes the transformative nature of his creation:

"Fairey transformed the literal depiction contained in the [AP] Photograph into a stunning, abstracted and idealized visual image that creates powerful new meaning and conveys a radically different message that has no analogue in the original photograph."

Fairey also alleges that he "did not create any of the Obama Works for the sake of commercial gain", that the AP photo was a "factual" work, that he used only a reasonable portion of the photo, and that his use did not impose any "significant or cognizable harm" to the value of the AP photo.

The AP's answer disputes Fairey's characterization of his use of the AP photo, claiming that Fairey's work copies "all the distinctive and unequivocally recognizable elements of the Obama Photo in their entire detail, retaining the heart and essence of The AP's photo[.]"

But the AP's counterclaims go on to say much more about both the AP and Fairey, apparently in order to paint a picture of the "equities of this lawsuit" as the AP sees them.  For example, AP's counterclaim alleges that Fairey has shown "willful disregard for the property rights of others" but has acted "hypocritically and aggressively when it comes to the protection of Fairey's works and enforcement against those who make use of them."  The AP also describes the parties' pre-filing discussions and alleges Fairey's counsel "reneged" on a "standstill agreement" by filing the lawsuit.

A copy of Fairey's complaint can be found here (PDF, 15 pages) and the AP's answer and counterclaims can be found here (PDF, 61 pages--with pictures--but worth the read).

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Jackson Browne's Lawsuit Against RNC and Sen. McCain Not "Running on Empty"

A few months before the (seemingly never ending) 2008 presidential election, singer/songwriter Jackson Browne sued then-Republican Presidential candidate Senator John McCain, the Republican National Committee and the Ohio Republican Party in connection with the use of portions of Browne's composition, Running on Empty, in a campaign commercial for Senator McCain.

Problem is (at least as Browne saw it) that none of these defendants obtained a license or Browne's permission to use the composition in the commercial.  Instead, according to the Court, the Ohio Republican Party purchased the composition from iTunes to use in the commercial.  The use of the composition did not sit well with Browne as he contended that the commercial falsely suggested that he sponsored, endorsed or was associated with Senator McCain and the Republican Party when, as his complaint put it, "nothing could be further from the truth."  To the contrary, although the Ohio Republican Party principals apparently were ignorant of the fact that Browne was politically active, Browne's public support for the Democratic Party and then-Presidential candidate Barack Obama was well known.

Browne thus sued the defendants in the Central District of California asserting copyright infringement, vicarious copyright infringement, false association or endorsement under the Lanham Act, and violation of California's common law right of publicity.  The RNC and Senator McCain responded with a motion to dismiss the first three claims for failure to state a claim as well as a motion to strike the right of publicity claim under California's Anti-SLAPP statute.  The defendants struck out on both motions.

Essentially, although couched in a variety of ways, the RNC's and Senator McCain's arguments boiled down to an assertion that Browne's claims failed as a matter of law because political speech/expression was involved.

Thus, they argued that the fair use doctrine barred, as a matter of law, Browne's copyright infringement claims; the Court disagreed, concluding that it could not make a fair use determination at this stage of the proceeding and specifically noting that the "mere fact" that the copyright claim was based on use of a copyrighted work in a political campaign did not bar Browne's claim as a matter of law.

And the RNC and Senator McCain argued that Browne's false association/endorsement claim under the Lanham Act failed because (1) the Act applies only to commercial speech and does not apply to political speech, (2) the commercial was an expressive work and therefore the claim was barred under the First Amendment and the Rogers artistic relevance test, and (3) there was no likelihood of confusion because the Ohio Republican Party was clearly identified as the source of the commercial.  The Court readily rejected the defendants' first premise, concluded that defendants had not established that the First Amendment and the artistic relevance test barred Browne's claim particularly at this stage of the proceeding, and found that the identification of the source of the commercial did not preclude the possibility of confusion as to whether Browne endorsed Senator McCain, the RNC or the Ohio Republican Party.

Similarly, with respect to the RNC's and Senator McCain's Anti-SLAPP motion to strike, although the Court found that the defendants had established the first element--that Browne's right of publicity claim arose from protected activity because it involves an issue of public interest, specifically, the 2008 presidential election and the candidates' energy policies--Browne met his resulting burden of showing a probability of prevailing on his claim, which the Court interpreted to mean a "mere possibility" of success.

The Court's order denying the RNC's motion to dismiss can be found here (PDF, 7 pages).  The Court's order denying the RNC's special motion to strike can be found here (PDF, 9 pages).

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President-elect Obama Adopts a Creative Commons License for Content on Change.gov

An interesting tidbit via the EFF, according to the copyright policy, the content on President-elect Barack Obama's website, change.gov, is licensed under a Creative Commons license.

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False Endorsement and "the Voice of God"

John Facenda won national acclaim for his work on various NFL Films becoming known to some football fans as "the Voice of God" because of the special qualities of his voice.  For decades, Mr. Facenda did worked on these films under an oral agreement, receiving a per-program fee.  But not long before he died of cancer in 1984, Mr. Facenda signed a standard release contract that stated that NFL Films enjoys "the unequivocal rights to use the audio and visual film sequences recorded of me, or any part of them . . . in perpetuity and by whatever media or manner NFL Films . . . sees fit, provided, however, such use does not constitute an endorsement of any product or service."

In 2005, NFL Films produced "The Making of Madden NFL 06," a 22-minute long production that was shown on the NFL Network eight times in a three-day span leading up to the release of the video game.  The program included three sentences read by Mr. Facenda that were taken from earlier NFL Films' productions (although they were apparently digitally altered to make them sound more like the synthesized speech from a computer) that totaled 13 seconds of the program.

Mr. Facenda's estate sued the NFL for false endorsement under Section 43(a) of the Lanham Act and for unauthorized use of name or likeness under Pennsylvania state law.  Specifically, as to the former claim, the Estate alleged that the use of the sound recordings of Mr. Facenda's voice falsely implied that the Estate had agreed to endorse the video game.  The case was split into liability and damages phases and, upon cross-motions for summary judgment on liability, the District Court granted summary judgment to the Estate on both claims.

 In a 60-page opinion, the Third Circuit reversed the grant of summary judgment on the Lanham Act false endorsement claim and remanded for trial but affirmed the grant of summary judgment to the Estate on the state law right of publicity claim.

As to the Lanham Act claim, the Third Circuit first rejected the NFL's First Amendment defense, concluding that the production was commercial speech and therefore declining to reach the issue of whether the Court would adopt the Rogers balancing test that weighs the public interest in avoiding consumer confusion against the public interest in free expression (in other words, it addresses the collision of the Lanham Act with the First Amendment).

Turning to the substance of the Lanham Act claim, the only prong at issue was the "likely to cause confusion" prong as the NFL did not contest that Mr. Facenda's voice could be protected as an unregistered mark and that the Estate owned the "mark." 

The Third Circuit, however, was exploring new territory as it had yet to announce the legal standard applying to false endorsement claims under Section 43(a).  The District Court had used the traditional 10-factor test from Section 43(a)(1)(A) cases as modified for false endorsement cases used by the Ninth Circuit.  With some modifications, the Third Circuit agreed with the District Court's use of these modified factors in false endorsement cases.  The Third Circuit also rejected the NFL's contention that claims under Section 43(a)(1)(A) required proof of actual confusion distinguishing between claims brought under that section versus those brought under Section 43(a)(1)(B) for false advertising.  Ultimately, the Third Circuit concluded that there were issues of fact (such as whether the NFL intended to profit unjustly from the use of Mr. Facenda's voice in the program) that precluded summary judgment.

As to the state law right of publicity claim, the Third Circuit readily agreed with the District Court's grant of summary judgment to the Estate.  The Court then turned to what appears to have been the NFL's primary argument, namely, that copyright law preempts the Estate's right of publicity claim.

The Third Circuit found no express preemption under Section 301(a) of the Copyright Act, in part because Pennsylvania's right of publicity statute required an additional element beyond what is required for a copyright infringement claim, specifically, that Mr. Facenda's voice have "commercial value."

The Court then went on to discuss--at some length--whether the right of publicity claim was impliedly preempted by copyright law because it clashed with the NFL's right to exploit its copyright.  As with the NFL's First Amendment argument, the commercial nature of the program was its downfall.  Relying on the premise that rights of publicity claims involving use of the work "for the purposes of trade" such as in an advertisement should not be preempted (as compared to claims involving expressive works), the Third Circuit concluded that the nature of the NFL program (which it characterized as a promotional piece) suggested that implied preemption was inappropriate.

The Third Circuit next turned to the release Mr. Facenda signed concluding that it did not support a finding of preemption.  The question in cases involving a contract and advertising was whether the plaintiff collaborated in the creation of a copyrighted advertising product.  If the plaintiff did, allowing the plaintiff to assert a right of publicity claim for use of its likeness in advertising would conflict with the copyright holder's rights.  But such was not the case here, the Third Circuit concluded.  To the contrary, Mr. Facenda participated in creating films documenting NFL games (presumably expressive works), not an advertisement for a football video game and the release he signed specifically preserved his right of publicity with respect to endorsements.  Thus, no implied preemption and summary judgment on this claim was affirmed.

 

Copyright Infringement in the Virtual World -- Update

UPDATE:  And since I'm on the subject of updates, in another "virtual world" case, a consent judgment recently was entered in the case of Eros, LLC v. Leatherwood, in which the plaintiff claimed that the defendant violated the Lanham Act and committed copyright infringement within the virtual world Second Life.  A copy of the Consent Judgment can be found here (PDF, 2 pages) and my earlier discussion of the case, including a copy of the plaintiff's complaint, here.
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Lincoln and Copyrights -- The Real History

William Patry at The Patry Copyright Blog sets the record straight on the history of copyright at the time of Lincoln.  The history buff in me says kudos for the fascinating history lesson.
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Update on Farting Fred

UPDATE After recovering a judgment of more than $575,000 on its copyright and trademark claims, Tekky Toys, the manufacturer of the no doubt charming farting doll "Pull My Finger Fred", successfully petitioned the Seventh Circuit for an award of attorneys' fees on appeal of that judgment.  Although the Seventh Circuit did find one portion of the fee request excessive (specifically, the claim that it took counsel 33.25 hours at $450 an hour to prepare the fee petition, which consisted of a six-page argument, three-page affidavit and computer-generated billing statements), it still awarded Tekky more than $70,000 in attorneys' fees.  The Seventh Circuit's attorneys' fee opinion in JCW Investments, Inc. v. Novelty, Inc., Case No. 05-2498, can be found here.

For the earlier discussion of the battle between Pull My Finger Fred and Fartman, see here.
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The History of a Six Second Drumbeat

The Patry Copyright Blog provides a link to a fascinating video tracing the surprisingly long and involved history of a six second drumbeat.  Regardless of whether one agrees with the author's comments about sampling or the development of new forms of expression and the role of copyright law in connection with these new forms, the video offers an interesting look at sampling seen from the perspective of a single six second drumbeat.  The complexity of the issues surrounding sampling--both legal and cultural--have taken on special significance to me given the firm's representation of George Clinton, who has been described as one of the most sampled artists.
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Copyright Claims Not Subject to Contractual Forum Selection Clause

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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Copyright Infringement in the Virtual World

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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Karaoke and Willful Copyright Infringement

Opining on the apparently wild popularity of karaoke, the Sixth Circuit in Zomba Enterprises, Inc. v. Panorama Records, Inc., affirmed the District Court's conclusion that Panorama's infringements of Zomba's copyrights were willful, awarding $806,000 in enhanced statutory damages and awarding attorneys' fees to Zomba.  Panorama had been manufacturing and selling karaoke CDs since 1998, apparently without obtaining licenses for any of the songs it had released as part of its karaoke packages.  Notably, after receiving a cease-and-desist letter from another music publishing company, Panorama ultimately negotiated license agreements with that company.  But despite two cease-and-desist letters from Zomba, Panorama continued selling karaoke CDs containing Zomba's songs and did not obtain any licenses from Zomba.  Then, after entering into a consent order with Zomba after Zomba asserted 30 counts of copyright infringement, Panorama apparently breached the consent order within a week of its entry by resuming sales of CDs containing Zomba's songs.  Based on these facts, the Sixth Circuit readily concluded that "Panorama exhibited a reckless disregard for Zomba's rights" and that "Panorama's reliance on its fair-use defense was objectively unreasonable."
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Download of digital music file not a "public performance"

Admittedly, this is not a new decision but an important one that I've intended to get to for some time.

The case, U.S. v. ASCAP, No. 41-1395 (S.D.N.Y., Apr. 25, 2007), arose when the parties--AOL, Yahoo!, RealNetworks and ASCAP--could not agree on a fee for a license to publicly perform ASCAP's repertoire of musical works in the applicants' online services.  The specific issue before the Southern District of New York on the parties' cross-motions for partial summary judgment was whether the downloading of a digital file of a particular song constituted a "public performance" of the song under Section 101 of the Copyright Act.

Parsing the definition of "performance" under the Act, which includes the terms "recite," "render" and "play," the Court concluded that "in order for a song to be performed, it must be transmitted in a manner designed for contemporaneous perception."  Distinguishing downloading from streaming, the Court agreed with the amicus curiae RIAA that the download of a music file more accurately constituted a mechancial reproduction of the copyrighted work in the form of a "digital phonorecord delivery" than a "performance" of the song.

Thus, although the Court did not foreclose the possibility that a transmission might constitute both a stream and a download, and therefore meet the definition of "performance," ultimately it concluded that the download of a digital music file does not, standing alone, constitute a "public performance" of the song under the Copyright Act.
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Family Guy "Charwoman" Parody Protected

The Central District of California dealt a heavy blow to Carol Burnett's challenge to the Family Guy's parody of Burnett's "Charwoman" character, dismissing her claims for copyright infringement and violations of the Lanham Act without leave to amend and declining to exercise supplemental jurisdiction of her state law claims.

In an episode of the Family Guy entitled "Peterotica," the "family patriarch" entered a porn shop with friends, noting that the shop was cleaner than expected.  In response, one of the friends explained that "Carol Burnett works part time as a janitor" and the scene shifted for less than five seconds to an animated figure resembling Burnett's "Charwoman" character mopping the floor next to some blow-up dolls, a rack of "XXX" movies and a curtained room with a sign above it reading "Video Booths."  As the character mops, there was a "slightly altered version of Carol's Theme from The Carol Burnett Show" playing.  The scene then switches back to the "patriarch" and his friends after which the friends make two remarks relating to Carol Burnett and her parents.

Carol Burnett then sued for copyright infringement, violation of the Lanham Act, violation of California's statutory right of publicity and common law misappropriation.  In response, the defendant filed a motion to dismiss Burnett's claims, also bringing a motion to strike Burnett's state law claims under California's anti-SLAPP statute.

Although Judge Pregerson noted how "distasteful and offensive" the segment was to Carol Burnett, the Court had no difficulty concluding that the parody was protected fair use, which precluded both her copyright infringement and Lanham Act claims.  The Court did not, however, rule on the defendant's motion to strike Burnett's state law claims, instead choosing to decline to exercise supplemental jurisdiction over those claims and therefore denying the motion to strike as moot.

In concluding its opinion, the Court offered some comments on its view of the broader import of the case:

To some extent this dispute is indicative of just how far the "new media" has come from the "old media."  The old media harkens back to days when crude jokes and insensitive, often mean spirited, programing was perhaps found in live night club performances but was not present on television.  In the new media, any self imposed restraint essentially has been eliminated.  Public figures, such as Ms. Burnett, are frequent targets of parodies and crude innuendo.  As Ms. Burnett well knows, it takes far more creative talent to create a character such as the "Charwoman" than to use such characters in a crude parody.  Perhaps Ms. Burnett can take some solace in that fact.
However, the law, as it must in an open society, provides broad protection for the defendant's segment.
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Farting Dolls & Copyright Law

Given the often staid practice of law, it's hard to resist a fart joke particularly when it appears in the context of a well-written, yet smartly funny discussion of, among other things, copyright law penned by Judge Diane P. Wood of the Seventh Circuit.

The dispute in JCW Investments, Inc. v. Novelty, Inc., No. 05-2498 (7th Cir., March 20, 2007) arose in the context of competing farting dolls.  On the one hand was Pull My Finger Fred, described by Judge Wood as a "white, middle-aged, overweight man with black hair and a receding hairline, sitting in an armchair wearing a white top and blue pants."  When you squeezed Fred's extended finger he, rather unsurprisingly given his name, farts and makes, according to the Seventh Circuit, "somewhat crude, somewhat funny statements" about his bodily noises.  On the other hand was Fartman, described as a "white, middle-aged, overweight man with black hair and a receding hairline, sitting in an armchair wearing a white tank top and blue pants."  As with Fred, when you squeeze Fartman's extended finger, he emits both farts and jokes about those farts, two of which jokes were the same as those cracked by Fred.

But unfortunately for Fartman, his farts and jokes were no laughing matter for Tekky Toys, the manufacturer of Fred.  Tekky Toys sued Fartman's maker, Novelty, Inc. for copyright infringement, trademark infringement, and unfair competition, eventually winning on all of the claims with an award of lost profits, punitive damages (under state unfair competition law) and more than $575,000 in attorneys' fees.

In affirming the judgment of the District Court, the Seventh Circuit dealt handily with Novelty's claim that the District Court had protected too much of Fred in the context of Tekky's copyright infringement claim, extending protection not only to the expression of the idea of Fred but also to the idea or common elements known as scenes a faire, which are "incidents, characters or settings which are as a practical matter indispensable or at least standard, in the treatment of a given topic."  The Seventh Circuit disagreed, concluding that it was not the idea of a "farting, crude man" that was protected but rather Tekky's particular embodiment of that concept in the form of Pull My Finger Fred.

It seems to me that Novelty had a tough row to hoe as its president apparently testified in deposition that when Novelty creates a new item, they "try to copy---or try to think of some relevant ideas" and further admitted that his idea for Fartman was based on Fred, whom he had seen in a showroom of a manufacturer of the Fred doll.

William Patry at The Patry Copyright Blog also has an interesting and thorough discussion of Pull My Finger Fred vs. Fartman.
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