Entertainment Law Update Podcast 032 – Lawyers, Libel, Logos and Lolipops

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In this Episode:

• Court to revisit Veoh ruling
• Football Uniforms trademark not infringed by artist's work
• Funny Junk/The Oatmeal, and their lawyer's exploits.
• Lawyers sued for participating in litigation?
• What? What? In the Butt?
• Maker's Mark…. is!
• and more…

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Show Notes

APPEALS COURT TO RE-EVALUATE UMG V. VEOH IN LIGHT OF VIACOM-YOUTUBE RULING
THResq: http://www.hollywoodreporter.com/thr-esq/viacom-youtube-lawsuit-334889
IPDuck – Links to briefs: http://ipduck.blogspot.com/2012/07/further-briefing-in-umg-v-veoh.html

We have an update on the long running UMG v. Veoh case.  Last year, the 9th Circuit decided in UMG v. Veoh that, in order for there to be “actual knowledge” of infringing material on an ISP’s video site, the copyright holder must first alert the ISP to the infringing material.  However, in light of the recent ruling by the 2nd Circuit in Viacom v. Youtube, the 9th Circuit has asked the parties in UMG v. Veoh to submit briefs on two questions:

1. “Does the Second Circuit draw the correct distinction between actual and red flag knowledge? If so, does the distinction affect the disposition of this case?”

2. “If there is no knowledge requirement, does a copyright holder need to show that a service provider possesses ‘something more than the ability to remove or block access to materials posted on a service provider’s website' in order to have the right and ability to control infringement? If so, what must the copyright holder show? Should this Court adopt the Second Circuit’s resolution of these questions?”

As a reminder, the 2nd Circuit made a distinction between “actual” and “red flag” knowledge as being that of a subjective versus objective standard of knowledge (“did they actually know,” versus “would the facts and circumstances have made the specific infringement obvious to a reasonable person”).  The 2nd Circuit was slightly vague in ruling that “the right and ability to control infringement” involved more than the ability to remove or block access to materials, failing to explain exactly what that something “more” is.

The 9th Circuit will review the supplemental briefs which were due at the end of June, and may hold another hearing on the case at a later date.

This could have some major implications.  These two cases are going to lay out the ground rules for what ISPs have to do to discover and deal with copyright infringement.

JUDGE BLASTS UNIVERSAL IN EMINEM ROYALTIES CASE RULING

THREsq: http://www.hollywoodreporter.com/thr-esq/judge-universal-eminem-royalties-case-342699

Judge Philip Gutierrez the CA judge presiding over the battle between UMG and Eminem has suggested that UMG has been “bamboozling” and attempting to “dupe” him into overlooking an issue that could mean substantial money for the plaintiffs (Eminem and FBT Productions).

As a quick refresher, FBT Productions (Eminem’s company) brought a lawsuit against UMG to determine whether record labels must account for digital music downloads as licenses or sales.

The 9th Circuit held that digital music should be treated under the licensing provisions of the contract, but now another huge issue has arisen: the way big music companies apportion revenue between foreign and domestic divisions before sharing proceeds with revenue participants.

In June, FBT was given the green light to amend its complaint to allege that UMG has breached an implied covenant of good faith and fair dealing as well as breaching a previous settlement agreement.

FBT now alleges that not all money generated by foreign sales of Eminemn songs returns to Aftermath (the division that releases his music) but instead 71% of the revenue is paid to UMG’s foreign affiliates while Aftermath only gets 29%. Thus, when UMG splits money with the artist, it only has to pay on the 29% not the 100%.

The judge is allowing FBT to go forward with these new claims that UMG isn’t dealing fairly by keeping revenues overseas.

What’s really intriguing here are Universal’s  arguments, and the Judge’s reaction to them.. The music giant said that FBT has known about these claims for years and should not be allowed to raise them now, just before the second trial. Even if FBT had realized what was going on recently, Universal said that it had still delayed in bringing the claims. Universal also asserted that the claims were futile, and lastly and most controversially, the company contended the issues FBT wished to raise were resolved on summary judgment in October.

The Court blasted Universal, incredulous at the suggestion that in such a major case, a party would risk leaving a known issue unaddressed as some kind of a gambit.  The Judge went on to say:  “Defendants’ current stance makes it appear as though Defendants carefully inserted the issue into the motion for summary judgment before they had notified FBT or the Court of what percentage of the revenues from foreign sales of permanent downloads and mastertones would be paid to FBT.

And, the court states, and I quote:  “An attempt to dupe the Court into a premature ruling will not serve as the basis to deny FBT an opportunity to challenge Defendants’ accounting practices.”

Wow.  Stay tuned.

SONGWRITER’S FAMILY SEEKS ROYALTIES FOR “ON THE GOOD SHIP LOLLIPOP”

Nashville Post:  http://nashvillepost.com/news/2012/6/21/famous_songwriter_s_family_seeks_royalties_for_on_the_good_ship_lollipop_others

In other music industry news, Deborah Bush Gervash, individually and on behalf of the Estate of Richard Whiting, sued Warner Music Group in Nashville accusing the label of breaching a royalty contract first executed in 1936. That agreement was between Whiting and Music Holders Publishing Corp., a predecessor to Warner Music, and was signed only two years before Whiting’s death in 1938.

The suit alleges that Gervash is the heir to the IP and estate of Whiting, who was known for songs like “On the Good Ship Lollipop” and “Hooray for Hollywood” and Warner Music maliciously breached its contract with Whiting (and now Gervash) ,  grossly failing to properly account for and pay all royalties from Whiting’s work in accordance with a 1943 renewal agreement between Whiting’s widow and Warner Music.

The action seeks remedies for Warner’s “knowing and at minimum grossly negligent violations of the terms of the Renewal Agreement” whereby Warner has “paid the estate significantly less royalties than are owed to the estate under the terms.” Gervash is seeking compensatory and punitive damages as well as an accounting of the business involved.

Gervash also wants the court to order Warner to pay 50 percent of Warner’s publishing income from all of Whiting’s work — the same amount Whiting’s widow had agreed to in the 1943 agreement.

Warner is arguing that royalties aren’t due Gervash because the first 1936 agreement governs the case, which according to Warner means Whiting’s lineal descendants wouldn’t receive the now litigated royalty payments from Whiting’s work.

LADY GAGA BATTLING COSMETIC COMPANY OVER TM

PopCrush: http://popcrush.com/lady-gaga-cosmetics-company-trademark/

Lady Gaga, via her company “Ate My Heart Inc” filed a trademark cancellation proceeding to cancel the mark “Gaga Pure Platinum.”   The Gaga Pure Platinum company launched in 2000, well before Lady Gaga adopted her persona.

While Lady Gaga has multiple trademark registrations for items other than perfume/cosmetics, she has been unable to secure a federal registration in those classes because of “Gaga Pure Platinum.” So far, she has been denied by the USPTO twice.

The arguments seem to center on whether the mark is still in use.  The recording artist’s side claims it’s not, and that they approached the company about finding a way to co-exist.  The cosmetic company denies any such contact occurred, and insists the mark is still in use.

CANADIAN COPYRIGHT LAW UPDATE

Deadline: http://www.deadline.com/2012/07/canada-passes-major-overhaul-of-copyright-protection-law/

Canada has updated its copyright law in an effort to modernize copyright law and align Canada more closely with WIPO (World Intellectual Property Organization).

The new law – Bill C-11 -also known as the Copyright Modernization Act, mainly addresses piracy concerns and contains the following:

• A provision that makes it illegal for consumers to break digital locks, including copy protection mechanisms on CDs and DVDs.

• Increases penalties for infringement:

  • Those who use copyrights for commercial purposes without the owner’s permission could pay as much as $20,000

  • Individuals who use copyrights for non-commercial purposes can be charged as much as $5,000

  • Internet service providers have to notify customers when a copyright owner identifies a potential infringement

  • Fair dealing provisions (i.e., “FAIR USE”) are extended to encompass education, parody and satire use; time shifting for legally obtained broadcast media, and reproducing copyrighted work for education purposes.

Interestingly, Parliament also agreed to review the law every five years to ensure the provisions were “up to date.

11TH CIRCUIT: ARTIST’S USE OF TRADEMARKED UNIFORMS AND LOGOS ENJOY FIRST AMENDMENT PROTECTION

Likelihood of Confusion: http://www.likelihoodofconfusion.com/11th-circuit-real-iife-not-endorsed-doesnt-need/

THREsq: http://www.hollywoodreporter.com/thr-esq/court-ruling-team-uniforms-trademarks-336312

The 11th Circuit recently decided the case of the University of Alabama Board of Trustees v. Daniel Moore.  Moore is an artist who painted football scenes, which showcased the University of Alabama’s team in uniform, for years.  At one point, the Board of Trustees demanded that Moore license the products, since they contained the team’s trademarks.  Moore refused, and the Board brought a trademark infringement action against him.

The court held the following:

• While a commercial product (they were sold for money, even in the University bookstore), the paintings themselves were speech protected under the First Amendment

• The uniforms’ color and design are necessary for a realistic portrayal of the famous football scenes depicted

• The Lanham Act should be construed narrowly when deciding the balance between an interest in expression versus an interest in not causing confusion

• There should be infringment only if

  • There is no artistic expression, or

  • If the work explicitly misleads as to the source

Note: Eriq Gardner on THREsquire blog discusses the implications for Hollywood films, citing Oliver Stone’s “Any Given Sunday” as an example.

FUNNY JUNK V. THE OATMEAL

The Globe and Mail: http://www.theglobeandmail.com/technology/digital-culture/social-web/the-oatmeal-vs-funnyjunk-an-online-morality-tale/article4350216/

We now turn our attention to an interesting and peculiar case that has been making news lately between Matthew Inman, an online cartoonist and creator of the comic strip, “The Oatmeal,” and FunnyJunk, a site that hosts funny pictures.

Matthew Inman of The Oatmeal discovered that FunnyJunk’s site hosted some of Inman’s graphics from The Oatmeal, which were uploaded without his consent. He didn’t file a formal takedown notice and instead wrote a blog post criticizing the way FunnyJunk did business. In response, FunnyJunk removed some of Inman’s comics but hundreds remained on the site. Further, the Admin of FunnyJunk responded with a message to all users claiming that “The Oatmeal wants to sue FunnyJunk and shut it down.” This message triggered an internet “flame war” (wherein users send hostile responses to each other) between The Oatmeal and FunnyJunk.

Then, about a year later, Matthew Inman was presented with a legal demand from FunnyJunk’s attorney, Charles Carreon, that he pay $20,000 for writing the allegedly defamatory blog post. In response, Inman said that he would “set out to raise the $20,000 from readers, give it to charity, and send FunnyJunk something else, namely a photograph of himself holding $20,000 and a drawing of Carreon’s mother seducing a bear (some humor can’t be explained).”

According to TheOatmeal’s blog, using IndieGogo as a platform, it took 64 minutes to raise $20,000 and within 24 hours, he raised $118,000.  At the end of his fundraising activities, the total reached $220,024. The proceeds will be split between the American Cancer Society and the Natural Wildlife Federation.

The attorney for FunnyJunk, Charles Carreon, then filed suit, representing HIMSELF arguing that Inman, the two target charities (American Cancer Society and the Natural Wildlife Federation), 100 John Does, and California State Attorney General were part of an alleged “cybervandalism” campaign waged against him (since The Oatmeal posted letters from Carreon on its site and Inman’s humorous responses were in response to the letter, Carreon became a key player in the Internet war between FunnyJunk and The Oatmeal).

Carreon then went so far as to request a temporary restraining order to halt any disbursement of the funds raised by Inman. Carreon argued that if IndieGogo pays the funds to Inman and Inman personally donates the money to the charities, he will be unjustly enriched by receiving a large tax write-off.

In a final twist, about a week ago, Carreon dropped the lawsuit against Inman.

The interesting initial legal question here, that we won’t get to hear a response from the court on (at least not in this case), was whether public accusations of copyright infringement are defamatory.   (also… Anti-slapp). (I think that’s why Carreon dropped his case)

TRAVOLTA AND SINGER SUED FOR LIBEL

Defamation Law Blog: http://www.defamationlawblog.com/2012/06/articles/defamation-basics/travolta-singer-sued-for-alleged-libel/
Robert Randolph, who wrote the book “You’ll Never Spa In This Town Again” is suing John Travolta and Martin Singer for trade libel based on statements Singer made on behalf of Travolta about Randolph in a letter to Gawker. The Gawker letter arose in response to Randolph’s book which chronicled Travolta’s alleged sexual exploits.
Singer allegedly said Randolph had been in mental institutions and suffered from brain damage.
Randolph claims the statements made by Singer are “untrue and amount to defamatory statements sought to disparage the quality of Randolph’s reputation and to induce member of the public to believe Randolph is an unreliable source and thus abstain from purchasing his book.” Randolph then made a statement that his memory was fully operational and claimed unspecified damages.
The letter is likely protected by the litigation privilege, an absolute bar to the trade libel claim, so it follows that this case will either be dismissed with prejudice or struck under anti-SLAPP.
With trade libel, you need to show falsity, malice, and a specific showing of pecuniary loss, which is hard to do–especially if you get hit with an anti-SLAPP motion.  That motion has the effect of staying all discovery.  (Hat tip to our friend Adrianos Facchetti for reminding us of this point.)  I reached out to Adrianos to join us on the show again today, but he wasn’t able to be here.  We’ll talk to him again as the need arises.
In another case dealing with the lawyers for the parties to a contentious lawsuit, we have

SUPERMAN ANTI-SLAPP MOTION – WARNER BROS. V. TOBEROFF

THREsq: http://www.hollywoodreporter.com/thr-esq/superman-lawsuit-warner-bros-marc-toberoff-341785
Marc Toberoff has been working with the estate of Superman co-creator Jerry Siegel to execute a copyright termination on the Superman IP, taking the property back from current owner Warner Brothers.  Warner Brothers brought a suit against Toberoff, the lawyer…. for tortuous interference, and Toberoff responded with an Anti-SLAPP motion.  Toberoff alleged in the motion that his First Amendment right to petition was being interfered with by Warner’s suit.  The district court denied Toberoff’s motion, and Toberoff has appealed to the 9th Circuit.

Warners is alleging that Toberoff, though he has a law license, is acting as an entrepreneur.  They claim that Toberoff is engaging in business dealings meant to gain him a percentage of the revenue from the Superman rights.
Meanwhile, documents pertinent to the case were stolen from Toberoff’s office and anonymously delivered to Warner Brothers.  Information from these documents was used in Warner’s original answering brief.  Toberoff argued that they were subject to Attorney/Client privilege, but since they were disclosed to law enforcement (in connection with the investigation of the break-in) the 9th Circuit found them to be admissible.  Toberoff once again objected, and the 9th Circuit has now ruled that a new brief be written WITHOUT the purloined information.

The hearing will occur sometime later this year.

Doesn’t this raise big questions about lawyers who take matters on contingency or percentage-based fee structures?

And, what if your office gets broken into… as an attorney, are you really going to be bound to NOT share with the police what documents were stolen, because in doing so, you’d effectively waive privilege and confidentiality)?

MAKERS MARK WAX SEAL GETS TRADEMARK PROTECTION – SIXTH CIRCUIT

Food Identity Blog: http://foodidentityblog.com/2012/05/09/sixth-circuit-upholds-trademark-protection-for-makers-mark-red-dripping-wax-seal/ Reuters: http://www.reuters.com/article/2012/05/09/makersmark-seal-lawsuit-idUSL1E8G9G2U20120509
The iconic wax seal of Maker’s Mark bourbon has been declared to be an “extremely strong” trademark, according to the Sixth Circuit.  In 1997, Mexico’s Casa Cuervo SA began using a similar wax seal on certain tequila bottles.  Maker’s Mark sued for an injunction in 2003, alleging trademark infringement.  Cuervo stopped using the seal the following year, but sued Maker’s Mark to invalidate the 1985 trademark.
The seal has been in use since 1958, and was originally applied using a deep fryer.  Maker’s Mark sells over a million bottles of this particular product every year.  Since it has been more than five years since registration, the mark has become “incontestible.”  The mark could be invalidated, however, if found to be functional.
The court held that:

• The wax seal was not “aesthetically functional,” since comparable alternative methods of sealing the bottle were available
• The “likelihood of confusion” factors weighed in favor of Maker’s Mark

So…Maker’s DOES indeed have a trademark in the distinctive wax seal. for liquor.

COPYING THE “LOOK AND FEEL” OF TETRIS CONSTITUTES COPYRIGHT INFRINGEMENT FOR IPHONE GAME MINO

Lexology: http://www.lexology.com/library/detail.aspx?g=aa54729e-ea71-4520-970c-c0dfa8083fff

The owners of the copyright to the video game Tetris, Tetris Holdings, LLC,  were granted summary judgment against defendant Xio Interactive in late May.  Xio had produced a game called Mino for the iPhone app store, which was essentially a copy of the popular Tetris game.  Xio did not dispute the fact that the games were extremely similar, but claimed that they had only copied the elements of Tetris that were not copyrightable.

The District Court of New Jersey disagreed.  The court looked at the issue of whether the “idea” of Tetris and the way the game functioned were copyrightable.  While functional aspects of the game are generally not available for protection under copyright, the court held that Tetris Holdings, LLC “is as entitled to copyright protection for the way in which it chooses to express game rules or game play as one would be to the way in which one chooses to express an idea.”  Because almost all expressible elements in a game are in some way tied up with the expression of the game rules or game play, the aesthetic elements that made up the “look and feel” of Tetris were protectible.

The “merger doctrine” stands for the principle that expression and idea can “merge” when there is only one way (or a very limited amount of ways) to express an idea, thus making it unavailable for copyright protection.  The court dismissed this argument by defendants, stating that there are many ways in which to express the idea of a “puzzle” game to be designed and functional.  “Scènes à faire” and Fair Use arguments on the part of the defendant were also summarily dismissed.

WHAT WHAT (IN THE BUTT) CASE – DECIDING FAIR USE PRIOR TO DISCOVERY

Ars Technica: http://arstechnica.com/tech-policy/2012/06/fair-use-gets-stronger-thanks-what-what-in-the-butt/ Techdirt: http://www.techdirt.com/articles/20120607/17481419243/big-victory-fair-use-via-south-park-what-what-butt-numa-numa-afro-ninja-et-al.shtml
In early June, a judge from the Seventh Circuit Court of Appeals dismissed a lawsuit by Brownmark Films, producers of the viral “What What (In the Butt)” music video.  The creators of the television show South Park had licensed the music and lyrics to the song, paying the artist and record label for such use.  In the show, the video was recreated with an animated nine year old boy singing the risque lyrics.  Brownmark Films claimed that this was not a parody, but rather a meticulous recreation of their copyrighted work.  (the video)
The trial court disagreed, ruling pre-trial that this was an obvious parody and clearly fair use.  Brownmark appealed, arguing that they had a right to discovery before such a judgment could be made.  The Seventh Circuit disagreed, stating that an obvious case of fair use can be decided before discovery.  The court also stated that Brownmark’s actions exhibited signs of being a “copyright troll.”