Entertainment Law Update Podcast Episode 34 – Publiciity, Politicians, Godfathers and more…

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In this Episode:

• Burberry/Bogart case settled
• Marilyn Monroe Estate loses Right of Publicity
• Political Campaigns use of music at rallies
• Desparate Housewife Sheridan still desperate
• SEC Rulemaking to relax ban on general solicitations
• North Face Butt Face/South Butt contempt claim
• Paramount/Puzo Case over Godfather prequel novel
• Resale Royalties Act unconstitutional
• .. and more.

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FOLLOW-UPS AND QUICK TAKES

Burberry Drops Lawsuit Against Humphrey Bogart Heirs
Business Week: http://www.businessweek.com/news/2012-08-01/burberry-drops-lawsuit-against-humphrey-bogart-heirs
DigiLaw Blog: http://digilaw.edwardswildman.com/?entry=4143
Discussed previously in ELU031

• In May, Burberry sought a declaratory judgment against the heirs of Humphrey Bogart, claiming that their use of Bogart’s image in advertisements was not an infringement on Bogart LLC’s trademark and publicity rights.
• Bogart LLC then sued Burberry for trademark infringement, misappropriation of publicity rights, and unjust enrichment in California court, seeking money damages and an injunction.
• Burberry had licensed the image in question from Corbis for use on its Facebook page, but did not obtain permission from Bogard LLC.
• On July 31st, both suits were settled on undisclosed terms, and dismissed with prejudice.

Maybe You Can Take it With You: Post-mortem Publicity Rights in the United States/Marilyn Monroe
World Trademark Review (pdf): http://www.worldtrademarkreview.com/issues/article.ashx?g=d8dc2b5e-e441-457f-8329-8ff1bc02503c#page=1
THResq: http://www.hollywoodreporter.com/thr-esq/appeals-court-rules-marilyn-monroes-image-public-estate-367160
Discussed previously in ELU029 (Marylin Monroe) and ELU030 (Tupac Hologram)

• On August 30th, the 9th Circuit ruled that, at the time of her death, Marilyn Monroe was domiciled in New York.
• The court ruled that, since at the time of her death her estate claimed that she was domiciled in New York to escape hefty estate taxes in California, the estate could not claim that she was domiciled in California in order to take advantage of a more generous right of publicity statute.
• In affirming the lower court decision, Judge Wardlaw says that “This is a textbook case for applying judicial estoppel.”

General Post-Mortem Right of Publicity Info from other article

• Two issues central to every Post-Mortem Right of Publicity claim

• Whether a state recognises a right of publicity that continues after an individual’s death
• Which state’s law applies to a particular deceased individual

• Monroe example
• New York does not recognize a post-mortem right of publicity, and California does, therefore the fight over which state’s law applies
• Domicile is a fact-specific analysis, taking into account such factors as

• length of residence;
• place of worship;
• voting registration;
• automobile registration;
• club memberships;
• locations of children’s schools;
• location of bank accounts;
• location of business dealings; and
• where tax returns are filed

Newt Gingrich Settling Lawsuit Over Use of ‘Eye of the Tiger,’ plus new Political Song Use Troubles
THResq: http://www.hollywoodreporter.com/thr-esq/newt-gingrich-settling-lawsuit-eye-of-tiger-365019
Discussed previously in ELU028
Lexology: http://www.lexology.com/library/detail.aspx?g=09dd0f1a-2125-45bc-a075-d453c0c0ada2

Gingrich Follow Up

• In January, Survivor member Frankie Sullivan sued Gingrich for using Eye of the Tiger as his walkout music at rallies and conferences
• While Gingrich appeared to be fighting back legally during March and April, in August the parties have reached a settlement

Romney/Obama Quick Take

• The Romney Campaign used a clip of Obama singing “Let’s Stay Together” and music publisher BMG requested they take down the clip.  
• BMG faced backlash for their decision due to the part that they had not complained when Obama initially used the song.
• The video with the song re-appeared on YouTube.
• Romney used another song, by LA-based alt-rockers the Silversun Pickups without permission and they sent a cease and desist order.
• Politicians have a long history of using songs, typically without permission.
• Case law shows that song use for political speeches and rallies have typically NOT met the fair use standard.

Touchstone Television Productions v. Superior Court (Sheridan): refusal to renew an employment contract is not a termination
Lexology: http://www.lexology.com/library/detail.aspx?g=4ba098b3-c99d-48e3-985c-b3d11578e379
THResq: http://www.hollywoodreporter.com/thr-esq/nicollette-sheridan-desperate-housewives-lawsuit-369885

• This is the long standing battle between Nicollette Sheridan, who played the character Edie Britt on Desperate Housewives and Touchstone Television.  If you watched the show, she tragically died of electrocution during the show’s fifth season.
• Sheridan claimed her on-screen death and Touchstone’s subsequent failure to renew her fixed-term contract were tantamount to wrongful termination in violation of public policy under CA law.
• Her contract provided for $175,000 an episode and the exclusive option to renew on an annual basis for six seasons. Touchstone exercised its option for Seasons 2 through 5 but did not renew the contract for Season 6.
• In this case, Touchstone Television Productions v. Superior Court, the court of appeal issued a writ of mandate compelling the trial court to grant Touchstone’s motion, holding that the company’s decision not to renew the contract was not a termination, and that Sheridan could not maintain a claim for wrongful termination in violation of public policy because “a decision not to renew a contract set to expire is not actionable in tort.” In other words, there is no cause of action for “tortious nonrenewal of an employment contract in violation of public policy.”
• The Court, however, did advise Sheridan to amend her complaint to allege a claim under California Labor Code § 6310. Such a claim, assuming it were ultimately supported by the facts of the case, would be maintained on the basis that Touchstone retaliated against Sheridan for her complaints about the “unsafe working conditions” posed by creator Marc Cherry’s alleged conduct.
• Sheridan intends to pursue a Section 6310 claim.  
• Sheridan has requested a rehearing, but was denied by the court in early September

New Jersey Casino Suing Gamblers Who Won $1.5 Million, Blames Unshuffled Decks of Cards
http://www.nj.com/news/index.ssf/2012/08/golden_nugget_suing_card_manuf.html

• This is a fun story about a group of gamblers who collectively racked up more than $1.5 million in winnings.

• The same sequence of cards were dealt over and over again.

• The casino, the Golden Nugget, filed a lawsuit against a Kansas City playing card manufacturer claiming that the cards were unshuffled despite being promised to be pre-shuffled.

• The casino also filed suit against the gamblers citing state gambling regulations requiring all casino games to offer fair odds.

=====================

FEATURES

SEC proposes new rules for Rule 506 offerings under Regulation D
SEC Press Release on new rules
The Rule proposal itself  – all 65 pages

The Current Offering Process

Companies seeking to raise capital through the sale of securities must either register the securities offering with the SEC or rely on an exemption from registration. Most of the SEC’s exemptions from registration prohibit companies from engaging in a general solicitation or general advertising in connection with securities offerings – that is, advertising in newspapers or on the Internet among other things. Rule 506 is one of those exemptions.

JOBS Act

The JOBS Act, enacted earlier this year, directed the SEC to remove the prohibitions on general solicitation or general advertising for securities offerings relying on Rule 506. By requiring the SEC to remove these restrictions, Congress sought to make it easier for companies to inform the public that they are seeking to raise capital through the sale of securities.

In particular, Section 201(a)(1) of the JOBS Act directs the SEC to amend Rule 506 to permit general solicitation or general advertising provided that all purchasers of the securities are accredited investors. It also says that “[s]uch rules shall require the issuer to take reasonable steps to verify that purchasers of the securities are accredited investors, using such methods as determined by the Commission.”

The new law also directs the SEC to revise Rule 144A, which governs the resale of securities primarily by larger institutional investors known as qualified institutional buyers (QIBs). Under current Rule 144A, offers of securities can only be made to QIBs. Under the new law, Rule 144A would be revised so that offers of securities could be made to investors who are not QIBs as long as the securities are sold only to persons whom the seller reasonably believes are QIBs.

The Proposed Rules

Rule 506

Under the proposed rules, companies issuing securities would be permitted to use general solicitation and general advertising to offer securities, provided that:

• The issuer takes reasonable steps to verify that the purchasers of the securities are accredited investors.
• All purchasers of securities are accredited investors, because either:

• They come within one of the categories of persons who are accredited investors under existing Rule 501.
• The issuer reasonably believes that they meet one of the categories at the time of the sale of the securities.

Under Rule 501, a natural person qualifies as an accredited investor if he or she has individual net worth – or joint net worth with a spouse – that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person. Or, if he or she has income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

In determining the reasonableness of the steps that an issuer has taken to verify that a purchaser is an accredited investor, the proposing release explains that issuers are to consider the facts and circumstances of the transaction. This includes, among other things, the following factors:

• The type of purchaser and the type of accredited investor that the purchaser claims to be.
• The amount and type of information that the issuer has about the purchaser.
• The nature of the offering, meaning:

• The manner in which the purchaser was solicited to participate in the offering.
• The terms of the offering, such as a minimum investment amount.

The SEC  notes that proposing specific verification methods that an issuer must use “would be impractical and potentially ineffective in light of the numerous ways in which a purchaser can qualify as an accredited investor … a prescriptive rule that specifies required verification methods could be overly burdensome in some cases, by requiring issuers to follow the same steps, regardless of their particular circumstances, and ineffective in others, by requiring steps that, in the particular circumstances, would not actually verify accredited investor status.”

The proposed rules would preserve the existing portions of Rule 506 as a separate exemption so that companies conducting 506 offerings without the use of general solicitation and general advertising would not be subject to the new verification rule.

Form D

The proposed rules would amend Form D, which issuers must file with the SEC when they sell securities under Regulation D. The revised form would add a separate box for issuers to check if they are claiming the new Rule 506 exemption that would permit general solicitation and general advertising.

(this was a 4-1 vote.  comm’r Aguilar dissented, expressing concerns about an uptick in fraud)  The SEC eliminated the general solicitation ban under Rule 504 in 1992 and had to reinstate it in 1999 because of the rise in microcap fraud. Several other commissioners expressed concern that approaches to mitigating fraud and other problems weren’t given adequate consideration in the rulemaking process,. but voted in favor anyway) (procedural concerns)

Practitioners are concerned about the lack of definitive instruction regarding what “reasonable steps” are… as well.

The SEC is also about to issue proposed rules to enable crowdfunding for investments.  We’ll be talking more about that when the rules come out, but meanwhile,
If you’re interested in this Crowdfunding stuff, I want to let you know about a fantastic conference coming up in a few weeks.  The CROWDFUNDING BOOTCAMP is coming up October 9th through 11th, at the Ravella Resort in Lake Las Vegas, Nevada.  You can find more information at FIREMARK.com/CFBOOTCAMP, and if you use my affiliate promo code ELU2012, you’ll save 10% on the price of the conference.  

I’m unfortunately, not going to be able to attend, due to other commitments that week, but I checked out the program and it looks great.  The speakers are stellar.  Peter Shankman is giving the keynote, and I’ve heard him speak before… he’s a magnetic guy and will surely have some terrific insights.

So, if you’re interested, go to firemark.com/cfbootcamp, and use that affilate code ELU 2012 to save 10%

North Face Wants South Butt Sanctioned (Trademark Dispute)
Courthouse News: http://www.courthousenews.com/2012/08/09/49143.htm
-Outdoor clothing and equipment manufacturer North Face is seeking a contempt of court sanctions against parodic clothing manufacturer The Butt Face.
-North Face sued The South Butt in 2009, claiming copyright infringement, and were awarded a permanent injunction from using that mark.
-However, The South Butt reorganized as The Butt Face and is apparently relishing all the publicity that the lawsuit is bringing.
-The Butt Face, a father and son team, is spinning the lawsuit as a David vs. Goliath contest, while continuing to use marks that look similar in appearance to the North Face.
-North Face is requesting the court to find their continuing use of infringing marks to be a direct violation of the court’s order.

NBCU, Syfy Sued Over Skull Design in ‘Dream Machines' (see picture on next page)
THR-Esq: http://www.hollywoodreporter.com/thr-esq/nbcu-syfy-sued-skull-design-dream-machines-lawsuit-358629

• An artist, Preston Asevedo, who designed a “Comedy/Tragedy Skull” design, is suing NBC Universal and SyFy Network which produces the show “Dream Machines” for using the design in the logo  of the custom vehicle design shop featured on the show,.
• The show deals with two brothers who design souped-up cars for celebrities.
• They used an image on the sign for their shop that Artist Preston Asevedo claims he created, and thus is seeking an injunction against the production from using his artwork.
• The show further used the image in some of their own designs.
• Interestingly, when the artist contacted the show, they replied with a letter that, in effect, admitted to the unauthorized use of the image and claimed that they were trying to determine the original artist and wanted to work out a deal.
• No deal was forthcoming, so the artist, Mr. Asevedo, is now seeking damages as well as an injunction for claims of copyright infringement, unfair competition, and unjust enrichment

7th Circuit kills copyright infringement case; finds Kanye West’s claims stronger.
Lexology: http://www.lexology.com/library/detail.aspx?g=370e8d9d-3e25-44df-aaf0-9b71b84d98b4

Holding:

• In this case, Peters v. West, the Seventh Circuit found two identically named hip hop songs were not similar enough to support a finding of copyright infringement.

Facts:

• Plaintiff, Vincent “Vince P” Peters wrote, recorded and distributed a song entitled “Stronger” based on Nietzsche’s “What does not kill me, makes me stronger.”
• Peters pitched the song to music producer, John Monopoly. The parties agreed that Monopoly would be Peters’ producer but plans fell through and the project stalled.
• Shortly thereafter, Kanye West released a song also entitled “Stronger”
• John Monopoly also happened to be a close friend of West.

Claim:

• Peters claimed Kanye West copied the plaintiff’s song, evidenced by the fact that both featured a chorus (or “hook”) using Nietzsche’ maxim, both used similar rhyming schemes, and both contained “incongruous” references to supermodel Kate Moss, who is not ordinarily featured in hip-hop lyrics.

Test:

• The Seventh Circuit used the following test – absent an admission that the defendant copied the work in question, the plaintiff must prove

• (1) opportunity to copy the work, or access; and
• (2) evidence of similarity.
• The Seventh Circuit rejected the so-called “inverse ratio” rule, which states that if there is a strong proof of access, the plaintiff only need demonstrate a weak proof of similarity, and vice versa.
• Rather, the two issues are independent of one another. Once a plaintiff has shown access, he or she must separately demonstrate (regardless of how good or restricted the opportunity was) that the allegedly infringing work copied the original.

Analysis:

• The Seventh Circuit agreed West had an opportunity to copy Vince P’s song through his relationship with Monopoly.
• However, the plaintiff failed to demonstrate that the two works were similar. Use of Nietzsche’s phrase was not original because pop artist Kelly Clarkson also released a song Stronger (What Doesn’t Kill You), which also featured the common saying.
• Additionally, Vince P could not protect the rhyming pattern used in his song because, “Copyright protects actual expression, not methods of expression.”
• Finally, the reference to Kate Moss did not demonstrate copying. The two lines were “entirely different,” and using a model to refer to a beautiful woman is commonplace.
• Therefore, Vince P did not plausibly demonstrate that West’s Stronger infringed on his Stronger, notwithstanding the similar hooks, shared title, and references to Kate Moss.

Paramount and ‘Godfather' author heirs clash in NY
Business Week: http://www.businessweek.com/ap/2012-08-30/paramount-and-godfather-author-heirs-clash-in-ny
http://www.hollywoodreporter.com/thr-esq/puzo-estate-asks-judge-godfather-paramount-367721

Facts:

• There has been a long standing feud between Paramount Pictures and the estate of author Mario Puzo to allow a new Godfather book to come out.
• Most recently, the Puzo estate is attempting to take back rights granted to Paramount over the Godfather. If successful, the estate will be able to deny Paramount the ability to make any more Godfather films.
• As a brief history, in 1969, Puzo sold rights to adaptations of his famous Godfather work for $50,000; the Estate estimates that the Godfather franchise has a reasonable value of $100 million and has generated revenues over the years over $1 billion.
• The dispute between Paramount and Puzo’s Estate erupted after the Puzo estate licensed a new book entitled The Family Corleone about Vito Corleone's rise to power in Depression-era New York.
• Paramount sued last February, claiming that the 1969 deal gave it veto power, and that the new book would “tarnish” the legacy of The Godfather.
• The Puzo estate filed a countersuit the following month, alleging that an earlier 1967 rights agreement between the two sides expressly excluded and reserved “book publishing rights” for Puzo.
• In May, the two sides struck a deal whereby the new book would come out, with money being held in escrow pending the resolution of this case.

Big issue in current case is difference between cancellation and repudiation:

• Puzo wants to cancel:  Most recently, at a hearing held in late August, the Puzo estate told a judge how Paramount had poisoned its book deal and why it should be allowed to cancel its rights deals with Paramount.
• Paramount argues only repudiation would be ok: On the other hand, Paramount argues that the 1969 contract can’t be canceled because under the law, it can only be “repudiated” if a party has manifested an intent to fully breach a contract. The studio says that’s not what has been alleged and that after decades of building Godfather into one of the most lucrative literary properties around, there’s no way to restore the sides to the state before the 1969 deal was signed.
• The Puzo estate in turn believes that Paramount is conflating “cancellation” and “repudiation.” The estate seeks cancellation of Paramount’s future rights to make more Godfather movies.
• Decision to come soon.

FEDERAL
Court Finds California Resale Royalties Act Unconstitutional
Entertainment Law Matters: http://www.entertainmentlawmatters.com/?p=2129
LA Times: http://www.latimes.com/entertainment/arts/culture/la-et-cm-california-art-resale-royalty-act-unconstitutional-20120521,0,705518.story
(Take out if over-time – Art Law)

Facts

• The California Resale Royalty Act, which took effect in 1977, grants original artists a 5% commission on resales of their artwork if the sale takes place in California or the seller resides in California
• This clause allows for the statute to control sales that take place in other states
• In a class action lawsuit, Plaintiffs are a class of artists suing Defendants Sotheby’s and Christie’s in the Central District of CA over unpaid royalties

Reason for finding Unconstitutionality

• Judge found that the CRRA violated the “dormant Commerce Clause,” which is a judicially-created corollary to the Commerce Clause in the US Constitution
• The Commerce Clause grants Congress the power to regulate commerce “among the several states,” and the dormant Commerce Clause is the assertion prohibiting a state from passing legislation that improperly burdens or discriminates against interstate commerce
• Therefore, since the CRRA regulates the sale of art from state to state, and has a “problematic reach” that has a substantial effect on interstate commerce, it is per se unconstitutional under the dormant Commerce Clause.
• The court used the example of a seller in California using a New York auction house to sell to a New York resident – this sale takes place wholly in New York, but is controlled by California law
• Plaintiffs plan to appeal