Category: Entertainment Law

How To Stay Safe On a Boat This Summer

The weather is already heating up, and you may be thinking about getting out on a boat to enjoy some summer fun with your friends and family. Despite the ongoing COVID-19 pandemic, many people may choose to safely enjoy their time on the water. However, boating accidents can lead to significant injuries for those on board. During the latest reporting year of data, the US Coast Guard states that there were 4,145 total boating accidents across the country. These incidents led to thousands of injuries and more than 600 deaths. If you are going to be spending any time on the waterway this summer, there are various safety tips then we want to discuss with you today.

Always Have a Life Jacket

Life jackets are an essential part of boating safety, whether you are on a motorized or non-motorized water vessel. Statistics from the US Coast Guard show that approximately 75% of all boating deaths are due to drowning and that 84% of drowning victims were not wearing a life jacket when they went into the water.

We need to point out that even skilled swimmers need to wear life jackets when they are on a boat. A fall from a boat can lead to a personal injury that involves an individual hitting their head and becoming disoriented or injured, making these kinds of boat injuries difficult to stay above water. Every life jacket needs to be the appropriate fit for the wearer’s size and weight. Always ensure that the life jacket properly fastens.

Use Good Judgment

When boating, good judgment goes a long way. This can include the following:

  • Never operating a boat while under the influence of alcohol or drugs as this can affect judgment, vision, balance, and coordination.
  • If the weather looks rough or if the forecast for the day does not look good, you need to consider not going out on the boat. Bad weather conditions can create tremendous hazards for boaters.
  • Always operate at a safe speed. Open waters can be deceptively dangerous, and operating at high speeds increases the risk of a collision with other boats, docks, the shoreline, and obstacles in the water.

Be Careful When Participating in Water Sports

Many people in and around our area like to participate in various popular water sports, including water skiing, tubing, wakeboarding, kneeboarding, etc. If you or your family members will be participating in these activities, you need to thoroughly understand how to safely use all materials and objects involved.

  • Learn how to get out of the water safely and how to use the tow rope.
  • Understand basic hand signals and how to use a spotter in the boat.
  • Make sure that the tow line does not get caught in the propeller of the boat or wrapped around any person.
  • Wait for a propeller to stop moving before getting back on the boat.
  • Only participate in water sports during the daytime.

Ensure a Boat has Been Properly Maintained

The truth is that boats are high maintenance vessels. If you and your family own a boat or are enjoying time on a friend’s boat, ensure that the vessel has been properly inspected and maintained. If you will be enjoying boating activities or water sports on a rented boat, make sure you only work with accredited businesses with extensive experience handling boats.

Be Mindful of Social Distancing

Boats are not conducive to the social distancing measures necessary to stop the spread of COVID-19. This summer, you should consider only going out on a boat with those who live within your household. Failing to do so could risk you or somebody you love contracting the virus, which is not something you want to experience.

© 2020 by Console and Associates. All rights reserved.

See the Personal Injury law section of the National Law Review for similar topics.

How Outdoor Sports and Recreation Operations Can Legally Protect Themselves in a Post COVID-19 Environment

There is a world history of pandemics that, at one point or another, crippled civilizations or dynasties.  In America’s more recent history, our country has experienced the Spanish Flu (1918 – 1920), the Asian Flu (1957 – 1958), and the H1N1 Swine Flu (2009 – 2010).  Though the Swine Flu is in our society’s most recent memory, the current Coronavirus infection and death numbers have already surpassed the total Swine Flu infection and death numbers.  The Coronavirus (COVID-19) has wreaked havoc on Americans and their interactions with each other because of the rapid rate at which the virus spreads.  Businesses have been impacted due to governmental orders to temporarily close or greatly reduce their services.  But with proper action, the spread of the virus will slow, the economy will rebound, and people will return to the extracurricular activities they enjoy.

As our country presses forward, the Coronavirus will change the way business owners conduct business – including operators in the outdoor sports and recreation business.

On May 5, 2020, North Carolina Governor Roy Cooper signed Executive Order No. 138 (the “Order”), which modifies Executive Order No. 121 (also known as The North Carolina “Stay at Home” Order).  The Order signaled the beginning of Phase 1, effective 5:00 p.m. on May 8, 2020, and the gradual reopening of North Carolina.  On May 20, 2020, Governor Cooper signed Executive Order No. 141, which outlines “Phase 2” of reopening North Carolina and will begin on May 22, 2020, at 5:00 p.m. (also known as the North Carolina “Safer at Home” Order).  The Order removes the distinction between essential and non-essential businesses, which were defined in Executive Order No. 121, thus allowing many businesses originally deemed non-essential to reopen.  Additionally, the Order explicitly provides that outdoor activities are allowed and that day camps and programs for children and teens are permitted to resume if they are able to adhere to certain guidelines and social distancing requirements.  Phase 2 allows for overnight camps for children and teens to resume, also as long as requirements are met.  As North Carolina moves through Phase 1 and into Phase 2, several state parks will reopen to the public.  Phase 2 does not permit Mass Gatherings of more than ten people indoors or more than twenty-five people outdoors nor does it allow for indoor fitness facilities to reopen.  Please click HERE for a summary of what Phase 2 allows and does not allow.

As outdoor sports and recreation businesses prepare to eventually reopen, business owners should evaluate their legal documents to determine if the business is adequately protected in the event of this continuing pandemic or another pandemic.  Two items to consider are the contractual language in event contracts and liability waivers.

Update Contractual Language Regarding Event Cancellation or Postponement

Outdoor sports and recreation businesses that provide services such as race organization, adventure vacations, guided excursions, exhibition management, or outdoor recreation conference organization have been forced to cancel or postpone events if the event was scheduled to take place during one of the many state or local government orders to shut down.

Businesses that plan these events often expend costs associated with the event as the planning progresses.  In light of the Coronavirus, most businesses should revise their contractual language involving event production, especially in cases where there is a “no refund” policy.

If the current contractual language does not address governmental orders related to government-ordered shutdowns, pandemics, or does not contain a force majeure provision, then the contract likely should be revised to include such provisions.

The contractual language that addresses pandemics and governmental orders to shut down can help limit the business’s financial liability in the event of event cancellation or postponement due to a future pandemic or governmental order to shut down.

Update Liability Waivers

Outdoor sports and recreational activities come with inherent risks for participants and sometimes even for event spectators.  When a participant or spectator gets injured during the activity, there is potential liability exposure to the other participants, the event organizers, and the activity providers.  Liability exposure is greatly reduced with a proper liability waiver signed by the participant or agreed to by the spectator before the activity begins.

There are several key components to an effective liability waiver.  One such component is the assumption of risk provision.  This provision identifies (1) the activity at hand, (2) the inherent risks associated with engaging in or observing such activity, and (3) that these risks cannot be eliminated no matter the level of care taken to avoid injury.

In light of the Coronavirus, outdoor sports and recreation business owners should examine the assumption of risk provision in their liability waivers.  They should seek legal guidance in adding language to provide that participants are at risk of coming into contact with certain communicable diseases or viruses similar to COVID-19.  The waiver should also be updated to reflect that participants agree to waive claims arising from injury, illness, or death associated with these assumed risks.

Many runners and tri-athletes are looking eagerly to the day when they will once again be allowed to sign up for and compete in races and events. Others are awaiting the return of guided white-water rafting trips, lazy days floating on a tube down a local river, or visiting an adventure center to challenge themselves on a ropes or zip line course.  Owners of these outdoor sports and recreation operations should use this time to get their documents in order to protect themselves against potential future lost revenue or liability in the event of another pandemic or if a government order to shut down occurs.

© 2020 Ward and Smith, P.A.. All Rights Reserved.

For more on the return of sports, see the National Law Review Entertainment, Art & Sports law section.

DOJ Seeking to End Movie Studio and Theater Antitrust Decrees amidst Streaming Competition – A New Opportunity in Theatrical Distribution?

For the film and media distribution industries, this year has been action-packed.  Production budgets are skyrocketing and new digital services have been announced or are launching with each passing month. The streaming wars are upon us. Moreover, the FCC recently voted to treat streaming services as “effective competition” to traditional cable providers (or MVPDs), thereby triggering basic cable rate de-regulation in parts of Hawaii and Massachusetts.

The distribution landscape took yet another unexpected legal twist this week. On November 18, Assistant Attorney General Makan Delrahim announced that the Antitrust Division of the Department of Justice would ask a federal court to terminate the “Paramount Consent Decrees” (the “Decrees”), which have prohibited movie studios from engaging in certain distribution practices with movie theaters since the 1940s. The DOJ filed a motion to terminate the Decrees in federal court in the Southern District of New York on November 22, 2019.  Notably, the DOJ cites streaming services and new technology as a few of the many reasons that the Decrees may no longer be necessary in what the DOJ official sees as today’s highly competitive, consumer-driven content market. Given the volatility of the content licensing space, film licensors and licensees will have to carefully consider how the DOJ’s actions will affect their content rights and options going forward.

By way of background, the Decrees emerged out of the landmark 1948 Supreme Court antitrust case, United States v. Paramount Pictures, Inc. Prior to the case, top Hollywood studios frequently owned movie theaters (thus, owning both the means of production and distribution). This vertical integration led to lower distribution costs for the studios and gave them pricing power and the ability to discriminate about which theaters distributed their films. Not surprisingly, smaller, independent theaters struggled to survive.  The problem was exacerbated by studios engaging in practices such as “block-booking” (requiring theaters to distribute all or none of the studio’s slate of films) and overbroad “clearances” (restrictions on the time which must elapse between particular runs of a film), as well as alleged horizontal conspiracies between the studios and theaters on matters like minimum ticket pricing. As part of the Decrees, the defendant studios were restricted or prohibited from engaging in these practices and were required to divest certain interests in their theaters.

The DOJ’s November 22nd motion may not come as a surprise, as the DOJ first announced that the Decrees were under review in August 2018, after which several industry players, including the National Association of Theatre Owners (NATO), submitted comments. In particular, NATO argued, despite how streaming and technology might increase competition, that block-billing would still adversely impact independent or local chains that exhibit fewer films and may not be able to afford larger blocks of films.

Delrahim summed up the DOJ’s position, stating, “the [D]ecrees, as they are, no longer serve the public interest, because the horizontal conspiracy – the original violation animating the decrees – has been stopped. […] Changes over the course of more than half a century also have made it unlikely that the remaining defendants can reinstate their cartel.” In particular, the DOJ argued that the competitive concerns of the 1940s no longer exist because the movie marketplace has changed so drastically, citing how film distributors have become less reliant on theatrical distribution with the advent of streaming. According to the DOJ, colluding to limit theatrical film distribution in today’s market “would make no economic sense.”  In addition to streaming services, Delrahim also cited new theatrical release business models (such as flat-fee multi-ticket pricing) as increasing competition and innovation in film distribution.

The DOJ acknowledged NATO’s concerns in part and asked the court to implement a two-year sunset on block-booking and circuit dealing (licensing to all theaters under common ownership, as opposed to on a theater-by-theater basis). Whether terminating the Decrees would decrease innovation, neither the motion papers nor Delrahim venture to guess. Delrahim noted that antitrust enforcers need not predict the future but need only recognize that changes are occurring. He added that practices covered by the Decrees would not become per se lawful, but would rather be subject to review under the rule of reason standard.

Commentators are split on whether termination of the Decrees that have shaped Hollywood for decades will lead to any significant change for the movie business. One thing that is important to note is that the Decrees did not outright prohibit vertical integration of studios and theaters – the defendant studios could (and did) acquire theaters after proving that such acquisitions would not unreasonably restrain trade. Further, only those studios party to the Decrees remain subject to their restrictions, meaning many of today’s top studios (that now typically own a vast portfolio of traditional and digital entertainment properties) were non-existent or much smaller in the 1940s and have not been subject to the Decrees.

While it remains to be seen how this development will play out, it is noteworthy for digital providers because it may breathe extra life back into the theatrical release window. With mammoth streaming deals inked every week, the value of the theatrical release window was seemingly diminishing for some films. But now that many studios are forgoing third-party licensing fees and instead retaining their content for their own streaming platforms, studios may begin to ask whether added revenues from ownership of a theater chain could be a potential new source of revenue and a way to gain additional control of the theatrical window. Meanwhile, the effect of lifting the Decrees may not necessarily lead to a flurry of acquisitions, as other studios involved in direct-to-consumer streaming campaigns may not have the capital or desire to exploit the termination of the Decrees. Major theater chains will likely seek to strengthen relationships with studios, while independent theaters will look for ways to succeed despite potentially rising costs.

With all of these developments, studios and media platforms will also need to carefully consider how to protect their interests when handling their licensing arrangements, given the volatility in this space and keeping in mind the two-year sunset (assuming the DOJ succeeds) on block-booking and circuit dealing. While some distributors may be looking for long-term, exclusive content deals as they roll-out their streaming services, studios and content providers may seek flexibility as their distribution options are changing day-to-day.

© 2019 Proskauer Rose LLP.

More on entertainment distribution on the National Law Review Entertainment, Art & Sports law page.

Gaming Industry Associations Agree on Universal Esports Principles

Earlier this month, a set of gaming industry representatives agreed upon and released a set of unifying esports principles. These representatives include the Entertainment Software Association (ESA), as well as associations from Canada, Australia and New Zealand, the UK, and Europe. These “Principles of Esports Engagement” were developed in a collaborative effort and form a set of values applicable in all aspects of the global esports environment.

The principles include the following:

  • Safety and Well-Being
    • All esports community members deserve to participate in and enjoy esports in safe spaces and to be free from threats and acts of violence and from language or behavior that makes people feel threatened or harassed.
  • Integrity and Fair Play
    • Cheating, hacking, or otherwise engaging in disreputable, deceitful, or dishonest behavior detracts from the experience of others, unfairly advantages teams and players, and tarnishes the legitimacy of esports.
  • Respect and Diversity
    • Esports promotes a spirit of healthy competition. Whether in person or online, all members of the esports community should demonstrate respect and courtesy to others, including teammates, opponents, game officials, organizers, and spectators. 
    • Esports is truly global and brings together players from different backgrounds, cultures, and perspectives. We believe the broad and diverse player base of esports contributes to its success. We support an open, inclusive, and welcoming environment for all, no matter one’s gender identity, age, ability, race, ethnicity, religion, or sexual orientation.
  • Positive and Enriching Game Play
    • Esports can help build self-confidence and sportsmanship and boost interpersonal communication and teamwork skills. Esports brings players and fans together to problem solve through strategic play, collaboration, and critical thinking. Participation in esports can also lead to the development of new and lasting friendships among teammates, competitors, and members of the broader esports community.

The goal of these organizations in releasing this set of principles is to foster an esports community that is responsible, welcoming, engaging, and of course, fun. Notably, in ESA’s press release announcing these principles, the association highlighted the growth of esports, citing research that estimates that, in 2019, global esports viewership will hit nearly 500 million and revenues will exceed $1 billion USD. With this level of growth, the esports community has a vested interest in supporting the best conditions for play and ensuring esports remains an exciting and inclusive activity and industry at all levels.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

For more video gaming issues, see the National Law Review Entertainment, Art & Sports law page.

Celebrity Entertainer Sues Over Video Game Avatar

As real-world celebrities continue to expand the reach of their persona into the digital realm, the potential benefit for advertisers, game developers and esports event promoters is exceedingly high. But with increased opportunity comes increased risk.

A New York Supreme Court recently addressed this risk when it construed the State’s right of publicity statute[1] in a dispute over an NBA 2K18 video game avatar. In Champion v. Take Two Interactive Software, Inc., celebrity basketball entertainer Phillip “Hot Sauce” Champion sued the video game developer, alleging violation of his right to privacy for Take-Two’s use of his name and likeness. The Court ultimately dismissed the lawsuit, but not before it provided a helpful discussion of New York’s publicity statute and its modern application to the esports industry.

A Primer on New York’s Publicity Statute

New York publicity law allows both criminal charges and civil liability for use of a person’s “name, portrait or picture” for advertising or trade purposes without prior written permission. This right to publicity extends to any recognizable likeness that has a “close and purposeful resemblance to reality.” Courts have already held that video game avatars are within the scope of the statute’s reach.

However, while seemingly broad at first pass, this statutory right is actually more narrow than similar rights in other states where the right to publicity is recognized only at common law (i.e., in states that have no black-letter publicity statute). For example, in New York, neither “incidental” use of a person’s name or likeness, nor use that is protected under the First Amendment, are violations.

Further, unlike the words “portrait” and “picture,” the word “name” in the statute is construed literally. In fact, New York courts find liability only for uses involving an individual’s full name, and not just a surname, nickname, or business name. The statute does, however, protect certain “stage names” in limited situations, such as when the individual has become known by a stage name virtually to the exclusion of his or her real name.

The Plaintiff and the Video Game

Phillip Champion is a prominent street basketball entertainer known professionally as “Hot Sauce.” Champion claims that he is widely recognized as both “Hot Sauce” and “Hot Sizzle” in social media, and is regularly depicted on television and in blogs, movies, YouTube videos, sports magazines and live halftime shows. As a result, Champion is able to license his celebrity persona through sponsorships and endorsement deals with prominent consumer brands like AND1.

Photographs of Champion filed with the Court.

Take-Two created the NBA 2K18 basketball simulation video game, which realistically depicts the on-court competition and off-court management of the National Basketball Association. Users can create a custom player avatar, or select from existing player avatars modeled after real-life professional athletes. The game’s “MyCareer” mode allows the user to create a custom basketball player, and then design and play through the character’s entire career, competing in games and participating in off-court activities. The “Neighborhoods” option, which ties to the off-court activities in the MyCareer mode, lets users explore an off-court urban world while interacting with other basketball players—most of which are non-playable characters controlled by the computer—in scenarios like exercising in public gyms and playing casual basketball games on city courts.

Champion’s Claims

Champion’s lawsuit stems from one of the non-playable characters in the game’s Neighborhood mode, who is depicted as a young, African-American male with a mohawk, wearing all-white hi-top sneakers, a tank-top, and black shorts with white piping. On the front and back of the tank-top is the numeral “1,” and on the back are the words “Hot Sizzles.”

Images of the “Hot Sizzles” avatar filed with the Court.

Champion alleged that the look of the “Hot Sizzles” avatar incorporated numerous personal aspects of his life and identity in violation of the New York publicity statute, and further that the avatar’s “Hot Sizzles” name was itself a violation because Champion is “ubiquitously” known as “Hot Sizzle.”  Take-Two responded that its “Hot Sizzles” avatar does not sufficiently resemble Champion, whether in name or image, under New York law.

On Champion’s claims to his likeness, the Court found no physical resemblance between Champion and the “Hot Sizzle” avatar, and determined that the only reasonable commonalities are that “both are male, African-American in appearance, and play basketball.” The Court compared this case to two similar cases (Lohan v. Take-Two Interactive Software, Inc.  and Gravano v. Take-Two Interactive Software, Inc. ), both involving Take-Two’s Grand Theft Auto video game, in which the avatars exhibited many closer similarities to the plaintiffs in clothes, hair, poses, voice, and life stories. Finding no similar likenesses in this case, the Court ruled that, at least from a visual perspective, the Hot Sizzles avatar in NBA 2K18 is not recognizable as Champion as a matter of law.

On Champion’s claim to the name “Hot Sizzles,” the Court recognized that the use of a person’s celebrity or “stage” name with a video game avatar could aid in recognition of the avatar as that person’s likeness. However, the Court determined that Champion’s “primary performance persona” is actually “Hot Sauce,” which is entirely distinct from the NBA 2K18 avatar’s name, “Hot Sizzles.” Champion was not able to show that he is widely known as “Hot Sizzle” to the public at large—as opposed to just in the sporting or gaming circles—so the Court ruled that, without this level of connection between Champion and the name “Hot Sizzle,” Take-Two’s use of “Hot Sizzles” does not aid in the visual recognition of the NBA 2K18 avatar as Champion.[2]

Incidental Use and the First Amendment

Take-Two also defended against Champion’s claims by alleging that the “Hot Sizzles” character falls within the “incidental use” exception to liability under New York’s statute. After reviewing the NBA 2K18 game content and related advertising, the Court seemed to agree that the avatar “is a peripheral non-controllable character” that “adds nothing of true substance to a user’s experience in the game.” However, the Court declined to make an affirmative ruling on this component of the lawsuit.

Finally, Take-Two argued that its NBA 2K18 game is protected speech under the First Amendment, and as such, it does not constitute “advertising or trade” under New York’s law. In response, the Court declared that, while video games may conceptually qualify for free speech protection, not every video game constitutes “free speech” fiction or satire. In comparing NBA 2K18 to games that contain a detailed story with pre-defined characters, dialogue and unique environments created entirely by the game designers, the Court determined that here, the users create their own basketball career and completely define their character. Accordingly, the Court found that categorizing NBA 2K18 as “protected fiction or satire” under the First Amendment is “untenable.”

What it Means

As novel sponsorship and endorsement opportunities are created through the advent of esports, advertisers, game developers, and event promoters must be certain they have the appropriate content and publicity licenses in place. However, because publicity laws, in particular, are enforced at the state level, doing this without expert guidance can be daunting. Using the right tools and a proactive licensing and review strategy, brands and marketing agencies can capture (and keep) a broader share of the esports industry’s revenues, and keep the competition on the court, not in it.

[1] New York Civil Rights Law, §§ 50-51.

[2] The Court determined that “Hot Sizzle” is, at best, Champion’s secondary “nickname.”

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

War of the Words: Ninth Circuit Reverses Judgment for the Insurer in Rare War Exclusion Case

In Universal Cable Prods. LLC v. Atlantic Specialty Ins. Co., 2:16 cv-04435 PA, (9th Cir. July 12, 2019), the Ninth Circuit reversed the district court’s determinations as it relates to the application of two war exclusions.

In the summer of 2014, Universal Cable Productions wasfilming a television series, Dig, in Jerusalem.  During filming, hostilities arose in the region as Hamas, a Palestinian political movement, began firing rockets from Gaza into Israel.  The ongoing and escalating Israeli-Palestinian strife caused Universal to halt production, and ultimately move it out of the area.  Not surprisingly, the move resulted in significant expenses, prompting Universal to file a claim under its television production policy in order to cover the costs.

The insurer denied coverage for the claim, relying, for apparently the first time, on the applicability of the policy’s war exclusions.  The exclusions, which the insurer argued were triggered by Hamas’ firing of rockets, barred coverage for expenses resulting from: war, warlike action by a military force, or insurrection, rebellion, or revolution.  Universal countered that the exclusions are not applicable because the terms in the exclusions had a specialized meaning in the insurance context, and the Hamas action did not comport with that meaning.  The district court, refusing to apply any specialized meaning and instead using the plain meaning of the terms, sided with the insurer and found that Hamas’ actions clearly constituted war or warlike action which triggered the application of the exclusions.  Universal appealed.

On appeal, the Ninth Circuit disagreed with the district court’s analysis—namely the district court’s refusal to apply the alleged specialized meaning of the exclusions’ terms—finding that a provision of the California Civil Code required the application of specialized meaning when the meaning has been developed from customary usage.  The appellate court first found that the principal construing any ambiguity in favor of the insured was not applicable.  In doing so, the court noted that “the typical concerns animating [that principle] do not exist here.”  Next, the court found that because the terms “war” and “warlike action by a military force” had acquired a special meaning via usage, that special meaning must be followed and failure to do so “is reversible error.”  The court determined that in the insurance context, “war” and “warlike action by a military force” required the existence of “de jure” or “de facto” governments and because the court found that Hamas is neither, the exclusions did not work to bar coverage. Consequently, the court reversed the district court’s ruling in favor of the insured.

©2011-2019 Carlton Fields, P.A.

Article by Roben West of Carlton Fields.
For more insurance law, see the National Law Review Insurance Reinsurance & Surety law page.

Game Over: Obviousness Can Be Based on a Single Prior Art Reference

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial and Appeal Board (PTAB) obviousness decision, finding that obviousness can be based on a single prior art reference if modifying that prior art reference is found to be obvious. Game and Technology Co., Ltd. v. Activision Blizzard Inc., Case No. 18-1981 (Fed. Cir., June 21, 2019) (Wallach, J).

Game and Technology (GAT) owns a patent directed to a method for generating a “gamvatar” by combining game items with layers of an avatar in online games. Activision Blizzard and Riot Games sought and were granted inter partes review of the patent. During the proceeding, the PTAB construed the term “gamvatar” to be a combination of an avatar with a game item function, and construed the term “layers” to mean display regions. The PTAB issued a final written decision finding the challenged claims obvious based on a user manual for a video game called Diablo II. GAT appealed.

On appeal, GAT argued that the PTAB erred in construing the terms “gamvatar” and “layers,” and further argued that the PTAB erred in its determination that the claimed method would have been obvious over the Diablo II manual.

Addressing claim construction, GAT argued that the PTAB’s construction of “gamvatar” was broader than the broadest reasonable interpretation BRI, and argued that “gamvatar” should mean “concurrently usable online and in the game.” The Federal Circuit rejected GAT’s argument, finding that the PTAB did not err in construing the term “gamvatar” because the claims and specification both showed that “gamvatar” is a combination of an avatar with a game item function and is not limited to “concurrently useable online and in the game.” As to the term “layers,” GAT argued that the term should be construed as regions for displaying graphical objects where the layers are displayed on the avatar. The Court disagreed, finding that the claim and the specification supported the PTAB’s construction of the term “layers” to mean display regions.

Turning to obviousness, GAT argued that the PTAB erred in using the user manual to find obviousness because a “a single reference . . . cannot support obviousness.” The Federal Circuit rejected GAT’s argument as a matter of law, finding that a patent can be obvious based on a single prior art reference if it would have been obvious to modify the reference to arrive at the claims invention. Applying that standard here, the Federal Circuit found that the PTAB did not err in its obviousness decision because the PTAB’s finding that the Diablo II manual teaches the “gamvatar” and the “layers” limitations was supported by substantial evidence.

 

© 2019 McDermott Will & Emery
For more in PTAB cases, please see the Intellectual Property type of law page on the National Law Review.

Netflix Eliminates E-cigarette Depictions from Streaming Content

Netflix stated it will eliminate all e-cigarette representations from future streaming content targeted to TV-14 or below for series and PG-13 or below for films. CNN reported the move in response to a Truth Initiative study showing how Netflix depicts smoking more than broadcast TV.

Overall, 92% of cable/streaming shows showed cigarette/e-cigarette use. Netflix had “nearly triple the number of tobacco instances (866) compared to the prior year (299).” The multi-year study showed Stranger Things alone had “262 tobacco depictions in its second season, up from 182 in the first season.” This is significant because the Surgeon General warns that high levels of exposure to such visuals doubles the risk of smoking initiation. Considering 61% of young adults report online streaming channels as their primary means of program viewing, Netflix’s move away from e-cigarette representations could significantly impact this generation’s vaping epidemic.

Netflix will also limit cigarette depictions to adult usage. According to the CNN report, Netflix will only feature adult portrayals if “it’s essential to the creative vision of the artist or because it’s character-defining (historically or culturally important).”

The study did not specify how many of these depictions were related to the Juul vape device — which recently had a meteoric rise in use and captured over 70% of the e-cigarette market in the last two years. Juul has been accused of designing products and ads that appeal to youth and placing these ads in channels most populated by young adults and teens.

COPYRIGHT © 2019, STARK & STARK
This article was written by Domenic B. Sanginiti, Jr of Stark & Stark.
For more on cigarette & vape regulation see the Biotech, Food & Drug page on the National Law Review.

Esports Star Tfue Sues To Void His Contract With FaZe Clan

Fortnite player Turner Tenney, professionally known as “Tfue,” has sued to void his contract with Esports team, FaZe Clan, Inc. Tfue’s action, filed in Los Angeles Superior Court, alleges that the terms of the contract he signed to play for FaZe Clan’s Fortnite team are grossly oppressive, onerous, and one-sided and in violation of California law. His action could have a significant impact on the Esports industry and the players who participate in Esports as professional gamers.

Recognized as one of the world’s best Fortnite players, Tfue entered in an agreement with FaZe in April 2018.

The Complaint alleges that Tfue did not understand the terms of the agreement he signed and that he was exploited by FaZe. It further alleges that FaZe breached its fiduciary duty of loyalty by failing to share profits with him as mandated by the terms of his agreement and by rejecting a sponsorship deal and acting against his best interests. In addition,

Tfue alleges multiple violations of California law, including Section 16600 of the California Business and Professions Code, Section 17200 of the California Business and Professions Code, and California’s Talent Agency Act.

The contract refers to Tfue as an independent contractor. It mandates that he play in tournaments and training sessions, perform three days a month of publicity and promotional services, and participate in the company’s social media campaigns. In addition, Tfue is required to wear clothing bearing FaZe logos and identification, as well as items associated with specific FaZe Clan sponsors.

In exchange for an initial monthly base pay of $2,000 for the first six months of the contract, FaZe had an option to extend its deal with Tfue for an additional three-year period (which the company exercised) and unilaterally increase or decrease his monthly by 25%. The agreement also entitles Tfue to 80% of cash prizes earned from playing in Fortnite tournaments and an equal split with FaZe Clan of income earned from in-game merchandise, appearances, and touring and sign-up bonuses. The agreement also provides finder’s fees for brand deals that feature Tfue that can result in as much as 80% of the deal being retained by FaZe. The contract also limit Tfue’s ability to sign with another esports company at the end of his contract in 2021.

Tfue also seeks repayment of his sponsorship, fees, and commissions, as well as additional compensatory damages and punitive damages. In addition, he seeks to enjoin FaZe Clan’s ongoing alleged violations of California law.

It is probable that the court venue will be challenged. The agreement between FaZe and Tfue contains a choice-of-law provision, which provides that the agreement “shall be governed and construed in accordance with the laws of the State of New York” and the parties “submit exclusively to the state or federal courts in New York, NY for any claim” arising from the contract.

This suit will be watched closely by the industry. The lack of industry regulation and unified structure, employment law issues appear ripe for litigation. Esports team owners should ensure their contracts with players comply with federal and state employment laws and the contract language clearly defines sponsorships and endorsements, compensation, arbitration clauses, hours of service, health insurance, non-competition, and anticipated event participation.

Jackson Lewis P.C. © 2019
More in video gaming legal concerns on the National Law Review Entertainment, Art & Sports page.

The Definition of Film Fest Success– For Financiers and Filmmakers

The familiar annual rhythm of the major film festivals – Sundance in January, Berlin in February, Cannes in May and so on through Toronto in September – is well underway. And with Sundance and the Berlinale already in the rear-view, and SXSW right around the corner, it’s fair to say the 2019 sales environment looks to be very buoyant.

Although the single-film Sundance sale record was not eclipsed in 2019, the number of films that sold for eight figures was the highest ever, with numerous films racking up paydays in the $10-15 million range. Understandably, press reports out of Sundance tend to focus on these lofty (and once dreamlike) selling prices. It makes sense: the big numbers make great headlines, and the selling price is often the only deal information made publicly available.

But filmmakers – and in some situations, even film financiers – are not always best served by selling to the highest bidder. From a filmmaker perspective, the largest upfront payment, as great a thrill as it may be, does not necessarily translate into the best support for the film or most effectively accomplish the short- and long-term goals of the filmmakers. And even from a financier perspective, the biggest initial return does not always equate with maximizing the profitability of the film and the long-term interests of the financiers.

There are many other deal points that must be considered and carefully weighed. First, what type of distribution is being offered, and equally importantly, what level of support are the distributors promising in the chosen distribution channel or channels.

Is the distributor proposing a “conventional” initial theatrical release, such as might be expected from specialty theatrical distributors such as Fox Searchlight, Focus Features, Sony Pictures Classics, A24 and Roadside Attractions? Or is the buyer a streaming service such as Netflix, which may be offering no (or only a very limited) theatrical release and exclusive availability via their streaming service? Or is the proposed release a hybrid, offering both a substantial theatrical release and distribution via an early streaming release, as is common with Amazon Studios? For each distribution model, there’s a different mix of upfront payment and potential backend, with lots of variations available to a sophisticated negotiator, so the best selling price doesn’t always maximize ultimate revenue.

The level of distributor support for a film is also extremely important. If a theatrical release is involved, is the distributor committing to a minimum number of screens and markets and a minimum marketing spend? Even for exclusive streaming releases, the level of promotional support both in media and on platform can vary substantially. Whatever the distribution model, both the financiers and the filmmakers would like to know that their film is a high priority for the distributor and won’t get lost in the shuffle or suffer from lackluster promotion and advertising. (For example, is the title just another movie in the streaming service library, discoverable only via search, or is it heavily promoted on the home page and even supported by a media campaign, like Netflix’s Birdbox.) Indeed, this may be especially important to the filmmakers – and the director in particular – who may measure success at least as much based on how the film raises his or her profile as opposed to purely financial considerations.

This raises the obvious truth that the interests of filmmakers and financiers can diverge to a certain extent. Financiers may have a greater desire to recoup investment and protect the downside – after all, it’s their money on the line – whereas filmmakers may want to play for the upside as profit participants. As noted, the filmmakers may also be more focused on how the film release will affect their long-term career prospects than the shorter-term financial rewards.

Beyond the major deal points and strategic considerations covered in this alert – and just as importantly, everything not covered – it takes business savvy, industry knowledge and technical legal expertise to get these film sales deals optimally negotiated and properly documented. At MSK, we have the business, management, and executive-level operational experience in the industry which not only enables us to handle film distribution deals but also a wide variety of financing transactions such as production lending agreements, negative pick-up agreements, completion bond arrangements and interparty agreements. We also innovatively manage financial arrangements among producers, equity investors, distributors and other stakeholders. Most importantly, our broad experience and legal expertise enable us to represent both filmmakers and financiers, through every challenge and opportunity presented through the lifecycle of a film. Moreover, because we represent both financiers and filmmakers, we can often help balance their interests and make it easier for them to communicate and work together effectively. It’s our mission to be trusted strategic advisors to our clients, moving far beyond simply negotiating and drafting or reviewing documents.

In this environment, it’s more important than ever to think big picture and make sure you have expert advice.

 

© 2019 Mitchell Silberberg & Knupp LLP
This post was written by Steven G. Krone of Mitchell Silberberg & Knupp LLP.
Read more entertainment legal news on our Entertainment Type of Law Page.