Tag: copyright

Jennifer Lopez Sued for Copyright Infringement

More and more often nowadays, celebrities are being sued for posting pictures of themselves on Instagram. While this does not make much sense to many of us, posting a picture on social media that you did not take without permission from the photographer can result in copyright infringement charges.

Actress and singer, Jennifer Lopez, is the latest celebrity to be hit with a copyright infringement suit. Lopez and her production company are being sued for over $150,000 in damages by photographer Steve Sands, who alleges that Lopez posted a photo taken by Sands on Instagram. Sands contends that Lopez and her production company did not license the photograph from Sands or have permission from Sands to post the photo.

While the average person may do something similar and get away with it, celebrities often will not, due to the significant number of likes the photo receives and the celebrity’s large number of social media followers. Some say celebrities post these images to brand themselves without permission from the taker of the photo.

This is not the first time Lopez has been sued for posting. Lopez was sued by Splash News and Picture Agency for $150,000 in October 2019, when she posted a photo taken by the company of her now fiancé, Alex Rodriguez, in her Instagram story in 2017. Splash News alleged they were the owner and exclusive copyright holder of the picture.

The Copyright Act protects the rights of Connecticut photographers by prohibiting others from using their photos for promotion without consent. However, there are exceptions that allow use of another’s photos in certain circumstances.

© 2020 by Raymond Law Group LLC.

Photographer Unsuccessful in Copyright Case Over Use of Embedded Instagram Photo

User beware – you will be held to a social media platform’s terms of use. Most people are aware by using a social media platform that they give up some rights to the content that they share. What rights and to what extent depends on the platform and the specific terms of use.

A district court in the recent Sinclair case found no copyright infringement by the website Mashable, where it used one of photographer Sinclair’s Instagram photos in an article, even after an unsuccessful attempt to license the photo directly from Sinclair. Sinclair v. Ziff Davis, LLC, and Mashable, Inc., No. 1:18-CV-00790 (S.D.N.Y. April 13, 2020).

Plaintiff Sinclair had a “public” Instagram account and posted a copy of the subject photograph. Defendant Mashable, a digital media and entertainment platform, published on its website an article about female photographers that embedded the publicly posted photo from Sinclair’s Instagram account. Notably, prior to using the Instagram photo, an employee from Mashable contacted Sinclair about licensing the same photo to be used in the article. Sinclair declined Mashable’s US$50 offer to license the use of the photo. Sinclair later demanded that Mashable remove the embedded photograph from their website and demanded compensation. Mashable refused. Sinclair then sued for copyright infringement.

Sinclair argued that Mashable infringed her copyright in the photo since it did not have permission to use the photo. Mashable contended that it had a valid sublicense from Instagram to use the photo and therefore did not infringe Sinclair’s copyright. The court sided with Mashable.

By creating an Instagram account, Sinclair was bound to Instagram’s Terms of Use, which grant Instagram the right to sublicense content that is posted and made public by the user. Instagram then exercised that right by granting Mashable a sublicense to display the photo through sharing the embedded photo. Instagram utilizes API (application programming interface) which allows users to share public content posted by other users. The Instagram policies allow users to use API to embed posts on their websites.

The court held that Sinclair’s right to license the photo directly and Instagram’s right as a licensee to sublicense the photo to Mashable were independent from one another.

Sinclair also contended that the authorization of Instagram to sublicense the photo was invalid because of the complex and interconnected documents which established the rights. While the court agreed that Instagram could make their terms of service and policies more concise and accessible, they were under no obligation to do so.

Lastly, Sinclair argued that it was unfair of Instagram to force a professional photographer to choose between keeping her work “private” on one of the most popular photo sharing apps or to post publicly which would allow Instagram a sublicense to her photographs to users like Mashable. While the court noted this dilemma was very real, the court held that Sinclair had already made her choice by opting to post the photo publicly.

The court also noted that because it held that Instagram had granted Mashable a valid license to display Sinclair’s photo, it did not have to reach the question of unsettled law in the circuit of whether embedding an image is considered a ‘display’ capable of infringing a copyright in an image. That issue was addressed on a motion for summary judgment in Goldman v. Breitbart News Network LLC et al., 1:17-CV-03144 (S.D.N.Y. February 15, 2018), where the court came to the exact opposite conclusion.

In the Goldman case, a different Judge in the same jurisdiction held that the use of embedded Tweets on news media websites featuring a picture of Tom Brady did infringe the copyright of the photographer. The decision for partial summary judgment in favor of the photographer in the Goldman case was highly criticized, and the case ultimately settled outside of court.

While this case affirmed that use of a public Instagram photo as embedded in an article on a third-party website is covered by Instagram’s Terms of Use, this ruling does not necessarily mean that Instagram’s terms grant a blank check regarding the use of publicly posted content. This ruling addressed a specific use of an embedded photo, but did not touch on a litany of other potential concerns when using another’s photo posted publicly on the platform, such as right of publicity, unfair competition, false sponsorship or affiliation, or trademark infringement.

Copyright 2020 K & L Gates

For more on photo & other copyright issues, see the National Law Review Intellectual Property Law section.

A Registered Copyright is the Only Way to Guard Against Infringement

The legal world and the media closely monitor every move the Supreme Court makes or considers. However, some rulings attract more attention than others. One that the general public might have overlooked was a 2019 ruling involving infringement claims. Trying to clean up some inconsistent decisions in the Circuit Courts, the high court ruled unanimously that copyright infringement claims are valid only when there is a copyright registered with the United States Copyright Office.

This is a significant shift

Before this ruling, the courts were often more open to protecting copyrightable property even if it was not officially registered with the Copyright Office. For example, the Fifth and Ninth Circuit ruled that protection comes as soon as the owner applies for the copyright and pays the registration fee. The Tenth and Eleventh Circuits, on the other hand, ruled that protection was only valid when the application was approved. In the past, it was sometimes enough to say “patent pending” to dissuade infringers even if the application was later rejected. This phrase is now irrelevant.

What does this mean for applicants?

The processing time can vary but takes several weeks, which means that applicants will are vulnerable during the application process, which can important in fast-moving businesses like technology. Moreover, some thought the application was too long or too expensive. This ruling makes it clear that the only protection is when the companies, inventors, entrepreneurs, or content creators register their idea.

© 2020 by Raymond Law Group LLC.

No Copyright Case Too Small: Content Creators Rejoice or Casual Infringers Beware?

An office jokester emails a funny meme she copied off Google to a colleague. A tourist snaps a picture of a painting in an art gallery and posts it to his travel blog. A teacher prints copies of a recently published Internet article and distributes to his class. A teen reposts his friend’s Instagram picture on his own social media page. To these casual infringers, no harm has been done and there’s certainly no reason to “make a federal case out of it.” But to the copyright owners, these small acts of infringement mean something. Perhaps not enough to justify the expense and time required for a federal claim, but action may be worth pursuing on a smaller scale.

Enter the pending CASE Act, intended to protect the “creative middle class,” and a potential boon to small businesses and individual content creators, while simultaneously presenting a threat to the “micro-infringements” committed by the ordinary person throughout the day. Last week, the US House of Representatives approved the Copyright Alternative in Small-Claims Enforcement Act of 2019 (CASE Act) by a landslide 410-6 vote. The bill is intended to create a Copyright Claims Board within the US Copyright Office that would hear copyright claims of up to $15,000 per work infringed, with statutory damages capped at a total of $30,000.

If passed by the Senate, the CASE Act is likely to be a welcome avenue for graphic designers, bloggers, photographers, authors, vloggers, and other individual and small business copyright owners to protect their works. Currently, pursuing copyright infringement litigation is limited to filing suit in federal courts, the cost of which can be prohibitive for many small businesses. The proposed Copyright Claims Board provides a more affordable avenue—effectively, a copyright small claims court—to enforce copyright ownership.

Supporters say that small businesses have long needed a more efficient and affordable means to enforce their copyrights. To this point, much of the unauthorized exchange and use of Internet-based works or smaller-scale copyrighted works has been difficult to police. In fact, June Besek, the executive director of the Kernochan Center for Law, Media and the Arts at Columbia Law School, recently told the ABA Journal that many infringers knowingly exploit copyrighted material because they are confident they will never be challenged. (Anyone remember the flagrant use of Napster and LimeWire by teens in the late 1990s and early 2000s to illegally download music—excuse me, “file share”—with little fear of repercussions for their “small-scale” acts of infringement?). A number of organizations, including the American Bar Association, have expressed support for the CASE Act.

But that support, while widespread, is not universal. The American Civil Liberties Union opposes the proposed CASE Act on the grounds that it will stifle free speech and the open sharing of information. Other critics say that by lowering the threshold for infringement claims, lawmakers also are opening the door for “copyright trolls” to file nuisance infringement claims with the Copyright Claims Board. And many are less than keen on the idea that inadvertently unanswered copyright infringement complaints could cost ordinary Americans up to $30,000 in default judgments per proceeding—perhaps a small sum to a business, but potentially life-changing to many individuals—with very limited ability to appeal, under the currently proposed language of the Act.

Notably, as currently written, the small-claims tribunal established under CASE will be entirely voluntary, meaning the complaining party can elect to use the Copyright Claims Board, and the defending party may choose to opt out. But critics point out that the opt-out window is only 60 days long, and easily could be missed by an unwitting defendant.

Next, the Senate will consider the CASE Act, but observers believe it will pass with bipartisan support. The final language of the Act may be somewhat different from its current form, so stay tuned for more updates as the CASE Act makes its way through the legislature.

What the proposed CASE Act could mean for you:

Would-be plaintiffs (or defendants) appearing before the proposed Copyright Claims Board are encouraged to do so with licensed legal representation. Some have suggested that this small claims court format will allow parties to represent themselves without needing to incur the fees of legal representation. However, it is important to remember that, though the monetary stakes may be lower than in federal court, the complex legal nuances of copyright law, not to mention jurisdiction, service, discovery, evidence, joinder of parties, and expert testimony, remain the same and are best addressed by experienced legal counsel.

Owners of large copyright portfolios may find the CASE Act to allow greater leeway in defending their works against smaller-player infringers. Businesses with larger portfolios may wish to take stock of their protected works and develop an enforcement strategy, taking into account this more accessible avenue for enforcement.

Smaller companies or individual content creators, too, may find the proposed CASE Act to provide the freedom to assert their copyrights more aggressively than they have done previously. These companies and individuals also are encouraged to take stock of their copyright portfolios, and consider setting up infringement alerts through their legal representatives or third party vendors in order to take a more offensive stance.

On the opposite side of the court room, copyrighted work users are cautioned to think carefully about their use of protected works. Businesses and schools may want to consider updating policies on use and distribution of protected works, with a more conservative mindset. The relative ease of filing suit with the Copyright Claims Board may give rise to a more litigious “creative middle class.” And while the damages may be smaller-scale, the attendant legal costs may not be, and damages from multiple suits may add up quickly.

 

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

ARTICLE BY Kristin Lamb of  Womble Bond Dickinson (US) LLP.
For more copyright infringement regulation, see the National Law Review Intellectual Property law page.

Bronze, Shape, Glow: A Copyright Tale Destined For Broadway

Stores like Aldi are increasingly popular with UK consumers as a result of offering “copycat” products of well-known brands at drastically lower prices. However, with this rise in popularity, brand owners and creatives are being increasingly frustrated by finding their products and ideas at the mercy of imitation products.

One such aggrieved party was well-known makeup brand Charlotte Tilbury (Tilbury), who found their “Starburst” lid design and the “Powder Design” of their “Filmstar Bronze and Glow” set had provided the ‘inspiration’ for Aldi’s own “Broadway Shape and Glow” set. Tilbury filled a UK High Court claim for copyright infringement over the products shown below, with Aldi adamantly rejecting that any copyright had been infringed in their ‘inspired’ makeup set.

The main difficulty Tilbury faced was the fact that it is notoriously hard to claim copyright in mass produced 3D products as English Courts have historically been reticent to consider them “sculptures” or “works of artistic craftsmanship”.

However, Tilbury was successful in arguing that the “Starburst” lid design and the “Powder Design” on their product were original artistic works and as such the product was protected by copyright. Tilbury were able to establish their artistic copyright as “a work need only be ‘original’ in the limited sense that the author originated it by his efforts rather than slavishly copying it from the work produced by the efforts of another person.” Once establishing the existence of copyright in the artistic work the Court had little difficulty in finding that it had been substantially copied by Aldi for its “Broadway Shape and Glow” set and summary judgement was granted in Tilbury’s favour.

This case not only marks a success for the aggrieved brands and creatives who feel short changed by “Like brand inspiration” products but also provides some interesting learning opportunities for brand owners in the quest to protect their designs. Tilbury was successful in arguing copyright infringement due to the original artistic “starburst” element in its product design, the elements where the copyright lay. Brand owners may consider incorporating similar artistic elements into their products to act as a form of protection against imitators or at least provide ammunition for a copyright infringement claim should they need it.

Click here for the Judgement.

Copyright 2019 K & L Gates

Article by Serena Totino and  Daniel R. Cartmell of K&L Gates.
For more copyright cases see the Intellectual Property law page of the National Law Review.

Will the Supreme Court Weigh in on the Copyright Lawsuit of the Decade?

When two tech titans clash in court, the outcome can reverberate widely. In what has been dubbed the “copyright lawsuit of the decade,” Oracle sued Google in 2010 for infringing its copyrights in 37 Java Application Programming Interface (API) packages used in Google’s Android software platform for mobile devices (as explained further below, API packages consist of pre-written computer programs that perform specified functions).

At the first trial in 2012, a jury found that Google infringed Oracle’s copyrights. The judge, however, concluded that the Java API packages were not copyrightable as a matter of law. In 2014, the Federal Circuit reversed and remanded for a second jury trial on Google’s fair use defense. Oracle Am., Inc. v. Google Inc., 750 F.3d 1339 (Fed. Cir. 2014). The Supreme Court denied Google’s cert petition.

In 2016, a second jury found in favor of Google on its fair use defense, and the trial court denied Oracle’s motion for judgment as a matter of law. In 2018, the Federal Circuit overturned the jury’s verdict, concluding that Google’s use of the 37 Java API packages was not fair use as a matter of law. Oracle Am., Inc. v. Google LLC, 886 F.3d 1179 (Fed. Cir. 2018).

On January 24, 2019, Google petitioned the Supreme Court for a writ of certiorari. It identified the issues presented as:

(i) whether copyright protection extends to a software interface; and

(ii) whether Google’s use of a software interface in the context of creating a new computer program constitutes fair use.

The Federal Circuit’s rulings sent shockwaves through the software industry, and fifteen parties—ranging from corporations like Microsoft to software-related associations, and intellectual property scholars—filed amicus briefs in support of Google’s petition. Microsoft warned that the Federal Circuit’s approach “threatens disastrous consequences for innovation” in the software industry by depriving third parties of access to and reuse of functional code used to “facilitate interoperability across myriad software platforms and hardware devices.” An association representing over 70,000 software developers worldwide asserted that the Federal Circuit’s conclusions had spawned confusion concerning whether longstanding practices such as sharing libraries of common software functions constitute copyright infringement. Likewise, Professor Peter S. Menell and Professor David Nimmer (the editor of Nimmer on Copyright) maintained that the Federal Circuit had “upended nearly three decades of sound, well-settled, and critically important decisions of multiple regional circuits on the scope of copyright protection for computer software.”

On March 27, 2019, Oracle filed its opposition to the petition. The tech giant identified the issues as:

(i) Whether the Copyright Act protects Oracle’s computer source code that Google concedes was original and creative, and that Oracle could have written in any number of ways to perform the same function?

(ii) Whether the Federal Circuit correctly held that it is not fair use as a matter of law for Google to copy Oracle’s code into a competing commercial platform for the purpose of appealing to Oracle’s fanbase, where Google could have written its own software platform without copying, and Google’s copying substantially harmed the actual and potential markets for Oracle’s copyrighted works?

After Google filed its reply, the Supreme Court invited the Solicitor General to file a brief expressing the views of the United States. This is where the case presently stands.

The Java Programming Language

Oracle’s predecessor, Sun Microsystems, Inc. (“Sun”) developed the Java programming language to allow programmers to write programs that run on different types of computing devices without having to rewrite the programs from scratch for each type of device. To that end, Java’s motto is “write once, run anywhere.”

To provide programmers with shortcuts for executing specific functions, Sun created the Java API, which consists of packages (akin to a bookshelf in a library), classes (akin to books on the shelves), and methods (akin to “how-to” chapters in each book). See Oracle Am., Inc. v. Google Inc., 872 F. Supp. 2d 974, 977 (N.D. Cal. 2012), rev’d and remanded, 750 F.3d 1339 (Fed. Cir. 2014).

Each method performs a specific programming function (for example, choosing between the greater of two integers). The key components of a method are: the “declaring code” that defines the package, class and method names, form of inputs and outputs, and the “implementing code” that provides instructions to the computer concerning how to carry out the declared function using the relevant inputs.

Google began negotiating with Sun in 2005 to license and adapt Java for its emerging Android software platform for mobile devices. After those negotiations failed, Google decided to use Java anyway, and copied verbatim the declaring code in 37 Java API packages (consisting of 11,500 lines of code), as well as the structure and organization of the packages (referred to as the SSO). However, Google wrote its own implementing code for the relevant methods.

In 2007, Google began licensing the Android platform free of charge to smartphone manufacturers. It earned revenue—$42 billion from 2007 through 2016—from advertising on the phones. In 2010, Oracle acquired Sun, and promptly sued Google for infringement.

The Copyright Question

In 2014, the Federal Circuit reversed the lower court’s ruling that the declaring code and SSO were not entitled to copyright protection. Importantly, while the Federal Circuit only has jurisdiction over patent-related matters, it handled the appeal because Oracle’s complaint had also included patent claims (which the jury rejected). The Federal Circuit, however, applied Ninth Circuit law to the copyright questions presented.

The Federal Circuit began by noting that “copyright protection extends only to the expression of an idea—not to the underlying idea itself.” Moreover, to the extent the particular form of expression is necessary to the use of the idea, then using the expression to that extent is not copyright infringement. This is known as the “merger doctrine” which states that if there are a limited number of ways to express an idea, the idea is said to “merge” with its expression—and the expression becomes unprotected. Further, the “scenes a faire doctrine,” bars certain standard, stock, or common expressions from copyright protection.

Thus, to use a simple example, while a book on arithmetic can be copyrighted, the idea of adding, subtracting, multiplying, and dividing cannot be. Moreover, if using symbols like “+” and “x” are necessary or commonly used to express the concepts of adding and multiplying, those expressions are not copyrightable.

Applying these principles, the Federal Circuit first observed that copyright protection extends to expressive elements of a computer program. It then rejected Google’s argument that Oracle’s expression merged with unprotectable ideas, noting that Oracle had unlimited options as to the selection and arrangement of the declaring code that Google copied. The Federal Circuit also rejected Google’s reliance on the scenes a faire doctrine. Because at the time the code was written, its composition was not dictated by external factors like “mechanical specifications of the computer” or “widely accepted programming practices within the computer industry.”

The Fair Use Question

After determining that Oracle’s declaring code and SSO were subject to copyright protection, the Federal Circuit remanded for a jury trial on Google’s fair use defense. As noted, the jury found that Google had established the defense, but the Federal Circuit overturned that verdict.

The fair use defense is a judge-made doctrine that has been incorporated into the federal copyright statute as Section 107, which provides that “the fair use of a copyrighted work…for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” To determine whether particular copying constitutes fair use, the statute identifies the following factors as:

(1) “The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”

(2) “The nature of the copyrighted work.”

(3) “The amount and substantiality of the portion used in relation to the copyrighted work as a whole.”

(4) “The effect of the use upon the potential market for or value of the copyrighted work.”

The Federal Circuit ultimately concluded that because Google’s copying was for a highly commercial purpose, was not qualitatively insignificant, and substantially harmed Oracle’s own licensing efforts; the copying was not fair use as a matter of law, notwithstanding the jury’s verdict to the contrary.

Because APIs are key to broad acceptance of standardized software functions, IMS computer and software expert Dr. John Levy believes that were the Supreme Court to affirm the Federal Court’s ruling, it may severely limit the spread of useful API’s to important code bases. As an example, Dr. Levy notes that a small company will usually want to make its declaring code available to all users and developers, so that the underlying application code will get the broadest possible use and market share. The developer counts on having a competitive set of implementing code to make money.

According to Dr. Levy, the Federal Circuit may have been influenced by the fact that Google made so much money using the copied declaring code. But as evidenced by the large number of amicus briefs, the broader software industry cares more about defending a broad reading of “fair use” than assessing damages against companies who make money from copied declaring code.

Dr. Levy sees the issues in the Oracle case as similar to those in a case he worked on as an expert back in the 80386 chip days. In that case, Intel owned the instruction set of the 386 chip. But because Intel customers didn’t want to be limited to a single source for these Intel-compatible processors, Intel licensed the instruction set to other chip manufacturers.

“One licensee produced chips that performed the Intel-owned instruction set. Intel sued that licensee for copyright infringement of the underlying microcode (the implementation of the instruction set in the chip designed by the licensee company),” recalled Dr. Levy.

A federal court ruled that the microcode (firmware) was indeed copyrightable, but that there was no infringement under the “limited expression” doctrine explained above. There simply were not many ways to implement the licensed instructions in microcode, and therefore the licensee’s implementation did not infringe Intel’s own implementation. In the Oracle case, however, the Federal Circuit concluded that there were many ways for a programmer to select and arrange the declaring code that Google copied.

© Copyright 2002-2019 IMS ExpertServices, All Rights Reserved.

This article was written by Joshua Fruchter of IMS ExpertServices.
For more copyright cases, see the National Law Review Intellectual Property law page.

The Digital Millennium Copyright Act: Scope, Reach, and Safe Harbors

With businesses engaging in increasingly more commerce over the internet, it is crucial to understand the consequences of displaying, using, and transferring another entity’s works online. Enter The Digital Millennium Copyright Act (DMCA) of 1998, which was signed into law by President Clinton to keep pace with the new realities of internet technology and commerce. The Act sought to protect intellectual property rights while simultaneously advancing the growth and development of e-commerce.

The DMCA is divided into five titles.

  • Title I implements the 1996 World Intellectual Property Organization (WIPO) treaties and makes it unlawful to manufacture or distribute products, services, or technologies that can be used to circumvent any technological measures intended to control access to copyrighted works, such as passwords or encryptions.
  • Title II contains various “safe harbors” for internet service providers (ISPs) that limit their liability for direct, contributory, or vicarious copyright infringement.
  • Title III creates an exemption from infringement liability for computer program copying conducted for purposes of repair, diagnosis, or troubleshooting.
  • Title IV contains miscellaneous provisions for items such as ephemeral recordings and the transfer of rights to motion pictures.
  • Title V creates a new form of protection for vessel hull designs, overturning the United States Supreme Court’s Bonito Boats decision, which denied copyright protection to such boat designs.

Under the DMCA, ISPs such as AT&T, Comcast Xfinity, and Verizon, cannot be held liable for copyright infringement when they neither know, nor have reason to know, that they are providing internet services to a website that is engaged in copyright infringement. The safe harbors include:

  • A “storage safe harbor” that protects an online service provider’s hosting and storing, and makes available infringing matter stored at a third-party user’s direction.
  • A “transmission safe harbor” that protects the transmitting or providing of a connection to infringing material, typically evoked by telecommunications companies.
  • A “caching safe harbor” that protects an ISP from liability for intermediate and temporary storage of a third-party’s infringing material on a system or network either controlled or operated by the service provider or for the service provider.
  • A safe harbor for search engine websites that protects the linking or referring of users to online third-party locations with infringing material. In order for providers to invoke this protection, internet providers must make an ongoing investigation of their users’ material, “take down” any infringing material once they are made aware of the infringement and inform any of their subscribers of the illegal consequences of making use of that infringing material through, for example, a set of terms and conditions that appear on the site.

In light of the safe harbors, it is important to note what the DMCA does not protect against – trademark infringement, unfair competition, rights of publicity, invasion of privacy, defamation, foreign law copyright claims, the ISP’s own, directly infringing activities, and any collusion between ISPs and third parties to create infringing material. ISPs must therefore continuously monitor third-party conduct in addition to its own conduct to prevent any activity that could lead to liability or loss of an affirmative defense to copyright infringement.

Two recent cases illustrate the complexities of the DMCA. In Disney Enterprises Inc. et al. v. VidAngel Inc., a federal appeals court affirmed an injunction that shut down VidAngel, a web service that lets users stream Hollywood films without seeing nudity or violence. VidAngel essentially purchased authorized copies of DVDs and Blu-ray discs, decrypted one disc of each film to create a digital, unauthorized copy of the work, removed objectionable violent or obscene content from its created copy, and streamed a filtered version of the copy to its customers. Finding that VidAngel infringed on the studios’ copyrights and violated the ban on circumvention of digital encryption measures (VidAngel bypassed locks on the physical discs in order to upload and stream the movies), the district court issued a preliminary injunction to stop the company from streaming the altered films.

On appeal, the Ninth Circuit Court of Appeals sided with the district court despite VidAngel’s arguments that its actions were lawful because, as purchasers of the DVDs and Blu-ray discs, it was authorized by the Studios to decrypt the technical protection mechanisms installed to view the discs’ contents. The law, however, distinguishes between those entities the content owner authorizes to circumvent the access controls and those the owner authorized to access the work. Falling into the latter category, VidAngel was not be able to claim exemption from copyright liability under DMCA’s safe harbor provisions. The takeaway for business owners is that the DMCA cannot be used as a shield by purchasers of copyrighted works who use them for unlawful copying and dissemination.

In another case, Mavrix Photographs, LLC v. LiveJournal, Inc., 873 F.3d 1045 (9th Cir. 2017), a celebrity photography company that sells its photographs to celebrity magazines brought suit against LiveJournal for posting 20 of its copyrighted photographs online.

LiveJournal is an online platform where users create and run communities to post and comment on content. LiveJournal utilized the help of three unpaid administrative roles:

  1. “Moderators” who reviewed posts submitted by users to ensure compliance with company rules;
  2. “Maintainers” who reviewed and deleted posts and who had the ability to remove moderators; and
  3. “Owners” who removed maintainers and monitors.

The district court held that the DMCA’s safe harbor provision protected LiveJournal from liability since the photos were stored at the direction of its users and not LiveJournal itself. On appeal to the Ninth Circuit, however, using principles of the law of agency, the court ruled that the moderators might be “agents” of the websites they police and could lose DMCA safe harbor immunity if they permit infringing content to be posted. The court stated that moderators were provided with specific directions from LiveJournal, and LiveJournal employees substantively supervised, selected, and removed the moderators. On the other hand, moderators were also free to stop working for LiveJournal and volunteer their time elsewhere. Nonetheless, the court vacated the lower court’s order denying discovery of the moderators’ identities because it believed that the newfound, possible agency relationship impacted the decision to conceal the moderators’ identities.

The implications of the LiveJournal decision remain unclear. Some have criticized the holding as inconsistent with the DMCA framework because the statute was enacted to create a safe harbor that broadly protects service providers for material stored at the direction of its users, not literally for material stored directly by users themselves. But going forward, internet businesses and content providers who previously approved and monitored posts the way LiveJournal did may consider opting to forego such thorough oversight of its users’ posted content if they believe they would be unable to assert a safe harbor defense to copyright infringement.

COPYRIGHT © 2019, STARK & STARK

This post was written by Gene Markin of Stark & Stark Law Firm.

Read more news on the Digital Millennium Copyright Act on the National Law Review’s Intellectual Property page.

Trademarks, Bankruptcy, and Leverage: What Manufacturers and Other Trademark License Parties Should Know About A Potential Landmark Case Before the Supreme Court

On February 20, 2019, the United States Supreme Court heard oral arguments in the case Mission Products, Inc. v. Tempnology, LLC. The case has important implications for manufacturers and other parties to trademark licenses when a trademark licensor files, or threatens to file, bankruptcy. Lower courts including the First Circuit found that, in the event of a trademark licensor bankruptcy filing, the licensor may reject the trademark license, prevent the licensee from further use of the license, and leave the licensee with the sole remedy of filing a claim in the bankruptcy case. Other courts have disagreed with the effect of a trademark license rejection in bankruptcy, finding that a trademark licensee may retain certain rights following a licensor rejection. When the Supreme Court rules, the Tempnology case is slated to be a landmark decision both on the general issue of what rejection truly means in bankruptcy and on the specific issue of whether a trademark licensee’s rights can essentially be destroyed in a licensor bankruptcy case.

The decision is likely to have broad implications for trademark license parties no matter which way the Supreme Court rules. If the court holds that the rejection of a trademark license effectively terminates the rights of a licensee, both licensors and licenses will know that such a “nuclear option” is available in bankruptcy and negotiating leverage will swing heavily toward a licensor. On the other hand, a decision finding that licensees retain rights post-rejection will make a bankruptcy filing a much less attractive option for a licensor as a solution for dealing with a licensee. Both trademark licensors and licensees should, therefore, be aware that the bankruptcy sword or shield (depending on your perspective) may be about to change.

The Tempnology case involved Tempnology, LLC, a company that manufactured athletic sportswear and licensed the right to use its COOLCORE trademark and related rights to a licensee called Mission Product Holdings, Inc. More details about the company, the bankruptcy court decision, and the First Circuit decision can be found here. In summary, Tempnology attempted to use its Chapter 11 bankruptcy filing as a means to terminate the rights of the trademark license to Mission. Normally, following the rejection of an agreement such as a license in a bankruptcy case, non-debtor parties are limited to filing a general unsecured claim. Depending on the case, general unsecured claimants may receive much less than the face value of their claims. However, some courts have held that rejection does not “vaporize” a licensee’s rights and the non-debtor licensee thus may retain certain post-rejection enforcement rights. To that point, outside of the bankruptcy context, a licensor’s breach of a trademark license agreement does not mean that the licensee no longer has any rights in the license. In fact, state law provides a number of licensee remedies short of termination.

On appeal to the First Circuit, the court disagreed with the characterization that refusing to permit post-rejection rights would “vaporize” a trademark licensee’s rights. The licensee continued to have rights, the court noted, but they were limited to filing a claim for rejection damages. The court further noted that the purpose of rejection under the Bankruptcy Code is to free a debtor of costly obligations and that this purpose would be thwarted if a trademark licensor debtor were required to deal with post-rejection assertions of rights by the licensee.

Mission appealed to the Supreme Court and certiorari was granted on October 26, 2018. While Mission requested review of several issues, the Supreme Court limited the matter to one issue: whether a debtor/licensor’s rejection of a license agreement terminates rights of the licensee that would survive the licensor’s breach under applicable non-bankruptcy law. In addition to the briefs filed by the parties, there were several notable amici curiae briefs, the majority of which adopted Mission’s position that a trademark licensee should retain certain rights post-rejection. Such amici curiae briefs in support of Mission included the United States, the New York Intellectual Property Law Association, a number of revered law professors, and the International Trademark Association. Moreover, the United States, as represented by the Assistant to the Solicitor General, participated in oral argument in support of Mission.

During the oral arguments, the Justices probed the issue of a trademark licensor’s obligations, including contractual obligations under the terms of a license as well as obligations to maintain the trademark under the Lanham Act. This is an important point because rejection is designed to relieve a debtor of its contractual obligations in order to unburden the bankruptcy estate. The Lanham Act, however, may impose continuing obligations on the licensor with respect to the rejected license. Mission argued that Bankruptcy Code section 365 and the concept of rejection speaks to contractual obligations and that the obligation to maintain a trademark is outside the agreement. Justice Breyer challenged the argument with an analogy of a landlord for an igloo whose obligation included air conditioning the premises: “You know, you break your promise to air condition, no more igloo.” There were also some notable statements from the United States, which called the Tempnology’s position “extortionate” because the threat of a rejection would put the licensee to the “choice between paying a higher royalty payment or shutting down their business and firing all their workers.”

Tempnology responded by arguing that a trademark license involves a special relationship that deals with the trademark owner’s reputation. The Justices challenged Tempnology on that point by asking how a licensor’s breach would be treated outside of bankruptcy. When pressed on the point, Tempnology could not point to any case law or other authority that would compel the licensee to stop using the license as a result of the licensor’s breach. Justice Kagan succinctly summarized the parties’ positions that Mission was arguing rejection means breach and Tempnology was arguing that rejection means rescission. The fact that the applicable Bankruptcy Code section – section 365(g) – uses the word “breach” suggests that the Justices may be leaning in favor of Mission in the case. Note, however, the issue of mootness may preclude a substantive decision in this case. Both Justices Gorsuch and Sotomayor asked pointed questions on why the case is not moot on a number of grounds, including the fact that no court actually entered an order specifically preventing Mission from using the COOLCORE trademark post-rejection. The United States responded that the effect of the bankruptcy court order was to prevent such usage. It is not entirely clear, but it seemed that the Justices were able to get past the issue of mootness.

The issues in the Tempnology case have broad implications on whether a Chapter 11 bankruptcy can be used as a sword by a trademark licensor to relieve itself of what it perceives as burdensome licensee obligations. Under the law as adopted by the First Circuit, the scales are tipped decidedly in the favor of a debtor/licensor. If the Supreme Court rules in favor of Mission, it will provide clarity on what exactly rejection means in these circumstances and it will constitute a significant readjustment of negotiating leverage.

 

© 2019 Foley & Lardner LLP
This post was written by Jason B. Binford of Foley & Lardner LLP.
Read more in SCOTUS Litigation on the National Law Review’s Litigation type of law page.

Supreme Court Clarifies Copyright Law: “Application” v. “Registration” Finally Resolved

On Monday, March 4, 2019, the United States Supreme Court issued an opinion that clarified the long-standing issue of whether a plaintiff bringing a copyright infringement action has to have an issued registration or just a pending application. Justice Ginsburg, writing for a unanimous court, sided with the “registration approach,” which requires a litigant to have an issued registration, or a rejected application, subject to certain limited exceptions. For decades, copyright owners and their attorneys faced a patch-work of circuit and district court decisions that required either (i) an issued registration to institute an infringement action or (ii) merely have made an application to register the work(s) at issue. This decision provides certainty going forward.

In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, No. 17-571, the copyright owner Fourth Estate sued Wall-Street for use of news articles after a licensing agreement between the parties was terminated. Fourth Estate sued Wall-Street and its owner after it applied to register for copyright registrations for the news articles at issue but before any registrations issued. The District Court dismissed the action on defendants’ motion, the Eleventh Circuit affirmed, and the Supreme Court affirmed.

Under the Copyright Act of 1976, as amended, copyright protection attaches to “original works of authorship”— prominent among them, literary, musical, and dramatic works—“fixed in any tangible medium of expression.” 17 U.S.C. § 102(a). Before pursuing a claim for infringement, a copyright owner must comply with § 411(a)’s requirement that “registration of the copyright claim has been made.” Although rights exist before registration, the registration is a requirement that must be administratively exhausted before filing suit. An owner therefore must have an issued registration or a refusal to register from the Copyright Office. The Supreme Court referred to this as “an administrative exhaustion requirement.”

Limited exceptions apply. For example, for works that are particularly vulnerable to predistribution infringement, such as movies or musical compositions, an owner may apply for “preregistration” in which the Copyright Office conducts a limit review. Once a work is “preregistered” the owner may bring suit. However, the owner must also go on and fully register the work thereafter to maintain the action. Another exception covers live broadcasts. Suit may be brought before registration but must be made within three months of the first transmission.

For owners of copyright protected works, the take-away lesson from this decision is to register more of the works that could be subject to infringement. Strategies for protecting works, such as furniture, apparel, and musical works, have become more nuanced and strategic in recent years.

 

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.
Read More IP news on the National Law Review’s IP Type of law page.

“Knock-Offs” Beware: SCOTUS Makes a Fashion-Forward Decision

SCOTUS knock-offs copyrightThe U.S. Supreme Court has settled the closely watched Varsity Brands Inc. et al. v. Star Athletica LLC copyright dispute, holding that cheerleading outfits contain distinct design elements that allow for copyright ownership. The ruling has wide implications for both the fashion apparel and home furnishings industry, both of which rely on distinctive, eye-catching designs to sell products.

On Wednesday, the Supreme Court sided with Varsity Brands in a 6-2 vote. Varsity Brands Inc., the world’s largest maker of cheerleading apparel, alleged copyright infringement claims against rival manufacturer Star Athletica LLC. In particular, Varsity Brands claimed that the stripes, chevrons and other visual design elements on their uniforms are eligible for copyright protection.

Uniforms

Writing for the majority, Justice Clarence Thomas agreed with that contention if such designs “can be perceived as a two- or three-dimensional work of art separate from the useful article” and “would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.” The Varsity Brands uniform designs satisfied that test and, thus, are eligible for copyright protection, he wrote.

Justice Thomas also was careful to note that the ruling only limits competitors from copying Varsity Brands’ “surface designs” and not the underlying clothing shape. “Respondents have no right to prevent anyone from manufacturing a cheerleading uniform that is identical in shape, cut, or dimensions to the uniforms at issue here,” he wrote.

The dispute began in 2010. Star Athletica’s attorneys contended that clothing, as a “useful item,” is not eligible for copyright protection. Furthermore, Star Athletica claimed that the asserted design elements were simply a component of the cheerleading uniforms, and without them, each garment no longer would be a cheerleading outfit. A federal district court initially sided with defendant Star Athletica in 2014, but a Sixth Circuit panel reversed that decision the following year.

This decision confirms long-standing principles of copyright protection which have been found to include three-dimensional sculptural works and ornamentation applied to other “useful items” such as furniture pieces. A 2010 Court of Appeals decision from the Fourth Circuit set forth this principle in Universal Furniture Int’l, Inc. v. Collezione Europa USA, Inc., 618 F. 3d 417, and copyright remains an important tool in the furniture and home furnishings industry.

With yesterday’s Supreme Court decision, manufacturers of other fashion-guided products, including specifically apparel and clothing accessories, can take advantage of this new standard of copyright protection to combat increasing threats of counterfeits and other “knock-offs.” In particular, fashion brands should review their product lines to ensure that copyright-eligible products are protected under this new standard, as well through more traditional trademark mechanisms.

Click here to read our previous article on this case.

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