Tag: Litigation

So You Wanna Play with Copyright? “Joyful Noise” Ostinato Isn’t Original Expression

The US Court of Appeals for the Ninth Circuit affirmed a district court’s order vacating a jury award of damages for copyright infringement and granting judgment as a matter of law, explaining that the musical work alleged to have been copied did not qualify as an original work of authorship but consisted only of “commonplace musical elements.” Marcus Gray PKA Flame et al. v. Katheryn Elizabeth Hudson PKA Katy Perry et al., Case No. 20-55401 (9th Cir. Mar. 10, 2022) (Clifton, Smith, Watford, JJ.)

Key Definitions:

  • A musical scale is a sequence of musical notes or tones by pitch.
  • A subset of seven notes is called the minor scale and can be referred to with alphabetic names (A, B, C, etc.) or scale degrees (1, 2, 3, etc.).
  • An ostinato is a repeating musical figure (for example, 3-3-3-3-2-2).

In 2007, Marcus Gray (Flame) purchased an ostinato and used it in the song “Joyful Noise.” The song was released in 2008. While “Joyful Noise” did not achieve significant commercial success or airtime, it received millions of views online. In 2013, American singer-songwriter Katy Perry created “Dark Horse,” which was a hit, resulting in her performance at the Super Bowl halftime show in 2015.

The “Joyful Noise” ostinato consists of notes, represented as 3-3-3-3-2-2-2-1 and 3-3-3-3-2-2-2-6, whereas Dark Horse’s ostinato contains 3-3-3-3-2-2-1-5. Both have a uniform rhythm and equal note duration in time.

Plaintiffs sued Perry and her co-defendants for copyright infringement. Plaintiffs presented circumstantial evidence that the defendants had a reasonable opportunity to access “Joyful Noise” and that the ostinatos in both songs were substantially similar. Plaintiffs did not present direct evidence that Perry and the others had copied elements of the song, instead relying on testimony from their expert musicologist, Dr. Todd Decker.

Decker testified that the ostinatos were similar in many aspects, but he also testified that there was no single element that caused him to believe the ostinatos at issue were “substantially similar” when viewed “in isolation.” The jury also heard testimony from Perry’s expert, who disagreed altogether that the ostinatos were substantially similar.

The jury found that the defendants had a reasonable opportunity to hear “Joyful Noise” before composing “Dark Horse,” that the two songs contained substantially similar copyrightable expression and that “Dark Horse” used protected material from “Joyful Noise.” The jury found the defendants liable for copyright infringement and awarded $2.8 million in damages. The district court vacated the award and granted judgment as a matter of law to defendants, concluding that the evidence at trial was legally insufficient to show that the “Joyful Noise” ostinato was a copyrightable original expression. The plaintiffs appealed.

The Ninth Circuit explained that because the plaintiffs did not present any direct evidence that the defendants copied the “Joyful Noise” ostinato, they were required to show that the defendants had access to the work and that the ostinatos were substantially similar.

The Ninth Circuit began with its analysis of the “substantially similar” prong, employing a two-part test having “extrinsic” and “intrinsic” components. The Court noted that while it must refrain from usurping the jury’s traditional role of evaluating witness credibility and weighing the evidence, the extrinsic test requires that the Court ensure that the evidence of objective similarities between two works is legally sufficient to serve as the basis of a copyright infringement claim, regardless of the jury’s views. The Court explained that the substantial similarity test focuses on the protectable elements standing alone and disregards non-protectable elements.

To be a protectable element under copyright law, the “Joyful Noise” ostinato had to qualify as “original expression.” Based on the trial record, the Ninth Circuit found that the “Joyful Noise” ostinato consisted entirely of commonplace musical elements, and that the similarities between the two ostinatos did not arise out of an original combination of these elements. Without original expression, no element identified by Flame was individually copyrightable. For example, the Court noted that “the fact that Joyful Noise and Dark Horse both make use of sequences of eight notes played in an even rhythm is a trite musical choice outside the protection of copyright law.”

Finding the evidence presented at trial legally insufficient to establish that the musical elements were individually copyrightable, the Ninth Circuit determined that the jury’s verdict finding defendants liable for copyright infringement was unsupported by substantial evidence. Thus, the Court affirmed the trial court’s grant of judgment as a matter of law.

Article By Jodi Benassi of McDermott Will & Emery

For more intellectual property legal news, click here to visit the National Law Review. 

© 2022 McDermott Will & Emery

The Rocky Waters of Absentee Ballots

This Legal Update will help you navigate through those rough waters involving absentee ballots.

Absentee Voting

No election issue seems to be more of a lightning rod over the past year than absentee voting. While voting absentee has always occurred, this alternative voting option has been thrust into the spotlight due to the COVID-19 pandemic and the public scrutiny onslaught since the 2020 Presidential Election.

Wisconsin has been at the forefront of a variety of conflicts over absentee voting. Presently, a lawsuit is pending before the Wisconsin Supreme Court concerning absentee voting and the use of ballot boxes, which are drop boxes some municipalities used to collect absentee ballots throughout the pandemic. In January 2022, a Waukesha County Circuit Court Judge ruled against the use of ballot boxes; however, the Wisconsin Court of Appeals stayed that Judge’s ruling due to the close proximity of the February 15, 2022, election primary. The Wisconsin Supreme Court then took over the case from the Court of Appeals and, on February 11, 2022, issued a temporary decision allowing ballot boxes for the February 15, 2022, primary but not the April 5, 2022 election. Local officials continue to wait for the Wisconsin Supreme Court’s final decision, which hopefully will provide greater legal direction for absentee ballots.

In the meantime, following are FAQs on the fundamentals for absentee voting.

Who is an absentee elector?

An absent elector is a qualified voter, but who is unable or unwilling to appear in person, at the polling place in his or her applicable ward or election district to vote. An individual can choose to vote absentee for any reason.

What are the qualifications for voting absentee?

Most registered Wisconsin voters can vote absentee by mail. The specific qualifications are: (1) be a U.S. citizen, (2) be at least 18 years old, and (3) have resided in their voting district for at least 28 days.

What is an absentee ballot?

An absentee ballot is used by an absent voter to cast their vote. The ballot is printed and sealed in an envelope, that then needs to be mailed or hand-delivered to the municipal clerk. The municipal clerk will ensure that the absentee ballot is received by the proper polling place on election day, as long as the municipal clerk receives the ballot on time. The law provides specific requirements concerning timeframes regarding valid absentee ballots – those details are beyond the scope of this article and it is encouraged to consult with legal counsel for further direction.

Do the same absentee voting rules apply to military and overseas voting?

No. Military and overseas voters have special rules as well as additional options for voting. For instance, they can access their absentee ballot online.

How can a voter request an absentee ballot?

An absentee ballot can be requested in the following ways: by mail, by email, online, by fax, or in person. To find out more specific information to your voting district, you should go to your municipality’s website.

What about the use of drop boxes for an absentee ballot?

There is substantial debate currently regarding the use of ballot drop boxes for absentee ballots. It is strongly encouraged to communicate with legal counsel concerning this issue. However, given the pending Waukesha County Court case referenced above and in consideration of the WEC’s withdrawal of its guidance in that case, the safest approach would be to refrain from using a drop box until further direction from the Wisconsin Supreme Court.

This information is provided as a review of the fundamental requirements when it comes to balloting. Ideally, this information will be available for reference when basic questions or conflicts occur for a quick resolution. Nevertheless, more complicated questions may arise and it is strongly encouraged to reach out to your legal counsel for timely answers as these issues develop.

©2022 von Briesen & Roper, s.c
For more articles about elections, visit the NLR election & Legislative section.

Surprise! The No Surprises Act Changes Again

The No Surprises Act (Act), which became effective Jan. 1, 2022, is the latest health care law passed with the best of intent: to create consumer protection from unexpected out-of-network medical bills and to create a federal independent dispute resolution (IDR) process to resolve payment disputes between payers and out-of-network providers. Unfortunately, the Act, especially the U.S. Department of Health and Human Services’ (HHS) implementation of the IDR process, also creates a new administrative burden for health care providers. Providers and medical associations filed lawsuits in multiple jurisdictions to challenge HHS’ implementation of the IDR process and the constitutionality of the Act before it was even in effect.

On Feb. 24, 2022, the United States District Court for the Eastern District of Texas granted the Texas Medical Association’s Motion for Summary Judgement to vacate select IDR requirements. The Court found that HHS’ interim final rule’s IDR process, intended to resolve payment disputes regarding reimbursement for out-of-network emergency services and out-of-network services provided at in-network facilities, was contrary to the clear language of the Act[1] (Rule).

In general, the Act[2] requires health insurance payers (Insurers) to reimburse providers for certain out-of-network services at a statutorily calculated “out-of-network rate.”[3] Where an All-Payer Model Agreement or specified state law does not exist, to set such a rate, an Insurer must issue an initial out-of-network rate decision and pay such amount to the providers within 30 days after the out-of-network claim is submitted.[4] If the provider disagrees with the Insurer’s proposed out-of-network reimbursement rate, the provider has a 30-day window to negotiate a different payment rate with the Insurer.[5] If these negotiations fail, the parties can proceed to the IDR process.[6]

Congress adopted a baseball-style arbitration model for the Act’s IDR process. The Insurer and provider each submit a proposed out-of-network rate with limited supporting evidence. The arbitrator picks one of the offers while taking into account specified considerations, including the “qualified payment amount,” the provider’s training, experience, quality, and outcomes measurements, the provider’s market share, the patient’s acuity, the provider’s teaching status, case mix, and scope of services, and the provider’s/Insurer’s good-faith attempts to enter into a network agreement.[7] The “qualifying payment amount” (QPA), is designed to represent the median rate the Insurer would pay for the item or service if it were provided by an in-network provider.[8]

The Rule requires the IDR arbitrator to select the proposed payment amount that is closest to the QPA unless “the certified IDR entity [arbitrator] determines that credible information submitted by either party … clearly demonstrates that the [QPA] is materially different[9] from the appropriate out-of-network rate.”[10] This is a clear departure from the analysis set forth in the Act.

The Texas Medical Association challenged the Rule under the Administrative Procedures Act (APA), arguing that the Departments exceeded their authority by giving “outsized weight” to one statutory factor over the others specified by Congress, and that the Departments failed to comply with the APA’s notice and comments requirements in promulgating the Rule. In turn, the Departments argued that the plaintiffs did not have standing to bring the claims.

After dispensing with defendant’s standing arguments, the Eastern District of Texas Court ruled in favor of the plaintiff’s Motion for Summary Judgment and determined that “the Act unambiguously establishes the framework for deciding payment disputes and concludes that the Rule conflicts with the statutory text.” Under the Act, the arbitrators (or certified IDR entities) “shall consider … the qualifying payment amounts” and the provider’s level of training, experience, and quality outcomes, the market share held by the provider, the patient’s acuity, the provider’s teaching status, case mix, and scope of services, and the demonstrated good faith efforts of both parties in entering into a network agreement.”[11] The Act did not specify that any one factor should be considered the “primary” or “most important” factor. The Rule, in contrast, requires arbitrators to “select the offer closest to the [QPA]” unless “credible” information, including information supporting the “additional factors,” “clearly demonstrates that the [QPA] is materially different from the appropriate out-of-network rate.”[12] The Departments characterized the other factors as “permissible additional factors” that may be considered only when appropriate.[13] The Court found that the Department’s Rule was inconsistent with the Act and that since Congress had spoken clearly on the factors to be considered in the arbitration process, the Department’s interpretation of the Act was not appropriate and had exceeded the Department’s authority.[14]

Following the Court’s decision, the Departments issued a memorandum on Feb. 28, 2022, clarifying the Act’s requirements for providers and Insurers. The memo specifically noted that the Court’s decision would not, in their opinion, affect the patient-provider dispute resolution process.[15] The Departments also stated they would withdraw any guidance inconsistent with the Court’s Opinion, provide additional training for interested parties, and keep the IDR process portal open to resolve disputes. The Departments also will be considering further rulemaking to address the IDR process.

The No Surprises Act continues to surprise us all with more adaptations. Enforcement of this new law remains uncertain in light of the numerous legal challenges, including at least one constitutionality challenge.

[1] Requirements Related to Surprise Billing: Part II, 86 Fed. Reg. 55,980 (Oct. 7, 2021).

[2] Consolidated Appropriations Act of 2021, Pub. L. No. 116-260, div. BB, tit. I, 134 Stat. 1182, 2758-2890 (2020).

[3] 300gg-111(a)(1)(C)(iv)(II) and (b)(1)(D).

[4] 300gg-111(a)(1)(C)(iv) and (b)(1)(C).

[5] 300gg-111(c)(1)(A).

[6] 300gg-111(c)(1)(B).

[7] 300gg-111(c)(5).

[8] 300gg-111(a)(3)(E)(i)(I)-(II).

[9] “Material difference” is defined as “a substantial likelihood that a reasonable person with the training and qualifications of a certified IDR entity making a payment determination would consider the submitted information significant in determining the out-of-network rate and would view the information as showing that the [QPA] is not the appropriate out-of-network rate. 149.510(a)(2)(viii).

[10] 45 C.F.R. 149.510(c)(4)(ii).

[11] 300gg-111(c)(5)(C)(i)-(ii).

[12] 45 C.F.R. 149.510(c)(4)(ii)(A).

[13] 86 Fed. Reg. 56,080.

[14] Because the Departments had exceeded their statutory authority, no Chevron deference was owed to their regulations. Chevron U.S.A. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984).

[15] This is a separate dispute resolution process designed to address disputes between patients and providers when bills for uninsured and self-pay patients are inconsistent with the good faith estimate provided by the health care provider.

Article By Stacey A. Borowicz and Joseph D. Wheeler of Dinsmore & Shohl LLP

For more healthcare legal news, click here to visit the National Law Review.

© 2022 Dinsmore & Shohl LLP. All rights reserved.

“Levitating” Lawsuits: Understanding Dua Lipa’s Copyright Infringement Troubles

Even global stardom will not make copyright woes levitate away from British superstar Dua Lipa. The pop icon is making headlines following a week of back-to-back, bi-coastal lawsuits alleging copyright infringement with her hit “Levitating.” First, on Tuesday, March 1st, members of reggae band Artikal Sound System sued Dua Lipa for copyright infringement in a Los Angeles federal district court1. Then, on Friday, March 4th, songwriters L. Russell Brown and Sandy Linzer filed their own copyright infringement lawsuit against the pop star in a New York federal district court2. Both lawsuits were filed claiming violations of the Copyright Act, 17 U.S.C. §§ 101 et seq.3

The Artikal Sound System lawsuit is short and alleges that Dua Lipa and the co-creators of “Levitating” copied Artikal Sound System’s 2017 song “Live Your Life.”4 The lawsuit does not provide any details in the allegation, other than explaining that “Live Your Life” was commercially released in 2017, was available during the time Dua Lipa and her co-creators wrote “Levitating,” and that because the two songs are substantially similar “Levitating” could not have been created independently.5 As a remedy, Artikal Sound System seeks actual damages, a portion of Dua Lipa’s profits stemming from the alleged infringement, the cost of the lawsuit, and any additional remedies the Court sees fit.6

Similarly, the Brown and Linzer lawsuit alleges that Dua Lipa and her “Levitating” co-creators copied their works “Wiggle and Giggle All Night” and “Don Diablo.”7 More specifically, the Brown and Linzer lawsuit alleges that “Levitating” is substantially similar to “Wiggle and Giggle All Night” and “Don Diablo.”8

Accordingly, the lawsuit claims that the defining melody in “Levitating,” the “signature melody,” is a direct duplicate of the opening melody in “Wiggle and Giggle All Night” and “Don Diablo,” and therefore appears in all three songs.9 As additional support, the lawsuit points to professionals and laypersons noticing a similarity between the three songs, and Dua Lipa previously admitting that she “purposely sought influences from past eras for the album Future Nostalgia.”10

As for a remedy, Brown and Linzer request full compensatory and/or statutory damages, punitive damages, an injunction on “Levitating,” a portion of Dua Lipa’s profits stemming from the alleged infringement, the cost of the lawsuit, and any additional remedies the Court sees fit.11

The copyright infringement legal framework

A general overview of the copyright infringement legal framework is helpful in assessing the potential outcomes of the “Levitating” lawsuits. Specifically, the legal framework from the 9th Circuit, where one of the “Levitating” lawsuits was filed, provides great guidance.

In order to establish copyright infringement, one must prove two elements: owning a valid copyright and copying of “constituent elements of the work that are original.”12 Importantly, when there is no direct evidence of copying, but rather circumstantial evidence, plaintiffs must show that:

  1. the accused infringers had access to the copyrighted work, and

  2. the infringing work and the copyrighted work “are substantially similar.

Plaintiffs can easily show access to the copyrighted work, but “substantial similarity” is harder to show.

2-Part Test

Luckily, the 9th Circuit devised a 2-part test to prove “substantial similarity.”13 Under the test, there is sufficient copying, and therefore “substantial similarity,” if an infringing work meets an “extrinsic” and “intrinsic” prong.14 The intrinsic prong is met if there is “similarity of expression” between the works, as evaluated from the subjective standpoint of an “ordinary reasonable observer.”15 The extrinsic prong is objective and requires comparing the “constituent elements” of the copyrighted and infringing works to see if there is substantial similarity in terms of the “protected” elements in the copyrighted work.16

As such, if the commonality between the copyrighted and infringing works is not based on “protected” elements, then the extrinsic prong is not met, and there is no “substantial similarity” between the works for purposes of a copyright infringement action. It must be noted that the 9th Circuit recognizes that, in certain situations, there can be a “substantial similarity” even if the constituent elements are individually unprotected, but only if their “selection and arrangement” reflects originality.17

To understand “substantial similarity” one must define what is “protectable” under copyright law. Copyright protection extends only to works that contain original expression.18 In this context, the standard for originality is a minimal degree of creativity.19 According to the Copyright Act, protection does not extend to ideas or concepts used in original works of authorship.20 In the musical context, copyright does not protect “common or trite musical elements, or commonplace elements that are firmly rooted in the genre’s tradition” because “[t]hese building blocks belong in the public domain and cannot be exclusively appropriated by any particular author.”21

Katy Perry “Dark Horse” case and an ostinato

While the “Levitating” lawsuits are still young, a recent decision by the 9th Circuit in the infamous Katy Perry “Dark Horse” case is a good example of how courts conduct legal analyses in copyright infringement cases. The precedential ruling (Gray v. Hudson), released on March 10th, affirms a U.S. District Judge’s decision to vacate a jury verdict that awarded US$2.8 million in damages to a group of rappers who claimed Katy Perry’s “Dark Horse” copied their song “Joyful Noise.”22

The 9th Circuit’s opinion cogently applies copyright law to hold that the plaintiffs in the original lawsuit did not provide legally sufficient evidence that “Joyful Noise” and “Dark Horse” were “extrinsically similar” in terms of musical features protected by copyright law.23

Specifically, the Court reasoned that while “Dark Horse” used an ostinato (a repeating musical figure) similar to the one in “Joyful Noise,” the resemblance in the ostinatos stemmed from “commonplace, unoriginal musical principles” and made them uncopyrightable.24 Without the ostinatos, the plaintiffs could not point to any “individually copyrightable” elements from “Joyful Noise” that were “substantially similar” in “Dark Horse.”25

Additionally, the Court held that the “Joyful Noise” ostinato was not original enough to be a protectable combination of uncopyrightable elements.26 In turn, under the legal framework for copyright infringement the plaintiffs failed to meet their burden.27 The Court put it best by opining that:

“[a]llowing a copyright over [the] material would essentially amount to allowing an improper monopoly over two-note pitch sequences or even the minor scale itself, especially in light of the limited number of expressive choices available when it comes to an eight-note repeated musical figure.”28

“Levitating” lawsuits likely outcomes

Applying the copyright infringement framework to the “Levitating” lawsuits allows us to understand the likely outcomes. First, the Artikal Sound System lawsuit does not allege any direct evidence of copying. As such, Artikal Sound System must show that Dua Lipa had access to “Live Your Life” and that “Levitating” is “substantially similar” to their song under the 2-prong test. Access is easily proved, as “Live Your Life” was commercially available on multiple streaming services when Dua Lipa wrote “Levitating.”29

However, the Artikal Sound System lawsuit does not provide enough information to pass the 2-prong “substantial similarity” test. The lawsuit only alleges that “Levitating” is “substantially similar” to “Live Your Life,” but does not detail any similarities much less provide any evidence that there is similarity of expression between the works from the point of view of a reasonable observer, as required by the intrinsic component of the test.30

More importantly, the lawsuit does not even mention any protectable elements from “Live Your Life” copied in “Levitating” and would, therefore, fail the extrinsic prong of the “substantial similarity” test.31 In turn, as submitted, the Artikal Sound System lawsuit fails to make a prima facie case of copyright infringement by Dua Lipa’s “Levitating.”

The story may be different for the Brown and Linzer lawsuit. Like the first suit, the Brown and Linzer lawsuit does not provide direct evidence of copying and will therefore only succeed if it passes the circumstantial evidence requirements of 1) access and 2) “substantial similarity.” Unlike the first suit, however, the Brown and Linzer complaint includes comparisons of the notes in “Levitating” to the notes in “Wiggle and Giggle All Night” and “Don Diablo” as support for the allegation of “substantial similarity.”

The 2nd Circuit, where the lawsuit was filed, held that a court can determine as a matter of law that two works are not “substantially similar” if the similarity between the two works concerns non-copyrightable elements of the copyrighted work.32 In practice, this means that the 2nd Circuit can apply the 2-prong “substantial similarity” test. Brown and Linzer can easily prove access to “Wiggle and Giggle All Night” and “Don Diablo” since both songs are internationally popular.33

Brown and Linzer can also meet the intrinsic prong of the test because, as they point out, “laypersons” (ordinary reasonable observers) have noticed the commonality between their copyrighted works and “Levitating,” as supported by widespread postings on mediums like TikTok.34 The extrinsic prong of the test is more uncertain.

In their lawsuit, Brown and Linzer point to a “signature melody” that repeats in “bars 10 and 11 of all three songs… [and] with some slight variation, in bars 12 and 13.”35 The court may find that this “signature melody” is not protected by copyright if it reasons that a melody is a basic musical principle, much like the 9th Circuit did for ostinatos in the Katy Perry “Dark Horse” case.

At its core, it seems like Brown and Linzer will have to convince the court that a melody, which they define as “a linear succession of musical tones,” qualifies as copyrightable because it is an original creative expression. Conversely, Brown and Linzer can concede that a melody is not copyrightable, but that their original arrangement and use of the melody in their copyrighted songs is copyrightable. In the end, it will be up to whether or not a court finds that the “signature melody” is copyrightable. As such, the outcome of Brown and Linzer’s action for copyright infringement is uncertain.

Nonetheless, one thing is for sure, copied or not, “Levitating” will continue powering gym visits and nights out dancing.

Footnotes

  1. See Complaint, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  2. See Complaint, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  3. See Complaint at ¶ 7, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022); Complaint at ¶ 12, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  4. See Complaint at ¶ 17, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  5. See Complaint at ¶ 15-18, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  6. See Complaint at ¶ 19-22, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  7. See Complaint at ¶ 2, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  8. See Complaint at ¶ 2, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  9. See Complaint at ¶ 3, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  10. See Complaint at ¶ 49, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  11. See Complaint at 13-14, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  12. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991).

  13. Apple Comput., Inc. v. Microsoft Corp., 35 F.3d 1435, 1442 (9th Cir. 1994).

  14. Id.

  15. Id.

  16. Swirsky v. Carey, 376 F.3d 841, 845 (9th Cir. 2004).

  17. Satava v. Lowry, 323 F.3d 805, 811 (9th Cir. 2003).

  18. See 17 U.S.C. § 102(a); Feist, 499 U.S. at 345.

  19. See Feist, 499 U.S. at 345.

  20. See 17 U.S.C. § 102(b); Skidmore as Tr. for the Randy Craig Wolfe Tr. v. Led Zeppelin, 952 F.3d 1051, 1069 (9th Cir. 2020) (en banc).

  21. Skidmore, 952 F.3d at 1069.

  22. Gray v. Hudson, No. 20-55401, slip op at 26 (9th Cir. Mar. 10, 2022).

  23. Id.

  24. Id. at 14-21.

  25. Id. at 17.

  26. Id. at 22.

  27. Id. at 26.

  28. Id. at 24.

  29. See Complaint at ¶ 16, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  30. See Complaint at ¶ 18, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  31. See Complaint at ¶ 18, Cope v. Warner Records, Inc., Case 2:22-cv-01384 (C.D. Cal. 2022).

  32. Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57, 63-65 (2d Cir. 2010).

  33. See Complaint at ¶ 35, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  34. See Complaint at ¶ 4, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

  35. See Complaint at ¶ 38, Larball Publ’g Co., Inc. v. Dua Lipa, Case 1:22-cv-01872 (S.D.N.Y. 2022).

Article By Adrian Gonzalez Cerrillo and Sana Hakim of K&L Gates

For more intellectual property legal news, click here to visit the National Law Review.

Copyright 2022 K & L Gates

Electronic Medical Record Provider Pays $930,000 in First Civil Cyber-Fraud Initiative Settlement

For the first settlement as part of the Department of Justice’s Civil Cyber-Fraud Initiative, DOJ settled a case against medical services government contractor Comprehensive Health Services, LLC (CHS) for $930,000.  This settlement resolves allegations brought forth in two qui tam lawsuits, where four whistleblowers filed suit on behalf of the government under the qui tam provision of the False Claims Act.  Three of the whistleblowers received $15,000, in addition to attorneys’ fees, and one relator received $127,050 for reporting fraud.

“This settlement serves notice to federal contractors that they will be held accountable for conduct that puts private medical records and patient safety at risk,” said the United States Attorney for the Eastern District of New York.

CHS, as part of the medical services they provided to the U.S. government, was paid to implement a secure electronic medical record (EMR) system as part of contracts with the State Department and Air Force at various U.S. consulate and military locations in Iraq and Afghanistan.  The EMR system housed personal health information and medical records for anyone who received medical treatment at the locations CHS served, including U.S. service members, diplomats, officials, and contractors.  According to the allegations, CHS did not consistently store patients’ medical records on the secure EMR system and indeed left scans on a network drive which non-clinical staff could access.

As part of several contracts to which CHS was a party, CHS was supposed to provide medical supplies, including controlled substances subject to U.S. Food and Drug Administration (FDA) or European Medicines Agency (EMA) approval.  According to the allegations, CHS “knowingly, recklessly, or with deliberate ignorance” submitted claims for payment for controlled substances that they obtained by means not sanctioned by these contracts.  Not only did CHS lack a Drug Enforcement Agency license to export controlled substances, but CHS also obtained controlled substances by having their U.S.-based subsidiary request that a South African physician prescribe controlled substances, according to the allegations.  The South African physician prescribed these controlled substances, absent FDA or EMA approval, and a shipping company from the same country imported the substances to Iraq.

Government contractors are supposed to adhere to the terms of their contracts in order to receive reimbursement from the U.S. government.  This medical services provider ignored procurement guidelines to obtain controlled substances, undermining safety controls and misrepresenting their adherence to contract terms in providing medical services to U.S. military personnel.  The DOJ’s Civil Cyber-Fraud Initiative brings the power of the False Claims Act to bear on contractors whose job is to protect sensitive information and critical systems.  Representing that data is secure when it is, in fact, not is a violation of the False Claims Act and constitutes cyber-fraud.  As the Special Agent in Charge of the U.S. Department of State OIG, Office of Investigations noted, “…this outcome will send a clear message that cutting corners on State Department contracts has significant consequences.”

Whistleblowers raised data privacy concerns to CHS, but the contractor failed to implement better cybersecurity protocols in response to their concerns.  The Department of Justice has rewarded its first whistleblowers as part of the Civil Cyber-Fraud Initiative, and they’re just getting started.

© 2022 by Tycko & Zavareei LLP
For more articles about digital health, visit the NLR Health Care Law section.

One Less Way for Ohio Landowners to Challenge Royalty Severances

On February 15, 2022, the Ohio Supreme Court issued a significant decision in Peppertree Farms, L.L.C. v. Thonen establishing that, unless expressly stated otherwise, an oil and gas royalty interest retained in a deed executed prior to 1925 is not limited to the lifetime of the grantor. In so holding, the Ohio Supreme Court cut off one of the only grounds, other than the Dormant Minerals Act and Marketable Title Act, for landowners to quiet title and eliminate past oil and gas severances.

Ohio follows a legal tradition under which the default rules of English “common law” were adopted and then adapted by statute to form the basis of our legal system. At common law, a conveyance of real property had to include “words of inheritance” (i.e., an express statement that the royalty interest would last in perpetuity and be inheritable) or the interest being conveyed would be limited to the lifetime of the grantee (a life estate). Additional complications arose when a grantor sought to retain an interest by deed. If the grantor was retaining a right which had already been conveyed to him in perpetuity, then the retention qualified as a “technical exception” of a pre-existing right and additional words of inheritance were not required. However, if the grantor was creating and then retaining a new right, the retention qualified as a “technical reservation” and was limited to a life estate.

As new modes of production and corresponding property rights were discovered, it became unclear exactly what rights pre-existed a severance and the whole system of distinctions fell apart. In 1925, the General Assembly passed a law establishing that all future conveyances of real property were presumed perpetual unless stated otherwise. While eliminating this issue as to future deeds, the General Assembly did not settle the issue as to deeds executed before 1925 or clarify whether the retention of an oil and gas royalty was a “technical exception” or “technical reservation.”

In the Peppertree Farms case, Plaintiffs Peppertree Farms, Jay Moore and Amy Moore (collectively, “Peppertree”) sought to quiet title to certain lands in Monroe County, Ohio, against a severed oil and gas royalty interest (the “Royalty Interest”) originally retained by the grantor under a 1921 deed. In addition to a claim for extinguished under Ohio’s Marketable Title Act, Peppertree asserted that the Royalty Interest did not include words of inheritance and was therefore a newly created right which terminated upon the death of the grantor under the 1921 deed. Conversely, the defendant royalty owners (“Royalty Owners”) argued that the Royalty Interest was a pre-existing right which the grantor already held, and therefore could retain, in perpetuity without words of inheritance.

While Peppertree was able to convince both the trial and appellate court that the Royalty Interest was a newly created interest which was limited to a life estate, it was unsuccessful with the Ohio Supreme Court. Reasoning that a royalty was nothing more than the retention of part of the right to receive the proceeds of oil and gas production, the Court ultimately found that the Royalty Interest was a “technical exception” which survived the lifetime of the grantor. As a result, Peppertree was limited to its claims for extinguishment under the Marketable Title Act and Ohio surface owners lost another means to challenge ancient royalty reservations.

©2022 Roetzel & Andress
For more articles on local state litigation, visit the NLR Litigation section.

Securities Litigation: An Emerging Strategy to Hold Companies Accountable for Privacy Protections

A California federal judge rejected Zoom Video Communications, Inc.’s motion to dismiss securities fraud claims against it, and its CEO and CFO, for misrepresenting Zoom’s privacy protections. Although there have been a number of cases challenging inadequate privacy protections on consumer protection grounds in recent years, this decision shifts the spotlight to an additional front on which the battles for privacy protection may be fought:  the securities-litigation realm.

At issue were statements made by Zoom relating to the company’s privacy and encryption methods, including Zoom’s 2019 Registration Statement and Prospectus, which told investors the company offered “robust security capabilities, including end-to-end encryption.” Importantly, the prospectus was signed by Zoom’s CEO, Eric Yuan. The plaintiffs, a group of Zoom shareholders, brought suit arguing that end-to-end encryption means that only meeting participants and no other person, not even the platform provider, would be able to access the content. The complaint alleged that contrary to this statement, Zoom maintained access to the cryptographic keys that could allow it to access the unencrypted video and audio content of Zoom meetings.

The plaintiffs’ allegations are based on media reports of security issues relating to Zoom conferences early in the COVID-19 pandemic, as well as an April 2020 Zoom blog post in which Yuan stated that Zoom had “fallen short of the community’s  ̶ ̶  and our own  ̶ ̶  privacy and security expectations.”  In his post, Yuan linked to another Zoom executive’s post, which apologized for “incorrectly suggesting” that Zoom meetings used end-to-end encryption.

In their motion to dismiss, the defendants did not dispute that the company said it used end-to-end encryption.  Instead, they challenged plaintiffs’ falsity, scienter, and loss causation allegations – and all three attempts were rejected by the court.

First, as to falsity, the court did not buy the defendants’ argument that “end-to-end encryption” could have different meanings because a Zoom executive expressly acknowledged that the company had “incorrectly suggest[ed] that Zoom meetings were capable of using end-to-end encryption.”  Thus, the court found that the complaint did, in fact, plead the existence of materially false and misleading statements. The court also rejected the defendants’ argument that Yuan’s understanding of the term “end-to-end encryption” changed in a relevant way from the time he made the challenged representation to his later statements that Zoom’s usage was inconsistent with “the commonly accepted definition.” The court looked to Yuan’s advanced degree in engineering, his status as a “founding engineer” at WebEx, and that he had personally “led the effort to engineer Zoom Meetings’ platform and is named on several patents that specifically concern encryption techniques.”

Lastly, the court rebuffed the defendants’ attempt at undermining loss causation, finding that the plaintiffs had pled facts to plausibly suggest a causal connection between the defendants’ allegedly fraudulent conduct and the plaintiffs’ economic loss. In particular, the court referenced the decline in Zoom’s stock price shortly after defendants’ fraud was revealed to the market via media reports and Yuan’s blog post.

That said, the court dismissed the plaintiffs’ remaining claims, as they related to data privacy statements made by Zoom or, in general, by the “defendants,” unlike the specific encryption-related statement made by Yuan. The court found that the corporate-made statements did not rise to the level of an “exceptional case where a company’s public statements were so important and so dramatically false that they would create a strong inference that at least some corporate officials knew of the falsity upon publication.” Because those statements were not coupled with sufficient allegations of individual scienter, the court granted the defendants’ motion to dismiss those statements from the complaint.

© 2022 Proskauer Rose LLP.
For more articles about business litigation, visit the NLR Litigation section.

When Board Conflict Crosses the Line…

Elected officials are, naturally, sometimes at the center of conflict and division within their board.  Conflict is to be expected.  However, what happens when board members take action to freeze out a minority board member from information that he or she needs to do his or her respective job?  The use of information-control tactics against minority members on a board, impeding their ability to receive that information necessary to perform his or her duties is problematic – and it may be unconstitutional.\

Elected officials have duty to be informed. Palm v.Centre Tp., 415 A.2d 990, 992 (Pa. Commw. Ct. 1980):

It is the duty of a school board member, a commissioner, a councilman, or a supervisor to be informed. Supervisors are not restricted to information furnished at a public meeting. A supervisor has the right to study, investigate, discuss and argue problems and issues prior to the public meeting at which he may vote. Nor is a supervisor restricted to communicating with the people he represents. He is not a judge. He can talk with interested parties as does any legislator.

This responsibility extends beyond the contours of the public meeting and what is discussed at those meetings.

Elected officials have protections under the First Amendment. The Third Circuit has historically recognized that a public official’s right to free speech under the First Amendment will be violated when the retaliatory conduct of her peers interferes with her ability to adequately perform her elected duties. See Werkheiser v. Pocono Tp., 780 F.3d. 172, 182 (3d Cir. 2015); Monteiro v. City of Elizabeth, 436 F.3d 397, 404 (3d Cir. 2006).

To avoid entering the territory of this kind of interference, everyone can play a role in ensuring the government functions adequately and that Board members’ rights, duties, and privileges are protected.  Board division, when gone too far, can cross constitutional lines.  To avoid walking that line, there are things that everyone can do to make for a well-functioning Board or meeting:

  • Managers can stay neutral and ensure that every board member is kept up to date on significant municipal operations and projects.
  • Solicitors can host a meeting with the board to educate the board on laws pertaining to their position, such as a municipal code and the Pennsylvania Sunshine Act.
  • Board members can foster respect for fellow board members and learn how to communicate so that each board member can participate in healthy debate on contentious issues.  Enacting policies related to meeting decorum can be helpful, but they need to be enforced evenhandedly.

For more tips for handling divisiveness among a board, see the December 2021 article on “Tips for Handling Board Conflicts” in the Pa Township News.

©2022 Strassburger McKenna Gutnick & Gefsky
          

Fitness App Agrees to Pay $56 Million to Settle Class Action Alleging Dark Pattern Practices

On February 14, 2022, Noom Inc., a popular weight loss and fitness app, agreed to pay $56 million, and provide an additional $6 million in subscription credits to settle a putative class action in New York federal court. The class is seeking conditional certification and has urged the court to preliminarily approve the settlement.

The suit was filed in May 2020 when a group of Noom users alleged that Noom “actively misrepresents and/or fails to accurately disclose the true characteristics of its trial period, its automatic enrollment policy, and the actual steps customer need to follow in attempting to cancel a 14-day trial and avoid automatic enrollment.” More specifically, users alleged that Noom engaged in an unlawful auto-renewal subscription business model by luring customers in with the opportunity to “try” its programs, then imposing significant barriers to the cancellation process (e.g., only allowing customers to cancel their subscriptions through their virtual coach), resulting in the customers paying a nonrefundable advance lump-sum payment for up to eight (8) months at a time. According to the proposed settlement, Noom will have to substantially enhance its auto-renewal disclosures, as well as require customers to take a separate action (e.g., check box or digital signature) to accept auto-renewal, and provide customers a button on the customer’s account page for easier cancellation.

Regulators at the federal and state level have recently made clear their focus on enforcement actions against “dark patterns.” We previously summarized the FTC’s enforcement policy statement from October 2021 warning companies against using dark patterns that trick consumers into subscription services. More recently, several state attorneys general (e.g., in Indiana, Texas, the District of Columbia, and Washington State) made announcements regarding their commitment to ramp up enforcement work on “dark patterns” that are used to ascertain consumers’ location data.

Article By: Privacy and Cybersecurity Practice Group at Hunton Andrews Kurth

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