Sunday, August 26, 2007

Bardot, French Copyright and the First Amendment

I saw a collection of 5 Brigitte Bardot films in Barnes & Noble bookstore priced at $39.99. I didn't buy it, but I was glad to see that the French seem to be waking up to the possibility of exploiting their copyrights in the U.S. market in an attractively-packaged, competitively-priced way.
The United States has historically viewed French copyrights with suspicion. French laws have always included bells and whistles denied to our local authors and creators. They offend our puritan values by protecting frivolous things like fashion designs, designers, and the "moral rights" of artists and authors to the "integrity" of their works. Blank cassette tapes were taxed and rights paid to musicians' collecting societies because music would be copied to them without paying additional royalties.
But banish the thought that such prejudice prevails in Gotham: the Second Circuit is hip to French law. In Sarl Louis Feraud International v. Viewfinder, Inc., 489 F.3d 474 (2d Cir. 2007), the Second Circuit considered a situation where the district court threw out a French judgment without even looking at what the French law was. Neither the appellate nor the respondent briefed the Second Circuit on what French law it was that the district court found unconstitutional. The case involved a U.S. company that published photographs of French fashion designs on the internet. The U.S. company permitted a French judgment to be entered against it. The French court ordered a fine of 50,000 francs per day (France converted to the Euro on January 1, 2002). In the Southern District of New York, the Defendant succeeded in dismissing an action to enforce the French judgment.
The defendant, whose burden it was to show that the French law was repugnant to the law of the State of New York argued "there is simply no way for this Court to know what substantive law was actually applied in France and on what ground Defendant was found liable."
The court looked at the default judgment, which cites the French Intellectual Property Code. It then apparently sua sponte hopped onto the internet, and found the French Civil Code at It then cited:
Article L122-4 Any complete or partial performance or reproduction made without the consent of the author or of his successors in title or assigns shall be unlawful. The same shall apply to translation, adaptation or transformation, arrangement or reproduction by any technique or process whatsoever.
Sacre bleu! Quel horreur! That certainly sounds repugnant. It took me some navigation on the French government website, but sure enough, after pressing the little British flag buttons under "Droit Francais" and next to "Les Codes" and drilling down FIVE levels, I too, found the provision under the rubric "Patrimonial Rights" in English
But then the court cited another French Civil Code that has an odeur of "fair use":
Article L122-5 Once a work has been disclosed, the author may not prohibit: 1°. private and gratuitous performances carried out exclusively within the family circle; 2°. copies or reproductions reserved strictly for the private use of the copier and not intended for collective use, with the exception of copies of works of art to be used for purposes identical with those for which the original work was created and copies of software other than backup copies made in accordance with paragraph II of Article L. 122-6-1, as well as copies or reproductions of an electronic database; 3°. on condition that the name of the author and the source are clearly stated: a) analyses and short quotations justified by the critical, polemic, educational, scientific or informatory nature of the work in which they are incorporated; b) press reviews; c) dissemination, even in their entirety, through the press or by broadcasting, as current news, of speeches intended for the public made in political, administrative, judicial or academic gatherings, as well as in public meetings of a political nature and at official ceremonies; d) complete or partial reproductions of works of graphic or three-dimensional art intended to appear in the catalogue of a judicial sale held in France, in the form of the copies of the said catalogue made available to the public prior to the sale for the sole purpose of describing the works of art offered for sale. A decree by the Conseil d’Etat shall determine the characteristics of the documents and the conditions governing their distribution. 4°. parody, pastiche and caricature, observing the rules of the genre. 5°. acts necessary to access the contents of an electronic database for the purposes of and within the limits of the use provided by contract.
Can a court just hop on the internet and figure out the law of another country sua sponte? It seems un-American and likely to start a riot in Congress among the Freedom Fries crowd. The answer is yes. Although the Second Circuit didn't cite Rule 44.1 of the Federal Rules of Civil Procedure, it provides:
Rule 44.1. Determination of Foreign Law. A party who intends to raise an issue concerning the law of a foreign country shall give notice by pleadings or other reasonable written notice. The court, in determining foreign law, may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination shall be treated as a ruling on a question of law.
The Second Circuit agreed with the lower court's finding that copyright laws are "not matters of strong moral principle". But on the record before it, the court did not see a finding that the French law was "vicious wicked or immoral, and shocking to the prevailing moral sense."
The Second Circuit remanded for an analysis of "whether the intellectual property regime upon which the French Judgments were based impinged on rights protected by the First Amendment." Analogizing to libel judgments, the court held:
In deciding whether the French Judgments are repugnant to the public policy of New York, the district court should first determine the level of First Amendment protection required by New York public policy when a news organization engages in the unauthorized use of intellectual property at issue here. Then, it should determine whether the French intellectual property regime provides comparable protections.
The court noted that the fair use doctrine is coextensive with the First Amendment, and that the district court would have to determine whether the Defendant's use fell within the fair use doctrine as set forth in 17 U.S.C. 107.

Sunday, August 05, 2007

Contracts Involving Copyrights and Forum Selection Clauses: Motions To Dismiss

A musician enters into a recording contract for an album. The forum selection clause specifies England as the exclusive forum to bring legal proceedings. The choice of law clause specifies English law. The musician provides sufficient tracks to release an album. The musician also provides enough additional tracks to launch a second album. The record company asks for permission to launch the second album. The musician refuses. The record company launches the second album.

Can the musician sue in the Southern District of New York? The Second Circuit tackled this question in Phillips v. Audio Active Limited, --- F.3d ---, 2007 WL 2090202 (2d Cir.). The answer is "yes" on copyright claims and "no" on contractual claims.

The musician sued in New York claiming breach of contract, copyright infringement and pendent state law claims. The defendant record company moved to dismiss pursuant to Rule 12(b)(3) - improper venue.

The Second Circuit applies a four-part analysis in deciding motions to dismiss based on a forum selection clause in a contract:

(1) was the clause reasonably communicated to the party resisting enforcement?
(2) is the language of the forum selection clause mandatory rather than permissive? (ie does the language require a lawsuit to be brought in the specified jurisdiction or merely permit jurisdiction)
(3) are the claims and parties involved in the suit subject to the forum selection clause?
(4) if the answer to the above three questions is "yes", the final question is whether the resisting party has rebutted the presumption of enforceability by making a sufficiently strong showing that (a) enforcement would be unreasonable or unjust or (b) the clause was invalid for such reasons as fraud or overreaching.

The District Court dismissed the entire action for improper venue. The Second Circuit affirmed the dismissal of the contract claims.

The Second Circuit reversed on the copyright claims, permitting the copyright claims to proceed in the Southern District of New York. The court looked to the language of the forum selection clause which applied to claims "arising out of" the contract. The court found that the copyright claims did not "arise out of" the contract. The court held that even though the defendant could invoke the contract as a defense, the plaintiff's claims were grounded in the Copyright Act and in his authorship of the works.

The Second Circuit explicitly rejected the approach of the Seventh Circuit in Omron Healthcare, Inc. v. Maclaren Exps. Ltd., 28 F.3d 600 (7th Cir. 1994), which interpreted similar language as "all disputes the resolution of which arguably depend on the construction of an agreement 'arise out of' that agreement." The Omron case involved a distributor selling off excess inventory of strollers bearing trademarks following termination of a distribution agreement. The Seventh Circuit sent the trademark infringement claims over to England.

In other words, applying Omron the Seventh Circuit would have dismissed the copyright claims for lack of venue as well, since determining the validity of the copyright claims would rely on construing the language of the contract.

The result in Phillips was that the plaintiff was permitted to file copyright infringement claims in the Southern District of New York and would have to file breach of contract claims in England.

Professor Patry expresses his dissatisfaction with the Phillips case here. Anyone who drafts copyright or trademark license agreements and does not want to be litigating claims in two separate fora should read the Phillips case and redraft their forum selection clauses.