Thursday, April 29, 2010

SDNY: Copyright Transfer Termination Notices Subject California Copyright Heirs To Jurisdiction In New York

Kirby & Roussos Courtesy Wikipedia


In Marvel Worldwide, Inc. v. Kirby, 2010 WL 1655253 (April 14, 2010), SDNY Judge Coleen McMahon found that two defendants, heirs of comic artist Jack Kirby, submitted themselves to transactional jurisdiction under New York's long-arm statute by sending copyright transfer termination notices pursuant to 17 USC 304(c).   The decision discusses acts by non-domiciliaries that may trigger jurisdiction over foreign defendants for the purposes of being subjected to claims relating to the transaction in New York and uses the "minimum contacts" of International Shoe and Worldwide Volkswagen.

The Kirby heirs sent a notice of termination and Marvel responded with a declaratory judgment action.  The heirs moved to dismiss and simultaneously filed an action in California.   The court distinguished transfer termination notices from cease and desist letters which, if properly drafted and addressed (see Copyright Litigation Handbook Chapter 6) ordinarily (there are exceptions and murky case law), absent other contacts with the forum, should not, standing alone, subject the sender to personal jurisdiction in a foreign jurisdiction.

The Marvel v. Kirby decision does not discuss the copyright venue statute, 28 U.S.C. 1400 which provides:

§ 1400. Patents and copyrights, mask works, and designs


(a) Civil actions, suits, or proceedings arising under any Act of Congress relating to copyrights or exclusive rights in mask works or designs may be instituted in the district in which the defendant or his agent resides or may be found.

(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.

Wednesday, April 28, 2010

2d Cir: Statutory Damages - Rejects "Independent Economic Value" Test

In Bryant v. Media Right Productions, Inc., --- F.3d ---, 2010 WL 1659113 (2d Cir. April 27, 2010), the Second Circuit considered the question of how many statutory damages awards may be granted for an infringement of an album comprised of ten songs.

The court made clear that if the copyright owner published a work as a "compilation" - or album, only one award would be available under 17 USC 504(c).

If a defendant took ten songs from ten different albums and published them as one compilation, ten awards would be available because the copyright owner had not published the works as a compilation.

The decision was written by Judge Kimba Wood sitting by designation.  It relied on plain language and legislative history arguments regarding Congress's limitation on the number of awards of statutory damages in enacting the Copyright Act.

Bryant explicitly rejected the "independent economic value" test adopted by the 9th, 11th and DC Circuits in determining whether copyrighted works within a compilation could support additional awards of statutory damages.   The other Circuits have not explicitly dealt with the question of songs and albums but television shows (9th and 11th) and individual poses of Mickey Mouse (D.C. Cir.).

Monday, April 26, 2010

7th Circuit: $60,000 Sanction on Attorney for Bringing A Copyright Action


The United States had the "American Rule" for most of its history.  In recent years, the practice of law has been practically criminalized by judges imposing financial sanctions on attorneys.  Here is a case where sophisticated defense counsel gave repeated "warnings" (rather than making a Rule 11 motion), and then got a judge and a circuit court to sanction the attorney by going around Rule 11, sanctioning the attorney, giving the defendant a windfall.  Here's how:

In Tillman v. Newline Cinema, 2010 WL 1452500 (7th Cir. April 13, 2010), the 7th Circuit affirmed a lower court's decision to sanction both a client and an attorney.  The decision would be rather routine had the court proceeded under Rule 11 of the Federal Rules of Civil Procedure, which provides that a party seeking sanctions must first serve the person against whom sanctions are sought a copy of a motion seeking sanctions, and if the party withdraws the offending pleading, the Rule 11 sanctions motion can't be filed.

The Tillman court didn't rely on Rule 11, it relied on the court's inherent power to impose sanctions:

§ 1927. Counsel’s liability for excessive costs



Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
 
Rule 11 (not discussed by the court at all), provides as follows:
 
Rule 11. Signing Pleadings, Motions, and Other Papers; Representations to the Court; Sanctions

(a) Signature.
Every pleading, written motion, and other paper must be signed by at least one attorney of record in the attorney's name — or by a party personally if the party is unrepresented. The paper must state the signer's address, e-mail address, and telephone number. Unless a rule or statute specifically states otherwise, a pleading need not be verified or accompanied by an affidavit. The court must strike an unsigned paper unless the omission is promptly corrected after being called to the attorney's or party's attention.
(b) Representations to the Court.
By presenting to the court a pleading, written motion, or other paper — whether by signing, filing, submitting, or later advocating it — an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.
(c) Sanctions.
(1) In General.
If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee.
(2) Motion for Sanctions.
A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets. If warranted, the court may award to the prevailing party the reasonable expenses, including attorney's fees, incurred for the motion.
(3) On the Court's Initiative.
On its own, the court may order an attorney, law firm, or party to show cause why conduct specifically described in the order has not violated Rule 11(b).
(4) Nature of a Sanction.
A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated. The sanction may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney's fees and other expenses directly resulting from the violation.
(5) Limitations on Monetary Sanctions.
The court must not impose a monetary sanction:
(A) against a represented party for violating Rule 11(b)(2); or
(B) on its own, unless it issued the show-cause order under Rule 11(c)(3) before voluntary dismissal or settlement of the claims made by or against the party that is, or whose attorneys are, to be sanctioned.
(6) Requirements for an Order.
An order imposing a sanction must describe the sanctioned conduct and explain the basis for the sanction.
(d) Inapplicability to Discovery.
This rule does not apply to disclosures and discovery requests, responses, objections, and motions under Rules 26 through 37.

All of us have been frustrated with adversaries making frivolous motions and taking positions unwarranted by the law and the facts.  But the big firms almost never get sanctioned, it always seems to be the little guys.  Rule 11 gives attorneys almost no procedural protections and may create an ethical conflict between attorney and client.   It provides no real due process for an attorney.  Yet for all its weakness, it requires action of an adversary to impose a sanction.   I don't know why the court didn't issue the show-cause order required by Rule 11(c)(3).   Sanctions were imposed for 1. filing a long complaint; 2. filing an improper interlocutory appeal; 3. patently inadequate investigation of a conspiracy claim and 4. filing claims under 42 USC 1983 when there were no state actors.  There is not a law firm in the nation that didn't tack on an extra "in the alternative" claim in a complaint without thinking twice, or add an extra stupid claim that ought not to have been in the complaint - but this is usually thought to be prudent because one can't anticipate all of the facts one might find in discovery.

The Seventh Circuit's decision is a bad one for spirited and healthy advocacy (i.e. the American system).   Every attorney blunders in practically every case - by an act or omission - especially where resources are limited.   Where an attorney is inexperienced or simply makes a huge error - the adversary process permits the adversary to turn it to advantage.  There is no reason to impose criminal-like penalties on top of that.  This attorney may lose his house and his license for conduct that was found by the Seventh Circuit to be neither dishonest nor contumacious.  The courts should not be used to criminalize the practice of law and where Rule 11 sets out a mandatory procedure, the Seventh Circuit should not ignore it.  Sophisticated defense counsel sat on its hands rather than making a Rule 11 motion and should have waived the right to cash in at the poor lawyer's expense.

Thursday, April 22, 2010

9th Circuit: Toys Not Useful and Thus Copyrightable - Spirited Dissent

Is a toy that has handles on it and shoots things with rubber band mechanisms a "useful article" and thus not copyrightable?  A divided Ninth Circut confirmed a finding of copyrightability over a spirited dissent in  Lanard Toys Ltd v Novelty Inc, 2010 WL 1452527 (April 13, 2010).

At issue was Chinese knockoffs of popular American toys.   Toys are copyrightable as "pictorial, graphic or sculptural works" 17 USC 101.  But is a toy helicopter "useful" when it depicts something useful?  The majority cited a long line of decisions protecting frivolous things like clown noses and toy objects which have no use other than to depict a useful object (but not be used for anything but to play with).

So "Shoot Copter" "Drop Copter" and the "Pull-N-Launch Play Set" that obviously copied the features of other toys were infringing articles within the meaning of the Copyright Act.

Growing up in a large family, my siblings and I always found toys that we could use to zap each other quite useful, perhaps not the use intended by the manufacturer.

It seems anomalous that the poor inventor who made the real thing gets only twenty years of protection, but the clown who made the silly imitative toy gets life plus forever protection for his "original work of authorship".   Query whether such protection promotes the purposes of the Copyright Act.

Wednesday, April 21, 2010

New ‘Degenerate Art’ Database Shows 21,000 Works Seized by Nazis

‘Degenerate Art’ Database Shows 21,000 Works Seized by Nazis - Bloomberg.com

SCOTUS - Congress Lacks Power to Criminalize Depictions of Killing Wounding and Torturing Animals

In an attempt to stop "crush videos" (explanation of a sexual fetish involving a dominatrix stomping on animals in high heels or bare feet here and here ), Congress passed a law reading as follows:

18 U.S.C. §48. Depiction of animal cruelty


“(a) CREATION, SALE, OR POSSESSION.—Whoever knowingly creates,sells, or possesses a depiction of animal cruelty with the intention of placing that depiction in interstate or foreign commerce for commercial gain, shall be fined under this title or imprisoned not more than 5years, or both. “(b) EXCEPTION.—Subsection (a) does not apply to any depictionthat has serious religious, political, scientific, educational, journalistic, historical, or artistic value. “(c) DEFINITIONS.—In this section— “(1) the term ‘depiction of animal cruelty’ means any visual orauditory depiction, including any photograph, motion-picture film, video recording, electronic image, or sound recording of conduct in which a living animal is intentionally maimed, mutilated, tortured,wounded, or killed, if such conduct is illegal under Federal law or the law of the State in which the creation, sale, or possession takes place,regardless of whether the maiming, mutilation, torture, wounding, or killing took place in the State; and ( ... ***)
 
In United States v. Stevens, 559 U.S. ___ (April 20, 2010) found here, Congress affirmed the Third Circuit's striking the statute down as overbroad and unconstitutional.  From the decision:
 
The First Amendment provides that “Congress shall make no law . . . abridging the freedom of speech.” “[A]s a general matter, the First Amendment means that gov-ernment has no power to restrict expression because of its message, its ideas, its subject matter, or its content.” Ashcroft v. American Civil Liberties Union, 535 U. S. 564, 573 (2002) (internal quotation marks omitted). Section 48 explicitly regulates expression based on content: The statute restricts “visual [and] auditory depiction[s],” such as photographs, videos, or sound recordings, depending on whether they depict conduct in which a living animal isintentionally harmed. As such, §48 is “‘presumptively invalid,’ and the Government bears the burden to rebut that presumption.” United States v. Playboy Entertainment Group, Inc., 529 U. S. 803, 817 (2000) (quoting R. A. V. v. St. Paul, 505 U. S. 377, 382 (1992); citation omitted).
 
The Supreme Court goes on to analyze how the statute may be used to apply to situations involving perfectly legal and ethical behavior having nothing to do with crush videos.   The defendant was prosecuted for inter alia distributing videos of legal Japanese dogfights from decades past.
 
The decision shows a healthy skepticism of the government's claims that prosecutorial discretion will be used in the enforcement of an overbroad statute.   It is amazing how many Americans watch hunting videos (for recreation, not instruction), and the decision is interesting for its exploration of the depth and breadth of human cruelty for enjoyment's sake.
 
I agree with Clancco that the decision is a correct one.  The decision will be misread by popular media as endorsing cruelty to animals, it does no such thing and it speaks approvingly of state statutes regulating cruelty to animals. 
 
 
 
 

Tuesday, April 20, 2010

Copyright Act and the First Sale Doctrine - SCOTUS to hear Costco-Swatch copyright case | Reuters

I wrote about the Costco-Swatch case here.   It involved a manufacturer of Swiss OMEGA watches authorizing a sale in a foreign country.  The foreign authorized seller sold genuine watches to a person who then imported them into the US and sold them at Costco.

It is significant that the U.S. Supreme Court has taken on this issue of great importance to international trade. From Reuters:

U.S. top court to hear Costco-Swatch copyright case Reuters

Sunday, April 18, 2010

Cincinnati Museum Center

Pro-IP Act of 2008 - GAO Report on Counterfeits and Counterfeit Statistics


Loren Yager, Director of International Affairs and Trade of the Government Accountability Office (GAO) recently issued a report to Congress that was mandated by the Pro-IP Act of 2008 titled:  Intellectual Property:  Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods.  The 41-page report is found here.

The report makes no recommendations and is a follow up of another GAO report issued in March 2008 pursuant to a directive in the Pro-IP Act of 2008 titled Intellectual Property: Federal Enforcement Has Generally Increased, but Assessing Performance Could Strengthen Law Enforcement Efforts found here.
That report made a lot of sensible recommendations to law enforcement.

But the new GAO Report debunks all of the statistics thrown around by industry relating to the amount of IP infringement and its effects on the economy.   It basically concludes that both industry and government are simply making up numbers that have no basis in fact.  It contains a good simple discussion of the government agencies involved in the issue of infringement and their relative functions.  For example, it looks at the OECD "Rule of Thumb" that 5-7% of all commerce is in counterfeits and finds no factual basis for this.  The GAO looks at other statistics attributed to governmental agencies and finds all of them to have no basis in fact.




Fake pharmaceuticals pose a particular problem that I have not studied and that have truly life-threatening consequences.  You will recall the American antihero played by Orson Welles in The Third Man and his role in fake pharmaceuticals - a crime of tremendous horror in one of the greatest films ever made.

But on the copyright end, it is really too bad that the GAO didn't count Prof. William Patry and his excellent Moral Panics and the Copyright Wars among its experts and sources consulted.  In the field of copyright Prof. Patry has gathered more empirical specifics on the economic arguments involved in copyright issues and on the effects of infringement on the U.S. economy.

In Moral Panics Chapter on How the Copyright Wars Are Being Fought and Why, Patry's section titled "Chicken Little and False Figures" - Patry performs a debunking of trade industry statistics similar to that of the GAO. He also debunks the term "pirated" goods when used as a metaphor for copyright infringement and decries industry attempts to convince Congress that downloading a song is somehow connected to terrorism.

I would like to see studies broken down by industry and arguments broken down by product.

Wednesday, April 14, 2010

11th Cir: Copyright Owners Deliver Artworks At Their Peril - Implied License Doctrine Swallows Copyright Act

The Copyright Act provides:


Detail from Todd Latimer's Midnight Rider - Full image here.

§ 202. Ownership of copyright as distinct from ownership of material object


Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied. Transfer of ownership of any material object, including the copy or phonorecord in which the work is first fixed, does not of itself convey any rights in the copyrighted work embodied in the object; nor, in the absence of an agreement, does transfer of ownership of a copyright or of any exclusive rights under a copyright convey property rights in any material object.

(emphasis supplied).

§ 204. Execution of transfers of copyright ownership


(a) A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.


The 11th Circuit basically tossed out the bolded language in a recent decision captioned Latimer v. Roaring Toyz, Inc., 2010 WL 1253090 (11th Cir. April 2, 2010) and radically expanded the doctrines of implied license and constructive delivery.

Here's the scenario, wildly oversimplified: 

Artist paints artwork onto motorcycle.  Knows it will be used in photography, stream of commerce.  Motorcycle company gets no release.  Artist is not plaintiff, has nothing to do with the case, but 11th Circuit spends a lot of time on him.

Plaintiff is motorcyle photographer.  Takes photos at motorcycle company's request.  Orally grants certain publication rights and thinks he owns/reserves the rest.  Photographer has granted first publication rights to Two Wheel Tuner mag.   Instead of distributing his high quality digital files per his instructions, company distributes them to press who unwittingly publish them, including defendant Hachette's Cycle World.

Motorcycle company who uses photos claims that they were unauthorized derivative works because the photographer didn't have a release from the guy who made the paintings on the motorcycle.

11th Circuit finds that the fact that motorcyle photographer delivered photographs without clear reservation of rights grants an implied license to motorcycle company to do whatever it likes.   FURTHER finds that anyone downstream has "constructive delivery" from the photographer and can do whatever they like without getting written permission.

Here is the 11th Circuit's new rule:

"Thus, an implied license will be limited to a specific use only if that limitation is expressly conveyed when the work is delivered"

In other words, if you deliver your photograph to someone and YOU don't write down that they can't do whatever the heck they want with it, you lose your copyright to that person and to anyone they give it to.

This case is really a breathtaking blow to photographers who often deliver their works hoping that a potential client will fall in love and license them.   Since the photographer said he knew that Kawasaki "might" use them, the 11th Circuit threw out his affidavit as a "sham".

In other Circuits, one must generally obtain written permission to use a photograph, the implied license doctrine is narrowly construed.

In addition, the 11th Circuit held that the photographer must prove that he gave the motorcycle company a course in copyright law to prevail:

Kawasaki asserts that Latimer did not expressly communicate to Kawasaki any restrictions on the use of the photographs. However, Latimer contends that all of his communications with Kawasaki went through Roaring Toyz and that he granted Kawasaki permission to use the photographs for a specific purpose-a media display at Bike Week. Thus, the question here is whether Latimer delivered a warning adequate to put Kawasaki on notice that certain uses of Latimer's photos would constitute copyright infringement.


Latimer v. Roaring Toyz, Inc., 2010 WL 1253090, 11 (11th Cir. April 2, 2010).

It should be noted that the 11th Circuit purported to give a victory to the photographer, but the burdens of proof that have been spelled out are highly problematic and appear to be inconsistent with the plain language of the Copyright Act and a body of case law that generally puts photographers in the driver's seat when there is an unauthorized publication of their works.

The Photoattorney blog found some good news in the decision, read here.

For a wildly different view from Kevin Smith at Duke, look here.

A totally different angle at Exclusive Rights blog here.

Read on below:

LatimerVRoaringToyz

Tuesday, April 13, 2010

Monday, April 12, 2010

Copyrights & Campaigns - First Amendment, Parody or Copyright Infringement?

Here is a post by Ben Sheffner that has a link to a copy of a motion for summary judgment made arguing that use of "Boys of Summer" in an election campaign was a "parody". The motion makes the analogy to the Ralph Nader "Priceless" campaign (Mastercard sued Nader and lost) I would have to watch the video, but I can't imagine "Boys of Summer" was used by DeVore as a parody.

This case is analogous to the Obama/Hope case: I think the best argument is that this is pure political speech made during a political campaign. There is lots of good Supreme Court case law protecting election speech under the First Amendment. No copyright lawyer wants to open up that Pandora's box, but when copyright owners start suing political adversaries, my bet, based on the "core protected speech" caselaw is that free political discourse will ultimately win.

But the devil is in the details, I would need to know more.

Copyrights & Campaigns: Chuck DeVore moves for summary judgment in Don Henley copyright suit; argues fair use of songs in 'parody' videos

Two New Cases - Copyright Act: Infringement Plaintiff's Chain of Title Must Be Proven By Writings

Federico Fellini's La Dolce Vita From Wikipedia

Two recent cases underline the importance of being able to prove a written chain of title if you would like to bring a claim for copyright infringement.   If you wish to sue a gay pornographer for making a version of your film (Michael Lucas' La Dolce Vita).  In both International Media Films, Inc. v. Lucas Entertainment, Inc., 2010 WL 125358 (March 31, 2010) and  American Plastic Equipment, Inc. v. Toytrackerz, LLC, 2010 WL 1284471 (March 31, 2010), each copyright infringement plaintiff could not prove a chain of title showing ownership of the copyrighted work.

17 U.S.C. 204(a) says that transfers of exclusive rights need to be in writing.  There is an exception for non-exclusive writings and transfers "by operation of law".

The Fellini plaintiff had documents that looked liked they had been faked in Lichtenstein.

It looks like the American Plastic Equipment plaintiff did actually own the copyright, but didn't bother searching bankruptcy court records prior to judgment and waited until 60 days after judgment was entered against it to make a motion with "newly discovered evidence".

That is why it is so important to do research before bringing a lawsuit.   Document your chain of title and register your ownership with the Copyright Office.



 


Sunday, April 11, 2010

Judge Throws Copyright Law Tea Party: "Impolite" Flea Market Vendor Not Liable for Contributory Copyright Infringment

A Texas judge queries whether contributory or vicarious liability under the Copyright Act even exists and slaps Sony so hard it must still be spinning.

Did the Founding Fathers envision we'd all be digital sharecroppers under Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)?

                                                      Battle of the Alamo, Percy Moran 1912

From Sony Discos, Inc. v. E.J.C. Family Partnership, 2010 WL 1270342, 4 -5 (S.D.Tex. 2010)


If Cole had been even minimally polite, perhaps this suit would never have been filed, and in hindsight, Cole would probably agree that the cost of the offered training was far less than that of litigation. His arguably bad choices are not, however, willful blindness.


A flea market owner does not have the duty to police his vendors, or enforce the producers' copyrights. Clearly, if Cole induced or caused a sale of infringing music, he would be liable. If Cole knew of a particular infringing sale-at the time of the sale-and chose to ignore it, he might be liable. His assertion that he didn't have time to do it and his refusal to consider alternatives does not mean Cole was willfully blind to the vendors' infringing activities. He was not indifferent. On the contrary, he cared very much about the extra work he would have to do to enforce Sony's copyrights.

The essential trade in the Copyright Act is monopoly and policing: the grant of exclusivity comes with the duty to protect it. The Act does not grant the holder the windfall of both monopoly and reimbursement for its maintenance.

Description: The Boston Tea Party, protesting the English tax on tea.


Source: Charlotte M. Yonge Young Folks' History of England (Boston: D. Lothrop & Co., 1879)

CONCLUSION

Shapiro and its progeny reveal the danger of misapplying unbounded common-law principles to a statutory scheme that needs neither supplementation nor gap-filling to protect intellectual property. The Copyright Act has existed since 1790, and never in its six iterations has it mentioned vicarious or contributory liability. One must be wary when a lone circuit court in 1963, with one fell swoop, creates a new category of copyright liability.


If vicarious and contributory liability are here to stay, each element must be addressed rigorously and exclusively. The “right and ability to control” the infringer's act cannot be inferred from boilerplate contract language. “Financial benefit” must stem from the infringing goods themselves, not from a flat rate received from infringers and non-infringers alike. “Knowledge” must mean awareness of repeat infringing sellers, rather than past sellers who may never be seen again. “Material contribution” must mean promoting and sustaining infringing activities, not merely providing a site on which some infringing activity may occur. Gutting these elements of their meaning threatens many traditional American marketplaces by imposing impracticable requirements. It also gives copyright holders a windfall by allowing them to manufacture liability with insufficient evidence. At its core, this suit has nothing to do with copyright infringement. It is an attempt to pass the cost of protecting one's copyright to middlemen and, ultimately, to consumers.

Sony is understandably concerned with the unauthorized sale and distribution of copyrighted music. They are welcome to hire full-time investigators at Cole's flea market to increase enforcement of their copyrights. What they may not do is hold Cole liable for illicit sales by third-party, unsupervised vendors-from whom he profits indirectly, if at all-simply because the sales occurred on his land.

Sony will take nothing from Cole.

Them's fightin' words - EFF will be loving this decision.  Only in Texas can you ignore those damned lawyer letters and not risk your ranch.

UMG v. Veoh: Response to Eric Goldman: Fed.R.Civ.P. 68 Applies To Copyright Cases

Eric Goldman writes that Veoh Denied Attorneys' Fees in UMG v. Veoh.

He queries  Does FRCP 68 Apply to Copyright Cases?  He thinks that the judge got it wrong in denying attorneys fees AND denying fee-shifting in UMG Recordings, Inc. v. Veoh Networks, Inc., 2010 WL 1407316 (April 6, 2010).

I think he's right, but the judge simply doesn't say how much the offer of judgement was.  If Veoh offered anything and UMG got less, the case law I cite below tends to indicate that attorney fee-shifting by Rule 68 may be mandatory.

From my

Copyright Litigation Handbook, which Veoh's attorney's should have found and cited from the Westlaw Database COPYLITIG.

If Veoh's lawyers didn't buy the Copyright Litigation Handbook, maybe they deserve what they get?


Database updated July 2009
Raymond J. Dowd
Part II. Litigation
Chapter 18. Costs and Attorney's Fees
References
§ 18:7. Offer of judgment under Rule 68 of the Federal Rules of Civil Procedure: effect on award


Rule 68 of the Federal Rules of Civil Procedure permits a party to an action to make an offer of judgment to the other side. This is a one-page document signed by the party's counsel bearing the action's caption served on the adversary's counsel. The document should not be filed with the court.

Rule 68 provides that “if the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer.”[FN1] The U.S. Supreme Court in Marek v. Chesny interpreted the term “costs” in Rule 68 to include all costs properly awardable under the underlying statute.[FN2] Hence, Rule 68 refers to the underlying statute for its definition of “costs.” In a copyright infringement cause of action, the underlying statute is 17 U.S.C.A. § 505.[FN3] Section 505 of the Copyright Act permits the court to include attorney's fees as part of “costs.”[FN4]

In Lucas v. Wild Dunes Real Estate, a case involving copyright infringement of a photograph, the defendant presented an offer of judgment to the plaintiff in the amount of $15,000. The plaintiff rejected the offer. Subsequently, at trial, the jury awarded the plaintiff $4,120.40 on the copyright infringement claim. The defendant then filed a motion seeking costs, including attorney's fees. Even though the plaintiff technically “won” the copyright claim, the court refused to consider the plaintiff the “prevailing party” for purposes of awarding costs and attorney's fees because the plaintiff recovered less than the defendant's offer of judgment. Instead, the court interpreted the cost-shifting provision of Rule 68 of the Federal Rules of Civil Procedure to include attorney's fees and awarded the defendant costs, including attorney's fees. The court reasoned that the judgment for the plaintiff of $4,120.40 was less favorable than the defendant's offer, therefore the plaintiff must pay “costs” which included attorney's fee as indicated by the underlying copyright statute.

Practice Tip: If you receive an offer of judgment, advise your client in writing that a failure to accept may result in a liability for attorney's fees if the recovery does not exceed the offer.
----------------------------------------------------------------------------
[FN1] Fed. R. Civ. P. 68.
[FN2] Marek v. Chesny, 473 U.S. 1, 105 S. Ct. 3012, 38 Fair Empl. Prac. Cas. (BNA) 124, 37 Empl. Prac. Dec. (CCH) P 35396, 1 Fed. R. Serv. 3d 1297 (1985).
[FN3] See 17 U.S.C.A. § 505.
[FN4] 17 U.S.C.A. § 505.
Westlaw. © 2009 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.
COPYLITIG § 18:7

D.S.C.,2000.

Lucas v. Wild Dunes Real Estate, Inc.
197 F.R.D. 172, 2000 Copr.L.Dec. P 28,178

ORDER
NORTON, District Judge.

This matter comes before the court on Plaintiff and Defendant's Motion for Costs. For the reasons set forth below, both motions are granted.

I. BACKGROUND

This was a case about copyright infringement and servicemark infringement regarding a photograph taken by Plaintiff. Plaintiff claimed that Defendant used his copyrighted photograph depicting a golf club, tee, and a golf ball with the “Wild Dunes” logo depicted on it, in Defendant's real estate advertising campaign. Defendant denied liability to Plaintiff, claiming that the Plaintiff gave his express authorization for Defendant to use the photograph. Defendant also claimed that Plaintiff did not have any license from Defendant to use the Wild Dunes Service Mark in his photograph, but he distributed the photograph for over a year as part of a package of pictures. More than ten days before trial, Defendant submitted an Offer of Judgment to Plaintiff in the amount of $15,000, which Plaintiff rejected. At trial, the jury found for Plaintiff on his copyright infringement cause of action and awarded him a total of $4,120.40. The jury also found for Defendant on its action for servicemark infringement but awarded no damages.

II. LAW/ANALYSIS

Both Plaintiff and Defendant have filed Motions for Costs. Plaintiff's motion is filed pursuant to Rule 54(d) of the Federal Rules of Civil Procedure, and Defendant's motion is filed pursuant to Rule 68 and 17 U.S.C. § 505. This court will address Defendant's motion for first.
A. Defendant's Motion for Costs Including Attorney's Fees

Defendant's Motion for Costs requires this court to determine (1) whether such an award of costs, including attorney's fees, is proper; and (2) whether the amount of the fees requested is reasonable.

1. Whether to Award Defendant Costs Including Attorney's Fees

Defendant moves this court for an award of costs pursuant to Rule 68 of the Federal Rules of Civil Procedure and 17 U.S.C. § 505. Rule 68 provides in pertinent part that “[i]f the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer.” Fed.R.Civ.P. 68. “[T]he term ‘costs' in Rule 68 was intended to refer to all costs properly awardable under the relevant substantive statute or other authority.” Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). In the remedial provisions of the copyright infringement statute, the language provides that “the court may award a reasonable attorney's fee to the prevailing party as part of the costs.” 17 U.S.C. § 505 (1994).

In its brief and at oral argument, Defendant cited this court two cases for the proposition that a defendant is a prevailing party under § 505 when the plaintiff does not recover more than the Offer of Judgment. See Harris Custom Builders, Inc. v. Hoffmeyer, 140 F.3d 728 (7th Cir.1998); Screenlife Establishment v. Tower Video, Inc., 868 F.Supp. 47 (S.D.N.Y.1994). At oral argument, Defendant advised the court that these were the only two cases it had found that addressed the issue of whether a prevailing defendant can seek its attorney's fees as costs pursuant to Rule 68 when infringement occurred before registration.

There are two problems with each of the two cases Defendant has cited to the court. First, neither case is grounded in an application of Rule 68. In Harris Custom Builders, Inc., the district court had originally granted summary judgment for the plaintiff, but the Seventh Circuit reversed and granted summary judgment for the defendant. On remand, the district court awarded costs including attorney's fees to the defendant as the prevailing party under § 505. The Seventh Circuit vacated the district court's award of fees and remanded the case to allow *174 the district court to enunciate the reasons for its exercise of discretion, not because the Seventh Circuit disagreed with the district court's decision to award fees. See Harris Custom Builders, Inc., 140 F.3d at 729 (“When the case returned to the district court, Hoffmeyer [the defendant], in his new role as the prevailing party, moved for attorney fees, pursuant to 17 U.S.C. § 505. The district court granted fees, as it had discretion to do. The problem, however, is that, with limited exceptions, we cannot tell how that discretion was exercised ....”). Rule 68 was irrelevant to the analysis and cannot be found anywhere in the opinion. The Screenlife Establishment case is equally not grounded in an application of Rule 68. The Southern District of New York stated that it was “awarding [the defendant] its fees pursuant to 17 U.S.C. § 505. I need not and do not address whether [the defendant] is entitled to its fees and costs under Fed.R.Civ.P. 68 ....” Screenlife Establishment, 868 F.Supp. at 52.

Second, unlike the defendants in the cases cited, Defendant cannot satisfy the test required to make a litigant a prevailing party. “[D]efendants should be considered prevailing parties ... when they successfully defend against the significant claims actually litigated in the action.” Id. at 50. In Harris Custom Builders, Inc., the defendant was considered the prevailing party because summary judgment was granted in favor of the defendant. In Screenlife Establishment,

[t]he only issue litigated at trial was [the plaintiff's] claim for actual damages. After the trial, I ruled in favor of the defendants, denying [the plaintiff's] claim for actual damages. Thus [the defendants] prevailed completely on the only litigated claim in the action.... I find that this makes the defendants prevailing parties in this action.

Screenlife Establishment, 868 F.Supp. at 50. In contrast, in this case, the jury returned a verdict for Plaintiff on the only copyright claim that was litigated at trial. This precludes Plaintiff from satisfying the definition of a prevailing party.

At the hearing, Defendant handed to the court several pages from a treatise on copyright law that at first blush endorses its argument that Defendant should be considered a prevailing party to this litigation. “[P]articularly when the plaintiff recovers at trial, appreciably less than the defendant offered to settle the case prior to trial, even a defendant technically held liable should be deemed the prevailing party.” Nimmer on Copyright § 14.10[B], at 14-139 (Matthew Bender & Co., Inc. 1998) ( citing Warner Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126 (2d Cir.1989); Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236, 243 (9th Cir.1966); Florentine Art Studio, Inc. v. Vedet K. Corp., 891 F.Supp. 532, 541 (C.D.Cal.1995); Screenlife Establishment v. Tower Video, Inc., 868 F.Supp. 47, 50 (S.D.N.Y.1994); Warner Bros., Inc. v. Dae Rim Trading, Inc., 695 F.Supp. 100 (S.D.N.Y.1988); Warner Bros., Inc. v. Dae Rim Trading, Inc., 677 F.Supp. 740, 771-73 (S.D.N.Y.1988); Quinto v. Legal Times of Washington, Inc., 511 F.Supp. 579, 582 (D.D.C.1981); Shapiro, Bernstein & Co. v. Bleeker, 243 F.Supp. 999, 1001 (S.D.Cal.1965)). None of these cases are apposite to the case before the court.

In the Warner Bros., Inc. series of cases, the district court found that the defendant, rather than the plaintiff, was the overall prevailing party when the defendant prevailed on the “basic issue” before the court and on its counterclaim, even though the plaintiff succeeded in obtaining a consent injunction as to one copyright and a minimum statutory damage award of $100. See Warner Bros., Inc., 677 F.Supp. at 771. The Second Circuit reversed, holding that neither party's success was sufficiently significant to warrant an award of attorneys' fees. See Warner Bros. Inc., 877 F.2d at 1126. The facts of the case did not involve the application of Rule 68, nor did the district court or Second Circuit rule that a defendant is a prevailing party when a plaintiff recovers less than the Offer of Judgment. In the Shapiro, Bernstein & Co. cases, the district court had ruled the defendant to be the prevailing party when the defendant had offered a sum to the plaintiff to settle the case, but the plaintiff refused and subsequently was awarded less than that offer at trial. See *175 Shapiro, Bernstein & Co., 367 F.2d at 243. However, the Ninth Circuit ruled that

[a]fter studying Local Rule 15(c)[,] we agree that [the defendant] was the prevailing party only because of the provision [in the Local Rules] that ‘[i]f the defendant offers a judgment in a certain sum which is rejected by the plaintiff, and the case thereafter goes to trial with the resulting recovery of only the amount previously offered by the defendant, or less, then the defendant is the prevailing party.’

Id. at 243 (emphasis added). The Ninth Circuit went on to state that “[w]ithout that provision in Local Rule 15(c)[, the plaintiff] would have been the prevailing party because it established infringement by [the defendant] and its right to recover damages.” Id. In Florentine Art Studio, Inc., the district court, in finding that the defendants were the prevailing parties even though they did not win on all issues before the court, the district court stated that the
[d]efendants clearly succeeded in a substantial part of this litigation, and achieved substantially all the benefits they hoped to achieve in defending the suit.

Defendant Gonul Kurdoglu was completely exonerated on all counts....

Defendants Vedat Kurdoglu and Vedat K. Corporation prevailed on seven of the nine infringement counts, were found merely to be innocent infringers on the remaining two, and were assessed the minimum statutory damages.
Florentine Art Studio, Inc., 891 F.Supp. at 541. Based on these findings, the district court found that the defendants were the prevailing party and awarded them a reasonable attorney's fee pursuant to 17 U.S.C. § 505. See id. Rule 68 did not come into play. Moreover, unlike Defendant in this case, the defendants in Florentine Art Studio, Inc. actually prevailed in the majority of the litigation before the district court. As this court has already noted, the facts of the Screenlife Establishment case are also inapposite because the Southern District of New York considered the defendant to be the prevailing party when it won the only claim litigated, so the court did not address whether the defendant was entitled to fees under Rule 68. See Screenlife Establishment, 868 F.Supp. at 50, 52. Finally, in Quinto, the District of Columbia rejected the defendant's arguments as to why the plaintiff should not be awarded attorney's fees in a copyright case. After rejecting the defendant's first argument, the court stated that

Defendants next contend that no award should be made because plaintiff refused to accept a reasonable settlement offer or to negotiate in good faith. It suffices to say that this court's award of statutory damages, costs, and attorney's fees exceeds the $500 offer of judgment defendants made under Rule 68, Fed.R.Civ.P. Thus none of the justifications for denying an award of attorney's fees is present in this case and the court will order defendants to pay plaintiff's costs, including a reasonable attorney's fee.

Quinto v. Legal Times of Washington, Inc., 511 F.Supp. 579, 582 (D.D.C.1981). The court did not hold that even though a defendant loses on the copyright claim, it is still a prevailing party when its offer of judgment exceeded the damages awarded to the plaintiff. Because the cases cited by Nimmer are inapposite to the case at bar, this court declines to adopt a broad rule that courts should consider a defendant who loses the only copyright claim actually litigated to trial as the prevailing party because the plaintiff recovered less than the defendant's Offer of Judgment.

Even though Defendant is not a prevailing party, this court does not read the Supreme Court's language in Marek that the costs must be “properly awardable” to require that Defendant has to be a prevailing party in order to be eligible for an award of attorney's fees as costs in a copyright action pursuant to Rule 68.FN1 Instead, this court finds that so long “the underlying statute defines ‘costs' to include attorney's fees, [the Supreme Court is] satisfied such fees are to be included as costs for purposes of Rule 68.” Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). “When the plaintiff recovers less than the defendant's formal offer of judgment under Rule 68 of the Federal Rules of Civil Procedure, it has been held that the award to defendant of its fees incurred after that offer is mandatory.” Nimmer on Copyright § 14.10[B], at 14-139, 14-140 (Matthew Bender & Co., Inc.1998) ( citing Jordan v. Time, Inc., 111 F.3d 102, 105 (11th Cir.1997)). In Jordan, the plaintiff filed a copyright infringement suit against the defendant. See Jordan, 111 F.3d at 104. Pursuant to Rule 68, the defendant made an offer to the plaintiff to settle the suit for $15,000 and subsequently for $20,000, both of which were rejected by the plaintiff. See id. The jury awarded the plaintiff $5,000 in actual damages, so the plaintiff elected to recover statutory damages instead. See id. However, the district court only awarded the plaintiff $5,500 in statutory damages. See id. Consequently, the defendant argued that because the plaintiff “did not obtain a judgment more favorable than the ones contained in [the defendant's] offers of judgment, [the plaintiff] must pay [the defendant's] attorneys' fees and costs.” Id. The district court denied the defendant's motion. See id. The Eleventh Circuit disagreed, reversing the district court's order denying the defendant its costs and attorneys' fees. The Eleventh Circuit held that
FN1. At first glance, it may appear to be somewhat of an exercise in semantics for this court to find that Defendant is automatically entitled to costs, including attorneys' fees, under Rule 68 when the plaintiff recovers less than the Offer of Judgment, whereas the court could have extended cited precedent and found that a defendant is a prevailing party, and thus entitled to such fees, when the plaintiff recovers less than the Offer of Judgment. However, the analysis in which the court has engaged has one important ramification for Plaintiff in this case. Because this court does not find that Defendant is the prevailing party, Plaintiff is still eligible for an award of costs as the prevailing party pursuant to Rule 54(d)(1) of the Federal Rules of Civil Procedure. Moreover, a copyright plaintiff who succeeds on his copyright claim, at least to the degree that Plaintiff has in this case and who is not statutorily barred from obtaining attorneys' fees, would still be considered a prevailing party under § 505 and thus eligible for an award of attorneys' fees as costs, at the discretion of the district court.

[t]he language contained in Rule 68 is mandatory; the district court does not have the discretion to rule otherwise. Thus, the district court erred when it used its ‘equitable discretion’ to deny [the defendant's] motion for attorney's fees and costs.... Costs as used herein includes attorney's fees.... Rule 68 ‘costs' include attorneys' fees when the underlying statute so prescribes. The Copyright Act so specifies, 17 U.S.C. § 505.

Id. at 105.FN2 By ruling that Rule 68's mandatory language controls, the Eleventh Circuit implicitly resolved an apparent tension between Rule 68's mandate that a district court award costs if Plaintiff obtains a judgment less favorable than the Offer of Judgment and the language of § 505 providing the district court with discretion FN3 as to whether or not to award a prevailing party attorney's fees as part of their costs. Even though the Eleventh Circuit resolved this tension without any extensive analysis, the result is in harmony with the purposes of Rule 68. See Delta Air Lines, Inc. v. August, 450 U.S. 346, 352, 101 S.Ct. 1146, 67 L.Ed.2d 287 (1981) (“The purpose of Rule 68 is to encourage the settlement of litigation. In all litigation, the adverse consequences of potential defeat provide both parties with an incentive to settle in advance of trial. Rule 68 provides an additional inducement to settle in those cases *177 in which there is a strong probability that the plaintiff will obtain a judgment but the amount of recovery is uncertain.”); 12 Charles Alan Wright, Federal Practice & Procedure § 3001, at 67 (2d ed. 1997) (“[ Rule 68] might also, to some extent, deter the pursuit of some vexatious litigation.”).FN4

FN2. This court notes that the Eleventh Circuit did not even consider whether a defendant seeking costs, including attorneys' fees, pursuant to Rule 68 had to be a prevailing party because the Eleventh Circuit implicitly read Marek to mean that the underlying statute simply must define costs to include attorneys' fees in order for attorneys' fees to be properly awardable under Rule 68. The court did not even reference the fact that under § 505 a defendant must be a prevailing party to be eligible for an award of attorneys' fees. See Jordan v. Time, Inc., 111 F.3d 102, 105 (11th Cir.1997).

FN3. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 535 n. 19, 114 S.Ct. 1023, 1034 n. 19, 127 L.Ed.2d 455 (1994) (finding that an award of attorneys' fees under the Copyright Act is discretionary and that several nonexclusive factors should guide the district court's “equitable discretion,” including “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence”); Diamond Star Building Corp. v. Freed, 30 F.3d 503, 505 (4th Cir.1994) (setting out similar discretionary factors to be considered by district courts in this circuit).

FN4. However, the court does note that this court's adoption of the Eleventh Circuit's ruling leads to the anomalous result that an award of attorneys' fees to a prevailing defendant pursuant to § 505 is discretionary when judgment is entered for the defendant, but such an award is automatic and mandatory pursuant to Rule 68 when judgment is entered for the plaintiff and the plaintiff's verdict is simply less than the defendant's Offer of Judgment.

Under circumstances similar to those in Jordan, Defendant submitted, more than ten days before trial, an Offer of Judgment to Plaintiff in the amount of $15,000, which Plaintiff rejected. At trial, the jury found for Plaintiff, but awarded him a mere $4,120.40. Based on the Jordan case, Defendant is entitled to reasonable attorneys' fees as part of an award of costs.

Plaintiff argues that Defendant cannot obtain attorneys' fees as costs in this case when Plaintiff is ineligible to obtain such fees because Plaintiff claimed infringement of his copyright after his work was published and before it was registered. See 17 U.S.C. § 412 (1994) (“[N]o award of .... attorney's fees, as provided by section[ ] ... 505, shall be made for ... any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.”). However, § 412 only limits an award of attorneys' fees as costs to a plaintiff when the copyright infringement occurred before registration; § 412 is inapplicable to any claim by a defendant for attorneys' fees. See Screenlife Establishment v. Tower Video, Inc., 868 F.Supp. 47, 50 (S.D.N.Y.1994) (awarding the prevailing defendant attorneys' fees even though the plaintiff was not entitled to an award of attorneys' fees because of the registration bar of § 412). Specifically in the context of Rule 68, § 412 does not alter the fact that § 505, the underlying copyright statute, defines costs to include attorneys' fees, so as to satisfy the Supreme Court's rule that such fees are included as costs for purposes of Rule 68 when “the underlying statute defines ‘costs' to include attorney's fees.” Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985).

For the reasons set forth above, this court must award Defendant costs, including attorneys' fees, in this case.

2. Whether the Amount of the Requested Fees is Reasonable

Defendant seeks costs, including attorneys' fees and litigation expenses FN5 in the total amount of $46,936.39. Although Defendant is entitled to attorneys' fees and costs related to the copyright claim pursuant to Rule 68 and 17 U.S.C. § 505, it did not indicate to the court either in its briefs or at oral argument as to whether this total amount represented only counsel's efforts regarding the copyright claim or whether it grouped together the total costs and fees to defend the copyright claim and prosecute the servicemark infringement case. Only fees and costs attributable to the defense of the copyright claim are properly awardable. See Harris Custom Builders, Inc. v. Hoffmeyer, 140 F.3d 728, 730 (7th Cir.1998) (“In the present case, what the district court relied on was that the award [of attorneys' fees] was for work done on the copyright claims only, not on any of [the defendant's] counterclaims.... The court's conclusion that fees could be awarded only for the copyright claim ... is correct.”). To the extent possible, Defendant is instructed to sift through its invoices and bills to determine the fees, costs, and litigation expenses attributable only to the litigation of the copyright claim. Once Defendant files a revised submission for attorneys' fees, costs, and litigation expenses, Plaintiff is instructed to advise the court regarding any dispute he *178 may have as to the reasonableness of the requested fees.

FN5. “In determining an award of attorney's fees, ‘litigation expenses, such as supplemental secretarial costs, copying, telephone costs, and necessary travel, are integrally related to the work of an attorney’ and, thus, are compensable.” Superior Form Builders v. Dan Chase Taxidermy Supply Co., 881 F.Supp. 1021, 1029 (E.D.Va.1994) ( quoting Wheeler v. Durham City Bd. of Educ., 585 F.2d 618, 623-24 (4th Cir.1978)).

B. Plaintiff's Motion For Costs

As the prevailing party, Plaintiff is entitled to an award of costs. See Fed.R.Civ.P. 54(d)(1). Plaintiff filed a bill of costs with this court in the proper form, in compliance with statutory law and the Local Rules. Defendant has filed no objections to either an award of costs to Plaintiff under Rule 54(d)(1) or to the amount of such costs. With no objections from Defendant, this court awards Plaintiff his costs as requested in the amount of $1,587.78.

III. CONCLUSION

For the reasons set forth above, Defendant is entitled to an award of costs, including attorneys' fees and litigation expenses incurred after May 15, 2000 and attributable to the litigation of the copyright infringement claim. The amount of such fees and costs are to be determined after the submission of a revised request by Defendant. Furthermore, Plaintiff is entitled to an award of taxable costs in the amount of $1,587.78.
It is therefore,

ORDERED, that Defendant's Motion for Costs is GRANTED;
ORDERED, that Plaintiff's Motion for Costs in the amount of $1,587.78 is GRANTED;
IT IS FURTHER ORDERED, that Defendant must submit a revised request for attorneys' fees, costs, and litigation expenses in compliance with this Order.
AND IT IS SO ORDERED.

Second Circuit - Architectural Works: Noninfringement of Copyright on A Rule 12(b)(6) Motion

In Peter F. Gaito Architecture, LLC v. Simone Development Corp., 2010 WL 1337225, 1 (2d Cir. April 5, 2010), the Second Circuit held for the first time that a district court may compare the registered copyrighted materials annexed to the complaint to the allegedly infringing materials, enter a finding of non-infringement as a matter of law, and throw the case out on a Rule 12(b)(6) motion for failure to state a claim.

Ordinarily the facts alleged on the face of a Rule 12(b)(6) motion are assumed to be true in the earliest stage of a litigation.

District courts within the Circuit had been throwing cases out for a while, using the Second Circuit's "good eyes and common sense" standard to determining whether any reasonable juror could find the infringing materials to be "substantially similar".

Although the court tried to limit the holding to the facts involving very dissimilar buildings, the holding is likely to have a much broader application.

Lawsuit: Another Swiss Art Dealer Stole A Van Gogh From Persecuted Jews

Van Gogh - View of Saintes-Maries with Church and Ramparts - Arles - June, 1888 currently at Oskar Reinhart Collection - Winterthur, Switzerland

The Swiss have built yet another monument to a thieving art dealer, this time a creep named Oskar Reinhart.

You can read some of the terrible things that Swiss art dealers did to poor Jews fleeing for their lives in the Bergier Report, downloadable here.  The best and most detailed part of the report on looted art is available for purchase in the German language only.

The Swiss were warned by the Allies in 1943 not to traffic in goods belonging to Nazi persecutees.  The Swiss government issued formal warnings to art dealers in 1947 that transactions in property belonging to persecutees would not enjoy an innocent purchaser defense. The declaration, signed by 17 nations on January 5, 1943, was formally entitled "Declaration on Forced Transfers of Property in Enemy-Controlled Territory," but is known as the "Inter-Allied Declaration Against Acts of Dispossession."  More here

Lawsuit - Van Gogh Stolen By Swiss Art Dealer

The Law of Avatars: Copyright Act Doesn't Preempt State Law Governing Gwen Stefani's Avatar

No Doubt Group Photo - from Nodoubt.com
Band Hero - Courtesy Wikipedia

The law governing the use of a person's image for purposes of trade or advertising is called a "right of publicity" or "right of privacy".   It is a body of law governed by state, not federal law.   Celebrity-obssessed states like California and New York have statutes governing this right.  Other states recognize the right under common law.

No Doubt claimed that the video game Band Hero exceeded the scope of a license agreement and permitted players without authorization to show band members playing individually (rather than as a group) and to create in-game avatars by manipulating and distorting the images of the band members.   So the question is: does the Copyright Act preempt state laws of publicity (use of name and likeness), breach of contract, and unfair competition?  "Preemption" in this context means completely overriding the state law.  Copyright is one of the rare areas of law in which the "complete preemption" doctrine applies.

Backgrouns: Actors in a film lose the publicity right

When an actor appears in a film, he or she loses the right of publicity, which is said to be "preempted" by the Copyright Act.   So if an actor is stiffed on a fee for appearing in a film, there is no action for copyright infringement or any alternative theories such as "misappropriation" of the actor's image.  The actor must rely on state contract law and must pursue the person who broke the contract.  The logic is that the actor's performance is a "copyrightable work" that was captured by a film-maker "author".

No Doubt v. Activision Publishing, Inc., 2010 WL 1387988 (C.D. Cal. Jan. 14, 2010) discusses the situation of actors:

Notably, the actors' “performances in the film were recorded with their active participation and consent.” Id. at 1920 n. 5, 58 Cal.Rptr.2d 645. But after a pay dispute, the actors filed a claim for misappropriation of likeness and violation of their rights of publicity. Id. at 1915, 58 Cal.Rptr.2d 645.



The court held that the actors' claim fell within copyright subject matter. Id. at 1920, 58 Cal.Rptr.2d 645. The court reasoned that once the performances were put on film with the actors' consent, they were “fixed in a tangible medium of expression” that fulfilled the requirements of section 102 of the Copyright Act. Id. at 1919, 58 Cal.Rptr.2d 645. The actors' performances were part of the copyrighted material, and the actors' likenesses could not be detached from the copyrighted performances that were contained in the film. The court concluded that the actors' case “crumbles in the face of one obvious fact: their individual performances in the film ... were copyrightable .” Id. at 1919, 58 Cal.Rptr.2d 645. As a result, the court held that their claims were preempted: “A claim asserted to prevent nothing more than the reproduction, performance, distribution, or display of a dramatic performance captured on film is subsumed by copyright law and preempted.” Id. at 1924, 58 Cal.Rptr.2d 645.
No Doubt v. Activision Publishing, Inc., 2010 WL 1387988 (C.D. Cal. Jan. 14, 2010) on the other hand, dealt with the issue of whether the rock band No Doubt could sue under California law for right of publicity and unfair competition for unauthorized manipulation and distortion of their names and likenesses.

A bit of procedural history is in order.  In my Copyright Litigation Handbook (West 4th Ed. 2009), Chapter 10 is titled "Removal from State Court and Preemption.   Grossly simplified: if a complaint does not state a "federal question" on its face, it belongs in state court.  If a "federal question" appears on the face of a complaint, it can be automatically bounced to federal court by filing a notice of removal.  28 USC 1441  If the person whose case is removed to federal court is unhappy and has grounds to do so, he or she must then make a motion to remand.  I quote:

“[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States.” 28 U.S.C. § 1441(a). If the federal courts lack subject matter over the action, the case must be remanded to the state court from which it was removed. 28 U.S.C. § 1447(c).



The Ninth Circuit has expressed a “strong presumption against removal.” Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir.1992). The removing party bears the burden of establishing that removal was appropriate, and “the removal statute is strictly construed against removal jurisdiction.” Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d 709, 712 (9th Cir.1990). Federal courts must remand the case “if there is any doubt as to the right of removal.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992) (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir.1979)).

No Doubt v. Activision Publishing, Inc., 2010 WL 1387988, 2 (C.D.Cal. 2010)


Very few people on the face of the earth are fascinated by this pingpong between federal and state courts because the decisions rarely make it to the appellate level where law professors and law reviews concentrate their energies.   But as a working litigator, I find an understanding of this game of pingpong to be crucial for strategic reasons at the beginning of a litigation.

No Doubt v. Activision Publishing, Inc., was filed in state court and removed to federal court.  So the question before the No Doubt court was whether or not to bounce the case back to state court ("remand").

The court decided that the contract, right of publicity and unfair competition were not preempted, and remanded the case back to a California state court.

The court's reasoning below:

We must first determine whether the “subject matter” of the state law claim falls within the subject matter of copyright as described in 17 U.S.C. §§ 102 and 103. Second, assuming that it does, we must determine whether the rights asserted under state law are equivalent to the rights contained in 17 U.S.C. § 106, which articulates the exclusive rights of copyright holders.Laws, 448 F.3d at 1137-38.


First, Plaintiffs' rights do not fall within the subject matter of copyright. In this case, in contrast to Laws and Fleet, the object that is “fixed in a tangible medium of expression” is the physical likeness and persona of the Plaintiffs. Name, likeness, and persona are not copyrightable subject matter, both under the Copyright Act and the Copyright Clause of the Constitution, because a name, likeness, or persona is not a work of “authorship” entitled to copyright protection. See Downing, 265 F.3d at 1003-05; see also Toney v. L'Oreal USA, Inc., 406 F.3d 905 (7th Cir.2005) (holding no preemption where photo model asserted right of publicity claim against photo copyright holder).


It is true that Defendant's videogame is a work of authorship entitled to copyright protection, see Midway Mfg. Co. v. Arctic Intern., Inc., 704 F.2d 1009, 1012 (7th Cir.1983), and that the musicians' songs incorporated into Defendant's videogame are copyrightable. See 17 U.S.C. §§ 102(a)(2), (7) (listing “musical works” and “sound recordings” as copyrightable works of authorship). Further, live musical recordings that are captured on videotape are also copyrightable. See, e.g., Armstrong v. Eagle Rock Ent., Inc., 655 F.Supp.2d 779, 2009 WL 2923173, at *7-8 (E.D.Mich.2009) (musician's publicity and appropriation claims against music video distributor preempted by Copyright Act where case involved live musical performance recorded on videotape); see also 17 U.S.C. § 102(a)(6) (listing “motion pictures and other audiovisual works” as copyrightable works of authorship). Thus, if Plaintiff were suing on the basis of Defendant's misuse of Plaintiff's songs or videotaped musical performance, its claims would be preempted by the Copyright Act. See, e.g., Laws, 448 F.3d at 1138-43. The same result would occur if Plaintiff were claiming a right in the entire videogame as infringing a similar work of Plaintiff's own authorship. See, e.g., M. Kramer Mfg. Co., Inc. v. Andrews, 783 F.2d 421, 445-46 (4th Cir.1986).


However, Plaintiff does not allege that Defendant misused Plaintiff's copyrighted songs or copyrightable musical performances. Plaintiff alleges that the contents of Defendant's videogame infringes Plaintiff's rights under the parties' contract and under state publicity laws. Specifically, Plaintiff asserts that Defendant's videogame contains cartoon likenesses that resemble Plaintiff. See Kirby v. Sega of America, Inc., 144 Cal.App.4th 47, 55-57, 50 Cal.Rptr.3d 607 (2006) (video game character that resembled plaintiff potentially infringed plaintiff's likeness and identity); see also Wendt v. Host Intern., Inc., 125 F.3d 806, 810-12 (9th Cir.1997) (robot look-alike misappropriated plaintiff's identity); White v. Samsung Electronics America, Inc., 971 F.2d 1395, 1397-99 (9th Cir .1992) (same); Newcombe v. Adolf Coors Co., 157 F.3d 686, 692-94 (9th Cir.1998) (cartoon likeness of baseball player potentially infringed rights of publicity); Cardtoons, L.C. v. Major League Baseball Players Ass'n, 95 F.3d 959, 967-68 (10th Cir.1996) (same).


Even more specifically, Plaintiff asserts that Plaintiff consented to Defendant's use of Plaintiff's name, image, and likeness in the videogame, but only within the well-defined parameters laid out in the parties' contract. Defendant's videogame then included Plaintiff's name, image, and likeness in a manner that was outside the scope of Plaintiff's contractual consent.

This case is exactly what the Laws court had in mind when it suggested that Debra Laws might have a valid cause of action against Elektra Records (with whom she had entered into a recording contract), but not against Sony Records (which had obtained from Elektra licenses to use Laws's songs). The court clearly counseled that artists and entertainers should proceed exactly as Plaintiff has proceeded in this case:

If Laws wished to retain control of her performance, she should (and may) have either retained the copyright or contracted with the copyright holder, Elektra, to give her control over its licensing. Laws, 448 F.3d at 1145. The court added: But if Elektra licensed “Very Special” to Sony in violation of its contract with Laws, her remedy sounds in contract against Elektra, not in tort against Sony. Id. at 1144. Laws's right-of-publicity claims against the copyright licensee were preempted by the Copyright Act; but Laws's claims against the party with whom she contracted would not be preempted.

Here, Plaintiff contracted with the videogame's copyright holder (that is, Defendant) so that the copyright holder would only engage in certain activities. Plaintiff carefully controlled the rights it was allowing Defendant to incorporate into the videogame. Subsequently, Defendant engaged in certain other activities that were not contractually permissible. Thus Plaintiff has a valid breach of contract cause of action. Further, Defendant's alleged breach of contract involved Defendant's impermissible use of Plaintiff name, image, and likeness. Thus Plaintiff also has a valid tort cause of action for violation of Plaintiff's right of publicity. Accord Facenda v. N.F.L. Films, Inc., 542 F.3d 1007, 1031-32 (3d Cir.2008) (sportscaster's breach of contract and right of publicity claims not preempted by copyright where sportcaster's contract allowed defendant to use sportscaster's voice recordings in context of sports broadcasts, not in context of television advertisements for videogame).

In short, the rights asserted by Plaintiff are not copyrightable, see Downing, 265 F.3d 1003-04, and Plaintiff did not agree to Defendant's incorporation of Plaintiff's name, likeness, or image into Defendant's copyrighted work in the manner that Defendant did so, cf. Fleet, 50 Cal.App.4th at 1919, 58 Cal.Rptr.2d 645. Accordingly, Plaintiff's tort and contract claims are not preempted by the Copyright Act.

Remixing Videos Without Permission: Remix Culture - Analysis of Mashups in American Culture

Comment on Copyfight about a great video on Remix culture, Youtube and the battle for creative control over American culture.  Watch it.

Saturday, April 10, 2010

Watch and Listen! Powerpoint and Audio of Schiele's Dead City: Nazi Art Looting at Sotheby's Institute/New York State Bar Association

Egon Schiele's Dead City - Stolen from Fritz Grunbaum


You can WATCH and LISTEN to my Powerpoint presentation with audio is now available here  from the presentation I gave at Sotheby's Institute on March 24, 2010 in a program sponsored by the New York State Bar Association's Entertainment, Arts and Sports Law Section, chaired by Prof. Judith Prowda.

More material on artworks stolen from Fritz Grunbaum while he was in the Dachau Concentration Camp can be found at  http://artstolenfromfritzgrunbaum.wordpress.com/.


Egon Schiele's Girl With Black Hair - Experts Agree Stolen From Fritz Grunbaum
Falsified Provenance Published by Oberlin College's Allen Memorial Art Museum

Watch and listen to my Sotheby's Institute presentation and learn about why Oberlin College's provenance of Girl With Black Hair, found here, is false.

A summary of the evidence that Oberlin College has concealed below:

Below:  the cover of the 1956 Gutekunst & Klipstein (aka Galerie Kornfeld) - Eberhard Kornfeld testified that all of the artworks in this catalog belonged to Fritz Grunbaum.  Dead City was the only artwork pictured that listed Fritz Grunbaum as the prior owner.






Oberlin has never put Fritz Grunbaum's ownership of Girl With Black Hair in the provenance even though evidence of experts concluding that Fritz Grunbaum owned Girl With Black Hair was reported by Steven Litt of The Plain Dealer

Prewar catalogs show that Fritz Grunbaum owned Girl With Black Hair - Oberlin refuses to list these catalogs in its provenance of Girl With Black Hair



G.   Girl With Black Hair, according to Eberhard Kornfeld, spent 147 days in Switzerland before being sold to Otto Kallir on September 18, 1956.
Otto Kallir was Fritz Grunbaum's art dealer in Vienna.  Kallir had catalogued Dead City as being in Fritz Grunbaum's collection in 1930 when he wrote a catalogue raisonne of Schiele's oils.   As Otto Kallir's grand-daughter, Jane Kallir, testified at trial:  Fritz Grunbaum owned Girl With Black Hair.

So why does Oberlin's President Marvin Krislov refuse to admit Fritz Grunbaum's ownership?