Sunday, September 27, 2009

Statutory Mergers Trigger Copyright Infringement: M&A Lawyers Beware!

In Cincom Systems, Inc. v. Novelis Corp., --F.3d ---, 2009 WL 3048436 (6th Cir. Sept. 25, 2009), the Sixth Circuit found that a statutory merger not approved by a software licensor triggered a copyright infringement against the remaining entity, a subsidiary of Novelis (formerly Alcan Aluminum).

State law encourages statutory mergers, which are often viewed by M&A lawyers as little more than internal housekeeping or tax planning. Statutory mergers are used for a variety of reasons and often do not require advance notice to shareholders or permission of regulators.

Ohio law deems all property of the merged entity transferred. The Sixth Circuit found that the federal common law governing intellectual property licenses trumped state law. So where a non-exclusive license requires the permission of a copyright owner for any merger or transfer, this language means what it says, giving owners of software a major seat at the table where corporations wish to engage in any mergers or transfers.

The opinion is a good discussion of the tension between state law (facilitating mergers) and federal law (protecting IP owners) - and concludes squarely that federal policy and law trumps state policy on this point. The court notes that it is extending case law from patent cases into the copyright arena.
The Sixth Circuit affirmed the district court's grant of summary judgment and damages of $459,530 (equal to the amount of the initial licensing fee).

Once again, M&A lawyers have to start reading these software license agreements.

Friday, September 25, 2009

Christie's Off The Hook For Selling Nazi Looted Art To Innocent Purchaser

In Doss, Inc. v. Yoon Young Im, a case decided by Chief Judge Loretta Preska of the Southern District of New York on September 23, 2009, Christie's successfully fended off a claim from a purchaser who'd bought what turned out to be Nazi looted art for $235,000 at a 1991 auction in New York.

The case arose when in 2008, Doss, Inc., the purchaser of a Marie Laurencin Portrait from Christie's tried to sell it through Sotheby's. Sotheby's researched the artwork and found that it had been looted by the Nazis from the well-known Paris art dealer Paul Rosenberg. Sotheby's informed Doss Inc. (the would-be seller) that the artwork was stolen.

Doss then sued Christie's for breach of warranty. The problem is that New York's U.C.C. Section 275 provides a four-year statute of limitations for breach of warranty (claim for breach of warranty must be commenced within four years of tender of delivery of the goods).

Once the four years runs, a seller of stolen goods is off the hook in New York, as far as New York's U.C.C. is concerned, unless some tolling principle, such as fraudulent concealment. New York is a buyer beware state. But it would certainly be surprising if Christie's didn't know what it was selling when it put the work up for auction in 1991.

Auction houses and museum have been peddling the fiction that Hitler's art looting was not "discovered" until the mid-1990's. But the Nurember trials covered these crimes on the front pages of the New York Times and such authors as Janet Flanner covered Nazi art looting activities in depth in an extraordinary three-part series in the New Yorker magazine in 1947. Museums and auction houses would prefer to forget about such works as David Roxan & Ken Wanstall's groundbreaking report based on the Art Looting Intelligence Unit's Reports - The Rape of Art: The Story of Hitler's Plunder of the Great Masterpieces of Europe (Cowan-Mc Gill New York 1964). Flanner's accounts of artworks being uncovered in salt mines together with gold teeth removed from Jewish corpses is a chilling reminder of how the Nazis intertwined looting and murder.

The truth is, museums, private owners and auction houses have been waiting for a couple of generations of Jews to die so that they can safely peddle and display the looted artworks held in their collections.

Christie's didn't know it was stolen in 1991 when they sold it? Horsefeathers!

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Sunday, September 20, 2009

Looted Art in Spain via Germany: Thyssen-Bornemisza Can Be Sued In Federal Court

In Cassirer v. Kingdom of Spain, found here the Ninth Circuit dealt with a case of first impression. Where Germany stole an artwork, and Spain bought the stolen artwork, does the Foreign Sovereign Immunity Act (FSIA) make Spain immune from suit in a US federal court? The case arose from a Nazi taking a Pissarro from Claude Cassirer's mother in Nazi Germany in 1939.

The legal question presented was whether the expropriation exception to sovereign immunity in Section 1605(a)(3) of the FSIA applied to a sovereign entity that was not alleged to have taken property in violation of international law.

Spain bought a collection from a Swiss-based Baron Thyssen-Bornemisza and started a museum based on the collection.

This is similar to the arrangement Austria has with the Leopold Museum. The Leopold's collection is now being researched at the insistence of the Jewish Community of Vienna, which held protests and roped off the entire Leopold Museum in yellow "crime scene" tape.

When you buy from the Swiss the type of art that Nazis liked to loot, you really ought to check the provenance. Shame on Spain. Let's hope they set up a commission to publicly investigate the collection and give back the things that have been stolen from murdered Jews.

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Monday, September 07, 2009

Artwork in Artist Biography Fair Use: A Monstrous Copyright Decision

You are an artist, an architect, a photographer or anyone working in the creative arts. You'd like to use works you've created in a career retrospective, autobiography, part of your portfolio. You are writing a biography of someone who works in the creative arts. Do you have to pay to license full color images of the works?

The leading case is Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605 (2d Cir. 2006), involving a book on the Grateful Dead. In that case, images reduced and put on a timeline in a book about the Grateful Dead were held to be fair use, even though the publisher tried to license the works and was rejected.

But what about large color reproductions? A recent fair use case from the Eastern District of Pennsylvania by District Judge Bayleson, Warren Publishing v. Spurlock, 2009 WL 2412542, --- F. Supp.2d --- (August 4, 2009) tackles the issue in a thoughtful, thorough and monster-sized decision.

Basil Gogos illustrated cover art for monster movie magazines such as Creepy and Eerie. Spurlock wanted to write a biography of Gogos and show images of his poster art.

The decision goes into issues regarding the work-for-hire doctrine, the Copyright Act of 1909, the bankruptcy of the original publishers, battles of the experts, in all of the case's horrific details.

In the end, the use of full-color and large images of background art were found to be fair use in an artist's biography. The original magazines were about promoting Bela Lugosi and Dark Shadows, not Basil Gogos.

For those who claim that artists have been taken advantage of by greedy corporations who keep their out-of-print content under lockdown, this is a clear, resounding victory and a well-reasoned decision.

An important factor in the court's decision was the publisher's failure to exploit the coffee-table market for a perior of 22 years. In the age of Google, the culture of "use it or lose it" is taking hold.

The Copyright Wars proceed apace with a new folk devil to create a moral panic.
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Sunday, September 06, 2009

Patry's Moral Panics and the Copyright Wars: Strangled In Copyright, US Devoured By Korea

Professor William Patry, copyright's most prolific scholar and a bit of a folk devil himself, has come out with a new book that burns with the ambition of making us rethink copyright from the ground up. According to Patry, countries like Korea and Japan are far ahead of the US in technological innovation and embrace of the internet to create lucrative consumer-driven markets for copyrighted content.

If you want to know why your DVD player doesn't have a "record" button, Patry provides the best, most entertaining, and lively explanation I've ever seen.

Patry's erudition and lively writing style make for a brisk and entertaining read. His examples are interesting and compelling -and his discourses on metaphor are quite brilliant. Patry is at his best in cheerfully skewering corporate oligopolists who have successfully lobbied for laws that destroy technical innovation.

Patry plays Marc Antony to Jack Valenti's Caesar: Valenti was the head of the Motion Picture Association of America and a genius lobbyist. Valenti branded consumers as "pirates" and "thieves" for doing things like skipping commercials and mustered up populist outrage in Congress in order to grab cash and control over content for his oligopolist clients. Patry attacks these "folk devils" invented by Valenti and the "moral panics" he created and then cashed in on. Patry shows pretty convincingly that Hollywood and the RIAA have thoroughly misbehaved.

If you are interested in the debates over the past, present and future of copyright law, this is a terrific, unabashedly partisan book. Although Patry says we need to rethink copyright from the ground up as a privilege that is a creature of the legislature and a servant of the public good, I didn't find any concrete prescriptions for doing so. Patry is Senior Counsel to Google, but his book and the blog discussing his book have prominent disclaimers warning against attributing Patry's views to Google. But Patry's views are Google-friendly, to say the least and it would be pretty surprising if Google did not wholeheartedly embrace his views.

One concrete proposal that Patry supports is having the Obama Administration back a broadband initiative that would increase access and speed for consumers - essentially building a national online highway.

To bring home his point, Patry points to Korea and Japan and cites a study showing that "at this rate, it will take the United States more than 100 years to catch up with current Internet speeds in Japan".

This is after an entire book full of Patry blasting copyright owners for using dubious statistics, histrionic metaphors and "folk devils". Valenti would have liked Patry's conjuring this Asian menace - it's the same menace Valenti relied on.

Whether you agree or disagree with Patry, it's a thought-provoking book and likely to be influential with the U.S. judiciary. Despite the disclaimers, it's likely to be taken as a road map for lobbying Washington by technology companies currently shut out of lucrative markets by the content oligopolies.

Patry has created a blog to discuss his book found here. Hopefully this new blog will be a home to the lively and spirited debate that Patry is famous for.

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Saturday, September 05, 2009

Electronic Registration of Copyrights: Online Tutorial Available

The Copyright Office has a useful tutorial for those who wish to file copyrights electronically. The tutorial is here and here. The Copyright Office's website has a number of free, downloadable publications explaining how to register copyrights, what qualifies as a copyrightable work, and how to answer many of the basic copyright questions one is likely to confront.

Electronic filing is a great advance. It still takes a long time to receive an actual copyright registration certificate. For impending litigation, a registration certificate can be expedited. This procedure is known as "special handling" and costs $685.

As a U.S. author, unless you've got a copyright registration certificate (or the Register of Copyrights has denied you one) you generally can't sue in federal court. You can register after an infringement, but there are big disadvantages for waiting until you've been ripped off.

Unless you register your copyrights early, you may not be entitled to "statutory damages" and attorneys fees. When a copyright owner has failed to timely register, it puts the owner at a great disadvantage in obtaining compensation for copyright infringements.

Registering copyrights, registering license agreements, and registering transactions involving copyrights is extremely important. The news is full of transactions gone bad because transactional attorneys did not seem to understand the meaning or scope of licensing agreements.

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