Copyright Law: Donglegate - Fifth Circuit Shreds DMCA, Tosses Damages Experts

Mini Bluetooth Dongle

Here's a scenario for a copyright plaintiff's lawyer:

Client comes to you.  Potential defendant has cracked (infringing) copies of your client's software on its system.  Client uses a "dongle" to protect the software:  you can't access or operate the software without the dongle.  The cracked copies of the software can run without using your client's dongle key: bypassing the encryption system.   You sue. Judge gives you an injunction, infringer proceeds to ignore it, keeps using copies and fails to account for missing laptops.  Defendant is big, profitable company, made lots of $$ using your infringements.

Enter the Digital Millenium Copyright Act:

17 USC § 1201. Circumvention of copyright protection system



(a) Violations Regarding Circumvention of Technological Measures. — (1)(A) No person shall circumvent a technological measure that effectively controls access to a work protected under this title. The prohibition contained in the preceding sentence shall take effect at the end of the 2-year period beginning on the date of the enactment of this chapter.

From Wikipedia:
 
A dongle is a small piece of hardware that connects to a laptop or desktop computer for the purpose of copy protection or authentication of software to be used on that system.[1]
Electrically, dongles mostly appear as two-interface security tokens with transient data flow that does not interfere with other dongle functions and a pull communication that reads security data from the dongle. These are used by some proprietary vendors as a form of copy protection or digital rights management, because it is generally harder to replicate a dongle than to copy the software it authenticates. Without the dongle, the software may run only in a restricted mode, or not at all. As of July 26, 2010 it became legal in the United States to use programs protected by this method without needing a dongle as according to the United States this technology is obsolete.

(no citations for that last proposition)

You have a SLAM DUNK, in collecting big damages right?   Not in the Fifth Circuit, and not if you have screwed up your damages claim.

Enter MGE UPS Systems v. GE Consumer and Indus. Inc., 2010 WL 2820006 (5th Cir. July 20, 2010). You can find the decision here.

Deciding an issue of first impression, the Fifth Circuit Court of Appeals found that the dongle wasn't used by the infringer to bypass copyright protections to make infringing copies, it was bypassed simply to use the infringing copy, so didn't violate 17 USC 1201.  That is now the law of the Fifth Circuit interpreting 17 U.S.C. 1201.   The Fifth Circuit reasoned that once you bypassed the dongle, there wasn't ANOTHER layer of protection, so using the cracked software was AOK under 17 U.S.C. 1201.   Also, the infringer's possession of a cracked copy was not sufficient to show that the DEFENDANT had bypassed the technology.

Ordinarily in copyright law, showing access plus an infringing copy is enough to prove direct copying - videos of people actually cracking software are pretty rare.   So the general rule is when a copyright owner busts someone with a lot of cracked software, it's pay up or shut up time.  Not in the Fifth Circuit!

But for the poor copyright owner, it gets worse.  Rule 26 of  the Federal Rules of Civil Procedure requires a litigant to calculate damages upfront.  This is usually impossible prior to discovery, so litigants usually put in something pro-forma and then try to amend/update as possible or necessary as early as reasonably possible.  In this case, the plaintiff put in that it would rely on its expert.  The expert calculated only the Plaintiff's losses based on theories that the trial court threw out.  The expert NEVER SOUGHT OR CALCULATED ACTUAL PROFITS RELATING TO THE INFRINGEMENT.

The result?  Since the expert's hokey theories were thrown out, plaintiff's lawyers were left with the gross sales of the infringer.  But it gets worse.  They never present to the jury the revenues that they claim are RELATED TO THE INFRINGEMENT.

Result?   The Fifth Circuit threw out all jury awards, granted plaintiff injuntive relief plus a "take nothing judgment" (those are the Fifth Circuit's actual words).

Time for a book plug, because obviously the message is not getting through.   When you start a copyright litigation, please buy my book Copyright Litigation Handbook.  I took three years to write the book combing the case law for examples of lawyers running afoul of the Federal Rules of Civil Procedure as applied to claims under the Copyright Act.  Nimmer it ain't.  Patry it ain't.  It is SHORT and USEFUL.  It doesn't try to replace or compete with a treatise on copyright law.  It's a little over $200.  Unlike any other publication on copyright law, each Chapter is chock full of screwups for the litigation practitioner to avoid. When you get to your Rule 26 disclosures on damages and experts, read three relatively short chapters:  Chapter 14 Discovery; Chapter 15: Evidence and Experts and Chapter 17:  Damages and Profits.  They are short chapters, it won't kill you.

I am reading more and more case law where experts are coming in with goofy theories and getting tossed out by judges.   You may need to pursue a few different theories in discovery and be prepared for at least one to be tossed as outright nonsense (economists, industry comparisons, etc.).  And if you can't get those billions you think your case is worth, it's better to take home at least the value of your legal fees and costs.



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Copyright Blogs: Top Copyright Blawgs - Justia

This week's ranking of top Copyright Blogs from Justia Blawg Directory:

1. IPKat (62)  Alexa 453,723
2. Recording Industry vs The People (153) Alexa 288,637
3. Plagiarism Today (188) Alexa 98,910
4. Likelihood of Confusion (233) Alexa 1,384,049
5. Chilling Effects Clearinghouse (235) Alexa 17,035
6. Copyright Litigation Blog (247) Alexa 632,947
7. Copyright Reform (310)  Alexa 11,832,939
8.  Chicago IP Litigation Blog (320) Alexa 2,053,979
9.  Ruling Imagination: Law and Creativity (338) Alexa 2,182,191
10.TechnoLlama (397) Alexa 961,095
11. Excess Copyright (522) 2,055,389
12.  Nolo Presents the Law in Plain English (558) Alexa 5,489,995
13.  Video Game Law Blog (565) Alexa 1,014,265
14.   Internet Cases (602) Alexa 952,632
15.   The Patry Copyright Blog (606) Alexa 1,656,580



The number in parentheses is the popularity of each site compared to all other Blawgs this week (by Justia).  I put the Alexa numbers next to each.

Justia's list has 64 Copyright Blogs.  Justia has an Alexa ranking of 11,293.  If Blogs don't self-identify as Copyright Blogs, they are not included.  According to Justia, the most popular Blawg is Above the Law, which has an Alexa ranking of 29,575.

According to the Alexa numbers, the EFF's Chilling Effects Clearinghouse is by far the most popular site, they really must have tremendous traffic, people are really interested in cease and desist letters.  I wrote a chapter in my Copyright Litigation Handbook that is devoted to cease and desist letters.  I think it may be the only comprehensive discussion of the first-to-file rule, problems arising from cease and desist letters, and the issue of declaratory judgment actions filed in response to cease and desist letters.

For more on Copyright Litigation Handbook (what West calls an "author-generated summary), go here.

For a list of top Intellectual Property Blawgs and an explanation of statistics, go here.

 Purchase Copyright Litigation Handbook from West here  

Art Litigation: Nazi-Era Art Catalogs To Be Digitized By Getty - Tool for Researching Nazi Art Looting

Getty museum has received a National Endowment for the Humanities and German Research Foundation grants to digitize German art catalogs from 1930 - 1945 and to make them available to the public.  Press release here.   This is a step in the right direction and will provide an excellent tool for tracing artworks looted during the Nazi era.  More will be necessary, since pre-war catalalogues show where property was before World War II and at the time Jewish people and other persecutees bought it and is often critical in establishing provenance in favor of families who were looted.

Great step in the right direction.  Los Angeles Times story here.http://latimesblogs.latimes.com/culturemonster/2010/07/getty-receives-grant-money-for-german-art-project.html


Purchase Copyright Litigation Handbook from West here  

Art Litigation: Vienna's Leopold Museum Pays $19 Million For Stolen Schiele Portrait of Wally

Some good reporting on Portrait of Wally from Catherine Hickley of Bloomberg:

Vienna's Leopold Museum Pays $19 Million to Keep Schiele Portrait of Lover - Bloomberg

Piece on Portrait of Wally in the Washington Examiner.

My latest news on Austria buying the stolen Schiele Portrait of Wally here.

Purchase Copyright Litigation Handbook from West here

Art Litigation: Leopold Museum Capitulates in Egon Schiele - Portrait of Wally Case - Pays Full Price and Admits Artwork Stolen

Egon Schiele's Portrait of Wally

Chief Judge Loretta Preska approved a settlement in the Portrait of Wally case.  Herrick Feinstein's press release reporting the settlement terms of the Portrait of Wally case here - Portrait of Wally Case Settles

This is good news for heirs of Holocaust victims and a measure of justice.  It also gives a flavor of just how tainted the Leopold Collection is.  Congratulations to all - the courtroom battle started in 1999 has finally ended.

A very nice touch is that Portrait of Wally will be displayed at the Museum of Jewish Heritage in Battery Park City.   This is a very nice vindication for Robert Morgenthau's 1999 seizure of Portrait of Wally at the MoMA.

Dead City III, stolen from Fritz Grunbaum, is still hanging in the Leopold Museum.  For more information on Dead City III, go here.   My posts on Egon Schiele here.

If you have an interest in the topic of Nazi art looting, go here.   There is an incredible amount of stolen art remaining in U.S. museums.  Learn about Nazi agent and art dealer Curt Valentin here.

A really huge scandal and breathtaking example of Holocaust denial in the American museum community, the sad story of Alfred Flechtheim here.

I have copied the text of the press release below:

The United States of America, the Estate of Lea Bondi Jaray and the Leopold Museum Settle the Long-Standing Case Involving “Portrait of Wally” by Egon Schiele


New York, NY (July 20, 2010) -- The Estate of Lea Bondi Jaray (the “Estate”) announced today that the United States Government, the Estate and the Leopold Museum Privat-Stiftung (the “Leopold Museum”) have agreed to settle the long-pending case of United States of America v. Portrait of Wally, which was about to go to trial before Chief Judge Loretta Preska in federal court in Manhattan on July 26, 2010.
The case involves Portrait of Wally, a painting by Egon Schiele (the “Painting”), stolen from a Jewish art dealer and collector by a Nazi agent in the late 1930’s in Vienna. The major terms of the settlement agreement, which has been approved by Judge Preska, are as follows:
(a) the Leopold Museum pays the Estate $19 Million;
(b) the Estate releases its claim to the Painting;
(c) the United States Government dismisses the civil forfeiture action it brought against the Leopold Museum and releases the Painting to the Leopold Museum;
(d) the Leopold Museum will permanently display signage next to the Painting at the Leopold Museum, and at all future displays of the Painting of any kind that the Leopold Museum authorizes or allows anywhere in the world, that sets forth the true provenance of the Painting, including Lea Bondi Jaray’s prior ownership of the Painting and its theft from her by a Nazi agent before she fled to London in 1939; and
(e) before it is transported to the Leopold Museum in Vienna, the Painting will be publicly exhibited at the Museum of Jewish Heritage -- A Living Memorial to the Holocaust, in New York, beginning with a ceremony commemorating the legacy of Lea Bondi Jaray and the successful resolution of the lawsuit.

The Painting was the personal property of Lea Bondi Jaray, a Jewish art dealer in Vienna, who fled in 1939 to London, where she died in 1969. The Painting became the subject of court proceedings in New York City, after it was loaned in late 1997 and early 1998 to the Museum of Modern Art in New York by the Leopold Museum as part of an exhibition of Schieles from the Leopold Museum’s collection. In 1998, Robert Morgenthau, Manhattan District Attorney, subpeonaed the Painting in connection with his investigation into whether the Painting was stolen property. After the State Court of Appeals ruled in 1999 that such “seizure” of an artwork loaned for exhibition was prohibited under New York State law, the United States Government immediately commenced a civil forfeiture action in New York, alleging that the Painting was stolen from Lea Bondi Jaray during the Nazi era by a Nazi named Friedrich Welz, and was imported into the United States in 1997 by the Leopold Museum in violation of U.S. law. The Customs Service seized the Painting in connection with that action. The Estate of Lea Bondi Jaray asserted a claim to the Painting in the action, and the U.S. agreed that upon forfeiture of the Painting, it would transfer to the Estate all right and title to the Painting.

Based on the evidence presented during the case, Judge Preska ruled last fall that the Painting was the personal property of Lea Bondi Jaray and that it was stolen from her in Vienna in the late 1930's by Friedrich Welz, who was a member and collaborator of the Nazi party. The Court found that the Painting had been seized from Welz by U.S. Forces in Austria after World War II and delivered in 1947 to the Austrian Federal Office for the Preservation of Historical Monuments (the “Bundesdenkmalamt”), along with paintings Welz had acquired from Dr. Heinrich Rieger, a Jewish art collector who had perished during the Holocaust. In 1950, the Bundesdenkmalamt delivered artworks to an agent for the Rieger heirs and included the Painting in the delivery. Later that year, the Rieger heirs sold their works to the Austrian National Gallery (the “Belvedere”), and the Painting was included in the delivery of the artworks to the Belvedere. In 1954, the Belvedere traded the Painting to Dr. Rudolf Leopold. In 1994, Dr. Leopold transferred the Painting to the Leopold Museum.

In a statement, representatives of the Estate expressed their appreciation at reaching this historic settlement, which reflects the true value of the Painting, and acknowledges Lea Bondi Jaray’s ownership of the Painting and her and her family’s long quest for justice. In addition, they underscored that the public display of the Painting at the Museum of Jewish Heritage in New York will mean that visitors will be able to view the Painting in a setting that memorializes the sufferings of so many in the Holocaust and the resilience and resolve of those who escaped and/or survived. They added that the permanent signage reflecting the Painting’s true provenance will ensure that future generations are told the real story of the Painting’s theft from Lea Bondi Jaray during the Nazi era.

In conclusion, the Estate representatives said: “Justice has been served. Finally, after more than 70 years, the wrongs suffered by Lea Bondi Jaray are at last being acknowledged and, to some degree, corrected. We are grateful to the many people who helped Lea and her family during these many years. We especially thank our attorneys at Herrick, Feinstein, and all the members of the Asset Forfeiture Unit team of the U.S. Attorney’s Office, led by Assistant U.S. Attorney Sharon Cohen Levin, for their unstinting dedication to the pursuit of justice during the long course of this litigation.”


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First Amendment: The Obscenity of Wasting Taxpayer Money By Chasing Milkmaids Instead of Criminals

The National Law Journal reports here that a rare obscenity trial was thrown out against porn producer John Stagliano a/k/a "Buttman".  A federal agent went online and purchased "Jay Sin's Milk Nymphos" among other choice titles.

Robert Corn-Revere was on the defense team.  Years ago Bob participated in a CLE panel I organized on The Trials of Lenny Bruce, a great book (with sound recordings on CD).  Bob was also part of a successful petition to posthumously pardon Lenny Bruce.  Some more on Lenny Bruce here.

Lenny Bruce thought that war, not sex, was obscene.  Funny how the more money the government flushes down the toilet on useless and unwinnable foreign wars, the more it attacks people for engaging in or watching sex.

Try chasing Osama Bin Laden instead of wasting taxpayer money on chasing imaginary Milk Nymphos.  Human trafficking, sexual exploitation of children, and the health safety and welfare of those exploited in the sex trade should be much higher on law enforcement priorities.



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Copyright Law: NYU Bobcat May Not Be "Work For Hire" Rules EDNY Judge

NYU Bobcat Logo

In Fleurimond v. New York University, --- F.Supp.2d ----, 2010 WL 2773089 (EDNY July 14, 2010), Judge Spatt found that the question of whether the NYU Bobcat logo is a work for hire is a question of fact.

Defendant NYU made a motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure.   NYU's motion attached the designer's W-2 form and other documents supporting the contention that Fleurimond was an employee of NYU and created the Bobcat within the scope of her employment.   Judge Spatt pointed out that such documents could not be submitted on a Rule 12(c) pre-answer motion for judgment since only documents relied on by the complaint are appropriately considered at that stage of the pleadings:

NYU contends that the W-2 form and the emails between Fleurimond and several NYU employees conclusively establish that Fleurimond developed Orion while she was an NYU employee, acting within the scope of her employment. However, in the Court's view, these documents may not be considered on a Rule 12(c) motion for judgment on the pleadings. These documents were neither referenced in Fleurimond's complaint, nor relied upon in drafting the complaint. It is equally clear that they are not documents of which the Court may take judicial notice.



In the Daily News coverage of the case here, Fleurimond is described as a "freelancer".   Judge Spatt found that Fleurimond's allegation that she was the "sole creator" of the Bobcat logo was sufficient to render her claim of authorship "plausible" under the Twombly and Iqbal pleading standards.

Under 17 USC 201(a), copyright vests initially in the author of a work.

17 USC 201(b) provides:

(b) Works Made for Hire. — In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.


Judge Spatt applied the work-for-hire test (part of federal common law created in the landmark CCNV v. Reid case):

the hiring party's right to control the manner and means by which the product is accomplished ... the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party. Community for Creative Non-Violence v. Reid, 490 U.S. at 751-52.

Judge Spatt's conclusions here:

Even with the benefit of the materials NYU appended to its reply papers, the Court is not in a position, at this stage, to comprehensively assess these factors. The W-2 form and the emails seem to suggest that Fleurimond was an NYU employee acting within the scope of her employment when she developed Orion. However, the Court is not prepared to conclusively determine these issues without giving Fleurimond an opportunity to conduct discovery.


In summary, the Court finds that Fleurimond has offered a plausible copyright infringement claim. Her allegation that she is the sole creator of Orion suggests that she could be the legal owner of the Orion copyright. Evidence that exists outside the four corners of the complaint reflects that NYU may be the rightful copyright owner under Section 201(b). However this is not an issue that can be addressed on a Rule 12(c) motion and the Court declines to convert NYU's motion to one for summary judgment. Fleurimond v. New York University L 2773089, 3 -4 (E.D.N.Y. 2010)

I discuss the Work for Hire Doctrine in Copyright Litigation Handbook - Chapter 8: Copyright Ownership and Licensing Litigation and in Chapter 13:  Answer and Defenses.

Earlier Copyright Litigation Blog posts relating to works for hire here and here.

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Copyright Litigation Blog In Top 20 Most Popular Intellectual Property Law Blogs - Justia

This week's list of the most popular IP Law Blogs from Justia's BlawgSearch.

The number in parentheses is the ranking, in Blawg popularity, Justia has assigned.  So Patent Docs is 39th in popularity among all Blawgs tracked by Justia.  The Alexa number is adjusted daily and an indicator of the blog's popularity compared to all websites in the world, this is from the service Alexa.

1.  Patent Docs (39)  Alexa 676,831
2.  IPKat (58)Alexa  435,277
3. Patently-O (59)Alexa  212,812
4. IPBiz (87)Alexa 1,851,345
5.  The University of Chicago Law School (131)Alexa 373,013
6. US Law Watch (164) (BNA)Alexa 5,991,713
7.  Law & Disorder (166)Alexa  2,029 (Ars Technica)
8.  Plagiarism Today (171)Alexa 102,089
9.  The TTAB Blog (185)Alexa 1,045,360
10 The Journal of The Business Law (203) (Illinois Business)Alexa 3,559
11. Recording Industry vs The People (217)Alexa 313,989
12.  Copyright Litigation Blog (221)Alexa 702,533
13.  ITC 337 Law Blog (230)Alexa 1,328,726
14. IP Thinktank (233)   Alexa 401,451
15.  IPWatchdog (234)  Alexa 80,792
16.  Philip Brooks' Patent Infringement (240) Alexa 3,035,653
17.  The Trademark Blog (255)  Alexa 310,211
18.  43(B) Blog (262)  Alexa 797,491
19.  Orange Book Blog (267) Alexa 2,360,924
20.  Likelihood of Confusion (271)  Alexa 1,485,098

On May 28, 2010 Copyright Litigation blog came in at number 28 in popularity among IP Law Blawgs and number 311 among Blawgs.   This week, from a view of Justia's Blawg Directory, Copyright Litigation Blog is at number 12 in popularity among IP Law Blawgs and number 221 among Blawgs.

These statistics vary from week to week, and the Alexa stats give an indication that a not-so-popular blog might have a good week, and vice versa.  It is interesting to see that Patent Blawgs rank so high, Trademark Blawgs proliferate, but very few Copyright Blawgs in the popularity mix.

Note that Ben Sheffner's popular Copyrights & Campaigns is at Alexa No 640,214, but is not included in Justia's rankings, probably because he didn't list the blog with Justia under the Intellectual Property category.

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Art Litigation: Artworks Stolen By U.S. Soldier Returned to German Museum

Image Wikimedia Commons via Art News - Heinrich Buerkel's Regenschauer in Garmisch

Art News and the AP report on the grand-niece of an American Serviceman who inherited 11 artworks and realized that they were stolen from a German museum and then decided to restitute them.

But unfortunately, the Art News piece claims: 

"it has emerged in recent years that Allied soldiers also stole work."

That is an absolute falsehood.   As Milton Esterow reported in November 16, 1964 front page article for the New York Times "Europe Is Still Hunting Its Plundered Art" discussed here, the U.S. State Department had recovered almost 4,000 stolen artworks in the U.S. from 1945 to 1962, many that were looted by U.S. servicemen.  The U.S. State Department, principally Ardelia Hall and the Roberts Commission warned U.S. museums and art dealers in the 1940's and 1950's not to acquire stolen art and gave a general amnesty to people returning stolen works.

Stolen art was a big deal in 1945 and 1946, getting lots of ink in the New Yorker (Janet Flanner's groundbreaking work), Atlantic Monthly, National Geographic and many other major publications.

It is unfortunate that for the last 60 years, the American museum community and art press feign perpetual surprise each time stolen works surface.   This collective amnesia is a national disgrace.  Tens of thousands of works stolen from murdered Jews or foreign museums are missing or were donated to an American museum in exchange for tax breaks and hidden in the basement. U.S. museums have shirked their ethical duties as set forth in the Washington Principles to research their collections and publish provenances of the works in their collections.  Let's not act shocked and surprised every time an American is caught with his hand in the cookie jar.

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Fair Use Friday: Holocaust Survivor Dances To "I Will Survive" At Auschwitz Death Camp

An extraordinary video, Auschwitz survivor dances with his grandchildren at Auschwitz to Gloria Gaynor's "I Will Survive".

News "Dancing Auschwitz" artist unbowed by criticism



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Copyright Law: Fair Use Fridays - Kutiman Mixes YouTube - The Mother of All Funk Chords

Copyright law's fair use doctrine is embedded in 17 USC 107, which provides:

§ 107. Limitations on exclusive rights: Fair use



Notwithstanding the provisions of sections 106 and 106A [a copyright owner's exclusive rights to publish and distribute copyrighted works] , the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

The four "fair use" factors require a fact intensive analysis.   So what do you think of Kutiman's mashup/remix of videos he found on YouTube (video below)?  Cool?  Yes.  Fair use?  You decide, and check out Kutiman's other "Thru You videos on YouTube here.

Kutiman's thru-you.comhttp://thru-you.com/ says:  "Check out the credits for each video - you might find yourself".

Yes, another way for America to find itself.  Will Kutiman be YouTube's Andy Warhol, doling out 15 seconds of fame to the famous and not-so-famous?

 HT to Mike Masnick of Techdirt.

More Copyright Litigation Blog posts on the fair use doctrine here.

Copyright Litigation Blog reporting on Max Papeschi and the continuing NaziSexyMouse controversy here.  Pamela Geller, author of Atlas Shrugs Blog (and author of The Obama Administration's War on America's post "The left owns western culture. Music, media, arts.  Where does the road of leftism lead?  To hell." Full post here.  That's a relief! Up until now, everyone was thinking that NaziSexyMouse was a vast right wing conspiracy.



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Art Litigation: Austrian Panel Recommends Return of Four Leopold Foundation Works Stolen From Jews

No Polizei for the Stolen Property of Vienna's Jews (Photo Wikipedia)

Oskar Reichel, a Jewish doctor in Vienna, was forced to give up his artworks by the Nazis, an Austrian panel found, including one work by Egon Schiele.

Jenny Steiner's Schiele "Houses by the Sea" was confiscated and sold through Vienna's infamous Dorotheum in 1941.

All of the works are at the infamous Leopold Museum in Vienna.   Austria used the fiction of creating a "private foundation" so that it could acquire Rudolph Leopold's vast collection of artworks, many looted from Jews.   More on Leopold here.

Of course the recommendations of the panel are non-binding.  No chance that the Bundespolizei will be called in.

From the Dorotheum's self-serving Wikipedia page:

During the Nazi regime important posts within the Dorotheum hierarchy were assigned to supporters of the regime. The institution's infrastructure was used to auction off aryanised property, although the Dorotheum itself was at no time actively involved in Aryanisation.

Link to AP Story:

Austrian Panel Recommends Return of 4 Works - ABC News

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Copyright Law: Attorneys Fees To A Prevailing Party in an Infringement Action

Although the Copyright Act, 17 USC 505 permits judges in their discetion to allow costs to a prevailing party, and as part of costs to allow reasonable attorneys fees, there is a whole body of developing case law showing the minefields and hoops firms representing prevailing parties must jump through to get paid, and the many ways judges may exercise their discretion to deny attorneys fees.

Add Corbis Corp. v. Starr, --- F. Supp.2d ---, 2010 WL 2572049 (N.D. Ohio June 25, 2010) to the literature.

Judge Carr notes that the attorneys billed time in quarter-hour increments, rather than tenth of an hour increments, which he believes warrants a downward adjustment.  He objects to the attorneys billing in block hour lumps and not describing their tasks.  And he reviews the law of privilege, and finds that neither the work product privilege nor the attorney client privilege cover legal bills.   He permits the firm to resubmit their bills in a redacted form to protect any purportedly privileged information.

In Chapter 18:  Costs and Attorneys Fees of my Copyright Litigation Handbook, I cover the growing case law governing applications for attorneys fees and the various approaches taken in different Circuits.  Getting paid is an uncertain business and the discretion of a judge to police over-reaching is considerable.  Making a record showing exercise of "billing judgment" may be unfamiliar, but taking the time to trim bills to disallow efforts that ought not in fairness be charged to an adversary before submitting them to a court might save a painful review.  On the other hand, there is case law supporting the concept that not every litigation strategy need be successful to be reasonable, particularly where an adversary is misbehaving.

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Copyright Law: Tenenbaum and Statutory Damages - Comments from the Blogosphere

Derek Bambauer is critical of Judge Nancy Gertner's decision in Sony BMG v Tenenbaum.

Info/Law » Tenenbaum and Statutory Damages

My admiring post on Judge Gertner's decision in Tenenbaum here.

The Electronic Frontier Foundation's  Corynne McSherry writes on the Deeplinks blog

But the most interesting aspect of the ruling may be the court's conclusion that Congress never intended copyright's extraordinary statutory damages provisions — which permit an award of up to $150,000 per work if the defendant has willfully infringed — to apply to noncommercial users of peer-to-peer networks, even if they are found liable for willful infringement. After a lengthy review of the legislative history, Judge Gertner found that there was "substantial evidence indicating that Congress did not contemplate that the Copyright Act’s broad statutory damages provision would be applied to college students like Tenenbaum who file-shared without any pecuniary gain."

Full Deeplinks post here

Expect the opposite from Ben Sheffner, who is thinking about it here.

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Copyright Law: WSJ Column Endorses Prof. Lawrence Lessig "On the Economics": Curse of the Copyright Holders

WSJ columnist Tony Woodlief ran into what he believed to be ridiculous demands of copyright holders and opted out of using the materials. In doing so, he endorsed Prof. Lawrence Lessig, the leading light of the Copyleft movement "on the economics".
Lessig fought the Copyright Term Extension Act at the U.S. Supreme Court.  Woodlief's column shows how contemporary writers are penalized when copyright holders don't permit what ought to be fair use of the works.

Here is the link:

Tony Woodlief: Curse of the Copyright Holders and Their Fee-Seeking Lawyers, - WSJ.com

Update:  The Legal Satyricon disagrees with Woodlief here

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Art Litigation: Egon Schiele's Prison Converted To A Museum, Image At Center of Stolen Art Controversy

Egon Schiele's "I Love Antitheses" 1912 (Estee Lauder Trust)

Artkabinett has an article Schiele Prison Attracts Collectors on the prison that housed Egon Schiele in Austria when he was imprisoned for scandalizing public morals.   Today the prison is a museum dedicated to Schiele's works.  Above is an image of one of the works that Schiele created while in prison.  According to Schiele expert Jane Kallir, "I Love Antitheses" was part of the collection of Fritz Grunbaum, a Jewish cabaret performer who was murdered in the Dachau Concentration Camp.  Jane Kallir testified at trial that "I Love Antitheses" was one of the few works that Schiele himself titled, and that the work is documented as belonging to Fritz Grunbaum by a 1925 Wurthle Catalog and a 1928 Hagenbund - Neue Galerie catalog.  Today it is held in an Estee Lauder trust.

Neue Galerie was the name of Otto Kallir's art gallery in Vienna that organized a 1928 exhibition to commemorate the tenth anniversary of Schiele's death.  Otto Kallir borrowed 22 works from Fritz Grunbaum's collection to include in the 1928 exhibition.  The 1928 correspondence shows that Otto Kallir had full access to Fritz Grunbaum's Schiele collection and selected the works that he wanted to borrow.

Grunbaum's collection was stolen by the Nazis and surfaced in Switzerland in 1956 where some of it was sold off by Eberhard Kornfeld of Galerie Kornfeld to Otto Kallir.  Kallir bought 20 of Fritz Grunbaum's Schieles from Kornfeld, including Dead City III. 

Kornfeld shipped the Grunbaum Schieles to New York and sold them through the Galerie St. Etienne, the gallery today owned by Jane Kallir and named after St. Stephen's Cathedral (Stephansdom)  in Vienna.  Otto Kallir knew that the works had belonged to Fritz Grunbaum and was aware that Fritz and his wife had been murdered by the Nazis.   In the period Kallir was selling the stolen artworks from his gallery on 57th Street in New York, the U.S. State Department had issued warnings to art dealers, museums and collectors not to acquire artworks from Europe that did not have a clear provenance.   Schiele was unknown outside Austria prior to World War II and many of Schiele's top collectors were murdered Jews such as Heinrich Reiger,  Oskar Reichel,  Karl Maylander and Fritz Grunbaum.

Galerie St. Etienne's Inspiration  -  Stefansdom - Vienna - Image from Wikipedia

Dead City III was seized as stolen property by D.A. Robert Morgenthau in 1998. After Morgenthau's subpoena was quashed, MoMA gave Dead City III to Rudolph Leopold.

A lawsuit alleging that Fritz Grunbaum's art dealer, Otto Kallir (and for a time monarchist supporting the restoration of the Hapsburgs) laundered the Grunbaum collection through Switzerland is still pending. See New York Observer, Dealer with the Devil.   The heirs of Fritz Grunbaum have been battling to regain the artworks stolen from him.  More information at Art Stolen From Fritz Grunbaum.   Museums and private collectors who purchased the stolen works have not returned them and the issue on appeal now to the Court of Appeals for the Second Circuit is whether the 147 days that the stolen artworks passed through Switzerland was sufficient to apply Swiss law to "launder" the title to these stolen works.  Massachusetts collector David Bakalar sued Fritz Grunbaum's heirs to obtain a declaration of title to one of the stolen artworks.   My firm represents Fritz Grunbaum's heirs in the litigation and I was lead trial counsel in the action in the Southern District of New York, story here.

Along with Dead City III in the September 1956 of artworks from Eberhard Kornfeld was the work "I Love Antitheses" and "Girl With Black Hair" that is now at Oberlin College.   Oberlin's Allen Museum has refused to share its research or to publish a full provenance of "Girl With Black Hair" with Fritz Grunbaum's heirs in violation of the Washington Principles on Nazi-Confiscated Art.   The earliest provenance given of Girl with Black Hair by Oberlin College is Switzerland, 1956.

Artkabinett also has a story Infamous Collector Leopold Dies at 85 on Rudolph Leopold, the art collector who amassed a number of stolen artworks that Austria has never returned to the Jewish families from whom they were stolen.

Related:   Will Austria Return Egon Schiele's Portrait of Wally?  and David D'Arcy's Settlement close on Portrait of Wally case

Work stolen from Fritz Grunbaum at Oberlin College here.  More on the battles over Fritz Grunbaum's collection and Oberlin's falsification of the provenance of Girl With Black Hair here.

Watch the Boston College video here.

More information and coverage of the 1928 Hagenbund/Neu Galerie correspondence in the following Powerpoint:

Federal Bar Association ND Ohio IP Crimes Seminar on Nazi Art Looting

View more presentations from Raymond Dowd.

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Licensing Litigation: "Hollywood Accounting" of Licensing Royalties Loses Bigtime: Jury Finds Disney Owes $269.2 Million

Who Wants to Be A Millionaire, per Wikipedia here.

Celadon licensed the show to Disney, seeking a 50-50 profits split.  Using "Hollywood Accounting" (link to great Wikipedia article on the practice). Disney managed to pocket $269.2 million that it owed to a licensor, according to a jury.

A percentage of the net profits is considered in Hollywood to be a percentage of nothing, since studios simply make up the math to always eliminate net profits by funnelling these monies to their friends.

Nice to see that a jury saw through it all...


Disney-Celador Lawsuit Verdict: Disney Ordered To Pay 'Millionaire' Makers $269.2 Million

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Art Litigation: Trademarks in Works of Fine Art NaziSexyMouse Deemed Legal In Poland

Max Papeschi's NaziSexyMouse

Max Papeschi's Faschion

Today the Baltimore News.net reported here that a spokesperson for Poland's public prosecutor found that an art gallery's display of artist Max Papeschi's NazySexyMouse was legal.  Poland lost six million lives due to Nazism.  My earlier post on the controversy here.
More Max Papeschi here (nuclear war at Disneyland) and here.

Below Papeschi uses Hitler to hawk a Chanel-type perfume.




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Copyright Law: Boston Judge Holds Jury Award Unconstitutional in Music Dowloading Statutory Damages Case

In Sony BMG Music Entertainment (07cv11446-NG)(D. Mass July 9, 2010), Judge Nancy Gertner has written a 61-page decision that is an intellectual tour-de-force - concluding that a $675,000 statutory damages award against a student named Joel Tenenbaum who illegally downloaded music and then shared the songs on peer-to-peer file sharing services.  Judge Gertner's decision is linked below via Scrib'd.

The judge reduced the statutory damages award to $2,250 for each of the thirty infringed works.  This was a reduction of 90% from the jury's award of $22,500 per song.

The Tenenbaum case was debated in an IP Colloquium moderated by Prof Doug Lichtman, free CLE and audio here.   On this blog I rarely try to handicap the outcome of ongoing copyright cases.  All too often the casual observer doesn't have all of the operative facts.   But after listening to the excellent debate on the IP Colloquium I disagreed with Doug Lichtman's apparent conclusion that statutory damages clearly wouldn't be held unconstitutional based on Prof. Charlie Nesson's arguments.  My post on the Tenenbaum case here.

Both Doug Lichtman and Charlie Nesson, counsel for Tenenbaum hopped on the blog and commented on my post.   Check out the debate here.   I think that it's the most interesting discussion held on this blog since I started it.

I think that Doug Lichtman ended up being right about the analysis that would be applied to the case, you can see his thinking in his comments to my March 28, 2009 post (I had expressed sympathy for Nesson's arguments that excessive statutory damages were penal in nature).

The RIAA originally wrote a cease and desist letter to Tenenbaum asking for $3500.  Tenenbaum mailed them $500.  They rejected it.  RIAA sued and demanded $12,500.  He refused and this litigation ensued.

A key fact that all should know and that escapes many media posts is that the court found that Joel Tenenbaum first lied about his responsibility for file sharing (he tried to blame family members), then he claimed he'd deleted files, which he hadn't.   This is a key fact when we look at statutory damages, because wilfullness/innocence is a factor that is taken into account.   Courts routinely whack people who lie and who cause property owners to incur hassles and increased damages due to their untruthfulness.

So the basic first lesson to be taken from this and any other case is that if you want to be a martyr for a great cause and to vindicate some great principle through our courts, don't compound any initial error by lying about your actions.  Tenenbaum is not a pop hero, he should count his lucky stars and work out a settlement.  If Harvard wants another test case, find a fourteen year-old.   Tenenbaum should consider quitting school, getting a job and paying off the debt.  The Boston Globe interview (video posted below) shows that Tenenbaum shows little inclination to accept any responsibility for his actions, and as attorneys fees mount, his downside keeps getting worse.

Turning to Judge Gartner's decision -  it is a landmark work of scholarship in the area of punitive damages and the rules that should apply to copyright.  If you care about this area, read it. It also explains the relationship between remittitur and a judge's ability or obligation to address the constitutionality of a statutory damages award.  Her decision is groundbreaking, thoughtful, and accords with the thinking of the federal judge in Minnesota who vacated the jury's award in the Jammie Thomas case.  My post on that case here.

The case is at a point that the RIAA and Tenenbaum can each claim victory.  Charlie Nesson's arguments made during the IP Colloquium were vindicated, although not in the way he envisioned, and he has created law that is sensible, humane and realistic in the field of statutory damages and punitive damages in copyright cases.  Doug Lichtman's analytical approach was adopted by the court, although not quite the way he envisioned.

Settle it.

Related post:  2d Cir Rejects "Independent Economic Value" Test.





Boston Judge Holds Music Filesharing Damages Unconstitutional in Tenenbaum Case



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Art Litigation: Nazi Liquidation of Picasso's Jewish Dealer By Nazis Makes News In Germany

Thea Sterheim's 1911 Portrait of Alfred Flechtheim

The art press in the United States and art historians here have obliterated Alfred Flechtheim from the history of 20th Century Art.  In Germany, where Holocaust denial is illegal, museums are starting to confront the truth about the Nazi liquidation of Flechtheim's collection, and a critical press is scolding museums who are not doing the right thing.

New York's art press is asleep at the wheel.   My earlier posts on Flechtheim here.

Translation of the article “Er war sein bester Kunde” by Tobias Timm in Die Zeit - Nr.28 - July 8, 2010

He Was His Own Best Client

The legendary Flechtheim collection was liquidated by the Nazis. Now the heirs demand justice.


This case concerning unresolved Nazi-history is of such a dimension that it will probably occupy the biggest German museums for months, if not for years. It appears as if artworks that once belonged to the art dealer and publisher Alfred Flechtheim are hanging in dozens of institutions such as the Ludwig Museum in Cologne, the Bavarian State Collection of Paintings in Munich, the State-Gallery Stuttgart or the Berlin State Museums. Last week it became public that the heirs of Flechtheim are claiming back a portrait of the actress Tilla Durieux by Oskar Kokoschka from the Ludwig Museum. Further requests and restitution demands apparently concern major works by Max Beckmann, Paul Klee and Pablo Picasso.

Alfred Flechtheim was a central figure of the art market in the Weimar Republic. After Paul Cassirer, he is considered among the most important patrons of avant-garde art. Born in 1878 as the son of a successful wheat dealer, he started collecting art around 1900. In 1913 he opened his own gallery in Dusseldorf. After the First World War, in which Flechtheim served as a cavalry officer, he moved to Berlin. With dozens of exhibitions, he successfully represented the French cubists, in addition to George Grosz, Willi Baumeister, and Paul Klee. Flechtheim was also what is most despised among art dealers – he was his own best client.

Flechtheim was not only dealing and collecting, he also wrote art critiques, founded the magazine Querschnitt and enriched the Berlin society life with salons and soirees. “If I was a painter” the Boxer Max Schmeling writes in his homage to Flechtheim at is 50th birthday in 1928 “I want to be in Flechtheim’s stable”.

Already before the Nazis came to power the dealer was bombarded with hate articles by Nazi authors who recognized Flechtheim’s significance regarding the art that they denounced as degenerate. This led to Flechtheim fleeing already at the end of 1933, over Zurich and Paris to London where he died in 1937, probably due to blood poisoning.

Flechtheim’s gallery was immediately aryanized, and his private collection, which included works by Pablo Picasso, Juan Gris, Fernand Leger, Willi Baumeister and Vincent van Gogh was liquidated from 1933 on under the pressure of Nazi persecution. For the past two years, Flechtheim’s heirs, with the help of lawyers, have been searching for the paintings and sculptures from the former Flechtheim collection. The whereabouts of various paintings is unclear today, but a good hundred of them, estimates the Marburg lawyer Stötzel, ended up in museums in America and Germany. Many of the artworks will have to be restituted by public museums in accordance with the Washington principles regarding transaction involving Nazi looted art.


The Durieux portrait by Kokoschka, for example, belonged to Flechtheim’s private collection and was sold to the collector Josef Haubrich in 1934 by the “aryanizer” of his Dusseldorf gallery, Alex Vömel, for 1800 Reichsmark, a price that was below the 1931 insurance value of the painting. The low price and the absence of records proving that Flechtheim received the sales proceeds from Vömel and that he was able to freely dispose of the sales proceeds, make this a clear case of Nazi looted art, according to the heirs’ lawyer.

The City of Cologne has, however, refused to give the painting back so far. The provenance of the painting, says Kaspar König, director of the Ludwig Museum, to ZEIT, is not fully resolved. He says the history is more complex, but details will not yet be published since research is still ongoing.


Exactly which paintings are being claimed back by the heirs from different museums is something neither the attorney nor the museums involved wanted to comment on. The Hamburg Kunsthalle, however, known for their special commitment to provenance research, was able to successfully exclude that Klee’s Felsige Küste (1931) was from Flechtheim’s collection. In contrast to this, other museums, eleven years after their commitment to the return of looted art, are showing only little impetus to research their holdings.

Museums stonewalling Jews is nothing new, but it is good to see that the German press is critical of museums that do not return art stolen from Jews.

In the U.S., museum directors who hold on to artworks stolen from Jews get big promotions.  When will any American museum recognize Flechtheim's contribution to 20th Century art?  And when will they admit that the art in their collections was stolen from Flechtheim by a Nazi?   If a German newspaper can publish these things, why won't the New York Times?


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Fair Use Fridays: Naked Nazi Disney Characters in Poland

Fine artists are always pushing the envelope.  This is a large advertisement for an art gallery's poster exhibition in Poland.   It uses a trademarked/copyrighted Disney character/logo and a Swastika that is an ancient religious symbol that when combined with red and black became the symbol of the Nazi Reich.

In a number of countries, display of Nazi/fascist materials is outlawed.   According to Orange News story Row over Nazi naked Minnie Mouse, this advertisement for a fine art gallery was recently hung on the side of a building in Poland near a synagogue.

The use of trademarks and logos in fine art raises the issue of the limits of the power of a trademark owner to control commentary, criticism, and the commercialization of art-related multiples.  Combine that with hate speech, a traumatized minority population and intolerant politics advocating mass murder and it is a troubling, toxic brew.

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Art Litigation: US Executive Policy, Nazi Looted Art and Flechtheim's Nose

Rudolph Belling's Portrait of Alfred Flechtheim at Harvard

Professor Jennifer Kreder attacks the subject of US Executive policy on Nazi-looted art on the Prawfsblawg here.  The Executive Branch started an exception to the Act of State Doctrine known as the "Bernstein Exception".   In the Bernstein case, the State Department indicated to the Southern District of New York that it was free to unwind any act of the Nazis because the US did not consider the Nazis a legitimate government and the Second Circuit affirmed the District Court's power to review and invalidate Nazi acts.

Very few people know about the Bernstein case and its continuing application to Nazi-looted art cases.  U.S. museums have taken the position that Hitler's acts of stripping German museums of Jewish and "degenerate" artworks should be considered legitimate governmental acts in a bid to hold onto artworks stolen from German museums.

This is problematic on many levels.  Today, the American Association of Museum Directors is desperately trying to keep these stolen artworks by falsifying and concealing the provenance of artworks in its collections and by trying to have Hitler's acts rubber-stamped by the federal courts.

The stolen loot should be returned and American museums should start acknowledging their debts to Germany's Jewish community and the German avant-garde of the 1920's and 30's.

A look at MoMA's website today shows that the MoMA still can't find a picture of Alfred Flechtheim's nose (above) which according to Boston Modern author Judith Bookbinder was the very first modern German sculpture collected by Harvard and what became the Busch-Reisinger Museum.  My posts on Alfred Flechtheim and his tragic story, which has never been recounted by any of the members of the American Association of Museums or American Association of Museum Directors, and MoMA's inability to find Flechtheim's nose here.

MoMA's Portrait of Alfred Flechtheim was gifted to it by Nazi agent Curt Valentin, more on Valentin here.

Maybe MoMA could ask Judith Bookbinder to find Alfred Flechtheim's nose?

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