Justice Department Eyeballs Google Settlement

In the fast-paced world that is the Google Book Settlement, the Justice Department has decided to review the proposed settlement to determine whether it violates any anti-trust laws. We'll update this post to explain what this means shortly.

Google Book Settlement Stalls

Today, Judge Denny Chin extended the deadline to opt-out of the Google Book Settlement. First, a little history. Several years ago, Google embarked upon an ambitious project to scan every book ever created. Working with several institutional libraries, Google has, thus far, scanned approximately 7 million volumes.

In 2005, the Authors Guild and others commenced a class action against Google alleging that the scanning project infringed upon the individual authors copyright rights. We won't get into the basis for the lawsuit here. In 2008, the parties reached a complicated settlement that addresses Google's prior actions in scanning the 7 million volumes and also grants Google significant rights to continued use of its digital library going forward.

The forward looking aspects of the settlement are unusual. Class action are typically resolved by providing some measure of compensation for prior acts and an agreement that the behavior that led to the class action is not repeated. This settlement is different. The settlement agreement runs 334 pages long (no, that's not a typo) and includes more in attachments (200 pages) than primary text (134 pages). A vast array of rights are implicated in the settlement agreement and a new entity -- the Registry -- is created to administer those rights on behalf of authors.

We represent at least two class members of the Google Book Settlement who received their notice within the last two weeks. We suspect that other clients of ours may be class members, but they have yet to receive any notice. We are pleased that the deadline is extended and thank Gail Steinbeck and Andrew DeVore for their efforts. If you have received a class notice or suspect that you may be a member of the class, we'd be happy to help you understand your rights. We're also interested to know if you have only recently received your notice.

Eagle Attacks Elephant

They say that politics makes strange bedfellows. Don Henley, legendary voice of the Eagles found himself associated with Chuck DeVore, a California Assemblyman, and Republican, who created political songs by altering the lyrics to "The Boys of Summer" and "All She Wants to do is Dance."

DeVore used the music to the songs and created new lyrics to boost his campaign for the United States Senate. The assemblyman created videos from the song which were distributed and posted on YouTube.

Henley, who did not want to be associated with DeVore's campaign asked YouTube to remove the video. It did, but it was reposted following a request by DeVore. Now, Henley has sued.

This case will likely turn on whether the reworking of the two songs is protected under the fair use doctrine. DeVore will likely face an uphill battle to argue fair use. It is undisputed that he used all of the music from the two songs and there is nothing to suggest that the reworked songs were satire or parody.

Generally, to qualify as a parody, the new work must recall the original. The classic case of parody involves the group 2 Live Crew, which created a parody of the Roy Orbison classic "Pretty Woman." The Supreme Court was persuaded that the 2 Live Crew song was protected as fair use, largely because the Court concluded that the new work was in part a comment on the original work. Of course, parody is a subjective concept, so it is difficult -- if not impossible -- to define bright line rules to follow.

Trib Calling Dick Tracy

Tribune Media Services has sued Warren Beatty, seeking to recover rights to the "Dick Tracy" comic strip series. Beatty purchased the rights in the 1980s, which resulted in the film starring Beatty and others in 1990. According to the complaint, Tribune's contract with Beatty allowed it to get the rights back if Beatty did not start any other projects based on the comic strip within five years after the release of the film.

After many years had passed, Tribune sought the rights back from Beatty, but he claimed to be in production on a half-hour special for the sole purpose of extending his rights. Beatty then sued Tribune, asking a court to bless his maneuver. However, in December, Tribune filed for bankruptcy protection and Beatty's lawsuit ground to a halt.

When a company files for bankruptcy protection, all litigations against it are automatically stayed. This allowed Tribune to commence its own lawsuit -- within the friendly confines of the Bankruptcy Court -- asking that the court award it the rights to "Dick Tracy." We'll see how the case proceeds.

RIAA Pwned by Expert

Evidence can be a pesky thing. The endless formalities of the trial process. And, oh yes...it better be accurate. In another chapter that is the saga of the effort by the Recording Industry of America ("RIAA") to crackdown on illegal downloads -- one person at a time -- a defense expert has chastised the methodology used by the RIAA to support its infringement claims.

We previously posted about a Connecticut decision holding that the RIAA had to prove that files had actually been downloaded from an individual computer to win its case. A Minnesota federal judge has made a similar ruling, creating a significant roadblock in the first trial to be held among the scores of cases the RIAA has been prosecuting. Capital Records, Inc. et al v. Thomas, No. 06-CV-1497.

District Judge Michael J. Davis had originally concluded that the mere availability of files on a peer-to-peer network, in this case Kazaa, was enough to hold the defendant liable. Proof that a particular song was available on a peer-to-peer network seems relatively straightforward. But what about proof that a particular file was downloaded? How do you prove, in a peer-to-peer environment with thousands of linked computers that a file was accessed from one particular computer. This requires more than just evidence that the file existed.

Yongdae Kim, an assistant professor of computer science at the University of Minnesota points out just how difficult a task the RIAA faces. For instance, Kim noted that MediaSentry, RIAA's expert, ignored innocent reasons to explain the presence of the disputed files on her hard drive. For example, the files could be copies of legally purchased CDs. Further, Kim pointed out that Windows XP and the Internet are replete with security holes. These security holes, which can be accessed anonymously by hackers, make it very hard to identify an individual user. So, evidence that the defendant engaged in actual distribution is unreliable.

The Court has scheduled a retrial in this case for May 11. Courts don't care for unreliable evidence. If MediaSentry can't come up with a better methodology, the retrial may prove to be difficult for the RIAA.

Not McLovin' It

Never underestimate the power of formality. We know that registering a copyright can seem like a pain -- as well as an unnecessary expense. After all, copyright protection exists whether a work is registered or not. Relying on this, many artists opt for the so-called "poor man's copyright." They put their work in an envelope and mail it back to themselves and rest easy knowing that they have fully protected themselves. Well, guess again. As a photographer in Puerto Rico learned, the failure to formally register a work with the Copyright Office can yield harsh results.

Antonio Amador is an artist who specializes in photographs of the Puerto Rican landscape. In 2006, Amador discovered, to his considerable surprise, that the McDonald's restaurant at Luis Munoz Marin International Airport had enlarged copies of two of his photographs on display in the restaurant. To make matters worse, the restaurant had displayed these photographs since 2001. Amador had not given his permission for McDonalds to enlarge and hang his photographs. And Amador had gone through the formalities of registering his copyrights in his work -- one in 2004 and the other in 2006. However, he had published the photographs in 1999 and 2003. Publication under the Copyright Act essentially means that they were offered for sale.

Understandably upset, Amador sued McDonalds seeking statuory damages, which can be up to $150,000. It should have been an easy case to win. After all, the photographs were clearly his, he had observed the formality of registering his Copyrights, and McDonald's clearly infringed upon his rights by enlarging and then displaying copies of the photographs without permission. The result, however, may seem surprising. The United States District Court of Puerto Rico ruled that Amador was precluded from recovering statutory damages and attorneys fees. Amador v. McDonald's Corp. et al., No. 07-1312, 2009 WL 349804 (D.P.R. February 11, 2009). In other words, Amador lost the case.

Here's where Amador went wrong. He did register his work with the Copyright Office, but he waited too long to do so. To be eligible for statutory damages under the Copyright Act, an artist must register the work within three months of first publication or prior to the acts of infringement. In this case, Amador didn't do either. He formally registered his works several years after publication and several years after McDonald's act of infringement.

Before you lick the next envelope addressed to yourself, think of poor Amador. Copyright registration is easy to do and not that expensive. Also, registering the copyright gives you a powerful tool in policing potential infringement.

Doing Time

When considering the consequences of copyright infringement, we tend to think about money damages or an injunction that stops a project dead in its tracks. Would anyone be surprised to learn that you could go to jail for copyright infringement? If so, put on a DVD and actually watch the warning. When you see it, you will learn what Kevin Cogill knows -- that copyright infringement can be criminal and result in up to one year in prison and a $100,000 fine.

Kevin Cogill uploaded nine tracks from the new Guns N' Roses album "Chinese Democracy" to the internet prior to the album release. He was prosecuted for criminal copyright infringement and ultimately pled guilty. In his plea, Cogill admitted that he got the tracks from a third-party, but the source was undisclosed. The uploaded tracks were available for download by the public at large. Through advertising on his website, Cogill profited from the availability of the songs on his website. Now, the government has asked that he be sentenced to six months imprisonment in an effort to deter other infringers. In particular, the government called leaks of pre-release works a "serious and growing commercial threat demanding more of a punishment than a slap on the wrist." The RIAA, the recording industry trade association, in a victim impact statement, claimed that the recording industry lost more than $3 million in sales as a result of Cogill's acts. The $3 million in sales roughly equals 150,000 copies of the album.

How Much Class Does the District Court Have?

Today we digress slightly to discuss an important litigation issue that will be going before the Supreme Court having to do with class actions. A class action is a powerful way to seek relief for smaller claims. One individual with a claim for $1000 is not likely to sue -- it wouldn't be cost effective. But imagine 1,000 or 10,000 people with the same $1,000 claim. If they could sue as a group -- and share the expense -- that individual $1000 claim would not go unaddressed. Of course, trying to get that many people together in a lawsuit is a daunting task, to say the least. A class action solves this problem by allowing a couple of individual plaintiffs the ability to sue on behalf of all persons in a similar position.

OK, so what does any of this have to do with IP an entertainment law? To assert a claim of copyright infringement in court, an artist must first formally register their copyright in the work with the Copyright Office. An artist who fails to take this essential step will be quickly shown the door. This requirement also exists to start a copyright based class action. But what about all of the class members who are included in the case? Since a class action includes all persons "similarly situated," can class members include artists who have not formally registered their copyrights?

Let's put the question into context. Imagine two artists with the exact same claim against an infringer. One artist has registered her copyright. The other has not. In a class action, would it be fair for the artist who did register to receive settlement proceeds, but not the other? Keep in mind that without the existence of the class action, only the artist who registered would be entitle to sue. Does this alter your opinion?

Now, look at it from the point of view of the defendant. Assume that a finding of infringement is inevitable. The defendant is equally liable to the artist who registered the copyright as the artist who did not. Do you think it would make sense for that defendant to seek the broadest possible class -- and avoid the possibility of further litigation on the subject?

The 13th Juror aka Twitter, Google, or Blackberry

Today we digress slightly to discuss an article that appeared in the New York Times a couple of days ago. The legal system has gone to great lengths to establish an orderly trial process that tightly controls the information presented to juries. Now, litigants are finding that jurors are conducting their own shadow trials -- engaged in independent research through Google or Wikipedia, or discussing deliberations with friends through Twitter. The phenomenon, as reported by the Times, has led to mistrials in significant cases. Ironically, the court system in New York has installed WiFi in various Courts as a service to serving jurors. No good deed...?

We used to lock up jurors in New York. Okay, not lock up exactly. Juries in felony trials -- serious criminal cases -- were sequestered, meaning that the jury stayed in a hotel until the trial ended. Jurors were sequestered to prevent them reading news reports about cases or discussing the case with family and friends. Easy enough, before the Internet that is. If we still sequestered juries, all laptops, Blackberrys and other devices with the ability to connect wirelessly to the Internet would be confiscated.

Maybe we should lock offending jurors up again, only for real this time. Or maybe there should be fines for engaging in independent research. Seem too harsh? Litigants who spend tens of thousands of dollars on trials might not think so.

What should trial lawyers do? What can they do? Monitor Twitter, among other sites, for evidence that jurors are discussing the case? Is there any mechanism to discover whether jurists are using other resources, like Wikipedia or Google?

Hero Trumps Romantics

If you practice really hard, you could have an opportunity to try your hand at The Romantics' "What I Like About You" on Guitar Hero. Apparently, The Romantics weren't thrilled about video game immortality and they sued. The Romantics et al. v. Activision Publishing, Inc., et al. We'll discuss two theories of interest.

First, The Romantics asserted a violation of their right of publicity. The right of publicity is a state common law concept that protects an individual's right to commercially exploit their own name and likeness. Here, The Romantics sought to protect the sound of their voice, which they claimed was distinctive -- like Bob Dylan is distinctive. Michigan law has never recognized a right to protect the sound of a voice, even a distinctive voice. There is plenty of logic in this. Imagine all of the impressionists that would be out of work.

Second, The Romantics argued that Guitar Hero traded on their name in fame in selling the game -- a claim we lawyers call false endorsement. Again, The Romantics based their claim on their "distinctive sound.". Here too, the Court found no support for this position in the caselaw. On this claim, the Court concluded that The Romantics had failed to establish that the use of the song in the game was likely to cause confusion or mistake between the game version of the song and the original. There was no dispute that the song version of the game was a new recorded version, for which the game publisher had obtained a synchronization license. The result seems right to us. Any dissent?

Out of the Mouths of Babes and the Pockets of Authors?

Last month we commented on the introduction of Amazon's new Kindle and its potential impact on the publishing industry. About a week ago, Roy Blount, Jr., president of the Authors Guild commented on the "Read-to-Me" feature that will read Kindle content -- magazines, blogs, books -- aloud. Blount argued that this new feature is no different than an audio book, which authors are separately compensated for. There is apparently no extra compensation from Amazon in light of the "Read-to-Me" feature. He's right to point this out as it does represent another commercial use of the original work. We say commercial to distinguish Kindle from bedtime stories which nobody would suggest requires a royalty payment to the author. We found it strange that there was no technological solution to this problem, so we went to Amazon to see if the site would shed some light. According to the specs, the "Read-to-Me" feature is not available where it is disabled by the rights holder. So that would appear to solve Blount's issue. But this is clearly something that authors and their agents should discuss with either Amazon or the publisher.

UPDATE: We learned that the ability to disable the "Read-to-Me" feature resulted in part from Blount's op-ed piece.

That's My Catastrophe: The Concept of "Hot News"

Can a news organization assert ownership over -- well -- the news? This interesting question landed on our desk recently. Judge Kevin Castel of the Southern District, in The Associated Press v. All Headline News Corp., 08 Civ. 323 reached back to a 1919 Supreme Court decision to find that the Associated Press ("AP") has a property right to "hot news" that it distributes through its wire service.

All Headline News had essentially created a news service by copying news reports filed by AP reporters and editing them for its own use. The AP sued All Headline, relying on several legal theories, including misappropriation.

Misappropriation of "hot news" was first recognized as a federal common law claim in 1919. International News Service v. Associated Press, 248 U.S. 215 (1919). The Supreme Court was concerned that the unfettered ability to copy the work of another news gathering agency would lead to the end of news gathering by rendering such efforts essentially profitless. By establishing a quasi property right to "hot news," the Court sought to allow news gatherers to enjoy the benefit of their work.

This may sound strange. After all, news is news. How can anyone assert an ownership right to it. Think about patents for drug companies. Since the drug companies spend millions of dollars to create drug products, patent law provides the drug companies with a limited monopoly, to allow them to recoup their up front investment in the new drug. That's the theory at any rate. The analogy holds for news organizations as well. AP spends millions of dollars to report the news. That shouldn't give them a monopoly, of course, but does anybody think it's right that a company like All Headline News should be allowed to simply copy the AP's work without committing the resources to do the reporting.

Facebook Drops Its New Terms of Service: Time to Breathe Easy?

So last week Facebook dropped its controversial new terms of service. That got us to thinking...what was in the old (and now current) terms of service. More importantly, what should our clients know about uploading their material on the site. What we learned gave us some pause.

1. User Content: In this section, there are two provisions worth knowing. First, the terms make clear that users agree that the use of the site is for "personal, non-commercial use only." Users also agree not to post any videos that "are original art or animation created by you or your friends."

2. User Content Posted on the Site. This section authorizes Facebook to make copies of content as it deems necessary "to facilitate the posting and storage." Users grant Facebook "an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to use, copy publicly perform, publicly display, reformat, translate, excerpt (in whole or in part) and distribute such User Content for any purpose, commercial, advertising, or otherwise...to prepare derivative works of, or incorporate into other works, such User Content."

We'll focus on the second part and, in particular, the scope of the license granted. First, the license never terminates and can never be cancelled by the user. This is pretty troubling for obvious reasons. Second, the scope of the license includes the right to prepare derivative works. An example of a derivative work would be a film based upon a novel, or a musical based upon a film or a catelogue of songs. The right to create derivative works is frequently among the most valuable to a copyright owner. While the grant is non-exclusive, multiple derivative works are generally not created from the same underlying work.

Obviously, notwithstanding these legal concerns, there is a practical perspective here. There are valid reasons for Facebook to seek these broad rights -- to avoid unintentional infringement, etc. -- and we're not suggesting that Facebook has the intent to run around creating all sorts of derivative works based upon its users' works. It did, however, remind us of the importance of understanding the legal relationships that exist between content creators and sites such as Facebook that provide an outlet for creative content.

RIAA Hits a Wall

Yesterday, the RIAA dropped one of its many file sharing lawsuits after twice being denied a default judgment. In the first decision, a Federal judge in Connecticut concluded that the allegations of distribution and copying were insufficient to state a claim. In denying the first motion for a default judgment, Judge Janet Bond Arterton found RIAA's claim of distribution "problematic." Atlantic Recording Corp v. Brennan, 534 F. Supp. 2d 278 (D. Conn. 2008). In its complaint, the RIAA alleged that the defendant made certain sound recordings available for distribution. To assert a claim of the right to distribute, it must be proved that the defendant actually distributed copies of the copyrighted work. See, e.g., Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1162 (9th Cir. 2007). This decision only underscores the difficulty the courts have had in addressing digital downloads. See, Motown Record Co., L.P. v. DePietro, 2007 WL 576284 (E.D. Pa. Feb. 16, 2007); Interscope Records v. Duty, 2006 WL 988086 (D. Ariz. April 14, 2006).

Shepard Fairey Sues AP: Is Obama Image Fair Use?

So Shepard Fairey has decided to ask a Federal Court to declare that his now famous rendering of President Obama does not infringe upon the AP's copyright in the photograph upon which it is based.  Fairey apparently argues that his use of the photograph is exempt under the "fair use" provisions of the Copyright Act.  The doctrine of "fair use" permits the reproduction of copyrighted material in limited circumstances, such as satire, news reporting, criticism, scholarship, and research.  Section 107 of the Copyright Act also identifies four factors to be considered in whether a particular use is "fair."

1. The purpose of the use, such as whether it is for commercial or nonprofit purposes;

2. The nature of the underlying copyrighted work;

3. The amount of the copyrighted work copied; and

4. The effect on the market or value of the copyrighted work

At first blush, it would appear that the first and third tests would not favor application of "fair use" but the fourth probably would.  This does not appear, however, to present a clear case of "fair use."

Will Amazon Save Book Publishing?

Jeff Bezos of Amazon unveiled the new generation Kindle today, which got us wondering about the future of the publishing industry. The industry is clearly contracting -- imprints closing, massive layoffs, fewer deals are getting made. Could the Kindle change that trend -- or at least staunch the bleeding? At $10, an e-book is a fair bit less than a typical trade paperback and with the ability to download automatically -- not even the iPod can do that -- traditional marketing tools, such as television and radio interviews, can convert sales on the spot. Perhaps it's too soon to tell, but indications are that publishers are embracing the e-book market. We just completed a deal on a backlist title. We also hear that generic devices are around the corner. Any thoughts?

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