Karaoke and Fair Use

It is hardly news that bad arguments can lead to bad law. A recent example is the Sixth Circuit's opinion Tuesday in Zomba Enterprises, Inc. v. Panorama Records, Inc., 2007 WL 1814319 (6th Cir. June 26, 2007). There have been a few other cases involving the unlicensed use of music in karaoke CDs, see e.g. ABKCO Records, Inc. v. Stellar Records, Inc., 96 F.3d 60 (2d Cir. 1996)(Section 115 compulsory license not available), but in Zomba, defendant had the chutzpah to argue that its unlicensed creation and marketing of CD+Gs (CD plus graphics) constituted fair use. Not surprisingly the claim was rejected and a judgment of $806,000 for willful statutory damages awarded, along with $76,456 in attorney's fees.

What is regrettable is loose language in the court's proper rejection of the fair use argument, particularly in its discussion of the first factor, reproduced here almost in its entirety:

As an initial matter, Panorama's use of the compositions is only minimally, if at all, transformative. Although Panorama created its own recordings of these songs, Santos admitted that the hired musicians did not “change the words or music.” Unlike a parody, see Campbell, 510 U.S. at 579-80, a facsimile recording of a copyrighted composition adds nothing new to the original and accordingly has virtually no transformative value. Cf. Princeton Univ. Press, 99 F.3d at 1389 (“If you make verbatim copies of 95 pages of a 316-page book, you have not transformed the 95 pages very much.... This kind of mechanical ‘transformation’ bears little resemblance to the creative metamorphosis accomplished by the parodists in the Campbell case .”).

The crux of Panorama's fair-use argument is its assertion that its use was transformative because its karaoke packages are used for “teaching.” Notably, this focus is newly found. In the district court, Panorama's primary argument was that their karaoke packages “encourage creativity, and often commentary” among their end-users, and accordingly qualify as “transformative works.” Although Panorama offered a passing reference to karaoke's value as “an interactive and educational experience,” it never argued that the primary purpose of karaoke is “teaching,” and for good reason, as this argument is wholly meritless. Panorama's own description of karaoke further undermines its assertion regarding “teaching”: “Karaoke is primarily thought of as a form of entertainment that allows anyone to grab a microphone, hop on stage, and live out their [sic] fantasies of performing as famous music stars.” Moreover, the record is bereft of evidence indicating that Panorama's products are used for teaching at all (e.g., invoices showing sales to schools, advertisements aimed at educators, affidavits from teachers, etc.).

More importantly though, the end-user's utilization of the product is largely irrelevant; instead, the focus is on whether alleged infringer's use is transformative and/or commercial. In Princeton University Press, we considered a copyright suit against a college-town copy shop that copied portions of books and then sold these copies to students in “coursepacks.” 99 F.3d at 1383. We rejected the copy shop's fair-use defense, concluding that the defendant's copying was a commercial use, even though the students ultimately used the copies for educational purposes. Id. at 1389. To reach this conclusion, we emphasized that “the use of the materials by the students is not the use that the publishers are challenging.” Id. at 1386. Instead, the publishers were challenging “the duplication of copyrighted materials for sale by a for-profit corporation that has decided to maximize its profits ... by declining to pay the royalties requested by the holders of the copyrights.” Id.

Quite similarly, Zomba does not challenge karaoke crooners' renditions (atrocious or otherwise) of the relevant compositions, but rather Panorama's decision to copy these songs onto CD+Gs and then distribute them without paying royalties. Like the copying at issue in Princeton University Press, Panorama's manufacturing and selling the karaoke packages at issue “was performed on a profit-making basis by a commercial enterprise.” Id. at 1389. Accordingly, Panorama's use is commercial in nature, a fact militating against its fair-use defense.

Its the bolded sentence that bothers me: "More importantly though, the end-user's utilization of the product is largely irrelevant; instead, the focus is on whether alleged infringer's use is transformative and/or commercial." The sentence bothers me because Zomba did not make the end-user's conduct an issue so the court didn't need to reach it. Princeton University Press and other decisions, like Kinko's in the SDNY, paint with too broad a brush. It is reasonable that each defendant has to prove its own entitlement to fair use, but to argue that that entitlement has to be made in a vacuum is absurd: it divorces the purpose of the use from the first factor's "nature and purpose of the use." Fpr example, in the Cablevision RS-DVR case (478 F. Supp.2d 607 (S.D.N.Y 2007), currently on appeal), had Cablevision made a fair use argument for itself, would it have been "largely irrelevant" that Cablevision's letting consumers store time-shifted programming on Cablevision's servers rather than on a set-top box?

The signal failure of fair use decision making is the irresistible tendency of courts to announce and apply hard and fast rules to what is always an ad hoc determination, in the process destroying the very nature and purpose of the doctrine.

The Bible and Copyright

In a post a week ago, entitled “Christians and the Copyright Laws, Claude Mariottini,
a Professor at Northern Baptist Seminary in Illinois, discussed whether scripture provides the basis for a principled position on copyright, including this comment: “The tenth commandment is clear: ‘You shall not covet anything that belongs to your neighbor’ (Exodus 20:17).’ A song written by a Christian musician is his property and under current laws it is protected under intellectual property rights. To take by stealth what belongs to another person is theft. Christians should respect the rights and property of another Christian.”

The Biblical text cites is merely paraphrased (and the numbering of the passage in Christian numbering is frequently given as 20:14, not 20:17). The original Hebrew is found in Sefer Shemot (“Book of Names”), Parsha Yitro (Yitro is Moses’ father-in-law, known to Christians as Jethro, and who in this section recommends that Moses appoint judges rather than wear himself by being the sole “decider”):

לֹא תַחְמֹד, בֵּית רֵעֶךָ; {ס} לֹא-תַחְמֹד אֵשֶׁת רֵעֶךָ, וְעַבְדּוֹ וַאֲמָתוֹ וְשׁוֹרוֹ וַחֲמֹרוֹ, וְכֹל, אֲשֶׁר לְרֵעֶךָ

One translation of the original is: “Do not cover your neighbor’s house. Do not cover your neighbor’s wife, his slave, his maid, his ox, his donkey, or anything else that belongs to your neighbor.” Works of authorship aren’t in the list (or in the later, repetition of the commandments in Sefer Devarim (“Book of Words”) – Deuteronomy).

In Judaism, a different source is looked to adress copyright issues, hassagut gevul ("infringement of boundary"), a form of trespass originally, and found in Sefer Devarim, Parsha Shoftim (19:14), which admonishes: “Do not move back the boundary of your neighbor.” See generally, The Principles of Jewish Law 344–345 (Menachem Elon ed., 1975, Encyclopedia Judaica, Jerusalem) and earlier post here for a quote from Elon). Elon also refers to a later recognition “of a full legal right in respect of one's own spiritual creation.” Id. at 346. See also Adin Steinsaltz, The Essential Talmud 78–79 (1992) (discussing copyrights granted by various European communities in the mid-18th century for the printing of the Talmud and disputes that arose).

My former colleague at Cardozo, Rabbi David Bleich, has written that in the very early rabbinic literature, the issue discussed was attribution of authorship rather than proprietary rights in the words spoken (it was an oral tradition at the time). See David Bleich, 2 Contemporary Halakhic Problems 121-131 (1983). Thus, in the Mishnah Pirkei Avot (6:6), it is declared that one who repeats wisdom in the name of its expositor brings salvation to the world. The Tosefta (Baba Kamma 7:3), far from condemning use of other’s words without their permission as “theft” regards it as meritorious, so long as credit is given.

Those interested in how ancient Islam dealt with these issues should read Amir Khoury, "Anicent and Islamic Sources of Intellectual Prioperty Protection in the Middle East," 43 Idea 151(2003).

Complete Preemption Considerered

On June 13th, I did a posting about preemption and res judicata. The posting dealt with whether a state court decision on the preempted nature of a state claim has res judicata effect when the same claim is subsequently brought in federal court. I think so, although others disagreed. Given our dual system of courts, such uncertainties are common, although not inevitable: Congress could, for example, grant concurrent jurisdiction to state and federal courts, even to enforce a wholly federally created right like copyright (at least in published works). The first Copyright Act of 1790 did not provide federal question jurisdiction for adjudicating copyright claims, and it should not be surprising therefore that the first cases under the 1790 Act were heard by state courts. In 1819, the circuit courts were given original, but not exclusive jurisdiction over copyright claims under the 1790 statute. Exclusive jurisdiction was not granted until 1873, two years before general federal question jurisdiction was given to the federal courts in the Judiciary Act of March 3, 1875. (The "Midnight Judges Act" of 1801 had earlier granted federal question jurisdiction, but it was repealed the next year).

Claims arising under the federal copyright act have been exclusive in the federal courts continuously since 1873, a fact that heightens the need to determine when a claim arises under the federal act. A related issue is preemption. There is now a statutory preemption provision in 17 USC 301, but preemption existed under the Supremacy Clause before then. Courts have created various approaches to deal with these thorny issues, including the well-pleaded complaint rule, which in one facet, precludes the exercise of federal question jurisdiction where the federal question is raised by defendant rather than plaintiff. The principal reason for this is docket control: permitting defendants to create federal jurisdiction by raising federal defenses and the like might lead to massive removal of state claims to federal courts, inundating federal courts. Plaintiffs however, are said to be the masters of their own complaints and if they want to forego federal jurisdiction in order to pursue a state claim, that's their cohice.

But as with all rules, there is an exception to letting the plaintiff be the master of its own complaint, called complete preemption. Complete preemption permits courts to look beyond the face of the complaint to see if a federal claim has been clothed in state court garb, to avoid removal (e.g., a federal copyright claim is brought as a state unfair competition claim). The theoretical basis for complete preemption has been explored in a new article by Professor Gil Seinfeld of the University of Michigan Law School, called "The Puzzle of Complete Preemption," to be published in 155 U.Pa. L. Rev. 537 (2007), but available here through ssrn. Unfortunately, while copyright provides an excellent field for him to test his theories, he doesn't mention it, but the article is worthy reading generally.

The Winter Hill Gang and Fair Use

How new does news reporting have to be to be fair use? That’s a simplistic way of framing a complex set of facts and a perhaps disappointing outcome in Fitzgerald v. CBS Broadcasting, Inc., 2007 WL 1793551 (D. Mass. June 22, 2007). Readers are pointed to the opinion for the convoluted facts, but here, for fair use purposes, are the essentials.

The Winter Hill Gang in Boston is an infamous organization, described by Wikipedia this way:

The Winter Hill Gang is a loose confederation of Boston-area organized crime figures, mostly Irish-American and some Italian-American. It derives its name from the Winter Hill neighborhood of Somerville, Massachusetts north of Boston. Its members have included notorious Boston gangster James J. "Whitey" Bulger and hitman Stephen “The Rifleman” Flemmi.

The story of Whitey Bulger, is all the more fascinating due to his straight-arrow brother William, who was the president of the Massachusetts Senate and then the president of the University of Massachusetts until forced from that post by Governor Mitt Romney.

Plaintiff Christopher Fitzgerald is a freelance photographer who in 1995, took a photograph of The Rifleman being transferred from the Framingham State Police Barracks to an undisclosed location. His were the only photographs of the event. The photo was licensed numerous times, but CBS appears to have been snake-bit in its relationship to the photos and Fitzgerald, getting repeatedly sued and repeatedly breaching settlement agreements.

The most recent suit was triggered by the arrest of former Winter Hill gang member John Martorano, and his purported agreement to cooperate in the authorities’ investigation into Whitey Bulger and The Rifleman. (Flemmi and Bulger had earlier been FBI informants and are alleged to have committed vicious murders while informants). In connection with the arrest of Martorano, CBS dusted off Fitzgerald’s photos from its archives (which should have been purged of the images under a settlement agreement), cropped out the police from the shot, and showed the cropped photo of Flemmi on the evening news in conjunction with a story of the arrest. Fitzgerald sued; CBS alleged fair use news reporting, which the court rejected, granting plaintiff summary judgment on the issue (ouch!).

The court’s opinion is earnest, thoughtful, and detailed. It is also a fair-use-by-the numbers opinion, meaning it marches through the four factors and at the end announces a conclusion. This may reflect nothing more than the requirements of opinion writing, but alas, the opinion is all we have as insight into the court’s thinking.

On the first factor, plaintiff argued there could be no news reporting because there was no new news, The Rifleman having been arrested 9 years earlier, but as the court pointed out, the Martorano events were news. Nevertheless, the court found the use non-transformative:

CBS argues that it transformed the meaning of the photo by cropping out some of the evidence of the arrest-the state troopers-and embedding the cropped photo in a narrative about John Martorano. This is slicing things a bit thinly. In its news report, CBS highlighted the importance of Martorano's sentencing partly by explaining that Martorano's testimony had led to Flemmi's arrest; CBS used Fitzgerald's photograph of the arrest to enhance this point. The only “transformation” was that Flemmi's arrest was downgraded from breaking news to a supplementary part of a larger story. The distinction that CBS argues for here is so fine that it ceases to have meaning in the context of ordinary news practice.

The final passage refers to licensing, and while the court did not let industry practice dictate fair use (see footnote 2 in the opinion), CBS’s own checkered history with Fitzgerald must have played an important role. The court also found the use commercial in nature, weighed the second factor in CBS’s favor by describing the photos as factual works (a bit of a stretch), found the third factor to have minor importance, and after describing the fourth as the most important, weighed it in favor of plaintiff after noting CBS’s tortured past conduct.

In the end, the case may be nothing more than fact specific (i.e., CBS's snake-bit behavior; a jury is to determine whether it was willful), but the court’s discussion of transformative use solidifies for me the need to abandon that terminology before it swallows the whole of fair use: the discussion of cropping and whether it was transformative and therefore helpful in determining fair use, is the worst sort of mechanistic, formalist thinking: to me the issue should have been simply whether there was a valid new reporting purpose and use for the photo, and whether the settlement agreements, as a contractual matter, effectively barred reliance on fair use.

I Don't Have to Show You Any Stinkin' Badges

In John Huston's 1948 movie, "The Treasure of the Sierra Madre," the putative heroes come across some bandits. One of the bandits, the character Gold Hat, played by Alfonso Bedoya, claims that his group of bandits are Mexican police. Humphrey Bogart then asks to see their badges if they are police. Bedoya then responds in one of the great lines of film history: “Badges? We ain't got no badges. We don't need no badges. I don't have to show you any stinking badges! Here is a link to a video clip of the scene.

Last week, there was an interesting opinion issued by Justice Rimmer of the English High Court, Chancery Division, involving flashing novelty badges. The opinion is here, from the fantastic BAILII website of UK opinions. The badges do indeed flash as can be seen on plaintiff's website here, and consist of messages like "Happy Birthday," "Princess" (but no Di), and "16 Today." Each badge has a distinctive style, some with "flamboyant" script, and all with six flashing, battery powered LED's. The badges are secured to garments by magnets. Defendant's badges were examples of what the Eleventh Circuit would call "virtual identicality." (Justice Rimmer thankfully describes them as being "virtually identical.").

The case presents issues involving the intersection of design law and copyright law, as well as a peculiar feature of the UK copyright act, Section 51:

"51. Design documents and models
(1) It is not an infringement of any copyright in a design document or model recording or embodying a design for anything other than an artistic work or a typeface to make an article to the design or to copy an article made to the design.
(2) Nor is it an infringement of the copyright to issue to the public, or include in a film or communicate to the pubic, anything the making of which was, by virtue of subsection (1), not an infringement of that copyright.
(3) In this section --
'design' means the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article), other than surface decoration; and
'design document' means any record of a design, whether in the form of a drawing, a written description, a photograph, data stored in a computer or otherwise."

The case centered on the outline of the badge and not the surface decoration. The outline of the badge might be protected under a separate design right, but in this case registration for such protection was not sought. Plaintiff claimed that nevertheless, the outline too was an artistic work with the meaning of the copyright act, while defendant asserted that Section 51 provided it with a defence to the copyright infringement claim. After a wonderful review of the parties' arguments and the various opinions by the Justices of the Court of Appeals in the leading case of Lambretta Clothing Co. Ltd v. Teddy Smith (UK) Ltd., [2005] RPC 88, Justice Rimmer sided with plaintiff and found Section 51 inapplicable.

In the U.S., the result would have been the same, I think, but the analysis would, I think, have been different. Thanks to the enlightened decision of Register of Copyright Marybeth Peters (60 Fed. Reg. 15605, March 24, 2005), applicants for copyright registration need no longer choose between copyright and design patent protection. Under the U.S. Copyright Act, there is no analog to Section 51 of the UK statute, so the analysis would have been simply whether the outline for the badge was original. The closest provision in the U.S. statute to Section 51 of the UK statute is Section 113(b):

"(b) This title does not afford, to the owner of copyright in a work that portrays a useful article as such, any greater or lesser rights with respect to the making, distribution, or display of the useful article so portrayed than those afforded to such works under the law, whether title 17 or the common law or statutes of a State, in effect on December 31, 1977, as held applicable and construed by a court in an action brought under this title."

I doubt though, whether a decorative badge constitutes a useful article, and thus whether Section 113(b) would prevent the copyright owner in the design of such badge from enjoining others from manufacturing the badges, as defendant appearently argued in the UK case.

Ahoy Matey, Compilation Copyright Overboard

Yesterday, the Eleventh Circuit returned to the issue of compilation copyrights, in BUC International Corporation v. International Yacht Council Limited, 2007 WL 1774643 (11th Cir. June 21, 2007. (HT to Mike Madison). This area has not been the circuit's strongest suit. Fear struck me as I read the opening sentence:

In this copyright infringement case, the plaintiff claimed copyright protection of a factual compilation - specifically, the selection, order, and arrangement of information about yachts listed for sale -- vis a vis the defendants' competing factual competing factual compilation, which came on to the scene after the plaintiff had obtained certificates of registration.
An alternative might be: "This is an action for infringement of copyright in the selection, order, and arrangement of yacht listings."

The opinion is 42 pages long, so it was with dread that I sat down with a strong cup of herbal tea to make my way through it. But happily first impressions can be wrong: the opinion settles down and is a straightforward explication of basic principles, a task that is more difficult than one might imagine given the less than straightforward nature of the arguments made.

Plaintiff's work is the yacht equivalent of the real estate Multiple Listing Service: brokers send in listings, which plaintiff then compiles into a centralized directory. The directory is divided into categories, along with section headings like "accommodations and layout, vessel walkthrough, electronics and navigation." Defendant developed a competing product, using many of the same listings as plaintiff and allegedly substantially similar categories and section headings. While pre-trial plaintiff appears to have had a grandiose view of the scope of any copyright, by trial it had narrowed its claim to infringement of its selection, coordination, and arrangement of the categories and section headings. There was a jury trial. The jury held that plaintiff possessed a valid copyright and that defendant had infringed it. Defendant made an ineffectual motion for a new trial, which was denied. The Eleventh Circuit affirmed.

I will focus on two components of the court of appeals' opinion: (1) what constitutes originality in a compilation, and (2) what is the standard for infringement of a compilation. Regarding originality, the opinion is pretty much a by-the-book analysis of originality in compilations and the merger doctrine. This is not a criticism, but rather praise: by-the-book is quite fine when the book is fine. On infringement, the court was faced with defendant's argument that the trial court erred by not adopting its proposed "virtual identicality" standard for infringement (as opposed to substantial similarity). I confess to laughing (snorting, really), when I read this. It reminded me of Jeff Koons' description of Michael Jackson's "radicality." Outisde of the BUC case, a Westlaw search reveals only three other uses of this bizarre term: MiTek Holdings, Inc. v. Arce Engineering Co., Inc., 89 F.3d 1548, 1558 (11th Cir. 1996) - which originated the term; Curico Webb LLC v. National Benefit Programs Agency, Inc., 2006 WL 47506 (S.D. Ohio Jan. 9, 2006)l and, Nautical Solutions Marketing, Inc. v. Boats.com, 2004 WL 782121 (M.D. Fla. April 4, 2004). The term is derived from the more literate "virtual identity" standard used by the Ninth Circuit in Apple Computer, Inc. v. Microsoft Corporation, Inc., 35 F.3d 1435, 1446 (9th Cir, 1996).

Whatever the source or phrasing, the concept of requiring a higher level of similarity for any work is fatally flawed. In all cases, as the Eleventh Circuit recognized en banc in its BellSouth case (999 F.2d 1436, 1445 n.22), the only thing that matters for infringement is substantial similarity in expression. Given the limitation to expression, there is no possible justification for requiring a greater taking of expression from one type of work (say compilations) than for another (say fiction). The worst offender in this regard is Nimmer, who writes (Nimmer on Copyright, sec. 13.03[a]):

The measure of how substantial a “substantial similarity” must be made vary according to the circumstances. For many, copyrights represent significant creative effort, and are therefore reasonably robust, whereas others reflect only scant creativity; the Supreme Court labels the latter “thin.” It would seem to follow analytically that the more similarity is required when less protectible matter is at issue. Thus, if substantial similarity is the normal measure required to demonstrate infringement, “supersubstantial similarity” must pertain when dealing with “thin” works.
The approach of the last two sentences in this passage misapprehends the basic issue of infringement. When Feist spoke of “thin” copyrights, it was referring to determining the amount of protectible material, not to the level of similarity required to prove infringement of that material for originality purposes. The level of similarity required to prove infringement is the same for every class of work—namely, substantial similarity of expression. If a defendant has copied nonprotectible material only, or a de minimis amount of expression, there is no infringement. On the other hand, if a defendant has copied a substantial amount of expression from a work having a “thin” copyright, infringement occurs. The error in the supersubstantiality test is that it confuses copyrightability with infringement and in the process misleads courts into requiring a higher level of similarity in expression. Blessedly, the Eleventh Circuit in BUC rejected the higher standard for compilations, limiting MiTek to its own facts, claims of infringement of the nonliteral elements of a computer program. The higher test makes no sense there either, but the BUC court was stuck with it, and deserves the highest praise for not letting it infect other areas. Bravo to the court of appeals.

Arbitration and Injunctive Relief

Courts have been resolute in enforcing arbitration agreements that cover copyright disputes. One issue, however, is injunctive relief. In Pacific Reinsurance Management Corp. v. Ohio Reinsurance Corp., 935 F.2d 1019, 1022-23 (9th Cir.1991), the Ninth Circuit wrote:

Temporary equitable relief in arbitration may be essential to preserve assets or enforce performance which, if not preserved or enforced, may render a final award meaningless. However, if temporary equitable relief is to have any meaning, the relief must be enforceable at the time it is granted, not after an arbitrator's final decision on the merits. Arbitrators have no power to enforce their decisions. Only courts have that power. Consequently, courts in other circuits that have been faced with arbitrators' temporary equitable awards have not characterized them as non-final awards on the merits which can only be reviewed in extreme cases. Rather, they have characterized them as confirmable, final awards on an issue distinct from the controversy on the merits.

In that case, the arbitrators had requited, on an interim basis that money be placed in an escrow account pending a final order. The arbitrators did not "enjoin" conduct. Yet, in Arrowhead Global Solutions, Inc. v. Dapath, Inc., 166 Fed. Appx. 39 (4th Cir. 2006), the Fourth Circuit, after quoting the above passage from the Ninth Circuit, wrote:

In short, as the other circuits to have addressed this issue recognize, arbitration panels must have the power to issue temporary equitable relief in the nature of a preliminary injunction, and district courts must have the power to confirm and enforce that equitable relief as “final” in order for the equitable relief to have teeth.

I don't think this what the Ninth Circuit meant. On way around the issue was presented recently in National League of Junior Cotillions, Inc. v. Porter, 2007 WL 1741278 (W.D. N.C. June 14, 2007), where the parties' arbitration clause had this exception: "Injunctive relief: As an alternative or supplement to arbitration ... Licensor, at its option, may obtain in any court of competent jurisdiction any injunctive relief, including temporary restraining orders and preliminary injunctions, against conduct or threatened conduct for which no adequate remedy at law may be available or which may cause Licensor irreparable harm." Following this clause, the court sent the dispute to arbitration , but retained jurisdiction to entertain a preliminary injunction motion, therefore staying, rather than dismissing the copyright claim.

Over-Criminalizing Copyright

In an important speech delivered on the occasion of the the Stephen Stewart Memorial lecture in 1995 and later published as "Copyright: Over-Strength, Over-Regulated, Over-rated," 18 European Intellectual Property Review 253 (1996), the great English judge and intellectual property scholar Sir Hugh Laddie questioned the appropriateness of criminal proceedings for copyright infringement. Since I can't write as well as Sir Hugh, I will reproduce his remarks:

Those of you who have hired video films may have noticed that, when the tape is played, a message comes up on the television screen which says "VIDEO PIRACY IS A CRIME'. Well it is. Criminal provisions have been found in Copyright Acts for some years but now, apparently for the first time, they are being used in earnest. A recently reported case is illuminating. Criminal proceedings were brought against a book publisher and its directors. I think there were nine directors in all. One of them was the infirm 87-year-old widow of the original founder of the publisher. The publisher had produced a book which contained reproductions of one or more copyright paintings. Difficult questions of fair dealing were raised as a defence. It might be thought that to bring such proceedings with complicated issues of copyright law before a magistrates' court did not make sense. However, I find it difficult to fault the logic of those acting for the private prosecutor. The Copyright Act stipulates that criminal procedures may be invoked against an alleged infringer and, in the case of an infringing company, its directors. Why not use these weapons? If the proceedings had been brought in civil courts, it is almost certain that the directors would have been struck out of the proceedings since there was no evidence, at least in relation to most of them, that they had any personal involvement in the production of the offensive book. But the criminal provisions relating to directors in the Act are, to say the least, relaxed. And if it is permissible to bring criminal proceedings, why not do so? The threat of a criminal conviction hanging over an alleged infringer's head and the heads of its directors is much more likely to make them sue for peace than the mere risk of losing in civil proceedings. Like the prospect of being hanged, it does concentrate the mind. The fact that these statutory provisions are being used to enforce purely private commercial rights appears to be irrelevant. Furthermore, there is a great incentive to proceed in this way. The costs of the prosecuting copyright owner are usually paid out of central funds, even if the prosecution fails. This little bit of budgetary largesse has escaped critical scrutiny so far. We have therefore reached the stage where taxpayers' money is being used to enforce private rights which many might think are more than adequately protected by civil remedies. I should also mention that it appears that in most cases it is not the poor and weak who are using these criminal provisions but the rich and well organised.

The issue of criminal prosecutions in copyright disputes came up again last week during a press conference in Washington, D.C. held by yet another group seeking the strengthen IP law, this time the "Coalition Against Counterfeiting and Piracy." Who could be for counterfeiting and piracy (assuming the terms are properly defined). The remarks that drew the most press were those of NBC/Universal General Counsel Rick Cotton, who is reported to have stated:
“Our law enforcement resources are seriously misaligned. If you add up all the various kinds of property crimes in this country, everything from theft, to fraud, to burglary, bank-robbing, all of it, it costs the country $16 billion a year. But intellectual property crime runs to hundreds of billions [of dollars] a year. We’re having intensive consultations with the leadership in Congress, and we’ll be consulting closely with the appropriate committee chairman to try to put the agenda into the appropriate legislative vehicles." The group is also said to support the creation of a new IP enforcement coordinator within the White House.

I am not opposed to all criminal copyright provisions. I drafted two while copyright counsel to the U.S. House of Representatives, the bootleg provision that Mr. Martignon will now perhaps be tried under, and a general revision of the criminal sections to eliminate differences among subject matter. But I cannot imagine that enforcement difficulties have anything to do with the lack of existing adequate criminal remedies. Very few acts of infringement warrant criminal prosecution, which should be limited to large-scale commercial enterprises. With Justice laddie, I think that taxpayers' money should not be used to enforce private rights which are more than adequately protected by civil remedies, and I doubt many taxpayers share the view that theft, fraud, and violent crime are, absolutely or relatively, petty.

Double Counting of Damages

A recent decision in the 6th circuit, Thoroughbred Software International, Inc. v. Dice Corporation, 2007 WL 1702777 (6th Cir. June 14, 2007), raises the question of double counting of damages that can arise when plaintiff seeks both its losses and defendant's gains. Section 504(b) permits copyright owners to recover its actual damages "and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages."

In Bucklew v. Hawkins, Ash & Baptie, LLP, 329 F.3d 923, 931 (7th Cir. 2003), Judge Posner wrote: “A copyright owner can sue for his losses or the infringer's profits, but not for the sum of the two amounts … . That would be double counting.” For example, if the copyright owner proves it lost 10 sales because of the infringement, and that defendant made those 10 sales, there is only one award of damages/profits from the 10 sales, and not 20 (the sum of the two in Judge Posner's terminology). If the copyright owner proves it lost 10 sales because of the infringement, and that defendant made 15 sales, 5 of which plaintiff wouldn't have made, plaintiff recovers on 15 sales, not on 25.

Judge Posner gave another formulation of the principle in Taylor v. Meirick, 712 F.2d 1112, 1120 (7th Cir. 1983): “If the profits the owner would have made but for the infringement are equal to the profits the infringer made by selling the copyrighted item, and the owner proves up his lost profits,” the statute “bars the owner from receiving an additional award of damages based on the infringer's profits.” In most cases, the choice faced by the prevailing copyright owner is straightforward: pick the largest number.

In Thoroughbred Software, plaintiff licensed accounting software. Defendant licensee (with permission), installed plaintiff's software on computers and then rented the computers to its own customers. The rental fee wasn't broken down between the hardware and software. Defendant made more copies than it paid for and plaintiff sued. Some of those extra copies were unused, though, and one issue on appeal was whether plaintiff could prove that it was damaged by the unauthorized, but unused copies. The district court found plaintiff had failed to show a causal connection between the unused copies and any financial loss. By contrast, the cour of appeals found the license agreement straightforward: defendant was required to pay for all copies made, without any limitation on whether they were used. Plaintiff was, therefore, awarded actual damages of lost license fees for the unused copies.

On to defendant's gains. The court of appeals thought the proper measure of defendant's gains was "the amount that Dice Corp. charges its customers for the infringing software, minus the amount that Dice Corp. should have paid for the infringing software (i.e. the lost license fee), which was already been included as actual damages." Because the court found plaintiff couldn't provide a non-speculative basis for such an amount - due in large part to the bundling of the software with the hardware rental - an award of defendant's damages was precluded.

I am very interested in what others think of the court's theory of how to measure defendant's gains. I am skeptical it was proper (although none were ultimately awarded). Usually defendant's non- double counted damages are for sales that plaintiff could not have made, but which are nonetheless one-for-displacement, as where defendant is selling a knock-off of plaintiff's sweater design. But in Thoroughbred, the most plaintiff could ever get was the proper license fee paid by defendant, a measure of damages already taken into account by the award of plaintiff's license fee for the unused copies. Plaintiff never had a claim to the profit defendant made off the license fee, which seems to be what the court of appeal was trying to figure out.

Eleventh Circuit Reverses Tasini Course

Shortly before the Supreme Court issued its opinion in Tasini v. New York Times, 533 U.S. 483 (2001), construing the Section 201(c) privilege, the Eleventh Circuit issued its opinion in Greenberg v. National Geographic Society, 244 F.3d 1267 (11th Cir. 2001). The prudent course for the Eleventh Circuit would have been to wait until the Supreme Court issued its opinion, but perhaps the author of Greenberg hoped for the high court's approval of his approach. If so, it was a vain wish because Justice Ginsburg ignored the court of appeals' opinion. And, by virtue of having issued an opinion at odds with the approach subsequently taken by Justice Ginsburg, the Eleventh Circuit caused a problem: did any of its opinion survive Tasini, including for example, most basically the finding of liability? (A jury had awarded the maximum statutory damages for willful copyright infringement, so the issue was hardly academic).

Four years later, the Second Circuit in a case involving the same defendant and the same issue, rejected plaintiff's argument of collateral estoppel, held that Greenberg had been superseded by Tasini, and ruled for defendant, Faulkner v. National Geographic Society, 409 F.3d 26 (2d Cir. 2005). This set up a conflict between the circuits. Two days ago, the Eleventh Circuit did the right thing, and vacated the jury award, holding that "Tasini established a new framework for applying the Section 201(c) privilege that effectively overrrules the earlier panel decision in this case." The opinion was, interestingly, by a district judge from the Eastern District of New York sitting by designation, and may be found here.

Martignon Reversed

Twenty-three months after oral argument, the Second Circuit has issued its opinion in United States v. Martignon, 2007 WL 1695089 (2d Cir. June 13, 2007), reversing Judge Baer's ruling of unconstitutionality, and upholding 28 USC 2319A(a)(1) and (3). (Section 2319A(a)(2) - the transmission section - and the civil provisions in chapter 11 of title 17 were not addressed). While I am relieved at the outcome (as far as it went), I do not rejoice in the opinion itself: it is as if the second year law students who wrote Judge Baer's opinion were tasked with drafting an opinion coming out the other way.

To recap: in the 1994 GATT implementing legislation, in response to Article 14(1) of TRIPs, Congress added a new chapter 11 in title 17 as well as criminal provisions in title 28 dealing with the unauthorized fixation of live musical performances, as well as the transmission of such unauthorized fixations and sale of physical embodiments of the fixations. These provisions were an exercise by Congress of its power under the Commerce Clause. Congress never for one second believed it was enacting the legislation under the power granted it under the Copyright Clause, and for this reason: it was Congress's judgment, based upon Supreme Court precedent and statements made by the Register of Copyrights during the enactment of the 1976 Act that the term "writings" in the Article I, section 8, clause 8, is limited to fixed works, meaning original works of authorship fixed with the permission of the creator. I know this because I was there and was the principal drafter of the provisions. Textual support for this is found in the statute. Section 1101, in referring to remedies for the civil provisions states that remedies are available "to the same extent as an infringer of copyright." This provision clearly indicates that the act is not a copyright act: if it was, Congress would have simply said that the remedies are those provided for in chapter 5 of title 17.

It is of course possible that Congress could draft something that walks, talks, and looks like a copyright statute, and it is fair enough in such a case to see if, in that event, there is some perceived conflict with Congress's Article I, section 8, clause 8 powers. In the case of the bootleg provisions, the perpetual nature of the protection presented such a perceived conflict. But the perception of a conflict doesn't mean there is one. In the case of the bootleg provisions, there could only be a true conflict if one believes the Supreme Court, Congress, and the Register of Copyrights were wrong that the Constitutional term "writings" requires the authorized fixation of the creator. I was of the view in 1994 and remain of the view that "writings" does require the authorized fixation of the creator. Defendant and his amici, in my view, fundamentally misunderstood the issue in the case and the Constitution by focusing on whether the performance was "original," in the sense of possessing the requisite modicum of creativity. It matters not at all that a performance if fixed with permission would be original. What matters is that to be a writing within the meaning of the constitution, there has to be a fixation, with the permission of the creator. Nor can an unauthorized fixation convert an unfixed performance into a writing: indeed, it is a signal failure of the defendant and his amici that they failed to distinguish between the very act that gave rise to liability - the unauthorized fixation - and the unfixed performance. To them, by engaging in an unauthorized fixation of a performance (or any downstream acts based on the initial fixation), the whole "writings" issue goes away simply by virtue of the unauthorized act. The confused the violation with the performance itself.

How did the Second Circuit deal with this, the central issue? Not at all. The court of appeals never once analyzed the text of the statute. That's a very big omission. The court was interested only in the "dormant" Copyright Clause issue: does the Copyright Clause limit Congress's power to act under the Commerce Clause? Not in all cases, as shown in the case of the trademark act after the Supreme Court held the first act unconstitutional in The Trademark Cases, 100 U.S. 82 (1879). That first act was held unconstitutional because it was believed to have been enacted under the Copyright Clause and extended rights to unoriginal material.

Under the Trademark Cases and Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964), the court of appeals drew "the not surprising conclusion that if a statute is outside even the most generalized interpretation of the scope of the Copyright Clause, i.e., it is not a copyright law, it can be regulated under the Commerce Clause." The conclusion is not surprising because it is circular and thus cannot provide any analytical heft. Railway Labor Executives Association v. Gibbons, 455 U.S. 457 (1982) was distinguished on this ground - that the statute at issue there was in truth a bankruptcy statute enacted under the Commerce Clause and one that conflicted with the uniform limitation in the constitutional bankruptcy clause. From Gibbons, the Martignon court of appeals concluded: "Congress exceeds its power under the Commerce Clause by transgressing limitations of the Copyright Clause only when (1) the law it enacts is an exercise of the power granted Congress by the Copyright Clause and (2) the resulting law violates one or more specific limits of the Copyright Clause. "

This is not much of a test: how does one know if the law is an exercise of a power granted to Congress by the Copyright Clause and whether it violates one of the specific limits in that clause? For example, the Lanham Act prohibits the copying of one's trademark (and that trademark could also be a copyrighted work), with no limit on protection, thereby violating one of the specific limits of the copyright clause. The court of appeals attempts to avoid casting doubt on the Lanham Act by saying it has "additional characteristics that [don't] make it an exercise of Copyright Clause power," footnote 6. But this merely elides the question of what is an exercise of Copyright Clause power. In the case of trademarks one might say that the essence of the right is consumer confusion arising from copying the trademark; in the case of bootlegs, it is the unauthorized fixation of an unfixed work.

Since the court of appeals upheld Sections 2319A(1) and (3), why aren't those sections an exercise of Copyright Clause power? Bizarrely, the court of appeals focused on the word "securing" in that clause. What might that have to do with whether a "writing" needs to be fixed with the authorization of the creator? Nothing, of course. But to the court of appeals (which fatuously described its approach as a "textual approach"), securing means creating, bestowing, or allocating, and therefore "the issue becomes whether Section 2319A creates, bestows, or allocates rights." The answer is obviously, yes. But wait, the answer is no, it doesn't. According to the court "[r]ather than creating a right in the performer him or herself, it creates a power in the government to protect the interest of performers from commercial predations. Section 2319A does not grant the performer the right to exclude others from the performance - only the government can do that. ... Neither may the performer transfer his or her interests under Section 2319A to another. ... Section 2319A only prevents others from doing something without the authorization of the protected person. It may therefore protect the property interests an individual holds by virtue of other laws, but it does not itself allocate those interests. Section 2319A is not a law 'secur[ing] rights,' or is it a copyright law."

One can only express shocked amazement at such an analysis. Under this approach, a civil provision that is blatantly unconstitutional can provide the basis for a constitutionally valid criminal prosecution (and see the lame effort in footnote 7 to avoid the obvious consequence of this). And, under this analysis, the civil provision in chapter 1101 is most assuredly unconstitutional since it does grant a right to exclude others and permits transfer of the right to exclude. One can expect a petition for rehearing en banc and a petition for certiorari to be filed, but to think we waited 23 months for this is depressing enough.

Finally, it should be noted that the court of appeals has given the defendant the chance to argue a violation of the First Amendement: fat chance given the court of appeals' characterization of the statute.

Preemption and Res Judicata

In Lynn v. Sure-Fire Music Company, Inc., 2007 WL 1645402 (6th Cir. June 6, 2007), a panel of the Sixth Circuit took something so much for granted that the issue does not seem to have occurred to them. It may be that is because I misunderstand re judicata, and hope therefore that readers will be able to point me in the correct direction.

The plaintiff was the famous country singer Loretta Lynn, the "First Lady of Country Music." She had brought suit in a Tennessee state court against defendant, her longtime music publisher asserting, multiple state claims arising from their contract. The state court held the claims preempted. Ms. Lynn then filed suit in federal court alleging the exact same state law causes of action. The district court held the claims not preempted, and that it therefore lacked subject matter jurisdiction. Oddly, it was the defendant who appealed, apparently upset over the ruling that the claims weren't preempted.

I would have thought the state claims would be barred in federal court by res judicata. Indeed, in a reverse situation, the Ninth Circuit awarded attorneys fees for objectively unreasonable behavior, Domingo Cambeiro Professional Corporation v. Advent, 2000 WL 262590 (9th Cir. March 7, 2000). In that case, plaintiff brought claims initially in federal court which held the claims preempted. It then brought the same claims in state court. Defendants removed to federal court. The district court denied a motion to remand and awarded attorneys fee on the ground that plaintiff attempted to relitigate the preempted claims.

By contrast in Ms. Loretta's case, the Sixth examined de novo the preemption issue and affirmed the district court's ruling that the claims were no preempted, contrary to the state court. That resulted in Ms. Loretta with no way to go: the federal courts found they had no subject matter jurisdiction over what they deemed state claims, but after the state court held that the state claims were preempted as, in effect, federal claims.

Manchester Cathedral and Copyright

Various UK sources ran stories yesterday about the Church of England's pique over Sony's Playstation 3 alleged replication of the interior of the Manchester Cathedral as a dropback in a gunfight in the game "Resistance: The Falll of Man. (HT to Bruce C. in the frozen north). The stories paint a picture of UK copyright law quite different from that in the U.S. I have no idea if the depictions of UK law are accurate and call on my UK friends, including the fabulous felines at IPKat to add their meow on the matter. Here are excerpts from a Times of London online story by Rhys Blakey:

"The Church of England has threatened to sue Sony after the Japanese company used Manchester Cathedral as the backdrop to the gunfight in the PlayStation 3 game Resistance:The Fall of Man.

It could have a case, lawyers say.
....

In general, the outside of a well-known building is not considered to be protected under the law, Tom Frederikse, an intellectual property specialist with Clintons, the law firm, said.

That means that games such as the controversial Grand Theft Auto series, where players drive around cities – including London – winning points for committing crimes, can copy real locations.

Even so, the games’ developer, RockStar, decided to rename its cities – so San Francisco became San Andreas and Miami was dubbed “Vice City”. The move could also have insulated the developer from allegations that they represented the real cities as more violent than they really are.

The legal situation changes radically, however, once a game enters the doors of a location.

The Copyright, Designs and Patents Act 1988 contains the so-called '2D to 3D rule'. Designed to prevent architects’ blue prints being bootlegged by builders who could use them to build replica buildings it could also stop a games developer creating a fictional representation of a real site.

...
'If a computer game developer is copying a landmark there generally isn’t a problem,' Mr Frederikse said. “But if a developer were to use details from inside a new building they will run into real trouble if they don’t have permission.'

In general a '2D to 3D' case can only be made if a copyright holder is still alive or has died in the past 70 years – a potential problem for the Church of England as Manchester Cathedral’s archives stem back as far as 1361 – though it was extensively rebuilt after the Second World War.

However, under the 1988 Act, the Church could also argue that it owns the copyright to the photos that Sony is thought to have used to recreate Manchester Cathedral, Catrin Turner, a Partner at Pinsent Mason said."

I wonder who would be the copyright owner of the building, and where this alleged 2D to 3D rule is found in the UK statute. Under U.S. law (and it should be noted, the game was made in the U.S.), the cathedral wouldn't be protected at all since it was constructed before 1990. But even if the cathedral was covered, we make no distinction between interiors and exteriors for protectibility. On the infringement side, Section 120(a) reads:

(a) Pictorial Representations Permitted. — The copyright in an architectural work that has been constructed does not include the right to prevent the making, distributing, or public display of pictures, paintings, photographs, or other pictorial representations of the work, if the building in which the work is embodied is located in or ordinarily visible from a public place.

This section is broad enough to cover use in a video game, but it is unclear if it encompasses interiors, something I frankly had not thought about until the Manchester Cathedral story raised it for me. Read one way, so long as the building is located or ordinarily visible from a public place, Section 120(a) applies if the interior is publicly accessible, as I believe the Manchester Cathedral is. Another reading would limit Section 120(a) only to those parts that are located in or ordinarily visible from a public place. Note though that Section 120(a) doesn't require that the work itself to be located in or ordinarily visible from a public place, or that the building in which it is embodied to be located in or ordinarily visible from a public place.

Chasing Copyright Notices

A dispute between two personal injury law forms brought to the fore, again, an anomaly in Second Circuit case law: that for purposes of complying with the notice requirements of the 1976 Act as passed, one could deliberately omit the notice, later “discover” one’s own omission, and then, by complying with curative provisions, avoid forfeiture of copyright.

The case is Niemark v. Ronai & Ronai, 2007 WL 1544641 (S.D.N.Y. May 25, 2007). Here are some facts from the court’s opinion:

"The relevant facts are undisputed. Plaintiff is an attorney licensed to practice law in the State of New York. His practice is devoted to personal injury law and is operated out of New City, New York. Defendant is a personal injury law firm owned and operated by Peter Ronai and Holly Ostrov Ronai, both of whom are licensed to practice law in New York, with offices in White Plains, New York and Manhattan.

Over the years, plaintiff has advertised his law practice using a cartoon drawing of a hospital patient fully bandaged lying in a hospital bed with one leg elevated by a sling. He first published the Drawing on July 1, 1988 and again in 1989 in the Rockland County Yellow Pages. The Drawing bore no copyright notice in either publication.

On January 30, 1990, plaintiff registered the Drawing with the United States Copyright Office and received a Certificate of Copyright Registration. Plaintiff thereafter placed advertisements that featured the Drawing in the Rockland County Yellow Pages in 1990, In contrast to the 1988 and 1989 advertisements, the 1990, 1991 and 1992 advertisements contained a copyright symbol, i .e., “©,” at the lower left corner of the page, but did not indicate the year of first publication or the name of the copyright owner. The copyright notice in the 1993 advertisement consisted of the copyright symbol, the date and plaintiff's name. Plaintiff presently displays the Drawing on each page of his website. See http://www.neimarklaw.com. Each copy contains the copyright symbol accompanied by the date of publication and his name, except for the copy on the homepage, which contains no notice at all. See id. The copies of the Drawing on plaintiff's website differ slightly from the copies in the Yellow Page advertisements in that they contain a medical chart at the foot of the hospital bed that reads, “Rx Call Niemark,” while the latter contain a chart with five rows, eight columns and several check marks

At some point prior to August 17, 2006, a cartoon drawing substantially identical to the one found on plaintiff's website appeared on the last page of defendant's website. Instead of the inscription “Rx Call Niemark,” the drawing on defendant's website featured a medical chart that read, “Call Ronai & Ronai.” Defendant claims that it hired a college student to create its website and that his whereabouts are currently unknown.

…

Plaintiff contends, however, that he cured this omission by complying with 17 U.S.C. § The relevant statutory provision is 405(a)(2) which provides:

With respect to copies and phonorecords publicly distributed by authority of the copyright owner before the effective date of the Berne Convention Implementation Act of 1988, the omission of the copyright notice described in sections 401 through 403 from copies or phonorecords publicly distributed by authority of the copyright owner does not invalidate the copyright in a work if [ ] ... registration for the work has been made before or is made within five years after the publication without notice, and a reasonable effort is made to add notice to all copies or phonorecords that are distributed to the public in the United States after the omission has been discovered ...."


The operative word is “discovered.” No reasonable person would believe that you can discover that you deliberately refrained from affixing a required notice. Yet, as the court observed:

"T]he law in this Circuit is clear: deliberate omissions are curable under § 405(a)(2). See Hasbro Bradley, 780 F.2d at 196. The Second Circuit reasoned that the statute itself does not restrict its application to unintentional omissions and the legislative history 'affords ample demonstration that Congress intended to bring deliberate omissions within the ambit of § 405(a)(2).' Hasbro Bradley, 780 F.2d at 195; see H.R. Rep. No. 94-1476, U.S.C.C.A .N. 5659, 5763, reprinted in 17 U.S.C.A. § 405 Historical Note ('Under the proposed law, a work published without any copyright notice will still be subject to statutory protection for at least 5 years, whether the omission was partial or total, unintentional or deliberate.'). "

I am a liberal when it comes to statutory interpretation: I think it is always appropriate to examine legislative history, but this doesn’t mean it is appropriate to rely on legislative history that conflicts with any reasonable interpretation of the statute, as is the case with the Second Circuit and Section 405. (In Niemark, summary judgment was denied plaintiff because of genuine issues of material fact about whether plaintiff had taken reasonable curative steps).

Paris, Jail, Infringement

I flew out here to LA to see if Paris Hilton would be sent back to jail after her dramatic release to home arrest. The LA police are known for their gentleness and compassion, especially toward minorities and protestors (two categories than can and frequently do overlap). Sheriff Lee Baca's decision to hustle Paris out of jail after only a few days due to an unspecified medical condition was thus standard policy, applied to rich and poor alike. But in the middle of the night, the Sheriff was leaned on, and Paris was sent back to the slammer. There will be a hearing of sorts today, but not with Paris and supposedly not even with the Sheriff; a scape goat will no doubt be sent. I am of course doubly disappointed.

Paris' re-incarcertation makes it temporarily more difficult for her to participate in a copyright infringement suit, brought by a British group UB40, and discussed in this posting by uncut.uk:


"UB40's record label, the Sparta Florida Music Group, are suing V2 Music Publishing, Warner Chappell Music, and Paris Hilton's songwriter/producer for $500,000 in damages in London's High Court.

The band claim that their classic song "Kingston Town" features heavily in Paris Hilton's debut single "Stars Are Blind" and are suing her for breaching copyright laws.

The Sparta Music Group are going to use information from the internet and a musicologist, to prove that "Stars Are Blind" used a large amount of the UB40 1990 single.

UB40's "Kingston Town," written by Kendrick Patrick, reached number four in U.K. charts, while "Stars Are Blind" released last year, reached number five.

As Paris Hilton has been dropped from her record label, Warner Bros., she isn't being sued directly. However, she is still in the wrong side of the law as she starts her 23-day sentence in Century Regional Detention Facility in Los Angeles today (June 4)."

Enforcing Repugnant Foreign Verdicts

In Sarl Louis Feraud International v. Viewfinder, Inc., 406 F. Supp.2d 274 (S.D.N.Y. 2005), Judge Gerard Lynch refused to enforce a French judgment on the grounds that it would be repugnant to the public policy of New York because it would violate Viewfinder's First Amendment rights. Plaintiff asserted in a French court that its copyright in the actual designer of dresses was infringed by defendant's taking photographs of them and placing them on a website. Viewfinder failed to answer the complaint, and a default judgment was entered. Enforcement was sought in the U.S. under New York State law. Judge Lynch found that there was no big deal in enforcing copyright rights in the design itself even though under U.S. law they would not be protectible. Judge Lynch found (and the Second Circuit later agreed) that copyright laws do not present matters of strong moral policy, but rather are mere economic legislation. But, having done so, Judge Lynch was disturbed about the First Amendment-fair use implications of imposing liability for taking and posting pictures of public events. His analysis of fair use was brief to the say the least.

The Second Circuit has just reversed, 2007 WL 1598057 (2d Cir. June 5, 2007), finding that Judge Lynch was required to undertake a full fair use analysis before finding that enforcement the judgment was repugnant to pubic policy. The court seems to acknowledge that if he concludes the use would be fair under U.S. law (regardless of whether it would be permitted under French law), then the judgment cannot be enforced. This is a major decision.

Conley v. Gibson Overruled

Since 1957, Conley v. Gibson, 355 U.S. 41, has been the main case construing FRCP 8(a)(2)'s requirement that complaints contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Conley stated that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," 355 U.S. at 45-46. This was, aptly, called a "liberal" pleading standard, the principal effect of which was to permit many meritless pro se (and poorly drafted attorney) complaints to go forward, into the money pit of discovery. This is a very common occurrence in copyright cases, especially pro se suits against motion picture companies, who should, therefore, applaud the Court's decision.

On May 21th, the Supreme Court overruled Conley in Bell Atlantic Corp. v. Twombly, 2007 WL 1955, a case brought by a putative class against local telephone exchange carriers. The question before the Court was what needed to be plead in order to state a claim under Section 1 of the Sherman Act: Judge Gerard Lynch of the SDNY (a brilliant judge) had dismissed the complaint for failure to state a claim, but the Second Circuit reversed. The Supreme Court, 7-2, in an opinion by Justice Souter, reversed the court of appeal.

The Court rejected Conley's "no facts" formulation as permitting a wholly conclusory statement of a claim to go forward, unless there is a factual impossibility of plaintiff at some time (even in the future) being able to support its allegations. The Court held that from now on, a certain level of plausibility is required: "Factual allegations must be enough to raise a right to relief above the speculative level," "a complaint [must contain] enough factual matter (taken as true) to suggest that" violative activity has occurred. These allegations must plausibly suggest not merely consistent with that activity. The Court was particularly aware of the desire to weed out groundless cases before expensive discovery occurs.

Hopefuly, district judges will quickly read the Court's signals and start dispatching the hundreds of meritless pro se cases that clog dockets and waste time and money. If we could get rid of striking similarity too, I would believe we would be well on the way to a legal Mosiach coming.

One can, though, make too much of Twombly's jettisoning on Conley, which was after all, limited to Conley's extremities. On Monday, the Court signalled that we haven't moved to a heightened pleading requirement. In a per curiam opinion, Erickson v. Pardus, 2007 WL 1582936 (June 4, 2007), involving a pro se prisoner who brought a Section 1983 action over alleged indifference to his medical condition, the Court simultaneously granted cert. and vacated the lower court's dismissal of the complaint: "The holding [below] departs in so stark a manner from the pleading standard mandated by the Federal Rules of Civil Procedure mandated by the Federal Rules of Civil Procedure that we grant review." The Court noted that "Specific facts are not necessary; the statement need only 'give the defendant fair notice of what the ... claim is and the grounds on which it rests."

Expert Struck Twice

The use of experts in copyright infringement analyses where copying and substantial similarity are at issue is problematic. In Nichols v. Universal Pictures Corp., 45 F.2d 119, 120 (2d Cir. 1930), Learned Hand argued against using them at all, although admitting it was not reversible error to admit their testimony. (See also his pre-bench article, "Historical and Practical Considerations Regarding Expert Testimony," 15 Harv. L. Rev. 40 (1901)). In Arnstein v. Porter, 154 F.2d 464 (2d Cir. 1946), a majority of Jerome Frank and Hand permitted expert testimony at the copying stage, but precluded it at the substantial similarity stage. This drew a vigorous dissent by the great Charles Clark who castigated what he perceived as the "anti-intellectual and book-burning nature of their decision," 154 F.2d at 478.

Judge Clark would have permitted experts at all phases, and while I think experts are a cancer on the legal system, if a jury is hearing an expert blather on at the copying stage about how something is scenes a faire, so common that it could not have been copied by defendant, can we really expect they jury to ignore that testimony when deliberating on substantial similarity?

Two recent decisions by trial courts in the Second Circuit, involving the same expert, Kenneth Dancyger, point out the problems. In A Slice of Pie Productions, LLC v. Wayans Entertainment, 2007 WL 1549139 (D. Conn. May 30, 2007), plaintiff alleged that defendants' movie "White Chicks" infringed a screenplay called "Johnny Bronx." Access was alleged through agents. Claiming striking similarity, plaintiffs submitted an expert report by Dancyger. Defendants moved to strike it for untimely designation; the court agreed, but used it any way for a separate summary judgment opinion (2007 WL 1549141), noting that expert testimony while impermissible at the substantial similarity stage, was permissible at the copying stage.

The rub is that defendant conceded access for summary judgment purposes, but did not concede copying. One can have access but still have not copied. The judge held that "the Movie Defendants' argument about the inadmissibility of expert evidence is inapposite if Dancyger's report could be read to constitute dissection and analysis probative of whether defendants copied plaintiff's screenplay, including regarding striking similarities which could obviate the need for proof of access." Defendants had, however, conceded access. Then, in the separate summary judgment opinion, the court considered Dancyger's report in evaluating substantial similarity, justifying it by this statement, "the Court refers to it, however, because plaintiff relies on it in its briefing for the similarities that it claims a lay observer would detect between the works." This of course is precisely what the Second Circuit has repeatedly held expert testimony is incompetent for. And what a nice trick: just rely on inadmissible testimony in your brief and it will be considered.


In Price v. Fox Entertainment Group, Inc., 2007 WL 125901 (S.D.N.Y. April 27, 2007), decided a month before, the court granted defendants' motion to strike Dancyger's testimony because the court held that no reasonable jury could find the two works (involving the movie "Dodgeball") strikingly similar. The court then added that his report was not needed for the copying stage because "[t]hese are not technical works. The jury is capable of recognizing the similarities between the works without the help of an expert," to which I say Praise the Lord. The court continued that if the report was considered to deal with substantial similarities, Dancyger was incompetent to testify about those issues. In a very surprising move, though, the court let plaintiffs find an another expert who might be competent on substantial similarity, although subject to a renewed Rule 702 or Daubert motion. I don't get that either: the issue is not competency in the sense of training, but rather inadmissibility.

In short, the law may be clear at the circuit level, but in the trenches, things are messy.

Don't Go Dutch

The Institute for Information Law at the University of Amsterdam has been home to many IP scholars, including Bernt Hugenholtz and Mireille van Eechoud. The most famous scholar, now emeritus, is Herman Cohen Jehoram, who put Dutch copyright scholarship on the map and who has been fearless in expressing his views. Last year he published an article on a Dutch decision protecting, under copyright, the scent of a perfume, The Dutch Supreme Court Recognises Copyright in the Scent of a Perfume. The Flying Dutchman: All Sails, no Anchor [2006] European Intellectual Property Review 629.

His most recent article, in the just published issue of E.I.P.R. (HT to IPKat), takes on not only another Dutch decision, but other Dutch copyright scholars, The Dutch Supreme Court Recognises "Dilution of Copyright" by Degeneration of a Copyright Design into Unprotected Style, 29 EIPR 205-208 (2007). The subject of Professor Jehoram's ire is the Elwood decision, September 8, 2006 (Elwood) NJ 2006, 492 and BIE 2007/1, 41, which extended protection to "style." (The closest we have seen to this in the United States is Steinberg v. Columbia Pictures Industries, Inc., 663 F. supp. 706 (S.D.N.Y. 1987), involving Saul Steinberg's famous cover of the New Yorker magazine, but there fictional buildings were copied too).

As described by Professor Jehoram:

On September 8, 2006 the Dutch Supreme Court handed down its unreflected decision in a lawsuit between the Amsterdam firm G-Star and the Italian firm Benetton. G-Star had marketed new fashionable blue jeans, the "Elwood" jeans. The characteristics of this product were simultaneously described in the trade mark register: "slanted stitchings from hip towards crotch, knee parts, inserted piece in the seat, horizontal stichings at kneehight on the rear, wave-band on the rear at the bottom of the leg of contrasting color or other material, also used in combinations." Later the Benetton jeans appeared on the market, which, according to G-Star infringed her trade mark and copyrights in the Elwood jeans. The Amsterdam Court of Appeal awarded both claims. The Supreme Court suspended its decision on the trade mark claim until the European Court of Justice would have answered a preliminary question regarding European trade mark law. In this article only the final copyright decision of the Supreme Court will be considered. The defendant, Benetton, had argued that the copyright design of the Elwood jeans had degenerated into a common style, which was free for the taking, an analogy to trade mark law where a trade mark can degenerate into a generic term and thereby lose its protection, like for instance the original trade mark Grammophone. In court this reasoning failed, but only because G-Star had consistently sued third-party infringers of her copyright. Her own use of the design could of course not result in the degeneration of the design into a common and copyright-free style. The new construct of dilution of a design copyright in itself found favour, first with the Advocate-General at the Supreme Court Verkade. The court then followed this advice. The application of the construct in this case was only based on the fact, already stated, that the plaintiff G-Star had consistently warded off infringers of her copyright. This argument in itself is again consistent with accepted trade mark law. The mixing up of copyright and a certain particular element of trade mark law as such was not rejected, and this is the alarming message of the G-Star decision of the Dutch Supreme Court.

Professor Jehoram then discusses the theory behind the protection of style in the Elwood decision:

Style is free, whether it is a collective one of a certain period, like Jugendstil or Art Deco, or a personal one like the distinctive personal drawing style of Dick Bruna, an internationally famous Dutch writer and illustrator of children's books. Legally no distinction should be made between collective and personal style. Only a certain Dutch copyright expert, the lawyer and Utrecht professor Grosheide, wanted it differently. He defended copyright in at least a personal style, although this particular kind of style had already been at issue in [a] famous Dutch copyright decision of 1946 mentioned before, denying copyright in the personal style at issue. Grosheide argued that personal style and personal character are essentially synonymous in the copyright requirement of personal imprint of the author on a work. He wanted copyright protection of a whole oeuvre of an author, his existing works, and the ones still to be created. He called this the "handwriting" of an author. He forgot that copyright does not protect "handwriting", and not oeuvre. Grosheide confused copyright protection of a personal work with protection of the character of the author himself. As [I] wrote before : "Le style est l'homme même" (the style is the person himself). The person as such however is not protected by copyright, only his specific works. Undeniably though, the question can become more complicated when the work of an artist has been copied by others by way of style. ...[T]he Nijmegen copyright specialist Quaedvlieg... proposes to make the protection of the trendsetter "variable in time, to diminish". He is of the opinion that "In a breathing cultural (and industrial!) climate one cannot escape this", and that "The trendsetting design can have laid bare a string which vibrates with the spirit of the time, or opens new perspectives". In connection with "the development of the common inheritance of design" he thinks that "Copyright is not there to bind the spirit of the time, or the growth into something new". He then pleads for a "biologically breaking down of the trendsetting model". Copyright is here apparently something like plastics in garbage which should be biologically broken down. Professor Jehoram then returns to Professor Grosheide:

Grosheide now agitates for even a further merging of copyright and trade mark law: the specific requirement of trade mark infringement, "confusion of the public", should also be used in copyright cases. The result of the system of the Utrecht professor and his followers would be that the absence of confusion of the public in a specific case should lead to the judgment that no copyright infringement has taken place. This implies that if a pirate publisher reprints a bestseller and takes care to mention the real author and his own pirate publisher's imprint and in this way avoids any risk of confusion of the public, there would be no infringement of copyright. Would it not be simpler then to abolish the Copyright Act and those annoying treaties behind it in the first place? It remains to be seen what the Dutch Supreme Court will eventually decide on this proposed further merger: will it again succumb to the "phenomenological" siren song of Grosheide? Or will it retreat from its Elwood decision? The Supreme Court has with its Elwood decision introduced a totally new kind of annulment of copyright, the trade mark "dilution" by "degeneration of a work into an unprotected style". This concept runs counter to the Dutch Copyright Act and all copyright treaties which only recognise the ending of copyright by lapse of the term of protection. The Elwood monster is an internationally unique invention. The Netherlands are in this way again out of step with copyright in Europe, which had just been harmonised by the EU with no less than seven Directives, all in order to realise the free movement of goods.... The European Commission will have to put an end to both Dutch legal developments, although such a move may--it is feared--further contribute to the europhobic aversion of trendy Dutch lawyers to "Brussels". It is to be hoped that the Supreme Court will retreat from its unreflected Elwood decision before the European Commission steps in.