Monday, April 30, 2007

ASCAP, Performing Rights, and Downloads

The legislative reports to the 1976 Act indicate that “[t]he[ ] exclusive rights, which comprise the so-called ‘bundle of rights’ that is a copyright, are cumulative and may overlap in some cases. Each of the five enumerated rights may be subdivided indefinitely and, as will be discussed in connection with section 201, each subdivision of an exclusive right may be owned and enforced separately.” The reports also note that multiple rights may be violated in the course of a single activity, “as where a publisher reproduces, adapts, and sells copies of a person's copyrighted work as part of a publishing venture.”

The question of infringement of multiple rights arises most intensely in debates over whether a digital transmission can implicate more than one right, such as the reproduction and performance rights. In the debates over what became the Digital Performance Right in Sound Recordings Act of 1995, the performing rights societies (ASCAP and BMI) insisted on inclusion of numerous “savings clauses,” stating that the grant of a limited digital performance right for sound recordings in Section 106(6) did not affect the Section 106(4) performance right. Music publishers also insisted on extending the “mechanical” compulsory license in Section 115 to include digital phonorecord deliveries.

In my personal view, a “digital phonorecord delivery” under Section 115 is only a distribution and not a performance, while streaming is only a performance and not a distribution. The distinction between a performance and a distribution should be drawn by reference to the type of transmission involved: if the transmission delivers a copy of a work to a consumer in non-real time, it is a distribution. If streaming or other real-time conduct is involved, it is a performance.

This issue was faced head on by Judge Conner of the SDNY, who has long ridden herd over the ASCAP consent decree, as the ASCAP rate court. On April 25th, he issued an opinion on the question of whether the downloading of a digital musical file constituted a public performance of the song. He held it did not. Of particular interest to the Cablevision case (and buffering) is the following language:

[W]e are not persuaded by ASCPA's argument that downloaded music files are indistinguishable from streamed performances because, after a certain amount of digital data has been transmitted to the client computer, the purchaser can begin listening to the transmitted portion of the music file. However, the mere fact that a customer's online purchase is conveyed to him in a piecemeal manner, each segment of which is capable of playback as soon as the transmission is completed, does not change the fact that the transaction is a data transmission rather than a musical performance broadcast.
Opinion at 10-11 (emphasis in original).
(HT to Josh Wattles.)

Friday, April 27, 2007

Jack Valenti

Jack Valenti’s death yesterday was a sad event. In my years in Washington, I had many occasions to interact with him. On every occasion, he was honest, forthright, helpful, colorful, and a helluva lot of fun to be with. You knew you were in the presence of greatness and felt privileged to be with him. He was particularly good at one-on-one meetings with members of Congress. His advice was always straight, never slanted, and gladly taken. One occasion sticks out in this respect. After getting taken to the cleaners by the broadcasters in their successful efforts to get retransmission consent, I came up with what I thought was a brilliant solution to reverse their victory, and which my boss, the chairman of the subcommittee,, Mr. Hughes, agreed to introduce on the first day of the next session (the 103d Congress) as H.R. 12. (S. 12 had been the bill in the 102d Congress in which the broadcasters got their booty, so we reserved the number as an inside joke).

The bill came to me complete, in a flash one day while jogging in Rock Creek Park, and it was , I thought, a work of great beauty: simple, elegant (in the drafting sense), extremely short (one sentence), very easy to understand, and grounded in fundamental copyright law. Nevertheless, it had the effect (unstated) of repealing both retransmission consent and the Section 111 compulsory license.

Section 501 of title 17, United States Code, is amended by adding at the end the following:

`(f) A television broadcast station is an infringer of copyright and is subject to the remedies provided for in this chapter (other than section 506) if such station, without the express written consent of the copyright owner of a work broadcast by such station, authorizes the secondary transmission of such copyrighted work by a cable system or other multichannel video programming distributor.'

To this day, I believe it is the best work I have ever done, which not only shows that my best is very poor indeed, but it explains why to this day I remain deeply interested in statutory drafting, which I regard as high art if practiced correctly.

I was immensely proud when the bill was introduced, and was dying to see what the MPAA and Mr. Valenti thought of it since it would, if enacted, have helped them tremendously. Mr. Valenti asked for a meeting with Congressman Hughes. I went to the meeting in Mr. Hughes’ office. Mr. Valenti lavishly praised the ingenuity of the bill, but asked Mr. Hughes not to advance it, since it had zero chance of passing. Mr. Hughes accepted Mr. Valenti’s advice, and my work of art was DOA.

Mr. Valenti could have taken a number of approaches, such as urging hearings, using the bill as a trading card for something else, etc. But he didn’t: he did the honorable thing, and in private: he asked us not to proceed even though the bill was very favorable to him. That was the Jack Valenti I knew. It became a parlor game to quote some his wild metaphors, like the Boston Strangler-VCR quip. That was show business and he was a masterful showmen. But no one should mistake that for his real self. He was a gentleman in the old school sense who always kept his word and called it as he saw it. I am deeply honored to have known him. May he rest in peace.

Thursday, April 26, 2007

Gowers on Gowers

In December 2005, the Chancellor of the Exchequer asked Andrew Gowers, a former editor of the Financial Times, to conduct an independent review of the English IP laws. Mr. Gowers' report, issued in December 2006, is a landmark document. Here is a link to a Treasury Office site with a brief description of the process, but many, many helpful links, including to the report itself. This much is old news.

What is new is a podcast interview Mr. Gowers gave explaining his deliberations, especially on the question of term of protection for sound recordings. In the interview, he explains that the economic evidence supported a shorter term than the existing (UK) 50 year term, but that lowering the term would have been well-neigh impossible, so he settled for not raising it:

"Our conclusions were roundly criticised by the music industry in particular for actually doing the non-revolutionary thing of leaving the status quo in place, i.e. 50 years' term protection for sound recordings," he said. "I could have made a case for reducing it based on the economic arguments.

"We certainly considered it, and if you look at the report that came from the academics that we commissioned to examine the arguments and examine the evidence they also argued very robustly that 50 years could be arguably more than enough. In the end we took the politically prudent course. To be honest reducing it in any case would be a very big international debate. It would stand very little chance of making headway in Europe.

It is an interesting interview worth listening to. Here's the link.

Wednesday, April 25, 2007

Is Estoppel a Jury Question?

There are a number of types of estoppel, some of which are prefaced with the word "equitable." Equitable invokes chancery judges, Charles Dickens, and not juries. The Supreme Court's opinion in Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477-478 (1962), addressed part of this problem:

The respondents' contention that this money claim is ‘purely equitable’ is based primarily upon the fact that their complaint is cast in terms of an ‘accounting,’ rather than in terms of an action for ‘debt’ or ‘damages.’ But the constitutional right to trial by jury cannot be made to depend upon the choice of words used in the pleadings. The necessary prerequisite to the right to maintain a suit for an equitable accounting, like all other equitable remedies, is, as we pointed out in Beacon Theatres, the absence of an adequate remedy at law. Consequently, in order to maintain such a suit on a cause of action cognizable at law, as this one is, the plaintiff must be able to show that the ‘accounts between the parties' are of such a ‘complicated nature’ that only a court of equity can satisfactorily unravel them. In view of the powers given to District Courts by Federal Rule of Civil Procedure 53(b) to appoint masters to assist the jury in those exceptional cases where the legal issues are too complicated for the jury adequately to handle alone, the burden of such a showing is considerably increased and it will indeed be a rare case in which it can be met.But be that as it may, this is certainly not such a case. A jury, under proper instructions from the court, could readily determine the recovery, if any, to be had here, whether the theory finally settled upon is that of breach of contract, that of trademark infringement, or any combination of the two. The legal remedy cannot be characterized as inadequate merely because the measure of damages may necessitate a look into petitioner's business records.

Dairy Queen dealt with remedies. What about defenses, as where defendant asserts that plaintiff delayed in asserting its rights? Two cases in the Second Circuit have dealt with this, both of which support a jury deciding the issue.

Defendants' estoppel claim fails, at least at the summary judgment stage. The copy of the manual attached to the grant application and those handed out at workshops contained a notice on the first page stating "[a]ny reproduction is prohibited unless permission is granted by the author" and identified Pavlica as the copyright owner. (Wulff Ex. C. at BW 7304). This notice creates a triable issue of fact whether defendants were "ignorant of the true facts." Additionally, plaintiff only alleges copying committed after he requested that defendants stop using the manual constitutes copyright infringement. Rather than conceding to his demands, defendants waited two years to create their own manual, thereby casting doubt on their claim that they detrimentally relied on Pavlica's conduct. From these facts, a reasonable jury could find that plaintiff is not estopped from asserting his rights.

In Bourne v. Walt Disney Co., 68 F3d 621, 633 (2d Cir. 1995), there was a jury trial. Estoppel was asserted as a defense; the jury considered it and rejected it. Disney moved for a new trial, which the court of appeals rejected:

Disney's principal contention on its cross-appeal is that the district court should have entered judgment as a matter of law on its affirmative defense of estoppel. Judgment as a matter of law cannot be granted on an issue if "there is [a] legally sufficient evidentiary basis for a reasonable jury to find" to the contrary. See Fed.R.Civ.P. 50. Our review of the record persuades us that a reasonable trier of fact could have found that Disney had not relied detrimentally on Bourne's conduct. See General Elec. Capital Corp. v. Armadora, S.A., 37 F.3d 41, 45 (2d Cir.1994). In particular, we note that Disney continued to obtain licenses from Bourne for the use of the Compositions in television advertisements during the 1970s and mid-1980s, and that Disney's paid television advertisements were infrequent up and through this time period. While Disney certainly provided strong evidence of estoppel, we believe that the jury was entitled to decide this issue in favor of Bourne .

The point of Bourne is not that Dsney lost, but that the issue was presented to and considered by a jury. The other opinion is by Judge Chin, Pavlica v. Behr, 397 F. Supp.2d 519, 527 (S.D.N.Y. 2005)(Chin,J), in which he denied a motion for summary judgment on the question of estoppel:

Defendants' estoppel claim fails, at least at the summary judgment stage. The copy of the manual attached to the grant application and those handed out at workshops contained a notice on the first page stating "[a]ny reproduction is prohibited unless permission is granted by the author" and identified Pavlica as the copyright owner. (Wulff Ex. C. at BW 7304). This notice creates a triable issue of fact whether defendants were "ignorant of the true facts." Additionally, plaintiff only alleges copying committed after he requested that defendants stop using the manual constitutes copyright infringement. Rather than conceding to his demands, defendants waited two years to create their own manual, thereby casting doubt on their claim that they detrimentally relied on Pavlica's conduct. From these facts, a reasonable jury could find that plaintiff is not estopped from asserting his rights.

Again, estoppel was treated as a jury issue, and properly so: many times, resolution of the merits of the defense turns on credibility issues, and those issues are par excellence one for a finder of fact, including a jury.

Tuesday, April 24, 2007

Architectural Works and Section 120(b)

In enacting protection for architectural works in 1990, Congress faced the issue of the extent of
the derivative right: would it include the right to prohibit alterations to an authorized building? Interestingly, architects themselves did not want such a right, fearing it would enmesh them in ugly disputes with their clients. As a result, Section 120(b) was enacted:

(b) Alterations to and Destruction of Buildings. — Notwithstanding the provisions of section 106(2), the owners of a building embodying an architectural work may, without the consent of the author or copyright owner of the architectural work, make or authorize the making of alterations to such building, and destroy or authorize the destruction of such building.

A recent Texas case, Javelin Investments, LLC v. McGinnis, 2007 WL 781190 (S.D. Tex. Jan. 23, 2007), added a gloss to the section. As I understand it, a couple began working with plaintiffs to remodel their house, fell out over price, and using substantially similar plans generated for the remodeling, went ahead anyway. Plaintiff sued, defendant asserted Section 12o(b). Section 120)b) doesn't expressly refer to making copies of new plans, but the court found an implied right to permit such copying:

Wood's implied limitation upon § 120(b) alteration rights also defies common sense. Wood argues that the McGinnises had three alternatives if they wished to finish their house: (1) getting Plaintiffs' permission to use Plaintiffs' plans; (2) finishing construction without using any plans; or (3) substantially altering the existing structure so that it was not “substantially similar” to Plaintiffs' plans. These supposed alternatives illustrate perfectly the predicament building owners would face in the absence of § 120(b). Option 1 would give the architect a “veto” over subsequent adaptation and even repair of inhabitable buildings, a result not only impractical but also inimical to the best interest of architects in the long run. Option 2 is a recipe for professional malpractice and structural failure. No professional architect or builder would commence a substantial renovation project without drawings or plans reflecting the existing structure. One common way to generate such plans is to measure the existing structure, as the McGinnises admittedly did here. It would serve little purpose for Congress to expressly grant homeowners the right to make whatever changes they wish to their own homes, while silently denying them the practical means to exercise that very right. Option 3 merely encourages economic waste, forcing the owner to destroy work product which he has already bought and paid for. These “alternatives” to § 120(b) sharply illustrate the practical wisdom of Congress in bestowing upon building owners a limited statutory license to modify their own buildings.

Friday, April 20, 2007

WKRP in Cincinnati and Section 114(b)

Wired magazine has been covering the saga of putting the TV show "WKRP in Cincinnati" on DVD. The first story, from March 2005, details how the show's license to use music in the original show did not extend to syndication or DVD. Since the show involved a radio station, music was an integral part of the plot. The most recent story, from Tuesday, gives the solution:

The series will finally be released on DVD on April 24th, but fans are already irate. The music originally included in the show has been replaced by generic muzak in order to placate the almighty copyright gods, who would otherwise have prevented the series from being released by (apparently) demanding so much licensing money as to render the whole project unfeasible.

Here's an account of the situation from the guy whose job it was to replace the offending musical compositions in order to pave the way for the series' release on DVD:

"During my years with MTM, I was asked to perform the most painful duty I have ever had to do in entertainment business. I was given the task of excising much of the original music from the episodes and replace it with Muzak-style songs that could be licensed in perpetuity for a small flat fee. This was deemed necessary in order to keep the program in syndication.

"The new music that was inserted into the show sucked ass. It was wrong for the feel and attitude of the show. Some scenes relied on specific songs at particular junctures (i.e., Les Nessman trying on a toupee to the soundtrack of Foreigner's “Hot Blooded”) . Those scenes were ruined. In many instances, we couldn't even finesse the proper audio levels in order to cut the costs of replacing the music...

"Allegedly, the original producer of the show (Hugh Wilson) was involved in replacing the Muzak with some other generic songs that are more palatable. While this is admirable, and Wilson has some great artistic instincts, it still isn't enough to undo the damage."

"Music" in the above discussion refers not to the musical composition, but to the sound recording. Making DVDs of music even when included in a TV show involves the reproduction right, and without a license from the music composition owner, no such DVD can be distributed. The real problem is the sound recording then. The muzak solution is the cheap way out. Other times, as with sound track albums, a sound-alike band has been hired to produce a sound recording mimicing exactly the original performance. This happened with the soundtrack to Peter Fonda's 1969 "Easy Rider" movie, when The Band would not give permission for its song The Weight to be included in the (vinyl) album, and so a cover was done by Smith. A reviewer on gives the story in connection with a 2 CD release:

In some ways it's fitting that the soundtrack to this landmark film has suffered a series of legal hassles from The Man. In its original 1969 vinyl release, it was denied the film's use of The Band's "The Weight" (by the band's then-label Capitol), and a sound-alike cover by Smith was issued in its place. More recently, the soundtrack was withheld from domestic CD reissue, squeaking out a European version many years before MCA's 2000 digital issue. The latter reunited The Band with their film-mates, at the expense of altering the original Smith-bred artifact. Hip-O's deluxe two-disc reissue provides the best of both worlds - including both versions of "The Weight" - and filling out a second disc of contemporaneous radio hits.

One can now decide which one prefers, Smith or the Band. The legal basis for covers of sound recordings goes back to the original 1971 legislation granting federal copyright in sound recordings, embodied now in Section 114(b):

The exclusive right of the owner of copyright in a sound recording under clause (1) of section 106 is limited to the right to duplicate the sound recording in the form of phonorecords or copies that directly or indirectly recapture the actual sounds fixed in the recording. The exclusive right of the owner of copyright in a sound recording under clause (2) of section 106 is limited to the right to prepare a derivative work in which the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality. The exclusive rights of the owner of copyright in a sound recording under clauses (1) and (2) of section 106 do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording.

Thursday, April 19, 2007

Catherine Seville's New Book

Catherine Seville is Vice-Principal and Director of Studies in Law at Newnham College, as well as being the Herchel Smith College Lecturer in Intellectual Property at the Faculty of Law, University of Cambridge. I have previously used with great satisfaction her 1999 book Literary Copyright Reform in Early Victorian England: The Framing of the 1842 Copyright Act. She has recently published a new book, The Internationalisation of Copyright Law: Books, Buccaneers and the Black Flag in the Nineteenth Century. The new work builds on "Literary Copyright Reform in Early Victorian England" and particularly the efforts of Serjeant Talfourd in the later 1830s to enact a reform bill containing both domestic and international elements. Talfourd is best known for his fervent belief in a longer term of copyright, and for having, as we Yanks would say, having had his butt kicked by Lord Macaulay in what is the most famous copyright speech in history. (Macaulay actually addressed the topic on the floor of the House of Commons twice). As Professor Seville points out in both books, Talfourd's interests went well beyond term and into a synthetic solution to the myriad problems of the time. He failed and died a death that all judges must fear: on the bench after giving jury instructions.

Professor Seville is at her best when she integrates domestic and international concerns in the 19th century, especially the triangular relationship among England, Canada, and the U.S., a troubled relationship largely due to the U.S.'s staying outside the Berne Convention and its refusal to grant rights to works of foreign origin until 1891, and then only on compliance with the manufacturing clause. Her book contains copious and rich inquiries into the cast of characters, as well as the economic and legal regimes that played off of and frequently against each other. Hers is the most extensive look yet at this fascinating time. One senses that she sees many lost opportunities from the lack of passage of Talfourd's initiative, as imperfect as it may have been in particulars. (Politics has, after all, been described as the "Art of the Possible," and never "The Art of the Perfect").

Professor Seville's brief, though, is "not simply to describe the evolution of copyright law in the nineteenth century, fascinating though this is. I also argue that what the history discloses can be of help as intellectual property negotiates what is often described as its latest 'crisis' in the shape of the digital revolution," (p. 18). I think not, and not because I ascribe to the view that "digital changes everything." On that last point I lean more toward Judge Easterbrook's "Law of the Horse" skepticism.

My problems are larger. First, I would question there has been an evolution in copyright law in the sense of an organic entity that can be understood as having innate attributes that exist through all time, even as they may change. I view the various statutes as felt responses to the exigencies at hand. I have never heard a legislator talk about his or her job as other than problem solving. Legislators are not theorists, nor for that matter am I. I cannot grasp the field of jurisprudence, as it emanated from Cambridge in the era of H.L.A. Hart, his successor to the chair (and frequent foil), Ronald Dworkin , and the many American deep thinkers of the philosophy of law. This reflects entirely, of course, my own considerable shortcomings and prejudices, but I also have a nagging suspicion that it is not worth the candle to understand it, even as I try: After all, neither Hart nor Dworkin, Raz, or anyone else for that matter claim, as far as I know, that theory has ever directly impacted the law. So, I doubt greatly that a study of the 19th century copyright will reveal anything about how a legislator or court today will address any issue of copyright involving digital uses.

My second reservation about the goal Professor Seville has set for herself is that the subject matter of the book, and many such studies is exceedingly narrow: the book trade. Literary works do not encompass all of copyright law, and the one-sided emphasis on them has led, I believe, to theorizing off of too small a sample. The study of protection for music, paintings, architecture, choreography, and motion pictures is in sorely in need of attention, and until it gets that attention, we cannot say much about "copyright law" and even less about its "evolution."

That said, I am very happy enjoying Professor Seville's outstanding book as an historical effort to understand what happened in the past. Indeed, I think that is all any of us can ultimately do, and thus the above should not be taken in the least bit criticism of her actual research, which is uniformly insightful and thorough. I recommend the book highly to others.

Tuesday, April 17, 2007

Sir, Mr. Justice, Professor Hugh Laddie

Yesterday, after 24 hours of continuous bailing out of water from my flooded basement, I had the chance to talk to Hugh Laddie, also known as Sir Hugh Laddie, Mr. Justice Laddie, and now Professor Laddie. HL (for short) was in NYC briefly, and is one of the most extraordinary figures in IP, indeed in the entire worldwide legal community. After 25 years as an IP barrister (QC), he was appointed a High Court Judge in 1995, hearing cases in the Chancery Division and Patents Court (which includes copyrights). He resigned in 2005, the first High Court judge to do so in 35 years. His resignation caused a furor (in British spelling "furore," signifying a great degree of sturm und drang than the shorter, more base U.S. emotion). What added poignancy to his resignation was that it wasn't a retirement; HL didn't go off to practice fly fishing. Rather, declaring boldly but honestly that he felt isolated on the bench, he expressed a desire to return to private practice, to go back to the "fun and mutual support of working in a team."

In the U.S., this last statement would, without question, be interpreted as code-words for "I need the money and have to finally go out and make a living." But, HL's remarks were genuine, as seen in his decision not to go with a high-paying platform, say an American firm with a London office, and to instead become a consultant with the IP boutique Willoughby & Partners, and to become the chair of the IP program at University College, London. The Willoughby in the firm's name is Tony Willoughby. Mr. Willoughby had been a highly regarded partner in one of London's largest law firms, Herbert Smith, but decided to leave to go with a more intimate but less remunerative environment. HL had once before made a move that caused gasps, and that was in 1995 when he gave up a lucrative private practice to go on the bench for a pittance. He thought it the right thing to do then, and his move off the bench was the right thing for him too.

HL has been a brilliant iconoclast his entire career. In 1980, he, and two like-minded co-authors, Peter Prescott and Mary Vitoria, took on the long-reigning Copinger and Skone James treatise in their "The Modern View of Copyright and Designs." The book went in to a second edition in 1995, a third in 2000 (with two new co-authors Adrian Speck and Lindsay Lane), and rumor has it there may be a 4th edition. Their book was adventurous and innovative and didn't shy away from criticizing sacred cows. Paul Torremans, reviewing the third edition in EIPR in 2001, described some of the chapters as revolutionary. He referred specifically to their pointing out problems with the way that EU Directives have been implemented in the UK. HL put his views into practice on the bench in what may be his most controversial opinion, a trademark case, involving the Arsenal football club. As described years ago by Marty Schwimmer:

A vendor sold scarves wtih the Arsenal football club name and indicia. The issue turns on whether use of a team name in such way is trademark use in that sense that the team name designates the origin of the good, or is the team name and logo merely decorative use in the sense that the wearer of the scarf is merely communicating allegiance to that team. It's my understanding that Laddie himself tends toward the latter view ... . Laddie referred the case to the ECJ. Now that the ECJ has ruled that of course it's trademark use, Laddie has refused to follow its decision, apparently relying on the fact that the ECJ made fresh findings of fact, something it had no power to do.
The court of appeals reversed him. Reversal by a higher court doesn't of course mean HL was wrong, only that he had the courage to point out the dangerous usurpation by the EU, an "Emperor Has No Clothes" statement that must have embarrassed the court of appeals. May we all emulate him. Nor did his opinion stem from antipathy toward EU rights. Quite the contrary, in his earlier, 2001 Burrell Competition Lecture, "National I.P. Rights: A Moribund anachronism in a Federal Europe," 23 E.I.P.R. 402 (2001), he concludes "Now that we are in a single market, our domestic economy is Community-wide. So should our I.P. rights be. ... I can only hope that the Community trade mark will prove such a success that users will vote with their feet and will use it to the exclusion of national rights."

In another speech, the 1995 Stephen Stewart lecture, "Copyright, Over-Strength, Over-Regulated, Over-Rated," 18 E.I.PR. 253 (1996), given the year he joined the bench, he bravely attacked term extension, and even more bravely perhaps criticized the UK's fair dealing provisions, commenting favorably on the broader U.S. fair use, tying the restrictiveness of the U.K. fair dealing regime to a tendency toward more expansive rights at the expense of the public, what he called "a complacent certainty that wider copyright protection is morally and economically justified." He then asked rhetorically, "But is it?"

His copyright opinions as a judge are legendary, and too numerous to list (although very worth reading carefully as I have and repeatedly do), but what one finds throughout is a refusal to be taken in by copyright's equivalent of stupid little pet tricks: efforts to encapsulate complicated, Black Swan issues into generic tests so beloved by those who love to give the appearance of thought but who are deathly afraid of what that actually means in practice. I am convinced that this is what is meant when one is described as an iconoclast: an iconoclast is one who thinks and thinks for him or herself. My treasured friend Judge Pierre Leval is an iconoclast under this definition: his approach is to disassemble everything and put it back together again in a way he is satisfied with. Sometimes the reassembled form looks like it did before it was taken apart, sometimes it doesn't. Judge Leval goes through this ritual because it is the way his mind works, it is how he understands things. Lesser lights would simply look at what other judges had said on the matter. Judge Posner goes further and refuses to even acknowledge the legtimacy of boxes, much less to think within them. And so it is with all original thinkers; they think and they originally, that is, for themselves free of the baggage of others.

HL is an iconoclast and a particularly brave one, and if I have any advice to give to young lawyers it is to ignore what everyone else says as an initial matter and decide what works for you. You can then check your conclusions against others and always should: the worst intellectual sin is hubris: we are always our own greatest impediment to intellectual and moral development. My late mother, aleha hashalom, impressed upon me the religious obligation to learn every day, but we can't learn unless we are willing to strip away what other people say they have learned; it has to be our own learning to be genuine: one can inherit many things, even treatises, but knowledge and wisdom have to be acquired though your own life.

HL has lived his own life and is truly a man for all seasons, a Greek among the Romans. I regret deeply he is not on this side of the pond to stiffen our backs. I know I would be a far better person if he was.

Troll Dolls and Restoration

Judge Jon O. Newman of the Second Circuit is one of our national treasures. He has devoted his long, illustrious career to public service, beginning as a law clerk to Chief Justice Earl Warren, stints as a U.S. Senate aide, U.S. Attorney for the District of Connecticut, U.S. district judge, and chief judge of the court of appeals. His opinions are always thoughtful, restrained, and scholarly. We are doubly blessed because Judge Newman has been the author of dozens and dozens of landmark copyright opinions. We now have a new one, Troll Company v. Uneeda Doll Company, 2007 WL 1097082 (2d Cir. April 13, 2007).

The case is one of first impression in the Second Circuit, and one of the few on Section 104A. (See also Dam Things from Denmark v. Russ Berrie & Co., 290 F.3d 554 (2d Cir. 2002)). The works at issue are "those dam" troll dolls, "ugly but somehow endearing ... with oversized heads, big grins, pot bellies, and frizzy hair." The dolls have Denmark as a country of origin. They fell into the public domain for failure to affix notice; they were restored by Section 104A in the 1994 GATT implementing legislation.

Two issues were presented: (1) was plaintiff Troll Co. the owner of the restored copyright; (2) was defendant Uneeda a "reliance party." The questions were answered (prelimarily), respectively, yes and no. The first question turned on a number of factors, principal of which was the choice of law provision in Section 104A(b): rather than determining ownership of restored copyrights by reference to U.S. copyright law, such rights are governed by the law of the country of origin. This means that courts will have to examine a diversity of sources, but it is the only appropriate way to deal with the issue: the copyrights that were restored were created by foreign law. In 1994, we considered a proposal to apply U.S. law, but rejected it out of hand. Examining Danish copyright law, Judge Newman's opinion affirmed the preliminary injunction holding it likely that under Danish law, plaintiff is likely to be deemed the author.

The reliance party issue is one that we very deliberately considered in drafting Section 104A: it was the key element in concerns over a Takings Clause violation. One aspect of reliance party status was critical in Judge Newman's opinion: the requirement the reliance party has engaged in "continuing acts." The act deliberately refrains from providing a definition of "continuing" due to the fact-specific nature of such inquiries. Instead, in Congressman Hughes's floor statement, he analogizes to the continuing infringement doctrine, a doctrine well understood by courts, since they developed it. Judge Newman cites this statement and comes to the correct conclusion: defendant, who ceased exploiting the work for many years was not a reliance party.

Judge Newman's opinion points out one reason why Justice Scalia's screed against resort to legislative history is so profoundly misguided. Congress, aware that efforts to define a concept in the statute might prove under or over inclusive of the facts in real disputes, chose to refer courts, in legislative history, to a doctrine they had themselves developed and applied . Given that there was no Judiciary Committee report on the bill due to its fast-track nature, the legislative history was a floor statement by the subcommittee chairman, the person with the most familiarity with the provision, indeed the person on whose behalf the provision was drafted and inserted. A dispute arose, the court found the statute could admit of either argument advanced by defendant, and so it resorted to the floor statement, which supplied the answer.

Bravo to Judge Newman and to Craig Mende of Fross Zelnick of NYC, attorney for plaintiff.

Friday, April 13, 2007

A Blazing Waste?

A recent suit filed by Gary Friedrich, the creator of the comic book character Ghost Rider, alter ego of Johnny Blaze raises a number of issues, one of them whether there exists a cause of action for "waste" of a copyright. Friedrich recently filed suit in Illinois against Marvel, Sony Pictures Entertainment and a few other entities over Sony's movie "Ghost Rider." There are copyright claims based on reversion rights, which I don't understand from the news reports. The waste claim is, I think, based on the heavy marketing of the film through merchandizing and other ancillary products.

The only proponent I know of for waste as a possible cause of action for authorized use of a copyrighted work is the later Professor Mel Nimmer. I have never understood the argument. Co-owners of copyright do not owe each other a duty not to “waste” the copyright. “Waste” is a real property concept inapplicable to copyright. Unlike land, where one can see and test the property's continued utility, one cannot distinguish between a copyright co-owner's efforts to vigorously exploit the work and “over exploiting” which theoretically might lead to depletion of a copyright's economic value.

This is no source of law for a duty not to waste a copyright. Federal law does not apply since the Copyright Act does not contain any such concept, nor, post-Erie, is there any relevant federal common law. This leaves state law. However, a state law (statutory or common law) prohibiting a copyright owner from exercising its federally granted rights runs afoul of field preemption. Moreover, as a practical matter, how would a finder of fact determine where the line is between normal aggressive marketing and abnormal depletion of an asset's value?

Wednesday, April 11, 2007


Carolyn Kinder International, LLC, 2007 WL 1046911 (W.D. Tex. April 5, 2007), may represent both of these problems. Pursuant to a written agreement, the parties in the dispute agreed “to maintain any designs being considered as Designs and accepted in a timely manner, confidential except for the inclusion of Home Depot in deciding upon the selection of the Designs for Products and Families thereof.” There was a falling out, and litigation ensued. One of the claims was for “trade secret misappropriation.”

Plaintiff alleged:

Specifically, Uttermost and/or Mac Cooper, with the assistance of CKI and/or Carolyn Kinder, stole the designs for lighting products that Kinder and/or CKI had prepared for Spectrum. Plaintiff further states that every design contained in the excel spreadsheet titled ‘Copy of Spectrum all-collections composite 0223 06′ which Uttermost stole and produced only as recently as December 8, 2006 are Spectrum's trade secrets that Uttermost misappropriated.” Spectrum now asserts that the evidence shows that Uttermost misappropriated trade secrets including confidential product designs, information about Spectrum's relationship with CKI and Home Depot, and Spectrum's sales and contemplated business activities.

Defendant argued preemption, which plaintiff denied:

Spectrum argues that the Copyright Act does not preempt its trade secret misappropriation claims related to its product designs. In contrast, Spectrum argues, numerous cases have held that the Copyright Act does not preempt a claim for trade secret misappropriation whether or not the trade secret itself is copyrightable.

Spectrum argues that copyright law does not preempt trade-secret law because, among other reasons, trade secret protection extends to subject matter that is not copyrightable, and provides protection in a manner that does not clash with the objectives of copyright laws. In addition, Spectrum contends that the “extra element” test is satisfied because proof of trade secret misappropriation has two extra elements-(1) proof of the confidential or secret nature of the information and (2) violation of a confidential or contractual relationship, acquisition through improper means, or use after notice of an improper disclosure.

The court held in a passage that is fairly circular:

With regard to the first prong, it appears undisputed that the product designs come within the subject matter of copyright. The preemption issue thus turns on whether the rights are determined to be equivalent. The court evaluates the equivalency of rights under the “extra element” test. Under this test, if the act or acts of the defendant about which the plaintiff complains would violate both misappropriation law and copyright law, then the state right is deemed “equivalent to copyright” and is preempted. If, however, one or more qualitatively different elements are required to constitute the state-created cause of action being asserted, then the right granted under state law does not lie “within the general scope of copyright” and there is no preemption. The Court agrees with Spectrum that its claim for trade secret misappropriation based on the misappropriation of its product designs is not preempted.

The holding seems correct as to the information, and perhaps as to product designs created by plaintiff that had not been disclosed, but as to the designs that defendant created for plaintiff, and which were embodied in publicly displayed lamps, any claim in the outward design is a copyright claim in disguise and preempted (to say nothing of not being a valid trade secret claim either).

Tuesday, April 10, 2007

Those aren't Graham Crackers

What happens after a jury awards plaintiff $19 million and the trial judge grants defendants' motion for a new trial? The answer is, naturally, a grant of summary judgment to defendant. This unusual scenario played out in the ongoing saga of insurance company William A. Graham against one of its former employees, Thomas P. Haughey, and his current employer, USI Holdings Corporation. The most recent opinion may be found at 2007 WL 1008403 (E.D. Pa. March 29, 2007). Earlier significant opinions may be found at 2006 WL 3386672 (E.D. Pa. Nov. 21, 2006), 2006 WL 1704539 (E.D. Pa. June 14, 2006), and 430 F. Supp.2d 458 (E.D. Pa. 2006). All are by Judge Harvey Bartle III, and contain meaty discussions of the law and detailed reviews of the facts. The opinions may also be downloaded for free on the Eastern District of Pennsylvania's website.

The most recent opinion is limited to statute of limitations issues. Due to its wiping out the jury award based on the jury's awarding damages beyond the three year limitations period set forth in Section 507, a new trial on damages is necessary. Plaintiff is reported to plan an appeal. An initial question is why the jury was permitted to award damages beyond the three year period if the court was willing to grant summary judgment to defendant on the issue. No satisfactory answer was provided.

Despite recent case law in the Supreme Court and by Judge Lewis Kaplan of the SDNY in his Auscape opinion emphasizing violation accrual rather than discovery accrual, the William Graham opinion proceeds as if there was no issue. That said, Judge Bartell's discussion of discovery accrual bears careful examination. First, he notes that assertion of a statute of limitationd bar is an affirmative defense (pp. 7-8), but adds that when plaintiff asserts continuing infringement and claims it was justifiably unaware of earlier acts of infringement, the burden shifts to plaintiff to show it exercised reasonable diligence that it could not have earlier discovered those acts. (p.8). If by burden, the court was referring to an evidentiary burden, he may be correct if defendant has first met its evidentiary burden, but if by burden he meant burden of persuasion, I think defendant always bears the burden of establishing its affirmative defense.

The part of the opinion that led to vacating the jury award dealt with the state of plaintiff's knowledge of infringement, i.e., whether it was reasonable for plaintiff not to have brought suit earlier. This is a highly fact-specific inquiry, and it must be pointed out that Judge Bartell engaged in a very thorough review of the evidence both in this opinion and in the predecessor November 21 opinion. Of interest to the rest of us are his comments about a duty to "investigate indications that infringement is in the offing, even if, in the course of the investigation, it learns that infringement has not yet occurred." (p. 22).

Friday, April 06, 2007

Claim Preclusion and State Courts

Res Judicata is a trap that inexperienced litigants can fall into. Res judicata bars a party who had the opportunity to press its claims from later bringing another action involving the same occurrences, even though the causes of action are different. The term res judicata is generally used in two different ways, issue preclusion and claim preclusion. In Gener-Villar v. Adcom Group, Inc. , 417 F.3d 201 203 (3d Cir. 2005), the First Circuit explained:

The first doctrine (known variously as claim preclusion, merger and bar doctrine, or simply res judicata) “generally binds parties from litigating or relitigating any [claim] that was or could have been litigated in a prior adjudication and prevents claim splitting.” … The second doctrine (known as issue preclusion or collateral estoppel) forecloses relitigation in a subsequent action of a fact essential for rendering a judgment in a prior action between the same parties even when different causes of action are involved … .

In the case of copyright infringement, claim preclusion will bar later, related litigation if the first suit was brought in federal court. But what if the first suit was brought in state court? There can be no claim preclusion because claims arising under the Copyright Act can never be brought in state court due to the original and exclusive jurisdiction of the federal courts. This principle was affirmed this week by the Third Circuit in Walzer v. Muriel, Siebert & Co., Inc., 2007 WL 990265 (3d Cir. April 4, 2007), where the court, per curiam wrote:

Nor is claim preclusion a bar to Walzer's federal claims in this action. Under New York law, a prior judgment between the parties generally bars any subsequent cause of action arising out of the same occurrence or transaction. See O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 429 N.E.2d 1158 (1981). However, the prior judgment will not act as res judicata if the current claim could not have been asserted in the previous action. Yoon v. Fordham Univ. Faculty and Admin. Ret. Plan, 236 F.3d 196, 206 (2d Cir.2001) (J. Kaplan concurring). If the current claim is in the exclusive jurisdiction of the federal courts, then the New York state court would not have had jurisdiction to hear it and a judgment will not act as res judicata. See Cullen v. Margiotta, 811 F.2d 698, 732 (2d Cir.1987) (holding RICO claim was not barred by prior New York judgment), overruled on other grounds, Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143 (1987); see also RX Data Corp. v. Dept. of Social Servs., 684 F.2d 192, 198 (2d Cir.1982)(finding that copyright infringement claim was not barred by previous litigation in New York state courts because copyright infringement claims are within the exclusive jurisdiction of the federal courts).

Thursday, April 05, 2007

eBay and Personal Jurisdiction

One might think that in cases of copyright infringement, where the federal courts are granted original and exclusive jurisdiction, issues of personal jurisdiction would be a matter of federal law too. Personal jurisdiction is, though, instead intertwined with service of process, which is, in turn, determined by state law.

While Fed. R. Civ. P. 4(k)(1)(D) states that service of a summons is effective to establish personal jurisdiction when authorized by a federal statute, the Copyright Act (like many federal statutes) does not specify the manner of service of process. This lack of specification has been construed as precluding nationwide service of process. As a result, Fed. R. Civ. P. 4(e)(1) requires that service must be effected in any federal district “pursuant to the law of the state in which the district is located, or in which service is effected, for the service of a summons upon the defendant in an action brought in the courts of general jurisdiction of the State.

Service of process by itself does not confer personal jurisdiction; instead, personal jurisdiction is determined by the law of the state in which service is effectuated, tempered, however, by federal constitutional due process concerns. That state will typically be plaintiff’’s forum state with service of process being made under a long-arm statute. For those who do not regularly transact business in the forum state, personal jurisdiction is usually asserted under the purposeful availment prong of specific jurisdiction.

Courts which have considered whether commercial transactions over eBay and other internet auction sites are sufficient to confer specific jurisdiction over the seller have noted that the seller had no control over who would ultimately be the highest bidder, and determined that the seller did not purposefully avail himself of the privilege of doing business in the forum state. A recent example is Great Notions, Inc. v. Thomas Danyeur, 2007 WL 944407 (N.D.Tex.) in which a pro se defendant successfully moved to have a complaint of copyright infringement dismissed (without prejudice) due to lack of subject matter jurisdiction.

According to the complaint, the plaintiff Great Notions, Inc. (“Great Notions”) owns U .S. copyrights to thousands of embroidery designs. Danyeur allegedly counterfeited and sold Great Notions' designs through his online auction account with and other interactive websites. Great Notions argued that the transactions over eBay were sufficient to establish jurisdiction. Siding with numerous other courts involving eBay transactions, the Court held that the typical online auction process is insufficient to confer specific jurisdiction over the defendant.

Sunday, April 01, 2007

Canadian politicians and infringement

In the U.S., we recently had a flash in the pan controversy over Speaker of the House Nancy Pelosi's use of C-Span clips on her website. In Canada, a similar controversy has erupted over the unauthorized use of a photograph by a Member of Parliament, but there is a twist: the photograph was distributed with a Creative Commons license. When no payment was made, the photographer complained. The MP promptly apologized and offered to pay up. The photographer, however, despite using the Creative Commons license, turned down the money because he doesn't approve of the MP's politics. I hadn't thought that was one of the license options. Here's the story, from Canada's Kamloops website:

Staff reporter

Apr 01 2007

Claims his copyrighted pic was on MP’s mailout material

Hobby photographer David Wise said he may sue Betty Hinton’s office over an alleged copyright infringement of a photograph the Conservative MP used in her February newsletter.

“The licensing information was right there, right on the photo. So that was bypassed by a member of Ms. Hinton’s office,” Wise told KTW.

“Now we are into the stage where we need to work out compensation for this. And that’s where it’s stalled right now. We’re having a bit of a difference in opinion in what constitutes compensation for this infringement.”

Wise said he is asking Hinton’s office for up to $2,000 to cover the costs of the photograph and “additional damages,” such as compensation for incurred legal fees.

Wise said Hinton has called him to apologize and to offer him the money for the photograph her office would otherwise have paid.

Wise, however, declined the offer because he wouldn’t have allowed the MP to use his photograph in the first place because he disagrees with “her campaign and political viewpoint.”

Wise said he would also have thought twice about letting the Liberals or New Democrats use his photograph for political purposes.

“I do like to choose my clients,” he said.

The newsletter in question, compiled by one of Hinton’s Ottawa staff members, features a photograph of Hinton, flanked by photographs of the House of Parliament in Ottawa on her left and Wise’s photograph of Kamloops on her right.

The staffer, according to Wise, had allegedly downloaded the image from, a popular photo-sharing website.
Photographs on this site are copyright-protected under a creative-commons license, which Wise said will be accepted in a court of law.

A copyright notice to that effect appears at the bottom of the photograph.
Hinton’s staffer has also failed to credit Wise in the newsletter.

Wise said he still would have been upset had his photo credit appeared with the picture.
Wise’s photographs have found several takers, including Harvard University’s mathematics department and Venture Kamloops.

He has also sold several of his photographs to Kamloops Coun. Hinton could not be reached for comment on Thursday and Friday with her office saying the MP could not be reached Thursday and would be travelling to Kamloops from Ottawa on Friday.


No blog on Tuesday or Wednesday due to Passover; chag sameach.