I, Robot: The U.S. Copyright Office Publishes Guidance on Registration of Works Generated by AI

July 1, 2023 · by ·

On March 16, 2023, the U.S. Copyright Office (USCO) published its Copyright Registration Guidance: Works Containing Material Generated by Artificial Intelligence(the Guidance).

Artificial Intelligence (AI) is now “capable of producing expressive material”. The USCO chose its words carefully: AI “produces” works, it does not “create” them. However, these works are “expressive materials”.

AI is now among us, but not in the shape imagined by Isaac Asimov, androids, such as Robbie, who is taking care of a little girl. AI is on our desktop and in our pockets, an app installed on our smart phone.

AI technology can be used to produce a work by first obtaining a large data set of preexisting works, using this data set to “train” and then “use inferences from that training to generate new content.” Such content can be a text, an image, or an audio. The USCO mentioned in the Guidance that it would later this year publish a notice of inquiry about how law should address the use of works protected by copyright in the data set.

The USCO mentioned two recent cases raising the issues of whether a work created using an AI program can be protected by copyright: “Entrance to Paradise”, pictural work, and Zarya of the Dawn, a comic book which images were created by AI while a human authored the text. Are the works thus produced protectable by copyright?

An Entrance to Paradise

Dr. Stephen Thaler created A Recent Entrance to Paradise, the image of an abandoned train tracks framed by wisterias, using an AI program it called the “Creativity Machine” that he had created and programmed.

Dr. Thaler sought to register its copyright in November 2018 but the USCO denied registration in August 2019, because the Office has a “Human Authorship Requirement” policy. Dr. Thaler filed two requests for reconsideration which the USCO both denied.  Dr. Thaler filed a suit against the USCO in June 2022, claiming that “the denial creates a novel requirement for copyright registration that is contrary to the plain language of the Copyright Act…, contrary to the statutory purpose of the Act, and contrary to the Constitutional mandate to promote the progress of science.” The denials are subject to judicial review under the Administrative Procedure Act, 5 U.S.C. § 704.

On January 10, 2023, Dr. Thaler filed a motion for summary judgment, arguing that “the plain language of the Copyright Act… does not restrict copyright to human-made works, nor does any case law.” The work is fixed, visual artwork. As explained in 1991 by the Supreme Court of the U.S. (SCOTUS) in Feist Publications, Inc. v. Rural Telephone Service Company “To qualify for copyright protection, a work must be original to the author”, which means that the work must be  independently created by the author and must  possess at least some minimal degree of creativity.

Dr. Thaler also argued that “courts have referred to creative activity in human-centric terms, based on the fact that creativity has traditionally been human-centric and romanticized.”

Alternatively, Dr. Thaler argued that he owns the copyright in “A Recent Entrance to Paradise” because the work for hire ownership originally vested in him because he invented and owns the Creativity Machine and its outputs automatically vest in him.

Zarya of the Dawn

Kristina Kashtanova, created a comic book, Zarya of the Dawn, using an AI program to illustrate it. She sought to register its copyright and was successful at first, but the USCO then canceled the certificate and issued a new one protecting only the text of the comic book and the selection, coordination, and arrangement of its written and visual elements. However, the images created  by AI were not protectable because they “are not the product of human authorship.” The letter of the USCO cited Burrow-Giles Lithographic Co. v. Sarony, a 1884 case where SCOTUS explained that photographs, still a technological novelty at the time, were protected by copyright because they were “representatives of original intellectual conceptions of the author.” SCOTUS defined authors in Burrow-Giles as “he to whom anything owes its origin; originator; maker; one who completes a work of science or literature.” But the Court explained that if photography was a “merely mechanical” process …with no place for novelty, invention or originality” for the photographer, then the photographs could not be protected by copyright.

The USCO explained in its letter about Zarya of the Dawn that even if Ms. Kashtanova claimed to have “guided” the structure and content of the comic images, it was the AI program, not her, “that originated the “traditional elements of authorship” in the images.”

Public guidance on the registration of works containing AI

These two cases show that works can be entirely protected by AI or only partially. The purpose of the Guidance is to provide the public (and its attorneys!) if seeking to register works containing content generated (not created!) by AI.

In the Guidance, the USCO explained that it evaluated whether works containing human authorship combined by uncopyrightable material generated by or with assistance of technology by assessing if technology was an “assisting instrument” or if the work was conceived by it. In the case of AI, the USCO explained that it “will consider whether the AIA contributions containing AI-generated are the result of “mechanical reproduction “or instead an author’s “own original mental conception, to which [the author] gave visible form”, and that this would assessed case by case.

If the AI receives solely a prompt from a human being, the work cannot be protected by copyright, as it is the human being does not have creative control over how the AI system interprets the prompt and generate the work, and that the prompts are more like instructions to a commissioned artist.

If a work contains AI-generated material and sufficient human authorship, it can be protected by copyright, for instance, if a human being selects and arranges AI-generated materials in a way original enough to be protectable.

Public guidance on the registration of works containing AI

Does the Copyright Act indeed require human authorship?

The USCO cited Burrow-Giles in its Guidance to support its view that authors must be human and also cited the Ninth Circuit Urantia Found. v. Kristen Maahera case, where the court held that a book, which both parties believed was “authored by celestial beings and transcribed, compiled and collected by mere mortals.” The defendant in this copyright infringement suit claimed that the book was not protected by copyright, because it was not authored by a human being  and thus not a “work of authorship” within the meaning of the Copyright Act.

However, the Ninth Circuit noted that “[t]he copyright laws, of course, do not expressly require “human” authorship, and considerable controversy has arisen in recent years over the copyrightability of computer-generated works”. In this case, the Court noted that the Copyright Act was not intended to protect “creations of divine beings” and that “in this case some element of human creativity must have occurred in order for the [b]ook to be copyrightable.”

If the Copyright Act does not require human authorship, but refuses to accept that “divine beings” can be the author, and case law states that a monkey, human beings’ closest cousin, cannot be an author within the meaning of the Copyright Act (Naruto v. Slater, a case from the United States District Court, Northern District of California previously discussed in the TTL Newsletter), will robots ever be able to claim authorship of a work? Such works are already winning prizes at art fairs, such as Théâtre D’opéra Spatial, created using AI, which won first prize at the Colorado State Fair’s digital arts competition.

If works created by AI cannot be protected by copyright, the incentive to develop such technology may be lacking. We are likely to see more and more works crated by humans using elements created by AI, and the border between elements crated by human beings or by machines blurring more and more.

The image of  of “Little Fire Hydrant”  is courtesy of Flickr user Trọng Nguyễn and is in the public domain.
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Filed Under: Copyright, Copyright Office, Uncategorized · Tagged: , ,

When Faux-Fur Birkin Bags Blur a Famous Mark in the Metaverse

July 1, 2023 · by ·

A year ago, this blog reported about the Hermès v. Rothschild case, a trademark infringement suit filed by French fashion house Hermès against artist Mason Rothschild.

Rothschild had created in December 2021 the MetaBirkins series, a series of 100 non-fungible tokens (NFTs) featuring digital images of blurry Birkin Hermès bags covered in fake fur. The NFTs, which are retaining digital records of ownership of the images on a blockchain, sold “for prices comparable to real-world Birkin handbags” as noted by Judge Jed S. Rakoff, from the U.S. District Court for the Southern District of New York (SDNY), in his May 18, 2022 Order, denying Rothschild’s motion to dismiss.

On December 30, 2022, Judge Rakoff denied the parties’ cross motions for summary judgment, with opinion to follow.

Plaintiff and Defendant had  both asked the Court to answer two questions:

  • Should the MetaBirkins be evaluated using the two-part Rogers v. Grimaldi test used when evaluating trademark infringement in artistic works or the Gruner + Jahr test used for general trademark infringement?
  • Whichever test is applied, do the MetaBirkins dilute the Hermès’ BIRKIN trademarks?

Judge Rakoff published his opinion on February 2, 2023. He reaffirmed, as he did in his May 18,  2022 Order, that the trademark infringement claim should be assessed under the Rogers v. Grimaldi test. However, as genuine issues of material fact remained, the second question had to be answered by a jury, who had to decide whether Rothschild’s decision to focus the series on the Birkin bag was made for artistic expression purposes or merely to use the BIRKIN trademark.

 

The Rogers test

Under the Rogers test, there is no trademark infringement if defendant uses a mark as the title of an expressive work, or as part of the expressive work if use of the trademark (1) does not have any artistic relevance whatsoever to the underlying work and (2) is not explicitly misleading.

For Judge Rakoff, the Rogers test must be used in this case because:

“Rothschild’s use of Hermès’ marks did not function primarily as a source identifier that would mislead consumers into thinking that Hermès originated or otherwise endorsed the MetaBirkins collection, but rather as part of an artistically expressive project.”

Judge Rakoff reasoned that the title “MetaBirkins” refered to both the NFT and the digital images with which it is associated and that  “MetaBirkins” did not, as argued by Hermès, refer only to the NFTs “separate and apart from the digital images” of the faux-fur bags. The NFTs are artistic expression.

Judge Rakoff noted further that Rothschild “viewed the project as a vehicle to comment on the Birkin bag’s influence on modern society”, stating in an interview that the series was “an experiment to see if [he] could create that same kind of illusion that [the Birkin bag] has in real life as a digital commodity”, and that he had decided to cover the bag in fake fur “to introduce “a little bit of irony” to the efforts of some fashion companies to “go fur-free.” Indeed , the artist wrote that the series“ inspired by the acceleration of fashion’s “fur free” initiatives and embrace of alternative textiles.”

While an artistic expression, the First Amendment could not be a defense. Judge Rakoff quoted the  Second Circuit Twin Peaks Prods., Inc. v. Publications 1993 case which held that even if a trademark’s use bears “some artistic relevance” to an underlying artistic work, such use is not protected by the First Amendment if it “explicitly misleads as to the source or the content of the work.”

The Second Circuit noted in Twin Peaks that ”the finding of likelihood of confusion must be particularly compelling to outweigh the First Amendment interest recognized in Rogers” and that the Polaroid factors must be applied to determine whether or not there is likelihood of confusion and thus trademark infringement.

Judge Rakoff explained that “the most important difference between the Rogers consumer confusion inquiry and the classic consumer confusion test is that consumer confusion under Rogers must be clear and unambiguous to override the weighty First Amendment interests at stake.”

The Rogers test was indeed used by a federal jury to determine whether or not the MetaBirkins infringed Hermès’ trademarks, but, following a six-day trial, a jury found on February 14, 2023,  that Rothschild was liable on the claims of trademark infringement, trademark dilution, and cybersquatting, that the First Amendment was not a defense, and awarded Hermès $133,000 in damages.

Trademark dilution and blurring

Hermès had also claimed trademark dilution and blurring, which refers to use of a famous trademark in a way which dilutes such famous mark by blurring or tarnishment.  A famous mark is defined by the Trademark Dilution Revision Act (TDRA) as widely recognized by the general U.S. consuming public as a designation of source of the mark owner’s goods or services.

The jury found that the BIRKIN mark was blurred by Rothschild’s by blurring the  distinctiveness of the famous BIRKIN mark and diminished its capacity to identify and distinguish Hermès’ goods and services, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.

Cybersquatting

The jury also held in favor of Hermès, which had claimed that the <metabirkins.com> domain name was cybersquatting. To prevail on a cybersquatting claim, Hermès had to prove (1) that the BIRKIN mark was distinctive at the time <metabirkins.com> was registered; (2) that the <metabirkins.com> domain name is  identical to, or confusingly similar to, Hermes’ s BIRKIN mark; and (3) that Rothschild had a bad faith intent to profit from the BIRKIN mark.

The court’s instructions to the jury explained that when determining whether Rothschild acted in bad faith on this claim, the jury had to consider whether the artist used the domain name in connection with the offering of any goods or products and whether he “intended to divert consumers from the mark owner’s online location to a site that could harm the goodwill represented.”

Trademarks, symbols and humor

While the primary function of a  trademark is to indicate the source or a product or service, some trademarks have become symbol and are used by consumers to provide a desired cachet, one of luxury and exclusivity in the case of the BIRKIN trademark.

The Birkin bag created by Hermès was named after actress and singer Jane Birkin. While expensive, they sell well: as noted by Judge Rakoff in its February 2, 2023, opinion, since 1986, Hermès has sold over $1 billion worth of Birkin handbags in the United States, $100 million dollars’ worth in the past ten years. Both parties recognized that it is a “symbol of wealth and exclusivity.”

The MetaBirkins sold in total over $1.1 million through June 2022 and it is likely that at least some bought them as symbol of their wealth, taste, and sense of irony. However, unlike in the case of Jack Daniel’s Properties, Inc. v. VIP Products LLC, a case about dog chew toys resembling Jack Daniels bottles, the use of the BIRKIN mark was not humorous.

 

This post was first published on the TTLF Newsletter on Transatlantic Antitrust and IPR Developments,  Stanford-Vienna Transatlantic Technology Law Forum.
The image of  of “Hermes Carriage Auto Body”  is courtesy of Flickr user Christopher Schmidt and is used, with no modifications, under a CC BY 2.0 license.

 

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Filed Under: Trademark, TTLF Newsletter · Tagged: , ,

Not For Trademark : Hermès Claims MetaBirkin NFTs Are Infringing

May 13, 2022 · by ·

On January 14, 2022, Hermès filed a trademark infringement suit against artist Mason Rothschild, claiming that by selling “MetaBirkins” NFTs, Rothschild infringes and dilutes the HERMÈS trademark. Defendant filed a motion to dismiss on February 9, claiming that the First Amendment gives him the right to sell the NFTs. The case is Hermès International, et al. v. Mason Rothschild, 1:22-cv-00384 (SDNY).

The facts

NFTs (non-fungible tokens) are unique digital assets. Their authenticity and uniqueness are guaranteed by a blockchain from their creation through transfer of ownership, as the blockchain also record the transfers. As such, NFTs are suited to the art market, and NFTs are popular and sometime expensive. A NFT created by digital artist Beeple sold in auction in March 2021 for 69 million USD.

Hermès is a luxury house having its headquarters in Paris. One of its most famous sacs is the Birkin, named after British actress and singer Jane Birkin. The Birkin bag is a bigger version of the Kelly Bag, itself named after Grace Kelly, the American actress who became Princess of Monaco.

Mason Rothschild is an artist living in California. Last May, he created a “Baby Birkin” NFT, the digital image of a 40-week-old fetus gestating inside a Hermès Birkin bag. The NFT originally sold for 23,000 USD and was resold for 47,000 USD. Rothschild then created the MetaBirkins.com website, which features and sells “a collection of 100 unique NFTs created with faux fur in a range contemporary color and graphic executions.” The complaint alleges that Mason Rothschild “first began advertising the METABIRKINS NFTS under The METABIRKINS trademarks on December 2, 2021, at Art Basel Miami.

A BIRKIN bag may be considered by some as a work of art, at least as a highly collectible item: a bag made from crocodile skin sold at auction in 2016 for HKD 2,320,000 (more or less USD 300,000.00). MetaBirkins are valuable as well: one sold in February 2022 for 3.5 Ether, that is, more or less USD 10,500.

The C&D letter

On December 16, 2022, Hermès International sent a Cease-and-Desist letter (C&D) to Mason Rothschild and carbon copied the OpenSea platform, on which the NFTs were sold. Hermès asked the artist to cease using commercially the Hermès trademarks. Indeed, Hermès owns, among others, U.S. trademark registrations for HERMÈS, BIRKIN, and for the configuration of the Birkin handbag.

The C&D claimed that Mason Rothschild was identifying the NFTs he is selling by using the BIRKIN trademark and that he “employ(s) the HERMÈS trademark to advertise and promote the sale of the Birkin NFTs…”. Hermès also claimed that this use of the marks may dilute them.

Disclaimer is not enough

After receiving the C&D, as alleged in the complaint, the MetaBirkins.com website was updated to add a disclaimer stating:  “We are not affiliated, associated, authorized, endorsed, or in any way officially connected with HERMES, or any of its subsidiaries or affiliates. The official HERMES website can be found at https://www.hermes.com.” The complaint alleges that the disclaimer “unnecessarily” linked to the official Hermes website and “capitalizes the HERMÈS mark” and that “Defendant’s uses of the HERMÈS  Mark in conjunction with his uses of the BIRKIN Mark, and the display of the METABIRKINS bags, serves only to create a confusing impression among consumers as to the Hermès’ sponsorship of the METABIRKINS NFTs or the METABIRKINS website.”

The complaint

OpenSea took the NFTs down. Mason Rothschild then sold the MetaBirkins on another platforms. As Mason Rothschild had not taken the MetaBirkins down, Hermès filed a trademark infringement suit on January 14, 2022, in the federal court of the  Southern District of New York. The complaint includes claims of false designation of origin, trademark dilution, and cybersquatting (claiming that <metabirkins.com> is infringing and confusingly similar to the BIRKIN mark).

In its complaint, Hermès described Defendant as “a digital speculator who is seeking to get rich quick by appropriating the brand METABIRKINS for use in creating, marketing, selling and facilitating the exchange of [NFTs]”.

Hermès claimed that the name MetaBirkin is formed by merely adding “the generic prefix “meta” to the famous trademark Birkin.” Hermès has not registered METABIRKIN as a trademark.  Other companies have filed trademark registration applications for trademarks protecting their marks in the meta universe, such as McDonald’s who filed in February 2022 several meta-related trademarks (for instance, MCDONALD’s in Class 43 for “Operating a virtual restaurant featuring actual and virtual goods, operating a virtual restaurant online featuring home delivery”).

The motion to dismiss

On February 9, 2022, Mason Rothschild filed a motion to dismiss, arguing that the trademark infringement claim must be dismissed under Rogers v. Grimaldi. In this case, the Second Circuit held that the Lanham Act must be broadly interpreted in cases when the allegedly infringing product is an artistic expression. Under Rogers, the Lanham Act:

“should be construed to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression. In the context of allegedly misleading titles using a celebrity’s name, that balance will normally not support application of the Act unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.”

First prong of the Rogers test: artistic relevance

Use of the mark by defendant is protected under the Rogers test unless such use has no artistic relevance to the underlying work whatsoever.

The motion to dismiss argues it does, pointing out that the bags are “depicted as fur covered… [to] commen[t] on the animal cruelty inherent in Hermès’manufacture of its ultra-expensive leather handbags” and further argues that “[t]he First Amendment guarantees [Defendant]’s rights to respond in the marketplace of ideas to the inescapable corporate brand  message by which we are bombarded every day, virtually everywhere we look.”

Before Hermès filed its suit, Mason Rothschild had posted on social media a response to both Hermès and Open Sea, writing that “… the First Amendment gives [him] every right to create and based on [his] interpretations of the world around [him].” He also argued that the NFTs he sells “are also a commentary on fashion’s history of animal cruelty, and its current embrace of fur-free initiatives and alternative textiles.” Jane Birkin had asked Hermès a few years ago to stop using her name for the bag after a video released by People for the Ethical Treatment of Animals showing reptiles being skinned or sawed open alive on farms which supplied luxury brands, including Hermès. The parties settled after Hermès showed that the incident was a unique occurrence.

The motion to dismiss argues that the NFTs are “depicted as fur covered… [to] commen[t] on the animal cruelty inherent in Hermès ’manufacture of its ultra-expensive leather handbags” and further argues that “[t]he First Amendment guarantees [Defendant]’s rights to respond in the marketplace of ideas to the inescapable corporate brand message by which we are bombarded every day, virtually everywhere we look.” As such, the Metabirkins could also be considered a parody. The motion to dismiss cites the SDNY Vuitton v. My Other Bag case, where the court found that fabric totes with drawings of famous bags  were not infringing nor diluting the Louis Vuitton marks, as they were a parody. Hermès was not a plaintiff, but could have been, as one tote showed a drawing of the Hermès Kelly bag.

Second prong of the Rogers test: not explicitly misleading as to the source

The second prong of the Rogers test is determining whether use of the mark is not explicitly misleading as to its source. The  Rogers case was about the title of the Fellini movie Ginger and Fred. The Second Circuit distinguished cases where the title of the product would be an endorsement, giving as example “Jane Fonda’s Workout” (the case is from 1989…). Such titles would be protected by the Lanham Act. However, as explained by the Second Circuit, “Many titles… include a well-known name without any overt indication of authorship or endorsement — for example, the hit song “Bette Davis Eyes,” and the … film “Come Back to the Five and Dime, Jimmy Dean, Jimmy Dean.” Defendant argues that the website clearly identifies that the MetaBirkins are works of art.

Rogers would likely guarantee the motion to dismiss to be granted if Jane Birkin, not Hermès, was the Plaintiff, or if the case would have been filed in the Ninth Circuit.  The Ninth Circuit adopted Rogers in its Barbie Girl case, and extending it beyond mere title, as explained in Mattel, Inc. v. MCA Records. In VIP Products  v. Jack Daniel’s Properties, the Ninth Circuit held in 2020 that chewy dog toys “Bad Spaniels Silly Squeaker” in the shape of a bottle of Jack Daniel’s Old No. 7 Black Label Tennessee Whiskey were not infringing.

Defendant argues that his images “show luxury with no function but communication, luxury emptied of anything but its own image, calling into questions what it is that luxury lovers actually pay for.” It is an interesting argument but may be weaker because of the nature of the goods protected by the Hermès marks. When trademarks are used logos, used prominently and externally on the product, they may have very well  “no function but communication.” Hermès bags are made by highly trained artisans, by hand, and thus the Hermès marks indicate what “luxury lovers actually pay for.”

What if a similar lawsuit would be filed across the Atlantic?

The lawsuit was filed in the U.S., where the Birkin handbag cannot be protected by copyright, because it is a useful article, defined by Section 101 of the Copyright Act as “an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information”. Useful articles are not protectable under U.S. copyright laws.

Other countries, such as France, offer bags and other fashion goods protection under their copyright laws. What is an NFT is currently debated by legal scholars and practitioners. The motion to dismiss argues that the NFTs “signify ownership of an image of a handbag.” The defendant does not sell the Hermès handbags, nor does Hermès claim he does. If the Hermès bag would be protected by copyright, Mason Rothschild would have argued fair use. In a country such as France, he would likely not have  claimed that NFTs “signify ownership of an image of a handbag”, as such image may be infringing, because there is not a comprehensive “fair use” defense available to the defendant of a copyright infringement suit. The artist  would likely claim instead that the MetaBirkin NFTs are parodies, a defense against copyright infringement claims, commenting on the luxury industry or on the use of expensive leather to manufacture the bags.

This case will be an interesting suit to watch, as it is one of the first trademark infringement suit filed against the seller of NFTs. Other cases have been filed, such as one filed on February 3 by Nike v. StockX LLC, also in the Southern District of New York (Nike v. StockX LLC, 1:22-cv-00983, SDNY), which claims that an online resale platform selling NFTs of Nike sneakers is infringing and diluting Nike’s trademarks. The platform claims on its site that the NFTs do “no more than track ownership of a physical Nike product safely secured in its vault” and that buyer can trade the NFT for the associated physical shoes. This case shows that blockchain can be used to authenticate goods. As Hermès and Nike product ‘s are routinely illegally reproduced, they will have at heart to defend the source of any Hermès or Nike NFT, for fear of not being able to use the technology to authenticate their products.

 

This post was first published on the TTLF Newsletter on Transatlantic Antitrust and IPR Developments,  Stanford-Vienna Transatlantic Technology Law Forum.

 

Image of “Pink Handbags” is courtesy of Flickr user Layla’s Sugar Flowers and is used, with no modifications, under a CC BY-SA 2.0 license.

 

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Filed Under: Art Law, NFT · Tagged: , ,

A sponsored blog post may be trademark infringement

August 30, 2021 · by ·

Cosmetics company Rodan & Fields, LLC (R+F) launched in July 2020 a new product, its “Brow Defining Boost,” which did not fare well with Petunia Products, Inc. (Petunia), a competitor owning the federal trademark BROW BOOST, registered since June 2006.

R+F marketed its “Brow Defining Boost” product on social media and allegedly used the #BROWBOOST hashtag so prominently that it flooded Petunia’s marketing efforts to use this hashtag.

Former model Molly Sims now manages a beauty blog. Users may register for her newsletter, and follow her Instagram account, which is “shoppable.” Sims wrote a post on her blog promoting R+F “Brow Defining Boost” product, linking to R+F’s website. She wrote a second blog post, thanking R+F for sponsoring her post, reviewing favorably R+F’s product, including a link to R+F’s site as well as an image of the product and its price.

Last April, Petunia sued R+F and Sims for trademark infringement, contributory trademark infringement, false advertising under Cal. Bus. & Prof. Code § 17500, and unlawful and unfair business practices under Cal. Bus. & Prof. Code § 17200.

Sims moved to dismiss. On August 6, 2021, Judge Carney from the Central District of California granted the former model’s motion to dismiss Plaintiff’s contributory trademark infringement and Cal. Bus. & Prof. Code § 17500 claims but denied her motion to dismiss Plaintiff’s direct trademark infringement and Cal. Bus. & Prof. Code § 17200 claims.

The case is Petunia Products, Inc. v. Rodan & Fields, 8:21-cv-00630 (C.D. Cal.).

The blog post may be direct trademark infringement

Plaintiff alleged that R+F is a direct competitor, that its product serves a similar purpose than Plaintiff’s product, and further argued that it uses similar marketing channels as R+F, which may increase likelihood of confusion.

Judge Carney found that the Molly Sim’s post was a paid advertisement, and that she has “thus crossed from protected consumer commentary to commercial use.” As Molly Sims had used the term “Brow Defining Boost” several times in her post, which is similar to BROW BOOST, Judge Carney found that it was “plausible that readers of Sims’ Blog Post might believe that the Allegedly Infringing Product is affiliated with Plaintiff.”

Judge Carney found that “Plaintiff has sufficiently pled a likelihood of confusion under the Sleekcraft factors,” used in the Ninth Circuit to assess likelihood of confusion. The name of R+F’s “Brow Defining Boost” “is quite similar” to Plaintiff’s BROW BOOST trademark, as it “contains the terms “Brow” and “Boost”—the terms which comprise the Trademark—separated by the term “Defining.””

Judge Carney also noted that there is a risk of likelihood of reverse confusion, which “occurs when consumers dealing with the senior mark holder believe that they are doing business with the junior one.”

The blog post is not contributory trademark infringement

Contributory trademark infringement occurs when a defendant intentionally induced the primary infringer to infringe, or if a defendant has continued to supply an infringing product to an infringer knowing that the infringer is mislabeling the product supplied.

However, merely blogging about Defendant’s product as Sims did in the sponsored post is not contributory trademark infringement, and she was not aware of any infringement. Judge Carney granted her motion to dismiss the contributory infringement claim.

The blog post is not false advertising under California law

Using a mark likely to cause confusion can constitute false advertising under Section 17500. However, as Plaintiff “ha[d] not alleged actual or constructive knowledge as required under Section 17500,” Judge Carney granted Sims’ motion to dismiss the contributory infringement claim.

The blog post may be unlawful and unfair business practices under California law

As Judge Carney did not dismiss Plaintiff’s claim of direct trademark infringement, he did not dismiss Plaintiff’s “congruous” unlawful and unfair business practices claim under Cal. Bus. & Prof. Code § 17200.

Takeaway

The case will now move forward to a jury unless the parties settle.

Should Petunia prevail in a court of law, influencers would have to conduct due diligence before accepting to sponsor a product or services, including verifying that the name of the product or services is not infringing. This would be a heavy responsibility to bear.

Influencers would then be likely to negotiate in their contract a provision that the company “represents, warrants and covenants” that the product or service they are asked to promote or sponsor does not infringe third parties’ rights.

 

Image is courtesy of the Met Museum: Tabula (Square) with the Head of Spring, 5th–7th century

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Filed Under: Influencers, Social Media Law, Trademark · Tagged: , ,

Can a school discipline students for any off-campus speech, including speech on social media?

June 18, 2021 · by ·

The Supreme Court of the United States heard arguments in April in the Mahanoy Area School District v. B.L. case (audio is here).

The Mahanoy case is about a 14-year-old high school cheerleader, who failed to make the cheerleading varsity teams of her school and vented her frustration on social media in no uncertain terms. She posted on Snapchat a photo of her and a friend both “flipping the bird” with the text, “fuck school fuck softball fuck cheer fuck everything” superimposed on the photo. The snap post was made on a weekend, the picture had not been taken on school’s premises, and did not mention or name the high school.

The cheerleading squad to which the teenager belonged had the following for policy:

Please have respect for your school, coaches, teachers, and other cheerleaders and teams. Remember, you are representing your school when at games, fundraisers, and other events. Good sportsmanship will be enforced, this includes foul language and inappropriate gestures…. There will be no toleration of any negative information regarding cheerleading, cheerleaders, or coaches placed on the internet.

The teenager was suspended from the squad for a year because she had been “disrespectful” when posting the Snap message.

She sued the school district claiming a violation of her First Amendment rights. The United States District Court for the Middle District of Pennsylvania granted summary judgment in her favor, ruling that the school had violated her First Amendment rights. The Third Circuit agreed and affirmed, holding that Tinker does not apply to off-campus speech.

The School District then filed a certiorari petition to the Supreme Court, which was granted. This is an important case as the Court will decide whether a school can discipline students for any off-campus speech, including speech on social media.

The Tinker 1969 case: should it apply today for social media speech?

The question presented to the Supreme Court is whether its “Tinker v. Des Moines Independent Community School District case, which holds that public school officials may regulate speech that would materially and substantially disrupt the work and discipline of the school, applies to student speech that occurs off campus.”

Indeed, the Court held in is 1969 Tinker case that “[s]chool officials do not possess absolute authority over their students.” For the Court, students or teachers did not “shed their constitutional rights to freedom of speech or expression at the schoolhouse gate.”

However, Tinker provided a narrow exception that student conduct, “in class or out of it, which for any reason — whether it stems from time, place, or type of behavior — materially disrupts classwork or involves substantial disorder or invasion of the rights of others” is not protected by the First Amendment.

In Tinker, petitioners were teenagers who had planned to wear black armbands at school to protest the Vietnam war. The school had then adopted a policy banning wearing armbands at school. Petitioners had nevertheless worn armbands and had been suspended. The students who gave their name to this famous case, Mary Beth Tinker and John Tinker, filed an amici curiae brief in the Mahanoy case in support of Respondents (the teenager and her parents).

Law professors Bambauer, Bhagwat and Volokh’s Amici Curiae Brief

Law professors Bambauer, Bhagwat and Volokh filed an amici curiae brief in support of Respondents, explaining that they were concerned that extending Tinker “to all off-campus student speech… expected to reach campus… would empower schools to punish students for expressing unpopular or controversial viewpoints.”

They argued that, while student speech outside school activities should generally be fully protected by the First Amendment, the “schoolhouse gate” is no longer only physical, but is also virtual. This argument is acutely understood in 2021 after more than a year where students were taught online, attending classes from home because of the pandemic.

As all students‘s online speech is expected to reach campus, expanding Tinker to online speech “would be an enormous expansion of schools’ power to censor the speech of their students.” They propose to apply Tinker to student speech outside the school only in certain cases, such as when students say “cruel personal things to or about each other, especially online,” that is, bullying or harassment. Disruptive  speech in a school-sponsored forum could be disciplined as well.

Arguments of the Petitioners

During the arguments, Petitioners’ counsel mentioned that for state law or policies in all fifty states, including statutory law in twenty-six states , “the standard for bullying is severe, persistent harassment that interferes, actually prevents that child from getting an education.” For instance, New York law defines “harassment” and “bullying” as “creation of a hostile environment by conduct or by threats, intimidation or abuse, including cyberbullying,” that would, inter alia, “unreasonably and substantially interfere with a student’s educational performance, opportunities or benefits, or mental, emotional or physical well-being” or “reasonably cause or would reasonably be expected to cause a student to fear for his or her physical safety.”

Petitioners argue schools can regulate off campus speech if it is directed at the school and the audience is the school.

During the oral argument, Justice Thomas asked Petitioners’ counsel whether the place where a student posts a social media post, at school or at home, does make a difference for applying Tinker. Counsel stated that it does not make a difference.

Justice Breyer said that the teenager’s speech, while inelegant, had not caused a material and substantial disruption, and quipped that, if swearing off campus did cause such disruption, “every school in the country would be doing nothing but punishing.”

Justice Alito said that he had no idea of the meaning of speech “targeting the school.” Justice Sotomayor asked Petitioner’s attorney whether a student could be punished for cursing at her home or on the way to school (no was the answer). Justice Sotomayor added that she had been told by her clerks “among certain populations, a certain large percentage of the population, how much you curse is a badge of honor,” asking how the line would be drawn if such language would target the school.

Arguments of the Respondents  

Counsel for Respondents argued “expanding Tinker would transform a limited exception into a 24/7 rule that would upend the First Amendment’s bedrock principle and would require students to effectively carry the schoolhouse on their backs in terms of speech rights everywhere they go.” If that would be the case, that “kids won’t have free speech, period.”

He further argued that “the blunt instrument of Tinker” is not needed to address off-campus behavior issues because the First Amendment allows regulating threats, bullying, harassment, and cheating, if the response to these issues is consistent with the First Amendment.

If the speaker is “under the supervision of the school” the school can prevent the student to swear or even publish an article about teen pregnancy, but if the student is at home, the school cannot regulate the student’s speech. Counsel for Respondent further argued that Tinker means that the school can silence a speaker if the speech is going to lead to disruption. However, Tinker cannot be applied to out-of-school speech just because listeners in school might be disrupted by this speech.

Justice Sotomayor asked him whether a school would be powerless to regulate out-of-school speech directed at a student being told “you are so ugly, why are you even alive.” Such speech is not a true threat, it is not harassment if they are just speaking. Counsel for Respondents answered that the school could regulate that conduct “if it satisfies a First Amendment, permissible definition of bullying,” adding that they thought that permissible definition of bullying, under the First Amendment could be “severe or pervasive interpersonal aggression that interferes with access to education.” However, if a school code would prevent any speech that would cause emotional harm, then it would not be consistent with the First Amendment. Judge Sotomayor was not convinced, stating that saying “You are so ugly, why are you around” is not aggressive.

Both Justice Kagan and Justice Barrett asked about regulating cheating, Justice Kagan giving as example  a student emailing answers to geometry homework from home. Counsel for Respondents answered that cheating is conduct, not speech , and thus could be regulated, as Giboney v. Empire Storage and Ice Co. allows prohibiting speech integral to prohibited conduct (this was a case about picket lines).

The case is important as the Court will decide whether a student can be disciplined for any off-campus speech, including speech on social media. It is doubtful that the Court will hold that schools have such rights, as doing so would allow schools to have a right to punish students for expressing their opinions, as long as the intended public is the school. A decision should be announced soon.

 

Image courtesy of Flickr user Pete, Public Domain.

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New York Law Creates Private Right of Action for Victims of Pornographic Deepfakes

June 15, 2021 · by ·

We saw in a former post how S5959D /A5605-C became law, creating a post-mortem right of publicity in New York.

The law, which became effective on May 29, 2021, also created a “private right of action for unlawful dissemination or publication of a sexually explicit depiction of an individual,” codified at CVR § 52-C. This new Section of New York Privacy Law thus addresses the issue of pornographic “deepfakes.” California already enacted a similar law in 2019, Cal. Civ. Code § 1708.86.

“Deepfake” is a word referring to “deep learning” and “fake.” Deep learning refers to Artificial Intelligence (AI) technology. AI can, of course, be used in many ways, but can also be used to create deepfakes, which are lifelike digital representations of an individual. The technology needed to create a deepfake is now affordable and easy to use, placing it within the reach of average users.

Deepfakes are manipulated content and for that reason alone may raise concern. A report of the University College London published in 2020 by Crime Science ranked “deepfakes” as the most serious AI crime. This technology is particularly apt to be used for “revenge porn” purposes, which is a misdemeanor under New York law, or to fuel a campaign of hate against an individual, most likely a woman.

Such was the case in 2018 when a pornographic deepfake of an Indian investigative journalist was widely shared on social media and by text messages, disclosing her name, address, phone number and the words “I am available,” in an attempt to intimidate and discriminate against her. More recently, the mother of a cheerleader was arrested last March for having created deepfakes of three of her daughter’s cheerleading team members for the purpose of harassing them. The deepfakes showed the three teenagers in the nude, drinking alcohol or vaping.

What is a pornographic deepfake?

A pornographic deepfake is created when the face of an individual is morphed into a body engaged in a sexual activity, making it appear as if the person is indeed engaged in this activity. This is defined by Section 52-C-1-a as:

“an individual who appears, as a result of digitization, to be giving a performance they did not actually perform or to be performing in a performance that was actually performed by the depicted individual but was subsequently altered.”

The meaning of “digitization” is “to realistically depict the nude body parts of another human being as the nude body parts of the depicted individual, computer-generated nude body parts as the nude body parts of the depicted individual engaging in sexual conduct… in which the depicted individual did not engage.”

Possible Defenses

The defendant must have known or reasonably should have known that plaintiff did not consent to the “creation, disclosure, dissemination, or publication” of the deepfake.

Defendant cannot use a disclaimer as a defense. However, defendant could prove the plaintiff had “knowingly and voluntarily” consented to the creation, disclosure, dissemination or publication of the deepfake by signing an agreement “written in plain language that includes a general description of the sexually explicit material and the audiovisual work in which it will be incorporated,” Section 52-C 3.a. Defendant would also have to prove that such consent has not been rescinded “by delivering written notice within three business days from the date consent was given,” Section 52-C 3.b.

The new law also provides a defense to individuals who disclosed, disseminated or published a pornographic deepfake “in the course of reporting unlawful activity, exercising the person’s law enforcement duties, or hearing, trials, or other legal proceedings,” Section 52-C-4-a-I.

The law also provides a freedom of expression defense if the pornographic deepfake “is a matter of legitimate public concern, a work of political or newsworthy value or similar work, or commentary, criticism or disclosure that is otherwise protected by the constitution of [the state of New York] or the United States,” Section 52-C-4-a-ii.

Consent

The depicted individual must have been given three days to review the agreement before signing it, Section 52-C-2-b-i, unless the individual is represented by an attorney, a talent agent or a personal manager who has provided “additional written approval of the signed agreement,” Section 52-C-2-b-ii.

Therefore, if an individual is represented, the three-day delay before signing the contract may be waived, if the representative provides “additional written approval.” The law does not specify, however, the terms of this additional approval.

About the efficiency of this right of action

A court may award injunctive relief, punitive damages, compensatory damages, as well as “reasonable court costs” and attorney’s fees, Section 52-C-5. However, even putting aside the issue of litigation costs, plaintiff would face some hurdles before being awarded relief under the new law.

It may be difficult, even impossible, to identify the defendant, and even if identified, the defendant may be outside the United States, and U.S. law may not be able to establish jurisdiction.

The law could be used to file a suit against publishers of websites, some of which may be in the U.S., as it provides a cause of action against the person who disclosed, disseminated or publishes the deepfake, if knowing that the individual did not consent. However, Section 52-C.10 specifies that the law cannot be construed as limiting or enlarging the protection provided to interactive computer service providers by Section 230 of the Communications Decency Act.

It is a long and arduous process to contact websites hosting such content, and even if one succeeds in having one site take down the deepfake, another one may publish it again almost immediately.

The statute of limitation is three years “after the dissemination or publication of sexually explicit material,” Section 52-C-6-a, or one year only from the date “a person discovers, or reasonably should have discovered, the dissemination or publication of such sexually explicit material,” Section 52-C-6-b, whichever the later.

 

 

 

Image courtesy of Flickr user Alan Levine, Public Domain.

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New York Post-Mortem Right of Publicity Law Becomes Effective

June 7, 2021 · by ·

New York is now one of a few states, California and Tennessee among them, to have a postmortem right of publicity, as the new section 50-f of New York Civil Right Law became effective on May 29, 2021. The law does not apply retroactively but applies instead only to living individuals and deceased individuals who died on or after May 29, 2021.

The bill (S5959D /A.5605-C) passed the New York Senate unanimously on July 22, 2020, and passed the State Assembly unanimously but for one vote.

The new law protects the rights of publicity of both deceased performers and deceased personalities, for the forty years following their deaths.

Section 50-f-3 states that these rights are property rights, and that they can be freely transferred by contract, license, gift or trust. They are also freely descendible, either by will or, if the person died intestate, following the laws of intestate succession (Section 50-f(5).

Scope of the law

Only natural persons domiciled in the state of New York at the time of their death can be protected. The legal definition of “deceased performer” as someone “who, for gain or livelihood, was regularly engaged in acting, singing, dancing, or playing a musical instrument” does not call for much comment, but such is not the case for Section 5-f‘s definition of a “deceased personality” as someone:

“whose name, voice, signature, photograph, or likeness has commercial value at the time of his or her death, or because of his or her death, whether or not during the lifetime of that natural person the person used his or her name, voice, signature, photograph, or likeness on or in products, merchandise, or goods, or for purposes of advertising or selling, or solicitation of purchase of, products, merchandise, goods, or services.”

The definition recognizes that one can be famous without being a performer. This is, of course, the case with politicians and other public figures, but has become a trait of our society in love with images. Paris Hilton may have been one of the first persons to be famous for being famous, but many now enjoy fame without being a performer or a public figure. Influencers, for instance, do not perform, yet are famous, at least to their followers, and they use their likeness for the purpose of selling and advertising products.

More gruesomely, the law recognizes that one can become famous for the circumstances of one’s death, may it be as the victim of a crime, a gruesome accident, or because of a heroic act.

The rights of the successors in interest/The Public Registry

The successors in interest may provide notice of such interest through a public registration and posting maintained by the New York Secretary of State. Section 50-f-7(a) uses the word “may” and thus it appears that this formality is not mandatory. This administrative procedure is addressed in 19 NYCRR 13:

  • 131.2 Fee. The fee for filing a registration of a person claiming to be a successor in interest to the rights of a deceased personality or a licensee thereof with the Department of State under Civil Rights Law section 50-f is $150.
  • 131.3 Verification by affirmation. (a) The registration form for any person claiming to be a successor in interest to the rights of a deceased personality or a licensee thereof may be verified by affirmation under penalty of perjury. (b) In the case of an agent, lawfully appointed, completing a registration form on behalf of a person claiming to be a successor in interest to the rights of a deceased personality or a licensee thereof, the agent shall be required to verify by affirmation, under the penalty of perjury, that such agent has been duly appointed to file such registration, knows the contents of such registration, and believes the same to be true.

Digital replicas of deceased performers

Section 50-f(1)(c) addresses the issue of “digital replica”, which it defines as:

“a newly created, original, computer-generated, electronic performance by an individual in a separate and newly created, original expressive sound recording or audiovisual work in which the individual did not actually perform, that is so realistic that a reasonable observer would believe it is a performance by the individual being portrayed and no other individual. A digital replica does not include the electronic reproduction, computer generated or other digital remastering of an expressive sound recording or audiovisual work consisting of an individual’s original or recorded performance, nor the making or duplication of another recording that consists entirely of the independent fixation of other sounds, even if such sounds imitate or simulate the voice of the individual.”

Unauthorized digital replicas of deceased personalities are not within the scope of the law. Kim Kardashian-West recently received for her 40th birthday a hologram of her late father, who was a famous attorney. Ms. Kardashian is a California resident, and so was her father at the time of his death. However, would the family have lived in New York, an authorization to produce the hologram would not have been required under the statute, as an attorney is not a performer.

Section 50-f(2)(b) forbids using without authorization the digital replicas of a deceased performer “in a scripted audiovisual work as a fictional character or for the live performance of a musical work, ” but only “if the use is likely to deceive the public into thinking it was authorized.” Such authorization can be provided either by the performer, while alive, or by a successor in interest.

An unauthorized use is, however, not deceptive “if the person making such use provides a conspicuous disclaimer in the credits of the scripted audiovisual work, and in any related advertisement in which the digital replica appears, stating that the use of the digital replica has not been authorized …”

Section 50-f(2)(d)(ii) provides an exception to Section 50-f(2)(b) if the digital replica is a satire, a parody or a critique. Works which are newsworthy are also exempt. The statute gives as example of such works documentaries or historical works.

However, this exception does not cover works using the digital replicas of a deceased performer “in a live performance of a musical work.” Having performers take the stage after their death via a hologram is now a lucrative business. One of the first of its kind was presented in 2012 at Coachella when the late Tupac Shakur was seen on stage with Snoop Dogg and Dr. Dre.

 Remedies

As for remedies, the law provides damages to the greater of 2,000 dollars or the compensatory damages suffered by the injured party or parties, who may also claim lost profits stemming from the unauthorized use which were are not taken into account when computing the compensatory damages. The law also provides punitive damages.

First Amendment exceptions

Using a deceased personality’s name, voice, signature, photograph, or likeness without authorization is allowed in literary works such as plays, books, magazines, newspapers, in musical works, visual works, and works “of political, public interest, educational or newsworthy value, including comment, criticism, parody or satire; audio or audiovisual work, radio or television program, if it is fictional or nonfictional entertainment,” Section 5-f-2(d)(i). The exception extends to advertising of these works.

Use without authorization of a digital replica of a performer is authorized for parody, satire, commentary, or criticism purposes and in “works of political or newsworthy value, or similar works, such as documentaries, docudramas, or historical or biographical works, regardless of the degree of fictionalization,” Section 5-f-2(d)(ii). The law also authorizes use without authorization to advertise these works.

If such digital replica represents a deceased performer, as herself or as himself, “regardless of the degree of fictionalization,” the use is also authorized, “except in a live performance of a musical work.” Section 50-f also authorizes de minimis or incidental use without authorization.

Section 50-f(2)(d)(iii) provides that the statute authorizes “use of a name, voice, signature, photograph, or likeness… in connection with any news, public affairs, or sports program… or any political campaign.” This may be interpreted as referring only to deceased performers and personalities, but it could also be interpreted as encompassing digital replicas, as “it shall not be a violation of this section…”appears to refer to the entire section 50-f.

If the use of digital replicas is authorized in “any political campaign,” electoral elections as we know them now may drastically change in the next few years . Digital replicas of politicians are agile vessels to propagate “fake news,” and then-President Trump retweeted last year a “deepfake” of then Presidential candidate Joe Biden.

The New York law does not address “deepfake” use in political campaigns, but addresses sexually explicit deepfakes in the new Section 52-c, which  provides a private right of action “for unlawful dissemination or publication of an intimate image,” including digitized sexual images. Section 52-c will be discussed in a separate post.

 

Image is courtesy of Flickr user Kevin Dooley under a CC BY 2.0 license.

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Who owns the copyright on Jack Ryan?

May 7, 2021 · by ·

On 10 February 2021, United States District Judge Ellen L. Hollander from the Federal District Court of Maryland published an 89-page Memorandum Opinion, addressing the issue of ownership of the books and fictional characters created by Tom Clancy, including Jack Ryan. The case is Alexandra Clancy v. Jack Ryan Enterprises, Ltd.

Facts

The character of Jack Ryan first appeared in The Hunt for Red October (The Hunt), the first book ever published by Tom Clancy. It was published in 1984, by a small academic press, the United States Naval Institute (USNI). One of the book’s characters is Jack Ryan, an analyst working for the Central Intelligence Agency. Jack Ryan became a recurring character in Tom Clancy’s books, and appeared in several movies and television series adapted from Clancy’s best-sellers.

Clancy and USNI signed a publishing agreement in 1983, which stated that:

“Author [Tom Clancy] grants and assigns to the Publisher [USNI] the exclusive worldwide rights and any subsisting copyright, including the right to secure copyrights and any renewals or extensions thereof, in connection with a certain unpublished work provisionally entitled THE HUNT FOR RED OCTOBER…” and also stated “The Author agrees that he will not, without the written permission of the publisher, publish or permit to be published any material based on, or derived from, or directly competitive with the Work [i.e., Hunt], so long as this agreement shall remain in force.”

On October 29, 1984, USNI received a certificate of copyright registration for The Hunt which identifies Clancy as the author, and USNI as the copyright claimant. On May 7, 1985, USNI, as owner of the exclusive rights, licensed a theatrical film from Paramount Pictures.

Jack Ryan Enterprises, Ltd. (“JREL”) was formed on May 28, 1985 by Tom Clancy and then-wife Wanda King. JREL’s only assets were the computers that Clancy used to write his books. JREL was owned 40% by Tom Clancy, 40% by Wanda King, and 20% by their four children. Tom Clancy died in 2013, and JRE is now owned 40% by his estate, 40% by Wanda King, and 20% by Clancy and King’s children. Wanda King is JREL’s President.

The issue of ownership of the Jack Ryan character first arose between Clancy and USNI in 1987. Clancy asked USNI to transfer the copyright registration for The Hunt back to him, claiming it was needed for Clancy to move forward with his negotiations with Viacom. USNI claimed it owned the rights to The Hunt.

Robert Youdelman, Clancy’s attorney, told his client at the time that he believed that USNI had “acquired the copyright in [Hunt],” which gave it a continuing “interest in new books using the same characters.” He added that “[t]he author of a novel usually retains the copyrights…. The publisher customarily has no interest in new books using the same characters,” and noted that USNI had acquired “world-wide publishing rights” and added that because the “contract entitles [USNI] to 50% of all you make from any book in which ‘Jack Ryan’ or other characters from Red October appear, it is our view that this alone departs so far from industry practice as to make the entire contract unconscionable.”

In 1988, Clancy filed for arbitration with the American Arbitration Association, arguing that he owned the Jack Ryan character, because the history of the relationship between USNI and Clancy showed that Clancy never relinquished his ownership of the now famous character. The parties settled: Clancy agreed to pay USNI $125,000 and, in exchange, USNI agreed to reassign the copyright in The Hunt to Clancy. However, the agreement did not explicitly mention the Tom Clancy character.

JREL and Paramount entered into an agreement in 1989 clarifying the ownership rights to the motion picture, television, and literary rights in The Hunt, which stated that JREL, as owner, had rights reserved for use and disposition, including in all literary property using the character Jack Ryan or any other principal character in The Hunt. JREL subsequently entered into other contracts for novels and movies featuring Jack Ryan.

Clancy formed Jack Ryan Limited Partnership (“JRLP”), a Maryland limited partnership, on 26 February 1992. Clancy’s 50% interest is now owned by his estate. Regina King still owns 50%. In 1992, and again in 1994, Clancy entered into employment agreements with both JREL and JRLP.

Clancy formed Rubicon, Inc. in November 1995, which was owned entirely by Clancy. Clancy published The Bear and the Dragon (2000), Red Rabbit (2002), and The Teeth of the Tiger (2003), featuring Jack Ryan, under contracts executed by Rubicon. Clancy published these books without the agreement of the JR Entities and no proceeds were paid to the JR entities.

Clancy & King separated in November 1996. Their separation agreement included sections on the ownership and control of JREL and JRL:

“Husband [i.e., Clancy], Wife [i.e., King] and Michelle Clancy [one of the Older Children] are the only directors of JREL. Husband is the President, and Wife is the Vice President, Treasurer and Secretary of JREL + Clancy, as president of JREL, would have the usual powers of the chief executive of a personal service corporation, including the power to negotiate and sign on behalf of JREL royalty and other contracts…”

This agreement was incorporated in the 1999 divorce decree. Tom Clancy married Alexandra Clancy in 1999. The couple stayed married until Clancy’s death in October 2013 and had one child.

Paramount announced in 2008 that it was developing a new movie, Jack Ryan: Shadow Recruit, featuring Jack Ryan, which would not be based on any of Clancy’s previous novels. Based on emails between Clancy and his representatives, there was some concerns on whether Paramount had the right to develop the Jack Ryan character. Robert Youdelman reminded Clancy’s agent that the “‘Jack Ryan’ character is owned by Jack Ryan Enterprises Ltd, an entity in which Wanda [King] and the children have an interest[.]” Paramount eventually paid to use the Jack Ryan character in the new movie.

Clancy died in 2013. After his death, Putnam wanted to publish “Tom Clancy” novels, at least one novel focusing on the Jack Ryan character. In March 2015, his Estate, Rubicon, JREL, and JRLP, collectively as the “Author,” executed a four-book deal with Putnam.

Procedure

Alexandra Clancy filed on August 25, 2017 a complaint for declaratory judgment in the Circuit Court for Baltimore City to obtain a declaration that the rights to the Jack Ryan character are owned by Rubicon, a company created by Tom Clancy, which is now wholly-owned by the Tom Clancy Estate.

Defendants are J.W. Thompson Webb, as personal representative of the Estate of Thomas L. Clancy, Jr. (the “Estate”) and the three separate business entities formed by Clancy: JREL, JRLP and Rubicon.

The case was removed to the federal District Court for the District of Maryland because some of the claims arise under the Copyright Act.

Authorship and Work Made for Hire

Defendants claim that JR Books were written as works made for hire for the JR Entities, which, therefore, own all of the copyrightable elements of the books, including the characters delineated in them.

Neither side argues that any of the books were “specially ordered or commissioned,” and thus the issue is whether Clancy was an employee of the JR Entities and wrote the JR Books within the scope of his employment.

If Clancy was an employee of JREL and JRLP, then the works he wrote at the time are works for hire and the two companies own the copyright. This is the view of the Defendants, but not, of course, of the Plaintiff, who claims that Clancy was neither an employee nor agent of the JR Entities, that, therefore, the works are not works made for hire as Clancy’s relationship with the JR Entities “had none of the earmarks of a true employee relationship.”

Section 101 of the Copyright Act defines a work for hire as:

“(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”

The Copyright Act does not define the terms “employee” or “employment,” however, leaving the application of the terms to the courts.

The U.S. Supreme Court held in Community for Creative Non-Violence v. Reid, that “the term ‘employee’ should be understood in light of the general common law of agency,” and set out a non-exhaustive list of factors to consider. However, none of these factors are determinative, and the Supreme Court did not indicate how the factors must be weighed.

The Courts do not mechanically apply the Reid factors and only consider the factors which are relevant in each case:

  • hiring party’s right to control the manner and means by which the product is accomplished;
  • skill required;
  • source of the instrumentalities and tools;
  • location of the work;
  • duration of the relationship between the parties;
  • whether the hiring party has the right to assign additional projects to the hired party;
  • extent of the hired party’s discretion over when and how long to work;
  • method of payment;
  • hired party’s role in hiring and paying assistants;
  • whether the work is part of the regular business of the hiring party;
  • whether the hiring party is in business;
  • provision of employee benefits; and
  • tax treatment of the hired party

The Second Circuit Court of Appeals identified in Aymes v. Bonelli five factors to consider when determining whether a work was made for hire:

  • hiring party’s right of control over the hired party;
  • skill required of the hired person;
  • provision of employee benefits;
  • tax treatment of the hired party; and
  • whether the hiring party has the right to assign additional projects to the hired party.

Judge Hollander found the Aymes factors “particularly relevant” in the Clancy case, and concluded that they weighed against finding a work for hire status, as evidence demonstrated that neither of the JR Entities had attempted to “control the manner and means” by which Clancy’s books were written. King acknowledged that Clancy had complete autonomy with respect to every aspect of his books, and even though she may have reviewed the books once they were written, it was Clancy who chose what books to write and when to work on them.

Clancy was a co-owner of both entities, but there are factors that support finding that the famous author was an employee of the JR Entities:

  • JREL paid for the computer that Clancy used to write the books;
  • Clancy worked for both entities for an extended period of time;
  • Clancy’s work was part of the regular business of the entities; and
  • Clancy received health benefits.

Defendants argued that publishing agreements between the JR Entities and Putnam proved that Clancy believed the books were made for hire. Judge Hollander found that these agreements prove that Clancy had the intent to form an employment relationship, but that they did not necessarily “suffice on [their] own” to overcome the factors weighing against finding a work for hire relationship.

Judge Hollander could not thus conclude, as a matter of law, that Clancy was an employee of the JR Entities and that his books were made for hire and denied both Plaintiff and Defendants’ motions with respect to the work for hire claims.

Alleged Copyright Assignments from Clancy to the JR Entities

The Parties did not dispute that JREL owns the copyright to The Hunt but disagreed over whether the Jack Ryan character as developed in The Hunt, was assigned to USNI and then JREL, along with the copyright in The Hunt or, instead, whether Clancy retained the copyright in Jack Ryan at the time of his death.

Ownership of a copyright is freely transferrable “by any means of conveyance or by operation of law,” 17 U.S.C. § 201(d)(1). However, “[a] transfer of ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or a memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent,” 17 U.S.C. § 204(a).

Section 204’s requirement may be satisfied by an oral assignment that is subsequently ratified or confirmed by a written memorandum of the transfer.

Defendants claimed that JR Entities own the JR Books and their characters because the copyrights were validly assigned to them by Clancy, pursuant to 17 U.S.C. § 204(a), while Plaintiff claims that any alleged assignment of the JR Books to the JR Entities was ineffective.

Defendants argued that there were “several written instruments, signed by Tom Clancy, that memorialize the transfer of copyright in each book from Tom Clancy to JREL and JRLP, respectively,” including:

  • the publishing agreements with Putnam;
  • the Guaranty Letters accompanying those agreements;
  • the Separation Agreement that acknowledges ownership of the books by JREL and JRLP;
  • Guaranty Letters and the Separation Agreement operate as written “note[s] or memorand[a]” validating earlier transfers between the JR Entities and Clancy.

Plaintiff argued that these are not the kind of documents that “qualify as assignments” under Section 204 and that “none of the referenced documents are between Clancy and JREL or JRLP,” none of them “set forth the clear and unequivocal intent to transfer required by Section 204.”

Judge Hollander applied Maryland law to interpret the agreements and concluded Tom Clancy clearly intended to transfer copyright ownership to the JR Entities, and that the requirement of an assignment under Section 204(a) were satisfied.

 

 

Impact of the assignment on ownership of the characters featured in the JR Books, including Jack Ryan 

Judge Hollander noted that the parties appeared to agree that the owner of the copyright to these works also owns the rights to the characters or the incremental character developments in them, with the exception, however, of the Jack Ryan character. She considered separately the issue of ownership of the Jack Ryan character and concluded that the characters developed in the JR Books, like the books themselves, were validly assigned to the JR Entities.

The parties disagreed on whether the assignment to USNI of the copyright to The Hunt, and the assignment of The Hunt to JREL included assignment of the copyright in Jack Ryan, a character who first appeared in this book.

Defendants claimed that Clancy assigned the copyright in Hunt to USNI “without reservation,” and thus USNI acquired the copyright to the Jack Ryan character, and that, when USNI assigned the copyright in The Hunt to JREL, “it also assigned the rights to Jack Ryan as delineated in Hunt to JREL.”

Plaintiff stated that Jack Ryan “is a fully delineated, distinctive and iconic character,” and is “important to the Clancy franchise.” She conceded that the rights to The Hunt were assigned to USNI and JREL, but not the character of Jack Ryan:

“The 1983 [USNI] Contract does not grant USNI any rights to the characters featured in HUNT or to sequels or derivative works. None can be inferred.”

Fictional characters are not an enumerated copyrightable subject matter under the Copyright Act, see 17 U.S.C. § 102(a), but courts recognized that they can be protected by copyright if developed with enough specificity so as to constitute protectable expression.

The Ninth Circuit Court of appeals explained, however, in DC Comics v. Towle, that “[n]ot every comic book, television, or motion picture character is entitled to copyright protection.” The Ninth Circuit enumerated its “Towle” test for characters:

A character is entitled to copyright protection if

  • the character has “physical as well as conceptual qualities;”
  • the character is “sufficiently delineated to be recognizable as the same character whenever it appears” and “display[s] consistent, identifiable character traits and attributes;” and
  • the character is “especially distinctive” and “contain[s] some unique elements of expression.”

Section 201(d)(2) of the Copyright Act provides:

Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified in section 106, may be transferred…and owned separately. The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by his title.

As such, under the theory of divisible copyrights, fictional characters may be protected separately from the underlying work, and this copyright may be assigned separately from the copyright in the general work.

Judge Hollander noted that the issue was not only whether Jack Ryan was sufficiently delineated in The Hunt to be protected by copyright, separately from the book, but also whether the assignments of The Hunt copyright to USNI, then JREL, included the transfer of ownership of Jack Ryan.

As both parties agreed that Jack Ryan is sufficiently developed to be protected, Judge Hollander addressed only the issue of assignment of rights, found these assignments to be ambiguous and denied summary judgment:

“Whether the rights to Jack Ryan were assigned to USNI or JREL, as part of the assignment of rights to Hunt, depends on the interpretation of the… agreements. …Applying the tools of contract interpretation, I conclude that the assignment of rights to Jack Ryan is ambiguous because at least one of the relevant agreements—the Settlement Agreement—is susceptible to multiple interpretations.”

The case is now heading to trial. A jury will be asked to decide who owns the Jack Ryan character, unless the parties settle.

 

This article was first published by TTLF Newsletter on Transatlantic Antitrust and IPR Developments ( Stanford-Vienna Transatlantic Technology Law Forum)

Image of the spine of The Hunt for Red October courtesy of Flickr user Drümmkopf under a CC BY 2.0 license. 

 

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Filed Under: Copyright, TTLF Newsletter, Uncategorized · Tagged: , ,

Upcoming Sale of An Empowering NFT

May 4, 2021 · by ·

The New York Times recently published an article about the upcoming auction of ‘Buying Myself Back: A Model for Redistribution’, a nonfungible token (NFT) to be auctioned by Christie’s on May 14.

Buyers purchasing an NFT become owners of a digital good, which can be an image, as is A Model for Redistribution, a video, or even a music album, all sold in the form of a unique blockchain digital token.

Such tokens are non-fungible, meaning they are unique and cannot be exchanged for their equivalent. Interestingly, works which were not originally digital, such as this photograph of Keith Haring, may be made an NFT, thus reaching new markets and increasing their value, as NFT technology makes a work verifiably unique. Scarcity enhances values and then artists, or content owners may benefit.

This new technology is not confined to the art world. The NBA introduced its Top Shot marketplace where fans can buy NFT videos of their favorite players, thus buying a licensed video, just as, not a long time ago it seems, fans collected trading cards of their favorite players. A paper trading card featuring Lebron James recently sold for $5.2 million, setting a record. NBA NFT, while not (yet) as pricey, are not cheap either. It remains to be seen, however, if the market will remain strong allowing for NFT high prices to hold.

The NFT market is new and evolving: Everydays: The First 5000 Days, a NFT digital collage created by Beeple, was sold last March by Christie’s for 69,346,250 US dollars. However, some NFTs can be purchased for a reasonable price. The buyer must, however, have a bitcoin wallet to pay for the purchase. Even Christie’s accepted to be paid in bitcoins for the sale of Everydays: The First 5000 Days.

Blockchain technology also ensures the authenticity of the work and records its provenance. Art historians compiling catalogues raisonnés of NFT artists will be able to rely on blockchain technology to establish the provenance of the work. A NFT may be copied easily, as it is a digital work, but the original work will be the only one with a blockchain, thus authenticating ownership and provenance.

Christie’s explains that the token “reinstates Ratajkowski’s agency over her own image by allowing her access to its monetary and symbolic value, both of which she and other women in similar professions have too often been deprived.”

The Buying Myself Back: A Model for Redistribution NFT has an interesting story. It features a photograph of fashion model Emily Ratajkowski in front of a work by Prince’s featuring her, which was part of the New Portraits exhibition at the Gagosian Gallery in 2014. Prince reproduced Instagram posts on canvas, after adding a comment or two under the post using his own Instagram account. This method of creating a piece of art did not fare well with one of the original artists (see here).

The title of the work sold by Ms. Ratajkowski alludes to an essay she wrote, Buying Myself Back, published last September by New York Magazine and was widely shared, where she describes how she came into possession of the Prince work, including having to buy it back from a former boyfriend. She also described a 2012 photo session where she posed nude, after which some polaroids taken at the session became part of a book published without her permission.

Ms. Ratajkowski wrote the essay after being sued for copyright infringement in October 2019 by photographer Robert O’Neil after the model had posted on her Instagram account a photograph O’Neil had taken of her in the streets of New York. Her image, his copyright (allegedly at least, the case is ongoing).

Announcing the sale of Buying Myself Back: A Model for Redistribution on her Instagram account, Ms. Ratajkowski wrote:”

“The digital terrain should be a place where women can share their likeness as they choose, controlling the usage of their image and receiving whatever potential capital attached. Instead, the internet has more frequently served as a space where others exploit and distribute images of women’s bodies without their consent and for another’s profit.”

She explained further in a Twitter post that

“using the newly introduced medium of NFTs, [she] hoped to symbolically set a precedent for women and ownership online, one that allows for women to have ongoing authority over their image and to receive rightful compensation for its usage and distribution.”

Christie’s describes the work as a “conceptual work.” Considering this statement from a copyright point of view, we ask : is the work protected by copyright?

Starting with basic concepts of copyright law, only works fixed in a “tangible medium of expression… sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration” are protected by copyright.

As such, a NFT can be protected by copyright, because it is fixed in tangible medium of expression and can be communicated for more than a transitory period of time, even though Christie’s “lot essay” explains that Ms. Ratajkowski “employ[s] the NFT as a tradeable metaphor for that which has no physical embodiment.”

A work must also be original to be protected. It is probably original enough to be protected, especially considering that it is original to have the model of a painting pose in front of it.

The work is a derivative work of the original Prince’s work, which itself reproduced a photo which copyright he did not own. As Prince claims fair use, the copyright owner of Buying Myself Back: A Model for Redistribution, in the unlikely event h/she would be sued by Prince, could also claim fair use.

What about copyright’s ownership? The original owner is likely to be the person who took the photograph, but Ms. Ratajkowski may have acquired the right.

As a note, merely creating an NFT from an original work is unlikely to be considered derivative work protected by fair use. A NFT Jean-Michel Basquiat’s drawing was recently withdrawn from sale because the seller did not own its copyright nor a copyright license. Similarly with the recent sale of a Bansky NFT, the buyer would have been given the right to destroy the sale, a move which would not have violated the Visual Artists Rights Act of 1990 as it protects certain works of art only during the lifetime of the artist (this contrasts greatly with, say, French law, which recognizes that moral rights are perpetual…).

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Filed Under: Art Law, NFT · Tagged: , , ,

New Research Project Comparing How EU Digital Service Act and Facebook Oversight Board Empower Users

April 30, 2021 · by ·

My new research project as a Fellow of the Transatlanctic Technology Law Forum is Comparing the powers given to users by the EU Digital Service Act and by the Facebook Oversight Board: at the service of users or overseeing them?

Abstract:
The European Union Commission published on December 15, 2020, its Proposal for a Regulation on a Single Market For Digital Services (Digital Services Act, “DSA”). This new horizontal framework aims at being a lex generalist which will be without prejudice to the e-Commerce Directive, adopted in 2003, and to the Audiovisual Media Services Directive, revised in 2018.

This new Regulation is likely to dramatically change how online platforms, particularly social media platforms, moderate content posted by their users. Very large platforms, defined by the DSA as ones providing monthly services on average to 45 million active users in the European Union, will face heightened responsibilities, such as assessing and mitigating risks of disseminating illegal content. Whether this heightened scrutiny may lead illegal speech to migrate to smaller platforms remains to be observed.

Each Member State will design its Digital Service Coordinator, a primary national authority ensuring the consistent application of the DSA. Article 47 of the DSA would establish the European Board for Digital Services, which will independently advise the Digital Services Coordinators on supervising intermediary services providers. A few months earlier, the creation of Facebook’s Oversight Board (“the Oversight Board”) was met with skepticism, but also hope and great interest. Dubbed by some as “Facebook’s Supreme Court,” its nature is intriguing, appearing to be both a corporate board of the U.S. public company Facebook and a private court of law, with powers to regulate the freedom of expression of Facebook and Instagram users around the world. This independent body has for its main mission to issue recommendations on Facebook’s content policies and to decide whether Facebook may, or may not, keep or remove content published on its two platforms, Facebook and Instagram. The Oversight Board’s decisions are binding on Facebook, unless implementing them violates the law.

The law of the States remains thus the ultimate arbiter of the illegality of content. However, such legal corpus is far from being homogeneous. Both the European Court of Justice and the European Court of Human Rights have addressed the issue of illegal content. In the European Union, several instruments, such as the revised Audiovisual Media Services Directive and the upcoming  Regulation on preventing the dissemination of terrorist content online, address harmful, illegal content. Member States have each their own legal definitions. France is currently anticipating the DSA by amending its June 21, 2004 Law for Confidence in the Digital Economy. If the French bill becomes law, platforms will have to make public the resources devoted to the fight against illegal content, and will have to implement procedures, as well as human and technological resources, to inform judicial or administrative authorities, as soon as possible, of actions taken following an injunction by these courts or authorities.

The DSA does provide a definition of illegal content but aims at harmonizing due diligence obligations of the platforms, and how they address the issue. For instance, article 12 of the DSA is likely to influence how platforms’ terms and conditions are written, as it directs platforms to inform users publicly, clearly, and unambiguously, about the platform’s content moderation policies and procedures, including the roles played by algorithms and by human review.

This requirement is particularly welcome as the use of algorithms to control speech and amplify messages currently suffers from a lack of transparency, and has been credibly accused of fostering bias: is algorithm bias illegal content? The Oversight Board will only examine a few posts among the billions posted each year, and the cases submitted for approval may be the proverbial trees hiding in the forest: the use of algorithms to control speech by amplifying messages likely to trigger reactions, clicks, likes, often monetizing hate and preventing minority speech to be heard. As freedom of expression is not only the right to impart, but also to receive information, are algorithms, which are striving to keep us in well-delimited echo chambers, the ultimate violation of the freedom of expression?

Users are provided a way to have a say about what should be considered illegal online speech, and both the DSA and the Oversight Board aim at providing users more power. The DSA would provide users a user-friendly complaint and redress mechanism and the right to be provided an explanation if content they have posted is taken down by a platform. The Oversight Board is using a crowdsourcing scheme allowing users all around the world to provide their opinion of a particular case before it is decided.

International users will also be provided the power to define and shape illegal content. Is this a new form of private due process? The DSA would provide several new rights to users: the right to send a notice (article 14  on “Notice and action mechanisms”); the right to complain (article 17 on “Internal complaint-handling system”); the right to judicial redress (article 18 on “Out-of-court dispute settlement”); a special right to flag, if considered particularly trustworthy (article 19 on “Trusted Flaggers” whose opinion will be given more weight than common users); the right to be provided an explanation (article 15 of the Digital Service Act on “Statement of reasons”).

The Oversight Board also gives powers to users: they have the power to appeal a decision made by Facebook about content posted on its two platforms and are also provided the opportunity to share their opinions, knowledge, or expertise in each case. Users are invited to share their explanation of local idioms and standards, shedding further light on what content should be considered illegal. As such, they are given an easy way to file an “amicus brief”‘ comment.

Surprisingly, both the DSA and the Oversight Board appear to have the fundamental rights of users as ultimate standards in their mission. As stated by the DSA Explanatory Memorandum, the DSA “seeks to improve users’ safety online across the entire Union and improve the protection of their fundamental rights.” More curiously, the Oversight Board has shed new light on international human rights. The Oversight Board’s first decisions, issued on January 28, 2021, were not based on U.S. laws or on the private rules of the Facebook platform, but on international human rights laws. As such, it can be argued that their decisions were “based on European values – including the respect of human rights, freedom, democracy, equality and the rule of law,” the same values which are the foundations of the DSA. This research paper will analyze the decisions of the Oversight Board during its first year, including how the cases were chosen, where the speaker of the speech at stake lives, and the legal issues raised by the cases.

However, assessing the legality of content in accordance with the law is still the prerogative of the Courts. The DSA provides them the right to be informed by the platforms on the effect of their order to act against a specific illegal content (article 8). This power is, however, also provided by the DSA to administrative authorities. Will the administrative judge soon have more power than the judiciary to protect freedom of expression? The DSA may lead human rights to become a mere part of corporate compliance, overseen by administrative authorities, as is, arguably, already the case with the right to privacy under the GDPR. Would tortious conduct and civil responsibility be more adequate to protect the rights of users?

Regardless of their differences, the DSA and the work of the Oversight Board may have a  common goal, transparency. The DSA aims at setting a higher standard of transparency and accountability, as its article 13 on “Transparency reporting obligations for providers of intermediary services” directs platforms to publish, at least once a year, a clear and comprehensible report on their content moderation practices. Very large online platforms will have to perform external risk auditing and public accountability. The Oversight Board is committed to publicly sharing written statements about its decisions and rationale.

This research paper will compare the place and power provided to victims of illegal speech by the Oversight Board’s caselaw and recommendations, with the place and power provided to victims of illegal speech by the platforms in their DSA compliance practice. It will also examine how the Oversight Board’s decisions have been implemented by Facebook. Are the future European Union Digital Service Act and the corporate Oversight Board at the service of users or they overseeing them?

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Filed Under: Free Speech, Internet Law, Publications, Social Media Law, Uncategorized · Tagged: , , ,
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