Licensing Like a Champion (Can it be an Afterthought?)

Fall is back, and, in the United States, that means pumpkin-flavored products and (American) football galore. If you have not yet eaten pumpkin-flavored pop-corn, drunk pumpkin-flavored coffee and watched at least one game of football, well, your neighbors probably consider you to be weird. 

So grab a pumpkin-flavored cookie and read this blog about a recent Second Circuit decision, Spinelli v. National Football League, No 17-0673 (HT Court House News for the link to the document). The case is about copyright licensing, retroactive and royalty-free licensing and a touch (down) of football.

Plaintiffs are seven sports photographers. Defendants are the Associated Press (AP), the National Football League (NFL) and the 32 NFL teams. If you do not know the names of the NFL teams, you can read their complete list in the document (The Falcons! The Steelers! The Forty Niners!)

The photographers filed a copyright infringement suit in 2013 against the NFL and AP in the Southern District of New York (SDNY), claiming that AP had granted the NFL a royalty-free license without permission from the authors of the photographs.

Plaintiffs also argued that the NFL and AP had conspired to restrain trade in the market for commercial licenses of NFL event photographs thus breaching antitrust laws (I will not write about this issue).

Defendants moved to dismiss and the SDNY granted their motion in 2015. Plaintiffs appealed. On September 11, 2018, the Second Circuit remanded the case which is now likely to go to trial.

In order to take and use photographs from an NFL event, one needs to secure a license from the NFL, as such photographs almost always contain NFL trademarks. Getty had the exclusive worldwide right to license NFL’s pictures from 2004 to 2009, and then AP became the NFL’s exclusive licensor.

Plaintiffs had entered into “contributor agreements” with AP which allowed them to access NFL events, and to obtain licenses for the intellectual property contained in the photographs they took at these events. Plaintiffs took thousands of NFL photographs, during games or practices. Some of these pictures feature NFL trademarks, but others did not.

The 2009-2012 NFL-AP agreement

The original agreement between the NFL and AP, which lasted from 2009 to 2012, had granted the NFL a royalty-free license to use “AP-owned” images, but had not extended this license to images taken by non-AP contributors. However a new agreement, entered into in 2012, extended the royalty-free license granted to the NFL to photographs taken by non-AP contributing photographers.

Plaintiffs had indeed provided AP a “perpetual, irrevocable transferable worldwide right and license to reproduce, edit, translate the caption of, prepare derivative works of, publicly perform, publicly display, load into computer memory, cache, store and otherwise use“ their works along with the right to "transfer or sublicense these rights to other entities." This agreement was lucrative for the Plaintiffs, as AP payed royalties when it licensed one of the works. At issue in this case was whether Plaintiffs had thus allowed AP to grant royalty-free licenses to the NFL.

For the SDNY, copyright law gives copyright owners and their exclusive licensees the right to freely grant a license "after the fact" as they see fit, quoting Wu v. Pearson, 2013 WL 145666, at 4: "[T]here is no legal prohibition to obtaining a retroactive license if it is authorized by the rights holder." Plaintiffs had argued instead that, citing the 2007 Davis v. Blige Second Circuit decision, that AP could not grant a retroactive license. In Davis, the Second Circuit had rejected retroactive copyright licensing as a way to cure past infringement.

In our case, the Second Circuit found that even though facts in our case were slightly different than the ones in Davis, the court had to come to the same conclusion. The Second Circuit reasoned that Plaintiffs had the right, before the execution of the 2012 AP-NFL agreement, to sue the NFL for copyright infringement. Therefore, if AP could grant a license to the NFL retroactively in 2012, that right would have thus been extinguished, and “[d]oing so was impermissible, irrespective of whether AP had the authority to issue a prospective license to the NFL starting in 2009.”

The case was kicked back to the lower court

The SDNY had dismissed their claim because the license Plaintiffs had provided AP was as broad as their own copyright in their photos, and “[n]othing in the license require[d] AP to issue only royalty-bearing sublicense.” For the SDNY, the language of the agreement made clear that the rights granted by Plaintiffs to AP, including the right to sublicense, were “broad and unlimited.”

However, the Second Circuit found the 2012 contract to be “ambiguous” and recognized that it could be interpreted as limiting the ways AP can sublicense Plaintiffs’ photographs to third parties. The court remanded the case to the lower court. Litigation is not a contact sport. But you must win the last game.

Fair Use? It’s in the bag

On December 22, 2016, the Second Circuit affirmed the January 6, 2016 order from Judge Furman of the Southern District of New York (SDNY), which had found that the use of the Louis Vuitton logo and the representation of the Louis Vuitton bags on fabric totes was fair use. The maker of the tote, My Other Bag (MOB), was represented by David Korzenik, my former Entertainment Law professor at Cardozo School of Law, who encouraged all his students to write and publish and first gave me the idea to write about law.

Louis Vuitton famously designs and sells luxury bags carrying its LV logo. These bags are often seen in first class airport lounges all around the world, or so I’ve been told, but is it wise to use them as gym bags or shopping bags? The founder of MOB, Tara Martin, wondered, like all of us, if one should carry one’s Louis Vuitton bucket bag to go grocery shopping, considering, after all, that one Louis Vuitton bag was originally designed to carry champagne bottles (the French are so clever, non?)

Ms. Martin’s answer was to create fabric totes with one side representing a somewhat cartoonish rendition of a famous luxury bag, such as Hermès’ Kelly bag, Chanel’s matelassé bag, and several models of Louis Vuitton bags, while the other side read “My Other Bag is…”This phrase is inspired by the “My other car is a Jaguar/a Mercedes…” bumper stickers which were once ubiquitous on automobiles of a somewhat less expensive nature. The Louis Vuitton ‘LV’ logo are replaced on the MOB totes by the initials MOB and are sold from $35 to $55.

Source: http://www.myotherbag.com

Louis Vuitton considered this use to be infringing and filed a suit against MOB, claiming trademark dilution, trademark infringement, and copyright infringement. MOB moved for summary judgment, which was granted on all points by Judge Furman from the SDNY.

As this blog concentrates on copyright, I will only address this particular issue in this case (I wrote about the trademark issues of the case here). Judge Furman had examined all the four fair use factors and found the use of the copyrightable elements of Louis Vuitton’s prints to be fair use.

Judge Furman from the SDNY: it is a parody and it is fair use

The first factor, the purpose and character of the use, was in favor of MOB, even though the use is commercial, because the use is a parody, which, “even when done for commercial gain, can be fair use” (at 445). Judge Furman found that that the second factor, the nature of the copyrighted work, was not of much help, as a parody almost invariably copy publicly known, expressive works. The third factor, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, was found by Judge Furman to be reasonable in relation to the purpose of the use, because “MOB's totes must successfully conjure Louis Vuitton's handbags in order to make sense”(at 445).

As for the fourth factor, the effect of the use upon the potential market, Judge Furman had found that even though

“MOB's totes are, in an abstract sense, in the same market as Louis Vuitton's handbags, its totes do not "serve[] as a market replacement for" Louis Vuitton's bags in a way that would make "it likely that cognizable market harm to [Louis Vuitton] will occur… [as] any reasonable observer would grasp that the whole point of MOB's invocation of the "my other car..." trope is to communicate that MOB's totes are not replacements for Louis Vuitton's designer handbags. See Cariou v. Prince, 714 F.3d 694, 707 (2d Cir.2013) ("What is critical [in evaluating a fair use defense] is how the work in question appears to the reasonable observer.") (at 445).

The Second Circuit: the use is transformative

The Second Circuit reviewed the summary judgment de novo and affirmed both the award of summary judgment to MOB on Louis Vuitton’s trademark infringement claim, trademark dilution claim, and copyright infringement claim.

The Second Circuit found that MOB's use of Louis Vuitton’s designs was a parody which “produces a “new expression [and] message” that constitutes transformative use…. Like the district court, we conclude that the remaining fair-use factors either weigh in MOB's favor or are irrelevant, see Louis Vuitton Malletier, S.A. v. My Other Bag, Inc., 156 F. Supp. 3d at 444–45, and LV's arguments to the contrary largely repeat or echo those we have already rejected.”

This case signals that the Second Circuit is continuing to affirm the importance for a court to assess whether a particular use is transformative when deciding whether a particular use is fair use or not.

Richard Prince May Offer the SDNY Another Chance to Define Transformative Use of a Work

Richard Prince was sued on November 16 by yet another photographer over the use of a photograph in his New Portraits series. The case is Eric McNatt v. Richard Prince, 1:16-cv-08896, Southern District of New York (SDNY).

Readers of this blog may remember that Richard Prince used various photographs protected by copyright to create his New Portraits exhibition. He had commented, cryptically, or nonsensically, whatever your mood is, below several photographs which had been uploaded by others on Instagram. He then printed the results on canvas to create a series of works, New Portraits, which has been shown in New York. Prince has been sued by some of the copyright holders of the original works (see here and here). One of these cases, Donald Graham v. Prince, is still pending at the SDNY.

This time, it is photographer Eric McNatt who is suing Richard Prince and the Blum and Poe Gallery for copyright infringement. The complaint alleges that Richard Prince reproduced a photograph taken by Plaintiff of Kim Gordon, a founding member and bassist of Sonic Youth, by downloading it from the web, where it had been published with a copyright notice, and uploading it on his own Instagram account. Prince has since deleted this account. Prince then wrote three lines of comments under the photograph:  “Portrait of Kim Gordon,” then “Kool Thang You Make My Heart Sang You Make Everythang Groovy” and finally added a string of music-related emojis.

This Instagram post and its comments was then printed and added to the New Portraits exhibition, which was shown in the spring of 2015 by the Blum & Poe gallery in Tokyo and featured in the catalog of the exhibition.

Will TCA Television Corp. v. McCollum Influence the Outcome of this Case?

The Donald Graham v. Richard Prince case is still pending at the SDNY. On November 4, attorneys for Donald Graham sent a letter to Judge Sidney Stein from the SDNY, who is presiding over the case, to alert him of the recent TCA Television Corp. v. McCollum Second Circuit case (2^nd Circ. Oct. 11, 2016), which, in their view, “undermines Defendants ‘motion to dismiss on fair use grounds.”

In TCA Television Corp., the author of the play Hand of God had been sued by the heirs of Abbot and Costello over the use of their famous “Who’s on First” routine. The main character of the play recites the routine verbatim in the play with his trusty (but evil) sock puppet acting as sidekick. Judge Daniels from the SDNY had dismissed the copyright infringement suit, finding the use of the routine in the play to be fair use. The Second Circuit affirmed, but on alternative grounds: the use of the routine was not transformative enough to be fair use, but the heirs had not proven that they owned the copyright in the routine.

Attorneys for Prince sent their own letter a few days later, where they argued that the holding in TCA Television is distinguishable from the case, that the TCA Television case is not even related to fair use and that thus “the entire discussion of fair use is dicta.” They also argue that the Second Circuit did not find the use of the routine to be fair because, according to the Court, “the extent of defendants’ taking is identically comedic to that of the original authors, that is, to have two performers expand on a singular joke in order to generate increasing audience laughter.”

Attorneys for Prince also argued in the letter, that, “[b]y contrast, Prince used Graham’s photograph for a highly transformative purpose: as a commentary on social media. This new meaning and message is apparent to any reasonable observer who looks at the artwork. “Prince’s attorneys also argued that “Prince’s transformative purpose [was] to provide a commentary on social media [and thus] required the incorporation of the entire Instagram post… to accomplish that purpose. “

Is the use of the McNatt Photograph Transformative Enough to be Fair Use?

What is transformative use? We still do not have a “so transformative it is fair use” test. However, the TCA Television case may influence the McNatt v. Prince case. If we consider that Prince’s purpose for reproducing Eric McNatt’s photograph of Kim Gordon was to comment on social media, as claimed by Prince’s attorneys in the Graham v. Prince case, then it is fair use under Cariou if Prince added something materially new or provided a different aesthetic. The Second Circuit had found in Cariou v. Prince that Prince’s use of Cariou’s photographs was fair use, because he had used them to create new works and had “employ[ed] new aesthetics with creative and communicative results distinct from Cariou.”

Judge Daniels from the SDNY had found in TCA Television that the use of the routine was fair use, explaining that “[t]he contrast between Jason's seemingly soft-spoken personality and the actual outrageousness of his inner nature, which he expresses through the sock puppet, is, among other things, a darkly comedic critique of the social norms governing a small town in the Bible Belt. Thus, Defendants' use of part of the Routine is not an attempt to usurp plaintiffs’ material in order to "avoid the drudgery in working up something fresh." Campbell, 510 U.S. at 580, 114 S.Ct. 1164. Nor is the original performance of the [r]outine "merely repackaged or republished." Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 97 (2d Cir.2014).”

The Second Circuit found that the use was not fair because it had not transformed the routine's aesthetic, it had appropriated the routine extensively, and “[n]o new dramatic purpose was served by so much copying” and “there is nothing transformative about using an original work in the manner it was made to be used.”

If we apply this to our case, then Prince must prove that he used the original work in a different manner than it was made to be used. Should we only look at the comments written by Prince to decide if the use is transformative enough to be fair, or at the ensemble, work and comments? In both ways, the Prince’s work could be considered fair use if proven to be a critique on the desperate banality of social media and social media comments. But is it?

As noted by the Complaint, “Kool Thang You Make My Heart Sang You make Everythang Groovy” is “a transliteration of lyrics to the 1960 song “Wild Thing,”written by Chip Taylor, except that the word “Kool” replaces the word “Wild.” “Kool Thing” is the title of Sonic Youths first major label record single.” As itself, this comment may not be original enough to be protected by copyright yet it is more creative than most social media comments. The emojis chosen by Prince, however, are quite banal and so their banality may comment on banality. Pass the aspirin.

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

Broadcasters triumph in battle to define internet streaming

The US based television streaming service ivi suffered a major setback this week after the federal appeals court upheld a lower court’s temporary injunction against the controversial company.

The case was brought against  Seattle based ivi by ABC, NBC, Universal, Univision, Fox Television, CBS and several other broadcasters, networks and rights owners, asserting that the startup was infringing their copyrights by live-streaming their programming without permission. Initially, ivi began retransmitting signals from about 30 New York and Seattle stations in 2010, but it quickly expanded, retransmitting signals from Los Angeles and Chicago and offering several thousand copyrighted programs to its subscribers. For about $5 per month, subscribers could access content owned by and distributed through major networks. 

In its ruling, the U.S. Court of Appeals for the Second Circuit said that allowing ivi to resume service could “threaten to destabilize the entire industry” and inflict irreparable damage on the networks.   It also determined that ivi was not legally the same as a cable network, noting in particular that it “retransmits broadcast signals nationwide, rather than to specific local areas". Ivi’s position is that as it was an "Online Video Distributor" that could be considered a cable system, it only required the same compulsory licenses the U.S. Copyright Office grants to cable providers under §111 of the Copyright Act, and that it didn’t need consent to retransmit signals because as an online service it is outside the Federal Communications Commission’s remit.  The company argued that like other cable systems, it merely had to pay a statutory rate of about $100 a year to have access to the content. 

Giving the unanimous judgment of the Court, Judge Denny Chin reviewed ivi's system of capturing and retransmitting programming, with the ability to record, pause, fast-forward, and rewind streams, and its legal arguments. The judge says that based on the statutory text of the copyright provision, it was "not clear" whether a service that retransmits live television programming over the Internet constitutes a cable system and said the growth of "cloud-based systems...highlights the uncertainty". But Judge Chin then noted that "Congress has not codified a statutory provision for Internet retransmissions, nor has it included the 'Internet' as an acceptable communication channel under § 111.7." and that the statutory licensing system was put in place to allow remote rural  communities to obtain a stronger TV signal – and that Congress was not “opening the door to digital streamers”. Put simply, the Second Circuit said that streaming services are not cable systems. 

Upholding the February 2011 decision of Judge Naomi Reice Buchwald in the U.S. District Court for the Southern District of New York, granting a preliminary injunction barring ivi from transmitting copyrighted material belonging to such as ABC, CBS, NBC, Fox Television and Major League Baseball, Judges Chin, Ralph Winter and Christopher Droney said “The absence of a preliminary injunction would encourage current and prospective retransmission rights holders, as well as other Internet services, to follow ivi’s lead in retransmitting plaintiffs’ copyrighted programming without their consent” and noted that if ivi’s service were to continue “The strength of plaintiffs' negotiating platform and business model would decline. The quantity and quality of efforts put into creating television programming, retransmission and advertising revenues, distribution models and schedules –- all would be adversely affected. These harms would extend to other copyright holders of television programming. Continued live retransmissions of copyrighted television programming over the Internet without consent would thus threaten to destabilize the entire industry." 

"We are very pleased the Court recognized that ivi's unauthorized streaming of our copyrighted content would substantially diminish the value of television programming," said ABC, NBC, CBS and Fox in a statement. "

1709 Readers will remember that Judge Chin was also the judge in the 'Google Books' settlement - where he rejected in Google's first offering as it gave Google a significant advantage over competitors, and would have rewarded the web giant for wholesale copying of copyrighted  works without permissions.

More at the Hollywood Reporter and The New York Law Journal

WPIX v ivi 11-788-cv