37541052 – belchonock

It is not often that a court of law can issue a landmark opinion laden with profanity and sexual innuendos.  But last Friday, the United States Court of Appeals for the Federal Circuit seized the opportunity in a colorful decision holding the refusal of the United States Patent and Trademark Office (USPTO) to register street artist Erik Brunetti’s mark “FUCT” is an unconstitutional restriction of Brunetti’s right to free speech.

Brunetti and professional skateboarder Natas Kaupas created the “Fuct” clothing brand in 1990 and sought to register “FUCT” as a federal trademark in 2011.  In its refusal, the USPTO cited Section 2(a) of the Lanham Act which case law has interpreted to bar registration of a mark if a “substantial composite of the general public” would find it “immoral” or “scandalous.”  Brunetti then turned to the Trademark Trial and Appeal Board (TTAB) to no avail.

Since the enactment of the 1905 Trademark Act, the USPTO has had the power to refuse registration to marks deemed immoral, scandalous, deceptive, or disparaging.  This restriction was imported into the Lanham Act in 1946 and withstood a constitutional challenge in the 1981 case In re McGinley where the government successfully argued a refusal to register a mark does not implicate an applicant’s First Amendment rights because the applicant can still use the mark as he or she pleases, just without federal trademark protection.

Then came a game-changer when the U.S. Supreme Court decided the pivotal case In re Tam this June involving an Asian rock group who sought trademark registration of the racial slur “THE SLANTS” but was denied under the disparagement provision of Section 2(a).  In Tam, the Court found refusing to register “THE SLANTS” constituted an impermissible viewpoint-based restriction on speech and struck down the disparagement element of 2(a) as unconstitutional.

Judge Kimberly A. Moore of the Federal Circuit wasted little time affirming the TTAB’s finding that “FUCT” was an immoral and scandalous mark rooted in an “unmistakable aura of negative sexual connotations.”  However, Moore acknowledged that, although offensive and uncouth, an immoral and scandalous mark still conveys expression protected by the First Amendment and restricting registration on these grounds constitutes content-based discrimination.

The government conceded this but argued a form of intermediate scrutiny as set forth in the seminal Supreme Court case Central Hudson should apply because trademarks derive from a federal subsidy, involve a limited forum, and constitute commercial speech – arguments largely rejected in Tam.

Judge Moore was not persuaded and found the restriction fails even under intermediate scrutiny.  “In this electronic/Internet age, to the extent that the government seeks to protect the general population from scandalous materials, with all due respect, it has completely failed,” wrote Moore.  The Federal Circuit also found Section 2(a) was not sufficiently tailored enough to exclude, for example, only sexually explicit or obscene material, since “immoral” and “scandalous” are fatally ambiguous.  Moore noted how the subjective nature of Section 2(a) has caused a myriad of inconsistent registrations such as “BACKROOM MILF,” “MUTHA EFFIN BINGO”, and “FCUK” vs. the rejected marks “GOT MILF”, “F**K PROJECT” and Brunetti’s “FUCT.”

In the wake of Tam and Brunetti, critics are concerned that stripping the government’s ability to refuse registration to immoral and scandalous marks will poison the marketplace.  But Lincoln D. Bandlow, a partner in the Fox Rothschild LLP Los Angeles office who specializes in First Amendment and intellectual property matters, told the Los Angeles Daily Journal the market will keep scandalous marks in check.  “Market forces will tamp it down,” he said.  “There’s a lot of things people don’t say on television – not because people don’t want to hear it, but because sponsors don’t want to hear it.”  As for a truly obscene mark depicting sexual conduct, Bandlow added “then you’d have a scenario where you’d have material that’s not protected under the Miller test.”  Miller was the seminal 1973 case in which the Supreme Court held obscene materials do not enjoy First Amendment protection.

The government has ninety days from the entry of judgment to ask the Supreme Court for a writ of certiorari.  As of now, it appears the opinion is here to stay.

A federal court on Monday held California’s State Insurance Compensation Fund has no obligation to cover a series of claims from three porn actors against Cybernet for allegedly causing them to contract human immunodeficiency virus (HIV) during film shoots in 2013.

52004697

Cybernet, a San Francisco-based porn studio, was founded in 1998 and currently operates a series of adult-websites including Kink.com which primarily features content involving bondage, domination, sadism, and masochism (BDSM).  Actors John Doe, Cameron Adams and Joshua Rogers sued the company in 2015 for creating a dangerous and unsanitary work environment by failing to test performers for sexually transmitted diseases before each shoot, discouraging the use of condoms, and inviting random members of the public to participate in intimate group activities.  The actors further allege Cybernet intentionally misrepresented the shoots were safe by “requiring” the use of protection, subjected actors to physical assault without consent, and intentionally inflicted emotional distress by creating a situation where the spread of sexually transmitted diseases was virtually certain to occur.

After Cybernet demanded that its insurer, the State Fund, cover the actors’ tort claims, the State Fund fired back, arguing it already paid the actors medical expenses under California’s workers’ compensation system and owed no further duty.  U.S. District Court Judge for the Northern District of California Yvonne Gonzalez Rogers agreed and found the actors’ exclusive remedy for their negligence-based causes of action came within the workers’ compensation system.

Further, while the actors’ allegations of intentional misconduct were not necessarily relegated to workers’ compensation, Rogers found the insurance policy’s exclusion for “damages or bodily injury intentionally caused or aggravated by [Cybernet]” exempted claims of intentional torts.  Cybernet argued case law requires insurers to provide conclusive evidence demonstrating an exclusion of coverage applies and such evidence did not exist for a myriad of reasons, including the language of the policy itself which expressly covered “bodily injury by disease of an employee.”  Rogers was not convinced and cited precedent which indicated that even though an insurance policy can expressly cover a disease contracted on the job, claims that the employer intentionally caused or aggravated the disease are a different story.           

Cybernet has requested leave to file a motion for reconsideration.

My partner Nancy Yaffe has just posted a blog with disturbing implications for California entertainment lawyers. As young practitioners we  all were taught that every agreement with a person providing services on a film or TV show must include a provision that the results and proceeds of the person’s services are a “work made for hire” under copyright law.  This language is as important for entertainment lawyers as the Prime Directive is for Capt. Kirk on Star Trek. It now appears that the California EDD takes the position that the presence of those four words in a contract creates a presumption that the service provider is an employee, not a contractor. The Department will take this position even if none of the other indicia of employment are present, and regardless of the plain intent and structure of the Copyright Act.

Law concept: circuit board with  copyright icon, 3d render

Producers can still obtain copyright ownership using assignment language, but this has drawbacks, including that the assignor can terminate the assignment after 35 years. This presents producers with a difficult choice. Proceed as usual and run the risk of being assessed for back taxes and penalties, or engage all cast and crew as employees, with the inconvenience and cost that can entail.

Read Nancy’s enlightening blog here.

We blogged recently about criminal proceedings brought by the LA City Attorney against numerous defendants accused of operating pay-for-play casting workshops in which actors allegedly paid for the opportunity to audition in front of casting directors. These cases are working thei

Man in handcuffs covering face
Copyright: ratru / 123RF Stock Photo

r way through the justice system, as some defendants pled guilty. Two more casting directors have taken guilty pleas, while some twenty-five are still awaiting trial.

Read more about it in the Deadline Hollywood story here.

The stakes just raised in an imminent trial over the validity of the San Diego Comic-Con trademark. What started out as a straightforward trademark dispute has now implicated First Amendment free speech issues.

10066940 – super hero and a ninja doing battle.

The underlying case involves an action by SDCC, which owns a trademark registration for San Diego Comic-Con, against Dan Farr and Bryan Brandenburg, organizers of a Utah convention named Salt Lake Comic Con. Among Farr’s and Brandenburg’s defenses is that “Comic Con” has become a generic description of fan conventions of that type. I recently blogged about this here.

Springing into action outside the courtroom as well as in, Farr and Brandenburg made numerous posts on their website and social media accounts, including by posting court documents, painting themselves as plucky Davids against the mighty San Diego Goliath. In addition to the trademark arguments, their posts also included accusations of fraud against SDCC, but these claims were dismissed last month on summary judgement. Ultimately, over 200,000 media articles were written on the case.

Anthony Battaglia, the US District Judge in San Diego, became concerned that the extensive coverage would taint the local jury pool. He issued a series of gag orders requiring both sides to refrain from discussing the issues publicly or from posting court documents. He also ordered Farr and Brandenburg to post a disclaimer on the Salt Lake Comic Con website specifically stating that they were under court order to make no comments on the case.

Farr and Brandenburg petitioned the Ninth Circuit Court of Appeals for a writ of mandamus overturning the District Court order on First Amendment grounds. They assert that they order constitutes a prior restraint on free speech, which is highly disfavored under First Amendment jurisprudence. They claim that, contrary to Judge Battaglia’s point that the imminence of trial justified his order, “the nearness of trial weighs at least as heavily against prior restraints … because that is the ‘precise time when public interest in the matters discussed would naturally be at its height.'”

They argue further that the gag order is overbroad. The judge could, for example, have prohibited comment only on the fraud claims that had already been dismissed without also barring comment on the genericness of SDCC’s trademark, which is the critical issue in the case. The ban on posting court documents also aroused Farr’s and Brandenburg’s ire. They claim that a prior restraint on truthful publication of official court records is “unprecedented.”

They had this to say in opposition to the mandated disclaimer:  “[T]he petitioners should not be forced to make the Hobson’s choice between (1) acquiescing in the continued infringement of their right to remain silent, by retaining the unduly intrusive disclaimer mandate, or (2) saying nothing, not even that they have been suppressed, when they want to explain their silence.”

The Ninth Circuit agreed on October 3 to hear the petition and gave SDCC until October 6 to file its answering brief. In a rare move, the appeals court also invited Judge Battaglia to respond to Farr’s and Brandenburg’s petition.

 

1. Registration of a song with a PRO does not provide any copyright protection.

Closeup of earbuds and smartphoneThe most common misunderstanding I encounter from songwriters is that registering their songs with one of the U.S. music performance rights organizations (“PROs”), i.e. ASCAP, BMI, SESAC or GMR, gives the songwriter some protection of their intellectual property rights in their songs. That is simply not the case. Registration of a song with a PRO simply puts the song into the licensable database of the PRO and makes the proprietor information publicly available.

Music performance rights organizations, also known as performing rights societies, act as licensing agents for songwriters and music publishers with respect to the public performance of their songs. In order to play a copyrighted song on radio (over-the-air, satellite and internet), on television (network, cable, satellite and internet), perform it live (bars, concert halls and festivals) or digitally stream it (Pandora, Spotify, etc.), a public performance license must be obtained from the writer and publisher.

Registering a song or catalog of songs with a PRO will enable a songwriter or publisher to receive public performance rights and allow them to participate in events or take advantage of collective negotiating efforts, but that is all the registration does. The PRO registration does not register the copyright in a song or provide any licensing benefits other than public performance. In order to obtain the full benefits of copyright law protection, the writer or publisher should register their songs with the U.S. Copyright Office.

Although copyright registration is not a prerequisite to copyright protection, it is certainly “cheap insurance” from an intellectual property standpoint. If registration is made within three months of publication of the song or at any time prior to an infringement of the song, the copyright owner is entitled to seek statutory damages and attorney’s fees in federal court. That means a losing infringer may have to pay the owner’s legal fees and the damages awarded to the owner may be substantially increased based on the copyright law.

In addition to registering their songs with a PRO, songwriters and publishers should take the additional step of registering the copyrights in their songs with the Copyright Office. PRO registration is beneficial for searching writer/publisher information and for performance royalty collection purposes, but songwriters and publishers should not assume that registration provides any more expansive advantages than it actually does.

2. PROs issue licenses for public performance of songs and collect performance royalties (that is basically all they do).

The right of public performance is one of the exclusive rights granted to copyright owners under the U.S. Copyright Act (see 17 U.S. Code §106). Although copyright law allows songwriters and publishers to license performance rights themselves, it would be impossible (or at least impractical) for them to negotiate licenses with every radio station, television station, concert hall, etc. So, the concept of performing rights organizations arose. PROs aggregate the performing rights of writers and publishers, negotiate licenses with users of their music, collect the income from those licenses, and distribute that income to the applicable writers and publishers after deducting their operating expenses.

PROs track performances using various reporting and sampling techniques, and they offer both catalog licenses and per-use licenses. PROs do provide certain career development assistance, legislation advocacy efforts and philanthropic help for their members and outside musicians. They consistently present concerts, expos, seminars, workshops, camps and other activities for their members and the public, but that is where their efforts stop. PROs are not huge rights clearing houses for song catalogs.

3. Registration of a song with a PRO does not facilitate issuing mechanical licenses or synchronization licenses.

PROs do not issue mechanical licenses, synchronization licenses or any music publishing licenses other than public performance licenses. Registration of a song with a PRO makes the relevant writer/publisher information searchable for the song, which may help a potential licensee locate the proprietor of a song. However, the applicable PRO does not have any involvement in procuring, negotiating or issuing mechanical licenses for recordings of songs by recording artists or synchronization licenses for uses of songs in films, television programs, video games or other audiovisual productions. Those types of licensing must be handled separately by a songwriter’s music publisher and/or attorney.

Spotify, the world’s largest music streaming service, was sued last week for over $366 million by two music publishers, Bluewater Music Services in Nashville and a group of companies affiliated with Bob Gaudio, the award-winning songwriter and member of Franki Valli and the Four Seasons.

Closeup of earbuds and smartphoneEach plaintiff claims in their lawsuit that Spotify failed to comply with the requirements of Section 115 of the U.S. Copyright Act for obtaining mechanical licenses to use the plaintiff’s songs on Spotify’s streaming service, thereby infringing the plaintiff’s copyrights. Under U.S. law, streaming companies like Spotify are not required to negotiate mechanical licenses with publishers, but they must send publishers written notices of their intention to obtain compulsory licenses. The plaintiffs claim that Spotify did not provide proper notices to them and continued to stream their songs without mechanical licenses.

When a stream occurs, it utilizes two of the exclusive rights granted to a copyright owner of a song, the reproduction right and the communication right. In the music publishing business, those are known as “mechanical rights” and “performing rights.” Performance rights are licensed in the U.S. by performing rights organizations, like ASCAP, BMI and SESAC, which each represent different catalogs of songs. Mechanical rights in the U.S. are licensed primarily through The Harry Fox Agency, which acts as a licensing agent for music publishers, but mechanical rights in many songs must be obtained from individual publishers or songwriters, who can be challenging to locate and communicate with.

This is not the first time Spotify has been admonished for failing to implement adequate procedures to notify song proprietors of Spotify’s intention to add their songs to its playlist. In 2016, Spotify reached a $30 million settlement with the National Music Publishers’ Association (NMPA) for unpaid mechanical royalties and Spotify recently settled a class action suit by a group of songwriters led by David Lowery for $43.3 million. The largest members of the NMPA are the major music publishing companies, whose parent companies own a combined 18% of Spotify, according to the recent lawsuits. The lawsuits claim the three major U.S. record companies stand to make $700 million each if Spotify pursues a public offering (which is anticipated this year), thus fostering speculation those companies settled the lawsuits to protect that windfall.

In those prior lawsuits, Spotify emphasized the difficulty of identifying and contacting each song publisher and the company agreed in the settlements to “work collaboratively to improve the gathering and collecting of information about composition owners to help ensure those owners are paid their royalties in the future.” The complaints in the recent lawsuits claim that Spotify has “built no infrastructure capable of collecting compositional information and failed to ask for such information.”

In most countries outside the U.S., mechanical rights are licensed via a centralized collective licensing organization, which represents all the song owners in the particular country. Even if music publishers license their songs directly to a streaming service, the mechanical rights “society” in their country usually handles the administration associated with collecting and paying out the royalties due. In the U.S., there is no industry-wide or national organization to assist with processing mechanical licensing and collecting mechanical royalties

Although the U.S. music industry has acknowledged that a global music rights database is necessary, no one has yet made it a reality. Everyone seems to agree that songwriters and music publishers should be paid properly when their songs are streamed, and some argue it is the responsibility of the well-financed streaming firms to design a system to identify songs and make appropriate payments. Others argue the music publishing establishment should create a industry-wide system for identification and payment.

If the U.S. were to adopt the nationwide collective licensing model utilized in almost all other countries and create a centralized mechanical licensing entity, the recent lawsuits against Spotify would never have been necessary. Unfortunately, that is not likely to occur due to the entrenched and vested business interests involved, and the reluctance to collaborate and share databases of song information, which many consider to be proprietary.

Copyright: <a href=’https://www.123rf.com/profile_pasta77′>pasta77 / 123RF Stock Photo</a>

An ugly dispute between two reality stars has the potential to create precedent on the responsibility of television networks for posts by its talent on social media sites.

The protagonists are Mykel Hawke and Joseph Teti, both veterans of Special Forces. The seeds were sown when Teti, who was Hawke’s former employee, was given a show by Discovery Network called Dual Survival. Hawke already had a similar show on Discovery, entitled Man, Woman, Wild. Things only got worse after Hawke’s show was cancelled. The parties traded attacks on Facebook. Hawke accused Teti of complicity in a fatal helicopter crash and of misrepresenting his military service. Teti questioned Hawke’s mental health. Litigation ensued.

The battle ultimately involved four juridsictions. In Texas, Hawke sought a protective order against Teti’s alleged stalking. Teti’s riposte was to file a defamation action in North Carolina. Hawke counterattacked in South Carolina, bringing his own suit for defamation and tortious interference. In a creative move, Hawke’s lawyers named Discovery as a co-defendant in this action. Their theory is that Discovery is responsible for the social media posts of its employee Teti. The complaint alleges that Discovery “failed to take action to stop the defamatory statements from being posted online,” and failed to “adequately train personnel in public interaction, when and what types of communications employees should say publicly and/or put into print.”

Teti was dismissed from the South Carolina suit for lack of personal jurisdiction. Discovery, now sole defendant, moved for summary judgment and subsequently removed the case to federal court in Maryland.

Discovery’s first argument for summary judgment goes to the underlying alleged defamation: simply that the facts will not support a claim that Teti’s statements meet the legal standard for defamation.

The network moves on to rebut its alleged direct liability for the posts. It says that in response to Hawke’s complaints about Teti’s posts on the official Dual Survival Facebook page, it applied a filter to block any posts containing Hawke’s name. It also claims that Hawke has been unable to state with certainty whether particular statements were made on an official page or on Teti’s personal social media accounts. Discovery also denies that it ever directed or encouraged Teti to say the things he did.

As far as vicarious liability goes, Discovery argues that Teti’s remarks were “outside the course and scope of his duties at Discovery.” It asserts that Teti made the posts entirely on his own, on his own time, not on the set, and using his own internet connection and devices.

Discovery also makes an interesting statutory argument under Section 230 of the Communications Decency Act. That section provides that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” It is due to this section that, for example, it would likely have been futile for Hawke to sue Facebook itself for the contents of the Dual Survival Facebook page. Discovery argues that by creating and administering the page on which third parties could share content, it should be likewise regarded as an “interactive computer service” with complete immunity from Hawke’s causes of action.

In just a few short years, social media have transformed our world. Cases such as this one have the potential to establish the legal principles that will guide parties’  behavior going forward.

The Jukebox musical is alive and well and living on Broadway. From the songs of Gloria Estefan to Carole King, from Frankie Valli to Abba, we are amidst a 20-year old trend to present pop music’s biggest hits on the live theatrical stage. Indeed, blockbusters like Jersey Boys, Mamma Mia and Rock of Ages have encouraged music rights holders to exploit their catalogues in what has proven for some to be a very lucrative market, and the 2018-2019 Broadway season continues to welcome jukebox properties to the Great White Way.

Woman singing with microphone
Copyright: arturkurjan / 123RF Stock Photo

The licensing of a non-dramatic musical composition (for example, a pop song) for use within a dramatico-musical stage play (aka a musical) is often misunderstood by creatives and rights holders alike. To debunk some commonly held misconceptions, here is my 60-second elevator summary:

  1. A grand right is a right that subsists in the entire dramatico-musical play as a single work – not the music in and of itself. As such, a “grand right” combines the elements of the music, lyrics and book of a dramatico-musical or operatic work into a single right. A grand right is usually owned and controlled by the theatrical producers and/or composers who create the dramatico-musical or opera. When your child’s middle-school performs Annie for the ninth year in a row, that performance is the exercise of a grand performance right.
  2. If you are looking to incorporate existing, non-dramatic compositions into a dramatic work, for example, in the creation of a jukebox musical, you will need to obtain a dramatic performance license. Whereas performance rights societies such as ASCAP are able to grant licenses for non-dramatic performances of non-dramatic compositions (e.g., to allow your gym to play Rihanna), only the copyright owner of the non-dramatic composition can grant a dramatic performance license – customarily, the music publisher.
  3. Always keep in mind, dramatic performance licenses do not include a grant of life rights and/or underlying rights to the story of the writers or performers of the non-dramatic compositions. If you intend on acquiring a dramatic performance license to tell the story of your favorite band, you will also need to obtain some kind of life rights and/or underlying rights agreement.

Understanding these distinctions can save creatives and producers time and expense in the long run, particularly in this evolving and competitive ancillary rights market.

Charlie Nelson Keever writes:

The Supreme Court ruled this morning that a federal law that prohibits the government from registering trademarks that “disparage” others violates the First Amendment.

Members of an Asian-American rock band filed a lawsuit after the U.S. Patent and Trademark Office (PTO) kept the band from registering its name, The Slants, a reference to the derisive slur sometimes wielded against Asian-Americans. The PTO said the name was likely to denigrate a significant number of Asian-Americans in violation of the Lanham Act, which prohibits any trademark that could “disparage … or bring … into contempt[t] or disrepute” any “persons, living or dead.”

Rock star cartoon
Copyright: kennykiernanillustration / 123RF Stock Photo

The band’s founder, Simon Tam, said the point of the band’s name is just the opposite. “[Growing up] the notion of having slanted eyes was always considered a negative thing… Kids would pull their eyes back in a slant-eyed gesture to make fun of us. … I wanted to change it to something that was powerful, something that was considered beautiful or a point of pride instead.”

The Supreme Court sided with The Slants.

“The disparagement clause violates the First Amendment’s Free Speech Clause,” Justice Samuel Alito wrote in his opinion for the court. “Contrary to the Government’s contention, trademarks are private, not government speech.” Alito noted that the government “still has an interest in preventing speech expressing ideas that offend,” but suggested the “disparagement clause” was overly broad.

This case could have a broad impact on how the First Amendment will be applied in other trademark cases. In 2014, the PTO canceled the Washington Redskins’ trademarks, finding the term “Redskins” disparages Native Americans under the same statutory clause that was quashed by the Supreme Court today. The team is calling today’s ruling a win. Redskins attorney Lisa Blatt said in a statement, “The Supreme Court vindicated the team’s position that the First Amendment blocks the government from denying or cancelling a trademark registration based on the government’s opinion.” The Redskins’ case has been on hold in the U.S. Court of Appeals for the 4th Circuit in Richmond, pending today’s decision.


Charlie Nelson Keever is a summer associate in the firm’s Los Angeles office.