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IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks
April 2, 2008
Table of Contents
Siegel, et al. v. Warner Bros. Entertainment Inc., et al., USDC C.D. California, March 26, 2008
 Click here for a copy of the full decision. In a 72-page opinion, the district court granted in part the plaintiffs’ motion for summary judgment on their claim that in 1999 they successfully terminated their share of the grant of copyright for the Superman character made by creators Jerome Siegel and Joseph Shuster in 1938. The court also held that the termination applied only to the domestic copyright owned by DC Comics and not to any rights DC Comics might have in the Superman character in other countries.
At the center of the case were a 1938 agreement in which Siegel and Shuster sold the copyright for Superman for $130, a series of subsequent agreements, payments, litigation, and settlement negotiations, and efforts by Jerome Siegel’s heirs to terminate the original 1938 grant under §304(c) of the 1976 Copyright Act.
Regarding the plaintiffs’ efforts to provide notice of termination, the court held that the effective date of the plaintiffs’ termination notice was April 16, 1999. Pursuant to the statutory timeframe contained in section 304(c), the court counted back from that date 61 years and confirmed that any statutory copyright that had been secured in any Superman material prior to April 16, 1938, would be outside the scope of the termination notices and that defendants’ copyright ownership of that material would remain unaffected. The court confirmed that the dates on the notice are precisely enforced, and that the termination periods are calculated from the exact date of publication, rather than from the end of the publication year, as is appropriate for determining copyright terms under the 1976 Act.
At issue were two single-page “promotional announcements” that appeared in two comics, Detective Comics and More Fun Comics, allegedly published prior to the comic in which Superman was first presented, Action Comics, Vol. 1. The promotional announcements consisted of a black-and-white copy of the front cover of the Action Comics depicting Superman lifting a car.
The defendants relied upon the dates of publication contained in the initial term copyright registrations for each of the two prior comics, placing the promotional announcements outside the scope of the plaintiffs’ termination notice. The court rejected the plaintiffs’ argument that, at least with respect to one of the comics, the usual prima facie presumption of the facts stated in the registration certificate should not apply because the registration was not applied for until 28 years after publication. The court held that the statute did not provide for any such limitation on the presumption, nor did any case law.
The plaintiffs also tried to rebut the evidentiary presumption of the accuracy of the date of publication by presenting the testimony of an expert in the comics industry, who had previously been hired by DC Comics to help them establish publication dates for copyright registration certificates. The expert testified that the dates in the copyright applications were usually “mere guesstimates.” The court considered the testimony insufficient because it did not provide any evidence that the publication date in the specific registrations at hand were not accurate.
The court held that the front cover of Action Comics, Volume 1 was first published prior to April 16, 1938, and, therefore, that whatever copyrightable material was included in that cover remained unaffected by the termination. The court reviewed the cover in the promotional announcement and concluded that the defendants can continue to exploit “the image of a person with extraordinary strength who wears a black-and-white leotard and cape.”
The defendants had claimed that portions of Action Comics, Volume 1 were a work made for hire for Detective Comics and thus were not subject to termination. The court, however, held that the defendants were collaterally estopped from making such arguments by virtue of their prior litigation with Siegel and Shuster and the final judgment entered by the Second Circuit in 1974.
The court also rejected the defendants’ attack on the termination notices for failing to specifically reference a 1948 Consent Judgment resulting from another prior litigation between the parties. The court noted that only “grants of rights” needed to be referenced in the termination notice, and the Consent Judgment did not effectuate any “grant” of any rights: it was merely a repetition and confirmation of a prior stipulated agreement of settlement in that action – which was identified in the termination notices. In any event, the court held that in light of the fact that the stipulation was identified, the failure to identify the consent judgment was a “harmless error” – which will not affect the adequacy of the information in a termination notice.
The court rejected the defendants’ statute of limitations defense. The court held that the defendants’ letter to the plaintiffs challenging the scope of the rights that could be recaptured by the termination notices was not a “plain and express repudiation of co-ownership,” required for approval of the limitations period, because the letter did not challenge the validity or enforceability of the notices. The court also rejected the defendants’ argument that a written settlement outline constituted a final settlement agreement binding upon the plaintiffs.
Having concluded that the plaintiffs effectively terminated Jerome Sigel’s grant of copyright contained in Action Comics, Volume 1, the court went on to address the limitations and scope of the termination right. First, the court held that the plaintiffs did not recapture any right to foreign profits arising by virtue of exploitation of any Superman work outside the United States. The court held that the termination statute itself, Section 304 (c)(6)(E), expressly states that the termination “in no way affects the rights arising under any other Federal, State, or foreign laws.” The court concluded that the termination notice affects only the domestic portion of Siegel’s and Schuster’s 1938 worldwide grant (“all rights”) to Detective Comics of the copyright in the Superman material contained in Action Comics, Volume 1. The termination notice is not effective as to the remainder of the grant, that is, the defendants’ exploitation of the work abroad under the aegis of foreign copyright laws. Thus, although the defendants retained the unfettered right to exploit the work (and retained the profits derived therefrom) in foreign nations, they may do so domestically only as a co-owner (through Shuster’s share) of the works.
The court held, and the parties essentially conceded, that the plaintiffs were not entitled to any of the profits the defendants obtained through the use of Superman trademarks that are purely attributable to those trademark rights, and, pursuant to the derivative work exception in the statute, the plaintiffs are not entitled to any profits derived from the post-termination use of pre-termination derivative works.
Yari v. Producers Guild of America, Inc., et al., California Court of Appeal, Second Appellate Division, March 25, 2008
Click here for a copy of the full decision. Plaintiff Bob Yari was a producer of the movie Crash, but did not receive an Academy Award when the movie won the Best Picture award in 2006 because the Academy of Motion Picture Arts and Sciences and the Producers Guild of America had determined that he was not a producer for purposes of the award. Yari appealed the decision to the Academy and the Guild without success and then filed suit in state court claiming that the decision by the Academy and the Guild should be subject to judicial review. The trial court disagreed and entered judgment in favor of the defendants following the defendants’ demurrer and the appeals court affirmed.
The court noted that the common-law right of fair procedure has been used to subject the decisions of private organizations to judicial review only when such decisions deny or limit an individual’s ability to work (for example, exclusion from membership in a labor union) or involve quasi-public institutions which operate in the public interest (for example, medical organizations that conduct disciplinary proceedings against members). However, in this case, the appellate court found that the defendant’s decision about Best Picture producer credit did not have the power to deprive Yari of the ability to practice his trade. This holding was based in part on allegations in the complaint regarding Yari’s own career including the statement that he “has been and continues to be engaged in the profession of motion picture producing.” The appellate court also found that the Academy Awards do not act as a “certification” for making movies because the awards do not determine who can work. Rejecting the notion that the defendants were “quasi-public entities,” the court stated that while the public is interested in the motion picture industry, “[t]hat does not mean that industry-related organizations like the defendants operate in the public interest.”
The court also rejected the plaintiff’s argument that the organizations had breached a contract by asking him to complete an eligibility application and then not following their own rules and awarding him the Best Picture award, or that the organizations breached a fiduciary duty owed to him. The court found that “Yari’s application for an award did not create a contract, or a promise on which reliance was reasonable.”
Elektra Entertainment Group, Inc., et al. v. Barker, USDC S.D. New York, March 31, 2008
Click here for a copy of the full decision. Plaintiff record companies filed suit against the defendant for copyright infringement, alleging that she copied and made available for distribution to others copyrighted sound recordings. The defendant moved to dismiss for failure to state a claim, arguing that: (1) the complaint does not plead copyright infringement with adequate specificity; and (2) making copyrighted recordings available for distribution to others was not a right protected by the Copyright Act.
With respect to the “make available” claim, the defendant argued that the plaintiffs cannot establish a violation of their distribution rights without an actual transfer of the plaintiffs’ works by the defendant. The plaintiffs, in turn, argued that §106(3) includes not only an exclusive right to physically distribute their copyrighted sound recording to the public but also an exclusive right to “make available” the copyrighted sound recordings to the public. Relying heavily on statutory construction and legislative history, the court held that the term “distribute,” which is not defined in the Copyright Act, and the term “publication,” which is defined in the Act, are synonymous. Having reached this conclusion, the court looked to the Act’s definition of “publication” in §101 in concluding that “the offer to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display” can violate the distribution right in §106.
The court nonetheless “hesitate[d] in equating this avenue of liability with the contourless ‘make available’ right proposed by Plaintiff[s],” finding support for the theory quite limited and that the Fourth Circuit’s decision in Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (1997), was not grounded in the statute. Given that the record companies had used the “make available” language in their complaint, and had not affirmatively pled that the defendant “made an offer to distribute, and that the offer to distribute was for purposes of further distribution, public performance, or public display,” the court provided the plaintiffs with thirty days to amend their complaint to be consistent with the opinion and affirmatively plead such an offer. The court found that despite a failure to state a claim with the existing “make available” language in the complaint, dismissal was not appropriate at this stage because the plaintiffs also had alleged actual distribution.
In reaching its holding with respect to offers to distribute, the court disagreed with the argument that the approval and understanding of WIPO by the 105th Congress should control the interpretation of §106(3).
The court additionally rejected the defendant’s argument that the complaint should be dismissed because it does not describe the infringement or the dates and times on which the infringements allegedly occurred, finding that the complaint adequately put the defendant on notice of the alleged acts of infringement. In reaching this conclusion, the court noted that the plaintiffs’ complaint attached a copy of the defendant’s “shared folder,” which included a comprehensive list of the infringed works, identified the network used and provided the defendant’s alias. The court found that a specific date or time of infringement was not required when continuing infringement was pled. Notably, the court was “unpersuaded” by a recent decision from the Southern District of California (Interscope Records v. Rodriquez), which held a similar complaint was not sufficient to state a claim upon which relief could be granted.
Smith, et al. v. Stewart, Georgia Court of Appeals, March 28, 2008
Click here for a copy of the full decision. A Georgia trial court denied the defendant author and publisher’s motion for summary judgment on the plaintiff’s defamation claim, and the Georgia Court of Appeals affirmed.
The author, Haywood Smith, wrote a bestselling novel called The Red Hat Club about five women living in Atlanta. The author admitted that she had used some information about the plaintiff, who was a childhood friend of the author, to create one of the characters, including the death of the plaintiff’s first husband, the subsequent insurance payment, a second marriage to someone who stole the insurance money, moved to Florida and transferred his assets to a mistress, the plaintiff’s attempt to locate her second husband by advertising a reward for information about him in a Florida newspaper, and her decision at age fifty to become a flight attendant. The author also claimed that she made up many other attributes of the character including that she is an alcoholic who drinks on the job, is sexually promiscuous, is foul-mouthed, insensitive, ill-mannered, a right-wing reactionary and a loose canon with a bad temper.
The trial court had found that despite the book being labeled a work of fiction, the many specific similarities between the plaintiff and the character in the book, the numerous references to actual people and places and the nature of the allegedly defamatory statements created jury questions as to whether the book contained false and defamatory statements concerning the plaintiff, and the appeals court agreed. Addressing the first element of a defamation claim, whether the publication could be found to be “a false and defamatory statement concerning the plaintiff,” the appeals court stated that the test is “whether persons who knew or knew of plaintiff could reasonably have understood that the fictional character was a portrayal of the plaintiff,” and it is not an issue of what all the world understands. In addressing whether the excerpts from the book could reasonably be understood to be stating actual facts about the plaintiff when it was a work of fiction, the appeals court noted that the test for libel is not whether the story is characterized as fiction or not, but whether the portions, in context, could be reasonably understood as describing actual facts about the plaintiff.
The appeals court then went on to address the defendants’ claim that they were entitled to summary judgment on the plaintiff’s defamation claim because she did not plead or present evidence of special damages, finding that extrinsic evidence was not required because passages of the book related to alcohol abuse and sexual promiscuity were defamatory per se.
The appeals court also affirmed denial of summary judgment on the plaintiff’s claim of negligence, finding that a jury issue exists as to whether the publisher, who was aware of the plaintiff’s allegations of defamation before the book was issued in paperback, exercised ordinary care by undertaking reasonable steps to protect a private person from defamatory statements. However, the court dismissed the claim of negligence against the companies who published the book in audio and large print format because they did not have actual knowledge of the plaintiff or her allegations about the book.
The plaintiff’s complaint also included claims of false light invasion of privacy, public disclosure of private facts, negligent infliction of emotional distress and intentional infliction of emotional distress. The defendants argued that the plaintiff simply recast her defamation claim as public disclosure of private facts claim, but the appeals court disagreed, noting that the elements for the tort of public disclosure of private facts differ from the elements required to prove a defamation claim. However the court did dismiss the claim of false light invasion of privacy because it is encompassed in the defamation claim, and the court dismissed the plaintiff’s claims for negligent and intentional infliction of emotional distress because there is no evidence of physical injury resulting from the defendants' alleged negligence and no evidence that the defendants’ actions in writing and publishing the work were directed at the plaintiff.
A.V., et al. v. iParadigms LLC, USDC E.D. Virginia, March 11, 2008
Click here for a copy of the full decision. The U.S. District Court for the Eastern District of Virginia held that the defendant’s use of the plaintiffs’ copyrighted works constituted fair use under 17 U.S.C. §107.
Defendant iParadigms owns and operates Turnitin, a proprietary technology system that evaluates the originality of written works in order to prevent plagiarism. Educational institutions contract with iParadigms and require their students to submit their written works via Turnitin. When the student work is submitted to Turnitin, the system compares the work electronically to content available on the internet, student works previously submitted to Turnitin and commercial databases of journal articles and periodicals. Turnitin also has the ability to archive a student’s work upon its submission to Turnitin.
The plaintiffs each used Turnitin to submit their written works and agreed to the terms of the online registration agreement (a click-through or clickwrap agreement) which included a limitation of liability clause. However, the students had also written on their papers that they did not give permission for the papers to be archived. The defendant continued to archive all student-submitted works, including all the works submitted by the plaintiffs, and the plaintiffs subsequently filed suit, claiming that the defendant’s continued archiving of their works constituted copyright infringement.
The court examined the four fair use factors and concluded that the web site’s use was a fair use. First, it examined “the purpose and character of the use,” stating that if the new work is transformative or adds something new, it is strong evidence of a fair use. Citing to Perfect 10, Inc. v. Google, Inc., 487 F.3d 701 (9th Cir. 2007), in regard to use of works in a computer database, the court held that the use by the defendant was highly transformative, because the papers are used for an entirely different purpose, namely to prevent plagiarism and protect the students’ written works from plagiarism, whereas the original purpose of the students’ works was education and creative expression. “Defendant does this by archiving the students’ works as digital code and makes no use of any work’s particular expressive or creative content beyond the limited use of comparison with other works.”
Next, the court examined the nature of the copyrighted work, stating that this factor is of lesser importance because the allegedly infringing use makes no use of any creative aspect of the students’ works. Rather, the use relates solely to the comparative value of the works. The court held that this factor either favored neither party or favored a finding of fair use, because the defendant’s use in no way diminishes the incentive for creativity on the part of students.
Third, the court examined “the amount and substantiality of the portion used,” citing to Supreme Court precedent and stating that complete and entire use of the original work does not automatically preclude a finding of fair use. Citing again to Perfect 10, the court found that although the defendant must use the entirety of the original work to be successful in its plagiarism detection services, the use is highly transformative and highly beneficial to the public, and held that this factor either favored neither party or favored a finding of fair use.
Finally, the court examined the fourth fair use factor, the effect of the use upon the potential market for the copyrighted work, and found that it was clear that the defendant’s use of the plaintiffs’ works has caused no harm to the market value of the works. Rather, the defendant’s use has a protective effect, preventing others from using the plaintiffs’ works as their own and protecting the future marketability of the plaintiffs’ works.
The court also held that the online registration agreement, that contained a limitation of liability clause, was an enforceable contract and precluded the students’ copyright infringement suit against the defendant. The court reached this conclusion despite a defense of infancy by the plaintiffs, stating that “if an infant enters into any contract subject to conditions or stipulations, he cannot take the benefits of the contract without the burden of the conditions or stipulations.” The court, however, denied the defendant’s claim for indemnification against the plaintiffs because the indemnification language was contained in the web site terms of use and not the registration agreement, and the terms of use did not create an enforceable contract because users were not required to view or agree to the terms of use before using the web site.
For more information, please contact Jonathan Zavin, W. Allan Edmiston, David Grossman, Jonathan Neil Strauss, Tal Dickstein or Meg Charendoff.
Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.
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