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IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks
April 29, 2009
Table of Contents
Federal Communications Commission, et al. v. Fox Television Stations, Inc., et al., U.S. Supreme Court, April 28, 2009
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- Supreme Court holds FCC’s indecency rulings regarding isolated utterances of profanity were not “arbitrary or capricious” and reverses Second Circuit’s decision setting aside FCC’s indecency order arising from 2002 and 2003 Billboard Music Awards broadcasts
In a 5 to 4 ruling, the U.S. Supreme Court reversed and remanded the Second Circuit’s decision relating to fleeting utterances of profanity broadcast during the 2002 and 2003 Billboard Music Awards on Fox television channels. The FCC had found that the broadcasts were “actionably indecent,” even though prior FCC policy suggested that fleeting utterances of expletives were not actionably indecent.
The Second Circuit set aside the FCC’s order as arbitrary and capricious under the Administrative Procedure Act because the FCC failed to adequately explain its change in policy towards fleeting utterances or profanity.
The Supreme Court reversed, holding that the FCC’s order was not arbitrary and capricious and that the FCC was not obligated to make clear why the original reasons for adopting the displaced rule or policy are no longer dispositive. The court explained that neither the Administrative Procedure Act nor Supreme Court precedent holds that “every agency action representing a policy change must be justified by reasons more substantial than those required to adopt a policy in the first instance.” According to the court, an agency may not, for example, depart from a prior policy without announcing the change, or simply disregard rules that are still on the books. An agency must show that there are good reasons for the new policy, “[b]ut it need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates.”
The court also declined to rule on the First Amendment issues raised by the broadcasters because the Second Circuit did not definitively rule on the constitutionality of the FCC’s orders, and the Supreme Court is one of final review, not of first review. Justice Scalia wrote the opinion in which Justices Roberts, Kennedy, Thomas and Alito joined. Justices Breyer, Stevens, Souter and Ginsburg dissented.
Rescuecom Corp. v. Google, Inc., USCA Second Circuit, April 3, 2009
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- Second Circuit holds that Google’s recommendation and sale of trademarks as search terms in its AdWords program and Keyword Suggestion Tool constitute a “use in commerce” for purposes of the Lanham Act and vacates district court’s dismissal of plaintiff’s trademark infringement claim
The Second Circuit vacated the district court’s dismissal of plaintiff’s Lanham Act claims arising out of Google’s recommendation and sale of plaintiff’s trademark as search terms or keywords.
Plaintiff, a computer repair company, filed suit against Google for trademark infringement, false designation of origin and dilution under the Lanham Act. The issue before the court was whether Google’s AdWords program and Keyword Suggestion Tool constitute a “use in commerce,” a key element for liability under the Lanham Act. Google’s AdWords program allows advertisers to purchase terms (i.e., keywords) that will trigger the display of the advertiser’s ad (in the form of a link) on the search engine’s results pages. These paid-for ads in the form of links appear at the top of the search results page or along the right margin and are labeled “Sponsored Links.” Google’s Keyword Suggestion Tool is a program that recommends keywords for an advertiser to purchase. Google allows advertisers to purchase keywords that are trademarks, including trademarks owned by competitors.
Rescuecom alleged that its competitors purchased its trademark as a keyword using Google’s AdWords program and Keyword Suggestion Tool, and that consumers were confused when they entered Rescuecom’s trademark as a search term and saw ads for Rescuecom’s competitors at the top of the search results page.
The Lanham Act provides, in part, that “a mark shall be deemed to be in use in commerce . . . (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce.” 15 U.S.C. § 1127.
The district court dismissed plaintiff’s claims for failure to state a claim, holding that Google’s use of Rescuecom’s trademark was not a “use in commerce” under the Lanham Act. The district court relied on 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), a Second Circuit decision involving pop-up ads triggered by keywords in which the Second Circuit held that WhenU.com’s use of plaintiff’s trademark was not a “use in commerce.”
In this case, the Second Circuit distinguished WhenU.com’s use of trademarks from Google’s use of trademarks: WhenU.com’s software program displayed pop-up ads in response to the website address entered by a user, not a trademark, and WhenU.com’s software program did not suggest keywords that were trademarks – instead, the program sorted search terms into categories and then displayed pop-up ads that related to a specific category.
According to the Second Circuit, the present case contrasts sharply with the 1-800 decision. “First, in contrast to 1-800, where we emphasized that the defendant made no use whatsoever of the plaintiff’s trademark, here what Google is recommending and selling to its advertisers is Rescuecom’s trademark. Second, in contrast with the facts of 1-800 where the defendant did not ‘use or display,’ much less sell, trademarks as search terms to its advertisers, here Google displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services. In addition, Google encourages the purchase of Rescuecom’s mark through its Keyword Suggestion Tool. Google’s utilization of Rescuecom’s mark fits literally within the terms specified by 15 U.S.C. § 1127.”
The court stated that it did not know whether Rescuecom would be able to show a likelihood of confusion, but it remanded the case back to the district court for further proceedings. The court also attached a lengthy Appendix to its opinion that details the pertinent history of the Lanham Act and the meaning of “use in commerce.”
Jane Doe v. Home Box Office, Inc., et al., California Superior Court, Los Angeles County, April 21, 2009 (tentative ruling)
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- California court says Da Ali G Show is an obvious spoof program that no reasonable person would consider as making factual statements; dismisses defamation and fraud claims against broadcaster
A California trial court granted summary judgment for Britain’s Channel 4 in a defamation and fraud action involving Da Ali G Show starring Sacha Baron Cohen.
The plaintiff had filed suit for, among other things, libel per se, slander per se, fraud, negligence and negligent misrepresentation. The court stated that whether a statement declares or implies a probably false assertion of fact is a question of fact for the court, unless the statement is susceptible to both an innocent and libelous meaning.
The court held that the allegedly defamatory statements are not reasonably understood to be statements of fact. According to the court, the program is “obviously a spoof of a serious interview program” and no reasonable person could consider the statements made by Ali G to be factual. The court noted that the Ali G character is absurd, all his statements are gibberish and intended as comedy, and that the actor portraying Ali G never strays from the character.
In addition, the plaintiff executed a release in 2006. The terms of the release are broad, applying to any actions “whether known, or unknown, now or in the future, arising out of or related to the Program.”
The court rejected the plaintiff’s assertion that she signed the release in reliance on a fraudulent promise by the defendant not to include the plaintiff’s name in a rebroadcast of the program. One element of fraud is damages. The plaintiff attested in discovery responses that the damages all flow from a rebroadcast of the program that the plaintiff knew about before executing the 2006 release. According to the court, no other damages flow from any subsequent rebroadcast, including broadcasts on YouTube.
Finally, the court held that a claim for negligent misrepresentation is only actionable regarding past or existing facts, not future events.
Steele, et al. v. Turner Broadcasting System, Inc., et al., USDC D. Massachusetts, April 3, 2009
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- District court holds that, despite the fact that the court could compare the two subject works before it, plaintiffs in copyright infringement cases involving musical works should have an opportunity to gather evidence of substantial similarity, and thus denies defendants’ motion to dismiss
Plaintiff Samuel Bartley Steele is a songwriter and musician who allegedly wrote a “love anthem” about the Boston Red Sox entitled Man I Really Love This Team (“the Steele Song”) and a “derivative” version of the song entitled Man I Really Love This Town, that removed specific references to the Red Sox (the “Derivative Song”). Steele registered the original song with the copyright office, but failed to register the derivative version.
Defendant Turner Broadcasting System, Inc. (“TBS”) produced and aired an advertisement during the 2007 Major League Baseball post-season featuring a song performed by Bon Jovi entitled I Love This Town along with baseball footage. According to Steele, much of the visual portion was derived from his song and the Bon Jovi Song was then based upon that advertisement, the Steele Song or both. Steele sued under the Lanham Act, the Massachusetts Consumer Protection Act (“MCPA”), and the federal Copyright Act.
The Lanham Act prohibits conduct that could lead to confusion with respect to the “origin, sponsorship, or approval” of goods or services. However, the “origin of goods” refers to “the producer of the tangible goods that are offered for sale, and not . . . the author of any idea, concept or communication embodied in those goods.” Here, because Steele did not assert that he was the producer of any tangible goods distributed by the defendants, but rather the artist whose creative work was allegedly contained in those goods, he failed to state a claim pursuant to the Lanham Act.
The court denied the motion to dismiss Steele’s federal copyright infringement claim for the Steele Song. To succeed on a claim of copyright infringement, a plaintiff must prove (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. As part of the second prong, a plaintiff must prove that the copyrighted and infringing works are “substantially similar.” In determining substantial similarity, courts apply an “ordinary observer” or, in musical terms, an “ordinary listener” test.
Defendants suggested that the court make the substantial similarity determination on a motion to dismiss because both the original and allegedly infringing works were properly before the court. The court, they argued, could simply listen to (and view) those works and apply the ordinary listener standard to determine whether there was any colorable claim of substantial similarity. However, the court held that a plaintiff is entitled to gather and present evidence of substantial similarity beyond what is included in the pleadings, and in musical copyright cases experts are frequently relied upon. Therefore, the court permitted limited discovery on the issue of substantial similarity in order to decide a summary judgment motion on that specific issue.
The court held that it lacked jurisdiction over Steele’s copyright infringement claim for the Derivative Song because copyright claims are prohibited until pre-registration or registration is made. Moreover, the court found plaintiff’s claim pursuant to the MCPA was preempted by the Copyright Act because it was indistinguishable from his copyright claim in that it alleged only that the defendants unlawfully copied his work.
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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