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IP/Entertainment Case Law Updates

Lucasfilm Ltd. LLC v. Ren Ventures Ltd.

District court grants summary judgment to Lucasfilm on its copyright claim against mobile game app developers that marketed Star Wars-themed card game app by using images and dialogue from Star Wars canon, finding that those were not fair uses and rejecting defendants’ other defenses.

Lucasfilm Ltd. LLC and Lucasfilm Entertainment Company Ltd. LLC , owners of copyrights in the Star Wars franchise, filed suit in December 2017 against mobile game app makers Ren Ventures and Sabacc Creative Industries Ltd. for copyright infringement, trademark infringement and other claims, based on defendants’ creation and distribution of a mobile game app called “Sabacc – The High Stakes Card Game” that mimics a fictional card game featured in the Star Wars canon. In promoting the Sabacc app on their Facebook page and Twitter account, defendants posted images, dialogue and GIFs from the Star Wars franchise, often with Star Wars-themed hashtags and captions designed to sell the game. Lucasfilm was aware of defendants’ use of its intellectual property at least as early as April 2017, when its counsel sent a cease and desist letter to defendants demanding that they stop using Lucasfilm’s works in the marketing materials for their Sabacc app.

While the trademark claim remains pending, Lucasfilm moved for partial summary judgment on its copyright claim and for a finding that defendants’ infringement was willful. In opposition, defendants argued that Lucasfilm failed to establish ownership over the Star Wars works copied; that Lucasfilm was equitably estopped from asserting its copyright claim; that defendants’ use of Lucasfilm’s material was de minimis; and that the use of the materials constituted fair use under the Copyright Act. The district court disagreed and granted partial summary judgment on the copyright infringement claim in Lucasfilm’s favor.

With respect to ownership, defendants argued that Lucasfilm could not prove that its copyrights in the works covered the copied materials because Lucasfilm failed to produce the actual copyright registration applications and the deposit copies submitted to the Copyright Office. The District Court rejected this argument, finding that Lucasfilm had offered DVDs of the works into evidence, had demonstrated that those DVDs contained the same works as those submitted for registration, and had shown that the images and dialogue used by defendants in the marketing of Sabacc were a part of those registered works. The District Court also rejected defendants’ argument that no evidence had been offered by Lucasfilm proving that the works were “made for hire,” as indicated on the copyright registration documents; the court held that, as the holder of copyright registrations in the works, Lucasfilm was entitled to the presumption of a valid copyright, and that it was defendants’ burden (which defendants did not meet) to rebut the presumption that the works were made for hire and owned by Lucasfilm.

With respect to equitable estoppel, defendants argued that the April 2017 cease and desist letter sent by Lucasfilm’s counsel addressed only Lucasfilm’s trademark rights, with no indication that Lucasfilm would pursue a copyright infringement action against defendants. The court disagreed with defendants’ characterization of the cease and desist letter, finding that it clearly asserted Lucasfilm’s copyright interest in the works. Furthermore, the District Court rejected defendants’ claim that they were unaware of Lucasfilm’s copyright interest in the works due to the widespread availability of Star Wars-themed GIFs available on social media, holding that defendants could not expect to be sued by Lucasfilm because others had engaged in the sharing of these Star Wars images without consequence: “That copyright protections may be ignored or go undetected is not a strong indication that no such protections exist.”

With respect to de minimis use, defendants asserted that their use of the Star Wars material was de minimis, as it consisted of images, dialogue and short GIFs taken from the hourslong works. Even so, the district court rejected this defense because “[a] use is de minimis only if the average audience would not recognize the appropriation.” Here, no reasonable jury would find defendants’ use to be so slight that the average audience would not recognize its source. In fact, the court noted that defendants’ use of Star Wars materials and hashtags in the context of marketing Sabacc indicated that defendants relied on potential consumers to recognize the game’s connection to Star Wars.

Finally, defendants argued that their use of the Star Wars images and dialogue in marketing Sabacc was a fair use. The District Court examined this argument in the context of the four fair use factors set forth in 17 U.S.C. § 107: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

The court found that the second and third factors weighed in favor of fair use, while the first and fourth weighed against. First, defendants’ use was nontransformative, amounting merely to reposting images and dialogue from the works with minor cropping and the inclusion of captions. Additionally, the court found that defendants’ use of the works for the purpose of promoting their app Sabacc indicated that the use was “an unfair exploitation,” and, therefore, that the first factor weighed against a finding of fair use.

Second, while the nature of the Star Wars works is expressive and subject to a high level of protection, the extensive publication of the Star Wars works in the decades since their release leans toward fair use. Third, the secondslong GIFs and images taken from the Star Wars works were insignificant compared with the feature films and television episode formats of the original works.

Fourth, while the court agreed with defendants that no one would watch Star Wars GIFs in place of watching the films or television show, it held that such uses can have an adverse effect on the derivative market for the original works. In fact, when a subsequent user uses an original work for commercial gain, there is a presumption of market harm. Thus, because defendants used material from the Star Wars works to promote the sale of their Sabacc app, and offered no evidence showing the lack of market harm from their use, the court held that the fourth factor weighed against fair use. Taking all four factors into consideration, and noting the overriding importance of the first and fourth factors, the District Court thus held that defendants’ use was not a fair use.

Lastly, Lucasfilm also moved for partial summary judgment finding defendants’ infringement willful. While the court found that defendants arguably exhibited reckless disregard or willful blindness as to whether their conduct infringed on Lucasfilm’s copyrights, Lucasfilm had not presented sufficient evidence showing that defendants had actual awareness of their infringing activity. Thus, defendants’ willfulness remained a question of material fact to be determined by a jury.

Summary prepared by Linna Chen and Kyle Petersen