2% Credibility: Lohan v. E*Trade
Lindsay Lohan’s right of publicity suit against E*Trade, filed in the Supreme Court of Nassau County, New York on Monday, is a novel approach for celebrity plaintiffs who may otherwise be defamation-proof. Unfortunately for her it is likely to get short-shrift from the New York Supreme Court.
Fair Use Ruling Overturned on Appeals
Last year I wrote an article about Gaylord v. U.S., a case involving a U.S. postal stamp that incorporated a photograph of a sculpture from the Korean War Memorial in Washington D.C. The sculptor (Frank Gaylord) sued for copyright infringement and initially lost with the trial court ruling that the stamp's depiction of the sculpture constituted transformative fair use and was therefore allowed under copyright law. Today a federal appeals court majority held that the stamp was not a fair use of the sculpture and remanded the case to the trial court for an assessment of damages. Records show that the government grossed over $17 Million on sales of the stamp, so damages could be substantial.
"The Column" Sculpture at the Korean War Memorial
To review fair use, courts analyze four factors on a case by case basis:
(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.
I wrote a thorough analysis of the lower court ruling in my earlier article, but the opinion largely flowed from the trial judge's finding that the photograph, as shown in the stamp, was highly transformative of the sculpture. The trial judge focused his analysis on the artistic choices of the photographer, emphasizing that transformation was achieved because the photographer "experiment[ed] with angles, exposures, focal lengths, lighting conditions, as well as the time of year and day . . . [and] also achieved his vision using various photographic effects and equipment [such as] using a portrait lens and a tripod, using slide film, and choosing glossy prints." Because he found that the "character" of the use was transformative under the first factor, the trial judge weighed that factor strongly in favor of a fair use finding and allowed it to color his determination of the other factors as well.
In reversing the lower court decision, a 2-1 appellate majority ruled that the trial judge was wrong to focus on the transformative aspects of the photograph. Instead, it held that it must analyze the purpose and character of the stamp. The appellate majority then found that the purpose of the stamp was the same as the purpose of the sculpture: to honor Korean War veterans. It further held that the stamp did not reflect any of the typical purposes of fair use: commentary, criticism, news reporting, teaching, scholarship, and research. Finally, the majority held that although the stamp altered the appearance of the sculpture, it attributed the alterations to mother nature, not the photographer and said that "nature's decision to snow cannot deprive Mr. Gaylord of an otherwise valid right" to his copyright. Once it threw out the lower court's finding of transformation, the majority easily swung the next two fair use factors in favor of the sculptor before acknowledging that lack of market harm favored a fair use finding. The appellate majority ultimately held that "even though the stamp did not harm the market for derivative works [of the sculpture], allowing the government to commercially exploit a creative and expressive work will not advance the purposes of copyright in this case."
At first blush, this ruling seems to be a tremendous blow to the concept of fair use. In an era where copyright laws seem to be growing stronger and an international copyright treaty is being negotiated in secret, fair use plays a critical role in protecting the constitutional mandate that copyright protection "promote the progress of science and useful arts."
A closer look, however, reveals the limits of the appellate ruling. By shifting the focus of judicial inquiry from the photograph to the stamp, and therefore from the photographer to the U.S. Government, the court limits its holding to similarly situated defendants. Rather than implicating the photographer's right to take or even market the photo, the decision re-emphasizes the need for commercial end-users to obtain proper releases. And while it is impossible to know what external influences might have affected the majority, its shift of focus set up a David and Goliath story where human nature favors the little guy. Indeed, the money involved seems to have played a significant role: the court was careful to contrast Gaylord's work on the memorial with the $17 million the government grossed from the stamp.
Unfortunately, the ruling is likely to have a chilling effect on creative expression that incorporates the work of others. Many artists already tend to stay far from the blurry line between allowed and infringing use, but progress of the useful arts requires bolder action. Whenever possible, it is undeniably a good idea to get permission to use someone else's creative expression. But if permission isn't attainable, check with someone who truly understands fair use case law to assess your level of risk.
The case is Gaylord v. U.S., -- F 3d --, 2010 WL 653272, (Ct. Fed. App. 2010). The full text opinion is available from Technasauruslex.
Update: Professor Peter Friedman has a thorough analysis of the possible fair use implications of the case for photographers at Geniocity.com.
Proper Copyright Notice bars an “innocent infringer” defense
I've long advised clients about the importance of including proper notice on their works. As a practical matter, you should do everything in your power to make it easy for someone to get in touch with you for permission (and payment) to use your copyrighted material. As a matter of law, however, proper notice—especially when you also embed it in your metadata—gives you some important legal tools. Yesterday the 5th Circuit Court of Appeals issued an opinion that elaborates on one of those tools: the ability to foreclose "innocent infringement" claims by unauthorized users of your work.
The so-called innocent infringement defense isn't technically a defense since the claiming party is still held liable for infringement. Instead, it is a means for that party to get its damages reduced to as low as $200 per infringement (down from the normal $750 minimum for statutory damages). To successfully claim innocent infringement, the defendant must show that (1) it did not know and (2) had no reason to suspect that the infringed-upon work was copyright protected.
But sections 401(d) and 402(d) of the Copyright Act foreclose any use of the innocent infringer defense when the copyright holder originally publishes its work with proper copyright notice.
The form of the notice is important. The Act defines proper notice as follows:
Form of Notice.— If a notice appears on the copies, it shall consist of the following three elements:
(1) the symbol © (the letter C in a circle), or the word “Copyright”, or the abbreviation “Copr.”, or for sound recordings, the symbol ℗ (the letter P in a circle); and
(2) the year of first publication of the work; in the case of compilations, or derivative works incorporating previously published material, the year date of first publication of the compilation or derivative work is sufficient. The year date may be omitted where a pictorial, graphic, or sculptural work, with accompanying text matter, if any, is reproduced in or on greeting cards, postcards, stationery, jewelry, dolls, toys, or any useful articles; and
(3) the name of the owner of copyright in the work, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the owner.
Yesterday's court opinion held that when proper notice is used, it provides "absolute protection" against the innocent infringer defense. Even when the infringer did not know that the work was protected or that it was published with proper notice, "the plain language of the statute shows that the infringer's knowledge or intent does not affect its application. Lack of legal sophistication cannot overcome a properly asserted § 402(d) limitation to the innocent infringer defense."
The case is Maverick Recording Co. v. Harper, --- F.3d ----, 2010 WL 653322 (5th Cir., 2010), and the full-text opinion is available from Technasauruslex.
Protecting non-U.S. Works Using U.S. Copyright Law
You don’t have to be a resident of the United States to take advantage of the many benefits of U.S. copyright laws. These laws offer some of the strongest protections of any country and non-U.S. copyright holders—including media and software companies, writers, bloggers, artists, photographers, designers, and any other creative professionals—can use legal enforcement methods available here even without registering your work in this country.
Provisions such as Digital Millennium Copyright Act (DMCA) takedown procedures and strict penalties for tampering with copyright notices allow copyright holders to target infringers in ways that just aren’t available in other countries. Moreover, many of these tools focus on the companies that make the Internet run, therefore making them your allies in the fight against infringement.
Because major companies such as Google, PayPal, eBay, and Yahoo are based in the U.S., they must comply with U.S. law. This means that copyright holders worldwide can use U.S. law to shut off an infringer’s web hosting, payment processing, advertising servers, and other essential services. Not only can this prevent the infringer from making money off of your work, it can provide a strong incentive to pay you a settlement in order to get these systems restored.
Of course, if you plan to distribute your work in the U.S., it is also a good idea to register for a U.S. copyright certificate. This registration will provide you with even stronger enforcement tools to use against infringers and counterfeiters, including enlisting the U.S. Customs Agency to assist in detecting pirated copies of your work.
To learn more about how to put U.S. Copyright law to work for you, contact Imua Legal Advisors for a consultation.
Why am I Reading Your Email?: “Pay to Play” and the FTC
There's an interesting dustup on The Stranger's Slog concerning a blast email from a popular Seattle restaurant. It offers two lessons on etiquette and legal compliance in the digital age.
The first post is fairly pedestrian: David Schmader writes about the fact that any replies to the original email seemed to automatically trigger a "reply all" effect on the listserv used to send the email. We've all seen this—first a few people post something like "take me off your list," then a few respond with "quit using reply-all," and eventually everyone's inbox is crammed with a jillion messages, most of which have nothing to do with them.
The etiquette lesson here is obvious, the legal compliance perhaps less so (although commenters danced all around it). The CAN-SPAM act requires that any business sending commercial email comply with a strict set of standards, and each separate email that violates those standards can trigger a $16,000 fine from the FTC. Ouch. Compliance isn't tough, but at first glance it looks to me like the restaurant may have missed a few points. The FTC offers a nice clear guide on complying with the law. If you send email for your business, you MUST read it.
The second post is juicier. Turns out one of the responses came from a food reporter and blogger for a prominent radio station offering a trade of "two radio spots (or blog posts, your choice) for 2 seats at the dinner." In other words, pay to play.
Assuming anyone took the reporter up on her offer, the situation could trigger FTC attention on an entirely different topic: the new guidelines covering product endorsements. Those guidelines make it clear that "When there exists a material connection [such as the receipt of free products or services] between the endorser and the seller of the advertised product . . . such connection must be fully disclosed." So leaving ethics of a pay to play system aside, not disclosing such a system's existence is a clear FTC violation.
[Update] Both the reporter and the restaurant have chimed in to say that the whole "pay to play" thing was meant as a joke (offering a third lesson on the inability of internet users to see tongues in cheeks). Seems credible, but the possible FTC issues illustrated by the matter remain.
Related:
“Project Pricing” Article featured on Biznik
Looks like the Project Pricing article I posted earlier this week has become a featured article on Biznik.com. Follow the link to Biznik to see what others are saying and to add your comment or rating. Some of the comments so far include:
- I love John's model. Till date I was very afraid of even talking to a lawyer because I used to have an apprehension that his fees would burn a deep hole in pocket. This model is perfect for small business owners who may be in need of legal counseling but cannot afford the fees of a "mainstream" lawyer. --Marya Jones
- I love this. I have shied away from working with an attorney because I'm so afraid of the costs. [I]t's good to know there is a trend going towards the flat rate pricing model. I fully support it. --Arden Clise
- I have to agree with John completely on this model. I have a HUGE hourly fee that im currently paying off for one Lawyer and when I worked with John he came in UNDER his bid... Thats the first time I ever smiled when I got an invoice. --John Morefield
Nice to see such a positive response. To read more about the Imua price approach, check out our pricing page.
Project Pricing: A Better Way to Pay your Lawyer
Lawyers can add tremendous value to your business, but traditional legal pricing often leaves clients feeling helpless. Project-based legal services give you control over your budget and offer an improved and more transparent relationship with your attorney.
Supreme Court Justices Call For Project-based Legal Services
At Imua Legal Advisors, we understand that people need to control their legal expenses in ways that give them the best possible value for your legal dollar. That's why we introduced project pricing and embrace an education-based approach. We believe our methods stand on their own by offering our clients a superior value. Still, we were happy to see a tacit approval of our model from two of the nation's leading judges.
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Benefits of Copyright Registration
While it is true that copyright protection for a creative work vests in the author of that work from the moment it becomes fixed in a tangible medium of expression, you shouldn't ignore the incredibly strong benefits of registering your work with the U.S. Copyright Office. This article discusses some basics of copyright law and why registration is such a good idea.
Can Washington State Define an LLC?
Washington State leaves it to Wikipedia to define the term limited liability company on its own website. Is this any way to inspire confidence that forming an entity in our state is the best course of action for your business?
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