& Entertainment Law KB Comment

K&B Entertainment Law
Comment
KING  BALLOW LAW OFFICES
Vol. 25, Number 12
EDITOR, THOMAS J. MOTZNY
December 2011
© 2011 King  Ballow
INFRINGEMENT
EMPLOYMENT
Obstruction of exploitation
not copyright infringement
Copying of copyrighted
materials was multi-million
dollar error for infringer
by Patrick Ogilvy
pogilvy@kingballow.com
The United States Court of Appeals for the Sixth Circuit
has found acts preventing a copyright holder from commercially exploiting a copyrighted work, such as requesting that
music retailers not offer the work for sale, do not constitute
copyright infringement under the United States Copyright Act.
by Patricia Kryder
pkryder@kingballow.com
A record producer for an independent record company
wrote the music and lyrics for a song, which he then recorded with a country music artist. The artist and producer
orally agreed that both would be co-authors of the sound recording they created. After receiving positive response for
When an insurance agent left his job in 1991, he took
with him certain sales materials belonging to his insurance brokerage employer. There were hundreds of pages
of text in two binders describing various types of insurance coverage, exclusions, conditions, and similar matter. These binders had been prepared by employees of
the former employer and they were subject to the
employer’s copyrights.
From 1992 until 2005, the former employee and his
new employer made use of these materials in preparing
insurance coverage proposals for presentation to their
clients. The new employer hired a temporary employee
see “obstruction,” page 4
see “dollar,” page 5
Who’s the owner?
PARODY
On or off the shelf, parody of a Christmas elf can be fair use
by Andrew Coffman
acoffman@kingballow.com
The Elf on the Shelf is a popular children’s Christmas book
sold in a box set with a plush toy elf doll. Since 2005, its
publisher claims to have sold more the 1.5 million copies of
the book and toy. The publisher owns registered copyrights
in the elf doll and an image of an elf in a red Santa-like costume sitting on a shelf. The publisher also owns registered
trademarks in the word mark “The Elf on the Shelf.” Further, the publisher possesses and uses the domain name
www.elfontheshelf.com.
The story in The Elf on the Shelf explains how Santa keeps
track of who’s naughty and nice each year and the wishes of
children through a series of “scout” elves. The friendly elves
are dispatched via retail and are often used as a tool by parents to keep children in line.
Naughty elf parodies “big brother” aspects of spy elves
The Elf Off the Shelf tells a different but related story.
The elf narrator, Horace, of this book describes himself
as a discount elf also charged with helping Santa decide
who has been naughty or nice. Horace drinks spiked
eggnog, tries to make a “move” on Barbie, watches pornography and changes children’s wish lists in order to
get presents he desires.
The Elf Off the Shelf is marketed as a parody for
adults. The Elf on the Shelf publisher brought suit seeking a preliminary injunction against The Elf Off the Shelf
to halt sales.
The publisher claims The Elf Off the Shelf violated
its copyright. The Elf Off the Shelf defended on grounds
that it was a parody of The Elf on the Shelf and any
copying was protected by a fair use defense.
Parody is a legally recognized and sanctioned form of
fair use of an original copyright work. A work is a parody
if its aim is to comment upon or criticize a prior work by
see “elf” page 2
1
DAMAGES
Statutorily limited: Damages limited to "per work" infringed
by Seth Wilson
swilson@kingballow.com
The Middle District of Tennessee ruled that when it comes
to statutory damages available under the U.S. Copyright Act,
a single statutory award is available for all infringements
related to a single copyrighted work.
A music publishing company sued a number of companies which contributed to karaoke versions of songs owned
by the publisher. The publisher alleged that all of the named
defendants together manufactured, reproduced, distributed,
advertised, promoted and offered for sale illegal and unauthorized copies of compositions in the form of karaoke recordings in various formats, both digitally as downloads
and as compact discs.
In its complaint, the publisher listed a number of its songs
multiple times as different acts of infringement. The karaoke
companies challenged the complaint on the limited basis that
the publisher was seeking damages on a "per infringement"
basis, and not on a "per song" basis. The defendants therefore brought a Rule 12(c) motion for judgment on the pleadings to resolve this issue. The distinction between the “per
infringement” and “per song” determination was the difference between allowing statutory damages for nearly 1,400
infringements versus 448 songs.
Under the United States Copyright Act, copyright own-
ers who are successful in showing infringement of their
work are allowed to seek damages in the amount of compensation per “work” infringed. The award of statutory
damages can be significantly more than the actual damages suffered by the copyright owner, and do not require
the stringent amount of proof to obtain actual damages.
The level of statutory damages allowed under the Copyright Act range from a sum not less than $750 to not more
than $30,000 per “work” infringed. If the copyright owner
can show willful infringement, they can be entitled to damages up to $150,000 per work. If a defendant can show
that they were not aware and had no reason to believe they
were infringing on the copyright, statutory damages may
be reduced to $200 per work. Statutory damages are only
available for works that are either registered with the U.S.
Copyright Office before infringement, or within three
months of publication.
Here the distinction of whether “work” under the Copyright Act meant a per infringement basis or a per song
basis could mean the difference of more than $28.5 million
in possible damages.
The court found substantial caselaw to back up their
proposition that the “work” in the Copyright Act meant an
see “infringed,” page 4
from “elf,” page 1
appropriating elements of the original in creating a new artistic work. The court found The Elf Off the Shelf was a
parody. Horace highlights the perceived absurdity of a “big
brother” type of elf reporting on small children as depicted
in The Elf on the Shelf.
“Extremes”- By definition, going to extremes means going
way out of range, or going out of bounds. The original
extremes were places in the early Middle Ages. From the
Latin word extremus, the extremes were areas of land set
just beyond the boundary of town, designated solely for
the socially outcast. As this area was situated as far from
the center of town as possible, extremes became
synonymous with living way out of bounds due to one’s
behavior being way out of line.
Parody provides a defense to copyright infringement
In determining whether a parody is entitled to a fair use
defense, courts look to four factors: the purpose and character of the work; the nature of the copyrighted work; the
amount and substantiality of the portion used; and the effect on the market value of the original work.
The fact The Elf Off the Shelf was a parody combined
with its transformation of the copyrighted work by un-romanticizing the elf, its creation of a new creative work by
adding to the copyrighted material, and its lack of effect on
the market value of the original work allowed a finding that
the work was a fair use. Based on the possibility of a finding of fair use, the court denied the publishers of The Elf
on the Shelf’s request for a preliminary injunction.
Reprinted with permission of Scribner, an imprint of
Simon & Schuster
Adult Publishing Group from I DIDN’T KNOW THAT
by Karlen Evins. Visit www.karlenevins.com.
Copyright © 2011 by Karlen Evins
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COPYRIGHT
Diaper dispute gets messy
by Jennifer Romeo
jromeo@kingballow.com
In a copyright infringement
suit involving a diaper design, the
copyright owner of “diaper
jeans” claimed the manufacturer
of Huggies “jeans diapers,”
ripped off his idea of making
diapers resemble jeans. The diaper manufacturer argued they did
not infringe on the diaper copyright because “the designs themselves are not substantially
similar” and “the only commonality is that both designs attempt
Jennifer Romeo
to express the idea of a diaper
that is supposed to look like jeans.”
The copyright owner argued he was not trying to protect the common elements of jeans but rather the creative
idea of diapers designed to resemble jeans and further
argued “the ‘aesthetic appeal’ of both parties’ concepts
are essentially the same.”
In a similar case, the copyright owner of “toe socks”
mistakenly believed she obtained an exclusive right in
toe socks and later brought a copyright infringement suit
against a party selling and manufacturing toe socks. In
dismissing her case, the court explained “in this case we
have encountered no difficulty in distinguishing between
the idea and expression of the idea.”
Aside from a substantial similarity argument, another
possible way to succeed on a copyright claim in cases
involving a design idea, such as the diaper jean design or
toe sock design, the copyright owner could argue the
alleged infringer produced, manufactured, sold or distributed the copyright owner’s drawings of the product.
Here, the diaper copyright owner made no such claim
even though he submitted a copy of diaper jeans artwork to the Huggies manufacturer.
While the copyright owner of “diaper jeans” specifically complained the Huggies manufacturer “created,
displayed, and distributed unauthorized reproductions of
Plaintiff’s copyrighted work, as well as unauthorized
derivatives of the work,” the copyright owner failed to
establish copyrightable elements of his design were copied. Interestingly, the copyright owner did not raise a
trade dress claim under the Lanham Act.
It is well established copyright protection must be
fixed in a tangible medium of expression, in no case does
copyright protection extend to an idea. “Unlike a patent,
a copyright gives no exclusive right to the art disclosed:
protection is given only to the expression of the idea not
the idea itself.” Here, not only did the copyright owner
lose on his copyright infringement claim, but the court
found his complaint to be “plainly objectively unreasonable” awarding the Huggies manufacturer attorney's fees
and costs.
Diaper jeans vs. jeans diapers
Unfortunately for the copyright owner, his copyright
does not confer the protection he claimed. The copyright
does not give the copyright owner the right to exclude
others such as Huggies from manufacturing diapers that
resemble jeans. Instead, the copyright “protects the much
narrower right to exclude others from producing ‘substantially similar’ versions of diaper jeans.” In comparing
the colors, pattern, stitching color, pockets and the fly,
the court found “not only are the diapers not substantially similar, they are substantially different.” For example, the “diaper jeans” design comes in two patterns,
flat white or flat light blue, while Huggies “jeans diapers”
comes in one pattern, distressed blue denim.
Jennifer R. Romeo is an attorney in the Intellectual Property Section of King & Ballow. Mrs. Romeo received her law degree from Hofstra University School of Law. While in law school, she pursued a concentration in Intellectual Property Law. Mrs. Romeo received her undergraduate degree from St. John’s University,
where she graduated cum laude with a bachelor’s degree in Communications and minors in Business and
Music. Mrs. Romeo is a writer for King & Ballow’s Entertainment and Employment Comment newsletters.
Before joining King & Ballow, she was a legal affairs intern at EMI Music and a paralegal at a boutique New
York firm, specializing in commercial and transactional work. Mrs. Romeo is admitted to practice law in
Tennessee.
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from "obstruction,” page 1
blog on page entitled, “WARNING!!! Illegal music being
sold on my page,” accusing the independent record company of unethical activity and asking her fans not to purchase the songs. The artist also contacted several digital
music stores, including Apple’s iTunes, which were selling the two songs, and informed the companies that the
independent record company did not have the rights to
offer the songs for sale. Both iTunes and IODA removed
the songs from their digital music stores, and IODA terminated its distribution agreement with the independent
record company. Soon after, the independent record company and its producer sued the artist and Muzik Mafia for
copyright infringement, among other claims.
the song, the artist and the producer began working on
another song, for which the producer wrote the music and
both co-wrote the lyrics. The two recorded this second
song, and the artist included both songs on a demo she
used to shop herself to record companies as a recording
artist. The artist soon signed a publishing deal with a music publishing company and a management deal with Muzik
Mafia, who is well known for breaking country artists such
as Gretchen Wilson and Big & Rich. Under the publishing
deal, the artist assigned her copyright ownership in the
songs to the publishing company.
After the artist signed with Muzik Mafia, the independent record company entered into several deals to commercially distribute the recordings of the two songs,
including deals with retailer CD Baby’s online store and
several digital music distribution stores. The independent
record company also featured the songs on its MySpace
page and its own website. Muzik Mafia sought to prevent
this exploitation of the songs by sending a cease-and-desist letter to the independent record company and an email to members of the music industry entitled “Illegal
Activity,” accusing the independent record company of illegally selling the artist’s music. An agent of Muzik Mafia
also contacted CD Baby, demanding the removal of the
artist’s works from its website. Though CD Baby followed up with the independent record company and ultimately determined to continue selling the songs, CD Baby
had made the songs unavailable for purchase for a period
of time while it was investigating the dispute.
About a year later, the independent record company began using a company called IODA for the digital distribution of the two songs. Using this company allowed the
independent record company to place a digital store on the
artist’s MySpace page. In response, the artist posted a
No basis for infringement
The independent record company alleged that Muzik
Mafia and the artist infringed its copyrights in the two songs
by taking steps to prevent the commercial exploitation of
those songs, including the email, cease-and-desist letter,
and contact with CD Baby, IODA, and iTunes. The court
rejected this attempt to “grossly expand” claims for copyright infringement, finding attempts to create barriers to a
copyright holder’s ability to fully exploit copyrights simply did not fall within the gambit of the Copyright Act.
Instead, infringement lies only where there is improper
copyright or use of a work without permission of the author. Neither of these situations was present here. In
fact, the independent record company specifically conceded
neither the artist nor Muzik Mafia had engaged in unauthorized copying, but rather had prevented the independent
record company from so copying. Therefore, the court
found the artist and Muzik Mafia did not infringe the independent record company’s copyrights in the two songs.
from “infringed,” page 2
individual song, not an individual act of infringement.
The court also found that statutory damages should be
limited to one award per infringed work whether the judge
or jury eventually determined there to be joint and several
or individual liability with respect to a given work. This
means that if it is determined that the defendants in this
action acted together when infringing a particular work into
a karaoke version of the song, the statutory damages is
limited to one award per each song for all of the defendants. In the alternative, if it is determined that a defendant was acting in their individual capacities, and not
together with other defendants, when infringing a particular work, then the publisher could obtain one statutory damage award from each individual defendant per each song
infringed.
Feedback
If you have any questions on the cases
or regulations mentioned in the articles,
please feel free to contact the editor,
Thomas Motzny, at
tmotzny@kingballow.com.
4
from "dollar,” page 1
to type the contents of the two huge binders into a word
processing program so that the text could be electronically referenced and easily copied into new documents.
The language in the two binders was used in more than
800 sales proposals prepared for more than 300 clients
over the course of thirteen years. When the former employer found out about the use of these materials in 2005,
a lawsuit was filed under the U.S. Copyright Act.
Although the Copyright Act has a three year statute of
limitations, the District Court for Eastern Pennsylvania
ruled that the statute of limitations was tolled until the
employer learned of the copyright infringement or with
reasonable diligence could have learned of the infringement.
The Copyright Act permits the recovery in an infringement action of either statutory damages, or actual damages and any additional profits of the infringer. The
company asserted their rights to the profits of the infringer
that were attributable to the infringement, which required
proof of the gross revenues over the course of the relevant time period, and then to establish the connection
between the infringement, and the profits sought.
The company proved gross commissions of about $32
million, and a jury found the necessary causation, and
awarded more than $19 million in damages. In addition,
the jury found that the company could not have discovered the infringement before 2002.
The district court judge set aside the jury’s verdict and
held a second trial limited to damages that had arisen within
three years of the commencement of the action. The second jury entered a verdict in excess of $1.5 million.
Both parties appealed to the Third Circuit, which concluded that the company could not have discovered the infringement before 2002. The Third Circuit remanded the
case to the district court, which reinstated the jury verdict
for more than $19 million in damages. The infringers appealed again to the Third Circuit arguing that the jury’s verdicts shocked the judicial conscience and the prejudgment
interest was improper.
The Third Circuit held that the accrual of the cause of
action occurred at the moment at which each of its component elements came into being, and that the federal discovery rule then operated to toll the running of the limitations
period. Prejudgment interest, however, could be awarded
from the initial accrual date.
Applying this holding to the facts, the Third Circuit concluded that the copyright infringement claim accrued in 1992,
when the first infringement took place. The limitations period was then tolled until the company discovered the infringement in 2004. Therefore, the district court’s
assessment of prejudgment interest beginning in 1992 was
within its discretion and was upheld by the Third Circuit.
Entertainment Comment is published monthly by the law firm of King & Ballow, Nashville, Tennessee, and San
Diego, California. The materials contained herein have been abridged from laws, court decisions and administrative
rulings and should not be construed as legal advice on specific subjects.
Additions and/or deletions to King & Ballow’s e-mailing list should be e-mailed to brooks@kingballow.com.
Professional educational courses for CLE credit are also available online at www.kingballowlearning.com.
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