Major Record Company Brings Copyright Action Against Upstart Company Selling Used Digital Music

Photo titled "I love my music!" by Shiv Shankar Menon Palat

Last month, EMI, a top record company, alleged that ReDigi, an upstart company that sells used digital music, creates unauthorized copies of its songs through the operation of its business. EMI brought a copyright complaint against ReDigi, asking the United States District Court for a preliminary injunction to force ReDigi to shut down its business pending the court proceedings.

While the judge denied EMI’s request for the preliminary injunction, the resolution of the case will likely answer many of the questions facing the digital age. Some of the issues raised by the case include the meaning of “copy” for copyright purposes and whether transmitting copies of digital material count as a public performance. One of the biggest issues brought up with this case are what property rights does a purchaser of digital music through a source like ITunes really have?

Back before digital music existed through purchasing sites such as ITunes, people bought music the old-fashioned way—by going to the music store and purchasing a record, tape, or CD. Once someone purchased the music album, that particular copy was their album. The person could not duplicate the album and sell copies, but he or she could use it for a year and sell it to another individual or to a music store specializing in used music albums under the First Sale Doctrine.

ReDigi claims it does the same thing with digital music, since it scans the seller’s hard-drive and deletes the music file once the transaction of sale is complete. This act makes it impossible for the song initially purchased from ITunes and sold to ReDigi to be duplicated or transferred. Is this not the same thing as selling your physical album for some cash? Something the court may have to determine is whether ReDigi has really taken away the rights of the digital music holder when it deletes the song from their hard-drive, or if in this advanced technological age the seller could in actuality retain access; posing problems for companies like EMI.

Supreme Court Preview – Golan v. Holder: Can Congress Remove Works from the Public Domain?

On Wednesday, October 5th, the Supreme Court heard arguments for Golan v. Holder, to decide whether Article I, § 8, cl. 8 of the Constitution prohibits Congress from taking works out of the public domain. This clause, known as the Progress Clause, exists to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Essentially, the Court’s task is to decide whether Congress can restore copyright protection for works whose copyright protection has already expired. For the purposes of Golan, analyzing the phrase “for limited times” will be particularly important to the Court as they discuss whether that limited time status is revocable by Congress for certain works—specifically foreign works.

U.S. copyright laws have always been formulated to accord with the time limitation mandated by the Progress Clause. Originally, or at least commencing with the 1909 Act, copyrighted works, so long as they complied with the requirements of notice and registration, were granted with a twenty-eight year period of copyrightability, which was renewable for a subsequent term of equal duration. This Act was then superseded by the Copyright Act of 1976. Regarding the term of protection under the 1976 Act, works created prior to 1976 received an extension amounting to fifty plus the life of the author. Subsequently, the Berne Convention was held, and in 1988, a two-part implementation took place. First, signatories to the Act are required to recognize the works of authors from other signatory countries, and second, all works (with an exception) shall have copyright protection for at least fifty years after the author’s death. It was not until 1998 and the enactment of the Copyright Term Extension Act (CTEA), more affectionately dubbed the “Sonny Bono Bonus Act,” that copyright duration as it exists today was implemented. The Act extended the duration of a copyright to the life of the author plus seventy years. Additionally, it stipulated that any works created in or after 1923 were, as they were still under copyright protection in 1998, were granted additional protection until 2019 or later. As a matter of course, since works created prior to January 1, 1978 (the triggering date for the 1976 Act) would naturally lapse into the public domain, the 1998 Act included that such works were to remain protected until 2047. Often the 1998 Act is called the Mickey Mouse Extension Act, because it was largely believed that the extension was granted in order to postpone the date at which copyright protection for Mickey Mouse would enter the public domain. And it is here that the issues in Golan arose.

Golan is irrevocably tied to another Supreme Court case of note, Eldred v. Ashcroft, decided in 2003. In Eldred, the plaintiff operated a website that displayed what new works entering the public domain were every year. The 1998 Act effectively put Eldred out of business, however, since per the Act, the next time any works will enter the public domain is 2019; Eldred would have to go on hiatus for quite some time before his website could finally be updated. Ultimately, the Court upheld the constitutionality of the CTEA. Represented by copyright advocate and champion Lawrence Lessig, Eldred made several arguments essentially claiming that this extension was just one of many the public could expect in order to prevent certain works from ever lapsing into the public domain. Lessig argued that the extension violated the limited nature of the Progress Clause, and invariably became unlimited. The solicitor general, arguing on behalf of the attorney general, countered by explaining that the very act of setting a time limit—seventy years plus the life of the author—was inherently limited because it set a hard date at which a copyrighted work would no longer be protected. The Court agreed with this argument, and others, and upheld the constitutionality of the Act 7-2. The ultimate impact of Eldred was to uphold the notion that Congress, empowered through the Progress Clause, is the appropriate body for setting the relevant limit.

Returning to Golan, the result of Eldred initially doomed Golan; the U.S. District Court for the District of Colorado dismissed the primary issue of whether the 1998 Act violated the limited time element of the Progress Clause. That case, originally under the name Golan v. Ashcroft in accordance with the fact that John Ashcroft was the attorney general at the time of suit, morphed into Golan v. Holder, as Attorney General Eric Holder was attorney general in 2009 when the suit was brought again. Under this new title, a new Act was brought under scrutiny: the 1994 Uruguay Rounds Agreement Act (URAA). This Act relies heavily on the restoration provisions of the Berne Convention. Under the 1988 Act, foreign works still copyrighted in their source country but that were not in the United States were restored to copyright protection in the U.S. But, in a twist, the United States refused to sign on to this particular aspect of the Berne Convention, and the criticism it faced as a result of this denouncement was remedied by the passing of the URAA. The relevant provision of the URAA restored copyright protection to foreign works that were previously not copyrighted in the United States. It is this provision of the URAA— in addition to the restoration provisions of the CTEA—with which Golan took issue.

As Eldred did for the CTEA, Golan challenges that the URAA violates the limitedness of copyright law by restoring certain foreign works to copyright protection. This argument was not persuasive at the district court level, nor at the in the Appeals Court for the Tenth Circuit. The Supreme Court then granted certiorari on March 7, 2011 for review in its upcoming term.

While oral arguments have been made, the outcome of this case in the Supreme Court could mean many things for the right of the public to copy works that have entered the public domain by virtue of the lapse of their copyright protection. Some argue that withdrawing certain works from the public domain will stifle creativity and discourage the production of new works. Preserving Congress’s right to restore copyright protection to works of its choosing opens up the possibility for doing so for unlimited works. Perhaps if Congress deems it necessary in the future, it will restore copyright protection to works it decides are worthy of continued protection. Advocates argue that the concept of a free and open public commons, one in which artists are free to draw on other works for inspiration, is threatened by a shrinking public domain. It is believed that focusing the Court’s attention on the integrity of the public domain, indeed, the public domain which allows U.S. artists and authors to use the foreign works at issue as a foundation for their own work, is at risk.

Conversely, the government could potentially argue that this practice of restoring copyright protection to certain works is a prerogative Congress has exercised before. The natural byproduct of passing new copyright laws extended copyright protection to works that would have lapsed by for the extension. For example, works created prior to 1978 were gifted with additional years of protection; those who sought to rely on the lapsing of the copyright for those works into the public domain were, at that time, disappointed, but the constitutionality of the 1978 was ultimately upheld. The same could be said for the extensions granted under Berne and the CETA, and therefore, the government could argue, for the sake of consistency, the Court should hold that the extensions under the URAA are similarly constitutional.

This case could finally settle the right of Congress to exclusively control the setting of the limits for copyrighted works. So long as there is a limit, it is the privilege of Congress to set that limit within reason. And in light of the rapidity of technological advancements and the impact that invariably has on the creation of new types of works, not allowing Congress to exclusively control the setting of limits certainly emphasizes a clear bottom line: those who believe the creative commons should be inherently public are hereby being disabused of that notion. In other words, copyright protection persists for the purpose of protecting the rights of artists and authors to continue to create without the threat of copying, which is the basic purpose of the Progress Clause. It will be interesting to see which side prevails, and whether the Court opts to sanctify the superiority of Congress in this matter, or instead upholds the accessibility of knowledge and ideas.

For an analysis of the procedural history of Golan v. Holder, see “Today Congress Giveth, Tomorrow They Taketh Away” by Charles Glyman.

Supreme Court Says "GAME OVER" to Law Banning Minors from Purchasing Violent Video Games

Photo titled "Supreme Court Violent Videogame Trial Courtroom Drawings" courtesy of Zero-Lives on Flickr

This summer, the United States Supreme Court held that a California statute banning the sale or rental of “violent video games” to minors was unconstitutional. Justice Scalia, writing for the majority, held that video games qualified for First Amendment protection, that violent video games were not excluded from protection based on the Court’s obscenity jurisprudence, that violent video games were not unique so as to be their own category of unprotected speech, and that the California statute failed to meet strict scrutiny. Justice Alito and the Chief Justice concurred, with Justices Thomas and Breyer filing separate dissents.

The court briefly addressed whether video games as a technological medium qualified as speech protected under the First Amendment. Comparing video games to books, plays, and movies, the Court quickly held that video games were a protected form of speech.

The Court then addressed the issue of whether violent video games were considered obscenity, a form of non-protected speech. Focusing on the Court’s obscenity jurisprudence, Justice Scalia aptly noted that obscenity had been limited to certain sexually explicit content. The Court has had the opportunity to expand this definition on several occasions, including to violence, most recently in U.S. v. Stevens, but has declined to do so.

In holding that violent video games were not obscenity, the Court next addressed whether violent video games should be their own category of non-protected speech. Leaning on his originalist tendencies, Justice Scalia recounted the historical absence of banning minors from accessing violent content. The Court referenced the violence portrayed in Grimm’s Fairy Tales, Homer’s Odyssey, and Dante’s Inferno—stories that are currently, and historically have been, read to minors. Citing this historical exposure to violence, the Court found no reason to carve out a new exception for violent video games from the First Amendment.

At that point, the Court turned to a traditional strict scrutiny analysis, reiterating that a restriction of protected speech was presumptively invalid unless the state could demonstrate that the statute was narrowly tailored to serve a compelling government interest. Justice Scalia was quick to point to the lack of a causal link between minors playing violent video games and harm to minors. Without an actual harm that needed preventing, the Court logically held that the state had no compelling interest, and therefore the statute was unconstitutional.

The Court’s decision in Brown v. EMA is consistent with their First Amendment jurisprudence and is a victory for free speech, minors, and the video game industry. A full copy of the Court’s decision may be found here.

Reforming R&D Tax Incentives: Do Video Games Deserve Special Treatment?

Image Courtesy of Wikimedia

In September, the New York Times reported that video game designers have been taking advantage of tax breaks meant for other industries, often under terms more favorable than those received by many of the originally intended recipients. Electronic Arts (EA), for example, paid $98 million on $1.2 billion of operating profits over the last five years—an effective corporate tax rate of just under 8.2%. In addition, EA has set up off shore subsidiaries in tax havens and successfully lobbied Congress for new tax breaks.

Firms claiming the federal R&D tax credit elect to receive either a credit for 20% of their research costs above a base amount, or 14% of the excess above the average of the last three years’ R&D spending. I.R.C. §41. Inventive procurement of R&D tax credits has become a lucrative business for the accountants and attorneys who assist firms in obtaining these tax breaks. AlliantGroup, for example, specializes in helping clients obtain tax incentives, and claims credit for helping its clients secure over $1 billion in R&D tax incentives to date.

Claiming the R&D tax credit has become more difficult since its heyday in the 1980s, the NY Times writes, “the credit was being claimed by businesses with little technological background — fast-food restaurants, hair stylists and fashion designers.” Marketing and social science research are no longer eligible for the R&D tax credit. But previous plans to further restrict the credit to basic research have been as poorly designed as the original credit. The Clinton administration proposed restricting the credit to research producing an “actual innovation,” but the Bush administration dropped the proposal as unenforceable.

This difficulty of the enforcement rationale, however, is specious. According to Alliantgroup, more than $5 billion in R&D tax credits are given out annually. Given the amount of money at stake, significant enforcement efforts are warranted. The entire budget of the US Patent and Trademark Office is only about half the amount spent on R&D tax credits. The cost of determining the novelty for products supposedly qualifying for R&D tax credits would be worthwhile if it brought in more revenue by ending frivolous tax credits.

The actual cost, however, would be much lower than the cost of de novo assessments of novelty, as the IRS could treat R&D tax credits as it does the rest of the tax code: grant the credit, only questioning it if the application raises red flags or is part of a routine audit. The threat of being one of those randomly chosen for an audit would ensure substantial honesty from most taxpayers. In the event of an audit, a patent could be accepted as incontrovertible evidence of an “actual innovation.” An innovation subject to trade secret protection would still be eligible for the tax credit as long as the company could prove to auditors that such an innovation existed.

The real problem with the “actual innovation” requirement is that it would increase the tax burden on companies which engage in significant, valuable, but unsuccessful research. Ninety percent of new drugs, for example, fail in clinical trials. Successful research is already incentivized through market forces. There is no need to convince companies to engage in research they know will be successful. The real benefit derived from R&D tax credits is the mitigation of risks involved in R&D expenditures, by reducing total losses, so research failures must be subsidized along with successes.

Alternatively, Congress could simply make a political judgment about which industries or types of research create enough public benefit to deserve R&D tax credits. When video game developers change a few lines of code to create version 10 of their game are the really conducting “research” on something that provides public benefits beyond what the market can reward adequately? Alliantgroup argues that video games do produce public benefits, such as the use of some video games in training military personnel. But this benefit is rewarded by lucrative defense contracts. The best rationale Electronic Arts can come up with is that it donates some games to charity. This, of courses, is already rewarded by a separate tax write-off.

Making video games does create jobs, just like every industry. But making video games is profitable. There is no evidence that game producers would choose to stop making potentially profitable investments if they stopped receiving favorable tax treatment. And even if deprived of the R&D credit, they would still be eligible for the economic development credits given to every industry. R&D tax credits will continue to be just one more government handout for the already well off, unless they are restricted to research which has public value beyond what the market will reward. Those who advocate preserving or expanding the R&D tax credit for video game producers have failed to make a convincing case that there is a public benefit.

Sony’s Decree: Goliath to Fight One David at a Time

Image by FallingFifth Comics

The target of public disdain over its privacy failings just months ago, Sony is again finding itself in the crosshairs of consumer activists and its large user base. Recently, Sony amended its Terms of Service and User Agreement to exclude user participation in any class-action lawsuits against it or its entities unless users submitted opt-out declarations. Using the class-action waiver to push users into individualized arbitration, Sony should escape the majority of future consumer suits derived from its Playstation, Music Unlimited, and Video Unlimited (“Playstation Network”) product lines, significantly reducing its legal exposure in one fell swoop.

Sony finds itself on firm legal footing, and its decision to amend its Terms of Service cannot be said to have been unexpected. In April, 2010, The Supreme Court upheld a contractual clause precluding class action attack in AT&T Mobility v. Concepcion. The court went on to reject nonconsensual class arbitration, finding that it defeated the purposes of arbitration and federal law. Following its decision, large companies were expected to begin implementing similar class-action-defeating clauses into their own contracts.

Sony’s new user agreement requires individuals with disputes to utilize individualized arbitration. Arbitration clauses, of course, are matters of contract and are enforced according to their terms. Having agreed to the new terms, users of the affected product lines are very much bound by the agreement. Defeating the arbitration terms would require a showing of some traditional contract defense, including duress and unconscionability, and seem unlikely given the factual circumstances.

Also interesting is the amendment’s timing. What is clear is that Sony’s decision was decidedly future-oriented—it will not escape the class action suits that were filed in April, in response to its large-scale security breaches. Given Sony’s demonstrated exposure to network attack, however, one would be justified in questioning the urgency and nature of the change. Rather than fixing its extensive network flaws, Sony appears to have undertaken a rather artful shortcut—shielding itself from punishment should such problems occur again.

Facebook’s Open Graph API - Be Afraid or Be Very Afraid?

Illustration by Hank Grebe

Mark Zuckerberg unveiled the next generation of Facebook’s Open Graph API at the F8 conference in San Francisco on Thursday, September 22nd. The updated protocol allows third party applications to more easily utilize Facebook users’ data. The goal is to encourage users to share increasingly dynamic content more frequently. A simple example of the API in action is the inclusion of a Like button on a webpage – when a visitor clicks the Like button that information is recorded in that user’s Facebook feed.

The new version of Open Graph “allows apps to model user activities based on actions and objects.” Eventually, the old-fashioned (ha!) Like button will be supplemented with a number of other verb choices. Thus, you can receive news by emulating what your friends are reading on Yahoo! News, be exposed to new music by examining what your friends are listening to on Spotify, or challenge yourself by running the same route as your friend that uses a Nike Running application.

As happens pretty much any time Facebook changes their site in a way that implicates privacy concerns, a backlash is building. Critics’ primary concern: the availability of data to application developers for more than 24 hours, strikes me as fairly harmless considering that many applications previously circumvented this restriction anyway. Other concerns focus on the fact that Facebook has a variety of new partners that automatically fall under the ‘Instant Personalization’ category and automatically ‘personalize the experience’ for you. In other words, new users have to opt out of in order to avoid sharing information that they might not otherwise want to share by using these applications. However, all of the Open Graph features can be easily disabled.

So are there any laws in the United States that will govern Facebook’s conduct when they roll out new functionality with respect to these privacy concerns? Well, not really; not any comprehensive ones, at least. The United States has taken a very pointed approach to regulating privacy issues, addressing privacy only certain specific instances such as HIPAA (Health Information), Gramm-Leach-Bliley (Financial Information), or FERPA (Educational Records). This is to be contrasted with the European (most notably French) approach to privacy regulation where privacy is implicit in the constitution. Social networking sights such as Facebook and Google have found themselves more frequently arguing privacy issues in European states. So while we are largely at the mercy of the social networking industry giants, we can take some comfort stateside in the fact that many of these concerns are mitigated by the market forces imposed on the companies because they do not want to alienate the user base.

One last point that all these Facebook shenanigans got me thinking about – are the developers of these applications adequately protecting their copyrights? Facebook encourages independent third-party development of integrated applications. For that matter, what about users that are, in addition to just going around Liking things, generating a wide variety of copyrightable material in the form of photos, blog posts, and music? If they’re not – they will be, as new tools are popping up to facilitate this protection. The website Myows provides free tools to manage your copyrightable works and to build a case for infringement. In their own words, “Myows offers a professional one-stop copyright management solution from registration through to issuing take-down notices.” Very cool. The website DepotCode is an alternate site that provides similar tools for managing and proving copyrights in source code.

BitTorrent Pirates, Copyright Troll Lawsuits, and the Forthcoming Congressional Response

Imagine by: Cyberspace Law and Policy Centre, University of New South Wales

BitTorrent has become the tool of choice for Internet users sharing digital media. BitTorrent is a peer-to-peer file sharing protocol under which users can access the files shared on others’ computers. The genius of the technology as compared to pre-existing P2P technologies is that it allows users to “swarm” connections, i.e., upload and download pieces of large files from multiple sources at once. The BitTorrent protocol was first released in 2001 and use of the tool has increased steadily over the last decade – with over one hundred million active users of the technology and more arriving daily. This army of users is, wittingly or unwittingly, often guilty of violating the rights of copyright holders.

Needless to say, most media industries that rely on traditional distribution mechanisms are in no way “cool” with this latest wave of file-sharing technology and its tendency to enable copyright infringement. In an attempt to recoup some of the losses that they are incurring from pirates, several companies have enlisted the help of lawyers to churn out massive John Doe lawsuits. In the face of a threatening cease and desist letter (that notes the possibility of $150,000 in damages per download) the suspected infringer is urged to settle. The superficial nature of these lawsuits has earned the firms that engage in this practice the not-so-endearing term “copyright troll”. Corynne McSherry, intellectual property director at the Electronic Frontier Foundation described the practice as “a dragnet approach to litigation.”

One prominent Washington D.C. law firm calling itself the U.S. Copyright Group sued 25,000 users for downloading the movie “The Hurt Locker” in April of 2011. Jeffrey Weaver, head of the U.S. Copyright Group described the approach of his group: “We’re creating a revenue stream and monetizing the equivalent of an alternative distribution channel.” Yikes. Many of The Hurt Locker suits were dropped because of a lack of personal jurisdiction. Another massive lawsuit campaign took place over infringement on The Expendables (do you remember this incredible cinematic achievement?). 70% of the profits from these settlement shakedowns go to the lawyers, with only 30% returning to the rights holders. So at least the lawyers are happy.

More of these lawsuits are coming down the pike (for a weekly update, see http://story.albuquerqueexpress.com/index.php/ct/9/cid/63e88d54af0cf473/id/46388238/). The best way for BitTorrent users to avoid getting sued is not to download or share any copyrighted material- i.e., only share/download files 1) that are in the public domain, 2) for which you have permission to share, or 3) that are made available under pro-sharing licenses. The Electronic Frontier Foundation provides advice on what to do in the event that a cease and desist letter is received.

Meanwhile, Congress is spinning its wheels once again to create new legislation providing additional enforcement mechanisms for the rights holders. Senator Leahy’s proposed Protect IP Act is the latest attempt; many are critical of the bill’s tendency to inhibit technological innovation.

The digital piracy problem has, to this point, been unsolvable. The media establishment and Congress’s responses over the last decade feels a lot like a rearranging deck chairs. Traditional business models that create revenue streams based upon their pseudo-property rights are opposed to the very concept of the Internet as a tool for the open exchange of information. Whether the tool in question is Napster, YouTube, Google Books, BitTorrent, or some unforeseen, yet-to-be-invented piece of technology, we can be sure the opposition from IP rights holders will continue.

A Fashion Fiasco

Photo By: ChristopherMacsurak

Hollywood actresses spend thousands of dollars on couture dresses for the Academy Awards. The designers who craft these exquisite gowns spend hours of time and bundles of money to adorn such fashion-forward actresses. Yet in minutes of stepping on the red carpet, individuals are sketching these designs with plans to recreate a cheaper version of the couture for the mass-market. With the rapid use of technology, designs from runway shows in Paris and Milan are being recreated overnight and are shown in stores, such as Forever 21, in the United States within weeks. The quick snap of a camera and the instant upload to a computer can turn a couture design into a cheap knock-off.

Currently, trade dress law and policy does not cover the design of a dress but rather covers only the look and feel of the article. In the basis for a Supreme Court case, Samara designed and manufactured children’s clothing. Wal-Mart sold knock-offs or copies of these designs and generated approximately $1.5 million in gross profits. In Wal-Mart v. Samara, 529 U.S. 205 (2000), the Supreme Court held that clothing is product design and therefore secondary meaning is needed.

Similarly, copyright law doesn’t cover the overall design of a dress but it does cover a pattern. Specifically, copyright law covers the lace pattern of a wedding dress but does not extend to the wedding dress as a whole. Over the past four years, Representatives have introduced design piracy legislation into Congress only to have it die in committee hearings before reaching a vote.

Along with maintaining creativity, designers must endure the push and pull nature between copyright and trade dress law while searching for available protections for their designs. With the scarce options of intellectual property remedies for designers, design pirates are monetarily capitalizing on a designer’s creation and are usurping their creative marrow.

The question left for designers is whether the fate of their protective remedies is left with Congress or with the courts. Moreover, if either of those routes fail, then will designers be left with parsing the intellectual property principles of copyright and trade dress to protect specific aspects of their design?

GUEST ENTRY: Robots and the Law: Will Robots Be Entitled To A Jury of Their Peers?

In our first guest entry, Attorney Arthur F. Licata analyzes the legal issues that accompany the potential use of self-aware robots in a global society. Invoking images of a not so distant future, “Will Robots Be Entitled To A Jury of Their Peers” demonstrates that the present legal infrastructure is unprepared for this potential wave of oncoming technology. This article leaves the reader wondering whether these predictions will ever manifest, or whether inventors or government will account for grave uncertainties.

Click here to read the full article

Judge Doty: The Player’s Best Friend?

Three weeks ago, Federal District Court Judge David Doty sided with the NFLPA when he ruled that the NFL had violated the terms of the, then in place, collective bargaining agreement. By using its extraordinary market power, the NFL was able to force the networks wishing to carry its product to agree to provisions that required the networks to continue paying even if there was a work stoppage. Moreover, Doty continued, the NFL did so in preparation of a work stoppage, which was at least a few years away. Additionally, these provisions came at the expense of securing higher annual fees under the contracts if they removed the lockout terms. This was done because in the years prior to the lockout, where the NFL accepted lower annual fees, the fees were to be shared with the players; however, in the event of a lockout, the owners would have been able to keep all the revenue.

Judge Doty stressed that the NFL’s actions were taken with an eye toward locking out the players in a way that would hurt the players financially without a similar harm to themselves. In effect, the owners structured the deals, that were supposed to be negotiated to “maximize revenue for players,” to advance their own interests and not the players. The deals were done in a way to gain leverage for the owners in the event (an event that the owners were planning to occur) of a work stoppage. A plan Judge Doty put a stop to.

Although this was a win for the players, one wonders if the same logic won’t work against them in their upcoming April 6th hearing, a hearing brought by NFL players, led by the likes of Tom Brady, Peyton Manning, and Drew Brees, claiming that the lockout violates antitrust laws. However, this antitrust lawsuit is only available because the players decertified, a process they began in the fall of 2010. The decertification was done in such a public way in an attempt to gain leverage during negotiations and to allow this current lawsuit to take place. The NFL will/is going to argue that the decertification should be overlooked/ignored as it is a simple ploy to gain leverage whenever the two sides meet again at the bargaining table. It is certainly possible a Judge could look at the NFLPA’s actions the same way Judge Doty looked at the NFL owner’s actions when negotiating the TV deals and agree with the NFL to ignore the decertification.

Slash Not Welcome in the Jungle: Axl Rose Sues Activision Over Use of Slash's Image in Guitar Hero III

Axl Rose is suing Activision for $20 million for allegedly breaking its promise not to include images of Slash, his former band mate in Guns N’ Roses, in Guitar Hero III. Mr. Rose claims that this promise was a condition of his granting Activision a license to use the song “Welcome to the Jungle” in Guitar Hero III. This promise was allegedly in the form of a written agreement in a series of emails. An animated version of Slash appears on the cover of the videogame. The suit claims fraud and breach of contract amongst other causes for relief.

It may be difficult to prove breach of contract due to the parol evidence rule. The parol evidence rule concerns what can be admitted as evidence when the court considers a contract. California’s parol evidence rule states that “[t]erms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement . . . .” Cal. Civ. Proc. Code § 1856(a) (2007).

A full parol evidence analysis is beyond the scope of this blog entry, and would require a copy of the contract, all relevant material, and the actual complaint; therefore this blog post will concentrate on just one limited aspect. If the court finds that the parties had a contract that was a “writing intended by the parties as a final expression of their agreement,” that will affect the admissibility of evidence of a prior agreement. If the email agreement to not use Slash’s image was made prior to the contract, that agreement will not be admissible as evidence to contradict the contract.

Prior agreements can, nevertheless, be admitted to show fraud. Under California law, the key language which defines fraudulent deceit is “[o]ne who willfully deceives another with intent to induce him to alter his position to his injury . . . .” Cal. Civ. Code § 1709 (2009). Deceit is defined as:

1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true; 2. The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true; 3. The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or, 4. A promise, made without any intention of performing it.

Cal. Civ. Code § 1710 (2009). In order for Mr. Rose to succeed with a fraud claim, he will have to prove that Activision purposely deceived him with the intention of getting him to license “Welcome to the Jungle” to Activision. Fraud cases are often difficult to prove, as there is rarely a “smoking gun” to show the fraudulent intention, and instead, must often rely on the fact-finder to impute intent based on circumstantial evidence. Yet, the fraud claim may wind up being stronger than the breach of contract claim because the parol evidence rule can absolutely bar evidence from even being considered at trial.

Dear Anita, are you there? It’s me, Ginny.

When you think of Supreme Court Justice Clarence Thomas, the following topics come to mind: his failure to ask a question during oral argument since 2006, his conservative judicial philosophy, and Anita Hill.

In 1981, Hill was an attorney-adviser to Thomas at the U.S. Department of Education and then followed him to his position at the Equal Employment Opportunity Commission. Ten years later, she was called to testify at his Supreme Court Confirmation Hearing for her allegations that Thomas made sexually provocative statements toward her during their employment together. Thomas denied the allegations and stated that the confirmation process had become a “circus” resulting in “high-tech lynching of uppity blacks”. See Hearing Transcript.

Now almost twenty –years later, the N.Y. Times reports that Ginny, Thomas’ wife, asked Hill to apologize and provide a full explanation for her actions. Hill insists that she finds Ginny’s extension of an olive branch “offensive” and that she will not apologize for something that she believes is true. It is unclear as to what is more shocking – Ginny’s attempt to regain closure on a two-decade old issue or her method of communication, voicemail.

These two women have never met; however, they have now engaged in an indirect relationship using various methods of communication. In her book, Speaking Truth to Power, Hill noted that Ginny’s accusation of Hill’s interest in Justice Thomas stemmed from Ginny’s unreasonable belief that just because she found her husband to be attractive, other women must as well. Ginny chose to utilize a thirty-second clip on a voicemail to address her concerns. Even for the lovers of brevity, this method of technology is a bit disconcerting. Specifically, the timing and the choice of voice-recognition leads to speculation that perhaps Ginny’s attempt was not an olive branch, but was a way to reignite interest in her life - at a time when she just launched her new non-profit group, Liberty Central. On the other hand, it can be argued that Anita is not an innocent bystander since she reached out to the press by playing the voicemail for N.Y. Times.

Regardless of the semantics of their relationship, it’s even more important to note that despite the geographical difference between these two women, technology reminds us that even Supreme Court Justices are dealing with the age-old story of the wife versus the other women.

Life’s a Jungle Out There for ‘Dora the Explorer’

Dora the Explorer is one unhappy camper. Caitlin Sanchez, the former voice of “Dora,” who was fired after her voice changed, has sued Nickelodeon through her parents, as she is a minor and her parents are the guardians and also entered into the contract. The claim against Nickelodeon asserts the company forced Sanchez to enter an unconscionable deal which “swindled” her out of tens of millions of dollars while also exploiting her. It is still in the early stages of development, but Sanchez claims she is owed these “millions” through merchandising revenue, residuals, and marketing that she was never paid for. She is claiming when she originally entered the contract, Nickelodeon forced her and her family to sign within twenty minutes or the part of Dora would be given to someone else. Further, she is arguing that the contract contained many unfair and vague provisions, forced her to participate in activities not prescribed by the contract, and did not pay or only paid minimally for these activities, revenue and hours of recording sessions.

Nickelodeon, of course, is saying that the claim is baseless and that she was compensated fully for her services. Sanchez, according to Nickelodeon and Viacom, made over $300,000 while working as Dora and had a well-negotiated contract and lived a lavish lifestyle while being employed with them. The network claims the contract contained an option to renew could, allowing them terminate her. Sanchez avers that she was fired because she tried to renegotiate a better deal, which she claims Nickelodeon called unfair.

After the complaint was issued, Sanchez’ lawyer recently tried setting a deadline for Nickelodeon to offer a reasonable settlement offer, claiming that if they did not, Sanchez would grant media interviews and damning evidence towards the network. Nickelodeon didn’t bite, stating that there is nothing to hide and Sanchez is being used as a pawn to extort the company and further a groundless claim initiated by her parents.

Current laws protecting child performers are still emerging. They stem from the ‘Coogan Law’ where a young child actor saw his earnings diminish, as under law his wages went solely to his parents. Massachusetts has one of the most thorough child performer statutes, yet there are still holes, which may benefit companies and parents. These laws have been enacted to protect a child’s assets as well as protect companies from disaffirmance.

Under basic contract law, a minor cannot lawfully enter into a contract because of the law of nonage. Most companies enter the contract with the adult or guardian to shield them from disaffirmance. Disaffirmance allows a minor, if timely, to void any contract made because the contract was voidable due to the person’s status as a minor. This however, can lead to one-sided situations, as in Sanchez’, along with the children’s parents and guardians taking advantage, both monetarily and physically, of the child performer.

Child performer statutes allow courts to affirm contracts made with minors to protect their income until they reach a certain age, provide for unreasonable and time consuming contracts and also shields companies from disaffirmance. Problems arise, though, because in most states that have enacted these laws, affirmance is only voluntary and usually initiated by the company. As is the case here, the contract was entered into under New York law, therefore it was not required to be affirmed as it also included the parents as co-signers and consenting parties to the deal. This gives the parents the ability to continue to profit off their children, companies to offer one-sided, take-it-or-leave it deals, and children ultimately left with minimal say and little remedy.

The sad reality is that it is a buyer’s market when it comes to these child actors due to the lack of openings and changing landscape. It is often the parent who pushes these children and they are unwary of repercussions of entering into these deals without lawyer review, as they are usually just thinking about the dollar signs. While this may or may not be the case here, absent uniform regulations or state laws, companies can still take advantage of child actors and parents, and parents can still take advantage of their children’s talent. Or, as Nickelodeon claims, former employees or parents of these employees can possibly exploit them for personal financial gain. However, sometimes these suits may be for the better when the child’s best interests, professionally and pecuniary, are in mind.

Bring Out Bigger Cannons to Fight Online Pirates

In their continued frenzy to stop online piracy, the entertainment industry has supported a new bill in the Senate titled the “Combating Online Infringement and Counterfeits Act" (COICA). Patrick Leahy (D-Vt.) introduced the bill on the last day of the Senate session in the hope that it could be pushed through before Congress adjourned. Despite support from both sides of the aisle, lawmakers ran out of time, and shelved the act until after the Fall recess.

The proposed legislation would give the Department of Justice the power to file a civil suit against a website providing pirated material, and then file for a court order to require domain registries, ISPs, DNS providers, and others to block access to the site. The DOJ would also maintain a list of sites that it believes provide infringing content, but has yet to file suit against. Service providers are encouraged to also block these sites, and are given legal protection if they choose to do so. Critics have taken issue with the bill, claiming that it could lead to technical issues and the infringement of free speech rights.

A major problem with this legislation is its definition of which sites violate the law. It allows the DOJ to seek a court order for any Internet site that is “dedicated to infringing activities.” This includes a a site that is “primarily designed, has no demonstrable, commercially significant purpose or use other than, or is marketed by its operator” to distribute copyrighted or counterfeit materials. Combating Online Infringement and Counterfeits Act, §2324 (a)(2), 111th Cong. (2nd Sess. 2010).

A judge considering a court order blocking the site could either read the law broadly or narrowly, and either would have severe consequences. A broad reading would block sites that have both legal and illegal content. This could include sites like Rapidshare, or Megaupload, which allow users to share any type of file, copyrighted or otherwise. More alarmingly, the users of online forums regularly share copyrighted materials with other members. If a court order blocked this kind of site, it would raise a myriad of First Amendment issues, especially because the order would be issued without a chance for the accused site to defend itself.

On the other hand, a judge reading the statute narrowly would render the law ineffective. If a site only needs to have another purpose besides distributing copyrighted or counterfeit material, then this could easily be designed around. The owner of a website could change the format so that links to infringing works are presented in conjunction with a blog, a forum, or any other legitimate online activity. Furthermore, a high judicial standard for showing a violation would require the DOJ to present more evidence, thus slowing down the process. In addition to consuming valuable governmental resources, the sheer number of piracy sites would make the entire exercise futile.

Although piracy and counterfeit goods may be a problem in the United States, an ineffective bill that potentially violates the free speech rights is not the answer. An issue of this complexity requires careful thought and consideration, and cannot be fixed in a day, especially if that day is the last day before Congress adjourns.