Law
I have often advised my clients of the need to investigate whether or not a license is needed in order to use images on a website or in any printed material. If a license is needed, it can be an unanticipated additional expense. However, not obtaining a license when it is needed can result in an unanticipated lawsuit. For example, Getty Images, the owner of over 150 million images, including many of the most famous archival news photos, is very aggressive in pursuing non-licensed users of its images. Getty often demands payment for past use in order to avoid the filing of a lawsuit.
So, last week’s news was quite remarkable: Getty announced that it will make approximately 35 million images available for use, without a fee, to online non-commercial users such as bloggers and tweeters. Such bloggers and tweeters will now be authorized to embed such images on blogs and tweets, similar to how YouTube allows videos to be used. The only caveat is that there must appear a Getty Images photo credit and a link to Getty’s website where viewers of the image can then elect to obtain a license to use it. The images may then be used for “editorial purposes,” meaning that the images would be used in connection with reporting or commentary of events that are newsworthy or of public interest. They cannot be used for advertising purposes.
Why did Getty take this action? They claim that “this will provide people with a simple and legal way to utilize content that respects creators’ rights, including the opportunity to generate licensing revenue.” They believe that allowing free access and dissemination of their images will generate brand awareness of Getty Images and, potentially, advertising revenue from the linked-to advertisers.
I think that it probably had more to do with two factors: one, as a practical matter, Getty was spending too much time and money pursuing all of these infringers and not recovering enough to justify the investment. Second, many bloggers and others using the images as part of a commentary, news report, etc. had claimed that such uses were allowed under the Fair Use Doctrine (see my blawg posts of February 20, 2013 and November 21, 2013 for a broader discussion of the Copyright Act’s Fair Use Doctrine).
Getty is still insisting that all commercial users of its images pay licenses fees; this new policy only applies to non-commercial users. Further, when users click on the required links that have to accompany the images, they may be taken to advertisements that generate revenue for Getty. Of course, commercial use licensees will have much broader rights to use the images—they can use them on multiple platforms, may edit the images and maintain copies of them on their servers—all things that the free users may not do.
Law, Technology
On July 1, 2014, the first of several phases of Canada’s sweeping new Anti-Spam Law (“CASL”) passed in 2010 will become effective after a long “phase in” period. CASL, while containing significant tools to combat bad spam and to make e-mail marketing more user-friendly and respectful, will require businesses and charities doing business in Canada to devote significant attention (and resources) to re-qualifying their procedures for e-mail communications.
CASL should be of keen interest to any organization, for profit or non-profit, that sends electronic messages (i.e., not just emails, but also text messages) to recipients in Canada in connection with a “commercial activity.” Anyone doing business with Canadian companies or residents, including American companies and organizations, will have to comply with CASL or face the consequences of failing to do so.
The first part of CASL aims to protect consumers from unsolicited electronic messages (which includes not only emails but also text messages) by giving consumers control over who can send them a commercial electronic message or business email. Primarily a law to counter spam, CASL will have a major impact on how businesses conduct operations and market their products in Canada. New rules for electronic communications will compel companies to review their current email practices and, most likely, require them to re-qualify their email customer/contact lists to make them compliant. Persons and businesses in violation of the new laws may face significant financial penalties.
The basic prohibition contained in CASL is against sending “commercial electronic messages” unless the recipient has consented to receiving the message and the message contains certain prescribed information, including the identity of the sender and the sender’s contact information, as well as the unsubscribe mechanism. What is considered “commercial” under CASL is very broad. It is defined to include “any offer to transact any product or service or an interest in land, offer an economic opportunity (including gambling) or to promote any of these activities.” The mechanism to unsubscribe from receiving emails has to remain operative for 60 days and an unsubscribe request must be acted on within 10 days.
Canada’s new law represents a significant and tougher stance against unsolicited commercial emails and is far more restrictive than the United States’ CAN-SPAM Act. The US law is an “opt-out” system. CAN-SPAM only applies to emails Under current US law, as long as an email header (i.e., the subject line) is not misleading, companies are allowed to send one unsolicited commercial email (i.e., SPAM) to a recipient, so long as the email message contains a link to allow the recipient to opt out of receiving future emails and the company then removes the recipient from their mailing lists if they opt out. Canada’s new system, on the other hand, is an “opt-in” system that will require prior to consent to receive emails or texts “in connection with a commercial activity,” subject to a proviso that “implied” consent may be used within specifically defined circumstances such as a contractual relationship with a recipient.
The CASL does include some exclusions and exemptions. For example, several broad categories of messages are excluded entirely from the CASL prohibition or, while governed by it, will have no consent requirement. Excluded entirely are messages between individuals having a family or other personal relationship and business-to-business inquiries or applications. A second category of messages will be required to comply with the required “content” provisions described above, but not the consent requirement. This category broadly includes commercial communications that have a consensual basis, specifically: providing a quote in response to a request, facilitating a commercial transaction, providing warranty, product recall or safety information about a purchased product, providing information regarding the ongoing use of a purchased product or service or an employment relationship, or delivering a product or service (including upgrades) for a previously purchased product or service, to which the purchaser is entitled.
One important group of electronic communications that is exempt from the consent requirement are those falling under the category of “implied consent.” The most important of these are communications relating to an “existing business relationship” or an “existing non-business relationship.” The term “implied consent” is defined to include only specified circumstances. In addition to the two categories just listed, it includes a person posting an e-mail address in effect inviting communications or providing an e-mail address to a sender with no indicated intent not to receive messages, provided that any message sent is relevant to the person’s business.
While the “implied consent” exemption may appear to be an easy “out” from having to comply with CASL’s opt-in requirements, the scope of the “implied consent” rule is limited by the explicit definitions given to the terms “existing business relationship” and “existing non-business relationship.” In both cases, the required element is either an existing commercial relationship (e.g., a recent product or service purchase or a written contract) or a non-commercial relationship (e.g., a gift or donation, volunteer work or membership in an organization).
So how does a company whose messages are not going to be exempted under CASL acquire the required opt-in consent? The request for consent must set out clearly the purposes for which it is sought and, in a prescribed manner, identity information of the requestor. CASL places the legal burden on the organization to prove that consent was, in fact, obtained.
The second phase of CASL will become effective on July 1, 2015. That phase will prohibit the unsolicited installation of computer programs or software, as well unauthorized interference with private electronic messages. This portion of CASL seeks to protect consumers from potentially damaging and deceptive electronic threats (such as identity theft, phishing and spyware) by allowing them to decide who is allowed to put computer programs on their electronic devices. The general rule is that express consent is required to interfere with a message or to download. Furthermore, if downloaded software will perform functions such as collecting the user’s personal information, changing settings already installed on a computer, or interfering with stored data, this fact must be described clearly, prominently, and separately apart from the license attached to the software. Downloading of certain computer programs, such as cookies, where it is reasonable to assume the user’s consent, as well as upgrades to existing programs that have been installed previously with the user’s consent, are deemed to have received express consent.
The third phase, which will become effective on July 1, 2017, pertains to a person’s right to commence an action in court in response to a violation of CASL.
Once CASL is fully phased in, the penalties for failing to comply with it will be significant. These penalties include: (i) monetary penalties in amounts of up to $1,000,000 for individuals and $10,000,000 for other entities; (ii) criminal penalties for obstructing an investigation; and (iii) a private right of action for persons suffering actual loss or damage as a result of non-compliance with CASL. With respect to both the violations and the criminal offences, directors and officers who authorized an organization’s non-compliance will be personally liable. Further, the private right of action (which does not exist for violations of the US CAN-SPAM Act) is significant and potentially far-reaching. It will be available to any individual or other person who has suffered damage as a result of non-compliance. While it will be necessary to prove actual damages, in certain cases it may be possible for a large class of individuals impacted by a violation to file a large and costly class action suit.
The bottom line is that CASL represents a significant change to existing Canadian law, and it should be considered carefully by anyone doing business in Canada.
Entertainment & Media, Law, Technology
An expensive nine year legal battle between Google and The Authors Guild, the nation’s largest organization of published authors, has ended in a victory for Google. Federal Judge Denny Chin, of the influential U.S. District Court for the Southern District of New York, awarded a summary judgment to Google with respect to copyright infringement claims brought by the Authors Guild and several other named authors as a result of Google’s mass digitization of literary works for its “Google Books” project. In legal parlance, a “Summary Judgment” is a judgment rendered by the court prior to a verdict because no material issue of fact exists and one party or the other is entitled to a judgment as a matter of law. In other words, the facts that are material to the decision are not disputed by the parties and, therefore, the judge can render a decision based on the relevant law.
So what started this massive lawsuit? For several years now, Google has embarked on a massive project, called Google Books, to make digital copies of entire books (not just portions of them) to enable full-text searching of the texts. While many of the books are no longer protected by copyright, an enormous number of them still are. So far, Google has digitized approximately twenty million books. The Authors Guild and the group of individual authors (collectively, the authors) sued Google, claiming that such copying amounted to a massive copyright infringement of millions of books.
The District Court held that Google’s use of digital copies for full-text searching was “transformative” (I’ll explain that in a minute) and thus constituted “fair use.” As a result, the court held that Google may make full digital copies of the works without authorization of the Authors.
I have discussed the Copyright Act’s fair use doctrine in a previous post. It continues to be one of the most litigated issues in copyright law. Just to recap from that earlier post, the Copyright Act sets forth a non-exhaustive list of four elements that the courts must consider in determining if any unauthorized use of a copyrighted work is a “fair use.” They are: (1) the purpose and character of the work (which is claimed to be a fair use); (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. In addition to those four factors, the statute states that the court may consider other factors it deems relevant to the analysis.
As a result of the landmark 1994 U.S. Supreme Court decision in the case of Campbell v. Acuff-Rose Music (a case involving rapper Luther Campbell’s unauthorized cover version of Roy Orbison’s classic song, Oh, Pretty Woman), the courts have established another element to be considered: whether or not the unauthorized use is a “transformative use.” As I noted in the previous post, while some consider this to be a new “fifth element” to be considered, most legal scholars consider the “transformative work” test to be an element to be considered as part of the analysis of the first of the four statutory factors, i.e., the purpose and character of the work.
The Campbell Court stated that a derivative work becomes a “transformative work” (and, thus, entitled to fair use treatment) if it uses a source work in a completely new or unexpected way. In other words, even though the statute says that a copyright owner may stop others from preparing derivative works based on their copyrighted work, if that new work is “transformative” enough, the copyright owner may not be able to stop the use, even if the other four fair use factors set forth in the statute weigh against a finding of fair use. One thing that has led to quite a bit of confusion over the years is that the definition of a “derivative work” includes a work that is “transformed.” The test often applied is whether the new work “supplants” the original work. If so, it is not transformative.
OK, so how did the Google court apply the fair use analysis? Incorrectly, in my opinion.
In analyzing the first factor, i.e., the purpose and character of the Google works, the court concluded that Google’s use was “highly transformative” and, thus, that factor weighed heavily in favor of a finding of fair use. The court was impressed by Google’s digitization as a transformation of the books into a comprehensive word index that is designed to allow people to search through entire texts based on inputting search terms for any terms contained within that text. I fail to see how simply making copied text searchable is “transformative.” (I suspect the court of appeals might agree with me.) The court seemed to place a great deal of weight on the fact that Google’s scanning makes it easier for students, teachers, researchers and the public to find books. While the court acknowledged that Google’s use was commercial (which would tend to weigh against a finding of fair use) it nonetheless was impressed that researchers could use the indexed text without direct payment. What the court conveniently overlooked was that Google is a commercial enterprise and it generates millions of dollars in revenue as a result of ads and traffic on its site, including the Google Books pages.
The next factor the court discussed, the nature of the copyrighted work, i.e., books, once again would seem to weigh against a finding of fair use. However, the court said that the vast majority of the digitized books were non-fiction and thus entitled to little protection. Again, I disagree with that. While facts contained in non-fiction books are not protected by copyright, the choice of the way to express those facts is. While certain non-fiction works (for example, parts catalogs and phone directories) may have a very “thin” layer of copyright protection, other non-fiction works are highly creative. For example, does the court really think that Truman Capote’s classic, In Cold Blood, is not worthy of strong copyright protection just because it is not a work of “fiction?”
In analyzing the third factor, i.e., the amount and substantiality of the portion used, the court decided to use reason and stated that Google’s digization of entire works did weigh against a finding of fair use, but only “slightly” because Google takes steps to keep people from viewing complete copies of books online (even though the entire text is searchable).
In applying the final fair use factor, namely, the effect of the use on the market for the underlying work, the court opined that since Google does not sell the digitized versions, and only allows “snippets” of books to be viewed, Google Books are not a substitute for the original and will actually boost sales for the original works. The court stated that Google Books has given “new life” to “out-of-print and old books that have been forgotten in the bowels of libraries.” While Google’s legion of fans may love the convenience of being able to search millions of books this way, it is important to keep in mind that the authors feel that they have been economically harmed by this, notwithstanding the court’s view that the authors would benefit from it.
Judge Chin felt that the value of Google Books to researchers and other academics was compelling, stating that “Google Books provides significant public benefits.”
What is the impact of this decision (assuming that it is not overturned on appeal)? The decision gives a legal greenlight to search services that include images, text and other portions of works in the search results. Already, the courts have held that use of thumbnail images as part of a search engine is fair use. So long as such a search result does not act as a substitute for content by showing readers all of it, and instead simply shows where to find the rest of the content, the usage will be permitted.
Frankly, the court’s decision left me scratching my head wondering how it could reach some of these conclusions. My criticism of the decision is not so much the end result of a finding of fair use, but, rather, the court’s position on each of the four factors that led to that result. It is important to keep in mind that this decision (strangely taking nine years to get to summary judgment) likely will be appealed. I suspect that the court of appeals will agree with me and overturn this decision, but one thing that I have learned in my 28 years of law practice is that, when it comes to fair use cases, expect the unexpected. You can be certain that I (and others) will be watching this case closely.
Entertainment & Media, Law, Music
Often the first order of business for a newly formed band is the all-important selection of the band’s name. Sometimes, the name of the group includes the surname of one or more of the band members. A few notable examples are Bon Jovi, Hall & Oates, The Brian Setzer Orchestra, Simon & Garfunkel and Van Halen.
The next order of business SHOULD BE to decide who will own the chosen band name in the event of a breakup of the band or a change in personnel. Though these eventualities are probably the last thing on the minds of the members of a brand new band, they carry important consequences.
The ownership of the band name can be critical to the ability to continue to tour and merchandise. Many of the legendary Big Bands (e.g., The Glenn Miller Orchestra, The Buddy Rich Band, Woody Herman & the Thundering Herd), as well as classic Motown groups (e.g., The Spinners, The Four Tops, The Miracles) and even rock groups (The Animals, Pure Prairie League, Yes), just to name a very few, are comprised by many people who were never part of the original group (who may have died or just chose to leave the group). In some cases (known as “Ghost Bands”), none of the original members remain but through a series of ownership transfers a new party has acquired the rights to use the band name. These changes in personnel and ownership transfers can create disputes about the right to use the original band name.
One notable example of a dispute of the ownership of a band name involved competing versions of the band, Yes. Guitarist Steve Howe toured with one version of Yes. Keyboardist Rick Wakeman toured with his own version of Yes. Both of these versions of “Yes” were touring the United States at the same time and there was considerable confusion as to which version, Howe’s or the Wakeman’s, would be the one to play in the local arena. This battle of the bands led to extensive litigation over who owned the rights to the name “Yes.” These problems might never have arisen had these issues been settled when the band formed their legal entity.
Now there is a new twist on the “who owns the band name” issue: The ex-wife of Alex Van Halen, Kelly Van Halen, is being sued for using the name “Van Halen.” She is not using the name as the name of a new band, but as the name of businesses that intend to produce furniture and other household goods and clothing and to engage in the construction and interior design businesses. Van Halen, the band, was formed in 1972 by guitarist Eddie Van Halen and his brother, drummer Alex Van Halen . In 1984, Alex Van Halen married Kelly Carter and she legally took his name, going thereafter as Kelly Van Halen (the name she continues to use today as her legal name).
The Van Halen brothers formed an entity to hold their intellectual property rights—E.L.V.H., Inc. E.L.V.H. filed for and obtained numerous U.S. trademark registrations for the “VAN HALEN” name not only for entertainment services, but also for a broad variety of merchandise and goods, including recordings, musical instruments, books, posters, printed materials, clothing, etc.
In 1992, after twelve years of marriage, Alex and Kelly divorced. Now, almost twenty years after the divorce, E.L.V.H. has decided to sue Kelly to prohibit her use of the name she has used since 1984, Kelly Van Halen, in connection with her businesses. Kelly attempted to secure her own U.S. trademark registrations for “KELLY VAN HALEN” for use in connection with a broad variety of goods and services (based on a bona fide intent to use the mark in this way) for goods ranging from furniture and bedding, to clothing items, and to construction and interior design services. The lawsuit, filed in Federal District Court in California, seeks to block those registrations and to force Kelly to cease from using the “Van Halen” name in connection with any of these businesses.
While the U.S. Supreme Court has previously held that a person’s name is a form of their own property, the right to use that name is not without limitation. Under traditional trademark law, E.L.V.H. would not have to prove that the two names are identical, but only that there is a “likelihood of confusion” between its use of “VAN HALEN” and Kelly’s use of “KELLY VAN HALEN” in connection with her goods and services. Even if E.L.V.H. cannot prove that there is a likelihood of confusion, under the fairly recent law of “trademark dilution,” if it can prove that the “VAN HALEN” mark is famous and has been or is likely to have that fame diluted by Kelly’s use, it could prevail under that theory. Finally, if E.L.V.H. can prove that Kelly’s use of the “KELLY VAN HALEN” name falsely implies that there is some connection, affiliation or sponsorship between her goods and services and those of the famous band, E.L.V.H. may prevail under the theory of “unfair competition.”
Essentially, E.L.V.H. will have to prove that Kelly’s use of the “KELLY VAN HALEN” name, not in connection with a band or other entertainment enterprise, but in connection with the goods and services listed in those applications, is trading upon the goodwill in the “VAN HALEN” named owned by E.L.V.H.
So, I guess there are two morals to this story: First, be careful in deciding who in the band will own the name in the event of the departure of one or more of the founders from the band. Second, if you are in a band named after yourself and you decide to marry, will you allow the person you marry to take your name?
Pre-nup, anyone?
Entertainment & Media, Law, Music
Victor Willis, lead singer and the “policeman” in the 1970s disco group, The Village People, has won back his portion of the copyrights to 33 of the songs that he co-wrote for the group, including the omnipresent YMCA. As a co-writer of these songs (there is currently some debate as to whether he had one or two other co-writers), Mr. Willis, by virtue of having written the musical compositions, held copyrights on these musical compositions (i.e., the songs themselves, not the recordings of the songs whose copyrights always have been owned by the record company). He then entered into a publishing agreement with respect to his song catalog. Like other standard music publishing agreements, under his agreement he assigned his copyrights to the music publisher, in return for the payment of royalties generated by the publisher’s commercial exploitation of the songs.
The case, filed by Mr. Willis in Federal court in Los Angeles, was limited to a determination of his rights in the musical compositions; the rights in the sound recordings created by the band were not at issue and remain with the record company or its assignees. After thirty-five years, Mr. Willis (and his co-owners) had the right to terminate these copyright assignments in the musicial compositions and to regain his rights in the 33 songs. This right is grant by Section 203 of the Copyright Act, a little known provision of the US copyright law; under this law, copyright assignments, exclusive licenses and non-exclusive licenses, if executed after January 1, 1978, may be terminated by an author of the work (or, if that person is no longer alive, by his or her heirs) any time during the period beginning 35 years after the date of the original assignment or license and terminating five years later. In essence, the author -or his heirs- has been given a statutory “second bite at the apple” with respect to his portion of the work. The termination right applies even if the author had signed a document expressly waiving the termination right. Songs whose copyrights were licensed or assigned prior to January 1, 1978 are not eligible for this treatment. The creation of this termination right was a key part of the Copyright Act of 1976 (which became effective with respect to works first created after January 1, 1978). It was enacted in response to the belief that many popular songwriters in the 1940s and 1950s had “given away” the rights to the renewals on their song copyrights by not fully understanding the old copyright mechanism under the pre-1978 law which had an original term of 28 years and a renewal term of an additional 28 years.
There is one important exception to this right: it does NOT apply to “works made for hire.” Under the Copyright Act, “works made for hire” are those prepared by an employee within the scope of their employment, as well as works prepared by independent contractors if there is a written agreement to treat the work as a work for hire AND the work falls into one of nine enumerated categories of work. When talking about creative works, the primary categories of works that might be eligible for “work for hire” treatment are: 1) contributions to collective works; or 2) as part of a motion picture or other audiovisual work. For example, if a group of writers worked collaboratively on a song and they all agreed in writing to treat their collective efforts as a work made for hire for another party (i.e., the agreement was not just among themselves), the termination right likely would not apply.
In this case, Mr. Willis did have co-writers, but there was no signed work for hire agreement with the music publisher or record label as to song ownership. The party currently holding the rights to those songs argued that Mr. Willis and his co-writers were “employees” of the publisher. The judge hearing the case did not agree. As a result, Mr. Willis now controls his percentage interest in the work (there is some debate as to whether there are two or three other co-writers) and is entitled to his prorata percentage on those works.
Mr. Willis, now emboldened by his recent victory (after a five year legal battle), has stated that he may prohibit the current touring version of The Village People (which is comprised of different members from when he was the lead singer of the group) from performing his works. In fact, his view is that he can now prevent all public performances of the work (which is part of the bundle of exclusive rights owned by a copyright owner), even the performances of YMCA that have become such a staple of stadium sporting events. However, since Mr. Willis did not write the compositions alone, but instead jointly with other authors, he cannot prevent those other authors (or their assignees) from granting non-exclusive licenses to perform the works. Copyright law provides that all joint owners must consent to an assignment of the work (a transfer of copyright ownership) or to an exclusive license (an agreement granting rights solely to one person), but any joint owner of the copyright may grant non-exclusive licenses without the consent of the other joint owners. If such a non-exclusive license is granted, there is a duty to account to those joint owners for their prorata share of the earnings. Thus, it is possible that the works could continue to be licensed by Mr. Willis’ joint owners (which may include the publishing company if the other individual or individuals who were co-writers do not exercise their termination rights), as long as the licenses are non-exclusive. Either way, Mr. Willis can look forward to receiving royalty checks that he has not seen for the past 35 years, and he can now probably afford not to stay at the YMCA.
Law, Music
Have you ever celebrated a birthday at one of those chain restaurants where the overly enthusiastic wait staff serenades you with something other than the traditional “Happy Birthday to You?” If so, you are not alone. Many of the large chains, not wanting to pay copyright public performance royalties, have told their employees to sing some other song to birthday celebrants. If a recently filed lawsuit in Federal court in New York is decided in favor of the plaintiff in that case, the traditional song may replace all of those other “substitutes.”
The issue in the case of Good Morning To You Productions Corp. v. Warner/Chappell Music, Inc., is quite simple: Is “Happy Birthday To You” still protected by copyright?
According to the lawsuit, there is evidence dating back to 1893 that demonstrates that the song’s copyright expired around 1921. Apparently four previous copyrights to a similar-sounding song “Good Morning to All,” filed in 1893, 1896, 1899 and 1907, have expired or been forfeited. The lawsuit further alleges that the copyright that Warner/Chappell has been relying on protects only a particular piano arrangement of the song that was first published in 1935. Under the copyright law, if something is in the public domain but a new copyrightable version of it is created, only the elements added to the original public domain version are then protected by the new copyright. For example, the iconic Whitney Houston version of the Star Spangled Banner that was performed at the Super Bowl is protected by copyright, but only the orchestration and arrangement—not the underlying song which is in the public domain.
The plaintiff in the case is a filmmaker who is doing a film about the song. It claims that Warner/Chappell (who purchased the copyrights around 1985) has been illegally charging people for the right to publicly perform the song, as well as the right to include the song in films, etc. In the lawsuit, the filmmakers argue that the song should be “dedicated to public use and in the public domain.” The company will seek monetary damages and restitution of more than $5 million in licensing fees collected by Warner/Chappell Music Inc. from everyone who has paid the company’s licensing fees. Should the court rule that the song is now in the public domain, anyone could use it royalty free.
This will be a very interesting case to monitor. Don’t be surprised in a year or so if your birthday celebration at Applebee’s includes a spirited version of Happy Birthday to You.
