1. Introduction

            47% of gross domestic product involves intellectual property (IP) transactions, and about 6% of the USA’s national worth — $626 billion annually — is from copyright businesses.  

            The internet has caused massive financial havoc.[1]  IFPI, the international music industry trade organization, estimates freely traded downloads outnumber paid tracks 20 to 1.[2]

2.      Contracts

a.       Improper jury instruction: In Roger Rabbit creator’s breach of contract action against Disney, the court of appeal held whether the term “purchaser” in the contract assigning rights to novel’s characters to movie production company included the production company’s subsidiaries was a judicial function, even though the parties vigorously disputed the inferences to be drawn from extrinsic evidence of production company’s predispute conduct, absent any dispute over the evidentiary facts themselves, and therefore the trial court improperly permitted the jury to interpret the meaning of “purchaser.”  Wolf v. Walt Disney Pictures and Television, 162 Cal.App.4th 1107, 76 Cal.Rptr.3d 585 (Cal.App. 2 Dist. 2008).[3]

3.      Trademark

a.       eBay wins over Tiffany: eBay prevailed in defending claims that it did not take enough steps to police fake Tiffany jewelry sold on its website, with the court holding that brand owners are ultimately responsible for protecting their own trademarks.  Tiffany (NJ) Inc. v. eBay, Inc., 2008 WL 2755787 (S.D.N.Y.).

b.      Troubles with trademarking a name: Individual was permanently enjoined and restricted from using his personal name to sell, market, or otherwise promote, goods, products, and services to the consuming public because he had previously sold the rights to his trademarked name.  JA Apparel Corp. v. Abboud, 2008 WL 2329533 (S.D.N.Y.).

4.      Copyright

a.       Copyright holder must get registration before infringement for statutory damages and attorneys’ fees:  An award of statutory damages or attorneys’ fees for post-registration infringements (not within three months after first publication of work) is not available under the Copyright Act when the initial act of infringement occurred prior to effective copyright registration date and there was no legally significant difference between pre-registration and post-registration infringement.  Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696 (9th Cir. (Wash.) 2008).

b.      When a co-owned copyright interest comes through an assignment from someone who was themselves a co-owner, rather than arising as a result of joint authorship, that person is not a co-owner but merely a non-exclusive licensee with no standing to bring an infringement claim.  Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137 (9th Cir. (Cal.) 2008).[4]

c.       Contributory infringement – Perfect 10: Copyright owner brought actions against operator of Internet search engine and Internet retailer for, inter alia, infringement of copyrighted images.  The court remanded the case for factual inquiries into the claims that Google and Amazon.com were secondarily liable for infringement of Perfect 10’s full-size images.  Copyright owner also brought action against credit card companies and several affiliated banks and data processing services alleging secondary liability under federal copyright and trademark law and liability under California statutory and common law for processing credit card payments to Internet websites that infringed publisher's intellectual property rights.  The Ninth Circuit affirmed dismissal of that case, holding that there was no material contribution to infringements or vicarious infringements.  Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701 (9th Cir. (Cal.) 2007); Perfect 10, Inc. v. Visa Intern. Service Ass’n, 494 F.3d 788 (9th Cir. (Cal.) 2007).[5]

d.      Riviera Distributors, Inc., et al. v. Jones, et al., 517 F.3d 926
(7th Cir. (Ill.) 2008).  In a copyright infringement suit between competing video game makers, after the time for voluntary dismissal under Fed. R. Civ. Proc. 41(a)(1) had passed, the plaintiff filed a motion to dismiss its own claim without prejudice.  Defendant was awarded attorneys fees as a “prevailing party.”

5.      Talent Agencies Act

a.       Personal managers may be able to keep money even though they violated the Talent Agencies Act: Personal manager of an actress sued for his commission on her earnings from a television show. After Labor Commissioner voided parties’ contract ab initio for manager’s procurement of employment for actress without license under Talent Agencies Act, actress moved for summary judgment.  The Supreme Court of California held that the Talent Agencies Act applied to the personal manager, that the doctrine of severance applied to contracts partially illegal under the Act, and that a fact issue remained whether contract was severable. Marathon Entertainment, Inc. v. Blasi, 42 Cal.4th 974, 70 Cal.Rptr. 3d 727 (2008). This is the most important legal decision in the history of talent-manager relations. For over four decades, talent has sought to terminate contracts because managers offered, promised, procured, or attempted to procure employment and did not have a talent agencies license. The severity of the remedy is now looked at on a case by case basis, and monies derived from that which was wrongfully procured can be “severed” allowing manager to still collect his/her commission.

b.      The role of the Labor Commissioner in Talent Agencies Act disputes gets dealt a serious blow: Where an attorney who rendered services for personnel in motion picture-television industry initiated arbitration proceeding against performer, seeking to recover fees to which he claimed he was entitled under their contract, the California Court of Appeal (145 Cal.App.4th 440, 51 Cal.Rptr.3d 628) affirmed the denial of arbitration and grant of the performer’s motion to stay action pending proceedings before Labor Commissioner.  The United States Supreme Court held that when parties agree to arbitrate all questions arising under contract, Federal Arbitration Act (FAA) supersedes state laws lodging primary jurisdiction in another forum, whether judicial or administrative.  Preston v. Ferrer, -- U.S. --, 128 S.Ct. 978 (2008).[6]

6.      Guilds

a.       Plaintiff contended that he was improperly left out as a producer on the 2006 Academy Award winning best picture “Crash.”  The court of appeal held that the right of fair procedure does not apply to the decisions that private organizations, such as the Academy of Motion Picture Arts and Sciences and Producers Guild of America, make about their own awards.  Yari v. Producers Guild of America, Inc., 161 Cal.App.4th 172, 73 Cal.Rptr.3d 803 (Cal.App. 2 Dist. 2008). (Note, however, that the two entities above are not unions in the traditional sense, so traditional labor laws do not apply to them.)

b.      Attorneys can be class counsel even if representing competing clients: Non-union writers brought wage and labor law class action lawsuits against reality television production companies and television networks. Defendants filed motion to disqualify counsel based on a conflict of interest, alleging that law firm who represented labor union was also counsel for the writers, that the union paid for writers’ attorney fees and costs, and the union had conceived the litigation as part of its organizing campaign, which many writers supported.  The Court of Appeal held that the named representatives and union each waived any conflict of interest, that, as an issue of first impression, conflict of interest waivers were not required from each and every member of putative class, and that the issue of whether named writers could act as representatives of putative classes was premature.  Sharp v. Next Entertainment, Inc., 163 Cal.App.4th 410, 78 Cal.Rptr.3d 37 (Cal.App. 2 Dist. 2008).

c.       Class actions allege that less than half of approximately $100 Million in foreign levies collected for directors, writers, and actors has been paid out, going back to 1991.  Federal court remanded claims to state court, finding that labor laws are not applicable and defendants can be sued for common law claims.  Webb v. Directors Guild of America; Richert et al. v. Writers Guild of America west; Osmond v. Screen Actors Guild.  2007 WL 5022165 (Johnson & Johnson LLP is counsel for plaintiffs; all cases are currently pending in Los Angeles Superior Court.)

7.      SLAPP

a.       The SLAPP or anti-SLAPP statute is a special motion to strike created by Civil Code of Procedure section 425.16.  At its core the statute was enacted “to provide a procedural remedy to dispose of lawsuits that are brought to chill the valid exercise of constitutional rights.”  Rusheen v. Cohen, 37 Cal.4th 1048, 1055-1056, 39 Cal.Rptr.3d 516 (2006).  Section 425.16 requires a two-step process for determining whether an action is a SLAPP.  Navellier v. Sletten, 29 Cal.4th 82, 88, 124 Cal.Rptr.2d 530 (2002).  First, the defendant must make a threshold showing that the challenged cause of action is one arising from protected activity.  Id. (citing §425.16(b)(1)).   “A defendant meets this burden by demonstrating that the act underlying the plaintiff’s cause fits one of the categories spelled out in section 425.16, subdivision (e).”  Braun v. Chronicle Publishing Co., 52 Cal.App.4th 1036, 1043, 61 Cal.Rptr.2d 58 (1997).  If the court finds that such a showing has been made, it must then determine whether the plaintiff has demonstrated a probability of prevailing on the claim.  Navellier v. Sletten, supra, 29 Cal.4th at 88 (citing §425.16(b)(1)); see generally Equilon Enterprises v. Consumer Cause, Inc., (2002) 29 Cal.4th 53, 67, 124 Cal.Rptr.2d.  Therefore, the threshold issue of whether a case falls within the parameters of the SLAPP statute is often litigated.

b.      “‘[A]n issue of public interest’ within the meaning of section 425.16, subdivision (e)(3) is any issue in which the public is interested.  In other words, the issue need not be ‘significant’ to be protected by the anti-SLAPP statute--it is enough that it is one in which the public takes an interest.”  Nygard, Inc. v. Uusi-Kerttula, 159 Cal.App.4th 1027, 72 Cal.Rptr.3d 210, 220 (Cal.App. 2 Dist. 2008) (emphasis in original) (collecting cases and analyzing statute).

                                                              i.      For example, a website created by a patient brought related to her experience with her plastic surgeon concerned a matter of public interest within the meaning of section 425.16, with the court recognizing that there was no dispute that plastic surgery is a subject of widespread public interest and discussion, citing a Google search, the popular television series Extreme Makeover, and the “firestorm” of negative publicity and comment.   Gilbert v. Sykes, 147 Cal.App.4th 13, 53 Cal.Rptr.3d 752 (Cal.App. 3 Dist. 2007).

c.       After obtaining pre-filing discovery order in Ohio to aid in effort to learn identities of anonymous individuals who had posted statements about him on the Internet that he believed were defamatory, plaintiff filed request for subpoenas in California court.  The posters filed a SLAPP motion, which the court granted, and the plaintiff withdrew his request for subpoenas.  The Court of Appeal held that a request for subpoenas does not fall within section 425.16, and therefore the superior court erred in granting the motion and in awarding attorneys’ fees.   Tendler v. www.jewishsurvivors.blogspot.com, 2008 WL 2352497, 79 Cal.Rptr.3d 407 (Cal.App. 6 Dist. 2008).

8.      Miscellaneous

a.       Court allowed estate to pursue intentional infliction of emotional distress and civil rights claims where an assistant district attorney in Texas shot himself in his home as he was about to be arrested by the police for attempting to solicit a minor online.  Waiting outside the house were members of the cast and crew of the national television news show Dateline NBC, there to film Conradt’s arrest for a segment of “To Catch A Predator.”   Conradt v. NBC Universal, Inc., 536 F.Supp.2d 380 (S.D.N.Y. 2008).

b.      Prima facie showing required to subpoena identity of anonymous “internet speaker”:  A corporate president, who had brought action in Florida for damages and injunctive relief against 10 fictitiously named defendants for alleged defamatory statements posted on Internet sites under pseudonyms, served subpoena on custodian of records of California internet service provider (ISP) to ascertain identities of anonymous posters. One defendant moved to quash subpoena.  The Court of Appeal held that for issuance of subpoena, president was required to make prima facie showing of alleged tort, which he did not do.  Krinsky v. Doe 6, 159 Cal.App.4th 1154, 72 Cal.Rptr.3d 231 (Cal.App. 6 Dist. 2008).

c.       Professional model sued corporation after corporation used model’s image on a coffee label without model’s consent and without remuneration. Following trial, the jury awarded model $330,000 in damages and over 15 million dollars in profits.   The court of appeal reversed and remanded, holding that the model must provide some evidence that the corporation’s profits were specifically attributable to the use of his identity or persona and that only then does the burden shift to the corporation to show what percentage of its profits that are not attributable to the use of the model’s persona.  Christoff v. Nestle USA, Inc., 62 Cal.Rptr.3d 122, previously published at 152 Cal.App.4th 1439 (Cal.App. 2 Dist. 2007) (petition for review granted, 169 P.3d 888, 67 Cal.Rptr.3d 468; however this is only on the issue of whether the wrongful use need be knowing,” which the lower court found was not a requirement).[7]  This is not the end of the tort (which is common law and statutory, Civil Code section 3344) as emotional and punitive damages may be available, but a “profits” analysis will be much more difficult for non-celebrities.

d.       Where the plaintiffs sued defendant, an individual, for libel, alleging that she maliciously republished messages and postings on the Internet after being warned that they were defamatory, the California Supreme Court held that Internet service providers and users are immune by federal statute from defamation liability for republication under the Communications Decency Act of 1996.  Barrett v. Rosenthal, 40 Cal.4th 33, 51 Cal.Rptr.3d 55 (2006); see 47 U.S.C., §230; accord Zeran v. America Online, 129 F.3d 327 (4th Cir. 1997).  

The internet has created huge privacy and defamation issues.  There is no immunity if a chat room is moderated.  A, if not the, most important issue is whether the potential defendant can satisfy a judgment.

e.       Comedy Club Inc. v. Improv West Associates, Comedy Club, Inc. v. Improv West Associates, 514 F.3d 833 (9th Cir. (Cal.) 2007).  Comedy Club allegedly breached trademark licensing agreement by not opening a sufficient number of Improv clubs.  A covenant not to compete in term (here until 2019) by opening other comedy clubs was found to violate Cal. Bus. and Prof. Code section 16600, which provides “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”  Such covenants are not necessarily invalid, but are prohibited when they foreclose competition in a “substantial share of the affected line of commerce.”