Interactive Online Entertainment Law

                 By

 Rob Hassett and Suellen W. Bergman

Casey Gilson P.C.

Atlanta, GA 30328

(770) 512=0300

http://www.internetlegal.com

 

ACKNOWLEDGEMENTS

The writers wish to thank Robert C. Port and Lori Brill for their help in preparing these materials.

INTERACTIVE ONLINE ENTERTAINMENT LAW

I. Introduction

Over the past year, courts, Congress, and state legislatures have dealt with a number of different issues that concern Interactive Online Entertainment, including:

1. How far will the courts, Congress and ICANN go to restrict the use of marks as domain names, metatags and for other uses on Web sites?

2. Under what circumstances may “ephemeral” (in other words temporary) copies be made and used for digital broadcast purposes?

3. What performance rights do owners of copyrights in sound recordings have with regard to the use of their recordings by Webcasters?

4. Under what circumstances may operators of interactive online entertainment sites attract people to their sites using bulk email?

5. What are the privacy rights of users of Web sites?

6. Under what circumstances are agreements entered into over the Internet enforceable?

7. What is a Web site operator’s liability for a Web site which involves activity that is legitimate in some jurisdictions, but illegal in others?

These and other issues are discussed in this paper.

II. Domain Names and Marks

A. Case law

Uses of domain names and references made to marks on the Internet frequently clash with the rights of owners of trademarks and service marks. Ten (10) examples of these kinds of clashes are discussed below in order from those most likely to be prohibited to those most likely to be allowed.

1. Consumer Confusion

Where consumers are likely to be confused because two marks are similar and used in the same channels of trade, courts will almost always prohibit those uses. See Playboy Enter. v. Calvin Designer Label, 985 F. Supp. 1218 (N.D. Cal. 1997).

2. Dilution

Where a mark has become “famous” it is entitled to protection not only from “confusion” but also from tarnishment and blurring. For example, it is not likely that customers using the adult site “Adults “R” US” thought that the site was being operated by Toys “R” US. As discussed below, the use of that domain name was nevertheless illegal.

a. Toys “R” US, Inc. v. Adults “R” US, 1996 U.S. Dist. LEXIS 17090, 40 U.S.P.Q.2d (BNA) 1836 (N.D. Cal. 1996). The Court awarded a preliminary injunction to Toys “R” Us, finding that its marks are famous and distinctive and, thus, eligible for protection from dilution under 15 U.S.C. § 1125, and enjoined the defendants from using “Adults R Us” because it tarnishes the “‘R’ Us” family of marks by “associating them with a line of sexual products that are inconsistent with the image Toys ‘R’ Us has striven to maintain for itself.” 1996 U.S. Dist. LEXIS 17090 at *7.

b. Ringling Bros.-Barnum & Bailey Combined Shows v. Utah Div. of Travel Dev., 170 F.3d 449 50 U.S.P.Q.2d (BNA) 1065 (4th Cir. 1999), held that Ringling Brothers could not prevent Utah from using “The Greatest Snow on Earth” as a slogan for Utah’s winter sports attractions because the Federal Anti-Dilution law was held to require a showing of “actual economic harm” to the famous marks’ economic value by lessening its selling power as an advertising agent for its goods or services. Proof of this harm should be demonstrated by surveys and by showing actual loss.

c. The First Circuit, in I.P. Lund Trading A.P.S. v. Kohler Co., 163 F.3d 27, 49 U.S.P.Q.2d (BNA) 1225 (1st Cir. 1998), specifically rejected the “lessening of demand for the product” test that had been applied by the Fourth Circuit in the Ringling Brothers case.

3. Contributory Infringement

The Ninth Circuit upheld summary judgment in favor of Network Solutions, Inc. (NSI) in a case where a trademark owner sought to hold NSI liable for trademark infringements by cybersquatters and others who used its services. Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 52 U.S.P.Q.2D (BNA) 1481 (9th Cir. 1999). Lockheed sued NSI in 1996 over use of the domain name “Skunkworks,” which is a trademark of Lockheed’s Southern California aircraft construction and design laboratory. Lockheed wanted NSI to “preclude anyone from registering anything with [the words] >Skunk Works,’ in the domain name or that sounded like >Skunk Works.'”(1) The Court held that NSI was only vulnerable to suit if it intentionally induced a third party to infringe a mark or supplied a product to that third party with actual or constructive knowledge that the product was being used to infringe the service mark. See Lockheed, 194 F.3d 980, 984.

4. Cybersquatting

Panavision, Int., L.P. v. Toeppen, 945 F. Supp. 1296, 40 U.S.P.Q.2d (BNA) 1908 (C.D. Cal. 1996). The Court found that defendant’s registration of the plaintiff’s trademarks as the defendant’s domain name for purposes of resale constituted trademark dilution. Accord Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227, 41 U.S.P.Q.2d (BNA) 1223 (N.D. Ill. 1996). The plan to resell the domain name was determined to be “commercial use” which is required to constitute dilution.

5. Hijacking

Until recently, registration of a competitor’s mark as a domain name (hijacking) would not be illegal, see, Juno Online Servs., L.P. v. Juno Lighting, Inc., 979 F.Supp. 684 (N.D. Ill. 1997), 44 U.S.P.Q.2D (BNA) 1913. See also HQM Ltd. and Hatfield Inc. v. William B. Hatfield, 71 F. Supp. 2d 500 (D. Md. 1999) (holding that the registering and activating of a Web site with the”.com” designation does not, by itself, constitute commercial use). Hijacking with “bad faith intent to profit” is now illegal under the recently enacted Anticybersquatting Act, discussed below.(2)

6. Registering

Registering a domain name with “intent to profit” would now be illegal under the Anticybersquatting Act (which created a new §43(d) of the Lanham Act, 15 U.S.C. §1125(d)). Previously, registering a domain name without more would not constitute either “use in commerce” or “commercial use” as was previously required under the Lanham Act to establish a violation.

7. Criticism

In Bally Total Fitness Holding Corp. v. Faber, 29 F. Supp.2d 1161, 50 U.S.P.Q.2D (BNA) 1840 (C.D. Cal. 1998), the defendant used Bally’s trademark in a Web site entitled “Bally sucks,” which was critical of Bally. The District Court dismissed Bally’s suit because the defendant’s use of Bally’s mark did not create a likelihood of confusion or otherwise constitute trademark infringement or dilution. See the Web site at Compupix.com/ballysucks/index.htm

8. Communicative Use

Playboy Enters., Inc. v. Welles, 7 F.Supp.2d 1098, 47 U.S.P.Q.2D (BNA) 1186, (S.D. Ca. 1998), aff’d, 1998 U.S. App. LEXIS 27739 (9th Cir. 1998). A former playmate was permitted to state her association with Playboy enterprises, Inc. (PEI)(3) on her own Web site. The heading of the defendant’s Web site is “Terri Welles–Playmate of the Year 1981,” and the title of the link page is “Terri Welles–Playboy Playmate of the Year 1981.” Each of the pages uses “PMOY ’81” as a repeating watermark in the background. According to defendant, eleven of the fifteen free Web pages include a disclaimer at the bottom of the pages which indicates that the Web site is not endorsed by Playboy. Id. at 1100. Playboy moved for a preliminary injunction which would enjoin the defendant (1) from using the trademarked term “Playmate of the Year” in the title of the home page and the link page; (2) from using the watermark “PMOY ’81” in the background; and (3) from using the trademarked terms “Playboy’ and ‘Playmate” in the meta-tagging(4) of defendant’s site. The Court denied a preliminary injunction because the trademarks that defendant uses, and the manner in which she uses them, describe her and identify her. Therefore the Court held that the defendant has made a “fair use” of these marks(5) and her site was not confusingly similar to Playboy’s site.

Later, the Court granted the defendant’s motion for summary judgment, holding that the use of the words “playboy” and “playmate” in the text portion of her Web site were a fair use of Playboy’s trademarks because they fairly described and identified the defendant.(6) The Court noted that Playboy failed to introduce compelling evidence of actual consumer confusion.(7) Compare N.V.E. v. Hoffmann-La Roche, CA No. 99-5858 (D.N.J. 1999) (WHW) (the District Court enjoined metatagging where the metatag misdirected searchers to a competing Web site).(8)

9. Associating Advertisements With Internet Searches

Playboy Enters., Inc. v. Netscape Communications Corp., 55 F. Supp. 2d 1070 (C.D. Ca. 1999) aff’d without opinion, 1999 U.S. App. LEXIS 30215 (9th Cir. 1999). This case involves the sale of online banner ads keyed to the specific search terms: “playboy” and “playmate.” The Court ruled that the terms “playboy” and “playmate” are generic and that Playboy has no monopoly on these words in all forms. Consequently, the Court denied Playboy’s request for a preliminary injunction against Excite, Inc. and Netscape Communications Corporation finding that the sale of those search keywords to third-party advertisers which operate adult entertainment sites does not constitute trademark infringement or dilution.

The freedom to create links has also become an issue where courts enjoined entities from linking due to contributory infringement. See Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., Civ. No. 2:99-CV-808C (C.D. Utah Dec. 6, 1999).(9)

10. Common Surnames

Avery Dennison Corp. v. Sumpton, 189 F.3d 868 51 U.S.P.Q.2D (BNA) 1801 (9th Cir. 1999). This was an appeal of a case in which an entity which maintained domain registrations for individual names that included among other surnames, “Avery.net” and “Dennison.net” was held not to have diluted the “Avery Dennison” mark. The Ninth Circuit reversed the District Court’s holding that there was dilution. The Ninth Circuit held that:

a. The Avery Dennison mark was not famous because it was not “truly prominent and renowned” so that even marks “with such powerful consumer associations and even non-competing users can impinge on their value.” Avery, 189 F.3d 868, 875. The Court noted that there were many registrations of marks and uses of the marks “Avery” and “Dennison” by others, and this factor weighs against those being famous marks.

b. The Court also said that although “an intent to arbitrage” constituted a commercial use, an intent to “capitalize on the surname status of ‘Avery’ and ‘Dennison’ did not constitute a commercial use of a mark.” Id. at 880.

Other domain-name decisions have favored the “smaller” party. See, e.g., Hasbro, Inc. v. Clue Computing, Inc., 66 F. Supp. 2d 117, 52 U.S.P.Q.2D (BNA) 1402 (D. Mass. 1999) [holding that ownership of a well-known trademark (the mark “clue” for a board game) does not automatically entitle a party to a domain name (“clue.com” which Clue Computing registered)].(10)

11. Generic and Descriptive

The Federal Circuit held that the slogan “Best Beer in America” was incapable of registration as a trademark because of its highly laudatory and descriptive nature. In re Boston Beer Co. Ltd. Partnership, No. 99-1123 (Fed. Cir, 1999).(11) But see Etoys.com v. etoy.com, Los Angeles Superior Court, preliminary injunction issued Nov. 29, 1999.(12)

12. Multiple Defendants

The Anticybersquatting Act, infra, allows a court to order the cancellation or forfeiture of a domain name or the transfer of a name to the owner of the trademark. It is now possible for plaintiffs to pursue domain names as a group rather than being forced to sue each of the registrants individually. Cf. Porsche Cars North America, Inc. v. Porsche.com, 51 F. Supp. 2d 707, 51 U.S.P.Q.2d (BNA) 1461 (E.D. Va. 1999), in which the Court rejected Porsche’s “in rem” claim to grab control of domain names incorporating versions of the “Porsche” name. The ‘in rem” action was an effort to avoid having to individually sue hundreds of registrants who had registered those domain names.

B. Legislation: Anticybersquatting Consumer Protection Act

On November 29, 1999, President Clinton signed the Omnibus Appropriations Act (H.R. 3194). This Act includes the Intellectual Property and Communications Omnibus Reform Act of 1999 (S. 1948), which incorporates, inter alia, the Anticybersquatting Consumer Protection Act.

1. The Anticybersquatting Consumer Protection Act (S. 1255):(13)

a. Allows parties to bring an in rem action(14) against any domain name that has been registered in violation of the Act and,

b. Permits obtaining injunctive relief and damages from those who, “with bad faith intent to profit,”(15) register domain name identifiers which are identical or similar to a trademark; in lieu of actual damages, the trademark holder can recover damages of at least $1,000.00, but not more than $100,000 per domain name identifier. The court can order that the defendant transfer the domain name to a successful plaintiff. See, e.g., Lozano Enter. v. La Opinion Publ’g Co., 1997 U.S. Dist. LEXIS 20372, 44 U.S.P.Q.2d (BNA) 1764 (C.D. Cal. 1997).

2. Recent Cases

Victims of cybersquatting are already taking advantage of this new Act. See, e.g., John Tesh v. Celebsites, Inc., C.D. Calif., 00-00603ABC (RZX) (filed Jan. 19, 2000), (John Tesh claims, inter alia, that defendants, owners of “JohnTesh.com,” falsely advertised that site as the official site for Tesh, creating consumer confusion because Tesh owns and operates his own official Web site, “Tesh.com.”);(16) President and Fellows of Harvard College v. Rhys, D. Mass., No. 99CV12489RCL, (filed 12/6/99, Judge Reginald Lindsey), (Harvard sued domain name owners, and seeks to prevent Web Productions, a company which has registered sixty-five domain names relating to Harvard and Radcliffe, from using Harvard’s trademarks). Brad Pitt has also filed suit against the owners of “bradpitt.com,” who initially tried to sell the domain name to Pitt for as much as $50,000.00, and the owners of “bradpitt.net,” a commercial cite and fan club outlet which sells merchandise featuring Brad Pitt.(17)

Moreover, courts are enforcing the Anticybersquatting Act: see, e.g., Bargain Bid v. Ubid, 99-CV-7598 (E.D.N.Y. 2000) (the District Court, Eastern District of New York, enjoined defendants (1) from using the Bargain Bid and Barginbid marks and (2) from indicating that the defendants’ services were sponsored, affiliated, or approved by Bargain Bid, where the defendants registered the domain name “bargainbid.com” to allegedly divert consumers from the Bargain Bid’s Web site by using the common misspelling of “bargain.”)(18)

C. ICANN (Internet Corporation for Assigned Names and Numbers)

ICANN is the non-profit body responsible for domain name system management, IP address allocation, and related functions. ICANN was established last year to (a) phase out the government’s involvement in the domain name system and (b) to end the monopoly held by Network Solutions Inc. (Nasdaq: NSOL), by opening up the registration of such popular domains as “.com” and “.net” to additional companies. Although the database for the Top Level Domain is still managed by NSI (a “registry” function), the domains may be “registered” by many different entities including www.register.com and www.aol.com. ICANN is now considering additional generic TLDs to .com, .net and .org for commercial uses.(19)

On October 24, 1999, ICANN adopted a uniform domain name dispute resolution policy which is binding on all accredited registrars; this policy incorporates by reference the Rules for Uniform Domain Name Dispute Resolution Policy.(20) The policy and the rules provide a method to contest the propriety of existing domain name registrations. In order to be entitled to obtain transfer of a domain name from a prior registrant, a complainant must establish that:

(1) the domain name(s) is/are identical or confusingly similar to a trademark or service mark in which the Complainant has rights; and

(2) the domain name holder has no rights or legitimate interests with respect to the domain name(s) that is/are the subject of the complaint; and

(3) the domain name(s) has been registered and is being used in bad faith.(21)

III. Copyright

Several recent Internet related cases and statutes involve copyright issues, including the expansion of rights in sound recordings and the lengthening of the copyright term.(22)

A. Legislation

The Digital Millennium Copyright Act of 1998 (105 P.L. 304; 112 Stat. 2860)

1. Exempts Internet service providers from liability for copyright infringement under certain circumstances;(23)

2. Makes it illegal to circumvent technology used to prevent copyright infringement(24) (this provision is to take effect two (2) years from October 28, 1998); and, inter alia,

3. Expands the rights of owners of sound recordings to restrict performance of (or in some cases receive set royalties for) their sound recordings from what was covered by the Digital Sound Recording Act of 1995(25) to any sound recordings provided over the Internet whether or not it is via subscription or interactive (this provision is effective as of the date of enactment).

The effect of the Digital Millennium Copyright Act on Webcasting and the interplay of the rights any Webcaster must acquire are as follows:

a. Webcasting. Webcasting refers to the streaming of audio on the Internet (i.e. “Internet radio”). Webcasters sometimes transmit many different channels of uninterrupted music divided into genres. Webcasters must obtain a license for each of the two copyrighted works embodied in a musical recording:

(1) the underlying musical composition or “musical work,” which is comprised of written notes and lyrics, and (2) the sound recording, which is the sound of the music, including the recording artist’s interpretation of the musical composition. The DMCA enables Webcasters (and other subscription or nonsubscription digital audio services) to obtain a statutory license(26) to perform sound recordings on the Internet. Webcasters are usually eligible for a statutory license because their primary purpose is to provide audio or other entertainment programming, not to promote or sell particular products or services. Interactive services (i.e. services which permit a listener to choose a particular song or create a personalized program for the listener) and Webcasters who do not qualify for a statutory license must obtain licenses from the copyright owners of the sound recordings they want to transmit.

i. Current license agreements (BMI, ASCAP, SESAC).(27)

Spinner.com, a Webcaster which provides original programming,(28) currently has licensing agreements with BMI, ASCAP, and SESAC (for performance of compositions on Web sites). BMI and ASCAP have licensing agreements which are about 3% of gross revenue. ASCAP uses a formula which takes from the greater of revenue or expenses. BMI’s license agreement deals strictly with revenue, and is a little lower than ASCAP. SESAC’s license caps out at $3,000-$4,000 per year, so Spinner.com pays the cap every year.

ii. Future license agreements.

While BMI, ASCAP, and SESAC have agreements with many Websites (Webcasters), RIAA (Record Industry Association of America) has agreements with only a few for performances of sound recordings by Webcasters.(29) Supposedly, RIAA’s license is similar to ASCAP’s license, but RIAA seeks a much higher royalty percentage. RIAA negotiates these performance royalties with Webcasters on behalf of record companies. Consequently, Spinner.com and other Webcasters are negotiating with RIAA for a performance royalty license for the sound recordings, but do not have one currently. “Royalty percentages being asked by the [recording] labels range as high as fifteen percent of a [Web] site’s gross revenues. Representatives for the Web sites say they are arguing for as low as one to two percent.”(30) These negotiations will probably be resolved through the copyright arbitration royalty proceeding (CARP),(31) as was done previously under the Digital Sound Recording Act of 1995 with respect to non-interactive digital subscription services (see “c.” below). Although there is no license now, some Webcasters are holding money in reserve because the license will apply retroactively to October 28, 1998.(32)

iii. Failure to obtain a license.

RIAA has sued a Web site operator (Napster), which allegedly offers downloads of unlicensed music, for copyright infringement. See Ricker, Di Mari, Music Bar Upbeat On AOL-Time Warner Merger, Cal L., Jan. 14, 2000. Downloading is very different from performance. Downloading allows the user to replay the recording at will.

b. Ephemeral Recordings. Ephemeral recordings are copies of sound recordings which a Webcaster (or radio broadcaster) makes for programming purposes. A Webcaster does not need to pay separately for these recordings if it is licensed to transmit them (i.e. it has a statutory license to transmit the recordings), and it meets, inter alia, the following conditions:

(1) The copy of the recording must be used only by the Webcaster;

(2) The copy must be destroyed within six months, unless preserved exclusively for archival purposes; and

(3) Only one ephemeral copy of the recording may be made, and no further copies of the recording can be made from that ephemeral copy.

c. Previous Royalty Determination. Recording Indus. Ass’n of Am. v. Librarian of Congress, 176 F.3d 528, 50 U.S.P.Q.2D (BNA) 1768 (D.C. Cir. 1999). Under Section 114(f) of the Copyright Act, 17 U.S.C. §§ 101-1332, the Librarian of Congress is charged with establishing the rates and terms for compulsory licenses of certain subscription transmissions of digital audio music. In the first proceeding under § 114, the Librarian determined that three music services subject to the terms of the license must pay the Recording Industry Association of America (“RIAA”) 6.5 percent of their gross domestic residential revenues in exchange for the right to transmit digital audio music. The RIAA claimed that the 6.5 percent royalty for subscription digital musical services set by the Librarian was too low, but the Court upheld this rate as an acceptable interpretation of 17 U.S.C. §801(b)(1).

B. RIAA v. Diamond Multimedia Sys., Inc., 29 F. Supp. 2d 624 (C.D. Cal. 1998) aff’d, 180 F.3d 1072 (9th Cir. 1999), 51 U.S.P.Q.2d (BNA) 1115. The Court of Appeals for the Ninth Circuit affirmed the denial of a preliminary injunction finding that Diamond Multimedia, the maker of Rio,(33) had not violated the Audio Home Recording Act of 1992(34) with the Rio because the Rio could not make copies except from a hard drive. The Court found that such copying was not covered by the Act. However, on August 4, 1999, Diamond Multimedia and the RIAA announced that they entered into a settlement agreement. RIAA’s general counsel and senior executive vice president, Cary Sherman, stated that this “announcement makes clear that the future of the digital music marketplace will be created in the marketplace itself, enabled by initiatives like SDMI [Secure Digital Music Initiative].”(35) While the authors have not been able to obtain details of the settlement reached between RIAA and Diamond Multimedia, one can infer from what has been published that the terms probably include a requirement that Diamond incorporate technology which prevents serial copying.

C. Tasini v. The New York Times Co., 192 F.3d 356, 52 U.S.P.Q.2d (BNA) 1186 (2d Cir. 1999). A Federal District Court in New York held that making publication information accessible on Lexis-Nexis and other similar data bases “constitutes reproduction and distribution of freelance contributions as part of that particular collective work.” Tasini v. The New York Times Co., 972 F.Supp. 804, 43 U.S.P.Q.2D (BNA) 1801 (S.D.N.Y. 1997). The District Court held that the publishers were protected by a privilege afforded to publishers of “collective works” under Section 201(c) of the Copyright Act, but the Second Circuit reversed this decision in Tasini v. The New York Times Co., 192 F.3d 356, 52 U.S.P.Q.2d (BNA) 1186 (2d Cir. 1999). The Second Circuit concluded that “the Publishers’ licensing of Authors’ works to UMI for inclusion in these databases is not within the Section 201(c) revision privilege.” Tasini, 192 F.3d 356, 364. The Court continued:

The relevant inquiry under Section 201(c), is . . . whether the republication or redistribution of the copyrighted piece is as part of a collective work that constitutes a ‘revision’ of the previous collective work, or even a “later collective work in the same series.” If the republication is a “new anthology” or a different collective work, it is not within the privilege. H.R. Rep. No. 94-1476, at 122-23 (1976), reprinted in 1976 U.S.C.A.A.N. 5659, 5738. Because NYTO is for present purposes at best a new anthology of innumerable editions of the Times, and at worst a new anthology of innumerable articles from these editions, it cannot be said to be a “revision” of any (or all) particular editions or to be a “later collective work in the same series.”

Id. Accord Ryan v. Carl Corp., 23 F. Supp. 2d 1146, 1150, 48 U.S.P.Q.2D (BNA) 1626 (N.D. Cal. 1998) (commenting that “calling the reproduction of a single article a “revision” of a collected work, however, is more strained than even a flexible interpretation can withstand” and construing Section 201(c) of the Copyright Act in the authors’ favor).

The impact of Tasini on electronic media could take two paths. First, according to Patricia Felch, an attorney who represented four of the Tasini plaintiffs in the appeal of the trial court’s ruling, print and electronic publishers could claim that print publishers must refrain from reselling free-lancers’ works to electronic publishers and that electronic publishers must remove free-lancers’ works from the electronic databases.(36) Felch notes that this reaction would ruin the value of databases as a comprehensive and long term research tool she therefore proposes an alternate solution which lead plaintiff Jonathan Tasini encouraged: electronic database producers and print publishers can join the Publishing Rights Clearinghouse (PRC).(37) In a similar manner to what ASCAP and BMI do with royalties earned from public performances of music, the PRC accepts applications for reuses of individual works and (a) sets a cost for such reuses, (b) finds the authors, and (c) administers payments to the original authors.(38)

D. Transformative Fair Use of Copyrighted Works.

In Kelly v. Arriba Soft Corp., C.D. Calif, SAC No. 99-560 GLT (JW) Dec. 15, 1999, the Federal District Court for the Central District of California granted summary judgment to the creators of a “visual search engine,” www.ditto.com, which searches a database of digital images, even though the images were copied without authorization from third-party Web sites. The Court found that such actions constitute a “fair use.”(39) The Court determined that the defendant’s visual search engine was designed to catalog and improve access to images on the Internet, not for an artistic or illustrative purpose, and was, therefore, a “transformative” use and additionally did not harm the market for the copied works.

E. Challenging the constitutionality of Sonny Bono Copyright Term Extension Act of 1998 (CTEA).(40)

The Sonny Bono Copyright Term Extension Act of 1998 has been criticized as copyright overprotection, rather than copyright extension. This Act is important to the Internet because it reduces the benefits of those Internet sites that provide digital copies of public domain works.

Some have criticized the CTEA because it offers an extension of the term of copyrights for an author or creator without any reciprocal requirement of the author or creator. Also, the CTEA delays works from entering the public domain, without any corresponding benefit to society. One such critic of the CTEA, Lawrence Lessig, the Berkman Professor of Law at Harvard Law School, has filed a lawsuit on behalf of Eldritch Press,(41) a non-profit organization that posts literary works on the Internet when they have entered the public domain.(42)

Article I, Section 8 of the United States Constitution states that Congress may “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” (emphasis added). In 1790, this limited time period of copyright was twenty-eight years. Subsequently, Congress enacted a series of extensions, which provide for copyright terms of up to seventy-five years. These extensions retroactively extended the copyright for works which were written many years ago that would otherwise soon enter the public domain.(43) CTEA has again retroactively extended the copyright terms; this extension is challenged in the Eldritch lawsuit. The plaintiffs argue that (1) the retroactive extension in CTEA violates the constitutional “limited times” requirement for constitutional exclusive rights to “writings and discoveries” and (2) the retroactive and prospective extensions violate the First Amendment because they suppress speech without promoting any respective governmental interests. The CTEA has also been criticized by some as merely a vehicle which will benefit Disney (which lobbied for the Act) because Mickey Mouse would have entered the public domain in 2004. Under the CTEA, however, Mickey Mouse will remain Disney’s copyright until 2023.(44)

F. Hacking DVD.

Two courts have recently granted preliminary injunctions against Web site operators from “posting [hacking information] on any Internet Web site, or in any other way [assisting users to circumvent the protections from copying afforded by DVD technology].” The court held that such activities constituted circumvention of technological measures which control access to a work protected under the Copyright Act as prohibited under the Digital Millennium Copyright Act of 1998. The defense argued that the circumvention procedures had been obtained as a by-product of developing a system to allow the playing of DVD on Unix computers (which arguably would be allowed).(45)

G. MP3.com and Fair Use.

There have been recent news reports that the Record Industry Assocation of America has filed a lawsuit against MP3.com because MP3.com has just started providing a service where any of its users that has purchased a particular record may listen to that record from the MP3.com archives over the Internet at any time such user wishes. MP3.com is apparently taking the position that this service is merely a form of time shifting which was held to be a “fair use” with respect to videotaping in Sony Corp. of America v. Universal City Studios, 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984).(46)

IV. Spam (47)

A. Spam cases

1. The Tenth Circuit, in U.S. West v. FCC, 182 F.3d 1224 (10th Cir. 1999), held that U.S. West could not be blocked by an FCC rule from using information obtained from customers regarding who the customers called, and other similar data, for marketing to those individuals because such prohibition was “a violation of the First Amendment.” The Court reasoned that such use constituted commercial speech, applied the First Amendment commercial speech analysis, and held that the proposed FCC rule was unconstitutional. The test(48) was as follows:

First, determine whether the commercial speech concerns lawful activity and is not misleading. If so, the speech can only be restricted if:

(1) the government has a substantial state interest in regulating the speech;

(2) the regulation directly and materially advances that interest; and (3) the regulation is no more extensive than necessary to serve the governmental interests.

Surprisingly, the Court found that the rule was not narrowly tailored because it did not do such things as allow phone customers to opt in or opt out (assuming that there is a serious desire by telephone company customers to have their personal calls tracked and used for marketing purposes). This indicates that some anti-spam statutes may violate free speech if they completely prohibit spam without considering other alternatives.

This case has been criticized because:

(1) it allows telephone companies that track customer calls to use that information to market to those customers, and

(2) this analysis could support a First Amendment right to send spam, as there is a First Amendment right to send “junk mail.”

As in other spam cases, U.S. West involves a “captive,” as opposed to a “voluntary,” audience.(49)

To date, the cases that have held spam to be illegal involved claims of Internet Service Providers and Intel(50) that spam is a form of trespass. This analysis of spam as a trespass is not as vulnerable to a First Amendment attack as a state or federal statute prohibiting spam. See, e.g., CompuServe, Inc. v. Cyber Promotions, Inc., 962 F. Supp. 1015 (S.D. Ohio 1997) (holding that a private company’s motion seeking a court to enjoin “spam trespass” did not constitute state action subject to a First Amendment attack).(51)

2. Courts are now beginning to enforce the prohibition against trespass via spam with serious sanctions.

In America Online v. The Christian Bros., ___ F. Supp. 2d ___, No. 98 Civ. 8959, (S.D.N.Y. 1999), the Court found that the defendant’s unsolicited bulk e-mail had damaged the plaintiff’s business, trademark, service mark, and goodwill. The defendant had unlawfully obtained mailing lists of the plaintiff’s member’s e-mail addresses and sent over twenty million messages which included fraudulent headers misrepresenting that the messages came from the plaintiff. Since the defendant defaulted, the Court awarded the plaintiff $17,940 in hardware processing costs; treble damages of $389,020 for lost advertising revenue; $24,625 in attorney fees; and $200,000 in punitive damages, for a total of over $600,000 dollars.(52)

B. Federal Legislation

A proposed federal statute regarding unsolicited bulk e-mail was introduced in the House on May 5, 1999: the Internet Freedom Act, 106 H.R. 1686. This Act, in proposed Section 104, entitled “Protection from Fraudulent Unsolicited E-Mail,” would amend 18 U.S.C. §1030 such that, inter alia, it would be a violation of the Act to “intentionally and without authorization initiate the transmission of a bulk unsolicited electronic mail message to a protected computer with knowledge that such message falsifies an Internet domain, header information, date or time stamp, originating e-mail address or other identifier” or to sell or distribute a computer program which (a) “is designed or produced primarily for the purpose of concealing the source or routing information of bulk unsolicited electronic mail messages(53) in a manner prohibited by” the Act, (b) “has only limited commercially significant purpose or use other than to conceal such source or routing information,” or (c) “is marketed by the violator or another person acting in concert with the violator and with the violator’s knowledge for use in concealing the source or routing information of such messages.” The Act provides for the following potential damages for various offenses: injunctive relief and other equitable relief, actual monetary losses, statutory damages of $15,000 per violation or an amount of up to $10 per message per violation, whichever is greater; reasonable attorneys’ fees, and other litigation costs. Because this language is written broadly enough to prohibit noncommercial anonymous bulk e-mailings, it arguably violates the First Amendment. See, ACLU of Georgia v. Miller, 977 F.Supp. 1228 (N.D. Ga. 1997).

C. State Legislation

Some states have passed laws regarding unsolicited e-mail.

1. Washington State: Wash. Rev. Code §19.190.020 (1999), entitled “Unsolicited or Misleading Electronic Mail — Prohibition,” provides as follows:

(1) No person, corporation, partnership, or association may initiate the transmission of a commercial electronic mail message from a computer located in Washington or to an electronic mail address that the sender knows, or has reason to know, is held by a Washington resident that:

(a) Uses a third party’s Internet domain name without permission of the third party, or otherwise misrepresents any information in identifying the point of origin or the transmission path of a commercial electronic mail message; or

(b) Contains false or misleading information in the subject line.

(2) For purposes of this section, a person, corporation, partnership, or association knows that the intended recipient of a commercial electronic mail message is a Washington resident if that information is available, upon request, from the registrant of the Internet domain name contained in the recipient’s electronic mail address.

2. Nevada’s statute focuses on spam which contains advertisements. Nev. Rev. Stat. 41.730, entitled “Liability of Persons Who Transmit Items of Electronic Mail That Include Advertisements,” provides:

1. Except as otherwise provided in Nev. Rev. Stat. 41.735,(54) if a person transmits or causes to be transmitted to a recipient an item of electronic mail(55) that includes an advertisement, the person is liable to the recipient for civil damages unless:

(a) The person has a preexisting business or personal relationship with the recipient;

(b) The recipient has expressly consented to receive the item of electronic mail from the person; or

(c) The advertisement is readily identifiable as promotional, or contains a statement providing that it is an advertisement, and clearly and conspicuously provides:

(1) The legal name, complete street address and electronic mail address of the person transmitting the electronic mail; and

(2) A notice that the recipient may decline to receive additional electronic mail that includes an advertisement from the person transmitting the electronic mail and the procedures for declining such electronic mail.

2. If a person is liable to a recipient pursuant to subsection 1, the recipient may recover from the person:

(a) Actual damages or damages of $10 per item of electronic mail received, whichever is greater; and

(b) Attorney’s fees and costs.

3. In addition to any other recovery that is allowed pursuant to subsection 2, the recipient may apply to the district court of the county in which the recipient resides for an order enjoining the person from transmitting to the recipient any other item of electronic mail that includes an advertisement.

3. California has also passed a law dealing with unsolicited bulk e-mail (which also applies to unsolicited faxes(56)). This California Statute requires that the sender of unsolicited advertisements advise the e-mail recipient that the e-mail is an advertisement by placing the characters “ADV:” first in the subject line and also requires that the sender provide the recipient a return address or a toll-free number where the recipient can request that the sender refrain from sending additional unsolicited e-mail. See Cal. Business & Professions Code §17538.4. (Division 7, Part 3, Chapter 1) (Deering 1999), entitled “Unsolicited fax or e-mail.”(57)

V. Privacy

The latest developments concerning privacy on the Internet relate to the passage of the Children’s Online Privacy Protection Act of 1998 and the effect of the European Privacy Directive.

A. Legislation

The Children’s Online Privacy Protection Act of 1998 (COPPA), 64 Fed. Reg. 22750 (April 27, 1999), forbids the collection and distribution of minors’ personal information(58) without parental consent and restricts distribution and use of that information. This Act is intended to provide protection to the individually identifiable data of children as collected by Internet Service Providers or Web site operators, and it is effective as of April 21, 2000.(59) The Act is implemented by FTC rules which were published in the Federal Register on October 21, 1999:(60)

Of particular importance is the COPPA requirement that, with certain exceptions, Web sites obtain “verifiable parental consent” before collecting, using, or disclosing personal information from children. Section 312.5 of the proposed rule sets forth this requirement along with the following performance standard:

An operator must make reasonable efforts to obtain verifiable parental consent, taking into consideration available technology. Any method to obtain verifiable consent must be reasonably calculated, in light of available technology, to ensure that the person providing consent is the child’s parent. (64 Fed. Reg. 22756)

In its discussion of this section, the Commission identified a number of methods an operator might use to obtain verifiable parental consent, including a print-and-send form signed by the parent and mailed or faxed to the Web site; a credit-card transaction initiated by the parent; a call made by the parent to a toll-free number; or an e-mail accompanied by the parent’s valid digital signature. The Commission also solicited comment on whether there are other e-mail based mechanisms that could provide sufficient assurance that the person providing consent is the child’s parent. (64 Fed. Reg. 22756, 22762)(61)

COPPA requires:

(a) The Web site must provide notice, including types of personal information collected, how such personal information is used and whether such personal information is disclosed to third parties;

(b) The Web site must not condition its use on a child’s disclosing more personal information than is necessary; the site must give the parent the right to review and delete personal information of the child;

(c) Parental consent must be required to collect information from children, but for two years, more reliable methods (i.e. mail, use of credit cards, and digital signatures) are only required for those activities that pose the greatest risk to the safety and privacy of children (i.e. disclosing personal information to third parties or making it publicly available through chat rooms or similar activities);

(d) Web sites which only use a child’s personal information for the Web site’s internal use can obtain parental consent via e-mail.

B. European Union Privacy Directive

The European Union (EU), in its European Union Privacy Directive,(62) has granted broad rights to individuals about whom personal information is collected and stored in databases. This EU position, based on the idea that privacy is a fundamental human right, is more rigorous than the United States’ position, which does not provide as extensive access to individuals to review this kind of information and has relatively few restrictions on the use of such personal information.(63) This conflict between the EU position and the US position has threatened international electronic commerce.(64) Therefore, the US Department of Commerce negotiated with EU representatives and proposed safe harbor principles for American companies to use in determining whether they comply with EU data protection laws.(65) The “safe harbor” arrangement is expected to be finalized in the Fall of 1999.(66)

Major companies are now requiring sites in which they advertise to meet these standards and the proposed safe harbor provision. For example, IBM’s policy(67) on personal information states that it will inform the consumer how it will use the personal information collected:

At IBM, we intend to give you as much control as possible over your personal information. In general, you can visit IBM on the Web without telling us who you are or revealing any information about yourself. There are times, however, when we may need information from you, such as your name and address. It is our intent to let you know before we collect personal information from you on the Internet.

If you choose to give us personal information via the Internet that we or our business partners may need — to correspond with you, process an order or provide you with a subscription, for example – it is our intent to let you know how we will use such information. If you tell us that you do not wish to have this information used as a basis for further contact with you, we will respect your wishes. We do keep track of the domains from which people visit us. We analyze this data for trends and statistics, and then we discard it.

VI. What constitutes an enforceable agreement entered into over the Internet?

Agreements entered into over the Internet generally take one of two forms, either an exchange of e-mail or clickwrap. Clickwrap agreements are agreements formed by a purchaser manifesting assent to the terms of an agreement online by pointing and clicking a mouse. An agreement based on an exchange of e-mails relating to subject matter which does not require a signed writing to be enforceable has been held to be effective. See, e.g., CompuServe, Inc. v. Richard S. Patterson, 89 F.3d 1257 (6th Cir. 1996). The controversies regarding the enforceability of agreements entered into over the Internet involve the enforceability of clickwrap agreements and whether agreements entered into over the Internet constitute signed writings.

A. Clickwrap Agreements

The authors are not aware of any cases to date that directly address the issue of whether clickwrap agreements are enforceable. There is one case that implicitly holds that they are enforceable. A number of cases deal with whether shrinkwrap agreements (which we believe provide a useful legal analogy) are enforceable. The most important issue addressed by courts today regarding the enforceability of shrinkwrap agreements is whether or not shrinkwrap agreements are pre-empted by copyright law.

1. The case that implicitly held that clickwrap licenses are enforceable is Hotmail Corp. v. Van Money Pie, Inc., ___ F. Supp. 2d ___, 47 U.S.P.Q. 2d (BNA) 1020 (N.D. Cal. 1998); 1998 U.S. Dist. Lexis 10729 (April 16, 1998). In that case, the United States District Court for the Northern District of California granted the plaintiff a preliminary injunction in a case alleging that the defendants breached the terms of a service contract for using the plaintiff’s e-mail service. Without discussing the issue, the Court in that case implicitly held that the defendants were obligated to the terms of service on the Hotmail Web site. Users of that service agreed to those terms by clicking the “I agree” button.

2. In ProCD, Inc., v. Zeidenberg, 86 F.3rd 1447 (7th Cir. 1996), ProCD developed and sold copies of a CD ROM containing a database of telephone numbers. The CD ROM box informed the consumers there was a shrinkwrap license inside the box. The shrinkwrap license provided that the purchaser was only receiving a license and the purchaser could not make copies of the product. Zeidenberg copied the database onto his own Web site and then provided access to the database via his Web site to customers for a fee. The Court rejected the holding of Vault Corp. v. Quaid Software Ltd., 847 F.2d 255 (5th Cir. 1988), that shrinkwrap licenses are pre-empted by copyright law, and held that the ProCD shrinkwrap license was enforceable.(68) The Court thus provided a way for database developers to protect their databases (by contract) even though copyright law would probably not protect the database here.(69)

a. Several courts have followed the ProCD decision: Microstar v. Formgen, Inc., 942 F. Supp. 1312 (S.D. Cal. 1996) (copying from a computer game); Hill v. Gateway 2000, Inc., 105 F.3rd 1147 (7th Cir.), cert. denied, 522 U.S. 808, 118 S.Ct. 47, 139 L.Ed.2d 13 (1997) (shrinkwrap license sent with a Gateway computer); Brower v. Gateway 2000, Inc., 246 A.D.2d 246, 676 N.Y.S.2d 569, 37 U.C.C. Rep. Serv. 2d (CBC) 54 (N.Y. App. Div. 1st Dep’t 1998) (allowed Gateway 2000 to require that any disputes be resolved by arbitration in Chicago, Illinois); and Mortenson Co., Inc. v. Timberline Software Corp., 93 Wash. App. 819, 831, 970 P.2d 803, 809 (1999) (upheld a shrinkwrap license agreement, included in the software, which was fairly standard and contained an “accept-or-return” provision).(70)

A case which tangentially addressed the shrinkwrap issue is Step-Saver Sys. v. Wyse Tech. and The Software Link, 939 F.2d 91 (3rd Cir. 1991), where the Court applied the “battle of the forms” rules and determined that the parties’ agreement was complete when the goods were ordered via telephone coupled with the purchase order. The Court held that the shrinkwrap license was sent after the fact and thus had no effect. The Software Link’s shrinkwrap license was also held unenforceable for the same reason in Arizona Retail Sys., Inc. v. The Software Link, 831 F. Supp. 759 (D. Ariz. 1993).

b. Note that Section 112 of the Uniform Computer Information Transactions Act (UCITA), discussed infra, would slightly modify the holding in ProCD. UCITA provides that where a mass-market purchaser licensee does not have an opportunity to review a mass-market license or a copy of it before becoming obligated to pay and does not agree to the license after having the opportunity to review it, the licensee is entitled to return the product and (1) is entitled to reimbursement of any reasonable expenses incurred in complying with the licensor’s instructions for return or destruction of the computer information or, in the absence of instructions, incurred for return postage or similar reasonable expense in returning it; and, in some circumstances, (2) is entitled to compensation for any reasonable and foreseeable costs of restoring the licensee’s system. See UCITA Section 112.

3. Preemption. Generally, it appeared that the copyright pre-emption barrier raised in Vault Corp., supra, had been buried by ProCD and its progeny. However, in a case involving claims relating to the pitching of a marketing concept (which did not involve any kind of online agreement but could have repercussions in the online context), the United States District Court for the Western District of Michigan held that the claim was pre-empted by copyright law. See Wrench, LLC v. Taco Bell Corp., 51 F. Supp. 2d 840, 51 U.S.P.Q.2d (BNA) 1238 (W.D. Mich. 1999). The Court denied the claim of a company that had pitched the Chihuahua concept to Taco Bell and claimed Taco Bell used the concept without paying for it. The Court held that any implied contract was pre-empted by copyright law. The Court distinguished ProCD on the somewhat nebulous grounds that the ProCD agreement was in effect at the time of purchase (i.e. before use of the product) whereas the Taco Bell agreement was not supposed to take effect unless Taco Bell started using the Chihuahua concept (i.e. after use of the concept). Note that use or copying of a product (i.e. a copyrighted item) is the same action which triggers liability under copyright law.

B. Signed Writings.

Both clickwrap agreements and e-mail exchanges may cover transactions where signed writings are required under the applicable statute of frauds. A number of states now have some kind of a digital signature act. Most of these acts require that, to satisfy any statute of frauds, the electronic signature must be:

1. Unique to the person using it,

2. Capable of verification, and

3. Under the sole control of the person using it.

See, e.g., Georgia Electronic and Signatures Act at O.C.G.A. §10-12-3 et seq. as originally enacted; the Utah Digital Signatures Act, Utah Code Ann. §46-3-101, et seq. (Supp. 1996). Before the enactment of O.C.G.A. §10-12-3 et seq., an argument could be made in Georgia that anything intended to be a signature would constitute a signature. See, e.g., Troutt v. Nash AMC-Jeep, Inc., 157 Ga. App. 399, 278 S.E.2d 54 (1981), which held that the printing of a company name at the bottom of a form constituted a signature, permitting a car dealer to meet certain state law requirements of providing a signed form. The latest developments in this area are discussed below.

1. The newest version of Georgia’s statute,(71) The Georgia Electronic and Signatures Act, which provides for broad acceptance of electronic signatures, reads, in pertinent part, as follows:

(a) Records and signatures shall not be denied legal effect or validity solely on the grounds that they are electronic.

(b) In any legal proceeding, an electronic record or electronic signature shall not be inadmissible as evidence solely on the basis that it is electronic.

(c) When a rule of law requires a writing, an electronic record satisfies that rule of law.

(d) When a rule of law requires a signature, an electronic signature satisfies that rule of law.

(e) When a rule of law requires an original record or signature, an electronic record or electronic signature shall satisfy such rule of law.

(f) Nothing in this Code section shall prevent a party from contesting an electronic record or signature on the basis of fraud.

O.C.G.A. §10-12-4 provides further as follows:

The term “electronic signature” is defined as “a signature created, transmitted, received, or stored by electronic means and includes but is not limited to a secure electronic signature.”(72) O.C.G.A. §10-12-3. The term “record” is defined as “information created, transmitted, received, or stored either in human perceivable form or in a form that is retrievable in human perceivable form.” O.C.G.A. §10-12-3.

2. The proposed Uniform Electronic Transactions Act (UETA). This Act provides that “an electronic record or signature may not be denied legal effect or enforceability solely because it is in electronic form” and that “if a law requires a record to be in writing, an electronic record satisfies the law”(73) has been approved by the National Conference of Commissioners on Uniform State Laws, and the Conference has voted to present the Act to states for adoption.(74)

The Electronic Transactions Act has been passed in California. California’s Governor signed the Uniform Electronic Transactions Act on September 16, 1999, and it was chaptered (Chapter No. 428) by the Secretary of State on the same date. See CA S.B. 820.

3. The Uniform Computer Information Transactions Act (former proposed UCC Article 2B).

The legal rules for computer information transactions which was to be promulgated by the National Conference of Commissioners on Uniform State Laws(75) as Article 2B of the Uniform Commercial Code. Instead it is being proposed as the Uniform Computer Information Transactions Act (UCITA).(76) The Act is the first general commercial statute to provide comprehensive procedures and rules for computer software licensing. Most of those rules would also be appropriate for a broad range of transactions outside UCITA’s scope, and it is expected that they will form the model for several future articles of the UCC as they did for the Uniform Electronic Transactions Act (UETA), which was approved at the same time.(77) The provisions include:

an express recognition of electronic records as the equivalent of writings, rules for attribution of electronically generated messages, methods for establishing authentication, rules for allocating losses caused by electronic errors, and rules for determining when electronic messages are deemed to be effective. A particularly noteworthy provision recognizes the enforceability of agreements made by the interaction of “electronic agents,” even if no human was directly involved in either or both sides of the “negotiation.”(78)

Software publishers and computer manufacturers strongly support UCITA, but it is as strongly opposed by a wide range of groups who contend UCITA “favors big business at the expense of consumers and small businesses.”(79) UCITA is controversial because:

UCITA represents a movement toward licensing of information in its many forms and away from the sale of copies as traditionally understood under copyright law. UCITA would enforce the broad [consumer] use of “shrink-wrap” and computer “click-on” licenses (called “mass-market licenses” in UCITA). By licensing rather than selling something, a vendor can wield more control of the downstream use of the product. Placing new constraints on the use of information in mass-market transactions can, in turn, constrain the use of information for important public purposes such as democratic speech, education, scientific research, and cultural exchange. Many believe that UCITA fails to appreciate the strong public interest in prohibiting new restrictions on information exchange.

The scope of UCITA is extremely broad. “Computer information,” under UCITA, includes everything from copyrighted expression, such as stories, computer programs, images, music and Web pages; to other traditional forms of intellectual property such as patents, trade secrets, and trademarks; to newer digital creations such as online databases and interactive games. Although the statute claims to be limited to information in electronic form, it allows other transactions to “opt-in” to being governed by UCITA.

Many legal community commentators are of the opinion that UCITA (or something like it) is not necessary or, at least, it is premature. This view is based on the opinion that existing common law and copyright law are developing appropriately to handle the new types of information-based transactions emerging in the information economy.

The American Law Institute (ALI), consumer advocacy groups, libraries, and the Federal Trade Commission have continued to criticize and/or oppose the UCITA proposal and prior UCC 2B drafts, yet their concerns have not been addressed. Instead, NCCUSL intends to push the UCITA proposal as quickly as possible to state legislatures.

A Quick Look at the Uniform Computer Information Transactions Act (UCITA), American Association of Law Libraries: Washington Affairs, July 15, 1999.(80)

4. Assignment of Copyright By Email.

Ballas v. Tedesco, 41 F.Supp. 2d 531 (D.N.J. 1999). This case addresses the issue of whether an exchange of e-mails can satisfy the requirement that assignments of copyrights are not effective unless they are in writing and signed by the transferor. See, Copyright Act §201(d). Tedesco wanted to produce a CD of dance music for Ballas. Ballas would pay Tedesco a fee for the musical arrangements and production of the CD, and Ballas would have the exclusive right to manufacture copies of the CD for sale. Negotiations, via e-mail, were unsuccessful, and the parties did not agree on terms of the arrangement. The parties agreed that the music content copyright belonged to the Defendant. The Court enjoined the Plaintiff from making or selling the music on the CD because the Court found that there was no valid assignment of the copyright since there was no written assignment.

VII. Jurisdictional Issues

A. People v. World Interactive Gaming Corp., N.Y. Sup. Ct., N.Y. Co. (July 24, 1999). According to the Internet Newsletter, August 1999, a New York trial court has held that a gambling site in Antigua that would not allow gambling on the site if anyone gave an address in a state that prohibited gambling but did not take any other further steps to verify the address’ accuracy constituted a violation of New York State’s prohibitions on gambling and the Federal Wire Act, the Travel Act, and the Interstate Transportation of Wagering Paraphernalia Act.

B. Coastal Video Communications Corp. v. Staywell Corp., 59 F. Supp. 2d 562 (E.D. Va. 1999). In a copyright case where one company alleged that its employee handbook had been infringed by another company, the District Court held that whether there was long-arm statute jurisdiction depended on whether the defendant had actually sold its publication, not just attempted to sell its publication, in Virginia. The Court also said that even if such copies were sold in Virginia, that would not be enough to grant specific jurisdiction in that case because the declaratory judgment action that had been filed does not “arise from the sale of the defendant’s publication” but rather from its very existence. Perhaps the lesson from this case is, in order to obtain jurisdiction, file an infringement action in a copyright case instead of a declaratory judgment.

C. Where a Virginia resident sued out of state defendants for posting allegedly defamatory material (one defendant posted the material on servers in Virginia via “AOL” and the other defendant posted the material on servers outside Virginia but was held by the Court to be doing business in Virginia from its Web site), a District Court for the Eastern District of Virginia held that there was a tort in the State of Virginia, and there were sufficient minimum contacts to allow for jurisdiction. Bochan v. LaFontaine, 1999 U.S. Dist. LEXIS 8253 (E.D. Va. 1999).

D. In a similar case, Melvin v. Doe, Cir. Ct. of Loudoun County, Civil No. 21942 (June 24, 1999), a Virginia Court held that where both the plaintiff and the defendant were Pennsylvania residents, even though a tort may have occurred in Virginia by defamatory material being placed on the AOL server in Virginia, there were not sufficient minimum contacts to meet the jurisdiction requirements for personal jurisdiction.

E. In Mink v. AAAA Dev., 190 F.3d 333 (5th Cir. 1999), the Fifth Circuit articulated a structure for determining when a court can assume jurisdiction of a company with a presence in cyberspace.

1. The Fifth Circuit followed the sliding scale in Zippos Mfg. Co. v. Zippo Dot Com, 952 F. Supp. 1119, 1124 (W.D. Pa. 1997), setting out three levels of Internet business.(81)

a. First, companies which merely advertise or post information about their business on the Internet with “passive” Web sites cannot be sued out of state simply because they maintain the Web site. In Mink, the company’s Web site “provides users with a printable mail-in order form, AAAA’s toll-free telephone number, a mailing address, and an electronic mail (“e-mail”) address, [and] orders are not taken through AAAA’s website [sic]. This does not classify the website [sic] as anything more than a passive advertisement.” Mink at 337.

b. The second category consists of companies whose Web site allows a user to exchange information with a host computer. Citing Zippos, the Court reasoned that the exercise of jurisdiction is determined by the level of interactivity. Mink at 336.

c. The companies which enter into contracts with out-of-state residents that involve the knowing and repeated transmission of computer files over the Internet, can be sued in the home state of the out of state residents. Id.

VIII. Conclusion

As the practical possibilities for using the Internet for entertainment purposes grow, the tension between the desire to take advantage of the enormous potential benefits of the Internet and to protect traditional legal rights also grows. Legal questions that seemed obscure and academic only six months ago are now important and practical. This tension is likely to increase exponentially in the future as the Internet, and its successors, become the major distribution method for entertainment.

1  Sandburg, Brenda, Lockheed Suit Over Domain Names Crashes, The Recorder/Cal Law, Oct. 26, 1999.

2  Note that the Hatfield case, which held that there was no liability, occurred prior to the enactment of the Anticyersquatting Act.

3  As found by the Court, Playboy Enterprises (PEI):

owns federally registered trademarks for the terms Playboy, Playmate, Playmate of the Month, and Playmate of the Year. The term Playmate of the Year is sometimes abbreviated “PMOY.” PEI does not have a federally registered trademark in the abbreviation “PMOY,” although PEI argues that “PMOY” is worthy of trademark protection because it is a well-known abbreviation for the trademark Playmate of the Year.

Playboy Enters., 7 F.Supp.2d at 1100.

4  A “metatag” is a hidden word or label in a Web page which often includes keywords to draw the attention of Internet search engines to that Web page. See Kaplan, Carl S., Former Playboy Model Wins Rights to Use Keywords, Cyber Law Journal, Dec. 17, 1999.

5  The Court also found that, with respect to the metatags, there is no trademark infringement where defendant has used Playboy’s trademarks in good faith to index the content of her Web site.

6  See Former Playboy Model Wins Right to Use Keywords, Cyber Law Journal, Dec. 17, 1999, (wysiwyg://66//http://www.nytimes.com/library/tech/99/12/cyber/cyberlaw/17law.html); Playboy Enters., Inc. v. Welles, Case No. 98-CV-0413-K, Judge Judith Keep (S.D. Cal. Dec. 1, 1999) (http://www.terriwelles.com/order_01.htm).

7 Id.

8 See Slind-Flor, Victoria, False Signs on the I-Highway, Nat’l L.J., Jan 5, 2000.

9 See, also Kaplan, Carl S., Copyright Decision Threatens Freedom to Link, Cyber Law Journal, Dec. 10, 1999.

10 See also Kaplan, Carl S., Judges Pick David Over Goliath in Domain Name Suits, Cyber Law Journal, Sept. 17, 1999.

11 See also Groner, Jonathan, Court Rejects Trademark for “Best Beer in America,” Legal Times, Dec. 13, 1999.

12 Kettmann, Steve, E-Riots Threaten Etoys.com, Wired News, Dec. 15, 1999; Mirapaul, Matthew, Etoys Lawsuit is No Fun for Artist Group, New York Times, Dec. 9, 1999. See also Priority of Parties’ Use of Marks on Web Pages Too Close to Call, E-Commerce Law Weekly, Dec. 14, 1999, pp. 219-220. The parties ultimately settled Etoys.com v. etoy.com.

13 See Riffer, Jeff, New Federal Law on Cybersquatting Signed, The Internet Newsletter, Dec. 1999, pp. 1-2.

14 See Porsche Cars North America, Inc. v. porsch.com, supra.

15 The Anticybersquatting Consumer Protection Act provides a non exhaustive list of factors that a court may consider when measuring an alleged infringer’s bad faith intent. These factors include:

(a) whether the registrant holds trademark or other intellectual property rights to the domain name;

(b) whether the domain name is the registrant’s legal name;

(c) whether the registrant had engaged in prior use of the domain name in connection with the bona fide offering of any goods or services;

(d) whether the registrant intended to divert consumers from the mark owner’s online location;

(e) the registrant’s prior conduct including whether the person had offered to sell or transfer the domain name to the mark owner or a third party for financial gain, without having an intent to use the domain name to offer goods or services;

(f) whether the registrant had provided misleading information when applying for the registration of the domain name; and

(g) whether the registrant was “warehousing” multiple domain names that mirror the trademarks of others.

Gilbert, Robert D., Significant Changes in Law Offer Cyberspace Protections for Trademark Owners, e-Commerce Law & Strategy, Vol. 16, No. 8, Dec. 1999, pp. 1-4 at 4. See also Riffer, Jeffrey K, Anticybersquatting Consumer Protection Act Targets “Bad Faith” Domain Name Holders, Nat’l L.J., Jan 7, 2000.

16  John Tesh Sues for Trademark Infringement and Cybersquatting, E-Commerce L. Weekly, Jan. 31, 2000.

17 Shepherd, Ritchenya A., Cyberpirates Now May Have to Walk the Plank, The National Law Journal, Dec. 16, 1999.

18 See also Jones, Leigh, Federal Cybersquatter Law Survives Test, N.Y.L.J., Jan 18, 2000.

19 See a copy of the undersigned’s “Internetlegal Report” for January 2000, a copy of which is attached hereto as Exhibit “B,” addressing issues relating to the addition of generic TLDs.

20 Information about this policy is available at http://www.icann.org/udrp/udrp.htm

21 The policy sets forth several factors to consider as evidence of registration and use in bad faith, including facts which indicate that the registrant

(1) had registered the domain “primarily for the purpose of selling, renting, or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of documented out-of-pocket costs directly related to the domain name;”

(2) has “registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name,” provided that the registrant has “engaged in a pattern of such conduct;”

(3) has registered the domain name “primarily for the purpose of disrupting the business of a competitor;” or

(4) by using the domain name, intentionally attempted to attract, for commercial gain, Internet users to its site or other online location, “by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of the registrant’s site or location of a product or service on its site or location.

22 Recall that 17 U.S.C. § 106 requires businesses that perform copyrighted music to first obtain permission from the copyright owner, such as the composer, publisher, or the agency representing the copyright owner (such as SESAC, ASCAP, or BMI) prior to performing copyright compositions.

23 Jonathan Band of Morrison & Foerster outlines steps that should be taken to benefit from the DMCA’s safe harbor provision for online service providers: online service providers should (1) adopt a written policy providing for termination of subscribers and account holders who are repeat offenders and post the policy on the Web site; (2) designate an agent to receive notification of claimed infringement from the copyright owner and post the agent’s contact information in a publicly accessible place on the Web site; and (3) register the designated agent with the Copyright Office according to interim regulations at 60 Fed. Reg. 59233, along with a filing fee. See http://www.sla.org/govt/band2html.

24 See Digital Millenium Copyright Act, Sec. 1201. Circumvention of copyright protection systems.

25 Digital Performance Right in Sound Recordings Act of 1995 (Public Law 104-39). See also, Regulations amended by the Copyright Office at 37 C.F.R. Part 201. The Digital Performance Right in Sound Recordings Act of 1995 gave record companies a limited performance right in sound recordings (i.e. the right to bar and/or receive statutory royalties for digital audio transmissions of recordings for which they hold a copyright, namely, interactive transmissions, and those for which a subscription fee was paid). The DMCA applied this right to audio streaming over the Internet, or Webcasting, discussed infra.

26 A Webcaster must meet the following conditions to qualify for the statutory license:

A. Pay royalties (discussed infra).

B. Sound recording performance complement: A Webcaster may not play in any three-hour period (1) more than three songs from a particular album, including no more than two consecutively, or (2) four songs by a particular artist or from a boxed set, including no more than three consecutively. This limit is called the “sound recording performance complement.” Retransmitters of over-the-air radio broadcasts are required, upon notice, to cease retransmissions of digital broadcasts that regularly exceed the sound recording performance complement. For analog broadcasts, retransmissions must cease, upon notice, if a substantial portion of the broadcast transmissions exceed the complement.

C. Prior announcements not permitted. Advance song or artist playlists generally may not be published. However, a Webcaster may name one or two artists to illustrate the type of music on a particular channel. DJ “teaser” announcements using artists’ names are permitted, but only those that do not specify the time a song will be played.

D. Archived programming. Archived programs — those that are posted on a Web site for listeners to hear repeatedly on-demand — may not be less than five hours in duration. Those that are five hours or more may reside on a Web site for no more than a total of two weeks. Merely changing one or two songs does not meet this condition.

E. Looped programming. Looped or continuous programs — those that are performed continuously, automatically starting over when finished — may not be less than three hours in duration. Again, merely changing one or two songs does not meet this condition.

F. Repeat of other programs limited. Programs under one hour in duration that are performed at scheduled times may be performed only three times in a two-week period, four times if one hour or more in duration.

G. Obligation to identify song, artist and album. When performing a sound recording, a Webcaster must identify the sound recording, the album and the featured artist, if receivers of the service are capable of displaying this information. This requirement took effect October 28, 1999.

H. Prohibition on falsely suggesting a link between recordings or artists and advertisements. A Webcaster may not perform a sound recording in a way that falsely suggests a connection between the copyright owner or recording artist and a particular product or service.

I. Obligation to take steps to defeat copying by recipient. A Webcaster must disable copying by a transmission recipient if in possession of the technology to do so, and must also take care not to induce or encourage copying by transmission recipients.

J. Requirement to accommodate technical protection measures. A Webcaster must accommodate the transmission of measures widely used by sound recording copyright owners to identify or protect copyrighted works, if it is technically feasible to transmit them without imposing substantial burdens on the transmitting entity.

K. Obligation to cooperate to defeat scanning. A Webcaster must cooperate with copyright owners to prevent recipients from using devices that scan transmissions for particular recordings or artists.

L. Transmission of bootlegs not covered. The statutory license is limited to transmissions made from lawful copies of sound recordings. It does not cover transmissions made from bootlegs or pre-released recordings (unless the performance of a pre-released recording is otherwise authorized by the copyright owner).

M. Automatic switching of channels. The Webcaster must not automatically and intentionally cause a device receiving the transmission to switch from one program channel to another.

N. Transmission of copyright management information. If technically feasible, transmissions by the Webcaster must be accompanied by the information encoded in the sound recording by the copyright owner that identifies the title of the song, the featured artist and other related information (if any).

See http://www.riaa.com/weblic/wlwcast.htm.

27 Sample Webcasting agreements of BMI, ASCAP, and SESAC are attached, with permission, at Appendix A.

28 Other Internet sites (a) serve as a secondary transmission sites for analog radio, (b) operate as facilitators for commercial radio stations (e.g. Broadcast.com), or (c) operate as a blended entertainment site and offer a mix of audio streaming and entertainment news. See Scherzer, Dov H., Statutory Fee Issues for Online Recordings, Ent. L. and Fin., Dec. 1999, Vol. 15, No. 9, pp. 1, 4-5.

29 The RIAA has reached an agreement with Musicmusicmusic Inc., which operates a service called RadioMoi. Richtel, Matt, Web Sites and Recording Labels at Impasse on Fees, N.Y. Times, Nov. 29, 1999.

30 Richtel, Matt, Web Sites and Recording Labels at Impasse on Fees, N.Y. Times, Nov. 29, 1999.

31 The RIAA submitted a Petition to Convene the Copyright Arbitration Royalty Panel (CARP) to the Copyright Office in July, 1999. “When the arbitration panel convenes, it will have six months to issue a recommendation. The Library of Congress will have an additional four months to approve the recommendation.” Scherzer, Dov H., Statutory Fee Issues for Online Recordings, Ent. L. and Fin, Dec. 1999, Vol. 15, No. 9, pp. 1, 4-5. “Separate from the its petition, the RIAA is continuing to negotiate voluntary license agreements with individual Webcasters in the hopes of setting a favorable precedent.” Id.

32 Scherzer, Dov H., Statutory Fee Issues for Online Recordings, Ent. L. and Fin., Dec. 1999, Vol. 15, No. 9, pp. 1, 4-5.

33 The Rio portable music player is a digital audio recording device. The Rio is a small device (roughly the size of an audio cassette) with headphones that allows a user to download MP3 audio files from a computer and to listen to them elsewhere.

34 See 17 U.S.C. §1001 et seq. (P.L. 102-563, at 4, 106 Stat. 4248).

35 Discord Surrounding Diamond Multimedia’s Rio Player is Ended Through Settlement Agreement, The Intellectual Property Strategist, Sept. 1999, Volume 1, Number 12, at 4. See generally, Houston, Randolph B. Jr., Let’s Get Digital, Texas Lawyer, Dec. 17, 1999.

36 Felch, Patricia A., Free-Lancers Victorious in Tasini, but Impact on Electronic Media Still Unclear, e-Commerce Law & Strategy, Nov. 1999, Vol. 16, No. 7, p. 4.

37 Id.

38 Id.

39 See Clarida, Robert W., Fair Use on the Web – a New Ballgame, Intellectual Property Strategist, Jan. 2000, Vol. 6, No. 4, p. 7; Slind-Flor, Victoria, Thumbnail Not Even Tiny Infringement, Nat’l L.J., Nov. 30, 1999. See also Los Angeles Times v. Free Republic, CV No. 98-7840-MMM (holding that “adding commentary to a verbatim copy of a copyrighted work or portions thereof does not transform the work [to a fair use], especially where the first posting of this article . . . often contains little or no commentary.”); Shepherd, Ritchenya A., Web Site Can’t Post News Stories, Nat’l L.J., Nov. 17, 1999.

40 See P.L. 105-298, 112 Stat. 2827.

41 Eric Eldred founded Eldritch Press in late 1995, and initially, Eldritch Press posted works of American literature by authors such as Nathaniel Hawthorne and Henry James. Now, Eldritch Press posts new works the moment they enter the public domain. Some of the works Eldritch Press posts are out of print or are not included in library collections, and therefore they are not obtainable by the public in any other way. See How Long is Too Long? Recent Congressional Copyright Giveaway Claimed Unconstitutional at http://eldred.ne.mediaone.net/pr-1999-01-12.txt.

42 See Eldred v. Reno, United States District Court for the District of Columbia, Case No. 1:99CV00065 JLG (filed January 11, 1999). Visit this Web site to view the pleadings in this case: http://cyber.law.harvard.edu/eldredvreno/legaldocs.html.

43 See http://www.kingkong.demon.co.uk/ccer/ccer.htm, a site that documents all renewals of 1923 book copyrights, representing works that the Copyright Term Extension Act keeps from the public domain.

44 Slotek, Jim, M-I-C . . . See you real soon . . . k-e-y . . ., Toronto Sun Times, Nov. 1, 1998; see also Naughton, John, Mickey Mouse Saved for Disney? Phew. What a Narrow Squeak, Guardian Unlimited, May 2, 1999.

45 See, Universal Cities, Inc. v. Reimerdes, S.D.N.Y., No. 00 Civ. 277 (LAK), (Jan. 20, 2000), and Control Association, Inc. v. McLaughlin, No. CV 786-804, Sup. Court Calif, (Jan. 21, 2000). In the California state court case, the Judge had caused quite a stir by denying a temporary restraining order; apparently the Judge initially believed that the use and information was focused properly on just allowing the playing of DVD’s on Unix systems. See, also, Godwin, Mike, Courts Enjoin Sites That Publish DVD Decryption Software, E-Commerce L. Weekly, Jan. 28, 2000.

46 For an indepth discussion of fair use, see the article on fair use at the authors’ Web site at http://www.internetlegal.com.

47 Spam is the name given for unsolicited e-mail messages which flood the Internet. Spam generally consists of commercial advertising (sometimes for adult oriented Web sites or get-rich-quick schemes).

48 See Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y., 447 U.S. 557, 562-563, 65 L.Ed.2d 341, 100 S.Ct. 2343 (1980).

49 Cf. Sable Communications v. FCC, 492 U.S. 115, 127-128, 109 S.Ct. 2829, 2837, 106 L.Ed.2d 93 (1989) (there is no captive audience problem where the listener of dial-a-porn must take affirmative steps to receive the communication).

50 See Intel v. Hamidi, Superior Court of California, County of Sacramento, Judge John R. Lewis, April, 1999.

51 In similar cases, the First Amendment issue was not raised. See, e.g., America Online v. IMS, 24 F. Supp. 2d 548 (E.D. Va. 1998); America Online v. Prime Data Sys., Inc., 1998 U.S. Dist. LEXIS 20226 (E.D. Va. 1998); America Online v. LCGM, Inc., 46 F. Supp. 2d 444 (E.D. Va 1998).

52 See also Balestier, Bruce, Big Fine for Spamming AOL Members, New York Law Journal, Dec. 14, 1999.

53 The Act defines the term “unsolicited electronic mail message” as “any substantially identical electronic mail message other than electronic mail initiated by any person to others with whom such person has a prior relationship, including prior business relationship, or electronic mail sent by a source to recipients where such recipients, or their designees, have at any time affirmatively requested to receive communications from that source.”

54 Nev. Rev. Stat. 41.735 provides immunity for persons who provide users with access to a network and applies to items of electronic mail obtained voluntarily.

55 Nev. Rev. Stat. 41.715 defines “electronic mail” as a message, a file or other information that is transmitted through a local, regional or global network, regardless of whether the message, file or other information is:

1. Viewed;

2. Stored for retrieval at a later time;

3. Printed onto paper or other similar material; or

4. Filtered or screened by a computer program that is designed or intended to filter or screen items of electronic mail.

56 In New Jersey, recipients of bulk unsolicited faxes are attempting to file a class action lawsuit under the 1991 federal Telephone Consumer Protection Act, 47 U.S.C. §227: Levine v. 9 Net Ave., HUD-L-7965-99. See Booth, Michael, Suit Seeks Class-Action Status For Receivers of Junk Faxes, New Jersey Law Journal, Nov. 10, 1999.

57 Cal. Business & Professions Code §17538.4 provides as follows:

(a) No person or entity conducting business in this state shall facsimile (fax) or cause to be faxed, or electronically mail (e-mail) or cause to be e-mailed, documents consisting of unsolicited advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit unless:

(1) In the case of a fax, that person or entity establishes a toll-free telephone number that a recipient of the unsolicited faxed documents may call to notify the sender not to fax the recipient any further unsolicited documents.

(2) In the case of e-mail, that person or entity establishes a toll-free telephone number or valid sender operated return e-mail address that the recipient of the unsolicited documents may call or e-mail to notify the sender not to e-mail any further unsolicited documents.

(b) All unsolicited faxed or e-mailed documents subject to this section shall include a statement informing the recipient of the toll-free telephone number that the recipient may call, or a valid return address to which the recipient may write or e-mail, as the case may be, notifying the sender not to fax or e-mail the recipient any further unsolicited documents to the fax number, or numbers, or e-mail address, or addresses, specified by the recipient.

In the case of faxed material, the statement shall be in at least nine-point type. In the case of e-mail, the statement shall be the first text in the body of the message and shall be of the same size as the majority of the text of the message.

(c) Upon notification by a recipient of his or her request not to receive any further unsolicited faxed or e-mailed documents, no person or entity conducting business in this state shall fax or cause to be faxed or e-mail or cause to be e-mailed any unsolicited documents to that recipient.

(d) In the case of e-mail, this section shall apply when the unsolicited e-mailed documents are delivered to a California resident via an electronic mail service provider’s service or equipment located in this state. For these purposes “electronic mail service provider” means any business or organization qualified to do business in this state that provides individuals, corporations, or other entities the ability to send or receive electronic mail through equipment located in this state and that is an intermediary in sending or receiving electronic mail.

(e) As used in this section, “unsolicited e-mailed documents” means any e-mailed document or documents consisting of advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit that meet both of the following requirements:

(1) The documents are addressed to a recipient with whom the initiator does not have an existing business or personal relationship.

(2) The documents are not sent at the request of, or with the express consent of, the recipient.

(f) As used in this section, “fax” or “cause to be faxed” or ” e-mail” or “cause to be e-mailed” does not include or refer to the transmission of any documents by a telecommunications utility or Internet service provider to the extent that the telecommunications utility or Internet service provider merely carries that transmission over its network.

(g) In the case of e-mail that consists of unsolicited advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit, the subject line of each and every message shall include “ADV:” as the first four characters. If these messages contain information that consists of unsolicited advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit, that may only be viewed, purchased, rented, leased, or held in possession by an individual 18 years of age and older, the subject line of each and every message shall include “ADV:ADLT” as the first eight characters.

(h) An employer who is the registered owner of more than one e-mail address may notify the person or entity conducting business in this state e-mailing or causing to be e-mailed, documents consisting of unsolicited advertising material for the lease, sale, rental, gift offer, or other disposition of any realty, goods, services, or extension of credit of the desire to cease e-mailing on behalf of all of the employees who may use employer-provided and employer-controlled e-mail addresses.

(i) This section, or any part of this section, shall become inoperative on and after the date that federal law is enacted that prohibits or otherwise regulates the transmission of unsolicited advertising by electronic mail (e-mail).

58 The Act defines “personal information” to include an individual’s first and last name, home and other physical address, e-mail address, social security number, and telephone number. 1999 S. 809; 106 S. 809.

59 15 U.S.C. §6501 et seq. A copy of the Act is available on the Federal Trade Commission Web site:

http://www.ftc.gov/privacy/index.html

60 16 C.F.R. Part 312. The Rules are available at the Federal Trade Commission Web site, supra.

61 See Benjamin I. Berman, Acting Secretary of the Federal Trade Commission, Federal Register Notice announcing Public Workshop on Proposed Regulations Implementing the Children’s Online Privacy Protection Act, Supplementary Information, June 23, 1999, 16 C.F.R. Part 312, Children’s Online Privacy Protection Rule at http://www.ftc.gov/os/1999/9906/kidsprivacy.htm.

62 For the official text of the European Union Privacy Directive, see Official Journal of the European Communities of 23 November 1995 No L. 281 p. 31. For an unofficial version, visit http://www.cdt.org/privacy/eudirective/EU_Directive_.html.

63 See, e.g., Mosceyunas, Anne K., On-Line Privacy: The Push and Pull of Self-Regulation and Law, Computer Law Section Newsletter, State Bar of Georgia, July, August, September, 1999, pp. 13-15; Cranman, Kevin A., Internet and Electronic Communication Privacy Issues: An Overview and Legislative Update, 14th Annual Computer Law Institute, Program Materials 1999, Part 10.

64 Winn, Jane K., Digital Signatures, Smart Cards, and Electronic Payment Systems, ICLE Fourteenth Annual Computer Law Institute, Sept. 24, 1999, p. 22.

65 See Joint Report on Data Protection Dialogue to the EU/US Summit, June 21, 1999.

66 Id.

67 See http://www.ibm.com/privacy/.

68 In Vault Corp. v. Quaid Software Ltd., 847 F.2d 255 (5th Cir. 1988), the Fifth Circuit, applying Louisiana law, held that the shrinkwrap license was unenforceable. In this case, the Plaintiff, Vault Corporation, created software for Vault Corp.’s software developer customers to embed in their software to prevent their end user customers from using the software on more than one computer. When the Vault Corporation sold its software, it included a shrinkwrap license which was expressly authorized by a Louisiana statute and prohibited reverse engineering of the software. The defendant, Quaid, purchased the software and reversed engineered it. The Fifth Circuit held that the shrinkwrap license and the related statute were unenforceable because they were “pre-empted” by copyright law. The Court’s holding implies that if pre-emption does not apply, then the shrinkwrap license is enforceable. Most courts that have decided the issue have held that agreements prohibiting reverse engineering and disclosure of confidential information are not pre-empted by the Copyright Act because they involve an agreement between private consenting parties, and therefore are different from copyright which is imposed by statute. See, e.g., Computer Assoc. v. Altai, 982 F.2d 693 (2nd Cir. 1992).

69 See, e.g., Feist Publications, Inc. v. Rural Telephone Co. Serv., 499 U.S. 340, 111 S. Ct. 1282, 113 L.Ed. 2d 358 (1991). For additional materials on copyright law, see the writers’ law firm Web site at http://www.internetlegal.com. There is some concern among commentators that to allow unlimited use of shrinkwrap and clickwrap licenses to protect material not otherwise protected by copyright law could vitiate the copyright fair use doctrine.

70 This case dealt with the enforceability of a limitations of remedies clause contained in a shrinkwrap license.

71 See O.C.G.A. §10-12-2.

72 A “secure electronic signature” is defined as “an electronic or digital method executed or adopted by a party with the intent to be bound by or to authenticate a record, which is unique to the person using it, is capable of verification, is under the sole control of the person using it, and is linked to data in such a manner that if the data are changed the electronic signature is invalidated.” O.C.G.A. §10-12-3.

73 The Act provides, in Section 106, Legal Recognition of Electronic Records, Electronic Signatures, and Electronic Contracts:

(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(c) If a law requires a record to be in writing, or provides consequences if it is not, an electronic record satisfies the law.

(d) If a law requires a signature, or provides consequences in the absence of a signature, the law is satisfied with respect to an electronic record if the electronic record includes an electronic signature.

See UETA Sections 201, 301, and 401(a) (1998 Annual Meeting Draft); Uncitral Model Articles 5, 6, and 7.

74 A copy of the proposed Act is available online at www.law.upenn.edu/library/ulc/ulc.htm

75 The National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute (ALI) are responsible for overseeing updates to the Uniform Commercial Code. In 1995, a committee was formed to draft a separate UCC article to specifically address software licensing and electronic commerce. Various versions have been proposed and debated. The goal is to propose a version that most, if not all, of the state legislatures will adopt.

76 UCITA was approved by the National Conference of Commissioners on Uniform State Laws (NCCUSL) at its annual meeting in Denver at the end of July, 1999. Foster, Ed, UCITA Author Does Some Moonlighting for Money, Courtesy of Microsoft, InfoWorld: The Gripe Line, Oct. 11, 1999.

77 Graff, George L., Controversial Computer Act Offers Major Innovations: Proposed Uniform Statute for The Information Age Is Approved, Computer Law Strategist, Aug. 1999, Vol. XVI, No. 4.

78 Id.

79 Cassidy, Padraic, Attorneys General Object to Law Regulating Online Transactions, New Jersey Law Journal, Dec. 21, 1999.

80 See also http://www.ll.georgetown.edu/allwash/UCITA2html

81 For further analysis, see Koppel, Nathan, Cyber-Ad Jurisdiction Isn’t Automatic, Texas Lawyer, Sept. 27, 1999.

The information above is provided for general educational purposes and not as legal advice. Laws in areas in which we practice change continually and also vary from jurisdiction to jurisdiction. Therefore no visitor to our site should rely on any of the articles provided for legal advice, but should always consult their own attorney regarding legal matters.

© 2000, Rob Hassett, Atlanta, Georgia. All Right Reserved.

 

Spam Laws and Entertainment

By Rob Hassett

Casey Gilson P.C.

Six Concourse Parkway, Suite 2200

Atlanta, Georgia 30328

(770) 512-0300, ext. 557

rob@internetlegal.com

Law Firm Website:  www.caseygilson.com

Personal Website:  http://www.internetlegal.com/

Posted: May 8, 2006

* Mr. Hassett is a co-author of Volume 5 (which volume is entitled Internet and Interactive Media) of the 10 volume treatise entitled Entertainment Industry Contracts which is published by Lexis Nexus.  This article is adapted from Chapter 109Q of Volume 5 of that treatise.

109Q.01   Background

One of the goals of any entertainment oriented website is to encourage individuals to view the site.  Websites generally earn income by selling products or services, charging for subscriptions or advertising.  No matter what approach is used, the more “eyeballs” the better.  Therefore, one of, if not the primary, goal of any entertainment website is to attract viewers.

One way to attract viewers is by sending promotional emails to customers and potential customers.  However, if the email is unsolicited, or, even if consented to, if the recipient believes it is unsolicited or if the recipient otherwise does not want it, the sender risks serious adverse consequences which may include:

(1)       Alienation of customers and potential customers irritated by the email;

(2)       Blocking of all email from the sender either by the recipient or by the recipient’s use of certain types of software and services that block out all email from a sender’s address; and

(3)       Violating applicable law including incurring substantial civil and/or even criminal penalties.

109Q.02         Alienation of Customers and Potential Customers

Most recipients of spam hate receiving it and a significant percentage of recipients of email will in effect “boycott” any vendor that sends them unsolicited email.  Unfortunately, many spammers will weigh this fact against the fact that a significant portion of the population (according to some reports, as high as eight (8%) percent) will, on at least some occasions, purchase products or services in which they are interested from a vendor they learn about from spam.  Still, the likely alienation of customers and potential customers should be enough, without more, to dissuade most owners of entertainment websites from trying to attract viewers by using unsolicited email.

109Q.03         Blocking of Emails

Email recipients can take steps to block a substantial percentage of email sent to them by spammers.  One option, available to most recipients of email, is to intentionally block all email from a particular email address or from an entire domain.  There are two (2) major drawbacks to this approach.  First, many times the spammers use the return email addresses of other innocent parties. This practice, called spoofing, is illegal and even criminal, but does make it impossible for any recipient to be sure that they are blocking email from the address of the spammer as opposed to the address of an innocent third party.  Second, this approach is reactive, as opposed to proactive, in that the recipient must first receive the unwanted email before being able to block future email from that same address.

There are also software programs, such as the “SafetyBar” software available at http://www.spamnet.com/, that are community based and use algorithms to redirect email received that purportedly constitutes spam into a spam folder.  Such software does not rely on the purported return address to determine whether an email is spam.  Instead the software blocks emails based on whether a certain number of its over 1 million users report that they have seen the email and that it is spam.  If the email is confirmed as spam, then it is sent to the spam folders of all users of the software (the users can always view the software and elect to receive email from that source).  Then, using proprietary algorithms, emails from the same source, which, as addressed above, may not be the same as the purported return address on the email, are also blocked.

Additionally, many business users run all of their email through outside spam and virus blocking services such as the service available from AppRiver at http://www.appriver.com/ and Postini at http://www.postini.com/.  With these services the user routes all email to a particular domain through the spam and virus blocking service of the third party provider.  The advantage of these third party services is that the email is blocked before it ever reaches the user’s computer and so the services are much better for users who also view their email with BlackBerries, cell phones and other wireless devices.  Products like SafetyBar work only on the computer on which the software resides and so are no help for blocking spam to BlackBerries and similar devices.

The problem for the owner of a website is that if the owner sends out mass emails not wanted by the recipients, with widespread use of the above described software and/or services, all emails from that owner may be blocked.  In that situation a customer who, by signing up, is supposed to receive  an email,  may never receive it and, if they do not check to see what is blocked, may never know they did not receive it.

109Q.04         Anti-Spam Laws

Prior to January 1, 2004 there was no federal law prohibiting spam.  However, 29 states had enacted laws prohibiting unsolicited email.  There was variation among these statutes.  The most restrictive statutes were Delaware’s (prohibited all unsolicited bulk commercial email) and California’s (prohibited all unsolicited commercial email).  Other states included one or more of the following four prohibitions on commercial and/or bulk email:

(1)       Must not include false or missing routing information, misleading subject line and/or use another’s domain name;

(2)       Must not include sexually explicit material;

(3)       Must include “ADV” or “ADV ADLT” (or similar, but differing) language in the subject line (generally at the beginning); and/or

(4)       Must include an easy method to opt out from future emails.

One question many lawyers had was whether the Delaware and California laws were constitutional.  If constitutional, the law in these states would legally prohibit most unsolicited commercial email.  With respect to commercial speech that concerns lawful activity and is not misleading, the test of constitutionality is:

(1)       Is there a substantial governmental interest;

(2)       Does the law directly advance that governmental interest; and

(3)       Is there a reasonable fit between the purpose of the restriction and the scope of the restriction?

The Delaware and California statutes did meet the first two tests.  There is a substantial governmental interest in reducing unsolicited commercial email in that there is now so much of it that it slows down the Internet and most people hate receiving it.  A prohibition on unsolicited commercial email advances that interest since, if spammers are prohibited from sending unsolicited commercial email to Delaware and California, their citizens would, at least theoretically, not receive any.

The interesting question is whether or not the third test is met.  Is there a reasonable relation between the objective being achieved and the scope of the restriction?  There are certain other, less drastic, ways to reduce unsolicited commercial email such as requiring “ADV” in the subject line.  With “ADV” in the subject line any individual or ISP could screen out the email.  Proponents of the Delaware law would probably argue that the constitutionality of the Delaware law is supported by the cases holding that the federal anti-fax statute, which prohibits all unsolicited faxes, is constitutional.  However, there is no way for individual fax machine owners to screen out unwanted faxes while there is a way to screen out unsolicited commercial bulk email other than to bar all of it.

In any event the state laws only applied to unsolicited “commercial” email.  The reason is that under the “free speech” clause of the First Amendment to the U.S. Constitution any restriction of non-commercial speech must be narrowly tailored (in other words there is less room to go beyond what is necessary to advance the interest of concern).  So sending out a bulk email that contains primarily informative, literary or artistic content, even if it also contains a promotional or advertising element, would seemingly not have been barred under any state law.

All of the state statutes of which the author is aware defined “unsolicited” as having no pre-existing relationship.  So if there was a pre-existing relationship, these statutes would not apply.

Until January of 2004, there was no federal law expressly prohibiting spam.  Probably partially due to lobbying by bulk emailers who were operating in the United States and believed themselves to be vulnerable to lawsuits based on state anti-spam laws at the end of 2003 Congress enacted a federal anti-spam law that became effective as of January 1, 2004.  The bulk emailers who lobbied for passage probably preferred one anti-spam law that applied across the country and allowed mass emailings provided certain requirements were met as opposed to a large number of different, sometimes contradictory, laws that in a few states completely prohibited mass commercial emailings.  The Act is entitled:  “The Controlling the Assault of Non-Solicited Pornography and Marketing Act” and is referred to as the “CAN-SPAM Act of 2003.”  Most  sections of the Act are codified at 15 USC 7701 et. seq.  Important features of the CAN-SPAM Act include:

(1)       It only applies to “commercial electronic mail.”  “Commercial electronic mail” is defined as “electronic mail . . . the primary purpose of which is the commercial advertisement or promotion of a commercial product or service (including content on an Internet website operated for a commercial purpose).”  The Federal Trade Commission was assigned the task of enacting regulations for determining “the primary purpose of an electronic mail message.”  One reason the Act was written to apply only to “commercial email” was to reduce the likelihood of a court finding that the Act violates the free speech clause of the first amendment.  The term “commercial email” is ambiguous.  However, an email newsletter with primarily informative or entertainment content concerning computers, the Internet, news, sports,  political or other matters sent out by an entity that promotes nothing or includes ads and/or solicitations which are placed deep in the newsletter and from multiple sources would not, in the opinion of the author, be within the scope of the CAN-SPAM Act.  On the other hand, an email from an entertainment website inviting recipients to try out the site would certainly be within the scope.  Whether an emailed newsletter from a business, such as a law firm, that provides goods and services but does not distribute, in either a printed or electronic format, publications as its main business is within the scope of the CAN-SPAM Act can be a close question.  The author believes that if the newsletter consisted primarily of informative material, it would not be considered “commercial” and therefore not subject to the requirements of the Act.

(2)       The Act “supersedes any statute, regulation or rule of a State or political subdivision of a State that … regulates or restricts the use of electronic mail to send commercial messages, except to the extent that such statute, regulation, or rule prohibits falsity or deception [or laws that are not specifically focused on electronic mail such as state trespass, contract or tort law or state laws that relate to acts of fraud or computer crime].”

(3)       The law does not prohibit the sending of commercial email messages, but instead prohibits certain activities in conjunction with sending out such electronic mail.

(4)       Unlike the state laws, although an exemption may be introduced by regulation, the Federal law does not exempt email just because there is a prior relationship between the parties except that it does provide an exception from requirements not related to deception as to the source of the email to the extent the email is a follow-up to a previous transaction such as related to warranty rights.  It is important to note that this exemption does not, by definition, apply if the email contains advertising or a solicitation.

(5)       Unlike as was the case under state law, obtaining a consent only exempts a spammer from being required to clearly and conspicuously indicate that a commercial email is an advertisement or solicitation (See “7(g)” below).  The state law prohibitions only applied to email that was “unsolicited.”

(6)       The following constitute criminal violations:

(a)      Assessing a computer without authorization and sending out multiple commercial email messages from such computer (some of the worst spammers have been using computers of unaware consumers with fixed connections to the Internet such as over cable modems or DSL to send out their commercial email);

(b)      Deceiving recipients of email as to the source of the email message (this would cover one of the most insidious, but common, practices whereby spammers “spoof” the email domain name of an unknowing website owner misleading all email recipients into believing that that innocent website owner sent the spam thereby harming the reputation of the website owner).

(7)       The following constitute civil violations:

(a)       The above criminal violations can also be the basis for civil claims;

(b)       Inclusion of deceptive subject headings;

(c)        Failure to include a functioning return electronic mail address;

(d)       Failing to clearly provide an opportunity to decline further communications via email;

(e)       Continuing to send email ten (10) days after being requested to stop;

(f)         Failing to provide a valid physical postal address of the sender; and

(g)  Failing to clearly and conspicuously indicate that the message is an advertisement or solicitation.

(8)       Any sexually oriented email must contain a warning in the subject heading.

(9)       The prohibitions apply to any person that “initiates” a commercial electronic mail message which includes both originating or transmitting the message and procuring the origination or transmission of the message.  So a website owner that hires a bulk emailer to send out the emails can be liable for all the above violations.

(10)     A supplier of products or services to an affiliate (an entity in which the supplier holds a greater than 50% controlling or economic interest) or to an unrelated third party when the supplier has actual knowledge of a violation is required to take reasonable actions to prevent the transmission of or detect and report to the Federal Trade Commission the sending of commercial email with misleading information in the header of the email regarding the sender of the email.

(11)     Enforcement of criminal penalties is handled by the United States Department of Justice.  The right to enforce civil penalties is vested in the Federal Trade Commission except for bulk emailers which are regulated by specific agencies such as member banks of the Federal Reserve System, brokers and dealers under the Securities & Exchange Commission and insurance companies under state insurance commissioners, with respect to which enforcement of civil penalties is vested in such other agencies.  There are no private rights of action.  Attorney Generals of various states can file actions on behalf of the citizens of those states.  For certain violations, application service providers may file actions to recover damages to them.

(12)     Penalties and liabilities include:

(a)       For a criminal violation – fines up to $500,000 for organizations and $250,000 for individuals and imprisonment for up to 5 years and forfeiture of all gross proceeds obtained as a result of the offense and of any equipment, and/or software used to commit or facilitate the offense;

(b)       For a civil violation –

(i)         If subject to enforcement by specific agencies such as the Securities & Exchange Commission, penalties are set by the statute specific to regulation of those agencies; otherwise, penalties are set under the Federal Trade Commission Act and include penalties of up to $11,000 per violation.

(ii)        Enforcement by states – the attorney general of any state may file a civil action on behalf of residents of the state denominated as an action “as parens patriae” – the courts are unclear as to whether that money is kept by the state or provided to the citizens –  equal to the greater of $250 per email to each recipient in the state or the amount of actual damages proved.  The court may triple the award and also award attorney fees.

(c)        Internet Access Services – have the right to file actions to enjoin actual losses and collect up to $100 per email per recipient.

The FTC reports on its website (www.ftc.gov/spam) that it has already filed actions for violations of the Anti-Spam Act, although the descriptions of cases on the website indicate that the initial actions are against spammers that are involved in some sort of deception as opposed to other types of violations such as failures to indicate that the spam is an advertisement or promotion.

Various state cases have held that the sending of large volumes of unsolicited email to the customers of particular internet service providers, after being notified not to do that, can constitute trespass under state law because of the damage to the computers of the internet service providers.

For additional information about anti-spam laws see Professor David Sorkin’s excellent website at http://www.spamlaws.com/ and the Federal Trade Commission’s website concerning its anti-spam activities at www.ftc.gov/spam.

109Q.05         Foreign Anti-Spam Laws

Although beyond the scope of this Chapter, the sending of promotional email to residents of many countries outside the United States, including countries that are members of the European Union and Canada, is restricted by the laws of those countries.

109Q.06         Conclusions

To avoid alienating customers, being added to numerous block lists and violating applicable law, choices for website owners are:

(1)       Not to use email to promote the website;

(2)       Send email only to visitors to the website that have consented to the sending of email to them, or have otherwise consented to receiving email at seminars, trade shows and the like, not to exceed the scope of such consents and comply with the provisions of the CAN-SPAM Act that apply even when a consent has been obtained; or

(3)       Include an ad in established well-received email publications such as emails sent daily by the New York Times, the emails sent weekly by email services such as the Leebow Letter published by 300incredible.com (see http://www.300incredible.com/), or the CNET newsletter available at (http://www.seenet.com/).

Because of the uncertainty about what constitutes “commercial electronic mail” the undersigned is currently cautioning clients against sending “educational” emails that are apparently sent for the purpose of drawing potential customers to a website except in strict compliance with the CAN-SPAM Act.  Although a very strong argument can be made that if informative and where directly promotional material is only a minor part of such emails and placed toward the end, such emails are not covered by the CAN-SPAM Act, unless and until it is made clear by applicable regulations or case decisions that such emails are not covered, the potential exposure is too great to justify sending those materials out except in compliance.  Additionally, no matter how valuable the newsletters may be, many recipients will block further emails from such address which could interfere with later communications.

Even if the bulk email your client is planning to send out is in compliance with federal law, it is also necessary for your client to comply with the terms of use of its own internet service provider.    Also, if the volume of email being sent out is sufficiently large, your client may receive a notice to stop sending to customers of a particular ISP and, if not stopped, there are cases that would indicate that action could be considered trespass.

© 2006 LexisNexis and Rob Hassett, All rights reserved.

The information above is provided for general educational purposes and not as legal advice. Laws in areas in which we practice change continually and also vary from jurisdiction to jurisdiction. Therefore no visitor to our site should rely on any of the articles provided for legal advice, but should always consult their own attorney regarding legal matters.


Film & Television 101: Acquiring Life Story, Publishing & Other Related Rights

For:  Fourth Annual Entertainment and Sports Law: A Basics Boot Camp

Friday, September 26, 2003

Grand Hyatt Hotel, Atlanta

 

By Rob Hassett[1], Casey Gilson Leibel P.C., Atlanta, Georgia.

TABLE OF CONTENTS

I. INTRODUCTION ……………………………………………..…………………..

II. PROTECTING IDEAS ………………………………………………………….

III. LEGAL ISSUES RELATING TO DISTRIBUTION ………..…………………

IV. LIFE STORY RIGHTS …………………………………………………………

V. AUDIOVISUAL RIGHTS IN LITERARY MATERIALS ……………………..

VI. NEGOTIATIONS AND ACQUIRING RIGHTS ……….…………………….

VII. RECORDING EXCLUSIVE LICENSES …………………………………….

VIII. CONCLUSION ……………………………………….……………………….

I.          INTRODUCTION

An individual with an idea for a film or television program (hereinafter referred to as a “Filmmaker”) will want to reduce the likelihood that:

1.         his or her idea will be stolen; and

2.         legal concerns or uncertainties will make it difficult for the Filmmaker to obtain a distribution deal.

Obtaining life story rights, audiovisual rights to a pre-existing literary work, or other exclusive rights can reduce or eliminate these concerns.

II.        PROTECTING IDEAS

A well-established Filmmaker can generally discuss their ideas with actors, studios and potential distributors with little fear of the idea being stolen. This is because it is likely that people with whom the established Filmmaker discusses the deal:

1.         Would not want to cross the Filmmaker and face the consequences of making an enemy of someone with connections in the business; and

2.         Would prefer to work with that proven Filmmaker if only to avoid competing with someone that is likely to complete production long before that actor, distributor, etc. could complete a competitive film or program.

This is not the case with a new Filmmaker. Ideas of new Filmmakers are frequently stolen. Of course, a new Filmmaker can have a non-disclosure agreement prepared which service providers (production companies, less well-known actors, etc.) would probably sign. However, the film studios and networks will not be willing to sign non-disclosures. In fact, they will require that the Filmmaker sign a submission release before submitting the idea. The submission release will usually provide that unless the studio or network violates the Filmmaker’s copyrights, the Filmmaker has no claim against the studio or network. So the Filmmaker should try to develop assets that are connected with the film or series that the studio would want. Assets could include an exceptionally well written script, audiovisual rights in a novel or other book, special skills, such as, if the film will involve underwater photography, talent as an underwater photographer, or if the film involves esoteric knowledge, exclusive agreements with a particular professor in the field. If the film involves a person’s life, exclusive rights to personal interviews, documentation and old footage would be helpful. The objective is to make it so that the studio wants something that the studio can get only if it works with the Filmmaker. Exclusive rights to base a film on a novel and exclusive life story rights are excellent ways for a Filmmaker to try to protect his or her idea.

III.       LEGAL ISSUES RELATING TO DISTRIBUTION

A distributor of a film or series does not want to be concerned about lawsuits. Lawsuits relating to a film or program may be brought on a variety of grounds including:

1.         Violation of privacy and publicity rights of an individual who is a subject of the film or program including:

(a)        Wrongful appropriation of identity, likeness, image or name (this form of the right of privacy, with minor differences, also constitutes the right of publicity);

(b)        Wrongful intrusion (peeping Tom scenario);

(c)        Wrongful disclosure of embarrassing private facts; and

(d)        False light;

2.         Defamation, libel or slander of an individual who is a subject of the film or program; or

3.         Copyright infringement of an underlying work such as a book.

Each of the above rights, except for copyrights, are governed by state, rather than federal, law and therefore vary from state to state. However, the statutes, in those states with statutes that concern privacy and publicity rights, tend to be similar. In those states, such as Georgia, where the rights are based on case law, the principles applied are generally similar both to other states where the rights are based on case law and those where the rights are set forth in statutes. Additionally, application of these laws is subject to the free speech clause of the first amendment, which curbs the impact that privacy and publicity rights can have on films and television programs. Of course, because of the differences that still exist, it is necessary to specifically check the law of each state that may be relevant. Likewise, most states have enacted statutes relating to defamation that are generally similar and their impact is subject to the free speech clause of the first amendment.

Wrongful appropriation and wrongful disclosure of embarrassing private facts are the areas of privacy law most likely to be violated by Filmmakers. Both are addressed in detail in the author’s article on privacy and publicity rights provided with this paper.

The type of wrongful intrusion that constitutes a violation of the right of privacy is wrongful intrusion into private activities in such a manner as to outrage or cause mental suffering, shame, or humiliation to a person of ordinary sensibilities. To constitute a violation of the right of privacy an intrusion must occur in a situation where there is first a reasonable expectation of privacy.

False light invasion of privacy is the same as defamation except that the false statement need not be disparaging. For instance, if you say that a person went to Harvard when that person did not, you have not defamed that person, but you may have violated that person’s false light version of the right of privacy.

Often the subject of a biography or other work based on historical events will have created paintings, writings, photographs or other materials protected by copyright which could be useful in a film or series. Obtaining copies without cooperation of the subject of the film or series may not be possible. Use without authorization of the author will often constitute copyright infringement.

Films and television programs are also often based on literary works such as books and screenplays. These works are also usually protected by copyright law (unless because of the length of time since the author died or other reasons they are in the public domain) and therefore use as the basis of a film or program would constitute copyright infringement.

IV.       LIFE STORY RIGHTS

Drafting and negotiating agreements is much more than a logical exercise where the attorney throws in every term favorable to his or her client. The attorney also has to try to determine in the particular circumstances what the client can live with and reasonably expect to obtain and help guide the client in determining what can be asked for without destroying any chance of obtaining the rights that are needed. Generally, for a first time Filmmaker who is not paying a substantial sum to the subject of a film or program, it is probably best to seek:

(a)        Exclusive rights to interviews for any audiovisual work for a period of time (obviously the longer the better);

(b)        A release from all privacy and publicity rights; and

(c)        An exclusive right to use any documents, film footage or other materials that may pertain to the matter, especially photographs and audiovisual materials, for a period of time (at least 5 years).

For a first time Filmmaker who is not paying a substantial sum for the grant of rights, it is probably better not to seek a release of claims for libel and/or slander since this tends to cause the subject to reject the entire proposal. Producers, writers and directors should always be warned not to defame anyone in their works and have their productions reviewed by a qualified lawyer at each level (scripts, first cuts and final cuts) to flag potential problems.

V.        AUDIOVISUAL RIGHTS IN LITERARY MATERIALS

Because of the great quantity of nonfiction books, novels and short stories published each year, and those that have been published in the past and not been used as the basis for audiovisual works, literary materials can be a great resource for Filmmakers. Many writers are as eager to see a film made based on their books as Filmmakers are to make one. A good approach is to find a terrific book that was popular many years ago, has since been forgotten, and has never been used as the basis for a movie or television program. A typical arrangement is to obtain either an agreement for exclusive rights or an option. Typically for a low option price (such as $1,000 to $5,000), the option can be extended from year to year for a similar low payment for up to 5 years. Exclusive rights can be exercised, for a much higher payment( $100,000 or more), at any time during the option period. Once exercised, the Filmmaker would have the exclusive right to make an audiovisual work based on that book for the life of the copyright subject to any applicable right of reversion, such as, for grants of exclusive rights by an individual author on or after January 1, 1978, the right of reversion set forth in 17 U.S.C. §203 of the United States Copyright Act.

VI.       NEGOTIATIONS AND ACQUIRING RIGHTS

Acquiring Life Story and Audiovisual rights in literary works is usually not easy. It often takes many months and requires a great deal of energy, persistence, and patience. Expressing frustration is a sure fire way to kill any chance of putting the deal together.

VII.     RECORDING EXCLUSIVE LICENSES

No one would think of purchasing a house without first assuring that a chain of title to the property is established in the courthouse. A transfer of the property is obtained in writing and that transfer is then recorded in the courthouse of the county in which the property is located. However, acquirers of exclusive licenses to literary works frequently fail to take the analogous steps provided for under the Copyright Act. This is detrimental because grants of copyrights and exclusive rights in copyrights are not valid unless they are in writing, and are subject to loss due to bankruptcy of the grantor or unscrupulous conduct of the grantor who resells the rights (even though the acquirer would have a right to sue such unscrupulous grantor for damages) if the grant is not recorded in the U.S. Copyright Office. The copyright of the original author should be registered in the name of the original author and each grant of an assignment or exclusive license should be recorded. Rather than record the entire agreement, the parties will often sign a short form exclusive license that sets forth the terms of the license to be recorded. This maintains the confidentiality of the overall deal while still meeting the requirements of the Copyright Act.

VIII.    CONCLUSION

Life story and audiovisual rights in literary works can be extremely valuable, especially for a new Filmmaker. Acquiring such rights can mean the difference between having an idea stolen and making one’s own film or program. These rights can also increase the chances that the Filmmaker can obtain distribution of his or her film or proposed program.


© 2003 Rob Hassett, All Rights Reserved.


[1] The writer wishes to thank Laura Hassett for her help in preparing this paper.

The information above is provided for general educational purposes and not as legal advice. Laws in areas in which we practice change continually and also vary from jurisdiction to jurisdiction. Therefore no visitor to our site should rely on any of the articles provided for legal advice, but should always consult their own attorney regarding legal matters.

Will Internet Radio Stations That Stream Music Have to Shut Down?

First Published in the Atlanta Lawyer March 2009

by Rob Hassett

Introduction
Creative and adventurous entrepreneurs, who could never afford to buy a broadcast radio station, have set up many internet radio stations that stream music and offer features that could only be made available over the internet. www.live365.com allows you to find stations that play almost  any type of music imaginable. Yahoo’s Launchcast, (http://music.-yahoo.com/launchcast/), now  managed by CBS Radio, (http://yahoo.client.shareholder.com/) and Pandora, (http://www.pandora.com/) allow you to type in names of favorite artists or songs and will then play songs, based upon those choices. With Pandora you can set up as many “channels” as you want, with each based on a different artist or set of artists (i.e. with each song by the artist selected or an artist with a similar sound). Although Congress has passed laws to promote experimentation, growth and development on the internet by limiting liability exposure of the owners of commercial websites, Congress has also  passed laws that have put internet radio, and all that it offers, on the verge of extinction.

Background
In the United States, songwriters (and publishers for songwriters) have traditionally received “public performance” royalties when their songs were played on broadcast radio and in other public forums. Royalties for songs are collected by ASCAP, BMI and SESAC and, for internet radio, total royalties have been in the range of 3.5 – 5% of gross income derived from the broadcast of the music. Owners of the copyrights in sound recordings have traditionally received  no royalties for public performances in the United States. This continued to be the case until enactment of the Digital Performance Right in Sound Recordings Act of 1995. This Act provided that copyright owners of sound recordings would have a public performance right in  audio recordings that were transmitted by a station requiring a subscription, such as satellite radio, and in any digital transmission that was “interactive.”  In 1998, the Digital Millennium Copyright Act was enacted, which, among other things, included provisions, codified in 17 USC § 106(6) and §114, that expanded performing rights of  the owners of sound recordings to include sound recordings transmitted digitally over the internet (i.e. via internet radio). In connection with this right, Congress also provided for a set  (“statutory”) royalty rate to be established for non-interactive internet radio stations that met  certain other criteria. If not decided by negotiation among stakeholders, it provided that the royalty rate would be determined by an ad hoc Copyright Arbitration Royalty Panel.  The statutory rates would only apply if the webcast was not “interactive” and other criteria were met, such as, limiting notice of when songs would be played, to make it unlikely that webcast streaming would become a substitute for music downloads.

2 Problems
There were two problems with Congress’ approach. First, to benefit from a set royalty rate (which would be better for each station than having to negotiate separately with each record label), the station could not be “interactive.” Unfortunately, Congress defined “interactive” broadly and ambiguously so many stations do not know whether they are interactive or not.  Second, Congress’ wording of the standard the arbitrators were to use for determining the statutory rates encouraged the arbitrators to impose unreasonably high royalties.

Determining Whether a Station Is Interactive
The definition of “interactive” set forth in the Digital Millennium Copyright Act reads, in pertinent part, as follows:

An “interactive service” is one that enables a member of the public to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording, whether or not as part of a program, which is selected by or on behalf of the recipient.  17 USC § 114(j)(7).

The phrase “a program specially created for the recipient” is ambiguous. As referred to in the above Introduction, using advanced techniques, some of the most popular internet radio stations utilize input from the listener to create a “personalized station.” So does that result in programs that are “specially created for the listener”?

In 2001, Sony BMG, and other record labels, filed a lawsuit against Launchcast internet radio for copyright infringement, claiming Launchcast was an “interactive” radio station and had no right to stream music under the statutory license granted to non-interactive radio stations. On November 3, 2005, the United States District Court for the Southern District of New York held that whether or not Launchcast was “interactive” was a jury question. Arista Records, Inc. v.  Launch Media, Inc., 2005 WL 2898735 (S.D.N.Y.), and on April 27, 2007, a jury found that Launchcast was not interactive. Sony BMG said it would appeal. As of this writing, the author has not seen any order relating to the appeal of that decision.

Statutory (Set) Rates
For reasons that are likely related to which groups had the more effective lobbyists, the standard for determining statutory rates as provided for in the acts referred to above, was made much more favorable to existing satellite radio, than to webcasters. The Digital Performance Right in Sound Recordings Act of 1995, in a provision codified at 17 USC § 801(b), directed ad hoc Copyright Arbitration Panels to set royalty rates for pre-existing satellite radio that are reasonable and are calculated to maximize the availability of creative works to the public, to afford the copyright owner a fair return on his or her investment and the copyright user a fair income, to consider the contributions and risks taken by each party and to minimize any disruptive impact on the industries involved. The Digital Millennium Copyright Act, in a provision codified at 17 USC §§ 114(f) (2) (A), directed the Copyright Arbitration Royalty Panels to set royalty rates for webcasters (as well as others including new, i.e. not  preexisting, satellite radio stations) “that would have been negotiated between a willing buyer and a willing seller.” No language indicated that the Panels should be concerned about maximizing the availability of creative works or the disruptive impact on internet radio.  As a result, in 2002, royalties for internet radio were set at an amount that would put many internet radio stations, already earning little if any money, out of business. Webcasters appealed the decision to the D.C. Circuit Court of Appeals. The D.C. Circuit Court of Appeals affirmed the decision. See, Beethoven.com LLC v. Library of Congress, 394 F.3d 939 (D.C. Cir. 2005); and See generally, Melville B. Nimmer and David Nimmer, Nimmer on Copyright 8-352.  (Rel.61-8/2003).  In 2002, partly because of concerns over the adverse effects of the high rates, Congress passed  the Small Webcaster Settlement Act of 2002. The new Act led to an agreement among the participating stake holders of an alternative rate equal to 5% of expenses or 8% of gross revenues, depending on which is greater, through 2002 for “small webcasters,” with increases scheduled for 2003 and 2004. See, Nimmer on Copyright, 8-352.12 (Rel.61-8/2003).

Current Royalties for Webcasting
On March 7, 2007, the Copyright Royalty Judges, who had replaced the ad hoc Copyright  Arbitration Panels and are sometimes referred to as the Copyright Royalty Board, set the rates for webcasting beginning at .08 cents per performance for 2006 with yearly increases reaching  .19 cents per performance for 2010, with a minimum fee of $500 per channel per year. The $500 per channel fee could be interpreted to require the payment of much more than the rates per song for stations like Pandora, that permit each user to set up multiple “stations.” Daniel McSwain, Radio and Internet Newsletter, “CRB Coverage,” March 2, 2008.  http://textpattern.kurthanson.com/crb/58/webcast-royalty-rate-decision-announced; See also, “free103point9 Newsroom,” tp://blog.free103point-9.org/labels/internet%20radio.html. On  April 17, 2007, the Copyright Royalty Board rejected an appeal. David DeJean, Information Week, April 17, 2007. “Copyright Royalty Board Puts Internet Radio On Death Watch,”  http://www.informationweek.com/blog/main/archives/2007/04/copyright_royal.html; See also,  “free103point9 Newsroom”, http://blog.free103point9.org/labels/internet%20radio.html.

In contrast, based on the differences in the statutory formulas for setting royalties for webcasters versus pre-existing satellite radio, in 2006, the Copyright Royalty Judges set royalty rates for  pre-existing satellite radio that were much more favorable to the owners of the radio stations, resulting in fees of anywhere between 6.0% to 8.0% of gross income. Most internet radio stations would much prefer having their royalties based on their revenue rather than on the number of times songs are played.
An appeal from the order setting the rates for webcasters was filed in the US Court of Appeals for the District of Columbia. No court decision has been published to date. David Oxenford, Broadcast Law Blog, http://www.broadcastlaw-g.com/archives/internet-radio-nab-joins-thefray-on-internet-radio-appeals-and-a-request-for-stay-are-filed-and-a-settlement-offer-is-madeto-noncommercial-webcasters.html; See also, “free103point9 Newsroom”  http://blog.free103point9.org/labels/internet%20radio.html.

Finally, on October 1, 2008, Congress enacted the Webcaster Settlement Act that permits the 4 webcasters and SoundExchange (the collecting agency for the record labels and performers) to negotiate rates lower than the statutory rates, which helps only to the extent the record labels recognize that internet radio can promote the sale of records and be another source of revenue.

Conclusion
The law relating to internet radio is still evolving, but up to now fails to support internet radio as it has other web based businesses. The royalty payments required for internet radio have been set at levels so high that they could cause many popular webcasters to shut down. As Congress did with pre-existing satellite radio, to “unleash the power of the internet,” with respect to internet radio, Congress should set standards for maximum royalties that do not exceed 8% of a radio station’s gross income.

Rob Hassett is an attorney with Casey Gilson P.C. in Atlanta and focuses on technology, entertainment and corporate law.

Rights of Privacy and Publicity for Film and Television

By Rob Hassett

An earlier version of this article appeared in the January 1997 issue of The Multimedia & Technology Licensing Law Report published, at that time, by Warren, Gorham & Lamont, and later published by West Group.  That article was based on program materials developed by the writer in connection with his presentation at the Cutting Edge Music Conference in New Orleans, Louisiana in August of 1996.

The writer wishes to thank Lori Brill, Lynn Hassett, and Adam Alexander for their help in updating earlier versions of this Article.

RIGHTS OF PRIVACY AND PUBLICITY

When may a producer of a film and/or television program use an individual’s name, likeness, or identity or information concerning such individual without permission? Restrictions on the use of names, likenesses and identities of individuals and public disclosure of information about them are governed by the right of publicity and two categories of the right of privacy.

Restatements

Section 46 of the Restatement of the Law Third, Unfair Competition, states in pertinent part:

One who appropriates the commercial value of a person’s identity by using without consent the person’s name, likeness, or other indicia of identity for purposes of trade is subject to liability for the relief appropriate.

Section 652A of the Restatement of the Law, Torts 2d, states in pertinent part:

The right of privacy is invaded by: … (b) appropriation of the other’s name or likeness…; (c) unreasonable publicity given to the other’s private life….;

The elements of appropriation invasion of privacy are the same as for violation of the right of publicity with one exception.  The invasion of the right of privacy is a personal tort and generally may not be assigned or inherited.  The  right of publicity, a property right, may generally be assigned and inherited. See, e.g., Martin Luther King Jr. Center For Social Change v. American Heritage Products, 250 Ga. 135, 296 S.E.2d 697 (Ga. 1982).

There are two other categories of the right of privacy which are not addressed in this article – wrongful intrusion and false light.  Intentional intrusion upon the solitude or seclusion of another on his or her private affairs or concerns if such intrusion would be highly offensive to a reasonable person constitutes “wrongful intrusion.”  The elements of “false light” are the same as for defamation except that false light does not require that the false statement be disparaging.

Origins

English common law did not recognize the right of privacy or publicity except to the extent that such rights existed tangentially under copyright and trademark law. In 1890, Samuel D. Warren and future Supreme Court Justice Louis D. Brandeis wrote an article arguing that a right of privacy should exist. Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890). The first court to accept the right of privacy was the Georgia Supreme Court in Pavesich v. New England Life Ins. Co., 122 Ga. 190, 50 S.E. 68 (1905).  The Georgia Supreme Court held that Mr. Pavesich stated a claim against New England Life for alleged wrongful use of his picture in an advertisement for the Defendant’s insurance products.  Today, privacy and publicity rights are based on state common and statutory law. Because these rights are relatively new and different legislatures and courts decide how they apply, there are variations in the interpretation and application of these rights.

Acceptance

Since the Pavesich case, some form of the right of privacy relating to appropriation and/or the right of publicity has been adopted either by statute or court decision in every state that has addressed the issue. Minnesota and Virginia (in Virginia only in federal cases applying Virginia law) appear to be the only states which have rejected right to privacy involving giving unreasonable publicity to an individual’s private life. See, Hendry v. Conner, 303 Minn. 317, 226 N.W.2d 921 (1975) and Williams v. Nathan, 21 Med. L. Rptr. 1339 (E.D. Va. 1993); Brown v. American Broadcasting Co., 704 F.2d 1296 (4th Cir. 1983).   In 1998, the Supreme Court of Minnesota overruled prior precedent in recognizing this right.  See, Lake v. Wal-Mart Stores, Inc., 582 N.W.2d 231 (Minn.1998).

Written Consent

To avoid violating these rights, the best approach is to obtain a written consent from each person whose name, likeness, or identity will be included in a film or television program. There are three reasons consent should be obtained in writing. First, unless in writing, some state statutes provide that such consents are not valid. See, J. Thomas McCarthy, The Right of Publicity and Privacy, § 10.6 (2003). Second, there could be a dispute about the existence of an oral consent. Finally, unless the consent is in writing, there could be confusion concerning its scope.

USE OF NAME, LIKENESS OR IDENTITY WITHOUT CONSENT

Uses Permitted

There are often situations in which it is impractical to obtain written consent to use a name, likeness or identity and one must decide whether or not to use a particular photograph or video for a film or television program. Situations in which such uses are permitted include the reporting of newsworthy events and uses in which no person is identified or identifiable.  Courts generally hold that the use of names, likeness or identity in connection with the reporting of newsworthy events is allowed under the First Amendment which forbids any laws “abridging the freedom of speech or of the press.”

There are four circumstances in which the use of photographs, films and/or videos is permitted. First, the use of photographs, films and videos of buildings or other structures taken from public streets and similar non-restricted areas in which individuals are not recognizable does not violate anyone’s privacy or publicity rights. The reason is that privacy and publicity rights relate to individuals and not to buildings or other structures. See, e.g., Jaubert v. Crowley Post-Signal, Inc., 375 So.2d 1386 (La. 1979).  Of course it would still be important to make sure that the use of the photographs, films or videos of the structure does not infringe someone’s copyrights in the materials or constitute a violation of other privacy rights such as wrongful public disclosure of embarrassing private facts, which is discussed in this paper below, or amount to a wrongful intrusion, not addressed in this article but relating to such actions as peering into someone’s home through the windows.

Second, only individuals who are recognizable in a photograph or video have any claim for misappropriation of likeness or identity. Therefore, morphing pictures and videos so individuals are not recognizable eliminates any privacy and publicity right claims. See, e.g., Cheatham v. Paisano Publications, 891 F.Supp. 381 (W.D. Ken. 1995), where the Court said that there was a jury question whether or not the Plaintiff’s posterior was recognizable in the particular photograph.

In Pesina v. Midway, 948 F. Supp. 40 (N.D. Ill.1996), a martial artist hired to model for characters of the coin operated arcade games Mortal Kombat and Mortal Kombat II alleged that use of his name and likeness in subsequent home video games violated his common law right of publicity.  Mr. Pesina’s movements had been captured on video, digitized, and incorporated into the games after extensive editing.  The district court granted Midway’s motion for summary judgment in part because Midway was able to show that the public did not recognize Mr. Pesina within the game.  “[A]fter comparing Mr. Pesina and the game character, Johnny Cage, who allegedly resembles the plaintiff, only 6% of 306 Mortal Kombat users identified Mr. Pesina as the model.”  Id. at 42.  The brief use of Pesina’s name in the game (for eight seconds only when a player won), although unauthorized, also was held not enough to constitute a right of publicity claim.

Third, photographs, videos, and films taken of participants and spectators in connection with a newsworthy event may be used in photo essays and documentaries of the event. In Cheatham v. Paisano Publications, supra, the Plaintiff was a jean “designer” who wore one of her own “designs” to a Kentucky bikers’ convention. She had cut out the bottom of a pair of jeans and replaced it with fishnet fabric. A magazine published a photo essay of the event which included pictures of her wearing her special outfit. She sued the magazine and claimed that it misappropriated her identity. In dismissing her claim, the Court held that the photo essay was a report of a newsworthy event. See also, Time, Inc. and Steve Kagan v. Sand Creek Partners, L.P., 825 F.Supp. 210 (S.D. Ind. 1993). The Court in Cheatham also held that use of the Plaintiff’s pictures on T-shirts was not a protected newsworthy use and, if the Plaintiff were recognizable from the picture, then Plaintiff would have a basis for a claim.

There are limitations on the use of name, likeness, and identity in connection with reporting news. For example, in the movie “Woodstock” there is an extensive interview with an individual responsible for cleaning latrines. This interviewee sued for misappropriation of his right of privacy. The Court held that he was made an “involuntary performer” due to the extensive interview and allowed the case to proceed to trial. See, Taggart v. Wadleigh-Maurice, Ltd., 489 F.2d 434 (3d Cir. 1973). Additionally, copying a performer’s entire performance goes beyond the allowed reporting of a newsworthy event and constitutes a violation of the performer’s right of publicity. See, Zacchini v. Scripps-Howard Broadcasting, Co., 433 U.S. 564 (1977). Also, where a performance is staged using actors, such as a professional wrestling match, it is unlikely a Court would hold it to be the type of event to which the rights of publicity and appropriation policy do not apply. See, e.g., Ventura v. Titan Sports, Inc., 65 F.3d 725 (8th Cir. 1995).

Finally, use of names, pictures and identities in connection with the production of biographies of newsworthy individuals is permissible. In Harris Matthews v. Random House, 15 F.3d 432 (5th Cir. 1994), the Fifth Circuit U.S. Court of Appeals, applying Texas law, held that a book detailing the author’s and her ex-husband’s experiences as undercover agents did not violate the privacy or publicity rights of her ex-husband.  Information concerning their activities and convictions were the subject of news reports.  Thus, it was a matter of public record and considered newsworthy events. See, also, Mickey Dora v. Frontline Video, Inc., 18 Cal. Rptr. 2D 790 (Cal. App. 1993), in which Mickey Dora, a surfing legend, appeared in a video documentary entitled “The Legends of Malibu.”  The Court held that the use of Dora’s picture was newsworthy.

Uses Not Permitted

As to some extent referred to above, there are at least three (3) categories of uses of names, likenesses, and identities of individuals which are generally not permissible. Those uses involve advertising and similar commercial exploitation of name, likeness or identity, staged performances and exceeding the scope of agreements limiting scope of use.

First, use of an individual’s name, likeness, or identity in advertising, without that individual’s consent is not permitted. For example, in Town & Country Properties, Inc. v. Riggins, 249 Va. 387, 457 S.E.2d 356 (1995), the Plaintiff, who had been a successful football player for the Washington Redskins, transferred his interest in a house he owned in Virginia to his ex-wife as part of a divorce settlement. When his wife decided to sell the house, she placed his name and picture prominently on flyers promoting her sale of the house. The Supreme Court of Virginia held that Riggins had a claim for infringement of what was, in effect, his right of publicity. See also, Pooley v. National Hole-N-One Assoc., 89 F. Supp. 2d 1108 (D.C. Az. 2000) (holding that Plaintiff’s right of publicity was violated because Defendant used video footage of Plaintiff making a “hole in one” in a commercial manner to promote its fundraising program).  The aforementioned situation is treated differently from the use of an individual’s name, likeness or identity in advertising of a publication or other media in which that person’s name, likeness or identity is legally used. See, e.g., Montana v. San Jose Mercury News, Inc., 40 Cal. Rptr. 2d 639 (6th Cir. 1995); Lane v. Random House, Inc., 23 Med. L. Rptr. 1385 (D.D.C. 1995).   If the name, likeness or identity is used in a form of media for a legitimate purpose, it may also be used in advertising for that publication, television program or other media.

Also, use of an individual’s name, likeness or identity for a purely commercial purpose (as opposed to in an informative or artistic, including literary, work) is prohibited.  For example, use of the Reverend Martin Luther’s King’s profile on mugs without the consent of his estate was held to constitute a violation of the right of publicity in Martin Luther King Jr. Center For Social Change v. American Heritage Products, 250 Ga. 135, 296 S.E.2d 697 (Ga. 1982).  Likewise, selling posters with the photo of a model or recording artist (as opposed to, for example, including an informative article about them in magazines) is a violation of these rights.

Second, there is no exception to privacy and publicity rights with respect to individuals performing as actors and actresses in dramatic productions. See, e.g., Ventura v. Titan Sports, Inc., supra.

Third, even where use is newsworthy and does not constitute advertising, unauthorized usage has been held to be illegal in instances where the limited purpose for which the interview or pictures was intended is exceeded. In Multimedia WMAZ, Inc. v. Kubach, 212 Ga. App. 707, 443 S.E.2d 491 (Ga. App. 1994), the Plaintiff appeared on a television program in which he was interviewed about having contracted AIDS. Prior to the program, the Plaintiff and Defendant reached an understanding that the Plaintiff’s face would be disguised digitally so that he could not be identified. Apparently, due to the negligence of station employees, the Plaintiff was recognizable at the beginning of the show. The Court held that the Plaintiff had a claim. See also, Daughtry v. Booth & Random House, 23 Med. L. Rptr. 1215 (Glynn County, Georgia Superior Court 1994).

Parody

Parodies are entitled to a substantial degree of First Amendment protection.  However, this protection must be balanced against intellectual property rights. See, for example, the Supreme Court’s application of the Doctrine of Fair Use in the copyright law context in Luther R. Campbell, et al. v. Acuff-Rose Music, Inc., 114 S.Ct. 1164 (1994). In Cardtoons, L.C. v. Major League Baseball Players Ass’n, 838 F. Supp. 1501 (N.D. Okla. 1993), the Plaintiff sought a declaratory judgment claiming that it was not a violation of the publicity rights of well-known baseball players to produce and distribute cards with caricatures and names similar to those baseball players and containing text on the back that ridicules the players. The Tenth Circuit Court of Appeals balanced the publicity rights of the baseball players against the Plaintiff’s First Amendment right to use parody to criticize activities of public figures.  The Court held that the Plaintiff was entitled to produce and distribute the cards. But see, White v. Sansung Electronics America, 971 F.2d 1395 (9th Cir. 1991) in which the Ninth Circuit Court of Appeals held, over two vigorous dissents, that a print advertisement using a robot that mimicked and parodied the persona of Vanna White infringed her right of publicity. Critics argued that celebrities’ monopolization of words, names and images of general cultural significance would lead to the depletion of the public domain and the stifling of free expression. However, recently, the Ninth Circuit Court of Appeals held that California’s right of publicity protects against uses of one’s image in advertising.  Newcombe v. Adolph Coors Co., 157 F.3d 686 (9th Cir. 1998).

Artistic and Literary Uses

Many times artists employ the use of a name or likeness of a real person in their artistic and literary projects.  Although this may not fall under the umbrella of newsworthy events, the First Amendment’s right to free speech often shields forms of expressive art.  “The use of the name of a real person as the name…in a title of a work of entertainment” can be immune from liability where it has “some real artistic relevance” to the work and is “not  chosen just to exploit the publicity value of the person”.  J. Thomas McCarthy, 2 Rights of Publicity and Privacy § 8:72 (2d ed. 2000).

First amendment protection and the right of publicity recently clashed in a case involving the music industry.  In Parks v. LaFace Records, 76 F. Supp. 2d 775 (E.D. Mich. 1999), Rosa Parks sued the Defendants to prevent the use of her name as the title of a rap song written, performed, marketed and distributed by the Defendants.  Ms. Parks objected to the use of her name due to the content of the song.  The United States District Court for the Eastern District of Michigan held that “because the title ‘Rosa Parks’ is not ‘wholly unrelated’ to Defendants’ song, and because the title is the name of an expressive work and not a disguised commercial for a product” the right of publicity did not exist.  Id. at 782.  The Second Circuit reversed and remanded holding that there was a genuine issue of material fact regarding the question of whether the title to the song “Rosa Parks” is or is not “wholly unrelated” to the content of the song.  The song does include the line “move to the back of the bus” but the Plaintiff argued that that line did not relate to Rosa Parks’ experience as a civil rights icon but rather to Outkast’s position that “Outkast” was superior to competitive music groups and that other groups should “take a back seat” to Outkast.  Interestingly, the Court of Appeals also held that there was a genuine issue of fact whether Rosa Parks had a claim for unfair competition under the federal Lanham Act, 15 U.S.C. §1125(a), stating that: “Rosa Parks clearly has a property interest in her name akin to that of a person holding a trademark” and said that the only difference between a right of publicity claim and a claim for unfair competition, which the Court also referred to here as “false advertising,” is that a right of publicity claim does not require any evidence that a consumer is likely to be confused (i.e., any evidence that the public would believe that Rosa Parks had endorsed “Outkast’s” song).

In Guglielmi v. Spelling Goldberg, 25 Cal. 3d 860, 603 P.2d 454 (1979),  the Supreme Court of California skirted the issue by declaring that the right of publicity is not descendible.  However, in Chief Justice Bird’s concurrence, she discussed the issue of whether the use of a celebrity’s name and likeness in a fictional film exhibited on television constituted an actionable infringement of that person’s right of publicity.  Id. The Chief Justice emphasized that film is “a significant medium for the communication of ideas”…and “is protected by the constitutional guarantees of free expression”. Id. at 865.  Film is an expression of ideas and is entitled to constitutional protection irrespective of its contribution to the market place.  The nature of celebrity and prominence is that they will invite creative comment.  Chief Justice Bird concluded that in this situation the value of first amendment protections outweighs the right of publicity.  Additionally, the use of likeness in advertisements of the film was considered merely an adjunct to the exhibition of the film and therefore, not actionable. Id.

Although many instances encompass the use of famous personalities, cases involving private individuals also arise.  Recently, the Second Circuit, upheld a New York Court of Appeals ruling stating that a Plaintiff could not recover under New York’s right of privacy statute “regardless of any false implication that might be reasonably drawn from the use of her photographs to illustrate” a magazine column on sexual regrets.    Messenger v. Gruner + Jahr Printing and Publ’g, 208 F.3d 122 (2nd Cir. 2000).   This decision was based on the determination that the column was newsworthy, the Plaintiff’s picture bore a relationship to the article and the article was not an “advertisement in disguise.”  Id.   The model whose photograph accompanied the article was not informed of its use prior to publication.   Individuals are cautioned to review the pertinent statutes and/or common law in each state.  The case in question was in New York, a jurisdiction which has exemptions to the laws of right of publicity which many other states do not follow.

Advertising versus Other Use

Under the law in most states, use of a person’s name, likeness, or picture other than as part of a public event, for a newsworthy purpose or in connection with an artistic work not primarily an impersonation would not be allowed. See, e.g., Estate of Elvis Presley v. Robb Russen, 513 F.Supp. 1339 (D.Ct. N.J. 1981) where an Elvis impersonator was held to have violated the rights of the Elvis estate. In some states, misappropriation of privacy rights and publicity rights prohibit only advertising. Courts applying Tennessee and Virginia law have construed applicable statutes that way. See, e.g., Apple Corps. Ltd. v. A.D.P.R., Inc., 843 F.Supp. 342 (M.D. Tenn. 1993) (holding that a band impersonating the Beatles could not be restricted from performing its act but was restricted from advertising it). See also, Williams v. Nathan, 21 Med. L. Rptr. 1339 (E.D. Va. 1993). On the other hand, although the California statute relating to privacy and publicity rights prohibits only use of an individual’s name, likeness, or identity in advertising, the California common law dictates that individuals have such rights in situations not involving advertising. See, e.g., Perfect 10, Inc. v. Talisman Communs. Inc., 2000 U.S. Dist. LEXIS 4564 (C.D. Ca. 2000).  In Perfect 10, the Court granted a default judgment to Plaintiff as a result of Defendant’s appropriation of photographs of Plaintiff’s assignors.  The photographs were appropriated for the purpose of advertising and soliciting “sale of photographs and other works on Defendant’s website and for the purpose of selling the appropriated photographs through paid subscriptions to restricted areas of Defendant’s website.”   The Court ruled that this constituted a violation of California’s right of publicity law. See also, Dora v. Frontline Video, Inc., 15 Cal. App. 4th 536 (1993).

UNREASONABLE PUBLIC DISCLOSURE OF EMBARRASSING PRIVATE FACTS

The tort of unreasonable public disclosure of embarrassing private facts is applicable only where the facts being publicized are not newsworthy or, if arguably newsworthy, go beyond the “information to which the public is entitled, and becomes a morbid and sensational prying into private lives for its own sake.” See, e.g., Baugh v. CBS, Inc., Group W. Television, 28 F.Supp. 745 (N.D. Cal. 1993), infra. In addition, the facts must be at least relatively confidential. In Cox Communications v. Lowe, 173 Ga. App. 812, 328 S.E.2d 384 (Ga. App. 1985), a prison inmate who incidentally appeared in a television report concerning prison abuse had no claim for public disclosure of the fact that he was imprisoned as his incarceration was a matter of public record. In Batts v. Capital City Press, Inc., 479 So.2d 534 (La. App. 1985), the Louisiana Court of Appeals held that because the Plaintiff was attacked in a public place, the information was public and could not be the subject of a claim for public disclosure of embarrassing private facts. Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222 (7th Cir. 1993), involved a book which detailed historical events. In the book, the writer discusses the life stories of various individuals. In a section regarding a particular woman, the author disclosed information about the woman’s ex-husband. The District Court rejected the ex-husband’s claim regarding publicity given to embarrassing private facts on the grounds that the information disclosed was either public record or publicly known prior to publication of the book. On the other hand, in Baugh v. CBS Company, Inc. Group W Television, 828 F.Supp. 745 (N.D. Cal. 1993), the Court held that there was a jury question whether the producers and broadcasters of Street Stories had gone too far in publicly disclosing private facts about a woman who was the victim of spousal abuse. See also, Johnson v. Sawyer, 4 F.3d 369 (5th Cir. 1993), in which a Texas court held that the IRS was liable for wrongfully disclosing confidential information relating to a taxpayer’s tax return.

With the explosion of the Internet, the rights of publicity and privacy have entered a new battlefield.  In a manner of seconds, photography, music and streaming video can be distributed to subscribers worldwide, posing increasing threats to the protection of these rights.  Once posted on the Web, users can copy items almost instantaneously.  This issue of unreasonable publicity of private facts was recently addressed in Michaels v. Internet Entertainment Group Inc., et. al., 5 F.Supp. 2d 823 (D.C. Cal. 1998).  Singer Bret Michaels and actress Pamela Anderson Lee sought to enjoin Defendants from disseminating videotape via the Internet of Michaels and Lee engaged in sexual intercourse.  Plaintiffs filed a preliminary injunction, inter alia, for violation of the right of privacy and right of publicity.  The Defendant argued that Ms. Anderson’s nude appearances in magazines, movies and publicly distributed videotapes rendered the facts on the Michaels videotape no longer private.   The Court disagreed concluding that the private facts depicted on the video were not public by either the “virtue of Lee’s professional appearances or by dissemination of the Tommy Lee videotape.” Id. at 841.  Furthermore, the Court disposed of the newsworthiness argument by noting that the “privilege to report newsworthy information is not without limit.  ‘Where the publicity is so offensive as to constitute a morbid and sensational prying into private lives for its own sake, it serve no legitimate public interest and is not deserving of protection’.” Id. at 840 (citing Diaz v. Oakland Tribune, Inc., 188 Cal. Rptr. 762 at 767 (1983)).  However, the United States District Court granted summary judgment to Paramount Pictures and Viacom (for broadcasting information about the video, as opposed to broadcasting the video itself, in a syndicated television program) noting that the California Supreme Court had recently restated the principle that the newsworthiness defense was to be construed broadly and reiterated that it is “not limited to high-minded discussion of politics and public affairs.” Michaels v. Internet Entertainment Group Inc., et. al., 48 U.S.P.Q. 2d (BNA) 1891(D.C. Cal. 1998).

Conclusion

It is always better to obtain a written consent which permits the use of the name, likeness, or identity of any individual appearing in or who is the subject of disclosure of events in any publication or production.  As outlined above, there are limited situations in which one may make such use without permission.  However, because of the legal uncertainty in this area, it is necessary to have competent counsel review the situation presented prior to any such proposed use.

Rights of Privacy and Publicity in Interactive Media

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(REVISED FOR NBI PROGRAM ON THE LAW OF THE INTERNET IN GEORGIA)

By Rob Hassett, Casey Gilson P.C., Atlanta, Georgia

Earlier versions of this article appeared in the program materials for the internet law seminar sponsored by NBI, Inc. which was held in Atlanta, Georgia on February 18, 1998 and the January 1997 issue of The Multimedia & Technology Licensing Law Report published, at that time, by Warren, Gorham & Lamont, and currently published by West Group. That article was based on program materials developed by the writer in connection with his presentation at the Cutting Edge Music Conference in New Orleans, Louisiana in August of 1996.

The writer wishes to thank Lori Brill and Lynn Hassett, attorneys in his law firm when he wrote the article, as well as Adam Alexander, an attorney at the law firm of Cooper & Scully, in Dallas, Texas, for their help in updating this Article.

© 2000 Rob Hassett, All Rights Reserved.

RIGHT OF PUBLICITY AND RIGHT OF PRIVACY

Today, interactive media incorporates video, music and still photography. When may a producer of interactive media use an individual’s name, likeness, or identity without permission? Restrictions on the use of names, likenesses and identities of individuals are governed by the right of publicity and two categories of the right of privacy.

Restatements

Section 46 of the Restatement of the Law Third, Unfair Competition, states in pertinent part:

One who appropriates the commercial value of a person’s identity by using without consent the person’s name, likeness, or other indicia of identity for purposes of trade is subject to liability for the relief appropriate. (1)

Section 652A of the Restatement of the Law, Torts 2d, states in pertinent part:

The right of privacy is invaded by: … (b) appropriation of the other’s name or likeness…; (c) unreasonable publicity given to the other’s private life….; (2)

The elements of appropriation of invasion of privacy are the same as for violation of the right of publicity with one exception. The invasion of the right of privacy is a personal tort and it generally may not be assigned or inherited. Whereas, the right of publicity, a property right, may generally be assigned and inherited. See, e.g., Martin Luther King Jr. Center For Social Change v. American Heritage Products, 250 Ga. 135, 296 S.E.2d 697 (Ga. 1982).

Origins

English common law did not recognize the right of privacy or publicity except to the extent that such rights existed tangentially under copyright and trademark law. In 1890, Samuel D. Warren and future Supreme Court Justice Louis D. Brandeis wrote an article arguing that a right of privacy should exist. Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890). The first court to accept the right of privacy was the Georgia Supreme Court in Pavesich v. New England Life Ins. Co., 122 Ga. 190, 50 S.E. 68 (1905). The Georgia Supreme Court held that Mr. Pavesich stated a claim against New England Life for alleged wrongful use of his picture in an advertisement for the Defendant’s insurance products. Today, privacy and publicity rights are based on state common and statutory law. Because these rights are relatively new and different legislatures and courts decide how they apply, there are variations in the interpretation and application of these rights.

Acceptance

Since the Pavesich case, some form of the right of privacy relating to appropriation and/or the right of publicity has been adopted either by statute or court decision in every state that has addressed the issue. Minnesota and Virginia appear to be the only states which have rejected right to privacy involving giving unreasonable publicity to an individual’s private life. See Hendry v. Conner, 303 Minn. 317, 226 N.W.2d 921 (1975) and Williams v. Nathan, 21 Med. L. Rptr. 1339 (E.D. Va. 1993); Brown v. American Broadcasting Co., 704 F.2d 1296 (4th Cir. 1983).

Written Consent

To avoid violating these rights, the best approach is to obtain a written consent from each person whose name, likeness, or identity will be included in a multimedia production. There are three reasons why consent should be obtained in writing. First, unless in writing, some state statutes provide that such consents are not valid. See, J. Thomas McCarthy, The Right of Publicity and Privacy, § 10.6 (1996). Second, there could be a dispute about the existence of an oral consent. Finally, unless the consent is in writing, there could be confusion concerning its scope.

Uses Permitted

There are often situations in which it is impractical to obtain written consent, and one must decide whether or not to use a particular photograph or video for an interactive media production. Situations in which such use is permitted include the reporting of newsworthy events and uses in which no person is identified or identifiable. Courts generally hold the reporting of newsworthy events to be allowed under the First Amendment which forbids any laws “abridging the freedom of speech or of the press.”

Assuming that the individual is not violating anyone’s copyrights, there are four circumstances in which the use of photographs, films and/or videos is permitted. First, the use of photographs, films and videos of buildings or other structures taken from public streets and similar non-restricted areas in which individuals are not recognizable does not violate anyone’s privacy or publicity rights. The exception to this rule is the unusual situation where false information or embarrassing private facts about an individual connected with a building or structure is included in the production. The reason is that privacy and publicity rights relate to individuals and not to buildings or other structures. See, e.g., Jaubert v. Crowley Post-Signal, Inc., 375 So.2d 1386 (La. 1979).

Second, only individuals who are recognizable in a photograph or video have any claim for misappropriation of likeness or identity. Therefore, morphing pictures and videos so individuals are not recognizable eliminates any privacy and publicity right claims. See, e.g., Cheatham v. Paisano Publications, 891 F.Supp. 381 (W.D. Ken. 1995), where the Court said that there was a jury question whether or not the Plaintiff’s posterior was recognizable in the particular photograph.

In Pesina v. Midway, 948 F. Supp. 40 (N.D. Ill.1996), a martial artist hired to model for characters of the coin operated arcade games Mortal Kombat and Mortal Kombat II alleged that use of his name and likeness in subsequent home video games violated his common law right of publicity. Mr. Pesina’s movements had been captured on video, digitized, and incorporated into the games after extensive editing. The district court granted Midway’s motion for summary judgment in part because Midway was able to show that the public did not recognize Mr. Pesina within the game. “[A]fter comparing Mr. Pesina and the game character, Johnny Cage, who allegedly resembles the plaintiff, only 6% of 306 Mortal Kombat users identified Mr. Pesina as the model.” Id. at 42. The brief use of Pesina’s name in the game (for eight seconds only when a player won), although unauthorized, also was held to not constitute a right of publicity claim.

Third, photographs, videos, and films taken of participants and spectators in connection with a newsworthy event may be used in photo essays and documentaries of the event. In Cheatham v. Paisano Publications, supra, the Plaintiff was a jean “designer” who wore one of her own “designs” to a Kentucky bikers’ convention. She had cut out the bottom of a pair of jeans and replaced it with fishnet fabric. A magazine published a photo essay of the event which included pictures of her wearing her special outfit. She sued the magazine and claimed that it misappropriated her identity. In dismissing her claim, the Court held that the photo essay was a report of a newsworthy event. See also, Time, Inc. and Steve Kagan v. Sand Creek Partners, L.P., 825 F.Supp. 210 (S.D. Ind. 1993). The Court in Cheatham also held that use of the Plaintiff’s pictures on T-shirts was not a protected newsworthy use and, if the Plaintiff were recognizable from the picture, then Plaintiff would have a basis for a claim.

There are limitations on the use of name, likeness, and identity in connection with reporting news. For example, in the movie “Woodstock” there is an extensive interview with an individual responsible for cleaning latrines. This interviewee sued for misappropriation of his right of privacy. The Court held that he was made an “involuntary performer” due to the extensive interview and allowed the case to proceed to trial. See Taggart v. Wadleigh-Maurice, Ltd., 489 F.2d 434 (3d Cir. 1973). Additionally, copying a performer’s entire performance goes beyond the allowed reporting of a newsworthy event and constitutes a violation of the performer’s right of publicity. See Zacchini v. Scripps-Howard Broadcasting, Co., 433 U.S. 564 (1977). Also where a performance is staged using actors, such as a professional wrestling match, it is unlikely a Court would hold it to be newsworthy. See, e.g., Ventura v. Titan Sports, Inc., 65 F.3d 725 (8th Cir. 1995).

Finally, use of names, pictures and identities in connection with the production of biographies of newsworthy individuals is permissible. In Harris Matthews v. Random House, 15 F.3d 432 (5th Cir. 1994), the Fifth Circuit U.S. Court of Appeals, applying Texas law, held that a book detailing the author’s and her ex-husband’s experiences as undercover agents did not violate the privacy or publicity rights of her ex-husband. Information concerning their activities and convictions were the subject of news reports. Thus, it was a matter of public record and considered newsworthy events. See, also, Mickey Dora v. Frontline Video, Inc., 18 Cal. Rptr. 2D 790 (Cal. App. 1993), in which Mickey Dora, a surfing legend, appeared in a video documentary entitled “The Legends of Malibu.” The Court held that the use of Dora’s picture was newsworthy.

Uses Not Permitted

There are at least three (3) categories of uses of names, likenesses, and identities of individuals which are never permissible. Those uses involve advertising, using actors and actresses, and exceeding the scope of agreements limiting use of interviews or photographs. First, use of an individual’s name, likeness, or identity in advertising, without that individual’s consent is not permitted. For example, in Town & Country Properties, Inc. v. Riggins, 249 Va. 387, 457 S.E.2d 356 (1995), the Plaintiff, who had been a successful football player for the Washington Redskins, transferred his interest in a house he owned in Virginia to his ex-wife as part of a divorce settlement. When his wife decided to sell the house, she placed his name and picture prominently on flyers promoting her sale of the house. The Supreme Court of Virginia held that Riggins had a claim for infringement of what was, in effect, his right of publicity. See also, Pooley v. National Hole-N-One Assoc., 89 F. Supp. 2d 1108 (D.C. Az. 2000) (holding that Plaintiff’s right of publicity was violated because Defendant used video footage of Plaintiff making a “hole in one” in a commercial manner to promote its fundraising program). The aforementioned situation is treated differently from the use of an individual’s name, picture, or identity in connection with advertising in a legitimate newsworthy context. This kind of advertising is permitted. See, e.g., Montana v. San Jose Mercury News, Inc., 40 Cal. Rptr. 2d 639 (6th Cir. 1995); Lane v. Random House, Inc., 23 Med. L. Rptr. 1385 (D.D.C. 1995). Second, there is no exception to privacy and publicity rights with respect to individuals performing as actors and actresses in dramatic productions. See, e.g., Ventura v. Titan Sports, Inc., supra.

Third, even where use is newsworthy and does not constitute advertising, unauthorized usage is illegal in instances where the limited purpose for which the interview or pictures was intended is exceeded. In Multimedia WMAZ, Inc. v. Kubach, 212 Ga. App. 707, 443 S.E.2d 491 (Ga. App. 1994), the Plaintiff appeared on a television program in which he was interviewed about having contracted AIDS. Prior to the program, the Plaintiff and Defendant reached an understanding that the Plaintiff’s face would be disguised digitally so that he could not be identified. Apparently, due to the negligence of station employees, the Plaintiff was recognizable at the beginning of the show. The Court held that the Plaintiff had a claim. See also, Daughtry v. Booth & Random House, 23 Med. L. Rptr. 1215 (Glynn County, Georgia Superior Court 1994).

Parody

Parodies are entitled to a substantial degree of First Amendment protection. However, this protection must be balanced against intellectual property rights. See, for example, the Supreme Court’s application of the Doctrine of Fair Use in the copyright law context in Luther R. Campbell, et al. v. Acuff-Rose Music, Inc., 114 S.Ct. 1164 (1994). In Cardtoons, L.C. v. Major League Baseball Players Ass’n, 838 F. Supp. 1501 (N.D. Okla. 1993), the Plaintiff sought a declaratory judgment claiming that it was not a violation of the publicity rights of well-known baseball players to produce and distribute cards with caricatures and names similar to those baseball players and containing text on the back that ridicules the players. The Tenth Circuit Court of Appeals balanced the publicity rights of the baseball players against the Plaintiff’s First Amendment right to use parody to criticize activities of public figures. The Court held that the Plaintiff was entitled to produce and distribute the cards. But see, White v. Samsung Electronics America, 971 F.2d 1395 (9th Cir. 1991) in which the Ninth Circuit Court of Appeals held, over two vigorous dissents, that a print advertisement using a robot that mimicked and parodied the persona of Vanna White infringed her right of publicity. Critics argued that celebrities’ monopolization of words, names and images of general cultural significance would lead to the depletion of the public domain and the stifling of free expression.(3) However, recently, the Ninth Circuit Court of Appeals held that California’s right of publicity protects against uses of one’s image in advertising. Newcombe v. Adolph Coors Co., 157 F.3d 686 (9th Cir. 1998).

Artistic and Literary Uses

Many times artists employ the use of a name or likeness of a real person in their artistic and literary projects. Although this may not fall under the umbrella of newsworthy events, the First Amendment’s right to free speech often shields forms of expressive art. “The use of the name of a real person as the name … in a title of a work of entertainment” can be immune from liability where it has “some real artistic relevance” to the work and is “not chosen just to exploit the publicity value of the person”. J. Thomas McCarthy, 2 Rights of Publicity and Privacy § 8:72 (2d ed. 2000).

First amendment protection and the right of publicity recently clashed in a case involving the music industry. In Parks v. LaFace Records, 76 F. Supp. 2d 775 (E.D. Mich. 1999), Rosa Parks sued the Defendants to prevent the use of her name as the title of a rap song written, performed, marketed and distributed by the Defendants. Ms. Parks objected to the use of her name due to the content of the song. The United States District Court for the Eastern District of Michigan held that “because the title ‘Rosa Parks’ is not ‘wholly unrelated’ to Defendants’ song, and because the title is the name of an expressive work and not a disguised commercial for a product” the right of publicity did not exist. Id. at 782.

In Guglielmi v. Spelling Goldberg, 25 Cal. 3d 860, 603 P.2d 454 (1979), the Supreme Court of California skirted the issue by declaring that the right of publicity is not descendible. However, in Chief Justice Bird’s concurrence, he discussed the issue of whether the use of a celebrity’s name and likeness in a fictional film exhibited on television constituted an actionable infringement of that person’s right of publicity. Id. The Chief Justice emphasized that film is “a significant medium for the communication of idea”…and “is protected by the constitutional guarantees of free expression”. Id. at 865. Film is an expression of ideas and is entitled to constitutional protection irrespective of its contribution to the market place. The nature of celebrity and prominence is that they will invite creative comment. Chief Justice Bird concluded that in this situation the value of first amendment protections outweighs the right of publicity. Additionally, the use of likeness in advertisements of the film was considered merely an adjunct to the exhibition of the film and therefore, not actionable. Id.

Although many instances encompass the use of famous personalities, cases involving private individuals also arise. Recently, the Second Circuit, upheld a New York Court of Appeals ruling stating that a Plaintiff could not recover under New York’s right of privacy statute “regardless of any false implication that might be reasonably drawn from the use of her photographs to illustrate” a magazine column on sexual regrets. Messenger v. Gruner + Jahr Printing and Publ’g, 208 F.3d 122 (2nd Cir. 2000). This decision was based on the determination that the column was newsworthy, the Plaintiff’s picture bore a relationship to the article and the article was not an “advertisement in disguise.” Id. The model whose photograph accompanied the article was not informed of its use prior to publication. Individuals are cautioned to review the pertinent statutes and/or common law in each state. The case in question was in New York, a jurisdiction which has exemptions to the laws of right of publicity which many other states do not follow.

Advertising Versus Other Use

Under the law in most states, use of a person’s name, likeness, or picture other than as part of a public event or for a newsworthy purpose would not be allowed. See, e.g., Estate of Elvis Presley v. Robb Russen, 513 F.Supp. 1339 (D.Ct. N.J. 1981) where an Elvis impersonator was held to have violated the rights of the Elvis estate. In some states, misappropriation of privacy rights and publicity rights prohibit only advertising. Courts applying Tennessee and Virginia law have construed applicable statutes that way. See, e.g., Apple Corps. Ltd. v. A.D.P.R., Inc., 843 F.Supp. 342 (M.D. Tenn. 1993) (holding that a band impersonating the Beatles could not be restricted from performing its act but was restricted from advertising it). See also, Williams v. Nathan, 21 Med. L. Rptr. 1339 (E.D. Va. 1993). On the other hand, although the California statute relating to privacy and publicity rights prohibits only use of an individual’s name, likeness, or identity in advertising, the California common law dictates that individuals have such rights in situations not involving advertising. See, e.g., Perfect 10, Inc. v. Talisman Communs. Inc., 2000 U.S. Dist. LEXIS 4564 (C.D. Ca. 2000). In Perfect 10, the Court granted a default judgment to Plaintiff as a result of Defendant’s appropriation of photographs of Plaintiff’s assignors. The photographs were appropriated for the purpose of advertising and soliciting “sale of photographs and other works on Defendant’s website and for the purpose of selling the appropriated photographs through paid subscriptions to restricted areas of Defendant’s website.” The Court ruled that this constituted a violation of California’s right of publicity law. See also, Dora v. Frontline Video, Inc., 15 Cal. App. 4th 536 (1993).

Unreasonable Publicity Concerning Private Facts

The tort of unreasonable publicity of private facts is applicable only where the facts being publicized are not newsworthy or, if arguably newsworthy, go beyond the “information to which the public is entitled, and becomes a morbid and sensational prying into private lives for its own sake.” See, e.g., Baugh v. CBS, Inc., Group W. Television, 28 F.Supp. 745 (N.D. Cal. 1993), infra. In addition, the facts must be at least relatively confidential. In Cox Communications v. Lowe, 173 Ga. App. 812, 328 S.E.2d 384 (Ga. App. 1985), a prison inmate who incidentally appeared in a television report concerning prison abuse had no claim for public disclosure of the fact that he was imprisoned as his incarceration was a matter of public record. In Batts v. Capital City Press, Inc., 479 So.2d 534 (La. App. 1985), the Louisiana Court of Appeals held that because the Plaintiff was attacked in a public place, the information was public and could not be the subject of a claim for public disclosure of embarrassing private facts. Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222 (7th Cir. 1993), involved a book which detailed historical events. In the book, the writer discusses the life stories of various individuals. In a section regarding a particular woman, the author disclosed information about the woman’s ex-husband. The District Court rejected the ex-husband’s claim regarding publicity given to embarrassing private facts on the grounds that the information disclosed was either public record or publicly known prior to publication of the book. On the other hand, in Baugh v. CBS Company, Inc. Group W Television, 828 F.Supp. 745 (N.D. Cal. 1993), the Court held that there was a jury question whether the producers and broadcasters of Street Stories had gone too far in publicly disclosing private facts about a woman who was the victim of spousal abuse. See also, Johnson v. Sawyer, 4 F.3d 369 (5th Cir. 1993), in which a Texas court held that the IRS was liable for wrongfully disclosing confidential information relating to a taxpayer’s tax return.

With the explosion of the Internet, the rights of publicity and privacy have entered a new battlefield. In a manner of seconds, photography, music and streaming video can be distributed to subscribers worldwide, posing increasing threats to the protection of these rights. Once posted on the Web, users can copy items almost instantaneously. This issue of unreasonable publicity of private facts was recently addressed in Michaels v. Internet Entertainment Group Inc., et. al., 5 F.Supp. 2d 823 (D.C. Cal. 1998). Singer Bret Michaels and actress Pamela Anderson Lee sought to enjoin Defendants from disseminating videotape via the Internet of Michaels and Lee engaged in sexual intercourse. Plaintiffs filed a preliminary injunction, inter alia, for violation of right of privacy and right of publicity. The Defendant argued that Ms. Anderson’s nude appearances in magazines, movies and publicly distributed videotapes rendered the facts on the Michaels videotape no longer private. The Court disagreed concluding that the private facts depicted on the video were not public by either the “virtue of Lee’s professional appearances or by dissemination of the Tommy Lee videotape.”(4) Id. at 841. Furthermore, the Court disposed of the newsworthiness argument by noting that the “privilege to report newsworthy information is not without limit. ‘Where the publicity is so offensive as to constitute a morbid and sensational prying into private lives for its own sake, it serve no legitimate public interest and is not deserving of protection’.” Id. at 840 (citing Diaz v. Oakland Tribune, Inc., 188 Cal. Rptr. 762 at 767 (1983)). However, the United States District Court granted summary judgment to Paramount Pictures and Viacom noting that the California Supreme Court had recently restated the principle that the newsworthiness defense was to be construed broadly and reiterated that it is “not limited to high-minded discussion of politics and public affairs.” Michaels v. Internet Entertainment Group Inc., et. al., 48 U.S.P.Q. 2d (BNA) 1891(D.C. Cal. 1998).

Right to Privacy on the Internet

Legislation

Right to privacy has become a fervently debated topic with the advent of the Internet. Concerns over improper use of information gathered on-line has prompted special interest groups and Congress to regulate the dissemination of personal information. The latest developments concerning privacy on the Internet relate to the passage of the Children’s Online Privacy Protection Act of 1998 and the effect of the European Privacy Directive.

Children’s Online Privacy Protection Act of 1998 (COPPA)

The Children’s Online Privacy Protection Act of 1998 (COPPA), 15 U.S.C. §§ 6501, et. seq. prohibits the collection and distribution of personal information regarding children under 13 and restricts distribution and use of that information. This Act became effective April 21, 2000 and rules written by the Federal Trade Commission govern its operation. The applicable rules are available in the federal register at 16 C.F.R. Part 312 and at www.ftc.gov/privacy/index.html. These rules apply to Web sites that target children under 13 years old or know that personal information is being provided by children under 13 years old. For the first two years after implementation, the more verifiable forms of parental consent are only required for those activities that pose the greatest risk to the safety and privacy of children (i.e., disclosing personal information to third parties or making that information publicly available through chatrooms or similar activities). The more reliable methods are mail, use of credit cards and digital signatures. The less reliable method is e-mail from a parent (because it is easier for a child to send that form of consent and pretend it is from a parent).

European Union Privacy Directive

The European Union (EU), in its European Union Privacy Directive, has granted broad rights to individuals whose personal information is collected and stored in databases. (For the official text of the European Union Privacy Directive, see Official Journal of the European Communities of 23 November 1995 No L. 281 p. 31. For an unofficial version, visit http://www.cdt.org/privacy/eudirective/EU_Directive_.html.) This EU position, based on the idea that privacy is a fundamental human right, is more rigorous than that of the United States. The United States does not provide as extensive access to individuals to review personal information and has relatively few restrictions on the its use.(5) The conflict between the EU position and the US position has threatened international electronic commerce.(6) Therefore, the US Department of Commerce negotiated with EU representatives and proposed safe harbor principles for American companies to utilize in determining whether they comply with EU data protection laws. See Joint Report on Data Protection Dialogue to the EU/US Summit, June 21, 1999. The data privacy accord “safe harbor” provision was approved in May 2000. Now, the European parliament and the European Union executive body must decide on a plan. The plan is expected to be approved in July.(7)

Major companies are now requiring sites on which they advertise to meet the European Union standards and the safe harbor provision. For example, IBM’s policy on personal information states that it will inform the consumer how it will use the personal information collected (See http://www.ibm.com/privacy/.):

At IBM, we intend to give you as much control as possible over your personal information. In general, you can visit IBM on the Web without telling us who you are or revealing any information about yourself. There are times, however, when we may need information from you, such as your name and address. It is our intent to let you know before we collect personal information from you on the Internet.

If you choose to give us personal information via the Internet that we or our business partners may need — to correspond with you, process an order or provide you with a subscription, for example – it is our intent to let you know how we will use such information. If you tell us that you do not wish to have this information used as a basis for further contact with you, we will respect your wishes. We do keep track of the domains from which people visit us. We analyze this data for trends and statistics, and then we discard it.

Conclusion

It is always better to obtain a written consent which permits the use of the name, likeness, or identity of any individual appearing in or who is the subject of disclosure of events in any publication or production. As outlined above, there are limited situations in which one may make such use without permission. However, because of the legal uncertainty in this area, it is necessary to have competent counsel review the situation presented prior to any such proposed use.

1 This videotape depicting sexual relations between Lee and her husband Tommy Lee was widely distributed.

2 Anne K. Mosceyunas, On-Line Privacy: The Push and Pull of Self-Regulation and Law, Computer Law Section Newsletter, State Bar of Georgia, July, August, September, 1999, pp. 13-15; Kevin A. Cranman, Internet and Electronic Communication Privacy Issues: An Overview and Legislative Update, 14th Annual Computer Law Institute, Program Materials 1999, Part 10.

3 Jane K. Winn, Digital Signatures, Smart Cards, and Electronic Payment Systems, ICLE Fourteenth Annual Computer Law Institute, Sept. 24, 1999, p. 22.

4 Jason Spingard-Koff, European Union OKs “Safe Harbor,” Wired News, May 31, 2000.

5 Relief is granted in the form of an injunction and recovery of the value of the appropriation.

6 Note that there are two other categories of the right of privacy, wrongful intrusion and false light, that are not addressed in this article.

7 Michael Higgins, A Pitch for the Right of Publicity, IP Magazine, December 1998.

Rob Hassett is an attorney with Hassett Cohen Goldstein & Port, LLP in Atlanta, Georgia.

The information above is provided for general educational purposes and not as legal advice. Laws in areas in which we practice change continually and also vary from jurisdiction to jurisdiction. Therefore no visitor to our site should rely on any of the articles provided for legal advice, but should always consult their own attorney regarding legal matters.

© 2000, Rob Hassett, Atlanta, Georgia. All Right Reserved

The Law of the Internet – Copyright

By:  Rob Hassett

Hassett Cohen Goldstein, LLP

990 Hammond Drive

Suite 990 Atlanta, GA 30328

(770) 393-0990

www.internetlegal.com

The writer wishes to thank his wife, Lynn Hassett, an attorney in his law firm, and Adam Alexander, formerly a law student at Emory University Law School, now practicing law at the firm of Cooper & Scully, PC in Dallas, Texas, for their help in preparing this section of these materials.

Background and Summary

This article first appeared in the program materials for the internet law seminar sponsored by NBI, Inc. which was held in Atlanta, Georgia on February 18, 1998. This intermediate level article addresses the subject of copyright law as it relates to the internet. (18 Pages)

I. INTRODUCTION

Article I, Section 8 of the Constitution of the United States reads in pertinent part:

The Congress shall have power …;

….

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;

Protection of works of authorship that are fixed in any “tangible medium of expression” is governed by Chapters 1 through 8 and Chapter 10 of Title 17 of the United States Code.(1) State law with respect to such works is pre-empted by federal law.(2) State law still applies with respect to rights in sound recordings fixed before February 15, 1972 and with respect to works that are not fixed in any tangible medium of expression.

The United States has been a party to numerous treaties regarding copyright law. The most important treaty is the Berne Convention to which the United States became a party in 1989. The Berne Convention provides that each member nation will protect the works of each other member nation’s citizens at least as well as it protects the works of its own citizens; as well as sets forth standards that must be met regarding the protection of works of authorship by all member nations. The process of proposing amendments to the Berne Convention is administered by the World Intellectual Property Organization (“WIPO”) which is an agency of the United Nations headquartered in Geneva, Switzerland.(3)

II. COPYRIGHTABLE SUBJECT MATTER

A. General Principles

17 U.S.C.A. §102 reads in pertinent part:

(a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated either directly or with the aid of a machine or device. Works of authorship include the following categories:

(1) Literary works;

(2) Musical works, including any accompanying words;

(3) Dramatic works, including any accompanying music;

(4) Pantomimes and choreographic works;

(5) Pictorial, graphic, and sculptural works;

(6) Motion pictures and other audiovisual works;

(7) Sound recordings; and

(8) Architectural works.

(b) In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery regardless of the form in which it is described, explained, illustrated, or embodied in such work. (Emphasis added.)

In part (b), Congress codified the pre-existing case law that held that copyright law protects the expression of an idea but not the idea itself. It is thought that the idea/expression dichotomy is required by the First Amendment prohibition against enactment of any law that would abridge freedom of speech.(4) The basic concept is that copyright cannot monopolize an idea or concept. This has resulted in rules that are especially important to the Internet including:

(1) If there are only a limited number of ways to express an idea (for example, to write a computer program accomplishing a particular function) the idea and expression are said to merge and the coding is not protected by copyright law.(5)

(2) Scenes a` faire, which are stock literary devices such as incidents, characters or settings which, as a practical matter, are indispensable or at least standard in the treatment of a given topic are not protected by copyright law. The reasoning is that standard expression is so close to the non-protectable idea itself that the expression provides nothing new or additional over the idea, see, e.g., Atari, Inc. v. North American Phillips Consumer Electronics Corp., 672 F.2d 607 (7th Cir.), cert. denied, 459 U.S. 880 (1982).

(3) Expression is also not protectable where it is required by particular standards in the industry or considerations of efficiency, see, e.g., Data East U.S.A., Inc. v. Epyx, Inc., 862 F.2d 204 (9th Cir. 1989).

Additionally, whether an aspect of a work is an idea or expression of an idea is a matter of degree. Exact copying of the language of a novel, play or computer program is a copyright infringement. Writing a novel using no more than the same overall general plot as another novel or writing a computer program performing the same function as another is not a copyright infringement. Paraphrasing a novel or following a detailed plot outline is an infringement. See, Twin Peaks Productions, Inc. v. Publication Int’l, Ltd., et al., 996 F.2d 1366 (2d Cir. 1993) (finding detailed plot summaries of television series to be infringement). Paraphrasing linear computer code or following the structure, sequence and organization of that code has been held to be an infringement.(6)

B. Non-Literal Elements of Computer Software

The non-literal elements of computer software are elements of the software other than the source code and object code such as the overall layouts, menus, structure and look and feel. At one point there appeared to be a significant amount of protection for the non-literal elements of computer software. The courts even went so far as to apply the notion that taking the “total concept and feel” of a computer program (which had been found to be illegal with respect to television characters)(7) constitutes a copyright infringement.(8)

In the 1990’s the courts began restricting protection of non-literal elements in computer programs under copyright law. The two leading cases in this regard are Computer Associates, Inc. v. Altai, Inc.(9) and Lotus Dev. Corp. v. Borland Int’l, Inc.(10)

In the Altai case, Computer Associates had developed a scheduling program and, separately, an “ADAPTER” to allow the scheduling program to be operated on a number of different operating systems. Altai, a competitor of Computer Associates, desired to develop an “adapter type” program to allow its scheduling program to be used on an additional operating system. Altai hired an employee of Computer Associates who, without Altai’s knowledge, brought over code from the ADAPTER program. After Computer Associates filed suit, Altai realized what had happened, admitted liability for the direct copying and reconstructed the program without any literal copying. The court had to determine whether the non-literal copying constituted an infringement. The Court of Appeals approved the statements of the district court below that had said “references to structure, sequence, and organization” are no longer necessarily relevant to how computer programming is done. With object oriented programming, and especially with Windows based object oriented programming, such as Visual Basic, it is difficult to point to any particular sequence of a computer program. The court went on to describe its three step test for determining what, if any, of the non-literal elements of a computer program are protectable under copyright law.

The first step is “abstraction” where the court goes through a sort of “reverse engineering.” The court determines what are the various levels of abstraction of the program. At the lowest level are the actual instructions organized into a hierarchy of modules. At a higher level are the functions of each module. (Note that a selection and organization of modules could involve creativity that is protectable if at that level the program survives Step 2 “filtration” (discussed below), as compilations may be protectable under Section 103 of the Copyright Act.)

The second step is filtration of each level of abstraction. Here the court filters out the following at each level:

(a) Elements that constitute ideas or are dictated by efficiency;

(b) Elements dictated by external factors such as standard techniques rather than creative originality on the part of the programmer; and

(c) Elements taken from the public domain.

The third step is the comparison test. From the filtration step, the court has determined what of the plaintiff’s program is protectable expression and then the court determines whether or not the “defendant copied any aspect of this protected expression, as well as an assessment of the copied portion’s relative importance with respect to the plaintiff’s program.” The Court of Appeals also held that the district court’s appointment of its own expert witness was appropriate. Following these tests, the court held that there was no infringement. The court did hold that there was a possibility of misappropriation of trade secrets. The court said that state trade secret law is not pre-empted under Section 301 of the Copyright Act.

In Lotus v. Borland, supra, Borland had developed a competitive spreadsheet program that included an option which provided “a virtually identical copy of the 1-2-3 menu tree” contained in the Lotus spreadsheet program. There was no contention that the underlying code or protected elements of computer screen displays had been copied. Lotus’ only contention was that Borland had unlawfully copied its menu command hierarchy. The trial court concluded that Lotus’ menu hierarchy was protectable expression because, for example, many different words could be used for the same commands. The Court of Appeals reversed. Referring to 17 U.S.C. §102(b) (quoted above), the Court of Appeals said:

We hold that the Lotus menu hierarchy is an uncopyrightable method of operation. We do not consider whether it could also be a system, process, or procedure.

The Supreme Court granted certiorari to Lotus on an appeal from the First Circuit Court of Appeals decision, but the Supreme Court affirmed by default when it turned out that the Justices were equally divided on the issue.(11)

As courts became reluctant to protect non-literal elements of computer programs under copyright law, courts, at the same time, became more comfortable with granting patent protection to computer programs.(12)

Shifting much of the protection for non-literal elements of computer programs from copyright to patent law has created a situation that makes it much more difficult for start up companies to protect their software because of the much higher expense of filing for patent protection. In the writer’s view it also allowed for monopoly protection of some matters that would not have ever been protected by copyright law that are too easy to create in the software context to fairly be the subject of patent protection. There is so much programming code created every day that much of the software for which patent protection is granted is already being used by others in the industry who just have not gone to the trouble of applying for a patent. The writer submits that a modified hybrid of trade secret, patent and copyright law should be developed for the protection of computer software.

C. Screen Displays – Web Pages

The Copyright Office has taken the position that registration of an underlying computer program automatically covers the screen displays. The applicant need only describe the work as “computer programs.” However, if the application includes “screen displays” in its description of the work, the applicant will be required to include a printout or videotape of the screen display showing sufficient copyrightable authorship to support a claim to copyright in the screen display.(13) Note that computer programs are generally registered as literary works on Form TX (“TX” refers to “text”). For works on the Internet that are predominantly visual works of art, which is the typical case now, Form VA (“VA” refers to “visual arts”) should be used. Where audiovisual authorship predominates, which is likely to be more and more often the case in the future for Internet sites, the work should be registered as an audiovisual work on Form PA (“PA” refers to “performing arts”).

D. Data Bases

Also important to Internet issues is the protectability status of online data bases. An author has copyrights in his original contributions to a compilation, but not in the underlying works being used.(14) At one time there was a split in the circuits about whether compilations of pure facts could be protected by copyright if there was no originality involved based on the labor and effort used in the compilation. See, e.g., Leon v. Pacific Telephone & Telegraph Co., 91 F2d 484 (9th Cir. 1937). This “sweat of the brow” line of cases was overruled in Feist Publications, Inc. v. Rural Telephone Service Co.,(15) where the Supreme Court held that there was no copyright infringement in copying a telephone book because there was no creativity involved in compiling it. The Court pointed out that placing names in alphabetical order and adding addresses was standard and not creative.(16) In Matthew Bender & Company, Inc. v. West Publishing Co.,(17) it was held that copying West Publishing compilations of Federal and District Court cases was not an infringement. West had successfully argued in West Publishing Co. v. Mead Data Central, Inc.,(18) that it had a protectable interest in selection of the order in which it assembled the case decisions.

At the December 1996 WIPO conference in Geneva, the United States representative proposed that the Berne Convention be amended so that the time and effort that went into developing data bases would be sufficient to allow for copyright protection – the current rule in Europe. The United States scientific community and others effectively lobbied the White House to withdraw this proposal.(19)

III. EXCLUSIVE RIGHTS

Section 106 of the Copyright Act reads in pertinent part:

Subject to Sections 107 through 120, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) To reproduce the copyrighted work in copies or phonorecords;

(2) To prepare derivative works based upon the copyrighted work;

(3) To distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending [this provision does not apply to redistribution of an authorized copy, see Section 109 of the Copyright Act];

(4) In the case of literary, musical, dramatic, and choreographic works, pantomimes and motion pictures, and other audiovisual works, to perform the copyrighted work publicly [this provision does not apply to sound recordings, see Section 114 of the Copyright Act];

(5) In the case of literary, musical, dramatic, and choreographic works, pantomimes and pictorial, graphics, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) In the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission [this provision is modified by Section 114 of the Copyright Act – see the discussion of “musical works” below].

To the extent that each of these exclusive rights have special relevance to online use, they are discussed in Part VIII below. For an in-depth discussion of how the exclusivity of these rights is affected by the doctrine of fair use under Section 107 of the Copyright Act, see the article on Fair Use In New Media Technology by Rob Hassett and Adam Alexander included with these materials.

IV. OWNERSHIP

Copyrights in a work of authorship vest initially in the individual author unless the work is a “work made for hire” in which case the employer is considered to be the author.(20) A transfer of copyright ownership may only be made in writing.(21) A work may be a work made for hire only if it:

(1) Is a work prepared by an employee within the scope of his or her employment, or

(2) It is a work prepared as a contribution to a collective work, an audiovisual work or one of the other categories of work listed under the definition of “work made for hire” under Section 101 of the Copyright Act and “the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”

Ownership can be a problem where a company employs another company as an independent contractor to create a web site. Under those circumstances, without a writing to the contrary, the commissioning company would not own the copyrights in that web site.(22) This is contrary to the law that applied before the 1976 Copyright Act became effective in 1978. Where a company pays for an independent contractor to develop a web site and does not have a written agreement as to ownership, the company would arguably have an implied license to do whatever it wished with the web site, but couldn’t prevent the independent contractor from also using those portions of the web site developed by the independent contract. Of course, the independent contractor would not be permitted to use materials contributed by others and would be subject to any privacy and publicity rights of any individuals whose name and/or likeness appeared in the web site.

V. REGISTRATION

Prior to January 1, 1978, registration was required to maintain ownership of a copyright in a work. Currently, all that is required for ownership is that the work be fixed in a tangible medium of expression. Registration in the Copyright Office is still advisable. With some minor exceptions, unless a work is registered before an infringement occurs, the copyright owner may not recover statutory damages (damages which a judge may award under Section 504 without proof) or attorney’s fees (which a judge may otherwise award under Section 505).(23) Additionally, with some minor exceptions, registration is required prior to the filing of a lawsuit for copyright infringement.

VI. NOTICE OF COPYRIGHT

Prior to March 1, 1989, when the United States became a member of the Berne Convention, it was required that copyright notices be placed on works in order to maintain ownership in the copyrights in those works. Notice of a copyright is no longer required for ownership. Nevertheless, it is recommended that copyright notices be placed on any work. Adding the notice prevents a defendant’s claim of innocent infringement in mitigation of damages on the grounds that the infringer did not realize that a copyright was claimed. A copyright notice on visually perceptible copies consists of the following:

© [year of first publication] [name of the copyright owner]

Note that the word “Copyright” or the abbreviation “COPR” are also both acceptable but in order to comply with requirements under what is known as the U.C.C. Convention, it is recommended that a “©” be used. It is also advisable to add the language “all rights reserved” at the end of the notice as that is still required in some Latin American countries. Where the work is a sound recording and the owner wishes to give notice of the copyrights in the sound recording, a “p in a circle” should be used.(24)

VII. MUSIC

Rights relating to music are being treated separately in these materials. This is because the law relating to some aspects of music is different and, also, because, as a result of industry practices, music rights are handled differently from rights in other works.

There are two separate sets of rights relating to every sound recording and/or audiovisual work involving music. First, there are rights in the underlying song or composition. These typically belong to the author – the songwriter or composer – and to their publisher. Second, there are rights in the sound recording itself. These typically belong to the record company.

1. Licenses of Rights in the Underlying Song

Before any discussion as to the rights of the author of a musical work, it must be determined who the author is. Generally, the author is the actual writer or co-writers. However, where the writer is employed by another or is an independent contractor, the work may be deemed a “work made for hire”, and the author, and owner of the copyright of the work, may be the employer or person who commissioned the work. See, the discussion regarding “OWNERSHIP” hereinabove.

With respect to songs that are released as singles, or as part of albums, most songwriters enter into agreements with publishers who pitch the song to record companies and performers and handle administrative matters for the writer. Most songwriters and composers are also affiliated with either the American Society of Composers, Authors and Publishers (“ASCAP”) or Broadcast Music, Inc. (“BMI”). These organizations license their catalogs of songs on a yearly basis to radio stations, television stations, restaurants, and other operations that publicly perform music. ASCAP and BMI then allocate and distribute the money (performance royalties) they receive based on the relative volume of use of the songs in their catalogs. The royalties are usually evenly divided between the publisher and the songwriter. However, where music is written as “works made for hire,” as is often the case for music for commercials or product jingles, the composer may not be entitled to ASCAP and/or BMI performance royalties.

In addition to performance royalties, songwriters may also receive what are called mechanical royalties. Mechanical royalties are based on the number of copies of the sound recording of the song distributed. After a recording of the song is released, other performers are permitted to record their versions of the song, provided they comply with the compulsory license provisions of Section 115(c) of the Copyright Act and pay the set royalty (currently 6.95 cents per song per copy of any recording sold). This set royalty is referred to as the “statutory rate”. See 37 CFR § 255.3(h). The rate is determined by ad hoc Arbitration Royalty Panels appointed and convened by the Library of Congress. Because the compulsory processes – such as the statutory provisions for accounting and notice provisions – are somewhat cumbersome, most record companies do their own negotiating of mechanical royalties for new recordings of previously released songs. The statutory rate is still used as a basis. The Harry Fox Agency in New York City administers the issuance of mechanical licenses and the receipts of royalties for many publishers of previously recorded songs.

Sometimes producers wish to include pre-existing music in their audiovisual work. For that purpose, the producer must acquire synchronization licenses for use of music embodied in their audiovisual work.(25) Synchronization licenses are generally negotiated with either the publisher or the Harry Fox Agency.

2. Rights in Sound Recordings

Rights in sound recordings are treated differently. Traditionally there have been no performance rights in sound recordings. Record companies owning copyrights in the sound recordings of songs on their records, earn income from the sale of the records and from the synchronization of those sound recordings for film, television, and other audiovisual uses. Thus, unlike the owner of the underlying song, record companies do not receive any performance royalties from ASCAP, BMI or anyone else, for radio airplay and other public performance uses of the recording.

It should be noted that in many other countries, especially in Europe, the owners of sound recordings do have performance rights in sound recordings. However, because the United States does not grant reciprocal rights, no royalties are collected for the performance rights for sound recordings owned by American companies when those songs are played, for example, on radio stations in countries that do recognize this right.(26)

There is one exception to the rule that U.S. law does not allow for the payment of performance royalties for performances of sound recordings. On November 1, 1995, President Clinton signed into law the Digital Performance Right in Sound Recordings Act of 1995 which provides for owners of sound recordings and recording artists to receive performance royalties for certain digital performances. This Act is discussed below under Internet related issues.

VIII. SPECIAL INTERNET ISSUES

A. Reproduction

Under Section 106(1), a copyright owner has exclusive right to “reproduce the copyrighted work … ” Whenever a computer program is used (or a web page is viewed) a copy is made on to the random access memory (“RAM”) of a computer. When copies are transmitted over the Internet, transitory copies are made throughout the transmission. Copying into RAM in conjunction with using a computer program has been held to be a violation of the exclusive rights of the copyright holder under Copyright Act Section 106(1).(27) The U.S. representative at the WIPO conference in December of 1996 urged amending the Berne Convention to explicitly provide that the making of transitory copies in connection with Internet transmissions would be an infringement. This proposal was successfully opposed by the telephone companies and Internet Service Providers (“ISP’s”) because they were concerned that it would create an additional source of liability. See, John Browning Africa 1 Hollywood 0 Wired Magazine, March 1997, at 61. Nevertheless, a statement was issued that: “the reproduction right … fully appl[ies] in the digital environment, and particularly to the use of digital works in digital form … [and] that the storage of a protected work in digital form in an electronic medium constitutes a reproduction.”(28)

Although no court has decided the issue at this time, it is not clear whether the making of transitory copies as part of Internet transmissions constitutes the sort of reproduction governed by §106(a) but the copying onto RAM in connection with viewing a copy is certainly an infringement.(29) Telephone companies and routers are probably not liable for their part in transmissions over the Internet which do involve the making of transitory copies.(30)

B. Performances

Because the licensing rights for copying and distribution of music are handled separately from the licensing of the rights of public performances, it is necessary to differentiate online copying and distribution from online performances. The writer knows of no cases on this issue to date. Several authors have asserted that where performances can be viewed in the process of downloading, there is probably a performance, and otherwise there is not.(31)

C. Criminal Liability

Until recently, Section 506(a) of the Copyright Act read:

Any person who infringes a copyright willfully and for purposes of commercial advantage or private financial gain shall be punished as provided in Section 2319 of Title 18. [Emphasis added]

Because of the requirement of “commercial advantage” or “private financial gain” it was recently held that individuals placing copyrighted materials on the Internet where users could make copies for free had not committed any crime. This leaves copyright owners vulnerable to actions by individuals who are not concerned about civil liability. Congress has remedied this situation by passage of the “No Electronic Theft” (“NET”) Act which was signed into law by President Clinton on December 16, 1997. The Act changes Section 506(a) to read:

Any person who infringes a copyright either willfully –

(1) For purposes of commercial advantage or private financial gain; or

(2) By the reproduction or distribution, including by electronic means, during any 180/day period, of one or more copies or phonorecords of one or more copyrighted works, which have a total retail value of more than $1,000 shall be punished …(32)

D. Liability of ISP’s and OSP’s

Section 230(c)(1) of the Telecommunications Act of 1996 states:

Treatment of publisher or speaker. — No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

This statute has been held to bar liability of an ISP or OSP for defamatory or obscene material posted by one of its customers.(33) This statutory limitation of liability for ISP’s and OSP’s has not, to date, been extended to copyright.

Two bills are now pending in Congress that would limit the liability of ISP’s and OSP’s for copyright infringement by adding a Section 512 to the Copyright Act.(34) In the meantime, ISP’s and OSP’s must rely on court decisions.

In Religious Technology Center, et al. v. Netcom On-Line Communication Services, Inc.,(35), the plaintiff held the copyrights in the Church of Scientology’s writings. A former member of the Church, Erlich, had placed Church of Scientology materials on a news group on the Internet through a bulletin board service connected to the internet through the national Internet service provider, Netcom. The plaintiff sued Netcom for its involvement in the claimed copyright infringement. Netcom moved for summary judgment. The court first decided that Netcom was not liable for direct infringement. Netcom had argued that Erlich, not Netcom, had actually placed the copies on the Netcom server. The court held that following the logic that Netcom had not actually made the copies and for policy reasons, Netcom would not be liable for direct infringement. The Court held that, unlike in Playboy Enterprises v. Frena,(36) Netcom was not liable for distribution or for publicly displaying the copies. In rejecting the argument that Netcom could be liable for direct infringement for distribution and public display, the court said in pertinent part:

No purpose would be served by holding liable those who had no ability to control the information to which the subscribers have access, even though they might be in some sense helping to achieve the Internet’s automatic “public distribution” and the users’ “public” display of files.

The court next dealt with the plaintiff’s contributory infringement claim against Netcom. The court said in pertinent part:

[Contributory] infringement will be established where the Defendant “with knowledge of the infringing activity,” induces, causes or materially contributes to the infringing conduct of another.

The court held that there was a fact question about whether Netcom, after receiving notice, should have known that the copies that Erlich was posting were infringing. It stated that:

[w]here a DBS operator cannot reasonably verify a claim of infringement, either because of a possible fair use defense, the lack of copyright notices on the copies, or the copyright holder’s failure to provide the necessary documentation to show that there is a likely infringement, the operator’s lack of knowledge will be found reasonable and there will be no liability for contributory infringement for allowing the continued distribution of the work on its system.

Finally, the court rejected the contention that Netcom was vicariously liable which requires:

[that] the Defendant:

(1) Has the right and ability to control the infringer’s acts; and

(2) Receives a direct financial benefit from the infringement.

The Court found that there was no direct financial benefit because Netcom received the same monthly sum regardless of whether Netcom did or didn’t post the material.

E. Framing

“Framing” is discussed in the segment of these materials relating to unfair competition. Although the writer knows of no case on point, it is likely that a court would hold that framing constitutes a derivative work.

F. Music Issues

On November 1, 1995, President Clinton signed the Digital Performance Right In Sound Recordings Act of 1995 into law. This act is codified in Sections 106(6), 114, 115(c)(3) and 115(d) of the Copyright Act. This new addition to the Copyright Act provides a performance right in sound recordings when the sound recordings are transmitted over a service that is either interactive (the customer can choose the song they wish to hear) or where the sender is charging a subscription fee. There is a provision for compulsory (referred to in the statute as “statutory”) licensing where the sender is charging a fee with the exception that the statutory licensing set up does not apply in certain situations where members of Congress felt that a service would in fact be providing copies, rather than performances, of the sound recordings.(37) Where the service is interactive (the customer can choose which song they wish to download) or in the other situations described in Endnote 37 below, the sender is required to negotiate a license with the owner of the sound recording, but may follow a compulsory procedure to pay a set rate for a mechanical license for the underlying compositions.

Other than for subscription and interactive services, there is no performance license required, even on the Internet, for sound recordings. However, licenses are almost always necessary when a musical work and sound recordings, not owned by the web site owner, are used. Examples are:

(1) It may be necessary for the web site developer/manager to copy musical works and sound recordings onto the server (they may not be playable directly from a purchased copy) in which case a reproduction license for the underlying work and sound recording would be required;

(2) Viewers of the web site may copy, or be capable of copying, the musical work and the sound recording onto their own computer which would also require a reproduction license (since Real Audio and Real Player do not allow for a viewer to make copies of a recording of an audiovisual work, the writer does not believe a reproduction license would be necessary to cover those transmissions);

(3) If the music is performed as the web site is being downloaded, a performance right for the underlying musical work would be required;

(4) If a sound recording of a musical work is being synchronized with an audiovisual work, a synchronization license (a form of the right to make derivative works) would be required for both the musical work and the sound recording.(38)

ENDNOTES

1 Chapter 9 of Title 17 provides protection relating to the design of semi-conductors. Chapter 11 prohibits the unauthorized recording of live musical performances.

2 See 17 U.S.C.A. §301.

3 http://www.wipo.org/.

4 Nimmer on Copyright §1.10 [B] [2].

5 Nimmer, at §2.18[J]. See also, Kearn River Gas Transmission Co. v. Coastal Corp., 899 F.2d 1458, 1464 (5th Cir.), cert. denied 498 U.S. 952 (1990).

6 Whelan Associates, Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222 (3rd Cir. 1986).

7 See, Sid and Marty Krofft Television Productions v. McDonald’s Corp., 562 F.2d 1152 (9th Cir. 1977).

8 See, generally, Scott On Computer Law, Second Edition, Section 3.47(C)(1).

9 982F.2d 693 (2d Cir. 1992).

10 489 F.3rd 807 (1st Cir. 1995). See also, Softel, Inc. v. Dragon Medical & Scientific Communications, Inc., 118 F.3rd 955 (2nd Cir. 1997).

11 116 S.Ct. 804 (1996).

12 See the paper by Bill Marvin on Patent Law included with these materials.

13 See, 53 Fed. Reg. 21817 (June 10, 1988).

14 See, e.g., 17 U.S.C. § 103.

15 499 U.S. 340 (1991).

16 See, also, Bell South Advertising & Publishing Corp. v. Donnelley Information Publishing, Inc., 999 F.2d 1436 (11th Cir.1993); and Warren Publishing, Inc. v. Microdos Data Corp., 115 F.3rd 1509 (11th Cir. 1997).

17 1997 W.L. 266972 (S.D. N.Y. May 19, 1997).

18 616 F. Supp. 1571 (D.Minn. 1985) affirmed 799 F.2d 1219 (8th Cir. 1986).

19 John Browning, Africa 1 Hollywood 0, Wired Magazine March 1997 at 61 (www.wired.com/5.03/).

20 §201(a) and (b) of the Copyright Act.

21 See, §204 of the Copyright Act.

22 See, e.g., Community For Creative Non-Violence v. Reid, 490 U.S. 730 (1989) (holding that the employer of an artist as an independent contractor to create a sculptural work did not own the copyrights in the sculptural work after paying for it).

23 See generally, § 412 of the Copyright Act.

24 Copyright Act §§ 401 and 402.

25 Sometimes performance licenses are also required. ASCAP and BMI do not cover every type of performance – for example, they do not grant performance licenses to, or collect payments from, movie theaters.

26 Howard Siegle & Paul Karl Lukacs, A Mega-Million Dollar Musical Mea Culpa, Are U.S. Record Companies Overlooking A Fortune In International Public Performance Royalties?, 15 Ent. & Sports Law., Vol. 15., No. 303, Fall 1997.

27 Mai Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993).

28 Meca Jung and Stephen D. Rosenboro, The WIPO Treaties, The International Battle Over Copyright Cyberturf, 15 Ent. & Sports Law., Vol. 15, No. 3, Fall 1997.

29 Mai Systems Corp. v. Peak Computer, Inc., supra. Note 27.

30 See, e.g., Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F.Supp. 1361 (N.D. Cal. 1995) (holding that an ISP wouldn’t be directly liable for material placed on its server because it would not be reasonable to hold ISP’s liable and because ISP’s are not actually the ones making the copies).

31 Jeffrey P. Cunard, et al. Internet & Online Law, Section 6.08(4) (Kent B. Stuckey, ed., 1997).

32 See the information posted regarding H.R. 2265 at http://thomas.loc.gov.

33 See, e.g., Zeran v. American Online, Inc., 958 F.Supp. 1124 (E.D. Va. 1997), aff’d 129 F.3d 327 (4th Cir. 1997).

34 See, generally, H.R. 2180 and S. 1146, http://thomas.loc.gov/

35 907 F.Supp. 1361 (N.D. Cal. 1995).

36 839 F.Supp. 1552 (N.D. Fla. 1993).

37 The owner of the sound recordings is not required to provide a statutory license both where the license is interactive and in other situations where the drafters of the legislation felt that such transmittal could substitute for purchases of copies of the sound recordings such as situations where more than four (4) selections by the same artist are played in any three-hour period, more than three selections in total from any one sound recording are played in any three-hour period, and where a list of the sound recordings to be transmitted is being provided in advance.

38 For an in-depth analysis relating to incorporating music into a web site, see, Al Kohn and Bob Kohn, Kohn on Music Licensing, 1236 – 1250 (1996).

The information above is provided for general educational purposes and not as legal advice. Laws in areas in which we practice change continually and also vary from jurisdiction to jurisdiction. Therefore no visitor to our site should rely on any of the articles provided for legal advice, but should always consult their own attorney regarding legal matters.

© 1998, Rob Hassett, Atlanta, Georgia. All Right Reserved.