Copyright Developments in 2020

New York State Bar Association - Entertainment, Arts and Sports Law Journal

Spring 2021

By Neville L. Johnson and Douglas L. Johnson

2020 was an eventful year for the world of copyright law in the United States. The following cases are of particular interest.

Authorship and Ownership Are Not One in the Same: Everly v. Everly

This dispute between Phil Everly's heirs and Don Everly in this case arose out of the parties' dispute over the authorship of the hit song Cathy's Clown by the Everly Brothers, arguably one of the greatest vocal duos in pop music history, but who had a notoriously difficult relationship and used to perform pursuant to engagements where they would not have to speak to the other.1 When the song was released in 1960, both brothers were credited as co-authors, were identified as co-authors on the original copyright registration, and received royalties pursuant to their publishing agreement with Acuff-Rose, to whom they had transferred ownership of the song.2 Don then began to receive all royalty payments and sole credit as author.3 In 2011, Don served Acuff-Rose with a termination notice, exercising his right as an author of the underlying musical composition.4 When Phil died in 2014, his heirs also served a termination notice on Acuff-Rose, as well as a termination on Don with respect to the 1980 release agreement.5 In 2017, Don filed a claim for a declaration that he was the sole author of the song, arguing that Phil's heirs' claim of authorship was untimely under the Copyright Act's three-year statute of limitations.6 The district court held in Don's favor, since authorship claims, unlike infringement claims, can accrue only once.7 Phil's heirs argued that the agreement was made as a favor to Don, and was not a waiver of authorship. The court reasoned that it was clear that Don had repudiated Phil's ownership as late as 2011, and that any co-authorship claims had expired by 2014.8 Phil's heirs appealed to the Sixth Circuit and obtained a ruling in their favor.

The Sixth Circuit reversed the lower court's granting of Don's motion for summary judgment because there was a triable issue of fact as to whether Don had actually repudiated Phil's ownership in Cathy's Clown.9 The court reasoned that ownership and authorship are not one in the same, and that while ownership of a copyright may be transferred, authorship cannot.10 Therefore, under this logic, the 1980 release agreement could not have assigned Phil's authorship rights to Don.11 The court then established that “an authorship claim will not accrue until the putative author's status as an author is expressly repudiated,”12 and that “actions repudiating ownership are irrelevant.”13 The court added that the act of repudiation “must come from someone asserting authorship of the work, not from a third party.”14 Applying these principles to the facts, the court held that there was a triable issue of fact as to whether Don repudiated Phil's authorship in the song, because it was not clear whether the 1980 release agreement served as Don's express repudiation or whether it was simply a transfer of the rights to the royalties and public credit from Phil to Don.15

To Boldly Copy: Dr. Seuss Enters., Ltd. P'ship v. ComicMix Ltd. Liab. Co.

The Dr. Seuss-Star Trek fair use battle made headlines (in the copyright world) when the Ninth Circuit reversed the lower court's decision that ComicMix's use of elements from Dr. Seuss' Oh, The Places You'll Go! in its Star Trek mash-up book Oh, The Places You'll Boldly Go! did
not constitute fair use.16 The lower court had previously adjudicated the issue of fair use on ComicMix's motion
to dismiss, granting it on the grounds that it was highly transformative, did not take more than necessary, and that it was unclear whether the work presented a high risk of market harm to the Seuss books.17 The Ninth Circuit applied the statutory fair use factors, and found that each factor weighed against fair use.18 The court reasoned that ComicMix's work was not a parody and was not transformative because merely adding material to a pre- existing work was not a “get-out-of-jail-free card” making a work transformative.19 Moreover, due to the substantial amount of the original work that had been used, and the potential threat the new work posed to the market of the original work, the court was not convinced by Comic- Mix's arguments.20

“Experimental Use” Enters the Fair Use Conversation: Chapman v. Maraj

Tracy Chapman alleged that rapper Nicki Minaj infringed her musical composition Baby Can I Hold You by using the lyrics and melody in Minaj's song Sorry, and by distributing the song to a DJ.21 In 2017, Minaj had been working on Sorry to include on her then upcoming album.22 At the time, she was unaware that the song was based off of Chapman's Baby Can I Hold You.23 When Minaj realized the truth, she sought a license from Chapman in order to “clear” Sorry and release it commercially.24 Chapman repeatedly declined to license the song.25 In 2018, ahead of her album release, Minaj sent Sorry to a radio DJ, who played the song on his radio show.26 Chapman sued Minaj for copyright infringement of the exclusive right to make a derivative work and the exclusive right to distrib- ute a work.27 The United States District Court for the Central District of California held, on a motion for summary judgment, that Minaj was not liable for copyright infringement because the fair use defense applied.28

What makes this a notable case is the court's analysis under the first prong of the fair use doctrine, i.e., the “purpose and character of the use.” The court held that Sorry was not a commercial use because Minaj was “experimenting” with her vision, and that she never intended to distribute the work without a license.29 The court emphasized that an artist should be able to experiment with his/her/their music prior to releasing it, and that having to obtain a license would “limit creativity and stifle innovation within the music industry.”30 While the policy of promoting creativity is consistent with the principles of the Copyright Act, this case sets a precedent for copyright infringement in music sampling of which it could easily be taken advantage. The court spent little time on addressing that Minaj did in fact release the song—even if not on an album—as a way to promote her upcoming album, which likely contributed to the success of its release. Sorry contains a sizable portion of Baby Can I Hold You's lyrics and melody, and is a direct reproduction of Baby Can I Hold You. To conclude that Sorry would have been a commercial use only had it been released on an album implies that anyone could sample another writer's song, release it on the internet in some fashion without a record label, gain exposure, and financially benefit.

Two Conflicting Tattoo Cases: Solid Oak Sketches, LLC v. 2K Games, Inc. and Alexander v. Take-Two Interactive Software, Inc.

In Solid Oak Sketches, LLC v. 2K Games, Inc, Solid Oak Sketches brought a copyright infringement claim against 2K Games for the use of certain tattoos for which Solid Oak Sketches holds licenses in an NBA basketball simulation video game.31 Solid Oak argued that 2K Games had failed to obtain a license to depict the NBA players with the tattoos at issue.32 The court held that there was no copyright infringement because the defenses of de minimis use, implied license and fair use applied.33 The court granted the defendants' motion for summary judgment and held that the use of the tattoos in the game was de minimis, because out of the 400 available basketball players in the game, the tattoos only appeared three times, and when the tattoos did appear in the game, they were distorted and blurry.34 The court then stated that 2K Games had an implied license to use the tattoos in the video game because the tattoo artists had granted an exclusive license to the players, and the players in turn had granted 2K games the license to use their likeness in the video game.35 Finally, the court held that the use of the tattoos was fair use because the tattoos were incidental to the value of the game and were transformative; the designs were not sufficiently expressive; 2K had only taken what was necessary; and that the tattoos were transformative enough such that their use in the game would not impact the rightsholders' market.36

In Alexander v. Take-Two Interactive Software, Inc, similar to Solid Oak Sketches, a tattoo artist brought a copyright claim against Take-Two for depicting six tattoos by the artist on professional wrestler Randy Orton in a simulated wrestling video game series.37 The court denied the defendants' motion for summary judgment on the grounds that there were no disputed material facts as to the fact that Alexander owned the copyrights and that there had been copying, and because there were material facts in dispute as to whether the defenses of implied license, fair use, and de minimis use applied.38 On the implied license defense, the court found that it was unclear whether Alexander and the wrestler had discussed acceptable ways of copying and distributing the tattoos, in addition to whether any such implied license would include Orton's ability to license the tattoos as part of his likeness to a third party.39 For fair use, the court reasoned that there were triable issues as to the four factors that could not be adjudicated on a motion for summary judgment.40 Finally, the court concluded that the de minimis copying defense could not apply, because the defense is used to “allow copying of a small and usually insignificant portion of the copyrighted works, not the wholesale copying of works in their entirety as occurred here.”41

No Attorney's Fees for Plaintiffs Who Overstate Their Claim to Prolong Litigation: Otto v. Hearst Communs.

Otto, a photographer, sued Hearst Communications, Inc. for copyright infringement for publishing his photograph of Donald Trump on its website Esquire.com without permission.42 The court held that Hearst was liable for copyright infringement, rejecting the company's fair use defense.43 The court then determined that a reasonable license fee for the photograph was $100, rejecting Ottos' argument that the license fee should be $4,000, and awarding $750 in statutory damages.44 Otto then attempted to obtain attorney's fees under the Copyright Act.45 The court rejected the argument as a matter of law and noted that Otto was not entitled to attorney's fees because he had consistently overstated the value of his claim, leaving Hearst with no choice but to continue litigation when the value of the license in reality was only $100.46 Otto could not be rewarded for prolonging litigation when his claim was unjustifiably inflated.47

Internet Service Providers Can No Longer Escape Secondary Copyright Infringement Liability: Warner Records Inc. v. Charter Communications, Inc. and Sony Music Entm't v. Cox Communs.

Two rulings from 2020 may pave the way for right- sholders to finally hold internet service providers (ISPs) secondarily liable for user-uploaded infringing materials. In Warner Records Inc. v. Charter Communications, Inc., Warner Records, together with a number of other record labels and publishers, sued Charter Communications (Charter) for copyright infringement.48 The plaintiffs alleged that Charter was vicariously liable for subscribers distributing pirated music through peer-to-peer file-sharing programs.49 Charter argued that they could not be held liable because they did not receive a financial benefit from the piracy and they were unable to supervise all infringing users.50 In an interesting turn of events, the court denied Charter's motion to dismiss and held in favor of the plaintiffs, reasoning that: “Charter's lack of action against known infringers likely draws further subscriptions, as subscribers know they can download infringing content without consequence, [encouraging] subscribers to continue using Charter's service as well as purchase higher bandwidth to facilitate higher download speeds.”51

In Sony Music Entm't v. Cox Communs., Sony Music Entertainment (Sony) and a number of other music companies brought an infringement claim against Cox Communications (Cox) after a third party company that Sony hired identified 10,478 pirated works shared by Cox subscribers through peer-to-peer file sharing services and sent the appropriate notices to Cox.52 Cox raised the same defenses as Charter, namely that it received no financial benefit, that it could not monitor every user's activity, and that it did not have specific knowledge of infringing activities.53 The court held that Cox could be secondarily liable because, in addition to the reasons above, Cox had been served with notices of infringing activities and had the ability to suspend or terminate accounts and failed to do so.54 The court issued an order for Cox to pay $1 billion as a settlement.55

An Infringer Does Not Have an Expectation of Privacy Just Because He Illegally Downloads Porn: Strike 3 Holdings, LLC v. Doe

In Strike 3 Holdings, LLC v. Doe, Strike 3, a producer and distributor of adult films, sued defendant John Doe for copyright infringement for illegally downloading videos.56 Strike 3 sought to obtain John Doe's information through his internet protocol address by subpoenaing his online service provider for his identity by filing a Rule 26(d)(1) motion.57 The district court denied Strike 3's discovery motion on grounds that the need for the defendant's identity was outweighed by the defendant's right to be anonymous, especially given that the content at issue was pornography.58 The D.C. Circuit Court of Appeals reversed on this issue, holding that the content of a copyrighted work is irrelevant to a motion seeking to discover the identity of an infringing plaintiff.59 The court reasoned that “[h]aving accepted Strike 3's allegations of copyright ownership, the district court could not weaken the property rights attached to that ownership by imposing a content-based restriction on Strike 3's access to discovery.”60

A Win and a Loss for Recording Artists: Waite v. UMG Recordings, Inc.

The saga of regaining ownership over master sound recordings continues. In a class action lawsuit for copyright infringement against Universal Music Group (UMG), the recording artist plaintiffs argued that UMG had infringed on the plaintiffs' copyrights by continuing to exploit their sound recordings after being served with § 203 termination notices.61 Under § 203 of the Copyright Act, an author has a right to terminate a grant to a third party 35 years after execution, or 40 years after execution if the grant contains the right of publication.62 In order to terminate a grant to a third party, the author must serve a termination notice.63 In this case, the plaintiffs argued that they had terminated the grants, i.e., their recording agreements with UMG and its subsidiaries, to UMG by serving termination notices, and that UMG had committed copyright infringement by continuing to exploit those sound recordings despite those grants being terminated.64 Aside from a number of procedural issues, the Southern District of New York held for the first time that works created on or after January 1, 1978, that were created under agreements entered into before that date, which are considered gap grants, are terminable, delivering a big win to artists.65 This holding did come with one caveat, however, which was that recording agreements between an artist's loan-out corporation and recording agreement was not subject to termination under § 203 because, according to the statute, the grant must be executed by the author and not a third party.66 The court found that the inducement letters signed by and between the artist and loan-out corporations were insufficient to negate this finding.67 This caveat diminishes the win for the artist, because using loan-out corporations is a common practice within the music industry. The issue of loan-out corporations has been a major problem for screenwriters and others who used them and seek termination rights, and is a warning to those establishing loan-out entities in the present day.

Endnotes

1. Everly v. Everly, 958 F.3d 442, 445 (6th Cir. 2020); see also Kevin Rutherford, The Everly Brothers' Phil Everly Dead at 74, Billboard (Jan. 3, 2014), https://www.billboard.com/articles/ news/5862238/the-everly-brothers-phil-everly-dead-at-74.
2. Id. In 1980, Phil signed a release agreeing to transfer his interest and his claim as co-composer in Cathy's Clown to Don. Id. at 446.
3. Id.
4. Id. at 447.
5. Id.
6. Id.
7. Id. at 448.
8. Id.
9. Id. at 455.
10. Id. at 453
11. Id.
12. Id.
13. Id.
14. Id. 
15. Id. at 467.
16. Dr. Seuss Enters., Ltd. P'ship v. ComicMix Ltd. Liab. Co., No. 19-55348, 2020 U.S. App. LEXIS 39770 at *34 (9th Cir. Dec. 18, 2020).
17. Id. at *9
18. Id. at *12.
19. Id. at *12-34.
20. Id.
21. Chapman v. Maraj, No. 2:18-cv-09088-VAP-SSx, 2020 U.S. Dist. LEXIS 198684 at *2 (C.D. Cal. Sep. 16, 2020).
22. Id. at *15.
23. Id. at *16.
24. Id.
25. Id. at *17.
26. Id.
27. Id. at *21.
28. Id. at *33. The parties have since settled for a reported $450,000. Eriq Gardner, Tracy Chapman Wins $450K in Copyright Suit Against Nicki Minaj, Billboard (Jan. 8, 2021) https://www.billboard.com/ articles/news/9508798/tracy-chapman-wins-copyright-suit-nicki- minaj/.
29. Id. at *27.
30. Id.
31. Solid Oak Sketches, LLC v. 2K Games, Inc., 449 F. Supp. 3d 333, 339 (S.D.N.Y. 2020).
32. Id.
33. Id. at 353.
34. Id. at 345.
35. Id. at 346.
36. Id. at 346-50.
37. Alexander v. Take-Two Interactive Software, Inc., No. 18-cv-966-SMY, 2020 U.S. Dist. LEXIS 177130 at *4 (S.D. Ill. Sep. 26, 2020).
38. Id. at *8-19.
39. Id. at *8-10.
40. Id. at *11-16.
41. Id. at *17.
42. Otto v. Hearst Communs., No. 1:17-cv-04712-GHW, 2020 U.S. Dist. LEXIS 12246 at *2 (S.D.N.Y. Jan. 23, 2020).
43. Id.
44. Id. at *5.
45. Id.
46. Id. at *10.
47. Id. at *11.
48. Warner Records Inc. v. Charter Communications, Inc., 454 F.Supp.3d 1069, 1072 (D. Colo. 2020).
49. Id.
50. Id. at 1073.
51. Id. at 1073.
52. Sony Music Entm't v. Cox Communs., 464 F. Supp. 3d 795, 804-08 (E.D. Va. 2020).
53. Id.
54. Id. at 813-16.
55. Chris Egertsen, Judge Upholds $1 Billion Major Label Verdict Against Cox Communications, Billboard (Jan. 13, 2021), https://www. billboard.com/articles/business/9510360/cox-1-billion-copyright- infringement-verdict-upheld-labels/.
56. Strike 3 Holdings, LLC v. Doe, 964 F.3d 1203, 1205 (D.C. Cir. 2020).
57. Id.
58. Id. at 1206.
59. Id. at 1209.
60. Id.
61. Waite v. UMG Recordings, Inc., No. 19-cv-1091 (LAK), 2020 U.S.
62. Dist. LEXIS 143419 at *2-3 (S.D.N.Y. Aug. 10, 2020). 62. Id. at *2.
63. Id.
64. Id. at *3.
65. Id. at *17.
66. Id. at *13.
67. Id.

Neville L. Johnson and Douglas L. Johnson are part- ners at Johnson & Johnson LLP in Beverly Hills, Cali- fornia, concentrating in entertainment, media, complex business and class action cases. Suna Izgi, a student at Southwestern Law School, greatly assisted in writing this article.

Reprinted with permission from the New York State Bar Association, One Elk Street, Albany, NY 12207.