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April 19, 2021 |
Media, Entertainment and Technology Litigation Update – Non-Fungible Tokens (NFTs) – April 2021

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Each month, Gibson Dunn’s Media, Entertainment and Technology Practice Group highlights notable developments and rulings that may impact future litigation in this area.  This month we focus on the increasingly popular digital asset known as non-fungible tokens or “NFTs” and related issues in the entertainment space and beyond.

Issue: Non-Fungible Tokens (NFTs)

Summary: NFTs have gone mainstream in what some have called a new “gold rush.”  An NFT sold for almost $70 million at a Christie’s auction last month, NFTs of basketball video highlights have generated hundreds of millions of dollars in sales on the NBA Top Shot platform, and NFTs even were the subject of a skit on a recent episode of Saturday Night Live.  Some consider them a fad or a bubble, citing the almost $600,000 sale of an image of an animated flying cat with a pop-tart body that anyone can download from the internet for free.  But in one form or another, NFTs are here to stay.  Even if the market matures and interest wanes in some unconventional pieces of digital art, NFTs will continue to offer a significant potential revenue stream for artists and entities in the film and television, music, and online gaming industries, among many others.  We highlight below some of the emerging legal and policy issues related to NFTs, which include intellectual property law, profit participation issues, securities law, and even climate change.

What do the music group Megadeth, former University of Iowa basketball player Luka Garza, and New York City track and field center The Armory have in common?  In the span of 24 hours earlier this month, each of them entered the rapidly expanding NFT market.  They joined a number of artists and entertainers who have led the charge in selling NFTs.  As film studios and other entities with large content libraries consider following suit, they will need to consider a number of deeply rooted legal issues against a relatively new technological backdrop.

I. Background

There are widely varied understandings of NFTs and related issues concerning tokens and blockchain technology.  While many of our readers are familiar with these terms, a brief introduction is helpful to frame the issues that follow.

A. What are NFTs and What is the Blockchain?

An NFT, or “non-fungible token,” is a unique unit of data stored on a public ledger of transactions called a blockchain.  The unique data could represent an image, an electronic deed to a piece of property, or a digital ticket for a particular seat at a sporting event.  In contrast to these “non-fungible” tokens, cryptocurrencies such as Bitcoin and Ether—just like U.S. dollars, British pounds and other “fiat” government-issued currencies—are fungible; one penny in your pocket has the same intrinsic value as the penny under your couch cushion.

Today, NFTs generally reside on the Ethereum blockchain, which also supports, among other things, the cryptocurrency Ether—the second largest cryptocurrency in terms of market capitalization and volume after Bitcoin.  While other blockchains can have their own versions of NFTs, right now Ethereum is the most widely used (though NBA Top Shot uses the Flow blockchain).

But what is a blockchain?  As noted above, it is an electronic database or ledger showing a history of transactions.  Each transaction is represented by an entry into the electronic ledger and multiple ledger entries are ordered in data batches known as “blocks” to await verification on the network.  New blocks are added after the current block reaches its data limit.  The blocks are connected using cryptography: each block contains a “hash” (a sort of coded electronic signature linking it to the previous block), which is how the blockchain gets its name.

A key feature of the Ethereum blockchain that distinguishes it from a database one might have at a business or law firm is that the blockchain is decentralized across a community of servers.  Data is not stored in any one location or managed by any particular body.  Rather, it exists on multiple computers simultaneously, with network participants holding identical copies of the ledger reflecting the encrypted transactions.

That is why blockchains are touted as both verifiable and secure.  It is similar to the tracking details showing each step in a package’s journey from the shipper to its final delivery destination.  Unlike the tracking details provided by a shipping company, however, on the blockchain no one person can alter that record to change the encrypted data without the network’s users noticing and rejecting the fraudulent version.  And if any one computer system fails, there are duplicate images of the tracking details on the blockchain ledger available on other computers around the world.

B. What Do You Get When You Buy An NFT?

While an NFT is unique, it is important to keep in mind what that unique digital item actually is.  In most cases the NFT is a digital identifier recording ownership, not—to borrow an example from the above—the actual image of the pop-tart cat.  What amounts to your “receipt” is reflected in the blockchain, but the image file itself resides elsewhere.

This has to do with blockchain storage limitations and costs.  The digital image itself theoretically can be stored in metadata on the blockchain, but in the vast majority of cases it is hosted on a regular website or the decentralized InterPlanetary File System (IPFS).  The identifier is logged on the blockchain, but if the image is taken down from its non-blockchain location—say, because it violates someone’s copyright—the NFT could end up being a unique digital path to a closed door (even if there may be seemingly identical “copies” of the digital asset elsewhere).  The immutable purchase record would remain on the blockchain, but the original image might not be viewable.

Almost uniformly, the NFT transfer conveys an interest in a licensed copy while copyright ownership of the underlying image or song is not transferred.  The NFT may be in a limited edition and it may have some additional perceived value because it is officially authorized by the copyright holder or originated from the address of the copyright holder.  But while the underlying copyright can be transferred when the NFT is sold or licensed, typically it isn’t.  The terms and conditions of an NFT platform may reveal the limits of what actually is being transferred and how it might be used.

Under NBA Top Shot’s terms, for example, the purchaser who obtains a license to a “Moment” cannot use it for a commercial purpose, modify it, or use the image alongside anything the NBA considers offensive or hateful.  An NFT platform that controls the image file is able to remove that file from its platform.

* * *

Monetization strategies for NFTs are constantly evolving, so one cannot generalize and say that all NFTs fall in one legal bucket or another.  An NFT can be fair use of a copyright or it can violate it.  An NFT likewise could be a simple collectible or it may be offered in such a way to convert it into a security subject to myriad regulations and disclosure requirements.  It depends on the NFT.  But as the market evolves, complicated questions will need to be answered by NFT creators, platforms, and, potentially, courts.

II. Intellectual Property

Any NFT platform must be particularly focused on the intellectual property rights underlying the NFTs stored, sold, or licensed on the platform.  A single NFT may include various copyrightable elements, including a video clip and any accompanying music.  Whereas the platform may be able to invoke a statutory liability protection with respect to some potential claims—like defamation—certain intellectual property claims are not precluded.

Specifically, Section 230 of the Communications Decency Act of 1996 shields certain online service providers from liability for hosting content that someone else created.  In particular, Section 230(c)(1) states that “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.”

To the extent Section 230 applies to a particular NFT platform, the law’s broad protection still has carve-outs.  Among other things, it does not apply to “any law pertaining to intellectual property.”  Courts have different interpretations of the scope of Section 230’s reference to “intellectual property.”  In Perfect 10 v. CCBill, 488 F.3d 1102 (9th Cir. 2007), the Ninth Circuit ruled that Section 230 permitted claims under federal intellectual property laws but preempted state intellectual property claims alleging a violation of the plaintiff’s right of publicity.  In Atlantic Recording Corp. v. Project Playlist, Inc., 603 F. Supp. 2d 690 (S.D.N.Y. 2009), a Southern District of New York court reached the opposite conclusion, holding that the “intellectual property” carve-out extended beyond intellectual property claims under federal law to include state-law claims.

Whether or not an NFT platform would be subject to potential liability for violating someone’s state-law right in her or his name and likeness, federal intellectual property law still would apply.  And offering an NFT that potentially infringes a copyright could result in liability for the platform if, for example, it does not take the necessary steps under the Digital Millennium Copyright Act.  That risk is heightened for some platforms given how easy it is to tokenize someone else’s work.  Speculators can turn any digital image into an NFT that they can then try to sell, even if the original creator does not agree to that use or even know about it.

Studios and other intellectual property rights holders will need to be especially vigilant in protecting their intellectual property—and NFT platforms likewise will need to promptly remove content if a copyright owner notifies it of an infringement—as the market for small pieces of content expands.

III. Profit Participations

Especially in the current NFT environment, it is not difficult to imagine the potential value of tokenized iconic moments from movies and television.  Of course, there would be a number of contractual issues for a rightsholder to navigate, which would vary from deal to deal.  Valuable clips might come from movies dating back long before the advent of NFTs, the internet, or even computers.  The relevant agreements certainly would not address NFTs, but even analogous provisions might be difficult to identify.  Agreements may refer to “clips,” for example, but typically a clip is used to promote the full program or film rather than to be monetized on its own.

Depending on what it depicts, an NFT might not be a “clip” at all.  Again using NBA Top Shot as an example, a “Moment” is not just a short video excerpt showing a pass or dunk; it is a package of on-court video, still photographs, digital artwork, and game information.  Contracts would need to be analyzed to determine if the NFT should be categorized as a clip, a derivative production, merchandising, promotional material, or something else, with potential consequences on the calculation of gross receipts and any corresponding rights to profit participations or Guild royalties.

Exclusivity provisions in film or television licenses to third parties might bar or limit a studio from “minting” an NFT from a work in its library.  Other considerations might also limit a rightsholder’s willingness to enter the NFT space.  With vast libraries of well-known and high‑quality content, however, studios are better positioned than most to take advantage of the increased interest and marketability of discrete portions of a film or program.

IV. Securities Law

Particularly in light of the SEC’s increased focus on cryptocurrencies, including its recent lawsuit accusing Ripple Labs Inc. and two of its executives of engaging in an unregistered “digital asset securities offering,” anyone involved in marketing an NFT should give careful consideration to whether the NFT is a security under U.S. law.

This should be of particular concern to the celebrities marketing their own NFTs.  Several years ago, in response to celebrity endorsements for cryptocurrency Initial Coin Offerings (ICOs), the SEC warned that “[a]ny celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.”[1]  A failure to do so would be “a violation of the anti-touting provisions of the federal securities laws.”[2]  The same principle would apply to NFTs, with the key question being whether an NFT is a security.  This issue has significant bearing on the NFT platform as well.  If an NFT is a security, the offeror must follow securities law disclosure requirements and restrictions on who may invest.

The term “security” in U.S. securities laws includes an “investment contract” as well as other instruments like stocks and bonds.  Both the SEC and federal courts often use the “investment contract” analysis to determine whether unique instruments, such as digital assets, are securities subject to federal securities laws.

To determine whether a digital asset has the characteristics of an investment contract, courts apply a test derived from the U.S. Supreme Court’s decision in SEC v. W.J. Howey Co., 328 U.S. 293 (1946).  Under that Howey test, federal securities laws apply where

  1. there is an investment of money or some other consideration,
  2. in a common enterprise,
  3. with a reasonable expectation of profits,
  4. to be derived from the efforts of others.

Again, it would depend on the NFT, but transactions that resemble a fan buying a collectible likely would not be securities under this test.  The notion that an NFT is non-fungible also makes it less likely to be a security.

Nevertheless, the NFT market is a creative one.  Many NFTs, for example, are configured through the “smart contracts”—which are essentially computer programs—to automatically pay out royalties to the digital artwork’s original creator with every future sale of the NFT on that platform; the artist could package those royalty rights for sale to potential investors.

NFT issuers also can sell fractional interests in NFTs or groups of NFTs.  As prices for some NFTs climb into the stratosphere, this approach becomes more appealing to potential buyers who want a piece of the NFT but are unwilling or unable to pay for the whole thing.  According to recent statements by SEC Commissioner Hester Peirce, however, doing so increases the likelihood that the NFT would be deemed a security under the Howey test.[3]  That likelihood grows where the NFT issuer or a third party claim to be able to help increase the NFT’s value.

V. Climate Change

A major issue that has arisen related to NFTs— and cryptocurrency generally—is their believed effect on the environment.  Articles abound comparing the energy consumption of the Ethereum blockchain to entire countries.  An analysis by Cambridge University asserts that what it calls the “Bitcoin network” uses more energy than Argentina.[4]  NFTs thus have proven somewhat controversial, with one online marketplace for digital artists dropping its plans to launch an NFT platform after backlash that included an artist labeling NFTs an “ecological nightmare pyramid scheme.”[5]

Some contend that these ecological concerns are exaggerated and misleading, noting that NFTs themselves do not cause carbon emissions.  As one platform wrote in a recent blog post, “Ethereum has a fixed energy consumption at a given point of time.”[6]  The carbon footprint of the Ethereum blockchain would be the same if people minted more NFTs or stopped minting them altogether.  But even the post acknowledges that “[i]t is true that Ethereum is energy intensive.”[7]

The crypto energy consumption issue relates to how blockchain technology currently operates.  To validate a transaction—and engender trust in a system that is not backed by any central bank or other government authority—the blockchain network relies on a method called “Proof of Work.”  The hashing function described above that allows the blocks to be chained together requires complex mathematical equations that only powerful computers can solve.  “Miners” must solve these equations to add a new block to the chain.  As incentive to solve the mathematical puzzles, the miner receives a reward of new tokens or transaction fees.

The energy costs to complete the hash functions under the Proof of Work model can be high, with miners using entire data centers to compete to solve the puzzles first and garner the reward.  To mitigate any environmental effects, mining sites may increasingly rely on renewable energy and “stranded” energy, which is surplus energy created, for example, by excess power that some hyrdroelectric dams around the world generate during rainy seasons.

Another option, at least for the Ethereum blockchain, is moving to a “Proof of Stake” model.  Rather than relying on miners using significant amounts of electricity in a race to solve an equation the fastest, the Proof of Stake model involves validators of transactions who are assigned randomly via an algorithm.  These validators also have to commit some of their own cryptocurrency, giving them a “stake” in keeping the blockchain accurate.

Reports indicate that Ethereum may move to the Proof of Stake model as soon as this year.[8]  Doing so would decrease energy consumption associated with NFTs, allow more transactions per second than in the Proof of Work model, and seemingly remove (or at least mitigate) an apparent drag on the willingness of some to embrace NFTs.

At the same time, one recent article noted what a crypto-mining finance company executive called the “‘inherent security issue of using the native tokens of a blockchain to decide the future of those tokens or the blockchain.’”[9]  If the value of the tokens fall, the value of a validator’s stake falls along with it.  The validator then has less to lose if they decide to propose an incorrect transaction or otherwise misbehave.

VI. Conclusion

NFTs present significant opportunities for content creators and owners, but they also present novel legal and policy issues across a wide range of areas as the technology continues to evolve.  Beyond those listed here, areas of potential concern include Commodities/Derivatives, Tax, Data Privacy, and Cross-Border Transactions.  Understanding the potential complications of moving into the NFT space is a necessity in anticipation of the regulatory scrutiny and litigation that often follow similar explosions of interest and investment.

_______________________

[1] https://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos (Nov. 1, 2017).

[2] Id.

[3] https://cointelegraph.com/news/sec-s-crypto-mom-warns-selling-fractionalized-nfts-could-break-the-law (Mar. 26, 2021).

[4] https://www.bbc.com/news/technology-56012952 (Feb. 10, 2021).

[5] https://www.theverge.com/2021/3/15/22328203/nft-cryptoart-ethereum-blockchain-climate-change (Mar. 15, 2021).

[6] https://medium.com/superrare/no-cryptoartists-arent-harming-the-planet-43182f72fc61 (Mar. 2, 2021).

[7] Id.

[8] https://www.coindesk.com/ethereum-proof-of-stake-sooner-than-you-think (Mar. 17, 2021).

[9] https://cryptonews.com/exclusives/proof-of-disagreement-bitcoin-s-work-vs-ethereum-s-planned-s-9788.htm (Apr. 3, 2021).


The following Gibson Dunn lawyers assisted in the preparation of this client update: Michael Dore and Jeffrey Steiner.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s Media, Entertainment & Technology Practice Group:

Scott A. Edelman – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder – Co-Chair, Media, Entertainment & Technology Practice, New York (+1 212-351-2400, osnyder@gibsondunn.com) Brian C. Ascher – New York (+1 212-351-3989, bascher@gibsondunn.com) Michael H. Dore – Los Angeles (+1 213-229-7652, mdore@gibsondunn.com) Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Ilissa Samplin – Los Angeles (+1 213-229-7354, isamplin@gibsondunn.com) Nathaniel L. Bach – Los Angeles (+1 213-229-7241,nbach@gibsondunn.com)

Please also feel free to contact the following members of the firm's Digital Currencies and Blockchain Technology team:

Jeffrey L. Steiner – Washington, D.C. (+1 202-887-3632, jsteiner@gibsondunn.com) Arthur S. Long – New York (+1 212-351-2426, along@gibsondunn.com) Stephanie Brooker – Washington, D.C. (+1 202-887-3502, sbrooker@gibsondunn.com) M. Kendall Day – Washington, D.C. (+1 202-955-8220, kday@gibsondunn.com) Thomas J. Kim – Washington, D.C. (+1 202-887-3550, tkim@gibsondunn.com) Judith Alison Lee – Washington, D.C. (+1 202-887-3591, jalee@gibsondunn.com) Michael H. Dore – Los Angeles (+1 213-229-7652, mdore@gibsondunn.com)

© 2021 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

April 8, 2021 |
Five Partners Named to Variety’s 2021 Legal Impact Report

Variety has named Century City partner Scott Edelman, Los Angeles partners Kevin Masuda and Ilissa Samplin, and New York partners Brian Ascher and Orin Snyder to its 2021 Legal Impact Report, an annual list of the leading attorneys in the entertainment industry who have “made an impact in entertainment, helping showbiz artists in their endeavors.” The report was published on April 8, 2021. Scott Edelman, Kevin Masuda and Orin Snyder are Co-Chairs of Gibson Dunn’s Media, Entertainment and Technology Practice Group. Scott Edelman represents multiple studios, television networks, music companies, production companies and other media-related entities. Recognized as go-to counsel for his deep litigation experience, he is consistently recognized by legal and industry publications for his work. Kevin Masuda represents content companies including motion picture studios and music companies, technology companies, gaming companies, private equity funds, sports and talent agencies, and other clients in various types of business transactions, including mergers and acquisitions, joint ventures, investments, restructurings, public and private securities offerings, licensing agreements, sponsorships, and other strategic agreements. Orin Snyder is one of the country’s leading trial lawyers and litigators. He represents both digital and traditional media and entertainment clients, which often seek him out for their bet-the-company cases. Brian Ascher has represented corporate and individual clients in a wide range of commercial litigation, including through trial, in both federal and state court and administrative proceedings. His practice focuses on complex civil litigation, including contract, profit participation, trade secrets, and other intellectual property disputes. Ilissa Samplin has represented corporate and individual clients in the media, entertainment, and technology industries in a wide range of litigation in both federal and state court, including breach of contract, unfair competition, copyright, trademark, and trade secret matters.

March 18, 2021 |
Media, Entertainment and Technology Litigation Update – March 2021

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Gibson Dunn’s Media, Entertainment and Technology Practice Group highlights some recent notable rulings and developments that may impact future litigation in this area.

Issue: Profit Participation Case: Nye v. The Walt Disney Co. et al., L.A. County Superior Court, Case No. BC 673736 Date: Feb. 2, 2021 Holding: SVOD/EST revenues are included within the definition of “Video Device” in a 1993 agreement regarding production and distribution of the series Bill Nye The Science Guy.

Summary: In August 2017, Bill Nye sued the Walt Disney Company and several Disney-related entities for fraudulent concealment, breach of contract, and breach of fiduciary duty, alleging that he was deprived of millions of dollars in profits for the program Bill Nye The Science Guy, which originally aired on PBS in the 1990s.  At issue in Los Angeles County Superior Court Judge David Cowan’s February 2 ruling was whether Nye could present a key contract interpretation issue to a jury, or instead if the court could resolve it as a matter of law.

The parties’ dispute was over what revenues are included within “Gross Receipts,” as defined in Nye’s 1993 agreement with Buena Vista Television.  Specifically, are streaming revenues arising from subscription video on demand (SVOD) (including income from Netflix) or electronic sell-through (EST) (for example, purchases through iTunes) included within gross receipts?  In 1993 there was no such thing as streaming technology and SVOD/EST revenues did not exist, so the court had to interpret the agreement’s application to technology that neither party was thinking about decades ago.

Buena Vista Television argued that SVOD and EST revenues are similar to a video cassette or video disc and thus are income derived from a “Video Device,” which the 1993 agreement defined as “an audio visual cassette, video disc or any similar device.”  Nye argued that income derived from a “Video Device” does not include SVOD and EST revenues.  The issue was significant because if the SVOD/EST revenues were from a “Video Device,” then the 1993 agreement permitted Buena Vista Television to contribute only 20% of that income towards Gross Receipts and pay an 80% royalty to its related entity distributing the series.  If EST/SVOD revenues were not video device income, then, according to Nye, 100% of the income should have been applied to gross receipts.

The 1993 agreement provided Nye and Buena Vista Television with a 50% stake of Net Profits, which the agreement defined as receipts remaining from gross receipts after certain specified deductions.  So the dispute was over the size of the Net Profits pie.  Roughly speaking, if EST/SVOD counted as a “Video Device,” then the Disney companies could take 80% of the revenue off the top and would only need to split the remaining 20% with Nye.  Under Nye’s view, the parties’ agreement required the full 100% of EST/SVOD revenue, after deductions, to be split between them.

The court ruled that Nye could not present his argument to a jury because, even if a jury were to find his position valid, it was inconsistent with other terms of the 1993 agreement—and therefore was not a reading of the agreement to which it was reasonably susceptible.

Of particular importance to the court was language in the agreement stating that Buena Vista Television’s rights to exploit the series applied not just to technology then existing but also to any future technology still to be developed.  The Nye court found that California law is “seemingly silent” on the point, but “new use cases” in other jurisdictions found that extrinsic evidence was rarely useful.  The court, for example, cited the Second Circuit’s holding in Boosey & Hawkes v. Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481 (2d Cir. 1998), that “intent is not likely to be helpful when the subject of the inquiry is something the parties were not thinking about.”  Id. at 487.  What mattered was the language of the agreement, which expressly contemplated future types of distribution.  According to the Nye court, it could not reach a conclusion that rendered that language “superfluous.”

For similar reasons, the court also focused on Nye’s contention that SVOD/EST did not fall into any category of distribution in the 1993 agreement that would entitle Buena Vista Television to a distribution fee.  Under Nye’s reading, neither Buena Vista Television nor its affiliated distributor would receive any compensation for SVOD/EST distribution; there would be no distribution fee for Buena Vista Television and no video royalty for its affiliated distributor.  Whereas Buena Vista Television would receive distribution fees ranging from 10% to 40% for other means of distribution, when it came to SVOD and EST, according to Nye, it would get no fee at all.  The court concluded that this would be “inconsistent with [Buena Vista Television] receiving a distribution fee under the Agreement for all other means of distribution of the Series.”

Nor could Nye rely on the fact that Buena Vista Television would receive 50% of Net Profits.  To the court, that did not equate to a guaranteed distribution fee or royalty; “[r]eceiving half of net profits is not the same as a distribution fee because there might not have been any net profits.”  According to the court, it was “not reasonable to infer that the party with the bargaining power – as all agreed [Buena Vista Television] had – would only provide for its compensation if the show proved to be successful.”

As a result, the court interpreted the 1993 Agreement to include SVOD/EST within its definition of “Video Device,” entitling Nye only to roughly 10% of overall SVOD/EST revenue rather than 50%.

Why It Matters:  The long-term impact of the ruling will be worth watching.  Some have read it broadly to mean that the court equated streaming with home video, and have questioned how a digital file streamed over the internet could be a “video device” like a physical VHS tape or disc.  That is not what the court held.  Rather, the court concluded that the similarity between SVOD/EST and a video cassette or video disc was “debatable,” and ruled that it “cannot hold as a matter of law that SVOD and EST are sufficiently similar to a video cassette or disc that they are a ‘video device.’”

That is not to say that the court believed a jury would agree with Nye’s view that SVOD and EST are outside the 1993 agreement’s definition of a video device.  It noted, for example, that Buena Vista Television “put on evidence to suggest that even with internet distribution there were still physical devices like a Roku or Apple TV box – thereby undercutting Nye’s argument that SVOD/EST do not also have a similar physical component to make them operable.”  In turn, the court acknowledged, Buena Vista Television “might still argue that the software that would be inside a smart tv screen is in some sense still a physical device – even if not a separate device.”  In short, SVOD/EST might be an evolution of, and similar to, home video, even without the clunky plastic case.

In a vacuum, the dispute about similarity could have been a jury question.  But the court concluded that the disputed issue was immaterial, and that Nye could not reach a jury, for two primary reasons: (1) the 1993 agreement had a “by any means or methods now or hereafter known” clause, and (2) Nye argued that all streaming and download revenue should be allocated to gross receipts, with no distribution fee or royalty going to the Disney companies.  The language in these agreements will differ, particularly when they pre-date the advent of streaming by years or decades.  But the lasting impact of the Nye ruling is more likely to be in elevating the importance of these two issues than in deciding whether SVOD/EST revenue is derived from a “video device.”

Issue: Anti-SLAPP Law Case: Coleman v. Grand, E.D.N.Y. No. 18-cv-5663 (ENV) (RLM) Date: Feb. 26, 2021 Holding: New York’s 2020 amendment of its anti-SLAPP law broadly expanded the universe of defamation plaintiffs who must show actual malice, and that expanded scope applies in federal court actions and is retroactive.

Summary:  In October 2018, plaintiff Steven Coleman filed a defamation lawsuit against his former romantic partner, defendant María Grand.  Grand then filed counterclaims alleging defamation and intentional infliction of emotional distress.  Eastern District of New York District Judge Eric Vitaliano held that all the claims failed as a matter of law and granted the parties’ cross-motions for summary judgment.  The unique aspect of Coleman was the standard the court applied in rejecting the parties’ respective defamation claims.

Coleman’s defamation claim arose from an email Grand sent to approximately 40 friends and colleagues, describing her experiences in the relationship with Coleman and her belief that Coleman had used his age and professional status to harass and take advantage of her.  Grand’s counterclaim arose from, among other communications, a May 2018 email that Coleman sent to approximately 80 people saying that Grand’s accusations were false, giving his account of the events, and including explicit text messages between them.

Citing New York Times Co. v. Sullivan, 376 U.S. 254 (1964), and other authorities, the Coleman court noted that federal constitutional law requires plaintiffs who are public figures to show that libel defendants acted with actual malice (knowledge the statement was false or with reckless disregard of whether it was false or not), whereas private figures need only meet a gross negligence standard.  The court further noted, however, that “for statements on matters of public concern, New York law has long required all plaintiffs to show defendants acted with gross irresponsibility and . . . recently imposed an actual malice standard in some cases.”

The court’s reference to the “recently imposed . . . actual malice standard” related to New York’s November 2020 amendments to its anti-SLAPP law targeting “Strategic Lawsuits Against Public Participation.”  A component of the new law that garnered significant attention was its expansion of the types of cases that would be subject to an anti-SLAPP motion to dismiss.  New York’s old anti-SLAPP statute narrowly applied only to a claim brought by someone who had sought or obtained a permit, lease, zoning change or other similar government entitlement where the claim related to the efforts by the defendant to report on that application or permission.  In essence, it was limited to controversies over public permits and real estate development.

The amended anti-SLAPP law made numerous fundamental changes that better enable a defamation defendant to quickly escape a bad-faith SLAPP suit without laboring through time-consuming and expensive discovery.  It expands the universe of cases subject to an anti-SLAPP motion, stays discovery while the anti-SLAPP motion is pending, requires the plaintiff to show that their libel claim has a substantial basis in law, and requires a plaintiff to pay a successful defendant’s attorneys’ fees in bringing the anti-SLAPP motion.

Coleman addressed another consequence of the amended anti-SLAPP law, which, when viewed in tandem with existing New York law, significantly raised the bar for most defamation plaintiffs to state a claim.  Holding that Coleman was not a public figure, the court recognized that, prior to November 2020, New York law would have required Coleman to show that Grand acted with “gross irresponsibility” in making the purportedly defamatory statements.  But, Grand argued, the amended anti-SLAPP statute imposed a new standard that required Coleman to make the higher showing that she acted with actual malice.

The Coleman court agreed, noting that “[i]t was an important tweak to New York law.”  New York Civil Rights Law section 76-a(2) has always imposed an actual malice standard in any “action involving public petition and participation.”  But New York’s amended anti-SLAPP law broadly expanded what actions satisfied that definition, and thus the universe of cases subject to the actual malice standard.  Rather than just actions brought by a “public applicant or permittee,” an action involving public petition and participation now includes:

  1. any communication in a place open to the public or a public forum in connection with an issue of public interest; or
  2. any other lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public interest, or in furtherance of the exercise of the constitutional right of petition.
The Coleman court noted that the only other court to address the amendment at that point concluded that the amendment to § 76-a applies in federal court and has retroactive effect.  See Palin v. New York Times Co., ___ F. Supp. 3d ___, 2020 WL 7711593, at *3-4 (S.D.N.Y. Dec. 29, 2020).  It then reached the same conclusion.  According to Coleman, “[t]he anti-SLAPP provision at issue here, § 76-a, applies in federal court because it is ‘manifestly substantive,’ governing the merits of libel claims and increasing defendants’ speech protections.”  And, the Coleman court held, the anti-SLAPP amendments were just the type of remedial legislation that should be given retroactive effect to effectuate its beneficial purpose.  See In re Gleason (Michael Vee, Ltd.), 96 N.Y.2d 117, 122 (2001). Because Coleman’s claim was based upon “lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public interest,” N.Y. Civ. Rights Law § 76-a(1)(a), the court held that he had to prove that Grand acted with actual malice.  Invoking a pre-existing protection in New York’s anti-SLAPP law that now also has much broader application, the Coleman court further noted that Coleman had to establish actual malice “by clear and convincing evidence.”  N.Y. Civ. Rights Law § 76-a(2).  The district court held that Coleman failed to meet that burden, and that Grand’s statements were protected opinion in any event, so his defamation claim was dismissed.  As “for the flip side,” as the court described it, Grand failed to meet her burden to show actual malice by clear and convincing evidence, and Coleman’s statements were protected opinion, so Grand’s counterclaims failed as well.  Grand’s intentional infliction of emotional distress claim also failed because the alleged acts did not meet the “exceedingly high bar required to constitute IIED.” Why It Matters:  In Palin, the Southern District of New York court recognized that former vice presidential candidate Sarah Palin was a public figure, so the court held that it “need not and does not address whether § 76-a subjects to New York’s actual malice rule a broader collection of plaintiffs than does the First Amendment.”  2020 WL 7711593, at *4 n.5.  Less than two months later, Coleman reached that exact conclusion.  It is the first federal court to hold that New York’s amended anti-SLAPP law requires a vastly expanded universe of defamation plaintiffs to prove actual malice, and to do so by clear and convincing evidence. That standard does not apply to every defamation claim by a private plaintiff.  But if the challenged speech is on a “matter of public interest,” the plaintiff’s burden increases significantly regardless of whether they are a public or private figure.  And in defining the scope of those matters of public interest, the amended law states that “‘public interest’ shall be construed broadly, and shall mean any subject other than a purely private matter.”  N.Y. Civ. Rights Law § 76-a(1)(d).  Coleman thus shows both how New York has significantly increased its protections for a wide range of defamation defendants and that its now broadly applicable “actual malice” protection applies in cases filed in federal court.

The following Gibson Dunn lawyers assisted in the preparation of this client update: Michael Dore and Marissa Moshell.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s Media, Entertainment & Technology Practice Group:

Scott A. Edelman – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder – Co-Chair, Media, Entertainment & Technology Practice, New York (+1 212-351-2400, osnyder@gibsondunn.com) Brian C. Ascher – New York (+1 212-351-3989, bascher@gibsondunn.com) Michael H. Dore – Los Angeles (+1 213-229-7652, mdore@gibsondunn.com) Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Ilissa Samplin – Los Angeles (+1 213-229-7354, isamplin@gibsondunn.com) Nathaniel L. Bach – Los Angeles (+1 213-229-7241,nbach@gibsondunn.com)

© 2021 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

February 2, 2021 |
Brian Ascher and Molly Senger Named Among LMG’s 2020 Rising Stars Americas

Euromoney Legal Media Group named New York partner Brian Ascher and Washington D.C. partner Molly Senger among its 2020 Rising Stars Americas in their respective practice areas. Ascher was named one of two Rising Stars in the Media and Entertainment category and was also recognized nationally in the United States category. Senger was named one of two Rising Stars in the Labor and Employment category. The awards were announced on January 28, 2021. Brian Ascher’s practice focuses on complex civil litigation, including contract, profit participation, trade secrets, and other intellectual property disputes.  He also has significant experience in litigating founder disputes and First Amendment cases. Molly Senger has represented clients in a wide range of employment litigation matters, including cases involving allegations of trade secret misappropriation, wage-and-hour violations, whistleblowing, race, age, and disability discrimination, and sexual harassment.

February 2, 2021 |
Media, Entertainment and Technology Group 2020 Year-End Review

Click for PDF As we wrap up a particularly unique year in the legal industry, Gibson Dunn’s Media, Entertainment and Technology Practice Group highlights some of the notable rulings, developments, and trends that will inform industry litigation long after the COVID-19 pandemic has faded from view.

A.   Copyright Litigation

1.   Second Circuit Finds 50 Cent’s Right of Publicity Claim Against Rick Ross Preempted

On August 19, 2020, the Second Circuit held that the Copyright Act preempted a Connecticut common law right of publicity claim brought by Curtis James Jackson III (the hip-hop artist known as 50 Cent) against William Roberts (the hip-hop artist known as Rick Ross).[1] Jackson alleged that Roberts violated Jackson’s personal right of publicity when Roberts used a sample from one of Jackson’s best-known songs, “In Da Club,” in a free mixtape that Roberts released in 2015.[2] Affirming the district court’s grant of summary judgment, Judge Pierre Leval wrote for the panel that the Copyright Act impliedly preempted and, in the alternative, expressly preempted, Jackson’s state law right of publicity claim. As to implied preemption, the Second Circuit examined the state interests at play and the potential for conflict between the state law claim and the operation of federal copyright law. First, the circuit court held that “Roberts’s mere reproduction of a sound that can be recognized as Jackson’s voice, . . . do[es] not violate any substantial state law publicity interest.”[3] In reaching that conclusion, the Second Circuit emphasized that Roberts had not used Jackson’s name or persona “in a manner that falsely implied Jackson’s endorsement of Roberts” or his mixtape—i.e., Jackson’s right of publicity claim was not seeking to vindicate an interest in preventing consumer confusion or false endorsements.[4] Nor had Roberts used Jackson’s music “in any way derogatory, or an invasion of Jackson’s privacy”—i.e., Jackson’s claim was not seeking to vindicate a reputational or privacy interest.[5] Rather, in the circuit court’s view, the “predominant focus” of Jackson’s right of publicity claim was simply to challenge the unauthorized use of a copyright-protected sound recording.[6] But, as the Second Court noted, Jackson holds no copyright interest in “In Da Club,” which is owned by Shady Records/Aftermath Records—non-parties to the litigation.[7] If such a right of publicity claim were allowed to proceed, it “would impair the ability of a copyright holder or licensee to exploit the rights guaranteed under the Copyright Act.”[8] Second, the appellate court examined the potential for conflict between state law and federal copyright law, finding two potential conflicts weighing in favor of a finding of preemption: (a) applying the right of publicity to the publication, reproduction, or performance of the many works featuring depictions or appearances of real persons raises an “obvious and substantial” “potential for impairment of the ability of copyright holders and licensees to exploit the rights conferred by the Copyright Act”; and (b) Jackson’s suit “is more properly seen as a thinly disguised effort by the creator and performer of a work within the subject matter of copyright—who owns no copyright interest in the work—to nonetheless exert control over its distribution.”[9] The Second Circuit thus found Jackson’s claim impliedly preempted by the Copyright Act. The Second Circuit held in the alternative that Jackson’s claim was expressly (i.e., statutorily) preempted by Section 301 of the Copyright Act, finding that Jackson’s right of publicity claim focused on Roberts’s use of a work that plainly fell “within the subject matter of copyright,” as opposed to a use of Jackson’s voice independent of a work covered by the Copyright Act for the purpose of an endorsement.[10] The circuit court also found that the basis for Jackson’s right of publicity claim was “in no meaningful fashion distinguishable from infringement of a copyright.”[11] Thus, the claim was expressly preempted.

2.   Ninth Circuit Adopts New “Asserted Truths” Doctrine for Nonfiction Works

On September 8, 2020, as part of a long-running dispute, the Ninth Circuit affirmed the U.S. District Court for the District of Nevada’s decision granting judgment as a matter of law in favor of Frankie Valli, his former Four Seasons bandmates, and others involved in the creation of the musical Jersey Boys, holding that they did not infringe the copyright in a biography about the Four Seasons when creating and performing the musical.[12] Donna Corbello, widow of the ghostwriter and copyright owner of Tommy Devito’s unpublished autobiography about the band, alleged that the creators of Jersey Boys had access to the autobiography and that, in addition to infringing the copyright in the book, they had also breached a contract among the band members. At trial, a jury found that Jersey Boys infringed the book and was not a fair use. The district court subsequently vacated the jury’s verdict and entered judgment as a matter of law in favor of the defendant on the grounds that the musical was a fair use, and ordered a new trial on damages apportionment as it related to the contract issues. The Ninth Circuit affirmed without reaching the district court’s analysis of the fair use defense, finding instead that Jersey Boys did not infringe Corbello’s copyright in the work in the first place. Applying the extrinsic test for substantial similarity, the Ninth Circuit found that half of the alleged similarities between the musical and the book were common phrases, scenes-a-faire, or otherwise non-protectable, non-copyrightable elements, and the other half were non-protectable because they were held out by the book’s authors as factual.[13] In so holding, the Ninth Circuit adopted a new circuit standard for copyright protection for non-fiction works, which it dubbed the “asserted truths” doctrine, adapted from what other circuits and district courts have called “copyright estoppel”—a doctrine in which “elements of a work presented as fact are treated as fact, even if the party claiming infringement contends that the elements are actually fictional.”[14] Under this doctrine, “[a]n author who holds their work out as nonfiction [] cannot later claim, in litigation, that aspects of the work were actually made up and so are entitled to full copyright protection.”[15] The Ninth Circuit described the breadth of the asserted truths doctrine, noting that it “applies not only to the narrative but also to dialogue reproduced in a historical nonfiction work represented to be entirely truthful,”[16] and found it applied to bar the assertion of infringement as to numerous alleged similarities given the book’s “emphatic representation that it is a nonfiction autobiography.”[17]

3.   Seinfeld Prevails in “Comedians in Cars” Copyright Ownership Dispute

On May 7, 2020, the Second Circuit rejected a copyright lawsuit targeting Jerry Seinfeld’s hit Netflix show, “Comedians in Cars Getting Coffee.”[18] Shortly after Netflix announced a deal to stream the show, Christian Charles, whom Mr. Seinfeld hired to direct the show’s pilot, filed suit against Mr. Seinfeld, Netflix, and Sony Pictures, alleging that Mr. Seinfeld stole the concept for the show and that he—not Mr. Seinfeld—was the owner of the show’s copyrights.[19] Judge Nathan of the U.S. District Court for the Southern District of New York dismissed the copyright claims with prejudice, ruling that they were time-barred by the Copyright Act’s three-year statute of limitations and that the facts pled in the complaint were self-defeating.[20] The district court found that Mr. Charles’s “attempts to distinguish Second Circuit precedent” were “unavailing” and concluded that, “[b]ecause Charles was on notice that his ownership claim had been repudiated since at least 2012, his infringement claim is time-barred.”[21] Specifically, the court held that Mr. Seinfeld expressly repudiated Mr. Charles’s ownership claim “in 2011 [when he] twice rejected Charles’s request for backend compensation and made it clear that Charles’s only involvement was to be on a ‘work-for-hire’ basis” and in 2012 when Mr. Seinfeld “went on to produce and distribute the show without giving any credit to Charles.”[22] The court also recognized the opportunistic nature of the lawsuit, finding that Charles was prompted to sue after the announcement in 2017 that “Netflix inked a lucrative new deal for the show to join their platform.”[23] The Second Circuit issued a summary order affirming the judgment of the district court “for substantially the same reasons that [the district court] set out in its well-reasoned opinion.”[24] The Second Circuit agreed that the case concerned a copyright ownership dispute, as opposed to an infringement dispute—a key distinction for determining accrual of the Copyright Act’s statute of limitations, as while an infringement claim accrues after each separate infringement, an ownership claim accrues only once. The Second Circuit reaffirmed its precedent by holding that if “the ownership claim is time-barred, the infringement claim itself is also time-barred, even if any allegedly infringing activity occurred within the limitations period.”[25] Siding with the defendants’ classification of the dispute as one over copyright ownership, the Second Circuit found that Mr. Charles’s arguments to the contrary were “seriously undermined by his statements in various filings throughout this litigation which consistently assert that ownership is a central question.”[26] The Second Circuit then agreed with the defendants’ argument that Charles’s self-defeating allegations in his complaint were “enough to place [him] on notice that his ownership claim was disputed [as of 2012] and therefore this action, filed six years later, was brought too late.”[27] Shortly thereafter, Charles filed a petition for panel rehearing.[28] Citing a recently decided Sixth Circuit Court of Appeals copyright case, Everly v. Everly[29]—discussed below in this update—Charles argued that the Second Circuit erred by failing to distinguish between authorship and ownership claims in the context of determining when the statute of limitations accrued.[30] On June 10, 2020, the Second Circuit declined to adopt Everly and summarily denied Charles’s petition for panel rehearing.[31] Charles filed a petition for a writ of certiorari—arguing that Everly created a circuit split—which the U.S. Supreme Court denied on December 14, 2020.[32] The defendants’ motion for attorneys’ fees and costs is currently pending before Judge Nathan.[33] [Disclosure: Gibson Dunn represents the defendants in this action.]

4.   Ninth Circuit Rules Dr. Seuss–Star Trek Mashup Not a Fair Use

On December 18, 2020, the Ninth Circuit held that a comic book “mashup” of Dr. Seuss and Star Trek was not protected against copyright claims as a fair use.[34] The mashup, which combined Dr. Seuss’s Oh, the Places You’ll Go! with elements of the television program Star Trek, is entitled Oh, the Places You’ll Boldly Go! The Ninth Circuit’s ruling revived the 2016 infringement lawsuit brought by Dr. Seuss Enterprises against ComicMix, the creator of the comic book, after the district court entered summary judgment in favor of ComicMix last year on the basis that the comic was a fair use, but affirmed the district court’s Rule 12(c) dismissal and grant of summary judgment in favor of ComicMix on Seuss Enterprises’ trademark claim.[35] On the copyright infringement claim, the Ninth Circuit rejected the district court’s fair use conclusion, finding that each of the four statutory fair use factors weighs against Boldly! being considered a fair use. The circuit court found Boldly! was not a fair use because it placed characters in a “Seussian world that is otherwise unchanged,” was not transformative, failed to parody or comment on Dr. Seuss’s work, used a substantial quantitative amount of Go! (“replicat[ing], as much and as closely as possible from Go!, the exact composition, the particular arrangements of visual components, and the swatches of well-known illustrations”), “took the heart of Dr. Seuss’s works,” and harmed Seuss’s ability to sell derivative works, particularly where Seuss had a history of licensing authorized derivatives.[36] The Ninth Circuit, however, affirmed the district court’s ruling that Seuss’s trademark infringement claim failed because Boldly! is protected as an expressive work under the Rogers test (of Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), as adopted and extended by the Ninth Circuit’s precedents).[37] Under the Rogers test, “which balances artistic free expression and trademark rights,” the Ninth Circuit held that the Lanham Act does not apply because Boldly! was “not explicitly misleading as to its source.”[38]

5.   Liability for “Making Available” Works Protected by Copyright

Federal courts continue to grapple with the bounds of the exclusive distribution right under the Copyright Act and whether an owner’s copyright has been infringed when a protected work is “made available” to the public for permanent download or streaming, even if no one purchases the work or listens to the clip. In June 2020, in Sony Music Entertainment et al. v. Cox Communications Inc., the U.S. District Court for the Eastern District of Virginia upheld a jury verdict finding Cox, an Internet service provider, vicariously and contributorily liable for its subscribers’ infringement of the plaintiffs’ copyrights in their sound recordings and musical compositions.[39] Cox argued that direct infringement by its subscribers was not sufficiently proven at trial as the evidence supported only that the plaintiffs’ works were available for sharing, but not that they were disseminated.[40] The court considered prior Fourth Circuit caselaw holding that a work made available to the “borrowing or browsing public [ ] has completed all the steps necessary for distribution to the public,”[41] but found that line of cases to be of limited applicability, noting that direct proof of dissemination is unnecessary to bring a claim under the Copyright Act.[42] Consequently, the court found overwhelming circumstantial evidence of direct infringement through distribution based on Cox’s subscribers’ use of P2P (peer-to-peer) networks such as BitTorrent to share files.[43] On January 12, 2021, the court upheld the $1 billion award against Cox and entered judgment. The U.S. District Court for the Western District of Washington considered similar issues in SA Music, LLC v. Amazon.com, Inc., et al., addressing whether a violation of a copyright owner’s exclusive distribution rights requires actual dissemination of the infringed works by sale or other transfer of ownership, or by rental, lease or lending.[44] The plaintiffs—heirs to the rights of composers Harold Arlen, Ray Henderson, and Harry Warren—alleged that a content provider had pirated thousands of recordings of their compositions and then made them available, and sold them, in the United States through Amazon’s digital music store.[45] Amazon moved to dismiss the plaintiffs’ “making available” theory of liability (i.e., liability for making the allegedly infringing works available in Amazon’s digital music store, without corresponding sales).[46] The court granted the motion, holding that distribution of a copyright-protected recording under § 106(3) of the Copyright Act on a digital music store requires the transfer or download of a file containing the work from one computer to another.[47] In so holding, the court distinguished Fourth Circuit precedent, reasoning that although a protected work may be deemed distributed when made available in a public library or a file-sharing network, when it comes to an online music store, the work is not distributed simply by being made available because the user cannot access the full work without first paying for the right to download the work.[48]

B.   Trademark Litigation

1.   Supreme Court Holds that Combining “.com” with a Generic Term Can Create a Protectable Mark.

As we wrote last summer, on June 30, 2020, the Supreme Court voted 8-1 to reject a bright-line rule promulgated by the U.S. Patent and Trademark Office (PTO) that would prevent registration of an otherwise generic term in combination with a top-level Internet domain (such as “.com”), finding that the combination can create a protectable mark if consumers recognize the term to identify a specific source of goods or services.[49] Booking.com, a hotel reservation website, applied to register the mark BOOKING.COM. The PTO denied registration because it broke down the proposed mark into its constituent elements and determined that “booking” is the generic term for hotel reservation services and “.com” is a generic indicator of a website.[50] Booking.com appealed that decision in district court, which ruled in favor of Booking.com, relying heavily on evidence that consumers recognized the term as a unique brand name and not a generic term.[51] The Fourth Circuit affirmed.[52] The Supreme Court affirmed, with Justice Ruth Bader Ginsburg writing for the Court.[53] The Court based its holding on the “principle that consumer perception demarcates a term’s meaning.”[54] That principle applies even to marks that combine generic elements; “[b]ecause ‘Booking.com’ is not a generic name to consumers, it is not generic.”[55] The Court, however, did not adopt its own bright-line rule that all “.com” marks are protectable. Rather, the Court made clear that the protectability of marks is a fact question under the Lanham Act, and all relevant evidence must be taken into account in deciding the ultimate question of whether consumers understand a particular term to serve as a trademark, including consumer surveys, dictionaries, and usage by consumers and competitors. The Court noted that the likelihood of confusion element of a trademark claim and affirmative defenses such as fair use will prevent companies like Booking.com from claiming a monopoly over otherwise generic terms, like “booking.”[56] [Disclosure: Gibson Dunn submitted an amicus brief on behalf of Salesforce.com, Inc. et al. in support of Booking.com BV.]

2.   Videogame’s Depiction of Humvees Protected Under First Amendment

On March 31, 2020, District Judge George B. Daniels of the U.S. District Court for the Southern District of New York ruled that the First Amendment protects Activision Blizzard’s depiction of real-life Humvee vehicles in the popular Call of Duty series of war videogames.[57] Humvee manufacturer AM General brought claims under the Lanham Act and New York state law against Activision over its widespread depiction of the vehicles across nine Call of Duty games, which allow players to ride in and interact with Humvees.[58] The court held that because the Call of Duty games are “artistic or expressive,” the “Rogers test” of Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) applied to the videogames’ depictions of Humvees.[59] Under the Rogers test, courts must determine whether the contested use is an “‘integral element’ of the artistic expression.”[60] The court held that, even accepting AM General’s evidence of some actual confusion by consumers, the depiction of Humvee vehicles in Call of Duty that bear recognizable trademarks does not infringe the trademark holder’s rights because “[i]f realism is an artistic goal, then the presence in modern warfare games of vehicles employed by actual militaries undoubtedly furthers that goal.”[61] In doing so, the district court acknowledged that commercial and artistic motivations behind a depiction can coexist, and that “an artist can sell her art without the First Amendment abandoning her.”[62]

C.   First Amendment Litigation & Developments

1.   United States Agency for Global Media Senior Officials Preliminarily Enjoined from Interfering with Journalistic Activity

On November 20, 2020, Chief Judge Beryl A. Howell of the U.S. District Court for the District of Columbia issued a preliminary injunction in Turner v. USAGM, prohibiting the Trump-appointed CEO of the United States Agency for Global Media (“USAGM”), Michael Pack, and his appointed officials, from “continuing” activities likely to violate the First Amendment.[63] The defendants’ conduct at issue was directed towards journalists and editors of USAGM’s publicly funded international broadcasting networks, such Voice of America (“VOA”), and included “taking or influencing personnel actions against” journalists or editors, “attempting to influence content through communications with individual journalists or editors, and investigating purported breaches of journalistic ethics.”[64] The case was brought by career civil servants of USAGM and VOA who asserted that soon after the Senate’s June 4, 2020 confirmation of Pack as CEO of USAGM, Pack and his co-defendants “commenced a series of events designed to fundamentally undermine the networks’ independence” from the agency’s political leadership.[65] Plaintiffs claimed these events—including (among other things) attempts by the defendants to interfere “directly in the newsrooms at VOA and [other] networks” and to commence investigations into purported “breaches of journalistic ethics . . . to root out perceived liberal bias”—violated the International Broadcasting Act, 22 U.S.C. §§ 6201-16, and associated regulations, designed to “guarantee . . . the networks’ journalistic independence in the face of government oversight”—as well as the First Amendment.[66] While the district court found that subject matter jurisdiction was “likely lacking over plaintiffs’ statutory and regulatory claims,” it held that one of the plaintiffs, VOA’s Program Director, was likely to succeed on the merits of her First Amendment claim.[67] The district court rejected the defendants’ argument that this plaintiff had “no First Amendment protection for speech taken pursuant to [her] official duties,” holding that “network speech made in relation to editorial and journalistic activities is protected under the First Amendment,” specifically under the standard set forth in Pickering v. Board of Education, 391 U.S. 563 (1968).[68] Applying that standard, the court concluded that to the extent defendants had “taken or influenced personnel actions against individual journalists or editors,” had tried “to monitor VOA and network content through communications with individual editors or journalists,” and had undertaken “their own investigations of alleged discrete breaches of journalistic ethics,” the plaintiff was likely to succeed on her First Amendment claim.[69] The court found that each of the remaining preliminary injunction factors favored issuing an injunction. The court’s preliminary injunction order is currently on appeal before the D.C. Circuit.[70] [Disclosure: Gibson Dunn represents the plaintiffs in this action.]

2.   New York Passes New Right of Publicity Law.

As we noted in our Fall 2020 update, in July 2020, the New York state legislature passed a much-anticipated right of publicity bill.[71] On November 30, 2020, Governor Andrew Cuomo signed the bill into law.[72] The bill, Senate Bill S5959D/Assembly Bill No. A05605B, replaced New York Civil Rights Law § 50 and changed the right of publicity landscape in the state.[73] Significantly, the bill makes a person’s right of publicity an independent property right that is freely transferable and creates postmortem rights for forty years after the death of an individual.[74] It further “protects a deceased performer’s digital replica in expressive works to protect against persons or corporations from misappropriating a professional performance.”[75] After signing the bill into law, Governor Cuomo stated that “[i]n the digital age, deceased individuals can often fall victim to bad actors that seek to capitalize on their death and profit off of their likeness after they pass away—that ends today.”[76] He said that “[t]his legislation is an important step in protecting the rights of deceased individuals while creating a safer, fairer New York for decades to come.”[77] SAG-AFTRA praised Governor Cuomo for signing the legislation, which it believes protects its members and their families who are at risk for post-mortem exploitation.[78] The New York State Broadcasters Association, Inc., on the other hand, noted elements of the law that may narrow its scope and reduce the risk of litigation, including: (i) decedents must be domiciled in New York at the time of death; (ii) the law applies only to those who die after the legislation takes effect; (iii) rights extend for only 40 years after death; and (iv) the decedent’s estate must register with the New York Secretary of State before filing a lawsuit.[79] Governor Cuomo’s signing of the right of publicity bill followed his signing in November 2020 of another notable piece of media-related legislation: New York’s revised anti-SLAPP law. We wrote about the details of that law in a prior alert, here.

3.   First Amendment Bars Right of Publicity Claim for Alleged Inspiration of Gears of War Character

In September 2020, the Third Circuit rejected a former professional wrestler’s right of publicity lawsuit against Microsoft over a character in the Gears of War videogame, finding that the former athlete’s suit was barred by the First Amendment.[80] Lenwood Hamilton, a former professional wrestler and entertainer, alleged that Microsoft misappropriated his likeness to create the Augustus “Cole Train” Cole character.[81] The U.S. District Court for the Eastern District of Pennsylvania granted Microsoft’s motion for summary judgment, finding that the Cole character appears in such a “profoundly transformative context” that its use in Gears of Wars is protected by the First Amendment under the Transformative Use Test employed by the Third Circuit.[82] The Third Circuit affirmed.[83] Applying the Transformative Use Test, the Third Circuit found that no reasonable juror could conclude that Hamilton was the “sum and substance” of the Cole character.[84] Despite acknowledging that Hamilton and Cole undoubtedly shared similarities—such as skin tone, facial features, and build—the Third Circuit found that significant differences revealed that Hamilton was at most, one of the “raw materials” that inspired the Cole character.[85] The circuit court explained that while Cole fights “a fantastic breed of creatures in a fictional world,” Hamilton “of course, does not.”[86] Similarly, the Third Circuit noted that in the game, the Cole character is not a wrestler—as Hamilton was—but a fictional soldier.[87] It also remarked that Hamilton himself admitted the “Cole character’s persona [was] alien to him” and unreflective of Hamilton’s actual personality.[88] Finding that the Cole character had been “so transformed as to become primarily the defendant’s own expression,” the Third Circuit held that the First Amendment barred Hamilton’s claims.[89]

D.   Music Litigation & Related Developments

1.   D.C. Circuit Finds Copyright Royalty Board Improperly Set Streaming Royalties

On August 7, 2020, the D.C. Circuit held that the Copyright Royalty Board (the “Board”) failed to provide fair notice or adequately explain its decision making when setting royalty rates for the period from January 1, 2018 through December 31, 2022.[90] The Copyright Act charges the Board with setting the royalty rates and terms every five years for the compulsory mechanical licenses that allow musicians to record their own versions of songs that have been publicly released in return for set compensation.[91] On January 27, 2018, the Board issued its Initial Determination of the royalty rates and terms for the 2018-2022 mechanical license, replacing the use of different formulas and percentages for different categories with a single, uncapped total content cost rate for all categories of offerings. The Board also increased the total content cost rate to 26.2% (the rates previously ranged from about 17% to 22%) and the revenue rate from 10.5% (for most but not all categories) to 15.1%. On November 5, 2018, the Board issued its Final Determination, which closely tracked the Initial Determination, but redefined how “Service Revenue” would be calculated for bundled offerings.[92] Ruling in favor of streamers Spotify, Amazon, Google, and Pandora, the D.C. Circuit held that the Board failed to provide adequate notice of the rate structure it adopted, which deviated “substantially and unforeseeably” from the parties’ proposals, the arguments made during the evidentiary hearing, and preexisting rate structures.[93] The D.C. Circuit emphasized that the parties were deprived of the opportunity to object to the new structure, address the interplay between the new structure and increased rates, and create a record confronting the “significant, and significantly adverse, overhaul of the mechanical license royalty scheme.”[94] It further held that the Board failed to explain its rejection of prior settlements as benchmarks.[95] Finally, it held that the Board failed to explain what authority it had to redefine “Service Revenue” after publishing its Initial Determination, and remanded to the Board for further consideration.[96]

2.   Sixth Circuit Revives Suit Concerning One Everly Brother’s Termination Rights to Best-Selling Song Cathy’s Clown

On May 4, 2020, the Sixth Circuit revived a copyright dispute between Don Everly and the successors-in-interest of his deceased brother, Phil Everly, over termination rights to the former duo’s best-selling single, Cathy’s Clown.[97] When the song was written, recorded, and copyrighted by Don and Phil in 1960, both brothers were listed as authors, received royalties, and took credit publicly for having co-authored the song.[98] But, the brothers granted the copyrights to a third party, Acuff-Rose Publications.[99] Following a personal dispute, Don and Phil executed a Release and Assignment in 1980, under which Phil relinquished to Don all of his rights and interests in the song, including as to royalties and any claim of co-authorship.[100] Even after the agreement was executed, however, both brothers continued to make public statements crediting Phil as co-author.[101] Over 30 years later, in 2011, Don sought to terminate the 1960 copyright grant to Acuff-Rose Publications, and, in doing so, claimed to have exclusive copyright ownership of the song.[102] Then, in 2016, Phil’s successors-in-interest attempted to terminate the 1980 assignment of Phil’s rights to Don.[103] Don filed a complaint for declaratory relief in 2017, seeking an order declaring that he was the sole author of Cathy’s Clown and that the 1980 agreement did not grant Phil termination rights under the Copyright Act of 1976.[104] Phil’s successors-in-interest filed a counter-claim, seeking a declaration that Phil was a co-author of the song and that he had termination rights under the 2018 agreement.[105] Judge Aleta Trauger of the U.S. District Court for the Middle District of Tennessee granted summary judgment in favor of Don, finding that Phil’s authorship had been expressly repudiated no later than 2011, when he filed his notice of termination of the 1960 grant.[106] Phil’s claim of authorship was thus barred by the Copyright Act’s statute of limitations.[107] Reversing the district court, the Sixth Circuit held that a genuine factual dispute existed as to whether Don’s actions constituted express repudiation of Phil’s claims for authorship, when Phil was indisputably not the owner of the song.[108] The circuit court held that in the rare case where a dispute involves “authorship claim[s] without [] corresponding ownership claim[s],” the statute of limitations on the authorship claim does not begin until an individual claiming authorship expressly repudiates authorship status, rather than ownership status, (1) privately through direct communication; (2) publicly, including in a listed credit on the published work; or (3) implicitly by receiving remuneration for the work to which the plaintiff is entitled.[109] The Sixth Circuit explained that its test of express repudiation in the ownership context is “consistent” with the Second Circuit’s test and “should apply to such a claim for a declaration of authorship rights.”[110] Because a reasonable juror could find that no repudiation of Phil’s authorship status had taken place, the circuit court held that summary judgment was improper.[111] Judge Ralph B. Guy, Jr. dissented, reasoning that the 1980 Release constituted express repudiation and that “one cannot avoid the accrual of a claim based on a dispute over co-authorship by agreeing to give up the right to claim to be a co-author.”[112]

3.   High School Prevails in Copyright Appeal Over Choral Performances

On March 24, 2020, the Ninth Circuit upheld the U.S. District Court for the Central District of California’s grant of summary judgment in favor of Burbank High School and its competitive show choirs—the same choirs that reportedly inspired the television program Glee—in a copyright infringement suit brought by Tresóna Multimedia.[113] Tresóna had alleged that Burbank High violated its copyrights interests by failing to obtain licenses before incorporating segments of four songs into choir performances.[114] The district court had granted summary judgment in favor of Burbank High with regard to the alleged infringement of three of the songs, reasoning that Tresóna did not have standing to sue under the Copyright Act because it held only non-exclusive licenses in those works.[115] As to the fourth work, Olivia Newton John’s song “Magic,” the district court ruled that the choir director was entitled to qualified immunity and that the Booster Club and parent-members could not be held liable for any alleged infringement.[116] The Ninth Circuit largely affirmed the district court in an opinion that strongly criticized Tresóna for its “aggressive litigation strategy” against a public high school engaging in educational extracurricular activities.[117] The court agreed that Tresóna’s licenses in the three songs were not exclusive because Tresóna received its interests “from individual co-owners of copyright, without the consent of the other co-owners.”[118] With respect to one of the songs (“Magic”), the Ninth Circuit affirmed on the ground that the school’s “non-profit educational and transformative” use of the song constituted fair use.[119] After this ruling was handed down, Tresóna asked the Ninth Circuit to stay its mandate to allow Tresóna to petition for a writ of certiorari in the United States Supreme Court, contending that the Ninth Circuit incorrectly interpreted the Copyright Act.[120] Approximately five months after this motion was filed, the parties reached a settlement.[121]

4.   Musicians Sue Trump Campaign Over Song Usage

On August 4, 2020, Neil Young filed a copyright infringement lawsuit against Donald Trump’s campaign for unauthorized use of his songs at campaign rallies, stating that “Plaintiff in good conscience cannot allow his music to be used as a ‘theme song’ for a divisive, un-American campaign of ignorance and hate.”[122] The complaint objected to use of the songs “Rockin’ the Free World” and “Devil’s Sidewalk.”[123] On December 7, 2020, following the election, Young filed papers to dismiss the suit.[124] Lawsuits such as Young’s do not often prevail, as campaign venues obtain public performance licenses from ASCAP and BMI. However, due to recent controversies over the Trump campaign (primarily) performing artists’ songs against their wishes, ASCAP and BMI have begun to allow songwriters to exclude their music for political use, and warn candidates that a performance license may not cover all claims by musicians.[125] Courts have yet to determine whether this limitation is permitted under ASCAP and BMI consent decrees. Weeks after Young’s suit, on September 1, 2020, Eddy Grant filed a lawsuit against the Trump campaign, alleging the use of his song “Electric Avenue” in a campaign video tweeted by Trump infringed Grant’s copyright.[126] Trump’s campaign filed a motion to dismiss the suit on November 11, 2020.[127] Grant’s complaint, however, did not raise the issue of public performance, such as at campaign rallies, because his rights were allegedly infringed by unauthorized use in a recorded video. In its motion to dismiss, the Trump campaign claimed that its use of the song constitutes fair use, arguing that the song has been transformed by a clear “comedic, political purpose,” and that the video was “choreographed to mock President Trump’s political opponent.”[128] A ruling on the motion to dismiss is pending.

E.   Social Media Litigation

1.   TikTok Challenges Trump’s Executive Order

On December 7, 2020, U.S. District Judge Carl J. Nichols of the U.S. District Court for the District of Columbia issued a preliminary injunction barring enforcement of a set of restrictions that the Trump administration issued to ban the operation of social media application TikTok in the United States.[129] The challenged restrictions, which were published by the Secretary of Commerce in September 2020, prohibited five different types of transactions, including the provision of internet hosting services and content delivery network services, and the utilization of constituent code.[130] Plaintiffs TikTok and ByteDance filed suit on September 18, 2020, arguing that the restrictions violate the Administrative Procedure Act (“APA”) as well as several constitutional provisions, and exceed the President and Secretary’s authority under the International Emergency Economic Powers Act (“IEEPA”). On September 27, 2020, the court granted a partial preliminary injunction, enjoining the first of the five restrictions.[131] A month later, on October 30, 2020, in a separate case brought by a different plaintiff, a federal district court in Pennsylvania preliminarily enjoined all five prohibitions.[132] TikTok then renewed its motion to enjoin all five restrictions in the District of Columbia. Following a hearing, Judge Nichols found that TikTok was likely to succeed on the merits of its APA and IEEPA claims. The IEEPA expressly provides that the President’s authority “does not include the authority to regulate or prohibit, directly or indirectly,” certain activities, including “personal communications and the import or export of informational materials.”[133] The court looked to the government’s “stated goals” in issuing the prohibitions, which included “stopping the exportation of data” and “stopping the importation of propaganda,”[134] and concluded that those intended regulatory objects constituted “informational materials” and likely exceeded the President and Secretary’s IEEPA authority.[135] As to the APA claim, the court found that TikTok was likely to succeed in its claim that the Secretary’s action was arbitrary and capricious, as a result of “the Secretary’s failure to adequately consider an obvious and reasonable alternative” before issuing the prohibitions.[136] The court also declined to refrain from issuing the injunction because the restrictions at issue were also enjoined in the parallel Pennsylvania case, concluding that the Pennsylvania order was subject to appeal and could be “modified, stayed, or vacated at any time.”[137] _______________________     [1]     In re Jackson, 972 F.3d 25 (2d Cir. 2020).     [2]     Id. at 30.     [3]     Id. at 39.     [4]     Id. at 38.     [5]     Id. at 39.     [6]     Id.     [7]     Id. at 31.     [8]     Id. at 35.     [9]     Id. at 39-40.     [10]   Id. at 47-51.     [11]   Id. at 54 (citation omitted).     [12]   Corbello v. Valli, 974 F.3d 965, 984 (9th Cir. 2020).     [13]   Id.     [14]   Id. at 978.     [15]   Id.     [16]   Id. at 980.     [17]   Id. at 984.     [18]   Charles v. Seinfeld, 803 F. App’x 550, 552 (2d Cir. 2020), cert. denied, 2020 WL 7327869 (U.S. Dec. 14, 2020).     [19]   Charles v. Seinfeld, 410 F. Supp. 3d 656, 658 (S.D.N.Y. 2019).     [20]   Id. at 661.     [21]   Id. at 659, 661.     [22]   Id. at 660.     [23]   Id. at 661.     [24]   Charles, 803 F. App’x at 551.     [25]   Id.     [26]   Id.     [27]   Id. at 552.     [28]   Charles v. Seinfeld, No. 19-3335-cv, Pet. for Rehearing, ECF 94 (2d Cir. May 21, 2020) [hereinafter, Pet. for Rehearing].     [29]   Everly v. Everly, 958 F.3d 442 (6th Cir. 2020).     [30]   Pet. for Rehearing at 8-12.     [31]   Charles v. Seinfeld, No. 19-3335-cv, Order Denying Pet. for Rehearing, ECF 101 (2d Cir. June 10, 2020).     [32]   Charles v. Seinfeld, 2020 WL 7327869, at *1 (U.S. Dec. 14, 2020).     [33]   Charles v. Seinfeld, No. 18-cv-01196, Motion for Attorneys’ Fees and Costs, ECF 124 (S.D.N.Y. July 1, 2020).     [34]   Dr. Seuss Enterprises L.P. v. ComicMix LLC, 983 F.3d 443 (9th Cir. 2020).     [35]   Dr. Seuss Enterprises L.P. v. ComicMix LLC, 372 F. Supp. 3d 1101, 1128 (S.D. Cal. 2019).     [36]   Dr. Seuss Enterprises L.P., 983 F.3d at 451–61.     [37]   Id. at 461–63.     [38]   Id. at 463.     [39]   464 F. Supp. 3d 795, 805 (E.D. Va. June 2, 2020).     [40]   Id. at 809.     [41]   Id. at 810 (quoting Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199, 203 (4th Cir. 1997)).     [42]   Id.     [43]   Id. at 811.     [44]   No. 2:20-cv-00105-BAT (Arlen Docket), 2020 WL 3128534 (W.D. Wash. June 12, 2020).     [45]   Id. at *4.     [46]   Id. at *2.     [47]   Id. at *7.     [48]   Id. at *4.     [49]   U.S. Patent and Trademark Office v. Booking.com B.V., 140 S.Ct. 2298 (2020).     [50]   Id.     [51]   Id.; see also, Booking.com B.V. v. Matal, 278 F. Supp. 3d 891, 918 (2017).     [52]   Id. at 2304; see also, Booking.com B.V. v. U.S. Patent and Trademark Office, 915 F. 3d 171, 184 (2019).     [53]   Id. at 2300.     [54]   U.S. Patent and Trademark Office v. Booking.com B.V., 140 S.Ct. 2298, 2304 n.3 (2020).     [55]   Id. at 2305.     [56]   Id. at 2308.     [57]   AM General LLC v. Activision Blizzard, Inc., 450 F. Supp. 3d 467 (S.D.N.Y. 2020).     [58]   Id. at 475.     [59]   Id. at 477.     [60]   Id. at 484.     [61]   Id.     [62]   Id. at 485.     [63]   No. 20-2885 (BAH), 2020 WL 6822780, at *34.     [64]   Id.     [65]   Id. at *4-5.     [66]   Id. at *2, *6.     [67]   Id. at *10.     [68]   Id. at *26.     [69]   Id. at *33.     [70]   Grant Turner v. U.S. Agency for Global Media, No. 20-5374 (D.C. Cir. Dec. 18, 2020).     [71]   Senate Bill S5959D, 2019-2020 Legislative Session of The New York State Senate (last accessed Aug. 26, 2020), https://www.nysenate.gov/legislation/bills/2019/s5959.     [72]   Governor Cuomo Signs Legislation Establishing a “Right To Publicity” for Deceased Individuals to Protect Against the Commercial Exploitation of their Name or Likeness, Office of New York Governor Andrew M. Cuomo (last accessed Jan. 8, 2021), https://www.governor.ny.gov/news/governor-cuomo-signs-legislation-establishing-right-publicity-deceased-individuals-protect.     [73]   Jennifer E. Rothman, New York Reintroduces Right of Publicity Bill with Dueling Versions, Rothman’s Roadmap to the Right of Publicity (May 22, 2019), https://www.rightofpublicityroadmap.com/news-commentary/new-york-reintroduces-right-publicity-bill-dueling-versions.     [74]   Senate Bill S5959D, Summary Memo, supra note 72.     [75]   Id.     [76]   Governor Cuomo Signs Legislation, supra note 73.     [77]   Id.     [78]   Kevin Stawicki, Cuomo Signs Bill Recognizing Post-Mortem Publicity Rights, Law360, https://www.law360.com/articles/1333362/cuomo-signs-bill-recognizing-post-mortem-publicity-rights.     [79]   Senate Bill S5959D, Summary Memo, supra note 72; Governor Signs New Right of Publicity/Digital Replica and Deep Fakes Bill – Broadcasters Protected from Unwarranted Lawsuits; New York State Broadcasters Association, Inc., https://nysbroadcasters.org/2020/12/governor-signs-new-right-of-publicity-digital-replica-and-deep-fakes-bill-broadcasters-protected-from-unwarranted-lawsuits/.     [80]   Hamilton v. Speight, 827 F. App’x 238 (3d Cir. 2020).     [81]   Id.     [82]   Hamilton v. Speight, 413 F. Supp. 3d 423, 433-34 (E.D. Penn. 2019).     [83]   Hamilton, 827 F. App’x at 241.     [84]   Id.     [85]   Id.     [86]   Id.     [87]   Id.     [88]   Id.     [89]   Id.     [90]   Johnson v. Copyright Royalty Bd., 969 F.3d 363 (D.C. Cir. 2020).     [91]   17 U.S.C. §§ 115, 801(b).     [92]   84 Fed. Reg. 1918 (Feb. 5, 2019).     [93]   Johnson, 969 F.3d at 382.     [94]   Id. at 381, 383.     [95]   Id. at 386-87.     [96]   Id. at 389-92, 397.     [97]   Everly v. Everly, 958 F.3d 442 (6th Cir. 2020).     [98]   Id.     [99]   Id. at 445.     [100]  Id. at 446.     [101]  Id.     [102]  Id. at 447.     [103]  Id.     [104]  Id.     [105]  Id.     [106]  Id. at 448.     [107]  Id.     [108]  Id. at 459.     [109]  Id. at 453.     [110]  Id. at 452.     [111]  Id. at 457.     [112]  Id. at 470 (Guy, J., dissenting).     [113]  Tresóna Multimedia, LLC v. Burbank High Sch. Vocal Music Ass’n, 953 F.3d 638, 642, 655 (9th Cir. 2020).     [114]  Id. at 642.     [115]  Tresóna Multimedia, LLC v. Burbank High Sch. Vocal Music Ass’n, No. CV 16-4781-SVW-FFM, 2016 WL 9223889, at *3 (C.D. Cal. Dec. 22, 2016).     [116]  Id. at *8; Tresóna Multimedia, LLC v. Burbank High Sch. Vocal Music Ass’n, No. CV 16-04781-SVW-FFM, 2017 WL 2728589, at *6 (C.D. Cal. Feb. 22, 2017).     [117]  Tresóna Multimedia, LLC, 953 F.3d at 647, 652–53.     [118]  Tresóna, 953 F.3d at 646–67.     [119]  Id. at 651, 652.     [120]  Tresóna Multimedia, LLC v. Burbank High Sch. Vocal Music Ass’n, Nos. 17-56006, 17-56417, 17-56419, Tresóna Multimedia, LLC’s Motion For Stay of Mandate (9th Cir. May 21, 2020).     [121]  Tresóna Multimedia, LLC v. Burbank High Sch. Vocal Music Ass’n, Nos. 17-56006, 17-56417, 17-56419, Tresóna Multimedia, LLC’s Notice of Settlement and Stipulation of Dismissal (9th Cir. Oct. 13, 2020).     [122]  Complaint ¶ 1, Young v. Donald J. Trump for President, Inc., No. 20-cv-06063 (S.D.N.Y.) (ECF No. 6).     [123]  Id. ¶¶ 9–10.     [124]  Notice of Voluntary Dismissal, Young v. Donald J. Trump for President, Inc., No. 20-cv-06063 (S.D.N.Y.) (ECF No. 21).     [125]  See “Using Music In Political Campaigns,” ASCAP, https://www.ascap.com/~/media/files/pdf/advocacy-legislation/political_campaign.pdf.     [126]  Complaint, Grant v. Trump, No. 20-cv-07103 (S.D.N.Y.) (ECF No. 1).     [127]  Motion to Dismiss, Grant v. Trump, No. 20-cv-07103 (S.D.N.Y.) (ECF No. 19).     [128]  Id. at 10–11.     [129]  TikTok Inc. v. Trump, No. 1:20-cv-02658, 2020 WL 7233557, at *1 (D.D.C. Dec. 7, 2020).     [130]  Id. at *3.     [131]  Id. at *5.     [132]  Marland v. Trump, No. 20-4597, 2020 WL 6381397, at *14-15 (E.D.Pa. Oct. 30, 2020).     [133]  TikTok, 2020 WL 7233557, at *7 (citing 50 U.S.C. § 1702(b)).     [134]  Id. at *12.     [135]  Id.     [136]  Id. at *15.     [137]  Id. at *16.
The following Gibson Dunn lawyers assisted in the preparation of this client update: Howard Hogan, Ilissa Samplin, Brian Ascher, Nathaniel Bach, Marissa Moshell, Doran Satanove, Afia Bonner, Dillon Westfall, Kaylie Springer, Amanda LeSavage, David Kusnetz, Jeremy Bunting, Sarah Scharf, Adrienne Liu, Melanie Sava, and Hannah Yim. Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s Media, Entertainment & Technology Practice Group: Scott A. Edelman – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder – Co-Chair, Media, Entertainment & Technology Practice, New York (+1 212-351-2400, osnyder@gibsondunn.com) Brian C. Ascher – New York (+1 212-351-3989, bascher@gibsondunn.com) Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Ilissa Samplin – Los Angeles (+1 213-229-7354, isamplin@gibsondunn.com) Nathaniel L. Bach – Los Angeles (+1 213-229-7241,nbach@gibsondunn.com) © 2021 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

January 25, 2021 |
Kevin Masuda Named to The Hollywood Reporter’s Top Dealmakers of 2020

Los Angeles partner Kevin Masuda was named to The Hollywood Reporter’s Top Dealmakers of 2020 list, which “spotlights the people who kept on their toes to keep the entertainment industry on its feet.” The list was published on January 25, 2021. Kevin Masuda is Co-Chair of the firm’s Media, Entertainment and Technology Practice Group. He regularly represents content companies including motion picture studios and music companies, technology companies, gaming companies, private equity funds, sports and talent agencies, and other clients in various types of business transactions, including mergers and acquisitions, joint ventures, investments, restructurings, public and private securities offerings, licensing agreements, sponsorships, and other strategic agreements.

January 15, 2021 |
D.C. Circuit Issues Rare Opinion Clarifying Right of Public Access to National Security Information in Judicial Documents

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On January 8, 2021, the United States Court of Appeals for the D.C. Circuit in CNN v. FBI, -- F.3d --, 2021 WL 68307 (D.C. Cir. Jan. 8, 2021), issued a rare precedential opinion clarifying application of the factors relevant to determining whether competing interests outweigh the “strong presumption” of public access to judicial records, in particular, in a context in which the government provides a national security justification for continued sealing. The case arose out of CNN’s efforts to obtain copies of the “Comey Memos”—memos former FBI Director James Comey claimed to have written about his conversations with President Trump—though the D.C. Circuit’s decision does not concern access to the Comey Memos themselves, but rather access to an FBI declaration submitted in the course of litigation about the Comey Memos.

I.   Background

Following President Trump’s firing of FBI Director James Comey in 2017, news outlets, including CNN, filed Freedom of Information Act (“FOIA”) requests to obtain access to memos that Director Comey claimed to have written about his meetings with President Trump.[1] The FBI denied the FOIA request, including on the basis of the then-ongoing investigation of Special Counsel Robert Mueller into Russian interference in the 2016 presidential election.[2] CNN challenged the denial of the FOIA request in court, and to support the denial of the FOIA request, the FBI submitted an ex parte, in camera declaration from then-Deputy Assistant Director of the FBI David Archey, who oversaw all FBI employees working on the Mueller probe. Relying on the Archey declaration, Judge Boasberg of the District Court for the District of Columbia initially ruled that the FBI could withhold the Comey Memos at least until the end of the ongoing Mueller investigation.[3]

After the Department of Justice subsequently released the Comey Memos to members of Congress in redacted form, after which they were released to the public, CNN sought disclosure of the Archey declaration. Rather than disclose the declaration in its entirety, however, the FBI filed a redacted version. In a June 7, 2019 decision, the district court considered whether CNN had a common-law right of access to the unredacted Archey declaration as a judicial document.[4] The court found that CNN had established that the Archey declaration was a judicial record because the government had filed it to support its motion for summary judgment, raising a “strong presumption in favor of public access.”[5] The court next considered whether the government had established that its interest in secrecy outweighed the public right of access according to factors set forth in United States v. Hubbard, 650 F.2d 293, 317-22 (D.C. Cir. 1980):

(1) [T]he need for public access to the documents at issue; (2) the extent of previous public access to the documents; (3) the fact that someone has objected to disclosure, and the identity of that person; (4) the strength of any property and privacy interests asserted; (5) the possibility of prejudice to those opposing disclosure; and (6) the purposes for which the documents were introduced during the judicial proceedings.

The district court found that none of these factors strongly favored redaction, and in particular, that factor (1) favored disclosure due to the “enormous public interest in the Comey Memos,” even though “the Court sees little public value in the specific information that remains redacted” in the Archey declaration.[6] The district court also found that factor (2) favored disclosure because “the vast majority of the declaration” had already been released.[7] With respect to factor (3), the district court noted that while the government had objected to the disclosure on national security grounds, a “third-party objection”—which had not been made—would have more weight.”[8] The district court also found that factor (6) was the “most important” factor in its assessment and favored disclosure because the FBI introduced the declaration to persuade the court to rule in the FBI’s favor regarding disclosure of the Comey Memos.[9] The district court thus concluded that there was a heightened public interest in the redacted material that weighed in favor of its complete disclosure.[10] The district court ordered disclosure of the redacted material in the Archey declaration

II.   Access to Judicial Documents in the D.C. Circuit

On appeal, the D.C. Circuit held that the district court had erred in evaluating several of the Hubbard factors, and vacated and remanded for further proceedings.

In reviewing the district court’s decision, the D.C. Circuit acknowledged that it “ha[d] not previously given . . . sufficient guidance regarding the meaning of” the multi-factor test set forth in United States v. Hubbard,[11] which had been the subject of only six precedential opinions since its issuance in 1980.[12]

With respect to the first two Hubbard factors, the D.C. Circuit held that the district court’s lens was too broad. With respect to factor (1) the relevant consideration was the “public’s need to access the information that remains sealed, not the public’s need for other information sought in the overall lawsuit,” including the Comey Memos, which the district court had taken into consideration in evaluating this factor.[13] Similarly, with respect to factor (2), the D.C. Circuit held that the relevant consideration was “the public’s previous access to the sealed information, not its previous access to the information available in the overall lawsuit,” including the disclosed parts of the Archey declaration, which the district court had considered in evaluating this factor.[14]

In connection with the third factor, the D.C. Circuit noted that while the absence of any third-parties objecting to disclosure would usually weigh in favor of disclosure, the “national security context” had to be taken into account. Here, “the National Security Act requires the FBI to keep intelligence sources and methods confidential.”[15] Thus, the FBI was “no ordinary agency” in this context, and “the third parties with the most acute interest in the disclosure of the sealed material”—namely, “the intelligence sources whose lives may depend on those redactions”—were not in a position to object without outing themselves.[16] Thus, the D.C. Circuit noted that in assessing this factor, district courts “should consider whether secrecy plays an outsized role in the specific context” at issue.[17] The national security context also had to be considered with respect to factor (5); specifically, courts “should consider the dire consequences that may occur if an agency discloses its intelligence sources and methods” because “‘[e]ven a small chance that some court will order disclosure of a source’s identity could well impair intelligence gathering and cause sources to close up like a clam.’”[18]

The D.C. Circuit held that the district court had erred in considering factor (6)—the purpose for which the document was introduced—as the “most important” factor in its analysis.[19] It explained that when the Hubbard court referred to this factor, the purpose for which a document was used, as “the most important element” in assessing whether or not to require its disclosure, that holding was confined to “the context of that case.”[20] Indeed, “when the sixth factor highlights the fact that a sealed document didn’t affect a judicial decision, it can be the ‘most important’ element cutting against disclosure,” but “the reverse can also be true” “[w]hen a sealed document is considered as part of judicial decisionmaking.”[21] Once again, taking the “national security context of the sealed information” into account, the “sixth factor [did]n’t outweigh other factors.”[22] Rather, the D.C. Circuit found that this factor “cut both ways”; while the fact that the Archey declaration was “submitted to influence a judicial decision” weighed in favor of disclosure, the fact that “the government necessarily had to disclose information to the court for the very purpose of keeping it secret” “cut[] against disclosure.”[23]

In light of this elucidation of the Hubbard factors, the D.C. Circuit remanded the matter for further consideration by the district court. The D.C. Circuit expressly declined to address whether a First Amendment right of access might have provided an alternative ground for affirmance of the lower court’s initial decision requiring disclosure of the Archey declaration in its entirety.[24]

III.   Conclusion

CNN v. FBI offers a rare elaboration of the Hubbard factors that will be critically important for litigants seeking to withhold or force the disclosure of judicial documents, in particular in the face of objections from government agencies in the national security context. By narrowing the analysis to focus only on the public’s interest in particular information withheld, rather than the broader context, the opinion appears to put a thumb on the scale in favor of non-disclosure, at least in the national security context, for keeping secret redacted portions of court filings in all manner of litigation.

____________________

   [1] CNN v. FBI, 271 F. Supp. 3d 108 (D.D.C. 2017).

   [2]   5 U.S.C. § 552 (b)(7)(A) (exempting from disclosure “records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information . . . could reasonably be expected to interfere with law enforcement proceedings”).

   [3]   CNN v. FBI, 293 F. Supp. 3d 59, 65-66 (D.D.C. 2018).

   [4] CNN v. FBI, 384 F. Supp. 3d. 20, 43-44 (D.D.C. 2019).

   [5]   Id. at 41-42 (internal quotation marks omitted).

   [6]   Id. at 42.

   [7]   Id. at 42-43.

   [8]   Id. at 43.

   [9]   Id. at 43-44.

[10] Id. at 44.

[11] CNN, -- F.3d –, 2021 WL 68307 at *3.

[12] See Leopold v. United States, 964 F.3d 1221 (D.C. Cir. 2020); League of Women Voters v. Newby, 963 F.3d 130 (D.C. Cir. 2020); MetLife, Inc. v. Fin. Stability Oversight Council, 865 F.3d 661 (D.C. Cir. 2017); In re Sealed Case, 237 F.3d 657 (D.C. Cir. 2001); EEOC v. Nat’l Children’s Ctr., 98 F.3d 1406 (D.C. Cir. 1996); In re Application of NBC, 653 F.2d 609 (D.C. Cir. 1981).

[13]   CNN, -- F.3d –, 2021 WL 68307 at *3.

[14]   Id. (emphasis added).

[15]   Id.

[16]   Id. at *4.

[17]   Id.

[18]   Id. (quoting CIA v. Sims, 471 U.S. 159, 175 (1985)).

[19]   Id.

[20] Id.

[21]   Id. at *5.

[22]   Id..

[23] Id.

[24] Id. at *2 n.4.


The following Gibson Dunn lawyers assisted in the preparation of this client update: Anne Champion, Brian Ascher, Michael Nadler, Michael Klurfeld and Thomas A. Lloyd.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s Media, Entertainment & Technology Practice Group:

Orin Snyder – Co-Chair, Media, Entertainment and Technology Practice, New York (+1 212-351-2400, osnyder@gibsondunn.com) Anne M. Champion – New York (+1 212-351-5361, achampion@gibsondunn.com) Theodore J. Boutrous, Jr. – Co-Chair, Litigation Practice, Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Scott A. Edelman – Co-Chair, Media, Entertainment and Technology Practice, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Co-Chair, Media, Entertainment and Technology Practice, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) © 2021 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

December 28, 2020 |
COVID-19 Relief Bill Creates New Small Claims Copyright Board, Stronger Criminal Penalties for Illicit Streaming

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On December 27, 2020, President Trump signed the bipartisan COVID-19 relief and government funding bill, which incorporated the Copyright Alternative in Small-Claims Enforcement Act of 2020 (“CASE Act”) that had been pending as part of H.R. 133, as well as legislation designed to increase criminal penalties for illicit streaming of copyright-protected content. The CASE Act contains various revisions to the Copyright Act, 17 U.S.C. §§ 101 et seq., with the goal of creating a new avenue for copyright owners to enforce their rights without having to file a lawsuit in federal court. The CASE Act creates a Copyright Claims Board within the United States Copyright Office that may adjudicate small claims of copyright infringement using streamlined procedures and award limited remedies, including no more than $30,000 in total damages in any single proceeding. The stimulus package also includes the language of a separate bipartisan bill, the Protecting Lawful Streaming Act, that amends Title 18 of the U.S. Code to make it a felony (rather than just a misdemeanor) to unlawfully stream copyright-protected content online for profit, with penalties of up to 10 years of imprisonment. We briefly summarize these key copyright provisions below.

  • Creation of Copyright Claims Board. While federal courts generally exercise exclusive jurisdiction over claims of copyright infringement,[1] the CASE Act establishes a Copyright Claims Board as an alternative forum in which parties may voluntarily resolve small claims of copyright infringement arising under Section 106 of the Copyright Act.[2] The Board consists of three Copyright Claims Officers who may conduct individualized proceedings to resolve disputes before them, including by managing discovery and conducting hearings as necessary, and awarding monetary and other relief.[3] The Officers must issue written decisions setting forth their factual findings and legal conclusions.[4]  But parties that choose to proceed before the Board waive their right to formal motion practice and a jury trial.[5] Participation in a proceeding before the Board is voluntary, and parties may opt out upon being served with a claim, choosing instead to resolve their dispute in federal court.[6]
  • Board Decisions. The CASE Act grants the Register of Copyrights authority to issue regulations setting forth specific claim-resolution procedures, but the CASE Act expressly articulates choice-of-law principles and states that Board decisions are not precedential.
    • Choice of Law: Although the Board sits within the Copyright Office in Washington, D.C., the Board must follow the law in the federal jurisdiction in which the action could have been brought if filed in federal court.[7] Given the conflicts that could arise where an action could have been brought in multiple jurisdictions that are split on a legal question, the Act provides that the Board may apply the law of the jurisdiction the Board determines has the most significant ties to the parties and conduct at issue.[8]
    • Board Decisions Are Not Precedential: The CASE Act provides that Board decisions may not be cited or relied upon as legal precedent in any action before any tribunal, including the Board.[9] And Board decisions have preclusive effect solely with respect to the parties to the proceeding and the claims asserted and resolved in the proceeding.[10]
  • Board Remedies. As in federal court, parties before the Board may seek actual or statutory damages. But the CASE Act caps the amount of damages the Board may award. Specifically, the Board may not award more than $15,000 in statutory damages per work, may not consider whether infringement was willful (and, therefore, may not increase a per work statutory award based on willfulness, as is permitted in federal court), and may not award more than $30,000 in total actual or statutory damages in any single proceeding, notwithstanding the number of claims asserted.[11] While attorneys’ fees are recoverable under the Copyright Act,[12] the Board may not award attorneys’ fees except in the case of bad faith conduct—in which case, any fee award may not exceed $5,000, absent extraordinary circumstances, such as where a party has engaged in a pattern of bad faith conduct.[13]
  • Limited Appellate Review. The CASE Act permits parties to seek limited review of Board decisions. After the Board issues its written decision in a matter, a party may submit to the Board a written request for reconsideration.[14] If the Board declines to reconsider its decision, the party may ask the Register of Copyrights to review the Board’s decision under an abuse of discretion standard of review.[15] If the Register does not provide the requested relief, the party may then seek an order from a district court vacating, modifying, or correcting the Board’s determination under only very limited circumstances: if (a) the determination was the result of fraud, corruption, misrepresentation, or other misconduct; (b) the Board exceeded its authority or failed to render a final determination; or (c) the determination was based on a default or failure to prosecute due to excusable neglect.[16]
  • Bar on Repeat Frivolous Filings. In an attempt to deter copyright trolls from filing repeated, frivolous claims before the Board, the CASE Act provides that any party who pursues a claim or defense in bad faith more than once in a 12-month period may be barred from initiating a claim before the Board for 12 months.[17] The CASE Act also grants the Register of Copyrights authority to issue regulations limiting the number of proceedings a claimant may initiate in any given year.[18]
  • Implications of the CASE Act. The CASE Act authorizes the Register of Copyrights to issue implementing regulations setting forth specific procedures for proceedings before the Board, so it remains to be seen exactly how the Board will conduct proceedings before it. It also is an open question how and whether the Board will resolve constitutional questions that arise in copyright infringement actions, such as First Amendment questions relating to the fair use defense. Further, it remains to be seen whether defendants in small copyright disputes will consent to Board proceedings, or will opt out in favor of the federal courts. Regardless, the CASE Act creates mechanisms for the more efficient and economical pursuit of small claims of copyright infringement, where the expense of litigating in federal court would otherwise exceed any potential recovery.
  • Protecting Lawful Streaming Act. The separate criminal copyright provisions tucked into the stimulus bill are designed to address a loophole under current law that allows the reproduction and distribution of copyright-protected material to be charged as felonies, but only allows the live streaming (or “publicly performing”) of such works to be charged as a misdemeanor. According to the legislative history, the bill sponsors thought it was important to recognize that streaming, rather than copying, has become the primary way that audiences consume entertainment. This new statutory language will allow the U.S. Justice Department to bring felony charges not against individual users, but rather against a digital transmission service that: (1) is primarily designed or provided for the purpose of streaming copyrighted works without the authority of the copyright owner or the law; (2) has no commercially significant purpose or use other than to stream copyrighted works without the authority of the copyright owner or the law; or (3) is intentionally marketed or directed to promote its use in streaming copyrighted works without the authority of the copyright owner or the law.[19] The statutory language represents a compromise with some critics who had feared that broader criminal provisions could be used to limit free speech online.
______________________

[1]   28 U.S.C. § 1338(a) (“The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to … copyrights,” and “[n]o State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to … copyrights.”).

[2]   H.R. 133 § 1502(a); § 1504(c); see also 17 U.S.C. § 106 (“the owner of copyright under this title has the exclusive rights to … reproduce the copyrighted work”; “to prepare derivative works based upon the copyrighted work”; “to distribute copies or phonorecords of the copyrighted work to the public”; “to perform the copyrighted work publicly”; “to display the copyrighted work publicly”; and “to perform the copyrighted work publicly”).

[3]   H.R. 133 §§ 1502(b)(1)–(3), 1503(a)–(b), 1504(e)(2).

[4]   Id. § 1506(s)–(t).

[5]   Id. § 1506(c), (e)-(g), (m), (p).

[6]   Id. §§ 1504(a), 1506(g).

[7]   Id. § 1506(a)(2).

[8]   Id. § 1506(a)(2).

[9]   Id. § 1507(a)(3).

[10]   Id. § 1507(a).

[11]   Id. § 1504(e)(1)(A), (D).

[12]   17 U.S.C. § 505.

[13]   H.R. 133 §§ 1504(e)(3), 1506(y)(2).

[14]   Id. § 1506(w).

[15]   Id. § 1506(x).

[16]   Id. § 1508(c).

[17]   Id. § 1506(y)(3).

[18]   Id. § 1504(g).

[19]   18 U.S.C. § 2319C.


Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please feel free to contact the Gibson Dunn lawyer with whom you usually work in the firm's Intellectual Property, Media, Entertainment and Technology, or Fashion, Retail, and Consumer Products practice groups, or the following authors:

Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Ilissa Samplin – Los Angeles (+1 213-229-7354, isamplin@gibsondunn.com) Jonathan N. Soleimani – Los Angeles (+1 213-229-7761, jsoleimani@gibsondunn.com) Shaun Mathur – Orange County (+1 949-451-3998, smathur@gibsondunn.com)

Please also feel free to contact the following practice leaders:

Intellectual Property Group: Wayne Barsky – Los Angeles (+1 310-552-8500, wbarsky@gibsondunn.com) Josh Krevitt – New York (+1 212-351-4000, jkrevitt@gibsondunn.com) Mark Reiter – Dallas (+1 214-698-3100, mreiter@gibsondunn.com)

Media, Entertainment and Technology Group: Scott A. Edelman – Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder – New York (+1 212-351-2400, osnyder@gibsondunn.com)

© 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

December 22, 2020 |
New Law Creates Procedural Tools to Challenge Fraudulent Trademark Filings and Formalizes Presumption of Irreparable Injury for Trademark Violations

Click for PDF On December 22, 2020, Congress passed the content of a pending bill, H.R. 6196, the “Trademark Modernization Act of 2020,” as part of its year-end virus relief and spending package.[1] The Act includes various revisions to the Lanham Act, 15 U.S.C. §§ 1051 et seq., intended to respond to a recent rise in fraudulent trademark applications. Among other things, the Act seeks to create more efficient processes to challenge registrations that are not being used in commerce, including by establishing new ex parte proceedings. The Act also seeks to unify the standard for irreparable harm with respect to injunctions in trademark cases, in light of inconsistencies that have emerged across federal courts after the Supreme Court’s decision in eBay v. MercExchange, LLC, 547 U.S. 388 (2006). We briefly summarize these key features of the Act below.

  • Presumption of Irreparable Harm. Section 6 of the Act provides that a “plaintiff seeking an injunction shall be entitled to a rebuttable presumption of irreparable harm” upon a finding of a violation or a likelihood of success on the merits, depending on the type of injunction sought.[2] That language effectively reinstates the standard that most courts applied in trademark cases until the Supreme Court’s decision in the patent case, eBay v. MercExchange, LLC, 547 U.S. 388 (2006). Before eBay, courts generally treated proof of likelihood of confusion as sufficient to establish both a likelihood of success on the merits and irreparable harm. In eBay, however, the Supreme Court concluded that courts deciding whether an injunction should issue must consider only “traditional equitable principles,” which do not permit “broad classifications.” Id. at 393. In light of that decision, some courts determined that liability for trademark infringement no longer presumptively supported injunctive relief and that irreparable injury had to be shown independently.[3] This Act resolves the division among the courts following eBay and clarifies that a rebuttable presumption of irreparable harm applies for trademark violations.
  • New Ex Parte Processes. Section 5 of the Act creates two new ex parte cancellation proceedings, designed to address concerns that the trademark register is becoming overcrowded with marks that have not been used in commerce properly, as the Lanham Act requires.[4] The first creates a new Section 16A to the Lanham Act, that allows for ex parte expungement of a registration that has never been used before in commerce.[5] The second creates a new Section 16B to the Lanham Act that allows for ex parte reexamination of a registration where the mark was not in use in commerce at the time of either the first claimed use, or when the application was filed.[6] The Act further authorizes the Director to promulgate regulations regarding the conduct of these proceedings.[7]
  • Changes to the Examination Process. The Act establishes two notable updates to the trademark examination process: first, it formalizes the process by which third-parties can submit evidence to the United States Patent and Trademark Office concerning a given application; second, it provides the Office with greater authority and flexibility to set the deadlines by which trademark applicants must respond to actions taken by the examiner.
    • Third-Party Evidence: The Act effectively codifies the longstanding informal practice by which third parties submit evidence to the Office regarding the registrability of a mark during the examination process. Section 3 expressly permits the submission of this evidence and also establishes new formalities concerning the process to do so—including by requiring that the submitted evidence include a description identifying the ground of refusal to which it relates, and by providing the Office with the authority to charge a fee for the submission.[8] The Act also imposes a two-month deadline for the Office to act on a third-party submission,[9] which should incentivize third-parties to submit relevant evidence to the examiner before he or she makes any decision on an initial application.
    • Response Times: Section 4 of the Act amends the Lanham Act’s provision that imposes a six month deadline for an applicant to respond to an examiner’s actions during the application process.[10] Specifically, Section 4 grants the Office the authority to determine, by regulation, response periods for different categories of applications, so long as the period is between 60 days and six months.[11]

It remains to be seen how the Office will interpret the Act and what procedures it will promulgate. It is also an open question whether the new ex parte and examination procedures created by the Act will address Congress’ underlying concerns that the register has become overcrowded with fraudulent registrations obtained by foreign entities, especially from China.[12] But it is clear that the Act will open up new fronts for administrative proceedings to challenge registered trademarks, and create new weapons for those who believe they are or would be affected by a pending application or registration. At the same time, the restoration of a formal presumption of irreparable harm in trademark infringement cases will make it procedurally easier for trademark owners to enjoin uses of confusingly similar marks and avoid consumer confusion about the source of a good or service.

_______________________

[1] See Office of Congressman Hank Johnson, Congressman Johnson’s Bipartisan, Bicameral Trademark Modernization Act Becomes Law, available at https://hankjohnson.house.gov/media-center/press-releases/congressman-johnson-s-bipartisan-bicameral-trademark-modernization-act (Dec. 22, 2020).

[2] The Act also clarifies that this amendment “shall not be construed to mean that a plaintiff seeking an injunction was not entitled to a presumption of irreparable harm before the date of the enactment of this Act.” H.R. 6196 § 6(a).

[3] See, e.g., Herb Reed Enters., LLC v. Fla. Entm’t Mgmt., Inc., 736 F.3d 1239, 1249 (9th Cir. 2013) (reading eBay as signaling “a shift away from the presumption of irreparable harm” and holding that a plaintiff must separately establish irreparable harm for a preliminary injunction to issue in a trademark infringement case); Salinger v. Colting, 607 F.3d 68, 78 n.7 (2d Cir. 2010) (suggesting that eBay’s “central lesson” that courts should not “presume that a party has met an element of the injunction standard” applies to all injunctions); see also Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 31 (1st Cir. 2011) (questioning whether, after eBay, irreparable harm can be presumed upon a finding of likelihood of success on the merits of an infringement claim).

[4] See H.R. 6196 § 5(a); House Report Section C.1 (explaining the intent behind the new proceedings).

[5] H.R. 6196 § 5(a).

[6] Id. § 5(c).

[7] Id. § 5(d) (providing that the Director “shall issue regulations to carry out” the new “sections 16A and 16B” “[n]ot later than one year after the date of the enactment of this Act.”).

[8] See H.R. 6196 § 3(a) (“A third party may submit for consideration for inclusion in the record of an application evidence relevant to a ground for refusal of registration. The third-party submission shall identify the ground for refusal and include a concise description of each piece of evidence submitted in support of each identified ground for refusal. Within two months after the date on which the submission is filed, the Director shall determine whether the evidence should be included in the record of the application. The Director shall establish by regulation appropriate procedures for the consideration of evidence submitted by a third party under this subsection and may prescribe a fee to accompany the submission.”).

[9] Id.

[10] See 15 U.S.C. § 1062(b).

[11] See H.R. 6196 § 4.

[12] See, e.g., Tim Lince, Fraudulent Specimens at the USPTO: Five Takeaways from Our Investigation – Share Your Experience, World Trademark Rev. (June 19, 2019), https://www.worldtrademarkreview.com/brand-management/fraudulent-specimens-uspto-five-takeaways-our-investigation-share-your (reporting on investigation of nearly 10,000 US trademark applications filed in May 2019 with many seemingly fraudulent specimens originating from China).


Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please feel free to contact the Gibson Dunn lawyer with whom you usually work in the firm's Intellectual Property, Fashion, Retail, and Consumer Products, or Media, Entertainment and Technology practice groups, or the following authors:

Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Alexandra Perloff-Giles – New York (+1 212-351-6307, aperloff-giles@gibsondunn.com) Doran J. Satanove – New York (+1 212-351-4098, dsatanove@gibsondunn.com)

Please also feel free to contact the following practice leaders:

Intellectual Property Group: Wayne Barsky – Los Angeles (+1 310-552-8500, wbarsky@gibsondunn.com) Josh Krevitt – New York (+1 212-351-4000, jkrevitt@gibsondunn.com) Mark Reiter – Dallas (+1 214-698-3100, mreiter@gibsondunn.com)

Media, Entertainment and Technology Group: Scott A. Edelman – Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder – New York (+1 212-351-2400, osnyder@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

December 10, 2020 |
Kevin Masuda Named to Variety’s 2020 Dealmakers Impact Report

Los Angeles partner Kevin Masuda was named to Variety’s 2020 Dealmakers Impact Report, which features the “top negotiators that have kept Hollywood humming.” The report was published December 9, 2020. Kevin Masuda is Co-Chair of the firm’s Media, Entertainment and Technology Practice Group. He regularly represents content companies including motion picture studios and music companies, technology companies, gaming companies, private equity funds, sports and talent agencies, and other clients in various types of business transactions, including mergers and acquisitions, joint ventures, investments, restructurings, public and private securities offerings, licensing agreements, sponsorships, and other strategic agreements.

December 2, 2020 |
Gibson Dunn Named a 2020 Firm of the Year

Law360 named Gibson Dunn a Firm of the Year for 2020 in its November 30, 2020 article "The Firms That Dominated in 2020,” featuring eight firms that received the most Practice Group of the Year awards.  The publication noted that its Firms of the Year are honored “for guiding landmark deals, scoring victories in high-profile disputes and helping companies navigate uncharted legal seas made rough by the coronavirus pandemic.” The firm was named a Practice Group of the Year in the following categories:

  • Appellate [PDF] - Gibson Dunn’s Appellate and Constitutional Law Practice Group’s lawyers participate in appeals in all 13 federal courts of appeals and state appellate courts throughout the United States and have presented arguments in front of the Supreme Court of the United States more than 100 times.
  • Employment [PDF] - Gibson Dunn’s Labor and Employment Practice Group covers a complete range of matters, and we are known for our unsurpassed ability to help the world’s preeminent companies tackle their most challenging labor and employment matters.  Our practice covers the full range of labor and employment matters, including wage and hour class actions; employment discrimination class actions; whistleblower litigation; non-compete agreements and trade secrets; appeals, post-trial briefings and litigation management; labor-management relations; ERISA and employee benefits; and occupational safety and health issues.
  • Energy [PDF] – Our Energy Practice Group has a wide array of experience across all parts of the energy sector – from traditional sources of energy such as oil and gas and electric utilities to renewable forms such as solar and wind. The firm has handled energy-related matters involving numerous practice areas, including mergers, acquisitions and divestitures; debt and project finance; capital markets; joint ventures; fund formation; project and infrastructure development; dispute resolution; commercial arrangements; and all manners of energy-related regulatory and antitrust issues.
  • Life Sciences [PDF] - Gibson Dunn’s Life Sciences Practice Group represents and advises innovative biotechnology, pharmaceutical and medical device companies on a wide range of legal, regulatory and strategic issues, including patent and product liability litigation, U.S. Food and Drug Administration (FDA) investigations and enforcement actions, and corporate transactions and financings.  Many Gibson Dunn lawyers hold advanced scientific degrees and have hands-on experience working in life sciences companies or within the government agencies that regulate the industry.
  • Media & Entertainment – Gibson Dunn’s Media, Entertainment and Technology Group represents both established and emerging media, entertainment and technology companies and handle our clients’ most important and complex corporate and intellectual property transactions, litigation, antitrust, internal investigations and other legal challenges.  Our litigators are well-known for their decades of experience in handling the full array of media and entertainment-related matters, including accounting, contract and profit participation disputes and enforcing film and television distribution agreements.
  • Trials [PDF] - Acclaimed as a litigation powerhouse, Gibson Dunn has a long record of outstanding successes.  The members of our Litigation Practice Group are not just litigators, they are first-rate trial lawyers who have tried cases and argued appeals before the U.S. Supreme Court and state supreme courts in addition to federal and state courts across the United States involving almost every foreseeable area of controversy.

November 11, 2020 |
Governor Andrew Cuomo Signs Revised Anti-SLAPP Law to Deter Frivolous Lawsuits and Strengthen Free Speech Protections

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On November 10, 2020, Governor Andrew Cuomo signed legislation that will expand First Amendment protections under New York’s anti-SLAPP law by providing new tools for defendants to challenge frivolous lawsuits. The bill was initially passed by the New York State Senate and Assembly on July 22, 2020. The bill amends and extends New York’s current statute (sections 70-a and 76-a the New York Civil Rights Law) addressing so-called strategic lawsuits against public participation (“SLAPPs”):[1] suits that seek to punish and chill the exercise of the rights of petition and free speech on public issues by subjecting defendants to expensive and burdensome litigation.[2] Prominent First Amendment and free speech advocates, including the Reporters Committee for Freedom of the Press,[3] Time’s Up Now,[4] the New York Civil Liberties Union,[5] and the Authors Guild[6] came out in its support, as did the Editorial Board of The New York Times.[7]

Anti-SLAPP laws currently exist in 30 states and the District of Columbia, yet despite being home to some of the world’s most prominent media and news organizations,[8] New York’s own anti-SLAPP law, enacted in 2008, has been narrowly limited to litigation arising from a public application or permit, often in a real estate development context.[9] The new law, sponsored by Senator Brad Hoylman and Assemblywoman Helene E. Weinstein, amends the civil rights law in several ways to expand and strengthen New York’s anti-SLAPP protections.

The following is a summary of the law’s changes, which take effect immediately upon enactment, and key continuing features:

  • Expands the statute beyond actions “brought by a public applicant or permittee,” to apply to any action based on a “communication in a . . . public forum in connection with an issue of public interest” or “any other lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public interest, or in furtherance of the exercise of the constitutional right of petition.”[10]
  • Confirms that “public interest” should be construed broadly, including anything other than a “purely private matter.”[11]
  • Requires courts to consider anti-SLAPP motions based on the pleadings and “supporting and opposing affidavits stating the facts upon which the action or defense is based.”[12]
  • Provides that all proceedings—including discovery, hearings, and motions—shall be stayed while a motion to dismiss is pending, except that the court may order limited discovery where necessary to allow a plaintiff to respond to an anti-SLAPP motion.[13]
  • Alters the formerly permissive standard (“may”) for awarding attorneys’ fees to provide that where the court grants such a motion, an award of fees and costs is mandatory: i.e., “costs and attorney’s fees shall be recovered.”[14]

While the amended statute provides welcome tools to defendants facing SLAPP suits, it remains to be seen how the revisions will function in practice. For example, while the revisions incorporate some of the key language and structure of California’s anti-SLAPP statute[15] —including a stay of discovery, and mandatory attorneys’ fees and costs to prevailing defendants—the proposed law preserves the standard for evaluating the merits: a motion to dismiss such an action “shall be granted” unless the plaintiff can show “that the cause of action has a substantial basis in law or is supported by a substantial argument for an extension, modification or reversal of existing law.”[16] In the context of the previous limited anti-SLAPP law, New York courts have interpreted that standard to impose a “heavy burden” on plaintiffs opposing anti-SLAPP motions,[17] requiring them to make an evidentiary showing of the facts supporting their claim and demonstrating that the defendant cannot establish a defense against it.[18] It will be up to courts to determine how that standard functions when applied to a broader range of cases, including defamation and other tort claims, that may present closer questions.

Separately, the status of the applicability of state anti-SLAPP statutes in federal court remains an open question, especially in light of the Second Circuit’s recent decision that California’s anti-SLAPP statute does not apply in federal court. La Liberte v. Reid, No. 19-3574, 2020 WL 3980223 (2d Cir. July 15, 2020). Whether New York’s revised anti-SLAPP law will be available to defendants in federal lawsuits in the Second Circuit is an open question that federal courts may soon need to confront.

Finally, courts will be asked to determine whether the revised statute is effective in currently pending actions, or if it will only have effect in actions filed after enactment. New York reserves this question as “a matter of judgment made upon review of the legislative goal,” based on “whether the Legislature has made a specific pronouncement about retroactive effect or conveyed a sense of urgency; whether the statute was designed to rewrite an unintended judicial interpretation; and whether the enactment itself reaffirms a legislative judgment about what the law in question should be.”[19] New York courts will likely conclude that the revised statute has “retroactive” effect and will apply in pending cases in light of the statute’s clear “remedial purpose.”[20] The legislature was careful to explain that the revisions intend to correct judicial “narrow[] interpret[ation]” of the existing anti-SLAPP statute and to remedy the courts’ “fail[ure] to use their discretionary power to award costs and attorney’s fees” in SLAPP suits, and that the revised statute “will better advance the purposes that the Legislature originally identified in enacting New York’s anti-SLAPP law.”[21] These factors all suggest that the revisions will take immediate effect in both pending and post-enactment lawsuits.

______________________

[1] 2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a.

[2] Understanding Anti-SLAPP Laws, Reporters Committee for Freedom of the Press, https://www.rcfp.org/resources/anti-slapp-laws/ (last visited August 3, 2020).

[3] Reporters Committee supports legislation that would strengthen New York’s anti-SLAPP law, Reporters Committee for Freedom of the Press, https://www.rcfp.org/briefs-comments/rcfp-supports-ny-anti-slapp-bills/(last visited August 3, 2020).

[4] TIME’S UP (@TIMESUPNOW), Twitter, https://twitter.com/TIMESUPNOW/status/1286031156446728193 (last accessed August 3, 2020).

[5] Senator Brad Hoylman (@bradhoylman), Twitter, https://twitter.com/bradhoylman/status/1286002251685863424 (last accessed August 3, 2020).

[6] Authors Guild Signs Letter in Support of Anti-SLAPP Statute, Authors Guild, https://www.authorsguild.org/industry-advocacy/authors-guild-signs-letter-in-support-of-anti-slapp-statute/ (last accessed August 3, 2020).

[7] The Legal System Should Not Be a Tool for Bullies, N.Y. Times, https://www.nytimes.com/2020/07/17/opinion/new-york-slapp-frivolous-lawsuits.html.

[8] Id.

[9] 2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a.

[10] Id. (emphasis added).

[11] Id.

[12] Id.

[13] Id.

[14] Id. (emphasis added).

[15] Cal. Civ. Proc. Code § 425.16.

[16] 2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a (emphasis added).

[17] 161 Ludlow Food, LLC v. L.E.S. Dwellers, Inc., 107 N.Y.S.3d 618, at *4 (N.Y. Sup. Ct. 2018), aff’d, 176 A.D.3d 434 (1st Dep’t 2019).

[18] Edwards v. Martin, 158 A.D.3d 1044, 1048 (3d Dep’t 2018).

[19] Nelson v. HSBC Bank USA, 87 A.D.3d 995, 997–98 (2d Dep’t 2011).

[20] In re Gleason (Michael Vee, Ltd.), 96 N.Y.2d 117, 122–23 (2001).

[21] 2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a.


The following Gibson Dunn lawyers assisted in the preparation of this client update: Anne Champion, Nathaniel Bach, Connor Sullivan, Kaylie Springer, and Dillon Westfall.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s Media, Entertainment & Technology Practice Group:

Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Connor Sullivan - New York (+1 212-351-2459, cssullivan@gibsondunn.com) Scott A. Edelman - Co-Chair, Media, Entertainment and Technology Practice, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda - Co-Chair, Media, Entertainment and Technology Practice, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Nathaniel L. Bach - Los Angeles (+1 213-229-7241, nbach@gibsondunn.com)

October 8, 2020 |
Media, Entertainment and Technology Group – Fall 2020 Update

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While the COVID-19 pandemic has disrupted the practice of law in 2020, courts have continued to churn out important rulings impacting the media and entertainment industries. Here, Gibson Dunn’s Media, Entertainment and Technology Practice Group highlights some of those key cases and trends: from politically charged First Amendment cases to copyright battles over rock anthems, fictional pirates, and real-life music piracy.

I.   Recent Litigation Highlights

A.   First Amendment Litigation

1.   President Trump’s Failed Efforts to Block Publication of Critical Books.

This presidential election year saw two efforts by the federal government and President Trump to enjoin the publication of forthcoming books critical of the current president. Both efforts to obtain a prior restraint order failed and the books were released, though one of the cases is far from over.

On June 20, 2020, the District Court for the District of Columbia rejected the U.S. government’s motion for a preliminary injunction and temporary restraining order to block former National Security Advisor John Bolton from publishing his memoir, The Room Where it Happened.[1] The United States filed its lawsuit on June 16, 2020, alleging that Bolton’s book contains sensitive information that could compromise national security, that its publication breached non-disclosure agreements that bound Bolton, and that Bolton abandoned the prepublication review process.[2] In addition to an injunction, the government seeks as a remedy a constructive trust over Bolton’s proceeds from the book. PEN American Center, Inc., Association of American Publishers, Inc., Dow Jones & Company, Inc., The New York Times Company, Reporters Committee or Freedom of the Press, The Washington Post, the ACLU and others filed amicus briefs opposing the government’s effort to enjoin publication, arguing, among other things, that the First Amendment prohibits prior restraints for any duration of time.[3] Rejecting the government’s motion, the district court held that, while the government is likely to succeed on the merits of its complaint, it did not establish that it would suffer irreparable injury absent an injunction.[4] Judge Lamberth had harsh words for Bolton, stating that—while not controlling as to that present motion—Bolton “has exposed his country to harm and himself to civil (and potentially criminal) liability.”[5] On July 30, 2020, the government filed a motion for summary judgment against Bolton.[6] On September 15, 2020, it was reported that the Justice Department had opened a criminal investigation into Bolton’s alleged disclosure of classified information in connection with his book.[7] On October 1, 2020, the district court denied Bolton’s motion to dismiss the government’s civil case against him.[8] [Disclosure: Gibson Dunn represented amicus PEN American Center, Inc. in opposing the government’s effort to enjoin publication.]

On July 13, 2020, the New York Supreme Court rejected a similar attempt by President Trump’s brother, Robert S. Trump—brought shortly before his death—to enjoin publication of their niece Mary Trump’s book, Too Much and Never Enough.[9] Robert Trump filed his motion for temporary restraining order and preliminary injunction against Mary Trump and her publisher, Simon and Schuster, on June 26, 2020, alleging that publication of Ms. Trump’s book would breach a confidentiality clause in a nearly 20-year-old settlement agreement among the Trump family regarding the president’s parents’ estates.[10] Ms. Trump argued, among other things, that a prior restraint is not a constitutionally permissible method of enforcing a settlement agreement’s confidentiality provision and that the contract Robert Trump invoked was not enforceable under the circumstances.[11] The Court agreed, finding that “in the vernacular of First year law students, ‘Con. Law trumps Contracts.’”[12] Ms. Trump’s book was released and became a best-seller. [Disclosure: Gibson Dunn represents Mary Trump in this lawsuit.]

2.   Defamation Litigation

a.   A Barrage of Defamation Claims, Settlements, Trials, and Dismissals.

The past year has been particularly active in the defamation arena. While media defendants have won some high-profile victories over slander and libel claims, such claims remain a threat, and plaintiffs continue to file lawsuits with headline-grabbing damages requests. Sarah Palin’s libel case against The New York Times Company—over a 2017 editorial that she alleges falsely tied her to a mass shooting—will proceed to trial in February 2021 after the judge denied dueling summary judgment motions and found that the case should be decided by a jury.[13] And this year, Nicholas Sandmann settled suits brought against The Washington Post and CNN over coverage of his viral-video encounter with a Native American activist at the 2019 March for Life rally in Washington D.C.[14] Sandmann still has pending suits against NBC, ABC News, CBS News, The New York Times, Gannett, and Rolling Stone.[15]

On the other hand, in December 2019, a Los Angeles jury determined that Elon Musk did not defame Vernon Unsworth when he called him a “pedo guy” during a name-calling spat on Twitter.[16] Moreover, over the past year, Congressman Devin Nunes has seen many of his defamation suits against media companies rebuffed, with courts recently dismissing his lawsuit against Esquire and journalist Ryan Lizza, and dismissing another suit against the political research firm Fusion GPS, though Nunes continues to pursue both actions.[17] Nunes also continues to try to sue Twitter and certain of its users for defamation, including a Republican political strategist and anonymous parody accounts belonging to a fake cow (Devin Nunes’ cow @DevinCow) and to Nunes’ “mother” (Devin Nunes’ Alt-Mom @NunesAlt), even after Twitter was dismissed from the case.[18] Nunes has also filed suits against McClatchy, The Washington Post, and CNN.[19] [Disclosure: Gibson Dunn represents The McClatchy Company in the suit filed by Nunes.]

b.    Rachel Maddow Wins Dismissal of One America News Network Owner’s Defamation Claim.

On May 22, 2020, Judge Cynthia A. Bashant of the Southern District of California granted Rachel Maddow, MSNBC, NBCUniversal, and Comcast’s anti-SLAPP special motion to strike in response to a complaint filed by Herring Networks, Inc., owner of the conservative news outlet One America News (“OAN”).[20] Herring Networks filed its lawsuit in September 2019 over comments Ms. Maddow made during a broadcast of The Rachel Maddow Show. During that show, she commented on a Daily Beast article that reported how OAN employed an on-air reporter who also worked for Sputnik, a pro-Kremlin news organization funded by the Russian government. While reporting on the article, Ms. Maddow exclaimed, “the most obsequiously pro-Trump right wing news outlet in America really literally is paid Russian propaganda. Their on air U.S. politics reporter is paid by the Russian government to produce propaganda for that government.”[21] Herring Networks argued Ms. Maddow’s statement that the network “really literally is paid Russian propaganda” was false and defamatory.[22]

Ms. Maddow and the other defendants challenged Herring Networks’ suit via a motion to strike under California’s anti-SLAPP law, arguing that Ms. Maddow’s statement was fully protected opinion under the First Amendment and, in any event, was substantially true.[23] The court granted the defendants’ motion, explaining Ms. Maddow clearly outlined the basis for her opinions during the segment and “inserted her own colorful commentary” regarding the facts.[24] As such, the court found the statement was protected opinion as a matter of law and disagreed with Herring Networks’ argument that Ms. Maddow’s statement raised a factual issue for a jury. The court dismissed Herring Networks’ complaint with prejudice, and ordered the defendants to file a motion to recover their fees (as required by California’s anti-SLAPP law).[25] Herring Networks has filed a notice of appeal with the Ninth Circuit. [Disclosure: Gibson Dunn represents Ms. Maddow, MSNBC, NBCUniversal, and Comcast in this action.]

c.   “Wolf of Wall Street” Libel Claim Fails.

In June 2020, the Second Circuit rejected a libel lawsuit filed against Paramount Pictures over the film “The Wolf of Wall Street,” in which Wall Street brokerage-firm attorney Andrew Greene alleged he was defamed by a fictional character in the film who Greene claimed resembled him.[26] Greene, an ex-employee of the financial firm portrayed in the film, alleged that the film featured a character that is “recognizable as him” and “depicted as engaging in behavior that defames his character.”[27] The District Court for the Eastern District of New York granted the defendants’ motion for summary judgment, holding that Greene failed to raise a genuine issue of material fact as to whether Paramount Pictures acted with knowledge or reckless disregard in making defamatory statements “of and concerning” Greene.[28]

The Second Circuit affirmed, holding that Greene’s claims failed as a matter of law because a reasonable jury would not find that Paramount Pictures acted with actual malice.[29] First, the Second Circuit found that Paramount Pictures “took appropriate steps to ensure that no one would be defamed by the Film.”[30] Those steps included reading the book and news articles on which the film was based and assigning characters fictitious names with no “specific real life analogue.”[31] Second, the circuit court found that “no reasonable viewer” of “The Wolf of Wall Street” would believe that Paramount Pictures intended the character in the film as a depiction of Greene, as Paramount Pictures knew the film character was a fictitious, composite character.[32] Also, Greene worked as head of the corporate finance department at the financial firm portrayed in the film, while the character at issue worked as a broker on the trading floor.[33] Finally, the film included a disclaimer that characters in the film were fictionalized.[34]

3.   Right of Publicity

a.   New York Considers New Right of Publicity Law.

In July 2020, both houses of the New York Legislature unanimously passed a much-anticipated proposed right of publicity bill, which awaits signature by Governor Andrew Cuomo.[35] The bill, Senate Bill S5959D/Assembly Bill No. A05605B, would replace New York Civil Rights Law § 50 and changes the right of publicity landscape in the state.[36] Significantly, the bill makes a person’s right of publicity an independent property right that is freely transferable and creates postmortem rights for forty years after the death of an individual.[37] It further “protects a deceased performer’s digital replica in expressive works to protect against persons or corporations from misappropriating a professional performance.”[38]

Given the rise of pornographic deepfakes—“hyper-realistic manipulation of digital imagery that can alter images so effectively it’s largely impossible to tell real from fake”[39]—SAG-AFTRA called the bill’s passage “a remarkable step in the ongoing effort to protect our members, and all performers, from the exploitation of our images and voices – the very assets we use to make a living.”[40] But others, including the Motion Picture Association of America (“MPAA”) and the New York State Broadcasters Association, Inc., have voiced concerns about the bill’s implications, arguing it chills speech and presents First Amendment concerns.[41] Specifically, the MPAA argues that the bill’s language is vague and overbroad and interferes with the ability of filmmakers to tell stories inspired by real people and events.[42]

B.   Profit Participation & Royalties

1.   AMC Prevails in First The Walking Dead Profits Trial in California.

On July 22, 2020, following a bench trial, Judge Daniel Buckley of the Superior Court for the County of Los Angeles issued a sweeping ruling in favor of AMC in a profit participation action regarding the hit AMC series The Walking Dead.[43] This California lawsuit, governed by New York contract law, was brought by various show participants, including Robert Kirkman, David Alpert, and Gale Anne Hurd. The case also involved issues pertaining to spin-offs Fear the Walking Dead and Talking Dead. The profit participants alleged that AMC failed to properly account to them under their agreements, and Judge Buckley ordered the eight-day trial to resolve key, gateway issues of contractual interpretation.

Those issues included (1) whether AMC’s standard modified adjusted gross receipts definition (“MAGR Definition”) governed the calculation, reporting, and payment of MAGR to the plaintiffs; and (2) whether the affiliate transaction provision in certain plaintiffs’ agreements applied to AMC Network’s exhibition of The Walking Dead.[44]

Judge Buckley found that AMC’s standard MAGR Definition governed the calculation, reporting, and payment of MAGR to the plaintiffs, even where the MAGR exhibit was supplied after the plaintiffs signed their agreements. The court looked at the plain text of the parties’ agreements, which stated that “MAGR shall be defined, computed, accounted for and paid in accordance” with AMC’s MAGR Definition, and explained that “New York courts routinely uphold the right of one party to a contract to fix a material price term in the future.”[45] The court also noted that the plaintiffs bargained for and received particular MAGR protections in the agreements themselves.[46] Though the court found looking to extrinsic evidence was unnecessary, it explained how years of post-performance conduct only confirmed AMC’s position that its MAGR Definition controlled, with certain plaintiffs waiting four years to object to the MAGR Definition after they received it, all the while accepting payments from AMC under that definition.[47]

One of the plaintiffs’ key arguments was that the license fee imputed for AMC Network’s exhibition of The Walking Dead, which appeared in the MAGR Definition, was too low and not in compliance with the affiliate transaction provisions in their agreements. Those provisions required “‘AMC’s transactions with Affiliated Companies [to] be on monetary terms comparable with the terms on which AMC enters into similar transactions with unrelated third party distributors for comparable programs after arms’ length negotiation.”[48] The court held AMC Network’s exhibition of The Walking Dead was governed by the imputed license fee in the MAGR Definition, and that the affiliate transaction provisions only applied to transactions where the participant “has no seat at the table to negotiate. . . .”[49] The court found the provision did not apply to the kind of internal rights transfers the plaintiffs challenged.

Similar lawsuits over The Walking Dead were filed by CAA and Frank Darabont in New York.[50] The consolidated jury trial in these lawsuits is scheduled to begin in April 2021. [Disclosure: Gibson Dunn represents AMC in these actions.]

C.   #MeToo Litigation

1.   Ninth Circuit Revives Ashley Judd’s Harassment Claim against Harvey Weinstein.

On July 29, 2020, the Ninth Circuit ruled that the actor Ashley Judd could proceed with her sexual harassment claim against Harvey Weinstein. Ms. Judd filed her action alleging defamation, sexual harassment, intentional interference with prospective economic advantage, and unfair competition on April 30, 2018. Ms. Judd’s claims stemmed from events occurring in and around 1997, at which time Ms. Judd alleges Mr. Weinstein invited her, a Hollywood newcomer, to a “general” industry meeting at the Peninsula Hotel in Beverly Hills, where she was to seek advice and guidance. When Ms. Judd arrived, she was directed to Mr. Weinstein’s private hotel room, where Mr. Weinstein appeared in a bathrobe, asked to give Ms. Judd a massage, and asked her to watch him shower.

Judge Phillip Gutierrez of the Central District of California granted Mr. Weinstein’s motion to dismiss Ms. Judd’s sexual harassment claim, brought pursuant to California Civil Code section 51.9, finding Ms. Judd and Mr. Weinstein’s relationship did not fall within the definition of a “business, service, or professional relationship” under the statute. The court nonetheless explained that “an appellate decision on these important issues could provide needed guidance to lower courts applying § 51.9.” Ms. Judd appealed the dismissal of her sexual harassment claim to the Ninth Circuit.

Reversing the district court, the Ninth Circuit explained that “[Ms. Judd’s and Mr. Weinstein’s] relationship consisted of an inherent power imbalance wherein Weinstein was uniquely situated to exercise coercion or leverage over Judd by virtue of his professional position and influence as a top producer in Hollywood.”[51] The court held that section 51.9 does, in fact, cover such business or professional relationships where there is an inherent power imbalance.[52] [Disclosure: Gibson Dunn represents Ashley Judd in this action.]

D.   Music Industry Litigation

1.   Led Zeppelin Prevails in En Banc “Stairway” Ruling.

On March 9, 2020, the Ninth Circuit, sitting en banc, reinstated a Los Angeles jury’s 2016 verdict clearing Led Zeppelin of infringing the band Spirit’s song “Taurus.”[53] Michael Skidmore, the trustee of for the estate of Spirit’s founding member Randy Wolfe (pka Randy California), had alleged that the opening riff of “Stairway to Heaven” is substantially similar to “Taurus,” and infringed Wolfe’s copyright in the composition. In 2016, the jury found no substantial similarity between “Taurus” and the rock anthem under the extrinsic test for unlawful appropriation. But in September 2018, a Ninth Circuit three-judge panel vacated the verdict and remanded the case for a new trial.[54] The three-judge panel found that lack of an instruction explaining copyrights that cover the selection and arrangement of music, combined with an allegedly faulty instruction on the requisite element of originality prejudicially “undermined the heart of plaintiff’s argument.”[55]

The March 2020 en banc ruling overturned the panel in a detailed opinion, agreeing with U.S. District Judge R. Gary Klausner that the 1909 Copyright Act, not the 1976 Copyright Act, governed, and that only the bare-bones “deposit copy” of “Taurus” was properly introduced for comparison to “Stairway to Heaven.”[56] The en banc panel held that “[b]ecause the 1909 Copyright Act did not offer protection for sound recordings, [Spirit]’s one-page deposit copy defined the scope of the copyright at issue.”[57] Thus, it was not error for the district court to deny the plaintiff’s request to play for the jury sound recordings of “Taurus.”[58]

The en banc panel also rejected the “inverse ratio rule” previously adopted by the Ninth Circuit, under which it had “permitted a lower standard of proof of substantial similarity where there is a high degree of access.”[59] To preserve the inverse ratio rule, Judge McKeown wrote for the en banc panel, would “unfairly advantage[] those whose work is most accessible by lowering the standard of proof for similarity,” thereby benefitting “those with highly popular works.”[60] The “Stairway” case had been closely watched by the music industry and attracted numerous amicus at the court of appeals, including the U.S. Department of Justice supporting Led Zeppelin’s position on appeal. On October 5, 2020, the U.S. Supreme Court denied Skidmore’s petition for writ of certiorari.[61]

2.   Labels’ and Publishers’ Billion-Dollar Verdict Against Cox Upheld.

On June 2, 2020, U.S. District Judge Liam O’Grady of the Eastern District of Virginia largely upheld a $1B verdict against Cox Communications won by over 50 records labels and music publishers, including Sony Music Entertainment, Universal Music Group, and Warner Bros. Records.[62]

Judge O’Grady rejected Cox’s contention that the evidence at trial was insufficient, concluding that there was “overwhelming” and “strong” evidence that Cox’s users illegally reproduced the sound recordings and distributed them over Cox’s network.[63] Further, there was “ample” evidence for the jury to conclude that Cox gained some direct benefit from the infringement and find Cox liable for vicarious copyright infringement.[64] Judge O’Grady emphasized evidence showing that “Cox looked at customers’ monthly payments when considering whether to terminate them for infringement.”[65]

Judge O’Grady also rejected Cox’s argument that the award was “grossly excessive.”[66] He noted that the per-work damages of $99,830.29 were more than $50,000 below the statutory maximum under the Copyright Act,[67] but ordered additional briefing on the issue of the calculation of the number of infringed works.[68]

3.   Music Publishers and Peloton Reach Settlement in Copyright Suit After Dismissal of Cycling Company’s Counterclaims.

In March 2019, more than a dozen music publishers filed suit in New York federal court alleging popular fitness tech company Peloton failed to license songs for its online classes, thereby violating the publishers’ copyrights.[69] The publishers claimed over $150 million in damages for unlicensed uses of more than 1000 songs, with each use of an allegedly unlicensed song constituting a separate infringement because audiovisual “sync” licenses are issued on a per-video basis.[70] The publishers also alleged Peloton’s conduct was “deliberate and willful” because the company had obtained the necessary “sync” licenses from other music copyright owners.[71]

In response, Peloton counterclaimed against the publishers, alleging that any failure to obtain licenses was due to the National Music Publishers’ Association’s (“NMPA”) creation of a price fixing “cartel.”[72] Peloton alleged the NMPA both engaged in “horizontal collusion” to inflate prices in its own negotiations with the company and tortiously interfered with Peloton’s ability to negotiate with individual publishers.[73] On January 29, 2020, U.S. District Judge Denise Cote dismissed Peloton’s counterclaims without leave to amend, finding that Pelton failed define a “relevant market,” a necessary element to Peloton’s antitrust claim under Section 1 of the Sherman Act.[74] A month later, the case settled.

4.   Second Circuit Upholds Copyright Win for Drake.

On February 3, 2020, the Second Circuit affirmed the Southern District of New York’s ruling that Drake did not violate copyright law by incorporating a 35-second clip of the song “Jimmy Smith Rap” into his song “Pound Cake” without a license.[75] The lawsuit began in April 2014, when the estate of Jimmy Smith sued Drake and Drake’s record labels and publishers for copyright infringement. The defendants moved for summary judgment, arguing that Drake’s use of the song was protected by the fair use doctrine.[76]

The District Court granted the defendants’ motion for summary judgment in May 2017.[77] In its 2020 ruling, the Second Circuit affirmed, finding Drake’s use of the song was protected by the fair use doctrine, as the use was “transformative.”[78] The Court stated that “‘Pound Cake’ criticizes the jazz-elitism that the ‘Jimmy Smith Rap’ espouses. By doing so, it uses the copyrighted work for a purpose, or imbues it with a character, different from that for which it was created.”[79] In addition, the Court found “no evidence that ‘Pound cake’ usurps demand for ‘Jimmy Smith Rap.’”[80] [Disclosure: Gibson Dunn represented one of the defendants in the action.]

E.   Copyright Litigation

1.   Ninth Circuit Revives Screenwriter’s Pirates of the Caribbean Copyright-Infringement Suit.

On July 22, 2020, the Ninth Circuit revived a screenwriter’s copyright-infringement suit against The Walt Disney Company alleging that the film Pirates of the Caribbean: Curse of the Black Pearl is substantially similar to plaintiff’s screenplay.[81] The district court had granted Disney’s Rule 12(b)(6) motion to dismiss on the grounds that the two works were not substantially similar as a matter of law.[82] In reversing, the Ninth Circuit acknowledged “striking differences between the two works,” but nonetheless found “the selection and arrangement of the similarities between them [to be] more than de minimis” and sufficient to warrant denial of Disney’s motion.[83]

The district court had noted the similarities between the works but concluded that many of the shared elements were “unprotected generic, pirate-movie tropes.”[84] The Ninth Circuit disagreed, explaining “it is difficult to know whether such elements are indeed unprotectible material” at the pleading stage, and further noting that additional evidence—including expert testimony—“would help inform the question of substantial similarity.”[85] According to the court, such additional evidence would be “particularly useful” given that “the blockbuster Pirates of the Caribbean film franchise may itself have shaped what are now considered pirate-movie tropes.”[86] Ultimately, because “[t]he district court erred by failing to compare the original selection and arrangement of the unprotectible elements between the two works,” the Ninth Circuit reversed the dismissal and remanded for further proceedings.[87] And on August 31, 2020, the Ninth Circuit denied Disney’s petition for panel rehearing and for rehearing en banc. Some commentators and practitioners have noted that the ruling appears to represent the latest in a shift away from the Ninth Circuit’s prior precedents that had generally leaned toward upholding dismissals of substantial similarity suits, representing a cautionary ruling for industry defendants.[88]

2.   Copyright Act Preempts Lyrics Site Genius’s Claims Against Google.

On August 10, 2020, District Judge Margo Brodie dismissed Genius Media Group Inc.’s suit against Google. Genius Media had alleged in December 2019 that Google “misappropriated lyric transcriptions from its website.”[89] According to its complaint, Genius Media earns revenue by, among other things, licensing its database of high-quality lyrics to companies and generating ad revenue via traffic to its website.[90] In its complaint, Genius Media alleged that when users search for song lyrics, Google’s “Information Box”—which appears above the search results—displays complete song lyrics obtained from Genius Media’s website and thus reduces traffic to that site.[91] Genius Media sued Google for breach of contract, indemnification, unfair competition under New York and California law, and unjust enrichment.[92]

Judge Brodie determined, however, that Genius Media’s state law claims were preempted by the Copyright Act.[93] As an initial matter, Judge Brodie found that the transcribed song lyrics were among the works protected by the Copyright Act, and because the subject of Plaintiff’s claims was the transcribed lyrics, the subject-matter prong of the Copyright Act’s preemption test was met.[94] Judge Brodie additionally determined that Genius Media’s contract claims were “nothing more than claims seeking to enforce the copyright owner’s exclusive rights to protection from unauthorized reproduction of the lyrics and are therefore preempted”; however, Genius Media licensed, but did not own, the relevant copyrights.[95] The court found that Genius Media’s transcriptions are, in essence, derivative works, and held that “the case law is clear that only the original copyright owner has exclusive rights to authorize derivative works.”[96] Accordingly, the Court dismissed Genius Media’s complaint for failure to state a claim.[97]

______________________

   [1]   United States v. Bolton, No. 20-cv-1580, Order Denying Plaintiff’s Motion for Temporary Restraining Order and Preliminary Injunction (D. D.C. June 20, 2020).

   [2]   See id. at *1.

   [3]   See, e.g., United States v. Bolton, No. 20-cv-1580, Brief of PEN American Center, Inc. as Amicus Curiae in Support of Defendant (D. D.C. June 19, 2020).

   [4]   United States v. Bolton, No. 20-cv-1580, Order Denying Plaintiff’s Motion for Temporary Restraining Order and Preliminary Injunction, *8 (D. D.C. June 20, 2020).

   [5]   Id. at *10.

   [6]   United States v. Bolton, No. 20-cv-1580, Plaintiff’s Motion for Summary Judgment (D. D.C. July 30, 2020).

   [7]   Katie Benner, “Justice Dept. Opens Criminal Inquiry Into John Bolton’s Book,” N.Y. Times (Sept. 15, 2020), https://www.nytimes.com/2020/09/15/us/politics/john-bolton-book-criminal-investigation.html.

   [8]   Charlie Savage, “Government Lawsuit Over John Bolton’s Memoir May Proceed, Judge Rules,” N.Y. Times (Oct. 5, 2020), https://www.nytimes.com/2020/10/01/us/politics/john-bolton-book-proceeds-lawsuit.html.

   [9]   Trump v. Trump, No. 22020-51585, 2020 WL 4212159 (N.Y. Sup. Ct. July 13, 2020).

[10]   Trump v. Trump, No. 22020-51585, Motion for Temporary Restraining Order and Preliminary Injunction (N.Y. Sup. Ct. June 26, 2020).

[11]   Trump, 2020 WL 4212159, *14.

[12]   Id. at *16.

[13]   Palin v. The New York Times Co., No. 17-cv-4853, Opinion and Order on Motions for Summary Judgment (S.D.N.Y Aug. 28, 2020).

[14]   Ted Johnson, “Nick Sandmann, Student at Center of Viral Video, Settles Defamation Lawsuit Against Washington Post,” The Washington Post (July 24, 2020), https://deadline.com/2020/07/nick-sandmann-washington-post-defamation-1202994384/.

[15]   Cameron Knight, “Sandmann files 5 more defamation lawsuits against media outlets,” Cincinnati Enquirer (Mar. 3, 2020), https://www.cincinnati.com/story/news/2020/03/03/sandmann-files-5-more-defamation-lawsuits-against-media-outlets/4938142002/.

[16]   Lauren Berg, “Jury Says Elon Musk Didn’t Defame with ‘Pedo Guy’ Tweet,” Law360 (Dec. 6, 2019), https://www.law360.com/articles/1226249/jury-says-elon-musk-didn-t-defame-with-pedo-guy-tweet.

[17]   Kate Irby, “Judge tells Devin Nunes for 3rd time he can’t sue Twitter over anonymous tweets,” The Fresno Bee (Aug. 14, 2020), https://www.fresnobee.com/news/california/article244958665.html.

[18]   Id.

[19]   Id.

[20]   Herring Networks, Inc. v. Maddow, No. 19-cv-1713, Order Granting Defendants’ Special Motion to Strike (S.D. Cal. May 22, 2020).

[21]   Id. at *3 (internal quotations omitted).

[22]   Id.

[23]   See id. at *7-16.

[24]   Id. at *15.

[25]   Id. at *17.

[26] Greene v. Paramount Pictures Corp., 813 F. App’x 728 (2d Cir. 2020).

[27] Id. at 730.

[28] Greene v. Paramount Pictures Corp., 340 F. Supp. 3d 161, 172 (E.D.N.Y. 2018).

[29] Greene, 813 F. App’x at 732.

[30] Id. at 731.

[31] Id.

[32] Id.

[33] Id.

[34] Id. at

[35]   Senate Bill S5959D, 2019-2020 Legislative Session of The New York State Senate (last accessed Aug. 26, 2020), https://www.nysenate.gov/legislation/bills/2019/s5959.

[36]   Jennifer E. Rothman, New York Reintroduces Right of Publicity Bill with Dueling Versions, Rothman’s Roadmap to the Right of Publicity (May 22, 2019), https://www.rightofpublicityroadmap.com/news-commentary/new-york-reintroduces-right-publicity-bill-dueling-versions.

[37]   Senate Bill S5959D, Summary Memo, supra note 35.

[38]   Id.

[39] Eriq Gardner, Deepfakes Pose Increasing Legal and Ethical Issues for Hollywood, The Hollywood Reporter (July 12, 2019), https://www.hollywoodreporter.com/thr-esq/deepfakes-pose-increasing-legal-ethical-issues-hollywood-1222978.

[40] David Robb, SAG-AFTRA Expects NY Gov. Andrew Cuomo To Sign Law Banning “Deepfake” Porn Face-Swapping, Deadline (July 28, 2020), https://deadline.com/2020/07/deepfakes-sag-aftra-expects-andrew-cuomo-to-sign-law-banning-face-swapping-porn-1202997577/.

[41]   Ben Sheffner, New York vs. biopics? The state Legislature is poised to crack down on fact-inspired works of art, New York Daily News (June 18, 2019), https://www.nydailynews.com/opinion/ny-oped-stop-this-threat-to-free-speech-20190618-evesugulizgspk4reelegxiazu-story.html.

[42]   Id.

[43]   Kirkman v. AMC Film Holdings, LLC, No. BC672124, 2020 WL 4364279 (Cal. Super. Ct. July 22, 2020).

[44]   Id. at *4-5, *18-19.

[45]   Id. at *5.

[46]   Id. at *6.

[47]   Id. at *11-13.

[48]   Id. at *19.

[49]   Id. at *20.

[50]   Darabont v. AMC Network Entertainment LLC, No. 654328/2013 (N.Y. Sup. Ct.); Darabont v. AMC Network Entertainment LLC, No. 650251/2018 (N.Y. Sup. Ct.).

[51]   Judd v. Weinstein, 967 F.3d 952, 959 (9th Cir. 2020).

[52]   Id.

[53]   Skidmore v. Led Zeppelin, 952 F.3d 1051 (9th Cir. 2020) (“Skidmore II”).

[54]   Skidmore v. Led Zeppelin, 905 F.3d 1116 (9th Cir. 2018) (“Skidmore I”).

[55]   Id. at 1127–28.

[56]   Skidmore II, 952 F.3d at 1079.

[57]   Id.

[58]   Id. at 1063–64.

[59]   Id. at 1079.

[60]   Id. at 1068.

[61]   Bill Donahue, “Supreme Court Won’t Hear Led Zeppelin Copyright Fight,” Law360 (Oct. 5, 2020), https://www.law360.com/california/articles/1308109/supreme-court-won-t-hear-led-zeppelin-copyright-fight.

[62]   Sony Music Entm’t v. Cox Commc’ns, Inc., No. 1:18-CV-950-LO-JFA (E.D. Va. June 2, 2020).

[63]   Id. at 4–8.

[64]   Id. at 10.

[65]   Id.

[66]   Id. at 29–35.

[67]   Id. at 31.

[68]   Id. at 26.

[69]   Complaint, Downtown Music Publishing LLC, et al v. Peloton Interactive, Inc., No. 1:19-cv-02426 (S.D.N.Y. Mar. 19, 2019).

[70]   Id. at 8.

[71]   Id. at 18.

[72]   Answer to Complaint and Counterclaims Against National Music Publishers’ Association, Inc. and Plaintiff Publishers, Downtown Music Publishing LLC, et al v. Peloton Interactive, Inc., No. 1:19-cv-02426-DLC, at 35–37 (S.D.N.Y. Apr. 30, 2019).

[73]   Id. at 40–43.

[74]   Opinion & Order, Downtown Music Publishing LLC, et al v. Peloton Interactive, Inc., No. 1:19-cv-02426 (S.D.N.Y. Jan. 29, 2020).

[75]   Smith v. Graham, No. 19-28, 799 F. App’x 36 (2d Cir. Feb. 3, 2020).

[76]   Smith v. Cash Money Records, Inc., 253 F. Supp. 3d 737 (S.D.N.Y. 2017).

[77]   Id.

[78]   Smith v. Graham, No. 19-28, 799 F. App’x. 36, 78 (2d Cir. Feb. 3, 2020).

[79]   Id. at 38.

[80]   Id. at 39.

[81]   Alfred v. Walt Disney Co., --- F. App’x ---, 2020 WL 4207584 (9th Cir. July 22, 2020).

[82]   Id. at *1.

[83]   Id.

[84]   Id. at *2.

[85]   Id.

[86]   Id.

[87]   Id.

[88]   See Bill Donahue, “9th Circ. Making It Harder for Studios To Beat Copyright Suits,” Law360 (July 29, 2020), https://www.law360.com/articles/1296112/9th-circ-making-it-harder-for-studios-to-beat-copyright-suits.

[89]   Genius Media Grp. Inc. v. Google LLC, Case No. 1:19-cv-07279-MKB-VMS, Dkt. No. 22 at 1 (E.D.N.Y. Aug. 10, 2020).

[90]   Id. at 2.

[91]   Id. at 2–4.

[92]   Id. at 6.

[93]   Id. at 7.

[94]   Id. at 11.

[95]   Id. at 16; see also id. at 23, 29 (similarly finding the unjust enrichment and state-law unfair-competition claims preempted by the Copyright Act).

[96]   Id. at 18.

[97]   Id. at 36 (also denying Genius Media’s motion to remand to state court).


The following Gibson Dunn lawyers assisted in the preparation of this client update: Theodore Boutrous, Scott Edelman, Howard Hogan, Nathaniel Bach, Jonathan Soleimani, Dillon Westfall, Marissa Moshell, Kaylie Springer, Daniel Rubin, Sarah Scharf, and Abi Averill.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm's Media, Entertainment & Technology Practice Group:

Theodore J. Boutrous, Jr. - Co-Chair, Litigation Practice, Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Scott A. Edelman - Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda - Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder - Co-Chair, Media, Entertainment & Technology Practice, New York (+1 212-351-2400, osnyder@gibsondunn.com) Howard S. Hogan - Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Ari Lanin - Los Angeles (+1 310-552-8581, alanin@gibsondunn.com) Benyamin S. Ross - Los Angeles (+1 213-229-7048, bross@gibsondunn.com) Helgi C. Walker - Washington, D.C. (+1 202-887-3599, hwalker@gibsondunn.com) Nathaniel L. Bach - Los Angeles (+1 213-229-7241,nbach@gibsondunn.com)

© 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

October 5, 2020 |
Law360 Names Eight Gibson Dunn Partners as 2020 MVPs

Law360 named eight Gibson Dunn partners among its 2020 MVPs.  Law360 MVPs feature lawyers who have “distinguished themselves from their peers by securing hard-earned successes in high-stakes litigation, complex global matters and record-breaking deals.” The list was published on October 4, 2020. Gibson Dunn’s MVPs are:

  • Thomas Dupree, a Transportation MVP – Tom is Co-Partner-in-Charge of the Washington, D.C. office.  He is an experienced trial and appellate advocate. He has argued more than 80 appeals in the federal courts, including in all thirteen circuits as well as the United States Supreme Court.  He has represented clients throughout the country in a wide variety of trial and appellate matters, including cases involving punitive damages, class actions, product liability, arbitration, intellectual property, employment, and constitutional challenges to federal and state statutes.
  • Scott Edelman, a Media & Entertainment MVP – Scott is a partner in the Century City office and Co-Chair of the Media, Entertainment and Technology Practice Group.  He has first-chaired numerous jury trials, bench trials and arbitrations, including class actions, taking well over twenty-five to final verdict or decision.  He represents multiple studios, television networks, music companies, production companies and other media-related entities.
  • Shukie Grossman, a Fund Formation MVP – Shukie is a partner in the New York office and Co-Chair of the Investment Funds Practice Group.  His practice focuses on the formation of private investment funds, including domestic and offshore funds focused on buyout, growth equity, infrastructure, real estate, credit and other investment strategies.  He also advises investment firms on their operation, regulation and internal governance arrangements.
  • Andrew Lance, a Hospitality MVP – Andrew is Co-Partner in Charge of the New York office and Head of the Real Estate Practice Group’s Hotel and Hospitality Practice.  His clients include private real estate equity funds, hedge funds, sovereign wealth funds, corporate and individual developers and owners, mortgage and mezzanine lenders, REITs and other public and privately held companies investing in or using real estate.
  • Kristin Linsley, a Technology MVP – Kristin is a partner in the San Francisco office.  She specializes in complex business and appellate litigation across a spectrum of areas, including water and energy law, cybersecurity and technology law, international and transnational law, data and privacy, and complex financial litigation.  She has broad experience in the area of data privacy, cybersecurity, and technology law, representing companies such as Facebook and Expedia with respect to some of their most challenging data security issues.
  • Brian Lutz, a Securities MVP – Brian is a partner in the San Francisco office and Co-Chair of the Securities Litigation Practice Group.  His practice focuses on complex commercial litigation, with an emphasis on corporate control contests, securities class actions, and shareholder actions alleging breaches of fiduciary duties.  He represents and advises clients in connection with shareholder activist matters, mergers and acquisitions, and corporate governance issues, and regularly represents and advises boards of directors and board committees on litigation issues.
  • Rahim Moloo, an International Arbitration MVP – Rahim Moloo is a partner in the New York office.  His practice focuses on assisting clients to resolve complex international disputes in the most effective and efficient way possible.  His experience spans a number of industries, including energy, mining, telecommunications, financial services, infrastructure, construction and consumer products.
  • Jason Schwartz, an Employment MVP – Jason is a partner in the New York office and Co-Chair of the Labor & Employment Practice Group.  His practice includes sensitive workplace investigations, high-profile trade secret and non-compete matters, wage-hour and discrimination class actions, Sarbanes-Oxley and other whistleblower protection claims, executive and other significant employment disputes, labor union controversies, and workplace safety litigation.

September 22, 2020 |
Thirteen Gibson Dunn Partners Recognized in Expert Guides’ Women in Business Law

Expert Guides has named 13 Gibson Dunn partners to its 2020 Guide to the World’s Leading Women in Business Law, which recognizes top female legal practitioners advising on business law. Selection to this guide is determined by a survey of fellow legal practitioners. The Gibson Dunn partners included in the guide are Hong Kong partners Kelly Austin and Patricia Tan Openshaw, London partners Anna Howell and Penny Madden, Los Angeles partners Jennifer Bellah Maguire, Catherine Conway, Ruth Fisher and Amy Forbes, New York partners Barbara Becker, Lauren Elliot and Jane Love, San Francisco partner Mary Murphy and Washington, D.C. partner Judith Alison Lee. The guide was published on September 7, 2020.

August 5, 2020 |
New York Legislature Passes Revised Anti-SLAPP Law to Deter Frivolous Lawsuits and Strengthen Free Speech Protections

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On July 22, 2020, the New York State Senate and Assembly passed legislation that, if signed into law by Governor Andrew M. Cuomo, will expand First Amendment protections under New York’s anti-SLAPP law by providing new tools for defendants to challenge frivolous lawsuits. The bill amends and extends New York’s current statute (sections 70-a and 76-a the New York Civil Rights Law) addressing so-called strategic lawsuits against public participation (“SLAPPs”):[1] suits that seek to punish and chill the exercise of the rights of petition and free speech on public issues by subjecting defendants to expensive and burdensome litigation.[2] Prominent First Amendment and free speech advocates, including the Reporters Committee for Freedom of the Press,[3] Time’s Up Now,[4] the New York Civil Liberties Union,[5] and the Authors Guild[6] have all come out in its support, as has the Editorial Board of The New York Times.[7]

Anti-SLAPP laws currently exist in 30 states and the District of Columbia, yet despite being home to some of the world’s most prominent media and news organizations,[8] New York’s own anti-SLAPP law, enacted in 2008, has been narrowly limited to litigation arising from a public application or permit, often in a real estate development context.[9] The new proposed statute, sponsored by Senator Brad Hoylman and Assemblywoman Helene E. Weinstein, would amend the civil rights law in several ways to expand and strengthen New York’s anti-SLAPP protections. Governor Cuomo has not yet commented on whether he will sign the bill.

The following is a summary of the law’s changes, which would take effect immediately upon enactment, and key continuing features:

  • Expands the statute beyond actions “brought by a public applicant or permittee,” to apply to any action based on a “communication in a . . . public forum in connection with an issue of public interest” or “any other lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public interest, or in furtherance of the exercise of the constitutional right of petition.”[10]
  • Confirms that “public interest” should be construed broadly, including anything other than a “purely private matter.”[11]
  • Requires courts to consider anti-SLAPP motions based on the pleadings and “supporting and opposing affidavits stating the facts upon which the action or defense is based.”[12]
  • Provides that all proceedings—including discovery, hearings, and motions—shall be stayed while a motion to dismiss is pending, except that the court may order limited discovery where necessary to allow a plaintiff to respond to an anti-SLAPP motion.[13]
  • Alters the formerly permissive standard (“may”) for awarding attorneys’ fees to provide that where the court grants such a motion, an award of fees and costs is mandatory: i.e., “costs and attorney’s fees shall be recovered.”[14]

While the amended statute provides welcome tools to defendants facing SLAPP suits, it remains to be seen how the revisions will function in practice. For example, while the proposed revisions incorporate some of the key language and structure of California’s anti-SLAPP statute[15] —including a stay of discovery, and mandatory attorneys’ fees and costs to prevailing defendants—the proposed law preserves the standard for evaluating the merits: a motion to dismiss such an action “shall be granted” unless the plaintiff can show “that the cause of action has a substantial basis in law or is supported by a substantial argument for an extension, modification or reversal of existing law.”[16] In the context of the current limited anti-SLAPP law, New York courts have interpreted that standard to impose a “heavy burden” on plaintiffs opposing anti-SLAPP motions,[17] requiring them to make an evidentiary showing of the facts supporting their claim and demonstrating that the defendant cannot establish a defense against it.[18] It will be up to courts to determine how that standard functions when applied to a broader range of cases, including defamation and other tort claims, that may present closer questions.

Separately, the status of the applicability of state anti-SLAPP statutes in federal court remains an open question, especially in light of the Second Circuit’s recent decision that California’s anti-SLAPP statute does not apply in federal court. La Liberte v. Reid, No. 19-3574, 2020 WL 3980223 (2d Cir. July 15, 2020). Whether New York’s revised anti-SLAPP law would be available to defendants in federal lawsuits in the Second Circuit is an open question that federal courts may soon need to confront.

Finally, courts will be asked to determine whether the revised statute is effective in currently pending actions, or if it will only have effect in actions filed after enactment. New York reserves this question as “a matter of judgment made upon review of the legislative goal,” based on “whether the Legislature has made a specific pronouncement about retroactive effect or conveyed a sense of urgency; whether the statute was designed to rewrite an unintended judicial interpretation; and whether the enactment itself reaffirms a legislative judgment about what the law in question should be.”[19] New York courts will likely conclude that the revised statute has “retroactive” effect and will apply in pending cases in light of the statute’s clear “remedial purpose.”[20] The legislature was careful to explain that the revisions intend to correct judicial “narrow[] interpret[ation]” of the existing anti-SLAPP statute and to remedy the courts’ “fail[ure] to use their discretionary power to award costs and attorney’s fees” in SLAPP suits, and that the revised statute “will better advance the purposes that the Legislature originally identified in enacting New York’s anti-SLAPP law.”[21] These factors all suggest that the revisions will take immediate effect in both pending and post-enactment lawsuits.

______________________

[1] 2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a.

[2] Understanding Anti-SLAPP Laws, Reporters Committee for Freedom of the Press, https://www.rcfp.org/resources/anti-slapp-laws/ (last visited August 3, 2020).

[3] Reporters Committee supports legislation that would strengthen New York’s anti-SLAPP law, Reporters Committee for Freedom of the Press, https://www.rcfp.org/briefs-comments/rcfp-supports-ny-anti-slapp-bills/(last visited August 3, 2020).

[4] TIME’S UP (@TIMESUPNOW), Twitter, https://twitter.com/TIMESUPNOW/status/1286031156446728193 (last accessed August 3, 2020).

[5] Senator Brad Hoylman (@bradhoylman), Twitter, https://twitter.com/bradhoylman/status/1286002251685863424 (last accessed August 3, 2020).

[6] Authors Guild Signs Letter in Support of Anti-SLAPP Statute, Authors Guild, https://www.authorsguild.org/industry-advocacy/authors-guild-signs-letter-in-support-of-anti-slapp-statute/ (last accessed August 3, 2020).

[7]   The Legal System Should Not Be a Tool for Bullies, N.Y. Times, https://www.nytimes.com/2020/07/17/opinion/new-york-slapp-frivolous-lawsuits.html.

[8] Id.

[9] 2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a.

[10]   Id. (emphasis added).

[11] Id.

[12]   Id.

[13]   Id.

[14]   Id. (emphasis added).

[15] Cal. Civ. Proc. Code § 425.16.

[16]   2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a (emphasis added).

[17]   161 Ludlow Food, LLC v. L.E.S. Dwellers, Inc., 107 N.Y.S.3d 618, at *4 (N.Y. Sup. Ct. 2018), aff’d, 176 A.D.3d 434 (1st Dep’t 2019).

[18]   Edwards v. Martin, 158 A.D.3d 1044, 1048 (3d Dep’t 2018).

[19]   Nelson v. HSBC Bank USA, 87 A.D.3d 995, 997–98 (2d Dep’t 2011).

[20]   In re Gleason (Michael Vee, Ltd.), 96 N.Y.2d 117, 122–23 (2001).

[21]   2020 N.Y. Senate Bill No. 52-A/Assembly Bill No. 5991A (July 22, 2020), https://www.nysenate.gov/legislation/bills/2019/s52/amendment/a.


The following Gibson Dunn lawyers assisted in the preparation of this client update: Orin Snyder, Anne Champion, Nathaniel Bach, Connor Sullivan, Kaylie Springer, and Dillon Westfall.

Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or the following leaders and members of the firm’s Media, Entertainment & Technology Practice Group:

Orin Snyder - Co-Chair, Media, Entertainment and Technology Practice, New York (+1 212-351-2400, osnyder@gibsondunn.com) Anne M. Champion - New York (+1 212-351-5361, achampion@gibsondunn.com) Connor Sullivan - New York (+1 212-351-2459, cssullivan@gibsondunn.com) Theodore J. Boutrous, Jr. - Co-Chair, Litigation Practice, Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Scott A. Edelman - Co-Chair, Media, Entertainment and Technology Practice, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda - Co-Chair, Media, Entertainment and Technology Practice, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Nathaniel L. Bach - Los Angeles (+1 213-229-7241, nbach@gibsondunn.com)

© 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

July 22, 2020 |
Scott Edelman Named 2020 Top Litigator & Trial Lawyer in Los Angeles

Los Angeles Business Journal named Century City partner Scott Edelman among its 2020 Leaders of Influence: Litigators & Trial Lawyers, which is a list of “the very best litigators in the business” who “go to the proverbial mat to fight for their clients.” The list was published July 13, 2020. Scott Edelman is Co-Chair of Gibson Dunn’s Media, Entertainment and Technology Practice Group. He has first-chaired numerous jury trials, bench trials and arbitrations, including class actions, taking well over 25 to final verdict or decision. He has a broad background in commercial litigation, including antitrust, class actions, employment, entertainment and intellectual property, real estate and product liability.

July 14, 2020 |
Four Partners Named to Variety’s 2020 Legal Impact Report

Variety has named Century City partner Scott Edelman, Los Angeles partner Kevin Masuda and New York partner Orin Snyder to its 2020 Legal Impact Report, an annual list of the leading attorneys in the entertainment industry who have “made massive deals and litigated thorny disputes for entertainment industry clients, studios and networks.” Los Angeles partner Ilissa Samplin was named to the Up Next category, recognizing up and coming attorneys in the entertainment industry. The report was published on July 14, 2020. Scott Edelman, Kevin Masuda and Orin Snyder are Co-Chairs of Gibson Dunn’s Media, Entertainment and Technology Practice Group. Scott represents multiple studios, television networks, music companies, production companies and other media-related entities.  Recognized as go-to counsel for his deep litigation experience, he is consistently recognized by legal and industry publications for his work. Kevin represents content companies, including motion picture studios and music companies, technology companies, gaming companies, private equity funds, sports and talent agencies, and other clients in various types of business transactions, including mergers and acquisitions, joint ventures, investments, restructurings, public and private securities offerings, licensing agreements, sponsorships, and other strategic agreements. Orin is one of the country’s leading trial lawyers.  He represents both digital and traditional media and entertainment clients, which often seek him out for their bet-the-company cases. Ilissa Samplin has represented corporate and individual clients in the media, entertainment, technology, and fashion industries in a wide range of litigation in both federal and state court.

July 6, 2020 |
Law360 Names Five Gibson Dunn Lawyers as 2020 Rising Stars

Five Gibson Dunn lawyers were named among Law360’s Rising Stars for 2020, featuring “attorneys under 40 whose legal accomplishments transcend their age.”  The following lawyers were recognized: New York partner Brian Ascher in Media & Entertainment, Dallas partner Krista Hanvey in Benefits, New York partner Saee Muzumdar in Mergers & Acquisitions, New York associate Lindsey Schmidt in International Arbitration, and Washington, D.C. of counsel Molly Senger in Employment. The list of Rising Stars was published on July 5, 2020.