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February 21, 2019 |
Media, Entertainment and Technology Group Outlook and Review – 2019

Click for PDF With an active end to 2018 and a quick start to 2019, we have had no shortage of material to report on for our semi-annual Media, Entertainment & Technology Practice Group Update.  From remasters (of pre-1972 recordings) to remand (“Stairway to Heaven”), and from Tweets (Stormy Daniels v. Trump) to retweets (Joy Reid).  There was M&A and the passage of the MMA—the Music Modernization Act, enacted to facilitate the accounting and payment of royalties in the digital streaming era.  Cert denials cemented notable rulings regarding California’s right of publicity, copyright fair use, and the DMCA.  And in trademark law, the Supreme Court’s 2017 ruling in Matal v. Tam continued to make waves.  Here, then, are the deals, rulings, and regulatory actions that capture current legal trends and will define future industry movement. I.    Transaction & Regulatory Overview A.    M&A 1.    Disney’s Acquisition of Twenty-First Century Fox Races to Completion On July 27, 2018, Disney and Fox shareholders voted to approve the acquisition of the majority of Twenty-First Century Fox, Inc. by The Walt Disney Company for $71.3 billion in cash and stock.[1]  The U.S. Department of Justice had already approved the arrangement between Disney and Fox, on June 27, 2018, with the stipulation that Disney must sell Fox’s regional sports networks.[2] Through the latter half of 2018, a number of foreign regulatory bodies evaluated the Disney-Fox merger.  The Competition Commission of India approved the merger of Star India and related assets (Fox Star Studios and National Geographic channels) in August 2018.[3]  The European Commission’s approval of Disney’s purchase of Twenty-First Century Fox assets followed in November 2018, subject to the condition that Disney discharge its A&E channels in Europe to address concerns that the deal with Fox would remove competition with respect to factual channels.[4]  China unconditionally approved the Disney-Fox deal in November 2018.[5]  Despite lingering approvals required from other regulators, approval from the United States, the European Union, and China were thought to be the most important obstacles to clear.[6] Brazil’s antitrust regulator Cade (Administrative Council for Economic Defense) noted on December 3, 2018 that the Disney-Fox deal raised concerns “about undermining competition in the cable television market,” specifically regarding concentration in the market of cable sports channels.[7]  Cade recommended remedial measures and has until March 2019 to issue a decision (which deadline can be extended for 90 days).[8]  On January 4, 2019, Bloomberg Law reported that Cade is expected to approve the proposed merger between Disney and Fox without asking for any asset sale.[9]  Disney and Fox were expected to present a proposal including offers to change behavior to facilitate approval of the deal.[10]  Regulators returned from year-end recess on January 30, 2019.[11]  Despite meetings between Bob Iger, Disney’s Chief Executive Officer, and representatives of CADE in early February 2019, Cade has not issued a decision as of February 12, 2019.[12]  Brazilian regulators remain divided on whether the deal can be approved without Disney’s sale of one of its two sports channels in the country (Fox Sports and ESPN), with reports that some Cade board members still view behavioral remedies as the path to approval.[13]  Bloomberg reports that the deadline for a decision from Cade is March 17, 2019, though an extension can be requested if the case isn’t discussed at Cade’s upcoming February 27 meeting.[14] At the end of 2018, Disney and Fox also awaited authorization of regulatory authorities in Mexico, with speculation of regulations due to the likelihood that this deal will monopolize sports TV and that Disney, after the acquisition, would own 28% of the content distribution market in Mexico.[15]  On January 31, 2019, Mexico’s Federal Economic Competition Commission approved the Disney-Fox merger after Disney agreed to sell its share of Walt Disney Studios Sony Pictures Releasing de México to Sony Pictures Releasing International Corporation.[16] Twenty-First Century Fox announced its filing of a registration statement for Fox Corporation, the new Fox entity to be spun off in connection with the merger, with the SEC on January 7, 2019.[17]  At the end of January 2019, as per a filing with the SEC, Disney expects the Disney-Fox deal to close by June 2019,[18] though other sources expect the deal to close in February or early March 2019.[19] 2.    Universal and Lionsgate Expand on Prior Collaborations On August 6, 2018, Universal Music Group (“UMG”) announced a multi-year, first-look television deal with Lionsgate.[20] Under the deal, Lionsgate and Polygram Entertainment, UMG’s film and television production and development division, will create original scripted and unscripted television projects drawn from UMG’s catalogue of music, labels, and artists.[21] David Blackman, the head of Polygram Entertainment, stated that “[w]ith this partnership, we’ll continue to expand the definition of music-driven stories—whether that means narratives set against entire scenes of eras of music, or projects driven by our artists’ catalogues.”[22] UMG will also produce soundtrack albums associated with the projects.[23] This deal builds on the companies’ past successful collaborations, which includes film scores and soundtracks to La Land, Hunger Games, and Divergent.[24] Additionally, the announcement came days after Universal Music Publishing Group executed an exclusive administration deal to represent Lionsgate’s music publishing properties and administer its music rights.[25] 3.    Sinclair and Tribune Sue Each Other Over Failed Merger In August 2018, Tribune Media Co. terminated its agreement to be acquired by Sinclair Broadcast Group and filed suit against Sinclair, seeking approximately $1 billion in damages for Sinclair’s alleged failure to fulfill its obligation under their merger agreement to use its reasonable best efforts to obtain regulatory approval.  The $3.9 billion deal, which was announced in May 2017, would have created a company that owned television stations in 108 markets, covering 72% of U.S. homes.[26]  Before the agreement was terminated, the U.S. Federal Communications Commission issued an order stating there were “substantial and material questions of fact” as to whether “Sinclair engaged in misrepresentation and/or lack of candor in its applications with the Commission” and referred review of the acquisition to an administrative law judge.[27] Tribune alleged in its lawsuit that “in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the [government] over regulatory requirements, refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay—all in derogation of Sinclair’s contractual obligations.”[28]  Sinclair has called the lawsuit meritless, saying that it fully complied with its obligations under the merger agreement and that Tribune is trying “to capitalize on an unfavorable and unexpected reaction from the Federal Communications Commission to capture a windfall.”[29]  Sinclair also filed a countersuit against Tribune, alleging Tribune breached its obligation under their merger agreement to use its reasonable best efforts to obtain regulatory approval by prioritizing its litigation strategy against Sinclair at the expense of its cooperation with Sinclair to try to close the merger.[30] 4.    Nexstar Agrees to Acquire Tribune A few months after the failure of its merger with Sinclair, Tribune found a new buyer. In December 2018, Tribune signed a deal to be acquired by Nexstar Media Group for $4.1 billion in cash.[31]  If completed, the deal, which is worth $6.4 billion including the assumption of Tribune’s debt, would make Nexstar the largest regional U.S. TV station operator.[32]  Tribune shareholders will receive an additional 30 cents per share per month in consideration (less any dividends paid by Tribune) if the merger does not close by August 31, 2019.[33]  In order to get U.S. Federal Communications Commission approval for the merger, Nexstar said it plans to divest some of the more than 200 television stations that would be owned by the combined company, including stations in 13 of the 15 markets in which both Tribune and Nexstar currently own stations.[34] 5.    Sky Auction Draws to a Close The nearly two-year battle to acquire the European pay-TV broadcaster Sky PLC drew to an end in September 2018, with Comcast prevailing over Twenty-First Century Fox (which was backed by Disney due to the Fox acquisition).[35]  Fox, which held a 39% stake in Sky, was the first to offer a bid in December 2016, but faced delays due to the prolonged regulatory review in the U.K.[36]  Comcast thereafter made its own offer, with each company making competing bids thereafter until they deadlocked at $34 billion.[37]  The stand-off exceeded the September 22, 2018 deadline imposed by U.K. regulators and triggered a rare blind auction to force the companies to disclose their best offers.[38]  The auction was a one-day bidding process that lasted three rounds and required sealed bids with cash-only offers.[39]  After the bidding closed, it would be left to the Sky shareholders to accept either offer.[40] In the final round in September 2018, Comcast outbid Fox by $3.6 billion, offering a total of $38.8 billion.[41]  Comcast officially acquired Sky on October 9, 2018, by purchasing more than 75% of the company’s shares, including the 39% stake that Fox previously owned.[42] 6.    Microsoft Studios Acquires Six Video Game Development Studios and Founds a Seventh in 2018 On November 10, 2018, Microsoft Studios announced its acquisition of two video game development studios, Obsidian Entertainment and inXile Entertainment, for undisclosed amounts.[43]  Both studios are known for their development of role-playing games (RPGs), such as Obsidian’s Fallout: New Vegas and Star Wars Knights of the Old Republic II: The Sith Lords and inXile’s Wasteland series.[44]  The acquisitions followed the June 2018 announcement of Microsoft’s founding of a new video game studio, The Initiative, and its acquisitions of four other gaming developers: Compulsion Games (We Happy Few), Ninja Theory (Hellblade: Senua’s Sacrifice), Undead Labs (State of Decay series), and Playground Games (Forza Horizon series).[45]  Microsoft now owns thirteen gaming development studios.[46] B.    SVOD Update 1.    Diversification, Even More Original Content, and Increased Competition In July 2018, Netflix collected 112 Emmy nominations (across 40 different shows),[47] further illustrating its prioritization of original content to propel growth and influence in the streaming video on demand (SVOD) industry.  By October, Netflix had spent over $8 billion on content in 2018, and announced plans to offer another $2 billion in senior notes on October 22, 2018 to be used “for general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.”[48] Hulu and Amazon have also positioned themselves for continued growth through expansion of original content in early 2019.  Following Disney’s acquisition of Fox, Disney will own a 60% stake in Hulu, and, along with the potential integration of additional Fox content, Disney plans to use its expanded influence to invest in more original content for Hulu and promote international expansion of the service.[49]  Additionally, a study by Ampere Analysis from September 2018 revealed that Amazon’s current plans for new original programming will almost double its original content, with over 100 upcoming projects that will supplement the 105 original programs currently on its roster.[50] In addition to these efforts to expand original content, the latter half of 2018 was marked by efforts to shake up the SVOD industry with numerous new entrants.  In October 2018, AT&T announced that it would be releasing a streaming service in late 2019;[51] in November 2018, Disney officially confirmed that its upcoming streaming service will be called Disney+ and will be launching in late 2019.[52] 2.    Katzenberg & Whitman Launch Short-Form Streamer Quibi Quibi, a new streaming service led by Jeffrey Katzenberg and Meg Whitman, plans to create a library of high-quality, short-form videos for viewing on mobile devices.  Named for the “quick bites” of entertainment it will broadcast, the service plans to launch at the end of 2019 with 5,000 unique pieces of content, each 10 minutes or less, specifically designed to be viewed on a phone.[53]  Despite being nearly a year away from its anticipated launch date, Quibi is already attracting top talent, including Oscar-winning director Guillermo del Toro, Twilight and Lords of Dogtown director Catherine Hardwicke and Spider-Man director Sam Raimi. Incubated at WndrCo, the consumer technology holding company and venture investor, Quibi raised $1 billion in August 2017 from major Hollywood studios, a number of independent television studios and major technology companies.  The aim of such investments, in part, is to allow Quibi to tap into the studios’ creative talent and resources and the technology companies’ innovations like 5G broadband, big data and analytics.  [Disclosure: Gibson Dunn represents WndrCo and Quibi.] C.    China Update 1.    Open Road Films Files for Chapter 11 Bankruptcy On September 6, 2018, Open Road Films LLC, the North American film distributor known for its release of independent films such as the Best Picture Academy Award-winning film Spotlight, and its affiliated entities filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware, reporting approximately $141 million in liabilities.[54]  In August 2017, Tang Media Partners, the Shanghai and Los Angeles-based investment group, had acquired Open Road Films from AMC Entertainment and Regal Entertainment Group for approximately $28.8 million.[55]  This acquisition followed Tang Media Partners’ previous acquisition in summer 2016 of IM Global, a film finance and sales agency, and the related launch of a television joint venture, IM Global Television, with Chinese technology firm Tencent Holdings.[56]  Announcing its plans to combine Open Road Films, IM Global, and IM Global Television under one brand, Tang Media Partners launched Global Road Entertainment in October 2017 as a global content company with a particular focus on the development, production, and distribution of film and television content that would bridge the U.S. and China markets.[57]  In February 2018, Global Road announced a commitment of $1 billion to production finance over three years,[58] but the studio struggled to raise the capital needed to complete the Global Road restructure and suffered from poor box office performance.[59]  In July 2018, Tang Media Partners cut off additional funds to Open Road Films,[60] and shortly thereafter bank lenders froze its cash assets.[61] On December 19, 2018, the U.S. Bankruptcy Court for the District of Delaware approved the asset sale by Open Road, including its library of around 45 films, for approximately $87.5 million to stalking horse bidder Raven Capital Management.[62] 2.    Tencent’s China Literature Acquires New Classics Media for $2.25 Billion On August 13, 2018, China Literature, the publicly listed e-books company that was spun off by Tencent Holdings in November 2017, announced that it would wholly acquire the film and television production company New Classics Media for approximately $2.25 billion.[63] A prolific production company, New Classics Media is known for producing Chinese television series and blockbuster films, including Hello Mr. Billionaire,[64] which was one of last year’s five highest-grossing films at China’s box office, earning $367 million.[65] In March 2018, Tencent had previously purchased a 27 percent stake in New Classics Media from Beijing Enlight Media, an investment that was designed to unlock content for Tencent’s streaming-video platform, Tencent Video.[66] In announcing the buyout of the remaining equity interest in New Classics Media, Tencent cited its desire to join New Classics Media’s production expertise with China Literature’s extensive literary library, considering that a third of the top 50 films and a quarter of the top TV series in China are literary adaptations.[67] The acquisition marked yet another strategic investment in the entertainment sector by Tencent, which, in addition to its own film distribution and production unit, holds minority equity stakes in a number of entertainment companies, including the China-based studios Huayi Brothers Media and Bona Film Group and the U.S.-based entertainment companies Skydance Media and STX Entertainment.[68] 3.    Tencent Music Entertainment Raises $1.1 Billion in its U.S. IPO Following a delay of its planned IPO in October 2018, due to a downturn in technology stocks and a rise in global market volatility fueled, in part, by U.S.-China trade tensions, Tencent Music Entertainment, the online music division controlled by Tencent Holdings, raised $1.1 billion through its U.S. IPO last December, with an implied valuation of $21.3 billion.[69]  Tencent Holdings created Tencent Music after acquiring a controlling interest in China Music Corporation in 2016, which Tencent Holdings then combined with its own music streaming business.[70]  Tencent Music offers the largest music-streaming service in China, and the company focuses on three main offerings: music streaming, online karaoke, and live-streamed performances.  At the time of its IPO, Tencent Music reported over 800 million unique monthly active users,[71] but, unlike traditional subscription-based models, only a small percentage of these users are paying subscribers.[72]  In Q2 2018, the company earned over 70% of its revenue through in-app tipping, virtual gifts, and other music-related “social entertainment services.”[73] 4.    The Dalian Wanda Group Scales Back AMC Ownership As Chinese regulators continue their efforts to retrench Chinese companies’ foreign investments, it was announced on September 14, 2018 that the Dalian Wanda Group would be curtailing its equity interest in AMC Entertainment,[74] which Wanda acquired in 2012 for $2.6 billion.[75] AMC Entertainment repurchased around a third of the shares owned by Wanda and raised $600 million from private equity firm Silver Lake Partners through the issuance of unsecured convertible notes.[76] Following the transaction, Wanda owns around 50% of AMC shares; however, upon a full conversion of the notes, Wanda’s ownership stake in AMC would fall to around 38%.[77] II.    Legislative & Regulatory Updates A.    Music Modernization Act Enacted into Law In October 2018, the Music Modernization Act, the most sweeping update to copyright law in decades, was signed into law, introducing reforms that were designed to modernize copyright law for the digital streaming era.[78]  The bill unanimously passed both houses of Congress and had widespread support among record labels, musicians, and digital service providers.[79]  The act has three main pieces of legislation combined together: First, the Music Modernization Act creates a formalized non-profit agency, the Mechanical Licensing Collective, run by major music publishers, which creates a comprehensive database of recordings and then administers the mechanical license of recordings streamed on services like Spotify, Amazon Music, Google Play, and Tidal.  Rather than identifying who holds the mechanical license to a particular track, this agency will be responsible for establishing blanket royalty rates that would be used to pay the composers and songwriters for interactive streaming or digital downloads.  The legislation also revamps the rate court process when there are disputes over royalty rates by allowing disputes to be adjudicated by a randomly assigned district judge in the Southern District Court of New York, instead of being assigned to a single rate court judge. Second, the Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (“CLASSICS”) Act ensures that sound recordings made before 1972 are covered by federal copyright law until February 15, 2067.  Previously, sound recordings made prior to February 15, 1972 did not receive federal copyright law protection.  Because some state laws granted these recordings copyright protection and others did not, the CLASSICS Act is intended to address this patchwork of state laws.  Musicians will now have the opportunity to receive royalties for songs recorded before 1972.  The statute also ensures that older songs will enter the public domain.  Recordings made before 1923 will enter the public domain after a three-year period, with recordings from 1923 to 1956 entering within the next few decades. Finally, the Allocation for Music Producers (“AMP”) Act improves royalty payouts for producers, mixers, and sound engineers from SoundExchange, the non-profit organization established by Congress that distributes royalties on sound recordings, when their sound recordings are used on streaming services or digital downloads.  Notably, this is the first time that music producers have ever been mentioned in federal copyright law.[80] Regulations are currently being drafted to implement the provisions of the Music Modernization Act, and we will be watching closely to see how those regulations give effect to the Act, and how such provisions begin to be interpreted by the courts. B.    DOJ Opens Review of Paramount Consent Decrees In October 2018, the Department of Justice opened a review of the Paramount Consent Decrees that for over seventy years have regulated how certain movie studios distribute films to movie theaters.[81]  In 1938, the DOJ brought an antitrust suit against the major movie picture studios at the time (including Paramount, MGM, Universal, Columbia Pictures (now Sony), 20th Century Fox, United Artists, and Warner Brothers), alleging that they had conspired to control the industry through their ownership of film distribution and exhibition.  A decade later, the Supreme Court ruled in United States v. Paramount Pictures, Inc. that the studios had engaged in a widespread conspiracy and required that each studio enter into a consent decree with the DOJ, now known as the “Paramount Consent Decrees.”[82]  The studios were mandated to divest their distribution operations or movie theaters and, going forward, they were not permitted to both distribute movies and own theaters without prior court approval.  The decree also set limits on other practices such as circuit dealing and setting minimum pricing, and the practice of giving exclusive film licenses for certain geographic areas. The premise of the Department of Justice’s review is that the motion picture industry has changed considerably since the Paramount Consent Decrees were entered.[83]  For example, unlike the movie palaces seventy years ago that had one screen and showed one movie at a time, there are now multiplex theaters that have multiple screens showing movies from numerous different distributors at the same time.  Consumers today are also not limited to watching movies in theaters and have the ability to view movies on cable and broadcast television, DVDs, and over the Internet through streaming services.  The Department of Justice recently completed a thirty-day review period for public comment and is now determining whether these decrees should be modified or terminated altogether, which might lead to structural changes in the industry or encourage consolidation. C.    Supreme Court Declines Appeal Against Net Neutrality Laws On November 5, 2018, the Supreme Court denied a petition for writ of certiorari brought by the Trump administration and the telecommunications industry to overturn a D.C. Circuit ruling that had upheld Obama Administration-era net neutrality rules.[84]  Two years ago, the D.C. Circuit held that the Federal Communications Commission (“FCC”) had proper authority to reclassify broadband internet under Title II of the Telecommunications Act and could promulgate rules requiring internet service providers to offer equal access to all web content regardless of who build the facilities that allow that data to be disseminated.[85]  The Supreme Court’s refusal to take up the appeal does not affect a pending challenge to the 2017 repeal of net neutrality rules by the now Republican-led FCC.  The D.C. Circuit heard oral arguments in that case on February 1, 2019, with a decision expected by this summer.[86] In response to the FCC’s net neutrality repeal, some states have taken legislative action.  In September 2018, California passed a net neutrality bill seeking to restore internet access rules.  The Justice Department swiftly sued the state, alleging that Congress granted the federal government, through the FCC, the sole authority to create rules for internet service providers.[87]  A month later, California reached an agreement with the DOJ to stay the lawsuit until the D.C. Circuit issues its ruling on the pending challenge to the FCC’s 2017 repeal of federal net neutrality rules.[88] III.    Recent Litigation Highlights A.    Music Industry 1.    Ninth Circuit Holds Remasters Do Not Defeat Plaintiff’s Copyright Claims On August 20, 2018, the Ninth Circuit overturned the district court’s grant of summary judgment in favor of CBS Corporation in a state-law copyright infringement suit brought by Plaintiff ABS Entertainment, sending the case back to district court for further proceedings.[89]  On August 17, 2015, plaintiffs had filed a putative class action against CBS alleging violations of California state law that protects plaintiffs’ rights in pre-1972 sound recordings—recordings that precede amendments to federal copyright law that went into effect in 1972.  CBS moved for summary judgment, arguing that the digitally remastered recordings it broadcasted constituted derivative works that were themselves capable of federal copyright protection, thereby preempting plaintiffs’ state-law claims.  After excluding plaintiffs’ expert on the subject under FRE 702, the district court held that there was no dispute of material fact as to whether the remastered recordings constituted derivative works, and granted summary judgment in CBS’s favor. On appeal, the Ninth Circuit reversed both the grant of summary judgment and the exclusion of plaintiffs’ expert.  Applying the Durham test for determining whether a recording constitutes a “derivative work” as defined in the Copyright Act, the Ninth Circuit found that “the district court’s identification of ‘perceptible changes’ between the recordings in characteristics relating to ‘quality’ did not ensure that the remastered versions contained anything of consequence owing its origin to the remastering engineers.”[90]  The appellate court concluded that “[a]lthough we do not hold that a remastered sound recording cannot be eligible for a derivative work copyright, a digitally remastered sound recording made as a copy of the original analog sound recording will rarely exhibit the necessary originality to qualify for independent copyright protection.”[91] 2.    Royalty Streaming Disputes Two class action complaints against Sony Music Entertainment and Warner Music Group were filed at the end of 2018 on behalf of various musical artists alleging that the defendant distributors had failed to pay contractually owed royalties for the digital streaming of plaintiffs’ works abroad. In the Southern District of New York, The Rick Nelson Company, as a representative party of a similarly situated class of music artists, sued Sony Music Entertainment, alleging that Sony has been improperly assessing an “intercompany charge” on revenues collected from its wholly owned foreign affiliates that takes “up to 68% off the top of the international revenue earned from streaming sales” of plaintiffs’ artistic works.[92]  Sony has not yet responded to the complaint. In California, Leonard Williams filed a similar complaint against Warner Music Group in the Los Angeles County Superior Court, alleging that Warner was also assessing improper “intercompany charge[s]” in violation of existing agreements.[93]  Shortly thereafter, Warner Music Group removed to the District Court for the Central District of California and filed a motion to dismiss, arguing that there could be no breach of contract as a matter of law because the contract attached to the complaint “contains no provision for royalties to be paid based upon the digital streaming of sound recordings, let alone the foreign digital streaming of sound recordings,” instead limiting royalties to “sales” of “phonograph records” and “tape albums” by the distributor.[94] 3.    Ninth Circuit Walks “Stairway” Back to District Court In September 2018, the Ninth Circuit overturned a 2016 jury verdict in favor of Led Zeppelin and remanded for a new trial in a copyright infringement suit alleging that Led Zeppelin’s hit “Stairway to Heaven” was substantially similar to plaintiffs’ song “Taurus” (performed by the group Spirit).[95] Although at trial the jury found that plaintiff owns the copyright to “Taurus,” a finding not disputed on appeal, it also found that the two songs were not “substantially similar” under the extrinsic test for unlawful appropriation that requires the factfinder to determine similarity “by breaking the works down into their constituent elements, and comparing those elements.”[96]  On appeal, plaintiff Skidmore argued among other points that the court’s instructions to the jury failed to make clear that the selection and arrangement of unprotectable musical elements are themselves protectable by copyright.  The Ninth Circuit agreed, finding that the district court’s failure to include such an instruction, despite receiving such a proposed instruction from both parties, constituted an abuse of discretion. Defendants argued both that plaintiff had failed to preserve an objection to the exclusion of this instruction and that the error was otherwise harmless.  The panel disagreed, calling the waiver argument “baseless” and noting that the error was substantial in light of Skidmore’s heavy reliance at trial on the theory of selection and arrangement in arguing infringement.[97]  The Ninth Circuit similarly agreed with plaintiff that the court had erred in providing instructions to the jury that “copyright does not protect chromatic scales, arpeggios or short sequences of three notes” and that “any elements from prior works or the public domain are not considered original parts and not protected by copyright.”[98]  The panel noted that “[t]here is a low bar for originality in copyright” that can extend to “an arrangement of a limited number of notes.”[99] In remanding the case for retrial, although the panel confirmed that the scope of the protected copyright under the 1909 Act is defined by the deposit copy of the song, it found that the district court abused its discretion in refusing to allow recordings of “Taurus” to be played in the presence of the jury to prove that Led Zeppelin had access to the song for copying.[100]  The district court had found that, although probative, such recordings would be unduly prejudicial as they do not define the scope of the copyright in deciding whether copying occurred.  The Ninth Circuit held that “[l]imiting the probative value of observation was not proper here, as the risk of unfair prejudice or jury confusion was relatively small and could have been reduced further with a proper admonition.”[101]  A petition for rehearing en banc is currently being briefed, accompanied by several amici. 4.    Bluewater v. Spotify On October 4, 2018, the District Court for the Western District of Tennessee denied Spotify USA Inc.’s motion to dismiss a suit filed by Bluewater Music Services Corporation alleging willful copyright infringement of music compositions published by plaintiff and seeking the maximum $150,000 statutory damage award for each of 2,142 music compositions.[102]  Bluewater’s complaint alleged that Spotify failed to obtain licenses for works it streamed that are owned by Bluewater, including after Bluewater demanded proof of licensing and gave notice to Spotify terminating any rights defendant may have claimed to have.[103]  Spotify moved to dismiss the complaint, arguing that Bluewater had no standing as the mere administrator of the underlying copyrights and that Bluewater lacked copyright registrations for 23 of the music compositions in suit. Regarding standing, the court evaluated Bluewater’s administrative agreements and found that their grant of “the sole and exclusive right . . . to print, publish, sell, dramatize, use and license the use of the Compositions” was sufficient, despite another provision that prohibited Bluewater from executing any mechanical licenses except at the “full statutory rate without prior written consent.”[104]  Regarding the failure to obtain copyright registrations before filing suit, the court acknowledged that existing precedent requires such registration but also expressed judicial-efficiency concerns about the dismissal of only 23 works from the case.[105]  Ultimately, the court denied the motion to dismiss the unregistered works with leave to refile after the Supreme Court decides Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC (No. 17-571), which the court expects will decide whether “a copyright infringement action may be taken after the creative work has been filed with the Copyright Office, but before registration is approved.”[106] 5.    Chris Brown Loses Case Against Philippine Church for Alleged Extortion On December 6, 2018, a Los Angeles Superior Court Judge dismissed all claims brought by the singer Chris Brown against Iglesia Ni Cristo (a Philippine church) and its general counsel for alleged extortion.  Brown had brought suit alleging that following a July 2015 concert he performed in Manila, he was detained at a hotel at the direction of the church, which controls an arena where Brown had previously canceled a New Year’s Eve concert.  Brown alleged that the church sought to extort a payment from him in connection with his release and departure from the Philippines and that Brown had suffered emotional distress as a result. In September 2018, Judge Patricia Nieto of the Superior Court granted defendants’ motion to dismiss Brown’s second amended complaint against the church’s California branch (which was named in the lawsuit in an effort to confer California jurisdiction).  The court found that Brown failed to plead an alter ego theory or single enterprise theory as a matter of law and denied Brown an opportunity to replead the theory.  Later that month, the Philippine parent church organization and its general counsel, as specially appearing defendants, brought a separate motion to quash Brown’s service of summons on these two Philippine defendants for lack of personal jurisdiction.  On December 6, 2018, Judge Nieto granted the motion to quash, finding that Brown had failed to provide competent evidence to confer jurisdiction and held that asserting jurisdiction would violate the Supreme Court’s and California’s governing precedents on general and specific jurisdiction.[107]  After filing a notice of appeal, Brown failed to timely pursue that appeal, which the California Court of Appeal dismissed, on February 6, 2019.  [Disclosure: Gibson Dunn represented Iglesia Ni Cristo, its general counsel, and Iglesia Ni Cristo’s California branch.] 6.    Viktor v. Top Dawg Entertainment LLC On October 24, 2018, Judge Engelmayer of the District Court for the Southern District of New York denied a partial motion for summary judgment that sought to bar the plaintiff Lina Iris Viktor from receiving certain damages in her suit alleging that defendant creators of the music video for the single All the Stars by Kendrick Lamar infringed her copyrights by including her paintings in the music video without permission.[108]  The suit seeks actual damages and indirect profits for infringement of Viktor’s unregistered copyrights in her paintings, which appear in a 19-second part of the music video released in connection with the album accompanying the Black Panther film. Because Viktor’s copyrights are unregistered and therefore not entitled to statutory damages, she bears a burden under the Copyright Act to “demonstrate a causal relationship between the infringement and the defendants’ revenues.”[109]  Defendants sought summary judgment on the basis that “no non-speculative evidence could possibly be mustered that would demonstrate a causal nexus between defendants’ profits and defendants’ alleged infringing use of Viktor’s artwork in the video.”[110]  However, the court found the motion to be premature as discovery had not yet concluded, finding that “a challenge by the defense to this claim for damages is properly resolved on a motion for partial summary judgment following the development of a full factual record.”  The court also deferred a decision as to whether Viktor would be entitled to prove damages for reputational harm, an injury not explicitly recognized in the Copyright Act.[111]  On December 21, the case was dismissed following an apparent settlement.[112] B.    Copyright Fair Use Developments 1.    Fox News Network, LLC v. TVEyes, Inc. Ending a legal battle that began in 2013, the Supreme Court denied the media-monitoring company TVEyes’s petition for certiorari, leaving in place the Second Circuit’s February 2018 decision that TVEyes’s media-monitoring service could not be justified as fair use because it “deprives Fox of revenue that properly belongs to the copyright holder.”[113]  TVEyes recorded television around the clock and provided a searchable database of real-time television clips for its subscribers (which include journalists, politicians, and companies), who pay a monthly fee.  In 2013, Fox News sued TVEyes for copyright infringement.[114] After a lengthy battle in the district court, in February 2018 the Second Circuit reversed the lower court’s ruling that the service was protected by the fair use doctrine.  While the video service was a useful tool, the Second Circuit said it was “not justifiable as fair use” because “at bottom, TVEyes is unlawfully profiting off the work of others by commercially redistributing all of that work that a viewer wishes to use, without payment or license.”[115]  TVEyes had argued that its function of allowing users to search the “vast corpus” of available news material rendered it transformative and thus protected by the fair use doctrine, much like Google’s unauthorized digitization of millions of books, the subject of the landmark decision Authors Guild, Inc. v. Google, Inc.[116]  The Second Circuit agreed that the searchability of the material did weigh in favor of fair use, but that the service “usurped a function for which Fox is entitled to demand compensation under a licensing agreement” by allowing excessive use of the recorded clips and thus defeated the defense of fair use.[117] TVEyes sought to overturn the ruling, writing in its petition for certiorari that the ruling would allow networks like Fox News to “wield copyright law as a shield” against criticism and that the fair use doctrine is the “key first Amendment safeguard to protect the public from such abuses.”[118]  Fox News urged the Supreme Court to pass on the case, accusing TVEyes of trying to “clothe itself in the mantle of media criticism” and emphasizing that the Second Circuit’s decision did not involve political speech or First Amendment issues, but rather was a simple case of “unauthorized distribution of copyrighted content.”[119]  Following denial of certiorari, the parties reached a settlement.[120] 2.    Prince/Warhol In a key case regarding artistic expression, a federal judge in New York City will determine whether Andy Warhol’s iconic colorized images are protected from copyright claims by the fair use doctrine.[121]  In April 2017, Warhol’s estate sued photographer Lynn Goldsmith, asking the court for a declaration that his 1984 paintings of Prince did not violate her copyright in the original photo because, although Warhol often used photographs as inspiration, his works were “entirely new creations.”[122]  Goldsmith filed a counterclaim for copyright infringement shortly afterwards, and dueling motions for summary judgment are currently before the court.[123] Goldsmith argues that the court should grant her copyright claim on summary judgment because Warhol’s work directly copied hers and is not eligible for protection under the fair use doctrine.  “In today’s digital world, anyone can easily modify a photograph on a computer to add high contrast, coloration and artifacts” and Warhol “did little more than that” in the works at issue, Goldsmith argues.[124]  If the court were to find these “superficial revisions” transformative, she says, this would give a “free pass to appropriation artists and destroy derivative licensing markets for commercial photographers whose works are used without permission.”[125] Warhol’s estate, on the other hand, argues that the substantial similarity requirement for copyright infringement centers on protectable elements like lighting, shading, and the “aesthetic effect”—precisely the elements that Warhol manipulates in his works.[126]  After Warhol’s artistic manipulations, Warhol’s estate argued, the only commonality remaining between Warhol’s Prince Series and Goldsmith’s photograph is “the rough outline of Prince’s face—which cannot be copyrightable as a matter of law.”[127]  In addition, Warhol’s estate pointed out that the market for Goldsmith’s work is not harmed by Warhol’s works—fine art collectors who buy Warhol’s work are not “rock-and-roll memorabilia collectors” who buy hers.[128]  Finally, Warhol’s estate’s attorneys warned that a contrary ruling would “create a torrent of doubt and dispute over artists long considered to be transformative” and “chill[] future creativity.”[129]  A ruling is expected sometime this year. 3.    Instagram Art Show Was Fair Use, Richard Prince Says Richard Prince, a famous “appropriation artist,” is pushing to end copyright litigation over his Instagram-themed art exhibit, arguing that he was allowed to display largely unaltered versions of other artists’ images because he utilized them in “a radically different aesthetic context.”[130]  Mr. Prince is facing two separate copyright infringement lawsuits from photographers whose works were featured in “New Portraits”—an installation of large images made to look like Instagram posts, with captions written by Mr. Prince.  He moved for summary judgment in both cases, saying that his use of the images was protected by the fair use doctrine.[131] In both instances, Mr. Prince took images of the artists’ works, blew them up, and placed them in art installations designed to look like Instagram posts.  He acknowledges that his copies do not “cut, mark, paint over, scratch or otherwise obscure” the original photograph, but that this was a feature of his fair use argument, not a problem with it.[132]  Mr. Prince argues that his intent was to “authentically replicate[] in the physical world the virtual world of social media,” and therefore that this is protected by the fair use doctrine.[133]  Rulings are expected sometime this year. C.    DMCA 1.    Supreme Court Denies Certiorari for Porn Copyright Case In late October, the Supreme Court rejected an invitation to clarify the scope of the Digital Millennium Copyright Act’s (“DMCA”) safe harbor provision,[134] which immunizes online service providers from liability for infringing material maintained “at the direction of a user . . . on a system or network controlled or operated by or for the service provider” under certain circumstances.[135] As reported in our 2018 Mid-Year Update, in Ventura Content Ltd. v. Motherless Inc., et al.,[136] the Ninth Circuit rejected an attempt to reverse a grant of summary judgment to Motherless, Inc., a website that allows users to upload pornographic videos for public viewing.  Appellant Ventura Content Ltd. argued that Motherless failed to remove material that it knew or should have known was copyright infringing, and that Motherless did not have a proper policy for removing users who repeatedly infringed copyright.  Relying on a case from the Second Circuit, Capitol Records, LLC v. Vimeo, LLC,[137] the panel rejected the notion that Motherless had actual or constructive knowledge of the infringing material, holding that “[t]he copyright owner must show knowledge” of the specific videos “that infringed its copyright and are the subject of its claim.”[138]  Moreover, the panel affirmed the district court’s determination that there was “no issue of triable fact” as to whether Motherless had “adopted and reasonably implemented” a policy of terminating users who repeatedly posted copyright-infringing materials.[139] After its loss, Ventura filed a petition for certiorari in the Supreme Court, but in November 2018 the Supreme Court rejected Ventura’s petition, leaving the Ninth Circuit ruling in place.[140] 2.    Cox Settles BMG Case, Faces New Claims from Labels and Publishers Just days before trial was set to begin, Cox Communications settled a case brought by BMG Rights Management seeking to hold Cox liable for Cox users’ illegal downloads of BMG’s copyright-protected material.  The suit, which began in 2014, alleged that Cox failed to implement a policy for terminating the service of users who repeatedly downloaded the material at issue, a so-called “repeat infringer” policy, thereby allowing offending users to continue to illegally download the material.  After U.S. District Judge Liam O’Grady ruled that Cox’s failure to enact or enforce such a policy deprived Cox of the shelter of the safe harbor provision,[141] the case went to trial, and in 2015 a jury found Cox liable and awarded BMG a multimillion dollar verdict. The Fourth Circuit reversed, holding that the district judge had given improper jury instructions, but the panel importantly also held that the district court had properly found that Cox had failed to enforce its repeat infringer policy.[142]  The case was remanded to the district court for further proceedings.[143] In late 2018, Cox and BMG reached a settlement, but the settlement does not end Cox’s legal woes.  A case brought against Cox by a number of major record labels, including Sony Music Entertainment, Universal Music Corp., and Warner Bros. Records, raises similar issues and is also being presided over by Judge O’Grady.  Given that the Fourth Circuit has already upheld the ruling stripping Cox of safe harbor protection,[144] and that Judge O’Grady recently denied a motion for transfer of venue,[145] the case warrants ongoing attention, given the potential impact it may have on the liability of internet service providers nationwide. D.    Trademark 1.    Lanham Act Ban on Immoral or Scandalous Matter Unconstitutional? In June 2017, the U.S. Supreme Court decided Matal v. Tam, invalidating the provision of the Lanham Act that permitted the USPTO to refuse registration of a trademark if it contained “disparaging” matter.  The Supreme Court held the provision unconstitutional under the First Amendment.[146]  In the wake of that landmark decision, in December 2017 the Federal Circuit also invalidated under the First Amendment a similar provision of the Lanham Act, which permitted the USPTO to refuse registration of a mark if it contained “immoral” or “scandalous” matter.[147]  In September 2018, the government filed a petition for writ of certiorari to the Supreme Court in that case, which is now captioned Iancu v. Brunetti.[148] The Brunetti case involves the clothing brand FUCT.  The USPTO had refused to register the FUCT mark under the immoral or scandalous provision of the Lanham Act because of its similarity to a popular swear word.[149]  In light of the Supreme Court’s decision in Tam, the Federal Circuit held that the immoral or scandalous provision, like the disparaging provision, violates the First Amendment.  Unlike Tam, which was decided on the basis of impermissible viewpoint discrimination, the Federal Circuit held that the immoral or scandalous provision is unconstitutional as impermissibly content discriminatory, without reaching whether the provision is also viewpoint discriminatory.[150] In its petition for a writ of certiorari, the government argues that Tam is not controlling on the immoral or scandalous provision at a minimum because of this distinction between viewpoint discrimination and the less egregious content discrimination, and it further emphasizes several doctrinal questions not fully decided by Tam, such as whether trademark registration could be viewed as either a government subsidy or commercial speech—either of which would lower the level of constitutional scrutiny that would be applied to the provision.  The Supreme Court granted certiorari on January 4, 2019.[151] 2.    Seattle’s Transit Restriction on Disparaging Bus Ads also Falls The Supreme Court’s Matal v. Tam decision has also found influence in the realm of advertising, as the Ninth Circuit recently cited the Tam decision in striking down Seattle’s law that had allowed the transit authority to reject advertisements to be displayed on public buses if those ads were “disparaging.”[152]  In September 2018, the Ninth Circuit held that Tam applied with “full force” to Seattle’s ban on disparaging bus ads.[153]  The decision was a victory for the far-right group American Freedom Defense Initiative, previously known as the Stop Islamization of America.  The group sued the city after the Metro rejected a proposed advertisement featuring the slogan “Faces of Global Terrorism,” which included mugshots of alleged terrorists primarily of Middle Eastern or Asian descent, on the basis that the ad was disparaging.[154]  In light of Tam, the Ninth Circuit struck down Seattle’s ban on disparaging advertising, holding that it too violated the First Amendment as impermissibly viewpoint discriminatory. 3.    San Diego Comic-Con Wins $4M Fee Award in Trademark Dispute In a suit filed in August 2014, the San Diego Comic Convention (“SDCC”) brought trademark infringement allegations against a rival Utah event called Salt Lake Comic Con.  SDCC, which holds trademarks for its logo and various permutations of the term “Comic-Con,” alleged that the Utah event was infringing its “Comic-Con” mark and capitalizing on SDCC’s many decades of brand building.[155]  In response, the Utah event argued that the mark had been diluted, arguing both that the mark was invalid by virtue of its prior generic use, and that the mark had in any event become generic through SDCC’s broad licensing and failure to police.[156]  The case was tried before a jury in December 2017, and the jury found that the Utah event had infringed SDCC’s trademarks, but the infringement was not willful.  The jury awarded $20,000 in corrective advertising damages.[157] On post-trial motions, U.S. District Judge Anthony Battaglia granted SDCC’s request for a permanent injunction barring the Utah event from using the phrase “Comic-Con” with or without the hyphen, as well as anything that sounds similar.  Judge Battaglia further awarded nearly $4 million in attorneys’ fees, citing the Utah event’s questionable litigation tactics and repeated disregard for court rules.[158]  The Utah event has appealed these post-trial rulings to the Ninth Circuit, where briefing is scheduled to be completed in February 2019. 4.    Coachella Settles Trademark Dispute with Filmchella In August 2017, Coachella sued Filmchella founder Trevor Simms, alleging, among other things, trademark infringement.  U.S. District Judge R. Gary Klausner entered a preliminary injunction barring Simms from using either “Filmchella” or “Filmchilla” for his independent Joshua Tree Film Festival, but Judge Klausner denied Coachella’s motion for summary judgment on the issue of trademark infringement, explaining that a reasonable jury could find no likelihood of confusion between Coachella and Filmchella due to the difference in the nature of the festivals.[159]  Trial was scheduled for October 2018, but the parties reached a resolution just before trial was to begin.  Under the settlement, Simms agreed to forgo use of the term Filmchella and to transfer the domain name to Coachella.[160]  The other terms of the settlement remain confidential. E.    1st Amendment 1.    Media Access a.    CNN & Jim Acosta Prevail Over White House On November 7, 2018, the White House revoked CNN chief White House correspondent Jim Acosta’s hard pass—a type of press pass held by regular White House reporters—after a press conference in which President Trump cut off Mr. Acosta’s questions, ordered him to be seated, and called him a “rude, terrible person” after a White House staffer attempted to take the microphone out of his hands.  The next week, CNN and Mr. Acosta filed a lawsuit, claiming First and Fifth Amendment violations. The United States District Court for the District of Columbia granted CNN and Mr. Acosta’s request for a temporary restraining order and ordered the White House to restore Mr. Acosta’s press pass immediately.  The district court found that CNN and Mr. Acosta had a “First Amendment liberty interest” in Mr. Acosta’s hard pass because the Government had opened the White House to reporters.[161]  The district court concluded that CNN and Mr. Acosta were likely to succeed in showing the White House violated CNN and Mr. Acosta’s Fifth Amendment Due Process rights: the White House’s original reason for the revocation was “likely untrue” and was based on “evidence of questionable accuracy,” the decision-making process regarding whether to revoke the hard pass was “shrouded in mystery,” and the White House failed to provide CNN and Mr. Acosta with adequate notice before taking away his hard pass.[162] Further, the district court held that Mr. Acosta and CNN were harmed “every day” they continued to have their constitutional rights infringed.  Finally, the district court decided the harm Mr. Acosta would suffer from losing his hard pass “outweighed” the Government’s interest in holding “respectful” press conferences, so restoring Mr. Acosta’s hard pass served the public interest.[163]  Following the district court’s order, the White House issued a final decision restoring his hard pass, and he returned to reporting news.  [Disclosure: Gibson Dunn represented CNN and Mr. Acosta.] b.    Gubarev v. BuzzFeed, Inc. On December 19, 2018, the District Court for the Southern District of Florida granted summary judgment to BuzzFeed, Inc., in a defamation lawsuit filed against it by a Cyprus tech CEO, Aleksej Gubarev.[164]  The lawsuit arose from BuzzFeed’s publication of an online article entitled These Reports Allege Trump Has Deep Ties to Russia, which contained a 35-page dossier that included statements about the plaintiffs, such as that Gubarev’s company “XBT/Webzilla and its affiliates had been using botnets and porn traffic to transmit viruses, plant bugs, steal data, and conduct ‘altering operations’ against the Democratic Party leadership.”[165]  The Court ruled that BuzzFeed’s decision to publish the dossier was protected by New York’s fair report privilege, which “exists to protect the media while they gather the information needed for the public to exercise effective oversight of the government . . . even when they report on official action that the government would like to keep secret.”[166]  The Court further held that BuzzFeed’s presentation was fair and true, as required by the fair report privilege, because it reproduced the dossier in full without editorializing. Notably, the ruling came one day after the district judge ruled that Gubarev is not a public figure because he had not involved himself in the ongoing public debate about Russian interference in the 2016 election.[167]  This meant that plaintiffs would have had to meet a lower standard for defamation against BuzzFeed, had the district court not granted summary judgment based on the fair report privilege.  Plaintiffs have filed an appeal of the district court’s fair report ruling in BuzzFeed’s favor. 2.    Right of Publicity a.    Supreme Court Declines to Take Up de Havilland’s Feud Against FX On October 5, 2018, the 102-year-old actress Olivia de Havilland filed a petition for writ of certiorari with the U.S. Supreme Court, asking the high court to take up the California Court of Appeal’s ruling in her lawsuit against FX Network.[168]  De Havilland sued FX in June 2017 over its depiction of her in the docudrama Feud: Bette and Joan, alleging misappropriation, violation of her right of publicity, false light, invasion of privacy, and unjust enrichment.[169]  In response, FX filed an anti-SLAPP motion, which the trial court denied in September 2017.  In March 2018, the California Court of Appeal reversed, rejecting de Havilland’s claims and finding that the First Amendment protects expressive works, regardless of whether they are fact, fiction, or a combination thereof.[170]  De Havilland petitioned the California Supreme Court for review, which it denied on July 11, 2018. In de Havilland’s petition for writ of certiorari before the U.S. Supreme Court, de Havilland argued that the California Court of Appeal’s rulings create “absolute First Amendment immunity for docudramas,” even those that include knowingly false statements.[171]  FX filed its brief in opposition to de Havilland’s petition on November 13, 2018, asserting that the Court of Appeal’s “decision rested on a straightforward application of well-established law” and “that there is nothing cert-worthy about this case.”[172]  On January 7, 2019, the Supreme Court denied de Havilland’s petition without explanation.[173] b.    Second Circuit Lifts Injunction Against Lynyrd Skynyrd Film The Second Circuit recently lifted a district court’s injunction against Street Survivor:  The True Story of the Lynyrd Skynyrd Plane Crash, a movie about the plane crash that killed Lynyrd Skynyrd band members Ronnie Van Zant and Steve Gaines as told through the eyes of surviving band member Artimus Pyle.[174]  After the crash, Van Zant’s widow and two of the three surviving band members, Gary Rossington and Allen Collins, entered into a “blood oath” to never use the name Lynyrd Skynyrd again.[175]  The oath remained intact for ten years, until the surviving band members embarked on a tribute tour in 1987 and Van Zant’s widow, Judith, objected to the band’s use of the Lynyrd Skynyrd name.[176]  Judith filed suit, which ended with the district court entering a consent order restricting how the parties to the suit, including Pyle, could use the name Lynyrd Skynyrd, biographical material of Van Zant, the history of the band, and more.[177] After Pyle and Cleopatra Records, Inc., entered into a deal to create the Street Survivor film, heirs of Van Zant and Gaines, as well as founding lead guitarist Gary Rossington, sued Cleopatra.  In August 2017, the District Court entered a permanent injunction prohibiting the film from being made, asserting that it violated the consent order because of Pyle’s participation in the project.[178]  The Second Circuit reversed.  Although the court stated that the district court’s order did not constitute a “prior restraint” because the injunction was imposed as a result of a private contract rather than government censorship, it held that the order “implicates free speech concerns.”[179]  Moreover, the court held that the injunction could not restrict the actions of Cleopatra, which was not a party to the consent order.[180]  Finally, the court examined the language of the consent order and found that it was insufficiently specific to prohibit the making of the film.[181]  The court therefore lifted the injunction. c.    Daniels v. FanDuel Inc. In October 2018, the Indiana Supreme Court held that the use of players’ names, pictures, and statistics in online fantasy sports contests do not violate Indiana’s right of publicity law.[182]  The decision arose as the result of a class action lawsuit filed by collegiate student-athletes against various fantasy sports website operators, including DraftKings, Inc. and FanDuel, Inc., for using the players’ likenesses without their consent.  The district court dismissed the lawsuit, concluding that two statutory exceptions to Indiana’s right of publicity law permit the companies to use players’ names, likenesses, and statistics without compensation.[183]  On appeal, the Seventh Circuit certified the question “[w]hether online fantasy-sports operators that condition entry on payment, and distribute cash prizes, need the consent of players whose names, pictures, and statistics are used in the contests, in advertising the contests, or both,” to the Illinois Supreme Court.[184]  The Illinois Supreme Court held that no consent was needed because the use of the players’ names, pictures, and statistics fell within the “newsworthy value” exception to Illinois’s right of publicity statute.[185]  Ultimately, the court concluded that the use at issue “bears resemblance to the publication of the same information in newspapers and websites across the nation.”[186] Following the Illinois Supreme Court’s decision, the plaintiffs requested that the Seventh Circuit remand the case to the District Court to address the separate question of whether the fantasy-sports games violate Indiana criminal law.[187]  In a decision written by Judge Easterbrook, the Seventh Circuit stated that it had “nothing to say on the question whether the business of FanDuel or DraftKings violates Indiana’s criminal laws,” ruling that “this civil suit is over.”[188] d.    Can LeBron James License His Own Tattoos? In a case that intertwines the issues of whether and when copyright issues arise following the grant of rights of publicity, Defendants 2K Games, Inc. and Take-Two Interactive Software, Inc. recently moved for summary judgment in a lawsuit filed against them by Solid Oak Sketches, LLC.  Sold Oak brought suit over defendants’ depiction of tattoos on several prominent professional basketball players, including LeBron James, who appear in the videogame NBA 2K16.[189]  Solid Oak had obtained copyright licenses for the tattoos for use in a clothing line that was never produced, and now claims that the use in the videogame constitutes copyright infringement.[190]  In their summary judgment motion, defendants argue, amongst other things, that their use of the tattoos constitutes “fair use.”[191]  In opposition to defendants’ motion, Solid Oak argues that while the professional basketball players granted their rights of publicity to the companies, that does not include the copyright to the artwork in their tattoos.[192]  As to defendants’ fair use argument, Solid Oak asserts that the defense must fail, as “it is clear that Defendants’ appropriated the fundamental essence of the tattoo artists’ works, the copyright attached to same being owned by Plaintiff.”[193]  Defendants filed their reply brief on October 12, 2018, and the motion remains pending. 3.    Defamation a.    Stephanie Clifford’s Defamation Lawsuit Against President Trump Dismissed On October 15, 2018, U.S. District Judge S. James Otero dismissed a defamation lawsuit brought by adult-film actress Stephanie Clifford’s (p/k/a Stormy Daniels) against President Trump.[194]  The basis for the lawsuit was a tweet the president posted on April 18, 2018 from his personal Twitter account, @realDonaldTrump, claiming that the composite sketch Clifford released of a man who had purportedly threatened her in Las Vegas in 2011 was a “total con job” and “about a nonexistent man.”[195] In dismissing Clifford’s suit under the Texas anti-SLAPP statute,[196] the district court agreed with the president that the statements he disseminated through Twitter were mere “rhetorical hyperbole.”  The court reached this conclusion in light of the president’s “incredulous tone” and the fact Clifford had publicly positioned herself “as a political adversary to the President.”[197]  The court also reasoned that if it were to conclude that the president’s tweet was actionable under a theory of defamation, “it would significantly hamper the office of the President” by making any “strongly-worded response” by a president to criticism espoused by another public figure potentially unlawful.[198]  The court also found significant the fact that the president’s tweet was a “one-off” comment and not a “sustained attack” on Clifford’s claims regarding the threatening incident.[199]  Clifford appealed the district court’s order the same day it issued.[200] On December 11, 2018, Clifford was ordered to pay the president approximately $292,000 in attorney’s fees.  The court also ordered Clifford to pay $1,000 in sanctions.[201] b.    Discovery Communications Not Liable to Co-Host of Dual Survival On November 2, 2018, a district court in Arizona granted summary judgment to Discovery Communications in a defamation lawsuit brought by Cody Lundin, one of the original co-hosts of the reality television series Dual Survival.[202]  In the suit, Lundin argued that Discovery edited an episode that depicted his departure from the show in a way that portrayed him in a false light and was defamatory.[203]  The district court disagreed.  It held that none of the eight individual scenes that Lundin contended falsely depicted him as “grossly incompetent” and mentally ill was actionable under either theory.  Specifically, each scene depicted Lundin’s character in a “substantially true” manner even if it contained a number of “minor inaccuracies.”[204] In dismissing Lundin’s defamation lawsuit, the district court also described as “significant” the fact that Dual Survival “more than just occasionally falsely depicted what was actually occurring.”[205]  In one scene, for example, Lundin and his co-host unexpectedly encountered a rattlesnake that had, in reality, been purchased and placed there by the film crew.  The court therefore viewed Lundin’s claims with some level of skepticism given that he was “happy to participate in the charade as long as he was portrayed in the manner he preferred.”[206]  In November 30, 2018, Lundin appealed the summary judgment order.  The appeal remains pending before the Ninth Circuit.[207] c.    Court of Appeals Revives Defamation Lawsuit Against Kylin Pictures On November 27, 2018, a California appeals court reversed the grant of an anti-SLAPP motion in a defamation suit Bliss Media and its CEO Wei Han brought against Kylin Pictures.[208]  The suit arose because Kylin’s CFO Leo Shi Young called Han a “swindler” and Bliss a “shell company” at a press conference in China.  Bliss and Kylin had previously worked together to produce various films, but relations between the two companies soured when Kylin sued Bliss over the acquisition rights to Birth of the Dragon, a movie about Bruce Lee.[209] Kylin filed an anti-SLAPP motion in early 2017, arguing that the allegedly defamatory statements were made in connection with an issue of public interest because the purpose of the press conference was to address a dispute about the production of the Chinese-language version of a separate, critically acclaimed film—Hacksaw Ridge.[210]  The trial court agreed, concluding that the dispute between Bliss and Kylin “concerned the production of a very public thing” and that there “is very little that is private about the movie business.”[211] The California Court of Appeal reversed.  It first noted that the fact the press conference was held to discuss a dispute about Hacksaw Ridge was immaterial, because the alleged defamatory comments were about the plaintiffs’ conduct “concerning financing and rights acquisitions” for two different films, Birth of the Dragon and The King’s Daughter.[212]  It also rejected the defendants’ argument that the public is “specifically interested” in these two films merely because Birth of the Dragon is about Bruce Lee and The King’s Daughter features two movie stars.[213]  Because the alleged defamatory statements “in no way mention[ed] or implicat[ed] Bruce Lee or the movie stars,” the defendants failed to draw “any connection” between the statements and what purportedly made the films at issue of interest to the public.[214]  The appeals court also concluded that Han was not, at the time the statements were made, in the “public eye” simply because she is active in the Chinese film industry and in Hollywood.[215] d.    Retweets and the Communications Decency Act of 1996 On September 25, 2018, Roslyn La Liberte sued MSNBC host Joy Reid in the Eastern District of New York, alleging that several of Reid’s posts on Twitter, Instagram, and Facebook are defamatory.[216]  La Liberte’s original complaint focused primarily on Reid’s retweet of a photograph of La Liberte wearing a “Make America Great Again” hat and seemingly yelling at a high school student.  This photo was accompanied by a caption stating that “[s]he . . . in her MAGA hat” called the student a “dirty Mexican” and warned him that he would “be the first deported.”[217] La Liberte’s complaint alleges that because she never made any racial slurs directed at the student, Reid’s retweet is defamatory.[218]  It also alleges that Reid’s subsequent posts on Facebook and Instagram of the photograph alongside an image dating from the Jim Crow era are defamatory.[219] The allegations in the original complaint raised the question of whether section 230 of the Communications Decency Act of 1996 shielded Reid from civil liability for her retweet.  Section 230 provides, in relevant part, that “[n]o 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.”[220]  However, La Liberte recently dropped the allegations from her complaint regarding Reid’s retweet.  Section 230 is therefore no longer at issue in the case.[221]  The remainder of the case remains pending before the district court. F.    Profit Participation/Royalties 1.    Back to the Future Royalties Dispute Dismissed In October 2018, after years of disputes between the parties, a New Jersey district judge ruled that John DeLorean’s estate will not be able to collect additional royalties regarding the famous Back to the Future DeLorean from the DeLorean Motor Company (“DMC”) arising out of DMC’s separate licensing agreement with Universal Pictures.[222]  In 2014, John DeLorean’s estate filed a suit alleging that DMC violated the estate’s trademark by designing and selling various items under the estate’s asserted trademarks and by licensing use of the marks to others.[223]  The parties settled the case in 2015, and in relevant part the estate agreed “not to sue [DMC] pertain[ing] to [DMC’s] use of the following words and trademarks: (i) the name DeLorean Motor Company, (ii) the DMC logo, and (iii) the stylized word ‘delorean.’”[224] In 2018, the estate brought another suit against DMC, claiming that DMC had improperly claimed a right to royalty payments arising from an agreement between the Mr. DeLorean and Universal.  That agreement between the estate and Universal gave Universal “the right to use (i) ‘[t]he appearance of the DeLorean automobile,’ (ii) ‘[t]he name ‘DeLorean,’’ and (iii) ‘[t]he logo ‘DMC’ as it appears on the radiator grille of the DeLorean automobile.’”[225]  The estate alleged that DMC had improperly represented to Universal that DMC was entitled to certain royalties arising from the Back to the Future DeLorean, and the estate sought to receive the payments from Universal instead. The court dismissed the estate’s case, finding that the two agreements covered “the same or similar terms” and holding that that because “both agreements pertained to the merchandizing of similar items associated with the DeLorean automobile’s image, brand and related trademarks,” the “Plaintiff’s claims under the Universal Agreement were incorporated in, and therefore barred by, the Settlement Agreement.”[226] 2.    Donald Glover Fights Label Over Royalties Donald Glover (who records and performs as Childish Gambino) is countersuing his music label, Glassnote Entertainment Group, in an ongoing dispute regarding royalties from non-interactive streaming of Glover’s albums Awaken, My Love!, Because the Internet, and Camp.  In 2011, Glover signed a license agreement with Glassnote in which he retained the rights to master recordings of up to three future albums but “granted to Glassnote the exclusive right to exploit the master recordings on those albums” in exchange for a royalty equal to fifty percent of net proceeds.[227]  The license expired in late 2017, at which time Glassnote alleges that Glover “took the position that he was entitled to the entirety of Glassnote’s []share of public performance royalties” and “that Glassnote was not entitled to any such royalty.”[228] In July 2018, Glassnote sued Glover seeking a declaration that it is entitled to 50% of all performance royalties from non-interactive streams on Pandora, Spotify, SiriusXM, and others.  The suit claims that, under the Copyright Act, “it is Glassnote—not Glover—which is ‘the copyright owner of the exclusive right [] to publically perform’ Glover’s sound recordings,” and the statutory royalties due to the copyright holder should therefore belong to Glassnote.[229] In September 2018, Glover countersued Glassnote, alleging that after an audit in 2017, Glover discovered “Glassnote’s multiple breaches under the License Agreement” and “significant amounts that [Glassnote] failed to account and pay to” Glover.[230]  According to Glover, Glassnote agreed “to pay [Glover] a royalty equal to 50% of the ‘Net Proceeds’ realized from the exploitation of each” licensed album.[231]  After a 2017 audit of Glassnote’s accountings and payments to Glover, Glover determined that Glassnote had breached the License Agreement by failing to pay Glover his “share of digital transmission royalties” and by failing to fully pay Glover the share of the “Net Proceeds” to which he was entitled under the License Agreement.[232]  In his countersuit, Glover is seeking a full payment of the royalties Glassnote is alleged to owe and seeking a full accounting from Glassnote that includes any further monies earned from Glover’s albums.[233]  The case remains pending.     [1]    Edmund Lee and Brooks Barnes, Disney and Fox Shareholders Approve Deal, Ending Corporate Duel, N.Y. Times (July 27, 2018), https://www.nytimes.com/2018/07/27/business/media/disney-fox-merger-vote.html.     [2]    Paul Bond, The DOJ said Disney must sell Fox’s regional sports networks, The Hollywood Reporter (June 27, 2018), https://www.hollywoodreporter.com/news/disney-fox-deal-approved-by-department-justice-1123614.     [3]    Urvi Malvania, Fox-Disney deal: CCI approves takeover of Murdoch’s company in India, SmartInvestor (Aug. 12, 2018), https://smartinvestor.business-standard.com/market/Compnews-539887-Compnewsdet-Fox_Disney_deal_CCI_approves_takeover_of_Murdochs_company_in_India.htm.     [4]    Stewart Clarke, E.U. Approves Disney-Fox Deal, With Conditions, Variety (Nov. 6, 2018), https://variety.com/2018/biz/news/eu-approves-walt-disney-21st-century-fox-deal-conditions-1203020918/.     [5]    Patrick Brzeski and Georg Szalai, Disney Gets China Approval for Fox Acquisition, The Hollywood Reporter (Nov. 19. 2018), https://www.hollywoodreporter.com/news/disney-gets-china-approval-fox-acquisition-1162571.     [6]    Jull Disis, Disney gets approval from China for Fox purchase, CNN Business (Nov. 19, 2018), https://www.cnn.com/2018/11/19/media/disney-fox-china-approval/index.html.     [7]    Alberto Alerigi and Lisa Richwine, Brazil antitrust body raises concerns over Disney-Fox deal, Reuters (Dec. 3, 2018), https://www.reuters.com/article/us-fox-m-a-walt-disney-brazil/brazil-antitrust-body-raises-concerns-over-disney-fox-deal-idUSKBN1O22LS.     [8]    Id.     [9]    Brazil Regulator Said to Pass Fox-Disney Deal Without Asset Sale, Bloomberg Law (Jan. 4, 2019), https://news.bloomberglaw.com/tech-and-telecom-law/brazil-regulator-said-to-pass-fox-disney-deal-without-asset-sale-1.     [10]    Id.; see also Jason Aycock, Bloomberg: Brazil expected to OK Fox-Disney deal without divestment, Seeking Alpha (Jan. 3, 2019), https://seekingalpha.com/news/3420509-bloomberg-brazil-expected-ok-fox-disney-deal-without-divestment.     [11]    Aycock, supra note 10.; Jason Aycock, MLex: Brazil decision on Disney/Fox now put off past January, Seeking Alpha (Jan. 23, 2019), https://seekingalpha.com/news/3425253-mlex-brazil-decision-disney-fox-now-put-past-january.     [12]    Mario Sergio Lima and Christopher Palmeri, Disney CEO Flies to Brazil to Seal Fox Deal, Leaves Empty-Handed, Bloomberg (Feb. 12, 2019), https://www.bloomberg.com/news/articles/2019-02-12/disney-s-brazil-meeting-is-said-to-end-without-fox-deal-accord.     [13]    Id.     [14]    Id.     [15]    Carla Martinez, Strict regulation needed for Disney-Fox merger in Mexico, El Universal (Dec. 14, 2018), https://www.eluniversal.com.mx/english/strict-regulation-needed-disney-fox-merger-in-mexico-0.     [16]    Press Release, Comisión Federal de Competencia Económica, Clarification on Disney/Fox Transaction (Feb. 6, 2019), https://www.cofece.mx/wp-content/uploads/2019/02/COFECE-009-2019-English.pdf.     [17]    Dawn C. Chmielewski, 21st Century Fox Files Registration Statement With SEC To Form ‘New’ Fox, Deadline Hollywood (Jan. 7, 2019), https://deadline.com/2019/01/21st-century-fox-files-registration-statement-sec-new-fox-1202530940/; see also Press Release, 21st Century Fox, 21st Century Fox Announces Filing of Registration Statement On Form 10 For Fox Corporation (Jan. 7, 2019), https://www.21cf.com/news/21st-century-fox/2019/21st-century-fox-announces-filing-of-registration-statement-on-form-10-for-fox-corporation/.     [18]    Hannah Shaw-Williams, Disney Now Expects To Complete Fox Purchase By June, ScreenRant (Jan. 31, 2019), https://screenrant.com/disney-fox-deal-complete-june-2019/.     [19]    Cynthia Littleton, Fox Confirms It Won’t Bid on Disney’s Regional Sports Networks, Variety (Jan. 11, 2019), https://variety.com/2019/biz/news/fox-disney-regional-sports-networks-bid-1203105421/.     [20]    Tim Ingham, Universal Music Group Is Making TV Shows in Tandem With Lionsgate, Music Business Worldwide (Aug. 6, 2018), https://www.musicbusinessworldwide.com/universal-signs-deal-to-make-tv-projects-with-lionsgate/.     [21]    Dade Hayes, Lionsgate and Universal Music Group Set First-Look TV Deal, Deadline (Aug. 6, 2018), https://deadline.com/2018/08/lionsgate-and-universal-music-group-set-first-look-tv-deal-1202440406/.     [22]    Id.     [23]    Etan Vlessing, Lionsgate Sets First-Look TV Deal With Universal Music Group, The Hollywood Reporter (Aug. 6, 2018), https://www.hollywoodreporter.com/news/lionsgate-universal-music-group-announce-tv-project-deal-1132308.     [24]    Hayes, supra note 21.     [25]    Lionsgate and Universal Music Publishing Group Sign Exclusive Multiyear Agreement, PR Newswire (Aug. 2, 2018), https://www.prnewswire.com/news-releases/lionsgate-and-universal-music-publishing-group-sign-exclusive-multiyear-agreement-300691060.html.     [26]    Mike Snider, $4 billion TV deal creates nation’s largest broadcaster, USA Today (May 8, 2017), https://www.usatoday.com/story/money/business/2017/05/07/sinclair-broadcasting-buy-tribune-media-4-billion-deal-reports-say/101409222/.     [27]    Hadas Gold, FCC calls out ‘lack of candor’ in Sinclair-Tribune deal, CNN (July 19, 2018), https://money.cnn.com/2018/07/19/media/fcc-hearing-order-sinclair/index.html.     [28]    Press Release, Tribune Media Company, Tribune Media Terminates Merger Agreement with Sinclair Broadcast Group, Inc.; Files Lawsuit For Breach of Contract (Aug. 9, 2018), http://investors.tribunemedia.com/2018-08-09-Tribune-Media-Terminates-Merger-Agreement-with-Sinclair-Broadcast-Group-Inc-Files-Lawsuit-For-Breach-of-Contract.     [29]    Press Release, Sinclair Broadcast Group, Inc., Sinclair Responds to Tribune Lawsuit in Delaware Court of Chancery (Aug. 29, 2018), https://www.prnewswire.com/news-releases/sinclair-responds-to-tribune-lawsuit-in-delaware-court-of-chancery-300704251.html.     [30]    Sinclair’s Answer, Affirmative Defenses, & Verified Countercl. to the Verified Compl., Tribune Media Company v. Sinclair Broadcast Group, Inc., No. 2018-0593-JTL, 2018 WL 4194628 (Del. Ch. Aug. 29, 2018).     [31]    Arjun Panchadar and Sonam Rai, U.S. broadcaster Nexstar to buy Tribune Media for $4.1 billion, Reuters (Dec. 3, 2018), https://www.reuters.com/article/us-tribune-media-m-a-nexstar-media/nexstar-to-buy-tribune-media-in-6-4-billion-deal-idUSKBN1O217Z.     [32]    Id.     [33]    Cynthia Littleton, Nexstar Media Group Vaults Into TV’s Big League With Tribune Media Acquisition, Variety (Dec. 3, 2018), https://variety.com/2018/tv/news/tribune-media-nexstar-acquisition-4-1-billion-1203078104/.     [34]    Id.     [35]    Jim Waterson, Comcast Outbids Rupert Murdoch’s Fox to Win Control of Sky, The Guardian (Sept. 22, 2018), https://www.theguardian.com/business/2018/sep/22/comcast-outbids-rupert-murdochs-fox-to-win-control-of-sky.     [36]    Ben Martin, Comcast and Fox Take $34 Billion Battle for Britain’s Sky to the Wire, Reuters (Sept. 21, 2018), https://www.reuters.com/article/us-sky-plc-m-a-auction/comcast-and-fox-take-34-billion-battle-for-britains-sky-to-the-wire-idUSKCN1M12CV.     [37]    Id.     [38]    Id.     [39]    Georgina Prodhan & Ben Martin, Factbox: How the Auction Process for Sky Will Work, Reuters (Sept. 20, 2018), https://www.reuters.com/article/us-sky-plc-m-a-auction-process-factbox/factbox-how-the-auction-process-for-sky-will-work-idUSKCN1M01RF.     [40]    Spiha Srivastava, et al., Comcast Outbids Fox in a $39 Billion Takeover of Sky, CNBC (Sept. 22, 2018), https://www.cnbc.com/2018/09/22/sky-comcast-fox-36-billion-takeover-auction.html.     [41]    Id.     [42]    Stu Woo & Ben Dummett, Sky Takeover Explained, The Wall Street Journal (Oct. 10, 2018), https://www.wsj.com/articles/sky-takeover-explained-1523539364.     [43]    Keza MacDonald, Microsoft Buys Two More Video Game Studios, The Guardian (Nov. 10, 2018), https://www.theguardian.com/games/2018/nov/10/microsoft-buys-two-new-video-game-studios.     [44]    Id.; see also Stefanie Fogel, Microsoft Acquires Obsidian Entertainment, Variety (Nov. 10, 2018), https://variety.com/2018/gaming/news/obsidian-entertainment-joins-microsoft-studios-1203024898/; Stefanie Fogel, Microsoft Acquires ‘The Bard’s Tale’ Developer inXile Entertainment, Variety (Nov. 10, 2018), https://variety.com/2018/gaming/news/microsoft-acquires-inxile-entertainment-1203024762/.     [45]    Paul Tassi, Microsoft Acquires Ninja Theory, Undead Labs, Playground Games And More For Xbox, Forbes (June 10, 2018), https://www.forbes.com/sites/insertcoin/2018/06/10/microsoft-has-acquired-ninja-theory-undead-labs-and-playground-games/#16aee068277c; see also Stefanie Fogel, Xbox E3 2018: The 10 Biggest Announcements, Variety (June 10, 2018), https://variety.com/2018/gaming/news/e3-2018-biggest-microsoft-announcements-1202839671/.     [46]    MacDonald, supra note 43.     [47]    Cynthia Littleton, Netflix’s Ascent in Emmy Nominations Reflects Broader TV Industry Shakeup, Variety (July 12, 2018), https://variety.com/2018/biz/news/emmys-2018-nominations-netflix-tv-shakeup-1202871387/.     [48]    Annlee Ellingson, Netflix Aims to Raise $2 Billion for More Content, L.A. Business Journal (Oct. 22, 2018), https://www.bizjournals.com/losangeles/news/2018/10/22/netflix-aims-to-raise-2-billion-for-more-content.html.     [49]    Sarah Perez, Disney to Invest In More Original Content for Hulu, Expand Service Internationally, Tech Crunch (Nov. 12, 218), https://techcrunch.com/2018/11/09/disney-to-invest-in-more-original-content-for-hulu-expand-service-internationally/.     [50]    Craig Elvy, Netflix & Amazon Planning to Double Amount of Original Content, Screen Rant (Sept. 26, 2018), https://screenrant.com/netflix-amazon-prime-original-content-movies-shows/.     [51]    Travis Clark, AT&T Will Jump Into the Streaming Bloodbath By Launching a Netflix Competitor Next Year, Business Insider (Oct. 10, 2018), https://www.businessinsider.com/att-launching-streaming-service-next-year-with-hbo-included-2018-10.     [52]    Sarah Toy, Disney’s Netflix Rival Now Has a Name: Disney+, Which Will Launch in 2019. MarketWatch (Nov. 10, 2018), https://www.marketwatch.com/story/disneys-netflix-rival-now-has-a-name-disney-2018-11-08.     [53]    Lizette Chapman & Anousha Sakoui, Jeffrey Katzenberg’s Investment Firm Takes a Risky Bet on Mobile Video, Bloomberg Business (Dec. 20, 2018), https://www.bloomberg.com/news/articles/2018-12-20/hollywood-makes-a-big-bet-on-jeffrey-katzenberg-s-quibi.     [54]    Eriq Gardner and Pamela McClintock, Global Road Files Chapter 11 Bankruptcy for Film Division, The Hollywood Reporter (Sept. 6, 2018), https://www.hollywoodreporter.com/thr-esq/global-road-files-bankruptcy-1140266; Andrew Scurria, Open Road Films Is Placed in Chapter 11 by New Owner, The Wall Street Journal (Sept. 6, 2018), https://www.wsj.com/articles/open-road-films-is-placed-in-chapter-11-by-new-owner-1536265087; Rose Krebs, ‘Spotlight’ Studio Open Road Hits Ch. 11 In Del. With Sale Plan, Law360 (Sept. 6, 2018), https://www.law360.com/articles/1080248/-spotlight-studio-open-road-hits-ch-11-in-del-with-sale-plan.     [55]    Pamela McClintock and Patrick Brzeski, Why Global Road’s Film Studio Is Collapsing Less Than a Year After Launch, The Hollywood Reporter (Aug. 24, 2018), https://www.hollywoodreporter.com/news/why-global-roads-film-studio-is-collapsing-a-year-launch-1137298.     [56]    Patrick Brzeski, IM Global Acquired by Tang Media Partners, Launches TV Joint Venture With Tencent, The Hollywood Reporter (June 2, 2016), https://www.hollywoodreporter.com/news/im-global-acquired-by-tang-898927.     [57]    Mila Galuppo, Tang Media Partners Rebrands as Global Road Entertainment, The Hollywood Reporter (Oct. 30, 2017), https://www.hollywoodreporter.com/news/tang-media-partners-rebrands-as-global-road-entertainment-1053053.     [58]    Patrick Frater, Berlin: Global Road Touts $1 Billion Production Spend, Variety (Feb. 15, 2018), https://variety.com/2018/film/news/berlin-global-road-touts-1-billion-production-spend-1202700062/.     [59]    Krebs, supra note 54.     [60]    Id.     [61]    Scurria, supra note 54.     [62]    Vince Sullivan, Open Road Settles Contract Issues To Get OK On Ch. 11 Sale, Law360 (Dec. 19, 2018), https://www.law360.com/articles/1111145/open-road-films-ch-11-sale-delayed-by-assumption-issue; Eriq Gardner, Open Road Bankruptcy: Auction Called Off; Raven Capital Set to Acquire ‘Spotlight’ Studio, The Hollywood Reporter (Nov. 6, 2018), https://www.hollywoodreporter.com/thr-esq/open-road-bankruptcy-auction-called-raven-capital-set-acquire-spotlight-studio-1158472.     [63]    Patrick Brzeski, China’s Tencent Buys Film Studio New Classics Media for $2.25B, The Hollywood Reporter (Aug. 13, 2018), https://www.hollywoodreporter.com/news/tencents-china-literature-acquires-film-studio-new-classics-media-225b-1134569.     [64]    Id.     [65]    Patrick Brzeski, China Box Office Growth Slows to 9 Percent in 2018, Ticket Sales Reach $8.9B, The Hollywood Reporter (Jan. 2, 2019), https://www.hollywoodreporter.com/news/china-box-office-total-revenue-2018-1172725.     [66]    Patrick Brzeski, Tencent Buys Stake in Chinese Production Company New Classics Media for $524M, The Hollywood Reporter (Mar. 12, 2018), https://www.hollywoodreporter.com/news/tencent-buys-stake-chinese-production-company-new-classics-media-524m-1094124.     [67]    Patrick Frater, Tencent Unit Buys New Classics Media for $2.25 Billion, Variety (Aug. 13, 2018), https://variety.com/2018/biz/asia/tencent-unit-buys-new-classics-media-1202904254/.     [68]    Brzeski, supra note 66.     [69]    Joshua Franklin and Julia Fioretti, China’s Tencent Music Raises Nearly $1.1 Billion in U.S. IPO, Reuters (December 11, 2018), https://www.reuters.com/article/us-tencent-music-ipo/chinas-tencent-music-raises-nearly-1-1-billion-in-u-s-ipo-idUSKBN1OA2GR; Sara Salinas, Tencent Music Ends its First Day of Trading Up 9 Percent, CNBC (December 12, 2018), https://www.cnbc.com/2018/12/12/tencent-music-ipo-tme-stock-starts-trading-on-the-nyse.html.     [70]    Corrie Driebusch and Maureen Farrell, Tencent Music Prices Its IPO at Bottom of Range, The Wall Street Journal (December 11, 2018), https://www.wsj.com/articles/tencent-music-readies-its-ipo-after-a-turbulent-process-11544558237.     [71]    Id.      [72]    Kevin Kelleher, What Tencent Music’s $1.1B IPO Says About China’s Market Downturn, Fortune (December 12, 2018), http://fortune.com/2018/12/11/tencent-musics-ipo-chinas-market-turndown/.     [73]    Cherie Hu, From Social Entertainment to Licensing & Data Challenges: What You Need to Know About Tencent Music’s IPO, Billboard (December 13, 2018), https://www.billboard.com/articles/business/8490089/tencent-music-ipo-analysis-streaming-china-data-trends.     [74]    Paul Bond, Dalian Wanda Scales Back AMC Investment, The Hollywood Reporter (September 14, 2018), https://www.hollywoodreporter.com/news/dalian-wanda-scales-back-amc-investment-1143481; Allison Prang, Chinese Conglomerate Trims Staprake in AMC Entertainment, The Wall Street Journal (September 14, 2018), https://www.wsj.com/articles/chinese-conglomerate-trims-stake-in-amc-entertainment-1536934377.     [75]    Michelle Kung and Aaron Back, Chinese Conglomerate Buys AMC Movie Chain in U.S., The Wall Street Journal (May 21, 2012), https://www.wsj.com/articles/SB10001424052702303610504577417073912636152.     [76]    Prang, supra note 74.     [77]    Id.     [78]    The Orrin G. Hatch-Bob Goodlatte Music Modernization Act, H.R. 1551, 115th Cong. (2018).     [79]    Amy X. Wang, Music Modernization Act Passes, Despite Music Industry Infighting, Rolling Stone (Sept. 18, 2018), https://www.rollingstone.com/music/music-news/music-modernization-act-passes-despite-music-industry-726091/; The Music Modernization Act, SoundExchange, https://www.soundexchange.com/advocacy/music-modernization-act/.     [80]    Dani Deahl, The Music Modernization Act has been signed into law, The Verge (Oct. 11, 2018), https://www.theverge.com/2018/10/11/17963804/music-modernization-act-mma-copyright-law-bill-labels-congress.     [81]    Eriq Gardner, Justice Dept. Reviewing Movie Licensing Restrictions on the Books for Decades, The Hollywood Reporter (Aug. 2, 2018), https://www.hollywoodreporter.com/thr-esq/justice-dept-reviewing-movie-licensing-restrictions-books-decades-1131827; Dawn C. Chmielewski and Dade Hayes, DOJ To Review Paramount Consent Decrees Governing How Studios Distribute Movies to Theaters, Deadline (Aug. 2, 2018), https://deadline.com/2018/08/doj-to-review-paramount-consent-decrees-governing-how-studios-distribute-movies-to-theaters-1202439066/.     [82]    United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948).     [83]    See U.S. Dep’t of Justice, Office of Public Affairs, Department of Justice Opens Review of Paramount Consent Decrees, US Dep’t of Justice (Aug. 2, 2018), https://www.justice.gov/opa/pr/department-justice-opens-review-paramount-consent-decrees.     [84]    Lawrence Hurley, U.S. Supreme Court ends fight over Obama-era net neutrality rules, Reuters (Nov. 5, 2018), https://www.reuters.com/article/us-usa-court-netneutrality/u-s-supreme-court-ends-fight-over-obama-era-net-neutrality-rules-idUSKCN1NA1UW.     [85]    Alina Selyukh, U.S. Appeals Court Upholds Net Neutrality Rules In Full, Nat’l Pub. Radio (June 14, 2016), https://www.npr.org/sections/thetwo-way/2016/06/14/471286113/u-s-appeals-court-holds-up-net-neutrality-rules-in-full.     [86]    Ted Johnson, Net Neutrality Back in Court: Takeaways From Marathon Oral Arguments, Variety (Feb. 1, 2019), https://variety.com/2019/politics/news/net-neutrality-marathon-oral-arguments-1203126249/.     [87]    Cecilia Kang, Justice Department Sues to Stop California Net Neutrality Law, N.Y. Times (Sept. 30, 2018), https://www.nytimes.com/2018/09/30/technology/net-neutrality-california.html.     [88]    Eriq Gardner, California Will Hold Off Enforcing State’s Net Neutrality Law, The Hollywood Reporter (Oct. 26, 2018), https://www.hollywoodreporter.com/thr-esq/california-will-hold-enforcement-states-net-neutrality-law-1155484.     [89]    ABS Entm’t, Inc. v. CBS Corp., 908 F.3d 405 (9th Cir. 2018).     [90]    Id. at 422.     [91]    Id. at 423.     [92]    The Rick Nelson Company, LLC v. Sony Music Entertainment, C.A. No. 1:18-cv-08791-LLS, D.I. 1 ¶ 2 (S.D.N.Y. Sept. 25, 2018).     [93]    Williams v. Warner Music Group Corp., C.A. No. 18STCV00006, 2018 WL 5078046 (Cal. Super. Ct. Oct. 4, 2018).     [94]    Williams v. Warner Music Group Corp., C.A. No 2:18-cv-09691-RGK-PJW, at 7–9 (C.D. Cal. Dec. 7, 2018).     [95]    Skidmore v. Led Zeppelin, et al., No. 16-56057 (9th Cir. Sept. 28. 2018).     [96]    Id., slip op. at 7, 13.     [97]    Id. at 16–18.     [98]    Id. at 18-19.     [99]    Id. at 20.     [100]    Id. at 33–34.     [101]    Id. at 34.     [102]    Bluewater Music Servs. Corp. v. Spotify USA Inc., No. 3:17-CV-01051-JPM, 2018 WL 4714812 (W.D. Tenn. Sept. 29, 2018).     [103]    Id. at *1.     [104]    Id. at *4.     [105]    Id. at *5.     [106]    Id. at *6.     [107]    Brown v. Giongco, et al., No. BC669532, Ruling Re: Motion to Quash Service of Summons for Lack of Personal Jurisdiction, or, in the Alternative, Motion to Dismiss or Stay the Action for Forum Non Conveniens by Specially Appearing Defendants Iglesia Ni Cristo and Glicerio P. Santos IV (LA Super. Ct. Dec. 6, 2018).     [108]    Viktor v. Top Dawg Entm’t LLC, No. 18 CIV. 1554 (PAE), 2018 WL 5282886 (S.D.N.Y. Oct. 24, 2018).     [109]    Id. at *1.     [110]    Id.     [111]    Id. at *4.     [112]    Viktor v. Top Dawg Entm’t LLC, No. 18 CIV. 1554 (PAE), D.I. 125 (S.D.N.Y. Dec. 21, 2018).     [113]    Tiffany Hu, Supreme Court Won’t Hear IP Appeals by TVEyes, DHL, Law360 (Dec. 3, 2018), https://www.law360.com/media/articles/1107209/supreme-court-won-t-hear-ip-appeals-by-tveyes-dhl.     [114]    Bill Donahue, Siding with Fox, 2nd Circ. Says TVEyes Is Not Fair Use, Law360 (Feb. 27, 2018), https://www.law360.com/articles/1016495.     [115]    Id.     [116]    Id.     [117]    Id.     [118]    Hu, supra note 113.     [119]    Id.     [120]    Eriq Gardner, TVEyes Will No Longer Carry Fox News in Negotiated End to Big Copyright Fight, The Hollywood Reporter (Jan. 21, 2019), https://www.hollywoodreporter.com/thr-esq/tveyes-will-no-longer-carry-fox-news-negotiated-end-big-copyright-fight-1177661.     [121]    Ashley Cullins, Photographer Suing Andy Warhol’s Estate Claims His Work Isn’t ‘Transformative’, The Hollywood Reporter (Oct. 15, 2018), https://www.hollywoodreporter.com/thr-esq/photographer-suing-andy-warhols-estate-claims-his-work-isnt-transformative-1152405.     [122]    Id.     [123]    Id.     [124]    Id.     [125]    Id.     [126]    Id.     [127]    Id.     [128]    Id.     [129]    Id.     [130]    Bill Donahue, Instagram Art Show Was Fair Use, Richard Prince Says, Law360 (Oct. 9, 2018), https://www.law360.com/media/articles/1090373/instagram-art-show-was-fair-use-richard-prince-says.     [131]    Id.     [132]    Id.     [133]    Id.     [134]    17 U.S.C. § 512(c).     [135]    Id.     [136]    885 F.3d 597 (9th Cir).     [137]    826 F.3d 78 (2d Cir. 2016).     [138]    885 F.3d at 565.     [139]    Id.     [140]    Denial of Writ of Certiorari, Ventura Content Ltd. v. Motherless Inc., (No. 18-235).     [141]    BMG Rights Mgmt. LLC v. Cox Commc’ns, Inc., 149 F. Supp. 3d 634, 655–56 (E.D. Va. 2015).     [142]    BMG Rights Mgmt. LLC v. Cox Commc’ns, Inc., 881 F.3d 293, 303 (4th Cir. 2018).     [143]    Id.     [144]    Id.     [145]    Sony Music Entm’t v. Cox Commc’ns, Inc., No. 1:18-CV-950, 2018 WL 6059386 (E.D. Va. Nov. 19, 2018),     [146]    137 S. Ct. 1744 (2017).     [147]    See In re Brunetti, 877 F.3d 1330 (Fed. Cir. 2017).     [148]    U.S. Supreme Court Case No. 18-302.     [149]    See Brian Iverson, Supreme Court Asked to Consider Immoral or Scandalous Trademarks, IP Watchdog (Oct. 11, 2018), https://www.ipwatchdog.com/2018/10/11/supreme-court-asked-to-consider-immoral-or-scandalous-trademarks/id=101815/.     [150]    See id.     [151]    Bill Donahue, Supreme Court Will Hear ‘Scandalous’ Trademark Case, Law360 (Jan. 4, 2019), https://www.law360.com/articles/1115566/supreme-court-will-hear-scandalous-trademark-case.     [152]    See Am. Freedom Defense Initiative, et al. v. King County, Case No. 17-35891 (9th Cir. Sep. 27, 2018).     [153]    See Bill Donahue, 9th Cir. Strikes Down Seattle Ban On ‘Disparaging’ Bus Ads, Law360 (Oct. 3, 2018), https://www.law360.com/media/articles/1088992/9th-circ-strikes-down-seattle-ban-on-disparaging-bus-ads.     [154]    See id.     [155]    See San Diego Comic Convention v. Dan Farr Prods. et al., Case No. 3:14-cv-01865 (S.D. Cal. Aug. 7, 2014).     [156]    See Shayna Posses, San Diego Comic-Con Wins TM Use Ban, $4M Fee Award, Law360 (Aug. 24, 2018), https://www.law360.com/media/articles/1076513/san-diego-comic-con-wins-tm-use-ban-4m-fee-award.     [157]    See id.     [158]    See id.     [159]    See Ashley Cullins, Hollywood Docket: Coachella Trademark Fight Settles, The Hollywood Reporter (Oct. 12, 2018), https://www.hollywoodreporter.com/thr-esq/hollywood-docket-coachella-trademark-fight-settles-1145285.     [160]    See id.     [161]    Cable News Network, Inc. et al. v. Trump et al., Case No. 1:18-cv-2610 (D.D.C Nov. 16, 2018) (Trans. of Mot. Hrg.).     [162]    Id.     [163]    Id.     [164]    Gubarev v. BuzzFeed, Inc., Case No. 1:17-cv-60426-UU, Dkt. No. 388 (S.D. Fla. Dec. 18, 2018).     [165]    Id.     [166]    Id.     [167]    Gubarev v. BuzzFeed, Inc., Case No. 1:17-cv-60426-UU, Dkt. No. 385 (S.D. Fla. Dec. 18, 2018).     [168]    Petition for Writ of Certiorari, Olivia de Havilland, DBE v. FX Networks, LLC, No. 18-453.     [169]    de Havilland v. FX Networks, LLC, 21 Cal. App. 5th 845 (2018), review filed (May 4, 2018).     [170]    de Havilland, 21 Cal. App. 5th at 850.     [171]    Petition for Writ of Certiorari, Olivia de Havilland, DBE v. FX Networks, LLC, No. 18-453.     [172]    Opposition to Petition for Writ of Certiorari, Olivia de Havilland, DBE v. FX Networks, LLC, No. 18-453.     [173]    Dominic Patten, Olivia De Havilland Last Hope Petition Over ‘Feud’ Feud Denied By SCOTUS, Deadline (Jan. 7, 2019), https://deadline.com/2019/01/olivia-de-havilland-feud-us-supreme-court-petition-denied-ryan-murphy-1202530510/     [174]    Ronnie Van Zant, Inc. v. Cleopatra Records, Inc., 906 F.3d 253 (2d Cir. 2018).     [175]    Id. at 255.     [176]    Id.     [177]    Id.     [178]    Id. at 256.     [179]    Id. at 257.     [180]    Id.     [181]    Id. at 258.     [182]    Daniels v. FanDuel, Inc., 109 N.E.3d 390, 393 (Ind. 2018).     [183]    Daniels v. FanDuel, Inc., 884 F.3d 672, 674 (7th Cir. 2018).     [184]    Id.     [185]    Daniels, 109 N.E.3d at 394.     [186]    Id. at 396.     [187]    Daniels v. FanDuel, Inc., 909 F.3d 876, 877 (7th Cir. 2018).     [188]    Id. at 878.     [189]    Solid Oak Sketches, LLC v. Visual Concepts, LLC, Case No. 1:16-cv-00724-LTS-SDA, Dkt. 128.     [190]    Id.     [191]    Id.     [192]    Id., Dkt. 148.     [193]    Id.     [194]    Order Granting Defendant’s Special Motion to Dismiss/Strike at 1, Clifford v. Trump, No. 18-6893 (C.D. Cal. Oct. 15, 2018).     [195]    Id. at 1-2.     [196]    The district court applied Texas law to Clifford’s defamation claim and the Defendant’s Special Motion to Dismiss/Strike because Clifford is domiciled in Texas.  Id. at 4.     [197]    Id. at 9-11.     [198]    Id. at 11.     [199]    Id. at 12.     [200]    Notice of Appeal, Clifford v. Trump, No. 18-6893 (C.D. Cal. Oct. 15, 2018).     [201]    Matt Stevens, Stormy Daniels Ordered to Pay Trump $293,000 in Legal Fees, The N.Y. Times (Dec. 11, 2018), https://www.nytimes.com/2018/12/11/us/stormy-daniels-donald-trump.html.     [202]    Eriq Gardner, Discovery Beats Defamation Lawsuit as Judge Ponders What’s True in “Reality” Television, The Hollywood Reporter (Nov. 5, 2018), https://www.hollywoodreporter.com/thr-esq/discovery-beats-defamation-lawsuit-as-judge-ponders-whats-true-reality-television-1158089.     [203]    Order Granting Defendants’ Motion for Summary Judgment at 1, Lundin v. Discovery Commc’ns Inc., No. 16-cv-01568 (C.D. Cal. Nov. 2, 2018).     [204]    See, e.g., id. at 13-14.     [205]    Id. at 2.     [206]    Id.     [207]    Notice of Appeal, Lundin v. Discovery Commc’ns Inc., No. 2:16-cv-01568 (C.D. Cal. Nov. 2, 2018).     [208]    Ashley Cullins, Defamation Lawsuit Against ‘Hacksaw Ridge’ Financier Revived by Appeals Court, The Hollywood Reporter (Nov. 27, 2018), https://www.hollywoodreporter.com/thr-esq/defamation-lawsuit-hacksaw-ridge-financier-revived-by-appeals-court-1164328     [209]    Order at 3, Han v. Kylin Pictures, Inc., No. B282947 (Cal. Ct. App. Nov. 27, 2018).     [210]    Id. at 4.     [211]    Id.     [212]    Id. at 10.     [213]    Id. at 14.     [214]    Id.     [215]    Id. at 11-12.     [216]    Complaint at 12-13, La Liberte v. Reid, No: 1:18-cv-5398 (E.D.N.Y. Sept. 25, 2018); see also Ashley Cullins, MSNBC’s Joy Reid at Center of Free-Speech Legal Fight Over Retweets, The Hollywood Reporter (Nov. 6, 2018), https://www.hollywoodreporter.com/thr-esq/msnbc-s-joy-reid-at-center-free-speech-legal-fight-retweets-1158266.     [217]    Complaint at 12-13, La Liberte v. Reid, No: 1:18-cv-5398 (E.D.N.Y. Sept. 25, 2018).     [218]    Id.     [219]    Id. at 11.     [220]    47 U.S.C. § 230.     [221]    Amended Complaint, La Liberte v. Reid, No: 1:18-cv-5398 (E.D.N.Y. Nov. 27, 2018); see also Eriq Gardner, MSNBC’s Joy Reid to Escape Libel Claim Over Retweet, The Hollywood Reporter (Nov. 14, 2018), https://www.hollywoodreporter.com/thr-esq/msnbcs-joy-reid-escape-libel-claim-retweet-1161090.     [222]    Delorean v. Delorean Motor Co., No. CV 18-8212 (JLL), 2018 WL 4941790 (D.N.J. Oct. 12, 2018).     [223]    Id.     [224]    Id. at *4 (cleaned up).     [225]    Id. at *2.     [226]    Id. at *4.     [227]    Compl., Glassnote Entertainment Group, LLC, v. MC DJ Recording et al., 2018 WL 3327743 (S.D.N.Y. July 6, 2018).     [228]    Id. ¶ 7.     [229]    Id. ¶ 38.     [230]    Countercompl. ¶  37, Glassnote Entertainment Group, LLC, v. MC DJ Recording et al., 1:18-cv-06167-LGS (Sept. 14, 2018).     [231]    Id. ¶ 20.     [232]    Id. ¶¶ 52–53.     [233]    Id. ¶¶ 34–35. The following Gibson Dunn lawyers assisted in the preparation of this client update: Scott Edelman, Howard Hogan, Benyamin Ross, Nathaniel Bach, Jillian London, Corey Singer, Aaron Frumkin, Andrew Blythe, Gatsby Miller, Sara Ciccolari-Micaldi, DeDe Mann, Brittany Schmeltz, Sarah M. Kushner, Aaron M. Smith, Brian Castelloe, Bree Love, and Harrison Korn. 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, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Co-Chair, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder– Co-Chair, New York (+1 212-351-2400, osnyder@gibsondunn.com) Ruth E. Fisher – Los Angeles (+1 310-557-8057, rfisher@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) © 2019 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 11, 2019 |
2018 Year-End German Law Update

Click for PDF Looking back at the past year’s cacophony of voices in a world trying to negotiate a new balance of powers, it appeared that Germany was disturbingly silent, on both the global and European stage. Instead of helping shape the new global agenda that is in the making, German politics focused on sorting out the vacuum created by a Federal election result which left no clear winner other than a newly formed right wing nationalist populist party mostly comprised of so called Wutbürger (the new prong for “citizens in anger”) that managed to attract 12.6 % of the vote to become the third strongest party in the German Federal Parliament. The relaunching of the Grand-Coalition in March after months of agonizing coalition talks was followed by a bumpy start leading into another session of federal state elections in Bavaria and Hesse that created more distraction. When normal business was finally resumed in November, a year had passed by with few meaningful initiatives formed or significant business accomplished. In short, while the world was spinning, Germany allowed itself a year’s time-out from international affairs. The result is reflected in this year’s update, where the most meaningful legal developments were either triggered by European initiatives, such as the General Data Protection Regulation (“GDPR”) (see below section 4.1) or the New Transparency Rules for Listed German Companies (see below section 1.2), or as a result of landmark rulings of German or international higher and supreme courts (see below Corporate M&A sections 1.1 and 1.4; Tax – sections 2.1 and 2.2 and Labor and Employment – section 4.2). In fairness, shortly before the winter break at least a few other legal statutes have been rushed through parliament that are also covered by this update. Of the changes that are likely to have the most profound impact on the corporate world, as well as on the individual lives of the currently more than 500 million inhabitants of the EU-28, the GDPR, in our view, walks away with the first prize. The GDPR has created a unified legal system with bold concepts and strong mechanisms to protect individual rights to one’s personal data, combined with hefty fines in case of the violation of its rules. As such, the GDPR stands out as a glowing example for the EU’s aspiration to protect the civic rights of its citizens, but also has the potential to create a major exposure for EU-based companies processing and handling data globally, as well as for non EU-based companies doing business in Europe. On a more strategic scale, the GDPR also creates a challenge for Europe in the global race for supremacy in a AI-driven world fueled by unrestricted access to data – the gold of the digital age. The German government could not resist infection with the virus called protectionism, this time around coming in the form of greater scrutiny imposed on foreign direct investments into German companies being considered as “strategic” or “sensitive” (see below section 1.3 – Germany Tightens Rules on Foreign Takeovers Even Further). Protecting sensitive industries from “unwanted” foreign investors, at first glance, sounds like a laudable cause. However, for a country like Germany that derives most of its wealth and success from exporting its ideas, products and services, a more liberal approach to foreign investments would seem to be more appropriate, and it remains to be seen how the new rules will be enforced in practice going forward. The remarkable success of the German economy over the last twenty five years had its foundation in the abandoning of protectionism, the creation of an almost global market place for German products, and an increasing global adoption of the rule of law. All these building blocks of the recent German economic success have been under severe attack in the last year. This is definitely not the time for Germany to let another year go by idly. We use this opportunity to thank you for your trust and confidence in our ability to support you in your most complicated and important business decisions and to help you form your views and strategies to deal with sophisticated German legal issues. Without our daily interaction with your real-world questions and tasks, our expertise would be missing the focus and color to draw an accurate picture of the multifaceted world we are living in. In this respect, we thank you for making us better lawyers – every day. ________________________ TABLE OF CONTENTS 1.      Corporate, M&A 2.      Tax 3.      Financing and Restructuring 4.      Labor and Employment 5.      Real Estate 6.      Compliance 7.      Antitrust and Merger Control 8.      Litigation 9.      IP & Technology 10.    International Trade, Sanctions and Export Controls ________________________ 1.       Corporate, M&A 1.1       Further Development regarding D&O Liability of the Supervisory Board in a German Stock Corporation In its famous “ARAG/Garmenbeck”-decision in 1997, the German Federal Supreme Court (Bundesgerichtshof – BGH) first established the obligation of the supervisory board of a German Stock Corporation (Aktiengesellschaft) to pursue the company’s D&O liability claims in the name of the company against its own management board after having examined the existence and enforceability of such claims. Given the very limited discretion the court has granted to the supervisory board not to bring such a claim and the supervisory board’s own liability arising from inactivity, the number of claims brought by companies against their (former) management board members has risen significantly since this decision. In its recent decision dated September 18, 2018, the BGH ruled on the related follow-up question about when the statute of limitations should start to run with respect to compensation claims brought by the company against a supervisory board member who has failed to pursue the company’s D&O liability claims against the board of management within the statutory limitation period. The BGH clarified that the statute of limitation applicable to the company’s compensation claims against the inactive supervisory board member (namely ten years in case of a publicly listed company, otherwise five years) should not begin to run until the company’s compensation claims against the management board member have become time-barred themselves. With that decision, the court adopts the view that in cases of inactivity, the period of limitations should not start to run until the last chance for the filing of an underlying claim has passed. In addition, the BGH in its decision confirmed the supervisory board’s obligation to also pursue the company’s claims against the board of management in cases where the management board member’s misconduct is linked to the supervisory board’s own misconduct (e.g. through a violation of supervisory duties). Even in cases where the pursuit of claims against the board of management would force the supervisory board to disclose its own misconduct, such “self-incrimination” does not release the supervisory board from its duty to pursue the claims given the preponderance of the company’s interests in an effective supervisory board, the court reasoned. In practice, the recent decision will result in a significant extension of the D&O liability of supervisory board members. Against that backdrop, supervisory board members are well advised to examine the existence of the company’s compensation claims against the board of management in a timely fashion and to pursue the filing of such claims, if any, as soon as possible. If the board of management’s misconduct is linked to parallel misconduct of the supervisory board itself, the relevant supervisory board member – if not exceptionally released from pursuing such claim and depending on the relevant facts and circumstances – often finds her- or himself in a conflict of interest arising from such self-incrimination in connection with the pursuit of the claims. In such a situation, the supervisory board member might consider resigning from office in order to avoid a conflict of interest arising from such self-incrimination in connection with the pursuit of the claims. Back to Top 1.2       Upcoming New Transparency Rules for Listed German Companies as well as Institutional Investors, Asset Managers and Proxy Advisors In mid-October 2018, the German Federal Ministry of Justice finally presented the long-awaited draft for an act implementing the revised European Shareholders’ Rights Directive (Directive (EU) 2017/828). The Directive aims to encourage long-term shareholder engagement by facilitating the communication between shareholders and companies, in particular across borders, and will need to be implemented into German law by June 10, 2019 at the latest. The new rules primarily target listed German companies and provide some major changes with respect to the “say on pay” provisions, as well as additional approval and disclosure requirements for related party transactions, the transmission of information between a stock corporation and its shareholders and additional transparency and reporting requirements for institutional investors, asset managers and proxy advisors. “Say on pay” on directors’ remuneration: remuneration policy and remuneration report Under the current law, the shareholders determine the remuneration of the supervisory board members at a shareholder meeting, whereas the remuneration of the management board members is decided by the supervisory board. The law only provides for the possibility of an additional shareholder vote on the management board members’ remuneration if such vote is put on the agenda by the management and supervisory boards in their sole discretion. Even then, such vote has no legal effects whatsoever (“voluntary say on pay”). In the future, shareholders of German listed companies will have two options. First, the supervisory board will have to prepare a detailed remuneration policy for the management board, which must be submitted to the shareholders if there are major changes to the remuneration, and in any event at least once every four years (“mandatory say on pay”). That said, the result of the vote on the policy will continue to remain only advisory. However, if the supervisory board adopts a remuneration policy that has been rejected by the shareholders, it will then be required to submit a reviewed (not necessarily revised) remuneration policy to the shareholders at the next shareholders’ meeting. With respect to the remuneration of supervisory board members, the new rules require a shareholders vote at least once every four years. Second, at the annual shareholders’ meeting the shareholders will vote ex post on the remuneration report (which is also reviewed by the statutory auditor) which contains the remuneration granted to the present and former members of the management board and the supervisory board in the past financial year. Again, the shareholders’ vote, however, will only be advisory. Both the remuneration report including the audit report, as well as the remuneration policy will have to be made public on the company’s website for at least ten years. Related party transactions German stock corporation law already provides for various safeguard mechanisms to protect minority shareholders in cases of transactions with major shareholders or other related parties (e.g. the capital maintenance rules and the laws relating to groups of companies). In the future, in the case of listed companies, these mechanisms will be supplemented by a detailed set of approval and transparency requirements for transactions between the company and related parties. Material transactions exceeding certain thresholds will require prior supervisory board approval. A rejection by the supervisory board can be overcome by shareholder vote. Furthermore, a listed company must publicly disclose any such material related party transaction, without undue delay over media providing for a Europe-wide distribution. Identification of shareholders and facilitation of the exercise of shareholders’ rights Listed companies will have the right to request information on the identity of their shareholders, including the name and both a postal and electronic address, from depositary banks, thus allowing for a direct communication line, also with respect to bearer shares (“know-your-shareholder”). Furthermore, depositary banks and other intermediaries will be required to pass on important information from the company to the shareholders and vice versa, e.g. with respect to voting in shareholders’ meetings and the exercise of subscription rights. Where there is more than one intermediary in a chain, the intermediaries are required to pass on the respective information within the chain. In addition, companies will be required to confirm the votes cast at the request of the shareholders thus enabling them to be certain that their votes have been effectively cast, including in particular across borders. Transparency requirements for institutional investors, asset managers and proxy advisors German domestic institutional investors and asset managers with Germany as their home member state (as defined in the applicable sector-specific EU law) will be required (i) to disclose their engagement policy, including how they monitor, influence and communicate with the investee companies, exercise shareholders’ rights and manage actual and potential conflicts of interests, and (ii) to report annually on the implementation of their engagement policy and disclose how they have cast their votes in the general meetings of material investee companies. Institutional investors will further have to disclose (iii) consistency between the key elements of their investment strategy with the profile and duration of their liabilities and how they contribute to the medium to long-term performance of their assets, and, (iv) if asset managers are involved, to disclose the main aspects of their arrangement with the asset manager. The new disclosure and reporting requirements, however, only apply on a “comply or explain” basis. Thus, investors and asset managers may choose not to make the above disclosures, provided they give an explanation as to why this is the case. Proxy advisors will have to publicly disclose on an annual basis (i) whether and how they have applied their code of conduct based again on the “comply or explain” principle, and (ii) information on the essential features, methodologies and models they apply, their main information sources, the qualification of their staff, their voting policies for the different markets they operate in, their interaction with the companies and the stakeholders as well as how they manage conflicts of interests. These rules, however, do not apply to proxy advisors operating from a non-EEA state with no establishment in Germany. The present legislative draft is still under discussion and it is to be expected that there will still be some changes with respect to details before the act becomes effective in mid-2019. Due to transitional provisions, the new rules on “say on pay” will have no effect for the majority of listed companies in this year’s meeting season. Whether the new rules will actually promote a long-term engagement of shareholders and have the desired effect on the directors’ remuneration of listed companies will have to be seen. In any event, both listed companies as well as the other addressees of the new transparency rules should make sure that they are prepared for the new reporting and disclosure requirements. Back to Top 1.3       Germany Tightens Rules on Foreign Takeovers Even Further After the German government had imposed stricter rules on foreign direct investment in 2017 (see 2017 Year-End German Law Update under 1.5), it has now even further tightened its rules with respect to takeovers of German companies by foreign investors. The latest amendment of the rules under the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, “AWV“) enacted in 2018 was triggered, among other things, by the German government’s first-ever veto in August 2018 regarding the proposed acquisition of Leifeld Metal Spinning, a German manufacturer of metal forming machines used in the automotive, aerospace and nuclear industries, by Yantai Taihai Corporation, a privately-owned industry group from China, on the grounds of national security. Ultimately, Yantai withdrew its bid shortly after the German government had signaled that it would block the takeover. On December 29, 2018, the latest amendment of the Foreign Trade and Payments Ordinance came into force. The new rules provide for greater scrutiny of foreign direct investments by lowering the threshold for review of takeovers of German companies by foreign investors from the acquisition of 25% of the voting rights down to 10% in circumstances where the target operates a critical infrastructure or in sensitive security areas (defense and IT security industry). In addition, the amendment also expands the scope of the Foreign Trade and Payments Ordinance to also apply to certain media companies that contribute to shaping the public opinion by way of broadcasting, teleservices or printed materials and stand out due to their special relevance and broad impact. While the lowering of the review threshold as such will lead to an expansion of the existing reporting requirements, the broader scope is also aimed at preventing German mass media from being manipulated with disinformation by foreign investors or governments. There are no specific guidelines published by the German government as it wants the relevant parties to contact, and enter into a dialog with, the authorities about these matters. While the German government used to be rather liberal when it came to foreign investments in the past, the recent veto in the case of Leifeld as well as the new rules show that in certain circumstances, it will become more cumbersome for dealmakers to get a deal done. Finally, it is likely that the rules on foreign investment control will be tightened even further going forward in light of the contemplated EU legislative framework for screening foreign direct investment on a pan-European level. Back to Top 1.4       US Landmark Decision on MAE Clauses – Consequences for German M&A Deals Fresenius wrote legal history in the US with potential consequences also for German M&A deals in which “material adverse effect” (MAE) clauses are used. In December 2018, for the first time ever, the Supreme Court of Delaware allowed a purchaser to invoke the occurrence of an MAE and to terminate the affected merger agreement. The agreement included an MAE clause, which allocated certain business risks concerning the target (Akorn) for the time period between signing and closing to Akorn. Against the resistance of Akorn, Fresenius terminated the merger agreement based on the alleged MAE, arguing that the target’s EBITDA declined by 86%. The decision includes a very detailed analysis of an MAE clause by the Delaware courts and reaffirms that under Delaware law there is a very high bar to establishing an MAE. Such bar is based both on quantitative and qualitative parameters. The effects of any material adverse event need to be substantial as well as lasting. In most German deals, the parties agree to arbitrate. For this reason, there have been no German court rulings published on MAE clauses so far. Hence, all parties to an M&A deal face uncertainty about how German courts or arbitration tribunals would define “materiality” in the context of an MAE clause. In potential M&A litigation, sellers may use this ruling to support the argument that the bar for the exercise of the MAE right is in fact very high in line with the Delaware standard. It remains to be seen whether German judges will adopt the Delaware decision to interpret MAE clauses in German deals. Purchasers, who seek more certainty, may consider defining materiality in the MAE clause more concretely (e.g., by reference to the estimated impact of the event on the EBITDA of the company or any other financial parameter). Back to Top 1.5       Equivalence of Swiss Notarizations? The question whether the notarization of various German corporate matters may only be validly performed by German notaries or whether some or all of these measures may also be notarized validly by Swiss notaries has long since been the topic of legal debate. Since the last major reform of the German Limited Liability Companies Act (Gesetz betreffend Gesellschaften mit beschränkter Haftung – GmbHG) in 2008 the number of Swiss notarizations of German corporate measures has significantly decreased. A number of the newly introduced changes and provisions seemed to cast doubt on the equivalence and capacity of Swiss notaries to validly perform the duties of a German notary public who are not legally bound by the mandatory, non-negotiable German fee regime on notarial fees. As a consequence and a matter of prudence, German companies mostly stopped using Swiss notaries despite the potential for freely negotiated fee arrangements and the resulting significant costs savings in particular in high value matters. However, since 2008 there has been an increasing number of test cases that reach the higher German courts in which the permissibility of a Swiss notarization is the decisive issue. While the German Federal Supreme Court (Bundesgerichtshof – BGH) still has not had the opportunity to decide this question, in 2018 two such cases were decided by the Kammergericht (Higher District Court) in Berlin. In those cases, the court held that both the incorporation of a German limited liability company in the Swiss Canton of Berne (KG Berlin, 22 W 25/16 – January 24, 2018 = ZIP 2018, 323) and the notarization of a merger between two German GmbHs before a notary in the Swiss Canton of Basle (KG Berlin, 22 W 2/18 – July 26, 2018 = ZIP 2018, 1878) were valid notarizations under German law, because Swiss notaries were deemed to be generally equivalent to the qualifications and professional standards of German-based notaries. The reasons given in these decisions are reminiscent of the case law that existed prior to the 2008 corporate law reform and can be interpreted as indicative of a certain tendency by the courts to look favorably on Swiss notarizations as an alternative to German-based notarizations. Having said that and absent a determinative decision by the BGH, using German-based notaries remains the cautious default approach for German companies to take. This is definitely the case in any context where financing banks are involved (e.g. either where share pledges as loan security are concerned or in an acquisition financing context of GmbH share sales and transfers). On the other hand, in regions where such court precedents exist, the use of Swiss notaries for straightforward intercompany share transfers, mergers or conversions might be considered as an alternative on a case by case basis. Back to Top 1.6       Re-Enactment of the DCGK: Focus on Relevance, Function, Management Board’s Remuneration and Independence of Supervisory Board Members Sixteen years after it has first been enacted, the German Corporate Governance Code (Deutscher Corporate Governance Kodex, DCGK), which contains standards for good and responsible governance for German listed companies, is facing a major makeover. In November 2018, the competent German government commission published a first draft for a radically revised DCGK. While vast parts of the proposed changes are merely editorial and technical in nature, the draft contains a number of new recommendations, in particular with respect to the topics of management remuneration and independence of supervisory board members. With respect to the latter, the draft now provides a catalogue of criteria that shall act as guidance for the supervisory board as to when a shareholder representative shall no longer be regarded as independent. Furthermore, the draft also provides for more detailed specifications aiming for an increased transparency of the supervisory board’s work, including the recommendation to individually disclose the members’ attendance of meetings, and further tightens the recommendations regarding the maximum number of simultaneous mandates for supervisory board members. Moreover, in addition to the previous concept of “comply or explain”, the draft DCGK introduces a new “apply and explain” concept, recommending that listed companies also explain how they apply certain fundamental principles set forth in the DCGK as a new third category in addition to the previous two categories of recommendations and suggestions. The draft DCGK is currently under consultation and the interested public is invited to comment upon the proposed amendments until the end of January 2019. Since some of the proposed amendments provide for a rather fundamentally new approach to the current regime and would introduce additional administrative burdens, it remains to be seen whether all of the proposed amendments will actually come into force. According to the current plan, following a final consultancy of the Government Commission, the revised version of the DCGK shall be submitted for publication in April 2019 and would take effect shortly thereafter. Back to Top 2.         Tax On November 23, 2018, the German Federal Council (Bundesrat) approved the German Tax Reform Act 2018 (Jahressteuergesetz 2018, the “Act”), which had passed the German Federal Parliament (Bundestag) on November 8, 2018. Highlights of the Act are (i) the exemption of restructuring gains from German income tax, (ii) the partial abolition of and a restructuring exemption from the loss forfeiture rules in share transactions and (iii) the extension of the scope of taxation for non-German real estate investors investing in Germany. 2.1       Exemption of Restructuring Gains The Act puts an end to a long period of uncertainty – which has significantly impaired restructuring efforts – with respect to the tax implications resulting from debt waivers in restructuring scenarios (please see in this regard our 2017 Year-End German Law Update under 3.2). Under German tax law, the waiver of worthless creditor claims creates a balance sheet profit for the debtor in the amount of the nominal value of the payable. Such balance sheet profit is taxable and would – without any tax privileges for such profit – often outweigh the restructuring effect of the waiver. The Act now reinstates the tax exemption of debt waivers with retroactive effect for debt waivers after February 8, 2017; upon application debt waivers prior to February 8, 2017 can also be covered. Prior to this legislative change, a tax exemption of restructuring gains was based on a restructuring decree of the Federal Ministry of Finance, which has been applied by the tax authorities since 2003. In 2016, the German Federal Fiscal Court (Bundesfinanzgerichtshof) held that the restructuring decree by the Federal Ministry of Finance violates constitutional law since a tax exemption must be legislated by statute and cannot be based on an administrative decree. Legislation was then on hold pending confirmation from the EU Commission that a legislative tax exemption does not constitute illegal state aid under EU law. The EU Commission finally gave such confirmation by way of a comfort letter in August 2018. The Act is largely based on the conditions imposed by a restructuring decree issued by the Federal Ministry of Finance on the tax exemption of a restructuring gain. Under the Act, gains at the level of the debtor resulting from a full or partial debt relief are exempt from German income tax if the relief is granted to recapitalize and restructure an ailing business. The tax exemption only applies if at the time of the debt waiver (i) the business is in need of restructuring and (ii) capable of being restructured, (iii) the waiver results in a going-concern of the restructured business and (iv) the creditor waives the debt with the intention to restructure the business. The rules apply to German corporate income and trade tax and benefit individuals, partnerships and corporations alike. Any gains from the relief must first be reduced by all existing loss-offsetting potentials before the taxpayer can benefit from tax exemptions on restructuring measures. Back to Top 2.2       Partial Abolition of Loss Forfeiture Rules/Restructuring Exception Under the current Loss Forfeiture Rules, losses of a German corporation will be forfeited on a pro rata basis if within a period of five years more than 25% but not more than 50% of the shares in the German loss-making corporation are transferred (directly or indirectly) to a new shareholder or group of shareholders with aligned interests. If more than 50% are transferred, losses will be forfeited in total. There are exceptions to this rule for certain intragroup restructurings, built-in gains and business continuations, especially in the venture capital industry. On March 29, 2017, the German Federal Constitutional Court (Bundesverfassungsgericht – BVerfG) ruled that the pro rata forfeiture of losses (a share transfer of more than 25% but not more than 50%) is incompatible with the constitution. The court has asked the German legislator to amend the Loss Forfeiture Rules retroactively for the period from January 1, 2008 until December 31, 2015 to bring them in line with the constitution. Somewhat surprisingly, the legislator has now decided to fully cancel the pro rata forfeiture of losses with retroactive effect and with no reference to a specific tax period. Currently pending before the German Federal Constitutional Court is the question whether the full forfeiture of losses is constitutional. A decision by the Federal Constitutional Court is expected for early 2019, which may then result in another legislative amendment of the Loss Forfeiture Rules. The Act has also reinstated a restructuring exception from the forfeiture rules – if the share transfer occurs in order to restructure the business of an ailing corporation. Similar to the exemption of restructuring gains, this legislation was on hold until the ECJ’s decision (European Court of Justice) on June 28, 2018 that the restructuring exception does not violate EU law. Existing losses will not cease to exist following a share transfer if the restructuring measures are appropriate to avoid or eliminate the illiquidity or the over-indebtedness of the corporation and to maintain its basic operational structure. The restructuring exception applies to share transfers after December 31, 2007. Back to Top 2.3       Investments in German Real Estate by Non-German Investors So far, capital gains from the disposal of shares in a non-German corporation holding German real estate were not subject to German tax. In a typical structure, in which German real estate is held via a Luxembourg or Dutch entity, a value appreciation in the asset could be realized by a share deal of the holding company without triggering German income taxes. Under the Act, the sale of shares in a non-German corporation is now taxable if, at some point within a period of one year prior to the sale of shares, 50 percent of the book value of the assets of the company consisted of German real estate and the seller held at least 1 percent of the shares within the last five years prior to the sale. The Act is now in line with many double tax treaties concluded by Germany, which allow Germany to tax capital gains in these cases. The new law applies for share transfers after December 31, 2018. Capital gains are only subject to German tax to the extent the value has been increased after December 31, 2018. Until 2018, a change in the value of assets and liabilities, which are economically connected to German real estate, was not subject to German tax. Therefore, for example, profits from a waiver of debt that was used to finance German real estate was not taxable in Germany whereas the interest paid on the debt was deductible for German tax purposes. That law has now changed and allows Germany to tax such profit from a debt waiver if the loan was used to finance German real estate. However, only the change in value that occurred after December 31, 2018 is taxable. Back to Top 3.         Financing and Restructuring – Test for Liquidity Status Tightened On December 19, 2017, the German Federal Supreme Court (Bundesgerichtshof – BGH) handed down an important ruling which clarifies the debt and payable items that should be taken into account when determining the “liquidity” status of companies. According to the Court, the liquidity test now requires managing directors and (executive) board members to determine whether a liquidity gap exceeding 10% can be overcome by incoming liquidity within a period of three weeks taking into account all payables which will become due in those three weeks. Prior to the ruling, managing directors had often argued successfully that only those payables that were due at the time when the test is applied needed be taken into account while expected incoming payments within a three week term could be considered. This mismatch in favor of the managing directors has now been rectified by the Court to the disadvantage of the managing directors. If, for example, on June 1 the company liquidity status shows due payables amounting to EUR 100 and plausible incoming receivables in the three weeks thereafter amounting to EUR 101, no illiquidity existed under the old test. Under the new test confirmed by the Court, payables of EUR 50 becoming due in the three week period now also have to be taken into account and the company would be considered illiquid. For companies and their managing directors following a cautious approach, the implications of this ruling are minor. Going forward, however, even those willing to take higher risks will need to follow the court determined principles. Otherwise, delayed insolvency filings could ensue. This not only involves a managing directors and executive board members’ personal liability for payments made on behalf of the company while illiquid but also potential criminal liability for a delayed insolvency filing. Managing directors are thus well advised to properly undertake and also document the required test in order to avoid liability issues. Back to Top 4.         Labor and Employment 4.1       GDPR Has Tightened Workplace Privacy Rules The EU General Data Protection Regulation (“GDPR”) started to apply on May 25, 2018. It has introduced a number of stricter rules for EU countries with regard to data protection which also apply to employee personal data and employment relationships. In addition to higher sanctions, the regulation provides for extensive information, notification, deletion, and documentation obligations. While many of these data privacy rules had already been part of the previous German workplace privacy regime under the German Federal Data Protection Act (Bundesdatenschutzgesetz – BDSG), the latter has also been amended and provides for specific rules applicable to employee data protection in Germany (e.g. in the context of internal investigations or with respect to employee co-determination). However, the most salient novelty is the enormous increase in potential sanctions under the GDPR. Fines for GDPR violations can reach up to the higher of EUR 20 million or 4% of the group’s worldwide turnover. Against this backdrop, employers are well-advised to handle employee personnel data particularly careful. This is also particularly noteworthy as the employer is under an obligation to prove compliance with the GDPR – which may result in a reversal of the burden of proof e.g. in employment-related litigation matters involving alleged GDPR violations. Back to Top 4.2       Job Adverts with Third Gender Following a landmark decision by the German Federal Constitutional Court in 2017, employers are gradually inserting a third gender into their job advertisements. The Federal Constitutional Court (Bundesverfassungsgericht – BVerfG) decided on October 10, 2017 that citizens who do not identify as either male or female were to be registered as “diverse” in the birth register (1 BvR 2019/16). As a consequence of this court decision, many employers in Germany have broadened gender notations in job advertisements from previously “m/f” to “m/f/d”. While there is no compelling legal obligation to do so, employers tend to signal their open-mindedness by this step, but also mitigate the potential risk of liability for a discrimination claim. Currently, such liability risk does not appear alarming due to the relative rarity of persons identifying as neither male nor female and the lack of a statutory stipulation for such adverts. However, employers might be well-advised to follow this trend, particularly after Parliament confirmed the existence of a third gender option in birth registers in mid-December. Back to Top 4.3       Can Disclosure Obligation Reduce Gender Pay-Gap? In an attempt to weed out gender pay gaps, the German lawmaker has introduced the so-called Compensation Transparency Act in 2017. It obliges employers, inter alia, to disclose the median compensation of comparable colleagues of the opposite gender with comparable jobs within the company. The purpose is to give a potential claimant (usually a female employee) an impression of how much her comparable male colleagues earn in order for her to consider further steps, e.g. a claim for more money. However, the new law is widely perceived as pointless. First, the law itself and its processes are unduly complex. Second, even after making use of the law, the respective employee would still have to sue the company separately in order to achieve an increase in her compensation, bearing the burden of proof that the opposite-gender employee with higher compensation is comparable to her. Against this background, the law has hardly been used in practice and will likely have only minimal impact. Back to Top 4.4       Employers to Contribute 15% to Deferred Compensation Schemes In order to promote company pension schemes, employers are now obliged to financially support deferred compensation arrangements. So far, employer contributions to any company pension scheme had been voluntary. In the case of deferred compensation schemes, companies save money as a result of less social security charges. The flipside of this saving was a financial detriment to the employee’s statutory pension, as the latter depends on the salary actually paid to the employee (which is reduced as a result of the deferred compensation). To compensate the employee for this gap, the employer is now obliged to contribute up to 15% of the respective deferred compensation. The actual impact of this new rule should be limited, as many employers already actively support deferred compensation schemes. As such, the new obligatory contribution can be set off against existing employer contributions to the same pension scheme. Back to Top 5.         Real Estate – Notarization Requirement for Amendments to Real Estate Purchase Agreements Purchase agreements concerning German real estate require notarization in order to be effective. This notarization requirement relates not only to the purchase agreement as such but to all closely related (side) agreements. The transfer of title to the purchaser additionally requires an agreement in rem between the seller and the purchaser on the transfer (conveyance) and the subsequent registration of the transfer in the land register. To avoid additional notarial fees, parties usually include the conveyance in the notarial real estate purchase agreement. Amendment agreements to real estate purchase agreements are quite common (e.g., the parties subsequently agree on a purchase price adjustment or the purchaser has special requests in a real estate development scenario). Various Higher District Courts (Oberlandesgerichte), together with the prevailing opinion in literature, have held in the past that any amendments to real estate purchase agreements also require notarization unless such an amendment is designed to remove unforeseeable difficulties with the implementation of the agreement without significantly changing the parties’ mutual obligations. Any amendment agreement that does not meet the notarization requirement may render the entire purchase agreement (and not only the amendment agreement) null and void. With its decision on September 14, 2018, the German Federal Supreme Court (Bundesgerichtshof – BGH) added another exception to the notarization requirement and ruled that notarization of an amendment agreement is not required once the conveyance has become binding and the amendment does not change the existing real estate transfer obligations or create new ones. A conveyance becomes binding once it has been validly notarized. Before this new decision of the BGH, amendments to real estate purchase agreements were often notarized for the sake of precaution because it was difficult to determine whether the conditions for an exemption from the notarization requirement had been met. This new decision of the BGH gives the parties clear guidance as to when amendments to real estate purchase agreements require notarization. It should, however, be borne in mind that notarization is still required if the amendment provides for new transfer obligations concerning the real property or the conveyance has not become effective yet (e.g., because third party approval is still outstanding). Back to Top 6.         Compliance 6.1       Government Plans to Introduce Corporate Criminal Liability and Internal Investigations Act Plans of the Federal Government to introduce a new statute concerning corporate criminal liability and internal investigations are taking shape. Although a draft bill had already been announced for the end of 2018, pressure to respond to recent corporate scandals seems to be rising. With regard to the role and protection of work product generated during internal investigations, the highly disputed decisions of the Federal Constitutional Court (Bundesverfassungsgericht – BVerfG) in June 2018 (BVerfG, 2 BvR 1405/17, 2 BvR 1780/17 – June 27, 2018) (see 2017 Year-End German Law Update under 7.3) call for clearer statutory rules concerning the search of law firm premises and the seizure of documents collected in the course of an internal investigation. In its dismissal of complaints brought by Volkswagen and its lawyers from Jones Day, the Federal Constitutional Court made remarkable obiter dicta statements in which it emphasized the following: (1) the legal privilege enjoyed for the communication between the individual defendant (Beschuldigter) and its criminal defense counsel is limited to their communication only; (2) being considered a foreign corporate body, the court denied Jones Day standing in the proceedings, because the German constitution only grants rights to corporate bodies domiciled in Germany; and (3) a search of the offices of a law firm does not affect individual constitutional rights of the lawyers practicing in that office, because the office does not belong to the lawyers’ personal sphere, but only to their law firm. The decision and the additional exposure caused by it by making attorney work product created in the course of an internal investigation accessible was a major blow to German corporations’ efforts to foster internal investigations as a means to efficiently and effectively investigate serious compliance concerns. Because it does not appear likely that an entirely new statute concerning corporate criminal liability will materialize in the near future, the legal press expects the Federal Ministry of Justice to consider an approach in which the statutes dealing with questions around internal investigations and the protection of work product created in the course thereof will be clarified separately. In the meantime, the following measures are recommended to maximize the legal privilege for defense counsel (Verteidigerprivileg): (1) Establish clear instructions to an individual criminal defense lawyer setting forth the scope and purpose of the defense; (2) mark work product and communications that have been created in the course of the defense clearly as confidential correspondence with defense counsel (“Vertrauliche Verteidigerkorrespondenz”); and (3) clearly separate such correspondence from other correspondence with the same client in matters that are not clearly attributable to the criminal defense mandate. While none of these measures will guarantee that state prosecutors and courts will abstain from a search and seizure of such material, at least there are good and valid arguments to defend the legal privilege in any appeals process. However, with the guidance provided to courts by the recent constitutional decision, until new statutory provisions provide for clearer guidance, companies can expect this to become an up-hill battle. Back to Top 6.2       Update on the European Public Prosecutor’s Office and Proposed Cross-Border Electronic Evidence Rules Recently the European Union has started tightening its cooperation in the field of criminal procedure, which was previously viewed as a matter of national law under the sovereignty of the 28 EU member states. Two recent developments stand out that illustrate that remarkable new trend: (1) The introduction of the European Public Prosecutor’s Office (“EPPO”) that was given jurisdiction to conduct EU-wide investigations for certain matters independent of the prosecution of these matters under the national laws of the member states, and (2) the proposed EU-wide framework for cross-border access to electronically stored data (“e-evidence”) which has recently been introduced to the European Parliament. As reported previously (see 2017 Year-End German Law Update under 7.4), the European Prosecutor’s Office’s task is to independently investigate and prosecute severe crimes against the EU’s financial interests such as fraud against the EU budget or crimes related to EU subsidies. Corporations receiving funds from the EU may therefore be the first to be scrutinized by this new EU body. In 2018 two additional EU member states, the Netherlands and Malta, decided to join this initiative, extending the number of participating member states to 22. The EPPO will presumably begin its work by the end of 2020, because the start date may not be earlier than three years after the regulation’s entry into force. As a further measure to leverage multi-jurisdictional enforcement activities, in April 2018 the European Commission proposed a directive and a regulation that will significantly facilitate expedited cross-border access to e-evidence such as texts, emails or messaging apps by enforcement agencies and judicial authorities. The proposed framework would allow national enforcement authorities in accordance with their domestic procedure to request e-evidence directly from a service provider located in the jurisdiction of another EU member state. That other state’s authorities would not have the right to object to or to review the decision to search and seize the e-evidence sought by the national enforcement authority of the requesting EU member state. Companies refusing delivery risk a fine of up to 2% of their worldwide annual turnover. In addition, providers from a third country which operate in the EU are obliged to appoint a legal representative in the EU. The proposal has reached a majority vote in the Council of the EU and will now be negotiated in the European Parliament. Further controversial discussions between the European Parliament and the Commission took place on December 10, 2018. The Council of the EU aims at reaching an agreement between the three institutions by the end of term of the European Parliament in May 2019. Back to Top 7.         Antitrust and Merger Control 7.1       Antitrust and Merger Control Overview 2018 In 2018, Germany celebrated the 60th anniversary of both the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen -GWB) as well as the German federal cartel office (Bundeskartellamt) which were both established in 1958 and have since played a leading role in competition enforcement worldwide. The celebrations notwithstanding, the German antitrust watchdog has had a very active year in substantially all of its areas of competence. On the enforcement side, the Bundeskartellamt concluded a number of important cartel investigations. According to its annual review, the Bundeskartellamt carried out dawn raids at 51 companies and imposed fines totaling EUR 376 million against 22 companies or associations and 20 individuals from various industries including the steel, potato manufacturing, newspapers and rolled asphalt industries. Leniency applications remained an important source for the Bundeskartellamt‘s antitrust enforcement activities with a total of 21 leniency applications received in 2018 filling the pipeline for the next few months and years. On the merger control side, the Bundeskartellamt reviewed approximately 1,300 merger cases in 2018 – only 1% of which (i.e. 13 merger filings) required an in-depth phase 2 review. No mergers were prohibited but in one case only conditional clearance was granted and three filings were withdrawn in phase 2. In addition, the Bundeskartellamt had its first full year of additional responsibilities in the area of consumer protection, concluded a sector inquiry into internet comparison portals, and started a sector inquiry into the online marketing business as well as a joint project with the French competition authority CNIL regarding algorithms in the digital economy and their competitive effects. Back to Top 7.2       Cartel Damages Over the past few years, antitrust damages law has advanced in Germany and the European Union. One major legislative development was the EU Directive on actions for damages for infringements of competition law, which was implemented in Germany as part of the 9th amendment to the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen -GWB). In addition, there has also been some noteworthy case law concerning antitrust damages. To begin with, the German Federal Supreme Court (Bundesgerichtshof, BGH) strengthened the position of plaintiffs suing for antitrust damages in its decision Grauzementkartell II in 2018. The decision brought to an end an ongoing dispute between several Higher District Courts and District Courts, which had disagreed over whether a recently added provision of the GWB that suspends the statute of limitations in cases where antitrust authorities initiate investigations would also apply to claims that arose before the amendment entered into force (July 1, 2015). The Federal Supreme Court affirmed the suspension of the statute of limitations, basing its ruling on a well-established principle of German law regarding the intertemporal application of statutes of limitation. The decision concerns numerous antitrust damage suits, including several pending cases concerning trucks, rails tracks, and sugar cartels. Furthermore, recent case law shows that European domestic courts interpret arbitration agreements very broadly and also enforce them in cases involving antitrust damages. In 2017, the England and Wales High Court and the District Court Dortmund (Landgericht Dortmund) were presented with two antitrust disputes where the parties had agreed on an arbitration clause. Both courts denied jurisdiction because the antitrust damage claims were also covered by the arbitration agreements. They argued that the parties could have asserted claims for contractual damages instead, which would have been covered by the arbitration agreement. In the courts’ view, it would be unreasonable, however, if the choice between asserting a contractual or an antitrust claim would give the parties the opportunity to influence the jurisdiction of a court. As a consequence, the use of arbitration clauses (in particular if inconsistently used by suppliers or purchasers) may add significant complexity to antitrust damages litigation going forward. Thus, companies are well advised to examine their international supply agreements to determine whether included arbitration agreements will also apply to disputes about antitrust damages. Back to Top 7.3       Appeals against Fines Risky? In German antitrust proceedings, there is increasing pressure for enterprises to settle. Earlier this year, Radeberger, a producer of lager beer, withdrew its appeal against a significant fine of EUR 338 million, which the Bundeskartellamt had imposed on the company for its alleged participation in the so-called “beer cartel”. With this dramatic step, Radeberger paid heed to a worrisome development in German competition law. Repeatedly, enterprises have seen their cartel fines increased by staggering amounts on appeal (despite such appeals sometimes succeeding on some substantive legal issues). The reason for these “appeals for the worse” – as seen in the liquefied gas cartel (increase of fine from EUR 180 million to EUR 244 million), the sweets cartel (average increase of approx. 50%) and the wallpaper cartel (average increase of approx. 35%) – is the different approach taken by the Bundeskartellamt and the courts to calculating fines. As courts are not bound by the administrative practice of the Bundeskartellamt, many practitioners are calling for the legislator to step in and address the issue. Back to Top 7.4       Luxury Products on Amazon – The Coty Case In July 2018, the Frankfurt Higher District Court (Oberlandesgericht Frankfurt) delivered its judgement in the case Coty / Parfümerie Akzente, ruling that Coty, a luxury perfume producer, did not violate competition rules by imposing an obligation on its selected distributors to not sell on third-party platforms such as Amazon. The judgment followed an earlier decision of the Court of Justice of the European Union (ECJ) of December 2017, by which the ECJ had replied to the Frankfurt court’s referral. The ECJ had held that a vertical distribution agreement (such as the one in place between Coty and its distributor Parfümerie Akzente) did not as such violate Art. 101 of the Treaty on the Functioning of the European Union (TFEU) as long as the so-called Metro criteria were fulfilled. These criteria stipulate that distributors must be chosen on the basis of objective and qualitative criteria that are applied in a non-discriminatory fashion; that the characteristics of the product necessitate the use of a selective distribution network in order to preserve their quality; and, finally, that the criteria laid down do not go beyond what is necessary. Regarding the platform ban in question, the ECJ held that it was not disproportionate. Based on the ECJ’s interpretation of the law, the Frankfurt Higher District Court confirmed that the character of certain products may indeed necessitate a selective distribution system in order to preserve their prestigious reputation, which allowed consumers to distinguish them from similar goods, and that gaps in a selective distribution system (e.g. when products are sold by non-selected distributors) did not per se make the distribution system discriminatory. The Higher District Court also concluded that the platform ban in question was proportional. However, interestingly, it did not do so based on its own reasoning but based on the fact that the ECJ’s detailed analysis did not leave any scope for its own interpretation and, hence, precluded the Higher District Court from applying its own reasoning. Pointing to the European Commission’s E-Commerce Sector Inquiry, according to which sales platforms play a more important role in Germany than in other EU Member States, the Higher District Court, in fact, voiced doubts whether Coty’s sales ban could not have been imposed in a less interfering manner. Back to Top 8.         Litigation 8.1       The New German “Class Action” On November 1, 2018, a long anticipated amendment to the German Code of Civil Procedure (Zivilprozessordnung, ZPO) entered into force, introducing a new procedural remedy for consumers to enforce their rights in German courts: a collective action for declaratory relief. Although sometimes referred to as the new German “class action,” this new German action reveals distinct differences to the U.S.-American remedy. Foremost, the right to bring the collective action is limited to consumer protection organizations or other “qualified institutions” (qualifizierte Einrichtung) who can only represent “consumers” within the meaning of the German Code of Civil Procedure. In addition, affected consumers are not automatically included in the action as part of a class but must actively opt-in by registering their claims in a “claim index” (Klageregister). Furthermore, the collective action for declaratory relief does not grant any monetary relief to the plaintiffs which means that each consumer still has to enforce its claim in an individual suit to receive compensation from the defendant. Despite these differences, the essential and comparable element of the new legal remedy is its binding effect. Any other court which has to decide an individual dispute between the defendant and a registered consumer that is based on the same facts as the collective action is bound by the declaratory decision of the initial court. At the same time, any settlement reached by the parties has a binding effect on all registered consumers who did not decide to specifically opt-out. As a result, companies must be aware of the increased litigation risks arising from the introduction of the new collective action for declaratory relief. Even though its reach is not as extensive as the American class action, consumer protection organizations have already filed two proceedings against companies from the automotive and financial industry since the amendment has entered into force in November 2018, and will most likely continue to make comprehensive use of the new remedy in the future. Back to Top 8.2       The New 2018 DIS Arbitration Rules On March 1, 2018, the new 2018 DIS Arbitration Rules of the German Arbitration Institute (DIS) entered into force. The update aims to make Germany more attractive as a place for arbitration by adjusting the rules to international standards, promoting efficiency and thereby ensuring higher quality for arbitration proceedings. The majority of the updated provisions and rules are designed to accelerate the proceedings and thereby make arbitration more attractive and cost-effective for the parties. There are several new rules on time limitations and measures to enhance procedural efficiency, i.e. the possibility of expedited proceedings or the introduction of case management conferences. Furthermore, the rules now also allow for consolidation of several arbitrations and cover multi-party and multi-contract arbitration. Another major change is the introduction of the DIS Arbitration Council which, similar to the Arbitration Council of the ICC (International Chamber of Commerce), may decide upon challenges of an arbitrator and review arbitral awards for formal defects. This amendment shows that the influence of DIS on their arbitration proceedings has grown significantly. All in all, the modernized 2018 DIS Arbitration Rules resolve the deficiencies of their predecessor and strengthen the position of the German Institution of Arbitration among competing arbitration institutions. Back to Top 9.         IP & Technology – Draft Bill of German Trade Secret Act The EU Trade Secrets Directive (2016/943/EU) on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure has already been in effect since July 5, 2016. Even though it was supposed to be implemented into national law by June 9, 2018 to harmonize the protection of trade secrets in the EU, the German legislator has so far only prepared and published a draft of the proposed German Trade Secret Act. Arguably, the most important change in the draft bill to the existing rules on trade secrets in Germany will be a new and EU-wide definition of trade secrets. This proposed definition requires the holder of a trade secret to take reasonable measures to keep a trade secret confidential in order to benefit from its protection – e.g. by implementing technical, contractual and organizational measures that ensure secrecy. This requirement goes beyond the current standard pursuant to which a manifest interest in keeping an information secret may be sufficient. Furthermore, the draft bill provides for additional protection of trade secrets in litigation matters. Last but not least, the draft bill also provides for increased protection of whistleblowers by reducing the barriers for the disclosure of trade secrets in the public interest and to the media. As a consequence, companies would be advised to review their internal procedures and policies regarding the protection of trade secrets at this stage, and may want to adapt their existing whistleblowing and compliance-management-systems as appropriate. Back to Top 10.       International Trade, Sanctions and Export Controls – The Conflict between Complying with the Re-Imposed U.S. Iran Sanctions and the EU Blocking Statute On May 8, 2018, President Donald Trump announced his decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) and re-impose U.S. nuclear-related sanctions. Under the JCPOA, General License H had permitted U.S.-owned or -controlled non-U.S. entities to engage in business with Iran. But with the end of the wind-down periods provided for in President Trump’s decision on November 5, 2018, such non-U.S. entities are now no longer broadly permitted to provide goods, services, or financing to Iranian counterparties, not even under agreements executed before the U.S. withdrawal from the JCPOA. In response to the May 8, 2018 decision, the EU amended the EU Blocking Statute on August 6, 2018. The effect of the amended EU Blocking Statute is to prohibit compliance by so-called EU operators with the re-imposed U.S. sanctions on Iran. Comparable and more generally drafted anti-blocking statutes had already existed in the EU and several of its member states which prohibited EU domiciled companies to commit to compliance with foreign boycott regulations. These competing obligations under EU and U.S. laws are a concern for U.S. companies that own or seek to acquire German companies that have a history of engagement with Iran – as well as for the German company itself and its management and the employees. But what does the EU prohibition against compliance with the re-imposed U.S. sanctions on Iran mean in practice? Most importantly, it must be noted that the EU Blocking Statute does not oblige EU operators to start or continue Iran related business. If, for example, an EU operator voluntarily decides, e.g. due to lack of profitability, to cease business operations in Iran and not to demonstrate compliance with the U.S. sanctions, the EU Blocking Statute does not apply. Obviously, such voluntary decision must be properly documented. Procedural aspects also remain challenging for companies: In the event a Germany subsidiary of a U.S. company were to decide to start or continue business with Iran, it would usually be required to reach out to the U.S. authorities to request a specific license for a particular transaction with Iran. Before doing so, however, EU operators must first contact the EU Commission directly (not the EU member state authorities) to request authorization to apply for such a U.S. special license. Likewise, if a Germany subsidiary were to decide not to start or to cease business with Iran for the sole reason of being compliant with the re-imposed U.S. Iran sanctions, it would have to apply for an exception from the EU Blocking Statute and would have to provide sufficient evidence that non-compliance would cause serious damage to at least one protected interest. The hurdles for an exception are high and difficult to predict. The EU Commission will e.g. consider, “(…) whether the applicant would face significant economic losses, which could for example threaten its viability or pose a serious risk of bankruptcy, or the security of supply of strategic goods or services within or to the Union or a Member State and the impact of any shortage or disruption therein.” As such, any company caught up in this conflict of interests between the re-imposed U.S. sanctions and the EU Blocking Statute should be aware of a heightened risk of litigation. Third parties, such as Iranian counterparties, might successfully sue for breach of contract with the support of the EU Blocking Regulation in cases of non-performance of contracts as a result of the re-imposed U.S. nuclear sanctions. Finally, EU operators are required to inform the EU Commission within 30 days from the date on which information is obtained that the economic and/or financial interests of the EU operator are affected, directly or indirectly, by the re-imposed U.S. Iran sanctions. If the EU operator is a legal person, this obligation is incumbent on its directors, managers and other persons with management responsibilities of such legal person. Back to Top The following Gibson Dunn lawyers assisted in preparing this client update:  Birgit Friedl, Marcus Geiss, Silke Beiter, Lutz Englisch, Daniel Gebauer, Kai Gesing, Maximilian Hoffmann, Philipp Mangini-Guidano, Jens-Olrik Murach, Markus Nauheim, Dirk Oberbracht, Richard Roeder, Martin Schmid, Annekatrin Schmoll, Jan Schubert, Benno Schwarz, Balthasar Strunz, Michael Walther, Finn Zeidler, Mark Zimmer, Stefanie Zirkel and Caroline Ziser Smith. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the issues discussed in this update. The two German offices of Gibson Dunn in Munich and Frankfurt bring together lawyers with extensive knowledge of corporate, tax, labor, real estate, antitrust, intellectual property law and extensive compliance / white collar crime experience. The German offices are comprised of seasoned lawyers with a breadth of experience who have assisted clients in various industries and in jurisdictions around the world. Our German lawyers work closely with the firm’s practice groups in other jurisdictions to provide cutting-edge legal advice and guidance in the most complex transactions and legal matters. For further information, please contact the Gibson Dunn lawyer with whom you work or any of the following members of the German offices: General Corporate, Corporate Transactions and Capital Markets Lutz Englisch (+49 89 189 33 150), lenglisch@gibsondunn.com) Markus Nauheim (+49 89 189 33 122, mnauheim@gibsondunn.com) Ferdinand Fromholzer (+49 89 189 33 121, ffromholzer@gibsondunn.com) Dirk Oberbracht (+49 69 247 411 510, doberbracht@gibsondunn.com) Wilhelm Reinhardt (+49 69 247 411 520, wreinhardt@gibsondunn.com) Birgit Friedl (+49 89 189 33 180, bfriedl@gibsondunn.com) Silke Beiter (+49 89 189 33 121, sbeiter@gibsondunn.com) Marcus Geiss (+49 89 189 33 122, mgeiss@gibsondunn.com) Annekatrin Pelster (+49 69 247 411 521, apelster@gibsondunn.com Finance, Restructuring and Insolvency Sebastian Schoon (+49 89 189 33 160, sschoon@gibsondunn.com) Birgit Friedl (+49 89 189 33 180, bfriedl@gibsondunn.com) Alexander Klein (+49 69 247 411 518, aklein@gibsondunn.com) Marcus Geiss (+49 89 189 33 122, mgeiss@gibsondunn.com) Tax Hans Martin Schmid (+49 89 189 33 110, mschmid@gibsondunn.com) Labor Law Mark Zimmer (+49 89 189 33 130, mzimmer@gibsondunn.com) Real Estate Peter Decker (+49 89 189 33 115, pdecker@gibsondunn.com) Daniel Gebauer (+49 89 189 33 115, dgebauer@gibsondunn.com) Technology Transactions / Intellectual Property / Data Privacy Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Kai Gesing (+49 89 189 33 180, kgesing@gibsondunn.com) Corporate Compliance / White Collar Matters Benno Schwarz (+49 89 189 33 110, bschwarz@gibsondunn.com) Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Mark Zimmer (+49 89 189 33 130, mzimmer@gibsondunn.com) Finn Zeidler (+49 69 247 411 530, fzeidler@gibsondunn.com) Antitrust Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Jens-Olrik Murach (+32 2 554 7240, jmurach@gibsondunn.com) Kai Gesing (+49 89 189 33 180, kgesing@gibsondunn.com) Litigation Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Mark Zimmer (+49 89 189 33 130, mzimmer@gibsondunn.com) Finn Zeidler (+49 69 247 411 530, fzeidler@gibsondunn.com) Kai Gesing (+49 89 189 33 180, kgesing@gibsondunn.com) International Trade, Sanctions and Export Control Michael Walther (+49 89 189 33 180, mwalther@gibsondunn.com) Richard Roeder (+49 89 189 33 218, rroeder@gibsondunn.com) © 2019 Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, CA 90071 Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

December 4, 2018 |
Ari Lanin and Benyamin Ross Named to Variety’s Dealmakers Impact Report

Century City partner Ari Lanin and Los Angeles partner Benyamin Ross were named to Variety’s 2018 Dealmakers Impact Report, which profiles the entertainment industry’s top attorneys, executives, managers and financiers.  They were recognized for representing some of the industry’s major players and their deals including WndrCo in the formation of and $1 billion initial capital raise for its NewTV project.  Lanin advises companies, private equity firms and investment banks, focusing on public and private merger transactions, stock and asset sales, joint ventures and strategic partnerships, contests for corporate control and public and private capital-raising transactions.  Ross advises companies, private equity and venture capital firms in mergers and acquisitions, equity investments, joint ventures, restructuring transactions and general commercial agreements.  The issue was published on December 4, 2018.

November 29, 2018 |
Theodore Boutrous Named Lawyer of the Week by The Times

The Times named Los Angeles partner Theodore J. Boutrous Jr. “Lawyer of the week” [PDF] for helping CNN’s Jim Acosta win back his press pass after it was revoked by the White House in November. As both a crisis management strategist and a seasoned appellate and media lawyer, Boutrous has extensive experience handling high-profile litigation, media relations and media legal issues. The profile was published on November 29, 2018.

November 30, 2018 |
Theodore Boutrous and Theodore Olson Named Litigators of the Week

The Am Law Litigation Daily named Los Angeles partner Theodore J. Boutrous Jr. and Washington, D.C. partner Theodore B. Olson as “Litigators of the Week” [PDF] for leading a team that “jumped into action when the White House revoked the press pass of CNN’s Jim Acosta, suing to force the Trump administration to restore his access.”  Boutrous and Olson formed a team with deep knowledge of First Amendment law, including Washington, D.C. partner Joshua S. Lipshutz and New York partner Anne Champion.  The case moved quickly.  Within a few days of the team’s initial filing on Tuesday, November 13, the judge ruled in favor of CNN and Acosta, and by Monday, November 19, the White House restored Jim Acosta’s hard pass permanently.  The profile was published on November 30, 2018. Gibson Dunn is unique among law firms in terms of the depth and breadth of its media, entertainment and technology practice.  The firm has been extensively involved in handling First Amendment issues in virtually all areas of free speech and press and offers counseling, litigation at the trial and appellate levels, prepublication or prebroadcast review, and contractual negotiations among many other services.

November 21, 2018 |
New Export Controls on Emerging Technologies – 30-Day Public Comment Period Begins

Click for PDF On Monday, the Trump administration took the first step toward imposing new controls on the export of cutting-edge technologies.  Pursuant to the Export Control Reform Act of 2018 (“ECRA”), the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) published a request for the public’s assistance in identifying “emerging technologies” essential for U.S. national security that should be subject to new export restrictions.[1]  The advance notice of proposed rulemaking (“ANPRM”) reiterates the general criteria for emerging technologies, provides a representative list of targeted technologies, and provides a 30-day period for comment on which technologies should be subject to these new controls. In response to this notice, companies that operate in certain high technology sectors, such as biotechnology, artificial intelligence, computer processing, and advanced materials, should consider filing public comments and prepare for pending controls.  These companies should start by identifying technologies they possess that are likely to be targeted for new export controls and gather important evidence on the efficacy of potential controls on these technologies.  Companies likely to be affected should  also consider the impact that tighter controls on the transfer of these technologies may have on their business operations.  Additionally, U.S. businesses that engage with emerging technologies must be mindful of new CFIUS regulations that require such businesses to declare certain controlling and non-controlling foreign investments to CFIUS before the investment is made. BACKGROUND On August 13, 2018, President Trump signed the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (“FY 2019 NDAA”), an omnibus bill to authorize defense spending that includes—among other measures—the Export Control Reform Act of 2018 (“ECRA”).[2]  In addition to placing the U.S. export control regime on firm statutory footing for the first time in decades, ECRA significantly expanded the President’s authority to regulate and enforce export controls by requiring the Secretary of Commerce to establish controls on the export, re-export, or in-country transfer of “emerging or foundational technologies.”[3] ECRA was passed alongside the Foreign Investment Risk Review Modernization Act (“FIRRMA”), which reformed the CFIUS review process for inbound foreign investment.[4]  As originally drafted, FIRRMA would have included outbound investments—such as joint ventures or licensing agreements—in the list of covered transactions subject to CFIUS review to limit the outflow of technology important to U.S. national security.  This proposed provision was very controversial and was ultimately removed from the bill.  Instead, the final version of the NDAA included ECRA, which granted BIS the authority to work with the interagency group to identify and regulate the transfer of these emerging and foundational technologies.[5] WHAT ARE EMERGING TECHNOLOGIES? ECRA does not offer a precise definition of the “emerging technologies” to be controlled by BIS.  Instead, it offers criteria for BIS to consider when determining what technologies will fall within this area of BIS control.  Importantly, the definition of “technology” itself in the context of export controls is well established.  Such technology does not, for example, include end-items, commodities, or software.  Instead, technology is the information, in tangible or intangible form, necessary for the development, production, or use of such goods or software.[6]  Technology may include written or oral communications, blueprints, schematics, photographs, formulae, models, or information gained through mere visual inspection.[7]  For example, speech recognition software would not be a technology and therefore would not be subject to these new controls.  However, the source code for such software would be technology that could be considered “emerging,” depending on the criteria BIS applies. The ANPRM broadly describes emerging technologies as “those technologies essential to the national security of the United States that are not already subject to export controls under the Export Administration Regulations (“EAR”) or the International Traffic in Arms Regulations (“ITAR”).”[8]  The ANPRM suggests that technologies will be considered “essential to the national security of the United States” if they “have potential conventional weapons, intelligence collection, weapons of mass destruction, or terrorist applications or could provide the United States with a qualitative military or intelligence advantage.”[9] In narrowing down which of these technologies will be subject to new export controls, BIS will also consider the development of emerging technologies abroad, the effect of unilateral export restrictions on U.S. technological development, and the ability of export controls to limit the spread of these emerging technologies in foreign countries.  In making this assessment and further narrowing the category of affected technologies, BIS will consider information from a variety of interagency sources, as well as public information drawn from comments submitted in response to the ANPRM. Although the ANPRM does not provide concrete examples of “emerging technologies,” BIS does provide a list of technologies currently subject to limited controls that could be considered “emerging” and subject to new, broader controls.  These include the following: (1) Biotechnology, such as: (i)  nanobiology; (ii) synthetic biology; (iii) genomic and genetic engineering; or (iv) neurotech. (2) Artificial intelligence (AI) and machine learning technology, such as: (i) neural networks and deep learning (e.g., brain modelling, time series prediction, classification); (ii) evolution and genetic computation (e.g., genetic algorithms, genetic programming); (iii) reinforcement learning; (iv) computer vision (e.g., object recognition, image understanding); (v) expert systems (e.g., decision support systems, teaching systems); (vi) speech and audio processing (e.g., speech recognition and production); (vii) natural language processing (e.g., machine translation); (viii) planning (e.g., scheduling, game playing); (ix) audio and video manipulation technologies (e.g., voice cloning, deepfakes); (x) AI cloud technologies; or (xi) AI chipsets. (3) Position, Navigation, and Timing (PNT) technology. (4) Microprocessor technology, such as: (i) Systems-on-Chip (SoC); or (ii) Stacked Memory on Chip. (5) Advanced computing technology, such as: (i) memory-centric logic. (6) Data analytics technology, such as: (i) visualization; (ii) automated analysis algorithms; or (iii) context-aware computing. (7) Quantum information and sensing technology, such as: (i) quantum computing; (ii) quantum encryption; or (iii) quantum sensing. (8) Logistics technology, such as: (i) mobile electric power; (ii) modeling and simulation; (iii) total asset visibility; or (iv) distribution-based Logistics Systems (DBLS). (9) Additive manufacturing (e.g., 3D printing). (10) Robotics such as: (i) micro-drone and micro-robotic systems; (ii) swarming technology; (iii) self-assembling robots; (iv) molecular robotics; (v) robot compliers; or (vi) smart Dust. (11) Brain-computer interfaces, such as: (i) neural-controlled interfaces; (ii) mind-machine interfaces; (iii) direct neural interfaces; or (iv) brain-machine interfaces. (12) Hypersonics, such as: (i) flight control algorithms; (ii) propulsion technologies; (iii) thermal protection systems; or (iv) specialized materials (for structures, sensors, etc.). (13) Advanced Materials, such as: (i) adaptive camouflage; (ii) functional textiles (e.g., advanced fiber and fabric technology); or (iii) biomaterials. (14) Advanced surveillance technologies, such as faceprint and voiceprint technologies.[10] BIS REQUEST FOR COMMENT Along with a review of its mandate to regulate emerging technologies and a sample of several potentially affected industries, BIS specifically requested public comments on the following points: how the administration should define emerging technologies what the criteria should be for determining whether there are specific technologies within these general categories that are important to U.S. national security what sources the administration can refer to in order to identify emerging technologies what other general technology categories might be important to U.S. national security and warrant control information about the status of development of the listed technologies in the United States and other countries information about what impact the specific emerging technology controls would have on U.S. technological leadership, and suggestions for other approaches to identifying emerging technologies warranting controls.[11] Comments on these issues are due to BIS by December 19, 2018—only thirty days after the publication of the ANPRM. Critically, comments offered pursuant to this notice will be made public, and there is no express procedure for submitting redacted public comments and complete comments for the agency. HOW TO RESPOND Companies potentially affected by these new controls should simultaneously begin preparing for public comments and for pending controls.  The first step in this process should be the identification of potentially targeted technologies.  Companies should work with in-house engineers, researchers, and product development personnel—as well as export control experts—to begin identifying technology that may be targeted for control. Technologies currently controlled under the ITAR or broadly restricted by the EAR will not be included in the new category of “emerging technologies.”  Given the express limitations provided in ECRA, technologies produced outside of the United States are also unlikely to be targeted by the new controls, as unilateral U.S. export controls would do little to restrict the flow of these technologies.  Once a company identifies such non-controlled technologies predominantly of U.S.-origin, it should evaluate the extent to which it shares or will share this technology with non-U.S. persons and the means by which it makes such transfers. Having identified technology likely to be impacted by the new controls, companies should prepare public comments in response to the request posed in the ANPRM.  For example, companies may wish to suggest a definition for emerging technologies, or a limiting principle for a potential definition, that is based on an evaluation of potentially affected technologies, market concerns, and BIS’s policy objectives.  Concrete evidence of foreign production of comparable technology, the likely impact on U.S. technological superiority of new controls, and the ability of new controls to limit the spread of emerging technologies abroad will also be particularly persuasive.  Where possible, companies may also wish to differentiate their technology from comparable technology that may have conventional weapons, intelligence collection, weapons of mass destruction, or terrorist applications. In addition to providing comments to BIS, companies should also begin preparing to operate under expanded export controls.  Importantly, certain kinds of exports related to emerging technologies will not be subject to new licensing requirements.  For example, the provision of technology associated with the sale or license of finished goods or software will not be subject to a new licensing requirement if the U.S. party to the transaction generally makes the finished items and associated technology available to its customers, distributors, and resellers (e.g., an operation manual exported along with controlled hardware).[12] Similarly, the provision by a U.S. party of technology to a foreign supplier of goods or services to the U.S. party will not be restricted if the foreign supplier has no rights to exploit the technology contributed by the U.S. person other than to supply the procured goods or services.[13]  For example, the provision of blueprints to a foreign manufacturer under these circumstances would not be subject to the new controls.  Additionally, contribution by a U.S. person to an industry organization related to a standard or specification would not generally be subject to the new controls.[14] However, companies should be mindful of the circumstances in which new controls will limit their business operations.  For example, the new controls may limit operations under joint ventures or other cooperative arrangements where emerging technologies are currently exchanged.  In addition, the new controls are likely to limit the availability of certain license exceptions that could be used to facilitate such cooperative arrangements.  Cooperation with individuals and entities in countries subject to U.S. arms embargos, such as China, are likely to be significantly curtailed, as BIS may effectively prohibit exports of emerging technologies to those countries. With these potential impacts in mind, companies should begin evaluating how controls on targeted technologies will affect their operations. WHAT’S NEXT BIS will evaluate public comments offered during the 30-day window provided by the ANPRM, along with additional public and classified information collected through the interagency process, to establish the criteria to be used to identify  “emerging technologies” and related export controls.  As a part of this process, it is likely that BIS will rely on some of its existing mechanisms for monitoring and regulating emerging technologies to provide insight into the appropriate scope and content of the new controls. For example, BIS has indicated it will look to its Emerging Technologies and Research Advisory Committee, an advisory body of academics, industry personnel, and researchers that already assist BIS in identifying new technologies and gaps in existing controls.  BIS may also rely on the surveys and network of company partnerships used by its Office of Technology Evaluation to conduct assessments of defense-related technologies.  Other federal agencies engaged in the development of emerging technologies may also contribute to the identification of emerging technologies and appropriate controls, including for example the various advanced research projects agencies (e.g. DARPA, ARPA-E, and IARPA), the National Science Foundation’s Foundations of Emerging Technologies, and the national laboratories.  The work of these agencies and entities may suggest areas on which BIS could focus new controls. BIS’s current efforts to control emerging technologies and related products may also inform its development of new controls.  In 2012, BIS established a dedicated system for controlling emerging technologies under Export Control Classification Number (“ECCN”) 0Y521.  These new controls were similarly intended to restrict the export of items presenting a significant military or intelligence advantage to the United States.  Technology identified under this ECCN requires a license for export to all destinations, except Canada, with limited license exceptions available.  Although only a few items have been identified for control under this existing mechanism (e.g. X-ray deflecting epoxies, biosensor systems, and tools for tritium production), BIS’s use of the 0Y521 ECCN series may provide further evidence of the types of technologies BIS may target for control and the restrictions it will apply. As it continues to await public comments and identify emerging technologies, BIS plans to publish a similar ANPRM requesting the public’s assistance in identifying and defining “foundational technologies,” which will also be subjected to new ECRA-mandated controls.[15]  Once BIS has arrived at a definition for these terms and a set of potential controls, BIS will likely publish a proposed rule providing this information for another period of public comment.  Those comments will undergo a similar process of interagency review, and BIS will announce its final rule providing the new controls on the export of emerging and foundational technologies. Importantly, any technologies that BIS identifies as emerging or foundational through this rulemaking process will be considered “critical technologies” for the purposes of determining CFIUS jurisdiction.[16]  FIRRMA now requires that certain foreign investment in U.S. companies that deal in these critical technologies receive CFIUS review and approval.  Under CFIUS’s new program to pilot the implementation of these authorities, CFIUS must receive advance notice of certain types of non-controlling foreign investment in U.S. companies that design, test, manufacture, fabricate, or develop critical technologies—including emerging and foundational technologies identified by BIS—for use in one of several listed industries.[17]  In this regard, BIS’s final determination regarding what constitutes “emerging technologies” will also impact the scope of CFIUS’s expanded jurisdiction.    [1]   Review of Controls for Certain Emerging Technologies, 83 Fed. Reg. 58,201 (advance notice of proposed rulemaking Nov. 19, 2018), https://www.gpo.gov/fdsys/pkg/FR-2018-11-19/pdf/2018-25221.pdf [hereinafter, “ANPRM”].    [2]   Export Control Reform Act of 2018, Pub. L. No. 115-232, §§ 1751-1781 (2018).    [3]   Id. § 1758.    [4]   Foreign Investment Risk Review Modernization Act of 2018, Pub. L. No. 115-232, §§ 1701-1728 (2018).    [5]   Export Control Reform Act of 2018, Pub. L. No. 115-232, § 1758 (2018).    [6]   15 C.F.R. § 772.1.    [7]   Id.    [8]   ANPRM, supra note 1 at 58,201.    [9]   Id. [10]   Id. at 58,202. [11]   Id. [12]   Export Control Reform Act of 2018, Pub. L. No. 115-232, § 1758(b)(4)(c)(i) (2018). [13]   Id. § 1758(b)(4)(c)(iv). [14]   Id. § 1758(b)(4)(c)(v). [15]   ANPRM, supra note 1 at 58,202. [16]   Foreign Investment Risk Review Modernization Act of 2018, Pub. L. No. 115-232, § 1703 (2018). [17]   31 C.F.R. § 801.101. The following Gibson Dunn lawyers assisted in preparing this client update: Judith Alison Lee, Adam M. Smith, R.L. Pratt and Christopher Timura. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the above developments.  Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following leaders and members of the firm’s International Trade practice group: United States: Judith Alison Lee – Co-Chair, International Trade Practice, Washington, D.C. (+1 202-887-3591, jalee@gibsondunn.com) Ronald Kirk – Co-Chair, International Trade Practice, Dallas (+1 214-698-3295, rkirk@gibsondunn.com) Jose W. Fernandez – New York (+1 212-351-2376, jfernandez@gibsondunn.com) Marcellus A. McRae – Los Angeles (+1 213-229-7675, mmcrae@gibsondunn.com) Adam M. Smith – Washington, D.C. (+1 202-887-3547, asmith@gibsondunn.com) Christopher T. Timura – Washington, D.C. (+1 202-887-3690, ctimura@gibsondunn.com) Ben K. Belair – Washington, D.C. (+1 202-887-3743, bbelair@gibsondunn.com) Courtney M. Brown – Washington, D.C. (+1 202-955-8685, cmbrown@gibsondunn.com) Laura R. Cole – Washington, D.C. (+1 202-887-3787, lcole@gibsondunn.com) Stephanie L. Connor – Washington, D.C. (+1 202-955-8586, sconnor@gibsondunn.com) Helen L. Galloway – Los Angeles (+1 213-229-7342, hgalloway@gibsondunn.com) William Hart – Washington, D.C. (+1 202-887-3706, whart@gibsondunn.com) Henry C. Phillips – Washington, D.C. (+1 202-955-8535, hphillips@gibsondunn.com) R.L. Pratt – Washington, D.C. (+1 202-887-3785, rpratt@gibsondunn.com) Scott R. Toussaint – Palo Alto (+1 650-849-5320, stoussaint@gibsondunn.com) Europe: Peter Alexiadis – Brussels (+32 2 554 72 00, palexiadis@gibsondunn.com) Attila Borsos – Brussels (+32 2 554 72 10, aborsos@gibsondunn.com) Patrick Doris – London (+44 (0)207 071 4276, pdoris@gibsondunn.com) Penny Madden – London (+44 (0)20 7071 4226, pmadden@gibsondunn.com) Benno Schwarz – Munich (+49 89 189 33 110, bschwarz@gibsondunn.com) Michael Walther – Munich (+49 89 189 33-180, mwalther@gibsondunn.com) Richard W. Roeder – Munich (+49 89 189 33-160, rroeder@gibsondunn.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

November 1, 2018 |
U.S. News – Best Lawyers® Awards Gibson Dunn 132 Top-Tier Rankings

U.S. News – Best Lawyers® awarded Gibson Dunn Tier 1 rankings in 132 practice area categories in its 2019 “Best Law Firms” [PDF] survey. Overall, the firm earned 169 rankings in nine metropolitan areas and nationally. Additionally, Gibson Dunn was recognized as “Law Firm of the Year” for Litigation – Antitrust and Litigation – Securities. Firms are recognized for “professional excellence with persistently impressive ratings from clients and peers.” The recognition was announced on November 1, 2018.

October 24, 2018 |
Lessons from FTC’s Loss in, and Subsequent Abandonment of, DirecTV Advertising Case

The Federal Trade Commission (“FTC”) is increasingly focusing on the advertising, data privacy/security, and e-commerce processes of prominent companies marketing legitimate, valuable products and services, as compared to the types of fraudsters and shams that have been a central focus of FTC attention in the past. The FTC’s recently concluded action against DirecTV is emblematic of this trend. In FTC v. DirecTV, the FTC alleged that DirecTV’s marketing failed to adequately disclose that (a) the introductory discounted price lasted only twelve months while subscribers were bound to a 24-month commitment; (b) subscribers who cancelled early would be charged a cancellation fee; and (c) subscribers would automatically incur monthly charges if they did not cancel a premium channel package after a free three-month promotional period. On August 16, 2017, after hearing the FTC’s case-in-chief, Judge Gilliam of the U.S. District Court for the Northern District of California granted judgment for DirecTV on the majority of these claims. And earlier this week, the FTC agreed to voluntarily dismiss the remainder of its case with prejudice. Gibson Dunn partners Sean Royall and Rich Cunningham and associates Brett Rosenthal and Emily Riff recently published an article titled Lessons from FTC’s Loss in, and Subsequent Abandonment of, DirecTV Advertising Case in the Washington Legal Foundation’s The Legal Pulse blog. The article describes the case, the FTC’s evidence, and key takeaways for companies crafting advertising and marketing disclosures. Lessons from FTC’s Loss in, and Subsequent Abandonment of, DirecTV Advertising Case (click on link) © 2018, Washington Legal Foundation, The Legal Pulse, October 23, 2018. Reprinted with permission. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the authors of this Client Alert, the Gibson Dunn lawyer with whom you usually work, or one of the leaders and members of the firm’s Antitrust and Competition or Privacy, Cybersecurity and Consumer Protection practice groups: Washington, D.C. Scott D. Hammond (+1 202-887-3684, shammond@gibsondunn.com) D. Jarrett Arp (+1 202-955-8678, jarp@gibsondunn.com) Adam Di Vincenzo (+1 202-887-3704, adivincenzo@gibsondunn.com) Howard S. Hogan (+1 202-887-3640, hhogan@gibsondunn.com) Joseph Kattan P.C. (+1 202-955-8239, jkattan@gibsondunn.com) Joshua Lipton (+1 202-955-8226, jlipton@gibsondunn.com) Cynthia Richman (+1 202-955-8234, crichman@gibsondunn.com) New York Alexander H. Southwell (+1 212-351-3981, asouthwell@gibsondunn.com) Eric J. Stock (+1 212-351-2301, estock@gibsondunn.com) Los Angeles Daniel G. Swanson (+1 213-229-7430, dswanson@gibsondunn.com) Debra Wong Yang (+1 213-229-7472, dwongyang@gibsondunn.com) Samuel G. Liversidge (+1 213-229-7420, sliversidge@gibsondunn.com) Jay P. Srinivasan (+1 213-229-7296, jsrinivasan@gibsondunn.com) Rod J. Stone (+1 213-229-7256, rstone@gibsondunn.com) Eric D. Vandevelde (+1 213-229-7186, evandevelde@gibsondunn.com) San Francisco Rachel S. Brass (+1 415-393-8293, rbrass@gibsondunn.com) Dallas M. Sean Royall (+1 214-698-3256, sroyall@gibsondunn.com) Veronica S. Lewis (+1 214-698-3320, vlewis@gibsondunn.com) Brian Robison (+1 214-698-3370, brobison@gibsondunn.com) Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com) Denver Richard H. Cunningham (+1 303-298-5752, rhcunningham@gibsondunn.com) Ryan T. Bergsieker (+1 303-298-5774, rbergsieker@gibsondunn.com) © 2018 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 17, 2018 |
SEC Warns Public Companies on Cyber-Fraud Controls

Click for PDF On October 16, 2018, the Securities and Exchange Commission issued a report warning public companies about the importance of internal controls to prevent cyber fraud.  The report described the SEC Division of Enforcement’s investigation of multiple public companies which had collectively lost nearly $100 million in a range of cyber-scams typically involving phony emails requesting payments to vendors or corporate executives.[1] Although these types of cyber-crimes are common, the Enforcement Division notably investigated whether the failure of the companies’ internal accounting controls to prevent unauthorized payments violated the federal securities laws.  The SEC ultimately declined to pursue enforcement actions, but nonetheless issued a report cautioning public companies about the importance of devising and maintaining a system of internal accounting controls sufficient to protect company assets. While the SEC has previously addressed the need for public companies to promptly disclose cybersecurity incidents, the new report sees the agency wading into corporate controls designed to mitigate such risks.  The report encourages companies to calibrate existing internal controls, and related personnel training, to ensure they are responsive to emerging cyber threats.  The report (issued to coincide with National Cybersecurity Awareness Month) clearly intends to warn public companies that future investigations may result in enforcement action. The Report of Investigation Section 21(a) of the Securities Exchange Act of 1934 empowers the SEC to issue a public Report of Investigation where deemed appropriate.  While SEC investigations are confidential unless and until the SEC files an enforcement action alleging that an individual or entity has violated the federal securities laws, Section 21(a) reports provide a vehicle to publicize investigative findings even where no enforcement action is pursued.  Such reports are used sparingly, perhaps every few years, typically to address emerging issues where the interpretation of the federal securities laws may be uncertain.  (For instance, recent Section 21(a) reports have addressed the treatment of digital tokens as securities and the use of social media to disseminate material corporate information.) The October 16 report details the Enforcement Division’s investigations into the internal accounting controls of nine issuers, across multiple industries, that were victims of cyber-scams. The Division identified two specific types of cyber-fraud – typically referred to as business email compromises or “BECs” – that had been perpetrated.  The first involved emails from persons claiming to be unaffiliated corporate executives, typically sent to finance personnel directing them to wire large sums of money to a foreign bank account for time-sensitive deals. These were often unsophisticated operations, textbook fakes that included urgent, secret requests, unusual foreign transactions, and spelling and grammatical errors. The second type of business email compromises were harder to detect. Perpetrators hacked real vendors’ accounts and sent invoices and requests for payments that appeared to be for otherwise legitimate transactions. As a result, issuers made payments on outstanding invoices to foreign accounts controlled by impersonators rather than their real vendors, often learning of the scam only when the legitimate vendor inquired into delinquent bills. According to the SEC, both types of frauds often succeeded, at least in part, because responsible personnel failed to understand their company’s existing cybersecurity controls or to appropriately question the veracity of the emails.  The SEC explained that the frauds themselves were not sophisticated in design or in their use of technology; rather, they relied on “weaknesses in policies and procedures and human vulnerabilities that rendered the control environment ineffective.” SEC Cyber-Fraud Guidance Cybersecurity has been a high priority for the SEC dating back several years. The SEC has pursued a number of enforcement actions against registered securities firms arising out of data breaches or deficient controls.  For example, just last month the SEC brought a settled action against a broker-dealer/investment-adviser which suffered a cyber-intrusion that had allegedly compromised the personal information of thousands of customers.  The SEC alleged that the firm had failed to comply with securities regulations governing the safeguarding of customer information, including the Identity Theft Red Flags Rule.[2] The SEC has been less aggressive in pursuing cybersecurity-related actions against public companies.  However, earlier this year, the SEC brought its first enforcement action against a public company for alleged delays in its disclosure of a large-scale data breach.[3] But such enforcement actions put the SEC in the difficult position of weighing charges against companies which are themselves victims of a crime.  The SEC has thus tried to be measured in its approach to such actions, turning to speeches and public guidance rather than a large number of enforcement actions.  (Indeed, the SEC has had to make the embarrassing disclosure that its own EDGAR online filing system had been hacked and sensitive information compromised.[4]) Hence, in February 2018, the SEC issued interpretive guidance for public companies regarding the disclosure of cybersecurity risks and incidents.[5]  Among other things, the guidance counseled the timely public disclosure of material data breaches, recognizing that such disclosures need not compromise the company’s cybersecurity efforts.  The guidance further discussed the need to maintain effective disclosure controls and procedures.  However, the February guidance did not address specific controls to prevent cyber incidents in the first place. The new Report of Investigation takes the additional step of addressing not just corporate disclosures of cyber incidents, but the procedures companies are expected to maintain in order to prevent these breaches from occurring.  The SEC noted that the internal controls provisions of the federal securities laws are not new, and based its report largely on the controls set forth in Section 13(b)(2)(B) of the Exchange Act.  But the SEC emphasized that such controls must be “attuned to this kind of cyber-related fraud, as well as the critical role training plays in implementing controls that serve their purpose and protect assets in compliance with the federal securities laws.”  The report noted that the issuers under investigation had procedures in place to authorize and process payment requests, yet were still victimized, at least in part “because the responsible personnel did not sufficiently understand the company’s existing controls or did not recognize indications in the emailed instructions that those communications lacked reliability.” The SEC concluded that public companies’ “internal accounting controls may need to be reassessed in light of emerging risks, including risks arising from cyber-related frauds” and “must calibrate their internal accounting controls to the current risk environment.” Unfortunately, the vagueness of such guidance leaves the burden on companies to determine how best to address emerging risks.  Whether a company’s controls are adequate may be judged in hindsight by the Enforcement Division; not surprisingly, companies and individuals under investigation often find the staff asserting that, if the controls did not prevent the misconduct, they were by definition inadequate.  Here, the SEC took a cautious approach in issuing a Section 21(a) report highlighting the risk rather than publicly identifying and penalizing the companies which had already been victimized by these scams. However, companies and their advisors should assume that, with this warning shot across the bow, the next investigation of a similar incident may result in more serious action.  Persons responsible for designing and maintaining the company’s internal controls should consider whether improvements (such as enhanced trainings) are warranted; having now spoken on the issue, the Enforcement Division is likely to view corporate inaction as a factor in how it assesses the company’s liability for future data breaches and cyber-frauds.    [1]   SEC Press Release (Oct. 16, 2018), available at www.sec.gov/news/press-release/2018-236; the underlying report may be found at www.sec.gov/litigation/investreport/34-84429.pdf.    [2]   SEC Press Release (Sept. 16, 2018), available at www.sec.gov/news/press-release/2018-213.  This enforcement action was particularly notable as the first occasion the SEC relied upon the rules requiring financial advisory firms to maintain a robust program for preventing identify theft, thus emphasizing the significance of those rules.    [3]   SEC Press Release (Apr. 24, 2018), available at www.sec.gov/news/press-release/2018-71.    [4]   SEC Press Release (Oct. 2, 2017), available at www.sec.gov/news/press-release/2017-186.    [5]   SEC Press Release (Feb. 21, 2018), available at www.sec.gov/news/press-release/2018-22; the guidance itself can be found at www.sec.gov/rules/interp/2018/33-10459.pdf.  The SEC provided in-depth guidance in this release on disclosure processes and considerations related to cybersecurity risks and incidents, and complements some of the points highlighted in the Section 21A report. Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these issues.  For further information, please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Securities Enforcement or Privacy, Cybersecurity and Consumer Protection practice groups, or the following authors: Marc J. Fagel – San Francisco (+1 415-393-8332, mfagel@gibsondunn.com) Alexander H. Southwell – New York (+1 212-351-3981, asouthwell@gibsondunn.com) Please also feel free to contact the following practice leaders and members: Securities Enforcement Group: New York Barry R. Goldsmith – Co-Chair (+1 212-351-2440, bgoldsmith@gibsondunn.com) Mark K. Schonfeld – Co-Chair (+1 212-351-2433, mschonfeld@gibsondunn.com) Reed Brodsky (+1 212-351-5334, rbrodsky@gibsondunn.com) Joel M. Cohen (+1 212-351-2664, jcohen@gibsondunn.com) Lee G. Dunst (+1 212-351-3824, ldunst@gibsondunn.com) Laura Kathryn O’Boyle (+1 212-351-2304, loboyle@gibsondunn.com) Alexander H. Southwell (+1 212-351-3981, asouthwell@gibsondunn.com) Avi Weitzman (+1 212-351-2465, aweitzman@gibsondunn.com) Lawrence J. Zweifach (+1 212-351-2625, lzweifach@gibsondunn.com) Washington, D.C. Richard W. Grime – Co-Chair (+1 202-955-8219, rgrime@gibsondunn.com) Stephanie L. Brooker  (+1 202-887-3502, sbrooker@gibsondunn.com) Daniel P. Chung (+1 202-887-3729, dchung@gibsondunn.com) Stuart F. Delery (+1 202-887-3650, sdelery@gibsondunn.com) Patrick F. Stokes (+1 202-955-8504, pstokes@gibsondunn.com) F. Joseph Warin (+1 202-887-3609, fwarin@gibsondunn.com) San Francisco Marc J. Fagel – Co-Chair (+1 415-393-8332, mfagel@gibsondunn.com) Winston Y. Chan (+1 415-393-8362, wchan@gibsondunn.com) Thad A. Davis (+1 415-393-8251, tdavis@gibsondunn.com) Charles J. Stevens (+1 415-393-8391, cstevens@gibsondunn.com) Michael Li-Ming Wong (+1 415-393-8234, mwong@gibsondunn.com) Palo Alto Paul J. Collins (+1 650-849-5309, pcollins@gibsondunn.com) Benjamin B. Wagner (+1 650-849-5395, bwagner@gibsondunn.com) Denver Robert C. Blume (+1 303-298-5758, rblume@gibsondunn.com) Monica K. Loseman (+1 303-298-5784, mloseman@gibsondunn.com) Los Angeles Michael M. Farhang (+1 213-229-7005, mfarhang@gibsondunn.com) Douglas M. Fuchs (+1 213-229-7605, dfuchs@gibsondunn.com) Privacy, Cybersecurity and Consumer Protection Group: Alexander H. Southwell – Co-Chair, New York (+1 212-351-3981, asouthwell@gibsondunn.com) M. Sean Royall – Dallas (+1 214-698-3256, sroyall@gibsondunn.com) Debra Wong Yang – Los Angeles (+1 213-229-7472, dwongyang@gibsondunn.com) Christopher Chorba – Los Angeles (+1 213-229-7396, cchorba@gibsondunn.com) Richard H. Cunningham – Denver (+1 303-298-5752, rhcunningham@gibsondunn.com) Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Joshua A. Jessen – Orange County/Palo Alto (+1 949-451-4114/+1 650-849-5375, jjessen@gibsondunn.com) Kristin A. Linsley – San Francisco (+1 415-393-8395, klinsley@gibsondunn.com) H. Mark Lyon – Palo Alto (+1 650-849-5307, mlyon@gibsondunn.com) Shaalu Mehra – Palo Alto (+1 650-849-5282, smehra@gibsondunn.com) Karl G. Nelson – Dallas (+1 214-698-3203, knelson@gibsondunn.com) Eric D. Vandevelde – Los Angeles (+1 213-229-7186, evandevelde@gibsondunn.com) Benjamin B. Wagner – Palo Alto (+1 650-849-5395, bwagner@gibsondunn.com) Michael Li-Ming Wong – San Francisco/Palo Alto (+1 415-393-8333/+1 650-849-5393, mwong@gibsondunn.com) Ryan T. Bergsieker – Denver (+1 303-298-5774, rbergsieker@gibsondunn.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

August 8, 2018 |
Media, Entertainment and Technology Group – 2018 Mid-Year Update

Click for PDF For our latest semi-annual update, Gibson Dunn’s Media, Entertainment and Technology practice group is taking stock of another active period of deals, regulatory developments, and litigation. The first half of 2018 has been marked by landmark M&A, esports growth, precedent-setting copyright cases, an end to the “Blurred Lines” saga, and some clarity from California and New York courts in anticipated right of publicity cases. And we have seen courts wrestling with twenty-first century legal issues raised by terms like geoblocking, top-level domains, Simpsonizing, and embedded Tweets. Here, then, is our latest round-up to bring you current on the deals and decisions that will hold lessons for the months and years to come. I.    Transaction Overview A.    M&A 1.    AT&T and Time Warner Prevail in Antitrust Suit and Complete Merger On June 12, 2018, in a 172-page decision following a six-week trial, U.S. District Judge Richard J. Leon denied the government’s request to enjoin the proposed merger between AT&T and Time Warner, and the companies completed the merger two days later, bringing together the content produced by Warner Bros., HBO and Turner with AT&T’s mobile, broadband, video and other communications services.[1] “Our merger brings together the elements to fulfill our vision for the future of media and entertainment,” AT&T said in a press release.[2] On July 12, the government filed a notice of appeal.[3] (Disclosure: Gibson Dunn represents AT&T and DirecTV in the case.) 2.    Comcast Ends Pursuit of 21st Century Fox, Clearing Path for Disney The back-and-forth bidding between The Walt Disney Company and Comcast for Twenty-First Century Fox, Inc. appears to have ended, as on July 19, 2018, Comcast announced it would not pursue the acquisition any further, paving the way for Disney to close the deal.[4] Previously, on June 20, 2018, Disney and Fox announced that they had entered into an amended and restated merger agreement, providing for Disney’s acquisition of Fox’s film and television businesses for more than $71.3 billion in cash and stock, surpassing Disney’s original offer of $52.4 billion in Disney stock and made one week after Comcast’s unsolicited offer of approximately $65 billion in cash.[5] Under the amended and restated agreement, Fox’s shareholders can elect to receive their consideration in the form of cash or Disney stock, subject to 50/50 proration.[6] On June 27, 2018, Disney announced that the Antitrust Division of the Department of Justice had entered into a consent decree with Disney and Fox, clearing the way for the pending acquisition to close.[7] The consent decree requires the sale of the Fox Sports Regional Networks within 90 days of closing the Fox acquisition, subject to possible extension by the DOJ, and is subject to court approval.[8] On July 27, 2018, Disney’s and Fox’s shareholders voted to approve the acquisition.[9] 3.    Suitors Continue to Vie for Sky In abandoning its bid for Disney, Comcast turned its focus to acquiring Sky PLC, but Disney has its sights set on the European broadcaster as well.[10] At the moment, Comcast has the higher offer, currently valued at $34 billion, 5% higher than the latest bid from Fox, which owns 39% of Sky (a stake that will be sold to Disney as part of the Fox acquisition). Disney may then decide to pursue the remainder of Sky by topping Comcast’s bid or may look to sell Fox’s stake.[11] These latest developments follow Fox’s year-long battle with U.K. regulators regarding its proposed acquisition of Sky. The U.K. culture secretary, Matt Hancock, announced that the most recent terms offered by Fox are likely sufficient to allay concerns over media plurality.[12] Fox’s proposed acquisition, which we previously reported has been the subject of British antitrust regulatory scrutiny, caused the U.K.’s Office of Communications to raise red flags, which led to the U.K.’s Competition and Markets Authority to oppose the transaction, noting the proposal would give Rupert Murdoch’s family too much control over U.K. media.[13] Mr. Hancock noted that a sale of Sky News, the news outlet controlled by Sky PLC, to a suitable third party such as Disney (in connection with Disney’s proposal to acquire Twenty-First Century Fox) could alleviate regulatory concerns associated with the deal. Comcast’s bid for Sky was also given the green light by U.K. regulators.[14] 4.    CBS Fights for Control in Midst of Viacom Merger Negotiations Following months during which Shari Redstone, the controlling shareholder of both CBS and Viacom, actively participated in discussions between the companies regarding a potential merger,[15] tension regarding control came to a head on May 14, 2018 when CBS’s board of directors, led by CBS Chairman-CEO Leslie Moonves, sued to dilute Redstone’s preferred shares and those of her holding company National Amusements to prevent her from replacing board members to complete the deal.[16] Redstone and National Amusements returned suit on May 29, 2018, alleging that CBS’s board was overstepping its authority by attempting to dilute her preferred shares.[17] Two days later, a group of CBS’s non-voting Class B shareholders also filed suit against Redstone and National Amusements, claiming Redstone had improperly amended the bylaws to require a 90% board approval for special dividends that would give Class B stockholders the right to vote on the potential merger.[18] 5.    The Weinstein Company’s Bankruptcy Sale In the wake of the sexual assault accusations against Harvey Weinstein, his eponymous production company, The Weinstein Company, filed for bankruptcy in March 2018, listing between $500 million and $1 billion in assets and the same amount in total liabilities. Lantern Capital purchased the production company in the bankruptcy sale for $289 million.[19] On July 16, 2018, The Yucaipa Companies brought suit against Lantern Capital (its former partner in a bid to buy The Weinstein Company), alleging that Lantern failed to reimburse Yucaipa for costs related to the sale and a related purchase fee.[20] B.    SVOD Update 1.    Netflix, Hulu, and Amazon Each Ink High-Profile Creative Deals Netflix has continued to balance both its retention of creative talent and attraction of new talent. The company closed out December 2017 by entering into a four-year, seven-figure overall deal with Stranger Things producer Shawn Levy and his production company 21 Lapps Entertainment.[21] And on February 13, 2018, Netflix announced a five-year overall deal with Ryan Murphy, moving the showrunner and producer from his longtime home of Twentieth Century Fox TV.[22] Under the deal, valued between $250 million and $300 million, Murphy will produce new series and films exclusively for Netflix.[23] Less than a week after releasing the second season of its critically acclaimed original series The Handmaid’s Tale, Hulu announced an overall deal with its showrunner Bruce Miller, on April 30, 2018.[24] Under the deal, made in conjunction with The Handmaid’s Tale producer MGM Television, Miller will create and develop new projects for both Hulu and MGM Television.[25] Amazon has also continued to pursue lucrative creative deals, and on June 5, 2018, it announced that it signed a first-look deal with Jordan Peele, writer and director of the film Get Out, and his production company Monkeypaw Productions.[26] 2.    WndrCo Raises $1 Billion for NewTV WndrCo announced on August 7, 2018, that it had closed a $1 billion funding round for a project with the working title “NewTV”, a mobile-first media platform, led by Meg Whitman and Jeffrey Katzenberg.[27] The initial raise included investments by all of the major Hollywood studios, a number of independent television studios, and major technology companies. The round was led by Madrone Capital. Incubated at WndrCo, NewTV aims to build a user-friendly mobile platform to deliver short-form premium content, allowing users to make the most of every moment of their day. (Disclosure: Gibson Dunn represents WndrCo and NewTV.) 3.    Streaming Industry Expands Through Strategic Partnerships Through the first half of 2018, Netflix has continued to push for partnerships with U.S. cable companies, entering into a partnership with Altice USA, on January 31, 2018, under which Netflix is made available to Altice customers directly through Altice One,[28] and expanding its existing partnership with Comcast to provide Comcast the ability to include a Netflix subscription in new and existing Xfinity packages.[29] In early 2018, YouTube TV entered into strategic partnerships with several sports leagues in an effort to expand its reach, including with MLB and the NBA to become the presenting sponsor of the 2018 World Series and the 2018 NBA Finals, respectively.[30] Despite experiencing a service outage during a World Cup semifinal match,[31] YouTube TV stands to see further expansion in the sports league space throughout the remainder of 2018. On January 5, 2018, CBS became the first Amazon partner to offer a live stream of local broadcast TV by entering into a partnership that allows Amazon Prime U.S. members to access CBS All-Access as an add-on channel.[32] Amazon has increasingly stepped into the role of distributor and portal for companies with over-the-top streaming channels such as CBS, and Amazon’s Prime Video Channels program also has add-ons for programmers such as HBO, Showtime, and Starz.[33] 4.    Chinese Streaming Companies Go Public Often called the “Netflix of China,” iQiyi Inc. in mid-March 2018 launched an estimated $2.3 billion initial public offering.[34] iQiyi intends to use the IPO proceeds to extend its reach into China’s online entertainment industry and continue to provide “blockbuster original content” through its collaborations with Hollywood and Netflix.[35] Not long after, Bilibili Inc., a Chinese online platform used to primarily stream Japanese animation, launched its own IPO, priced at $438 million.[36] In its registration statement, Bilibili noted that it “believe[s] China will become the world’s largest online entertainment market in the future and [its] brand recognition and market leadership among the young generations in China position[s it] well to capture the significant opportunities.”[37] C.    China Partnerships 1.    Blumhouse and Tang Media Partners Partner to Bring Horror Films to China In June 2018, it was announced that Blumhouse Productions, known for its horror movies, partnered with Tang Media Partners, the Shanghai and Los Angeles-based entertainment company, to co-develop and co-finance a slate of Chinese language horror and thriller films.[38] Blumhouse Productions only recently had released its first movie in China in February with Happy Death Day.[39] One possible motivation for this partnership is the booming box office in China, which surpassed the U.S. in the first three months of this year.[40] In the first quarter of 2018, China’s box office took in $3.17 billion in revenues, compared to $2.85 billion in the United States.[41] As the Chinese box office continues to grow, it remains an attractive and unique opportunity for Hollywood and the U.S. entertainment industry. 2.    The Wanda Group Sees New Investments and Consolidation On January 29, 2018, Wanda revealed that Tencent Holdings entered into an agreement to purchase $5.4 billion worth of shares in Dalian Wanda Commercial Management, equaling a 14% interest in the company.[42] Days later on February 5, 2018, it was announced that Alibaba Group Holding Ltd. and Beijing Cultural Investment Holdings, a Chinese government-backed company, agreed to purchase a $1.2 billion stake in Wanda Film Holding Co., The Wanda Group’s domestic film and movie division, which includes the group’s Chinese movie theater.[43] As of the transaction, Alibaba became the second biggest shareholder in Wanda Film Holding Co., with a 7.66% holding.[44] These investments by China’s largest and well-known tech companies came at a time when The Wanda Group was under scrutiny by the Chinese government for its overseas investments and was in the process of selling off its overseas real estate assets to reduce its debt.[45] Then, on June 25, 2018, Wanda Film Holding Co. unveiled plans to acquire a 96.8% stake in Wanda Media (the group’s content-production business), in order to strengthen and consolidate the business’s film and entertainment divisions beyond its cinema division (Wanda Film), with a price tag of $1.78 billion to be paid via cash and equity.[46] The proposed deal would increase content production and afford The Wanda Group the opportunity to produce, distribute and exhibit its content under one roof.[47] AMC Entertainment and Legendary Entertainment—U.S. companies acquired by Wanda in 2016—are not included in the proposed restructuring.[48] The deal is pending authorization by the Shenzhen Stock Exchange.[49] D.    Esports 1.    Fortnite Brings Esports to Center Stage Fortnite, developed and published by Epic Games, has quickly become a phenomenon, and in doing so has helped propel domestic esports—the fast-growing industry of competitive spectator video-gaming—into the mainstream quicker than any game in recent memory. A testament to the game’s widespread adoption, a Fortnite Celebrity Pro-Am charity tournament was recently held at the Banc of California Stadium in Los Angeles during the annual E3 Expo. The tournament played host to 50 celebrities and 50 professional gamers competing for a $3 million cash prize pool.[50] Aside from the Pro-Am tournament, celebrities such as Drake and Travis Scott have taken part in livestreamed gameplay with professional gamers, including the famous Tyler “Ninja” Blevins, with some streams attracting more than 500,000 simultaneous live viewers.[51] Like other game developers, including League of Legends developer Riot Games and Overwatch developer Activision Blizzard, Epic Games has announced its first venture into organized esports via the Fortnite World Cup, which will take place in 2019 with a $100 million total cash purse for winners.[52] However, unlike Riot’s and Activision Blizzard’s esports leagues, which require that teams buy into the league (which generally restricts admission to franchises), Epic has opted for strictly merit-based qualifiers with no spots reserved for organized teams or franchises.[53] Fortnite’s success and the potential for its esports league have also garnered the interest of investors. Tencent, which currently owns 40% of Epic Games, has doubled down on its investment by contributing an additional ¥100 million, half of which will be used to support game development and video content creators, and the other half being used to bring Fortnite to China and develop it as a Chinese esport.[54] 2.    ICM Inks Joint Venture with Esports Agency Evolved ICM Partners and esports talent agency Evolved have announced a joint venture that will give Evolved’s roster of professional gamers, live streamers and internet personalities access to ICM’s full-service offerings.[55] The joint venture will be supervised by ICM’s Bennett Sherman and Peter Trinh, reporting directly to Managing Director Chris Silbermann, who sees esports as a growth opportunity for ICM Partners.[56] 3.    High School Esports Is on Its Way Los Angeles-based startup PlayVS recently closed a $15 million Series A funding round led by New Enterprise Associates with participation from the San Francisco 49ers, Science, CrossCut Ventures, Coatue Management, Cross Culture Ventures, rapper Nas, Dollar Shave Club founder Michael Dubin, and Twitch Cofounder Kevin Lin, among others.[57] PlayVS has worked closely with the NFHS, the high school equivalent of the NCAA, to develop an infrastructure for esports competition at the high school level.[58] PlayVS will be launching its first season in October 2018, bringing esports play to 5,000 high schools.[59]   II.    Regulatory Updates A.    FCC Repeals “Net Neutrality” Rules, Congressional Efforts Stall, and Attention Turns to Litigation and Statehouses In June 2018, the Federal Communications Commission (“FCC”) formally repealed rules concerning the regulation of internet service providers (“ISPs”) (popularly known as “net neutrality”) and no longer considers broadband service a “utility” under Title II of the Communications Act.[60] The FCC erased rules mandating that ISPs treat all web traffic equally and overturned prohibitions on blocking, throttling, and paid prioritization. The agency also included language meant to prevent states from enacting their own consumer protection laws concerning ISPs. Weeks prior to this repeal, the Senate approved a resolution with a 52-47 vote to nullify the FCC’s rollback, but the effort stalled in the House of Representatives.[61] Months before the repeal was enacted, 21 states and the District of Columbia filed suit against the FCC, alleging violation of the Administrative Procedure Act in repealing the “net neutrality” rules.[62] These cases were assigned to the Ninth Circuit via a judicial lottery. In March 2018, the Ninth Circuit granted petitioners’ unopposed request to move the suits to the D.C. Circuit given the court’s experience in presiding over net neutrality cases.[63] The first briefs are due on August 20, 2018, and we anticipate that this litigation will be closely watched over the next year. In addition, a number of states have seen bills introduced (California) or enacted (Washington) to provide net neutrality-type protections.[64] Such bills are sure to be the subject of upcoming challenges and litigation. B.    The European Union’s General Data Protection Regulation Goes into Effect The European Union (“EU”) enacted the General Data Protection Regulation (“GDPR”) in 2016 to unify the patchwork of data privacy laws across all EU member countries into one regulation.[65] The GDPR strengthens the protection of personal data by making clear that location data and online identifiers, such as IP addresses, are considered personal data. European authorities already had taken a more stringent view than U.S. regulators as to what constitutes personally identifiable information subject to protection, including emails and contact information. The GDPR also prohibits the use of lengthy terms and conditions seeking consent; instead, any request for consent must be presented clearly and concisely, and without ambiguity of meaning. The GDPR further provides individuals with the right to, in certain circumstances, require that a business erase personal data about them, obtain a restriction on the processing of personal data, and receive a copy of the personal data provided to the business. It permits individuals to file a class-action style complaint for any breach of personal data. The regulation went into effect on May 25, 2018, and will be applicable to every citizen of the EU and any business entity that transacts with them, regardless of the location of business. Penalties for violating the GDPR are severe. Liable parties could be fined up to four percent of annual global turnover or 20 million Euros, whichever is greater. While many businesses who transact in the EU have updated their privacy policies in light of the GDPR, we strongly urge those who have not done so to review their policies and update them to reflect the new regulation. One immediate consequence of the GDPR has been that ICANN, the not-for-profit company that manages domain names, has already begun removing from its public “WhoIs” database the contact information for domain name registrants in the EU.[66] We are also watching to see whether privacy groups file lawsuits on behalf of groups of individuals seeking to enforce provisions of the GDPR. C.    Hollywood Dealmakers Can No Longer Inquire About Salary History Effective January 1, 2018, California joined a growing number of states, including New York, that restrict an employer’s inquiries into an applicant’s salary history. Under California Labor Code Section 432.3, employers in the state will be prohibited from asking about an applicant’s prior compensation and benefits. The law was enacted to help remedy the gender pay gap. The new law is likely to have a significant impact on how deals are made in the entertainment industry. Going forward, when studios negotiate salaries for talent with agents, they will not be allowed to ask agents for recent quotes unless the talent provides written consent.[67] If consent is provided, agents can volunteer salary history, but studio executives are prohibited from asking for it or using other methods, like calling business affairs executives at previous places of employment to verify it. Should an employer violate this statute, the penalties could be more severe than the $250,000 fine under comparable New York law. In California, applicants will be able to file a lawsuit alleging damages, and remedies may include California’s Private Attorney General Act.[68] III.    Recent Litigation Highlights A.    Antitrust Litigation 1.    Ozzy Osbourne Challenging AEG over Tying Arrangement Regarding Los Angeles and London Venues On March 21, 2018, entertainer Ozzy Osbourne filed a federal antitrust suit in Los Angeles against live entertainment promoter AEG and its subsidiaries and affiliates.[69] The putative class action alleges that AEG is violating the Sherman Act by enforcing an anticompetitive tying arrangement purportedly barring musicians from playing the O2 Arena—”London’s most essential large concert venue”—unless they agree to play Staples Center on the Los Angeles leg of their tour.[70] According to the complaint, AEG—which owns the O2 Arena and Staples Center—effectively forces artists playing the O2 to forego playing certain venues in Los Angeles, like the Forum.[71] Osbourne claims this “Staples Center Commitment” deprives artists like Osbourne from “enjoy[ing] the benefits of competition between Staples and the Forum,” which recently underwent a $100 million renovation.[72] Osbourne seeks an injunction to prohibit AEG from imposing the alleged “illegal tying practice” on him and other musicians.[73] In a recently filed motion to dismiss, AEG argues the lawsuit “is a poorly-disguised attempt by Ozzy’s promoter, Live Nation (represented by the same lawyers), to pressure Defendants to abandon their lawful efforts to compete for bookings in Los Angeles and counteract Live Nation’s tactics to steer business away from venues that AEG owns.”[74] According to AEG, the lawsuit is flawed because the agreement Osbourne seeks to strike down is between AEG and Live Nation, and does not prevent Osbourne from playing at the Forum.[75] Rather, it merely prevents Live Nation from promoting Osbourne’s Los Angeles shows.[76] On August 1, 2018, Judge Dale S. Fischer denied AEG’s motion to dismiss. 2.    Coachella Owner AEG Faces Antitrust Suit over Restrictions on Musicians’ Ability to Play Competing Events On April 9, 2018, Portland music festival promoter Soul’d Out Productions filed suit in federal court in U.S. District Court for the District of Oregon against AEG, owner of the Coachella Valley Music and Arts Festival, accusing it of anticompetitive behavior by barring Coachella musicians from playing other events within 1,300 miles in the months surrounding the festival.[77] According to the complaint, AEG’s invocation of a “radius clause” in its contracts blocks competition in ways that violate federal antitrust laws as well as Oregon and California state laws.[78] Specifically, the suit alleges that AEG and its co-defendants use their “substantial market power” to “coerce artists into agreeing to these unlawful restrictions on trade.”[79] The plaintiff asserts that AEG’s purported “strong-arming and leveraging tactics” have had “an anticompetitive effect on the consumer, music venues and festivals on the West Coast, and promoters of such events.”[80] The suit accordingly seeks treble damages, a declaration that the “radius clause” is unenforceable, and injunctive relief.[81] AEG’s motion to dismiss the suit is currently pending. B.    Profit Participation Suits 1.    Disney to Face Trial in Turner & Hooch Royalty Fraud Claim Disney has been unable to chase off a lawsuit contending it concealed profits from the 1989 Tom Hanks comedy Turner & Hooch.[82] The suit, filed by Christine Wagner, whose late husband, Raymond Wagner, produced the film, alleges that Turner & Hooch, which grossed $71 million at the box office and more than $167 million in worldwide gross receipts, was profitable as early as 1991, but that “Disney reported that the film is not in profits” and sent no statement of accounting in the years since the film was made.[83] Wagner asserts she should be seeing more royalties.[84] In a decision in early May that sets the stage for a trial, a Los Angeles state court judge ruled that Wagner’s fraud claim can move forward.[85] The court found that Disney had presented no evidence on summary adjudication to counter Wagner’s assertion that it was Disney’s misrepresentations—in royalty statements indicating there were no profits to share—that kept the producer or his wife from discovering they had a claim.[86] Therefore, the court found that as it relates to the statute of limitations, Disney may not limit the royalties at issue to only the four years prior to the filing of the 2015 suit.[87] 2.    No, CBS Isn’t Paying Judge Judy Too Much In April 2018, a Los Angeles judge dismissed a claim that Judy Sheindlin’s (pka Judge Judy) compensation was purposely structured to wipe out profits on the hit television show.[88] Talent agency Rebel Entertainment Partners had filed a lawsuit in March 2016 against CBS and Big Ticket Television, alleging that it was entitled to a five percent share of net profits, but that the show had been running a deficit since February 2010 because Sheindlin’s massive salary was deducted as an expense.[89] CBS argued in response that the salary was a necessary expense to keep Judge Judy on the air.[90] In its ruling, the court accepted CBS’s determination that it was doing what it considered to be best for the show, and, moreover, that plaintiffs had not presented sufficient evidence that Sheindlin’s salary ran counter to industry custom.[91] Rather, the court found that “[h]er present salary was the result of arms-length negotiation and Sheindlin’s final ‘take-it-or-leave-it offer.'”[92] 3.    Columbo Producers File Claim Against TV Studio, 45 Years After Show Airs In February 2018, a Los Angeles Superior Court judge held that the creators of the 1970s show Columbo can proceed with their contract and fraud claims against Universal City Studios.[93] Producers William Link and the heirs of Richard Levinson claim that Universal never issued a profit participation statement to them.[94] They alleged that shortly after filing their complaint in November 2017, an accounting statement arrived with a check for $2.3 million.[95] Universal City Studios moved to dismiss the claim, arguing that plaintiffs “lacked specificity” on how they were allegedly underpaid, but the judge has allowed the case to proceed past demurrer.[96] C.    Copyright Litigation 1.    Embedding Tweets Violates the Exclusive Display Right In February 2018, U.S. District Judge Katherine B. Forrest determined on summary judgment that embedding a photo on a social media platform constitutes a “display” of work under Section 106(5) of the Copyright Act of 1976.[97] The plaintiff snapped a candid photo of Tom Brady, the Patriots’ quarterback, and Danny Ainge, the Boston Celtics’ general manager, walking in the Hamptons that quickly went viral, “rapidly moving from Snapchat to Reddit to Twitter—and finally . . . onto the websites of the defendants, who embedded the Tweet alongside articles they wrote about Tom Brady actively helping the Boston Celtics recruit basketball player Kevin Durant.”[98] The court noted that copyright law has “developed in response to significant changes in technology,”[99] and that Congress “cast a very wide net” in considering the display right.[100] Congress did “not intend to freeze the scope of copyrightable subject matter at the present stage of communications technology” when it passed the Copyright Act, and that its drafters intended it to broadly encompass new, not yet developed, technologies.[101] After framing the case as requiring the “the Court [to] construe how images shown on one website but stored on another website’s server implicate an owner’s exclusive display right,”[102] the court rejected application of and criticized the “Server Test,” a test deployed by the Ninth Circuit in Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (2007), noting that it has not been widely used outside of the Ninth Circuit.[103] The Court noted that under the Server Test, direct liability for infringement turns “entirely on whether the image is hosted on the publisher’s own server, or is embedded or linked from a third-party server.”[104] Here, however, the court focused on the fact that the defendants “actively took steps to ‘display’ the image.”[105] The court found support in the Supreme Court’s decision in American Broadcasting Cos., Inc. v. Aereo Inc. for the proposition that “liability should not hinge on invisible, technical processes imperceptible to the viewer.”[106] But, the case isn’t over yet. The court explained: In this case, there are genuine questions about whether plaintiff effectively released his image into the public domain when he posted it to his Snapchat account. Indeed, in many cases there are likely to be factual questions as to licensing and authorization. There is also a very serious and strong fair use defense, a defense under the Digital Millennium and Copyright Act, and limitations on damages from innocent infringement.[107] Following its ruling, and recognizing that this is a “high-profile, high-impact copyright case” with possible precedential effects, Judge Forrest certified the ruling for interlocutory appeal to the Second Circuit.[108] However, on July 17, 2018, the Second Circuit denied defendants’ request to take up the ruling.[109] 2.    TVEyes Video Clip Search Engine Is Not Fair Use In February 2018, the Second Circuit held that TVEyes’s service could not be justified as fair use, reversing a summary judgment ruling.[110] As we wrote in our 2016 Mid-Year Update reporting on the summary judgment rulings, TVEyes provides a service that continuously records television programming and indexes it into a text-searchable database, “allowing its clients to search for and watch (up to) ten-minute video clips that mention terms of interest to the clients.”[111] The district court had issued two summary judgment rulings, deeming a fair use TVEyes’s “functions enabling clients of TVEyes to search for videos by term, to watch the resulting videos, and to archive the videos on the TVEyes servers” a fair use, but holding that functions “enabling TVEyes’s clients to download videos to their computers, to freely e-mail videos to others, or to watch videos after searching for them by date, time, and channel (rather than by keyword)” were not fair use.[112] While the Second Circuit found that TVEyes’s service served a modest transformative purpose, isolating relevant television programing and allowing it to be accessed in a convenient manner, it further found that the fact that the service makes available, in its original form, almost all of Fox’s content undermines its transformative value.[113] The court also found that TVEyes’s service deprives Fox of licensing revenues and/or an ability to exploit the market itself.[114] On balance, therefore, the court concluded that “TVEyes’s service is not justifiable as a fair use” because “[a]t bottom, TVEyes is unlawfully profiting off the work of others by commercially re-distributing all of that work that a viewer wishes to use, without payment of license.”[115] On May 14, 2018, the Second Circuit denied TVEyes’s petition for rehearing en banc.[116] 3.    In Suit for Infringement Based on Foreign Broadcast, Geoblocking Thwarts Personal Jurisdiction In November, The Carsey-Werner Company filed a lawsuit in a California federal court against the British Broadcasting Company (“BBC”) and Sugar Films, alleging copyright infringement for the use and airing on the BBC of The Cosby Show clips in a documentary entitled Bill Cosby: Fall of an American Icon.[117] BBC moved for dismissal, arguing that no actionable infringement took place within a California federal court’s jurisdiction, as the documentary was only broadcast in the United Kingdom.[118] Afterward, it was available for 30 days on BBC’s iPlayer website, which, because of geoblocking, meant that the program was only available to those located in the United Kingdom.[119] However, unauthorized viewers could access the content by using virtual private networks (“VPNs”) and proxy servers.[120] Judge Percy Anderson held that “[u]nauthorized viewers outside of the United Kingdom do not provide a basis for personal jurisdiction; rather, Defendant’s relationship with California must arise out of contacts that they themselves created with the state.”[121] The court therefore held it lacked specific jurisdiction over BBC and Sugar Films.[122] 4.    Who Owns VFX Software Output? As we first wrote in our 2017 Year-End Update, in July 2017, Rearden LLC, a computer-generated imagery (CGI) software company, accused The Walt Disney Co., Marvel Studios, Paramount, and Fox of using without a license its intellectual property to animate characters in some of its highest-grossing productions of the last few years, as well as to advertise and promote the films.[123] Rearden alleged trademark, copyright, and patent infringement claims relating to Oscar-winning visual effects technology called MOVA Contour Reality Capture (“MOVA”). Rearden claims that Disney knowingly contracted with parties who stole and falsely claimed ownership of the MOVA system and related IP assets to create film productions such as Beauty and the Beast and Guardians of the Galaxy. Rearden separately pursued relief against the company providing these services, a Chinese company called Shenzhenshi Haitiecheng Science and Technology. In the lawsuits against Disney and the other studios, Rearden claims the studios knowingly used an unauthorized version of the MOVA software. With respect to the copyright claims, Rearden initially asserted a novel theory of copyright infringement, arguing that because its software program performs the “lion’s share” of the creativity involved in the computer art program, the end user fails to meet the minimum threshold for originality, and therefore Rearden, not the end user, should be deemed the legal author of the final product of the program.[124] The defendants moved to dismiss, pointing to film directors and other artists as indispensable creative elements to the artistic expression embodied in the files output by the program.[125] In February, the court sided with the defendants and rejected Rearden’s copyright claims, explaining that “[t]he Court does not find it plausible that the MOVA Contour output is created by the program without any substantial contribution by the actors or directors.”[126] The court thus dismissed the copyright claims without prejudice, and Rearden subsequently amended its complaint to allege copyright claims under a new contributory theory of infringement.[127] This time, Rearden argues that MOVA is an original literary work of authorship fixed in a tangible medium of expression when stored on computer hard drives. When the program is run, Rearden claims that the temporary copies that are made in the random access memory of the end user’s computer violate its copyright. The defendants again moved to dismiss Rearden’s copyright claims.[128] On June 19, 2018, the court denied defendants’ motion to dismiss, holding that Rearden plausibly alleged the defendants either induced or materially contributed to infringing conduct.[129] In light of this ruling, Rearden’s copyright claims will proceed against the studios. 5.    Disney and Redbox Tussle over Resale Rights On November 30, 2017, Disney, Lucasfilm, and Marvel filed suit in the District Court for the Central District of California, arguing that Redbox’s practice of reselling the digital download codes packaged with plaintiffs’ movie “Combo Packs” violates the user license terms and constitutes copyright infringement.[130] Disney moved for a preliminary injunction, which the court denied, finding that the license restriction constituted copyright misuse.[131] Specifically, licensing language on the website where Disney’s digital movie downloads are redeemed states that the downloader must be the owner of “the physical product that accompanied the digital code at the time of purchase.”[132] According to Judge Pregerson, this constitutes an “improper leveraging of Disney’s copyright” and “conflicts with public policy enshrined in the Copyright Act” because it forces users to “forego their statutorily-guaranteed right to distribute their physical copies of that same movie as they see fit.”[133] Disney subsequently updated the license terms, amended its complaint, and renewed its motion for a preliminary injunction.[134] Disney asserts that the new language, which instead requires the digital downloader to have received the code as part of the Combo Pack, rather than to be the current owner of the physical copies, satisfies the court’s concerns regarding copyright misuse.[135] Redbox counters that this change does not cure the misuse because it forces the preceding owner of the Combo pack to “forgo[] the first sale rights associated with the DVD and Blu-ray discs” or otherwise render the digital code “worthless.”[136] A hearing for the preliminary injunction motion was held on June 27, 2018, and Redbox filed a supplemental opposition brief on July 11, 2018, addressing additional changes to Disney’s licensing language.[137] 6.    Playboy’s Centerfold Copyright Suit Folds In February 2018, a District Judge in Los Angeles dismissed with leave to amend Playboy’s copyright infringement suit against the owner of the website BoingBoing.[138] Back in November 2017, Playboy had accused Happy Mutants, LLC—the owner of BoingBoing—of using the magazine’s centerfold photos without permission. The lawsuit pointed to a February 2016 post by BoingBoing that contained a link that directed viewers to a slideshow on a photo website that, at the time, contained the centerfold photos (it has since been taken down). BoingBoing responded that it did not create the offending content, and did not control the images or contribute to the infringement, and that if anything, its link constituted non-infringing fair use. Playboy responded that BoingBoing should not be permitted to knowingly link to copyright-infringing materials.[139] In his decision, the Judge Olguin stated that he was “skeptical” that Playboy had alleged facts to support its inducement or material contribution theories of copyright infringement, and cited the Ninth Circuit’s inducement theory as set forth in Perfect 10, Inc. v. Giganews, Inc.[140] The judge noted that BoingBoing’s fair use argument was premature at this early stage.[141] Rather than amend their complaint, in early March 2018, Playboy voluntarily dismissed its claim without prejudice.[142] D.    DMCA Developments 1.    Safe Harbor from Unfair Competition Claims In March 2018, the District Court for the Southern District of New York dismissed most of Capital Records’ state-law unfair competition claims against video-hosting website Vimeo, claims based on users’ posts to Vimeo’s site that are alleged to infringe pre-1972 copyrighted works. Previously, in June 2016, on an interlocutory appeal from a summary judgment order in the Southern District of New York, the Second Circuit held that the safe harbor provisions of the DMCA protect internet service providers from claims of infringement when users post works protected by state copyright law.[143] After the Supreme Court denied plaintiffs’ petition for a writ of certiorari in March 2017,[144] the district court considered Vimeo’s motion to dismiss and found that Capital Records’ unfair competition claims, which are based on Vimeo’s alleged infringement, were also foreclosed by the safe harbor of the DMCA.[145] The court reasoned that “[a]pplying the DMCA safe harbor to unfair-competition claims founded on copyright infringement ensures that service providers are aware of the infringing activity that forms the basis for the claims brought against them.”[146] The court denied the motion to dismiss as to the instances in which Capital Records alleges that Vimeo had “red-flag knowledge” of the underlying infringement that would negate the protections of the DMCA safe harbor.[147] Motions for summary judgement are still pending. 2.    DMCA May Protect ISPs Without a Written Takedown Policy In March 2018, a Ninth Circuit panel ruled that a website hosting user-uploaded pornography was protected by the Digital Millennium Copyright Act’s safe harbor provisions, even though it lacked a written policy to terminate users who repeatedly infringed copyrights.[148] Back in 2011, pornography producer Ventura Content sued Motherless, alleging claims of direct, vicarious and contributory copyright infringement and of unlawful, unfair and fraudulent business practices in violation of California Business and Professions Code for allowing its users to upload clips of movies that Ventura Content had created and had not licensed to Motherless.[149] In response, Motherless claimed that it qualified for protection under the DMCA’s § 512 safe harbor provision, even though it did not have a written policy to terminate users who repeatedly infringed copyrights.[150] Motherless is owned and operated by a single person who reviewed videos individually for infringement, and described his policy as a “gut decision.”[151] The divided panel found that Motherless did adhere to a policy, even if it was unwritten, to get rid of users who repeatedly uploaded infringing copyright of porn producers, and therefore qualified for the safe harbor provision of the DMCA.[152] Ventura has sought rehearing en banc.[153] E.    First Amendment 1.    Right of Publicity a.    Court of Appeals Resolves Legal Feud in FX’s Favor On March 26, 2018, a California appeals court ruled that Olivia de Havilland’s suit against FX Network and co-defendants is barred by the First Amendment.[154] In March 2017, FX aired a docudrama, Feud: Bette and Joan, in which Catherine Zeta-Jones portrays de Havilland.[155] De Havilland sued FX in June 2017, alleging misappropriation, violation of her right of publicity, false light invasion of privacy, and “unjust enrichment.”[156] In September 2017, the trial court denied FX’s anti-SLAPP motion, and FX (supported by a number of media organizations) appealed. Now, the appeal court has reversed the lower court’s order on the motion to strike.[157] Applying the anti-SLAPP law’s two-step test, the Court of Appeal reversed, finding that the now-102-year-old de Havilland failed to present evidence to establish that she is likely to prevail on her claims at trial.[158] The court explained that the First Amendment protects expressive works, regardless of whether they are fact, fiction, or a combination thereof.[159] The court concluded that Feud‘s portrayal of de Havilland was transformative because its “‘marketability and economic value’ does not ‘derive primarily from [de Havilland’s] fame’ but rather ‘comes principally from . . . the creativity, skill, and reputation’ of Feud‘s creators and actors.”[160] The court also rejected de Havilland’s false light and unjust enrichment claims.[161] On July 11, 2018, the California Supreme Court denied de Havilland’s petition for review; the docket entry noted that Justice Cuéllar would have granted the petition. b.    Lohan v. Take-Two Interactive Software In March 2018, the Court of Appeals of New York affirmed the dismissal of a lawsuit filed by Lindsay Lohan, claiming that Take-Two violated her right of privacy by featuring a “look-a-like” character in Grand Theft Auto without her permission.[162] The court concluded that while an avatar may be a “portrait” for purposes of New York’s right of publicity statute, the avatar featured in Grand Theft Auto was not recognizable as Lohan.[163] In doing so, the court sidestepped larger First Amendment issues, including whether or not individuals featured in video games are subject to the state’s right of publicity law, which “makes it a misdemeanor to use a living person’s name, portrait or picture for advertising or trade purposes . . .”[164] The intermediate appellate court had confronted that issue, in 2016, finding that works of fiction or satire (like the video game) are not of “advertising” or “trade,” in the language of the statute.[165] But the state’s high court specifically declined to address the issue, ruling for Take-Two on the narrower ground that the woman in the video game was simply not recognizable as Lohan. c.    “Simpsonized” Character Is Not Actionable In February 2018, a California appeals court affirmed the dismissal of a lawsuit filed by Frank Sivero against Twentieth Century Fox for misappropriation of his name and likeness in The Simpsons.[166] On October 21, 2014, Sivero filed the complaint, alleging common law infringement of right of publicity, misappropriation of name and likeness, misappropriation of ideas, interference with prospective economic advantage, and unjust enrichment.[167] Fox moved to strike the complaint under California’s anti-SLAPP statute.[168] The appeals court found that the cause of action arose from protected activity within the meaning of the anti-SLAPP statute, and that Sivero then failed to carry his burden to prove the merits of his claim.[169] Here, the court found that Sivero’s character had been “Simpsonized,” and thus contained “significant transformative content,” insulating it against a right of publicity claim[170] The court explained: Louie, the alleged look-a-like, “is a cartoon character with yellow skin, a large overbite, no chin, and no eyebrows. Louie has a distinctive high-pitched voice which, as the trial court pointed out, has ‘no points of resemblance to [Sivero].'”[171] The court concluded that this was not a “trivial variation,” but rather, the creators had created something “recognizably [their] own.”[172] Like in Lohan’s case, the California court gave weight to the difference between the depicted character and the plaintiff alleging misappropriation. 2.    Defamation a.    HBO & John Oliver Prevail over Coal CEO In June 2017, coal CEO Robert Murray brought suit against John Oliver, Partially Important Productions, HBO, and Time Warner claiming that on Oliver’s show “Last Week Tonight,” the comedian defamed the coal magnate by depicting a “villainous” portrait of him.[173] The segment at issue was critical of the coal industry, referring to Murray as a “geriatric Dr. Evil.”[174] Oliver’s segment stated that a mining accident that killed nine people was at least partially the result of improper mining practices rather than an earthquake, as Murray’s company had claimed.[175] Murray filed the suit for defamation, false light invasion of privacy, and intentional infliction of emotional distress. Following remand, and in a single-page order, West Virginia state judge Jeffrey Cramer dismissed the action, agreeing entirely with HBO’s argument that Murray failed to state a claim for defamation.[176] The critical portions of Oliver’s segment that alleged facts were based on judicial opinions and government reports. Oliver’s more “personal” jabs at Murray—including the Austin Powers-inspired name-calling—qualified as satire protected under the First Amendment.[177] b.    Did Cosby’s Lawyer’s Statements Defame Accuser? Even after his criminal trial ended in a conviction in April 2018, Bill Cosby’s reckoning with the #metoo movement continues in the courts. The actor is defending a defamation action arising from his alleged sexual misconduct with the former supermodel Janice Dickinson, one of several women who has accused Cosby of drugging and raping her in the 1980s. Dickinson alleges that a 2014 press statement by Cosby’s former attorney calling her story “fabricated” and “an outrageous lie,” constitutes defamation.[178] In November 2017, a California appeals court allowed Dickinson’s suit to move forward, rejecting Cosby’s contention that his attorney’s statement was non-actionable opinion.[179] The court held that based on the totality of the circumstances, “a reasonable fact finder could conclude that the demand letter states or implies a provably false assertion of fact—specifically, that Cosby did not rape Dickinson, and she is lying when she said that he did.”[180] However, several courts examined nearly the same factual claims in other actions to reach different results. The First[181] and Third Circuits[182] dismissed actions brought by two other Cosby accusers on the grounds that Cosby’s lawyer’s statements constituted non-actionable opinions protected by the First Amendment. On July 12, 2018, in considering Cosby’s and Singer’s anti-SLAPP motions to strike following remand, Los Angeles Superior Court Judge Randolf Hammock dismissed the defamation claims against Singer, holding that actual malice could not be established regarding Singer’s statements without invading the attorney-client privilege.[183] That same day, Cosby filed his petition for writ of certiorari with the U.S. Supreme Court, asking the high court to determine whether Singer’s statement qualifies as an opinion under the Supreme Court’s 1990 holding in Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990).[184] 3.    Public Fora in the 21st Century a.    @RealDonaldTrump Ruled a Public Forum President Trump’s use of Twitter as his favored communication platform is well known, and his tweets invariably lead to strong and diverse responses from other Twitter users. In a May 2018 ruling in Knight First Amendment Institute v. Trump, U.S. District Judge Naomi Reice Buchwald examined whether Trump’s and several of Trump’s close aides’ use of Twitter’s “blocking” feature—which prevents blocked users from viewing or replying to the blocker’s Tweets—violated the First Amendment rights of the seven plaintiffs, all of whom had been blocked by the President’s @realDonaldTrump’s account. The court ruled in plaintiffs’ favor, finding that the President’s account is a “designated” public forum operated by the government.[185] Thus, the President is prohibited from blocking other users because of their viewpoints—namely, in this case, for their criticisms of him. The decision does not hold, contrary to the criticisms leveled against it, that Twitter is public property or that a user violates the First Amendment every time he or she blocks a “troll” on the platform. Rather, commentators observed that “Twitter is how the president speaks to the people; replies on Twitter are how the people speak to each other, in a ‘place’ the government uses for expression and has opened to the public for expression as well,”[186] adapting First Amendment precedent to the political and technological realities of 2018. The 75-page ruling rejected the Justice Department’s argument that Trump was largely acting in a personal capacity and thus as a private individual, much like, as the DOJ argued, “giving a toast at a wedding or giving a speech at a fundraiser.”[187] In contrast, Judge Buchwald reasoned, through his Twitter “bio” and his use of the medium to comment on public policy, Trump portrays his account as presidential “and, more importantly, uses the account to take actions that can be taken only by the President as President,” referring to his use of the platform to propagate executive-order like decrees.[188] Furthermore, Buchwald said, the space below Trump’s tweets that show the public’s replies is a public forum, because it is “generally accessible to the public” and anyone with a Twitter account is able to view those responses, assuming that the user has not been blocked.[189] b.    Conservative Institution’s Lawsuit Against YouTube Fails In March 2018, U.S. District Judge Lucy Koh dismissed a censorship claim against YouTube and its parent company, Google, ruling that the online video-sharing platform is not a public forum subject to the First Amendment.[190] Plaintiff Prager University, a conservative media company owned by Dennis Prager, claimed that YouTube’s restricted mode, which filters out inappropriate content to protect young or sensitive viewers, was restricting access to Prager University videos about topics such as gun control and Islam while permitting access to left-leaning videos by liberal commentators like Bill Maher on the same topics.[191] Amongst other claims, PragerU’s complaint alleged that Google and YouTube’s practice of selectively restricting PragerU’s videos—and thus the group’s speech—violates the U.S. and California constitutions. In response, Google claimed its own First Amendment protection, arguing that because YouTube is a private company, it is not subject to laws prohibiting governmental restrictions on free speech. In dismissing the case, Judge Koh ruled that YouTube is not a “state actor” required to provide free speech protection merely because the company operates its private property as a forum for expression of diverse perspectives. Rather, “[Google and YouTube] are private entities who created their own video-sharing social media website and make decisions about whether and how to regulate content that has been uploaded on that website.”[192] Additionally, Plaintiff failed to show “that defendants have engaged in one of the very few public functions that were traditionally exclusively reserved to the state.”[193] 4.    California’s IMDB-Targeted Age Discrimination Law Declared Unconstitutional In February 2017, Judge Chhabria of the Northern District of California issued a preliminary injunction enjoining California from enforcing AB 1687—a law enacted to address age discrimination in Hollywood that would have prevented in certain instances the popular industry website IMDB.com from posting actors’ ages—writing that “it’s difficult to imagine how AB 1687 could not violate the First Amendment.”[194] In February 2018, Judge Chhabria made the injunction permanent.[195] The court held that the law “singles out specific, non-commercial—age-related information—for differential treatment.”[196] Applying strict scrutiny, the court held that California did not prove that the measure was “actually necessary” to combat age discrimination.[197] Judge Chhabria noted that “the record provides no evidence that California explored less-speech-restrictive alternatives,” such as better enforcement of preexisting anti-discrimination laws.[198] He also explained that the law was both under- and over-inclusive, and therefore not narrowly tailored.[199] The law only bans one speaker from sharing age-related information and only requires IMDb to remove some age-related information.[200] Moreover, the law is not restricted to age-related information of those individuals protected by age discrimination laws.[201] F.    Trademark Litigation 1.    No TRO Against Movie Trailer for The Happytime Murders Sesame Workshop, the makers of Sesame Street, brought suit in the Southern District of New York against STX Entertainment over its upcoming film The Happytime Murders. The film, a raunchy comedy starring Melissa McCarthy, follows two detectives—McCarthy and her partner, a puppet named Phil Phillips—as they work to solve the murders of the former cast of a classic puppet television show. Sesame Workshop sued the film’s backers, seeking a restraining order to block the production companies from using the phrase “No Sesame, All Street” in trailers and promotions for the film, alleging that the tagline seeded “confusion in the mind of the public as to the association between the movie, Sesame Street, and its beloved Muppets.”[202] STX Entertainment responded that the phrase “No Sesame, All Street” actually distinguished its film from Sesame Street. The court sided with STX Entertainment, denying Sesame Workshop’s bid for a restraining order on May 31, 2018.[203] Sesame Workshop dismissed the suit shortly thereafter. 2.     Generic TDLs Receive Protection After All? In August 2017, a federal district court in Virginia reversed a decision of the Trademark Trial and Appeal Board (“TTAB”) that “Booking.com” could not be registered as a trademark, ruling that the addition of “.com” to a generic term makes it potentially protectable under the Lanham Act.[204] The ruling specifically split from precedents in the Federal Circuit that have found the addition of a top-level domain to a generic word does not render it protectable, including the domain names Mattress.com and Hotels.com, finding that precedent unpersuasive.[205] Even though it was successful in that TTAB appeal, the court ordered Booking.com to pay the U.S. Patent and Trademark Office $76,000 in attorneys’ fees under the PTO’s new legal interpretation that the agency must be reimbursed such fees after certain types of patent and trademark appeals, regardless of the outcome. On April 11, 2018, Booking.com asked the Fourth Circuit to strike down that new policy, arguing that it violates the First Amendment right to “petition the government for redress of grievances.”[206] A separate case challenging the same PTO policy is currently pending en banc before the Federal Circuit. As of the date of this writing, neither the Fourth Circuit nor the Federal Circuit has ruled on this issue. 3.    Suit Over Seussian Trekkie Book Dismissed ComicMix LLC created a book entitled Oh, the Places You’ll Boldly Go! that combines creative elements from the Star Trek science fiction franchise with the underlying Dr. Seuss classic Oh, the Places You’ll Go! (“OTPYG“). Dr. Seuss Enterprises brought a trademark, copyright infringement, and unfair competition action against ComicMix for the unauthorized exploitation of Dr. Seuss’s works. Dr. Seuss Enterprises alleges that the new book misappropriates key protected elements of OTPYG, including its trademarks. On December 7, 2017, the district court denied ComicMix’s motion to dismiss the amended complaint on the basis that the book is protected by fair use and nominative fair use doctrines. But on May 21, 2018, the court granted ComicMix’s motion for judgment on the pleadings with respect to the trademark claims.[207] ComicMix had argued that its work merited First Amendment protection under Rogers v. Grimaldi, which tasks judges with determining whether the use of a mark has artistic relevance, and if so, whether the work is explicitly misleading.[208] Previously, the court had held that a potential exception to the First Amendment protection provided in Rogers for misleading titles that are confusingly similar to other titles perhaps applied to ComicMix’s work. But in light of the Ninth Circuit’s recent decision in the Empire case, which treated the Rogers test similarly to the likelihood-of-confusion test, the court held that this exception from Rogers did not apply, dismissing Dr. Seuss Enterprises’ trademark claims.[209] G.    Music 1.    “Blurred Lines” and a Narrow Ruling at 9th Circuit In March 2018, in a hotly awaited decision, the Ninth Circuit upheld on narrow grounds a 2015 jury’s finding that Robin Thicke and Pharrell Williams’s song “Blurred Lines” infringed the copyright of Marvin Gaye’s “Got to Give It Up.”[210] In the appeals court’s 2-1 decision, the majority focused largely on questions of procedure and trial strategy in declining to review a summary judgment motion, noting a full jury trial had taken place and Thicke and Williams’ lawyers had not preserved the issue by filing a motion.[211] The majority explained that after a jury trial, a court must measure the verdict against the weight of the evidence and such verdict may only be overturned in “an absolute absence of evidence supporting the jury’s verdict.”[212] With this, the majority upheld the damages award of $5.3 million. In dissent, Judge Jacqueline Nguyen sharply criticized the majority and did not hesitate to engage with the substantive legal issues and industry concerns that the trial court result created, writing that, “[t]he majority allows the Gayes to accomplish what no one else has before: copyright a musical style.”[213] In doing so, she wrote, “[t]he majority establishes a dangerous precedent that strikes a devastating blow to future musicians and composers everywhere.”[214] Judge Nguyen concluded that the two songs differ in melody, harmony, and rhythm, and Gaye’s expert witness “. . . identified four similar elements, none of which is protectable: (a) each phrase begins with repeated notes; (b) the phrases have three identical pitches in a row in the first measure and two in the second measure; (c) each phrase begins with the same rhythm; and (d) each phrase ends on a melisma (one word sung over multiple pitches).”[215] She would have concluded that such evidence is not appropriate to support an infringement verdict.[216] Nguyen seemed to encourage courts to appoint their own experts when the parties’ experts seem to have “starkly different” assessments of the works’ similarity.[217] The majority, in rebutting Nguyen’s dissent, stated that “[t]he dissent’s position violates every controlling procedural rule involved in this case” and “improperly tries, after a full jury trial has concluded, to act as judge, jury and executioner.”[218] On July 11, the Ninth Circuit declined to rehear the case en banc and issued an amended opinion.[219] 2.    Wolfgang’s Vault Found Liable for Streaming Recordings of Live Performances In April 2018, U.S. District Judge Edgardo Ramos found that Wolfgang’s Vault, a collection of thousands of live concert performances, and its owners had committed a large-scale copyright infringement by streaming its collection to the public, but stopped short of issuing an injunction, finding that the availability of the recordings is in the public interest, while suggesting a licensing deal could remedy the injury to plaintiffs.[220] In 2015, plaintiffs (music publishers and other rights holders) alleged that Wolfgang’s Vault lacked the requisite mechanical licenses to stream a collection of works.[221] Judge Ramos held that Defendants had failed to properly license 206 concert videos, pursuant to Section 115 of the U.S. Copyright Act.[222] Judge Ramos rejected the Defendants’ argument that certain contracts entered into with three major record labels were proof of the necessary consent needed.[223] To this same point, Judge Ramos underscored the fact that Defendants could not produce a single performance agreement.[224] A pending trial will explore whether the copyright infringement was willful, meaning that Plaintiffs could be entitled to statutory damages of up to $150,000 per work.[225] 3.    No Moral Rights for Foreign “Big Pimpin” Sample Holder On May 31, 2018, after years of legal action regarding Jay-Z’s 1999 hit, “Big Pimpin,” the Ninth Circuit Court of Appeals affirmed a win for Shawn “Jay-Z” Carter and other defendants by refusing to allow the Egyptian plaintiff the ability to enforce moral rights over a sample used in the song.[226] Judge Bea wrote that “[s]ince our federal law does not accord protection of moral rights to American copyright holders as to non-visual art, neither does it recognize [Plaintiff’s] claim to moral rights,” and “[t]hat [Plaintiff] retains moral rights in Egypt does him no good here.”[227] The case involved the hook of “Big Pimpin,” which came from a song titled “Khosara Khosara,” composed by Baligh Hamday for a 1960 Egyptian film.[228] Shortly after Jay-Z’s song came out in 1999, its producer, Timbaland paid EMI for a license to use the song.[229] Plaintiff, an heir of the composer Hamday, sought to enforce moral rights by alleging his uncle’s song had been “mutilated” (a term of art that moral rights, common in foreign countries, may protect against). The District Court first found the suit barred due to delay, but the case was revived following the Supreme Court’s Petrella decision and went to trial in 2015—with the main issue being whether Hamday’s heirs retained an inalienable moral right under Egyptian law—although District Judge Christina Snyder cut the suit short, granting Jay-Z’s motion for a judgment as a matter of law.[230] Judge Snyder held that Plaintiff lacked standing to pursue the copyright infringement claim. The Ninth Circuit upheld that ruling and further held that the foreign plaintiff’s moral rights are not enforceable in the United States.       [1]        United States v. AT&T Inc., No. CV 17-2511 (RJL), 2018 WL 2930849 (D.D.C. June 12, 2018); Press Release, AT&T Inc., AT&T Completes Acquisition of Time Warner Inc. (June 14, 2018), http://about.att.com/story/att_completes_acquisition_of_time_warner_inc.html.       [2]        Press Release, AT&T Inc., AT&T Debuts “WatchTV” With 2 New Unlimited Wireless Plans (June 21, 2018), http://about.att.com/newsroom/watchtv_app_with_unlimited_wireless.html.       [3]        Brent Kendall & Drew FitzGerald, Justice Department Appeals Ruling Allowing AT&T-Time Warner Merger, The Wall Street Journal (July 12, 2018), https://www.wsj.com/articles/justice-department-to-appeal-court-ruling-allowing-at-t-time-warner-merger-1531427031.       [4]        Liz Moyer, Comcast drops pursuit of 21st Century Fox assets, ending bidding war with Disney, CNBC (July 19, 2018), https://www.cnbc.com/2018/07/18/comcast-drops-pursuit-of-its-bid-for-21st-century-fox-assets.html.       [5]        Keach Hagey and Erich Schwartzel, 21st Century Fox Agrees to Higher Offer from Disney, The Wall Street Journal (June 20, 2018), https://www.wsj.com/articles/fox-disney-announce-new-deal-1529496937.       [6]        Id.       [7]        Press Release, The Walt Disney Company, U.S. Department of Justice Clears Disney Acquisition of 21st Century Fox (June 27, 2018), https://www.wsj.com/articles/PR-CO-20180627-911016.       [8]        Id.       [9]        Edmund Lee and Brooks Barnes, Disney and Fox Shareholders Approve Deal, Ending Corporate Duel, N.Y. Times (July 27, 2018), https://www.nytimes.com/2018/07/27/business/media/disney-fox-merger-vote.html.      [10]        Shalini Ramachandran, Comcast Drops Bid for Fox Assets, Will Focus on Pursuit of Sky, The Wall Street Journal (July 19, 2018), https://www.wsj.com/articles/comcast-drops-bid-for-fox-assets-will-pursue-sky-1532004447/.      [11]        Id.      [12]        Andria Calatayud, Fox’s Sky News Plan Meets Criteria: U.K. Official, Marketwatch (June 19, 2018), https://www.marketwatch.com/story/foxs-sky-news-plan-meets-criteria-uk-official-2018-06-19.      [13]        Adam Rhodes, Sky Brushes Off Fox As $41B Comcast Offer Rolls In, Law360 (Apr. 25, 2018), https://www.law360.com/media/articles/1037029/sky-brushes-off-fox-as-41b-comcast-offer-rolls-in.      [14]        Calatayud, supra note 12.      [15]        Jessica Toonkel, Viacom, CBS CEOs discuss potential merger – sources, Reuters (Jan. 25, 2018), https://ca.reuters.com/article/businessNews/idCAKBN1FE2XT-OCABS; Cynthia Littleton, CBS and Viacom Merger Discussions Set to Accelerate, but Valuation Remains a Big Hurdle, Variety (Mar. 23 2018), Variety (May 14, 2018), https://variety.com/2018/tv/news/cbs-viacom-merger-talks-deal-1202735168/.      [16]        Cynthia Littleton, CBS Sues Share Redstone and National Amusements in Bid to Block Viacom Merger, Variety (May 14, 2018), https://variety.com/2018/biz/news/cbs-sues-shari-redstone-national-amusements-in-bid-to-block-viacom-merger-1202809526/.      [17]        Meg James, Shari Redstone sues CBS, taking aim at Leslie Moonves, L.A. Times (May 29, 2018), http://www.latimes.com/business/hollywood/la-fi-ct-nai-redstone-sues-cbs-20180529-story.html.      [18]        Meg James, CBS shareholders sue Shari Redstone, National Amusements, L.A. Times (May 31, 2018), http://www.latimes.com/business/hollywood/la-fi-ct-redstone-shareholder-lawsuit-20180531-story.html.      [19]        Gene Maddaus, Ron Burkle Sues Lantern Capital Over Weinstein Co. Costs, Variety (July 16, 2018), https://variety.com/2018/biz/news/ron-burkle-lantern-suit-1202874814/.      [20]        Id.      [21]        Elise Sandberg, ‘Stranger Things’ Producer Inks Massive Overall Deal With Netflix, Hollywood Reporter (Dec. 6, 2017), https://www.hollywoodreporter.com/live-feed/netflix-inks-deal-shawn-levys-21-laps-1064839.      [22]        Debra Birnbaum and Cynthia Littleton, Ryan Murphy Inks Mammoth Overall deal with Netflix, Variety (Feb. 13, 2018), https://variety.com/2018/tv/news/ryan-murphy-netflix-overall-deal-fox-1202698305/.      [23]        Id.      [24]        Natalie Jarvey and Lesley Goldberg, ‘Handmaid’s Tale’ Showrunner Bruce Miller Inks Overall Deal at Hulu, The Hollywood Rep. (Apr. 30, 2018), https://www.hollywoodreporter.com/live-feed/handmaids-tale-showrunner-bruce-miller-inks-deal-at-hulu-1106790.      [25]        Id.      [26]        John Koblin, Jordan Peele Signs TV Deal With Amazon, N.Y. Times (June 5, 2018), https://www.nytimes.com/2018/06/05/business/media/amazon-jordan-peele.html.      [27]        Press Release, WndrCo, WndrCo Announces Initial Capital Raise of $1 Billion for New Media Platform (Aug. 7, 2018), https://www.businesswire.com/news/home/20180807005288/en/WndrCo-Announces-Initial-Capital-Raise-1-Billion.      [28]        Kevin Tran, Netflix furthers US cable partnership push, Business Insider (Jan. 31, 2018), http://www.businessinsider.com/netflix-furthers-us-cable-partnership-push-2018-1.      [29]        Bruce Haring, Comcast, Netflix Expand Partnership In Xfinity Packages, Deadline (Apr.13, 2018), https://deadline.com/2018/04/comcast-netflix-expand-partnership-in-xfinity-packages-1202363637/.      [30]        Sarah Perez, YouTube TV becomes first-ever presenting partner for the NBA Finals, following similar deal with MLB, TechCrunch (Mar. 26, 2018), https://techcrunch.com/2018/03/26/youtube-tv-becomes-first-ever-presenting-partner-for-the-nba-finals-following-similar-deal-with-mlb/.      [31]        Todd Spangler, YouTube TV Offers One-Week Credit After World Cup Outage, Variety (July 12, 2018), https://variety.com/2018/digital/news/youtube-tv-outage-one-week-credit-world-cup-1202872304/.      [32]        Todd Spangler, CBS All Access Available to Amazon Prime Members in U.S. as Add-On Channel, Variety (Jan. 5, 2018), https://variety.com/2018/digital/news/cbs-all-access-amazon-prime-channel-1202654346/.      [33]        Sahil Patel, Amazon has become an important distributor for over-the-top networks, Digiday (June 4, 2018), https://digiday.com/media/amazon-has-become-an-important-middle-man-for-over-the-top-networks/.      [34]        Tom Zanki, ‘China’s Netflix’ Leads 6 IPO Launches Exceeding $3B Total, LAW360 (March 19, 2018), https://www.law360.com/articles/1023526.      [35]        Id.      [36]        Tom Zanki, Chinese Streaming Co Leads 4 IPOs Netting $828M, LAW360 (March 28, 2018), https://www.law360.com/articles/1027175/chinese-streaming-co-leads-4-ipos-netting-828m.      [37]        Id.      [38]        Patrick Brzeski, Blumhouse Teams with Tang Media Partners to Make Horror Movies in China, The Hollywood Reporter (June 18, 2018), https://www.hollywoodreporter.com/news/blumhouse-teams-tang-media-partners-make-horror-movies-china-1120827.      [39]        Nancy Tartaglione, Blumhouse Partners With Tang Media On Chinese Horror/Thriller Pics, Deadline (June 18, 2018), https://deadline.com/2018/06/blumhouse-tang-media-chinese-horror-thriller-movies-deal-american-nightmare-1202412372/.      [40]        Cheang Ming, China’s Box Office Recently Beat The US, And Is Now On The Cusp Of A ‘New Growth Cycle,’ CNBC (May 24, 2018), https://www.cnbc.com/2018/05/24/china-beats-us-box-office-in-q1-and-is-entering-new-growth-cycle-hsbc.html.      [41]        Id.      [42]        J. DeMorel, Alibaba Buys State in Wanda Film in 41.2 Billion Share Sale, Bloomberg (February 5, 2018), https://www.bloomberg.com/news/articles/2018-02-05/alibaba-takes-stake-in-wanda-film-as-part-of-1-2-billion-sale.      [43]        Id.      [44]        Id.      [45]        Jason Raish, Can China’s Tech Giants Restore Confidence in Wanda?, The Hollywood Reporter (February 16, 2018), https://www.hollywoodreporter.com/news/can-chinas-tech-giants-restore-confidence-wanda-1084151.      [46]        Patrick Brzeski, China’s Wanda Plans $1.78B Consolidation of Film Assets, The Hollywood Reporter (June 25, 2018), https://www.hollywoodreporter.com/news/chinas-wanda-plans-178b-consolidation-film-assets-1123282.      [47]        Vivienne Chow, Wanda Unveils $1.77 Billion Plan to Consolidate Film Units, Variety (June 26, 2018), https://variety.com/2018/film/news/dalian-wanda-consolidate-film-units-china-1202857977/.      [48]        Brzeski, supra note 46.      [49]        Id.      [50]        Press Release, Epic Games, Fortnite Pro Am 2018, https://www.epicgames.com/fortnite/en-US/pro-am2018.      [51]        Justin Kirkland, 10 Celebrities Who Play Fortnite, Ranked, Esquire (May 11, 2018), https://www.esquire.com/entertainment/g20139550/celebrities-playing-fortnite/; Paul Tassi, Twitch Comments on the Record-Breaking Drake-Ninja ‘Fortnite’ Stream, Forbes (Mar. 15, 2018), https://www.forbes.com/sites/insertcoin/2018/03/15/twitch-comments-on-the-record-breaking-drake-ninja-fortnite-stream/#4a4bbb5f46c6.      [52]        Max Miceli, Epic Games Unveils Esports Plans With Fortnite World Cup Coming in 2019, The Esports Observer (June 25, 2018), https://esportsobserver.com/epic-games-fortnite-world-cup/.      [53]        Id.      [54]        Blake Hester, Tencent Invests $15 Million to Bring ‘Fortnite’ to China, Variety (Apr. 24, 2018), https://variety.com/2018/gaming/news/fortnite-tencent-china-1202785279/.      [55]        Patrick Hipes, ICM Partners Inks Partnership With Esports Talent Agency Evolved, Deadline Hollywood (June 14, 2018), https://deadline.com/2018/06/icm-partners-esports-evolved-joint-venture-1202410240/.      [56]        Id.      [57]        Jordan Crook, PlayVS, Bringing Esports Infrastructure to High Schools, Picks Up $15 Million, Techcrunch (June 4, 2018), https://techcrunch.com/2018/06/04/playvs-bringing-esports-infrastructure-to-high-schools-picks-up-15-million/.      [58]        Id.      [59]        Id.      [60]        Keith Collins, Net Neutrality Has Officially Been Repealed. Here’s How That Could Affect You., N.Y. TIMES (June 11, 2018), https://www.nytimes.com/2018/06/11/technology/net-neutrality-repeal.html.      [61]        Cecilia Kang, Senate Democrats Win Vote on Net Neutrality, a Centerpiece of 2018 Strategy, N.Y. TIMES (May 16, 2018), https://www.nytimes.com/2018/05/16/technology/net-neutrality-senate.html.      [62]        Cecilia Kang, Flurry of Lawsuits Filed to Fight Repeal of Net Neutrality, N.Y. Times (Jan. 16, 2018), https://www.nytimes.com/2018/01/16/technology/net-neutrality-lawsuit-attorneys-general.html.      [63]        Kelcee Griffis, 9th Cir. Hands Net Neutrality Litigation to DC Circ., Law360 (Mar. 28, 2018), https://www.law360.com/media/articles/1027383.      [64]        Klint Finley, New California Bill Restores Strong Net Neutrality Protection, Wired (July 5, 2018), https://www.wired.com/story/new-california-bill-restores-strong-net-neutrality-protections/; Klint Finley, Washington State Enacts Net Neutrality Law, In Clash With FCC, Wired (Mar. 5, 2018), https://www.wired.com/story/washington-state-enacts-net-neutrality-law-in-clash-with-fcc/.      [65]        Adam Satariano, What the G.D.P.R., Europe’s Tough New Data Law, Means For You, N.Y. Times (May 6, 2018), https://www.nytimes.com/2018/05/06/technology/gdpr-european-privacy-law.html.      [66]        Kieren McCarthy, US government weighs in on GDPR-Whois debacle, orders ICANN to go probe GoDaddy, The Register (Apr. 17, 2018),  https://www.theregister.co.uk/2018/04/17/us_government_whois_debacle/.      [67]        Mike Fleming Jr., It Will Soon Be Illegal For Studios To Verify Salary Quotes: Hollywood Dealmakers Brace For California Labor Code 432.3, Deadline (Dec. 13, 2017), https://deadline.com/2017/12/hollywood-dealmaking-california-labor-code-432-3-salary-quotes-1202225985/.      [68]        Philip Bonoli, Studios And Agencies Prepare For The Labor Code 432.3 Earthquake, Forbes (Dec. 13, 2017), https://www.forbes.com/sites/legalentertainment/2017/12/13/studios-and-agencies-prepare-for-the-labor-code-432-3-earthquake/#221350426509.      [69]        Eriq Gardner, Ozzy Osbourne Brings Antitrust Lawsuit Against AEG for Tying London and L.A. Venues, The Hollywood Rep. (Mar. 21, 2018), http://www.hollywoodreporter.com/thr-esq/ozzy-osbourne-brings-antitrust-lawsuit-aeg-tying-london-la-venues-1096448.      [70]        Id.      [71]        Id.      [72]        Id.      [73]        Id.      [74]        Eriq Gardner, AEG Says Ozzy Osbourne Lawsuit Isn’t What It Pretends to Be, The Hollywood Rep. (Jun. 4, 2018), http://www.hollywoodreporter.com/thr-esq/aeg-says-ozzy-osbourne-lawsuit-isnt-what-it-pretends-be-1116729.      [75]        Id.      [76]        Id.      [77]        Bonnie Eslinger, Coachella Owner Faces Antitrust Suit Over Artist Controls, Law360 (Apr. 9, 2018), http://www.law360.com/articles/1031313/coachella-owner-faces-antitrust-suit-over-artist-controls.      [78]        Eriq Gardner, AEG Faces Antitrust Lawsuit over Territorial Restrictions for Coachella Artists, The Hollywood Rep. (Apr. 10, 2018), http://www.hollywoodreporter.com/thr-esq/aeg-faces-antitrust-lawsuit-territorial-restrictions-coachella-artists-1101313.      [79]        Id.      [80]        Id.      [81]        Id.      [82]        Eriq Gardner, Disney Headed to Trial Over ‘Turner & Hooch’ Profits, The Hollywood Rep. (May 7, 2018), https://www.hollywoodreporter.com/thr-esq/disney-headed-trial-turner-hooch-profits-1109326.      [83]        Daniel Siegal, Disney Must Face ‘Turner & Hooch’ Royalty Fraud Claim, Law360 (May 4, 2018), https://www.law360.com/articles/1040685/disney-must-face-turner-hooch-royalty-fraud-claim.      [84]        Id.      [85]        Id.; Gardner, supra note 82.      [86]        Id.      [87]        Id.     [88]       Eriq Gardner, Judge Judy’s $47 Million Salary Isn’t Too Much, Rules Real Judge, The Hollywood Rep. (April 5, 2018), https://www.hollywoodreporter.com/thr-esq/judge-judys-47-million-salary-isnt-rules-real-judge-1100081.      [89]        Id.      [90]        Id.      [91]        Id.      [92]        Id.      [93]        Eriq Gardner, Judge Allows ‘Columbo’ Fraud Lawsuit Against Universal, The Hollywood Rep. (Feb. 9, 2018), https://www.hollywoodreporter.com/thr-esq/judge-allows-columbo-fraud-lawsuit-universal-1083344.      [94]        Id.      [95]        Id.      [96]        Id.      [97]        Goldman v. Breitbart News Network, LLC, No. 17-CV-3144, 2018 WL 911340, at *1 (S.D.N.Y. Feb. 15, 2018).      [98]        Id. at *2.      [99]        Id. at *3 (quoting Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 430 (1984)).    [100]        Id. at *4.    [101]        Id. at *3 (quoting H.R. Rep. 94–1476, 47, 51 (1976)).    [102]        Id. at *1.    [103]        Id. at *5.    [104]        Id.    [105]        Id. at *8.    [106]        Id. at *9.    [107]        Id. at *10.    [108]        Bill Donahue, Embedded Tweet Copyright Case Sent To 2nd Circ., Law360 (Mar. 20, 2018), https://www.law360.com/articles/1024012.    [109]        Heavy, Inc. v. Goldman, Case No. 18-910, Dkt. 35 (2d Cir. July 17, 2018).    [110]        Fox News Network, LLC v. TVEyes, Inc., 883 F.3d 169, 174 (2d Cir. 2018). See also Bill Donahue, Siding With Fox 2nd Circ. Says TVEyes Is Not Fair Use, Law360 (Feb. 27, 2108), https://www.law360.com/media/articles/1016495.    [111]        TVEyes, 883 F.3d at 173–74.    [112]        Id. at 174    [113]        Id. at 174, 176–79.    [114]        Id. at 174, 180.    [115]        Id. at 180, 181.    [116]        Bill Donahue, 2nd Circ. Won’t Rehear TVEyes Fair Use Case, Law360 (May 15, 2018), https://www.law360.com/articles/1043784/2nd-circ-won-t-rehear-tveyes-fair-use-case.    [117]        Eriq Gardner, ‘Cosby Show’ Producer Sues BBC for Using Clips in Bill Cosby Doc, The Hollywood Rep. (Nov. 6, 2017), https://www.hollywoodreporter.com/thr-esq/cosby-show-producer-sues-bbc-using-clips-bill-cosby-doc-1055167.    [118]        Eriq Gardner, BBC Points to Geoblocking in Bid To Defeat Lawsuit Over Use of ‘Cosby Show’ Clips, The Hollywood Rep. (Jan. 12, 2018), https://www.hollywoodreporter.com/thr-esq/bbc-points-geoblocking-bid-defeat-lawsuit-use-cosby-show-clips-1074282; The Carsey-Werner Co., LLC v. British Broad. Corp., No. CV 17-8041 PA (ASX), 2018 WL 1083550, at *1 (C.D. Cal. Feb. 23, 2018).    [119]        Id.; see also Eriq Gardner, BBC Points to Geoblocking in Bid To Defeat Lawsuit Over Use of ‘Cosby Show’ Clips, The Hollywood Rep. (Jan. 12, 2018), https://www.hollywoodreporter.com/thr-esq/bbc-points-geoblocking-bid-defeat-lawsuit-use-cosby-show-clips-1074282.    [120]        Carsey-Werner Co., 2018 WL 1083550, at *1.    [121]        Id. at *6.    [122]        Id. at *7.    [123]        See Complaint, Rearden LLC, et al. v. The Walt Disney Co., et al., No. 17-cv-04006, 2017 WL 3015899 (N.D. Cal. July 17, 2017).    [124]        See id.    [125]        See Reply in Support of Defendants’ Motion to Dismiss, Rearden LLC, et al. v. The Walt Disney Co., et al., No. 17-cv-04006, 2017 WL 7716172 (N.D. Cal. Nov. 9, 2017).    [126]        Rearden LLC v. Walt Disney Co., 293 F. Supp. 3d 963, 970 (N.D. Cal. 2018).    [127]        See First Amended Complaint, Rearden LLC, et al. v. The Walt Disney Co., et al., No. 17-cv-04006, 2018 WL 2948187 (N.D. Cal. Mar. 6, 2018).    [128]        See Notice of Motions and Motions for Partial Dismissal of First Amended Complaints, Rearden LLC, et al. v. The Walt Disney Co., et al., No. 17-cv-04006, 2018 WL 29498109 (N.D. Cal. Apr. 5, 2018).    [129]        See Bill Donahue, Hollywood Giants Must Face Copyright Claims Over Digital FX, Law360 (June 19, 2018), https://www.law360.com/articles/1054886/hollywood-giants-must-face-copyright-claims-over-digital-fx.    [130]        Disney Enterprises, Inc. v. Redbox Automated Retail, LLC, No. 2:17-cv-08655, Dkt. 1 (C.D. Cal. Nov. 30, 2017).    [131]        Disney Enterprises, Inc. v. Redbox Automated Retail, LLC, No. 2:17-cv-08655, Dkt. 74 (C.D. Cal. Feb. 20, 2018).    [132]        Id. at 17.    [133]        Id. at 18.    [134]        Dave Simpson, Term Changes Don’t Fix Disney’s Copyright Misuse: Redbox¸ Law360 (May 10, 2018), https://www.law360.com/articles/1042340/term-changes-don-t-fix-disney-s-copyright-misuse-redbox.    [135]        Disney Enterprises, Inc. v. Redbox Automated Retail, LLC, No. 2:17-cv-08655, Dkt. 86 at 2 (C.D. Cal. Apr. 9, 2018).    [136]        Disney Enterprises, Inc. v. Redbox Automated Retail, LLC, No. 2:17-cv-08655, Dkt. 94 at 12 (C.D. Cal. May 7, 2018).    [137]        Disney Enterprises, Inc. v. Redbox Automated Retail, LLC, No. 2:17-cv-08655, Dkt. 113 (C.D. Cal. Jul. 11, 2018).    [138]        Kat Greene, Playboy May Amend Centerfold Copyright Suit, Judge Rules, Law360 (February 15, 2018), https://www.law360.com/articles/1012972.    [139]        Id.    [140]        Playboy Entm’t Grp. Inc. v. Happy Mutants, LLC, No. CV-178140, 2018 WL 2315936, at *1 (C.D. Cal. Feb. 14, 2018).    [141]        Id. at *1, n.1.    [142]        See Response to Order to Show Cause, Playboy Entertainment Group, Inc. v. Happy Mutants, LLC, Case No. 2:17-cv-08140-FMO-PLA (March 12, 2018).    [143]        Capitol Records, LLC v. Vimeo, LLC, 826 F.3d 78 (2d Cir. 2016).    [144]        Capitol Records, LLC v. Vimeo, LLC, 137 S. Ct. 1374 (2017).    [145]        Capitol Records, LLC v. Vimeo, LLC, No. 09-CV-10101, 2018 WL 1634123, at *6 (S.D.N.Y. Mar. 31, 2018).    [146]        Id. at *4.    [147]        Id. at *6.    [148]        Dave Simpson, Split 9th Circ. Tosses Porn Co. Copyright Suit, Law360 (March 14, 2018), https://www.law360.com/media/articles/1022316.    [149]        Id.    [150]        Id.    [151]        Id.    [152]        Id.    [153]        Id.    [154]        de Havilland v. FX Networks, LLC, 21 Cal. App. 5th 845 (2018), review filed (May 4, 2018).    [155]        Id. at 851.    [156]        Id.    [157]        de Havilland, 21 Cal. App. 5th at 845.    [158]        Id. at 856, 870–71.    [159]        Id. at 849.    [160]        Id. at 864.    [161]        Id. at 864–67.    [162]        Lohan v. Take-Two Interactive Software, Inc., 97 N.E.3d 389, 392–93 (2018).    [163]        Id. at 122.    [164]        Id. at 119 (internal quotations omitted).    [165]        Bill Donahue, NY Top Court Says ‘Game Over’ For Lohan’s ‘GTA V’ Suit, Law360 (Mar. 29, 2018), https://www.law360.com/media/articles/1027785/ny-top-court-says-game-over-for-lohan-s-gta-v-suit.    [166]        Sivero v. Twentieth Century Fox Film Corp., No. B266469, 2018 WL 833696 (Cal. Ct. App. Feb. 13, 2018), reh’g denied (Mar. 2, 2018), review denied (May 23, 2018); see also Eriq Gardner, Appeals Court Won’t Let ‘Goodfellas’ Actor Have Another Shot at ‘Simpsons’ Mob Character, The Hollywood Rep. (Feb. 13, 2018), https://www.hollywoodreporter.com/thr-esq/appeals-court-wont-let-goodfellas-actor-have-shot-at-simpsons-mob-character-1084379.    [167]        Sivero, 2018 WL 833696, at *1.    [168]        Id. at 2.    [169]        Id.    [170]        Id. at 10.    [171]        Id.    [172]        Id.    [173]        Ashley Cullins, John Oliver, HBO Beat Coal Executive’s Defamation Lawsuit, The Hollywood Rep. (Feb. 24, 2018), https://www.hollywoodreporter.com/thr-esq/john-oliver-hbo-beat-coal-executives-defamation-lawsuit-1088133.    [174]        See id.    [175]        See id.    [176]        See Marshall Cty. Coal Co. v. Oliver, No. 17-C-124, 2018 WL 1082525, at *1 (W. Va. Cir. Ct. 2018).    [177]        See Amy B. Wang, A coal exec sued John Oliver for calling him a ‘geriatric Dr. Evil.’ A judge tossed the case, The Washington Post (Feb. 26, 2018), https://www.washingtonpost.com/news/arts-and-entertainment/wp/2018/02/26/a-coal-exec-sued-john-oliver-for-calling-him-a-geriatric-dr-evil-a-judge-tossed-the-case/.    [178]        See Eriq Gardner, Bill Cosby Asking Supreme Court to Review Janice Dickinson Defamation Lawsuit, The Hollywood Rep. (June 4, 2018), https://www.hollywoodreporter.com/thr-esq/bill-cosby-asking-supreme-court-review-janice-dickinson-defamation-lawsuit-1116912.    [179]        See Dickinson v. Cosby, 17 Cal. App. 5th 655, 660-61 (2017).    [180]        See id. at 687.    [181]        See McKee v. Cosby, 874 F.3d 54, 62 (1st Cir. 2017).    [182]        See Hill v. Cosby, 665 F. App’x 169, 177 (3d Cir. 2016).    [183]        Eriq Gardner, Bill Cosby’s Ex-Lawyer Marty Singer Escapes Janice Dickinson Lawsuit, The Hollywood Rep. (July 16, 2018), https://www.hollywoodreporter.com/thr-esq/bill-cosbys-lawyer-marty-singer-escapes-janice-dickinson-lawsuit-1127509.    [184]        Petition for Writ of Certiorari, Cosby v. Dickinson, No. 18-70.    [185]        Knight First Amendment Inst. at Columbia Univ. v. Trump, 302 F. Supp. 3d 541, 574-75 (S.D.N.Y. 2018).    [186]        Garrett Epps, What the @RealDonaldTrump Ruling Actually Means, The Atlantic (May 24, 2018), https://www.theatlantic.com/technology/archive/2018/05/what-the-realdonaldtrump-ruling-actually-means/561146/.    [187]        Bryan Fung and Hamza Shaban, Trump violated the Constitution when he blocked his critics on Twitter, a federal judge rules, The Washington Post (May 23, 2018), https://www.washingtonpost.com/news/the-switch/wp/2018/05/23/trump-cannot-block-twitter-users-for-their-political-views-court-rules/.    [188]        Knight First Amendment Inst., 302 F. Supp. 3d at 567.    [189]        Id. at 574.    [190]        See Prager Univ. v. Google LLC, No. 17-CV-06064-LHK, 2018 WL 1471939, at *8 (N.D. Cal. Mar. 26, 2018).    [191]        Eriq Gardner, Why Won’t Google Comment on a Lawsuit Accusing YouTube of Censoring Conservatives?, The Hollywood Rep. (Oct. 27, 2017), https://www.hollywoodreporter.com/thr-esq/why-wont-google-discuss-a-lawsuit-accusing-youtube-censoring-conservatives-1052497.    [192]        Prager Univ., 2018 WL 1471939, at *8.    [193]        Id. [194] IMDb.com, Inc. v. Becerra, No. 16-CV-06535-VC, 2017 WL 772346, at *1–2 (N.D. Cal. Feb. 22, 2017). [195] IMDb.com, Inc. v. Becerra, No. 16-CV-06535-VC, 2018 WL 979031, at *3 (N.D. Cal. Feb. 20, 2018). See also Eriq Gardner, California’s IMDb Age Censorship Law Declared Unconstitutional, The Hollywood Rep. (Feb. 20, 2018), https://www.hollywoodreporter.com/thr-esq/californias-imdb-age-censorship-law-declared-unconstitutional-1086540.    [196]        IMDb.com, 2018 WL 979031, at *2.    [197]        Id.    [198]        Id.    [199]        Id. at *3.    [200]        Id.    [201]        Id.    [202]        See RJ Vogt, Sesame Street Can’t Block Raunchy Movie Tagline In TM Row, Law360 (May 31, 2018), https://www.law360.com/articles/1048982/sesame-street-can-t-block-raunchy-movie-tagline-in-tm-row.    [203]        See id.    [204]        See Bill Donahue, Overturning TTAB, Judge Rules ‘Booking.com’ Not Generic, Law360 (Aug. 10, 2017), https://www.law360.com/articles/952925/overturning-ttab-judge-rules-booking-com-not-generic.    [205]        Id.    [206]        See Bill Donahue, Booking.com Asks Full 4th Cir. To Nix USPTO Atty Fee Rule, Law360 (Apr. 12, 2018), https://www.law360.com/articles/1032794/booking-com-asks-full-4th-circ-to-nix-uspto-atty-fee-rule.    [207]        See Eriq Gardner, ‘Star Trek’/Dr. Suess Mashup Creator Beats Trademark Claims, The Hollywood Rep. (May 22, 2018), https://www.hollywoodreporter.com/thr-esq/star-trek-dr-seuss-mashup-creator-beats-trademark-claims-1113911.    [208]        See id.; Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989).    [209]        See Gardner, supra note 207.    [210]        Ben Sisario, “Blurred Lines” Verdict Upheld by Appeals Court, The New York Times (Mar. 21, 2018), https://www.nytimes.com/2018/03/21/business/media/blurred-lines-marvin-gaye-copyright.html.    [211]        Bill Donahue, “Blurred Lines” Ruling Leaves Big Questions Unanswered, Law360 (Mar. 21, 2018), https://www.law360.com/articles/1024899/.    [212]        Williams et al. v. Gaye et al., No. 15-56880, 2018 WL 3382875, at *21 (9th Cir. Mar. 21, 2018) (Amend. Op.).    [213]        Williams, 2018 WL 3382875, at *23.    [214]        Id.    [215]        Id. at *27.    [216]        Id. at *31-32.    [217]        Id. at *33, n.14.    [218]        Id. at *19.    [219]        Eriq Gardner, Appeals Court Won’t Rehear “Blurred Lines” Case, The Hollywood Rep., July 11, 2018, https://www.hollywoodreporter.com/thr-esq/appeals-court-wont-rehear-blurred-lines-case-1126253.    [220]        Eriq Gardner, Music Publishers Win Major Copyright Fight Over Streaming of Legendary Rock Concerts, The Hollywood Rep. (Apr. 10, 2018), https://www.hollywoodreporter.com/thr-esq/music-publishers-win-major-copyright-fight-streaming-legendary-rock-concerts-1101359.    [221]        Id.    [222]        Abkco Music, Inc., et al. v. William Sagan, et al., 2018 WL 1746564, at *12 (S.D.N.Y. Apr. 9, 2018).    [223]        Id. at *12-15; see also Gardner, supra note 220.    [224]        Gardner, supra note 220.    [225]        Id.    [226]        Eriq Gardner, Jay-Z Triumphs in “Big Pimpin” Appeal as Egyptians Can’t Enforce Moral Rights, The Hollywood Rep. (May 31, 2018), https://www.hollywoodreporter.com/thr-esq/jay-z-triumphs-big-pimpin-appeal-as-egyptians-cant-enforce-moral-rights-1116131.    [227]        Fahmy v. Jay-Z, 891 F.3d 823, 823, 831 (9th Cir. 2018).    [228]        Id. at 826.    [229]        Id.    [230]        Id. at 829. The following Gibson Dunn lawyers assisted in the preparation of this client update: Scott Edelman, Howard Hogan, Ben Ross, Nathaniel Bach, Corey Singer, Jonathan Soleimani, Sara Ciccolari-Micaldi, Michael Policastro, Aaron Frumkin, Andrew Blythe, Rachil Davids, Lauryn Togioka, Harrison Korn, Brittany Schmeltz, Sarah Graham, and Sean O’Neill. 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, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Kevin Masuda – Co-Chair, Los Angeles (+1 213-229-7872, kmasuda@gibsondunn.com) Orin Snyder– Co-Chair, New York (+1 212-351-2400, osnyder@gibsondunn.com) Ruth E. Fisher – Los Angeles (+1 310-557-8057, rfisher@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) © 2018 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 4, 2018 |
The Hollywood Reporter Names Scott Edelman and Orin Snyder to its 2018 Power Lawyers List

The Hollywood Reporter named Century City partner Scott Edelman and New York partner Orin Snyder to its 2018 Power Lawyers list, which features 100 of the most influential entertainment attorneys in the country. The feature was published on April 4, 2018.

March 16, 2018 |
Aerospace and Related Technologies – Key Developments in 2017 and Early 2018

Click for PDF This March 2018 edition of Gibson Dunn’s Aerospace and Related Technologies Update discusses newsworthy developments, trends, and key decisions from 2017 and early 2018 that are of interest to aerospace and defense, satellite, and drone companies; and new market entrants in the commercial space and related technology sectors, including the private equity and other financial institutions that support and enable their growth. Specifically, this update covers the following areas: (1) commercial unmanned aircraft systems (“UAS”), or drones; (2) government contracts litigation involving companies in the aerospace and defense industry; (3) the commercial space sector; and (4) cybersecurity and privacy issues related to the national airspace.  We discuss each of these areas in turn below. I.    COMMERCIAL UNMANNED AIRCRAFT SYSTEMS The commercial drone industry has continued to mature through advancements in technology, government relations, and public perception.  Commercial drones are being used for various sensory data collection, building inspections, utility inspections, agriculture monitoring and treatment, railway inspections, pipeline inspections, mapping of mines, and photography.  New drone applications are being created on a regular basis.  For example, the concept of flying drone taxis was validated in Dubai in September 2017 when an uncrewed two-seater drone successfully conducted its first test flight. Around a year and a half ago, United States regulations governing non-recreational drone operations were finalized.  Since then, the Federal Aviation Administration (“FAA”) has issued over 60,000 remote pilot certificates.  The FAA has and continues to make efforts to advance its technology, and it recently released a prototype application to provide operators with automatic approval of specific airspace authorizations.  The national beta test of this system will launch in 2018, and we will be sure to report back with the results. One of the biggest boons for the industry over the past 15 months was the positive public perception stemming from Hurricane Harvey relief efforts.  In the days following the disaster, drones worked in concert with government agencies to support search and rescue missions, inspect roads and railroads, and assess water plants, oil refineries, cell towers, and power lines.  Further, major insurance companies used drones to assess claims in a safer, faster, and more efficient manner.  The aftermath of this disaster demonstrated the value of drone technology and increasingly has driven a positive public perception of the industry.  Indeed, even aside from the disaster relief efforts, media sources continue to carry positive drone stories.  For example, in January 2018, Australian lifeguards were testing a drone with the ability to release an inflatable rescue pod; during its testing, the drone was called into action, and rescued two teenagers from drowning. The future is bright, but there are still many obstacles for the industry to overcome before it fully matures, such as clarity around low altitude airspace, privacy concerns, and the risk to people, property, and other aircraft. To get you caught up on 2017 and early 2018 drone developments, we have briefly summarized below: (A) highlights of drone litigation impacting airspace, including highlights from previous years for context; (B) drone registration; (C) privacy issues related to drones; (D) the United States government’s expanded use of drones; (E) drone countermeasures; (F) drone safety studies; and (G) the UAS airspace integration pilot program. A.    Litigation Highlights Regarding Airspace Huerta v. Haughwout, No. 3:16-cv-358, Dkt. No. 30 (D. Conn. Jul. 18, 2016) The latter half of 2016 featured an important decision regarding the FAA’s authority over low-level airspace.  The 2016 decision, Huerta v. Haughwout—also known as “the flamethrower drone case,” involved two YouTube videos posted by the Haughwouts.  One video featured a drone firing an attached handgun, while a second video showed a drone using an attached flamethrower to scorch a turkey.  After the videos were publicly uploaded, the FAA served the Haughwouts with an administrative subpoena to acquire further information about the activities featured in the videos.  The Haughwouts refused to comply with the FAA’s subpoenas, asserting that their activities were not subject to investigation by the FAA.  In response, the FAA sought enforcement of the subpoenas in the District of Connecticut.[1] Judge Jeffrey Meyer found the administrative subpoenas to be valid.  Most importantly, however, his order included dicta casting doubt on the FAA’s claim to control all airspace from the ground up:  “The FAA believes it has regulatory sovereignty over every inch of outdoor air in the United States…. [T]hat ambition may be difficult to reconcile with the terms of the FAA’s statute that refer to ‘navigable airspace.'”  While this dicta addressed the question of where the FAA’s authority begins, Judge Meyer also noted that “the case does not yet require an answer to that question.”[2]  Judge Meyer further stated: Congress surely understands that state and local authorities are (usually) well positioned to regulate what people do in their own backyards.  The Constitution creates a limited national government in recognition of the traditional police power of state and local government.  No clause in the Constitution vests the federal government with a general police power over all of the air or all objects that leave the ground.  Although the Commerce Clause allows for broad federal authority over interstate and foreign commerce, it is far from clear that Congress intends–or could constitutionally intend–to regulate all that is airborne on one’s own property and that poses no plausible threat to or substantial effect on air transport or interstate commerce in general.[3] 2017 featured the resolution of another lawsuit where the plaintiff attempted to extend the significance of Haughwout in an effort to get the courts to address the question of what “navigable airspace” means in the context of drones (see discussion of Singer v. City of Newton, infra). Boggs v. Merideth, No. 3:16-cv-00006 (W.D. Ky. Jan. 4, 2016) In Boggs v. Merideth—better known as “the Drone Slayer case”—a landowner shot down an operator’s drone with a shotgun in the Western District of Kentucky.[4]  The plaintiff flew his drone roughly 200 feet above the defendant’s property, causing the defendant—the self-anointed “Drone Slayer”—to claim the drone was trespassing and invading his privacy and shoot it down.  The plaintiff believed the airspace 200 feet above the ground was federal airspace and therefore the defendant could not claim the drone was trespassing. Following a state judge’s finding that the defendant acted “within his rights,” the drone operator filed a complaint in federal court for declaratory judgment to “define clearly the rights of aircraft operators and property owners.”[5]  The case had the potential to be a key decision on the scope of federal authority over the use of airspace.  Rather than claiming defense of property, however, the defendant moved to dismiss the complaint on jurisdictional grounds.  The plaintiff unsuccessfully attempted to rely on the decision in Huerta v. Haughwout for the proposition that all cases involving the regulation of drone flight should be resolved by federal courts.  The court rejected the plaintiff’s argument, noting that Haughwout only concerned the FAA’s ability to exercise subpoena power and enforce subpoenas in federal court.  In fact, the district court noted, the court in Haughwout “expressed serious skepticism as to whether all unmanned aircrafts are subject to FAA regulation.”[6]  In his March 2017 order, Senior District Court Judge Thomas B. Russell granted the defendant’s motion to dismiss for lack of federal jurisdiction, stating that the issue of whether or not the drone was in protected airspace only arises on the presumption that the defendant would raise the defense that he was defending his property.[7]  Consequently, there was no federal question jurisdiction and the case was thrown out without ever reaching its merits. While the answer to what exactly constitutes “navigable airspace” in the drone context remained unanswered in 2017, the year did mark the beginning of federal courts addressing the overlap between conflicting state, local, and federal drone laws. Singer v. City of Newton No. 1:17-cv-10071 (D. Mass. Jan. 17, 2017) On September 21, 2017, a federal judge in the District of Massachusetts held that portions of the City of Newton, Massachusetts’s (“Newton”) ordinance attempting to regulate unmanned aircraft operations within the city were invalid.[8] The case, Singer v. City of Newton, marks the first time a federal court has struck down a local ordinance attempting to regulate drones.  The court held the following four city ordinance provisions to be unenforceable: (1) a requirement that all owners register their drones with the city; (2) a ban on all drone operations under 400 feet that are over private property unless done with express permission of the property owner; (3) a ban on all drone operations over public property, regardless of altitude, unless done with the express permission of the city; and (4) a requirement that no drone be operated beyond the visual line of sight of its operator.[9] All four of these provisions of the Newton ordinance were found to be preempted by federal regulations promulgated by the FAA. In the course of holding that the four sections of Newton’s ordinance were each preempted, the court identified the congressional objectives each section inhibited.  One relevant congressional objective is to make the FAA the exclusive regulatory authority for registration of drones.  The Newton ordinance required the registration of drones with the City of Newton, which impeded Congress’s objective; thus, the court found that section to be preempted.[10] The court also identified a congressional objective for the FAA to develop a comprehensive plan to safely accelerate the integration of drones into the national airspace system.  The two sections of the Newton ordinance requiring prior permission to fly above both public and private property within the city effectively eliminated any drone activity without prior permission; thus those sections were held to interfere with the federal objective and were invalidated.[11] Lastly, the court found that the Newton ordinance’s provision barring drone usage beyond the visual line of sight of the operator conflicted with a less restrictive FAA rule allowing such usage if a waiver is obtained or if a separate visual observer can see the drone throughout its flight and assist the operator.[12] The Singer ruling marked the long-anticipated beginning of federal courts addressing overlapping state, local, and federal drone laws.  While the ruling is significant for invalidating sections of a local ordinance and thus establishing a framework that federal courts may follow to invalidate state and local drone laws elsewhere, it is important not to overstate the case’s current significance.  The court in Singer declined to hold that law relating to airspace was expressly preempted or field preempted, but rather decided it was conflict preempted.  Consequently, the case does not provide support for the assertion that all state and local drone laws related to airspace will be preempted by FAA regulations.  Further, the court did not opine on the lower limits of the National Airspace and whether it goes to the ground, an issue likely to come up in future litigation. The unchallenged portions of the Newton ordinance still stand, and the closing lines in the opinion recognize that Newton is free to redraft the invalidated portions to avoid direct conflict with FAA regulations.  Thus it remains possible, even in the District of Massachusetts, for federal law to coexist with state and local laws in this field.  In order to successfully avoid invalidation in the courts, however, state and local lawmakers must draft legislation that allows for compliance with federal regulations, and which does not interfere with any federal objectives. The year 2017 left much to still be determined by the courts.  While Newton demonstrated that preemption concerns do and will continue to exist, the case did not address the boundary of the National Airspace.  Haughwout did address the boundary—though only through dicta—and suggested that, when the issue is decided, the boundary will likely not extend to the ground.  Thus, as was the case at the start of 2017, where the boundary will be drawn remains to be seen. B.    Drone Registration: From Mandatory to Optional and Back to Mandatory In December 2015, days before tens of thousands of drones were gifted for the holidays, the FAA adopted rules requiring the registration of drones weighing more than 0.55 pounds prior to operation.  This registration requirement only impacted recreational users, as commercial users are required to register under Part 107.  This rule was challenged in Taylor v. Huerta, and on May 19, 2017, the U.S. Court of Appeals for the D.C. Circuit vacated the rule.[13]  The FAA instituted a program to issue refunds, and recreational pilots enjoyed the freedom of flying unregistered drones for the next seven months. The Circuit Court struck down the rule because the FAA lacked statutory authority to issue such a rule for recreational pilots.  Section 336 of the FAA Modernization and Reform Act of 2012 states that the “Administrator of the Federal Aviation Administration may not promulgate any rule or regulation regarding a model aircraft.”[14]  The Court held that the FAA’s registration rule “directly violates that clear statutory prohibition” and vacated the rule to the extent it applied to model aircraft.[15]  The FAA responded by offering $5 registration fee refunds and the option to have one’s information removed from the federal database, but encouraging recreational operators to voluntarily register their drones. However, in a turn of events, on December 12, 2017, the President signed the National Defense Authorization Act of 2018, which included a provision reinstating the rule: Restoration Of Rules For Registration And Marking Of Unmanned Aircraft.—The rules adopted by the Administrator of the Federal Aviation Administration in the matter of registration and marking requirements for small unmanned aircraft (FAA-2015-7396; published on December 16, 2015) that were vacated by the United States Court of Appeals for the District of Columbia Circuit in Taylor v. Huerta (No. 15-1495; decided on May 19, 2017) shall be restored to effect on the date of enactment of this Act.[16] As a result of the Act, both recreational and commercial pilots are now required to register their drones, and one can do so on the FAA’s website. C.    UAS and Privacy 1.    Voluntary Best Practices Remain Intact A 2015 Presidential Memorandum issued by then President Obama ordered the National Telecommunications and Information Administration (“NTIA”) of the U.S. Department of Commerce to create a private-sector engagement process to help develop voluntary best practices for privacy and transparency issues regarding commercial and private drone use.[17]  Since Part 107 of Title 14 of the Code of Federal Regulations (“Part 107”)[18] does not address privacy, privacy advocates hoped that the NTIA would force the FAA to promulgate privacy regulations.[19]  Prior attempts to petition the FAA to consider privacy concerns in its Notice of Proposed Rulemaking (“NPRM”) for Part 107 were unsuccessful.[20] The NTIA issued its voluntary best privacy practices for drones on May 19, 2016.[21]  While the final best practices found support from some privacy organizations and most of the commercial drone industry, other privacy groups raised concerns that the best practices neither established nor encouraged binding legal standards.[22]  Nonetheless, the best practices offer useful guidelines for companies testing and/or actively conducting drone operations. 2.    Litigation Regarding the FAA’s Role in Addressing Privacy As we discussed in an earlier update, the Electronic Privacy Information Center (“EPIC”) challenged the FAA’s decision to exclude privacy regulations from Part 107 in an August 2016 petition for review.[23]  In 2012, EPIC petitioned the FAA to promulgate privacy regulations applicable to drone use, which the FAA denied in February 2014.[24]  EPIC argued that the FAA Modernization and Reform Act of 2012 required the FAA to consider privacy issues in its NPRM.[25]  The FAA argued that while the Act directed the FAA to develop a comprehensive plan to safely integrate drones into the national airspace system, privacy considerations went “beyond the scope” of that plan.[26]  The D.C. Circuit dismissed EPIC’s petition for review on two grounds.[27]  First, the Court deemed EPIC’s petition for review “time-barred” because EPIC filed 65 days past the time allotted under 49 U.S.C. § 46110(a).[28]  Second, the Court held that the FAA’s “conclusion that privacy is beyond the scope of the NPRM” was not a final agency determination subject to judicial review.[29] After the rule became final, EPIC filed a new petition for review asking the court to vacate Part 107 and remand it to the FAA for further proceedings.[30]  Consolidated with a related case, Taylor v. FAA, No. 16-1302 (D.C. Cir. filed August 29, 2016), EPIC argues that the FAA violated the Act by: (1) refusing to consider “privacy hazards,” and (2) refusing to “conduct comprehensive drone rulemaking,” which necessarily includes issues related to privacy.[31]  The FAA argues: (1) EPIC lacks standing, (2) the FAA reasonably decided not to address privacy concerns, and (3) even if EPIC has standing, Section 333 of the Act does not require the FAA to promulgate privacy regulations.[32]  Judge Merrick Garland, Judge David Sentelle, and Judge A. Raymond Randolph heard oral arguments in the consolidated cases on January 25, 2018.[33]  All eyes thus remain on the D.C. Circuit to determine whether the FAA must issue regulations covering privacy concerns raised by increased drone use. D.    The United States Government Expands Its Use of Drones Four years after the U.S. Department of Defense (“DoD”) issued its 25-year “vision and strategy for the continued development, production, test, training, operation, and sustainment of unmanned [aircraft] systems technology,”[34] the drone defense industry continues to experience rapid growth.  A recent market report estimated that commercial and government drone sales will surpass $12 billion by 2021.[35]  However, that estimate is likely conservative when considering that the DoD allocated almost $5.7 billion to drone acquisition and research in 2017 alone.[36]  Likewise, the DoD allocates almost $7 billion to drone technology in its 2018 fiscal year Defense Budget.[37]  Additionally, Goldman Sachs forecasted a $70 billion market opportunity for military drones by 2020.[38]  According to Goldman Sachs: “Current drone technology has already surpassed manned aircraft in endurance, range, safety and cost efficiency — but research and development is far from over.  The next generation of drones will widen the gap between manned and unmanned flight even further, adding greater stealth, sensory, payload, range, autonomous, and communications capabilities.”[39]  It should thus come as no surprise that organizations developing defense-specific drones will expect increased demand for complete systems and parts in the coming years. 1.    United States Government’s Domestic Use Drones The U.S. government mostly acquires drones for overseas military operations, a trend dating back to the deployment of the Predator drone in post-9/11 conflict territories.[40]  Domestic use of DoD-owned drones remains subject to strict governmental approval, and armed drones are prohibited on U.S. soil.[41]  In February 2015, the Deputy Secretary of Defense issued Policy Memorandum 15-002 entitled “Guidance for the Domestic Use of Unmanned Aircraft Systems.”[42]  Under the policy, the Secretary of Defense must approve all domestic use of DoD-owned UAVs, with one exception—domestic search and rescue missions overseen by the Air Force Rescue Coordination Center.[43]  However, DoD personnel may use drones to surveil U.S. persons where permitted by law and where approved by the Secretary.[44]  The policy expired on February 17, 2018,[45] and it remains to be seen how the Trump administration will handle domestic use of DoD-owned drones and the integration of UAVs into day-to-day civilian operations. E.    Drone Countermeasures In response to the rapid growth of militarized consumer drones, particularly in ISIS-controlled territories,[48] 2017 saw an increased offering of anti-drone technologies in the U.S.[49]  In April 2017, the U.S. Army’s Rapid Equipment Force purchased 50 of Radio Hill Technologies’ “Dronebuster” radar guns.[50]  The Dronebuster uses radio frequency technology to interrupt the control of drones by effectively jamming the control frequency or the GPS signal.[51]  The end-user can overwhelm the drone and deprive its operator of control or cause the drone to “fall out of the sky.”[52]  Handheld radar-type guns like the Dronebuster weigh about five pounds and cost an average of $30,000.[53]  The U.S. military also experimented with the Mobile High-Energy Laser-equipped Stryker vehicle.[54]  Similar to the Dronebuster, the 5 to 10kW laser overwhelms target drones’ control systems with high bursts of energy.[55]  It can shoot down drones 600 meters away, all without making a sound.[56] F.    Drone Safety Studies Making UAS operations commonplace in urban airspace will be a big step in the technological and economic advancement of the U.S.; however, there are obstacles to overcome in ensuring the safe operation of drones in urban areas.  On April 28, 2017, the Alliance for System Safety of UAS through Research Excellence (“ASSURE”) released the results of a study that explored the severity of a UAS collision with people and property on the ground.[57]  First, ASSURE determined the most likely impact scenarios by reviewing various operating environments for UAS and determining their likely exposure to people and other manned aircraft.[58]  Then the team conducted crash tests and analyzed crash dynamics by measuring kinetic energy transfer.[59]  The results revealed that earlier measurements of the danger of collision grossly overestimate the risk of injury from a drone.[60]  ASSURE concluded that the DJI Phantom 3 drone has a 0.03% chance of causing a head injury if it falls on a person’s head.[61]  This is a very low probability considering blocks of steel or wood of the same weight have a 99% risk of causing a head injury in the same scenario.[62]  The disparity in probability of head injury is largely due to the fact that the DJI Phantom 3 drone absorbs most of the energy resulting from a collision, and therefore less energy is transferred on impact from the drone than from a block of steel or wood in the same collision.[63] In fact there are numerous steps that drone designers and manufacturers can take to reduce the likelihood of injury in the event of a collision.[64]  Projectile mass and velocity, as well as stiffness of the UAS, are the primary drivers of impact damage.[65]  As such, multi-rotor drones tend to be safer because they fall more slowly due to the drag of the rotors as the drones fall through the air.[66]  The study made clear that blade guards should be a design requirement for drones used in close proximity to people in order to minimize the lacerations that can result from a collision.[67]  Moreover, ASSURE found that the more flexible the structure of the drone, the more energy the drone retains during impact, causing less harm to the impacted object of the collision.[68] Regarding crashes with other manned aircraft, however, the study revealed that the impact of a drone can be much more severe than the impact of a bird of equivalent size and speed.[69]  As such, the structural components of a commercial aircraft that allows it to withstand bird strikes from birds up to eight pounds are not an appropriate guideline for preventing damage from a UAS strike.[70]  The study also examined the dangers associated with lithium batteries, which are used to power most drones, in collisions.[71]  The major concern is the risk of a battery fire.[72]  The study found that typical high-speed impacts cause complete destruction of the battery, eliminating any concerns about battery fires.[73]  However, the lower impact crashes, which are mainly associated with take-off and landing, left parts of the battery intact, posing a risk of battery fire.[74] While the ASSURE study is the first of its kind, it certainly marks the need for more studies that analyze the practical aspects of collisions and how to reduce risk to minimize harm.  The hazards associated with commonplace drone operation are many.[75]  Analysis of the physical impact of a collision is one aspect of minimizing UAS risks.  There is still much work to be done in order to minimize other collateral risks, such as the risk of technology failures, which range from UAS platform failures, to failures of hardware or communication links controlling the UAS.[76]  Environmental hazards, such as the effect of rain, lightning, and other types of weather remains to be studied.[77]  Ways to safeguard against human error or intentional interference is another aspect of UAS safety that has yet to be studied in detail.[78]  Data link spoofing, jamming, or hijacking poses significant safety hazards, particularly as incidents of data breaches become more and more common.[79]  Before the integration of UAS into national airspace can be fully implemented, industry stakeholders must collaborate to conduct studies that will help inform legislators about what kind of technological requirements and operational regulations are necessary. G.    UAS Airspace Integration Pilot Program In October 2017, the U.S. Department of Transportation (“DOT”) announced that it was launching the Unmanned Aircraft Systems Integration Pilot Program.[80]  The program, which was established in response to a presidential directive, is meant to accelerate the integration of UAS into the national airspace through the creation of public-private partnerships between UAS operators, governmental entities, and other private stakeholders.[81]  The program is designed to establish greater regulatory certainty and stability regarding drone use.[82]  After reviewing the applications, DOT will select a minimum of five partnerships with the goal of collaborating with the selected industry stakeholder in order to evaluate certain advanced UAS operational concepts, such as night operations, flights beyond the pilot’s line of sight, detect-and-avoid technologies, flights over people, counter-UAS security operations, package delivery, the integrity and dependability of data links between pilot and aircraft, and cooperation between local authorities and the FAA in overseeing UAS operations.[83] One such application was made by the City of Palo Alto, in partnership with the Stanford Blood Center, Stanford hospital, and Matternet, a private drone company.[84]  The City of Palo Alto has proposed the use of drones to deliver units of blood from the Stanford Blood Center to Stanford hospital, which would involve establishing an approved flight path for drones to transfer the units of blood in urgent situations.[85]  Matternet has already tested its drones’ capacity for transporting blood and other medical samples in Switzerland.[86]  A second project proposed by the City of Palo Alto involves the use of drones in order to monitor the perimeter of the Palo Alto Airport.[87]  This project involves a partnership between the city and a company called Multirotor, a German drone company that has experience working with the German army and the Berlin Police Department to integrate UAS as tools for law enforcement activities.[88] The creation of the pilot program has given stakeholders the sense that the current administration is supportive of integrating drones into the national airspace.  The support of the government has created the potential for unprecedented growth in an industry that could bring lucrative returns to its stakeholders.  The DOT has already received over 2,800 interested party applications.[89]  The majority of these applications have come from commercial drone companies, as well as various other stakeholders including energy companies, law enforcement agencies, and insurance providers.[90]  The UAS Pilot Program is to last for three years.[91]  The projected economic benefit of integrated UAS is estimated to equal $82 billion, creating up to 100,000 jobs.[92]  Industries that could see immediate returns from the program include precision agriculture, infrastructure inspection and monitoring, photography, commerce, and crisis management.[93]  The advent of established, government-sanctioned rules for the operation of UAS will motivate industry stakeholders both in the public and private sectors to push forward with new and innovative ways to use drones. II.    GOVERNMENT CONTRACTS LITIGATION IN THE AEROSPACE AND DEFENSE INDUSTRY Gibson Dunn’s 2017 Year-End Government Contracts Litigation Update and 2017 Mid-Year Government Contracts Litigation Update cover the waterfront of the most important opinions issued by the U.S. Court of Appeals for the Federal Circuit, U.S. Court of Federal Claims, Armed Services Board of Contract Appeals (“ASBCA”), and Civilian Board of Contract Appeals among other tribunals.  We invite you to review those publications for a full report on case law developments in the government contracts arena. In this update, we (A) summarize key court decisions related to government contracting from 2017 that involve players in the aerospace and defense industry.  The cases discussed herein, and in the Government Contracts Litigation Updates referenced above, address a wide range of issues with which government contractors in the aerospace and defense industry are likely familiar. A.    Select Decisions Related to Government Contractors in the Aerospace and Defense Industry Technology Systems, Inc., ASBCA No. 59577 (Jan. 12, 2017) TSI held four cost-plus-fixed-fee contracts with the Navy for research and development.  Several years into the contracts, the government disallowed expenses that had not been questioned in prior years.  TSI appealed to the ASBCA, arguing that it relied to its detriment on the government’s failure to challenge those same expenses in prior years. The Board (Prouty, A.J.) held that the challenged costs were “largely not allowable” and that “the principle of retroactive disallowance,” which it deemed “a theory for challenging audits whose heyday has come and gone,” did not apply because the same costs had simply not come up in the prior audits.  The theory of retroactive disallowance, first articulated in a Court of Claims case in 1971, prevents the government from challenging costs already incurred when the cost previously had been accepted following final audit of historical costs; the contractor reasonably believed that it would continue to be approved; and it detrimentally relied on the prior acceptance.  Tracing the precedent discussing the principle, the Board cited the Federal Circuit’s decision in Rumsfeld v. United Technologies Corp., 315 F.3d 1361 (Fed. Cir. 2003), which stated that “affirmative misconduct” on the part of the government would be required for the principle of retroactive disallowance to apply because it is a form of estoppel against the government.  The Board “sum[med] up: there is no way to read our recent precedent or the Federal Circuit’s except to include an affirmative misconduct requirement amongst the elements of retroactive disallowance.  Period.”  Further, the Board held that the government’s failure to challenge the same costs in prior years did not constitute a “course of conduct precluding the government from disallowing the costs in subsequent audits.” Delfasco LLC, ASBCA No. 59153 (Feb. 14, 2017) Delfasco had a contract with the Army for the manufacture and delivery of a specified number of munition suspension lugs.  The Army thereafter exercised an option to double the number of lugs required.  When Delfasco stopped making deliveries due to an inability to pay its subcontractor, the Army terminated the contract for default.  Delfasco appealed to the ASBCA, asserting that the government had waived its right to terminate for untimely performance by allegedly stringing Delfasco along even after the notice of termination. The Board (Prouty, A.J.) set out the test for waiver in a case involving termination for default due to late delivery as follows:  “(1) failure to terminate within a reasonable time after the default under circumstances indicating forbearance, and (2) reliance by the contractor on the failure to terminate and continued performance by him under the contract with the Government’s knowledge and implied or express consent.”  The Board held that Delfasco failed to satisfy the first prong because the government’s show cause letter placed Delfasco on notice that any continued performance would only be for the purpose of mitigating damages.  Moreover, Delfasco failed to satisfy the second prong because Delfasco’s payment to its subcontractor after the show cause letter would have been owed regardless, and was not paid in reliance upon the government’s failure to terminate.  Therefore, the Board found that the government had not waived its right to terminate, and denied the appeal. Raytheon Co., ASBCA Nos. 57743 et al. (Apr. 17, 2017) Raytheon appealed from three final decisions determining that an assortment of costs—including those associated with consultants, lobbyists, a corporate development database, and executive aircraft—were expressly unallowable and thus subject to penalties.  After a two-week trial, the Board (Scott, A.J.) sided largely with Raytheon in a wide-ranging decision that covers a number of important cost principles issues. First, the Board rejected the government’s argument that the consultant costs were expressly unallowable simply because the government was dissatisfied with the level of written detail of the work product submitted to support the costs.  Judge Scott noted that written work product is not a requirement to support a consultant’s services under FAR 31.205-33(f), particularly not where, as here, much of the consultants’ work was delivered orally due to the classified nature of the work performed.  The Board found that not only were the consultant costs not expressly unallowable, but indeed were allowable.  This is a significant ruling because the documentation of consultant costs is a recurring issue as government auditors frequently make demands concerning the amount of documentation required to support these costs during audits. Second, the government sought to impose penalties for costs that inadvertently were not withdrawn in accordance with an advance agreement between Raytheon and the government concerning two executive aircraft.  Raytheon agreed that the costs should have been withdrawn and agreed to withdraw them when the error was brought to its attention, but asserted that the costs were not expressly unallowable and subject to penalty.  The Board agreed, holding that the advance agreements did not themselves clearly name and state the costs to be unallowable, and further that advance agreements do not have the ability to create penalties because a cost must be named and stated to be unallowable in a cost principle (not an advance agreement) to be subject to penalties.  This ruling could have significance for future disputes arising out of advance agreements. Third, the government alleged that costs associated with the design and development of a database to support the operations of Raytheon’s Corporate Development office were expressly unallowable organizational costs under FAR 31.205-27.  The Board disagreed, validating Raytheon’s argument that a significant purpose of the Corporate Development office was allowable generalized long-range management planning under FAR 31.205-12, thus rendering the costs allowable (not expressly unallowable). The only cost for which the Board denied Raytheon’s appeals concerned the salary costs of government relations personnel engaged in lobbying activities.  Raytheon presented evidence that it had a robust process for withdrawing these costs as unallowable under FAR 31.205-22, but inadvertently missed certain costs in this instance due to, among other things, “spreadsheet errors.”  Raytheon agreed that the costs were unallowable and should be withdrawn, but disputed that the costs of employee compensation (a generally allowable cost) were expressly unallowable and further argued that the contracting officer should have waived penalties under FAR 42.709-5(c) based on expert evidence that Raytheon’s control systems for excluding unallowable costs were “best in class.”  The Board found that salary costs associated with unallowable lobbying activities are expressly unallowable and that the contracting officer did not abuse his discretion in denying the penalty waiver. L-3 Comms. Integrated Sys. L.P. v. United States, No. 16-1265C (Fed. Cl. May 31, 2017) L-3 entered an “undefinitized contractual action” (“UCA”) with the Air Force in which it agreed to provide certain training services while still negotiating the terms of the contract.  After the parties failed to reach agreement on the prices for two line items in the UCA, the Air Force issued a unilateral contract modification, setting prices for those line items and definitizing the contract.  L-3 argued that the Air Force’s price determination was unreasonable, arbitrary and capricious, and in violation of the FAR, and filed suit seeking damages.  The government moved to dismiss for lack of subject matter jurisdiction. The Court of Federal Claims (Kaplan, J.) dismissed L-3’s complaint, concurring with the government that L-3 had never presented a certified claim to the contracting officer for payment “of a sum certain to cover the losses it allegedly suffered.”  The court found that the proposals L-3 had presented to the Air Force were not “claims,” but rather proposals made during contract negotiations that did not contain the requisite claim certification language. Innoventor, Inc., ASBCA No. 59903 (July 11, 2017) In 2011, the government entered into a fixed-price contract with Innoventor for the design and manufacture of a dynamic brake test stand.  As part of the contract’s purchase specifications, the new design had to undergo and pass certain testing.  After problems arose in the testing process, Innoventor submitted a proposal to modify certain design components and applied for an equitable adjustment due to “instability of expectations.”  The contracting officer denied Innoventor’s request for an equitable adjustment, stating that the government had not issued a modification directing a change that would give rise to such an adjustment.  Innoventor submitted a claim, which the contracting officer denied, and Innoventor appealed. The Board (Sweet, A.J.) held that the government was entitled to judgment as a matter of law because there was no evidence that the government changed Innoventor’s performance requirements, let alone that anyone with authority directed any constructive changes.  Here, the contract was clear that Innoventor’s design had to pass certain tests, and because it failed some of them, and did not perform pursuant to the contract terms, there was no change in the original contract terms that would give rise to a constructive change.  The Board also found that there was no evidence that any person beyond the contracting officer had authority to direct a change because the contract expressly provided that only the contracting officer has authority to change a contract.  Accordingly, the Board denied Innoventor’s appeal. L-3 Commc’ns Integrated Sys., L.P., ASBCA Nos. 60713 et al. (Sept. 27, 2017) L-3 appealed from multiple final decisions asserting government claims for the recovery of purportedly unallowable airfare costs.  Rather than audit and challenge specific airfare costs, the Defense Contract Audit Agency simply applied a 79% “decrement factor” to all of L-3’s international airfare costs over a specified dollar amount, claiming that this was justified based on prior-year audits.  After filing the appeals, L-3 moved to dismiss for lack of jurisdiction on the grounds that the government had failed to provide adequate notice of its claims by failing to identify which specific airfare costs were alleged to be unallowable, as well as the basis for those allegations. The Board (D’Alessandris, A.J.) denied the motion to dismiss, holding that the contracting officer’s final decisions sufficiently stated a claim in that they set forth a sum certain and a basis for such a claim.  The Board held that L-3 had enough information to understand how the government reached its claim, and its contention that this was not a valid basis for the disallowance of costs for the year in dispute went to the merits and not the sufficiency of the final decisions. Scott v. United States, No. 17-471 (Fed. Cl. Oct. 24, 2017) Brian X. Scott brought a pro se claim in the Court of Federal Claims seeking monetary and injunctive relief for alleged harms arising from the Air Force’s handling of his unsolicited proposal for contractual work.  Scott was an Air Force employee who submitted a proposal for countering the threat of a drone strike at the base where he was stationed.  The proposal was rejected, but Scott alleged that portions of the proposal were later partially implemented.  Scott sued, claiming that the Air Force failed properly to review his proposal and that his intellectual property was being misappropriated.  Scott argued that jurisdiction was proper under the Tucker Act because an implied-in-fact contract arose that prohibited the Air Force from using any data, concept, or idea from his proposal, which was submitted to a contracting officer with a restrictive legend consistent with FAR § 15.608. The Court of Federal Claims (Lettow, J.) found that it had jurisdiction under the Tucker Act because an implied-in-fact contract was formed when the Air Force became obligated to follow the FAR’s regulatory constraints with regard to Scott’s proposal.  Nevertheless, the Court granted the government’s motion to dismiss because Scott’s factual allegations, even taken in the light most favorable to him, did not plausibly establish that the government acted unreasonably or failed to properly evaluate his unsolicited proposal by using concepts from the proposal where Scott’s proposal addressed a previously published agency requirement. III.    COMMERCIAL SPACE SECTOR A.    Overview of Private Space Launches and Significant Milestones Space exploration is always fascinating—2017 and early 2018 was no exception.  Starting off in February 2017, India’s Polar Satellite Launch Vehicle launched 104 satellites, setting a record for the number of satellites launched from a single rocket.[101]  In June, NASA finally unveiled its 12 chosen candidates for its astronaut program out of a pool of over 18,000 applicants, which was a record-breaking number.[102]  A few months later, NASA’s Cassini spacecraft was intentionally plunged into Saturn, ending over a decade’s worth of service.[103]  President Donald Trump also signed Space Policy Directive 1, which instructs NASA to send astronauts back to the moon, which President Trump noted would help establish a foundation for an eventual mission to Mars.[104] In what was widely expected to be a record year for private space launches, SpaceX and other private space companies clearly delivered.  In 2017, SpaceX, the company founded and run by Elon Musk, flew a record 18 missions utilizing the Falcon 9 rocket.[105]  Blue Origin, the company founded by Jeff Bezos, also made significant progress.  It was able to launch a new version of its New Shepard vehicle on its first flight, which Bezos hopes will lay the foundation for potential crewed missions.[106]  Then, in late December, California startup Made in Space sent a machine designed to make exotic ZBLAN optical fiber to the International Space Station.[107]  Without a doubt, 2017 played witness to many significant milestones in space exploration. Additional milestones have already been surpassed in early 2018.  February 6, 2018 was a historic date for Space technology and exploration—SpaceX’s Falcon Heavy had its maiden launch.  The Falcon Heavy can carry payloads larger than any available commercial rocket, and it has the potential to launch payloads outside of Earth’s orbit.  In fact, the Falcon Heavy did just that by launching a Tesla Roadster, driven by “Starman” into interplanetary space.  Starman will likely continue driving its orbit for millions of years.  It is only a matter of time until Starman is replaced with astronauts and the destination becomes Mars—SpaceX plans to launch such a mission in 2024. B.    Update on Outer Space Treaty and Surrounding Debate The Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, otherwise known as the Outer Space Treaty, recently celebrated its 50th anniversary.  Signed in 1967 and designed to prevent a new form of colonial competition, the Treaty was lauded for its principal framework on international space law.  Indeed, shortly after the Treaty was entered into force, the United States and the Soviet Union successfully collaborated on many space missions and exercises.[108] The Treaty is not complex.  Consisting of 17 short articles, the Treaty obligates its signatories to perform space exploration “for the benefit and interest of all countries” and to not “place in orbit around the Earth any objects carrying nuclear weapons or any other kinds of weapons of mass destruction.”[109]  Having been in force for over 50 years, there have recently been discussions regarding whether the Treaty is ripe for an update.  Only as far back as half a decade ago, experts met in Australia to discuss moon-mining of anything from water and fuel to rare minerals in what was then a world’s first “Off-Earth Mining Forum.”[110]  Discussion surrounded the legality of such mining under the Treaty.  Then in 2014, NASA accepted applications from companies that desired to mine rare moon minerals in a program called “Lunar Cargo Transportation and Landing by Soft Touchdown.”[111]  This once again sparked a debate on the legality of such actions, specifically lunar property rights. In 2017, the focus turned toward private and commercial space flight, and spurred conversation as to whether the 50-year-old treaty needed an update.  For one, the Treaty was designed, and has been entirely focused, on only individual countries.  Thus, there is an argument that the Treaty does not apply to private appropriation of celestial territory.  Second, the quaint nature of the Treaty has spawned efforts at tackling the private appropriation issues.  For instance, the United States passed the Space Act of 2015, which provides for private commercial “exploration and exploitation of space resources.”[112]  The Act has incited further debate on the various legal loopholes that inherently afflict the Treaty and its ban on countries owning celestial territory. Meanwhile, the U.S. government has continued to find methods of regulation, specifically those involving the FAA and the Federal Communications Commission (“FCC”), among others.[113]  Now, lawmakers are purportedly discussing legislation that would provide a regulatory framework for private commercial space travel to adhere to the Treaty, as there currently does not exist a framework for the U.S. government to oversee the launch of private space stations.[114] Moreover, Senator Ted Cruz (R-TX) has been leading the charge on updating the Treaty to address issues related to modern spaceflight, where private commercial entities are playing an ever-increasing role.[115]  In May, Senator Cruz, the chairman of the Subcommittee on Space, Science, and Competitiveness, convened a hearing to “examine U.S. government obligations under the [Treaty]” and to also “explore the Treaty’s potential impacts on expansion of our nation’s commerce and settlement in space.”[116]  Featuring a panel of legal experts and a panel of commercial space business leaders, the hearing raised a number of different viewpoints with one apparently unifying message: the Treaty should not be amended.  One of the panel members, Peter Marquez, while acknowledging that the Treaty is not perfect, expressed concern that opening up the Treaty to modifications would leave the space industry worse off, and would be a detriment to national and international security.[117] One area of particular interest was Article VI of the Treaty, which provides that nations authorize and supervise space activities performed by non-governmental entities, such as a private commercial space company.  The CEO of Moon Express, Bob Richards, noted that while the Treaty should remain unchanged, the U.S. should adopt a streamlined regulatory procedure and process to make approvals for space activities more efficient and clear.[118]  One of the legal experts sitting on the panel, Laura Montgomery, expressed her belief that the U.S. need not further regulate new commercial space because a close reading of the Treaty would indicate that mining and other similar activities do not require such governmental approvals.[119] While the ultimate general consensus appeared to be that no change to the Treaty was necessary to accomplish the goals of private commercial space enterprises, the hearing did bring to light the issues that currently confront modern space protocols. C.    The American Space Commerce Free Enterprise Act of 2017, Which Seeks to Overhaul U.S. Commercial Space Licensing Regime, Passes Committee but Stalls in House On June 7, 2017, House members led by Rep. Lamar Smith (R-TX), Chairman of the U.S. House Science, Space, and Technology Committee, introduced H.R. 2809—the American Space, Commerce, and Free Enterprise Act of 2017 (“ASCFEA”).[120]  The bill, if adopted, would amend Title 51 of the United States Code to liberalize licensing requirements to conduct a variety of commercial space activities, while consolidating the licensing approval process for such activities under the authority of the U.S. Department of Commerce (“DOC”).[121] The regulation of commercial space activities historically has been distributed among a variety of agencies—with the National Oceanic and Atmospheric Administration (“NOAA”) governing remote sensing, the FCC governing communications satellites,[122] and the FAA/AST regulating launch, reentry, and some other non-traditional activities.[123]  But with that patchwork of authority, proponents of the Act believe there exists a regulatory gap for overseeing and authorizing new and innovative space activities.[124]  A primary goal of the Act is to address this perceived uncertainty, and in so doing, resolve long-standing questions associated with the United States’ responsibility to regulate commercial space activities under the Outer Space Treaty,[125] which the bill’s text references extensively. In its current form, the bill would grant the Office of Space Commerce (within the DOC) “the authority to issue certifications to U.S. nationals and nongovernmental entities for the operation of:  (1) specified human-made objects manufactured or assembled in outer space . . . and (2) all items carried on such objects that are intended for use in outer space.”[126]  The bill further eliminates the Commercial Remote Sensing Regulatory Affairs Office of the NOAA, and vests authority to issue permits for remote sensing systems, again, in the DOC.[127]  The bill also creates a certification process for other “commercial payloads not otherwise licensed by the government,” thereby providing fallback legislation for “non-traditional applications like satellite servicing, commercial space stations and lunar landers.”[128]  The DOC hence would occupy all the regulatory authority for commercial space activities, except for the FCC and FAA/AST’s current authority, which those agencies would maintain.[129] The commercial space industry supports the bill, and in particular the bill’s apparent presumption in favor of regulatory approval.[130]  Industry also supports the bill’s overhaul of the regulation of remote sensing—for example, the bill requires the DOC to issue a certification decision within just 60 days (or else the application is granted),[131] provide an explanation for any rejections, and grant every application that seeks authorization for activities involving “the same or substantially similar capabilities, derived data, products, or services are already commercially available or reasonably expected to be made available in the next 3 years in the international or domestic marketplace.”[132] Some opponents of the bill contend that the consolidation of regulatory approval will limit interagency review, which is important because the DoD, State Department, and the intelligence community currently play some regulatory role in the review of aspects of new commercial space activities that are perceived to potentially pose a threat to national security.[133]  Others contend that the Office of Space Commerce has inadequate resources and experience to handle the regulatory approvals.  The bill seeks to ameliorate these concerns by authorizing $5 million in funding for the Office in 2018.[134]  The Department of Justice also has voiced some constitutional concerns.[135] The House referred the bill to the House Committee on Science, Space, and Technology,[136] which on June 8, 2017 passed three amendments by voice vote.[137]  Since being marked up in committee, the bill has seen no further action by the House.[138]  The DOC currently is seeking public input on possible changes to commercial space operations licensing more broadly.[139] D.    Industry and Government Regulators Call for Changes to NOAA’s Licensing of Remote Sensing Technology ASCFEA’s effort to strip NOAA of its authority to regulate remote sensing technology coincides with a growing number of complaints from the remote sensing industry and government regulators concerning NOAA’s ability to handle an increased number of licensing applications.[140] The Land Remote Sensing Policy Act of 1992 authorized the Secretary of Commerce to “license private sector parties to operate private remote sensing space systems.”[141]  But despite a sea change in remote sensing technology and activities since 1992, that law remains the main source of authority for remote sensing licensing, and Congress has made few modifications to the law since its inception.[142]  Given the speed of technological change, and increased industry competition, remote sensing companies are advocating for NOAA to adopt a “permissive” approach to licensing, akin to the language proposed in the ASCFEA.[143] NOAA’s issues have been exacerbated by the fact that license applications are now more varied and complex than they were previously.[144]   Representatives from NOAA describe how prior to 2011, it took an average of 51 days to review license applications, since many applications sought permission for similar concepts for satellite systems.[145]  Even though the Land Remote Sensing Policy Act of 1992 calls for a 120-day approval window, in practice, applications now extend far longer than that—and further, NOAA sometimes provides little to no explanation about why it rejects particular applications.[146]  Under the ASCFEA, the DOC would be required to approve applications using the “same or substantially similar capabilities, derived data, products, or services as are already commercially available or reasonably expected to be made available in the next 3 years in the international or domestic marketplace.”[147] Another complexity is that many companies develop technology that do not solely or traditionally perform remote sensing functions, but have remote sensing capabilities.[148]  The ASCFEA addresses this problem by offering exceptions for “De Minimis” uses of remote sensing technology.[150] E.    Commercial Space Policy in the Trump Era On December 11, 2017, President Trump signed White House Space Policy Directive 1, entitled “Reinvigorating America’s Human Space Exploration Program.”[151]  As the subject suggests, the Directive’s goal is to bring a renewed focus on human space flight at a time when the United States lacks an organic capability to send American astronauts into low-Earth orbit, let alone beyond.[152]  Fittingly, President Trump signed the directive on the forty-fifth anniversary of the lunar landing of Apollo 17, with Apollo 17 astronaut Senator Harrison Schmitt present at the ceremony.[153] According to the Directive, the United States will “[l]ead an innovative and sustainable program of exploration with commercial and international partners to enable human expansion across the solar system….”[154]  The directive calls for missions beyond low-Earth orbit, with the United States “lead[ing] the return of humans to the Moon for long-term exploration and utilization, followed by human missions to Mars and other destinations.”[155] NASA is already working with several commercial entities to develop transportation to and from low-Earth orbit, as well as to the International Space Station.[156]  And a call for a return to the moon for use as a stepping-stone to other destinations is not new with President Trump; previous administrations have expressed a similar desire.[157]  What remains to be seen is how this “long-term exploration” will be funded, with a good indicator being what “will be reflected in NASA’s FISCAL Year 2019 budget request.”[158]  Until then, “No bucks, no Buck Rogers.”[159] F.    Updates on Space Law in Luxembourg, India, and Australia Luxembourg Continues its Push for Commercial Space Prominence The small country of Luxembourg, a signatory to the Outer Space Treaty,[160] has major commercial space ambitions.  In 2016, Luxembourg passed a law to set aside €200 million to fund commercial space mining activities, and also offered to help interested companies obtain private financing.[161]  On July 13, 2017, following the United States’ lead,[162] Luxembourg passed a law that gives qualifying companies the right to own any space resources they extract from celestial bodies including asteroids.[163]  The law further outlines a regulatory framework for “the government to authorize and supervise resource extraction and other space activities,” except for communications satellites, which a different Luxembourg agency regulates.[164]  To qualify for a space mining license, companies must be centrally administered and own a registered office in Luxembourg, and also must obtain regulatory approval.[165]  It is as of now unclear whether the Luxembourg law (as well as the U.S.’s analogous law) violate the Outer Space Treaty, which prohibits companies from claiming territory on celestial bodies, but does not clarify whether that prohibition extends to materials extracted from those celestial bodies.[166] India Unveils Draft of New Commercial Space Law; Sets Satellite Launch Record In November 2017, the India Department of Space released and sought comments for the “Space Activities Act, 2017.”[167]  The stated goal of the bill is to “encourage enhanced participation of non-governmental/private sector agencies in space activities in India.”[168]  The bill as currently drafted vests authority in the Indian Government to formulate a licensing scheme for any and all “Commercial Space Activity,” and states that licenses may be granted if the sought activity does not jeopardize public health or safety, and does not violate India’s international treaty obligations, such as the Outer Space Treaty, to which India is a signatory.[169] India’s space agency also made headlines this year when it sent 104 satellites into space in 18 minutes—purportedly tripling the prior record for single-day satellite launches.[170]  The New York Times reports that satellite and other orbital companies closely scrutinized the launch, since India’s space agency is cheaper to employ for satellite launches than its European and North American counterparts.[171] Australia Announced that It Will Create a Space Agency; Details Pending In September 2017, Australia’s Acting Minister for Industry, Innovation and Science announced that Australia will create a national space agency.[172]  While details are still pending, Australia’s goal purportedly is to take advantage of the $300-$400 billion space economy, while creating Australian jobs in the process.[173] IV.    CYBERSECURITY AND PRIVACY ISSUES IN THE NATIONAL AIRSPACE A.    Cybersecurity Issues The Federal Aviation Administration (FAA) has lagged behind other sectors in establishing robust cybersecurity and privacy safeguards in the national airspace, although federal policy identifies the transportation sector (which includes the aviation industry) as one of the 16 “critical infrastructure” sectors that have the ability to impact significantly the nation’s security, economy, and public health and safety.[174]  The need for the FAA to establish robust safeguards is obvious, as the catastrophic impact of a cyber attack on the national airspace is not hard to imagine post-9/11.  Recently, one hacker claimed he compromised the cabin-based in-flight entertainment system to control a commercial airline engine in flight. One development of note is the reintroduction of the Cybersecurity Standards for Aircraft to Improve Resilience Act of 2017 by U.S. Senators Edward Markey and Richard Blumenthal.[175] Senator Markey first introduced legislation aimed at improving aircraft cyber security protection in April 2016, following a 2015 survey of U.S. airline CEOs to discover standard cybersecurity protocols used by the aviation industry.  If signed into law, the bill would require the U.S. Department of Transportation to work with DoD, Homeland Security, the Director of National Intelligence, and the FCC to incorporate requirements relating to cybersecurity into the requirements for certification.  Additionally, the bill would establish standard protections for all “entry points” to the electronic systems of aircraft operating in the U.S.  This would include the use of isolation measures to separate critical software systems from noncritical software systems. B.    UAS Privacy Concerns UAS are equipped with highly sophisticated surveillance technology with the ability to collect personal information, including physical location.  Senator Ayotte, Chair of the Subcommittee on Aviation Operations, Safety, and Security, summarized the privacy concerns drones pose as follows: “Unlimited surveillance by government or private actors is not something that our society is ready or willing or should accept.  Because [drones] can significantly lower the threshold for observation, the risk of abuse and the risk of abusive surveillance increases.”  We describe below several recent federal and state efforts to address this issue. 1.    State Legislation Addressing Privacy Concerns At least five out of the twenty-one states that either passed legislation or adopted resolutions related to UAS in 2017 specifically addressed privacy concerns.[176] Colorado HB 1070 requires the center of excellence within the department of public safety to perform a study that identifies ways to integrate UAS within local and state government functions relating to firefighting, search and rescue, accident reconstruction, crime scene documentation, emergency management, and emergencies involving significant property loss, injury or death.  The study must consider privacy concerns, in addition to costs and timeliness of deployment, for each of these uses. New Jersey SB 3370 allows UAS operation that is consistent with federal law, but also creates criminal offenses for certain UAS surveillance and privacy violations.  For example, using a UAS to conduct surveillance of a correction facility is a third degree crime.  Additionally, the law also applies the operation of UAS to limitations within restraining orders and specifies that convictions under the law are separate from other convictions such as harassment, stalking, and invasion of privacy. South Dakota SB 22 also prohibits operation of drones over the grounds of correctional and military facilities, making such operation a class 1 misdemeanor.  Further, the law modifies the crime of unlawful surveillance to include intentional use of a drone to observe, photograph or record someone in a private place with a reasonable expectation of privacy, and landing a drone on the property of an individual without that person’s consent.  Such purportedly unlawful surveillance is a class 1 misdemeanor unless the individual is operating the drone for commercial or agricultural purposes, or the individual is acting within his or her capacity as an emergency management worker. Utah HB 217 modifies criminal trespass to include drones entering and remaining unlawfully over property with specified intent.  Depending on the intent, a violation is either a class B misdemeanor, a class A misdemeanor, or an infraction, unless the person is operating a UAS for legitimate commercial or educational purposes consistent with FAA regulations.  Utah HB 217 also modifies the offense of voyeurism, a class B misdemeanor, to include the use of any type of technology, including UAS, to secretly record video of a person in certain instances. Virginia HB 2350 makes it a Class 1 misdemeanor to use UAS to trespass upon the property of another for the purpose of secretly or furtively peeping, spying, or attempting to peep or spy into a dwelling or occupied building located on such property. 2.    UAS Identification and Tracking Report The FAA chartered an Aviation Rulemaking Committee (“ARC”) in June 2017 to provide recommendations on the technologies available for remote identification and tracking of UAS, and how remote identification may be implemented.[177]  However, the ARC’s 213 page final report, dated September 30, 2017, notes that the ARC lacked sufficient time to fully address privacy and data protection concerns, and that therefore those topics were not addressed: [T]he ARC also lacks sufficient time to perform an exhaustive analysis of all the privacy implications of remote ID, tracking, or UTM, and did not specifically engage with privacy experts, from industry or otherwise, during this ARC.  These members agree, however, that it is fundamentally important that privacy be fully considered and that appropriate privacy protections are in place before data collection and sharing by any party (either through remote ID and/or UTM) is required for operations.  A non-exhaustive list of important privacy considerations include, amongst other issues, any data collection, retention, sharing, use and access.  Privacy must be considered with regard to both PII and historical tracking information.  The privacy of all individuals (including operators and customers) should be addressed, and privacy should be a consideration during the rulemaking for remote ID and tracking. Accordingly, the ARC recognizes the fundamental importance of fully addressing privacy and data protection concerns, and we anticipate that future rulemaking will address these issues. IV.    CONCLUSION We will continue to keep you informed on these and other related issues as they develop. [1] See Huerta, No. 3:16-cv-358, Dkt. No. 30. [2] Id. [3] Id. [4] See Boggs, No. 3:16-cv-00006, Dkt. No. 1 (W.D. Ky. Jan. 4, 2016). [5] See id. [6] See Boggs, No. 3:16-cv-00006, Dkt. No. 20 (W.D. Ky. Jan. 4, 2016). [7] See id. [8] See Singer, No. 1:17-cv-10071, Dkt. N. 63 (D. Mass. Jan. 17, 2017). [9] See id. [10] See id. [11] See id. [12] See id. [13] See Taylor v. Huerta, 856 F.3d 1089 (D.C. Cir. 2017). [14] See Pub. L. No. 112–95, § 336(a), 126 Stat. 11, 77 (2012) (codified at 49 U.S.C. § 40101 note). [15] See Taylor, 856 F.3d at 1090. [16] See Pub. L. No. 115–91, § 3 1092(d), (2017). [17] The White House, Office of the Press Secretary, Presidential Memorandum:  Promoting Economic Competitiveness While Safeguarding Privacy, Civil Rights, and Civil Liberties in Domestic Use of Unmanned Aircraft Systems, Feb. 15, 2015, available at https://obamawhitehouse.archives.gov/the-press-office/2015/02/15/presidential-memorandum-promoting-economic-competitiveness-while-safegua. [18] Operation and Certification of Small Unmanned Aircraft Systems, 81 Fed. Reg. 42064 (June 28, 2016). [19] Electronic Privacy Information Center (“EPIC”), EPIC v. FAA: Challenging the FAA’s Failure to Establish Drone Privacy Rules, https://epic.org/privacy/litigation/apa/faa/drones/ (last visited Jan. 18, 2018). [20] See generally Electronic Privacy Information Center v. FAA (EPIC I), 821 F.3d 39, 41-42 (D.C. Cir. 2016) (noting that FAA denied EPIC’s petition for rulemaking requesting that the FAA consider privacy concerns). [21] Voluntary Best Practices for UAS Privacy, Transparency, and Accountability, NTIA-Convened Multistakeholder Process (May 18, 2016), https://www.ntia.doc.gov/files/ntia/publications/ uas_privacy_best_practices_6-21-16.pdf. [22] EPIC, supra, note xix. [23] EPIC I, supra, note xx, at 41. [24] Id. 41-42. [25] Id. [26] Id. [27] Id. at 42-43. [28] Id. at 42. [29] Id. at 43. [30] Pet. For Review, Electronic Privacy Information Center v. FAA (EPIC II), Nos. 16-1297, 16-1302 (Filed Aug. 22, 2016), https://epic.org/privacy/litigation/apa/faa/drones/EPIC-Petition-08222016.pdf. [31] Appellant Opening Br., EPIC II, Nos. 16-1297, 16-1302 (Filed Feb. 28, 2017), https://epic.org/privacy/litigation/apa/faa/drones/1663292-EPIC-Brief.pdf. [32] Appellee Reply Br., EPIC II, Nos. 16-1297, 16-1302 (Filed April 27, 2017), https://epic.org/privacy/litigation/apa/faa/drones/1673002-FAA-Reply-Brief.pdf. [33] United States Court of Appeals District of Columbia Circuit, Oral Argument Calendar, https://www.cadc.uscourts.gov/internet/sixtyday.nsf/fullcalendar?OpenView&count=1000 (last visited Jan. 18, 2018). [34] United States Department of Defense, Unmanned Systems Integrated Roadmap (2013), https://www.defense.gov/Portals/1/Documents/pubs/DOD-USRM-2013.pdf. [35] Andrew Meola, Drone Marker Shows Positive Outlook with Strong Industry Growth and Trends, Business Insider, July 13, 2017, available at http://www.businessinsider.com/drone-industry-analysis-market-trends-growth-forecasts-2017-7. [36] Office of the Under Secretary of Defense, U.S. Department of Defense Fiscal Year 2017 Budget Request (Feb. 2016). [37] Office of the Under Secretary of Defense, U.S. Department of Defense Fiscal Year 2018 Budget Request (May 2017). [38] Goldman Sachs, Drones: Reporting for Work, http://www.goldmansachs.com/our-thinking/technology-driving-innovation/drones/ (last visited Jan. 18, 2017). [39] Id. [40] Chris Woods, The Story of America’s Very First Drone Strike, The Atlantic, May 30, 2016, available at https://www.theatlantic.com/international/archive/2015/05/america-first-drone-strike-afghanistan/394463/. [41] Deputy Secretary of Defense, Policy Memorandum 15-002, “Guidance for the Domestic Use of Unmanned Aircraft Systems” (Feb. 17, 2015), https://www.defense.gov/Portals/1/Documents/Policy%20Memorandum%2015-002%20_Guidance%20for%20the%20Domestic%20Use%20of%20Unmanned%20Aircraft%20Systems_.pdf. [42] Id. [43] Id. [44] Id. [45] Id. [47] Id. [48] Eric Schmitt, Pentagon Tests Lasers and Nets to Combat Vexing Foe: ISIS Drones, N.Y. Times, Sept. 23, 2017, available at https://www.nytimes.com/2017/09/23/world/middleeast/isis-drones-pentagon-experiments.html. [49] Id. [50] Christopher Woody, The Pentagon is Getting Better at Stopping Enemy Drones—and Testing Its Own for Delivering Gear to the Battlefield, Business Insider, Apr. 24, 2017, available at https://www.businessinsider.com/military-adding-drones-and-drone-defense-to-its-arensal-2017-4. [51] Id. [52] Radio Hill Technology, Birth of the Dronebuster, http://www.radiohill.com/product/ (last visited Jan. 18, 2018). [53] Id. [54] Kyle Mizokami, The Army’s Drone-Killing Lasers are Getting a Tenfold Power Boost, Popular Mechanics, July 18, 2017, available at http://www.popularmechanics.com/military/research/news/a27381/us-army-drone-killing-laser-power/. [55] Sydney J. Freedberg Jr., Drone Killing Laser Stars in Army Field Test, Breaking Defense, May 11, 2017, available at https://breakingdefense.com/2017/05/drone-killing-laser-stars-in-army-field-test/. [56] Mizokami, supra, note lv. [57] ASSURE, UAS Ground Collision Severity Evaluation Final Report, United States (2017), available at http://www.assureuas.org/projects/deliverables/sUASGroundCollisionReport.php?Code=230 (ASSURE Study). [58] Id. [59] Id. [60] Id. [61] DJI, DJI Welcomes FAA-Commissioned Report Analyzing Drone Safety Near People, Newsroom News, Apr. 28, 2017, available at https://www.dji.com/newsroom/news/dji-welcomes-faa-commissioned-report-analyzing-drone-safety-near-people. [62] Id. [63] Id. [64] ASSURE Study, supra note lviii. [65] Id. [66] Id. [67] Id. [68] Id. [69] ASSURE, FAA and Assure Announce Results of Air-to-Air Collision Study, ASSURE: Alliance for System Safety of UAS through Research Excellence, Nov. 27, 2017, available at https://pr.cirlot.com/faa-and-assure-announce-results-of-air-to-air-collision-study/. [70] Id. [71] ASSURE Study, supra note lviii. [72] Id. [73] Id. [74] Id. [75] See Pathiyil, et al., Issues of Safety and Risk management for Unmanned Aircraft Operations in Urban Airspace, 2017 Workshop on Research, Education and Development of Unmanned Aerial Systems (RED-UAS), Oct. 3, 2017, available at http://ieeexplore.ieee.org/stamp/stamp.jsp?arnumber=8101671. [76] Id. [77] Id. [78] Id. [79] Id. [80] Patrick C. Miller, 2,800 Interested Parties Apply for UAS Integration Pilot Program, UAS Magazine, Jan. 3, 2018, available at http://www.uasmagazine.com/articles/1801/2-800-interested-parties-apply-for-uas-integration-pilot-program. [81] Unmanned Aircraft Systems Integration Pilot Program, 82 Fed. Reg. 50,301 (Oct. 25, 2017) (Presidential directive creating the program); see also Unmanned Aircraft Systems Integration Pilot Program—Announcement of Establishment of Program and Request for Applications, 82 Fed. Reg. 215 (Nov. 8, 2017) (Department of Transportation Notice of the UAS Pilot Program). [82] See id. [83] See id. [84] Elaine Goodman, Blood Deliveries by Drone Proposed—City Submits Unique Ideas to FAA, Daily Post, Jan. 5, 2018, available at http://padailypost.com/2018/01/05/blood-deliveries-by-drone-proposed-city-submits-unique-ideas-to-faa/. [85] Id. [86] Id. [87] Id. [88] Id. [89] Miller, supra note lxxxi. [90] Id. [91] Id. [92] Id. [93] Id. [101]   NASA Spaceflight, India’s PSLV deploys a record 104 satellites (Feb. 14, 2017), available at https://www.nasaspaceflight.com/2017/02/indias-pslv-record-104-satellites/. [102]   NASA, NASA’s Newest Astronaut Recruits to Conduct Research off the Earth, For the Earth and Deep Space Missions (June 7, 2017), available at https://www.nasa.gov/press-release/nasa-s-newest-astronaut-recruits-to-conduct-research-off-the-earth-for-the-earth-and. [103]   NASA, Cassini Spacecraft Ends Its Historic Exploration of Saturn (Sept. 15, 2017), available at https://www.nasa.gov/press-release/nasa-s-cassini-spacecraft-ends-its-historic-exploration-of-saturn. [104]   NASA, New Space Policy Directive Calls for Human Expansion Across Solar System (Dec. 11, 2017), available at https://www.nasa.gov/press-release/new-space-policy-directive-calls-for-human-expansion-across-solar-system. [105]   TechCrunch, SpaceX caps a record year with 18th successful launch of 2017 (Dec. 22, 2017), available at https://techcrunch.com/2017/12/22/spacex-caps-a-record-year-with-18th-successful-launch-of-2017/. [106]   The Verge, After a year away from test flights, Blue Origin launches and lands its rocket again (Dec. 12, 2017), available at https://www.theverge.com/2017/12/12/16759934/blue-origin-new-shepard-test-flight-launch-landing. [107]   Space.com, SpaceX Launches (and Lands) Used Rocket on Historic NASA Cargo Mission (Dec. 15, 2017), available at https://www.space.com/39063-spacex-launches-used-rocket-dragon-spacecraft-for-nasa.html. [108]   U.S. Department of State, Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, available at https://www.state.gov/t/isn/5181.htm#treaty. [109] NTI, Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies (Outer Space Treaty) (Feb. 1, 2017), available at http://www.nti.org/learn/treaties-and-regimes/treaty-principles-governing-activities-states-exploration-and-use-outer-space-including-moon-and-other-celestial-bodies-outer-space-treaty/. [110] PHYS.ORG, Space likely for rare earth search, scientists say (Feb. 20, 2013), available at https://phys.org/news/2013-02-space-rare-earths-scientists.html. [111]   NASA, Lunar CATALYST (Jan. 16, 2014), available at https://www.nasa.gov/content/lunar-catalyst/#.WmLx1qinGHs. [112]   The Conversation, The Outer Space Treaty has been remarkably successful – but is it fit for the modern age? (Jan. 27, 2017), available at http://theconversation.com/the-outer-space-treaty-has-been-remarkably-successful-but-is-it-fit-for-the-modern-age-71381. [113]   The Verge, How an international treaty signed 50 years ago became the backbone for space law (Jan. 27, 2017), available at https://www.theverge.com/2017/1/27/14398492/outer-space-treaty-50-anniversary-exploration-guidelines. [114]   Id. [115]   The Space Review, Is it time to update the Outer Space Treaty? (June 5, 2017), available at http://www.thespacereview.com/article/3256/1. [116]   U.S. Senate, Reopening the American Frontier:  Exploring How the Outer Space Treaty Will Impact American Commerce and Settlement in Space (May 23, 2017), available at https://www.commerce.senate.gov/public/index.cfm/hearings?ID=5A91CD95-CDA5-46F2-8E18-2D2DFCAE4355. [117]   The Space Review, supra note cxvi. [118]   Id. [119]   Id. [120] H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809.  The other primary sponsors of the bill are Brian Babin (R-TX), chairman of the space subcommittee; and Rep. Jim Bridenstine (R-OK). [121] Sandy Mazza, Space exploration regulations need overhaul, new report says, Daily Breeze (Dec. 2, 2017), https://www.dailybreeze.com/2017/12/02/space-exploration-regulations-need-overhaul-new-report-says/.  The Act’s stated purpose is to “provide greater transparency, greater efficiency, and less administrative burden for nongovernmental entities of the United States seeking to conduct space activities.”  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809 (Section 2(c)). [122] Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/. [123] Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/. [124] Under the Obama administration, many in government and industry presumed that the regulation of new space activities would fall to FAA/AST.  See Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/ (In fact, the agency heads of the FAA/AST, and the Office of Science and Technology Policy, recommended the same). [125] Marcia Smith, Companies Agree FAA Best Agency to Regulate Non-Traditional Space Activities, Space Policy Online (Nov. 15, 2017), https://spacepolicyonline.com/news/companies-agree-faa-best-agency-to-regulate-non-traditional-space-activities/. [126] H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809. [127] Id. [128] Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/. [129] Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/. [130] Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/; Marcia Smith, Companies Agree FAA Best Agency to Regulate Non-Traditional Space Activities, Space Policy Online (Nov. 15, 2017), https://spacepolicyonline.com/news/companies-agree-faa-best-agency-to-regulate-non-traditional-space-activities/.  The bill, for example, requires e the Secretary of Commerce to issue certifications or permits for commercial space activities, unless, for example, the Secretary finds by “clear and convincing evidence” that the permit would violate the Outer Space Treaty.  Bob Zimmerman, What You Need To Know About The Space Law Congress Is Considering, The Federalist (July 11, 2017), http://thefederalist.com/2017/07/11/need-know-space-law-congress-considering/.  Indeed, the policy section of the bill finds that “United States citizens and entities are free to explore and use space, including the utilization of outer space and resources contained therein, without conditions or limitations” and “this freedom is only to be limited when necessary to assure United States national security interests are met” or fulfill treaty obligations.  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809. [131] Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/. [132] Joshua Hampson, The American Space Commerce Free Enterprise Act, Niskanen Center (June 15, 2017), https://niskanencenter.org/blog/american-space-commerce-free-enterprise-act/. [133] Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/. [134] Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/; Congressional Budget Office Cost Estimate, Congressional Budget Office (July 7, 2017), https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr2809.pdf. [135] Samuel R. Ramer, Letter from the Office of the Assistant Attorney General, Justice Department (July 17, 2017), https://www.justice.gov/ola/page/file/995646/download. [136] H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809/all-actions. [137] Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/. [138] Jeffrey Hill, Congressman Babin Hints that Cybersecurity Could be Included in Larger Commercial Space Legislative Package, Satellite Today (Nov. 7, 2017), http://www.satellitetoday.com/government/2017/11/07/cybersecurity-featured-space-commerce-act/. [139] Commerce Department Now Accepting Public Inputs on Regulatory Streamlining, Space Commerce (Oct. 27, 2017), http://www.space.commerce.gov/commerce-department-now-accepting-public-inputs-on-regulatory-streamlining/; Sandy Mazza, Space exploration regulations need overhaul, new report says, Daily Breeze (Dec. 2, 2017), https://www.dailybreeze.com/2017/12/02/space-exploration-regulations-need-overhaul-new-report-says/. [140] Sean Kelly, The new national security strategy prioritizes space, The Hill (Jan. 3, 2018), http://thehill.com/opinion/national-security/367240-the-new-national-security-strategy-prioritizes-space; Jeff Foust, House panel criticizes commercial remote sensing licensing, Space News (Sept. 8, 2016), http://spacenews.com/house-panel-criticizes-commercial-remote-sensing-licensing/.  Critics argue that the NOAA’s approval pace is harming U.S. companies to the benefit of foreign competitors. Randy Showstack, Remote Sensing Regulations Come Under Congressional Scrutiny, EOS (Sept. 14, 2016), https://eos.org/articles/remote-sensing-regulations-come-under-congressional-scrutiny. [141] H.R. Rep No. 6133 (1992), available at https://www.congress.gov/bill/102nd-congress/house-bill/6133. [142] Randy Showstack, Remote Sensing Regulations Come Under Congressional Scrutiny, EOS (Sept. 14, 2016), https://eos.org/articles/remote-sensing-regulations-come-under-congressional-scrutiny.  Indeed, the Commercial Space Launch Competitiveness Act, signed into law in November 2016, requires the Department of Commerce to analyze possible statutory updates to the remote sensing licensing scheme.  Jeff Foust, House panel criticizes commercial remote sensing licensing, Space News (Sept. 8, 2016), http://spacenews.com/house-panel-criticizes-commercial-remote-sensing-licensing/.  The text of the ASCFEA also recognizes that since “the passage of the Land Remote Sensing Policy Act of 1992, the National Oceanic and Atmospheric Administration’s Office of Commercial Remote Sensing has experienced a significant increase in applications for private remote sensing space system licenses . . .”  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809. [143] Joshua Hampson, The American Space Commerce Free Enterprise Act, Niskanen Center (June 15, 2017), https://niskanencenter.org/blog/american-space-commerce-free-enterprise-act/.  The ASCFEA defines a Space-Based Remote Sensing System as “a space object in Earth orbit that is “(A) designed to image the Earth; or (B) capable of imaging a space object in Earth orbit operated by the Federal Government.”  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809. [144] Jeff Foust, Commercial remote sensing companies seek streamlined regulations, Space News (Mar. 17, 2017), http://spacenews.com/commercial-remote-sensing-companies-seek-streamlined-regulations/. [145] Id. [146] Jeff Foust, House panel criticizes commercial remote sensing licensing, Space News (Sept. 8, 2016), http://spacenews.com/house-panel-criticizes-commercial-remote-sensing-licensing/. [147] H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809 (Chapter 8012 § 80202(e)(1)). [148] Jeff Foust, Commercial remote sensing companies seek streamlined regulations, Space News (Mar. 17, 2017), http://spacenews.com/commercial-remote-sensing-companies-seek-streamlined-regulations/. [150] H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809 (Chapter 802 § 80201(d)). [151] Reinvigorating America’s Human Space Exploration Program, 82 Fed. Reg. 59501 (Dec. 11, 2017) [152] Nell Greenfieldboyce, President Trump Is Sending NASA Back to the Moon (Dec. 11, 2017) available at https://www.npr.org/sections/thetwo-way/2017/12/11/569936446/president-trump-is-sending-nasa-back-to-the-moon. [153] See Press Release, NASA, New Space Policy Directive Calls for Human Expansion Across Solar System (Dec. 11, 2017); see also NASA, https://www.nasa.gov/mission_pages/apollo/missions/apollo17.html (last visited Jan. 21, 2018). [154] Reinvigorating America’s Human Space Exploration Program, supra note clii. [155] Id. [156] NASA, Commercial Crew Program – The Essentials, available at https://www.nasa.gov/content/commercial-crew-program-the-essentials/#.VjOJ3berRaT. [157] Michael Sheetz, Trump Orders NASA to Send American Astronauts to the Moon, Mars, CNBC (Dec. 11, 2017) available at https://www.cnbc.com/2017/12/11/trump-orders-nasa-to-send-american-astronauts-to-the-moon-mars.html. [158] See New Space Policy Directive Calls for Human Expansion Across Solar System, supra note cv; see also Christian Davenport, Trump Vows Americans Will Return to the Moon.  The Question Is How?, (Dec. 11, 2017) available at https://www.washingtonpost.com/news/the-switch/wp/2017/12/11/trump-vows-americans-will-return-to-the-moon-the-question-is-how/?utm_term=.4ceb20131cdf. [159] The Right Stuff (The Ladd Company 1983). [160] Laurent Thailly and Fiona Schneider, Luxembourg set to become Europe’s commercial space exploration hub with new Space law, Ogier (Jan. 8, 2017), https://www.ogier.com/news/the-luxembourg-space-law. [161] Reuters Staff, Luxembourg sets aside 200 million euros to fund space mining ventures, Reuters (June 3, 2016), https://www.reuters.com/article/us-luxembourg-space-mining/luxembourg-sets-aside-200-million-euros-to-fund-space-mining-ventures-idUSKCN0YP22H; Laurent Thailly and Fiona Schneider, Luxembourg set to become Europe’s commercial space exploration hub with new Space law, Ogier (Jan. 8, 2017), https://www.ogier.com/news/the-luxembourg-space-law.  Luxembourg invested €23 million in U.S. company Planetary Resources, and now owns a 10% share in the company.  Kenneth Chang, If no one owns the moon, can anyone make money up there?, The Independent (Dec. 4, 2017), http://www.independent.co.uk/news/long_reads/if-no-one-owns-the-moon-can-anyone-make-money-up-there-space-astronomy-a8087126.html. [162] In 2015, the U.S. passed the Commercial Space Launch Competitiveness Act, which clarified that companies that extract materials from celestial bodies can own those materials.  Andrew Silver, Luxembourg passes first EU space mining law. One can possess the Spice, The Register (July 14, 2017), https://www.theregister.co.uk/2017/07/14/luxembourg_passes_space_mining_law/. [163] Jeff Foust, Luxembourg adopts space resources law, Space News (July 17, 2017), http://spacenews.com/luxembourg-adopts-space-resources-law/. [164] Jeff Foust, Luxembourg adopts space resources law, Space News (July 17, 2017), http://spacenews.com/luxembourg-adopts-space-resources-law;  Paul Zenners, Press Release, Space Resources (July 13, 2017), http://www.spaceresources.public.lu/content/dam/spaceresources/press-release/2017/2017_07_13%20PressRelease_Law_Space_Resources_EN.pdf. [165] Laurent Thailly and Fiona Schneider, Luxembourg set to become Europe’s commercial space exploration hub with new Space law, Ogier (Jan. 8, 2017), https://www.ogier.com/news/the-luxembourg-space-law.  Reportedly, two American companies already plan to move to Luxembourg:  Deep Space Industries and Planetary Resources. Vasudevan Mukunth, Fiat Luxembourg: How a Tiny European Nation is Leading the Evolution of Space Law, The Wire (July 15, 2017), https://thewire.in/157687/luxembourg-space-asteroid-mining-dsi/. [166] Andrew Silver, Luxembourg passes first EU space mining law. One can possess the Spice, The Register (July 14, 2017), https://www.theregister.co.uk/2017/07/14/luxembourg_passes_space_mining_law/;  Mark Kaufman, Luxembourg’s Asteroid Mining is Legal Says Space Law Expert, inverse.com (Aug. 1, 2017), https://www.inverse.com/article/34935-luxembourg-s-asteroid-mining-is-legal-says-space-law-expert. [167] Antariksh Bhavan, Seeking comments on Draft “Space Activities Bill, 2017” from the stake holders/public-regarding, ISRO (Nov. 21, 2017), https://www.isro.gov.in/update/21-nov-2017/seeking-comments-draft-space-activities-bill-2017-stake-holders-public-regarding;  Special Correspondent, Govt. unveils draft of law to regulate space sector, The Hindu (Nov. 22, 2017), http://www.thehindu.com/sci-tech/science/govt-unveils-draft-of-law-to-regulate-space-sector/article20629386.ece;  Raghu Krishnan & T E Narasimhan, Draft space law gives private firms a grip on rocket, satellite making, Business Standard (Nov. 22, 2017), http://www.business-standard.com/article/economy-policy/draft-space-law-gives-private-firms-a-grip-on-rocket-satellite-making-117112101234_1.html. [168] Antariksh Bhavan, Seeking comments on Draft “Space Activities Bill, 2017” from the stake holders/public-regarding, ISRO (Nov. 21, 2017), https://www.isro.gov.in/update/21-nov-2017/seeking-comments-draft-space-activities-bill-2017-stake-holders-public-regarding. [169] Id. [170] Ellen Barry, India Launches 104 Satellites From a Single Rocket, Ramping Up a Space Race, The New York Times (Feb. 15, 2017), https://www.nytimes.com/2017/02/15/world/asia/india-satellites-rocket.html. [171] Id. [172] Yes, Australia will have a space agency. What does this mean? Experts respond, The Conversation (Sept. 25, 2017), http://theconversation.com/yes-australia-will-have-a-space-agency-what-does-this-mean-experts-respond-84588;  Jordan Chong, Better late than never, Australia heads (back) to space, Australian Aviation (Dec. 29, 2017), http://australianaviation.com.au/2017/12/better-late-than-never-australia-heads-back-to-space/. [173] Andrew Griffin, Australia launches brand new space agency in attempt to flee the Earth, The Independent (Sept. 25, 2017), http://www.independent.co.uk/news/science/australia-space-agency-nasa-earth-roscosmos-malcolm-turnbull-economy-a7966751.html;  Henry Belot, Australian space agency to employ thousands and tap $420b industry, Government says, ABC (Sept. 25, 2017), http://www.abc.net.au/news/2017-09-25/government-to-establish-national-space-agency/8980268. [174]   White House, Critical Infrastructure Security and Resilience, Presidential Policy Directive/PPD-21 (Feb. 12, 2013). [175]   Woodrow Bellamy III, Senators Reintroduce Aircraft Cyber Security Legislation, Aviation Today (Mar. 24, 2017), http://www.aviationtoday.com/2017/03/24/senators-reintroduce-aircraft-cyber-security-legislation/. [176]   The eighteen states that passed UAS legislation in 2017 were Colorado, Connecticut, Florida, Georgia, Indiana, Kentucky, Louisiana, Minnesota, Montana, Nevada, New Jersey, North Carolina, Oregon, South Dakota, Texas, Utah, Virginia and Wyoming. The three states that passed resolutions related to UAS were Alaska, North Dakota and Utah. [177]   Under Section 2202 of the FAA Extension, Safety, and Security Act of 2016, Pub. L. 114-190, Congress directed the FAA to convene industry stakeholders to facilitate the development of consensus standards for identifying operators and UAS owners.  The final report identifies the following as the ARC’s stated objectives: The stated objectives of the ARC charter were: to identify, categorize and recommend available and emerging technology for the remote identification and tracking of UAS; to identify the requirements for meeting the security and public safety needs of the law enforcement, homeland defense, and national security communities for the remote identification and tracking of UAS; and to evaluate the feasibility and affordability of available technical solutions, and determine how well those technologies address the needs of the law enforcement and air traffic control communities. The final ARC report is available at: https://www.faa.gov/regulations_policies/rulemaking/committees/documents/media/UAS%20ID%20ARC%20Final%20Report%20with%20Appendices.pdf. 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March 9, 2018 |
D.C. Circuit Applies U.S. Copyright Law to Video Content Streamed from Abroad

Click for PDF On March 2, 2018, the United States Court of Appeals for the D.C. Circuit decided an important case addressing two separate, still unsettled questions about the scope of copyright infringement liability.  See Spanski Enterprises v. Telewizja Polska, S.A., No. 17-7051 (D.C. Cir. Mar. 2, 2018).  In brief, the court held that the defendant infringed the plaintiff’s exclusive public performance right when, without authorization, it made copyright-protected television programming available to stream inside the United States, even though the stream was hosted outside the United States.  This was the first time a federal court of appeals considered whether streaming content originating extraterritorially is subject to U.S. copyright liability.  Separately, though the defendant insisted that it could not face liability unless it “volitionally” selected the content delivered to each user, the court held that operating a video-on-demand system which allowed members of the public to receive a copyright-protected performance constituted copyright infringement. Spanski Enterprises involved a longstanding licensing agreement between Telewizja Polska (TVP), the national broadcasting company of Poland, and Spanski Enterprises, a Canadian corporation in the business of distributing Polish-language programming.  A 2009 settlement agreement between the parties established that Spanski alone could distribute the programming at issue in North and South America, whether over the Internet or otherwise.  TVP continued to distribute its programming everywhere else in the world, including by offering episodes for streaming on its website, but used geoblocking technology to ensure that no IP address associated with North or South America could access any programming to which Spanski held the license.  However, in 2011 attorneys for Spanski discovered that users in North and South America could still access programming that should have been geoblocked.  Spanski sued TVP for infringement and, after a five-day bench trial, Judge Tanya Chutkan of the United States District Court for the District of Columbia found TVP liable. On appeal, TVP raised two main challenges to the district court’s ruling.  First, it argued that it could not commit copyright infringement because none of its conduct took place within the United States, and the Copyright Act does not apply extraterritorially.  Second, it argued that a defendant only faces copyright liability if its “conduct was volitional.”  Because TVP merely operated an “automatic content delivery system” from which the user “selects the content it will view” without TVP’s involvement in processing that request, TVP insisted it had not violated the law.  The United States filed an amicus brief on behalf of Spanski, urging the court to reject both TVP’s arguments. In an opinion written by Judge Tatel and joined by Judges Griffith and Wilkins, the court of appeals affirmed, holding TVP liable for infringing Spanski’s exclusive rights.  Applying the Copyright Act to TVP’s conduct is not an impermissible extraterritorial application, the Court explained, because “the infringing performances—and consequent violation of Spanski’s copyrights—occurred on the computer screens in the United States on which the episode’s images were shown.”  TVP argued that when a performance originates internationally but is shown to the public within the country, only the domestic viewer was liable for copyright infringement.  The court disagreed, holding that a broadcaster remains liable for “the infringing display of copyrighted images on the viewer’s screen” whenever such a performance occurs “in the United States,” no matter where the broadcaster is located. The court also held that an unauthorized performance via a video-on-demand system like TVP’s infringed Spanski’s exclusive rights, even without proof that TVP took a “volitional” act, because TVP made it possible for end users to select copyright-protected content.  The text of the Copyright Act, the court explained, imposes liability whenever a defendant makes it possible for “members of the public” to “receive[] the performance” of copyrighted content.  The court found it unnecessary to decide whether a “volitional conduct” requirement exists at all or how far it extends, holding that TVP’s conduct constitutes infringement “whatever the scope of any such requirement might otherwise be.” In rejecting TVP’s “volitional conduct” argument, the court of appeals relied heavily on the Supreme Court’s 2014 decision in American Broadcasting Cos. v. Aereo, Inc., 134 S. Ct. 2498 (2014).  In Aereo, the Supreme Court held that an intermediary service that automatically captured and retransmitted broadcast television signals infringed the public performance right, even where the end user and not the service selected which content to capture.  The D.C. Circuit concluded that Aereo “forecloses [TVP’s] argument that the automated nature of its video-on-demand system or the end user’s role in selecting which content to access insulates it from Copyright Act liability.”  The court noted that TVP’s video-on-demand service involved TVP itself even more directly in the infringing performances than did the system in Aereo: unlike in Aereo, TVP itself selected and uploaded the content its system made available. Both holdings are important developments.  No other federal court of appeals has yet squarely held that U.S. copyright law applies to performances originating internationally that can be viewed inside the United States—though, as Professor Nimmer puts it in his copyright treatise, it requires only “a straightforward application of the statute” to hold that such performances are actionable.   5 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 17.02 (rev. ed. 2017).  This holding will prevent would-be infringers from evading liability simply by relocating across a border. Separately, though the court refused to decide whether a “volitional conduct” requirement exists, its application of Aereo to TVP’s on-demand system adds fuel to the ongoing debate over the Copyright Act’s scope.  Several courts of appeals, both before and since the Supreme Court’s Aereo decision, have held that the Copyright Act only applies to “volitional conduct.”  BWP Media USA, Inc. v. T & S Software Associates, Inc., 852 F.3d 436 (5th Cir. 2017); Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657 (9th Cir. 2017); CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004); Parker v. Google, Inc., 242 F. App’x 833 (3d Cir. 2007).  In its amicus brief, however, the Government argued that Aereo “rejected” a volitional-conduct argument.  Thus, it will be up to future courts to decide the ultimate fate of the defense. Gibson Dunn’s 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, or the authors: Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Connor S. Sullivan* – New York (+1 212-351-2459, cssullivan@gibsondunn.com) *Prior to joining the firm, Connor Sullivan contributed to an amicus curiae brief filed in this appeal in support of Spanski Enterprises. Please also feel free to contact the following practice group 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) Ruth E. Fisher – Los Angeles (+1 310-557-8057, rfisher@gibsondunn.com) Orin Snyder– New York (+1 212-351-2400, osnyder@gibsondunn.com) Appellate and Constitutional Law Group: Mark A. Perry – Washington, D.C. (+1 202-887-3667, mperry@gibsondunn.com) Caitlin J. Halligan – New York (+1 212-351-4000, challigan@gibsondunn.com) Nicole A. Saharsky – Washington, D.C. (+1 202-887-3669, nsaharsky@gibsondunn.com) Technology Transactions Group: David H. Kennedy – Palo Alto (+1 650-849-5304, dkennedy@gibsondunn.com) Daniel Angel – New York (+1 212-351-2329, dangel@gibsondunn.com) Shaalu Mehra – Palo Alto (+1 650-849-5282, smehra@gibsondunn.com) © 2018 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 30, 2018 |
NAURA Technology Group’s Acquisition of Akrion Systems Named Deal of the Year

China Business Law Journal has named the acquisition by NAURA Technology Group of Akrion Systems as one of its Deals of the Year 2017.  Gibson Dunn represented NAURA Technology Group, a Chinese semiconductor company, in the transaction. NAURA Technology Group received CFIUS approval for the purchase of Akrion Systems, a US semiconductor company, in December 2017, which should be the first CFIUS approval for any Chinese acquisition submitted since January 2017.  The full list was published on January 30, 2018.

January 19, 2018 |
Media, Entertainment and Technology Group – 2017 Year-End Update

Click for PDF 2017 was a banner year in the media, entertainment, and technology industries, chock full of deals, regulatory changes, and important copyright, trademark, and First Amendment rulings.  From Disney to DMCA; television royalties to mechanical royalties; fair use to the FCC; pink slime to piracy; and monkey selfies to Dr. Seuss.  It was also the year of the Weinstein scandal, and the ensuing #MeToo and Time’s Up movements, which have already upended the Hollywood order. In our Media, Entertainment & Technology practice group’s 2017 Year-End Update, we have identified those deals, trends, and rulings that are likely to shape an equally active 2018.  And building off our prior semi-annual updates, we continue to follow the arc of developments in the global streaming video industry, the pace of Chinese investment in Hollywood, and eSports, all of which continue to merit a close watch. __________________________ TABLE OF CONTENTS I……. Transaction & Regulatory Overview A.     M&A Watch 1.   Disney Announces Purchase of 21st Century Fox 2.   Discovery Purchasing Scripps 3.   DOJ Tries to Block AT&T-Time Warner Merger 4.   Meredith to Buy Time 5.   Penske Media Takes Majority Stake in Rolling Stone Mag B.     Streaming Industry Pursues a Global Presence with Original and Local Content 1.   Netflix’s Continued Growth 2.   Amazon Expands Presence and Partnerships 3.   Hulu’s Breakthrough & Foray into Foreign Language Content 4.   Disney Ends Netflix Deal & Announces Forthcoming Streaming Service 5.   iflix’s Continuing Emergence C.     The China Outlook 1.   Is The Heyday of Chinese Investments in Hollywood Over, or Just on Hold? D.     Cutting-Edge Deals and Securities Developments 1.   NBCUniversal/Snap’s Mobile-Focused Venture 2.   Royalty Flow Securitizes Eminem Royalties E.      eSports 1.   eSports Continue Electric Growth II….. Regulatory Updates A.     FCC Repeals “Net Neutrality” Rules B.     FCC Ends Rule on Media Co-Ownership III…. Recent Litigation Highlights A.     Hollywood’s Moment of Reckoning: Legal Fallout from the Weinstein Moment and the #MeToo Movement B.     Profit Participation (Film, TV, Music) 1.   MGM Wins Summary Adjudication in Home Video Class Action 2.   Stallone Seeks Demolition Man Profits 3.   A Supernatural Royalties Fight 4.   Members of Spinal Tap Banned From Suit 5.   Quincy Jones Wins $9.4 MM at Trial over Contract with Michael Jackson C.     Copyright Litigation 1.   DMCA Developments 2.   Volitional Conduct Three Years After Aereo 3.   Unmasking of Anonymous Infringers 4.   Hollywood Continues Its Judicial Assault on Piracy 5.   A Fairly Active Fair Use Docket 6.   The “Monkey Selfie” Settlement 7.   The Audio Home Recording Act Hits the Road D.     Trademark Litigation 1.   CGI and Nominative Fair Use 2.   EMPIRE Strikes Back: Ninth Circuit Holds Show’s Name Is Non-Infringing 3.   No Fair Use for Trekkie-Seuss Book 4.   Federal Circuit Finds Ban on “Scandalous and Immoral” Trademarks Unconstitutional E.      1st Amendment Litigation 1.   Defamation: ABC Settles “Pink Slime” Case 2.   “Libel in Fiction”: Greene v. Paramount Pictures 3.   Right of Publicity: Montel Williams v. Advanceable Technology, LLC 4.   Right of Publicity: Can Using a Voice Double Give Rise to Liability? F.      Music Litigation 1.   Mechanical Royalty Rate to Remain Unchanged 2.   Streaming Drives Music Consumption Growth as Lawsuits Continue to Flow 3.   Do “Players Playing” + “Haters Hating” = Copyright Infringement? 4.   Ticketmaster Acquires Songkick in Settlement of Antitrust Suit 5.   Fractional Licensing: Consent Decree No Bar to BMI and ASCAP __________________________ I.     Transaction & Regulatory Overview A.     M&A Watch The second half of 2017 continued the wave of activity in entertainment and media-related mergers and acquisitions, with a number of newly announced deals and others to keep a close eye on as they proceed through regulatory approval. 1.     Disney Announces Purchase of 21st Century Fox On December 14, 2017, The Walt Disney Company announced its acquisition of 21st Century Fox’s film and television studio businesses in an all-stock deal for $52.4 billion.  The transaction, which Disney anticipates will close in 12 to 18 months, values the purchased Fox assets at $66.1 billion.[1]  Disney will not acquire Fox’s news and sports networks, which will be spun off into a newly listed business.[2] The transaction comes at the end of a particularly active year for media deals, including Discovery’s purchase of Scripps, Meredith’s purchase of Time, and the previously announced AT&T-Time Warner merger, marking a distinct trend of consolidation. 2.     Discovery Purchasing Scripps On July 31, 2017, Discovery Communications announced that it would be purchasing Scripps Networks Interactive in an $11.9 billion transaction.  In its press release, Discovery highlighted that the transaction would align the two “complementary content producers” to create “a premier portfolio of real life entertainment brands” by adding Scripps’ HGTV, Food Network, Travel Channel, and DIY Network, among others, to Discovery’s list of TV brands.[3] 3.     DOJ Tries to Block AT&T-Time Warner Merger On November 20, 2017, the Department of Justice, voicing antitrust concerns, sued to block AT&T’s proposed $85.4 billion acquisition of Time Warner, which was first announced in October 2016.[4]  A trial date has been set for March 19, 2018.[5]  (Disclosure: Gibson Dunn represents AT&T and DirecTV in the suit.) 4.     Meredith to Buy Time Following a year of speculation, on November 26, 2017, Meredith Corporation, the owner of numerous local television stations and the publisher of magazines like Parents and Better Homes & Gardens announced that it will buy Time Inc. in an all-cash transaction valued at $2.8 billion, backed by Koch Equity Development.[6]  As a result of the transaction, Meredith will add Time, People, Fortune, and Sports Illustrated and other titles to its stable of publications.[7] 5.     Penske Media Takes Majority Stake in Rolling Stone Mag On December 20, 2017, it was announced that Penske Media Corporation had purchased a majority stake in Wenner Media, owners of Rolling Stone, in a transaction that values Wenner Media at $100 million.[8]  Despite selling a majority stake in the company, Wenner Media will retain control and editorial oversight over Rolling Stone.  Penske plans to revitalize the iconic music magazine, including its digital operations, and add the well-known title to its growing portfolio, which already includes Variety, Indiewire and Robb Report. B.     Streaming Industry Pursues a Global Presence with Original and Local Content 1.     Netflix’s Continued Growth Coming off the momentum of its Chinese market-entry deal in April 2017 with Beijing-based video service iQiyi,[9] Netflix has made continued efforts in 2017 to enter into foreign partnerships and expand its global presence. In September 2017, Netflix renewed and expanded its distribution deal with France’s leading telecom, Orange.[10]  Where the original deal covered Orange’s distribution of Netflix in France and Spain, the expansion made Netflix’s streaming service available to the 29 countries across Europe, Africa and the Middle East where Orange operates.[11]  Orange’s Poland customers will be offered Netflix by the end of the year, and Netflix will launch in the other 28 countries in 2018.[12] In a similar move, Netflix entered into a global partnership with Deutsche Telekom in November 2017, which enabled customers in Germany, Poland and the Netherlands to access Netflix’s streaming content.[13] Previously, Netflix’s content had been available only to German customers who subscribed to Deutsche Telekom’s EntertainTV.[14] Throughout the second half of 2017, Netflix has continued to invest in local content in its effort to expand internationally.  In October 2017, the company premiered its first Italian original series, Suburra; released a German original show, Dark, in December 2017;[15] and will be releasing its first Polish language series and first Swedish original series in 2018.[16] Netflix is also seeking to introduce local content in Latin America, where the biggest competition continues to be prime-time network telenovelas.[17]  In November 2017, the company announced it will be producing its first Columbian original series in partnership with the Narcos production company Dynamo.[18]  Also in November, Netflix announced an upcoming slate of 10 original Argentine productions ranging from series to documentaries.[19] 2.     Amazon Expands Presence and Partnerships In August 2017, Amazon announced it had entered into an overall deal with The Walking Dead creator Robert Kirkman and a first-look deal with Kirkman’s company Skybound Entertainment.[20]  Through the agreements, Kirkman and Skybound will develop television projects exclusively for Amazon Prime Video.[21] In December 2017, Amazon announced that that Amazon Prime Video app would be available to stream on Apple TV in more than 100 countries.[22]  Previously, Prime Video could only be streamed through the Apple AirPlay feature, a less streamlined method than utilizing a native app.[23] 3.     Hulu’s Breakthrough & Foray into Foreign Language Content In September 2017, Hulu’s original series The Handmaid’s Tale became the first streaming show to win the award for Outstanding Drama Series at the Emmys, where the show also picked up four other awards.  Along with expanding original content, Hulu also began its forays abroad by entering into a licensing deal with Studiocanal covering the foreign language Scandinavian dramas Below the Surface and Midnight Sun.[24]  And with the announcement in December 2017 that Disney will acquire 21st Century Fox, Disney will become the majority owner of Hulu, bringing more stability to the co-owned streamer.  Disney CEO Bob Iger stated that “Managing Hulu becomes a little bit more clear, a little bit more efficient,” and said he expects to “flow more content” to Hulu, making it “a more viable competitor to those already out there.”[25] 4.     Disney Ends Netflix Deal & Announces Forthcoming Streaming Service In August 2017, Disney announced it would end its distribution deal with Netflix and launch its own streaming service by 2019.[26]  The deal with Netflix had only gone into effect in 2016.[27]  As a result of the announcement, Netflix will lose access to newly announced Disney and Pixar films such as the sequel to Frozen, a live action version of The Lion King, and Toy Story 4.[28]  Just days after this announcement, Disney lost showrunner Shonda Rhimes to Netflix, who signed a multi-year production deal with the company and ended her 15-year relationship with ABC Studios.  Still, by removing the content stronghold of Pixar from Netflix, plus the popular content from Marvel Entertainment and Lucasfilm, and with the availability of even more content available through the 21st Century Fox deal, Disney’s streaming service, once launched, stands to become an immediate competitor in the streaming field. 5.     iflix’s Continuing Emergence iflix, a streaming service that launched in Asia in 2015, continues to grow as a low-cost alternative to Netflix in emerging markets.[29] The organization now boasts a subscriber base of over 5 million, and announced that it received $133 million in a round of funding led by Hearst Corporation.[30] Additional investors include Catcha Group, Evolution Media, John C. Malone’s Liberty Global and Sky.[31] With this latest funding round, iflix has raised more than $220 million through funding rounds in 2017.[32] C.     The China Outlook 1.     Is The Heyday of Chinese Investments in Hollywood Over, or Just on Hold? In the second half of 2017, Chinese investments in Hollywood continued their downward trend.  In August 2017, the Chinese State Council and the National Development and Reform Commission issued guidelines on foreign investments, which categorized investments in film, entertainment and sports as “restricted industries,” thereby placing increased scrutiny on Chinese investments in the media and entertainment industry.[33] These regulations are cited as a driving factor behind the multiple failed deals with Chinese investors throughout the year.[34]  In 2017, there has been a precipitous drop in the amount of Chinese investments in the U.S. entertainment industry, which, as of September 30, 2017, was at an aggregate of $489 million, compared to the $4.78 billion in 2016, according to a study by the Rhodium Group.[35] One of the most widely publicized deals that fell victim to the Chinese government’s tightening of capital controls was the slate financing agreement between Paramount, Huahua Media and Shanghai Film Co., by which Huahua Media and Shanghai Film Co. were intended to finance twenty-five percent of Paramount’s slate of films.[36] The $1 billion price tag on the deal was double the cost of any other slate deal between Chinese investors and Hollywood to date.[37]  On November 7, 2017, it was announced that the three were parting ways, citing the Chinese government’s new policies on foreign investments.[38] And Paramount then announced that it would instead enter into deals with Hasbro, Skydance Media and SEGA to create “a more flexible and tailored financing model going forward.”[39] The Paramount slate financing deal was not the only deal to falter in the second half of 2017.  In late summer, Recon Holdings, a Chinese media investment firm, terminated its $100 million bid to acquire a controlling stake in Millennium Films, a deal that had been announced in February 2017.[40] Additionally, the merger of Legendary Entertainment into the publicly traded Wanda Cinema Line, which was projected in 2016 to be a major windfall for investors, was stopped in its tracks shortly after the Chinese government’s new capital controls were issued.[41] While the frenzy of Chinese investments in the U.S. media, entertainment and technology industries has been reined in by the Chinese government, China’s own media, entertainment and technology industry has continued to see upward growth.  In November 2017, Tencent became the first Asian technology firm to reach a valuation over $500 billion.[42] The day after Tencent reached this milestone, it surpassed Facebook’s market valuation and was approaching that of Amazon.[43] Tencent owns China’s most popular messaging service, WeChat, which reaches nearly 1 billion users, and has made continuous efforts to expand its reach outside of China.[44] In taking steps toward becoming a global player, Tencent acquired a 5% interest in Tesla for $1.78 billion[45]  and a 12% interest in Snap Inc., for $2 billion.[46] Tencent’s investment in Snap Inc., the parent company of social media platform Snapchat, is the fifth largest investment in a U.S. tech firm involving a Chinese firm.[47] D.     Cutting-Edge Deals and Securities Developments 1.     NBCUniversal/Snap’s Mobile-Focused Venture In October 2017, Snap Inc. and NBCUniversal announced the formation of a new 50/50 joint venture to create original scripted content designed for viewing on mobile and social-media platforms.[48]  Although Snap has inked several studio deals for short-form content over the past year, the joint venture marks the continuation of a flourishing partnership between Snap and NBCUniversal.[49]  NBCUniversal invested $500 million in Snap’s March 2017 IPO and has produced a number of short-form programs for the Snapchat platform (including an Emmy-nominated The Voice offshoot).[50] 2.     Royalty Flow Securitizes Eminem Royalties Royalty Flow, a subsidiary of Royalty Exchange, has launched an IPO to raise between $11 million and $50 million that, if successful, will fund Royalty Flow’s purchase of income streams derived from rap artist Eminem’s music.[51]  The concept of Royalty Flow is to allow fans, as shareholders in Royalty Flow, to share in income from royalties for artists’ music through dividends paid by Royalty Flow, which currently holds an option to purchase 15 or 25 percent of royalty stream income from Eminem’s albums released between 1999 and 2013.[52]  Royalty Flow intends to acquire royalty streams from artists other than Eminem, though specific artists have not yet been named.[53]  Royalty Flow follows in the footsteps of other celebrity-related securities, including “Bowie Bonds” which allowed holders to share in revenues generated by artist David Bowie’s pre-1990 albums. E.     eSports 1.     eSports Continue Electric Growth We began our discussion of the growth of eSports—the professional competitive video gaming industry—in our 2017 Mid-Year Update, and the industry continues to see rapid growth and mainstream adoption.  However, with the maturation of the industry comes an increased focus on legal issues, as investors and gamers alike face the challenges of the growing sector. As major game developers such as Riot Games and Activision Blizzard have adopted traditional franchise models for their competitive eSports leagues, competitors are now realizing their role as professionals and viewing tournament play as a career, rather than a secondary source of income.[54]  Riot has commented that it would support the development of an independent players association for league members.[55]  However, players and coaches alike are already seeking legal counsel to protect their interests, as some players as young as 17 years old are now seeing contracts reach over six figures and have the opportunity to partake in tournament bonus pools reaching, in the case of Blizzard’s Overwatch League, $3.5 million.[56] eSports is also seeing growing investment from traditional sports organizations and owners.  In addition to the launch of the NBA 2K eSports league, which ties current NBA franchises to their respective eSports league teams, teams from Blizzard’s Overwatch League have received investments from traditional sports team owners including New England Patriots Owner Robert Kraft and New York Mets COO Jeff Wilpon.[57]  U.S.-based eSports franchise compLexity Gaming also recently sold a majority stake to Dallas Cowboys owner Jerry Jones.[58] II.     Regulatory Updates During the first year of the Trump administration, the Republican-controlled Federal Communications Commission (“FCC”) has approved sweeping rollbacks of regulations of internet service providers (“ISPs”) and local broadcasters that were implemented during the Obama administration.  These developments and the ongoing court challenges merit a close watch in the coming year, as states, businesses, and consumers react and adjust to the FCC’s recent moves. A.     FCC Repeals “Net Neutrality” Rules In early December 2017, the FCC voted 3-2 to repeal Obama-era rules concerning the regulation of ISPs—policies described by proponents as “net neutrality”—setting up a legal battle that could reshape how consumers pay for internet access.[59]  The original rules went into effect in 2015, and laid out a regulatory plan that considered broadband service a utility under Title II of the Communications Act, giving the FCC broad power over ISPs.[60]  Under those original rules, regulations were imposed on ISPs dictating how they could and could not provide internet broadband services, including a prohibition on regulating broadband delivery speeds for different categories of content. By repealing these rules, the FCC will no longer regulate high-speed internet delivery as if it is a utility.  Broadband providers will now have the option to offer a wider variety of service options.  Critics of these changes claim that consumers may have to pay more to access high-trafficked content.  In response, ISPs have reiterated their commitment to an open internet, and have stated that they currently have no plans to block or “throttle” sites, and will not engage in most forms of paid prioritization.[61] FCC Chairman Ajit Pai has defended the repeal.  “We are helping consumers and promoting competition,” Mr. Pai said.  “Broadband providers will have more incentive to build networks, especially to underserved areas.”[62]  Immediately following the vote, Senator Edward J. Markey (D-Mass.) and other Democrats on Capitol Hill vowed to introduce legislation to overturn the action.[63]  Multiple state attorney generals vowed to file suit against the FCC after the rules become official in January 2018,[64] and on January 16, 2018, 21 states and the District of Columbia filed suit against the FCC, alleging violation of the Administrative Procedure Act in repealing the “net neutrality” rules.[65]  The legal challenges to the repeal of these FCC regulations will surely be a hotly discussed issue over the coming year. B.     FCC Ends Rule on Media Co-Ownership The FCC voted 3-2, in November 2017, to eliminate the broadcast ownership rules that limited a single entity’s ownership of television, radio and newspaper properties within a local market.[66]  As part of the vote, the FCC provided increased flexibility for media owners, including raising the number of television stations a company can own in a local market from one of the largest four stations to two, and allowing for ownership of a newspaper and broadcast station in the same market.[67]  Like the legal battles over net neutrality rules, the FCC commissioners acknowledged that the FCC’s vote may face challenges in court. III.     Recent Litigation Highlights A.     Hollywood’s Moment of Reckoning: Legal Fallout from the Weinstein Moment and the #MeToo Movement On October 5, 2017, the New York Times broke a long-simmering story that Harvey Weinstein, head of The Weinstein Company and former head of Miramax, had reached settlements with at least eight women over the course of three decades after being accused of sexual misconduct and assault.[68]  Since then, dozens more women have come forward with similar allegations against Mr. Weinstein.[69]  Mr. Weinstein has since been forced out of The Weinstein Company, and has been the subject of civil suits and criminal investigations in connection with his conduct.[70] As of the end of 2017, at least seven civil suits have been filed against Harvey Weinstein, The Weinstein Company, Miramax, and their various board members in courts in California and New York in connection with these allegations.[71]  In addition to asserting claims for, among other things, sexual assault and battery against Mr. Weinstein himself, the plaintiffs are seeking to hold Miramax, The Weinstein Company, and their directors liable in connection with Mr. Weinstein’s actions. For example, two actions filed in Los Angeles Superior Court, one by actress Dominique Huett and another by an anonymous plaintiff, seek recovery against The Weinstein Company for negligent supervision and retention of Mr. Weinstein on the basis that the company knew or had reason to know of Mr. Weinstein’s propensity to use business meetings as a cover to lure actresses into compromising situations.[72] Meanwhile, in the Southern District of New York, a suit filed by six women is seeking class certification on behalf of women who claim to have met with Mr. Weinstein to discuss professional prospects and were instead subject to abuse.[73]  Among the 14 allegations in the complaint are claims that Miramax, The Weinstein Company, and their directors and employees, along with a network of professional and business intelligence firms, private investigators, law firms, journalists, and members of the entertainment industry effectively formed an organization engaged in racketeering by using threats, harassment, extortion, and misrepresentation to prevent disclosure of Mr. Weinstein’s deeds.[74]  Another suit accuses The Weinstein Company of sex trafficking on the basis that it facilitated foreign travel during which Mr. Weinstein would subject women to abuse.[75] Other suits have been filed elsewhere,[76] and these early suits are unlikely to be the last.[77]  In addition to private suits, the New York Attorney General has opened an investigation of The Weinstein Company, seeking to determine whether officials at the company violated state civil rights and New York City human rights laws.[78]  Finally, after separating from The Weinstein Company, Mr. Weinstein himself brought suit against his former company seeking documents to defend himself against claims, and is considering an action for wrongful termination.[79] These claims, and the public relations firestorm surrounding them, have already had serious implications for The Weinstein Company.  After the allegations surfaced, many of the company’s business partners cut ties,[80] requiring it to seek an emergency loan while it reportedly seeks buyers.[81]  Other reports say that executives at The Weinstein Company are attempting to rename the business and scrub Weinstein’s name in an attempt to save the company.[82]  Another reported plan involves a proposal for an outside group to buy the company outright, rename it, hire a majority-female board, and set up a mediation process and litigation fund to compensate victims.[83]  Regardless of the outcome, the scandal that has put the company at risk and rocked Hollywood has started a movement across industries in which reports of sexual misconduct against high-profile individuals are being reported on a near daily pace. The public reaction to these allegations has been widespread.  After the allegations against Mr. Weinstein were made public, the steadily increasing volume of sexual assault allegations making their way into the public consciousness this year turned into a veritable flood, leading some to dub it the “Weinstein Moment” or the #MeToo movement.[84]  Dozens of other prominent figures in the media (and elsewhere) have since been accused of sexual misconduct.[85]  In addition to the increased attention in the media being paid to issues of sexual assault, several changes to the business and legal landscape have been proposed. Business commentators are advocating for leaders to strongly endorse zero-tolerance policies and clear reporting and investigation of claims of harassment.[86]  There is also evidence that insurance covering claims arising from sexual harassment is increasing in popularity.[87]  Morals clauses in industry agreements are likely to take on additional importance as well. A spotlight has also been shone on non-disclosure agreements, which have come under criticism for silencing alleged victims.  In the New York legislature, one proposed law would “bar organizations from making contractual provisions with the effect of concealing claims of discrimination, harassment, or other violations of public policy” in an attempt to short circuit the ability of predators to hide their actions from scrutiny using non-disclosure or non-disparagement agreements clauses.[88]  Similarly, “[a] California state senator says she intends to introduce a bill next year to ban confidentiality provisions in monetary settlements stemming from sexual harassment, assault and discrimination cases.”[89] Another area to watch for change includes legislation creating rights of action against harassers.  For example, after accusations that prominent venture capitalists sexually harassed female entrepreneurs seeking investments surfaced earlier this year, the California legislature is considering whether to add “investors” to the list of professionals who can be held liable for harassment of non-employers.[90]  Another proposal in New York seeks to address harassment in the fashion industry by assigning responsibility for workplace-related harassment to the client hiring the model.[91] Other companies—perhaps especially those with high-profile executives or employees—should take note.  Indeed, in addition to Mr. Weinstein, dozens of other powerful men in media (and elsewhere) have been accused of sexual harassment or misconduct this year resulting in their termination or resignation and attendant abrupt changes in their organizations.  And in addition to claims from victims and public scorn directed at companies and employers, boards of directors may find themselves the targets of shareholder suits.[92] B.     Profit Participation (Film, TV, Music) As headline-consuming as the sexual harassment scandals have been, other legal developments moved at a breakneck pace in 2017 in the entertainment industry.  High-stakes profit participation battles continued this year, with developments from cases filed over the past few years and new filings as well.  California state and federal courts remain popular venues for these suits, although one notable case is proceeding in arbitration. 1.     MGM Wins Summary Adjudication in Home Video Class Action Starting in January 2013, various individuals and entities—including directors, stuntmen, loan-out companies, and their successors—filed a series of class actions against six Hollywood studios[93] alleging that the studios were improperly reporting and underpaying putative class members’ share of contingent compensation related to home video, going back to 1999.[94]  The nearly identical complaints generally alleged that the studios breached their contracts with putative class members by calculating each participant’s share of contingent compensation on 20% of revenues earned from the distribution of home video instead of 100% of gross receipts as plaintiffs claim was required by the contracts. In September 2017, MGM moved for summary adjudication, arguing that most of the plaintiff’s claims were time-barred by a two-year contractual limitations provision contained in the operative contract or by the applicable statute of limitations.  On January 8, 2018, the court granted MGM’s motion, significantly narrowing the plaintiff’s contractual and quasi-contractual causes of action to exclude any claims based on participation statements issued prior to two years preceding the filing of the lawsuit, and also entering judgment for MGM on the open book accounting and California UCL claims because they were unavailable under New York law, which governs the contract.  Plaintiff agreed that its conversion claim should be dismissed and the Court entered judgment in favor of MGM on that claim as well.  (Disclosure: Gibson Dunn represents MGM in this case.) 2.     Stallone Seeks Demolition Man Profits In April 2017, Sylvester Stallone (through his loan-out company Rogue Marble) filed suit in Los Angeles Superior Court against Warner Bros. Entertainment Inc., alleging the company failed to pay him revenue from the 1993 film Demolition Man.  Stallone alleges that when he contacted Warner Bros., the company first responded by issuing a statement purporting to indicate the film had over a $66 million deficit, and then sent a lump sum payment of $2.8 million.  Stallone alleges breach of contract, fraud, accounting, and other claims.[95]  In September 2017, the court overruled Warner Bros.’ demurrer, finding plaintiffs’ claims (including its fraud claim) adequately pleaded, and took the step of ordering Warner Bros. to produce documents pertaining to the film’s other profit participants.[96] 3.     A Supernatural Royalties Fight Warner Bros. recently became engaged in arbitration with Eric Kripke, creator of the CW’s long-running show Supernatural, over the show’s profits.[97]  Kripke alleges Warner Bros. has reported a deficit despite the show running for 13 seasons, and also has challenged Warner Bros.’ licensing agreements with the CW (co-owned by Warner Bros. and CBS), which he claims have depressed gross receipts by over $100 million.  He also raises concerns with license fees from affiliated on-demand services, as well as from Netflix and Hulu.  Warner Bros. has responded that Kripke’s protest is baseless because “Kripke granted WBTV absolute discretion and control over how and whether to distribute and exploit the Series, including by authorizing WBTV to license the show to an affiliated company” and has still received millions in fees.[98]  Kripke’s counsel has reportedly been particularly aggressive about challenging JAMS and its arbitrators, seeking detailed disclosures regarding their prior business for the studio.[99] 4.     Members of Spinal Tap Banned from Suit In September 2017, all but one of the co-creators of the 1984 rock “mockumentary” This Is Spinal Tap were dismissed from a suit in California federal court against Vivendi S.A., its subsidiary (Studiocanal S.A.S.) and one of its executives (Ron Halpern).  The court also dismissed a fraud claim for failure to plead a sufficient factual basis, with leave to amend.[100]  The Plaintiffs had included Christopher Guest and the loan-out companies of Harry Shearer, Rob Reiner, and Michael McKean, as well as Spinal Tap Productions (a defunct corporation owned by the three loan-outs and Guest).[101]  The suit asserts that Vivendi has not paid plaintiffs all film profits as required by contract, alleging that despite the film’s decades of success as a cult classic, the plaintiffs allegedly received only $81 in merchandizing and $98 in musical income.[102]  The court held that the three loan-out companies lacked standing to sue to enforce the contracts, which were formed between Vivendi’s predecessor and Spinal Tap Productions, because the loan-outs were not intended third-party beneficiaries.[103]  Guest, however, had standing and remains in the suit, and leave was granted to add his fellow co-creators or to allege additional facts.[104] 5.     Quincy Jones Wins $9.4 MM at Trial over Contract with Michael Jackson In 2013, Quincy Jones filed a lawsuit against MJJ Productions, the music label founded by Michael Jackson, alleging that Jones was owed $30 million in unpaid royalties, including on revenues from a joint venture between Sony and MJJ, the posthumous documentary This Is It, and Cirque due Soleil shows that featured Jackson’s music.[105]  In addition, Jones argued that contracts he formed with Jackson in 1978 and 1985 entitled him to royalty payments for the commercial exploitation of the albums Jones produced such as Off The Wall and Thriller.[106]  Following a July 2017 trial, a jury awarded Jones $9.4 million in damages.[107]  The court rejected MJJ’s attempt to reduce the verdict award, denying defendants’ motion for judgment notwithstanding the verdict,[108] and an appeal has been docketed with opening briefs yet to be filed. The court deferred consideration of MJJ’s separate equitable defenses, and briefing of its estoppel defense remains ongoing.  MJJ argues in part that Jones waived his rights regarding the royalty rate, because he audited the royalty reports every year since the joint venture with Sony was formed in 1991 and renegotiated in 2009, without raising these issues.[109]  The court has yet to rule on these equitable defenses. C.     Copyright Litigation 1.     DMCA Developments The Digital Millennium Copyright Act (“DMCA”) featured prominently in copyright litigation in 2017.  Although the DMCA was enacted over 19 years ago, the statute continues to generate disputes and key rulings regarding the meaning and interpretation of the law. a.     Safe Harbor & “Repeat Infringers” The DMCA establishes a “safe harbor” from copyright liability for Internet Service Providers (“ISPs”) that create a forum for third-party users to post content, as long as those ISPs meet certain conditions.  Throughout 2017, copyright holders and ISPs continued to fight about just how far the DMCA’s safe harbor provisions extend.  For instance, the DMCA requires ISPs to “adopt and reasonably implement . . . a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.”[110]  If ISPs fail to adopt such procedures, they may lose their safe harbor protection from liability. A recurring issue is what standards govern the determination of who should be considered a repeat infringer for the purposes of determining whether an ISP has taken sufficient steps to qualify for the safe harbor defense.  In the 2016 case, EMI Christian Music Group, Inc. v. MP3tunes, LLC, record companies and music publishers brought a copyright infringement action against two websites, Sideload.com and MP3tunes.com.  On Sideload.com, users could search for and download free music on the Internet.  When they did so, those songs became part of an index of searchable songs for other users to stream and download.  A sister site, MP3tunes.com, allowed users to store music for free in a virtual locker.  If a user reached his capacity, he could purchase more space for his virtual locker.  Before a jury trial, the district court had entered partial summary judgment for the ISPs, finding they had reasonably implemented a repeat infringer policy, which the court determined meant willful infringers.[111]  The music companies appealed to the Second Circuit, which reversed, finding that the lower court’s definition of “repeat infringer” was too narrow.[112]  The Second Circuit explained that a “repeat infringer does not need to know the infringing nature of its online activities,” given that copyright infringement is a strict-liability offense and does not require a showing of specific intent to infringe.[113] The issue of repeat infringers remains pending in other courts.  In October 2017, the Fourth Circuit held oral arguments in BMG Rights Management (US) LLC v. Cox Communications, Inc. et al.  BMG, which holds and administers numerous copyrights in musical works, sued Cox in 2014 for Cox’s failure to prevent repeat infringement by its customers of BMG’s copyrights.  In 2015, a judge in the Eastern District of Virginia entered partial summary judgment in favor of BMG, finding that Cox’s efforts to terminate repeat infringers were inadequate and that Cox had lost safe harbor protection.[114]  The Court explained in rejecting Cox’s argument that “repeat infringers” include those who are accused of infringement.[115] Following the district court’s partial summary judgment ruling, a trial was held and the jury assessed a $25 million infringement verdict against Cox, which appealed.  On appeal to the Fourth Circuit, Cox argued that a repeat infringer can only be one who is adjudicated and found liable of infringement.  BMG, in contrast, argued that Congress did not restrict repeat infringers to adjudicated infringers in the DMCA, and that no court has ever adopted this interpretation.  The Fourth Circuit’s decision is expected in the coming months. b.     Safe Harbor & Pre-1972 Copyrights In June 2016, on an interlocutory appeal from a summary judgment order in the Southern District of New York, the Second Circuit held that the safe harbor provisions of the DMCA protect internet service providers from claims of infringement when users post works protected by state copyright law.[116]  In the underlying case, Capitol Records, LLC and several other record and music publishing companies alleged that their copyrights were infringed by Vimeo, a website that allows users to post and share videos online.[117]  Some of the works in question predated 1972, when Congress updated the Copyright Act to make clear that federal copyright law would preempt state copyright law going forward.  Because Congress did not make those provisions retroactive, certain pre-1972 state law provisions governing sound recordings remained in force for then-existing works.[118] Vimeo claimed it was protected by the safe-harbor provision of the DMCA.  The district court, relying in part on a 2011 report from the Copyright Office, held that the DMCA does not apply to recordings not protected by federal law, reasoning that the term “infringement of copyright” is defined in the DMCA with reference to federal law, apparently excluding protection from infringement under state law.[119]  The Second Circuit disagreed, holding that nothing in the statute suggests that federal law is the exclusive source of “infringement” from which the safe harbor guards from liability, reasoning that any other interpretation would eviscerate the purpose of the statute, which is to free ISPs from engaging in prohibitively expensive monitoring.[120]  The Court of Appeals wrote that “to construe § 512(c) as leaving service providers subject to liability under state copyright laws for postings by users of infringements of which the service providers were unaware would defeat the very purpose Congress sought to achieve in passing the [DMCA].  Service providers would be compelled either to incur heavy costs of monitoring every posting to be sure it did not contain infringing pre-1972 recordings, or incurring potentially crushing liabilities under state copyright laws.”[121]  The court then specifically pointed to the volume of pre-1972 recordings that are still popular, including the work of The Beatles, among others.[122] The Supreme Court denied plaintiffs’ petition for a writ of certiorari in March 2017.[123] 2.     Volitional Conduct Three Years After Aereo After the Supreme Court’s 2014 decision in American Broadcasting Cos., Inc. v. Aereo, Inc., courts nationwide have wrestled with the question of whether Aereo eliminated the requirement of volitional conduct as a prima facie element of a copyright infringement case against an ISP.  Decisions rendered this year by the Ninth and Fifth Circuits answered that question in the negative, finding volitional conduct remains an essential element, and the Supreme Court denied certiorari of both cases, seemingly settling the question. Perfect 10, Inc. v. Giganews, Inc.: In 2011, the adult magazine Perfect 10 filed a lawsuit against the ISPs Giganews and Livewire, claiming the companies were engaged in indirect and direct copyright infringement.  The case revolves around Usenet, “an international collection of organizations and individuals … whose computers connect to one another and exchange messages….”[124]  Giganews is a Usenet provider.  It stores content on its own servers and also provides access to content stored on servers of other Usenet providers.[125]  Giganews, in exchange for a monthly fee, gives its users access to certain content via Usenet.  This content allegedly included Perfect 10’s images.  On summary judgment, however, the district court found that Giganews did not select or post any of the infringing images, and held that Giganews had not infringed Perfect 10’s copyrights.[126] Perfect 10 appealed to the Ninth Circuit, which affirmed in January 2017, finding that Giganews did not engage in “volitional conduct” (i.e., was not the direct cause of infringement) because its users are the ones who accessed Perfect 10’s images and they merely did so using Giganews’ platform.[127]  The Court of Appeals found its decision to be consistent with Aereo, in which the defendant (Aereo) had been a more active participant in the infringement by facilitating a public performance of the works in question.  The Ninth Circuit panel wrote that “[b]ecause Aereo did not expressly address the volitional-conduct requirement,” the Supreme Court’s decision could not have altered the widely accepted standard.[128]  Perfect 10’s petition for writ of certiorari was denied on December 4, 2017.[129] BWP Media USA, Inc. v. T&S Software Associates, Inc.:  In BWP Media USA, Inc. v. T&S Software Associates, Inc., the Fifth Circuit also confronted the volitional conduct requirement after Aereo.  T&S is a website that hosted an online forum, on which users could post content and add comments.  While there was a warning on the website not to post copyrighted images, many users posted images of celebrities.  BWP, which owns the copyrights to those photographs, sued T&S for infringement.  The Fifth Circuit held there was no infringement because there was no volitional conduct, and also that the DMCA had not abrogated the volitional-conduct requirement.[130]  Like the Ninth Circuit in Perfect 10, the Fifth Circuit considered and distinguished Aereo.[131]  The Court of Appeals explained that “although Aereo and T&S both provided a service that others could use to infringe, only Aereo played an active role in the infringement.  That role was to route infringing content to its users.”[132]  The Fifth Circuit continued, “T&S hosts the forum on which infringing content was posted, but its connection to the infringement ends there.”[133]  The Supreme Court denied BWP’s petition for writ of certiorari in October 2017. 3.     Unmasking of Anonymous Infringers In Signature Management Team, LLC v. John Doe, the U.S. Court of Appeals for the Sixth Circuit considered the question of whether ISPs can be compelled to disclose the identity of individuals who have been adjudicated to have infringed a plaintiff’s copyrights.[134]  The Court of Appeals held “that like the general presumption of open judicial records, there is a presumption in favor of unmasking anonymous defendants when judgment has been entered for a plaintiff.”[135] Doe had posted a hyperlink on his blog to a downloadable copy of the entirety of a volume of a book subject to a copyright held by Signature Management Team (“Team”).[136]  Team served the blog’s hosting service with a DMCA take-down notice and Doe removed the hyperlink to the work.  Team then filed suit seeking an order (1) unmasking Doe, and (2) requiring him to destroy all copies of the protected work in his possession and cease all infringing use of the protected work.[137]  The District Court granted summary judgment for Team and ordered Doe to destroy all copies of the infringing work, but, in a follow-on motion, denied discovery that would reveal Doe’s identity based on the balancing test from Art of Living Found. v. Does 1-10, No. 10-CV-05022, 2011 WL 5444622 (N.D. Cal. Nov. 9, 2011).  The Court did, however, compel Doe’s unmasking to the court and to Team’s counsel, pursuant to a protective order. Team appealed to the Sixth Circuit only as to the denial of the motion to unmask Doe.  The Court of Appeals noted that “[n]o case has considered the issue” of post-judgment unmasking, finding it to be “an important distinction,” and comparing it to the frequent pre-judgment unmasking cases in connection with effecting service of process.[138]  The Court found that “entry of judgment against a Doe defendant largely eliminates [concerns about unmasking potentially nonliable defendants] because the plaintiff will have established liability.”[139]  At the same time, the Court noted that where a Doe defendant has complied with a court’s order, the need to unmask is lessened.[140]  The Sixth Circuit held that “there is a presumption in favor of unmasking anonymous defendants when judgment has been entered for a plaintiff,” and notably did not cabin its holding to the copyright context, suggesting that litigants seeking to unmask anonymous defendants in other contexts will be able to rely on the precedent.[141] The Court of Appeals also wrote that “[a]lthough Doe’s infringing speech is not entitled to First Amendment protection, that speech occurred in the context of anonymous blogging activities that are entitled to such protection,” and stated that unmasking decisions should consider whether “other, non-infringing anonymous speech . . . would be chilled if [the Doe’s] identity were revealed.”[142]  The Court of Appeals sent the case back on remand for a decision on unmasking in accordance with its holding and the balancing test it articulated.  Judge Suhrheinrich filed a dissenting opinion, stating that an infringer should not be entitled to anonymity generally—”Doe should not be shielded from the consequences of his own actions, since he could have preserved his right to speak freely and anonymously by simply refraining from copyright infringement.”[143] 4.     Hollywood Continues Its Judicial Assault on Piracy In 2017, content owners and creators continued to band together to pursue online piracy via lawsuits, a tactic that has seen judicial success in recent years.  And in June 2017, a group of thirty studios, television networks, and online gaming companies announced the formation of a new trade organization to fight online piracy, The Alliance for Creativity and Entertainment (“ACE”), signaling a commitment to pursue copyright infringers in the years to come.[144] a.     Time’s Up for TickBox TV? ACE’s first lawsuit was filed in October 2017, on behalf of studios (Universal, Columbia, Disney, Twentieth Century Fox, Paramount, Warner Brothers) and streamers (Amazon, Netflix) against TickBox TV, a Georgia-based company that sells set-top boxes it markets as providing free streaming content to users, but that the studios and streamers claim facilitates piracy.[145]  According to the lawsuit, TickBox’s website claims that users can “plug the TickBox TV into your current television and enjoy unlimited access to all the hottest TV shows, Hollywood blockbusters and live sporting events in one convenient little device … absolutely free.”[146]  If that sounds too good to be true, the studios and streamers would agree.  TickBox TV operates using an open-source software called Kodi, which, along with available add-ons, allows users to search the internet for and watch non-licensed versions of films and shows, including those that are allegedly not available on SVOD platforms. The lawsuit asserts that TickBox is secondarily liable for its users’ acts of infringement on a theory that TickBox intentionally induced the infringement or otherwise engaged in contributory infringement.[147] Set-top box piracy is becoming increasingly problematic for Hollywood, as companies continue to offer consumers a purported ability to purchase unlicensed, pre-loaded set-top boxes.[148]  Last year, a man in the United Kingdom was sentenced to four years in prison for selling set-top boxes “modified for copyright theft.”[149]  The seriousness of this threat, many explain, is that “it is less cumbersome than traditional pirate sites … [it] tends to attract older users and families … [and i]t even looks more legitimate.”[150] 5.     A Fairly Active Fair Use Docket a.     VidAngel’s Wings Get Clipped In August 2017, movie studios won a victory at the Ninth Circuit over VidAngel, a service launched in 2014 that takes DVDs sold by the studios, copies the content, and then sells consumers the ability to edit out purportedly objectionable material, such as violence or nudity.  In December 2016, the studios won a preliminary injunction shutting down VidAngel, after a California federal judge found that plaintiffs had established a likelihood of success in showing that VidAngel was engaged in copyright infringement and violating the DMCA’s ban on the circumvention of digital encryption measures.[151]  Though VidAngel requires the user to purchase a physical DVD, Judge Andre Birotte found the service still illegally bypassed locks on the disc in order to upload it and stream it to those users: “The purchase of a DVD only conveys the authority to view the DVD, not to decrypt it.”[152]  After VidAngel’s motion to the Ninth Circuit for an emergency stay pending appeal of the preliminary injunction was denied,[153] the Ninth Circuit held oral argument in June 2017.[154] On August 24, 2017, the Ninth Circuit issued its decision against VidAngel.[155]  First, the panel held that VidAngel could not claim the protections of the Family Home Movie Act, as it “would create a giant loophole in copyright law, sanctioning infringement so long as it filters some content and a copy of the work was lawfully purchased at some point.”[156]  The panel thought it was “quite unlikely that Congress contemplated such a result.”[157]  Rather, the statute was enacted to let people edit objectionable content, but only to “authorized” copies.  VidAngel, in contrast, operates by streaming from a copy it ripped from a DVD, which constitutes unlawful copying.[158] Second, the panel rejected VidAngel’s claim that its service amounts to a fair use, upholding the district court’s finding that VidAngel’s use was not transformative:  VidAngel “does not add anything to Plaintiff’s works,”[159] it simply “retransmit[s] [the original work] in a different medium.”[160]  The panel put it in universal terms: “Star Wars is still Star Wars, even without Princess Leia’s bikini scene.”[161]  Finally, the panel upheld the district court’s ruling that VidAngel violated the DMCA’s protections for digital encryption when it ripped the movies to its servers.[162]  A few months after this ruling, VidAngel filed for bankruptcy in Utah.[163] b.     What is Art? What is Infringement?: Graham v. Prince In our 2016 Year-End Update, we wrote about a then-newly filed copyright suit against the famous appropriation artist Richard Prince.  This year, a federal court in New York rejected Prince’s request to dismiss the suit over an exhibit of photos he pulled from Instagram without permission, saying it was too early to decide if the works were protected by the fair use doctrine.[164]  Prince had been sued for his work “Rastafarian Smoking a Joint”—part of an installation that consisted of screenshots of Instagram posts that Prince had commented on using his account “richardprince4” and then enlarged.[165]  Prince moved for a ruling that the exhibit was protected by fair use, arguing that the case was an attempt to relitigate the principles of a landmark 2013 fair use ruling from the Second Circuit that Prince had won.[166] In the pending case, Graham v. Prince, Judge Sidney H. Stein found the issue of fair use too complex to be answered at the motion to dismiss stage.[167]  But the judge did note that, at this early stage, the fair use factors did not favor Prince:  Prince had copied “the entirety of Graham’s photograph” and did so “without significant aesthetic alterations,” all for “a distinctly commercial purpose” that would usurp the primary market for the original photo—all strikes against a finding of fair use.[168] c.     Can Classics Be Adapted to Children’s Books? In September 2017, a court ruled that “children’s versions” of classic books still under copyright protection like The Old Man and the Sea were not protected by the fair use doctrine.[169]  In the case, Penguin Random House LLC v. Colting, the author claimed his “KinderGuides” to the novels of Ernest Hemingway, Jack Kerouac, and other iconic authors transformed the classic works enough to count as fair use, likening them to Cliffs Notes for kids, while the authors’ estates and publishers disagreed, claiming the books brazenly violated the copyrights to the classic novels.[170]  Judge Rakoff agreed with the plaintiffs, holding that Colting’s books were infringing derivatives: “Fair use [] is not a jacket to be worn over an otherwise infringing outfit.”[171]  That Colting “tack[ed] on” a few pages of commentary does not provide “safe harbor for an otherwise infringing work.”[172]  The Judge went so far as to say that Colting only included the commentary in hopes that fair use would legalize a line of “clearly infringing” books.[173] 6.      The “Monkey Selfie” Settlement To the chagrin of legal reporters and punning headline writers everywhere, in September 2017, People for the Ethical Treatment of Animals (PETA) and the photographer David Slater reached a settlement to end a highly publicized lawsuit over PETA’s claim that a crested macaque was entitled to copyright protection for a “monkey selfie.”[174]  While the case was pending at the Ninth Circuit, and following oral argument, the parties announced the resolution of the case, and therefore the Court of Appeals will not issue a ruling at the center of a bizarre suit asking whether Naruto, the primate that snapped the viral image, has standing to file a copyright lawsuit in court. PETA filed the publicity garnering suit in 2015 against Slater, whose camera Naruto used to snap the image.[175]  The suit claimed that the monkey had the same rights in the photo as any human would, and that Slater had infringed them by publishing a book centered on the now-famous image.[176]  In January 2016, a district judge held that Naruto—again, a primate—did not have standing, and that there was simply no indication that Congress intended to give animals standing to sue for copyright infringement.[177]  PETA appealed the decision to the Ninth Circuit, where it was met with a skeptical panel at oral argument in July.  Under the terms of the settlement, PETA agreed to dismiss the infringement claims in return for Slater contributing 25% of future proceeds from the “selfie” toward conservation-related charities.[178] 7.     The Audio Home Recording Act Hits the Road In 2014, a music industry group, the Alliance of Artists and Recording Companies, brought suit against General Motors, Ford, and other car manufacturers over the use of copyright-protected works in in-car entertainment systems.  On October 24, 2017, during a hearing on cross motions for summary judgment, the federal judge presiding over the case expressed skepticism that the systems qualify as digital recording devices under the law.[179]  The group’s lawsuit alleges that the car companies sold vehicles with music and navigation systems that record songs, but that they had not paid royalties to artists.[180]  Whether the systems qualify as “digital audio recording devices” under the 1992 Audio Home Recording Act turns on the question of whether they create “digital music recordings,” as required by the Act.[181]  The Act defines a digital music recording as a “material object,” such as a compact disk or audio tape, that contains “only sounds, and material, statements, or instructions incidental to those fixed sounds.”[182]  Defendants argued that the cars’ internal hard drives do not meet that definition because they contain GPS systems and other programs unrelated to music.[183]  In response, plaintiff argued that a specific physical portion of the hard drive known as the “partition” satisfies the criteria for a digital music recording, and therefore opens the car companies up to copyright royalty liability under the AHRA.[184]  During the October 24 hearing, Judge Ketanji Brown Jackson was described as appearing unconvinced by the plaintiff’s arguments about the physical construction of the hard drive, and an opinion is expected in the coming months.[185] D.     Trademark Litigation 1.     CGI and Nominative Fair Use In July 2017, Rearden LLC, a computer-generated imagery (CGI) software company, accused The Walt Disney Co. of using its intellectual property to animate characters in some of its highest-grossing productions of the last few years, as well as to advertise and promote the films.[186]  Rearden alleges that it owns registered trademarks, copyrights, and patents that are embodied in its Oscar-winning visual effects technology called MOVA Contour Reality Capture.  Rearden claims that Disney knowingly contracted with parties who stole and falsely claimed ownership of the MOVA system and related IP assets to create film productions such as Beauty and the Beast and Guardians of the Galaxy.  Rearden separately pursued relief against the company providing these services, a Chinese company called Shenzhenshi Haitiecheng Science and Technology. In the lawsuits against Disney and the other studios, Rearden claims they knowingly used an unauthorized version of the MOVA software.  The studio defendants have moved to dismiss the claims, arguing that none of the alleged uses of the “MOVA” mark in press interviews, “featurette” material, or in movie credits constitutes infringement.[187]  They argue that “Rearden’s various trademark allegations fail for several reasons: in some cases, the marks are not even used; in others, the alleged use was by a third party; in others, the use plainly constitutes nominative fair use.”[188]  Relying on New Kids on the Block v. News Am. Pub’g, Inc., 971 F.2d 302, 308 (9th Cir. 1992), the studios argue that the use of “MOVA”—to describe the technology that captured actors’ facial performances, to describe a company (not a technology) in film credits, and to describe visual effects artists—meets the requirements for the nominative fair use affirmative defense, which allows use of another’s trademark as a descriptor or identifier when meeting the Ninth Circuit’s test in New Kids.[189]  As of the date of this writing, the court has yet to decide this motion to dismiss. 2.     EMPIRE Strikes Back: Ninth Circuit Holds Show’s Name Is Non-Infringing On November 16, 2017, a Ninth Circuit panel affirmed summary judgment in favor of Twentieth Century Fox Television and Fox Broadcasting Company for the use of the name “Empire” as protected by the First Amendment.[190]  A federal court in the Central District of California had applied the test derived from Rogers v. Grimaldi[191] to determine whether the protection of the trademark held by a music recording and publishing company—Empire Distribution—should give way to expressive speech protected by the First Amendment.[192]  Under the Rogers test, an artistic work’s use of a trademark is not actionable unless (1) the use has no artistic relevance to the underlying work whatsoever, or (2) it explicitly misleads as to the source or the content of the work if it has some artistic relevance.[193]  The district court held (1) that Fox’s “Empire” television series, which tells the fictional story of a feuding entertainment industry family in New York, made an artistically relevant use of the word “Empire” for its expressive work and (2) that Fox has not explicitly misled consumers about its affiliation with Empire Distribution. The Ninth Circuit upheld the lower court’s use of the Rogers test to determine whether the Lanham Act applies, and concluded that both prongs of the test were satisfied.  Judge Milan Smith explained “how a work fails the first prong of the Rogers test” is that it “bear[s] a title which has no artistic relevance to the work.”[194]  Judge Smith drew a contrast between ways courts had applied the first prong of the test in prior cases.  In one earlier action brought by Mattel over the song “Barbie Girl,” Judge Smith noted that the court had found the title to be artistically relevant, as the song was commenting on materialism associated with the doll.  In contrast, Judge Smith pointed to a case concerning Outkast’s song “Rosa Parks,” where the court found a title not to be artistically relevant, because the composers did not intend the song to be about Parks.  Ninth Circuit subsequently denied Empire Distribution’s petition for panel rehearing and rehearing en banc. 3.     No Fair Use for Trekkie-Seuss Book ComicMix LLC created a book entitled Oh, the Places You’ll Boldly Go! that combines creative elements from the Star Trek science-fiction franchise with the underlying Dr. Seuss classic Oh, the Places You’ll Go! (OTPYG).  Dr. Seuss Enterprises brought a trademark, copyright infringement and unfair competition action against ComicMix for the unauthorized exploitation of Dr. Seuss’s works.[195]  Dr. Seuss Enterprises alleges that the new book misappropriates key protected elements of OTPYG, including its trademarks. On December 7, 2017, the district court denied ComicMix’s motion to dismiss the amended complaint on the basis that the book is protected by fair use and nominative fair use doctrines.[196]  As to the trademarks at issue, the court held the Seuss book’s title is protected under section 43(a) of the Lanham Act, declined to determine whether trademark rights may be claimed in the fonts used in the Dr. Seuss book, and found that the general illustration style is not protectable.  Applying the nominative fair use analysis in a narrowed inquiry involving only the OTPYG title, the court found that ComicMix was not able to satisfy each factor of the defense.  In particular, the Court concluded that the Trekkie book is not protected because, even though Dr. Seuss’s work is not readily identifiable without the use of the trademark, ComicMix’s use of the mark—incorporating all of the words and even the look of the lettering—is more than reasonably necessary to identify the Dr. Seuss work as the object of the parody. 4.     Federal Circuit Finds Ban on “Scandalous and Immoral” Trademarks Unconstitutional In December 2017, the Federal Circuit held that the Lanham Act’s ban on “scandalous and immoral” trademarks is unconstitutional,[197] just months after the Supreme Court unanimously held in Matal v. Tam, 137 S.Ct. 1744 (2017), that the statute’s ban on “disparaging” marks was a facially unconstitutional restriction on speech.  The government attempted to distinguish Tam by arguing the scandalous and immoral ban is viewpoint neutral, but Judge Moore, who wrote the Federal Circuit’s original decision that was upheld in Tam, rejected the distinction. The case concerned a registrant’s request to trademark the name of his clothing brand entitled “FUCT.”[198]  The U.S. Patent and Trademark Office (“USPTO”) refused to register the mark on the ground that it amounts to the past tense of a vulgar word, and therefore concerns scandalous matters.[199]  The Trademark Trial and Appeal Board (the “Board”) affirmed.  The registrant appealed to the Federal Circuit, arguing (1) that the USPTO erred in concluding the mark comprises immoral or scandalous matter, and (2) whether the ban on registering immoral or scandalous marks is a constitutional restriction of free speech. The Federal Circuit first affirmed the Board’s decision that there was substantial evidence supporting the USPTO’s finding that the mark “FUCT” is vulgar and not registrable.[200]  They concluded that there was “no definition of scandalous, that in light of the PTO’s fact findings, would exempt [the registrant’s] mark.”[201] Second, the Federal Circuit determined that, “[i]ndependent of whether the immoral or scandalous provision is viewpoint discriminatory,” “the provision impermissibly discriminates based on content in violation of the First Amendment.”[202]  The court rejected the government’s argument that the federal trademark registration program amounted to a limited public forum, subjecting the Lanham Act’s content-based restriction on marks comprising immoral or scandalous matter to a less demanding degree of scrutiny.[203]  The Federal Circuit explained that “[b]ecause trademarks are by definition used in commerce, the trademark registration program bears no resemblance to [] limited public forums.”  The court further noted that “[t]he speech that flows from trademark registration is not tethered to a public school, federal workplace, or any other government property.”[204] Because the prohibition on the registration of immoral or scandalous trademarks targets the expressive content of speech, the Federal Circuit found it to be subject to strict scrutiny.[205]  The Federal Circuit concluded by stating that “[t]he First Amendment . . .  protects private expression, even private expression which is offensive to a substantial composite of the general public.”[206] E.     1st Amendment Litigation 1.     Defamation: ABC Settles “Pink Slime” Case On June 28, 2017, in the midst of trial, meat producer Beef Products, Inc. settled claims it brought against ABC News in South Dakota for defamation over reports about a processed lean beef product dubbed “pink slime.”[207]  In 2012, ABC News correspondent Jim Avila reported that questions had been raised about the safety of the product.  ABC News ultimately repeated the term “pink slime” over 350 times across six different media platforms, which Beef Products, Inc. claimed was a turn-off to consumers.  Following the reports, sales allegedly fell nearly 80%, and the South Dakota company closed three plants and laid off 700 workers.  The company sought $1.9 billion in actual damages, and an award of up to $5.7 billion under South Dakota law.[208] ABC News argued throughout the suit that its reports were accurate and that it was entitled to protection under the First Amendment’s free speech and free press clauses.  Beef Products, Inc. denied the accuracy of the reports, and asserted that the damage done by false reporting by a news outlet with such a widespread reach was particularly devastating to its business.[209]  The case reportedly settled for $177 million.  In a statement released following the settlement, ABC News said that it decided to settle because “continued litigation of this case is not in the company’s interests.”[210]  It did not retract or apologize for the reports, and continued to affirm their accuracy.  Although the settlement of the suit means that it will not set precedent for future defamation claims, the case nonetheless highlights the risks in the current legal landscape surrounding reporting, particularly reporting regarding substantial commercial interests. 2.     “Libel in Fiction”: Greene v. Paramount Pictures On February 18, 2014, relying on a little known subspecies of defamation law referred to as “libel in fiction,” the former general counsel at the now infamous brokerage firm Stratton Oakmont sued the producers of the movie The Wolf of Wall Street for publishing allegedly defamatory statements about him.[211]  In particular, Andrew Greene claims that the character of Nicky Koskoff was based on him, and that the defendants—Paramount Pictures, Red Granite, Martin Scorsese’s Sikelia Productions, and Leonardo DiCaprio’s Appian Way—acted with “actual malice” in making the false statements, via their depiction of Koskoff, that Greene was responsible for Stratton Oakmont’s illegal acts and that he engaged in illicit drug use and sexual misconduct.[212] Because Greene is alleging libel in fiction, he must show that the Koskoff character can reasonably be understood by viewers of the film to be a depiction of him.  In an October 13, 2017 letter to the Court requesting a pre-motion conference, defendants argued that this could not possibly be the case because the film used a fictional name and the character was actually based on a composite of other individuals who worked at Stratton Oakmont.[213]  Defendants also assert that Greene cannot meet his burden to show the statements in the film were false, pointing to evidence that Greene in fact engaged in drug use, sexual misconduct, and was a co-conspirator in the company’s money laundering scheme and other illicit activities.[214]  Finally, defendants contend that Greene cannot demonstrate actual malice—i.e., knowledge of falsity or reckless disregard for the truth:  “Defendants believed that the statements about Nicky Koskoff could not be ‘false’ because they were of and concerning a fictional character named Nicky Koskoff, and no reasonable viewer would believe that Koskoff was really Greene.”[215]  The Court has set a briefing schedule and an order should be issued in the coming months.[216] 3.     Right of Publicity: Montel Williams v. Advanceable Technology, LLC Former Emmy-winning talk show host turned medical marijuana advocate Montel Williams has filed suit against several medical marijuana retailers, alleging that they unlawfully used his name, image, reputation, identity, and persona in “fake news or blog posts” promoting their nonmedical cannabidiol oils.[217] The complaint alleges the following facts: Williams was diagnosed with multiple sclerosis in 2000.[218]  After finding prescription medications to be ineffective at treating his symptoms, Williams tried medical marijuana at the urging of his doctor.[219]  He allegedly found the products so effective that he thereafter became an advocate for medical cannabis reform law and founded his own company that produces medical marijuana products.[220]  In an April 20, 2017 Forbes article, however, Williams “warned about medical cannabis companies that ‘don’t do the research’ and whose products you would not call medicine.”  According to the complaint, a number of those very same companies allegedly used Williams’ name and identity in online marketing schemes to sell their products, copying content from the Forbes article and even adding “completely fabricated quotes and content that they attribute to Williams, which content falsely indicates that Williams is affiliated with and endorses Defendants’ Infringing Products.”[221] Williams asserted claims for, amongst other things, violation of the right of publicity and right of privacy under Florida law and violation of the common law right of publicity, arguing that the retailers have damaged his reputation by using his name and likeness for commercial gain.[222]  Williams has thus far been granted limited third party discovery for the purpose of determining the identities of unknown defendants who participated in the purportedly unlawful acts.[223] 4.     Right of Publicity: Can Using a Voice Double Give Rise to Liability? On October 18, 2017, the California Court of Appeal affirmed a trial court’s order partially granting an anti-SLAPP motion against the actress Paz de la Huerta.[224]  De la Huerta was hit by a moving ambulance while performing a stunt during the filming of the movie Nurse 3D.[225]  In post-production, de la Huerta recorded 27 off-screen voiceover narration parts, but those parts were later re-recorded using a voice double without her knowledge.[226]  In 2014, de la Huerta filed suit against Lions Gate Entertainment and individuals involved in the filming, alleging a number of claims related to both her injury and the voice dubbing, including claims for breach of contract, common law and statutory right to publicity, and trademark infringement.  De la Huerta’s central complaint as to the voice dubbing was that the voice double’s performance was “inferior” to her own and that viewers mistakenly attributed those aspects of the performance to her.[227]  The trial court granted the defendants’ anti-SLAPP motion with respect to de la Huerta’s dubbing claims. Under the anti-SLAPP statute, a cause of action arising from the constitutionally protected right of free speech may be stricken unless the plaintiff can demonstrate that she is likely to prevail on the merits of her claims.[228]  Here, the Court of Appeal held that the dubbing of plaintiff’s voice was a “protected artistic activity.”[229]  Specifically, the Court held that de la Huerta’s claims “arise from the decision to use a voice double to rerecord lines originally read by a well-known lead actress in a widely reviewed film.  That is a creative decision implicating a matter of public interest and hence within the scope of the anti-SLAPP statute.”[230]  The Court thereafter determined that de la Huerta had failed to establish a likelihood of success on any of her dubbing claims.  Notably, the Court held that de la Huerta’s right of publicity claim—in which she asserted that defendants had misappropriated her name or voice, or misused her persona, when they distributed the film after using a voice double—would necessarily fail, as defendants did not use de la Huerta’s name or voice independently of her performance in the film, and she had expressly consented to the use of her name or likeness in relation to the film.[231] The Court of Appeal also affirmed the sustaining of defendants’ demurrer to de la Huerta’s claims related to her stunt injuries, thereby affirming the disposal of the case in its entirety.[232] F.     Music Litigation 1.     Mechanical Royalty Rate to Remain Unchanged On March 28, 2017, the Copyright Royalty Board adopted a final rule that sets continued, unaltered rates and terms for statutory licenses to use and distribute physical recordings and permanent digital downloads (“Mechanical Licenses”) under subpart A of 37 C.F.R. 385.[233]  The mechanical royalty rate, which is 9.1 cents for recordings of five minutes or less and 1.75 cents per minute of those over five minutes, was first set on January 1, 2006.[234]  The Copyright Royalty Board noted that, although the originally proposed rule limited the rates to a time period ending in 2022, the rule as adopted will remain in effect until superseded by a subsequent rulemaking. 2.     Streaming Drives Music Consumption Growth as Lawsuits Continue to Flow Music streaming continued to see big growth in 2017, with over 618 billion on-demand streams throughout the year, an increase of 43 percent from 2016.[235]  Overall, music consumption was up 12.5 percent in 2017, with streaming a big driver of that growth.[236]  That growth has come with litigation pains, and mechanical royalties have been the subject of much litigation over the past year. In May, Spotify proposed a $43 million settlement in a class action lawsuit brought by singer-songwriter Melissa Ferrick, who had alleged that the streaming service infringed thousands of songwriters’ copyrights rather than follow the proper procedures to obtain mechanical royalties.  After attorney fees, $28.7 million of that settlement figure is proposed to compensate songwriters and publishers.[237]  Hundreds of musicians and music publishers have objected to the proposal,[238] and the Court held a fairness hearing on December 1, 2017, but has yet to approve the proposed settlement. In July 2017, two separate lawsuits were filed in Nashville against Spotify, each alleging that the streamer had not obtained necessary licenses:  one was filed by Bluewater Music, an independent publisher and copyright administration company, and the other by Robert Gaudio and his musical group Frankie Valli and the Four Seasons, among other plaintiffs.[239]  In response, Spotify has argued that music streams should be considered akin to public performances such that streamers need not obtain mechanical licenses from music publishers.[240] Most recently, on December 29, 2017, Wixen Music publishing—which licenses music from artists including Tom Petty, Neil Young, the Beach Boys, and Janis Joplin—sued Spotify in California, seeking damages of $1.6 billion, alleging that Spotify has been streaming works without the correct license.[241]  That same day, Spotify filed court papers questioning whether Wixen’s clients had authorized Wixen to take legal action against Spotify, arguing that it had given its clients only a brief opt-out period before their names would be included in the lawsuit.[242]  Wixen admitted that it filed its suit before the end of the year due to the introduction in the House of Representatives of the bi-partisan sponsored Music Modernization Act, which would protect streamers against such suits.[243] In other Spotify news, it was reported on January 3, 2018 that the company had filed papers with the SEC for its long-rumored IPO.[244] 3.     Do “Players Playing” + “Haters Hating” = Copyright Infringement? On September 18, 2017, Sean Hall and Nathan Butler sued Taylor Swift, among others, alleging that Swift’s hit song “Shake it Off” infringes plaintiffs’ copyright in the 2001 song “Playas Gon’ Play” by the group 3LW, which Hall and Butler co-authored.[245]  Specifically, Hall and Butler’s song includes the lyrics “Playas, they gonna play / And haters, they gonna hate,” which they allege are embodied in Swift’s lyrics “Cause the players gonna play, play, play, play, play and the haters gonna hate, hate, hate, hate, hate.”[246]  The complaint attempts to establish that it was the industry norm for Swift to have cleared her lyrics with Hall and Butler, citing several instances where artists have cleared the use of lyrics that are similar to, but not verbatim, songs by other artists.[247] On January 3, 2018, Swift and co-defendants moved to dismiss, arguing “there is no copyright protection in plaintiffs’ alleged decision to combine players playing with haters hating,” because the combined phrases are public domain elements.[248]  The Central District of California dismissed similar allegations against Swift in 2015 after screening the complaint in forma pauperis of Jessie Braham, who alleged that Swift infringed his song “Haters Gone Hate.”[249] 4.     Ticketmaster Acquires Songkick in Settlement of Antitrust Suit In December 2015, Songkick sued Ticketmaster and Live Nation, accusing them of antitrust violations in the market for live-concert ticket sales.  Songkick, which recently shut down its ticketing business, citing pressure from the defendants,[250] was in the business of “artist presale” ticketing, in which artists sell (typically at a reduced price) a reserved portion of concert tickets to dedicated fans in advance of general ticket sales.[251]  Songkick alleges that Ticketmaster and Live Nation, which merged in 2010, used their control of the majority of the concert ticket-sales market via exclusive contracts with venues, to prevent other parties like Songkick from engaging in “artist presale” ticketing.[252] On October 16, 2017, the court denied defendants’ motion for summary judgment, finding numerous material factual disputes in what it described as “an enormous gulf” between the proposed inferences from the known facts, but noting that “[t]here is no question that there is a restraint of trade involved.”[253]  Noting that the “[d]efendants certainly have potentially meritorious defenses,” the court nonetheless found that the case could not be resolved by summary judgment.[254]  With a trial date looming, on January 12, 2018, Songkick and Ticketmaster announced that they had reached a settlement in which Ticketmaster will pay $110 million to acquire Songkick’s assets.[255] 5.     Fractional Licensing: Consent Decree No Bar to BMI and ASCAP On December 19, 2017, the Court of Appeals for the Second Circuit affirmed that consent decrees that have been in place since 1941 do not prevent Broadcast Music Inc. (BMI) and the American Society of Composers, Authors and Publishers (ASCAP) from granting fractional licenses or from licensing works in which BMI and ASCAP do not have the authority to grant full rights—such as when a work has multiple authors.[256]  The United States District Court for the Southern District of New York ruled in favor of BMI last year, deciding that the consent decrees were silent as to fractional licensing.[257]  The Second Circuit agreed, finding that the “appeal begins and ends with the language of the consent decree.”[258]  The court also rejected the DOJ’s argument that allowing fractional licenses undermines the procompetitive objectives of the consent decree, finding that the government should seek to amend the decree or sue under the Sherman Act if it finds there are “unresolved competitive concerns.”[259]  BMI President Mike O’Neill praised the decision, stating that BMI is “incredibly gratified that Judge (Louis) Stanton and the Second Circuit agreed with [their] position.”[260]    [1]   Dana Feldman, What the Disney-Fox Merger Means for Consumers, Forbes (Dec. 15, 2017), https://www.forbes.com/sites/danafeldman/2017/12/15/what-the-disney-fox-52-4b-merger-means-to-the-consumer/#4c204cd317c8.    [2]   Benjamin Horney, Disney Buys 21st Century Fox Assets in $52.4B Blockbuster, Law360 (Dec. 14, 2017), https://www.law360.com/articles/994773.    [3]   Press Release, Discovery Communications (July 31, 2017), https://corporate.discovery.com/wp-content/uploads/2017/07/Final-Infographic.pdf.    [4]   Brian Fung, The Justice Department is Suing AT&T to Block its $85 Billion Bid for Time Warner, The Washington Post (Nov. 20, 2017), https://www.washingtonpost.com/news/the-switch/wp/2017/11/20/the-justice-department-just-sued-att-to-block-its-85-billion-bid-for-time-warner/.    [5]   Hadas Gold, Judge Sets March 19 trial date for AT&T, Time Warner case, CNN (Dec. 7, 2017), http://money.cnn.com/2017/12/07/media/doj-att-trial-date/index.html.    [6]   Press Release, Meredith Corporation, Meredith Corporation To Acquire Time Inc. to Create Premier Media and Marketing Company Serving Nearly 200 Million American Consumers (Nov. 26, 2017), https://ir.meredith.com/news-releases/press-release-details/2017/Meredith-Corporation-To-Acquire-Time-Inc-To-Create-Premier-Media-And-Marketing-Company-Serving-Nearly-200-Million-American-Consumers/default.aspx.    [7]   Id.    [8]   Variety Staff, Penske Media, Wenner Media Invest in Rolling Stone at $100 Million-Plus Valuation, Variety (Dec. 20, 2017), http://variety.com/2017/biz/news/penske-media-buys-majority-stake-in-rolling-stone-owner-wenner-media-for-over-100-million-1202646580/.    [9]   Patrick Brzeski, Netflix Signs Licensing Deal with China’s iQiyi, The Hollywood Rep. (Apr. 24, 2017), http://www.hollywoodreporter.com/news/netflix-signs-licensing-deal-chinas-iqiyi-997071. [10]   Elsa Keslassy, Netflix Renews and Expands International Deal With Orange, Variety (Sept. 14, 2017), http://variety.com/2017/digital/news/netflix-orange-1202558781/. [11]   Id. [12]   Id. [13]   Elsa Keslassy, Netflix, Deutsche Telekom Ink Global Partnership, Variety (Nov. 23, 2017), http://variety.com/2017/film/global/netflix-deutsche-telekom-ink-global-partnership-1202622357/. [14]   Id. [15]   Aaron Hemsworth, Netflix: Growing Its Business through Innovation, Market Realist (Nov. 7, 2017), http://marketrealist.com/2017/11/local-contents-gain-european-presence-netflix/. [16]   Id. [17]   Mac Margolis, Netflix Woos Latin American Viewers by Going Local, Bloomberg (Aug. 11, 2017), https://www.bloomberg.com/view/articles/2017-08-11/netflix-woos-latin-american-viewers-by-going-local. [18]   Denise Petski, Netflix Greenlights Colombian Original Series From ‘Narcos’ Producer, Deadline (Nov. 22, 2017), http://deadline.com/2017/11/netflix-colombian-original-series-narcos-producer-ciro-guerra-1202213839/. [19]   Manual Bentancourt, Netflix is Releasing 10 Argentine Series, Including a Musical Teen Novela, Remezcla (Nov. 29, 2017), http://remezcla.com/film/netflix-expanded-slate-argentine-productions/. [20]   Joe Otterson, ‘Walking Dead’ Creator Robert Kirkman Sets New Deal with Amazon, Variety (Aug. 11, 2017), http://variety.com/2017/tv/news/robert-kirkman-skybound-entertainment-amazon-1202523592/. [21]   Id. [22]   Todd Spangler, Apple TV Adds Amazon Prime Video After Years of Haggling, Variety (Dec. 6, 2017), http://variety.com/2017/digital/news/apple-tv-amazon-prime-video-launch-1202631975/. [23]   Id. [24]   Peter White, Hulu Strikes Foreign-Language TV Deal with Studiocanal, Deadline (Nov. 27, 2017), http://deadline.com/2017/11/hulu-studiocanal-deal-1202214791/. [25]   Lucas Shaw, Disney’s Deal With Fox Could Solve Hulu’s Ownership Headache, Bloomberg (Dec. 14, 2017), https://www.bloomberg.com/news/articles/2017-12-14/disney-s-deal-with-fox-could-solve-hulu-s-ownership-headache. [26]   Jacob Kastrenakes, Disney to End Netflix Deal and Launch Its Own Streaming Service, The Verge (Aug. 8, 2017), https://www.theverge.com/2017/8/8/16115254/disney-launching-streaming-service-ending-netflix-deal. [27]   Id. [28]   Brooks Barnes, How Disney Wants to Take on Netflix With Its Own Streaming Services, N.Y. Times (Aug. 8, 2017), https://www.nytimes.com/2017/08/08/business/media/disney-streaming-service.html. [29]   Chad Bray, Iflix Video-Streaming Service Secures $144 Million in Funding, N.Y. Times (Aug. 7, 2017), https://www.nytimes.com/2017/08/07/business/dealbook/iflix-streaming-hearst-netflix.html. [30]   Id. [31]   Id. [32]   Id. [33]   Sara Hsu, China’s New Capital Controls Expected to Slow Real Estate, But Improve Country’s Economic Health, Forbes (Aug. 28, 2017), https://www.forbes.com/sites/sarahsu/2017/08/28/chinas-new-capital-controls-expected-to-slow-real-estate-but-improve-countrys-economic-health/#13398af166fd. [34]   Ryan Faughnder & James Rufus Koren, As China Cools on Hollywood, the Movie Business Looks Close to Home for Money, L.A. Times (Nov. 12, 2017), http://beta.latimes.com/business/hollywood/la-fi-ct-china-hollywood-foreign-investment-20171112-htmlstory.html. [35]   Id. [36]   Brent Lang, Paramount Loses Slate Financing Deal with China’s Huahua, Variety (Nov. 7, 2017), http://variety.com/2017/film/news/paramount-china-huahua-1202609480/. [37]   Meg James & Ryan Faughnder, Paramount Pictures loses Huahua Media slate film financing deal, L.A. Times (Nov. 7, 2017), http://beta.latimes.com/business/hollywood/la-fi-ct-paramount-huahua-film-financing-20171107-story.html. [38]   Id. [39]   Lang, supra note 37. [40]   Patrick Frater, China’s Recon Abandons Millennium Takeover Deal, Variety (Aug. 30 2017), http://variety.com/2017/biz/asia/chinas-recon-abandons-millennium-takeover-deal-1202543634/. [41]   Patrick Brzeski, Chinese Investors Unload Stakes in Wanda’s Legendary Entertainment, The Hollywood Rep. (Sept. 27, 2017), https://www.hollywoodreporter.com/news/chinese-investors-unload-stakes-wandas-legendary-entertainment-1043522. [42]   Arjun Kharpal, China’s Tencent surpasses Facebook in valuation a day after breaking $500 billion barrier, CNBC (Nov. 21, 2017), https://www.cnbc.com/2017/11/21/tencent-surpasses-facebook-in-valuation.html. [43]   Id. [44]   Id. [45]   Meghan Reeder, Tesla Deals Boosts Chinese Presence in US Auto Tech, CNBC (Mar. 28, 2017), https://www.cnbc.com/2017/03/28/messaging-app-parent-tencent-takes-stake-in-tesla.html. [46]   Samantha Masunaga and David Pierson, What will Tencent get out of its 12% stake in Snap Inc.?, L.A. Times (Nov. 8, 2017), http://beta.latimes.com/business/technology/la-fi-tn-tencent-snap-20171108-story.html. [47]   Id. [48]   Todd Spangler, Snap, NBCUniversal Form Studio Joint Venture, Tap Duplass Brothers for Original Shows, Variety (Oct. 16, 2017), http://variety.com/2017/digital/news/snap-nbcuniversal-studio-venture-duplass-brothers-shows-1202591040/. [49]   Id.; see also Stephen Battaglio, NBCUniversal and Snap Form a New Venture to Produce Scripted Shows for Mobile Users, L.A. Times (Oct. 17, 2017), http://www.latimes.com/business/hollywood/la-fi-ct-snap-nbc-20171017-story.html. [50]   Spangler, supra note 49. [51]   Billboard Staff, Royalty Flow Launches IPO, Offering Fans a Slice of Eminem Royalties, Billboard (Nov. 27, 2017), https://www.billboard.com/articles/business/8046992/royalty-flow-ipo-eminem-royalties-nasdaq. [52]   Id. [53]   Id. [54]   Zachary Zagger, 5 Esports Issues Attorneys Should Watch, Law360 (July 20, 2017), https://www.law360.com/media/articles/946025/5-esports-issues-attorneys-should-watch. [55]   Id. [56]   Id.; Sabiq Shah, Overwatch’s Highest-Paid Pro Lands $150,000 Salary Deal, Engadget (Sept. 4, 2017), https://www.engadget.com/2017/09/04/overwatch-s-highest-paid-pro-lands-150-000-salary-deal/. [57]   Press Release, Activision Blizzard, The Overwatch League Partners With Sports, eSports Leaders to Build Teams for Major Cities Worldwide, (July 12, 2017), http://investor.activision.com/releasedetail.cfm?releaseid=1032873. [58]   Jacob Wolf, Jerry Jones, John Goff Buy Majority Stake in compLexity Gaming, ESPN (Nov. 6, 2017), http://www.espn.com/esports/story/_/id/21309068/dallas-cowboys-owner-jerry-jones-john-goff-buy-majority-stake-complexity-gaming. [59]   Cecilia Kang, F.C.C. Repeals Net Neutrality Rules, N.Y. Times (Dec. 14, 2017), https://www.nytimes.com/2017/12/14/technology/net-neutrality-repeal-vote.html. [60]   Keith Collins, Why Net Neutrality Was Repealed and How It Affected You, N.Y. Times (Dec. 14, 2017), https://www.nytimes.com/2017/12/14/technology/net-neutrality-rules.html. [61]   Id. [62]   Cecilia Kang, F.C.C. Repeals Net Neutrality Rules, N.Y. Times (Dec. 14, 2017), https://www.nytimes.com/2017/12/14/technology/net-neutrality-repeal-vote.html. [63]   Brian Fung, The never ending battle over net neutrality is far from over.  Here’s what’s coming next., Wash. Post (Dec. 15, 2017), https://www.washingtonpost.com/news/the-switch/wp/2017/12/15/the-never-ending-battle-over-net-neutrality-is-far-from-over-heres-whats-coming-next/. [64]   Id. [65]   Cecilia Kang, Flurry of Lawsuits Filed to Fight Repeal of Net Neutrality, N.Y. Times (Jan. 16, 2018), https://www.nytimes.com/2018/01/16/technology/net-neutrality-lawsuit-attorneys-general.html. [66]   Cecilia Kang, F.C.C. Opens Door to More Consolidation in TV Business, N.Y. Times (Nov. 16, 2017), https://www.nytimes.com/2017/11/16/business/media/fcc-local-tv.html. [67]   David Shepardson, FCC to loosen TV, newspaper ownership rules, Reuters (Oct. 25, 2017), https://www.reuters.com/article/us-usa-fcc-media/fcc-to-loosen-tv-newspaper-ownership-rules-idUSKBN1CU2TD. [68]   Jodi Kantor and Megan Twohey, Harvey Weinstein Paid Off Sexual Harassment Accusers for Decades, N.Y. Times (Oct. 5, 2017), https://www.nytimes.com/2017/10/05/us/harvey-weinstein-harassment-allegations.html. [69]   E.g., Carla Herreria, Gwyneth Paltrow: Harvey Weinstein Lied About Having Sex With Me to Lure Women, Huffington Post (Dec. 5, 2017), https://www.huffingtonpost.com/entry/gwyneth-paltrow-harvey-weinstein-lied-sex_us_5a273869e4b0c2117626a8b0. [70]   Maya Salam, 6 Women Sue Harvey Weinstein and His Former Businesses in Proposed Class Action, N.Y. Times (Dec. 6, 2017), https://www.nytimes.com/2017/12/06/business/harvey-weinstein-class-action.html; Yohana Desta, Inside Harvey Weinstein’s Growing Legal Nightmare, Vanity Fair (Dec. 6, 2017), https://www.vanityfair.com/hollywood/2017/12/harvey-weinstein-lawsuits. [71]   Complaint, Huett v. The Weinstein Company, LLC, Case No. BC680869 (L.A. Super. Ct. Oct. 24, 2017) (hereinafter Huett Complaint); Complaint, Ackers v. Harvey Weinstein, Case No. BC681850 (L.A. Super Ct. Nov. 2, 2017) (hereinafter Ackers Complaint);  Complaint, Jane Doe 1 v. The Weinstein Co. Holdings, LLC, C.A. No. 17 Civ. 8323 (C.D. Cal. Nov. 15, 2017) (closed);  Complaint, Jane Doe. v. The Weinstein Co. LLC, Case No. BC683411 (L.A. Super Ct. Nov. 14, 2017) (hereinafter Jane Doe Complaint); Complaint, Geiss v. The Weinstein Co. Holdings LLC, C.A. No. 17 Civ. 9554 (S.D.N.Y. Dec. 6, 2017) (hereinafter Geiss Complaint); Complaint, Noble v. Weinstein, C.A. No. 17 Civ. 9260 (S.D.N.Y. Nov. 27, 2017) (hereinafter Noble Complaint). [72]   Huett Complaint ¶¶ 11-15, 18; Jane Doe Complaint ¶¶ 18-2, 29. [73]   Geiss Complaint ¶ 183-191. [74]   Geiss Complaint ¶ 192-218. [75]   Noble Complaint. [76]   Desta, supra note 71. [77]   E.g., Gene Maddus, Harvey Weinstein’s Former Assistant Prepping Sexual Harassment Suit, Variety (Dec. 6, 2017), http://variety.com/2017/biz/news/harvey-weinstein-assistant-erectile-dysfunction-drugs-1202631811/. [78]   Josefa Velasquez, The Weinstein Company Now Probed by AG Schneiderman, N.Y.L.J. (Oct. 23, 2017), https://www.law.com/newyorklawjournal/sites/newyorklawjournal/2017/10/23/102317ny_weinstein/. [79]   Ryan Faughnder, Harvey Weinstein Sues His Own Company for Documents To Defend Himself Against Claims of Sexual Abuse, L.A. Times (Oct. 26, 2017), http://www.latimes.com/business/hollywood/la-fi-ct-harvey-weinstein-lawsuit-20171026-story.html. [80]   Ryan Faughnder and Samantha Masunaga, Harvey Weinstein’s Company Gets A Financial Lifeline as He Faces New Criminal Probe, L.A. Times (Oct. 16, 2017), http://www.latimes.com/business/hollywood/la-fi-ct-weinstein-colony-capital-20171016-story.html. [81]   Chris Lee, Is The Weinstein Company Firing Bob Weinstein, Too?, N.Y Mag. (Oct. 29, 2017), http://www.vulture.com/2017/10/is-the-weinstein-company-firing-bob-weinstein-too.html. [82]   David Ng and Ryan Faughnder, Can Weinstein Co. Survive Without Harvey Weinstein?, L.A. Times (Oct. 9, 2017), http://www.latimes.com/business/hollywood/la-fi-ct-weinstein-future-20171010-story.html. [83]   Ryan Faughnder, Can Former SBA Head Maria Contreras-Sweet Save Weinstein Co.?, L.A. Times (Nov. 19, 2017), http://www.latimes.com/business/hollywood/la-fi-ct-weinstein-company-bidder-20171119-story.html. [84]   Powerful men confronted as “Weinstein Effect” goes global, CBS News (Nov. 14, 2017), https://www.cbsnews.com/news/harvey-weinstein-effect-goes-global-powerful-men-confronted. [85]   Fiza Pirani, From Weinstein to Lauer, A Timeline of 2017’s Sexual Harassment Scandals, Atlanta J.-Const. (Dec. 11, 2017), http://www.ajc.com/news/world/from-weinstein-lauer-timeline-2017-sexual-harassment-scandals/qBKJmUSZRJqgOzeB9yN2JK/. [86]   Victor Lipman, 3 Steps Companies Can Take to Prevent Sexual Harassment, Forbes (Nov. 6, 2017), https://www.forbes.com/sites/victorlipman/2017/11/06/3-steps-companies-can-take-to-prevent-sexual-harassment/#3f956c5c38a9. [87]   Danielle Paquette, More Companies Are Buying Insurance to Cover Executives Who Sexually Harass Employees, Chi. Trib. (Nov. 3, 2017), http://www.chicagotribune.com/business/ct-biz-companies-sexual-harrassment-insurance-20171103-story.html. [88]   Katerina Ang, A Proposed New York Law Would Ban the Use of NDAs to Silence Harassment Survivors, Moneyish (Oct. 27, 2017), https://moneyish.com/ish/a-proposed-new-york-law-would-ban-the-use-of-ndas-to-silence-harassment-survivors/. [89]   Melanie Mason, California Lawmaker Wants to Ban Secret Settlements In Sexual Harassment Cases After Weinstein Scandal, L.A. Times (Oct. 19, 2017), http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-california-lawmaker-wants-to-ban-secret-1508428198-htmlstory.html. [90]   Lizette Chapman, California Looks to Outlaw Sexual Harassment by VCs, Bloomberg (Aug, 28, 2017), https://www.bloomberg.com/news/articles/2017-08-28/california-looks-to-outlaw-sexual-harassment-by-vcs. [91]   Steff Yotka, A Proposed New York Amendment Seeks to Protect Models from Sexual Harassment, Variety (Oct. 23, 2017), https://www.vogue.com/article/new-law-could-protect-models-against-sexual-harassment. [92]   See In re Caremark Derivative Litig., 698 A.2d 959 (Del. Ch. 1996); Daniel Miller, Ryan Faughnder, and David Ng, The Legal Fallout From the Mushrooming Weinstein Sex Scandal Could Be Big, L.A. Times (Oct. 10, 2017), http://www.latimes.com/business/hollywood/la-fi-ct-weinstein-legal-fallout-20171010-story.html. [93]   The studios sued included 20th Century Fox Film Corp., Paramount Pictures Corp., Universal City Studios, LLC, Sony Pictures Entertainment, Inc., Warner Bros. Entertainment, Inc. and Metro-Goldwyn-Mayer Studios Inc.  Plaintiffs settled the suits with all studios other than MGM and Warner Bros. [94]   Dominic Patten, Universal, Paramount, Fox & Sony Slapped With Class Action Suits Over Home Video Royalties, Deadline (Jan. 16, 2013), http://deadline.com/2013/01/universal-paramount-fox-sony-slapped-with-royalties-class-action-suits-405929/; Dominic Patten, Hal Needham Hits Warner Bros With Class Action Suit Over ‘Hooper’ Home Video Royalties, Deadline (Jan. 29, 2013), http://deadline.com/2013/01/hal-needham-hits-warner-bros-with-class-action-suit-over-hooper-home-video-royalties-416329/; MGM Faces Class-Action Lawsuit Over Home Video Revenue, Deadline (Mar. 21, 2014), http://deadline.com/2014/03/mgm-home-video-lawsuit-702923/. [95]   Bonnie Eslinger, Stallone Sues ‘Greedy’ Warner Bros. Over Movie Revenue, Law360 (Apr. 12, 2017), https://www.law360.com/articles/912991/stallone-sues-greedy-warner-bros-over-movie-revenue. [96]   Bonnie Eslinger, Warner Bros. Ordered to Give Stallone Film Profit Docs, Law360 (Sept. 27, 2017), https://www.law360.com/media/articles/968662/warner-bros-ordered-to-give-stallone-film-profit-docs. [97]   Eriq Gardner, A ‘Supernatural’ Profits Fight, and the AT&T-TW Merger Issue That Few Are Discussing, The Hollywood Rep. (Nov. 17, 2017), https://www.hollywoodreporter.com/thr-esq/a-supernatural-profits-fight-at-t-tw-merger-issue-few-are-discussing-1059396. [98]   Id. [99]   Id. [100]   Century of Progress Productions v. Vivendi S.A., No. 16-cv-7733-DMG (ASx) (C.D. Cal. Sept. 28, 2017). [101]   Id. at 1. [102]   Eriq Gardner, ‘Spinal Tap’ Lawsuit: Judge Tosses Harry Shearer, Fraud Claim From Profits Case, The Hollywood Rep. (Sept. 29, 2017), https://www.hollywoodreporter.com/thr-esq/spinal-tap-lawsuit-judge-tosses-harry-shearer-fraud-claim-profits-case-1044332. [103]   Vivendi, No. 16-cv-7733-DMG (ASx), at 8-9. [104]   Id. [105]   Complaint at 5–25, Jones v. MJJ Productions, Inc., No. BC52803 (Cal. Super. Ct. Oct. 23, 2013). [106]   Id. [107]   Bonnie Eslinger, Quincy Jones Wins $9.4M from Michael Jackson Co. at Trial, Law360 (July 26, 2017), https://www.law360.com/articles/947858/quincy-jones-wins-9-4m-from-michael-jackson-co-at-trial. [108]   Order Denying JNOV, Jones v. MJJ Productions, Inc., No. BC52803 (Cal. Super. Ct. Sept. 22, 2017). [109]   Reply Br. Regarding Equitable Defenses at 2–3, Jones v. MJJ Productions, Inc., No. BC52803 (Cal. Super. Ct. Nov. 16, 2017). [110]   17 U.S.C. § 512(i)(1)(A). [111]   See EMI Christian Music Grp., Inc. v. MP3tunes, LLC, 844 F.3d 79, 85 (2d Cir. 2016). [112]   See id. at 90. [113]   Id. [114]   See BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc. et al., 149 F. Supp. 3d 634, 662 (E.D. Va. 2015). [115]   Id. at 661. [116]   Capitol Records, LLC v. Vimeo, LLC, 826 F.3d 78 (2d Cir. 2016). [117]   Id. at 86–87. [118]   Id. at 87. [119]   Id. at 87–89. [120]   Id. at 89–90. [121]   Id. at 90. [122]   Id. at 90. [123]   Capitol Records, LLC v. Vimeo, LLC, 137 S. Ct. 1374 (2017). [124]   Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 663 (9th Cir. 2017) (quoting Ellison v. Robertson, 357 F.3d 1072, 1074, n.1 (9th Cir. 2004)). [125]   See id. [126]   See id. [127]   See id. at 668, 669-70. [128]   Id. at 667 (citing Aereo, 134 S.Ct. at 2507). [129]   See Perfect 10 v. Giganews et al., No.17-320, 2017 WL 3782333, at *1 (Dec. 4, 2017). [130]   See BWP Media USA, Inc. v. T&S Software Assocs, Inc., 852 F.3d 436, 443-44 (5th Cir. 2017). [131]   See id. at 442. [132]   Id. [133]   Id. [134]   Signature Mgmt. Team, LLC v. John Doe, No. 16-2188 (6th Cir. Nov. 28, 2017) (slip op) (emphasis added). [135]   Id. at 6. [136]   Id. at 2. [137]   Id. [138]   Id. at 5. [139]   Id. [140]   Id. [141]   Id. at 6. [142]   Id. at 7, 9. [143]   Id. at 13. [144]   See Todd Spangler, Entertainment Giants Forge New Alliance to Fight Piracy, Sue Offenders, Variety (June 13, 2017), http://variety.com/2017/digital/news/entertainment-studios-piracy-lawsuits-1202463987/. [145]   See Complaint at 1, Universal City Studios Productions LLLP et al. v. TickBox TV LLC, No. 2:17-cv-07496 (C.D. Cal. Oct. 13, 2017). [146]   See Ryan Faughnder, How an Atlanta Power Couple’s Business Has Heightened Hollywood and Silicon Valley’s Piracy Anxieties, L.A. Times (Nov. 17, 2017), http://www.latimes.com/business/hollywood/la-fi-ct-kodi-tickbox-studios-20171117-htmlstory.html. [147]   See Tickbox TV LLC Complaint, at 16, 18. [148]   See Faughnder, supra note 147. [149]   Id. [150]   Id. [151]   Order Granting Plaintiffs’ Motion for Preliminary Injunction, Disney Enterprises, Inc. et al v. VidAngel Inc., Case No. 2:16-cv-04109 – AB (PLAx) at *1-*2 (C.D. Cal. Dec. 12, 2016). [152]   Id. at *7. [153]   Bill Donahue, 9th Circ. Rejects VidAngel’s Emergency Stay Bid, Law360 (Jan. 5, 2017), https://www.law360.com/articles/877896. [154]   Bill Donahue, Hollywood Studios Beat Streaming Site At 9th Circ., Law360 (Aug. 24, 2017), https://www.law360.com/articles/957408. [155]   Opinion, Disney Enterprises, Inc. v. VidAngel, Inc., No. 16-56843 (9th Cir. Aug. 24, 2017). [156]   Id. at 19 (“If the mere purchase of an authorized copy alone precluded infringement liability under the FMA, the statute would severely erode the commercial value of the public performance right in the digital context, permitting, for example, unlicensed streams which filter out only a movie’s credits.”). [157]   Id. [158]   Id. at 20-21. [159]   Id. at 22. [160]   Id. at 23. [161]   Id. at 22. [162]   Id. at 26-31. [163]   Dave Simpson, VidAngel Files for Ch. 11 After 9th Circ. Copyright Loss, Law360 (Oct. 18, 2017), https://www.law360.com/articles/976054. [164]   Memorandum and Opinion, Graham v. Prince, No. 15-cv-10160(SHS) (S.D.N.Y. July 18, 2017) at *2. [165]   Id. [166]   Id. at *13 (referencing Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013)). [167]   Id. at * 16 (“This is not a case in which the ‘open-ended and context-sensitive’ fair use inquiry can be properly applied at the motion to dismiss stage.”). [168]   Id. at *16-*23. [169]   Opinion and Order, Penguin Random House LLC v. Colting, No. 17-cv-386 (JSR) (S.D.N.Y. Sept. 8, 2017). [170]   Id. at *22. [171]   Id. at *24. [172]   Id. at *23. [173]   Id. at *24 (“Here, defendants’ story summaries do not recount plaintiffs’ Novels in the service of literary analysis, they provide literary analysis in the service of trying to make the Guides qualify for the fair use exception”). [174]   Bill Donahue, ‘Monkey Selfie’ Copyright Suit Ends In Settlement, Law360 (Sept. 11, 2017), https://www.law360.com/media/articles/962819/-monkey-selfie-copyright-suit-ends-in-settlement. [175]   Id.; Order Granting Motions to Dismiss, Naruto v. Slater, No. 15-cv-04324-WHO (N.D. Cal. Jan. 28, 2016). [176]   Order Granting Motions to Dismiss, Naruto v. Slater, No. 15-cv-04324-WHO (N.D. Cal. Jan. 28, 2016). [177]   Id. (“[The plaintiffs] argue that this result is ‘antithetical’ to the ‘tremendous public interest in animal art.’ [] Perhaps.  But that is an argument that should be made to Congress and the president, not to me.”). [178]   Donahue, supra note 175. [179]   Jimmy Hoover, Music Group’s Copyright Suit Against Ford, GM On The Rocks, Law360 (Oct. 24, 2017), https://www.law360.com/articles/977666/music-group-s-copyright-suit-against-ford-gm-on-the-rocks. [180]   Complaint, Alliance of Artists and Recording Cos. Inc. v. General Motors Co. et al., No. 1:14-cv-01271 (D.C. July 25, 2014) at *2.  [181]   Id. at *3, *5. [182]   Id. at *7. [183]   See Memorandum of Points and Authorities in Support of Defendant General Motors LLC’s Phase 1(A) Motion for Partial Summary Judgment at *9, Alliance of Artists and Recording Cos. Inc. v. General Motors Co. et al., No. 1:14-cv-01271 (D.C. Dec. 6, 2017). [184]   See Plaintiff Alliance of Artists and Recording Companies, Inc.’s Memorandum in Support of Its Motion for Partial Summary Judgment As To Phase 1(A) at *4-*7, Alliance of Artists and Recording Cos. Inc. v. General Motors Co. et al., No. 1:14-cv-01271 (D.C. Dec. 6, 2017). [185]   See Hoover, supra note 180. [186]   See Complaint, Rearden LLC, et al. v. The Walt Disney Co., et al., No. 17-cv-04006, 2017 WL 3015899 (N.D. Cal. July 17, 2017).  Rearden subsequently made similar claims against Twentieth Century Fox Film, Paramount Pictures, and Crystal Dynamics Inc. [187]   See Motion to Dismiss, Rearden LLC, et al. v. The Walt Disney Co., et al., No. 17-cv-04006 (N.D. Cal. Sept. 15, 2017). [188]   See id. at *18. [189]   Id. at *18-21. [190]   See Twentieth Century Fox Television, et al. v. Empire Distrib., Inc., 875 F.3d 1192, 1200 (9th Cir. 2017). [191]   See Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). [192]   See Twentieth Century Fox Television, et al. v. Empire Distrib., Inc., 161 F. Supp. 3d 902 (C.D. Cal. 2016). [193]   See Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 902 (9th Cir. 2002). [194]   Empire Distrib., Inc., 875 F.3d at 1199. [195]   See Dr. Seuss Enterprises, L.P. v. ComicMix LLC, et al., No. 16-CV-2779-JLS, 2017 WL 6059130 (S.D. Cal. Dec. 7, 2017). [196]   Id. [197]   See In re Brunetti, No. 2015-1109, 2017 WL 6391161 (Fed. Cir. Dec. 15, 2017). [198]   See id. at *2. [199]   See id. [200]   Id. at *4. [201]   Id. [202]   Id. at *6. [203]   See id. at *10. [204]   Id. [205]   Id. at *12. [206]   Id. at *17. [207]   Timothy Mclaughlin, ABC TV settles with beef product maker in ‘pink slime’ defamation case, Reuters (June 28, 2017), https://www.reuters.com/article/us-abc-pinkslime/abc-tv-settles-with-beef-product-maker-in-pink-slime-defamation-case-idUSKBN19J1W9; Christine Hauser, ABC’s ‘Pink Slime’ Report Tied to $177 Million in Settlement Costs, N.Y. Times (Aug. 10, 2017), https://www.nytimes.com/2017/08/10/business/pink-slime-disney-abc.html. [208]   Mclaughlin, supra note 208. [209]   Id. [210]   Id. [211]   See Ltr. Requesting Pre-Motion Conf. at *1, Greene v. Paramount Pictures Corp., No. 2:14-cv-01044 (E.D.N.Y. Oct. 13, 2017). [212]   See id. [213]   See id. at *3. [214]   See id. [215]   Id. at *2. [216]   See Order, Greene v. Paramount Pictures Corp., No. 2:14-cv-01044  (E.D.N.Y. Dec. 18, 2017). [217]   See Complaint, Williams v. Advanceable Techs., LLC, No. 1:17-cv-23942-KMW, 2017 WL 4876233 (S.D. Fla. Oct. 27, 2017). [218]   See id. [219]   See id. [220]   See id. [221]   Id. ¶¶ 2, 27. [222]   Id. ¶¶ 67-84. [223]   Order, Williams v. Advanceable Techs., LLC, No. 1:17-cv-23942-KMW (S.D. Fla. Nov. 29, 2017). [224]   De La Huerta v. Lions Gate Entm’t Corp., No. B271844, 2017 WL 4676234, at *1 (Cal. Ct. App. Oct. 18, 2017), review filed (Nov. 27, 2017). [225]   Id. [226]   Id. [227]   Id. at *4. [228]   Id. at *2. [229]   Id. at *2-*3. [230]   Id. at *3. [231]   Id. at *6. [232]   Id. at *7-*9. [233]   Determination of Royalty Rates and Terms for Making and Distributing Phonorecords, 82 Fed. Reg. 58, 15297 (Mar. 28, 2017) (to be codified at 37 C.F.R. pt. 385). [234]   Historical Royalty Rates, Harry Fox Agency, https://secure.harryfox.com/public/HistoricalRoyaltyRates.jsp. [235]   Ed Christman, U.S. On-Demand Streams Passed 618 Billion in 2017, Outpacing Sales Declines Again, Billboard (Jan. 5, 2018), https://www.billboard.com/articles/business/8092882/on-demand-streams-618-billion-2017-outpacing-sales-declines. [236]   Id. [237]   Eriq Gardner, A Legal Campaign Against Spotify Intensifies Ahead of the Company’s Plan to Go Public, The Hollywood Rep. (Sep. 13, 2017), https://www.hollywoodreporter.com/thr-esq/a-legal-campaign-spotify-intensifies-companys-plan-go-public-1038440. [238]   Ferrick v. Spotify USA Inc., No. 1:16-cv-08412-AJN (S.D.N.Y.), ECF 208. [239]   Jack Stanley, Spotify Has Been hit With Another Copyright Infringement Lawsuit, https://hypebeast.com/2017/7/spotify-copright-infringment-frankie-valli-lawsuit. [240]   Memorandum at 6–7, Gaudio v. Spotify USA Inc., No. 3:17-cv-01052 (M.D. Tenn. Aug. 30, 2017); Memorandum at 6–7, Bluewater Music Services Corp. v. Spotify USA Inc., No. 3:17-cv-01051 (M.D. Tenn. Aug. 30, 2017). [241]   Complaint ¶¶ 9–25, Wixen Music Publishing Inc. v. Spotify USA Inc., No. 2:17-cv-09288-GW-GJS (C.D. Cal. Dec. 29, 2017). [242]   Motion, Ferrick v. Spotify USA Inc., No. 1:16-cv-08412-AJN (S.D.N.Y. Dec. 29, 2017). [243]   Andrew Flanagan, Sweeping New Music Law Expedites A $1.6 Billion Lawsuit Against Spotify, NPR Music (Jan. 3, 2018), https://www.npr.org/sections/therecord/2018/01/03/575368674/sweeping-new-music-law-expedites-a-1-6-billion-lawsuit-against-spotify. [244]   Id. [245]   Jem Aswad, Universal’s Move to Nullify $31 Million Prince Deal Approved by Judge, Variety (July 13, 2017), http://variety.com/2017/music/news/universals-move-to-nullify-31-million-prince-deal-approved-by-judge-1202495369/. [246]   Id. [247]   Id. ¶¶ 31–34. [248]   Mot. to Dismiss at 1, Hall v. Swift, No. 17-cv-6882 (C.D. Cal. Jan. 3, 2018). [249]   Braham v. Sony/ATV Music Publ’g, No. 215-cv-8422, 2015 WL 7074571 (C.D. Cal. Nov. 10, 2015). [250]   Dave Brooks, Ticketmaster Loses Motion for Summary Judgment in Songkick Case, Billboard (Oct. 18, 2017), https://www.billboard.com/articles/business/8005831/ticketmaster-songkick-case-motion-summary-judgement. [251]   Complaint ¶¶ 1–19, Complete Entm’t Res. LLC v. Live Nation Entm’t, Inc., No. 15-cv-9814 (C.D. Cal. December 22, 2015). [252]   Id. [253]   Order at 3, Complete Entm’t Res. LLC v. Live Nation Entm’t, Inc., No. 15-cv-9814 (C.D. Cal. October 16, 2017). [254]   Id. [255]   Dave Brooks, Ticketmaster Settles Songkick Lawsuit for $110M, Billboard (Jan. 12, 2018), https://www.billboard.com/articles/news/8094201/ticketmaster-songkick-settle-lawsuit-110-million. [256]   U.S. v. Broadcast Music, Inc., No. 16-cv-3830 (2d Cir. Dec. 19, 2017). [257]   Opinion and Declaratory Judgment, U.S. v. Broadcast Music, Inc., No. 64-cv-3787 (S.D.N.Y. Sept. 16, 2016). [258]   U.S. v. Broadcast Music, Inc., No. 16-cv-3830, slip op. at 4 (2d Cir. Dec. 19, 2017). [259]   Id. at 6–7. [260]   Diane Bartz, U.S. Justice Department loses music licensing appeal, Reuters (Dec. 19, 2017), https://in.reuters.com/article/usa-music-licensing-doj/u-s-justice-department-loses-music-licensing-appeal-idINKBN1ED2S5. The following Gibson Dunn lawyers assisted in the preparation of this client update: Scott Edelman, Howard Hogan, Ben Ross, Nathaniel Bach, Corey Singer, Sean O’Neill, Beatrice Hahn, Jillian London, Mike Policastro, Jessica Culpepper, Ilissa Samplin, Sara Ciccolari-Micaldi, Andrew Blythe, Marissa Moshell, Minae Yu, Lauryn Togioka, Brittany Schmeltz, and Taylor Hathaway-Zepeda. 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, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com) Ruth E. Fisher – Co-Chair, Los Angeles (+1 310-557-8057, rfisher@gibsondunn.com) Orin Snyder– Co-Chair, 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) © 2018 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 1, 2017 |
Sentiment Analysis & Natural Language: Processing Techniques for Capital Markets & Disclosure

New York counsel Nicolas H.R. Dumont is the author of “Sentiment Analysis & Natural Language: Processing Techniques for Capital Markets & Disclosure,” [PDF] published by The Corporate Governance Advisor in December 2017.

October 5, 2017 |
Local Drone Law Preempted in First-of-its-Kind Ruling

​Orange County associates Jared Greenberg and Brett Long are the authors of “Local Drone Law Preempted in First-of-its-Kind Ruling,” [PDF] published by The Daily Journal on October 5, 2017.

July 19, 2017 |
Media, Entertainment and Technology Group – 2017 Mid-Year Update

At the middle of 2017, Gibson Dunn’s Media, Entertainment and Technology practice group has taken stock of another particularly active period in deal-making, developments in both live and on-demand streaming, the rise of eSports, and a plethora of key cases and rulings that together provide a crucial snapshot of trends in these ever dynamic industries.  We are pleased to bring you our latest round-up of events that shaped these industries in early 2017, which hold important lessons for our clients and will drive decision-making in the boardroom and courtroom in the months to come. __________________________ TABLE OF CONTENTS I.     2017 Mid-Year Deal Report A.     Media & Entertainment Deals, Investments & IPOs 1.     Sinclair-Tribune Merger 2.     Fox Continues to Reach for Sky 3.     Verizon Goes For Yahoo! 4.     Vice Media Secures $450 Million Investment 5.     Time Warner Signs Deal with Snap for Advertisements and Original Scripted Content 6.     SiriusXM Invests in Pandora 7.     Cable IPOs Deliver Mixed Results B.     Chinese Investments in Hollywood Experience (A Temporary?) Cooling Period & Some Growing Pains C.     The Global Streaming Race Continues 1.     Netflix’s Continued Expansion 2.     Amazon Continues Its Global Growth 3.     Hulu With Live TV Beta Launch 4.     iflix: An Emerging (Market) Competitor? D.     Field of Streams:  The Rise of OTT Sports Offerings 1.     Amazon Nabs NFL Rights 2.     Hulu’s Sports Offerings 3.     Twitter’s New Sports-Related Partnerships E.     eSports Go Big League 1.     Riot Games Adopts Franchise Model for eSports League 2.     AEG Invests in Immortals eSports Team 3.     NBA Announces NBA 2K eSports League with 17 Teams Participating F.     Strikes Averted as Guilds Reach Deals II.     2017 Mid-Year Litigation Report A.     Hollywood Against the Hackers B.     Copyright Litigation Docket 1.     Fashioning a Key Ruling in Varsity Brands 2.     VidAngel’s Fading Halo 3.     Disney’s Zootopia Sued For Substantial Similarity 4.     Broadcasters Best FilmOn on Appeal 5.     Fees Cases Post-Kirtsaeng C.     Trademark Litigation Goes on Offense 1.     SCOTUS Confronts Ban on Disparaging Trademarks in Matal v. Tam 2.     SpongeBob SquarePants’ Fictional "Krusty Krab" Restaurant Wins In Trademark Infringement Suit 3.     GOOGLE Not Subject to Genericide 4.     Belushi Is Primarily a Surname 5.     Public University Should Have Allowed Student Marijuana-Reform Organization to Use University’s Trademarks D.     First Amendment Cases Speak Loudly 1.     IMDB.com v. Becerra 2.     Virginia Citizens Defense League v. Couric 3.     Fridman v. BuzzFeed 4.     Murray Energy Corp. v. Reorg Research, Inc. E.     Music Litigation 1.     Kesha v. Dr. Luke 2.     Prince’s Estate and Subsequent Legal Battles 3.     Royalties Disputes with Digital Music Streaming Services 4.     Fair Use and Sampling Go Another Round 5.     The Estate of Jimi Hendrix F.     New Efforts to Regulate ISPs 1.     The Right To Be Forgotten __________________________ I.     2017 Mid-Year Deal Report A.     Media & Entertainment Deals, Investments & IPOs 1.     Sinclair-Tribune Merger On May 8, 2017, Sinclair Broadcast Group announced a $3.9 billion cash-and-stock agreement to acquire Tribune Media, resulting in a combined entity that will own 223 television stations serving 108 markets; the new entity’s stations would reach approximately 72% of U.S. television households.  Adding Tribune’s 42 stations to its existing roster, Sinclair would be nearly twice the size of its nearest U.S. non-network broadcast competitors, the closest of which, Nexstar, reaches 39% of homes nationwide.  Sinclair plans to pay Tribune shareholders $43.50 per share, with $35 in cash and the rest in Sinclair stock.[1] On June 15, 2017, the U.S. Court of Appeals for the D.C. Circuit lifted a temporary stay of the FCC’s decision to reinstate the "UHF Discount," which allows television station owners to count only half of the households reached by UHF (ultra high frequency) stations toward their total number of households served.  As Sinclair’s post-merger reach will extend to 72% of homes nationwide, this is particularly relevant for Sinclair and other television conglomerates looking to consolidate, as no one company’s owned television stations may reach more than 39% of U.S. TV households under current FCC ownership rules.[2]  Consolidation efforts have already begun, as Ion Media, a station group that holds the most full-power UHF stations in the U.S., recently acquired three new stations in the wake of the UHF Discount reinstatement, adding 5 million viewers to the network’s audience that currently spans 58 of the largest U.S. markets.[3]  While issues related to the UHF Discount continue to be litigated, the rule is in effect for the time being following the D.C. Circuit’s recent ruling.[4]  With the UHF Discount in place, the pending Sinclair Tribune merger is expected to pass regulatory muster.[5]  2.     Fox Continues to Reach for Sky In late 2016, 21st Century Fox announced an agreement to acquire Sky plc, the largest pay TV provider in Britain, reaching 22 million customers in five European markets.  Fox currently owns 39% of Sky shares, and proposed to purchase the remaining 61% of shares for $14.5 billion.[6]    Ofcom, the U.K.’s government media regulator, recently reviewed the deal for any potential negative effects it believes the deal might have on editorial standards in the U.K., as Fox already controls the newspaper company News Corp, the owner of two major British newspapers.[7]  Ofcom also set out to determine whether Sky would remain a "fit and proper" TV license holder after the Fox acquisition, due to recent legal and corporate governance issues surrounding Fox News.[8]  Following Ofcom’s review, British Culture Secretary Karen Bradley said she was "minded to" send the merger proposal to the U.K. Competition and Markets Authority for further scrutiny.[9]  If the deal is ultimately sent to the Competition and Markets Authority, a final decision on the transaction is expected to be delayed until mid-2018.[10]     3.     Verizon Goes For Yahoo! On June 13, 2017, Verizon Communications Inc. acquired the operating business of Yahoo! Inc. for $4.48 billion.[11]  Verizon will combine Yahoo! with its existing AOL assets to create a new subsidiary, Oath, to be headed by former AOL CEO Tim Armstrong.[12]  Marissa Meyer, former CEO of Yahoo!, has resigned.[13] The deal ends Yahoo! as an operating business, and the company’s remaining assets—including its 15% stake in Chinese e-commerce company Alibaba, Yahoo! Japan, and a noncore portfolio of patents called Excalibur—will be renamed Altaba.[14]  The transaction helps Verizon build its portfolio of online content, whose assets also include The Huffington Post, Engadget, and TechCrunch (all three of which were acquired in last year’s $4.4 billion AOL deal), Tumblr, Flickr, and a mobile video app called go90.[15]  This newest move is seen as a way to advertise across the Verizon digital network, reaching a wider audience and boosting its presence in the mobile and online video space.[16] 4.     Vice Media Secures $450 Million Investment In June 2017, the privately held Vice Media secured a $450 million investment from private equity firm TPG.[17]  Vice will use the new money to finance Vice Studios, which will produce scripted programming for its Viceland Cable Channel, as well as a planned subscription service.[18] Vice’s assets include Viceland, a print magazine, HBO’s documentary series Vice, and daily news show Vice News Tonight.[19]  Walt Disney Co., which owns an 18% stake in Vice, did not participate in the funding round, despite speculation last summer that Disney might purchase all of the company.[20] 5.     Time Warner Signs Deal with Snap for Advertisements and Original Scripted Content In June 2017, following its $3.4 billion IPO, Snap Inc. entered a deal with Time Warner Inc. in which Time Warner’s Turner cable channels and Warner Bros. film studio (and possibly HBO) will create advertisements and up to ten original, scripted shows for Snapchat.[21]  Over the past several months, Snap has signed original content deals with NBCUniversal, Turner, A+E Networks, Discovery, BBC, ABC, ESPN, Vice Media, Vertical Networks, the NFL and Metro-Goldwyn-Mayer Inc., among others.[22]  Snap hopes to air two to three new episodes of original shows per day in its bid to boost its revenue, which comes almost entirely from advertising.[23] The Time Warner deal is seen as a vote of confidence for Snap—whose revenue and growth rate slowed in May—with media companies eager to reach Snap’s young, mobile users, who are shifting their attention from traditional television to mobile apps.[24] 6.     SiriusXM Invests in Pandora In June 2017, SiriusXM agreed to invest $480 million in the music streaming service Pandora, extending its reach into ad-supported digital radio for the first time.  Following the cash-and-stock purchase, SiriusXM will hold a 19% stake in Pandora, with the condition that it cannot acquire more than 31.5% of Pandora stock without approval from the Pandora board.[25]  Under the terms of the agreement, Pandora has terminated a previous deal with private equity firm KKR & Co., which had pledged $150 million to the company in May 2017, and will pay a $22.5 million breakup fee as a result.[26]  In a separate statement on the same day, Pandora announced a $200 million sale of the digital ticketing and marketing platform Ticketfly Inc., which it acquired in 2015, to Eventbrite.[27]  Just over two weeks after the two deals were announced, Pandora announced that co-founder Tim Westergren would be stepping down as CEO of the company.[28] 7.     Cable IPOs Deliver Mixed Results Two U.S. cable companies, Altice USA and WideOpenWest ("WOW"), launched IPOs in 2017, ending a five-year drought in the market for cable IPOs.  The offerings delivered mixed results, with Altice USA exceeding and WOW falling short of expectations. On June 12, 2017, Altice USA, a U.S. subsidiary of Dutch telecommunications company Altice NV, launched a $1.9 billion IPO.[29]  The IPO raised more than any other U.S.-listed telecom since 2000 and was the second-largest U.S. offering this year, after Snap Inc.’s $3.9 billion IPO in March.[30]  Altice USA priced 63.9 million shares at $30 per share, giving the company a market capitalization of approximately $22 billion.[31]  Already the fourth-biggest U.S. cable provider, Altice USA can now use its stock as capital in future acquisitions, and some analysts have speculated that acquisition targets may include cable giants such as Charter Communications and Cox Communications.[32] Altice USA’s IPO comes on the heels of another offering by a U.S. cable company, WOW, whose March offering was the first cable IPO in the last five years.[33]  WOW raised about $310 million after pricing 18.24 million shares at $17 per share, below the 19.05 million shares the company had expected to sell at $20-$22 per share.[34] B.     Chinese Investments in Hollywood Experience (A Temporary?) Cooling Period & Some Growing Pains In the first half of 2017, the surge of Chinese investment in Hollywood slowed from a particularly hot period in 2016.  This cooling trend comes shortly after the Chinese government placed restrictions on domestic capital leaving the country in November 2016, potentially creating an obstacle to Chinese investment in these blockbuster deals.  However, deal-making has continued nonetheless and we expect the trend to continue given the importance of the foreign box office and non-domestic capital to Hollywood. One of the largest Chinese investment deals announced in 2016 was the Dalain Wanda Group ("Wanda") proposed $1 billion purchase of Dick Clark Productions, producer of the "Golden Globes Awards," "Academy of Country Music Awards" and "Dick Clark’s New Year’s Rockin’ Eve with Ryan Seacrest."[35]  The deal would have been Wanda’s first venture into television.[36]  However in early March 2017, Eldridge Industries ("Eldridge), owner of Dick Clark Productions, announced that it called off the agreement because Wanda "failed to honor its contractual obligations."[37]  As a result, Eldridge filed a motion in the Delaware Chancery Court to compel the release of $25 million in escrowed funds as payment for a termination fee and $25 million due to Eldridge for its prior agreement made in January to extend the closing date.[38]  Whether the deal fell apart because Wanda felt that the $1 billion price tag was too high, because of the Chinese government’s tightening of the rules regarding foreign investments,[39] or for other reasons, the news that this deal was scrapped caused rumblings in the industry about the fate of Chinese investments in Hollywood.[40]  Chinese media conglomerate LeEco, often called the "Netflix of China," has found itself in a spiral of legal and financial troubles following its termination of merger negotiations with American television maker Vizio, in April 2017.  On July 4, Chinese courts froze $182 million in assets controlled by LeEco’s chairman Jia Yueting as a result of the company’s aggressive overexpansion and cash-flow shortages.[41]  Mere days thereafter, Vizio filed a lawsuit in California federal court alleging that LeEco was already collapsing when merger talks began, and that LeEco planned to use the merger to create false impressions about its financial health.[42]  Vizio further alleges that LeEco secretly planned as part of the merger to gain access to Vizio’s confidential customer lists and key decision makers, and that LeEco has since engaged in corporate subterfuge in an attempt to reduce its liability for a $100 million break-up fee owed under the merger agreement.[43]  Vizio is seeking the full $100 million break-up fee and punitive damages.[44] Additionally, Voltage Pictures’ recent deal with Anhui Xinke New Materials, valued at $350 million, fall apart and has resulted in litigation.  In December 2016, the deal terminated a month after the new Chinese restrictions on overseas acquisitions were put in place and has since moved to Los Angeles Superior Court as a result of a suit brought by Voltage Pictures over the payment of a $4 million deposit.[45] Despite these recent ups and downs, and the speculation as to the effect of Chinese regulations on foreign investments, there have still been some notable deals announced between Chinese investors and media, entertainment and technology companies in the first half of the year.  Wanda, Weying Technology and Huahua Media all announced investments in Paramount Picture’s Transformers: The Last Knight, giving them merchandising, global revenue and/or marketing rights.[46]  Blumhouse Productions also announced in April that it entered into a film financing agreement with Meridian Entertainment, a Chinese company, which will finance all production outside of Blumhouse’s deal with Universal.[47]  Additionally, in May, CAA launched a long-term film fund with China’s Bona Film Group ("Bona"), with Bona’s initial investment set at a reported $150 million.[48]  The film fund is intended to finance U.S.-China co-productions, in which Bona will retain all distribution right in China and CAA will represent North America and other international territories.[49]  Another deal that left the industry speculating how the tightening of capital controls in China will impact investments in the media, entertainment and technology industry is the $1 billion slate financing deal announced in January 2017 between Paramount and Shanghai Film Co. and Huahua Media.[50]  The deal would fund Paramount’s entire theatrical output over the next three years.[51]  Despite reports that the deal was to be called off in March 2017, Viacom CEO Bob Bakish confirmed in May, during Viacom’s quarterly earnings conference, that the deal was "moving ahead" and that Shanghai Film Co. and Huahua media "have elected to upsize their commitment from 25 to 30 percent" of the total slate.[52] Finally, Hollywood continues to make inroads in China in order to benefit from the country’s booming film market.  In line with this trend, CAA launched CAA China, in partnership with CMC Capital Partners, a Chinese equity firm, to establish itself in the country’s representation landscape.[53] Additionally, UTA partnered with Tang Media Partners, a Los Angeles-based entertainment company, and Joy Pictures, a Chinese film studio, to establish a film fund to distribute approximately twelve U.S. films in China per year.[54]  C.     The Global Streaming Race Continues 1.     Netflix’s Continued Expansion a.     Entering the Chinese Market Previously blocked by regulators from entering China’s entertainment market, global streaming giant Netflix announced in April 2017 that it had reached a content agreement with Beijing-based video service iQiyi.[55]  This deal comes just over a year after Netflix went global, with only a few territories (including China) missing from its roster.[56]  iQiyi is a subsidiary of Chinese search giant Baidu and is currently morphing from an ad-supported video platform into a subscription model (akin to Netflix).[57]  Shows Black Mirror, Stranger Things, Mindhunter, BoJack Horseman, and Ultimate Beastmaster are all included as part of this deal.[58] Netflix saw an early licensing success in China with House of Cards through a deal with local service Sohu, before the show was eventually removed from local streaming services by regulators.[59]  Netflix had also previously tried to move into China as a service operator, but acknowledged last year that the regulatory hurdles were too great.[60]  b.     Growing its Local Content In April 2017, Netflix signed a deal to acquire approximately 600 hours of scripted and unscripted TV shows from South Korea’s JTBC.  Netflix trails behind numerous regional competitors armed with larger local content lineups in several parts of Asia, and this move is consistent with the belief that local content will be key if Netflix is to flourish in these areas.[61] Netflix has also announced two original Korean productions, Love Alarm and Kingdom, which are set to premier in 2018.[62] Netflix has also employed local content strategies in India, and announced the opening of a Mumbai local office in April 2017.  Netflix competes against Hotstar (a popular ad-supported app with channels, fiction and sports) and Amazon Prime Video, among others, in India.[63]  c.     Deal with Altice Netflix signed a multi-year deal with Altice, the telco group of Patrick Drahi, to start distributing Netflix content in France, Portugal, Israel, and the Dominican Republic.  This deal emphasizes the content-driven strategy Altice is now favoring, with the launch of Altice Studio and the acquisitions of sports, series, and films rights and assorted deals with right-holders.[64] d.     Additional Capital Raise In April 2017, Netflix announced its plan to raise 1 billion euros (about $1.08 billion) in new debt financing from international lenders.[65]  It upped the size of its debt offering to 1.3 billion euros ($1.4 billion) shortly thereafter.[66]  This new offering was in addition to its $3.37 billion in existing long-term obligations.[67]  Netflix successfully closed its $1.4 billion in new debt financing in May 2017, marking the third time in a little over two years that Netflix has raised more than $1 billion.[68] 2.     Amazon Continues Its Global Growth a.     Launch of Amazon Channels in the U.K. and Germany Amazon Channels, a full pay-TV service which was unveiled in the U.S. last year, recently launched in the U.K. and Germany.  Prime members in the U.K. and Germany now can watch premium TV channels without a bundle or a contract.[69]  With this launch, Amazon offered its services as an alternative to Sky, the largest pay-TV operator in both countries.  Included in the offerings in the U.K. version are Discovery, ITV Hub+, and NBCUniversal’s reality-TV streaming service Hayu.  The roster of the German service includes three NBCU nets: E! Entertainment, Studio Universal Classics, and Syfy.[70] b.     Expansion of Amazon Prime Video in India Amazon launched Amazon Prime Video in India at the end of last year at a lower subscription rate than Netflix.  Since then, Amazon has moved quickly in recent months to expand its user base in the country through partnerships.  For example, Amazon recently worked with telecom provider Vodafone to provide its customers with access to Amazon Prime Video at promotional rates.[71]  Prior to launching Amazon Prime Video, Amazon India signed deals for existing and yet-to-be-produced films with Bollywood studios.[72]  Amazon India has also arranged a streaming deal with Paramount Pictures for various titles including Teenage Mutant Ninja Turtles: Out of the Shadows and Star Trek Beyond.  The deal also covers the studio’s library franchises, like Transformers, Indiana Jones, and others.  Terms of the deal, including price, were not disclosed.[73]  This deal builds on Amazon India’s offerings of Hollywood content after a recent deal with Lionsgate for titles such as La La Land and Deepwater Horizon.[74]  Most recently, Amazon India also signed a content deal with Warner Brothers covering a range of films and TV shows including Fantastic Beasts and Where to Find Them, Suicide Squad, and TV shows Lethal Weapon, Blindspot, and Two and a Half Men.  As with the other deals, no financial details were disclosed.[75]  3.     Hulu With Live TV Beta Launch Hulu recently announced the beta launch of Hulu With Live TV, a package that includes all four major broadcast networks, the top-rated cable news channels, and a substantial sports offering.[76]  The package also includes the 3,500-plus TV and movie titles in Hulu’s basic on-demand package.[77]  The service is priced starting at $39.99 monthly and includes approximately 50 channels.[78]  Subscribers have access to ABC, CBS, Fox, NBC programming (with the availability of local TV stations varying by market), and cable networks including ESPN, CNN, MSNBC, TNT, and USA Network.  The service also carries regional sports networks from Comcast and Fox in several markets.  Showtime is available for an additional $9.[79] As of May 2017, Hulu’s live TV menu did not include HBO, AMC Networks, Viacom’s Comedy Central, or Nickelodeon, among others.  However, in early July, Hulu announced that it will allow HBO and Cinemax as add-ons to its subscription plan.[80]  Hulu has also announced that it is working to arrange deals with network station groups to augment its lineup and plans to add more local channels over time.[81] Its new skinny bundle puts Hulu directly in competition with the cable, satellite, and telco TV distributors that comprise some of the biggest customers of Hulu’s parent companies Disney, 21st Century Fox, Comcast’s NBCUniversal, and Time Warner.[82]  Notwithstanding its new skinny bundle, Hulu has confirmed that it will continue to rely on a strategy of obtaining "the iconic shows that are timeless," as shown by the recent deal for Golden Girls (a classic NBC comedy), while also continuing with its roster of original productions.[83]  4.     iflix: An Emerging (Market) Competitor? iflix, a streaming service that launched in Asia in 2015, is positioning itself as a low-cost alternative to Netflix in emerging markets.  Boasting a subscriber base of just under 5 million and armed with a recent $90-million infusion from investors including Sky and Liberty Global, iflix is focusing on local content.  It is co-producing the first high-end Arabic online series, a comedy entitled Tough Luck, set in a Cairo tenement and boasting an all-star Arab cast.  iflix also recently expanded, through a joint venture with Kuwait-based telco Zain, into the Middle East and North Africa.[84] D.     Field of Streams:  The Rise of OTT Sports Offerings The trend of cord-cutting continues to disrupt the sports media industry.  Major players, including the NFL and MLB, as well as sports networks such as ESPN, are adapting to accommodate the preferences of their viewers by embracing over-the-top ("OTT") distribution of their games and other content.  Though Netflix has indicated that it intends to remain on the sidelines and has no interest in acquiring rights to live sports programming,[85] the following recent deals highlight the increase in live-streaming arrangements between content producers and social media networks in the world of sports. 1.     Amazon Nabs NFL Rights In April 2017, Amazon finalized a deal with the National Football League to stream ten NFL "Thursday Night Football" games next season.  These games will be streamed to Amazon Prime members, including international members in more than 200 countries, via the Amazon Prime Video app.  These games will also be shown on either CBS or NBC and simulcast on the NFL Network, as part of a distribution deal with those networks last year.[86] The NFL has not disclosed the value of this one-year deal, but several reports citing unidentified sources place the deal at $50 million, an increase in value from the $10 million Twitter paid last year to stream ten NFL games,[87] which had marked the first time the league made a deal for a package of games with an online-only partner.[88] 2.     Hulu’s Sports Offerings In May, Hulu launched its new streaming live television service (discussed above), which includes a collection of sports networks.  Hulu With Live TV allows users to watch their favorite cable channels (including national sports networks ESPN, NBCSN, and FS1, as well as certain regional sports networks) online without a traditional cable subscription.  This service is similar to Sling TV, which last year became the first OTT provider of the NHL Network.[89] 3.     Twitter’s New Sports-Related Partnerships On May 1, 2017, Twitter announced more than a dozen new live streaming content deals, including several sports-related partnerships.  The WNBA will live-stream a weekly regular season game on Twitter, twenty per season, for the next three seasons.  In addition to the weekly live MLB games streaming on Twitter this season, the MLB will also stream a new three-hour program once a week featuring live MLB game highlights and analyzing stories as they trend.[90] Twitter’s Stadium, a new and original 24-hour video network, "combine[s] exclusive live college sporting events with highlights, classic games, and daily live studio programming."[91]  Twitter will also provide live pregame video and on-demand highlights of key NFL games.  In addition to the existing live-streaming deal between Twitter and PGA Tour Live, the PGA Tour live-streamed 360-degree video of the 17th hole at TPC Sawgrass during The Players Championship on Periscope and Twitter.[92] E.     eSports Go Big League eSports—the professional competitive video gaming industry—is projected by analysts to grow to a $1.5 billion market by year 2020.[93]  Recent activity in the eSports industry continues to signal the industry’s rapid growth and unrelenting push into the mainstream. 1.     Riot Games Adopts Franchise Model for eSports League Riot Games, Inc., developer and publisher of the highly popular League of Legends video game, has announced that its U.S. eSports league, the North America League of Legends Championship Series (the "NA LCS"), will adopt a franchise model, positioning the league closer to traditional sports leagues such as the NBA and NFL.  Under the new franchise model, teams will apply to become permanent partners and, once approved, will pay a fee ($10 million for current league teams and $13 million for newcomers) to solidify their spot.[94]  Similar to mainstream sports leagues, the NA LCS will also adopt revenue sharing financial incentives for good team performance, a players’ association to give players a voice in the NA LCS’s decisions, and more robust team and player development programs to ensure the growth and development of league play.[95]  All-in-all, the NA LCS changes are being celebrated for bringing eSports closer in line with traditional sports leagues and helping solidify eSports in the competitive sports arena. 2.     AEG Invests in Immortals eSports Team AEG, owner of the Los Angeles Staples Center and L.A. LIVE complexes, has further expanded into the realm of eSports by announcing a strategic investment in eSports team organization Immortals, which currently has teams competing in League of Legends, Counter-Strike: Global Offensive, Overwatch and Super Smash Bros.[96]  With the investment, AEG hopes to make L.A. LIVE the home of Los Angeles’s eSports scene and to draw tournaments to its many other live entertainment venues.[97]  AEG’s investment in Immortals is its second foray into eSports, the first being a global partnership with ESL (f/k/a Electronic Sports League), the world’s largest eSports competition organizer.[98] 3.     NBA Announces NBA 2K eSports League with 17 Teams Participating Seventeen of the NBA’s 30 franchises have signed on to operate teams in the inaugural season of the NBA 2K eSports league in 2018.[99]  Gamers will compete in a format resembling that of the NBA basketball season, with an initial draft to place gamers on teams, followed by regular season matches and bracketed tournament play for the championship.[100]  The league is the result of a co-venture with NBA 2K game developer Take-Two Interactive Software, Inc., which had announced plans to launch a professional gaming league in February.[101] F.     Strikes Averted as Guilds Reach Deals A Writer’s Guild of America ("WGA") strike was averted in early May, when the Alliance of Motion Picture and Television Producers ("AMPTP") and the WGA reached a deal on the eve of the threatened strike.[102]  Until then, the negotiation sticking points involved employer contributions to the WGA’s health plan, compensation for short-order series, wage increases and job protection on parental leave.[103]  In a letter to its members, the WGA noted that they "were able to achieve a deal that will net [its] members $130 million more, over the life of the contract, than the pattern [they] were expected to accept."[104] Additionally, a SAG-AFTRA strike was averted on July 4, 2017, when the union and the Hollywood production companies reached an agreement on the three-year master deal.[105] II.     2017 Mid-Year Litigation Report There was no shortage of watershed rulings and key litigation developments in the entertainment industry in the first half of 2017.  The Supreme Court weighed in with highly anticipated copyright and trademark rulings, first amendment cases received increased attention and concern, and music played its role on dockets nationwide.  Keeping up with the deluge of key cases is no easy task, and we have highlighted those rulings and developments that should be top of mind for our clients. A.     Hollywood Against the Hackers Beyond the courtroom, Hollywood faces renewed challenges in safeguarding its intellectual property from cybercriminals.  In the aftermath of the 2015 Sony hack, entertainment studios continue to experience serious and significant threats from hackers seeking to illegally obtain their content.  This spring, Netflix and Disney/ABC were reported victims of a hacker collective named The Dark Overlord which demanded the companies pay an unspecified ransom to prevent content being prematurely released online.[106]  When the studios balked at the ransom demand, the hackers went ahead and released the content.  Now the hacker collective claims to have additional unaired films and television series.  The Dark Overlord has stated that "Hollywood is under attack, and we’re at the forefront of this most recent offensive. We’re not in the business to scare anyone.  We’re in the business of earning vast amounts of internet money."[107]  The FBI is attempting to identify who is behind this hacking collective, but even if a culprit is located, hackers will surely remain a menace to studios going forward, and security throughout the production chain including with third-party vendors remains a primary concern for studios.[108] B.     Copyright Litigation Docket 1.     Fashioning a Key Ruling in Varsity Brands This spring, in its first case on fashion copyrights, the Supreme Court issued a sweeping opinion validating broad copyright in designs affixed to apparel products in Star Athletica v. Varsity Brands.[109]  The case involved cheerleader uniforms designed by Varsity Brands, Inc., the market leader.  Many of these uniforms are emblazoned with two-dimensional designs, such as chevrons, stripes, or zigzags, giving them that distinctive "cheerleading" look.  Varsity holds copyrights for many of these designs.  The company brought suit for copyright infringement against Star Athletica, L.L.C., alleging that it was infringing several of its copyrights by selling cheerleading uniforms that bore similar two-dimensional designs.[110] The Copyright Act extends protection not only to works of music and literature, but also to "pictorial, graphic, or sculptural" works, but only so long as those works "can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article."[111]  Star Athletica argued that the particular combinations of chevrons, zigzags and stripes that characterize Varsity’s uniforms were influenced by utilitarian considerations, and thus did not warrant copyright protection.[112]  Specifically, Star Athletica argued that the artistic aspects of the uniform designs were not "separable" from the utilitarian function of the uniform itself, and thus were not copyrightable.[113]   The district court agreed with Star Athletica, but the Sixth Circuit reversed, holding that the designs were separable.[114]  Star Athletica then sought a writ of certiorari from the Supreme Court, supported by amici who noted that courts had enumerated no fewer than nine distinct tests for conceptual separability and urged the Supreme Court to create a uniform test.[115] In a textualist opinion written by Justice Thomas, the Supreme Court affirmed the Sixth Circuit, holding that Varsity’s two-dimensional cheerleading-uniform designs are "separable features . . . of those cheerleading uniforms."[116]  The court established a two-prong test, deciding that such elements are eligible for copyright "only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated."[117] The Court rejected Star Athletica’s argument that only "solely artistic"—as opposed to utilitarian—features of useful articles can be separable.[118]  It was therefore irrelevant whether the cheerleading uniforms remain "equally useful," or even "similarly useful," once the designs are imaginatively removed.  According to Justice Thomas’s opinion, the Court "necessarily abandon[ed] the distinction between ‘physical’ and ‘conceptual’ separability, which some courts and commentators h[ad] adopted based on the Copyright Act’s legislative history."[119]  The Court then applied this test to Varsity’s uniforms and concluded that the chevron, stripes, and stars—if separated from the uniform and applied to canvas—would qualify as works of art eligible for copyright.[120]  At the same time, the Court emphasized the limits of its ruling.  Varsity Brands and its related entities "have no right to prohibit any person from manufacturing a cheerleading uniform of identical shape, cut, and dimensions to the ones on which the decorations in this case appear.  They may prohibit only the reproduction of the surface designs in any tangible medium of expression—a uniform or otherwise."[121] In dissent, Justice Breyer focused on policy concerns—writing that by extending copyright protection to basic forms of surface designs, the majority would restrict competition for the underlying item.[122]  Indeed, many commentators and scholars, in discussing the impact of this case, have predicted that the fashion industry may use the Court’s formulation of copyright law, along with trademark law, to protect their designs from copy-cats and knockoffs.[123] 2.     VidAngel’s Fading Halo The major Hollywood studios have been waging a successful battle against VidAngel, which launched in 2014, with a business model in which the company buys DVDs sold by the studios and "sells" them to consumers, who receive the programming in a digital form that allows any objectionable content such as nudity and violence to be edited out by the consumer. This battle began in December of 2016, when the studios won a preliminary injunction, thereby shutting down VidAngel, after a California federal judge said it was likely that VidAngel was infringing their copyrights and violating the Digital Millennium Copyright Act’s ban on the circumvention of digital encryption measures.[124]  Though VidAngel requires the user to purchase a physical DVD, Judge Andre Birotte said the service still illegally bypassed locks on the disc in order to upload it and stream it to those users.  "The purchase of a DVD only conveys the authority to view the DVD, not to decrypt it," the Court wrote.[125]  Moreover, VidAngel failed to present any evidence that the Hollywood studios either "explicitly or implicitly authorized DVD buyers to circumvent encryption technology" in order to watch the DVD on another platform, such as VidAngel.[126]  Judge Birotte also rejected VidAngel’s claim that its service was shielded by the Family Home Movie Act, a 2005 statute aimed at allowing for technology to edit objectionable material from videos at home.[127]  Judge Birotte further ruled that VidAngel’s omission of objectionable material from movies did not render its use "transformative" such that it would qualify for the fair use exception under copyright law.[128]  VidAngel was then held in contempt when it did not immediately comply with the preliminary injunction order requiring it to take down the studios’ films: the order issued on December 12, 2016, but VidAngel did not comply until December 29.[129]  VidAngel’s motion to the Ninth Circuit for an emergency stay pending appeal of the preliminary injunction was denied.[130]  Although the Ninth Circuit has not yet ruled on the injunction, VidAngel in the meantime released a new filtering app on June 13, 2017, that purports to offer the same functionality, except instead of using DVDs, the app links to users’ Netflix and Amazon accounts.[131]  VidAngel filed a motion with the district court seeking clarification regarding whether the injunction order applies to this new service, but the studios are vigorously opposing VidAngel’s effort, arguing that the new service is an end run around the court’s preliminary injunction and threatens to confuse consumers regarding the legitimate streaming market.[132]  Hollywood studios remain keenly invested in guarding their intellectual property against companies like VidAngel that seek to create unauthorized copies or derivative works in order to separately monetize the studios’ films.  Thus far, the studios are prevailing in this fight. 3.     Disney’s Zootopia Sued For Substantial Similarity A recent lawsuit filed against Disney alleges that Disney copied the work of Gary L. Goldman in its Oscar-winning film, Zootopia.[133]  Some of Goldman’s other work includes Total Recall and Minority Report.  The lawsuit, brought by Esplanade Productions, alleges that Goldman twice pitched Disney his similar project—titled "Looney"—in 2000 and 2009.[134]  During those pitches, Goldman provided a title, synopsis, character descriptions and even illustrations.  Disney, however, declined to pursue Goldman’s proposal.  Shortly afterward, the lawsuit alleges, Disney began production on its own Zootopia project, which went on to gross more than $1 billion at the box office.[135]  On July 11, 2017, the Court granted Disney’s motion to dismiss with leave to amend, finding, based on the inclusion in the complaint of both the asserted and the allegedly infringing materials that "[t]he differences between the character designs outnumber the similarities."[136] 4.     Broadcasters Best FilmOn on Appeal In a significant victory for cable broadcasters, the Ninth Circuit Court of Appeals reversed a victory in favor of streaming company FilmOn, handing significant relief to broadcasters like CBS, Fox, NBC and ABC, who objected to a California federal judge’s decision in July 2015 that streamers can be deemed to be a "cable system," eligible to obtain a compulsory license to broadcasters’ content under Section 111 of the Copyright Act.[137] The Ninth Circuit held that a service that captures copyright-protected works broadcast over the air, and that then retransmits them to paying subscribers over the internet without the consent of copyright holders, is not a "cable system" eligible for a compulsory license.[138]  The panel found that even if the statute may be ambiguous, it was appropriate to defer to the guidance of the Copyright Office, which has consistently found that internet-based services do not qualify as "cable systems" under the law.[139] After the ruling, FilmOn and the cable broadcasters reached a settlement.[140]  The details are confidential, but FilmOn has withdrawn pending appeals in the DC and Seventh Circuits.[141]  5.     Fees Cases Post-Kirtsaeng In 2016, the Supreme Court issued a decision Kirtsaeng v. John Wiley & Sons, Inc., holding that in deciding whether to award attorney’s fees under the Copyright Act, a district court should give substantial weight to the "objective reasonableness" of the losing party’s position, while still taking into account all other circumstances relevant to granting fees.[142]  Since then, lower courts have endeavored to apply this new standard, including in the "Stairway to Heaven" appeal and the "Who’s On First" litigation. a.     Led Zeppelin’s "Stairway to Heaven" Last summer, a jury found that guitarist Jimmy Page did not copy "Stairway to Heaven’s" iconic opening from a 1968 instrumental piece by the band Spirit, which for a time had toured with Led Zeppelin.  However, Spirit songwriter Randy Wolfe’s trustee and lawyer, Michael Skidmore, refused to accept the loss, and filed a voluminous appeal in the Ninth Circuit.  Led Zeppelin’s attorney cross-appealed, asking the Ninth Circuit to reverse the District Judge’s order on fees, and to assess the defendants’ attorneys’ fees against the Wolfe estate.[143]  In August 2016, District Judge Gary Klausner ruled that the Wolfe estate’s claims were neither frivolous nor "objectively unreasonable" enough to force paying defendants’ legal bill of nearly $800,000, despite allegations of litigation misconduct by the Wolfe estate’s attorney.[144]  Judge Klausner’s ruling came just months after the Supreme Court’s decision in Kirtsaeng. On appeal, Zeppelin and Warner/Chappell argue that Judge Klausner erred in treating litigation misconduct with equal weight as the Fogerty factors, a set of standards that were established for evaluating fee awards in copyright cases in a 1994 U.S. Supreme Court case involving singer John Fogerty.[145]  A ruling from the Ninth Circuit is pending, and expected later this year. b.     "Who’s On First" In early June, a federal magistrate judge recommended that the heirs of the famed comedy duo, Abbott and Costello, pay more than $50,000 in attorneys’ fees for filing an unsuccessful copyright lawsuit against the producers of a Broadway play that featured the duo’s famous "Who’s On First" comedy routine.[146]  United States Magistrate Judge James C. Francis said the estate’s claim that it continued to own the rights to that iconic bit was precisely the kind of "objectively unreasonable" position that the Kirtsaeng opinion had indicated can result in an award of fees.[147]  But the heirs pushed back, saying the suit had, after all, survived a motion to dismiss, and did not end until the Second Circuit shot down their claim to the rights in October 2016, in a decision that created "new law relative to this technical copyright issue."[148]  The heirs argued that a later decision cannot retroactively transform the heirs’ claim from valid to objectively unreasonable at the time of filing.[149]  No decision has been reached on this issue, but it remains clear that even under the post-Kirtsaeng standards, courts continue to be reluctant to award fees in copyright cases in the absence of clear showing that a party advanced a position it knew to be inconsistent with the law. C.     Trademark Litigation Goes on Offense 1.     SCOTUS Confronts Ban on Disparaging Trademarks in Matal v. Tam On June 19, 2017, the Supreme Court handed down its opinion in Matal v. Tam (fka Lee v. Tam), ruling that the federal government’s ban on "disparaging" trademark registrations, which was enacted into law in 1946, violates the First Amendment.[150]  Under what became known as the "disparagement clause," the Lanham Act prohibited the federal registration of trademarks on the "principal register" that may "disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute."[151]  To determine if a trademark application was disparaging, the United States Patent and Trademark Office ("PTO") examiner would employ a two-part test.  First, the examiner would determine "the likely meaning of the matter in question," and then, "[i]f that meaning is found to refer to identifiable persons, institutions, beliefs or national symbols," the examiner considers if the meaning could be disparaging "to a substantial composite of the referenced group."[152] In the case at issue, Simon Tam, the lead singer of the band The Slants, applied to register the band’s name on the principal register in 2010.[153]  The band, whose members are of Asian descent, sought to "reclaim" the derogatory racial slur.  However, the PTO examiner denied the registration, citing "numerous dictionaries" that define the term as derogatory, online bloggers and commentators who wrote about the name being offensive, and a performance that was canceled due to the band’s name.[154] Tam challenged the denial, but initially lost before the PTO’s Trademark Trial and Appeal Board (the "Board").[155]  On appeal, the U.S. Court of Appeals for the Federal Circuit found that the Lanham Act’s disparagement clause was facially unconstitutional under the Free Speech Clause of the First Amendment.[156]  Justice Alito announced the judgment of the Court, which was unanimous with respect to the conclusion that, despite the role of government in the registration process, trademarks constitute private rather than government speech.  The Court reasoned that the government merely registers the contents of others’ trademarks; it "does not dream up these marks," "it does not edit marks submitted for registration," and the PTO has made clear in the past that registration does not constitute government approval of a particular mark.  The Court also found that prior Supreme Court precedents fail to support trademark registration as a form of government speech.  According to the opinion, trademarks are different from speech used to convey a government message—as was the case with selected monuments placed on governmental property in Pleasant Grove City v. Summum—and there is no evidence the public associates trademarks with the government itself—as was the case with specialty license plates in Walker v. Texas Division, Sons of Confederate Veterans.  Further backing away from Walker, which the Court noted "likely marks the outer bounds of the government-speech doctrine," the Court emphasized that government registrations in other, related contexts like copyright registration do not constitute government speech. Justice Alito went on to reject the remainder of the government’s arguments, writing only for himself, Chief Justice Roberts, Justice Thomas, and Justice Breyer.  First, Justice Alito explained that trademark registration is not a form of government subsidy, which would permit the government to subsidize speech expressing a particular viewpoint while refusing to subsidize activities it does not wish to promote.[157]  He also refused to create a new "government-program" doctrine for trademarks that would allow for some content- and speaker-based restrictions.[158]  Finally, Justice Alito explained that it is unnecessary to decide whether the relaxed-scrutiny afforded commercial speech under the First Amendment applies here, because the disparagement clause is too broad to withstand even that lesser standard of review.[159] Justice Kennedy, in a separate opinion joined by Justices Ginsburg, Sotomayor and Kagan, emphasized in greater detail why the First Amendment protects "THE SLANTS" trademark from governmental disapproval of a viewpoint the government finds unacceptable.  He reasoned that the case involved viewpoint discrimination that warranted heightened scrutiny, without undertaking a commercial speech analysis as in Justice Alito’s opinion.[160] Justice Thomas filed a short concurrence in part and in the judgment, reiterating his view that whenever the government seeks to restrict truthful speech in order to suppress the ideas conveyed, strict scrutiny applies.[161] Tam’s central holding—that the Lanham Act’s disparagement clause is unconstitutional—is likely to have only a limited impact, as most trademarks are not accused of disparagement.  The ruling has already had implications in the sports world, however, as the government has conceded in a filing to the Fourth Circuit that because the Tam case "controls the disposition of" the government’s effort to cancel the registration of the team name and other trademarks owned by the Washington Redskins professional football team, the team will likely prevail.[162] 2.     SpongeBob SquarePants’ Fictional "Krusty Krab" Restaurant Wins In Trademark Infringement Suit On March 17, 2017, the District Court of the Southern District of Texas granted Viacom International Inc.’s motion for summary judgment on its common law trademark infringement and unfair competition claims against IJR Capital Investments, LLC.[163]  IJR had filed a federal trademark application for THE KRUSTY KRAB mark under restaurant services.  Viacom, which owns the popular Nickelodeon cartoon SpongeBob SquarePants, issued a cease and desist letter, demanding that IJR withdraw the application because the proposed mark would cause a likelihood of consumer confusion with the fictional Krusty Krab restaurant that repeatedly appears in the SpongeBob cartoon series.  IJR rejected the request, and Viacom sued, alleging, among other things, common law trademark infringement, dilution, and unfair competition.[164] To succeed on its common law trademark infringement claim, Viacom needed to establish that it possessed a valid mark in The Krusty Krab and that IJR’s use created a likelihood of confusion as to the source of the mark.[165]  To prove a valid mark, Viacom had to show that it uses the mark in commerce and that the mark is either "inherently distinctive" or has "acquired distinctiveness through secondary meaning."[166] The court first found that Viacom possessed a valid mark, even though it never registered The Krusty Krab mark and The Krusty Krab is a fictional restaurant.  Trademark ownership "is established by use in the market, not by registration," the court stated.  The Krusty Krab has appeared in 166 episodes of SpongeBob since 1999, was depicted in both SpongeBob feature films (which grossed over $470 million), and has appeared on various licensed consumer products.[167]  The Court analogized The Krusty Krab to "Kryptonite" and the "Daily Planet," two fictional components of the Superman universe that have been ruled to possess common law trademark protections because they have "regularly appeared on licensed consumer merchandise over the years."[168] Second, Viacom demonstrated that the mark had "acquired distinctiveness through secondary meaning."[169]  The Court found that Viacom has "shown by a preponderance of the evidence that it has met several of the" factors courts use to determine distinctiveness through secondary meaning.  Krusty Krab-licensed merchandise has appeared in "numerous print and Internet advertisements," declarations and exhibits summarizing SpongeBob’s eleven seasons proved the length and manner in which The Krusty Krab had been used, and the amount and manner of advertising the mark was shown by the $197 million in advertising spent on the two SpongeBob movies.[170] Finally, Viacom established a likelihood of confusion, primarily based on the strength and continued use of its own mark and "the identical spelling and pronunciation of the two marks, including the unconventional way of spelling the words with a ‘K’ instead of a ‘C.’"[171]  The Court also found that the "sales and forms of advertising are likely to overlap" and that evidence existed that the creator of IJR’s mark "was aware of Viacom’s mark."[172]  As such, Viacom’s motion for summary judgment was granted, both as to Viacom’s claim for trademark infringement and for its claim of unfair competition.[173]  The Court entered its final judgment on April 11, 2017,[174] and IJR appealed on May 9, 2017.[175] 3.     GOOGLE Not Subject to Genericide On May 16, 2017, the Ninth Circuit Court of Appeals affirmed a district court grant of summary judgment for Google against claims that its registered GOOGLE mark had become generic and should be canceled.[176] Plaintiffs had registered hundreds of domain names that included the word "google."  After Google filed a complaint with the National Arbitration Forum, the two plaintiffs initiated a federal lawsuit in Arizona, petitioning to cancel the GOOGLE mark pursuant to 15 U.S.C. § 1064(3), "which allows [for] cancellation of a registered trademark if it is primarily understood as a ‘generic name for the goods or services . . . for which it is registered.’"[177]  Generic terms are not protectable as trademarks, and this process, which has affected aspirin, cellophane, and escalator, has become known as "genericide." Plaintiffs argued that "a majority of the relevant public uses the word ‘google’ as a verb" and that "verb use constitutes generic use as a matter of law."  Google, on the other hand, "argued that [Plaintiffs] failed to present sufficient evidence to support a jury finding that the relevant public primarily understands the word ‘google’ as a generic name for internet search engines."  On appeal, the Ninth Circuit agreed with Google’s position, and affirmed the district court’s decision.[178] The Ninth Circuit concluded that widespread use of "Google" as a verb has not caused "Google" to become a generic term like "aspirin" or "thermos."[179]  The court explained that a claim of genericide must relate to a particular type of product or service, not simply to the word itself.[180]  Accordingly, the proper question was not whether "Google" had become a generic term for the "act" of search, but instead whether it had become a generic name consumers use for internet search engines.[181] 4.     Belushi Is Primarily a Surname Applicant Beds & Bars Limited applied to register the mark BELUSHI’S for travel and hotel services, but the Trademark Examining Attorney refused the application, citing 15 U.S.C. § 1052(e)(4), which "precludes registration of a mark on the Principal Register that is ‘primarily merely a surname’ without a showing of acquired distinctiveness."[182]  Applicant appealed, and the Trademark Trial and Appeal Board affirmed the Examining Attorney’s refusal, concluding "that BELUSHI’S is a surname that "has no other ‘ordinary language meaning.’"[183] Proposed marks are considered "primarily merely a surname if, when viewed in relation to the goods or services for which registration is sought, its primary significant to the purchasing public is that of a surname."[184]  To assist in this analysis, examiners consider if "the applicant adopted a principal’s name," whether the proposed mark has a "nonsurname, ‘ordinary language’ meaning," and how common the surname is.[185] On appeal, Bed & Bars argued two points:  first, that "Belushi" is an extremely rare surname and second, "if BELUSHI’S brings to mind the famous Belushi brothers, then it cannot be primarily merely a surname."[186]  But Applicant did not present "any evidence showing that BELUSHI has a meaning other than as a surname."[187]  Consequently, although the Board agreed that use of the name BELUSHI as a surname is "rare"—with only five people in the United States using it as a surname—BELUSHI is "so well-known as a result of media publicity" over the years because of the actors Jim and John Belushi "that it would be immediately recognized as a surname."[188]  And therefore, even though it is "a rare surname" its "primary significance to purchasers is that of a surname."[189] 5.     Public University Should Have Allowed Student Marijuana-Reform Organization to Use University’s Trademarks On June 13, 2017, the Eight Circuit Court of Appeals affirmed a district court’s ruling that Iowa State University ("ISU") "violated plaintiffs’ First Amendment rights because [ISU] engaged in viewpoint discrimination" when ISU repeatedly denied the student chapter of the National Organization for the Reform of Marijuana Laws’ ("NORML ISU") requests to use ISU’s trademarks in connection with designs that included cannabis leaves.[190]  The Court also affirmed the district court’s ruling that the defendants were not entitled to qualified immunity.[191] ISU recognizes NORML ISU as one of the university’s approximate 800 official student organizations.[192]  NORML ISU advocates for reforming laws that prohibit marijuana use, and as an official student organization, it can submit to ISU’s Trademark Office proposed merchandise that incorporates ISU’s trademarks with the group’s name and message.[193]  If the proposed merchandise complies with ISU’s Trademark Guidelines, the application is approved.[194] In October 2012, NORML ISU submitted a t-shirt design with a cannabis leaf to ISU’s Trademark Office, and the Trademark Office initially approved the submission.[195]  Shortly thereafter, however, the Des Moines Register published a front-page article about efforts to legalize marijuana and quoted NORML ISU’s president.[196]  This article caught the attention of the Iowa House Republican caucus and the Governor’s Office of Drug Control Policy, and both groups pushed back against the school’s policy.[197]  Ultimately, ISU placed NORML ISU’s reorder of the t-shirt design on hold, required the group to seek special approval before submitting applications to the ISU Trademark Office, revised its Trademark Guidelines to prohibit "designs that suggest promotion of . . . illegal or unhealthy products . . . [or] drugs and drug paraphernalia," and rejected all of NORML ISU’s subsequent design applications that included cannabis leaves.[198] In affirming that ISU violated plaintiffs’ First Amendment rights, the Court ruled that "ISU created a limited public forum when it made its trademarks available for student organizations to use if they abided by certain conditions."[199]  Viewpoint discrimination—regulating speech due to the speaker’s message—is permissible in limited public forums only when "the government demonstrates that its regulation is narrowly drawn and is necessary to effectuate a compelling state interest."[200]  Here, however, the Court concluded that ISU’s "discriminatory motive [was] evidenced by the unique scrutiny [it] imposed on NORML ISU."[201]  ISU placed the t-shirt reorder on hold, required the group to obtain pre-approval before submitting future designs to the Trademark Office, NORML ISU was the only student organization "to have had its trademark application denied for fear that the university would be endorsing a political cause," and "[t]he record [was] replete with statements from defendants regarding their political motives."[202] An ISU spokesman has stated that ISU is reviewing whether it will appeal the decision.[203] D.     First Amendment Cases Speak Loudly First Amendment cases and concerns featured heavily in the national news cycle in the first half of 2017, which saw a journalist for The Guardian body-slammed by a congressional candidate on the eve of Montana’s special election to fill a vacated seat.  And courts around the country are working through difficult questions surrounding the rights and responsibilities of journalists and the often controversial struggle to balance rights of privacy with access to newsworthy information.  In California, a federal judge weighed whether a new law can prevent IMDB from publishing actors’ ages.  In New York, courts considered whether a small-scale, highly targeted subscription-based news source should be compelled to reveal its sources and whether BuzzFeed should face legal ramifications for publishing the infamous Trump dossier.  1.     IMDB.com v. Becerra In an attempt to reduce age discrimination against professionals in the entertainment industry, California recently passed legislation requiring that commercial online entertainment employment services providers remove information about an individual’s age or birth date upon their request.  The new law, known as AB 1687, requires service providers to remove the offending information within 5 days of such request and to ensure that any companion sites under their control remove the same.[204] Although the language of the law applies generally to all commercial online entertainment employment service providers, it appears that the Amazon-owned IMDB and IMDB Pro are the only sites affected and were intended to be the targets.[205]  While other such databases exist, they already remove age-related information from their websites upon an actor’s request.[206]  IMDB, in contrast, has resisted calls to redact such information and, according to the company’s policy, "do[es] not remove valid dates of birth."[207]  SAG-AFTRA reportedly receives hundreds of member claims each year about IMDB’s practice of publishing actors’ ages and the impact such public information may have on casting decisions.[208]  In November 2016, IMDB filed suit to enjoin enforcement of the law on the grounds that it amounts to an unconstitutional restriction on speech.  In February, a federal district court issued a preliminary injunction enjoining the state from enforcing AB 1687 while the lawsuit is pending.[209]  In the order issuing the injunction, Judge Chhabria wrote that "it’s difficult to imagine how AB 1687 could not violate the First Amendment."[210]  The court held that the law restricted non-commercial speech on the basis of content.[211]  Under First Amendment jurisprudence, the government is therefore required to demonstrate that the restriction is actually necessary to serve a compelling government interest. While preventing age discrimination is a compelling government interest, Judge Chhabria held that the law was not necessary to serve that goal and expressed doubt that the law could "meaningfully combat discrimination at all."[212]  He also noted that the government could achieve the same ends through "more direct, more effective, and less speech-restrictive ways," including enforcing existing anti-discrimination laws more strongly.[213] Following the issuance of the preliminary injunction, the court ruled that no discovery would be permitted in the case until the government filed a motion "describing with specificity the discovery it wished to conduct and the reasons why it would be appropriate to do so."[214]  The government filed a motion for discovery seeking permission to serve various document request, interrogatories and depositions of IMDB representatives.  The government asked specifically for information regarding any policies at IMDB regarding the posting of age information on the site and any efforts by IMDB to lobby against AB 1687.[215]  In June 2017, the court issued a strongly worded denial of the discovery motion, calling the government’s request "irrelevant and burdensome," and given the First Amendment concerns in the case, "disturbing."[216]  Judge Chhabria accused the government of imposing a strict restriction on speech and then "hop[ing] a justification materialized in discovery."[217] 2.     Virginia Citizens Defense League v. Couric In 2016, Katie Couric appeared in and executive produced a documentary film, Under the Gun, which deals with the social issues surrounding gun control.  The film highlights the absences of significant changes to the nation’s gun laws following the 2012 massacre at Sandy Hook elementary school in Newtown, Connecticut.  Footage in the documentary includes an interview between Couric and nine members of the Virginia Citizens Defense League ("VCDL"), which describes itself as a "non-partisan, grassroots organization dedicated to advancing the rights of responsible gun owners under the Second Amendment and Virginia Constitution."[218]  During an interview scene, Couric asked "If there are no background checks for gun purchasers, how do you prevent felons or terrorists from purchasing guns?"[219]  The film then depicts the interview panel sitting in an awkward silence; no one appears to respond to Couric’s question.  Following the film’s release, two members of VCDL who participated in the interview sued Couric, along with the director and distributor of the film, for defamation. The plaintiffs, a gun store owner and an attorney who practices litigation related to firearms and personal defense, alleged that Couric and the co-defendants manipulated footage of the interview and that the resulting segment defamed them, both directly and by implication.[220]  Contrary to what was portrayed in the final film, plaintiffs insisted that multiple members of the interview panel, including both named plaintiffs, responded to Couric’s query.  Plaintiffs alleged that Couric’s failure to include their responses to her question was defamatory because the silence suggested that they: "(1) had no basis for their opposition to background checks, (2) are uninformed notwithstanding their expertise in the areas of gun regulations and rights, (3) were stumped by Couric’s question and (4) are ignorant or unfit in their trades."[221] Ruling on defendants’ motion to dismiss, the court dismissed plaintiff’s defamation claims, noting that defamation requires an actionable statement that is both false and defamatory.[222]  The judge found that while plaintiffs did respond to Couric’s question, they did not answer it; rather, the Court explained, "[t]hey talked about background checks and gun laws generally, but did not answer the question of how to prevent felons or terrorists from purchasing guns without background checks."[223]  Thus, the Court found that the presentation of the interview in the film was not false but instead a "dramatize[d]" rendering of the reality that the plaintiffs did not have a responsive answer to Couric’s direct question.[224]  Further, the Court held that the statement at issue was not defamatory as a matter of law. Taken in context, the scene suggests that the plaintiffs oppose background checks and at worse, that they could not or would not answer Couric’s question regarding possible methods of restricting gun sales to felons or terrorists.[225]  The Court held that the inability or refusal to answer to a question about "difficult and complex issues" neither carried the necessary sting to be defamatory nor implied that either plaintiff was unfit for their respective profession.[226] 3.     Fridman v. BuzzFeed In January 2017, BuzzFeed made the controversial decision to publish an unverified dossier detailing, among other things, allegations of long-standing attempts by the Russian government and financial sector to influence then President-elect Trump.  Owners of Alfa Bank, a Russian Bank named in the dossier, filed a defamation action against the website in May, in New York state court, seeking unspecified damages.  The complaint alleges that BuzzFeed decided to publish the unverified allegations contained in the dossier, including that "Alfa and its officials and employees ‘co-operated’ with a Kremlin campaign to interfere in the U.S. Presidential election, "with "knowledge of their falsity or with reckless disregard of whether they were true or false."[227]  BuzzFeed has defended its decision to publish the dossier, citing the ongoing congressional and FBI investigations into allegations of Russian attempts to influence the election and the fact that two successive presidents received official briefings on the dossier.[228] This is the second lawsuit filed against BuzzFeed over the publication of the dossier.  Earlier this year, Russian technology entrepreneur Aleksej Gubarev filed a similar defamation action against the website in Florida.[229]  The dossier included claims that he and his companies conducted cyber operations against the Democratic Party.[230]  Shortly after the suit was filed, BuzzFeed redacted portions of the dossier naming Gubarev and issued an apology.[231] 4.     Murray Energy Corp. v. Reorg Research, Inc. In February 2017, a New York trial court issued a ruling requiring Reorg Research, Inc., a company that provides distressed debt market intelligence to paying subscribers, to disclose the identities of several anonymous sources.[232]  The individuals in question allegedly provided to the subscription news service confidential information about coal company Murray Energy’s ongoing negotiations with its creditors.  Reorg initially refused to reveal the names of its sources, citing the New York Shield Law, which protects professional journalists from being held in contempt of court for refusing to reveal the identities of their confidential sources.[233]  The trial court, however, held that the Shield Law’s protections did not extend to the employees and sources of a commercial subscription alert service with a relatively small subscriber base.[234]  The court noted that the purpose of the Shield Law is to promote "news intended for dissemination to the public," while the value in Reorg’s alerts is that subscribers receive access to otherwise non-public information before it is widely known by the general public.[235]  The trial court also noted that Reorg’s subscription terms bar subscribers from sharing the information with non-subscribers.[236]  Therefore, the trial court held that Reorg did not fit into any of the enumerated categories of news organizations protected by the Shield Law.[237]  Reorg appealed the trial court decision and was granted a stay of the order pending appeal.  In July 2017, the Appellate Division of the Supreme Court of New York issued an order reversing the trial court decision and dismissed the case, holding that Reorg is "a professional medium or agency which has as one of its main functions the dissemination of news to the public" and is therefore protected from revealing its sources by the Shield Law.[238]  Reorg and supporting amici successfully argued that its subscription model is "essential to the economic viability of specialty or niche publications that target relatively narrow audiences."[239]  In addition, the court held that the public receives secondary benefits from the service’s news alerts, despite the restrictions on subscribers ability to share the information, because its subscribers are "the people who are most interested in this information and most able to use and benefit from it."[240]  While the trial court viewed Reorg’s high subscription fees and small user base with suspicion, the appeals court noted that given the substantial investment necessary to report on a niche subject with a small number of interested readers, the alternative to the subscription model "is not broader coverage but no coverage at all."[241]  In its conclusion, court affirmatively extended the protection of the Shield Law to Reorg and other niche subscription news services while cautioning that conditioning the Shield Law’s protection on a "fact-intensive inquiry" regarding the number of subscribers, fees, and any restrictions on disclosing the information is "unworkable" and may lead "to a potential ‘chilling’ effect."[242] E.     Music Litigation 1.     Kesha v. Dr. Luke The long-running legal battle between singer Kesha and producer Lukasz "Dr. Luke" Gottwald, now spans multiple lawsuits and counterclaims.  In October 2014, Kesha filed a civil suit against Dr. Luke in California for infliction of emotional distress, gender-based hate crimes, employment discrimination and other causes of action.[243]  In response, Dr. Luke sued Kesha and her mother, Pebe Sebert, in New York, for defamation and breach of contract.[244]  Specifically, Dr. Luke alleged that Kesha failed to work on a third album as required under her contract. The New York lawsuit resulted in the staying of the California lawsuit, which Kesha later dropped, in August 2016.  Kesha filed a countersuit in the New York action seeking to be released from her contract on the basis that Dr. Luke had allegedly "sexually, physically, and verbally and emotionally" abused her since the beginning of their professional relationship.[245]  Last year, the New York court denied Kesha’s motion for preliminary injunction that would have allowed her to record an album outside of her contract.[246]  Months later, the court dismissed all of her counterclaims.  In January 2017, Kesha’s attorneys sought to amend her original counterclaim, alleging that Dr. Luke was refusing to send accounting statements and delaying her new album’s release.[247]  The following month, Dr. Luke argued that Kesha was attempting to litigate these disputes as part of a smear campaign to blacklist him from the music industry, and that she owed him $1.3 million in royalties. Dr. Luke also asked the court to allow him to amend his complaint to include allegations concerning additional defamatory statements made by Kesha and her representatives in the media, falsely claiming that Dr. Luke had raped another recording artist, and encouraging Internet petitions to pressure Sony Music Entertainment to release Dr. Luke from his contract.[248]  In March 2017, the New York court rejected Kesha’s attempt to amend her counterclaims, citing its prior finding that Kesha did not perform her obligations under her recording contract.[249]  The court also denied her request for declaratory relief, holding that it was "speculative, not justiciable" whether Sony Music Entertainment’s contract with Dr. Luke was ending and "whether [the deal] would be able to assist" Kesha in fulfilling her contractual duties.[250]  Finally, the court rejected Kesha’s effort to assert California’s seven-year rule on personal service contracts because the parties chose New York law to govern their dealings and there was no overriding public policy interest from another jurisdiction that was materially greater than New York’s interest in enforcing the parties’ choice of New York law.[251] Kesha has since filed a notice of appeal seeking to reverse the New York Supreme Court’s dismissal of her request to amend her counterclaims.[252]  It is now pending before the New York Appellate Division.  (Disclosure: Gibson Dunn represents Sony Music Entertainment in this matter.) 2.     Prince’s Estate and Subsequent Legal Battles  Following the pop star Prince’s unexpected passing in April 2016, his estate and legacy have been the subject of a fair amount of litigation.  While Prince was well known for strictly controlling his intellectual property rights during his lifetime, he died without a will and thereby left no specific instructions about how his much-discussed "vault" of music should be handled.  Since the overwhelming majority of his estate’s value is from the copyrights in his songs, we anticipate that additional lawsuits may crop up concerning Prince’s works in the future. a.     Universal Music Group Obtains Rescission of Deal That Included Conflicted Rights In February 2017, Prince’s Estate and Universal Music Group announced that they had inked a deal that would give UMG the rights to distribute much of Prince’s catalog as well as unreleased masters from the artist’s storied vault.[253]  But immediately after the deal was announced, Warner Bros. Records informed UMG that it held rights that conflicted with those that the Estate had purportedly sold to UMG, despite the Estate’s representatives’ assurances that UMG would receive those rights.[254]  As a result of those misrepresentations, UMG sought rescission of the licensing agreement,[255] and on July 13, 2017, the Minnesota probate court overseeing the administration of Prince’s Estate approved the rescission agreement over the strident objections of several parties, including three of Prince’s heirs.[256]  (Disclosure: Gibson Dunn represents UMG in this matter.) b.     Prince’s Estate Blocks Engineer’s Attempt to Release New Prince EP In April 2017, just a few weeks before the first anniversary of Prince’s death, his estate obtained an injunction against audio engineer and Prince’s former collaborator George Ian Boxill, blocking the unauthorized release of a new six-song EP entitled Deliverance, credited to the singer.[257]   The estate claimed that Boxill unlawfully held onto recordings made between 2006 and 2008 and that he does not have the authorization to release them.  Specifically, the estate points to a confidentiality agreement that Boxill signed with Prince which states that the pair’s recordings "would remain Prince’s sole and exclusive property" and that Boxill "would not use any recordings or property in any way whatsoever."[258]  c.     Andy Warhol Foundation v. Lynn Goldsmith The estate of pop artist Andy Warhol preemptively brought suit in New York federal court seeking declaratory judgment against photographer Lynn Goldsmith over certain artworks featuring Prince’s image "to protect the works and legacy of Andy Warhol."[259]  The complaint came after Goldsmith asserted that Warhol violated the copyright of her photographs of Prince, taken in 1981 for a Vanity Fair article, when they were used to make Warhol’s screen prints.[260]  The Warhol Foundation alleged that the works in Warhol’s "Prince" series do not infringe upon Goldsmith’s copyright in the photograph and are in fact "transformative or are otherwise protected fair use."[261]  The complaint goes into great detail to distinguish Goldsmith’s photo and Warhol’s prints, pointing to changes in color, depth, cropping, and more.  The Warhol Foundation further argues that Goldsmith’s claims are barred by the three-year statute of limitations of the Copyright Act.  Goldsmith responded in a Facebook post to the lawsuit by arguing that she only learned of the Warhol series’ existence following Prince’s death last year.[262]  In June 2017, Goldsmith filed her answer and counterclaims asserting infringement related to a May 2016 special Prince tribute magazine, alleging the lack of transformative nature through the following comparison between the image used for the magazine cover and the original image:[263]   3.     Royalties Disputes with Digital Music Streaming Services New technology streaming services like Spotify, Pandora, and SiriusXM have recently faced multiple royalty disputes from songwriters and artists for allegedly failing to obtain proper licenses and/or pay complete royalty payments.  For instance, in May 2017, Spotify agreed to a $43 million settlement in a class action lawsuit brought by singer-songwriter Melissa Ferrick, who alleged that the streaming service Spotify infringed upon thousands of songwriters’ copyrights rather than follow the proper procedures to obtain mechanical royalties.[264]  Specifically, Ferrick alleged that, as required for mechanical royalties under section 115 of the Copyright Act, Spotify did not file the formal "notice of intent" to obtain many licenses.  In a separate suit, last year, Spotify agreed to settle a suit from the National Music Publishers’ Association for $30 million over unmatched and unpaid song royalties.[265]  Mechanical royalties are currently of considerable interest to the industry because later this year, the Copyright Royalty Board—the panel of judges who describe the royalty rates paid to songwriters and music publishers for the sale of each musical composition to any streaming services—will decide the new mechanical royalty rates for 2018 to 2022.  The current mechanical rates are 9.1 cents for a sale, which is split by the music publisher and songwriter, and rates for streaming are fractions of a cent per play.  A hearing on the matter was held in March 2017, and the Copyright Royalty Board will issue its decision in December 2017.[266]  4.     Fair Use and Sampling Go Another Round Questions over the use and copying of older songs remained a hot-button issue in the aftermath of the 2015 "Blurred Lines" trial, where a jury awarded Marvin Gaye’s family nearly $7.4 million after determining that singers Robin Thicke and Pharrell Williams had copied Gaye’s music in creating their hit song.  This year, the plaintiffs in a different case were less successful in establishing copyright infringement when a New York district court held that the artist Drake’s sample of a spoken word Jimmy Smith track constituted non-infringing fair use.[267]  In 2014, the estate of jazz musician Jimmy Smith brought a copyright infringement suit against Drake over the spoken word sample that opens Drake’s track "Pound Cake/Paris Morton Music 2" on his album Nothing Was the Same.[268]  The lawsuit alleged that Jimmy Smith’s 1982 song "Jimmy Smith Rap" was so prominently sampled on Drake’s track that it amounted to infringement.  In the original track, Smith says, "Jazz is the only real music that’s gonna last.  All that other bull— is here today and gone tomorrow.  But jazz was, is, and always will be."  In Drake’s version, the words are cut down to "[o]nly real music’s gonna last.  All that other bull— is here today and gone tomorrow." The court held that Drake’s sample did not constitute copyright infringement.  When comparing the original against Drake’s version, the court found that Smith’s original was "an unequivocal statement on the primacy of jazz over all other forms of popular music" while Drake’s version transforms it into a "statement that ‘real music’ with no qualifiers, is ‘the only thing that’s gonna last.’"[269]  Because the purpose of the "Pound Cake" track was "sharply different" from Smith’s original message, it added something new and was thereby "transformative."[270]  On July 13, Smith’s motion for reconsideration was denied.[271]  Notably, while the "Blurred Lines" case revolved around the musical composition underlying the song, the Drake case focused on the prose of only a spoken word sample and the meaning of that prose in both songs, providing a contrast between music that was allegedly copied, on the one hand, and a brief sample of actual lyrics, on the other hand.  (Disclosure: Gibson Dunn represents Apple Inc. in this matter.) 5.     The Estate of Jimi Hendrix  For years, entertainment litigators have seen estates of famous celebrities move aggressively to safeguard the legacy of the deceased.  Experience Hendrix, LLC, the estate for legendary guitarist Jimi Hendrix, has been particularly vocal in raising legal challenges to protect his reputation and brand, as evidenced by two recent cases. In Experience Hendrix, LLC v. Tiger Paw Distributors, LLC, the Hendrix estate alleged that the liquor company Tiger Paw committed trademark infringement and disparagement, unfair competition, and other unlawful acts by using Hendrix’s trademarks on an unauthorized promotion of Purple Haze Liqueur.[272]  As part of a settlement, the U.S. District Court for the Southern District of Georgia entered a permanent injunction against the defendants in January 2017, prohibiting them from using the names "Jimi Hendrix" and "Jimi," the initials "JH," and any of the Hendrix estate’s trademarks that incorporate an image or likeness of Hendrix.[273]  The judgment, however, specified that Tiger Paw could nevertheless continue to sell spirits under titles that explicitly referenced several of Hendrix’s songs, and may in fact reference Hendrix directly, as long as those references have a smaller type face and do not infer any endorsement by or affiliation with Hendrix’s estate. Separately, the California Court of Appeal also recently resolved a long-standing contract dispute over whether a film documenting Hendrix’s February 1969 performances at the Royal Albert Hall in London would ever be released.  More than four decades after the performances, the Hendrix estate and film documentarian Gerald Goldstein formed a joint venture to distribute a film of the concert.  But the following year, the estate rescinded the deal, claiming that Goldstein breached it by unreasonably refusing to consent to Sony Pictures Entertainment’s distribution offer.  As a result, the Hendrix estate sued Goldstein seeking $5 million in restitution.  Goldstein responded by arguing that he envisioned a wide release of at least 1,500 movie theaters for the film and did not want to take the Sony deal, which only offered a limited release of about a half-dozen screens and allegedly would result in minimal, if any, profits. The Los Angeles Superior Court ruled in Goldstein’s favor in October 2014, finding that "[w]hile it appears unlikely that he would have been able to attract sufficient financing to achieve the wide release he had envisioned, Goldstein was not given the opportunity to attempt to obtain third party financing."[274]  The lower court also ordered the Hendrix estate to pay more than $300,000 in attorneys’ fees.  On appeal, in May 2017, the court of appeal rejected the estate’s arguments and held that Goldstein was within his contractual rights when he rejected Sony Pictures’ plans to distribute.[275]  The court affirmed the trial court’s finding that Goldstein’s longstanding vision for a wide release of the film may not have been a sound business decision, but was within his rights under the contractual terms.[276]  F.     New Efforts to Regulate ISPs So far, 2017 has seen a number of interesting developments in areas where social media and the internet intersect with speech and privacy rights.  One such development occurred in New York, where lawmakers are considering enacting a version of the European "Right to Be Forgotten" law, which raises a host of First Amendment considerations not implicated in Europe. 1.     The Right To Be Forgotten In May 2014, the European Court of Justice ruled that internet search engines must honor an individual’s right to be forgotten and delete links that do not serve a compelling public interest and which harm privacy rights.[277]  Since then, European Union policymakers have approved a general data protection regulation ("GDPR"), which goes into effect in May 2018.  The GDPR will require internet providers to balance takedown requests against other competing interests and rights.[278] One issue currently surrounding the European version of the law is its jurisdictional reach.  In France, the Commission Nationale de l’Informatique et des Libertés ("CNIL") has ordered Google to globally erase content subject to removal regardless of what country the request came from.[279]  Google maintains that it need only remove content from the European versions of its search engine, but government officials disagree, and similar fights would likely result from the New York law, which is styled to apply "regardless of whether such content also was or is published elsewhere."[280] On February 8, 2017, New York State Assemblyman David I. Weprin introduced The Right to Be Forgotten Act.[281]  Bill A05323, as currently written, would amend the state’s civil rights laws so that "[u]pon the request from an individual, all search engines, indexers, publishers and any other persons or entities that make available, on or through the internet . . . , information about the requester, shall remove information, articles, identifying information and other content about such individual . . . that is ‘inaccurate’, ‘irrelevant’, ‘inadequate’ or ‘excessive’ within thirty days of such request."[282]  The bill proceeds to collectively define "inaccurate," "irrelevant," "inadequate," or "excessive" as "content, which after a significant lapse in time from its first publication, is no longer material to current public debate or discourse, especially when considered in light of the financial, reputational and/or demonstrable other harm that the . . . content is causing to the requester’s . . . interest."[283]  However, the bill excludes "content related to convicted felonies, legal matters relating to violence, or a matter that is of significant current public interest."[284] In addition, the New York law does not appear to sufficiently account for First Amendment free-speech considerations or the need to preserve information that remains in the public’s interest, calling into question the bill’s constitutionality even before its enactment.[285]  In the United States, non-defamatory social media posts, news articles, and search engine histories are forms of protected speech under the First Amendment, and courts have repeatedly held that the freedom of speech extends to hateful and disagreeable speech.[286]  Therefore, were the law to be enacted, without clearer limitations, New York’s Right to Be Forgotten Act is likely to face constitutional challenges. Even putting aside such constitutional issues, experience with similar laws in Europe has shown that these laws have created uncertainty for internet companies.  And the proposed New York law is likely to raise similar issues.  In particular, critics have raised questions as to the  jurisdictional breadth of the proposed law and the burdens that it would place on the internet companies that would be forced to attempt to interpret and comply with it.  As written, the bill could result in fines of $250 per day against violators after a thirty-day grace period.[287]   [1] Cynthia Littleton, Sinclair Broadcast Group Sets $3.9 Billion Deal to Acquire Tribune Media, Variety, May 8, 2017, http://variety.com/2017/tv/news/sinclair-tribune-merger-station-group-1202416416/. [2] Jenna Ebersole, DC Circuit Lifts Halt on FCC TV Ownership Shift, Law360, June 15, 2017, https://www.law360.com/articles/935104/dc-circuit-lifts-halt-on-fcc-tv-ownership-shift. [3] Etan Vlessing, Ion Media Buys Three TV Stations, Bringing Total to 63, The Hollywood Rep., June 20, 2017, http://www.hollywoodreporter.com/news/ion-media-buys-three-tv-stations-bringing-total-63-1015058. [4] Ebersole, supra note 2. [5] Cynthia Littleton, Appeals Court Removes FCC Roadblock to Sinclair-Tribune Merger, Variety, June 15, 2017, http://variety.com/2017/tv/news/fcc-sinclair-tribune-uhf-discount-appeals-court-1202467351/. [6] George Szalai, Fox’s Sky Deal: Regulators Submit Reports, U.K. Government to Decide by June 29, The Hollywood Rep., June 20, 2017, http://www.hollywoodreporter.com/news/foxs-sky-deal-regulators-submit-reports-uk-government-1014630. [7] Ivana Kottasova & Alanna Petroff, Murdoch’s Fox-Sky Deal in Hands of U.K. Government, CNN Money, June 20, 2017, http://money.cnn.com/2017/06/20/media/sky-fox-deal-rupert-murdoch/index.html. [8] Szalai, supra note 6. [9] Jason Douglas & Stu Woo, Fox’s Bid for Sky Set for More U.K. Scrutiny, Wall St. J., June 29, 2017, https://www.wsj.com/articles/foxs-bid-for-sky-set-for-more-u-k-scrutiny-1498735307. [10] Id. [11] Arjun Kharpal, Verizon Completes Its $4.48 Billion Acquisition of Yahoo; Marissa Meyer Leaves with $23 Million, CNBC, June 13, 2017, http://www.cnbc.com/2017/06/13/verizon-completes-yahoo-acquisition-marissa-mayer-resigns.html. [12] Id. [13] Id. [14] Id. [15] Ryan Knutson, et al., Verizon Doubles Down on Media with Yahoo Deal, Wall St. J., June 13, 2017, https://www.wsj.com/articles/verizon-doubles-down-on-media-with-yahoo-deal-1469465120. [16] Kharpal, supra note 11. [17] Lukas I. Alpert & Shalini Ramachandran, Vice Media Secures $450 Million Investment from Private-Equity Firm TPG, Wall St. J., June 19, 2017, https://www.wsj.com/articles/vice-media-secures-450-million-investment-from-private-equity-firm-tpg-1497882405. [18] Id. [19] David Lieberman, Vice Media Grips $450M Investment That CEO Says Raises Valuation to $5.7B, Deadline Hollywood, June 19, 2017, http://deadline.com/2017/06/vice-media-grips-450m-investment-ceo-says-raises-valuation-1202115714/. [20] Id. [21] Shalini Ramachandran & Georgia Wells, Time Warner Signs $100 Million Deal With Snap for Shows and Ads, Wall St. J., June 19, 2017, https://www.wsj.com/articles/time-warner-signs-100-million-deal-with-snap-for-shows-and-ads-1497885737. [22] Shalini Ramachandran, Media Companies Line Up to Make Shows for Snap TV, Wall St. J., May 4, 2017, https://www.wsj.com/articles/media-companies-line-up-to-make-shows-for-snap-tv-1493890205. [23] Id. [24] Ramachandran & Wells, supra note 21. [25] Variety Staff, SiriusXM Sets $480 Million Investment in Pandora, Variety, June 9, 2017, http://variety.com/2017/music/news/siriusxm-480-million-investment-pandora-1202459872/. [26] Benjamin Horney, 4 Firms Assist On SiriusXM’s $480M Investment In Pandora, Law360, June 9, 2017, https://www.law360.com/articles/933029/4-firms-assist-on-siriusxm-s-480m-investment-in-pandora. [27] Id.; see also Chelsea Naso, Pandora Inks $450M Deal For Event Ticketing Service, Law360, Oct. 7, 2015, https://www.law360.com/articles/711861/pandora-inks-450m-deal-for-event-ticketing-service. [28]    Brian Heater, Pandora CEO Tim Westergren is Officially Out Amid Company Shakeup, TechCruch, June 27, 2017, https://techcrunch.com/2017/06/27/pandora-ceo-tim-westergren-is-officially-amid-company-shakeup/. [29] Nick Kostov & Corrie Driebusch, Cable Operator Delivers Biggest U.S. Telecom IPO in 17 Years, Wall St. J., June 21, 2017, https://www.wsj.com/articles/altice-usa-a-mashup-of-telecoms-set-to-be-one-of-the-biggest-ipos-of-the-year-1498053660. [30] Id. [31] Alex Barinka & Gerry Smith, Altice USA CEO Goei Thinks Ahead to M&A on First Day of Trading, Bloomberg Tech., June 21, 2017, https://www.bloomberg.com/news/articles/2017-06-21/altice-usa-raises-1-9-billion-in-year-s-second-biggest-u-s-ipo. [32] Lauren Hirsch & Liana B. Baker, Cable Operator Altice USA Raises $1.9 bln in IPO, Reuters, June 21, 2017, available at http://www.cnbc.com/2017/06/21/reuters-america-update-1-cable-operator-altice-usa-raises-19-bln-in-ipo.html. [33] Id. [34] Sruthi Shankar & Laharee Chatterjee, WideOpenWest Shares Fail to Wow in Debut, Reuters, May 25, 2017, http://www.reuters.com/article/us-wideopenwest-ipo-idUSKBN18L1YT. [35] Ryan Faughnder & David Pierson, The $1-billion deal to sell Dick Clark Productions to China’s Wand Group is dead, L.A. Times, March 10, 2017, http://www.latimes.com/business/hollywood/la-fi-ct-wanda-dick-clark-deal-20170309-story.html. [36] Id. [37] Sherisse Pham, Dick Clark Productions owner pulls the plug on $1 billion sale to China’s Wanda Group, CNN Money, March 13, 2017, http://money.cnn.com/2017/03/13/news/companies/dalian-wanda-dick-clark-deal-dead/index.html. [38] David Lieberman, Dick Clark Productions Owner Scraps $1B Sale to Wanda Group, Deadline, March 10, 2017, http://deadline.com/2017/03/dick-clark-productions-owner-scraps-sale-wanda-group-1202040693/. [39] Id. [40] Brent Lang & Gene Maddaus, After Dick Clark Productions Deal Fails to Close, What’s Next for Dalain Wanda, Variety, March 14, 2017, http://variety.com/2017/film/news/wanda-dick-clark-productions-deal-failure-hollywood-1202007964/. [41] Patrick Brzeski, Crisis Grows at China’s LeEco After Courts Freeze Chairman’s Millions, The Hollywood Rep., July 4, 2017, http://www.hollywoodreporter.com/news/crisis-grows-at-chinas-leeco-courts-freeze-chairmans-millions-1018664. [42] Eriq Gardner, Vizio Files Fraud Lawsuit Against China’s LeEco After $2 Billion Merger Fails, The Hollywood Rep., July 11, 2017, http://www.hollywoodreporter.com/thr-esq/vizio-files-fraud-lawsuit-chinas-leeco-2-billion-merger-fails-1020120. [43] Id. [44] Id. [45] Gene Maddaus, Chinese Metals Firm in Busted Voltage Deal Says It Can’t Be Sued in U.S. Court, Variety, June 2, 2017, http://variety.com/2017/biz/news/anhui-xinke-new-materials-voltage-china-lawsuit-1202452301/. [46] Patrick Brzeki, Wanda Boards Paramount’s ‘Transformer 5’ as Marketing Partner in China, The Hollywood Rep., June 19, 2017, http://www.hollywoodreporter.com/news/wanda-boards-paramounts-transformers-5-as-marketing-partner-china-1014635. [47] Mila Galuppo, Blumhouse Inks Multiyear Co-Financing Deal with China’s Meridian, The Hollywood Rep., Apr. 25, 2017, http://www.hollywoodreporter.com/news/blumhouse-inks-multiyear-financing-deal-chinas-meridian-997293. [48] Rebecca Sun, CAA and China’s Bona Film Group Establish $150 Million Film Fund, The Hollywood Rep., May 25, 2017, http://www.hollywoodreporter.com/news/caa-chinas-bona-film-group-establish-150-million-film-fund-1007809. [49] Id. [50] Patrick Frater, Paramount’s Billion-Dollar Deal With Chinese Partners Hits Major Snag, Variety, March 8, 2017, http://variety.com/2017/film/asia/paramount-slate-deal-chinese-partners-hits-road-bump-1202003483/. [51] Id. [52] George Szalai, Paramount’s China Partners Now Financing 30 Percent of Slate, The Hollywood Rep. May 4, 2017, http://www.hollywoodreporter.com/news/viacom-paramounts-china-deal-is-operation-partners-financing-30-percent-slate-1000160. [53] Rebecca Sun & Patrick Brzeski, CAA’s New China Frontier; Strong Investor Now, Possible IPO Later?, The Hollywood Rep., Apr. 26, 2017, http://www.hollywoodreporter.com/news/caas-new-china-frontier-strong-investor-ipo-997497. [54] Patrick Brzeski, Cannes: UTA, Tan Media Partners Tem on China Distribution Fund,  The Hollywood Rep., May 21, 2017, http://www.hollywoodreporter.com/news/cannes-uta-tang-media-partners-team-china-distribution-fund-1005959. [55] Patrick Brzeski, Netflix Signs Licensing Deal with China’s iQiyi, The Hollywood Rep., Apr. 24, 2017, http://www.hollywoodreporter.com/news/netflix-signs-licensing-deal-chinas-iqiyi-997071. [56] Patrick Frater, Netflix to Debut in China Via Original Content Licensing Deal with iQIYI, The Hollywood Rep., Apr. 24, 2017, http://variety.com/2017/digital/asia/netflix-strikes-streaming-deal-with-china-iqiyi-1202394504/. [57] Brzeski, supra note 54. [58] Id. [59] Id. [60] Frater, supra note 56. [61] Patrick Frater, Global Streaming Giant Netflix Plays Catch-Up in Asia, The Hollywood Rep., Apr. 27, 2017, http://variety.com/2017/digital/asia/netflix-plays-catch-up-in-asia-1202401071/. [62] Id. [63] Id.; Abhishek Madhavan, How Netflix Lost Big to Amazon in India, Wired, Jan. 12, 2017, https://www.wired.com/2017/01/how-netflix-lost-big-to-amazon-in-india/. [64] Elsa Keslassy, Patrick Drahi’s Telco Group Altice Inks Multi-Year Deal with Netflix, Variety, June 12, 2017, http://variety.com/2017/digital/global/patrick-drahis-telco-group-altice-inks-multi-year-deal-with-netflix-1202462301/; see also Section I.A.7, supra. [65] Todd Spangler, Netflix to Raise $1.1 Billion in New Debt From Non-U.S. Lenders, Variety, Apr. 24, 2017, http://variety.com/2017/digital/news/netflix-1-billion-debt-non-us-content-expansion-1202393530/. [66] Todd Spangler, Netflix Ups Size of Latest Debt Offering to $1.4 Billion to Fund Content Deals, Variety, Apr. 26, 2017, http://variety.com/2017/digital/news/netflix-debt-offering-1-4-billion-1202399657/. [67] Todd Spangler, Netflix Streams More Debt as Investors Wait to See Payoff, Variety, May 4, 2017, http://variety.com/2017/biz/news/netflix-more-debt-1202408166/. [68] Id. [69] Georg Szalai, Amazon Channels Launches in U.K. With Discovery, NBCU, ITV Content, The Hollywood Rep., May 23, 2017, http://www.hollywoodreporter.com/news/amazon-channels-launches-uk-discovery-nbcu-itv-content-1006625. [70] Stewart Clarke, Amazon Launches Channels in U.K. and Germany with Discovery, ITV, NBCU, RTL, Variety May 23, 2017, http://variety.com/2017/tv/global/amazon-channels-in-uk-and-germany-discovery-itv-nbcu-rtl-tele-munchen-mgm-bfi-hopster-1202441171/. [71] Trefis Team, Here’s How Amazon Is Expanding Prime Video In India, Forbes, March 20, 2017, https://www.forbes.com/sites/greatspeculations/2017/03/20/heres-how-amazon-is-expanding-prime-video-in-india/#74c6c8fe2ece. [72] Naman Ramachandran, Amazon Prepares to Launch Prime Video in India, Variety, December 13, 2016, http://variety.com/2016/digital/asia/amazon-prepares-launch-prime-video-india-1201940612/. [73] Nyay Bhushan, Paramount, Amazon India Strike Licensing Deal, The Hollywood Rep., Apr. 10, 2017, http://www.hollywoodreporter.com/news/paramount-amazon-india-strike-licensing-deal-992360. [74] Id. [75] Nyay Bhushan, Amazon India, Warner Bros. Ink Licensing Deal, The Hollywood Rep., June 5, 2017, http://www.hollywoodreporter.com/news/amazon-india-warner-ink-licensing-deal-1010113. [76] Todd Spangler, Hulu Live TV Service Launches With 50 Channels for $40 Monthly, Variety, May 3, 2017, http://variety.com/2017/digital/news/hulu-live-tv-service-launch-channels-1202407778/; Daniel Holloway, Hulu Sets Live TV Carriage Pact for NBCUniversal Channels, Variety, May 1, 2017, http://variety.com/2017/tv/news/hulu-nbcuniversal-carriage-pact-1202404615/. [77] Spangler, supra note 76. [78] Id. [79] Id.   [80] Andrew Wallenstein Hulu Offers HBO, Cinemax as Subscription Add-Ons, Variety, July 6, 2017,  http://variety.com/2017/tv/news/hulu-offers-hbo-cinemax-as-subscription-add-ons-1202488341/ [81] Id.   [82] Id. [83] Michael O’Connell, Hulu Chief Says Library Acquisitions, Like ‘Golden Girls,’ Still a Key to Streamer’s Strategy, The Hollywood Rep., Jan. 17, 2017, http://www.hollywoodreporter.com/live-feed/hulu-chief-says-library-acquisitions-like-golden-girls-still-key-965005. [84] Nick Vivarelli, iflix Looks to Take On Netflix in Emerging Markets, Variety, May 30, 2017, http://variety.com/2017/digital/news/iflix-middle-east-chief-nader-sobhan-netflix-emerging-markets-1202447431/. [85] Todd Spangler, Netflix CEO Reed Hastings on Amazon: ‘They’re Awfully Scary’, Variety, May 31, 2017, http://variety.com/2017/digital/news/netflix-reed-hastings-amazon-awfully-scary-1202448694. [86] Zachary Zagger, Amazon Grabs NFL Thursday Streaming Rights In $50M Deal, Law360, Apr. 5, 2017, https://www.law360.com/media/articles/910148/amazon-grabs-nfl-thursday-streaming-rights-in-50m-deal. [87] Id. [88] Cynthia Littleton, Amazon Nabs Streaming Rights to NFL’s ‘Thursday Night Football’ Games, Variety, Apr. 4, 2017, http://variety.com/2017/biz/news/amazon-streaming-nfl-thursday-night-football-deal-1202023105/. [89] Zachary Zagger, Hulu, Twitter Add Live Sports Options In Cord-Cutting Trend, Law360, May 3, 2017, https://www.law360.com/media/articles/920063/hulu-twitter-add-live-sports-options-in-cord-cutting-trend. [90] Todd Spangler, Twitter Pushes Live-Video Deals With MLB, NFL, Viacom, BuzzFeed, Live Nation, WNBA and More, Variety, May 1, 2017, http://variety.com/2017/digital/news/twitter-pushes-live-video-deals-with-mlb-buzzfeed-live-nation-wnba-and-others-1202405236/. [91] Id. [92] Id. [93] Peter Warman, eSports Revenues Will Reach $696 Million This Year and Grow to $1.5 Billion by 2020 As Brand Investment Doubles, NewZoo, Feb 14, 2017, https://newzoo.com/insights/articles/esports-revenues-will-reach-696-million-in-2017/. [94] Evolution of the NA LCS, Esports, June 1, 2017, http://www.lolesports.com/en_US/articles/evolution-of-the-na-lcs. [95] Id. [96] AEG Announces Investment in Leading eSports Franchise Immortals, Business Wire, June 20, 2017, http://www.businesswire.com/news/home/20170620005597/en/AEG-Announces-Investment-Leading-Esports-Franchise-Immortals. [97] Id. [98] Id. [99] Jacob Wolf, NBA Announces 17 Teams Will Participate in NBA 2K League, ESPN, May 4, 2017, http://www.espn.com/esports/story/_/id/19305330/nba-announces-17-teams-participate-nba-2k-esports-league. [100] Id. [101] Id. [102] Dave McNary, Writers Guild Strike Averted Without Fanfare, Variety, May 2, 2017, http://variety.com/2017/film/news/writers-guild-strike-averted-1202406222/. [103] Id. [104] Id. [105] David Robb & Erik Pedersen, DEAL! SAG-AFTRA & Producers Reach Tentative Agreement on New Film & TV Contracts; Read The Terms, Deadline, July 4, 2017, http://deadline.com/2017/07/screen-actors-guild-strike-averted-tentative-deal-film-tv-contract-sag-amptp-1202123068/; Jonathan Handel, SAG-AFTRA Reaches Deal with NPR, Strike Averted, The Hollywood Rep., July 16, 2017, http://www.hollywoodreporter.com/news/sag-aftra-reaches-deal-npr-strike-averted-1021565. [106] Hacker Releases New Episodes of "Orange Is The New Black," The Hollywood Rep., Apr. 28, 2017, http://www.hollywoodreporter.com/news/hacker-threatens-release-new-episodes-orange-is-new-black-998670;  Abid Rahman, Hacker Leaks Episodes of Steve Harvey’s ABC Game Show, ‘Funderdome,‘ The Hollywood Rep., June 7, 2017, http://www.hollywoodreporter.com/news/hacker-leaks-episodes-steve-harveys-abc-game-show-funderdome-1010101. [107] Tatiana Siegel, Netflix, ABC Hacker Promises More Leaks: ‘Hollywood Is Under Attack,‘ The Hollywood Rep., June 6, 2017, http://www.hollywoodreporter.com/news/netflix-abc-hacker-promises-more-leaks-hollywood-is-under-attack-1010789. [108]   Janko Roettgers, ‘Orange Is the New Black’ Leak Shows: Hollywood Cybersecurity Lives and Dies With Third-Party Vendors, Variety, Apr. 29, 2017, http://variety.com/2017/digital/news/oitnb-leak-hack-hollywood-security-1202403886/. [109]   Star Athletica, L.L.C. v. Varsity Brands, Inc., 580 U.S. ___, *1 (2017) ("Op."). [110]   Id. at *2. [111]  17 U.S.C. § 101. [112]   Id. [113]   Id. (citing 17 U.S.C. § 101).  [114]   Id. [115]   Id. at *4. [116]   Id. [117]   Id. at *1-*2. [118]   Id. at *12-*15. [119]   Id. at *15. [120]   Id. at *17. [121] Id. at *12. [122]   Id. at *9 (Stevens, J., dissenting). [123]  Steff Yotka, What the Supreme Court’s First Ruling on Fashion Copyrights Means for the Runway, Vogue, March 23, 2017, http://www.vogue.com/article/supreme-court-star-athletica-varsity-brands-ruling-fashion-industry ("Designers have relied mostly on trademarks to protect themselves, but now they can argue that more conceptual, less obvious aspects of their designs should be protected by copyright too…You can expect to see designers relying on copyright law more often to challenge what they perceive to be knock-offs."). [124]   Order Granting Plaintiffs’ Motion for Preliminary Injunction, Disney Enterprises, Inc. et al v. VidAngel Inc., Case No. 2:16-cv-04109 – AB (PLAx) at *1-*2 (C.D. Cal. Dec. 12, 2016). [125]   Id. at *7. [126]   Id. [127]   Id. at *7-*8. [128]   Id. at *13-*14 ("VidAngel’s service does not add anything to plaintiff’s works. It simply omits portions that viewers find objectionable."). [129] Ashley Cullins, VidAngel Found in Contempt for Delay in Removing Disputed Films, The Hollywood Rep., Jan. 6, 2017, http://www.hollywoodreporter.com/thr-esq/vidangel-found-contempt-delay-removing-disputed-films-961609. [130]   Bill Donahue, 9th Circ. Rejects VidAngel’s Emergency Stay Bid, Law360, Jan. 5, 2017, https://www.law360.com/articles/877896. [131]   Eriq Gardner, Hollywood Studios are Suspicious of VidAngel’s New Filtering App, The Hollywood Rep., June 21, 2017, http://www.hollywoodreporter.com/thr-esq/hollywood-studios-are-suspicious-vidangels-new-filtering-app-1015521.   [132] Ashley Cullins, Hollywood Studios Rip VidAngel’s New Service in Filtering Fight, The Hollywood Rep., July 3, 2017, http://www.hollywoodreporter.com/thr-esq/hollywood-studios-rip-vidangels-new-service-filtering-fight-1018550. [133]   Eriq Gardner, Disney Hit With Lawsuit Claiming ‘Zootopia’ Ripped Off ‘Total Recall’ Writer, The Hollywood Rep., Mar. 21, 2017, http://www.hollywoodreporter.com/thr-esq/disney-hit-lawsuit-claiming-zootopia-ripped-total-recall-writer-987660. [134]   Complaint, Esplanade Prods., Inc. v. The Walt Disney Company et al.,  Case No. 2:17-cv-02185 at *1-2, *11-13. (C.D. Cal. Mar. 21, 2017). [135]   Id. at *13. [136] Eriq Gardner, Disney Wins Dismissal of ‘Zootopia’ Copyright Lawsuit (For Now), The Hollywood Rep., July 11, 2017, http://www.hollywoodreporter.com/thr-esq/disney-wins-dismissal-zootopia-copyright-lawsuit-1020026. [137] Eriq Gardner, Appeals Court Rules TV Streamers Don’t Get Compulsory License to Broadcast Networks, The Hollywood Rep., Mar. 21, 2017, http://www.hollywoodreporter.com/thr-esq/appeals-court-rules-tv-streamers-dont-get-compulsory-license-broadcast-networks-987614.   [138] Opinion, Fox Television Stations Inc. et al. v. Aereokiller LLC et al., Case No. 15-56420 at *25 (9th Cir. Mar. 21, 2017). [139] Id. ("The Copyright Office says they are not eligible. Because the Office’s views are persuasive, and because they are reasonable, we defer to them."). [140] Eriq Gardner, Broadcasters Settle Copyright Dispute With FilmOn, The Hollywood Rep., May 15, 2017, http://www.hollywoodreporter.com/thr-esq/broadcasters-settle-copyright-dispute-filmon-1003980.  [141] Id. [142] Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979 (2016).  [143] Ashley Cullins, Led Zeppelin Asks Appeals Court to Award Fees for "Stairway" Trial Win, The Hollywood Rep., June 7, 2017, http://www.hollywoodreporter.com/thr-esq/led-zeppelin-asks-appeals-court-award-fees-stairway-trial-win-1011116. [144] Order re: Defendants’ Motion for Attorney’s Fees and Costs, Michael Skidmore v. Led Zeppelin et al,  Case No. CV 15-03462 RGK (AGRx) at *2-*5 (C.D. Cal. Aug. 8, 2016). [145] Combined Answering and Opening Brief, Michael Skidmore v. Led Zeppelin et al., Case Nos. 16-56057 & 16-56287 (9th Cir. June 2, 2017), at *82-*89 ("The District Court — without considering whether its ruling furthered the purposes of the Copyright Act — identified the following Fogerty factors: ‘(1) "the degree of success obtained on the claim"; (2) "frivolousness"; (3) "motivation"; (4) "objective reasonableness of factual and legal arguments"; and (5) "need for compensation and deterrence."’). [146] TCA Television Corp. et al v. McCollum et al, Report and Recommendation, Case No. 15 Civ. 4325 (GBD) (JCF) at *24 (S.D.N.Y. June 5, 2017). [147] Id.  [148] Objections to Report and Recommendation, TCA Television Corp. et al v. McCollum et al,  Case No. 15 Civ. 4325 (GBD) (JCF) at *5-*6 (S.D.N.Y. Jun. 19, 2017). [149] Id. at *6. [150] 582 U.S. ___, Slip Op. No. 15-1293, at *1, *3, *6 (Jun. 19, 2017). [151] Id. at *5-*6 (citing 15 U.S.C. § 1052(a)). [152] Id. at *6 (quoting Trademark Manual of Examining Procedure § 1203.03(b)(i) (Apr. 2017), p. 1200-150, available at http://tmep.uspto.gov). [153] Id. at *7; In re Tam, 808 F.3d 1321, 1331 n.2 (CA Fed. 2015) (en banc). [154] Tam, Slip Op. No. 15-1293, at *7. [155] Id. [156] In re Tam, 808 F.3d at 1321-32, 1334-39. [157] Tam, Slip Op. No. 15-1293, at *18-*19. [158] Id. at *20-*23. [159] Id. at *24. [160] Id. at *1-*8 (Kennedy, J., concurring). [161] See id. at *1 (Thomas, J., concurring). [162] Blackhorse v. Pro-Football, Inc., Cancellation No. 92046185 at 81 (T.T.A.B. 2014); Josh Gerstein, Feds Give Up Fight Against Redskins Trademarks, Politico, June 28, 2017, http://www.politico.com/blogs/under-the-radar/2017/06/28/washington-redskins-trademarks-240066. [163] Viacom Int’l Inc. v. IJR Capital Invs., LLC, — F.Supp.3d —, 2017 WL 1037294 (S.D. Tx. 2017). [164] Id. at *1-*2. [165] Id. at *2. [166] Id. at *3-*4. [167] Id. at *3. [168] Id. (internal quotations omitted). [169] Id. at *4. [170] Id. [171] Id. at *5. [172] Id. at *5-*6. [173] Id. at *8.  However, Viacom’s motion for summary judgement on its dilution claim was denied because "IJR has not used the mark in commerce, and the alleged threats of future dilution are speculative."  Id. [174] Final Judgment, Viacom Int’l Inc. v. IJR Capital Invs., LLC, No. 4:16-CV-00257 (S.D. Tx. Apr. 11, 2017), ECF at No. 49. [175] Notice of Appeal, Viacom Int’l Inc. v. IJR Capital Invs., LLC, No. 4:16-CV-00257 (S.D. Tx. May 9, 2017), ECF at No. 53. [176] Elliott v. Google, Inc., — F.3d —-, 2017 WL 2655528 (9th Cir. 2017) (original opinion amended on June 14, 2017). [177] Id. at *1 (quoting 15 U.S.C. § 1064(3)). [178] Id. at *2. [179] Id. at *3. [180] Id. at *4-*5. [181] Id. at *5, *9. [182] In re Beds & Bars Ltd., No. 85597669, at *1-*3 (T.T.A.B., May 5, 2017). [183] Id. at *13. [184] Id. at *4. [185] Id. at *4. [186] Id. at *9. [187] Id. at *8. [188] Id. at *11. [189] Id. [190] Gerlich v. Leath, — F.3d —, 2017 WL 2543363, at *1, *7 (8th Cir. 2017).  ISU also failed to "argue that [its] administration of the trademark licensing program was narrowly tailored to satisfy a compelling government interest."  Id. at *7. [191] Id. at *9. [192] Id. at *1. [193] Id. [194] Id. [195] Id. [196] Id. [197] Id. at *2, *6. [198] Id. at *3-*5. [199] Id. at *4. [200] Id. [201] Id. [202] Id. at *5-*6.  "NORML ISU’s use of the cannabis leaf does not violate ISU’s trademark policies because the organization advocates for reform to marijuana laws, not the illegal use of marijuana."  Id. at *9. [203] See Bill Donahue, 8th Cir. Again Says Pot TM Ban Violated First Amendment, Law360, June 13, 2017, https://www.law360.com/articles/934127/8th-circ-again-says-pot-tm-ban-violated-first-amendment. [204] Cal. Civ. Code §1798.83.5 (2016). [205] Jonathan Handel. "New California IMDB Age Law Probably Unconstitutional, Experts Say," The Hollywood Rep.,  Sept. 27, 2016, http://www.hollywoodreporter.com/thr-esq/new-california-imdb-age-law-932808. [206] Id. [207] "Submission Guides: Biographical Information," IMDB, (last visited June 25, 2017) available at http://www.imdb.com/help/search?domain=helpdesk_faq&index=2&file=bio_all_guides&ref_=hlp_sr_2#birthdeath [208] Handel, supra note 205. [209] IMDB.COM, Inc. v. Becerra. No. 16-cv-06535-VC, 2017 WL 772346 at *2 (N.D.Cal. Feb. 22, 2017). [210] Id. at *1. [211] Id. [212] Id. [213] Id. [214] IMDB.COM, Inc. v. Becerra, No. 16-cv-06535-VC, 2017 WL 2859063, at 1 (N.D.Cal. June 27, 2017). [215] Id. at *3. [216] Id. [217] Id. [218] Vir. Citizens Def. League v. Couric. No. 3:16-cv-00757-JAG 2017 WL 2364198 at *1 (May 31, 2017). [219] Id. at *2. [220] Id. at *3. [221] Id. at *4. [222] Id. [223] Id. at *3. [224] Id. [225] Id. at *5. [226] Id. [227] Complaint, Fridman. v. Buzzfeed., Inc., No. 154895/2017 (N.Y. Sup. Ct. N.Y. Cty. 2017). [228] Paul Colgan. "BuzzFeed CEO Jonah Peretti says Lawsuit Over Trump Dossier is an ‘Outrageous Attempt’ to Silence Media" Business Insider, May 30, 2017, http://www.businessinsider.com/buzzfeed-ceo-says-trump-dossier-lawsuit-is-an-attempt-to-silence-media-2017-5. [229] Peter Kafka, After Being Sued, BuzzFeed has Apologies to a Russian Executive Named in the Unverified Trump Dossier, Recode, Feb. 3, 2017, https://www.recode.net/2017/2/3/14505574/buzzfeed-russian-trump-dossier-defamation-suit-apology. [230] Complaint for Damages, Gubarev v. Buzzfeed, Inc., No. 0:17-cv-60426-UU (S.D.Fla. Feb. 3, 2017). [231] Kafka, supra note 229. [232] Murray Energy Corp. v. Reorg Research, Inc., 47 N.Y.S.3d 871 (N.Y. Cty. 2017). [233] N.Y. Civ. Rights L. §79-h (1970). [234] 47 N.Y.S.3d at 881-82. [235] Id. at 879. [236] Id. [237] Id. at 879-82. [238] Murray Energy Corp. v. Reorg Research, Inc., 2017 WL 2977781 at *1 (July, 13 2017). [239] Id. [240] Id. [241] Id. [242] Id. at *2. [243] Sebert v. Gottwald, No. BC560468 (L.A. Super. Ct. Oct. 10, 2014). [244] Gottwald v. Sebert, No. 653118/2014, Dkt. 1 (N.Y. Sup. Ct. Oct. 14, 2014). [245] Gottwald v. Sebert, No. 653118/2014, Dkt. 252 at 13 (N.Y. Sup. Ct. July 7, 2015). [246] Gottwald v. Sebert, No. 653118/2014, Dkt. 496 (N.Y. Sup. Ct. Feb. 9, 2016). [247] Gottwald v. Sebert, No. 653118/2014, Dkt. 626-630 (N.Y. Sup. Ct. Jan. 30, 2017). [248] Gottwald v. Sebert, No. 653118/2014, Dkt. 621-625 (N.Y. Sup. Ct. Jan. 30, 2017). [249] Gottwald v. Sebert, No. 653118/2014, Dkt. 808 at 10 (N.Y. Sup. Ct. Mar. 21, 2017). [250] Id. at 9. [251] Id. at 9-11. [252] Gottwald v. Sebert, No. 653118/2014, Dkt. 828-832 (N.Y. Sup. Ct. Apr. 21, 2017). [253] Ben Sisario, Prince’s Post-1995 Albums and Music From His Vault Will Be Released by Universal, The New York Times, Feb. 9, 2017, https://www.nytimes.com/2017/02/09/arts/music/prince-estate-universal-music-group-vault.html. [254] Jem Aswad, Universal May Try to Nullify Recorded-Music Deal With Prince Estate, Variety, Apr. 14, 2017, http://variety.com/2017/music/news/prince-recorded-music-universal-music-group-warner-bros-records-1202031182/. [255] Jem Aswad, It’s Official: Prince’s Estate Manager and Universal Music Group Move to Nullify Recorded-Music Deal, Variety, May 19, 2017, http://variety.com/2017/music/news/prince-recorded-music-universal-music-group-warner-bros-records-1202031182/. [256] Jem Aswad, Universal’s Move to Nullify $31 Million Prince Deal Approved by Judge, Variety, July 13, 2017, http://variety.com/2017/music/news/universals-move-to-nullify-31-million-prince-deal-approved-by-judge-1202495369/. [257] Paisley Park Enterprises, Inc. v. Boxill, No. 0:17-cv-01212, Dkt. 18-2 (D. Minn. Apr. 19, 2017). [258] Id. at 1. [259] Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, No. 1:17-cv-02532, Dkt. 6 at 1 (S.D.N.Y. Apr. 7, 2017). [260] Id. at 2. [261] Id. [262] Lynn Goldsmith, Facebook (Apr. 9, 2017), https://www.facebook.com/lynn.goldsmith/posts/10155098104516758. [263] Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, No. 1:17-cv-02532, Dkt. 20 (S.D.N.Y. July 10, 2017). [264] Ferrick v. Spotify USA Inc., No. 1:16-cv-08412-AJN, at Dkt. 165 (S.D.N.Y. May 26, 2017). [265] Ed Christman, Spotify and Publishing Group Reach $30 Million Settlement Agreement Over Unpaid Royalties, Billboard, Mar. 17, 2016, http://www.billboard.com/articles/business/7263747/spotify-nmpa-publishing-30-million-settlement-unpaid-royalties. [266] Emmanuel Legrand, US Copyright Royalty Board holds hearings on mechanical rates, Music Week, Mar. 8, 2017, http://www.musicweek.com/publishing/read/us-copyright-royalty-board-holds-hearings-on-mechanical-rates/067751. [267] Estate of James Oscar Smith v. Cash Money Records, Inc., No. 1:14-cv-02703-WHP, Dkt. 135 at 21 (S.D.N.Y. May 30, 2017). [268] Estate of James Oscar Smith v. Cash Money Records, Inc., No. 1:14-cv-02703-WHP, Dkt. 2 (S.D.N.Y. Apr. 16, 2014). [269] Estate of James Oscar Smith v. Cash Money Records, Inc., No. 1:14-cv-02703-WHP, Dkt. 135 at 16 (S.D.N.Y. May 30, 2017). [270] Id. at 17. [271] Estate of James Oscar Smith v. Cash Money Records, Inc., No. 1:14-cv-02703-WHP, Dkt. 157 (S.D.N.Y. July 13, 2017). [272] Experience Hendrix, LLC v. Tiger Paw Distributors, LLC, No. 4:16-cv-00107-JRH-GRS, Dkt. 1 (S.D. Ga. Feb. 29, 2016). [273] Experience Hendrix, LLC v. Tiger Paw Distributors, LLC, No. 4:16-cv-00107-JRH-GRS, Dkt. 206 at 2-6 (S.D. Ga. Jan. 27, 2017); see also Kevin Penton, Jimi Hendrix Estate, Booze Co. Settle TM Row, Law360, Jan. 30, 2017, https://www.law360.com/articles/885939.  [274] Experience Hendrix, LLC v. The Last Experience, Inc., No. BC460695 (L.A. Super. Ct. Aug. 5, 2015). [275] Experience Hendrix, LLC v. The Last Experience, Inc., No. B268414 at 2 (Cal. Ct. App. May 8, 2017). [276] Id. at 10. [277] Allison Grande, NY’s ‘Right To Be Forgotten’ Bill Needs Narrower Focus, Law360, Mar. 28, 2017, https://www.law360.com/articles/906491/ny-s-right-to-be-forgotten-bill-needs-narrower-focus. [278] Id. [279] See Shanti Salas, Conducting Due Diligence In A ‘Right To Be Forgotten’ Age, Law360, May 30, 2017, https://www.law360.com/articles/928932/conducting-due-diligence-in-a-right-to-be-forgotten-age. [280] Grande, supra note 277; see also Bill A05323, available at http://nyassembly.gov/leg/?default_fld=&leg_video=&bn=A05323&term=&Summary=Y&Text=Y. [281] Bill A05323. [282] Id. [283] Id. [284] Id. [285] See Grande, supra note 277. [286] See, e.g., Matal v. Tam, 582 U.S. ___, Slip Op. No. 15-1293, at 25 (Jun. 19, 2017) (the First Amendment "protect[s] the freedom to express ‘the thought[s] that we hate.’" (quoting United States v. Schwimmer, 279 U. S. 644, 655 (1929) (Holmes, J., dissenting))). [287] See id. The following Gibson Dunn lawyers assisted in the preparation of this client update: Ruth Fisher, Scott Edelman, Howard Hogan, Nathaniel Bach, Corey Singer, Sean O’Neill, Anthony Vita, Jerry Tower, Sara Ciccolari-Micaldi, Lauryn Togioka, DeDe Mann, and Joseph Ireland. 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, Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com)Ruth E. Fisher – Co-Chair, Los Angeles (+1 310-557-8057, rfisher@gibsondunn.com)Orin Snyder– Co-Chair, 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) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 21, 2017 |
Channeling the Channel-Partner Risk: Addressing Anti-Corruption Risk with Channel Partners in the Technology Sector

​Orange County partner Nicola Hanna, Los Angeles partner Michael Farhang, Washington, D.C. associate Pedro Soto and Orange Country associate Caitlin Peters are the authors of "Channeling the Channel-Partner Risk: Addressing Anti-Corruption Risk with Channel Partners in the Technology Sector," [PDF] published in FCPA Report on June 21, 2017.

June 21, 2017 |
Supreme Court Strikes Down Ban on Registration of Disparaging Trademarks on First Amendment Grounds

On June 19, 2017, the Supreme Court unanimously held in Matal v. Tam that a decades-old statute prohibiting the registration of disparaging trademarks violates the First Amendment to the U.S. Constitution.  The Court concluded that, because trademark registration is a mere administrative recognition of private speech rather than government speech, the registration process must be viewpoint-neutral.  Gibson Dunn filed a brief in the case on behalf of the United States Chamber of Commerce as amicus curiae, urging the conclusion that the Court reached. *          *          * The Tam case arose from a decision of the United States Patent and Trademark Office ("PTO") to refuse registration of a trademark for "THE SLANTS," the name of an Asian-American rock band.  The PTO relied on a provision of the Lanham Act prohibiting the registration of trademarks that "may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute."  15 U.S.C. § 1052(a).  Applying the PTO’s framework for disparagement, the examining attorney concluded that "THE SLANTS" was likely to disparage a significant number of Asian Americans. On appeal, the U.S. Court of Appeals for the Federal Circuit found that the Lanham Act’s disparagement clause was facially unconstitutional under the Free Speech Clause of the First Amendment.  The Supreme Court agreed, though several Justices expressed a difference of opinion as to the reasoning.  Justice Alito announced the judgment of the Court, which was unanimous with respect to the conclusion that, despite the role of government in the registration process, trademarks constitute private rather than government speech.  The Court reasoned that the government merely registers the contents of others’ trademarks; it "does not dream up these marks," "it does not edit marks submitted for registration," and the PTO has made clear in the past that registration does not constitute government approval of a particular mark.  It also found that prior Supreme Court precedents fail to support trademark registration as a form of government speech.  Trademarks are vastly different from, for example, speech used to convey a government message—as was the case with selected monuments placed on governmental property in Pleasant Grove City v. Summum—and there is no evidence the public associates trademarks with the government itself—as was the case with specialty license plates in Walker v. Texas Division, Sons of Confederate Veterans.  Further backing away from Walker, which the Court noted "likely marks the outer bounds of the government-speech doctrine," the Court emphasized that government registrations in other, related contexts like copyright registration do not constitute government speech.[1] Justice Alito went on to reject the remainder of the government’s arguments, writing only for himself, Chief Justice Roberts, Justice Thomas, and Justice Breyer.  First, Justice Alito explained that trademark registration is not a form of government subsidy, which would permit the government to subsidize speech expressing a particular viewpoint while refusing to subsidize activities it does not wish to promote.  He also refused to create a new "government-program" doctrine for trademarks that would allow for some content- and speaker-based restrictions.  Finally, Justice Alito explained that it is unnecessary to decide whether the relaxed-scrutiny afforded commercial speech under the First Amendment applies here, because the disparagement clause is too broad to withstand even that lesser standard of review. Justice Kennedy, in a separate opinion joined by Justices Ginsburg, Sotomayor and Kagan, emphasized in greater detail why the First Amendment protects "THE SLANTS" trademark from governmental disapproval of a viewpoint the government finds unacceptable.  He reasoned that the case involved viewpoint discrimination that warranted heightened scrutiny, without undertaking a commercial speech analysis as in Justice Alito’s opinion. Justice Thomas filed a short concurrence in part and in the judgment, reiterating his view that whenever the government seeks to restrict truthful speech in order to suppress the ideas conveyed, strict scrutiny applies.  Justice Gorsuch took no part in the consideration or the decision. *          *          * Tam‘s central holding—that the Lanham Act’s disparagement clause is unconstitutional—is likely to have only a limited impact, as most trademarks are not accused of disparagement.  One company likely to benefit from the decision, however, is the Washington Redskins professional football team, which had seen several of its trademark registrations invalidated by the PTO under the same Lanham Act provision.  The Supreme Court’s decision resolves a split on the constitutionality of the statute between the approach of the Federal Circuit in the Tam case and that of the U.S. District Court for the Eastern District of Virginia in the Washington Redskins case, Blackhorse v. Pro-Football, Inc. More broadly, the Supreme Court’s unanimous government-speech ruling suggests that it is poised to cabin what is considered to be government speech in the context of government registration and regulation.   The Court explicitly warned that courts "must exercise great caution before extending" government-speech rules to messages that originate from private parties.  And the Justices’ emphasis on viewpoint-neutrality as it relates to the government suggests that the Court is unlikely to extend the government speech doctrine any time in the near future.     [1]   In a portion of the opinion in which only Justice Thomas abstained, Justice Alito also wrote for the majority in concluding that the term, "persons," in the Lanham Act’s disparagement clause was meant to prohibit registration of marks that disparage members of a racial or ethnic group.   Gibson Dunn’s 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, or the authors: Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Michael R. Huston – Washington, D.C. (+1 202-887-3793, mhuston@gibsondunn.com) Christine Demana – Dallas (+1 214-698-3246, cdemana@gibsondunn.com) Rachel Y. Wade – Dallas (+1 214-698-3273, rwade@gibsondunn.com) Please also feel free to contact the following practice group leaders:  Intellectual Property Group:Josh Krevitt – New York (+1 212-351-4000, jkrevitt@gibsondunn.com)Wayne Barsky - Los Angeles (+1 310-552-8500, wbarsky@gibsondunn.com)Mark Reiter – Dallas (+1 214-698-3100, mreiter@gibsondunn.com) Appellate and Constitutional Law Group:Mark A. Perry – Washington, D.C. (+1 202-887-3667, mperry@gibsondunn.com)James C. Ho – Dallas (+1 214-698-3264, jho@gibsondunn.com) Caitlin J. Halligan – New York (+1 212-351-4000, challigan@gibsondunn.com) Fashion, Retail and Consumer Products Group: David M. Wilf  – New York (+1 212-351-4027, dwilf@gibsondunn.com) Howard S. Hogan – Washington, D.C. (+1 202-887-3640, hhogan@gibsondunn.com) Media, Entertainment & Technology Group: Ruth E. Fisher – Los Angeles (+1 310-557-8057, rfisher@gibsondunn.com) Scott A. Edelman – Los Angeles (+1 310-557-8061, sedelman@gibsondunn.com)Orin Snyder– New York (+1 212-351-2400, osnyder@gibsondunn.com) Sports Law Group: Andrew S. Tulumello – Washington, D.C. (+1 202-955-8657, atulumello@gibsondunn.com) Maurice M. Suh – Los Angeles (+1 213-229-7260, msuh@gibsondunn.com) Richard J. Birns – New York (+1 212-351-4032, rbirns@gibsondunn.com)     © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.