7th Circuit Unimpressed by 2d Circuit's "Transformativeness" Fair Use Analysis

In an opinion by Circuit Judge Easterbook, the Seventh Circuit affirmed summary judgment for the defendant in a copyright infringement action on the basis of the "fair use" defense.  Section 107 of the Copyright Act, 17 U.S.C. 107.  Kienitz v. Sconnie Nation LLC, No. 13-3004 (7th Cir. Sept. 15, 2014).  Here, defendant admitted using plaintiff's photograph of the Mayor of Madison, Wisconsin (somewhat modified) to make a political statement on t-shirts and tank tops (yielding a very modest profit) and to promote an annual street party opposed by the mayor.

The Court of Appeals rejected the lower court's focus on "just how 'transformative' the use must be ..." and its reliance on the Second Circuit's use of "transformativeness" in Cariou v. Prince, 714 F.3d 694 (2d Cir.), cert. denied, __ S.Ct. __ (2013).  Slip Op. 3.

Judge Easterbrook's opinion states that "transformativeness" is "not one of the statutory factors ..." in Section 107, though it acknowledges that "the Supreme Court mentioned it in Campbell v. Acuff-Rose Music, 510 U.S. 569, 579 (1994)."  Slip Op. 3-4.  

The Seventh Circuit said "we're skeptical of Cariou's approach, be cause asking exclusively whether something is 'transformative' not only replaces the list in 107 but also could override 17 U.S.C. 106(2), which protects derivative works."   The court concluded, "[w]e think it best to stick with the statutory list, of which the most important usually is the fourth (market effect)."  Slip Op. 4.

The Seventh Circuit's opinion perhaps understates the discussion of "transformative use" in the Supreme Court's decision in Campbell as part of the first fair use factor (purpose and character of use).  But it does seem that "transformative use" has become almost the single touchstone for decision in many fair use cases -- contrary to the way it was originally discussed by Second Circuit Judge Level in his article, Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105 (1990) and by the Supreme Court in Campbell -- merely as a way of analyzing the first fair use factor.  

In any event, the "transformative use" debate continues unabated.

DC Circuit Grants Rehearing En Banc in Important Affordable Care Act Case

The D.C. Circuit today granted rehearing en banc in Halbig v. Burwell, No. 14-5018, an important case in which the plaintiffs challenge the validity of a regulation concerning health care "exchanges" under the Affordable Care Act.  The issue turns on the definition of an "exchange" under the Act.

Today's order vacates the 2-1 panel decision of July 22, 2014, which invalidated an IRS regulation making tax credits available to individuals who purchased health insurance through health care "exchanges" established by the federal government for persons living in states which had declined to establish state-operated exchanges.

The D.C. Circuit's panel decision invalidating the regulation came on the same day that the Fourth Circuit had issued a decision upholding the validity of the same regulation in King v. Burwell, 4th Cir. No. 14-1158, setting up a direct circuit conflict.  

The losing plaintiffs in the Fourth Circuit wasted no time; they filed a petition for a writ of certiorari only nine days after the Fourth Circuit's adverse decision, with the direct circuit conflict as their leading reason for seeking review.  King v. Burwell, S.Ct. No. 14-114, filed July 31, 2014.

En banc review in the D.C. Circuit may cause a delay in the issue reaching the Supreme Court since the conflicting panel decision was vacated, but the issue seems destined for Supreme Court review eventually, given the importance of the issue under the Affordable Care Act.

The D.C. Circuit's en banc order sets a new briefing schedule with en banc oral argument on December 17, 2014.

Lindsay Lohan Claims "Grand Theft Auto V" Game Violates Privacy Right Under NY Civil Rights Law -- Defendants Say Au Contraire

Lohan, the "celebrity actor," sued the maker of "Grand Theft Auto V," the popular video game, alleging that the game includes an unauthorized character based upon her and events from her life, in alleged violation of Section 51 of the NY Civil Rights Law, though it does not use her name.  Lindsay Lohan v. Take-Two Interactive Software, Inc. et al., Index No. 156443/2014, filed June 2, 2014 (N.Y. Sup. Ct.).  She seeks unspecified damages and injunctive relief.

Section 51 prohibits "uses for advertising purposes, or for the purposes of trade, the name, portrait or picture of any living person without having first obtained the write consent of such person ....  New York law does not recognize a common law right of privacy or publicity.

On August 20, 2014, the defendants moved to dismiss Lohan's entire complaint and asked the Court to award attorney's fees and costs as sanctions on the ground that the claim is frivolous.  Defendants attack Lohan's complaint on numerous grounds -- that none of the Section 51 prohibitions were violated; that it does not protect a "life story"; that the First Amendment bars the claim entirely, as the video game is an expressive work of art; and that the complaint is time-barred.  

Defendants particularly rely upon another Lohan suit under Section 51 which sought damages and an injunction against the singer "Pitbull" based on the use of her "name and characterization" in the song "Give Me Everything."  Lohan v. Perez, 924 F.Supp.2d 447 (E.D.N.Y. 2013).  The court dismissed Lohan's claim "because the Song is a protected work of art ...," and also dismissed her claims of unjust enrichment and intentional infliction of emotional distress.  

Defendants seeks sanctions, alleging that Lohan and her counsel should have known that her "Grand Theft Auto" claim was baseless based on her loss on the same theory in Perez.  The court in Perez declined to award fees against Lohan, concluding that her claims were not frivolous, but did impose fines on her counsel for "plagiarism" in court papers and making a false representation to the court.  

Lohan's response to the motion to dismiss is due by September 2, 2014.  Stay tuned.

Supreme Court Holds Aereo's Teeny, Tiny Antennas Infringe Networks' Copyrights

In an eagerly awaited decision, the Supreme Court today held that Aereo's system for delivering broadcast television over the internet is an unauthorized public performance and infringes the copyrights of the television networks and others under Section 106(4) of the Copyright Act.  American Broadcasting System, Inc. v. Aereo, Inc., No. 13-461 (June 25, 2014), http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf.   

Justice Scalia's dissent, joined by Justices Alito and Thomas, contends that home users, not Aereo, were the volitional actors in connection with the television transmissions over the internet, and that Aereo thus could not be a direct infringer.  The dissent invoked the Second Circuit's decision in Cartoon Network LP, LLLP  v. CSC Holdings, Inc., 536 F. 3d 121, 130 (CA2 2008) on this point, stating that "the question is who does the performing."  Aereo, dissent 2.  The Supreme Court's majority decision rejects the dissent's analysis on this point, but without referring to the Second Circuit's decision in Cartoon Network.  

The Court's decision will undoubtedly have a significant ripple effect on pending and future copyright cases. 

Beastie Boys v. Monster Energy Case Goes to Trial re Copyright Infringement & Endorsement

The Bestie Boys began a jury trial on their claims for damages against the Monster Energy drink company on Tuesday, May 26, 2014 before Judge Paul A. Engelmayer in the U.S. District Court in New York City.  

Monster admits that it used several Beastie Boys songs and names without permission in a video promoting a Monster-sponsored snowboarding event, but claims that Monster acted in the good faith belief that it had permission.  Monster admits copyright infringement but denies that its actions also violated the Lanham Act prohibition on misleading endorsements and argues that the Beasties cannot recover damages separately for copyright infringement and the false endorsement claim.  The parties are far apart on the value of the claims.  

The Beasties Boys seek a million dollars per song plus a million for the alleged false endorsement.  Monster argues that $93,750 is reasonable compensation for both the unauthorized use of the songs and the claimed endorsement.  The jury will have to resolve the parties' wildly different view of appropriate damages.  The trial is expected to last through June 2nd or 3rd.  Beastie Boys v. Monster Energy Company, 12 Civ. 6065 (S.D.N.Y.).