Business and Technology Law

The Eleventh Circuit has held that a digital reproduction of a copyrighted image may, under certain circumstances, be a privileged revision of the work that does not violate the creator’s copyright. In an en banc decision, the sharply divided court in Greenberg v. National Geographic Society, 2008 WL 2571333 (11th Cir. 2008) (en banc), rejected a claim by a photographer that a digital reproduction of his work that had previously appeared in print did not, in and of itself, constitute infringement where the digital reproduction merely reproduced the original print version.

Jerry Greenberg is a freelance photographer who had some of his photographs published in four issues of the National Geographic Magazine. For decades, the National Geographic Society has been reproducing its back issues in bound volumes, microfiche, and microfilm. In 1997, National Geographic produced “The Complete National Geographic,” a thirty-disc CD-ROM set containing every monthly issue of the magazine since 1888. The CD-ROMS contained each magazine as it was originally published, reproducing each page. The CD-ROMS also included a short opening montage and a program that allowed users to search, zoom into particular pages, and print.

Greenberg sued National Geographic, alleging that it infringed his copyrights by reproducing the print magazine issues that included his photographs. The district court granted summary judgment in favor of National Geographic, holding that because the CD-ROMS constituted a revision of the print issues of the magazine, the reproduction was privileged under 17 U.S.C. section 201(c) of the Copyright Act and therefore did not constitute infringement. A panel of the Eleventh Circuit disagreed and reversed that decision. After a second appeal, the Eleventh Circuit granted rehearing en banc to address the question of whether National Geographic’s use of the photographs was a privileged revision.

By a 7-5 majority vote, the Eleventh Circuit held that National Geographic’s reproduction of Greenberg’s photographs was privileged under section 201(c). Section 201(c) provides that ”copyright in each separate contribution to a collective work is distinct from copyright in the collective work as a whole, and vests initially in the author of the contribution. In the absence of an express transfer of the copyright or of any rights under it, the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series.” A magazine is considered to be such a collective work. According to the court, section 201(c) is intended primarily to prevent publishers from revising the contribution of the author or including it in a new anthology or an entirely different magazine or other collective work without the author’s consent.

Greenberg claimed that the CD-ROMS constituted an entirely new collective work, such that section 201(c) did not apply. The court, however, concluded that the digital reproduction of the magazines was nothing more than a revision of the collective work. The court noted that the Supreme Court had previously recognized that reproducing a magazine on microfilm was privileged under section 201(c). By analogy, a digital reproduction is similarly privileged. The court rejected the notion that adding a computer program that allowed users to search and access individual pages somehow altered the collective works, concluding that “the revision of a magazine by reproducing it in its original context in a new ‘distinct form’ – i.e., a digital version – is not a difference that would undo a publisher's privilege under § 201(c).” The dissenters strongly disagreed with the majority’s conclusion, concluding that the CD-ROMS did constitute a new collective work to which the privilege of section 201(c) did not apply.

http://www.ca11.uscourts.gov/opinions/ops/200516964.ENB.pdf

The Naked Cowboy (a/k/a Robert Burck), a New York icon, is usually in the news for his well-known antics as a street performer. But the Naked Cowboy recently made some trademark law in a battle with Mars, Inc. and its Blue M & M. In Burck v. Mars, Inc., 2008 WL 2485524 (S.D.N.Y. 2008), the court recognized Burck’s trademark rights in the name and likeness of “The Naked Cowboy” but also allowed Mars to raise a defense of parody even though the parody was being used in part for advertising purposes.

The U.S. District Court for the Southern District of New York described Burck as follows: “a ‘street entertainer’ who performs in New York City’s Times Square as The Naked Cowboy, wearing only a white cowboy hat, cowboy boots, and underpants, and carrying a guitar strategically placed to give the illusion of nudity.” Burck owns registered U.S. trademarks in the Naked Cowboy name and likeness. Starting in April 2007, Mars began running an animated cartoon advertisement on two oversized video billboards in Times Square featuring a blue M & M dressed “exactly like The Naked Cowboy, wearing only a white cowboy hat, cowboy boots, and underpants, and carrying a guitar.” The court illustrated these facts with the following picture:

Burck sued Mars for compensatory and punitive damages asserting violations of New York’s right to publicity laws and trademark infringement. The court dismissed Burck’s right to privacy claim but held that Burck could proceed with his false endorsement claim under the Lanham Act because consumers might mistakenly conclude that the Blue M & M advertisements were endorsements of Mars’ products by Burck. The court, however, denied Burck’s motion to strike Mars’ affirmative defense of parody. According to the court, parody is a form of fair use that is protected under the First Amendment. This protection applies even where the parody is used in part for advertising purposes. Specifically, the court held that “because a parody may be of a hybrid nature, combining artistic expression and commercial promotion, it is valid to plead a parody defense even where the parody is used in part for advertising purposes.” The dispute between the Naked Cowboy and the Blue M & M will therefore continue.

It is natural for the owner of a trademark want to seek some sort of redress when another person or entity uses that mark in the URL or the content of a web site, especially when that site competes with or criticizes the owner. However, relief from such use may be unavailable under the Lanham Act when it is not possible to show commercial intent behind the use, and a recent 10th Circuit opinion suggests that the standard to prove commercial intent may be higher than some would expect.

In Utah Lighthouse Ministry (UTLM) v. Foundation for Apologetic Information and Research (FAIR), the plaintiff, UTLM, filed suit against FAIR based on a web site published by FAIR’s vice president and webmaster, a co-defendant, which parodied the content of UTLM’s site. UTLM is an organization that publishes critiques of the Mormon Church. FAIR, on the other hand, is a volunteer organization that responds to such critiques.

The description in the opinion indicates that the parody site bore many similarities to the UTLM site:

The design elements are similar, including the image of a lighthouse with black and white barbershop stripes. However, the words “Destroy, Mislead, and Deceive” are written across the stripes on the Wyatt website. Prominent text on the Wyatt website consists of a slight modification of the language located in the same position on the UTLM website. For example, the UTLM website states: “Welcome to the Official Website of the Utah Lighthouse Ministry, founded by Jerald and Sandra Tanner.” In comparison, the Wyatt website states: “Welcome to an official website about the Utah Lighthouse Ministry, which was founded by Jerald and Sandra Tanner.” (emphasis added.) The Wyatt website does not have any kind of disclaimer that it is not associated with UTLM.

The opinion also indicates that FAIR’s webmaster, through his company, also registered ten domain names, which were “combinations of ‘Utah Lighthouse Ministry,’ ‘Sandra Tanner,’ ‘Gerald Tanner,’ ‘Jerald Tanner,’ and ‘.com’ and ‘.org.’” UTLM alleged that FAIR’s parody site and its webmaster’s registration of the domain names at issue constituted trademark infringement, unfair competition, and cybersquatting. The trial court disagreed with UTLM and granted the defendants’ motion for summary judgment as to all UTLM claims. UTLM then appealed the trial court’s decision to the 10th Circuit.

In upholding the trial court’s grant of summary judgment, the 10th Circuit relied, in large part, on the fact that UTLM was able to prove no commercial intent behind the parody site or FAIR’s webmaster’s registration of the domain names. FAIR’s webmaster neither promoted nor sold any products or services at the parody site. UTLM argued that the parody site linked to FAIR’s web site, where FAIR sold books, some of which also were available through the UTLM site. However, the Court found that any connection between the parody site and the commercial activities at the FAIR site was too attenuated to support a finding of commercial intent. In reaching that conclusion, which was the 10th Circuit’s first time to analyze an argument for commercial intent based on this type of fact pattern, the Court cited to a 9th Circuit opinion in which no commercial intent was found where a parody site linked to another site operated by the same defendant, which in turn linked to a newsgroup containing advertisements for the plaintiff’s competitors. Though the “distance” between the parody site in this case and the FAIR site’s commercial activities was not as great as in the 9th Circuit case, the 10th Circuit held that the trial court had used an analysis similar to that employed by the 9th Circuit, which it believed to be appropriate.

UTLM also argued that the parody site interfered with “the ability of users to reach the goods and services offered on the UTLM website.” The 10th Circuit disagreed, stating:

In our view, the defendant in a trademark infringement and unfair competition case must use the mark in connection with the goods or services of a competing producer, not merely to make a comment on the trademark owner's goods or services. The Lanham Act addresses the specific problem of consumer confusion about the source of goods and services created by the unauthorized use of trademarks. Unless there is a competing good or service labeled or associated with the plaintiff's trademark, the concerns of the Lanham Act are not invoked. (quotations omitted)

UTLM raised a third argument regarding the general commercial nature of the Internet, but this too was denied by the Court. The Court also found that there was no likelihood of confusion between the sites at issue, especially in light of the fact that the defendants’ site was a parody site, and that UTLM had failed to prove any bad faith intent by FAIR or its webmaster to profit on the domain names that had been registered, thereby supporting the denial of UTLM’s cybersquatting claims.

Especially for businesses in the 10th Circuit, this case appears to present a significant challenge for claims of Internet-based trademark infringement where commercial intent is difficult to prove. Business considering lawsuits based on such claims should consult closely with counsel to determine whether the costs of litigation are worth the risk of loss.

A recent opinion written by Judge Richard Posner for the 7th Circuit highlights the importance of carefully considering some of the risks of loss for plaintiffs in proceeding with a copyright infringement lawsuit.

In Eagle Services Corp. v. H2O Industrial Services, Inc., the plaintiff, Eagle, filed suit after several of its employees, who left to form H2O, used copies of Eagle’s safety manual in operations at the new business. The manual in question consisted largely, if not entirely, of quotations from OSHA regulations, making the scope of the copyright limited to the compilation as a whole. Instead of pursuing an award of statutory damages under the Copyright Act, Eagle argued that it should be awarded all the profits that H2O made in its business before it created its own manual, because, according to Eagle, without a manual H2O could not have provided any services in its industry without violating OSHA regulations. Though the trial court allowed Eagle to present its case to the jury, at the close of its evidence, H2O moved for judgment in its favor as a matter of law, which the court granted, based on Eagle’s failure to prove that OSHA requires the companies it regulates to maintain a safety manual. However, the trial court refused to award H2O, as the prevailing party, its reasonable attorney’s fees on the ground that the suit was not frivolous and had not been filed in bad faith. H2O appealed the denial of attorney’s fees.

The 7th Circuit reversed the trial court’s decision. In his opinion, Judge Posner noted that the suit “could not have been brought in good faith,” because Eagle never had any reasonable basis to believe that the state would have shut down H2O’s operations for want of a safety manual, especially in light of the fact that, even if a manual were required, the applicable regulations would have given H2O an opportunity to procure one. Judge Posner further noted, colorfully:

So we have a suit brought almost certainly in bad faith, a frivolous suit, a suit against a newer and probably smaller and weaker firm. Under any standard we know for shifting attorney's fees from a losing plaintiff to a winning defendant, H2O (and the individuals joined as defendants along with it) would be entitled to an award of attorney's fees.

Judge Posner also noted that in copyright cases, prevailing defendants are not required to prove that the plaintiffs’ suit was frivolous in order to prove their entitlement to an award of attorney’s fees. According to Judge Posner, if there is any asymmetry in the analysis regarding whether to award attorney’s fees in copyright cases, that asymmetry actually tips in favor of prevailing defendants:

The successful assertion of a copyright confirms the plaintiff's possession of an exclusive, and sometimes very valuable, right, and thus gives it an incentive to spend heavily on litigation. In contrast, a successful defense against a copyright claim, when it throws the copyrighted work into the public domain, benefits all users of the public domain, not just the defendant; he obtains no exclusive right and so his incentive to spend on defense is reduced and he may be forced into an unfavorable settlement.

Though H2O’s success in this case did not result in the enlargement of the public domain, that fact did not rebut the basic presumption affirmed by Judge Posner that, in most cases, awards of attorney’s fees to prevailing parties are presumed to be appropriate.

This case serves as a useful reminder to businesses considering whether to file suit over infringement of its copyrighted works. The costs of federal litigation are always high, and a loss at trial could mean that the plaintiff would be out not only its own attorney’s fees, but also those of its adversary.

The Business Software Alliance (“BSA”), a trade association representing a number of software publishers, is launching a new campaign to attract would-be informants to its reward program. The BSA’s new Know it / Report it / Reward it campaign will attempt to attract a larger number of informants through a coordinated effort involving online advertisements, radio advertisements, research reports, and other tools.

The program continues the BSA’s practice of offering rewards of up to one million dollars for qualifying reports of software piracy. Individuals allegedly possessing knowledge about a business’ software compliance practices report information to the BSA which may become the basis of a legal engagement.

Issuance of a Software Policy can also provide the education and training employees need to help the business maintain compliance. Management should clearly delineate the company’s software asset philosophy and process to ensure compliance across the organization. Companies that receive audit letters from the BSA should contact experienced counsel for assistance.

View the BSA press release here.