IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks -- July 25, 2013

Table of Contents

American Broadcasting Cos., Inc. v. Aereo, Inc., USCA, Second Circuit, July 16, 2013
 Click here to download a PDF of the full decision.

  • Second Circuit denies petitions for en banc rehearing of ruling that Aereo’s streaming service does not infringe plaintiffs’ copyrights, but Judge Denny Chin forcefully dissents, arguing that capture and retransmission of over-the-air broadcasts is “public performance” under Copyright Act, regardless of technological means of retransmission.

Following earlier appeals in the actions WNET, Thirteen v. Aereo, Inc. and American Broadcasting Cos., Inc. v. Aereo, Inc., the Second Circuit held that Aereo, Inc.’s internet-based broadcast television service did not infringe the copyrights of the plaintiff broadcast networks. The networks argued that the Aereo service – which captures over-the-air broadcast television content on thousands of dime-sized antennae and streams the content to subscribers over the internet – constituted unauthorized public performance of the broadcasts without permission. Relying on its earlier decision in Cartoon Network LP, LLP v. CSC Holdings, Inc. (known as Cablevision), the Second Circuit held that the Aereo service did not constitute copyright infringement because it transmits a unique recording of the broadcast content to each subscriber, which was a private, not a public performance. Read our previous summary here.

The networks filed petitions for a rehearing en banc, which the Second Circuit denied. Judge Denny Chin dissented from the decision denying the rehearing, however. In his dissent, Judge Chin first argued that the Aereo decisions involve questions of “exceptional importance.” Among other things, these decisions allow services such as Aereo to retransmit public television broadcasts without paying a retransmission fee or any other fee to the networks, which already impacts the market for broadcast television content. These decisions also represent a departure from the Second Circuit’s pre-Cablevision rulings that retransmission of copyrighted content to the public without permission constituted infringement, and that no principled reason existed to make an exception when the retransmitter uses thousands of antennae to transmit thousands of unique copies to individual subscribers.

Second, Judge Chin argued that the Second Circuit’s decision was not consistent with the language of the Copyright Act, which includes in its definition of a “public” performance “to transmit or otherwise communicate a performance . . . [at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered] or to the public.” Aereo’s service constitutes a public performance, and the number of individual copies it produces or the technological means by which it retransmits content is not relevant under the Copyright Act.

Finally, Judge Chin argued that Cablevision was wrongly decided. There, the Second Circuit held that Cablevision’s Remote Storage Digital Video Recorder System (RS-DVR) – which allowed subscribers to have copies of copyrighted content stored remotely and transmitted to their homes at a later time – did not constitute a separate public performance of the content. The decision has been much criticized on the grounds that it improperly conflates the term “performance” under the Copyright Act with the term “transmission.” The decision further assumes that the use of unique copies somehow limits the potential audience of a transmission, an assumption that advancements in technology have rendered false. Even if Cablevision were correctly decided, the decision should not be extended to approve of Aereo’s service. Unlike Cablevision, Aereo does not pay any retransmission or licensing fees to the networks, which makes retransmission its entire service, not an add-on feature.
 

Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., USDC, N.D. Mississippi, July 18, 2013
 Click here to download a PDF of the full decision

  • District court dismisses claims brought by estate of William Faulkner, concluding that defendants’ unlicensed use of one-line quote from Faulkner’s novel Requiem for a Nun in film Midnight in Paris was protected “fair use” and could not, as a matter of law, constitute actionable infringement.

In William Faulkner’s novel, Requiem for a Nun, the attorney Gavin Stevens soberly states, in the context of a death penalty case that he is defending: “The past is never dead. It’s not even past.” Over 60 years after that novel’s publication, Woody Allen’s film Midnight in Paris included a scene in which the protagonist, Gil Pender, tells his fiancée, in the context of a dispute over his late-night time travel to 1920s Paris: “The past is not dead. Actually, it’s not even past. You know who said that? Faulkner, and he was right.” On the basis of this one-line, attributed quote, Faulkner’s estate brought suit against defendant Sony Pictures Classics Inc., alleging violations of the Copyright Act and the Lanham Act.

On Sony’s motion to dismiss, the district court characterized the copyright infringement claim as entailing several related issues: (1) whether Sony’s “fair use” affirmative defense could be properly considered at the motion to dismiss stage; (2) whether the film’s use of Faulkner’s quote could be justified under a “de minimis” copyright analysis; and (3) if the alleged infringement is not de minimis, whether it constituted fair use.

After reviewing Fifth Circuit precedent concerning de minimis infringement, the court noted that the circuit’s precedent on the issue in copyright cases is “largely undeveloped” and expressed its “reluctan[ce] to address it, except within the context of Sony’s affirmative defense, fair use.” The court viewed the substantial similarity and de minimis analyses to be “fundamentally related, and wholly encompassed within the fair use affirmative defense,” and focused its inquiry on the issue of whether the film’s contested use of Faulkner’s work fell under fair use as a matter of law. Because the court regarded its infringement and de minimis analyses as “wholly encompassed” within the fair use defense, the court’s analysis nominally rested on the former issues. Although the court rejected plaintiff’s contention that the affirmative defense of fair use should not be decided on a motion to dismiss, it then opined that the issue was “moot” given that it reached its conclusions on separate grounds.

Analyzing fair use, the court evaluated four factors: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

As to the purpose and character of the use, the court concluded that this factor weighed heavily in favor of defendants. The court noted that the quotes were used by characters in both works “for antithetical purposes of persuasion” and emphasized that the “transmogrification” of a serious piece of literature for use in a speaking part in a comedy movie tipped the factor in favor of transformative use. The court deemed the second factor to be “neutral,” but found that the third factor again weighed heavily in favor of defendants. The court noted that the disputed quote “constitutes only a small portion of the expression of this idea throughout the novel” and is “of miniscule quantitative importance to the work as a whole.” Finally, noting that the record was silent as to the effect of the quote’s use in the film on the potential market for or value of Faulkner’s work, it went on to state that it viewed the issue as “essentially a non-issue in light of the stark balance of the first factors weighing in favor of Sony” and that it doubted that any markets have been harmed by the film’s use of the quote. If anything, the court intimated, the allusion in Midnight in Paris may have enhanced the value of plaintiff’s copyrighted work.

Based on this analysis—and its belief that discovery would not prove fruitful—the court concluded that “no substantial similarity exists between the copyrighted work and the allegedly infringing work, and Sony’s use in this matter was de minimis.”

Having dismissed the copyright claim, the court proceeded to consider and quickly dismiss plaintiff’s Lanham Act claim. In the court’s words, “Faulkner has not provided any precedent suggesting that the mere use of a celebrity name in an artistic work somehow rises to the level of deception.” Finally, the court declined to exercise jurisdiction over Faulkner’s state law claim of commercial misappropriation, having deemed the federal law claims meritless.


Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.

Topics:  Aereo, Broadcasting, Copyright, Copyright Infringement, Entertainment Industry, Internet Streaming, Movies, Public Performance Rights

Published In: Art, Entertainment & Sports Updates, Civil Procedure Updates, Communications & Media Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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