Time Warp: May 20, 1985

Posted by Ken Davidson on May 20th, 2010

On this day in 1985, the U.S. Supreme Court held that the First Amendment did not protect The Nation magazine from liability for copyright infringement for publishing unauthorized excerpts from the unpublished memoirs of former President Gerald R. Ford. Harper & Row Publishers, Inc. v. Nation Enterprises. The Nation published an article that used about 300 words of verbatim quotes from former President Ford’s 200,000-word unpublished autobiography, “A Time To Heal.” At the time of The Nation’s publication of the article, Time Magazine had already agreed to purchase the exclusive right to print prepublication excerpts from the copyright holders. However, as a result of The Nation’s piece, Time canceled the agreement. The Nation claimed that its use of the excerpts, which made up about 15% of the entire article, was fair use under § 107 of the Copyright Act. Justice O’Connor, writing for the Court, said that The Nation article, which was “timed to ‘scoop'” the Time article, “took what was essentially the heart of the book,” and The Nation “effectively arrogated to itself the right of first publication.” The Nation’s use of the excerpts was not fair use.

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Time Warp: May 18, 2007

Posted by Ken Davidson on May 18th, 2010

On this day in 2007, the U.S. Court of Appeals for the 9th Circuit ruled that Elizabeth Taylor could keep a Van Gogh painting that may have been stolen from a Jewish art collector by the Nazis. In Orkin v. Taylor, the ancestors of a Jewish art collector sued Taylor under the Holocaust Victims Redress Act. Taylor had acquired the painting at an international auction in 1963. The court held that the Act does not provide a private remedy and that, even if it did, the statute of limitations had run.

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Time Warp: May 11, 2006

Posted by Ken Davidson on May 11th, 2010

On this day in 2006, New York Attorney General Eliot Spitzer announced a settlement with Universal Music Group (UMG) to end the company’s “pay-for-play” practices.

The company had been accused of bribing radio station programmers to increase air play for UMG’s artists. UMG used various inducements to secure airplay, including bribes in the form of electronics, vacations, airfare, hotel accommodations, tickets to sporting events and concerts; payments to radio stations to cover operational expenses and contest giveaways; using independent promoters as conduits for illegal payments; and payments for “spin programs” and “time buys” (i.e. airplay under the guise of advertising). The settlement required UMG to pay $12 million to New York State not-for-profit entities to fund music education and appreciation programs. UMG also agreed to make a number of changes to its policies and practices, including ceasing payments and other inducements to radio stations for play, discontinuing the use of independent promoters as pass-through for securing airplay, hiring a compliance officer to monitor promotion practices, and implementing a system to detect future abuses.

EMI, Sony BMG Music Entertainment, and Warner Music Group had also been accused of engaging in pay-for-play practices. The companies similarly settled throughout 2005 and 2006. Below are the links to the companies’ settlement agreements, supporting exhibits, and the NY AG press releases:

UMG Recordings, Inc: Settlement (pdf), Exhibits (pdf) Press Release
EMI Group: Settlement (pdf), Exhibits (pdf), Press Release
Sony BMG Music Entertainment: Settlement (pdf), Exhibits (pdf), Press Release
Warner Music Group: Settlement and Exhibits (pdf), Press Release

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Time Warp: May 10, 2000

Posted by Ken Davidson on May 10th, 2010

On this day in 2000, the FTC announced a settlement of a price-fixing case against the five largest music distributors: Universal Music and Video Distribution (UMVD), Sony Corp. of America, Time Warner Inc., EMI Music Distribution and Bertelsmann Music Group (BMG).

The FTC charged that the companies illegally modified their advertising programs to induce retailers into charging consumers higher prices for CDs. The companies had been requiring retailers to advertise CDs at or above the “Minimum Advertised Price” (MAP) set by the distribution companies. In exchange, the distribution companies paid retailers their advertising costs for the CDs. The restrictions applied to all advertising, including television, radio, newspaper, and in-store signs and banners. The restrictions even applied to advertising paid entirely by the retailer. Retailers who refused to adhere to the MAP policies lost all cooperative and advertising funds from the record companies. The FTC alleged that the MAP policies violated Section 5 of the FTC Act as unreasonable restraints of trade under the “Rule of Reason,” and that the policies were unlawful “facilitating practices,” which “increase[d] the risk of collusion or interdependent conduct by the market participants.”

It’s worth noting that independent distributors opposed the Consent Orders. They believed that an end to the MAP policies would allow discounters, such as Best Buy and Wal-Mart, to drive the independent record stores out of business.

Below are links to the FTC Consent Order and Complaint for each of the companies involved:

Agreements Containing Consent Orders: UMVD, Sony (pdf), Time Warner(pdf), EMI, BMG
Complaints: UMVD, Sony (pdf), Time Warner (pdf), EMI, BMG

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Time Warp: May 8, 2006

Posted by Ken Davidson on May 8th, 2010

On this day in 2006, a London court ruled that Apple Computer could use the Apple logo on its iTunes Music Store, and that doing so would not constitute a breach of the company’s 1991 consent agreement with Apple Corps., the Beatles’ record company.

In 1981, Apple Corps and Apple Computer entered into a consent agreement concerning the use of the “Apple” trademark and logos – Apple Computer could only use the mark in connection with computers so long as the computers didn’t record, reproduce, or create music. In 1989, after Apple Computer started developing computers that were capable of synthesizing music, Apple Corps sued Apple Computer for breaching the agreement. The parties settled and entered into a new agreement in 1991. That agreement generally gave Apple Corps the exclusive right to use the Apple marks in connection with Apple Corps’ artists, any music content, and certain promotional merchandising relating to music. The agreement gave Apple Computer the exclusive right to use the name and logo in connection with electronic goods. After Apple Computer launched its iTunes Music Service in 2003, Apple Corps sued again. The court found that Apple Computer’s use of the Apple logo in connection with the iTunes music store did not violate the agreement because Apple Computer used the logo in connection with the retail store, not the content of the music itself.

The two Apples finally settled the trademark dispute in 2007. Apple Computer now owns all of the trademarks related to “Apple,” but licenses some of those trademarks back to Apple Corps. The terms of the settlement are confidential.

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Net Neutrality Update: FCC Proposes a “Third-Way” Approach

Posted by Ken Davidson on May 6th, 2010

Today, the FCC proposed a new approach to regulating broadband. Under the proposal, the Commission will neither rely on “Title I ancillary authority” nor fully reclassify broadband communications as a “telecommunications service” under Title II.

Instead, the FCC has proposed a “third-way” approach. The Commission would reclassify the transmission component of broadband as a “telecommunications service” under Title II, but it would leave the content and rate components untouched. A handful of Title II’s 48 provisions would be applied to broadband access services. The FCC claims that this would give it the necessary authority to regulate the transmission activities of ISPs, such as enforcing net neutrality rules, while limiting its ability to regulate content. FCC General Counsel Austin Schlick suggests that as few as six Title II provisions would be necessary: 201, 202, 208, 222, 254, and 255. In short, the sections would:

  • Forbid unreasonable denials of services or other unreasonable practices;
  • Require the FCC to pursue policies that promote universal access;
  • Require providers to protect the confidential information of customer information; and
  • Require service providers and providers of telecommunications equipment to make their services and equipment accessible to individuals with disabilities, unless not “readibly achievable.”

You can read Chairman Julius Genachowski’s statement here, and General Counsel Austin Schlick’s statement here.

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Time Warp: May 5, 1989

Posted by Ken Davidson on May 5th, 2010

On this day in 1989, the Second Circuit held that the movie title to Federico Fellini’s Ginger and Fred was not a false designation under §43 of the Lanham Act, and that it did not violate Ginger Rogers’ Right of Publicity. In Rogers v. Grimaldi, the court created a new balancing test to determine when the Lanham Act outweighs the public’s interest in free speech. Under the Rogers balancing test, the Lanham Act will not apply to artistic works “unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.”

In this case, the court ruled that the title to Fellini’s film met the “minimum threshold of artistic relevance to the film’s content.” The characters were nicknamed “Ginger” and “Fred,” were not arbitrarily chosen to exploit the publicity value of the famous duo, and the title had “genuine relevance to the film’s story.” Furthermore, the title contained no explicit indication that Ginger Rogers endorsed the film or had any role in producing it.

The court rejected the right of publicity claim because the title was related to the content of the movie, and was not merely a disguised advertisement for the sale of goods or services.

The court affirmed summary judgment in favor of Alberto Grimaldi, MGM/UA Entertainment Co., and PEA Produzioni Europee Associate, S.R.L., the distributors and producers of the film.

Despite Court Ruling, FCC May Keep Broadband Framework in Place

Posted by Ken Davidson on May 4th, 2010

The Washington Post reports that despite the recent court ruling (pdf) that the FCC does not have the authority to force broadband service providers to treat all Internet traffic equally, the Commission may continue to regulate broadband services based on “Title I ancillary authority,” rather than define it as a “common carrier” service under the more legally stable TItle II:

[I]n recent discussions . . . [FCC Chairman] Genachowski has indicated he is less inclined to define broadband as common carrier service like regular copper wire phone services, which are clearly under the FCC’s oversight. The chairman was concerned that a move to that regime, called Title II, would be overly burdensome on carriers, they said. Yet he was also concerned that the current framework would lead to constant legal challenges to the FCC’s authority every time it attempted to pursue a broadband policy.

Fred Van Lohman, at EFF’s Deeplinks blog, makes a convincing argument for why regulating the Internet under “Title I ancillary authority” would be bad for net neutrality proponents and regulatory foes alike:

[W]e worry that the FCC may want to build its net neutrality regulations on a rotten legal foundation—”Title I ancillary authority”— which is both discredited and unbounded. As we’ve said before, if “ancillary jurisdiction” is enough for net neutrality regulations (something we might like) today, the FCC could just as easily invoke it tomorrow for any other Internet regulation that the Commission dreams up (including things we won’t like, like decency rules and copyright filtering). . . . [W]e don’t think that the FCC has—or should have—broad powers to regulate the Internet for any reason that strikes the Commissioners’ fancy. . .

Whatever your views on net neutrality, this is a terrible idea. If you oppose the proposed FCC net neutrality regulations because you are worried about expansive federal regulation of the Internet, then you should oppose an expansive reading of “Title I ancillary authority,” because that reading would be an invitation for even more federal regulations down the road.

And if you support net neutrality regulations from the FCC, it’s hard to imagine a less stable legal footing than the theory that the D.C. Court of Appeals just rejected in the Comcast ruling. There, the court found that the Commission had overstepped the limits of its “Title I ancillary authority” when it disciplined Comcast for doing exactly the sort of thing that the proposed net neutrality rules would prohibit. There is little chance future network neutrality rules could withstand a court challenge if the FCC rests on the same discredited argument that the court just rejected. In fact, following the Comcast ruling, many net neutrality advocates asked the FCC to rely on a different source of authority, Title II of the Communications Act, which applies to telecommunications “common carriers.” Title II would certainly provide a more stable, and narrower, basis of authority to impose open network rules, as well as other regulations familiar to telecommunications providers.

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Time Warp: May 4, 2000

Posted by Ken Davidson on May 4th, 2010

On this day in 2000, the District Court for the Southern District of New York held that MP3.com infringed the copyrights of Universal Music Group and other major record companies when it created a digitized database of their recordings without authorization. In UMG Recordings, Inc. v. MP3.com, Inc., the court ruled that the My.MP3.com service, which allowed users to listen online to an MP3 version of CDs that the subscribers already owned, did not constitute fair use under § 107 of the Copyright Act. In order for MP3.com to provide users with access to the music, the company converted tens of thousands of CDs to MP3 files and stored those files on its servers. MP3.com claimed that this activity was a transformative “space shift,” and therefore a non-infringing fair use. The court disagreed – it ruled that these conversions were unauthorized reproductions and found the company’s fair use defense “indefensible . . . as a matter of law.”

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Happy Law Day!

Posted by Ken Davidson on May 1st, 2010

President Obama has proclaimed May 1, 2010 as Law Day. This year’s theme is Law in the 21st Century: Enduring Traditions and Emerging Challenges. Read the ABA’s statement here.

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