The TMCA

Michael Crichton, author, director, and visionary created works that resonate today like Jurassic Park, Twister, Westworld, and ER. Now, his estate is suing the production team and leading actor of the newly released medical drama known as The Pitt for being a knock-off of ER. The lawsuit alleges a breach of contract action against Warner Bros. Television, claiming that the underlying concepts behind The Pitt mirror too closely to the original screenplay of the television series known as ER. The original show, ER, aired on NBC with Noah Wyles as a lead actor playing Dr. John Carter. John Wells was hired as the initial showrunner on ER, later joined by R. Scott Gemmill in the series' sixth season who held the title of supervising producer. After negotiations with the Crichton estate to reboot ER failed, Warner Bros. announced the debut of The Pitt, a medical drama based in a Pittsburg emergency room, starring… none other than Noah Wyles. Wyles plays Dr. Michael “Robby” Rabinovitch, an entirely different character from his role in ER, but there are some noticeable similarities between The Pitt and ER. First, Wyles’ character in The Pitt is a doctor in the emergency room but 30 years older and more experienced. Second, The Pitt's production team is similar to that of ER. Wells holds the position of executive producer. Gemmill holds the title of showrunner and is also one of the executive producers. Lawsuits regarding unauthorized derivative artistic works often focus on copyright claims, but this is a contract case. Although Crichton assigned the copyrights of ER to Warner Bros. in the original 1994 agreement, the contract contained a “Frozen Rights Provision,” in which they agreed that "any sequels, remakes, spin-offs and/or other derivative works . . . shall be frozen, with mutual agreement between [the parties] being necessary in order to move forward . . ." Crichton’s estate alleges that Warner Bros.' creation of The Pitt is a clear breach of the Frozen Rights Provision in the 1994 agreement. In other words, the Frozen Rights Provision in the 1994 agreement transformed what might more commonly be a copyright claim into a breach of contract claim, putting both parties in a unique position. If this were a copyright infringement case, Crichton’s estate would not only have to show that The Pitt is derivative of ER, but also meets the “substantial similarity test.” Proving substantial similarity can be difficult given the subjective nature of the analytic framework. Warner Bros. could also argue in defense that despite some similarities, they aren’t substantial because The Pitt takes on an entirely new setting, pace, and plot than that of ER. With the breach of contract claim, Crichton’s Estate must prove that Warner Bros. breached the Frozen Rights Provision—which covers any “derivative work”—in their creation of The Pitt. However, proving that a work is derivative and overcoming the substantial similarity test are not the same thing. A work can be derivative but still fall short of the similarities required to prove copyright infringement. Thus, in the context of a breach of contract claim, Crichton’s estate need only prove that The Pitt is a derivative work to support their breach of contract claim, rather than meeting the burden of proof required of a copyright infringement claim. IP rights are often covered in contracts, and it is worth considering the advantages and disadvantages of creating a specific contract provision like the “Frozen Rights Provision” here to limit future IP use. If The Pitt can convert Dr. Carter to Dr. Robby, then perhaps you can convert an IP claim into a breach of contract claim.

A recent ruling from the United States District Court for the District of Central California in the lawsuit against Miley Cyrus and others for the song “Flowers” highlighted the power that a single copyright co-owner holds in protecting their interest. The Court denied a motion to dismiss brought by Cyrus and her co-defendant song writers (the “Songwriter Defendants”), rejecting their argument that the plaintiff lacked standing to bring suit as the successor-in-interest of a copyright co-owner. The Songwriter Defendants’ motion turned on a key principle of copyright law: a single co-owner, even without the consent of other co-owners, can sue for infringement. The Court’s decision reinforced that copyright co-ownership includes not only the benefit of royalties—but also remedies. In February 2024, Cyrus left the Crypto.com Arena with not one but two Grammy Awards for her 2023 smash hit “Flowers,” triumphing Record of the Year and Best Pop Solo Performance. However, “Flowers” proved not to be all sunshine and roses for Cyrus, as it also brought her a federal lawsuit alleging unlawful copying of the 2013 Hot 100-Charting song “When I Was Your Man” performed by Bruno Mars. Mars, Ari Levine, Andrew Wyatt, and Philip Lawrence are the co-writers of “When I Was Your Man,” with Tempo Music Investments LLC (“Tempo”) acquiring Lawrence’s interests in the song in 2020. On September 16, 2024, Tempo sued Cyrus and others for copyright infringement in Tempo Music Investments LLC v. Miley Cyrus et al., 2:24-cv-07910, with Central California District Court Judge Dean D. Pregerson presiding. In its Complaint, Tempo claimed that any Mars fan would recognize that “‘Flowers’ duplicates numerous melodic, harmonic, and lyrical elements of ‘When I Was Your Man,’ including the melodic pitch design and sequence of the verse, the connecting bass-line, certain bars of the chorus, certain theatrical music elements, lyric elements, and specific chord progressions.” Tempo also included side-by-side comparisons of the songs’ respective melody, harmony, and lyrics to allege intentional similarities and meaningful connections. An example is the following lyrical comparison: “When I Was Your Man” “Flowers” That I should have bought you flowers And held your hand Should have gave you all my hours Take you to every party cause all you wanted to do was dance I can buy myself flowers And I can hold my own hand Talk to myself for hours I can take myself dancing Fans on social media noticed that while “When I Was Your Man” features a man lamenting his failure to treat his lover better, “Flowers” appears to celebrate a woman’s embrace of independence. The Songwriter Defendants moved to dismiss the case, arguing Tempo lacked standing because it does not own the exclusive copyright to “When I Was Your Man.” The Songwriter Defendants contended that Tempo’s Complaint suffered a “fatal flaw” because Tempo “br[ought] this copyright infringement action alone — without any of that musical composition’s co-authors or other owners[.]” The Songwriter Defendants interpreted Section 501(b) of the Copyright Act to mandate dismissal under these facts, because only an exclusive legal or beneficial owner of a copyright right may sue for infringement, with Tempo being neither. The Songwriter Defendants asserted that, in the Ninth Circuit, the law is that the assignee or licensee of one co-author’s interest in a joint work’s copyright lacks the requisite standing to bring a copyright suit. In so doing, the Songwriter Defendants primarily relied on Tresóna Multimedia, LLC v. Burbank High Sch. Vocal Music Ass’n, 953 F.3d 638 (9th Cir. 2020) and Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137 (9th Cir. 2008). The Songwriter Defendants interpreted these authorities for the proposition that a single co-author of a copyright interest, acting alone, cannot assign or license exclusive rights, because those rights are also owned by the assignor’s or licensor’s co-authors. The Songwriter Defendants further reasoned that a co-author can only grant non-exclusive rights because such co-owners are akin to tenants in common, each of which owns shares of an undivided whole. Tempo opposed, arguing that Section 201 of the Copyright Act makes clear that “copyright interests are divisible and can be sold just like any property interest” such that co-owners can unilaterally transfer their copyright interests without permission from the other co-owners. Likewise, Tempo asserted it is black letter law that a co-owner of a copyrighted work can sue a third-party for infringement without joining the other co-owners in the action or otherwise obtaining their permission to proceed with litigation. Thus, upon acquiring Lawrence’s interest to “When I Was Your Man,” Tempo maintains it stepped into Lawrence’s shoes as his successor-in-interest with the right to bring any claim for copyright that Lawrence (or any other owner of “When I was Your Man”) could bring. Judge Pregerson agreed with Tempo, and denied the motion to dismiss, ruling that, under the Copyright Act’s provisions for divisibility and alienability of copyright ownership, a co‐owner may sue a third party for infringement without joining the other co‐owners. The decision reasoned that the Songwriter Defendants misunderstood case law from the Ninth Circuit that stems from the word “exclusive,” because “[o]wnership of ‘exclusive rights’ is not to be conflated with ‘exclusive ownership’ of rights.” Indeed, each co‐owner of a copyright owns an interest in the exclusive rights that make up the copyright, and these exclusive rights are exclusive to the co‐owners collectively as against the rest of the world. Judge Pregerson emphasized that neither Tresóna nor Sybersound limited a co‐owner’s ability to transfer his/her ownership interest in a copyright. He underscored that in Corbello v. DeVito, 777 F.3d 1058 (9th Cir. 2015), the Ninth Circuit made clear the distinction between exclusive rights and exclusive ownership, reasoning that “[t]ransferability of a copyright is no different for a co-owner than it is for a sole owner.” If a co‐owner’s right to sue for infringement was otherwise lost upon transfer, that would diminish the value of jointly-owned copyrights, which in turn would undermine Congress’ intent in allowing copyrights to be divided and its acknowledgment of co-ownership of joint works. In rejecting the Songwriter Defendants’ lack of standing argument, Judge Pregerson clarified several other fundamental rights that copyright co-owners hold: A co‐owner may transfer his/her ownership interest without obtaining permission from the other co‐owners; A co‐owner cannot grant an exclusive license to a third party without the consent of all co‐owners, because a co‐owner cannot transfer more than he/she owns; A co‐owner cannot limit the independent right of the other co‐owners to use and exploit the copyright without their consent; A co‐owner, when acting alone, may only grant a non‐exclusive license to a third party; and Each co‐owner of a copyright owns an interest in the exclusive rights that make up a copyright, and these exclusive rights are exclusive to the co‐owners collectively as against the rest of the world. This reiteration of rights serves as an important reminder that copyright co-owners should be mindful of the parties with whom they share their rights and when they do (or do not) need permission to act independently of the other co-owners.

Given that litigation in the United States can take years from start to finish, we rarely see a conclusion to the cases we follow. In a prior blog post, we looked at the potential recusal requirements of the U.S. Supreme Court when one—or even six—Justices have a personal, professional, or financial interest in the parties arguing before it. Although our ultimate question of whether a Justice would, or should, recuse themselves will remain unanswered, a long-standing copyright infringement case has concluded and warrants a final review. To refresh, in a September 2024 decision, the Second Circuit affirmed a lower court’s decision that defendant Internet Archive had infringed the copyrights of 127 books by facilitating the unfettered lending of digitized copies during the COVID-19 pandemic. In light of libraries shutting down across the country, Internet Archive created its “National Emergency Library,” which provided thousands of digital copies of books to people around the country who did not otherwise have access to such resources. However, the plaintiff book publishers argued that while Internet Archive had a right to loan out copies of the printed books it had lawfully acquired, it went too far by digitizing those same books and allowing upwards of 10,000 digital loan outs. These acts through the National Emergency Library, the plaintiffs argued, amounted to blatant copyright infringement. The courts agreed. Internet Archive had until December 7, 2024 to file a writ of certiorari with the U.S. Supreme Court. In a press release dated just three days prior, Internet Archives stated that it had decided not to pursue Supreme Court review of the appellate court’s decision. Although lamenting the opinion, Internet Archive vowed to continue advocating for a future in which “libraries can purchase, own, lend, and preserve digital books” as part of its ongoing mission to provide individuals with access to knowledge they might not otherwise have. But as a result of the Second Circuit’s decision, it would continue to work with the Association of American Publishers (“AAP”) to remove digital copies of the AAP’s member publishers’ books from Internet Archive’s repository upon request. The AAP celebrated Internet Archive’s decision, which effectively ended five years of combative litigation. In its own press release, the AAP proclaimed that “publishers have achieved a decisive and broadly applicable victory for authors’ rights and digital markets.” Such authors’ rights include further protection against online piracy, as well as unlawful use by artificial intelligence developers, who collect voluminous amounts of material to train their generative systems. As we have seen in numerous other cases working their way up through the courts, copyright owners, authors, and news outlets argue that AI systems feed on digitized copyrighted materials for training purposes, and the output is, allegedly, copyright infringing material. Permanently enjoining Internet Archive from digitizing printed books and loaning them out en masse is just one more step in protecting authors’ work from widespread, unrestricted dissemination, the AAP’s logic follows. So the Internet Archive lawsuit will not be the case that tests the Supreme Court’s recusal standards. But this is only the beginning. Outside of the intellectual property world, there continue to be calls for Supreme Court Justices to step down from cases before them if they have a conflict with, or an interest in, any involved party. But until the Code of Conduct for Justices of the Supreme Court of the United States is amended to add clarity to its vague terms, such as “financial relationship” or “private interest,” recusals will continue to be based on an honor system.

On January 29, the U.S. Copyright Office released Part 2 of its planned 3-part report on the legal and policy issues related to copyright and artificial intelligence (AI). Part 1 of the report, which was published in July 2024, addressed the topic of digital replicas. Part 2 now addresses issues related to the copyrightability of generative AI model outputs. The highly anticipated Part 3 is slated to address copyright infringement and fair use issues involving generative AI. Generative AI Models (Generally) Generative AI models are machine learning models that, when given an instruction or request (a prompt), can generate new content such as text, images, videos, and sounds. Prompts are often textual, but can be other input, such as images. These models learn the underlying patterns and structures of their training data and use them to produce new data based on the prompt. Examples include Meta’s Llama models, OpenAI’s ChatGPT models, and Google’s Imagen 3 model. The creation of prompts themselves has developed into its own category of computer technology—many in the field have begun using generative models to develop large amounts of prompts or to develop optimized prompts. Due to the rising use of these generative AI models, the Copyright Office is publishing guidance addressing issues of copyright law uniquely applicable to AI models. Historical Copyright Law Gives Some Guidance The Copyright Office began Part 2 of its report by explaining how copyright law has kept up with changes in technology, particularly with the inventions of photography, movies, and video games. As technology evolves, the Copyright Office and courts must decide to what extent technology can be involved in works of authorship that can still claim copyright protection. Because technology has always been permitted to be used in generating copyrighted works, the Copyright Office explained that there cannot be a bright-line rule “that registration will be denied merely because a computer may have been used in some manner in creating the work.” Instead, the analysis involves a case-specific sliding scale: “Where AI merely assists an author in the creative process, its use does not change the copyrightability of the output. At the other extreme, if content is entirely generated by AI, it cannot be protected by copyright.” As discussed by the TMCA in the past, the U.S. Supreme Court and the Copyright Office have long held that authorship requires the involvement of human creativity. The crucial question is “whether the ‘work’ is basically one of human authorship, with the computer [or other device] merely being an assisting instrument, or whether the traditional elements of authorship in the work (literary, artistic, or musical expression or elements of selection, arrangement, etc.) were actually conceived and executed not by man but by a machine.” U.S. Copyright Office, Report to the Librarian of Congress by the Register of Copyrights (1965). The Copyright Office also analogized the generative AI model issues to other topics already decided in the law. For example, cases involving commissioning works, where courts have analyzed what level of contribution is necessary to qualify as authorship, seem applicable. A person who merely describes to an author what the commissioned work should do or look like is not a joint author for purposes of the Copyright Act, because such contributions constitute unprotectible ideas. Likewise, a person who provides high-level guidance to a generative AI model would also have difficulty proving sole or co-authorship. Specific Examples Provided by the Copyright Office The Copyright Office offered a few examples to illustrate the boundaries of copyright protection for material produced (at least in part) by generative AI models. Prompts On one end of the spectrum, prompts alone do not provide sufficient human control to make users of an AI system the authors of the output. “Prompts essentially function as instructions that convey unprotectible ideas.” The Copyright Office provided its own generative example to illustrate its point: While this prompt is very descriptive, and the resulting image reflects some of the instructions, it does not reflect all of them (there is no “highly detailed wood”). The generative AI model also uses its own content to fill in gaps (the cat’s breed, clothes beneath the robe, human hands, etc.). The Copyright Office noted that identical prompts can generate multiple different outputs, which further underscores the lack of human control. This reality may change as technology evolves. “There may come a time when prompts can sufficiently control expressive elements in AI-generated outputs to reflect human authorship. If further advances in technology provide users with increased control over those expressive elements, a different conclusion may be called for.” But for now, the Copyright Office’s position is clear: prompts are not copyrightable. Expressive Inputs Expressive inputs are inputs of copyrighted works into generative AI models with instructions to modify those works. For example, a human author may create a drawing, input that work into an AI system, and instruct the system to modify color or scale. Or a user could upload a copyrighted story written in the first person point of view, and instruct the model to re-write the story from that of a third person. These inputs are different from prompts because they contribute more than just an intellectual idea. The Copyright Office again provided its own example: Here, the Copyright Office appears more inclined to provide protection, though that protection would not cover the entire output. Instead, “copyright in this type of AI-generated output would cover the perceptible human expression.” Modifying or Arranging AI-Generated Content Finally, the Copyright Office addressed situations where a generative model is used as an initial step, but the author further modifies the output. The Copyright Office noted that whether or not such modifications rise to the minimum standard of originality, that is, whether the work is the product of creative choices with respect to the selection of the images and/or text that make up the work and the placement and arrangement of the images and/or text on each of the work’s pages. The copyright would extend to the material the human author contributed but would not extend to the underlying AI-generated content itself. The inclusion of elements of AI-generated content in a larger human-authored work does not affect the copyrightability of the larger work as a whole. “For example, a film that includes AI-generated special effects or background artwork is copyrightable, even if the AI effects and artwork separately are not.” Key Takeaways The key takeaways from Part 2 of the report include how the Copyright Office interprets the human authorship requirement as it relates to the use of models. The Copyright Office explained that “[c]opyright protects the original expression in a work created by a human author, even if the work also includes AI-generated material,” but “[c]opyright does not extend to purely AI-generated material, or material where there is insufficient human control over the expressive elements.” Whether the human interaction with the generative AI model is sufficient to constitute authorship should be decided on a case-by case basis. In the words of the Copyright Office: “prompts do not alone provide sufficient control.”

The emergence of generative artificial intelligence (AI) products in the past couple of years has significantly increased the capacity for individuals, businesses, and organisations to utilise AI to produce a wide range of content at great speed and low cost for personal, professional, and business purposes. ChatGPT, DALL-E, Midjourney, Claude, and Grok are a small number of prominent generative AI tools that are increasingly being used by business and the general public in an ever-growing range of use cases, producing literature, music, images, and art. The rapid rise of generative AI has drawn attention to a number of copyright issues, including the question of copyright protection for content generated by those tools. In the United Kingdom, a provision of the Copyright, Designs and Patents Act 1988 (CDPA) (section 9(3)), part of a broader set of rules regarding the authorship of different categories of works) provides that “in the case of a literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken”. On its face, s. 9(3) appears to proceed on the basis that copyright ought to subsist in literary, dramatic, musical, and artistic works which are created by a computer, which would seem to include works created by generative AI. In fact, Parliamentary records (Hansard) indicate that the proponents of the CDPA, which was enacted in 1988, “[believed] this to be the first copyright legislation anywhere in the world which attempts to deal specifically with the advent of artificial intelligence.” The legislature, therefore, envisaged that literary, dramatic, musical, or artistic works may be generated by computers – indeed by “artificial intelligence” – and it specifically provides that the authorship of such works should be attributed – as a matter of law – to the person making the arrangements for the creation of the work. There may be a question in specific cases which person exactly should be identified as the person who made those ‘arrangements,’ but the principle seems clear that the question of authorship itself does not come into question merely because a work is computer-generated. However, the correct legal effect of s. 9(3) CDPA has increasingly been drawn into question, particularly in view of a significant shift that took place in the past few years in the understanding of the concept of originality under the law. Changes in the concept of originality in UK copyright law Under the CDPA, copyright subsists in the following types of works: original literary, dramatic, musical or artistic works; sound recordings, films or broadcasts, and the typographical arrangement of published editions. Authorship and originality are two related concepts. Under the CDPA, literary, dramatic, musical, and artistic works (sometimes known as “authorial works”) require originality to attract copyright protection. Under Section 9 of the CDPA, with the exception of computer-generated works, the author of such works is their creator. With regard to the types of works that do not require originality to enjoy copyright protection (sound recordings, films or broadcasts, and typographical arrangements), other provisions were made in s. 9 attributing authorship to persons by reference to their responsibilities in relation to the generation of the work (for example, the authors of a film are deemed to be the producer and principal director and the author of a sound recording is its producer). However, the rule under s. 9(3) is the only rule of deemed authorship that applies to types of works which are protected in copyright subject to a requirement of originality. This raises the question of how deemed authorship can be reconciled with originality. The context in which this question falls has changed significantly in the past few years, not necessarily as a result of technological developments, but rather due to legal ones. At the time the CDPA was enacted, and until recently, the test for originality under English law was the ‘skill and labour’ test which considers whether a sufficient degree of skill, knowledge, mental labour, taste, or judgement were expended by the author in creating the work. The traditional rule required only a minimal degree of skill and labour (more than an insubstantial amount). Under this test of originality, the English courts had historically been able to recognise originality in works that were generated in circumstances where there was no human author (for example, in Nova Productions Ltd v Mazooma Games Ltd [2006] EWHC 24 (Ch) the Court accepted the subsistence of copyright in artistic images produced by a computer game in the course of play). However, since the decision in 2010 of the European Court of Justice’s in Infopaq International A/S v Danske Dagblades Forening (Case C-5/08) EU:C:2009:465, the question has been debated in a number of subsequent cases by the English courts, and it has now been established by the Court of Appeal in its decision in THJ Systems Ltd v Sheridan [2023] EWCA Civ 1354 that the traditional common law test for originality in copyright is no longer applicable. Through its interpretation of EU copyright legislation, the Infopaq decision adopted a uniform test of originality which defines an original work as one which is “the author’s own intellectual creation.” Although the UK (following its withdrawal from the EU) is no longer subject to the jurisdiction of the EU courts, the Court of Appeal in THJ Systems treated the EU test of originality as a test that had already been incorporated into UK law before Brexit through past cases that applied the Infopaq test. As summarised by the Court of Appeal in THJ Systems, the test of originality of the “author’s own intellectual creation” considers at its core whether “the author was able to express their creative abilities in the production of the work by making free and creative choices so as to stamp the work created with their personal touch.” This test is widely considered to set a higher standard than the traditional common law ‘skill and labour’ test. Although the Court of Appeal emphasises that the EU test is an objective one and not one of “artistic merit” and the court will not seek to assess the artistic quality of the work, it is still more than the minimalistic test previously applied by the English courts. The work must be an expression of the author’s creativity, choice, or judgment. Can a computer generated work meet the test of originality of the “author’s own intellectual creation?” Computers (including so called “artificial intelligence” software) do not possess an intellect and the works generated by AI do not express the “intellectual creative choices” of the software. In fact, the process by which AI generated content is produced is as far removed as possible from the idea of an intellectual creation. However, this does not necessarily mean that works created by AI cannot meet the originality test of the “author’s intellectual creation.” The aforementioned THJ Systems case, although it did not deal with an AI-generated work, can provide some guidance. The dispute concerned “risk and price charts” that were generated by a business software application. The case focused on the authorship (which dictated the ownership) of the works generated through the use of the software, although the question of subsistence of copyright was also considered. The claimant, the creator of the software, argued that the outputs it generates where his copyright works. The defendant denied there was copyright in the charts and argued that if there was, then under s. 9(3) CDPR, authorship ought to be attributed to the user of the software, the defendant, not to the software developer. At trial it was established that the graphical works in which the claimant claimed rights protected by copyright and which were reproduced by the software every time it was used were created by the claimant in developing the software. Although the user’s use of the software resulted in different figures being populated in the charts, those figures were not the copyrighted work in question, but rather it was the structure of the charts and other design elements displayed on the screens that attracted copyright and those were not the result of any choice or action taken by the user. On the question of the subsistence of copyright, the Court of Appeal held that the trial court misapplied the law by considering the matter against the now-discarded “skill and labour” test, rather than the Infopaq test of the “author’s own intellectual creation”. However, the Court of Appeal did not interfere with the trial court’s conclusion that there was sufficient originality in the structure and arrangements of the charts to justify copyright protection. Instead, the functionality of the software was held to be irrelevant to the question of originality. The enquiry concerned the visual appearance of the graphical works. Even though the charts were generated by the software each time it was used, the Court found that they were carefully arranged by the software designer who applied judgment and choice to achieve a certain visual result. It was not suggested that the particular way in which the charts were organised was dictated by technical requirements such that would exclude a finding of originality and copyright protection. The Court held that the degree of originality was clearly low (with the result being that only an identical copy could amount to an infringement) but the resulting artistic work was still the expression of the author’s (that is, the human software designer’s) intellectual creation and choices and that the works were sufficiently stamped with his personal touch, so that they can attract copyright protection. Accordingly, a graphical work can be at the same time a computer-generated work for the purpose of s. 9(3) CDPA whilst originality can be assessed by reference to the work carried out by the human designer who was responsible for making the relevant choices or judgments which resulted in the work being created (by the computer) in a certain way. The analysis with regard to AI-generated works could proceed along very similar lines. Although the charts in the THJ Systems case were directly arranged by a human developer (and not automatically by an AI), the Court of Appeal emphasised that the functionality of the software does not matter and, at least with regard to artistic works, a key element of evidence as to originality is the work itself. If a graphical work is generated through an AI tool and looks, on its face, like an original artistic work, a court would look at the creative choices and judgments made by the user (the author) and the extent to which the work reflects those choices and whether it is stamped by the author’s personal touch. It should not matter in principle that the graphical output itself is generated automatically by the software. It should not be a determinative factor whether the user applied any brushwork or drew any lines (virtual or otherwise). It would seem contrary to the intention of Parliament in enacting s. 9(3) CDPA to exclude copyright in an artistic work purely because it was generated by a computer. As long as it can be demonstrated that a human author has made sufficient free creative choices or applied sufficient judgment so that the resulting work expresses his own “intellectual creativity,” that should be sufficient for finding originality in the work. But the decision in the THJ Systems case leaves important questions unresolved. The question can be taken to the extreme, such as in the case of a work that is generated by AI with minimal user input. Here, a court might find insufficient authorship to amount to ‘creative choices or judgments’ or making the work a reflection of the author’s “own intellectual creation” – for instance an image produced by an AI tool based on the instructions: “flowers in a vase; natural style; green, red, yellow.” It would be difficult to argue that such banal instructions amount to creative choices that make the resulting work a reflection of the user’s creative free choices and judgment. But given the provision of s. 9(3) CDPA – which suggests that copyright should not be denied from an authorial work merely because it is computer-generated, perhaps in such a case authorship of the resulting work should be attributed (as in the THJ Systems case) to the designer of the software tool, rather than the user, and the creative choices and judgment can be said to have been those made by the developers who trained and developed the AI tool. After all, without their work the computer-generated image could not have been created. As long as the image is not a copy of images that were used to train the AI, perhaps it is the creative efforts of the software developers that should justify protecting the resulting image in copyright? On the other hand, can it seriously be argued that the unlimited number of different images that an AI image-generating tool can produce are all the reflection of the software developers’ creative choices and judgment? Can it be said that all such works (as long as they are not sufficiently moulded and individualised by the user of the tool) are stamped with the “personal touch” of the software developers? It seems doubtful. It is perhaps more likely that courts in the UK would take the approach that s. 9(3) CDPA does not mean that all computer-generated works must necessarily attract copyright. It is still necessary to show in each case that the work is original in the sense that it reflects its author’s free creativity and intellectual choice and judgments – whether that author is the user of the software or its creator. That would be a highly factual investigation and may depend on the nature of the AI tool, how it was developed, what it does, and the way it was used by humans to generate a particular output. Potential legislative reform The UK Government is currently conducting a public consultation on copyright issues related to AI. One issue under consideration is the special rule of authorship for computer-generated works. The consultation paper invites feedback from the public and relevant stakeholders, but also expresses an initial view that it may be preferable to abolish section 9(3) CDPA on the basis that the provision creates more uncertainty than it resolves. In forming that initial view, the Government took note of the fact that other major legal systems such as the European Union and the United States did not adopt a similar rule of deemed authorship regarding computer-generated works. The Government’s view (which is not binding on the courts) is that even without the special statutory rule of authorship under s. 9(3) CDPA, literary, musical, artistic, and dramatic works which are computer-generated but which exhibit human creativity (that is, works created by humans with the assistance of AI tools) would be protected in copyright on the basis of the general rule of originality. It is also noted that computer-generated films, videos, sound recordings, and broadcasts will enjoy copyright protection in any event since the requirement of originality does not apply to those types of works. It is yet to be seen if s. 9(3) CDPA is to be abolished or if any further clarifications might be made in legislation regarding the copyright protection of AI-generated works. As long as the law remains unchanged, courts are likely to consider each case on its facts with a focus on the degree of individual creativity that contributed to the creation of each work.

Two years ago, the Colorado State Fair’s annual art competition sparked controversy after awarding a blue ribbon to a work generated in part by A.I. Jason Allen, the artist responsible for the work, said at the time, “I won, and I didn’t break any rules.” The judges agreed, despite outrage from some that the work lacked artistic merit. While the fairground judges saw fit to credit Allen as author of the work, it remains to be seen whether the federal judiciary will do the same. The U.S. Copyright Office refused to register Allen’s work for copyright based on lack of human authorship, and Allen has recently filed suit in Colorado federal district court to reverse the Copyright Office’s decision. Allen’s case centers on the question of whether human authorship is present in A.I.-generated images where human input is limited to the textual prompts given to guide the A.I.’s work. Allen’s work, entitled “Théâtre D’opéra Spatial,” depicts Victorian performers looking out from a stage towards an otherworldly portal in a surreal synthesis of past and future. To create the work, Allen used Midjourney (an A.I.-driven text-to-image software) to generate an iterative series of images refined over the course of 624 prompting sessions undertaken by Allen. Allen then upscaled the resolution of the final image using Gigapixel AI and added additional elements using Adobe Photoshop. The Copyright Office has thus far taken a dim view of A.I-generated images. Last February, it partially canceled a copyright registration for a graphic novel upon learning that the novel’s images were produced by Midjourney. Although the text and arrangement of the images in the graphic novel were human authored, the Copyright Office concluded that the individual images themselves were not, and thus they could not be encompassed by the scope of the resulting copyright registration. Further guidance issued by the Copyright Office last March has reinforced this position. Applicants are now instructed to “disclose the inclusion of AI-generated content in a work.” Further, under this guidance, “AI-generated content that is more than de minimis should be explicitly excluded from the application.” The Copyright Office relied on its prior precedent in rejecting Allen’s application, which insisted upon copyright protection for his entire work—not just the elements he added manually to the base image via Photoshop. In Allen’s view, A.I. image generation is merely the latest technological innovation that artists can leverage to realize their creative visions. Just as human authorship exists in photographs captured by cameras and musical albums crafted in digital audio workstations, argues Allen, so too should human input be recognized as authorship in the generation of A.I.-assisted artworks using third-party tools. Although the Copyright Office has not yet answered Allen’s complaint, its rejection letter provides a framework for its likely defense. In that letter, the Copyright Office quoted Midjourney’s website disclosure in asserting that “Midjourney does not interpret prompts as specific instructions to create a particular expressive result, because Midjourney does not understand grammar, sentence structure, or words like humans.” Relying on this understanding of Midjourney’s processing of prompts, the Copyright Office reasoned that, “when an AI technology receives solely a prompt from a human and produces complex written, visual, or musical works in response, the ‘traditional elements of authorship’ are determined and executed by the technology—not the human user.” Thus, the Copyright Office concluded, the traditional elements of authorship in Théâtre D’opéra Spatial were determined by Midjourney, not Allen. While it remains to be seen whether the Copyright Office’s position will prevail in federal district court (Allen also posits in his complaint that the court should approach the question “with a fresh set of eyes” post-Loper Bright, the recent case where the U.S. Supreme Court overturned the judicial rule of interpretation that directs courts to defer to agency interpretations of statutes), other countries have already begun grappling with the issue. For example, last year, the Beijing Internet Court ruled that an A.I.-generated image was copyrightable, holding that a picture generated by using over 100 textual prompts met China’s copyright requirements that a work be original and demonstrate “intellectual achievement.” And in the UK, where “computer-generated works” are protected and authorship is granted to “the person by whom the arrangements necessary for the creation of the work are undertaken,” A.I.-generated images could presumably achieve copyright protection (although determination of ownership in such cases may be complicated). Allen’s complaint raises important questions about the role of A.I. image generation and the human inputs and/or manipulation involved in the creative process. Who actually forms the image that results from the prompting process? Are there elements of authorship that A.I. solely controls, which other technologies—such as cameras—do not? And if there is a line between human- and A.I.-authored works, where should it lie? As software tools like Midjourney evolve and become more widely accessible, the practical need to delineate between the roles of humans and machines in the creative process will only increase. Yet as these tools likewise become more responsive to human input, this line-drawing may become even harder. We’ll report further as this case progresses.

What happens if two-thirds of the U.S. Supreme Court justices have a conflict of interest in a case presented before the Court? The speculative possibilities are abundant in such a situation—do all of the affected Justices have to agree to recuse? What if only some, but not all, recuse? Can the case just be decided by the three unaffected Justices? While it is not a circumstance the Supreme Court has ever faced before, it may have to in the upcoming term. The potential scenario stems from a lawsuit filed by four large book publishing companies against a non-profit digital library alleging copyright infringement of printed books owned by the co-plaintiff book publishers. Six of the nine justices have previously published books or have signed book deals with three of the co-plaintiff book publishers, including Justices Barrett, Gorsuch, Jackson, Kavanaugh, Sotomayor, and Thomas. The Second Circuit issued a decision in this case in September. If that decision is appealed by the December 7th deadline, and the Supreme Court grants certiorari, six of the nine justices will have a professional relationship with some of the co-plaintiffs, which raises a host of conflict of issue questions. Founded in 1996, the defendant, Internet Archive, is a San Francisco-based non-profit digital library that offers the public free access to digitized versions of printed materials, software applications, music, and audiovisual content. To date, Internet Archive has digitized millions of printed books, and subsequently provides copies to its users for free. But while millions of the source printed books are in the public domain and not currently protected by intellectual property rights, roughly 3.6 million of the source books are subject to current copyright protection. Of these books, about 33,000 books and the subject copyrights belong to four prominent book publishers. For years, Internet Archive would limit its lending practices to one digital “checkout” for each physical book it held in storage. However, during the COVID-19 pandemic when libraries around the world were closed indefinitely, Internet Archive expanded its lending policies by lifting limitations on how many people could borrow a single digitized book at a time, allowing checkouts by up to 10,000 users at a single time. In 2020, the book publishers sued Internet Archive over the non-profit’s lending of, in particular, 127 books, including titles by Malcolm Gladwell, Toni Morrison, and C.S. Lewis. The book publishers’ case centered on the argument that while Internet Archive has the right to loan out copies of printed books that it has lawfully acquired, it does not have the legal right to digitize those books and lend out the scanned copies en masse. Internet Archive argues its practices are protected by copyright fair use laws because its digitalization of the books was “transformative” as it made the process of lending out the books more convenient, and served the greater public interest by promoting “access to knowledge.” Both the District Court for the Southern District of New York and the Second Circuit of Appeals agreed with the book publishers—Internet Archive had merely digitized verbatim the original books, instead of transforming them into something new, a requirement under the fair use doctrine. In its affirmation of the lower court’s decision, the Second Circuit’s rationale was that making books available for free not only injured the co-plaintiff book publishers as valid copyright owners, but it would also negatively impacted the public at large by removing the incentive for consumers and libraries to pay for books, and in turn, for authors to create new works in the first place. Internet Archive decried the Second Circuit’s ruling, claiming that it harms individuals who do not live near or have access to the public library system, and thus, cannot readily access this “valuable knowledge.” While the underlying case is interesting from a broader copyright perspective, the real conundrum arises if Internet Archive files such a writ with the U.S. Supreme Court, and if the Supreme Court decides to hear the case. By all objective standards, six of the nine Justices have conflicts of interest in the case, as those Justices have either published or have current book deals with three of the four co-plaintiff book publishers. As such, there is little question they have financial ties to parties in the case. While the Justices’ published books were not subjects of Internet Archive’s digitalization, the Justices have a professional relationship with the co-plaintiffs, which, under the “Code of Conduct for Justices of the Supreme Court of the United States,” may constitute an ethics violation. For instance, Canon 1(b) of the Code of Conduct states “[a] Justice should not allow family, social, political, financial, or other relationships to influence judicial conduct or judgment,” and a Justice should not “knowingly lend the prestige of the judicial office to advance the private interests of the Justice.” However, this language is relatively vague, and there is no enforcement mechanism or requirement that Justices recuse themselves if they may be subject to a “financial relationship” or a “private interest.” As other questions surrounding the Justices’ personal interests in cases in front of the Supreme Court abound, the general consensus appears to be that the decision to recuse is left up to the individual Justices. Some may feel their private, financial relationship with the respective co-plaintiff book publishers renders them unable to act impartially, while others may not view it as a concern. But if one Justice recuses, should all six? Must the decision be made as a collective unit of the conflicted justices? Currently, a quorum of six Justices is required to decide a case, which would still leave three conflicted Justices hearing the Internet Archive case. The Code of Conduct is silent as to this issue, so we won’t know unless and until a case reaches the Supreme Court that requires the Court to resolve it. It could be the Internet Archive case, or it could be another in the future. But given the possibility of such a stalemate occurring in the near future, it might be prudent to shore up Supreme Court Justice recusal requirements now - before the issue comes up on a granted writ of certiorari.

Artist Rights in Unauthorized Exhibitions Recent unauthorized Banksy exhibits highlight the ongoing struggle of what obligations society owes to artists. While intellectual property laws primarily provide artists with economic protections and redress, what of artists who are less concerned with economic remedies and more concerned with the integrity of their works? The unauthorized use of Banksy’s works raises such questions and highlights the dilemma and limits of legal protections. Banksy is a street artist who has built a career on covertness and intrigue. With a hidden identity, Banksy began producing street art in the 1990s in England, which has since extended to locations worldwide. Works like “Love is in the Air,” “Girl with Balloon” and “Bomb Hugger” are replete with social commentary and activism. Banksy has mastered the visual oxymoron—juxtaposing two images to make a statement. “Love is in the Air,” for example, depicts a masked man winding up to throw a flower bouquet where one might expect to see a grenade or Molotov cocktail. This subversion of visual and emotional norms has attracted much viewership and notoriety. Banksy has sold prints at very democratic prices throughout his career. He has further lampooned the sky-high prices fetched on the secondary market for his works, famously causing a print of his iconic “Girl with Balloon” to shred upon purchase at auction. An act that, ironically, increased the value of the new work, retitled “Love is in the Bin”. Banksy has also exhibited his works in bombastic shows like the chaotic 2003 London exhibit “Turf War,” which featured real painted animals, stencils on walls and originals in various media, all of which were displayed eclectically. The exhibit was held at a secret location, revealed shortly prior to opening, and closed early after the police responded to complaints. The exhibit also overcame at least some of Banksy’s anti-consumerism sentiment as it teamed with Puma for collaborative merchandise and sponsorship. Despite allegedly viewing copyright as part of the capitalist system his art mocks, Banksy appears to care about fakes and, unsurprisingly, commercial use of his work. He created Pest Control to issue certificates for authentic works. The Pest Control website cheekily states: Please do not use Banksy’s images for any commercial purpose, including launching a range of merchandise or tricking people into thinking something is made or endorsed by the artist when it isn’t. Saying “Banksy wrote copyright is for losers in his book” doesn’t give you free rein to misrepresent the artist and commit fraud. Numerous groups have sought to bring Banksy’s work to more people. Some exhibitions feature only genuine Banksy pieces. Others, such as “The Art of Banksy: Without Limits,” consist primarily of unauthorized reproductions, many of which include modified versions of Banksy originals, and, of course, end in a gift shop. The Without Limits exhibit advertises itself as an “unauthorized exhibition” but also indicates that it features his art. Reports indicate that only about 34 of the 150 works on display are original, and the originals are not readily identifiable. The modified works included in the Without Limits exhibit exchange the textured, colored city walls of Banksy’s originals for screen-printed or painted canvases. The exhibit’s works lack the texture and context of the buildings and city in which Banksy originally placed them, or the eclectic mix of one of his shows. The exhibit has also adapted works, for instance showing a depiction of “Love is in the Air” as a white sculpture holding red roses and sporting a black baseball cap. Additionally, it appears many works have been scaled down, colors have been changed, and duplicates of art have been lined in rows with minor color variations. Does Banksy have recourse for decontextualizing his works and turning them into a curated and commercial experience? Can Banksy prevent modifications of his art in a fashion that eliminates key attributes of the original works? Banksy has decried the exhibit as a fake but has not yet taken legal action against unauthorized exhibits like Without Limits. One might expect moral rights to offer some relief. The United States codified certain moral rights in the Visual Artists Rights Act (VARA) of 1990, trailing many other countries in recognizing such rights. VARA gives artists rights of attribution – allowing an artist to claim, or deny, ownership of their work – and rights of integrity – allowing artists to prevent others from distorting or destroying a work. Such rights are reserved to works of a certain caliber of art such as paintings, drawings, and sculptures. Banksy’s works would almost certainly be protected as we have reported, graffiti is protected art. VARA protection, however, reaches only to original works or certain limited editions. Congress expressly excluded reproductions, depictions, and other portrayals from VARA claims. Thus, while defacing a Banksy mural would violate VARA, creating modified reproductions of his works and displaying them without permission does not, at least under US law. Other branches of intellectual property law provide a host of other claims though. Copyright law gives authors control over who reproduces, displays, and distributes protected works. Perhaps more importantly, copyright allows authors the right to grant or withhold permission to create derivative works of – or to modify – an original. The right to prohibit modifications can be seen as an additional means to protect the integrity of an author’s works. As copyright infringement requires only that the infringer have access to the original work – admitted in the Without Limits case – and that one of the restricted actions be taken, it is clear the Without Limits exhibit has infringed Banksy’s rights. The Without Limits exhibit may argue the fair use doctrine excuses their infringing reproductions, displays, distributions, and derivative works. Fair use protects certain unauthorized uses of works to protect free expression. To determine whether fair use applies, courts consider four factors: 1. The purpose and character of the use; 2. The nature of the copyrighted work; 3. How much of the copyrighted work is used; and 4. The effect of the use on the market or value of the copyrighted work. The purpose and character factor is generally the most important. In the recent Warhol decision, the Supreme Court provided a two-part test to analyze whether the purpose and character of use is fair. First, how is the purpose and character of an unauthorized use different from the purpose of the original? Second, is the unauthorized use commercial or non-commercial? Where the unauthorized and original purposes are the same or quite similar and the unauthorized use is commercial, the first factor likely will weigh in favor of the copyright owner. The Without Limits exhibits are unquestionably commercial, so the purpose and character would be paramount. Without Limits has publicly commented their exhibits serve to make the scope of Banksy’s works available to the public, who would otherwise need to travel hundreds of miles to see the works. Their exhibits also educate the public about Banksy’s works and provide commentary on such works. Such arguments would likely hold sway for the exhibit as a whole. Further, exhibiting original works is protected under the first sale doctrine, which allows the owner of a tangible copy of a copyrighted work the ability to, among other things, display the work. Such arguments lose power when applied to the individual reproductions and modified works displayed in the exhibit and sold in the gift shop though. Those unauthorized works provide little to no commentary on Banksy or alternative purpose to the originals, other than to turn a profit. Accordingly, the first factor would favor Banksy as to the unauthorized reproductions. The three remaining factors all likely favor Banksy too. Street art and pop art, as noted above, are generally valued, so the nature of the works would lend to protection. The Without Limits exhibits, and individual works, use the whole of many Banksy works and directly compete with Banksy’s exhibits and authorized sales, harming the market and value of his originals. Accordingly, it seems unlikely Without Limits would be able to excuse all copyright infringements as fair use. And what of Without Limits calling the exhibit “The Art of Banksy” when most of the art is not actually his? Similar to copyright law, some unauthorized use is excused as “fair.” A mechanic can identify the brand of car on which services are performed, for instance. Fair use only applies to authentic products though. It does not excuse counterfeits. Further, causing consumer confusion is the exact harm trademark laws seek to prevent and redress. Reviews of Without Limits exhibits in the United States question whether the works shown are real or fake, indicating at least some level of actual confusion. It should, therefore, be possible for Banksy, or Pest Control, which owns trademark registrations in the United States for BANKSY and images of several of his works, to make successful claims for trademark infringement against the exhibition as well as the gift shop items. Indeed, the exhibit appears ripe for false advertising and misrepresentation claims as well. So why hasn’t Banksy taken any legal action? Most accounts conclude he has refrained from pursuing litigation to remain anonymous. In the United States, however, it may be possible to bring copyright claims under the Banksy pseudonym if the court decides the need for anonymity outweighs the public’s interest in identifying him. It is also possible Pest Control could bring copyright claims as the beneficial owner. Further, trademark rights are based on use, and Pest Control, as the owner of the registrations, could pursue claims. Accordingly, a desire for anonymity fails to explain his lack of action. Perhaps Banksy shirks the relief these laws offer as a rejection of the economic concerns the laws primarily protect. The laws, however, also offer injunctive relief – stopping the unauthorized or misrepresentative uses – which may appeal more to the principles Banksy purports to uphold. Or maybe he sees limiting exposure to his art (or interpretations of it) as antithetical to the messages he seeks to convey through the work.

A few months’ back, the TMCA wrote about a copyright dispute between the campaign committee of former Iowa Congressman Steve King and Laney Griner, the owner of the photograph used in the popular “Success Kid” meme. The Eighth Circuit Court of Appeals has since affirmed the jury’s finding that the campaign was liable for copyright infringement for using the meme in a fundraising message for King’s unsuccessful reelection campaign. Of most interest, the Eight Circuit affirmed the jury’s rejection of the campaign’s fair use defense. The campaign had claimed that Griner, who took the photograph of her son, Sam, the “Success Kid,” should not be allowed to encourage use of the photograph generally but then also target the campaign’s commercial use of the photograph. They based their argument on the first, third, and fourth fair use factors. The Eighth Circuit’s analysis focused primarily on the first factor, the purpose and character of the use. This case marks the first time that the Eighth Circuit has applied the Supreme Court’s recent seminal fair use case, Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508, 143 S. Ct. 1258, 215 L. Ed. 2d 473 (2023). As discussed by the TMCA, after Warhol, courts assessing the first fair use factor must focus on: (i) whether and to what extent the challenged use has a purpose that is different from that of the original work; and (ii) whether the challenged use is commercial or non-commercial. The campaign argued that its use of “Success Kid” was like the billions of other uses of the photograph: the creation and dissemination of a meme. The Eighth Circuit was unpersuaded, however, largely because of the campaign’s admittedly commercial use of the meme for fundraising purposes. Quoting Warhol, the Court noted that “the ‘commercial nature of the use’—while ‘not dispositive’—‘is to be weighed against the degree to which the use has a further purpose or different character.’” The Court explicitly stated that fair use is more difficult to establish when memes are used for commercial purposes. In the Court’s own words: “Memes used commercially in advertising or fundraising are subject to stricter copyright standards than memes used noncommercially, which are often fair use.” This statement clarifies that memes are to be treated no differently than other uses. The campaign did not satisfy that stricter standard because its use was not transformative, so there was nothing to weigh against the commerciality of the use when assessing the first fair use factor. The Court rejected the campaign’s claim that their fundraising meme was transformative because the original purpose for Griner photographing her son had nothing to do with memes. The Eighth Circuit disagreed, focusing not on Griner’s original purpose for taking the photograph, but instead on her reason for asserting her copyright rights in the photograph: to control the commercial use of the photograph in memes. The Court thus found that the campaign’s use of the photograph in a meme did not add to or alter the purpose or character of the original work. The Court was also sure to note that, like other uses, memes are transformative to differing degrees, depending on the circumstances. But here, any evidence of transformativeness was lacking because the purpose of the use was the same as Griner’s use. As the Court noted: “The fact that everyone else is doing it is not a particularly compelling justification, especially considering the vast majority of these uses are non-commercial.” The Eighth Circuit also held that the third fair use factor—the amount and substantiality of the portion used in relation to the copyrighted work as a whole—favored Griner because the photograph of “Success Kid,” which was the heart of the template used to create memes, was used in the campaign’s meme. The fourth fair use factor was neutral. The effect of the campaign’s use on the market for the copyrighted photograph could not be determined. Griner had licensed the photograph to many well-known brands over the years, though licensing requests had decreased before the campaign’s use. There was no evidence that the campaign’s use increased the market for licensing the photograph, and a reasonable jury could have found that an association with King and his campaign could further dampen the licensing market. The Court also upheld the denial of attorneys’ fees to the campaign because it did not prevail, despite having made an offer of judgment for more than the statutory minimum of damages awarded to Griner. It also upheld the district court’s decision not to award attorneys’ fees to King himself, who did prevail on the merits below. The full text of the opinion can be found here.

The Digital Millennium Copyright Act (DMCA) is a section in the US Copyright Act that provides a safe harbor for internet service providers so long as they comply with a notice and takedown system. The way the DMCA works is a company, such as an internet website host, a search engine, or a website operator, registers an agent with the United States Copyright Office. Then, any individual or entity who finds content it owns that is protected by copyright (whether or not registered) on a website hosted by the internet service provider can submit a takedown request to the service provider’s DMCA agent that contains the information required by the statute. The requestor should consider issues like fair use before filing the takedown notice. Assuming the complaint is compliant with the statute and legitimate, the service provider may then remove the content and send a notice to the alleged infringer about the removal to avoid a contributory infringement claim. The alleged infringer is then allowed to submit a counter-notification explaining why the takedown is not justified. The service provider then forwards the counter-notification to the original complaining party, which then has 10-14 days to file a lawsuit over the content. If no lawsuit is filed, the content will be reinstated by the service provider. If a lawsuit is filed, then the content remains disabled until the lawsuit is resolved. In April of 2023, Nexon Korea Corporation, owner of video game Persona 3 (P3), sued Ironmace Co. Limited, Ju-Hyun Choi, and Terence Seungha Park for copyright infringement and trade secret theft. Choi and Park were former employees of Nexon and founded Ironmace, another Korean corporation, in 2021. Together at Ironmace, Choi and Park created Dark and Darker, which, like P3, is a Dungeons and Dragons inspired role playing fantasy video game. After the game went live, Nexon filed a takedown notice under the DMCA with Valve Corporation, the platform that hosted the game in the United States. Valve removed Dark and Darker from their platform. Ironmace went on to file a counter notice saying its game did not violate any of Nexon’s US copyrights, and then Nexon filed its lawsuit in Washington State, where Valve is based. According to the DMCA, when Ironmace filed the counter notice, it consented to personal jurisdiction in Washington. However, Ironmace filed a motion to dismiss on the basis of forum non conveniens, arguing that the litigation should occur in South Korea, where both Nexon and Ironmace are based, despite the fact that the lawsuit involves US copyright law and the Dark and Darker was targeted to a US audience. Korea has different pre-trial discovery procedures, which Nexon called “inadequate” in its response. The lower court granted Ironmace’s motion to dismiss. In July 2024, the Ninth Circuit affirmed the lower court’s decision, stating that the DMCA does not categorically preclude forum non conveniens and that when Ironmace consented to personal jurisdiction, it did not consent to venue, which is a separate issue. The court emphasized that Choi and Park both signed employment agreements electing the Seoul District Court as the venue for any work-related intellectual property disputes. Notably, this is the first time a court has ruled that a DMCA related claim would be better suited to be litigated outside of the United States. Foreign entities with US copyrights often rely on the DMCA to enforce their rights in the United States and rely on United States law to govern. While courts are known to use the doctrine of forum non conveniens sparingly, they have noted that foreign plaintiffs do receive less deference to their choice of forum than domestic ones (see, e.g., Piper Aircraft, Co. v. Reyno, 454 U.S. 235 (1981)). However, courts in the past have looked at similar issues and decided the other way. For example, in DFSB Kollective Co. v. CJ E&M America, Inc., a California district court ruled the forum should not be changed to Korea when DFSB, a Korean corporation with a license to distribute K-pop music, sued a US entity under the DMCA for distributing the music in the Unites States. The case involved both Korean and US law, witnesses had to appear from Korea, documents and evidence needed to be translated from Korean into English, and a prior settlement agreement from a Korean court was disputed. Nonetheless, the California court rejected the American defendant’s motion to dismiss under forum non conveniens, stating that it is an “exceptional tool.” It will be interesting to see how the new ruling from the Ninth Circuit affects foreign entities who wish to file DMCA takedown requests to attempt to enforce their rights in the Unites States. Dorsey will continue to monitor the impacts, and we will report on any interesting new developments.

  The 1970s were the heyday of the now-extinct television genre known as the variety show: a weekly extravaganza headlined by a well-known entertainer, generally accompanied by a supporting cast of singers, dancers and comedians, and featuring a weekly guest star to liven things up. Among the longest lasting of these weekly spectacles was The Sonny & Cher Comedy Hour, which premiered in 1971 and featured the eponymous 1960s singing duo. Sonny (born Salvatore Bono) and Cher (nee Cherilyn Sarkisian) met in 1962, when Cher, then 16 and a recent high school dropout, approached Sonny, then an up-and-coming songwriter, about breaking into the music business. Sonny helped Cher become a backup singer on many recordings helmed by legendary music producer (and later convicted murderer) Phil Spector, before transitioning to a lead performer with Sonny, performing as Sonny & Cher. The pair, by now dating and sharing a great mutual Love and Understanding, scored multiple hits in the 1960s, including their signature song I Got You Babe, and others like Bang Bang (My Baby Shot Me Down) and Baby Don’t Go, mostly written or co-written by Sonny, who had also written hits for a number of other artists. In 1971, the pair agreed to star in a variety show that would also help transition Cher to a successful solo career; she would top the charts in the early 70s with hits like Gypsies, Tramps and Thieves and Half Breed. The Sonny & Cher Comedy Hour featured lavish production numbers; bigtime guests like Carol Burnett, George Burns, Ronald Reagan, The Jackson 5, and Burt Reynolds; daring Bob Mackie gowns; and caustic banter between the two stars (mostly about Sonny’s short stature). For a time, the show was a hit, and it ran for three successful seasons. Unfortunately, The Sonny & Cher Comedy Hour came to an unfortunate end, coinciding with the end of the Sonny & Cher marriage. The couple had wed in 1969 after the birth of their only child, now known as Chaz Bono; Sonny had a daughter, Christine, by an earlier marriage. But enterprising television executives were not going to let a pesky divorce get in the way of a solid ratings hit. CBS simply rebranded its program as The Cher Show and the Beat Went On as if Sonny had never been a part of the program. For his part, Sonny nabbed his own show on ABC, The Sonny Comedy Revue, which was a ratings flop. And The Cher Show was not all that successful either – the American public wanted Sonny & Cher together, and that is what they got in 1976, when Sonny & Cher reunited for the third iteration of their CBS show, The Sonny & Cher Show. Unfortunately, the now divorced couple could not recapture the magic of the original program, for cutting quips about the loving foibles of a happily married couple now came across as (and up to a point, were) bitter putdowns of estranged exes. This third and last iteration of their show marked the end of the Sonny & Cher entertainment partnership. The two never performed again together except for a 1987 appearance on The David Letterman Show. Time went on. Cher Found Someone, remarrying (briefly) the rock star Greg Allman, and she had another child with him. She also rebuilt her successful solo music career, then transitioned to acting and scored multiple Oscar nominations, winning for Moonstruck in 1988. Her music career has been even more long-lasting, with one hit song after another running into the 2000s. For his part, Sonny pursued a reasonably successful acting career and likewise remarried, to Mary Whitaker, in 1986. The couple had two children of their own, Chesare and Chianna, while Sonny was transitioning to a most unexpected new career: politician. Sonny was elected Mayor of Palm Springs in 1988, and then was elected to the U.S. House of Representatives in 1994. But, sadly, Sonny was killed in a skiing accident in 1998. At his widow Mary’s request, Cher gave one of the principal eulogies at his funeral, delivering one of the most moving, heartfelt tributes you will ever hear. In his honor, the 1998 revision to the US Copyright Act was named the Sonny Bono Copyright Term Extension Act. It is the events after Sonny’s death that give rise to this blog post. For all of his many music, business and political accomplishments, Sonny botched his estate planning: there was none – he died without a will (oy!). Mary, who had succeeded Sonny in Congress, serving until 2013, was appointed administrator of his estate. Among the estate’s creditors was Cher, who asserted her rights under an August 10, 1978 Marriage Settlement Agreement (the “MSA”). The MSA was meant to resolve all of the financial aspects of the Sonny & Cher divorce, and consistent with California’s community property laws, it granted Cher “an undivided 50% interest” in two revenue sources. The first was record royalties – royalties payable to performers when physical or digital copies of the recordings on which they sang are sold or downloaded – payable to Sonny under various recording contracts he entered into between 1964 (when he started dating Cher) and 1971. The second were composition royalties – royalties payable to songwriters whenever their compositions are recorded, played, performed, streamed, or licensed. Composition royalties tend to be more lucrative (depending on the popularity of the song) than record royalties. Mary, as estate administrator, recognized Cher’s rights to these royalties under the MSA, and Cher received her percentages of both royalties for nearly two decades after Sonny’s death. Cher and Mary also cooperated, per the MSA, in agreeing to the appointment of an administrator to collect and disburse both types of royalties. That administrator was entitled to receive 10% of both types of royalties under the MSA in consideration for their work. The apparently harmonious relationship between Cher and Mary began to hit the skids in 2016, when Mary invoked Section 304(c) of the US Copyright Act. That provision of the statute authorizes a copyright owner or grantor (if they are living), or their statutory heirs (if they are not) to terminate prior copyright grants or licenses for works created before January 1, 1978 in certain circumstances, and on particular timetables, by sending a notice of termination to the grantees/licensees. By sending such a notice, the copyright owner or their heirs can recapture their rights and, potentially, monetize their copyrighted works on more favorable terms. Mary sent such termination notices to a number of music publishers, specifying effective termination dates between 2018 and 2026. Cher was not told about the issuance of these termination notices, nor were the MSA and the Sonny & Cher recording contracts mentioned in the notices. But in 2021, Cher learned not only that Mary had ceased paying her composition royalties, as the prior grants from Sonny to various music publishers began to terminate, but that Mary was taking the position that the MSA no longer applied, at least as to composition royalties, and that Cher would also cease to receive Sonny’s share of record royalties when/if Mary chose to terminate the 1964-71 recording contracts and renegotiate them. Cher could not Believe that Mary was taking such a position, accused Mary of being a Dark Lady, and claimed Mary was trying to Turn Back Time to the period before the Sonny & Cher divorce. Cher therefore sued Mary in the U.S. District Court for the Central District of California, accusing Mary of breaching the MSA and seeking a declaratory judgment that the MSA’s obligations remained binding, termination notices or not. For her part, Mary lodged counterclaims against Cher for breach of the MSA because Cher had refused to consent to the continued appointment of the royalty administrator, and had objected to Mary’s plan to create a new royalty administration entity that she and Sonny’s four children would own. (Mary had Sat Down With the Kids, including Chaz, and apparently worked this out.) Mary also wanted the Court to declare that Mary could negate Cher’s interest in the Sonny & Cher recording contracts if Mary chose to terminate and renegotiate them. One added wrinkle to this case: after it was filed, in January 2023, Cher sold all of her rights in her song catalog, including her rights in the MSA, to an unnamed third party for an unknown amount of money. Last week, after several years of litigation in which both sides were presumably on Needles and Pins, the Court resolved the dispute by largely siding with Cher. It rejected Mary’s argument that the termination/recapture provisions of Section 304(c) relieved Mary of her obligations under the MSA, largely for two reasons. First, the MSA was not a copyright grant that could be terminated under the statute, but a contract dividing revenue between Sonny & Cher. In other words, Sonny did not grant Cher an interest in his copyrights, but simply agreed to divide with her the revenue produced by those copyrights. Because there was no grant of any copyright interests to Cher, there was nothing Section 304(c) could terminate. Second, Section 304(c) authorizes termination of “the exclusive or nonexclusive grant of a transfer or license of the renewal copyright or any right under it, executed before January 1, 1978.” The MSA was executed on August 10, 1978, and the Court rejected Mary’s argument that it was the date of Sonny’s prior grants that mattered, as opposed to the MSA’s execution date. Mary did score a partial victory on the royalty-administrator issue, as the Court found that Mary had sole discretion to select the royalty administrator, even one she created, but Cher could object to the terms of the appointment, including on things like fees and the administrator’s qualifications. So is this the final chapter of the Sonny & Cher business partnership? Not yet – Cher’s 2023 sale of her interest in the MSA left the Court uncertain about who should be paid certain royalties accruing during the pendency of the lawsuit – Cher or her anonymous buyer. So that issue remains to be resolved, meaning that, for now, Cher & Mary will have to continue Living in a House Divided, until the case is finally resolved.

The 2010s were a heyday for bridal fashion. TLC’s “Say Yes to the Dress” reality series captivated viewers watching brides navigate family opinions and emotions while shopping for “the dress” at Kleinfeld’s Bridal in New York City. Instagram became a new medium for the engaged to search for bridal fashion and plan the big day. The @misshayleypaige Instagram account used by bridal fashion designer Hayley Paige Gutman was particularly successful, amassing over 1.1 million followers by the end of 2020. Gutman was employed by JLM Couture, Inc., which manufactures and markets bridal fashion collections, including under a number of brands under the name “Hayley Paige” or variations thereof. The Instagram account features posts relating to both Hayley Paige designs and Gutman’s personal life. But, Gutman’s employment agreement with JLM contained provisions regarding the use of the names “Hayley,” “Paige,” “Hayley Paige,” and even “Hayley Paige Gutman.” Starting in 2019 into 2020, JLM began to take issue with Gutman’s use of the Instagram account, as well as her creation and use of a misshayleypage TikTok account. JLM accused Gutman of seizing control over the Instagram account and using “misshayleypage” handles to promote third party goods like olive oil, beer, and nutritional supplements without JLM’s approval. Things came to a head in late 2020, when JLM’s CEO confronted Gutman during a meeting at Kleinfeld’s, of all places. In December 2020, JLM sued Gutman in the Southern District of New York, alleging claims of trademark dilution, false designation of origin, unfair competition, and breach of Gutman’s employment agreement, among others. As The TMCA previously reported, JLM won a temporary restraining order that prohibited Gutman from using social media accounts bearing the misshayleypage name. Following the TRO ruling, Gutman resigned from JLM and took to Instagram on a new account tearfully describing the legal dispute and explaining that she was avoiding use her own name. In the years since then, the SDNY granted JLM a preliminary injunction, and the dispute bounced back and forth between the SDNY and Second Circuit Court of Appeals. In October 2023, JLM filed for chapter 11 bankruptcy with just $151,000 cash on hand, citing damage to its brand caused by litigation with Gutman as a primary driver of its financial decline. Gutman filed a motion seeking to convert JLM’s case to a liquidation under chapter 7 of the U.S. Bankruptcy Code, arguing the harm caused by the litigation to JLM’s relationships with vendors is so severe that JLM cannot successfully reorganize. On May 17, 2024, JLM filed a motion seeking bankruptcy court approval of a settlement with Gutman. The parties’ settlement agreement provides that JLM will dismiss its suit against Gutman and transfer a number of “Hayley Paige”-related intellectual property rights to Gutman in exchange for a payment that is not publicly disclosed. The transferred IP rights will include trademarks, rights of publicity, social media accounts, and copyrights embodied in Gutman’s copyrightable works owned by JLM, among other things. The bankruptcy court orally approved the settlement during a hearing on May 23, observing that the settlement payment will facilitate JLM’s reorganization. The court entered an order approving the settlement on May 24. Gutman has already recommenced posting on @misshayleypaige. The JLM-Gutman dispute showcases the power of a social media following. JLM’s CEO testified at the settlement hearing that JLM’s finances were negatively impacted by Gutman’s resignation and harsh criticism of the company on social media. JLM’s financial condition deteriorated notwithstanding its victories against Gutman and control of @misshayleypaige social media accounts, to the point that selling the disputed IP rights to Gutman is necessary for the company to have a chance at surviving. The case surely is and will continue to be a beacon for other brand owners seeking to establish and control social media presence.

The Supreme Court has now issued its awaited opinion in Warner v. Nealy, ruling that plaintiffs can recover damages for copyright infringement that is more than three years old, at least under the discovery accrual rule. We covered this case when the Court granted cert and heard oral arguments. Factual Background The plaintiff in the case, Sherman Nealy, sued for infringement that began roughly ten years previously. Nealy argued that he only learned of the infringement recently, as he was in and out of prison until roughly three years before filing suit. The District Court ruled that Nealy could sue for the older infringement, but could only recover damages for the instances of infringement that occurred in the three year period leading up to his suit. The Eleventh Circuit, ruling on an interlocutory appeal, found differently and held that Nealy could recover damages for older infringement, as long as his claim was otherwise timely filed. The defendant, Warner Chappel Music, Inc., then filed a cert petition, which the Court granted. Question Presented The Court took up this case to settle a growing divide among the Circuit courts on how to apply the discovery rule to copyright infringement claims. Specifically, the Court addressed the question of whether the discovery rule allows plaintiffs to recover damages for infringement that occurred more than three years before a lawsuit was filed. The Copyright Act’s statute of limitations requires that infringement claims must be brought within three years of their accrual. See 17 U.S.C. § 507(b). An antecedent question, one the Court expressly sidesteps, is how to decide when the claim accrues. One theory is the claim accrues when the infringement occurs. Another theory, one the Court assumes applies in the Warner v. Nealy case, is that the claim accrues when the plaintiff discovers, or should have discovered, the infringement. This is the discovery rule. Majority Opinion Justice Kagan wrote for the majority and was joined by Chief Justice Roberts and Justices Sotomayor, Kavanaugh, Barrett, and Jackson. The majority held that if the claim itself is otherwise timely under the discovery rule, plaintiffs can seek damages for infringement without further time limitations. Justice Kagan quickly clarified that there is no three-year damages bar in the text of the Copyright Act. The statute of limitations does not distinguish between a timely claim and timely sought damages, nor do the statute’s remedial provisions impose any time limit on monetary recovery. The Court clarified its prior opinion in Patrella v. Metro-Goldwyn-Mayer, the last case in which the Court examined the Copyright Act’s statute of limitations. In Patrella, the Court determined that the defense of laches cannot bar a claim for damages within the three-year limitation period. Justice Kagan distinguished Patrella, explaining that the plaintiff in Patrella had not relied on the discovery rule per se. The plaintiff in Patrella had long known about the infringement and therefore could not rely on the discovery rule. In other words, the Patrella plaintiff could only sue for infringement that occurred within the last three years and therefore could only recover damages for infringement that occurred within those three years. Dissenting Opinion Justice Gorsuch, writing in dissent and joined by Justices Thomas and Alito, raised a much broader issue, one Justice Kagan relegated to footnotes. Oral argument, and most of Warner’s briefing, centered on whether the discovery rule should apply at all to the Copyright Act. Justice Gorsuch argued the Court should not have addressed how to apply the discovery rule because the rule has no place in copyright cases. The dissent would instead be content to dismiss the present case as improvidently granted, taking up the merits of the discovery rule when properly presented to the Court. Copyright plaintiffs may rejoice with the clarity that Justice Kagan’s opinion brings because it allows plaintiffs to recover damages for timely claims. However, the majority painstakingly lays out a narrow decision, still leaving open the door for petitions to challenge whether the discovery rule should apply at all to copyright claims. Justice Gorsuch’s dissent all but invites petitioners to do so, hinting that the merits of the discovery rule should be put before the Court. If and when the issue gets presented to the Court, it is likely that at least three Justices (those joining in dissent), would hold that the discovery rule has no application to copyright claims. 

Tattoos and copyright law have once again crossed paths, as an Ohio jury recently concluded that the creators of the NBA 2K series had an implied license to use an artist’s designs that he tattooed on LeBron James. Even before reaching the jury, however, the artist may have doomed his case simply by not properly registering the copyrights in his tattoo designs. The popular video game series NBA 2K features realistic simulations of basketball, with a user directing on-court strategy and taking control of individual players. Though its original 1999 release included representations of stars such Allen Iverson that are pixelated by today’s standards, recent installments in the series include highly detailed character models that speak, perspire, and show players’ real-life tattoos. In late 2017, artist James Hayden filed a complaint against game publishers 2K Games Inc. and Take-Two Interactive Software Inc., asserting the publishers had improperly incorporated six tattoos he had inked on James and fellow players Danny Green and Tristan Thompson. In response, the publishers argued that Hayden failed to properly register the designs with the U.S. Copyright Office prior to filing the complaint. Although artists and creators do not need to register a copyrighted work to own rights in it, federal registration is a requirement to assert copyrights in federal court. See our earlier post on this issue. Furthermore, owners must properly exclude any material from their application for which they cannot claim ownership, such as preexisting works and material already in the public domain. In Hayden’s case, four of the asserted copyrights incorporated material belonging to third parties or the public domain, such as the image depicted on Thompson’s back of two fingertips touching in the style of Michelangelo’s “The Creation of Adam.” Hayden attempted to correct these mistakes by filing supplementary copyright registrations, but only after two years from initially filing the complaint. He also did not update his complaint accordingly. As a result, the court excluded these tattoos from the case, leaving only two designs sported by James. Evaluating the remaining designs, a jury later concluded that 2K Games Inc. and Take-Two Interactive Software Inc. had an implied license to use James’ tattoos in the video game. In rendering the verdict, the jury appears to have followed the court’s prior statement that Hayden had licensed to James the right to use and display the tattoos on his body simply by placing them on him, and James had licensed the right to use his likeness (including the tattoos) to the game publishers via the NBA and its Players Association. It is unclear whether the jury would have ruled differently on the four excluded designs, but the game publishers’ deft argumentation highlights not only the value of experienced IP trial counsel, but also the importance of shrewd filing strategy.

The Supreme Court heard oral argument in February in Warner Chappell Music, Inc. v. Nealy, a case that promised to resolve a split among the U.S. Courts of Appeal relating to the scope of damages available to copyright holders. This post is the second in our series on the Warner v. Nealy case. We previewed the case when the Supreme Court granted cert, and we now share highlights of the oral argument that has taken place. The music industry has hoped this case would provide a clear, geographically consistent answer on the issue of whether a party can recover damages for copyright infringement that went undiscovered for more than three years before a lawsuit is filed. The Second, Ninth and Eleventh Circuits all apply some form of a discovery accrual rule, which dictates that a claim arises when a party learns, or a reasonable person should have learned, that another party violated its rights. All three Circuits allow plaintiffs to sue for infringement that occurred more than three years ago, as long as the plaintiff sues within three years of discovering the suit. However, these Circuit courts differ on how the rule impacts a party’s entitlement to a damages award. The Second Circuit will not allow plaintiffs to recover damages for infringement that is older than three years. The Ninth and Eleventh Circuits will allow plaintiffs to recover damages for acts of infringement that occurred more than three years ago. Plaintiffs will presumably favor the Ninth and Eleventh Circuits, whereas defendants would favor the Second. Before diving into the oral argument, let’s recap the facts briefly. Factual Background The plaintiffs Sherman Nealy and Music Specialists Inc. (MSI) filed a Complaint against, among others, Warner Chappell Music, Inc. in December 2018. The plaintiffs sought injunctive relief and damages, claiming Warner had infringed copyrights in several songs, starting in 2008. Nealy did not discover the infringement until early 2016. Through a number of stipulations, the Eleventh Circuit concluded the only remaining question in the case was whether Nealy could recover damages for infringement more than three years old. After the Eleventh Circuit concluded Nealy could seek relief for older damages, Warner filed the petition for a writ of certiorari. Question Presented If the question presented seems narrow, that is because it is. Warner petitioned the Court to answer whether the Copyright Act’s statute of limitations (specifically 17 U.S.C. 507(b)) “precludes retrospective relief for acts that occurred more than three years before the filing of a lawsuit.” Warner’s question did not mention the discovery accrual rule. The Court granted cert “limited to” whether plaintiffs can recover damages for acts more than three years old under the statute of limitations and “under the discovery accrual rule applied by the circuit courts.” In other words, the Court arguably instructed the parties to assume the discovery rule applied. Oral Argument Warner spent surprisingly little time presenting its position on how to apply the discovery accrual rule. Instead, Warner urged the Court to address whether the discovery accrual rule should exist at all. Justices Barrett, Jackson, and Sotomayor were reluctant to address this broader issue, one they deliberately took off the table when the Court granted cert and rephrased the question presented. Justice Sotomayor questioned Warner’s strategy of merely hinting at this broader question in a footnote, and redirected Warner to the narrower question of how the rule should be applied. In response to questioning, Warner acknowledged that there is no Circuit split on the validity of the discovery accrual rule, conceding that all Circuits apply it in some form, but still urged the Court to consider this broader question. Justices Alito and Gorsuch appeared to entertain Warner’s broader plea. Justice Alito asked what would happen, hypothetically, if the Court merely dismissed the case and instead waited for a cert petition on this broader issue. He questioned the logic of deciding the scope of application of a rule that may or may not exist itself. Justice Gorsuch added on to this, reminding Nealy and MSI that the Court had cast doubt on the discovery accrual rule in previous opinions. Nealy and MSI, who did not brief the discovery accrual rule’s broader validity, urged the Court to answer the narrower question presented. However, they did acknowledge that the Court’s dismissal of the case altogether, as improvidently granted, would also be a win for them. They then reminded the Court that there is no Circuit split on the discovery accrual rule’s existence, only on how it applies to the Copyright Act’s statute of limitations. The Solicitor General, supporting Nealy and MSI, urged the Court to stick to the question presented and sided with the Eleventh and Ninth Circuits, but ultimately did not argue a viewpoint on the existence of the discovery accrual rule. Nor did the Solicitor General state a preference between dismissing the case as improvidently granted or affirming the Eleventh Circuit’s ruling. The Justices may have already made up their minds on the question presented before oral argument began. Existential questions raised about the cert granted and the validity of the discovery accrual rule loomed over the question of how to apply the rule to the Copyright Act. Stay tuned to the TMCA for an update when the Supreme Court issues their opinion.

Years ago, Laney Griner took a picture of her then toddler son, Sam, at the beach clenching his fist in what appeared like a celebratory gesture. The photo went viral, and later became a widely used meme on the internet known as “Success Kid.” Griner registered the copyright in the photo, and has successfully licensed its use to several large companies. She also has encouraged non-commercial uses of the photograph by publishing instructions on how to create a meme using “Success Kid.” The campaign committee of former Iowa Congressman Steve King used “Success Kid” without Griner’s permission to fundraise for King’s unsuccessful bid at reelection, adding a fundraising message to the image of Sam that said: “Fund our memes.” Griner sued both King and his campaign for copyright infringement, and the jury found the campaign liable, awarding Griner the statutory minimum of $750. Despite being liable for only the statutory minimum, the campaign appealed on multiple grounds, including that the Eighth Circuit should apply a different standard to determining an implied license, that the jury incorrectly rejected the fair use defense, and that the district court erred when it refused to award attorneys’ fees to the campaign. King—whom the jury found not liable for copyright infringement—also appealed the trial court’s refusal to award him attorneys’ fees as a prevailing party. The Eighth Circuit Court of Appeals recently heard oral argument on the appeal, which potentially raises multiple issues relevant to copyright owners of works used widely on the internet for non-commercial and commercial purposes. The campaign relied heavily on claims that Griner should not be permitted to both allow and encourage wide-spread use of “Success Kid”—which counsel called one of the five most popular memes ever—to increase the photo’s value for commercial licensing, but then to selectively target the campaign’s admittedly commercial use of the meme. The campaign urged the Court to imply a license to use the photo through Griner’s conduct, rather than apply the traditional factors required for an implied license. Griner’s counsel noted that musicians use a similar business model: making their music available for non-commercial uses on platforms like the Instagram Music Library, but then licensing that music for commercial purposes. One member of the panel wondered what would be left of copyright law in the Internet age if the Court agreed with the campaign and found an implied license (or that works passed into the public domain) due to widespread use of the work in memes. Though it would be more interesting from a copyright law perspective for the Court to weigh in on these arguments, it may not do so because the campaign appeared to have waived its implied license argument at trial. The campaign also argued that the purpose and character of its use of “Success Kid” favored a finding of fair use because the use was political, was like billions of other uses of the photo, and Griner had acquiesced to and encouraged the use of the photo as a meme. The campaign failed to recognize or to cite to the Supreme Court’s seminal fair use case, Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, which had been decided a few months before the campaign filed its brief. The Eighth Circuit has yet to publish a decision applying Andy Warhol, but questioned both counsel about its effects in this case and more generally. One member of the panel even asked point blank: “What’s left of the fair use doctrine after the Andy Warhol case?” As it applies to this case, counsel for Griner argued that the campaign’s use was commercial, and was not otherwise sufficiently transformative, so the first fair use factor favored Griner. Other than adding a fundraising message to the photo, the campaign did not point to other evidence distinguishing its use. Though the case presents an opportunity for the Eighth Circuit to apply Andy Warhol, the extent to which it will do so may be limited. The fair use argument not only appears to favor Griner here, but also, as one panelist noted, the campaign “is pushing a big rock up a big hill” in its efforts to overturn the jury’s finding of infringement. If the Court upholds that verdict, the case supports a copyright owner’s continued right to control the commercial use of their work, even where it has been widely used online for non-commercial purposes, and even where the copyright owner has encouraged such non-commercial use (though the financial incentives for doing so under similar circumstances may be small). Relevant to the potential financial incentives and risks facing copyright owners, the panel also will decide whether the district court properly exercised its discretion in denying attorneys’ fees to the defendants. The Eighth Circuit has not directly addressed the intersection of Rule 68 and Section 505 of the Copyright Act. The district court applied Marek v. Chesney, 473 U.S. 1 (1985), and found that Section 505 only supports awarding fees to a defendant whose offer of judgment was more favorable than the final award if the defendant was a prevailing party. So, even though Griner had rejected a Rule 68 offer of judgment for $15,000, the campaign could not recover its post-offer fees because it did not prevail on the infringement claim. As to King, who prevailed on the copyright claim, the court exercised its statutory discretion to award attorneys’ fees in any copyright case and determined that fees were not appropriate in part because Griner’s claim was reasonable and—contrary to King’s claims that the lawsuit was politically motivated—her motivations were not malicious. On appeal, Griner urges the Eighth Circuit to weigh in on Rule 68 offers in copyright actions, to agree with the district court, and to expressly adopt the reasoning of the Seventh and Ninth Circuits to find that defendants are only potentially entitled to attorneys’ fees in copyright cases if they actually prevail on the merits of the infringement claim. Doing so would ensure that copyright owners who prove infringement would not be on the hook for the infringer’s attorneys’ fees. In questioning Griner’s counsel on this issue, the panel instead focused on the trial court’s broad discretion to award fees in copyright cases, potentially signaling a reluctance to adopt the bright-line position urged by Griner. The TMCA will monitor this case to see what guidance the Eighth Circuit may offer to copyright litigants on these issues, and will be sure to provide our valued readers with any relevant updates.

In a mashup that the late pop artist Andy Warhol surely would have loved, the U.S. Court of Appeals for the Tenth Circuit has applied the Supreme Court’s 2023 decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith to vacate a prior district court decision on the issue of fair use, and to remand the case for further fact-finding. Does the decision settle the defense of fair use in that case? No, but as explained below, the defendants in that case still have reason to hope that their defense will prevail. In the dark days of the 2020 pandemic, one obsession of many television viewers looking for something to take themselves out of the world in which we were then living was the Netflix documentary, Tiger King. As explained by Netflix, the documentary focused on “the stranger-than-fiction world of big cat owners,” most notably “Joe Exotic, a mulleted, gun-toting polygamist and country western singer who presides over an Oklahoma roadside zoo. Charismatic but misguided, Joe and an unbelievable cast of characters including drug kingpins, conmen, and cult leaders all share a passion for big cats and the status and attention their dangerous menageries garner. But things take a dark turn when Carole Baskin, an animal activist and owner of a big cat sanctuary, threatens to put them out of business, stoking a rivalry that eventually leads to Joe's arrest for a murder-for-hire plot, and reveals a twisted tale where the only thing more dangerous than a big cat is its owner.” Tiger King was a massive hit and, as sometimes happens, Netflix and the documentary’s producers became the subject of a variety of legal claims, including, in this case, for copyright infringement. In 2020, Netflix and the Tiger King production company were sued in Oklahoma by Whyte Monkee Productions and Timothy Sepi, the alleged owners of the copyright in certain video footage from the documentary that was, per plaintiffs, used without their authorization or compensation. The footage in question consisted of eight recorded excerpts – seven created while Mr. Sepi was working for the animal park in question, and an eighth excerpt filmed after Mr. Sepi was no longer employed there. As to the first seven excerpts, both the district court and the Tenth Circuit agreed that plaintiffs did not own any copyright in them because Mr. Sepi shot the footage as part of his duties at the animal park, so they were works made for hire that did not belong to plaintiffs, such that there could be no infringement of plaintiff’s rights. But the copyright in the eighth excerpt – footage from the funeral of Joe Exotic’s husband, Travis Maldonado – did belong to plaintiffs because Mr. Sepi filmed the funeral after he ceased to be an animal park employee. To be sure, Mr. Sepi acknowledged that all he did to create this footage was place a video camera on a tripod in a location where funeral speakers could be recorded, hit “record,” and then press “stop” when the funeral was over. But, both the district court and Tenth Circuit held that the footage was sufficiently original to warrant copyright protection. However, the district court and the Tenth Circuit parted company on the defendants’ affirmative defense of fair use. Applying pre-Warhol precedents, the district court held that the inclusion of the eighth excerpt in the documentary was permitted under principles of fair use, largely because the excerpted sixty-six seconds of funeral footage focusing on portions of Mr. Exotic’s eulogy was “transformative.” Specifically, the district court held that the “purpose” of the excerpt’s inclusion in Tiger King – to make a point about Mr. Exotic’s narcissism – was different from the “purpose” of the original funeral footage – to record the services for Mr. Maldonado – meaning that the first statutory fair use factor (the “purpose and character of the use”) weighed strongly in favor of fair use. Enter Warhol, decided while the plaintiffs’ appeal was pending at the Tenth Circuit. In Warhol, the Supreme Court downplayed considerations of whether a particular use was or was not “transformative,” in favor of a two-part inquiry: (i) whether and to what extent the challenged use has a purpose that is different from that of the original work; and (ii) whether the challenged use is commercial or non-commercial. As the Supreme Court held, In sum, the first fair use factor considers whether the use of a copyrighted work has a further purpose or different character, which is a matter of degree, and the degree of difference must be balanced against the commercial nature of the use. If an original work and a secondary use share the same or highly similar purposes, and the secondary use is of a commercial nature, the first factor is likely to weigh against fair use, absent some other justification for copy­ing. Applying Warhol to the Tiger King controversy before it, the Tenth Circuit concluded that the video was not used in a transformative way to comment on the video, but to comment on Mr. Exotic. In the same way, per the Tenth Circuit, Andy Warhol’s use of Lynn Goldsmith’s photo of the artist Prince to create a new image was merely a commentary on Prince, not the Goldsmith photo, and therefore insufficiently transformative. To this writer, that is not quite what the Supreme Court said in Warhol on the issue of transformativeness. But, the Tenth Circuit went on to hold, per Warhol, that the commercial purpose of Tiger King, and the fact that using excerpted video in a documentary is often a purpose different from that underlying the creation of the excerpted video in the first place, tilted the first fair use factor strongly against defendants. That reasoning is entirely consistent with Warhol and highlights how sharply the Supreme Court’s decision has altered the fair use analysis, at least on the first statutory factor, to favor plaintiffs in copyright cases. What of the other three fair use factors? The second factor – the nature of the copyrighted work – weighed in favor of the defendants because the funeral excerpts were factual and had been live streamed, and therefore published. As to the third factor – the amount and substantiality of the portion of the funeral video used – the sixty-six-second excerpt from a twenty-four-minute video was a factor that weighed in favor of defendants, as they used only what a reasonable person would think appropriate to make their artistic point. Further, while the short excerpt was an “unusual” part of the video, both the district court and the Tenth Circuit felt that the segment was not likely to be viewed by most people as the most important portion of the video. As for the last fair use factor – the impact of the allegedly infringing use on the market for the plaintiffs’ video – here again the district court and Tenth Circuit diverged. The district court held that Tiger King was not a market substitute for the original funeral video, but the Tenth Circuit held that there was no evidence of this, nor of whether the inclusion of the funeral excerpt in Tiger King had an impact on plaintiffs’ ability to license their footage elsewhere. Indeed, because fair use is an affirmative defense, it was defendants’ burden to prove the absence of a market impact, a burden they largely made no attempt to carry, other than by establishing that plaintiffs had never licensed the video anywhere, which the Tenth Circuit felt was, by itself, insufficient. The court pointed to other evidence suggesting that licensing opportunities may have existed for the footage, and in light of the incomplete evidentiary record concerning this factor, the Court remanded the case for more fact-finding on that factor. Defendants therefore have every reason to believe that they can once again prevail on the defense of fair use, provided they can marshal evidence showing an absence of market harm. The main takeaway from the Whyte Monkey Productions case is that when it comes to fair use, the ability of defendants to persuade courts to weigh the first fair use factor in their favor has been substantially limited by the Warhol decision. It is therefore crucial that parties seeking to rely on that defense do everything they can to swing the other three factors – especially the fourth – in their favor.

On September 29, 2023, the Supreme Court granted certiorari in Warner Chappell Music, Inc. v. Nealy, a case that should resolve a split among the U.S. Courts of Appeal relating to the scope of damages available to copyright holders. The Supreme Court’s decision will determine whether a party can recover damages for copyright infringement that went undiscovered for more than three years before a lawsuit is filed. In the abstract, the question might seem rather narrow. But imagine you are an artist, someone uses your work without your permission, and you do not learn about it until four years later. Can you still sue for copyright infringement? The Court’s decision may determine how thorough copyright owners have to be in their efforts to ferret out infringers before their claims are time-barred. This post is the first of a series that will follow the Warner v. Nealy case. Over the next few months, we will publish updates on the case and provide an analysis of the Supreme Court’s forthcoming decision. But first, let’s discuss the question presented to the Court, take a look at the factual background of the dispute and the potential impact of the Supreme Court’s decision. Question Presented The Supreme Court granted certiorari on one question: whether, under the discovery accrual rule applied by the Circuit Courts and arising from the Copyright Act’s statute of limitations, a copyright plaintiff can recover damages for acts that occurred more than three years before the filing of a lawsuit. The Copyright Act has a three year statute of limitations reading “no civil action shall be maintained . . . unless it is commenced within three years after the claim accrued.” 17 U.S.C. § 507(b). The Supreme Court previously analyzed Copyright Acts’ statute of limitations in Patrella v. Metro-Goldwyn-Mayer, and determined that the defense of laches cannot bar a claim for damages within the 3-year limitation period. In the Patrella case, the Supreme Court said that Section 507(b) bars relief of any kind for conduct occurring prior to the three-year limitations period. Given the Supreme Court’s prior decision, it may seem clear that damages are limited to such three-year period. Enter the discovery accrual rule. Under the discovery accrual rule, a claim arises when a party learns, or a reasonable person should have learned, that the defendant violated its rights. As we have reported previously, courts apply the discovery accrual rule differently to copyright disputes relating to ownership than those relating to injury. For copyright claims relating to ownership, the claim arises only once and at the time the copyright owner discovers, or should have discovered, that another challenges their ownership of the copyright. If a copyright owner discovers such a claim within three years of filing the Complaint, the case is considered “timely” and generally is not barred by the statute of limitations. However, courts have differing opinions on how the discovery accrual rule applies to damages for copyright infringement. In the present case, the Eleventh Circuit Court of Appeals found that a plaintiff who has a timely claim—that is, it discovered the infringement less than three years before filing the Complaint—may obtain damages accruing beyond the three year period before the plaintiff filed suit. The court found that the Ninth Circuit Court of Appeals also supported this view. The Second Circuit Court of Appeals takes a different approach. The Second Circuit applies the discovery accrual rule when determining whether a claim is timely, but views Section 507(b) and Patrella as prohibiting recovery of damages from infringement occurring more than three years before a plaintiff files suit. In other words, you can sue for copyright infringement that occurred more than three years ago, but you cannot recover damages for that same infringement period. Thus, there is a circuit split that the Supreme Court’s decision in Warner should resolve. Facts of the Case In December 28, 2018, Nealy and his company Music Specialists Inc. (MSI) filed a Complaint against, among others, Warner Chappell Music, Inc. in the U.S. District Court for the Southern District of Florida. The plaintiffs alleged that, since 2008, Warner had infringed Nealy and MSI’s copyright in several songs by distributing them to others. The most lucrative of the songs was “Jam in the Box,” which Flo Rida and will.i.am sampled in their hip hop hit “In the Ayer.” Flo Rida and will.i.am’s song went double platinum and peaked at No. 9 on the Billboard Hot 100. Despite the ten year delay in taking action, Nealy and MSI rely on the discovery accrual rule to seek both injunctive relief and damages. For its part, Warner does not deny that it distributed the music, but argues that it was authorized by a third party to do so. The Eleventh Circuit Court of Appeals found that the only dispute in the case is whether the plaintiffs own the copyrights. The parties stipulated that if Nealy and MSI—not the third party—own the copyrights, the only remaining issue is damages. The Court readily accepted Nealy and MSI’s claims as timely under the discovery accrual rule. Nealy had a compelling reason the delay: he was in prison from 1989 to 2008 and again from 2012 to 2015. He did not discover Warner’s infringement or the third party’s claim to the copyrights until early 2016, less than three years before the plaintiffs filed the Complaint. The more difficult question is whether Nealy and MSI can recover damages dating back to 2008 or whether their recovery is limited by the three year statute of limitations. The Eleventh Circuit began by analyzing the Patrella decision and finding that it was not controlling. Specifically, Patrella only answered whether the laches defense applied to the plaintiff’s claims and the plaintiff in Patrella was not seeking damages for conduct outside the statute of limitations. The Court in Patrella had also noted that it was not opining on the discovery accrual rule. The Eleventh Circuit also analyzed the text of the Copyright Act. It found that Section 507(b) relates only to the timeliness of a claim and does not limit remedies available to a party. It noted that the “damages provisions” of the Copyright Act, 17 U.S.C. § 504, do not include any limits but broadly permit a party to seek “actual damages and any additional profits of the infringer.” The Court ultimately concluded that Nealy and MSI’s damages would not be limited to the three years preceding the filing date of the Complaint. Industry Impact Although Warner’s appeal has not yet been addressed on its merits, scholars and industry groups have filed amicus briefs that highlight the legal and practical implications of this case. The Recording Industry Association of America and National Music Publishers’ Association filed an amicus brief urging the Supreme Court to grant certiorari. These associations noted that “copyrights are the music industry’s most consequential asset” and argued that it is “exceptionally important” that the Supreme Court provide “a clear, predictable, and geographically consistent answer” to the question presented. They also highlighted the burden that the circuit split has placed on the industry. For example, they noted that the music industry is constantly involved in litigation in the Ninth Circuit and the Second Circuit—which happen to have the most copyright cases in the country—and are faced with navigating two inconsistent approaches to the scope of available damages. A group of professors from Southwestern Law School and the Chamber of Commerce of the United States also filed amicus briefs, arguing that the discovery rule should not apply to the Copyright Act. According to these amici, the Supreme Court should simply hold that the three year statute of limitations is controlling and find that the discovery accrual rule cannot be used for timeliness or damages purposes. One thing the amici agree on is that the Supreme Court needs to resolve the circuit split and provide some much needed clarity on the scope of damages available under the Copyright Act. No matter what the Supreme Court decides, the effects of its decision will extend far beyond the music industry. Stay tuned to the TMCA.com blog as we further discuss this case and the Supreme Court’s ultimate decision.

Artificial Intelligence (AI) is one of the hottest topics in technology, with businesses studying how to utilize its benefits and at least some workers wondering if smarter and cheaper AI technologies will replace them. Here at the TMCA, we have been covering an AI-related issue of particular interest to IP attorneys – the ongoing battle of Dr. Stephen Thaler to copyright artwork created by AI software. Back in June 2022, Thaler filed a federal lawsuit in the District of Columbia challenging the Copyright Office’s refusal to register artwork Thaler had created using AI on the basis that human authorship is a requirement for copyright protection. Thaler then moved for moved for summary judgment in January 2023 on the sole legal issue of whether an AI-generated work is copyrightable, and Copyright Office cross-moved on the same issue. As we noted at the time, Thaler had a creative argument. In brief, Thaler posited that an AI programmer is like an employer, the AI is like an employee, and so a programmer like Thaler should be considered the owner of the AI artwork created by the AI/employee under the work for hire doctrine. Thaler’s attempt to equate AI technology with human employees is not likely to calm the fears of those who believe their jobs might be outsourced to machines in the not too distant future. It also didn’t convince the District Court that AI-generated works are entitled to copyright protection. In a decision issued last month, Judge Beryl Howell denied Thaler’s motion for summary judgment and granted the Copyright Office’s cross-motion. As the Court put it in succinct fashion: “Human authorship is a bedrock requirement of copyright.” In reaching its conclusion, Judge Howell addressed and dismissed all of Thaler’s arguments in support of his claim that his AI-generated artwork (which was displayed on P. 2 of the decision) was entitled to copyright protection. For example, the Court held that Thaler’s “work for hire” argument “put the cart before the horse.” The issue was not who could register a copyright, but rather whether any valid copyright existed in a work absent human involvement. Interestingly, the Court noted that Thaler had argued that there was in fact a degree of human involvement in the “development, use, ownership, and prompting of the AI generating software.” Unfortunately for Thaler, however, that alleged human involvement was not in the record, as Thaler had represented to the Copyright Office that the AI system generated the work autonomously and that he played no role in its creation. One wonders if a copyright application that emphasized the human involvement in directing and prompting AI would have more luck (and the Court itself pondered this issue towards the end of its decision). Photographs are entitled to copyright protection – isn’t there an argument that AI is just a more sophisticated form of machine but that AI-generated works are still human works? Maybe, though in the next section the Court drew a distinction between cameras and AI. The Court agreed with Thaler that copyright law has proven malleable enough to cover works created with new technologies – in fact, Section 102(a) of the current Copyright Act itself provides that copyright attached to “original works of authorship fixed in any tangible medium of expression, now known or later developed.” But human creativity is nonetheless, as the Court stated, “the sine qua non at the core of copyrightability.” As the Supreme Court held in Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 58 (1884), photographs are the copyrightable creations of authors despite their use of a mechanical device because the photographic result represents the “original intellectual conceptions of the author.” Photographs, then, are more like paintings than AI-generated works. Thaler had no more success in arguing that the Copyright Act doesn’t define “author.” The Court consulted two dictionaries and concluded that the plain meaning of “author” means an “originator with the capacity for intellectual, creative, or artistic labor” (i.e., a human being). Such an interpretation is consistent with, in the view of the Court, “centuries of settled understanding” in copyright and patent law. Further evidence that copyright recognition requires human involvement is that numerous courts have consistently rejected copyright claims even when the claimed author was divine. Similarly, the works of monkeys are not entitled to copyright protection. The Court seems to conclude that if neither gods nor monkeys can register copyrights, then neither should AI be able to do so. Or at least one wishing to copyright an AI-generated work needs to show a great deal more human input than Thaler did.

A 4-foot tall, bronze girl defiantly stands with her hands on her hips and chin held high. Better known as Fearless Girl, the statue was intended to promote the power of women in leadership. The statue has come also to symbolize missteps and the consequences of unthoughtful legal planning. An advertising agency engaged Kristen Visbal to create the sculpture, apparently without any agreement as to rights, or, according to Visbal, any notice the sculpture was for a corporate sponsorship. State Street Global Advisors, the asset management company sponsoring the project initially placed Fearless Girl as a temporary counterpoint to the iconic Charging Bull statue: Fearless Girl was a tremendous success and had an immense social impact from its unveiling. The response prolonged display of the statute and spawned legal controversies. The first of which involved Arturo Di Modica, Charging Bull’s sculptor’s claims that the placement of Fearless Girl implicated issues of Di Modica’s copyright and trademark rights, and further distorted his artistic message as an “advertising trick.” We blogged about these claims back in 2017. Although Di Modica ultimately did not sue Visbal or the State of New York regarding the placement of Fearless Girl, Fearless Girl was eventually relocated to stand outside of the New York Stock Exchange. Another set of disputes arose from a trio of agreements State Street and Visbal negotiated following the statue’s success. The agreements were an attempt to sort out what each party could do with regard to the associated rights around the statue, but, unfortunately, created more problems than they solved. In 2019, State Street brought a claim in New York state court against Visbal, requesting a temporary restraining order to prevent Visbal from participating in an event in Australia that allegedly violated the agreements. The TRO was denied, but a later preliminary injunction was ultimately upheld. Following various claims and counterclaims, the parties filed motions for summary judgment, which the United States District Court for the Southern District of New York partially granted and partially denied. Judge Gregory H. Woods’ summary judgement opinion grapples for 90+ pages over the numerous breaches of contract, copyright and trademark infringement claims, and questions of preclusion. While nothing in the decision is groundbreaking, the opinion meticulously analyzes several breach of contract claims, offering excellent instruction as to drafting considerations. For instance, each of Visbal and State Street alleged claims regarding the other party’s breach of its obligations to provide attribution, which yielded opposing outcomes based upon the language in the agreements. Visbal’s claim stemmed from no attribution being provided when Fearless Girl was relocated to the New York Stock Exchange. The relevant agreement required State Street to “give attribution to [Visbal] as the sculptor of [Fearless Girl] wherever and whenever practicable, such as, for example, . . . plaques placed with” State Street replicas. The court denied summary judgement on this point, finding questions of fact with regard to whether attribution to Visbal would have been practicable (despite attribution being provided at the prior Charging Bull location). In contrast, Visbal agreed that any reproductions of Fearless Girl Visbal provided “as part of any promotional or corporate event, conference, ceremony, banquet, retreat, awards dinner, or the like” would include the attribution “Statute commissioned by SSGA.” The court found that Visbal’s verbal acknowledgement of State Street’s role was insufficient to meet the requirements as it did not include the exact language and did not appear on the reproduction, and granted summary judgement to State Street on this breach of the agreement. The contrast is a good reminder to use exact language, and avoid subjective considerations, in drafting specific requirements. Visbal did have a win with regard to State Street’s copyright infringement claims. The claim stemmed from Visbal’s grant of an exclusive license to State Street in connection with “gender diversity issues in corporate governance and in the financial services sector.” Visbal sold a Fearless Girl replica to an executive who worked at a financial institution. That executive later displayed the replica at a gender diversity in corporate governance event. Judge Woods denied summary judgement for both direct and vicarious infringement, finding Visbal did not take any action with regard to the executive’s use of the replica and did not profit from such use. The decision is not especially favorable to one party over the other, and Visbal’s counsel has already indicated her intention to appeal. The history of the sculpture and various legal disputes do serve as a cautionary tale and a necessary reminder of how important it is to carefully draft legal agreements—and just as carefully comply with them. The TMCA will continue to monitor this case.

The Supreme Court’s decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith issued earlier today is chock full of references to famous artists, famous works of art, famous musicians and famous celebrities dating back centuries. Given Andy Warhol’s focus on the famous during his prolific career, he’d have to be pleased to see his name and works mentioned with such celebrated company, and in a Supreme Court decision no less. But stripped of its many pop culture and artistic references, the Warhol Foundation decision is the most important fair use decision in the past two decades, with ramifications that will reverberate far longer than the fifteen minutes Warhol envisioned. To recap the basic facts, the core question in the case is whether the use of a copyrighted photograph taken of the artist Prince by the photographer Lynn Goldsmith, subsequently modified by the artist Andy Warhol to create what was referred to as the “Orange Prince,” qualifies as a fair use under Section 107 of the U.S. Copyright Act. Goldsmith had licensed her 1981 photo of Prince, below left, to Vanity Fair magazine, published by Conde Nast, with the understanding that it would be modified by an artist, who turned out to be Andy Warhol. Warhol’s version of the work, below right, was published in 1984. Goldsmith Warhol                 Unbeknownst to Goldsmith, Warhol created a series of works based on her photo called the “Prince Series,” most of which were sold to collectors, with four now held by the Andy Warhol Museum in Pittsburgh. In 2016, Conde Nast licensed from the Warhol Foundation another work from the Prince Series – called the “Orange Prince” – that appears below. The “Orange Prince” was used by Conde Nast on the cover of a commemorative magazine published after Prince’s death. The Warhol Foundation received $10,000 as a licensing fee for this use of the “Orange Prince,” but Goldsmith received neither compensation nor credit for this use of her work. When Goldsmith asserted that the unauthorized 2016 use of her copyrighted photo was infringing, the Warhol Foundation sued her in New York for a declaratory judgment, asserting that the use of her photo in the “Orange Prince” qualified as a fair use. The district court granted summary judgment to the Foundation on its fair use defense, holding that all four factors set forth in 17 U.S.C. § 107 bearing on the issue of fair use favored the Foundation, in that the Prince Series was: (1) “transformative” because, while Goldsmith’s photo portrayed Prince as “not a comfortable person” and a “vulnerable human being,” the Prince Series portrayed Prince as an “iconic, larger-than-life figure”; (2) although Goldsmith’s photo was both creative and unpublished, which would traditionally weigh in Goldsmith’s favor, this was “of limited importance because the Prince Series works are transformative works”; (3) in creating the Prince Series, Warhol removed nearly all of the Goldsmith photo’s protectable elements; and (4) the Prince Series was not a market substitute that harmed or had the potential to harm Goldsmith. On appeal, the U.S. Court of Appeals for the Second Circuit reversed – twice – holding that the Prince Series was neither transformative nor a fair use as a matter of law, and also concluding that the Goldsmith photo and Prince Series were substantially similar as a matter of law. Even after the Supreme Court’s decision in Google LLC v. Oracle America, Inc., 141 S. Ct. 1183 (2021), reaffirmed the principle that a new work is transformative if it “adds something new . . . [by] altering the copyrighted work ‘with new expression, meaning or message’” (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994)), the Second Circuit stuck to its guns and held that the Prince Series of works were not transformative. Subsequently, the Supreme Court agreed to hear the Warhol Foundation’s appeal, but in today’s 7-2 decision authored by Justice Sotomayor, it agreed almost entirely with the Second Circuit’s holding. Today’s decision in Warhol Foundation is both narrow and broad at the same time. The decision is narrow in that it addresses only: (i) the licensing to Conde Nast of the “Orange Prince” in 2016 and subsequent publication of that work in a commemorative magazine; and (ii) whether the first statutory fair use factor – the purpose and character of the use – favors the Warhol Foundation. The Court expressed “no opinion as to the creation, display, or sale of any of the original Prince Series works,” and did not consider any other statutory fair use factor except to note how they can relate to the analysis of the first. Indeed, the concurrence from Justices Jackson and Gorsuch noted that all other issues, including whether the “Orange Prince” as licensed by the Warhol Foundation to Conde Nast actually infringes the Goldsmith photo, remain to be addressed during further proceedings. That said, the Court’s ruling is quite broad in a number of respects. In terms of assessing the first fair use factor (the purpose and character of the use), the question of whether a challenged use is “transformative” is now of secondary importance. Indeed, the entire body of case law that has focused the fair use inquiry on the issue of whether a challenged use is or is not transformative is now of questionable validity. So what is of primary importance now to the assessment of the first fair use factor? Two things: (i) whether and to what extent the challenged use has a purpose that is different from that of the original work; and (ii) whether the challenged use is commercial or non-commercial. To sum up the Court’s holding, in its own words: In sum, the first fair use factor considers whether the use of a copyrighted work has a further purpose or different character, which is a matter of degree, and the degree of difference must be balanced against the commercial nature of the use. If an original work and a secondary use share the same or highly similar purposes, and the secondary use is of a commercial nature, the first factor is likely to weigh against fair use, absent some other justification for copy­ing. In this case, the Court held that the purposes of the Goldsmith photo and the “Orange Prince” were substantially the same – to depict the artist Prince. In reaching this conclusion, the Court emphasized the importance of Goldsmith’s extensive licensing of her famous portfolio of works for commercial purposes – not just the same photo of Prince – and the fact that Goldsmith had herself licensed her images of Prince for appearances in commemorative publications issued after his death. Since Conde Nast also published the “Orange Prince” to commemorate Prince’s death, the purposes of Goldsmith’s photo and the “Orange Prince” were substantially the same as far as the Court was concerned. And to the Court, when the purpose of two works is substantially the same, then the prospect that the junior use will substitute for the senior work – characterized as copyright law’s “bête noire” – looms large. The Court contrasted the use of the “Orange Prince” with Andy Warhol’s use of the famous Campbell’s Soup can logo, shown in the image below. This use of a copyrighted commercial logo had a purpose (commenting on consumerism) different from that of the original work (selling soup), and therefore the first statutory factor would favor a finding of fair use in this instance, according to today’s decision. Likewise, the use of a copyrighted work for purposes like parody, newsgathering, criticism, commentary and education would all likely support a finding of fair use because those purposes would, in most cases, differ from those of the original. The Court repeatedly emphasized in its decision that “the first fair use factor . . . focuses on whether an allegedly infringing use has a further purpose or different character, which is a matter of degree, and the degree of difference must be weighed against other considerations, like commercialism.” And on the issue of commercialism, Conde Nast’s commercial exploitation of the “Orange Prince” under license from the Warhol Foundation was of great importance to today’s ruling. Indeed, the Court emphasized that a use of the “Orange Prince” for non-commercial purposes might qualify as fair, but that Conde Nast’s use of that work was not fair insofar as the first factor was concerned, in part because the work was used for commercial purposes. So what about the question of whether a challenged use is transformative? Well, that still matters, but not nearly as much to the fair use analysis as it did before. Under today’s ruling, while the question of whether a later work has transformed a prior work by adding new meaning or message remains relevant, such additions will not by themselves tilt the first factor in favor of fair use, as most cases had held previously. Indeed, under today’s ruling, the first factor will only favor fair use if the newly added material rises to such a sufficiently transformative level that the new work achieves a different purpose than that of the prior work, and therefore does not supersede it. In the Court’s words: “Many secondary works add something new. That alone does not render such uses fair. Rather, the first factor (which is just one factor in a larger analysis) asks ‘whether and to what extent’ the use at issue has a purpose or character different from the original. Campbell, [510 U.S. at 579] (emphasis added). The larger the difference, the more likely the first factor weighs in favor of fair use. The smaller the differ­ence, the less likely.” Indeed, one major takeaway from today’s decision is the Court’s concern that a focus on whether a challenged use is transformative is both difficult to apply in a consistent manner from case to case, and simultaneously permits copying on a such a large scale that the purposes of copyright are subverted. “[A]n overbroad concept of transformative use, one that includes any further purpose, or any different character, would narrow the copyright owner’s exclusive right to create derivative works. To preserve that right, the degree of transformation required to make ‘transformative’ use of an original must go beyond that required to qualify as a derivative.” In this regard, the Court’s majority opinion differed sharply from the dissent penned by Justices Kagan and Roberts, which lamented that today’s decision “will stifle creativity of every sort. It will impede new art and music and literature. It will thwart the expression of new ideas and the attainment of new knowledge. It will make our world poorer.” The majority shot back that the dissent was rife with “misstatements and exaggerations, from the dissent’s very first sen­tence, post, at 1 (“Today, the Court declares that Andy Warhol’s eye-pop­ping silkscreen of Prince . . . is (in copyright lingo) not ‘transformative’”), to its very last, post, at 36 (“[The majority opinion] will make our world poorer”). The majority opinion characterized today’s decision as upholding the purpose of copyright – to protect the rights of creators in their original works – without preventing the uses of such works in circumstances long permitted by law, like when an unauthorized use qualifies as fair. Whether today’s decision actually achieves the balance the majority sought to strike will be a subject of extensive debate for many years to come. And whether subsequent decisions applying Warhol Foundation are effective in achieving that balance will be equally unclear until sufficient time has passed. But what is clear, now, is that the importance of Warhol Foundation to the fair use analysis in many artistic contexts is undeniable.

In a recent decision, the Federal Circuit approved the use of “Copyrightability Hearings.” Not sure what that means? Read on to find out. The case involved a dispute between two parties, SAS Institute, Inc. (“SAS”) and World Programming Limited (“WPL”). SAS created and markets a suite of software used for data access, management, analysis, and presentation, while WPL markets a competing system. Both systems generally allow users to input data in a specified format, then perform various functions depending on the users’ needs, and output resulting data. In the case, SAS alleged that WPL infringed several copyright registrations covering SAS’s system. The Federal Circuit decision is the latest development in a lengthy and contentious relationship between the parties, who have been suing each other since at least 2009. In its decision, the Federal Circuit considered whether nonliteral elements of SAS’s system are protected by SAS’s copyright registrations. The nonliteral elements at issue here include input formats—the vocabulary and syntax that dictate how users input their data—and output designs—the format and type of data that is generated and displayed to the users. The case began in the U.S. District Court for the Eastern District of Texas, where both parties moved for summary judgment on the eve of trial. SAS sought an order that the nonliteral elements are protected by copyright, while WPL sought an order that the nonliteral elements are not protected. In the District Court Decision, Judge Gilstrap noted that this put the Court in a tough position. The Court either had to grant one party’s motion or it had to deny both motions and let the copyrightability issue to go to trial. As copyrightability is a question of law for the Court to decide, letting it go to trial would risk “injecting copyrightability into the jury trial” and risk confusing the jury during its infringement analysis. To solve this issue the District Court conducted a “Copyrightability Hearing” to determine what the “core protectable expression” of each of SAS’s works is. Specifically, each party was asked to submit briefing and evidence in support of its position as to the copyrightability of the nonliteral elements. Following the hearing, Judge Gilstrap found that WPL showed that nonliteral elements of SAS’s system were not protected by copyright because some elements are present in SAS’s earlier system, SAS 76, and are now in the public domain, others are open-sourced and available to the public, and still others are well-known, conventional, or not original to SAS. The Court then found that SAS failed to show which nonliteral elements are protectable and instead argued that all of the elements are “creative.” Accordingly, the District Court found the nonliteral elements are not protected and dismissed SAS’s claims. On appeal, SAS argued that the Copyrightability Hearing was a novel procedure that was contrary to the Federal Rules of Civil Procedure. The Federal Circuit disagreed. It cited the well-settled rule that district court judges have discretion to manage their cases and to conduct reasonable pre-trial procedures to narrow the issues in dispute for trial. The majority opinion also relied on an analogy to patent law, citing Markman v. Westview Instruments, Inc., the case that spawned the now-standard Markman hearing designed to ascertain the scope and meaning of patent claims before trial. In short, the majority ultimately viewed the Copyrightability Hearing as nothing more than a pre-trial conference within the District Court’s discretion. SAS also argued that the District Court improperly placed the burden on SAS to prove that the nonliteral elements of its system are protected by SAS’s copyright registrations. SAS instead believed its copyright registrations entitled it to a presumption that the elements are protected. The Federal Circuit was split on this issue. The majority opinion, authored by Circuit Judge Reyna, affirmed the District Court’s decision, while the dissenting opinion, authored by Circuit Judge Newman, would reverse and remand. The majority opinion clarified that while copyright registrations establish a threshold showing of protectability, if the accused infringer presents evidence that elements of the work are not protected, the burden then falls on the copyright holder to rebut that evidence. Here, after WPL showed that several of the elements are not protectable, SAS failed to show that any of the nonliteral elements of its system are protected by its copyright registrations. The dissenting opinion expressed concern that the majority’s analysis is a “far-reaching change” to the question of copyrightability that would have a significant impact on the software industry. In that regard, the dissent cited a litany of cases finding that nonliteral elements of software programs, even those that may be well-known or pre-existing, are copyrightable when selected and arranged in a creative or original way. The opinion then faulted the District Court and the majority opinion for requiring the parties to engage in “filtering”—isolating protected and non-protected elements—which is “developed for determinations of infringement.” In the dissent’s view, because SAS has valid copyright registrations and had a non-frivolous argument that the selection and arrangement of its system was sufficiently creative, this case should have proceeded. It remains to be seen whether the majority’s opinion will bring “far-reaching change” to the protectability of software programs. It also remains to be seen whether “Copyrightability Hearings” become standard practice for courts faced with similar issues. In view of this decision, however, plaintiffs should be prepared to clearly explain what is – and what is not – protected by their copyright registrations. This may not be the last word on this dispute. Given the decades of litigation between the parties, the novel issues, and a split opinion from the Federal Circuit, an appeal to the Supreme Court may be forthcoming.

In 2018, the U.S. Copyright Office denied the registration of a 2-D work of art “A Recent Entrance into Paradise” generated by artificial intelligence (“AI”). The programmer behind the AI, Dr. Stephen Thaler, sued the Copyright Office sued the Copyright Office in Federal Court in D.C. in June 2022. We covered Thaler’s initial suit and his attempts to patent an AI-generated invention in previous TMCA articles. Thaler moved for summary judgment in January 2023 as to the legal issue alone – whether an AI-generated work is copyrightable . The Copyright Office cross-moved for summary judgment in February, and Thaler filed a reply brief on March 7th. In support of these dueling summary judgment cross-motions, the parties doubled down on their initial arguments. Thaler offered a creative view of how copyright law could adapt to accommodate AI-generated works. Specifically, Thaler argued that a programmer is analogous to an employer and is therefore the owner of the artwork created by the employee-like AI under the work for hire doctrine. The AI was like an employee, according to Thaler, because Thaler controlled the AI, directed the AI to create the 2-D artwork, and owned the AI. In its brief, the Copyright Office restated that copyright protection requires human authorship of the expressive elements of the work. In other words, a work of art is not registrable if a human merely typed a command into an AI program to create it. Rather, the human must direct the creative contents of the work. Perhaps the most surprising element of the motions was the Copyright Office’s hint at the end of its motion that more guidance on AI was forthcoming. Not long after, on March 10, 2023, the Copyright Office unveiled a Statement of Policy regarding works incorporating AI generated content, further articulating the lines drawn in its brief. We covered the intricacies of the policy in our recent TMCA post. The good news is works generated using AI can be registered with the Copyright Office, but only by virtue of a human author’s creative additions to the AI-generated content. The central inquiry is whether the human author (and not the AI) had creative control over the expressive elements of the work. The policy is likely cold comfort for Thaler, who claimed the artwork “A Recent Entrance into Paradise” was autonomously created by the AI, i.e., without control from Thaler. The policy statement also did not give any credence to Thaler’s work for hire analogy. The Copyright Office’s guidance might bring the landscape into focus for prospective applicants, but it may be too late for Thaler’s current masterpiece. The summary judgment motions are still pending before the district court. We will continue to monitor this developing issue, including the Copyright Office’s promise to hold a public comment period later this year.