One Year of the Defend Trade Secrets Act

May 16, 2017 marked the first anniversary of the Defend Trade Secret Act.  What has the year taught us about this new federal cause of action for trade secret misappropriation? Here are the top 13 lessons from the first year of DTSA litigation:

#1 The threat is from within.  Like the scary story punch line – the call is from inside the house.  Most of the DTSA cases in the first year have involved former employees.

#2 The tools of espionage are mundane.  No need for James Bond’s Q here, the implements of trade secret misappropriation are as simple as emailing[1] the secrets to a personal email account,[2] loading up a flash drive, using drop box,[3] logging on the company systems,[4] or keeping a company lap top.[5]

#3.  The DTSA applies to continuing use of a Trade Secret taken before the Effective date.    The most frequently litigated DTSA issue in the first year is the application of the DTSA to trade secrets taken before the May 16, 2016, effective date.  Although this will diminish in importance with time, the cases hold that the DTSA covers the continued use after the May 16, 2016, effective date, of trade secrets obtained before the effective date.[6]  The DTSA does not apply to misappropriations only occurring prior to enactment,[7] and the courts will dismiss a Complaint under the DTSA unless and until the plaintiff can allege an act after the effective date.[8] Conversely the courts will allow amendment to add a DTSA claim where plaintiff can allege post effective date use.[9]

#4 The Courts are willing to grant preliminary injunctions based upon the DTSA.[10]  The Courts apply the traditional four-factor test for the grant of a preliminary injunction.  In evaluating the balance of hardships the fact that the injunction does not require more than compliance with federal and state law weights in favor of a preliminary injunction.[11]

#5.  The DTSA seizure provisions are not the exclusive ex parte remedy.[12]  The DTSA provided for ex parte seizure, which can be a helpful tool in investigating and combatting trade secret misappropriation.  However, the rules are complex, if not onerous.  In appropriate cases, it may still be faster and easier, and just as effective, to go old school and seek a TRO under trade secret.

#6  The Trade Secret Owner (obviously)doesn’t have to disclose its trade secrets in its Complaint to protect those trade secrets.[13]  Nor is there any heighted level of pleading required for a DTSA complaint.[14]

#7.  You shouldn’t count on the DTSA to stop your former employees from competing with you – that’s what non-compete agreements are for.[15]  In the absence of a non-compete provision, courts will restrict an individual’s employment only where the individual has stolen its former employer’s trade secrets and there is a high probability that the individual will “inevitably disclose” this information to its new employer.[16]

#8.  Choice of Law Can be More Important Than Ever.  According to 18 U.S.C. § 1836(b)(3)(A)(i)(II), the remedies available under the DTSA may depend on state law, in the words of one district court, forcing the court into the “choice of law bramble.”[17]

#9.  Defendants may attempt to hide behind the “whistle blower” provisions.[18]  Plaintiffs who live in glass houses should not throw stones.  Trade secret owners, like all prospective plaintiffs, should consider potential adverse consequences of bringing suit.  Is there something that the potential defendant could tattle about?

#10.  The DTSA is not significantly different from state law including the Uniform Trade Secrets Act.[19]  The DTSA was patterned on the UTSA, and while there are some differences, the similarities outweigh the differences.[20]  The courts may look to the UTSA in interpreting the DTSA.[21]  Although one court noted that although the UTSA is effective in 48 states, those laws “vary in a number of ways and contain built-in limitations that make them not wholly effective in a national and global economy.”[22]

#11.  Restrictions of injunctions against employees may not apply to contactors.[23]  Under the DTSA, the Court cannot grant an injunction that “prevent[s] a person from entering into an employment relationship,” and the Court can only place conditions on employment “based on evidence of threatened misappropriation and not merely on the information the person knows.” 18 U.S.C. § 1836(b)(3)(A)(i)(I).  There is no indication that “employment relationship” encompasses the role of an outside contractor.

#12.  The balance of hardships favors the trade secret owner where the injunction would merely require defendant to comply with federal and state law.[24]

#13.  The DTSA won’t help those who don’t help themselves.  Like the UTSA, the DTSA requires that the trade secret owner take some responsibility for securing the alleged trade secret.[25]

[1] Protection Technologies, Inc. v. Ribler, 3:17–cv–00144–LRH–WGC 2017 WL 923912 (D. Nevada. March 08, 2017); Henry Schein, Inc. v. Cook, 16-cv-03166-JST 2016 WL 3418537 (N.D. California. June 22, 2016).

[2] Chubb Ina Holdings Inc. v. Chang,  16-2354-BRM-DEA 2017 WL 499682  (D. New Jersey February 07, 2017);  Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016);

[3] Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016).

[4] Henry Schein, Inc. v. Cook, 16-cv-03166-JST 2016 WL 3418537 (N.D. California. June 22, 2016).

[5] Henry Schein, Inc. v. Cook, 16-cv-03166-JST 2016 WL 3418537(N.D. California. June 22, 2016).

[6] Allstate Ins. Co. v. Rote, 16–cv–1432, 2016 WL 4191015, at *1–5 (D. Or. Aug. 7, 2016) (granting preliminary injunction in DTSA case where the defendant left her job before the DTSA was enacted but remained in possession of alleged trade secrets after the DTSA’s enactment); Syntel Sterling Best Shores Mauritius Ltd. v. Trizetto Grp., Inc., 15–cv–211, 2016 WL 5338550, at *6 (S.D.N.Y. Sept. 23, 2016)(finding viable a continuing misappropriation claim that began pre-enactment because the DTSA defines misappropriation as the “disclosure or use of a trade secret” and the complaint alleged that the defendants “continue[d] to use” the trade secrets after the DTSA was enacted) (emphasis in original); Brand Energy & Infrastructure Services, Inc. v. Irex Contracting Group, 16-2499 2017 WL 1105648 (E.D. Pa. March 24, 2017) (denying motion to dismiss as to continuing misappropriation that started prior to effective date); High 5 Games, LLC v. Marks, 13-7161 (JMV) 2017 WL 349375 (D.N.J. January 24, 2017)(granting motion to amend to add DTSA claim).

[7] Champions League, Inc. v. Woodard, 2016 WL 8193292 S.D. New York. December 15, 2016 (Denying leave to amend complaint to add DTSA claim because it would be futile because the DTSA applies only to acts of misappropriation that occur on or after the May 11, 2016, date of the enactment of the Act); Avago Technologies U.S. Inc. v. Nanoprecision Products, Inc., 16-cv-03737-JCS 2017 WL 412524   (N.D. California. January 31, 2017)(granting motion to dismiss where all of the actionable conduct alleged in the Counterclaim occurred before the DTSA came into effect)..

[8] Dazzle Software II, LLC v. Kinney, 16-cv-12191 2016 WL 6248906 (E.D. Michigan August 22, 2016), (Dismissing DTSA Count with leave to amend upon discovery of conduct following effective date of the act). Hydrogen Master Rights, Ltd. v. Weston, 16–474–RGA 2017 WL 78582 (D.Del. January 9, 2017)(DTSA Claims dismissed without prejudice because (1) the complaint fails to allege any nexus between interstate or foreign commerce; and (2) because he DTSA, by its own terms, applies only to an act of misappropriation that occur on or after the date of the enactment, and the Complaint only contains a conclusory allegation of continuing use and disclosure.); M.C. Dean, Inc. v. City of Miami Beach, Florida, 199 F.Supp.3d 1349 2016 WL 4179807  (S.D. Florida. August 08, 2016)(granting motion to dismiss for failure to state a claim); Cave Consulting Group, Inc. v. Truven Health Analytics Inc., 5-cv-02177-SI 2017 WL 1436044  (N.D. California. April 24, 2017) (Dismissed although agreeing post enactment use would be sufficient); Chubb INA Holdings Inc. v. Chang, 16-2354-BRM-DEA 2016 WL 6841075 (D. New Jersey. November 21, 2016)(granting motion to file amended complaint alleging violation of DTSA.).

[9] VIA Technologies, Inc. v. ASUS Computer International, 4-cv-03586-BLF 2017 WL 491172  N.D. California, San Jose Division. February 07, 2017(Granting Leave to Amend Complaint to add DTSA claim after discover showed post enactment use.).

[10] First Western Capital Management Company v. Malamed, 6–cv–1961–WJM–MJW 2016 WL 8358549 (D. Colorado. September 30, 2016)

This leads the court into the “choice-of-law bramble,”

[11] Dish Network L.L.C. v. Ramirez, No. 15–CV–04712–BLF, 2016 WL 3092184, at *7 (N.D.Cal. June 2, 2016) (balance of hardships tips in favor of plaintiff seeking injunction when it would “do no more than require Defendant to comply with federal and state…laws”).

[12] Magnesita Refractories Company v. Mishra, 2:16-CV-524-PPS-JEM 2017 WL 365619  (N.D. Indiana, January 25, 2017); OOO Brunswick Rail Management v. Sultanov, 5:17-cv-00017-EJD 2017 WL 67119  (N.D. California, San Jose Division. January 06, 2017); Protection Technologies, Inc. v. Ribler, 3:17–cv–00144–LRH–WGC 2017 WL 923912 (D. Nevada. March 08, 2017).

[13] Mission Measurement Corporation v. Blackbaud, Inc.,  16 C 6003 2016 WL 6277496 (N.D. Illinois, October 27, 2016)(Denying motion to dismiss DTSA claim, noting trade secrets need not be disclosed in detail in a complaint alleging misappropriation for the simple reason that such a requirement would result in public disclosure of the purported trade secrets.).

[14] Chubb Ina Holdings Inc. v. Chang,  16-2354-BRM-DEA 2017 WL 499682  (D. New Jersey February 07, 2017)(Denying motion to dismiss DTSA for failure to state claim because complaint included sufficient “factual allegations to raise a right to relief above the speculative level” that Defendants did, in fact, use Plaintiffs’ trade secrets, and noting “there is no heightened pleading standard for a misappropriation claim.”).

[15] Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016) (Granting in part plaintiff’s motion for a renewed TRO by prohibiting defendants from using or disseminating plaintiff’s confidential information, but denying plaintiff’s request that defendants be prohibited from soliciting its customers, noting New York law recognizes a specific means for plaintiff to protect information under such circumstances: a non-competition provision.).

[16] Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016).

[17] First Western Capital Management Company v. Malamed, 6–cv–1961–WJM–MJW 2016 WL 8358549 (D. Colorado. September 30, 2016),

[18] Unum Group v. Loftus, 4:16–CV–40154–TSH  2016 WL 7115967 (D. Massachusetts. December 6, 2016)( Denying motion to dismiss, granting preliminary injunction despite argument that defendant’s actions were exempted under § 1836(b) of the DTSA, which provides immunity under any federal and state trade secret laws to individuals who disclose trade secrets in confidence to an attorney, “solely for the purpose of reporting or investigating a suspected violation of law.).

[19] VIA Technologies, Inc. v. ASUS Computer International, 4-cv-03586-BLF 2017 WL 491172  N.D. California, San Jose Division. February 07, 2017(Finding differences between DTSA and uniform trade secret act did not justify denying motion to add DTSA claim to trade secret suit).

[20] Kuryakyn Holdings, LLC v. Ciro, LLC 15-cv-703-jdp 2017 WL 1026025  (W.D. Wisconsin. March 15, 2017)(“The DTSA gives rise to a federal cause of action, but the parties agree that substantively the UTSA and DTSA are “essentially the same,”).

[21] Kuryakyn Holdings, LLC v. Ciro, LLC, 15-cv-703-jdp 2017 WL 1026025 (W.D. Wisconsin. March 15, 2017); Earthbound Corp. v. MiTek USA, Inc., 16-cv-1150, 2016 WL 4418013, at *10 (W.D. Wash. Aug. 19, 2016).

[22]  Adams Arms, LLC v. Unified Weapon Sys., Inc., 16–cv–1503, 2016 WL 5391394, at *5–7 (M.D. Fla. Sept. 27, 2016).

[23] Engility Corporation v. Daniels, 16–cv–2473–WJM–MEH 2016 WL 7034976 (D. Colorado. December 02, 2016).

[24] Dish Network L.L.C. v. Ramirez, No. 15–CV–04712–BLF, 2016 WL 3092184, at *7 (N.D.Cal. June 2, 2016) (balance of hardships tips in favor of plaintiff seeking injunction when it would “do no more than require Defendant to comply with federal and state…laws”).

[25] Raben Tire Co., LLC v. McFarland, 5:16-CV-00141-TBR 2017 WL 741569 (W.D. Kentucky, Paducah Division. February 24, 2017)(Noting that Raben Tire Co.’s complaint is entirely devoid of any allegations of how it protected the information in question from dissemination.).

Copyright is a Joke

There is an interesting case pending in the Southern District of California that answers the question: Are jokes copyrightable?  Robert Kaseberg for has sued Conan O’Brien for infringing his copyright in some jokes that he wrote and posted on his blog prior to Conan’s telling of very similar jokes.  Conan moved for summary judgment, which was granted as to one joke that was shown to be created before Kaseberg, and as to another joke that was shown to be sufficiently different.  However the court denied summary judgment  as to the other jokes, confirming that jokes are copyrightable, although the court agreed with O’Brien, that jokes are only entitled to “thin” copyright protection.  The Court said that there was “little doubt that the jokes at issue merit copyright protection,” however that protection was constrained by their subject matter and the conventions of the two-line, setup-and-delivery paradigm.  The Court explained:

Each joke begins with a factual sentence and then immediately concludes with another sentence providing humorous commentary on the preceding facts. Facts, of course, are not protected by copyright. Feist, 499 U.S. at 345. And although the punchlines of the jokes are creative, they are nonetheless constrained by the limited number of variations that would (1) be humorous (2) as applied to the specific facts articulated in each joke’s previous sentence and (3) provide mass appeal. This merits only thin protection. The standard for infringement must therefore also be some form of “virtual identity.”

The court found sufficient difference as to one joke, but as to the others, the court concluded there was a triable issue of whether the jokes were sufficiently similar.

You Don’t Have a Right to Use a Photograph Just Because its of You

Xposure Photos (UK) Ltd. sued Khloe Kardashian for posting a Manual Munoz photo of Kardashian to her Instagram account. While the complaint The Photograph is highly creative, distinctive, and valuable, a substantial part of the vault is the subject: defendant.

One would expect that the litigation will be setlled, but it is still a good reminder that you can’t post images merely because you want to.

 

Visual Artists Rights Act Review

In 1990 Congress added the Visual Artists Rights Act to the Copyright Law as new Section 106A.  Section 106A provides:

106A Rights of certain authors to attribution and integrity

(a) Rights of Attribution and Integrity.—Subject to section 107 and independent of the exclusive rights provided in section 106, the author of a work of visual art—

   (1)shall have the right—

      (A) to claim authorship of that work, and
      (B) to prevent the use of his or her name as the author of any work of visual art which he or she did not create;
   (2) shall have the right to prevent the use of his or her name as the author of the work of visual art in the event of a distortion, mutilation, or other modification of the work which would be prejudicial to his or her honor or reputation; and

   (3)subject to the limitations set forth in section 113(d), shall have the right—

      (A) to prevent any intentional distortion, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation, and any intentional distortion, mutilation, or modification of that work is a violation of that right, and
      (B) to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right.

(b) Scope and Exercise of Rights.— Only the author of a work of visual art has the rights conferred by subsection (a) in that work, whether or not the author is the copyright owner. The authors of a joint work of visual art are coowners of the rights conferred by subsection (a) in that work.

(c) Exceptions.—

   (1) The modification of a work of visual art which is a result of the passage of time or the inherent nature of the materials is not a distortion, mutilation, or other modification described in subsection (a)(3)(A).
   (2) The modification of a work of visual art which is the result of conservation, or of the public presentation, including lighting and placement, of the work is not a destruction, distortion, mutilation, or other modification described in subsection (a)(3) unless the modification is caused by gross negligence.
   (3) The rights described in paragraphs (1) and (2) of subsection (a) shall not apply to any reproduction, depiction, portrayal, or other use of a work in, upon, or in any connection with any item described in subparagraph (A) or (B) of the definition of “work of visual art” in section 101, and any such reproduction, depiction, portrayal, or other use of a work is not a destruction, distortion, mutilation, or other modification described in paragraph (3) of subsection (a).

(d) Duration of Rights.—

   (1) With respect to works of visual art created on or after the effective date set forth in section 610(a) of the Visual Artists Rights Act of 1990, the rights conferred by subsection (a) shall endure for a term consisting of the life of the author.
   (2) With respect to works of visual art created before the effective date set forth in section 610(a) of the Visual Artists Rights Act of 1990, but title to which has not, as of such effective date, been transferred from the author, the rights conferred by subsection (a) shall be coextensive with, and shall expire at the same time as, the rights conferred by section 106.
   (3) In the case of a joint work prepared by two or more authors, the rights conferred by subsection (a) shall endure for a term consisting of the life of the last surviving author.
   (4) All terms of the rights conferred by subsection (a) run to the end of the calendar year in which they would otherwise expire.

(e)Transfer and Waiver.—

   (1) The rights conferred by subsection (a) may not be transferred, but those rights may be waived if the author expressly agrees to such waiver in a written instrument signed by the author. Such instrument shall specifically identify the work, and uses of that work, to which the waiver applies, and the waiver shall apply only to the work and uses so identified. In the case of a joint work prepared by two or more authors, a waiver of rights under this paragraph made by one such author waives such rights for all such authors.
   (2) Ownership of the rights conferred by subsection (a) with respect to a work of visual art is distinct from ownership of any copy of that work, or of a copyright or any exclusive right under a copyright in that work. Transfer of ownership of any copy of a work of visual art, or of a copyright or any exclusive right under a copyright, shall not constitute a waiver of the rights conferred by subsection (a). Except as may otherwise be agreed by the author in a written instrument signed by the author, a waiver of the rights conferred by subsection (a) with respect to a work of visual art shall not constitute a transfer of ownership of any copy of that work, or of ownership of a copyright or of any exclusive right under a copyright in that work.
A work of Visual Art to which Section 106A applies is defined as:
   (1) a painting, drawing, print, or sculpture, existing in a single copy, in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author, or, in the case of a sculpture, in multiple cast, carved, or fabricated sculptures of 200 or fewer that are consecutively numbered by the author and bear the signature or other identifying mark of the author; or
(2) a still photographic image produced for exhibition purposes only, existing in a single copy that is signed by the author, or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author.
A work of visual art does not include—
(A)(i) any poster, map, globe, chart, technical drawing, diagram, model, applied art, motion picture or other audiovisual work, book, magazine, newspaper, periodical, data base, electronic information service, electronic publication, or similar publication;
(ii) any merchandising item or advertising, promotional, descriptive, covering, or packaging material or container;
(iii) any portion or part of any item described in clause (i) or (ii);
(B) any work made for hire; or
(C) any work not subject to copyright protection under this title.
While it seems hard to quibble with the idea of protecting the integrity of artistic works, the VARA (and it should be noted similar state laws) seem to punish those who are foolish enough to allow their property to be the canvas.  Perhaps for this reason many of the VARA decisions seem to stretch the law to avoid what the court might perceive as an unjust result.
In Carter v. Helmsley-Spear, Inc., 71 F.3d 77 (2nd. Cir. 1995), the Second Circuit’s determination that a very large “walk-through sculpture” occupying most, but not all, of the building’s lobby was a work-made-for-hire that saved the building owner from liability under VARA. In the words of the district court:
The artwork consists of a variety of sculptural elements constructed from recycled materials, much of it metal, affixed to the walls and ceiling, and a vast mosaic made from pieces of recycled glass embedded in the floor and walls. Elements of the work include a giant hand fashioned from an old school bus, a face made of automobile parts, and a number of interactive components. These assorted elements make up a theme relating to environmental concerns and the significance of recycling.
In Phillips v. Pembroke Real Estate, Inc., 459 F.3d 128 (1st Cir. 2006), the First Circuit’s determination VARA does not include site-specific art (art that is integrated into a site) allowed a park to be redesigned without VARA liability.
In Chapman Kelley v. Chicago Park District, 635 F.3d 290 (7th Cir. 2011), the Seventh Circuit’s questionable determination that Kelley’s Wildflower Works was not protected by copyright because it was not fixed in a tangible medium, allowed the City to reconfigure Kelley’s oval flower beds into smaller, rectangular beds, and change some of the flowers, without liability under VARA.
In Pavia v. 1120 Avenue of the Americas Associates, 960 F.Supp. 620 (S.D.N.Y. 2003), the district court held that VARA applied to a sculpture created before its enactment, but not to alleged acts of mutilation that occurred before enactment.  Thus the district court dismissed Philip Pavia’s VARA claims resulting from defendants movement of his “The Ides of March” sculpture from a Hilton Hotel Lobby to a warehouse.
In Pollara v. Seymour, 344 F.3d 265 (2nd Cir. 2003) the Second Circuit’s determination that a hand-painted banner was not a work of visual art, saved a city employee from liability under VARA for removing the banner, which was installed at public plaza without a permit.
In Massachusetts Museum of Contemporary Art Foundation, Inc. v. Buchel, 593 F.3d 38 [93 U.S.P.Q.2d 1632] (1st Cir. 2010), although the First Circuit found that VARA applied to unfinished art, its determination that neither partially covering the unfinished work with tarpaulins nor displaying the unfinished work in its entirety violated VARA.
In Martin v. City of Indianapolis, 982 F.Supp. 625 (S.D.Ind. 2007), the district court granted summary judgment to Jan Martin for the city of Indianapolis’ destruction of his Symphony # 1 sculpture after his offers to donate and move the sculpture to another site for a cost of $8000.
In Scott v. Dixon, 309 F.Supp.2d 395 (E.D.N.Y. 2004), the district court found that Scott’s sculpture of a swan that the Dixons asked Scott to build in their backyard, was not a work of sufficient stature to merit protection under VARA, even though some of her other works may have attained that stature.
In Hunter v. Squirrel Hill Associates, L.P., 413 F.Supp.2d 517 (E.D.Pa. 2005), the district court found that the VARA action brought by the painter of a mural damaged by water leakage against a roof repairer was time-barred.
In Flack v. Friends of Queen Catherine Inc., 139 F.Supp.2d 526 (S.D.N.Y. 2001), Audrey Flack, an artist commissioned to create a statute of Queen Catherine of Braganza, namesake of the borough of Queens in New York City, sued Friends of Queen Catherine, Inc. the non-profit organization managing the project.  Flack sculpture of the head of the statue was left outside and was damaged, and rather than paying Flack to resculpt the face, one of her assistants was hired to do the work, so the statute could be completed. The district court rejected the claim that leaving the model outside violated VARA because damage from the passage of time or the inherent nature of the materials is excluded.  The court also rejected that the repair of the model violated VARA because conservation is also excluded.
In Board of Managers of Soho International Arts Condominium v. City of New York, 2003 WL 21403333 (S.D.N.Y. June 17, 2003) the district court denied the parties cross motions for summary judgment, noting that plaintiff failed to establish the sculpture was not removable from the building (and thus not protected under VARA), and defendant failed to established that it was removable (and thus entitled to limited production under VARA).  See Board of Managers of Soho Intern. Arts Condominium v. City of New York, 2005 WL 1153752, 75 U.S.P.Q.2d 1025 (S.D.N.Y. 2005).
In Cohen v. G & M Realty LP, 988 F.Supp.2d 212 (E.D.N.Y. 2003), the district court denied a preliminary injunction against the demolition of the buildings on which plaintiff’s aerosol artwork were created.

In Kleinman v. City of San Marcos, 597 F.3d 323 (5th Cir. 2010), the Fifth Circuit determined that a car-planter did not qualify as a “work of visual art” under the VARA, and thus was subject to regulation by the city.

 In English v. BFC&R East 11th Street LLC, [97 Civ. 7446(HB)] 1997 WL 746444 (S.D.N.Y. 1997), the district court denied artist’s motion for preliminary injunction and granted the developer’s motion for summary judgment, finding that the murals were placed illegally on the property, and thus not entitled to protection under VARA.
In Leicester v. Warner Bros., 232 F.3d 1212 [57 U.S.P.Q.2d 1001] (9th Cir. 2010), the Ninth Circuit determined that artist Andrew Leicesters contributions to the design of the streetscape around the 801 Tower in Los Angeles (featured in Batman Forever) became part of a unitary architectural work, and was not entitled to separate protection under VARA.
In Cheffins v. Stewart, 825 F.3d 588 [119 U.S.P.Q.2d 1094] (9th Cir. 2016), the Ninth Circuit affirmed the determination that a mobile replica of 16th-century Spanish galleon, built from used school bus, was a work of applied art, and thus not protect by VARA, when it was burned by the owner of the land on which it was stored, so that the bus could be sold as scrap.
 In Cort v. St. Paul Fire and Marine Ins. Companies, Inc., 311 F.3d 979 (9th Cir. 2002), the Ninth Circuit held that claims under VARA for covering over artist Jesus “Chuy” Campusano’s Lilli Ann mural did not constitute advertising injury covered by defendant’s commerical insurance policies.
In Hanrahan v. Ramirez, [2:97–CV–7470 RAP RC] 1998 WL 34369997 (C.D. Cal. 1998), Artist Mary B. Hanrahan won default judgment against the lessees of Avenue Liquor Store in West Ventura that painted over her mural.

In Whalen v. United Food and Commercial Workers Local 135, [14–CV–3017 W(BLM)] 2015 WL 4659213 (S.D. Cal. 2015), the district court granted and part and denied in part defendant’s motion to dismiss, finding that artists John and Jeanne Whalen did state a cause of action under VARA for the Union’s painting over their mural “Providing The Feast,” located on the Union’s wall.  SeeWhalen v. United Food and Commercial Workers Local 135, 2016 WL 2866875 (S.D.Cal. 2016)

In Kammeyer v. United States Army Corps of Engineers, [15–869 JGB (KKx)] 2015 WL 12765463 (C.D.Cal. 2015) the court granted the Corps’ motion to dismiss artist Ronald Kammeyer’s VARA lawsuit to stop the Corps from Bicentennial Freedom Mural in Corona, California, but allowed Kammeyer to refile.  See, also, Kammeyer v. United States Army Corps of Engineers, [15–869 JGB (KKx)] 2015 WL 12791408 (C.D.Cal. June 3, 2015) 
In Jackson v. Curators of the University of Missouri, [11–4023–CV–C–MJW] 2011 WL 5838432 (W.D. Mo. November 21, 2011), the district court denied the University’s motion to dismiss artist Paul Jackson’s VARA claims for mistreatment of his Tiger Spot mosaic installed on campus.
In Romero v. California Department of Transportation, [ 08–8047 PSG (FFMx)] 2009 WL 650629 (C.D.Cal. March 12, 2009), the district court granted CalDOT’s motion to dismiss Frank Romero’s VARA claim for painting over his “Going to the Olympics” mural rather than cleaning the graffiti from it.

Fair Use is Not Always Fair

Photographer TC Reiner sued Watkins Institute and one of its students Ryon Nishimori for copyright infringement when Nishimori incorporated one of Reiner’s copyrighted photographs into a mock advertisement for a classroom assignment, and saved his work on Flickr, along the way removing Reiner’s copyright notice to improve the appearance of the mock advertisement and giving rise to a DMCA claim as well.

Fortunately for the school and the student, the court granted summary judgment that the uses were a fair use under 17 U.S.C. §107.  The Court examined each of the four factors enumerated in the statute:

In evaluating the first factor, the Court considered whether the new work is transformative, and whether the use of that work is for commercial or noncommercial purposes.” The Federal Circuit agreed that Watkins gave the photograph to the students so that the students could learn to create a mock advertisement, not so the students would benefit merely from absorbing the content of the photograph itself. This is a nonprofit educational purpose.

In evaluating the second factor, the nature of the copyrighted work weighs slightly against finding fair use. Courts consider two aspects of the work in evaluating this factor: first, the extent to which it is a creative work enjoying broader copyright protection as opposed to a factual work requiring broader dissemination, and second, whether it is unpublished, in which case the right of first publication is implicated.

In evaluating the third factor, the amount and substantiality of the portion used in relation to the copyrighted work as a whole also weighs against finding fair use because defendants used Reiner’s entire photograph.

In evaluating the fourth factor, the court said that the burden of proof as to the market effect rests with the Reiner where the challenged use is of a noncommercial educational nature.  The court found a complete absence of proof of any impact on the market for the work.

After weighing all the factors in the light consistent with the purpose of the fair use doctrine, the Court conclude that the school’s educational use of the photograph was fair use.  The court made a similar conclusion with respect to Nishimori’s uses.  Finally, the court found that a DMCA requires knowing or having reasonable grounds to know that removal of Reiner’s copyright notice will induce, enable, facilitate, or conceal an infringement of the federal copyright laws.  The Court said it was undisputed the Nishimori did not know or have reasonable grounds to know that removing Reiner’s name, the name of the photograph, or the copyright tracking number, would induce, enable, facilitate, infringement, and thus did not violate 17 U.S.C. §1202(b)(1).

In the end, the fair use exception of 17 U.S.C. §107 protected the school and its student from liability for using a copyrighted photograph in an academic assignment, but it did not save them from just over two years of litigation, and the accompanying costs.  Just because a use qualifies as a fair use, does mean you are going to be treated fairly.

 

 

 

Just Because You Own a Copy Doesn’t Mean You Own the Copyright

The Estate of Vivian Maier has sued Jeffrey Goldstein and his company Vivian Maier Prints, Inc. for copyright infringement.  Vivian Maier was an American street photographer, who worked for about forty years as a nanny in Chicago’s North Shore, while pursuing photography during her spare time.  Chicago art collector Jeffrey Goldstein accumulated a significant quantity of Maier’s work, includign 17,500 negatives, 2,000 prints, 30 homemade movies, and numerous slides.  Before selling his collection in 2014, Goldstein formed Vivian Maier Prints, Inc., to sell prints.

On April 20, 2017, the Estate of Vivian Maier sued Goldstein for “copyright infringement, trademark infringement, false designation of
origin, unfair competition, unfair trade practices, and cybersquatting under the Copyright Act, 17 U.S.C. §§101 et seq., the Lanham Act, 15 U.S.C. §§1051 et seq., and the laws of the State of Illinois, based on, among other acts, Defendants’ unlawful copying, distribution, sale, and public exhibition of the Estate’s copyrighted works, Defendants’ use of the Estate’s registered mark VIVIAN MAIER, and Defendants’ false portrayal of their activities as officially endorsed or connected with Vivian Maier or her estate.”

Goldstein may or may not have been aware of 17 USC §102, whihc provides:

Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied. Transfer of ownership of any material object, including the copy or phonorecord in which the work is first fixed, does not of itself convey any rights in the copyrighted work embodied in the object; nor, in the absence of an agreement, does transfer of ownership of a copyright or of any exclusive rights under a copyright convey property rights in any material object.

This statute, which on some levels is intuitive, often leads to some surprising results.  Most of use understand and accept that buying a book doesn’t give the purchase the right to make a movie based upon the purchased  book.  However, it is less intuitive that the purchaser of a painting cannot hang the picture in a public place (because of the public display right), or the purchaser of a movie on DVD cannot show the movie in public (private showing is not prohibited, and is impliedly licensed in any event).  Does he owner of negatives get to make prints of the negatives — the only real use for them?  That would be making a copy of the image, and is arguably an infringement.

Given that Goldstein sold his collection nearly three years ago, and the copyright statute has just a three year statute of limitations, what does the  Estate hope to accomplish with the filing?  Well among other things, it may be a grab for whatever Maier materials Goldstein still has:

Perhaps getting back the materials that Goldstein accumulated is the ultimate goal.  The separation of copyright from the physical work works both ways: while the owner of the physical image can’t exploit the image without access to the copyright rights, the owner of the copyright rights in an image can’t exploit that copyright without access to the physical image.

The Estate also complains about Goldstein using the name Vivian Maier in selling prints of Vivian Maier’s photographs.  The Estate obtained an assignment of Supplemental Registration No. 4057824 on VIVIAN MAIER from another collector of Vivian Maier images, John Maloof, and on March 29, 2017, applied for another registration on VIVIAN MAIER (Application No. 4057824).  Is is really infringement of the Estate’s right to call a VIVIAN MAIER print a VIVIAN MAIER print?

 

Two Heads May Be Better Than One, But Six Heads Won’t Help You Market Your Bar

Monte Thrasher brought a VARA complaint against Marci Siegel and Co-Op 28 for painting over his “Six Heads” mural in the Los Feliz neighborhood of Los Angeles:

so that a mural of Charles Bukowski, a noted poet and tragic alcoholic, could be painted, apparently to promote a bar to be known as “Bukowski’s:

The case, Thrasher v. Siegel, 2:17-cv-03047 is pending in the Central District of California.

There are some other notable applications of Visual Artists Rights Act (VARA), of which the property owners need to be aware.  Permitting artwork to be placed on property without the proper planning, can interfere with subsequent alterations to the building.

In Henderson v. Ziman, (2:14-cv-03042-SJO-AS) (C.D. California), artist Victor Henderson sued for damages for the destruction of the mural “Brooks Avenue Painting” that he helped paint in 1969:

His complaints were apparent resolved, and the case was dismissed about four months after filing.

In Cohen v. Wolkoff, 13-CV-05612 (FB) (E.D.N.Y) Wolkoff and four corporations owned a group of commercial buildings that over the years were “decorated” by many self-proclaimed aerosol artists.  To control this problem, Cohen approached Wolkoff and offered to become the curator of any future works that would be permitted to be painted on the walls.  Although the agreement’s precise terms remain disputed, Wolkoff orally agreed to this general bargain.  Under Cohen’s guidance, the quality of the aerosol art vastly improved, and the site became known as 5Pointz and evolved into a mecca for high-end works by internationally recognized aerosol artists:

Defendants decided to raze the buildings that were the canvas for the 5Pointz project in order to build two new condominium towers. While the plaintiffs were denied a preliminary injunction, the Court recently ruled on cross motions for Summary Judgment, and plaintiff’s claim for damages for the destruction of their art will go to trial.

 

Transformative Use or Infringement

In Cariou v. Prince, 714 F3d 694 [106 USPQ2d 1497] (2d Cir. 2013), the Second Circuit said that a use of a copyrighted work need not comment on the original artist or work, or on popular culture, in order to constitute “transformative” use that qualifies for fair-use defense.  All that is needed to qualify as a fair use, is that the new work alters the original with “new expression, meaning, or message.  Thus the Second Circuit reversed the district court judgment that Cariou’s photograph (left) was infringed by Prince’s “transformative” image (right).

Apparently intent on testing the lower limits of “transformation,” Richard Prince has continued with his appropriation style of artistry, and has been sued by two other photographers:

In Graham v. Prince et al, [1:15-cv-10160-SHS ] filed in the Southern District of New York on December 30, 2015, Graham complained about the reproduction of his photograph with a instragram-style border:

In Morris v. Prince et al., [2:16-cv-03924-RGK-PJW ] filed in the Central District of California on June 3, 2016, photograph Dennis Morris complained about the appropriation of a portrait he published in a book by Richard Prince:

In Salazar v. Prince et al., [2:16-cv-04282-MWF-FFM] filed in the Central District of California on June 15, 2016, model/makeup artist Ashley Salazar complained about the appropriation of a selfie she posted on instagram by Richard Prince:

In McNatt v. Prince et al, [1:16-cv-08896-SHS] filed in the Southern District of New York on November 16, 2016, McNatt complained about the reproduction of his photograph with a instragram-style border:

It hard to imagine that using almost an entire image and “framing” it with a few comments and graphics is “transformative,”  and we will have to wait to see what the courts say.  The Morris and Salazar cases have been dismissed by stipulation, the Graham and McNatt are still pending.

One wonders what upsets these plaintiff’s more, the fact that virtually their entire work is appropriated by someone, or the fact that that someone sells these “transformations” for as much as $100,000!

 

“Begun, the Clone War Has”

Hot on the “heels” of the Supreme Court’s decision in Star Athletica, LLC v. Varsity Brands, Inc., (2:17-cv-02523PUMA SE has sued Forever 21 in the Central District of California (or among other things, copyright infringement in making a product simulating  Puma’s CREEPER, FUR SLIDE, and BOW SLIDE sneakers.

Puma asserts its U.S. Patent No. D774,288 on the CREEPER sneaker:

Puma also asserts its trade dress rights in the CREEPER, as well as in the FUR SLIDE:

and the BOW SLIDE:

And last but not least, citing Start Athletica, Puma asserts copyrights in all three styles:

The asserted expansion of copyright protection to such such designs seems to be the exact thing that Justice Breyer was concerned about in his dissent in Star Athletica.  Are fuzzy flip flops really something worthy of a century or more of protection? Should competitors have to risk substantial awards of statutory damages and attorneys fees, as well as possible criminal penalties to satisfy consumer demand for a product.  As Justice Breyer said (quoting Thomas Jefferson), sometimes costs can outweigh the benefit even of limited monopoly.  Or, more ominously, as Yoda once said, “Begun, the clone wars has.”

 

 

 

 

Soft Kitty, Warm Kitty, Little Furry Plaintiff . . .

In Chase v. Warner Bros. Enetertainment, Inc., 1:15-cv-10063-NRB (March 27, 2017), Judge Buchwald of the Southern District of New York, granted Warner Bros. motion to dismiss a copyright infringement suit brought by the daughters and heirs of  Edith Newlin, author of the lyrics to Warm Kitty.  Plaintiff’s charged that the song Soft Kitty, popularized by The Big Bang Theory, infringed the copyright in Warm Kitty.

Unfortunately for plaintiff’s they could not prove ownership of the copyright.  While the song was published in an song book that was copyrighted, and the copyright in the collection was renewed, neither the author nor her successors renewed the copyright in the individual song, so their rights lapsed.

Plaintiffs were the victims of the complexities of the 1909 Copyright Act, which are still being felt more than 100 years later.  At least they have a nice, public domain song to comfort them.