AI, Face Swapping, and Right of Publicity
By Marie-Andrée Weiss
Last April, several plaintiffs filed a putative class action against NeoCortext, Inc., the developer of the Reface face swapping application, alleging that the application infringed their right of publicity.
NeoCortext moved to dismiss the complaint, claiming that plaintiffs’ right of publicity was preempted by the Copyright Act and barred by the First Amendment. NeoCortext also moved to strike the complaint, claiming that the suit was a strategic lawsuit against public participation (SLAPP) aiming at “gagging a novel application that enables users to engage in creative activities that are protected by the First Amendment.”
On September 5, 2023, U.S. District Judge Wesley L. Hsu denied both motions.
The case is Kyland Young v. NeoCortex Case 2:23-cv-02496-WLH-PVC.
The Reface app
Neocortext developed Reface, a smartphone application using an artificial intelligence algorithm which allowed users to replace their faces in photographs and videos with the faces of celebrities (“face swap”), to place their faces into scenes and movies and to “mix [their] face[s] with a celebrity.”
Users were able to search for their favorite characters or individuals in the catalog of images, movie and show clips, which was compiled from several websites, such as mybestgif.com, https://tenor.com/, Google Video, and Bing Video. Among the individuals featured in the catalog was one of the plaintiffs, Kylan Young, finalist of the 23rd Big Brother show on CBS.
Users could then upload a photograph featuring one or more human beings, and the app “swapped” the faces with the faces of individuals featured in the images or clip chosen by the user from Reface’s catalogue. NeoCortext offered a free version of the services, where the “face swap” image or video was watermarked with the Reface logo. The complaint referred to these watermarked images and clips as “Teaser Face Swaps.” A paying subscription to the app allowed the user to remove the watermark.
Does the app infringe plaintiff’s right of publicity?
The complaint alleged that the app allowed users to recreate Mr. Young’s scenes from Big Brother, but that NeoCortext never asked for his consent nor paid him any royalties and thus profited from Mr. Young’s likeness and that defendant used the likeness of plaintiffs in violation of California’s right of publicity “to pitch its product for profit.” Plaintiff argued that Teaser Face Swaps were “essentially ads intended to entice users to buy PRO subscriptions, and the paid PRO version of the applications makes money by including Californians in its library of content.”
California Right of Publicity Law
California recognizes a right of publicity at common law and also by statute, California Civil Code § 3344, which prevents the use without prior consent of a person’s name, voice, signature, photograph or likeness, in products, merchandise or goods, to advertise, sell, or solicit the purchase of goods or services.
To succeed, a plaintiff must allege that (1) the defendant’s used the plaintiff’s identity; (2) appropriated the plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; (3) defendant did not consent; and (4) injury resulted from this unauthorized use (see for instance Fleet v. CBS, Inc. at 1918).
The two Anti-SLAPP steps.
In its motion to strike the case, NeoCortext argued that the app allowed its users to create “humorous and sometimes absurd new works for personal use” and that “[t]his is exactly the type of creative activity that the First Amendment protects and that the right of publicity does not.”
There are two steps in an anti-SLAPP analysis, the second step being equivalent of the standard used by courts to evaluate a motion to dismiss.
First step:
The first step under California Anti- SLAPP law, Cal. Civ. Proc. Code § 425.16, was for NeoCortext to show that its use of Mr. Young’s image was made “in furtherance of [NeoCortext’s] right of petition or free speech… in connection with a public issue. Such speech can be conduct, including “all conduct in furtherance of the exercise of the right of free speech” (Lieberman v. KCOP Television, Inc., at 166).
Judge Hsu reasoned that the conduct at the basis of Mr. Young’s complaint was the inclusion of his image in the app, allowing users to create a new image. As such, it was the users who exercised their freedom of speech, not NeoCortext. Because the app is a tool that users can use to exercise their free speech rights, NeoCortext’s use of plaintiff’s image in the app was conduct taken in furtherance of users’ exercise of free speech.
Such speech is connected with a public issue under the test used by California courts as it is: a (1) statement concerning a person or entity in the public eye (Mr. Young); (2) a conduct that could directly affect a large number of people beyond the direct participants; (3) or a topic of widespread public interest (“the use of technology to alter images and videos of individuals in a way that makes them look realistic” is such topic).
NeoCortext had shown that its conduct is in furtherance of the right of free speech made in connection with a public issue, thus satisfying its burden on the first step of the anti-SLAPP analysis.
Second step:
Plaintiff therefore then carried the burden to show “a probability of prevailing on the claim”, the second step required by California Anti-SLAPP law, identical to the standard for the motion to dismiss, and it did so, leading Judge Tsu to deny both motions.
NeoCortext had argued, unsuccessfully as we will now see, that the Copyright Act and the First Amendment preempted the right of publicity claim.
Copyright Act does not preempt the right of publicity claim
NeoCortext had argued that, if a right of publicity claim is entirely based on the display, reproduction or modification of a work protected by copyright, the claim is preempted by the Copyright Act.
Section 301 of the Copyright Act preempts state laws equivalent to the exclusive copyright rights as detailed by Section 106 of the Copyright Act.
The Ninth Circuit uses a two-part test to determine if a state law claim is preempted by the Copyright Act :
- (1) the subject matter of the claim must fall within the subject matter of copyright as described in Section 102 and Section 103 of the Copyright Act and;
- (2) the rights asserted under state law must be equivalent to the exclusive right on copyrights works (such as the right to reproduce or the right to prepare derivative works) rights contained in Section 106 of the Copyright Act (see Maloney v. T3Media, Inc., at 1010).
NeoCortex had claimed that Plaintiff’s claim was within the subject matter of copyright, as the images and clips in Neocortext’s catalog were protected by copyright.
In Maloney, the Ninth Circuit Court of Appeals held :
“that a publicity-right claim is not preempted when it targets non-consensual use of one’s name or likeness on merchandise or in advertising. But when a likeness has been captured in a copyrighted artistic visual work and the work itself is being distributed for personal use, a publicity-right claim interferes with the exclusive rights of the copyright holder, and is preempted by section 301 of the Copyright Act.” (Maloney, at 1011, our emphasis).
NeoCortex’s argument relied further on Maloney which held that :
“…where a likeness has been captured in a copyrighted artistic visual work and the work itself is being distributed for personal use, a publicity-right claim is little more than a thinly disguised copyright claim because it seeks to hold a copyright holder liable for exercising his exclusive rights under the Copyright Act.” (Maloney, at 1016).
First part of the Ninth Circuit test: Plaintiffs’ right of publicity claim do not fall within the subject matter of copyright
Nothing that the Copyright Act protects ownership of photographs, but that it does not protect the exploitation of a person’s likeness, “even if it is embodied in a photograph”, citing the Ninth Circuit decision in Downing v. Abercrombie & Fitch, Judge Hsu found that “[plaintiff]’s right of publicity claim does not fall within the subject matter of copyright”. Judge Hsu distinguished the case from Maloney, where a photograph of the plaintiff, protected by copyright, had been sold. In contrast, the use of Mr. Young’s likeness was outside of the original work protected by copyright as it was used to create a product containing the plaintiff’s image. As plaintiff’s claim did not fall under the subject matter of copyright, it was not preempted by the Copyright Act.
Second part of the Ninth Circuit test: State law rights asserted are not equivalent to Section 106 rights
Judge Hsu also found that the second factor of the test failed, because Section 106 of the Copyright Act does not give the owners of the photographs the right to use plaintiff’s name and likenesses to advertise the free version of the app and to induce users to buy the subscription. Plaintiff was “not seeking to “merely” restrict the reproduction or distribution of the original photographs/works, as the plaintiffs in Maloney ….”
The rights asserted by plaintiff were not equivalent to the rights conferred by the Copyright Act to the owners of the photographs from the app catalog. Under the two-part test used by the Ninth Circuit, the claim was not preempted by the Copyright Act.
The First Amendment does not preempt the right of publicity claim
NeoCortext had also argued that the First Amendment preempted the claim, as users used the app to create “their own unique, sometimes humorous and absurd expressions” which are protected by the First Amendment. NeoCortext further argued that the photos and clips thus created had “creative and aesthetic value” and that they were “new works … distinct from the originals”.
California courts apply the “transformative use” test to balance right of publicity and First Amendment, detailed by the California Supreme Court in Comedy III Productions v. Gary Saderup, Inc. (at 142):
“In sum, when an artist is faced with a right of publicity challenge to his or her work, he or she may raise as affirmative defense that the work is protected by the First Amendment inasmuch as it contains significant transformative elements or that the value of the work does not derive primarily from the celebrity’s fame.” (Our emphasis).
NeoCortext had to show that its use was transformative as a matter of law. Judge Hsu found it had not done so, noting that plaintiff’s face “is the only thing that change in the end product” and that the body is sometimes unchanged, citing Hilton v. Hallmark Cards, where the Ninth Circuit found that a greeting card featuring the likeness of Paris Hilton, arguably more transformative than the swap images created the app, was not transformative enough to entitle the defendant to a First Amendment affirmative defense as a matter of law.
What is next?
On September 8, NeoCortex filed an appeal to the U.S. Court of Appeals for the Ninth Circuit.
There have already been several complaints alleging that an AI-powered product or service is infringing the copyright of authors whose works have been used to train the data models, but Young v. NeoCortext is one of the first cases were a product or service triggered by AI is allegedly infringing a right to publicity.
As such it is worthy of following further. To be continued…
I, Robot: The U.S. Copyright Office Publishes Guidance on Registration of Works Generated by AI
By Marie-Andrée Weiss
On March 16, 2023, the U.S. Copyright Office (USCO) published its Copyright Registration Guidance: Works Containing Material Generated by Artificial Intelligence(the Guidance).
Artificial Intelligence (AI) is now “capable of producing expressive material”. The USCO chose its words carefully: AI “produces” works, it does not “create” them. However, these works are “expressive materials”.
AI is now among us, but not in the shape imagined by Isaac Asimov, androids, such as Robbie, who is taking care of a little girl. AI is on our desktop and in our pockets, an app installed on our smart phone.
AI technology can be used to produce a work by first obtaining a large data set of preexisting works, using this data set to “train” and then “use inferences from that training to generate new content.” Such content can be a text, an image, or an audio. The USCO mentioned in the Guidance that it would later this year publish a notice of inquiry about how law should address the use of works protected by copyright in the data set.
The USCO mentioned two recent cases raising the issues of whether a work created using an AI program can be protected by copyright: “Entrance to Paradise”, pictural work, and Zarya of the Dawn, a comic book which images were created by AI while a human authored the text. Are the works thus produced protectable by copyright?
An Entrance to Paradise
Dr. Stephen Thaler created A Recent Entrance to Paradise, the image of an abandoned train tracks framed by wisterias, using an AI program it called the “Creativity Machine” that he had created and programmed.
Dr. Thaler sought to register its copyright in November 2018 but the USCO denied registration in August 2019, because the Office has a “Human Authorship Requirement” policy. Dr. Thaler filed two requests for reconsideration which the USCO both denied. Dr. Thaler filed a suit against the USCO in June 2022, claiming that “the denial creates a novel requirement for copyright registration that is contrary to the plain language of the Copyright Act…, contrary to the statutory purpose of the Act, and contrary to the Constitutional mandate to promote the progress of science.” The denials are subject to judicial review under the Administrative Procedure Act, 5 U.S.C. § 704.
On January 10, 2023, Dr. Thaler filed a motion for summary judgment, arguing that “the plain language of the Copyright Act… does not restrict copyright to human-made works, nor does any case law.” The work is fixed, visual artwork. As explained in 1991 by the Supreme Court of the U.S. (SCOTUS) in Feist Publications, Inc. v. Rural Telephone Service Company “To qualify for copyright protection, a work must be original to the author”, which means that the work must be independently created by the author and must possess at least some minimal degree of creativity.
Dr. Thaler also argued that “courts have referred to creative activity in human-centric terms, based on the fact that creativity has traditionally been human-centric and romanticized.”
Alternatively, Dr. Thaler argued that he owns the copyright in “A Recent Entrance to Paradise” because the work for hire ownership originally vested in him because he invented and owns the Creativity Machine and its outputs automatically vest in him.
Zarya of the Dawn
Kristina Kashtanova, created a comic book, Zarya of the Dawn, using an AI program to illustrate it. She sought to register its copyright and was successful at first, but the USCO then canceled the certificate and issued a new one protecting only the text of the comic book and the selection, coordination, and arrangement of its written and visual elements. However, the images created by AI were not protectable because they “are not the product of human authorship.” The letter of the USCO cited Burrow-Giles Lithographic Co. v. Sarony, a 1884 case where SCOTUS explained that photographs, still a technological novelty at the time, were protected by copyright because they were “representatives of original intellectual conceptions of the author.” SCOTUS defined authors in Burrow-Giles as “he to whom anything owes its origin; originator; maker; one who completes a work of science or literature.” But the Court explained that if photography was a “merely mechanical” process …with no place for novelty, invention or originality” for the photographer, then the photographs could not be protected by copyright.
The USCO explained in its letter about Zarya of the Dawn that even if Ms. Kashtanova claimed to have “guided” the structure and content of the comic images, it was the AI program, not her, “that originated the “traditional elements of authorship” in the images.”
Public guidance on the registration of works containing AI
These two cases show that works can be entirely protected by AI or only partially. The purpose of the Guidance is to provide the public (and its attorneys!) if seeking to register works containing content generated (not created!) by AI.
In the Guidance, the USCO explained that it evaluated whether works containing human authorship combined by uncopyrightable material generated by or with assistance of technology by assessing if technology was an “assisting instrument” or if the work was conceived by it. In the case of AI, the USCO explained that it “will consider whether the AIA contributions containing AI-generated are the result of “mechanical reproduction “or instead an author’s “own original mental conception, to which [the author] gave visible form”, and that this would assessed case by case.
If the AI receives solely a prompt from a human being, the work cannot be protected by copyright, as it is the human being does not have creative control over how the AI system interprets the prompt and generate the work, and that the prompts are more like instructions to a commissioned artist.
If a work contains AI-generated material and sufficient human authorship, it can be protected by copyright, for instance, if a human being selects and arranges AI-generated materials in a way original enough to be protectable.
Public guidance on the registration of works containing AI
Does the Copyright Act indeed require human authorship?
The USCO cited Burrow-Giles in its Guidance to support its view that authors must be human and also cited the Ninth Circuit Urantia Found. v. Kristen Maahera case, where the court held that a book, which both parties believed was “authored by celestial beings and transcribed, compiled and collected by mere mortals.” The defendant in this copyright infringement suit claimed that the book was not protected by copyright, because it was not authored by a human being and thus not a “work of authorship” within the meaning of the Copyright Act.
However, the Ninth Circuit noted that “[t]he copyright laws, of course, do not expressly require “human” authorship, and considerable controversy has arisen in recent years over the copyrightability of computer-generated works”. In this case, the Court noted that the Copyright Act was not intended to protect “creations of divine beings” and that “in this case some element of human creativity must have occurred in order for the [b]ook to be copyrightable.”
If the Copyright Act does not require human authorship, but refuses to accept that “divine beings” can be the author, and case law states that a monkey, human beings’ closest cousin, cannot be an author within the meaning of the Copyright Act (Naruto v. Slater, a case from the United States District Court, Northern District of California previously discussed in the TTL Newsletter), will robots ever be able to claim authorship of a work? Such works are already winning prizes at art fairs, such as Théâtre D’opéra Spatial, created using AI, which won first prize at the Colorado State Fair’s digital arts competition.
If works created by AI cannot be protected by copyright, the incentive to develop such technology may be lacking. We are likely to see more and more works crated by humans using elements created by AI, and the border between elements crated by human beings or by machines blurring more and more.
When Faux-Fur Birkin Bags Blur a Famous Mark in the Metaverse
By Marie-Andrée Weiss
A year ago, this blog reported about the Hermès v. Rothschild case, a trademark infringement suit filed by French fashion house Hermès against artist Mason Rothschild.
Rothschild had created in December 2021 the MetaBirkins series, a series of 100 non-fungible tokens (NFTs) featuring digital images of blurry Birkin Hermès bags covered in fake fur. The NFTs, which are retaining digital records of ownership of the images on a blockchain, sold “for prices comparable to real-world Birkin handbags” as noted by Judge Jed S. Rakoff, from the U.S. District Court for the Southern District of New York (SDNY), in his May 18, 2022 Order, denying Rothschild’s motion to dismiss.
On December 30, 2022, Judge Rakoff denied the parties’ cross motions for summary judgment, with opinion to follow.
Plaintiff and Defendant had both asked the Court to answer two questions:
- Should the MetaBirkins be evaluated using the two-part Rogers v. Grimaldi test used when evaluating trademark infringement in artistic works or the Gruner + Jahr test used for general trademark infringement?
- Whichever test is applied, do the MetaBirkins dilute the Hermès’ BIRKIN trademarks?
Judge Rakoff published his opinion on February 2, 2023. He reaffirmed, as he did in his May 18, 2022 Order, that the trademark infringement claim should be assessed under the Rogers v. Grimaldi test. However, as genuine issues of material fact remained, the second question had to be answered by a jury, who had to decide whether Rothschild’s decision to focus the series on the Birkin bag was made for artistic expression purposes or merely to use the BIRKIN trademark.
The Rogers test
Under the Rogers test, there is no trademark infringement if defendant uses a mark as the title of an expressive work, or as part of the expressive work if use of the trademark (1) does not have any artistic relevance whatsoever to the underlying work and (2) is not explicitly misleading.
For Judge Rakoff, the Rogers test must be used in this case because:
“Rothschild’s use of Hermès’ marks did not function primarily as a source identifier that would mislead consumers into thinking that Hermès originated or otherwise endorsed the MetaBirkins collection, but rather as part of an artistically expressive project.”
Judge Rakoff reasoned that the title “MetaBirkins” refered to both the NFT and the digital images with which it is associated and that “MetaBirkins” did not, as argued by Hermès, refer only to the NFTs “separate and apart from the digital images” of the faux-fur bags. The NFTs are artistic expression.
Judge Rakoff noted further that Rothschild “viewed the project as a vehicle to comment on the Birkin bag’s influence on modern society”, stating in an interview that the series was “an experiment to see if [he] could create that same kind of illusion that [the Birkin bag] has in real life as a digital commodity”, and that he had decided to cover the bag in fake fur “to introduce “a little bit of irony” to the efforts of some fashion companies to “go fur-free.” Indeed , the artist wrote that the series“ inspired by the acceleration of fashion’s “fur free” initiatives and embrace of alternative textiles.”
While an artistic expression, the First Amendment could not be a defense. Judge Rakoff quoted the Second Circuit Twin Peaks Prods., Inc. v. Publications 1993 case which held that even if a trademark’s use bears “some artistic relevance” to an underlying artistic work, such use is not protected by the First Amendment if it “explicitly misleads as to the source or the content of the work.”
The Second Circuit noted in Twin Peaks that ”the finding of likelihood of confusion must be particularly compelling to outweigh the First Amendment interest recognized in Rogers” and that the Polaroid factors must be applied to determine whether or not there is likelihood of confusion and thus trademark infringement.
Judge Rakoff explained that “the most important difference between the Rogers consumer confusion inquiry and the classic consumer confusion test is that consumer confusion under Rogers must be clear and unambiguous to override the weighty First Amendment interests at stake.”
The Rogers test was indeed used by a federal jury to determine whether or not the MetaBirkins infringed Hermès’ trademarks, but, following a six-day trial, a jury found on February 14, 2023, that Rothschild was liable on the claims of trademark infringement, trademark dilution, and cybersquatting, that the First Amendment was not a defense, and awarded Hermès $133,000 in damages.
Trademark dilution and blurring
Hermès had also claimed trademark dilution and blurring, which refers to use of a famous trademark in a way which dilutes such famous mark by blurring or tarnishment. A famous mark is defined by the Trademark Dilution Revision Act (TDRA) as widely recognized by the general U.S. consuming public as a designation of source of the mark owner’s goods or services.
The jury found that the BIRKIN mark was blurred by Rothschild’s by blurring the distinctiveness of the famous BIRKIN mark and diminished its capacity to identify and distinguish Hermès’ goods and services, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.
Cybersquatting
The jury also held in favor of Hermès, which had claimed that the <metabirkins.com> domain name was cybersquatting. To prevail on a cybersquatting claim, Hermès had to prove (1) that the BIRKIN mark was distinctive at the time <metabirkins.com> was registered; (2) that the <metabirkins.com> domain name is identical to, or confusingly similar to, Hermes’ s BIRKIN mark; and (3) that Rothschild had a bad faith intent to profit from the BIRKIN mark.
The court’s instructions to the jury explained that when determining whether Rothschild acted in bad faith on this claim, the jury had to consider whether the artist used the domain name in connection with the offering of any goods or products and whether he “intended to divert consumers from the mark owner’s online location to a site that could harm the goodwill represented.”
Trademarks, symbols and humor
While the primary function of a trademark is to indicate the source or a product or service, some trademarks have become symbol and are used by consumers to provide a desired cachet, one of luxury and exclusivity in the case of the BIRKIN trademark.
The Birkin bag created by Hermès was named after actress and singer Jane Birkin. While expensive, they sell well: as noted by Judge Rakoff in its February 2, 2023, opinion, since 1986, Hermès has sold over $1 billion worth of Birkin handbags in the United States, $100 million dollars’ worth in the past ten years. Both parties recognized that it is a “symbol of wealth and exclusivity.”
The MetaBirkins sold in total over $1.1 million through June 2022 and it is likely that at least some bought them as symbol of their wealth, taste, and sense of irony. However, unlike in the case of Jack Daniel’s Properties, Inc. v. VIP Products LLC, a case about dog chew toys resembling Jack Daniels bottles, the use of the BIRKIN mark was not humorous.
The Jack Daniel case is currently pending at the Supreme Court of the United States, which will soon answer the question whether humorous use of another’s mark as one’s own on a commercial product is “noncommercial” under 15 U.S.C.§ 1125(c)(3)(C), and thus bars as a matter of law a claim of dilution by tarnishment under the TDRA. We will keep you posted.
“Royale with Cheese” – Copyright Issues Related to NFTs in Miramax v. Tarantino
By Sebastian Pech
Recently, non-fungible tokens (NFTs) have received a lot of attention owing to some spectacular digital art sales. Thereupon, several artists have started selling their work in the form of NFTs, including the award-winning filmmaker Quentin Tarantino, who was later sued by the film production company Miramax. This contribution analyses the copyright issues surrounding NFTs that emerge from the lawsuit.
I. Details of the Lawsuit
In November 2021, Quentin Tarantino, in collaboration with Scrt Labs, announced that he would auction off seven different parts of the handwritten screenplay of the 1994 blockbuster Pulp Fiction in the form of NFTs.[1] The so called “Private NFTs” provide their owners with specific privacy features, especially “content viewable only by the owner of the NFT”.[2]
Shortly after the announcement of the Tarantino NFT Collection, Miramax sued Tarantino in the Central District of California for breach of contract, copyright infringement, trademark infringement, and unfair competition.[3]
In 1993, Tarantino hadgranted Miramax “all rights (including all copyrights and trademarks) in and to [Pulp Fiction] (and all elements thereof in all stages of development and production) now or hereafter known”.[4] However, Tarantino expressly reserved some rights, namely the “soundtrack album, music publishing, live performance, print publication (including without limitation screenplay publication, ‘making of’ books, comic books and novelization, in audio and electronic formats as well, as applicable), interactive media, theatrical and television sequel and remake rights, and television series and spinoff rights”.[5]
Miramax argues that selling parts of the screenplay in the form of NFTs violates its right to create derivate works set forth in § 106(2) Copyright Act.[6] Tarantino, on the other hand, claims that he did not grant Miramax any rights to the screenplay[7] and even if this should be the case, he was acting within his reserved rights, especially the right to print publication.[8]
In January 2022, the first NFT based on a scene where the movie’s protagonists Jules and Vincent are talking about life in Europe and in particular the French term for a “quarter pounder with cheese” (“royale with cheese”) was sold for $1.1 Million.[9]
Only a few days later, the sale of the other six scenes was indefinitely postponed due to “extreme market volatility”.[10] This gave rise to speculations ranging from fear of the pending litigation and insufficient demand from buyers to technical problems.[11]
In September 2022, the lawsuit ended by a surprising settlement between Miramax and Tarantino,[12] shortly after the parties had informed the court that previous negotiations had failed.[13]
II. NFTs in a Nutshell
Tokens are digital representations of assets on the blockchain. A blockchain is a highly tamper-resistant and transparent database. The term “token” is often used as a synonym for cryptocurrency, but a token can represent any form of economic value, such as commodities, real estate, company shares, or copyright protected works. Tokens can be bought and sold using blockchain-based “smart contracts,” which are computer programs that execute transactions and enforce contractual terms automatically.
Fungible and non-fungible tokens are distinct from each other. Fungible tokens are interchangeable with other tokens. Cryptocurrencies, such as Bitcoin, are examples of fungible tokens. Every unit of Bitcoin is equivalent to another and has the same value. By contrast, a non-fungible token (NFT) is unique and thus not replaceable by other tokens.
Due to this feature, NFTs are used to represent unique assets on the blockchain, especially (digital) art or, in the present case, parts of a screenplay. Associating assets with an NFT allows authors, collectors, and owners to document and verify the provenance of the asset in question. In summary, an NFT can be best described as a forgery-proof certificate that confirms the ownership of a specific asset and/or the rights with respect to the said asset.
III. Analysis of the Copyright Issues Related to NFTs
Creating (or “minting”) an NFT for a copyright protected work does not, in most cases, lead to a reproduction of the work in the sense of § 106(1) Copyright Act. A reproduction requires a copy of the work which is defined under § 101 Copyright Act as a “material object[…] in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device”.[14] Since storing information on a blockchain is very expensive, in most cases no copy of the work itself, but only its digital representation is saved on the blockchain, comprising data identifying the underlying work, specifically a hyperlink pointing to a file stored somewhere on the web.
In the case of the Tarantino NFT Collection, it is not entirely clear whether the digital version of the screenplay is saved on the blockchain or “off-chain”. The definition of a “Secret NFT” in the terms and conditions for the sale as “a Non-Fungible Token minted on the Secret blockchain network containing a digital file of a Publication”[15] indicates that it is indeed stored on the blockchain. However, Scrt Labs’ description of a “Secret NFT” on its website only mentions metadata and links to files, not works themselves stored on the blockchain.[16] Due to the high costs associated with saving high-resolution scans on the blockchain, storage “off-chain” is far more likely.
The right to prepare derivative works based upon the copyrighted work (§ 106(2) Copyright Act) is not infringed either. A derivative work has to “contain[…] a substantial amount of material” from the preexisting work,[17] as it is the case with “translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted”.[18] Metadata which contains information about a work, such as a hyperlink, cannot be considered a substantive part of that work.
Furthermore, the distribution right set forth in § 106(3) Copyright Act is also not violated, because the sale of the NFT does not affect the work as such, but only its representation on the blockchain. In Perfect 10 v. Amazon, the Ninth Circuit held that posting a hyperlink to a work on the Internet is not distribution of the work because the person who provides the link just enables others to access the work but does not “own” the work by hosting it on his server.[19]
Therefore, in the Copyright Act, there is no exclusive right of the copyright owner to create an NFT. This is a reasonable result since an NFT serves as a certificate of ownership of the underlying asset. No one would suggest that creating an equivalent certificate for traditional art, such as an oil painting or a marble sculpture, could constitute a copyright infringement.
As a result, for minting an NFT, it is irrelevant whether Tarantino assigned the rights to the screenplay to Miramax or whether an NFT creation for the screenplay is covered by Tarantino’s reserved rights, for example the right to publication.
Conversely, making scans of the screenplay and storing them on a server is a reproduction in the sense of § 106(1) Copyright Act. In addition, selling these scans to the public constitutes distribution in the sense of § 106(3) Copyright Act. In dealing with these actions, it is indeed relevant whether Tarantino kept the rights to the screenplay, or at least the publication rights. However, this has nothing to do with NFTs; rather, it is a question of interpreting the contract between Miramax and Tarantino.
IV. Conclusion
From a legal perspective, the lawsuit’s crux revolves around the question of how the contract between Tarantino and Miramax is to be interpreted, and not the fact that the screenplay was sold in the form of an NFT. However, since the lawsuit ended in a settlement, it will be unknow whether the court would nevertheless have made any comments on the copyright issues with respect to NFTs discussed here.
[1] Quentin Tarantino Revealed as Iconic Artist Behind First-Ever Secret NFTs, Showcasing Never-Before-Seen Work Revealed Only to NFT Owner, Globe Newswire (Nov. 2, 2021), https://www.globenewswire.com/news-release/2021/11/02/2325448/0/en/Quentin-Tarantino-Revealed-as-Iconic-Artist-Behind-First-Ever-Secret-NFTs-Showcasing-Never-Before-Seen-Work-Revealed-Only-to-NFT-Owner.html.
[2] Id.
[3] Miramax, LLC v. Tarantino, 2:21-cv-08979-FMO-JC (C.D. Cal. 2021).
[4] Complaint at 24, Miramax, LLC v. Tarantino, 2:21-cv-08979-FMO-JC (C.D. Cal. 2021).
[5] Id.
[6] Id. at 17.
[7] Notice of Motion and Motion for Judgement on the Pleadings at 14, Miramax, LLC v. Tarantino, 2:21-cv-08979-FMO-JC (C.D. Cal. 2021).
[8] Id. at 17.
[9] SCRT Labs Announces Triumphant Sale of First Never-Before-Seen-Or-Heard Tarantino NFT for $1.1 Million, Business Wire (Jan. 24, 2022), https://www.businesswire.com/news/home/20220121005513/en/SCRT-Labs-Announces-Triumphant-Sale-of-First-Never-Before-Seen-Or-Heard-Tarantino-NFT-for-1.1-Million.
[10] @LegendaoNFT, Twitter (Jan. 28, 2022, 9:59 PM), https://twitter.com/LegendaoNFT/status/1487168591556456448.
[11] Eduardo Próspero, What Happened To Tarantino ’s “Pulp Fiction” NFT Collection? The Strange Finale, NewsBTC, https://www.newsbtc.com/crypto/what-happened-to-tarantino-s-pulp-fiction-nft-collection-the-strange-finale/ (last visited Sept. 9, 2022).
[12] Notice of Settlement at 1, Miramax, LLC v. Tarantino, 2:21-cv-08979-FMO-JC (C.D. Cal. 2021).
[13] Edvard Pettersson, Tarantino, Miramax settle lawsuit over ‘Pulp Fiction’ screenplay NFTs, Courthouse News Service (Sept. 8, 2022), https://www.courthousenews.com/tarantino-miramax-settle-lawsuit-over-pulp-fiction-screenplay-nfts/.
[14] 17 USC § 101.
[15] Secret NFT Purchase and License Agreement, Tarantino NFTs, https://tarantinonfts.com/terms (last visited Sept. 14, 2022).
[16] See Secret NFTs, Secret Network, https://scrt.network/about/secret-nfts (last visited Sept. 14, 2022).
[17] Twin Peaks Prods. v. Publ’ns Int’l, Ltd., 996 F.2d 1366, 1373 (2d Cir. 1993).
[18] 17 USC § 101.
[19] See Perfect 10, Inc. v. Amazon.Com, Inc., 508 F.3d 1146, 1162 (9thCir. 2007).
What Would Lady Whistledown Say? Prince, Warhol and the Duke (of Hasting)
By Marie-Andrée Weiss
Fair use is a statutory exception to copyright infringement. The Copyright Act, 17 U.S.C. § 107, identifies four factors which may be considered by the courts when determining whether an unauthorized use of a work protected by copyright was fair: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect on the potential market for or value of the copyrighted work.
The first factor, the purpose and character of the use, has been interpreted in 1994 by the Supreme Court of the United States (SCOTUS), in Campbell v. Acuff-Rose Music, Inc., as requiring that the use is transformative, meaning that the new work “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message” (Campbell, at 579).
SCOTUS revisited its fair use doctrine last year, holding in Google v. Oracle that Google’s copying of the Java SE AP was a fair use of that material as a matter of law, finding Google’s use to be “transformative” as it sought “to expand the use and usefulness of Android-based smartphones […] offer[ing] programmers a highly creative and innovative tool for a smartphone environment” and being as such a use “consistent with that creative “progress” that is the basic constitutional objective of copyright itself”, citing Feist Publications, Inc. v. Rural Telephone Service Co., at 349-350:
“The primary objective of copyright is not to reward the labor of authors, but `[t]o promote the Progress of Science and useful Arts'”.
Indeed, Article I, Section 8, Clause 8, of the United States Constitution grants Congress the power “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
Now SCOTUS has an opportunity to rule further on what use is transformative and thus, as an upcoming case is likely to influence fair use case law in the upcoming years.
Fair use and Prince: the Andy Warhol case
The Southern District Court of New York (SDNY) found in 2019 that the Prince Series created by Andy Warhol from a photograph of musical artist Prince, taken in 1981 by professional photographer Lynn Goldsmith, was transformative.
Goldsmith’s agency had licensed the photograph to Vanity Fair magazine in 1984 to be used as an artist reference to create an illustration. This artist was Andy Warhol, who created not only the illustration commissioned for the magazine, but also fifteen additional works, the sixteen works series now known as the Prince Series.
Goldsmith was not aware of the Prince Series, only learning about it after Prince’s death in 2016, when Vanity Fair published on the cover of its tribute issue to Prince a work from the Prince Series different from the one originally commissioned by Vanity Fair. The work had been licensed to Vanity Fair by the Andy Warhol Foundation for the Visual Arts (AWF), which owns the copyright in the Prince Series.
AWF sued Goldsmith for a declaratory judgment of non-infringement. The Southern District Court of New York granted summary judgment to AWF, finding that the Prince Series was transformative, noting that that photograph taken by Goldsmith portrayed Prince as “not a comfortable person” and a “vulnerable human being,” while Warhol’s Prince Series portrayed him as an “iconic, larger-than-life figure.”
The United States Court of Appeals for the Second Circuit, held, however, that the use was not transformative. AWF successfully petitioned to have the case heard by SCOTUS, which will hear next month the Andy Warhol Foundation for the Visual Arts, Inc., v. Lynn Goldsmith case, answering petitioner’s question:
Is a work of art “transformative” when it conveys a different meaning or message from its source material, a view taken by the U.S. Court of Appeals for the Ninth Circuit, or should a court be forbidden to consider the meaning of the derivative work where it “recognizably deriv[es] from” its source material, as held by the Second Circuit Court of Appeals?
Fair use and the Duke (of Hastings): the Unofficial Bridgerton Musical case
AWF noted in its petition that it is the legality of the Prince Series which is the issue of the case. Fair use is the somewhat elusive concept allowing thousands of new works to be created each year, including many works created by “fans”.
Abigail Barlow and Emily Bear (“Barlow & Bear”) are fans of the Netflix series Bridgerton. They are also Grammy® award winners for their work, the Unofficial Bridgerton Musical. The work, first developed in real time on the social media platform TikTok on the premise “but what if Bridgerton was a musical?” found viral fame online, leading to a full album which won the 2021 Grammy® for Best Musical Theater Album.
Barlow & Bear performed their work on July, 28 2022 at the Kennedy Center in Washington D.C. in front of a sold-our audience. This concert appeared to have been the proverbial last drop for Netflix, which filed a copyright infringement suit against the two musicians two days later, in the United States District Court for the District of Washington. Barlow & Bear were set to play at the Royal Albert Hall in London on September 20, 2022, but the show has been cancelled.
Netflix does not view these endeavors as fan fiction but argues that the Unofficial Bridgerton Musical “stretches “fan fiction” well past its breaking point. It is blatant infringement of intellectual property rights.” Netflix alleges that some of the lyrics copy “verbatim” the dialogue of the show, for instance, in the opening number “Tis the Season,” which allegedly copies the opening scene of the first episode of the series, using the character, the setting (Grosvenor Square, London, in 1813), “while also incorporating substantial dialogue verbatim. For instance, both works include the following dialogue regarding the setting and plot, spoken by Lady Whistledown: “Grosvenor Square, 1813. Dearest reader, the time has come to place our bets for the upcoming social season. Consider the household of the Baron Featherington.”
Netflix further argues that Netflix has exclusive right to authorize derivative works based on the series. While the Bridgerton actors are dressed in costumes fit for characters living in 1813 London, the show features contemporary music played by classical musicians, such as Ariana Grande’s thank u, next, played by the Vitamin String Quartet. Netflix may have plans to create its own Bridgerton musical, and the quality of the Unofficial Bridgerton Musical may well have a significant effect on the potential market or value of an official Bridgeton musical, the fourth fair use factor.
This case reflects the tension created by copyright between the need to “reward the labor of authors” as an incentive to create more works, which in turn benefits the public while “promot[ing] the Progress of Science and useful Arts” and the need for an exception to copyright, allowing some derivative works to be fair, even if using original works without permission, which also benefit the public and “promotes the Progress of Science and useful Arts”
There is no doubt that Barlow & Bear’s music is creative, delights many members of the public, and that the two musicians have likely a long and successful career ahead of them (their latest creation is Mexican Pizza The Musical, created for Taco Bell and featuring… Dolly Parton.)
The Unofficial Bridgerton Musical is hardly the only “TikTok musical” and is not even the only TikTok musical to have gained fame outside of the social media platform. Ratatouille the Musical is a work created collaboratively with multiple TikTok users during the first phase of the pandemic, which was then presented online as a way to raise money for The Actor Fund, at the time where the closure of theaters prevented actors to make a living. The musical is a derivative work of the Walt Disney Ratatouille movie, but no legal threat was made against it.
The defendants in Unofficial Bridgerton Musical have not filed an answer. If the parties do not settle, the ultimate outcome of the case is likely to be influenced by the 2023 SCOTUS decision in the Andy Warhol Foundation for the Visual Arts, Inc., v. Lynn Goldsmith case and a possible new “transformative use as fair use” test.
Will Prince help the Duke?
Not For Trademark : Hermès Claims MetaBirkin NFTs Are Infringing
By Marie-Andrée Weiss
On January 14, 2022, Hermès filed a trademark infringement suit against artist Mason Rothschild, claiming that by selling “MetaBirkins” NFTs, Rothschild infringes and dilutes the HERMÈS trademark. Defendant filed a motion to dismiss on February 9, claiming that the First Amendment gives him the right to sell the NFTs. The case is Hermès International, et al. v. Mason Rothschild, 1:22-cv-00384 (SDNY).
NFTs (non-fungible tokens) are unique digital assets. Their authenticity and uniqueness are guaranteed by a blockchain from their creation through transfer of ownership, as the blockchain also record the transfers. As such, NFTs are suited to the art market, and NFTs are popular and sometime expensive. A NFT created by digital artist Beeple sold in auction in March 2021 for 69 million USD.
Hermès is a luxury house having its headquarters in Paris. One of its most famous sacs is the Birkin, named after British actress and singer Jane Birkin. The Birkin bag is a bigger version of the Kelly Bag, itself named after Grace Kelly, the American actress who became Princess of Monaco.
Mason Rothschild is an artist living in California. Last May, he created a “Baby Birkin” NFT, the digital image of a 40-week-old fetus gestating inside a Hermès Birkin bag. The NFT originally sold for 23,000 USD and was resold for 47,000 USD. Rothschild then created the MetaBirkins.com website, which features and sells “a collection of 100 unique NFTs created with faux fur in a range contemporary color and graphic executions.” The complaint alleges that Mason Rothschild “first began advertising the METABIRKINS NFTS under The METABIRKINS trademarks on December 2, 2021, at Art Basel Miami.
A BIRKIN bag may be considered by some as a work of art, at least as a highly collectible item: a bag made from crocodile skin sold at auction in 2016 for HKD 2,320,000 (more or less USD 300,000.00). MetaBirkins are valuable as well: one sold in February 2022 for 3.5 Ether, that is, more or less USD 10,500.
The C&D letter
On December 16, 2022, Hermès International sent a Cease-and-Desist letter (C&D) to Mason Rothschild and carbon copied the OpenSea platform, on which the NFTs were sold. Hermès asked the artist to cease using commercially the Hermès trademarks. Indeed, Hermès owns, among others, U.S. trademark registrations for HERMÈS, BIRKIN, and for the configuration of the Birkin handbag.
The C&D claimed that Mason Rothschild was identifying the NFTs he is selling by using the BIRKIN trademark and that he “employ(s) the HERMÈS trademark to advertise and promote the sale of the Birkin NFTs…”. Hermès also claimed that this use of the marks may dilute them.
After receiving the C&D, as alleged in the complaint, the MetaBirkins.com website was updated to add a disclaimer stating: “We are not affiliated, associated, authorized, endorsed, or in any way officially connected with HERMES, or any of its subsidiaries or affiliates. The official HERMES website can be found at https://www.hermes.com.” The complaint alleges that the disclaimer “unnecessarily” linked to the official Hermes website and “capitalizes the HERMÈS mark” and that “Defendant’s uses of the HERMÈS Mark in conjunction with his uses of the BIRKIN Mark, and the display of the METABIRKINS bags, serves only to create a confusing impression among consumers as to the Hermès’ sponsorship of the METABIRKINS NFTs or the METABIRKINS website.”
In its complaint, Hermès described Defendant as “a digital speculator who is seeking to get rich quick by appropriating the brand METABIRKINS for use in creating, marketing, selling and facilitating the exchange of [NFTs]”.
Hermès claimed that the name MetaBirkin is formed by merely adding “the generic prefix “meta” to the famous trademark Birkin.” Hermès has not registered METABIRKIN as a trademark. Other companies have filed trademark registration applications for trademarks protecting their marks in the meta universe, such as McDonald’s who filed in February 2022 several meta-related trademarks (for instance, MCDONALD’s in Class 43 for “Operating a virtual restaurant featuring actual and virtual goods, operating a virtual restaurant online featuring home delivery”).
The motion to dismiss
On February 9, 2022, Mason Rothschild filed a motion to dismiss, arguing that the trademark infringement claim must be dismissed under Rogers v. Grimaldi. In this case, the Second Circuit held that the Lanham Act must be broadly interpreted in cases when the allegedly infringing product is an artistic expression. Under Rogers, the Lanham Act:
“should be construed to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression. In the context of allegedly misleading titles using a celebrity’s name, that balance will normally not support application of the Act unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.”
First prong of the Rogers test: artistic relevance
The motion to dismiss argues it does, pointing out that the bags are “depicted as fur covered… [to] commen[t] on the animal cruelty inherent in Hermès’manufacture of its ultra-expensive leather handbags” and further argues that “[t]he First Amendment guarantees [Defendant]’s rights to respond in the marketplace of ideas to the inescapable corporate brand message by which we are bombarded every day, virtually everywhere we look.”
Before Hermès filed its suit, Mason Rothschild had posted on social media a response to both Hermès and Open Sea, writing that “… the First Amendment gives [him] every right to create and based on [his] interpretations of the world around [him].” He also argued that the NFTs he sells “are also a commentary on fashion’s history of animal cruelty, and its current embrace of fur-free initiatives and alternative textiles.” Jane Birkin had asked Hermès a few years ago to stop using her name for the bag after a video released by People for the Ethical Treatment of Animals showing reptiles being skinned or sawed open alive on farms which supplied luxury brands, including Hermès. The parties settled after Hermès showed that the incident was a unique occurrence.
The motion to dismiss argues that the NFTs are “depicted as fur covered… [to] commen[t] on the animal cruelty inherent in Hermès ’manufacture of its ultra-expensive leather handbags” and further argues that “[t]he First Amendment guarantees [Defendant]’s rights to respond in the marketplace of ideas to the inescapable corporate brand message by which we are bombarded every day, virtually everywhere we look.” As such, the Metabirkins could also be considered a parody. The motion to dismiss cites the SDNY Vuitton v. My Other Bag case, where the court found that fabric totes with drawings of famous bags were not infringing nor diluting the Louis Vuitton marks, as they were a parody. Hermès was not a plaintiff, but could have been, as one tote showed a drawing of the Hermès Kelly bag.
Second prong of the Rogers test: not explicitly misleading as to the source
The second prong of the Rogers test is determining whether use of the mark is not explicitly misleading as to its source. The Rogers case was about the title of the Fellini movie Ginger and Fred. The Second Circuit distinguished cases where the title of the product would be an endorsement, giving as example “Jane Fonda’s Workout” (the case is from 1989…). Such titles would be protected by the Lanham Act. However, as explained by the Second Circuit, “Many titles… include a well-known name without any overt indication of authorship or endorsement — for example, the hit song “Bette Davis Eyes,” and the … film “Come Back to the Five and Dime, Jimmy Dean, Jimmy Dean.” Defendant argues that the website clearly identifies that the MetaBirkins are works of art.
Rogers would likely guarantee the motion to dismiss to be granted if Jane Birkin, not Hermès, was the Plaintiff, or if the case would have been filed in the Ninth Circuit. The Ninth Circuit adopted Rogers in its Barbie Girl case, and extending it beyond mere title, as explained in Mattel, Inc. v. MCA Records. In VIP Products v. Jack Daniel’s Properties, the Ninth Circuit held in 2020 that chewy dog toys “Bad Spaniels Silly Squeaker” in the shape of a bottle of Jack Daniel’s Old No. 7 Black Label Tennessee Whiskey were not infringing.
Defendant argues that his images “show luxury with no function but communication, luxury emptied of anything but its own image, calling into questions what it is that luxury lovers actually pay for.” It is an interesting argument but may be weaker because of the nature of the goods protected by the Hermès marks. When trademarks are used logos, used prominently and externally on the product, they may have very well “no function but communication.” Hermès bags are made by highly trained artisans, by hand, and thus the Hermès marks indicate what “luxury lovers actually pay for.”
What if a similar lawsuit would be filed across the Atlantic?
The lawsuit was filed in the U.S., where the Birkin handbag cannot be protected by copyright, because it is a useful article, defined by Section 101 of the Copyright Act as “an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information”. Useful articles are not protectable under U.S. copyright laws.
Other countries, such as France, offer bags and other fashion goods protection under their copyright laws. What is an NFT is currently debated by legal scholars and practitioners. The motion to dismiss argues that the NFTs “signify ownership of an image of a handbag.” The defendant does not sell the Hermès handbags, nor does Hermès claim he does. If the Hermès bag would be protected by copyright, Mason Rothschild would have argued fair use. In a country such as France, he would likely not have claimed that NFTs “signify ownership of an image of a handbag”, as such image may be infringing, because there is not a comprehensive “fair use” defense available to the defendant of a copyright infringement suit. The artist would likely claim instead that the MetaBirkin NFTs are parodies, a defense against copyright infringement claims, commenting on the luxury industry or on the use of expensive leather to manufacture the bags.
This case will be an interesting suit to watch, as it is one of the first trademark infringement suit filed against the seller of NFTs. Other cases have been filed, such as one filed on February 3 by Nike v. StockX LLC, also in the Southern District of New York (Nike v. StockX LLC, 1:22-cv-00983, SDNY), which claims that an online resale platform selling NFTs of Nike sneakers is infringing and diluting Nike’s trademarks. The platform claims on its site that the NFTs do “no more than track ownership of a physical Nike product safely secured in its vault” and that buyer can trade the NFT for the associated physical shoes. This case shows that blockchain can be used to authenticate goods. As Hermès and Nike product ‘s are routinely illegally reproduced, they will have at heart to defend the source of any Hermès or Nike NFT, for fear of not being able to use the technology to authenticate their products.
Embedding: Infringing in the Second Circuit but Not in the Ninth Circuit Under Server Test
By Marie-Andrée Weiss
United States District Judge Jed Rakoff, from the Southern District of New York (SDNY), published an opinion on 30 July 2021, which has generated a lot of attention, as it rejected the so-called server test in an embedding case. Caselaw is constantly changing in this area and may lead to a circuit split, as courts in the Second Circuit and courts in the Ninth circuit interpret differently whether embedding a work is displaying it under the Copyright Act.
The case is Nicklen v. Sinclair Broadcasting Group, Inc., et al, (S.D.N.Y. 30 July 2021).
Does embedding infringe plaintiff’s exclusive display right?
Nicklen argued that Defendant, by embedding his original post into an article published online, had displayed the protected work, in breach of the Copyright Act which provides owners of copyright the exclusive right to display the protected work.
17 U.S.C. § 106(5) provides that copyright owners have the exclusive right to publicly display literary, musical, dramatic, and choreographic works, pantomimes, pictorial, graphic, or sculptural works, but does not mention videos or films. However, 17. U.S.C. §101 defines “display” as showing a copy of a work “either directly or by means of a film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentially.” The Copyright Act defines “copies” as “material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.”
The Ninth Circuit “server test”
Defendant invoked the Ninth Circuit’s “server rule” in defense. The Ninth Circuit Court of Appeals approved a lower court in Perfect 10, Inc. v. Amazon.com, Inc. which had found that the owner of a computer not storing an electronic information is not displaying that information. If the images remain on a third party’s server, they have not been fixed in the memory of defendants’ computers, and therefore are not infringing. An image is displayed under the Perfect 10 server test only if a website publisher “us[es] a computer to fill a computer screen with a copy of the photographic imaged fixed in the computer’s memory.” This definition can be applied to embedding, as an image embedded using the API is fixed on the server of the site where it was published by the copyright owner, Instagram’s servers, in our case.
The Goldman v. Breitbart and the Sinclair v. Ziff Davis cases
Indeed, Judge Rakoff found, in our case, that, by embedding the video, Defendant had displayed the video withing the meaning of the Copyright Act, noting that the display right is “technology-neutral.” The embed code allows the video to be displayed and thus “embedding… falls squarely within the display right.” He quoted the 2018 S.D.N.Y. Goldman v. Breitbart case (for some background on this case, see TTLF Newsletter post here) and found it to be “a poor fit for this case.”
In Goldman, plaintiff had taken a photograph of football player Tom Brady walking on an East Hampton street with basketball player Kevin Durant. The photo became viral on social media and was embedded on defendant’s site to illustrate an article pondering whether Brady was actively helping the Boston Celtics basketball team recruit Durant. Defendant had evoked the “server test” in defense, but United States District Judge Katherine B. Forrest held the test only applied to cases where the defendant is a search engine, and that “outside of the Ninth Circuit, however, the Server Test has not been widely adopted…”
In another embedding S.D.N.Y. case, Sinclair v. Ziff Davis, LLC., United States District Judge Kimba M. Wood dismissed plaintiff Stephanie Sinclair’s claim for copyright infringement against Mashable, Inc. and its parent company, Ziff Davis, which alleged that defendants had infringed her copyright when Mashable posted one of her photograph on its website. Judge Wood had found that Mashable had used Sinclair’s photograph pursuant to a valid sublicense from Instagram.
In Nicklen, Judge Rakoff did not discuss the issue of whether a sublicense had been granted but critiqued the server rule as forcing photographers promoting their work on Instagram to “surrender[ ] control over how, when, and by whom their work is subsequently shown — reducing the display right, effectively, to the limited right of first publication that the Copyright Act of 1976 rejects.”
Defendants’ argument that Nicklen only had to remove his video from Instagram to remove it from Sinclair’s website as well did not pass muster with Judge Rakoff, as “the Copyright Act [does not grant] authors an exclusive right to display their work publicly only if that public is not online.” For Judge Rakoff, “[t]he server rule is contrary to the text and legislative history of the Copyright Act,” which defines “display” as showing a copy of the work, not “to make and then show a copy of the copyrighted work.”
As Judge Rakoff found that Defendant’s fair use affirmative defense could not be resolved at the motion to dismiss stage, he denied its motion to dismiss.
Towards a circuit split?
A few days after the Nicklen v. Sinclair case, United States District Judge Charles R. Breyer from the Northern District Court of California granted Instagram’s motion to dismiss in a class action case, Hunley v. Instagram LLC., where two photographers, representative of the class, had sued Instagram, claiming that the company was secondarily liable for copyright infringement for allowing third parties to use its embedding tool to display photos and videos posted on Instagram. The complaint alleged that Instagram’s “embedding” tool was used “to generate substantial revenue for its parent, Facebook, Inc., by encouraging, inducing, and facilitating third parties to commit widespread copyright infringement.”
Judge Breyer stated that, “[u]nder Perfect 10, the third parties do not violate Instagram users’ exclusive display. … Because they do not store the images and videos, they do not “fix” the copyrighted work in any “tangible medium of expression.” … Therefore, when they embed the images and videos, they do not display “copies” of the copyrighted work.”
This case is unusual as “[t]he parties agree that Instagram is not a direct copyright infringer” and it is not the defendant, but the plaintiff, who invoked the S.D.N.Y. Nicklen case, arguing that Perfect 10 should be “cabined” to search engine cases, or cases when users must click a hyperlink to view an image, and that the server test should not apply to cases where an image shared on social media is embedded on a third-party website.
Regardless, Judge Breyer put this argument firmly to rest, as :
“unlike the [S.D.N.Y.] this Court is not free to ignore Ninth Circuit precedent. And in purporting to establish a test for when a computer displays a copyrighted image, Perfect 10 did not state or indicate that its holding was limited to the unique facts presented there. Thus, this Court must faithfully apply Perfect 10 absent a contrary Ninth Circuit or Supreme Court ruling.”
As the Second Circuit sees embedding as infringing while the Ninth Circuit does not, it will be interesting to see if (when?) the Supreme Court will accept to review a case about embedding which would allow the Court to weigh in on the server test.
TTLF Newsletter on Transatlantic Antitrust and IPR Developments 