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.

“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.

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[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?

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.

Who owns the copyright on Jack Ryan?

By Marie-Andrée Weiss

On 10 February 2021, United States District Judge Ellen L. Hollander from the Federal District Court of Maryland published an 89-page Memorandum Opinion, addressing the issue of ownership of the books and fictional characters created by Tom Clancy, including Jack Ryan. The case is Alexandra Clancy v. Jack Ryan Enterprises, Ltd.

Facts

The character of Jack Ryan first appeared in The Hunt for Red October (The Hunt), the first book ever published by Tom Clancy. It was published in 1984, by a small academic press, the United States Naval Institute (USNI). One of the book’s characters is Jack Ryan, an analyst working for the Central Intelligence Agency. Jack Ryan became a recurring character in Tom Clancy’s books, and appeared in several movies and television series adapted from Clancy’s best-sellers.

Clancy and USNI signed a publishing agreement in 1983, which stated that:

“Author [Tom Clancy] grants and assigns to the Publisher [USNI] the exclusive worldwide rights and any subsisting copyright, including the right to secure copyrights and any renewals or extensions thereof, in connection with a certain unpublished work provisionally entitled THE HUNT FOR RED OCTOBER…” and also stated “The Author agrees that he will not, without the written permission of the publisher, publish or permit to be published any material based on, or derived from, or directly competitive with the Work [i.e., Hunt], so long as this agreement shall remain in force.”

On October 29, 1984, USNI received a certificate of copyright registration for The Hunt which identifies Clancy as the author, and USNI as the copyright claimant. On May 7, 1985, USNI, as owner of the exclusive rights, licensed a theatrical film from Paramount Pictures.

Jack Ryan Enterprises, Ltd. (“JREL”) was formed on May 28, 1985 by Tom Clancy and then-wife Wanda King. JREL’s only assets were the computers that Clancy used to write his books. JREL was owned 40% by Tom Clancy, 40% by Wanda King, and 20% by their four children. Tom Clancy died in 2013, and JRE is now owned 40% by his estate, 40% by Wanda King, and 20% by Clancy and King’s children. Wanda King is JREL’s President.

The issue of ownership of the Jack Ryan character first arose between Clancy and USNI in 1987. Clancy asked USNI to transfer the copyright registration for The Hunt back to him, claiming it was needed for Clancy to move forward with his negotiations with Viacom. USNI claimed it owned the rights to The Hunt.

Robert Youdelman, Clancy’s attorney, told his client at the time that he believed that USNI had “acquired the copyright in [Hunt],” which gave it a continuing “interest in new books using the same characters.” He added that “[t]he author of a novel usually retains the copyrights…. The publisher customarily has no interest in new books using the same characters,” and noted that USNI had acquired “world-wide publishing rights” and added that because the “contract entitles [USNI] to 50% of all you make from any book in which ‘Jack Ryan’ or other characters from Red October appear, it is our view that this alone departs so far from industry practice as to make the entire contract unconscionable.”

In 1988, Clancy filed for arbitration with the American Arbitration Association, arguing that he owned the Jack Ryan character, because the history of the relationship between USNI and Clancy showed that Clancy never relinquished his ownership of the now famous character. The parties settled: Clancy agreed to pay USNI $125,000 and, in exchange, USNI agreed to reassign the copyright in The Hunt to Clancy. However, the agreement did not explicitly mention the Tom Clancy character.

JREL and Paramount entered into an agreement in 1989 clarifying the ownership rights to the motion picture, television, and literary rights in The Hunt, which stated that JREL, as owner, had rights reserved for use and disposition, including in all literary property using the character Jack Ryan or any other principal character in The Hunt. JREL subsequently entered into other contracts for novels and movies featuring Jack Ryan.

Clancy formed Jack Ryan Limited Partnership (“JRLP”), a Maryland limited partnership, on 26 February 1992. Clancy’s 50% interest is now owned by his estate. Regina King still owns 50%. In 1992, and again in 1994, Clancy entered into employment agreements with both JREL and JRLP.

Clancy formed Rubicon, Inc. in November 1995, which was owned entirely by Clancy. Clancy published The Bear and the Dragon (2000), Red Rabbit (2002), and The Teeth of the Tiger (2003), featuring Jack Ryan, under contracts executed by Rubicon. Clancy published these books without the agreement of the JR Entities and no proceeds were paid to the JR entities.

Clancy & King separated in November 1996. Their separation agreement included sections on the ownership and control of JREL and JRL:

“Husband [i.e., Clancy], Wife [i.e., King] and Michelle Clancy [one of the Older Children] are the only directors of JREL. Husband is the President, and Wife is the Vice President, Treasurer and Secretary of JREL + Clancy, as president of JREL, would have the usual powers of the chief executive of a personal service corporation, including the power to negotiate and sign on behalf of JREL royalty and other contracts…”

 This agreement was incorporated in the 1999 divorce decree. Tom Clancy married Alexandra Clancy in 1999. The couple stayed married until Clancy’s death in October 2013 and had one child.

Paramount announced in 2008 that it was developing a new movie, Jack Ryan: Shadow Recruit, featuring Jack Ryan, which would not be based on any of Clancy’s previous novels. Based on emails between Clancy and his representatives, there was some concerns on whether Paramount had the right to develop the Jack Ryan character. Robert Youdelman reminded Clancy’s agent that the “‘Jack Ryan’ character is owned by Jack Ryan Enterprises Ltd, an entity in which Wanda [King] and the children have an interest[.]” Paramount eventually paid to use the Jack Ryan character in the new movie.

Clancy died in 2013. After his death, Putnam wanted to publish “Tom Clancy” novels, at least one novel focusing on the Jack Ryan character. In March 2015, his Estate, Rubicon, JREL, and JRLP, collectively as the “Author,” executed a four-book deal with Putnam.

Procedure

Alexandra Clancy filed on August 25, 2017 a complaint for declaratory judgment in the Circuit Court for Baltimore City to obtain a declaration that the rights to the Jack Ryan character are owned by Rubicon, a company created by Tom Clancy, which is now wholly-owned by the Tom Clancy Estate.

Defendants are J.W. Thompson Webb, as personal representative of the Estate of Thomas L. Clancy, Jr. (the “Estate”) and the three separate business entities formed by Clancy: JREL, JRLP and Rubicon.

The case was removed to the federal District Court for the District of Maryland because some of the claims arise under the Copyright Act.

Authorship and Work Made for Hire

Defendants claim that JR Books were written as works made for hire for the JR Entities, which, therefore, own all of the copyrightable elements of the books, including the characters delineated in them.

Neither side argues that any of the books were “specially ordered or commissioned,” and thus the issue is whether Clancy was an employee of the JR Entities and wrote the JR Books within the scope of his employment.

If Clancy was an employee of JREL and JRLP, then the works he wrote at the time are works for hire and the two companies own the copyright. This is the view of the Defendants, but not, of course, of the Plaintiff, who claims that Clancy was neither an employee nor agent of the JR Entities, that, therefore, the works are not works made for hire as Clancy’s relationship with the JR Entities “had none of the earmarks of a true employee relationship.”

Section 101 of the Copyright Act defines a work for hire as:

“(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”

The Copyright Act does not define the terms “employee” or “employment,” however, leaving the application of the terms to the courts.

The U.S. Supreme Court held in Community for Creative Non-Violence v. Reid, that “the term ‘employee’ should be understood in light of the general common law of agency,” and set out a non-exhaustive list of factors to consider. However, none of these factors are determinative, and the Supreme Court did not indicate how the factors must be weighed.

The Courts do not mechanically apply the Reid factors and only consider the factors which are relevant in each case:

• hiring party’s right to control the manner and means by which the product is accomplished;
• skill required;
• source of the instrumentalities and tools;
• location of the work;
• duration of the relationship between the parties;
• whether the hiring party has the right to assign additional projects to the hired party;
• extent of the hired party’s discretion over when and how long to work;
• method of payment;
• hired party’s role in hiring and paying assistants;
• whether the work is part of the regular business of the hiring party;
• whether the hiring party is in business;
• provision of employee benefits; and
• tax treatment of the hired party

The Second Circuit Court of Appeals identified in Aymes v. Bonelli five factors to consider when determining whether a work was made for hire:

• hiring party’s right of control over the hired party;
• skill required of the hired person;
• provision of employee benefits;
• tax treatment of the hired party; and
• whether the hiring party has the right to assign additional projects to the hired party.

Judge Hollander found the Aymes factors “particularly relevant” in the Clancy case, and concluded that they weighed against finding a work for hire status, as evidence demonstrated that neither of the JR Entities had attempted to “control the manner and means” by which Clancy’s books were written. King acknowledged that Clancy had complete autonomy with respect to every aspect of his books, and even though she may have reviewed the books once they were written, it was Clancy who chose what books to write and when to work on them.

Clancy was a co-owner of both entities, but there are factors that support finding that the famous author was an employee of the JR Entities:

• JREL paid for the computer that Clancy used to write the books;
• Clancy worked for both entities for an extended period of time;
• Clancy’s work was part of the regular business of the entities; and
• Clancy received health benefits.

Defendants argued that publishing agreements between the JR Entities and Putnam proved that Clancy believed the books were made for hire. Judge Hollander found that these agreements prove that Clancy had the intent to form an employment relationship, but that they did not necessarily “suffice on [their] own” to overcome the factors weighing against finding a work for hire relationship.

Judge Hollander could not thus conclude, as a matter of law, that Clancy was an employee of the JR Entities and that his books were made for hire and denied both Plaintiff and Defendants’ motions with respect to the work for hire claims.

Alleged Copyright Assignments from Clancy to the JR Entities

The Parties did not dispute that JREL owns the copyright to The Hunt but disagreed over whether the Jack Ryan character as developed in The Hunt, was assigned to USNI and then JREL, along with the copyright in The Hunt or, instead, whether Clancy retained the copyright in Jack Ryan at the time of his death.

Ownership of a copyright is freely transferrable “by any means of conveyance or by operation of law,” 17 U.S.C. § 201(d)(1). However, “[a] transfer of ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or a memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent,” 17 U.S.C. § 204(a).

Section 204’s requirement may be satisfied by an oral assignment that is subsequently ratified or confirmed by a written memorandum of the transfer.

Defendants claimed that JR Entities own the JR Books and their characters because the copyrights were validly assigned to them by Clancy, pursuant to 17 U.S.C. § 204(a), while Plaintiff claims that any alleged assignment of the JR Books to the JR Entities was ineffective.

Defendants argued that there were “several written instruments, signed by Tom Clancy, that memorialize the transfer of copyright in each book from Tom Clancy to JREL and JRLP, respectively,” including:

• the publishing agreements with Putnam;
• the Guaranty Letters accompanying those agreements;
• the Separation Agreement that acknowledges ownership of the books by JREL and JRLP;
• Guaranty Letters and the Separation Agreement operate as written “note[s] or memorand[a]” validating earlier transfers between the JR Entities and Clancy.

Plaintiff argued that these are not the kind of documents that “qualify as assignments” under Section 204 and that “none of the referenced documents are between Clancy and JREL or JRLP,” none of them “set forth the clear and unequivocal intent to transfer required by Section 204.”

Judge Hollander applied Maryland law to interpret the agreements and concluded Tom Clancy clearly intended to transfer copyright ownership to the JR Entities, and that the requirement of an assignment under Section 204(a) were satisfied.

Impact of the assignment on ownership of the characters featured in the JR Books, including Jack Ryan 

Judge Hollander noted that the parties appeared to agree that the owner of the copyright to these works also owns the rights to the characters or the incremental character developments in them, with the exception, however, of the Jack Ryan character. She considered separately the issue of ownership of the Jack Ryan character and concluded that the characters developed in the JR Books, like the books themselves, were validly assigned to the JR Entities.

The parties disagreed on whether the assignment to USNI of the copyright to The Hunt, and the assignment of The Hunt to JREL included assignment of the copyright in Jack Ryan, a character who first appeared in this book.

Defendants claimed that Clancy assigned the copyright in Hunt to USNI “without reservation,” and thus USNI acquired the copyright to the Jack Ryan character, and that, when USNI assigned the copyright in The Hunt to JREL, “it also assigned the rights to Jack Ryan as delineated in Hunt to JREL.”

Plaintiff stated that Jack Ryan “is a fully delineated, distinctive and iconic character,” and is “important to the Clancy franchise.” She conceded that the rights to The Hunt were assigned to USNI and JREL, but not the character of Jack Ryan:

“The 1983 [USNI] Contract does not grant USNI any rights to the characters featured in HUNT or to sequels or derivative works. None can be inferred.”

Fictional characters are not an enumerated copyrightable subject matter under the Copyright Act, see 17 U.S.C. § 102(a), but courts recognized that they can be protected by copyright if developed with enough specificity so as to constitute protectable expression.

The Ninth Circuit Court of appeals explained, however, in DC Comics v. Towle, that “[n]ot every comic book, television, or motion picture character is entitled to copyright protection.” The Ninth Circuit enumerated its “Towle” test for characters:

A character is entitled to copyright protection if 

• the character has “physical as well as conceptual qualities;”
• the character is “sufficiently delineated to be recognizable as the same character whenever it appears” and “display[s] consistent, identifiable character traits and attributes;” and
• the character is “especially distinctive” and “contain[s] some unique elements of expression.”

Section 201(d)(2) of the Copyright Act provides:

Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified in section 106, may be transferred…and owned separately. The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by his title.

As such, under the theory of divisible copyrights, fictional characters may be protected separately from the underlying work, and this copyright may be assigned separately from the copyright in the general work.

Judge Hollander noted that the issue was not only whether Jack Ryan was sufficiently delineated in The Hunt to be protected by copyright, separately from the book, but also whether the assignments of The Hunt copyright to USNI, then JREL, included the transfer of ownership of Jack Ryan.

As both parties agreed that Jack Ryan is sufficiently developed to be protected, Judge Hollander addressed only the issue of assignment of rights, found these assignments to be ambiguous and denied summary judgment:

“Whether the rights to Jack Ryan were assigned to USNI or JREL, as part of the assignment of rights to Hunt, depends on the interpretation of the… agreements. …Applying the tools of contract interpretation, I conclude that the assignment of rights to Jack Ryan is ambiguous because at least one of the relevant agreements—the Settlement Agreement—is susceptible to multiple interpretations.”

The case is now heading to trial. A jury will be asked to decide who owns the Jack Ryan character, unless the parties settle.

Oh, What a Case (9th Circ. 2020): Works Presented as Factual are Factual when Determining Scope of Copyright Protection

By Marie-Andrée Weiss

The U.S. Court of appeals for the Ninth Circuit held on September 8, 2020, in Corbello v. Valli, that the musical Jersey Boys did not infringe plaintiff’s copyright in an autobiography of Tommy DeVito ghost written by Rex Woodward, as it had not copied any protectable elements of the book.

The case is interesting because the Court applied its newly adopted “Asserted Truths” doctrine, holding that an author representing a work as nonfiction cannot later claim that it was fictionalized and thus entitled to full copyright protection.

The facts

Tommy de Vito is one of the founding members of the Four Seasons, with Frankie Valli, Bob Gaudio and Nick Massi. The group produced several hits, Sherry, Big Girls Don’t Cry, Walk Like a Man and December, 1963 (Oh, What a Night) andwasinducted into the Rock and Roll Hall of Fame in 1990.

Rex Woodard ghostwrote Tommy DeVito’s autobiography in the late Eighties (the Work), using taped interviews of the musician and even portions of the F.B.I. file on the Four Seasons obtained under the Freedom of Information Act. The two men, however, did not find a publisher for the book.

Tommy DeVito executed an agreement in 1999 with Frankie Valli and Bob Gaudio, granting them the exclusive rights to his “biography” for the purpose of creating a musical based on the life and music of the Four Seasons. The rights were to revert to DeVito should Valli and Gaudio not exercise their rights within a defined period. In 2004, Valli and Gaudio granted the right to use the name and music of the band, the name and likeness of the musicians, and the story of their lives, to the producers of an upcoming show about the Four Seasons.

DeVito provided access to his unpublished autobiography to the writers of the show, which became the Jersey Boys musical (the Play). It ran on Broadway from 2005 to 2017 and was adapted into a movie in 2014. The musical and the movie tells the story of the four members of the Four Seasons.

Donna Corbello, Woodward’s surviving wife, tried again unsuccessfully to publish the book written by her husband after the show started to run, believing that its success might help sell the autobiography to a publisher.

She discovered then that DeVito had registered the copyright of the Work as sole author and she then filed a supplementary application with the U.S. Copyright Office to add her late husband as a coauthor and co-claimant of the Work. The certificate of registration was amended to list Woodward and DeVito as coauthors and co-claimants of the Work.

The (long) procedure

Corbello then sued DeVito for breach of contract and equitable accounting for the Work’s profits, later adding as defendants the producers of Jersey Boys and Valli and Gaudio, after learning that DeVito provided access to the book, and also sued for copyright infringement. Corbello claimed that the Play was a derivative work of the Book, owned exclusively by the co-authors and thus herself, as lawful successor of her husband.

The U.S. District Court of Nevada issued a summary judgment in 2011, declaring the book a joint work, “because of DeVito’s non-de minimis creative edits.” The Court reviewed the 1999 agreement, found it to be the grant of an exclusive license, which had lapsed, but not a transfer of copyright. Woodard was a co-owner, Corbello a successor in interest.

A panel of the U.S. Court of appeals for the Ninth Circuit reversed in part in 2015. Judge Sack noted in his concurring opinion that the matter would be greatly simplified if the district court would decide on remand that the work is not infringing. But the case nevertheless proceeded to trial after the District had only partially granted summary judgment on remand, holding that, while there was substantial similarity sufficient to avoid summary judgment at least with a thin copyright protection, most of the similarities were based on historical facts. The jury found in favor of Plaintiff. The District Court granted a motion for new trial, which was appealed. The 9^th Circuit then reviewed the case de novo.

The Ninth Circuit copyright infringement test

The Ninth Circuit’s substantial-similarity test contains an extrinsic and intrinsic component.

The extrinsic test requires a three-step analysis: (1) identifying similarities between the copyrighted work and the accused work, (2) disregarding similarities based on unprotectable material or authorized use; and (3) determining the scope of protection (“thick” or “thin”) to which the remainder is entitled “as a whole.”

The intrinsic test is conducted only if the extrinsic analysis succeeds. It examines an ordinary person’s subjective impressions of the similarities between two works.

In our case, the Court did not apply the intrinsic test because the extrinsic test failed. The Court applied the extrinsic test to elements of the Work which were “undisputedly factual”. The introduction of Tommy de Vito is about a historical character, the introduction of the Song Sherry is a historical fact, as are the introduction of the songs Big Girls Don’t Cry and Dawn, and as is the description of the induction into the Rock and Roll Hall of Fame. As for comparing the Four seasons and the Beatles, these were unprotectable ordinary phrases. These elements were therefore not protectable.

The new asserted facts doctrine

The Court then applied the extrinsic test to the claimed fictions represented to be facts and presented its new asserted-truth doctrine, stemming from the doctrine of copyright estoppel, under which once a plaintiff’s work has been held out to the public as factual, the author-plaintiff cannot claim that the book is actually fiction and thus entitled to the higher protection allowed by fictional works.

The Ninth Circuit did not believe that copyright estoppel is the right term for the doctrine and named it instead the “asserted truths” doctrine, citing Houts v. Universal City Studios:

“Estoppel” is not, in our view, an apt descriptor for the doctrine at work here.  For one thing, … detrimental reliance is not an element of this doctrine, as “the [so- called] estoppel [is] created solely by plaintiff’s affirmative action and representation that the work was factual.”. For another, application of estoppel concepts often suggests that the party against whom estoppel is applied is in some way culpable….

“Rather than “copyright estoppel,” we will refer to this rule of copyright law as the “asserted truths” doctrine, because it is the author’s assertions within and concerning the work that the account contained in the book is truthful that trigger its application.”

In our case, the Work was presented as a reliable source of factual information about the Four Seasons, even presented as a “complete and truthful chronicle of the Four Seasons.” The Court noted that DeVito had provided a copy of it to Play’s writers when they were researching the history of the Four Seasons, and they viewed it as a factual source “even better than newspaper or magazine articles, because it was co-written by a participant in the events described.”

The Court specified that “the asserted truths doctrine applies not only to the narrative but also to dialogue reproduced in a historical nonfiction work represented to be entirely truthful” and “includes dialogue that an author has explicitly represented as being fully accurate, even if the author was unlikely to have recalled or been able to report the quotations exactly.”

Authors of biographies should thus be well advised to add a disclaimer to their work, claiming that the dialogues, while based on historical facts, are the fruits of the author‘s imagination.