Close-up,Reply,All,Button,On,The,Keyboard,And,Have,Green

Should I click “Reply All”?  Did I accidentally click “Reply All”? These thoughts have run through almost every person’s head when responding to an email that contained numerous other individuals besides the sender. The Reply All option on emails has always been a source of questions surrounding work-place etiquette and embarrassment. On top of that, lawyers should think about one more thing before selecting Reply All: ethics.

A recent opinion by the New Jersey Advisory Committee on Professional Ethics considered the implications of an attorney clicking Reply All on an email to adverse counsel when the adverse counsel’s client was also on the email.

The issue was brought to the Committee by an attorney who stated that he copies his client on emails to opposing attorneys, and that opposing attorneys often respond by selecting Reply All and include his client on those responses.  The attorney queried the Committee as to whether this type of response violated N.J. Rule of Professional Conduct 4.2, which prohibits an attorney from communicating directly with an individual represented by counsel.

The Committee disagreed that using Reply All in this setting amounted to a violation of the Rules of Professional Conduct. In so doing, the Committee relied on the fact that email is “an informal mode of communication” that often have a “conversational element with frequent back-and-forth responses.” The email conversation in this situation is primarily between the two attorneys and the clients are “mere bystanders.”

A lawyer who includes his client on the initial email to opposing counsel cannot have a “one way street” wherein opposing counsel cannot respond and include his client. The Committee found that attorneys who send an initial email to opposing counsel including their client “have impliedly consented” to having the adverse counsel Reply All to the group, including the first attorney’s client.

Other states, however, take a different approach. For example, Illinois, Alaska, South Carolina, and Kentucky, as the Committee noted, have rejected the approach that the attorney’s initial email acts as implied consent for the opposing counsel to respond to his client. In those states, an attorney who replies all to the group may be in violation of those states’ rules prohibiting communication with a represented individual.

In the end, the New Jersey Committee stressed that: “‘Reply All’ in a group email should not be an ethics trap for the unwary or a ‘gotcha’ moment for opposing counsel.”  It is thus incumbent on the sending attorney to not include his client if he does not want opposing counsel to include his client in reply. That makes one less thing (at least for New Jersey attorneys) to worry about before clicking Reply All in response to an email.

SCOTUS-Today

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “The Court at Peace“.

The following is an excerpt:

Given that there was a good deal of media interest in Justice Sotomayor’s somewhat vituperative dissenting criticism of Justice Kavanaugh in last week’s decision in the criminal sentencing case of Jones v. Mississippi¸ today’s per curiam GVR (Grant, Vacate, and Remand) order in Alaska v. Wright is worthy of at least passing mention.

Once again, the Ninth Circuit is reversed, this time by the whole Court in a case that, like Jones, involves a criminal sentence. In vacating the decision below, the Court held that Mr. Wright was Mr. Wrong, as was the Ninth Circuit.

Click here to read the full post and more on SCOTUS Today.

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We blogged last October (here) about the Third Circuit’s decision in FTC v. AbbieVie Inc., holding that Section 13(b) of the Federal Trade Commission Act, which expressly gives the FTC authority to obtain injunctive relief, does not allow a district court to order disgorgement or restitution. We also noted that the Supreme Court had granted certiorari to hear an appeal of the 9th Circuit’s decision in AMG Capital Management, LLC v. FTC, where the 9th Circuit upheld the Commission’s right to seek equitable monetary remedies pursuant to Section 13(b) of the FTC Act, while the 3rd and 7th Circuit’s had ruled otherwise. We predicted that with the passing of Justice Ginsberg, the appointment of Amy Cooney Barret, and the Court’s general rightward drift, it was likely that the FTC would be relieved of that particular arrow in its quiver.

Our prediction was prescient, and last week, the Supreme Court, in a unanimous opinion authored by Justice Breyer, overruled the 9th Circuit and held that Section 13(b) of the FTC act does not authorize the Commission to seek, or a court to award, equitable monetary relief such as restitution or disgorgement. A copy of the Supreme Court’s decision can be found (here). Not surprisingly, the Court took a purely textualist approach. As Justice Breyer put it, “the question presented is whether [Section 13(b) of the FTC Act] authorizes the Commission to seek, and a court to award, equitable monetary relief such as restitution or disgorgement. We conclude that it does not.”

This is a tremendous reversal of fortune for the FTC. The Commission’s Bureau of Consumer Protection has recovered billions of dollars in restitution and disgorgement over the last thirty years. In that regard, between 2016 and 2020 alone, the FTC collected $11.2 billion dollars. In AMG Capital Management, the case the Supreme Court just overturned, the Commission obtained an award of $1.27 billion dollars. Before the Supreme Court’s reversal, it was the largest litigated judgment ever recovered by the FTC.

For more than 30 years, Federal Circuit Courts had upheld the FTC’s ability to seek restitution and disgorgement under Section 13(b). Indeed, David Vladeck, a former Director of the FTC’s Bureau of Consumer Protection, and a current Professor at Georgetown University Law Center, published an article in the Fall 2016 edition of ANTITRUST that concluded that the argument that the FTC lacks authority to obtain monetary relief pursuant to Section 13(b) “has been repeatedly and uniformly rejected by every court to address it” and “this is not going to change.”

Professor Vladeck was right about the former, but not the latter. So what happens now that disgorgement and restitution are off the table? A look at new civil penalty authority recently provided to the FTC relative to COVID-19 related advertising provides a clue. Buried in the 2124 pages of the 2021 Appropriations Bill was the authority for the FTC to seek civil penalties for deceptive COVID-related advertising. (Titled the COVID-19 Consumer Protection Act, a copy of the Act can be found here on page 2094). The civil penalty authority is granted through the duration of the current public health emergency. The current maximum civil penalty amount per violation is $43,280.

This is significant because the FTC did not previously have the authority to seek civil penalties for a first violation of the FTC Act. That is the reason, consequently, why the FTC previously would seek restitution and disgorgement under Section 13 (b)). Penalties were only available where a company or individual was already subject to an order, and violated that order. With the authority granted in the COVID-19 Consumer Protection Act, the FTC can identify false or misleading advertising related to COVID-19 and seek civil penalties for that violation. A logical “fix” for the FTC would be to ask Congress for an extension of this authority to apply to all misleading advertising.

The law does not specify how penalties for each violation will be calculated, but a representative of the FTC suggested at a recent webinar that “Every ad is a separate violation and every day that ad runs or is disseminated to the public is a separate violation.”

Given the Supreme Court’s ruling in AMG Capital Management, it would not be surprising to see the FTC lobby Congress to amend the FTC Act to either expressly grant the Commission the authority to obtain monetary relief in Federal Court or expand its ability to obtain civil penalties under the Act to include not just COVID-19 related advertising, but any advertising the agency considers deceptive per Section 5 of the FTC Act and seek civil penalties for that violation.

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Our colleagues Gregory Keating and Francesco DeLuca of Epstein Becker Green have a new post on Workforce Bulletin that will be of interest to our readers: “Massachusetts Case Highlights Importance of Clear Communication in Compensation Plans.”

The following is an excerpt:

Preparing the terms of employee compensation can be a resource-intensive task requiring input from stakeholders across numerous departments, including human resources, finance, and legal. However, as the Massachusetts Appeals Court’s recent decision in Alfieri v. Merrimack Pharmaceuticals, Inc. demonstrates, investing those resources to complete the task will pay dividends when an employer is faced with a potentially costly claim for unpaid wages.

Background

In May 2014, Merrimack Pharmaceuticals, Inc. sent Michael Alfieri a letter offering him the position of corporate controller. In its offer letter, Merrimack explained that it would compensate Alfieri using a “total target cash compensation (‘TTCC’)” method under which it would pay him a percentage of his total compensation in biweekly salary payments and would retain a percentage to be paid in the first quarter of the following year. The offer letter set out three conditions that had to be met for Alfieri to receive the retained portion of his TTCC: “(i) the employee is an active employee of the Company on the date that the retention is paid, (ii) the employee is continuing to meet expectations and (iii) the Company is performing adequately, as determined by the Company’s Board of Directors (the ‘Board’).” After explaining Alfieri’s proposed compensation, the letter expressly stated that it “superseded ‘all prior understandings, whether written or oral, relating to the terms of [Alfieri’s] employment.’” Alfieri accepted the offer by signing the letter and began working for Merrimack in July 2014.

Click here to read the full post and more on Workforce Bulletin.

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As we have written here previously, businesses across the country have brought lawsuits against their insurers seeking coverage for losses related to COVID-19. According to the COVID Coverage Litigation Tracker at the University of Pennsylvania Carey Law School, over 1,500 suits have been filed since March 2020 in state and federal court. Some interesting statistics based on that information:

  • Over one third of the cases have been filed by food services establishments.
  • Almost one quarter of the cases were brought as class actions.
  • Approximately one third of the cases involved insurance policies that did not contain a virus exclusion.
  • Insureds have been much more successful in state court than federal court. Insurers have obtained a dismissal in 93% of the 241 cases decided in federal court, but only 54% of the 58 cases decided in state court.
  • Appeals have been filed in 107 cases and, surprisingly, almost all have been filed by insureds who had their cases dismissed. Insurance companies have only filed appeals in four cases.
  • Certain jurisdictions have been more favorable for insureds. We have written previously about Studio 417, Inc. v. Cincinnati Insurance Company, No. 6:20-cv-03127-SRB (W.D. Mo. Aug. 12, 2020), in which a federal district court in the Western District of Missouri denied the insurer’s motion to dismiss because the insureds had adequately alleged that they suffered a physical loss. That court has reached a similar ruling in two additional cases. See Blue Springs Dental Care v. Owners Ins. Co.; K.C. Hopps, Ltd. v. The Cincinnati Ins. Co. The most favorable jurisdiction for insureds appears to be Ohio state court where motions to dismiss have been denied in 11 of the 13 cases with reported decisions. Other favorable jurisdictions include state court in Washington (insurers have lost both cases with reported decisions) and state court in Oklahoma (granting two policy holders’ motions for summary judgment).

Although Ohio state court judges have been most favorable to insureds’ attempts to secure coverage, every COVID-19 related business interruption case is fact specific and the outcome of a motion will be based on the allegations in the complaint and the language of the insurance policies involved, including whether they include a virus exclusion and how that provision is drafted.  For example, a recent case in Ohio state court, McKinley Development Leasing co. Ltd., et al v. Westfield Insurance Co., determined that a virus exclusion did not apply after analyzing the specific wording of the exclusion. The exclusion at issue precluded coverage for “loss or damage caused by or resulting from any virus, bacterium, or other microorganism that induces or is incapable of inducing physical distress, illness or disease,” but did not specifically include pandemics. In finding that the exclusion did not apply to the insured’s claims, the court stated:

It is obvious to this Court that a virus is not the same as a pandemic. The insurer, being the one who selects the language in the contract, must be specific in its use; an exclusion from liability must be clear and exact in order to be given effect. . . .  More importantly, this Court questions if Westfield intended for a “pandemic” to be excluded from coverage, why didn’t it explicitly exclude it? After all, Westfield had control and wrote the policy.

Also, the landscape in Ohio will likely be impacted by the court’s decision in Neuro-Communication Services, Inc. v. Cincinnati Insurance Company, No. 4:20-CV-1275 (N.D. Ohio filed June 10, 2020), to certify to the Ohio Supreme Court the following question:

Does the general presence in the community, or on surfaces at a premises, of the novel coronavirus known as SARS-CoV-2, constitute direct physical loss or damage to property; or does the presence on a premises of a person infected with COVID-19 constitute direct physical loss or damage to property at that premises?

This is a question that has arisen in many other cases, but no appellate level court has yet ruled on the question. Thus, that decision will be not only an important milestone for COVID-19 business interruption lawsuits in Ohio, but in other jurisdictions too.

Only one case has gone to trial so far. That case, Cajun Conti LLC v Certain Underwriters at Lloyds, was the first COVID-19 business interruption case filed in March 2020 and a bench trial took place December 14-16, 2020 in state court in New Orleans. Despite the fact that the policy at issue in Cajun Conti contained no virus exclusion, the trial resulted in a judgment in the insurer’s favor. While the court did not include a written legal opinion along with its February 10, 2021 judgment, the outcome suggests that the court agreed with the insurer’s main argument that the virus itself causes no property damage within the meaning of relevant policy provisions.

Despite the trend favoring insurers, especially in federal court, insureds have continued to file business interruption lawsuits, but at a lower rate than in spring and summer of 2020. Although there have been fewer suits filed, within the last month, several major business such as the Los Angeles Lakers, Sacramento Downtown Arena (including the Sacramento Kings), Ceasars Entertainment, Madison Square Garden (including the Knicks and Rangers), Hooters and Planet Hollywood have filed suits seeking coverage for sizeable losses caused by COVID-19. Only the Madison Square Garden and Ceasars cases were filed in state court. It will be interesting to see whether the insurers seek to remove those cases to federal court.

Thus, it appears that we are still in the early stages of what will likely be a multi-year process to resolve the COVID-19 business interruption insurance cases throughout the country. Stay tuned for additional developments, especially as appellate courts begin to address these issues.

Judge`s,Gavel,,Lawer`s,Office.,Law,And,Justice

I was reminiscing the other day about how I missed my favorite, snarky website Gawker when I saw that the District of New Jersey has proposed an amendment to the local rules (Local Rule 7.1.1) that would require disclosure of third-party litigation funding. Under the proposed new rule, all parties would be required to file statements setting forth information about any non-party person or entity that is “providing funding for some or all of the attorneys’ fees and expenses for the litigation of a non-recourse basis” in exchange for either “a contingent financial interest based upon” the litigation’s results or a “non-monetary result that is not in the nature of a personal or bank loan, or insurance.”

The statement would need to be filed within 30 days of the filing of an initial pleading or removal and would need to include: (i) the identity of the funder(s), including name, address, and place of formation (if a legal entity); (2) whether the funder’s approval is “necessary for litigation decisions or settlement decisions,” and if so, “the nature of the terms and conditions relating to that approval”; and (3) a description of the nature of the financial interest involved. The proposed new rule further provides that a party may seek discovery “of the terms of any such agreement upon a showing of good cause that the non-party has authority to make material litigation decisions or settlement decisions, the interests of the parties or the class (if applicable) are not being promoted or protected, or conflicts of interest exist, or such other disclosure is necessary to any issue in the case. If adopted, Local Civil Rule 7.1.1 would take effect immediately “and apply to all pending cases upon its effective date, with the filing mandated in Paragraph 1 to be made within 45 days of the effective date of this Rule.”

The proposed rule is likely in response to recent decisions, most notably Judge Schneider’s in In re Valsartan NDMA Contamination Products Liability Litig., addressing whether litigation funding information is discoverable. In re Valsartan is a multi-district litigation concerning the FDA’s voluntary recalls of the generic prescription medication Valsartan. The defendants made a motion to compel the Plaintiffs to disclose their “litigation funding.” Plaintiffs objected on the grounds that the information was irrelevant to their claims and defenses and that the defendants had no legitimate need for the requested information. Judge Schneider recognized that courts were split on the issue, but ultimately denied the defendants’ motion and held that the plaintiffs did not have to disclose whether their claims were being funded by a third party. Despite their victory in Court, if adopted, Local Rule 7.1.1 will require plaintiffs to disclose this information.

Which brings me back to Gawker. Gawker Media might still be around today if the Sixth Judicial Circuit in Pinellas County, Florida had a rule like the District of New Jersey’s proposed Local Rule 7.1.1. Bollea v. Gawker is probably one of the most consequential (and strangest) lawsuits in the history of modern American media. In 2016, Hulk Hogan (né Terry Bollea), the professional wrestler, won a nine-figure jury verdict that ultimately bankrupted Gawker Media. The lawsuit concerned the publication of a video of Hogan having consensual sex with his best friend’s wife, which the same friend secretly recorded.

Behind the scenes, an even more bizarre story was playing out. Peter Thiel, the Paypal co-founder, was bankrolling Hogan’s lawsuit in order to exact revenge on Gawker for publicly outing the notoriously private billionaire as gay. In December 2007, Gawker Media’s tech blog Valleywag published a post under the headline “Peter Thiel is totally gay, people.” Thiel waited several years for the opportunity to take Gawker down before landing on Hogan’s lawsuit as the means to exact his revenge.

In 2012, the Hulk Hogan sex tapes were leaked to Gawker which published the videos under the headline: “Even for a Minute, Watching Hulk Hogan Have Sex in a Canopy Bed is Not Safe For Work but Watch it Anyway.” Hogan was mortified and decided to sue Gawker for invasion of privacy. News of Hogan’s intentions made it to Thiel’s legal team who reached out to Hogan’s lawyers and told them that Thiel was willing to bankroll the suit. In October 2012, Hogan filed a lawsuit against Gawker Media seeking $100 million in damages for invasion of privacy, infliction of emotional distress and violation of the Florida Security and Communications Act. The jury ultimately awarded Hogan $140 million in damages leading to Gawker Media filing for bankruptcy.

Had Gawker’s legal team been aware that Thiel was bankrolling the lawsuit, their strategy in the litigation probably would have been very different. If you are fighting Hogan alone you file motions and drag it out to be as painful as possible for Hogan, in the hopes that he’ll settle. Hogan wouldn’t settle—because Gawker wasn’t fighting Hogan—they were fighting a billionaire—with unlimited funds to litigate. Had Gawker known that Thiel was funding the lawsuit they could have cast aspersions on him and made the case to the jury that they were being hounded by a billionaire seeking revenge for a petty grudge. All of a sudden what initially looks like a pure invasion of privacy case is something much different—and raises serious questions about privacy and a free press and whether a billionaire should be able to shut down a media outlet out of pure spite. That’s an entirely different kettle of fish—and an argument the jury never got to hear.

Old,Book,In,Library,With,Judge,Gavel,On,Open,Law

On March 26, 2021, the United States Court of Appeals for the Second Circuit decided The Andy Warhol Foundation v. Goldsmith, a decision addressing the “fair use” doctrine, an important part of copyright law. “Fair use” tries to balance the extent to which one artist may build on a prior artist’s work without getting the first artist’s approval or license for doing so, and when so much of the quality or quantity of first work is copied that that artist’s work deserves protection against the latter piece. In the recently-decided case, which the Warhol Foundation had won below, the appellate court rejected the claim that Warhol’s uses of certain photographs of Prince Rogers Nelson by Linda Goldsmith (with photographs and Warhol works depicted in Slip Op. at 7-9) was protected fair use of the copyrighted photos. Instead, the Court concluded that the sixteen pieces of art Warhol had created in the Prince Series could provide Goldsmith the basis for a recovery for copyright infringement. Review of this case provides an important understanding of what “fair use” has been understood to mean, how that doctrine has changed and evolved, and what it may mean in future cases.

Understanding the decision requires an understanding of some basic facts and concepts. As the court noted, “Goldsmith is a professional photographer primarily focusing on celebrity photography, including portrait and concert photography of rock-and-roll musicians.” Slip op at 5. This eventually included taking a series of color and black/white photographs in 1981 of a “(then) up-and-coming musician Prince Rogers Nelson (known through most of his career simply as ‘Prince’).” Id. at 6-7. Eventually, Vanity Fair magazine got a license from Goldsmith to use a single black/white photograph from the collection:

“as an artist reference,” which in the industry meant that “an artist ‘would create a work of art based on [the] image reference.’” Id. at 7-8. As the Second Circuit noted:

Vanity Fair, in turn, commissioned [Andy] Warhol to create an image of Prince for its November 1984 issue. Warhol’s illustration, together with an attribution to Goldsmith, was published accompanying an article about Prince by Tristan Vox and appeared as follows:

In addition to the credit that ran alongside the image, a separate attribution to Goldsmith was included elsewhere in the issue, crediting her with the “source photograph” for the Warhol illustration. [Id. at 8-9].

Understanding those facts now require some understanding of who Andy Warhol was.

According to Court, Warhol “was an artist recognized for his significant contributions to contemporary art in a variety of media. Warhol is particularly known for his silkscreen portraits of contemporary celebrities.” Slip op at 5. After creating the item to run in Vanity Fair:

Warhol created 15 additional works based on the Goldsmith Photograph, known collectively, and together with the Vanity Fair image, as the “Prince Series.” The Prince Series comprises fourteen silkscreen prints (twelve on canvas, two on paper) and two pencil illustrations, and includes the following images:

Although the specific means that Warhol used to create the images is unknown (and, perhaps, at this point, unknowable), Neil Printz, the editor of the Andy Warhol Catalogue Raisonné, testified that it was Warhol’s usual practice to reproduce a photograph as a high-contrast two-tone image on acetate that, after any alterations Warhol chose to make, would be used to create a silkscreen. For the canvas prints, Warhol’s general practice was to paint the background and local colors prior to the silkscreen transfer of the image. Paper prints, meanwhile, were generally created entirely by the silkscreen process without any painted embellishments. Finally, Warhol’s typical practice for pencil sketches was to project an image onto paper and create a contoured pencil drawing around the projected image. [Id. at 9-10].

The question then is whether Warhol infringed, or simply made fair use of, the Goldsmith photo.

To answer that question, one needs to understand what constitutes “infringement” and what is “fair use.” Infringement is the unlicensed copying of a pre-existing work. Under copyright law, the original creator has a right to the first work and a presumptive right to the works derived from it. In fact the Copyright statute, “copyright protection extends both to the original creative work itself and to derivative works, which it defines as, in relevant part, ‘a work based upon one or more preexisting works, such as a[n] . . . art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted’ 17 U.S.C. § 101.” Slip op at 13. “Fair use” is also statutorily protected, at 17 U.S.C. § 107, and grows out of the notion that much progress in art, literature, and science comes in building on the work of others. Slip op at 14-15. Thus, determining whether one is in engaging in fair use of pre-existing works, and can proceed without license, depends on a balancing and weighing of the four statutory factors: (1) the purpose and character of the second artist’s/author’s use; (2) the nature of the earlier copyrighted work; (3) the amount and substantiality of the portion of the original work used in the second work; (4) the effect of the use on the potential market for the first work. Because “fair use presents a holistic context-sensitive inquiry ‘not to be simplified with bright-line rules,’” it gets complicated. Slip op at 15.

Frequently, as occurred in the Warhol case, the first factor becomes the battleground, and there was a trend in the law to see whether the second work had made a “transformative” use of the first, and therefore could be considered fair use. One makes such decision by determining “‘whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.’” Slip op at 16 (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994)). “Although the most straightforward cases of fair use thus involve a secondary work that comments on the original in some fashion, in Cariou v. Prince, we rejected the proposition that a secondary work must comment on the original in order to qualify as fair use. See 714 F.3d at 706.” Slip op at 17. Cariou was also a photograph case where the Court concluded that twenty-five of the thirty works at issue were transformative of the original  photographs because they had been used “‘as raw material, transformed in the creation of new information, new aesthetics, new insights and understanding.’” Slip op at 17 (quoting Cariou v. Prince, 714 F.3d 694, 706 (2d Cir. 2013)).

In this Warhol case, however, the Second Circuit stepped back from Cariou, the “high-water mark of our court’s recognition of transformative works,” to reject the argument that the Warhol Prince Series was transformative, instead finding the series merely derivative. In doing so, the appellate court made clear that a transformative purpose was a necessary, but alone insufficient element of establishing fair use, stating that:

[W]hether a work is transformative cannot turn merely on the stated or perceived intent of the artist or the meaning or impression that a critic—or for that matter, a judge—draws from the work. Were it otherwise, the law may well “recognize[e] any alteration as transformative.”

* * *

Although we do not hold that the primary work must be “barely recognizable” within the secondary work… the secondary work’s transformative purpose and character must, at a bare minimum, comprise something more than the imposition of another artist’s style on the primary work such that the secondary work remains both recognizably deriving from, and retaining the essential elements of, its source material. [Slip op. at 26, 28 (quoting Nimmer, § 13.05(B)(6) at 26)]

Because the appeals court concluded that “any reasonable viewer with access to a range of such photographs including the Goldsmith Photograph would have no difficulty identifying the latter as the source material for Warhol’s Prince Series,” the Second Circuit rejected the claim of fair use. Slip op. at 55. In doing so, the Second Circuit rejected what seemed like a fairly persuasive amicus argument (illustrated with photos at pages 9-26) that “recognizable similarity in expression is not, in itself, substantial similarity,” that only limited aspects of the Goldsmith work was protectable, and differences in aesthetic have been determinative in previous cases. It also pulled far back from the limits promoted by a number of legal scholars who, pre-Cariou, had suggested, in REFLECTIONS ON THE HOPE POSTER CASE, 25 Harv. J. L. & Tech. 243 (2012), even that “giving artists more freedom to make creative uses of copyrighted materials” should occur because it is “socially beneficial” to  provide a “safe harbor” for any use that is “creative,” which the article defined as anything that “either constitute[s] or facilitate[s] creative engagement with intellectual products.” Id. at 318-323.

One must understand that the appellate court here did more than simply look at the works side by side—an important element of the decision that use was not transformative comes from not seeing enough newness, for sure. Slip op at 25-26. The court deemed that true even though each allegedly infringing work is “immediately recognizable as a ‘Warhol.’ Entertaining that logic would inevitably create a celebrity-plagiarist privilege; the more established the artist and the more distinct that artist’s style, the greater leeway that artist would have to pilfer the creative labors of others. But the law draws no such distinctions.” Slip op at 31. But it is also important that the Second Circuit address the “commercial” purposes of the alleged use as within the same statutory prong as the transformativeness analysis. “[J]ust as we cannot hold that the Prince Series is transformative as a matter of law, neither can we conclude that Warhol and AWF are entitled to monetize it without paying Goldsmith the ‘customary price’ for the rights to her work, even if that monetization is used for the benefit of the public,” Slip op at 34, a point the Court drives home further when assessing the fourth (effect on market) statutory prong later in the opinion. Slip op at 44-50. This focus on the commercial impact, which also is further emphasized in Judge Sullivan’s concurrence, illustrates that the “fair use” analysis may be more aptly described as a “fare to use” test, in the sense that a court is determining whether the second artist must pay for the privilege of relying on the earlier creations to reach a new intended artistic destination.

It is worth noting that, despite reaction to the Warhol decision as an important one, it was ignored less than a week later by the Second Circuit itself in Marano v. Metropolitan Museum of Art, decided April 2, 2021, and the Supreme Court in Google v. Oracle. Indeed this debate continued almost immediately, as both the United States Supreme Court and the Second Circuit addressed fair use cases in recent days, and gave the second artist’s creative “purpose” a much greater continuing role in determining transformativeness than Warhol would suggest was appropriate. First, the Second Circuit itself in Marano v. Metropolitan Museum of Art (decided April 2, 2021), held in a case about a photograph of “Eddie Van Halen playing his ‘Frankenstein’ guitar” that “whether the use is ‘transformative’…constitutes the ‘heart of the fair use inquiry,’” and that the purpose the defendant sought to serve was a primary factor in determining fair use.  Summary order at 2-5 (allowing “the Met’s ‘copying the entirety of [the Photo]’”). Then, April 5th the US Supreme Court decided in Google v. Oracle that “fair use” is an “equitable rule of reason” requiring “judicial balancing” of “the sometimes conflicting aims of copyright law” so that copyright does not “stifle the very creativity which the law las was meant to foster.” (Op. at 13-15.) Neither Marano nor Google cite Warhol, though each address at some length, including in a Supreme Court dissent, the role “purpose” plays in assessing whether a use is “transformative.” See, e.g., Google, Slip op. at 24-28, Dissent at 15-17. So the debate goes on and fair use inquires remain “open-ended” and subject to “context-sensitive inquiry.” Summary order at 5.

Since fair use potentially applies to many media and markets beyond the visual art/photography one illustrated in Warhol, creators and owners of intellectual property generally need access to counsel experienced in such matters. From the book to screenplay to film progression noted as an example in Warhol, Slip op at 22, 28-29, 31, to newer (or newly popular) genres of poetry, to spoofs, pastiches and mash-ups, to video clips, to music, the question of “fair use” v. “fare to use” will continue to come up for artists building on earlier works.

SCOTUS-Today

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “The Court Dismisses the Trump Twitter Account Case as Moot, but Social Media Is Sure to Be on the Menu Again“.

The following is an excerpt:

Yesterday, I discussed the Supreme Court’s move into the world of technology in the case of Google LLC v. Oracle America, Inc., in which the Court held that Google’s copying of a small slice of Java programming language code constituted a permissible “fair use” of Oracle’s assumed copyright of Java itself. The Court’s reversal of a contrary decision by the Federal Circuit, saving Google perhaps more than $1 billion in damages, was based on factual determinations that copying the relevant code that constituted an “Application Programming Interface,” or “API,” to develop novel, transformative applications related to Android smartphones was, among other things, of minor and unrelated interest to Oracle’s interest in the Java programming language and was otherwise in the public interest. Whether this important decision will create an open season on API’s, an effective limitation on patent and copyright troll cases, or something that could affect antitrust litigation will only be seen in the future. What is certain is that the Court increasingly will be involved in cases related to information technology. As another recent Court action suggests, one such aspect of this might relate to social media.

Click here to read the full post and more on SCOTUS Today.

SCOTUS-Today

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “The Court Won’t Allow Second-Guessing of Convictions Supported by Persuasive Evidence”.

The following is an excerpt:

In a per curiam opinion (Sotomayor, J., dissenting without opinion), the Court today decided the case of Mays v. Hines, reversing the Sixth Circuit and reinstating a judgment of conviction in a murder case that originated almost 35 years ago.

Hines had been convicted of murder in the wake of evidence that he had been seen fleeing the scene in the victim’s car while wearing a bloody shirt. He was later heard by family members to admit to stabbing someone at the motel where the murder took place. Nevertheless, years after trial, a divided panel of the Sixth Circuit rendered a majority decision that Hines should be given a new trial because his attorney should have worked harder to blame someone else for the crime.

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SCOTUS-Today

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: “The Supreme Court Takes a Lenient View of Personal Jurisdiction and 4th Amendment Seizures”.

The following is an excerpt:

The Court rendered two opinions on Thursday, both interesting and impactful, one of them particularly significant with respect to civil litigation practice.

Ford Motor Co. v. Montana Eighth Judicial District Court arose following two motor vehicle accidents, one in Montana, the other in Minnesota, in which Ford vehicles were alleged to have been defective. Ford argued that the state courts’ having personal jurisdiction over it could only exist if the company’s conduct in the state had given rise to the plaintiffs’ claims, and that the necessary causal link could be found only if the company had designed, manufactured, or sold in the state the actual vehicle involved in the accident. None of those factors existed here, where the vehicles at issue were brought into each state via resale elsewhere and subsequent relocation. Affirming the judgments of the two state supreme courts who had ruled against the company, every Justice (save Barrett, J., who did not participate) rejected the company’s “causal link” proposition.

The lead opinion was written by Justice Kagan, who was joined by her increasingly frequent ally, the Chief Justice, along with Justices Breyer, Sotomayor, and Kavanaugh. The remaining three Justices concurred in various separate opinions.

Click here to read the full post and more on SCOTUS Today.