Copyrights

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Animal selfie enthusiasts rejoice – your pet cannot sue you for copyright infringement for reproducing their pictures online under the Copyright Act of 1976.  The United States Court of Appeals for the Ninth Circuit (“Ninth Circuit”) has now answered the concern that has (obviously) been at the forefront of every legal professional’s mind – whether a selfie-taking monkey can sue humans, corporations, and companies for copyright infringement.  The answer – (deep breath) – is no.

The copyright case at issue, Naruto, a crested macaque v. David John Slater, et al., Case No. 15-cv-4324, centered on the allegation that Naruto (a seven-year old Indonesian crested macaque) was the true author of a series of “selfies” allegedly taken by Naruto in 2011 with a camera owned by photographer David Slater and thereafter reproduced by Mr. Slater and certain companies.  The People for the Ethical Treatment of Animals (“PETA”), who brought the lawsuit on Naruto’s behalf, claimed that Mr. Slater and others violated the Copyright Act by falsely claiming to be the author of the “monkey selfies” and reproducing those images for profit.  In response, Mr. Slater argued that Naruto lacked constitutional “standing” to sue and that animals cannot sue under the Copyright Act.  The district court dismissed the action, agreeing that Naruto could not sue under the Copyright Act, but declining to assess whether Naruto has the constitutional “standing” to sue.  PETA appealed but settled the lawsuit with Mr. Slater while the appeal was pending.

Undeterred by the settlement, the Ninth Circuit affirmed the lower court’s dismissal.  Sharply criticizing PETA for bringing the lawsuit and then settling it without Naruto’s participation, the Ninth Circuit found that binding circuit precedent forced the court to accept that animals have constitutional standing to assert claims in the federal courts.  The Ninth Circuit, however, was not about to throw open the courthouse doors to all animal-plaintiffs.  The Ninth Circuit found that under the plain text of the Copyright Act Naruto (and all other nonhumans) could not file copyright infringement lawsuits.  In fact, the Ninth Circuit was so adamant about this conclusion that it awarded Mr. Slater his attorneys’ fees incurred in opposing the appeal.

Thus ended the saga of the monkey selfie seen ‘round the world – not with new, ground-breaking animal rights law, but with the strict interpretation of a federal statute, adherence to the doctrine of stare decisis, and a plea that the prior Ninth Circuit law on an animal’s constitutional standing be reexamined.

One little-publicized part of the new tax law (Tax Cuts and Jobs Act of 2017) may negatively affect the value of some patents and other intellectual property.  It does so by changing the tax treatment of income from sales of “patents, models and secret formulas or processes” from capital gains to ordinary income.

Prior to the amendment of Tax Code Section 1221(a)(3), income from sales of (1) “patents, models and secret formulas or processes,” (2) held by the IP creator, (3) for more than one year, was taxed at the capital gains rate.  This resulted in lower tax than the ordinary income tax rate that applied to other types of IP, such as copyrights, literary, musical, and artistic compositions.  Congress has now taken this tax advantage away.

The change in the law affects those that sell or license IP in the “primary market” only —in other words, the original creators of the IP.  It generally does not affect those that have paid to own the IP, including the IP creators’ employers.

There still remains an exception under Tax Code Section 1235 providing for lower tax on sales and licensing of all rights to patents, secret formulas and trade names (but only these types of IP).  For other types of IP, adjustments in sale prices and license royalties will need to compensate for the higher tax under the new law.

Our tax and IP groups can help you assess the new law’s impact on these valuable assets.

In 2015, a California jury decided that the mega-hit “Blurred Lines” by Pharrell Williams, Robin Thicke, and Clifford Harris (a/k/a “T.I.”) infringed the copyright in Marvin Gaye’s song, “Got To Give It Up.”  The jury awarded Gaye’s heirs $7.4 million.  Last week, a panel of the federal court of appeals in San Francisco affirmed the judgment in 2-1 split decision.  Williams v. Gaye, No. 15-56880 (9th Cir. March 21, 2018).

The appeals court decision confirmed what this blog argued just after the 2015 jury verdict:  that the most significant part of the “Blurred Lines” case is that a jury – not a judge – made the call.

That is somewhat unusual in a copyright case, especially a case involving music.  In copyright law, the question whether one work infringes another often turns on whether the allegedly infringing work is “substantially similar” to the previous work.  Courts often view the “substantial similarity” question as so clear or one-sided that there is no need for a jury to decide the issue (for our lawyer-readers:  i.e., summary judgment).  The main question in Williams v. Gaye was whether “Blurred Lines” was “substantially similar” to “Got To Give It Up.”  Unusually, the trial judge held a jury trial where the jury was presented with audio and expert testimony concerning the purported similarities/dissimilarities between the two works.  The jury ruled for the Gayes.

Courts hesitate to overturn jury verdicts, and this case proved no exception: the appeals court deferred to the jury’s findings without stating its own opinion whether “Blurred Lines” actually infringed Gaye’s composition, while providing little new legal guidance on the question of infringement of musical works.

This decision may not be the end of the case.  A strident dissenting opinion believed the case never should have gone to a jury and that the Gayes’ claim should have been rejected as a legal matter, and it is possible the entire court of appeals or the Supreme Court could review the case.  Failing further review, however, the “Blurred Lines” case heralds more jury decision-making in these “blurry” disputes.

The Digital Millennium Copyright Act (“DMCA”) affords an invaluable safe harbor to online “service providers” (as that term is very broadly defined in the DMCA) for copyright infringement claims arising from user-generated content posted to a service provider’s website.  To be eligible, service providers must satisfy several criteria.  For example, service providers must implement a policy for the termination of repeat infringers and comply with certain “standard technical measures” used by copyright owners to identify or protect copyrighted works.   Service providers must also designate an agent to receive notice of claimed infringement.  Although service providers wishing to take advantage of this safe harbor have traditionally designated their agents through a written submission to the United States Copyright Office, in May 2017, the Copyright Office issued a final rule requiring service providers to register their designated agents (or in the case of those already registered, re-register) through a new online system.  The deadline to register with the new online system is December 31, 2017.  The final rule also requires the designation be renewed every three years.  Failure to register and renew will result in a loss of eligibility for the DMCA safe harbor, a risk no service provider should take.

The First Amendment and Trademarks: Protecting “The Thought We Hate”

Can the federal government refuse to register offensive trademarks?  The Supreme Court held yesterday that it cannot.  Although the case did not directly involve the “Washington Redskins” trademark registration, discussed in previous blog articles in this space, it effectively gave the Redskins a victory in their effort to reinstate their trademark registration against efforts to cancel their mark as disparaging.

The Lanham Act governs all federal registration of trademarks.  Since it was enacted in 1946, the Lanham Act has included the “Disparagement Clause,” which prohibits the registration of trademarks “which may disparage . . . persons, living or dead, institutions, beliefs or national symbols, or bring them into contempt, or disrepute.”  In Matal v. Tam, No. 15-1293 (2017), a case sure to have wide-ranging effects, the Supreme Court unanimously held the Disparagement Clause unconstitutional under the First Amendment.

The case involves Simon Tam, the lead singer of a band called “The Slants,” who sought federal registration of “THE SLANTS” trademark.  The band chose its name in an attempt to “reclaim” and “take ownership” of stereotypes about its members’ own Asian ethnicities.  The United States Patent & Trademark Office (“PTO”) rejected Tam’s request to register the mark under the Disparagement Clause, finding “there is . . . a substantial composite of persons who find the term in the applied-for mark offensive.”

The Supreme Court, however, held the rejection of Tam’s registration unconstitutionally discriminated against speech.  The Supreme Court resolved two key issues.  First, it found that trademarks are private speech; not government speech.  Second, the Court ruled that such viewpoint-based discrimination of trademarks is impermissible.

Trademarks are Private, Not Government, Speech

The First Amendment does not regulate government speech.  The general effect of this principle is that the government is not required to give equal time and representation to competing viewpoints when the government itself speaks – in contrast to government regulation of a private person’s speech, which must be viewpoint-neutral.  For example, the government is not required to mount a pro-smoking crusade to balance out its anti-smoking campaign.  In Tam, the PTO argued that the act of approving of a trademark was itself government speech and therefore was not within the reach of the First Amendment.

Justice Alito, writing on behalf of the entire Court, quickly shot down the PTO’s contention, ruling that trademarks are private, not government, speech.  The Court explained that the government does not “dream up” the marks a private party seeks to register: the PTO registers the mark under the Lanham Act based on objective criteria, regardless of the content of the mark.  If registering a trademark is government speech, the Court wrote, then the government is “babbling prodigiously and incoherently” while “expressing numerous contradictory views . . . [and] unashamedly endorsing a vast array of commercial products and services.”  To hold otherwise would disqualify any speech subject to government registration from First Amendment protection.  This would necessarily include copyright protection, with broad and disturbing implications for the speech expressed in copyright-protected writing, art, music, film, and other content.

The Disparagement Clause Impermissibly Discriminates Based on Viewpoint

Having decided that trademarks are covered by the First Amendment’s free speech protection, the Supreme Court went on to find that the Disparagement Clause embodied an unconstitutional discrimination against speech based on its viewpoint.  Although the Court could not muster a five-member majority to agree on the exact reasoning, the Court unanimously disapproved the refusal to register trademarks based on their perceived offensiveness.

As four members of the Court explained, the Disparagement Clause impermissibly authorized the PTO to “favor some viewpoints or ideas at the expense of others.”  “Giving offense,” they wrote, “is a viewpoint.” Because the PTO’s refusal to register “The Slants” was to prevent offense, it ran afoul of “the heart of the First Amendment,” which protects “the freedom to express ‘the thought that we hate.’”  And because the Disparagement Clause impermissibly went further than necessary to achieve the government’s purported goal of preventing discrimination, it was unconstitutional.  A majority of the Court arguably went further, holding that because the Disparagement Clause impermissibly discriminated based on viewpoint, it was subject either to “heightened” or “strict” scrutiny and was therefore invalid regardless of whether it furthered the prevention of discrimination.

The Effects of Tam

The effects of Tam are likely to be comprehensive and wide-ranging.  In invalidating the Disparagement Clause, the Court ruled the PTO cannot refuse to register a trademark because it is disparaging.  This calls into question whether any viewpoint-based discrimination for a business’s trademarks or copyrights will pass constitutional muster.  Most prominently, it is good news for the embattled Washington Redskins, who were under fire when the PTO previously cancelled their registration based on their mark disparaging Native Americans.