Legal Blog

Assembly Bill 168’s Impact on Hollywood

As of January 1, 2018, Assembly Bill 168, a new California law prohibiting employers (including movie and television studios) from asking potential employees for their salary history, went into effect. The new law prohibits the following: (1) Relying on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant; (2) Asking (orally or in writing) an applicant for employment about his/her salary history, including compensation and benefits; (3) Refusing to provide, upon reasonable request, an applicant with the pay scale for a position; and (4) Contacting an applicant’s prior employer(s) for the information covered by (1), (2), and (3). However, the law does not prohibit the applicant from “voluntarily and without prompting” disclosing this information but, does prohibit agents from disclosing the information without express permission from their client. “This represents a pretty fundamental change in how negotiation has traditionally transpired in the entertainment industry,” says corporate attorney Bob Darwell, who represents companies like Amazon Studios. “The first step to cutting a deal was to call the talent representative and ask for quotes and then to verify those quotes.”[1]

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Blockchain and Film Distribution

As the world becomes more familiar with blockchain, people and companies continue to turn to the rapidly adopted technology to solve problems that were previously seen as just the costs of doing business. Over the past few years, in addition to serving as the backbone for headline-grabbing digital cryptocurrencies, the blockchain ledger has been used to create comprehensive, accurate and decentralized databases of music rights, image rights, and even the protection of voting rights. Over the past few months, players in the film industry have made efforts to implement the blockchain technology into the life cycle of a film, including with regard to the accounting and distribution processes.

As explained in detail in our previous posts, blockchain technology presents a decentralized way to record and account for verified transactions in a variety of commercial applications. Or, to put it another way, blockchain’s innovation has been to create a peer-to-peer platform, which allows for the automated management of certain rights and the verifiable recording of transactions concerning those rights. By removing the necessity of a third party to officiate a transaction (such as a bank), blockchain’s promise is a world where people can conduct business more immediately and directly without a loss in security. As such, any space that has a need to protect, manage, and transact in a set of rights, is fertile ground for blockchain applications. Continue reading

CDAS’s Copyright Photo/Video Claims Defense Checklist for Media Platforms

Copyright infringement claims from photographers and image licensing companies have become increasingly common with the widespread use of easily accessible digital content on the Internet and in social media.  Photo copyright owners discover these claims en masse by way of image recognition software, and often pursue them using high-volume contingency fee-based law firms, claiming that any number of posts from time immemorial constitute infringements justifying large settlement demands.  But just because you’ve received an unreasonably high demand that far exceeds any typical license fee doesn’t mean you’re liable for that amount.  Some due diligence can help you gain leverage in these disputes, and possibly even avoid further litigation.  To be sure, content creators should be fairly paid if their content has been misused, but the extremely aggressive way some of these claims are pursued calls for a nuanced and informed approach.  You should contact a firm with experience in copyright and litigating image claims if you find yourself on the business end of one of these demands (especially a formal lawsuit), but for now, here are the basic steps you should take to preserve your best defenses and minimize potential exposure to costs and damages: Continue reading

Examine How the #MeToo and #TimesUp Movements are Impacting Entertainment Contracts

As the #MeToo and #TimesUp movements and their effects continue to unfurl, Hollywood is utilizing legal mechanisms via entertainment contracts to implement and supplement the changing norms, from “morals provisions” to “inclusion riders.”

What are commonly referred to as “morals provisions” have a long history in the entertainment industry, but in recent years, have been more commonly found in endorsement and advertising deals than in television and film agreements. Studios and production companies that had stopped using such provisions have started putting in place plans to reimplement them, while those that had been using them all along are revising them to conform to the new landscape.  Even distributors who never used morals provisions are starting to include them in their contracts, lest one of their projects ends up with some unexpected negative baggage.  Regardless, all of these industry players are looking for ways to tailor their contractual language to better address the valid business concerns related to fallout from the #MeToo movement.  Although talent attorneys are generally not pleased at the resurgence of these provisions, it appears unlikely at this time that the provisions will go away entirely; indeed, in some cases talent representatives think that there should be reciprocal provisions benefitting talent if there is another Weinstein-like situation with a studio or distributor. Continue reading

Oracle America Inc. v. Google, LLC: Oracle Prevails in Fair Use Case before Federal Circuit; CDAS Provides Amicus Support

Last week the U.S. Court of Appeals for the Federal Circuit reversed the U.S. District Court for the Northern District of California’s ruling of fair use in Oracle America, Inc. v. Google LLC, and held that a verbatim and non-transformative taking in the presence of an actual or potential licensing market fatally undermined the defense.  Oracle had sued Google for copyright infringement, alleging that Google had unlawfully used 37 packages of Oracle’s Java application programming interface – “pre-written Java source code programs” that serve as shortcuts for various computer functions to save programming time – in its Android-powered devices.  Google copied verbatim 11,500 lines of Oracle’s copyrighted computer code as well as the structure, sequence, and organizing of the packages.  After a second jury trial on fair use, Google prevailed on its fair use defense, and Oracle appealed after the district court rejected its post-trial motion for judgment as a matter of law. Continue reading

Notable Blockchain Developments in Early 2018

Cryptocurrencies and blockchain technology are no longer relegated to the most esoteric corners of the Internet.  While these important technological and social innovations were once widely unknown, or considered the purview of the dark web, they have now reached the mainstream.  Federal and state governments, as well as major corporations, are taking notice. Here are a few recent noteworthy developments:

Cryptocurrencies Ruled “Commodities” Under the Commodities Exchange Act

U.S. District Court for the Eastern District of New York ruled on March 6, 2018 that virtual currencies are commodities regulated under the Commodities Exchange Act (CEA).  In this important decision, the court held that the Commodity Futures Trading Commission had standing to sue under the CEA to protect investors against fraud and manipulation in virtual currency markets.  This allowed the CFTC to bring claims against Coin Drop Markets alleging that this defendant “offered fraudulent trading and investment services related to virtual currency.”  Rulings like this challenge the common assumption that cryptocurrencies are unregulated, and may signal the shrinking of the crypto “wild west” frontier. Continue reading

Court Holds Violation of FTC Endorsement Guidelines Does Not Lead to Federal Trademark Claim

(Lokai Holdings LLC v. Twin Tiger USA LLC, S.D.N.Y. 2018)

While brand owners often benefit from the endorsement of online and social media “influencers,” such endorsements must not mislead consumers as to the relationship between the brand and individual endorsing the brand’s products or services. To ensure that “material connections” between brands and influencers are clearly and fully disclosed, the FTC has put forth guidelines designed to assist brand owners with meeting this requirement. Under the guidelines, brands are subject to liability for failing to disclose material connections between themselves and those individuals who promote or endorse the brand. To the extent an advertiser contravenes these guidelines, however, no private right of action exists; instead, it is up to the FTC to take action. A recent decision by the U.S. District Court for the Southern District of New York has added a further limitation, holding that a violation of the FTC guidelines cannot support a claim for false advertising under either federal or California state law. Continue reading

The de Havilland v. FX Networks, LLC Appeal: Round 2 Goes to FX

On Monday a California appeals court handed down a decision in the closely watched case of de Havilland v. FX Networks, LLC et al., triggering a collective sigh of relief from studios, networks, and other content producers. The court’s decision reaffirms two widely recognized principles: (1) that the First Amendment’s protection of creative works is not limited by the mere fact that a work generates income, and (2) that an individual cannot censor the way in which she is depicted in a creative work merely because she does not like that depiction.

These principles, as applied to the entertainment industry, have been challenged in recent years with a wave of cases such as de Havilland.  For instance, a case in New York, Porco v. Lifetime Entertainment Services, LLC, was allowed to proceed after an appellate court held that the newsworthiness exception to New York’s statutory right of publicity did not apply to a docudrama that substantially fictionalized the life story of a real person.  The court stated that such a work was “mainly a product of the imagination” and thus “nothing more than [an] attempt[] to trade on the persona of the plaintiff.” Continue reading

MoviePass Passes 2 Million Users, But Can It Keep Going? The Subscription Theater Ticket Service Looks to New Revenue Streams

MoviePass, the subscription movie ticket and streaming service, has grown its user base exponentially in recent months, but it may become a victim of its own success. The $7.95 per month service, which supplies its users with an unlimited number of monthly movie theater tickets and access to streaming content, has over two million users and counting. Purchasing multiple movie theater tickets for these two million users every month, however, generates a significant operating loss. MoviePass hopes to reverse its fortunes through a combination of monetizing the information its users provide, partnerships with movie studios (including acting as a distributor) and theater chains, as well as a gradual process by which its users stop “binging” the service and become more passive consumers. Continue reading

Fox News Network, LLC v. TVEyes, Inc.: Second Circuit Rejects Fair Use Defense for Mass Archiving and Re-Distribution of Copyrighted TV Content

A panel of the U.S. Court of Appeals for the Second Circuit today issued its much-anticipated opinion in the TVEyes appeal, reversing the decision of the U.S. District Court for the Southern District of New York, and holding that TVEyes’ copying, storage, and re-distribution for viewing, downloading, and sharing, of massive amounts of copyrighted TV content was not fair use.

TVEyes is a for-profit media company offering a service that allows its clients to “sort through vast quantities of television content in order to find clips that discuss items of interest to them.”  TVEyes records 1,400 channels’ worth of TV broadcasts, 24 hours a day, and makes the copied content searchable by also copying the closed-captioned text that accompanies the videos.  Clients can search for videos based on keywords and play unlimited video clips, each up to ten minutes in duration, and may archive, download, and share clips by e-mail.  Clients pay $500 per month for these services. Continue reading