Legal Blog

Managing Risk for Podcasts Through Media Liability Insurance

Producers, distributors, and marketers of creative content are vulnerable to legal risks, such as claims of copyright or trademark infringement, plagiarism, defamation (i.e., libel for written works, slander for audio or audiovisual works), misappropriation of a public figure or private person’s name, likeness, or other personal attributes, invasion of privacy, and other claims both legitimate or spurious – that can diminish the value of a creative work. This is especially true as a creative work achieves greater distribution or greater popularity or attention. Media liability insurance, a specialized type of errors and omissions insurance (commonly abbreviated as E&O), provides production companies, broadcasters, publishers, marketers, advertisers, and others in the digital media and entertainment industry with coverage against these types of claims. With more than half of Americans reporting having listened to a podcast and around 90 million people being monthly listeners, the excitement around podcasts has already given rise to a flourishing, diverse, and investment-rich industry that’s only expected to grow. As podcasts become more widely distributed, the risk of content related claims increases and producers, distributors, and marketers are increasingly looking to media liability insurance coverage to mitigate those risks.

Coverage Limits and Basis

The most typical E&O policy for podcasts and other media provides coverage on an occurrence basis with limits of $1,000,000 per occurrence, and $3,000,000 in the aggregate. In other words, the insurer will cover costs and damages up to $1,000,000 per claim made against the primary insured party (i.e., the production or distribution company or advertiser) or an additional insured party during the coverage period (also referred to as the policy term), and up to $3,000,000 in total for all claims made and paid out during the coverage period, with respect to content first disseminated or distributed during the coverage period. An “occurrence” policy covers claims for incidents or damages that occurred during the coverage period, regardless of when the claim was actually made, whereas a “claims made” policy only covers claims made during the coverage period for incidents or damages occurring during the coverage period.

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SCOTUS Rules Federal Ban on Registration of “Immoral” or “Scandalous” Trademarks Violates the First Amendment

In a major win for free speech advocates, on Monday, June 24, 2019, the United States Supreme Court ruled that a federal statutory ban on the trademarking of words and symbols that are “immoral” or “scandalous” violates the First Amendment.

Erik Brunetti of Los Angeles, a fashion designer for the streetwear brand “FUCT,” brought suit after being denied registration of the mark “F-U-C-T.” Brunetti applied for registration of the mark in 2011, but an examining attorney of the United Stated Patent and Trademark Office refused registration on the grounds that the phonetically profane term was too “highly offensive” and too “vulgar.” Brunetti appealed to the Trademark Trial and Appeal Board (the “TTAB”), but to no avail, as the TTAB affirmed the registration refusal. Brunetti took his case to the Court of Appeals for the Federal Circuit and sought a facial Constitutional challenge to the Lanham Act’s ban on “immoral or scandalous” marks; the appeals court held that the ban violated the First Amendment, and the Supreme Court granted cert.

In a rare bipartisan ruling, Justice Elena Kagan wrote for the majority, and in a 6-3 decision, was joined by Ruth Bader Ginsburg, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Clarence Thomas. Justice Alito added a brief concurrence, and justices Sotomayor, Roberts, and Breyer each concurred in part and dissented in part.

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Making Money and Protecting Yourself in Podcasting: Three Considerations for Unscripted Podcasts

The market for unscripted podcasts –from true crime, to sex and relationships, to sports and pop culture – is exploding. With top podcasts bringing in five figures in revenue per episode and opening the door to multiple ancillary opportunities including merchandise and live touring, what do podcast producers need to know to protect themselves and their commercial opportunities? Here are three quick recommendations:

  1. Secure Releases: It is best practice to obtain signed release agreements from everyone who appears on your podcast prior to them appearing or making a creative contribution. Whereas in the past it might have been possible for part-time podcasters to take a looser approach to securing signed paperwork, the podcast business is now becoming more sophisticated, and buyers are becoming more rigorous and demanding. Distributors, advertisers and financiers will begin requiring standard releases in the same way that Netflix or HBO requires releases when acquiring a documentary film. Releases will also be required in order for you to obtain errors and omissions insurance, which will help insulate you from legal liability in the event that a claim is filed against your podcast. And even if a third party does not require releases, obtaining releases upfront will help mitigate your legal risk. Make sure that you obtain a release from your attorney that is appropriate for the kind of podcast that you are making.
  2. Consider Vetting: Unscripted podcasters should consider working with an experienced first amendment attorney to help vet their podcasts and anticipate legal issues. This is particularly true if you are making statements and allegations concerning individuals who are not public figures (e.g., they are not celebrities or politicians). The potential risk is especially acute for podcasters operating in the true crime space, where stories often unravel in real time and there is a strong possibility of receiving incomplete or inaccurate information and thus making false or defamatory statements concerning a member of the public. An attorney will help review your scripts and ensure that you present information in a manner that is less likely to get you sued. Podcasters in the true crime space should also discuss with their attorney what to do in the possibility that their research and materials become subpoenaed as part of an active police case – in which event, the podcaster could be required to turn over materials and even act as a witness in court.
  3. Think Derivatives: Much of the money in podcasting at the moment arises from derivative rights – the ability to take the podcast into other avenues such as publishing, live touring, live stage, interactive, and especially film and television. Like their scripted brethren, unscripted podcasts are frequently being acquired by tv and film studios and producers – both to be transposed directly as documentaries and other unscripted formats, and for adaptation as scripted productions. Accordingly, it is important that podcasters are prepared in order to maximize their upside in the possibility of a sale. That means – at minimum – securing signed agreements with all contributors and collaborators. You may also want to consider securing life rights and/or exclusivity from your primary subjects. While this can slow down negotiations at the start of the podcast process, it does also ensure that you have maximum leverage when entering into negotiations with film and TV producers (whilst mitigating the risk of being circumvented by a competing project concerning the same subject matter – which is very possible when the subject matter relates to matters of public record, such as a historical event or crime). Your representatives will be able to discuss what is appropriate in order to protect you and your career in the event that your podcast takes off.

Learn more about CDAS LLP Podcasting here.

Protecting Diverse Content: 4 Deal Suggestions

The homogenous nature of Hollywood’s output has been a source of frustration for some time, especially taking into consideration that the stories it has been telling (largely told from a white, cis male, heterosexual, US-centric point of view) do not reflect the composition of the world or its audience. The entertainment business has made some progress recently, with the likes of Black Panther, FX’s Pose and Atlanta, Netflix’s To All The Boys I’ve Loved Before, Always Be My Maybe, Dear White People and Orange Is the New Black, Killing Eve, Hulu’s Shrill and HBO’s upcoming Euphoria, all of which feature diverse casts and generally include women and people of color among the core creative team.

However, we are not there yet. Per UCLA’s 2019 Hollywood Diversity Report, only two of ten lead actors in film are people of color (2.2 of 10 in broadcast TV), while only 1.3 of 10 film directors are female. Transgender actors are virtually invisible in lead roles on television.

This is not only important in the name of fairness, equality and an accurate depiction of the world we live in. Diverse stories also perform well commercially. Per the same UCLA report, “Films with casts that were from 31 to 40 percent minority enjoyed the highest median global box office receipts….films with the most racially and ethnically homogeneous casts were the poorest performers.”

With that said, the following reflects some posts from the perspective of rightsholders (such as book authors, or podcast creators) with some suggestions as to how they can help protect their diverse content in the journey from book (or stage, or podcast, or even video game) to screen. We do a huge amount of rights deals on both buyer and seller side, so we’re quite well positioned to offer observations on trends that we’re seeing.

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Fourth Circuit Rules in Favor of Stock Photographer, Overturning Widely Discussed Fair Use Decision

The rights of a stock photographer were recently vindicated when the U.S. Court of Appeals for the Fourth Circuit overturned a controversial Virginia district court decision, which had held that a production company’s use of a stock photo on a website promoting a film festival was fair use.  In the decision, Brammer v. Violent Hues Productions LLC, No. 18-1763, published on April 26, 2019, the Fourth Circuit determined that Violent Hues Productions, LLC’s online use of a cropped version of Russell Brammer’s photo of the Adams Morgan neighborhood in a list of D.C. tourist attractions promoting the Northern Virginia International Film and Music Festival failed all four factors of the fair use analysis.

The case arises from the unauthorized use of a photograph titled “Adams Morgan at Night” (seen in the decision in Appendix A), which Brammer shot from the rooftop of a building in the Washington D.C. neighborhood in 2011.  Experimenting with various shutter speeds and aperture combinations, Brammer photographed a busy street full of passing cars that appear as trails of red and white lights.  He published a digital copy of the photo on his website and on Flickr with a “© All rights reserved” notice, and later licensed the photo for online use.

Years later, in 2016, Violent Hues downloaded the photo—presumably from Flickr, while overlooking the rights notice—and proceeded to crop out the negative space before posting it on http://novafilmfest.com.  Brammer discovered the use and sued Violent Hues.  After the district court absolved Violent Hues of liability under the fair use doctrine, Brammer appealed the decision, asking the Fourth Circuit to set the record straight.

The Fourth Circuit did just that when it engaged in a thoughtful analysis of the fair use factors.  Its decision is instructive as it adds to the wealth of case law on how to interpret the complex and nuanced doctrine of fair use in a case that many thought would have an obvious outcome.

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The 150-Year Itch: California Legislature Amends Civil Code Section 1542 but Creates More Questions in the Process

California Civil Code Section 1542 (“Section 1542”) is ubiquitous in documents relating to California deals, parties, or litigations.  For instance, nearly every severance or settlement agreement entered into in California and/or involving a California person, company, or claim, will include a Section 1542 waiver provision. The main purpose of the Section 1542 statute is to prevent the inadvertent waiver of unknown claims by signing a general release (and at least in the context of settlement and release agreements, Section 1542 often appears in the context of a waiver of the rights granted by the statute).  After nearly 150 years on the books, Section 1542 has just been revised, likely piquing the interest of any lawyer whose practice touches the State of California.

The original language of Section 1542 read:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her, must have materially affected his or her settlement with the debtor.

In other words, a general release under California law, no matter how broad, does not extend to claims that were unknown at the time of executing the release. Absent an express waiver of Section 1542, broad release language will not prevent these claims from being brought.

Some of the language, however, has led to debate over interpretation throughout the years.  When the statute was codified in 1872, it referred solely to monetary claims in the context of creditors and debtors. Modern case law, however, has interpreted Section 1542 to not only include monetary claims in the limited debtor/creditor context, but also in many other types of claims and scenarios, for instance, in workers compensation proceedings, personal injury cases, and employment cases. 

In an effort to clarify Section 1542, the statute was amended effective January 1, 2019 to now read:

A general release does not extend to claims which that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, which  and that if known by him or her, must would have materially affected his or her settlement with the debtor or released party.

As stated in Section 3 of California Senate Bill No. 1431, these additions of “or releasing party” and “or released party” were meant to reflect the interpretations of the terms in Section 1542 as interpreted in existing case law. The revisions are intended to ameliorate confusion as to which types of cases are covered by Section 1542 and are meant to provide greater clarity to a releasing party choosing to waive their Section 1542 rights on the scope and ramifications of that waiver. The newly amended statute now gives notice to releasing parties that Section 1542 definitively encompasses more than just monetary claims, and that if they waive their Section 1542 rights, they are waiving their ability to bring a broader swath of claims.

While the additions of “or releasing party” and “or released party” serves to indicate the full scope of Section 1542’s application, whether the changes from “which” to “that” and “must have materially affected” to “would have materially affected” make a difference to the statute’s application remains uncertain. Similarly, it is unclear whether courts will find a Section 1542 waiver using the old language but executed after January 1,2019 valid.  Due to this particular uncertainty, the amended version of Section 1542 should be used moving forward to avoid potential invalidation of a Section 1542 waiver, including in settlement agreements, contracts and amendments, and other transactional documents. A failure to do so may result in potentially costly litigation over statutory interpretation that could have been easily avoided.  Further, the continued use of the old language, even if found to be enforceable, could potentially lead to the same type of confusion regarding scope that the Section 1542 amendment was meant to fix. The potential costs in time and resources can be easily prevented by updating the provision to its amended language.

The amendment of Section 1542 appears to mark an effort by the California legislature to adapt to the litigious environment in the Golden State. Parties entering into an agreement that includes a Section 1542 waiver should ensure they know what they are agreeing to and should consult counsel for the avoidance of any doubt in light of the recent statutory amendments. Due to the uncertainties raised by the amendment, it may have the unintended (and ironic) side-effect of causing further litigation over statutory interpretation. This section may ultimately require further clarifications and the amendment may have paved the way for even more legislation to streamline Section 1542’s application.

Supreme Court Hands Down Critical Decisions in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC and Rimini Street, Inc. v. Oracle USA, Inc.,Resolving Circuit Splits Over Interpretation of Copyright Act Provisions

It was an eventful day for copyright law on Monday, March 4, as the Supreme Court of the United States issued two unanimous opinions, both involving provisions of the Copyright Act.  The decisions were fittingly both issued on the 110th anniversary of the 1909 Copyright Act.

In the first case, Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC,No. 17–571, the Court, in an opinion authored by Justice Ginsburg, resolved a long-standing circuit split over whether a copyright owner can sue in federal court with only a copyright application in hand, or whether a completed registration is necessaryThe Court held that “registration . . . has been made” under Section 411(a) of the Copyright Act—and thus an infringement suit may be instituted—when the Copyright Office grants or denies registration after evaluating the copyright application (coined the “registration approach”) rather than when a copyright owner merely submits the application, materials, and fee required for the registration to begin processing (the “application approach”). 

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Law 360: Supreme Court Will Hear ‘Scandalous’ Trademark Case

Law 360 reports that “less than two years after ruling that a federal ban on racist trademark registrations violated the First Amendment, the U.S. Supreme Court agreed Friday to hear a case that will decide whether a similar rule banning “scandalous” material is also unconstitutional.”

Catch up on this issue with our coverage of the 2017 “Slants” decision here: Band Not Banned: High Court Finds Unconstitutional Trademark Office’s Basis for Refusal to Register THE SLANTS Trademark

Dance Dance Litigation: Actor Alfonso Ribeiro Moves to Take The Game Out of “The Carlton”

Earlier this week, actor Alfonso Ribeiro filed a claim for copyright infringement, violation of the right of publicity, and unfair competition against Epic Games, Inc. over its use of the dance move commonly known as “The Carlton” (the “Dance Move”) in the popular video game Fortnite: Battle Royale (“Fortnite”).  Ribeiro also filed a similar claim against Take-Two Interactive Software Inc. and certain of its subsidiaries over the use of the Dance Move in the NBA 2K video game series (“NBA 2K”). 

To date, both Fortnite and NBA 2K have generated millions of dollars in revenue via in-game purchases, including character avatar dance moves known as “emotes”.  These emotes have also taken on their own significance in current pop culture, with millions of teens all over the world posting videos of themselves copying the dance moves of their video game avatars on YouTube and other social media sites, often under hashtags referencing the video games (e.g., #fortnitedance or #fortnitevideos), rather than the dance move creators.  The Dance Move, which was first popularized by Ribeiro in an early 90s episode of the TV sitcom “The Fresh Prince of Bel-Air,” was included in Fortnite and NBA 2K as purchasable in-game emotes named the “Fresh” and “So Fresh”, respectively.  The Dance Move was also featured in promotional materials for the games.  None of these uses of the Dance Move gave attribution to Ribeiro or had Ribeiro’s prior permission, which Ribeiro argues was necessary.  Ribeiro’s complaint seeks injunctive relief to prevent the further inclusion and sale of the Dance Move in the games and use in promotional materials, as well as damages, including profits purportedly attributed to the misappropriation and improper use of the Dance Move and Ribeiro’s likeness.        

In the complaints, Ribeiro argues that despite first being aired more than twenty years ago, the Dance Move remains “distinctive, immediately recognizable, and inextricably linked to Ribeiro’s identity, celebrity, and likeness” and that accordingly, “the Dance [Move] has become synonymous with Ribeiro…..[and] is a part of Ribeiro’s identity.”  The complaints also note that Ribeiro filed an initial application with the United States Copyright Office on December 15, 2018 to obtain a copyright registration for the Dance Move.  Ribeiro’s complaint further alleges that the emotes constitute unlawful digital copies and derivative works of the Dance Move as well as a misappropriation of Ribeiro’s identity, and that the way the Dance Move is used creates the false implication that Ribeiro consented to the use of his likeness and endorsed the games.  Additionally, Ribeiro accuses the defendants of intentionally inducing the players of the games to perform and mark the Dance Move with hashtags referencing the games, and argues that this creates an erroneous public association between the Dance Move and the emote within the game.

Ribeiro’s claims are representative of growing pushback over the way in which the video game industry earns revenue and follows on similar claims brought by rapper 2 Milly and Russell Horning a/k/a the “Backpack Kid” over in-game uses of their respective signature dance moves, the “Milly Rock” and the “Floss.”  Many prominent musicians, including Chance the Rapper, have also grown vocal about their dislike of the exploitation of signature dance moves, noting that the songs behind the dance moves should also be included in the games so that the musicians and creatives that inspired the dances can also benefit from the revenues being generated.

If successful, the lawsuits brought by Ribeiro, 2 Milly, and Horning could significantly impact the types of micro-transactions and other in-game purchases that have become the largest revenue source and profit driver for most video game companies, particularly in light of the fact that many of the most popular video games out today, including Fortnite, are otherwise free to play.  A successful claim could also spark a wave of other celebrities and YouTube stars filing claims of their own, which could drastically impact the current profitability levels of the major video game companies. However, Ribeiro’s claims are certainly not a slam dunk.  First, the law is not clear as to whether an individual dance move, as opposed to an elaborate choreography, is actually copyrightable and so this issue is likely to play a large part in determining the outcome of the case.  Another potential setback that Ribeiro may face is the fact that in several public interviews in the past, he has openly stated that the Dance Move was “inspired by” both Courtney Cox’s dance in Bruce Springsteen’s Born to Run video, as well as Eddie Murphy’s “White People Dance”.  That the Dance Move may have been influenced by a prior dance or choreography does not mean it is not sufficiently original to avail itself of copyright protection, but it is another complicating factor that makes this case far from straightforward.  Finally, California’s Right of Publicity Statute protects a person’s name, voice, signature, photograph, and likeness, but not necessarily a person’s gestures or moves.  In determining “likeness” California courts have used the “readily identifiable” test (e.g., whether a person could reasonably determine that the use in issue depicts the plaintiff) to decide whether the right of publicity has been violated.  Thus, Ribeiro will have to show that the Dance Move is so closely intertwined with his persona that it becomes “readily identifiable” with his likeness.  It will be interesting to see how these claims progress and what kind of impact the decisions will have on the entertainment industry as a whole.        

Depp v. Bloom: Hollywood Handshake Deals May Be on the Way Out; Belt-and-Suspenders a Possible New Trend in Percentage Fee Arrangements for Legal Services

While former Judge Alex Kozinski of the Ninth Circuit once noted that “[m]oviemakers do lunch, not contracts[,]”[1] Los Angeles Superior Court Judge Terry Green’s August 28, 2018 decision in Depp v. Bloom, 2018 WL 4344241 (Cal. Sup. Aug. 28, 2018), may force legal professionals in Hollywood to skip lunch in favor of properly executed fee agreements.

In granting actor Johnny Depp’s motion to dismiss a counter-claim for breach of contract by Depp’s longtime attorney Jake Bloom in a dispute over legal fees allegedly owed to Bloom under a percentage fee agreement with Depp, Judge Green answered the question vexing entertainment attorneys for years: are percentage-based fee arrangements considered contingency fee contracts, and thus required to be in writing under California law?  Answering in the affirmative, Judge Green ruled from the bench on August 28, 2018, and issued a written decision on August 30, 2018, available here. Continue reading

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