Tuesday, October 27, 2009

NBC Sued over Fall Season Advertising

NBC has been sued by The Font Bureau, Inc., over NBC's use of particular printing fonts in its fall season advertising.  Font Bureau is one of the world's premier designers and licensers of typographic fonts, listing such clients as Apple, The Wall Street Journal and American Express.  It claims that NBC has: 1) violated the license NBC signed with FB to use three particular fonts, and 2) in violating the license, has infringed both the trademarks and copyrights FB holds in said fonts. 

As trademarks and copyrights are matters of federal law, the federal courts have subject matter jurisdiction over these matters.  Font Bureau, correctly, brought the suit in the U.S. District Court, and in this case, the one located in the Eastern District of New York (Brooklyn, Queens and Long Island).  I find this choice interesting because a majority of intellectual property cases are brought in the Southern District of New York, as this District covers Manhattan, the location of the most and largest intellectual property holders, and, therefore, the court most experienced in these matters.  Despite this, FB (located in Boston) decided to bring the suit in the Eastern District, which is a proper venue because NBC certainly does business (broadcasting and afvertising) in the areas the court presides over.  I assume this was because NBC is such a big party in Manhattan (both in size and favorable outcomes), the judge and case law might be more favorable to FB out in Brooklyn, which does itself have a lot of experience in intellectual property matters.

Although Font Bureau claims its trademarks and copyrights have been infringed, the case really hinges on the simple contracts question of whether or not NBC has violated the license it had signed with FB.  The trademark and copyright issues themselves really only arise if NBC did act outside of its license, and would act as a damages add-on, of sorts.  However, it is these intellectual property issues that have allowed FB to pursue this suit in court at all!  The license NBC signed (which is available in the third document embedded at the CityFile article) states that the parties agreed that any lawsuit that has the license at issue, would be resolved in an arbitration.  Further, if there were issues that were, for whatever reason, unable to be handled by an arbitrator, then the lawsuit would be brought in a Massachusetts court, and governed by Massachusetts law.  Now, this is not, obviously, what happened.  Using the rules provided by the federal laws at play, FB highlighted the intellectual property issues and sued in federal court in New York; the contract issue is the tie-on.  NBC could, in theory, ask the court to remove the case to arbitration or transfer the case to the federal court in Massachusetts, as that is what the parties agreed to in the license.  Arbitration is a possibility, but I don't think NBC would want to go to Massachusetts: it's on home turf in New York where costs will be lower and there won't be a home-field advantage for FB.

On to the license itself.  It looks pretty iron-clad.  NBC agreed that the fonts and their software (as fonts are really just computer programs, the software is part and parcel of the actual artistic fonts themselves) could be copied on to one computer only.  Essentially, one graphic artist could receive the disk containing the fonts, dave them on her computer, and manipulate them on her machine only.  She could make one back-up disk (in case the original disk and her saved file became corrupt), but that's it: can't share it with a co-worker by saving the fonts on his computer, can't use the fonts on the website, can't embed the fonts into another format (like Flash, Photoshop, etc.).  All NBC could do was create a non-editable PDF file with the fonts on it for illustration purposes, meaning the designer could create a document that says "These are the fonts from Font Bureau we are interested in using," in all of the different fonts, and bring a printout of that document to a meeting, but that's it.  If NBC wanted to then use a particular font for any other purpose, including in advertising its programs, it would have to purchase an upgraded license.  Essentially, what NBC agreed to was a sample disk so they could show the creative team what their font options were.  If they wanted to use the fonts, they'd have to pay up.

What appears to be evident is that NBC took those fonts and used them in its fall advertising.  If so, it would have broken its contract and would be liable for, potentially, up to whatever revenues they made from those advertisements.  More likely, the award would be whatever the upgraded license would have cost, plus some penalty.  However, there are also the trademark and copyright violations.

Font Brueau is making two trademark claims: run-of-the-mill trademark infringement, and trademark dilution.  The purpose of a trademark is to inform customers as to who created the product.  There is infringement when Company XYZ creates a mark that is so similar to Company ABC, that a customer would think XYZ's product was being sold by ABC.  This is known as "customer confusion."  A court tests whether customer confusion exists by looking at a few factors (differing slightly by federal circuit court), including, but not limited to: the products being sold, the marketing of the product, price, the type of consumers to whom the product is aimed, even focus groups and surveys in the mall.  In this case, a primary question is, "Who is the customer?"  NBC would argue that the customer is an advertising creator who would be able to easily identify a Font Bureau font and know NBC didn't design it, for the product being sold is the font.  FB would argue that the customer is anyone seeing NBC's advertising, who would think that the cool fonts used in the advertising were created by NBC's advertising department.  Not that this factor is determinative, but this question could be the fulcrum for this issue.  Personally, I think the judge would side with FB's interpretation becuase the font is worth nothing unless it is used in advertising for the general public to see.  If the judge does agree with FB, it is hard to see NBC prevailing on this issue: I think it is perfectly reasonable to expect the public to think any NBC advertising was designed, down to the fonts, by NBC itself.

As far as the dilution claim is concerned, we covered this ground in the Jones Day post.  A threshhold question for dilution is whether or not a mark is famous, in that a majority of the public knows the mark and its creator.  I had never heard of Font Bureau before this case, and I'm a pretty-tuned in kind of guy.  We are not dealing with McDonald's or Coca-Cola here.  There is no way a judge would find Font Bureau's fonts to be famous marks, so the dilution claim will fail.

Font Bureau's copyright claims are also in two parts: run-of-the-mill copyright infringement and contributory infringement.  A copyright exists when an original work, with a modicum of creativity, is fixed.  That's a bunch of legalese, so I will try to explain.  A "work" is any expression of an idea: a poem, a song, a painting, a photo, a sandcastle, a speech, skywriting, etc.  The caveats are, however, that the expression must be original, not solely facts, and not be utilitarian.  A list of the presidents is not a work because the names of the presidents are facts.  However, there are times when the arrangement of facts can result in a copyright (think of a Billboard Top 10 of 2008 CD.  The top ten songs of a given year are facts, but arranging them in a different order on the CD is sufficient to have a copyright).  Similarly, a ladder cannot be copyrighted (in most cases) because it is functional.  Next, the work must be "creative."  Creativity means that the work must be at least slightly different than another work.  I can't rewrite and publish The Lost Symbol.  I can write another book based on the mysteries of the Masons though.  Lastly, the work msut be "fixed."  This just means that the work needs to be "permanent."  I put permanent in quotes because permanency is a realtive term.  Obviously, a book is permanent in that it will take hundreds, if not htousands of years, to disintegrate.  TV shows are permanent because they are embedded on film.  Even bits of information flowing through the internet or on your computer are sufficiently permanent under the law, even if they only exist for mere moments.  A live performance of an improv troupe, that is not recorded, however, is not fixed.  Nor is a poem written in the sand (as it will be washed or blown away).

In this case, the fonts are the new design works, expressed in original computer code, that are fixed on the disk provided to NBC.  Certainly sufficient for a copyright.  Now, a person who owns a copyright controls, among other things, the right to, well, make copies of the work!  That is the purpose of FB's license: it allowed NBC to make one copy of the computer code.  That's it.  FB was controlling the copies of its work.  If NBC then made additional copies of the work, either by downloading them permanently on to a nother worker's computer, or even sending the code through the internet or internal NBC network (case law says this is sufficient copying), NBC has made illegal copies in violation of FB's copyright.  Needless to say, actually printing out the fonts in advertising posters, or using the fonts on TV violate the copyright as well.  The contributory infringement claim is based on vicarious liaibility law that states even though a person may not actually be doing the illegal copying, if that person instructs, forces, or permits someone else to do the illegal copying, the person will also be held liable.  This is the basis for any liability found in file sharing lawsuits like the seminal Napster case.  Here, NBC would have caused whomever printed their posters, and the local non-NBC-owned affiliates to infringe FB's copyright by playing and printing the fonts.  If the license is found to be controlling here, and NBC really did only have persmission for one copy, I don't see how they avoid liability on these issues.

Of course, there are always exceptions and defenses to these laws.  From the fair use doctrine to time-shifting, there are times copying works or using trademarks without the owner's permission are allowed.  I don't see how any of these defense are available to NBC, though, if all of FB's allegations are true.  Personally, I think NBC would be crazy not to settle this case.  FB is seeking at least $2 million in damages, which may be chump change to NBC, but is still not the type of judgment one wants against him.  This is, after all, really a licensing agreement case.  If NBC determines that it was, indeed, in violation of the agreement, it will probably settle for a smaller sum thatn the two million, and enter an upgraded licensing deal with Font Bureau.  There doesn't appear to be any great upside here for NBC; it's best for them to make it go away.  It does prove, however, that huge companies need to be very careful about the details because the difference between THIS and THIS, can cost you a whole bunch of money.

Sorry for the long post.  These basics on trademark and copyright law are very important, and will probably form the basis of a lot of the posts here, so I wanted to make sure I explained them sufficiently.  In the future, I will probably just reference back to this post for the basics, and then furhter detail any nucnces that arise in future situations.  If you have any questions or comments, please leave them below in the Comments section. 

Thanks for reading.

Saturday, October 10, 2009

Welcome to the Entertaining Law Blog!!

Readers of my other blog, Entertaining Thoughts, know that I am a lawyer with a deep and undying devotion to entertainment.  I used to produce special events, worked on Broadway, have an actress for a wife (she's a baker too!), and am an avid viewer of television, theater, and movies.  Every now and again, my interests collide.  When this has happened, I have posted an analysis of the pertinent issues on Entertaining Thoughts.  Well, as this occurs semi-regularly, I decided that my readers, my blog, and I might all benefit from a single place to discuss these issues.  Hence, I bring you Entertaining Law!

Entertaining Law will focus on the legal issues that arise in the entertainment industry.  Whether it be trademark, copyright, contract, publishing, or sports issues, I will offer my analysis of the problem here.  Really, any legal issue being addressed in the business that is show is fair game for this blog.  One caveat: I am NOT interested in turning this blog into a police blotter.  I don't care if Britney Spears gets arrested at Pure for indecent exposure, or if Jack Nicholson gets pulled over for reckless driving.  I'm interested in discussing J.K. Rowling being sued for copyright infringement, or NBC being sued for stealing a graphics company's fonts (blog post on this very soon).  A lot of times, I won't have all the specific claims, although I will seek the actual court filings where possible.  If I can't find the filings, I will still discuss the law behind them so we may all have a better understanding of what is being argued.

As these types of cases don't come up every day, posting here will not be a daily, or maybe even weekly thing.  When these issues do arise though, I will try to dig deep into them.  Hopefully, if this is successful, those with a love of entertainment, but a lack of a legal education (and trust me, that is not the worst thing in the world.  In fact, DON'T go to law school if you're thinking about it.  Save the money!  Go to Europe instead!) will better understand the sometimes sticky issues artists of all sorts encounter. 

Below, please find a few posts from Entertaining Thoughts similar to the ones that will regularly populate this space.  Thanks again for reading, and hopefully we'll talk soon.


Lost and the Law Meet! I Don't Know What to Do With Myself!

Hello everyone. Before I post on the most recent episode, let me speak on something that actually brings my love of Lost and my training as an intellectual property lawyer together. As you have seen from my Lost posts and the blog roll on the right, I always refer you to Erika Olson's fantastic recaps over at Long Live Locke. Well, a guy by the name of Seanie B has been offering video recaps on You Tube of this season's episodes, apparently for TV Guide (I'm not going to link directly to his You Tube account because I don't want this guy getting any more popular). Seanie B has been blatantly plagiarizing Erika's recaps, as well as other Lost recappers. You can see the clear copyright violation in this side-by-side comparison provided by Doc Arzt.

Essentially, Erika's recaps are fixed (on the website) expressions (written communications) that have a modicum of creativity (the words she chooses are sufficient creativity, but I would venture to say her wit and humor is the true creativity). Those are the elements of a work that is protected under copyright. A coyright holder has the right to control other uses of her work, including, specifically, the right to a public performance of her work. In other words, she can control any oral recitations of her writings on a You Tube post.

Now, the facts of the show can be freely discussed by all. If Erika writes, "Ben allowed Alex to be killed by Keamy," I can also write, "Ben allowed Alex to be killed by Keamy." Facts are not protected by copyright. As well, anyone who talks about Lost and dares to write about it (your humble blogger included) can speak about the ideas behind the show. Ideas are not protected by copyright; it is the expression of those ideas that is protected. Any kind of flourish Erika uses to express her thought about the ideas behind the show, where she thinks the show is headed, and even the layout/order she talks about the show is all protected. That is what Seanie B has stolen from her. Fortunately, Erika has said she has been receiving some great advice from some intellectual property lawyers and is working hard to have the matter resolved.

Folks, if you love the show, you should absolutely talk about it, but do so in your own words. There is so much within the show to talk about that we don't need to steal other people's work. And read Erika's posts to show your support! Recap coming soon.

"Hope" for Fairey

Some of you may have heard of the case of AP v. Shepard Fairey. Fairey created the famous Obama poster on the left. It was based on this AP photo on the right.

AP claims that Fairey violated the AP's copyright in the photo (photos can be copyrighted because the selection of angle, color, brightness, etc. illustrate sufficiently the creativity and originality required to secure a copyright). Many in the legal field have been making the case that Fairey is in the clear here due to the doctrine of fair use. For a good fair use analysis, see Tim O'Brien's blog here.

Essentially, I think this is right. Fairey has clearly created a derivative work of the AP's photo. Derivative works are adaptations or visible reuses of an existing work. The right to create derivative works based on one's original work, lie within the copyright of the original author. Fairey added his own creativity to the AP photo, but his poster is clearly based on the AP photo. However, up to the point the suit was filed, Fairey hadn't made any money on the poster; any revenue generated by selling the posters was reinvested to make more posters. Lack of commercial profit is a factor in the fair use analysis. Further, and I think more importantly, the work should be considered "transformative" in that it added something to the social discourse (the election). Transformative works are more often than not considered fair uses -- we want people to create more works that add to the social discourse by commenting on works already in the public sphere.

I think the only possible problem Fairey's fair use defense will run into is that the AP's market for their photo as a poster. Under the ruling in the National Geographic Society v. Classified Geographic, Inc., 27 F.Supp 655 (D.Mass 1939), if a copyright owner has a market for derivatives of its own work, fair use will not prevail. However, as the AP is supposed to be in the reporting business, and not in the campaigning business (although the AP's "neutrality" has been called into question a number of times), the chance they were going to make and sell Obama campaign posters is virtually nil.

All in all, it doesn't seem like the AP really has a case. In fact, this is eerily similar to the Jones Day case we discussed below; another case of an entity with a lot of money trying to push around a small fry. I know, this happens all the time, but I just hope Fairey holds firm and sees this through. The AP has already been dropped by a number of papers and is facing a fiscal crisis of its own, so perhaps Fairey can do some pushing of his own.

Hey You, Non-Lawyer, You Ever Heard of Jones Day?

I had a request in the comments on the Pat Sajak thread about my thoughts on the Jones Day v. BlockShopper case which settled last week. As I concentrated on Intellectual Property in law school, here's my take. Briefly, BlockShopper is a website that chronicles real estate sales. The site detailed the purchase of pricey condos by two associates at the law firm Jones Day. The site used the firm's name and pictures of the associates (pulled from the firm's website) in the description. Jones Day sued BlockShopper for trademark infringement.

This appears to me to be a simple case of a firm being embarassed and not wanting to appear to be giving away lavish salaries during these Tough Economic Times®. In my opinion, Jones Day's chance of success on a trademark infringement claim was about .00001%. Jones Day claimed BlockShopper was diluting Jones Day's trademark and causing customer confusion.

Without getting too lost in the legal weeds, the customer confusion claim (the prototypical trademark infringement claim) is almost completely without merit. Jones Day would have to have proven customers of the BlockShopper site, or of Jones Day itself, thought Jones Day somehow sponsored BlockShopper -- that BlockShopper was a Jones Day product. Click around the site. Other than the paid advertising, do you get any inclination that BlockShopper is somehow sponsored by anyone, let alone Jones Day?

The blurring claim is ridiculous because as a threshold issue, the trademark being diluted needs to be a "famous mark." Famous marks are defined by federal law as marks that are “widely recognized by the general consuming public of the United States.” Anyone out there in the non-legal world ever heard of Jones Day? McDonald's? Yes. Nike? Yes. Jones Day? No. Let's assume that Jones Day is a famous mark, then what is the analysis? Well, Jones Day would then have had to prove that BlockShopper's use was so pervasive that when a customer heard or saw "Jones Day" he or she would say, "Jones Day? Hmmmm.....is that the law firm or the real estate website?" Again, proving this would have been virtually impossible.

On top of the ridiculousness of the claims themselves, BlockShopper would have also likely been protected by fair use. Fair use is the idea, found in both statutory and case law, that sometimes use of another's trademark that may be illegal is still permissible. There are numerous fair uses: one being comparison (e.g. Pepsi showing a Coke machine in its commercials), but of direct importance, the use of trademarks descriptively. Just as NBC can talk about Starbucks (and put a picture of Starbucks' logo on the screen) to describe the closing of hundreds of Starbucks stores, so too can BlockShopper use Jones Day's name to describe the public real estate transactions of its associates.

To me, this seems like an embarrassed large company using it's financial power to push around the person doing the embarrassing. If Jones Day had pursued a copyright claim related to BlockSopper's use of Jones Day's pictures, that would have been a lot more reasonable; perhaps not advisable, but at least the argument would have been rooted in the law. BlockShopper, faced with ridiculous legal bills in order to defend these ridiculous claims, opted to settle by placing full addresses linked to the associates' Jones Day bio pages and stating that more info on the associates are available on the site. It's a shame that BlockShopper had to settle, but the prospect of losing the site because of mounting legal debt is far more adverse.

Thanks to the following sites for some great info on the case: The Legal Satyricon, Consumer Law & Policy Blog (also some info on Jones Day's other attempts to use trademark infringement claims to bully people being critical of them), and Slate.

Protect the Source

While it appears that the only thing Congress is concerning itself with is the stimulus, Justin Miller, writing for The Atlantic's new Politics blog, gives some details on the House picking up some legislation I feel is rather important: the Free Flow of Information Act -- protection for journalists and their sources.

The whole reason the right to a free press is enshrined in the 1st Amendment is so that reporters can reveal the inner workings of government, corporations and other bastions of power, and expose any hidden cancers within them, without the fear of reprisal. How can they do this necessary work if those with knowledge within these institutions are unwilling to step forward because they might be exposed? While we do have whistleblower protection laws, nothing has extended to journalists themselves.

Per Justin's summary, there could be some possible issues, namely whether bloggers are covered (see the definition of "journalist"), and that the government only need show a preponderance of evidence to have the source or documents revealed. The preponderance test jumps out at me.

*I apologize in advance for the legal mubo-jumbo to follow. I am a lawyer after all.*

When laws are scrutinized to see if they infringe on certain rights, depending on what is being infringed, different tests are utilized. The least amount of scrutiny is whether the government has a rational basis in enacting the law (e.g. giving tickets for running red lights). The middle level is known as intermediate scrutiny and requires that a law relate to important government interests (e.g. requiring separate men's and women's bathrooms in public facilities). Lastly, there is strict scrutiny, which requires that a law must fail unless the government has a "compelling government interest." This is invoked when a right granted in the Constitution is potentially infringed (e.g. Zoroastrianists can't practice their religion). Requiring a "preponderance" of the evidence is equal to the rational basis test. The requirement of a jury to find guilt "beyond a shadow of a doubt" is equal to strict scrutiny.

While anonymous source cases don't involve the direct restriction of a free press, which would clearly invoke strict scrutiny, I feel laws effecting the ability of the press to conduct it's job and fully realize it's 1st Amendment right should be subjected to more scrutiny than what is essentially a rational basis. An intermediate scrutiny seems appropriate here. Regardless, this law, in my humble opinion, is the right way to go as the media and news coverage explodes. Thoughts?