Legal Updates 2002

There are seven banknotes and 8 different coins. While the 14.5 billion banknotes look the same throughout the euro area, the new coins - 50 billion of them - have one side common to all 12 countries and a reverse side specific to each country.

There are also different designers to all these notes and coins - designer of the common note is Robert Kalina of the National Bank of Austria, designer of the common side of all the coins is Luc Luyex of the Royal Belgian Mint, national sides of the coins have a different designer stemming from the original country. However, the designers have transferred their copyright to the European Central Bank based in Frankfurt, Germany. There are however no rights to be paid to the ECB for reproduction of the coins or the notes. An image of the different coins and notes may be downloaded for free on the website of the ECB and only the mention of origin is required in the event of publication. www.euro.ebc.int

Amendments to Chinese Copyright Law
Courtesy of Lehman, Lee & Xu, who publish a newsletter from China, some potentially promising news regarding improvements in Chinese Copyright Law. Of course, whether the laws will be effectively enforced will be the critical next step. However, the fact that China is making an effort to move towards harmonization with the Berne Convention is promising. In general the Chinese law provides copyright protection for works of foreigners according to agreement and national conventions, in addition to Chinese citizens. Photographic, cinematographic, painting and graphic works are among protected works. Interesting, the law does not apply to "News on Current Events". Whether that concept is similar to "Fair Use" is unclear. Many similar concepts are present such as joint works, works created under commission, compilations, etc. Single works may be reproduced in textbooks for the nine year compulsory education, without a license, except if the author has declared in advance that it does not allow the use, and then the author is paid according to regulation. Works may also be republished after first publication unless that right is restricted in advance. For most rights, the term is life of author plus 50 years, or if an entity, for 50 years.

The following is the synopsis of Leeman Lee & Xu: Synopsis of the Amendments to the Copyright Law of China
The amendments to the Copyright Law of China were approved and published by the National People's Congress on October 27, 2001. The new law is improved in many ways. One of the greatest improvements is that the subject matter protected by copyright is enlarged. Now, according to Articles 3 and 14, matters such as architectural works, model works, acrobatic works and software works are all protected. This is in accordance with the Berne Convention, which requires that all natural and social science, literary, artistic and engineering works are protected by copyright. Future works are also provided for in Item 9 of Article 3 which states that "other works set out by laws and administrative regulations" are also protected. The rights of copyright owners are also expanded. Whereas the previous law did not deal with the right of rental nor the right of distribution over a public network, Article 10 of the new law includes the Right of lease, Right of broadcast, Right of information network dissemination as new property rights of copyright holders. This amendment now allows for subject matter on the Internet to be protected by copyright. Compared with the same article in the previous law, the new Article 10 is much more clear and specific regarding the personal and property rights of copyright holders. The new law also requires that radio and TV stations compensate copyright holders for using their works. According to the old law, if the purpose of use was "non-commercial", a radio or TV station was not required to pay any compensation.

Now, according to the revised Article 43, although radio and TV stations do not need a license or permission to use a work, they must pay compensation to the copyright holder. Property rights of a copyright are now assignable. Compared with the previous law, which did not allow for the assignment of any property rights, Article 25 not only legally recognizes assignments concerning the rights of reproduction, distribution, lease, exhibition, performance, show, broadcast, information network dissemination, production, adaptation, translation and compilation, but also determines what details are necessary for a rights assignment contract. Infringers will bear a much heavier liability according to the new Copyright Law. Now, the Copyright Administrative Authorities have the administrative power to order the stopping of an infringing activity, confiscate illegal profits and any equipment used to carry out the infringing acts, and to punish the infringers by fine.

Furthermore, suspected infringers such as publishers, producers or distributors will now bear the liability of infringement if they are unable to prove that the infringing product was bought through lawful means. Concerning damages, according to Article 48 of the new law, infringers must pay the "actual loss of the rights owner." If the amount of damages is difficult or impossible to determine, there is a maximum of RMB 500,000 in statutory damages available. The new Copyright Law now gives copyright holders the option of a preliminary injunction and property preservation. Article 49 reads that any copyright owner "who has evidence to establish that another person is committing or will commit an act of infringing his right" may apply to the court for measures such as an "order to stop the relevant act and property preservation." It is believed that two more revised copyright-related regulations will come out in the near future, The Regulations for the Protection of Computer Software and The amendments to Regulations for Implementation of the Copyright Law. The new Copyright Law assists China greatly in meeting the requirements set out by the WTO, TRIPS and the Berne Convention. However, it will still take some time before the Copyright Law is balanced by a sophisticated and predictable system of enforcement.

Some Frequently Asked Questions (FAQ's)
by Nancy E. Wolff, PACA Counsel, Wolff & Godin LLP

Question: Do I need a model release for a photograph of a [dog, cat, frog, etc.]? Answer: Never (almost). Model releases are required if using a photograph of a recognizable PERSON'S likeness for commercial purposes, such as advertising or trade. It is either based on common law tort theory, for example invasion of privacy or misappropriation of one's likeness for commercial use or based on various state statutes that recognize a right of publicity for living or in some states, even a deceased person's likeness. The common element is that it applies to a PERSON not any inanimate object, building, corporation, bird, reptile or animal (no matter how cute). The underlying principle is only a person can be embarrassed by the publication of the his or image. [My dog might argue that he gets very embarrassed if anyone puts stupid reindeer antlers on him at Christmas, but that is not yet protectible by law]. The exception would be if a dog (or race horse, etc.) were a recognized character, such as a movie or TV character. (Think Lassie, Rin Tin Tin, Airbud, Secretariat). Then there might be a trademark claim, based on the argument that the commercial use by an unlicensed entity might cause confusion as to sponsorship or interfere with an already licensed user. A person's common pet would not be a trademark, no matter how much loved.

Question: What is advertorial?
Answer: A word made up by advertisers to fool readers into reading advertisements and try to negotiate cheaper rates from copyright holders. It is advertising and not editorial no matter how you try to disguise it. Editorial use of an image is the use of an image to illustrate something that is newsworthy or of public interest. No release is required and the First Amendment protection of free of speech permits the truthful publication. If an article is really imbedded in a section that is paid for by one sponsor or entity, even if it is a not-for-profit, the article is there to promote their business or service. You do not have the presumption of a journalist's independent reporting. Remember two previous cases discussed in past updates. One involved an historic photograph of surfers used in an article about surfing.

However interesting the article, it was in a catalog that sold shirts identical to those worn in the historic photograph. Although there might have been some newsworthy purpose to the article, the overwhelming purpose of the catalog and the article was to sell merchandise. If that article on historic surfing had appeared in a surfing magazine, there would have been advertising pages independent of the article, by a variety of advertisers. It would not have been published to sell one manufacturer's shirt. The other case was an action against the drug company, Merck, by a model whose photograph was used in a brochure to promote one of its drugs by illustrating a fictitious story of someone with HIV and herpes. The model release was limited to educational use. The drug company argued that the brochure was educational, but the court disagreed and found the use to be advertising, making the use both defamatory and a violation of privacy under the New York Statute. So be wary if a company or advertising agency wants to use a non-model released photograph for editorial and not commercial use, and ask further questions.

Kelly v. Arriba: Visual Search Engines and Fair Use of Thumbnail Images
by Nancy E. Wolff, PACA Counsel, Wolff & Godin, LLP
February 6, 2002

The US Court of Appeals for the Ninth Circuit reviewed the right of a visual search engine to create a database of images that it obtained by "crawling" through the web and copying images from other web sites. This case involved Kelly, a photographer who has been battling an Internet search engine owned by Arriba. Arriba's site (now known as "Ditto") downloaded Kelly's on-line images and generated "thumbnails" of them for inclusion within a large database of other visual images. Using this search engine, a user could type in a key word that would correspond to Kelly's image and bring up the thumbnail of his image. By clicking on the thumbnail, a user could view the original full-sized image. However, the full sized image remained framed by Arriba's website, which included its text and advertising. The court noted that the user "typically would not realize that the image actually resided on another web site." Over different time periods, the two methods of viewing the full size images were by "inline linking", (where the image is brought into the Arriba site) and "framing" (where you see the full size image on a window within another window).

The court decided that Arriba was making two different uses of Kelly's images. The thumbnails were found to fall under the fair use exception to copyright infringement. However, the full-sized images constituted infringing uses. In both instances the court did a fair use analysis, weighing the following four fair use factors:

1. The purpose and character of the use,

2. The nature of the copyrighted work,

3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole, and

4. The effect of the use upon the potential market for or value of the copyrighted work.

The court affirmed the lower court's decision in part and found that creating a database of thumbnail images to search for images on the web was fair use. Even though the thumbnails were commercial uses of the images, were creative works, and were used in their entirety, the court determined that the fair use defense still applied. The use by Arriba was considered transformative because the thumbnails were smaller, lower-resolution images that served an entirely different function than Kelly's on-line images. The more transformative the new work, the less important the other factors, including commercialism become. The appellate court reversed the lower court's decision that Arriba's displaying of the full size images was fair use. This was the first time any court considered whether inline linking and framing infringed copyright. In this instance, Arriba's use of the full sized images was found to infringe Kelly's right of display, one the copyright holder's exclusive rights under copyright. Showing the images to a visitor of the Arriba web site was considered a public display without Kelly's permission. It was irrelevant in determining infringement whether anybody saw the images, just that they were made available.

The court rejected the defense of fair use for the full sized images, since the use was not transformative and served the same esthetic function of the end product, the images themselves. I would be careful not to overly expand the meaning of this case to include any use of a thumbnail image as being fair use on the Internet. Fair use is a defense of copyright infringement and requires each case to be analyzed. If individual thumbnails are used to illustrate or promote a particular web site, or sold for profit, another court might not find that type of use "transformative".

According to this court, search engines that are capable of combing through a database of images are helpful to users on the Internet and the resolution of the thumbnails are so poor that no one would use them for esthetic purposes. However, if technology improves, and thumbnails can be increased in size with little loss of quality, the balance of the four factors may change to weigh against fair use when thumbnails are no longer used just for reference.

The court affirmed the lower court's decision in part and found that creating a database of thumbnail images to search for images on the web was fair use. Even though the thumbnails were commercial uses of the images, were creative works, and were used in their entirety, the court determined that the fair use defense still applied. The use by Arriba was considered transformative because the thumbnails were smaller, lower-resolution images that served an entirely different function than Kelly's on-line images. The more transformative the new work, the less important the other factors, including commercialism become.

The appellate court reversed the lower court's decision that Arriba's displaying of the full size images was fair use. This was the first time any court considered whether inline linking and framing infringed copyright. In this instance, Arriba's use of the full sized images was found to infringe Kelly's right of display, one the copyright holder's exclusive rights under copyright. Showing the images to a visitor of the Arriba web site was considered a public display without Kelly's permission. It was irrelevant in determining infringement whether anybody saw the images, just that they were made available.

The court rejected the defense of fair use for the full sized images, since the use was not transformative and served the same esthetic function of the end product, the images themselves. I would be careful not to overly expand the meaning of this case to include any use of a thumbnail image as being fair use on the Internet. Fair use is a defense of copyright infringement and requires each case to be analyzed. If individual thumbnails are used to illustrate or promote a particular web site, or sold for profit, another court might not find that type of use "transformative". According to this court, search engines that are capable of combing through a database of images are helpful to users on the Internet and the resolution of the thumbnails are so poor that no one would use them for esthetic purposes. However, if technology improves, and thumbnails can be increased in size with little loss of quality, the balance of the four factors may change to weigh against fair use when thumbnails are no longer used just for reference.

Status of Copyright Office Mail Delivery
from Nancy E. Wolff, Wolff & Godin, PACA Counsel

U.S. Postal Service mail to the Copyright Office continues to be suspended pending establishment of an off-site mail processing center for the Library of Congress and Congressional offices. The Copyright Office has not received U.S. Postal Service mail since October 17, 2001. Although it is anticipated that all mail addressed to the Copyright Office will eventually arrive at the Office, additional delays are anticipated. Currently, the Office continues to receive deliveries by commercial carriers such as Federal Express, Airborne Express, DHL Worldwide Express, and United Parcel Service, without any delays. The current plan is that eventually such deliveries will be diverted to the off-site processing center, which would result in delays of several days before the Office's actual receipt of the deliveries. The same will be true for deliveries by messenger services. For the time being, however, such deliveries should be received in a timely manner. When this situation changes, it will be announced in a future NewsNet. If it is essential that your material reach the Office immediately, it may be advisable to have it delivered to the Office by hand. If you are not located in or near Washington, D.C., you may wish to consider sending your material to somebody in Washington who can arrange to have it hand delivered. For more information on the mail delivery disruption, please consult the Copyright Office website at http://www.loc.gov/copyright/mail.html. What this means is if you mailed any applications using the postal service since October 15, 2001, the Copyright Office has not received it. Interim rules have been made to deal with the effective date of registration, and you should check with the Copyright Office web site for the procedures. The applications, even when they are finally delivered, may be damaged. Irradiation turns paper brittle and causes it to crumble. CD-ROMS and photographs may be damaged from the high heat. It is estimated that over 100,000 applications have not been delivered. I would recommend overnight couriers for now, unless that is disrupted as well. If you have someone hand deliver an application, make sure they do not look like a messenger (no bike helmets)!

Copyright Office Update

I just returned from the Copyright Society Annual meeting. In addition to enjoying the views of lake George, a highlight was Mary Beth Peters' "state of the union," or "Views from the Copyright Office."

The Copyright Office has redesigned its web site to make it easier to use. The web address is now www.copyright.gov. It now offers a word search engine to find information within the site. You can also send questions by email.

The good news is that the Copyright Office is beginning to receive mail delivered by the Post Office. However, it is still recommended that you either hand deliver the application or that you send the application via a private carrier such as FedEx, UPS, and DHL. There are fee increases commencing July 1, 2002, but the standard application fee will remain at $30. The web site should be checked to examine the additional fees. One increase to note is the fee for expedited applications that are required to commence litigation. Regulations on registering web sites are expected shortly. Issues involving broadcasting music over the Internet are taking up much of the Copyright Office's time. Finally, the Supreme Court will be reviewing whether the Sonny Bono Copyright Term Extension Act is constitutional.

Legal Update - Doe v. Merck

Last year, we reported on a right of publicity case, Doe v. Merck, in which a model sued a pharmaceutical company for printing her photograph along side a false biography indicating that she was HIV+ and had become infected through promiscuity. The false biography also falsely indicated that the plaintiff was Hispanic and only 19, when in reality she was 32. The photograph and biography ran in an advertising brochure promoting the defendant's product Crixivan, an AIDS medication.

At trial, the jury awarded over $3 million in damages to the plaintiff. This sum included compensatory and punitive damages to be paid by both defendants, Merck and the advertising agency responsible for compiling the brochure. The defendants appealed, and the Court modified the damages. Generally, damages are left to the discretion of the jury, but may be modified when the plaintiff has failed to introduce sufficient evidence to authorize the jury verdict. Here, the Court agreed that the plaintiff was not entitled to punitive damages at all, and was entitled only to a reduced award for compensatory damages.

In order to justify an award of punitive damages in a right of publicity case, a plaintiff must show that the defendant acted maliciously, or with an evil and reprehensible motive resulting in a conscious disregard of the rights of the plaintiff. Here, the defendants actions, while careless or negligent, did not rise to the level of "hatred, ill will, [or] spite" to establish malice. Thus, punitive damages were not an appropriate remedy and the Court vacated the jury's $2 million dollar award.

Next, the Court examined the extensive testimony given at trial regarding the effect defendants' actions had on the plaintiff in order to evaluate the jury award of $1 million for compensatory damages. Compensatory damages are awarded as a remedy for the plaintiff's pain and suffering. Here, there was ample evidence regarding the plaintiff's mental state, and the effect the brochure had on her, but the evidence was not persuasive enough to support the jury's large award. Consequently, the Court reduced the award to $650,000.

This case exemplifies the tendency for juries to grant large awards based on passion or prejudice. Here, the Court applied a legal evaluation to arrive at a more reasonable verdict. However, this is not always the case, and a sympathetic plaintiff may be very successful at trial and win an appeal. This case was the result of the errors arising from a lack of centralized supervision of a project, where various employees "passed the buck" and never received a signed, valid model release, and it is difficult to argue that the plaintiff did not really suffer from this type of publicity. Therefore, it is of the utmost importance to ensure that each and every model signs a release, because even $650,000 is too much to pay for carelessness.

Who Owns the Copyright to a Derivative Image?

I frequently receive questions from members regarding derivative works under the Copyright Act and whether granting a client a license to create a derivative work impairs the original photographer's copyrighted work. Consequently, I have created a FAQ's and Answer you can use.

FAQ: Who owns the copyright to a derivative image?

ANSWER: The definition of a "derivative work" under the Copyright Act is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a "derivative work".

An example of a derivative work would be a photograph digitally altered by a designer in Photoshop or other software that allows manipulation or merging of the photograph with other images or materials. Another example is changing the medium of art, such as adapting a photograph to create a painting or sculpture.

A derivative work, in certain circumstances, may have its own copyright distinct from the copyright in the original photograph if the newly added material is sufficiently original, but it is a limited copyright that does not impair the copyright to the original work. The derivative copyright only covers any original work added in making the second work. Further, any derivative work created by a customer can only be used for the purpose granted in the license. Any greater use would be considered an infringement of the copyright to the original work and an action can be brought against the infringer.

The PACA form Online Digital Distribution Agreement states that a user may not create any derivative use of an Image unless indicated on the invoice. Further, the PACA terms and Conditions are very clear that copyrights to images are retained by the copyright holder.

What Are Moral Rights?

In addition to copyright, a body of law that relates to "works" of authorship, there is a European tradition respecting the personal rights of authors embodied in various laws known as le droit moral, or moral rights. Generally speaking, European law protects the right to be known as the author of your work; the right to prevent others from falsely attributing to you the authorship of a work that you have not in fact written; the right to prevent others from being named as the author of your work; the right to publish a work anonymously or pseudonymously, as well as the right to change your mind at a later date and claim authorship under your own name; the right to prevent others from using the work or the author's name in such a way as to reflect adversely on his or her professional standing.

The laws of different countries vary to some extent, with France recognized as being a strong protector of an author's le droit moral. Because it is a right belonging to the author as a person, and not the work created, it does not accompany the transfer of ownership of the work, and in some countries may not be waived by the author.

The United States had traditionally resisted enacting laws endowing an author with moral rights protection, as it was seen to impede transactions in the art and entertainment industry. In 1988, the United States became a signatory to the Berne Convention, an international treaty whose purpose in part is to harmonize member state laws. Consequently, Congress had to enact a version of moral rights protection to comply with Berne standards. Thus, we now have the Visual Artists Right Act of 1990 ("VARA"), included in our copyright laws (17 U.S.C. Û106A).

What Works Are Protected by VARA?

A "work of visual art" under VARA is defined as:

(1) a painting, drawing, print, or sculpture, existing in a single copy, in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author, or, in the case of a sculpture, in multiple cast, carved, or fabricated sculptures of 200 or fewer that are consecutively numbered by the author and bear the signature or other identifying mark of the author; or

(2) a still photographic image produced for exhibition purposes only, existing in a single copy that is signed by the author, or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author.

Congress severely limited VARA and there are multiple exceptions to this definition. Most notably, works made for hire are excluded from being classified as works of visual art. Generally speaking, any type of applied or commercial art is also denied the protection of VARA as well. Stock photographs and illustrations, as they are not limited editions or signed would not by granted protection under VARA.

What protection does VARA offer?

The type of protection offered by VARA is markedly different from copyright protection. Unlike economically driven transfers and licenses governed by the Copyright Act, VARA makes artists' rights inalienable (non-transferable).

Specifically, VARA confers upon artists several rights of attribution and integrity. First, the author has the right to claim authorship. Second, in addition to that attribution right, the author enjoys the right to prevent use of his or her name as the author of a work that he or she did not in fact create. Third, the author may prevent use of his or her name as the author of a work of visual art that -- although she might have created it -- has been subject to a ''distortion, mutilation, or other modification of the work which would be prejudicial to ... his or her honor or reputation."

There are, however, limitations on these rights as well. Modification that is a result of the passage of time or the inherent nature of the materials is not considered to be a violation of moral rights. Also, unless caused by gross negligence, the modification of a work of visual art that is the result of conservation, or of the public presentation, including lighting and placement is exempt. Finally, all works not covered by the right of attribution are also not protected by the right of integrity.

How long does protection last?

For works created after VARA became effective, the artists' rights extend for the life of the author. For works preceding VARA, the rights expire with the author's rights granted under the Copyright Act. For works of joint authorship, rights exist for a term of the life of the last existing author.

Again, the rights may not be transferred. However, they may be waived if the author expressly agrees to such waiver in a written instrument signed by the author. Such instrument shall specifically identify the work, and uses of that work, to which the waiver applies, and the waiver shall apply only to the work and uses so identified. In the case of a joint work prepared by two or more authors, a waiver of rights under this paragraph made by one such author waives such rights for all such authors. Also, a transfer of ownership does not convey a transfer of the artists' rights.

DMCA Ramifications of Linking

Where Copyright and Free Speech Collide

Under the Digital Millennium Copyright Act (DMCA), Internet Service Providers (ISPs) can avoid the risk of monetary liability for hosting infringing material if the ISPs promptly remove the infringing material after receiving notice, or what lawyers call "cease and desist" letters. This, of course, encourages the removal of infringing material. This ease of removal has prompted critics to "complain" that the removal of material violates the First Amendment's guarantee of free speech. Consequently, unusual websites have been created to serve as a voice for such complaints.

For example, the Church of Scientology recently wrote a cease and desist letter to Google, Inc. requesting the company to remove links to a website that is critical of Scientology. That website, www.xenu.net posts "secret" material about Scientology, including material that is copyrighted and trademarked. Therefore, if google.com were to continue providing links to xenu.net, Google, Inc. would be held liable.

In order to comply with the DMCA, Google removed the links. However, the executives at Google were dissatisfied with what they perceived as a First Amendment violation. Now, if Google users manage to find the infringing links, a message will appear persuading the user to visit chillingeffects.com, a website that posts pro-First Amendment material. Chillingeffects.com even posts the cease and desist letter written by the lawyers for the Church of Scientology to Google.

This illustrates the fine line between copyright protection and the right to free speech. While we fight to protect copyrighted material on the Internet, dissenting opinions are emerging and are finding ways to support their grievances in a public manner.

Ty, Inc. v. Publications International, Ltd.

The Circuit courts still are struggling with the fair use doctrine. Recently, the Seventh Circuit dealt with an appeal made by Publication International, Ltd. (PIL) when a lower court granted a permanent injunction preventing PIL from selling its catalogs For the Love of Beanie Babies and Beanie Babies Collector's Guide. There was no dispute that photographs of the copyrighted Beanie Babies in the catalog were derivative works, and thus potentially infringed Ty's copyright. However, PIL alleged that it was entitled to the protection of the Fair Use doctrine.

The Circuit court did not make a final decision regarding whether PIL's catalogs were fair use, but sent the case back to the lower court with a few words to guide the final decision.

The judge for the Circuit court, Judge Posner, is renowned for his economic analysis of copyright cases. Here, Posner focused on whether PIL's catalogs provided a complement for Ty's market or a substitution for Ty's market. Posner made several market analogies, including how the market for book reviews complements the market for books. Similarly, a catalog can complement the market for toys and collectibles. This is evidenced by the fact that Ty does license certain publishers to create catalogs for Beanie Babies. However, Posner noted that certain types of book reviews can substitute for the actual book, especially where the book review quotes the book in its entirety. Again, a catalog may substitute toys and collectibles in a similar fashion.

The court distinguished between the catalogs that were the subject of this case. One was clearly aimed at young people and contained limited and relatively meaningless text. The other catalog was designed for the sophisticated collector and contained useful information and commentary regarding each Beanie Baby. In keeping with his original analogy, Posner outlined a spectrum, where at one end, potentially infringing material is "embedded" in text. Like an excerpt from a novel in a book review, so too are the photos of Beanie Babies "embedded" in the text of the second catalog. At the other end of the spectrum is the type of publication that reproduces copyrighted material in its entirety, and is thus not protected by Fair Use.

Posner went on to warn against a potential First Amendment violation. It has already been noted that Ty licensed its own catalogs. However, Ty retained control over those catalogs and would not permit any negative commentary to be published and required the catalogs to indicate that the publication was "not sponsored or endorsed by" Ty. Effectively, the court said that copyright ownership does not grant a monopoly to control all commentary about the copyrighted work. Just as a novelist cannot force a reviewer to write only positive commentary, Ty cannot restrict others from remarking about its products.

The most significant aspect of this opinion is that Posner indicated that the four factors that are used to analyze a fair use case are not exclusive, but rather illustrative of what judges can consider. This means that the door has been opened to include other factors, whether they be economics or free speech. Ultimately, Posner says, the courts must conclude what is reasonable, and if the four factors do not provide a reasonable conclusion, other issues may be considered.

This is a very hot topic right now since catalogs are used widely to depict copyrighted material. This case, when it is finally decided, will effect many areas, from museum catalogs to secondary market advertising.

Restoration of Copyright

Cordon Holding B.V. v. Northwest Publishing Corp.

It is a common assumption that older works, particularly photographs and works of art, that were created under the pre-1978 Copyright Act, are now in the public domain for lack of compliance with formalities such as publication with proper copyright notice, or registering copyright renewals within the 28th year after publication. While this might be a valid assumption with US works, it may not be accurate with works of foreign authors. Under the current Copyright Act, certain foreign works that were in the public domain can be restored and protected under copyright.

For example, a federal court in New York recently decided a case concerning copyright restoration and reproductions of various works by M.C. Escher. The plaintiffs were two companies from Netherlands who claimed to hold the copyright to the works. The defendant American company claimed that the works were in the public domain because the plaintiffs had not properly restored their copyrights.

As mentioned, prior to the new 1978 copyright law, works were only protected when they were published with proper copyright notice. Unpublished works could be protected under various state laws, but the federal copyright law afforded them no protection. In 1989, the notice requirement was repealed, but certain works published without notice before 1989 still fell into the public domain. In order to comply with international treaties, the US created a safe harbor provision for works created by foreign nationals to restore their works from the public domain.

In order to restore a copyright, three conditions must be met: 1) the work must not be in the public domain in the original country (i.e. the Netherlands); 2) the work must be in the public domain in the US due to noncompliance with formalities (i.e. lack of proper notice); and 3) the work must have at least one author who was, at the time the work was created, a national of an eligible country, and if the work was published, it was first published in an eligible country.

The court here found that the plaintiffs satisfied these requirements and denied the defendant's motion for summary judgment.

On another note:

Our office has been alerted that a website, photofil.net, was allegedly licensing other agents' celebrity photographs without a license. As we were ready to send the DMCA "notice and takedown" letter for a particular client to the hosting ISP to remove certain images, we were informed that the site was not operating today, but unfortunately could be created under another name.

Use of Name and Likeness of "Diana Princess of Wales" on Considered Fair Use

The Estate of Diana Princess of Wales and the Diana Princess of Wales Memorial Fund (collectively the "Fund") brought an action in California federal court against the Franklin Mint seeking damages based on the use of her name and likeness on commemorative jewelry, plates and dolls and the advertisements for these products. The action was based both on California's Right of Publicity law and Federal trademark law. The district court denied all claims and awarded the Franklin Mint attorneys' fee. The Fund, not pleased with such a result, appealed to the Ninth Circuit.

The Franklin Mint had been selling unauthorized products years before Princess Diana's death in 1997, and continued thereafter. Shortly after her death, the Fund commenced a claim in California, which recognizes post-mortem rights of publicity. However, in applying choice of law rules, (the jurisdiction whose law should be applied in the case) the California court concluded that the law of the decedent's domicile controlled. Since British law does not recognize a right of publicity, there was no basis for a claim.

The court also concluded that the Fund did not have a claim against Franklin Mint under the Lanham Act for false endorsement.

California amended its post-mortem right of publicity law and added language extending the statute to all cases in which the liability or damages arise from acts occurring within the state. Seizing an opportunity, the Fund reinstated its claim against the Franklin Mint, based on the revised publicity statute. Nonetheless, the Ninth Circuit maintained that the amendment was not a choice of law provision, requiring the application of California law, and continued to view British law as the appropriate choice of law and denied the claim.

Next, the Court reexamined the lower court's determination that there was no consumer confusion as to the source of the Franklin Mint's products under the Lanham Acts False Endorsement provision. Not only did the Ninth Circuit agree that there was no consumer confusion, these products had been in existence since 1981, but in addition, the Franklin Mint was entitled to a Fair Use defense for its reference to Princess Diana to describe the Diana-related products. The court stated that using a name that is merely descriptive does not imply endorsement. (The Court did state that she could be described as "The English Princess who died in a car crash" but it was much simpler to describe her as "Diana Princess of Wales"). Similarly, the court justified the use of a photograph of Diana in its advertising. Finally, because the California Right of Publicity Statute permitted the court to award attorneys' fees to the prevailing party, the Franklin Mint was entitled to the award of attorneys' fees.

This case is significant in that it recognizes that where the celebrity itself is the product, using the name or likeness to identify the product does not violate federal trademark laws, as it is reasonable necessary to use a photograph and the name to describe the person. Finally, it resolves a dispute regarding the reach of the California post-mortem publicity statute, confirming that you must look at the law where the deceased person lived. This is particularly relevant if the deceased lived in New York prior to death or in the UK where post-mortem publicity rights are not recognized.

Trademarks and Fair Use

We have received several inquiries regarding the fair use of trademarks. Like copyright, trademark law has a statute governing the area of fair use, and courts have decided cases explaining fair use. It is valuable to understand what is permitted, especially in the area of advertising.

An example of fair use of trademarks in advertising is a commercial that references and displays the trademarked name and logo of another company without obtaining prior permission. The Lanham Act, which governs trademark law permits a fair use defense where the trademark identified is not to be used as a mark, but to describe the good or service provided, and there is a fair use defense to using the trademark without obtaining prior permission.

This statute has been interpreted by the courts and one illustrative case, which concerned an unauthorized poster of the Rock and Roll Hall of Fame, noted that the statute permits a party to defend an infringement charge on the ground that the use of the mark to be an infringement is a use, otherwise than as a mark of a mark which is descriptive of and used fairly and in good faith only to describe the goods or services of such party." The court found that the poster, which was a photo of the Hall of Fame and said "Rock N' Roll Hall of Fame" on it, was a fair use even though the Rock and Roll Hall of Fame is a registered trademark because it accurately identified the building.

Moreover, another well-known case that concerned the pop group the New Kids on the Block dealt with an unauthorized telephone poll regarding the group. The court set forth three requirements for fair use: First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder." In addition, the court said, "Where the use of a trademark does not imply sponsorship or endorsement, the fact that it is carried on for profit and in competition with the trademark holder's business is beside the point."

The Restatement (Third) of Unfair Competition, which is a reference book for lawyers, points out that one is not subject to liability when one uses another's protected designation to refer to the other or the other's goods, services, or business, since such use does not create a likelihood of confusion. For example, use of another's trademark in comparative advertising, even if the comparison is unfavorable to the other, does not subject the actor to liability. And, if the use merely causes prospective purchasers to recognize the mark as a reference to the trademark owner, the use is not an infringement.

Furthermore, the Restatement helps clarify the distinction between the use of another's mark as a trademark for the actor's own goods or services and a nontrademark use of the mark. In both contexts the perception of prospective purchasers and not the intent of the user is controlling. For example, if prospective purchasers interpret the actor's use of the mark as an indication of the source or sponsorship of the actor's goods or services, the use is within the scope of provisions of the Lanham Act. On the other hand, if the use is interpreted merely as a reference to or a comment on the goods, services, business, or mark of the trademark owner, the Lanham Act should not be applicable.

In conclusion, a general rule of thumb for trademark fair use is that, so long as the trademark is not being used to confuse a customer and is merely identifying a product or service that already exists, the unauthorized use may be permissible. It is important to remove readily identifiable logos and trademarks from objects within a photograph in order to avoid the appearance that the owner of the trademark is endorsing or sponsoring the good or service for which the photo might be used.

The Importance of Copyright Registration

In Villa v. Brady Publishing, the importance of registering a copyright was made apparent to a graffiti artist whose action for copyright infringement was dismissed by the federal court. Although he had applied for registration, he failed to provide confirmation of the registration in the form of either an acceptance or refusal by the Copyright Office.

Hiram Villa, is a graffiti artist who works in large wall murals often consisting of stylized letters spelling his pseudonym, "UNONE". When Brady Publishing published a book entitled Tony Hawk's Pro Skater 2 Official Strategy Guide and included a reproduction of one of Villa's murals without obtaining permission, he was not flattered and commenced a claim for copyright infringement. The publisher successfully attacked Villa's claim of copyright infringement for failure to prove that his artwork was registered. Under the Copyright Act, registration (except for foreign works) serves as "the key to the court house" and is a prerequisite to any infringement action. Although Villa claimed to have applied for registration, the court was not satisfied that registration was complete without evidence in the form of acceptance or refusal of registration from the Copyright Office. The court emphasized that it is not enough to say that the application is in the mail. Villa's claim was dismissed.

In addition to copyright claims, Villa's complaint included deceptive business practices, invasion of privacy and violation of his right to publicity for use of his pseudonym. The court looked at these allegations and concluded that they were all really one in the same. The essence of the behavior to which Villa took issue is an unauthorized reproduction, a copyright infringement claim. The Copyright Act preempts state law claims that are based on the same conduct. Therefore his state law claims were dismissed as well.

The importance of registering a copyright goes beyond avoiding the headache of court filings and an extended judicial process. Although a work can be registered at anytime (unless it is already in the public domain), the advantages of early registration (ideally within three months of any first publication) are great. If you have not registered prior to an alleged infringement, not only will you be prevented from filing an infringement suit until you obtain a registration, (unless you are a foreign author) but you will also be prevented from receiving attorneys' fees and statutory damages and will be limited to proving actual damages. Normally, registration of a copyright can take between 5-9 months without the expedited process. Although is certainly possible to seek special handling and request an expedited registration, the cost for this service is $580 in fees to the Copyright Office in addition to the $30.00 registration fee.

Trademark Infringement and Search Engines

J. K. Harris and Co. v. Kassel

As the saying goes, "Sticks and stones may break my bones but names will never hurt me." This may be true for the playground but when it comes to the Internet, a Federal District Court in California disagrees and not just for name calling but also for excessive mention of a competitor's registered trademark in a party's website architecture to unfairly garner "hits" in an Internet search. J.K. Harris and Co., one of the largest tax representation and negotiation companies in the US, filed suit against a competitor, Steven H. Kassel and First Tax Inc., for trademark infringement alleging that Kassel's website unnecessarily and excessively made mention of the Harris trade name, drawing away potential Harris clients. J.K. Harris also sought an injunction against negative statements published on the Kassel site.

The Lanham Act prohibits "initial interest confusion" which occurs when a consumer is lured to a product by its similarity to a known mark, even though the consumer realizes the true identity and origin of the second product before making a purchase. In this case, Kassel established a page on its website entitled "J.K. Harris Employees Tell of Wrongdoing While Complaints Pile Up", dedicated to criticizing J.K. Harris. It included statements from unidentified disgruntled former employees and customers, as well as solicitations for critical information about the J.K. Harris for publication on its website.

J.K. Harris alleged that Kassel strategically manipulated its website so that a customer typing in "J.K. Harris" in any search engine would find Kassel's site within the top ten hits, including the line "J.K. Harris Employees Tell of Wrongdoing While Complaints Pile Up". This was accomplished by creating keyword density using the J.K. Harris name, creating "header tags" and "underline tags" around sentences that used the J.K. Harris name, using the J.K. Harris name as keywords within the site and by using various hot links to websites with information about J.K. Harris.

Kassel argued that mentioning J.K. Harris was reasonable under a rule known as "nominative fair use" which allows a registered trademark to be used by a commercial user. The courts apply a three-part test to determine if the use qualifies as "fair use". First, the product or service in question must not be readily identifiable without use of the trademark; second, the mark's use must be reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark suggest sponsorship or endorsement by the trademark holder. Although the court agreed that Kassel satisfied the first and third factors, the court found that Kassel's use of the mark was more excessive than reasonably necessary. The court noted that Kassel's site made mention of the J.K. Harris trade name as a keyword over 75 times, that the Kassel site did not need to use the J.K. Harris name in "header tags and "underline tags", or increase the font size, underline the sentences using the competitor's trade name or place the name in sentences at the top of the web page. The fair use argument was denied.

J.K. Harris was successful in showing a likelihood of initial interest confusion and the court granted an injunction, preventing Kassel from further excessive use of the trade name but only from using it more than necessary, rather than completely.

Kassel argued that it had a First Amendment right to free speech, and should be permitted to display content regarding J.K. Harris. However, the court pointed out that the Lanham Act, which governs commercial speech, specifically prohibits false statements made in a commercial advertisement that have a tendency to deceive a substantial segment of the audience. The court did not enjoin statements that were publicly available and factually correct, but required that Kassel remove third party statements from disgruntled employees and customers submitted to Kassel since they were factually unreliable and harmful to the business reputation and goodwill of J.K. Harris.

In this Internet world, where everyone fights over the most "eyeballs", being in the top ten list of any search engine is critical to generating traffic to a site. However, where unfair tactics are employed, parties are fighting back, using traditional trademark law to level the playing field.

The Difficulty in Obtaining Profits as a Measure of
Damages for Copyright Infringement (Mackie v. Reiser)

Jack Mackie, a Seattle based artist specializing in public outdoor artwork, filed a copyright infringement suit against the Seattle Symphony Orchestra Public Benefit Corporation and Bonnie Reiser, a graphic designer. In 1979, Mackie was commissioned by the City of Seattle to create a series of sidewalk installations entitled, "The Dance Steps". The series depicted various dance steps including one called "The Tango". In 1995, the Seattle Symphony contracted with Reiser to create a direct mail subscription campaign for the 1996-97 season. Reiser created a montage for the "Pops" series comprised of images from the Symphony's then future buildings as well as other aspects of Seattle Culture, which Reiser completed by painting pastel swirls and lettering over the collage. One of the figures included in the montage was "The Tango". Reiser had scanned this image, cropped it and added to her final work. The Symphony then incorporated this work in a brochure that was mailed to approximately 150,000 people all over the United States.

After learning of Reiser's montage and the Symphony's distribution, Mackie sought damages which included a hypothetical royalty payment, the loss of future employment opportunities, the recoupment of profits that the Symphony generated during the 1996-97. Mackie also demanded profits for future seasons, arguing that people who subscribed to the Pops renewed their subscriptions in part because of the infringing collage. Despite Mackie's passionate convictions and bruised ego, the court could not offer much more than sympathy. The appellate court affirmed the decision of the trial court limiting the artist's damages to $1000 in actual damages and denying any award of indirect profits. In its opinion, section 504(b) of the Copyright Act (the section that provides for actual damages and profits as a result of an infringement), precludes the court from awarding any monetary remedies to a plaintiff, like Mackie who failed to register his copyright before infringement, unless a causal nexus between the infringing work and the profits can be proven. Unfortunately for Mackie, the proof he offered was purely speculative. The court commented that it would be impossible to tell what moved the public to purchase tickets and therefore, how much of the profits were due to Mackie's "Tango" and how much were based on Reiser's design, the Symphony's reputation, the music, a particular conductor etc. Furthermore, on cross-examination, Mackie conceded that his loss of further earnings was speculative at best and that in the past, he had given permission to others to use "The Tango" without payment of a royalty.

Although profits is a measure of damages under copyright law, it is very difficult for a plaintiff to establish the right to the defendant's profits when the infringement is based on the reproduction of either artwork or photographs used in an advertisement or brochure. An example of an appropriate claim for profits would be if an infringer were selling pirated copies of a CD-ROM or other product, where the link between the infringement and profits is clear. Typically, where an image is incorporated into advertising material, damages are limited to a license fee or royalty unless the infringed work was registered before the infringement. In such a case, statutory damages and attorneys' fees can be sought.

Proposed PACA By-Laws

This summer the extended executive committee attended a strategic planning committee. One goal was to review the seventeen-year old By-laws that were written when the industry was quite different. Although it had been amended several times, it was clear that new by-laws were necessary to reflect the current business procedures in the industry.

These proposed by-laws represent a repeal of the former by-laws. These proposed by-laws will be presented again at the next meeting in Miami, Florida, and will be voted upon by the voting members present that are designated by each member to vote.

Each voting member should read the proposed by-laws carefully. The three areas of significant change include 1) changing the name of the organization to PICTURE ARCHIVE COUNCIL OF AMERICA, to reflect the current variety of image distribution models, without losing the trade name "PACA", 2) moving frequently changing operating procedures out of the by-laws to a policy handbook, to avoid cumbersome by-law revisions, and 3) broadening and streamlining membership categories to reflect the industry. The policy handbook is still being drafted and will be sent to the members shortly.

The by-laws will soon be available at the PACA web site for member review.

Copyright Infringement Actions: Proof of Access

When bringing a copyright infringement claim, the party who claims their work was infringed must establish that 1) they own a valid copyright in the work and 2) that protected elements in their work have been copied. When the actual work itself is copied, proof of copying is obvious. However, many infringements are alleged based on works that look similar to the original but there are some differences between the works. Proof of copying is required.

The test for unauthorized copying is two-part test. The first part requires proof that the infringer had access to the copyrighted work. The second part requires substantial similarities as to the items that are considered subject to copyright protection. The issue of what constitutes access is the subject of a number of cases. With respect to access, it is not enough to simply show that the accused party had a bare possibility of access. You are required to prove access by showing a particular chain of events or link by which the alleged infringer might have gained access to the work.

In a recent case an owner of a copyright in a song claimed that a record company copied elements in his music resulting in two other songs. The original copyright owner, Jorgensen, had recorded a demo tape of his song, "Lover" and sent the unsolicited demo tape to a record company. Later, after hearing songs entitled, "Amazed" and "Heart", Jorgenson became convinced that his work was copied. He argued that since the demo tapes were received by employees who regularly interact with industry artists, it is possible that his music was disseminated through the industry system and somehow got into the hands of the writers of "Amazed" and "Heart." Jorgensen could not mention any specific instances or factual occurrences by which the demo tape was allegedly circulated through the industry and into the hands of the writers of the two songs, but argued that access was possible by virtue of the demo tape being sent in and the record company's natural association and with other artists.

The court was not persuaded that there was enough proof of access to support his claim of copyright infringement. Jorgensen could have attempted to prove access by showing a particular chain of events by which the alleged infringer might have gained access to the work. However, merely alleging receipt of an artist's work by a corporate defendant is insufficient to establish access according to the court. Further, the court noted that Jorgensen could not even prove that the tape was actually received but only that he sent it in. His speculation as to what happened after he submitted his demo tape included a myriad of possibilities and neglected to offer evidence of meaningful access and opportunity to copy. The court did not find this argument convincing and found it too far-fetched.

The generally rule is, absent proof of access, courts turn to the works and compare them for striking similarities. In instances where the similarities are so pronounced to preclude any possibility of independent creation, access will be presumed. In cases where the similarities are subtle, as in this music case, a stronger showing of access is required.

Supreme Court Update:

The Supreme Court heard arguments on Wednesday October 9, 2002 in Eldred v. Ashcroft. The case contests the power of the Congress to extend the term of copyright protection from life plus 50 years to life plus 70 years. The Copyright Clause in the constitution permits Congress the power to promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries". The Sonny Bono Term Extension Act extended the term by twenty years in 1998. Works scheduled to fall into the public domain were given an additional twenty years of life. Those who exploit public domain works complained that this term extension was not "limited" but extended the length of protection beyond a period reasonable to encourage the arts.

The current term of copyright is in harmony with the period of protection in EU countries. Otherwise, works of European authors would be protected twenty years longer then American authors. The fact that the court decided to hear this case has everyone on both sides of the argument intrigued.

Supreme Court Hearing on Extension of Copyright Term

A colleague from the Copyright Society attended last week's oral argument in the Eldred case. The issue before the Supreme Court was whether Congress had the authority to extend by twenty additional years the term of copyright to life of the author plus seventy, and to extend the term to ninety-five instead of seventy-five years for corporations.

His reading of the justices was that it was unlikely that the Sonny Bono Term Extension Act would be declared unconstitutional. Whether the justices agree with the length of the term or not, great deference is given to Congress to enact laws as provided under the Constitution.

Faulkner v. National Geographic Society

Faulkner v. National Geographic is a similar case to Ward v. National Geographic Society, recently commented on. In Faulkner, a group of four freelance photographers and their estates brought suit against the NGS for infringement of copyright based on the NSG CD-ROM product "The Complete National Geographic".

The photographers, who had contributed to the Magazine on a work for hire basis similar to that in the Ward case, applied separately to register copyrights in these works. They were refused registration because the text and photographs were published only with the notice of NGS. The photographers then attempted to register their works as "a compilation of photographs and text previously published in National Geographic." Some of the registrations were granted and others not, although the Copyright Office erred by including them all in a letter of denial. Those that were denied were given the reason that the compilation was essentially identical to the photos and text that were already protected by NGS's copyright notice and therefore, lacked sufficient originality. The Copyright Act only extends protection in a compilation to the original elements of selection, coordination and arrangement but not to the individual images.

NGS argued that the photographers' case should be dismissed since the Copyright Office denied registration. The court disagreed and noted that regardless of what the Copyright Office said in their denial to register, it was not conclusive as to the validity of the copyrights and could be contested.

The court also examined a claim by the estate of Arthur Allen, a contributor of text and photos to NGS that were published before 1964. Under the 1909 Copyright Act, which governs all works published before 1978, an author was entitled to an initial twenty-eight year copyright term before the work fell into the public domain. To prevent this from happening, the author was required to register a renewal of copyright protection during the 28th year following publication or forever lose his right to protection. (Under amendment to the Copyright Act, works published after 1964 were granted automatic renewal). Arthur Allen's estate never applied for renewal, but claimed that since NGS obtained initial and renewal registration of the work, it was saved from the public domain, relying on a Second Circuit case, Goodis v United Television Artists. The court disagreed and noted that renewal by the wrong party is not a valid renewal and therefore, the renewal was void and equal to not having been renewed at all. The Allens could not rely on the renewal by another party to save them from an action they should have properly taken themselves. If the Allens were to concede that the work was properly registered by NGS, they would lose their claim for infringement but that either way they would lose their right to the work.

Finally, the court also dismissed a claim for direct, vicarious and contributory infringement against Kodak. The film manufacturer entered into a co-sponsorship agreement in 1997 with NGS which provided that Kodak would pay a fee to the multimedia software developers NGS hired to produce "The Complete National Geographic", in exchange for inclusion of Kodak promotional and advertising messages. Additionally, the agreement provided that Kodak would be involved in a sweepstakes connected with the launch of "The Complete National Geographic" and would help to promote it on Kodak's own website. However, Kodak did not receive other revenues or remuneration from its sales. The evidence was insufficient to establish that Kodak exercised any degree of control over the allegedly infringing activities to establish vicarious liability. As for the contributory infringement, an infringer must have knowledge of the infringing activity and also must have materially contributed to it. The court denied this claim as well finding that although Kodak may have been aware of infringement claims brought against NGS, it may not have known that those claims were of any merit.

The court's refusal to apply Goodis to protect works created by freelance photographers published in magazines before 1964 is significant. It has been assumed by photographers and authors that the magazine's copyright notice, as well as the registration, protected all the works contained in the publication. The magazine's copyright was deemed to be for the benefit of the contributors. Photographers would not have been aware of the dire necessity to register works independent of the magazine in the 28th year after publication. This interpretation of Goodis by a trial court creates the same problem Goodis sought to avoid, inserting works into the public domain. Whether this aspect of the case is to be appealed is not known.

Copyrighting Photographs

Under US copyright law, holding a valid copyright registration is considered holding the keys to the courthouse, without which you cannot even file a claim, unless the owner is a foreign author. Registration of photographs has always been a challenge to photographers, who produce many works in a year and for which registration is burdensome. Currently the Copyright Office offers group registration of multiple works for photographers. Even prior to such new regulation, photographers could register a group of photographs as an unpublished collection of works, or would register the works first published in one publication such as a magazine or a book. A recent district court case, Thron v. HarperCollins Publishers Inc., a photographer's case was dismissed because a registration of multiple works in a book was considered defective. The case seems wrong and the court did not explain its reasoning.

Doug Thron filed suit against HarperCollins publishers for copyright infringement and violation of the Digital Millennium Copyright Act (DMCA). Thron claimed that the publishers misappropriated two of his photographs in a book entitled, "The Legacy of Luna", infringing his copyrights in violation of the Copyright Act. Thron then further claimed that the publishers subsequently tried to publicize the book through the internet via Amazon.com, using digitally altered photographs that in turn violated the DMCA.

In order to commence the action, Thron relied on his registration of a book entitled "From the Redwood Forest" which contained 57 photographs including the two involved in the copyright claim. The court found that the registration of the works in the book was defective because the regulations dealing with group registration of photographs did not take affect until two years later.

Thron then tried to amend his register as a compilation, but failed there too since he had not properly filled out the compilation section of the application form..

The court also denied the claim under the Digital Millenium Copyright Act that prohibits removal of "copyright management information". The court ruled that since the registration of the photographs involved was deficient, that the copyright information removed was not "copyright management information" under the statute.

According to plaintiff's attorney, this case is not going to be appealed. It is a decision of a trial court and does not have to be followed, but the holding that a copyright in a book of photographs does not protect the individual photographs by one author does not make sense.

Attorneys' Fees

When deciding whether to commence a copyright action or not, a decision is often made based on the expense of litigation rather than the nature of the infringement or the likelihood of success. Lawsuits can be expensive and attorney's fees are commonly part of the relief that one seeks under the Copyright Act. But attorneys' fees are not automatic and whether a plaintiff is entitled to recover attorneys' fees is up to the discretion of the judge hearing the matter. This makes the decision difficult where there is a great likelihood of success in winning a copyright infringement case, but the statutory damages may not cover the cost of litigation.

Recently a court was faced with the dilemma of what standard to apply in deciding whether attorneys' fees should be awarded to a plaintiff who won a copyright infringement suit. David Gonzales owned several copyrights in designs he intended to imprint on T-Shirts. Transfer Technologies, a company that produces temporary tattoos, took Gonzales designs and turned them into temporary tattoos without obtaining a license. Gonzales sued and won. In its decision, the court noted that Transfer's infringement was voluntary and willful but surprisingly, awarded Gonzales the minimum amount allowable for statutory damages at a total of $3000.00 or $750 per infringed copyright. The judge also decided that in this case attorneys' fees should not be awarded, stating "Transfer's actions, though willful, are not the kind of flagrant behavior that would justify an award of attorneys' fees."

Gonzales appealed and won. The court reviewed past cases to determine what standard to use since the act does not provide any standard but merely authorizes that such awards can be given at the discretion of the judge presiding over the case. The leading case in this area did not create a standard as to how to decide when it attorneys' fees are appropriate, but made note of certain factors that should be considered. Among those listed were frivolousness, motivation and the need in particular circumstances to advance consideration of compensation and deterrence.

The Appeals Court decided that in Gonzales' case, there was little deterrent in the amount of damages that the infringer was ordered to pay. The fact that Transfer stopped infringing after it was sued, although a point in Transfer's favor, was simply not enough of a deterrent. It was effectively patting a criminal on the back for not continuing with its criminal behavior. The court pointed out that "no one can prosecute a copyright suit for $3,000." The court in its decision took a big step forward and opined that the earlier Gonzales decision would, in effect, allow minor willful infringements to be committed without impunity. The court went as far as saying that the prevailing party in a copyright infringement case where the monetary stakes are small should have a presumptive entitlement to an award of attorneys' fees.

The decision in the Gonzales case could have profound affects in favor of copyright holders. As a result of the ruling, copyright owners who have a good chance of proving willful infringement may not have to consider whether a minor infringement is worth litigating when payment of attorneys' fees is a deciding factor. However, the entitlement to statutory damages and attorneys' fees is predicated on obtaining registration of the work prior to the infringement. The importance of registration cannot be over emphasized

President Signs New "Distance Learning" Bill

Part 1

TEACH

On November 2nd, 2002, the "Technology, Education and Copyright Harmonization Act" (the TEACH Act), part of the larger Justice Reauthorization legislation (H.R. 2215), was signed into law by President Bush. TEACH redefines the terms and conditions on which accredited, nonprofit educational institutions throughout the U.S. may use copyright protected materials in distance education-including web sites and by other digital means--without permission from the copyright owner and without payment of royalties. Under TEACH, faculty will be permitted to use copyrighted materials as part of their classroom instructional activities in portions or under conditions that are analogous to conventional teaching and lecture formats. The law anticipates students will access each learning session within a prescribed time period and under the supervision or direction of an instructor. The law is not, however, intended to permit scanning and uploading of full or lengthy works, stored on a website, for students to access throughout the semester.

What is distance education and why does it implicate copyright law?

Distance education takes place when a teacher and student(s) are separated by physical distance, and technology (i.e., voice, video, data, and print) is used to bridge the instructional gap.

Currently, distance education programs use combinations of available technologies in varied ways, involving e-mail among teachers and students, class chat rooms, links to resources on the World Wide Web, incorporation of preexisting content in the course of instruction, and the delivery of supplementary materials in electronic form. As technology advances, so do resources for distance education. Over the years, this advance has raised some complicated copyright issues. Educators use writings, images, videotapes, musical works, sound recordings, motion pictures or computer programs in their teaching, all copyright-protected materials. Specifically, unless there is a statutory exemption, copyright owners retain the exclusive right to make copies and to make public performances and public displays of the works. An assembled or even dispersed group of students may well constitute the "public" under the law. Consequently, educators were frequently at risk of incurring violations of owners' rights whenever they copied materials as handouts, uploaded works to web sites, "displayed" slides or other still images, or "performed" music, videos, and other works. Librarians and other educators have been lobbying for change to what they believed were outdated copyright laws that were ill-equipped to deal with the emerging and rapidly growing world of distance education.

Benefits of the TEACH Act for Educators

The primary benefit of the TEACH Act for educators is its repeal of the earlier version of Section 110(2), of the Copyright Act which was drafted in 1976 and covered the limited forms of distance education that then existed. As written, section 110(2) had only limited application to courses offered over a digital network. For example, the performance or display had to be made as a regular part of systematic instructional activity by a nonprofit educational institution or governmental body, it had to be directly related and of material assistance to the teaching content and it had to be primarily for reception in classrooms or places of instruction, or to persons whose disabilities or other special circumstances prevent their attendance in classrooms, or to government employees.

The TEACH Act expands upon existing law as follows:

1. The law explicitly allows retention of the content of the distance-education transmission and student access for a brief period of time, and it permits copying and storage that is incidental or necessary to the technical aspects of digital transmission systems.

2. The new law allows educational institutions to reach students through distance education at any location; the transmissions are no longer limited to just classrooms.

3. Most significantly, is the expanded range of allowed works. The new law permits the display and performance of nearly all types of works, including:

a. Performances of nondramatic literary works (such as readings from textbooks, novels, and poetry);

b. Performances of nondramatic musical works (such as pop music, folk music, and symphonies);

c. Performances of any other work, including dramatic works (such as stage plays, opera and musical theater) and audiovisual works (such as feature films, educational videos, and filmstrips), but only in "reasonable and limited portions"; and

d. Displays of any work "in an amount comparable to that which is typically displayed in the course of a live classroom session."

A few categories of works are specifically left outside the range of permitted materials under the TEACH Act.

The following materials may not be used:

a. Works that are marketed "primarily for performance or display as part of mediated instructional activities transmitted via digital networks"; and

b. Performances or displays given by means of copies "not lawfully made and acquired" under the U.S. Copyright Act, if the educational institution "knew or had reason to believe" that they were not lawfully made and acquired.

The first exclusion is designed to prevent the unrestricted use of commercially available education materials marketed specifically for online distribution via an inline database or other digital systems. . Instructors are to purchase those materials rather than digitize and upload their own copies. The second category is to discourage the use of pirated material.

Under the TEACH Act, while thee is more freedom to use materials for distance learning purposes, Section 110(2), the law still imposes numerous requirements for distance education that reach far beyond the modest limits in the traditional classroom. Educators must still be prepared to explore alternatives, such as securing permission from the copyright owners for use of materials beyond the limits of the law, and applying the law of fair use.

Part II will discuss these restrictions.

Part II The Teach Act

Restrictions

Despite the greater leeway given to instructors and educational institutions, the TEACH act still imposes restrictions on use of copyrighted material for educational purposes. The duties of the various decision making bodies at an educational institution are outlined below.

Duties of Institutional Policymakers

1. The benefits of the TEACH Act apply only to a "government body or an accredited nonprofit educational institution." Most familiar educational institutions will meet this requirement, however many private entities-such as for-profit subsidiaries of nonprofit institutions-may not be duly "accredited."

2. Copyright policy. The educational institution must institute policies regarding copyright, although the language does not detail the content of those policies.

3. Copyright information. The institution must "provide informational materials" regarding copyright, and in this instance the language specifies that the materials must "accurately describe, and promote compliance with, the laws of United States relating to copyright." These materials must be provided to "faculty, students, and relevant staff members."

4. Notice to students. In addition to the general distribution of informational materials, the statute further specifies that the institution must provide "notice to students that materials used in connection with the course may be subject to copyright protection." The "notice" to students may be a brief statement simply alerting the reader to copyright implications. The notice could be included on distribution materials in the class or perhaps on an opening frame of the distance-education course. Taking advantage of electronic delivery capabilities, the educational materials may include a brief "notice" about copyright, with an active link to more general information resources.

5. Enrolled students. The transmission of content must be made "solely for . . . students officially enrolled in the course for which the transmission is made. The content should not be broadcast for other purposes, such as promoting the college or university, generally edifying the public, or sharing the materials with colleagues at other institutions.

Duties of Information Technology Officials

Limited access to enrolled students. The new law calls upon the institution to limit the transmission to students enrolled in the particular course "to the extent technologically feasible." To comply, institutions may need to create a system that permits access only by students registered for that specific class.

Technological controls on storage and dissemination. An institution deploying "digital transmissions" must apply technical measures to prevent "retention of the work in accessible form by recipients of the transmission . . . for longer than the class session." The statute offers no clarification about the meaning of a "class session," but language throughout the statute suggests that any given transmission would require a finite amount of time, and students would be unable to access it after a designated time. Also, in the case of "digital transmissions," the institution must apply "technological measures" to prevent recipients of the content from engaging in "unauthorized further dissemination of the work in accessible form."

3. Interference with technological measures. If the content transmitted through "digital transmissions" includes restrictive codes or other embedded "management systems" to regulate storage or dissemination of the works, the institution may not "engage in conduct that could reasonably be expected to interfere with [such] technological measures."

4. Limited temporary retention of copies. The statute explicitly exonerates educational institutions from liability that may result from most "transient or temporary storage of material." On the other hand, the statute does not allow anyone to maintain the copyrighted content "on the system or network" for availability to the students "for a longer period than is reasonably necessary to facilitate the transmissions for which it was made." Moreover, the institution may not store or maintain the material on a system or network where it may be accessed by anyone other than the "anticipated recipients."

5. Limited long-term retention of copies. The TEACH Act also amended Section 112 of the Copyright Act, addressing the issue of so-called "ephemeral recordings." The new Section 112(f)(1) explicitly allows educational institutions to retain copies of their digital transmissions that include copyrighted materials, provided that no further copies are made from those works, except as allowed under the statute. As a practical matter, Congress seems to have envisioned distance education as a process of installments, each requiring a specified time period, and the content may thereafter be placed in storage and outside the reach of students. The institution may, however, retrieve that content for future uses consistent with the new law.

Duties of Instructors

Instructor oversight. The statute mandates the instructor's participation in the planning and conduct of the distance education program and the educational experience as transmitted. An instructor seeking to use materials under the protection of the new statute must adhere to the following requirements:

• The performance or display "is made by, at the direction of, or under the actual supervision of an instructor";
• The materials are transmitted "as an integral part of a class session offered as a regular part of the systematic, mediated instructional activities" of the educational institution; and
• The copyrighted materials are "directly related and of material assistance to the teaching content of the transmission."

The requirements share a common objective: to assure that the instructor is ultimately in charge of the uses of copyrighted works and that the materials serve educational pursuits and are not for entertainment or any other purpose

4. Mediated instructional activities. The statute directs that performances and displays, involving a "digital transmission," must be in the context of "mediated instructional activities." This language means that the uses of materials in the program must be "an integral part of the class experience, controlled by or under the actual supervision of the instructor and analogous to the type of performance or display that would take place in a live classroom setting." In the same provision, the statute specifies that "mediated instructional activities" do not encompass uses of textbooks and other materials "which are typically purchased or acquired by the students." The point of this language is to prevent an instructor from including, in a digital transmission, copies of materials that are specifically marketed for and meant to be used by students outside of the classroom in the traditional teaching model. For example, the law is attempting to prevent an instructor from scanning and uploading chapters from a textbook in lieu of having the students purchase that material for their own use. The occasional, brief handouts-perhaps including entire short works-may be permitted in distance education, while reserves and other outside reading may not be proper materials to scan and display under the auspices of the new law.

5. Converting analog materials to digital formats. The TEACH Act includes a prohibition against the conversion of materials from analog into digital formats, except under the following circumstances:

• The amount that may be converted is limited to the amount of appropriate works that may be performed or displayed,[under the Act]); and
• A digital version of the work is not "available to the institution," or a digital version is available, but it is secured behind technological protection measures that prevent its availability for performing or displaying in the distance-education program consistent with [theAct].

These requirements generally mean that educators must take two steps before digitizing an analog work. First, they need to confirm that the exact material converted to digital format is within the scope of materials and "portion" limitations permitted under the new law. Second, educators need to check for digital versions of the work available from alternative sources.

Since the Act requires that copyright information must be provided, PACA may consider preparing copyright educational material for publishers of textbooks and other material for educational use, so students, teachers and institutions understand the copyright protections and requirements under TEACH and do not misuse visual content.

Copyright Damages

Bruce v. Weekly World News, Inc.
The PACA sample delivery contracts and invoices contain language that provide for a multiplier of a use fee if a work is used outside of the license agreement.

In the event you use an image for any use other than that indicated on the invoice, including but not limited to the number of uses, the publication using, or the size of the reproduction, agrees to forego its right to sue for copyright infringement and breach of contract if you pay, as liquidated damages, a sum equal to times the maximum price we would have charged for such use, within 10 (ten) days of us billing such fee. This is not a penalty but an agreed fair use charge. If you fail to make such payment in ten (10) days, we shall have the right to sue for copyright infringement and breach of contract.

Although we make the argument in negotiating retroactive licenses for infringing uses that an infringer should not receive the benefit of the rate that it would have received if the request to use came before the infringing use, no court had addressed this issue. For the first time a federal court in Massachusetts has accepted a "five times" multiplier in determining the amount of damages a photographer is entitled to recover in a copyright infringement.

In March 1992, freelance photographer, Douglas Bruce took a photograph of President, Bill Clinton shaking hands with an unidentified Secret Service Agent. A World News photo editor contacted The Picture Group, Bruce's stock photo agency and obtained the photograph. World News intended to alter the photo by superimposing its own image of a "Space Alien" over the person shaking Clinton's hand. Before obtaining permission World News began manipulating the photograph. The Picture Group and World News were not able to reach an agreement on an appropriate license fee. Nonetheless, World News published the retouched photograph together with the banner "Alien Backs Clinton" on the cover of its August 11th 1992 issue.

The Picture Group billed World News $500 for use of the photo. Thereafter, the Picture Group billed World News for each occasion that the photo appeared in its publication until 1993 when the Picture Group went out of business. Bruce's share of the license fee for the billed uses was $1,775.

In 1994, Bruce came across a World News T-Shirt advertisement displaying his retouched photograph. Bruce sent the publication a cease and desist letter claiming copyright infringement. In response, World News offered to pay Bruce +$500 for a general release of copyright which he refused. The photograph continued to be utilized in other advertisements including a different T-Shirt featuring twelve Senators under the banner "12 US Senators Are Space Aliens!" as well as numerous times on the World News Internet site. In total, the World News T-Shirt advertisements appeared 188 times in its publication and over 10,000 T-shirts were printed. Additionally, Bruce's retouched photo appeared 48 times in the publication' subscription advertisements. A district court awarded Bruce $20,142.45 in damages plus interest at a bench trial during which World News acknowledged its infringements. In reaching its decision, the court calculated the actual damages by using a multiplier of 5 for unauthorized use.

Bruce, however felt that the court miscalculated the damages and appealed arguing that he was entitled to at least $359,000. He argued that the court erred by awarding only one half of the $2,200.00 in licensing fees. Originally, Bruce had agreed to split the licensing fees with The Picture Group, but since the stock photo agency had gone out of business, World News only paid the half owed to Bruce. This resulted in World News being unjustly enriched by not having to pay the full licensing fee for their infringing use. The court agreed with Bruce and awarded him an additional $5,500.00 ($1,100.00 license fee x multiplier of 5).

Bruce made other assertions that the district court erred in calculating appropriate damages, but the court found his arguments unconvincing. Bruce asserted that the district court incorrectly ruled that he was only entitled to licensing fees for World News' first unauthorized editorial uses of his photograph in 1992 but not for each subsequent unauthorized use, including T-Shirt and subscription ads and reprints of World News covers. The court disagreed with Bruce and concluded that he would not have been able to negotiate with World News for anything other than a single lump-sum, up front licensing fee, as distinguished from a per-use fee, even if the use had been authorized.

Further, Bruce argued that although he received revenues realized from T-shirt sales, he should have received royalties on the number of T-shirts produced rather than just the ones that were actually sold. The court ruled that without evidence of such a continuing royalty contract existing in the industry, they could not find in his favor.

Finally, Bruce maintained that the lower court's apportionment of a 50-50 split between himself and World News of the profits generated from t-shirt sales was incorrect. He asserted that the repetitive use by World News of the retouched photo turned it into a sort of icon, resulting in a valuation exceeding the sum of its two components. Here, the court reasoned that in light of decisions in other cases where copyrighted material was later enhanced by so-called "star-power" and an award of far less than 50% of the profits was given, Bruce's share in profits was arguably generous.

Other than its importance that a multiplier is relevant for actual damages, this case shows the importance of industry practice in presenting evidence of licensing in a copyright case. The court accepted the practice of the multiplier, but also agreed that the plaintiff could only obtain a one time fee for the other infringing uses, absent other evidence of industry licensing. (Bruce was not entitled to statutory damages or attorneys' fees because the photograph was not registered before the infringement).