NYSBA FALL 2020 | VOL. 29 | NO. 3 Bright Ideas

A publication of the Intellectual Property Law Section of the State Bar Association

In This Issue n Copyright Enforcement Risk Analysis After n Implications of Brexit for Trademarks, Fourth Estate: Deal Considerations for Copyrights, and Patents Transactional Attorneys William Samuels and Kristin Garris Carolyn J. Casselman and Jacqueline Malzone n Copyright Considerations as Art Galleries n Supreme Court Weighs in on Profit and Museums Move Online in the Wake of Disgorgement in Trademark Cases COVID-19 David J. Haas and Mark J. Rosenberg Amelia K. Brankov NYSBA.ORG/IPS New York State Bar Association New York

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*Select discounts and promotions will vary by partner Table of Contents Page Message from the Chair...... 4 Michael Oropallo Copyright Enforcement Risk Analysis After Fourth Estate: Deal Considerations for Transactional Attorneys...... 5 Carolyn J. Casselman and Jacqueline Malzone Supreme Court Weighs in on Profit Disgorgement in Trademark Cases...... 8 David J. Haas and Mark J. Rosenberg Sohm v. Scholastic: Second Circuit Schools Litigants on Key Copyright Issues...... 10 Scott J. Sholder and Lindsay R. Edelstein Is DMCA Section 512 Working for Users? A Response to the Copyright Office’s 512 Report...... 16 Katharine Trendacosta Implications of Brexit for Trademarks, Copyrights, and Patents...... 20 William Samuels and Kristin Garris Copyright Considerations as Art Galleries and Museums Move Online in the Wake of COVID-19...... 24 Amelia K. Brankov Section Committees and Chairs...... 28 Welcome New Section Members...... 29 Submission of Articles...... 30

NEW YORK STATE BAR ASSOCIATION

If you have written an article you would like considered for publication, or have an idea for one, please contact the Editor-in-Chief:

Jonathan Bloom Editor-in-Chief Weil, Gotshal & Manges LLP 767 New York, NY 10153-0001 [email protected]

Articles should be submitted in electronic document format (pdfs are NOT acceptable), along with biographical information. REQUEST FOR ARTICLES

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 3 Message from the Chair: New Beginnings

As I take the reins of you who have lost loved ones or who have been per- as Chair of a great sonally affected more than the rest of us. Section of a great Bar Bright Ideas Association, I can’t Kudos once again to longtime editor help thinking about Jonathan Bloom for putting together another great edition the former Chairs that of our Section journal. And thanks to the authors, con- have been instrumen- tributors, and those behind the scenes for taking time out tal in my journey and of their collective days to pen such timely and thought- whose guidance and provoking articles. Please keep the articles coming. If you mentorship I am so have a case of interest or have run across an interesting thankful for. I only issue, we encourage you write it up and hit “send.” hope to build upon To those of you who have a tendency to put your their foundation and Bright Ideas journal in a pile with the many other mail- take the IP Section to ings you get, I urge you to take a moment to peruse the a new level. So too is articles in this issue. There are several articles regarding this a time for reflec- recent copyright law issues, including the SCOTUS Fourth Michael A. Oropallo tion and reemergence Estate opinion and the need to register a copyright prior for us all—a new to filing an infringement suit; proposed reforms to the beginning—as we face DMCA and copyright issues facing galleries and muse- the uncertainty COVID-19 has hoist upon us all. Before ums as they expand their online operations during the March few of us knew what Zoom was, let alone that pandemic. On the trademark front, there is a look at the Zoom meetings would become the norm. As IP lawyers, impact of Brexit and an overview and discussion of the many of us counsel clients on change, innovation, and SCOTUS Romag ruling concerning trademark damages, technology. And as lawyers, many of us were used to a disgorgement, and willfulness. daily routine of commuting to (and from) the office, trav- eling to some degree, and trying to balance our work with Please keep in mind that NYSBA’s Annual Meeting our personal lives. To say that our lives have changed is will be virtual this year, and the IP Section portion will an understatement. But we learn how to adapt. We find be split into two days: Wednesday, January 20 from 1:00 a way to make sense out of this craziness. We learn how to 4:30 p.m., and Tuesday, January 26 from 8:30 a.m. to to put our clients at ease, and we learn how to keep our noon. The theme, “Intellectual Property in a New Virtual loved ones safe. We find a new routine—albeit one where World,” should be practical, timely, and of interest to all. I the lines between work and home are blurred. And we encourage you to attend and participate. find tolerance, if not humor, in those intersections of our As we wade our way through the remainder of this formerly separate lives. crazy year and prepare for what will hopefully be a 2020 continues to tax us all. Just as it seems we might breakthrough 2021, I wish you all the best. be turning the corner, another bump in the road appears. Thanks to the perseverance of many, we will get through Michael A. Oropallo this together. And our collective thoughts are with those

Contribute to the NYSBA Journal and reach the entire membership of the state bar association The editors would like to see well-written and researched articles from practicing attorneys and legal scholars. They should focus on timely topics or provide historical context for New York State law and demonstrate a strong voice and a command of the subject. Please keep all submissions under 4,000 words. All articles are also posted individually on the website for easy linking and sharing. Please review our submission guidelines at www.nysba.org/JournalSubmission.

4 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 Copyright Enforcement Risk Analysis After Fourth Estate: Deal Considerations for Transactional Attorneys By Carolyn J. Casselman and Jacqueline Malzone

I. Introduction (especially in smaller designated marketing areas), port- In the unanimous Supreme Court decision Fourth folios of local media assets in the aggregate can yield high Estate Public Benefit Corp. v. Wall-Street.com, LLC,1 Justice enterprise value. Recent transactions involving local media Ruth Bader Ginsburg wrote a short and seemingly simple assets with multibillion-dollar purchase prices include the opinion holding that section 411(a) of the Copyright Act acquisition of Tribune Media Company by Nexstar (add- provides that a claimant may commence a copyright in- ing Tribune’s 42 local television stations along with digital fringement suit only after the Register of Copyrights “has applications and websites reaching 50 million households registered a copyright after examining a properly filed to Nexstar’s stable of over 170 television stations and com- application.”2 This approach had long been the law in the munity portal websites), the acquisition by New Media In- Second Circuit, but the Fifth and Ninth Circuits previously vestment Group, Inc. of Gannett Co., Inc. (combining New had used the “application” approach, whereby submitting Media’s 154 daily publications of locally focused print and an application for registration—without the further step digital content with Gannett’s flagship USA Today brand of examination and issuance of a registration certificate— and more than 100 local media brands), and the acquisi- satisfied the prerequisite under section 411(a) that prior to tion of Raycom Media (with 65 television stations across filing an infringement action “registration of the copyright 44 markets as well as multiple newspapers in small and claim has been made.”3 Thus crisply resolving a circuit medium-sized markets) by Gray Television, Inc. (These split between the Second and the Ninth Circuits (arguably transactions are cited as examples of M&A activity involv- the two most significant circuits with respect to copyright ing local news assets, not as examples of companies with a jurisprudence), Fourth Estate may read like a straightfor- large number of unregistered copyright assets.) ward technical exercise in statutory interpretation, of inter- Lawyers representing potential buyers or financiers est primarily to copyright litigators. However, transaction- in this space should be prepared to review the copyright al lawyers active in mergers, acquisitions, and financing in registration practices of target companies and advise the media space would do well to understand the impact clients as to how those registration and enforcement of Fourth Estate on risk analysis with respect to copyright practices enhance or mitigate associated value risk related enforcement by target companies and borrowers. to potential copyright infringement on a broad scale, An underlying cause of frustration that was raised in as the current Locast dispute (discussed further below) Fourth Estate is the significant processing time between illustrates. SEC filings for listed media companies active the filing of a copyright application and issuance of a in the local broadcast and newspaper markets sometimes registration certificate (which averaged six months at the note as a risk factor that inability to enforce intellectual time). Acknowledging that the administrative lag was property rights may prevent a company from realizing 5 “unfortunate,” Justice Ginsburg noted correctly that the the full value of these assets. delays are due “in large measure to staffing and bud- Clients may need to be apprised of the following key getary shortages that Congress can alleviate, but courts issues, both as part of a diligence exercise and in negotiat- 4 cannot cure.” Although processing times have been re- ing provisions of transaction documents related to risk duced since Fourth Estate was handed down, a processing allocation in representations, warranties, and indemnities: period of several months is likely to persist and will be part of the landscape in which companies with material • Limitations on enforcement actions without copyright registrations in hand, even with copyright assets must operate for the foreseeable future. respect to wide-scale infringement. Fourth Estate highlights why counsel to buyers or fi- • Restrictions on registration of online content nanciers should consider whether barriers to copyright en- and bulk registration limitations. forcement, registration limitations, and associated expens- • Expenses associated with so-called “special es are material risks in deals involving target companies or handling” requests for expedited copyright borrowers with a potentially high volume of unregistered registration in anticipation of litigation. copyright assets. In particular, local television news outlets and local newspapers generate daily content, but in many instances they do not register individual newscasts or Carolyn J. Casselman co-authored this article while newspaper editions due to a variety of factors including Counsel at Paul, Weiss, Rifkind, Wharton and Garrison cost, registration restrictions applicable to bulk and online LLP and is now a partner at Davis Wright Tremaine LLP. content, and perceived low infringement risk. Although Jacqueline Malzone is an associate with Paul, Weiss, such content may be of limited value on a discrete basis Rifkind, Wharton and Garrison, LLP.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 5 II. Limitations on Enforcement Actions many local print newspapers do not register daily print Companies with a large number of unregistered issues, notwithstanding the availability of group registra- copyright assets may encounter enforcement limitations tion, and as declining subscription revenue contributes to with respect to wide-scale infringement that may have a increasingly tight operating budgets, more local news- material impact on business operations (as opposed to the papers may migrate from print to online editions as a typically more moderate impact of such limitations with cost-saving measure. Once online, newspapers may not respect to infringement of individual newscasts or news- be eligible for group registration unless each online issue paper articles). The ongoing dispute among broadcasters is distributed “as a self-contained, downloadable work, 12 and Locast is one example of the potentially significant such as a digital version of a tangible newspaper.” impact of the registration requirement in the context of al- The Copyright Office eligibility requirements expressly leged wide-scale infringement. Locast streams the broad- exclude newspaper websites because “a website is not 13 cast signals of over-the-air television stations (capturing considered a serial for purposes of registration.” Al- both nationally distributed primetime programming and though a website may contain text, artwork, photographs, also news telecasts produced by local affiliate stations) or videos that are copyrightable as individual works, a and transmits those streams to residents within the appli- website as a whole “is not explicitly recognized as a type 14 cable local affiliate station’s designated market area (Lo- of copyrightable subject matter.” 6 cast characterizes itself as a signal “digital translator”). As a result, local news outlets that update online Shortly after debuting its service, Locast was sued for materials on a rolling basis (a feature that many newspa- copyright infringement by national networks on behalf per publishers likely consider a necessity to attract traf- 7 of themselves and local affiliate stations. One element of fic—and advertising revenue—to the site) face hurdles to implementing copyright registration practices that best position the business to quickly and efficiently enforce “The ongoing dispute among broad- their copyrights. On June 22, 2020, the Copyright Office casters and Locast is one example of announced a new rule allowing for the Group Registra- tion of Short Online Literary Works (GRTX), but there are the potentially significant impact of the limits on the length of the pieces that can be included in registration requirement in the context of such submissions; all works included in the application alleged wide-scale infringement.” must be published within three months of each other, and while the Copyright Office announced the GRTX applica- tion will be implemented by August 2020, the final rule al- lowed that there may be delays in its launch.15 Perhaps of Locast’s defense has been that to the extent any of the al- greater interest for corporate copyright claimants, works legedly infringed works are unregistered local television made for hire are not eligible for registration under GRTX, newscasts, “Plaintiffs’ [i.e., owners/affiliates of the local and the registered works all must be created by the same stations] claims are barred inasmuch as this Court lacks individual(s) (thus excluding groups of works published subject matter jurisdiction over claims to enforce copy- in a single online edition created by different authors).16 rights for which Plaintiffs have not previously obtained, or have not pleaded ownership of, registrations.”8 The Furthermore, audiovisual works are not eligible for plaintiffs appeared to urge the court to ignore Fourth Es- group registration, presenting a significant impediment tate, noting that all allegedly infringed content “has been for local TV news outlets. If a local station (or the ultimate or will be, consistent with the requirements of 17 U.S.C. corporate owner of a portfolio of local stations) wishes to 411, registered with the United States Copyright Office.”9 be ready to enforce against potential wide-scale infringe- As of this writing, the court has not ruled on Locast’s ment of locally produced content and to reduce the risk subject matter jurisdiction claim, and it remains to be seen of infringement going unchecked while an application whether the court will accept the assurance that certain matures to a registration, copyright proprietors are left of the infringed works “will be” registered as sufficient with the more expensive option of registering individual to proceed with the claim insofar as it includes currently works on a periodic basis.17 unregistered works.10 IV. Special Handling III. Group Registration Limitations The Copyright Office offers an expedited review The Copyright Office permits group registration process through Special Handling, but it is only available of—in relevant part for local media assets—newspapers, in three limited instances: (i) when the claimant is facing newsletters, and serials. Group registration can yield pending or prospective litigation; (ii) for certain customs significant savings in fees because a single filing fee cov- matters; or (iii) when contract or publishing deadlines ers all works included in the group registration filing, and necessitate expedited issuance of a certificate. A copyright it can ease the burden of preparing individual registra- claimant could argue that a transaction agreement for tions for each eligible issue of the newspaper.11 However, sale of the company that requires registration as a clos-

6 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 ing condition should be granted Special Handling under 6. ABC Inc., et al v. Goodfriend, No. 19-cv-7136 (“Locast”)) (Defendant the third category (although these authors are not aware Answer, Counterclaims Para. 52); see also Locast’s About page, https://www.locast.org/about. of any such request having been made to the Copyright 7. ABC Inc., et al v. Goodfriend, No. 19-cv-7136 (“Locast”)) (Plaintiff Office). However, even if M&A or financing transac- Complaint, Paras. 67, 68). tions are arguably within the ambit of this third category, 8. ABC Inc., et al v. Goodfriend, No. 19-cv-7136 (“Locast”)) (Defendant the Copyright Office has discretion in granting Special Answer, Affirmative Defenses Para. 11). Handling requests. The Office “may refuse to grant [a] 9. ABC Inc., et al v. Goodfriend, No. 19-cv-7136 (“Locast”)) (Plaintiff request if it is not sufficiently justified or if the Office is Complaint, Para. 72) (emphasis added). unable to process the request due to workload or budget 10. Recent decisions have relied on Fourth Estate in dismissing constraints.”18 Even if a claimant can take advantage of claims where the plaintiffs alleged copyright infringement in Special Handling, it is likely to prove cost-prohibitive unregistered works and attempted to amend the complaint after receiving a registration certificate. See, e.g., Lee v. Black as a workaround for quickly commencing a copyright Entertainment Television, LLC, No. 19-CV-02751, 2020 WL 1140795 infringement action involving a significant number of (S.D.N.Y. March 6, 2020); Malibu Media, LLC v. Doe, No. 18-CV- works; the current fee is $800 per request, and this fee ap- 10956 (JMF), 2019 WL 1454317 (S.D.N.Y. Apr. 2, 2019). In certain plies to each registered work when the subject works do circumstances courts have distinguished Fourth Estate, such as 19 in Martin v. SGT, Inc., No. 2:19-CV-00289, 2020 WL 1930109 (D. not qualify for group registration. Utah Apr. 21, 2020), in which the court found that a copyright claim was not barred even though the work in question was unregistered at the time the initial complaint was filed because the V. Conclusion initial complaint alleged a cause of action for breach of contract, Potential buyers of companies with material portfoli- not copyright infringement; the court held that because the infringement claim was first asserted in an amended complaint os of local news assets may wish to understand the copy- that was filed after the plaintiff had received the registration right registration practices for both audiovisual media as certificate, the registration was timely. Courts have noted, in well as print and online content and assess the economic dismissing claims where the plaintiff eventually obtained a impact of potential enforcement limitations on wide-scale registration certificate, that the plaintiff was free to file a new complaint alleging infringement of the now registered work. See, infringement versus encouraging more frequent registra- e.g., Ambrosetti v. Oregon Catholic Press, No. 3:19-CV-00682-JD- tion of eligible works. MGG, 2020 WL 2219172 *4 (N.D. Ind. May 7, 2020) (“The Court does not see any indication that a fresh copyright suit would Strategic buyers will presumably be more familiar be untimely since, as alleged by Mr. Ambrosetti, the potentially with copyright registration practices and risk assessment infringing use of the song is ongoing and each new reproduction in the media context and may be in a better position to as- is a fresh wrong, with its own three-year period of limitations.”). sess enforcement risk and the economic impact of unreg- 11. There are limitations on the number of works that can be included on an application for group registration – newspapers must all be istered copyright assets. Financial buyers—particularly published within the same calendar month and bear issue dates those without experience in media more broadly—may be within that month, by way of example (see Copyright Office Cir. unaware of the limiting effect these seeming procedural 62A, 3) – but even with such limitations, group registration can technicalities have on copyright enforcement options and still result in meaningful cost savings as compared to registration of individual works (especially over time as a routinely incurred the financial impact of implementing revised copyright operating expense). registration practices to address those limitations. Lenders 12. Copyright Office Cir. 62A, 1. may wish to consider the potential impact on revenues to 13. Id. service debt or note obligations if there is a material risk of I14. Copyright Office Cir. 66. inability to enforce against wide-scale infringement. 15. 85 Fed. Reg. 37341. Counsel to buyers and financiers active in the media 16. 37 CFR 202.4(j). industry should be prepared to review and flag issues 17. Copyright proprietors still will be able to seek redress back to the related to unregistered copyright assets during diligence date of registration (including infringement occurring during the application processing period), but seemingly will have no ability and, if the client considers the issue sufficiently mate- to actually stop the infringement during that processing period rial, negotiate representations and warranties related to (e.g., by seeking a preliminary injunction or obtaining a favorable near-term enforcement risks and covenants regarding decision in a lawsuit). copyright registration practices during interim operating 18. Special Handling, FAQs, copyright.gov/help/faq/faq-special. periods or the term of the loan or other repayment obliga- html. tion period. 19. When the Copyright Office solicited comments on a proposed new fee schedule, many commentators objected to a proposed increase in Special Handling fees (see Comment of the National Endnotes Music Publishers’ Association, contending that the ‘‘increase 1. 139 S. Ct. 881 (2019). in special handling fees in particular will increasingly make copyright enforcement a privilege rather than a right’’) (83 Fed. 2. Id. at 892. Reg. 24054). Eventually the Copyright Office promulgated the 3. See, e.g., Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, 606 F.3d 612 (9th new fee schedule (effective as of March 20, 2020) without an Cir. 2010). increase in the Special Handling fee (85 Fed. Reg. 9374). 4. 139 S. Ct. at 892. 5. Gannet Co., Inc., Form 10-K for Fiscal Year Ended December 31, 2019.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 7 Supreme Court Weighs in on Profit Disgorgement in Trademark Cases By David A. Haas and Mark J. Rosenberg

I. Introduction justices, vacated and remanded the Federal Circuit’s rul- In Romag Fasteners, Inc. v. Fossil, Inc.,1 decided on ing on the ground that the statute does not require the April 23, 2020, the U.S. Supreme Court addressed the plaintiff in a trademark infringement suit to show that the question of whether willfulness is a prerequisite for defendant willfully infringed the plaintiff’s trademark as obtaining a defendant’s profits as a damages remedy a precondition to receiving an award of the defendant’s 4 in a trademark infringement case. 15 U.S.C. § 1117(a) profits. The Court noted that whereas § 1117(a) expressly provides: requires a showing of willfulness to recover profits or damages for trademark dilution under § 1125(c), it con- When a violation of any right of the reg- tains no such requirement for a violation of § 1125(a).5 istrant of a mark registered in the Patent The Court found the absence of this language telling and Trademark Office, a violation un- because other remedies provisions of the Lanham Act, der section 1125(a) or (d) of this title, or a such as §§ 1114, 1117(b) and (c), and 1118, contain specific willful violation under section 1125(c) of references to the requisite mental state. The Court also this title, shall have been established held that “principles of equity” are not tantamount to a . . . the plaintiff shall be entitled, subject requirement of willfulness.6 The Court observed, howev- to the provisions of sections 1111 and er, that a trademark defendant’s mental state is a “highly 1114 of this title, and subject to the princi- important consideration” when determining whether a ples of equity, to recover (1) defendant’s disgorgement of the defendants’ profits is appropriate.7 profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. III. How Can Willfulness Be Considered but Not Prior to Romag the circuits had been split as to wheth- Required? er § 1117(a) requires a showing of willfulness in order to In its narrow decision, the Supreme Court did not obtain a defendant’s profits in a trademark infringement provide any guidance as to the role of willfulness in a case. Six circuits—the First, Second, Eighth, Ninth, Tenth, profit disgorgement analysis beyond stating that willful- and D.C. circuits—had required a finding of willful- ness is a “highly important consideration.”8 Whether ness, while the Third, Fourth, Fifth, Sixth, Seventh, and this means that willfulness is a first among equals (like Eleventh did not. In Romag the Supreme Court held that objective unreasonableness among the factors bearing on the statute does not require a finding of willfulness as a whether to award attorneys’ fees in copyright infringe- predicate to an award of profits. ment cases) or only one of several factors to consider is This article analyzes the Supreme Court decision and left for the circuit courts to decide. offers some thoughts on its ramifications. Before Romag, the circuits that held a defendant’s profits could be disgorged even without a finding of II. Background willfulness, such as the Third, Fourth, and Fifth circuits, Despite having signed an agreement to purchase viewed the defendant’s willfulness as one of six fac- trademarked magnetic snap fasteners produced by tors to be examined and balanced against each other: (1) Romag Fasteners, Inc. for use in certain of its leather whether the defendant intended to confuse or deceive; goods, Fossil, Inc. unknowingly used counterfeit Romag (2) whether sales have been diverted; (3) the adequacy of fasteners. Romag sued Fossil for trademark infringement other remedies; (4) any unreasonable delay by the plain- under 15 U.S.C. § 1125(a) in Connecticut district court. tiff in asserting his rights; (5) the public interest in making the misconduct unprofitable; and (6) whether it is a case The jury returned a verdict finding Fossil liable for patent 9 and trademark infringement. The court rejected Romag’s of palming off. While willfulness is an “important fac- request for trademark damages based on Fossil’s profits tor” in these circuits, the absence of which “should weigh generated from its infringing sales on the ground that the jury did not find that Fossil had acted willfully.2 The

Federal Circuit affirmed based on the Second Circuit’s David A. Haas is a managing director in the disputes, rule that a finding of willfulness is required in order to compliance & investigation group at Stout Risius Ross. 3 disgorge an infringer’s profits. Mark J. Rosenberg is a partner in Tarter, Krinsky & Dro- The Supreme Court granted certiorari and, in an gin’s intellectual property group and co-chair of the opinion by Justice Neil M. Gorsuch joined by seven other firm’s reputation management practice.

8 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 against” the disgorgement of profits, a lack of willfulness In those cases, under the current caselaw, an award of the does not preclude an award of profits.10 defendant’s profits can be used as a proxy for the plain- tiff’s actual damages.12 Accordingly, businesses would be Not among the factors these circuits consider, nota- wise to boost their trademark vetting processes to avoid bly, is whether an award of a defendant’s profits in the the possibility of inadvertent infringement by, among absence of intent to infringe would result in a windfall to other things, conducting a comprehensive clearance the plaintiff, putting it in a better position than if its trade- search before adopting a new trademark and carefully mark had not been infringed, nor do the factors include examining the costs and benefits of using a new mark

“Although disgorgement of a defendant’s profits has long been available to trademark owners under the Lanham Act, the lack of consistency and clarity among the circuits as to the need to prove willfulness has often created uncertainty.”

whether actual confusion has been shown. The latter when a third party’s mark revealed in the search repre- is particularly important in other circuits, such as the sents a close call. Businesses also will need to regularly Romag Second Circuit, which, before , permitted an award monitor the marketplace to check on whether previously of a defendant’s profits under three distinct rationales: unknown but senior trademark owners have emerged. unjust enrichment; as a proxy for the plaintiff’s damages; or to deter a willful infringer, with willfulness being re- quired for all three rationales and actual confusion being required for the first two.11 After Romag the basis for an Endnotes award of defendant’s profits under these rationales will 1. Romag Fasteners, Inc. v. Fossil, Inc., 140 S.Ct. 1492 (Apr. 23, 2020). need to be reformulated. 2. Romag Fasteners, Inc. v. Fossil, Inc., 29 F. Supp.3d 85, 108 (D. Conn. 2017). IV. Where Does Romag Lead? 3. Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782, 790-91 (Fed. Cir. 2016). Although disgorgement of a defendant’s profits Id. has long been available to trademark owners under the 4. Lanham Act, the lack of consistency and clarity among 5. Id. at 1496. the circuits as to the need to prove willfulness has often 6. Id. created uncertainty. Although Romag does not eliminate 7. Id. at 1497. consideration of the defendant’s state of mind, it may 8. Id. lower the bar to obtain a defendant’s profits in some cir- 9. See, e.g., Synergistic Intern., LLC v. Korman, 175 F3d. 162, 175 (4th cuits. However, given the emphasis that certain circuits, Cir. 2006). such as the Second, have placed on willfulness, Romag 10. Id. also may lead to another circuit split regarding the weight 11. 4 Pillar Dynasty LLC v. New York & Co., 933 F.3d 202, 212–13 (2d Cir. that should be given to willfulness or the lack thereof. 2019).

It is too soon to predict whether relaxing the standard 12. Id. at 210. for obtaining the defendant’s profits will result in a flurry of new trademark infringement suits or open the door to “trademark .” However, Romag undoubtedly will re- duce the likelihood of early summary judgment motions on the issue of innocent infringement. Such motions have been a way for defendants to foreclose the possibility of a large profits award, thereby making a case less desirable for the plaintiff to pursue. As a result, Romag is likely to increase the value of trademark infringement cases and to increase the pressure on defendants to settle before trial. In addition, Romag may make it easier for trademark owners to obtain profit disgorgement in cases where the plaintiff’s actual damages are small or difficult to prove.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 9 Sohm v. Scholastic: Second Circuit Schools Litigants on Key Copyright Issues By Scott J. Sholder and Lindsay R. Edelstein

I. Introduction A. Interpretation of “Accrual”: Psihoyos and Its On May 12, 2020, the Second Circuit handed down Progeny a decision in Sohm v. Scholastic, Inc.1 in which the court Federal courts have adopted two interpretations of addressed several unsettled issues of copyright law, when accrual occurs for statute of limitations purposes. including whether a three-year “lookback” period limits The first is the “discovery rule” approach, under a plaintiff’s recovery of monetary damages in a copyright which an infringement claim does not accrue until action.2 Prior to this ruling, copyright litigants had been the copyright holder discovers, or with due diligence faced with seemingly contradictory decisions interpret- should have discovered, the infringement.10 To date ing the application of the Copyright Act’s three-year nine circuits, including the Second, have adopted the statute of limitations, both with respect to the proper date discovery rule.11 Some courts, on the other hand, apply of claim accrual and the time limitation on recoverable the “injury rule,” wherein a claim accrues on the date monetary damages.3 By adopting the three-year lookback the infringement commences regardless of whether the rule, the court clarified this important issue, at least in plaintiff was, or reasonably should have been, aware one region of the country. Sohm also raised questions of it.12 Under the injury rule, a copyright owner must concerning the sufficiency of group registrations for file an infringement suit within three years after the photographs—a practice commonly used by licensing infringement began, regardless of when he or she learned agencies—and whether the proper cause of action for of the infringement.13 Because it gives the plaintiff more allegedly acting outside the scope of a license sounds in opportunity to bring a suit (even many years after the copyright or contract. initial infringement occurred), the discovery rule is typically considered to be the more “plaintiff-friendly” This article will provide background on each of these rule.14 issues and discuss how they were resolved in Sohm. The Second Circuit expressly adopted the “discov- ery rule” for copyright infringement claims in 2014 in II. Statute of Limitations and Recoverable Psihoyos v. John Wiley & Sons.15 Psihoyos involved claims Damages brought in 2011 in the Southern District of New York Pursuant to 17 U.S.C. § 507(b), civil actions for copy- by professional photographer Louis Psihoyos against right infringement must be commenced “within three publisher John Wiley & Sons for purported infringe- years after the claim accrued.”4 Before the enactment of ments of several images of dinosaur skeletons and a § 507(b) in 1957, the Copyright Act did not contain a stat- narcoleptic dog dating back to 2005.16 Wiley moved for ute of limitations for infringement claims; federal courts summary judgment, alleging, in part, that the Copyright in copyright infringement actions applied the statute Act’s three-year statute of limitations barred Psihoyos’s of limitations for the analogous state law claim under claims.17 the law of the state in which the action was brought.5 Citing Stone v. Williams,18 Judge J. Paul Oetken held Depending on which jurisdiction a plaintiff was in, the that Psihoyos’s claims accrued when he learned of Wi- statute of limitations could run anywhere from one to ley’s use of his images in 2010 and that the claims there- eight years.6 Citing concerns over the “wide divergence fore were not time-barred.19 Wiley appealed, arguing of time periods” provided in the statutes of limitation of that TRW Inc. v. Andrews,20 in which the Supreme Court various states and the potential for “forum shopping” by held that Congress intended to exclude the discovery rule copyright owners, Congress enacted section 507(b).7 when calculating the statute of limitations under the Fair Congress emphasized that § 507(b) was to “extend to Credit Reporting Act (FCRA), was binding.21 The Second the remedy of the person affected thereby, and not to his Circuit rejected Wiley’s reliance on TRW, opining that substantive rights[,]” and noted that “under [this] reme- “the text and structure of the Copyright Act, unlike the dial type of statute, the basic right is not extinguished, FCRA, evince Congress’s intent to employ the discovery but the limitation is applied merely to the remedy.”8 This context is important, as later courts relied heavily on this language in interpreting § 507(b) in determining what Scott Sholder is a partner and Lindsay R. Edelstein is an monetary remedies were recoverable in connection with associate with Cowan DeBaets Abrahams and Sheppard the three-year limitations period.9 LLP in New York.

10 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 rule, not the injury rule.”22 According to the court, policy In 1998, Petrella’s daughter, who had inherited rights considerations also counseled in favor of the discovery to the film after Petrella’s death, informed MGM that she rule.23 Thus, the court agreed with Judge Oetken that Psi- owned the copyright to the screenplay and that exploita- hoyos’s claims accrued when he discovered the infringe- tion of any derivative work, including the film Raging ment and were not barred by the statute of limitations.24 Bull, constituted infringement.32 More than 10 years later, in January 2009, she sued MGM for copyright infringe- B. Due Diligence Under the Discovery Rule ment, seeking damages only for acts of infringement In addition to being “plaintiff friendly” because it occurring on or after January 6, 2006—three years prior to potentially allows plaintiffs a larger window of time in commencement of the lawsuit.33 which to file copyright infringement suits, application of the discovery rule also can benefit a copyright owner MGM moved for summary judgment on multiple grounds, including laches, based upon Petrella’s 18-year insomuch as determining whether a plaintiff exercised 34 the requisite “due diligence” to trigger accrual is of- delay in filing suit. The district court granted MGM’s ten considered to be a question of fact not susceptible motion, finding Petrella’s delay unreasonable and preju- dicial to MGM, in part because of the significant invest- to determination at the motion to dismiss stage—and 35 sometimes not even on summary judgment.25 As a result, ments MGM had made in exploiting the film. The Ninth Circuit affirmed, citing the fact that Petrella had delayed the discovery rule can benefit a plaintiff who commences 36 an infringement action more than three years after the filing the suit because the film had not yet made money. allegedly infringing behavior has ceased (and adequately The Supreme Court reversed, holding that laches pleads reasonable diligence in discovering the infringe- cannot bar copyright infringement claims brought within ment), as it is the defendant’s burden to establish that the the statutory three-year limitations period.37 In discuss- plaintiff knew or should have known about the alleged ing the nature of the statute of limitations under § 507(b), infringement more than three years before suing. the Court held that “[u]nder the Act’s three-year provi- There are exceptions, of course, and some courts sion, an infringement is actionable within three years, have been willing to find, based on the pleadings alone, and only three years, of its occurrence”—alluding to the that the plaintiff should, through reasonable diligence, injury rule—but that the Copyright Act “itself takes ac- have discovered the infringement more than three years count of delay” and that “a successful plaintiff can gain before filing the suit.26 In Minden Pictues, Inc. v. BuzzFeed, retrospective relief only three years back from the time of suit . . . [n]o recovery may be had for infringement in Inc., for example, the court dismissed certain claims on a 38 motion to dismiss, taking into account both the fact that earlier years.” Muddying the waters, the Court added the plaintiff was “a seasoned litigator” that had filed 36 in a footnote that it was not actually passing on whether the injury rule or the discovery rule was the appropriate lawsuits to protect its copyrights beginning more than 39 nine years before the plaintiff suing BuzzFeed, and the standard for when an infringement claim accrues. fact that some of the images had been publicly available Since Petrella, district courts in the Second Circuit, on BuzzFeed’s website for more than five years before the applying the discovery rule, have reached conflicting plaintiff discovered them.27 conclusions as to whether the holding in Petrella as to the three-year lookback applies when using the discovery C. Damages Recoverable Under the Three-Year rule. According to one line of cases, the Petrella Court ap- Limitations Period peared to consider the three-year damages lookback limi- Determining when the claim accrued does not neces- tation only in connection with application of the injury sarily answer the question of the time period for which rule. In Energy Intelligence Grp., Inc. v. Scotia Capital (USA) the plaintiff is entitled to seek damages. In Petrella v. Inc., for example, Judge P. Kevin Castel held that “under Metro-Goldwyn-Mayer, Inc., the Supreme Court addressed no reasonable reading of Petrella could the opinion be in- this issue but nevertheless left it in doubt. The issue in Pe- terpreted to establish a time limit on the recovery of dam- trella was whether the equitable defense of laches applied ages separate and apart from the statute of limitations.”40 to claims for copyright infringement in view of the Copy- right Act’s three-year statute of limitations.28 The work at Conversely, in Papazian v. Entm’t, the issue in Petrella was the motion picture Raging Bull, based court opined that “because the clear and specific three- on a screenplay written by boxer Jake LaMotta and his year limitation on damages under section 507(b) was nec- friend, Frank Petrella.29 Petrella and LaMotta had as- essary to the result in Petrella, it cannot be construed as signed their rights to a production company that, in turn, dicta” and therefore required the court to limit damages 41 sold the motion picture rights to Metro-Goldwyn-Mayer accordingly. It held that Psihoyos requires application of (MGM).30 In 1980, MGM released the film Raging Bull, the discovery rule, but under Petrella a plaintiff “is en- starring Robert De Niro. Since then, MGM had continu- titled to recover damages only for infringing acts actually ously marketed the film and converted it into multiple occurring up to three years before filing the complaint” 42 formats, including DVD and Blu-ray.31 even if the infringements reach back further in time.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 11 Thereafter, in PK Music Performance, Inc. v. Timberlake, B. Decision on Statute of Limitations: Upholding the court expressly declined to follow Papazian on the Psihoyos and Clarifying Petrella ground that Papazian “improperly separates Petrella’s Following Psihoyos, Judge Oetken (who was the discussion of the injury rule from its discussion of the district judge in Psihoyos) applied the discovery rule and 43 three-year lookback.” PK Music involved a copyright in- rejected Scholastic’s argument that Sohm’s receipt of fringement claim brought by the owner of the copyright monthly royalty statements and his subsequent failure to to the musical composition “A New Day Is Here at Last” “conduct[] an audit or contact[] Sohm’s agents to inquire against musician in connection with his about [such] payments, despite having the right to do so” musical composition and sound recording “Damn Girl” meant that Sohm “reasonably should have discovered 44 from Timberlake’s Futuresex/Lovesounds album. While any infringement” earlier, thereby triggering accrual of “Damn Girl” was released by Timberlake in 2006, the his infringement claims.55 Instead, the court opined that plaintiff alleged that its principal first discovered the pur- “[w]ithout identifying any information that would have 45 ported infringement in 2015. The complaint was filed prompted such an inquiry . . . Scholastic cannot simply on February 18, 2016, and defendants moved to dismiss rely on the passage of time to establish that Plaintiff rea- on the ground that the claim was untimely as to all time sonably should have discovered [the] infringement.”56 periods prior to February 17, 2013.46 With respect to whether recoverable damages would Judge Vernon S. Broderick denied the motion, hold- be limited to the three years before suit was filed, the ing that “Petrella [could not] be read to require a three- court noted the conflicting conclusions reached by district year limitation on damages when applying the discov- courts in the Second Circuit and endorsed the view of the ery rule” and characterizing Petrella’s references to the court in Energy Intelligence Group that no three-year limit three-year lookback limitation as merely a hypothetical on the recovery of damages applies.”57 consequence of applying the injury rule (which it did not apply).47 Addressing Papazian, the court was skeptical On appeal, Scholastic took the position that the dis- of the holding that, on one hand, Petrella’s discussion of trict court erred in applying the “discovery rule” rather the injury rule was non-binding dicta, and, on the other than the “injury rule” to determine when Sohm’s claims hand, that Petrella’s discussion of the three-year lookback accrued.58 Scholastic argued that subsequent to Psihoyos, was binding.48 The court also cited “the lack of clear the Supreme Court in Petrella had “cast serious doubt on guidance from the Second Circuit on the appropriate rule the viability of the discovery rule.”59 The Second Circuit, of accrual for an infringement claim prior to Psihoyos and however, declined to depart from Psihoyos on the ground the lack of persuasive case law applying the discovery that it was “a published opinion of a prior panel” and rule in conjunction with a three-year look-back.”49 Enter therefore was binding precedent unless “overruled im- Sohm v. Scholastic, Inc. plicitly or expressly by the Supreme Court or by the Sec- ond Circuit en banc.”60 While recognizing that the refer- ence in Petrella to an infringement claim being actionable III. Sohm v. Scholastic only within three years “of its occurrence” was “perhaps A. Background consistent with the injury rule,” the court relied on the In May 2016, Joseph Sohm, a professional photog- Supreme Court’s representation that, notwithstanding the rapher, sued Scholastic Inc., a publisher and distributor split of authority, it was not deciding whether the discov- of children’s books, over certain uses by Scholastic of ery rule or the injury rule applied and held that it would contravene settled principles of stare decisis to depart from Sohm’s photographs of historical monuments and travel 61 destinations.50 In 1986, Sohm had entered into agree- its prior holding in Psihoyos. ments with three photographic agencies—The Image Scholastic also argued that the district court erred in Works, Inc., Continuum Productions Corporation, and allowing damages going back more than three years.62 Photo Researchers, Inc.—to issue limited licenses of his Scholastic maintained that the Supreme Court in Petrella 51 images to third parties on his behalf. Scholastic was “was crystal clear . . . that, independent of whether the one such licensee. After Scholastic purportedly printed injury or discovery rule applies, [u]nder the [Copyright] certain photographs in quantities that exceeded the Act’s three-year [statute of limitations] provision, an agreed-to print run limits, Sohm sued for infringement infringement is actionable within three years, and only in the Southern District of New York alleging 117 infring- three years, of its occurrence” and that the infringer is 52 ing uses of 89 different photographs. At the close of “insulated from liability for earlier infringements of the discovery, the parties each moved for partial summary same work.”63 Sohm, on the other hand, argued that the 53 judgment as to certain uses. In relevant part, Scholastic three-year look-back language in Petrella was merely sought partial summary judgment on the grounds that dicta, taken out of context,” since the principal issue in certain claims were barred by the statute of limitations; Petrella was whether laches applied.64 that Sohm had failed to produce a valid copyright regis- tration for certain works; and that some claims sounded The Second Circuit agreed with Scholastic, revers- in breach of contract rather than in copyright.54 ing the district court and declining to rely on the Energy

12 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 Intelligence line of cases.65 Like the district court in Papa- in.73 The district court rejected this argument, relying on zian, the Court of Appeals held that because the Supreme Alaska Stock, LLC v. Houghton Mifflin Harcourt Publishing Court’s ruling in Petrella as to the “lookback” period was Co., in which the Ninth Circuit held that assignment of necessary to its holding, it was binding precedent.66 Ac- ownership of copyrights in images to a stock agency for cordingly, it held that Sohm could recover damages only registration purposes constituted proper registration for for the three-year lookback period. the collection as a whole as well as for the individual images.74 The lower court held that the relevant language Sohm This portion of strongly suggests that the in § 409(2)—i.e., “in the case of a work”—when read in Supreme Court needs to weigh in on the correct applica- context, does not require a database registrant like Corbis tion of the Copyright Act’s statute of limitations—both to list each individual author of each individual work in in terms of when a claim accrues and whether, if the the database in order to effectively register those individ- infringement occurred more than three years before the ual works.75 To the contrary, listing Corbis as an author of suit was timely filed, damages are limited to a three-year the database satisfied this requirement.76 Moreover, the lookback period. District courts both within and outside court held, persuasive policy reasons, notably the inef- the Second Circuit have taken the position that damages ficiency of requiring that each registration list each author outside the three-year period are permitted where accrual 67 of a large number of constituent works, supported this is governed by the discovery rule. In the meantime, reading of the statute.77 however, the Sohm decision limits copyright owners’ potential recovery, providing some balance as against the On appeal, the Second Circuit noted that it had “yet plaintiff-friendly discovery rule. to address th[e] question . . . of whether the registration of a compilation of photographs under § 409 by an applicant C. Other Issues: Registration and Contractual that holds the rights to component works also effectively Interpretations registers the underlying individual photos where the 1. Group Registration compilation does not list the individual authors of the The court in Sohm also ruled on the validity of Sohm’s individual photos,” but the court readily agreed with the Alaska Stock copyright registrations. district court and with that both the collec- tion as a whole and the individual images are considered In the 1990s, Continuum Productions Corporation registered under these circumstances.78 (a predecessor-in-interest of Corbis Corporation), one of the photographic agencies with whom Sohm had entered 2. Conditions Precedent into a licensing agreement, registered a number of Sohm’s Finally, the parties in Sohm disputed whether the photographs with the Copyright Office pursuant to the contractual print-run limitations constituted contractual agency’s “copyright registration program.”68 Under this covenants or conditions precedent.79 Under New York program, Sohm assigned his copyrights to Corbis for reg- law, a covenant is “a manifestation of intention to act istration purposes, with the intention that Corbis would or refrain from acting in a specified way, so made as to reassign the copyrights back to him after registration was justify a promisee in understanding that a commitment completed.69 The photographs at issue were registered by has been made.”80 A condition precedent, on the other Corbis as part of a compilation of photographs by differ- hand, is “an act or event . . . which, unless the condition is ent photographers for which it had also been assigned the excused, must occur before a duty to perform a promise rights for purposes of copyright registration.70 The group in the agreement arises.”81 The distinction is important registrations were registered under Corbis’s own name, because where a licensee’s improper conduct constitutes and none identified by name Sohm as an author.71 a breach of a covenant undertaken by the licensee (and where the covenant constitutes an enforceable contractual In the district court, Scholastic made a number of obligation), the licensor will have a cause of action only arguments challenging the validity of Sohm’s registra- for breach of contract.82 Conversely, if the licensee’s viola- tions. Most relevant to the appeal, Scholastic argued that tion consists of a failure to satisfy a condition precedent certain of Sohm’s registrations were invalid because they to the license, any such misuse may constitute copyright did not identify by name either Sohm or his company, Vi- infringement.83 sions of America LLC, as an “author” in contravention of 17 U.S.C. § 409, which states that “[an] application for [a] The relevant agreement between Corbis and Scho- copyright registration shall . . . include . . . in the case of a lastic contained the following language: “Any license work other than an anonymous or pseudonymous work, granted by Corbis is conditioned upon . . . your meeting the name . . . of the author or authors . . . .”72 all conditions and restrictions imposed by Corbis . . . You may not otherwise make, use or distribute copies of any Muench Photography, Scholastic relied primarily on Images for any purpose except as authorized.”84 Because Inc. v. Houghton Mifflin Harcourt Pub. Co. , which held that it viewed Scholastic’s overrun as a violation of its cove- it would contravene the plain language of the Copyright nant not to “make, use or distribute copies of any Images Act to allow group database registrations to constitute for any purposed except as authorized,” the district court registration of the individual images contained there- held that the purportedly violated contract term “merely

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 13 delineated acceptable and unacceptable behavior under 8. Id. at 3. the licensing agreement.”85 Accordingly, because Scho- 9. See, e.g., Stone v. Williams, 970 F.2d 1043, 1051 (2d Cir. 1992) (citing lastic had breached a covenant, rather than a condition the “long-established rule that statutes of limitations bar remedies, not the assertion of rights”). precedent, the court held that all of Sohm’s infringement 10. See Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120 (2d Cir. 2014) claims under the Corbis licenses sounded in breach of (hereinafter, “Psihoyos II”). contract rather than in copyright, and it therefore granted 11. Petrella, 572 U.S. at 670 (“[n]ine Courts of Appeals have adopted 86 summary judgment to Scholastic on those claims. . . . a ‘discovery rule’”). Indeed, the First through Ninth Circuit Courts of Appeals apply the discovery rule. See Warren Freedenfeld The Second Circuit disagreed, finding the provisions Assocs., Inc. v. McTigue, 531 F.3d 38, 44-46 (1st Cir. 2008); Comcast in the applicable agreements “replete with conditional v. Multi–Vision Elecs., Inc., 491 F.3d 938, 944 (8th Cir. 2007); Roger language of conditions precedent—‘unless,’ ‘conditioned Miller Music, Inc. v. Sony/ATV Publ’g, LLC, 477 F.3d 383, 390 (6th upon,’ ‘except where specifically permitted’—thereby di- Cir. 2007); Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 705- 07 (9th Cir. 2004); Gaiman v. McFarlane, 360 F.3d 644, 653 (7th Cir. rectly refuting the conclusion that the license agreements 2004); Lyons P’ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 796 created only contractual covenants.”87 The court cited (4th Cir. 2001); Daboub v. Gibbons, 42 F.3d 285, 291 (5th Cir. 1995); Kashi v. McGraw-Hill Global Education Holdings, in which Stone v. Williams, 970 F.2d 1043, 1048 (2d Cir. 1992). The other Circuit the district court interpreted similar license agreements Courts of Appeals have not clearly endorsed either test. See, e.g., Vient v. Raycom Media, No. 2:18-CV-1054-GMB, 2019 WL 2158235, at and held that “overuse of the photos” implicated a condi- *4 (M.D. Ala. Apr. 25, 2019), report and recommendation adopted, tion, not a covenant.88 Accordingly, because the print-run No. 2:18CV1054-MHT, 2019 WL 5680793 (M.D. Ala. Oct. 31, 2019) limitations were conditions precedent, the violation of (“the Eleventh Circuit has not clearly endorsed either test”). which gives rise to claims for infringement, the Court of 12. See Auscape Int’l v. Nat’l Geographic Soc’y, 409 F. Supp. 2d 235, 242-43 Appeals reversed the dismissal of Sohm’s claims based (S.D.N.Y. 2004) (collecting cases applying injury rule); see also U.S. v. 89 Shabazz, 724 F.2d 1536, 1540 (11th Cir.1984) (holding that limitations on the relevant agreements. period “begins on the date of the last infringing act” in the criminal copyright context). Having affirmed in part and reversed in part certain 13. Id. of the district court’s rulings, the Second Circuit remand- 14. See William A. Graham Co. v. Haughey, 646 F.3d 138, 150 (3d Cir. 2011) ed the case to the district court. Whether the remand will (“To cast the discovery rule as changing the date of accrual, so as to spawn further appeals, of course, remains to be seen, but delay the onset of interest charges, would warp its fundamentally at least for now the Second Circuit has granted some clar- plaintiff-friendly purpose.”). ity to several previously opaque copyright doctrines. 15. Psihoyos II, 748 F.3d at 124 (“We agree with our sister Circuits that the text and structure of the Copyright Act, unlike the FCRA, evince Congress’s intent to employ the discovery rule, not the injury Endnotes rule.”). 16. Id. at 122. 1. Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020) (hereinafter, “Sohm II”). 17. Psihoyos v. John Wiley & Sons, Inc., No. 11 CIV. 1416 JSR, 2011 WL 4916299, at *4 (S.D.N.Y. Oct. 14, 2011) (hereinafter, Psihoyos I). 2. Id. at 51. 18. Stone, 970 F.2d at 1051. 3. Compare Park v. Skidmore, Owings & Merrill LLP, No. 17-cv-4473, slip op. at 5 (S.D.N.Y. Sept. 30, 2019) (opining that a plaintiff “cannot 19. Psihoyos I, 2011 WL 4916299 at *5 (“Plaintiff discovered the alleged recover damages for infringements occurring more than three infringement in 2010 . . . Accordingly, plaintiff’s claims are not years before filing” the operative complaint), Papazian v. Sony barred by the statute of limitations.”). Music Entm’t, No. 16-cv-7911, 2017 WL 4339662, at *5 (S.D.N.Y. 20. 534 U.S. 19 (2001). Sept. 28, 2017) (upholding the “clear and specific three-year 21. See Psihoyos II, 2013 WL 3771997 (C.A.2), Appellant’s Reply Br. at 32 limitation on damages under section 507(b)”), Fischer v. Forrest, (“the Supreme Court’s decision in TRW is seminal for its guidance No. 14-cv-1304, 2017 WL 128705, at *7 (S.D.N.Y. Jan. 13, 2017), as to the approach that courts should use in discerning whether report and recommendation adopted, 2017 WL 1063464 (S.D.N.Y. Congress has expressed an intent to override the background Mar. 21, 2017), and Wu v. John Wiley & Sons, Inc., No. 14-cv-6746, principle that a statute of limitation begins to run when the 2015 WL 5254885, at *7 (S.D.N.Y. Sept. 10, 2015) (“Wu can recover right to bring an action is ‘complete and present’ . . . [T]he TRW damages only for any [of] Wiley[’s] infringing acts that occurred decision is also noteworthy for Justice Scalia’s concurring opinion, [not more than three years prior to filing the action].”), with Energy in which he emphatically declared that the lower courts’ ‘general Intel. Grp., Inc. v. Scotia Cap. (USA) Inc., 16-cv-617, 2017 WL 432805, rule’ of discovery accrual is not supported by the Supreme Court’s at *2 (S.D.N.Y. Jan. 30, 2017) (“[U]nder no reasonable reading of precedents and is ‘bad wine of recent vintage.’”). Petrella could the opinion be interpreted to establish a time limit 22. Psihoyos II, 748 F.3d at 124. on the recovery of damages separate and apart from the statute of limitations.”) (citing to Petrella v. Metro-Goldwyn-Mayer, Inc., 572 23. Id. U.S. 663, 669 (2014)). 24. Id. at 125. 4. 17 U.S.C. § 507(b). 25. See, e.g., Michael Grecco Prods., Inc. v. Valuewalk, LLC, 345 F. Supp. 3d 5. See Petrella, 572 U.S. at 669 (2014) (citing S. Rep. No. 1014, 85th 482, 512 (S.D.N.Y. 2018) (“The parties do not dispute that the statute Cong., 1st Sess., 2 (1957) (hereinafter, “1957 Senate Report”). of limitations period is three years, or that the applicable rule in the Second Circuit is the discovery rule. However, they do disagree 6. The 1957 Senate Report noted that “in Alabama the statute of as to when the alleged infringement could have been discovered limitations applied to this type of action is [one] year,” in New with due diligence, and therefore when the statute of limitations York the period was “apparently [six] years,” and in Wyoming “the began to run . . . The materials before the court are insufficient to period was [eight] years.” 1957 Senate Report, at 2. determine [at the summary judgment stage] whether the statute 7. Id. Originally codified in 1957 as 17 U.S.C. § 115(b), the statute of of limitations began running in 2012 or 2015”); see also Palmer/Kane limitations was re-codified in 1976 as 17 U.S.C. § 507(b). LLC v. Benchmark Educ. Co. LLC, No. 18-CV-9369 (NSR), 2020 WL

14 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 85469, at *10 (S.D.N.Y. Jan. 6, 2020) (“there are insufficient facts from 62. Id. at 51. which the Court may find that Plaintiff with due diligence should 63. Sohm II, 959 F.3d, Defendant-Appellee-Cross-Appellant. Br. at 38-39 have discovered the various infringements. Accordingly, the Court (internal quotations and citations omitted). concludes that the Defendant’s statute-of-limitations defense does not support dismissal at this stage.”). 64. Sohm II, 959 F.3d at 52 (citing Sohm’s Reply Br. at 29). 26. See, e.g., Minden Pictures, Inc. v. Buzzfeed, Inc., 390 F. Supp. 3d 461, 65. 2017 WL 4339662, at *4. 466 (S.D.N.Y. 2019) (dismissing certain claims at the motion to 66. See infra n. 41. dismiss stage where the plaintiff, “with due diligence should have 67. See Johnson v. UMG Recordings, Inc., No. 2:19-cv-02364-ODW, 2019 discovered [] the infringement”). WL 5420278 (C.D. Cal. Oct. 23, 2019). 27. Id. at 467. 68. Sohm II, 959 F.3d at 42. 28. Petrella, 572 U.S. at 670. 69. Id. 29. Id. at 674. 70. Id. 30. Id. at 673. 71. Id. at 46-47. It was undisputed that Corbis reassigned certain 31. Id. copyrights to Sohm. 32. Id. at 674. 72. Id. at 47. 33. Id. 73. Id. (citing Muench Photography, Inc. v. Houghton Mifflin Harcourt 34. Id. at 675. Publ’g Co., 712 F. Supp. 2d 84 (S.D.N.Y. 2010)). 35. Id. 74. Sohm I, 2018 WL 1605214, at *12 (citing Alaska Stock, LLC v. Houghton Mifflin Harcourt Pub. Co., 747 F.3d 673, 682 (9th Cir. 2014)). 36. Id. at 675-76. 75. Sohm I, 2018 WL 1605214, at *12. 37. Id. at 677. 76. Id. 38. Id. at 675-76. 77. Sohm II, 959 F.3d at 47. 39. Id. at 670. 78. Id. 40. See No. 16CV00617PKCKNF, 2017 WL 432805 (S.D.N.Y. Jan. 30, 2017). 79. Id. 41. No. 16-CV-07911 (RJS), 2017 WL 4339662, at *5 (S.D.N.Y. Sept. 28, 80. Id. at 45-46 (citing Merritt Hill Vineyards Inc. v. Windy Heights 2017). Vineyard, Inc., 61 N.Y.2d 106, 112 (1984)) (internal quotations and citations omitted). 42. Id. at *4. 81. Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 43. No. 16-CV-1215 (VSB), 2018 WL 4759737, at *1 (S.D.N.Y. Sept. 30, 690 (1995) (citations omitted). 2018). 82. Sohm II, 959 F.3d at 47. 44. Id. at *10. 83. Id. 45. Id. 84. Sohm I, 2018 WL 1605214, at *12. 46. Id. at *9. 85. Id. 47. Id. 86. Id. 48. Id. at *10. 87. Sohm II, 959 F.3d at 47. 49. Id. at *8. As the court in PK Music noted, the Papazian court’s reference to the distinction between the “rolling approach” and the 88. No. 17-cv-1818, 2018 WL 5262733 (E.D. Pa. Oct. 23, 2018). “continuing wrong approach” is perhaps misplaced, as “those two Numerous other courts have agreed when confronted with similar rules specifically address when a claim accrues, not the scope of circumstances. See, e.g., Menzel v. Scholastic, Inc., No. 17-cv-5499, relief to which a plaintiff is entitled.” Id.; see also Petrella, 134 S. Ct. 2019 WL 6896145, at *7–9 (N.D. Cal. Dec. 18, 2019); Krist v. Pearson at 1969 (“It is widely recognized that the separate accrual rule [i.e., Educ., Inc., 419 F.Supp.3d 904, 911–914 (E.D. Pa. 2019); Krist v. the rolling approach] attends the copyright statute of limitations. Scholastic, Inc., 415 F. Supp. 3d 514, 533–36 (E.D. Pa. 2019); Harrington Under that rule, when a defendant commits successive violations, v. McGraw-Hill Glob. Educ. Holdings, LLC, No. 17-cv-2960, 2019 WL the statute of limitations runs separately from each violation. . . . 1317752 (D. Colo. Mar. 22, 2019); Pac. Stock, Inc. v. Pearson Educ., Each wrong gives rise to a discrete claim that accrues at the time the Inc., 927 F. Supp. 2d 991 (D. Haw. 2013). In Harrington, the district wrong occurs . . . Separately accruing harm should not be confused court interpreted substantially identical Corbis agreements to those with harm from past violations that are continuing.”) (internal at issue in Sohm and agreed with the Kashi court that “the parties’ quotation marks omitted). agreement expressly provided that unauthorized use of the images would constitute copyright infringement,” and that use in excess of 50. Sohm II, 959 F.3d at 42. the print-run limitations was unauthorized use. 2019 WL 1317752, 51. Id. at *3. 52. Id. 89. Sohm II, 959 F.3d at 47-48. 53. Id. 54. Sohm v. Scholastic Inc., No. 16-CV-7098 (JPO), 2018 WL 1605214, at *3 (S.D.N.Y. Mar. 29, 2018) (hereinafter, Sohm I. 55. Id. at 11. 56. Id. 57. Id. 58. Sohm II, 959 F.3d, Defendant-Appellee-Cross-Appellant. Br. at 34. 59. Id. 60. Sohm II, 959 F.3d at 50 (citing U.S. v. Allah, 130 F.3d 33, 38 (2d Cir. 1997)). 61. Id.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 15 Is DMCA Section 512 Working for Users? A Response to the Copyright Office’s 512 Report By Katharine Trendacosta

I. Introduction II. Dissatisfaction of One Party Does Not Mean Today, internet users far outnumber big tech the Law Is Broken companies and major media corporations, although their The recently released Copyright Office study on concerns are heard less often by policymakers. People § 512 attempts to portray the online ecosystem as it has who go online depend on an internet that depends on § developed since the DMCA passed in 1998. Unfortu- 512 of the DMCA. nately, large parts of the study view the DMCA’s role in the internet ecosystem as merely to achieve a balance Section 512 of the DMCA is one of the most impor- between the needs of online service providers and those tant provisions of U.S. internet law. Congress designed of rightsholders.2 As a result of this mistaken view of the the DMCA to give rightsholders, service providers, and law, the office appears to believe that because rightshold- users relatively precise and consistent “rules of the road” 1 ers are dissatisfied with the DMCA, the law’s objectives for policing online copyright infringement. At the center are not being met. of that scheme is the “notice and takedown” process. In exchange for substantial protection from liability for the There are at least two major problems with this actions of their users, service providers must promptly theory. First, major rightsholders are never satisfied with take down any content on their platforms that has been the state of copyright law (or with how the internet works identified as infringing and also must take several other today in general); they continually seek broader restric- prescribed steps. Copyright owners, for their part, tions, higher penalties, and more control over users of are given a fast, extra-judicial procedure for obtaining creative works.3 Their displeasure with § 512 may in fact redress against alleged infringement along with explicit be a sign that the balance is working just fine. statutory guidance as to the process for doing so as well Second, Congress’s goal was to ensure that the as provisions designed to deter and remedy abuses of internet would be an engine for innovation and expres- that process. sion, not to ensure perfect infringement policing. The Without § 512, the risk of crippling liability for the record shows that safe harbors were intended to facilitate acts of users would have prevented the emergence of “the robust development and worldwide expansion of most of today’s social media outlets and online plat- electronic commerce, communications, research, develop- forms. With the protection of § 512, the Internet has ment, and education.”4 In the decades since the DMCA become the most revolutionary platform for the creation passed, we have seen this happen. The internet has be- and dissemination of speech the world has ever known. come vital to daily life. By that measure, § 512, although Thousands of companies and organizations, big and far from perfect, is doing reasonably well considering the small, rely on it every day. Interactive platforms like ease with which knowledge and culture is distributed video-hosting services and social networking sites that over the Internet. are vital to democratic participation, as well as to the abil- ity of ordinary users to forge communities, access infor- III. The Copyright Office Has Misread the Balance mation, and discuss issues of public and private concern, depend on § 512. and Discounted Abuse Part of the problem may be that the Copyright Office But large copyright holders, led by major media and fundamentally misconstrues the bargain that Congress entertainment companies, have complained for years struck when it passed the DMCA. The report repeatedly that § 512 doesn’t put enough of a burden on service refers to § 512 as striking a balance between rightsholders providers to actively police online infringement. Bowing and service providers. But § 512 is supposed to benefit a to their pressure, in December 2015, Congress asked the third group: the public. Copyright Office to report on how § 512 is working. Five years later, the Copyright Office has issued its report— Congress built in protections for free speech, know- and it seems unconcerned with the actual needs and ing that the DMCA could be abused. Congress knew that experiences of internet users. § 512’s quick and easy takedown process could result in lawful material being censored without any court super-

Katharine Trendacosta is the lead policy analyst for the Electronic Frontier Foundation.

16 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 vision, much less any advance notice to the person who swat the creator (swatting is a harassment technique that posted the material or any opportunity to contest the re- consists of calling in a fake emergency to 911, resulting in moval. To inhibit abuse, Congress made sure the DMCA a large number of police officers, often with guns drawn, included a series of checks and balances. First, it created showing up to the target’s home). Brady and YouTube a counternotice process that allows for content to be put settled, with Brady apologizing and admitting to sending back online after a two-week waiting period.5 Second, false takedowns. Congress set out clear rules for asserting infringement under the DMCA.6 Third, it gave users the ability to hold The amount of identifying information required by rightsholders accountable if they send a DMCA notice in counternotices is a strong disincentive for users to send bad faith.7 Section 512 is thus a carefully crafted system them, even when the takedowns are illegitimate. And, which, when properly deployed, gives service provid- as shown by the Brady case and cases where abusive spouses used the DMCA to find their victims,11 that fear is ers protection from liability, copyright owners tools to 12 police infringement, and users the ability to challenge the not unwarranted. improper use of those tools. High-profile incidents of DMCA abuse have con- tinued to be reported, some very recently. In early 2020, for example, an NYU School of Law panel about how one proves similarity in music infringement cases was removed from YouTube because the music used as “Congress’s goal was to ensure that examples during the panel triggered the filter. Not even the school’s copyright law experts could figure out what the internet would be an engine for would happen to their account if they disputed the filter innovation and expression, not to en- match—whether it would count as a DMCA takedown, how many “strikes” the account would get, etc.—and the sure perfect infringement policing.” account was only restored through backchanneling.13 In May 2020, the Wall Street Journal published a lengthy re- port on how people use fake DMCA claims to get Google to take news reports offline.14 In light of these recent inci- However, the Copyright Office report focuses on the dents, the office’s dismissive treatment of DMCA abuse is views of online service providers and rightsholders while profoundly disappointing. largely ignoring evidence presented to the office as to the millions of internet users that are neither. A detailed IV. The Report Wrongly Second-Guesses the study by Jennifer Urban, Joe Karaganis, and Brianna Courts Schofield (the Urban study) found, among other things, Another overall theme of the report is that courts all that the counternotice and put-back procedures are rarely over the country have been misinterpreting the DMCA used and that those whose material is taken down are ever since its passage in 1998. not being protected the way the law intended.8 While this study and other evidence of DMCA abuse was entered One of the DMCA’s four safe harbors, § 512(c), covers into the record of the study, the office asserted a lack of “storage at the direction of a user.”15 The report sug- empirical evidence of DMCA abuse. This is despite the gests that appellate courts “expanded” the DMCA when fact that even before the office began its study, artist Jona- they concluded, one after another, that services such as than McIntosh found his remix video “Buffy vs. Edward: transcoding, playback, and automatically identifying Twilight Remixed”—which was mentioned by name related videos qualify as part of storage because they are in official recommendations from the Copyright Office so closely related to it.16 The report also questions another regarding DMCA exemptions for transformative non- appellate court ruling that peer-to-peer services qualify commercial video works—subject to a DMCA takedown for protection.17 notice.9 It took three months of intense legal wrangling before Lionsgate finally relinquished its claim. The report is even more critical of court rulings about when a service provider is on notice of infringement, The Urban study found that the counternotice system triggering a duty to police that infringement. The report was underused, and there is mounting evidence showing challenges one appellate ruling that requires awareness of why people whom the counternotice procedures were facts and circumstances from which a reasonable person meant to help do not use them. In 2019, for example, would know a specific infringement had occurred.18 YouTube sued Christopher Brady under § 512(f) of the Echoing an argument frequently raised by rightsholders DMCA.10 Brady was alleged to have abused the notice and rejected by courts, the report contends that general and takedown regime and YouTube’s repeat infringer knowledge that infringement is happening on a platform policy to extort creators. When one creator correctly used should be enough to mandate more active intervention.19 a counternotice to challenge the false takedowns, Brady Subsection 512(m) of the DMCA says plainly that service allegedly used the information in the counternotice to providers do not have a duty to monitor for infringement.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 17 However, the Office dismisses this language, concluding that the real problem of repeat infringer policies is that that § 512(m) is merely intended to protect user privacy.20 courts are not requiring service providers to create and enforce stricter ones, kicking more people off the internet The Office also suggests the Ninth Circuit’s deci- entirely.26 sion in Lenz v. Universal Music was wrong.21 In that case, the court ruled that entities that send takedown notices The Office does suggest that a different approach must first consider whether the use they are targeting might be needed for students and universities, because is a fair use, as failure to do so would necessarily mean students need the internet for “academic work, career they could not have formed a good-faith belief that the searching and networking, and personal purposes, such material was infringing, as the DMCA requires.22 In the as watching television and listening to music,” and Office’s view, if the Ninth Circuit is correct, rightsholders students living in campus housing would have no other might be held liable for not doing the necessary review choice for internet access if they were kicked off the even if the material is actually infringing. school’s network.27 However, these uses do not meaning- fully distinguish the populations of universities from the This is nonsensical. In real life, no one would sue general population. under § 512(f) to defend unlawful material, even if the provision had real teeth, because doing so would risk Many millions of Americans use the internet for being slapped with a massive statutory damages award. work, career building, education, communication, and And the worry is overblown: it is not too much to ask a personal purposes. And few could go to another provider person wielding a censorship tool as powerful as § 512, if an allegation of infringement led to them being kicked which lets a person take others’ speech offline based on off their ISP. Most Americans have only one or two high- nothing more than an allegation, to take the time to figure speed broadband providers, with a majority stuck with a out whether they are wielding that tool appropriately. cable monopoly for high-speed access.28 Given that one Ninth Circuit judge concluded the Lenz decision actually “eviscerates § 512(f) and leaves it tooth- The internet is vital to people’s everyday lives. To lose less against frivolous takedown notices,”23 it is hard to access because of an unproven accusation of copyright infringement would be, as the Copyright Office briefly take rightsholders’ complaints seriously, but the Copy- 29 right Office did. acknowledges,“excessively punitive.” In short, the Office has taken upon itself to second- VI. Conclusion: By Focusing on Online Service guess the many judges actually tasked with interpret- ing the law because it does not like their conclusions. Providers and Rightsholders, the Report Fails to Rather than describe the state of the law today and advise Capture the Actual Landscape of the Internet Congress as an information resource, the report argues Post-DMCA for what the law should be per the viewpoint of a discrete By judging the success or failure of § 512 based on special interest. Advocacy for changing the law should be whether the interests of online service providers and for the public and their elected officials. It is not the job major rightsholders are balanced, the Copyright Office of the Copyright Office, and it undermines any claim the has fundamentally misunderstood the internet landscape. report might make to a neutral approach. Millions of people in the United States depend on the in- ternet and online services every day, and it is users whose V. The Report Recommends Cutting Off needs should be of paramount concern. They are the tar- gets of DMCA abuse and the ones who could lose internet Internet Access Based on Mere Allegations of access as a result of the Office’s findings. The report’s Infringement, While Recognizing the Danger of casual dismissal of their complaints in favor of those by Such a Policy in Other Contexts large media companies is concerning, especially as the In order to take advantage of the safe harbor includ- Office offers itself up as an educational resource and a fo- ed in § 512, companies must have a “repeat infringer” rum for new policies and has requested more regulatory policy. This requirement is fairly flexible, since different authority. The skewed nature of the report suggests that companies offer different products and services, but in the Office would not be a truly neutral arbiter. all cases the service provider must have procedures in place to terminate users who have repeatedly infringed. For example, the Office proposes that it be given Perhaps the most famous iteration of this requirement regulatory authority to help manufacture consensus on is YouTube’s “Three Strikes” policy: If a user gets three standard technical measures (STMs) to police copyright copyright strikes in 90 days on YouTube, their account is infringement. According to § 512, service providers must deleted, all videos are removed, and they cannot create accommodate STMs in order to receive safe-harbor pro- new channels.24 Fear of getting to three strikes has not tection. To qualify as an STM, a measure (1) must have only made YouTubers very cautious; it has also created been developed pursuant to a broad consensus in an a landscape where extortion can flourish.25 And that “open, fair, voluntary, multi-industry standards process”; is just the landscape for YouTube. The report suggests (2) must be available on reasonable and nondiscrimi-

18 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 natory terms; and (3) cannot impose substantial costs 12. Corynne McSherry, et al., Additional Comments of the Electronic on service providers.30 Nothing has ever met all three Frontier Foundation, EFF (Feb. 21, 2017), https://www.eff.org/ document/reply-comments-0. requirements, not least because no “open, fair, voluntary, multi-industry standards process” exists. It is all too easy 13. Engelberg Center on Innovation Law & Policy, How Explaining Copyright Broke the YouTube Copyright System, NYU School of Law, to see the result of such a process would be the adoption https://www.law.nyu.edu/centers/engelberg/news/2020-03-04- of filtering mandates, and filtering has repeatedly shown youtube-takedown?fbclid=IwAR1ruv0KnYwVawITN1uEv9J5FCx itself not to work.31 zVkPEUySSVEEZ7S78eeKFRmOX2tefnNA. 14. Andrea Fuller, Kirsten Grind and Joe Palazzolo, Google Hides There is some good news for users, however. The News, Tricked by Fake News (May 15, 2020), https://www.wsj. Office stopped short of recommending that Congress pass com/articles/google-dmca-copyright-claims-takedown-online- a law requiring online services to filter for infringing con- reputation-11589557001. tent—a dangerous and drastic step they describe with the 15. 17 U.S.C. § 512(c)(1). bland-sounding term “notice and staydown”—or require 16. See Viacom Int’l, Inc. v. YouTube, Inc., 676F.3d 19, 38-39 (2d Cir. a system of website blocking.32 Furthermore, in response 2012); Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1110 to a letter from Senators Thom Tillis and Patrick Leahy, (W.D. Wash. 2004; In re Aimster Copyright Litig., 334 F.3d 643, 655(7th Cir. 2003). the Office reiterated that there has not been a successful model for “notice and staydown,” emphasized that ac- 17. Copyright Office Report at 87-90. count termination is a much harsher punishment in 2020 18. Veoh IV, 718 F.3d [fix cite[ EDITOR: FIX CITE] than it was in 1998, and advocated for the inclusion of 19. Copyright Office Report at 118. user and creator groups in further discussions—groups 20. Id. at 111. 33 that were missing in 1998. 21. Id.at 150-52. Ultimately, it is important not to mistake the Office’s 22. Lenz v. Universal Music Corp., 801 F.3d 1126 (9th Cir. 2015). report as an unbiased account of the internet ecosystem 23. Lenz v. Universal Music Corp., 815 F.3d 1145, 1160 (9th Cir. 2016) in the 22 years since the DMCA was passed. It wrongly (Smith, J., concurring in part and dissenting in part) takes the dissatisfaction of one party as a sign that the law 24. Copyright Strike Basics, YouTube, https://support.google.com/ youtube/answer/2814000?hl=en. is broken, glosses over the existence of a major stakehold- er group’s concerns, and maintains—despite consistent 25. Jack Hauen, A Scammer Used YouTube’s Copyright System to Ransom Creator, Vice.com (Feb. 7, 2019), https://www.vice.com/ caselaw—that the courts have gotten the DMCA wrong en_us/article/evevdk/scammer-used-youtube-copyright-system- over and over. The report presents a skewed picture of to-ransom-creators. the internet, spending disproportionate time and energy 26. Copyright Office Report at 100-09. on the opinions of only one constituency. As a result, any 27. Id. at 109-10. legislation or policy based on the report would cause 28. Ernesto Falcon, New FCC Data Indicates Future Broadband Access for harm to the millions of Americans who use the internet Most Americans Will Be a Monopoly, EFF (Dec. 12, 2018), https:// daily. www.eff.org/deeplinks/2018/12/new-fcc-data-indicates-future- broadband-access-most-americans-will-be-monopoly. Endnotes 29. Copyright Office Report at 98. 30. 17 U.S.C. § 512(k)(1). 1. S. Rep. 105-190, at 19-20. 31. See Michael Andor Brodeur, Copyright Bots and Classical Musicians 2. U.S. Copyright Office, Section 512 of Title 17: A Report of the Are Fighting Online. The Bots Are Winning, Washington Post (May Register of Copyrights (2020). 21, 2020), https://www.washingtonpost.com/entertainment/ 3. Margot Kaminski, Enough, Already: The SOPA Debate Ignores music/copyright-bots-and-classical-musicians-are-fighting-online- How Much Copyright Protection We Already Have, The Atlantic the-bots-are-winning/2020/05/20/a11e349c-98ae-11ea-89fd- (Feb. 8, 2012), https://www.theatlantic.com/technology/ 28fb313d1886_story.html?outputType=amp&fbclid=IwAR0vJ0klf archive/2012/02/enough-already-the-sopa-debate-ignores-how- SlmoFA73DrcBYb0bv7LxZCdHp3nN8W8qkxc73Z3-yrPBNXlIJ0; much-copyright-protection-we-already-have/252742/. Kate Cox, SpaceX Launch Footage Was Taken Down Thanks to Bogus 4. S. Rep. 105-190, at 1-2. Copyright Claim, Ars Technica (June 1, 2020), https://arstechnica. com/tech-policy/2020/06/false-natgeo-copyright-claim-took- 5. 17 U.S.C. § 512(g)(3). nasas-launch-video-down-this-weekend/; Elliot Harmon, Don’t 6. 17 U.S.C. § 512(c)(3). Sacrifice Fair Use to the Bots, EFF (March 1, 2019), available at https://www.eff.org/deeplinks/2019/03/dont-sacrifice-fair-use- 7. 17 U.S.C. § 512(f). bots. 8. Jennifer M. Urban, Joe Karaganis, and Brianna Schofield, Notice 32. Copyright Office Report at 68. and Takedown in Everyday Practice 44 (UC Berkeley Public Law Research Paper No. 2755628, Mar. 29, 2016), https://ssrn.com/ 33. U.S. Copyright Office Responses to Additional Questions abstract=2755628. Regarding Section 512 (June 29, 2020). 9. See Jonathan McIntosh, Buffy vs. Edward Remix Unfairly Removed by Lionsgate. (Jan. 9, 2013), http://www.rebelliouspixels.com/2013/ buffy-vs-edward-remix-unfairly-removed-by-lionsgate. 10. Complaint for Violation of the Digital Millennium Copyright Act, YouTube v. Brady, No. 19-353 (D. Neb). 11. Urban et al., supra note 8.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 19 Implications of Brexit for Trademarks, Copyrights, and Patents By William Samuels and Kristin Garris

I. Introduction Office (EPO) is not an EU Intellectual Property Office (EUIPO) institution. Instead, it is a public international If you are wondering how the United Kingdom organization established by the European Patent Conven- 8 (UK) leaving the European Union (EU) has affected tion (EPC), as opposed to by an EU Community action. intellectual property rights that had been recognized With that being the case, those patents successfully across the whole European Community, you have come registered in individual EU countries will not be affected to the right place. Recall that when the UK was part of by the UK’s withdrawal and should remain intact. At the the EU, EU protections covered the UK because it was same time, patent protections granted in the UK will also a member state. With the UK exiting the EU (a/k/a remain in effect as if there were no Brexit. Brexit), questions have arisen about what happens to UK- recognized EU intellectual property. IV. Trademarks While the UK officially left the EU on February 1, Brexit does have direct bearing on trademark matters. 2020, there has been and will be a transition period in EU trademarks were applicable and enforceable in the 1 effect until December 31, 2020. During this transition UK before Brexit, when the UK was part of the EU.9 But period, EU intellectual property law will remain appli- after the transition period ends, the EU and UK will be cable in the UK, and all EU proceedings that involve the wholly separate legal jurisdictions.10 It follows, then, that territory of the UK will continue with full effect until the an applicant who wants trademark protection in both the 2 end of the transition period (December 31). This is also EU and the UK will need to file separately in each juris- true for EU Trademarks (EUTM) and Registered Commu- diction and pay separate filing fees. nity Designs (RCD) regulations.3 But what happens after December 31, 2020? Intellectual property lawyers will But what about those EU trademark registrations need to advise their clients about the impending changes issued and applications filed before January 1, 2021? that Brexit will bring to bear on registered intellectual The first thing to note is that EU trademark registrations property. registered on or before December 31, 2020 will be cop- ied automatically to the UK trademark register.11 Each qualifying EU registration will be granted a registration II. Copyrights number in the UK, and the transition for such marks Copyright rights are granted on a national level, but will be free of charge.12 The original EU registration will they are also governed by international treaties such as remain untouched, and if an applicant does not want its the Berne Convention4 and the WIPO Copyright Treaty5 mark transferred (or “cloned”) to the UK register, it must through which countries provide (or reciprocate) protec- opt out by submitting an opt-out request to the U.K’s tions across borders. Because copyright rights remained Intellectual Property Office (UK IPO) on or after January at the country level and never became an EU-registered 1, 2021.13 For the first five years after Brexit, any use of right, those copyrights registered in EU member coun- a successfully cloned comparable EU mark outside the tries should not be affected by Brexit and will remain UK before the transition will suffice as use in the UK to valid in the UK6 It is unknown at this time exactly what maintain the registration.14 However, where the five-year changes the UK will adopt regarding its own copyright period includes any time after the transition period, use law. However, one thing is certain: the British govern- of the comparable trademark in the EU (i.e., outside of ment announced in January 2020 that it would not en- the UK ) will not be taken into account to maintain the force the EU Copyright Directive,7 which is (very broad- “cloned” UK registration.15 After five years have passed, ly) designed to facilitate cross-border access to online the registrant will need to show use in the UK in order to content but also requires online platforms to take more maintain the registration.16 responsibility for the copyright status of user-posted content. So now that the UK has left the EU, the UK has If an EU trademark application is still pending as of no obligation to implement the measure by the June 2021 December 31, 2020, and has not yet matured to registra- deadline applicable to all EU countries. tion, that application will not be transferred to the UK

III. Patents William Samuels Kristin Garris Perhaps surprisingly, patents also should remain is a partner and is counsel generally unaffected by Brexit. The European Patent at Warshaw Burstein LLP

20 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 register automatically. Instead, to retain the priority date As such, it may benefit some applicants with pending EU of the EU filing, those parties with pending EU applica- applications to file in the UK before December 31, 2020. One tions will need to apply for a UK registration within nine advantage to doing so is that a new UK registration will months of the end of the transition period (i.e., by not be subject to cancellation by the EUIPO. It is also pos- September 30, 2021).17 The UK IP Office (UK IPO) will sible that the EU will restrict or deny in part the goods or honor the original EU filing date and any claims to prior- services claimed in the pending application, while the UK ity, but parties making these types of filings will be sub- may approve the goods or services in full. ject to UK IPO filing fees.18 Each application filed in this manner will be subject to UK IPO examination and may What about deals parties have made based on owner- face objections in the UK IPO that it did not originally ship rights in and licenses of EU IP? The UK government face in the EUIPO examination process. The key deadline assures that subject to any specific conditions it may re- quire, a license or security interest recorded against an EU

“It is unknown at this time exactly what changes the UK will adopt regarding its own copyright law. However, one thing is certain: the British government an- nounced in January 2020 that it would not enforce the EU Copyright Directive . . . ”

26 to remember here is September 30, 2021 to retain priority. trademark will continue to have legal effect in the UK. Even so, as the UK government itself has pointed out, it Even more, if a registrant’s EU trademark registra- is important for trademark owners and licensees to un- tion expired within six months prior to January 1, 2021, a derstand the creation of UK intellectual property rights corresponding UK trademark registration will be created and whether this “new right” breaches any agreement.27 with an “expired” status.19 The UK IPO will then give the registrant six months to late-renew the trademark And then there are legal actions related to EU regis- with the EUIPO.20 If the appropriate actions are taken to trations. During the transition period UK courts can act as EU courts in trademark actions relating to EU trade- late-renew the corresponding trademark registration in 28 the EU, the comparable “expired” registration in the UK marks. That is, cases in the UK are heard under the EU Trade Mark Regulation,29 and UK courts can issue IPO will automatically be renewed in the UK trademark 30 system.21 However, if the registration’s renewal date is injunctions that apply across the EU. But as of January after December 31, 2020, a renewal in the EU will have no 1, 2021, the EU and UK will be legally separate, and any effect on a renewal in the UK . If such a registrant wants EU-wide injunctions issued after that date will not apply to renew in the UK , it must seek such renewal directly in to the comparable UK right. The UK government has the UK and will need to pay the UK IPO renewal fees.22 assured interested parties that legislation will ensure that ongoing cases in the UK will continue to be heard as if the At the end of the transition period, if a pending appli- UK were still an EU member state, although actions and cation is in a state of refusal by the EUIPO, the application remedies available to the parties will only be applicable to will not be eligible for filing on the UK register during the comparable UK right.31 These proceedings will con- the nine-month window afforded to applications with- tinue toward resolution on the basis of the law as it stood out refusals.23 Instead, an EU trademark registration or before January 1, 2021.32 For injunctions in place before application that has been refused or withdrawn may be the end of the transition period that prohibit actions in converted into a national right in the UK , provided that the UK as infringing on a current EU trademark, the UK an application for conversion is submitted to the EUIPO will recognize the terms of that injunction as it relates to within three months of the EU right ceasing to have ef- the comparable UK trademark.33 fect.24 So where an EU trademark registration or applica- tion was in a state of refusal or withdrawal on January V. Registered Community Designs 1, 2021, but such action occurred less than three months before that date, the UK trademark law will preserve Brexit affects RCD protections as well. RCD protec- a party’s right to seek conversion of the EU right into a tions are valid in all EU member countries and cover UK right.25 From a practical standpoint, anyone seeking “the appearance of a product: its shape, patterns and 34 to exercise conversion rights after the end of the transi- colours.” Brexit will extinguish RCD rights in the UK at tion period should apply to the UK IPO to register a the end of the transition period, but such rights will be trademark, claiming the earlier filing or priority date of replaced with “re-registered” UK design rights without 35 the EU application/registration that had been refused or the RCD owner having to take any action. withdrawn.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 21 As of January 1, 2021, all registered and published RCDs renewal fee, even if a renewal action was taken on the cor- will have comparable UK design protections registered responding RCD before the end of the transition period.52 36 with the UK IPO. The UK government assures RCD 53 rights owners that these re-registered UK design protec- Under the Community Design Regulation, it is tions will be treated as if they initially had been the sub- possible for a right to be reinstated after being canceled ject of applications and subsequent registrations under by the EUIPO because of failure to meet a deadline. After 37 reinstatement, such right is treated as if it had continu- UK law. In this process, the original comparable RCD 54 will remain untouched.38 ous legal effect. Keep this in mind because re-registered designs will only be created from RCDs that were reg- If an applicant does not want its RCD re-registered istered within six months of their renewal date prior to as a UK registered design, the applicant must opt out.39 January 1, 2021.55 EU rights not registered during that A party cannot opt out where it has assigned, licensed, or period but which are subject to reinstatement will not entered into an agreement in relation to the re-registered automatically result in the grant of re-registered designs.56 UK design or launched proceedings based upon it.40 Once The UK government has taken this type of situation into re-registered UK design rights are created, renewing the consideration: Where RCDs that expired outside the six UK design registration will require payment of a renewal months prior to January 1, 2021 are reinstated after that fee to the UK IPO, separate and apart from any renewal date, the rights owner should notify the UK IPO, which fee due to the EUIPO for the corresponding RCD.41 will then create a re-registered UK design.57 If a party has a pending RCD application that is reinstated after January applications pending Parties with RCD on January 1, 1, 2021, within nine months of the date it is reinstated, the 2021 will have nine months from the end of the transition applicant may submit a UK registered design application period (i.e., by September 30, 2021) to apply to register a claiming the earlier EU filing and/or priority date of the UK design and retain the earlier filing date of the subject reinstated RCD application.58 This is a lot to keep track pending RCD application.42 These applications will be of, and thankfully the UK IPO will provide owners of re- treated as if they were UK-registered design applications; registered UK designs reminders of upcoming expiration they will be examined under UK law, and applicants will dates.59 be subject to the standard UK filing fees.43 It is worth noting that as long as an application meets the require- ments and falls within the nine-month filing window, VI. Conclusion any priority claim made with the corresponding pending While Brexit will cause some disruption, in general RCD will be applied to the subsequent comparable UK EU IP rights holders will not be denied protections in the application.44 UK. In many instances their rights will be preserved and At the end of the transition period, comparable priority-in-time can be maintained. They just may have to “expired” re-registered UK designs will be created to cor- pay for it. respond with RCDs that expired in the six months prior 45 to January 1, 2021. Any such “expired” re-registered Endnotes UK design comparable to a corresponding RCD that is 1. Agreement on the withdrawal of the United Kingdom of Great still within the six-months-late renewal period on Janu- Britain and Northern Ireland from the European Union and ary 1, 2021, and has not received a late-renewal action at the European Atomic Energy Community, OJ L 29, 31.1.2020, the EUIPO, can be renewed without a UK IPO fee if the at 7 (“Withdrawal Agreement”),https://eur-lex.europa.eu/ owner files to late-renew the corresponding RCD.46 Upon legal-content/EN/TXT/?uri=uriserv:OJ.CI.2019.384.01.0001.01. ENG&toc=OJ:C:2019:384I:TOC; see also NOTICE TO late-renewal payment to the EUIPO, the comparable “ex- STAKEHOLDERS, WITHDRAWAL OF THE UNITED KINGDOM pired” re-registered UK design will be renewed.47 Should AND EU RULES IN THE FIELD OF EUROPEAN UNION TRADE the registrant not late-renew the corresponding RCD, the MARKS AND COMMUNITY DESIGNS, https://ec.europa.eu/ comparable “expired” re-registered UK design will be info/sites/info/files/brexit_files/info_site/trademarks_and_ designs_en.pdf. treated as if it had never been on the UK register.48 2. https://euipo.europa.eu/ohimportal/en/brexit-q-and-a. For protections that expire after January 1, 2021, the 3. Id. standard procedure for renewal and late-renewal of UK 4. Berne Convention for the Protection of Literary and Artistic Works, registered designs will apply to re-registered UK de- Sept. 9, 1886, as revised at Paris on July 24, 1971 and amended in signs.49 However, if the re-registered UK design registra- 1979. tion will expire within six months of January 1, 2021, the 5. WIPO Copyright Treaty, Dec. 20, 1996. renewal fee will not be due.50 In all other instances, just 6. Guidance: Changes to copyright law from 1 January 2021, https:// as if it had originally been filed in the UK , a renewal www.gov.U.K./guidance/changes-to-copyright-law-after-the- fee will be required by the UK IPO for the re-registered transition-period#protection-of-U.K.-copyright-works-in-the-eu. UK design.51 And remember, after the transition period, 7. The EU Copyright Directive is the “Directive (EU) 2019/790 of the EU and UK will be legally separate. So unless noted the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and otherwise, from January 1, 2021 forward any re-registered amending Directives 96/9/EC and 2001/29/E,” https://eur-lex. UK design up for renewal will be subject to a UK IPO europa.eu/eli/dir/2019/790/oj.

22 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 8. https://www.epo.org/law-practice/legal-texts/epc.html. 33. Id. Existing injunctions. 9. REGULATION (EU) 2017/1001 OF THE EUROPEAN 34. https://euipo.europa.eu/ohimportal/en/designs. PARLIAMENT AND OF THE COUNCIL of 14 June 2017 on the 35. Guidance: Changes to EU and international designs and trade European Union trademark, CHAPTER I GENERAL PROVISIONS, mark protection from 1 January 2021, https://www.gov.U.K./ Article 1 EU trademark, ¶2, https://eur-lex.europa.eu/legal- guidance/changes-to-eu-and-international-designs-and-trade- content/EN/TXT/?qid=1506417891296&uri=CELEX:32017R1001. mark-protection-after-the-transition-period. 10. NOTICE TO STAKEHOLDERS, WITHDRAWAL OF THE UNITED 36. Id. Creation of the re-registered design. KINGDOM AND EU RULES IN THE FIELD OF EUROPEAN UNION TRADE MARKS AND COMMUNITY DESIGNS, p. 2 37. Id., “Legislative changes introduced in the U.K. will ensure that the (“After the end of the transition period, the EU rules in the field of holder of an RCD is provided with an equivalent U.K. right.” European Union trademarks and Community designs, in particular 38. Id. Creation of the re-registered design. Regulation (EU) 2017/10017 and Regulation (EC) No 6/20028, no longer apply to the United Kingdom“), https://ec.europa.eu/info/ 39. Id. Opt out. sites/info/files/brexit_files/info_site/trademarks_and_designs_ 40. Id. en.pdf. 41. Id. Designs which expire before 1 January 2021. 11. Guidance: EU trad mark protection and comparable U.K. trad 42. Id. Pending applications. marks from 1 January 2021, Receiving a comparable U.K. trademark, https://www.gov.U.K./guidance/eu-trademark-protection-and- 43. Id. comparable-U.K.-trademarks#receiving-a-comparable-U.K.-trade- 44. Id. Effect of priority claims. mark. 45. Id. 12. Id. 46. Id. Designs which expire before 1 January 2021. 13. Id., https://www.gov.U.K./guidance/eu-trademark-protection- and-comparable-U.K.-trademarks#requesting-an-opt-out. 47. Id. 14. Id. Use and reputation: https://www.gov.U.K./guidance/eu- 48. Id. trademark-protection-and-comparable-U.K.-trademarks#use-and- 49. Id. Designs which expire after 1 January 2021. reputation. 50. Id. 15. Id. 51. Id. 16. Id. 52. Id. 17. Id. Registering a pending EUTM application as a U.K. trademark. 53. COUNCIL REGULATION (EC) No 6/2002 of 12 December 2001 on 18. Id. Priority and seniority claims; automatic retention of existing Community designs (OJ EC No L 3 of 5.1.2002, p. 1) amended by priority and seniority dates. Council Regulation No 1891/2006 of 18 December 2006 amending 19. Id. Trademarks that expire before 1 January 2021. Regulations (EC) No 6/2002 and (EC) No 40/94 to give effect to the accession of the European Community to the Geneva Act of 20. Id. the Hague Agreement concerning the international registration of 21. Id. industrial designs (OJ EC No L 386 of 29.12.2006, p. 14), (https:// euipo.europa.eu/tunnel-web/secure/webdav/guest/document_ 22. Id. Renewing trademarks. library/contentPdfs/law_and_practice/cdr_legal_basis/62002_ 23. NOTICE TO STAKEHOLDERS, WITHDRAWAL OF THE UNITED cv_en.pdf). KINGDOM AND EU RULES IN THE FIELD OF EUROPEAN 54. Id. Art. 13. UNION TRADE MARKS AND COMMUNITY DESIGNS at 6 (“After the end of the transition period, the EU rules in the field of 55. Guidance Changes to EU and international designs and trademark European Union trade marks and Community designs, in particular protection from 1 January 2021, Regulation (EU) 2017/10017 and Regulation (EC) No 6/20028, no https://www.gov.U.K./guidance/changes-to-eu-and- longer apply to the United Kingdom“) https://ec.europa.eu/info/ international-designs-and-trade-mark-protection-after-the- sites/info/files/brexit_files/info_site/trademarks_and_designs_ transition-period#registered-design en.pdf. RCD registrations and applications reinstated after 1 January 2021. 24. Guidance: EU trade mark protection and comparable U.K. trade 56. Id. marks from 1 January 2021, Receiving a comparable U.K. trade 57. Id. mark, https://www.gov.U.K./guidance/eu-trademark-protection- and-comparable-U.K.-trademarks#receiving-a-comparable-U.K.- 58. Id. trade-mark, Conversion. 59. Id. Renewals and restoration. 25. Id. 26. Id. Licences, security interests and assignments. 27. Id. 28. Id. Jurisdictional arrangements and pending proceedings. 29. https://euipo.europa.eu/ohimportal/en/eu-trade-mark-legal- texts. 30. Guidance: EU trade mark protection and comparable U.K. trade marks from 1 January 2021, Receiving a comparable U.K. trade mark, https://www.gov.U.K./guidance/eu-trademark-protection- and-comparable-U.K.-trademarks#receiving-a-comparable-U.K.- trade-mark, Jurisdictional arrangements and pending proceedings. 31. Id. 32. Id.

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 23 Copyright Considerations as Art Galleries and Museums Move Online in the Wake of COVID-19 By Amelia K. Brankov

I. Introduction In displaying this content online, galleries must be Earlier this year, lockdowns and social distancing cognizant of the intellectual property rights in the im- orders to contain the spread of COVID-19 forced art gal- ages and in the text. As for the rights of the artist, for a leries and museums around the world to close their doors primary-market sale offer (i.e., the first sale of an artwork and look to new ways of continuing to engage the public by the artist or gallery), the gallery generally can clear the online. This article describes some of the digital efforts rights to use high-resolution images through the artist or employed by galleries and museums and discusses how her licensing agency (e.g., Artists Rights Society). As for to manage the risk of infringement claims arising from the photographer, if she is not employed by the artist or such efforts as well as how to protect the gallery or mu- the gallery, the gallery should consider obtaining a broad seum’s own intellectual property. license or require the photographer to execute a work- made-for-hire agreement with the customary in-the- alternative assignment language.1 The gallery should also II. Changes in How Art Merchants Offer Works obtain the necessary rights from the authors of the essays for Sale featured in the viewing room. Most art galleries sell works primarily through For secondary-market sales (i.e., resales), the gallery exhibitions in the gallery and at art fairs, although the art may not have a relationship with the artist or her estate. market has increasingly migrated online in recent years. However, the fair use doctrine generally will at least al- Before the onset of COVID-19, galleries and art fairs typi- low use of small, low-resolution images.2 Whether fair cally provided only limited information on their websites use permits the display of large-scale, high resolution im- concerning their exhibitions, relying for the most part ages without permission is less clear, particularly where on in-person contact with collectors. The information the use could be characterized as brand marketing. available to collectors in advance of an exhibition gener- ally was limited to targeted emails with PDF attachments The gallery also should be attentive to whether the containing images of and information about works avail- work incorporates third-party content and, if so, whether able for sale. the owner of that content might have a claim.3 Galler- ies can mitigate this risk by working with the artist in With many exhibitions and fairs postponed or can- advance of an exhibition to obtain a fair use opinion from celed this year due to COVID-19, art merchants faced counsel and ensure that errors and omissions insurance unexpected practical challenges to their ability to offer is in place. Galleries also can negotiate a written repre- works to potential purchasers. As a result, many of them sentation and warranty from the artist that the works do have explored alternative ways of disseminating infor- not infringe any third-party rights and a corresponding mation electronically to facilitate sales, to foster brand indemnification.4 awareness, and to maintain engagement with collectors. One common technique has been the creation of online “viewing rooms,” a type of marketing platform that III. Online Museum Collections had been used by a few gallerists prior to the pandemic. Following COVID-19 closures, museums also have An online viewing room is a webpage that is the online had to rely on their websites and social media channels equivalent of a curated exhibition experience. To “enter” to engage with the public. Many museums have for years the viewing room, the gallery’s website prompts the maintained online catalogues of their collections. The viewer to supply certain information—at a minimum, amount of information contained in such catalogues can the viewer’s email address and in some cases, her name. range from basic “tombstone information” (name of the Most viewing rooms consist of large images of the works artist, title, and date of the work) to additional contextual available for sale (sometimes with a price), an “inquire” materials, including the work’s provenance, publication button that allows the viewer to email the gallery directly, history, technique, and historical significance. and, in some cases, a click-to-purchase feature. In addi- tion to images and information about the works offered In an online collection, whether an image of a work for sale, viewing rooms also can contain essays by cura- of art is available for viewing and unrestricted down- tors or scholars explaining the work and its significance to an artist’s oeuvre or to an artistic movement accompa- nied by images of other artworks, of the artist, of how the Amelia K. Brankov is counsel at Frankfurt Kurnit Klein & work was made, and the like. Selz P.C. and leads the firm’s fine art practice.

24 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 load by the public depends largely in the first instance Some museums do not rely on fair use at all, instead on whether the work is in the public domain. For public obtaining permission to reproduce works of art as a domain works, the museum may elect to make images matter of course as a risk-management measure and/ (including high-resolution images) available for unre- or to preserve relationships with artists. This caution stricted access and use under Creative Commons Zero may reflect the fact that while the Marano court had no (i.e., no copyright rights reserved) license.5 For works that trouble disposing of the plaintiff’s claim on a motion to remain under copyright, if the museum did not obtain a dismiss, fair use is a fact-based inquiry that often cannot copyright license from the artist or her estate when the be resolved without discovery.16 While some criticize this work was acquired, it should consider whether to obtain “permissions culture” approach as contributing to an those rights or to rely on fair use. In 2017, the Associa- unduly narrow understanding of fair use,17 clearing use tion of Art Museum Directors, an association of over 200 of an image with the copyright holder can be done with directors of art museums in the United States, Canada, the understanding that it is a courtesy, not a legal require- and Mexico, published Guidelines for the Use of Copyrighted ment, and that any licenses obtained do not contractually Materials and Works of Art by Art Museums (“Guidelines”).6 preclude uses that would otherwise qualify as fair use. The Guidelines state that under the traditional view, the reproduction of thumbnail-size images of works in a searchable database is fair use.7 This view is supported by a recent decision in the Southern District of New York, “Some museums do not rely on fair Marano v. The Metropolitan Museum of Art.8 Marano, a use at all, instead obtaining permis- photographer, claimed that the Metropolitan Museum of Art’s display of a thumbnail version of his photograph of sion to reproduce works of art as a Eddie Van Halen playing his self-made “Frankenstein” matter of course as a risk-manage- guitar in an online catalogue for the “Play It Loud: Instru- ment measure and/or to preserve ments of Rock & Roll” exhibition infringed his copyright in the photograph.9 Judge Valerie Caproni ordered Ma- relationships with artists. ” rano to show cause why the case should not be dismissed on fair use grounds,10 and, after briefing, dismissed the case for failure to state a claim.11 The court relied largely While online museum collections could increase on- on Bill Graham Archives v. Dorling Kindersley Ltd.,12 in line engagement by the public during COVID-19 closures, which the Second Circuit held that the reduced-sized re- some do not expect that they will do so. Museum profes- production of a Grateful Dead concert poster in a book to sionals have noted that online collections generally are ac- illustrate the history of the band was transformative and cessed by students, scholars, and researchers looking for a fair use. The Marano court found that Marano’s origi- specific information.18 nal purpose in creating the photograph was to capture They also note that online collec- what Van Halen looked like on stage, whereas the mu- tions simply show the viewer the contents of a collection and do not provide the social gathering function offered seum’s purpose was to spotlight the instrument. As in Bill 19 Graham Archives, because that purpose differed from the by a physical museum. photographer’s original purpose, it was transformative.13 IV. Virtual Tours and Immersive Experiences The Guidelines advance a broader and more nuanced approach to fair use. According to the Guidelines: In order to provide substitute offerings that replicate the physical experience of walking through an exhibition, As the nature of the information included art galleries and museums have begun offering “virtual” in an online collection becomes more ro- exhibitions.20 These efforts include posting films and bust and contextual, the use also becomes videos of time-based art, films of curators providing a more transformative, involving other, guided tour of an exhibition, live-streamed interviews of core fair uses directly relating to the im- artists, user-generated content, social media marketing, age such as commentary and criticism, 360-degree photography, and augmented and virtual real- thereby justifying a larger size and higher ity experiences.21 quality resolution necessary to illustrate the content in the accompanying text.14 Virtual reality (VR) is the computer-generated simu- lation of a three-dimensional image or environment that An online collection can comprise images in a variety can be interacted with in a seemingly real or physical way of formats and accompanying text that may or may not by using special electronic equipment, such as a helmet include commentary.15 As the case law in this area is lim- with a screen inside. Augmented reality (AR) is a view ited, some museums take a more conservative approach of a physical, real-world environment that is augmented than the Guidelines suggest and limit unauthorized uses by computer-generated overlays such as sound, video, of third-party images to those supported by existing cases images, graphics, and/or text. With AR technology, the such as Bill Graham Archives. information about the surrounding real world of the user

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 25 becomes interactive and can be digitally manipulated. rights they need to obtain from third parties as well as Some museums have created AR and VR applications how to protect the intellectual property they are creating that are available for download by the public onto their and displaying. Where a gallery or a museum devel- computers or mobile devices.22 ops an application with an outside vendor, the gallery should ensure that it obtains the necessary rights from the For example, in 2016, the National Museum of Sin- developer, either through a license or a work-made-for- gapore launched an immersive installation, “Story of the hire agreement with the customary assignment language. 23 Forest,” by Japanese art collective teamLab. The exhibi- They should exchange representations and warranties tion includes three-dimensional interactive animations of that the materials supplied by each party in developing history drawings and is accompanied by an AR applica- 24 the application do not infringe any third-party rights. If a tion available for download by visitors. Riding on the museum or gallery develops an application in connection popularity of Pokémon Go, the application allows one to with a particular artist’s work, the artist ordinarily should “capture” animals by pointing at them as they appear in 25 be consulted and authorize the use of images of her the digital mural in order to learn more about them. artwork. In some instances, the artist may wish to own Last year, as part of its blockbuster Leonardo da Vinci the copyright in the application. If the gallery is financing exhibition, the Louvre created “Mona Lisa: Beyond the the development of the application, it may request that Glass,” a VR experience available both at the museum a similar or identical competing application will not be and for download that uses interactive design, sound, developed and used. and animated images to explore the painting and its 26 Larger museums and galleries have become ac- context. COVID-19 pushed museums forced to close customed to managing the intellectual property rights their doors to accelerate their use of virtual reality. Some associated with a variety of online media made available museums released interactive virtual tours of temporary 27 to members of the public. Smaller entities, however, may exhibitions. lack the necessary training and resources to navigate the various rights issues, all at time when many players in the art world are struggling economically. “Museums and galleries that are employing these digital tools find V. Website Terms of Use themselves acting as a producer or pub- As museum and gallery websites use images of art- lisher—a role that requires them to un- work and other materials in a variety of ways, their web- derstand the rights they need to sites should include “terms of use” related to this intellec- obtain from third parties as well as how tual property and potentially a click-through agreement to protect the intellectual for additional protection. For example, the terms of use should inform visitors that certain materials and works property they are creating and of art on the website are protected by copyright and displaying.” also may be subject to other third-party rights, includ- ing trademark and privacy and/or publicity rights. The terms of use also should disclaim any warranties as to the The gallery world also accelerated its AR and VR ef- museum’s or gallery’s rights in the copyrighted materials forts as a result of COVID-19. The Frieze art fair replaced and should limit the gallery’s or museum’s liability for physical gallery booths with online viewing rooms, as unauthorized downstream uses of the content. described above, but its site also used AR to allow users to view artworks on their walls.28 In April, Lisson Gal- VI. Conclusion lery and the software company Augment announced an The online presence of museum and art galleries AR platform that allows users to digitally depict what an has grown due to COVID-19. The extent to which these artwork will look like in their home and virtually share expanded online offerings will continue once the public a three-dimensional scene to be viewed and edited by 29 is again able to visit exhibitions physically remains to be others. While the application was going to be a licensed seen. What is certain is that with the increase in online Lisson Gallery application, due to COVID-19 the product 30 reproduction and display of works of art and the art mar- is now available to all on a subscription basis. In June, a ket’s adaptation of AR and VR technology, the art world number of London galleries launched a concurrent exhi- will have to increasingly consider rights-management bition on Vortic, another extended reality application, and issues. While art market participants can in some cases many other galleries have either launched or are in the 31 comfortably rely on fair use, whether fair use applies to process of developing online VR and AR applications. many of these newer digital efforts has yet to be tested in Museums and galleries that are employing these court. Accordingly, at least until the law develops further, digital tools find themselves acting as a producer or art market participants should adopt rights-management publisher—a role that requires them to understand the practices tailored to their risk tolerance.

26 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 Endnotes Discovery, Dkt. No. 48); see generally Amelia Brankov and Azita Iskandar, Does Your Rule 12 Motion Based on Fair Use Have a Chance, 1. If these rights are not secured, the artist and the gallery could face Law360 (Dec. 5, 2017). an infringement claim from the photographer. See Compl., Pereda v. Navarro, No. 12 CIV 7323, 2020 WL 4485965 (S.D.N.Y. filed Sept. 17. Rosemary Chandler, Putting Fair Use on Display: Ending the 28, 2012) (suit by photographer Rodrigo Pereda against artist Ivan Permissions Culture in the Museum Community, 15 Duke L. & Tech. Navarro and Paul Kasmin Gallery for copyright infringement for Rev. 60, 72-73 (2016), https://scholarship.law.duke.edu/cgi/ distributing Pereda’s photographs of Navarro’s three-dimensional viewcontent.cgi?article=1298&context=dltr. installation artwork in various media). A sample work-made-for- 18. Daniel Grant, America’s Virtual Museums Take on New Significance as hire provision with assignment language is as follows: COVID-19 Lockdown Deepens, The Art Newspaper (Mar. 18, 2020), You agree that all results and proceeds of every kind of https://www.theartnewspaper.com/news/COVID-19-pushes- the services rendered by you to the gallery hereunder (the museums-to-embrace-the-virtual-world. “Work Product”) shall be deemed to be a “work made for 19. Id. hire” for the gallery for copyright purposes. To the extent any Work Product is deemed not to be a “work made for 20. Aimee Dawson, On Coronavirus Lockdown? The Top Online hire,” you hereby assign and transfer all right, title, and Museum and Art Tours to Enjoy from Home, The Art Newspaper interest in such Work Product to the gallery. (Mar. 13, 2020), https://www.theartnewspaper.com/feature/ on-coronavirus-lockdown-the-top-ten-online-museum-and-art- 2. See Magnum Photos Int’l, Inc. v. Houk Gallery, Inc., 16-cv-7030 (VSB), tours?null. 2018 WL 4538902, at *5 (S.D.N.Y. Sept. 21, 2018) (gallery’s display on its website of small, uncropped, low-resolution images of 21. Grant, supra note 18; Dawson, supra note 20; Collections, Google Henri Cartier-Bresson photographs which were available for sale Arts & Culture, https://artsandculture.google.com/partner?hl=en through gallery constituted fair use). (last visited July 15, 2020). 3. See, e.g., Graham v. Prince, 265 F. Supp. 3d 366, 385 (S.D.N.Y. 2017) 22. Charlotte Coates, How Museums Are Using Augmented Reality, (denying Rule 12(b)(6) motion of defendants Richard Prince, MuseumNext (Apr. 26, 2020), https://www.museumnext.com/ Gagosian Gallery, and Lawrence Gagosian to dismiss claim by article/how-museums-are-using-augmented-reality/; Charlotte photographer arising out of use of plaintiff’s photograph in a Coates, Virtual Reality Is a Big Trend in Museums, but What Are the Prince artwork that was included in an exhibition and reproduced Best Examples of Museums Using VR?, MuseumNext (Jan. 17, 2020), in an exhibition catalogue, on a billboard, and in a social media https://www.museumnext.com/article/how-museums-are- post). using-virtual-reality/. 4. A sample representation and warranty from the artist is as 23. Coates (Apr. 26, 2020), supra note 22; Story of the Forest, follows: National Museum of Singapore, https://www.nhb.gov.sg/ nationalmuseum/our-exhibitions/exhibition-list/story-of-the- The artist represents and warrants to the gallery that neither forest (last visited July 15, 2020). the artwork, nor any usage of images or footage of the artwork permitted hereunder, will infringe or violate any 24. Coates (Apr. 26, 2020), supra note 22. copyright, trademark, right of privacy or publicity, patent, or 25. Id. other right of any third party. 26. Coates (Jan. 17, 2020), supra note 22. 5. See, e.g., Frequently Asked Questions: Image and Data Resources, 27. Dawson, supra note 20. The Metropolitan Museum of Art, https://www.metmuseum. org/about-the-met/policies-and-documents/image-resources/ 28. Sol Rogers, COVID-19 Is Accelerating the Art World’s Adoption of frequently-asked-questions (last visited July 15, 2020). Technology, Forbes (Apr. 27, 2020), https://www.forbes.com/sites/ solrogers/2020/04/27/COVID-19-is-accelerating-the-art-worlds- 6. Guidelines for the Use of Copyrighted Materials and Works of Art by adoption-of-technology/#28b23db35900. Art Museums, Ass’n of Art Museum Dirs., (Oct. 11, 2017), https:// aamd.org/sites/default/files/document/Guidelines%20for%20 29. Lisson Gallery Augmented Reality platform now live with Instructional the%20Use%20of%20Copyrighted%20Materials.pdf). Video and Frequently Asked Questions, Lisson Gallery (Apr. 24, 2020), https://www.lissongallery.com/news/lisson-gallery-augmented- 7. Id. at 11 (citing Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th reality-platform-now-live; Announcing New Augmented Reality Cir. 2007); Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003)). Platform (Apr. 10, 2020), https://www.lissongallery.com/news/ 8. No. 19-cv-8606 (VEC), 2020 WL 39629009 (S.D.N.Y. July 13, 2020). announcing-new-augmented-reality-platform; Eileen Kinsella, 9. Id. at *1-2. Lisson Gallery Has Launched a New Augmented Reality Platform That Allows You to Test-Drive Art in Your Home Before You Buy It, Art Net 10. Id. at *1. News (Apr. 13, 2020), https://news.artnet.com/market/lisson- 11. Id. at *8. gallery-and-massimo-de-carlo-augmented-reality-1832349. 12. 448 F.3d 605, 611 (2d Cir. 2006). 30. Id. 13. Marano, 2020 WL 39629009, at *5. 31. Rogers, supra note 28; Kinsella, supra note 29; Mark Westall, London Collective from Vortic Brings Together 42 Commercial Galleries on the 14. Ass’n of Art Museum Dirs., supra note 6, at 12. XR App, Fad Magazine (June 25, 2020), https://fadmagazine. 15. Id. at 12-13. com/2020/06/25/london-collective-from-vortic-brings-together- 16. For example, in 2019, photographer Debra Rothenberg filed a 42-commercial-galleries-on-the-xr-app/. copyright infringement lawsuit against the Museum of Fine Arts, Houston for reproducing in its online collection her image of the World Trade Center collapsing on September 11, 2019. See Rothenberg v. The Museum of Fine Arts, Hous., No. 4:19-cv-3026 (S.D. Tex.). The museum filed a motion to dismiss under Rule 12(b)(6) for failure to state a claim, arguing that the use of a smaller, low- resolution image of the photograph in the museum’s searchable online database was fair use. On June 8, 2020, the court denied the motion to dismiss (Hearing Minutes, Dkt. No. 37). Subsequently, the parties requested a stay of discovery to allow them to complete a written settlement agreement (Joint Motion for a Stay of

NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 27 Section Committees and Chairs The Intellectual Property Law Section encourages members to participate in its programs and to contact the Section Officers or Committee Chairs for information.

Advertising Law Legislative & Amicus Transactional Law Brooke Erdos Singer Dr. Charles E. Miller Robin E. Silverman Davis & Gilbert LLP Leichtman Law PLLC Golenbock Eiseman Assor 1740 3 Park Ave Fl 15 Bell & Peskoe LLP New York, NY 10019 New York, NY 10016 711 3rd Ave Fl 17 [email protected] [email protected] New York, NY 10017 [email protected] Cyber Security and Data Privacy Litigation Danielle Ella Maggiacomo Daniel Francis Forester Paul W. Garrity, Esq. Frankfurt Kurnit Klein & Selz PC Davis Polk & Wardwell Sheppard Mullin Richter & 488 Madison Ave Fl 10 450 Lexington Ave Hampton LLP New York, NY 10022 New York, NY 10017 30 Rockefeller Plz Fl 39 [email protected] [email protected] New York, NY 10112 [email protected] Diversity Joyce L. Creidy Marc A. Lieberstein [email protected] Kilpatrick Townsend & Stockton LLP Deborah Robinson 1114 Avenue of the Americas Fl 21 [email protected] New York, NY 10036 [email protected] Ethics Rory J. Radding Membership Mauriel Kapouytian Woods LLP William Robert Samuels 15 W 26th St Warshaw Burstein LLP New York, NY 10010 [email protected] [email protected] Patent Law Philip Furgang Michael A. Oropallo Furgang & Adwar, LLP [email protected] 2 Crosfield Ave Ste 210 West Nyack, NY 10994 Douglas A. Miro [email protected] [email protected]

In-House Initiative Trademark Law Joseph John Conklin William Robert Samuels Coty Inc. Warshaw Burstein LLP 350 5th Ave [email protected] New York, NY 10118 [email protected] A. Ashford Tucker Ashima Aggarwal Fross Zelnick Lehrman & Zissu John Wiley & Sons 4 Times Sq Fl 17 [email protected] New York, NY 10036 [email protected] Internet & Technology Law Richard L. Ravin Trade Secrets Hartman & Winnicki, PC Andre G. Castaybert 74 Passaic St Castaybert PLLC Ridgewood, NJ 07450 200 Park Ave Ste 1700 [email protected] New York, NY 10166 [email protected]

28 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 Welcome New Section Members The following members joined the Section between September 12, 2020 and October 28, 2020.

Elizabeth Aaron Marek Krizka Morgan Silva Boaz Abraham Leland James Mack Alexa T. Steinbuch Nicole Bittan Susana Maria Papakanakis Justin Tubelli Angel Roman Campos Joshua Pinkhasov Robyn Teresa Williams Helen D’Eletto Bruce A Pokras Nicola Young Aral Egilmez[P Sarah Ryu

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NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 29 BRIGHT IDEAS

Submission of Articles Editor-in-Chief Jonathan Bloom Anyone wishing to submit an article, announcement, Weil, Gotshal & Manges LLP practice tip, etc., for publication in an upcoming issue 767 Fifth Avenue of Bright Ideas is encouraged to do so. Articles should be New York, NY 10153 works of origi­­nal authorship on any topic relating to [email protected] intel­lectual property. Submissions may be of any length. Executive Editor Submissions should preferably be sent by e-mail to Rory J. Radding Jonathan Bloom, Editor-in-Chief, at the address indicated Mauriel Kapouytian Woods LLP on this page. 15 W 26th St At-Large Members of the Executive Committee New York, NY 10010 David B. Bassett Raymond A. Mantle [email protected]

Section Officers Chair Accommodations for Persons with Disabilities: Michael A. Oropallo NYSBA welcomes participation by individuals with Barclay Damon LLP disabilities. NYSBA is committed to complying with [email protected] all applicable laws that prohibit discrimination against individuals on the basis of disability in the full and equal Vice-Chair enjoyment of its goods, services, programs, activities, Brooke Erdos Singer facilities, privileges, advantages, or accommodations. Davis & Gilbert LLP To request auxiliary aids or services or if you have any questions regarding accessibility, please contact the Bar New York, NY 10019 Center at 518-463-3200. [email protected]

Bright Ideas is a publication of the Intellectual Property Treasurer Law Section of the New York State Bar Association. William Robert Samuels Mem­bers of the Section receive a subscription to Warshaw Burstein LLP the publication without charge. Each article in this [email protected] publication represents the author’s viewpoint and not that of the Editors, Section Officers or Section. The accuracy of the sources used and the cases, statutes, rules, legislation and other references cited is the responsibility of the respective authors.

Copyright 2020 by the New York State Bar Association. ISSN 1530-3934 (print) ISSN 1933-8392 (online)

30 NYSBA Bright Ideas | Fall 2020 | Vol. 29 | No. 3 PUBLICATIONS Now Available! Virtual Virtual Lawyering: Lawyering: A Practical Guide

Editor A Practical Guide Mark A. Berman, Esq.

Editor: Mark A. Berman, Esq.

NEW YORK STATE BAR ASSOCIATION

As a result of the public health crisis created by COVID-19, the legal profession is operating virtually more and practicing in person less. The legal profession will never be the same: attorneys will be litigating, arguing, closing transactions, and counseling individuals and corporate clients over virtual platforms, from the most commonplace tasks, such as a virtual notarization or executing a will, to holding virtual hearings before a court or closing on multi-million dollar transactions. Whether you are a litigator, transactional attorney or in-house attorney, Virtual Lawyering: A Practical Guide will provide you with practical advice as you navigate through the virtual legal world and confront eBook (413720E) new issues. NYSBA Members $45.00 Non-Members $60.00

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New York State Bar Association ANNUAL MEETING A TWO-WEEK VIRTUAL CONFERENCE

JANUARY 19 – 29, 2021 INTELLECTUAL PROPERTY LAW SECTION WEDNESDAY, JANUARY 20, 2021 | 1:00 p.m. – 4:30 p.m. TUESDAY, JANUARY 26, 2021 | 8:30 a.m. – 12:00 p.m. NYSBA.ORG/AM2021

*Date and time is subject to change