Disputin Bout Rasputin: Beer Trademark Woes

Brouwerij De Molen (Belgium) and North Coast Brewing (California) have reached an agreement regarding competing beer names.  North Coast, producer of Old Rasputin, contacted De Molen, producer of Rasputin, in hope of stopping them from using the name Rasputin for their beer.  North Coast’s Old Rasputin was already one of the most widely available Imperial Stouts in the US Market for a number of years when De Molen’s Rasputin appeared in US stores just last year.  The use of the name Rasputin by De Molen could likely dilute the trademark of North Coast when sold in the same stores.  The two came to an agreement in lieu of a long court battle.

The agreement caused De Molen to stop using the Rasputin name, but not without taking a shot at North Coast in the process.  After changing the name of their beer to Disputin, De Molen printed the following under the name, ”This stout used to be called Rasputin, but the people who make Old Rasputin in California thought you were too dumb to tell the two products apart, and threatened to sue us for trademark infringement.” [LABEL IMAGE]  While many breweries are teaming up to create collaborative brews, some continue to fiercely compete.

Full Story From Beernews.org

Summary judgment granted to Apple in case against maker of Mac clones

On November 13, U.S. District Judge William Alsup (N.D. Cal) granted summary judgment to Apple in its copyright infringement case against Psystar.  As background, Psystar offers non-Apple machines for sale to the public that come pre-installed with Apple’s Mac OS X operating system.  Psystar developed a work-around of Apple’s Mac OS X protection measures to run the operating system on their own machines, thus enabling customers to get the inner workings of a Mac without any of the burden of paying for Apple’s R&D or award-winning industrial design.

Judge Alsup rejected all of Psystar’s arguments, including under the first sale doctrine, holding that the doctrine only applies to legal copies, not the unauthorized copies that Psystar had made.  Apple also won its claim under the DMCA, with the judge holding that Psystar had violated the DMCA by circumventing Apple’s protective measures to prevent it from being installed on non-Mac machines.  The case does provide a few practice tips for aspiring attorneys.  If you are going to rely on a fair use defense, you may want to actually run through the ubiquitous four factors, as apparently Psystar was too busy to do so in their own brief and got slapped down by the judge.

With victory in hand, Apple has now moved on to the remedy; seeking a permanent injunction, which would prohibit Psystar from selling any machine that is pre-loaded with Apple’s operating system.  Apple is also asking for $2.1 million in statutory damages.  While this case was a seemingly easy win for Apple based upon these facts, a harder case may be yet to come from those in “hackintosh” industry that simply offer software that enables legitimate buyers of Mac OS X to install it on their own non-Apple machine, rather than actually pre-installing and distributing non-Apple machines containing Apple software. Apple would heavily rely on its EULA which prohibits customers from installing its OS X operating system on non-Apple computers.

How to guard Terms and Conditions agreements from being found unenforceable after Harris v. Blockbuster, Inc?

The U.S. District Court in Harris v. Blockbuster, Inc. (622 F.Supp.2d 396) denied Blockbuster’s motion to compel arbitration under the terms in the Click-Wrap Agreement that its customers were required to accept as a condition of joining Blockbuster online. The Court found that the agreement was unenforceable because the arbitration provision cannot be reasonably applied to disputes arising, or arising out of events occurring before the change was posted online.

Does this mean that customers can rely on this decision and not worry about signing the Terms of Use agreement online? What kind of provision should be included in Terms and Conditions agreement to protect the business from being found unenforceable by the Courts?

Blockbuster’s agreement had the problem that it could change its Terms and Conditions in the click-wrap agreement at its sole discretion, and the changed provisions would become effective immediately upon posting. The Circuit Court in the case stated that the right to modify provision concerned them since it leaves no room for the other party – the customers, to respond to the terms, and thus putting them at an unfair disadvantage in the event of a dispute.

What should the business do? The Court in Blockbuster pointed to a Texas Supreme Court case from 2002, In re Halliburton Co., 80 S.W. 3d 566, which found an electronic agreement enforceable because it included a provision like: “notwithstanding any provision to the contrary, no amendment shall apply to a dispute of which the amending party had actual notice on the date of amendment.”

So there should be a provision stating that parties should be subjected to the provisions that were effective at the time when the dispute arose, but not to the amendment made thereafter.

No Doubt Sues Activision Under Right of Publiciy Claim

The Orange County based rock band, No Doubt, has recently filed a lawsuit in Los Angeles Superior Court, claiming that Activision, the creator of Band Hero (the latest of the Guitar Hero series), exceeded its contractual terms that allowed activition to use the  likenesses of band members Gwen Stefani, Tony Kanal, Tom Dumont and Adrian Young in the video game.   As the band members see it, the game has made the members a part of a “virtual karaoke circus act.”

The complaint states that “Activision has deceived and confused the public into believing that No Doubt authorized the use of its name and likeness for the Character Manipulation Feature of Band Hero and that No Doubt approves and endorses the appearance of its members individually performing songs that are wholly inappropriate and out of character for No Doubt.”   The band members view the Character Manipulation Feature as particularly problematic since users could, for example, have Stefani’s image sing to the Rolling Stones’ “Honky Tonk Woman.” 

Jim Gueiront, No Doubt’s manager, claimed ”[the members] are bitterly disappointed that their name and likeness [were] taken and used without their permission…[Activision] agreed to play three No Doubt songs as a band…. Activision then [without permission] put them in 62 other songs and broke the band up.” 

Activision believes it is within its legal rights and that the lawsuit is meritless: “Activision has a written agreement to use No Doubt in Band Hero – an agreement signed by No Doubt after extensive negotiations with its  representatives, who collectively have decades of experience in the entertainment industry.  Pursuant to that agreement, Activision worked with No Doubt and the band’s management in developing Band Hero.” 

To succeed on a right of publicity claim under California law, a plaintiff must show four elements: (1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.  Hilton v. Hallmark Cards, 580 F.3d 874, 889 (9th Cir. 2009); Downing v. Abercrombie & Fitch, 265 F.3d 994, 1001 (9th Cir. 2001).  

It will be interesting to see how elements 3 and 4 will be litigated. 

(http://latimesblogs.latimes.com/music_blog/2009/11/no-doubt-sues-activision-over-band-hero.html)

Do Ringtones Played in Public Spaces Violate the Copyright Act?

In an attempt to collect additional royalties from Verizon Wireless and AT&T, ASCAP recently tried to persuade a federal judge that playing a ringtone on a cellular phone in public amounted to copyright infringement. 

Enforcement issues aside, In re Application of Cellco Partnership (09 CIV. 7074) raises important policy questions regarding the scope of copyright.  Are copyright holders overly compensated for their creative efforts under the current regime or are more incentives needed to keep pace with the changes in technology that allow for massive infringement with the single click of a mouse?  Regardless of the policy viewpoint adopted, the public can (for now) take comfort in letting their cell phones ring at the park or the beach without worrying that doing so constitutes copyright infringement. 

At issue in Cellco was whether ringtones playing in public placed constituted a “performance” within the meaning of Section 106 of the Copyright Act, which provides that a copyright owner has the exclusive right “in the case of literary, musical, dramatic, and choreographed works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly.”  Section 101 specifies that to perform or display publically means to “transmit or otherwise communicate a performance … by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”  

The Court reasoned that because only subscribers receive the transmission or alleged performance, such transmission or performance is not available to the public (non-subscribers) and thus not covered by the Transmission Clause.  According to the Court, “there is no qualifying public performance under §106(4) when the customer uses the ringtone to alert her to an incoming call.  Thus, even [if] the downloading of a ringtone is considered as the first link in the chain of transmissions, it does not qualify as a public performance.”   Accordingly, ringtones played in public places did not qualify as public performances within the meaning of Section 106 of the Copyright Act and the Court held that Verizon could not be directly or secondarily liable. 

Verizon was found not to be directly liable because Verizon neither “performs” the music nor engaged in “conduct that can be said to cause a ringtone to be played in public.”  In applying Section 101 of the statute, the Court held “Verizon does not ‘recite, render, play, dance or act [the ringtone] either directly or by means of any device’ and thus does not ‘perform’ the music.”  The Court noted that “Verizon’s only role in the playing of a ringtone is the sending of a signal to alert a customer’s telephone to an incoming call.”

After looking to the exemption from §106(4) found in §110(4) for “those performances of a musical work that occur within the ‘normal circle of a family and its societal acquaintances,” the Court found that Verizon could not be secondarily liable.  The Court reasoned that the “expectation of profit is important to determining whether a performance fits within the §110(4) exemption,” but “Verizon customers are not playing ringtones for any ‘commercial advantage;’ they do not get paid any fee or compensation for these performances; and they do not charge admission.”  Thus, after finding that neither the customers nor Verizon were liable for copyright infringement, the Court granted Verizon’s motion for summary judgment (the Court also granted summary judgment in favor of AT&T “for substantially the same reasons”  in In Re Application of AT&T Mobility, (09 CIV. 7072)).  

Consequently, Verizon Wireless and AT&T do not need public performance licenses for the ringtones they sell to their customers. 

This decision seems to comport with the general policy underlying Copyright Law – to grant copyright holders exclusive rights to their works in order to “promote the Progress of Science and useful Arts.”  If indeed economic rewards to authors should be treated as secondary to the broad dissemination of works for the public benefit, then denying ASCAP’s request for additional royalties in order to give the public access to the works for which they have already paid rings true to me.

Germany’s Proposal to Protect Publishers

Publishers around the globe are suffering from consistent reductions in ad sales and revenue driven by decreased circulation.  The most common target of the publishers’ anger and frustration have been online aggregators.  In the U.S., aggregators have been party to a series of lawsuits, most of which have ended in undisclosed settlements.  The U.S. government has yet to take action to clarify how the copyright laws relate to the aggregation of content online.

A different story is unfolding in Germany where the government is proactively taking steps to create a new type of copyright designed to protect publishers against online news sites.  According to the The New York Times, the German government’s proposal would give publishers a “neighboring right,” similar to what music labels and movie houses already enjoy.  Details of the proposal have not been fully hashed out, but one suggestion is to require a license for any commercial use of published material online.  A new royalty collection agency would be created to gather and distribute the fees.  Private, noncommercial uses would remain unrestricted.

Opponents to the plan say extension of the copyright laws runs counter to the “spirit of openness” that characterizes the web.  They also argue that distinguishing between commercial and private noncommercial use would be extremely difficult.  Fair use is an additional concern, though fair use protection in Germany is nowhere near as strong as it is in the U.S.  It will be interesting to see whether the German proposal is adopted, and if it will have any influence on the extension of U.S. copyright laws in this area.