Licensing Litigation: "Hollywood Accounting" of Licensing Royalties Loses Bigtime: Jury Finds Disney Owes $269.2 Million

Who Wants to Be A Millionaire, per Wikipedia here.

Celadon licensed the show to Disney, seeking a 50-50 profits split.  Using "Hollywood Accounting" (link to great Wikipedia article on the practice). Disney managed to pocket $269.2 million that it owed to a licensor, according to a jury.

A percentage of the net profits is considered in Hollywood to be a percentage of nothing, since studios simply make up the math to always eliminate net profits by funnelling these monies to their friends.

Nice to see that a jury saw through it all...


Disney-Celador Lawsuit Verdict: Disney Ordered To Pay 'Millionaire' Makers $269.2 Million

Purchase Copyright Litigation Handbook from West here

Copyright Office: Copyright Royalty Judges Have Subpoena Power Over Non-Witnesses

Copyright Office issued an opinion on a novel question of law, published in Federal Register here.  Copyright Royalty Judges have the power to issue subpoenas to non-participants in proceedings.

Creative Commons, Open Source, Copyright and Contract Law

For a number of years, activists dismayed at how commercial enterprises exploited copyright agitated to change the nature of how copyrighted works affected creative collaboration. They imagined a world of greater creative collaboration where everyone would still be able to make a living.

Authors, artists and musicians who wished to have their works used in others' materials could signify their interest.

Information and tools to understand this movement, including the "creative commons" marking and sample licenses are available at the Creative Commons website.

Wikipedia is a stunning example of this type of creative collaboration.

But what about the making money part? If you put your work on the internet and tell everyone that they can use it, are these very creative "creative commons" licenses going to eventually help you make a living? Can these licenses be enforced? And if someone ventures beyond the terms of the license, is that a breach of contract or is it copyright infringement?

The issue went from an interesting and hotly debated academic question to a tremendous commercial reality with the advent of the "open source" software movement, which adopted a creative commons-type license. Essentially, software programmers put up programming code that anyone can download, modify, use and distribute for free, as long as the "borrowed" or "open source" code is clearly indicated and enabled for the distributee to copy, download and use.

On August 13, 2008, the Court of Appeals for the Federal Circuit decided Jacobsen v. Katzer, 2008 WL 3395772, a decision that reviewed a district court's denial of a preliminary injunction to the owner of programming code who sued a person who downloaded his code, removed the identifying materials, and sold a new software package commercially.

The district court found that the open source license was an intentionally broad non-exclusive license unlimited in scope. Rather than being a matter of "copyright infringement", the issue became one of "breach of contract". The district court's holding meant that the owner of the open source code would be stripped of powerful rights and remedies available in federal court to copyright owners who are victims of copyright infringement, including the right to injunctive relief.

Generally, a copyright owner who grants a nonexclusive license to use copyrighted materials waives the right to sue the licensee for copyright infringement. But where a license is limited in scope and the licensee acts outside the scope, the licensor can sue for copyright infringement.

The Court of Appeals framed the issue as follows: if, under California law the terms of the open source license were "conditions" for the use of the copyrighted materials, then use outside such conditions would be copyright infringement. If, however, the terms of the open source license were "covenants" under state contract law, then the open source owner would be limited to remedies for breach of contract.

Analyzing the terms of the open source license, the Court of Appeals found that its provisions were "enforceable copyright conditions" for the use of the copyrighted material and that copyright remedies would be available to the owner.

The Court of Appeals decision contains an excellent discussion of the commercial benefits flowing from open source collaboration that cannot be measured in terms of traditional royalties. This is a well-reasoned opinion that is a strong victory for the owners of these copyrighted works. According to Creative Commons, it is estimated that approximately 100,000,000 works are licensed under various Creative Commons licenses. The court noted that both Creative Commons and the Wikimedia Foundation filed friend of the court (amicus curiae) briefs in support of the appeal.

While the question of how or if many of these copyright owners will seek or achieve returns on their investments is an open one, this case is a clear victory for the rights of copyright owners who want to make their works available through the digital commons.

German Copyright in US Courts

Wrapped Reichstag, Berlin 1971-1995 (Christo & Jeanne-Claude)

I am leaving shortly to go to Germany. I will give a joint lecture at the University of Konstanz's law school with Prof. Dr. Axel Nordemann of Boehmert & Boehmert on July 6. On July 9, I will be giving a lecture in Berlin to the Berlin Chapter of the German Intellectual Property Law Association.(DEUTSCHE VEREINIGUNG FÜR GEWERBLICHEN RECHTSSCHUTZ UND URHEBERRECHT).

In preparation, I have been thinking about what copyrights would be of interest to German students and attorneys. Judge Alex Kozinsky noted in Mattel Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002) that Mattel's Barbie Doll was originally a "German street walker". In that case, the court found that trademark infringement and dilution claims asserted against the Danish band Acqua and their song "Barbie Girl" failed because a trademark owner doesn't have the right to control public discourse when the public imbues a mark beyond its source-identifying function. Barbie has spawned enormous litigation. For example, artist Tom Forsythe was awarded $1.8 milllion in attorneys fees and damages because of Mattel's meritless litigation against him for his "Food Chain Barbie" series of photographs. Mattel Inc. v. Walking Mountain Productions, 353 F.3d 792 (9th Cir. 2003).

One of my favorite German copyright disputes didn't involve a German copyright. The Copyright Office's Board of Appeals rejected Christo and Jean-Claude's application to register their wrapping of the Reichstag in Berlin as a "sculptural work". Re: Wrapped Reichstag, Berlin, 1971-1995 Control No. 60-504-9973 Decision of Appeals Board, U.S. Copyright Office, October 1, 1997. The image appears above. Christo and Jean-Claude own the copyright in the photograph shown above, but they do not have a copyright in the sculptural aspects of the wrapped Reichstag. A copy of this decision may be found at Franklin Pierce Law School's IP Mall.

Dr. Nordemann and I will discuss two cases in depth. One, Twin Books Corporation v. The Walt Disney Corporation, 83 F.3d 1162 (9th Cir. 1996), involves the initial publication in Germany in 1923 of the classic children's tale "Bambi, A Life in the Woods" without a US copyright notice.

The second, Blanch v. Koons, 467 F.3d 244 (2d Cir. 2006) involved a fashion photographer named Andrea Blanch visiting the Deutsche Guggenheim in Berlin and noticing that a photograph she'd taken had been painted into the latest work of the artist Jeff Koons (Koons and Barbie are jointly responsible for a good chunk of U.S. copyright law). Ms. Blanch returned from Berlin and sued Jeff Koons in New York, rather than in Berlin. Dr. Nordemann and I will discuss whether Germany might not have been a friendlier forum for her, and why.

A Westlaw search of "German copyright law" turned up only five cases in the ALLFEDS database. "German copyright" turned up only ten. "germany w/5 copyright" yielded 18 results, including the famous Wheaton v. Peters, 33 U.S. 591 (1834)("In Germany, where a free, perpetual copyright exists, books are cheaper than any where else in the world.")

But I think that we are going to see many more German copyrights exploited in the United States. I recently had the pleasure of watching Fritz Lang's "M" (1931) - a Criterion collection release. An amazing film.

And two years ago, I started representing the heirs of Fritz Grunbaum. Grunbaum was a Jewish cabaret performer and film star in Berlin who mocked Hitler mercilessly. He was one of the founders and stars of Vienna's Kabarett Simpl. Christopher Isherwood's "Berlin Stories" are said to be based on Fritz Grunbaum and his world, which in turn formed the basis for Kander & Ebb's "Cabaret". Grunbaum and many member of his family were murdered by the Nazis. His art collection, like the collections of so many victims of the Holocaust, ended up with a Nazi-owned Austrian transport and storage company called Schenker & Co AG that has never accounted for it. What happened to the artworks after they left Schenker and made their way to the walls of the world's museums is now a hotly disputed matter. According to Eberhard Kornfeld, owner of Galerie Kornfeld in Bern, Switzerland, the Egon Schiele self-portrait hanging in the Morgan Library belonged to Fritz Grunbaum. The Morgan Library's catalog From Berlin to Broadway: The Ebb Bequest of Modern German and Austrian Drawings claims that Kornfeld acquired it from Egon Schiele's estate.

Two years ago, when I googled Fritz Grunbaum I found very little on him. I did it again recently and found blog posts, a museum in Vienna devoted to him, a very respectable Wikipedia entry, and an IMDB filmography of his works. Checking out his film "The Theft of the Mona Lisa" (Der Raub der Mona Lisa) (1931), I discovered that he played the role "Adolph G" to make fun of Hitler and that the New York Times gave the film an amazing review in 1932, which I got to read.

Although Grunbaum's artworks vanished, his copyrighted celluloid image survived, his musical copyrights endured, and the German collecting societies steadily credited his estate with royalties over the years for his famous musical compositions.

Hollywood is hungry for remakes, and the appetite is only growing. Someone is going to want to remake the "Theft of the Mona Lisa" which was based on an actual incident in 1911.

As German films of the twentieth century become better known, catalogued, distributed and affordable, the market for and interest in German copyrights in the United States should grow.