Litigation Lessons Drawn from 2018 Entertainment Law Cases
Courts this year have wrestled with issues such as rights in a band’s name, the intersection of new technology and copyright infringement, traditional claims of copyright infringement, rights in “monkey selfies,” the fair-use doctrine in the Copyright Act and the appropriate methodology for calculating attorneys’ fees for a prevailing party. Although the cases discussed here focus on substantive issues arising in the context of the entertainment industry, the principles addressed by the underlying lawsuits apply to any civil-litigation practice.
The courts in these cases construed contracts and statutes and analyzed procedural challenges, such as preserving perceived errors at trial for review on appeal. One case explored the concept of statutory standing, and another clarified factors that courts may consider in setting a reasonable attorneys’ fee under particular circumstances.
The questions presented in these cases, absent the substantive entertainment concepts, could arise in civil litigation regardless of the underlying subject matter. For instance, may a party, after a full trial, appeal a decision denying a motion for summary judgment? Also, what should a court do when a jury returns inconsistent verdicts in a multi-defendant case? Finally, how should a court weigh a lawyer’s own reputational and public-interest concerns in calculating a reasonable hourly rate in a fee award due to a prevailing party?
Contract Interpretation and Course of Dealing: Commodores Entm’t Corp. v. McClary
In January, the United States Court of Appeals for the Eleventh Circuit concluded that Thomas McClary, a founding member of the musical group The Commodores, “left behind his common-law rights” to use the band name when he left the band in 1984.1 In reaching its decision, the court analyzed both (1) the contracts among the parties and (2) the parties’ efforts to control the quality and characteristics of the band by departing band members.
“The Commodores was formed in 1968.”2 The members and their manager originally formed a general partnership; the partners then registered the partnership as a corporation — Commodores Entertainment Corporation (CEC), and they eventually amended the general partnership agreement.3 Along the way, the group and its members consistently memorialized their agreements with each other and with their record label: Motown Record Corporation. Without exception, those agreements provided that rights to the band’s name remained with the group and that no leaving member was entitled to use the name.4
Over time, many of the original members left the group. The two remaining original members, William King and Walter Orange, eventually “transferred their common-law trademark rights in the Commodores’ name and logo” to CEC.5 In 2001, CEC registered four Commodores-related trademarks with the United States Patent and Trademark Office.6
In 2014, CEC filed suit against McClary, alleging a number of claims, including trademark infringement. The lawsuit arose out of McClary’s allegedly improper use of the marks.
The case went to trial in July 2016 on the issue of trademark-ownership rights between McClary and CEC. The district court granted CEC’s motion for judgment as a matter of law at the close of all proof, finding that McClary left behind all rights to the trademarks when he left the band in 1984 and that those rights remained with the group, including Mr. Orange and Mr. King. The trial court also found that the original members had acquired common-law rights to the trademarks and that McClary had walked away from those rights as well when he left the band in 1984, finding that “no reasonable juror could conclude that McClary had exercised any control over the quality and characteristics of the band since his departure.”7
On appeal, the court wrote: “The essential question presented in the first phase of the trial was this: What happens to the ownership of a trademark in the name of a performing group when the group’s membership has evolved over time?”8 The court found that the proof was undisputed (1) that the group continued to use the name “The Commodores” after McClary’s departure, (2) that Mr. King and Mr. Orange were the only original members who remained with the group and (3) that “the common-law rights to the marks remained with the group members who continued to use and exert control over the group.”9
Finally, the court found a second, independent reason that McClary had no remaining rights in the name “The Commodores.” “Reviewing the terms of the various agreements, the contracts establish that leaving the group meant leaving behind any rights to the group’s name.”10
Statutory Interpretation: BMG Rights Mgmt. (US) LLC v. Cox Communications Inc.
In February, the United States Court of Appeals for the Fourth Circuit decided that Cox Communications Inc., and CoxCom LLC (collectively, “Cox”), were not entitled to protection for claims of copyright infringement based upon the safe-harbor defense contained in the Digital Millennium Copyright Act (DMCA).11 The court engaged in a fact-specific analysis in determining whether the statutory defense applied to the facts presented.
The DMCA provides a safe harbor to any internet service provider (ISP) that “has ‘adopted and reasonably implemented … a policy that provides for the termination in appropriate circumstances of subscribers … who are repeat infringers.’”12 The Fourth Circuit held that “Cox failed to qualify for the DMCA safe harbor because it failed to implement its policy in any consistent or meaningful way — leaving it essentially with no policy.13
Cox is an ISP, and “some of Cox’s subscribers shared and received copyrighted files, including music files, using a technology known as BitTorrent.”14 BitTorrent is a particularly efficient method of file sharing for two reasons: a user can download a file from multiple users simultaneously, and a user can begin sharing a piece of a file while continuing to download the rest of the file.15
The court summarized Cox’s 13-strike policy, noting that Cox never automatically terminates a subscriber under that policy.16 Each strike results in notices to the subscriber, and the notices are followed by responses that could fairly be characterized as anemic. 17
The district court granted summary judgment in favor of Plaintiff regarding defendants’ defense of immunity under the DMCA, holding “that no reasonable jury could find that Cox implemented a policy that entitled it” to DMCA safe-harbor protection.18 “The jury found Cox liable for willful contributory infringement and awarded BMG $25 million in statutory damages.”19 Cox appealed.
“Cox’s principal contention is that ‘repeat offenders’ means adjudicated repeat infringers: people who have been held liable by a court.”20 The appellate court, relying on the plain meaning of the word “infringer” and the legislative history of the statute, rejected Cox’s argument.21
Civil Procedure and Appellate Review: Williams v. Gaye
In March, the United States Court of Appeals for the Ninth Circuit decided a copyright-infringement case that “the dissent prophesies … will shake the foundations of copyright law, imperil the music industry, and stifle creativity.”22 In response, the majority wrote, “Far from heralding the end of musical creativity as we know it, our decision, even construed broadly, reads more accurately as a cautionary tale for future trial counsel wishing to maximize their odds of success.”23
A “jury found that Pharrell Williams, Robin Thicke and Clifford Harris Jr.’s song ‘Blurred Lines,’… infringed Frankie Christian Gaye, Nona Marvisa Gaye, and Marvin Gaye III’s copyright in Marvin Gaye’s 1977 hit song ‘Got to Give It Up.”24 The appellate court noted “[o]ur law requires that we review this case, which proceeded to a full trial on the merits in the district court, under deferential standards of review. We accordingly decide this case on narrow grounds, and affirm in part and reverse in part.”25 Thus, perhaps the most important entertainment-law case of the year was decided largely on principles of civil and appellate procedure, although critics of the decision would likely disagree.
First, the court of appeals addressed the challenge by the Thicke Parties26 to the district court’s order denying summary judgment. “The order is not reviewable. The Supreme Court has squarely answered the question: ‘May a party…appeal an order denying summary judgment after a full trial on the merits? Our answer is no.’”27
The court next addressed whether the district court abused its discretion in denying the Thicke Parties’ motion for a new trial. “We may reverse the denial of a new trial only if the district court ‘reaches a result that is illogical, implausible, or without support in the inferences that may be drawn from the record.’”28 The court then reviewed the record and determined that reversal was not warranted.29
Regarding damages, the court of appeals found that the award of actual damages was not based on speculation and that the award of lost profits was not clearly erroneous.30 The court also found that the trial court’s award of equitable relief in the form of a 50 percent royalty going forward was not an abuse of its discretion.31
At trial, the jury had returned mixed general verdicts: the jury found in favor of the Interscope Parties32 and Harris but found that More Water from Nazareth Publishing Inc., Williams and Thicke infringed.33 The district court overturned the jury’s verdicts in favor of Harris and the Interscope Parties.34
On appeal, the court reversed the district court’s decision to impose liability on Harris and the Interscope Parties.35 Although the verdicts had been inconsistent, “in most cases where a jury renders inconsistent verdicts, the trial judge must allow those verdicts to stand because ‘it is unclear whose ox has been gored.’”36
In July, the court of appeals denied the petition for rehearing en banc and amended its opinion.37 The amendments do not affect this analysis.
Appellate Motion Practice and Standing: Naruto v. Slater
In April, the United States Court of Appeals for the Ninth Circuit denied a Joint Motion to Dismiss the Appeal and Vacate Judgment in the case widely known as the Monkey-Selfie case.38 The court noted that the language of the applicable rule of appellate procedure was permissive, and that “[t]he grant of a voluntary dismissal is not mandatory, and sometimes neither is advisable.”39
The request was made nearly two months after oral argument.40 The court concluded that “courts must be particularly wary of abetting ‘strategic behavior’ on the part of institutional litigants whose continuing interest in the development in the law may transcend their immediate interest in the outcome of a particular case.”41
Ten days later, that same panel decided the appeal and concluded that “animals other than humans [ ] lack standing to sue under the Copyright Act.”42 The court also concluded that counsel for the Defendants were entitled to recover attorneys’ fees and costs.43
“Naruto was a seven-year-old crested macaque that lived — and may still live — in a reserve on the island of Sulawesi, Indonesia. In 2011, David Slater left his camera unattended in the reserve, and Naruto took several photographs of himself.”44 Defendants published a book containing those photographs.45 The book identified Defendants as the copyright owners.46
“In 2015 People for the Ethical Treatment of Animals … filed a complaint for copyright infringement … as Next Friends on behalf of Naruto.”47 “The district court concluded that Naruto failed to establish statutory standing under the Copyright Act” and dismissed the case.48
In affirming the dismissal, the court noted both that its own prior precedent controlled the answer to the question of whether an animal had standing to sue under the Copyright Act and that precedent was binding on this panel “until and unless overruled by an en banc panel or the Supreme Court.”49 The court of appeals in Naruto wrote: “If an Act of Congress plainly states that animals have statutory standing, then animals have statutory standing. If the statute does not so plainly state, then animals do not have statutory standing. The Copyright Act does not expressly authorize animals to file copyright infringement suits under the statute.”50
Statutory Interpretation: Brammer v. Violent Hues Productions LLC
In June, the United States District Court for the Eastern District of Virginia found that the use of a photograph by film-festival organizer Violent Hues Productions LLC (Violent Hues), was a fair use.51 Plaintiff Russell Brammer took a time-lapse depiction of a neighborhood of Washington, D.C., at night, and he posted the photo on several image-sharing websites.52
“Violent Hues posted a cropped version of Brammer’s photo on its website.”53 Brammer’s lawyer sent a demand letter; Violent Hues immediately removed the photo from its website, and Brammer sued.54
The court analyzed the four statutory factors. With respect to the first factor — the purpose and character of the use, the court found that Violent Hues’s use was transformative and not commercial, concluding that these factors favored a finding of fair use.55 The court found Violent Hues’s use to be transformative in function and purpose: Brammer’s purpose was “promotional and expressive,” while
Violent Hues’s purpose “was informational: to provide festival attendees with information regarding the local area.”56 The court found that Violent Hues’s was not commercial, “because the photo was not used to advertise a product or generate revenue.”57
The court next noted that Violent Hues’s use was in good faith and highlighted three facts supporting its conclusion: Violent Hues’s owner (1) found the photo on line and saw “no indication that it was copyrighted,”58 (2) believed the photo was “publicly available,” and (3) removed the photo from the website as soon as he knew it might be copyrighted. A party’s good faith is not a statutorily enumerated factor, but the four statutory factors are not exclusive.
Considering the second factor — the nature of the copyrighted work — the court noted that the use of factual works, rather than more expressive works, favored a finding of fair use.59 The court concluded that the second factor favored a finding of fair use because “Violent Hues used the photo purely for its factual content, to provide festival attendees a depiction of the Adams Morgan neighborhood.”60
The court moved to the third factor: “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.”61 The court found that the third factor favored a finding of fair use because Defendant had cropped about half of the photo for use on its website, taking “no more of the photo than was necessary to convey the photo’s factual content and effectuate Violent Hues’ informational purpose.”62
Finally, the court found “no evidence that Violent Hues’ use of the photo had any effect on the potential market for the photograph.”63 The lack of effect on the market, combined with the Plaintiff’s testimony that he “currently makes no effort to market the photo,” led the court to conclude that the fourth factor likewise militated in favor of a finding of fair use.64
Attorneys’ Fees: We Shall Overcome Foundation & Butler Films v. Richmond Org. Inc.
In July, the United States District Court for the Southern District of New York awarded Plaintiffs attorneys’ fees of $352,000 plus certain costs in an action that resulted in the Defendants’ either losing or agreeing not to claim certain rights in the musical composition “We Shall Overcome” (the “Song”).65 Previously, the court had determined that the lyrics and melody in two verses of the composition “were not sufficiently original to qualify for copyright protection.”66 As the case approached trial, Defendants “tendered a covenant-not-to-sue over … [the remaining verses and] argued that this mooted the claims as to the remaining verses of the Song, and allowed judgment to be entered.”67
“Section 505 of the Copyright Act provides that a district court ‘may …award a reasonable attorney’s fee to the prevailing party.”68 The “touchstone” of the analysis of who prevailed is whether a material alteration of the legal relationship between the parties occurred.69 The change may either be in the form of “‘some relief on the merits’” or “‘settlement agreements enforced through a consent decree.’”70
Plaintiffs “obtained a summary judgment decision in their favor.”71 They therefore are the prevailing parties. The court analyzed the “Fogerty factors” in evaluating whether to award fees to a prevailing party in a case arising under the Copyright Act and determined that Plaintiffs were entitled to a fee award.72
In setting the fee, the court recognized that a fee award under “Section 505 … [is based on] the fee that a ‘reasonable, paying client would be willing to pay.’”73 The court analyzed the hours expended. “As an overall matter, comparison with the time spent by defense counsel on this litigation indicates this request is a reasonable reflection of the investment in time made by skilled counsel representing the plaintiffs.”74 In determining an appropriate hourly rate, the court noted that a “reasonable client wishes to spend the minimum necessary to litigate the case effectively” and might negotiate a fee based, in part, on an attorney’s “‘desire to obtain the reputational benefits that might accrue from being associated with the case.’”75 “Cases that would be attractive to many talented lawyers, either as candidates for pro bono or reduced-fee representation, or because they fulfill a lawyer’s own reputational and societal goals,” provide the client with significant negotiating leverage; the court therefore reduced the hourly rates by 65 percent.76
Tim Warnock is a member of Riley Warnock & Jacobson PLC in Nashville. He is a member of the American Board of Trial Advocates. He has served as chair of the Federal Practice and Entertainment and Sports Law Sections of the Tennessee Bar Association.
1. Commodores Entm’t Corp. v. McClary, 879 F. 3d 1114, 1121 (11th Cir. 2018).
2. Id. at 1122.
3. Id. at 1122 – 1123.
5. Id. at 1123.
7. Id. at 1125 – 1126.
8. Id. at 1131.
9. Id. at 1132 – 1133.
10. Id. at 1137.
11. BMG Rights Mgmt. (US) LLC v. Cox Communs. Inc., 881 F. 3d 293, 298 (4th Cir. 2018).
12. Id. at 301 (Quoting 17 U.S.C. § 512 (i) (1) (A)).
13. Id. at 305.
14. Id. at 298.
15. Id. at 298 – 299.
20. Id. at 301.
21. Id. at 301-302.
22. Williams v. Gaye, 885 F. 3d 1150, 1182 (9th Cir. 2018).
24. Id. at 1159.
25. Id. at 1160.
26. Pharrell Williams, Robin Thicke Clifford Harris, Jr., and More Water from Nazareth Publishing Inc., comprise the “Thicke Parties.”
27. Id. at 1166 (internal citation omitted).
28. Id. at 1167.
30. Id. at 1172 – 1174.
31. Id. at 1174.
32. Interscope Records, UMG Recordings Inc., Universal Music Distribution and Star Trak LLC, comprise the “Interscope Parties.”
33. Id. at 1162.
35. Id. at 1175.
36. Id. at 1176 (internal citations omitted).
37. Williams v. Gaye, 895 F. 3d 1106 (9th Cir. 2018).
38. Naruto v. Slater, 2018 U. S. App. LEXIS 9477, *2 (9th Cir. April 13, 2018)
41. Id. at *5 (internal citation omitted).
42. Naruto v. Slater, 888 F. 3d 418, 426 (9th Cir. 2018).
44. Id. at 420.
48. Id. at 420 – 421.
49. Id. at 421 (internal citation omitted).
50. Id. at 426.
51. Brammer v. Violent Hues Prods. LLC, 2018 U. S. Dist. LEXIS 98003, *7 (E. D. Va. June 11, 2018).
52. Id. at *1.
53. Id. at *2.
55. Id. at 4.
58. Id. at *5 – *6.
59. Id. at *5.
61. 17 U.S.C. § 107 (3).
62. Brammer, 2018 U. S. Dist. LEXIS 98003, *6.
64. Id. at *7.
65. We Shall Overcome Found. & Butler Films v. Richmond Org. Inc., 2018 U. S. Dist. LEXIS 128174, *1 (S.D.N.Y. July 31, 2018).
66. Id. at *4 – *5.
67. Id. at *6 – *7.
68. Id. at *8.
69. Id. (internal citation omitted).
70. Id. (quoting Buckhannon Board & Care Home Inc. v. West Virginia Dep’t of Health and Human Resources, 532 U.S. 598, 602 – 03, 121 S. Ct. 1835, 149 L Ed. 2d 855 & n. 4 (2001)).
71. Id. at *8 – *9.
72. Id. at *10 – *15.
73. Id. *16.
74. Id. at *18.
75. Id. at 19 (internal citation omitted).
76. Id. at *22 – *23.