IHEARTMEDIA Chairman/CEO BOB PITTMAN will sit down with ALL ACCESS Pres./Publisher JOEL DENVER
BOB will also discuss the role of air talent with the flexibility to broadcast in any market with local music elements, and the creation of the first and only AI system for music analysis and selection using 3,500 data inputs. He’ll also address how all of this modernization, including changes in staffing and resources, has been painful but necessary to evolve, “as there is no growth with a static vision.
Hollywood Docket: Biden Admin Is OK With Antitrust Trial for Comcast A roundup of developments on the media law front
Back in Feb. 2020, the 7th Circuit Court of Appeals reversed a lower court and primed a trial against Comcast for monopolizing local TV ad sales. Viamedia is taking on the cable TV giant and is specifically upset at how Comcast has allegedly leveraged control over “interconnects” — local clearinghouses that serve pay-TV providers on the local ad front. According to the suit, Comcast told Viamedia’s clients that they’d only get access to the interconnects if they ended their relationship with Viamedia and bought services from Comcast.
Robert De Niro Accused in Sex Bias Suit of Treating Company’s Ex-VP as "Office Wife"
Kevin Costner Sues ‘Open Range’ Distributors Over Profits
The actor-director says the 2003 film was undersold by at least $9.7 million and the defendants are engaging in a “shell game” to conceal exactly how much he’s owed in profits.
Kevin Costner has filed a $12 million lawsuit against the distributors and sales agent of Open Range, a 2003 film that he describes as “one of the best and most popular western movies of all time.”
The actor, through Open Range Productions, is suing Cobalt Pictures, Kew Media Group and several of their other business entities. He claims he’s been shorted millions in profits and has never been given a proper accounting statement.
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The film, which Costner directed and starred in alongside Robert Duvall and Annette Bening, cost less than $28 million to make and has brought in more than $250 million in worldwide gross revenues.
According to the complaint, Costner championed the film and personally paid for development costs — after having done so successfully for Dances With Wolves. That film was produced for “well under $30 million” and has brought in “well over $1 billion in worldwide gross revenue.”
“It is against this backdrop, and at a time when Costner was one of the biggest (if not the biggest) and most sought after stars in the world, that [Cobalt] negotiated to finance a portion of the Picture and license valuable international distribution rights,” writes attorney Howard Kaplan in the complaint.
Costner says Cobalt understood he was taking pay for acting and directing that was “well below his market value” and deferred $18 million so that profit participants could start collecting their earnings sooner. Under their deal, Cobalt would put up $16 million for production and distribution and ORP would collect 70 percent of the revenue in perpetuity. Cobalt agreed if it intended to make a sale below its guaranteed minimums ($23,245,000) it would notify Costner in writing.
“No such notification was provided by Cobalt to Plaintiff,” states the complaint. “Instead, years later, and following numerous demands by ORP and its representatives, Cobalt and the other defendants provided a sales report indicating that it made sales in numerous territories that were well below the stated minimums.”
Costner estimates the shortfall is at least $9.7 million and alleges Cobalt used Open Road to leverage higher sales for products in which it had a larger stake, licensed it as part of multi-picture packages and intentionally licensed it at below market rates to gain goodwill with and “other off the books compensation” from customers. He also alleges that Cobalt has failed to provide the accounting statements required by their agreement and licensed Internet distribution rights without Costner’s consent.
According to the complaint, Costner believes Cobalt is no longer “qualified to do business in California” and its rights were transferred to Kew, although he hasn’t seen evidence that there was a “proper assignment.”
Costner also alleges that the full legal names of the entities asserting distribution rights have never been disclosed and “together with its business structure, gives the appearance of a shell game designed to further conceal both the entity that is asserting distribution rights and the amount that entity owes.”
The actor-director is suing for breach of contract, breach of fiduciary duty, breach of the obligation of good faith and fair dealing and conversion. He wants the court to order an accounting from all defendants from 1991 to present regarding all financial dealings related to the picture and a declaration to clarify who controls distribution rights of the film. Costner is seeking $12 million in general and special damages, plus punitive damages.
Ashley Cullins
THR
Warner Bros. Haunted By Lawsuit from Producers of 1990 ‘It’ Miniseries
Frank Konigsberg and Larry Sanitsky claim being denied contractual rights on the recent blockbusters.
Frank Konigsberg and Larry Sanitsky, executive producers of the first adaptation of Stephen King’s horror novel, It, say they were wrongfully denied an opportunity to participate on Warner Bros’ recent It movies.
In a lawsuit filed on Thursday in Los Angeles Superior Court, the two allege they had a contractual right to engage in a negotiation for any “sequel, series, remake, or spinoff,” plus are entitled to a minimum share of 10 percent of net profits on any such subsequent production.
This action arises out of the Warner’s utter failure to honor its obligations,” the complaint introduces.
The latest version of It was released th
rough Warner Bros’ New Line banner in 2017 and grossed more than $700 million worldwide. A sequel hits theaters in September.
Konigsberg and Sanitsky ran Telepictures Productions in the mid-1980s before that company was merged with Lorimar Productions. Today, Telepictures is a division of Warner Bros that produces such shows as Ellen, Extra and TMZ Live.
The plaintiffs say they shepherded development of the 1990 miniseries, but that despite its success, a profit participation statement in 1995 showed the miniseries was in deficit with no profits to distribute. The two say they then waited 25 years for another profit statement, when finally this past March they got one showing they were entitled to $1 million in profits. The lawsuit questions whether that’s really everything, and Konigsberg and Sanitsky include claims of fraud over the accounting.
The portion of the dispute pertaining to the more recent movies figures to be the higher stakes battle given how It has reached blockbuster status.
“That the 2017 feature film is indeed a ‘remake’ is indisputable,” states the complaint.
Indisputable? Clever lawyers may attempt to argue that the 2017 movie is a remake of the Stephen King book rather than the 1990 miniseries. Whether or not that matters probably depends on the interpretation of the Konigsberg contract.
The litigation may also be destined to explore whether Warner Bros actually assumed obligations towards Konigsberg and Sanitsky. The lawsuit asserts the belief that the studio is the “successor-in-interest to Konigsberg’s and Sanitsky’s 1986 agreement with Lorimar-Telepictures,” and whether that’s specific enough could be challenged by Warner Bros. See, for example, the way Warner Bros once successfully beat back a lawsuit over the Oscar-winning film Gravity by an author who claimed contractual rights with a company that had been assumed.
The plaintiffs are represented by Dale Kinsella, an attorney who is also presently representing a producer who claims being shafted from the Fast and Furious spinoff Hobbs & Shaw.
Warner Bros had no comment about the lawsuit.
Eriq Gardner
THR
CNN convinces the state’s highest court that the reason it fired an Emmy Award-winning producer
CNN convinces the state’s highest court that the reason it fired an Emmy Award-winning producer — concerns over plagiarism — amounted to protected activity.
The California Supreme Court on Monday gave CNN a partial victory in its long-running legal dispute over the termination of producer Stanley Wilson. The new opinion offers the prospect that moving forward, employment discrimination and retaliation lawsuits against media companies will be subjected to more scrutiny at the get-go.
Wilson won three Emmy Awards and other journalistic honors during his tenure with CNN, but was terminated in 2014 upon concerns of plagiarism in connection with a story about the retirement of Los Angeles County Sheriff Lee Baca. Wilson, who is African-American and Latino, alleges that he has long raised noise about the cable news channel’s treatment of black men and also says he was given menial assignments and denied promotions after taking a five-week paternity leave after the birth of his twin children in 2013. He brought suit for discrimination, retaliation and defamation, the latter claim premised on what CNN told prospective employers about him.
In 2016, a California appellate court revived Wilson’s suit with the conclusion that CNN’s conduct did not arise from protected activity. At issue was how to interpret Wilson’s legal action within the context of California’s SLAPP statute, with was enacted by state lawmakers to deter frivolous actions targeting First Amendment activity on matters of public importance. According to the divided panel in the prior appellate decision, discrimination and retaliation do not ever qualify as protected activity, even when committed by a news organization otherwise engaged in free speech.
On Monday, the California Supreme Court, led by Associate Justice Leondra Reid Kruger, rules the prior decision went too far, that discrimination and retaliation can fall within the ambit of the SLAPP statute and that a lawsuit like the one brought by Wilson can be screened for minimal merit whenever protected activity is involved.
Descriptio
The essential question: Do the reasons underpinning someone’s firing matter when reviewing what’s in furtherance of speech rights?
“Wilson contends that ‘the basis of CNN’s alleged liability is not staffing or hiring for a news position, but discriminatory treatment and actions,'” explains the latest opinion. “But the discriminatory treatment and actions Wilson alleges in support of his claims are actions related to the staffing of CNN’s newsroom. The argument thus boils down to an assertion that, for purposes of the first step of the anti-SLAPP analysis, a court must accept Wilson’s allegation that the challenged personnel actions were taken for discriminatory reasons and are therefore unlawful.”
Settling a split that has arisen among California courts, the Supreme Court says that when confronted with an anti-SLAPP motion, courts must look beyond pleadings and consider evidentiary submissions so as to come to a conclusion about whether the complained-about activity qualifies for protection. “At this stage, the question is only whether a defendant has made out a prima facie case that activity underlying a plaintiff’s claims is statutorily protected, not whether it has shown its acts are ultimately lawful,” the opinion continues.
Thus, after deciding that Wilson’s allegations about CNN’s motives are not dispositive, the Supreme Court then addresses whether Wilson is targeting protected activity, or stated another way, whether Wilson is suing over actions in furtherance of CNN’s free speech activity on matters of public concern.
CNN argued that its selection of content producers facilitates its free speech; essentially, that the staffing decisions impact the news that its viewers see. Jus
t by exercising editorial control and judgment, CNN asserts that such hiring and firing activity is connected to its right to choose what news will be reported and how it will be reported.
The California Supreme Court agrees with this argument to some degree, but doesn’t think it follows that everything a news organization does qualifies as protected activity under the anti-SLAPP statute. What’s more, the justices point to permissible regulation of the media by government. “Not every staffing decision a news organization makes — even with respect to those who write, edit, or otherwise produce content — enjoys constitutional protection,” states the opinion.
Kruger then points to Wilson’s relatively minor role in the hierarchy at CNN. “As far as the record shows, Wilson was one of countless employees whose work contributes to what a large news organization like CNN says about the issues of the day, but was not among those who appear on-air to speak for the organization or exercise authority behind the scenes to determine CNN’s message. CNN’s decisions concerning which assignments to give Wilson and whether to continue employing him, without more, had no substantial relationship to CNN’s ability to speak on matters of public concern. It follows that a claim based on these decisions, without more, falls outside the reach of the anti-SLAPP statute,” the opinion continues.
CNN experiences better luck with regards to its plagiarism rationale for terminating Wilson.
As Kruger writes, “Plagiarism is universally recognized as a serious breach of journalistic ethics. Disciplining an employee for violating such ethical standards furthers a news organization’s exercise of editorial control to ensure the organization’s reputation, and the credibility of what it chooses to publish or broadcast, is preserved. These objectives lie ‘at the core’ of the press function. CNN has made out a prima facie case that its staffing decision was based on such considerations, and that such decisions protect the ability of a news organization to contribute credibly to the discussion of public matters. The staffing decision thus qualifies as ‘conduct in furtherance’ of CNN’s ‘speech in connection with’ public matter.”
That appears to give CNN a boost on claims related to the termination of Wilson, as the Supreme Court holds that CNN has carried its first-step burden there and is now entitled to a preliminary screening of those claims to determine whether they have requisite merit.
But the Supreme Court says that Wilson’s causes of action based on other activity — “passing him over for promotions, menial assignments, and so on” — will survive regardless. That includes the way that CNN privately communicated Wilson’s alleged violation of journalistic ethics, the basis for a defamation claim that is now deemed to not constitute conduct in furtherance of free speech rights in connection with a public issue. The full opinion (read here) concludes that what CNN told other employers about Wilson really didn’t contribute in any meaningful way to discussion or resolution of an ongoing matter of public significance given that the correspondence was private and Wilson was hardly a famous journalist.
Eriq Gardner
THR
If successful, the motion, called a demurrer, would leave only eight individual plaintiffs asserting various claims against CAA and three other large agencies — WME, UTA and ICM Partners — and even at that, there might be little left, as the agency also filed a motion to strike an unprecedented bribery claim from the litigation, as well as filing papers alleging that individual plaintiffs consented to packaging.
A hearing is set for Sept. 5. The WGA need not file a reply to CAA’s motions until two weeks before the hearing, with CAA then having a week to respond. Meanwhile, the other three agencies are expected to file their own motions by June 24. And although CAA did not bring counterclaims against the WGA, that agency could yet bring separate, affirmative claims. The WGA’s complaint is not a class action, but involves something similar: an organization asserting associational standing in order to bring claims on its many members’ behalf. But the devil is in the details.
“Associational standing … requires that the WGA demonstrate that ‘neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit,’” says a CAA legal brief, quoting a California case. “The WGA’s First Amended Complaint fails this test. The WGA’s burden to prove that CAA breached a fiduciary duty or committed constructive fraud as to individual members of the WGA necessarily requires individualized proof and participation in the lawsuit from each of the allegedly harmed writers to whom duties were owed.”
As examples of the individualized issues, the brief continues, “Each WGA member would need to prove that each accused CAA agent engaged in a breach of duty, by concealing information about packaging that was otherwise unknown to that WGA member, relating to the packaged television program at issue. Further, CAA is entitled to obtain evidence concerning each member’s knowledge of and consent to packaging fees and to present individual defenses to such a claim, including that the member waived any such claim, suffered no causally-related damage, or that the statute of limitations has expired. Thus, the WGA’s claims that CAA agents breached duties to their WGA-member clients necessarily raise a host of individual issues as to each WGA member that requires each member’s participation in the lawsuit.”
Beyond fiduciary duty and constructive fraud, the WGA’s third claim is a California unfair competition claim based on a federal statute aimed at preventing employers from bribing union officials. But CAA attacks that as well, on
the grounds that packaging fees aren’t bribes and talent agencies aren’t unions. In addition, any state claim in this realm is preempted, says CAA, by the federal statute.
As to the individual plaintiffs, CAA previously filed an answer on June 6 arguing that David Simon’s and Meredith Stiehm’s claims were “preposterous,” because Simon had signed a settlement agreement 19 years ago and because Stiehm was aware and had repeatedly consented to packaging. In a new answer, CAA deflects claims from other individual plaintiffs as well.
Jonathan Handel
jh@jhandel.com
PIRATE Act Reintroduced In Congress
The bill, H.R. 583, was reintroduced WEDNESDAY (1/16) by Reps. PAUL TONKO (D-NY) and GUS BILIRAKIS (R-FL), both co-sponsors of last year’s bill. The PIRATE Act would increase fines for AM and FM pirate radio operators to a maximum of $2 million ($100,000 per day of violation). It would also require “enforcement sweeps” every five years in the top-five markets with pirate activity.
“Protecting our public airwaves is critical for preserving community safety, whether for first responders or for working parents who don’t want to expose their children to uncontrolled hate and obscenity,” said TONKO. “Whether a frequency is being used in emergencies to coordinate community response and save lives or by parents who just want to tune their car radios with their kids in the car, our communities are better served when broadcasting is governed by the rule of law. I am hopeful that my new House colleagues will join in support of the PIRATE Act and we can pass this commonsense legislation without delay.”
“We need to make sure that these illegal operators do not interfere with public safety communications,” added BILIRAKIS. “These illegal actors not only hurt our economy, but they can prevent people from receiving important emergency information during a crisis. This bill will give teeth to enforcement of illegal radio operators by hitting them in their pocketbook and better stop these illegal actors for good.”
“NAB thanks Reps. TONKO and BILIRAKIS for today’s introduction of the PIRATE Act, which strengthens the FCC’s enforcement tools to combat illegal pirate radio operations,” said NAB EVP of Communications DENNIS WHARTON. “Unlicensed radio stations are not merely a nuisance to legitimate radio broadcasters who play by the rules. They also pose a threat to public safety by disrupting communications between air traffic controllers and airline pilots. We strongly urge bipartisan support of the PIRATE Act and we look forward to its swift passage.”
“The NEW YORK STATE BROADCASTERS ASSOCIATION applauds Congressman PAUL TONKO and Congressman GUS BILIRAKIS for introducing the bipartisan PIRATE Act,” said NYSBA President DAVID DONOVAN. “Today, illegal radio stations interfere with this nation’s Emergency Alert Service, cause interference with air to ground communication systems at airports, ignore all FCC rules and disregard all federal and state consumer protection laws. The PIRATE Act will give the FCC additional tool to address this harmful and dangerous situation.”
“The NATIONAL ASSOCIATION OF BLACK OWNED BROADCASTERS is pleased to see that Congressman PAUL TONKO and Congressman GUS BILIRAKIS are introducing the bipartisan PIRATE Act,” said NABOB President JAMES WINSTON. “Illegal pirate radio stations have for many years exploited African American and other minority communities across the country. They interfere with legal broadcast operations and do not comply with any laws designed to protect consumers. The PIRATE Act provides the FCC additional resources for combating these illegal operators. We look forward to working with the Congressmen to get this bill passed.”
Writer Sues Disney Over Home Video Profits
Disney is facing a class action lawsuit for allegedly relying on outdated revenue models when calculating profit participation.
The Jerk scribe and Head of the Class creator Michael Elias, through his loanout corporation Neversink Productions, is suing Walt Disney Pictures. He claims the studio has been violating his contract for 1982’s Young Doctors in Love by only including 20 percent of home video revenue when it calculates the amount due to profit participants.
“When home video distribution was in its infancy, and motion pictures studios such as Disney had no yet established in-house home video departments or subsidiaries, the large, independent home video distributors paid a flat 20% royalty to the studios from home video sales,” states the complaint. “However, after the studios established their own home video divisions, they continued the practice of only reporting 20% of actual receipts to profit participants, as if the revenue earned by these studio divisions were not their own, and were not subject to eventual accounting and disbursement requirements to profit participants.”
Elias is seeking damages and a declaration from the court outlining the proper method of calculating payments derived from home video distribution, including on-demand, streaming and digital downloads. The proposed class includes anyone with a profit participation agreement that doesn’t expressly state that home video revenue should be accounted for based on a royalty percentage.
Ashley Cullins
THR
John Groom explores the legal treatment
Sales of illicit set-top boxes, designed to enable users to watch copyright-protected content for free, have steadily increased in recent years. Rightsholders have fought back strongly against this behavior, committing significant resources to investigate, identify and expose wrongdoers, and pursuing a variety of civil, criminal and commercial measures around the world.
Johnny Depp Settles Blockbuster Lawsuit Against Business Managers
A deal heads off an Aug. 15 trial that would have examined how the actor’s fortune was lost.
About a month away from a trial that would have captivated the entertainment industry, Johnny Depp has settled his blockbuster lawsuit against his former business managers. The deal was made Saturday at a mediation session, The Hollywood Reporter has learned.
Depp filed his $25 million fraud case against The Management Company at the beginning of 2017. He alleged being the victim of gross misconduct and that the firm — run by Joel and Robert Mandell, and which had represented him for 17 years — had failed to file or pay his taxes on time, failed to keep proper books, loaned money to third parties without authorization and was self-dealing by investing his money in business ventures in which the firm’s partners had ownership stakes. Depp was looking to recover commissions.
But that was only his side of the story.
According to the Mandels, who brought counterclaims, the firm repeatedly warned and advised Depp to reduce his spending and sell unnecessary assets. They charged Depp with living an “ultraextravagant lifestyle that knowingly cost Depp in excess of $2 million per month to maintain, which he simply could not afford.”
Depp’s alleged spending — $30,000 a month for wine, $500,000 in rental fees for storage warehouses that held his Hollywood collectibles, $200,000 for a private jet, and on and on — all became fodder in the lawsuit. The detailed spending also fueled many stories telling how he blew an estimated $650 million fortune. (Depp is also in the midst of a legal battle with his former transactional attorney, Jake Bloom.)
The trial was quickly advancing with an Aug. 15 date that the judge refused to move back any further. The mediation session represented the parties’ last shot at coming to a deal, and both sides were probably motivated to avoid any embarrassing secrets that would come out in open court.
Then again, Depp and his lawyer recently told Rolling Stone that this lawsuit would change Hollywood forever.
Instead, with no word on the terms of the settlement and dismissal papers forthcoming, it will end quietly, if certainly memorably.
ERIQ GARDNER
THR
Apple, Samsung Finally Settle Patent Dispute June 28, 2018 at 3:06 AM (PT)
RMLC Heads To Rate Court, BMI Responds
BMI EVP/Licensing & Creative commented, “BMI has spent more than two years attempting to negotiate a new rate with the RADIO MUSIC LICENSE COMMITTEE (RMLC) that fairly and accurately reflects the scope and quality of the music we represent. As anticipated, the RMLC is trying to use a below-market rate they negotiated with the only U.S. PRO they were able to come to an agreement with; an agreement based on flawed market share data and one that has since been made irrelevant by newly-agreed to and adjudicated rates in the marketplace. We look forward to presenting our position before the Court and demonstrating the dominance of BMI’s repertoire.”
Harris Dickinson and Donald Sutherland on FX’s ‘Trust
John Paul Getty III’s sister says the upcoming series makes it appear as if her family was complicit in his 1973 kidnapping.
John Paul Getty III’s sister is demanding that FX hand over episodes of its upcoming drama series Trust for her review, claiming the show makes it appear as if her family was complicit in his infamous 1973 kidnapping.
In a letter obtained by The Hollywood Reporter, Ariadne Getty’s lawyer Martin Singer claims the series is “a cruel and mean-spirited defamatory depiction” of the family.
“It is ironic that you have titled your television series Trust,” Singer writes in the letter. “More fitting titles would be Lies or Mistrust, since the defamatory story it tells about the Gettys colluding in the kidnapping is false and misleading, and viewers rightly ought to mistrust it.”
Danny Boyle’s 10-part series, which is set to premiere March 25, stars Donald Sutherland and begins with the kidnapping of the then-16-year-old Getty.
Singer says Trust defames the Gettys by portraying them as cooperating in a kidnapping that left a teenage family member mutilated in order to “dupe” J. Paul Getty out of millions. Even if the series doesn’t explicitly state Ariadne and others were complicit, Singer argues that it is defamatory for even implying it.
“You are using a false version of the Getty family tragedy for entertainment for your own financial gain,” Singer writes. “That is indeed ironic, since one of the themes of Trust is to portray my client’s family as greed-driven.”
Singer says Ariadne wasn’t consulted for the series, and he is demanding that FX immediately make all of the episodes available for review.
FX did not immediately respond to a request for comment.
The network’s attorneys are currently gearing up for appellate arguments Tuesday in a lawsuit from actress Olivia de Havilland, who claims the FX series Feud: Bette and Joan painted her in a false light and violated her rights of privacy and publicity.
Ashley Cullins
ashley.cullins@thr.com
@AshleyCullins
John Paul Getty III’s sister says the upcoming series makes it appear as if her family
NBC Sued for Wrongful Death Following Wheelchair Crash Near ‘America’s Got Talent’ Filming Site
The family of a 79-year-old woman claims she died because of injuries caused by crashing her wheelchair while trying to use a disabled access ramp to the Pasadena Civic Auditorium.
NBC is being sued for wrongful death by the family of a woman who died after allegedly falling out of her wheelchair near the set of an America’s Got Talent shoot.
Maureen Allen’s family claims she died on June 25, 2017, as the result of “severe and debilitating injuries” she suffered on March 26 of that year while trying to maneuver her wheelchair over an obstruction that blocked access to a handicap ramp to the Pasadena Civic Auditorium.
The 79-year-old Allen and her husband were volunteering at the 67th Annual Los Angeles County Science and Engineering Fair, which was being held at the event center. Both of them were using motorized wheelchairs, and they discovered that disabled access points to the auditorium were blocked off because America’s Got Talent was filming there in the coming days.
“[T]he television show’s trailers and equipment [sic] were blocking all handicap access points to the building except for one,” writes attorney Brian Panish. “However, in order to gain access to the SUBJECT RAMP, individuals with disabilities were forced to navigate and maneuver over a large power cord protector that obstructed the only available path of travel.”
The front wheel of Allen’s wheelchair got caught on the cord protector and the chair flipped onto its side, according to the complaint. Allen was thrown from the chair onto the payment, which resulted in a broken hip and injuries to her head and arms. The injuries, her family claims, caused a blood clot and severe stroke and caused Allen to undergo multiple procedures including a hip replacement. She died after two days on life support.
Allen’s family is also suing the City of Pasadena and the show’s producers. NBC has not yet replied to a request for comment on the complaint,
Ashley Cullins
ashley.cullins@thr.com
Mel Gibson Sued by Voltage Pictures Amid ‘Professor and the Madman’ Legal War
A ‘Supernatural’ Profits Fight, and the AT&T-TW Merger Issue That Few Are Discussing
Since AT&T announced in October 2016 that it would be acquiring Time Warner for $85 billion, there has been hardly any talk about how the deal will impact creative talent. When the issue of vertical integration comes up, it’s often a discussion on whether distributors including Comcast, Dish and Verizon will get fair terms to license networks like HBO or TBS, or whether AT&T might try to unfairly compete for telecom customers by holding exclusives on a would-be owned show like Game of Thrones or a franchise like that of Batman. AT&T executives insist this would make no business sense, that receiving money for content is the name of the game and that antitrust history prevents government officials blocking a merger between a supplier and a distributor. But virtually ignored is how this deal will impact those who create, write, star and direct in popular entertainment.
If the question hasn’t provoked more examination, there could be a reason for that beyond the complexity of the topic. Almost all contracts in entertainment include arbitration provisions. As a result, most of the disputes that arise from vertical integration are kept hushed. But The Hollywood Reporter has learned about one pending fight in arbitration — and it’s a battle that not only involves Warner Bros. and the very lawyer now tasked with fighting the Justice Department, but it also addresses the fairness of media consolidation and the mechanism to resolve disputes from those who feel shortchanged by studios selling to their affiliated distributors.
The arbitration is over The CW’s Supernatural, a show that is now in its thirteenth season. It’s obviously a successful program, given its longevity, but few appreciate the economics underpinning the series. According to a 2013 profit participation statement sent out by Warners, the total gross receipts for the show’s first eight seasons amounted to $570 million. But after expenses, distribution fees, interest payments and money to the talent agency that packaged the series, Warners reported that Supernatural had a deficit of nearly $23 million, meaning nothing in the pool for those entitled to a percentage of net profits.
Eric Kripke, the creator of the fantasy horror series as well as a profit participant, objects to the studio’s accounting. In particular, he points to what Warners has been booking in license fees from its affiliated broadcast network. (In fairness to Warners, it must be noted that The CW is only half-owned by the studio, with the other half enjoyed by CBS, which presumably had a say, too.)
“The show is one of The CW’s most successful series,” states an audit claim. “It is customary in the television industry for studios to obtain license fees from networks that, starting in Season 5, equal or exceed the cost of producing the show. … If Warners had merely received a full cost license fee from The CW for Season 5 through 8, the gross receipts would be increased by $104,005,323.”
This is what actually occurred:
Kripke, through his loan-out, also raises other issues including transactions with affiliated on-demand services and insufficient documentation to determine whether the license fees from Netflix and Hulu represent fair market value.
In response, Warners has invoked arbitration by filing a demand at JAMS, a leading arbitration forum.
Represented by a team at O’Melveny & Myers which includes Daniel Petrocelli (recently tapped by AT&T to defend that Time Warner merger, in case the government sues to block it), the studio retorts, “Under the parties’ agreements, Kripke granted WBTV absolute discretion and control over how and whether to distribute and exploit the Series, including by authorizing WBTV to license the show to an affiliated company.”
Warners knocks at Supernatural in its arbitration demand letter and says Kripke has gotten the benefit of the bargain with millions of dollars in fixed fees. The studio says the reduction in license fees was necessary. According to its lawyers, “As a result of these deals, Kripke has continued to obtain greater total compensation, because the Series, which otherwise would have been cancelled during its early years based on its performance, has remained on the air.”
Now that the case is in arbitration, Kripke’s attorney is mounting what might best be characterized as a fight priming the bigger fight. It’s something that Warners probably didn’t expect.
Kripke is represented by Ron Nessim, an attorney at Bird, Marella, who recently sued AMC on behalf of various Walking Dead executive producers including Robert Kirkman and Gale Anne Hurd. Along with the Frank Darabont litigation, the Walking Dead profits cases represent more exploration over the issue of whether creatives are being treated fairly when studios producing content share a parent company with the outlet distributing the content.
Nessim is also the author of a 2015 article in the UCLA Entertainment Law Review titled “Mandatory Arbitration Provisions Involving Talent and Studios and Proposed Areas for Improvement.” In that article, Nessim makes the argument that studios may be advantaged in arbitration thanks to a phenonomenon that critics call “repeat player bias.” Meaning, if an arbitration vendor like JAMS wishes to maximize its revenue, that vendor may have financial motives — unconscious or otherwise — to favor parties who arbitrate repeatedly.
Nessim’s concerns have now impacted how he’s handling the Supernatural case.
After Warners submitted its demand for arbitration, the parties began volleying letters to each other and to a case manager at JAMS. Correspondence began last month and has continued through this week.
Among other things, Nessim is demanding information about financial and professional relationships between JAMS and those involved in the present case. He also is insisting upon disclosures about potential arbitrators. He wants to know all about Warner Bros.’ prior and pending cases, the amount of the claims, the prevailing parties and so forth. Last and not least, Nessim is pushing JAMS to classify this clash as a “consumer arbitration,” which would mean that JAMS would have to publish information about this Supernatural case on its website.
Warners has attacked Kripke’s endeavor as a “sideshow,” while Nessim writes in his most recent letter, “[I]n a ‘company town’ like Los Angeles, we believe that members of the talent community are justifiably concerned about the danger of arbitration providers and their neutrals being influenced in favor of the entertainment conglomerates that draft the contracts that direct the business to them.”
The matter remains unresolved.
If the Justice Department does move forward with a courtroom effort to stop AT&T’s $85 billion acquisition, the issues faced by creatives might not be overtly discussed in a complaint spelling out the competit
ive harms of vertical integration. But as the government’s case continues, it just well might.
In an important speech Thursday before the American Bar Association, the Justice Department’s antitrust chief Makan Delrahim addressed vertical mergers. He expressed skepticism of behavioral remedies or divestitures that may only partially remedy the harms of consolidation of suppliers and distributors. He also said, “If a merger is illegal, we should only accept a clean and complete solution, but if the merger is legal we should not impose behavioral conditions just because we can do so to expand our power and because the merging parties are willing to agree to get their merger through.”
Led by Petrocelli, AT&T may probe any undue influence that CNN-hating President Donald Trump has had on the Justice Department, which is supposed to operate independently. At the same time, there’s potential skeletons in Hollywood’s closet to probe and put before a judge if prosecutors dare. After all, if any problems from a merger of this type aren’t dealt with on the front end, how many creatives in Hollywood have confidence such issues will be fairly resolved later on in private forums?
ERIQ GARDNER
THR
Irving Azoff Song Licensing Outfit Gains Edge in Antitrust Battle With Radio Stations
A magistrate judge potentially deals a blow to some 10,000 radio stations fighting licensing demands over songs by Bruce Springsteen, Prince, and Bruno Mars, among other superstars.
Thanks to a magistrate judge’s recommendation on Wednesday, a key legal battle that could determine the future of songs on the radio may be headed away from Pennsylvania in what would represent an initial victory for Irving Azoff’s Global Music Rights, which is attempting to boost licensing income for Bruce Springsteen, Bruno Mars, Pharrell Williams and other superstars.
Global Music Rights is an upstart that competes with ASCAP and BMI, two performance rights organizations that, thanks to consent decrees with the U.S. government, must issue blanket licenses to radio stations upon request. GMR has a more free hand to negotiate the public performance of song compositions, at least for the time being. That’s because GMR is fighting antitrust claims made by the Radio Music License Committee, which represents some 10,000 radio stations throughout the nation.
RMLC sued GMR in Pennsylvania, while GMR sued RMLC in California.
It’s the contention of the radio stations that GMR is an “unlawful monopolist” demanding “supra-competitive” prices for licenses to works by John Lennon, Prince, Jon Bon Jovi and others. GMR responds that its repertory only includes 74 songwriters and that it has “a single-digit share of radio spins.” In other words, GMR may have an illustrious clientele, but it doesn’t believe it is a monopolist. However, if it does win, other musicians may choose to bolt ASCAP and BMI, which continues to fight the government over those consent decrees. And if GMR beats the antitrust claims, it would have the power to take its songs off of radio unless those 10,000 radio stations agreed to fork over more money.
The location where the battle will be fought between GMR and RMLC is important largely because a few years ago, an East Coast judge looked at another small performance rights organization called SESAC and issued an injunction upon a finding that there were no substitutes for a SESAC blanket license. Eventually, SESAC had to pay TV stations a $58.5 million settlement to resolve antitrust claims. Thus, RMLC sees advantage to fighting the case in Pennsylvania.
As the parties squared off over the forum, the situation became heated.
GMR offered the radio stations an interim license for rights to perform hit songs with the caveat that if Pennsylvania radio stations accepted, this couldn’t be used as evidence to show that the case belonged in Pennsylvania. RMLC demanded the interim license be on “non-discriminatory terms” and asked the judge for an injunction, lest radio stations suddenly found themselves without the ability to perform songs authored by Don Henley, Eddie Vedder and Ira Gershwin, to name three more GMR clients. Fighting this demand was O’Melveny attorney Daniel Petrocelli, whose other big antitrust case at the moment is representing AT&T against the government over the Time Warner merger.
With that background comes the recommendation yesterday by U.S. Magistrate Judge Lynn Sitarski, who had to consider whether GMR had sufficient contact with Pennsylvania to establish jurisdiction over the licensing outfit.
RMLC asserted that GMR had national contacts, and that was enough for an antitrust defendant.
But Sitarski writes that “GMR’s contacts with states other than Pennsylvania cannot be aggregated in order to obtain personal jurisdiction over GMR in this forum.”
The judge then points out that GMR resides in California, not Pennsylvania, and that the negotiations over a licensing agreement took place outside the Keystone State.
“GMR has no jurisdictionally significant contacts, ties, or relations with Pennsylvania,” she writes. “The Amended Complaint does not allege — and the record does not contain any evidence of — a single affirmative act through which GMR purposefully directed any of its activities at the forum state, or purposefully availed itself of the privilege of conducting activities within the forum state. GMR has not invoked the benefits and protections of Pennsylvania’s laws. Accordingly, there is no need to consider the other two factors for evaluating specific personal jurisdiction — whether RMLC’s claims arise out of or relate to at least one of GMR’s activities in the forum and whether an exercise of jurisdiction over GMR would otherwise comport with fair play and substantial justice.”
Sitarski later adds in her report (read here) that RMLC’s assertions about the injuries experienced by the Pennsylvania radio stations aren’t enough to establish contact with the state, and even if there was harm, RMLC has not demonstrated that GMR “expressly aimed” conduct at the state.
Sitarski recommends dismissing the case, which would allow the California lawsuit to proceed after a stay
is lifted. The district court judge has to sign off on the recommendation, which comes as Cumulus Media, the nation’s second largest radio company, filed for bankruptcy.
Eriq Gardner
THR
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David Jackson Mueller Testifies In Taylor Swift Trial
MUELLER has steadfastly denied inappropriately touching the singer at the 2013 pre-concert meet-and-greet, and repeated his denial on the stand, admitting that he may have touched her ribs with a closed hand while trying to reach around her posing for a photo.
On the audio files, MUELLER said he recorded a meeting with then-PD/host EDDIE HASKELL (HERSHEL COOMER) and VP/Market Manager BOB CALL but, after sending 19 clips to SWIFT’s lawyers (who said they got only 11 of them), the coffee spill and a water spill on a second computer prevented further clips from being sent. Further testimony involved MUELLER’s assertion that HASKELL told him that SWIFT had jumped into his arms and he held her with his hands on her butt, which MUELLER dismissed as “one of his stories,” but he did not explain under cross-examination why he did not inform CALL about the story.
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Disney, VidAngel Weigh Family-Friendly Filtering Against Copyright Protection in the 9th Circuit
“In the absence of the Family Movie Act, you’ve got these works that are encrypted and you use what appears to be illegal software … to decrypt them,” said one judge of VidAngel’s service.
“I think this one’s a lot easier,” whispered 9th Circuit judge Carlos T. Bea to his colleague Andrew D. Hurwitz, comparing the unlicensed family-friendly streaming dispute between Disney and VidAngel to previous items on their calendar while the attorneys were setting up for their oral arguments on Thursday.
It’s unclear whether those in the room could hear, but the statement was plainly audible in a live stream on the court’s website. “I do, too,” responded Hurwitz with a laugh.
The dispute itself is no laughing matter, however, and has potentially wide-ranging implications for the entertainment industry in regard to fair use. It centers on whether VidAngel’s service that allows users to set filters and stream content infringes upon copyrights held by Hollywood studios in those films. Disney, 20th Century Fox and Warner Bros. argue the service threatens the legitimate streaming market, while VidAngel paints the lawsuit as part of a war on family-friendly content.
The panel, comprised of Bea, Hurwitz and district judge Leslie E. Kobayashi, is currently reviewing whether the district court erred in issuing an injunction that paused VidAngel’s service. “The statute clearly requires that a performance or transmission of filtered content must come from an ‘authorized copy’ of the motion picture,” wrote U.S. District judge Andre Birotte in that decision. “The digital content that VidAngel streams to its customers is not from an authorized copy.”
The appellate arguments were the last on the panel’s Thursday calendar — and the apparent perception that two of the three judges consider this a straightforward case bodes well for the studios.
During the oral arguments, VidAngel attorney Peter Stris told the panel that the case boils down to two key questions: “Does the Family Movie Act authorize VidAngel’s copying and streaming and, if so … should the DMCA be interpreted to gut not only the Family Movie Act but also other well-recognized exemptions to copyright infringement?”
DVDs and Blu-rays contain technological measures that prevent unauthorized copying, and the Digital Millennium Copyright Act lays out specific situations in which circumventing those measures would be legal. Those exemptions are re-evaluated every three years. In 2015, for example, the exemption that allowed documentary filmmakers to lawfully access DVD content pursuant to fair use was expanded to include Blu-rays for the first time.
The Family Entertainment and Copyright Act of 2005, meanwhile, creates a different exemption. It allows “the making imperceptible … limited portions of audio or video content of a motion picture … from an authorized copy of the motion picture.”
So, as Birotte noted, whether VidAngel’s service filters from authorized or unauthorized copies is key here.
“In the absence of the Family Movie Act, you’ve got these works that are encrypted and you use what appears to be illegal software … to decrypt them,” said Hurwitz. “Isn’t that exactly what the DMCA is about?”
Stris said “absolutely not” and argued that, by buying the discs, VidAngel was given permission to access the content and therefore the family movie exemption applies. “You don’t pay $20 for a disc unless you’re going to have the right to watch it,” he said, adding that, in order to watch it, your DVD player has to bypass the access controls. He argues that, after buying a disc, he should be allowed to rip it and filter it without worry of legal consequences. “It’s very dangerous if our interpretation is rejected … I don’t think Mr. Verrilli will be able to explain how, under their interpretation of the Family Movie Act, anyone can ever filter through streaming without the studio’s permission.”
Hurwitz seemed skeptical. “The central issue for me is … you’re not transmitting from the one that you actually bought from them,” he said. “You’re transmitting from a copy that you’ve ripped. … Why is that ‘from an authorized copy’ language not fatal to your claim?”
VidAngel’s interpretation of the statute is that you can make a fixed copy of the original work if it enables filtering, and Stris argued that “Congress didn’t care about the technology and whether it made an intermediate copy as long as it met the other conditions in the provision.”
Donald Verrilli, attorney for the studios, argued that Birotte issued the injunction because he saw the service for what it is. “It’s an unlicensed on-demand streaming service that lacks any legal
justification and is totally unfair to us and to licensed streaming services,” Verrilli said. “The only way you gain access lawfully under the DMCA is by using the means that the copyright owner has authorized for gaining access.”
Verrilli argued the 9th Circuit has already “unambiguously” held in MDY v. Blizzard that consumers can’t circumvent access control measures to view a DVD on a competing platform just because they purchased it.
“You cannot invoke the Family Movie Act to excuse conduct that would be a violation of the DMCA on the ground that you’re violating the DMCA so that you can do what the Family Movie Act would otherwise authorize,” said Verrilli, paraphrasing Sen. Orrin Hatch, who sponsored the bill. “What they’re essentially saying is ‘if we filter, we can stream without a license.'”
Further, Verrilli argued that the studios aren’t inherently against filtering, only illegal filtering. “I think it speaks volumes that the filtering company out there that’s trying to do this in a way that’s consistent with the copyright laws and DMCA, ClearPlay, has filed an amicus brief on our side,” he said. “I think that tells you all you need to know about whether we’re trying to kill off filtering or not.”
Led Zeppelin Asks Appeals Court to Award Fees for "Stairway" Trial Win
“Skidmore continues to advance frivolous arguments and misstate the law,” writes the band’s attorney in the brief.
The “Stairway to Heaven” legal fight has become an even more formidable climb for the 9th Circuit, as Led Zeppelin’s legal team has filed a cross-appeal asking it to consider whose glittering gold should be used to pay for the litigation.
Last summer, a jury found guitarist Jimmy Page did not copy the song’s iconic riff from a 1968 instrumental piece by Spirit called “Taurus.”
Michael Skidmore, the trustee who sued the band on behalf of late Spirit songwriter Randy Wolfe’s estate, wasn’t content to accept the loss. His attorney Francis Malofiy filed a 90-page appeal brief in March, arguing that the jury did not believe the songs were substantially similar because it wasn’t allowed to hear the “Taurus” sound recording. At the time Wolfe created the composition, sheet music was protected by federal copyright law but sound recordings weren’t.
The jury did find, however, that Page had access to the song — and that’s the cornerstone of Malofiy’s second major argument on appeal. He says the jury wasn’t adequately informed about the inverse ratio rule, which essentially lowers the bar for substantial similarity when a high degree of access has been proven.
Led Zeppelin attorney Peter Anderson filed an even more voluminous reply on Friday, arguing that “substantial evidence supports the jury’s verdict and Skidmore’s appeal has absolutely no merit.”
Specifically, Anderson says the argument about jury instructions regarding the inverse ratio rule is moot because Skidmore “did not prove the high degree of access required to trigger that rule” and “no amount of access will establish copyright infringement if, as the jury found here, there is no substantial similarity in protectable expression.”
As to the sound recording issue, Anderson argues, “Skidmore misreads statutes and cases to advocate against black-letter copyright law that the copyright registered in a work protects only the copyrighted work and that federal copyright does not extend to sound recordings created prior to February 15, 1972.”
In addition to replying to Skidmore’s appellate arguments, Anderson is cross-appealing. He’s asking the 9th Circuit to affirm the judgment, but reverse U.S. District Court judge R. Gary Klausner’s order regarding fees. Anderson also represents publisher Warner/Chappell Music, which bore nearly all of the legal costs and fees for the defense — and he wants the appellate court to make Wolfe’s estate pick up the tab.
Klausner in August denied Warner/Chappell’s request for an award of $800,000 in fees and costs, finding that Skidmore’s lawsuit was not frivolous or objectively unreasonable — despite litigation misconduct by his attorney.
Anderson says Klausner erred in treating that misconduct with equal weight as the Fogerty factors, a set of standards that were established for evaluating fee awards in copyright cases in a 1994 U.S. Supreme Court case involving singer John Fogerty.
“The District Court — without considering whether its ruling furthered the purposes of the Copyright Act — identified the following Fogerty factors: ‘(1) “the degree of success obtained on the claim”; (2) “frivolousness”; (3) “motivation”; (4) “objective reasonableness of factual and legal arguments”; and (5) “need for compensation and deterrence,”‘” writes Anderson. “However, the District Court erred on the law and the record, and all of the Fogerty factors favor awarding attorneys’ fees.”
Anderson argues that it was unreasonable for Skidmore to sue based on “the shared presence of five pitches of the chromatic scale” when it’s fundamentally true that “no one owns musical scales.”
Further, Anderson argues that “motivation” should have been a strike against Skidmore because Wolfe in his lifetime did not sue Led Zeppelin, and neither did any of his heirs until a 2014 Supreme Court case eliminated the defense of laches in copyright claims. That case, Petrella v. Metro-Goldwyn-Mayer, opened the floodgates for damages claims that were previously time-barred as long as they were filed within the three-year statute of limitations. Here, Led Zeppelin became a target by releasing a remastered version of the band’s album IV containing “Stairway” in 2014.
Finally, Anderson argues that treating litigation misconduct as an unofficial sixth Fogerty factor dilutes the severity of the act.
“Defendants respectfully submit that the District Court’s Judgment and Amended Judgment should be affirmed and that the District Court’s Order denying Warner/Chappell’s motions for attorneys’ fees and additional costs should be reversed with instructions to grant those motions,” writes Anderson. “In addition, and inc
luding because Skidmore continues to advance frivolous arguments and misstate the law … defendants should recover their costs and attorneys’ fees on appeal.”
Most Important Documents Filmmakers must have with Entertainment Attorney Mark Litwak
Judge Explores Boundaries of Authorship With Nods to ‘Star Wars,’ Spike Lee and ‘Love Actually’
Move over Get Out, The Handmaid’s Tale and Kendrick Lamar. A California federal judge has just thrown his hat into the ring for one of the most thought-provocative pieces of authorship this year. The topic of U.S. District Court judge Charles Breyer’s latest decision is itself authorship, and with a crazy number of pop culture references, he explores a situation wherein game players become creative gods and the attendant implications.
What follows is a summary, although the full opinion is a highly recommended read.
Fifteen years ago, Blizzard Entertainment came out with a computer strategy game titled Warcraft III: Reign of Chaos, full of humans, orcs, elves, and zombies fighting for dominance. What made this game even more popular for fantasy fans was the fact that Blizzard enabled players to create “mods,” featuring new settings, characters, storylines, and rules. At the time, Blizzard didn’t require players via an end user license agreement to assign rights back to the company. Blizzard only prohibited the commercial distribution of mods on a stand-alone basis.
“Some mods proved more contagious than others,” writes Breyer. “A high-school student named Kyle Sommer, operating under… his online moniker ‘Eul,’ was Patient Zero for one of the most infectious: Defense of the Ancients a/k/a ‘DotA.’ His mod pitted two teams of heroes against one another, each trying to destroy the other’s ‘central structure’ while defending one’s own.”
After working on DotA for two years, Eul went to college and with other things to do, he declared on a community web forum that from that point forward, DotA would be open source. All the teenager requested was some credit.
Thus came new strains of DotA, including DotA Allstars, developed by players who called themselves “Meian” and “Madcow.” In turn, came other contributors including “Neichus,” “Syl-la-ble,” “Zetta,” “Terrorblaze,” and “Guinsoo.”
Then, there was Abdul Ismail, a.k.a. “Icefrog,” who took a leadership role on the development of this universe and was hired in 2009 by Valve Corporation after it began work on Defense of the Ancients 2. Eul also took a job with Valve and for what the judge calls a “handsome price,” both assigned rights to their creations to Valve.
Over time, the gaming market shifted.
“As any millennial could tell you, players no longer need a computer or console to enjoy video games,” writes Breyer. “The market for video games built specially for smart phones has exploded in recent years.”
Two companies — uCool and Lilith Games — came in. They are the defendants in this case because in February 2014, Lilith released a smart-phone game called DotA Legends while uCool released its own game titled Heroes Charge.
Blizzard and Valve are now suing for copyright infringement of DotA 2 with uCool challenging whether the plaintiffs really own rights.
That’s the background — but it’s Breyer’s discussion of the legal issues that’s equally sure to become a classic.
“With literally hundreds of versions of DotA and DotA Allstars floating around in the ether, the Court confronts quite the copyright conundrum,” he writes. “To sort through things, it must first determine just what, exactly, is the work(s) at issue here. Second, it must determine who is the relevant author(s). Third and finally, the Court will consider just what result(s) flows from the answers to those questions.”
In figuring out the first part, Breyer considers whether versions of the game are a unitary work or a collective work. An example of a unitary work is a movie. There may be
“inseparable and interdependent parts” like direction, acting performances, cinematography, and costume design, but all of that is merged into a whole. In contrast, an example of a collective work is a magazine. A publisher might have the privilege of reproducing and distributing the collected contributions, but the authors of each article can retain independent copyrights to their respective works.
uCool argued that DotA Allstars was a collective work, pointing to the many players who took the most popular heroes from DotA to arrange them for a new game.
“But by that logic Star Wars: The Force Awakens (Walt Disney Studios 2015) would be a collective work because it arranged the most popular Star Wars heroes, settings, and one-liners into a new movie,” counters Breyer. “The same might be said of Love Actually (Universal Pictures 2003), given its all-star cast and web of different storylines. But Castaway (20th Century Fox 2000), with its solitary protagonist and even more solitary plot, would presumably be a unitary work. None of this can be right, and the Copyright Act does not suggest otherwise.”
Breyer adds that DotA Allstars is nothing like The New Yorker, The Beatles Anthology or Encyclopedia Britannica.
“Heroes do battle in teams on fictional battlefields—together,” he notes. “They do not stand alone in self-contained bubbles. So like Star Wars: The Force Awakens and Love Actually, each version of DotA Allstars is no collective work. To the contrary, each version is a unitary derivative work based on earlier versions DotA and DotA Allstars.”
Next question: Who are the authors?
For the answer, Breyer turns to a rather famous (at least in legal circles) opinion concerning Malcolm X. When that 1992 film came out, an individual named Jefri Aalmuhammed came forward to say that he was an expert on the 1960s Civil Rights hero and that he was hired by Spike Lee for input. Aalmuhammed claimed to have rewritten several passages of dialogue that appeared in the film. Thus, he claimed Malcolm X was a “joint work” and that he was a co-author entitled to a portion of the copyright.
The 9th Circuit Court of Appeals disagreed with Aalmuhammed because joint works are “intended by everyone involved with it to be a unitary whole,” and in the case of Malcolm X, Spike Lee wasn’t bound to accept his suggestions. It was the director who was deemed the ultimate mastermind.
“The record contains ample evidence that Eul, Guinsoo, and Icefrog were the masterminds behind their respective versions of DotA and DotA Allstars,” writes the judge. “uCool concedes as much with respect to Eul… Guinsoo and Icefrog are no different, legally speaking. They, like Spike Lee, took suggestions from others—some elaborate, some less so—and decided which ones made the cut. So just as Spike Lee was the author of the work at issue in Aalmuhammed, a reasonable jury could (and perhaps must) conclude that Eul, Guinsoo, and Icefrog are the authors of the various works at issue here.”
Breyer then puts this together by saying that as long as Valve validly acquired rights from player-creator “masterminds” like Eul and Icefrog, it is entitled to own the work that was allegedly copied by uCool in its smart phone version of the game. But what about all the other players who made contributions? uCool attempts to argue that Valve must demonstrate ownership of particular heroes and other visual elements, but the judge disagrees and turns again to the Malcolm X case to explain why it’s not necessary to “chop up” copyrights in this fashion.
Actually, Breyer comes up with this scenario.
“Spike Lee assigns his copyright in Malcolm X to, let’s say, Warner Brothers,” the judge imagines. “Disney comes along and makes a cartoon version of the movie called Malcolm ABC. Warner Brothers sues, claiming Malcolm ABC infringes its copyright in Malcolm X. Disney responds that Aalmuhammed, not Spike Lee, wrote the scene chronicling the protagonist’s Hajj pilgrimage, which appears in both Malcolm X and Malcolm ABC. And under Aalmuhammed and Effects Associates, Inc. v. Cohen, Aalmuhammed owned a copyright in that scene. Warner Brothers, the argument goes, does not own the Hajj scene, and so cannot recover for Disney’s copying of that piece of Malcolm X (nor for its copying of any scene, character, or other cinematic element dreamed up by anyone not named Spike Lee).”
“Winning argument?” the judge asks. “No, and it was a loser even before Garcia v. Google,” writes Breyer, referencing the Innocence of Muslims case where an actress’ attempt to own her performance was ultimately rejected. “The whole point of Aalmuhammed’s contributions was to integrate them into Malcolm X, and so they must be understood as parts of the movie to protect copyright in the movie. Copyright in movies, comic books, and video games would be worthless otherwise.”
So then the question becomes whether Valve validly acquired Eul’s and Icefrog’s copyrights given that Blizzard originally put limitations on commercial distribution of mods. Breyer seems intrigued here, but for whatever reason, uCool didn’t argue it. The judge deems the argument thus waived. Too bad.
But how about the possibility that Eul abandoned his copyrights when he made his version “open source”? Drumroll, please… That question appears to be going to a jury.
Here’s how Breyer sums everything up:
“At bottom, uCool asks why Valve should get to capitalize on others’ ‘free work.’The answer is because Valve, if it prevails, will have proved that it acquired copyrights from people who spent years creating, growing, and (yes) masterminding much of the DotA universe. Help along the way does not drain those efforts of their considerable value. If helpers feel cheated, they may come to court. But theirs is not uCool’s case to make.”
Eriq Gardner:
THR
C-Murder Ordered to Pay More Than $1 Million to Slain Teen’s Family
A judge in Louisiana has ordered Corey Miller, the one-time No Limit rapper known as C-Murder who is serving a life sentence for killing a teenag
er at a nightclub, to pay the victim’s family more than $1.1 million.
The New Orleans Advocate reports Jefferson Parish Judge Glenn Ansardi of the 24th Judicial District Court found Miller — younger brother of No Limit founder Master P – liable in a 2013 civil proceeding for the killing of 16-year-old Steve Thomas. On Wednesday (May 10), he ordered Miller to pay $500,000 to each of Thomas’ parents and $150,000 to account for the victim’s suffering.
Authorities in Louisiana believe rapper C-Murder recorded and released a rap song while in prison.
The Advocate reports that the rapper, whose real name is Corey Miller, released a video for a new single, “Dear Supreme Court,” last week.
The rapper is serving a life sentence at Louisiana State Penitentiary at Angola for killing a 16-year-old in a nightclub in 2002.
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The video for “Dear Supreme Court/Under Pressure” features an actor in a red baseball cap and sunglasses playing Miller in partial close-ups. Other than a quick exterior of a penitentiary, the setting is a cell, though it’s actually just a set.
The Louisiana Department of Corrections began looking into how Miller managed to record material from behind bars in January, when reports of a new album first surfaced, spokeswoman Pam Laborde said Tuesday.
Miller was questioned by prison officials and claimed not to have recorded anything while at Angola. He insisted that any material released by his record company was recorded before he was incarcerated, Laborde said.
In the lyrics and video for “Dear Supreme Court” Miller professes his innocence and asks the state’s high court to release him, alleging that his trials were rigged and jurors were paid off. At one point, he imagines that if he were released, he could persuade inner-city criminals to lay down their guns.
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The video includes shots of people holding signs in front of the state Supreme Court building that say “Justice” and “Free C. Miller.”
Miller has a formal request for a new trial pending before the Supreme Court. That request, which alleges a juror was pressured to vote to convict him and says two new witnesses will testify that Miller wasn’t involved in the killing, was denied by a state appeals court in late 2015.
Miller was convicted in 2003 for shooting 16-year-old Steve Thomas during a brawl at a Harvey nightclub, but a state district judge ruled prosecutors withheld information about the criminal background of a witness and granted Miller a new trial. He was convicted again by a 10-2 jury verdict in 2009.
Cast and crew saying or implying that War Dogs is a “true story” is enough to keep a false advertisement lawsuit against Warner Bros. alive, a Florida federal judge ruled Wednesday.
Efraim Diveroli, a former arms dealer portrayed by Jonah Hill in the 2016 film, is suing Warners for false advertising and unfair competition, among other claims.
Instead of optioning Diveroli’s manuscript, Once a Gun Runner, Warner Bros. enlisted Guy Lawson, a Rolling Stone writer who had interviewed him in prison and written a magazine feature that was expanded into a book. The ex-con takes issue with how he was portrayed and how the film was promoted.
“The gravamen of the Amended Complaint is that Warner grossed more than $85 million by promoting War Dogs as Diveroli’s ‘true story’ when it was not the true story,” writes U.S. District Judge Mary Scriven. “The Amended Complaint identifies a number of allegedly false advertisements, including statements in movie trailers, social media posts, and promotional interviews with War Dogs’ director, Todd Phillips, screenwriter Stephen Chin, and stars Jonah Hill, Miles Teller, and Bradley Cooper.”
Warners, meanwhile, argued that the statements regarding the truth of the story aren’t actionable because they’re protected by the First Amendment.
Scriven found that Diveroli plausibly alleged in his amended complaint that the comments are “commercial speech” and therefore subject to the Lanham Act, which prohibits false advertising in connection with commercial advertising or promotion. The judge found that the statements were promotional, referred to a specific product and that Warners had an economic motivation for making them.
“Warner knew that representing the story as ‘true’ would induce consumers to see War Dogs,” writes Scriven. “Although movies are works of artistic expression and must be protected, ‘they are also sold in the commercial marketplace like other more utilitarian products, making the danger of consumer deception a legitimate concern that warrants some government regulation.'”
The studio also argued that Diveroli failed to allege facts necessary to state a false advertising claim, but Scriven disagrees, noting that, while Warner Bros. is right to insist the statements be considered in their full context, the argument is not well-suited to a motion to dismiss.
“[A]part from advancing that argument, Warner neglects to address the relevant question: whether the statements, read in their full context, falsely or misleadingly portray War Dogs as a true story,” writes Scriven. “Warner implies that they do not, but that conclusion calls for a fact-intensive inquiry and that the Court draw inferences in Warner’s favor, neither of which is appropriate on a motion to dismiss.”
The decision isn’t a total loss for the studio, though. The judge found that allegations involving the War Dogs website and Facebook page and comments Lawson made while promoting his own book “are not, in and of themselves, actionable.”
(The full order is posted below.)
were false or misleading, the accuracy of the movie is not relevant to the issue of materiality.
3. Zone of interests and proximate causation
Warner next argues that the Amended Complaint omits the necessary allegations of injury and causation. (Dkt. 89 at 22-23) In Lexmark International, Inc. v. Static Control Components, Inc., the Supreme
Court held that, in order to state a false-advertising claim under the Lanham Act, a plaintiff “ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising . . . .” 134 S. Ct. 1377, 1391 (2014).
With respect to injury, the Amended Complaint alleges that Warner’s advertising has caused “loss of goodwill” and “loss of sales.” (Dkt. 78 at ¶ 113) Those allegations are similar to the allegations in Lexmark, and Warner cites no authority to support its contention that Plaintiff must allege in “detail” how its goodwill was damaged or how its sales declined. (Dkt. 89 at 22); Lexmark, 134 S. Ct. at 1393 (explaining that the counterclaimant’s “alleged injuries – lost sales and damage to its business reputation – are injuries to precisely the sorts of commercial interests the [Lanham] Act protects”). Warner may instead seek discovery on the nature and extent of Plaintiff’s damages. With respect to causation, Lexmark instructs that the necessary showing is present when “deception of consumers causes them to withhold trade from the plaintiff.” Lexmark, 134 S. Ct. at 1391. In contrast to the facts at issue in Lexmark, which involved a claim by a downstream supplier, Plaintiff alleges that it is a direct victim of Warner’s advertising because
War Dogs
diverted book sales from Plaintiff. In particular, the Amended Complaint alleges that “consumers who desire to learn the true story are most likely to purchase a ticket to the movie, after being bombarded with promotional material, rather
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than purchasing Diveroli’s memoir.” (Dkt. 78 at ¶ 75) Accordingly, Plaintiff plausibly alleges that its injuries “flow[ ] directly” from Warner’s advertising. Lexmark, 134 S. Ct. at 1393. Again, whether Plaintiff will actually be able to prove its theory is a separate question that is not appropriate for resolution on a motion to dismiss.
C. Florida’s Anti-SLAPP Statute
At the conclusion of the motion to dismiss, Warner asserts that Plaintiff’s complaint falls within Florida’s anti-SLAPP (Strategic Lawsuits Against Public Participation) statute, Fla. Stat. § 768.295. (Dkt. 89 at 24-25) As a result, Warner contends that “if and when” the Court grants its motion to dismiss, Warner will file a motion for an award of fees and costs. (Id. at 25); see Fla. Stat. § 768.295(4) (“The court shall award the prevailing party reasonable attorney fees and costs incurred in connection with a claim that an action was filed in violation of this section.”). Currently, Warner does not appear to ask for any relief under the anti-SLAPP statute. For instance, Warner does not contend that resolution of this motion is evaluated under a summary-judgment standard and it does not request an expedited hearing. See Fla. Stat. § 768.295(4) (providing that a defendant may file a motion for summary judgment seeking a determination that the anti-SLAPP statute has been violated). The Court therefore declines to address the application of Fla. Stat. § 768.295 at this juncture. Compare Royalty Network, Inc. v. Harris, 756 F.3d 1351, 1357-62 (11th Cir. 2014) (holding that verification requirement imposed by Georgia’s anti-SLAPP statute did not apply in a diversity case), and Abbas v. Foreign Policy Grp., LLC, 783 F.3d 1328, 1337 n.5 (D.C. Cir. 2015) (holding that attorney’s fees were not available under Washington D.C.’s anti-SLAPP statute), with Edward Lewis Tobinick, MD, 848 F.3d at 944-45 & n.8
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(applying California’s anti-SLAPP statute, which allowed a special motion to strike, where the appellants waived their challenge to its application in the district court), and Adelson v. Harris, 774 F.3d 803, 809 (2d Cir. 2014) (holding that mandatory fee shifting provision in Nevada’s anti-SLAPP scheme applied in federal court).
D. Consideration of Exhibits
Warner filed a separate request for the Court to consider twenty-two exhibits in support of its motion to dismiss, which are designated as Exhibits A through V. (Dkts. 90, 91) After the parties conferred, Warner withdrew its request as to Exhibits F through H, and Plaintiff stipulated to the Court’s consideration of Exhibits A and N through V (Dkt. 96), which are referred to, excerpted in, or attached to the Amended Complaint or original complaint, and which are central to Plaintiff’s claims. (Dkt. 91 at ¶¶ 4, 17-25; Dkt. 78 at ¶¶ 29-30, 55, 60, 62-67, 70); see Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) (holding that documents may be considered on a Rule 12(b)(6) motion if they are undisputed and central to the plaintiff’s claims). The remaining exhibits—Exhibits B through E and I through M—include documents from Diveroli’s criminal and civil cases, a U.S. Congressional committee report about Diveroli’s company, and a related news article. (See Dkt. 91 at ¶¶ 5-8, 12-16) Although Warner asserts that these exhibits are relevant to Diveroli’s “misconduct and notoriety” (Dkt. 90 at 5), the Court declines to consider the documents because Diveroli’s misconduct and notoriety are not relevant to the motion to dismiss. For its part, Plaintiff submits screenshots from four websites that offer movies on-demand and in which
War Dogs
is described as a “true story.” (Dkt. 98) Plaintiff contends that these descriptions were “located after filing the Amended Complaint,” and that they
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Writers Guild Strike Authorization Meetings Continue With Beverly Hills Confab
The Wednesday night meeting was Guild members’ last chance to vote in person, but online voting continues through midday Monday.
Another day, another meeting or two — and at least one more traffic jam, this one in Beverly Hills as writers flooded into the Beverly Hilton in Los Angeles Wednesday night for the third of three in-person meetings to vote on a strike authorization.
By 7 p.m., the meeting’s scheduled start time, the hotel’s self-parking garage
was filled to capacity, forcing drivers into a valet parking scrum. But for those who didn’t brave the get-togethers — one in Universal City Tuesday, the Beverly Hills meeting today and a New York meeting that ended several hours ago — online voting was available and will be through midday Monday.
The result of all this will surely be a strike authorization for the Guild, which it will symbolically bring to the table when now-suspended negotiations with the studio alliance resume Tuesday.
Whether those talks will result in a deal before the current contract’s scheduled expiration on May 1 is very much uncertain. The bargaining parties were $350 million apart when the matter was last assayed, and although both sides are understood to have moved since, it seems likely that a gulf of as much as $300 million separates their respective positions.
That large divide, if accurate, will complicate efforts to reach an agreement in the five business days between resumption of talks and contract expiration. In the absence of a successor agreement, the Guild has said that it will immediately go on strike. For that reason industry participants and even investors await the results of the strike authorization vote and subsequent negotiations with nervous anticipation.
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NBCUniversal Sued by ‘Brooklyn Nine-Nine’ Extra Who Says He Was Taunted by Caterer
The actor says he wasn’t served because of his race.
A Brooklyn Nine-Nine extra says a caterer refused to serve him an omelet on-set and taunted him because he’s Asian, according to a complaint filed Tuesday in L.A. County Superior Court.
Kwon Kang says he was dressed in costume as a police officer when he tried to order breakfast on-set in January 2016, and a Limelight Catering employee told him he “refuses to serve food to police officers because his brother was killed by a police officer.”
He says he thought the man was kidding, so he asked again. That’s when Kang says other chefs and crew members started laughing at him, leaving him humiliated.
“Soon thereafter the crew members stopped laughing and Limelight’s employee told the plaintiff he will serve him food now,” writes attorney Jamie Jiyoon Kim in the complaint. “Despite the oppressive and discriminative behavior by Limelight’s employee, Plaintiff was thankful and he expressed his gratitude.” But, Kang says, he still wasn’t served and became even more embarrassed.
According to the complaint, the employee served other background actors who were wearing the same police uniform, and Kang was the only Asian among them.
He is suing Limelight for assault, racial discrimination and negligent infliction of emotional distress, and NBC for failure to maintain a harassment-free environment. He’s seeking $500,000 in punitive damages plus lost earnings.
A letter from NBC to Kang is attached to the suit. It says the company investigated the incident after the actor brought it to the attention of SAG-AFTRA and was unable to substantiate his allegations of verbal harassment or inappropriate conduct but it used the complaint as an opportunity to remind crew members of policies prohibiting discrimination.
NBC and Limelight did not comment on the suit, which is posted in full below.
Ashley Cullins
ashley.cullins@thr.com
@AshleyCullins
Blake Shelton Settles Defamation Fight With In Touch Weekly
The deal resolves a dispute over a 2015 cover that said the singer had hit rock bottom.
Country singer Blake Shelton and In Touch Weekly have reached a settlement in the defamation fight over a Sept. 28, 2015, cover story headlined “The Real Story: REHAB for Blake.”
Details of the settlement have not been released, but Shelton’s attorney Larry Stein confirmed Thursday that the singer and magazine have resolved the situation amicably.
Shelton cleared a tough legal hurdle last April, when the court found the magazine’s claims weren’t protected speech. Attorneys for In Touch had argued that Shelton’s suit was barred by California’s anti-SLAPP statute, which aims to bri
ng an early end to lawsuits that arise from constitutionally protected activity like free speech.
California federal judge Christina A. Snyder found the headline alone supported a claim for libel per se. “A reasonable person viewing the In Touch headlines and sub-headlines –– which were located 30 pages away from the Article –– might well have concluded that Shelton had, in fact, entered ‘REHAB’ after ‘his friends begged him to stop joking about drinking & get help,'” Snyder wrote.
As a public figure, Shelton faced an uphill battle because he would have to prove the magazine published the story with “actual malice” in order to succeed on his defamation claim — and In Touch argued his drunken tweets made him libel-proof in this instance.
But beating the anti-SLAPP motion was a strong sign that the court believed Shelton could prove In Touch either knew the claims were false or acted with reckless disregard of the truth. In fact, Snyder, in denying the motion to strike the complaint, found it was undisputed that the magazine ran the headline without believing the singer was actually in rehab.
Ashley Cullins
ashley.cullins@thr.com
@AshleyCullins
Roman Polanski’s Attorney Skewers L.A. Justice System in New Filing
Director Roman Polanski isn’t giving up on his attempt to find out if U.S. prosecutors intend to put him behind bars if he were to return to the States — and his lawyer isn’t mincing his words.
The 83-year-old Oscar winner asked the court to force prosecutors to state on the record whether they believe he has served his time for the 1977 rape of a 13-year-old girl. Polanski contends that he fled decades ago because he got word that the late Judge Laurence Rittenband was going to increase his sentence from three months of psychiatric evaluation to five decades behind bars. L.A. Superior Court Judge Scott Gordon earlier this month denied this request, finding that Polanski isn’t entitled to have his demands heard by the court while he stands in contempt of it.
In a motion to reconsider filed Friday, attorney Harland Braun called the order “morally incoherent, legally illogical, and factually deceptive.”
“Rather than the 90 days promised Mr. Polanski, this Court threatened Mr. Polanski with up to 50 years in state prison and deportation,” writes Braun. “If a defendant flees because of an illegal judicial threat, that threat should be removed before the defendant is expected to return to court.”
The attorney argues that Gordon failed to mention in his decision the reason Polanski fled because it eviscerates his theory for applying the doctrine of fugitive disentitlement, which holds that a fugitive from justice can’t seek relief from the judicial system whose authority he or she is evading.
“The Court should consider why Mr. Polanski was not charged with unlawful flight by either the State or federal authorities,” writes Braun. “Mr. Polanski was as justified in fleeing this Court’s illegal conduct as he was to flee the Germans who invaded Poland.”
Braun argues that the only question before the court is a simple one: What was Polanski promised 40 years ago? He says declarations of defense counsel, the victim’s lawyer and former Deputy District Attorney Roger Gunson all show Polanski’s 43 days of psychiatric evaluation were intended to have satisfied his total custody time. Gunson’s sworn testimony is currently sealed, and Braun has filed a motion to make that public.
“Once the promise is established, this case solves itself,” writes Braun — noting that, while 43 days had been deemed sufficient, Polanski later served more than nine months in Swiss custody while authorities were deciding whether or not to extradite him. “The Court has no legal alternative but to give Mr. Polanski credit for his total custody time in California and Switzerland.”
Should that happen, Braun argues that “simple math” shows Polanski has already served more time than the 90 days he was promised. (Read the motion in full below.) He also says that judges asking prosecutors, “What is the people’s position?” is a commonplace occurrence in criminal courtrooms, and there is nothing strange or unprecedented about Polanski wanting that question answered in his case.
“What if the People represented to the Court that Mr. Polanski owes no more custody time?” asks Braun. “Does that not simplify this proceeding?”
A hearing on the motion to unseal Gunson’s testimony is currently set for April 25, which will likely also be the date the motion to reconsider is heard.
The actor claims that the studio intentionally concealed ‘Demolition Man’ profits and is seeking to “end” bad accounting practices on Warners’ part “for all talent.”
In the 1993 science-fiction film Demolition Man, Sylvester Stallone’s character is brought out of a decades-long state of cryopreservation to pursue a nemesis. The actor himself has now wakened from a slumber of a different kind to take on Warner Bros. over its accounting of profits on the film.
On Wednesday, through his loan-out company Rogue Marble, Stallone filed contract and fraud claims against the studio. In a complaint lodged in Los Angeles Superior Court, he alleges that the participation statement doesn’t make sense while demanding a fuller accounting on Demolition Man, which also starred Wesley Snipes and Sandra Bullock. The film made about $58 million upon its theatrical release and much more in home video sales.
In taking on Warner Bros., Stallone is fighting the same studio that distributed 2015’s Creed, which earned him an Oscar nomination. But the 70-year-old actor believes the time is right and is making a stab at doing something about “Hollywood Accounting” with the stated intention of helping others in the creative community.
“The motion picture studios are notoriously greedy,” states the complaint. “This one involves outright and obviously intentional dishonesty perpetrated against an international iconic talent. Here, WB decided it just wasn’t going to account to Rogue Marble on the Film. WB just sat on the money owed to Rogue Marble for years and told itself, without any justification, that Rogue Marble was not owed any profits. When a representative of Rogue Marble asked for an accounting, WB balked and then sent a bogus letter asserting the Film was $66,926,628 unrecouped. When challenged about this false accounting, it made a double-talk excuse, then prepared an actual profit participation statement for the same reporting period, and sent a check for $2,820,000 because the Film had in fact recouped its deficit.”
According to the lawsuit, Stallone got 15 percent of defined gross once the picture earned $125 million. When Demolition Man earned more than $200 million, his take would escalate to 17.5 percent, and when it surpassed $250 million, his profit participation would climb to 20 percent.
Demolition Man, states the complaint, achieved at least $125 million, so Stallone asserts he’s entitled to at least 15 percent.
Stallone says that after 1997, he got no profit participation statements until his agent reached out to Warners in 2014 to inquire.
In January 2015, he received a short summary which noted an alleged deficit for the film and stated that no payment was due. Stallone’s company then questioned the validity of numbers “because they did not make any sense.” Soon, a second statement came along with a $2.8 million check. It was only one page. There wasn’t much detail.
“Rogue Marble alleges on information and belief that it is owed additional contingent compensation on the Film,” states the complaint.
The actor is seeking an unknown amount of restitution for the alleged contractual breach and also targeting much greater damages with a fraud claim. Stallone will be attempting to support the fraud claim by showing that the studio misrepresented and intentionally concealed facts. However, as the case moves forward, he’ll likely need to demonstrate why such a claim isn’t duplicative of the asserted contract breach.
Somewhat unusually, Stallone is also bringing a cause of action that alleges Warner Bros. has engaged in unfair business practices. The complaint characterizes the studio’s conduct as “unscrupulous, unethical and offensive, and causes substantial injury to consumers” and “threatens or harms competition because other studios (that compete with WB) have their own agreements with profit participants and account using their own accounting methods. … WB attempts to keep its accounting methods hidden from competitors and the public at large because revealing such methods will have an impact on competition.”
Besides money, the actor wants injunctive relief. The complaint states, “Mr. Stallone is entitled to, among other things, a full accounting, an explanation of how this practice came to be, interest, damages, and an end to this practice for all talent who expect to be paid by WB for the fruits of their labor.”
We’ve uploaded a full copy of the complaint. Stallone is represented by attorney Neville Johnson.
Warner Bros. had no comment.