Nurturing culture to build economies and communities

A newly released briefing by Professor Ann Markusen of the University of Minnesota Hubert H. Humphrey Institute of Public Affairs highlights the importance and influence of a creative arts community serves as a tool to develop a region’s broader economic growth.

The paper published by the Ewing Marion Kauffman Foundation highlights the opportunities created by encouraging a creative arts economy to help develop a more robust economic environment. Among the key findings of the report:

City appreciation for cultural entrepreneurship has grown following economists’ and city planners’ documentations of the roles that artists play in the local economy. Many artists and designers contribute to the city’s economic base, bringing in income from elsewhere by exporting their creations—books, recordings, visual art—and by travelling to perform elsewhere. Pools of artists attract and anchor cultural industry firms in fields like publishing, advertising, music, design, and architecture. Artists often work on contract in other industries to design and market products and services (visual artists, musicians, and writers) and improve employee relations (actors). …

Despite heightened interest in fostering artists/designers as innovators and entrepreneurs, most cities have found that traditional policies and services don’t work for artists. … Artists are many times more likely to be self-employed than are scientists and engineers. Some 48 percent of artists reported in the 2000 Census long form that they are self-employed. … Overwhelmingly, surveys of artists underscore that they need and want to develop business skills. Many organizations—some nonprofit, some linked to higher educational institutions, some for-profit—offer artist-tailored entrepreneurial training.

The work by Professor Markusen reinforces many of the themes discussed in the recent  NKU Chase Law + Informatics Institute program: Success Strategies for the Professional Artist in the Digital Age. That program helped artists and their attorneys learn to navigate self-promotion, online contracting, sophisticated financing, and a host of challenges that pull the artist away from the creative process and into the fast-paced world of digital commerce. A webcast is available of the program.

Group shot of panelists at Success Strategies for the Professional Artist in the Digital Age event

“With social media gaining in popularity, more people are becoming content creators, and there is great opportunity to share creative works, but many are now becoming aware that there is real value to maintain some control over what is shared,” commented Terry Hart, director of legal policy, Copyright Alliance.

“Artists have long been recognized as commodities in our communities, driving innovation and adding color to our environment,” shared Sarah Corlett, director of creative enterprise, ArtsWave SpringBoard. “It has become increasingly more important that our creative sector has opportunities to turn their passion into profit through education and training. This improves the likelihood that these individuals will stay in our region and continue to make this an even better place to live.”

Professor Markusen, building on her earlier scholarship concludes in the report that for cities, “economic development strategy/practice is increasingly turning to occupational approaches, asserting the significance of human capital and entrepreneurship in supplementing traditional industry-targeted programs.”

But the creative artist panelist had some words of caution.  Dayton School of Law professor Dennis Greene reminded audience members that “the devil is in the details.”  Jennifer Kreder noted “when art is created in more traditional visual medium and then digitized several issues will come up” to which Stephen Gillen explained that “there is no ‘one size fits all answer'” for how best to contract for rights.

The Kauffman Foundation report provides a strong reminder of what cities can do to improve the likely success of artists and entrepreneurs in their communities. These are partnerships well worth promoting.

Success Strategies for the Professional Artist in the Digital Age was presented by the NKU Chase Law + Informatics Institute and sponsored by the ABA Business Section Cyberspace Law Committee, Copyright AllianceArtWorks SpringBoardKentucky Arts Council, and Frost Brown Todd, this program featured expert attorneys and filmmakers who discussed a range of business and legal practices.

 Frost Brown Todd

ABA Cyberspace Law Committee
Springboard
KAC
Copyright Alliance

How Google Book Search transformed from impossible to inevitable

English: Google Digitization signs are all ove...

English: Google Digitization signs are all over the Michigan engineering library. (Photo credit: Wikipedia)

In a widely reported copyright fair use decision, Judge Denny Chin ruled that the Google Books program constituted fair use, denying claims of the Authors Guild that the scanning of 20 million library books and posting snippets of those works online infringed the rights of authors.

The litigation history reflects the transformation that has taken place on the internet in the past decade. In 2004 Google entered into an agreement with several universities, beginning with University of Michigan.

Google began the process of digitizing books at the nation’s great libraries, starting at the University of Michigan, the alma mater of company co-founder Larry Page. “Even before we started Google, we dreamed of making the incredible breadth of information that librarians so lovingly organize searchable online,” said Page. A 2005 lawsuit resulted in three years of negotiation and a proposed settlement in 2008. That settlement collapsed among antitrust concerns and fairness of the representatives of the plaintiffs’ sub-classes.

As the Google Books program evolved, two discrete projects operated. In the Partner Program “works are displayed with the permission of the rights holder.” The rights holders had the ability to opt out of the scanning, but in 2011 the Association of American Publishers settled with Google. According to the decision, “As of early 2012, the Partner Program included approximately 2.5 million books, with the consent of some 45,000 rights holders.” The participation suggests an industry voting with its feet.

Under the publisher agreement, Google stopped displaying ads with the publisher’s books. In turn, the publishers provide Google with the books. This settlement, even more than the two district court decisions, effectively ended the dispute – leaving the two lawsuits as mop-up activities.

In the HathiTrust litigation, Judge Harold Baer determined Google’s Library Project partners who comprised the HathiTrust partnership were entitled to fair use protection for the digitization of the 20,000,000 volumes copied and used by the libraries. The decision highlighted the benefits to visually-impaired students and researchers who had access to content not previously available through audio readers or braille, the benefits of digital search functionality, and the importance of protecting the library collections from physical harm and erosion.

In both opinions, the courts highlighted the new research opportunities created by the digital database:

Mass digitization allows new areas of non-expressive computational and statistical research, often called “textmining.” One example of text mining is research that compares the frequency with which authors used “is” to refer to the United States rather than “are” over time. Quoting the brief of the Digital Humanities amicus, “it was only in the latter half of the Nineteenth Century that the conception of the United States as a single, indivisible entity was reflected in the way a majority of writers referred to the nation.”).

The Google decision followed the same path, highlighting the benefits of digital search, the limits placed on commercial exploitation by Google, and the pro-market effects agreed to by the publishers. “Google Books expands access to books.” With this simple sentence, the court highlights the essence of the eight years of litigation. In looking at the transformative nature of the fair use test, the court explained, “Google Books does not supersede or supplant books because it is not a tool to be used to read books.”

The court does not discuss the tremendous value the Google Books program benefits the search engine, speech recognition and other algorithms operated by Google. It also dismisses the intermediary copying as a necessary function to enable the research and archival function to be exploited. But it does highlight that Google “does not run ads on the About the Book pages that contain snippets” and that Google “does not engage in the direct commercialization of copyrighted works.”

Google’s settlements and decisions not to commercialize the Google Books program likely tipped the scales with the publishers and may have strongly influenced the courts. Unlike Judge Baer, Judge Chin does not even discuss the potential to license the digitized database to Google. Baer rejected the potential to license the database as speculative. Moreover, since new works are added by voluntary participation with the publishers, the licenses for new works are included.

The decision appears a simplistic fair use summary that could lead casual observers to wonder why it required eight years of litigation. But changes to the conduct of both parties are what really led to this simple decision. Google adapted its behavior to limit its commercialization of the works. Publishers shifted their position from one of demanding opt-in, ex ante control to recognizing that the opt-out partnership met their needs. Eight years of experience did not produce significant evidence of authors being harmed as a result of snippet-searches replacing library purchases of academic texts.

In addition, the role of digital texts has changed. The Amazon Kindle and Apple iPad have paved the way for a fundamental shift in the relationship authors have with electronic texts. Market forces proved Google correctly anticipated a highly reconstructed book industry. Google was only one of the players bringing about this change.

Both the HathiTrust litigation and the Authors Guild v. Google litigation will likely be appealed, but there is little appeal in undoing the transformations to publishing that the Google Books program began.

Tech ignorance a major hurdle to conducting modern litigation

Guest Post by Michael Goodwin

Although recent changes to the ABA model rules specifically require technological competence, many lawyers remain unapologetic luddites. According to one federal judge, this lack of tech savvy is a major hurdle conducting modern litigation efficiently.

In the Fall issue of the journal Litigation, United States Magistrate Judge Patrick J. Walsh takes lawyers to task for what he perceives as a failure to educate themselves on basic technology:

Lawyers need to be versed in technology if they are going to be successful in discovery. If they are not, they should find someone in their firm who is and bring that person into the case for the discovery phase. Because I find that the lawyers are often unable to adequately discuss discovery of electronically-stored data, I often require them to bring the client’s information technology person to the hearing or have that person available by telephone to explain what the company is capable of retrieving and the time and costs that would be involved in doing so.

The failure to articulate the logistics and costs to find data, particularly electronically-stored data, is often fatal to arguments that the discovery sought is unduly burdensome or disproportionate.

A modicum of self-education is required, but like many lawyering skills, competently handling e-discovery is as much about asking the right questions, and finding out to whom they should be addressed. Learning the necessary technological concepts to manage e-discovery does not require a degree in computer science or a formal education in information technology, but it usually does require consultation with people who have that background. As Judge Walsh observes in the article, the client’s employees should be key members of the e-discovery team. These are the people who are usually in the best position to know where their ESI “lives,” how to capture it, and how much it will cost to do so. At least one landmark decision in e-discovery jurisprudence endorsed active collaboration with clients in the e-discovery process:

[I]f you are knowledgeable about and tell the other side who your key custodians are and how you propose to search for the requested documents, opposing counsel and the Court are more apt to agree with your approach.

Da Silva Moore v. Publicis Groupe, 287 F.R.D. 182, 192 (S.D.N.Y. 2012). U.S. District Judge Shira Scheindlin made similar observations almost a decade ago in Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 439 (S.D.N.Y. 2004).

While obtaining appropriate tech skills does require some effort, lawyers aren’t alone. Teamwork, along with a willingness to learn, goes a long way.

Michael Goodwin is a litigation attorney at Jardine, Logan & O’Brien in Minnesota. Michael has experience in a range of practice areas, including government liability, insurance coverage, products liability, and employment law. He can be reached at mgoodwin@jlolaw.com.

Commission report warns U.S. is losing the spy race from lack of R&D, STEM-education

On Nov. 5, 2013, The National Commission for the Review of the Research and Development Programs of the United States Intelligence Community released an unclassified version of its assessment of U.S. research and development programs, finding that the U.S. is falling behind and highly uncoordinated. [The Report can be found here.]

The Commission making the review was originally constituted at the 9-11 Commission (properly The National Commission on Terrorist Attacks Upon the United States. In 2010, the Commission was reauthorized to serve more broadly on the Intelligence Community readiness.

The New York Times described the report as “blistering … charging that the intelligence world’s research-and-development efforts are disorganized and unfocused.”

The Commission said the lack of investment, coordination, infrastructure and foresight is putting the nation at risk.

U.S. technological superiority is diminishing in important areas, and our adversaries’ investments in [Science and Technology]—along with their theft of our intellectual property, made possible in part by insufficient cyber protection and policies—are giving them new, asymmetric advantages. The United States faces increasing risk from threats against which the IC could have severely limited warning, deterrence, or agility to develop effective countermeasures.

The report is not primarily an intelligence report. The Commission was not focused on the failures associated with the NSA massive – and in some cases unconstitutional – spying campaign. Nor was it tied to the Edward Snowden disclosures and the global embarrassment triggered by those disclosures.

Instead, the report identifies the need to treat intelligence as a global issue that needs broad reforms, such as STEM education and immigration/workforce reform. It identifies a wide range of concerns about the lack of investment in intelligence and the failure to be prepared.

The report calls for much greater data analytics, which will likely be the platform used by the NSA to justify its ongoing activities. Even a pro-intelligence report such as this, however, identifies the need for intelligent data analytics rather than the massive, undifferentiated and largely counter-productive methods currently highlighted by the NSA disclosures. Not surprisingly, the admonitions also demand better coordination, including “development of a new joint program plan between the Director of Science and Technology and the Deputy Director of National Intelligence for Intelligence Integration for Enhanced Integrated Intelligence, which it will use to track, prioritize, and coordinate Enhanced Integrated Intelligence R&D across the [intelligence community].”

“Exacerbating these challenges are U.S. policies that weaken the U.S. R&D talent base,” the report warned.  “As scientific and technical knowledge and the resulting economic growth spread around the world, the competition for R&D talent is increasingly global.”

This is just one of many reports highlighting the continued disarray of the intelligence community, an infrastructure struggling to keep up with cyber-threats and embarrassing the U.S. with political follies.

The report opens with a powerful juxtaposition of quotes that should help guide future discussions:

Failure to properly appraise the extent of scientific developments in enemy countries may have more immediate and catastrophic consequences than failure in any other field of intelligence.

—Task Force Report on National Security Organization (the Eberstadt Report) (1948)

Failure to properly resource and use our own R&D to appraise, exploit, and counter the scientific and technical developments of our adversaries—including both state and non-state actors—may have more immediate and catastrophic consequences than failure in any other field of intelligence.

—National Commission for the Review of the Research and Development Programs of the United States Intelligence Community (2013)

Report of the National Commission for the Review of the Research and Development Programs of the United Sta…

Social Media in the workplace – wide-ranging overview now available

In a recent blog post regarding Sam Moore‘s claim for publicity rights in a fictional film, I provided a general update on publicity rights law because such laws are now being used as part of the social media agreement between the public and such companies as Google and Facebook.

The discussion about continuing evolution of publicity rights doctrine is part of a larger review I have written on the role of social media across the spectrum of media law.  That working paper, Social Media in the Workplace – From Constitutional to Intellectual Property Rights is now available at SSRN: http://ssrn.com/abstract=2348779 or for download.

Social media has become a dominant force in the landscape of modern communications. From political uprisings in the Middle East to labor disputes in Washington State, social media has fundamentally disrupted the way in which communications take place. As noted constitutional scholar Erwin Chemerinsky explained, “technology has changed and so has First Amendment doctrine and American culture. It now is much more clearly established that there is a strong presumption against government regulation of speech based on its content.” Just as the government must tolerate more speech, the same thing is true about employers. Chemerinsky further notes that “for better or worse, profanities are more a part of everyday discourse.” Abrasive speech may be coarse from the word choice or may more readily upbraid the objects of the speech. Whether foul or abusive, such speech now pervades commercial and social media.

Social media fundamentally upends the notion of the traditional commercial media environment and with that, it reverses the established legal doctrine from constitutional assumptions to everyday rules involving copyright, defamation, and unfair labor practice. For employers, these rules are particularly important to navigate because they effect the manner in which the companies communicate with the public, how employees communicate with each other, and how laws are restructuring the employee-employer relationship. The transformation is taking place with changing policies affecting trade secrets, confidential information, copyrighted material, aggregated data, trademarks, publicity rights, and endorsements.

This article highlights the nature of the changes as they present the new paradigm shift and provides some guidance on how to prepare policies for the transitional model. The article tracks the rise of the many-to-many model of social media, its effect on commercial speech, intellectual property, and labor law. The article concludes with suggestions on employment policies geared to managing these changes in the modern workplace.

There will be a CLE program sponsored by the Dayton Intellectual Property Law Association on Friday November 8, 2013 featuring these materials.

Sam Moore loses publicity rights dispute with The Weinstein Company while the use of the Transformative Use Test is applied again

Publicity Rights continue to vex courts and counsel. An October 31st decision of the Sixth Circuit in Moore v. Weinstein provides yet another unfortunate twist to the judicial approach to balancing publicity rights with free speech rights.

The litigation stems from the 2008 film Soul Men produced by The Weinstein Company starring Samuel L. Jackson and Bernie Mac. Grammy winning artist, Sam Moore claimed the movie was an unauthorized life story because of the title, story-line, and music used in the film. Having lost on appeal, Moore took his fight to the Sixth Circuit where the court again sided with The Weinstein Company.

The problem with the decision is not the outcome. Instead the concern is that the court interpreted a state law which relied on the Restatement (Third) of Unfair Competition to determine the scope of publicity rights but still insisted on adding an additional opportunity for plaintiffs to stop communicative works if the defendants could not prove the works were transformative.

State law protection of publicity rights are constrained by free speech concerns.[1] Publicity rights are protected as a common law extension of privacy,[2] but like other common law doctrine affecting speech, many aspects have been constitutionalized.[3] Publicity rights are properly considered a form of limitation on commercial speech and should be subject to legitimate content regulation as is allowed by the FCC and FTC, namely intermediate scrutiny.[4] Traditional publicity rights doctrine first asks whether the use of the name or likeness involves a commercial transaction.[5] The commercial transaction may be the sale of a commercial item or an endorsement of a good or service.[6] If the use of the publicity rights constitutes an endorsement, then the FTC endorsement guidelines offer further liability for unauthorized use.

In theory, formulations such as that embodied in the Restatement (Third) of Unfair Competition should provide clear breathing room between expressive works and their commercial cousins. As the Sixth Circuit recently stated, “A viable right-of-publicity claim usually requires (1) defendant’s use of plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to the defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.”[7]

Section 47 of the Restatement sets an explicit limit on the scope of publicity rights:

The name, likeness, and other indicia of a person’s identity are used “for purposes of trade” under the rule stated in § 46 if they are used in advertising the user’s goods or services, or are placed on merchandise marketed by the user, or are used in connection with services rendered by the user. However, use “for purposes of trade” does not ordinarily include the use of a person’s identity in news reporting, commentary, entertainment, works of fiction or nonfiction, or in advertising that is incidental to such uses.[8]

The scope of publicity rights explicitly excludes news, entertainment, and creative works.[9] The limitation embodied in the Restatement is written to be categorical, which provides for greater certainty and reinforces the importance of free speech rights and avoidance of a chilling effect caused by fear of litigation involving a person’s identity in a communicative work. Comment d. to the Restatement recognizes this concern by stating “[b]roader restrictions on the use of another’s identity in entertainment, news, or other creative works threaten significant public and constitutional interests.”[10]

Nonetheless, in practice, publicity rights are tested under a variety of inconsistent court-fashioned doctrine which do not balance commercial and speech interest nearly as cleanly as does the Restatement. “Various commentators have noted that right of publicity claims—at least those that address the use of a person’s name or image in an advertisement—are akin to trademark claims because in both instances courts must balance the interests in protecting the relevant property right against the interest in free expression.”[11]

The Rogers test[12] most squarely distinguishes between commercial works and communicative works. Under that test, a court should not “permit the right of publicity to bar the use of a celebrity’s name in a movie title unless the title was ‘wholly unrelated’ to the movie or was ‘simply a disguised commercial advertisement for the sale of goods or services.’”[13] This test most closely mirrors the FTC commercial endorsement guidelines, particularly if the recognition of disguised commercial advertisements extends to the various undisclosed endorsements.

The Predominant Use test loosely balances the free speech rights of the publisher against the economic goals of that publisher.[14] Works that predominantly exploit the commercial value of identity must certainly include all celebrity magazines, ESPN, and the Sunday section of the New York Times. The fact that a work is published under a profit motive does not transform the content into commercial speech.[15] The Predominant Use Test is ineffectively under-inclusive and over-inclusive, making it unhelpful for jurisprudential guidance.[16]

The third common test flows from copyright law rather than trademark law. Based upon the Supreme Court jurisprudence involving fair use, the California Supreme Court adopted the transformative test from the first factor of copyright fair use to determine the right of publicity free speech doctrine.

According to the Supreme Court as applied by the California Supreme Court,

the central purpose of the inquiry into this fair use factor ‘is to see … whether the new work merely “supercede[s] the objects” of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is “transformative.”[17]

To the first factor of the copyright test embodied in Transformative Test, the California Supreme Court obliquely reintroduced the copyright fair use test’s fourth factor: the effect on the potential market for the work.[18]

Virtual worlds and video games may trigger the most direct conflict between publicity rights and free speech jurisprudence.[19] The communicative nature of video games highlighted in Brown v. Entm’t Merchs. Ass’n should require the medium be treated like any other.[20] Nonetheless, both video game manufacturers and the courts tend to continue to treat these works as if they are commercial products rather than works of expression protected by the First Amendment.[21] As products, they are commercial works subject to the Transformative Test or another of the balancing tests rather than excluded from the limitation in publicity rights that such rights only apply to commercial products or the advertisements for such goods and services.

The communication in a video game generally is not a proposal of a commercial transaction or the sale of a product, so rights of publicity simply do not apply.[22] If instead, the media is used to make an endorsement or advertise a commercial product, then the FTC endorsement guidelines and the state publicity rights come back into play.[23]

This distinction should guide the behavior and social media policies of employers. To the extent they are creating content as media broadcasters, there are no publicity rights constraints and no endorsement concerns.[24] If instead the content is designed to promote commercial transactions, serve as advertisements, or sell merchandise, then permission is required from the endorser and the endorser must be providing factual, honest information.

The confusion surrounding publicity rights raises serious chilling effects. As reported in the Hollywood Reporter, the NCAA is trying to take up an appeal in Keller v. EA Sports despite the settlement in the case following a ruling unfavorable to EA based on an application of the Transformative Use Test. The NCAA petition for cert (read here) provided:

[T]he interplay between right-of-publicity claims and the First Amendment is an issue on which the lower courts are badly divided. It is also important, affecting the fundamental rights of a wide array of speakers—from movie and television producers (e.g., The Social Network) to biographers and songwriters (Bob Dylan’s Hurricane), to videogame makers, like one of the defendants here.

Something must be done to restore to return the presumption of free speech and eliminate the chilling effect of publicity rights claims against communicative works. Publicity rights are very important economic and personal rights which should be enforced against commercial theft of identity, but that does not mean they should be used to stifle the ability of other authors and artists. A Supreme Court decision in Keller will be unlikely to develop the balance needed to restore the law. Instead federal legislation is a more likely tool to get the balance correct.


[1] See, e.g., Donahue v. Warner Bros. Pictures Distributing Corp., 272 P.2d 177 (Utah 1954) (publicity rights statute limited to the use of name or likeness in advertising, or the sale of “some collateral commodity.”); Cal. Civ. Code § 3344(a) (West 1997) (limiting protection to use “on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person’s prior consent.”).

[2] See Samuel Warren & Louis Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890). See also William L. Prosser, Privacy, 48 Cal. L. Rev. 383, 383–85 (1960).

[3] Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562, 577 (1977) (In distinguishing between defamation, false light and publicity cases, the Court explained that the “Constitution does not prevent Ohio from … deciding to protect the entertainer’s incentive” to perform.)

[4] See Sorrell, 131 S. Ct. 2653, supra note 53 at 2663; Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557, 562 (1980); Ohralik v. Ohio State Bar Assn., 436 U.S. 447 (1978) (upholding state lawyer advertising regulation); Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771-772 (1976) (establishing First Amendment protection for commercial speech and recognizing right of recipients of commercial speech to have access to the content).

[5] See, e.g., Comedy III Productions, Inc. v. Gary Saderup, Inc., 21 P.3d 797, 802 (Cal. 2001).

[6] Id. at 802 (although the speech was not an “advertisement, endorsement, or sponsorship of any product,” defendant nonetheless “used the likeness of The Three Stooges on . . . products, merchandise, or goods within the meaning of the statute.”).

[7] Moore v. Weinstein Co. LLC, 12-5715, (6th Cir. Oct. 31, 2013) (unreported) quoting Restatement (Third) of Unfair Competition.

[8] Restatement (Third) Unfair Competition §47 (1995).

[9]  Id.  at cmt. c. (“the use of a person’s name or likeness in news reporting, whether in newspapers, magazines, or broadcast news, does not infringe the right of publicity. The interest in freedom of expression also extends to use in entertainment and other creative works, including both fiction and nonfiction.”).

[10] Id. at cmt. d.

[11] Hart v. Elec. Arts, Inc., 717 F.3d 141, 155 (3d Cir. 2013).

[12] Rogers v. Grimaldi, 875 F.2d 994 (2d Cir.1989).

[13] Id.  at 1004.

[14] Doe v. TCI Cablevision, 110 S.W.3d 363 (Mo.2003) (en banc).

If a product is being sold that predominantly exploits the commercial value of an individual’s identity, that product should be held to violate the right of publicity and not be protected by the First Amendment, even if there is some “expressive” content in it that might qualify as “speech” in other circumstances. If, on the other hand, the predominant purpose of the product is to make an expressive comment on or about a celebrity, the expressive values could be given greater weight.

Id.  at 374.

[15] See New York Times v. Sullivan, 376 U.S. 254, 265 (1964). See also Valentine v. Chrestensen, 316 U.S. 52, 55 (1942) (commercial speech cannot evade regulation by appending protected first amendment content).

[16] See Hart, supra note 73 at 154 (“By our reading, the Predominant Use Test is subjective at best, arbitrary at worst, and in either case calls upon judges to act as both impartial jurists and discerning art critics.”).

[17] Comedy III Prods., Inc. v. Gary Saderup, Inc., 25 Cal.4th 387, 404 (2001) (quoting Campbell v. Acuff–Rose Music, Inc., 510 U.S. 569, 579 (1994) (citations omitted).

[18] Id.  at 407.

Furthermore, in determining whether a work is sufficiently transformative, courts may find useful a subsidiary inquiry, particularly in close cases: does the marketability and economic value of the challenged work derive primarily from the fame of the celebrity depicted? If this question is answered in the negative, then there would generally be no actionable right of publicity. When the value of the work comes principally from some source other than the fame of the celebrity—from the creativity, skill, and reputation of the artist—it may be presumed that sufficient transformative elements are present to warrant First Amendment protection. If the question is answered in the affirmative, however, it does not necessarily follow that the work is without First Amendment protection—it may still be a transformative work.

[19] See Hart, supra note 73 at 152-53; O’Bannon v. NCAA, 2010 U.S. Dist. LEXIS 19170 (N.D. Cal. Feb. 8, 2010) (dismissing Keller v. Elec. Arts, Inc., 2010 WL 530108 (N.D. Cal. 2010) to substitute anti-trust claims for publicity rights claims); In re NCAA Student-Athlete Name & Likeness Licensing Litig., 2011-2 Trade Cas. (CCH) ¶ 77, 549 (N.D. Cal. 2011) (ongoing litigation emphasizing anti-trust implication of refusing to negotiate rights with former NCAA players).

[20] Brown v. Entm’t Merchs. Ass’n, supra note 37 at 2737 n.4.

[21] See Hart, supra note 71 at 148-49 (“Appellee [EA Sports] concedes, for purposes of the motion and appeal, that it violated Appellant’s right of publicity; in essence, misappropriating his identity for commercial exploitation.”)

[22] Cf. Comedy III, supra note 71 at 802; Hart, supra note 75 at 149.

[23] Garon, supra note 52 at 615, 624.

[24] See Facenda v. N.F.L. Films, Inc., 542 F.3d 1007, 1017 (3d Cir. 2008) (quoting U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914, 933 (3d Cir. 1990)).

The Estate contends that the program is commercial speech, and we agree. Our Court has “three factors to consider in deciding whether speech is commercial: (1) is the speech an advertisement; (2) does the speech refer to a specific product or service; and (3) does the speaker have an economic motivation for the speech.”

Rent-to-Spy Highlights Need for Diligence

Seal of the United States Federal Trade Commis...

(Photo Wikipedia)

Aaron’s Inc. a leading franchisee in the rent-to-own retail market has agreed to settle FTC complaints[1] that allowed Aaron’s franchisees to install and use software to spy on customers.

In announcing the proposed settlement, the FTC explained that “Aaron’s franchisees used the software, which surreptitiously tracked consumers’ locations, captured images through the computers’ webcams – including those of adults engaged in intimate activities – and activated keyloggers that captured users’ login credentials for email accounts and financial and social media sites.”

Aaron’s, Inc. is a leading rent-to-own retailer focusing on “residential furniture, consumer electronics, home appliances and accessories with more than 2,000 Company-operated and franchised stores in 48 states and Canada.” Aaron’s reports 1,190 Company-operated Aaron’s Sales and Lease Ownership stores, 717 Aaron’s Sales & Lease Ownership franchised stores, 78 HomeSmart stores, one franchised HomeSmart store, 17 Company-operated RIMCO stores, and six franchised RIMCO stores.

The allegations focus on the franchisees rather than Aaron’s own operations. Nonetheless, the complaint highlights that Aaron’s “allowed its franchisees to access and use the software, known as PC Rental Agent. In addition, Aaron’s stored data collected by the software for its franchisees and also transmitted messages from the software to its franchisees. In addition, Aaron’s provided franchisees with instructions on how to install and use the software.”

A proposed consent agreement with the FTC has been approved 4-0 by the Commission. Aaron’s will be prohibited from using monitoring technology that captures keystrokes or screenshots, or activates the camera or microphone on a consumer’s computer, except to provide technical support requested by the consumer.

Unfortunately the consent agreement still allows Aaron’s to install tracking technology, provided the customer gives consent. Given the history of such abuse, Aaron’s should be prohibited from using tracking software at all. Consent does little or nothing to affect consumer behavior; companies who have violated the public trust should be prohibited from seeking such illusory permission to continue to abuse their customers.

The risks of allowing opt-in consent are highlighted from another provision of the proposed consent decree:

The agreement will also prevent Aaron’s from using any information it obtained through improper means in connection with the collection of any debt, money or property as part of a rent-to-own transaction. The company must delete or destroy any information it has improperly collected and transmit in an encrypted format any location or tracking data it collects properly.

Under the agreement, Aaron’s will also be required to conduct annual monitoring and oversight of its franchisees and hold them to the requirements in the agreement that apply to Aaron’s and its corporate stores, and to terminate the franchise agreements of franchises that do not meet those requirements.

The proposed agreement will be subject to public comment through Nov. 21, 2013.[2] If opt-in consent is insufficient, the perhaps the Commission can be convinced.


[1] The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

[2] Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section. Comments in electronic form should be submitted online by following the instructions on the web-based form. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.