02 November 2016

The Sequel's Merits (and Procedure)

Only a few more days until I will be strapped down inside a very Bond-villainesque device and have my digestive tract flushed from both ends with barium contrast solution, as a necessary follow-up to a breadbasket of deplorables. That's what I get to do on 08 November — how about you? OK, I guess I have it easy, since out here we all vote early by mail.

Not really a sausage platter today; instead, I intend to tease a few interesting tidbits out of a copyright opinion. The Eighth Circuit — not normally a fount of copyright matters, but for the greeting-card industry centered in Kansas City — yesterday issued a decision in Warner Bros. Entm't, Inc. v. X One X Productions, et al., No. [20]15–3728 (8th Cir. 01 Nov 2016) ("AVELA II") (PDF). (IP nerds with relatively long memories for trivia may recall that this case has already generated an appellate opinion on many core issues, Warner Bros. Entm’t, Inc. v. X One X Productions, et al., 644 F.3d 584 (8th Cir. 2011) ("AVELA I").) Yesterday's decision is interesting more for what it rejects than for what it accepts... and its implications for Mickey Mouse. And Sherlock Holmes.

AVELA had, for its business model, a two-step process. First, it would restore and digitize old film publicity materials, especially posters. These had fallen into the public domain for a variety of reasons, the most common of which being that the posters (as distinct from the films) were not properly marked with copyright notices (AVELA I, 644 F.3d at 589–90) and, in any event, were frequently not timely registered or renewed (id., 644 F.3d at 590 n.2, although this understates the registration problems reflected in the record below). Neither of these is/would be a problem under the 1976 Act as amended... but they were fatal to the copyright claims in the respective publicity materials under the 1909 Act. So far, so good; doing this sort of restoration is fine under the 1909 Act (or even the 1976 Act) for materials that have fallen into the public domain. Even selling copies of the restored materials without substantial alteration would be fine — putting a reproduction of the film poster or postcard onto a coffee mug or t-shirt, for example. The second step of AVELA's process is where things got fun, however: AVELA would either further modify the publicity materials themselves, such as by adding a character's "catch phrase" or other dialogue, or would extract character images from the publicity material and completely repurpose them. AVELA II, slip op. at 2; AVELA I, 644 F.3d at 590, 602–04. This latter course of action was problematic — not because the publicity materials were themselves protected by copyright, but because the publicity materials were authorized reuses of material that was protected by copyright and therefore maintained a chain back to protected material.1 This case determined that that ownership chain was protectable under the law — both copyright and trademark.

AVELA raised several objections to the judgment eventually rendered on remand. In the order stated in AVELA II:

  • AVELA tried to evade 257 counts of statutory copyright damages at $10,000 each by claiming that the judge's imposition of those damages violated its Seventh Amendment right to a jury trial. However, AVELA didn't properly present this objection to the trial court and therefore waived it. Slip op. at 5.
  • AVELA also claimed that the copyright statutory damages imposed were disproportionate and violated its substantive due-process rights (slip op. at 5–7). The court took not much longer to trash this objection, particularly since "AVELA’s intransigence rendered calculating actual damages impossible due to missing or inaccurate records" (slip op. at 6) and that "AVELA did not cease the infringing activity at any time" during the decade-long suit (id.). There was therefore no clear error in the district court's calculation of statutory damages — which, under both the legislative history and the plain language of the Copyright Act, are intended to compensate copyright plaintiffs under these very circumstances.
  • AVELA tried to knock all trademark claims out by characterizing a hypothetical posed by counsel for Warner as a binding admission against interest. As is usual for these kinds of arguments, the court's discussion of why "not even close, bud" is the correct response to this assertion takes several pages (slip op. at 7–9), primarily by pointing out that a hypothetical of this nature isn't an admission of any kind and deserves exactly no weight under any legal theory.
  • AVELA's Dastar argument failed for a simple reason that even a judicial opinion could state concisely:

    Images of the film actors in character and signature phrases from the films are not communications, concepts, or ideas that the consumer goods embody as Dastar defines these terms. Products marketed under AVELA’s licenses employ iconic film characters’ pictures to associate the products with Warner’s films, not to copy the film itself. Accordingly, these are trademark claims, not disguised copyright claims, and Dastar does not bar them.

    That is, when what one is selling is itself a derivative work and not a copy (or edited copy, as in Dastar), one-to-one trademark-as-false-designation-of-origin claims will stand, independent of the copyright status of the "original" — especially when the "original" is, like here, itself a derivative work of something that remains in copyright.2

  • In another example of civil procedure errors below, AVELA forfeited its fair-use and functionality defenses under trademark law by not pleading them. Slip op. at 10–11. I do not know what the discovery below demonstrated, nor am I familiar with all of the potential products... but it seems to me that this was at least in the abstract AVELA's best possible line of defense, especially in light of White (9th Cir.) and TCI Cablevision (Mo., also in the 8th Circuit even if it's a state court).
  • AVELA's position on likelihood of confusion being inappropriate for summary judgment also foundered on erroneous assertions of civil procedure. It's not that the judge had the authority to weigh evidence on specific parts of the six-factor test, because he didn't; it's that the other factors were so overwhelmingly in Warner's favor, and the weighing of the six factors is a question of law committed to the judge's discretion and not a question of fact for the jury, that even if the evidence were truly equivocal on the contested factors an opposite finding by the jury wouldn't have made a difference (slip op. at 11–13, and esp. at 12 n.3).
  • AVELA's last two arguments — that the permanent injunction entered was too broad, and that the district court's grant of relief on trademark claims was inconsistent with the copyright rulings in AVELA I — also founder on civil procedure grounds. Yet again, the first one was not raised in the trial court; yet again, the second one concerned different legal structures that have some overlap but are nonetheless distinct.

So what does this mean for Mickey Mouse... and for Sherlock Holmes? One of the slippery-slope arguments presented in the 1990s when the term of copyright was extended (consistent with WTO requirements, however substantively unjustified) in the Mickey MouseSonny Bono Copyright Term Extension Act of 1998, was that Disney would just come around again — about now, in fact — and extend the term of copyright further so as to protect That Mouse's original appearance in "Steamboat Willie." AVELA II demonstrates that would be unnecessary to prevent others from repurposing the short film into trademark-infringing derivative products.3 Conversely, many of the trademarkesque visual cues for Sherlock Holmes arise from filmed productions, which remain in copyright; many of the underlying characteristics of Sherlock Holmes, however, arise from in-the-public-domain printed materials. This is going to create some interesting jockeying over the next few years, as the rest of the printed materials — and some of the filmed versions — fall into the public domain over the next decade... from multiple copyright holders.

And it's all less distressing than choosing among four deplorables for the highest office in the land. Or a barium enema.

  1. Mad Magazine 377 (Jan 1999), resizedAt this point, and at this time, I cannot resist an election reference to the two-decade-old "poster" reproduced here and ask how this court would end up dealing with this poster... keeping in mind that the 8th Circuit is stuck with the insanity of the "target of the parody" doctrine implied in 2Live Crew and ossified in the various Courts of Appeal, especially the Ninth Circuit (Air Pirates was bad law when decided and is worse law now). Perhaps Hillary seems a bit too robotic for comfort.
  2. This is also a subtle objection to the substantive-due-process problems with the "registration equals copyright" statutory regime of the 1909 Act. However, because the parties didn't raise that issue and the court didn't need to go there, it remains subtle indeed.
  3. The irony that some of the grousing about extending copyright terms strengthens the trademark claims under such circumstances seems to have escaped most copyright-term-limits activists. For that reason alone, I think AVELA II will have a rich citation future.