MediaLaw Monitor

Media, Technology and First Amendment Legal Developments from Davis Wright Tremaine

winter/spring 2012

medialawmonitor.com

P.02 Libel Claim

P.03

Oregon blogger moves for new trial to reverse a $2.5M verdict.

F

Golan v.

Holder

and the Controversial New Efforts to Update IP Law for the Internet Age

BY DAN LAIDMAN

or the second time in nine years, the United States Supreme Court has weighed in on the relationship between copyright law and the First Amendment.

The Court’s decision in Golan v. Holder upholds a statute restoring U.S copyright protection to certain foreign works previously in the public domain.

At a time when the political branches are engaging in controversial new efforts to update intellectual property law for the Internet age, the opinion affirms that Congress re-affirms that Congress is due great deference in the copyright realm, and rejects several sweeping arguments that could have curtailed future copyright legislation.

It is somewhat ironic, then, that the Golan case involved the oldest of old media. For decades, foreign artistic works could fall into the public domain in the United States despite remaining protected by the copyright laws of their nations of origin. This gave Americans broad freedom to perform or otherwise reproduce many foreign works, but it also alienated the United States from international intellectual property norms. Under the Berne Convention for the Protection of Literary and Artistic Works, which was first established in 1886, a growing number of nations had agreed to extend similar copyright protection to both foreign and domestic works. ...continued on page 06

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California

Judge rules state assembly must open records—a resounding victory for public access to state government documents.

INSIDE P.05

Internet Privacy for Kids

FTC Proposes Modifications to Children’s Online Privacy Protection Act (COPPA) A rulemaking notice proposes to update the FTC’s rules implementing COPPA to reflect the popularity of social networking and the use of smartphones to access the Internet and provide location information.

P.08 Gaming

Emphasizing Interactivity, Court Rules that First Amendment Defeats Right of Publicity Claims target EA’s NCAA football video games.

P.12

Video Policy

Seattle Federal Court Begins Pilot Program to Record Civil Proceedings A development that is surprising in light of the federal courts’ traditional hostility toward cameras in the courtroom.

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A Word From the Editors Not even a year has passed since we first clicked “publish” on our inaugural online issue at medialawmonitor.com, and already this publication has been recognized in an annual awards competition held by the national Legal Marketing Association (LMA) for “best newsletter.” We are truly honored by this award and hope to keep highlighting important legal updates to the media industry for years to come.

Oregon Blogger Moves for New Trial to Reverse $2.5 Million Verdict

BY DUANE BOSWORTH

A

n unusual Oregon libel case recently captured the attention of the blogosphere and mainstream press. In late November, blogger Crystal Cox was hit with a $2.5 million verdict for defaming Obsidian Finance Group and its principal. Obsidian Finance Group, LLC v. Cox, Case No. CV-11-57-HZ, 40 Media L. Rep. 1084 (D. Ore. Nov. 30, 2011) (Hernandez, J.). More notable than the size of the judgment against the pro se defendant was the court’s controversial discussion of who is to be considered a journalist in the online sphere, in order to determine whether statutory or First Amendment protections applied to the blog in question.

In January 2012, Cox filed a Motion for New Trial and in the alternative, for Remittitur. The motion, coauthored by leading First Amendment scholar Professor Eugene Volokh of UCLA Law School, argues that the jury should have been instructed, consistent with New York Times Co. v. Sullivan, that it could find defendant liable only if she acted with “actual malice.”

Alternatively, even if the Sullivan standard did not apply, the motion argues the jury should have been

instructed, consistent with Gertz v. Robert Welch, Inc., that it could hold defendant liable for proven compensatory damages only if it found that defendant acted negligently, and that it could hold defendant liable for presumed damages only if it found that defendant acted with “actual malice.” The motion also argues that the evidence presented to the jury did not support $2.5 million in damages, whether proven or presumed, arising from the single Internet post considered at trial.

The motion is supported and supplemented by an amicus curiae brief filed by the Electronic Frontier Foundation. That brief additionally challenges the court’s ruling that Oregon’s retraction statute does not apply to the Internet, and that because defendant Cox was not a member of the “media,” Oregon’s shield law does not apply.

Background. The Obsidian Finance saga began in earnest last summer with U.S. District Court Judge Marco Hernandez’s denial of plaintiff ’s motion for partial summary judgment on liability regarding the 10 blog entries submitted. Despite the fact that Cox was unrepresented and filed little relevant opposition, the court on its own held that plaintiffs failed to address “the obvious First Amendment issues raised by defendant’s statements” and that “defendant’s statements are expressions of opinion protected by the First Amendment.” The court added that although Cox had not moved for summary judgment, it would sua sponte grant summary judgment for her, pursuant to F.R.Civ.P.56(f ), unless plaintiffs successfully opposed that conclusion.

In response, plaintiffs newly submitted 16 different blog entries. The court again found that all were “protected by the First Amendment” because “no reasonable juror could conclude that the statements contained provable assertions of fact.” With regard to one newly submitted post, however, the court concluded that “reasonable readers could ...continued on page 10

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Editors-at-Large,

Sarah Duran Rory Eastburg

03

2012

Editors-at-Large Sarah Duran, SEATTLE Rory Eastburg, WASHINGTON, D.C.

Contributors Samuel Bayard Duane Bosworth Ambika Kumar Doran Elizabeth McNamara Dan Laidman Kelli Sager Jonathan Segal David M. Silverman Eric M. Stahl Rochelle Wilcox

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Judge Rules State Assembly Must Open Records

BY JONATHAN SEGAL, KELLI SAGER AND ROCHELLE WILCOX

I

n a resounding victory for public access to state government documents, a Sacramento judge has rejected efforts by the California State Assembly to keep secret records reflecting its internal budgeting and spending of taxpayer money.

In Dec. 2011, Judge Timothy Frawley held that the Legislative Open Records Act (LORA), a little-interpreted 36-year-old law, provides broad access to the Legislature’s documents, and further held that the Assembly’s refusal to provide records in response to requests from two news organizations was unjustified. The Assembly chose not to challenge Judge Frawley’s ruling, and agreed to pay attorneys’ fees and costs incurred by the La Cañada Valley Sun, the Los Angeles Times, and the Sacramento Bee in bringing the lawsuit.

More than 15,000 pages of materials were provided initially after the ruling.

The dispute started in the fall of 2011, when the Newspapers requested copies of records that would show how the Assembly allocates money to individual Members, and how the Members spend their allocated funds. The requests were made after one Assembly Member claimed that party leaders were using legislators’ budgets as a form of political patronage, rewarding legislators for voting along party lines, and punishing Members who did not follow directives from party leadership. The Assembly largely rejected the Newspapers’ requests, claiming that the records were exempt from disclosure under LORA. The Newspapers then filed suit.

LORA Creates a Presumption of Access. LORA was enacted in 1975 as part of broad state-wide legislation designed to increase the public’s access to important

government information.

In language similar to that used in California’s Public Records Act, LORA’s preamble recognizes that “access to information concerning the conduct of the people’s business by the Legislature is a fundamental and necessary right of every citizen in this state.” Consequently, the Sacramento Court found that LORA “reflects a strong presumption in favor of public access to legislative records” which is “subject only to the specific exemptions set forth in the Act.” Evaluating the Newspapers’ requests, the Court found that the records sought “indisputably contain information relating to the conduct of the public’s business,” because they “all reflect how Assembly money is budgeted and spent, which is critical to an understanding of the Legislature’s operations.”

In what the Court noted was “a somewhat ironic twist,” the Assembly argued that a law dedicated to “Open Records” should be construed narrowly in a way that “significantly restricts the public’s

well-established law under the CPRA, the Court rejected the Assembly’s claims that the documents sought were exempt from disclosure as “correspondence” or “preliminary drafts,” and found that the materials were not protected under the common-law deliberative process privilege.

With respect to the correspondence exemption, the Court rejected the Assembly’s argument that the exemption “applies to all internal and external written communications of legislators and staff.” Instead, the Court held that the correspondence exemption narrowly applied only to “external (third-party) communications by letter to members of the Legislature and their staff, to insure that individuals and entities outside the Legislature would not be chilled in their ability to communicate with their elected representatives.” The Court found that the Assembly’s interpretation was overly broad, because “it would, in effect, shield every written communication within the Assembly, and it would allow any Assembly member or staff to shield any record in his or her possession simply by “passing” it to any other member or staff person.” Because that exemption would “clearly swallow the rule of public access,” it “cannot have been the Legislature’s intent.”

The Court also rejected the claim that the budget documents were “preliminary drafts”; as the Court explained, “[t]he fact that an

In what the Court noted was “a somewhat ironic twist,” the Assembly argued that a law dedicated to “Open Records” should be construed narrowly in a way that “significantly restricts the public’s right to inspect legislative records.” right to inspect legislative records.”

The Assembly also argued that the separation of powers doctrine forbade the Court from enforcing LORA. The Court rejected both arguments.

Exemptions in LORA Must Be Construed Narrowly. The Court agreed with the Newspapers that cases interpreting the California Public Records Act inform the interpretation of LORA. Applying

approved budget could be modified again at some later point in time does not render it a ‘preliminary’ writing.” Again, the Court pointed out that the Legislature’s broad reading of the exemption would mean that “virtually every document related to the Assembly’s business would be exempt from disclosure, since virtually every document could, at least in theory, ...continued on page 12

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Ninth Circuit Holds that DMCA Requires Specific Knowledge of Copyright Violation for Service Provider Liability

BY DAVID M. SILVERMAN

I

n an important decision on the issue of website operators’ copyright liability for user-generated content, the U.S. Court of Appeals for the Ninth Circuit has refused to hold a site operator liable for copyright infringement based solely on its general knowledge that some of the third party content on its site may be infringing.

The Ninth Circuit’s opinion in the case of UMG Recordings v. Shelter Capital Partners concerned the potential liability of video-sharing website operator, Veoh Networks, under one of the so-called “safe harbors” of the Digital Millennium Copyright Act (DMCA). Veoh operates a publicly accessible website that enables users to share videos with other users. The particular safe harbor Veoh invoked protects website operators and other “service providers” from liability for the copyright infringement of others who provide content on their sites when the provider “expeditiously” takes down the allegedly infringing content residing on its servers in response to a notice from a copyright owner that the content is infringing. In this case, UMG argued that Veoh’s general knowledge that infringing content resided on its servers was sufficient to deprive Veoh of the protections of the DMCA’s safe harbor for infringing content. The Ninth Circuit disagreed and affirmed the district court in upholding summary judgment for Veoh.

There was no question that Veoh acted expeditiously to remove allegedly infringing content from its servers upon receipt of a DMCA notice alleging that specific content on its site was infringing. However, UMG claimed that Veoh’s actions were “too little, too late” due to Veoh’s late adoption of filtering technology to detect infringing material and Veoh’s takedown of only the specific videos identified in DMCA takedown notices.

In finding that Veoh was entitled to the DMCA safe harbor, the Court first found that Veoh’s functions in connection with video uploads by users

fell within the safe harbor requirement that the uploaded content was on Veoh’s website “by reason of the storage at the direction of the user.” In so holding, the Court found that Veoh’s automatic processes of creating Flash files and/or “chunks” of videos to facilitate streaming and downloading did not deprive Veoh of the safe harbor for “storage at the direction of the user.” The Court reasoned that such a narrow interpretation of that language would render the safe harbor meaningless. The Court also noted that, by contrast, the DMCA safe harbor for providing transient (peer-to-peer or P2P) communications in Section 512(a) requires that the third party material not be modified in any way. That restriction does not apply to DMCA Section 512(c) (Information Residing on Systems or Networks at Direction of Users) at issue here.

The Court then addressed UMG’s claim that Veoh had “actual knowledge” of the infringing activity, which would deprive Veoh of the DMCA safe harbor, if true. UMG raised numerous factors that could have tipped off Veoh to the presence of infringing content on its servers, such as the presence of music videos without any license from a rights holder. As the Court pointed out, however, many music videos do not require licenses, such as originally created music or music provided with permission of the rights holder. On this point, the Court followed the Supreme Court’s 1984 Sony decision, holding that a product “capable of substantial noninfringing uses” (like a VCR in that case) does not violate copyright law just because it is capable of being used for copyright infringement. As the Court noted, the safe harbor provisions of the DMCA presume that websites such as Veoh’s may be used for infringing purposes. Accordingly, “the general knowledge that one’s services could be used to share infringing material [ ] is insufficient to meet the actual knowledge requirement . . . .”

The Court reached the same conclusion regarding the safe harbor condition that, “in the absence of [actual] knowledge, [the service provider] is not aware of facts or circumstances from which infringing activity is apparent.” Ultimately, the Court refused to shift the safe harbor burden from the copyright owner to the service provider. The Court noted that shifting the burden could violate other DMCA provisions that specifically exempt service providers from having to monitor or investigate content and could result in the removal of noninfringing content.

Finally, the Court addressed UMG’s claim that Veoh violated the safe harbor condition that it not “receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.” The Court followed its reasoning in the knowledge provisions discussed above, i.e., a service provider “must be aware of specific infringing material to have the ability to control that infringing activity within the meaning of ” the safe harbor provision of the DMCA. This is one of the first cases decided by a U.S. Court of Appeals on the obligations of a service provider claiming protection under the DMCA safe harbor where the service provider has general knowledge that there may be infringing material on its website. So long as the service provider acts expeditiously to remove allegedly infringing materials when statutorily compliant and specific takedown notices are received, the safe harbor will not be lost. It will be interesting to see whether other appellate courts—including the Second Circuit, where the issue is on appeal in the Viacom v. YouTube case with a decision expected soon—follow the Ninth Circuit or whether a split in the circuits arises that could merit Supreme Court review. m

05

2012

FTC Proposes Modifications to Children’s Online Privacy Protection Act (COPPA)

BY DAVID M. SILVERMAN

T

he Federal Trade Commission (FTC) has issued a rulemaking notice proposing to update its rules implementing the Children’s Online Privacy Protection Act (COPPA) to reflect changes in technology and online practices, primarily, the popularity of social networking and the use of smartphones to access the Internet and provide location information.

COPPA is intended to provide notice to parents and secure verifiable parental consent prior to the collection of personal information from children under the age of 13.

As part of this rulemaking, the FTC considered broadening the scope of COPPA to include teenagers, but ultimately decided to retain its applicability to children under the age of 13 only.

The rule modifications proposed by the FTC cover five different areas: 1) definitions, including what children’s “personal information” the rule covers, and what it means to “collect” it; 2) parental notice; 3) new parental consent mechanisms; 4) confidentiality and security requirements; and 5) “safe harbor” determinations for how self-regulatory programs can be deemed “in compliance” with COPPA. The primary proposals in

each of these areas are summarized below.

Background. COPPA requires operators of websites or online services directed to children under 13, or those that have actual knowledge that they are collecting personal information from children under 13, to obtain verifiable consent from parents before collecting, using, or disclosing such information from children. The FTC’s Rule implementing COPPA and FTC commentary adopting and interpreting it establish criteria for determining whether websites/services are directed to children under 13, what falls within the scope of children’s “personal information,” how to provide notice and obtain verifiable parental consent, and other related matters. The new rulemaking bears on these and a variety of other facets of the Rule, including the following: Definitions. Perhaps the most significant changes proposed to the definitions are those regarding the definition of “personal information.” Under the current rule, screen names are considered “personal information” only when coupled with an individual’s email address. Under the proposed rule, screen names would be considered

“personal information” without more, unless used solely for internal operations. The FTC is also proposing to greatly expand the definition of a “persistent identifier” that can be used to identify an individual. The current rule includes only cookies that are coupled with individually identifiable information. The proposed rule would include cookies (without more), IP addresses and even

video and audio files that contain a child’s image or voice within the definition of “personal information.” The current rule applies only to photos that contain contact information, and does not address video or audio files. The new FTC rule would also include “geolocation data.” While not a specific proposal, the FTC asks commenters whether a combination of items, such as birth date, gender and zip code or even “zip+4” zip codes alone might be sufficient to identify a particular individual or address so as to warrant inclusion within the definition of “personal information.”

The FTC also proposes amending the definition of “collects or collecting” personal information so that it reaches not only sites that specifically “request” such information, but also those that “prompt” or “encourage” children to disclose such information about themselves. It also includes all means of passive tracking of children online.

However, the FTC is also proposing to relax its current provision that exempts online operators who delete 100% of all such information collected. The proposed exemption would now include those who take “reasonable” measures to delete “all or virtually…all” of the personal information collected from children. Another proposed exemption would include personal information collected solely for the

… what falls within the scope of children’s “personal information,” how to provide notice and obtain verifiable parental consent … unique device identifiers, other than those collected solely for the purpose of internal operations. It would also include any “identifier that links the activities of a child across different websites or online services.” Thus, any information that identifies a particular personal computer or handheld device would be included within the definition of “personal information,” implicating the notice and consent provisions of COPPA when linked to children under the age of 13.

The FTC also proposes to include all photographs, as well as

purpose of supporting the internal operations of the website or online service.

The FTC declined to adopt a specific standard such as a demographics percentage to identify a “website or online service directed to children” but rather proposes to keep its current rule that uses a totality-of-circumstances approach.

Parental Notice. The FTC proposes that parental notice be “prominent and clearly labeled” and that it ...continued on page 07 be posted

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Golan v. Holder

The United States joined the Berne Convention in 1989, but did not immediately agree to restore copyright to foreign works that had entered the public domain in this country but not in their home country. This stirred resentment among some of the other 163 Berne member states, and the grievances became more potent in 1994 with the establishment of a new enforcement mechanism through the World Trade Organization. Congress responded that same year by enacting Section 514 of the Uruguay Round Agreements Act (codified as 17 U.S.C. § 104A).

The law had its greatest impact on a broad category of works that were published internationally between 1923 and 1989, that still enjoyed protection abroad, and that fell into the public domain in the U.S. due to (i) failure to comply with copyright formalities, (ii) lack of subject matter protection, or (iii) lack of national eligibility due to the absence of copyright relations with the U.S. Section 514 restored copyright in these works until the term for each one would have expired had the author initially obtained such protection. Congress sought to soften the blow for those who had relied on the free availability of such works by including a grace period and other protections in the new law.

The Golan litigation began in 2001 when a group of plaintiffs including orchestra conductors, teachers, publishers, and film distributors and archivists sued the federal government, arguing that Congress unconstitutionally restricted their access to foreign public domain works. After two decisions by the Tenth Circuit, the Supreme Court granted review and issued its opinion on January 18, 2012. Justice Ruth Bader Ginsburg wrote for the 6-2 majority that upheld Section 514 ( Justice Elena Kagan, recently the United States Solicitor General, was recused).

First, the Court rejected the plaintiffs’ challenge based on the Copyright Clause itself. Article I, Section 8, clause 8 of the Constitution provides the basis for the nation’s intellectual property regime by giving Congress the power “[t]o promote the Progress

of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The plaintiffs argued that by its very language the Constitution prevents Congress from restoring copyright protection to works that have already entered the public domain.

The plaintiffs had argued that granting such broad leeway to Congress could enable legislators to enact successive copyright terms that would effectively result in perpetual exclusive rights. Justice Ginsburg rejected this hypothetical argument, writing that by “aligning the United States with other nations bound by the Berne

In its 2003 decision in Eldred v. Ashcroft, the Supreme Court rejected a similar contention that the 1998 Copyright Term Extension Act, which added 20 years to the existing term of copyrighted works, ran afoul of this “limited Times” language. Justice Ginsburg, who authored the Eldred decision, wrote that the precedent was largely dispositive of the plaintiffs’ Copyright Clause argument in Golan. Quoting the Eldred opin-

Convention, and thereby according equitable treatment to once disfavored foreign authors, Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights.”

The Court also rejected the plaintiffs’ argument that Section 514 failed to advance the core purpose of copyright law—incentivizing of creative activity—because it dealt exclusively with preexisting works. Disagreeing, the Court held

nothing … warrants exceptional First Amendment solicitude for copyrighted works that were once in the public domain.” ion, Justice Ginsburg explained that the word “limited” does not mean “fixed” or “inalterable,” but “[r]ather, the term is best understood to mean ‘confine[d] within certain bounds,’ ‘restrain[ed],’ or ‘circumscribed.’” The Court held that the statute was consistent with the Copyright Clause because Section 514 did not create any perpetual copyrights.

that each individual provision of copyright law does not need to induce the creation of new works; rather, Congress has broad authority to pass laws that serve the overall purpose of the Copyright Clause by promoting the creation or dissemination of creative works. Congress, the Court concluded, “rationally could have concluded” that Section 514 served this objective because

a “well-functioning international copyright system would likely encourage the dissemination of existing and future works.”

Turning to the plaintiffs’ First Amendment challenge, the Court began by recognizing “that some restriction on expression is the inherent and intended effect of every grant of copyright.” However, the Court noted that the its prior decisions in Eldred and the 1985 case Harper & Row, Publishers, Inc. v. Nation Enterprises, established that the First Amendment and Copyright Clause were nonetheless complementary. The decisions harmonized the provisions by explaining that copyright law contains two powerful built-in protections for free speech that alleviate any First Amendment concerns.

The idea/expression dichotomy ensures that only expression can be protected and that there are no exclusive rights in ideas, while the fair use defense permits certain license-free uses of copyrighted works for criticism, scholarship, news reporting and other such ends. Following Harper & Row and Eldred, the Golan Court determined that because of the “speechprotective purposes and safeguards embraced by copyright law,” there was no need to apply heightened First Amendment scrutiny to Section 514. Therefore, it applied the same deferential standard of review it used to dismiss the Copyright Clause challenge, concluding that it was sufficient that Congress acted rationally in enacting the statute.

To distinguish their claim from Eldred and Harper & Row, the Golan plaintiffs argued that the disruption to the public domain created a unique First Amendment harm. But the Court disagreed, holding that “nothing in the historical record, congressional practice, or our own jurisprudence warrants exceptional First Amendment solicitude for copyrighted works that were once in the public domain.” Justice Ginsburg wrote that any harm to free expression resulting from the restoration of copyright protection to foreign works previously in the public domain was minimal. “Prokofiev’s Peter and the Wolf could once be

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performed free of charge; after §514 the right to perform it must be obtained in the marketplace.

This is the same marketplace, of course, that exists for the music of Prokofiev’s U.S. contemporaries: works of Copland and Bernstein, for example, that enjoy copyright protection, but nevertheless appear regularly in the programs of U.S. concertgoers.”

Justice Ginsburg concluded the Court’s decision by again stressing the breadth of Congress’ authority to pass laws that rationally further the broad goals of the Copyright Clause. “Congress determined that U. S. interests were best served by our full participation in the dominant system of international copyright protection. Those interests include ensuring exemplary compliance with our international obligations, securing greater protection for U. S. authors abroad, and remedying unequal treatment of foreign authors. The judgment §514 expresses lies well within the ken of the political branches.”

Dissenting, Justice Stephen Breyer (joined by Justice Samuel Alito) argued that by restoring protection to public domain works, Section 514 in fact inhibited the dissemination of creative works, in contravention of purpose of the Copyright Clause. Justice Breyer noted that the “price of a score of Shostakovich’s Preludes and Fugues Op. 87, for example, has risen by a multiple of seven.”

Moreover, the dissent argued that Section 514 created new “administrative costs, such as the costs of determining whether a work is the subject of a ‘restored copyright,’ searching for a ‘restored copyright’ holder, and negotiating a fee.” The latter problem is especially pronounced, Justice Breyer noted, in the case of “orphan works” whose dissemination is severely limited because of their elusive ownership.

The Golan majority acknowledged the orphan work problem as well. But in a passage emblematic of the deference to Congress that will likely be the enduring legacy of the Golan decision, Justice Ginsburg concluded that it was not “a matter appropriate for judicial, as opposed to legislative, resolution.” m

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on the website’s home page as well as each location where personal information is collected from children. As for notice content, the FTC proposes requiring website operators to provide their contact information, including name, address, telephone number and email address. For each form of direct notice provided to parents, the FTC proposes that operators provide the following: the items of personal information the operator has already obtained from the child (generally, contact information only); the purpose of the notice; actions that the parent must or can take; and the operator’s use of the information collected. Each notice must also contain a hyperlink to the operator’s information practices.

Parental Consent Mechanisms.

Critical to the operation of COPPA is the mechanism by which website and online operators receive “verifiable parental consent.” The FTC considered a number of new proposals for obtaining consent such as text messaging, online payment services (e.g. PayPal), parental consent features in game consoles and electronic signatures, but rejected all of those options as unreliable.

However, the FTC did approve the use of electronically scanned versions of signed parental consent forms as well as video verification. Also approved is the use of a government issued identification such as a driver’s license or social security number, so long as the information is verified by checking it against a database and deleted following verification.

Among the methods for consent

contained in the current rule is a method called “email plus,” used when personal information is collected from children for internal purposes only. Email plus consists of an email address plus one other piece of information, such as an address or telephone number. In this proceeding, the FTC proposes deletion of “email plus” as a measure that has outlived its usefulness as a reliable means of consent. In its place, the FTC proposes a process by which interested parties can propose a new form of consent that will be published for comment in the Federal Register on a case-bycase basis. Also, any operator participating in the FTC’s safe harbor program described below can use any parental consent mechanism approved for use in that program.

Finally, the FTC proposes one new exception to the need to obtain parental consent in order to allow operators to obtain parental contact information from children solely for the purpose of notifying the parent of a child’s participation in a service that does not otherwise

“for only as long as is reasonably necessary to fulfill the purpose for which the information was collected,” and to delete information no longer needed, taking “reasonable measures to protect against unauthorized access to, or use of ” the deleted information.

Safe Harbor. COPPA established a “safe harbor” program allowing participants in FTCapproved self-regulatory programs to be deemed “in compliance” with COPPA. TRUSTe and CARU (Children’s Advertising Review Unit) are examples of organizations that operate FTC-approved safe harbor programs. The FTC proposes several changes to strengthen the reliability and accountability of safe harbor programs.

Specifically, it proposes (a) that safe harbor programs conduct an annual, comprehensive review of their members’ information practices; (b) that new safe harbor program applicants explain their business model and technological capabilities and mechanisms for assessing operators’ fitness for

The FTC proposes that parental notice be “prominent and clearly labeled” and that it be posted on the website’s home page as well as each location where personal information is collected from children. collect, use or disclose children’s personal information. Existing exceptions maintained in the proposed rules allow communication with children to initiate the parental consent process, to respond to the child, and to protect the child’s safety or the website’s integrity.

Confidentiality and Security Requirements. COPPA requires that operators “establish and maintain reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children.” The FTC proposes extending that provision to require operators to “take reasonable measures to ensure that” any third party to whom children’s personal information is provided also has such reasonable procedures in place. As a corollary to this provision, the FTC proposes a new rule requiring operators to retain children’s personal information

membership in their safe harbor program; and (c) that safe harbor programs conduct an independent audit of their programs every 18 months and submit the results of that audit to the FTC along with any disciplinary actions taken against member operators within that 18 month time period. To the extent new rules require existing safe harbor programs to modify their guidelines, such modifications must be made within 60 days after publication of the final rule to avoid potential revocation of their safe harbor status. m —————————————

Comments on any of the proposals summarized above were due to the FTC online or via hard copy by Nov. 28, 2011. If you have any questions regarding the potential impact of the FTC’s COPPA update proposals on your business, the proceedings at the FTC, or the submission of comments, please do not hesitate to contact us.

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Emphasizing Interactivity, Court Rules that First Amendment Defeats Right of Publicity Claims Targeting EA’s NCAA Football Video Games

BY SAMUEL BAYARD AND ELIZABETH MCNAMARA

I

n an important case involving the intersection between the First Amendment and rights of publicity, Judge Freda Wolfson of the United States District Court for the District of New Jersey granted summary judgment for Electronic Arts (“EA”) on the claims of a putative class of NCAA football players that EA had misappropriated their likeness and identity under New Jersey law by featuring them in its NCAA Football video games. Hart v. Electronic Arts, Inc., 2011 WL 4005350 (D.N.J. Sept. 9, 2011).

The Court held that EA’s First Amendment right to free expression outweighed the plaintiff ’s right of publicity under either the “transformative use” test developed

by California state courts or the “Rogers” test developed by the Second Circuit in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989).

Judge Wolfson’s thorough and scholarly opinion is a significant contribution to the law on the interplay between the First Amendment and the right of

publicity. Of particular note, the decision places great emphasis on the interactivity of EA’s video games in finding them protected by the First Amendment. Judge Wolfson’s decision is also noteworthy because it stands in sharp contrast to the decision in Keller v. Electronic Arts, Inc., No. C 09-1967, 2010 WL 530108 (N.D. Cal. Feb. 6, 2010), appeal pending (No. 10-15387). Both decisions apply the transformative use test to the same NCAA Football game series and reach conflicting results.

The Hart decision could inform the pending Ninth Circuit appeal of Keller.

Factual Background. Plaintiff Ryan Hart, a former quarterback for Rutgers University, originally brought suit in New Jersey state court on behalf of himself and others similarly situated alleging, inter alia, that EA had violated his right of publicity by misappropriating his likeness as a virtual player in four editions of EA’s NCAA Football video game. After EA removed the case to federal court,

it moved to dismiss. Judge Wolfson granted the motion, but gave Hart leave to file an amended complaint to allege additional facts in support of his right of publicity claim.

The amended complaint alleged that EA misappropriated Hart’s likeness by including in several editions of the game a virtual Rutgers player from his home state, bearing his jersey number, incorporating his physical attributes (height, weight, hair color and style) and equipment preferences (wrist band, helmet visor), as well as his skills (speed and agility rating and passing accuracy – all derived from his published season statistics). Hart alleged that the games’ commercial value derived from the wholesale appropriation of the individual players‘ identity and the resulting “realism” of the games. Hart further argued that the use of his photograph in a photo montage inside the 2009 edition of the game constituted an unauthorized promotional use of his image.

Solely for purposes of its summary judgment motion, EA

conceded that it used Hart’s likeness within certain versions of NCAA Football. It argued, however, that as expressive speech, the games should be afforded full First Amendment protection, which here outweighed the plaintiff ’s publicity interests. The Court agreed and granted summary judgment dismissing Hart’s claims.

Judge Wolfson began her analysis with the foundational point that video games are entitled to First Amendment protection. Here, the United States Supreme Court’s recent decision in Brown v. Entertainment Merchants Association, 131 S.Ct. 2729 (2011), provided ready support: “Like the protected books, plays, and movies that preceded them, video games communicate ideas— and even social messages—through many familiar literary devices (such as characters, dialogue, plot, and music) and through features distinctive to the medium (such as the player’s interaction with the virtual world). That suffices to confer First Amendment protection.”

09

2012

Hart, 2011 WL 4005350, at *7 (quoting Brown, 131 S.Ct. at 2733).

Judge Wolfson then analyzed the distinction between commercial and expressive speech, easily concluding the NCAA Football games were not commercial speech under the three-part test used in the Third Circuit. Id. at *9. Contrasting EA’s video games with the “infomercial” at issue in Facenda v.

N.F.L. Films, Inc., 542 F.3d 1007 (3d Cir. 2008), the court explained: “Here . . . the speech is the video game that is being sold. It is not a separate instance of speech that promotes the purchase of another work.” Id. (emphasis in original).

Judge Wolfson also found that the alleged use of Hart’s photograph in a photo montage inside NCAA Football 2009 did not constitute promotion or advertising “because this photograph is part of the video game itself, the commercial transaction has already taken place.” Id. at *10.

To determine whether the First Amendment trumped Hart’s New Jersey common law right of publicity, the Court examined the origin and development of the right of

tests, and those examined at length

by Judge Wolfson, are the transformative use test, urged by Hart in his papers, and the Rogers test, advocated by EA, and it is here that the decision makes its greatest contribution to this area of the law. Although expressing a preference for the transformative test because “it best encapsulates the type of nuanced analysis required to properly balance the competing …interest[s],” Id. at *30, the Court found that EA prevailed under either test.

The Court explained that the transformative test, which has

sufficiently transformative to enjoy First Amendment protection.

Notably, the Court did not focus on the NCAA Football’s representation of Hart in isolation. The Court concluded that, “viewed as a whole,” EA’s video games contain “sufficient elements of EA’s own expression . . .[to] justify the conclusion that its use of Hart’s image is transformative.” Id. at 21. Here, Judge Wolfson cited the multitude of creative elements in the video games beyond Hart’s image, including “virtual stadiums, athletes, coaches, fans, sound effects, music, and commentary, all of

its origins in the fair use analysis of copyright law, looks to the extent that the likeness has been transformed by expressive changes or additions in the new work, or, in the words of the California Supreme Court, whether “the celebrity likeness is one of the ‘raw materials’ from which an original

which are created or compiled by the games’ designers.” Id. (quoting Brown v. Electronic Arts, Inc., No. 2-09-cv-01598, slip op. at 7 (C.D. Cal. Sept. 23, 2009)).

Judge Wolfson then determined that, even focusing on Hart’s virtual image alone, NCAA Football is transformative. Here, the court

play.” Id. at *22. Amusingly, the Court noted that its own review of the game revealed eight hairstyle options that can be morphed onto a player’s image: “fade 1, fade 2, close crop, buzzout 1, buzzout 2, afro, balding 1, and balding 2.”

Id. (Who knew you needed two variations on bald?) Speaking more generally, the court explained: To be clear, it is not the user’s alteration of Hart’s image that is critical. What matters for my analysis of EA’s First Amendment right is that EA created the mechanism by which the virtual player may be altered, as well as the multiple permutations available for each virtual player image. Id. at *22.

The Court rejected the notion that using Hart’s unaltered image as the starting point for the virtual player rendered the use nontransformative, indicating that this argument “fails to fully take into account the distinctive interactive nature of video games.” Id. Harkening back to the above-quoted language from Brown v. Entertainment Merchants Association, the Court explained that “[t]his language from Brown recognizes that a user’s interaction with a

publicity, New Jersey’s adoption of the Restatement (Second) of Torts, the shift from a right-of-privacybased tort to a property-based one, and the history of the application of the First Amendment to the right of publicity, leading to the various tests that courts have employed across the country to balance those competing interests. The primary

work is synthesized, or whether the depiction of the celebrity is the very sum and substance of the work in question.” Comedy III Productions, Inc. v. Gary Saderup, Inc., 25 Cal. 4th 387, 406 (2001). Reviewing recent cases applying the transformative use test, including to video games, the Court concluded that EA’s use of plaintiff ’s likeness was

emphasized the interactive features of the game. For instance, Judge Wolfson noted that the “the game permits users to alter Hart’s virtual player, control the player’s throw distance and accuracy, change the team of which the player is a part ..., or engage in _Dynasty’ mode, in which the user incorporates players from historical teams into game

video game is one of the means by which video games communicate ideas and social messages” and added that denying EA protection “would not give due accord to this expressive aspect of video games.”

Id. It was the strong interactive element in EA’s games that enabled the Court ...continued on page 11

Who knew you needed two variations on bald?

10 continued from page 2... Oregon

winter/spring Blogger Moves for New Trial to Reverse Verdict

Because the individual plaintiff was not a public figure, “actual malice” did not apply and, because the defendant was not “media” even the negligence standard of Gertz was not triggered.

reach differing conclusions about whether the statements contain or imply an assertion of objective facts.” While nearly all of the posts were made on a single website, the post in question appeared on a different website. The court noted that it was one of only two postings submitted by plaintiff from that site, and therefore “a full assessment of the flavor or tenor of the website is not possible.”

While the court noted that the post in question contained “several none-provable, figurative or subjective-type words which tend to negate the impression that defendant asserts provable statements of fact,” because so little material from the website was presented by plaintiffs, the court found that it could not “collectively examine the surrounding posts to determine the frequency with which defendant uses these words.” The court added that “while the post is somewhat confusing and uses some unclear terms such as ‘liquidating trust,’ it reads more like a factual narrative” than the other 25 posts plaintiffs provided.

The court held that the context of the post in question “does not necessarily negate the impression

that the statements are incapable of being proved true or false. On the one hand, a reasonable reader may view the title of the website [bankruptcycorruption.com], the fact that the statements appear on a blog, and the use of loose, figurative language, as dispelling such impression. However, ... a different reader could reasonably understand the statements to imply provable assertions of fact.” The case proceeded to trial on this single post.

Just before trial, the court ruled on a number of legal issues. First, defendant argued that plaintiffs were precluded from general damages because plaintiffs had failed to seek a retraction in accordance with the requirement of Oregon’s retraction statute. The court held that “because the statements at issue in this case were posted on an Internet blog, they do not fall under Oregon’s retraction statutes.” The statute, enacted in 1955, applies to “a defamatory statement published or broadcast in a newspaper, magazine, other printed periodical, or by radio, television, or motion pictures.” While there are no appellate decisions, Oregon’s state trial courts have frequently applied the retraction statute to Internet

A version of this article was published in the MLRC MediaLaw Letter.

statements made by traditional newspapers and broadcasters.

The court also held that Oregon’s shield law did not apply to defendant in the first instance because “the record fails to show that she is affiliated with any newspaper, magazine, periodical, book, pamphlet, news service, wire service, news or feature syndicate, broadcast station or network, or cable television system.” The Oregon shield applies to any “medium of communication,” which includes, but is not limited to, the litany of particular media the court listed.

The brief submitted by Electronic Frontier Foundation challenges the court holding that Cox’s status as an Internet publisher precluded her from shield law protection.

Most significantly, the court held that because the individual plaintiff, a bankruptcy trustee, was not a public figure “actual malice” did not apply and, because the defendant was not “media” even the negligence standard of Gertz was not triggered. The court found that defendant failed to bring forth any evidence “suggestive of her status as a journalist,” citing “no evidence of (1) any education in journalism; (2) any credentials or proof of any

affiliation with any recognized news entity; (3) proof of adherence to journalistic standards such as editing, fact-checking, or disclosures of conflicts of interest; (4) keeping notes of conversations and interviews conducted; (5) mutual understanding or agreement of confidentiality between the defendant and his/her sources; (6) creation of an independent product rather than assembling writings and postings of others; or (7) contacting ‘the other side’ to get both sides of a story.”

The court also rejected the argument that the blog “referred to a matter or issue of public concern, further implicating First Amendment protections.” The court held that “similarly to the plaintiff ’s status as a lawyer in Gertz [plaintiff ’s] status as a bankruptcy trustee does not make statements about his actions in that role a matter of public concern.” The jury instructions therefore allowed them to find for plaintiffs simply if the defendant published a defamatory communication which damaged them.

At press time, the motions are still pending. m

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2012 continued from page 09... Emphasizing

to distinguish a recent California decision, No Doubt v. Activision, Inc., 192 Cal. App.4th 1018 (2011), which held that the Band Hero video game was not sufficiently transformative because it included computer-generated avatars designed to look identical to the members of the band No Doubt and did not permit players to alter the avatars. Id. at 20.

In contrast to its distinguishing of No Doubt, Judge Wolfson confronted directly a federal district court’s contrary holding in Keller v.

Electronic Arts, Inc., supra, a putative class action involving the same series of EA video games. There, denying EA’s motion to dismiss under California’s anti-SLAPP statute, the district court for the Northern District of California held that NCAA Football was not sufficiently transformative because it did not “depict [the plaintiff ] in a different form” and “the game’s setting is identical to where the public found [the plaintiff ] during his collegiate career: on the football field.” Keller, 2010 WL 530108, at *5. Judge Wolfson criticized the Keller court’s failure to take into account the expressive nature of the interactive features of the game and its overly narrow focus on the alleged likeness alone instead of the game as a whole. “[I]n my view, it is logically inconsistent to consider the setting in which the character sits, which Keller does in its analysis, yet ignore the remainder of the game.” Id. at 24.

Finally, Judge Wolfson turned to the “Rogers” test, developed by the Second Circuit and adopted by numerous courts across the country in both Lanham Act “false endorsement” and right of publicity claims. Under Rogers, the First Amendment bars right of publicity claims arising from the use of a plaintiff ’s name or likeness in an expressive work, unless the use is “wholly unrelated” to the work or is “simply a disguised commercial advertisement for the sale of goods or services.” 875 F.2d at 1004.

Although Judge Wolfson praised the clarity of its application, she questioned whether a test derived from trademark law was properly applicable to a right of publicity claim and whether it struck the

Interactivity, Court Rules That First Amendment Defeats Rights of Publicity

right balance between the competing interests. See Hart, 2011 WL 4005350, at *26-29. Nonetheless, applying the test to the facts at issue, the Court easily concluded that Hart’s image was not wholly unrelated to NCAA Football, nor was its incorporation into the game a “disguised commercial advertisement” indicating his endorsement or creative input. Summary judgment was therefore appropriate under this test as well.

the link between trademark law and rights of publicity could discourage future courts from adopting the Rogers test. This preference appears based on the assumptions that there are “common underlying principles shared by the right of publicity and copyright doctrine,” Hart, 2011 WL 4005350, at *14, and that “right of publicity claims do not embody the same likelihood-of-confusion concerns” that the Lanham Act is designed to address, Id. at *28. While

As noted, Judge Wolfson’s thorough and scholarly opinion will likely have a significant impact on future cases involving the intersection between the First Amendment and rights of publicity.

First, this is a big victory for video game developers. Close on the heels of the Supreme Court’s decision in Brown v. Entertainment Merchants Association, a federal district court has extended robust First Amendment protection for video games beyond the specific context of statutes targeting violent video games. While the Court did not apply strict scrutiny as in Brown, the basic recognition that video games are expressive works entitled to protection comes through clearly in this opinion. The court’s emphasis on the interactive features of EA’s games is also good news for video game developers and others interested working in “new media,” where user interaction and incorporation of usergenerated content is becoming more-and-more the norm.

Second, Judge Wolfson’s decision may be influential in convincing future courts outside of California to adopt the transformative use test.

While the Court analyzed the facts under both tests, the Court’s clear preference was for the transformative use test and its skepticism about

fully addressing this point is beyond the scope of this short article, it is worth noting that these assumptions are very much open to question.

In the Keller appeal, a coalition of media organizations submitted an amicus brief that argues persuasively that rights of publicity and copyright law are not actually analogous, that borrowing from copyright law is premised on a misreading of Zacchini v. Scripps-Howard Broad., 433 U.S. 562 (1977), and that trademark law and right of publicity are in fact closer cousins in the field of intellectual property because they both are concerned with the misuse of names, titles, and brands. See generally Brief Amicus Curiae in Support of Appellants by Advance Publications et al., No. 10-15387, Docket # 26-2 (Sept.

7, 2010).

Third, it is important to remember that the transformative use test is one of a series of First Amendmentrelated tests used by California courts in right of publicity cases, and was developed specifically to deal with visual depictions of celebrities. As such, it does not necessarily provide a good across-the-board test for balancing First Amendment rights against rights of publicity. In particular, the transformative use test makes an awkward fit for other types of expressive works like biographies,

A version of this article was published in the MLRC MediaLaw Letter.

docudramas, and reality TV, where interactivity is not an option and where the creator’s intention may well be to represent a famous person in his or her real-life context. Despite Judge Wolfson’s helpful determination that courts should look at the creative expression in a work as a whole rather than the celebrity’s image in isolation, there remains a risk that courts will continue to impose a requirement of physical transformation of the celebrity’s image or placement of the celebrity in a counter-factual setting, based on a reading of cases like Kirby v. Sega of America, Inc., 144 Cal. App. 4th 47 (Cal. App. 2006), and No Doubt v. Activision, Inc., 192 Cal. App.4th 1018 (2011).

Judge Wolfson herself felt obliged to thread a needle between these two cases, stating that this case presented a “closer call” than either of them. Hart, 2011 WL 4005350, at *20. In the same vein, Judge Wolfson expressly warned future game developers in dicta: “a game developer that bases its work on real players in the context of the games that bring them notoriety … may walk a fine line between using reality as a building block for the developer’s own creative work and exploiting the hard-earned reputation of college players for its own profit,” Id. at *20 (emphasis added).

Any across-the-board test for balancing First Amendment and publicity rights has to take into account the strong First Amendment and public interests in creation of expressive works that depict reallife individuals in their real-life contexts, something current readings of the transformative use test – at least in the context of video games – still fail to accomplish. This is one of the strengths of the Rogers test, in that it looks primarily to artistic relevance and does not get caught up in the need to “transform” the celebrity’s name or likeness, something that may continue to trip up future courts applying the transformative use test. m

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In the New Jersey action, Electronic Arts is represented by Elizabeth McNamara, Chris Robinson, and Sam Bayard from Davis Wright Tremaine LLP, and Bruce Rosen from McCusker, Anselmi, Rosen & Carvelli, P.C. EA is represented in the 9th Circuit appeal of the Keller decision by Davis Wright Tremaine’s Kelli Sager, Al Wickers, Karen Henry, and Lisa Kohn, and Robert A. Van Nest, Steven A. Hirsch, and R. James Slaughter of Keker & Van Nest, LLP.

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winter/spring 2012 continued from page 3...Judge

Rules State Assembly Must Open Records

Seattle Federal Court Begins Pilot Program to Record Civil Proceedings

BY AMBIKA KUMAR DORAN AND ERIC M. STAHL

T

he federal district court in Seattle on March 11th, 2012 launched a new program that permits video recording of certain civil proceedings. Though limited in scope, particularly as compared to recordings permitted in Washington state courts, the development is significant in light of the federal courts’ traditional hostility toward cameras in the courtroom.

The move is part of a nationwide pilot program to study the effects of video recording judicial proceedings in which a handful of federal district courts, including the Western District of Washington, will participate. Courts in other major cities like San Francisco, Boston, Chicago, and Miami are also participating.

Each district has its own local rules. In Washington, the presiding judge selects cases for possible recording, and requires the parties to object or consent at the beginning of the lawsuit. If the parties object, no recording will take place in the case. If they consent, then hearings will be eligible for recording, but only if the parties do not object prior to each one.

In addition, the presiding judge has discretion to stop the cameras at any time. Recordings made public are posted to the court’s

website. Criminal proceedings will not be recorded.

Although the program does not allow the media to record proceedings, the media or any member of the public may request that the court record a hearing no later than 20 days prior to the hearing at issue. If the parties consent, recording will take place.

In the Western District of Washington, the program is limited to the Seattle division, and to date seven judges have agreed to participate: Chief Judge Marsha J. Pechman, Judge Robert S. Lasnik, Judge Ricardo S. Martinez, Judge James L. Robart, Judge Richard A. Jones, Judge John C. Coughenour, and Judge Thomas S. Zilly.

The pilot program was announced in September 2010 by the Judicial Conference of the United States, the policy-making arm of the federal courts. Other participating districts include: Middle District of Alabama; Northern District of California; Southern District of Florida; District of Guam; Northern District of Illinois; Southern District of Iowa; District of Kansas; District of Massachusetts; Eastern District of Missouri; District of Nebraska; Northern District of Ohio; Southern District of Ohio; and Western

District of Tennessee.

The Conference conducted a similar program in the 1990s but decided not to make it permanent. In 1996, the Conference allowed appellate courts to approve camera access, something just two courts—the Ninth and Second Circuits—have done.

Although recording is permitted in many states’ courts, federal courts have long resisted the effort. Most recently, the United States Supreme Court prohibited the broadcasting of the trial in a case challenging the constitutionality of California’s ban on same-sex marriage. Although the trial court recorded the hearing, the recording’s release has been blocked.

The Conference promulgated detailed guidelines for the pilot, available at http://www.uscourts. gov/uscourts/News/2011/docs/CamerasGuidelines.pdf. They require courts to gather data on the process, including on which parties did not consent and why; prohibit recording of privileged communications and sidebar conversations without the judge’s permission, and jurors while in the jury box; and prohibit the parties from using the recordings in arguing their case. m

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...be modified at some later point in time.” Accordingly, the Court held that the preliminary drafts exception to the law does not apply to documents that “represent a final decision to allocate funds or modify an Assembly member’s office budget.”

Finally, the Court rejected the Assembly’s claim that the documents were exempt from disclosure under the common law deliberative process privilege. “The key question when the deliberative process privilege is invoked,” the Court wrote, “is whether the disclosure of materials would expose the decision-making process in such a way as to discourage candid discussion within the government and thereby undermine the government’s ability to perform its functions.” The Court concluded that “the strong public interest in disclosure outweighs any reasons for keeping the records secret.”

Judgment Is Entered and Records Released. The Assembly chose not to appeal the Court’s decision. Given the volume of materials, the Newspapers and the Assembly agreed to a rolling production schedule, and the initial production of more than 15,000 pages was made on Jan. 6, 2012.

The Court’s final judgment was entered on Jan. 10, 2012.

Davis Wright Tremaine attorneys Kelli Sager, Rochelle Wilcox, and Jonathan Segal represented the La Cañada Valley Sun, the Los Angeles Times and McClatchy Newspapers before the Superior Court. m