On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or the “Act”).  The Act is a $2.2 trillion swiss army knife of economic relief provisions meant to reduce the impact of the COVID-19 pandemic on various parts of the U.S. economy.  Among these provisions is the $349 billion Paycheck Protection Program (the “PPP”), an expansion of the Small Business Administration Economic Injury Disaster Loan program (the “SBA”).  The purpose of the PPP is to help small and middle market businesses pay their employees and otherwise keep the lights on during the economic slowdown.  As entertainment productions grind to a halt worldwide as a result of COVID-19, the PPP may be a welcome boon for entertainment businesses trying to stay afloat during this challenging time.

Before addressing the rules, it should be emphasized that taxpayers should file their PPP loan applications ASAP.  It is anticipated that the $349 billion allocation to the PPP will be quickly absorbed and accounted for by applications submitted by this Friday (April 3), which means that applications filed next week may be out of luck unless Congress elects to expand the size of the PPP fund.  With that as our background, we continue with a general description of the PPP.

Continue Reading FILE NOW! Eligibility of Entertainment Businesses for PPP Loans Under the CARES Act

On March 23, 2020, the United States Supreme Court held that the Copyright Remedy Clarification Act of 1990 (CRCA) is unconstitutional and therefore invalid. See Allen v. Cooper, No. 18-877, 589 U.S. ___ (2020). Prior to Allen, the CRCA provided a means for individuals to sue states for copyright infringement by expressly abrogating the states’ sovereign immunity in that realm. But as a result of the Court’s recent decision, states are once again totally immune from copyright infringement lawsuits.

The facts of Allen date back to 1718, when the infamous pirate Blackbeard ran his flagship vessel (the Queen Anne’s Revenge) aground on a sandbar off the coast of what is now North Carolina, causing the ship to sink. The shipwreck was discovered nearly 300 years later, and due to its location, the wreck itself is owned by North Carolina state. Upon learning of the discovery, the state of North Carolina hired a salvage company to excavate the wreck, which in turn hired Allen to document the numerous recovery missions. For over a decade, Allen photographed and filmed the underwater missions to salvage the shipwreck, and Allen registered copyrights in all of the works. This dispute arose from Allen’s claims that North Carolina had infringed some of those copyrights by using and reproducing Allen’s photographs and videos online without his permission. See Allen, No. 18-877, slip op. at 1–2.

Continue Reading Fair Winds to Copyright Holders: States Have Sovereign Immunity from Infringement Suits

As the coronavirus pandemic yells “Cut!” across the world, the entertainment industry will feel the economic impact, with theaters closing their doors, lower attendance at film festivals, delayed productions, and the like.  Business managers and entertainment businesses, however, may feel some relief as Treasury called in sick and postponed Tax Day for 91 days.  The news first broke via tweet on March 20, 2020, when Treasury Secretary Steven Mnuchin announced on Twitter that Tax Day will be moved from April 15 to July 15.  A few hours later, the IRS fleshed out Mr. Mnuchin’s announcement by publishing Notice 2020-18, which provided more details regarding the taxes covered and the taxpayers affected by the new deadline.  The move is one of several recent measures taken by the federal government as it attempts to relieve the immense economic strain being put on Americans by the COVID-19 pandemic.

This announcement comes just two days after—and supersedes—Notice 2020-17, which postponed until July 15 the payment but not the filing of federal income taxes and imposed limits of $1 million for individuals and $10 million for corporations with respect to such postponement.  Notice 2020-18 restates and expands upon Notice 2020-17 by eliminating the distinction between payment and filing of taxes for purposes of the new deadline and by doing away with any pecuniary limits on the amount of tax that may be postponed.

Continue Reading Treasury Gives U.S. Taxpayers Relief from COVID-19’s Economic Impact by Postponing Tax Day

Venable attorneys Marcella Ballard and Kristen Ruisi recently participated in an MIP Global Trademark Forum panel on Responsible Advertising, Social Media and Influencers. With Marci moderating and Kristen presenting, the panel also included Jessica E. Cardon, deputy general counsel at Quality King Distributors; Lydia Cheuk, deputy general counsel at Away; and Melissa Moriarty, assistant general counsel at VaynerMedia. During their discussion, panelists shared the following insights:

  1. Brands are relying more on influencers, leading to increased FTC scrutiny

Kristen spoke about how the FTC is becoming stricter in its enforcement of its guidelines, which strive to prevent influencers from making false claims about products or services they haven’t tried and ensure that consumers are aware of advertising relationships. While the responsibility to disclose relationships with the brand they are promoting or endorsing ultimately rests with the influencer, brands still have to work with influencers to ensure they are meeting their disclosure obligations.

Continue Reading Panel Recap: Responsible Advertising, Social Media and Influencers

As the U.S. braces for the coronavirus COVID-19 pandemic, companies across a broad range of industries are increasingly affected by the growing restrictions on travel and trade.  Practically speaking, concerns abound over issues like whether airlines will issue refunds for cancelled flights, or what happens to manufacturers who source materials from Asia.  Indeed, the entertainment industry is not immune either.  For instance, what if a production contract calls for filming in Hong Kong next week?  What if talent is unable to leave their home country for a concert tomorrow?  What if, heaven forbid, talent is under mandatory quarantine while recovering from the virus?  At times like these, the answers usually lie in the contracts, specifically in a powerful provision that is often underestimated because it is only invoked in the unlikeliest of scenarios: the force majeure clause. Continue Reading Force Majeure Clauses under California Law in Light of the Coronavirus

Critics of increasingly restrictive effects of copyright law in musical production can seek solace in the recent Southern District of New York copyright decision of Guity v. Santos, et al., No. 18-cv-10387 (SDNY Dec. 05, 2019) (“Order”).

The district court ultimately granted defendants’ motion to dismiss copyright infringement claims brought by musician Nazim Guity against Anthony (Romeo) Santos, Sony, Alcover, and We Loud. Guity claimed that defendants “recorded, released, and profited” from his copyrighted work. Order at 1. The accused song shares the name “Eres Mia” with the protected work, a 2011 song by Guity. Guity collaborated with Alcover and We Loud in creating “Eres Mia” and procured copyright protection in 2014. Santos worked with Alcover and We Loud as well in creating Santos’s “Eres Mia” and later with Sony for the song’s marketing and distribution.

Guity specifically alleged that defendants were guilty of 1) copyright infringement by failing to obtain a mechanical license and/or failure to pay a compulsory license fee; 2) copyright infringement by claiming to compose, author, record, and distribute a copyrightable song; and 3) civil conspiracy to commit copyright infringement; and further alleged 4) plaintiffs were entitled to the equitable remedies of accounting and constructive trust. Id. at 2. Continue Reading SDNY Helps Draw the Boundaries of Copyright Protection in Music Cases

On November 19, 2019, the California Court of Appeal held that comments made by celebrity actor Shia LaBeouf in a private and isolated dispute were not a matter of public concern and, therefore, did not constitute protected speech under the First Amendment.

The case, David Bernstein v. Shia LaBeouf, stems from an April 5, 2017 incident in which LaBeouf and his female companion walked into a Los Angeles bar appearing “significantly under the influence.”  When they were refused service by Bernstein, the establishment’s bartender, LaBeouf allegedly became angry, and called Bernstein a “fucking racist” and a “fuckin’ racist bitch” as he was being escorted out of the bar by security.  Video of the incident circulated quickly and widely, much of the internet praised and supported LaBeouf, and Bernstein’s life and reputation allegedly suffered.  Bernstein subsequently sued LaBeouf for assault, slander per se, and intentional infliction of emotional distress.  LaBeouf responded with an anti-SLAPP motion, arguing that the speech giving rise to Bernstein’s claims (the insults hurled at Bernstein) was protected activity concerning a matter of public interest.

LaBeouf argued that his statements were protected speech because: (1) they occurred in a public place; (2) they were of interest to the public because they were published publicly on the internet; (3) LaBeouf is a celebrity; and (4) they contributed to the public debate on racism.

The trial court denied LaBeouf’s motion, and the Court of Appeal affirmed the trial court’s decision.  In declining to grant First Amendment protections to LaBeouf’s alleged name-calling, the Court of Appeal concluded that his statements were not made in connection with an issue of public interest.  The Court took care to narrow the scope of its ruling to the specific circumstances of LaBeouf’s case, however, namely the specific nature of LaBeouf’s speech. Continue Reading Shia LaBeouf Walks Into a Bar . . . And Ends Up Losing an Anti-Slapp Motion

A circuit court in Cook County, Illinois granted summary judgment in favor of Crain Communications (a publishing company) and others for publishing an article in June 2016 that allegedly was defamatory against Joseph J. Fox, then co-founder and CEO of Ditto Holdings, Inc.

(See Fox v. Crain Communications, Inc., et al., Case No. 17L5955.)

The article, titled “Frustrated investors led Fox hunt in LA” in digital form and “The Elusive Fox Who Fled to L.A.” in print, addressed Ditto’s financial position, investigations launched by the SEC and the Financial Industry Regulatory Authority, an employment lawsuit filed by a former Ditto executive, and testimonials from Ditto’s investors.

In his complaint, Fox alleged that the following statement and headlines in the article were false: a “federal judge in Chicago agreed with Simons, ordering Ditto in April to pay him $2.7 million” (the Judge Statement), “Frustrated investors led Fox hunt in LA,” and “The Elusive Fox Who Fled to L.A.” Fox claimed that Crain Communications, the company’s editor, and the reporter of the article (collectively, Crain Communications) knowingly published false and defamatory information about him.

Crain Communications moved for summary judgment on several bases, namely that:

Continue Reading Court Dismisses Defamation Claim Against Crain Communications

In a groundbreaking ruling about harassment and social media, a California Appellate Court has upheld the dismissal of a lawsuit against actor and comedian Marlon Wayans over comments made on a film set and a tweet comparing a movie extra to a cartoon character.

The case, Daniel v. Wayans (2017), 8 Cal. App. 5th 367, was based on comments made and a tweet posted by Wayans during the writing and production of A Haunted House 2. Wayans was accused by actor Pierre Daniel of using a racial epithet. The court unanimously ruled that in the context of the word being spoken by a black man to another black man, the word was not an epithet but instead was a term of endearment and was being used as part of the creative process.

“We are very gratified that the court unanimously upheld the ruling dismissing the case against Mr. Wayans. The entertainment industry as a whole can breathe a sigh of relief with this ruling. Creators of content for film, television, and social media will approach their tasks with a sense of greater freedom rather than fear of repercussions for what happens in the writers’ room and on set,” said William Briggs.

This ruling has been covered by The Hollywood Reporter and Law360.

On January 28, 2020, Paul Bernstein and Carly Trainor published “Inspiration to Infringement: Copyright Issues in Scripted Entertainment Inspired by Song Lyrics” in Music Connection Magazine. The following is an excerpt:

MGM Television is developing Scenes from an Italian Restaurant, a television series based on the lyrics of Billy Joel’s hits. This is the latest endeavor by a studio in lyric-inspired scripted entertainment, following Heartstrings, a series inspired by Dolly Parton’s hits, Heart of Life, a pilot inspired by John Mayer’s song of the same name, and talk of a forthcoming series inspired by Plain White T’s “Hey There Delilah.”

But this begs the question: at what point does one need permission to create scripted entertainment inspired by song lyrics?

Click here to access the article.