Last week, the Supreme Court issued a long-awaited copyright fair use decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith et al. In short, the Supreme Court looked at whether it was fair use under the copyright law for the Andy Warhol Foundation to license a print (known as Orange Prince) to Condé Nast when such print was based on a 1981 photo that photographer Lynn Goldsmith took of Prince in 1981. The 7-2 decision, featuring extremely sharp and contrasting views from common allies, Justice Sotomayor in the majority and Justice Kagan in the dissent, illustrates the complexities and murkiness of copyright fair use precedent. In the end, the majority held that Warhol’s Orange Prince did not constitute fair use of Goldsmith’s copyrighted photograph of Prince, based upon “the purpose and character of the use,” which is the first factor in the four-factor fair use test.

In sum, the fair use defense is a defense to a copyright infringement claim. There are four factors courts must consider, and each of the four need not be given equal weight, something that can make analyzing risk challenging. For years, relying on a fair use defense has been and, after this recent decision, will continue to be, very risky, and likely even more so than in the past. The factors are:

Continue Reading The Supreme Court’s Warhol Ruling Makes Fair Use Defense Seem Even Riskier

Innovations in artificial intelligence (AI) have made it easier than ever to replicate a person’s name, image, and likeness (NIL), particularly if that person is a celebrity. AI algorithms require massive amounts of “training data”— videos, images, and soundbites—to create “deepfake” renderings of persona in a way that feels real. The vast amount of training data available for celebrities and public figures make them easy targets. So, how can celebrities protect their NIL from unauthorized AI uses?

The Right of Publicity

The right of publicity is the primary tool for celebrity NIL protection. The right of publicity protects against unauthorized commercial exploitation of an individual’s persona, from appearance and voice to signature catchphrase. Past right of publicity cases provide some context for how this doctrine could be applied to AI-generated works.

Continue Reading Artificial Intelligence Wants Your Name, Image and Likeness – Especially If You’re a Celebrity

Generative AI is creating previously unimaginable possibilities for influencers and brands to engage with consumers. Rather than merely posting on social media, influencers will be able to utilize AI to have two-way conversations that feel authentic. Influencers can do this literally in their own voice, having unique dialogs with countless people at the same time.

Influencers and brands are accustomed to the rules governing what can be said on social media, but now they’ll need to start thinking about what sort of information they can elicit from their fans and consumers in the course of unique and unpredictable interactions, and what they can do with that information, because they will have the ability to gather more consumer information than ever before, and in ways that may be difficult to control.

Continue Reading Let’s Chat: Influencers and Brands Testing the Waters of Generative AI Must Navigate Data Privacy and FTC Issues

The recent explosion in popularity of generative artificial intelligence (AI), such as ChatGPT, has sparked a legal debate over whether the works created by this technology should be afforded copyright protections. Despite that several lawsuits on the subject have been filed, and the U.S. Copyright Office has recently issued guidance clarifying its position, that the bounds of copyright protections for works created using AI are not yet clearly defined and many questions remain unanswered. For now, it appears that copyright eligibility for such works depends on the extent of human involvement in the creative process and whether any use of copyrighted work to generate a new work falls within the purview of the fair use doctrine.

The analysis of this issue has been framed around two key aspects of the technology itself: input data and output data. Input data are the pre-existing data that human users introduce into the AI system that the system then uses to generate new works. Output data are the works ultimately created by the system—the finished product. Thus, copyright eligibility for AI-generated or AI-assisted works depends on whether the AI system’s use of copyrighted works as input data is permissible and whether the output data is itself copyrightable.

Continue Reading ChatGPT and the Rise of Generative Artificial Intelligence Spark Debate on Copyright Protections of AI-Generated Works

The blockchain community has debated for years whether Decentralized Autonomous Organizations (DAOs) can or should be analogized to a corporate form and whether they operate to insulate DAO members from legal liabilities. Some states have passed statutes regarding how DAOs are classified, such as Wyoming’s “DAO LLCs” law and Utah’s DAO Act. In Sarcuni v. bZx DAO, a class action pending in the Southern District of California, the liability of DAO members is at the forefront, and the first round of the fight was not a good one for them. On March 27, the court denied a motion to dismiss filed by members of the DAO, finding that the bZx DAO and its successor Ooki DAO are plausibly alleged to be a general partnership in which the members of the DAO are the partners. This is a case of first impression where a DAO’s members (its token holders) could be jointly and severally liable for the actions of the DAO.

bZx DAO operates a blockchain-based software system called bZx Protocol. The bZx Protocol was hacked in 2021, and its users lost approximately $55 million in digital tokens. To compensate those impacted by the hack, the bZx DAO developed and approved a compensation plan, but recoupment would take many years. Plaintiffs, who are 19 bZx Protocol users who lost $1.7 million collectively in the hack, filed a lawsuit in June 2022 claiming that bZx DAO’s negligent security protocols led to the hack.

Continue Reading DAO or Dare: The Implications of <em>Sarcuni v. bZx DAO </em>for DAO Member Liability

The start of 2023 hasn’t gone much better for the blockchain and cryptocurrency industry than the end of 2022 did. In declining to dismiss a case alleging that non-fungible tokens (NFTs) called Moments are considered securities, a federal judge held in Friel v. Dapper Labs that a lawsuit against the creator of the NBA Top Shot platform can proceed. By surviving the motion to dismiss, the Plaintiffs plausibly alleged that these NBA Top Shot NFTs, and only these NFTs, could be a security. While the first of its kind to hold that an NFT could be considered a security, this seemingly narrow ruling could have far-reaching implications for other NFT projects and marketplaces.

NBA Top Shot is an NFT platform, owned and operated by Dapper Labs, that allows consumers to buy, sell, and trade Moments (digital video clips of player highlights) on Dapper Lab’s Flow Blockchain. On February 22, 2023, the United States District Court for the Southern District of New York denied Dapper Labs’ motion to dismiss, holding that although “it [is] a close call and the Court’s decision is narrow,” Moments qualify as a security under the Howey test. In its decision to deny the motion to dismiss, the court focused on prongs two and three of the Howey test.

Continue Reading Layup or Airball? Court Holds NBA Top Shot NFTs May Be a Security in Friel v. Dapper Labs
This article was also published in The Daily Journal.

The United States Court of Appeals for the Eleventh Circuit recently affirmed dismissal of a trademark infringement lawsuit against the producers of MTV Floribama Shore in MGFB Properties, Inc. v. Viacom Inc., 54 F.4th 670 (11th Cir. 2022) (the “Order”). The Court’s Order sought to strike a balance between the trademark protections of the Lanham Act and the artistic freedoms guaranteed by the First Amendment.

At the heart of the MGFB dispute were two words, “Flora-Bama” and “Floribama.” They refer to a popular beach area that borders the states of Florida and Alabama. “Flora-Bama” is a federal trademark registered by MGFB Properties, Inc. (MGFB). Order at 673. Together with Flora-Bama Management LLC and Flora-Bama Old S.A.L.T.S. Inc. (collectively, “Trademark Owners”), MGFB owns and operates a relatively well-known lounge on the Florida-Alabama border, the Flora-Bama Lounge, Package and Oyster Bar (“Lounge”). Id. at 672. “Floribama” is included in the title of a reality series, MTV Floribama Shore, developed and produced by 495 Productions Holdings LLC, 495 Productions Services LLC, and ViacomCBS Inc. (“Viacom”) (collectively, “Producers”) as a spin-off of their reality series, Jersey Shore. Id. In the spin-off, the Producers wanted to feature a subculture of “young [S]outhern folks” who spend time on the Gulf of Mexico, “extending from the Florida panhandle into Alabama and Mississippi.” Id. at 674.”Flora-Bama” Trademark Owners sued Floribama Shore Producers for trademark infringement and unfair competition under the Lanham Act and Florida statutory and common law. Id. at 676. The trial court granted summary judgment for the Producers on all claims, and Trademark Owners appealed. Id. at 677. The Eleventh Circuit affirmed the finding that MTV Floribama Shore passes the Rogers test. Id. at 683–84.

Continue Reading Eleventh Circuit Affirms MTV Floribama Shore Does Not Infringe Flora-Bama Trademark

The SEC has rung the bell again on a celebrity touting a crypto token offering without adequate disclosure of a paid role. On October 3, 2022, the Securities and Exchange Commission released its order instituting cease and desist proceedings against Kim Kardashian and detailing Kardashian’s violation of Section 17(b) of the Securities Act (see Administrative Proceeding File No. 3-21197). Kardashian came under scrutiny from the SEC after she promoted EthereumMax Tokens (Emax Tokens) via her Instagram account in June of 2021, near the height of the cryptocurrency market, without making the proper disclosures. The SEC had previously fined boxer Floyd Mayweather and rapper DJ Khaled in 2018 for similar violations of the SEC’s “anti-touting” rules.

Continue Reading Oops they did it again – SEC brings Crypto Anti Touting Action against another celebrity – this time Kim Kardashian

A federal district court judge in the Central District of California recently dismissed a choreographer’s claims against Epic Games Inc. (“Epic Games”) arising out of Epic Games’ alleged use of his dance moves in its Fortnite video game. See Kyle Hanagami v. Epic Games Inc., No. 22-cv-02063-SVW-MRW (C.D. Cal. Aug. 24, 2022) (Dkt. 45) (“the Order”).

As the Order explains, Fortnite features a virtual reality world where players can choose an avatar to represent them as they explore, build, and destroy structures, and battle each other in player-to-player combat. Fortnite players can customize their avatars by utilizing a variety of features, including “emotes,” which are dances that avatars perform while attending concerts or to celebrate a victory in a battle royale game, among other things. Choreographer Kyle Hanagami brought copyright infringement and unfair competition claims against Epic Games based on his allegations that one of Fortnite‘s nearly 500emotes incorporated a handful of dance moves from a five-minute routine he posted to YouTube in 2017 and obtained a copyright for in 2021.

Continue Reading California District Court Holds Dance Moves in Fortnite Did Not Infringe Copyright
This client alert was also published in Westlaw Today.

A Michigan State Court recently dismissed claims against Euclid Media Group, the parent company to several media properties, including Deadline Detroit, Inc. (“Deadline”), for publishing articles about a Plaintiff’s conduct at a Birmingham Public School Board of Education meeting. See Paul Marcum vs. Euclid Media Group, Docket No. 2022-191878-CZ (Mich. Cir. Ct. Jan. 4, 2022) (Dkt. 129) (“Order”).

On August 23, 2021, Deadline published an article, “Man Who Gave Nazi Salute at Birmingham Schools Meeting Loses Tennis Job” (the “Article”). The Article asserted that Plaintiff had gestured and uttered a Nazi salute toward two African American women and a Jewish woman who had voiced their support for a classroom mask mandate. The Article not only identified Plaintiff by name, but it also included his picture and stated Plaintiff had been “accused of flashing a Nazi salute and repeatedly chanting ‘Heil Hitler.'”

Continue Reading Truth Remains an Absolute Defense Against Defamation Claims