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

The United States Court of Appeals for the Third Circuit recently upheld the federal cyberstalking statute against a constitutional challenge. See United States v. Ho Ka Yung, 37 F.4th 70 (3d Cir. 2022). The Third Circuit narrowly construed the statute’s intent element to require an intent to make the victim fear death or bodily injury or to cause the victim distress through threats or intimidation.

According to the opinion, the case begins with Yung’s application to Georgetown Law. The admission interview went poorly, and Yung was rejected. In turn, Yung allegedly embarked on a cyber-campaign against the unsuspecting interviewer, including creating fake blog posts as the interviewer bragging about raping women and children, filing false reports accusing the interviewer of sexual assault, and impersonating the interviewer’s wife in online sex ads. After the FBI became involved, Yung was charged with cyberstalking.

Continue Reading Third Circuit Upholds Federal Cyberstalking Law

On June 3, 2022, the Ninth Circuit Court of Appeals held that an Arizona district court erred in dismissing a defamation suit for lack of personal jurisdiction. The suit was brought by an attorney against three Catholic bishops and their respective dioceses located in Pennsylvania, New Jersey, and Ohio. See Burri L. PA v. Skurla, No. 21-15271, 2022 WL 1815827 (9th Cir. June 3, 2022).

According to the complaint, Plaintiff alleged that Defendants made defamatory statements about him to individuals in Arizona. Plaintiff alleged that these communications were designed to interfere with a contract that Plaintiff had with the Phoenix Eparchy in Arizona. Defendants also allegedly repeated these defamatory statements about Plaintiff at a meeting with multiple representatives from the Phoenix Eparchy, where they urged the Phoenix Eparchy to drop a prior action that Plaintiff had brought on behalf of the Phoenix Eparchy against Defendants in Arizona. Based on Defendants’ conduct and communications, Plaintiff filed a lawsuit against Defendants in Arizona for defamation and tortious interference.

Continue Reading Personal Jurisdiction and the Calder Effects Test: Ninth Circuit Sides with Florida Plaintiff in Defamation Suit Against Bishops

Last month, a bipartisan pair of senators released the first comprehensive cryptocurrency bill that, though it is unlikely to become law, will frame how Congress discusses future legislation. The sweeping draft from Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), viewed as friendly to the crypto industry, defines digital assets and proposes a lighter-touch regulatory architecture, among the provisions that address current core cryptocurrency policy debates in Washington.

The Responsible Financial Innovation Act would settle jurisdictional battles among executive branch agencies by giving the Commodities Futures Trading Commission (CFTC) oversight over most digital assets and constraining the authority of the Securities and Exchange Commission (SEC), whose chairman, Gary Gensler, has taken a more combative stance toward the crypto industry. The CFTC would not have authority over digital collectibles or non-fungible digital assets, including NFTs. While NFTs are outside the scope of the current draft, a future proposal could alter the status quo.

Continue Reading Bipartisan Bill to Regulate Digital Assets Introduced: Pathway to Comprehensive Regulation Remains Unclear, NFTs Not Addressed

More than two years have passed since the tragic helicopter crash that killed basketball player Kobe Bryant, his daughter Gianna Bryant, and all others on board the January 26, 2020 flight. Since that time, several cases related to the crash have been working their way through the U.S. District Court for the Central District of California, including two brought by Vanessa Bryant, the widow of Kobe Bryant and mother of Gianna Bryant. One case, brought by Vanessa Bryant against the owners of the helicopter and the estate of the helicopter’s pilot, was settled by the parties and voluntarily dismissed with prejudice on December 14, 2021.[1] The other case was brought by Vanessa Bryant against the County of Los Angeles and others, alleging severe and continuing emotional distress caused by Los Angeles County employees who allegedly took and disseminated graphic photographs of the crash site using their personal smartphones. That case, Vanessa Bryant v. County of Los Angeles, et al., No. CV 20-9582, is headed for trial following U.S. District Judge John F. Walter’s denial of the County’s motion for summary judgment on January 5, 2022.[2] The trial is scheduled to begin on July 26, 2022.[3]

One of the most contentious issues we can expect at trial is proximate causation. It is not disputed that Vanessa Bryant has suffered significant emotional injury. Nonetheless, the County is poised to argue that Vanessa Bryant’s emotional distress was not proximately caused by the alleged tortious acts of the County.[4] One way the County may attempt to do so is by using Vanessa Bryant’s mental health records to show that it was the effects of the helicopter crash itself, and not the subsequent acts of County employees, that caused her emotional distress.

Continue Reading Vanessa Bryant v. County of Los Angeles, et al.

On April 7, 2022, Venable partner Sarah Cronin was featured on the NPR podcast The Indicator from Planet Money, where she discussed pandemic insurance for the entertainment industry and her role handling insurance recovery disputes on behalf of policyholders.

According to the podcast, a lot can happen in a music venue that could result in injury to people or damage to property for which the owner could be held liable. That’s why business owners often rely on insurance to cover themselves, but policies are complex, and so are the various kinds of coverage they offer. The pandemic forced the closure of music venues around the country. Owners of many of these businesses believed their existing insurance policies would help them weather the storm, but many of those policies weren’t designed for pandemics.

Even before COVID-19, pandemic coverage was rare, but it has since virtually disappeared. “Now with event cancellation insurance, every insurance company throws on a communicable disease exclusion so that there would not be coverage,” said Cronin.

Click here to access the podcast.

To learn more about Sarah Cronin’s insurance practice, click here.