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2017 Trends in Marketing Communications Law

Copyright >> Courts, Not Congress, Are Resolving Copyright Issues

April 11, 2017

The most significant developments in U.S. copyright law will be coming from the courts and not elected officials this year, continuing a trend from 2016.

Congress is not expected to expand copyright protection for clothing, combat offshore online piracy, broaden exemptions to software anti-circumvention protection or otherwise modernize the Copyright Act, despite demands from the public for these and other copyright reforms. Instead, the courts are likely to remain the principal source for meaningful substantive and procedural changes to copyright law.

For example, the Supreme Court recently issued a decision in the so-called "cheerleader uniform" case, creating a very permissive standard for determining whether the pictorial, graphic and sculptural features of a useful article are protected by copyright. Under this new standard the aesthetic features of an industrial design, like the surface decorations on a cheerleading uniform, are protected by copyright when those features can theoretically be separated from the industrial design, applied to another tangible medium, and exist as a freestanding pictorial, graphic or sculptural work. This decision gives the fashion industry and industrial design businesses broad protection and a robust tool to help fight knockoffs.

Also noteworthy is the long-running "dancing baby" case, which in 2016 held that a copyright owner may not send a Digital Millennium Copyright Act (DMCA) notice to a website, demanding takedown of allegedly infringing user-generated content (UGC) – there, a YouTube video of a baby boogieing to a Prince song – without first determining in good faith that the UGC is not a fair use. Currently a petition is pending before the Supreme Court for a decision that copyright owners must consider fair use under objectively reasonable standards, and not merely subjectively in good faith.

Relatedly, a lawsuit by the music industry last year against the video-sharing website Vimeo increased the proof required for copyright owners to establish that websites hosting UGC have "red flag" knowledge that the UGC is infringing, and, therefore, lose DMCA immunity. The court there held that website employees lack "red flag" knowledge unless they have actual knowledge that UGC is infringing or are aware of facts that make infringement obvious to an ordinary person. The case also held that copyright owners cannot impute "red flag" knowledge to websites merely because the websites suspected copyright infringement or failed to investigate or screen for copyright infringement.

Additionally, businesses that commission vendors to create copyrightable content should take careful note of a 2016 appellate court decision involving video footage commissioned by the actor Jared Leto, which held that, to be enforceable, a work-for-hire agreement must be entered into before the commissioned work is created. Interestingly, this decision is consistent with one circuit court, and in conflict with other circuit courts.

Key Takeaways

  • Fashion designers and other creators of useful articles have received expanded copyright protection for their designs, giving them a powerful new tool to combat knockoffs.
  • Copyright owners must determine in good faith, and perhaps even objectively reasonably, that UGC is not a fair use before filing a DMCA takedown notice.
  • Copyright owners will face a high bar to prove that a website had "red flag" knowledge that UGC was infringing and, therefore, that the website should lose DMCA immunity.
  • Work-for-hire agreements should be executed before a work is created, or their enforceability will depend on the state law governing the agreements.