Technology Law Update

And the dead shall rise again. In California, anyway.

Earlier this year, the New York Supreme Court ruled  in Shaw Family Archives LTD v. CMB Worldwide (S.D.N.Y. May 2, 2007), that the California right of publicity statute enacted in 1985, did not allow the right of publicity to be transferred by the will of the celebrity who died prior to the enactment of the statute. Marilyn died in 1962. Another court similarly ruled several days later in The Milton Greene Archives, Inc. v. CMB Worldwide, Inc. (C.D. Cal. May 14, 2007). We wrote on the Shaw case at the time it was decided.

Now another Hollywood celebrity, the Governor of California, has signed into law a bill specifically intended to reverse the result in both cases. SB 771, Chapter 439, amends Cal. Civil Code sec. 3344.1 to provide that the postmortem right of publicity is deemed to have existed at the time of death of a celebrity who passed away prior to the enactment of the statute in 1985. The legislation cites both cases, and states that it is intended to abrogate the summary judgment orders entered in them. The California Legislature was responding, it seems, to the comment made in the Shaw case to the effect that state legislatures were free to reverse the result in the case legislatively:

The court reaches this conclusion with some reluctance because . . . at least some personalities who died before passage of the California . . . right of publicity statute[] left their residuary estates to charities, which will be "divested" of those rights under the court's holding. As noted, however, nothing in this order prevents legislatures from enacting right of publicity statutes so as to vest the right of publicity directly in the residuary beneficiaries of deceased personalities' estates or their successors-in-interest.

The Analysis of the Assembly Committee on the Judiciary also provides interesting background on the legislative history of the right of publicity statute, which has been amended more than once before to benefit the survivors of deceased celebrities.

Despite the amendment of the California statute, it is not clear what effect, if any, it will have on the litigations that prompted it. In the Shaw case, the court did not decide that the California statute applied to the dispute, which concerned the sale of a t-shirt with a photograph of Marilyn in a Target store in Indiana. The court ruled that neither of the two states in which Ms. Monroe could conceivably have been domiciled at her death (New York or California) allowed for the transfer by will of a right of publicity that did not exist at the time of the testator's death.

It being the California Legislature, it should be no surprise that the bill amending the California law was sponsored by yet another celebrity. Perhaps one not as well known as Marilyn Monroe, but familiar nevertheless to the fans of the 1960's situation comedy "The Many Loves of Dobie Gillis." Senator Sheila James Keuhl played Dobie's would-be girlfriend Zelda Gilroy.

The First Amendment and Baseball

If you build it, they will come.  And the fans have, of course, flocked to online fantasy sports sites. Fantasy sports leagues are big business, about $1 billion a year, according to one estimate. Recognizing the revenue potential in fantasy sports, in 2005 Major League Baseball included in its agreement with the Major League Baseball Players Association a provision that provided Major League Baseball Advanced Media with rights to license and sublicense to others group rights for the development and creation of on-line games, including fantasy baseball.

C.B.C. Distribution and Marketing is a company engaged in selling fantasy sports products that incorporate the names, performance data and biographical data of Major League Baseball players. In 1994 and 2002 C.B.C. licensed the right to use players' names and information from the MLB Players Association, but when the 2002 agreement expired, C.B.C. was offered a more limited license to the players' information and rights of publicity by MLB Advanced Media. C.B.C. instead brought an action for a declaratory judgment in federal court that its use of the players' information did not violate their rights of publicity.  In C.B.C. Distributing and Marketing, Inc. v. Major League Baseball Advanced Media, L.P. 443 F.Supp.2d 1077 (E.D. Mo. 2006), the district court granted summary judgment to C.B.C. on the ground, among others, that C.B.C. was not infringing the players' state law rights of publicity under Missouri law and that even if it was, those rights were preempted by the First Amendment.

Now, just in time for the World Series, the Eighth Circuit has upheld the grant of summary judgment, but did not agree with the lower court ruling in its entirety. In a ruling that may have broad implications for other kinds of virtual worlds, the court ruled that even though C.B.C. violated the state law right of publicity of the players, the First Amendment trumps those rights in the present context. C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P., No. 06-3357/3358 (8th Cir. Oct. 16, 2007)

The circuit court noted that the information used by C.B.C. is in the public domain, and that the use of that information in the context of a video game is First Amendment protected expressive speech. The circuit court also heavily relied on the "public value of information about the game of baseball and its players," commenting:

A California court, in a case where Major League Baseball was itself defending its use of players' names, likenesses, and information against the players' asserted rights of publicity, observed, "Major league baseball is followed by millions of people across this country on a daily basis ... The public has an enduring fascination in the records set by former players and in memorable moments from previous games ... The records and statistics remain of interest to the public because they provide context that allows fans to better appreciate (or deprecate) today's performances." Gionfriddo v. Major League Baseball, 94 Cal. App. 4th 400, 411 (2001). The Court in Gionfriddo concluded that the "recitation and discussion of factual data concerning the athletic performance of [players on Major League Baseball's website] command a substantial public interest, and, therefore, is a form of expression due substantial constitutional protection." Id. We find these views persuasive.

The circuit court also referenced the compensation levels of MLB players, in assessing the economic interests implicated by the players' rights of publicity:

In addition, the facts in this case barely, if at all, implicate the interests that states typically intend to vindicate by providing rights of publicity to individuals. Economic interests that states seek to promote include the right of an individual to reap the rewards of his or her endeavors and an individual's right to earn a living. Other motives for creating a publicity right are the desire to provide incentives to encourage a person's productive activities and to protect consumers from misleading advertising. See Zacchini, 433 U.S. at 573, 576; Cardtoons, 95 F.3d at 973. But major league baseball players are rewarded, and handsomely, too, for their participation in games and can earn additional large sums from endorsements and sponsorship arrangements. Nor is there any danger here that consumers will be misled, because the fantasy baseball games depend on the inclusion of all players and thus cannot create a false impression that some particular player with "star power" is endorsing CBC's products.

As to the argument that publicity rights protect non-monetary rights, the circuit court appeared to endorse Tom Hanks's famous line (in "A League of Their Own") that "there's no crying in baseball."

Then there are so-called non-monetary interests that publicity rights are sometimes thought to advance. These include protecting natural rights, rewarding celebrity labors, and avoiding emotional harm. See Cardtoons, 95 F.3d at 973. We do not see that any of these interests are especially relevant here, where baseball players are rewarded separately for their labors, and where any emotional harm would most likely be caused by a player's actual performance, in which case media coverage would cause the same harm. … We also note that some courts have indicated that the right of publicity is intended to promote only economic interests and that noneconomic interests are more directly served by so-called rights of privacy. *** For instance, although the court in Cardtoons, 95 F.3d at 975-76, conducted a separate discussion of noneconomic interests when weighing the countervailing rights, it ultimately concluded that the non-economic justifications for the right of publicity were unpersuasive as compared with the interest in freedom of expression. "Publicity rights ... are meant to protect against the loss of financial gain, not mental anguish." Id. at 976. We see merit in this approach.

Ninth Circuit Orders En Banc Review of Controversial Roomates.com CDA Immunity Opinion

The Ninth Circuit has ordered an en banc review of the controversial panel opinion in Fair Housing Council of San Fernando Valley v. Roommates.com, No. 04-56916 (9th Cir. May 15, 2007), on which we previously commented. The panel ruled that the Roommates.com site was not entitled to immunity under Section 230 of the Communications Decency Act because it was an "information content provider" with respect to the housing listings posted by users. The court focused on the "structured questionnaire" format of the listings, which asked information about roommate preferences based on characteristics such as age, sex, sexual preference, and whether children would live in the user's household, allegedly in violation of the federal Fair Housing Act. The court commented: "By categorizing, channeling and limiting the distribution of users’ profiles, Roommate provides an additional layer of information that it is “responsible” at least “in part” for creating or developing."

The petition for en banc review was supported by an amicus brief filed by the Electronic Frontier Foundation, Lycos, Inc., and Prof. Eric Goldman, a frequent commentator on Section 230 issues, including on this blog. Prof. Goldman is pleased with the result.

Court Enforces Browsewrap Agreement in Airline "Bot" Case

There has been a lot of press attention in the last few days to the lawsuit brought last April by Ticketmaster against a "ticketbot" software company that enabled scalpers to corner the market on highly sought-after tickets to events such as the Bruce Springsteen and Hannah Montana tours. The Wall Street Journal profiled the lawsuit last Friday. The case is captioned Ticketmaster LLC v. RMG Technologies Inc and Does, No. 2:2007cv02534 (C.D. Cal. complaint filed Apr. 17, 2007).

No decision has yet issued in the Ticketmaster lawsuit, but Professor David Sorkin in his Law Blog recently profiled a decision in a similar lawsuit , Southwest Airlines v. BoardFirst L.L.C.,  No. 3:06-cv-00891 (N.D. Tex. Sept. 12, 2007).  As related by Prof. Sorkin, Southwest Airlines brought the action against BoardFirst, a company that utilizes software to access the Southwest Web site to obtain preferred boarding passes for airline passengers. The court enforced the Southwest browsewrap agreement, ruling that the agreement, which prohibits the use of the Soutwest site for commercial purposes, was enforceable.

Here are some excerpts from the decision, which discusses the circuit court decisions in Specht v. Netscape and Register.com v. Verio (among others) at some length:

As browsewraps have become more prevalent in today’s increasingly e-driven commercial landscape, the courts have been called upon to determine their enforceability. Though the outcomes in these cases are mixed, one general principle that emerges is that the validity of a browsewrap license turns on whether a website user has actual or constructive knowledge of a site’s terms and conditions prior to using the site. See Mark A. Lemley, Terms of Use, 91 MINN. L. REV. 459, 477 (Dec. 2006) (“Courts may be willing to overlook the utter absence of assent only when there are reasons to believe that the defendant is aware of the plaintiff’s terms.”); Tarra Zynda, Note, Ticketmaster Corp. v. Tickets.com, Inc.: Preserving Minimum Requirements of Contract on the Internet, 19 BERKELEY TECH. L. J. 495, 507 (2004) ([“S]o far, courts have held browsewrap agreements enforceable if the website provides sufficient notice of the license.”).

***

There is no dispute that BoardFirst has had actual knowledge of Southwest’s Terms at least since Kate Bell received from Southwest the December 20, 2005 cease-and-desist letter in which Southwest informed Bell that the Terms forbid the use of the Southwest website for commercial purposes. (Pl. App. 14, 94, 106-07). Despite having actual knowledge of the Terms, BoardFirst has continued to use the Southwest site in connection with its business. In so doing BoardFirst bound itself to the contractual obligations imposed by the Terms.

The cyberspace version of “trover” - Thyroff V. Nationwide Mutual Insurance Co.

“Trover” is a word that most attorneys haven’t heard of since their bar review course. The derivation of the term is explained in a New York Law Journal Computer Law Column recently published by my colleagues Richard Raysman and Peter Brown, entitled “Electronic Records and the Tort of Conversion.” The ancient English common law action for trover was “modernized” several centuries ago by development of the tort of conversion; now the tort of conversion has been modernized in Thyroff v. Nationwide Mutual Insurance Co., 8 NY3d 283 (2007) to encompass the wrongful withholding of electronic records.

The article discusses the New York Court of Appeals decision in Thyroff, in which the court ruled that you can be liable for the tort of conversion, i.e., the unauthorized assumption and exercise of the rights of ownership over goods belonging to another, where the “goods” withheld consist of electronic records belonging to the plaintiff. Thyroff involved personal e-mails and electronic business records and customer information that were withheld when an insurance company that leased a computer system to an insurance agent repossessed the system.

Here’s an excerpt from the article:

As electronic methods continue to replace the physical storage of paper-based communications and related items, the law may continue to rely less on outdated definitions in determining what is considered personal property. In many instances, as Thyroff illustrates, courts have begun to recognize that the value of information does not necessarily change because it has been encoded in electronic form rather than being reduced to paper.

The full text of the article is available here.