Wednesday, September 14, 2011

Court punts to jury, then announces it won't follow binding precedent

Hackett v. Feeney, 2011 WL 4007531 (D. Nev.)

Plaintiff Hackett and the individual defendants formed TRP Entertainment in 2002 to produce a live tribute show to the Rat Pack. The show was performed in Las Vegas and elsewhere; Hackett wrote the script and acted in the show. In 2005, Hackett registered the copyright (and later filed other registrations for revisions and to correct errors in the original registration). Defendants contended that they bought out Hackett’s interest in TRP in 2006, though Hackett disputed this; Hackett continued to be involved in the production until 2009, at which point the parties’ relationship dissolved. Hackett was terminated from the show and he told defendants that he terminated any license to his copyrighted materials. Defendants allegedly continued to use his materials.

Hackett then formed Hackett/Miller to produce a new tribute to the Rat Pack based on the same script. H/M created a website using TRP’s original designer based on the same “html and graphical code” to promote Sandy Hackett's Rat Pack Show.

Hackett sued defendants for multiple claims, but the court here considered only copyright infringement, and TRP counterclaimed, with only the false advertising/unfair competition counterclaims considered here.

TRP alleged three types of false advertising: (1) that Hackett/Miller's website claimed two awards it had not won (specifically "Best Entertainment Website and Best of Show" from the "2006 Electronic Media Awards"); (2) Hackett/Miller misattributed testimonials from What's On magazine and Player Magazine to its show on its website; and (3) Hackett/Miller displayed banners, posters, and billboards including the statement "Voted # 1 Best Show in Vegas!" surrounded by a laurel wreath.

H/M argued puffery. As for the “voted #1” claim, TRP argued that there was no official vote, making this a literally false statement. The court disagreed, after an aside about H/M’s failure to involve Democrats and Republicans and to comply with campaign finance law. Adding “voted” “does not substantively change the context much, though maybe some. It is no different than the addition of the word ‘Considered’ or ‘Rated’ or anything similar. All of these words (voted, considered, rated, etc.) in combination with ‘# 1 Best Show in Vegas’ beg the question: By whom? Without answering that critical question there is no specific claim and the statement is simply exaggerated advertising which precludes reliance by consumers.” But, the court continued, there was a thin line here: if the claim had continued “by X,” it would be false advertising unless X had actually voted the show #1 in Vegas. (It’s good to know that our courts can so easily tell what reasonable consumers think!) Since there was no X named, the claim was nonactionable puffery, “as no one can take real meaning from the phrase in the context of no actual endorsement from a voting body.”

The other claims were not puffery. However, TRP failed to show materiality sufficient to entitle it to summary judgment on this point. It argued that intentionally and literally false statements should be presumed material, but it didn’t have in-circuit precedent and many of the cases it cited involved really egregious conduct. “Here, Hackett/Miller placed on its website a reference to a website award that isn't even about the actual show but the website design. The conduct here is not nearly so obviously material as in TRP Entertainment's examples which may warrant a presumption of materiality not requiring actual proof.”

TRP also argued that its website was the one that won the award. This was true “to an extent,” but it was the web designer, “who entered the contest independent of TRP Entertainment and later designed the Hackett/Miller website from the same html codebase,” who won the award. Still, winning an award at one point doesn’t entitle the designer to claim that future projects have also won awards. But
the point remains: How is this material to purchasing (or advertising) tickets to a live tribute show to the Rat Pack? Who determines what show they are going to go see on the Strip based on the fact that the website they purchase the tickets from has won a design award? The website isn't even the product being sold. This is like choosing your hotel based on it having an award-winning booking system: Who cares? The Court is not sure and will therefore leave it to a jury to determine whether website award claims on the website are material.
Given that the websites were highly similar (practice note: businesses, get at least an exclusive license from your website designer!), there were also questions about the truth value of the claim. George Lucas modifies the classic Star Wars movies with “pretty much every new release.” The originals won bunches of awards. Can a modified Blu-ray release claim these awards? The court thought that the answer was yes for Lucasfilm, but that it wasn’t clear for these websites where to draw the line.

The magazine testimonials, by contrast, were given to TRP’s show, before H/M’s even existed. Thus, attributing them to the H/M show is literally false, material, and otherwise meets the other elements of the Lanham Act test.
However, when these accolades were given, the TRP Entertainment show was Hackett's script, Hackett was a key actor in the show, and Billy Karl was the director. Now, Hackett's same script is the basis for the Hackett/Miller show, Hackett apparently plays the same part as he did in the TRP Entertainment Show, Billy Karl directs the Hackett/Miller show, and there are other ways in which the two shows are the same (at least at the time the statements were displayed online). Further, TRP Entertainment admits to having the same statements on its own website despite the fact that its show was no longer the same show the magazines originally commented on as TRP Entertainment claims to have modified it in contesting copyright infringement.
The court hadn’t seen evidence of the differences between the shows. But Miller admitted that the statements were posted in error and removed. The court therefore declined to grant summary judgment to TRP: “the issue of the script and the general sameness and interrelations of the two shows” created factual questions for a jury.

I really don’t know how to read this result except as an implicit holding that the claims were not in fact literally false but only potentially misleading in this particular set of circumstances.

Turning to copyright, TRP argued that Hackett’s registration was invalid because the deposit copy was not a bona fide copy of the registered work, and that Hackett granted an oral, nonexclusive license of indeterminate duration that Hackett could not terminate at will. The court found disputed factual issues on each question. Specifically, a reasonable jury could find that the parties’ understanding was that any license terminated if and when Hackett left TRP. Also, a licensee can infringe by exceeding the scope of its license, and a reasonable jury could find that this happened when TRP revised the material after Hackett left.

But the most notable thing here is the court’s turn from snappy writing to outright defiance of clearly and concededly binding precedent. Rano v. Sipa Press, Inc., 987 F.2d 580 (9th Cir. 1993), holds that an oral license of unspecified length can’t be terminated at will, but is subject to § 203. TRP pointed that out, and the court agreed that this was the law of the circuit. “Nonetheless, the Circuit Court was wrong in its interpretation of § 203.… [T]he Court could not in good conscience apply such erroneous law and would hold that Hackett could terminate an oral license as allowed under Nevada law.”

I don’t recall seeing a court of appeals do this with a Supreme Court opinion that it thinks should be, and might be, overruled if cert is granted, and I’ve certainly never seen a district court announce this kind of rejection of its role in the system. I’m honestly shocked and am leaning towards the position that the case should be taken away from a district judge who's announced unwillingness to comply with the law. It’s one thing to rule under protest, inviting the court of appeals to reconsider en banc with one’s best arguments (other circuits disagree and so does Nimmer). But this kind of civil disobedience makes no sense to me, even as a tactic: it’s hard to imagine the Ninth Circuit looking with favor on this behavior.

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