Building Owners Sued For Trademark Counterfeiting

Designer Louis Vuitton has filed a trademark infringement and counterfeiting lawsuit against real estate companies and owners of building along Canal Street in New York City’s Chinatown.  In its Complaint, Vuitton claims that the landlords have knowingly allowed tenants to use the premises as storehouses and retail outlets for counterfeit goods.  Vuitton asserts that one particular property owner, Richard E. Carroll, is “at the helm of this assault on Louis Vuitton’s intellectual property rights,” claiming that Carroll derives substantial profits from the counterfeiting enterprises going on in his buildings.  According to Vuitton, knockoffs of Vuitton handbags, wallets, scarves, watches, umbrellas and other fake Vuitton goods were sold out of various storefronts housed in the defendants’ buildings with the actual knowledge of the property owners.

It appears that Vuitton may be taking a cue from the property forfeiture provisions under the drug trafficking laws.  Also, it is notoriously difficult for trademark owners to recover judgments from counterfeiters who often do not have the money to pay or have otherwise disappeared into the general population while the lawsuit is pending.  Property owners at least have tangible assets that can be seized.  The outcome of this case may determine whether Vuitton’s new strategy will provide trademark owners with a solid means of shutting down counterfeiting by forcing property owners not to turn blind eyes to the criminal doings of their “commercial” tenants.

While Vuitton claims that Carroll and the other defendant landlords knowingly allowed that counterfeiting to go on and allegedly profited from the conduct, we recommend nonetheless that landlords periodically review their tenants’ activities as well as review their tenant leases to insure that landlords may avoid potential liabilities for tenants' unlawful  actions in the premises.

Louis Vuitton Malletier v. Richard E. Carroll, et al., U.S. District Court-Southern District of New York, Case No. 05-cv-3331.

Freelance Writers Take Notice — Publishers Take Warning

The Supreme Court in 2001 rendered milestone copyright decision in The New York Time v. Tasini, 533 U.S. 483 (2001).  The Court ruled that print publishers infringed the copyrights of freelance writers by reprinting and distributing their articles in electronic databases.  Now comes U.S. District Court Judge George Daniels who recently approved a settlement in one of the largest copyright class action cases in history.  In keeping with Tasini, the lawsuit claims that major newspapers and magazines published freelance articles in electronic databases without the authors’ permission.  These databases include such heavy weights as West Group and Lexis.  In the settlement, the publishers agreed to pay the freelancers up to $1,500 for articles with registered copyrights and up to $60 to writers who did not register the copyrights in their works, depending also on other factors such as the amount of the original fee paid.  Between Tasini and this recent settlement, freelancers might find a boost in bargaining power with publishers.  On the other hand, since Tasini, publishers have become more careful about including in writer’s contracts a provision for republication and distribution of articles in electronic databases.

Writers should pay close attention to the contracts offered them by publishers to understand the full scope of their rights and the rights of the publisher to reproduce the work.  If the contracts are missing the clause for electronic publication or the grant of right does not cover it, then writers may be entitled to additional compensation if the publisher archives, publishes or displays  writers’ works online.

In re Literary Works in Electronic Databases Copyright Litigation, MDL No. 1379 (S.D.N.Y., April 4, 2004).

New York Boosts the Recording Industry By
Protecting Recordings of Music Performances Until 2067

In a far-reaching decision, the New York Court of Appeals on April 5, 2005, unanimously ruled that the common law copyright in recordings of musical performances are extended and in effect even though foreign copyrights on the works have expired.  Under current law, the common law copyright would not expire until 2067.  Prior to the Copyright Act of 1976, the copyright of unpublished works was protected under state rather than federal law.  However, the release of commercially recorded musical performances would constitute a publication and would therefore lose protection under the common law.  But federal law did not extend copyright protection to such recordings until 1972.  The Court of Appeals decision turns on a distinction that the publication of a work pertains to the composition itself and not the performance of the composition.  On that basis the Court found that the recordings of musical performances, even though put on the market, were not “published” and therefore could not lose their protection under New York law.  At issue in the case were several classical music recordings made in the 1930’s in the United Kingdom.  The rights in the recordings are owned by music giant EMI.  The British copyrights expired in 1990, but the works never received protection under U.S. copyright law.  Under U.K. law, the recordings were now in public domain.  In 1996 Emi granted a license to its subsidiary Capitol Records to remaster the original recordings and release them on CD.  Another company, Naxos of America, located copies of the original 1930s recordings and remastered their own versions, which Naxos released in the U.S. in 1999.  Capitol Records sued in federal court in New York for copyright infringement, but the district court granted summary judgment to Naxos, finding that when the U.K. copyrights expired in the performance EMI lost all its intellectual property rights.  EMI appealed to the Second Circuit Court of Appeals, which directed the case to New York State’s highest courtto certify questions concerning protection of musical performances under New York’s common-law copyright.  With the New York Court of Appeals now ruling that pre-1972 recordings of musical performances are unpublished and therefore protected under the common-law, the case goes back to the federal Second Circuit Court of Appeals, which is expected to reverse the district court’s finding in favor of Naxos and set the case down for trial.  The music industry has reason to celebrate this decision.  Many valuable pre-1972 recordings of performances have their protection extended to February 15, 2067, when federal copyright law will pre-empt all remaining common-law copyright protection.  At risk is potential multi-district confusion as to the scope of protection available for these sound recordings.  Recordings that are in the public domain in Britain and Europe — and quite likely in other states in the U.S. — may be freely copied, used, and redistributed by anyone, except in New York.  Companies that restore and re-master old classic recordings will not to be able to work without a license, even though the work may be in the public domain everywhere except “New York.  If the Second Circuit reverses the district court, as expected, Naxos is seriously considering an appeal the U.S. Supreme Court.

Capital Records, Inc. v. Naxos of America, Inc., (N.Y., April 5, 2005).

Bootlegging Street Vendors Be Warned

Street vendors are common in New York City.  Some however are rather nefarious, selling bootlegged movie DVDs and music CDs on the sidewalks of Fulton Street and in Greenwich Village, insouciantly spreading out their illegal wares on blankets.  Many of these copies are of first-release films that are not otherwise available yet on video.  Typically, copies of first releases are made by sending a person into a theatre with a digital video camera to record the film as it rolls on the big screen, commonly known as camcording.  The ill-got copy is then transferred to DVD.  These pirates, however, now face a new federal crime.  On April 27, 2005, President Bush signed into law the Family Entertainment and Copyright Act of 2005.  One provision of the new law, the Artist’s Rights and Preservation Act or the “Art Act,” criminalizes camcording.   A guilty verdict under this new law will impose prison time and fines up to $250,000.  The law also criminalizes online file-swapping of first-run movies with a three-year prison term.  Penalties apply for posting the swap on the Internet, even if the work is never downloaded.  In addition to the criminal provisions, the new law exempts scene-skipping technologies for the copyright law, thus permitting the distribution of devices that allow parents to censor movie scenes with objectionable language or violence.  These devices essentially automatically fast-forward or mute certain scenes.

Family Entertainment and Copyright Act of 2005, Pub.L. 109-009.

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