Tag Archives: copyright law

Nobody Puts Your 401K in the Corner: Should Dirty Dancing IP Prevail?

by Katherine Imp

Did this title make you think of the 1987 film, Dirty Dancing?

Unless you’ve been living under a rock for 28 years, the answer is probably yes. According to the American Film Institute, “nobody puts baby in a corner” is one of the top 100 greatest movie quotes of all time.

Unfortunately for TD Ameritrade, the creator of “nobody puts your old 401(k) in the corner,” popular quotes generate revenue. And Lionsgate has no intention of giving TD a free pass.

TD Ameritrade’s Dirty Dancing ad spoof ran for seven months before TD received a cease and desist letter from Lionsgate, coupled with a 7-figure settlement demand. On June 26, TD fought back, filing for declaratory relief against Lionsgate in the Southern District of New York. Lionsgate responded by filing its own lawsuit on July 2 in the Central District of California, asserting claims like false association, unfair competition, trademark infringement and trademark dilution.

Who should win?

There is no question that Lionsgate has protection under copyright law. Lionsgate copyrighted the motion picture back in 1987 when Dirty Dancing was first released. However, the Supreme Court has unequivocally held that a “parody” qualifies as fair use. Meaning, TD can use some elements of the film Dirty Dancing without Lionsgate’s permission so long as the use qualifies as a parody.

Trademark law is a little trickier. Trademark law seeks to prevent confusion among consumers as to the origin, sponsorship or approval of goods or services. As a result, the central issue in every trademark infringement case is the likelihood of consumer confusion.

Unlike copyright law, parody is not a defense to a claim of trademark infringement. Instead, the “likelihood of confusion” test requires an analysis of several factors, including freedom of expression concerns.

Last fall, Lionsgate filed trademark applications with the USPTO for use of the quote “nobody puts baby in a corner” in connection with various goods (e.g., paper-based items, clothing, glass and household items). This filing took place one month before the TD ad was released.

In its complaint, Lionsgate also argued that its common law trademark rights (rights to a trademark not registered with the USPTO) date back to 1987.

That said … I’m with TD on this one. For one, TD’s “use” of the Dirty Dancing quote is in connection with the financial services industry, not the goods encompassed in the trademark applications filed last fall. Secondly, TD’s “use” of the quote was intended to amuse, not confuse. In fact, I’d further argue that because the quote is so recognizable, consumers would actually have an easier time distinguishing between a parody and the original.

However, I also understand why Lionsgate won’t back down until it receives a 7-figure settlement check from TD Ameritrade. Lionsgate is an entertainment conglomerate whose sole value is in its intellectual property rights. Giving TD a free pass, regardless of whether the use was proper or improper, opens the door for other third parties to push the boundaries between fair use and infringement.

Whether or not these powerhouses decide to settle or battle it out in court remains to be seen, but one thing is for sure: Nobody puts Lionsgate in a corner.

Katherine Imp is a transactional entertainment attorney at Cummins & Associates, Ltd., specializing in production legal, film finance and intellectual property matters. Contact Katherine at @KatherineImp or kimp@cumminsassociates.com.

Disclaimer: The information in this post is intended for general information purposes only and should not be construed as legal advice.

To see the original post, and similar articles, check out Katherine Imp’s SCREEN Magazine column, Street Legal

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Filed under Copyrights, Entertainment Law, Intellectual Property, Motion Picture, Trademarks

A Comparison of Fair Use in the U.S. to Fair Use in the People’s Republic of China

by Brian Hong*

When it comes to copyright infringement cases, U.S. law provides for a specific list of factors that a court should consider when determining whether a fair use defense applies.  Because the U.S. relies on a common law system, one can typically make an educated guess as to how a court will interpret and apply a statute based on controlling or persuasive precedent.  In contrast, because the People’s Republic of China (“PRC”) relies on a civil law system, there have been unpredictable outcomes when it comes to the applicability of the fair use.  Furthermore, fair use in the PRC is based on enumerated exemptions to copyright protection, but because these exemptions are somewhat vague, some Chinese courts strictly apply the listed exemptions, while others have called for a multifactor analysis similar to the U.S.’s fair use analysis.

U.S. Fair Use

In section 107 of the Copyright Act, Congress expressly recognizes the fair use defense.  When determining whether or not a fair use defense applies in copyright infringement cases, U.S. courts must consider the following four factors: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used; and (4) the effect upon the plaintiff’s potential market.  However, Congress has not stated how much weight to afford to each factor.

The purpose and character of the use:  If the work is “transformed,” meaning that the defendant adds something or uses the work in a different manner than it was originally used, then this factor sways in favor of fair use.  Whether the work is used for a commercial purpose or for nonprofit or educational purposes is also considered.

The nature of the copyrighted work:  The second factor can refer to either the form or the content of the original work, the presumption being that some works are closer to the core intent of copyright protection than others.  For example, use of an original novel will weigh in favor of copyright protection, while use of a newscast will weigh in favor of fair use.

The amount and substantiality of the portion used:  The third factor requires a court to quantitatively and qualitatively analyze how much of the original work has been used (in relation to the copyrighted work as a whole) and whether it is reasonable.

The effect upon the plaintiff’s potential market:  For the fourth factor, the court considers whether a party’s use of a copyrighted work could cause a substantial adverse impact on the market for the original work.

Fair use has been a subject of debate in the realm of search engines that provide internet users with images of and links to original works.  In Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003), the defendant’s search engine created small “thumbnail” versions of plaintiff’s photographs on its database.  The 9th Circuit held that defendant’s use of plaintiff’s images was transformative given that they were small, lower-resolution images that were used to index images.  Further, they were not highly exploitative, given that when a user clicked on an image, it transported the user to the original webpage with the image.  The 9th Circuit reached a similar ruling in Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007).

U.S. courts have mostly denied fair use as a defense in piracy cases.  In A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001), the defendant claimed that users did not engage in direct infringement of works but rather that they engaged in personal use like sampling or space shifting.  In that case, the 9th Circuit found that the four fair use factors weighed against a finding of fair use.  Most notably, the existence of free copies of a plaintiff’s work could cause a substantial impact on the market for that work (factor 4).  In BMG Music v. Gonzalez, 430 F.3d 888 (7th Cir. 2005), the 7th Circuit likewise found that “sampling” of copyrighted music was not eligible for fair use because it served as a direct substitute for a purchased copy and caused a substantial impact on the market for the original work.

PRC Fair Use

Article 21 of the PRC’s Implementing Regulation of Copyright Law, which went into force on September 15, 2002, states that “according to relevant provisions of the Copyright Law, use of published works without authorization of the copyright holder shall not impair the normal exploitation of such work or unreasonably prejudice the legitimate interests of the copyright holder.”  In effect, this provision is an implementation of the three-step examination under Article 13 of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which is an international agreement administered by the World Trade Organization.

Under Article 22 of the PRC Copyright Law, fair use is limited to the exemptions.  Article 22 states: “In the following cases, a work may be exploited without the permission from, and without payment of remuneration to, the copyright owner, provided that the name of the author and the title of the work are mentioned and the other rights enjoyed by the copyright owner by virtue of this Law are not infringed upon.”  Article 22 provides the following list of exceptions:

1) Private use:  Allows for an individual to use a published work for one’s own private study, research, or personal entertainment.

2) Quotation:  Allows for an “appropriate” quotation from a published work for use in one’s own work.

3) Education and research:  Allows for the translation or reproduction of a work for use in classrooms or to aid in scientific research.

4) Official state use:  Allows for a state entity to utilize a work, provided that such use is for actual official use and does not interfere with the normal exploitation of the work.

5) Institute Display or Preservation:  Allows for libraries, archives, or museums to reproduce a work for display or preservation.

6) Translation into minority languages:  Allows for an original Han Chinese language work to be translated into the languages of minority nationalities for publication and dissemination.

7) Braille Transliteration:  Allows for the transliterations of published works into Braille.

8) News Reporting:  Allows for the reproduction of published works by newspapers, television shows, or other mass media for reporting on current events.

9) Re-disseminating News Articles and Speeches:  This exemption is related to the above exemption on news reporting in that it allows mass media to reproduce articles on economic, political, or religious topics already made publicly available.

10) Free Public Performance:  Allows for one to publicly perform a published work, provided that nothing is charged and no payment is made to the performers.

11) Artistic Works in Public Places:  Allows for one to reproduce, draw, photograph, or make a video recording of an artistic work on public display e.g. sculptures, paintings, and calligraphy.

12) Broadcasting of a Speech at a Public Gathering:  Provided that the author does preclude this type of publishing, Article 22 allows for the mass media to publish or broadcast a speech made at a public gathering.

As shown above, the listed exemptions do not provide much background.  For instance, what constitutes an “appropriate” quotation under exemption 2 is unclear.  Furthermore, because the PRC utilizes a civil law system, each court can come to its own understanding of the fair use standard.  This often leads to unpredictable outcomes.

In some cases, whether or not the fair use defense applies is clear.  For instance, in New Modern Chinese Dictionary v. Modern Chinese Dictionary, the defendant lifted thousands of sample sentences and numerous pages of text from the plaintiff’s copyrighted dictionary for use in its own published dictionary.  The Beijing Higher People’s Court held that the whole-scale copying of text constituted infringement and did not qualify for the education and quotation exemptions.  Obviously, such use was neither in the aid of research nor was it a “limited quotation.”

However, some courts have tweaked the standard.  For example, in Beijing Sanmian v. Hefei Bang Lue, the plaintiff sued for copyright infringement when the defendant published plaintiff’s article on mobile telephone trends in China.  The defendant argued for the news reporting exemption on current events.  The court held that in order to utilize the news reporting exception the event needed to be “timely sensitive” and “significant.”  The court ruled that although the article was timely, it was not significant enough to fall under the exemption.

Although deference is given to the listed exceptions, some courts have provided a more open-ended and detailed multifactor analysis.  In SARFT Movie Channel Production Center v. China Education TV Station, defendant CETV broadcasted plaintiff’s copyrighted film “Out to Amazon River.”  Defendant argued for fair use as a state-owned television station that broadcast the film for educational purposes.  The court first tackled the fair use exemption and held that the exemption was only limited to in-person classroom teaching and did not include remote broadcasting.  Despite the exemption, the court noted that fair use should “evolve to accommodate new development[s] and demand[s].”  The court conducted further analysis and considered: 1) the purpose of the use, and 2) the effect of the use on the market for the film, which is similar to the first and fourth factors considered under the U.S.’s fair use analysis.  Defendant inserted numerous advertisements during the broadcasting of plaintiff’s film, which the court found swayed in the plaintiff’s favor.  Because both the plaintiff and defendant were television stations with broadcasting rights the court found that the defendant’s broadcasting of plaintiff’s movie would negatively impact plaintiff’s ability to engage in normal exploitation of its work.  Like U.S. courts in online piracy cases, this particular Chinese court perceived the potential adverse impact in allowing defendant to broadcast plaintiff’s work.  As a result, the court found that the defendant had infringed upon the plaintiff’s work.

Closing Thoughts

When it comes to fair use, U.S. law is more open-ended with its multifactor analysis compared to Chinese courts’ strict deference to Article 22 exemptions.  However, as shown above, some Chinese courts have undertaken a multifactor analysis similar to U.S. courts.  Overall, with the rising in internet connectivity and technological advances, it seems that both Chinese and U.S. courts will continue to face challenges in adapting their factors and exemptions to remain relevant and applicable in this digital age.

Brian Hong is an associate attorney at Grassini & Wrinkle.  He also writes Legal Brainz, a legal blog focusing on video game developments throughout Asia. *A prior version of this piece was originally posted on Legal Brainz. 

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