What to Watch in 2023
Here’s a roundup of legal issues at the intersection of art, intellectual property, and technology.
Supreme Court Docket
Two legal battles before the Supreme Court may give creators and their advisors additional guidance on whether a follow-on usage of existing material infringes another’s intellectual property rights.
The Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith
In October 2022, the Supreme Court heard argument in this case. (Background here). The Warhol Foundation sought reversal of the Second Circuit Court of Appeals’ ruling that the artist’s foundation infringed Lynn Goldsmith’s photograph of Prince when it commercially licensed the reproduction of one of Andy Warhol’s works from his Prince series as a magazine cover. According to the Foundation, the Second Circuit erred in failing to credit Warhol’s follow-on usage of Goldsmith’s photograph as transformative. The Foundation claimed that the Second Circuit’s opinion creates a circuit split, will create confusion in the lower courts, and casts a cloud of legal uncertainty around works of visual art incorporating third-party source material.
Goldsmith, for her part, argued that the Second Circuit followed prior Supreme Court precedent. She also argued that the Foundation was exaggerating the effect of the decision below, which is about the licensing of the artwork, not the artwork’s creation. She also noted that the Second Circuit endorsed as fair use other examples of artwork that directly copied from a source work but were nonetheless transformative.
The Supreme Court’s decision in this case will be the first time in nearly 30 years that the court has decided a fair use case involving an expressive work, and is expected to be issued in the coming months.
VIP Products LLC v. Jack Daniel’s Properties, Inc.
VIP Products sells the “Bad Spaniels Silly Squeaker,” which resembles a bottle of Jack Daniel’s Old No. 7 whiskey, but altered into a poop-themed dog toy. After Jack Daniel’s demanded that VIP stop selling the toy, VIP filed an action seeking a declaration that the toy does not infringe or dilute any claimed trademark rights of Jack Daniel’s.
Following a bench trial, the trial court found for Jack Daniel’s. The court enjoined further manufacturing and sales of the dog toy on the ground that the use of Jack Daniel’s trademarks was likely to confuse consumers, infringed the marks, and tarnished Jack Daniel’s reputation.
On appeal, the Ninth Circuit Court of Appeals held that the dog toys were expressive works that were subject to heightened protection under the framework set forth in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Under that test, trademark infringement will not lie unless the follow-on use “has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless [it] explicitly misleads as to the source or the content of the work.” Id. at 999. The Ninth Circuit held that the dog toy, while “surely not the equivalent of the Mona Lisa,” was an “expressive work” because it communicated a “humorous message,” and thus, the Rogers test applied.
Jack Daniel’s asked the Supreme Court to hear the case, arguing that the Ninth Circuit’s embrace of First Amendment protection for humorous trademark use conflicts with decisions of other circuits, which hold that a mark holder need only satisfy the traditional likelihood-of-confusion test, and that humor or parody is merely a factor in that test that makes it less likely the mark holder will prevail. According to Jack Daniel’s, the Ninth Circuit stretched too far the concept of what qualifies as an expressive work entitled to free speech protection under the Rogers test.
In November 2022, the Supreme Court agreed to hear the case. On January 11, 2023, Jack Daniel’s filed its brief. Per Jack Daniel’s:
Under those rulings, anyone could use a famous mark to sell sex toys, drinking games, or marijuana bongs, while misleading customers and destroying billions of dollars in goodwill—all in the name of just having fun. Humor does not transform the Lanham Act into a trademark free-for-all. The decision below, and the Rogers decision from which it flows, are egregiously wrong.
VIP has yet to file its responsive brief.
The Supreme Court’s decision in this case will affect the scope of works that are afforded heightened First Amendment protection under the Rogers test, and will affect other cases involving works at the intersection of culture and commerce. For example, the Second Circuit held the appeal in abeyance in the trademark dispute Vans brought against art collective MSCHF over the Wavy Baby sneakers pending the outcome of the Jack Daniel’s case. Like the Jack Daniel’s case, the MSCHF case raises the question of whether the allegedly infringing items constitute “expressive works” or are merely consumer products.
Artificial Intelligence
The emergence of artificial intelligence image generators has resulted in legal challenges to the business practices of AI companies and to the artwork generated through its use.
Is a Work Generated through Artificial Intelligence Copyrightable?
In a 2022 refusal to register an AI-generated work, the U.S. Copyright Office took the position that a work created autonomously by artificial intelligence without any creative contribution from a human being is not eligible for copyright protection because copyright requires human authorship. (This decision is being challenged in federal court.)
The Register of Copyrights has recently stated:
The more difficult cases that are likely to come up in the future will be cases where there is some level of human creativity …[a]nd then the question is, does it rise to the level of authorship under all the case law that’s been developed over the years? So this issue was only going to get more complex and will continue to be before us.
A recent matter before the Copyright Office raises these issues. In 2022, AI artist Kris Kashtanova, who developed a comic-book style story through combining text they authored and artwork created through the Midjourney image generator, posted on Instagram that they had received a precedent-setting copyright registration for their book. After the widespread media coverage of the registration, Kashtanova received notice that the Copyright Office initiated cancellation of her registration, apparently out of concern that their work failed to exclude elements that do not contain human authorship. In November 2022, counsel for Kashtanova argued to the Copyright Office that the entire work should remain registered, as Kashtanova authored the text, and the press oversimplified Kashtanova’s creative process in generating the images. According to Kashtanova, while Kashtanova used Midjourney to help in creating some of the images in the book, the use of the tool “does not diminish the … human mind that conceived, created, selected, refined, cropped, positioned, framed, and arranged all the different elements of the Work into a story that reflects [their] personal experience and artistic vision.”
When Can AI Tools Infringe Another’s Copyright?
AI image-generator tools rely on big data sets that have been scraped from the internet, along with paired text-based captions. Two cases discussed below challenge the propriety of using copyrighted images in AI data sets without payment to or approval by the underlying copyright holders.
Andersen et al. v. Stability AI Ltd. et al.
On January 13, 2023, three artists filed a class action lawsuit in federal court in San Francisco against Stability AI, Midjourney, Inc., and DeviantArt, Inc. for direct and vicarious copyright infringement, violation of the Digital Millennium Copyright Act, violation of plaintiffs’ rights of publicity, unfair competition, and declaratory relief. The artists accuse the AI companies of taking copyrighted images to train AI-art generators to reproduce the artists’ unique styles without compensating the artists or asking for consent. (Complaint here).
Getty Images Lawsuit
Getty Images is suing Stability AI in London for copyright infringement. According to its press statement, Getty Images claims that Stability AI “unlawfully copied and processed millions of images protected by copyright and the associated metadata” owned by Getty Images or its represented photographers to train its software. Getty Images further stated:
Getty Images believes artificial intelligence has the potential to stimulate creative endeavors. Accordingly, Getty Images provided licenses to leading technology innovators for purposes related to training artificial intelligence systems in a manner that respects personal and intellectual property rights. Stability AI did not seek any such license from Getty Images and instead, we believe, chose to ignore viable licensing options and long‑standing legal protections in pursuit of their stand‑alone commercial interests.
NFTs
Joint NFT Study by U.S. Copyright Office and U.S. Patent and Trademark Office
On the non-fungible token (NFT) front, the U.S. Copyright Office and the U.S. Patent and Trademark Office have launched a joint study on NFTs. The Offices have invited the public to submit written comments on these matters and will host three roundtable meetings to gather input from the public as they continue the study (more background here). The deadline for submission of public comments has been extended to February 3, 2023, and the virtual roundtable discussions will occur later this month. In particular, the Offices are hoping members of the public will comment on issues such as “IP-related challenges or opportunities associated with NFTs or NFT markets” and whether “current IP laws are adequate to address the protection and enforcement of IP in the context of NFTs.”
Yuga Labs v. Ripps et al.
In July 2022, Yuga Labs, Inc., the creator of the Bored Ape Yacht Club NFT collection, filed a lawsuit against artist Ryder Ripps and a collaborator alleging that the defendants’ NFT collection, known as the Ryder Ripps Bored Ape Yacht Club collection, infringes Yuga Labs’ trademark rights and constitutes unfair competition (along with other claims). The defendants subsequently moved to dismiss the Complaint and sought an order striking the state law causes of action under California’s anti-SLAPP statute.
On December 16, 2022, the court denied the defendants’ motion (except dismissed one cause of action for unjust enrichment). By the decision, the court held that the Rogers test (discussed above) did not apply to Yuga Labs’ trademark claims – per the court, the Ripps NFTs were not expressive works protected by the First Amendment because they merely point to the same images associated with the BAYC collection. Further, the court found that, even if the Rogers test applied, the BAYC marks are not artistically relevant to the defendants’ art because the defendants were using the BAYC marks as a pretext to disguise a business profiting from another’s trademarks, and because the defendants’ use of the BAYC marks is explicitly misleading.
In denying the anti-SLAPP motion, the court noted that, despite the defendants’ criticism of Yuga Labs’ alleged use of racist, neo-Nazi and alt-right dog whistles, Yuga Labs wasn’t suing defendants for defamation, but for using its trademarks to sell competing products. Therefore, per the court, Yuga Labs’ claims did not arise from an act in furtherance of their right to petition for free speech.
On December 21, 2022, the defendants filed a notice of appeal of the trial court’s December 16, 2022 decision, and on December 27, 2022, they filed an answer with counterclaims. By their counterclaims, the defendants seek, among other things, a declaration that the BAYC images either are not protected by copyright or that Yuga Labs does not hold the copyrights, and for a declaration of no defamation.
Hermès Int’l et al. v. Rothschild
We previously blogged about this case here. In a nutshell, Hermès, which owns the Birkin trademark for luxury handbags, sued artist Mason Rothschild for trademark infringement over the artist’s MetaBirkin NFT project, which depicts imaginary Birkin bags covered in faux fur. Rothschild had made a pre-answer motion to dismiss the case, which was denied (explanation here – note that unlike in the Ripps case, the court found that the Rogers test applied to Rothschild’s NFT project).
Since that time, the parties engaged in discovery and both moved for summary judgment. Last month, the court issued a summary order denying the parties’ motions and noting that the trial in the case is set to commence on January 30, 2023.
