The Briefing by Weintraub Tobin

Did you know the popular Stanley Travel Cup is tied to Stanley Black & Decker? A lawsuit is brewing over trademark rights and branding disputes. Is PMI overstepping, or is Stanley Black & Decker overreaching?  Weintraub Tobin attorneys Scott Hervey and Tara Sattler discuss the legal battle over the iconic cup on this episode of The Briefing. Watch this episode on the Weintraub YouTube channel here. Show Notes: Scott Most people who have spent any time in a Home Depot, a Lowe’s, or an Ace Hardware are well aware of Stanley Black & Decker Company. They’re a manufacturer of a wide variety of tools and equipment. Well, did you know that the very popular Stanley Travel Cup is manufactured in connection with an agreement with Stanley Black & Decker? Well, I didn’t know of this relationship. Well, it seems that that relationship is soured, and there’s some trouble brewing in that Stanley insulated Stanley Black & Decker, which has filed a lawsuit against the Cupmaker Pacific Market International for trademark infringement and breach of contract. I’m Scott Herbie, a partner with the law firm of Weintraub Tobin, and I’m joined today by my partner, Tara Sattler. We’re going to talk about this case and some issues related to Stanley Black & Decker’s claims on this installment of the briefing. Tara, welcome back to the briefing. Tara Hi, Scott. Always great to be here. Scott Do you own a Stanley Cup? Tara I do. I have one sitting right here on my desk out of the screen. Scott I have one as well. Okay, so that’s why I picked this case for us to talk about because I think everybody has a Stanley Cup. Let’s set the stage here. Stanley, Black & Decker, let’s just refer to them as Stanley. They were founded way back in 1843 and built a solid reputation over nearly two centuries. They have a family of trademarks associated with Stanley, many of which have become incontestable. Tara Now, Pacific Market International’s predecessor, Aladdin Industries, started selling Stanley-branded insulated containers in 1913 when William Stanley Jr. Developed the revolutionary vacuum flask. The complaint alleges that beginning in 1966, Stanley and Aladdin entered into a series of agreements which sought to limit Aladdin’s use of the Stanley trademark. Scott These agreements, at least as it’s alleged in the complaint, restricted Aladdin and the company that bought Aladdin, Pacific Market International, we’ll just call them PMI, their use of Stanley to specific goods. Fast forward to 2012, the parties entered into another agreement to address PMIs, then allegedly non-use of Stanley, which exceeded the scope of the previous agreement. This new agreement, according to the complaint, again further limited PMI’s use of the mark to insulate food and beverage containers and placed requirements on how Aladdin and PMI could use the Stanley name in advertising and online. Tara Okay, so then what triggered Stanley to file a complaint? Scott Well, according to the complaint, PMI has been willfully and intentionally disregarding the 2012 agreement. Specifically, Stanley accused PMI of dropping PMI in its company name, that it changed its company name to just Stanley. Stanley also says PMI expanded its product offerings beyond food and beverage containers to include items such as apparel. Tara The 2012 Agreement expressly limits PMI’s use of Stanley solely to use as a trademark to promote and sell insulated and non-insulated containers for food or beverages and carrying cases for transporting the same. Scott Right, that’s what the complaint says. The complaint also accuses PMI of using the domain name www.stanley1913.com without prominently displaying PMI, and also failing to include PMI prominently in advertising materials and on products, including point-of-sale displays. Tara It sounds like Stanley Black & Decker is claiming PMI essentially tried to rebrand themselves as just Stanley in order to capitalize on the brand recognition. Scott Exactly. That’s what the complaint essentially says. That lines up with the allegations that PMI stopped, including PMI and its company name, and changed its name to Jess Stanley. Tara The complaint also goes on to say that PMI’s actions have caused negative press associating Stanley with things like lead poisoning and burn hazards and a recall of 2. 6 million travel months. Scott Right. Let’s break down the specific allegations. Stanley, Black & Decker is claiming that PMI breached the 2012 agreement by using Stanley as a company name, violated restrictions on advertising and product marketing, expanded product offerings beyond food and beverage containers, as was restricted in the 2012 agreement, failed to properly identify itself as PMI in advertising and in press releases, and use social media in a that infringes on Stanley’s trademark rights. Tara The legal claims brought by Stanley based on PMI’s actions are a breach of contract, alleging PMI violated the 2012 agreement, unfair competition, claiming PMI’s actions create confusion among consumers, trademark infringement, asserting PMI is using the Stanley trademark without authorization, or Connecticut Common Law claims. For trademark infringement, management, and unfair competition under state law in Connecticut. Scott Right. And this is the relief that Stanley is seeking. So, they want PMI to stop using Stanley in ways that violate the 2012 agreement or infringe on their trademarks. They want a court order for PMI to comply with the 2012 agreement. They want a court order requiring PMI to issue statements clarifying the relationship between the two companies. They want damages, including actual enhanced punitive damages, as well as attorney’s fees. Tara So then it seems pretty straightforward, doesn’t it? Scott It does, but we all know that disputes are never straightforward, and companies only present one side of the story. So, let me break it down. It appears that PMI actually owns a number of federally registered trademarks that incorporate Stanley. This includes the mark Stanley, and Stanley since 1913 with the winged bear logo for insulated food and and beverage containers, both of which have been registered since 2014 and 2020, respectively. Now, the complaint alleges that PMI breached the 2012 agreement by not using PMI on its products. PMI contends that Stanley is overreaching and trying to prevent PMI from using its registered and incontestable trademarks. Tara The complaint didn’t include a copy of the 2012 agreement, so it is tough to assess the breach of contract claims. But Scott, what are your thoughts on the trademark claims? Scott It’s interesting, right? Stanley owns a number of trademarks as well, but they’re all related to tools and building-type products. I didn’t see any trademarks covering goods that are related to food or beverage containers. And I don’t think that an insulated beverage container or a food container is related to hand tools or power tools. I don’t see Stanley’s trademark claim for those goods, for the insulated cups and the insulated food and beverage goods. However, Stanley does own a trademark for Stanley covering work clothing. PMI’s use of its mark Stanley for clothing could potentially be problematic. Tara In a press release, PMI said the companies have distinct market positions, customer segments, and marketing approaches. PMI claims it has grown Stanley into a global lifestyle brand with a focus on innovative food and beverage containers. In contrast, according to its annual report, Fouled the SEC, Stanley holds itself out as a global provider of hand tools, power tools, outdoor products, and related accessories. PMI claims the difference between these two companies and their brands is pretty stark. Scott Right. I guess PMI said that it will vigorously defend the suit. It’s yet to file an answer. This probably isn’t the last that we are going to hear about this dispute. PMI, the manufacturer of the Stanley insulated mugs and other products, they’ve built their brand like Yeti, as an outdoor lifestyle brand, or at least a lifestyle brand. So they’ve got a lot to protect. And in building their brand as a lifestyle brand, they’ve got a lot of real estate opening up in front of them for brands selling new branded products. They do need to be pretty aggressive in defending their turf or the turf they want to take. Otherwise, they may be just restricted to the insulated mugs and other things and related to insulated mugs and food containers. There’s probably a broader universe of merchandise that they could take advantage of if they weren’t regulated by Stanley, Black & Decker. Tara Yeah, and I wonder, when they entered into this, if they even thought that this potential real estate in front of them was something that they may be interested in. Maybe they didn’t. Now, here we are trying to deal with two different companies in the same name. Scott I really wanted to read a copy of the 2012 agreement. Usually, when a plaintiff alleges a breach of contract claim, they have to file the contract as an attachment to the complaint. I didn’t see that in the filings. I assume they’ll probably file it at some point in time, and then we’ll have an opportunity to read it and see what it says because I am curious what the actual restrictions in the 2012 agreement are because we really are at this point only getting one side of the story. But because I own a Stanley mug, I thought this was an interesting topic to cover. Also, probably, depending on what the 2012 agreement says, there’ll probably be some good takeaways for drafters of agreements of that type. Tara Yeah, I definitely agree. This will be an interesting one to keep an eye on. Scott Okay. Thanks for joining me today, Tara. Tara Thanks, Scott. Scott Thanks for listening to this episode of The Briefing. We hope you enjoyed this episode. If you did, please remember to subscribe, leave us a review, and share this episode with your friends and colleagues. If you have any questions about the topics we covered today, please leave us a comment.  

Joining the discussion is Andy Tan, an attorney at Weintraub Tobin specializing in AI deals and law. He dives into the recent Delaware court ruling in Thomson Reuters v. Ross AI, which may reshape AI copyright law and training practices. The conversation highlights the complexities of AI training and potential market shifts, emphasizing the growing importance of original datasets. Andy also addresses the implications for content creators as the power dynamics in the industry evolve with AI integration.

In the case of Sydney Nicole vs. Alyssa Sheil, a federal district judge ruled that certain vibes and aesthetics can be protected under copyright law. Weintraub attorneys Scott Hervey and Tara Sattler break down this decision and what it means for content creators and brands in the digital age on this episode of The Briefing. Watch this episode on the Weintraub YouTube channel here. Show Notes: Scott: In December of last year, we talked about the report and recommendation of a magistrate judge that would hold that a vibe or a look could be protected under copyright law. That report was adopted by the district Court for the Western district of Texas. So, it seems, at least in the Western district of Texas, that copyright law extends to protection of ideas, concepts, or general styles. I’m Scott Hervey, a partner with the law firm of Weintraub Tobin, I’m joined today by my partner, Tara Sattler. Given the adoption of the Magistrate Judges recommendations, we are going to discuss the potential implications of this case, Sydney Nicole versus Alyssa Sheil, on the creator marketing industry on this installment of the briefing. Tara, welcome back to the briefing. Tara: Hi there, Scott. Always great to be here. Scott: Good to have you again, Tara. I think this is going to be a real interesting discussion here. As a quick recap, this case involved a dispute between Sydney Nicole, a content creator, and Alyssa Sheil, another creator, accused of copying Nicole’s online content. Sydney Nicole alleged that Sheil’s work closely mimicked her original content, including the themes, style, and presentation of her videos. However, she’ll argue that she was merely drawing on a general model and idea and concept that copyright law has traditionally deemed unprotectible. Namely, this Clean Girl look, a very popular look among content creators and the creator marketing community. Adopters of this look include the likes of Hailey Bieber, Bella Hadid, Selena Gomez and Kim Kardashian, to name just a few. Tara: The federal magistrate judge issued a report and recommendation, which was later adopted by the district court, siding with Nicole. The ruling found that Sheil’s content bore sufficient similarity to Nicole’s protected expression rather than just her general ideas, effectively expanding the scope of what might be considered copyright infringement in the digital content space. Scott: So we’re not going to analyze the decision itself. For that, I recommend our listeners check out our previous episode on this case back in December. We’re going to put a link in the episode description to make it easy for you to find. What I want to talk about today are the critical issues for content creators and brands and the broader creator economy because of this case. So The first thing I want to talk about is that the finding of this case potentially blurs the line between protecting expression and protecting ideas. Tara: I definitely think you’re right, Scott. One of the foundational principles of copyright law is that it protects the specific expression of an idea, but not the idea itself. However, this ruling raises concerns that court may be moving towards an approach that grants de facto protection to certain creative concepts, especially within digital content creation. Scott: That’s right. The similarities in this case were largely thematic or conceptual. I think there’s a chance that this decision risks chilling the very creative development that copyright law has meant to foster. Creators often build upon common trends and esthetics and industry norms, and if those elements can be locked down as protected expression, it could deter new entrance and limit creative evolution. Tara: That’s right. This case could also open the door to secondary liability for brands that work with influencers. If an influencer unknow post content that closely resembles another creator’s work, there is a distinct possibility that brands that sponsor or collaborate with those creators could be held secondarily liable. Scott: Yeah, I can certainly see that under a theory of vicarious liability. So vicarious liability is generally found where the defendant has the right and ability to control the infringing activity, and the defendant derives a direct financial benefit from the infringement. So for example, where a brand hires or contracts with an influencer to create content, and that brand has the ability to review or direct that content, the brand might be found vicariously liable if the influencer infringes somebody else’s vibe and the brand benefits from it, which they will be deemed to because this is an advertisement. Tara: Courts have historically been cautious about extending liability in such cases. But as influencer marketing becomes a dominant advertising strategy, we may see an increased focus on due diligence and compliance by brands to avoid potential legal entanglements. Scott: Beyond the legal risk, this increased exposure to liability could also slow the growth of brand spend within the creator economy. If brands fear legal consequences, they may reduce investment in influencer partnerships or ship their budgets to lower risk advertising channels. Additionally, companies may impose stricter content review processes and demand more extensive indemnification clauses and contracts, which could make influencer deals more complex more time-intensive, and less attractive, particularly for smaller creators. In addition to potentially stifling brand spend, this decision could potentially stifle competition in the creator economy. Tara: I agree. The creator economy really strives on iteration, remixing, and reinterpreting of popular trends. This decision could make competitors wary of engaging in common industry practices out of fear that their work might be deemed infringing. If courts begin interpreting copyright law in a way that grants broader protection to influencer-driven content, it could discourage new creators from entering the market and inadvertently strengthen the position of already established influencers. Scott: Less competition within the creator economy could lead to a less diverse and not so innovative content landscape. New and smaller creators may struggle to gain traction if they fear illegal consequences for inadvertently producing a similar vibey content to an existing influencer. This could concentrate marketing power among top influencers who, having more resources, are better positioned to assert and enforce their copyright claims, even if those claims are nebulous. Tara: However, there could be some potential benefits for certain groups. Established influencers and content creators might benefit from increased legal protections that shield their work from being copied in the future. Scott: True, but this would come at a cost which creates a huge barrier to entry and also would artificially inflate the cost to advertisers. If there are only a handful of creators that would be able to emulate a specific look or vibe, naturally, the cost to work with those creators would increase substantially. Ultimately, while the ruling might provide some advantage for market leaders, it risks stifling creativity and competition, making it harder for emerging creators to build their presence in the industry and making it tougher for emerging brands to use creator marketing to expand their market share. I also think that this case could result in an increase in copyright litigation among influencers. With the rise of social media content creation, this case might embolden more influencers to file copyright claims against their competitors. Could this Can we create an environment where disputes over content style and approach become more litigious rather than fostering creative competition? I mean, we’ve already seen it in this case. Tara: Yeah, we have, and I agree. It or not, we all know that litigation is a business strategy, and if it makes economic sense to use litigation to whittle down the competitive landscape, more litigation is probably going to come. Scott: I agree. As lawyers, we are very much in favor of helping our clients use the law to advance their business endeavors. I mean, that’s what they hire us to do. This finding by the district Court is precedent, at least within the Western district of Texas, and it would be 100% acceptable for any influencer to protect his or her rights and business interests in line with this decision. Let’s talk about how this case might have an effect on platform moderation policies. If more courts begin recognizing this broader form of copyright protection for digital content creators, platforms like YouTube, Instagram, and TikTok may need to revise their copyright enforcement policies. This could lead to stricter takedown policies and increased content takedowns. This could also mean more aggressive use of automated copyright filters, which could result in faster and broader removal of content flagged for infringement and less room for creators to dispute takedown claims before their removal. Tara: You could also see stricter algorithmic policing. Ai-powered copyright detection could become more sensitive, leading to more false positives where non-infringing content, for example, fair use or independently created materials, get flagged and removed. Scott: That’s right. I could also see platforms expanding the use of content fingerprinting technologies, which could prevent certain styles, esthetics, or trends from being used across multiple creators, even if they are not directly infringing. This could result in preemptive blocking becoming more common where content is not even published if it triggers copyright algorithms. Tara: All of this really would have a chilling effect on competition within the greater economy. It will be harder for creators to establish originality, and even where they can, the smaller creators who lack legal resources could It can be disproportionately affected as they may struggle to dispute automated takedowns. Scott: Let’s wrap this up. While this case does not set binding precedent beyond its jurisdiction, there’s a question as to whether or not this is a signal of a potential shift in how courts are now going to analyze copyright disputes in the creator economy space as it may address a esthetic or a vibe. As litigation over digital content continues to grow, creators and brands alike are going to need to pay close attention to how courts balance the need for protection with the imperative to keep creative industries dynamic and competitive. Lawyers like us who advise both brands and content creators within the space are going to have to be aware of this decision and counsel our clients on how to avoid potential liability, and frankly, avoid being the defendant in a lawsuit alleging copyright infringement where the content allegedly infringed is an esthetic or a vibe. Tara: Yeah, that’s absolutely right, Scott. I think the conversations between brands and creators that already exist about approvals over content and direction given by the brand to the creator are only going to deepen when these types of precedents start to get set because both sides have higher stakes and more worries than they did before. Scott: Yeah, I agree. We’ll see if this decision goes up on appeal, but until it does, it is at least precedent within the Western district of Texas. Who knows how other courts might view this decision. We’ll definitely need to have our eye on this ball and advise our clients of this potential risk. Thanks for joining me today, Tara. Tara: Absolutely. It was great to talk to you about this one, Scott. Scott: Well, that’s all for today’s episode of The Briefing. Thanks to Tara for joining me today. Thank you, the listener or the viewer, for tuning in. We hope you found this episode informative and enjoyable. If you did, please remember to subscribe, leave us a review, and share this episode with your friends and colleagues. If you have any questions about the topics we covered today, please leave us a comment.

On this episode of The Briefing, Scott Hervey and Tara Sattler dive into the landmark Jack Daniels v. VIP Products case that changed trademark law. They break down the Supreme Court’s ruling on trademark infringement vs. dilution and explore how a dog toy parody nearly tarnished Jack Daniels’ brand. Watch this episode on the Weintraub YouTube channel.   Show Notes: Scott: VIP products versus Jack Daniels’ properties brought a landmark Supreme Court case that forever changed the application of the Rogers Test. However, cross-motions for summary judgment at the District Court following the Supreme Court have provided some degree of closure and finality on the trademark and dilution claims raised by Jack Daniels. I’m Scott Hervey, a partner with the law firm of Weintraub Tobin, and today I’m joined by my partner, Tara Sattler. We’re going to talk about a dog toy, a bottle of whiskey, and the Sometimes-murky waters of Trademark Law on this installment of The Briefing. Tara, welcome back to the briefing. It’s good to have you back. Tara: Thanks, as always, Scott. Scott: We’ve talked about this Jack Daniels case as it has affected other cases I think, boy, almost ad nauseam. But there has finally been a resolution itself of the Jack Daniels case. Let me just give a little brief history of the background, and then you can recap the Supreme Court’s decision. This legal battle began all the way back in 2014, so over 10 years ago, when VIP Products, a company that makes dog toys, filed a declaratory relief lawsuit against Jack Daniels, seeking a declaration that their Bad Spaniels dog toy did not infringe on Jack Daniels’ trademarks. The Bad Spaniels toy was designed to mimic a bottle of Jack Daniels’ Black Label Whisky. Jack Daniels counterclaimed, alleging both trademark infringement and trademark dilution. The case has gone through multiple appeals, including a trip to the Supreme Court. Court. The Supreme Court ultimately vacated the Ninth Circuit’s decision and remanded that case back to the District Court. From there, let’s quickly recap the Supreme Court decision. On June 8, 2023, the Supreme Court decided this case. At the district Court and on appeal to the Ninth Circuit, the issue was framed as whether the dog toy was an expressive work since trademark claims involving expressive works were analyzed under the Rogers test. Tara: Right. But on appeal, the Supreme Court said that the issue was not whether the dog toy was an expressive work, but rather the nature of the use of the Jack Daniels mark. Scott: Right. The Supreme Court found that the IP’s use of the marks, while humorous, was for the purpose of serving as a source identifier, a trademark use, in other words. The Supreme Court held that the Rogers test does not apply to instances where the mark is used as a source identifier, regardless of whether it’s also used to perform some expressive function. Tara: And then from there, the case was eventually remanded to the district Court to determine Jack Daniels’ Lanham Act claims for dilution and infringement. Scott: Before we get into the dilution part, let’s briefly touch on trademark infringement. To win on this claim, Jack Daniels needed to show that its trademarks were distinctive and nonfunctional and that there was a likelihood of consumer confusion. The court had previously ruled that Jack Daniels’ trademarks were distinctive and nonfunctional. The key issue was whether VIP’s Bad Spaniels toy would cause a likelihood of confusion about the source of the product. The Or ultimately found that while Bad Spaniels as a toy did evoke the Jack Daniels brand, it was a successful parody. Tara: That’s right. A successful parody of a famous mark, one that conjures up the original yet creates contrasts from the original so that the message of ridicule or pointed humor becomes clear, is not often likely to create confusion. Scott: All right. The court waved several factors and determined that due to the parotic nature of the toy, consumers were unlikely to be confused about its source. Therefore, the court found that VIP was not liable for trademark infringement. Tara: Right. That’s score one for the dog toy. But now let’s get into the, I think, more interesting part of the case, the trademark dilution claim. This is where the court found VIP liable. Trademark dilution is different from infringement. Trademark dilution is about protecting the distinctiveness and selling power of a famous mark, even if there’s no confusion about the source of the infringing product. The Trademark Dilution Revision Act, or TD as it’s called by trademark lawyers, defines dilution as the, quote, whittling away of the value of a trademark when it’s used to identify different products. It prohibits the use of a mark that is likely to cause dilution, either by blurring or by tarnishment. In this case, Jack Daniels argued that the Bad Spaniels toy diluted their trademark by tarnishment. Scott: To prove dilution by tarnishment, Jack Daniels had to prove three things. First, Fame, that its trademarks were famous before VIP’s use of the Bad Spaniels toy began. Second, Similarity there was a similarity between the Bad Spaniels toy and Jack Daniels trademarks. And third, reputational harm. That the Bad Spaniels toy was likely to harm the reputation of the Jack Daniels trademarks. Tara: Let’s look at each of these in detail. I’ll start with Fame. I think that was an easy one for the court. The court found that Jack Daniels trademarks were famous, and they are famous, noting the brand’s century-long history, excessive advertising, and massive sales. Vip argued that the old number seven trademark, specifically, was not famous enough, but the court rejected this, stating that it was the overall use of Jack Daniels’ marks in a tarnishing way that mattered. The court emphasized that it was VIP’s use of Jack Daniels’ marks on the dog toy and not the bad spaniel’s name in isolation that caused the tarnishment. Scott: Okay, so turning to the second factor, similarity. The court found that VIP intentionally designed the Bad Spaniels toy to mimic Jack Daniels’ trademarks and trade dress, including the shape of the bottle, color scheme, and font. The IP replaced Jack Daniels with Bad Spaniels Old Number Seven with Old Number Two, and also Tennessee Whisky with Tennessee Carpet, while retaining other designer elements. The court determined that this was enough to show a similarity. Tara: As to the third element, reputational harm, the court noted that such harm, the harm to the reputation of the famous Mark, mark arising from the similarity between the famous mark and the junior mark. The court noted that this harm generally arises when the plaintiff’s trademark is linked to products of shoddy quality or where it’s portrayed in an unwholesome or unsavory context, likely to evoke unflattering thoughts about the owner’s products. Jack Daniels argued that the Bad Spaniels toy tarnished their trademark by associating the brand with dog poop. Vips’ toys included phrases like 43% poop by volume and 100% smelly and replaced Old Number 7 with old number two on your Tennessee carpet. To support their argument, I mean, that all just seems funny to me, but to support their argument, Jack Daniels brought in an expert who testified about the negative associations that the Bad Spaniel’s toy was likely to create with Jack Daniel’s whiskey, particularly because the product is intended for human consumption. The court gave prevailing weight to the expert’s testimony, concluding that the toy was likely to tarnish Jack Daniel’s reputation by creating a negative association with dog poop, essentially. Scott: From there, VIP argued that there was no actual evidence of reputational harm and that their dog toy was not as offensive as other products that have been found to cause tarnishment. But the court disagreed. Importantly, the court emphasized that the TDRA only requires a likelihood of dilution, not actual harm. The court also dismissed VIP’s argument that the old number seven mark itself was not famous enough, stating that the tarnishment arose from the use of the overall Jack Daniels marks on a product associated with dog poop. Tara: So VIP also raised a First Amendment challenge to the Lanamack’s prohibition on trademark dilution, arguing that it amounted to unconstitutional viewpoint discrimination. Scott: Let’s remember that under the TDRA, the law provides an explicit exemption for certain uses of a famous trademark, including parity if the use is non-commercial or involves fair use in news reporting, commentary, or criticism. Obviously, this is commercial speech, so it’s not entitled to the statutory exemption. Tara: Right. The court declined to consider the First Amendment challenge because VIP failed to raise it in their pleadings. This procedural point is important. The court found that because VIP did not formally include this argument in its initial court filings, it was not properly before the court at the time that the court decided the parties’ cross-motions for summary judgment. Scott: In the end, the court ruled that while the Bad Spaniels toy was a successful parody that did not infringe on Jack Daniel’s trademarks, it did, however, dilute Jack Daniels’ trademarks through tarnishment. Tara: Right. The court found that the use of Jack Daniels’ trademarks on a dog toy that referenced dog poop was likely to harm the reputation of Jack Daniels’ brand. Now, Now, the court’s dilution finding here, I think, is almost opposite to what the Fourth Circuit found in a 2007 case, Louis Vuitton versus Hot Diggity Dog. In that case, Louis Vuitton, the luxury fashion house, sued Hot Diggity Dog, a company that manufactured and sold a line of parody dog toys called, Ready? Chooi Vuitton. These toys, obviously, mimic Louis Vuitton famous handbags featuring similar design elements like the LV monogram pattern and style. Louis Vuitton argued trademark infringement, trademark dilution, and unfair competition, arguing that the parody toys harmed its brand and diluted the distinctiveness of its trademarks. Scott: In that case, the District Court ruled in favor of Hot Diggity Dog, finding that the dog toys were a parody and did not dilute or infringe on Louis Vuitton’s trademarks. Louis Vuitton then appealed to the Fourth Circuit, which affirmed the District Court’s decision. Tara: On appeal, the Fourth Circuit evaluated Louis Vuitton’s dilution claims, specifically whether the Chuy Vuitton dog toy diluted Louis Vuitton’s trademarks through tarnishment. Like Jack Daniels, Louis Vuitton argued that the dog toys could tarnish its brand by associating its luxury image with pet products. The court rejected this argument, emphasizing that the Chuy Vuitton toys were playful and non-offensive. They were not of inferior quality, nor did they create a negative association with the Louis Vuitton brand the court found. The parody was clearly a joke and unlikely to harm Louis Vuitton’s reputation, so said the fourth circuit. Scott: Then, Scott, does this mean that there is a split in the circuit? Tara: Probably not. The court’s finding here in the Jack Daniels case is probably a result of the unique procedural nature of that case. Remember, after remand, the parties agreed that the court didn’t need to undertake additional findings of fact in order to decide the matter and that briefings on the remaining legal issues would suffice on cross-motions for summary judgment. Scott: Theiding of dilution by tarnishment in the Jack Daniels case rests solely on the fact that the dog toy makes jokes about dog poop. Tara: I mean, that seems to be the case. If the dog toy didn’t include jokes about dog poop or dog pee, then the expert opinion probably would have been different, and we probably would have seen a different result. But I guess we’ll never know. The court gave great weight to the expert for Jack Daniels in their determination that there was a likelihood of tarnishment due to the references to dog poop or pee. Scott: I think that that’s really the only distinction. But I also think that there’s sure a lot of joking that happens about dog poop and poop in general. It seems to me to be a pretty thin line between Jack Daniels and Louis Vuitton. Tara: I agree. I mean, I don’t know what the toy company’s expert opinion What it included and whether or not that opinion found that the references to dog poop and dog pee were not likely to cause dilution. We probably won’t know unless we read the docket. But that’s the only thing I think I can hang my hat on here and explain the differences between the two cases because otherwise, we do have a split, and we seem to have a split in the circuit. But I think that the differences rest on the unique facts of these two cases. Scott: I definitely agree with you. I guess we should all be careful before we make any more dog poop jokes. Let me go, especially if we’re parading a strong brand like Jack Daniels and creating a dog toy. Thanks for joining me today, Tara. Tara: Thanks, Scott. Scott: That’s all for today’s episode of The Briefing. Thanks to Tara for joining me today. Thank you, the listener or viewer, for tuning in. We hope you found this episode informative and enjoyable. If you did, please remember to subscribe, leave us a review, and share this episode with your friends and colleagues. If you have any questions about the topics we cover today, please leave us a comment.

A motivational passage from Keith Bell’s book Winning Isn’t Normal sparks a legal battle after Ole Miss coach Lane Kiffin shares it on Twitter. Scott Hervey and Tara Sattler dive into the lawsuit, exploring how the Fifth Circuit’s ruling raises important questions about fair use, copyright enforcement, and Bell’s “serial litigant” status. Watch this episode on the Weintraub YouTube channel. Show Notes: Scott: In 2021, we reported on the copyright lawsuit filed by inspirational book author, Keith Bell, against the defensive back coach for the Miami Dolphins, Jerold Alexander. This was based on the coach’s inclusion of a passage from Bell’s 1982 book, Winning Isn’t Normal, in a social media post, and a federal court’s refusal to dismiss Bell’s lawsuit based on Alexander’s arguments, including fair use. In that case, the Florida federal court judge said that consideration of the fair use defense on a motion to dismiss was not appropriate unless it’s clear, based on the complaint itself, that fair use is applicable. The party The purpose of that case later settled. However, Bell had a much different result in a lawsuit brought against the University of Mississippi football coach, Lane Kiffin. I’m Scott Hervey, a partner with the law firm of Weintraub Tobin and I’m joined today by my partner, Tara Sattler. We are going to take a look at this particular case and a related case in the Fifth Circuit to try to understand why this federal judge and the Fifth Circuit came to such a different conclusion than the judge in Florida based on essentially similar facts on this installment of the briefing. Tara, welcome back to the briefing. I think this is going to be a real interesting discussion. Tara: It definitely is, and it’s really timely with the Super Bowl coming up here. Scott: It is timely with Super Bowl coming up, but it’s really appropriate that you and I are talking about that Giving all the coverage you and I have done on the Warhol case and the new analysis of fair use. Absolutely. Yeah. So let’s get into this case. Like Bell’s case against Alexander, Bell’s lawsuit against Lane Kiffin, the head football coach at the University of Mississippi, revolves around a passage from Bell’s book, Winning Isn’t Normal. And that passage is known as the win passage. This passage provides motivational advice, and Bell has separately copyrighted that passage. So Kiffin tweeted the passage, the same passage that Alexander had tweeted. However, here, Kiffin included no other commentary or elaborate on the passage while Alexander had. Tara: As we know from our previous coverage, this isn’t Bell’s first lawsuit over this passage. Bell has filed dozens of copyright lawsuits over similar social media uses of the wind passage. This became an issue in Bell’s lawsuit against the Eagle Mountain Saginaw Independent School district for a similar use. In that case, the Fifth Circuit declared Bell a serial litigant who makes exorbitant demands for damages in hopes of extracting disproportionate settlement. Scott: I want to talk about the Court’s criticism of Bell’s litigation strategies. But before we have that discussion, let’s talk about the Court’s treatment of Kiffin’s fair use argument. The Kiffin Court cited the Fifth Circuit’s decision in Bell versus Eagle Mountain, Saginaw, Independent School district, which dismissed a nearly, on a motion to dismiss, a 12: 06 So not a summary judgment motion, but a motion to dismiss just based on a complaint itself and the defense is advanced by the defendant. They dismissed a nearly identical claim on fair use grounds. So Let’s remember that this case is a post-Warhol Fair use case. Tara: Right. The Court’s analysis closely followed the framework established in Eagle Mountain. It applied the four statutory fair use factors codified in the Copyright Act. One, the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes. Two, the nature of the copyrighted work. Three, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and four, the effect of the use on the potential market or value of the copyrighted in the war. Scott: So interestingly, both the Fifth Circuit in the Eagle Mountain case and this court, the Kiffin Court, make no mention of the Supreme Court’s analysis in Warhol, which requires an analysis of whether the purpose of the secondary use is different enough to justify copying. Let’s look at what the court did say in looking at those four fair use factors. Tara: As mentioned, the court’s analysis closely followed the framework established in Eagle Mountain. First, regarding the purpose and character of the use, the court found Kiffin’s use to be non-commercial and intended to motivate and inspire, a purpose often protected under fair use. Next, to the nature of the copyrighted work. The wind passage was deemed creative, favoring Bell slightly, though the court noted this is generally the least significant factor. Third, the amount and substantiality of the portion used. While Kiffin tweeted the entire win passage, the court here determined this factor was neutral because the passage was already widely accessible online. Finally, with respect to the fourth factor, effect on the market, this was the decisive factor. The court here found no evidence that Kiffin’s tweet harmed the market for Bell’s book or related merchandise. Bell’s claims of potential licensing revenue were speculative at best. Scott: I have issues with the court’s analysis, and we’re going to get into that in a bit. I think it’s also important to point out, and it’s clear from the Fifth Circuit’s opinion that Bell’s litigation history just highly influenced the court’s decision. The court was critical of Bell’s history of targeting what the court referred to as minor and often harmless uses of the win passage, despite the fact that the uses were not authorized by win. Sorry, not authorized by Bell, calling Bell a serial litigant and comparing his behavior to that of a copyright troll. This bad faith history, as the court calls it, undercut Bell’s argument especially regarding the fair use analysis. Tara: That’s right. And Scott, you mentioned the issues that you have. So I have some, too. Let’s talk about them. Scott: Yeah. So let’s start with the court’s analysis of the first factor. The court said that anyone reading Kiffin’s tweet would assume that the post was Kiffin simply saying in effect, quote, Somebody said this, and I thought it was worth sharing. The The Court said that this is the contribution to the exchange of ideas which the copyright law should be very hesitant to find unlawful, particularly when the quote in question is of such a harmless and non-commercial nature as the wind passage. We’ve covered a number of copyright cases that stem from the post of a photo that a person didn’t take. I mean, think of the numerous celebrity photo cases that we’ve covered. I don’t ever recall any other court applying a similar analysis. Could you imagine the argument? Some photographer took this photo of me and I thought it was worth sharing. I just don’t agree with the court’s analysis here. Tara: That’s true. I agree with We have never seen this, and I can’t imagine that this type of an argument would really go over very well in any other case or any other type of situation. Scott: The court noted that Kiffin’s use was intended for motivational and inspirational purposes. Kiffin shared this post for the same reason that all the other coaches and sports organizations have shared this passage, motivation and inspiration. Now, Bell is an internationally recognized expert in sports psychology and performance enhancement. The purpose behind his book and its content is to motivate and inspire. Now, while Kippen’s use may have been non-commercial, the purpose was the exact same purpose as Bell’s purpose for publishing his book. Tara: I agree with you, Scott. For all the analysis that we’ve done in this post-war hall world, the purpose typically carries quite a bit of weight. This is a very interesting position that the court took here, in my opinion. Scott: Right. And the court never asked the Warhol question whether the purpose of the secondary use is different enough to justify a copying. In both Kiffin and Eagle Mountain, they just reproduced the passage, the passage that is separately protected by copyright without any additional commentary or anything else. I don’t know how that use could be different enough to justify the copying done by Kiffin or the school district. Tara: Yeah, I agree with you, Scott. Let’s talk about the third factor now, the amount and substantiality of the work used. Bell does hold a separate copyright for the win passage. And in both the Eagle Mountain case and in the Kiffin case, the defendants use the entire work. Scott: That’s right. Also, the Court’s treatment of Bell having this passage on his website saying that, Oh, it’s readily available and online, and that makes this factor neutral. I’ve never seen that before. I mean, think of all the photo sharing cases that we’ve covered. Usually, those photos are available online because that’s where the celebrities get them from. I don’t agree with the court’s analysis here. Tara: Yeah, and typically making something widely available really does not have an impact on its protectability. Scott: Right. Tara: Usually, when we see In the case involving the entire work, the third factor generally does not favor fair use and generally isn’t neutral. Scott: When they use the whole work, it generally favors a finding of infringement. It favors the complainant. Bell wrote an extremely popular passage. It has to be extremely popular given the amount of sharing that is happening with this passage. It’s one that coaches and players apparently find extremely valuable, insightful, and motivational. Unfortunately, it seems that their exuberance has resulted in the unpermitted sharing of this passage. Bell, the copyright owner, has elected to actively challenge those uses. The court said that this likens him to a copyright troll. But trolls, whether they’re a copyright troll or a patent troll, they generally attempt to enforce rights beyond the rights actual value. And value, I think, is… I don’t know. It’s hard to substantiate what value is. Also, trolls generally do not manufacture products or supply services based on the patents in question. But Bell is an author and a speaker, and he actively He relatively merchandises the passage in his books, and he’s still selling his books. He is exercising the rights he has under the Copyright Act. The fact that he has to play whack-a-mole with other coaches in schools that seemingly don’t respect copyright, in my opinion, it doesn’t make him a troll, and it doesn’t strip him of his rights to protect and enforce his copyrights. Tara: I agree with you, Scott. It seems pretty strong to come at someone, especially in this particular fact pattern, where the win passage itself is separately registered for copyright protection, and the whole passage has been used. I do think this just seems like a very extreme example. So, Scott, do you think that the Fifth Circuit’s decision in Bell versus Egle Mountain is the beginning of a new rip in the fair use analysis in our post-warhol world? Scott: Well, I think it already has had an effect. Remember, the Kiffin case was based on the Fifth Circuit decision in Bell versus Eagle Mountain. So I think this decision has already caused issues within the Fifth Circuit and the district courts in that circuit. So think about this. In that case, in the Eagle Mountain case, the school district did not argue that its use was transformative, and the court did not find that its use was transformative. Same in Kiffin. But the court said, there are other factors that are of equal importance. Could you imagine a fair use analysis where the use is admittedly non-transformative, but it’s still found to be fair use. One does not immediately come to mind for me, and if that has happened in the past, I assume that it is a rare, rare thing. Tara: I agree with you, Scott. Scott: It’s obvious to me that the court didn’t want to find for Bell, even though he clearly showed infringement. So the court twists itself into this knot to find fair use. I think instead, the court should have found copyright infringement as a matter of law. If it didn’t want to find in favor of well, then it could have awarded nominal damages for statutory damages. I think this case and this Fifth Circuit’s decision in Eagle Mountain, it doesn’t comport to Warhol. I think that the district Court and the Fifth Circuit in Eagle Mountain were motivated by factors other than fair use. I think the Fifth Circuit case makes for bad precedent. Tara: Yeah, I think that’s right. I think the Fifth Circuit is really going to have to untangle itself from this. I’m sure we will be talking more about fair use in the Fifth Circuit in the weeks and months to come. I also think the Bell should probably take a look at how he wants to monetize his intellectual property moving forward, and hopefully, he can come up with some more creative and maybe symbiotic ways to get some money off of his intellectual property rather than trying to go to court every time since the courts don’t seem to appreciate that. Scott: If sharing Having an asset on social media constitutes copyright infringement. The unpermitted sharing of a copyrighted work, whether that work is a whole photograph or a whole passage from a book, in this case, then what’s Bell to do? Could you imagine if a court were to say, Oh, I I’m sorry, Paramount Pictures, but your motion picture is widely available, or I’m sorry, Universal Music Group, this track, this song is widely available on Spotify and on Pandora, even though you made it available there. We’re not going to allow you to enforce the peer-to-peer infringement of your song. Where does the fact that the rampant and, I don’t know, untethered infringement of a particular IP asset, how does that diminish the copyright holder’s rights to try to corral those acts of infringement? Basically, the court was saying, almost like, because other people, coaches, schools, what have you, are using this passage frequently to inspire and motivate and not getting permission, it’s okay. Because the masses are doing it, we’re going to find it to be okay, and we’re going to find it to be fair use. That doesn’t work. That’s not what the Copyright Act protects. That’s not how the fair use works. Scott: I think this particular decision in the Fifth Circuit is a risk for all copyright asset holders, whether they be somebody like Bell, whether they be a photographer, whether they be a music company or a motion picture or a television company. I think those asset holders need to be concerned about cases in the Fifth Circuit because apparently in the Fifth Circuit, you don’t need to comport with the Supreme Court’s analysis in Warhol, and the requirements to establish fair use are pretty light. Tara: Even though this is pretty harsh treatment of Bell and Bell’s work here, I think that hopefully schools and coaches and athletic departments will take note of Bell’s litigious nature and respect his intellectual property and stop doing this behavior that continues to cause Bell to go to court to enforce his rights. Scott: Right. It seemed like the court was motivated by the fact that Bell wouldn’t agree to settle for an amount that the court found to be reasonable. Okay. If the court believes that Bell is not reasonable in his settlement decisions, don’t find fair use, find technical infringement, but award him the nominal amounts under the Copyright Act for statutory damages, and don’t award him attorney’s fees. And all of All of a sudden, the motivation to pursue claims in court become a lot less because you’re not going to get more than the minimal amount awardable under the Copyright Absolutely. Yeah. Well, we’ll see what happens with this case. I’m interested to see if any other pundits who talk about these subjects like we do take issue with this decision and the Fifth Circuit’s decision. We’ll see. Thanks for joining me today, Tara. Tara: Thanks for having me, Scott. Scott: That’s all for today’s episode of The Briefing. Thanks to Tara for joining me today. Thank you, the listener or viewer, for tuning in. We hope you found this episode informative and enjoyable. If you did, please remember to subscribe, leave us a review, and share this episode with your friends and colleagues. If you have any questions about the topics we covered today, please leave us a comment.

As TikTok’s future in the US hangs in the balance, influencers and brands are left wondering how a potential ban could impact their posting contracts. In this episode of The Briefing, Scott Hervey and Jamie Lincenberg dive into the potential legal challenges and share insights on how brands can stay ahead of the curve in this ever-changing landscape. Watch this episode on the Weintraub YouTube channel. Show Notes: Scott: On January 19, 2025, TikTok went dark, forced to cease operations in the US as a result of a federal law that bans the app in the US unless TikTok divest itself from its Chinese parent company. Now, as we record this podcast today on the 21st, TikTok is back up. It has a 75-day stay granted by current President Trump. While TikTok sorts out whether it’s going to sell itself or some other deal structure that will allow it to continue to operate in the US. For influencers that use TikTok as a content platform, many are concerned, very concerned that this federal law ban will have a serious impact on their livelihood. But here’s something that I haven’t heard much chatter about. What happens to those brand integration contracts where an influencer is required to post content to TikTok after the ban date? Does this Does this mean that an influencer is in breach? Can the influencer be liable to a brand for failure to perform, even though it’s really out of the control of the influencer? I’m Scott Hervia, a partner with the law firm of Weintraub, Tobin, and I’m joined today by my colleague, Jamie Lindsberg, to talk about whether influencers face potential liability due to the TikTok ban on this installment of the briefing. Jamie, welcome back to The Briefing. Jamie: Thanks for having me again, Scott. Scott: This is an interesting topic, and I got to say, from the time that I put our outline together till today when we’re recording this podcast, it really has been about three days, and so much has changed in those three days. But as we’re recording this, we’re recording this on the 21st, yesterday, the 20th, President Trump granted TikTok a 75-day stay for the band to take effect, pending some deal to work out the issues related to this federal law that would ban TikTok’s operations and also would ban any company from hosting or allowing TikTok app to be made available to users in the United States. Let’s first talk about the TikTok ban or sale law. This law was passed in April 2024 as part of a broader For an aid package. It gives ByteDance, TikTok’s Chinese parent company, approximately 9 to 12 months to sell TikTok’s US operations to an American buyer. If ByteDance fails to divest TikTok within the time frame, which we know happened, the app would be banned from US app stores and web hosting services. In between April 2024 and January 19, 2025, which is the band date, there were lawsuits filed by TikTok, lawsuits filed by the FTC and the DOJ, appeals to federal courts, including the Supreme Court, which upheld the ban. As I said, while I was working on our outline for the episode, the Wall Street Journal reported that President-elect Trump said that he would issue in order to reopen TikTok on Monday, January 20th, 2025. As we know, on Monday, President Trump gave TikTok a 75-day stay of the ban. Jamie: Yeah, that’s right, Scott. A lot’s happened in the last couple of days around this, but we have been anticipating the effects of this for quite some time now. The history of TikTok’s bumpy relationship with the US prior to April of 2024 is important to understand. In 2020, the Trump administration had expressed some concerns about TikTok’s Chinese ownership and privacy and security issues, and the administration had threatened to force a sale or a ban through executive orders. You may recall that Trump had even pushed for an acquisition Microsoft. But after that fell through, Oracle entered into a commercial agreement with TikTok for the purpose of protecting US data. Scott: Right. But even after that, and through 2023, various states passed laws banning the use of TikTok on government devices. And in the end, 39 states have banned TikTok on government devices. Also, important to note, the federal government bans TikTok on devices owned by the federal government, and certain universities have banned the use of TikTok on campus WiFi and university-owned computers. And in 2023, there was increased bipartisan pressure and congressional hearings about TikTok’s data practices and potential national security concerns. Jamie: The timeline that you’ve just mentioned creates legal implications for influencer contracts. We can essentially divide those contracts into three distinct time periods, each with its own legal implications. First contract signed before 2020, when TikTok faced its first serious regulatory scrutiny under the Trump administration. Second, contract signed between 2020 and early 2024 during that period of increasing regulatory pressure. Third, following enactment of the law in April 2024. Scott: Let’s explain why this timeline is important in looking at potential influence or liability under a brand agreement that requires posting of integrations on TikTok after the ban. We’re looking at a potential defense to this liability. The first is under a legal doctrine called the doctrine of impossibility, and the other is under the application of any force majeure provision that might be in the agreement. Let’s talk about the doctrine of impossibility first. Under the doctrine of impossibility, a party may be excused from performing a contract if a supervening event prevents compliance with the agreement. In California, the doctrine requires the party a hurting the defense of impossibility to establish the following: one, that the supervening event, in this case, the TikTok ban, makes performance impossible or impractical. Two, the non-occurrence of the event, meaning that the US government’s shutdown of TikTok, was a basic assumption upon which the contract was based. Essentially, was the supervening event foreseeable at the time the contract was entered into. Three, the occurrence of the supervening event resulted without the fault of the party seeking to be excused. Four, the party seeking to be excused did not assume the risk of the occurrence of that event. And five, the parties have not agreed, either expressly or impliedly, to perform in spite of the impossibility or impractability that would otherwise justify on performance. Jamie: It sounds like the doctrine of impossibility could provide a defense to a breach claim depending on when the contract was actually entered into. If there are agreements where performance is still required that were entered into prior to 2020, when TikTok first faced US scrutiny, then the impossibility defense would be strongest as a full platform ban wasn’t widely contemplated at that point. Scott: I agree with you. For any agreement signed after 2020, but before April 2024, I think it’s a mixed bag as some level of platform risk was foreseeable. However, I can also see an argument that TikTok’s deal with Oracle mitigated the potential of any platform ban. Prior to the enactment of the ban or sale law in April 2024, I can see a real strong argument that That impossibility, the doctrine of impossibility would provide a good defense. Jamie: Right. And I think in practice, the concern really has only come up and been a point of conversation over the last maybe 6 to 12 months. So the agreement The arguments that may face bigger problems applying the impossibility defense would be those entered into after April of 2024. At that point, the risk of a potential platform ban was known, and any influencer who entered into an agreement requiring posting on TikTok after the ban date likely did take on the burden of performing despite that risk of impossibility. Scott: Yeah, I can see that. But there is an argument to the contrary because the legislation did provide the possibility of a sale and not just a ban. So as such, courts might view this differently than a straightforward impossibility case. So the question then becomes, Is it the ban that’s foreseeable or the possibility of continued operation under new ownership? Which one is more foreseeable than the other? Or how foreseeable would be the ban over continued operation under new ownership? Jamie: It’s a good point, Scott. Now let’s talk force-major clauses. These provisions typically excuse performance when circumstances beyond a party’s control make performance impossible. A force major provision lists certain events that could constitute a force major event, and the occurrence of which would excuse performance. But here’s where it gets interesting with the TikTok situation. We We do sometimes see a force major clause lists government actions or changes in law as a force major event that may excuse performance. But what about a clause that doesn’t mention government actions or changes in laws, but only focuses on acts of God or natural disasters such as earthquakes or floods or hurricanes, war, terrorism, civil unrest? A clause that broadly mentions government actions, while one limited to So these traditional force majour events like natural disasters, really wouldn’t. Scott: Right. I agree with you. I remember after COVID, we started seeing a pandemic listed as one of these force majeure events. But I will say most force majeure provisions I see say that a force majeure event is one that prevents performance where such failure is caused by events beyond that party’s reasonable control. Jamie: So let’s We’ll talk practical implications and contract drafting. First, based on the evolving social media landscape and recent platform uncertainties, it seems that a force majeure provision should always be included in influencer contracts, and these force majeure provisions should probably specifically mention platform-specific risks. Scott: I agree. Such a provision would remove any ambiguity about whether platform issues qualify as force majeure events. But let me ask you a question. Is just saying that platform unavailability or the unavailability of relevant platform features or functions, listing those as a force majeure event, is that enough? Might it also be a good idea to include specific language addressing what happens in the event of a platform issue? Jamie: Definitely. In a perfect world, it would be great to lay out alternative performance language in the event of a platform issue. But that language would then have to address a multitude of potential platform issues. Remember, Scott, these agreements are negotiated very quickly. As a practical matter, there sometimes just isn’t enough time to ponder all of the different potential platform issues and to negotiate alternative performance options. In all likelihood, a provision requiring the parties to negotiate in good faith regarding to the deliverables and alternative performance in the event of a platform issue is more practical. Scott: I’m sure also if you’re on the brand side, the brand would also argue that a partial refund is also just as practical and should also be in the mix as part of this renegotiation. I’m sure that compensation adjustments due to metric requirements would be on the table as well. Jamie: Right. I can see a brand making that argument, and depending on how much the influencer has performed up to the date of the force majeure event would determine the partial refund or partial compensation. Scott: It is true that these type of agreements move very fast. However, I think this situation highlights the importance of careful contract drafting in the dynamic social media landscape. The best protection isn’t just relying on the doctrine of impossibility or a force majeure provision, regardless of how well it’s drafted. I think it’s also anticipating and planning for platform uncertainty. Jamie, what do you guys normally do? Jamie:Typically, we do include a force majeure provision, which addresses a situation beyond either party’s control. Sometimes it is solely brands control. But of course, when working with the influencers, we want that to be a mutual right which is another factor that plays into all of this to suspend or terminate for a force majore. But typically, we do see a force majeure provision, and the influencer is paid out for services that have been rendered up to the time that the force majeure event interrupted performance of the contract. Scott: Jamie, let’s talk about what you have seen in the last six months, where I guess it It became clear that TikTok was not going to sell and that the ban may well have taken effect. So what have you been seeing with regard to force majeure provisions, provisions for alternative performance, et cetera? Jamie: We have been seeing these provisions negotiated out more in the last 6-12 months. I would say if the agreement contemplates a TikTok deliverable, then in the event that TikTok is unavailable at the time of the agreed posting date, the parties will either mutually agree on an alternative platform for the influencer to post the updated deliverable on, or they will set out pre-negotiated alternatives. Scott: How flexible have brands been on on negotiating the terms of the force majeure provision? Jamie: Fairly flexible. I mean, it’s an issue that affects both sides. We do see the brands wanting to work with the influencers in the event that something like this were to happen. I would say that it’s generally a pretty amicable discussion or negotiation over the terms. Scott: Compensation Compensation to the influencer in the event of a force majeure provision or compensation to any artist that performs services in the event of a force majeure provision, that’s always going to be a sticky issue and a heavily negotiated point. I know that usually artists want to be paid in full, and brands want the benefit of the bargain, and they want the benefit of what they’ve contracted for, which usually is not just half-delivered content, but the delivered content posted and the metrics proving that they got the ROI. What have you been seeing with regards to if you have at all, been seeing negotiated changes or negotiated modifications to influence or compensation in the event of a force majeure event? Jamie: It is a sticky situation. We We typically see that the influencer will be paid out a pro-rata portion of their compensation, depending on services that have been rendered up to and including the effective date of termination for such force, major event. I will say that a lot of times that doesn’t address maybe the usage rights that the brand has also had during that period of time. So We like to incorporate that as well. It’s all a discussion. A lot of times it’s a discussion between the parties at such time because it’s really very difficult to come up with a number of what that would be ahead of time. Scott: Would you say that this potential ban has been a lot more challenging for influencers that are primarily focused on their TikTok presence as opposed to influencers that are across multiple platforms? Jamie: Platforms? Of course, absolutely. There are many influencers. Tiktok is their top performing platform, and it would definitely have much more of an effect on those influencers than those who have diversified their platforms. Scott: I know that’s one thing that we always talk to our clients about is diversifying the platforms on which they rely for their and how they reach their audience. Here’s a lesson why you should listen. Jamie: It’s a different type of content creation. They’re short form videos versus on Instagram, it’s a different ball game. Yeah, so the effects are widespread and important. Scott: Right. Well, Jamie, thanks for taking the time to talk to us today here. I do want to point out that this is probably going to be Jamie’s today’s last podcast because she, sadly, is leaving our firm. She’s not going to another firm. Otherwise, we would wipe all presence of her off of our podcast. No, I’m joking. But she’s going in-house at a company to be working right in this creator economy space. I think we’ll probably continue to see her in a different capacity in the future. Hopefully, she’ll become an avid listener and maybe commenter on some of our podcast episodes. But it’s always been great having you. You’ve provided really great insight. You’re a really great co-host, and we’re going to miss having you. Jamie: Thanks, Scott. This has been really fun. If you ever want me on again as a special outside guest, I’m happy to join you. Scott: Oh, that’s a great idea. That’s a great idea. Maybe we just might do that. We just might do that. Once again, Jamie, thanks for joining us today. Thanks. Well, that’s all for today’s episode of The Briefing. Thanks to Jamie for joining me today. Thank you, the listener or viewer, for tuning in. We hope that you found this episode informative and enjoyable. If you did, please remember to subscribe. Leave us a review and share this episode with your friends and colleagues. If you have any questions about the topics we cover today, please leave us a comment.

Kick off 2025 by reviewing your company’s IP assets! Whether you’re new to IP protection or a seasoned pro, it’s crucial to keep track of your valuable intellectual property. Scott Hervey & Tara Sattler break down key steps in safeguarding your trademarks, copyrights, and patents on this episode of The Briefing. Watch this episode on the Weintraub YouTube channel.   Show Notes: Scott: As 2025 kicks off, it’s time for companies to review and take stock of their intellectual property assets. This applies to every company, whether you are new to IP protection or an old pro. I’m Scott Hervey, a partner with the law firm of Weintraub Tobin, and I’m joined today by my partner, Tara Sattler. We’re going to break down how to review and safeguard your company’s most valuable intellectual property assets on this installment of The Briefing. Tara, welcome back to the briefing. Happy New Year to you. Happy New Year to you, too, Scott. Great to be here again. Tara: Great to have you. Let’s jump right into this. As you know, intellectual property is a company asset, just like inventory. No CEO or CFO would think of running a company where they didn’t know the extent of company inventory. Likewise, it makes no sense for a company to not have a firm understanding of all of its potential intellectual property assets. Even companies that regularly take steps to protect intellectual property through, for example, registering trademarks or registering copyrights, should yearly review their IP assets, and this can prove to be very beneficial. Scott: Understanding the extent of a company’s IP holdings usually starts with what’s known to the company, such as all registered copyrights, trademarks, or patents, both domestic and foreign. After compiling a list of those IP assets, the next step would be to review what the company is using and compare that to the list of registered or pending marks for registration. Let’s discuss with trademarks since every business has at least one trademark. Outside of any registered trademarks, check your marketing and promotional materials, website, mobile app, and social media. If these materials show use of trademarks, logos, or slogans that are not already the subject of a trademark registration or application, then these marks should be cleared for use to prevent unintended liabilities, and they should be considered for possible registration. Tara: Don’t overlook company social media accounts, as mentioned, domain names and toll-free numbers, which may also serve as potential trademarks. Does anybody use toll-free numbers anymore? I don’t know. They’re not as popular as they used to be. Be sure to confirm that all domain names and social media accounts are registered to the company. You’d be surprised at how many times a domain name or a social media account is registered to to an individual company employee or to the marketing company that created, let’s say, the company website or is doing social media engagement and not the company itself. Also, if the company has changed the graphic user interface to any of its technology products or has changed product packaging, point of sale displays, or product designs, these may also be protectable trade dress. Scott: That’s right. Next up would be assets that are subject to copyright laws. In reviewing for copyrightable content, check the company’s website, marketing materials, manuals, YouTube videos, podcasts, posted content on Instagram, TikTok, social media, and other social media, photos, software, blog posts, articles, white paper, and all things like that. While the cost of registering every piece of content may not be economical, companies should at least maintain inventory of all copyrightable works and then make a decision from there. Tara: Right, I agree. Let’s talk about patents. On the patent front, a company should always be aware of any new inventions under development, and it’s good practice to investigate the status of any inventions developed by company employees during the past year. Such inventions may be protectable under federal patent laws. Now, an inventor must secure a patent application within a very short period of in order to prevent the work from falling into the public domain. And that’s even shorter internationally. Companies that routinely produce new inventions should put to place a process which enables inventors to disclose a potential invention to a responsible executive well prior to the invention being disclosed to the general public in order to protect international patent rights and watch the clock for US patent rights. Scott: Trade secrets are a category of proprietary assets that companies may not truly understand or appreciate. This is probably because something can either be a trade secret or not a trade secret, depending on the manner in which the company treats it. Trade secrets are items not generally known by the public, but have economical value and are the subject of reasonable precautions to maintain their secrecy. Tara: Trade secrets can lose their protected status if they’re no longer kept secret. Specifically, if a company’s trade secret or a bit of information or items like a customer list or vendor list that a company considers to be proprietary and trade secret, if that becomes generally known to the public, then it loses its trade secret status. Also, if the company does not take steps to keep that information secret, it can also lose its protected status. Now, this includes physical security measures, also contractual security measures, and internal policies regarding data sharing. Scott: It’s worth noting that unlike patents or copyrights, trade secrets have no set duration of protectability. However, this protection depends entirely on maintaining the secrecy like you were talking about. Scott, Scott. If the information becomes public or the owner fails to take reasonable precautions to keep it secret, the trade secret then loses its protection. Tara: Trade secrets, as you said, they have no saturation of protectability. Some companies choose instead of filing a patent, for example, the the formula for Coca-Cola. My understanding of that is that it is a trade secret. It’s It’s not subject to a patent. It could be, but it’s not subject to a patent because patents have a duration. After that, the invention itself becomes available to the public. But as long as a company keeps something secret, like the formula to make Coca-Cola, that can live on forever. Let’s talk about items that can be protected by state trade secret laws. It includes source code and related documentation, customer lists, employee knowledge, training and experience, proprietary technologies, definitions and formulas, specifically developed customer information, sales practices, negative information, such as negative results from research and development projects, and customer and consumer surveys. Each of the above could constitute proprietary trade secrets depending on whether its owner took reasonable steps to maintain its trade secret status. Scott: A special note about customer data. In addition to regularly reviewing IP assets, a company should regularly make sure that its privacy and data use policies comply with the manner in which it collects and uses customer and employee data. In the US, privacy laws are generally driven by state law, but there may be applicable federal law depending on the nature of the information collected. Tara: That’s a great point. Data security and customer data laws are changing rapidly and continue to change yearly. Also, like you said, if a company conducts business internationally, it may have to adhere to the privacy laws of foreign countries. What company that’s providing either goods or services online is not doing business internationally. Almost every consumer product company that sells online is doing business internationally. Scott: Yeah, that’s right, Scott. Now I think we’ve talked about IP assets that are known to a company. The other thing the company should do is to look into what may not be known. Sometimes, marketing departments and independent divisions spin out valuable intellectual property assets that, for one reason or another, never made it past the desk of general counsel or a responsible executive. Tara: Now, that’s a good point, Tara. Also, intellectual property rights acquired by way of contractual agreements may sometimes be overlooked. Items that were developed or created through the use of independent contractors, such as consultants, photographers, website and application developers, other software developers, advertising agencies, media firms, graphic artists, etc. They may be company assets depending upon contract terms. If the company intends to own all of the rights including any intellectual property rights in these types of works, works created by these independent contractors, then the agreements with these independent contractors should have proper intellectual property vesting language, such as work made for higher language or/and an assignment provision, or both. If the agreements with these independent contractors were only verbal or were written and didn’t contain proper IP transfer language, then the company needs to make another resolution, make sure that it actually owns the intellectual property it paid for because it doesn’t. Sticking to this resolution would include a review of standard independent contractor and employment agreements to confirm that they have proper assignment language and proper confidentiality provisions. Scott: Unintended liabilities can also result from a company’s interaction with independent contractors who have been hired to create something for the company. Whether it’s a website designer hired to redesign a company website, a software developer hired to work on a company’s app, a graphic artist hired to create a new logo or artwork, or a marketing professional hired to create social media assets. We’ve seen countless instances of these types of vendors taking shortcuts and borrowing assets from existing sources. Unless the company executive is closely managing these vendors when they do their work, it would be difficult to determine whether or not they engage in acts that may be considered infringement until the time that the company receives a cease and desist letter or something even stronger than that potentially. Tara: Right. Our podcast audience couldn’t really see you include the air quotes around borrowing. I can’t tell you. We see a few of those letters every year. Our clients are always very like, How did this happen? We hired this company to create this new logo or to create this white paper or to do X, Y, or Z. This always comes up. There are precautionary steps a company can take to prevent these types of unintended liabilities. A company should always have a written agreement with vendors, which unconditionally requires them to indemnify the company for any claims of infringement resulting from the works that the vendors were hired to create and did, in fact, create. Additionally, a company should require these vendors to carry insurance that would provide coverage for such a claim It’s either errors and omissions insurance or some type of professional liability insurance, and the company should be named as an additional insured on these policies. Scott: Those are really good points, Scott. Lastly, and most importantly, the company should have a general understanding of who they’re doing business with. A little time spent researching whether the vendor has negative claims with the Better Business Bureau, has any licensing issues, if there are generally satisfied customers, if there are any pending lawsuits, all those sorts of things can really tell a company quite a bit about the work habits and the ethics of any potential vendor they’re going to use. Tara: Right. And That little ounce of prevention is really, it’s worth the time because the aggravation of dealing with a claim by a third party when you then can’t find the vendor or the vendor doesn’t engage with you or despite the fact that you have an indemnification provision, now you have to go after the vendor for indemnity. It’s well worth the time spent doing that investigation. After you have your IP inventory, the next step is to identify which items have protection and which do not. The company, along with counsel, should then determine which of the unprotected intellectual property assets makes sense to protect. Sometimes the cost to secure protection outweighs the potential value, or the protection is simply duplicative. It’s probably best to always do a cost-benefit analysis. Scott: Yeah, that’s right. I think that’s why we’re talking about all of these steps and suggesting a new review each year because something that may not be worth protecting last year may actually be worth protecting this year. It’s always good to stay current with your review of all intellectual property. Tara: No, fully agree. Companies may have new services, new service offerings, new goods that they’re selling. They may develop a new line of goods. They may have a spinoff company. Companies should always be looking at their IP assets. Those IP assets become very important when a company is sold or when you are the purchaser of another company, it’s quite a good thing, and it saves a bunch of time to have the list of IP assets in hand because it’s In the event of an M&A transaction, you’re going to have to put that all together. If you haven’t already started, it’s going to take quite a bit of time to put that entire list together. Scott: But time well spent. Tara: Right. Thanks, Tara, for joining me today. Scott: Thanks, Scott. Tara: That’s all for today’s episode of The Briefing. Thanks to Tara for joining me today. Thank you, the listener or viewer, for tuning in. We hope you found this episode informative and enjoyable. If you did, please remember to subscribe, leave us a review, and share this your friends and colleagues. If you have any questions about the topics we covered today, please leave us a comment.

The Ninth Circuit recently upheld a ruling allowing a class action against NeoCortex, the creators of the Reface app, over the unauthorized use of content creator Kyland Young’s likeness. This case highlights the growing tension between AI innovation and individual rights. Scott Hervey and Jamie Lincenber discuss the lawsuit and what it means for AI companies using digital likenesses on this installment of The Briefing. Watch this episode on the Weintraub YouTube channel here. Show Notes: Scott: Recently, the Ninth Circuit upheld the District Court’s refusal to throw out a proposed class action brought by a one-time reality star based on the use of his face by an AI-based face-swapping application. The tech company, NeoCortex, argued that its use of the TV star’s face didn’t violate his publicity rights and moved to dismiss the case under California’s anti-slap laws. Both the District Court and the Ninth Circuit on appeal rejected NeoCortex’s This is Motion to dismiss. I’m Scott Hervey, a partner with the law firm of Weintraub Tobin, and I’m joined today by my colleague, Jamie Lincenberg. We are going to talk about this case and its broader implications for AI companies whose business playbook involves exploiting the likeness of others on today’s installment of the Briefing. Jamie, welcome back to the briefing. Jamie: Thanks, Scott. It’s always good to be here. Scott: Yes, this one, I think, is going to be a real fun one, Jamie. How about we get into this one? Kylin Young brought this suit against Neocortex. Neocortex is the creator of the Reface app. Jamie, have you used the Reface app? Jamie: I haven’t. No, but it sounds fun. Scott: It does sound fun. I haven’t used it either. I’m going to have to give it a shot here. Okay, so Mr. Young alleged that Neocortex used his likeness without consent to promote the Reface app. Reface, it’s an app that allows users to superimpose their faces onto celebrities and images and videos. Kyla Dylan was a cast member of a few reality shows, including Big Brother. The Reface preset catalog contains videos and images of Young from his appearance on Big Brother. Jamie: Young claimed that Neocortex used Young’s likeness in promotional watermarked clips to advertise their subscription service. He argued that the watermarked images created with the free version of Reface were teasers and that the watermarks incentivized users to pay to remove them. They serve as free advertising to attract new downloads of the Reface application. He also alleges that the images generated with the pro-version of Reface are paid products that would then constitute commercial use and purpose. Scott: He alleged that this all violated California’s right of publicity statute, specifically, Section 3344 of the Civil Code. We’re all very familiar with 3344, and anybody who listens to this podcast knows we talk a lot about 3344. So Section 3344 prohibits the use of another person’s name, voice, signature, photograph, or likeness in any manner on or in products, merchandise, or goods, or for the purpose of advertising or selling such products, merchandise or goods without such person’s prior consent. Young brought a class action on behalf of all other individuals whose name, voice, and likeness were used to promote the Reface app without their consent. Jamie: So on the surface, this case probably seems rather cut and dry, but we all know that’s rarely the case. At the district Court level, Neocortex filed a motion to dismiss under California’s anti-slap statute. Scott: Right. So procedurally, the district Court denied Neocortex’ motion to dismiss. Neocortex appealed, and the Ninth Circuit upheld the district Court’s decision. So I I thought it would be good to look at where the district Court and the Ninth Circuit were aligned, because that’s going to be very informative for both AI companies whose playbook involved using individuals likenesses, and also maybe for potentially future aggrieved individuals. Jamie: Right. Yeah. To set the stage, California’s anti-slap statute is designed protect defendants from lawsuits that might stifle their right to free speech or petition. California’s anti-slap statute is a two-step process. The first step, the defendant must show that the plaintiff’s claims arise from an act in furtherance of their right to free speech or petition. Step two, if the defendant makes that showing, the burden shifts to the plaintiff to demonstrate a likelihood of prevailing on the merits their claim. Scott: In this case, Neocortex argued that its use of Young’s likeness and promotional watermarked clips was part of its constitutionally protected commercial speech aimed at promoting its app. Thus, it contends ended the claims fell within the scope of the anti-slap statute. The District Court essentially agreed. It said, wrongful or not, Neocortex use of Jung’s image as a tool to provide users with a mode of creative expression is conduct in furtherance of a user’s free speech rights. Jamie: On appeal, the Ninth Circuit assumed, without really deciding, that Neocortex satisfied the first step of the anti-slap test. Scott: Right. I think that’s really because all the action is really in the second part of the analysis, determining whether Jung demonstrated a probability of prevailing on the merits of his claim. Jamie: So The Neocortex argued that Jung failed to show that Neocortex violated his right of publicity on three grounds. The first is copyright preemption. The second was that Neocortex used was First Amendment transformative use. And thirdly, that Neocortex lacked knowledge that it was specifically using Jung’s likeness. Scott: So let’s take those one step at a time. As to copyright preemption, the district Court found that Young’s claim was not preempted. The reasoning is rooted in the nature of publicity rights. Unlike copyrights, which protect creative works, publicity rights protect a person’s name and likeness. The Court emphasized that the claim targeted the misuse of Young’s likeness in advertising, not the distribution of a creative work. Because Young’s allegations center on how his name and likeness are used in Neocortex products and not on the ownership rights to the image itself, Young’s claim in the complaint does not fall under the subject matter of copyright, and his claim is, therefore not preempted under the Copyright Act. Jamie: Right. The Ninth Circuit agreed with the district Court on this. Scott: Right. That’s correct. Jamie: Let’s now talk about the transformative use argument. The transformative use defense assesses whether a person’s likeness is merely a raw material for creating something new or if it’s the core substance of the work. Neocortex argued that the refaced generated clips were transformative, but the District Court didn’t quite buy that. Scott: Right, it didn’t. The District Court noted that the clips still portrayed Jung in roles that aligned with his public persona, not as something distinct or creatively altered. Neocortex would only be entitled to the defense as a matter of law if no trial or fact could reasonably conclude that the resulting clips or images were not transformative. However, a trial of fact could reasonably conclude that the neocortex’s use of Jung’s likeness was not sufficiently transformative, given Jung’s allegation that the resulting clips and images featured Jung in the roles for which he is known. Jamie: Right. And so the Ninth Circuit upheld the District Court’s conclusion. Scott: Right. And I think this is an important takeaway for establishing transformative use of an individual’s likeness. Using a likeness in a way that doesn’t significantly alter its context or meaning likely won’t qualify as transformative under California law, and therefore, that use probably still could be actionable under 3344. Jamie: Lastly, both the District Court and the Ninth Circuit addressed Neocortex’s contention that Young failed to show that Neocortex had knowingly used Young’s identity in the re-face application. The court highlighted that Neocortex made its database searchable, potentially allowing users to identify specific individuals, including Jung. This level of customization really suggests Neocortex likely knew they were using Young’s likeness, even if not explicitly stated. Scott: Yeah, that makes a lot of sense, the court’s conclusion here, when you think about it. Somebody at Neocortex needed to include a meta tag on the video or images that Young appeared in, and they needed to include Jung’s name in that meta tag. Otherwise, the images that included Jung would not be searchable. Someone needs to enter the data that allows users to search for those individuals or other things. I think the court’s finding that knowledge was essentially imputed in the neocortex makes a lot of sense. However, let’s take a step back. This It’s the contention that knowledge is required under a right of publicity claim under 3344, it’s a very interesting contention when you think about it. Usually in a right of publicity case, the issue of knowledge, it’s not really an issue. Generally, the defendant knows whose image, whose likeness it was using. Jamie:  Right. Yeah. The district Court doesn’t really address whether this is an actual requirement. It said, even assuming that 3344A requires a defendant to affirmatively know that it’s using a specific plaintiff’s likeness likeness. Young’s allegations support a reasonable inference that Neocortex knew that it was using Young’s likeness. The court may have to go deeper into this later on if the case persist. Scott: Right. But I think there might be a danger in this. There might be a danger in this opinion and the court leaving it open, whether or not 3344(A), a claim requires knowledge, because I think what you’re going to start to see then is where claims are brought, right? A publicity claims are brought under 3344A. A defendant is going to allege, or not allege, a defendant will begin to try to defend that claim by saying that the plaintiff hasn’t established knowing use by the defendant. So we’re going to see this requirement or an allegation that knowledge is a requirement of 3344(A), I think we’re going to start to see it start to proliferate right of felicity cases. So I think not nipping this in the bud might present a problem down the road, because if I was representing a defendant in a 3344A case, I certainly would defend the case on every ground that’s reasonably possible, including the lack of knowledge by the defendant. Jamie: Right. Yeah, I agree. Scott: Yeah. But let’s talk about what this case means for AI developers and evolving landscape of digital likeness rights. Jamie: Well, the case definitely underscores the tension between innovation and individual rights. Scott: It does. We know that there is a hodgepodge of state laws that address this type of tension. This type of activity is prohibited Probably prohibited in Tennessee under the new Elvis Act. It would probably also be in violation of the proposed federal No Fakes Act. Jamie: Yeah, it’s a cautionary tale for AI developers. We all know that tech companies like to move fast, but in dealing with publicity rights, AI developers really need to carefully navigate how they’re using identifiable personal features in their products, and especially for marketing purposes. Scott: Agreed, completely. At the state level, as we mentioned, there are already laws on the books that specifically target the use of famous individuals likeness is both dead and alive within an AI product. At the federal level, like I said, while it would probably be a violation under the proposed federal No Fakes Act, It’s a bit unclear which way the winds may blow as a result of the election. But I think that this is a non-partisan issue, and it probably deserves federal review, but we’ll see. As of this week, there’s a new AI czar, so we will see what happens here. Jamie: Yeah. One more thing It also seems relevant to point out that there are ways that Neocortex may have been able to secure these rights without having to go directly to the user. Scott: I agree. It’s not clear to me whether Neocortex actually licensed these clips from the broadcast networks. As we know, working in this space, the producers and broadcasters of programming programs like this, specifically, non-scripted television programs, generally obtain pretty broad use rights for the content. I would suspect that the be right granted by Young to the producers of Big Brother would probably include this type of use had Neocortex licensed this content from the producers of Big Brother. I don’t know whether they did or didn’t. That’s not part of this case. Maybe we’ll know as this case goes forward. I guess we’ll see, right? Jamie: Yeah, we’ll see. I think a common thread that I’m finding with a lot of these AI cases is that at the moment, there’s really no great way of monitoring all of this use. It’s so widespread that I think that becomes a major concern. Scott: Yeah, I agree. Jamie: I don’t know the fix there. Scott: Well, I guess there’s a business there for somebody who wants to be in the business of monitoring new AI platforms’ use of potentially infringing content, because you’re right. There’s a lot of platforms and a lot of content and a lot A lot of new uses of GAI type of content, and it’s challenging to keep abreast of everything that’s out there. There’s a business for somebody there for sure. Jamie: Definitely. Scott: Yeah. Well, that’s all for today’s episode of The Briefing. Thanks to Jamie for joining me today. And thank you, the listener or the viewer for tuning in. We hope you found this episode informative and enjoyable. If you did, please remember to subscribe, leave us a review, and share this episode with your friends and colleagues. And if you have any questions about the topics we covered today, please leave us a comment.

The discussion dives into the legal risks brands encounter in social media marketing. Key topics include FTC compliance and the need for transparency in influencer partnerships. Legal implications of copyright infringement are highlighted, especially in user-generated content cases. The importance of licensing agreements and permission reviews is emphasized to avoid liabilities. As social media ad spending surges, understanding these legal intricacies is crucial for brands to protect themselves in the digital landscape.

While influencer marketing has become popular in the creator space, it doesn’t come without risks. From IP infringement to FTC compliance, Scott Hervey and Jessica Marlow discuss the key issues surrounding brand endorsement deals in this archive two-part episode of The Briefing. Watch this episode on the Weintraub YouTube channel. Show Notes: Scott: Influencer social media marketing is big business, whether it’s a brand integration on Instagram by an influencer or a long-term brand endorsement deal by an A-list movie star. Each deal is different, but there are similar issues that are apparent in all brand deals. I’m Scott Hervey with Weintraub Tobin, and I’m joined today by my partner, Jessica Marlow. Today is part one of our profile on understanding and navigating risks in brand marketing deals on today’s installment of “The Briefing” by Weintraub Tobin. Jessica, welcome back to “The Briefing.” Jessica: Thank you. Happy to be back. Scott: This is something we both deal with frequently from both the brand and the talent side. There are certain risks that celebrities and brands have to navigate in these types of deals. Making these risks more prevalent is the fact that we’re talking about digital marketing, where things tend to move quicker. And for whatever reason, people, even marketing professionals, may sometimes believe that the laws applicable to terrestrial or regular advertising don’t apply to the Internet. Let’s talk about our top general risks from a talent perspective and how to deal with them. Now, we have a bunch of lawyers that listen to our podcast, and you might have a different list, and we would love to hear from you if you think we should have covered something that we didn’t. But this is what we think are the top legal issues in a talent brand deal. Jessica: One of the major risks is IP infringement. Now, this is multifaceted, and the risk of infringement comes from a few different places. First, there is infringement risks that the celebrity or influencer imposes on themselves, which can happen in a few ways. The first way is by using content where the copyright is owned by a third party, for example, where a celebrity or influencer posts an image that they don’t own. You’ve covered a few cases on “The Briefing” about this. Scott: That’s right. One of the more well-known case is what is O’Neill versus Ratajkowski. While that case didn’t necessarily involve brand marketing, it’s a perfect example of this type of risk. In 2009, O’Neill, who was a professional paparazzi, took a photo of Ratajkowski outside of a flower shop in downtown Manhattan. Now, the photo showed Ratajkowski with her face covered by this bouquet of flowers. O’Neill subsequently registered his photograph with the Copyright Office. Now, shortly after O’Neill posted the photo online, Ratajkowski posted the photo on her own Instagram account. The photo she posted was the same, except that she added the words “Mood Forever” to the bottom of the Instagram post. Now, O’Neill, of course, sued Ratajkowski and her loan-out company for copyright infringement. Jessica: Right. And Ratajkowski tried to get out of the case on a fair use defense on a motion to dismiss, but she was unsuccessful. And this case was before the Supreme Court ruling in Warhol versus Goldsmith. Under the new fair use analysis, it’s almost certain that Ratajkowski would not have had a fair use defense. Scott: Yeah, that’s true. And this type of liability isn’t just limited to cases where the photo that is used makes up the entire post. This type of potential liability can exist where the third-party photo only makes up a portion of the poster video. Jessica: Right. It’s just not limited to photos. This could be a video or other similarly copyrighted, protected material like music or logos. Scott: Yeah, and music can be a bit tricky. You would think that almost everyone would understand that you can’t just use your favorite band sound recording in a YouTube video or Instagram story. Unless, of course, it’s offered as music library content from the platform. But you still see that happening. Jessica: True. But where there tend to be more problems with music is not in the use of the sound recording, but in the use of the composition. As you know, there are two copyrights in music. One copyright covers the actual sound recording, and those rights are generally owned by the record company. The other copyright is in the composition, meaning the actual music and the lyrics. The copyright in the composition is generally owned by either a music publisher if the song have a publishing deal, or by the songwriters themselves. When you normally see issues of publishing is where the celebrity or influencer performs as in sings the song. Scott: Now, normally, if you are a celebrity or influencer and you want to record the performance of a song, you have to get what is called a synchronization license from whoever holds the publishing rights in the music, whether that be the publisher or the songwriters. Without obtaining a sync license, your recording and subsequent broadcast of the performance of the song is copyright infringement. Jessica: So not only is this a potential issue for the endorser with the owner of the copyright, but this also could result in a big issue for the brand. First, it’s likely to constitute a breach of the agreement with the brand and result in the endorser not getting paid. Also, if there’s any action by the copyright holder, then the endorser will likely have to indemnify the brand. Scott: Yeah, that’s right. Now, there is another type of infringement risk that an endorser potentially faces. And this one usually comes as a big surprise to endorsers and, frankly, their agents. That’s the endorser’s exposure to either a trademark or a copyright infringement claim based on something the brand does. Now, we previously talked about a trademark case where Molly Sims was sued for trademark infringement, all because of a of a sponsored post she did for a beauty product, which another cosmetic company claimed infringed its trademark. Jessica: I remember that case well. Sims’ involvement in the matter was no different than any other influence or marketing campaign. As part of a product launch, the defendant cosmetic company hired Sims to post a review of its product on her blog. Sims’ blog post acknowledged that the review was sponsored, as she’s required to for the FTC, and included a link to the defendant’s website. The plaintiff, a competing cosmetic company, sued the defendant cosmetic company and Sims for trademark infringement and other related claims. Scott: So, Sims tried to get out of the case early, but the court denied her motion to dismiss. In order to establish direct trademark infringement, the plaintiff must establish the use of its mark by the defendant in commerce and the likelihood of confusion. The judge found that the plaintiff had adequately pled that the blog post was likely to cause confusion as to the source of the product and that Sims’ post was essentially advertising, thereby satisfying the use and commerce requirement. Sims raised some arguments why her use should not constantly trademark infringement as a matter of law, including that the blog post was non-commercial editorial speech. The court said that because this was paid content, it crossed the line from editorial or consumer commentary to commercial use. Jessica: Most endorsers don’t appreciate that a one-off integration for a brand could land that endorser right in the middle of a trademark infringement case. This is why we always fight hard to get indemnity from the brand in every deal we do. But as mentioned in your coverage of the Sims case, indemnity is only as good as the solvency or the corporation of the indemnitor. Scott: Speaking of solvency of the indemnitor, this brings to mind the rash of promoter liability lawsuits against the celebrity endorsers from the fallout over FTX’s bankruptcy. If I told Tom Brady, Giselle Bündchen, Steph Curry, and Shaquille O’Neal that they could face potentially millions in civil liability all because they just appear in a TV ad for FTX, they and their agents probably would have laughed me out of the room. But that’s what’s happening now. Tom Brady, Giselle Bündchen, Steph Curry, Shaquille O’Neal, and others are all defendants in massive lawsuits seeking to hold these celebrities liable for the money’s lost by FTX customers. The customers claim that the celebrities were promoting unregistered securities which fall under the Regulatory Authority of the Securities and Exchange Commission. Under federal law and securities law, anyone who promotes a securities offering has a legal duty to ensure that the information they publish is complete, accurate, and not misleading. Jessica: And not only is there potential civil liability, but there’s also potential liability from the SEC. In March 2023, the SEC announced charges against multiple celebrities who were accused of participating in a fraudulent scheme to promote TRX and BitTorrent cryptocurrency securities. The SEC alleged that the celebrities violated federal law by illegally touting the TRX and the cryptocurrency without disclosing that they were compensated for doing so and the amount of compensation. And these penalties can be substantial. In October 2022, Kim Kardashian entered into a $1.26 million settlement with the SEC following its investigation of her online promotion of EMAX tokens. According to the SEC, Kardashian failed to disclose the payment that she received when promoting the crypto asset security on social media. Scott: And your example is a perfect lead in for the next potential legal landmine, and that’s an endorser’s failure to comply with the FTC disclosure guidelines. Jessica: Right. That is a big issue. We did an entire episode on that and the recent changes to the FTC guidelines, so our audience should certainly listen to that episode. Scott, I think we should cover on an additional episode sort of the risks related to product liability and when an endorser is promoting a product, particularly if we’re talking about food or skincare or makeup, ingestible, vitamins, those sorts of products, and where the liability could ultimately lead for our celebrities and our influencer clients. Scott: Yeah, absolutely. That’s a huge topic and certainly would need its own episode. Jessica: Absolutely. But next week, we’re going to cover the company side of the legal risk coin. Scott: Yes, we are. I’m looking forward to that. Jessica, thanks for joining me today. Jessica: Thank you for listening to this episode of “The Briefing.” We hope you enjoyed the episode. If you did, please remember to subscribe, leave us a review, and share the episode with your friends and colleagues. If you have any questions about the topics we covered today, please leave us a comment.