Creator Economy Law Newsletter – Issue #12

Franklin Graves

My copyright C&D response checklist, stock-pumping influencers charged by SEC/DOJ, Remember Flipboard?, Nintendo’s documentary takedown, and more!

This is Creator Economy Law, a newsletter dedicated to exploring and analyzing the legal issues surrounding the creator economy, creators, and internet platforms. If you enjoy what you’re reading, share with friends, and invite them to subscribe using the button above and share using #CreatorEconomyLaw.

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Here’s what’s been happening in the world of Creator Economy Law.

SEC, DOJ charge 8 influencers in stock manipulation scheme promoted via Twitter and Discord

On Wednesday, the Securities and Exchange Commission (SEC) announced charges against eight individuals in a $100 million securities fraud scheme in which they used the social media platforms Twitter and Discord to manipulate exchange-traded stocks.

According to the SEC, since at least January 2020, seven of the defendants promoted themselves as successful traders and cultivated hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord. These seven defendants allegedly purchased certain stocks and then encouraged their substantial social media following to buy those selected stocks by posting price targets or indicating they were buying, holding, or adding to their stock positions. However, as the complaint alleges, when share prices and/or trading volumes rose in the promoted securities, the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them.

📖 Read:

Will the U.S. Copyright Office and the USPTO establish a national commission on artificial intelligence?

The USCO and USPTO have sent a reply letter to Senators Tillis and Coons responding to a letter sent by the Senators in October 2022 regarding IP issues related to artificial intelligence. In short, the Offices highlight the work they’re already undertaking in the areas of AI and its impact on IP rights. But, the Copyright Office also use the letter to highlight the need for more funding (💰💰💰) in order to avoid derailing already-approved uses of congressionally appropriated funds. The response letter highlights the congressional action involved with the 1974 establishment of a national commission to explore copyright protections for computer programs (CONTU), which included funding and payment for staff hired and a stipend to commission members. Basically, the USCO is suggesting congress should act to pass legislation outlining the scope of the commission’s work and a supporting budget authorization.

Let’s see how Congress responds!

It’s also worth noting that the USCO mentions a forthcoming public notice of inquiry (NOI) in 2023 to explore thoughts on AI and copyright.

Flipboard wants to foster “conversations” between Magazines curators and readers

News aggregation app Flipboard announced it is launching the ability for curators to “write new notes and start conversations in your Magazines.” Notes are messages to followers, who can comment back on the notes.

📖 Read: “Spark Conversation and Build Community In Your Flipboard Magazines” via Flipboard

🗣️ Franklin’s Take: I remember Flipboard being one the first apps I used on my iPad 2 back in the day. It had a lot of potential as an early news and magazine article reader; however, it faced stiff competition from other tech companies while having to deal with content publishers retaining control over their distribution (and advertising). I’m ultimately unsure of how much engagement these new features could bring, but perhaps for the existing user base, it will foster greater engagement, a sense of connecting with the content, and longer audience retention time within Magazines or the app as a whole. I do wonder where or when (if at all) the revenue share comes into play for curators that aren’t brands or publishers.

Nintendo issued a DMCA takedown for a documentary uploaded to YouTube… but why? 🧐

Back in October 2022, the YouTube channel Did You Know Gaming uploaded a documentary exploring the lost history of a Nintendo game that was never made. Video game studio Retro Studios submitted a pitch to Nintendo nearly 20 years ago for a Legend of Zelda spin-off called ‘Heroes of Hyrule’, but the project was never accepted and didn’t move forward. Did You Know Gaming’s video included research behind what the game would have been… so why did this get taken down after Nintendo issued a DMCA takedown request?

🗣️ Franklin’s Take: Why is this not considered a fair use to any copyright infringement claim, which is essentially what’s being claimed by the filing of a DMCA takedown request with YouTube? Documentaries can sometimes rely on fair use as a defense against not having obtained a license for a copyrighted work. I’d add that this particular instance involved a documentary that is based solely on a single video game pitch, which was ultimately scrapped, and that has historical significance/interest. It seems like a perfect candidate for a fair use defense. Check out this article from Cowan, DeBaets, Abrahams & Sheppard LLP covering a 2012 decision in a documentary film Copyright fair use case, National Center For Jewish Film v. Riverside Films, LLC (C.D. Cal. Sept. 14, 2012).

Is the issue that this is possibly an unpublished work, or maybe an unauthorized derivative (since the project pitch wasn’t accepted)? Perhaps characters?

Does DMCA even apply? If there’s no copyrighted work, and there’s no registration, then under what basis was the DMCA takedown even issued?

Note also that Nintendo issued a DMCA takedown notice, so it isn’t based on trademark infringement or some other cause of action.

Have you or a client ever received a cease and desist (C&D) or a similar letter with accusations of copyright infringement? Here’s my checklist of potential things to consider, or steps to take:

  1. Confirm License – It’s often easy to lose track of licenses, especially when frequently generating content for distribution online. Stock asset websites and the apps we use every day make it easy to incorporate third-party works into the content we create. It’s common to not save a copy of the license, which may even just be website terms, let alone have an asset management system to track all of the assets in use. I typically will start with a reverse image search (Google Images), if the content in question is an image, to see if the image appears on any stock asset websites and to help refresh memories about from where the image may have come. Otherwise, I try to Google the name of the work and see if it’s been offered on stock websites or otherwise made available online before.
  2. Fair Use – Determine whether or not the use qualifies for the fair use defense under copyright law. This may be the case if the work is being commented on or otherwise an activity that has been recognized as a valid fair use. Check out the Copyright Office Fair Use Index.
  3. Confirm Registration – Ask for proof of copyright registration, or enough information to verify a quick search yourself via the Copyright Office search tool online. If they don’t provide this, and the matter involves a photograph or similar stock asset, then an offer to settle for $50-75 may be sufficient to make the claim go away. If they provide a registration, still continue to verify and then seek to settle for $100-$150, or a reasonable license fee. Ultimately, registration is not required for copyright protection. However, it is a best practice to require proof of ownership before agreeing to any settlement.
  4. Consider CCB Options – It’s now important to consider whether or not the copyright owner may be able to use the Copyright Claims Board as a less costly method of pursuing an award. Historically, a lawsuit would have been filed in federal court, which often deterred many copyright owners from actually pursuing any action beyond sending a C&D. The CCB also allows for filing without yet having a copyright registration, which is different than what is required for filing in federal court.
  5. Innocent Infringer Defense – Use of a work without a license is an infringement, and it doesn’t matter whether or not there was intent to infringe. However, there is the possibility of a lower damages award in certain situations.
  6. Deposit Copy – Does the allegedly infringing work actually match the deposit copy of the work that was filed along with the application for copyright registration? It can be costly to obtain a copy of the deposit copy, but sometimes the other side will play nice and provide a copy for review. Note also that the Copyright Office doesn’t always retain the deposit copy.
  7. Offer a Settlement and Release Agreement – Make sure that there is a written agreement in place that documents the agreed-upon settlement, even if just an agreement to take down the content without payment. Additionally, the agreement should contain release language that releases the person receiving the C&D from any and all liability regarding the claim. There are nuances to this, such as whether it is just a backward-looking release, or whether it would cover other future use of the image. The agreement may also include a license to continue the use of the work, or this could be a separate document (such as a standard license agreement). Here are some example templates: One, Two, and Three. Practical Law also offers a robust template form for subscribers.

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Sometimes… you just have to shake it off… and settle? The lawsuit against Taylor Swift alleging copyright infringement for the hit song “Shake It Off” has now been dismissed (with prejudice), which typically means there’s been a settlement. In honor of this news, this week’s music video is…

Watch on YouTube or Apple Music.

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No Legal Advice. This newsletter is published solely for educational and entertainment value. Nothing in this newsletter should be considered legal advice. If you need legal assistance or have specific questions, you should consult a licensed attorney in your jurisdiction. I am not your attorney. Do not share any information in the comments you should keep confidential.

Personal Opinions. The opinions and thoughts shared in this newsletter are my own, and not those of my employer or any of the third parties mentioned or linked to in this newsletter. No affiliation or endorsement is implied or otherwise intended with third parties that are referenced or linked.

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