Aereo is one of several startups that pioneered the concept of streaming TV over the Internet and making it viewable on every available gadget, including smart phones, tablets, and even good old computers. However, Aereo and other similar services never bothered to request licenses or offered to pay anything to the content owners of the broadcasted programming, and they were all promptly sued. Unlike other companies, though, an injunction has not yet been placed on Aereo, and the company has been seamlessly offering online television since March of this year. The plaintiffs in the case, which include Fox, CBS, NBC, and PBC, are claiming that Aereo infringed upon their copyrights by publicly performing and reproducing copyrighted works. They are also claiming unfair competition under state law. (Complaint available at https://www.eff.org/document/wnet-v-aereo-complaint)

Aereo has brought a number of novel concepts to the technological and legal discussion in this highly litigated area. First, according to its pleadings, unlike other similar services, Aereo does not provide access to cable-subscription-only networks such as CNN, USA, and TNT, which has allowed it to argue that it is not offering its subscribers any content they were not already entitled to. Second, it has devised a very cheap to manufacture tiny antenna, which every subscriber would install on his or her rooftop. Unlike other over-the-air signal intercepting antennae, these are not shared among subscribers; each one is dedicated to a single consumer. Third, the programming is not streamed directly to a subscriber’s device, rather, the signals are intercepted by the miniscule antenna and retransmitted to and stored on Aereo’s remote infrastructure. Then the signal is encoded for streaming over a digital device and transmitted back to the subscriber. (Aereo’s Pre-hearing Memorandum of Law available at: http://archive.recapthelaw.org/nysd/392874/)

According to the defendant, no “streaming” takes place, even when the subscriber requests the “watch now” option of its service. Indeed, Aereo claims that the “record” and “watch now” functions trigger exactly the same mechanism of recording the signal on Aereo’s infrastructure. The only difference between the two functions is that the “watch now” option plays back the content while it is still being recorded, causing a short delay for the subscriber. Another legally significant detail of Aereo’s setup is that only one subscriber would have access to and ability to play the stored content. Even if another subscriber requests the same content at that same time, a unique copy of the program would be stored for that subscriber.

This technological setup may be capable of skillfully bending around many of the obstacles Aereo’s brethren have tripped over. Aereo is hoping to defeat the public performance claim by arguing that no public performance takes place when each subscriber is playing his or her unique copy of recorded programming which is exclusive and unique for this subscriber. If this argument sways the court, Aereo would have its cake and eat it too, because from a subscriber’s perspective, he or she is watching live, streaming television; while from a legal perspective, subscribers are watching pre-recorded programs, and enjoying the same functionality as provided by DVR or TiVo.

This week, the Southern District of New York dismissed the plaintiffs’ state law claim for unfair competition. The court noted that the question of whether private performances of copyrighted works are actionable under New York’s unfair competition statute is one of first impression. Concluding that the claim is preempted by the Copyright Act, the court agreed with Aereo that imposing liability on private performances of copyrighted works would extend copyright protection beyond the scope of the Copyright Act. The court reasoned that Congress specifically excluded from copyright protection performances to “a normal circle of a family and its close social acquaintances,” to indicate its intent to not impose liability for this type of activity. (Opinion available at: http://www.mediabistro.com/tvspy/aereo-scores-legal-victory-over-broadcasters_b49496)

Stay tuned, because the “season finale” on the copyright infringement claims under the theories of public performance and reproduction of copyrighted works, is coming up next…

This year the National Academy of Recording Arts & Sciences (The Recording Academy) granted far fewer Grammy Awards than those awarded in previous years. The 54th annual Grammy Awards were reduced and consolidated from 109 to 78 awards within their respective core genres of R&B, American roots music, classical, Latin, jazz, country, pop and rock. (See a full list of consolidated awards here: http://www.grammy.org/recording-academy/announcement/category-list) The overall effect of the restructuring was to eliminate the separate male and female soloist awards, lump together collaborative works with group works, and solo performances with instrumental solo performances, as well as combine sub-genres into broader genre awards.

In its letter to its members announcing the restructuring, the Recording Academy cited as one of the reasons to reduce awards was to make each category more competitive, since it had experienced “consistently low entries over the past several years in many categories.” Among the 31 eliminated awards was the Best Latin Jazz Album category, which sparked a class action lawsuit against the Recording Academy soon after it announced the consolidation. In his complaint, well-known Latin jazz percussionist Robert (Bobby) Sanabria and three other notable Latin jazz recording artists, charged, among other claims, the Recording Academy with breach of contract and breach of fiduciary duty owed to members of the Recording Academy, and asked the court to reinstate the Best Latin Jazz Album category. The musicians describe this category as having granted “the long-overdue recognition to the highly-regarded artistic work of musicians who blended the improvisationary leaning of jazz with the native music and cultures of the Caribbean and Central and South America.” (See complaint, available at: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=OmzvfJBEeIvKr7VdrnkQMQ==&system=prod) This category was originally introduced in 1994 and its first recipient was Arturo Sandoval, a renowned jazz trumpeter and composer. (http://www.grammy.com/nominees/search?page=2&artist=&title=&year=All&genre=16)

Among the plaintiffs’ main grievances against the Recording Academy is the manner in which it chose to carry out the restructuring. They accuse it of not engaging its members in the process, of not keeping them informed, as well as of not using consistent criteria in evaluating the award categories, and as a result making the process discriminatory. Further, the plaintiffs allude to the detrimental effect the elimination of the category would have on their careers and on their chances of ever getting a Grammy, thus depriving them of a “meaningful opportunity to gain broad exposure of their music to the general public…” and devaluing past nomination recognitions they have received in the eliminated category. (See complaint: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=OmzvfJBEeIvKr7VdrnkQMQ==&system=prod)

Last week New York State Supreme Court Justice Jeffrey Oing granted the Recording Academy’s motion to dismiss the class action lawsuit without issuing an opinion. The Recording Academy welcomed the judge’s dismissal of the case and announced that they anticipate to make some “individual tweaks and adjustments” to the 2013 Grammy Awards during their meeting in late May, but they will not alter the overall award restructuring. (http://www.goldderby.com/forum/topics/view/2217#). Bobby Sanabria has already expressed his intention to appeal, however this may be a battle better fought in the court of public opinion, rather than in the court of law. While the law may not be coming down on Mr. Sanabaria’s side, numerous prominent musicians and activists, such as Carlos Santana and Rev. Jessie Jackson have supported the lawsuit and have strongly criticized the consolidation as diminishing the ethnic and cultural diversity of the Grammy Awards. (http://allhiphop.com/2012/02/03/mordr-cornel-west-jesse-jackson-join-fight-against-grammys-over-eliminated-categories/)

It is very possible that artists previously eligible for the eliminated categories would be negatively affected and might be marginalized as a result, but this is not necessarily the case. Musicians who were once eligible in both an eliminated subcategory and a broader category only competed in the narrower category, which may also have marginalized them because they were not considered for the generic categories. These musicians will now have the opportunity to be nominated in the broader, and arguably more competitive and prestigious categories, which may serve as an even stronger boost for their careers. This said, eliminating awards for music sub-genres which traditionally do not enjoy commercial success but carry powerful artistic and cultural value, could very well have deprived certain artists of their last venue of global public exposure.

Gagosian Gallery’s Legal Troubles

Gagosian Gallery e-mails reveal the “behind the scenes” of the litigated sale of Girl in Mirror. (http://www.nytimes.com/2012/03/27/arts/design/revealing-e-mails-by-gagosian-gallery-in-lichtenstein-suit.html)

Recently, the embattled Gagosian Gallery suffered another legal setback. New e-mails have come to light, suggesting that in his negotiations to sell a painting, Larry Gagosian, the owner of the Gagosian Gallery, ardently solicited a “low ball” bid from a buyer. In January, Jan Cowles, a prominent New York art collector, filed a lawsuit against Gagosian and his gallery for conversion, fraud, breach of fiduciary duty, and unjust enrichment over the sale of a painting from her collection. The piece in question is Roy Lichtenstein’s 1964 Girl in Mirror, which is one of a series of eight pieces in epoxy enamel on metal. In her complaint, Mrs. Cowles alleged that in the fall of 2008, Mr. Gagosian struck a deal with her son, without her knowledge or consent, to sell the painting on consignment for $3 million and retain half a million dollars as commission. The plaintiff maintains that the piece’s market value at the time had been $4.5 million. Mrs. Cowles further alleged that her son, who had been an art dealer for many years, had no authority to sell the painting and acted without her knowledge only because he was in a “desperate financial condition.” (See Jan Cowles’ complaint, available at (http://www.courthousenews.com/2012/01/20/Gagosian.pdf).

Mr. Gagosian eventually sold the piece for $2 million and retained a $1 million commission. The plaintiff claimed that Mr. Gagosian induced her son to accept the “below market sales price” by falsely representing that the painting was badly damaged. She argued that if there had been any damage to the work, Gagosian Gallery’s staff would have documented it before accepting the painting on consignment, which is a customary practice in the industry to avoid subsequent disputes about the value and condition of the artwork. Mrs. Cowles further implies that at the time of the sale of the painting, the Gagosian Gallery had a second piece from the Girl in Mirror series that may have been damaged. Her theory is that Gagosian sold the damaged painting for $2 million while her painting may still be in Gagosian’s possession. If Mrs. Cowles is able to back up this admittedly cinematic hypothesis, she would provide a plausible explanation of the sold painting’s condition report, which describes the damage as “numerous dark inclusions and small pits in the yellow field,” “three areas of discoloration,” “altered texture” and “noticeable prior restoration.”

As The New York Times reported, the latest papers filed by Mrs. Cowles’ attorney reveal the e-mail negotiations between Mr. Gagosian and the art collector who eventually bought the painting. Apparently, Gagosian represented that the seller of the work was “in terrible straits and needs cash” and invited the art dealer to make “a cruel and offensive offer” for the painting. This new evidence, coupled with Mrs. Cowles’ theory that the piece had been swapped with a damaged one, may account for why it was sold for less than half of its claimed market value at the time. (Randy Kennedy, Frank E-Mails Reveal Negotiations at Art Gallery, N.Y. TIMES, March 26, 2012, http://www.nytimes.com/2012/03/27/arts/design/revealing-e-mails-by-gagosian-gallery-in-lichtenstein-suit.html)

This is not the first time Mr. Gagosian and his gallery have been sued over the sale of a painting from Mrs. Cowles collection. Last year, Mrs. Cowles filed a lawsuit in Federal court for the gallery’s sale of The Innocent Eye Test by Mark Tansey, another piece her son had put up for sale. Apparently, she had donated 31 percent of her interest in the painting to the Metropolitan Museum of Art, where the painting was on display for many years, with the intention of eventually transferring her entire interest in the work to the museum. Mrs. Cowles sued Gagosian for the return of the painting and the British collector who purchased it sued him for fraud. The case was settled for $4.4 million after the piece was returned to Mrs. Cowles, who then donated it to the museum. This prior implicit victory for Mrs. Cowles adds more ammunition to the merits of her case in the current dispute with Gagosian. (Randy Kennedy, Collector Sues Gagosian Gallery for Selling Him a Painting Partially Owned by Met, N.Y. TIMES, March 11, 2011, http://artsbeat.blogs.nytimes.com/2011/03/11/collector-sues-gagogosian-gallery-for-selling-him-a-painting-partially-owned-by-met/).

Mrs. Cowles is seeking $4.5 million in compensatory damages and $10 million in punitive damages for the Girl in Mirror sale.