December 2018 New York Entertainment and Media Legal Highlights Concerning Reposting Instagram Photographs, Reselling of MP3s, and Defamation Claims Based on Movie Characters  

As summarized below, in December 2018 the New York Federal courts handed down three significant opinions relevant to entertainment and media professionals.

Court Finds Hearst Engaged in Copyright Infringement by Reposting a Photograph Taken from Instagram

The District Court for the Southern District of New York ruled that Hearst Communications Inc. was liable for copyright infringement by taking a photograph from Instagram of President Trump at a wedding held at the Trump National Gold Club, which President Trump showed up to unexpectedly, and posting the photograph on the website for Esquire magazine, which Hearst owns, in connection with an article titled “President Trump is the Ultimate Wedding Crasher.”  The photograph was originally taken by Jonathan Otto, a self-described “guy with an iPhone” who on the day he took the photo sent it to a friend of his, Sean Burke, but did not post it on social media or share it with anyone else.  The next day Otto was surprised to see the photograph on various websites on the Internet, including Esquire’s site.  Esquire credited the photograph on its website to the Instagram account owner from where Esquire obtained it, who was a family member of the bride that had posted the photograph on her Instagram account.  The judge, in holding that no “fair use” defense was available to Hearst for the posting of the photograph, held that “stealing a copyrighted photograph to illustrate a news article, without adding new understanding or meaning to the work, does not transform its purpose – regardless of whether that photograph was created for commercial or personal use.”  The judge found that even though the photograph may have depicted an event that was newsworthy and Hearst was not the first to publish it, those factors were outweighed in the fair use analysis. Specifically, the court held that Esquire’s article used the entire image for commercial purposes and did not add any new or transformative meaning to the photograph, while at the same time hurting the photographer’s right to license the photograph.  Though Hearst argued that Otto had waived his copyright in the photograph by sharing it with Burke, the court rejected this defense where here, Otto had specifically told Burke upon realizing that it had been shared that Burke could not share it without Otto obtaining compensation.  It remains uncertain and will be up to a jury at trial to determine whether Hearst’s actions in poaching the photograph were “willful” and thus could entitle Otto to up to $150,000 in statutory damages.  In the future, media companies, news organizations, and others will need to further evaluate expropriation of photographs for illustrative purposes from Instagram and other social media accounts under the standards set forth in this case, even where such images were created for personal use.

The case is Otto v. Hearst Communications Inc., case number 1:17-cv-04712 in the U.S. District Court for the Southern District of New York.

Court Blocks Resale of Digital Music

The United States Court of Appeals for the Second Circuit upheld the lower court’s ruling that online service, ReDigi Inc., which launched in 2011 as “the world’s first and only online marketplace for used digital music,” cannot resell digital music the same way that records stores or individuals resell albums.  While legally the “first sale” doctrine codified in the Copyright Act of 1976 allows the resale of copyrighted works such as albums and books, the court held that because ReDigi Inc. was technically creating new digital files rather than merely transferring an existing song to a new user, ReDigi infringed the record companies’ exclusive right to reproduce the copyrighted music they owned and thus the “first sale” doctrine did not apply.  ReDigi obtained the MP3s from the original owner by breaking down the digital music into small blocks of data and creating a transitory copy of each packet in the initial purchaser’s computer buffer.  Then, as the packets of data were transferred to ReDigi’s server to be reassembled as complete files, ReDigi’s software sent a command to delete the digital file data from the initial owner’s device.   In addition to holding that ReDigi’s methodology constituted copying of the copyrighted works, the appellate court held that the fair use doctrine did not apply to protect the reproductions that ReDigi made in connection with the resale.  Unless the case is reviewed and reversed by the United States Supreme Court, or Congress makes further revisions to copyright law, time will tell whether another technical platform can be developed that will allow for a lawful secondary market of MP3s.

The case is Capitol Records LLC v. ReDigi Inc., case number 16-2321 in the United State Court of Appeals for the Second Circuit.

Court Finds No Defamation of Character in The Wolf of Wall Street

The District Court for the Eastern District of New York ruled that Andrew Greene, a former employee at a financial firm, was not defamed as a result of the alleged fictional portrayal of him by the character Nicky “Rugrat” Koskoff in The Wolf of Wall Street, the 2013 Oscar-nominated film starring Leonardo DiCaprio and directed by Martin Scorsese.  Greene sued the producers and distributors of the film which was purported to be based on actual events, and Greene alleged that Koskoff was defamatory because the film depicted “him” as engaging in activities that he never did, including shaving a woman’s head, doing cocaine at work, and having sex with a prostitute.  But the court held that Greene failed in his burden of showing that the defendants acted with knowledge or reckless disregard for whether the character Koskoff was “of and concerning” Greene.  Thus, the court found, that the defendants did not act with actual malice, the required state for those who are found to have defamed a public figure.  The judge supported his opinion that there was no defamation by showing that The Wolf of Wall Street was heavily fictionalized, the movie included a disclaimer, and “the Koskoff character is a composite of three people and has a different name, nickname, employment history, personal history, and criminal history than [Greene].”

The case is Andrew Greene v. Paramount Pictures Corporation, case number 2:14-cv-01044 in the United States District Court for the Eastern District of New York.

Ethan KrasnooThis article is intended only as a general discussion of these issues. It is not considered to be legal advice or relied upon. For more information, please contact RPJ Attorney Ethan Krasnoo, who counsels both companies and individuals on entertainment and media, First Amendment, data privacy, and employment (including sexual harassment, discrimination, and contractual) matters. Mr. Krasnoo is admitted to practice in New York State, the U.S. District Courts for the Southern and Eastern Districts of New York, the U.S. Court of Appeals for the Second Circuit, and U.S. Tax Court. Attorney Advertising.