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Midnight Syndicate sues Insane Clown Posse for Copyright Infringement: Entity Production, Inc. v. Psychopathic Records, Inc.

April 16, 2012 articles Comments Off on Midnight Syndicate sues Insane Clown Posse for Copyright Infringement: Entity Production, Inc. v. Psychopathic Records, Inc.

Some Cleveland-based musicians specializing in the horror genre have unleashed a monster-sized lawsuit against some evildoers. On Halloween 2011, the recording artists Midnight Syndicate and their company Entity Production, through their attorney Marc Avsec (a musician himself) filed a $2.1 million copyright infringement suit against Michigan bad boy rappers Insane Clown Posse and their company, Psychopathic Records. Judge Solomon Oliver of the U.S. District Court for the Northern District of Ohio in Cleveland will preside over the case, which is expected to begin after the first of the year. That is, if the case even gets to trial, in view of the sublime complaint crafted by Avsec. The filing, in twenty pages, sets out every jurisdictional requirement and answers every possible question in a copyright infringement case – what was taken, who did it, who owns it, and what it is worth. Copyright registration certificate numbers are listed for all the seven appropriated compositions and sound recordings made from them. Information is given in several counts about the popularity of Midnight Syndicate’s Halloween/horror themed songs, their distribution and sales worldwide of 500,000 copies, and their use in theme parks, television shows, films and video games. Against this in other counts is the research showing the Insane Clown Posse (ICP) catalogue has sold 6.5 million units worldwide and reaps $10 million per year in revenue from exploitation of their songs and related merchandise.

Although the Midnight Syndicate music samples were used in bands other than ICP itself, (like “Twiztid”, and “Dark Lotus”) the bands are part of ICP’s companies and are controlled by Psychopathic Records and the principals of that company and Insane Clown Posse LLC, Joseph Utsler aka Shaggy 2 Dope, and Joseph Bruce, aka Violent J. The complaint leaves no stone unturned, listing the trademark registration for “Insane Clown  Posse®” in several different classes for sound recordings, record production services and entertainment services including musical performances. The other bands on ICP’s label are also marketed under ICP’s trademark. In meticulous but straightforward detail, the complaint alleges the harm caused to the plaintiff Entity Production, the control, supervision and ultimate responsibility of the principals for the infringement, and how they profited from the exploitation of the Midnight Syndicate samples. Direct and vicarious liability is alleged with the statement that “Bruce and Utsler personally sampled or directed the sampling of Midnight Syndicate Recordings.” A copy of the cease and desist letter that Entity Production sent to Psychopathic Records in October of 2009 is attached to the complaint, detailing the specific infringements of Midnight Syndicate recordings by the ICP groups. The letter was ignored by the “wicked clowns”, leading to this lawsuit. Illustrating the defendants’ utter defiance of the claims of infringement, ICP again sampled a Midnight Syndicate recording in the summer of 2011, leading to the lawsuit’s claim that the infringement was malicious and intentional.

The allegations are that ICP sampled substantial portions of Midnight Syndicate recordings and used them in their original form with vocal overdubbing and multiple looping, essentially making them into the musical bed for seven of ICP’s and the other related band’s songs. One writer who listened and compared the original to the infringing songs stated that it sounded like the sample was lifted straight from the Midnight Syndicate song. The complaint claims in count 59 that ““Mirror” is basically Midnight Syndicate’s “Haunted Nursery” recording and musical composition with Twiztid’s vocals overdubbed.” Under section 114 of the Copyright Act, which grants an exclusive right to the copyright owner to reproduce and make derivative versions of the copyrighted work, infringement is found when there is physical copying of a recording by digital sampling. By the precedent set in a 2005 case from the 6th Circuit Court of Appeals, Bridgeport Music v. Dimension Films, no tests of substantial similarity or de minimis inquiry is required when there is unauthorized sampling, no matter how small the sample. Bridgeport set a new rule that the copyright owner is the only one who may sample his own copyrighted works; the court in that case admonishes prospective samplers to get a license from the owner or don’t sample, also noting that licensing of samples is now standard practice in the recording industry. There are a number of clearinghouses for licensing music samples as a result of actual and threatened litigation in the area of digital sampling infringement, which are authorized by member copyright owners to clear samples for use on albums according to an agreed upon fee structure. However the court in Bridgeport also stated that there will still be artists and companies that choose to sample and take their chances, and six years after that case, Insane Clown Posse have been haled into court for doing just that.

Entity Production’s case may not make it to trial, either because of a settlement, in view of the overwhelming evidence of intentional infringement, or because it can be decided simply on the information contained in the complaint, on summary judgment. I don’t believe there is any believable defense that ICP can put forth to Midnight Syndicate’s claims of copyright infringement, and we will soon find out if they want to take their chances in a trial, which would be more costly than a settlement. Either way it would be a nice victory for the underdogs, two niche recording artists from the Cleveland area, against two million dollar mainstream performers and merchandise salesmen from Michigan.

 

© 2012 Mary Ellen Tomazic

Cleveland’s Underground Music Scene, 1967-1979

April 1, 2012 articles Comments Off on Cleveland’s Underground Music Scene, 1967-1979

 

(originally published in Negative Print Fanzine, September 1983)

Part One.

As far as most of us are concerned, the musical apocalypse happened in 1977 with the Sex Pistols in England, opening the door for new forms of rock’n’roll. Yeah, we all know the Dead Boys released their first LP that year, but the members didn’t suddenly appear overnight. Clevo does have a past – most of the participants in this early subculture are still around.  Jim Jones and Brian Sands who both work at Record Rendezvous at 3d and Prospect were part of it; so was Tony Maimone, who now has a band called Tight Dreams; Nick Stephanoff is now Nick Knox of the Cramps; and the legendary Peter Laughner tragically ended up dead of natural causes in 1977. I can’t begin to chronicle those days in very much detail – I was a minor myself back in those days. I can, however, try to give the reader a feel for the Clevo underground of 1967 – 1979, a glimpse into the musical roots of our industrial city.

People who complain about the situation now don’t realize that in 1971, having a regular place to play and hear original music (besides garages) was beyond the wildest dreams of those involved. The closest thing to a underground bar was La Cave on Euclid Avenue near E. 103d near CWRU, where the Velvet Underground held court as the house band from ’67 to ’69. This is where Peter Laughner and other Clevo bands of the time got their strong Velvets influence.

Peter was one of the driving forces of the Clevo scene in the early ‘70s, being both journalist and musician. Laughner’s first band, Mr. Charlie, was born when he was in high school; he went on the join the Mr. Stress Blues Band as one of their more interesting guitarists. He once met Lester Bangs, rock writer extraordinaire from Creem Magazine, which led to the publication of several Laughner articles in that beloved rag. Laughner’s next band, Cinderella Backstreet, was formed in late 1972 and included Albert Dennis, Rick Kallister, and Scott Krause (later drummer for Pere Ubu and Home and Garden.) CB played the Viking Saloon on Wednesday nights in the early 70s; the Viking was a CSU bar at 2005 Chester which burned down in late 1975. Laughner was heavily into the Velvets and Stooges at this time and had actually put an ad in the Plain Dealer asking for some “real punks”. The two guys who answered, Johnny Madanski and Gene O’Conner will be featured in Part Two of this article.

Around the same time Laughner was playing in Mr. Charlie, his good friends Craig Bell, Jamie Klimek, Jim Crook, Mike Weldon and Paul Marotta formed the “quintessential basement band”, Mirrors, while attending Lakewood High. Mirrors was heavily Velvets-oriented too, Craig and Jamie having spend many nights sneaking into La Cave with Peter. The band sang of “lust and degradation”, but seldom left their basement except to play several Lakewood YMCA teen dances. When Craig Bell was drafted, Jim Jones replaced him on bass. The band stayed together long enough to finally release a single in 1977, “She Smiled Wild” b/w “Jailbait” and ”Shirley” (recorded in 1975) on Hearthan Records (Pere Ubu’s label.) A few of the Mirrors then formed the Styrene Money Band, which still did the Mirrors’ “Cheap and Vulgar” and released a fairly well-known single, “Drano in Your Veins” around 1978 or so.

Probably the most infamous of the early Clevo underground bands was the Electric Eels, featuring Dave McManus on lead vocals, clarinet and lawnmower; John Morton as guitarist and tinfoil head; Paul Marotta, Brian McMahon and itinerate drummer Denny Foland, Nick Stephanoff and Tony Fier made up the rest of the band. Nick went on to fame and fortune in the Cramps, replacing another Ohio resident, Miriam Linna, who formed the Zantees. Tony Fier started the Styrene Money band with Paul, and John Morton had a non-band of the visual arts, Johnny and the Dicks. Some of the Eels originals were “Safety Week”, “You’re Full of Shit”, and “Flapping Jets”. They did several non-originals too – The Patty Duke theme, Lawson’s Big-O commercial, the Flintstones theme and Dead Man’s Curve.

The Eels hardly ever played out either, but posthumously released a single in 1979 which has had some influence in today’s scene – “Cyclotron” b/w “Agitated” (I’m positive this is where the Plague got their best tune!) The Eels biggest gig was also the most legendary of the Clevo underground scene of the time – “Special Extermination Music Night” with the Eels, Mirrors, and Rocket from the Tombs (more about them in Part Two.) The poster proclaimed “Attendance Required” and the venue – the Viking Saloon on December 22, 1975, with – are you ready for this? – Kid Leo as the HOST! This gig went over so well that the Viking couldn’t top it, and spontaneously burned to the ground the very next day.

Part Two.

In the opening years of the seventies, David Thomas, a teenage heavy metal freak, badgered Scene editor Jim Girard until he let him write a column. This column transformed David into “Crocus Behemoth” in 1971, by 1972 it was “The Phlorescent Crocus and Ricky”, then in 1973 “Croc ‘O’ Bush” (with Mark Kmetzko.) Local band and scene news showed through the Crocus column for years, and it made David something of a Clevo celebrity, but nothing compared to his notoriety in his later bands.

It must be remembered that WMMS was not the enemy back in 73 or 74; they were an underground radio station at that time, where no tune was ever played twice in one day (well, almost no tune.) The Scene and WMMS bunch were known as the “Cleveland Mafia” (more appropriately now, but then merely as a joke) and had a joke band called “The Great Bow-Wah Death Band”, with Davis Thomas as “Dr. Science”. It could be described as “free-form anarchy”, included a few genuine musicians, and played at the Viking Saloon, Agora and the glorious House of Bud (now a parking lot across from CSU.)

David really wanted a more musically proficient band to “bring Cleveland to its knees”; his favorite bands were the Stooges, MC5, Blue Oyster Cult, Lou Reed, and the Youngstown glitter/metal band Left End. On June 14, 1974, he made his debut with the now-legendary Rocket from the Tombs, originally also including Kim Zonneville (a/k/a Charlie Weiner), Tom Clements and Glenn Hach, at the Viking Saloon. David described the band at first as a “punk rock lampoon” and a “New York Dolls takeoff” – they even did a version of Zappa’s “Flower Punk” called “Hey Punk” as well as other assorted zaniness. In October 1974, Peter Cangliner joint Rocket from the Tombs, and Charlie Weiner left when David and Peter wanted a more “serious” band to do Stooges-type material.

In early 1975, Gene O’Connor and Johnny Madansky, the two “real punks” who had answered Peter’s 1971 P.D. ad joined Rocket from the Tombs. They had previously been in a band called Slash, doing N.Y. Dolls, Kiss, and Mott the Hoople covers. These two were also Stooges fans, and R from the T now did “Raw Power”, “Search & Destroy”, and “Rich Bitch”, which didn’t come out until 1976 on Metallic KO, but was performed by the Ig in Clevo (opening for Slade) at the Allen Theater in February 1974. Original Rocket from the Tombs tunes included “30 Seconds Over Tokyo”, “I Heard Her Call My Name”, “Life Stinks”, “Sonic Reducer”, and “Down In Flames” (last two made famous by the Dead Boys.) The final addition to Rocket from the Tombs (in May 1975) was Stiv Bators from Girard, Ohio who was an Ig fan and local scenemaker. In 1970, NBC filmed the Stooges in Cincinnati for their “Experiments in TV” show, and as Iggy was walking on the hands of the fans into the audience (first stage diver?) Stiv handed him a jar of peanut butter which he spread on his chest. This incident made Stiv famous nationwide, it being a network show.[1]

In early 1975, David and Peter badgered Kid Leo so much that he consented to having Rocket from the Tombs on his Sunday night interview show on ‘MMS. Rocket even got to play the Agora in May of 1975 after Stiv joined. Before this though, Peter arranged to have Television play Clevo at the Piccadilly Inn at E. 30th & Euclid (in the Penthouse.) He financed the gig out of his own pocket; it was TV’s first non-Manhattan gig, and Rocket from the Tombs was the opening act. At this time Kid Leo and others at ‘MMS were playing Television’s first independent single pretty heavily, a version of Roky Erikson’s “Fire Engine” from the Eno demos.

After the Television show, Peter Laughner left Rocket from the Tombs to play in the (Television inspired) band Friction. Friction had as a member Adele Bertei, who later was in Peter and the Wolves with Laughner, and then went to N.Y. to join James Chance and the Contortions. This left only David Thomas, Stiv Bators, Gene O’Connor, and Johnny Madansky in Rocket from the Tombs. With too few places to play (RFTT once played Bain Park Community Cabin in Fairview Park for a teen dance) and too diverse ideas, Rocket split into Frankenstein (including Stiv, Johnny and Gene) and Pere Ubu which David formed with some ex-Cinderella Backstreet members. Frankenstein was more of a true punk band. On New Year’s Eve 1975 they played the Piccadilly Penthouse and engaged in a little pool cue-swinging, making then notorious toughs immediately. In late 76 and early 77 they played the Crypt in Akron, run by the guys in the Rubber City Rebels. Pere Ubu, of course, went on to become the most famous and well respected Clevo band so far, touring Europe many times and putting out numerous singles, albums and EPs between 1975 and 1981 when they broke up. David planned Ubu to be more of a psychedelic, Seeds-influenced band, but it went far beyond his wildest dreams to become one of the most intense and unique bands ever heard. Even back in 75-76 WMMS was cool enough to play Ubu’s legendary tunes, “30 Seconds Over Tokyo” and “Final Solution” before they went totally corporate. Pere Ubu was also the first non-Manhattan band to play Max’s Kansas City in New York, and in fact was included on their compilation album in 1976.

Frankenstein was a band with a shaky foundation, and split up soon after forming. They must have had some conflict, because Gene O’Connor (now Cheetah Chrome) and Stiv Bators answered an ad in the musicians section of Scene advertising for members to complete a hardcore band. This was in early June of 1976. My brother and his guitarist put the ad in to find a singer and bass player, and talked to Cheetah for close to an hour on the phone about the band Cheetah was forming. Unfortunately my brother’s guitarist had a broken finger and couldn’t play for a month, so even though addresses and phone numbers were exchanged, Cheetah and Stiv couldn’t wait. They packed up and went to N.Y., taking their old drummer Johnny Madansky (now Johnny Blitz), adding Jimmy Zero on 2d guitar, and leaving the bass section flexible (like Roxy Music did.) About a month after the phone call from Cheetah, a picture and note in the Scene announced the new Clevo band in New York – “The Dead Boys”. The Dead Boys played their first near-Clevo gig at Chippewa Lake Park at a concert put on by WKDD-FM, Akron (now soft rock.) Other bands there were the Rubber City Rebels, Blue Ash (from Youngstown), and Mahogany Rush who gave out the lyrics to their “World Anthem” so people could sing along. The next Clevo gig was a bit closer, in Lakewood at the Phantasy – Channel 8 News even showed up and made the Dead Boys go on early to get a few live shots for the 11:00 news.

Rocket from the Tombs tunes showed up on the first two Dead Boys albums – “Sonic Reducer” and “Down In Flames” on the first one, and Peter Laughner’s “Ain’t It Fun” on the second, with a recording of Peter’s voice at the end saying “I’m dead”. Stiv Bators claims that the Dead Boys are haunted by Peter.

Part Three.

The Summer of Love, 1967, saw a band called the Munx get started around town. The band included Bob Bensick (who returned around 1982 with his wife in an MTV-style band called Berlin, now Zara), Denny & Billy Earnest (who just may have later become Deadly Earnest and the Honky Tonk Heroes, – not being a Country/Western music fan, I can’t say for sure.) In 1969, Bensick formed Sheffield Rush (many bands had “Rush” in their names back then, before the Canadian Rush. Who out there remembers Joel Lariccia’s “Roseflown Rush”? I guess everyone was “rushing out” in those days!) That last year of the 60s brought us probably the most legendary original band to come out that early in Clevo. Moses included not only two ex-Choir members, Randy Klawon on lead guitar and Dennis Carlton on bass, but also David Alexy on drums and our own Brian Sands (a/k/a Brian Kinchy) on vocals and guitar. Moses played the legendary Midwest teen club circuit located in shopping centers and obscure suburbs (remember Cyrus Erie West, formerly a Hullaballo, in North Ridgeville?) throughout Ohio, Michigan and Pennsylvania. They opened for the Stooges several times, at the Chagrin Armory and Mentor Hullaballoo, and also for Alice Cooper twice (once at the N. Ridgeville Hullaballoo in 1971.) They did an original song called “Shock Treatment” six years before the Ramones hit the big time, as well as many other tunes they had written – this was the heyday of cover bands, remember. They also gave out illustrated programs and sometimes even wore masks – again, years before other Clevo “theatrical” bands such as Fayrewether and Molkie Cole tried these techniques.

The early 70s brought out the same bunch with new bands – Bob Bensick form and electronic band with Allen Ravenstine called “Hy Maya” that used to give “performances” from time to time, mainly on the East Side. David Alexy and Dennis Carlton from Moses formed a band called “Milk” in 1973, which also included Al Globekar, later to be in Circus. They were also theatrical (wasn’t everyone back in the glitter days?), played Cyrus Erie, and once opened for Canned Heat. Ex-Moses Brian Sands played around with several projects, Brian Bulldog (toy drum kit, pre-recorded tapes) and Brian and the Juniors (with two 15 year olds, circa 1978.) Brian also did the fab 60s commercials at Disastrodome II at the WHK Auditorium in 1978 – Farrah Fawcett for Dubonnet, and the infamous Doral “Taste Me, Taste Me” spot. One can converse with the legendary Mr. Sands at Record Rendezvous at 3d and Prospect downtown, or read about him in the “S” issue of “CP” Magazine.

The “Summer of Hate”, 1977, didn’t pass Clevo by as far as punk bands go – a slew of ideas were flying around town at that time. Probably the major punk entrepreneur of this period was Johnny Dromette, who owned the Drome record store. He used to have bands play in the window of the store up on Cedar Hill near Coventry – Devo was one of them, the Pagans were another (see the cover of their single “What’s This Shit Called Love?” for a memorialization of the event.) Dromette also managed the Pagans, who did their first gig July 6th, 1977 at the Looking Glass in Euclid. Even then they did a fair amount of covers, including “(I’m Not Your) Stepping Stone” and even (ugh) Rolling Stones songs; Mike Hudson, Tom Metoff, Tim Alee and Brian Morgan were in the band then, and their first single (still considered by some to be their best offering) was “Six and Change” recorded live in October 1977.

Cle Magazine was the premier publication at the time though only four issues came out (all collector’s items now.) Contributors and staff included David Thomas, Johnny Dromette, Mike Weldon, Charlotte Pressler, Mike Hudson, Andre Klimek, Mark Mothersbaugh (as artist) and John Morton, (a/k/a Johnny and the Dicks visual art band.) Cle number 3A had a 2 page rundown of all Clevo alternative bands, and it is a revealing bunch of history to say the least! Some of the bands mentioned were: The Baloney Heads, featuring ex-Bluestone Drummer Wally Gunn and ex-Strutter drummer Jeff Cougenour; Live Jack, a nine year old from South Euclid who sent Cle tapes with a heavy Stooges influence, featuring songs such as “School’s So Dumb”, “People Growing Beards” and “Microscopic Jets”; and a young 3-piece called Public Enemy with a tune called “New High School” and the fastest ever version attempted of “I Wanna Be Your Dog”. Also featured were the Dromones, which Johnny Dromette formed to be “a crass, one-gimmick exploitation of modern trends”; they did 30-second tunes like “Coed Jail”, “Drome Theme”, “5 Seconds over Borneo” and an extremely condensed “Master of the Universe” by Hawkwind. They opened for the Pagans and others, and were all Drome employees – Mike Weldon (ex-Mirrors), Jim Ellis, and Pasadena Dromona as chanteuse. Ex Blank X was another clever band with ex-Eels members doing ex-Eels tunes, including “the hit” “Agitated” (later done by the Plague.) Last but not least, Cle 3A mentioned a band called the “Dead Kennedys”, renamed the Kneecappers (remember this was in Spring 1978) featuring “Russ and Pat from Elyria”, Mr. Chris Yarmock (later Easter Monkey vocalist/sax player with Jim Jones) on vocals and Gary Lupico from WRUW and the Scene mag. – very interesting, but puzzling!

The late 70s spawned one more magazine and a bunch of bands semi-connected with it – Larry Lewis (now known for his band Faith Academy) put out a magazine called Mongoloid at a very tender age, and also had a band called Medusa Cranks. A band prominently featured in Mongoloid was the Lepers, who made their debut in June 1978 with songs such as “Desegregation Blues”, “Welcome to Cleveland”, “Avant-God” and “I Hate Coventry”. In late ’78 they had a single on Drome Records, “Cops”, “Coitus Interruptus”, “Light Up a Pack” and “Flipout”. These mid-period punk bands were probably more involved with real politics than the HC bands now – they played benefits for causes other than their own projects. One event was “Meltdown ‘78” at CSU on November 12, 1978, a benefit for the Western Reserve Alliance and the North Shore Alert – two area “No Nukes” groups. Bernie and the Invisibles, Medusa Cranks, Public Enemy, Backdoor Men, the Lepers and the Pagans played.

And so ends the tale of the Clevo Underground – you all know what goes on now – a bigger scene doesn’t necessarily make for more harmony. Thanks to Cle, Mongoloid, and PTA Magazines for the research sources for these articles.

(Postscript – several of the musicians in this article have since passed away – RIP Stiv Bators, Gary Lupico, Jim Jones and Larry Lewis.)

 

© Mary Ellen Tomazic 1983

 

[1] Later scrutiny of the film by some Stooges buffs revealed that Stiv may not have been the one who handed Iggy the peanut butter jar, but he claimed that honor and legend till his untimely death.


The “Godfather Works” and the Godfather of Soul – Contracts for Assignment and Licensing of Rights Often Require Predictions of the Future

March 9, 2012 articles Comments Off on The “Godfather Works” and the Godfather of Soul – Contracts for Assignment and Licensing of Rights Often Require Predictions of the Future

When authors and musicians grant movie and television rights to use their works, it is considered to be an emblem of their success, as they receive not only monetary gain but a big assist to their fame. As much as the artists agree to assignments of certain rights in the present, they must also anticipate how those rights could benefit them in the future. A contract that assigns all copyrights to a work without any reservation of rights by the artist could cut him or her out of a lucrative payday for products created from their original work in formats and on platforms that were not invented at the time of the assignment. Contracts granted in the 1960s by Mario Puzo for rights to use his book “The Godfather”, and by James Brown for rights to use his performance on a 1965 television program called “The TAMI Show” both generated litigation over the language used.

On February 12, 2012, Paramount Pictures sued the family of the author of the original novel, “The Godfather”, Mario Puzo, for copyright and trademark infringement. Mr. Puzo had assigned his entire copyright to the novel to Paramount in 1969, granting them, among other rights, “any and all copyrights therein and all rights now known and hereafter accruing therein and thereto, forever and throughout the world, together with the sole and exclusive right to use said work, in whole or part, in whatever manner the Purchaser (i.e., Paramount) may desire including, but not limited to, the sole and exclusive right: to make and cause to be made literary and dramatic and other versions and adaptations of every kind and character of said work or any part or parts thereof and/or any or all of the characters created therein … [and] to adapt, arrange, change, interpolate in, transpose, add to and subtract from said work to such extent as the Purchaser, in its sole discretion, may desire in connection with any use which the Purchaser may make of said work.”[1] Mr. Puzo did not reserve any rights to The Godfather, except the right to publish the original novel in book form. He did not reserve the right to publish a sequel based on the characters in the first novel.

The entire movie going public knows what happened next: the movie made of the book “The Godfather” went on to become one of the most popular, famous and well loved films of all time, in fact being rated by the Film Institute of America as the third best movie of all time.[2] Not only did the movie become famous, but the stylized script of the name “The Godfather” used on the novel and all the movies has come to identify the Godfather movies and book, and Paramount registered both the name and the distinctive design used for the logo as trademarks in the U.S. Patent and Trademark Office, comprising no fewer than twelve different registrations, referred to by Paramount as the “Godfather Marks”.[3] These trademarks have been used on not only the book and movies, but on a range of products marketed around the world. It could be argued that the trademark owned by Paramount that sprang from the name of the original novel is as valuable, if not more valuable, than the copyright originally sold to them by Mario Puzo.

The complaint points out that Paramount maintained a good working relationship with Mr. Puzo during the making of the three Godfather movies, and also after his death, when in an attempt to “accommodate” the Puzo Estate Paramount entered into an agreement with the Estate granting it the right to publish one (but only one) Godfather sequel novel written by new authors. That agreement also recited the Estate’s contention that it had the right to publish subsequent novels, and that Paramount contended to the contrary. The Estate went ahead with the first sequel novel, entitled “The Godfather Returns”, which had success, and good sales, but then without Paramount’s knowledge or consent published another sequel novel,[4] which did not do well in sales and received “mediocre reviews” according to Paramount’s complaint. The family has a third sequel novel ready for release in May 2012, to be called “The Family Corleone”.

Paramount then filed suit not only for copyright infringement, as they have the sole right under copyright law to prepare derivative works of the first novel[5], but for trademark infringement claiming tarnishment and consumer confusion of the Godfather Marks,[6] which the Estate has used on the second sequel and planned to use on the third. Because of the claimed inferiority of the unauthorized sequels, Paramount says it has and will suffer damages from the Estate’s use of the Godfather Marks which is likely to cause confusion, mistake, or deception of the public as to the source of the books. The essence of trademark law is to identify the source of goods and to help bolster the goodwill and value of the brand. Having spent countless millions on the establishment of the Godfather brand and its connection to the beloved Godfather movies, Paramount had no intention of allowing the Puzo Estate to tarnish the “integrity of the Godfather franchise”.[7] A trademark being used as an identification of a movie series and products based on that series is a legitimate, though not always recognized, derivative use of the original grant of rights. The independent development of the Godfather marks by Paramount to identify its copyrighted works is a collateral right necessarily granted by the language of the original contract between Paramount and Puzo, which grants not only copyrights but “all rights now known or hereafter accruing therein” and also the exclusive rights to “use said work … in whatever manner the Purchaser may desire” including the right to use “any and all of the characters created therein”. The copyright includes the title of the work, and it is able to be registered for trademark because it identifies a series of movies, not just one, which is not able to be the subject of a trademark.[8]

The popularity of the Godfather movies, and the use Paramount made of its grant of rights, gave the owners of the intellectual property rights a very lucrative franchise which Paramount has every right to preserve and benefit from. The theory of the Puzo family estate is in direct opposition to the rights assigned and sold by their patriarch in 1969, and the language of the contract does not seem to give them a loophole in which to claim the right to create their unauthorized sequels. Paramount is claiming willful copyright and trademark infringement, and it remains to be seen how the Estate will counter that strong claim in light of the seemingly clear contract language. Mario Puzo sold the rights to everything that could possibly be created from his novel, in perpetuity, leaving nothing that could be invented later to be exploited by him and his family.

The situation was somewhat similar for the Godfather of Soul[9], James Brown, with his case against a film company for copyright infringement. In James Brown v. Twentieth Century Fox Film Corporation[10], Mr. Brown challenged the use of a clip from his performance on the 1965 television show in the 1991 move “The Commitments”. His letter agreement with the producers of the TAMI Show in 1965 was an employment contract which granted the producers sole and exclusive rights in the reproduction of his performance on the show. The contract included perpetual rights of exploitation of all parts of the performance including “all or any part of your acts, poses, plays and appearances of every kind and nature made or done by you … all instrumental, musical or sound effects produced by you (that presumably included his distinctive exhortations of “Hey!” and other famous James Brown exclamations), made or done by you in connection with the Performances and your services hereunder”, and the right to “exhibit, transmit, reproduce, distribute, broad cast and exploit … or the advertising or exploitation thereof, in and by all media and means whatsoever.”[11] The contract also gave the TAMI Show producers “the right to use and display, and to license others to use and display, your name and likeness for advertising or publicizing the Performance in conjunction with and so called ‘commercial tie-ups’”. Mr. Brown was paid the sum of $15,000.00 for these grants of rights. Mr. Brown contended that the 1964 letter agreement was ambiguous whether the grant of rights included the rights to use his performance in films, film promotions and videocassettes. He urged the court to focus on the phrase “in connection with”, and argued that it limits the producer’s rights to using his performance only in connection with the original TAMI Show itself, and not entirely separate contexts such as a full-length motion picture.[12] Mr. Brown submitted extrinsic evidence to support his interpretation of the contract language, which is allowed under California law, of industry practices requiring that consent of performers be obtained before film footage clips are used, and that other companies secured consent to use the TAMI Show footage. However, even under the permissive California standard, extrinsic evidence cannot be used to advance an interpretation to which the contract is not reasonably susceptible. The court stated that the language of the agreement expressly permitted the reproduction of a “portion” of the performance, indicating that the contracting parties contemplated the later use of the performance as segments of other larger projects.[13] The contract prohibited “commercial tie-ups” but this phrase was interpreted to mean Mr. Brown’s name and likeness could not be used for product endorsements, to which he had always been strictly opposed.[14] Finally, James Brown argued that the grant of rights did not encompass the right to the videocassette market, since it was not specified, nor was it even in existence at the time of the 1964 agreement. The court, in citing a number of cases litigating that question, found that the contract language did not limit the use of the performance to a specific medium, and quoted Rooney v. Columbia Pictures Indus., Inc.[15] : “[w]here a party has acquired a contractual right which may be fairly read as extending to a media developed thereafter, the other party may not escape that part of the agreement by showing that the specific nature of the new development was not foreseen.”

The scope of use, including geographic extent and duration, and kinds of rights desired (TV, film, DVD, online, etc) should always be carefully considered in a grant of rights. With the advent of films, television shows and even books being offered in digital form online[16] and on wireless devices such as smartphones and I Pads, questions persist about how to compensate copyright holders for their music and other works in previously released and new films and shows. In film studio contracts, the language has been changed to “all media excluding theatrical” (AMXT) for new films so negotiations do not have to occur with each new technology platform. In addition, many television show contracts are being amended to provide for rights in perpetuity, instead of the formerly standard five year option.[17]

The two “Godfather” cases illustrate the need in contract drafting to be able to anticipate things that don’t exist now and may not even seem possible – other than Dick Tracy and his two way wrist radio, who would have predicted fifty years ago the many devices we now use for two way audio and video communication? In licenses and contracts granting rights to intellectual property, nothing should be left to chance. Collateral rights such as trademarks may be created once money begins flowing from the original grant of rights, and enforcement of copyrights usually also depend on how much money is being made on the original works.

 

© 2012 Mary Ellen Tomazic


[1] Paramount Pictures Corporation v. Anthony Puzo, As Executor of the Estate of Mario Puzo, Civil Action No. 12 CIV 1268, United States District Court, Southern District of New York, Count 2.

[2] AFI’s 100 Years, 100 Movies, AFI.com (last visited 3/8/2012).

[3] Paramount v. Puzo, Count 30.

[4] “The Godfather’s Revenge”.

[5] 17 U.S.C. § 106(2).

[6] 15 U.S.C. § 1114 and 15 U.S.C. § 1125(a).

[7] Paramount v. Puzo, Count 5.

[8] TRADEMARK MANUAL OF EXAMINING PROCEDURE § 1202.08 (8th Edition 2011) available at tess2.uspto.gov/tmdb/tmep (last visited February 8, 2012).

[9] A footnote in the case quotes a statement in the complaint that “the plaintiff is known throughout the world as ‘The Godfather of Soul’, [and] alleges that he is one of the most influential living musicians in the world and is one of the greatest live performers of all time … and one of the original inductees into the Rock and Roll Hall of Fame”.

[10] 799 F.Supp. 166, 26 U.S.P.Q.2d 1626 (1992).

[11] Brown v. Twentieth Century Fox Film Corporation, 799 F.Supp 166, 26 U.S.P.Q.2d 1626 (1992).

[12] Id. at 170.

[13] Id.

[14] Id. at 171. Mr. Brown also lost his right of publicity claim in this case, as the court stated that “there is no allegation that plaintiff’s name or any aspect of his persona other than his appearance in the TAMI Show clip as it appears in the film was used by defendants to promote the product”. Id. at 172.

[15] 538 F.Supp. 211, 229 (S.D.N.Y.), aff’d without op., 714 F.2d 117 (2d Cir.1982), cert. denied 460 U.S. 1084, 103 S.Ct. 1774, 76 L.Ed.2d 346 (1983).

[16] For example, current television shows and movies are now offered for a monthly subscription fee on live streaming platforms such as Hulu and Netflix; millions of books are available for downloading to several types of “e-readers”.

[17] Melinda Newman, I Want My Mobile TV, Billboard, July 8, 2006, at 32.

 

Trade Secrets and Reverse Engineering – When does Industry Expertise Become Misappropriation?

February 29, 2012 articles One comment

I. Introduction

A recent case on computer software has defined the standards for trade secret violations in a reverse engineering case. The court in Aqua Connect, Inc. v. Code Rebel, LLC[1] emphasized that under the California Uniform Trade Secret Act[2] , “improper means” does not include reverse engineering or independent derivation alone; it must be combined with some other improper action to form the basis of a cognizable misappropriation claim.”[3] In the case, a computer software company acquired the plaintiff’s software by downloading a free trial version. However, the version included a “clickwrap” agreement in which the user specifically warrants that he or she will not reverse engineer the software. The court notes that the plaintiffs may have a cause of action in breach of contract based on the clickwrap agreement, but the means by which the software was obtained was not an “improper means” under the statute. Putting aside whether such clickwrap agreements can override the state statute by forbidding reverse engineering, which is clearly allowed under the uniform trade secret law[4], questions remain about what kind of other improper means must be proven along with reverse engineering to state a trade secret misappropriation claim?

The question on trade secrets brought to me involved the development of cigarette tobacco blends by a company which sells a variety of smoking materials and accessories. The tobacconist who created the `house blends’, which were identified by initials indicating that they were “like” or “similar to” famous national brand cigarette tobacco blends.[5] The trademark names were not used, but the initials were recognizable by those who regularly partake of those brands in their smoking habits. The creator of the “knockoff” blends just happened to be a former employee of one of the major cigarette companies, who was employed in the area of tobacco blend creation there. Although it was not known whether he had signed a confidentiality agreement with the major tobacco company not to reveal trade secrets, it was fairly likely that he did not take physical copies of the “recipes” for the blends with him when he ended his employment with the company.  Being experienced in the area of mixing different types of tobacco to approximate the well-known national brands, was he off the hook for misappropriation of trade secrets because he was able, through his own knowledge, to reverse engineer the “knockoff”  blends? The tobacco products seller, it was learned, had received correspondence from the former employer of the tobacconist claiming he had misappropriated their proprietary “recipes” for the well-known cigarette tobacco blends. To make matters more complex, the tobacconist had been employed by another company doing similar work in between his employment with the national company and his current job, and had received the same type of “warning” letter when he was employed there. So what kind of “improper means” would the tobacconist’s former employer have to prove in order to charge him with misappropriation of their cigarette tobacco blend formulas, which they hold as trade secrets?

II. Overview of Trade Secret Law

Trade secrets have been around for many years, back to the time of the Romans, and causes of action for misappropriation of trade secrets were brought over to America from England and became part of its common law.[6]  The prohibitions against misappropriating trade secrets stems from a desire to protect innovations not within the categories of things that are patentable or copyrightable. Trade secrets are innovations that are usually processes, procedures, or ideas. The definition of a protectable trade secret is information which “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” [7] Other intellectual property laws have limitations, either in subject matter or time. Patent law requires that inventions be a new invention or a “new and useful improvement”, “novel” and “non-obvious”,[8] while copyright  grants a limited time to its owner to exploit “an original work of authorship”, and protects innovations in their expression only, not in processes, procedures, or the ideas themselves.[9] Trade secret laws allow the innovator a way to protect his ideas and prevent others from saving time and effort to develop similar innovations by appropriating his. They do not prevent a second company from independently discovering and using the first company’s innovation, as long as the second company uncovered the first company’s idea by proper means. The main condition of protection as a trade secret is that the owner of the innovation takes steps to safeguard it, and companies send millions of dollars investing in confidentiality measures to protect their trade secrets.

III. State and Federal Trade Secret Laws

State laws giving trade secrets protection help to encourage businesses to develop new uses by allowing them to keep the confidentiality of their valuable competitive information. The laws do not discourage competitor businesses from developing their own valuable uses.[10] There are only a few states which have not adopted their own Trade Secrets Acts,[11]  most modeled on the Uniform Trade Secrets Act of 1985, drafted by the National Conference of Commissioners on Uniform State Laws.[12] The Uniform Trade Secrets Act, upon which all state trade secret legislation has been based, including Ohio’s, defines “misappropriation” as the acquisition of a trade secret by “improper means”. This includes having knowledge that another person used improper means to acquire the trade secret information, as well as “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.”[13] The California Uniform Trade Secret Act makes part of its law the helpful admonition that reverse engineering or independent derivation alone do not constitute improper means, but the comments to the 1985 revision of the Uniform Trade Secret Law refine the definition by listing several proper means of discovery, including by independent invention; reverse engineering; licensing arrangements; and published literature.[14]

The push for states to have uniform laws on trade secret misappropriation has become much more urgent in recent years due to the global nature of our communications and trade. Some of our multinational treaties have requirements that signatory nations provide a minimal level of protection for intellectual property existing within their borders, such as the North American Free Trade Agreement (NAFTA), the General Agreement on Tariffs and Trade (GATT) and the Uruguay Round Agreements Act (URAA) which include the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS.)[15] The TRIPS Agreement specifically offers protection for “undisclosed information”[16] and its definition of such information is consistent with treatment of trade secrets in common and civil law countries.[17] Some authors have urged the enactment of a federal trade secret act, so that compliance problems are not created with America’s international obligations if a state alters or interprets its trade secret law in a manner inconsistent with our international treaties.[18] The Supreme Court case of Golan v. Holder recently decided a longstanding issue involving enforcement of these federal treaties in the area of international intellectual property. In 1996, the Economic Espionage Act was enacted, making the theft of physical copies of trade secrets a federal criminal offense.[19] The criminal offenses may only be prosecuted by the federal government, not parties in civil litigation, and the law addresses only actual theft (rather than the less severe “misappropriation” prohibited by the uniform trade secret acts) of the information, mainly through industrial espionage.

IV. Case Studies and Evidence Issues

In a case claiming trade secret misappropriation, the plaintiff must raise an inference of improper use, such as access by the defendant, that the defendant’s design mirrors the plaintiff’s design, or that the defendant designed the product in less time than typically required to complete the trial and error process of independent derivation or reverse engineering. The plaintiff is not required to prove improper use by presenting evidence specifically refuting reverse engineering or independent derivation, though it may choose to do so. Once credible evidence is presented by the plaintiff establishing improper use, the defendant then bears the burden of proof of its defense of reverse engineering or independent derivation.[20]

Many trade secret misappropriation claims come from knowledge obtained by employees in the course of their employment, and necessary to their work. When an employee goes to work for a rival company in the same field, some information that was considered to be “secret” may be used at the new job. Even if the employee has signed a confidentiality agreement and does not intent to reveal a trade secret, the nature of his job may involve information absorbed in his previous employment, and recalled by him through his experience in the field. Since airtight protection of corporate information would make it difficult for employees to move between jobs, resulting in an inefficient labor market and infringing on personal liberties. Therefore, courts have tended to require the holder of trade secret information to demonstrate the misappropriation of documents or the misuse of specific product information.[21]

This standard does not take the defendant off the hook for preserving evidence pertaining to the case, though. A recent California trade secrets case against a former engineer employee of a diving company, who left the company and set up a competing business, shows the consequences of attempting to destroy evidence of misappropriation of a trade secret. In Amron International Diving Supply, Inc. v. Hydrolinx Diving Communication,[22] the defendant was found to have stolen 110,000 files from his former employer. He then violated a court order to preserve all evidence by using wiping software to permanently eradicate data and destroyed hard drives on two of  his computers. He even installed a new hard drive on a third computer and manipulated the system  clock to make it appear older, all after he had received the preservation order. The court found the defendant in contempt of court and fined him $73,000 plus attorney fees and costs for the plaintiff, who had to employ a forensic consulting firm to discover the defendant’s misconduct. Also, as a result of the defendant’s actions, his lawyer asked to be removed as his counsel on the case.[23]

Turning to the operation of trade secret law on the question of development of cigarette tobacco blends that are similar to national brands, there is a possibility that cigarette formula information may be obtainable by one of the “proper means” listed in the uniform trade secret law. Published information about the ingredients in the most popular cigarettes may be available to the public, presumably allowing for some reverse engineering of the formulas. Some tobacco companies have voluntarily listed the ingredients of their cigarettes on their websites for years, but not in the amounts that would allow blends to be recreated.[24] R.J. Reynolds Company, the second largest tobacco company in the world, which produces the cigarette brands Camel, Kool, Pall Mall and Winston states on its website that “the specific blend formulas for our products (the recipes that include the exact amounts of every ingredient) are trade secrets, and we vigorously work to ensure that our competitors do not have access to our formulas.”[25]  Phillip Morris, the world’s largest tobacco company, controls fifty percent of the consumer market.[26] The Federal Food and Drug Administration now require tobacco companies to tell them their formulas, in an attempt to determine whether certain ingredients may make tobacco more harmful or addictive.[27]

In a suit brought by Phillip Morris against the state of Massachusetts over an act passed requiring tobacco companies selling their wares in the state to publicly disclose their ingredient lists for cigarettes, claimed that the operation of the act would threaten to destroy the company’s enormously valuable trade secrets. The court cited the information publicly released by the tobacco companies made the cigarette formulas no longer truly confidential.[28] However, it turns out that it is not that easy to “reverse engineer” exactly the ingredients that make up famous national cigarette brands. The court in Phillip Morris noted that “despite regular efforts by various of the plaintiffs to monitor competing brands and to reproduce those brands’ flavorings, to date the companies have failed to reverse-engineer brand-specific recipes.”[29] The plaintiffs insisted that “a complete ingredient list with the ingredients listed in descending order by weight would advance the feasibility of duplicating the taste and aroma of a competitor’s brand.”[30] The plaintiff’s arguments, including several constitutional grounds including taking of property without compensation, were eventually accepted by the federal court, and they were granted an injunction against the enactment of the Massachusetts law.[31]

V. Conclusion

Even with the utmost protection of cigarette tobacco blend recipes as trade secrets, the promotion of the companies’ national brands is probably the most effective way to prevent a competitor from taking market share. Consumers choose their cigarette brands based on flavor, taste and aroma, but also develop a loyalty to certain brands that is bolstered by advertising. The strength and value of their brands is emphasized in advertising, and although cigarette ads are no longer on television, the image of the Marlboro Man is still ubiquitous in print ads, and leads smokers to identify with the strong and virile character. The money spent on brand recognition assures that there are many smokers who would never switch to a “knockoff” brand because of their loyalty to the national brands.

With the price of cigarettes always increasing, the economy has led many formerly loyal smokers to roll their own to save money, but they still would prefer to use tobacco that is similar in taste and aroma to their favorite national brands, even if they can’t duplicate the “Marlboro experience.” The development of tobacco blends that “compare to” their favorite brands allows the home cigarette maker to somewhat duplicate a smoking experience that has become prohibitively expensive for them. In addition, since the loose tobacco presumably does not have a lot of the added ingredients that the FDA is worried about in national branded cigarettes, although the home rolled smokes may be more natural, whether that increases the safety or healthfulness of any cigarette is doubtful. Whether the tobacconist uses the knowledge stored in his brain from his former job at the national tobacco company, uses the published ingredient lists available from the companies, or reverse-engineers the blends using study of the national cigarette’s leaf composition[32], chances are he has not done so in violation of his former employer’s trade secrets. The elaborate procedures used by the national tobacco companies to safeguard their ingredient information, and the probability that the former employee was not given and did not have full access to the cigarette recipes in his work, makes it unlikely that the blends he has created were anything but a product of his experience and familiarity with tobacco types, and his interpretation of the famous cigarette’s flavor and aroma. Smokers of the knock-off blends would probably say they are not identical to their favorite smokes, but are close enough to avoid paying the national brands’ prices. The initials used to indicate the blends’ similarity to national brand names are not enough under trademark laws to violate the marks by passing off or false association, and the direct labeling that the blends are not the actual identical blends but are “similar to” them refutes any claim of consumer confusion.

© 2012 Mary Ellen Tomazic

[1] No. 2:11-cv-05764-RSWL-MAN (C.D. Cal., Feb 15, 2012).

[2] Cal. Civ. Code §3426.1 – .11, sec. 3426.1(a).

[3] Aqua Connect, Inc. v. Code Rebel, LLC, sec. II.

[4] The court cites another case in which the California Supreme Court states that no decision has recognized a right of a party to employ a consumer contract to change the statutory definition of “improper means” under trade secret law to include reverse engineering, DVD Copy Control Ass’n,

Inc. v. Bunner, 31 Cal. 4th 864, 901 n.5 (2003).

[5] Some of the initials were “MRD”, “MLT”, “CFF”, and “CLT”.

[6] See Christopher Rebel J. Pace, The Case for a Federal Trade Secrets Act, 8 Harvard L. Rev. 427, 428 (Spring 1995), citing state trade secret cases from the 1800s.

[7] . Unif. Trade Secrets ACT § 1(4); Ohio’s Trade Secret Act, O.R.C. 1331.61(D), mirrors this definition.

[8] 35 U.S.C. § 101, 154.

[9] 17 U.S.C. § 102(b).

[10] Pace, at 435.

[11] Massachusetts, Texas and New York have not adopted the Uniform Act, but maintain their own laws against misappropriation of trade secrets.

[12] See 14 U.L.A. 433 (1985).

[13] Ohio Revised Code 1331.61 (B) and (A)

[14] Unif. Trade Secrets ACT § 1, Comment.

[15] GATT was originally agreed to in 1947, and was concerned almost exclusively with trade in goods; The World Trade Organization, established in 1995, succeeded the GATT agreement, and extended the subject matter coverage to trade in services, and also to trade-related aspects of intellectual property rights (TRIPS.) NAFTA was negotiated in 1992; the URAA was finalized in 1994.

[16] TRIPS Agreement, art. 39.1.

[17] TRIPS Agreement, art. 39.2.

[18] Pace, at 454.

[19] 18 U.S.C. §1832.

[20] Sargent Fletcher, Inc. v. Able Corporation, 3 Cal. Rptr. 3d 279, 110 Ca.App.4th 1658  (2003).

[21] Frederick M. Abbott, Thomas Cottier, and Francis Gurry, International Intellectual Property In An Integrated World Economy 593 (Aspen Publishers, 2007).

[22] Case No. 11-CV-1890-H (JMA) (S.D. Ca. 2011).

[23] Id.

[24] Tobacco companies must reveal ingredients, formulas to FDA, Associated Press, January 19, 2010.

[25] General and Brand Specific Ingredients, R.J. Reynolds Company Tobacco Brand Ingredients, http://www.rjrt.com/ingredients.aspx (last visited February 28, 2012.)

[26] Why Philip Morris Supports FDA Regulation of Tobacco, David Gutierrez, NaturalNews.com, April 1, 2008,

http://www.naturalnews.com/022922_tobacco_FDA_Philip_Morris.html

[27] Family Smoking Prevention and Tobacco Control Act, 21 U.S.C. § 387d, Pub. L. No. 111-13, 123 Stat. 1776 (2009).

[28] Phillip Morris, Inc. v. Reilly, 113 F.Supp. 2d 129, 135 (2000).

[29] The court’s footnotes states that “the cigarette manufacturer plaintiffs report that they have tried to reverse-engineer one popular brand, Marlboro, with no success.”

[30] Phillip Morris at 137.

[31] Phillip Morris at 151.

[32] In the similar area of cigar blending, one writer suggests the use of a method for  reverse blending and studying a cigar’s components he calls “Ashtray Analysis”, which consists of removing the cigar’s component leaves one at a tie and burning them in an ashtray to smell the tobacco leaf’s characteristics. Reverse Cigar Blending, Tobacconist University, March 30, 2011, http://tobacconistuniversity.org/blog/?p=1710 (last visited February 28, 2012).

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