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DISSOLUTION OF GOOD WILL

Wednesday, March 19th, 2014

Paul D. Supnik practices trademark, copyright, and entertainment law. He advises businesses in the selection and use of brand identities, protects trademarks through registration strategies, enhances value through licensing, and litigates trademark and copyright disputes. Paul has spoken on these subjects in the U.S. and internationally. Industries represented include: Internet, apparel, cosmetic, restaurant, advertising, sporting goods, software, financial, arts, and media. As a bar association leader, Paul has served as president of the Los Angeles Copyright Society, chair of both the Entertainment/IP Law and International Law Sections of the Los Angeles County Bar, and chair of the Los Angeles Lawyer magazine editorial board. Paul has a Martindale-Hubbell Peer Review Rating of “AV” and has been selected by SuperLawyers® in the field of Intellectual Property for the years 2010 through 2013. He also served as an adjunct associate professor at Southwestern Law School from 2008-2011. For more details, see http://rufuslaw.wpengine.com/2013/08/paul-d-supnik/

Paul A. Lenz is certified by the Board of Legal Specialization of the State Bar of California as a specialist in the areas of estate planning, probate and trust law. He limits his practice to these areas including conservatorships, will contests and trust litigation. For more details, see http://rufuslaw.wpengine.com/2013/10/paul-a-lenz/

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THE UK CHAPTER OF THE BHBA ENTERTAINMENT LAW SECTION

Wednesday, March 5th, 2014

Entertainment law has always had international aspects, but now it is a truly global practice area. And given the exceptional quality of the seminars that the Entertainment Law Section of the Beverly Hills Bar Association puts on each month, we began to consider the idea of opening chapters in other entertainment centers across the world. It fell to me, as the token Brit, to explore the possibility of a UK chapter. After numerous emails and phone calls, I had a list of around 50 UK media lawyers who had expressed quizzical interest (we don’t “do” unbounded enthusiasm). Interestingly, there is no organization of entertainment/media lawyers in London, so we may have found a niche. However we were faced with a major obstacle, namely, the extreme reluctance shown by my countrymen to attend anything so mundane as a meeting of fellow lawyers for fear of being stigmatized as a social outcast, for whom there are no invitations to attend glittering dinner parties that evening. This will take time to change, but at the first meeting last September (2013), which was hosted by one of London’s large media firms, around 25 people showed up, which was viewed as a decent start. We had originally hoped to organize the meetings around a live webcast, but the time difference makes that unworkable, so we went with the next best thing, which was to show a DVD of a relevant seminar, and at the first meeting, we showed the DVD of Ken Ziffren’s “State of the Industry” seminar the previous month. The reaction was polite applause, naturally, masking great interest. Over drinks afterwards, several attendees came up and asked if they could borrow the DVD and watch it again. The reason was very simple – UK lawyers who advise UK clients about the US market need to know which subscription models work, what the price points are, what are the standard release windows, and a myriad of other important details. The second meeting in November featured a DVD of the seminar about Clearances, and on February 27^th, our third meeting featured the DVD of the recent Annual Review seminar at the offices of Marriott Harrison off Chancery Lane, courtesy of Tony Morris, and had a strong turnout of around 25, with several new members showing up. [See attached photo]. The flow reverses on March 19^th, when Martin Kelly of Harbottle & Lewis, whose firm represents the Royal Family, Angelina Jolie, Madonna and others on right of publicity issues, will be on the panel for the Publicity Rights seminar. And future panels may include speakers from London via videolink. Any lawyers in London who are interested are invited to join the LinkedIn group: http://www.linkedin.com/groups?gid=6540154&trk=groups_members-h-dsc&goback=.gin_6540154_false_im*5invite_cs*5connections.anp_6540154_1390962748157_1

– Alexander Rufus-Isaacs

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SHERLOCK HOLMES UNCOVERS A KNOTTY ISSUE IN THE COPYRIGHT LAW

Thursday, February 13th, 2014

A recent law case filed by the Sir Arthur Connor Doyle estate highlights protectability of fictional literary characters. Paul D Supnik, of counsel to Rufus-Isaacs, Acland & Grantham LLP was recently quoted on this issue in an Associated Press article discussing this lawsuit.

http://bigstory.ap.org/article/writer-doyle-estate-dispute-copyright-sherlock

An anthology of stories by contemporary authors was created using certain Sherlock Holmes characters sparked a declaratory judgment lawsuit to determine that there was no copyright infringement. Some characters, according to a decision in the lawsuit by a United States District Court in Chicago were found to be in the public domain because the copyright had expired, while others still protected by copyright. So long as the characters used were in the public domain, no copyright infringement claim could be sustained.

According to the copyright law, literary characters can be protected if they are sufficiently delineated. Ideas are not protectable under copyright law. Only the expression of an idea can be copyrighted. Insufficiently delineated characters are essentially ideas and not protected. A perennial question is to what extent must a fictional character be described, such as by its personality characteristics, dress, appearance, actions, interactions with other characters and other specific features that are dealt with in a literary manner. Once protection is established, how can you tell if a character has been infringed if various elements of the identified character no longer appear in the would be infringing work?

While often an academic exercise, for fictional works based on fictional literary characters, the economic value to rights holders can be a defeated by the scope of copyrightable protection against similar works. Thus, the value is reduced if there is open competition to use similar characters are those bearing the same names. Lack of exclusivity diminishes value. For example it is at least a bargaining chip by the studios to seek a reduction in a negotiated fee for purchasing rights.

Update:

The decision of the District Court was affirmed in June 2014 by the Seventh Circuit Court of Appeals. The Estate argued that the early stories in which Holmes or Watson are already in the public domain does not permit their less than fully “complexified” characters in the early stories themselves to be copied. The Seventh Circuit did not buy that argument. Alterations to a character in later works do not revive or extend the life of expired copyrights on the original characters. Otherwise this would have a tendency to potentially perpetually extend the copyright term.

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THE NEW LIMITED LIABILITY COMPANY LAW IN CALIFORNIA

Friday, February 7th, 2014

There’s a new statute in town governing limited liability companies (“LLC’s”)*. Effective since Jan 1, 2014, it automatically applies to all California LLC’s (and possibly some out of state ones) regardless of when formed. You can’t opt out.

Some of the key changes made by the new statute are: first, there are several “default” rules that apply unless your operating agreement expressly changes them; second, new rules govern fiduciary obligations; and third, a clarification of the duty of loyalty.

A. Default Rules. The main ones are:

• Under the old law, in order not to be deemed “member managed”, all you had to do was to check the appropriate box in the LLC-1. But under the new law, that’s not enough – you have to check one of the other boxes and the operating agreement must provide for different management.

• Under the old law, provisions in the operating agreement would typically grant managers broad rights of management so as to give them the maximum amount of control over business decisions, without expressly stating that these might be outside the ordinary course of business. Now, unless the operating agreement expressly states otherwise, managers will be required to obtain the unanimous consent of the members before performing an act outside the ordinary course of business. Because the new law doesn’t define “the ordinary course of business,” there’s no magic language that will necessarily work to override this new default rule; accordingly, operating agreements should define that term as broadly as the members wish. In particular, a sale, lease or exchange of all or substantially all of the assets of the LLC need to be addressed, as these actions are expressly covered by the new law as requiring unanimous consent.

• Under the old law, managers and members were entitled to reimbursement of expenses incurred on behalf of the LLC only if the operating agreement expressly so provided. Now, under the new law such reimbursement is permitted automatically unless a breach of fiduciary duty is involved. Members and managers of LLC’s should therefore consider putting appropriate limitations or requirements (such as pre-approval) into their operating agreements.

• Similarly, under the old law those acting on behalf of the LLC were merely permitted to indemnification (i.e. would have it only if the operating agreement provided it). Now, it’s automatic unless a breach of fiduciary duty is involved. Again, members and managers of LLC’s should consider the issue of mandatory indemnification if they want to limit or restrict it.

• The new law provides that the default rule for amendments to the operating agreement is unanimous consent (the old rule being only majority consent). This means that each member – even members with small LLC interests – will have veto power over the will of the majority.

B. Fiduciary Obligations. The new law provides greaterflexibility with regard to fiduciary duties, both of managers of manager-managed LLCs and of members of member-managed LLCs. The new law prohibits an operating agreement from eliminating the fiduciary duties of a manager or a member, it clarifies these duties and permits their modification.

C. Duty of Loyalty. The New Law specifically limits the duty of loyalty to three duties:

(i) the duty to account;

(ii) the duty to refrain from self-dealing; and

(iii) the duty to refrain from competing.

The new law permits an operating agreement to designate certain acts as expressly not violating the duty of loyalty, provided that the list is not “manifestly unreasonable.” While this may be somewhat vague, the new law does permit the operating agreement to specify the number or percentage of members required to authorize or ratify specific acts that would otherwise violate the duty of loyalty, after full disclosure.

* The new law is California Revised Uniform Limited Liability Company Act (Corp. Code§§17701.01-17713.13). It replaces the Beverly-Killea Limited Liability Company Act, Corp Code §§17000-17656.

– David Lewis

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SCOTTISH INDEPENCENCE RAISES SOME FASCINATING LEGAL ISSUES

Tuesday, December 3rd, 2013

On September 18, 2014, the people of Scotland will vote either “Yes” or “No” on a vexing and divisive issue that has simmered just below the surface of the nation’s affairs longer than the U.S.A. has been in existence – should Scotland be an independent nation?

If the referendum vote is “Yes”, Scotland’s full secession from the United Kingdom will take place on March 24, 2016.

The chosen date is not without historical significance: on the same day in 1603 the Union of the Crowns occurred, when James VI of Scotland also became James I of England and Ireland after the death of his cousin Elizabeth I, while on 24 March 1707 the Acts of Union – which merged the parliaments of Scotland and England and established governance from Westminster – were signed, making one single country, Great Britain.

The romance of the question masks a mass of more practical considerations as to the political and legal ramifications inherent in the transition of a country from part of a Union to a fully independent nation. One of the most fascinating questions is that of a written constitution.

The United Kingdom is the only nation in the European Union or Commonwealth without a written constitution or Constitution Act. The closest historical document to such a charter is the Magna Carta, signed somewhat unwillingly by King John of England at Runnymede in 1215.

Although the Magna Carta is cited as the model for numerous constitutional documents throughout the centuries since, including the American Constitution, it was never itself codified and most of its original clauses had been repealed by the mid-19^th century.

A schoolboy in modern-day Britain is more likely to declare the Magna Carta a wimpy folk group and Runnymede a particularly malodorous cheese than identify correctly their historical significance.

An independent Scotland would, however, adopt a written constitution and a draft of the proposed document was recently released and is now available to read at the following link:

A Proposed Constitution for Scotland

Among the fundamental rights proposed for the new nation are a handful of particular note to the ideological debates currently proving so divisive in this country, such as the following:

“Trade unions have the right to negotiate and enforce collective agreements, and to enforce these by strike action”; and,
“Everyone shall have a right to adequate healthcare through a universal public health system established by law, as well as to public assistance, sufficient to maintain their health and dignity of life, in the event of accident, illness, disability, unemployment, and old age.”

Neither of these proposed fundamental rights have generated as much as a ripple on the surface, let alone a storm in a tea (Party) cup, in Scotland. Principles of climate change, the environment and sustainable use of Scotland’s natural resources are also to be protected by the constitution, and a separate constitution chapter sets forth the “Seven Principles of Public Life”, all of which might cause our own members of Congress to run screaming for cover and John Boehner to dissolve into uncontrollable fits of sobbing.

They are:

“(75) All members of Parliament, Ministers, Civil Servants, Judges, County, City and Burgh Councillors, and other persons holding public office, shall be morally bound to act according to the Seven Principles of Public Life:
(i) SELFLESSNESS: Holders of public office should act solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.
(ii) INTEGRITY: Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might seek to influence them in the performance of their official duties.
(iii) OBJECTIVITY: In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit.
(iv) ACCOUNTABILITY: Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.
(v) OPENNESS: Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.
(vi) HONESTY: Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.
(vii) LEADERSHIP: Holders of public office should promote and support these principles by leadership and example.”

Laudable principles indeed, which probably means they are tantamount to socialism to our friends on the extreme right of this country’s political spectrum.

For more on the legal aspects of an independent Scotland’s constitutional future, you may wish to peruse the Law Society of Scotland’s discussion paper, issued in August of this year and available here:

Scotland’s Constitutional Future

A written constitution is just one of the intriguing issues born of the debate over independence. Others include the effect of independence on Scotland’s membership in the European Union, NATO, the United Nations and other international organizations, whether an independent Scotland would remain obligated under currently existing treaties, and should the new nation adopt a new currency and raise her own armed forces.

And, of course, those central questions of long standing north of the border:

1. Language– Gaelic anyone?;

2. National anthem – Is there any doubt “Flower of Scotland”, with its merry tale of ancient thumpings by and of the English, will be the official anthem;

3. The national motto – odds-on favorite; “Nemo me impune lacessit” (use your Google translate!);

4. And finally, who will be the royal head of state, to be known as “The King (or Queen) of Scots”?

My vote – Billy Connolly!

Slainte!

– Neil J. Fraser

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