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June 06, 2024 2023 Round-Up

Litigation & Industry Updates

Thomas J. Kliebhan, Gordon, Rees, Scully, Mansukhani, LLP. (Editor), Amanda J. Alasauskas, Swanson, Martin, & Bell, LLP. (Editor), Brian A. Rosenblatt, Downey & Lenkov LLC. (Editor), Contributing Authors: Alexa Tipton (Irwin IP), Colette Manahan (DePaul University College of Law), Brenna Bellew (DePaul University College of Law)

1. Expanding the Scope of Copyright Protection for Compositions: Second Circuit Petitioned to Disregard Skidmore

The Plaintiffs in Structured Asset Sales, LLC v. Sheeran, et al., one of the series of cases accusing Ed Sheeran’s “Thinking Out Loud” of infringing Marvin Gaye’s “Let’s Get It On” composition, have appealed the Southern District of New York’s ruling that the deposit copy submitted to the Copyright Office when applying for a U.S. copyright registration defines the scope of copyright protection.

Appellants contend that the District Court erred when determining that Ed Sheeran’s composition did not infringe Marvin Gaye’s composition due to the allegedly copied musical elements not being included in Gaye’s deposit copy attached to the copyright registration. Appellants argue that there is no statutory law nor case law that supports this proposition and thus, Appellants urge the Second Circuit on appeal to reverse the District Court’s decision.

Specifically, Appellants argue that neither the Copyright Act of 1909 nor case law that is often relied upon by courts have ever expressly limited the protection of a copyright registration to its deposit copy. Frequently cited cases in defense of the deposit copy limitation like Merrell v. Tice, 104 U.S. 557, 561 (1881), merely offered in dicta that a deposit copy could be used to determine what is protected by the registration. Further, Appellants argue that authority relied upon by the Ninth Circuit in Skidmore v. Led Zeppelin, 952 F.3d 1051 (9th Cir. 2020), which held that the scope of a copyright registration for a musical composition is limited to its deposit copy, merely states that the deposit copy is there to provide “sufficient material to identify the work” in order to prevent confusion of which work is protected by a copyright registration. Data General Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147 (1st Cir. 1994). Additionally, Appellants argue that the Compendium of U.S. Copyright Office Practices should not be given even limited deference because it treats the scope of protection for a deposit copy differently for distinct classes of works, which is not aligned with Congress’s intent.

Therefore, Appellants hope that the Second Circuit will decline to follow the Ninth Circuit’s suit and instead hold that a composition’s copyright registration is not limited to its deposit copy, allowing the actual sound recording of the composition to aid in determination of whether an infringement of the underlying composition has occurred.

2. Update on NCAA NIL Class Certification, cont’d. from Classes Certified Making Student Athletes One Step Closer to a NCAA NIL Payout

In November of 2023, the Northern District of California certified three damages classes of student-athletes in In Re: College Athlete NIL Litigation, Case No. 20-cv-03919 CW (N.D. Cal.). In response, the NCAA and Power Five Conferences petitioned the Ninth Circuit, seeking an interlocutory appeal.

On January 18, 2024, the Ninth Circuit denied Defendants’ petition to appeal, leaving the NCAA and Power Five Conferences potentially on the hook for billions in damages. Defendants state that this amount could be the “quintessential death-knell” of this litigation, potentially putting the NCAA and Power Five Conferences out of business. Plaintiffs seek over $4 billion after trebling under the Sherman Act. The NCAA argued in its brief that because the NCAA subsidizes Division I, II, and III collegiate athletic programs, the effects of this litigation could mean the elimination of scholarships and entire teams, stating that it would have “devastating consequences for college sports, public education, and countless student-athletes nationwide.”

3. Alleged Management Inadequacies cause Electric Zoo Class Action Disaster

Far from the Electronic Dance Music (EDM) motto of peace, love, unity, and respect, Electric Zoo Festivals, LLC. has been hit with a class action following the last-minute cancellation of the 2023 festival’s first day and sporadic denials of entry to ticket holders across the following two days.

A few hours before the festival was set to open, organizers announced that supply chain disruptions led to a failure to construct the main stage, although the complaint attributes the failure to lack of proper permits and inspections. It would not be ready to go, either, when the festival did open the next day, two hours past schedule. Even then, over 7,000 ticket holders would still be denied entry due to the organizer’s overselling of tickets quickly bringing the festival grounds to max capacity, while others already inside would be barred from leaving. To add insult to injury, promised refunds were not made.

The Brockmole v. EZ Festivals, LLC action members allege that on September 1, instead of enjoying the opening night of the yearly festival held on Randall’s Island in New York City, they were left in the cold without sufficient notice or reason for cancellation in violation of ticketed terms. Brockmole et al v. EZ Festivals, LLC et al., (S.D.N.Y. 2023) (1:23-CV-8106-VM) filed September 13, 2023 with a consolidated complaint filed December 26, 2023. Those terms read:

“8. You understand that EZ Festivals reserves the right to cancel, postpone, and/or change the Event, including the venue, artists, time, and/or date of all or any portion of the Event at any time without prior notice or compensation to You. Such cancellation, postponement, and/or change to the venue, artists, time, and/or date of the Event shall not entitle you to a refund or any other reduction in the Ticket price or compensation of any kind. EZ Festivals will not be liable for travel, lodging and/or any other expenses You or anyone else incurs. YOU UNCONDITIONALLY UNDERSTAND THAT ALL TICKET SALES ARE FINAL, THERE WILL BE NO TICKET REFUNDS AND/OR TICKET EXCHANGES. THIS IS A RAIN OR SHINE EVENT.”

But terms and conditions do not always protect against liability. The complaint attributes EZ’s 2023 issues to its new management, Defendant Avant Gardner, an entity known for frequently cancelling and overselling shows, and its venue “Brooklyn Mirage.’’ Through this venue, Avant Gardner has received numerous violations and been shut down several times for unsafe conditions. The class action draws upon this history and statements made by the NYPD to support its argument for liability on counts of deception, fraud, negligent misrepresentation, false advertisement, unjust enrichment, and breach of contract and implied covenant of good faith and fair dealing.

The complaint emphasizes the organizer’s history of unreliability and unprofessionalism, while also maintaining that festival goers had no reason to suspect anything would not go according to schedule. It claims the attendees had every assurance for a fun weekend, especially because EZ’s social media accounts shared images of smaller stages and the message, “We’ll see you tomorrow on the island.” the night of August 31st.

The defendants’ response is forthcoming.

4. Courtroom Coin Toss: The Legal Battle Between Florida State University and the ACC

After an unprecedented 2023 college football season, the novelty continues in the courtroom with a legal battle between the Board of Trustees of Florida State University (“FSU”) and the Atlantic Coast Conference (“ACC”). FSU seeks to prematurely severe its relationship with the ACC, which has lasted over three decades. Back in December 2023, FSU and the ACC filed oppositional complaints against one another in the span of 24 hours. The ACC filed for declaratory judgment against FSU in Mecklenburg County, North Carolina, on December 21, 2023. The following day, December 22, 2023, FSU filed for declaratory judgment against the ACC in Leon County, Florida. The suits seek to resolve a dispute over what it will cost FSU to opt out of the Conference twelve years early, but a preliminary impasse requiring resolution in this face-off is which state court should get to rule on the dispute.

In the beginning of December 2023, the FSU Seminoles beat out the University of Louisville Cardinals in a 16-6 game to garner the title of 2023 ACC Football Champions and solidify a 13-0 undefeated season. Despite the FSU football team’s great success in the 2023 season, the College Football Playoff Selection Committee left FSU out of the 10th and final four-team College Football Playoff (the College Football Playoff is expanding to a twelve-team model beginning in the 2024 season). Instead, they opted to include two universities holding 12-1 records, the University of Alabama Crimson Tide of the SEC and the University of Texas Longhorns of the Big 12. This was an unprecedented decision by the College Football Playoff Selection Committee, as it marked the first time a 13-0 Power Five Conference Champion had been excluded from the four-team College Football Playoff. Dean Straka, ACC Seeks to Block Florida State from League Affairs in Amended Complaint as School Explores Exit Options, CBS Sports, (Jan. 17, 2024). FSU players, athletic directors, and the Board of Trustees were stunned by this decision. This playoff spot snub ultimately became the catalyst for FSU to file suit against the ACC amidst the school’s proliferating displeasure with the Conference in recent years. Andrea Adelson & David Hale, Florida State vs. ACC Grant of Rights Lawsuit: What You Need to Know, ESPN (Dec. 22, 2023).

FSU and the ACC are parties to a Grant of Rights, which gives exclusive media rights to the Conference through 2036, giving the ACC control over television revenue and home game broadcasts in all sports. It also extends the same length as the television contract that the ACC has with ESPN. Andrea Anderson, Florida State Files Motion to Dismiss ACC Lawsuit, ESPN (Feb. 8, 2024).

The ACC amended its complaint on January 17, 2024, and alleges that FSU intends to breach its contractual obligations to the ACC. Complaint 1, Atl. Coast Conf. v. Fla. State Uni. Bd. of Tr., No. 23CV040918-590 (Feb. 7, 2024) The ACC contends that by agreeing to and executing a Grant of Rights, FSU and the other ACC members, aggregated their collective media rights in the conference, resulting in agreements and contracts between the ACC and ESPN that provided a predictable source of revenue for the ACC members, of which FSU has been the beneficiary. Id. The claims that FSU promised that its Grant was “irrevocable” and “exclusive” through 2036, and further, that FSU explicitly agreed that it would not take any action that would affect the validity and enforcement of the Grant of Rights. Id. The ACC argues that in bringing the Florida action, FSU has breached its contractual obligation to the ACC by violating its contractual promise not to challenge the validity or enforceability of the Grant of Rights, thus, breaking its promise that the Grant was “irrevocable” and “exclusive.” Id. The ACC also accused FSU of deliberately releasing confidential trade secrets to the public pertaining to the Grant of Rights and the media rights agreements between ESPN and the ACC. The ACC argues that FSU’s continued participation in and management of the conference, in light of FSU’s alleged actions, violates FSU’s fiduciary obligation to the ACC. Ultimately, the ACC makes claims that the Grant of Rights and its amendments are valid and enforceable, quasi-estoppel, and breaches of contract. Id.

FSU contends that the ACC has failed to fulfill its most fundamental commitments to FSU for years. Complaint 1, Fla. State Uni. Bd. of Tr. V. Atl. Coast Conf., No. 23-CA-002860 (Jan. 29, 2024). FSU advances the argument by claiming that the ACC’s failure to fulfill its fundamental commitments to the University is the result of chronic fiduciary mismanagement, bad faith, and self-dealing, which have persistently undermined the ACC members’ revenue opportunities and streams. Id. at 2-3. Additionally, FSU asserts that the ACC has made efforts to effectively deprive the ACC members of their fundamental right to withdraw through the combination of an unconscionable Grant of Rights provision and a prohibitive withdrawal penalty that are unparalleled in the history of college athletics. Id. FSU estimates that severing its contract with the ACC, which isn’t scheduled to expire until 2036, to withdraw from the league and regain control over its media rights will cost the school $527 million. Dan Murphy, ACC Wants FSU’s Lawsuit Filed in Florida Put on Hold, ESPN (Feb. 16, 2024). FSU contends that the ACC’s failure to fulfill fundamental commitments, coalesced with the effective deprivation of the fundamental right to withdrawal, has resulted in ACC members being forced to endure deteriorating media rights agreements while preventing schools from leaving with “draconian withdrawal penalties.” Id. FSU predicts that the repercussions of the ACC’s actions are going to cause insurmountable annual financial gaps between the ACC and other Power Five conferences. Complaint 2, Fla. State Uni. Bd. of Tr. v. Atl. Coast Conf., No. 23-CA-002860 (Jan. 29, 2024). Ultimately, FSU sets forth allegations of restraint of trade, breach of contract, and failure to perform against the ACC while also challenging the legality of the withdrawal penalties. Id. at 47, 51-55, 57.

Both parties have moved to dismiss, or, alternatively, to stay the action in the oppositional suit. In its motion filed on February 7, 2024, FSU requests that the North Carolina court dismiss the ACC’s First Amended Complaint, or, alternatively, to stay the suit in favor of the FSU’s action currently pending in Leon County, Florida. Motion to Dismiss or Stay 1, Atl. Coast Conf. v. Fla. State Uni. Bd. of Tr., No. 23CV040918-590 (Feb. 7, 2024). FSU argues that the ACC’s lawsuit is fundamentally flawed and subject to dismissal under Rules 12(b)(1), (2), and/or (6). Id. at 2. FSU cites the ACC’s premature filing before actual controversy arose, the ACC’s lack of an attempt to provide notice, the ACC’s failure to plead that FSU approved the Grant of Rights, and the fact that FSU has not waived its sovereign immunity, among other reasons, in support of its motion to dismiss. Id. In support of staying the action, FSU argues that “the Florida Action is the broader and more comprehensive action, and the ACC should not be entitled to any first-filing deference as a result of its improper forum-shopping.” Id. at 3.

In its motion to dismiss, or, alternatively, to stay FSU’s action, the ACC argues lack of personal jurisdiction, improper venue, challenges the ripeness of FSU’s claim challenging its contract with the ACC, and failure to state a cause of action in any one of FSU’s seven counts. Motion to Dismiss or Stay 4, Fla. State Uni. Bd. of Tr. v. Atl. Coast Conf., No. 23-CA-002860 (Jan. 29, 2024). In support, the ACC cites FSU’s failure to meet the burden of pleading jurisdiction, reliance on a venue statute that is inapplicable to the ACC, lack of official withdrawal or intent to withdraw from the Conference, and improper request for relief for actions that have not occurred and are not certain to occur, among other reasons. Id. at 5, 7-9, 34-35. Alternatively, for its motion to stay, the ACC argues that “under Florida Law, it is well-established that in instances where co-sovereigns both maintain jurisdiction regarding a single dispute, principles of comity dictate that the court in which jurisdiction first attaches should be given priority regarding adjudication of its case.” Id. at 38-39.

No school has ever tried to challenge a modern grant of rights in court, and because of this, it is unclear how the judges may rule. Andrea Adelson & David Hale, Florida State vs. ACC Grant of Rights Lawsuit: What You Need to Know, ESPN (Dec. 22, 2023). In the instance where both judges deny the parties motions to dismiss and/or stay the actions, both cases will forge ahead and potentially create a race to judgment, in which the first court to reach a ruling would effectively end the other case. Dan Murphy, ACC Wants FSU’s Lawsuit Filed in Florida Put on Hold, ESPN (Feb. 16, 2024). The North Carolina court has scheduled a hearing on the dismissal request for March 22, 2024, where it will be decided which court gets to kick and which court gets to receive.

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Thomas J. Kliebhan, et al

Editors and Contributing Authors

Thomas J. Kliebhan, Gordon, Rees, Scully, Mansukhani, LLP. (Editor); Amanda J. Alasauskas, Swanson, Martin, & Bell, LLP. (Editor); Brian A. Rosenblatt, Downey & Lenkov LLC. (Editor).

Contributing Authors: Alexa Tipton (Irwin IP), Colette Manahan (DePaul University College of Law), Brenna Bellew (DePaul University College of Law)