Patron Saint of High Minded Indie Film Dies

Ishmail Merchant of Merchant Ivory Films has died at 68. Whatever your take on his films or his well earned reputation as a deal maker, he brought high minded, cerebral indie films to America and the world in a persistent, studied, and compelling fashion.

WAR of the Web—The Reinvasion of the Grokker

Not so long ago, Google had its momentous IPO that for the most part made it a bullet proof brand for web indexing and related tasks. Some time before that there was a stranger in a strange land known as Grokker that promised to index web information in a “visual” format similar to a Vends diagram. That software was platform driven and had to be downloaded as a separate application for a significant fee. You probably never heard of it amidst the din of the Google-plex. Not surprising for a small branded fee based searching applet.

Recently, that little alien visitor (its search functionality seems almost completely alien to anyone who was weaned on list driven search engines) has teamed up with the minority party Yahoo to offer a free web based service. I have used it and have had it used to find me and am delighted with the results. It is not for the casual searcher and has accordingly gained a reputation among research professionals, particular in the academic setting. If you are looking for that 5 nanosecond web byte, this is not for you. However, it can take the mystery out of “deep” or “invisible” web content, that usually takes the form of the 3,000 other links that do not make it to the 1st page of a Google search, by visually grouping those links into “spheres” based on keywords and concepts.

It’s curious to see if this technology will pose a threat to Google or other search engines, given its radically different approach. Software history is now long enough to recount other promising watersheds that never transformed the market or were appropriated by the dominant brand. I hope that this technology becomes more mainstream in one shape or another. Given that the only thing worth talking about the new Mac OS and Longhorn is their expanded search capability, the arena is set.

Kaiser Wahab

Highway to Fiscal Heaven--Basic Overview of Angel Investors

Venture Capital is often an elusive item for a start up venture high on cash burn, low on morale, and in an awkward natal stage. And seed capital, well beyond piggybanks and petty funds, is often required before any “real” funding round can be conceived of. For some, a loan is possible through a variety of institutions, the most venerable and visible of which being the Small Business Association. Then there is the oft mentioned, little understood “Angel Investor.” It is no wonder that many don’t understand the definition of the Angel, when in fact there is no formal requirement, title, or designation to be one. Given the fact the original "Angel" investors were high net worth individuals who backed Broadway shows for the glamour privileges, the history and nature of Angel investment as an institution is really organic.

An Angel investor usually is a high net worth individual with a high degree of financial sophistication capable of and willing to invest in high risk, high return companies. Like VC’s, Angel investors seek companies with high growth potential, exciting products and services, and proven management. Unlike VC’s however, Angels are often not arms length investors and may often take the form of the rich uncle. Some argue that Angels bridge the gap between the financing provided by family and friends and VC’s. In other words, Angels may be friends and family who can afford to make VC minded investments in terms of risk and reward. And hopefully for the company, they will not play as much “hardball” with the investment term sheet. Though Angels typically operate individually, they are increasingly pooling their assets in groups and syndicates.

Rent to Modify--2nd Circuit Permits Software Modification for Software Licensee

Whether the Copyright Act provides a licensee the authority to modify software was recently taken up by the Second Circuit in Krause v. Titleserv, Inc. Under Section 117 of the Copyright Act, copying, modifying or adapting a computer program is permissible if it (a) is made by “the owner of a copy of a computer program,” (b) is an “essential step in the utilization of the computer program in conjunction with a machine” and (c) is “used in no other manner”. In Krause the Second Circuit held that licensees may adapt or modify software they license even if they do not have formal title of ownership in the copy. Instead, the court found that the proper analysis is whether the licensee exercises “sufficient incidents of ownership over a copy of the program” to be deemed an “owner”.

The plaintiff in the case, William Krause, wrote eight software programs for Titleserv during the ten years he was a consultant to the company. Although he retained ownership over the underlying programs, the source code was installed on Titleserv’s computers and was accessible to its employees. In 1996, Krause terminated his consulting relationship with the company and entered into negotiations to assign his right to the programs. No assignment agreement was ever executed. Krause and Titleserv orally agreed, however, that the company was free to continue to use the program so long as the source code was not modified. Krause inserted a lock into the programs to prevent source code modification. However, after Titleserv discovered that it could not perform various routine business functions without modifying the source code, it circumvented the lock.

Krause brought suit alleging copyright infringement of the programs he had authored. Summary judgment was granted in favor of Titleserv by the district court of Eastern District of New York. Krause appealed arguing that Section 117 of the Act did not apply because Titleserv did not “own” copies of the software. In assessing Titleserv’s right to modify the software the court focused on whether ownership required formal title. While formal title may be a factor in determining ownership, Titleserv’s right to possess and use a copy of the software perpetually without material limitations, even after its relationship with Krause ended, gave it sufficient incidents of ownership to make it an owner for purposes of Section 117. This was particularly true, the Court found, since it would be illogical to prevent a user with broad rights to possess the software from being able to fix bugs or retain archival copies.

The court also examined whether the modification constituted an “essential step in the utilization of the program”. A modification is essential if it allows the program to be used for the purpose for which it was purchased. Applying this criteria, the court determined that fixing bugs, adapting the program to perform routine tasks and modifying the software to conform to the requirements of a new computer operating system, comes with the scope of Section 117 and Titleserv had not violated Krause’s rights under the Act.

Simon Riveles

Perfect Storm Family Shuttered Out of Court--Case Analysis and Video

A curious and sometimes thorny issue in media law is the dramatization or fictionalization of “real life events.” Certainly the privacy, publicity, and first amendment issues in a documentary or news vehicle are myriad. And Moreover, the tension between commerce and privacy as governed by the first amendment is a drama in itself in the world of a film based on a “real” story. A recent case brought together a perfect confluence of state privacy laws, an international movie blockbuster, and the first amendment, much like the perfect storm of which the movie borrowed its name.

The Florida Supreme Court ruled in favor of Warner Entertainment Movie Company, producer of the hit film The Perfect Storm starring George Clooney. The movie, based on the real life account of a fishing boat, the Andrea Gail, lost at the hands of a treacherous storm, depicted the real life characters with understandable dramatic and creative license.

Specifically, the family relied on a strain of invasion of privacy, claiming that the film portrayed the captain in a “false light” in connection with a commercial purpose. The court sided with Warner and threw out the family’s claim that the captain was maligned by Clooney’s portrayal of him as a demanding and insensitive man. Moreover, the filmmakers contended that the movie only bore the legend that it was based on true events and Captain Tyne’s life story and as such was protected by the First Amendment.

Ultimately after the false light and other common law claims were eliminated, the Eleventh Circuit narrowed the issues to a key point of statutory interpretation of Section 540.08 of the Florida Statutes, a state law issue, for the Florida Supreme Court. As the movant’s brief stated: “The question before this Court is whether unprotected and arguably harmful speech is actionable under Florida’s commercial misappropriation statute. The scope of Section 540.08, Fla. Stat., which explicitly prohibits the unauthorized use of a person’s name or other likeness ‘for purposes of trade or for any commercial or advertising purpose,’ is a matter for which there is no direct precedent by this Court.”

The court concluded that commercial speech is more properly applied to speech coupled with the sale of pure merchandise, not creative, expressionist works, though commercial in nature. "We find that defining the term 'commercial purpose' to apply to motion pictures or similar works raises a fundamental constitutional concern," Justice Charles Well stated. The court made mention of the ironic fact that the film industry is capable of turning life stories into films without technically acquiring consent of the real people, provided that the image or likeness of the person was not utilized.

This ruling certainly bodes favorably for the studios which have long relied on the added commercial appeal of “life event” films. Moreover, the recent reality-zation of television is and will continue to permeate film as seen by the explosion of documentaries with theatrical runs and assorted life event films. The Court’s decision to narrow “commercial purpose” in my mind truly frustrates the plain language of the applicable statute and leans heavily on the qualifying language that invokes the first. On the other hand, a more eloquent distillation of the court’s logic is that a film is akin to a book and other creative forms of expression that are loftier than pure advertising speech, which is commonly understood not to have first amendment protection. Many state courts have declined to extend the “commercial purpose” blanket to creative works with quasi commercial characteristics such as books and film.

Some of the briefs in this case are here at the very comprehensive Florida State University College of Law Library. And in the glorious information age, there is also video of some of the oral argument in the matter.

Kaiser Wahab

www.Its-Crap.com still open in the 9th Circuit--Ruling Upholds Non-Commercial Use of Company Trademark on a “Gripe Site”

Consumers are increasingly turning to the Internet to publicize their displeasure at a company’s products or services. These so-called “gripe sites” use the company’s trademark as part of the gripe-site’s domain name. Recently, in Bosley Medical Institute, Inc. v. Michael Steven Kremer (9th Cir., April 4, 2005), the Ninth Circuit addressed whether such a gripe site constitutes a “commercial use” of a mark in violation of the Lanham Act.

The plaintiff, Bosley Medical Institute (“Bosley”) performed hair transplantation surgery on the Michael Kremer. Kremer was highly dissatisfied with the quality of work performed by Bosley and launched a web site at the domain BosleyMedical.com that was highly critical of its services. “Bosley Medical” is a registered trademark owned by plaintiff, which it uses to market its hair restoration services. Bosley sued Kremer under a variety of claims, including trademark infringement and under Anticybersquatting Consumer Protection Act (“ACPA”).

In order to establish a claim for trademark infringement under the Lanham Act, a plaintiff must show that its mark was used “in connection with the sale of goods or services” and that there was a likelihood of consumer confusion. Bosley presented three arguments in support of its claim that Kremer’s site was commercial. Most significantly, the company argued that the commercial use requirement was satisfied because Kremer’s use of the company’s mark prevented users from obtaining Bosley’s goods and services. In effect, Bosley argued that Kremer’s use was “in connection with” the sale of Bosley’s own products and services. In support of its contention Bosley cited the Fourth Circuit’s decision in People for the Ethical Treatment of Animals v. Dougherty, where the Court held that a parody site that criticized PETA was nonetheless commercial because it prevented users from obtaining PETA’s goods and services. The appropriate inquiry, held the Court, was instead whether Kremer offers competing services. Failing that, his use of plaintiff’s mark was not one against which the Lanham Act was designed to protect.

However, the Court did rule in favor of Bosley’s Anticybersquatting Consumer Protection Act (“ACPA”) claim finding that it did not impose the same commercial use requirement as the Lanham Act. The Court rested its decision, in part, on the ACPA’s prohibitions against the registration of another’s mark with a bad faith intent to profit thereon, as well as the Act’s listing of noncommercial use as only one factor to be used by the Court in analyzing whether the defendant acted in bad faith. Because the lower court held to the contrary, its decision was reversed, and plaintiff’s ACPA claims remanded for a determination of whether Kremer acted in bad faith, in light, inter alia, of his pre-launch letter threatening to publish his criticisms of Bosley Medical if his dispute was not settled.

Simon Riveles

A SAG Actor for Every Occasion

Proving once again there is a specialty house for any film production need, there is a web site solely for SAG actors who are former cops.Industrious officers with a taste for Hollywood should now be consoled by the fact that their seniors have attained coveted SAG cards. SAG, one of the major actors’ unions requires an applicant to have appeared in a number of SAG productions prior to attaining union membership.So these career cops have traded in their batons and their beats, transforming into bona fide union players. So beware, employing a non-SAG cop on a SAG production could have you facing jail time or more likely worrying about the confusing array of SAG agreements.

http://www.policeactors.com/

Future Retro-Adobe Buys Macromedia for $3.4 Billion in Stock, but Should We be Celebrating?

Macromedia’s Announced buyout by Adobe has been covered to tears, mostly in a celebratory, “Eureka” tone that hails the union as a marriage of perfection. However, few have talked about the consolidation as a sign of a more disturbing trend and business strategy.

The two major players in the creative market are Macromedia and Adobe. For years Microsoft has been shut out of the creative software market, despite creating the piecemeal empire that is Office and its accessories. Moreover, Microsoft’s dominance extends only to PC’s while Apple users not only celebrated their OS independence, but their close alignment with creative applications that were also not Microsoft driven. Like Microsoft, Macromedia and Adobe resorted to patent skirmishes to punish each other outside of the checkout line. Most famous of these was the “palette” lawsuit, in which Adobe successfully claimed that Macromedia had infringed its proprietary floating, context sensitive “tool palette.” Macromedia ultimately lost the suit and paid out $2.8 million, a fraction of the revenue generated by the two giants, nary a drop of blood in the multi-billion dollar market. Despite this and other disputes, the two have weathered the dot com bust and built cottage industries, with Macromedia serving the web design industry through flagship product Studio MX, while Adobe serves nearly every other creative industry ranging from photo professionals to desktop publishing. For many, Macromedia was considered to be a division of Adobe in that they produced tools that seemed native to the Adobe camp and, for many, their separation was a puzzling historical anomaly. As a result, the recent announcement has been met by much celebration on Wall Street and in creative circles. However, Adobe’s move can be viewed not just from the most obvious vantage point of two competitors that should have never have competed.

The further consolidation of the software industry will undoubtedly lead to innovative suffocation. From this perspective, Macromedia was not an anomaly but a necessity, developing such milestone products as the Flash vector format. Moreover, without the Macromedia Adobe war, the products’ interfaces, core engines and feature bundles would not have been so aggressively developed, with both companies fielding a ridiculous number of newer versions, each answering the other in a punch for punch exchange. The point is that a business rival is the finest expression of a functioning capitalist system. What would Intel be without AMD? And even worse, what would Microsoft be without Apple? Even with such a nimble and creative counterpart, Microsoft still dominates the market in nearly every venue and the impact is clear with a new virus targeting the ubiquitous Windows OS every 10 minutes, between product updates every couple of years. Diversity is good and bigger is not always better.

Nonethless, there is another perspective that has been largely overlooked. Adobe has captured valuable business market share, much to Microsoft’s chagrin, through its line of Acrobat products, the indispensable suite of document processing applications (I wonder how many trees write thank you emails to Adobe each week). This recent acquisition is also likely a bid to secure one front while preparing to assault on the other. In short, Adobe is looking to take on Microsoft in the document and office market with a stronger and consolidated platform. If it means that Microsoft is going to have to be more innovative to ward off a reinvigorated Adobe, the acquisition of Macromedia might be a good thing after all.

Time will tell and no outcome is certain. However, with the tremendous proliferation and resurgence of open source efforts, the recent news seems future-retro.

Kaiser Wahab