June 11, 2024
The long-running dispute between wedding dress designer Hayley Paige Gutman and her former employer JLM Couture over ownership of the social media accounts she created and that bear her name is at last over.
On May 8, the District Court revised its earlier preliminary injunction and restored control of the @misshayleypaige Instagram, Pinterest and TikTok accounts to Gutman. In its decision, the Court held JLM couldn’t establish that the social media accounts belonged to JLM at their inception or that Gutman had transferred ownership to JLM.
In case you’re new to my analysis of the very public case (at least to Gutman’s 1 million-plus followers), I originally wrote about it here and, more recently, here.
How did the District Court reach a conclusion that is 180 degrees from its earlier decisions?
Well, in March 2024 the Second Circuit disagreed with the six-factor test the District Court created to determine ownership of the social media accounts and remanded the case back to the District Court with instructions to look at the accounts as normal property rather than through novel tests (a decision I heartily agreed with). After that, the District Court requested and received additional briefing on whether JLM could show that it either owned the accounts at the time they were created or that ownership was subsequently transferred to JLM, and that Gutman only had access to the social media accounts because she was a JLM employee.
In its analysis, the Court found:
- Gutman opened the Instagram account at the recommendation of a friend;
- She was at least partially motivated to create the accounts for personal use even if she saw them as potentially useful in promoting products manufactured by JLM;
- The Instagram was initially linked to her personal Facebook account;
- The Instagram account wasn’t linked to the JLM Facebook account until four years later; and
- The first five Instagram posts were clearly personal, as were early pins on Pinterest
According to the Court, taken together, these facts showed that Gutman created the accounts for personal use and not solely as a JLM employee, even if she did later use them to promote JLM products, allowed JLM employees access to them, and included links to JLM accounts.
Thus, since JLM couldn’t establish a valid claim to ownership of the social media accounts when they were created, it would have to show that the accounts were transferred to it. It was unable to do this for several reasons including the fact that Instagram’s terms of service prevent a user from transferring an account.
There were a few other interesting factors in the mix. For one, while Gutman’s contract with JLM included licensing her name to JLM for commercial purposes, she retained the right to use her name for non-commercial purposes. Thus, the Court found her use of @misshayleypaige as a handle on social media was not on its own a basis for finding that her social media accounts belong to JLM. And, as the Second Circuit found, the social media accounts themselves do not qualify as works for hire.
Gutman had also signed an employment manual with JLM in which she agreed that she would use her time during her workday only for employment-related activities; that her use of the Internet during that time was for job-related activities; and all intellectual properties she created belonged to JLM. The order modifying the preliminary injunction noted that even if Gutman’s posting on social media during working hours was a violation of JLM’s employment manual, it doesn’t mean that, despite JLM’s arguments, it was tantamount to her transferring her social media accounts to JLM. It does suggest, however, that JLM has a legitimate claim to the content Gutman posted on her social media accounts.
What’s really interesting here is that, in the end, the final decision in the District Court is opposite to the results reached by just about every other court that has looked at usage to determine ownership of a social media account. Will the Gutman decision reverberate throughout the growing number of legal disputes in this area, and give pause to companies who rely heavily on consumer relationships through the Instagram posts of highly visible employees and brand ambassadors?
What’s next? Well, not much. Shortly after the most recent decision from the District Court, Gutman and JLM resolved all matters in a settlement agreement that included Gutman paying JLM (well, its bankruptcy estate) $263,000. In exchange, Gutman was released from her non-compete agreement which would have continued for another 18 months or so.
May 29, 2024
If you’re into hip hop, you’re probably familiar with a photograph of rapper The Notorious B.I.G., a/k/a Biggie Smalls, looking contemplative behind designer shades with the Twin Towers of the World Trade Center in the distance behind him. However, you might not know this well-known portrait has been the subject of litigation for the past five years and that litigation settled just before a trial was supposed to start earlier this year.
Photographer Chi Modu snapped the picture (the “Photo”) in 1996, originally for the cover of The Source hip hop monthly. However, after the magazine used another image, and Biggie was killed a year later, Modu began licensing the image to various companies, including Biggie’s heirs’ own marketing company. The Photo became famous and, after the destruction of the World Trade Center in 2001, what is now commonly called “iconic.”
There was no beef (do people still say that?) between Modu and Biggie’s heirs until 2018 when, according to an attorney for Chi Modu’s widow (the photographer himself passed away in 2021), Modu tried to negotiate increased licensing fees with Notorious B.I.G. LLC (“BIG”), which owns and controls the intellectual property rights of the late rapper’s estate.
Apparently, Modu and BIG weren’t able to reach an agreement because BIG brought suit against Modu and a maker of snowboards bearing the image, asserting claims for federal unfair competition and false advertising, trademark infringement, violation of state unfair competition law and violation of the right of publicity.
In a countersuit, Modu asserted his copyright in the Photo of Biggie preempted all of BIG’s claims. Modu argued that BIG’s claims were nothing more than an attempt to interfere with his right to reproduce and distribute the Photo, as permitted under Section 301 of the Copyright Act.
In December 2021, BIG sought a preliminary injunction barring Modu from selling merchandise including skateboards, shower curtains and NFTs incorporating the Photo, claiming these uses violated its exclusive control of Biggie’s right of publicity. (BIG had previously settled with the snowboard manufacturer.)
In June 2022, the Court granted the injunction in part, concluding that the sale of skateboards and shower curtains was not preempted by the Copyright Act as they did not involve the sale of the Photo itself but rather items featuring the Photo. In its order, it prohibited Modu’s estate from selling merchandise featuring the Photo or licensing the Photo for such use. However, the Court permitted Modu’s estate to continue selling reproductions of Modu’s photo as “posters, prints and Non-Fungible Tokens (‘NFTs’).” The Court found that the posters, prints and NFTs were “within the subject matter of the Copyright Act [as t]hey relate to the display and distribution of the copyrighted works themselves, without a connection to other merchandise or advertising.”
This decision follows a line of cases that distinguish between the exploitation of a copyright and the sale of products “offered for sale as more than simply a reproduction of the image.” In the former situation, a copyrighted work will take precedence over a right of publicity claim. In the latter, where the products feature something more than just the copyrighted work, a right of publicity claim is likely to prevail.
Not surprisingly, given the risks for both sides, the case settled just prior to the start of the trial. Although the contours of the settlement were not made public, presumably it allowed Modu’s estate to continue selling the Photo as posters of it remain available for purchase on the photographer’s website.
May 14, 2024
I’ve posted a few times this year thoughts (here and here) on some of the lessons I’ve learned since starting my law practice, hoping they may be helpful to others in their own business or career.
Now, I’m back with more although this lesson is less about growing and running a business and more about how to deal with (really) unpleasant people, which is something they don’t teach in law school but definitely should.
More specifically, recently I found myself negotiating with a lawyer who easily ranks as one of the three most unpleasant adversaries I’ve ever met. We’d be on the phone and he’d constantly interrupt me with rude lectures on how, in his view, things should be done; he’d follow these verbal assaults with condescending emails purporting to explain basic points of law with which I am quite familiar, thank you very much. (Amusingly, these emails contained glaring errors which I, being generous of spirit, refrained from pointing out.)
While all this was painfully unfolding, my new assistant (hallelujah!) was indexing the topics I’ve covered in my past posts and the monthly email newsletters I send out (the emails are concise and fun; if you’re interested in subscribing, sign up here). While reviewing the results, I came upon a pre-pandemic newsletter where I discussed the Netflix documentary Knock Down the House, which follows Alexandria Ocasio-Cortez and three other women who ran for Congress in 2018. In the documentary, AOC gives herself a pep talk before facing then-incumbent Joseph Crowley in a debate. She repeats the mantra, “I need to take up space. I need to take up space. I am here!” This had immediately resonated with me, a female commercial litigator who was constantly having to contend with dismissive male attorneys.
AOC’s message was in my mind during my recent back-and-forth with the aforementioned adversary, Mr. Condescension, Esq. Earlier in my career I would have soldiered through this kind of interaction by putting on a brave face, trying to outsmart my opponent while letting him set the rules of engagement, and tossing at night running through all the things I should have said or done. In those wee hours, I would even start to think that maybe I wasn’t that good at my job (imposter syndrome, anyone?). However, keeping AOC’s “I need to take up space. I am here!” in my head has helped me change this internal dialog and my interactions with opposing counsel.
I’ve also altered my approach to confrontational or potentially confrontational calls. Rather than let an adversary set the agenda for a call, I write down my goals, which can be as simple as being able to truthfully tell a court that I got on the phone with an adversary (many courts require this before submitting a dispute for resolution).
I also write down the tone I plan to maintain on the call: conciliatory, simply, aggressively, etc. I keep this in front of me during the call or any other related interaction. For me, it’s a visible indicator of how I want the dispute to progress toward my end goal and a reminder to stay focused rather than let anyone cause me to veer off the path I’ve set.
Obviously, this isn’t to say that I never deviate from my intentions or outlines. I’m no robot, after all. But by working this way, I am able to make sure I — and, more importantly, my client’s objectives — take up space.
It’s also not to say that I’m 100 percent successful at following my own advice and everything is rainbows and unicorns forevermore. It takes focus and practice. That’s why I make time each week to reflect on where things have gone well and where they have not, reviewing how I’ve stuck to the plan or veered from my approach. Doing this helps me figure out new ways to improve, and keeps those sleepless nights at bay.
April 30, 2024
Lately, I’ve had privacy on my mind. It’s a little personal. After all, it feels like every 30 seconds I’m clicking on or looking at something that wants a piece of my data. And privacy is at the heart of the legislation that just passed which, because of national security concerns, would either effectively ban TikTok in the United States or force the Chinese company that owns it to divest. It’s also central to the book I’m currently reading, Your Face Belongs to Us, which exposes the efforts of a stealth startup to create an enormous database of faces for use by police departments across the United States. My skin is crawling.
Nor does the grossness stop there. Heard of “sharenting”? It’s a mashup of “sharing” and “parenting” that refers to what happens when parents put their kids lives online — often, for profit. A few weeks ago I got sucked into the rabbit hole of Utah “momfluencer” Ruby Franke and her 8 Passengers YouTube channel. That channel documented the life of her family of six children with a focus on parenting advice within her Mormon faith. I’ll spare you the details but suffice it to say that Franke has since pleaded guilty to four counts of aggravated child abuse and is serving time.
Did her children ever want to be part of her YouTube sensation? Does it even matter?
The right of publicity, which I’ve written about in the past (see here and here), including its relationship to AI, is supposed to serve as a kind of limitation. Simply put, the right of publicity is a form of intellectual property protection that prevents the unauthorized use of a person’s name, likeness, photograph, etc. for commercial benefit. However, there’s a big limitation here. The First Amendment, as currently interpreted, limits the right of publicity to speech that is purely commercial. This means that, because Franke was documenting her family’s life, even if there was clearly a financial benefit, she was free to proceed without fear of a right of publicity claim. (She was also free to proceed because as a parent, she could consent for her children to appear on YouTube whether they liked it or not.)
While I don’t have a lot of faith that this interpretation of the First Amendment is going to change anytime soon, my general state of alarm over privacy did make me think about other times where questions about the public dissemination of private information have come up and the relationship of these issues to technology.
Notably, in 1890 Samuel Warren and Louis Brandeis (who went on to become a Supreme Court justice and have a university named for him) authored an article called “The Right to Privacy.” This article, which is frequently cited as the origin of the right of publicity, was prompted by the invention of the Eastman Kodak camera. As Warren and Brandeis noted, “[i]nstantaneous photographs and newspaper enterprise have invaded the sacred precincts of private and domestic life; and numerous mechanical devices threaten to make good the prediction that ‘what is whispered in the closet shall be proclaimed from the house-tops.’”
Interestingly, besides the right of publicity, the article discusses three other possible causes of action to protect privacy — false light, public disclosure of private facts, and invasion of privacy. These rights are premised on something that we seem to have lost along the way: the idea that each of us has a right to maintain control over certain information as private. Or, as Warren and Brandeis put it, “the more general right of the individual to be let alone.” They premise this right “not on the principle of private property, but that of an inviolate personality.” In particular, they call attention to the fact that there’s a difference between expressing thoughts or ideas — the “conscious products of labor” — and “often involuntary expression… in the ordinary conduct of life.”
It’s hard to imagine any phrase from the 19th century hitting home so hard today. In an era dominated by social media, AI deepfakes, cameras everywhere, and a relentless stream of true crime documentaries and podcasts made without the need for permission from victims or their families, it seems like there are no boundaries between what is private and what is public anymore.
I don’t have any great answers here other than to say that it seems like it’s time to revisit the idea that Warren and Brandeis so eloquently promoted: that each person has a right to be left alone unless they say otherwise, regardless of their age or their celebrity.
April 16, 2024
As you probably know, my practice focuses primarily on intellectual property law. Nonetheless, many of the cases I handle tend to cross over into other legal areas, and, for whatever reason, lately I’ve handled a bunch of matters related to restrictive covenants and trade secrets. It’s an area of law I’ve dealt with before, but this sudden uptick of cases at one time is definitely out of the ordinary. Maybe it is something in the water — or maybe it has to do with the Federal Trade Commission’s proposal to ban non-compete agreements, along with the New York State legislature passing a bill banning them (Governor Hochul vetoed it.) It’s hard to say. But it is an interesting, and, if you’re a business owner, important subject.
So let’s talk about restrictive covenants, trade secrets, how they relate to each other, and the enforceability of restrictive covenants because, based on my recent experience, there’s a good deal of misunderstanding — even among lawyers — about what restrictive covenants can and can’t do, what trade secrets actually are, and the enforceability of restrictive covenants.
A note about terminology: Media coverage of the FTC’s proposed ban or relevant state legislation focuses on “non-competes” — agreements where an employee agrees not to compete against his or her employer after leaving employment. In my view, non-competes are just one type of restrictive covenant — the umbrella term I’m using here. This term encompasses not just “non-competes,” but also agreements barring a former employee from soliciting his or her former employer’s customers, vendors, or employees.
Ok, let’s get down to business: Are restrictive covenants enforceable? The short (and very lawyerly) answer is: it depends. Under existing law, restrictive covenants are enforceable to the extent that they are necessary to protect the former employer’s legitimate interest(s), don’t impose an undue hardship on the employee, and aren’t harmful to the public.
These are key points. In New York (where I’m based), courts look at a couple of things (there are some variations between states) to determine if a restrictive covenant meets these criteria. For example, is the covenant for a reasonable time period and is it limited to a reasonable area? One that limits a former employee’s ability to work for companies that directly compete with the former employer for six months may well be reasonable. One that bars a former employee from working anywhere in the world for 50 years, though? Probably not.
In determining whether a restrictive covenant is reasonable, courts also look at whether it’s necessary to protect an employer’s interest. Usually this means that courts want to see that there are trade secrets, confidential information, and relationships an employee developed through his or her employment that need to be protected. In my experience, this is where we run into problems.
Have I seen people take their former employer’s trade secrets, or confidential or highly proprietary information, to their next job? Absolutely. But are there other cases where the information might not really be secret or proprietary? Yes, because there seem to be a lot of misconceptions about what really constitutes a trade secret or confidential information.
For starters, just because an employer calls something a trade secret or says something is confidential, doesn’t mean that a court is going to agree. In fact, courts understand these terms very differently from most people. I think that if you asked a group of reasonably well educated people whether an employer’s client list is a trade secret, most would probably say it is. However, unless it would be really hard or almost impossible to figure out the identity of the clients on that list, many courts will say that list is not not a trade secret. The same goes for a list of vendors.
In other words, in many circumstances, what people think are trade secrets aren’t actually trade secrets. In turn, this means that many restrictive covenants are less enforceable than many employers hope or believe.
However, there are a whole bunch of significant qualifications to this. Most importantly, just because a restrictive covenant may not be enforceable, or may be only partially enforceable, an employee doesn’t have the freedom to do whatever they want with their employer’s information. While someone is employed, they’re required to act in their employer’s best interests; they can’t, for example, influence a client to take its business elsewhere. Similarly, as a general rule, work product created during an employment relationship and on an employer’s equipment, belongs to the employer.
So while our governments and their agencies fight it out over changes to restrictive covenants, make sure you understand what any that apply to you or your company actually can enforce or prevent.
