Court: Merchandising of Shepard Fairey 'Obama Hope' image not fair use; factual issues remain on substantial similarity

The court in the case involving Shepard Fairey's use of an AP photograph in his famous "Obama Hope" poster has ruled that a company that manufactured and distributed clothing bearing the Obama Hope image under license from one of Fairey's corporate entities did not engage in fair use. The court, however, held that there remains a factual dispute whether the images used by One 3 Two, Inc. on its merchandise were "substantially similar" to the AP photo. Judge Alvin Hellerstein did not explain his reasoning in his brief summary order. Trial on the remaining issues is set for March 21. Here is One 3 Two's opening brief, and the AP's.
Shepard Fairey Summary Judgment Order

The claims between the AP and Fairey and his corporate entities have been dismissed pursuant to settlement.

AP and Shepard Fairey settle case; claims against corporate entities remain

The Associated Press announced that it has "settled in principle" its copyright case against artist Shepard Fairey over his use of an AP photograph in the iconic "Obama Hope" poster. The announcement of the settlement comes a little more than seven months after the judge in the case stated at a hearing, "sooner or later, The Associated Press is going to win" the case and urged settlement.

According to the AP's announcement:

In settling the lawsuit, the AP and Mr. Fairey have agreed that neither side surrenders its view of the law. Mr. Fairey has agreed that he will not use another AP photo in his work without obtaining a license from the AP. The two sides have also agreed to work together going forward with the image and share the rights to make the posters and merchandise bearing the image and to collaborate on a series of images that Fairey will create based on AP photographs. The parties have agreed to additional financial terms that will remain confidential.

The AP's claims against other Fairey-related entities, however, remain. So do its claims against One 3 Two, Inc., a company that manufactured and distributed clothing bearing the Obama Hope image under license from Obey Giant, one of Fairey's entities. One 3 Two's summary judgment brief argues that it didn't copy protectable elements of the AP's photo but, for procedural reasons, does not address fair use. The AP's brief does argue that Fairey's and One 3 Two's use of its photo was not fair.

Still unknown is the status of the federal grand jury investigation of Fairey for his admitted falsehoods and evidence spoliation regarding which photograph he used as a basis for the poster.

Court sets trial date in Shepard Fairey case; Mannie Garcia drops out

The judge refereeing the dispute between the AP and artist Shepard Fairey over the "Obama Hope" poster has set a trial date of March 21, 2011. Of course, it's not certain there will actually be a trial; I expect one or both sides to seek summary judgment, and settlement is always a possibility.

Also, last Friday the AP and Mannie Garcia, the photographer who took the photo that served as the basis for Fairey's poster, voluntarily dismissed their claims and counterclaims. The two sides disputed whether the AP or Garcia owned the copyright in the photo. A source tells me that there was no "settlement," which suggests that Garcia simply dropped his claim. I have an inquiry in to his attorney and will update this post if I get additional information.

Update: The AP has released the following statement:

The Associated Press is very pleased that Mannie Garcia has withdrawn from the case with prejudice, meaning that he cannot refile his claim against the AP. The AP has not wavered in its belief that Mr. Garcia was a staff photographer at the time he took the image of then-Sen. Barack Obama, that AP properly employed Mr. Garcia, and that AP is the rightful copyright owner of the photo in question. Further, the AP is pleased that Mr. Garcia voluntarily withdrew without any payment or consideration of any kind -- this was not a settlement.

In a Court hearing on Monday, Judge Alvin Hellerstein indicated that he would sign the stipulation and enter the order. Also in Monday’s hearing, the judge set both a summary judgment schedule and a trial schedule for the case involving Shepard Fairey. The AP is happy to have these dates set. The AP continues to be confident in its position that the use Mr. Fairey made of its photo is not fair use, but one that should have been licensed so as to help ensure the AP's photographers will be able to continue creating new works. The AP looks forward to resolution whether through summary judgment or trial on the merits.

Court: AP 'is going to win' Shepard Fairey case

The judge presiding over the copyright dispute between the Associated Press and Shepard Fairey regarding the "Obama Hope" poster today indicated that the AP "is going to win" the case, and urged the parties to settle. According to the AP's report:

Federal Judge Alvin Hellerstein said Friday at a hearing in New York that he has a feeling that "whether it's sooner or later, The Associated Press is going to win" the case.

He suggested that artist Shepard Fairey and the news organization move on to settlement talks and consider dropping penalties. Neither side seemed ready to do so.

AP lawyer Dale Cendali says the news organization wants to make it clear that the AP owns the copyright to the photograph that Fairey used to create the "HOPE" poster and that he violated the copyright.

As far as I'm aware (unless it was changed at today's status conference), the parties' summary judgment motions on liability are still due July 26.

Update: A later report by the AP includes the following:

U.S. District Judge Alvin Hellerstein made the suggestion at a hearing in which he ordered Fairey's lawyers to turn over records of communications Fairey had with his lawyers before he sued the AP in February 2009. He also said AP lawyers can depose Fairey a second time.

While it's hard to say for sure what happened without seeing a transcript (which I haven't), it appears the AP's attorneys successfully invoked the crime-fraud exception to the attorney-client privilege to get at the the communications between Fairey and his lawyers. As background, Fairey is under federal criminal investigation for perjury and evidence tampering, based on his admitted falsehoods regarding which photograph he used as a basis for the "Obama Hope" poster.

AP wins discovery rulings in Shepard Fairey case, hires UCLA's Doug Lichtman

The Associated Press has won a significant discovery battle in its case against artist Shepard Fairey, as the judge in the parties' copyright dispute has ordered Fairey to hand over information and documents related to his admitted falsehoods and destruction of evidence. In an order issued yesterday, Judge Alvin Hellerstein said that Fairey must "disclose the identities of those who performed these acts, of those who commanded and supervised these acts, and of those who were told of these acts," referring to "those who did the deletion and destruction, and of those who knew about such deletion and destruction" of evidence in the case. As previously reported, a federal grand jury is investigating Fairey for perjury and evidence tampering following his admission that he lied about which AP photo he used as the basis for his "Obama Hope" poster, and then created and destroyed evidence to cover his tracks. The court also ordered Fairey to hand over financial information, concluding that "Plaintiffs’ excuses for not producing all aspects of their financial records are frivolous." Here's the AP's own story on the discovery ruling.

In other news in the Fairey case, the AP has added some academic heft to its legal team, bringing on UCLA law professor Doug Lichtman as one of its attorneys of record (Dale Cendali of Kirkland & Ellis remains its lead counsel). Lichtman actually moderated a discussion about the Fairey case last year as part of his "IP Colloquium" podcast. Fairey is represented by Harvard Law School's Terry Fisher and a Jones Day team led by Geoffrey Stewart.

Under the court's schedule, summary judgment motions on the main liability issues in the case are due July 26, 2010. Dispositive motions on photographer Mannie Garcia's claim that he -- not the AP -- actually owns the copyright in the photo that Fairey used are due May 3.

Revealed: Details of Shepard Fairey criminal investigation

Recently unsealed legal briefs filed by Shepard Fairey reveal that the Los Angeles artist is the "subject" of a federal criminal investigation for "potential violations" of laws prohibiting evidence tampering and perjury. According to a motion filed by Fairey seeking to postpone his deposition in the civil copyright dispute with the Associated Press over the "Obama Hope" poster, a federal grand jury is investigating whether Fairey violated 18 U.S.C. §§ 1512(c) and 1621. Section 1512 makes it a crime to "corruptly...alter[], destroy[], mutilate[], or conceal[] a record, document, or other object, or attempt[] to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding; or...otherwise obstruct[], influence[], or impede[] any official proceeding, or attempts to do so." Violations carry a prison sentence of up to 20 years, though sentencing guidelines usually call for considerably less than the maximum. Section 1621 is the federal perjury statute, which provides for a maximum sentence of five years.
Fairey Motion to Postpone Depo

Fairey admitted last October that he had "submitted false images" to the AP during the civil discovery process "and deleted other images" in an effort to mislead the AP as to which photo he used as the basis for the iconic poster, which became ubiquitous during the 2008 campaign. It was revealed in a court hearing January 26 that Fairey faced a criminal investigation over his actions, but the specifics were not known until his briefs in support of his motion to postpone his deposition were unsealed. On January 27, Judge Alvin Hellerstein denied Fairey's motion to postpone or limit the deposition until the earlier of the conclusion of the investigation or six months.

Fairey indicated that he has been advised by his criminal counsel to invoke his Fifth Amendment right against self-incrimination during the deposition and refuse to answer questions about the submission of false evidence and destruction of relevant material. "If Mr. Fairey is compelled to testify and exercises his Fifth Amendment rights per his criminal counsel’s advice, the consequences of invoking those rights would severely impair his ability to defend this case on the merits — and this Court’s ability to resolve it on the merits," states the brief. Fairey acknowledges that if he does invoke his right to refuse to answer questions, the jury in the copyright case "will be free to draw adverse inferences against him on issues crucial in this litigation, in which he faces counterclaims for bankrupting damages." Again in his reply brief, Fairey warns that his refusal to answer questions at his depo "could lead to crippling liability against him based on adverse inferences rather than the facts."

And in a rather extraordinary passage, Fairey concedes that he likely faces sanctions in the civil case for his admitted wrongdoing and may face indictment:

Mr. Fairey has already admitted engaging in misconduct and accepts that he will face sanctions by the Court at a later stage of this case. But his error, however serious, should not force him to choose between abandoning his Fifth Amendment rights and forfeiting his right to testify in this civil action and to defend the action on the merits. Of course, the Court can impose sanctions upon Mr. Fairey if it deems them appropriate, and the U.S. Attorney can choose to file criminal charges against him.

"But," he argues, "the triple punishment of potentially crippling civil liability — based not on the merits, but on his inability to testify during this particular brief period — would be unjust."

Fairey's brief also reveals that last Nov. 9, federal prosecutors in New York served subpoenas on Fairey, his wife Amanda, and several of Fairey's businesses. The brief also accuses the AP of "play[ing] an ongoing role in encouraging charges against Mr. Fairey, through continuing communications with the U.S. Attorney’s Office that go beyond merely responding to a grand jury subpoena." (The AP's brief, whose arguments prevailed, has also been unsealed but is not available on PACER.)

Update: I now have the AP's opposition brief (whose arguments carried the day) and the supporting documents. The AP's basic argument is that Fairey's troubles are entirely of his own making, and that "[f]or Mr. Fairey now to point to the government's investigation of his own misconduct as grounds for a discovery extension...is truly the definition of chutzpah." A few interesting tidbits from the documents:

• The AP says that "Neither the AP nor its counsel played any role in initiating [the] criminal investigation.... The AP did not become aware of the investigation until after it had commenced."
• The AP itself received a document subpoena in the criminal investigation last November.
  
• The AP's brief quotes from a declaration from Fairey's counsel (which I have not seen) stating that "[a] resolution with the government is expected to take between three and six months." A "resolution" typically refers to a plea bargain. Of course, there's no certainty that the two sides will reach an agreement.
• A transcript of a Nov. 10, 2009 hearing in the case sheds light on how Judge Hellerstein plans to deal with Fairey's transgressions. It's clear that Hellerstein views Fairey's misdeeds as "serious," and that he will impose sanctions of some kind. But it seems doubtful that the sanctions will include issue, evidentiary, or terminating sanctions, which would actually affect the outcome of the case: "I want this case to be concluded on the merits and then we'll get into this," i.e., sanctions for Fairey's wrongdoing. And Hellerstein made clear that he plans to sanction Fairey even if the case settles: "[I]f the case is settled in some fashion, I don't want this issue to be settled." Of course, the AP still argues that Fairey's lies and evidence creation and attempted destruction are relevant to the fair use analysis because they demonstrate his bad faith. See Harper & Row v. Nation (fair use "presupposes good faith and fair dealing") and cases cited at p. 24 of the AP's brief.
• Judge Hellerstein is funny. Explaining his practice of issuing quick discovery rulings (rather than referring such matters to a magistrate judge): "I'd rather be prompt than correct." (Tr. at 18:21.) Who does he think he is, some blogger?
  

AP: Shepard Fairey under criminal investigation over falsehoods in copyright case

The copyright lawsuit between the Associated Press and Shepard Fairey over the artist's use of an AP photo in his iconic "Obama Hope" poster was interesting enough. But the case now has taken a decidedly strange and ominous turn for Fairey, as it was revealed in court today that a federal grand jury is investigating Fairey over his admitted lies about the photo he copied and the creation and deletion of evidence about which which photo he used. Reports the AP:

A judge permitted the disclosure for the first time Tuesday that the artist known for his Barack Obama "HOPE" image is under criminal investigation, though details of the probe were not divulged.

U.S. District Judge Alvin K. Hellerstein mentioned the grand jury probe in a handwritten note denying a request by a lawyer for artist Shepard Fairey that a hearing relating to a copyright lawsuit they brought against The Associated Press be closed.

***

The U.S. Attorney's office had a grand jury begin an investigation after Fairey said he erred about which AP photo he used as the basis for "HOPE" and had submitted false images and deleted other images to conceal his mistake.

Meir Feder, a lawyer for Fairey, asked for secrecy in a letter to the judge, arguing that a public hearing "would risk compromising the confidential nature of the criminal investigation."

At the hearing, which was open to the public, Feder asked for a six-month delay in the civil case. He said Fairey had been instructed by his criminal lawyer to invoke the Fifth Amendment if asked questions at a deposition.

Hellerstein denied the request, noting that "this whole thing's going to be wrapped up by the end of spring."

***

"Credibility is probably the most significant issue," the judge said. "Credibility is a very important factor and you can't go into credibility without going into the destruction of evidence."

Feder disagreed, saying, "Credibility is not the most important issue."

Having the judge declare that "[c]redibility is probably the most significant issue" cannot bode well for Fairey. But the civil copyright case may now be the least of his worries.