Michaels v. Internet Entertainment Group

Citation: Michaels v. Internet Entertainment Group, Inc., 5 F.Supp.2d 823 (C.D. Cal. 1998)(full-text).

Factual Background
Plaintiffs, Bret Michaels is a musician best known as the lead of the rock band “poison.” Intervenor Pamela Anderson Lee is a well-known television and film actor. Defendant Internet Entertainment Group (IEG) is a corporation involved in the distribution of adult entertainment material through a subscription service on the internet.

Michaels and Lee made a videotape depicting them having sex. This tape came into the possession of IEG through a private investigator named Revilla, who received the tape from an undisclosed source. IEG informed Michaels of their possession of the tape and their claim to have all rights necessary to publish it. Michaels, through counsel, informed IEG that he had not authorized any distribution of the tape and notified them that any publication of the tape would violates Michael’s copyright as well as common law and statutory rights to privacy and publicity.

After the letter was sent, Michael’s registered the tape with the Copyright Office and filed suit alleging that IEG, among other claims, has infringed on his copyright, violated his right to privacy and right to publicity.

Trial Court Proceedings
The court issued a temporary restraining order to prevent the dissemination of the tape and order a bond be posted for payment of cost and damages that may be incurred by the defendants if the TRO was found to have been improvidently granted. The plaintiffs also sought a preliminary injunction to prevent dissemination of the tape.

According to the Ninth Circuit, the party seeking a preliminary injunction must show either 1) a combination of probable success on the merits and the possibility of irreparable injury if relief is not granted or 2) the existence of serious questions governing the merits and that the balance of hardships tips in its favor. The court first addressed the copyright claim and found that Michael’s has a valid copyright in the tape because “registration certificates are prima facie evidence that the plaintiff owns a valid copyright” 17 U.S.C. §410 (c) and the “presentation of the certificate shifts the burden to the defendant’s to overcome the presumption of validity.” Therefore, distribution of the tape would conflict with plaintiff’s exclusive rights to distribute copies of the tape to the public. IEG alleges the affirmative defense of having a non-exclusive license, despite the fact that it was transferred without a written contract. A non-exclusive license does not give an ownership interest and therefore has a narrow exception by which a party may give a non-exclusive license orally or implied through the parties conduct. In support of their affirmative defense, IEG offered two chains of reasoning: (1) the inconsistencies between Michael’s and Lee’s respective depositions gives rise to the inference that one of them conveyed a license to distribute the tape and (2) that the deposition provided by Revilla and his recent statements support the inference that Michael’s authorized an associate to negotiate a license. The court rejected both chains of reasoning. The first chain of reasoning provided by IEG claims that since Michael’s and Lee’s testimony is inconsistent on whether Michael’s promised to destroy the tape and whether Lee every received a copy of the tape, would lead to the inference that one of them is lying about seeking distribution for the tape. However, both deny that they ever conveyed an interest in the tape. The court rejected this because such inconsistencies can be explained by differing recollections and understandings of the events as they occurred. Furthermore, the court held that even if one did give the tape to an unknown agent for purposes of negotiating a distribution deal, there is no evidence to determine the scope and authority of said agent.

The second chain of reasoning provided by IEG claims that Revilla’s contacts with the unknown associate of Michael’s resulted in the transfer of an implied non-exclusive license. In support of this contention, IEG produced a declaration by a former attorney of IEG where it states that he, the attorney, was contacted by Revilla’s attorney and was informed that Revilla’s attorney would be representing the undisclosed party and if deposed, would provide testimony that Michael’s gave him the tape and asked him to create interest in the tape and try to arrange for its distribution. The court held that this contention is inadequate to rebut plaintiff’s showing of likelihood of success on the merits and it does not support an inference that Michael’s conveyed a license in the tape. The court reasoned that the declaration by IEG’s former attorney is unpersuasive because there is no other evidence to support it. Furthermore, Revilla had contacted Michael’s agent and offered him $1 million for the right to distribute the tape, but was rejected. Had Revilla already had rights to the tape, he would not need to contact Michael’s. Furthermore the court noted that Michael’s had rejected an offer of $1 million but would have to take substantially less for had he gave an implied license. This would defy economic rationality. In addition, the court rejected IEG’s chain of title claim that Michael’s granted a non-exclusive license to the unknown associate and then he in turn granted it to Revilla. The court cited to Harris v. Emus Records Corp., 734 F.2d 1329 where the Ninth Circuit rejected such a claim holding that “ a copyright license itself does not include the right to transfer the license unless the copyright owner explicitly conveys this right in addition to the license itself.” Id at 1333. The court held that viewing IEG’s assertion in a light most favorable to it, IEG has not met it’s burden for the affirmative defense.

The court also rejected IEG’s contention that the injunction should be tailored to allow IEG to use small portions of the tape in the course of public discussion under fair use. The court looked to the Copyright Act §107 in which the factors for addressing fair use are present. The court reasoned that since the purpose of the use was for distribution as pornographic material and small segments are the stock-in-trade of such an industry and that the effect on market would saturate the potential market for plaintiff’s copyright that it would weigh against a finding of fair use.

After dispensing with IEG’s affirmative defenses, the court proceeded to address the other causes of action brought by plaintiffs, the first of which is a right to publicity. Under California, the plaintiffs own the right to exploit their names and likenesses for commercial gain. The Court rejected IEG’s initial claim that the right to publicity claim is preempted by the Copyright Code because a copyright claim is only preempted where the conduct alleged consists only of copying the work in which the plaintiff claims a copyright. In this case, the claim contains elements that are different from copyright infringement because it is not only concerned with the distribution of the tape but rather the use of their names, likenesses, and identities on radio, television and internet to advertise the tape. (5 F.Supp.2d 823, 838)

The court subsequently analyzed the likelihood of success on the merits of Plaintiff’s right to publicity claim. The elements for the right to publicity claims are “(1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to defendant’s advantage, commercial or otherwise; (3)lack of consent; and (4) resulting injury.” Eastwood, 198 Cal. Rptr. at 347. The court held that the plaintiffs demonstrated a likelihood of success because the defendant’s did use plaintiff’s names and likenesses to promote the tape, they would gain commercial advantage due to the nature of IEG’s business, there was a lack of consent, and there are damages because IEG’s membership has gone up due to the publicity of the tape and the plaintiffs presented evidence that this publicity has damaged their attempts to maintain careers in mainstream entertainment. Furthermore, the court found that the plaintiffs had irreparable injury due to the publicity of this sex tape and the plaintiffs are entitled to an injunction but it cannot reach the use of their names and likenesses to report or comment on matters of public interest.

The court then addressed the right to privacy claim brought by the plaintiff and held they were entitled to an injunction. IEG asserted three reasons why the court should not consider the tape private but each was rejected. The first reason presented by IEG was the status of Lee as a sex symbol precluded the tape being private. The court held that since the private facts depicted on the Michael’s tape have not become public either by virtue of Lee’s professional appearance or by the dissemination of another video tape of her engaged in sexual activity with Tommy Lee, it was private. The second reason IEG presented was the fact that a foreign internet source has already released part of the tape and the facts are no longer private. The court held that the release of a small clip (148 seconds) was insufficient to destroy the privacy interest in the entire tape, distinguishing this case from Lee v. Penthouse Int’l Ltd., 25 Med.L.Rptr.1651 and Sipple v. Chronicle Publ’g Co., 154 Cal.App.3d 1040 in which the plaintiff’s asserted privacy was already well-known. The last reason claimed by IEG is the newsworthy privilege. The court held that the first two factors of the social value and depth of intrusion weighed in favor of finding privilege due the sexual nature of the tape and the third prong, voluntary accession to fame, weighed against privacy. The Court also found that there was irreparable injury due the content of the material and that the injury inflicted was the plaintiffs “human dignity and peace of mind.” The Court held that the plaintiffs have established a likelihood of success on the merits and were entitled to a preliminary injunction.

Lastly, the court upheld Michael’s posting a bond because it accurately reflects the losses IEG will suffer if it is erroneously enjoined from using its purported license.