Last Tuesday, the Authors Guild and 17 authors, including George R.R. Martin, Jonathan Franzen, Elin Hilderbrand, John Grisham and Jodi Picoult, filed a proposed class action complaint against OpenAI, alleging direct, vicarious and contributory copyright infringement. The Plaintiffs seek “redress for Defendants’ flagrant and harmful infringements of Plaintiffs’ registered copyrights in written works of fiction.”

Plaintiffs’ complaint alleges that:

Continue Reading Authors Guild and 17 Well-Known Authors Claim OpenAI Infringes Their Copyrighted Works

In an opinion yesterday, Judge Gardephe dismissed a complaint (see our prior coverage here) brought by Liberty Tax Service against the makers of the TV show “Better Call Saul” for depicting an allegedly similar business, “Sweet Liberty Tax Services,” as a criminal enterprise. In the show, the business is run by Craig Kettleman, who had been convicted of embezzlement in an earlier season but then opened “Sweet Liberty Tax Services” with his wife after being released from prison.

Under Second Circuit law, using a mark in this way is protected so long as it is artistically relevant and not explicitly misleading. Judge Gardephe agreed with the Defendants that the “Sweet Liberty” name was artistically relevant insofar as it was intended to be “richly ironic”:

Continue Reading Judge Gardephe: Better Call Saul’s Fictional “Sweet Liberty” Tax Firm Does Not Infringe Rights of Similarly-Named, Real Business

In an opinion yesterday, Judge Castel denied a summary judgment motion that sought to dismiss the defamation action brought by former prosecutor Linda Fairstein against Netflix and others over a “docudrama” called “When They See Us” about the Central Park Five.  Our coverage of the denial of the motion to dismiss is here.

Judge Castel recognized that the makers of films and television shows dramatizing real events have some license to advance an “opinion-based version of events, provided that the account has some support in the historical record.” He also noted that, while docudramas will often use “composite” characters, “Fairstein does not complain that she was defamed through the use of a fictionalized composite character. Her claims are directed to words and deeds attributed to her by name.”

The decision details why a jury could find that five particular scenes were capable of defamatory meaning and were made with “actual malice.”

In the first example, Fairstein is depicted as creating a timeline of the underlying attack, and then manipulating it to fit a predetermined conclusion that the “Central Park Five” were guilty:

Continue Reading Judge Castel Denies Summary Judgment to Netflix in Defamation Case Over Central Park Five “Docudrama”

In the SEC’s closely-watched action against the crypto firm Ripple, Judge Torres on Thursday issued a summary judgment decision finding that some types of sales of Ripple’s crypto token, XRP, were governed by the securities laws while others were not. The decision is a notable counterweight to the SEC’s effort to broadly categorize crypto transactions as falling under the securities laws.

The key issue was whether the underlying transactions met the definition of the “investment contracts” as interpreted by the Supreme Court’s decision in SEC v. W.J. Howey Co., 328 U.S. 293 (1946). Under Howey, a transaction is an investment contract if there is “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

For XRP’s sales to institutional investors, Judge Torres found that the Howey test was met because the investors paid money to Ripple, which then “used the funds it received from its Institutional Sales to promote and increase the value of XRP by developing uses for XRP and protecting the XRP trading market.”

Sales on digital asset exchanges were different, however, because the purchasers (referred to as “Programmatic Buyers” in the opinion) did not even know if the funds were going to Ripple:

Continue Reading Judge Torres: Sales of Ripple’s Crypto Tokens on Exchanges Are Not Securities Transactions

On Thursday, Judge Castel sanctioned two lawyers and their law firm $5,000 in connection with their widely publicized submission of fake cases generated by ChatGPT.

The relevant events began on March 1, when the plaintiff’s lawyers submitted an “affirmation” in opposition to the defendant’s motion to dismiss, which first cited the fake cases. On March 15, the defendant a reply brief questioning the existence of many of the cases cited in plaintiff’s “affirmation.”

After reading the reply and being unable to locate a number of the cases himself, Judge Castel ordered plaintiff’s lawyers to produce the cases cited in their opposition. Plaintiff’s counsel submitted an affidavit attaching the excerpts of the “cases” on April 25th. Judge Castel reviewed the “purported decisions” and described them as showing “stylistic and reasoning flaws that do not generally appear in decisions” from federal courts and containing legal analysis that was “gibberish.” On May 4, he ordered plaintiff’s lawyers to show cause why they should not be sanctioned. On May 25, one of the lawyers finally admitted that he had used ChatGPT to conduct his legal research, not understanding that it could invent fake cases.

Continue Reading Judge Castel Sanctions Lawyers Who Submitted Fake Cases Generated By ChatGPT

In an Order yesterday, Judge Figueredo sanctioned a defendant for failing to show up for his deposition and thereby causing two lawyers for the plaintiff to waste two hours of their time, until they learned he was not coming. The sanction amount is notable for approving the hourly rate of $1,285.50 for a commercial litigation partner at a large law firm (Proskauer Rose) and also for approving an $800 rate for an associate (reduced from the requested $1,102.50).

Two hours of their time, plus the court reporter feeds, totaled $5,850.

Yesterday, the Second Circuit overturned Judge McMahon’s December 2021 decision rejecting the Purdue Pharma bankruptcy on the grounds that the Bankruptcy Code did not permit releases of third-party direct claims against non-debtors. As we previously covered, Judge McMahon’s opinion found that the bankruptcy court lacked authority to issue releases in favor of the Sackler family. 

While acknowledging that both sides put forth arguments “about fairness and accountability, particularly as it relates to the Sacklers, in releasing parties from liability for actions that cause great societal harm” the Second Circuit concluded that the only questions it needed to resolve were (1) whether the Bankruptcy Code permits nonconsensual third-party releases of direct claims against non-debtors, and (2) if so, were such releases proper here in light of all equitable considerations and the facts of this case. The Court answered both questions in the affirmative:

Continue Reading Second Circuit, Reversing Judge McMahon’s Order, Affirms Purdue Pharma Bankruptcy

On Wednesday, Judge Vyskocil denied a request by Manhattan District Attorney Alvin Bragg for a TRO enjoining the enforcement of the subpoena issued to Mark F. Pomerantz by Congressman Jim Jordan in his role as Chair of the House Committee on the Judiciary. We previously covered DA Bragg’s TRO and Complaint here.

Before addressing the merits of the TRO request, Judge Vyskocil faulted DA Bragg for filing the order to show cause for the TRO without notice to Defendants and before serving them with the Complaint. She characterized the first 35 pages of the Complaint as “nothing short of a public relations tirade against former President and current presidential candidate Donald Trump,” before concluding “that this action is merely a motion to quash a subpoena dressed up as a lawsuit.”

Continue Reading Judge Vyskocil Denies DA Bragg’s Request to Enjoin Pomerantz’s Testimony, but Second Circuit Grants Stay Pending Appeal

Today, Manhattan DA Alvin Bragg filed a complaint and motion for a TRO and preliminary injunction seeking to quash a subpoena that was served by a Congressional committee on former Special ADA Mark Pomerantz. The subpoena seeks testimony about the New York State criminal prosecution and investigation of former President Trump. Judge Vyskocil declined to issue a TRO, but ordered expedited briefing and set a hearing on the preliminary injunction motion for next week.

The subpoena target, Mr. Pomerantz, participated in the Manhattan DA’s investigation of former President Donald Trump and his businesses. Congressman Jim Jordan served the subpoena in his capacity as Chairman of the House Committee on the Judiciary, and the subpoena seeks a deposition of Mr. Pomerantz on April 20.

DA Bragg’s Complaint argues that Mr. Jordan is seeking “highly sensitive and confidential local prosecutorial information that belongs to the Office of the District Attorney and the People of New York” and that “[b]asic principles of federalism and common sense, as well as binding Supreme Court precedent” forbid such a request from Congress, which has no authority to supervise state criminal prosecutions:

Continue Reading Judge Vyskocil Schedules Hearing Next Week in Challenge to Congressional Subpoena for Testimony About Manhattan DA’s Trump Investigation

In a decision Friday, Judge Koeltl ruled that the Internet Archive (“IA”), the nonprofit entity behind the popular “Wayback Machine,” committed copyright infringement through its program of scanning and lending digital copies of copyrighted books to the public. IA advanced a type of “fair use” defense that it called “controlled digital lending,” arguing that an entity that owns a physical copy of a book can digitize it and then lend out the digital copy, as long as it only loans out a single digital copy for each physical copy owned.

Judge Koeltl rejected IA’s fair use argument, finding “nothing transformative about IA’s copying and unauthorized lending.”

At bottom, IA’s fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book. But no case or legal principle supports that notion. Every authority points the other direction.