Back in March, the Verge reported that the Beastie Boys had settled their lawsuit against educational toy company GoldieBlox. That suit alleged copyright infringement, trademark infringement, false advertising, false endorsement, and unfair competition, stemming from GoldieBlox’s unauthorized use of the band’s song “Girls” in the company’s popular Internet promotional video.[no_toc]
According to the Verge, “[a]s part of the settlement, GoldieBlox will no longer be able to use its parody of the Beastie Boys song “Girls” and will publish an apology to the band…The toy maker will also make a donation based on a percentage of its revenues to a charity selected by the Beastie Boys that supports science, technology, engineering, and mathematics education for girls — the very subjects that GoldieBlox’s toy lines try to promote.”
Until recently, the specific amount of GoldieBlox’s donation was unknown. But on May 12, 2014, Digital Music News reported that the amount of the donation had recently been detailed in court filings from the Beastie Boys’ copyright infringement lawsuit against Monster Energy drink: To compensate for its unauthorized use of “Girls,” Goldieblox will donate 1 percent of its gross revenue to the Beastie Boys’ specified charity until it has paid a total of $1 million.
With this final piece of the puzzle in hand, now seems like a good time to offer a little recap commentary on the GoldieBlox drama, highlighting a couple of the important story lines and the lessons they offer for content users and content owners.
So I give you the Beastie Boys vs. GoldieBlox–A Drama in Four Acts.
Act I: GoldieBlox draws the ire of the Beastie Boys.
GoldieBlox initially drew the ire of the Beastie Boys by using the band’s song “Girls” in a company promotional video without permission. This video was widely circulated on the Internet, achieving so-called “viral” status. GoldieBlox argued that it was not required to secure a license for “Girls”, because its video was created “specifically to comment on the Beastie Boys song, and to further the company’s goal to break down gender stereotypes.”
It’s unclear from the news accounts exactly how the Beastie Boys communicated with GoldieBlox about its unauthorized use of “Girls”. Did they send a cease and desist letter? Did somebody simply send an e-mail message or make a phone call?
Why would the nature of the contact matter here? I’ll get into that in a minute. But at this point, it’s enough to know that in response to the Beastie Boy’s communication, GoldieBlox did not cease its use of the song. Instead, it filed a suit against the Beastie Boys in federal court seeking a declaratory judgment that its use was subject to the fair use exception of U.S. copyright law.
Our friend Wikipedia describes a declaratory judgment action as follows:
A declaratory judgment, also called a declaration, is the legal determination of a court that resolves legal uncertainty for the litigants. It is a form of legally binding preventive adjudication by which a party involved in an actual or possible legal matter can ask a court to conclusively rule on and affirm the rights, duties, or obligations of one or more parties in a civil dispute (subject to any appeal).
To say the least, GoldieBlox’s approach was novel. Here’s why: Fair use is an affirmative defense to copyright infringement. Typically, one doesn’t raise it until after one has been sued for infringement. Here, the Beastie Boys had not yet sued GoldieBlox for infringement.
Prior the U.S. Supreme Court’s 2007 decision in MedImmune v. Genentech (“MedImmune”), a declaratory judgment action on this issue likely would have been dismissed for lack of jurisdiction on the grounds that there was no “reasonable apprehension” of an infringement suit.
But in MedImmune, a patent licensing case, the Supreme Court replaced the “reasonable apprehension” test with an “all circumstances” test. Little by little, the lower courts have been extending MedImmune’s new (and more permissive) standard beyond the patent law context, applying it to other intellectual property law scenarios as well (e.g., trademark infringement). Consequently, there’s no reason to believe that the same standard couldn’t be applied to a matter involving an alleged copyright infringement.
Under the “all circumstances” test, a court’s analysis shifts to determining “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment”.
Therefore, under the MedImmune test, when the Beastie Boys challenged GolideBlox’s use of their song, via a cease and desist letter (or otherwise), that action, in and of itself, might have established enough “controversy” to pass jurisdictional muster. And had Goldieblox managed to get through the courthouse doors, it would have had a shot at a quick, cheap, fair use determination, thereby avoiding protracted litigation (or having to operate its business with the ongoing threat of litigation hanging over its head).
I’m sure there were plenty of onlookers in Silicon Valley who would have very much enjoyed seeing GoldieBlox test the envelope of MedImmune in the context of copyright infringement and fair use. But in the end, it wasn’t to be. For a few days after the suit was filed, GoldieBlox shifted course, pulling back from the suit, removing “Girls” from its video, replacing it with a different song, and stating publicly that the company was sorry for using “Girls” without permission and now wanted to be friends with the Beastie Boys.
These actions didn’t come as a huge surprise to me. Probably, GoldieBlox realized that it had milked all the publicity it could from the dust-up and that public opinion was swinging towards the Beastie Boys. At the same time, GoldieBlox’s attorneys must have understood, even before filing the complaint for declarative judgment, that this sort of action wasn’t an optimum vehicle for asserting the fair use defense, because it provided leeway for a court to dismiss the suit without ever determining the applicability of the fair use defense. So while MedImmune opened up the possibility of pursuing a declaratory judgment action in this sort of case, it remained, at best, a Hail Mary for GoldieBlox.
Act II: GoldieBlox Beats a Strategic Retreat, leaving the Beastie Boys with three unappealing options.
Whatever its reasons, GoldieBlox’s decision to pull back was great strategy. In doing so, it presented the Beastie Boys with three rather unpalatable options: negotiate a settlement, walk away with nothing but an apology, or sue for infringement.
Of the three options, a settlement seemed to have the best likelihood of allowing everybody to walk away with their wallets and dignity more or less in tact, which is no doubt why the parties eventually did reach a settlement.
But at first blush, pursuing a settlement was complicated, because deceased Beastie Boy Adam Yauch had requested in his will that any song to which he contributed as a writer or co-writer never be used in advertising (although at least one estate planning attorney has questioned whether that provision would actually be enforceable). Consequently, it didn’t matter how good a settlement might look on paper or how virtuously it could be constructed. It was still going to feel like something of a loss to the band, because “Girls” had arguably already been used in advertising, and a settlement wouldn’t change that fact.
The second option, simply walking away, was unpleasant for similar reasons. At some level, it was letting GoldieBlox win.
By contrast, the third option, litigation, at least held out the possibility that the surviving band members could make GoldieBlox pay for disrespecting the wishes of their dead brother. That said, litigation wasn’t exactly a great option either.
First, it would be expensive.
Second, once the Beastie Boys sued for infringement, they would give GoldieBlox a much better vehicle for asserting the fair use parody defense and getting a court to rule on it. And while GoldieBlox might not have had the absolute best facts for mounting a parody defense, imho, there were enough favorable facts to make things interesting in court. So while the Beastie Boys probably had a better than 50/50 chance of prevailing, the facts weren’t necessarily a slam dunk for them.
Third, if GoldieBlox succeeded with a fair use defense, it could establish a precedent with wide ranging negative implications for the music industry as a whole.
(Here’s how the bad precedent would have worked: If a court had found that GoldieBlox’s actions here constituted fair use and were okay, then we’d undoubtedly see a flood of other corporate videos on-line, where companies “parody” popular songs in an effort to get around having to pay to license them. And while this may not be an issue for the Beastie Boys, who are not interested in licensing their music for commercials, it could be very negative for the vast majority of artists who are interested in licensing these uses.)
Act III: The Beastie Boys Call GoldieBlox’s Bluff.
Of course, a lawsuit could be expensive for GoldieBlox too, and its odds if winning weren’t great. So at the end of the day, the Beastie Boys rolled the dice, called Goldieblox’s bluff, and brought suit, hoping, I imagine, that it might improve their leverage.
In the end, apparently it did. Within a few months of bringing suit, the parties announced that they had reached a settlement, the specifics of which we learned more about on May 12.
Act IV: The Aftermath of GoldieBlox.
I’m sure many music industry folks would have taken great satisfaction watching the Beastie Boys drag GoldieBlox through the mud in court. Indeed, I might be one of those people myself. Nevertheless, it’s probably for the best that things were resolved outside the courtroom.
That being said, it’s hard not to feel that the Beastie Boys’ mostly won a Pyhrric victory here, if it can be viewed as a victory at all. This is especially true if we see GoldieBlox’s actions around “Girls” for what they clearly were: a clever business strategy based more on cost-benefit or perceived negotiating leverage than on ethics or empathy.
Given a choice, the Beastie Boys would not have licensed this song, no matter how high the price. Nevertheless, at the end of the day, GoldieBlox got temporary use of “Girls” and a ton of free publicity, which was its goal. In exchange, GoldieBlox had to pay one million dollars to charity.
From where I sit, that looks like a bargain for GoldieBlox. Indeed, if somebody had asked the principals of GoldieBlox at the outset whether they’d be willing to pay one million dollars for the results they achieved, I suspect they would have answered “yes” in a heartbeat.
This is one of the dispiriting takeaways from this situation: Despite all of its protestations to the contrary, GoldieBlox did not see the members of the Beastie Boys as human beings. By its actions, GoldieBlox revealed the cold, selfish, lack empathy that lurks underneath its feel-good, girl power image.
Apparently, all GoldieBlox saw was a reified abstraction called the Beastie Boys, a famous symbol that could be leveraged in the service of gaining attention and aggrandizing its project. Perhaps the principals of GoldieBlox rationalized their actions on the grounds that the Beastie Boys’ early work had utilized unauthorized digital samples. So what’s good for the goose ought to be good for the gander too, right?
And under normal circumstances, that line of thinking might have provided GoldieBlox a thin veneer of cover. For on the issue of IP law ethics, the Beastie Boys’ hands were not spotlessly clean. But these circumstances weren’t normal. What GoldieBlox lost sight of was the human element: that there were people who power the abstraction called “the Beastie Boys.” Much like the employees of GoldieBlox, these people who are the Beastie Boys must also get up each morning, do their business, and try to make their way through the world.
Somehow, the people at GoldieBlox forgot that one of the people inside the Beastie Boys abstraction died far too young. He didn’t drink himself to death, overdose, hang himself, or go in some other kind of crazy rock star way. He just got cancer and died, like lots of other regular people in the world.
All indications are that he meant a lot to the people who were close to him. And whether GoldieBlox cared or not, this was a person who apparently didn’t want his music used in advertising. At least from the outside looking in, it doesn’t appear that the Beastie Boys ever tried to use this fact as a negotiating tactic or game to extract a higher license fee from GoldieBlox. Indeed, if it seemed like the band had been doing that, I’d have a lot more sympathy for GoldieBlox.
Instead, the surviving band members tried to honor their dead friend’s wish that his music not be used in ads. Such a bummer that carrying out this wish and honoring his memory required the surviving Beastie Boys to endure the ordeal of suing GoldieBlox before accepting a settlement, which attempts to heal a wound with money that can’t be healed that way.
That’s a painful there-by-the-grace-of-god-go-I moment for any content owner who values control of their IP. But to make matters even worse, the GoldieBlox affair also leaves unresolved some other thorny questions, including whether it may now be possible to adjudicate a fair use claim via a declaratory judgment action, even when the content owner has not yet brought suit for infringement.
If a content owner sends a cease and desist letter to an unauthorized user, is that now sufficient to trigger declaratory judgment jurisdiction on the question of fair use? In the post-MedImmune world, the answer may well be “yes,” and that has to concern musicians, publishers, record labels, and other content owners. It also underscores the increased importance of proceeding carefully and strategically when a content owner learns that a third party has made an unauthorized use of their content. For the possibility of unintended consequences is now higher than it used to be.
GoldieBlox decided not to push the declaratory judgment strategy, but that doesn’t mean somebody else, perhaps with better facts on the issue of parody, may not choose to pursue that approach in the future. And if somebody does get a favorable declaratory judgment outcome around fair use, that will no doubt embolden others to do the same, by lowering the perceived downside risk of pushing the envelope from a full-bore trial to a summary proceeding.
That’s the sort of challenge that Silicon Valley hackers love, because it’s what they do: probe systems for weaknesses, potential advantages, opportunities, or efficiencies. Cheaper adjudication of fair use disputes is exactly that sort of opportunity. To the extent that the various parameters around fair use jurisprudence have changed, it also changes the system as a whole, the respective bargaining leverage of parties, and what is possible within that system. Therefore, it’s hard to imagine that we won’t encounter this sort of situation again, and content owners would do well to prepare for it.
Update: On June 5, 2014, Pitchfork reported that the Beastie Boys had won a $1.7 million damage award in their copyright infringement suit against Monster Energy Drink. So perhaps there was a silver lining for the Beastie Boys in the GoldieBlox situation after all, to the extent that the settlement helped the band establish a market value for Monster’s unauthorized use of its songs. That being said, Monster has indicated that it will appeal. I guess we’ll have to wait and see whether that damage award holds up or is ultimately reduced.