Is 'Avatar' really immune from piracy?

By Eriq Gardner and Matthew Belloni

"Avatar" director James Cameron has frequently touted 3D filmmaking as the industry's best hope for combating piracy.

He's followed others in the industry, such as DreamWorks Animation CEO Jeffrey Katzenberg, who was one of the first to posit that one can't camcord 3D cinema.

Is it really true? Can 3D glasses accomplish what no industry lawyer has been able to do in holding back the pirates?

Cameron may be a visionary, but we're betting he's dead wrong here.

According to a story in the UK's The Times, "Avatar" was illegally downloaded almost one million times within seven days of its release—a record. By comparison, "New Moon" was pirated 610,000 times in the same time period. Word that "Avatar" is an underground hit follows overlooked news that "Avatar" leaked onto file-sharing websites a few days before it hit theaters.

The film is doing amazing boxoffice anyway. And if there was ever a poster child for the argument that online pirates merely check out "event" films for free before going to theaters for the real experience, this would be it. But we're sure that 20th Century Fox has high hopes for the future DVD release of the film, which could be hampered by rampant filesharing.

A few months ago, a UK scientist examined the question of whether 3D films are immune to piracy. He proposed that future pirates might eventually attach a 3D glasses-type filter to their camcorders or set up two cameras in the theater so as to recreate the 3D experience at home.

With 3D televisions poised to stampede the market in 2010, the prospect of splashy new hardware demanding for content could give rise to a wave of 3D piracy in the very near future.

In fact, we'll go out on a limb and predict that the introduction of 3D will only escalate the piracy/copyright battles, as studios refine their technology with DRM, pirates respond, and court battles ensue.

One of these days, we bet we'll be reporting that someone is claiming 3D glasses as a copyright circumvention device.

Russell Frackman Q&A: 'Without the Napster suit, iTunes would never have existed'

By Eriq Gardner

This week we're commemorating the 10-year anniversary of the record industry's lawsuit against Napster. Earlier we took a poll on whether the recording industry made a mistake by setting off a legal war with the pioneering file-sharing service. And today we're chatting with Russell Frackman, the industry's lead lawyer in the case, looking at the impact of the litigation.

THR, Esq: A majority of our readers seem to think that Napster litigation was a mistake. With all that's happened since, do you believe that filing the lawsuit was the best course?

Frackman: I start from the proposition that, frankly, this is not a fair question. Our clients didn't set out to sue Napster out of existence. Our consistent position was that copyright holders aren't against technology, only the way it's illegitimately used. We said we believed in a legitimate Napster and it never happened. The game plan wasn't to sue it out of existence; just to sue to make it legal.

THR, Esq: There's been an escalation in copyright battles against technology providers since the Napster case. Some lawyers we've spoken to wonder whether the industry could have gone further to work with Napster and avoided many of the later problems.

Frackman: There's always been a thought by some that the record industry has been dragged kicking and screaming into the 21st century. The reason why Napster took months instead of years to build its service is simply because they took the content and gave it away. The industry had lots of considerations like contractual issues with artists, issues with music publishers, issues with brick-and-mortar customers—who were significant at that time—issues with compensation, protection, and more. The other thing is that without the Napster suit, iTunes would never have existed. There would have been no incentive for people to pay money for music.

THR, Esq: So there weren't any discussions to figure out a way beyond litigation to clear the mess?

Frackman: This is just hearsay on my part, because I wasn't involved in this, but I do believe there were discussions before the lawsuit was filed in an attempt to resolve difficulties with Napster. I have speculation on why that didn't succeed, but I can't go into it.

THR, Esq: Considering the cases that followed, from Grokster to Cablevision to YouTube, has your perspective on the way that the Napster case was handled changed at all?

Frackman: I do believe that it was litigated in the best and most efficient way possible and attained the best result short of final determination. I think it's possible that the defendant may have explored a different approach. But I also think the case set an important precedent and got courts thinking about good and bad conduct.

THR, Esq: What copyright case or issue do you have your eye on now?

Frackman: I'm very curious to see if Universal appeals the Veoh decision. I think the district court got that wrong, and I think that sooner or later, the questions explored in that case (over DMCA "safe harbors" for copyright liability) will be addressed by the appeals circuit. There's a lot of ground left to cover in the relationship of copyright holders and technology companies.

Frackman is a partner at LA's Mitchell Silberberg & Knupp.

Was suing Napster ten years ago a mistake? (POLL)

By Eriq Gardner

Ten years ago this week, the recording industry filed a landmark lawsuit against a peer-to-peer file-sharing service called Napster.

Represented by Russell Frackman at Mitchell Silberberg & Knupp, 18 record labels decided to push the legal theory that a service that let users distribute sound recordings online should be liable for contributory and vicarious copyright infringement. 

Here's the original complaint filed against Napster in December, 1999.

Napster lost at the District Court and was unsuccessful on appeal to the Ninth Circuit. After the District Court ordered a shut down, Napster declared bankruptcy and sold its assets. Throughout the decade, the record industry has been pursuing other copyright flagrants, including taking a case against P2P service Grokster up to the Supreme Court and going after some 30,000 individuals who allegedly made music available to these P2P services.

The decision to file the case may ultimately have been as important as the outcome. 

Was the decision to sue the original Napster out of existence a wise legal course or should the industry have tried to co-opt the technology?

Some argue that the record industry had no choice in the matter and needed to send a strong message that piracy wouldn't be tolerated in the digital age. Others believe that the industry may have been able to exert influence on a central depository of music hosted by Napster and suing the entity only lead to a proliferation of other technologies that thrived after learning Napster's legal missteps. 

In honor of the 10-year anniversary, we're conducting a poll. Let us know what you think.

Do Hollywood studios own rights on Mars?

By Eriq Gardner

Throughout space and time, industry lawyers have been caught flat-footed by new technology. Fifty years ago, no attorney demanded digital rights to books, movies, TV shows, and the rest.

These days, they compensate for this lack of vision by drafting broad, vague contract terms that can handily be applied in far-off galaxies.

The WSJ has some fun with this topic in a front-page article that picks on the contractual phrase, "throughout the universe, in perpetuity." 

The authors make the point that the language has become standard in Hollywood as entertainment companies pick on amateur talent by locking up every possible future stream of revenue.

True, one will find a universal rights-grab in contracts with reality television stars. The Real Housewives of New Jersey, for example. But even power players often give up rights "throughout the universe." A search of the SEC's Edgar database turns up 560 examples of the phrase in the last couple years alone, including in CBS CEO Les Moonves' employment agreement.

Our favorite quote comes from a spokesperson for Lucasfilm, who, responding to the need for such boilerplate on the Starwars.com terms-of-service, says, "To be honest with you, we have had very few cases of people trying to exploit rights on other planets."

As hard as it is to believe, there's actually been a bit of discussion in recent years on the issue of intellectual property in outer space.

We have two questions for legal-minded science/philosophy geeks: First, is there an assumption that if some dispute should arise on a planet like Mars, the contract would be honored in an alien jurisdiction? Second, why haven't entertainment lawyers locked up rights in parallel universes?

'Watchmen' Watch: Tallying the opening weekend grosses/damages

By Eriq Gardner 

The reviews weren't great. The opening weekend boxoffice numbers were mediocre. But what about the litigation returns on "Watchmen"?

We'll still have to wait and see.

Over the weekend, the film we've been writing about and writing about and writing about and writing about pulled in $55.7 million domestically for Warner Bros. But Fox gets a piece of that revenue (as much as 8.5% if the film is a megahit) as part of the settlement of the  litigation between the studios over who had the right to distribute the picture.

Judging by a NYU's professor's regression model on how opening weekend box office numbers predict total movie grosses, and adjusting downward due to expected higher-than-normal opening weekend geek fandom, we'd expect this film to eventually gross about, or just above, $130 million domestically when all is said and done (Paramount holds overseas rights). Funny enough, that happens to be the same figure as the reported budget of the film.

Surely that won't be enough to trigger the full 8.5% payout, will it? Minimal profits means a limited payout,right?

Then there's Larry Gordon. A couple weeks ago, we wrote about the veteran producer's strange position watching box office returns on "Watchmen":

"The better the film does, the more he could pocket as a profit participant but the more he might have to fork over to make Warners whole. That’s because Warners claims its agreements with Gordon contain an indemnity clause requiring the producer to reimburse it for unforeseen problems with the picture."

Funny enough, at the rate this film is going, Gordon may be lucky enough, or unlucky enough — depending on how one wants to see this — as not being caught up in any further litigation. But given this film's litigious history, the prospect of strife-free resolution seems unlikely.

Meanwhile, in other "Watchmen" related legal news, Warner Bros. is demanding on copyright grounds that websites pull down streams of the film's innovative title sequence. Obviously, those title sequences are still floating out there, but the studio's take-down notices have elicited comments like this one: "I will never understand Hollywood’s approach to free publicity."

Just Asking: Were those Jack Nicholson Clips in the Hillary Ad Cleared For Use?

Posted by Eriq Gardner

By now, you've probably seen the Jack Nicholson political ad that culls together several of the actor's more famous performances in an amusing endorsement of Hillary Clinton. But if you haven't, click here.

The Towleroad blog has an interview with the two Hollywood veterans, John Krokidas and Bruce Cohen, behind the spot and how they developed it. According to the interview, Cohen ("American Beauty," ABC's "Pushing Daisies") took the ad to Rob Reiner's political consultant Chad Griffin, who took it to Reiner, who took it to Jack, who approved and filmed the last scene.

One question: Did anybody take it to the various studios that own the rights to "Batman," "The Shining," "A Few Good Men" and the other films spotlighted in the ad?

Mastercard once sued Ralph Nader for $15 million for showcasing a political advertisement that ripped off its "Priceless" campaign, and not only is this new Nicholson ad packed with copyrighted footage, but we can imagine that a number of people in Hollywood support the other Democratic candidate.