Understanding the Takings Clause of the Fifth Amendment
Takings by the government have long been a complex and murky area of constitutional law. The Fifth Amendment of the U.S. Constitution does not provide much detail on how takings were to be carried out. While recent case law has added some clarity, the topic remains complicated.
The Takings Clause of the Fifth Amendment was designed to compensate private citizens when the government takes private property for public use. It states:
“Nor shall private property be taken for public use, without just compensation.”
The intent was to limit government power in serving the public interest, while also giving private citizens recourse against uncompensated property seizures by local, state, or federal authorities.
Over time, the Takings Clause has expanded to cover not only physical takings (when land is seized) but also regulatory takings—when government regulations reduce property value or make land unusable. These two categories form the basis of per se takings law.
Fenced-off house in Turner (August 2013)
Two important cases clarified aspects of takings actions:
Murr v. Wisconsin (2017, U.S. Supreme Court)
Matter of New Creek Bluebelt, Phase 3 (Baycrest Manor Inc.) (2017, New York Appeals Division)
Murr v. Wisconsin and the Denominator Problem
Background of the Case
In Murr v. Wisconsin, the Murr family inherited two abutting lots along the St. Croix River. One lot had a cabin, while the other was undeveloped and smaller than one acre.
The family wanted to sell the smaller lot to fund cabin repairs, but state ordinances prohibited selling or developing adjacent substandard lots under common ownership. The Murrs claimed this amounted to an uncompensated regulatory taking, as Lot E could not be sold or developed independently.
The case reached the U.S. Supreme Court, which sided with the state, ruling that the two lots should be considered as one property.
The Denominator Question in Takings Law
One of the biggest issues in takings law is the “denominator problem”—what portion of property is considered when determining if a taking has occurred.
The Court introduced a new three-pronged test to define the denominator:
This built upon the earlier Penn Central Transportation Co. v. New York City framework, which broadly considered the “parcel as a whole” but lacked specific guidance.
Dalles of St. Croix
Reciprocity of Advantage and Fairness
The Court also applied the concept of reciprocity of advantage. This means that even if one lot is burdened, it may still benefit from regulations that increase the overall value of nearby land.
In this case, the undeveloped lot was restricted, but the combined lots gained value due to preservation of the scenic St. Croix River. Thus, while the Murrs could not sell Lot E separately, the two lots together were worth more.
Although criticized by Chief Justice Roberts for potentially favoring the government, the Murr decision emphasized fairness, considering both burdens and benefits in takings analysis.
Baycrest Manor: Clarifying Regulatory Takings in New York
Case Background
The Baycrest Manor case involved land in New York that was entirely wetlands and had no viable economic use under strict environmental regulations.
Baycrest Manor, Inc. argued that the land was effectively deprived of all use, amounting to a regulatory taking under the Fifth Amendment.
The Court’s Ruling and Key Precedent
The Court held that subsequent purchasers of restricted land can still bring takings claims, even if they knew about the regulations at the time of purchase.
This ruling followed Palazzolo v. Rhode Island (2001) and overturned New York’s Kim Quartet, which had previously barred such claims.
By allowing challenges from later purchasers, the Court recognized that unreasonable regulations remain unfair, no matter when the property was acquired.
Downtown Manhattan view over Freshkills Park
Compensation and the Penn Central Test
The New York Court of Appeals upheld higher compensation than typical regulatory takings claims, recognizing that wetlands, while limited economically, may still have non-economic value.
The Court evaluated:
Economic impact of the regulation
Interference with reasonable investment-backed expectations
Character of the governmental action
This analysis aligned with the Penn Central test, but the Court also factored in New York’s reasonable probability incremental increase rule.
Essentially, the Court considered what a hypothetical buyer might pay, knowing that a takings claim could succeed. This calculation helped determine fair compensation.
Conclusion
Both Murr v. Wisconsin and Baycrest Manor address different aspects of the Takings Clause but share a common goal—fairness in property rights disputes.
Murr v. Wisconsin clarified how courts define the denominator in takings analysis, weighing both benefits and burdens.
Baycrest Manor ensured that even subsequent landowners can bring takings claims, and that compensation fairly reflects realistic property value.
While one decision appears to favor the government and the other the property owner, both rulings refine takings law to promote balance and fairness.
The evolution of Fifth Amendment takings jurisprudence shows that while government regulations are necessary to protect public interests, private property rights remain central to constitutional protections.
[1] Murr v. Wisconsin, 582 US _ (2017)
[2] Matter of New Creek Bluebelt, Phase 3 (Baycrest Manor Inc.), ___ A.D.3d ____, 2017 N.Y. App. Div.
[3] Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978)
[4] Palazzolo v. Rhode Island, 533 U.S. 606 (2001)
[5] Kim v. City of New York, 90 N.Y.2d 1 (1997); Gazza v. Dep’t of Envir. Conserv., 89 N.Y.2d 603 (1997); Basile v. Town of Southampton, 89 N.Y.2d 974 (1997); and Anello v. Zoning Board of Appeals, 89 N.Y. 2d 535 (1997)
Recently, the Supreme Court decided the landmark case South Dakota v. Wayfair, Inc., addressing whether remote sellers of goods and services can be required to collect and remit sales taxes imposed by the consumer’s state.[1]
According to S. 106, 2016 Leg. Assembly, 91st Sess. (S. D. 2016) [hereinafter “the Act”], remote sellers must collect and remit sales tax to the state in which the goods are sold.[2] Consequently, the State of South Dakota filed for an injunction requiring respondents to register for licenses to collect and remit sales tax.[3]
Respondents Wayfair, Overstock.com, Inc., and Newegg, online merchants selling goods such as furniture and electronics, moved for summary judgment, arguing that the Act is unconstitutional.[4] The Supreme Court therefore, granted certiorari to interpret precedent cases “in light of current economic realities.”[5]
Wayfair logo
Commerce Clause and Commercial Real Estate
To decide the issue, the Court analyzed the Commerce Clause and revisited two precedent cases:
National Bellas Hess, Inc. v. Department of Revenue of Illinois (1967)
Quill Corporation v. North Dakota (1992)
Both rulings determined that an out-of-state seller’s ability to collect and remit tax depended on physical presence in the state.[6][7] For instance, if a seller only permitted catalog orders, it was not considered to have a physical presence. Consequently, many online retailers escaped sales tax obligations.
Core Principles of State Taxation and Commercial Real Estate
The Court emphasized two guiding principles:
State regulations cannot disfavor interstate commerce.
States cannot impose undue burdens on such commerce.[8]
Moreover, combined with the Commerce Clause, these principles help courts decide outcomes in cases involving state laws.[9]
In Complete Auto Transit, Inc. v. Brady, the Court held that a state can tax interstate commerce if the tax:
Applies to an activity with a significant connection to the state
Is fairly apportioned
Does not discriminate against interstate commerce
Is sufficiently related to state-provided services[10]
Thus, the Complete Auto test became central to the Court’s reasoning.
Physical Presence Rule and Commercial Real Estate
The “significant connection” requirement stems from due process, which demands that businesses have minimum contacts with the taxing state.[11] For example, in Miller Brothers Co. v. Maryland, the Court held that there must be a direct link between the state and the transaction it wishes to tax.[12]
However, the Court found that the physical presence rule was outdated and flawed in today’s digital economy. It unfairly advantaged online businesses without a physical presence in the state while simultaneously creating market distortions.[13][14] As a result, physical retailers bore heavier tax burdens, while e-commerce companies thrived without equal obligations.
Revenue Loss and State Impact
South Dakota and other states have faced massive revenue losses—between $8 and $33 billion annually—due to the Bellas Hess and Quill rulings.[15] As a result, South Dakota residents had to pay use tax on out-of-state purchases.[16]
Since South Dakota has no state income tax, sales tax revenue is critical for funding public services such as police and fire departments.[17] Moreover, some states, like Colorado, introduced notice requirements for remote vendors, signaling future challenges over defining physical presence.[18][19]
Consumers have moved increasingly towards online shopping in the past few years due to convenience and efficiency
The Supreme Court’s Decision
The Court ultimately overruled Quill and Bellas Hess, holding that the physical presence rule was untenable.[20] Applying the Complete Auto test, the Court found that respondents had significant economic and virtual contacts with South Dakota. Nevertheless, it left open the possibility that another Commerce Clause principle could challenge the Act in the future.[21]
Therefore, the decision granted South Dakota the authority to enforce its tax collection law on remote sellers.
Chief Justice Roberts’ Dissent
Chief Justice Roberts dissented, acknowledging that Bellas Hess was wrongly decided but arguing that Congress, not the Courts, should determine interstate commerce rules.[22] Furthermore, he emphasized stare decisis and claimed any harm caused by the physical presence rule was declining over time.[23]
Roberts warned that the decision could burden small businesses, raising costs and reducing product variety.[24] He argued that Congress is better positioned to weigh competing business interests and avoid drastic policy changes with unintended retroactive effects.[25]
Broader Implications for Online Retail and Real Estate
This ruling has wide-reaching implications:
Commercial real estate benefit from leveling competition with online retailers.[26]
Large e-commerce players like Amazon—which did not collect taxes on third-party sales in all states—face new obligations. Consequently, after the decision, Amazon shares fell, and other online marketplace stocks were expected to follow.[27]
As a result, South Dakota can now require remote sellers with over 200 transactions or $100,000+ in revenue from state residents to collect sales taxes. Consequently, this decision may encourage other states to follow suit, potentially generating $13 billion in tax revenue nationwide.[28]
Amazon
Conclusion
The Supreme Court’s decision in South Dakota v. Wayfair, Inc., marks a turning point in online commerce and state taxation. By overruling outdated precedent, the Court opened the door for states to collect billions in lost tax revenue while reshaping the responsibilities of online sellers.
As the digital marketplace expands, future disputes will likely test the balance between fair taxation, interstate commerce, and small business protection.
[1]South Dakota v. Wayfair, 138 S. Ct. 2080, 2093 (2018).
Copyright Protection of Non-Utilitarian Designs under the Copyright Act of 1976
Designers in the high fashion industry face many obstacles in receiving intellectual property protection for the utilitarian aspects of their clothing. Congress has provided copyright protection only for original works of art, but not for industrial designs that embody utilitarian functions. See 17 U.S.C. 101. Copyright protection does not extend to utilitarian aspects of objects because it would open up a flood of litigation over exclusive monopoly rights that would “burden competition, raise prices, and also harm consumers.” SeeStar Athletica, L.L.C. v. Varsity Brands, Inc., Brief for United States as Amicus Curiae 5-6. This proves problematic, however, when art and industrial design are intertwined, especially in the fashion industry which combines aesthetic elements with utilitarian garments. Under the separability doctrine, these pictorial, graphic, and sculptural works on the design of a useful article are copyrightable so long as they “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” See 17 U.S.C. 101. But what happens when pictorial, graphic, sculptural works are inseparable from the utilitarian aspects of a garment? SeeStar Athletica, L.L.C. v. Varsity Brands, Inc.provided fashion designers with newfound intellectual property protection for aesthetic aspects that are incorporated into utilitarian aspects of their garments.
Obstacles Designers Faced in the High Fashion Industry Prior to the Star Athletica Decision
It is without a doubt that fashion, namely high fashion, has now become a status symbol that relies heavily on its branding and aesthetic more so than any utilitarian value its designs may serve. So much of the value that these high fashion designs derive is from its rarity and accessibility to only the elite and wealthy. Accordingly, it is not too surprising that fast fashion powerhouses have copied these high fashion runway looks along with several other brand elements available to the more general public.
Fast fashion brands, i.e. Zara or Mango, have often tried emulating high fashion ad campaigns by recreating the featured garments for an exponentially lower price. For example, Celine’s ad campaign for the 2011 fall and winter collection consisted of models in a natural setting surrounded by aloe plants. Zara later emulated this in black and white during the Spring and Summer 2014 season and again during the Fall and Winter 2015 season with a minimalist focus on a model in black and white and an aloe plant.
High fashion Black & White
A few other examples of this are pictured below where Zara emulated Balenciaga’s Fall and Winter 2016 collection with its red parka and comparable styling to Lotta Volkova or a cream colored trench coat with athletic zip up wear underneath for the Burberry Fall 2016 season, which was a distinctive look for that season featuring model Chris Wu.
Balenciaga on the left and Zara on the right
The similarities between the campaigns are not entirely identical, and even if they were, there were not rigidly defined protections under the Copyright Act. Zara and other fast fashion powerhouses such as Mango and Forever 21 have a legally cognizable right to provide their own independent expressions about their fashion ideas. Accordingly, they continue to use these similarities with the intention that consumers create a psychological connection between the high fashion brand and the fast fashion brand. Fast fashion powerhouses strengthen these connections by recreating the styling, colors, and design to produce the same high fashion look elite fashion designers were inspired by without infringing logos, patents, or trademark protected designs. This leaves high fashion designers left fairly powerless and unprotected by copyright laws. This all changed with the holding of Star Athletica, L.L.C. v. Varsity Brands, Inc., which provided high fashion designers with much more expansive intellectual property protection.
Burberry coat on left and Zara coat on rightGucci on left and Mango on right
Star Athletica, LLC v. Varsity Brands, Inc.: Progress Toward Copyright Protection of Fashion Design
In March 2017, the Supreme Court established a test for determining the copyright eligibility of design elements in fashion in Star Athletica, L.L.C. v. Varsity Brands, Inc.Respondent Varsity Brands, Inc. obtained more than 200 copyright registrations for two-dimensional designs that appear on their cheerleading uniforms. Respondent employed designers who sketched design concepts of uniforms consisting of “original combinations, positionings, and arrangements of elements which include V’s (chevrons), lines, curves, stripes, angles, diagonals, inverted V’s, coloring, and shapes.” 137 S. Ct. 1002, 1007 (2017). RespondentVarsity Brands, Inc. sued Star Athletica, L.L.C., a competitor that also markets cheerleading uniforms, for copyright infringement for using 5 of Respondent’s copyrighted designs. Id. The District Court granted the petitioner summary judgment holding that designs could not be conceptually or physically separated from the uniforms, and therefore were not copyrightable designs. Id. The Sixth Circuit later reversed this and concluded that graphics “could be identified separately and were capable of existing independently” of the uniforms under 17 U.S.C. 101. Id. Specifically, they found that the graphic designs were separately identifiable because “the designs and a blank cheerleading uniform can appear ‘side by side’ and . . . are capable of existing independently.” Id. The Supreme Court found these conflicting perspectives on the separability analysis warranted certiorari to resolve this widespread disagreement over the proper separability test. Id.
Appendix to Opinion of the Supreme Court
The Supreme Court relied solely on a statutory interpretation of 17 U.S.C. 101, rather than a free-ranging interpretation of the best copyright policy for the case at hand. SeeMazer v. Stein, 347 U.S. 201 (1954). The Court looked at the “whole provisions of the law” to determine the meaning of 17 U.S.C. 101. SeeUnited States v. Heirs of Boisdore, 8 How. 113, 122 (1849). The statute provides that:
A pictorial, graphic, or sculptural feature incorporated into the design of a useful article is eligible for copyright protection if it (1) can be identified separately from, and 2) is capable of existing independently of, the utilitarian aspects of the article. 17 U.S.C. 101.
The Court focuses more on the second requirement, stating that the burden of proof for the first requirement is not that difficult to satisfy. SeeStar Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. at 1010. The Court states that the trier of fact must determine whether the separately identified feature can exist apart from the utilitarian aspects of the article. Id. This means that it has to be able to exist on its own if its imagined independent from the useful article. Id. If it cannot be imagined separately from the useful article, then it is not a pictorial graphic or sculptural feature of the article itself, but rather as part of one of the utilitarian aspects of the garment. Id.
The Copyright Act provides that the owner of the copyright can reproduce this work copies on any kind of article regardless of whether it embodies a utilitarian property. See 137 S. Ct. at 1005. The Court states that this is a mirror image of 17 U.S.C. 113(a) which protects an authorship fixed on some tangible medium that is non-utilitarian and then later applied to a utilitarian object. Id. On the other hand, 17 U.S.C. 101 protects the art that is first fixed in the medium of a useful article. Id. Accordingly, the Court holds that the copyright protection extends to pictorial, graphical, or sculptural objects regardless of whether they are affixed to utilitarian or non-utilitarian objects. Id.
The Court held that this interpretation of the statute is consistent with a past holding in the Copyright Act’s history. Id. In Mazer, the Court held that the respondents owned copyright protection for a statuette that served as the base of the lamp and it was irrelevant if can be identified as a freestanding sculpture or lamp base. Id. The Copyright Office used the Mazer holding in the modern separability test to copyright law in section 101 of the 1976 Act. Id.
Using statutory interpretation and case law, this Court held that the surface decorations on the cheerleading uniforms can be considered separate under the separability test mandated in Section 101 of the 1976 Act. See 137 S. Ct. at 1006. They reasoned that if the decorations were removed from the uniforms and affixed to another medium, they would not copy the uniform itself. Id. They analogized that just as two-dimensional fine art are aligned with the shape of the canvas on which it is painted, these decorations are aligned with the shape of the uniform itself. See 137 S. Ct. at 1012. Respondents may only prohibit the reproduction of these surface designs; however, the Court holds that they have no right to prevent others from manufacturing a cheerleading uniform identical in shape, cut, or dimensions. See 137 S. Ct. at 1006
Ultimately, the design of the uniforms satisfy the requirements of Section 101 of the 197 Act because they 1) can be perceived as a two- or three- dimensional work of art separate from the useful article; and 2) would qualify as a protectable pictorial, graphic, or sculptural work either on its own or in some other medium if imagined separately from the useful article. 137 S. Ct. at 1016. Based on this interpretation, the Supreme Court affirmed the Court of Appeal’s judgment. Id.
Now high fashion designers can turn to this holding when any aesthetic design is affixed to a utilitarian design. This holding has revolutionized high fashion designers’ intellectual property interests for their designs in the high fashion industry that is victim to fast fashion’s intellectual property theft.
New York’s first step towards rent regulation can be traced back to the 1920s.[1] The history of rent control in New York has been a battle between owners and tenants for quite some time. In general, rent controlled apartments must be in buildings of three or more units constructed on or before February 1, 1947 and tenants must have occupied their apartment since at least July 1, 1971.[2] Under rent control, the maximum rent is determined by statute, through the Maximum Base Rent formula.[3] The Maximum Base Rent formula allows a landlord to increase monthly rent charges in order to recoup the costs of owning the building.[4] In addition, hardship increases may be allowed in specific circumstances, including when there is substantial rehabilitation to the building, and to recover the cost of major capital improvements.[5] When a rent-controlled apartment becomes vacant, it is subject to rent stabilization, or, if it does not meet the requirements of rent stabilization, it is deregulated entirely. If a rent-controlled apartment becomes vacant, and the maximum legal rent exceeds $2,000.00 instead of remaining under rent stabilization, the unit is deregulated.
Under the NYC Rent Stabilization Law, rent-stabilized apartments are subject to certain statutory rent increases, including a 20% increase for a two-year lease upon vacancy.[6] In addition, rent Stabilization Law §26-504.2 [a] provides for the deregulation of rent-stabilized apartments that reach a threshold of legal regulated rent. Specifically, deregulation will apply to:
“any housing accommodation which becomes vacant on or after [April 1, 1997] and before the effective date of the rent act of 2011 and where at the time the tenant vacated such housing accommodation the legal regulated rent was two thousand dollars or more per month; or, for any housing accommodation which is or becomes vacant on or after the effective date of the rent regulation reform act of 1997 and before the effective date of the rent act of 2011, with a legal regulated rent of two thousand dollars or more per month.”[7]
Owners have been abiding by Rent Stabilization laws for years but, when Richard Altman decided to sue his owner for illegally deregulating the unit he leased in 2003 by counting the 20% rent increase allowed by statute to push his rent over the $2,000.00 threshold, uncertainty spread throughout New York. For apartments involuntarily placed under rent regulation in New York City, those regulations were removed when a vacant apartment crossed a certain rent level. However, previously unresolved in the case law was whether, in order to effect deregulation, that rent level had to be reached during the tenancy of the last tenant prior to vacancy, or could be reached through implementation of various increases allowed to owners between two actual tenancies, such as the 20%.
Initially, in 2015 the New York Appellate Division for the First Department ruled in favor of Richard Altman, holding that although the owner was entitled to a 20% rent increase for Altman’s initial lease, that increase did not serve to deregulate the apartment because the rent was not over $2,000.00 at the time the prior tenant vacated the premises. The decision by the Appellate Division caused mass uncertainty by owners and tenants who had been previously deregulated by the 20% increase. Tenants believed they had won and were ready to start filing lawsuits to return their units to rent stabilized and collect damages for over paid rent. While tenants were excited about the court’s ruling the decision left landlords in a very difficult position because they had previously followed the law by including the 20% to deregulate the apartments and were facing potentially thousands of dollars in back-pay to tenants and thousands of apartments being re-stabilized. However, the Altman decision was appealed and heard by the New York Court of Appeals.
The Final Decision
April 26, 2018 was a monumental day for landlords who were facing potential re-stabilization of thousands of previously deregulated apartments. The Court of Appeals introduced Altman with the statement that it must determine whether the 20% vacancy increase should be included in determining if the rent of a unit exceeds the $2,000.00 threshold. To tenant’s dismay, New York’s highest Court ruled in favor of the landlords allowing vacancy rent increases to be used to boost a unit’s cost over the deregulation threshold. Ultimately, the Court of Appeals ruled that the 20% increase should be considered when determining the legal regulated rent at the time of the vacancy. The decision was a massive defeat for Altman and all other tenants hoping to re-stabilize their rent. The Court of Appeals Chief Judge Janet DiFiore wrote in her decision that state law makes it clear the vacancy rent increase should be counted when figuring if any apartment has reached the deregulation threshold. “The legislative history could not be clearer and leaves no doubt that the Legislature intended to include the vacancy increase,” DiFiore wrote.[8] The unanimous ruling by the Court of Appeals prevents the unjustified re-stablization of thousands of apartments that were appropriately deregulated according to law. It also prevents thousands of deregulated tenants from receiving a windfall in the form of a rent-stabilized apartment with a below-market rent.
New York City landscape
The New York Court of Appeals decision will continue to allow landlords to deregulate units and buildings that were once rent stabilized. In a city where rent is continuing to increase and become unaffordable, rent stabilized apartments will continue to decrease. Unfortunately, for tenants seeking rent stabilized apartments there are not many left and there will not be new rent stabilized apartments appearing on the NYC real estate horizon. The endless new construction taking place all over New York will continue to make landlords deregulate apartments and drive rent prices up. Bear in mind if you are one of the lucky few living in a rent stabilized apartment, hold on to it for as long as you can. Otherwise, it will be like looking for a need in a haystack of brand-new, highly-priced, luxury apartments.
[1] Peter D. Salins & Gerard C.S. Mildner, Scarcity By Design: The Legacy ofNew York City‘s Housing Policies, 120-21, 52-53 (1992).
On June 4, 2018 the United States Supreme Court issued a decision in the controversial case, Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission. The case concerned a baker, Mr. Jack Phillips, a devout Christian, who in 2012 declined to create a wedding cake for a same-sex wedding on the basis that doing so would require him to express himself artistically in a way that was inconsistent with his religious beliefs. At the time, gay marriage was not legally recognized in Colorado. However, the state had an anti-discrimination act regarding goods and services available to the public. See C.R.S. 24-34-601. The Commission determined that Mr. Phillips violated the anti-discrimination act. On review, the Supreme Court held that the Commission violated the First Amendment’s Free Exercise Clause by egregiously treating Mr. Phillips’ case with hostility towards his religious beliefs. The Free Exercise Clause requires that states not base regulations and laws on hostility towards a religious belief, but that they remain neutral. The Supreme Court reversed the lower court’s decision stating that Mr. Phillips had been “entitled to a neutral decision-maker who would give full and fair consideration to his religious objection as he sought to assert it . . . ” Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n, 201 L.Ed.2d 35, 46 (U.S. 2018).
Jack designing cake
Critical to the effect of this decision on similar future cases is that the Court did not decide for the states the limits and boundaries between anti-discrimination and freedom of speech. Rather, the Court narrowly held that these disputes “must be resolved with tolerance, without undue disrespect to sincere religious beliefs . . . ” while avoiding “subjecting gay persons to indignities when they seek goods and services in an open market.” Id. at 50. In other words, the Supreme Court simply held that state courts must be neutral decision-makers who faithfully uphold the entire Constitution.
Nevertheless, the case was not decided without much disagreement among the nine Supreme Court Justices, despite the final 7-2 decision. With three concurring opinions (one such written and joined by two of the four liberal Justices) and one dissenting opinion, it is no wonder why the case has caused such controversy. What might cause even more shock is that Justice Kennedy, who wrote the majority opinion, also wrote the 2015 landmark decision which legalized gay marriage nationwide. Because of the different opinions, this case becomes an effective model for answering the following questions. How do Supreme Court Justices decide who writes each opinion? Why do they write concurring and dissenting opinions? What precedential value do concurring and dissenting opinions have?
The Majority Opinion is Assigned by the Chief Justice
After oral arguments, the Justices convene in a conference to express how each of them would decide the case; the conference is followed by a vote. Once the votes have been counted, the Chief Justice assigns a Justice in the majority to write the opinion of the Court or does so himself. However, if the Chief Justice is not in the majority, the most senior Justice in the majority has the authority to assign writing the opinion of the court. In Masterpiece Cakeshop, Chief Justice Roberts was a part of the majority and assigned writing the opinion of the court to Justice Kennedy. They were joined by Justices Breyer, Alito, Kagan, and Gorsuch. Often, a Justice in the majority will agree with the outcome of the case, but not with the majority’s reasoning for it. That Justice may write a concurring opinion, which can be joined by other Justices. Here, Justice Kagan filed a concurring opinion in which Justice Breyer joined. Justice Gorsuch filed another concurring opinion, joined by Justice Alito. Justice Thomas wrote an opinion concurring in the judgment, but only concurring in part as to the majority’s rationale. Any Justice who disagrees with the majority judgment can write a separate dissenting opinion. Here Justice Ginsberg, who was joined by Justice Sotomayor, filed a dissenting opinion.
Often, the opinions reference each other, each Justice arguing their reasoning in comparison to another’s. The following sections briefly describe the main points of each opinion and illustrate how the Justices agree and disagree with each other.
Majority Opinion:
Written by J. Kennedy; Joined by JJ. Roberts, Breyer, Alito, Kagan, Gorsuch
“While it is unexceptional that Colorado law can protect gay persons in acquiring products and services on the same terms and conditions as are offered to other members of the public, the law must be applied in a manner that is neutral toward religion.” Id. at 37. The commissioners made hostile comments about Mr. Phillips’ faith, casting doubt on the fairness and impartiality of the Commission’s adjudication of the case. Justice Kennedy compared this case to another where other bakers prevailed before the Commission despite refusing to create a cake for a client (because it depicted anti-gay messages, which the bakers opposed) while being willing to sell other products with a different message to the same customers. The cases are all too similar, he argues, and yet the Commission reached opposite decisions.
Concurrence:
Written by J. Kagan; Joined by J. Breyer
“[A] proper basis for distinguishing the cases was available—in fact, it was obvious.” Id. at 50. The three bakers, Justice Kagan argues, would have denied making the anti-gay cake for any customer, regardless of his religious beliefs. However, Mr. Phillips would have created a wedding cake for an opposite-sex couple, but refused to create one for the same-sex couple. Nevertheless the commission made their decision with hostility and bias.
Concurrence:
Written by J. Gorsuch; Joined by J. Alito
Pushing back against the Kagan and Ginsberg opinions, Justice Gorsuch argues that the different bakers’ cases were legally almost identical and should have resulted in the same determinations. He argues that the Commission treated them differently because they deemed Mr. Phillips’ beliefs offensive. The courts should not be deciding what is offensive. “[T]he place of secular officials isn’t to sit in judgment of religious beliefs, but only to protect their free exercise. Just as it is the ‘proudest boast of our free speech jurisprudence’ that we protect speech that we hate, it must be the proudest boast of our free exercise jurisprudence that we protect religious beliefs that we find offensive.” Id. at 55.
Concurrence:
Written by J. Thomas; Joined by J. Gorsuch Justice Thomas addresses the freedom of speech argument that Mr. Phillips made. He believes creating a custom wedding cake for a couple is “expressive conduct” and should therefore be protected by the First Amendment. “States cannot punish protected speech because some group finds it offensive, hurtful, stigmatic, unreasonable, or undignified.” Id at 65.
Dissent:
Written by J. Ginsberg; Joined by J. Sotomayor
Justice Ginsberg argues that neither the commissioners’ statements about religion nor the commission’s prior treatment of other bakers amounts to hostility towards religion. The Court’s decision is therefore unjustified. She argues that the other bakers refused to make an offensive cake because of the cake itself, but that Mr. Phillips refused to bake the wedding cake because of their sexual orientation.
Precedential Value of Concurring and Dissenting Opinions
While lower courts must follow the Supreme Court’s majority opinion (under stare decisis), there are times when a concurring opinion, and even a dissenting opinion, can influence future decisions and the development of law. Overtime, the view of the courts might therefore shift drastically.
As for the Masterpiece Cakeshop case, it will take careful consideration by lower courts of the decision as they apply it to similar cases. Courts will need to balance applying the law in a manner that is neutral towards religion while protecting people from discrimination.
It was only a matter of time before cryptocurrency [1] pervaded the music industry. The proliferation and potential applications of blockchain seem to be the perfect fit for the challenges struggling musicians face. While musicians are the creators of their art, it’s the record labels that distribute the music who tend to own the songs. It is for this reason Paul McCartney has now been fighting for 40 years for the rights to The Beatles albums.[3] As technology evolves, some crafty music executives have been devising new ways for musicians to protect and sell their songs.
Paul McCartney and Michael Jackson from 1983—before McCartney sold Jackson a significant amount of the rights to The Beatles Catalog
The Crypto Solution
Hakim Draper, cofounder of Boogie Shack Music Group, has been creating a new means for every artist in the music industry to have their very own digital currency. Boogie Shack has teamed up with Tao Network, a blockchain-based content distribution platform for the music industry, and plans to use XTO tokens (XTO = Tao Network’s abbreviation for it’s cryptocurrency) to create a unique currency for music artists. Each artist will be able to sell rights to their songs in exchange for XTO tokens.[4]
Tao Network’s Logo for their Crypto-Currency, the currency itself is also referred to as XTO
The potential for musician’s intellectual property (IP) to be converted into monetized data will serve as a direct pipeline between artists and their fans. Artists and fans may very well collaborate on songs, merchandising, and tours, meaning the level of fan involvement will directly correlate to an artist’s success. The more artists rely on other funding sources, the more of their rights they are forced to give away. This has the potential to be a great step forward for artists in the music industry assuming that the fans who support these artists using cryptocurrency will have the artist’s best interests in mind. It should also be noted that cryptocurrencies such as XTO—especially in their early phases with limited funding—are controlled by a very small number of people who could potentially thwart/control the artist. It should also be noted—even despite all the traction it has been gaining—cryptocurrency is not regulated by the SEC, so it is new ground that many are skeptical about. There has been no legal entity or other organizational form that governs and protects the ongoing developments and ensures fair decision-making for cryptocurrencies in the United States.[5]
Current Issues in the Music Industry
Most issues stem from the complexities around who “owns” a song. Ownership is critical as it secures the right to royalties for any use of the song for the owners fortunate enough to be royalty holders.[6] As we are in the year 2018, it’s not surprising that streaming has emerged as the most important source of incoming royalties representing 62% of royalty revenue in 2017 (worth about $5 billion). Record companies tend to walk away with the lion’s share of revenue, while only the most popular artists and songwriters gain relatively small sums of money relative to the popularity of their output. To put it in perspective, struggling artists have complained that a million listens on a streaming service are worth about $100 to the writer of the song once the music industry has taken its cut.[8]
Other Music Cryptos are starting to Join the Mix
There are a few blockchain-based solutions that exist for paying musicians via crypto-currency. Bitmark—a crypto startup that uses blockchain technology to enable property rights for digital assets—has partnered with Asia’s largest streaming platform KKBOX to create a mechanism for artists to see instant payments when their songs are streamed on the service.[9]
Another huge startup crypto contender in the blockchain world goes by the name of Vezt. The Los Angeles-based blockchain startup brought in its funds via initial coin offering (ICO) worth $4.7 million, which it’s planning to use to launch its royalties management platform.[10] The team at Vezt has already landed the rights to some 30 songs from music icons: Dr. Dre, Kanye West, Jay-Z, John Legend, and Drake.
The platform allows the rights holder to a song to sell their portion of the rights through an initial song offering (ISO). Artists and rights holders can then choose how much they would like to raise from a fraction of their song, set the reversion term and set a date for the ISO.[11] Rights are purchased with the tokens issued by Vezt. Musicians are paid with the funds from the crypto offering (after Vezt takes its cut), and the digital rights to the song move to the buyer’s Vezt digital wallet. The song rights information is encoded on Vezt’s blockchain, and the startup will distribute purchaser royalties and allow users to store profits on the platform.[12] It should be noted that changing those profits out of Vezt tokens and into fiat currency, or even another form of digital currency, comes with a fee of at least 5%.
Where do Music Cryptos Currently Stand?
Vezt still has a long way to go before it makes a name for itself among the ASCAPS and the BMIs. Drake and J. Cole’s, “Jodeci Freestyle” (strong verse from a younger Cole very Born Sinner) became the first song to ever be featured as an ISO as a Beta test for Vezt last November.[13] However, Drake only offered 10% of the publishing of the song, not the actual master, which means artists are still hesitant to go all in on the platform.[14]
At this stage it is an interesting idea, but one that is not likely to make a lot of money for either artists or investors in the near future until it gains some serious traction. While the current generation of musicians may not become fully acclimated with crypto currency, it is most certainly likely to only gain in popularity among the younger generations. In other words, as musicians from younger generations become pertinent, IP will be more commonly valued as monetized data. Thus, musicians and the music industry alike are looking forward to seeing how monetizing data will impact (and potentially revolutionize) the Intellectual Property industry as a whole.
[1] A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
[2] A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
The idea behind the concept of Net Neutrality arose in the early 2000s, when, inter alia, the High Tech Broadband Coalition (“HTBC”) filed comments before the Federal Communications Commission (“FCC”). At the time, the HTBC urged the FCC to “vigilantly monitor” the provision of internet services to consumers to ensure rights to access content of their choice.
Today the matter has, to a great extent, become a political battle largely drawn along ideological/party lines. Nonetheless, the issue remains an important one that should not be ignored, especially in today’s world where access to the internet is essential to daily personal and business life.
The regulations, put in place by the Obama administration in 2015, enshrined the principle of net neutrality in U.S. law. The basic tenet of Net Neutrality is that Internet Service Providers (“ISPs”), like ComCast, Spectrum or Verizon, should treat all internet traffic ‘traveling’ through their infrastructure to the end consumer in the same manner. Essentially, Net Neutrality ensures that these ISPs act as mere conduits to data that travel between the content provider/originator and the end consumer.
The argument for, and against, net neutrality
Some of the initial proponents of Net Neutrality were content providers, such as Amazon and Google, who put forward the view that regulation was needed to ensure broadband providers were not unfairly, or otherwise, prioritizing the internet. It was argued that such prioritization would lead to consumers receiving substandard service and experience, especially when the providers themselves were competing in the provision of similar services.
Since these initial days, the arguments for net neutrality has gained widespread support, amongst them from the American Civil Liberties Union (ACLU). They argue that there is no guarantee the internet will remain a free and open medium should Net Neutrality be taken away. Rather, they argue, the pursuit of profit and corporate policies, may favor the monitoring and playing favorites to what individuals see on the internet and/or the quality of their connection. There were well known instances in the past where AT&T interfered by censoring a rock star’s political speech and Comcast decreasing the quality of the internet services to those who use BitTorrent programs. The ACLU also cites to an occasion where a Canadian Wireless provider, Telus, blocked its users from accessing the website of a Labor Union that was on strike against Telus.
The repeal of Net Neutrality concerns are well-founded. In other jurisdictions, where net neutrality laws were not to the standard set forth by the Obama Administration, ISPs have been experimenting with plan offerings of piecemeal media and data offerings.
In Portugal, with no net neutrality, internet providers are starting to split the net into packages. In Portugal, mobile carrier MEO offers regular data packages, but it also offers, for €4.99 a month, 10GB “Smart Net” packages. One such package for video provides 10GB of data exclusively for YouTube, Netflix, Periscope and Twitch, while one for messaging bundles six apps including Skype, WhatsApp and FaceTime.
European example of possible aftermath of net neutrality repeal
In New Zealand, Vodafone offers a similar service: for a daily, weekly, or monthly fee, users can exempt bundles of apps from their monthly cap. A “Social Pass” offers unlimited Facebook, Instagram, Snapchat and Twitter for NZ$10 for 28 days, while a “Video Pass” gives five streaming services – including Netflix but not YouTube – for $20 a month.
However, when discussing the issue of Net Neutrality, it should not be discussed without analyzing the arguments of the ISPs outside of the political prism. The reality is the provision of internet services to data hungry consumers is an expensive endeavor. Hence, the reason why common carriers, such as telecom and now internet service providers, have been traditionally allowed a natural monopoly. High entry costs and barriers to entry meant only a few large companies are able to provide a service to the end consumers. The present composition of FCC, trying to undo (or palm off the policing of the internet to the FTC) argue that since 2015, when Neutrality regulations came into force, investment in broadband infrastructure has diminished. This in-turn, they argue, would mean areas where broadband services are unavailable or less available would fall further behind in infrastructure investments as the revenue streams for the providers are harder to come by.
Conclusion
Thus, it is clear that the debate about Net Neutrality is a serious and could decide the future of America’s superhighway. Decisions on such a wide ranging and important subject matter should be taken after careful consultations with all parties concerned and devoid of the toxic political climate. This issue, effectively, if not decided properly has the potential to adversely affect America’s edge in innovation and competition. The vote is planned for Thursday, December 14, 2017 and the net neutrality repeal proposal is expected to pass along party lines.
One thing that many new business owners don’t realize is that they should also make sure they have the right legal assistance for their business. Too often, they wait until it is too late—or when they desperately need help—before they start searching for legal support.
You need to understand that hiring a corporate lawyer early makes things easier. Having legal assistance ready at hand ensures your business is protected whenever issues arise. To hire the right legal partner, you must know what to look for when choosing the best in the field.
First and foremost, you should consider hiring a law firm with extensive experience in the corporate world. Do not simply hire the first firm you come across, especially if they lack business-related expertise.
Asking about their track record in assisting businesses is essential. This is particularly important if you plan to hire a business litigation lawyer who will represent your company in complex disputes.
The Corporate Lawyer needs to know your business
Not every corporate lawyer will have the right knowledge for your specific industry. This can create problems because the wrong advice may increase your legal risks instead of resolving them.
Therefore, you should ask questions related to your business type before deciding if a law firm is the right fit. The more they understand your operations, the better they can provide tailored legal solutions.
Compare Fees Before Hiring a Business Litigation Lawyer
Different business litigation lawyers charge different fees. Some require a monthly retainer, while others bill per case or consultation.
You should always ask about fee structures upfront and confirm whether they match your business budget. By doing so, you avoid surprises and ensure the lawyer’s services remain cost-effective for your company.
Don’t Wait Until a Legal Issue Arises
One of the biggest mistakes business owners make is waiting until they face a legal problem before hiring a corporate lawyer. At that stage, the risk of hiring someone who may not be the best fit is much higher.
The more time you give yourself to find the right law firm, the better chance you have of working with someone who offers fair pricing and strong legal expertise.
Take Your Time to Hire the Best Legal Assistance
Even if your need is urgent, you should still take the time to research before hiring a business litigation lawyer. The less effort you put into searching, the higher the chance of ending up with the wrong fit.
Don’t wait until your business is already facing issues. The sooner you begin your search and the more thorough you are, the greater the likelihood of securing the best possible legal support.
Many business owners who rush the process regret their decision later. Instead, explore different options, ask around, and check which law firms other businesses recommend.
Final Thoughts: The Importance of Hiring a Corporate Lawyer
When it comes to hiring a corporate lawyer, you must consider these important factors before choosing a law firm. Many business owners delay legal planning until they encounter a problem, but proactive hiring is always a smarter approach.
By taking your time and making a careful choice, you increase your chances of finding one of the best lawyers in town—someone who will safeguard your business from potential legal issues and provide reliable support when challenges arise.
In the rapidly changing world of Intellectual Property Law, street art protection is less commonly discussed than that of other innovative creations. Street art is somewhat ambiguous in its meaning. It is common to associate street art with the graffiti spray-painted tags on a building or subway. However, actual street art is something created with more depth. Legally, the distinction between permanent graffiti and art is permission. Street art becomes vandalism when that permission to publicly paint is not granted.[1] Because of the complexity of public art, the amount of protection warranted to street art is unclear. Graffiti law is not yet a legal practice; however, graffiti-related disputes have been stirring across the country.[2]
Unauthorized graffiti name tagging on government property is vandalism, as seen here on a NYC transit train
In a case close to home, 5Pointz graffiti curators have been wrestling with building owners over their famous murals being torn down without notice in Long Island City, New York.[3] 5Pointz, the outdoor art exhibition once praised as an international “graffiti mecca,” is undergoing construction as it transforms into two residential high-rises with luxury apartments.[4] Strikingly, the apartments will keep the 5Pointz name. The newly constructed buildings will showcase street art-style decorations in memory of the destroyed exhibit, much to the dismay of original 5Pointz artists. The building may even display replicas of 5Pointz if the artists grant permission. That may be unlikely, though, considering their adversarial stance against the building owners.
The “RIP wall” at 5Pointz in Queens, NY paid tribute to lost iconic figures, like Notorious B.I.G.
5Pointz name behind the reception desk of the new luxury apartment building
The legacy of 5Pointz began with curator Jonathan Cohen in the early 1990s.[5] Nearly three decades ago, the site was merely made up of unused artist studios. So, Cohen asked the building’s owners, Jerry and David Wilkoff, for permission to paint on the walls of the buildings.[6] After agreeing to the artist’s use, Cohen went to work and, over time, local and international artists joined him, turning the buildings into the colorful outdoor art exhibit it came to be known as over time.[7]
The 5Pointz graffiti mecca stood tall and colorful before its demolition
The building owners were issued a permit on August 21, 2013 by the City Planning Commission to convert the 5Pointz buildings into high rise apartments. On October 10, 2013, Cohen and other aerosol artists sued the owners of the buildings that housed 5Pointz to prevent their works’ destruction, asserting VARA (Visual Artists Rights Act) and common law tort claims in the Eastern District Court of New York. In the case of Cohen, et al. v. G&M Realty, L.P., the court denied the artists’ request for injunctive relief.[8] Despite the suit, the 5Pointz artwork were quickly whitewashed in one night, erasing all artwork to allegedly prevent the property from being able to claim landmark status. The artists accused the owners of deliberately whitewashing the art so rapidly in an attempt to sabotage their plan to get the building landmarked because they had already prepared over 20,000 landmark forms for submission to the Landmarks Commission that were collected during a rally several days before the destruction. The stigma behind graffiti being an act of vandalism is blurred when building owners consent to having street art on their property, and then forcefully remove it without giving the artists an opportunity to preserve their work.
Twenty-three artists had accused Jerry Wilkoff of removing the murals without giving the artists a fair opportunity to remove and preserve their work, or even the minimum notice required by law.[9] In March 31, 2017, Senior District Judge Frederic Block ruled against the real estate developers, who made a motion to dismiss the artists’ third and final complaint. Judge Bloc stated that: “For VARA, the plaintiffs would have no right to prevent 5Pointz’s destruction by its rightful and legal owner; hence, the plaintiffs’ “moral rights” to prevent another’s disposition of his property arise purely under VARA. Because the plaintiffs’ conversion and property damage claims wholly depend on the viability of their VARA claim, the Court finds them to be fully preempted.”[10] This significant legal victory for the artists is meaningful for the entire art community because the judge is allowing the case to go in front of a jury who may be more sympathetic to the wronged artists than to the real estate owners and developers.[11]
Cohen and his fellow artists asserted that their street art is protected under VARA, a federal act that grants visual artists limited rights over visual works of art they created but do not own, and thus they are entitled to monetary damages for the destruction of their visual works of art.[12] VARA offers limited protections to only visual works of art. A “work of visual art” is:
(1) a painting, drawing, print, or sculpture, existing in a single copy, in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author, or, in the case of a sculpture, in multiple cast, carved, or fabricated sculptures of 200 or fewer that are consecutively numbered by the author and bear the signature or other identifying mark of the author.[13]
Evidently, the 5Pointz street art exhibition can be classified as a visual work of art because the murals were spray painted at the site and signed by the artists, and Judge Frederic Block agreed. The developers unsuccessfully argued that the rights warranted by VARA were “narrow and inapplicable given that, while the artists are well-known, the works are not.”
The judge ruled that the evidence provided by both developers and artists on VARA claims were sufficient to allow this case before a jury. VARA states:
(a) Rights of Attribution and Integrity.—Subject to section 107 and independent of the exclusive rights provided in section 106, the author of a work of visual art—
(1) shall have the right—
(A) to claim authorship of that work…
(3) subject to the limitations set forth in section 113(d), shall have the right—
(A) to prevent any intentional distortion, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation, and any intentional distortion, mutilation, or modification of that work is a violation of that right, and
(B) to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right.
(b) Scope and Exercise of Rights.—
Only the author of a work of visual art has the rights conferred by subsection (a) in that work, whether or not the author is the copyright owner. The authors of a joint work of visual art are co-owners of the rights conferred by subsection (a) in that work.
(c) Exceptions.—
(1) The modification of a work of visual art which is a result of the passage of time or the inherent nature of the materials is not a distortion, mutilation, or other modification described in subsection (a)(3)(A).
(2) The modification of a work of visual art which is the result of conservation, or of the public presentation, including lighting and placement, of the work is not a destruction, distortion, mutilation, or other modification described in subsection (a)(3) unless the modification is caused by gross negligence.
(3) The rights described in paragraphs (1) and (2) of subsection (a) shall not apply to any reproduction, depiction, portrayal, or other use of a work in, upon, or in any connection with any item described in subparagraph (A) or (B) of the definition of “work of visual art” in section 101, and any such reproduction, depiction, portrayal, or other use of a work is not a destruction, distortion, mutilation, or other modification described in paragraph (3) of subsection (a).
(d) Duration of Rights.—
(1) With respect to works of visual art created on or after the effective date set forth in section 610(a) of the Visual Artists Rights Act of 1990, the rights conferred by subsection (a) shall endure for a term consisting of the life of the author.
(e) Transfer and Waiver.—
(1) The rights conferred by subsection (a) may not be transferred, but those rights may be waived if the author expressly agrees to such waiver in a written instrument signed by the author…[14]
Interestingly, real estate and copyright law seem to intersect where VARA applies, and so real estate owners, like those of the 5Pointz site, need to be aware of its protections. Title 17 of the United States Code, Section 106A(a)(1)(B)(3)(A) provides that the author of a visual art has the right to prevent intentional mutilation of a work, and any such mutilation is a violation of that right. Undoubtedly, the developers have violated the artists’ VARA-granted right. None of the statutory exceptions apply to the developers. The works were not naturally distorted over time or modified for improvement. Furthermore, 5Pointz comprised of original visual works based on each artist’s own perception; they were not reproductions or depictions of other works, so the third exception does not apply either. VARA grants visual artists these rights for the duration of the artist’s life, unless that right has been waived in a written instrument and signed by the artist, and there is no evidence of such waiver by the artists here.
While some perceived Judge Block’s ruling against the developers as an “unexpected turn” for the graffiti artists, it’s almost clear-cut that VARA is written in the artists’ favor. Despite the undefined realm of graffiti law, VARA is not so ambiguous as to the protections it warrants; nonetheless, it is narrowly construed. With the support of articles on 5Pointz, corporate and worldwide recognition, and “aerosol art” experts’ testimonies, it seems quite feasible that a jury will sympathize with the 5Pointz artists who, with the permission of the owners, worked on the demolished buildings. In the meantime, the art world awaits and anticipates the trial that turn out to be a landmark case for street artists in need of protection for their recognized works.
—
[1] Nicole Martinez, Street Art or Vandalism? Art Law Journal (2017).
[2] Marie-Andree Weiss, “Spray” the Word: Graffiti Law is a New Legal Niche, The 1709 Blog (2016), http://the1709blog.blogspot.com/2016/11/spray-word-graffiti-law-is-new-legal.html (last visited Aug. 4, 2017).
[3] Claire Voon, A Glimpse Inside the Street Art–Themed 5Pointz Condos, Hyperallergic (2017), https://hyperallergic.com/386244/a-glimpse-inside-the-street-art-themed-5pointz-condos (last visited Aug. 4, 2017).
[4] Corey Kilgannon, 5Pointz Graffiti Artists Whose Works Were Erased Will Get Day in Court, The New York Times (2017), https://www.nytimes.com/2017/04/09/nyregion/5pointz-graffiti-artists-whose-works-were-erased-will-get-day-in-court.html (last visited Aug. 4, 2017).
[5] Bruce Wallace, Remembering 5Pointz: A Five-Story Building That Told Plenty More, NPR (2013), http://www.npr.org/2013/11/21/246549375/remembering-5pointz-a-five-story-building-that-told-plenty-more (last visited Aug. 4, 2017).
[6] Jessica Meiselman, 5 Pointz Graffiti Artists Score Major Win in Suit against Developers, Artsy (2017), https://www.artsy.net/article/artsy-editorial-5-pointz-graffiti-artists-score-major-win-suit-developers (last visited Aug. 4, 2017).
[7] Leonard Greene, Two high-rise towers will pay homage to graffiti mecca 5Pointz, NY Daily News (2017), http://www.nydailynews.com/new-york/high-rise-towers-pay-homage-graffiti-mecca-5pointz-article-1.3207741 (last visited Aug. 4, 2017).
[8]See Cohen v. G & M Realty L.P., 988 F. Supp. 2d 212 (E.D.N.Y. 2013).
[9] Laurel Babcock & Bob Fredericks, Graffiti mecca 5 Pointz erased overnight, New York Post (2013), http://nypost.com/2013/11/19/5-pointz-graffiti-erased-in-overnight-paint-job/ (last visited Aug. 4, 2017).
[10] Cohen v. G&M REALTY LP, Case No. 13-CV-05612 (FB) (RLM) (E.D.N.Y. Mar. 31, 2017), https://scholar.google.com/scholar_case?case=13462150384806350539&q=COHEN+V.+G%26M+REALTY+L.P.&hl=en&as_sdt=3,33&as_vis=1 (last visited Aug 24, 2017).
[11] Corey Kilgannon, 5Pointz Graffiti Artists Whose Works Were Erased Will Get Day in Court, The New York Times (2017), https://www.nytimes.com/2017/04/09/nyregion/5pointz-graffiti-artists-whose-works-were-erased-will-get-day-in-court.html (last visited Aug. 4, 2017).
[12] Cohen v. G&M REALTY LP, Case No. 13-CV-05612 (FB) (RLM) (E.D.N.Y. Mar. 31, 2017), https://scholar.google.com/scholar_case?case=13462150384806350539&q=COHEN+V.+G%26M+REALTY+L.P.&hl=en&as_sdt=3,33&as_vis=1 (last visited Aug. 24, 2017).
The term e-sports is short for electronic sports and has come to be associated with describing video games competitions. Much like traditional sports, there are amateur and professional scenes for the sports in question. There are also teams and contracts, leagues, and sponsorships. However, e-sports are very early in their lifespan and thus the infrastructure is not as well developed as traditional sports in many ways. Visas, for example, are routinely denied to competitors to go to events because they do not fit the traditional definition of an athlete or businessman. Specific contracts between players and teams are kept secret with unethical strategies being used. The basic terms of these contracts also are slanted heavily in favor of the organization, with players unable to argue for better conditions. Many of these issues do not exist for traditional sports; contracts in the NFL for example are highly regulated, teams must abide by clearly defined rules, (including forced buyouts in the NBA, such as what happened to the L.A. Clippers) and rarely are athletes denied visas to compete.
This lack of infrastructure, direct precedent, and general lack of legal knowledge on both the parts of players, organizations, and to an extent the companies, is likely the cause behind all of the issues that exist in the e-sports scene. It must be stressed that there is very little scholarly research done about e-sports, even less so in legal scholarship. For many of the issues discussed in this blog post, very few have any research of any sort conducted and most of the sources will be press articles that are not peer-reviewed or under any formal scrutiny. In this sense, the issue of lack of infrastructure also extends to the scholarship itself. This blog post seeks to be an introduction to the field of exports, while highlighting some potential issues that may exist in the field regarding copyright and trademarks.
E-sports has been growing year after year in its size and has never been bigger. In terms of viewership the largest e-sports event of 2015 was the League of Legends LCS 2016 with over 43 million unique viewers and a peak of 14 million concurrent viewers worldwide. The prize-pool for the event was $6.7 million USD. The second largest event, called the International 2016, an e-sports event featuring the game DotA 2, had a peak viewership of 8 million and an $20 million USD prize pool. Championships matches for LCS and the International have filled up entire sports stadiums and smaller events still are able to occupy large convention spaces. These statistics are not very surprising in light of the fact that over 150 million Americans play video games, with more than half of all households owning some sort of dedicated games console and 40% of Americans responding that they play three hours or more of video games each week. Of course, these statistics are not directly translatable to e-sports because the study did not specify between e-sports titles and non-e-sports titles. The study for instance, did not differentiate between individuals who played video games on mobile devices (phones, tablets) as opposed to traditional gaming devices (portable, home, personal computer). Of the largest e-sports titles in terms of revenue, sponsorship, and prize money, the vast majority of them are only available on personal computer (League of Legends, DotA 2, Starcraft II, Counter-Strike Global Offensive are all personal computer exclusive games), so it stands to reason that there may not be direct correlation between the figures.
Nevertheless, the size of the e-sports industry is hard to deny, even when it is evaluated separately from the gaming industry as a whole. According to SuperData research, the e-sports industry generates around $748 million USD in sponsorships, pro-players, ticket sales, gambling, merchandising, ticket sales, and other direct revenue. This figure does not include game sales, sales of downloadable content, or microtransactions; (in game payments which can offer direct benefits ingame, most often in mobile games such as the ability to purchase extra plays in Candy Crush) it only looks at the revenue that e-sports directly generates through competitions).
Unlike traditional sports, e-sports themselves are software that some entity has copyright control over. No individual or entity owns football for instance, so theoretically one could organize a football tournament and no one could stop the tournament on the basis of the organizers not having the rights to the game. Originally, Blizzard Entertainment (the creators of Starcraft) found it more difficult to restrict Korean broadcasting of games and tournaments. When the successor to Starcraft, Starcraft 2 was released, the game could not be played without a direct connection to Blizzard, thus allowing Blizzard to control licensing more directly. This mistake has not been repeated by League of Legends, in which the game cannot be played offline and thus allowing for Riot to have complete control over the game. Interestingly enough, both Counter-Strike Global Offensive and DotA 2 can be played on local area network (allowing for non-internet multiplayer gameplay on multiple computers) and are both owned by Valve Entertainment. However, this likely ties into Valve’s business strategy with these two games, which relies heavily on community generated content and will be detailed later in the paper.
Proprietary control is very important when it comes to e-sports. Many gaming companies have learned from the mistakes of Blizzard Entertainment, who was unable to control KESPA (Korean Esports Association, which was responsible for organizing pro players, granting licenses, scheduling showtimes on Korean television, etc.) for many years and as a result did not receive a portion of the direct revenue generated from the e-sports scene for Starcraft Brood War. For the most part, now all of the largest tournaments are sponsored and funded by the companies themselves. The International is funded by Valve, LCS is funded by Riot, Starcraft II is funded by Blizzard and they sublease broadcasting rights to several different Korean companies. Nearly all of these games have their largest tournaments broadcast on Twitch.tv, an online streaming website that allows for people to watch gameplay footage in real time. Because of the primarily online distribution of e-sports content (with the exception of South Korea) this furthermore allows the companies not to have to rely on other broadcasting companies to show their tournaments. Indeed, streaming has become so lucrative that YouTube is beginning to expand their streaming capabilities for games.
(Blizzard and Kespa reaching an agreement regarding broadcasting rights)
Third party e-sports leagues are being brought into line, but instead of shutting them down they allow them to continue with a license. A great example of this happening occurred with the Super Smash Brothers community. In 2013, EVO was sent a cease and desist letter by a lawyer in Nintendo stating that they were not allowed to broadcast Super Smash Brother Melee. However, after online backlash, especially considering that Melee had been a staple at EVO for years, Nintendo reversed the decision. To this day, there are those who believe (like myself) that this decision was actually made in error, given that the decision was immediately reversed and no such decision was made before, there is a suspicion that the lawyer may simply have been new and didn’t know what he was doing. Regardless, after the EVO 2013 incident, Nintendo started to reach out to tournament organizers and sponsored them. In 2014 and 2015, Nintendo not only licensed broadcasting rights to MLG (Major League Gaming), EVO, APEX 2015 (the premier Smash tournament where all versions of the game are played) and many other leagues, but also sponsored the events, providing money, equipment, and promotion on their Twitter and Facebook pages.
(complete sponsor list for EVO 2014)
Leasing and sponsoring the tournament also had other benefits for Nintendo. A fan-made modification to Super Smash Brothers Brawl, referred to as Project M, was very popular and featured in many tournaments. However, because Project M was not a Nintendo product, not only did they not receive money from it (it was a free download, but the makers received donations) but it also created a product that could potentially compete with their products. Many users online noted that when they played Smash 4 for the first time that the game felt similar to Project M. When Nintendo began to sponsor these tournaments, Project M disappeared from the event listings in its entirety, although this cannot be definitely linked to Nintendo, it is very likely that Project M’s omission was a stipulation by Nintendo for sponsorship. In 2015, the makers of Project M would cease their development of the mod in its entirety, the reason they claim was not because they were targeted by any legal action by Nintendo but rather because they saw it as a potential hurdle in the future and wished to avoid it.
Third party leagues are becoming more valuable as well, as their production companies, industry knowledge, and connections make them very valuable to both investors and gaming companies. It also allows for the company to have more control over their e-sports presence. In 2015, ESL (Electronics Sports League) was acquired by a Swedish Media company for $87 million USD, because the company saw the worth in the future. In 2016, MLG, (Major League Gaming) was purchased by Activision-Blizzard for a rumored $46 million USD in order to better promote their esports titles (which include Starcraft, Warcraft, Call of Duty, Heroes of the Storm, Hearthstone, etc.). By absorbing the league, it is able to better control the tournament. Another example would be in how Nintendo sponsors tournaments. At these tournaments, the traditional commercial break, where an ad would be run on the streaming website (usually Twitch.tv) was instead replaced with Nintendo commercials and promotions. For example, Nintendo brought a setup of the then-unreleased game Splatoon for attendees to play a demo of at Apex 2015. Greater company involvement and control allows for greater control of the message.
A potentially interesting issue that could have a large impact on the e-sports scene is the idea of copyrighting concepts and game mechanics. It is well established in copyright law that you cannot copyright archetypes and settings, for example while you can copyright Spiderman, you cannot copyright the idea of a superhero who has spider-based powers in New York City. Although untested in the realm of video games however, it seems that this principle also applies to game mechanics.
(comparison of Dota 2 versus League of Legends)
The U.S. Copyright Office statement on this matter seems pretty succinct. The Office states that the “methods of playing a game” are unprotected according to the statement and “similar methods” may be used. (https://www.copyright.gov/fls/fl108.pdf) This is consistent with the history of several e-sports titles. An example that highlights this is the history of DotA, League of Legends, Heroes of Newerth, Heroes of the Storm, and SMITE. The original DotA was a fan modification for Warcraft III, developed by several enthusiasts. Over time, the developer split up to pursue their own projects. Guinsoo, one of the original developers, would end up creating League of Legends and Icefrog, another original developer, would be hired by Valve to create DotA 2. Heroes of Newerth was a game that had similar game mechanics as the other two and also was derived from the original DotA. With the popularity of what was then called DotA-style games arising, other companies jumped into the mix, Blizzard created a game known as Blizzard DotA, and Hi-Rez studios created SMITE. All of these games retained elements from DotA, for example leveling, three lanes, items, 5 versus 5 games, etc. However, even though these games all derived heavily from the same source and were very mechanically similar, there were very few legal problems between all of these companies.
In fact, the only lawsuit filed within the realm of DotA-style games was filed for trademark reasons, not copyright. Blizzard, the owner of Warcraft III which is the game the original DotA was derived from, claimed that Valve could not commercialize the name because it belonged to the Blizzard community and would create confusion as to if DotA 2 was a Blizzard product. The end result was that Blizzard conceded the rights to commercially use DotA to Valve while Valve conceded that non-commercial work (the original DotA for instance) could use the DotA name freely. To that end, Blizzard changed the name of their game from Blizzard Dota to Blizzard All Stars, and the final name for the game was Heroes of the Storm.
As the newest medium to express creative ideas, video games have a long ways to go before significant legal findings are made about it. And as far as e-sport goes, there will be a long time before the legal issue present within the field get any significant attention by legal scholars…certainly when more money is involved. While it is true that the entirety of e-sports revenue generated worldwide is larger than that of the NBA, the field still needs more time to expand its audience beyond those who play video games and attract those who also do not. In the meantime however, familiarizing oneself with the history and potential legal issues of e-sports will help any lawyer who wishes to get into video games related litigation in the future. Video games are the next big frontier.
Although many legal issues, especially with e-sports, will be familiar to lawyers who are otherwise unfamiliar with video games (for example, players contracts or trademark law) there are many more potential issues that are unexplored and have potentially large ramifications. Intellectual property (IP) lawyers will be at the forefront of this effort, as they are best suited for interpreting older statutes that never had video games in mind when they were written to be applied towards video games. Already there is a growing number of lawyers involved in video games, whether it is the popular Video Games Attorney who gained notoriety by helping smaller studios sue larger companies or the legal divisions of Activision-Blizzard and other large companies. Navigating this unknown frontier of IP law requires the guidance of an experienced IP attorney.
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