United States District Court Judge P. Kevin Castel issued an opinion on June 22, 2023, imposing sanctions and other penalties on the attorneys who relied on the artificial intelligence application, ChatGPT, in citing to fake cases in pleadings submitted to the court earlier this year.

Judge Castel’s thirty-four page opinion details the missteps of the lawyers, including filing the submission citing the fake cases, failing to withdraw the submission after opposing counsel identified the fake cases, doubling down on the existence of such cases when their validity was called into question, offering false information to the court in order to obtain an extension to a court ordered deadline, and providing “shifting and contradictory explanations” as to how and why the bogus case citations were submitted to the court.

The opinion makes clear that the real issue was the fact that the lawyers continued to mislead the court. Judge Castel wrote that, had the lawyers come clean about their actions shortly after they received the opposing parties’ brief questioning the existence of the cases, the outcome may have been different. While “poor and sloppy research” would amount to mere “objectively unreasonable” actions, the court found that the lawyers acted with subjective bad faith in violation of Federal Rule of Civil Procedure 11 based on all the subsequent failures to disclose.

Luckily for the offending attorneys, the court found that their submission of the fake opinions did not constitute a violation of 18 U.S.C. § 505. The statute states that it is a crime to knowingly forge the signature of a United States Judge or the seal of a federal court. Because the fake opinions did not include a signature or seal, the statute was not violated. But the court noted that the submission of fake opinions raises concerns with protecting the integrity of federal judicial proceedings and is an abuse of the adversary system.

Ultimately, the implicated lawyers were required to pay a penalty of $5,000 and to send letters to each individual judge falsely identified as the author of the fake opinions. Judge Castel’s opinion is a reminder that while a court may be forgiving of a lawyer’s choice to cut corners, lying to the court is still sanctionable.

Cite: Mata v. Avianca, Inc., No. 22-cv-1461, slip op. (S.D. NY. June 22, 2023).

On Tuesday, May 16, 2023, the D.C. Circuit denied in part and dismissed in part a petition for review filed by environmental groups, the Center for Biological Diversity, and the Sierra Club (collectively, “Petitioners”). Ctr. for Biological Diversity v. FERC, D.C. Cir., No. 20-01379, 5/26/2023. The petition sought a review of the Federal Energy Regulatory Commission’s (“FERC”) approval of a controversial $39 billion liquefied natural gas (“LNG”) project in Alaska.

This Alaska LNG project would build liquefaction facilities on the Kenai Peninsula to uptake gas and ready it for transportation through an 807-mile pipeline. A pipeline that can transport up to 3.9 billion cubic feet of gas daily to the plant.

According to the Petitioners, FERC’s approval of the project and its associated environmental impact statement violated the National Environmental Policy Act (“NEPA”), which requires agencies to “take a hard look at the environmental consequences before taking a major action.” Petitioners raised two central challenges to FERC’s decision: (1) the ruling erroneously failed to comply with NEPA, and (2) FERC’s substantive decision to authorize the LNG project was arbitrary and failed to satisfy the Natural Gas Act (“NGA”).

Concerning their first challenge, Petitioners asserted five arguments in support: (1) FERC failed to comply with NEPA because it inadequately considered alternatives to the LNG project; (2) FERC acted arbitrarily and contrary to law by refusing to employ the “social cost of carbon” metric to estimate the significance of the project’s direct emissions of greenhouse gases; (3) FERC failed to consider the project’s indirect greenhouse gas emissions; (4) FERC failed to adequately consider the impact of the project on the endangered Cook Inlet beluga whales; and (5) FERC’s evaluation of the project’s impacts on the wetlands was arbitrary and capricious.

The three-judge panel rejected all of the Petitioners’ arguments. First, the Court ruled it lacked jurisdiction to consider the Petitioners’ challenge regarding the “social cost of carbon” because the groups’ rehearing petition did not raise that issue. While the Petitioners discussed the social cost of carbon in their petition, they did not root their argument in the proper regulation, 40 C.F.R. § 1502.22. The panel noted the Petitioners only cited the regulation one time, in a “see, e.g.,” citation, which was not sufficient to put FERC on notice of the applicability of 40 C.F.R. § 1502.22, nor was it enough to properly raise the argument before the Circuit.

Next, the panel ruled FERC adequately considered reasonable alternatives but rejected them because they wouldn’t have furthered the project’s purpose or reduced environmental impacts. The Court also determined Petitioners’ remaining arguments failed because FERC’s decision not to consider the indirect effects of Alaska-bound gas was lawful, FERC adequately considered how noises and ship traffic might harm the endangered beluga whales, and how the construction of the liquefaction facilities could impact wetlands.

What’s more, the Court reasoned that under FERC’s delegated authority, it “‘shall issue’ authorization for LNG facilities ‘unless’ it determines doing so ‘will not be consistent with the public interest.’” Thus, FERC’s approval of the LNG project comported with the NGA because the agency concluded the project was in the public interest due to its substantial economic and commercial benefits, which outweighed any projected environmental impacts. The Circuit concluded its opinion by noting, “[i]n approving the Alaska Liquid Natural Gas Project, the Commission complied with the NGA, NEPA and the APA.” In sum, while the Petitioners “may disagree with the [FERC]’s policy choice to approve the Project, … the Commission comported with its regulatory obligations.”

When President Joe Biden expressed his concerns about children’s Internet usage during his 2023 State of the Union address, Louisiana certainly agreed with that concern. On June 8, 2023, the Louisiana legislature enrolled for Governor John Bel Edwards a bill intended to extend parental consent requirements on social media use by children under the age of 16. This bill is only one of many that have been proposed and passed by states and the federal government to restrict or limit children’s access to social media. Some of the most notable include California’s Age Appropriate Design (requiring tech companies to design applications that implement privacy by default), the Utah social media regulation amendments (requiring parental consent for users under 18, imposing a curfew for social media use, and restricting messaging abilities), and the proposed federal Protecting Kids on Social Media Act (setting a minimum age of 13 for social media). If signed, the Louisiana bill would become effective on July 1, 2024.

The bill applies only to social media companies, as it is a direct response to rising concerns about child mental health and development, cyberbullying, addiction, and data collection associated with social media platforms.  “Social media company” means a person or entity that provides a social media platform that is an interactive computer service to at least 5 million users. A “social media platform” is a public or semipublic internet-based service or application with Louisiana users that connects users for social interaction and allows users to do all of the following: (1) construct a profile for signing in and using the service; (2) create a list of other users that the user has a social or virtual connection, including subscribing to content related to other users; and (3) create content viewable to others. Certain services for K-12 schools are not considered to meet the criterion for connecting users for social interaction.

In an effort limit the applicability to just the large social media companies, the bill lists 21 exceptions to the definition “social media platform.” The services included in that list are services where the predominant or exclusive function are:

  • Email.
  • A service that does not allow minors to use the platform and uses commercially reasonable age assurance mechanisms to prevent minors from becoming a user.
  • Streaming services that only provides media to end users.
  • News, sports, entertainment, or other non-user generated content providers where any user interaction is limited to commenting on the service provided content.
  • Online shopping where the only user interaction is limited to uploading items for sale or submitting product reviews.
  • Interactive or virtual gaming where the user-provided content and communication is for the purpose of the gaming, educational entertainment, or associated entertainment.
  • Photographic editing services where interaction is limited to liking or commenting.
  • Sufficiently moderated single purpose community groups for public safety.
  • Business-to-business software, teleconferencing services, and technical support.
  • Cloud computing services, including cloud storage and shared document collaboration.
  • Academic, scholarly, or genealogical research.
  • Internet access and broadband service.
  • Classified advertising services with limited user interaction.
  • Services used under the direction of an educational entity where the majority of content is provider-created or posted and the ability to interact is directly related to the provider’s content.

If an online service does qualify as a social media platform that is not subject to these exceptions, then the social media company must obtain express parental consent for a minor to use its services. “Minor” is any person under the age of 16 that is not emancipated or married. Express parental consent has been a requirement since 2000 for websites directed towards children under the age of 13 through the Children’s Online Privacy Protection Act (COPPA). The Louisiana bill will extend that requirement to children under 16 for the social media companies, regardless of whether they are directed at children.

The bill does offer several methods to obtain express parental consent but allows for “any other commercially reasonable method” to allow for changes in technology. Methods include a form the parent can mail in or sign, a telephone number to call in consent, video conferencing to confirm consent, collecting the parent’s ID and then deleting it after verification, and responding to an email and taking additional steps to verify the parent’s identity (known as the “email plus” method). Interestingly, some of the methods listed in the bill are methods that the Federal Trade Commission has said are not sufficient for age verification under COPPA. Namely, the “email plus” method is only acceptable under COPPA if the child’s information is only used internally and will not be disclosed to others. The Department of Justice may develop additional rules for age verification and parental consent.

The social media platform must also offer the consenting parent additional controls over their child’s use of the services by enabling account supervision functionality. This function must allow a parent to view the minor accounts’ privacy settings, set daily time limits for the service, schedule breaks, and offer the minor the option to notify their parents when reporting a person or issue. The bill is silent on whether the account supervision will be turned off once the user is 16.

The social media platform must also curtail the way they use data collected from users under 16. First, the social media platform must prohibit adults from direct messaging a minor unless the minor is already connected to the adult on the service. This requirement is similar to one imposed by the FTC in a consent judgment against Meta. Second, the social media company cannot base advertising to the minor on any personal information other than age and location. Last, the social media company cannot collect or use the minor’s personal information from posts, content, messages, or usage activities for reasons beyond what is necessary for the original reason it was collected or disclosed.

Enforcement is solely by the division of public protection of the Department of Justice, and no private right of action is available. However, any person can submit a complaint to the division. Penalties for non-compliance can be an administrative fine of up to $2,500 per violation, injunctions, forfeiture of any profits, damages to the aggrieved person, and any other relief the court considers reasonable and necessary. The bill does provide for a 45-day cure period for violators to cure the violation before enforcement. Any money collected by the division for violations are to be used for consumer protection and education purposes.

With this bill, Louisiana joins a growing collection of states acting to effectively raise COPPA applicability for social media companies. Whether the efforts will be effective in limiting problematic social media use for children remains to be seen, but the bill provides for an annual reporting requirement on its effectiveness. Considering the FTC heavy focus on children’s privacy (accompanied by heavy fines), social media use by children will continue being strictly scrutinized.

Images from Opinion of the Supreme Court of the United States.

On June 8, 2023, the United States Supreme Court unanimously ruled in favor of Jack Daniel’s in the case of Jack Daniel’s Properties, Inc. v. VIP Products LLC, 599 U.S. ___ (2023). The case arose from Jack Daniel’s complaint about VIP’s sale of a dog toy designed to resemble a bottle of Jack Daniel’s whiskey. As shown below, there is no question that the VIP bottle is designed to resemble the Jack Daniel’s bottle, although several of the notable components are modified for comedic purposes.  For example, “Jack Daniel’s” is replaced with “Bad Spaniels”, and references to Old No. 7, is replaced with a numeric nod to dog excrement.

Jack Daniel’s sent a cease and desist letter to VIP shortly after the product launched. VIP filed suit, seeking a declaratory judgment that Bad Spaniels neither infringed nor diluted the Jack Daniel’s brand. Jack Daniel’s countersued, and the District Court initially ruled in favor of Jack Daniel’s, finding both infringement and dilution by tarnishment.

The 9th Circuit reversed on appeal. Finding that the design of the Bad Spaniels bottle was an “expressive work” parodying the elements of the Jack Daniel’s bottle for non-commercial purposes, the 9th Circuit held that the District Court erred in not applying the threshold First Amendment test derived from Rogers v Grimaldi, 875 F. 2d 994, 999 (2nd Cir. 1989). The goal of the Rogers test is to limit the application of the Lanham Act to expressive works where “the public interest in avoiding consumer confusion outweighs the public interest in free expression.” Under the Rogers test, the use of another’s mark in an expressive work will not be actionable under the Lanham Act unless it “has no artistic relevance to the underlying work whatsoever, or if it has some artistic relevance, unless [it] explicitly misleads as to the source or content of the work.” These factors are not a rigid test to be applied mechanically, but instead a balancing test that recognizes that the trademark rights of the senior user and the public’s right to not be confused must be carefully weighed against the artistic license granted to the junior user. The 9th Circuit remanded the dispute to the District Court to review in light of the Rogers test, where the District Court found that Jack Daniel’s could not prove the VIP product had no artistic relevance nor that the product was explicitly misleading.  The 9th Circuit affirmed the ruling, and the Supreme Court granted certiorari.

In a 9-0 opinion drafted by Justice Elena Kagan, the Supreme Court reversed the 9th Circuit’s holding. The Supreme Court criticized the 9th Circuit’s opinion that “because Bad Spaniels ‘communicates a humorous message,’ it is automatically entitled to Rogers’ protection.” The Court noted that applying Rogers to all matters where there is an expressive element would impermissibly extend Rogers to nearly all facets of life and potentially supplant the purpose of trademark law.  The Court explained that trademarks act “as source identifiers—as things that function to ‘indicate the source’ of goods, and so to ‘distinguish’ them from ones ‘manufactured or sold by others.’ And because of this, “trademarks are often expressive, in any number of ways.”

The opinion stresses that the defendant’s use must be considered in determining the applicability of the Rogers test. Citing to a litany of cases, the Court noted that the Rogers test has traditionally been used only in the context of “non-trademark” use, i.e., where the defendant has used the mark at issue in a “non-source-identifying way”, typically in an expressive function. For example, as noted by J. Kagan, the Ninth Circuit applied the Rogers test to evaluate the band Aqua’s song “Barbie Girl” when toymaker Mattel sued the group for trademark infringement. Here, the record presented evidence—including even VIP’s own admission—that VIP used the design elements as a source identifier for its products. As such, the Rogers test should not have been applied. 

The Court further reversed the 9th Circuit’s ruling as to the “fair use” defense related to dilution by tarnishment. The 9th Circuit opined that VIP’s use of the mark was non-commercial in nature even if it was used to sell a product because it “parodies” and “conveys a humorous message.” Without setting the limits of “noncommercial use”, the Court expressly rejected the opinion that every parody or humorous commentary would automatically benefit from this defense. Instead, the Court again turned to the purpose of the use as codified in Section 43 of the Lanham Act, finding that the defense does not apply when the use is as a designation of source for the person’s own goods or services, as VIP had admitted its use to be. 

In summation, the Court held as follows and remanded the case for further proceedings consistent therewith:

Today’s opinion is narrow. We do not decide whether the Rogers test is ever appropriate, or how far the “noncommercial use” exclusion goes. On infringement, we hold only that Rogers does not apply when the challenged use of a mark is as a mark. On dilution, we hold only that the noncommercial exclusion does not shield parody or other commentary when its use of a mark is similarly source-identifying. It is no coincidence that both our holdings turn on whether the use of a mark is serving a source-designation function. The Lanham Act makes that fact crucial, in its effort to ensure that consumers can tell where goods come from.

As the opinion notes, the Court did not make any decisions as to whether VIP actually infringed Jack Daniel’s trademark rights. That decision will be in the Ninth Circuit’s hands, who are ordered to review the dispute without using the Rogers test. Jack Daniel’s must still demonstrate that VIP’s products are likely to confuse an ordinary consumer as to the affiliation between VIP and Jack Daniel’s and dilute Jack Daniel’s brand, although such was already determined when the matter was first heard by the District Court. This case will likely be watched closely by famous brands who often find their brands parodied in unrelated products, as they seek to prevent any damage to their brand image.

We also note that this is the second case within the past month where the Supreme Court reined in a fair-use defense in the context of the nature of the use. In Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. ___ (2023), which we discussed here, the Supreme Court declined to extend fair use to the Andy Warhol Foundations’ licensing of a Warhol print that was based on a photograph of Prince. In that case, the Court focused on the economical use and purpose of the original photograph. The Supreme Court is clearly sending a message that fair use will continue to be fact intensive to the specific issue at hand and that the specific use of the contested material is a crucial focus point. 

With the revamp of the residential short-term rental regulations passed recently, the New Orleans City Council has turned its attention to commercial short-term rental (“CSTR”) regulations.  The City Council has asked the City Planning Commission (“CPC”) to study the regulations to determine the overall impact of CSTRs on the City’s neighborhoods.  In particular, the CPC is to analyze the overall impact of CSTRs on the availability of both affordable and market-rate housing and make recommendations on possible solutions to mitigate CSTR impacts on citizens’ quality of life.  Areas for analysis include:

  1. Limitation on number of units per building;
  2. Limitation on number of rooms and guests, by unit;
  3. Other density limitations, which may vary by zoning district, zoning district classification, future land use designation, or other such land use designation;
  4. Number of commercial permits allowed per owner and/or operator;
  5. Requirement that each permit holder is a natural person, not a juridical person;
  6. Strengthened requirements, including density limitations and other new standards, for CSTRs that 1) abut residential or mixed-use zoning districts, and/or 2) are located in the building that also houses long-term residents, so as to mitigate quality-of-life impacts;
  7. A ban on whole home or whole building CSTRs;
  8. A requirement for CSTRs to be located on the same lot, parcel, or building as other commercial uses;
  9. Possible use of CSTR allowances to incentivize the development and/or preservation of affordable housing;
  10. In buildings with units used for both long-term and short-term housing, requiring separate entrances to access short-term dwelling units;
  11. Requiring other standards for entry, including keypads;
  12. Requiring on-site operators; and
  13. Overall impact of CSTRs on the availability of long-term housing, both affordable and market rate, and possible measures to mitigate such impacts, including but not limited to, an overall cap on persons or permits who may participate in the commercial short-term rental market, and increasing the price of a commercial short-term rental owner and/or operator permit.

At the CPC’s public hearing on the topic, there were comments for and against strengthening the current CSTR regulations.  Those in favor of strengthening the regulations argued that CSTRs are affecting New Orleans residents’ quality of life due to CSTRs creating nuisances such as increased noise, parking, and litter.  They also argued that CSTRs replace affordable housing and hotels.  Those against strengthening the current CSTR regulations argue that CSTRs foster other commercial growth in neighborhoods in need of redevelopment and CSTRs could be used as a mechanism to require affordable housing development as a component of approval of CSTRs.  There will be another public hearing before the City Planning Commission with the revised study to be introduced by August 23, 2023, which will be open to public comment in person or by email.  In the meantime, there is still an Interim Zoning District in effect that prohibits the issuance of new CSTR licenses in certain zoning districts.  Those licensees that currently hold licenses should be grandfathered in absent legislation that would phase out CSTRs.

On May 1, 2023, the U.S. Supreme Court granted certiorari to Loper Bright Enterprises v. Raimondo [1] – a D.C. Circuit decision that upheld agency deference under Chevron v. Natural Resources Defense Council. [2] Chevron has stood for nearly 40 years on the principle that agencies should be armed with the flexibility to craft regulations with a higher level of specificity than the enabling statute. But prior decisions and recent dicta of the Supreme Court point to a drastic reduction in agency deference, if not a complete reversal of Chevron.

In Loper, a group of commercial fishing companies challenged a rule promulgated by the National Marine Fisheries Service that requires fishing vessels to be accompanied by a paid regulatory compliance monitor. The rule is based on a provision of the Magnuson-Stevens Act, which states that federal regulators have the authority to place “observers” on fishermen’s boats. But the Act is silent on who should pay for the costs of the observers. The D.C. circuit found in a 2-1 opinion that although the statute is ambiguous, the agency’s interpretation of the statute to require the fisher cover the cost of the observer was ‘reasonable’ under Chevron.

Agency decisions are generally reviewed under the “arbitrary and capricious” standard, which in effect allows an agency to apply its own construction of the enabling statute unless the construction is unreasonable. Chevron instructs that courts analyze cases involving an agency’s interpretation of a statute using a two-step analysis:

The Supreme Court granted cert to the fisher petitioners on two grounds:

  • “Whether the Court should overrule Chevron or
  • Whether the Court should at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.”

Accordingly, the Court could do away with the framework all together and allow courts to apply general principles of statutory construction without considering the reasonableness of the agency’s decision. The Court could also more narrowly hold that Chevron deference should not apply in some instances. Either way, it seems likely that there will be a change to the way courts are directed to review agency action under an ambiguous or silent enabling statute.

States, including Louisiana, have adopted the Chevron deference framework. Thus, if the Chevron framework is disturbed, states would be left to grapple with their own methods of reviewing agency decisions.

Loper is the latest development in a series of cases that the Court has considered agency deference. The Court most recently addressed agency deference in West Virginia v. EPA [3] in 2022. In that case, the Court found that the EPA did not have authority under Section 111(d) of the Clean Air Act to promulgate emissions caps.  The Court in West Virginia utilized the “Major Questions Doctrine,” which provides that an agency must point to “clear congressional authorization” in “extraordinary cases” where the “history and the breadth of the authority that [the agency] has asserted,” and the “economic and political significance” of that assertion, provide a “reason to hesitate” before concluding that Congress meant to confer an agency with authority. [4]

Based on that ruling and dicta from the Court, it seems likely that the Court will side with the fisherman petitioners to at least limit agency deference under Chevron.

The case will be considered during the next term beginning in October 2023, with a decision expected sometime in 2024 near the conclusion of the term. Kean Miller will continue to monitor the case for developments.

[1] https://www.scotusblog.com/case-files/cases/loper-bright-enterprises-v-raimondo/

[2] Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).

[3] W. Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587 (2022).

[4] Id. at 2595.

When award-winning photographer Lynn Goldsmith snapped a portrait of the artist formerly known as Prince for Newsweek in 1981, she could not have predicted the cultural and legal impact the pop legend’s portrait would have. In 1984, Vanity Fair sought to license the photograph for an “artist reference” in a story about the musician. Goldsmith agreed to license a one-time use of the photograph with full attribution. Vanity Fair commissioned Andy Warhol to create a silkscreen using Goldsmith’s image and used Warhol’s piece in the magazine with attribution as promised. However, Andy Warhol would go on to create 15 additional works using the Goldsmith photograph, now known as the artist’s “Prince Series.” Although Warhol created the Prince Series nearly forty years ago and three years prior to Warhol’s death, it was not until 2016 when Condé Nast featured the “Orange Prince,” one of Warhol’s silkscreen prints, as part of its tribute to Prince’s passing that Goldsmith learned of the additional reproductions. Condé Nast paid the Andy Warhol Foundation for the Visual Arts, Inc. (“AWF”) $10,000 for the license, while Goldsmith received neither a license fee nor a source credit.

Upon failure to resolve the matter privately, AWF filed suit against Goldsmith, seeking a declaratory judgment that Warhol’s works did not infringe Goldsmith’s copyright in the original photograph, or, in the alternative, Warhol’s works constituted fair use of the subject photograph.[1] The Southern District of New York granted summary judgment to AWF on its claim of fair use, but the Second Circuit Court of Appeals reversed.

The Copyright Act motivates creativity by granting the author of an original creative work rights to reproduce their work, prepare derivatives works, and (in the case of pictorial or graphic works) display the copyrighted works publicly. This ownership interest in the creative work is balanced with the general public’s need to access the creative arts and exercise First Amendment rights. The fair use doctrine (the basis of AWF’s copyright infringement defense) allows use of a copyrighted work by persons other than the author for “purposes such as criticism, comment, news reporting, teaching . . ., scholarship, or research”[2] and is evaluated through multiple factors. On petition for writ of certiorari, AWF asked the Supreme Court to evaluate whether the Condé Nast licenses are fair use based on just the first fair use factor, “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”[3] On this issue, the Supreme Court agreed with the Second Circuit that the first factor of fair use favored Goldsmith. Because AWF did not dispute that the remaining fair use factors favored Goldsmith, the Court affirmed the Second Circuit’s finding of copyright infringement.

The first factor of fair use considers the nature of and reasons for a copier’s use of an original work.[4] “The larger the difference, the more likely the . . . factor weighs in favor of fair use. The smaller the difference, the less likely.”[5] When the original and the copy share a similar purpose, there is a concern that the copy will substitute for the original. Because the copyright owner has the exclusive right to prepare derivative works of their original—that is, recasts, transformations, or adaptations of the original work—the copy must be substantially transformative to have a different purpose or character than the original and that degree of transformation must also be balanced against any commercial nature of the use.

AWF argued that the Prince Series is sufficiently transformative of Goldsmith’s original photograph because the artworks convey a different meaning or message than her photograph. Yet, because the first use factor focuses on the degree in which the infringing use has a different purpose or character, the Court ultimately sided with Goldsmith. The majority found that AWF’s licensing of the “Orange Prince” copy to Condé Nast is not a substantially different purpose than Goldsmith’s photograph. Goldsmith took the original photograph and licensed it to Newsweek for use in an article about Prince, and then similarly licensed the work to Vanity Fair in association with an article about Prince. AWF licensed the “Orange Prince” to Condé Nast for an article about Prince. “As portraits of Prince used to depict Prince in magazine stories about Prince, the original photograph and AWF’s copying use of it share substantially the same purpose,” wrote Justice Sonia Sotomayor for the majority.

The majority opinion stresses that its opinion is limited to AWF’s license to Condé Nast: “Only . . . AWF’s commercial licensing of ‘Orange Prince’ to Condé Nast, is alleged to be infringing. We limit our analysis accordingly. In particular, the Court expresses no opinion as to the creation, display, or sale of any of the original Prince Series works.”[6] A concurrence written by Justice Neil Gorsuch (joined by Justice Ketanji Brown Jackson) further argued that the subsequent use (AWF’s licensing to Condé Nast) is the relevant inquiry rather than considering the original copier’s (Andy Warhol) intent in creating the “Orange Prince.” Conversely, Justice Elena Kagan’s (joined by Justice John Robert’s) condemnatory dissent sharply criticized the majority’s purported failure to appreciate how Warhol’s work differed from Goldsmith’s photograph. The dissent specifically cited to the Court’s decision just over two years ago in Google LLC v. Oracle America, Inc., where Warhol’s works were deemed the “perfect exemplar of a ‘copying use that adds something new and different.’”[7] The majority opinion dismisses the dissent as “a false equivalence between AWF’s commercial licensing and Warhol’s original creation” which results in “a series of misstatements and exaggerations, from the dissent’s very first sentence.”[8]

Most often in fair use inquiries, the dispute focuses on a copier’s use of the copyrighted work. It is not often a court is presented with the issue of a third party’s independent use (that is, use without the involvement of the copy’s creator) of the subsequent work. The majority opinion is narrow and focuses on one specific fair use factor in the context of one specific use. The Court’s decision cautions that the motivations behind the third party’s use must be considered on their own merit, rather than allowing the use and motivations of the original work to automatically transfer to the third party’s use.

Significant also to the finding of infringement is that the remaining fair use factors—including the fourth factor, “the effect of the use upon the potential market for or value of the copyrighted work”—was admitted to favor Goldsmith. In fact, that is precisely what occurred in this matter. Throughout her career, Goldsmith regularly photographed celebrities and licensed those photographs to magazines for articles about that celebrity. Condé Nast needed a picture of Prince for its 2016 memorial article about Prince, and it licensed the “Orange Prince” from AWF instead of Goldsmith’s photograph. This use “served the same essential purpose of depicting Prince in a magazine commemorating his life and career.”[9]

Despite the pains made by the majority to limit the opinion’s reach, this decision will likely have significant ramifications for the art world, particularly art markets and licensing. While here the original artist’s use itself is unaddressed, the decision may temper a creator’s ability to market new creative works that incorporate copyrighted works. The fair use doctrine’s intent is to protect use of copyrighted works in particular contexts and has particular importance in artistic criticism and parody. Though a creator may still be able to express themselves artistically using the copyrighted work, finding a gallery or dealer willing to accept the work may prove more challenging. For those willing to accept the work, expect strong warranties and artist indemnification contract clauses.

Read the Supreme Court’s opinion here.

Special thanks to William Wildman, Loyola University New Orleans College of Law, Class of 2023, for his assistance in the researching and drafting of this post.

[1] See Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 382 F.Supp. 3d 312 (S.D. N.Y. 2019).

[2] 17 U.S.C. § 107.

[3] Id.

[4] Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. ___ (2023).

[5] Id.

[6] Id. at ____ (slip op. 21).

[7] Id. at ____ (dissent op. 2).

[8] Id. at ____ (slip op. 22, n. 10).

[9] Id. at ___ (slip op. 23, n. 11).

In this part two of our discussion of the foreclosure process on commercial real estate in Louisiana, we are demystifying the procedures involved in executory process foreclosures in Louisiana. While Louisiana does not allow non-judicial foreclosure options for creditors, it does provide a streamlined judicial process known as executory process foreclosure, allowing a creditor to get to a sale of the property within 75-120 days of filing the petition, in most instances.

For a creditor to utilize executory process under Louisiana law, it must possess certain loan documents. Specifically, the mortgage must contain a confession of judgment of the indebtedness and must be in authentic form (i.e., executed before a notary and two witnesses). Additionally, subject to a few exceptions, the creditor must have the original promissory note or other evidence of debt that is secured by the mortgaged property. If the borrower is a legal entity, such as a corporation or limited liability company, the creditor must have (or locate) a proper written authorization for the individual who executed the documents to act for the borrower entity.

After the preparatory work has been done, an executory process foreclosure lawsuit begins with the filing of a verified petition that includes the original note, authorization, and a certified copy of the mortgage as attachments. The petition is processed on an expedited basis and an order directing the sheriff to seize and sell the property can be issued in a matter of days. The parish clerk of court will issue a writ of seizure and sale that directs the sheriff to seize and sell the property at issue to satisfy, in whole or part, the creditor’s debt.

The sheriff’s office will constructively seize the property by filing a notice in the parish property records and will proceed to advertise and sell the property. Notice of the sale must be provided to all individuals and entities who may have an interest in the property. Many sheriff’s offices will ask the creditor to assist in cancelling any liens and encumbrances that should not remain on the property prior to the sheriff’s sale and/or prior to any deed being issued.

Many seizing creditors decide to sell the property with appraisal, which will preserve any deficiency rights against the debtor and any guarantors post-sale. This requires both the creditor and debtor to provide an appraisal of the property to the sheriff’s office. Should any party fail to appoint an appraiser, the sheriff’s office will appoint one on their behalf. The bidding at the sheriff’s sale will open at two-thirds (2/3) of the appraisal value of the property for a sale done “with appraisal.”

At the sale, the creditor is allowed to “credit bid” up to the amount of its debt, which amount will be provided by the creditor prior to the sale date. Should the creditor be the winning bidder for the property, the creditor will be required to pay a 3% commission to the Sheriff in cash, plus certain fees and costs of the sale, as well as any unpaid property taxes. Should a third party be the winning bidder, the sheriff’s commission and fees, as well as any unpaid taxes, will be deducted from the sale proceeds prior to a check being issued to the creditor.

If there are no bidders at the sale, the creditor may ask the sheriff’s office to reset the property for sale. At a second sale of the property, the opening bid will start at the sheriff’s costs and fees instead of at two-thirds (2/3) of appraised value.

An attorney experienced with Louisiana’s executory process foreclosure laws and procedures will be able to help a creditor determine if foreclosure via executory process is possible. Kean Miller works with lenders, servicers, and law firms from across the country on workouts, foreclosures, dation en paiement (read “deed in lieu”), note sales, and commercial bankruptcy cases. We would be glad to talk with you about how we may be able to help with your distressed credit situation.

Artificial Intelligence (AI) is a rapidly growing field that has the potential to revolutionize many aspects of our lives. One area where AI has already made significant inroads is in content creation. With the help of AI-powered writing assistants, businesses and individuals can generate high-quality content with minimal effort. However, there are legal concerns associated with using AI to generate content, like this blog article, which was created in part through the assistance of ChatSonic AI.

One of the primary legal concerns is related to copyright – both in terms of protecting the work generated and the concern of infringing someone else’s work. Copyright law protects original works of authorship, including literary works like blog articles. When an AI program generates a blog article, it is unclear who owns the copyright. Is it the person who programmed the AI, the AI itself, or the person who uses the AI to generate the content? This is a complex legal issue that has yet to be fully resolved. Currently, US law does not allow for copyright protection on works created solely by AI. This prohibition is currently being challenged in US Courts and will undoubtedly make its way through the appeals process over the next few years. Patent law has about a year’s head start on this issue, but the decisions have not been pro-AI. In 2022, the Federal Circuit ruled that computer programs cannot qualify as inventors under the US Patent Act. Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022). It stands to reason that if a computer program cannot invent, it also cannot create a work of authorship. The owner of the AI software in Thaler recently filed a petition for a writ of certiorari asking the Supreme Court to review the Federal Circuit’s ruling. Interestingly, the same individual and computer program are behind the leading test case on the copyright side as well. But neither of these cases deals with the scenario where the AI is a co-inventor or, like this article, a co-author with a human. As such, we will not have definitive answers on ownership and protection of AI-generated works for years to come. 

Many are concerned with the potential for plagiarism. In the legal context, however, plagiarism is more properly referred to as “copyright infringement.” While AI writing assistants may be designed to generate original content, there is still a risk that the AI could inadvertently produce content that is substantially similar to existing work. This could result in accusations of plagiarism, causing reputational harm, or liability for infringement. “I didn’t know” is not likely to be a viable defense in such a claim. Most forms of infringement are strict liability torts, meaning that the owner of the infringed work does not need to prove the infringer’s intent or knowledge of infringement. Rather, the infringer’s knowledge and intent really only determine if enhanced damages may be assessed against the infringer. As such, using AI carries intrinsic risk because the user often has no way to determine the source of information or to check that the content is truly original. 

Liabilities may also arise from the publication of inaccurate information. If an AI-generated blog article contains inaccurate, misleading, or even defamatory information, who is responsible? US law does not currently allow suits against computer programs as they are neither natural nor juridical persons (i.e., entities). Furthermore, the use of AI software is typically conditioned upon the acceptance of license terms, which often pass the liability for content onto the end user of the software. In all likelihood, the poster of the content will be liable, at least under a negligence theory. 

To mitigate these legal concerns, it is important to take certain precautions when using AI to generate blog articles. First and foremost, it is essential to ensure that the AI writing assistant being used is reliable and produces high-quality, original content. It is also important to properly credit any sources used in the content generated by the AI. Another important step is to have a clear agreement in place that specifies ownership of the content generated by the AI. This can help avoid any disputes over copyright ownership down the line. It is also a good idea to have a disclaimer on any AI-generated content that clarifies that an AI program generated the content and that the user is responsible for verifying the accuracy of the information presented. Those looking for an example may look at the last line of this article. 

In conclusion, while AI-powered writing assistants can be a valuable tool for generating high-quality blog content, legal concerns must be considered. Copyright, plagiarism, and liability are all potential issues that must be addressed to ensure that the use of AI in content creation is legal and ethical. By taking the appropriate precautions, however, it is possible to harness the power of AI to create compelling and engaging blog articles while also protecting your legal interests.

Disclaimer: To be clear, this article was generated using the assistance of an AI program. A human has reviewed, revised, supplemented, and rewritten parts of this content. By doing so, an article that may have otherwise taken an hour and a half to write took about 45 minutes. Nevertheless, as with all blog articles, the reader is responsible for verifying the information presented and should not rely upon this article as providing any legal advice. 

Artificial Intelligence (AI) is trending. It can be found in our cars, our smartphones, our search engines, and even in our homes. 

AI is also profoundly disrupting major industries and professions. In more recent years, AI infiltrated the legal services industry and is now poised to fundamentally alter the practice of law. But AI will not drive lawyers to extinction. 

Instead, it will become an essential tool that we must embrace and learn to use in order to provide optimal representation to our clients. Put differently, AI will only eliminate the need for lawyers who are unprepared or unwilling to use it.

There are two types of AI, hard and soft. Hard AI includes machines thinking like humans. Soft AI, on the other hand, involves training machines to do work that humans would ordinarily perform. In the case of soft AI, the machines are not thinking like humans but rather include a process through which the computers can complete tasks and learn as they go. Within the broader category of AI, there is also Machine Learning (ML) and Deep Learning. The primary aim of ML is to allow computers to learn automatically without human intervention. While Deep Learning, a smaller subset of ML, allows computers to independently classify images, generate automatic handwriting, colorize black and white images, or add sound to silent movies.  

Importantly, AI is already assisting the legal services industry in several key respects. Legal research has been at the forefront of incorporating AI into the legal practice. 

Legal research tools rely upon user-generated search terms and parameters to allow lawyers to search legal rulings and statutes across multiple jurisdictions in a matter of minutes. 

Some publishing companies offer enhanced features that employ AI to evaluate written briefs in order to assess the strengths and weaknesses of the arguments made, identify gaps in the underlying research, and predict the potential outcomes of these submissions. 

Thus, AI has gone beyond merely finding and categorizing results to providing a predictive analysis.

AI has been employed with Electronic-Discovery (E-Discovery) for years, and its use in this arena is now well-established. E-discovery software allows lawyers to use specific search terms and parameters to quickly scan and retrieve relevant, responsive, and non-privileged information for a case. Existing AI can also organize and summarize these documents to allow easy access.

Most law firms have abandoned paper files in favor of electronic files. Document management software, a simpler form of AI, allows lawyers to code, organize, store, and search documents, all while protecting confidentiality and privilege.

More recently, AI has been deployed in expertise automation, which involves accumulating legal knowledge into software that clients and lawyers alike can use to assist in particular legal disputes. For example, software has been developed that can assist individuals in drafting wills or partitioning property through divorce or other proceedings. User input is required for expertise automation, but this AI facilitates access to legal services for those who would not otherwise have the resources to retain an attorney.

Most applications of AI in the legal profession require the input, management, and oversight of attorneys. That is because the majority of widespread AI technologies produce data-based solutions to specific problems. The future of AI in the legal profession will include more automated services, such as preparing initial drafts of contracts or legal briefs. But it is important to understand that there are practical limitations to the use of AI and, hence, its ability to fully automate the need for lawyers. AI cannot replicate or replace the need for human judgment, empathy, creativity, and adaptability. For example, AI cannot present a compelling case to a jury. Nor can AI replicate creative, persuasive writing required in appellate briefs.  

So far, large language model-based systems, such as ChatGPT, have shown flaws in their ability to delve into creative writing. AI does not perfectly replicate human thought processes and, as a result, can generate bizarre or sometimes false results. As one legal scholar noted, ChatGPT found a legal authority that was on all-fours with what was requested. The problem, however, was that the case did not exist in real life. (See Spoehel, Jay “Will AI replace lawyers? Two legal experts weigh in”, Fox Business: https://www.foxbusiness.com/technology/artificial-intelligence-replace-lawyers-two-legal-experts-weigh-in).

Additionally, because AI draws upon existing data, there are practical limitations to its efficacy. Existing data may be tainted by bias, thereby skewing the results. Furthermore, the rules of law and precedent are not as steadfast as computer coding, and AI may not accurately or quickly adapt to these changes. 

Nonetheless, law practices must embrace these technological advances and be prepared to deploy them to further their clients’ interests and goals.

In 2012, the American Bar Association added a comment to the rule governing an attorney’s obligation to provide “competent representation to a client” that espoused the notion that the attorney must understand “the benefits and risks associated with relevant technology….” While the scope of this is ever-changing, it is easy to anticipate the inclusion of relevant AI technologies in the not-too-distant future. 

When it comes to AI, however, the ABA model rules do not mandate that lawyers become computer coders. Instead, lawyers will need a working knowledge and understanding of the available AI tools. Lawyers will need to be able to know which tools will best meet their clients’ needs and, more importantly, understand how to use those tools. The savvy lawyer will know what queries to run, how best to construct them, and how to evaluate and structure the results in order to devise a cohesive action item or argument on behalf of their client. AI will not, in the end, render the legal profession obsolete but will drive to extinction those professionals who refuse to embrace it.