GIFs and the NFL: IP Considerations

Originally published by Heather Holmes.

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On Sunday, NRG Stadium in Houston will host more than 70,000 football fans for Super Bowl LI. Pre-game events have already drawn thousands of people to the city. Those attending the big game will pay up to $6,000 per ticket, but the millions of viewers watching from home will, arguably, have a much better seat. The vantage point of your sofa will give you many perks: commentary, replays, fun commercials, and better food to name a few. Many fans will capture game video with the hopes of turning a fantastic play or a memorable touchdown celebration into a GIF for all the world to see on Facebook, Twitter, and Tumblr. For its part, the NFL strongly discourages the use of its images, so for those of you hoping to create the next viral meme, let the law be your guide.

The NFL is notoriously protective of its brand. All text, images, photographs, video, audio, and graphics are tightly controlled, and any use of the NFL’s content must comply with the NFL.com Terms and Conditions Agreement. Nonetheless, ripping images or video from television broadcasts is a popular way to create the GIFs and other graphic memes that fill our news feeds, and football replays are some of the most widely shared.

When news outlets use GIFs to enhance a story, they often rely on the fair use defense, but legal experts question the plausibility of such claims. Ricardo Bilton, Staff Writer at Digiday.com, describes the legal murkiness of sports highlight GIFs, saying that fair use may not apply. When publishers rip video highlights and repost them unaltered online, those content providers reap the benefits of increased ad revenue. However, as the popular websites, Deadspin and SB Nation, found out, fair use has its limits, and legislation such as the Digital Millennium Copyright Act can be invoked to support claims of copyright infringement.

Those who appropriate content without paying the rebroadcasting fees that sports leagues, including the NFL, typically require must be careful. As long as the new content is “derivative of the original and does not create economic competition for copyright holders,”  the NFL will evaluate it on a case-by-case basis.

As for the armchair quarterback and amateur image manipulator, the same rules apply. Remixing and repurposing content to parody or critique your favorite plays of the game follows the spirit of fair use. Unless the NFL sends you a takedown notice, your GIF of the game-winning catch, modified for new utility and meaning with no intent to profit, is probably safe. May the best GIFs go viral and may the best team win.

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Update on Passport Revocation, Denial or Limitation for Seriously Delinquent Tax Debts (2/1/17)

Originally published by Jack Townsend.

A new article has good information on the state of § 7345, here, dealing with potential State Department denial, revocation or limitation of use of the U.S. passport. Jim Buttonow, Ten things you need to know about passport restrictions on delinquent taxpayers (TaxProToday 1/31/17), here.  I previously wrote on the subject, New Transportation Bill, FAST, Adds Some Tax Provisions (Federal Tax Crimes Blog 12/7/15; 2/27/16), here, but I strongly recommend the TaxProToday article.
I offer some excerpts for new information since my blog, but encourage readers to read the entire article:

4. What will happen to the person who owes seriously delinquent tax debt? 

Starting in late March, the IRS will send Letter 508C, Notice of certification of your seriously delinquent federal tax debt to the State Department, to the taxpayer’s last-known address to notify the taxpayer that they are certified as owing seriously delinquent tax debt. At that time, the IRS will also send the certification to the State Department. 

* * * * 

6. Can taxpayers just pay the balance to under $50,000 to remove the certification and passport restrictions? 

The short answer from the IRS is no. Just reducing the amount under $50,000 will not decertify the taxpayer. The key is to get into good standing – that is, individuals certified as having seriously delinquent tax debt must either pay the entire balance or set up a payment agreement with the IRS. 

Two quick collection alternatives come to mind. First, the quickest way to remove passport restrictions could be paying the balance to under $50,000 and setting up a streamlined installment agreement for the rest (payment terms up to 72 months).
Second, taxpayers who owe between $50,000 and $100,000 can use the new IRS expedited installment agreement process to quickly get in good standing with the IRS. Taxpayers who owe more than $100,000 can pay the balance down to under that amount to get into this special 84-month payment plan. Otherwise, taxpayers who owe more than $100,000 or need terms longer than 84 months must file detailed collection information statements (Form 433 series) with the IRS and wait for the IRS to approve their installment agreement. This process can take months, which will also mean extended passport restrictions until the IRS approves the agreement and decertifies the taxpayer. 

7. Can taxpayers appeal their seriously delinquent tax debt certification? 

Under Section 7345(e), taxpayers can appeal their status in federal district court or U.S. Tax Court. But the taxpayers’ passports will remain restricted while they appeal.
Expect further legislative and administrative remedies to allow taxpayers to contest their status at the same time they learn about passport restrictions. One reason we should see these additional remedies is the uncertainty of international mail. Many taxpayers may not be receiving IRS letters about their unpaid taxes. In fact, they may first find out about their passport restrictions when they try to travel to another country or return to the United States. A 2015 Treasury Inspector General for Tax Administration study reported that the IRS had no idea whether U.S. taxpayers living abroad had received the 855,000 notices it sent. 

For taxpayers who are surprised by their passport restrictions when they try to travel, the best way to expedite travel is to obtain a quick installment agreement. 

8. What if taxpayers don’t think they owe the tax? 

Here, taxpayers are in a pickle, because time is of the essence. For example, if the IRS assessed tax on an unfiled return (that is, the IRS filed a return for the taxpayer, called a substitute for return), or through a completed audit or underreporter inquiry, there’s not much the taxpayer can do to quickly contest the tax assessment and remove the seriously delinquent tax debt certification. Filing an original return or contesting the tax through IRS administrative options or courts may take a long time. 

To get immediate relief, the only quick option is for taxpayers to pay the balance, or more likely, set up an installment agreement, and contest the tax later with the IRS.
Again, recent IRS changes to installment agreements for people who owe between $50,000 and $100,000 may also help. These rules streamline the process to set up an installment agreement and would help cut down on the wait time to get passport restrictions lifted. 

* * * * 

Next steps for taxpayers affected by passport restrictions 

Owing taxes without being in an arrangement with the IRS to pay them has bad consequences for any taxpayer. That’s why all taxpayers, regardless of passport restrictions, should arrange to pay their unpaid balances. 

Starting in March, taxpayers who think that they may be subject to passport restrictions because of tax debt can call the National Passport Information Center at (877) 487-2778.
And taxpayers who want to avoid or remove passport restrictions should contact a tax professional or call the IRS to set up an agreement on their balances right away: (855) 519-4965 for domestic calls, (267) 941-1004 for international calls.

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IRS LB&I “Campaigns” to Focus on OVDP Declines-Withdrawals, Among Other Issues (2/1/17)

Originally published by Jack Townsend.

The IRS has announced that LB&I “is taking a new approach to tax compliance, with a series of 13 campaigns aimed at cracking down on tax evasion.”  Michael Cohn, IRS rolls out new compliance campaigns for large businesses and international taxpayers (AccountingToday 1/31/17), here.  The campaigns are directed to several issues of tax compliance that the IRS will focus on.  The article lists them all, but the one particularly relevant to the subjects previously covered on Federal Tax Crimes Blog is:

• OVDP Declines-Withdrawals Campaign 

The Offshore Voluntary Disclosure Program allows U.S. taxpayers to voluntarily resolve past non-compliance related to unreported offshore income and failure to file foreign information returns. The campaign addresses OVDP applicants who applied for pre-clearance into the program but were either denied access to OVDP or withdrew from the program of their own accord. The IRS will address continued noncompliance through a variety of treatment streams including examination.

The article has the other categories, so interested readers should go there.

The article notes in concluding:

These campaigns represent the first wave of LB&I’s issue-based compliance work. The IRS said more campaigns will continue to be identified, approved and launched in the coming months. 

JAT Comment:  I am not sure what this adds to the current process.  I had only two OVDP submissions that were  not completed — one denied and one withdrawn.  Both were audited with good results — in the denied case, ended up with same result as OVDP (which is what we wanted in the first place) and the other got a great result (which we anticipated in withdrawing).  So my limited anecdotal experience is that the IRS was attending to this category anyway.  But, perhaps the IRS had fallen behind or some were slipping through the cracks.

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Fifth Circuit Affirms Order Denying Arbitration in Ponzi Scheme Case

Originally published by Beth Graham.

The United States Court of Appeals for the Fifth Circuit has affirmed a district court’s order denying a motion to compel arbitration that was filed by a group of former Ponzi scheme employees.  In Janvey v. Alguire, et al., No. 14-10857, Cons. w/Nos. 14-10945, 14-11014, 14-11093, (5^th Cir. January 31, 2017), R. Allen Stanford created a massive Ponzi scheme using a large network of interconnected companies and a bank that were collectively known as the Stanford Group.  Over the course of 10 years, the Stanford Group apparently brought in more than $7 billion in investments.

In 2009, the Securities and Exchange Commission brought suit against the Stanford Group and froze all of its assets.  Stanford was later imprisoned after pleading guilty to numerous federal charges related to the Ponzi scheme. In addition, a Receiver was appointed by the Northern District of Texas to unwind the Ponzi scheme and preserve and recover company assets that were conveyed through fraudulent transactions.

The Receiver filed suit against several former Stanford Group employees in an effort to recover about $215 million in allegedly inflated salary payments, bonuses, commissions, and forgiven loans.  In response to the Receiver’s lawsuit, the employees filed a motion to compel the dispute to arbitration based on agreements the workers signed with various companies that were part of the Stanford Group.  The district court denied the employees’ motion because the Receiver’s claims were brought on behalf of third-party creditors who were not a signatory to the contracts between the workers and the Stanford Group.

Meanwhile, the Fifth Circuit held in a related case that the Receiver had “standing to assert only the claims of the entities in receivership, and not the claims of the entities’ investor-creditors.”  Janvey v. Democratic Senatorial Campaign Committee, Inc. (DSCC II), 712 F.3d 185 (5th Cir. 2013). As a result, the appellate court also vacated the Northern District of Texas’ order denying the employees’ motion to compel arbitration and remanded the case.

On remand, the district court once again denied the workers’ motion to compel arbitration.  According to the court, the Receiver was obligated “to sue on behalf of the Company, which was party to the arbitration agreements,” he permissibly “rejected the arbitration agreements,” and “arbitration of the Receiver’s claims would conflict with the central purposes and objectives of the federal equity receivership statutory scheme.”  The employees then filed an interlocutory appeal with the nation’s Fifth Circuit.

First, the Court of Appeals addressed the Receiver’s claim “that he is free to bring his TUFTA claims on behalf of any of the Stanford entities and that, by bringing the claims on behalf of the Bank, which was not a signatory to the arbitration agreements (except for the agreement with Giusti), he is not bound by the arbitration agreements.”  The court stated:

If the corporations retain identities distinct from Stanford himself, as “separate legal entities with rights and duties,” it logically follows that they are distinct from one another. Scholes, 56 F.3d at 754. Now that Stanford no longer controls the Bank and the Company for the benefit of an integrated criminal scheme, the Bank and the Company are separate actors. The Receiver, appointed by the court to represent all of the Stanford entities, may bring his claim on behalf of whichever of the entities he chooses, provided that the entity has a claim against the defendant in question.

The court then dismissed the employees’ alter ego, equitable estoppel, and third-party beneficiary arguments before concluding:

Because the Receiver may sue on behalf of any of the Stanford entities that has a claim against the defendants, because he has chosen to sue on behalf of the Bank, which has not consented to arbitrate claims against any of the defendants, except Giusti, and because none of the equitable doctrines urged by the defendants applies, the Receiver cannot be compelled to arbitrate his claims against these defendants.

We also conclude, though on different grounds, that the Receiver cannot be compelled to arbitrate its claims against Giusti, who did enter into an agreement to arbitrate with the Bank. A party who has entered into an agreement to arbitrate must insist on this right, lest it be waived. “Under this circuit’s precedent, a party waives its right to arbitrate if it (1) substantially invokes the judicial process and (2) thereby causes detriment or prejudice to the other party.” Al Rushaid v. Nat’l Oilwell Varco, Inc., 757 F.3d 416, 421 (5th Cir. 2014) (internal quotation marks omitted). While waiver should not be inferred lightly, we conclude that Giusti’s conduct in this case clears the waiver threshold.

Ultimately, the Fifth Circuit Court of Appeals affirmed the district court’s order denying the former Stanford Group employees’ motion to compel arbitration.

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No arbitration in Stanford cases

Originally published by David Coale.

The receiver of the Allen Stanford businesses sued several investors for receiving fraudulent conveyances. In earlier appeals, the Fifth Circuit resolved other thresehold issues in these cases; in Janvey v. Alguire, the Court reviewed the denials of the defendants’ motions to compel arbitration. It affirmed, rejecting their arguments based on arbitration clauses in various Stanford-related documents: “Because the Receiver may sue on behalf of any of the Stanford entities that has a claim against the defendants, becausehe has chosen to sue on behalf of the Bank, which has not consented to arbitrate claims against any of the defendants [except for one, who waived the issue], and because none of the equitable doctrines urged by the defendants applies, the Receiver cannot be compelled to arbitate his claims against these defendants.” No. 14-10945 et al. (Jan. 31, 2017).

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Texas Bar Journal must-reads for February

Originally published by Jillian Beck.

The Texas Bar Journal’s February issue provides practical tips for law practice management. Check out our editorial staff’s must-read picks below, and of course, Memorials, Disciplinary Actions, and Movers and Shakers.

Starting Out
What to consider before launching your own firm.
By Dirk Jordan

Making It Work
Effective law practice management for small to mid-sized firms.
By Joan Jenkins

President’s Opinion: The Uniform You’re Wearing
By Frank Stevenson

In Recess: Born to Drive
A Fort Worth attorney speeds past the competition.
Interview by Jillian Beck and Lindsay Stafford Mader

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Texas Courts Structure and Statistics…

Originally published by Roger G Jain & Associates, P.C..

The existing Texas court system was established by an amendment to the state Constitution in 1891.  Below is a description of the basic hierarchal structure of the court system.

 

• Supreme Court: The Texas Supreme Court is the highest state appellate court for civil cases. The Supreme Court is made up of nine judges, referred to as “justices,” who review the decisions of lower courts.
• Court of Criminal Appeals: The Texas Court of Criminal Appeals is the highest state appellate court for criminal cases. The Court of Criminal Appeals consist of nine justices who review criminal decisions made by lower courts, post-conviction habeas corpus petitions, and criminal cases involving the death penalty.
• Courts of Appeals: Texas has 14 Courts of Appeals that hear both civil and criminal cases on appeal from the trial courts. Each of the Court of Appeals has at least three justices.  There is currently a Court of Appeals in each of the following cities:  Amarillo, Austin, Beaumont, Corpus Christi/Edinburg, Dallas, Eastland, El Paso, Fort Worth, San Antonio, Texarkana, Tyler, Waco, and two courts in Houston.
• Trial Courts: There are several levels of trial courts in Texas that have jurisdiction over different types of cases. The Government Code provides for courts in different counties to have slightly different jurisdiction, but each type of court generally hears the items listed below.
  • District Courts: There are 507 Districts Courts that serve as the trial courts of general jurisdiction. Generally speaking, District Courts hear felony criminal cases and misdemeanors involving official misconduct; divorces; slander or defamation; contested elections; disputes over land titles or enforcement of liens on land; and suits on behalf of the State for penalties, forfeitures and escheat.
  • Constitutional County Courts: The state Constitution provides for a county court in each of the 254 counties in Texas. Constitutional County Courts have jurisdiction over civil cases not exceeding $10,000 in damages, as well as uncontested probate matters.     
  • Statutory County Courts: Statutory County Courts were created by the Texas Legislature to increase judicial efficiency. These courts have overlapping concurrent jurisdiction with Constitutional County Courts and District Courts where the amount in controversy does not exceed $200,000. More specifically, Statutory County Courts hear workers’ compensation appeals, eminent domain cases, probate and family law matters.
  • Probate Courts: Probate Courts were also created by the Texas Legislature to specifically handle probate proceedings. Not all counties utilize statutory Probate Courts, however, this court will have original jurisdiction of probate matters if such a court does exist in that county.

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