Loan Outs in Limbo

The California EDD, the state agency that administers unemployment, has informed multiple entertainment payroll companies that cast and crew working on productions under the common “loan out” method have been misclassified. The EDD contends that many of those working under a loan out agreement should have been classified as employees, with productions paying them directly and withholding taxes from payment.

Loan outs are prevalent in the entertainment industry, with many department heads, actors, and other using them. Loan outs allow workers to own their own company, pay themselves through it, and “loan out” their services to productions. While this can benefit the productions, the primary purpose is allowing the worker to write-off their business expenses, including owned equipment, advertising, and agency fees.

The scope of the EDD’s objections are not yet clear, and the payroll houses, as well as the major guilds, are asking for clarification. It’s unclear whether the EDD is targeting specific instances of loan outs, or if this is the harbinger of a larger ruling. The Franchise Tax Board and other relevant agencies have not yet weighed in either.

This is a story that is likely to change quickly, but the Law Firm of Dillon McCarthy is monitoring the situation and what it will mean for clients.

Personality Rights in the Age of AI

This week Scarlett Johansson threatened legal action against OpenAI, the company behind ChatGPT. She contends that they asked her to provide voice samples to create a voice for ChatGPT. When she refused, OpenAI created a number of different voices that ChatGPT can use, hiring other actors and synthesizing an AI voice from their vocal samples. One of those voices, Sky, has no been taken down while OpenAI considers their next steps. She wasn’t the only one to note that the voice sounded a lot like her, drawing comparisons to her performance as an AI in the 2013 film Her.

But that doesn’t automatically mean that Johansson has a case. This is another example of how artificial intelligence has upended intellectual property, and how current law is being contorted to fit into a new framework in lieu of new legislation.

If none of Johansson’s actual performances were used, she would primarily rely on personality rights to bring an action. Personality rights exist at the largely at the state level, and not every state protects them. But California, where both OpenAI and Johansson reside, has some of the strongest protections. Personality rights protect the commercial use of one’s likeness, including identifiable features like one’s voice. If a company makes it seem like a celebrity has endorsed their product by using images or voice clips from that celebrity, they’ve likely violated their personality rights.

Personality rights extend to fake or impersonated voices as well. In Midler v. Ford, the Ninth Circuit found that Ford violated Bette Midler’s personality rights by hiring an impersonator to mimic her singing voice in a series of commercials. But here, OpenAI didn’t push claims that Johansson endorsed their product, and insisted it was not her voice. Even if they did make the voice sound like her performance in Her, it’s unclear whether this constitutes a violation of her personality rights. Personality rights never anticipated the speaking voice of an AI.

AI is changing the frontier of entertainment and intellectual property law. In doing so, it’s opening up new legal arguments that the courts will need to wrestle with.

Public Domain Day 2024

It’s the annual Public Domain Day: the day that a bunch of older works enter the public domain. This year, works published in 1928 enter the public domain. There’s no way around it: this year is completely about Mickey Mouse. Steamboat Willie, the first widely available appearance of Mickey Mouse, has fallen into the public domain.

But steer carefully. Only a very specific depiction of Mickey has fallen into the public domain.

This is a significant moment because not long ago Disney spent a lot of lobbying effort and money to avoid it. The Copyright Term Extension Act in 1998 was heavily supported by Disney specifically to avoid Mickey Mouse’s depiction in Steamboat Willie from falling into the public domain. They weren’t the only ones involved, but they were the most prominent proponent of the extension.

Other works have enter the public domain as well, including classic literary works like Lady Chatterley’s Lover and All Quiet on the Western Front. It also includes some of the finest examples of silent film in The Man Who Laughs and The Passion of Joan of Arc.

But one needs to be careful using Mickey Mouse in their own works, as Disney still has newer versions and uses of the character protected. Only the earliest Mickey Mouse of Steamboat Willie fame is in the public domain. Any newer depictions, including his gloves and newer design elements, remain copyrighted. To complicate things, Disney has a trademark on Mickey Mouse, meaning one cannot slap him on merchandise if that leads a consumer into believing the merchandise was made by Disney.

But what one can do is distribute Steamboat Willie and make new art that depicts the characters in that fashion. Just make sure those Steamboat sequels don’t include modern Mickey, and get legal advice before selling specific merchandise.

Happy New Year and Happy Public Domain Day from the Law Firm of Dillon McCarthy!