Court Awards Realtor Commission and Attorney’s Fees Despite Breach of Purchase Agreement

Under the Copyright Act of 1976, copyright protection “subsists in any original work of authorship fixed in any tangible medium of expression, now know or later developed, from which they can be perceived or otherwise communicated, either directly or with the aid of a machine or device.”^ The Act goes on to state that works that may receive copyright protection are not limited to script or printed material but may include “any physical rendering of the fruits of creative intellectual or aesthetic labor.”^

Throughout its history, and despite the Act’s somewhat archaic language, copyright law has proven to be adaptable enough to cover all manner of works created with new and emerging technologies. However, the traditional understanding of copyright law is being challenged by the advent of artificial intelligence (AI) and its ability to produce new creations.

The US District Court for the District of Columbia. recently ruled that works created autonomously by AI are not susceptible of copyright protection. In Thaler v. Perlmutter, Stephen Thaler appealed an administrative decision by the United States Copyright office denying his application to register the copyright for an image generated by an AI program he developed. The court’s decision examined the meaning of what it means to be an “author,” as defined by the Copyright Act and held that only works of human authorship are susceptible of copyright protection under U.S. law.*

The court compared the issue to a case from 1884 that examined whether copyright protection could extend to the then-cutting edge field of photography. In Burrow-Giles Lithographic Co. v. Sarony, it was argued that a photograph should not qualify as a protected work because it was created by a camera. The US Supreme Court disagreed and held that while a camera may generate a “mechanical reproduction” of a scene, it does so only after the photographer develops a “mental conception” of the photograph^^. The court reasoned that the technology used to create the work was immaterial so long as there was human involvement in and creative control over the work.

In a later case, the US Ninth Circuit examined a case in which a crested macaque monkey took a photograph of himself, and various parties attempted to file suit on the monkey’s behalf to confirm copyright protection for the monkey’s photograph.** While the case was decided on standing grounds, the court considered whom the Copyright Act was designed to protect and concluded that the act was designed solely to protect humans.

The Thaler court identified no authority supporting copyright protection in any work originating from a non-human.* However, the issue presented in Thaler was limited to copyright protections for a work created solely by an AI, absent any human input. Therefore, it remains to be seen how courts will address issues related to copyright protection for images that blend human and AI origins.

We stand in a new frontier in both technology and copyright law. As artists and developers increasingly use AI as a tool, the increased distance between human creativity and the final product will present challenging questions regarding how much human input is necessary to afford these creations protection under copyright law.*

References:

^17 U.S.C § 102(a)

* Thaler v. Perlmutter, No. 22-CV-01564-BAH, R. Doc. 24 (Filed 08/18/23).

^^ Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 59 (1884).

** Naruto v. Slater, 888 F.3d 418 (9^th Cir. 2018).

The owner of a strip mall retained a realtor to list available property in its shopping center. A purchase agreement was secured and set a deadline to complete the sale. When the purchaser did not complete the sale, the realtor sued the purchaser for lost commission. See Beau Box Commercial Real Estate, LLC v. Pennywise Solutions, Inc., 2019-0114 (La. App. 1 Cir. 10/23/19), 289 So. 3d 600. The case raised the issue of whether the realtor was a third-party beneficiary to the purchase agreement.

After the sale fell through, the realtor filed suit against the purchaser to recover commission for the sale of the property, attorney’s fees, and other costs. In response, the purchaser admitted to the breach of the purchase agreement but argued that the listing agent had no right to recover because it was not a party to the purchase agreement. The trial court disagreed and granted summary judgment in the realtor’s favor. The trial court held that the purchase agreement established a “stipulation pour autrui”(third-party benefit) for the realtor.

The court acknowledged that agents generally are not parties to purchase agreements. However, the language of the specific purchase agreement conferred a benefit in favor of both agents because it explicitly stated that a party defaulting on the purchase agreement “shall be liable” for realtor’s commissions, attorney’s fees, and costs incurred in the enforcement of the contract.

The court also rejected the purchaser’s second argument that it had to be “placed in default” before any cause of action could arise. In response, court found that, when a term for performance is fixed in a contract, the arrival of that term automatically puts the breaching party in default.

The result in Beau Box may be limited to its own facts. However, realtors and parties should now pay closer attention to the terms of purchase agreement, which can create benefits for non-parties to the contract.

Marty Golden has been practicing law based in Baton Rouge, Louisiana for over thirty years, concentrating in civil litigation primarily involving injuries, property damage, insurance coverage, and contract disputes. Much of his practice is defending and advising real estate agents in suits by property buyers and sellers, but Marty also defends other professionals, insurance companies, manufacturers, and business owners. Marty has a special interest in all things procedural, because they are the rules of the road for litigators and knowing them better than his opponent gives him a leg up in court.

Ina recent case involving Keogh Cox attorneys, the Eastern District of Louisiana in MichaelBrander, Jr. v. State Farm Mutual Auto. Ins. Co., Civ. A. No. 18-982(Feb. 14, 2019), 2019 WL 636423 barred testimony of substantial projectedmedical expenses because it was not based on a reliable methodology. Thisruling stands to impact many other cases where plaintiffs seek to usefar-reaching projections of a life-long need for radiofrequency ablations("RFAs") or other pain-management modalities to "board" sixand even seven-figure numbers for future medical expenses.

InDaubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), theUnited States Supreme Court recognized the trial judge as the “gatekeeper” of expertopinion testimony and held that only reliable and relevant expert opinions maybe admitted. The reliability requirement serves to keep expert opinions“outside the gate” when they constitute unsupported speculation or meresubjective belief; only scientifically valid expert opinions are allowedinside. To ascertain whether an expert opinion is scientifically valid, Daubertinstructs the trial court to consider:

∙ whether theexpert’s theory can or has been tested;

∙ whether it hasbeen subject to peer review and publication;

∙ the known orpotential rate of error when applying the theory;

∙ applicablestandards and controls; and,

∙ the degree towhich the theory has been generally accepted in the scientific community.

InBrander, the plaintiff advanced medical testimony that he would needRFAs every year of his expected lifetime, a period of 36 years. The courtdisallowed the testimony, noting that the plaintiff’s physicians had less thanten years personal experience in administering RFAs to patients, the medicalliterature only considered the effectiveness of RFAs over a span of seven toten years, and there was no showing that the 36-year treatment plan was ingeneral acceptance by the medical community. According to the court, theexpert opinions offered by plaintiff failed Daubert “on all points.” Asa result, the plaintiff was permitted to introduce testimony of future RFAs foronly a seven-year period.

The reasoning of Brander may be equally applicable to projections of lifetime treatment involving other medical procedures, such as medial branch blocks, Botox injections, or spinal cord stimulators, for which the long-term efficacy has not been firmly established in the medical literature. Opinions unsupported by personal treatment experience and peer-reviewed medical studies are not scientifically valid and are properly halted “at the gate.”

Nancy B. Gilbert is a partner with Keogh Cox in Baton Rouge, Louisiana. She is a puzzle-solver by nature, and specializes in providing clear and in-depth analysis of complex litigation issues.