Incarcerated Entm't, LLC v. CNBC LLC

331 F. Supp. 3d 352
CourtDistrict Court, D. Delaware
DecidedAugust 2, 2018
DocketCivil Action No. 18-480
StatusPublished
Cited by5 cases

This text of 331 F. Supp. 3d 352 (Incarcerated Entm't, LLC v. CNBC LLC) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Incarcerated Entm't, LLC v. CNBC LLC, 331 F. Supp. 3d 352 (D. Del. 2018).

Opinion

KEARNEY, District Judge

A television network advertising a show purporting to describe the "true" story of disputed historical events must be careful to not misrepresent the specifics of its show so as to mislead the consumer concerning its product. Summarizing an argument or opinion offered within the show is different than a statement made about a show as a product such as its length, characters or producers. When the advertisement represents the show as the "true story" of disputed historical events as specifically stated in the show and is motivated by significant economic benefits, it is commercial speech subject to the Lanham Act. The viewer can agree or disagree with the speaker's theories after viewing the show. But we cannot find the advertisement summarizing a theory expressed in the show is false and misleading advertising violating the Lanham Act. We grant the television networks' and producer's *356motion to dismiss the Lanham Act unfair competition claim in the accompanying Order.

I. Alleged Facts

Eighteen year old Efraim Diveroli owned a defense contracting business, AEY, Inc. specializing in arms, ammunition trading, and bidding on small United States defense contracts.1 AEY supplied the United States weapons and munitions under more than 100 government contracts.2 In 2007, the United States bid out a "massive contract" to arm the Afghan army and its related police forces to fight the Taliban and Al Qaeda.3 The United States chose AEY over more established contractors like Northrop Grumman and Lockheed Martin to fulfill the $298M weapons and munitions contract.4

In 2008, the United States suspended AEY's contracts believing AEY violated arms embargos by obtaining ammunition from China.5 A federal grand jury indicted Mr. Diveroli on fraud charges and he plead guilty to conspiracy.6 Mr. Diveroli served a forty-eight-month sentence.7

While incarcerated, Mr. Diveroli wrote a memoir entitled "Once a Gun Runner ..." describing his experience as a "gun runner."8 Mr. Diveroli wrote the first draft in January 2012 and completed the memoir in June 2014.9 In February 2014, Mr. Diveroli began marketing the rights to his life story.10 Mr. Diveroli registered his manuscript with the United States Copyright Office.11 Incarcerated Entertainment, LLC owns the copyright registrations by assignment.12 Incarcerated also owns Mr. Diveroli's other copyright registrations including photographs of Mr. Diveroli, dating back to his early childhood, and Mr. Diveroli's life story.13

In August 2016, Warner Bros. Pictures released, distributed, and promoted a film entitled War Dogs. Warner Bros. promoted the War Dogs film as being based on Mr. Diveroli's life story, specifically Mr. Diveroli's experience as a government contractor supplying weapons and munitions to the United States. It allegedly did very well in ticket sales.

Beginning in December 2016, Incarcerated discussed producing and distributing a documentary based on Mr. Diveroli's life story in his memoir.14

In January 2017, in its made-for-television crime series American Greed , CNBC broadcasted an episode entitled "The Real 'War Dogs' " which similarly focused on Mr. Diveroli's experience as a government contractor.15 The "Real" in the episode title appears to draw a contrast with the 2016 War Dogs film. Kurtis Productions, Ltd. produced this episode for CNBC and *357NBCUniversal.16 CNBC promoted American Greed as a "shocking true crime series [that] examines the dark side of the American dream" and "tak[ing] you deep inside shocking true stories of brazen con artists who thrive on stealing fortunes, ruining and even taking lives."17

CNBC also broadcasted a video advertisement for the "The Real 'War Dogs' " American Greed episode.18 The advertisement contains a video clip from an interview included in the episode with a comment Mr. Diveroli got rich selling "bad ammunition while people the same age as him are taking the sacrifices. Despicable."19

II. Analysis

Incarcerated sues CNBC, Kurtis Productions, NBCUniversal Media, LLC, Hulu, LLC, Google, LLC, Apple, Inc., and Amazon.com, Inc. under the Copyright Act of 1976 and the Lanham Act. While the Lanham Act focuses on protecting the general public by prohibiting the deceptive and misleading use of trademarks, the Act reaches beyond trademark infringement.20 The Act also prohibits unfair competition through false or misleading advertisements of goods and services.21 The Act protects the general public from two types of unfair competition: (1) using false and misleading words, symbols, or representations of fact which cause confusion in the marketplace as to the association or affiliation between different persons or products; and (2) using false and misleading words, symbols, or representations of fact in an advertisement or promotion misrepresenting the nature, qualities, or origin of goods or services.22

Today we focus on Incarcerated's claims CNBC, Kurtis, and NBCUniversal violated the Lanham Act by making false statements in their advertisements for the American Greed episode "The Real 'War Dogs.' "

CNBC, Kurtis, and NBCUniversal move to dismiss Incarcerated's unfair competition claim under the Act.23 They *358argue Incarcerated fails to plead the American Greed advertisement is false. They argue the advertisement accurately represents the American Greed episode and therefore does not include an actionable false statement under the Act. They argue the statements in the advertisement are pulled directly from an expressive work (the television show) and therefore the advertisement is protected under the First Amendment. They argue Incarcerated is attempting to assert a quasi-defamation claim by challenging the factual accuracy of the episode through an improper attack of the advertisement under the Act.

Incarcerated responds the advertisement representing American Greed presents Mr. Diveroli's true story is false. Incarcerated claims Mr. Diveroli's memoir presents Mr. Diveroli's true story. As an example of a false representation in American Greed about Mr. Diveroli's life story, Incarcerated cites to a statement in an advertisement about Mr. Diveroli selling "bad ammunition" to the United States. Incarcerated asserts Mr. Diveroli did not sell bad ammunition to the United States. Incarcerated claims consumers who want to learn Mr. Diveroli's true story are likely to watch American Greed , instead of purchasing Mr. Diveroli's memoir. Incarcerated concedes if the advertisement claimed the American Greed episode is "based on a true story," its claim under the Act would not be viable.

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Bluebook (online)
331 F. Supp. 3d 352, Counsel Stack Legal Research, https://law.counselstack.com/opinion/incarcerated-entmt-llc-v-cnbc-llc-ded-2018.