Welcome back to What I’m Hearing+, where we are counting the days until the unfolding Olivia Nuzzi vs. Ryan Lizza grudge match escalates into seemingly inevitable litigation. Until then, Eriq Gardner is back with exclusive updates on the Blake Lively and Rebel Wilson legal wars, plus a Warner Discovery battle with billion-dollar implications. All yours, Eriq…

Discussed in this issue: Bryan Freedman, Alexandra Shapiro, Lewis Liman, Justin Baldoni, Blake Lively, Leah McSweeney, Andy Cohen, Rebel Wilson, Amanda Ghost, Gregor Cameron, Melissa Nathan, Camille Vasquez, Daniel Petrocelli, Carl Rinsch, Michael Jordan, Makan Delrahim, and more… Not a Puck member yet? Just click here. Got a news tip or an idea for me? Just reply to this email, text me, or message me on Signal at 310-804-3198. Let’s begin…

Eriq Gardner

Tuesday Thoughts…

Outtakes from the ballad of Blake and Justin: Have litigators Bryan Freedman and Alexandra Shapiro been studying Judge Lewis Liman’s recent rulings as preparation for their client Justin Baldoni’s battle with Blake Lively in his courtroom? Of course they have! Thumbing through Baldoni’s summary judgment motion last week, I noticed he’s leaning heavily on Liman’s ruling earlier this year in McSweeney v. Bravo. That was the case, you’ll recall, where Leah McSweeney accused the Real Housewives franchise of weaponizing her alcoholism for ratings. It seems Team Baldoni has latched on to Liman’s dismissal of McSweeney’s claim that a comment about her breast augmentation rose to the level of gender discrimination and/or established a hostile workplace, which he instead characterized as a “petty slight.”Baldoni’s team is now deploying similar reasoning, describing the director’s alleged on-set behavior during the making of the sexually charged It Ends With Us as “low-level or innocuous”—i.e., not anything that would support Lively’s sexual harassment claims. Likewise, where McSweeney had unsuccessfully tried to frame media leaks by Andy Cohen’s lawyer as unlawful retaliation, Baldoni argues that the actions of his crisis comms team—remember, they are accused of a “digital manipulation” strategy to drive negative sentiment against Lively—amounted to nothing more than defensive P.R. hygiene. With all the noise around this case, it’s easy to lose sight of the legal issues at its core. But this is where the battle lines are now being drawn.
The producers v. Rebel Wilson: Meanwhile, as the Lively case unfolds, a separate courtroom drama with some notable crossover is taking place over Rebel Wilson’s Australian musical The Deb. Co-producers Amanda Ghost and Gregor Cameron have been locked in a legal battle with Wilson—who directed and stars in the film—after a writing credit disagreement snowballed into allegations of embezzlement and sexual harassment. The fallout torpedoed the film’s prospects and triggered dueling lawsuits in L.A. Superior Court.Ghost has now amended her complaint to add publicist Melissa Nathan as a co-defendant, citing “confirmation” from filings in Lively v. Baldoni that Wilson’s P.R. team (the same group backing Baldoni) orchestrated the launch of a smear website—AmandaGhostSucks.com—that published defamatory attacks against her. Ghost’s attorney, Camille Vasquez, also represented Johnny Depp in his successful 2022 anti-defamation case against ex-wife Amber Heard. Now comes Wilson’s anti-SLAPP motion. If invoking crisis P.R. as a constitutionally protected form of “defensive” self-expression sounds inventive, just wait. While Wilson denies creating the site, she can’t deny promoting it—she amplified its content across social media. But that, Wilson’s legal team argues, is immune under Section 230 of the Communications Decency Act. The law, of course, is famous for shielding digital platforms from liability over third-party content. Wilson is now pushing a lesser-known clause stipulating that users of “interactive computer services” are likewise immune when disseminating information authored by someone else. (Think retweets.) Wilson’s lawyers want to extend the free pass to boosting industry gossip, alleging that the law protects her when she reposts venom about a rival. Seems like a stretch.
TikTok sues California: I’ve been keeping an eye on how the courts are treating the increasing intrusion of algorithms in every aspect of our lives. Last week, looking at a proposed class-action suit against Spotify, I noted that courts haven’t squarely answered whether algorithmic personalization enjoys the same level of speech protections as traditional editorial choices. Now that issue is front and center, thanks to a new lawsuit from TikTok, represented by one of Hollywood’s most well-known lawyers, Daniel Petrocelli of O’Melveny.In TikTok’s first real courtroom offensive since Treasury Secretary Scott Bessent announced last month that China had agreed to some form of U.S. ownership, the company is suing the state of California over its relatively new “Protecting Our Kids From Social Media Addiction Act” on First Amendment grounds. TikTok claims the law, which requires parental consent before minors can access personalized content feeds, unlawfully restricts both TikTok’s content-curation rights and minors’ access to information. We’ve seen age-gating battles before, mostly concerning porn sites and brought by the tech trade group NetChoice, but this one arrives under a sharper glare, amid the American public’s growing agitation over A.I. chatbots, screen addiction, and the effect of algorithmic amplification on mental health. Here’s the complaint.
Don’t blame Netflix: Quick update on Carl Rinsch, the 47 Ronin director turned defendant who had a deal for a Netflix sci-fi series and is now being prosecuted for taking $55 million and allegedly using it… not all on the show. With a fraud trial looming next month, federal prosecutors are moving to limit Rinsch’s courtroom narrative. Specifically, they don’t want him shifting blame onto Netflix.In a new motion, the government argues Rinsch should be barred from portraying Netflix as gullible or failing to do its due diligence. Cross-examination of Netflix executives, they add, shouldn’t veer into the streamer’s profligate ways or its willingness to make risky bets on projects even when the chances of completion were low. There’s even a vague reference to the streamer’s “history funding other projects.” It’s now up to the judge to determine the probative value of Netflix’s reputation for indulging visionary auteurs.
Speaking of trials on deck…: I’m particularly eager for next month’s face-off between Michael Jordan and NASCAR. (The NBA Hall of Famer’s 23XI Racing filed a federal antitrust lawsuit alleging that the organization wields its monopoly power over stock car racing to, among other things, limit compensation for its chartered teams.) It’s a rare moment when a major sports league finds itself under the antitrust microscope for deciding who gets to play and who gets benched. But don’t expect NASCAR to argue that its allegedly exclusionary tactics were justified because they fattened up the media rights pie. The judge tossed that line of reasoning, ruling that NASCAR can’t simply rebrand a revenue grab as “procompetitive.” That said, NASCAR’s broadcast deals aren’t totally off-limits. The court will allow evidence of those agreements when it comes to calculating damages, which could get interesting.

This week, Disney and YouTube TV came to a new licensing agreement. Of course they did. Now, it’s time for a hard negotiation…

WBD’s World War P

The streaming boom has been partly enabled by an underappreciated—and potentially incredibly valuable—suite of software, which suddenly has license holders and distributors racing to courthouses across the globe. The future of digital content delivery may hang in the balance. And Warner Bros. Discovery is on the front lines.

Eriq Gardner

Have you heard about the brain-melting “anti-anti-suit injunction” that Warner Bros. Discovery just won in a U.K. court? The rare and dramatic legal move was taken to gain some high ground in a shadowy patent war that will determine whether streaming platforms must pay staggering new royalties for the technologies that power modern entertainment. It’s the newest flash point in a fight that has been quietly building and only recently erupted into open conflict on the global stage. This story starts in the 1990s, when electronics giants joined forces to create the standards that made DVDs and Blu-rays interoperable to encourage broad adoption. They pooled their patents and, under the auspices of the U.N.-affiliated International Telecommunication Union, developed the “codec” software that compresses video for efficient delivery. For a while, everything was hunky-dory—innovations like 4K and HD flourished, and when disputes arose, they usually involved hardware makers and were quietly litigated in the patent-friendly backwaters of East Texas.

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Streaming changed everything. As Disney+, Netflix, HBO Max, and others became the primary content delivery systems for video, a new breed of patent holders—backed by deep-pocketed investors and operating outside the old cooperative pools—began arguing that the streamers themselves should be paying royalties for the very technologies that make their platforms possible.

Finnish phone maker Nokia led the charge. After watching its hardware empire crumble, the company turned to its portfolio of video-compression patents as a revenue stream. And after a $2 billion patent settlement with Apple in 2017, Nokia went after Hollywood with aggressive licensing demands. Its licensing chief even promised a “reckoning.” By 2022, serious negotiations between patent owners and streamers were underway. They did not go well. What followed was a global litigation blitz—from Munich to São Paulo—as codec patent owners began testing where they could win injunctions fastest. Meanwhile, in the U.S., cases like DivX’s suit against Netflix for patent infringement grind on. DivX’s argument is that Netflix owes it a slice of streaming revenue, plus more than $1 billion in damages, because the streamer is using DivX’s smoother 4K playback technology without a license. Running through much of this is the thorny issue of FRAND, short for “fair, reasonable, and non-discriminatory” licensing. When the codec standards were drafted, tech companies promised to license their patents on FRAND terms. The streamers say those commitments still apply; the patent owners—many of whom bought their portfolios later—say they don’t. FRAND, they argue, was meant for licensing device makers to decode streams, not streamers to encode them. That hairsplitting has triggered a worldwide race to the courthouse, with each side shopping for the friendliest jurisdiction. Which brings me back to WBD’s U.K. victory earlier this month. Fearing that Nokia might convince a German court to block a FRAND case elsewhere, WBD sprinted to a London judge and won an anti-anti-suit injunction. In other words, the Brits just told a Finnish multinational to not even think about asking the Germans to stop Hollywood from demanding a fair deal.

Netflix: Never Settle

As patent holders press their case that streamers and, by extension, their subscribers should shoulder more of the cost for the technologies powering modern entertainment, the platforms have started questioning whether those inventions are worth the paper they’re patented on. A steady stream of cases has sought to invalidate supposedly “innovative” features—like auto-adjusting video quality based on bandwidth—as either obvious or unoriginal. Netflix, in particular, has adopted a “never settle” posture, counterpunching even in the face of injunctions and fines.

A MESSAGE FROM OUR SPONSOR

We keep talking about the war for attention, but we’ve been getting it wrong.

The winners already know — it’s quality of attention, not quantity, that matters to consumers, brands, and the media companies that connect them.

Are you fighting the right battles in the war for attention?

Then there’s Disney, which is claiming that InterDigital, the publicly traded licensing shop whose largest shareholder is BlackRock, pulled a bait and switch—profiting off commitments once made to license on fair and reasonable terms. Disney points to 21,000 patents that InterDigital scooped up from Technicolor in 2018, when the onetime Hollywood stalwart was circling the drain. Those assets, including “standard essential patents,” are now Disney’s Exhibit A. Citing a “major risk” to its global streaming business, Disney has gone full Sherman Act, accusing InterDigital of wielding its patent trove like a monopolistic cudgel. Disney’s wish list is pure studio spectacle: a declaration that InterDigital’s codec patents are unenforceable, its licensing deals void, its FRAND obligations reaffirmed, and, for good measure, treble damages.

The Justice Department hasn’t been napping during all this, either. Curiously, Trump’s D.O.J. has come out swinging for the patent holders, telling a Delaware judge that “InterDigital’s litigation efforts to bring patent infringement claims are exempt from antitrust liability.” Perhaps that’s not so shocking, given Madisonian reverence for limited monopolies “to promote the progress of science and useful arts,” and the reasonable view that antitrust law shouldn’t be used to police FRAND commitments. That’s been the intellectual throughline of Makan Delrahim, the assistant attorney general for the D.O.J.’s Antitrust Division during Trump’s first term, who may have influenced the government’s current stance. (These days, Delrahim is chief legal officer at Paramount Skydance, which is also facing a Nokia lawsuit.) Then there’s the fact that Commerce Secretary Howard Lutnick holds more than 400 patents and has told inventors, “You have a friend at Commerce.” Meanwhile, the risk of so-called “patent holdup” looms larger as courts around the world issue injunctions and even set global royalty rates—which could open the door to something streamers dread: an innovation tax on every subscriber. Streamers I’ve spoken with are quietly gaming out how much bad precedent they can afford, especially when no one knows how many patent holders will ultimately line up for their cut. Behind the scenes, a kind of shadow pricing effort is underway to determine how much modern video delivery should cost. Who knows whether this ends in sweeping invalidations, forced licenses, or some strange new pay-per-codec regime? But if the courts make digital distribution too expensive, perhaps studios might rediscover their old love affair with theatrical. Stranger things have happened.

Thanks, Eriq. I’ll be back on Thursday.

Matt

Puck founding partner Matt Belloni takes you inside the business of Hollywood, using exclusive reporting and insight to explain the backstories on everything from Marvel movies to the streaming wars.

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