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A New Year’s Eve advertising sleight-of-hand has resulted in litigation between the Atlanta-based owners of a landmark Times Square building and CBS Broadcasting Inc. The problem: couch potatoes who stayed home on New Year’s Eve flipping channels saw a depiction of Times Square that didn’t exist if they were watching a CBS affiliate. They saw a building called One Times Square, from which the glittering New Year’s ball drops each year, emblazoned with the CBS logo. Revelers braving the chill in Times Square, however, saw something very different: ads for NBC, Budweiser and Panasonic. When CBS noticed that anchorman Dan Rather would be broadcasting from a location that would show the Times Square NBC logo, they used digital technology to make it appear to viewers that the building had a giant CBS logo. That digital fix became the subject of dozens of news articles and discussions about CBS’ ethics. Now it’s also a legal issue. Earlier this month, Atlanta-based OTS Signs LP, the owner of One Times Square, filed suit in federal court in New York alleging that CBS engaged in unfair competition, deceptive trade practices and trespass. OTS Signs, LP v. CBS Broadcasting, No. 00CIV6688 (U.S. Dist. Ct. S.D.N.Y. filed Sept. 6, 2000). Stephen J. Zoukis, a former attorney and one of three partners in Jamestown, a real estate company affiliated with OTS Signs, says the network is guilty of an ethical lapse in its news coverage, but the issue in the suit is money: CBS, in effect, posted an ad on the building and didn’t pay for it. The suit does not claim copyright or trademark infringement. Zoukis says the owners like to see the building’s image reproduced, so long as it is done accurately. The building’s reproduction on postcards and perennial appearance as the centerpiece of the city’s New Year’s celebration actually increases the value of the ads on the building, according to Zoukis. The suit claims that CBS placed an unauthorized advertisement on the building, in addition to obliterating the ads of paying customers, who, according to the complaint, now will be less likely to buy space. Zoukis says the suit seeks a share of CBS’ profits for the virtual “ad.” KILPATRICK, OTHERS HIRED Though Holland & Knight usually represents One Times Square’s owners, General Counsel Matt M. Bronfman says because of the type of expertise required for this case, Kilpatrick Stockton partners Jerre B. Swann, Jeffrey J. Toney and Theodore H. Davis Jr., along with New York counsel from Herrick, Spiegler, will handle the litigation. Bronfman says he’s not sure who’ll represent CBS, but that it probably will be the New York firm Paul, Weiss, Rifkind, Wharton & Garrison. Ad space on the building is very valuable, according to Zoukis. The building is covered with large advertising signs called “spectaculars,” a large-screen television and the “Zipper,” a moving electronic sign that shows news and stock quotes. Ad revenue accounts for 95 percent of the income that the building produces; rents account for the rest, Zoukis says. Signs on the north side of the building, where CBS superimposed its logo, lease for “a couple million a year,” he says. Signs on the building’s less-high-profile faces lease for about $250,000 a year. Advertisers pay for space based on the number of people who’ll see their ad, according to Zoukis. They also pay for the building’s residual image, for its depictions on postcards, in movies and TV shows. The complaint says nearly 7.5 million viewers watched CBS’s millennium coverage of One Times Square and the ball’s descent. If CBS had leased space for the millennium celebration, according to Zoukis, the cost would have been in the “high millions of dollars.” COMPLAINTS FROM ADVERTISERS He says advertisers whose messages were covered by the CBS image have complained, but have not filed suit. Zoukis says his company wants to protect the building’s image and value. It is also interested in preventing this type of electronic poaching from recurring. And it could recur. A New York Times report shortly after New Year’s quoted CBS Television President Leslie Moonves saying that, “Anytime there’s an NBC logo up on our network, we’ll block it again.” A CBS spokesman contacted this week says the network has not superimposed its logo on the One Times Square building since the New Year’s broadcasts. Zoukis acknowledges that this is true, but says the suit is important because the building still is vulnerable to those seeking high-profile, free ad space. For example, he says, during the 1998 Goodwill Games, Time-Warner Inc., superimposed advertisements for charities favored by Ted Turner and Jane Fonda on the building. Jeff Pomeroy, director of public relations for the Goodwill Games, confirms that ads were superimposed on the building for a print campaign. Because Time-Warner is a tenant of One Times Square, the matter was settled internally, according to Zoukis. The building also is susceptible to those seeking compensation for not superimposing their logos. “MTV has threatened to do that,” says Zoukis. “Those boneheads called and said, ‘If you don’t pay us, we’ll advertise.’ “ Calls to MTV’s media relations department in New York were not returned. Lawrence K. Nodine, a shareholder at intellectual property firm Needle & Rosenberg and an adjunct law professor at Emory University, says the suit has no legal precedent. Similar technology has been used to add a first-down stripe during televised football games, and CBS has used it to add logos to classic New York images, including horse-drawn carriages in Central Park during “The Early Show” and the TV news magazine “48 Hours.” But Nodine says he isn’t aware of any litigation over the issue of using the technology to obscure existing advertising. That doesn’t mean that One Times Square doesn’t have rights. Nodine says altering a building’s image could trigger a trademark or copyright violation. That’s not the case here. Zoukis says One Times Square isn’t protected in those ways because its owners want the building’s image to get lots of exposure, so long as it’s done accurately. The suit also makes a trespass claim, based on cases where hackers who broke into government Web sites and added graffiti were held liable for trespass. Those cases may not be on point, according to Nodine. “There is an element in those cases of some sort of limited access,” he says. “You have to get past a password, you have to lie. … Where is limited access here?” His analysis: the claim is creative, but “it’s a stretch.” Even without those claims, Nodine says CBS may be able to make several arguments in its defense. The network may argue that the public didn’t really believe the CBS logo was actually on the building. It may argue that it had no intent to mislead people, he says. Indeed, in a post-New Year’s news report, CBS News President Andrew Heyward said, “I think most people know there’s probably not a CBS logo in Times Square.” Nodine offers another example. If Dan Rather propped a piece of cardboard in the window behind him that read “CBS” and obscured part of One Times Square and its ads, “Would you believe there was liability then? I would say no,” Nodine says. But what if, as OTS Signs alleges, the digital CBS logo were manipulated to look as if it were actually a part of the building? “If you assume that CBS really tricked viewers into believing that its ad is on the building, then my instinct is that there’s a claim. But I find it a sort of elusive claim to define, because the cause of action doesn’t fit neatly into any category. But it does seem as if there was a wrong perpetrated,” Nodine says.

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