Archive for the ‘Litigation’ Category

Ask Dr. Copyright

Thursday, March 28th, 2013

copyright question

Dear Doc:

 I’ve been listening to NPR, and when they talk about Supreme Court cases, they talk about someone standing around, and how much that matters to all them old folks on the Court.  Then they complain that folks lack standing (I guess they never heard of those tall desks like old Tom Jefferson used.) Now, I can understand a bunch of senior citizens being concerned about people standing, but why does it matter to the rest of us, and why don’t they just get more chairs in the courtroom?

Signed,

Supremely Clueless

Dear SC:

NO! NO! NO! It’s not a lack of chairs, it’s a lack of standing. Let me explain…

Under the Constitution, Article III (stay with me here) our courts are only allowed to decide “cases and controversies”. That’s a way of saying that you’re not allowed to ask a court a hypothetical question, like, “If I were to shoot an arrow into the air and it came down I know not where, but, like, onto the top of my good-for-nothing son-in-law’s thick skull, would I be found guilty, or be given a medal for thinning out the gene pool?”

Courts can’t answer such questions.  The Founding Fathers wanted to be sure that judges would not have to work very hard, so they made sure that only REAL cases can come before the courts. Since judges can’t just come right out and tell folks to get out of their courtrooms, they invented this concept called “standing”.

For you to have standing, the outcome of the case must affect some right or interest of yours. You literally can’t just be a bystander. When the Supreme Court really, really does not want to answer a question, it can determine that one of the parties to the case actually never had a right to bring the case to the courts in the first place. So, let’s say that you see that Monster Corporation has just been granted a patent on a product that you want to make, right after you convince your brother-in-law to invest $1 million in your company. You can’t sue Monster to invalidate the patent because they have not threatened to sue you. Monster can’t sue you, because you have not “made, used, sold or imported” the patented product — you’ve only thought about it. See? Nobody has standing, and the courts will politely throw you out in the street if you try to bring a lawsuit.  Got it?

Good!  Now why are you just standing/sitting around reading this? Listen to your Mother…go outside and play in the fresh air!

The “Doc”

Sitting Bull and Buffalo Bill

Ok, let’s hear your comments about why this image is funny….

– Lawrence A. Husick, Esq.

Patentable Subject Matter – The Issue That Will Not Die

Tuesday, July 31st, 2012

Whether an invention is the sort that can be patented is determined by §101 of the patent statute. That section states:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

The issue of patentable subject matter is not a problem for physical inventions in the mechanical or electrical arts, but can present thorny problems for less concrete inventions, such as processes in the pharmaceutical, software and financial fields.

The U.S. Supreme Court has interpreted §101 several times, most recently in Mayo Collaborative Services v Prometheus Laboratories, 132 S. Ct. 1289 (2012).   The invention before the Court was a method of treating a particular disease by administering a particular drug, monitoring levels of breakdown products of the drug in the patient’s blood, and adjusting the dosage to achieve a specified range of concentrations.  The Court held that the invention was nothing more than an unpatentable ‘natural law;’ namely, the natural process occurring in the patient’s body of breaking down the drug in a way that indicated the effectiveness of the drug.  The other steps of the invention were not enough to convert this unpatentable ‘natural law’ into a patentable invention.  In considering whether the other steps were sufficient, the Court found persuasive that the drug, the breakdown products and the tests were old and well known.  The Court was concerned that patenting this or any other ‘natural law’ would preclude other researchers from utilizing the same law.

The Court specifically refused to adopt the PTO’s argument that whether an invention was old, obvious or vague should be considered under other sections of the patent law  and not under §101.   The Court flatly stated that those concepts are incorporated into §101.

The net result of Prometheus and other Supreme Court precedent is that at the margins patentable subject matter is a bit like pornography – the Supreme Court justices know it when they see it.  This approach makes life unpredictable for the PTO, for the Federal Circuit Court, and particularly for inventors in the pharmaceutical, computer software and financial services industries.  The dust from the Prometheus decision still has not settled and several cases are pending in the Federal Circuit that will apply the decision.

– Robert Yarbrough, Esq.

The ‘First Sale’ Doctrine and Why You Shouldn’t Rely on Google (or Your Friends) as Your Lawyer

Wednesday, November 30th, 2011

Copyright QuestionOne of the exclusive rights in copyright granted to the creator of a work is the right to distribute it.  For instance, if you self-publish a book — a popular activity these days — you also have the exclusive right to make copies and distribute them to whomever you want.  The distribution right, however, is not unlimited.  If I were to purchase one of your self-published books, the law permits me to resell it to whomever I want without violating your exclusive right of distribution.  This is known as the “First Sale” doctrine — codified in Section 109 (a) of the Copyright Act.  The First Sale doctrine is important because it legitimizes the sales activities of used book stores, art galleries, and other establishments, which resell copyrighted works.  But what are the limits of the First Sale doctrine?  That was the question raised by a recent case before the U.S. Court of Appeals for the Second Circuit in John Wiley & Sons, Inc. v. Supap Kirtsaeng, No. 09-4896-cv (August 15, 2011, 2nd Cir).  It may have far-reaching implications.

In 2009, Supap Kirtsaeng, a Thai national, opened a used textbook business to support his educational studies in the United States. The business model was simple.  He enlisted his friends and family in Asia to buy textbooks and ship them to him in the United States for resale on e-Bay. To ensure that he was acting legally, Kirtsaeng asked the opinion of his friends in Thailand and consulted “Google Answers” (now defunct). Apparently, these sources gave him the green light because his textbook selling activities continued and prospered.  Kirtsaeng was so successful that he caught the eye of John Wiley & Sons, Inc. (“Wiley”) — the copyright owner — who sued him in federal court for copyright infringement.  Wiley based its lawsuit on Section 609(a) of the Copyright Act, which prohibits the importation of copyrighted works manufactured outside of the United States without the authorization of the copyright holder.  At trial, the federal district court prohibited Kirtsaeng from raising the first sale doctrine as a defense to copyright infringement and as a result, the jury found in favor of Wiley and awarded it damages for intentional copyright infringement.

On appeal, the United States Circuit Court of Appeals for the Second Circuit affirmed the decision of the lower court. The court of appeals acknowledged that there was a tension between the First Sale doctrine, which gives rights to owners of copyrighted works and Section 609(a) of the Act, which takes them away if the works were manufactured outside of the United States.  Nevertheless, it was persuaded by a recent decision of the United States Supreme Court in Quality King Distributors, v. L’anza Research International, Inc., which suggested that Section 609(a) was meant to give control to copyright owners over imported goods, which, by definition, are not “lawfully made” under the U.S. Copyright Act.  Under the First Sale doctrine, the law requires that the goods be “lawfully made” under the Act.

Although a decision by the U.S. Circuit Court of Appeals for the Second Circuit is not the law of the land, only decisions of the U.S. Supreme Court wear that title, it could potentially persuade other courts to decide cases in the same direction.  The end result may have important implications for used book sellers, art galleries, libraries and any other establishment that may resell copyrighted works manufactured abroad.    Of course the Kirtsaeng case also suggests that you shouldn’t make important business decisions based on advise from non-experts even if they bear the “Google” name.

– Adam G. Garson, Esq.

Trademark Infringement Cases on the Rise

Wednesday, November 30th, 2011

ExclamationTrademark owners are now litigating more than ever to preserve their brand names and logos. They are taking aggressive stands with much success.  Here are some recent examples.

Courts are enforcing the law of trademark infringement and trademark dilution to prevent unfair competition, a commercial tort designed to promote fair and honest competition. To preclude an action for trademark infringement, the mark, logo or design must not be “confusingly similar” to an existing mark, logo or design.  A trademark is “confusingly similar” if it is likely to cause confusion amongst consumers as to the source of the product or service.

For example, In May 2011, Apple brought an infringement and dilution action against defendant Fei Lik Lam, a/k/a Phillip Lam for using the name whiteiphone4now.com. Apple’s complaint states “The Apple Logo and iPhone Trademark are distinctive, iconic and famous trademarks that are instantly recognized as indicating products and services created, designed, manufactured, produced and/or provided by Apple.”  The court eventually found Lam’s domain name to be  confusingly similar to Apple’s iphone in the sense that consumers may be confused that whiteiphone4now.com is part of Apple’s line of products.

In 2008, Adidas filed an infringement case against Payless Shoes Source; a subsidiary of Collective Brands Inc. The Federal Court found Payless’ sneakers with 2 and four parallel stripes infringed Adidas’ sneakers and assessed Payless damages of $304.6 million. The Payless victory empowered Adidas to sue any sneaker company that sells sneakers bearing two, three or four stripes.  Indeed, federal court records show that Adidas has approximately 325 pending infringement cases in the United States and approximately 45 settlement agreements. Most recently, in March 2011, Adidas sued small footwear manufacturing company Radii in federal court in Oregon.

In another infringement case, Facebook Inc., sued Teachbook.com LLC for trademark infringement for its use of the “Teachbook” domain name. In its defense, Teachbook argued that the word “book” was generic and could not be claimed by Facebook as a trademark. The court was not persuaded and on Oct 26, 2011, it refused to dismiss Facebook’s complaint.

Similarly, businesses that dilute a famous mark may also be prevented from using their trademark. Trademark dilution refers to the concept where a trademark that is confusingly similar to a famous mark may not be used in a way that will lessen the uniqueness of the famous mark even though it may brand an entirely different product.  That was one of the causes of action asserted by Apple in its case against whiteiphone4now.com discussed above.  Foreign trademark law of dilution is very similar to that of the United States.  For example, in November 2011, Lodha Garments in India was using the trademark ‘Cadbeery’. Cadbury UK Ltd. and the Indian subsidiary filed a suit in the Delhi High Court against Lodha Garments on the grounds of “adopting a deceptively identical name to promote its product.” The Delhi High Court granted an injunction against Lodha Garments.  Here, the garment factory in India was not producing chocolates so as to directly infringe Cadbury’s mark. However, they were diluting the famous mark ‘Cadbury’, renowned chocolate manufacturers, by using a similar name for garments.

New and start up businesses need to be wary of their choice of trademarks. A state and federal clearance search of the proposed mark is essential and consultation with a trademark attorney should be a high priority given the current climate and increase in trademark litigation.

– Ash Tankha, Esq.

Copyright Infringement and The Vanishing Corporate Veil

Friday, August 26th, 2011

copyrightProtecting oneself from personal liability is top on the list when a business owner forms a corporation or similar entity.  Lawyers and courts refer to this protection as the “corporate veil”.  Be careful, though, because your corporate veil is not armor clad.  Larry Chasin, president of Ideal Diamond Solutions, Inc. (IDS), learned this the hard way when a competitor, Blue Nile, Inc. (Blue Nile), sued him and his company for copyright infringement.  Apparently, IDS, which provided e-commerce solutions for jewelry stores, maintained certain websites on which were displayed images of diamonds and other jewelry copied directly from Blue Nile’s web site.  Blue Nile, an online jewelry and diamond retailer, sued Chasin for copyright infringement and other claims in the U.S. District Court for the Western District of Washington in Seattle.  Blue Nile, Inc. v. Ideal Diamond Solutions, Inc., et al., No. C10-380Z (August 3, 2011). [link]

Chasin argued against his being held liable for copyright infringement: his was a small company, he had no role in creating the infringing websites, and he had no knowledge that the content was copyrighted by Blue Nile.  The court listened but was unconvinced, noting that Chasin was the man in charge: Chasin was the “brainchild” and he “controlled the corporate affairs.”  According to the court, he may have been an innocent infringer — that is, without knowledge that images were infringing — but lack of knowledge did not protect him from liability (although it may be relevant to damages).  The court wrote,

Copyright is a strict liability tort; therefore there is no corporate veil and all individuals who participate are jointly and severally liable . . . It is well established that a corporate officer will be liable as a joint tortfeasor with the Corporation in a copyright infringement case where the officer was the dominant influence in the Corporation, and determined the policies which resulted in infringement.

The Blue Nile case teaches important lessons for both the copyright holder and the user of copyrighted materials.  For the holder, it demonstrates the importance of registering your copyrights.  Copyright Registration gave Blue Nile the right to sue in federal court and to collect statutory damages (and attorneys fees).  For users of copyrighted material, Blue Nile also carries an important warning.  Corporate officers, whether your company is big or small, may be personally liable for the infringing activities of the company.  If you are using content created by others be sure that you have the appropriate rights to copy it.  If you don’t know, hire a copyright lawyer to advise you.

–Adam G. Garson, Esq.

Employees, Patent Rights and Government Contracts – Who owns that invention?

Thursday, July 28th, 2011

gavelEvery employer that engages in research and development work should obtain a present assignment of patent rights in future inventions from every employee.  The U.S. Supreme Court underscored this fact in the recent case of Standford v Roche.

Stanford University’s research employee worked on a project to detect HIV infection.  In the employment agreement, the employee “agree[d] to assign” to Stanford all inventions resulting from his employment.

Stanford arranged for the employee to perform work on the HIV project at Cetus, a small research company that had specialized DNA amplification capabilities.  As a condition of having access to the Cetus facilities to perform the Stanford work, the employee signed an agreement with Cetus saying that the employee “does hereby assign” to Cetus his inventions made as a result of his access to the Cetus facilities.

Get the picture?  The Stanford agreement was an agreement to assign in the future.  The Cetus agreement was a present assignment of rights to future inventions.

Stanford applied for and obtained patents on the HIV testing procedure.  Meanwhile, Roche acquired Cetus and commercialized the HIV test in the form of test kits, which are now widely used.  Stanford sued Roche for patent infringement and the lawsuit made it all the way to the Supreme Court, which found in favor of Roche.  The Supreme Court ruling has great importance for employers.

The bottom line:  An employee inventor is free to assign an invention made for an employer to someone else unless the invention is already assigned to the employer, even if the research was funded by the Federal government.  An obligation of the employee to assign inventions to the employer in the future is not good enough to preserve the employer’s rights in the invention.

Why it’s important:  Your employee can assign your invention to anyone, including your competitor, unless you already have an assignment from the employee.

If you are an employer, be sure to obtain a present assignment of future inventions from every employee.  If you are contracting for development of an invention or product, obtain a present assignment of future inventions preferably from both the development partner and each person working on the project.  You’ll be glad you did.

– Robert Yarbrough, Esq.

Ask Dr. Copyright….

Wednesday, June 29th, 2011

copyright questionDear Doc,

What ever happened to that “Copyright Troll” that was trying to sue anyone who quoted the Las Vegas newspaper?

Jus’ Wondrin’

Dear Jus:

Funny you should ask.  You will recall that Righthaven LLC (the “troll” you talked about) is a company that brought hundreds of law suits for copyright infringement against web sites, bloggers, and mainstream media companies that used content from the Las Vegas Review Journal.  More recently,  Righthaven  sued a website called the Democratic Underground. The Electronic Frontier Foundation, a digital rights nonprofit group, got into the case on the side of the defendant.  Its attorneys, wondering how Righthaven got the rights from the Las Vegas Review Journal, requested copies of agreements from Righthaven.

Righthaven said that its contracts were confidential, but the Federal judge ordered them to produce the documents, and guess what? It turned out the Righthaven did not own the copyrights, and was not even the exclusive licensee of the rights. Under the law, Righthaven did not have “standing” to sue for infringement. (Standing is the legal concept that a party to a law suit must have a genuine interest in the suit, so that only real “parties in interest” are allowed to participate in the action.)

The judge ordered the suit against Democratic Underground dismissed. Now many other victims of Righthaven have asked that their cases be dismissed on the same basis, and many have asked courts to order RIghthaven to pay their costs and attorney fees, too.

Does this mean the end of such suits? Obviously not, since others will now understand that a genuine transfer of rights is necessary before starting copyright law suits. Of course, the newspaper itself (or the company that owns it) could have brought suit in the first place, but since suing people is not the usual business of newspapers, the Doc does not expect a wave of such filings any time soon.

That said, the advice still stands repeating: short quotes from sources are fine, but for anything longer, a link to the original is still legally safer.

– Lawrence A. Husick, Esq.

LWH Reclaims Domain Name from Marchex Sales

Wednesday, June 29th, 2011

domainsYour trademarks are among your company’s most valuable assets; controlling them is a necessity for successful branding.  Domain names, particularly if they incorporate your trademarks, are part of your intellectual property portfolio and demand as much attention as your other assets.

Sometimes, through no fault of your own,  another company owns a domain name, which flatly infringes your trademark.  Such was the case with a client who recently retained Adam Garson of Lipton, Weinberger & Husick to reclaim a domain name from Marchex Sales, Inc. (Marchex), a public company in the business of acquiring huge portfolios of domains for Internet marketing.  It owns such domains as videocamera.com, Debts.com, LasVegasVacations.com, CareerInfo.com and RentGuide.com.  Marchex was running a website using our client’s trademark as its domain name.  The web site contained various links to related goods and services including our client’s competitors.

Our client’s trademark, which cannot be disclosed here for confidentiality reasons, was only recently registered with United States Patent and Trademark Office.  Nevertheless, it had been using the mark since the 1990′s and could prove continuous use until the present.

To rescue our client’s domain name, LWH filed an administrative action with the National Arbitration Forum (NAF) under the Uniform Domain-Name Dispute Resolution Policy (UDRP).  The UDRP is a procedure sanctioned by the Internet Corporation for Assigned Names and Numbers and is available to anyone who has a domain name dispute.  The UDRP may be used to obtain an order directing a domain’s registrar to transfer the domain to its rightful owner.

To succeed, the plaintiff — in this case our client — is required to prove the following:

(i) its domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

(ii) it has no rights or legitimate interests in respect of the domain name; and

(iii) its domain name has been registered and is being used in bad faith.

The process involves eight steps, from filing a complaint to final review.  In our situation, it took 60 days after filing the complaint for the NAF to render an opinion.  The panel found in favor of our client on all three counts.  Marchex, the Respondent, argued that at the time it acquired the domain name, our client possessed no trademark rights because the trademark was generic and descriptive.  The Panel rejected that argument.  Here’s a sample from the panel’s 24-page opinion:

Complainant’s uncontested relevant evidence presented in support of Complainant’s having timely common law trademark rights in the at-issue mark are sufficient to demonstrate secondary meaning and overcome any presumption that the … mark is generic notwithstanding that each of the component words may be generic when taken discretely.

Respondent takes no steps to avoid holding or using trademarked domain names when it would be a simple matter to screen domain names prior to registration or acquisition to determine if they contain registered trademarks or marks in which there is likely a claim of rights such as the … mark.  With even less trouble the Respondent might, after finding out that a trademarked domain name such as Complainant’s was registered as a domain name, cancel the trademarked domain name or voluntarily transfer registration, rather than link it do the mark holder’s competition.

….

It thus seems disingenuous for Respondent to claim it acquires domains because of the target domain name’s descriptive value. And even if Respondent’s motivation is as stated, the fact that Respondent cares not that it also is acquiring trademarked names is troubling and further calls into question the bona fide nature of Respondent’s endeavors….Registrants of large numbers of domain names or those acquiring domain names in bulk must be particularly careful in respect of the rights of third parties.

The case demonstrates that trademark owners who can establish common law trademark rights can prevail against large corporations even when the odds do not seem particularly favorable.  Let us know if we can assist you with your efforts at reclaiming your trademarks and domain names.

– Adam G. Garson, Esq.

Viacom v. YouTube: The Saga Continues

Thursday, May 26th, 2011

YouTubeYouTube is no stranger to copyright infringement issues.  In 2008, Viacom filed a $1 billion copyright infringement suit against YouTube, claiming that the video site contributed to an explosion of copyright infringement by permitting users to post infringing videos.  The federal district court eventually dismissed Viacom’s action against YouTube on grounds that the Digital Millennium Copyright Act’s (DMCA) safe harbor provisions protected YouTube from liability.  You may recall that we’ve written about the safe harbor provisions of the DMCA in this newsletter.  Under the the safe harbor provisions, web site owners are immune from liability arising out of materials uploaded by others unless the site owners know about infringing materials and fail to take action.  In Viacom, the U.S. District court held that YouTube’s executives had only general knowledge of infringing activities, which was not specific enough to trigger liability under the DMCA.

Viacom has not surrendered.  In December 2010, it filed an appeal with the U.S. Court of Appeals for the Second Circuit and in early May 2011, the last round of briefs were filed.  The case is now ready for decision.

Since the filing of Viacom’s lawsuit, YouTube has not remained idle.  It has strengthened its anti-infringement efforts by creating a copyright school for users subject to at least three copyright complaints, requiring them to watch a video and pass a short multiple-choice test.  Here’s the video for your enjoyment (and education):

YouTube Copyright School

YouTube Copyright School

These efforts were mocked by Viacom in its closing brief:

That the YouTube of today is increasingly effective in filtering copyrighted material and sends infringing users to “copyright school” is of no moment, except perhaps to demonstrate what YouTube could have been doing during the time period that is at issue in this lawsuit, from YouTube’s launch in 2005 to May 2008.

We now await the decision of the appeals court.

Adam G. Garson, Esquire

Ask Dr. Copyright: The Death of a Copyright Troll?

Saturday, April 30th, 2011

copyright question

Dear Dr. C,

I heard that a copyright troll died recently…what’s the scoop?

Sincerely,

Morbidly Interested

Dear Morbidly,

Righthaven LLC is a company that has brought hundreds of law suits for copyright infringement against web sites, bloggers, and mainstream media companies that have used content from the Las Vegas Review Journal.  Quotations as small as one sentence, even when properly attributed to the Review-Journal, have brought demands for payment and federal suit from Righthaven, which alleged that it owned the rights to the paper’s morgue (archive of past issues.)  Reportedly, Righthaven has received payments to settle these suits that total several hundred thousand dollars.

In a legal counterattack, Democratic Underground, a target of a copyright claim by Righthaven, used discovery to gain access to the agreement between the newspaper publisher and Righthaven.  (Righthaven LLC v. Democratic Underground LLC, Civ. Action No. 2:10-cv-01356, D. Nevada.)  That agreement granted Righthaven LLC only the right to sue, but not ownership of the copyrighted works.  United States District Judge Roger Hunt ordered publication of the agreement, and those that have been sued by Righthaven have now been given the tool to bludgeon the troll.  You see, under existing law, having a bare right to sue is not sufficient basis for standing before the court, and each defendant may now move to have cases dismissed on that ground.  Expect to see a LOT of motions filed.

This leaves the fundamental question of what constitutes fair use of a newspaper’s content in today’s digital world.  Is it sufficient to include the link (URL) with the text of the story posted or emailed?  Is it permissible only to post the link itself?  Is there some middle ground?  Unfortunately, Congress was very vague about what would be considered “fair use” when it wrote the Copyright Statute, and our courts have not provided much precision in the more than thirty years since.  This important question must be answered, but it may take many more cases, at great cost in time and expense, before we have a workable and consistent answer.  For now, the safe course is to quote only a few sentences, at most, and provide a reader with the opportunity to view the original article using a link (such as, “To read the rest, click here…”)

Is Righthaven LLC totally out of business?  Not yet, and our guess is that they will come up with a new agreement and be back in court before the ink is dry.  Word to the wise: quote carefully, and if at all possible, do not quote that paragon of journalistic excellence, the Las Vegas Review Journal.

– Lawrence Husick, Esq.