SoCal IP Institute :: June 3, 2013 :: Copyright Sanctions and Mandatory Cross-Appeals

Our weekly SoCal IP Institute meeting on Monday, June 3, 2013 will be a discussion of one district court copyright sanctions case and a Federal Circuit decision regarding cross appeals of invalidity. Brief synopses of the cases appear below.

Ingenuity 13 LLC v. John Doe, Case No. 2:12-cv-8333-ODW (JCx) (C.D. Cal.  May 5, 2013) (available here).

This case has been quite popular in the legal press.  The outcome, thus far, is that the lawyers representing the plaintiffs in this case have been sanctioned with $81,319.72 in attorney’s fees and costs.  The facts, broadly speaking, are recited by Judge Wright:

Plaintiffs have outmaneuvered the legal system. They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs. And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video. Then they offer to settle—for a sum calculated to be just below the cost of a bare-bones defense. For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn. So now, copyright laws originally designed to
compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry.

Judge Wright issued an order to show cause why sanctions should not be entered against the plaintiff and plaintiff’s counsel.  He also sought for each of several named individuals including the principals of the plaintiff and of the plaintiff’s counsel appear before him at a hearing.  Only one counsel, Mr. Gibbs, appeared before him at that hearing.  Based upon all that the court was able to deduce, the plaintiffs, who appear to be the lawyers prosecuting the cases, maintained full control of the entire operation, stole the identity of a man in Minnesota to hold him out as the principal of the plaintiff, and filed numerous lawsuits based upon a scant internet investigation, then sought to settle the cases quickly.  Once the scheme was discovered, the plaintiffs then sought to deceive the court as to the true status of the cases, the investigation undertaken prior to an allegation of infringement, the ownership involvement of a number of lawyers, and of the actual ownership of the allegedly infringed works.

Based upon the court’s difficulty in obtaining true information regarding any of the facts of the matter, the court found that it was inadequately placed to issue a large, seven-figure sanction.  The court openly suspected that such a sanction would be avoided regardless.  Instead, the court awarded an attorney’s fees and costs sanction under its inherent authority in Rule 11 and passed all information that the court has obtained regarding the attorneys’ conduct on to the U.S. Attorney’s office for the Central District of California, to the IRS criminal division, and to all relevant state and federal bar associations to which any of the alleged plaintiffs belong or in which they had cases presently pending.

Lazare Kaplan Int’l., Inc. v. Photoscribe Technologies, Inc. et al. (Fed. Cir. 2012-1247 April 19, 2013) (available here).

In this case, Lazare Kaplan appealed from a summary judgment of invalidity after a prior judgment and appeal that those same claims were not infringed and not invalid.  After the original trial held in 2008, the jury returned a verdict that Photoscribe did not infringe claims 1 or 7 under the doctrine of equivalents. The district court then issued a final judgment that claims 1 and 7 were not invalid and not infringed, either literally or under the doctrine of equivalents. Lazare Kaplan filed a notice of appeal from the judgment of noninfringement. Photoscribe, however, did not file a notice of appeal from the judgment that the asserted claims were not invalid.  On remand after the appeal, the court entered summary judgment of invalidity.

Lazare Kaplan appealed this decision on the basis that Photoscribe had not reserved the issue of invalidity with a cross-appeal and, as a result, that issue was not addressable on remand.  The Federal Circuit found that Lazare Kaplan was correct and further than Fed. R. Civ. P. 60(b), which enables a party to seek relief from a final judgment, did not save Photoscribe’s issue.  Doing so would undermine the purpose of the mandatory cross-appeal in this case.  As a result, the case was remanded with instructions to vacate the judgment of invalidity.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, June 3, 2013 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: May 20, 2013 :: Subject matter jurisdiction and standing

Our weekly SoCal IP Institute meeting on Monday, May 20, 2013 will be a discussion of one Federal Circuit case regarding subject matter jurisdiction and a 9th Circuit case regarding copyrights.  Brief synopses of the cases appear below.

Forrester Environmental v. Wheelabrator Technologies, Case No. 12-1686 (Fed. Cir. May 16, 2013) (available here).

The Federal Circuit vacated and remanded defendant’s summary judgment motion regarding plaintiff’s state law business tort claims. The Federal Circuit held that the district court lacked subject matter jurisdiction over plaintiffs’ claims because: 1) defendant’s allegedly inaccurate statements regarding its patent rights concerned conduct taking place entirely in Taiwan; 2) the use of a patented process outside the United States is not an act of patent infringement; and thus, 3) there is no prospect of a future U.S. infringement suit arising out of the Taiwan company’s use of the parties’ products in Taiwan, and accordingly no prospect of inconsistent judgments between state and federal courts.

Righthaven LLC v. Hoehn, Case No. 11-16571 (9th Cir. May 9, 2013) (available here).

Dismissal of two copyright infringement suits is :1) affirmed in part, where agreements assigning plaintiff the bare right to sue for infringement of newspaper articles, without the transfer of any associated exclusive rights in the articles, did not confer standing to sue; and 2) vacated in part, as to the portion of the district court’s order granting summary judgment on fair use in one of the suits, because given plaintiff’s lack of standing, the district court lacked jurisdiction to rule in the alternative on the fair use defense.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, May 20, 2013 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

SoCal IP Institute :: April 16, 2012 :: Summary Judgment of Copyright Claims and Functionality in Trademarks

We will be discussing one Ninth Circuit case and one Federal Circuit case during our weekly SoCal IP Institute meeting on Monday, April 16, 2012. Brief synopses are presented below.

L.A. Printex Indus., Inc. v. Aeropostale, Inc., Case No. 10-56187 (9th Cir. Apr. 9, 2012) (attached).  A designer at LA Printex created a design including flowers that it labeled “C30020.”  LA registered the C30020 design in a collection with four other designs.  LA Printext subsequently saw a very similar design in products sold by Aeropostale.  The two designs appear below:

The C30023 was registered as a collection of unpublished works.  However, two of the designs had been previously published.  After the suit began, this issue was corrected by LA Printex at the Copyright Office by a supplemental registration.  There were cross motions for summary judgment.  The defendants’ motion was granted on the basis that there was no genuine issue of material fact that the defendants had access to the C30020 design or substantial similarity.  Defendants then moved for and received attorneys fees.  LA Printex appealed.

LA Printex argued that the district court’s determination that there was no “access” to the design was faulty.  In particular, they asserted that the court’s relianceonly upon a declaration by an LA Printex employee.  However, the 9th Circuit found substantial additional invoices showing more than 50,000 yards of C30020 fabric sold from 2002-2008 in the trial record.  The question then was whether this was “widely distributed” as claimed by LA Printex, thereby demonstrating a genuine issue of material fact as to Aeropostale’s access to the pattern.  The court described the various levels of access required to show “wide dissimination” under copyright “access” jurisprudence in different contexts.  Based upon the sales, mostly to local Los Angeles fabric converters and the invoices, the 9th Circuit reasoned that a reasonable jury could find widespread dissemination of the C30020 design.  Thus, there was at least a genuine issue of material fact as to Aeropsotale’s access.

The 9th Circuit then took up the district court’s determination that the works were not substantially similar.  Though there were differences between the designs and elements of the design were not protectable by Copyright, the 9th Circuit pointed out that questions of substantial similarity should rarely be decided at the summary judgment phase.  Based upon an extrinsic (objective) evaluation of the designs and an intrinsic (subjective) evaluation, the 9th Circuit found that the question should at least be put to a jury.

Finally, Aeropostale argued that the registration was faulty and invalid. Therefore, they argued, they were entitled to summary judgment on this alternative ground.  The 9th Circuit reasoned that the original registration included an error that was subsequently corrected.  The inclusion of an error regarding two other designs does not render the C30020 registration invalid or bar LA Printex’s suit.  The summary judgment was reversed, the attorney’s fee award vacated and the case remanded for further proceedings.

In re Becton, Dickinson and Co., Case No. 2011-1111 (Fed. Cir. April 12, 2012) (attached).  Becton, Dickinson and Company (“BD”) appealed from the final decision of the Trademark Trial and Appeal Board (“TTAB”) affirming a refusal to register BD’s design of a closure cap for blood collection tubes as a trademark on the ground that the design is functional. BD also appealed the Board’s determination that the mark has not acquired distinctiveness. The Federal Circuit did not reach the issue of acquired distinctiveness. The Court held that the mark was not registerable because the mark as a whole was functional.  The cap is depicted below:

Judge Linn dissented, faulting the majority for deciding the case “piecemeal” rather than reviewing the proposed mark as a whole.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, April 16, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Elisha Manzur by 9 am Monday morning.

SoCal IP Institute :: May 9, 2011 :: False Marking Strikes Out and a Reaffirmation of Implied Contractual Protection for Movie Ideas

We will be discussing two recent, relevant opinions in our weekly SoCal IP Institute meeting on Monday, May 9, 2011.  The first case further develops the growing false marking jurisprudence.  The second case addresses the situation in which a movie production company uses an individual’s idea for a movie but fails to pay.  A brief synopsis of the cases is presented below.

Juniper Networks Inc. v. Shipley, 2010–1327 (Fed. Cir. April 29, 2011) (attached).  Mr. Shipley was inventor of two patents related to a “dynamic firewall”.  Mr. Shipley later assigned these patents to an unrelated third party who sued Juniper Networks for infringement.  Juniper Networks brought a qui tam action for a judgement of false marking of the patents based upon statements made on Mr. Shipley’s website from 2000 to the present regarding the systems covered by the patents.  Namely, Juniper Networks alleged that the indication on Shipley’s website that software embodying the patents was “in progress” of being created was a “marking” of the patents.  When Mr. Shipley’s hard drive crashed in 1999 losing the only known embodiment of those firewall products, Juniper Networks alleged that those markings became false when Mr. Shipley failed to remove them from his site.

Mr. Shipley moved to dismiss for failure to state a claim.  The district court granted the motion without leave to amend.  Juniper Networks appealed.  The Federal Circuit rejected Juniper Networks’ various assertions and affirmed the district court.  In particular, the Federal Circuit affirmed the district court’s decision that the alleged markings did not indicate that the website itself was protected by the software, that the district court need not consider other aspects of the false marking test when one element is not satisfied and that the proper standard of review under 12(b)(6) was applied.  The Federal Circuit also affirmed the district court’s dismissal without leave to amend because it was clear that the complaint could not be saved by any amendment.

Montz v. Pilgrim Films & Television, Inc., 08-56954 (9th Cir. May 4, 2011) (attached).  Larry Montz envisioned a television series following a group of paranormal investigators to real-world locations searching for confirmation of paranormal activity.  From 1996 to 2003 Mr. Montz pitched his idea to various television production companies.  In 2006, Mr. Montz sued the plaintiffs in this case after they began production and airing of the show Ghost Hunters on the Sci-Fi Channel.  Mr. Montz claimed copyright infringement and breach of an implied contract on the basis of his prior disclosure of the concept to the plaintiffs.

The District court dismissed the claims as preempted by Federal Copyright law and, absent a license, the plaintiffs were not under any obligation to pay for the concept.  The en banc panel of the 9th Circuit reversed concluding that copyright law did not preempt Mr. Montz claim for an implied-in-fact contract under long-standing California Supreme Court precedent in Desney v. Wilder, 299 P.2d 257 (Cal. 1956).  As a result, the case was remanded to the district court for further proceedings.

All are invited to join us in our discussion of these cases during the SoCal IP Institute meeting on Monday, May 9, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.

SoCal IP Institute :: May 2, 2011 :: Standing to Sue for Copyright Infringement and Personal Jurisdiction in the Patent Context

We will be discussing two recent, relevant opinions in our weekly SoCal IP Institute meeting on Monday, May 2, 2011.  The first case discusses the requirement of an exclusive license in order to have standing to sue for copyright infringement.  The second case addresses issues of personal jurisdiction in patent cases.  A brief synopsis of the cases is presented below.

HyperQuest, Inc. v. N’Site Solutions, Inc., 08-2257, 08-3979, 08-4176 (7th Cir. Jan. 19, 2011) (attached).  This case concerns the standing requirement to sue for copyright infringement of a software product for processing insurance claims.  The product was licensed by Quivox Systems to N’Site Solutions.  The terms of this license are in dispute.  Quivox later sold its assets including the copyright for the software to Safelite Group who later granted those rights to HyperQuest.  HyperQuest maintained the license originally entered into by Quivox.  The source code for the software was eventually sold to Unitrin Direct Insurance.  Eventually, HyperQuest sued N’Site and Unitrin for infringement.

The district court concluded that HyperQuest held only a non-exclusive license and, therefore, lacked standing to sue.  The court also awarded costs and attorneys’ fees to N’Site and Unitrin.  HyperQuest appealed and, in this case, the 7th Circuit affirmed.  Essentially, the 7th Circuit agreed with the district court’s determination that, pursuant to the original agreement, HyperQuest was never in exclusive control of any one of the bundle of copyright rights in the eDoc software.  As such, it was not an exclusive licensee in the appropriate meaning of that term, and lacked standing to sue for copyright infringement.

Radio Systems Corp. v. Accession, Inc., 2010-1390 (Fed. Cir. April 25, 2011) (attached).   In this case, the Federal Circuit is reviewing a decision of the U.S. District Court for the Eastern District of Tennessee dismissing a patent declaratory judgment suit filed by Radio Systems.  Accession, over a course of a number of years and through various actions, sought to license its patent on electronic pet door access systems to Radio Systems.  Radio systems refused, attempted to patent its own product and, eventually brought suit.  The district court dismissed the case for lack of personal jurisdiction over Accession in Tennessee.

Radio Systems sought review of this decision and asserted a number of basis for personal jurisdiction.  First, Radio Systems argued that Accession’s activities in seeking to license the patent to Radio Systems were “directed” to Tennessee sufficiently to support personal jurisdiction.   Second, Accession made ex parte efforts to inform the Patent and Trademark Office of its own patent application during the course of the prosecution of Radio System’s own patent.  Radio Systems alleged that this was sufficient for personal jurisdiction in Tennessee because it’s primary effect was on Radio Systems in Tennessee.  Finally, Radio Systems asserted that an NDA signed between the parties included a choice of forum clause that named Tennessee and that this conferred personal jurisdiction.  The Federal Circuit disagreed with each contention and confirmed the district court’s dismissal of the declaratory judgment suit.

All are invited to join us in our discussion of these cases during the SoCal IP Institute meeting on Monday, May 2, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.

SoCal IP Institute :: February 28, 2011

After a holiday week away, we invite you to join us for a SoCal IP Institute meeting, Monday, February 28 at Noon. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to  Amanda Jones by 9 am Monday.

We will be discussing the following cases:

ABB, Inc. v. Cooper Indus., LLC, 2010-1227 (Fed. Cir. Feb. 17, 2011) (case attached).  ABB sought declaratory judgment in the Southern District of Texas that it did not infringe a number of Cooper patents.  ABB was a licensee to the patents as a result of a prior dispute between the two parties.  Whether or not the resulting settlement and license agreement covered the situation was the basis of ABB’s declaratory judgment action.  The S.D. Tex dismissed the case for lack of subject matter jurisdiction as not requiring any application of patent laws and being a purely state law contractual dispute.  After some lengthy discussion, the Federal Circuit reversed the decision because the basis of the claim rested in patent law.

Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317  (9th Cir. Feb. 23, 2011) (case attached).  Fleischer Studios, Inc. sought review of a summary judgment dismissing his copyright infringement and trademark infringement claims.  Fleischer alleged that the defendants sale of their posters featuring Betty Boop infringed both his copyrights and trademarks.

The ownership of Betty Boop appears to have been convoluted for some time, but Fleischer offered a number of chain of title bases for his copyright ownership in the character at the district court.  Fleischer only sought review of one on appeal.  The 9th Circuit found that one of the assignments upon which the plaintiff relied specifically carved out the character of Betty Boop from the assignment of several teleplays in which she was featured.  Accordingly, he lacked the title necessary to maintain a case for copyright infringement.

Fleischer’s only trademark claim was, at best, to a common law word mark for the phrase “Betty Boop”.  The district court granted summary judgment in view of Fleischer’s failure to provide any evidence of ownership of a valid mark.  The 9th Circuit affirmed on the alternative basis that the defendants were not using the image of Betty Boop as a trademark, but instead as functional and aesthetic aspects of the posters.